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        <title><![CDATA[cdixon.org RSS Feed]]></title>
        <description><![CDATA[Chris Dixon's blog.]]></description>
        <link>https://cdixon.org</link>
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        <lastBuildDate>Thu, 22 Jun 2023 16:19:56 GMT</lastBuildDate>
        <item>
            <title><![CDATA[I wrote a book: Read Write Own]]></title>
            <description><![CDATA[I wrote a book: Read Write Own I believe blockchains and the software movement around them – typically called crypto or web3 – provide the…]]></description>
            <link>https://cdixon.org/2023/06/22/read-write-own</link>
            <guid isPermaLink="false">https://cdixon.org/2023/06/22/read-write-own</guid>
            <pubDate>Thu, 22 Jun 2023 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I wrote a book: &lt;em&gt;Read Write Own&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;I believe blockchains and the software movement around them – typically called crypto or web3 – provide the only plausible path to sustaining the original vision of the internet as an open platform that incentivizes creativity and entrepreneurship. I’ve been investing behind this thesis for years, and advocating for it through writing and speaking and by talking to business leaders, journalists, and policymakers both here and around the world.&lt;/p&gt;
&lt;p&gt;Through all that, it became clear that we need a comprehensive book that clearly explains new technologies like blockchains and the services built on top of them; how they fit into the history of the internet; and why they should matter to founders, developers, creators, and anyone interested in the history and evolution of business, technology, and innovation.&lt;/p&gt;
&lt;p&gt;So I wrote that book: &lt;em&gt;Read Write Own: Building the Next Era of the Internet.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;My thesis is that seemingly small initial decisions around software and network design can have profound downstream consequences on the control and economics of digital services. The book walks through the history of the internet, showing how it has gone through three major design eras: the first focused on democratizing information (read), the second on democratizing publishing (write), and the third on democratizing ownership (own).&lt;/p&gt;
&lt;p&gt;We are on the cusp of the third era – own – so I explain the key concepts underlying it, including blockchains and digital services built on top of blockchains. The book therefore answers a common question I hear: “&lt;em&gt;What problems do blockchains solve?&lt;/em&gt;” Blockchains solve the same problems that other digital services solve, but with better outcomes. They can connect people in social networks, while empowering users over corporate interests. They can underpin marketplaces and payment systems that facilitate commerce, but with persistently lower take rates. They can enable new forms of monetizable media, interoperable and immersive digital worlds, and artificial intelligence services that compensate – rather than cannibalize – creators and communities.&lt;/p&gt;
&lt;p&gt;The book takes controversial questions head on, including policy and regulatory topics, and the harmful “casino” culture that has developed around crypto that hurts public perception and undermines its potential. And I go deeper into intersecting topics like artificial intelligence, social networks, finance, media businesses, collaborative creation, video games, and virtual worlds.&lt;/p&gt;
&lt;p&gt;Inspired by modern tech classics like &lt;em&gt;Zero to One&lt;/em&gt; and &lt;em&gt;The Hard Thing About Hard Things&lt;/em&gt;, I wrote the book to be succinct, thorough, and accessible. I also distill cutting-edge thinking from technologists and founders to make it useful to practitioners. My goal was to make it accessible without watering it down. The book is meant for a range of audiences, including entrepreneurs, technologists, company leaders, policymakers, journalists, business thinkers, artists, community builders, and people who are simply curious about new technologies, culture, and the future of the internet.&lt;/p&gt;
&lt;p&gt;I love reading books but believe that tech and business topics usually work better in shorter formats, which is why in the past I’ve stuck to blogging and tweeting. But accomplishing all of the above warranted a longer treatment, bringing new and different ideas together in one place. So I spent much of the last year doing this. Many of the ideas I’ve thought about for a long time but never took the time to write. &lt;/p&gt;
&lt;p&gt;&lt;em&gt;Read Write Own: Building the Next Era of the Internet&lt;/em&gt; will be published by Random House on March 12, 2024. You can pre-order it &lt;a href=&quot;https://readwriteown.com&quot;&gt;here&lt;/a&gt;. &lt;/p&gt;
&lt;p&gt;Sign up for more book updates &lt;a href=&quot;https://cdixon.substack.com&quot;&gt;here&lt;/a&gt;. &lt;/p&gt;
&lt;hr&gt;
&lt;p&gt;[more about the term and title &quot;Read Write Own&quot; &lt;a href=&quot;https://readwriteown.com/terminologyhistory/&quot;&gt;here&lt;/a&gt;]&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[NFTs and A Thousand True Fans]]></title>
            <description><![CDATA[In his classic 2008 essay “1000 True Fans,” Kevin Kelly predicted that the internet would transform the economics of creative activities: To…]]></description>
            <link>https://cdixon.org/2021/02/27/NFTs-and-a-thousand-true-fans</link>
            <guid isPermaLink="false">https://cdixon.org/2021/02/27/NFTs-and-a-thousand-true-fans</guid>
            <pubDate>Sat, 27 Feb 2021 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 400px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 58.50000000000001%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/png;base64,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&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;nfts&quot; title=&quot;nfts&quot; src=&quot;/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png&quot; srcset=&quot;/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/924ad/nfts.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
 
&lt;p&gt;In his classic 2008 essay “&lt;a href=&quot;https://kk.org/thetechnium/1000-true-fans/&quot;&gt;1000 True Fans&lt;/a&gt;,” Kevin Kelly predicted that the internet would transform the economics of creative activities:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;To be a successful creator you don’t need millions. You don’t need millions of dollars or millions of customers, millions of clients or millions of fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;A true fan is defined as a fan that will buy anything you produce. These diehard fans will drive 200 miles to see you sing; they will buy the hardback and paperback and audible versions of your book; they will purchase your next figurine sight unseen; they will pay for the “best-of” DVD version of your free YouTube channel; they will come to your chef’s table once a month.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Kelly’s vision was that the internet was the ultimate matchmaker, enabling 21st century patronage. Creators, no matter how seemingly niche, could now discover their true fans, who would in turn demonstrate their enthusiasm through direct financial support.&lt;/p&gt;
&lt;p&gt;But the internet took a detour. Centralized social platforms became the dominant way for creators and fans to connect. The platforms used this power to become the new intermediaries — inserting ads and algorithmic recommendations between creators and users while keeping most of the revenue for themselves.&lt;/p&gt;
&lt;p&gt;The good news is that the internet is trending back to Kelly’s vision. For example, many top writers on Substack earn far more than they did at salaried jobs. The economics of low take rates plus enthusiastic fandom does wonders. On Substack, 1,000 newsletter subscribers paying $10/month nets over $100K/year to the writer.&lt;/p&gt;
&lt;p&gt;Crypto, and specifically &lt;a href=&quot;https://variant.mirror.xyz/T8kdtZRIgy_srXB5B06L8vBqFHYlEBcv6ae2zR6Y_eo&quot;&gt;NFTs&lt;/a&gt; (non-fungible tokens), can accelerate the trend of creators monetizing directly with their fans. Social platforms will continue to be useful for building audiences (although these too should probably be replaced with superior &lt;a href=&quot;https://cdixon.org/2018/02/18/why-decentralization-matters&quot;&gt;decentralized&lt;/a&gt; alternatives), but creators can increasingly rely on other methods including NFTs and crypto-enabled economies to make money.&lt;/p&gt;
&lt;p&gt;NFTs are blockchain-based records that uniquely represent pieces of media. The media can be anything digital, including art, videos, music, gifs, games, text, memes, and code. NFTs contain highly trustworthy documentation of their history and origin, and can have code attached to do almost anything programmers dream up (one popular feature is code that ensures that the original creator receives royalties from secondary sales). NFTs are secured by the same technology that enabled Bitcoin to be owned by hundreds of millions of people around the world and represent hundreds of billions of dollars of value.&lt;/p&gt;
&lt;p&gt;NFTs have received a lot of attention lately because of high sales volumes. In the past 30 days there has been over &lt;a href=&quot;http://cryptoslam.io&quot;&gt;$300M&lt;/a&gt; in NFT sales:&lt;/p&gt;
&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 500px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 43.8%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/png;base64,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&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;pic1&quot; title=&quot;pic1&quot; src=&quot;/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png&quot; srcset=&quot;/static/a80ec982b7e8b39e8f1437e9c12f20ed/924ad/pic1.png 170w,
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/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png 500w&quot; sizes=&quot;(max-width: 500px) 100vw, 500px&quot; loading=&quot;lazy&quot;&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
&lt;p&gt;Crypto has a history of boom and bust cycles, and it’s very possible NFTs will have their own ups and downs. &lt;/p&gt;
&lt;p&gt;That said, there are three important reasons why NFTs offer fundamentally better economics for creators. The first, already alluded to above, is by removing rent-seeking intermediaries. The logic of blockchains is once you purchase an NFT it is yours to fully control, just like when you buy books or sneakers in the real world. There are and will continue to be NFT platforms and marketplaces, but they will be constrained in what they can charge because blockchain-based ownership shifts the power back to creators and users — you can shop around and force the marketplace to earn its fees. (Note that lowering the intermediary fees can have a multiplier effect on creator disposable income. For example, if you make $100K in revenue and have $80K in costs, cutting out a 50% take rate increases your revenue to $200K, multiplying your disposable income 6x, from $20K to $120K.)&lt;/p&gt;
&lt;p&gt;The second way NFTs change creator economics is by enabling granular price tiering. In ad-based models, revenue is generated more or less uniformly regardless of the fan’s enthusiasm level. As with Substack, NFTs allow the creator to “cream skim” the most passionate users by offering them special items which cost more. But NFTs go farther than non-crypto products in that they are easily sliced and diced into a descending series of pricing tiers. NBA Top Shot cards range from over $100K to a few dollars. Fan of Bitcoin? You can buy as much or little as you want, down to 8 decimal points, depending on your level of enthusiasm. Crypto’s fine-grained granularity lets creators capture a much larger area under the demand curve.&lt;/p&gt;
&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/007c807f7f779bad96bcb007eca8611d/e11df/pic2.png&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 20.9%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAECAYAAACOXx+WAAAACXBIWXMAABYlAAAWJQFJUiTwAAAA3UlEQVQY0z1Pu27DMAz0/39C5k6dAnRrt6JA0KJLhwQI7AZFYlPyQ3Ikx49Asa8i0fSEA6kTjxSTruvgnINSCkSEqqowDAOMMSBF0FqLzuSaoihgbRtp5c7vzKZpwL2SsiwRbgFLPPMyI4SYL4sYO3fBHawxp2lCdsii8Kezb54l548l/aVH7BMLrxLvUIbwpd9l2DiOMkwQw0f+irw/IEw3hGv49/BmCZkcZE/YZVukxz1O5gf6TPhMN1hvH3B2raxU1zVsa2HrFi+7JzymK7zlz/jWe3jn4b0Hb/sLBkQuy0nVp9sAAAAASUVORK5CYII=&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;pic2&quot; title=&quot;pic2&quot; src=&quot;/static/007c807f7f779bad96bcb007eca8611d/94a55/pic2.png&quot; srcset=&quot;/static/007c807f7f779bad96bcb007eca8611d/924ad/pic2.png 170w,
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/static/007c807f7f779bad96bcb007eca8611d/94a55/pic2.png 681w,
/static/007c807f7f779bad96bcb007eca8611d/e11df/pic2.png 1000w&quot; sizes=&quot;(max-width: 681px) 100vw, 681px&quot; loading=&quot;lazy&quot;&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
&lt;p&gt;The third and most important way NFTs change creator economics is by making users owners, thereby reducing customer acquisition costs to near zero. Open any tech S-1 filing and you’ll see massive user/customer acquisition costs, usually going to online ads or sales staff. Crypto, by contrast, has grown to over a trillion dollars in aggregate market capitalization with almost no marketing spend. Bitcoin and Ethereum don’t have organizations behind them let alone marketing budgets, yet are used, owned, and loved by tens of millions of people.&lt;/p&gt;
&lt;p&gt;The highest revenue NFT project to date, &lt;a href=&quot;https://www.nbatopshot.com/&quot;&gt;NBA Top Shot&lt;/a&gt;, has generated $200M in gross sales in just the past month while spending very little on marketing. It’s been able to grow so efficiently because users feel like owners — they have skin in the game. It’s true peer-to-peer marketing, fueled by community, &lt;a href=&quot;https://twitter.com/ROSGO21/status/1364724500642689027?s=20&quot;&gt;excitement&lt;/a&gt;, and ownership. &lt;/p&gt;
&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 400px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 35.50000000000001%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/jpeg;base64,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&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;pic3&quot; title=&quot;pic3&quot; src=&quot;/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg&quot; srcset=&quot;/static/02d87ce135354a8c8f9b7d470f6118a0/c2e49/pic3.jpg 170w,
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/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg 400w&quot; sizes=&quot;(max-width: 400px) 100vw, 400px&quot; loading=&quot;lazy&quot;&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
&lt;p&gt;NFTs are still early, and will evolve. Their utility will increase as digital experiences are built around them, including marketplaces, social networks, showcases, games, and virtual worlds. It’s also likely that other consumer-facing crypto products emerge that pair with NFTs. Modern video games like Fortnite contain sophisticated economies that mix fungible tokens like V-Bucks with NFTs/virtual goods like skins. Someday every internet community might have its own micro-economy, including NFTs and fungible tokens that users can use, own, and collect.&lt;/p&gt;
&lt;p&gt;The thousand true fans thesis builds on the original ideals of the internet: users and creators globally connected, unconstrained by intermediaries, sharing ideas and economic upside. Incumbent social media platforms sidetracked this vision by locking creators into a bundle of distribution and monetization. There are, correspondingly, two ways to challenge them: take the users, or take the money. Crypto and NFTs give us a new way to take the money. Let’s make it happen.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;(Image: CryptoPunks — Larva Labs)&lt;/em&gt;&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Doing old things better vs doing brand new things]]></title>
            <description><![CDATA[New technologies enable activities that fall into one of two categories: 1) doing things you could already do but can now do better because…]]></description>
            <link>https://cdixon.org/2020/10/19/doing-old-things-better-vs-doing-brand-new-things</link>
            <guid isPermaLink="false">https://cdixon.org/2020/10/19/doing-old-things-better-vs-doing-brand-new-things</guid>
            <pubDate>Mon, 19 Oct 2020 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;New technologies enable activities that fall into one of two categories: 1) doing things you could already do but can now do better because they are faster, cheaper, easier, higher quality, etc. 2) doing brand new things that you simply couldn’t do before. Early in the development of new technologies, the first category tends to get more attention, but it’s the second that ends up having more impact on the world.&lt;/p&gt;
&lt;p&gt;Doing old things better tends to get more attention early on because it’s easier to imagine what to build. Early films were shot like plays — they were effectively plays with a better distribution model — until filmmakers realized that movies had their own visual grammar. The early electrical grid delivered light better than gas and candles. It took decades before we got an electricity “app store” — a rich ecosystem of appliances that connected to the grid. The early web was mostly digital adaptations of pre-internet things like letter writing and mail-order commerce. It wasn’t until the 2000s that entrepreneurs started exploring “internet native” ideas like social networking, crowdfunding, cryptocurrency, crowdsourced knowledge bases, and so on.&lt;/p&gt;
&lt;p&gt;The most common mistake people make when evaluating new technologies is to focus too much on the “doing old things better” category. For example, when evaluating the potential of blockchains, people sometimes focus on things like cheaper and faster global payments, which are important and necessary but only the beginning. What’s even more exciting are the new things you simply couldn’t create before, like internet services that are &lt;a href=&quot;https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations&quot;&gt;owned and operated by their users&lt;/a&gt; instead of by companies. Another example is business productivity apps architected as web services. Early products like Salesforce were easier to access and cheaper to maintain than their on-premise counterparts. Modern productivity apps like Google Docs, Figma, and Slack focus on things you simply couldn’t do before, like real-time collaboration and deep integrations with other apps.&lt;/p&gt;
&lt;p&gt;Entrepreneurs who create products in the “brand new things” category usually spend many years deeply immersed in the underlying technology before they have their key insights. The products they create often &lt;a href=&quot;https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy&quot;&gt;start out looking toy-like&lt;/a&gt;, &lt;a href=&quot;https://cdixon.org/2019/01/08/strong-and-weak-technologies&quot;&gt;strange, unserious, expensive&lt;/a&gt;, and sometimes even dangerous. Over time, the products steadily improve and the world gradually embraces them. &lt;/p&gt;
&lt;p&gt;It can take decades for this process to play out. It’s clear that we are early in the development of emerging technologies like cryptocurrencies, machine learning, and virtual reality. It is also possible we are still early in the development of more established technologies like mobile devices, cloud hosting, social networks, and perhaps even the internet itself. If so, new categories of native products built on top of these technologies will continue to be invented in the coming years.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Computers that can make commitments]]></title>
            <description><![CDATA[Blockchains are computers that can make commitments. Traditional computers are ultimately controlled by people, either directly in the case…]]></description>
            <link>https://cdixon.org/2020/01/26/computers-that-can-make-commitments</link>
            <guid isPermaLink="false">https://cdixon.org/2020/01/26/computers-that-can-make-commitments</guid>
            <pubDate>Sun, 26 Jan 2020 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Blockchains are computers that can make commitments. Traditional computers are ultimately controlled by people, either directly in the case of personal computers or indirectly through organizations. Blockchains invert this power relationship, putting the code in charge. A game theoretic mechanism — a so-called consensus mechanism — makes blockchains resilient to modifications to their underlying physical components, effectively making them resilient to human intervention.  &lt;/p&gt;
&lt;p&gt;As a result, a properly designed blockchain provides strong guarantees that the code it runs will continue to operate as designed. For the first time, a computer system can be truly autonomous: self-governed, by its own code, instead of by people. Autonomous computers can be relied on and trusted in ways that human-governed computers can’t.&lt;/p&gt;
&lt;p&gt;Computers that make commitments can be useful in finance. The most famous example of this is Bitcoin, which makes various commitments, including that there will never be more than 21 million bitcoins, a commitment that makes bitcoins scarce and therefore capable of being valuable. Without a blockchain, this commitment could have been made by a person or a business, but it is unlikely that other people would have really trusted that commitment, since people and businesses change their minds all the time. Prior to Bitcoin, besides precious metals which are naturally scarce, the only credible commitments to monetary scarcity came from governments.&lt;/p&gt;
&lt;p&gt;Ethereum was the first blockchain to support a general-purpose programming language, allowing for the creation of arbitrarily complex software that makes commitments. Two early applications built on Ethereum are &lt;a href=&quot;https://compound.finance/&quot;&gt;Compound&lt;/a&gt; and &lt;a href=&quot;https://makerdao.com/en/&quot;&gt;Maker Dao&lt;/a&gt;. Compound makes the commitment that it will act as a neutral, low-fee lending protocol. Maker Dao makes a commitment to maintain the price stability of a currency called Dai that can be used for stable payments and value store. As of today, users have locked up hundreds of millions of dollars in these applications, a testament to the credibility of their commitments.&lt;/p&gt;
&lt;p&gt;Applications like Compound and Maker can do things that pre-blockchain software simply couldn’t, such as hold funds that reside in the code itself, as opposed to traditional payment systems which only hold pointers to offline bank accounts. This removes the need to trust anything other than code, and makes the system end-to-end transparent and extensible. Blockchain applications do this autonomously — every human involved in creating these projects could disappear and the software would go on doing what it does, keeping its commitments, indefinitely.&lt;/p&gt;
&lt;p&gt;What else can you do with computers that make commitments? One fertile area being explored is re-architecting popular internet services like social networks and marketplaces so that they make strong, positive commitments to their communities. For example, users can get commitments baked into the code that their data will be kept private and that they won’t get de-platformed without due process. Third-party developers can safely invest in their businesses knowing that the rules are baked into the network and can’t change, protecting them from &lt;a href=&quot;https://cdixon.org/2018/02/18/why-decentralization-matters&quot;&gt;platform risk&lt;/a&gt;. Using the financial features of blockchains, users and developers can receive tokens in order to participate in the upside of the network as it grows. &lt;/p&gt;
&lt;p&gt;Blockchains have arrived at an opportune time. Internet services have become central to our economic, political, and cultural lives, yet the trust between users and the people who run these services is breaking down. At the same time, industries like finance that have traditionally depended on trust have resisted modernization. The next few years will be exciting — we are only beginning to explore the &lt;a href=&quot;https://cdixon.org/2013/08/04/the-idea-maze&quot;&gt;idea maze&lt;/a&gt; unlocked by this new kind of computer.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Inside-out vs. outside-in: the adoption of new technologies]]></title>
            <description><![CDATA[There are broadly two adoption paths for new computing technologies: inside-out and outside-in. Inside-out technologies are pioneered by…]]></description>
            <link>https://cdixon.org/2020/01/17/inside-out-vs-outside-in</link>
            <guid isPermaLink="false">https://cdixon.org/2020/01/17/inside-out-vs-outside-in</guid>
            <pubDate>Fri, 17 Jan 2020 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There are broadly two adoption paths for new computing technologies: inside-out and outside-in. Inside-out technologies are pioneered by established institutions and later proliferate outward to the mainstream. Apple (followed by Google and others) pioneered the modern touchscreen smartphone, university and corporate research labs pioneered machine learning, and big tech companies like Amazon pioneered cloud computing.&lt;/p&gt;
&lt;p&gt;Outside-in technologies, by contrast, start out on the fringes and only later move inward to established institutions. Open-source software started out as a niche anti-copyright movement. The web was invented at a physics lab and then built out by hobbyists and entrepreneurs. Social media began as a movement of idealistic blogging enthusiasts.&lt;/p&gt;
&lt;p&gt;Inside-out technologies tend to require significant capital and formally trained technical expertise. They also tend to be technologies that most people would recognize as valuable even before they exist. It wasn’t very hard to imagine that affordable, easy-to-use, internet-connected pocket supercomputers would be popular, or that machines that could learn to behave intelligently could do all sorts of useful tasks.&lt;/p&gt;
&lt;p&gt;Outside-in technologies tend to require less capital and less formally trained technical skills, creating a much more level playing field between insiders and outsiders. In many cases the value of outside-in technologies is not only unclear before they’re invented, but remains unclear for many years after they’re invented.&lt;/p&gt;
&lt;p&gt;Take the example of social media. Early on, blogs and services like Twitter were mostly used to discuss niche tech topics and share mundane personal events. This led many sophisticated observers to &lt;a href=&quot;https://www.nytimes.com/2007/04/22/business/yourmoney/22stream.html&quot;&gt;dismiss&lt;/a&gt; them as toys or passing fads. At its core, however, social media was about the creation of curated information networks. Today, this is easy to see -- billions of people rely on services like Twitter and Facebook for their news -- but back then you had to cut through the noise generated by the eccentricities of early adopters. Social media is a technology for creating global media networks that arrived disguised as a way to share what you had for lunch. &lt;/p&gt;
&lt;p&gt;Both inside-out and outside-in technologies are important, and in fact they’re often mutually reinforcing. Mobile, social, and cloud powered the growth of computing over the last decade: mobile (inside-out) brought computers to billions of people, social (outside-in) drove usage and monetization, and cloud (inside-out) allowed back-end services to scale. Most likely the next major wave in computing will also be driven by a mutually reinforcing combination of technologies, some developed at established institutions and some developed by enthusiastic and possibly misunderstood outsiders. &lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Strong and weak technologies]]></title>
            <description><![CDATA[During a media tour in 2007 in which Steve Jobs showed the device to reporters, there was one instance in which a journalist criticized the…]]></description>
            <link>https://cdixon.org/2019/01/08/strong-and-weak-technologies</link>
            <guid isPermaLink="false">https://cdixon.org/2019/01/08/strong-and-weak-technologies</guid>
            <pubDate>Tue, 08 Jan 2019 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;&lt;em&gt;During a &lt;a href=&quot;https://www.businessinsider.com/steve-jobs-reaction-first-iphone-2015-9&quot;&gt;media tour&lt;/a&gt; in 2007 in which Steve Jobs showed the device to reporters, there was one instance in which a journalist criticized the iPhone’s touch-screen keyboard.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“It doesn’t work,” the reporter said.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Jobs stopped for a moment and tilted his head. The reporter said he or she kept making typos and the keys were too small for his or her thumbs.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Jobs smiled and then replied: “Your thumbs will learn.”&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;When the iPhone was introduced in 2007, it &lt;a href=&quot;https://www.wsj.com/articles/behind-the-rise-and-fall-of-blackberry-1432311912&quot;&gt;mystified&lt;/a&gt; its competitors, because it wasn’t built for the world as it existed. Wireless networks were too slow. Smartphone users only knew how to use physical keyboards. There were no software developers making apps for touchscreen phones. It frequently dropped phone calls.&lt;/p&gt;
&lt;p&gt;But the iPhone was such a remarkable device — fans called it “The Jesus Phone” — that the world adapted to it. Carriers built more wireless capacity. Developers invented new apps and interfaces. Users learned how to rapidly type on touchscreens. Apple kept releasing better versions, fixing problems and adding new capabilities.&lt;/p&gt;
&lt;p&gt;Smartphones are a good example of a broader historical pattern: technologies usually arrive in pairs, a strong form and a weak form. Here are some examples:&lt;/p&gt;
&lt;table&gt;
&lt;thead&gt;
&lt;tr&gt;
&lt;th&gt;&lt;strong&gt;Strong&lt;/strong&gt;&lt;/th&gt;
&lt;th&gt;&lt;strong&gt;Weak&lt;/strong&gt;&lt;/th&gt;
&lt;/tr&gt;
&lt;/thead&gt;
&lt;tbody&gt;
&lt;tr&gt;
&lt;td&gt;Public internet&lt;/td&gt;
&lt;td&gt;Private intranets&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Consumer web&lt;/td&gt;
&lt;td&gt;Interactive TV&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Crowdsourced encyclopedia (Wikipedia)&lt;/td&gt;
&lt;td&gt;Expert-curated encyclopedia (e.g. Nupedia, Encarta)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Crowdsourced video (YouTube)&lt;/td&gt;
&lt;td&gt;Video tech for media companies (e.g. RealPlayer)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Internet video chat (Skype)&lt;/td&gt;
&lt;td&gt;Voice-over-IP (e.g. Vonage)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Streaming music (Spotify)&lt;/td&gt;
&lt;td&gt;MP3 downloads (e.g. iTunes)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Touchscreen smartphones with full operating system and app store (iPhone)&lt;/td&gt;
&lt;td&gt;Limited-app smartphones with physical keyboards (e.g. Blackberry)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Fully electric cars (Tesla)&lt;/td&gt;
&lt;td&gt;Hybrid cars&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Permissionless blockchains powered by cryptocurrencies&lt;/td&gt;
&lt;td&gt;Permissioned/private blockchains&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Public cloud&lt;/td&gt;
&lt;td&gt;Private / hybrid cloud&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;App-based media companies (e.g. Netflix)&lt;/td&gt;
&lt;td&gt;Video on demand delivered by cable companies&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Virtual realty&lt;/td&gt;
&lt;td&gt;Augmented reality&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;E-sports&lt;/td&gt;
&lt;td&gt;Traditional sports delivered over the internet&lt;/td&gt;
&lt;/tr&gt;
&lt;/tbody&gt;
&lt;/table&gt;
&lt;p&gt;Strong technologies capture the imaginations of technology enthusiasts. That is why many important technologies start out as weekend hobbies. &lt;a href=&quot;http://cdixon.org/2013/03/03/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years/&quot;&gt;Enthusiasts vote with their time&lt;/a&gt;, and, unlike most of the business world, have long-term horizons. They build from first principles, making full use of the available resources to design technologies as they ought to exist. Sometimes these enthusiasts run large companies, in which case they are often, like Steve Jobs, founders who have the gravitas and vision to make big, long-term bets.&lt;/p&gt;
&lt;p&gt;The mainstream technology world notices the excitement and wants to join in, but isn’t willing to go all the way and embrace the strong technology. To them, the strong technology appears to be some combination of strange, &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toy-like&lt;/a&gt;, unserious, expensive, and sometimes even dangerous. So they embrace the weak form, a compromised version that seems more familiar, productive, serious, and safe.&lt;/p&gt;
&lt;p&gt;Strong technologies often develop according to the Perez/Gartner hype cycle:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;researchmethodology illustration hype cycle&quot;
        title=&quot;researchmethodology illustration hype cycle&quot;
        src=&quot;/static/153f5948062ac4cc6f9e4f79607be64b/d6856/researchmethodology-illustration-hype-cycle.jpg&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;During the trough of disillusionment, entrepreneurs and others who invested in strong technologies sometimes lose faith and switch their focus to weak technologies, because the weak technologies appear nearer to mainstream adoption. This is usually a mistake.&lt;/p&gt;
&lt;p&gt;That said, weak forms of technology can be successful. For example, it is very likely that augmented reality will be important, watching traditional sports on the internet will be popular, and so on.&lt;/p&gt;
&lt;p&gt;But it’s strong technologies that end up defining new eras. What George Bernard Shaw said about people also applies to technologies:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Weak technologies adapt to the world as it currently exists. Strong technologies adapt the world to themselves. Progress depends on strong technologies. Your thumbs will learn.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Who will control the software that powers the Internet?]]></title>
            <description><![CDATA[Originally published by Wired. As the internet has evolved over its 35-year lifespan, control over its most important services has gradually…]]></description>
            <link>https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations</link>
            <guid isPermaLink="false">https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations</guid>
            <pubDate>Fri, 04 Jan 2019 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;em&gt;Originally published by &lt;a href=&quot;https://www.wired.com/story/how-blockchain-can-wrest-the-internet-from-corporations/&quot;&gt;Wired&lt;/a&gt;.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;As the internet has evolved over its 35-year lifespan, control over its most important services has gradually shifted from open source protocols maintained by non-profit communities to proprietary services operated by large tech companies. As a result, billions of people got access to amazing, free technologies. But that shift also created serious problems.&lt;/p&gt;
&lt;p&gt;Millions of users have had their private data misused or stolen. Creators and businesses that rely on internet platforms are subject to sudden rule changes that take away their audiences and profits. But there is a growing movement—emerging from the blockchain and cryptocurrency world—to build new internet services that combine the power of modern, centralized services with the community-led ethos of the original internet. We should embrace it.&lt;/p&gt;
&lt;p&gt;From the 1980s through the early 2000s, the dominant internet services were built on open protocols that the internet community controlled. For example, the Domain Name System, the internet’s “phone book,” is controlled by a distributed network of people and organizations, using rules that are created and administered in the open. This means that anyone who adheres to community standards can own a domain name and establish an internet presence. It also means that the power of companies operating web and email hosting is kept in check—if they misbehave, customers can port their domain names to competing providers.&lt;/p&gt;
&lt;p&gt;From the mid 2000s to the present, trust in open protocols was replaced by trust in corporate management teams. As companies like Google, Twitter, and Facebook built software and services that surpassed the capabilities of open protocols, users migrated to these more sophisticated platforms. But their code was proprietary, and their governing principles could change on a whim.&lt;/p&gt;
&lt;p&gt;How do social networks decide which users to &lt;a href=&quot;https://www.wired.com/story/how-right-wing-social-media-site-gab-got-back-online/&quot;&gt;verify&lt;/a&gt; or &lt;a href=&quot;https://www.wired.com/story/tumblrs-porn-ban-reveals-controls-we-see-online/&quot;&gt;ban&lt;/a&gt;? How do search engines decide how to rank websites? One minute social networks court media organizations and small businesses, the next minute they de-prioritize their content or change the revenue split. The power of these platforms has created widespread societal tensions, as seen in debates over fake news, state-sponsored bots, privacy laws, and algorithmic biases.&lt;/p&gt;
&lt;p&gt;That’s why the pendulum is swinging back to an internet governed by open, community-controlled services. This has only recently become possible, thanks to technologies arising from the blockchain and cryptocurrencies.&lt;/p&gt;
&lt;p&gt;There has been a lot of talk in the past few years about blockchains, which are heavily hyped but poorly understood. Blockchains are networks of physical computers that work together in concert to form a single virtual computer. The benefit is that, unlike a traditional computer, a blockchain computer can offer strong trust guarantees, rooted in the mathematical and game-theoretic properties of the system. A user or developer can trust that a piece of code running on a blockchain computer will continue to behave as designed, even if individual participants in the network change their motivations or try to subvert the system. This means that the control of a blockchain computer can be placed in the hands of a community.&lt;/p&gt;
&lt;p&gt;Users who depend on proprietary platforms, on the other hand, have to worry about data getting stolen or misused, privacy policies changing, intrusive advertising, and more. Proprietary platforms may suddenly change the rules for developers and businesses, the way Facebook &lt;a href=&quot;https://venturebeat.com/2016/06/30/facebook-kicked-zynga-to-the-curb-publishers-are-next/&quot;&gt;famously did to Zynga&lt;/a&gt; and Google &lt;a href=&quot;https://www.nytimes.com/2017/07/01/technology/yelp-google-european-union-antitrust.html&quot;&gt;did to Yelp&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;The idea that corporate-owned services could be replaced by community-owned services may sound far-fetched, but there is a strong historical precedent in the transformation of software over the past twenty years. In the 1990s, computing was dominated by proprietary, closed-source software, most notably Windows. Today, billions of Android phones run on the open source operating system Linux. Much of the software running on an Apple device is open source, as is almost all modern cloud data centers including Amazon’s. The recent acquisitions of &lt;a href=&quot;https://www.wired.com/story/microsofts-github-deal-is-its-latest-shift-from-windows/&quot;&gt;Github by Microsoft&lt;/a&gt; and &lt;a href=&quot;https://www.wired.com/story/ibm-buying-open-source-specialist-red-hat-34-billion/&quot;&gt;Red Hat by IBM&lt;/a&gt; underscore how dominant open source has become.&lt;/p&gt;
&lt;p&gt;As open source has grown in importance, technology companies have shifted their business models from selling software to delivering cloud-based services. Google, Facebook, Amazon, and Netflix are all services companies. Even Microsoft is now primarily a services company. This has allowed these companies to outpace the growth of open source software and maintain control of critical internet infrastructure.&lt;/p&gt;
&lt;p&gt;A core insight in the design of blockchains is that the open source model can be extended beyond software to cloud-based services by adding financial incentives to the mix. Cryptocurrencies—coins and tokens built into specific blockchains—provide a way to incentivize individuals and groups to participate in, maintain, and build services.&lt;/p&gt;
&lt;p&gt;The idea that an internet service could have an associated coin or token may be a novel concept, but the blockchain and cryptocurrencies can do for cloud-based services what open source did for software. It took twenty years for open source software to supplant proprietary software, and it could take just as long for open services to supplant proprietary services. But the benefits of such a shift will be immense. Instead of placing our trust in corporations, we can place our trust in community-owned and -operated software, transforming the internet’s governing principle from “don’t be evil” back to “can’t be evil.”&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Why decentralization matters]]></title>
            <description><![CDATA[The first two eras of the internet During the first era of the internet — from the 1980s through the early 2000s — internet services were…]]></description>
            <link>https://cdixon.org/2018/02/18/why-decentralization-matters</link>
            <guid isPermaLink="false">https://cdixon.org/2018/02/18/why-decentralization-matters</guid>
            <pubDate>Sun, 18 Feb 2018 00:00:00 GMT</pubDate>
            <content:encoded>&lt;h2&gt;The first two eras of the internet&lt;/h2&gt;
&lt;p&gt;During the first era of the internet — from the 1980s through the early 2000s — internet services were built on open protocols that were controlled by the internet community. This meant that people or organizations could grow their internet presence knowing the rules of the game wouldn’t change later on. Huge web properties were started during this era including Yahoo, Google, Amazon, Facebook, LinkedIn, and YouTube. In the process, the importance of centralized platforms like AOL greatly diminished.&lt;/p&gt;
&lt;p&gt;During the second era of the internet, from the mid 2000s to the present, for-profit tech companies — most notably Google, Apple, Facebook, and Amazon (GAFA) — built software and services that rapidly outpaced the capabilities of open protocols. The explosive growth of smartphones accelerated this trend as mobile apps became the majority of internet use. Eventually users migrated from open services to these more sophisticated, centralized services. Even when users still accessed open protocols like the web, they would typically do so mediated by GAFA software and services.&lt;/p&gt;
&lt;p&gt;The good news is that billions of people got access to amazing technologies, many of which were free to use. The bad news is that it became much harder for startups, creators, and other groups to grow their internet presence without worrying about centralized platforms changing the rules on them, taking away their audiences and profits. This in turn stifled innovation, making the internet less interesting and dynamic. Centralization has also created broader societal tensions, which we see in the debates over subjects like fake news, state sponsored bots, “no platforming” of users, EU privacy laws, and algorithmic biases. These debates will only intensify in the coming years.&lt;/p&gt;
&lt;h2&gt;“Web 3”: the third era of the internet&lt;/h2&gt;
&lt;p&gt;One response to this centralization is to impose government regulation on large internet companies. This response assumes that the internet is similar to past communication networks like the phone, radio, and TV networks. But the hardware-based networks of the past are fundamentally different than the internet, a software-based network. Once hardware-based networks are built, they are nearly impossible to rearchitect. Software-based networks can be rearchitected through entrepreneurial innovation and market forces.&lt;/p&gt;
&lt;p&gt;The internet is the ultimate software-based network, consisting of a relatively simple &lt;a href=&quot;https://en.wikipedia.org/wiki/Internet_Protocol&quot;&gt;core layer&lt;/a&gt; connecting billions of fully programmable computers at the edge. Software is simply the encoding of human thought, and as such has an almost unbounded design space. Computers connected to the internet are, by and large, free to run whatever software their owners choose. Whatever can be dreamt up, with the right set of incentives, can quickly propagate across the internet. Internet architecture is where technical creativity and incentive design intersect.&lt;/p&gt;
&lt;p&gt;The internet is still early in its evolution: the core internet services will likely be almost entirely rearchitected in the coming decades. This will be enabled by crypto-economic networks, a generalization of the ideas first introduced in &lt;a href=&quot;https://bitcoin.org/bitcoin.pdf&quot;&gt;Bitcoin&lt;/a&gt; and further developed in &lt;a href=&quot;https://github.com/ethereum/wiki/wiki/White-Paper&quot;&gt;Ethereum&lt;/a&gt;. Cryptonetworks combine the best features of the first two internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services.&lt;/p&gt;
&lt;h2&gt;Why decentralization?&lt;/h2&gt;
&lt;p&gt;Decentralization is a commonly misunderstood concept. For example, it is sometimes said that the reason cryptonetwork advocates favor decentralization is to resist government censorship, or because of libertarian political views. These are not the main reasons decentralization is important.&lt;/p&gt;
&lt;p&gt;Let’s look at the problems with centralized platforms. Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.&lt;/p&gt;
&lt;p&gt;&lt;span
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&lt;p&gt;When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits. Historical examples of this are Microsoft vs. Netscape, Google vs. Yelp, Facebook vs. Zynga, and Twitter vs. its 3rd-party clients. Operating systems like iOS and Android have behaved better, although still take a healthy 30% tax, reject apps for seemingly arbitrary reasons, and subsume the functionality of 3rd-party apps at will.&lt;/p&gt;
&lt;p&gt;For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment. In addition, users give up privacy, control of their data, and become vulnerable to security breaches. These problems with centralized platforms will likely become even more pronounced in the future.&lt;/p&gt;
&lt;h2&gt;Enter cryptonetworks&lt;/h2&gt;
&lt;p&gt;Cryptonetworks are networks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants. Some cryptonetworks, such as Ethereum, are general programming platforms that can be used for almost any purpose. Other cryptonetworks are special purpose, for example Bitcoin is intended primarily for storing value, &lt;a href=&quot;https://golem.network/&quot;&gt;Golem&lt;/a&gt; for performing computations, and &lt;a href=&quot;https://filecoin.io/&quot;&gt;Filecoin&lt;/a&gt; for decentralized file storage.&lt;/p&gt;
&lt;p&gt;Early internet protocols were technical specifications created by working groups or non-profit organizations that relied on the alignment of interests in the internet community to gain adoption. This method worked well during the very early stages of the internet but since the early 1990s very few new protocols have gained widespread adoption. &lt;a href=&quot;2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design&quot;&gt;Cryptonetworks fix&lt;/a&gt; these problems by providing economics incentives to developers, maintainers, and other network participants in the form of tokens. They are also much more technically robust. For example, they are able to keep state and do arbitrary transformations on that state, something past protocols could never do.&lt;/p&gt;
&lt;p&gt;Cryptonetworks use multiple mechanisms to ensure that they stay neutral as they grow, preventing the bait-and-switch of centralized platforms. First, the contract between cryptonetworks and their participants is enforced in open source code. Second, they are kept in check through mechanisms for &lt;a href=&quot;https://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty&quot;&gt;“voice” and “exit.”&lt;/a&gt; Participants are given voice through community governance, both “on chain” (via the protocol) and “off chain” (via the social structures around the protocol). Participants can exit either by leaving the network and selling their coins, or in the extreme case by forking the protocol.&lt;/p&gt;
&lt;p&gt;In short, cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy skeptics and flourish, even while new cryptonetworks like Ethereum have grown alongside it.&lt;/p&gt;
&lt;p&gt;Today’s cryptonetworks suffer from limitations that keep them from seriously challenging centralized incumbents. The most severe limitations are around performance and scalability. The next few years will be about fixing these limitations and building networks that form the infrastructure layer of the crypto stack. After that, most of the energy will turn to building applications on top of that infrastructure.&lt;/p&gt;
&lt;h2&gt;How decentralization wins&lt;/h2&gt;
&lt;p&gt;It’s one thing to say decentralized networks should win, and another thing to say they will win. Let’s look at specific reasons to be optimistic about this.&lt;/p&gt;
&lt;p&gt;Software and web services are built by developers. There are millions of highly skilled developers in the world. Only a small fraction work at large technology companies, and only a small fraction of those work on new product development. Many of the most important software projects in history were created by startups or by communities of independent developers.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“No matter who you are, most of the smartest people work for someone else.” — &lt;a href=&quot;https://en.wikipedia.org/wiki/Joy%27s_law_(management)&quot;&gt;Bill Joy&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Decentralized networks can win the third era of the internet for the same reason they won the first era: by winning the hearts and minds of entrepreneurs and developers.&lt;/p&gt;
&lt;p&gt;An illustrative analogy is the rivalry in the 2000s between Wikipedia and its centralized competitors like Encarta. If you compared the two products in the early 2000s, Encarta was a far better product, with better topic coverage and higher accuracy. But Wikipedia improved at a much faster rate, because it had an active community of volunteer contributors who were attracted to its decentralized, community-governed ethos. By 2005, Wikipedia was the most &lt;a href=&quot;https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b&quot;&gt;popular&lt;/a&gt; reference site on the internet. Encarta was shut down in 2009.&lt;/p&gt;
&lt;p&gt;The lesson is that when you compare centralized and decentralized systems you need to consider them dynamically, as processes, instead of statically, as rigid products. Centralized systems often start out fully baked, but only get better at the rate at which employees at the sponsoring company improve them. Decentralized systems start out half-baked but, under the right conditions, grow exponentially as they attract new contributors.&lt;/p&gt;
&lt;p&gt;In the case of cryptonetworks, there are multiple, compounding feedback loops involving developers of the core protocol, developers of complementary cryptonetworks, developers of 3rd party applications, and service providers who operate the network. These feedback loops are further amplified by the incentives of the associated token, which — as we’ve seen with Bitcoin and Ethereum — can supercharge the rate at which crypto communities develop (and sometimes lead to negative outcomes, as with the excessive electricity consumed by Bitcoin mining).&lt;/p&gt;
&lt;p&gt;The question of whether decentralized or centralized systems will win the next era of the internet reduces to who will build the most compelling products, which in turn reduces to who will get more high quality developers and entrepreneurs on their side. GAFA has many advantages, including cash reserves, large user bases, and operational infrastructure. Cryptonetworks have a significantly more attractive value proposition to developers and entrepreneurs. If they can win their hearts and minds, they can mobilize far more resources than GAFA, and rapidly outpace their product development.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.” — &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Centralized platforms often come bundled at launch with compelling apps: Facebook had its core socializing features and the iPhone had a number of key apps. Decentralized platforms, by contrast, often launch half-baked and without clear use cases. As a result, they need to go through two phases of product-market fit: 1) product-market fit between the platform and the developers/entrepreneurs who will finish the platform and build out the ecosystem, and 2) product-market fit between the platform/ecosystem and end users. This two-stage process is what causes many people — including sophisticated technologists — to consistently underestimate the potential of decentralized platforms.&lt;/p&gt;
&lt;h2&gt;The next era of the internet&lt;/h2&gt;
&lt;p&gt;Decentralized networks aren’t a silver bullet that will fix all the problems on the internet. But they offer a much better approach than centralized systems.&lt;/p&gt;
&lt;p&gt;Compare the problem of Twitter spam to the problem of email spam. Since Twitter &lt;a href=&quot;https://www.theverge.com/2012/8/23/3263481/twitter-api-third-party-developers&quot;&gt;closed&lt;/a&gt; their network to 3rd-party developers, the only company working on Twitter spam has been Twitter itself. By contrast, there were hundreds of companies that tried to fight email spam, financed by billions of dollars in venture capital and corporate funding. Email spam isn’t solved, but it’s a lot better now, because 3rd parties knew that the &lt;a href=&quot;https://en.wikipedia.org/wiki/Simple_Mail_Transfer_Protocol&quot;&gt;email protocol&lt;/a&gt; was decentralized, so they could build businesses on top of it without worrying about the rules of the game changing later on.&lt;/p&gt;
&lt;p&gt;Or consider the problem of network governance. Today, unaccountable groups of employees at large platforms decide how information gets ranked and filtered, which users get promoted and which get banned, and other important governance decisions. In cryptonetworks, these decisions are made by the community, using open and transparent mechanisms. As we know from the offline world, democratic systems aren’t perfect, but they are a lot better than the alternatives.&lt;/p&gt;
&lt;p&gt;Centralized platforms have been dominant for so long that many people have forgotten there is a better way to build internet services. Cryptonetworks are a powerful way to develop community-owned networks and provide a level playing field for 3rd-party developers, creators, and businesses. We saw the value of decentralized systems in the first era of the internet. Hopefully we’ll get to see it again in the next.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Originally published on &lt;a href=&quot;https://medium.com/s/story/why-decentralization-matters-5e3f79f7638e&quot;&gt;Medium&lt;/a&gt;.&lt;/em&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Crypto token roundup]]></title>
            <description><![CDATA[Roundup of lots of recent posts on crypto tokens: Balaji S. Srinivasan — Thoughts on Tokens Fred Wilson — ICOs and VCs here, Ethereum in 2…]]></description>
            <link>https://cdixon.org/2017/06/06/crypto-token-roundup</link>
            <guid isPermaLink="false">https://cdixon.org/2017/06/06/crypto-token-roundup</guid>
            <pubDate>Tue, 06 Jun 2017 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Roundup of lots of recent posts on crypto tokens:&lt;/p&gt;
&lt;p&gt;Balaji S. Srinivasan — &lt;a href=&quot;https://medium.com/@balajis/thoughts-on-tokens-436109aabcbe&quot;&gt;Thoughts on Tokens&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Fred Wilson — &lt;a href=&quot;http://avc.com/2017/06/icos-and-vcs/&quot;&gt;ICOs and VCs&lt;/a&gt; &lt;a href=&quot;http://avc.com/2017/06/icos-and-vcs/&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://avc.com/2017/05/video-of-the-week-ethereum-in-25-minutes/&quot;&gt;Ethereum in 25 minutes&lt;/a&gt;, &lt;a href=&quot;http://avc.com/2017/04/polychain/&quot;&gt;Polychain&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Joel Monegro — &lt;a href=&quot;https://www.usv.com/blog/fat-protocols&quot;&gt;Fat Protocols&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Nick Tomaino — &lt;a href=&quot;https://thecontrol.co/cryptoeconomics-101-e5c883e9a8ff&quot;&gt;Cryptoeconomics 101 &lt;/a&gt;, &lt;a href=&quot;https://thecontrol.co/some-blockchain-reading-1d98ec6b2f39&quot;&gt;Some Blockchain Reading&lt;/a&gt;, &lt;a href=&quot;https://thecontrol.co/tokens-tokens-and-more-tokens-d4b177fbb443&quot;&gt;Tokens, Tokens and More Tokens&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Fred Ehrsam — &lt;a href=&quot;https://medium.com/@FEhrsam/the-dapp-developer-stack-the-blockchain-industry-barometer-8d55ec1c7d4&quot;&gt;The dApp Developer Stack&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Albert Wenger — &lt;a href=&quot;http://continuations.com/post/148098927445/crypto-tokens-and-the-coming-age-of-protocol&quot;&gt;Crypto Tokens and the Coming Age of Protocol Innovation&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;My post and podcasts — &lt;a href=&quot;https://medium.com/@cdixon/crypto-tokens-a-breakthrough-in-open-network-design-e600975be2ef&quot;&gt;Crypto Tokens: A Breakthrough in Open Network Design&lt;/a&gt;, &lt;a href=&quot;https://a16z.com/2016/08/28/ethereum/&quot;&gt;podcast with Vitalik Buterin&lt;/a&gt;, &lt;a href=&quot;http://a16z.com/2017/04/03/cryptocurrencies-protocols-appcoins/&quot;&gt;podcast with Olaf Carlson-Wee&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Regulatory discussions — &lt;a href=&quot;https://coincenter.org/report&quot;&gt;Coincenter&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Crypto Tokens: A Breakthrough in Open Network Design]]></title>
            <description><![CDATA[It is a wonderful accident of history that the internet and web were created as open platforms that anyone — users, developers…]]></description>
            <link>https://cdixon.org/2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design</link>
            <guid isPermaLink="false">https://cdixon.org/2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design</guid>
            <pubDate>Sat, 27 May 2017 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It is a wonderful accident of history that the internet and web were created as open platforms that anyone — users, developers, organizations — could access equally. Among other things, this allowed independent developers to build products that quickly gained widespread adoption. Google started in a Menlo Park garage and Facebook started in a Harvard dorm room. They competed on a level playing field because they were built on decentralized networks governed by open protocols.&lt;/p&gt;
&lt;p&gt;Today, tech companies like Facebook, Google, Amazon, and Apple are &lt;a href=&quot;https://medium.com/@cdixon/the-internet-economy-fc43f3eff58a&quot;&gt;stronger&lt;/a&gt; than ever, whether measured by &lt;a href=&quot;http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/&quot;&gt;market cap&lt;/a&gt;, share of top mobile apps, or pretty much any other common measure.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)&quot;
        title=&quot;Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)&quot;
        src=&quot;/static/947f1b1248d2dc4d69cd8a63fc8e4884/94a55/11LduvqPVCAVsy-rQ2qlhvg.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;These companies also control massive proprietary developer platforms. The dominant operating systems — iOS and Android — charge 30% payment fees and exert heavy influence over app distribution. The dominant social networks tightly restrict access, hindering the ability of third-party developers to scale. Startups and independent developers are increasingly competing from a disadvantaged position.&lt;/p&gt;
&lt;p&gt;A potential way to reverse this trend are &lt;a href=&quot;http://continuations.com/post/148098927445/crypto-tokens-and-the-coming-age-of-protocol&quot;&gt;crypto tokens&lt;/a&gt; — a new way to design open networks that arose from the cryptocurrency movement that began with the introduction of Bitcoin in 2008 and accelerated with the introduction of Ethereum in 2014. Tokens are a breakthrough in open network design that enable: 1) the creation of open, decentralized networks that combine the best architectural properties of open and proprietary networks, and 2) new ways to incentivize open network participants, including users, developers, investors, and service providers. By enabling the development of new open networks, tokens could help reverse the centralization of the internet, thereby keeping it accessible, vibrant and fair, and resulting in greater innovation.&lt;/p&gt;
&lt;h2&gt;Crypto tokens: unbundling Bitcoin&lt;/h2&gt;
&lt;p&gt;Bitcoin was introduced in 2008 with the publication of &lt;a href=&quot;https://en.wikipedia.org/wiki/Satoshi_Nakamoto&quot;&gt;Satoshi Nakamoto’s&lt;/a&gt; landmark &lt;a href=&quot;https://bitcoin.org/bitcoin.pdf&quot;&gt;paper&lt;/a&gt; that proposed a novel, decentralized payment system built on an underlying technology now known as a &lt;a href=&quot;https://en.wikipedia.org/wiki/Blockchain&quot;&gt;blockchain&lt;/a&gt;. Most fans of Bitcoin (including &lt;a href=&quot;/2013/12/31/why-im-interested-in-bitcoin/&quot;&gt;me&lt;/a&gt;) mistakenly thought Bitcoin was solely a breakthrough in financial technology. (It was easy to make this mistake: Nakamoto himself called it a “p2p payment system.”)&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;2009: Satoshi Nakamoto’s (post) announcing Bitcoin&quot;
        title=&quot;2009: Satoshi Nakamoto’s (post) announcing Bitcoin&quot;
        src=&quot;/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg&quot;
        srcset=&quot;/static/a48b63f4b03d22f29cb6edd6bf50f717/c2e49/1MQ68XZTGHQG7E6ut5UimEw.jpg 170w,
/static/a48b63f4b03d22f29cb6edd6bf50f717/c2dc0/1MQ68XZTGHQG7E6ut5UimEw.jpg 341w,
/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg 432w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;2009: Satoshi Nakamoto’s (post) announcing Bitcoin&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;In retrospect, Bitcoin was really two innovations: 1) a &lt;a href=&quot;https://en.wikipedia.org/wiki/Store_of_value&quot;&gt;store of value&lt;/a&gt; for people who wanted an alternative to the existing financial system, and 2) a new way to develop open networks. Tokens unbundle the latter innovation from the former, providing a general method for designing and growing open networks.&lt;/p&gt;
&lt;p&gt;Networks — computing networks, developer platforms, marketplaces, social networks, etc — have always been a powerful part of the promise of the internet. Tens of thousands of networks have been incubated by developers and entrepreneurs, yet only a very small percentage of those have survived, and most of those were owned and controlled by private companies. The current state of the art of network development is very crude. It often involves raising money (venture capital is a common source of funding) and then spending it on paid marketing and other channels to overcome the “bootstrap problem” — the problem that networks tend to only become useful when they reach a critical mass of users. In the rare cases where networks succeed, the financial returns tend to accrue to the relatively small number of people who own equity in the network. Tokens offer a better way.&lt;/p&gt;
&lt;p&gt;Ethereum, introduced in 2014 and launched in 2015, was the first major non-Bitcoin token network. The lead developer, &lt;a href=&quot;https://a16z.com/2016/08/28/ethereum/&quot;&gt;Vitalik Buterin&lt;/a&gt;, had previously tried to create smart contract languages on top of the Bitcoin blockchain. Eventually he realized that (by design, mostly) Bitcoin was too limited, so a new approach was needed.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 576px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 41.14583333333333%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;2014: Vitalik Buterin’s (forum post) announcing Ethereum&quot;
        title=&quot;2014: Vitalik Buterin’s (forum post) announcing Ethereum&quot;
        src=&quot;/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png&quot;
        srcset=&quot;/static/0f4f3db516b79d9d910990abb1c077fd/924ad/1Crmcqo6mdF1okzHt4Bdp4g.png 170w,
/static/0f4f3db516b79d9d910990abb1c077fd/f570f/1Crmcqo6mdF1okzHt4Bdp4g.png 341w,
/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png 576w&quot;
        sizes=&quot;(max-width: 576px) 100vw, 576px&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;2014: Vitalik Buterin’s (forum post) announcing Ethereum&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Ethereum is a network that allows developers to run “smart contracts” — snippets of &lt;a href=&quot;https://en.wikipedia.org/wiki/Ethereum#Smart_contracts&quot;&gt;code&lt;/a&gt; submitted by developers that are executed by a distributed network of computers. Ethereum has a corresponding token called Ether that can be purchased, either to hold for financial purposes or to use by purchasing computing power (known as “&lt;a href=&quot;https://ethereum.stackexchange.com/questions/3/what-is-gas-and-transaction-fee-in-ethereum&quot;&gt;gas&lt;/a&gt;”) on the network. Tokens are also given out to “miners” which are the computers on the decentralized network that execute smart contract code (you can think of miners as playing the role of cloud hosting services like &lt;a href=&quot;https://en.wikipedia.org/wiki/Amazon_Web_Services&quot;&gt;AWS&lt;/a&gt;). Third-party developers can write their own &lt;a href=&quot;https://dapps.ethercasts.com/&quot;&gt;applications&lt;/a&gt; that live on the network, and can charge Ether to generate revenue.&lt;/p&gt;
&lt;p&gt;Ethereum is inspiring a new wave of token networks. (It also provided a simple way for new token networks to launch on top of the Ethereum network, using a standard known as &lt;a href=&quot;https://github.com/ethereum/EIPs/issues/20&quot;&gt;ERC20&lt;/a&gt;). Developers are building token networks for a wide range of use cases, including distributed &lt;a href=&quot;http://filecoin.io/&quot;&gt;computing&lt;/a&gt; &lt;a href=&quot;https://golem.network/&quot;&gt;platforms&lt;/a&gt;, &lt;a href=&quot;https://augur.net/&quot;&gt;prediction&lt;/a&gt; and financial markets, incentivized &lt;a href=&quot;https://steem.io/&quot;&gt;content creation networks&lt;/a&gt;, and &lt;a href=&quot;https://basicattentiontoken.org/&quot;&gt;attention and advertising networks&lt;/a&gt;. Many more networks will be invented and launched in the coming months and years.&lt;/p&gt;
&lt;p&gt;Below I walk through the two main benefits of the token model, the first architectural and the second involving incentives.&lt;/p&gt;
&lt;h2&gt;Tokens enable the management and financing of open services&lt;/h2&gt;
&lt;p&gt;Proponents of open systems never had an effective way to manage and fund operating services, leading to a significant architectural disadvantage compared to their proprietary counterparts. This was particularly evident during the last internet mega-battle between open and closed networks: the social wars of the late 2000s. As Alexis Madrigal recently &lt;a href=&quot;https://www.theatlantic.com/technology/archive/2017/05/a-very-brief-history-of-the-last-10-years-in-technology/526767/?utm_source=atltw&quot;&gt;wrote&lt;/a&gt;, back in 2007 it looked like open networks would dominate going forward:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In 2007, the web people were triumphant. Sure, the dot-com boom had busted, but empires were being built out of the remnant swivel chairs and fiber optic cables and unemployed developers. Web 2.0 was not just a temporal description, but an ethos. The web would be open. A myriad of services would be built, communicating through APIs, to provide the overall internet experience.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;But with the launch of the iPhone and the rise of smartphones, proprietary networks quickly won out:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;As that world-historical explosion began, a platform war came with it. The Open Web lost out quickly and decisively. By 2013, Americans spent about as much of their time on their phones &lt;a href=&quot;http://www.marketingcharts.com/online/smart-device-users-spend-as-much-time-on-facebook-as-the-mobile-web-28422/&quot;&gt;looking at Facebook&lt;/a&gt; as they did the whole rest of the open web.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Why did open social protocols get so decisively defeated by proprietary social networks? The rise of smartphones was only part of the story. Some open protocols — like email and the web — survived the transition to the mobile era. Open protocols relating to social networks were high quality and abundant (e.g. &lt;a href=&quot;https://en.wikipedia.org/wiki/RSS&quot;&gt;RSS&lt;/a&gt;, &lt;a href=&quot;http://xmlns.com/foaf/spec/&quot;&gt;FOAF&lt;/a&gt;, &lt;a href=&quot;https://en.wikipedia.org/wiki/XHTML_Friends_Network&quot;&gt;XFN&lt;/a&gt;, &lt;a href=&quot;http://openid.net/&quot;&gt;OpenID&lt;/a&gt;). What the open side lacked was a mechanism for encapsulating software, databases, and protocols together into easy-to-use services.&lt;/p&gt;
&lt;p&gt;For example, in 2007, Wired magazine ran an &lt;a href=&quot;https://www.wired.com/2007/08/open-social-net/&quot;&gt;article&lt;/a&gt; in which they tried to create their own social network using open tools:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;For the last couple of weeks, Wired News tried to roll its own Facebook using free web tools and widgets. We came close, but we ultimately failed. We were able to recreate maybe 90 percent of Facebook’s functionality, but not the most important part — a way to link people and declare the nature of the relationship.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Some developers &lt;a href=&quot;http://bradfitz.com/social-graph-problem/&quot;&gt;proposed&lt;/a&gt; solving this problem by creating a database of social graphs run by a non-profit organization:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;strong&gt;Establish a non-profit and open source software&lt;/strong&gt; (with copyrights held by the non-profit) which collects, merges, and redistributes the graphs from all other social network sites into one global aggregated graph. This is then made available to other sites (or users) via both public APIs (for small/casual users) and downloadable data dumps, with an update stream / APIs, to get iterative updates to the graph (for larger users).&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;These open schemes required widespread coordination among standards bodies, server operators, app developers, and sponsoring organizations to mimic the functionality that proprietary services could provide all by themselves. As a result, proprietary services were able to create better user experiences and iterate much faster. This led to faster growth, which in turn led to greater investment and revenue, which then fed back into product development and further growth. Thus began a flywheel that drove the meteoric rise of proprietary social networks like Facebook and Twitter.&lt;/p&gt;
&lt;p&gt;Had the token model for network development existed back in 2007, the playing field would have been much more level. First, tokens provide a way not only to define a protocol, but to fund the operating expenses required to host it as a service. Bitcoin and Ethereum have tens of thousands of servers around the world (“miners”) that run their networks. They cover the hosting costs with built-in mechanisms that automatically distribute token rewards to computers on the network (“mining rewards”).&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.092592592592595%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;There are over 20,000 Ethereum nodes around the world (source)&quot;
        title=&quot;There are over 20,000 Ethereum nodes around the world (source)&quot;
        src=&quot;/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png&quot;
        srcset=&quot;/static/cc7fc235606a1a2f9a369f35ef63d3ff/924ad/1-lu1cuJeeDIFPsDpPPo8lw.png 170w,
/static/cc7fc235606a1a2f9a369f35ef63d3ff/f570f/1-lu1cuJeeDIFPsDpPPo8lw.png 341w,
/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;There are over 20,000 Ethereum nodes around the world (source)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Second, tokens provide a model for creating shared computing resources (&lt;a href=&quot;https://medium.com/@FEhrsam/the-dapp-developer-stack-the-blockchain-industry-barometer-8d55ec1c7d4&quot;&gt;including&lt;/a&gt; databases, compute, and file storage) while keeping the control of those resources decentralized (and without requiring an organization to maintain them). This is the blockchain technology that has been talked about &lt;a href=&quot;https://trends.google.com/trends/explore?q=blockchain&quot;&gt;so much&lt;/a&gt;. Blockchains would have allowed shared social graphs to be stored on a decentralized network. It would have been easy for the Wired author to create an open social network using the tools available today.&lt;/p&gt;
&lt;h2&gt;Tokens align incentives among network participants&lt;/h2&gt;
&lt;p&gt;Some of the &lt;a href=&quot;/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;fiercest battles&lt;/a&gt; in tech are between &lt;a href=&quot;https://en.wikipedia.org/wiki/Complementary_good&quot;&gt;complements&lt;/a&gt;. There were, for example, hundreds of startups that tried to build businesses on the APIs of social networks only to have the terms change later on, forcing them to pivot or shut down. Microsoft’s battles with complements like Netscape and Intuit are legendary. Battles within ecosystems are so common and drain so much energy that business books are full of frameworks for how one company can squeeze profits from adjacent businesses (e.g. Porter’s &lt;a href=&quot;https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis&quot;&gt;five forces&lt;/a&gt; model).&lt;/p&gt;
&lt;p&gt;Token networks remove this friction by aligning network participants to work together toward a common goal— the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy &lt;a href=&quot;https://99bitcoins.com/bitcoinobituaries/&quot;&gt;skeptics&lt;/a&gt; and flourish, even while new token networks like Ethereum have grown along side it.&lt;/p&gt;
&lt;p&gt;Moreover, well-designed token networks include an efficient mechanism to incentivize network participants to overcome the bootstrap problem that bedevils traditional network development. For example, &lt;a href=&quot;https://steemit.com/&quot;&gt;Steemit&lt;/a&gt; is a decentralized Reddit-like token network that makes payments to users who post and upvote articles. When Steemit launched last year, the community was &lt;a href=&quot;https://coinreport.net/social-network-steemit-distributes-1-3-million-first-cryptocurrency-payout-users/&quot;&gt;pleasantly surprised&lt;/a&gt; when they made their first significant payout to users.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 576px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 50.86805555555556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Tokens help overcome the bootstrap problem by adding financial utility when application utility is low&quot;
        title=&quot;Tokens help overcome the bootstrap problem by adding financial utility when application utility is low&quot;
        src=&quot;/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png&quot;
        srcset=&quot;/static/5b04980dfae9d027698ea230a794feca/924ad/1mi0v6PNlGnjL9QH-AWZxAA.png 170w,
/static/5b04980dfae9d027698ea230a794feca/f570f/1mi0v6PNlGnjL9QH-AWZxAA.png 341w,
/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png 576w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Tokens help overcome the bootstrap problem by adding financial utility when application utility is low&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;This in turn led to the appreciation of Steemit tokens, which increased future payouts, leading to a &lt;a href=&quot;https://www.usv.com/blog/fat-protocols&quot;&gt;virtuous cycle&lt;/a&gt; where more users led to more investment, and vice versa. Steemit is still a beta project and has since had mixed results, but was an interesting experiment in how to generalize the mutually reinforcing interaction between users and investors that Bitcoin and Ethereum first demonstrated.&lt;/p&gt;
&lt;p&gt;A lot of attention has been paid to token pre-sales (so-called “ICOs”), but they are just one of multiple ways in which the token model innovates on network incentives. A well-designed token network carefully manages the distribution of tokens across all five groups of network participants (users, core developers, third-party developers, investors, service providers) to maximize the growth of the network.&lt;/p&gt;
&lt;p&gt;One way to think about the token model is to imagine if the internet and web hadn’t been funded by governments and universities, but instead by a company that raised money by selling off domain names. People could buy domain names either to use them or as an investment (collectively, domain names are worth tens of billions of dollars today). Similarly, domain names could have been given out as rewards to service providers who agreed to run hosting services, and to third-party developers who supported the network. This would have provided an alternative way to finance and accelerate the development of the internet while also aligning the incentives of the various network participants.&lt;/p&gt;
&lt;h2&gt;The open network movement&lt;/h2&gt;
&lt;p&gt;The cryptocurrency movement is the spiritual heir to previous open computing movements, including the open source software movement led most visibly by Linux, and the open information movement led most visibly by Wikipedia.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/ac3acb338ebc31e660f966ff99f85d32/f5059/1U0B5FlpNVXSXeIcqodktLQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 25.05330490405117%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAA0UlEQVQY02WPW3KFIBBE3f/SbnaQSpS3vBIQQRBEM14/c6rna6qnewbOmJxnRqm11nvvnAsh1Fqv6+q9Y0Kc89eb3s81biEWHza3pLTtw4+15kFrpXS8SfeklHN+vT7GCSGEv0bEuVhzA+W9llKO4xgIrCZMMJm5oIQKISilGGFOGVwgmIZ11doIzpU0MeZSWq0HFDnPc4DC0zhxxiFYSqkg/Q300cZ/Y5vLbn8X59enOQh4HhlCWLxftFSQzCiDcPCnm+h8/BxN3HJrDTzXP/4Ah3QY3Y9kIOMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)&quot;
        title=&quot;1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)&quot;
        src=&quot;/static/ac3acb338ebc31e660f966ff99f85d32/94a55/1U0B5FlpNVXSXeIcqodktLQ.png&quot;
        srcset=&quot;/static/ac3acb338ebc31e660f966ff99f85d32/924ad/1U0B5FlpNVXSXeIcqodktLQ.png 170w,
/static/ac3acb338ebc31e660f966ff99f85d32/f570f/1U0B5FlpNVXSXeIcqodktLQ.png 341w,
/static/ac3acb338ebc31e660f966ff99f85d32/94a55/1U0B5FlpNVXSXeIcqodktLQ.png 681w,
/static/ac3acb338ebc31e660f966ff99f85d32/f5059/1U0B5FlpNVXSXeIcqodktLQ.png 938w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Both of these movements were once niche and &lt;a href=&quot;https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b&quot;&gt;controversial&lt;/a&gt;. Today Linux is the dominant worldwide operating system, and Wikipedia is the most popular informational website in the world.&lt;/p&gt;
&lt;p&gt;Crypto tokens are currently niche and controversial. If present trends continue, they will soon be seen as a breakthrough in the design and development of open networks, combining the societal benefits of open protocols with the financial and architectural benefits of proprietary networks. They are also an extremely promising development for those hoping to keep the internet accessible to entrepreneurs, developers, and other independent creators.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[How Aristotle Created the Computer]]></title>
            <description><![CDATA[The philosophers he influenced set the stage for the technological revolution that remade our world. Originally published by The Atlantic…]]></description>
            <link>https://cdixon.org/2017/02/20/aristotle-computer</link>
            <guid isPermaLink="false">https://cdixon.org/2017/02/20/aristotle-computer</guid>
            <pubDate>Mon, 20 Feb 2017 00:00:00 GMT</pubDate>
            <content:encoded>&lt;h2&gt;The philosophers he influenced set the stage for the technological revolution that remade our world.&lt;/h2&gt;
&lt;p&gt;&lt;em&gt;Originally published by &lt;a href=&quot;https://www.theatlantic.com/technology/archive/2017/03/aristotle-computer/518697/&quot;&gt;The Atlantic&lt;/a&gt;.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;The history of computers is often told as a history of objects, from the abacus to the Babbage engine up through the code-breaking machines of World War II. In fact, it is better understood as a history of ideas, mainly ideas that emerged from mathematical logic, an obscure and cult-like discipline that first developed in the 19th century. Mathematical logic was pioneered by philosopher-mathematicians, most notably George Boole and Gottlob Frege, who were themselves inspired by Leibniz’s dream of a universal “concept language,” and the ancient logical system of Aristotle.&lt;/p&gt;
&lt;p&gt;Mathematical logic was initially considered a hopelessly abstract subject with no conceivable applications. As one computer scientist &lt;a href=&quot;http://bactra.org/notebooks/mathematical-logic.html&quot;&gt;commented&lt;/a&gt;: “If, in 1901, a talented and sympathetic outsider had been called upon to survey the sciences and name the branch which would be least fruitful in [the] century ahead, his choice might well have settled upon mathematical logic.” And yet, it would provide the foundation for a field that would have more impact on the modern world than any other.&lt;/p&gt;
&lt;p&gt;The evolution of computer science from mathematical logic culminated in the 1930s, with two landmark papers: Claude Shannon’s “&lt;a href=&quot;http://www.ccapitalia.net/descarga/docs/1938-shannon-analysis-relay-switching-circuits.pdf&quot;&gt;A Symbolic Analysis of Switching and Relay Circuits&lt;/a&gt;,” and Alan Turing’s “&lt;a href=&quot;http://www.dna.caltech.edu/courses/cs129/caltech_restricted/Turing_1936_IBID.pdf&quot;&gt;On Computable Numbers, With an Application to the &lt;em&gt;Entscheidungsproblem&lt;/em&gt;&lt;/a&gt;.” In the history of computer science, Shannon and Turing are towering figures, but the importance of the philosophers and logicians who preceded them is frequently overlooked.&lt;/p&gt;
&lt;p&gt;A well-known history of computer science describes Shannon’s paper as “possibly the most important, and also the most noted, master’s thesis of the century.” Shannon wrote it as an electrical engineering student at MIT. His adviser, Vannevar Bush, built a prototype computer known as the &lt;a href=&quot;http://www.mit.edu/~klund/analyzer/&quot;&gt;Differential Analyzer&lt;/a&gt; that could rapidly calculate differential equations. The device was mostly mechanical, with subsystems controlled by electrical relays, which were organized in an ad hoc manner as there was not yet a systematic theory underlying circuit design. Shannon’s thesis topic came about when Bush recommended he try to discover such a theory.&lt;/p&gt;
&lt;p&gt;Shannon’s paper is in many ways a typical electrical-engineering paper, filled with equations and diagrams of electrical circuits. What is unusual is that the primary reference was a 90-year-old work of mathematical philosophy, George Boole’s &lt;em&gt;The Laws of Thought&lt;/em&gt;.&lt;/p&gt;
&lt;p&gt;Today, Boole’s name is well known to computer scientists (many programming languages have a basic data type called a Boolean), but in 1938 he was rarely read outside of philosophy departments. Shannon himself encountered Boole’s work in an undergraduate philosophy class. “It just happened that no one else was familiar with both fields at the same time,” he &lt;a href=&quot;http://georgeboole.com/boole/legacy/engineering/&quot;&gt;commented&lt;/a&gt; later.&lt;/p&gt;
&lt;p&gt;Boole is often described as a mathematician, but he saw himself as a philosopher, following in the footsteps of Aristotle. The Laws of Thought begins with a description of his goals, to investigate the fundamental laws of the operation of the human mind:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The design of the following treatise is to investigate the fundamental laws of those operations of the mind by which reasoning is performed; to give expression to them in the symbolical language of a Calculus, and upon this foundation to establish the science of Logic ... and, finally, to collect ... some probable intimations concerning the nature and constitution of the human mind.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;He then pays tribute to Aristotle, the inventor of logic, and the primary influence on &lt;a href=&quot;http://www.gutenberg.org/files/15114/15114-pdf.pdf&quot;&gt;his own work&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In its ancient and scholastic form, indeed, the subject of Logic stands almost exclusively associated with the great name of Aristotle. As it was presented to ancient Greece in the partly technical, partly metaphysical disquisitions of The Organon, such, with scarcely any essential change, it has continued to the present day.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Trying to improve on the logical work of Aristotle was an intellectually daring move. Aristotle’s logic, presented in his six-part book &lt;em&gt;The Organon&lt;/em&gt;, occupied a central place in the scholarly canon for more than 2,000 years. It was widely believed that Aristotle had written almost all there was to say on the topic. The great philosopher Immanuel Kant &lt;a href=&quot;https://books.google.com/books?id=WJVYp0C0taYC&amp;#x26;pg=PA36&amp;#x26;lpg=PA36&amp;#x26;dq=unable+to+take+a+single+step+forward,+and+therefore+seems+to+all+appearance+to+be+finished+and+complete&amp;#x26;source=bl&amp;#x26;ots=W4Lrt9I80J&amp;#x26;sig=KpZlOd-Yc9brgTksIJJZcxUD-Mg&amp;#x26;hl=en&amp;#x26;sa=X&amp;#x26;ved=0ahUKEwjeg8i1iLvQAhVH6IMKHTMXDMgQ6AEIHTAA#v=onepage&amp;#x26;q=unable%20to%20take%20a%20single%20step%20forward%2C%20and%20therefore%20seems%20to%20all%20appearance%20to%20be%20finished%20and%20complete&amp;#x26;f=false&quot;&gt;commented&lt;/a&gt; that, since Aristotle, logic had been “unable to take a single step forward, and therefore seems to all appearance to be finished and complete.”&lt;/p&gt;
&lt;p&gt;Aristotle’s central observation was that arguments were valid or not based on their logical structure, independent of the non-logical words involved. The most famous argument schema he discussed is known as the syllogism:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;All men are mortal.&lt;/li&gt;
&lt;li&gt;Socrates is a man.&lt;/li&gt;
&lt;li&gt;Therefore, Socrates is mortal.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;You can replace “Socrates” with any other object, and “mortal” with any other predicate, and the argument remains valid. The validity of the argument is determined solely by the logical structure. The logical words — “all,” “is,” are,” and “therefore” — are doing all the work.&lt;/p&gt;
&lt;p&gt;Aristotle also defined a set of basic axioms from which he derived the rest of his logical system:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;An object is what it is (Law of Identity)&lt;/li&gt;
&lt;li&gt;No statement can be both true and false (Law of Non-contradiction)&lt;/li&gt;
&lt;li&gt;Every statement is either true or false (Law of the Excluded Middle)&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;These axioms weren’t meant to describe how people actually think (that would be the realm of psychology), but how an idealized, perfectly rational person ought to think.&lt;/p&gt;
&lt;p&gt;Aristotle’s axiomatic method influenced an even more famous book, Euclid’s &lt;em&gt;Elements&lt;/em&gt;, which is &lt;a href=&quot;https://en.wikipedia.org/wiki/Euclid%27s_Elements&quot;&gt;estimated&lt;/a&gt; to be second only to the Bible in the number of editions printed.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 630px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png&quot;
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    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 60.79365079365079%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;A fragment of the Elements (Wikimedia Commons)&quot;
        title=&quot;A fragment of the Elements (Wikimedia Commons)&quot;
        src=&quot;/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png&quot;
        srcset=&quot;/static/2c8ad9d68abd743af2370247bda0f885/924ad/2c8ad9d68.png 170w,
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/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png 630w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;A fragment of the Elements (Wikimedia Commons)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Although ostensibly about geometry, the &lt;em&gt;Elements&lt;/em&gt; became a standard textbook for teaching rigorous deductive reasoning. (Abraham Lincoln once said that he learned sound legal argumentation from studying Euclid.) In Euclid’s system, geometric ideas were represented as spatial diagrams. Geometry continued to be practiced this way until René Descartes, in the 1630s, showed that geometry could instead be represented as formulas. His &lt;em&gt;Discourse on Method&lt;/em&gt; was the &lt;a href=&quot;http://www.storyofmathematics.com/17th_descartes.html&quot;&gt;first&lt;/a&gt; mathematics text in the West to popularize what is now standard algebraic notation — x, y, z for variables, a, b, c for known quantities, and so on.&lt;/p&gt;
&lt;p&gt;Descartes’s algebra allowed mathematicians to move beyond spatial intuitions to manipulate symbols using precisely defined formal rules. This shifted the dominant mode of mathematics from diagrams to formulas, leading to, among other things, the development of calculus, invented roughly 30 years after Descartes by, independently, Isaac Newton and Gottfried Leibniz.&lt;/p&gt;
&lt;p&gt;Boole’s goal was to do for Aristotelean logic what Descartes had done for Euclidean geometry: free it from the limits of human intuition by giving it a precise algebraic notation. To give a simple example, when Aristotle wrote:&lt;/p&gt;
&lt;p&gt;All men are mortal.&lt;/p&gt;
&lt;p&gt;Boole replaced the words “men” and “mortal” with variables, and the logical words “all” and “are” with arithmetical operators:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;x = x * y&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Which could be interpreted as “Everything in the set &lt;em&gt;x&lt;/em&gt; is also in the set &lt;em&gt;y&lt;/em&gt;.”&lt;/p&gt;
&lt;p&gt;The &lt;em&gt;Laws of Thought&lt;/em&gt; created a new scholarly field—mathematical logic—which in the following years became one of the most active areas of research for mathematicians and philosophers. Bertrand Russell called the &lt;em&gt;Laws of Thought&lt;/em&gt; “the work in which pure mathematics was discovered.”&lt;/p&gt;
&lt;p&gt;Shannon’s insight was that Boole’s system could be mapped directly onto electrical circuits. At the time, electrical circuits had no systematic theory governing their design. Shannon realized that the right theory would be “exactly analogous to the calculus of propositions used in the symbolic study of logic.”&lt;/p&gt;
&lt;p&gt;He showed the correspondence between electrical circuits and Boolean operations in a simple chart:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/99df968e4a381af54b90ef8d287fb9de/07a90/99df968e4.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 42.7536231884058%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)&quot;
        title=&quot;Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)&quot;
        src=&quot;/static/99df968e4a381af54b90ef8d287fb9de/07a90/99df968e4.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;This correspondence allowed computer scientists to import decades of work in logic and mathematics by Boole and subsequent logicians. In the second half of his paper, Shannon showed how Boolean logic could be used to create a circuit for adding two binary digits.&lt;/p&gt;
&lt;p&gt;By stringing these adder circuits together, arbitrarily complex arithmetical operations could be constructed. These circuits would become the basic building blocks of what are now known as &lt;a href=&quot;https://en.wikipedia.org/wiki/Arithmetic_logic_unit&quot;&gt;arithmetical logic units&lt;/a&gt;, a key component in modern computers.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Shannon’s adder circuit (University of Virginia)&quot;
        title=&quot;Shannon’s adder circuit (University of Virginia)&quot;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Shannon’s adder circuit (University of Virginia)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Another way to characterize Shannon’s achievement is that he was first to distinguish between the logical and the physical layer of computers. (This distinction has become so fundamental to computer science that it might seem surprising to modern readers how insightful it was at the time—a reminder of the adage that “the philosophy of one century is the common sense of the next.”)&lt;/p&gt;
&lt;p&gt;Since Shannon’s paper, a vast amount of progress has been made on the physical layer of computers, including the invention of the transistor in 1947 by William Shockley and his colleagues at Bell Labs. Transistors are dramatically improved versions of Shannon’s electrical relays — the best known way to physically encode Boolean operations. Over the next 70 years, the semiconductor industry packed more and more transistors into smaller spaces. A 2016 iPhone &lt;a href=&quot;http://www.macrumors.com/2016/09/12/cpu-improvements-iphone-7-apple-watch/&quot;&gt;has&lt;/a&gt; about 3.3 billion transistors, each one a “relay switch” like those pictured in Shannon’s diagrams.&lt;/p&gt;
&lt;p&gt;While Shannon showed how to map logic onto the physical world, Turing showed how to design computers in the language of mathematical logic. When Turing wrote his paper, in 1936, he was trying to solve “the decision problem,” first identified by the mathematician David Hilbert, who asked whether there was an algorithm that could determine whether an arbitrary mathematical statement is true or false. In contrast to Shannon’s paper, Turing’s paper is highly technical. Its primary historical significance lies not in its answer to the decision problem,  but in the template for computer design it provided along the way.&lt;/p&gt;
&lt;p&gt;Turing was working in a tradition stretching back to Gottfried Leibniz, the philosophical giant who developed calculus independently of Newton. Among Leibniz’s many contributions to modern thought, one of the most intriguing was the idea of a new language he called the “&lt;a href=&quot;https://en.wikipedia.org/wiki/Characteristica_universalis&quot;&gt;universal characteristic&lt;/a&gt;” that, he imagined, could represent all possible mathematical and scientific knowledge. Inspired in part by the 13th-century religious philosopher &lt;a href=&quot;https://en.wikipedia.org/wiki/Ramon_Llull&quot;&gt;Ramon Llull&lt;/a&gt;, Leibniz postulated that the language would be ideographic like Egyptian hieroglyphics, except characters would correspond to “atomic” concepts of math and science. He argued this language would give humankind an “instrument” that could enhance human reason “to a far greater extent than optical instruments” like the microscope and telescope.&lt;/p&gt;
&lt;p&gt;He also &lt;a href=&quot;http://publicdomainreview.org/2016/11/10/let-us-calculate-leibniz-llull-and-computational-imagination/&quot;&gt;imagined&lt;/a&gt; a machine that could process the language, which he called the calculus ratiocinator.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;If controversies were to arise, there would be no more need of disputation between two philosophers than between two accountants. For it would suffice to take their pencils in their hands, and say to each other: Calculemus—Let us calculate.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Leibniz didn’t get the opportunity to develop his universal language or the corresponding machine (although he did invent a relatively simple calculating machine, the &lt;a href=&quot;https://en.wikipedia.org/wiki/Stepped_reckoner&quot;&gt;stepped reckoner&lt;/a&gt;). The first credible attempt to realize Leibniz’s dream came in 1879, when the German philosopher Gottlob Frege published his landmark logic treatise &lt;em&gt;&lt;a href=&quot;https://en.wikipedia.org/wiki/Begriffsschrift&quot;&gt;Begriffsschrift&lt;/a&gt;&lt;/em&gt;. Inspired by Boole’s attempt to improve Aristotle’s logic, Frege developed a much more advanced logical system. The logic taught in philosophy and computer-science classes today—first-order or predicate logic—is only a slight modification of Frege’s system.&lt;/p&gt;
&lt;p&gt;Frege is generally considered one of the most important philosophers of the 19th century. Among other things, he is credited with catalyzing what noted philosopher Richard Rorty called the “&lt;a href=&quot;https://en.wikipedia.org/wiki/Linguistic_turn&quot;&gt;linguistic turn&lt;/a&gt;” in philosophy. As Enlightenment philosophy was obsessed with questions of knowledge, philosophy after Frege became obsessed with questions of language. His disciples included two of the most important philosophers of the 20th century—Bertrand Russell and Ludwig Wittgenstein.&lt;/p&gt;
&lt;p&gt;The major innovation of Frege’s logic is that it much more accurately represented the logical structure of ordinary language. Among other things, Frege was the first to use quantifiers (“for every,” “there exists”) and to separate objects from predicates. He was also the first to develop what today are fundamental concepts in computer science like recursive functions and variables with scope and binding.&lt;/p&gt;
&lt;p&gt;Frege’s formal language — what he called his “concept-script” — is made up of meaningless symbols that are manipulated by well-defined rules. The language is only given meaning by an interpretation, which is specified separately (this distinction would later come to be called syntax versus semantics). This turned logic into what the eminent computer scientists Allan Newell and Herbert Simon called “the symbol game,” “played with meaningless tokens according to certain purely syntactic rules.”&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;All meaning had been purged. One had a mechanical system about which various things could be proved. Thus progress was first made by walking away from all that seemed relevant to meaning and human symbols.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As Bertrand Russell famously quipped: “Mathematics may be defined as the subject in which we never know what we are talking about, nor whether what we are saying is true.”&lt;/p&gt;
&lt;p&gt;An unexpected consequence of Frege’s work was the discovery of weaknesses in the foundations of mathematics. For example, Euclid’s &lt;em&gt;Elements&lt;/em&gt; — considered the gold standard of logical rigor for thousands of years — turned out to be full of logical mistakes. Because Euclid used ordinary words like “line” and “point,” he — and centuries of readers — deceived themselves into making assumptions about sentences that contained those words. To give one relatively simple example, in ordinary usage, the word “line” implies that if you are given three distinct points on a line, one point must be between the other two. But when you define “line” using formal logic, it turns out “between-ness” also needs to be defined—something Euclid overlooked. Formal logic makes gaps like this easy to spot.&lt;/p&gt;
&lt;p&gt;This realization created a &lt;a href=&quot;https://en.wikipedia.org/wiki/Foundations_of_mathematics#Foundational_crisis&quot;&gt;crisis&lt;/a&gt; in the foundation of mathematics. If the &lt;em&gt;Elements&lt;/em&gt; — the bible of mathematics — contained logical mistakes, what other fields of mathematics did too? What about sciences like physics that were built on top of mathematics?&lt;/p&gt;
&lt;p&gt;The good news is that the same logical methods used to uncover these errors could also be used to correct them. Mathematicians started rebuilding the foundations of mathematics from the bottom up. In 1889, Giuseppe Peano &lt;a href=&quot;https://en.wikipedia.org/wiki/Peano_axioms&quot;&gt;developed&lt;/a&gt; axioms for arithmetic, and in 1899, David Hilbert &lt;a href=&quot;https://en.wikipedia.org/wiki/Hilbert%27s_axioms&quot;&gt;did&lt;/a&gt; the same for geometry. Hilbert also outlined a program to formalize the remainder of mathematics, with specific requirements that any such attempt should satisfy, including:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;em&gt;Completeness&lt;/em&gt;: There should be a proof that all true mathematical statements can be proved in the formal system.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Decidability&lt;/em&gt;: There should be an algorithm for deciding the truth or falsity of any mathematical statement. (This is the “&lt;em&gt;Entscheidungsproblem&lt;/em&gt;” or “decision problem” referenced in Turing’s paper.)&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;Rebuilding mathematics in a way that satisfied these requirements became known as Hilbert’s program. Up through the 1930s, this was the focus of a core group of logicians including Hilbert, Russell, Kurt Gödel, John Von Neumann, Alonzo Church, and, of course, Alan Turing.&lt;/p&gt;
&lt;p&gt;Hilbert’s program proceeded on at least two fronts. On the first front, logicians created logical systems that tried to prove Hilbert’s requirements either satisfiable or not.&lt;/p&gt;
&lt;p&gt;On the second front, mathematicians used logical concepts to rebuild classical mathematics. For example, Peano’s system for arithmetic starts with a simple function called the successor function which increases any number by one. He uses the successor function to recursively define &lt;a href=&quot;https://en.wikipedia.org/wiki/Peano_axioms#Addition&quot;&gt;addition&lt;/a&gt;, uses addition to recursively define &lt;a href=&quot;https://en.wikipedia.org/wiki/Peano_axioms#Multiplication&quot;&gt;multiplication&lt;/a&gt;, and so on, until all the operations of number theory are defined. He then uses those definitions, along with formal logic, to prove theorems about arithmetic.&lt;/p&gt;
&lt;p&gt;The historian Thomas Kuhn once observed that “in science, novelty emerges only with difficulty.” Logic in the era of Hilbert’s program was a tumultuous process of creation and destruction. One logician would build up an elaborate system and another would tear it down.&lt;/p&gt;
&lt;p&gt;The favored tool of destruction was the construction of self-referential, paradoxical statements that showed the axioms from which they were derived to be inconsistent. A simple form of this  “liar’s paradox” is the sentence:&lt;/p&gt;
&lt;p&gt;This sentence is false.&lt;/p&gt;
&lt;p&gt;If it is true then it is false, and if it is false then it is true, leading to an endless loop of self-contradiction.&lt;/p&gt;
&lt;p&gt;Russell made the first notable use of the liar’s paradox in mathematical logic. He showed that Frege’s system allowed self-contradicting sets to be derived:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Let &lt;em&gt;R&lt;/em&gt; be the set of all sets that are not members of themselves. If &lt;em&gt;R&lt;/em&gt; is not a member of itself, then its definition dictates that it must contain itself, and if it contains itself, then it contradicts its own definition as the set of all sets that are not members of themselves.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This became known as Russell’s paradox and was seen as a serious flaw in Frege’s achievement. (Frege himself was shocked by this discovery. He replied to Russell: “Your discovery of the contradiction caused me the greatest surprise and, I would almost say, consternation, since it has shaken the basis on which I intended to build my arithmetic.”)&lt;/p&gt;
&lt;p&gt;Russell and his colleague Alfred North Whitehead put forth the most ambitious attempt to complete Hilbert’s program with the &lt;em&gt;Principia Mathematica&lt;/em&gt;, published in three volumes between 1910 and 1913. The &lt;em&gt;Principia’s&lt;/em&gt; method was so detailed that it took over 300 pages to get to the proof that 1+1=2.&lt;/p&gt;
&lt;p&gt;Russell and Whitehead tried to resolve Frege’s paradox by introducing what they called type theory. The idea was to partition formal languages into multiple levels or types. Each level could make reference to levels below, but not to their own or higher levels. This resolved self-referential paradoxes by, in effect, banning self-reference. (This solution was not popular with logicians, but it did influence computer science — most modern computer languages have features inspired by type theory.)&lt;/p&gt;
&lt;p&gt;Self-referential paradoxes ultimately showed that Hilbert’s program could never be successful. The first blow came in 1931, when Gödel published his now famous incompleteness theorem, which proved that any consistent logical system powerful enough to encompass arithmetic must also contain statements that are true but cannot be proven to be true. (Gödel’s incompleteness theorem is one of the few logical results that has been broadly popularized, thanks to books like &lt;a href=&quot;https://en.wikipedia.org/wiki/G%C3%B6del,_Escher,_Bach&quot;&gt;Gödel, Escher, Bach&lt;/a&gt; and &lt;a href=&quot;https://www.amazon.com/dp/B00ARGXG7Q/ref=dp-kindle-redirect?_encoding=UTF8&amp;#x26;btkr=1&quot;&gt;The Emperor’s New Mind&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;The final blow came when Turing and Alonzo Church independently proved that no algorithm could exist that determined whether an arbitrary mathematical statement was true or false. (Church did this by inventing an entirely different system called the &lt;a href=&quot;https://en.wikipedia.org/wiki/Lambda_calculus&quot;&gt;lambda calculus&lt;/a&gt;, which would later inspire computer languages like &lt;a href=&quot;https://en.wikipedia.org/wiki/Lisp_%28programming_language%29&quot;&gt;Lisp&lt;/a&gt;.) The answer to the decision problem was negative.&lt;/p&gt;
&lt;p&gt;Turing’s key insight came in the first section of his famous 1936 paper, “On Computable Numbers, With an Application to the &lt;em&gt;Entscheidungsproblem&lt;/em&gt;.” In order to rigorously formulate the decision problem (the “&lt;em&gt;Entscheidungsproblem&lt;/em&gt;”), Turing first created a mathematical model of what it means to be a computer (today, machines that fit this model are known as “universal Turing machines”). As the logician Martin Davis describes it:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Turing knew that an algorithm is typically specified by a list of rules that a person can follow in a precise mechanical manner, like a recipe in a cookbook. He was able to show that such a person could be limited to a few extremely simple basic actions without changing the final outcome of the computation.&lt;/p&gt;
&lt;p&gt;Then, by proving that no machine performing only those basic actions could determine whether or not a given proposed conclusion follows from given premises using Frege’s rules, he was able to conclude that no algorithm for the Entscheidungsproblem exists.&lt;/p&gt;
&lt;p&gt;As a byproduct, he found a mathematical model of an all-purpose computing machine.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Next, Turing showed how a program could be stored inside a computer alongside the data upon which it operates. In today’s vocabulary, we’d say that he invented the “stored-program” architecture that underlies most modern computers:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Before Turing, the general supposition was that in dealing with such machines the three categories — machine, program, and data — were entirely separate entities. The machine was a physical object; today we would call it hardware. The program was the plan for doing a computation, perhaps embodied in punched cards or connections of cables in a plugboard. Finally, the data was the numerical input. Turing’s universal machine showed that the distinctness of these three categories is an illusion.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This was the first rigorous demonstration that any computing logic that could be encoded in hardware could also be encoded in software. The architecture Turing described was later dubbed the “Von Neumann architecture” — but modern historians generally agree it came from Turing, as, apparently, did Von Neumann &lt;a href=&quot;https://en.wikipedia.org/wiki/Alan_Turing#cite_note-36&quot;&gt;himself&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Although, on a technical level, Hilbert’s program was a failure, the efforts along the way demonstrated that large swaths of mathematics could be constructed from logic. And after Shannon and Turing’s insights—showing the connections between electronics, logic and computing—it was now possible to export this new conceptual machinery over to computer design.&lt;/p&gt;
&lt;p&gt;During World War II, this theoretical work was put into practice, when government labs conscripted a number of elite logicians. Von Neumann joined the atomic bomb project at Los Alamos, where he worked on computer design to support physics research. In 1945, he wrote the &lt;a href=&quot;http://www.virtualtravelog.net/wp/wp-content/media/2003-08-TheFirstDraft.pdf&quot;&gt;specification&lt;/a&gt; of the EDVAC—the first stored-program, logic-based computer—which is generally considered the definitive source guide for modern computer design.&lt;/p&gt;
&lt;p&gt;Turing joined a secret unit at Bletchley Park, northwest of London, where he helped design computers that were instrumental in breaking German codes. His most enduring contribution to practical computer design was his specification of the ACE, or Automatic Computing Engine.&lt;/p&gt;
&lt;p&gt;As the first computers to be based on Boolean logic and stored-program architectures, the ACE and the EDVAC were similar in many ways. But they also had interesting differences, some of which foreshadowed modern debates in computer design. Von Neumann’s favored designs were similar to modern CISC (“complex”) processors, baking rich functionality into hardware. Turing’s design was more like modern RISC (“reduced”) processors, minimizing hardware complexity and pushing more work to software.&lt;/p&gt;
&lt;p&gt;Von Neumann thought computer programming would be a tedious, clerical job. Turing, by contrast, said computer programming “should be very fascinating. There need be no real danger of it ever becoming a drudge, for any processes that are quite mechanical may be turned over to the machine itself.”&lt;/p&gt;
&lt;p&gt;Since the 1940s, computer programming has become significantly more sophisticated. One thing that hasn’t changed is that it still primarily consists of programmers specifying rules for computers to follow. In philosophical terms, we’d say that computer programming has followed in the tradition of deductive logic, the branch of logic discussed above, which deals with the manipulation of symbols according to formal rules.&lt;/p&gt;
&lt;p&gt;In the past decade or so, programming has started to change with the growing popularity of machine learning, which involves creating frameworks for machines to learn via statistical inference. This has brought programming closer to the other main branch of logic, inductive logic, which deals with inferring rules from specific instances.&lt;/p&gt;
&lt;p&gt;Today’s most promising machine learning techniques use neural networks, which were first &lt;a href=&quot;http://www.cse.chalmers.se/~coquand/AUTOMATA/mcp.pdf&quot;&gt;invented&lt;/a&gt; in 1940s by Warren McCulloch and Walter Pitts, whose idea was to develop a calculus for neurons that could, like Boolean logic, be used to construct computer circuits. Neural networks remained esoteric until decades later when they were combined with statistical techniques, which allowed them to improve as they were fed more data. Recently, as computers have become increasingly adept at handling large data sets, these techniques have produced remarkable results. Programming in the future will likely mean exposing neural networks to the world and letting them learn.&lt;/p&gt;
&lt;p&gt;This would be a fitting second act to the story of computers. Logic began as a way to understand the laws of thought. It then helped create machines that could reason according to the rules of deductive logic. Today, deductive and inductive logic are being combined to create machines that both reason and learn. What began, in Boole’s words, with an investigation “concerning the nature and constitution of the human mind,” could result in the creation of new minds—artificial minds—that might someday match or even exceed our own.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Gadgets and Computers]]></title>
            <description><![CDATA[From Benedict Evans’ Cars as Feature Phones: This is a common theme in many classes of device: you start with a product that has a few…]]></description>
            <link>https://cdixon.org/2017/01/16/gadgets-and-computers</link>
            <guid isPermaLink="false">https://cdixon.org/2017/01/16/gadgets-and-computers</guid>
            <pubDate>Mon, 16 Jan 2017 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;From Benedict Evans’ &lt;a href=&quot;http://ben-evans.com/benedictevans/2017/01/10/cars-as-featurephones&quot;&gt;Cars as Feature Phones&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;This is a common theme in many classes of device: you start with a product that has a few electronic functions added, and then those functions are delivered with chips, and perhaps they gain an interface and then a screen, and more and more functions (and probably multi-function buttons) — and then, somehow, you’ve built a little weird custom computer without actually meaning to, and all the little silos of features and functions become unmanageable, both at an interface level and also at a fundamental engineering level, and the whole thing gets replaced by a real computer with a real software platform. And this new computer is almost certainly made by a different company.
You could see this problem very clearly at Motorola, which developed as many as two dozen ‘operating systems’ — for phones, pagers, satellite phones, car-control, industrial devices, chip evaluation boards and so on and so on, and picked them for each device out of a metaphorical parts bin just as you’d choose a sensor or battery or any other component. And boy, they really knew how to write operating systems — they had dozens! With, probably, ‘&lt;a href=&quot;https://www.technologyreview.com/s/508231/many-cars-have-a-hundred-million-lines-of-code/&quot;&gt;millions of lines of code&lt;/a&gt;’. This was exactly the right approach in 1995, but in 2005, again, the whole thing collapsed under its own weight, because they needed software as a platform rather than as a one-off component, and instead &lt;a href=&quot;http://www.theregister.co.uk/Print/2012/11/29/rockman_on_motorola/&quot;&gt;they had a mess&lt;/a&gt;.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The iPhone was the first mainstream cell phone that was also a proper computer. It had a full-fledged operating system and a (mostly) open developer platform. We are likely seeing the same pattern play out across the &lt;a href=&quot;https://medium.com/software-is-eating-the-world/what-s-next-in-computing-e54b870b80cc#.bmdmkoc13&quot;&gt;next generation of computers&lt;/a&gt;: not only cars, but drones, IoT devices, wearables, etc. In the beginning, hardware-focused companies make gadgets with ever increasing laundry lists of features. Then a company with strong software expertise (often a new market entrant) comes along that replaces these feature-packed gadgets with full-fledged computers. These computers have proper (usually Unix-like) operating systems, open developer platforms, and streamlined user interfaces (increasingly, powered by AI).&lt;/p&gt;
&lt;p&gt;This process takes time to play out. Apple waited more than a decade from the initial popularity of cell phones to the release of the first iPhone. And sometimes you don’t know the significance of a new computing device until many years later. It wasn’t obvious until around 2012 that iOS and Android smartphones would become the dominant form of computing (recall Facebook’s “&lt;a href=&quot;https://techcrunch.com/2012/10/19/facebook-mobile-first/&quot;&gt;pivot to mobile&lt;/a&gt;” in 2012). Some people (including me) believe we’ve already entered the “computer phase” of consumer IoT with voice assistants like Alexa, but it will probably take years before we understand the enduring mainstream appeal of these devices.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[As [Edwin] Land ultimately recognized, the adoption of his [polarized headlight] system was fatally…]]></title>
            <description><![CDATA[As Edwin Land ultimately recognized, the adoption of his polarized headlight system was fatally hampered by the fact that there was no…]]></description>
            <link>https://cdixon.org/2016/09/25/as-edwin-land-ultimately-recognized-the-adoption-of-his-polarized-headlight-system-was-fatally</link>
            <guid isPermaLink="false">https://cdixon.org/2016/09/25/as-edwin-land-ultimately-recognized-the-adoption-of-his-polarized-headlight-system-was-fatally</guid>
            <pubDate>Sun, 25 Sep 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;As [Edwin] Land ultimately recognized, the adoption of his [polarized headlight] system was fatally hampered by the fact that there was no competitive advantage for any car company in using it first. Since all cars needed to incorporate the technology as simultaneously as possible, it was either going to be all, either voluntarily or as directed by the government, or none. No state or federal governmental agency ever stepped in to direct the adoption of the technology in the way that seat belts would be required decades later. Herbert Nichols, a journalist with the Christian Science Monitor who had followed the story, believed that the industry killed the idea even though the demonstrations clearly showed that the system worked. According to Nichols, the industry concluded that it “just didn’t need anything to sell automobiles. They realized they could sell all the automobiles they could make.” Thus, with no economic or competitive incentive, why bother with a system that clearly added costs and admittedly presented implementation issues? After more than two decades, Land reluctantly gave up the fight.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;But he learned one very important lesson. “I knew then that I would never go into a commercial field that put a barrier between us and the customer.” Rather than deal with other companies as intermediaries, he would market his innovative products directly to the public. He believed “that the role of industry is to sense a deep human need, then bring science and technology to bear on filling that need. Any market already existing is inherently boring and dull.” Land, like Steve Jobs many decades later, believed that his company should “give people products they do not even know they want.” Fortunately, he already had such a product in mind.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;— &lt;em&gt;&lt;a href=&quot;https://www.amazon.com/dp/B00OHRYYFO/&quot;&gt;A Triumph of Genius: Edwin Land, Polaroid, and the Kodak Patent War&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Eleven Reasons To Be Excited About The Future of Technology]]></title>
            <description><![CDATA[“The strongest force propelling human progress has been the swift advance and wide diffusion of technology.” — The Economist In the year…]]></description>
            <link>https://cdixon.org/2016/08/18/eleven-reasons-to-be-excited-about-the-future-of-technology</link>
            <guid isPermaLink="false">https://cdixon.org/2016/08/18/eleven-reasons-to-be-excited-about-the-future-of-technology</guid>
            <pubDate>Thu, 18 Aug 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;“The strongest force propelling human progress has been the swift advance and wide diffusion of technology.” — &lt;a href=&quot;http://www.economist.com/node/841842&quot;&gt;The Economist&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In the year 1820, a person could &lt;a href=&quot;https://ourworldindata.org/life-expectancy/&quot;&gt;expect to live&lt;/a&gt; less than 35 years, 94% of the global population &lt;a href=&quot;https://ourworldindata.org/world-poverty/&quot;&gt;lived in extreme poverty&lt;/a&gt;, and less that 20% of the population was literate. Today, human life expectancy is over 70 years, less that 10% of the global population lives in extreme poverty, and &lt;a href=&quot;http://www.oecd.org/statistics/How-was-life.pdf&quot;&gt;over 80% of people&lt;/a&gt; are literate. These improvements are due mainly to advances in technology, beginning in the industrial age and continuing today in the information age.&lt;/p&gt;
&lt;p&gt;There are many exciting new technologies that will continue to transform the world and improve human welfare. Here are eleven of them.&lt;/p&gt;
&lt;h2&gt;1. Self-Driving Cars&lt;/h2&gt;
&lt;p&gt;Self-driving cars exist today that are safer than human-driven cars in most driving conditions. Over the next 3–5 years they‘ll get even safer, and will begin to go mainstream.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/9095391e908f6d180dfe446b3c85d104/1_HfoJs9tCyyr6VeLvD45wyQ.gif&quot;&gt;&lt;/p&gt;
&lt;p&gt;The &lt;a href=&quot;http://www.who.int/mediacentre/factsheets/fs358/en/&quot;&gt;World Health Organization estimates&lt;/a&gt; that 1.25 million people die from car-related injuries per year. Half of the deaths are pedestrians, bicyclists, and motorcyclists hit by cars. Cars are the leading cause of death for people ages 15–29 years old.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 535px;&quot;
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    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 44.48598130841121%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAJCAIAAAC9o5sfAAAACXBIWXMAAAsSAAALEgHS3X78AAABGElEQVQoz4VR23KCMBT0/7+iT+2/9KWt1SoSIHKLoCAQopAbXcSZTrWXnUzmnMnuZk8yM8b2RitrtdKAUqrve62NtcP9MlMxXGpjZ704Pzw+PbuL15e398Vy7WzWjiOEGEYGaN/QSrs+6NVBhbUexUpKMp/vWJJm+zTLd/leSqkvQISpRjEZKWO5tE1v4YIUM5yxPA+2W9/3A0rjJCHEczYbl5AwitDGUZQyBtpNCthBbMCjlBLPJ56HzEFAsXuePzJ+Cv8lNsaAF4YRLMYLXXf5AazQIvPwO65izJnusv2hiFOWsKwoyq7rOOf3UW/FSmneiqrhZVUfq6Y81nlR1rwd/sN1ZujxruLUnTs8r4JXK074ib8BwifMWQP6XlWXAAAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1 SNGdeK4GNUhjL6wlh7sfJw&quot;
        title=&quot;1 SNGdeK4GNUhjL6wlh7sfJw&quot;
        src=&quot;/static/b1331e887bede1ec31bb4ddd87d920f3/fd7a0/1_SNGdeK4GNUhjL6wlh7sfJw.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Just as cars reshaped the world in the 20th century, so will self-driving cars in the 21st century. In most cities, &lt;a href=&quot;http://oldurbanist.blogspot.com.es/2011/12/we-are-25-looking-at-street-area.html&quot;&gt;between 20–30%&lt;/a&gt; of usable space is taken up by parking spaces, and most cars are parked &lt;a href=&quot;http://www.reinventingparking.org/2013/02/cars-are-parked-95-of-time-lets-check.html&quot;&gt;about 95%&lt;/a&gt; of the time. Self-driving cars will be in almost continuous use (most likely hailed from a smartphone app), thereby dramatically reducing the need for parking. Cars will communicate with one another to avoid accidents and traffic jams, and riders will be able to spend commuting time on other activities like work, education, and socializing.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e38574048864fdccbafce0305e175014/1654f/1_k6w2wkkREpVeu9_cS2xxtg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 74.4047619047619%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)&quot;
        title=&quot;Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)&quot;
        src=&quot;/static/e38574048864fdccbafce0305e175014/1654f/1_k6w2wkkREpVeu9_cS2xxtg.png&quot;
        srcset=&quot;/static/e38574048864fdccbafce0305e175014/924ad/1_k6w2wkkREpVeu9_cS2xxtg.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;2. Clean Energy&lt;/h2&gt;
&lt;p&gt;Attempts to fight climate change by reducing the demand for energy &lt;a href=&quot;https://en.wikipedia.org/wiki/World_energy_consumption&quot;&gt;haven’t worked&lt;/a&gt;. Fortunately, scientists, engineers, and entrepreneurs have been working hard on the supply side to make clean energy convenient and cost-effective.&lt;/p&gt;
&lt;p&gt;Due to steady technological and manufacturing advances, the price of solar cells has &lt;a href=&quot;http://www.saskwind.ca/wind-cost-decline/&quot;&gt;dropped 99.5% since 1977&lt;/a&gt;. Solar will soon be more cost efficient than fossil fuels. The cost of wind energy has also dropped to an all-time low, and in the last decade represented about a &lt;a href=&quot;http://energy.gov/articles/top-10-things-you-didnt-know-about-wind-power&quot;&gt;third of newly installed&lt;/a&gt; US energy capacity.&lt;/p&gt;
&lt;p&gt;Forward thinking organizations are taking advantage of this. For example, in India there is an initiative to convert airports to self-sustaining clean energy.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 314px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/4cf0c503c956282e349bc8751260c793/808c1/1_idAW1ONI_iIeevzPaUv-pg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 76.43312101910827%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAPCAIAAABr+ngCAAAACXBIWXMAAAsSAAALEgHS3X78AAADjklEQVQoz02N209aBxzHz+Pe+wfsZU/bHrZlyZb4Mhe3JZ0xc003O2dF50AU5MDhVkQuiof7RSq3Al3bUU1a5uq4tNxEkFsVhYDIbYBQmByV1TW7INlkZ+nLPskv+eWX7+f7A44RpFQqn56e5rLZer3RbDZ/ecnRETqFYgGlUW/kcrkKymEFTRaKxbOzs263Cxw3j3xeH5qIRsKbmwG73e73+9OpVOYgk0gko5GIx+0OhyMejxftSSYT8XgcvWxv7/wnnyDNxO5uJBzO53OVcvkgs/9zsfjyf61aazQaCII8q9Vy2Uw+n2+3293/AdTrz5yPH7t9Pn8wlEql3G63zfZTJBrN5bLBYCAajabT+8GA3+V2OZyOJtJEnc4/F52/uxeoXPnt4mGh46icu6qdreqfkVp7p9HZbpxHqn/t1M9DpRfokkC6yZPuQetiu/Ziq/q7s9xezf1R+LUDVFptXRTRhuoqb0nqSAusUf6Kd8HyBLY4JPefyFZc2h89qjW36lFQ7UjqvMV7saY1/Xw19bzUOgcSh8cYtXUEVl8X0DA8LI6NYQqn5Yrh24bPv7/1tcMI7a1wN6yyZSNzQT/O0lDIKnhaZSSYbMlaCwjGY/3j/RjS5SnONa5iBqR9KpdOaoSDauGAXjEgF/evyrB2PU57p9do6THe/ezmrSGBEjNKuxLaCwNPdzex1B7m4lU8dXCa0TcJ4YkzeAZEnWOwJBw6zANhAU0rwSmUAxrdVaXpXa7hdbm5V23syxRcQPUwC5JHhyfe/gr7wTCegSPw5ung3A2aTMgySBgGKaSV0VeWqTYTy6CkqLQfK01vic098u96C+UgEIy5Pvry0jD+EwwRxpLnBVzqMkxa5FCXxEyjDDJLSXopdF9N8twlaeWgVEQWS4fWf+Cndh6dNEvA04RtnPzaGDg7MsUm06A5FpHBpIv5kIhPkwuIOtE3lqUJtGVZBN5TTclggkAwKZR9uGYmt+o1YG/fiqW/c53EGSNwyRCdQJ4lU+lsFo3LpikXJ5VCUCOh6GQUtfiGVgxphNQFDk1/Ey+UvJHPBoBYcr0fCwziXxmbeZUAvofBX8YRr4HQtxAdlPK+gOdGRdwJPm9CuDg0y77C4/aRGO/jmG+OUC6Fdh8CDaT0wLlkscGrDp7Dw3H6uB6/0B9cioXuxCO3o2FzOGTyBgy+kNK1Ba9vzD/wLKxtKOwezRGS+xdfsUd83V/QOAAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))&quot;
        title=&quot;Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))&quot;
        src=&quot;/static/4cf0c503c956282e349bc8751260c793/808c1/1_idAW1ONI_iIeevzPaUv-pg.png&quot;
        srcset=&quot;/static/4cf0c503c956282e349bc8751260c793/924ad/1_idAW1ONI_iIeevzPaUv-pg.png 170w,
/static/4cf0c503c956282e349bc8751260c793/808c1/1_idAW1ONI_iIeevzPaUv-pg.png 314w&quot;
        sizes=&quot;(max-width: 314px) 100vw, 314px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Tesla is making high-performance, affordable electric cars, and &lt;a href=&quot;http://www.treehugger.com/cars/tesla-built-858-new-charging-stations-us-over-past-12-months.html&quot;&gt;installing&lt;/a&gt; electric charging stations &lt;a href=&quot;http://mashable.com/2016/04/01/tesla-supercharger-expansion/#v93tzyDFl5qR&quot;&gt;worldwide&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 416px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 32.45192307692308%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Tesla Model 3 and US supercharger locations&quot;
        title=&quot;Tesla Model 3 and US supercharger locations&quot;
        src=&quot;/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png&quot;
        srcset=&quot;/static/12dcb7e7db7e072104c07a6c4a11ef4e/924ad/1_YwcTRiWETVn4aXiZhEJtcg.png 170w,
/static/12dcb7e7db7e072104c07a6c4a11ef4e/f570f/1_YwcTRiWETVn4aXiZhEJtcg.png 341w,
/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png 416w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Tesla Model 3 and US supercharger locations&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;There are hopeful signs that clean energy could soon be reaching a tipping point. For example, in Japan, there are now more electric charging stations than gas stations.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 530px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 23.584905660377355%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAABAUlEQVQY02WOTUvDQBiE9wf7Q/SkJz0UQUUELx60Km1TI7S1khSbrNmGtTSxNZvdtEk3H5ZIILvGFC/6HF7mHYZhwP6tftwxzlR40UPxJpdSlqX4R1n5ef5J6Wwduc4yfRkZ9pSAveaooZhHrfGp+so3X1VICPkHUVtpTPHb88B6vzaL1smBOsRgST7SeB1HIY9WjFHGmO/7hBDP8yoRBAGl1HXdxXy+YFEPzq6gVJp33cuG4kig6TpCE9M0J7ZtGIZlWQihSkAIq4osy5IkWYUhD4NpIO4Hdv989+lw56Y97mAJshrOeVKzTW/foih+Z/8ckspHzdW67QcsFCyHjvwGCIMIwPGdYIMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)&quot;
        title=&quot;Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)&quot;
        src=&quot;/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png&quot;
        srcset=&quot;/static/f0656d499ee525e25ff757b8185f167f/924ad/1_RNmY6abYWA2n2W6EgP3lcA.png 170w,
/static/f0656d499ee525e25ff757b8185f167f/f570f/1_RNmY6abYWA2n2W6EgP3lcA.png 341w,
/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png 530w&quot;
        sizes=&quot;(max-width: 530px) 100vw, 530px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And Germany produces so much renewable energy, it sometimes produces even more than it can use.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 567px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 20.987654320987655%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAECAIAAAABPYjBAAAACXBIWXMAAAsSAAALEgHS3X78AAAA30lEQVQI12PYcebV1M33+zfc7Vx9u2Lh9c377/yZP/vTxIlfuru+r171Hwj+gQCMRgCgCMPFe193nPmw9ui7Gdue9mx6cvjoo5+Bvl+Dg764uXwrLABp/vv3PxL4h2QWw7mLFzdu2zlvxabJCza0TFq0dvOOowcPHt637+ihg4cOHjx69OjevXsPHz4MZBwEc0+fPn327Nljx47du3ePYemiztb6uK7WlO7W1OrSsHWrpp85d+HYyROnzpw5eeo0UPWJEyeAGi5dunTgwIHbt2///Pnz27dvX758+fXrFwCsor9lnxcDKAAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)&quot;
        title=&quot;Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)&quot;
        src=&quot;/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png&quot;
        srcset=&quot;/static/9661ec8ec5964b9e1bfa2b363ac66891/924ad/1_wETYiSDThJ5fQYIVWuw8aA.png 170w,
/static/9661ec8ec5964b9e1bfa2b363ac66891/f570f/1_wETYiSDThJ5fQYIVWuw8aA.png 341w,
/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png 567w&quot;
        sizes=&quot;(max-width: 567px) 100vw, 567px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;3. Virtual and Augmented Reality&lt;/h2&gt;
&lt;p&gt;Computer processors only recently became fast enough to power comfortable and convincing virtual and augmented reality experiences. Companies like Facebook, Google, Apple, and Microsoft are investing billions of dollars to make VR and AR more immersive, comfortable, and affordable.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/1350b5689fa0fbce6dfb550fa4c19d0a/1_6cmd8P-bPYRU1olrJHsvfw.gif&quot; alt=&quot;Toybox demo from Oculus&quot;&gt;&lt;/p&gt;
&lt;p&gt;People sometimes think VR and AR will be used only for gaming, but over time they will be used for all sorts of activities. For example, we’ll use them to manipulate 3-D objects:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.111111111111114%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))&quot;
        title=&quot;Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))&quot;
        src=&quot;/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg&quot;
        srcset=&quot;/static/0afbba4f3da17a3da9c74f36d4c413fd/c2e49/1_q_pqQCTcTETf4G-ARUm00A.jpg 170w,
/static/0afbba4f3da17a3da9c74f36d4c413fd/c2dc0/1_q_pqQCTcTETf4G-ARUm00A.jpg 341w,
/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;To meet with friends and colleagues from around the world:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.25%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))&quot;
        title=&quot;Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))&quot;
        src=&quot;/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg&quot;
        srcset=&quot;/static/88d7e722ff6d193076d4febc8176a940/c2e49/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 170w,
/static/88d7e722ff6d193076d4febc8176a940/c2dc0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 341w,
/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And even for medical applications, like treating phobias or helping rehabilitate paralysis victims:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 442px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 44.11764705882353%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)&quot;
        title=&quot;Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)&quot;
        src=&quot;/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png&quot;
        srcset=&quot;/static/10a331bba9e4617d902cefb39e581824/924ad/1_q_J7Ql2iVfdDYc5t6hM98Q.png 170w,
/static/10a331bba9e4617d902cefb39e581824/f570f/1_q_J7Ql2iVfdDYc5t6hM98Q.png 341w,
/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png 442w&quot;
        sizes=&quot;(max-width: 442px) 100vw, 442px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;VR and AR have been dreamed about by science fiction fans for decades. In the next few years, they’ll finally become a mainstream reality.&lt;/p&gt;
&lt;h2&gt;4. Drones and Flying Cars&lt;/h2&gt;
&lt;blockquote&gt;
&lt;p&gt;“Roads? Where we’re going we don’t need… roads.” — Dr. Emmet Brown&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;GPS started out as a military technology but is now used to hail taxis, get mapping directions, and hunt Pokémon. Likewise, drones started out as a military technology, but are increasingly being used for a wide range of consumer and commercial applications.&lt;/p&gt;
&lt;p&gt;For example, drones are being used to inspect critical infrastructure like bridges and power lines, to survey areas struck by natural disasters, and many other creative uses like fighting animal poaching.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 280px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 86.42857142857143%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)&quot;
        title=&quot;Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)&quot;
        src=&quot;/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png&quot;
        srcset=&quot;/static/a94118042c235b69dba7ef47f6e8ccd3/924ad/1_hLhAdWXECMyNLwrHfad6pA.png 170w,
/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png 280w&quot;
        sizes=&quot;(max-width: 280px) 100vw, 280px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Amazon and Google are building drones to deliver household items.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/3c01e2971f2a14802ded27e094f4306f/1_s1eQciCtoaD_AaovzJouAA.gif&quot; alt=&quot;Amazon delivery drone&quot;&gt;&lt;/p&gt;
&lt;p&gt;The startup &lt;a href=&quot;http://flyzipline.com/product/&quot;&gt;Zipline&lt;/a&gt; uses drones to deliver medical supplies to remote villages that can’t be accessed by roads.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 403px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 78.66004962779157%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)&quot;
        title=&quot;Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)&quot;
        src=&quot;/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png&quot;
        srcset=&quot;/static/6a0a0088057af583180f5eb158a62e93/924ad/1_BDepNtZOTWXNOi5F4Dk3Dg.png 170w,
/static/6a0a0088057af583180f5eb158a62e93/f570f/1_BDepNtZOTWXNOi5F4Dk3Dg.png 341w,
/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png 403w&quot;
        sizes=&quot;(max-width: 403px) 100vw, 403px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;There is also a new wave of startups working on flying cars (including &lt;a href=&quot;http://www.bloomberg.com/news/articles/2016-06-09/welcome-to-larry-page-s-secret-flying-car-factories&quot;&gt;two&lt;/a&gt; funded by the cofounder of Google, Larry Page).&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 42.01388888888889%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))&quot;
        title=&quot;The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))&quot;
        src=&quot;/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png&quot;
        srcset=&quot;/static/0416750c29ed2c774eaf1a7cbe8e13c3/924ad/1_FJyVIp3MI_k7mVM5obpSsA.png 170w,
/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Flying cars use the same advanced technology used in drones but are large enough to carry people. Due to advances in materials, batteries, and software, flying cars will be significantly more affordable and convenient than today’s planes and helicopters.&lt;/p&gt;
&lt;h2&gt;5. Artificial Intelligence&lt;/h2&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 192px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/18eb617fbac070d37985e2d5b3c81aca/5bcd3/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.29166666666667%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1 I2dRn7D8ZZM7nI2IvvMFDw&quot;
        title=&quot;1 I2dRn7D8ZZM7nI2IvvMFDw&quot;
        src=&quot;/static/18eb617fbac070d37985e2d5b3c81aca/5bcd3/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg&quot;
        srcset=&quot;/static/18eb617fbac070d37985e2d5b3c81aca/c2e49/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;‘’It may be a hundred years before a computer beats humans at Go — maybe even longer.” — &lt;a href=&quot;http://www.nytimes.com/1997/07/29/science/to-test-a-powerful-computer-play-an-ancient-game.html?pagewanted=all&quot;&gt;New York Times, 1997&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;“Master of Go Board Game Is Walloped by Google Computer Program” —&lt;a href=&quot;http://www.nytimes.com/2016/03/10/world/asia/google-alphago-lee-se-dol.html&quot;&gt; New York Times, 2016&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Artificial intelligence has made rapid advances in the last decade, due to new algorithms and massive increases in data collection and computing power.&lt;/p&gt;
&lt;p&gt;AI can be applied to almost any field. For example, in photography an AI technique called artistic style transfer transforms photographs into the style of a given painter:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 40.27777777777778%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)&quot;
        title=&quot;[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)&quot;
        src=&quot;/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png&quot;
        srcset=&quot;/static/2515b9fb2936c39f47ae0fa4c4a985ed/924ad/1_aHFJuj-jhnP4zHY1dD7tRA.png 170w,
/static/2515b9fb2936c39f47ae0fa4c4a985ed/f570f/1_aHFJuj-jhnP4zHY1dD7tRA.png 341w,
/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png 432w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Google built an AI system that controls its datacenter power systems, saving hundreds of millions of dollars in energy costs.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 439px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 33.029612756264235%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABFUlEQVQY0z1P26qCUBT0/1+CwA8QrCdRMZI0xUTDx+gDfLC85T2vKKRnjpuah83stWbNmkVZlnU4HE6n0/V6VRTFMAzTNEVRRNG2bYZhBEGQZVmSpOPxuN/vN5vNbrfbbrf3+51SVZVlWZqmNU3jeR5SXddhASnHcej6vv9c4bqu53lhGGZZBlIUxf8wjLEKyx3HQZDz+Xy5XLAfFrfbbVmWz+ezfDHP8+9Lvd/vuq7btu37Hhx+TdMMw1CWJepVVWFn+MXr9YrjOEkSxIGAejweQRAgBl60SUhwQiBFEV/IyLy/Ar5d11FgRBqsIFK8GIui6DdANNhJZAg4jiOVpmme56iCZCtApmkip+JCcuePkGtJ6w+g7WoFFJ2DrwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)&quot;
        title=&quot;Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)&quot;
        src=&quot;/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png&quot;
        srcset=&quot;/static/a32709cc2124ea0694736d54e82621c5/924ad/1_HpTNGOsV1a0PpqjQZNXKEQ.png 170w,
/static/a32709cc2124ea0694736d54e82621c5/f570f/1_HpTNGOsV1a0PpqjQZNXKEQ.png 341w,
/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png 439w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The broad promise of AI is to liberate people from repetitive mental tasks the same way the industrial revolution liberated people from repetitive physical tasks.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“If AI can help humans become better chess players, it stands to reason that it can help us become better pilots, better doctors, better judges, better teachers.” — &lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;Kevin Kelly&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Some people worry that AI will destroy jobs. History has shown that while new technology does indeed eliminate jobs, it also creates new and better jobs to replace them. For example, with advent of the personal computer, the number of typographer jobs dropped, but the increase in graphic designer jobs more than made up for it.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.19444444444444%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)&quot;
        title=&quot;Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)&quot;
        src=&quot;/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png&quot;
        srcset=&quot;/static/0809ccab1e05badc59f9f26a966354ac/924ad/1_c_lt2s5TuSoOfmPb_Rv46w.png 170w,
/static/0809ccab1e05badc59f9f26a966354ac/f570f/1_c_lt2s5TuSoOfmPb_Rv46w.png 341w,
/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;It is much easier to imagine jobs that will go away than new jobs that will be created. Today millions of people work as app developers, ride-sharing drivers, drone operators, and social media marketers— jobs that didn’t exist and would have been difficult to even imagine ten years ago.&lt;/p&gt;
&lt;h2&gt;6. Pocket Supercomputers for Everyone&lt;/h2&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 529px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 37.051039697542535%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAAA90lEQVQY042O3W6DMAyFef+XmfYA024m7Wa9qYoKBJIQ/hpGoAXa8BOcGSZVkzZp/WRFR3bOsR0ACwDGGLizwNb8s8BubP+sM4F9e34KXHfvHveHw8duV9f199j+opusp8yxMkW/4ArnqufXl3cu8lyWSV4UssS2hXs8/BTjDO0Il2Hpxs28LEulKkJIvMIZpTyOKWMkCj3fp5RGlKKIYxEQEoZhFBLf96Q8bWdPM8E54wEJUXh+IEQiyzJJU8Z5mmWYhS8iEpHlOcOYJNFa4yHOPJtP1VTNWTVnFKdStV1vH2DdjGY9DP31dmm7m9YYISsF/7OavwCqwozCGI2I1AAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1 5tt6F Cxnf5n7J5v6Lx0Ug&quot;
        title=&quot;1 5tt6F Cxnf5n7J5v6Lx0Ug&quot;
        src=&quot;/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png&quot;
        srcset=&quot;/static/05b15a9d75ac41ca6699faf70f2e3a00/924ad/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 170w,
/static/05b15a9d75ac41ca6699faf70f2e3a00/f570f/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 341w,
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        sizes=&quot;(max-width: 529px) 100vw, 529px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;By 2020, 80% of adults on earth &lt;a href=&quot;&quot;&gt;will have&lt;/a&gt; an internet-connected smartphone. An iPhone 6 has about 2 billion transistors, roughly 625 times more transistors than a 1995 Intel Pentium computer. Today’s smartphones are what used to be considered supercomputers.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 100.92592592592592%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))&quot;
        title=&quot;Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))&quot;
        src=&quot;/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png&quot;
        srcset=&quot;/static/e0f88db9f4e1e8e291fb0383c2d37dbc/924ad/1_vovBLv3ePKce3dPrU3q9Lg.png 170w,
/static/e0f88db9f4e1e8e291fb0383c2d37dbc/f570f/1_vovBLv3ePKce3dPrU3q9Lg.png 341w,
/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Internet-connected smartphones give ordinary people abilities that, just a short time ago, were only available to an elite few:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“Right now, a Masai warrior on a mobile phone in the middle of Kenya has better mobile communications than the president did 25 years ago. If he’s on a smart phone using Google, he has access to more information than the U.S. president did just 15 years ago.” — &lt;a href=&quot;http://edition.cnn.com/2012/05/06/opinion/diamandis-abundance-innovation/&quot;&gt;Peter Diamandis&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;h2&gt;7. Cryptocurrencies and Blockchains&lt;/h2&gt;
&lt;blockquote&gt;
&lt;p&gt;“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.” — &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Protocols are the plumbing of the internet. Most of the protocols we use today were developed decades ago by academia and government. Since then, protocol development mostly stopped as energy shifted to developing proprietary systems like social networks and messaging apps.&lt;/p&gt;
&lt;p&gt;Cryptocurrency and blockchain technologies are &lt;a href=&quot;http://avc.com/2016/07/the-golden-age-of-open-protocols/&quot;&gt;changing this&lt;/a&gt; by providing a new business model for internet protocols. This year alone, &lt;a href=&quot;https://medium.com/the-coinbase-blog/app-coins-and-the-dawn-of-the-decentralized-business-model-8b8c951e734f#.2atvp1cxd&quot;&gt;hundreds of millions of dollars&lt;/a&gt; were raised for a broad range of innovative blockchain-based protocols.&lt;/p&gt;
&lt;p&gt;Protocols based on blockchains also have capabilities that previous protocols didn’t. For example, &lt;a href=&quot;https://en.wikipedia.org/wiki/Ethereum&quot;&gt;Ethereum&lt;/a&gt; is a new blockchain-based protocol that can be used to create smart contracts and trusted databases that are immune to corruption and censorship.&lt;/p&gt;
&lt;h2&gt;8. High-Quality Online Education&lt;/h2&gt;
&lt;p&gt;While college tuition &lt;a href=&quot;http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html&quot;&gt;skyrockets&lt;/a&gt;, anyone with a smartphone can study almost any topic online, accessing educational content that is mostly free and increasingly high-quality.&lt;/p&gt;
&lt;p&gt;Encyclopedia Britannica &lt;a href=&quot;http://www.csmonitor.com/Business/Latest-News-Wires/2012/0314/Encyclopaedia-Britannica-After-244-years-in-print-only-digital-copies-sold&quot;&gt;used to cost $1,400&lt;/a&gt;. Now anyone with a smartphone can instantly access Wikipedia. You used to have to go to school or buy programming books to learn computer programming. Now you can learn from a community of over 40 million programmers at &lt;a href=&quot;http://stackoverflow.com&quot;&gt;Stack Overflow&lt;/a&gt;. YouTube has millions of hours of free tutorials and lectures, many of which are produced by top professors and universities.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9405b4c60e322f888759a2953fd92459/9fa53/1_NZTqnqYbOPv6sf7gCVLz8g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 17.270194986072422%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAIAAAAcOLh5AAAACXBIWXMAAAsSAAALEgHS3X78AAAAn0lEQVQI11WMywqCQBiFfVIJ7GFSS0gqpL1DBkG01WhRTxERMZPM7zTgZZEzNU2p1KKPc4GzOMbEHy+jaJskcZwMbTsMEc0F5SXOCsJKyO+0qCGvX1q//9FaG/PAv2B8PJ0RWvRM03MdzjnGmBByTVMAyBhrBdmNtQDQrllVVYbnDXb7w2q9cdyRZfWD2bR5FUI8Ox5fpJStfymbSSn1AYQXmXaw3HgjAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&amp;amp;view=0&amp;amp;flow=list)&quot;
        title=&quot;UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&amp;amp;view=0&amp;amp;flow=list)&quot;
        src=&quot;/static/9405b4c60e322f888759a2953fd92459/94a55/1_NZTqnqYbOPv6sf7gCVLz8g.png&quot;
        srcset=&quot;/static/9405b4c60e322f888759a2953fd92459/924ad/1_NZTqnqYbOPv6sf7gCVLz8g.png 170w,
/static/9405b4c60e322f888759a2953fd92459/f570f/1_NZTqnqYbOPv6sf7gCVLz8g.png 341w,
/static/9405b4c60e322f888759a2953fd92459/94a55/1_NZTqnqYbOPv6sf7gCVLz8g.png 681w,
/static/9405b4c60e322f888759a2953fd92459/9fa53/1_NZTqnqYbOPv6sf7gCVLz8g.png 718w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&amp;amp;view=0&amp;amp;flow=list)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The quality of online education is getting better all the time. For the last 15 years, &lt;a href=&quot;http://ocw.mit.edu/index.htm&quot;&gt;MIT has been recording lectures&lt;/a&gt; and compiling materials that cover over 2000 courses.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“The idea is simple: to publish all of our course materials online and make them widely available to everyone.” — Dick K.P. Yue, Professor, MIT School of Engineering&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As perhaps the greatest research university in the world, MIT has always been ahead of the trends. Over the next decade, expect many other schools to follow MIT’s lead.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 529px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 44.234404536862%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)&quot;
        title=&quot;Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)&quot;
        src=&quot;/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png&quot;
        srcset=&quot;/static/9b407de166883dc7d0827adc1d32f609/924ad/1_W-i0QTotXS-K4MU9qbpylQ.png 170w,
/static/9b407de166883dc7d0827adc1d32f609/f570f/1_W-i0QTotXS-K4MU9qbpylQ.png 341w,
/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png 529w&quot;
        sizes=&quot;(max-width: 529px) 100vw, 529px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;9. Better Food through Science&lt;/h2&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 149.53703703703704%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)&quot;
        title=&quot;Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)&quot;
        src=&quot;/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png&quot;
        srcset=&quot;/static/9a4613065b3002711b5234dfc25907a6/924ad/1_O5VQyJRhI2-sHYzZPrHSBQ.png 170w,
/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png 216w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Earth is running out of farmable land and fresh water. This is partly because our food production systems are incredibly inefficient. It takes an astounding 1799 gallons of water to produce 1 pound of beef.&lt;/p&gt;
&lt;p&gt;Fortunately, a variety of new technologies are being developed to improve our food system.&lt;/p&gt;
&lt;p&gt;For example, entrepreneurs are developing new food products that are tasty and nutritious substitutes for traditional foods but far more environmentally friendly. The startup &lt;a href=&quot;http://www.impossiblefoods.com/&quot;&gt;Impossible Foods&lt;/a&gt; invented meat products that look and taste like the real thing but are actually made of plants.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.75925925925925%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))&quot;
        title=&quot;Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))&quot;
        src=&quot;/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png&quot;
        srcset=&quot;/static/1c41f64865a3586233d3edc29a00e879/924ad/1_bUV4b3Xp0mvvdA8dp1hMtA.png 170w,
/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Their burger &lt;a href=&quot;http://www.impossiblefoods.com/our-burger&quot;&gt;uses&lt;/a&gt; 95% less land, 74% less water, and produces 87% less greenhouse gas emissions than traditional burgers. Other startups are creating plant-based replacements for &lt;a href=&quot;http://ripplefoods.com/&quot;&gt;milk&lt;/a&gt;, &lt;a href=&quot;https://www.hamptoncreek.com/&quot;&gt;eggs&lt;/a&gt;, and other common foods. &lt;a href=&quot;http://soylent.com/&quot;&gt;Soylent&lt;/a&gt; is a healthy, inexpensive meal replacement that uses advanced engineered &lt;a href=&quot;http://terravia.com/Terravia_Sustainability.pdf&quot;&gt;ingredients&lt;/a&gt; that are much friendlier to the environment than traditional ingredients.&lt;/p&gt;
&lt;p&gt;Some of these products are developed using genetic modification, a powerful scientific technique that has been widely mischaracterized as dangerous. According to a &lt;a href=&quot;https://www.geneticliteracyproject.org/2015/01/29/pewaaas-study-scientific-consensus-on-gmo-safety-stronger-than-for-global-warming/&quot;&gt;study&lt;/a&gt; by the Pew Organization, 88% of scientists think genetically modified foods are safe.&lt;/p&gt;
&lt;p&gt;Another exciting development in food production is automated indoor farming. Due to advances in solar energy, sensors, lighting, robotics, and artificial intelligence, indoor farms have become viable alternatives to traditional outdoor farms.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.055555555555564%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))&quot;
        title=&quot;Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))&quot;
        src=&quot;/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png&quot;
        srcset=&quot;/static/c78fe388501ae55323a669e8a24e6d74/924ad/1_0Jyjlgj1KU2yfBqo7quCLQ.png 170w,
/static/c78fe388501ae55323a669e8a24e6d74/f570f/1_0Jyjlgj1KU2yfBqo7quCLQ.png 341w,
/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Compared to traditional farms, automated indoor farms use roughly 10 times less water and land. Crops are harvested many more times per year, there is no dependency on weather, and no need to use pesticides.&lt;/p&gt;
&lt;h2&gt;10. Computerized Medicine&lt;/h2&gt;
&lt;p&gt;Until recently, computers have only been at the periphery of medicine, used primarily for research and record keeping. Today, the combination of computer science and medicine is leading to a variety of breakthroughs.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.55555555555556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1 IjKrWZdlbB2ksis Dmia5A&quot;
        title=&quot;1 IjKrWZdlbB2ksis Dmia5A&quot;
        src=&quot;/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png&quot;
        srcset=&quot;/static/11092e974a0ba17d284bbe0de86d63c7/924ad/1_IjKrWZdlbB2ksis_Dmia5A.png 170w,
/static/11092e974a0ba17d284bbe0de86d63c7/f570f/1_IjKrWZdlbB2ksis_Dmia5A.png 341w,
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;For example, just fifteen years ago, it cost $3B to sequence a human genome. Today, the cost is about a thousand dollars and continues to drop. Genetic sequencing will soon be a routine part of medicine.&lt;/p&gt;
&lt;p&gt;Genetic sequencing generates massive amounts of data that can be analyzed using powerful data analysis software. One application is analyzing &lt;a href=&quot;http://a16z.com/2016/06/09/freenome/&quot;&gt;blood samples&lt;/a&gt; for early detection of cancer. Further genetic analysis can help determine the &lt;a href=&quot;http://www.businessinsider.com/super-cheap-genome-sequencing-by-2020-2014-10&quot;&gt;best course&lt;/a&gt; of treatment.&lt;/p&gt;
&lt;p&gt;Another application of computers to medicine is in prosthetic limbs. Here a young girl is using prosthetic hands she controls using her upper-arm muscles:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/50c3c36ca4ab13bede47dbec74e587c4/1_jVH1wxchOJ5qJzT46s907A.gif&quot; alt=&quot;Source: [Open Bionics](https://twitter.com/openbionics/status/755691739147538432)&quot;&gt;&lt;/p&gt;
&lt;p&gt;Soon we’ll have the technology to control prothetic limbs with just our thoughts using &lt;a href=&quot;http://news.uci.edu/feature/to-walk-again/&quot;&gt;brain-to-machine interfaces&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Computers are also becoming increasingly effective at diagnosing diseases. An artificial intelligence system recently diagnosed a rare disease that human doctors failed to diagnose by finding hidden patterns in 20 million cancer records.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 26.944444444444443%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAAzElEQVQY041Oy46DMAzk/z+r2gM0gbKEFiHS5um4oUJwJ5S67A/sHMae0cjjrCgKpZTW5lLXnDOSVVmdz6wVLedciKb5bRivqrK8toLz8nq7nU4/eZ4/Y8wYY33fd103SKm1ds4Nw0DHxhg9+HF8GW2sdQFgmiaAEGOUUpI1L0tWC0FtVELpfd9TSu8Da0rbtqWDSdJY13U7mOTfkt1D1Or+UNpa673HgMTOA3gPIQRAegcR4TAwgHcuIFLi+7Yzljyj1bzM1ExX93/jA2AaDy3dq/c4AAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)&quot;
        title=&quot;Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)&quot;
        src=&quot;/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png&quot;
        srcset=&quot;/static/1d53d8a4853677abbec06825ca25a55c/924ad/1_OEgWlj9sp2mCV0PrT9yp8A.png 170w,
/static/1d53d8a4853677abbec06825ca25a55c/f570f/1_OEgWlj9sp2mCV0PrT9yp8A.png 341w,
/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;11. A New Space Age&lt;/h2&gt;
&lt;p&gt;Since the beginning of the space age in the 1950s, the vast majority of space funding has come from governments. But that funding has been in decline: for example, NASA’s budget &lt;a href=&quot;https://en.wikipedia.org/wiki/Budget_of_NASA&quot;&gt;dropped&lt;/a&gt; from about 4.5% of the federal budget in the 1960s to about 0.5% of the federal budget today.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 351px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 75.78347578347578%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)&quot;
        title=&quot;Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)&quot;
        src=&quot;/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png&quot;
        srcset=&quot;/static/dc1015e8f9aafcf2420d7c943cf5a7fd/924ad/1_paniidrx59zPQjq_q6rUHA.png 170w,
/static/dc1015e8f9aafcf2420d7c943cf5a7fd/f570f/1_paniidrx59zPQjq_q6rUHA.png 341w,
/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png 351w&quot;
        sizes=&quot;(max-width: 351px) 100vw, 351px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The good news is that private space companies have started filling the void. These companies provide a wide range of products and services, including rocket launches, scientific research, communications and imaging satellites, and emerging speculative business models like asteroid mining.&lt;/p&gt;
&lt;p&gt;The most famous private space company is Elon Musk’s SpaceX, which successfully sent rockets into space that can return home to be reused.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/48e0750d49b2935902966ac3547d7769/1_5iiaQsTBu1tQ_hTy8fupXg.gif&quot; alt=&quot;SpaceX Falcon 9 [landing](https://www.youtube.com/watch?v=_ZXu_rYF51M)&quot;&gt;&lt;/p&gt;
&lt;p&gt;Perhaps the most intriguing private space company is &lt;a href=&quot;http://www.planetaryresources.com/&quot;&gt;Planetary Resources&lt;/a&gt;, which is trying to pioneer a new industry: mining minerals from asteroids.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 407px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 71.4987714987715%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)&quot;
        title=&quot;[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)&quot;
        src=&quot;/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png&quot;
        srcset=&quot;/static/262cc9197f91446c777da68102288c42/924ad/1_6zvea6z14lJ6inZQsVBsBA.png 170w,
/static/262cc9197f91446c777da68102288c42/f570f/1_6zvea6z14lJ6inZQsVBsBA.png 341w,
/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png 407w&quot;
        sizes=&quot;(max-width: 407px) 100vw, 407px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If successful, asteroid mining could lead to a new gold rush in outer space. Like previous gold rushes, this could lead to speculative excess, but also dramatically increased funding for new technologies and infrastructure.&lt;/p&gt;
&lt;hr&gt;
&lt;p&gt;These are just a few of the amazing technologies we’ll see developed in the coming decades. 2016 is just the beginning of a new age of wonders. As futurist Kevin Kelly &lt;a href=&quot;https://www.linkedin.com/pulse/internet-still-beginning-its-kevin-kelly&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;If we could climb into a time machine, journey 30 years into the future, and from that vantage look back to today, we’d realize that most of the greatest products running the lives of citizens in 2050 were not invented until after 2016. People in the future will look at their holodecks and wearable virtual reality contact lenses and downloadable avatars and AI interfaces and say, “Oh, you didn’t really have the internet” — or whatever they’ll call it — “back then.”&lt;/p&gt;
&lt;p&gt;So, the truth: Right now, today, in 2016 is the best time to start up. There has never been a better day in the whole history of the world to invent something. There has never been a better time with more opportunities, more openings, lower barriers, higher benefit/ risk ratios, better returns, greater upside than now. Right now, this minute. This is the moment that folks in the future will look back at and say, “Oh, to have been alive and well back then!”&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[“Ether is a necessary element — a fuel — for operating the distributed application platform…]]></title>
            <description><![CDATA[“Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by the…]]></description>
            <link>https://cdixon.org/2016/08/07/source-ethereum-org</link>
            <guid isPermaLink="false">https://cdixon.org/2016/08/07/source-ethereum-org</guid>
            <pubDate>Sun, 07 Aug 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. To put it another way, ether is the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources).&lt;/p&gt;
&lt;p&gt;Ether is to be treated as “crypto-fuel”, a token whose purpose is to pay for computation, and is not intended to be used as or considered a currency, asset, share or anything else.”&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Source: &lt;a href=&quot;https://ethereum.org/ether&quot;&gt;ethereum.org&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the…]]></title>
            <description><![CDATA[“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the next big thing — to listen for the…]]></description>
            <link>https://cdixon.org/2016/08/07/steve-jobs-supposedly-said-returning-to-apple-that-his-plan-was-to-stay-alive-and-grab-onto-the</link>
            <guid isPermaLink="false">https://cdixon.org/2016/08/07/steve-jobs-supposedly-said-returning-to-apple-that-his-plan-was-to-stay-alive-and-grab-onto-the</guid>
            <pubDate>Sun, 07 Aug 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the next big thing — to listen for the footsteps. He tried video, and a few other things, but he got there in the end. But he might not have.”&lt;/p&gt;
&lt;p&gt;From: &lt;a href=&quot;http://ben-evans.com/benedictevans/2016/5/2/inevitability-in-technology&quot;&gt;Inevitability in technology&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[“If you asked people in 1989 what they needed to make their life better, it was unlikely that they…]]></title>
            <description><![CDATA[“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network…]]></description>
            <link>https://cdixon.org/2016/07/30/if-you-asked-people-in-1989-what-they-needed-to-make-their-life-better-it-was-unlikely-that-they</link>
            <guid isPermaLink="false">https://cdixon.org/2016/07/30/if-you-asked-people-in-1989-what-they-needed-to-make-their-life-better-it-was-unlikely-that-they</guid>
            <pubDate>Sat, 30 Jul 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.”&lt;/p&gt;
&lt;p&gt;— &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer
&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[“The typical path of how people respond to life-changing inventions]]></title>
            <description><![CDATA[I’ve never heard of it. I’ve heard of it but don’t understand it. I understand it, but I don’t see how it’s useful. I see how it could be…]]></description>
            <link>https://cdixon.org/2016/05/11/the-typical-path-of-how-people-respond-to-life-changing-inventions</link>
            <guid isPermaLink="false">https://cdixon.org/2016/05/11/the-typical-path-of-how-people-respond-to-life-changing-inventions</guid>
            <pubDate>Wed, 11 May 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;ol&gt;
&lt;li&gt;I’ve never heard of it.&lt;/li&gt;
&lt;li&gt;I’ve heard of it but don’t understand it.&lt;/li&gt;
&lt;li&gt;I understand it, but I don’t see how it’s useful.&lt;/li&gt;
&lt;li&gt;I see how it could be fun for rich people, but not me.&lt;/li&gt;
&lt;li&gt;I use it, but it’s just a toy.&lt;/li&gt;
&lt;li&gt;It’s becoming more useful for me.&lt;/li&gt;
&lt;li&gt;I use it all the time.&lt;/li&gt;
&lt;li&gt;I could not imagine life without it.&lt;/li&gt;
&lt;li&gt;Seriously, people lived without it?&lt;/li&gt;
&lt;li&gt;It’s too powerful and needs to be regulated”&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;em&gt;Credits:&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;#1–#9 by &lt;a href=&quot;http://time.com/author/morgan-housel-the-motley-fool/&quot;&gt;Morgan Housel&lt;/a&gt;, &lt;a href=&quot;http://time.com/money/3940273/innovation-isnt-dead/&quot;&gt;Time&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;#10 by &lt;a href=&quot;https://twitter.com/peterpeirce/status/616664561068994560?lang=en&quot;&gt;@peterpeirce&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Comma.ai]]></title>
            <description><![CDATA[I wrote a blog post last month highlighting some of the exciting trends in the computing industry. One trend I discussed is the rapid…]]></description>
            <link>https://cdixon.org/2016/04/02/comma-ai</link>
            <guid isPermaLink="false">https://cdixon.org/2016/04/02/comma-ai</guid>
            <pubDate>Sat, 02 Apr 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I wrote a blog post last month highlighting some of the exciting trends in the computing industry. One trend I discussed is the rapid progress in a branch of artificial intelligence called deep learning. Big tech companies are making significant investments in deep learning, but there are also opportunities for startups:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Many of the papers, &lt;a href=&quot;https://code.google.com/archive/p/word2vec/&quot;&gt;data&lt;/a&gt; &lt;a href=&quot;http://image-net.org/download-images&quot;&gt;sets&lt;/a&gt;, and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;software&lt;/a&gt; &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;tools&lt;/a&gt; related to deep learning have been open sourced. This has had a democratizing effect, allowing individuals and small organizations to build powerful applications. WhatsApp was able to build a global messaging system that &lt;a href=&quot;http://www.wired.com/2015/09/whatsapp-serves-900-million-users-50-engineers/&quot;&gt;served 900M users with just 50 engineers&lt;/a&gt;, compared to the thousands of engineers that were needed for prior generations of messaging systems. This “&lt;a href=&quot;https://twitter.com/cdixon/status/473221599189954562&quot;&gt;WhatsApp effect&lt;/a&gt;” is now happening in AI. Software tools like &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;Theano&lt;/a&gt; and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;TensorFlow&lt;/a&gt;, combined with cloud data centers for training, and inexpensive GPUs for deployment, allow small teams of engineers to build state-of-the-art AI systems.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;You might have seen &lt;a href=&quot;http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/&quot;&gt;recent press&lt;/a&gt; coverage of a software developer named George Hotz who built his own self-driving car.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/3e4557898d50fca6b58438ec68613e09/8f8c6/1U00Hr0kDEBcGUf87W4iPcQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 53.888888888888886%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1U00Hr0kDEBcGUf87W4iPcQ&quot;
        title=&quot;1U00Hr0kDEBcGUf87W4iPcQ&quot;
        src=&quot;/static/3e4557898d50fca6b58438ec68613e09/8f8c6/1U00Hr0kDEBcGUf87W4iPcQ.png&quot;
        srcset=&quot;/static/3e4557898d50fca6b58438ec68613e09/924ad/1U00Hr0kDEBcGUf87W4iPcQ.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;I first met George a few months ago, and, like a lot of people who had seen the press coverage, I was skeptical. How could someone build such an advanced system all by himself? After spending time with George, my skepticism turned into enthusiasm. I tested his car, and, along with some of my colleagues and friends with AI expertise, dug into the details of the deep learning system he’d developed.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/aeeb093ae3647c097d49dfcdb2a4fab6/1xJP7l8qL4IbNyJnwHYNwdA.gif&quot; alt=&quot;Comma’s self-driving car&quot;&gt;&lt;/p&gt;
&lt;p&gt;I came away convinced that George’s system is a textbook example of the “WhatsApp effect” happening to AI.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 416px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/b6e0f8789aee57b10c68f840d630159b/59a95/1d9qMneOOvDP2WHCxgakQkw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.25%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;George with test car #1&quot;
        title=&quot;George with test car #1&quot;
        src=&quot;/static/b6e0f8789aee57b10c68f840d630159b/59a95/1d9qMneOOvDP2WHCxgakQkw.png&quot;
        srcset=&quot;/static/b6e0f8789aee57b10c68f840d630159b/924ad/1d9qMneOOvDP2WHCxgakQkw.png 170w,
/static/b6e0f8789aee57b10c68f840d630159b/f570f/1d9qMneOOvDP2WHCxgakQkw.png 341w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;George with test car #1&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;George is certainly brilliant (he’s a &lt;a href=&quot;https://en.wikipedia.org/wiki/George_Hotz&quot;&gt;famous hacker&lt;/a&gt; for a reason), and he’s no longer alone: he’s now working with a small team of machine learning experts. But he’s also riding a wave of exponentially improving hardware, software, and, most importantly, data. The more his system gets used, the more data it collects, and the smarter it becomes.&lt;/p&gt;
&lt;p&gt;Today we are announcing that &lt;a href=&quot;http://a16z.com/&quot;&gt;a16z&lt;/a&gt; is leading a $3.1M investment in George’s company, &lt;a href=&quot;http://comma.ai/&quot;&gt;Comma.ai&lt;/a&gt;. This investment will help them continue to build their team (they’re &lt;a href=&quot;http://comma.ai/hiring.html&quot;&gt;hiring&lt;/a&gt;), and bring their technology to market. Expect more announcements from Comma in the next few months. We are very excited to support George and his team on this ambitious project.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The Internet Economy]]></title>
            <description><![CDATA[We are living in an era of bundling. The big five consumer tech companies — Google, Apple, Facebook, Amazon, and Microsoft — have moved far…]]></description>
            <link>https://cdixon.org/2016/03/13/the-internet-economy</link>
            <guid isPermaLink="false">https://cdixon.org/2016/03/13/the-internet-economy</guid>
            <pubDate>Sun, 13 Mar 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;We are living in an era of bundling. The big five consumer tech companies — Google, Apple, Facebook, Amazon, and Microsoft — have moved far beyond their original product lines into all sorts of hardware, software, and services that overlap and compete with one another. But their revenues and profits still depend heavily on external technologies that are outside of their control. One way to visualize these external dependencies is to consider the path of a typical internet session, from the user to some revenue-generating action, and then (in some cases) back again to the user:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    rel=&quot;noopener&quot;
  &gt;
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  &gt;&lt;/span&gt;
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        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1bUnzLePRb7E25uoUEMYQgA&quot;
        title=&quot;1bUnzLePRb7E25uoUEMYQgA&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;When evaluating an internet company’s strategic position (the defensibility of its profit &lt;a href=&quot;http://www.investopedia.com/terms/e/economicmoat.asp&quot;&gt;moat&lt;/a&gt;), you need to consider: 1) how the company generates revenue and profits, 2) the loop in its entirety, not just the layers in which the company has products.&lt;/p&gt;
&lt;p&gt;For example, it might seem counterintuitive that Amazon is a &lt;a href=&quot;/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core/&quot;&gt;major threat&lt;/a&gt; to Google’s core search business. But you can see this by following the money through the loop: a &lt;a href=&quot;http://www.wordstream.com/articles/google-earnings&quot;&gt;significant portion&lt;/a&gt; of Google’s revenue comes from search queries for things that can be bought on Amazon, and the buying experience on Amazon (from initial purchasing intent to consumption/unboxing) is significantly better than the buying experience on most non-Amazon e-commerce sites you find via Google searches. After a while, shoppers learn to skip Google and go straight to Amazon.&lt;/p&gt;
&lt;p&gt;Think of the internet economic loop as a model train track. Positions in front of you can redirect traffic around you. Positions after you can build new tracks that bypass you. New technologies come along (which often look &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toy-like&lt;/a&gt; and unthreatening at first) that create entirely new tracks that render the previous tracks obsolete.&lt;/p&gt;
&lt;p&gt;There are interesting developments happening at each layer of the loop (and there are many smaller, offshoot loops not depicted in the chart above), but at any given time certain layers are industry flash points. The most prominent recent battle was between mobile devices and operating systems. That battle seems to be over, with Android software and iOS devices having won. Possible future flash points include:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The automation of logistics.&lt;/strong&gt; Today’s logistics network is a patchwork of ships, planes, trucks, warehouses, and people. Tomorrow’s network will include significantly more automation, from robotic warehouses to autonomous cars, trucks, drones, and &lt;a href=&quot;http://fortune.com/2016/04/06/dispatch-carry-delivery-robot/&quot;&gt;delivery bots&lt;/a&gt;. This transition will happen in stages, depending on the economics of specific goods and customers, along with geographic and regulatory factors. Amazon of course has a huge advantage in logistics. Google has tried repeatedly to get into logistics with &lt;a href=&quot;http://recode.net/2015/08/19/google-express-plans-to-shut-down-its-two-delivery-hubs/&quot;&gt;little success&lt;/a&gt;. On-demand ride-sharing and delivery startups could play an interesting role here. The logistics layer is critical for e-commerce, which in turn is critical for monetizing search. Amazon’s dominance in logistics gives it a very strong strategic moat as e-commerce continues to take market share from traditional retail.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Web vs apps&lt;/strong&gt;. The mobile web &lt;a href=&quot;/2014/04/07/the-decline-of-the-mobile-web/&quot;&gt;is&lt;/a&gt; &lt;a href=&quot;http://daringfireball.net/2014/04/rethinking_what_we_mean_by_mobile_web&quot;&gt;arguably&lt;/a&gt; in decline: users are spending more time on mobile devices, and more time in apps instead of web browsers. Apple has joined the app side of this battle (e.g. allowing ad blockers in Safari, encouraging app install &lt;a href=&quot;https://developer.apple.com/library/ios/documentation/AppleApplications/Reference/SafariWebContent/PromotingAppswithAppBanners/PromotingAppswithAppBanners.html&quot;&gt;smart banners&lt;/a&gt; above websites). Facebook has also taken the app side (e.g. encouraging publishers to use &lt;a href=&quot;https://instantarticles.fb.com/&quot;&gt;Instant Articles&lt;/a&gt; instead of web views). Google of course needs a vibrant web for its search engine to remain useful, so has joined the web side of the battle (e.g. &lt;a href=&quot;http://techcrunch.com/2015/09/01/death-to-app-install-interstitials/&quot;&gt;punishing websites&lt;/a&gt; that have interstitial app ads, developing &lt;a href=&quot;https://www.ampproject.org/&quot;&gt;technologies&lt;/a&gt; that reduce website loading times). The realistic danger isn’t that the web disappears, but that it gets marginalized, and that the bulk of monetizable internet activities happen in apps or other interfaces like voice or messaging bots. This shift could have a significant effect on web publishers who rely on older business models like non-native ads, and could make it harder for small startups to grow beyond niche use cases.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Video: from TV to mobile devices.&lt;/strong&gt; Internet companies are betting that video consumption will continue to shift from TV to mobile devices. The hope is that this will not only create compelling user experiences, but also unlock access to the tens of billions of ad dollars that are currently spent on TV.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“I think video is a mega trend, almost as big as mobile.” — &lt;a href=&quot;https://twitter.com/cdixon/status/706198805922902018&quot;&gt;Mark Zuckerberg&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Last decade, the internet won the market for ads that harvest purchasing intent (ads that used to appear in newspapers and yellow pages), with most of the winnings going to Google. The question for the next decade is who will win the market for ads that generate purchasing intent (so far the winner is Facebook, followed by Google). Most likely this will depend on who controls the user flow to video advertising. Today, the biggest video platforms are Facebook and YouTube, but expect video to get embedded into almost every internet service, similar to how the internet transitioned from text-heavy to image-heavy services last decade.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Voice: baking search into the OS.&lt;/strong&gt; Voice bots like Siri, Google Now, and Alexa embed search-like capabilities directly into the operating system. Today, the quality of voice interfaces isn’t good enough to replace visual computing interfaces for most activities. However, artificial intelligence is &lt;a href=&quot;https://medium.com/software-is-eating-the-world/what-s-next-in-computing-e54b870b80cc#.kyn1qnbvj&quot;&gt;improving&lt;/a&gt; rapidly. Voice bots should be be able to handle much more nuanced and interactive conversations in the near future.&lt;/p&gt;
&lt;p&gt;Amazon’s &lt;a href=&quot;https://developer.amazon.com/public/solutions/alexa/alexa-voice-service&quot;&gt;vision&lt;/a&gt; here is the most ambitious: to embed voice services in every possible device, thereby reducing the importance of the device, OS, and application layers (it’s no coincidence that those are also the layers in which Amazon is the weakest). But all the big tech companies are investing heavily in voice and AI. As Google CEO Sundar Pichai recently &lt;a href=&quot;https://googleblog.blogspot.com/2016/04/this-years-founders-letter.html&quot;&gt;said&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The next big step will be for the very concept of the “device” to fade away. Over time, the computer itself — whatever its form factor — will be an intelligent assistant helping you through your day. We will move from mobile first to an AI first world.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This would mean that AI interfaces — which in most cases will mean voice interfaces — could become the master routers of the internet economic loop, rendering many of the other layers interchangeable or irrelevant. Voice is mostly a novelty today, but in technology the &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;next big thing&lt;/a&gt; often starts out looking that way.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[What’s Next in Computing?]]></title>
            <description><![CDATA[The computing industry progresses in two mostly independent cycles: financial and product cycles. There has been a lot of handwringing…]]></description>
            <link>https://cdixon.org/2016/02/21/what-s-next-in-computing</link>
            <guid isPermaLink="false">https://cdixon.org/2016/02/21/what-s-next-in-computing</guid>
            <pubDate>Sun, 21 Feb 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The computing industry progresses in two mostly independent cycles: financial and product cycles. There has been a lot of handwringing lately about where we are in the financial cycle. Financial markets get a lot of attention. They tend to fluctuate unpredictably and sometimes wildly. The product cycle by comparison gets relatively little attention, even though it is what actually drives the computing industry forward. We can try to understand and predict the product cycle by studying the past and extrapolating into the future.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 470px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 35.95744680851064%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;New computing eras have occurred every 10–15 years&quot;
        title=&quot;New computing eras have occurred every 10–15 years&quot;
        src=&quot;/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png&quot;
        srcset=&quot;/static/cc45282778cf70cf803a653453e04996/924ad/1_Gzmn-yCmeOGEVPrrq9esMA.png 170w,
/static/cc45282778cf70cf803a653453e04996/f570f/1_Gzmn-yCmeOGEVPrrq9esMA.png 341w,
/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png 470w&quot;
        sizes=&quot;(max-width: 470px) 100vw, 470px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;New computing eras have occurred every 10–15 years&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Tech product cycles are mutually reinforcing interactions between platforms and applications. New platforms enable new applications, which in turn make the new platforms more valuable, creating a positive feedback loop. Smaller, offshoot tech cycles happen all the time, but every once in a while — historically, about every 10 to 15 years — major new cycles begin that completely reshape the computing landscape.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2204db0d3cfd69ab9733517942f7fae5/6f6e3/1_oOZjdUvjYRlrFtYUKLIMGg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.661991584852736%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAABT0lEQVQoz42Sy26DMBBF+f8viPoFXWbZRfeJqkTpolFeiqhSm2AeBgzEb6cX0UpRpUrMagZ875xriO7TKoTwZ+ScRxOVfd8/6p1zeDJJ7L3H0dEFPZRSSq31JLExBqeVUhCggRH0GCMMQoiu6/4DxjlrLRpYjBQj/7B5JBnKeZhJeUP1/e1nlTHWOfNbGKHxxjvrtHnAhqE2FibjiG3O+a6ps4T4MJBba8Ax3LOuldEgigCcUNqIVlZ5Fq8Lzt83m/VqURQMFpeYvi+3Az9Calc1+nA6vq5ejBsiRFgFTkBLpZuGHPe72expPn8mXzFenwn9OMdSd71SVXM7xeXibUk+L4MdxMiA20M8YBRlJURbNyJlecoyloOjKkuepCy5plmel7ysa4EA4R4QM4IGeiR8+JMCvNq2G78Qr2qaJIRQlhXJlV0I3e4Ou/2R0us39Rt7kgL/UxwAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Financial and product cycles evolve mostly independently&quot;
        title=&quot;Financial and product cycles evolve mostly independently&quot;
        src=&quot;/static/2204db0d3cfd69ab9733517942f7fae5/94a55/1_oOZjdUvjYRlrFtYUKLIMGg.png&quot;
        srcset=&quot;/static/2204db0d3cfd69ab9733517942f7fae5/924ad/1_oOZjdUvjYRlrFtYUKLIMGg.png 170w,
/static/2204db0d3cfd69ab9733517942f7fae5/f570f/1_oOZjdUvjYRlrFtYUKLIMGg.png 341w,
/static/2204db0d3cfd69ab9733517942f7fae5/94a55/1_oOZjdUvjYRlrFtYUKLIMGg.png 681w,
/static/2204db0d3cfd69ab9733517942f7fae5/6f6e3/1_oOZjdUvjYRlrFtYUKLIMGg.png 713w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Financial and product cycles evolve mostly independently&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The PC enabled entrepreneurs to create word processors, spreadsheets, and many other desktop applications. The internet enabled search engines, e-commerce, e-mail and messaging, social networking, SaaS business applications, and many other services. Smartphones enabled mobile messaging, mobile social networking, and on-demand services like ride sharing. Today, we are in the middle of the mobile era. It is likely that many more mobile innovations are still to come.&lt;/p&gt;
&lt;p&gt;Each product era can be divided into two phases: 1) &lt;em&gt;the gestation phase&lt;/em&gt;, when the new platform is first introduced but is expensive, incomplete, and/or difficult to use, 2) &lt;em&gt;the growth phase&lt;/em&gt;, when a new product comes along that solves those problems, kicking off a period of exponential growth.&lt;/p&gt;
&lt;p&gt;The Apple II was released in 1977 (and the Altair in 1975), but it was the release of the IBM PC in 1981 that kicked off the PC growth phase.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 48.611111111111114%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137&quot;
        title=&quot;PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137&quot;
        src=&quot;/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png&quot;
        srcset=&quot;/static/b5098181472b3ff3803631cb20ad549a/924ad/1_vfatwon6YWQGRvYad2ggqw.png 170w,
/static/b5098181472b3ff3803631cb20ad549a/f570f/1_vfatwon6YWQGRvYad2ggqw.png 341w,
/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The internet’s gestation phase took place in the &lt;a href=&quot;https://en.wikipedia.org/wiki/National_Science_Foundation_Network&quot;&gt;80s and early 90s&lt;/a&gt; when it was mostly a text-based tool used by academia and government. The release of the Mosaic web browser in 1993 started the growth phase, which has continued ever since.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 44.72222222222222%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Worldwide internet users, source: http://churchm.ag/numbers-internet-use/&quot;
        title=&quot;Worldwide internet users, source: http://churchm.ag/numbers-internet-use/&quot;
        src=&quot;/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png&quot;
        srcset=&quot;/static/069843001450b5e3756c2f2fb7607f29/924ad/1_6jgrfjHpBKlObla1x0NYtg.png 170w,
/static/069843001450b5e3756c2f2fb7607f29/f570f/1_6jgrfjHpBKlObla1x0NYtg.png 341w,
/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Worldwide internet users, source: http://churchm.ag/numbers-internet-use/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;There were feature phones in the 90s and early smartphones like the Sidekick and Blackberry in the early 2000s, but the smartphone growth phase really started in 2007–8 with the release of the iPhone and then Android. Smartphone adoption has since exploded: about 2B people have smartphones today. By 2020, &lt;a href=&quot;http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world&quot;&gt;80% of the global population&lt;/a&gt; will have one.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.75925925925925%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Worldwide smartphone sales per year (millions)&quot;
        title=&quot;Worldwide smartphone sales per year (millions)&quot;
        src=&quot;/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png&quot;
        srcset=&quot;/static/b400fb4c8927bce57a546334ecf465e0/924ad/1_8o0-IQSyDQ0KRxSVV2njdA.png 170w,
/static/b400fb4c8927bce57a546334ecf465e0/f570f/1_8o0-IQSyDQ0KRxSVV2njdA.png 341w,
/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Worldwide smartphone sales per year (millions)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If the 10–15 year pattern repeats itself, the next computing era should enter its growth phase in the next few years. In that scenario, we should already be in the gestation phase. There are a number of important trends in both hardware and software that give us a glimpse into what the next era of computing might be. Here I talk about those trends and then make some suggestions about what the future might look like.&lt;/p&gt;
&lt;h2&gt;Hardware: small, cheap, and ubiquitous&lt;/h2&gt;
&lt;p&gt;In the mainframe era, only large organizations could afford a computer. Minicomputers were affordable by smaller organization, PCs by homes and offices, and smartphones by individuals.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 74.76851851851852%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338&quot;
        title=&quot;Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338&quot;
        src=&quot;/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png&quot;
        srcset=&quot;/static/446eff6d101af863b1d5852b1fef5c0d/924ad/1_gZQE6-shm1dqgJAbmNn6ww.png 170w,
/static/446eff6d101af863b1d5852b1fef5c0d/f570f/1_gZQE6-shm1dqgJAbmNn6ww.png 341w,
/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png 432w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;We are now entering an era in which processors and sensors are getting so small and cheap that there will be many more computers than there are people.&lt;/p&gt;
&lt;p&gt;There are two reasons for this. One is the steady progress of the semiconductor industry over the past 50 years (&lt;a href=&quot;https://en.wikipedia.org/wiki/Moore%27s_law&quot;&gt;Moore’s law&lt;/a&gt;). The second is what Chris Anderson &lt;a href=&quot;http://foreignpolicy.com/2013/04/29/epiphanies-from-chris-anderson/&quot;&gt;calls&lt;/a&gt; “the peace dividend of the smartphone war”: the runaway success of smartphones led to massive investments in processors and sensors. If you disassemble a modern drone, VR headset, or IoT devices, you’ll find mostly smartphone components.&lt;/p&gt;
&lt;p&gt;In the modern semiconductor era, the focus has shifted from standalone CPUs to &lt;a href=&quot;https://medium.com/@magicsilicon/how-the-soc-is-displacing-the-cpu-49bc7503edab#.h6wfmbk8n&quot;&gt;bundles&lt;/a&gt; of specialized chips known as systems-on-a-chip.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 68.05555555555554%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C&quot;
        title=&quot;Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C&quot;
        src=&quot;/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png&quot;
        srcset=&quot;/static/95b5d17871f51d25b3fab9ad1416c465/924ad/1_SwUUpb2cjLIPFa3-8U9LzQ.png 170w,
/static/95b5d17871f51d25b3fab9ad1416c465/f570f/1_SwUUpb2cjLIPFa3-8U9LzQ.png 341w,
/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png 432w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Typical systems-on-a-chip bundle energy-efficient ARM CPUs plus specialized chips for graphics processing, communications, power management, video processing, and more.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 257px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Raspberry Pi Zero: 1 GHz Linux computer for $5&quot;
        title=&quot;Raspberry Pi Zero: 1 GHz Linux computer for $5&quot;
        src=&quot;/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg&quot;
        srcset=&quot;/static/43a41d31e86aa75bc4249f5debc78aed/c2e49/1_Wz-CMXmQFd64yFKWFfHefQ.jpg 170w,
/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg 257w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Raspberry Pi Zero: 1 GHz Linux computer for $5&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;This new architecture has dropped the price of basic computing systems from about $100 to about $10. The &lt;a href=&quot;https://www.raspberrypi.org/blog/raspberry-pi-zero/&quot;&gt;Raspberry Pi Zero&lt;/a&gt; is a 1 GHz Linux computer that you can buy for $5. For a similar price you can buy a &lt;a href=&quot;http://makezine.com/2015/04/01/esp8266-5-microcontroller-wi-fi-now-arduino-compatible/&quot;&gt;wifi-enabled microcontroller&lt;/a&gt; that runs a version of Python. Soon these chips will cost less than a dollar. It will be cost-effective to embed a computer in almost anything.&lt;/p&gt;
&lt;p&gt;Meanwhile, there are still impressive performance improvements happening in high-end processors. Of particular importance are GPUs (graphics processors), the best of which are made by Nvidia. GPUs are useful not only for traditional graphics processing, but also for machine learning algorithms and virtual/augmented reality devices. Nvidia’s &lt;a href=&quot;http://www.extremetech.com/gaming/201417-nvidias-2016-roadmap-shows-huge-performance-gains-from-upcoming-pascal-architecture&quot;&gt;roadmap&lt;/a&gt; promises significant performance improvements in the coming years.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 286px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 49.65034965034965%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/&quot;
        title=&quot;Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/&quot;
        src=&quot;/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png&quot;
        srcset=&quot;/static/aa40193bdc30d5a4b923fa0e2648552c/924ad/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png 170w,
/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png 286w&quot;
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        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;A wildcard technology is quantum computing, which today exists mostly in laboratories but if made commercially viable could lead to orders-of-magnitude performance improvements for certain classes of algorithms in fields like biology and artificial intelligence.&lt;/p&gt;
&lt;h2&gt;Software: the golden age of AI&lt;/h2&gt;
&lt;p&gt;There are many exciting things happening in software today. Distributed systems is one good example. As the number of devices has grown exponentially, it has become increasingly important to 1) parallelize tasks across multiple machines 2) communicate and coordinate among devices. Interesting distributed systems technologies include systems like &lt;a href=&quot;http://hadoop.apache.org/&quot;&gt;Hadoop&lt;/a&gt; and &lt;a href=&quot;https://amplab.cs.berkeley.edu/projects/spark-lightning-fast-cluster-computing/&quot;&gt;Spark&lt;/a&gt; for parallelizing big data problems, and Bitcoin/blockchain for securing data and assets.&lt;/p&gt;
&lt;p&gt;But perhaps the most exciting software breakthroughs are happening in artificial intelligence (AI). AI has a long history of hype and disappointment. Alan Turing himself &lt;a href=&quot;http://loebner.net/Prizef/TuringArticle.html&quot;&gt;predicted&lt;/a&gt; that machines would be able to successfully imitate humans by the year 2000. However, there are good reasons to think that AI might now finally be entering a golden age.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“Machine learning is a core, transformative way by which we’re rethinking everything we’re doing.” — Google CEO, Sundar Pichai&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;A lot of the excitement in AI has focused on deep learning, a machine learning technique that was &lt;a href=&quot;http://www.nytimes.com/2012/06/26/technology/in-a-big-network-of-computers-evidence-of-machine-learning.html?pagewanted=all&quot;&gt;popularized&lt;/a&gt; by a now famous 2012 Google project that used a giant cluster of computers to learn to identify cats in YouTube videos. Deep learning is a descendent of neural networks, a technology that &lt;a href=&quot;https://en.wikipedia.org/wiki/Artificial_neural_network#History&quot;&gt;dates back&lt;/a&gt; to the 1940s. It was brought back to life by a &lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;combination&lt;/a&gt; of factors, including new algorithms, cheap parallel computation, and the widespread availability of large data sets.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 386px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e07807f2b8b6bba160ba923346426218/398bb/1_P4BXse9pJYAUbasCEkQanA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.73575129533679%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)&quot;
        title=&quot;ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)&quot;
        src=&quot;/static/e07807f2b8b6bba160ba923346426218/398bb/1_P4BXse9pJYAUbasCEkQanA.png&quot;
        srcset=&quot;/static/e07807f2b8b6bba160ba923346426218/924ad/1_P4BXse9pJYAUbasCEkQanA.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;It’s tempting to dismiss deep learning as another Silicon Valley buzzword. The excitement, however, is supported by impressive theoretical and real-world results. For example, the error rates for the winners of the &lt;a href=&quot;http://image-net.org/challenges/LSVRC/2015/&quot;&gt;ImageNet challenge&lt;/a&gt; — a popular machine vision contest — were in the 20–30% range prior to the use of deep learning. Using deep learning, the accuracy of the winning algorithms has steadily improved, and in 2015 surpassed human performance.&lt;/p&gt;
&lt;p&gt;Many of the papers, &lt;a href=&quot;https://code.google.com/archive/p/word2vec/&quot;&gt;data&lt;/a&gt; &lt;a href=&quot;http://image-net.org/download-images&quot;&gt;sets&lt;/a&gt;, and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;software&lt;/a&gt; &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;tools&lt;/a&gt; related to deep learning have been open sourced. This has had a democratizing effect, allowing individuals and small organizations to build powerful applications. WhatsApp was able to build a global messaging system that &lt;a href=&quot;http://www.wired.com/2015/09/whatsapp-serves-900-million-users-50-engineers/&quot;&gt;served 900M users with just 50 engineers&lt;/a&gt;, compared to the thousands of engineers that were needed for prior generations of messaging systems. This “&lt;a href=&quot;https://twitter.com/cdixon/status/473221599189954562&quot;&gt;WhatsApp effect&lt;/a&gt;” is now happening in AI. Software tools like &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;Theano&lt;/a&gt; and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;TensorFlow&lt;/a&gt;, combined with cloud data centers for training, and inexpensive GPUs for deployment, allow small teams of engineers to build state-of-the-art AI systems.&lt;/p&gt;
&lt;p&gt;For example, here a &lt;a href=&quot;http://tinyclouds.org/colorize/&quot;&gt;solo programmer&lt;/a&gt; working on a side project used TensorFlow to colorize black-and-white photos:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/3961e4658cda043618a76fad7bb54647/300a7/1_L6cT-HQMC-mc34kJ450pdA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 32.985074626865675%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/&quot;
        title=&quot;Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/&quot;
        src=&quot;/static/3961e4658cda043618a76fad7bb54647/94a55/1_L6cT-HQMC-mc34kJ450pdA.png&quot;
        srcset=&quot;/static/3961e4658cda043618a76fad7bb54647/924ad/1_L6cT-HQMC-mc34kJ450pdA.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And here a small startup created a real-time object classifier:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/1bf0017b1448eaf0208ca9d6953f755c/1_cAtej8oZh2u80cii--YgTw.gif&quot; alt=&quot;Teradeep real-time object classifier, source: https://www.youtube.com/watch?v=_wXHR-lad-Q &quot;&gt;&lt;/p&gt;
&lt;p&gt;Which of course is reminiscent of a famous scene from a sci-fi movie:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/d2a582498ade91504ee02f106ad719bd/1_wiG-xc456HpdBkRTQi84Eg.gif&quot; alt=&quot;The Terminator (1984), source: https://www.youtube.com/watch?v=YvRb9jZ9wFk&quot;&gt;&lt;/p&gt;
&lt;p&gt;One of the first applications of deep learning released by a big tech company is the search function in Google Photos, which is &lt;a href=&quot;http://gizmodo.com/google-photos-hands-on-so-good-im-creeped-out-1707566376&quot;&gt;shockingly&lt;/a&gt; smart.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/af124f61d4fa799fad054f8de7401d8b/1_N1K_Wv2M-QDMF7FeOmJfcw.gif&quot; alt=&quot;User searches photos (w/o metadata) for “big ben”&quot;&gt;&lt;/p&gt;
&lt;p&gt;We’ll soon see significant upgrades to the intelligence of all sorts of products, including: voice assistants, search engines, &lt;a href=&quot;http://www.wired.com/2015/08/how-facebook-m-works/&quot;&gt;chat bots&lt;/a&gt;, 3D &lt;a href=&quot;https://www.google.com/atap/project-tango/&quot;&gt;scanners&lt;/a&gt;, language translators, automobiles, drones, medical imaging systems, and much more.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The business plans of the next 10,000 startups are easy to forecast: Take X and add AI. This is a big deal, and now it’s here. — &lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;Kevin Kelly&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Startups building AI products will need to stay laser focused on specific applications to compete against the big tech companies who have made AI a top priority. AI systems get better as more data is collected, which means it’s possible to create a virtuous flywheel of &lt;a href=&quot;http://mattturck.com/2016/01/04/the-power-of-data-network-effects/&quot;&gt;data network effects&lt;/a&gt; (more users → more data → better products → more users). The mapping startup Waze &lt;a href=&quot;https://digit.hbs.org/submission/waze-generating-better-maps-through-its-network-of-users/&quot;&gt;used&lt;/a&gt; data network effects to produce better maps than its vastly better capitalized competitors. Successful AI startups will follow a &lt;a href=&quot;/2015/02/01/the-ai-startup-idea-maze/&quot;&gt;similar&lt;/a&gt; strategy.&lt;/p&gt;
&lt;h2&gt;Software + hardware: the new computers&lt;/h2&gt;
&lt;p&gt;There are a variety of new computing platforms currently in the gestation phase that will soon get much better — and possibly enter the growth phase — as they incorporate recent advances in hardware and software. Although they are designed and packaged very differently, they share a common theme: they give us new and augmented abilities by embedding a smart virtualization layer on top of the world. Here is a brief overview of some of the new platforms:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Cars&lt;/strong&gt;. Big tech companies like Google, Apple, Uber, and Tesla are investing significant resources in autonomous cars. Semi-autonomous cars like the Tesla Model S are already publicly available and will improve quickly. Full autonomy will take longer but is probably not more than 5 years away. There already exist fully autonomous cars that are almost as good as human drivers. However, for cultural and regulatory reasons, fully autonomous cars will likely need to be significantly better than human drivers before they are widely permitted.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/3e2056b76d877d2ae8629bffc0b8af07/1_nJjPHXo_qBtzvoH8OLx9hQ.gif&quot; alt=&quot;Autonomous car mapping its environment&quot;&gt;&lt;/p&gt;
&lt;p&gt;Expect to see a lot more investment in autonomous cars. In addition to the big tech companies, the big auto makers &lt;a href=&quot;http://www.cnet.com/roadshow/news/gm-new-team-electric-autonomous-cars/&quot;&gt;are&lt;/a&gt; &lt;a href=&quot;http://spectrum.ieee.org/automaton/robotics/industrial-robots/toyota-to-invest-1-billion-in-ai-and-robotics-rd&quot;&gt;starting&lt;/a&gt; &lt;a href=&quot;https://media.ford.com/content/fordmedia/fna/us/en/news/2016/01/05/ford-tripling-autonomous-vehicle-development-fleet--accelerating.html&quot;&gt;to&lt;/a&gt; take autonomy very seriously. You’ll even see some interesting products made by startups. Deep learning software tools have gotten so good that a &lt;a href=&quot;http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/&quot;&gt;solo programmer&lt;/a&gt; was able to make a semi-autonomous car:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/c644e896d35381c2fc1a48fba97664ef/1_z442b_u8RfSqBEyI-1AkxQ.gif&quot; alt=&quot;Homebrew self-driving car, source: https://www.youtube.com/watch?v=KTrgRYa2wbI&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Drones&lt;/strong&gt;. Today’s consumer drones contain modern hardware (mostly smartphone components plus mechanical parts), but relatively simple software. In the near future, we’ll see drones that incorporate advanced computer vision and other AI to make them safer, easier to pilot, and more useful. Recreational videography will continue to be popular, but there will also be important &lt;a href=&quot;http://www.airware.com&quot;&gt;commercial&lt;/a&gt; use cases. There are tens of millions of &lt;a href=&quot;http://www.psmag.com/politics-and-law/cell-tower-climbers-die-78374&quot;&gt;dangerous&lt;/a&gt; jobs that involve climbing buildings, towers, and other structures that can be performed much more safely and effectively using drones.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/54d3f2063791db1e9364b090526a0a12/1_N7SlK3WKwkfZ6v50JFLkCg.gif&quot; alt=&quot;Fully autonomous drone flight. source: https://www.youtube.com/watch?v=rYhPDn48-Sg&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Internet of Things&lt;/strong&gt;. The obvious use cases for IoT devices are energy savings, security, and convenience. &lt;a href=&quot;https://nest.com/thermostat/meet-nest-thermostat/&quot;&gt;Nest&lt;/a&gt; and &lt;a href=&quot;https://nest.com/camera/meet-nest-cam/&quot;&gt;Dropcam&lt;/a&gt; are popular examples of the first two categories. One of the most interesting products in the convenience category is Amazon’s &lt;a href=&quot;http://www.amazon.com/Amazon-SK705DI-Echo/dp/B00X4WHP5E&quot;&gt;Echo&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 348px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.7471264367816%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAAA40lEQVQoz2P4jwP8+/cPSN64eWfV6k0/fnyHiyADBkxt3759e/To0dOnzx89uO4VPU9Eb8L2rRuB4n/+/CGsGagIqP/Dh48/f3yta5oaHld+984toPjfv38Ja0Z29ocPb548vovVzTht/v3798+fP4HsiRMnxyckgQ37T0AzxPiPHz/eBwOgIfPmL0hITCLWZogiIAnx4ekzZ7Zu3YbLawT8/O79h7v3HxClGajhx48fED9//w6K2w0bN6Vl5WINaiyaH4MB0MO3bt0C6l+zZm14eCRRmpEBRPXFi5eWLluOK8AAnOlzCisJJFsAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Three main uses cases for IoT&quot;
        title=&quot;Three main uses cases for IoT&quot;
        src=&quot;/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png&quot;
        srcset=&quot;/static/5ca197c2fdbd18c0039d8b90c43133bd/924ad/1_bsxhmUfI-7biIF-dW8a80w.png 170w,
/static/5ca197c2fdbd18c0039d8b90c43133bd/f570f/1_bsxhmUfI-7biIF-dW8a80w.png 341w,
/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png 348w&quot;
        sizes=&quot;(max-width: 348px) 100vw, 348px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Three main uses cases for IoT&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Most people think Echo is a gimmick until they try it and then they are &lt;a href=&quot;http://qz.com/611026/amazon-echo-is-a-sleeper-hit-and-the-rest-of-america-is-about-find-out-about-it-for-the-first-time/&quot;&gt;surprised&lt;/a&gt; at how useful it is. It’s a great &lt;a href=&quot;https://500ish.com/alexa-5f7924bffcf3#.iou9jsaj4&quot;&gt;demo&lt;/a&gt; of how effective always-on voice can be as a user interface. It will be a while before we have bots with generalized intelligence that can carry on full conversations. But, as Echo shows, voice can succeed today in constrained contexts. Language understanding should improve quickly as recent breakthroughs in deep learning make their way into production devices.&lt;/p&gt;
&lt;p&gt;IoT will also be adopted in business contexts. For example, devices with sensors and network connections are extremely &lt;a href=&quot;https://www.samsara.com/&quot;&gt;useful&lt;/a&gt; for monitoring industrial equipment.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Wearables.&lt;/strong&gt; Today’s wearable computers are constrained along multiple dimensions, including battery, communications, and processing. The ones that have succeeded have focused on narrow applications like fitness monitoring. As hardware components continue to improve, wearables will support rich applications the way smartphones do, unlocking a wide range of new applications. As with IoT, voice will probably be the main user interface.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/a8271f926bbf193ab70125a08af973ca/1__4r-bIpz7jWMYiLnxKFCJQ.gif&quot; alt=&quot;Wearable, super intelligent AI earpiece in the movie “*Her”*&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Virtual Reality.&lt;/strong&gt; 2016 is an exciting year for VR: the launch of the &lt;a href=&quot;https://www.oculus.com/en-us/rift/&quot;&gt;Oculus Rift&lt;/a&gt; and HTC/Valve &lt;a href=&quot;https://www.htcvive.com/us/&quot;&gt;Vive&lt;/a&gt; (and, possibly, the Sony Playstation VR), means that comfortable and immersive VR systems will finally be publicly available. VR systems need to be really good to avoid the “&lt;a href=&quot;https://en.wikipedia.org/wiki/Uncanny_valley&quot;&gt;uncanny valley&lt;/a&gt;” trap. Proper VR requires special screens (high resolution, high refresh rate, low persistence), powerful graphics cards, and the ability to track the precise position of the user (previously released VR systems could only track the rotation of the user’s head). This year, the public will for the first time get to experience what is known as “&lt;a href=&quot;http://a16z.com/2015/01/22/virtual-reality/&quot;&gt;presence&lt;/a&gt;” — when your senses are sufficiently tricked that you feel fully transported into the virtual world.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/a5e9dac7f584d81d959842c82b7c674a/1_bcHvjQwlLxyORwjHFH87Qg.gif&quot; alt=&quot;Oculus Rift Toybox [demo](https://www.youtube.com/watch?v=dbYP4bhKr2M)&quot;&gt;&lt;/p&gt;
&lt;p&gt;VR headsets will continue to improve and get more affordable. Major areas of research will include: 1) new tools for creating rendered and/or &lt;a href=&quot;https://www.lytro.com/&quot;&gt;filmed&lt;/a&gt; VR content, 2) machine vision for &lt;a href=&quot;http://venturebeat.com/2016/02/08/oculus-vr-guru-john-carmack-leads-crucial-position-tracking-development-for-mobile-vr/&quot;&gt;tracking&lt;/a&gt; and scanning directly from phones and headsets, and 3) distributed back-end &lt;a href=&quot;/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds/&quot;&gt;systems&lt;/a&gt; for hosting large &lt;a href=&quot;https://twitter.com/cdixon/status/662836035508940800&quot;&gt;virtual environments&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/f0b9361f08011696d616fe6efe4747e6/1_Fv9_4fCAOHoEA3dxjMf2jw.gif&quot; alt=&quot;3D world creation in [room-scale VR](https://www.youtube.com/watch?v=JKO9fEjNiio)&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Augmented Reality&lt;/strong&gt;. AR will likely arrive after VR because AR requires most of what VR requires plus additional new technologies. For example, AR requires advanced, low-latency machine vision in order to convincingly combine real and virtual objects in the same interactive scene.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 600px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.333333333333336%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Real and virtual combined (from *The Kingsmen*)&quot;
        title=&quot;Real and virtual combined (from *The Kingsmen*)&quot;
        src=&quot;/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg&quot;
        srcset=&quot;/static/87e0d14dc73016bf6ebca9396c14a960/c2e49/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 170w,
/static/87e0d14dc73016bf6ebca9396c14a960/c2dc0/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 341w,
/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 600w&quot;
        sizes=&quot;(max-width: 600px) 100vw, 600px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Real and virtual combined (from *The Kingsmen*)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;That said, AR is probably coming sooner than you think. This demo video was shot directly through &lt;a href=&quot;http://www.magicleap.com/#/home&quot;&gt;Magic Leap’s&lt;/a&gt; AR device:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/4b0d7fe5166ee726a724228c68df0a36/1_7jbz4N1GZTFm0wDzDEmQ1Q.gif&quot; alt=&quot;Magic Leap demo: real environment, virtual character&quot;&gt;&lt;/p&gt;
&lt;h2&gt;What’s next?&lt;/h2&gt;
&lt;p&gt;It is possible that the pattern of 10–15 year computing cycles has ended and mobile is the final era. It is also possible the next era won’t arrive for a while, or that only a subset of the new computing categories discussed above will end up being important.&lt;/p&gt;
&lt;p&gt;I tend to think we are on the cusp of not one but multiple new eras. The “peace dividend of the smartphone war” created a Cambrian explosion of new devices, and developments in software, especially AI, will make those devices smart and useful. Many of the futuristic technologies discussed above exist today, and will be broadly accessible in the near future.&lt;/p&gt;
&lt;p&gt;Observers have noted that many of these new devices are in their “&lt;a href=&quot;http://www.nytimes.com/2016/01/07/technology/on-display-at-ces-tech-ideas-in-their-awkward-adolescence.html?_r=0&quot;&gt;awkward adolescence&lt;/a&gt;.” That is because they are in their gestation phase. Like PCs in the 70s, the internet in the 80s, and smartphones in the early 2000s, we are seeing pieces of a future that isn’t quite here. But the future is coming: markets go up and down, and excitement ebbs and flows, but computing technology marches steadily forward.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of…]]></title>
            <description><![CDATA[If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of spectacular superorganisms to choose from…]]></description>
            <link>https://cdixon.org/2016/02/11/if-an-alien-film-crew-chose-to-feature-our-species-in-a-nature-documentary-they-d-have-plenty-of</link>
            <guid isPermaLink="false">https://cdixon.org/2016/02/11/if-an-alien-film-crew-chose-to-feature-our-species-in-a-nature-documentary-they-d-have-plenty-of</guid>
            <pubDate>Thu, 11 Feb 2016 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of spectacular superorganisms to choose from. Perhaps they’d spotlight the U.S. military, the most powerful superorganism ever to arise on our humble planet. Or the Catholic Church, a superorganism that’s managed to survive, with awe-inspiring continuity, for nearly two millennia. Meanwhile, impressive at smaller scales, the Boston Symphony Orchestra coordinates muscle movements to a precision of millimeters and milliseconds. And improv troupes like the Upright Citizens Brigade manage to arrange themselves into compelling scenes at the drop of a hat, all without any explicit coordination. Then there’s the superorganism responsible for the stable, secure, 20-million-line codebase that powers much of the world’s computing infrastructure — a loose affiliation of some 5,000 individuals,mostly strangers, who have somehow managed to assemble one of the most intricate artifacts ever built. As you might have guessed, I’m referring to the developers of the Linux kernel.&lt;/p&gt;
&lt;p&gt;— &lt;a href=&quot;http://www.ribbonfarm.com/2016/02/11/minimum-viable-superorganism/&quot;&gt;Minimal Viable Superorganism&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Nine reasons screenshots are awesome]]></title>
            <description><![CDATA[By taking a screenshot, you can “export” from any app on any device. You can “import” screenshots back into any app that imports photos…]]></description>
            <link>https://cdixon.org/2015/11/13/nine-reasons-screenshots-are-awesome</link>
            <guid isPermaLink="false">https://cdixon.org/2015/11/13/nine-reasons-screenshots-are-awesome</guid>
            <pubDate>Fri, 13 Nov 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;ol&gt;
&lt;li&gt;By taking a screenshot, you can “export” from any app on any device.&lt;/li&gt;
&lt;li&gt;You can “import” screenshots back into any app that imports photos (most apps).&lt;/li&gt;
&lt;li&gt;For these reasons, screenshots act like a universal file type on mobile. As &lt;a href=&quot;http://twitter.com/artypapers&quot;&gt;@artypapers&lt;/a&gt; says:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 568px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 54.22535211267606%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)&quot;
        title=&quot;tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)&quot;
        src=&quot;/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png&quot;
        srcset=&quot;/static/0ba4fbd003eb13531173f39e8f18ba87/924ad/1fcFNUN55yNgnbY1ZKaU4bA.png 170w,
/static/0ba4fbd003eb13531173f39e8f18ba87/f570f/1fcFNUN55yNgnbY1ZKaU4bA.png 341w,
/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png 568w&quot;
        sizes=&quot;(max-width: 568px) 100vw, 568px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;4&quot;&gt;
&lt;li&gt;Screenshots let you circumvent restrictions like file format incompatibilities, service non-interoperability, character limits, etc&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 82.29166666666666%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Much higher engagement when text is inline&quot;
        title=&quot;Much higher engagement when text is inline&quot;
        src=&quot;/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png&quot;
        srcset=&quot;/static/95734049b48ea09f2e5585f03318595a/924ad/1523dJ35IDTth7yIxY1O85w.png 170w,
/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Much higher engagement when text is inline&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;5&quot;&gt;
&lt;li&gt;You can easily edit screenshots using simple tools that are bundled with most desktop and mobile operating systems:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 93.05555555555556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;You can’t do this with embeds&quot;
        title=&quot;You can’t do this with embeds&quot;
        src=&quot;/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png&quot;
        srcset=&quot;/static/434a6a3f83cb4f6ae53511626b4c3953/924ad/1XyUJT8xhd-i0YPGuJ7WpDQ.png 170w,
/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;You can’t do this with embeds&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;6&quot;&gt;
&lt;li&gt;It’s easy to annotate screenshots:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 248px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 152.01612903225805%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAeCAIAAACjcKk8AAAACXBIWXMAAAsSAAALEgHS3X78AAAGF0lEQVQ4y11US28jWRWuX4BmCQt+DGKFWPAPkBCsWSAEM0gs0IiBgWZoulEzzTCou0N7MnEe3Ykd2/G74me5XFV2vW5V3Vvv98uPdMdO4thTQWLD1dnc7+rofPc73znYP0vTPzYvXvWNz0/4x18TX5zDF/XwbKjRlc+e/+Ppk8ef9tvluY9UkfIMvk8dvWk8L5eftJ7++uW/fov9Cccf9f7+jG7WmetXbbfJzQmwNCxOF0vf/s53P/jgWxzRfRfbiWc6Ds+planTQfm/Ln/zM/7FJ1hHC75gDsaGsNvtFtc32+1me7+539xl1ydPn/7l0aPt/fa/yOb+Pnu6z/CZJisvnswghynJ7v0skjguQ7ebu83t3c3t5mqxvI3T3Xb3f2e7fYDcIFQ083b1DgPceHZ9F6928WIdL6+j+Wy1imOKDEnCJ4deF09Hw5WmrT1v7brrq8Vqdb26vlrdXoehg+GNcuf8ZeFSzlO7E/Kqfll1lJ5TL2smr2oMEkcmnAT82B/hAdnx+y2v03A6NWt0qQxwrMDtyoR9WTlolfLMqBTrQ9cw0kEr7bdnF4VFu5bi1bjfDJlh1Kkn7cqsXkouzmKBit8eYufM+niyO+du2VEVNX4HJnhMFIzRQGmUUT4nvz00cnt2sxozA+eiqB0eo+Nj+bIFVEV7c4wVJ7dn9Pqgv4OgH2qEPL30Tz50Ks9lOEUSCzjKgJyjCpEte6YMVQgBKwtTeUprhbcPtPPMbo+WaPgfVaU8D6JOLXz9yyUi55ad+GroQd9RAlOKHSW2xMQCkQsTcZyOu1iFCHI962z6DEjVOlduwQpO/Ztt/k3s55XeSTLqWZ2afFngmAsTjH1TMk3ZDzRfpAMCx0rDRZHuS9JhpJu+LnlIcBGLLJHVB323FgEm5sfBpI/wrwP8XG63xngnpTohXgu4EXY03h0r7QSdw1/83OmVghBCnnIhb8tCSzo3EZ/RTnwtcVHoKpEmhDwZCVTEDBIbYifk9kjYN+S88YdPbKYlo6EG6MRRfAuQVlMHU1cTPE2wIWsj3kKCqQNTEwxVdDQRO6auq3IlNSu6yocWCAzJNUBqqcghJXcYGZnIAPI0Sw84ZghYkqe7gKW5UVtpP8MKQtoVKs6gCIg2IrvWlAwsaW6poj1QnFFqotCWQisLORPc04XQ5D3+LBl/CdsvsANmfiq+mcF+pMNYA4kuB7qUGlCwCckm57aa5fwvxMAErgYMNNIHuaO2gR3R74sgT1lnlNfj3a7hTJIFDD2+quNTFfrmBGl9U8l8wmc+yX5uIXEhj4aN0mtihxXodxxb9yxCkhjVpPryxU8/+nF1cjIJOrGJTJ1CkEACHRjT0AQSN/RsNJ9cNKqNfXqHEYI5M0qRhUzEaCLDDns/+N73BbK78LWMZOpkC4ixFCYw2NCULZ2JVDlmSiWcz2fJBwPfg6XQ0lydTXwEJv2PP/294lrpg05yZEmewdlGlvwgm4f4bDwjIlemF4fUFjsa+gE6T2zFlMaONGG6tY8+/BXLjHwkWCatasPUhmGmliXY6ljhGJevCsPzwnR3NL7DiqQcqRlt1UWcCRiR6tUKhx6cZCZ1DS4jHOqSY7KORqs8aevywhg16u3caHfK3GI1ik60cmDrsQMjR54Heuoqng6uQiN10cMk6oCfdhDf87NGempictRo8NVw85bZYGeXUxdReL24v/dlpXC4v/d57uBxqfz6ZP9l8c1B6TRfOj2sFo4zwbORTH0t22E365Xo3jzQZsGrxKKJXq3TLEKRFJkeZGuQPWmVvqKG+JS8JDpVjurGrhLo4P0ysR23Xq+ubzcF5gYjpsWlNYw9c+ah1OYjS7a5pj1t2RJtS0zGPPVQnNnDmDgGHTpwuXw/ny+cYJYn1hg/yaWo5CHS1fjA4EMDOJA2ZcZBnA0nvpFZUtIBLYgNETSRMEg8YZsKVOcilzlsypZDpaJxJXbcMeAk61lkKb4BsiZndXxLyEZt5mTFpdAGsQ326trHe0KuCg8zk6igmBrjWDs1EKcB0tWFzFhZxI7q2IJvSwbiPV0MLeXKB8e48sM/L3/yfPmjx1f50fobCKvUJEYtuC8AAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1i 4InKrSJoQfwpfOtKwtiQ&quot;
        title=&quot;1i 4InKrSJoQfwpfOtKwtiQ&quot;
        src=&quot;/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png&quot;
        srcset=&quot;/static/2424bae772bcbde995c949fd7d8049bd/924ad/1i_4InKrSJoQfwpfOtKwtiQ.png 170w,
/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png 248w&quot;
        sizes=&quot;(max-width: 248px) 100vw, 248px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;ol start=&quot;7&quot;&gt;
&lt;li&gt;On mobile, the photo roll where screenshots are kept is similar to a file system. You can delete photos, edit them, back them up to the cloud, etc.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 150.46296296296296%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1YZi7TPYylq 2s1q9zwhJJw&quot;
        title=&quot;1YZi7TPYylq 2s1q9zwhJJw&quot;
        src=&quot;/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png&quot;
        srcset=&quot;/static/0314b36561b6757d79d25f28bd76df0f/924ad/1YZi7TPYylq-2s1q9zwhJJw.png 170w,
/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;ol start=&quot;8&quot;&gt;
&lt;li&gt;You can combine otherwise incompatible formats in a single screenshot&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 147.91666666666669%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)&quot;
        title=&quot;The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)&quot;
        src=&quot;/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png&quot;
        srcset=&quot;/static/bcd79cb3b12cdd53f1678b96ac6c9af4/924ad/1ZQVVeKcjUqk8wRJUd3duFw.png 170w,
/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;9&quot;&gt;
&lt;li&gt;Screenshots persist even when the thing screenshotted disappears:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 15.625%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAYAAACTWi8uAAAACXBIWXMAAAsSAAALEgHS3X78AAAAuklEQVQI1x2OWXKEMBBDuf85MhThg2BCwCzGNuBZMlMUHCDkJo90+GuV9FqKuq4jhAnvPG3bcg0B7z3WOpZlofwqGYaBqtas6yqew4gOYWYaPXmec3/c6buGff8l8uMosMH0hs+iYNs2jOmxAmVZdt7OubNgnEYGO6C1lvKG5/dDGMU8z1RVyc++E/2H4ziRFRZdV7wniTz64PV8USjF2+Uifoyz9gSVyqXMUOtG1tozn6Yp4XbjOA7+APBQwRWs/+gPAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1TQa0p6EzFb2CaJmd0 o87g&quot;
        title=&quot;1TQa0p6EzFb2CaJmd0 o87g&quot;
        src=&quot;/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png&quot;
        srcset=&quot;/static/4ab560f0052888e059906ec7f154bafb/924ad/1TQa0p6EzFb2CaJmd0-o87g.png 170w,
/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.18055555555556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1vsqP1ZQvd0M0vFdGPWzkOA&quot;
        title=&quot;1vsqP1ZQvd0M0vFdGPWzkOA&quot;
        src=&quot;/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png&quot;
        srcset=&quot;/static/8755b722217e371387c8a3ffec6ee12f/924ad/1vsqP1ZQvd0M0vFdGPWzkOA.png 170w,
/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;And more:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 537px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 37.243947858473%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABL0lEQVQY02VQvVKDQBjk3XwF38OxsLa1s/c1nBQ6to5F1EkEvvtLQHIQDUQFzhzccUQ/ksIZs/MVW+zu7H5elsbgj7XeKPVd16qq6rKqrLU/h9j2le4epBmn5n7Rlk3vXV1enBwfUc6epn4Ux2FIQqAYdOjtOxPIz7Obj/O79eloxfLWg8C/HV0rvWk7u90Bdc45Y4zdo7Ou65zDQ/RKG9VY4walV9tqqZY0o3KdEMopZULMJ1Ofc8HFjDAeAgEAysU8irMsY4yVX+UwAs1FXjw+TyjjaZqiPH5NQsL8ADACORASJ3KVF0hCAByF4ft2CC9/f0N1FKFywYXI84LzGUoZ4wuElEAoAEHbRmu0YfU/c5GvXoIhEjtjLn7rNZFa66ZpcHZrjG4GrnfOfy/8Bc6JfNJJHJvzAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1G9eixRmfjvIITvw5Jl4Bdg&quot;
        title=&quot;1G9eixRmfjvIITvw5Jl4Bdg&quot;
        src=&quot;/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png&quot;
        srcset=&quot;/static/66109310819c0dd0781d28282a0b3095/924ad/1G9eixRmfjvIITvw5Jl4Bdg.png 170w,
/static/66109310819c0dd0781d28282a0b3095/f570f/1G9eixRmfjvIITvw5Jl4Bdg.png 341w,
/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png 537w&quot;
        sizes=&quot;(max-width: 537px) 100vw, 537px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 601px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 33.94342762063228%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABHUlEQVQY042RPU/DMBCG888ZmFgRG2JiROInwFYhPkSVkLqOHceOieO4sdMmqWjTxMEpSweQeHXD3eme+9B5w9Bba8f/6dDbdmebL7vvJsS7v7sEYP7uL4IgmPs+RKjvB3vUcCprm7W5fa3PHurzx/pq1k7wzfVFyrEsS6nUSpt91/06cxpkB1weZnT3lO4CMZV523Js1Ng1Y9tspSyEyAu1co4siizLEspoQstSxyRx+bbenHb0WKximGdM50JGESIkCUOAcOwMLOHzy1u4AH7wgY9hCKBrnkupq/UEL5YAQJByhmMHYCFEhDCMMIQo5VwWShvDeVZV60KpT7eMEFpr8wOThDHGjTaEUEKpMcYVuCVhhDZ1PV369y++Ae+Egwj2IUk6AAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1bI apTKjUaOPV8TVyTq2gg&quot;
        title=&quot;1bI apTKjUaOPV8TVyTq2gg&quot;
        src=&quot;/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png&quot;
        srcset=&quot;/static/b642c197248ad3ba35c80f0e99bf2f9a/924ad/1bI_apTKjUaOPV8TVyTq2gg.png 170w,
/static/b642c197248ad3ba35c80f0e99bf2f9a/f570f/1bI_apTKjUaOPV8TVyTq2gg.png 341w,
/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png 601w&quot;
        sizes=&quot;(max-width: 601px) 100vw, 601px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;What are some other reasons screenshots are awesome?&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[It’s hard to believe today, but 10 years ago Wikipedia was widely considered a doomed experiment…]]></title>
            <description><![CDATA[Today, Wikipedia is widely considered an invaluable resource. There are occasional errors and controversies, but for the most part it…]]></description>
            <link>https://cdixon.org/2015/10/31/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment</link>
            <guid isPermaLink="false">https://cdixon.org/2015/10/31/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment</guid>
            <pubDate>Sat, 31 Oct 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Today, Wikipedia is widely considered an invaluable resource. There are occasional errors and controversies, but for the most part it provides accurate, comprehensive information to billions of people every day.&lt;/p&gt;
&lt;p&gt;Wikipedia was &lt;a href=&quot;https://en.wikipedia.org/wiki/History_of_Wikipedia&quot;&gt;founded&lt;/a&gt; in 2001, and for the first few years was mostly treated as curiosity by those outside of the Wikipedia “movement.” But Wikipedia grew in popularity, and in 2005 became the most &lt;a href=&quot;https://en.wikipedia.org/wiki/History_of_Wikipedia#2005&quot;&gt;popular reference&lt;/a&gt; site on the internet. Popularity led to intense media scrutiny. Most commentators considered Wikipedia a doomed experiment run by utopian radicals. To give a sense of this for those who weren’t following the controversy at the time or don’t remember, here are some examples of popular critiques of Wikipedia from 2005.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“One day Wikipedia may well be the most amazing reference work the world has ever seen, lauded for its quality. &lt;strong&gt;But to get from here to there it will need real experts and top quality writing — it won’t get there by hoping that its whizzy technical processes remedy such deficiencies.&lt;/strong&gt; In other words, it will resemble today’s traditional encyclopedias far more than it does today.” (&lt;a href=&quot;http://www.theregister.co.uk/2005/10/18/wikipedia_quality_problem/&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;“The Seigenthaler affair points up a crucial condition of the Internet’s information ecology: &lt;strong&gt;It’s a system that doesn’t select for truth. Currency, controversy, charisma, fascination — these count much more in determining the vitality and survivability of online articles, facts, or ‘’memes.’’&lt;/strong&gt; In the 21st century’s networked knowledge environment, truth will be less and less identified by the imprimatur of expert writers and invisible, omnicompetent editors, but by readers who understand the principles of networked information.” (&lt;a href=&quot;http://www.boston.com/news/globe/ideas/articles/2005/12/18/the_wiki_effect/?page=full&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;“If you read anything about Web 2.0, you’ll inevitably find praise heaped upon Wikipedia as a glorious manifestation of “the age of participation.” Wikipedia is an open-source encyclopedia; anyone who wants to contribute can add an entry or edit an existing one. O’Reilly, in a &lt;a href=&quot;http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html&quot;&gt;new essay&lt;/a&gt; on Web 2.0, says that Wikipedia marks “a profound change in the dynamics of content creation” — a leap beyond the Web 1.0 model of Britannica Online. To Kevin Kelly, Wikipedia shows how the Web is allowing us to pool our individual brains into a great collective mind. It’s a harbinger of the Machine. In theory, Wikipedia is a beautiful thing — it &lt;em&gt;has&lt;/em&gt; to be a beautiful thing if the Web is leading us to a higher consciousness. In reality, though, Wikipedia isn’t very good at all. Certainly, it’s useful — I regularly consult it to get a quick gloss on a subject. &lt;strong&gt;But at a factual level it’s unreliable, and the writing is often appalling. I wouldn’t depend on it as a source, and I certainly wouldn’t recommend it to a student writing a research paper&lt;/strong&gt;.” (&lt;a href=&quot;http://www.roughtype.com/?p=110&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;“To many guardians of the knowledge cathedral — librarians, lexicographers, academics — that’s precisely the problem. Who died and made this guy professor? No pedigreed scholars scrutinize his work. No research assistants check his facts. Should we trust an encyclopedia that allows anyone with a pulse and a mousepad to opine about Jackson Pollock’s place in postmodernism? What’s more, the software that made Wikipedia so easy to build also makes it easy to manipulate and deface. &lt;strong&gt;A former editor at the venerable Encyclopedia Britannica recently likened the site to a public rest room: You never know who used it last.”&lt;/strong&gt; (&lt;a href=&quot;http://www.wired.com/2005/03/wiki/?tw=wn_tophead_5&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Wikipedia is a classic example of how &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;the next big thing often starts out looking like a toy.&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Lessons from the PC video game industry]]></title>
            <description><![CDATA[The future of media is here — it’s just not evenly distributed The success or failure of tech and media products depends on complicated…]]></description>
            <link>https://cdixon.org/2015/10/31/lessons-from-the-pc-video-game-industry</link>
            <guid isPermaLink="false">https://cdixon.org/2015/10/31/lessons-from-the-pc-video-game-industry</guid>
            <pubDate>Sat, 31 Oct 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;h2&gt;The future of media is here — it’s just not evenly distributed&lt;/h2&gt;
&lt;p&gt;The success or failure of tech and media products depends on complicated interactions between products, economics, technology, and culture. It’s very hard to predict what will work and what won’t. Today, billions of people carry internet-connected supercomputers in their pockets, the largest knowledge repository in the world is a massive &lt;a href=&quot;https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b&quot;&gt;crowdsourced encyclopedia&lt;/a&gt;, and a social network is one of the &lt;a href=&quot;http://moneymorning.com/2015/06/23/facebook-nasdaq-fb-joins-top-10-companies-by-market-cap/&quot;&gt;10 most valuable companies&lt;/a&gt; in the world. Ten years ago, someone who predicted these things would have seemed crazy.&lt;/p&gt;
&lt;p&gt;The subtitle to this post is a variation of William Gibson’s famous remark: “The future is already here — it’s just not very evenly distributed.” An obvious follow up question is: &lt;em&gt;if the future is already here, where can I find it&lt;/em&gt;? There is no easy answer, but history shows there are characteristic patterns. For example, it’s often useful to look at what the &lt;a href=&quot;/2013/03/03/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years/&quot;&gt;smartest people work on in their free time&lt;/a&gt;, or things that are growing rapidly but &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;widely dismissed as toys&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 62.26851851851851%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;An example idea maze (source: startup.stanford.edu)&quot;
        title=&quot;An example idea maze (source: startup.stanford.edu)&quot;
        src=&quot;/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png&quot;
        srcset=&quot;/static/46820c30039bf9890f62289655c2338a/924ad/1luou1d-WIS3t-_oMboptGA.png 170w,
/static/46820c30039bf9890f62289655c2338a/f570f/1luou1d-WIS3t-_oMboptGA.png 341w,
/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;An example idea maze (source: startup.stanford.edu)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Another clue to the future is to look for communities that embrace rapid, Darwinian experimentation. Entrepreneurs are in the business of running experiments (and VCs are in the business of funding experiments). Experiments are how we collectively navigate through the startup &lt;a href=&quot;/2013/08/04/the-idea-maze/&quot;&gt;idea maze&lt;/a&gt; to discover products and business models that work.&lt;/p&gt;
&lt;p&gt;Even if you have no interest in video games, if you are interested in media, you should be interested in &lt;a href=&quot;https://en.wikipedia.org/wiki/PC_game&quot;&gt;PC gaming&lt;/a&gt;. Over the past decade, PC gaming has, for a variety of reasons, become a hotbed of experimentation. These experiments have resulted in a new practices and business models — some of them surprising and counterintuitive — that provide valuable lessons for the rest of the media industry.&lt;/p&gt;
&lt;h2&gt;PC games are way bigger than you think&lt;/h2&gt;
&lt;p&gt;A lot of PC gaming happens on &lt;a href=&quot;http://www.valvesoftware.com/&quot;&gt;Valve Software’s&lt;/a&gt; &lt;a href=&quot;http://store.steampowered.com/&quot;&gt;Steam&lt;/a&gt; platform, which has over &lt;a href=&quot;https://www.vg247.com/2015/02/24/steam-has-over-125-million-active-users-8-9m-concurrent-peak/&quot;&gt;125 million active users&lt;/a&gt;. If you aren’t a gamer, you may not have even heard of Steam, and probably haven’t heard of many it’s roughly 4,500 games, even the most popular ones.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
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    href=&quot;/static/5edda99c038aee503bebd13853ee9891/8f8c6/19ImGNbCQwMpdjIMEx9AGFw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;19ImGNbCQwMpdjIMEx9AGFw&quot;
        title=&quot;19ImGNbCQwMpdjIMEx9AGFw&quot;
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        srcset=&quot;/static/5edda99c038aee503bebd13853ee9891/924ad/19ImGNbCQwMpdjIMEx9AGFw.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;The types of games on Steam vary widely, as do the business models. The most popular game, &lt;a href=&quot;http://blog.dota2.com/&quot;&gt;Dota 2&lt;/a&gt;, is free. It makes money selling in-app items, mostly “cosmetic items” that alter the appearance of characters.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 591px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/d58a864e3b0ecb58bf4db97637ec326f/a615a/1vgeYrK2Z0GZNm_GljOIibA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.28257191201353%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsSAAALEgHS3X78AAAClElEQVQozw2RyXKbSABAqUymHEtGBrFDs3UDvdEIxB6BZEm2LLuSTCapqTmmcsk1x/n98Re8V+9JmypnOQMQgTR7fG3GS1U+z5uvVz6xtt5cLp/EVO/P7HAdpi/jvBf1x50YelYWPCdS1ZcJiZeGsnD1fF9728rMiV8KJwBAXUau3QiuuM77xa1m6SBFZBrJbiA5ZgWVhpcLLIRrrVfKcgFst23Btu6e/wKEvFsuGMdjmsimvdB0aBgeZ9HYuzg1PCupK6m6PCV9G4WeoSshRunU6GVFz7MloJ/A9OPginzt+7cekG134QE1SbQEanEQd62UPwz5+QA4WRq6jbPk8/meC5NzNcPbcRKfXjSRe1zIcbz0g0SQUBCN4nWK9DiQSIujgmhxvM6wHCI5SlVW6PXg7U7V0/Px93/uuNeKUqVMxfjbj1/N9eUuChQElcCRnDRUfc9C0MDpXQQXIDRR5tDcbHdht3PKxulnGSVL0/hgOw4r1pSuYKRmyT2EkpGla5y++QAUqYH3IQhNF4AQqrw0toPZjnbdLYPwZq1ojLj9oOdihaBdbzVKJJNRh2b3gS97jhIAlVIF0ze+jNIb4NvtZDaduSnlt0g5i0+ncJ7dpn6bsooiKeSE1VW2rdcovkOJwplGc6fcQR+i+9U7wzQ3/cIHfzrWe1NTOYmPR/j4BB8vVtNKrCTt8WEet4hknh8MzcEu+KrjuCLYvZNN9Rbqf4TWDXNviGdsi3ges67LqrxshdScAW3CTVuEDO+K+t+HGW9o8iCcAno9b77v9tfP4yvrnvtyPCLHbiInTjwMfZ5G0utP0R1Ae8jE1P59HS9TnMKAIUuzTB9H1Wt13f/z9QCPFZ6q6ZRNJ5HVm4RzmrPsf3Mbd7wwQD5bAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Dota 2&quot;
        title=&quot;Dota 2&quot;
        src=&quot;/static/d58a864e3b0ecb58bf4db97637ec326f/a615a/1vgeYrK2Z0GZNm_GljOIibA.png&quot;
        srcset=&quot;/static/d58a864e3b0ecb58bf4db97637ec326f/924ad/1vgeYrK2Z0GZNm_GljOIibA.png 170w,
/static/d58a864e3b0ecb58bf4db97637ec326f/f570f/1vgeYrK2Z0GZNm_GljOIibA.png 341w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Dota 2&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Steam takes a revenue share (&lt;a href=&quot;http://forums.steampowered.com/forums/archive/index.php/t-2073030.html&quot;&gt;roughly&lt;/a&gt; 30%) from the games it hosts, and &lt;a href=&quot;http://www.tweaktown.com/news/46666/report-valve-rakes-1-5-billion-revenue-steam-sales-2014/index.html&quot;&gt;reportedly&lt;/a&gt; made $1.5B from its cut last year. (Valve also makes its own games, including some of Steam’s most popular games like Dota 2).&lt;/p&gt;
&lt;p&gt;PC games are a global phenomenon. They are particularly popular in Asia, and above all in South Korea, where they are so popular that the government passed a &lt;a href=&quot;https://en.wikipedia.org/wiki/Shutdown_law&quot;&gt;law&lt;/a&gt; restricting the hours kids could play games, and runs PSAs warning about the dangers of video game addiction:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/73ca87440d60439c88c37c22c11fed27/1hUJ-0zXUe-EZqZUgefY38w.gif&quot;&gt;&lt;/p&gt;
&lt;h2&gt;Putting the “free” back in freemium&lt;/h2&gt;
&lt;p&gt;We’re all familiar with the &lt;a href=&quot;http://avc.com/2006/03/the_freemium_bu/&quot;&gt;freemium&lt;/a&gt; business model popularized by companies like Dropbox: give away something useful, and then charge highly engaged users who want more storage, time, features, etc.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/066da48a04f9eb5be1c8fa5061620513/8f8c6/12rSlVSIYJjGMEn6m_slbjA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 49.722222222222214%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;South Park’s take on freemium&quot;
        title=&quot;South Park’s take on freemium&quot;
        src=&quot;/static/066da48a04f9eb5be1c8fa5061620513/8f8c6/12rSlVSIYJjGMEn6m_slbjA.png&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;South Park’s take on freemium&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The PC gaming world has taken the freemium model to the extreme. In contrast to smartphone games like Candy Crush that are “free-to-play,” PC games like Dota 2 are “free-to-win.” You can’t spend money to get better at the game — that would be seen as corrupting the spirit of fair competition. (PC gamers, like South Park, generally view the smartphone gaming business model as cynical and manipulative). The things you can buy are &lt;a href=&quot;http://www.theverge.com/2015/2/16/8045369/valve-dota-2-in-game-augmentation-pay-to-win&quot;&gt;mostly&lt;/a&gt; cosmetic, like new outfits for your characters or new background soundtracks. &lt;a href=&quot;https://en.wikipedia.org/wiki/League_of_Legends&quot;&gt;League of Legends&lt;/a&gt; (the most popular PC game not on Steam) is estimated to have made &lt;a href=&quot;http://www.pcgamer.com/league-of-legends-has-made-almost-1-billion-in-microtransactions/&quot;&gt;over $1B&lt;/a&gt; last year selling these kinds of cosmetic items.&lt;/p&gt;
&lt;p&gt;PC games are so popular they can also make money from live events. Live gaming competitions have become huge: over 32M people watched the League of Legends championship this year, almost double the number of people who &lt;a href=&quot;http://www.statista.com/statistics/240377/nba-finals-tv-viewership-in-the-united-states/&quot;&gt;watched&lt;/a&gt; the NBA finals.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
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    href=&quot;/static/b899945e932959da5aa463eecffac9b3/04c30/18FTKMln2S-EsV7HVhRG_fg.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.03644646924829%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;2014 League of Legends championship&quot;
        title=&quot;2014 League of Legends championship&quot;
        src=&quot;/static/b899945e932959da5aa463eecffac9b3/d6856/18FTKMln2S-EsV7HVhRG_fg.jpg&quot;
        srcset=&quot;/static/b899945e932959da5aa463eecffac9b3/c2e49/18FTKMln2S-EsV7HVhRG_fg.jpg 170w,
/static/b899945e932959da5aa463eecffac9b3/c2dc0/18FTKMln2S-EsV7HVhRG_fg.jpg 341w,
/static/b899945e932959da5aa463eecffac9b3/d6856/18FTKMln2S-EsV7HVhRG_fg.jpg 681w,
/static/b899945e932959da5aa463eecffac9b3/04c30/18FTKMln2S-EsV7HVhRG_fg.jpg 878w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;2014 League of Legends championship&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Watching these events online is free, but offline tickets cost $50–$100 each. This is similar to the trend in the music business where concerts have become an increasingly important source of income for musicians. Concert ticket prices have &lt;a href=&quot;https://www.whitehouse.gov/blog/2013/06/12/rock-and-roll-economics-and-rebuilding-middle-class&quot;&gt;increased&lt;/a&gt; dramatically while digital music prices have dropped.&lt;/p&gt;
&lt;p&gt;What the PC game industry figured out is that in a world of abundant media, users have endless choices; instead of fighting for scarcity, fight for attention. Maximize user engagement and money will — with enough experiments — inevitably follow.&lt;/p&gt;
&lt;h2&gt;&lt;strong&gt;Embracing remixes and mods&lt;/strong&gt;&lt;/h2&gt;
&lt;p&gt;In the gaming world, “mods” are user created versions of games or elements of games. Steam has about 4500 games but about &lt;a href=&quot;https://www.vg247.com/2015/02/24/steam-has-over-125-million-active-users-8-9m-concurrent-peak/&quot;&gt;400 million pieces&lt;/a&gt; of user-generated content. Dota itself was &lt;a href=&quot;https://en.wikipedia.org/wiki/Defense_of_the_Ancients#Development&quot;&gt;originally&lt;/a&gt; a user-created mod of another game, &lt;a href=&quot;https://en.wikipedia.org/wiki/Warcraft_III:_Reign_of_Chaos&quot;&gt;Warcraft 3&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Contrast this to the music industry, which relies on litigation to aggressively stifle remixing and experimentation. Large music labels have effectively become law firms devoted to protecting their back catalog. Sometimes this means suing their peers, and sometimes this means suing communities of users.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 665px;&quot;
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    href=&quot;/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 26.466165413533837%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAABIElEQVQY0zVPPUvDUBR90l8guOrQSRAqpTjrpoPiIKUuijiIldqlq7sIFTd/gDj4WxJMYmgSQjXNe9o0oYkmeWkM5uN5o/TAPZwL5x7ORQQTgrE5MrFpgnAch4aU4zhJkjiel17kwUARRVGWZVVVFUUBHg6HgiBgjJFlTQxMHNebep++77ueRynVNE3XdeGZd+xxnmdZlqcwf0jTtCiKf42ue73bs+P7bvvm/KLdPDrcO3h6eGSM/YApi1n2xfIZbKxI8zkgDAwQgTbWavWFSmt58aRaXUIVhNBlpwsVDMMg5MMeG649mk5erfc36EnmsG07CALU2W/urqy26rWr7Z3TxubWeuOu36dRBPdRidgPKJ1901KXFMcx/BWGYZIkv6Ww7M+AwIWqAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1rF9a0NBeGKzovQO059iqIg&quot;
        title=&quot;1rF9a0NBeGKzovQO059iqIg&quot;
        src=&quot;/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png&quot;
        srcset=&quot;/static/7436e93d8bc87e0495eae8133c6ccc35/924ad/1rF9a0NBeGKzovQO059iqIg.png 170w,
/static/7436e93d8bc87e0495eae8133c6ccc35/f570f/1rF9a0NBeGKzovQO059iqIg.png 341w,
/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png 665w&quot;
        sizes=&quot;(max-width: 665px) 100vw, 665px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;The end result is a strong chilling effect on new experiments. Almost all new music-related tech products are minor variations of preceding products. It’s too risky and expensive to try something genuinely new.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.33333333333333%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;A live DJ session in Turntable.fm&quot;
        title=&quot;A live DJ session in Turntable.fm&quot;
        src=&quot;/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png&quot;
        srcset=&quot;/static/47d4d6dd2b1555909f82675e12ecf0e9/924ad/1aFc0sYHcJ-pTxwD6ddj28A.png 170w,
/static/47d4d6dd2b1555909f82675e12ecf0e9/f570f/1aFc0sYHcJ-pTxwD6ddj28A.png 341w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;A live DJ session in Turntable.fm&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;For example, one of the best music-related experiments in recent history was &lt;a href=&quot;https://en.wikipedia.org/wiki/Turntable.fm&quot;&gt;Turntable.fm&lt;/a&gt;, which invented a brand new way to curate and enjoy music.&lt;/p&gt;
&lt;p&gt;Here’s what the founder said &lt;a href=&quot;https://medium.com/@billychasen/shutting-down-7958dae1d27b&quot;&gt;when the company shut down&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Ultimately, I didn’t heed the lessons of so many failed music startups. It’s an incredibly expensive venture to pursue and a hard industry to work with. We spent more than a quarter of our cash on lawyers, royalties and services related to supporting music. It’s restrictive. We had to shut down our growth because we couldn’t launch internationally. It’s a long road. It took years to get label deals in place and it also took months of engineering time to properly support them (time which could have been spent on product).&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 92.0138888888889%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;One Direction fan fiction on Wattpad&quot;
        title=&quot;One Direction fan fiction on Wattpad&quot;
        src=&quot;/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg&quot;
        srcset=&quot;/static/8df4505f43f950da2b797514199ced65/c2e49/1RDKsjy_D9pZatN1Ef1smZQ.jpg 170w,
/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;One Direction fan fiction on Wattpad&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Remixing books is popular on services like Wattpad where users write fanfiction inspired by books, celebrities, movies, etc. From a &lt;a href=&quot;https://en.wikipedia.org/wiki/Legal_issues_with_fan_fiction&quot;&gt;legal perspective&lt;/a&gt;, some fanfiction could be seen as copyright or trademark infringement. From a business perspective, the book industry would be smart to learn from the PC gaming business. Instead of fighting over pieces of a &lt;a href=&quot;http://mic.com/articles/91697/you-ll-be-shocked-at-how-much-time-young-people-spend-reading-each-day#.CeR7XhAsn&quot;&gt;shrinking pie&lt;/a&gt;, try to grow the pie by getting more people to read and write books.&lt;/p&gt;
&lt;p&gt;Another form of video game remixing happens on broadcasting sites like &lt;a href=&quot;http://www.twitch.tv/&quot;&gt;Twitch&lt;/a&gt;, where you can watch live videos of people playing games (while they chat with the audience — the end result is an interesting mix between video games and talk radio).&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.27777777777778%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Fallout 4 player on Twitch.tv&quot;
        title=&quot;Fallout 4 player on Twitch.tv&quot;
        src=&quot;/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png&quot;
        srcset=&quot;/static/fb7cfa48decc89695a87f9f61905cb47/924ad/1tc2aabGj2sMt9A4lAOzO7g.png 170w,
/static/fb7cfa48decc89695a87f9f61905cb47/f570f/1tc2aabGj2sMt9A4lAOzO7g.png 341w,
/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Fallout 4 player on Twitch.tv&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If you ask people who watch Twitch why they do so, many will say that it’s easier and cheaper than playing the game themselves. Legally, it would probably be easy for the games industry to crack down on broadcasting, but instead they have encouraged it, seeing it as a new way to engage users and generate revenue.&lt;/p&gt;
&lt;h2&gt;Crowdfunding and user feedback&lt;/h2&gt;
&lt;p&gt;PC gaming has enthusiastically embraced crowdfunding. On Kickstarter, video games (most of of which PC games) is the &lt;a href=&quot;https://www.kickstarter.com/help/stats&quot;&gt;highest-funded category&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 503px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e923419242b1efcc9bc17ae40c549422/d6c85/1NIzpyJz5DoKssFW71_nIoQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.918489065606366%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1NIzpyJz5DoKssFW71 nIoQ&quot;
        title=&quot;1NIzpyJz5DoKssFW71 nIoQ&quot;
        src=&quot;/static/e923419242b1efcc9bc17ae40c549422/d6c85/1NIzpyJz5DoKssFW71_nIoQ.png&quot;
        srcset=&quot;/static/e923419242b1efcc9bc17ae40c549422/924ad/1NIzpyJz5DoKssFW71_nIoQ.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;And this doesn’t count all the games crowdfunded elsewhere, including the largest crowdfunding project ever: a PC game called &lt;a href=&quot;https://robertsspaceindustries.com/&quot;&gt;Star Citizen&lt;/a&gt; that has raised over $94 million from over 1 million users.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/041851246586ebdb96a40839336e645e/2bff6/1_LGj50-ex36_uGEqRsWw_A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.19444444444444%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Star Citizen has 4M comments in its user forums&quot;
        title=&quot;Star Citizen has 4M comments in its user forums&quot;
        src=&quot;/static/041851246586ebdb96a40839336e645e/2bff6/1_LGj50-ex36_uGEqRsWw_A.png&quot;
        srcset=&quot;/static/041851246586ebdb96a40839336e645e/924ad/1_LGj50-ex36_uGEqRsWw_A.png 170w,
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        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Star Citizen has 4M comments in its user forums&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The money that comes from crowdfunding is obviously important, but just as important is the user participation it fosters. Almost all crowdfunded video game projects are accompanied by extremely active user discussion forums.&lt;/p&gt;
&lt;p&gt;A close cousin to crowdfunding is the trend of pre-releasing games before they are finished. Minecraft is probably the most famous PC game that succeeded during pre-release, selling over a million copies while &lt;a href=&quot;https://en.wikipedia.org/wiki/Minecraft#Reception&quot;&gt;still in beta&lt;/a&gt;. In 2015, &lt;a href=&quot;http://www.gamesindustry.biz/articles/2015-09-02-half-of-steams-million-sellers-in-2015-are-on-early-access?utm_source=newsletter&amp;#x26;utm_medium=email&amp;#x26;utm_campaign=european-daily&quot;&gt;three of the six top selling games&lt;/a&gt; on Steam were pre-release (these three games were not free-to-play, which means users paid $10-$20 to buy them despite the games being incomplete and buggy). The developers get the benefit of continuous user feedback, and users get to play and contribute to games they love.&lt;/p&gt;
&lt;p&gt;Another way to describe what’s going on here is a shift from a &lt;em&gt;wholesale&lt;/em&gt; to a &lt;em&gt;retail&lt;/em&gt; media model. As Buzzfeed’s Jonah Peretti &lt;a href=&quot;https://www.youtube.com/watch?v=8N5jJYswREM&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The big problem with traditional media is you create content and get back money, but you don’t have any relationship with the consumer that gives you back knowledge or data to get better over time. We like to be in places where the model is to have ideas and be able to test those ideas with real audiences. It’s both an art and science — you learn and get better. That means thinking of media as a service and not just a product. Tech companies tend to think of themselves as retailers where they know what is the customer doing. Traditional media company think themselves wholesalers. They will essentially sell into any window — whoever pays them the most. A retailer wants to understand the customer and wants understand their experience.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Companies like BuzzFeed pioneered the retail model for ad-supported media. The PC games industry pioneered the retail model for transaction-supported media.&lt;/p&gt;
&lt;h2&gt;Peeking into the future&lt;/h2&gt;
&lt;p&gt;Software is &lt;a href=&quot;http://www.wsj.com/articles/SB10001424053111903480904576512250915629460&quot;&gt;eating&lt;/a&gt; the world, and the internet is &lt;a href=&quot;http://qz.com/416416/we-now-spend-more-than-eight-hours-a-day-consuming-media/&quot;&gt;eating media&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/67f3329b3d28aa438930b751a8c69fe9/2bff6/1K4ItafU0ybT5arlf3P_8hw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 48.611111111111114%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1K4ItafU0ybT5arlf3P 8hw&quot;
        title=&quot;1K4ItafU0ybT5arlf3P 8hw&quot;
        src=&quot;/static/67f3329b3d28aa438930b751a8c69fe9/2bff6/1K4ItafU0ybT5arlf3P_8hw.png&quot;
        srcset=&quot;/static/67f3329b3d28aa438930b751a8c69fe9/924ad/1K4ItafU0ybT5arlf3P_8hw.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Older forms of media — TV, movies, books, music, etc — can thrive in this new world. By 2020, four billion people worldwide &lt;a href=&quot;http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world&quot;&gt;will have&lt;/a&gt; internet-connected smartphones. The addressable market for media companies is orders-of-magnitude larger than ever before.&lt;/p&gt;
&lt;p&gt;It is possible for companies to adapt even within industries dominated by old models. For example, Netflix has successfully applied the retail media model to an industry segment dominated by wholesalers:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“We are just a learning machine. Every time we put out a new show, we are analyzing it, figuring out what worked and what didn’t so we get better next time.” — &lt;a href=&quot;http://www.businessinsider.com/netflix-ceo-says-all-tv-will-be-on-internet-in-10-to-20-years-2015-9&quot;&gt;Reed Hastings, Netflix&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The internet renders business models focused on scarcity and litigation obsolete. But, as the PC gaming market shows, it also unlocks lucrative new business models, and lets creators connect with consumers in new and exciting ways.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Gordon Moore on self-driving cars]]></title>
            <description><![CDATA[“I never thought I’d see autonomous automobiles driving on the freeways. It wasn’t many years ago they put out a request to see who could…]]></description>
            <link>https://cdixon.org/2015/10/23/gordon-moore-on-self-driving-cars</link>
            <guid isPermaLink="false">https://cdixon.org/2015/10/23/gordon-moore-on-self-driving-cars</guid>
            <pubDate>Fri, 23 Oct 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“I never thought I’d see autonomous automobiles driving on the freeways. It wasn’t many years ago [they] put out a request to see who could build a car that could go across the Mojave Desert to Las Vegas from a place in Southern California, and several engineering teams across the country set out to do this. Nobody got more than about 300 yards before there was a problem. Two years later, they made the full 25-mile trip across this desert track, and which I thought was a huge achievement, and from that it was just a blink before they were driving on the freeways.”&lt;/p&gt;
&lt;p&gt;source: &lt;a href=&quot;http://www.nytimes.com/2015/05/13/opinion/thomas-friedman-moores-law-turns-50.html?mabReward=CTM&amp;#x26;action=click&amp;#x26;pgtype=Homepage&amp;#x26;region=CColumn&amp;#x26;module=Recommendation&amp;#x26;src=rechp&amp;#x26;WT.nav=RecEngine&amp;#x26;_r=1&quot;&gt;NYTimes&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[One man came to Mozart and asked him how to write a symphony.]]></title>
            <description><![CDATA[One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You…]]></description>
            <link>https://cdixon.org/2015/10/17/one-man-came-to-mozart-and-asked-him-how-to-write-a-symphony</link>
            <guid isPermaLink="false">https://cdixon.org/2015/10/17/one-man-came-to-mozart-and-asked-him-how-to-write-a-symphony</guid>
            <pubDate>Sat, 17 Oct 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You were writing symphonies when you were 10 years of age, and I am 21.” Mozart said, “Yes, but I didn’t run around asking people how to do it.”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;a href=&quot;http://25iq.com/2015/10/10/a-dozen-things-ive-learned-from-charlie-munger-about-moats/&quot;&gt;source&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Keybase: bringing public-key cryptography to mainstream users]]></title>
            <description><![CDATA[Today I’m excited to announce that a16z is leading a $10.8M Series A financing of Keybase, a company that is trying to make the internet…]]></description>
            <link>https://cdixon.org/2015/06/27/keybase-bringing-public-key-cryptography-to-mainstream-users</link>
            <guid isPermaLink="false">https://cdixon.org/2015/06/27/keybase-bringing-public-key-cryptography-to-mainstream-users</guid>
            <pubDate>Sat, 27 Jun 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Today I’m excited to &lt;a href=&quot;https://keybase.io/blog/2015-07-15/keybase-raises-series-a&quot;&gt;announce&lt;/a&gt; that &lt;a href=&quot;http://www.a16z.com&quot;&gt;a16z&lt;/a&gt; is leading a $10.8M Series A financing of &lt;a href=&quot;http://www.keybase.io&quot;&gt;Keybase&lt;/a&gt;, a company that is trying to make the internet more secure by making public-key cryptography accessible to mainstream internet users. I’ll be joining Keybase’s board.&lt;/p&gt;
&lt;p&gt;Almost every day we read about another major internet security breach. Recent examples include the &lt;a href=&quot;https://en.wikipedia.org/wiki/Sony_Pictures_Entertainment_hack&quot;&gt;Sony Pictures hack&lt;/a&gt;, in which confidential business emails were stolen and made public, and the &lt;a href=&quot;https://en.wikipedia.org/wiki/2014_celebrity_photo_hack&quot;&gt;Apple iCloud hack&lt;/a&gt;, in which private celebrity photos were stolen and made public.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 571px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 31.698774080560423%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Major security breaches have become frighteningly common&quot;
        title=&quot;Major security breaches have become frighteningly common&quot;
        src=&quot;/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png&quot;
        srcset=&quot;/static/1b25886d5c0baf31e8b217c7a5709e5e/924ad/15bwgo_w6Ppmx1hZBY-UqaQ.png 170w,
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/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png 571w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Major security breaches have become frighteningly common&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Hackers are increasingly sophisticated, with the skills and resources to penetrate security systems that were developed mostly for a prior generation of threats. People are — quite justifiably — starting to question whether they can trust technology companies with their private information.&lt;/p&gt;
&lt;p&gt;This is happening despite the fact that technology exists that can provide complete end-to-end security: public-key cryptography. Public-key cryptography was invented by mathematicians and computer scientists in the 1970s. It is hard to overstate the significance of this invention. As MIT computer science professor &lt;a href=&quot;http://www.scottaaronson.com/&quot;&gt;Scott Aaronson&lt;/a&gt; &lt;a href=&quot;http://www.scottaaronson.com/democritus/lec8.html&quot;&gt;explains&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Even though cryptography has influenced human affairs for millennia, developments over the last thirty years have completely — yes, completely — changed our understanding of it. If you plotted when the basic mathematical discoveries in cryptography were made, you’d see a few in antiquity, maybe a few from the Middle Ages till the 1800&apos;s, one in the 1920&apos;s (the one-time pad), a few more around World War II, and then, after the birth of computational complexity theory in the 1970&apos;s, &lt;strong&gt;boom boom boom boom boom boom boom&lt;/strong&gt;…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Using public-key cryptography, person A can send person B a message that &lt;em&gt;nobody else in the world&lt;/em&gt; except person B can decrypt, even though persons A and B have never communicated before. Person A simply needs to know person B’s “public key” (a long number that can be listed in public) and use that to encrypt the message. Person B uses a “private key” (another long number that has a mathematical relationship to the public key and is kept private) to decrypt the m tessage.&lt;/p&gt;
&lt;p&gt;Public-key cryptography means you don’t need to trust email providers, messaging companies, social networks, search engines, ISPs, cellular carriers, venture capitalists, tech startups, politicians, legal agreements, IT departments, and so on. You just need to trust math.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 144px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 100%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,/9j/2wBDABALDA4MChAODQ4SERATGCgaGBYWGDEjJR0oOjM9PDkzODdASFxOQERXRTc4UG1RV19iZ2hnPk1xeXBkeFxlZ2P/2wBDARESEhgVGC8aGi9jQjhCY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2P/wgARCAAUABQDASIAAhEBAxEB/8QAGQABAAIDAAAAAAAAAAAAAAAAAAQFAQMG/8QAFAEBAAAAAAAAAAAAAAAAAAAAAP/aAAwDAQACEAMQAAABxH1DolWLWAFsD//EABsQAAMBAQADAAAAAAAAAAAAAAECAwQSABEh/9oACAEBAAEFAtOo9Gjy8lUOhnxU+mObO3FZqwhNWYfB/8QAFBEBAAAAAAAAAAAAAAAAAAAAIP/aAAgBAwEBPwEf/8QAFBEBAAAAAAAAAAAAAAAAAAAAIP/aAAgBAgEBPwEf/8QAHhAAAgEEAwEAAAAAAAAAAAAAAAERAhIhMRAiQXH/2gAIAQEABj8CtoKXOGTI7k9wPq14PzJJqPnH/8QAHBABAAIDAAMAAAAAAAAAAAAAAQARITFBUXGR/9oACAEBAAE/Ic59qbdbExUHIXFapuPDCodks3MqvLuI0Zr7FmPoqAACg5P/2gAMAwEAAgADAAAAEADHPP/EABQRAQAAAAAAAAAAAAAAAAAAACD/2gAIAQMBAT8QH//EABQRAQAAAAAAAAAAAAAAAAAAACD/2gAIAQIBAT8QH//EAB8QAQEAAgIBBQAAAAAAAAAAAAERACExQVFhgZGhsf/aAAgBAQABPxC1W2Q7jK+/WHKiG4l+T5sw6iozh7v3m4CMQRfPSj3OdOFQ13o8AOVGcY64YBFYAutcjjjgwpNPCOnCqc2yT6XnBjCgDQZ//9k=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1zKRxnaArGgVXMV4daSk5nA&quot;
        title=&quot;1zKRxnaArGgVXMV4daSk5nA&quot;
        src=&quot;/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;So why isn’t public-key cryptography widely used? It is, but in diluted form: various forms of cryptography are baked into almost every popular internet service. Yet the hacks and data breaches continue, mainly because the otherwise invulnerable cryptographic protocols are embedded within larger systems in which vulnerabilities are introduced by software bugs, employee mistakes, product design tradeoffs, legal constraints, management decisions, etc.&lt;/p&gt;
&lt;p&gt;The ideal solution would be for users to adopt public-key cryptography themselves, in its pure, unadulterated form, without having to trust third-party service providers. Today, you’ll see this being done on occasion by more tech-savvy internet users. For example, here is &lt;a href=&quot;https://twitter.com/kashhill&quot;&gt;Kashmir Hill&lt;/a&gt;, an investigative journalist for &lt;a href=&quot;http://fusion.net/&quot;&gt;Fusion&lt;/a&gt;, publishing her &lt;a href=&quot;https://twitter.com/kashhill/status/583653381408849921&quot;&gt;public key&lt;/a&gt; on Twitter:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 31.25%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAGCAYAAADDl76dAAAACXBIWXMAAAsSAAALEgHS3X78AAABOUlEQVQY031R20rDQBDN/+OLoIIU+gMigg+CvimiKPoq2prNZXNpkmYb21x22+SkM1t9dWF2smfmzJyZOM+3D7i6vIMqFZIkQZZlkHEC1ewwjsAwDHThYH/nF2rqDa4/Khw9ljh+Ujh/VXDuT05xMZkgLRRc4aEoCqjVD2ozUMHxX9vqDjefa5y9KEzfV5i+lXC6tkHX1ug6Da01jDHW667FerNBVVWo6xpN09iY0QZt21qM8/qtBth2xjZxYhpTeD7SdIEojhFFMb09+EGABY3v+wcfhCHFIutDKeG6wuaEkjFpeXyc5XKJmAqxZ2KW5ZBE5CYhJTImiVTSjhnP84K+S9s8pOIsxPN9sDDet5PnOWbzuf0ZgnbI6nhMVhKQAiZ+zWbUNLEKhRB2zxznfBby7bq2eN/32ANq5r5VjHL8pwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;A journalist publishing her public key&quot;
        title=&quot;A journalist publishing her public key&quot;
        src=&quot;/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png&quot;
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/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;A journalist publishing her public key&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;To send her an encrypted message, however, you’d have use software tools that are generally too complicated and cumbersome for mainstream internet users. As a result, public-key cryptography is mostly limited to a small circle of tech savvy security enthusiasts.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 180px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 134.44444444444446%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;xkcd.com/1269/&quot;
        title=&quot;xkcd.com/1269/&quot;
        src=&quot;/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png&quot;
        srcset=&quot;/static/063e3b69a7ec2d6b291dce71fe66bd43/924ad/1h4wTN_yogOBTiUJp8fj1FQ.png 170w,
/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png 180w&quot;
        sizes=&quot;(max-width: 180px) 100vw, 180px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;xkcd.com/1269/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The idea behind Keybase is to make public-key cryptography accessible to everyday internet users. Keybase is, at its core, a database that connects people’s social media identities to their public cryptographic keys. For example, here’s the Keybase profile for &lt;a href=&quot;http://www.stripe.com&quot;&gt;Stripe&lt;/a&gt; co-founder &lt;a href=&quot;http://www.keybase.io/pc&quot;&gt;Patrick Collison&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 45.238095238095234%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAJCAIAAAC9o5sfAAAACXBIWXMAAAsSAAALEgHS3X78AAABaUlEQVQoz4WRWU7DMBCGe0QuAOIAvCEhOAcn4BI80NIWIVCRWt4AdU9DlzRpVu9jx2ZCKMsTo1/WzMif5ve4wTmtpUDpUgtR5YwRAOX+i0ZFMiKVfH566DavuWA1rLUyxuRZlmcpJQWlRMdbp+EPjPek5J437lxdnh8ddO/a2CUk1xo0QLBLVhkJ02Kds3i3S7hi5hdMaeGs6Q36J8eHF6dno8mkNIBNbbSSwo+SJbhA2EC5wGBSErA/sBAsz9Mk2fUHAyQpI0hWto2WgntBGIHNwJTOYuwpW6uhlFgt/eHwLQg2njd7fX1J0xjXhjCndLaONsqFwqbSEXA5OG7c9+xqYfhmUuTz+dT3PSzRy+fCAEBGJMwMS4DGQFNdiVouLNeOohr1P9XO4zhCz/uvwsXCBnpTerPgHZ935ux2wdtT0vR4NywH27L/BeM0nI+qyxounVyp3oi0JrSNmtIOaly08HxXjwt+/wElSPfuxLUC7wAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Patrick’s keybase profile&quot;
        title=&quot;Patrick’s keybase profile&quot;
        src=&quot;/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png&quot;
        srcset=&quot;/static/df9215941e799a4d7e6271855d2998fe/924ad/1OQich6uTLM8k7Hc1aBlWNg.png 170w,
/static/df9215941e799a4d7e6271855d2998fe/f570f/1OQich6uTLM8k7Hc1aBlWNg.png 341w,
/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png 504w&quot;
        sizes=&quot;(max-width: 504px) 100vw, 504px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Patrick’s keybase profile&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Each identity listed on his profile has been cryptographically verified to be owned by Patrick (other people can verify this for themselves by following the links on the page). So if you interact with Patrick as, say, &lt;em&gt;patrickc&lt;/em&gt; on Twitter, you know the public key listed here is owned by the same person.&lt;/p&gt;
&lt;p&gt;There are many things you can do with public-key cryptography besides sending messages. You can share files with individuals or with groups. You can verify that a file was created by the stated author and wasn’t altered (this use case is common with software developers who want to verify code they download doesn’t contain malware). In the future, you should also be able to use public-key cryptography to login to websites instead of having to remember passwords (this is already common behavior among developers who use cryptographic methods to login to servers)&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 23.61111111111111%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Keybase is developing native apps&quot;
        title=&quot;Keybase is developing native apps&quot;
        src=&quot;/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png&quot;
        srcset=&quot;/static/357754298b0e01ebae9cd8a6b321fade/924ad/12RYi_5_AA0Q2il0DPTk-kQ.png 170w,
/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Keybase is developing native apps&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;A database by itself is useful to only the most tech savvy users. So Keybase is also building a set of applications to complement the database. These include native software clients for all the major platforms (iOS, Android, OS X, Linux, and Windows) that make it easy to do secure messaging and file sharing using the Keybase directory. Keybase will remain in invite-only private beta until the client software is ready.&lt;/p&gt;
&lt;p&gt;A key design principle of Keybase is: &lt;em&gt;you don’t have to trust Keybase&lt;/em&gt;. All the relevant software is open source and therefore independently auditable, fork-able, etc. The keybase directory is fully public and therefore also fully auditable, fork-able, etc. Everything you need to verify that you can trust the end-to-end cryptography is open and auditable. Keybase could get hacked or acquired or shut down and it wouldn’t affect the security of anything that uses Keybase. You don’t need to trust Keybase. &lt;strong&gt;You only need to trust math.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 144px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 84.72222222222221%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Chris and Max&quot;
        title=&quot;Chris and Max&quot;
        src=&quot;/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png&quot;
        srcset=&quot;/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png 144w&quot;
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        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Chris and Max&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The founders of Keybase, &lt;a href=&quot;https://keybase.io/chris&quot;&gt;Chris Coyne&lt;/a&gt; and &lt;a href=&quot;https://keybase.io/max&quot;&gt;Max Krohn&lt;/a&gt;, met at Harvard where they studied math and computer science and started their first company, &lt;a href=&quot;https://en.wikipedia.org/wiki/SparkNotes&quot;&gt;SparkNotes&lt;/a&gt;. Max also got his PhD from MIT where he &lt;a href=&quot;http://pdos.csail.mit.edu/~max/pubs/&quot;&gt;focused&lt;/a&gt; on security and file systems. Chris and Max and two other friends then founded &lt;a href=&quot;https://en.wikipedia.org/wiki/OkCupid&quot;&gt;OKCupid&lt;/a&gt;, where Chris and Max ran product and technology up until the company was acquired by Match.com in 2011. Chris and Max have both technical depth and consumer design savvy, an ideal combination for a project like Keybase.&lt;/p&gt;
&lt;p&gt;Many of the best internet services were derived from ideas that came from Unix and the Unix-related academic and open-source communities:&lt;/p&gt;
&lt;p&gt;Entrepreneurs have had considerable success adapting these amazing tools for mainstream use. Public-key cryptography has been cloistered within niche technical communities for too long. The time is right to bring it to the mainstream. We are thrilled to back the Keybase team on their mission to make that happen.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 26.38888888888889%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1n7G6jdQsTC9NeaMsLy7SyQ&quot;
        title=&quot;1n7G6jdQsTC9NeaMsLy7SyQ&quot;
        src=&quot;/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Keybase is hiring — more info &lt;a href=&quot;https://keybase.io/jobs&quot;&gt;here&lt;/a&gt;.&lt;/strong&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The Babe Ruth Effect in Venture Capital]]></title>
            <description><![CDATA["How to hit home runs: I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can…]]></description>
            <link>https://cdixon.org/2015/06/07/the-babe-ruth-effect-in-venture-capital</link>
            <guid isPermaLink="false">https://cdixon.org/2015/06/07/the-babe-ruth-effect-in-venture-capital</guid>
            <pubDate>Sun, 07 Jun 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;&quot;How to hit home runs: I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can swing it through the ball, and the farther the ball will go. I swing big, with everything I&apos;ve got. I hit big or I miss big.&quot;&lt;/p&gt;
&lt;p&gt;— Babe Ruth&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;One of the hardest concepts to internalize for those new to VC is what is known as the “Babe Ruth effect”:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Building a portfolio that can deliver superior performance requires that you evaluate each investment using expected value analysis. What is striking is that the leading thinkers across varied fields — including horse betting, casino gambling, and investing — all emphasize the same point. We call it the Babe Ruth effect: even though Ruth struck out a lot, he was one of baseball’s greatest hitters.&lt;/p&gt;
&lt;p&gt;— &quot;The Babe Ruth Effect: Frequency vs Magnitude” [&lt;a href=&quot;http://turtletrader.com/pdfs/babe-ruth.pdf&quot;&gt;pdf&lt;/a&gt;]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The Babe Ruth effect occurs in many categories of investing, but is especially pronounced in VC. As Peter Thiel &lt;a href=&quot;http://25iq.com/2014/07/13/a-dozen-things-ive-learned-from-peter-thiel/&quot;&gt;observes&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Actual [venture capital] returns are incredibly skewed. The more a VC understands this skew pattern, the better the VC. Bad VCs tend to think the dashed line is flat, i.e. that all companies are created equal, and some just fail, spin wheels, or grow. In reality you get a power law distribution.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The Babe Ruth effect is hard to internalize because people are generally predisposed to avoid losses. Behavioral economists have famously &lt;a href=&quot;http://en.wikipedia.org/wiki/Loss_aversion&quot;&gt;demonstrated&lt;/a&gt; that people feel a lot worse about losses of a given size than they feel good about gains of the same size. Losing money feels bad, even if it is part of an investment strategy that succeeds in aggregate.&lt;/p&gt;
&lt;p&gt;People usually cite anecdotal cases when discussing this topic, because it&apos;s difficult to get access to comprehensive VC performance data. &lt;a href=&quot;http://www.horsleybridge.com/&quot;&gt;Horsley Bridge&lt;/a&gt;, a highly respected investor (Limited Partner) in many VC funds, was kind enough to share with me aggregated, anonymous historical data on the distribution of investment returns across the hundreds of VC funds they&apos;ve invested in since 1985.&lt;/p&gt;
&lt;p&gt;As expected, the returns are highly concentrated: about ~6% of investments representing 4.5% of dollars invested generated ~60% of the total returns. Let&apos;s dig into the data a little more to see what separates good VC funds from bad VC funds.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Home runs:&lt;/em&gt; As expected, successful funds have more &quot;home run&quot; investments (defined as investments that return &gt;10x):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screenshot-2015-06-06-11-55-45.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 65.44240400667779%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAABYlAAAWJQFJUiTwAAABOklEQVQoz42SiY6DIBRF+f9fmw+YdlJrXOtSNxYRFOxVGmNN0+kjEiLvcu7jQeZ5nqZJCDF/HdZatyBOzBhzfz+HsQZpTDUpuy7iuq6VUl8i8Y1GhezMx24Rl2XZ933XdZ/JYMLsaMaI/knN15MsqaoK4n9qXJmYE3YRI91ckCRJwjDUWr/VLcA1T03yVP8wVb9cWJqmvu8D/s6nXfVT2Scx89rhvtDXeIrzPIfztz4RN+EH9ERXoHO+zyNZlqHJUsqlDXbedoWmCfdiehmNdv6dlxcyxIvSmO0auO5Sfs1FoM1wMHIIMgwDNpWR6F4mwpT5IT03qtib3GhHsuOVVeHdfhmjspfVvSmykgveNE0URbgU1IW3FMdx27ZYY3bvgjyP2VWLtikMrSELggCNpJQiDR5ddZjdo3wA+1j4kiK0bjUAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screenshot 2015 06 06 11 55 45&quot;
        title=&quot;screenshot 2015 06 06 11 55 45&quot;
        src=&quot;/static/0f6e844996f72f89dbefb507ac6e0945/94a55/screenshot-2015-06-06-11-55-45.png&quot;
        srcset=&quot;/static/0f6e844996f72f89dbefb507ac6e0945/924ad/screenshot-2015-06-06-11-55-45.png 170w,
/static/0f6e844996f72f89dbefb507ac6e0945/f570f/screenshot-2015-06-06-11-55-45.png 341w,
/static/0f6e844996f72f89dbefb507ac6e0945/94a55/screenshot-2015-06-06-11-55-45.png 681w,
/static/0f6e844996f72f89dbefb507ac6e0945/e8f76/screenshot-2015-06-06-11-55-45.png 1022w,
/static/0f6e844996f72f89dbefb507ac6e0945/2b6f6/screenshot-2015-06-06-11-55-45.png 1198w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(For all the charts shown, the X-axis is the performance of the VC funds: great VC funds are on the right and bad funds are on the left.)&lt;/p&gt;
&lt;p&gt;Great funds not only have more home runs, they have home runs of greater magnitude. Here&apos;s a chart that looks at the average performance of the &quot;home run&quot; (&gt;10x) investments:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screenshot-2015-06-06-11-55-55.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 60.930232558139544%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAABG0lEQVQoz41S23KEIAz1//+uD+1DZ6drZQXFsnSVcAcbL+OsPnQNDHO4nJyQpBjHMedsrR1PG75fQHHYv6CN0zOmysHLlZxSijGelNVBUfW1eCmEEIQQrfUZZszxNlxCcmvYjLGqql5Gvki1QJT/3bYF57yua+fcgZxnSzim8+lK2o7DbZcwDPt/5ZSjS4ZrcpFvm+ZKbhpWlqWPFnxvApigByd1GHRUP5peH+8tVFzfpOXo4uC38N4HH4VqyfApDMNZPj4a+Ja2RRf4w5jD87d35OecrHPDaQ4bUxwjlnNKwWzHJlEKpLwbowEUpbW4C2tN3/eUUgDA/uu6DjFW1BiDacJ112GbP9RBHEJAAhYCy4EYT7ZGWvQR/AFDIL9s6Bn47QAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screenshot 2015 06 06 11 55 55&quot;
        title=&quot;screenshot 2015 06 06 11 55 55&quot;
        src=&quot;/static/38e297c82eed5b8ebfad830f87fa5251/94a55/screenshot-2015-06-06-11-55-55.png&quot;
        srcset=&quot;/static/38e297c82eed5b8ebfad830f87fa5251/924ad/screenshot-2015-06-06-11-55-55.png 170w,
/static/38e297c82eed5b8ebfad830f87fa5251/f570f/screenshot-2015-06-06-11-55-55.png 341w,
/static/38e297c82eed5b8ebfad830f87fa5251/94a55/screenshot-2015-06-06-11-55-55.png 681w,
/static/38e297c82eed5b8ebfad830f87fa5251/e8f76/screenshot-2015-06-06-11-55-55.png 1022w,
/static/38e297c82eed5b8ebfad830f87fa5251/8d6e5/screenshot-2015-06-06-11-55-55.png 1290w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;The home runs for good funds are around 20x, but the home runs for great funds are almost 70x. As Bill Gurley &lt;a href=&quot;http://25iq.com/2013/09/09/a-dozen-things-ive-learned-from-bill-gurley-about-investing-and-business/&quot;&gt;says&lt;/a&gt;: “Venture capital is not even a home run business. It’s a grand slam business.&quot;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Strikeouts:&lt;/em&gt; The Y-axis on the this chart is the percentage of investments that lose money:&lt;a href=&quot;images/screen-shot-2015-05-25-at-9-48-04-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 65.43859649122807%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 25 at 9 48 04 pm&quot;
        title=&quot;screen shot 2015 05 25 at 9 48 04 pm&quot;
        src=&quot;/static/2c25c398e5f89ee7ab732eae076e0a54/94a55/screen-shot-2015-05-25-at-9-48-04-pm.png&quot;
        srcset=&quot;/static/2c25c398e5f89ee7ab732eae076e0a54/924ad/screen-shot-2015-05-25-at-9-48-04-pm.png 170w,
/static/2c25c398e5f89ee7ab732eae076e0a54/f570f/screen-shot-2015-05-25-at-9-48-04-pm.png 341w,
/static/2c25c398e5f89ee7ab732eae076e0a54/94a55/screen-shot-2015-05-25-at-9-48-04-pm.png 681w,
/static/2c25c398e5f89ee7ab732eae076e0a54/e8f76/screen-shot-2015-05-25-at-9-48-04-pm.png 1022w,
/static/2c25c398e5f89ee7ab732eae076e0a54/f4f98/screen-shot-2015-05-25-at-9-48-04-pm.png 1140w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;This is the same chart with the Y-axis weighted by dollars invested per investment:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/4ce52870185b61838bc37f4e0d0a560f/4db5f/screen-shot-2015-05-25-at-9-45-05-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.64646464646465%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 25 at 9 45 05 pm&quot;
        title=&quot;screen shot 2015 05 25 at 9 45 05 pm&quot;
        src=&quot;/static/4ce52870185b61838bc37f4e0d0a560f/94a55/screen-shot-2015-05-25-at-9-45-05-pm.png&quot;
        srcset=&quot;/static/4ce52870185b61838bc37f4e0d0a560f/924ad/screen-shot-2015-05-25-at-9-45-05-pm.png 170w,
/static/4ce52870185b61838bc37f4e0d0a560f/f570f/screen-shot-2015-05-25-at-9-45-05-pm.png 341w,
/static/4ce52870185b61838bc37f4e0d0a560f/94a55/screen-shot-2015-05-25-at-9-45-05-pm.png 681w,
/static/4ce52870185b61838bc37f4e0d0a560f/e8f76/screen-shot-2015-05-25-at-9-45-05-pm.png 1022w,
/static/4ce52870185b61838bc37f4e0d0a560f/4db5f/screen-shot-2015-05-25-at-9-45-05-pm.png 1188w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;As expected, lots of investments lose money. Venture capital is a risky business.&lt;/p&gt;
&lt;p&gt;Notice that the curves are U-shaped. It isn&apos;t surprising that the bad funds lose money a lot, or that the good funds lose money less often than the bad funds. What is interesting and perhaps surprising is that the great funds lose money more often than good funds do&lt;em&gt;.&lt;/em&gt; The best VCs funds truly do exemplify the Babe Ruth effect: they swing hard, and either hit big or miss big. You can&apos;t have grand slams without a lot of strikeouts.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Exponential curves feel gradual and then sudden]]></title>
            <description><![CDATA["How did you go bankrupt?" "Two ways. Gradually, then suddenly.” – Ernest Hemingway, The Sun Also Rises The core growth process in the…]]></description>
            <link>https://cdixon.org/2015/05/12/exponential-curves-feel-gradual-and-then-sudden</link>
            <guid isPermaLink="false">https://cdixon.org/2015/05/12/exponential-curves-feel-gradual-and-then-sudden</guid>
            <pubDate>Tue, 12 May 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;&quot;How did you go bankrupt?&quot; &quot;Two ways. Gradually, then suddenly.”&lt;/p&gt;
&lt;p&gt;– Ernest Hemingway, The Sun Also Rises&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The core &lt;a href=&quot;http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;growth&lt;/a&gt; &lt;a href=&quot;https://twitter.com/cdixon/status/551943341563457538&quot;&gt;process&lt;/a&gt; in the technology business is a mutually reinforcing, multi-step, positive feedback loop between platforms and applications.  This leads to exponential growth curves (Peter Thiel calls them &lt;a href=&quot;http://blakemasters.com/post/21869934240/peter-thiels-cs183-startup-class-7-notes-essay&quot;&gt;power law&lt;/a&gt; curves), which in idealized form look like:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-5-46-11-pm1.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 59.227467811158796%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAAAu0lEQVQoz52S6QqEIBSFe/8njHSElH7Zhpn7MjdhYoYYyC4XUTnH76A2Oef0qMDY5PpKIeTTXIGLEfS678O+PyEn5zQh9eSCdeNoGCvHpLrYIFYYRWNSSXE7dnE6zk9sRexD5v3ettH7VCw3yCD6OBVCfl1P7C8ZJqUv9uSWBZhuno9ljH8+CexZG7WOSkEHKS1j8DCGUti/xmoU5xulchgEIaLrBEIbxseIkMAvPU1GSg9XBWWt+yowvwFQFcPtyt2pjwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 5 46 11 pm1&quot;
        title=&quot;screen shot 2015 05 12 at 5 46 11 pm1&quot;
        src=&quot;/static/1d6abd11f72e426e83625e0d5a2592cc/94a55/screen-shot-2015-05-12-at-5-46-11-pm1.png&quot;
        srcset=&quot;/static/1d6abd11f72e426e83625e0d5a2592cc/924ad/screen-shot-2015-05-12-at-5-46-11-pm1.png 170w,
/static/1d6abd11f72e426e83625e0d5a2592cc/f570f/screen-shot-2015-05-12-at-5-46-11-pm1.png 341w,
/static/1d6abd11f72e426e83625e0d5a2592cc/94a55/screen-shot-2015-05-12-at-5-46-11-pm1.png 681w,
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        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;The most prominent recent &lt;a href=&quot;http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world&quot;&gt;example&lt;/a&gt; of this was the positive feedback loop between smartphones (iOS and Android phones) and smartphone apps (FB, WhatsApp, etc):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-6-05-30-pm1.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.047318611987386%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 6 05 30 pm1&quot;
        title=&quot;screen shot 2015 05 12 at 6 05 30 pm1&quot;
        src=&quot;/static/f44307318457ff0b7d5fed7eccfed059/94a55/screen-shot-2015-05-12-at-6-05-30-pm1.png&quot;
        srcset=&quot;/static/f44307318457ff0b7d5fed7eccfed059/924ad/screen-shot-2015-05-12-at-6-05-30-pm1.png 170w,
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;After the fact, exponential curves look relatively smooth. When you are in the midst of them, however, they feel like they are divided into two stages: gradual and sudden.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-5-48-37-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 634px;&quot;
    &gt;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 5 48 37 pm&quot;
        title=&quot;screen shot 2015 05 12 at 5 48 37 pm&quot;
        src=&quot;/static/ab2268105f124d6bee4cbf8d62639d62/24a49/screen-shot-2015-05-12-at-5-48-37-pm.png&quot;
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      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Singularity University &lt;a href=&quot;http://www.evolutionpartners.com.au/exponential-growth-vs-linear-thinking-in-management-teams.html&quot;&gt;calls&lt;/a&gt; this the &quot;deception of linear vs exponential growth&quot;:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/3125e31111d353e83b375066eb7fce95/3b243/linear-vs-exponential-1024x658-1.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.2578125%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;linear vs exponential 1024x658 1&quot;
        title=&quot;linear vs exponential 1024x658 1&quot;
        src=&quot;/static/3125e31111d353e83b375066eb7fce95/94a55/linear-vs-exponential-1024x658-1.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Today, smartphone growth seems obviously exponential. But just a few years ago many people thought smartphones were growing linearly. Even Mark Zuckerberg underestimated the importance of mobile in the &quot;feels gradual&quot; phase. In 2011 or so, he realized what we were experiencing was actually an exponential curve, and consequently dramatically increased Facebook&apos;s investment in mobile:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-6-19-33-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.31825273010921%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 6 19 33 pm&quot;
        title=&quot;screen shot 2015 05 12 at 6 19 33 pm&quot;
        src=&quot;/static/07acec0e2013aa43c6f5c609f2003eb8/94a55/screen-shot-2015-05-12-at-6-19-33-pm.png&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Exponential growth curves in the &quot;feels gradual&quot; phase are deceptive. There are many things happening today in technology that feel gradual and disappointing but will soon feel sudden and amazing.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Proprietary services vs open protocols]]></title>
            <link>https://cdixon.org/2015/04/12/proprietary-services-vs-open-protocols</link>
            <guid isPermaLink="false">https://cdixon.org/2015/04/12/proprietary-services-vs-open-protocols</guid>
            <pubDate>Sun, 12 Apr 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote class=&quot;twitter-tweet&quot; data-lang=&quot;en&quot;&gt;&lt;p lang=&quot;en&quot; dir=&quot;ltr&quot;&gt;1/ the history of the internet is a series of battles between proprietary services and open protocols&lt;/p&gt;&amp;mdash; Chris Dixon (@cdixon) &lt;a href=&quot;https://twitter.com/cdixon/status/587373396805160961?ref_src=twsrc%5Etfw&quot;&gt;April 12, 2015&lt;/a&gt;&lt;/blockquote&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Improbable: enabling the development of large-scale simulated worlds]]></title>
            <description><![CDATA[Over the past decade, computing resources that were previously available only to large organizations became available to almost anyone…]]></description>
            <link>https://cdixon.org/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds</link>
            <guid isPermaLink="false">https://cdixon.org/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds</guid>
            <pubDate>Tue, 24 Mar 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Over the past decade, computing resources that were previously available only to large organizations became available to almost anyone. Using cloud-scale development platforms like Amazon Web Services, developers can write software that runs on hundreds or even thousands of servers, and do so relatively cheaply.&lt;/p&gt;
&lt;p&gt;But it is still difficult to write software that makes efficient use of this abundant computing. For some projects, like creating websites, there are well-known software architectures that work reasonably well. In other areas, there&apos;s been progress building generalized tools (for example, Hadoop in data processing). For the most part, however, developers need to solve the parallelization problem over and over again for each application they develop. New tools that help them do this are sorely needed.&lt;/p&gt;
&lt;p&gt;Today, I am excited to announce that a16z is investing $20M in &lt;a href=&quot;http://improbable.io/&quot;&gt;Improbable&lt;/a&gt;, a London-based company that was founded by a group of computer scientists from the University of Cambridge. Improbable’s technology solves the parallelization problem for an important class of problems: anything that can be defined as a set of entities that interact in space. This basically means any problem where you want to build a simulated world. Developers who use Improbable can write code as if it will run on only one machine (using whatever simulation software they prefer, including popular gaming/physics engines like Unity and Unreal), without having to think about parallelization. Improbable automatically distributes their code across hundreds or even thousands of machines, which then work together to create a seamlessly integrated, simulated world.&lt;/p&gt;
&lt;p&gt;The Improbable team had to solve multiple hard problems to make this work. Think of their tech as a “spatial operating system”: for every object in the world — a person, a car, a microbe —the system assigns “ownership” of different parts of that entity to various worker programs. As entities move around (according to whatever controls them  -- code, humans, real-world sensors) they interact with other entities. Often these interactions happen across machines, so Improbable needs to handle inter-machine messaging. Sometimes entities need to be reassigned to new hardware to load balance. When hardware fails or network conditions degrade, Improbable automatically reassigns the workload and adjusts the network flow. Getting the system to work at scale under real-world conditions is a very hard problem that took the Improbable team years of R&amp;#x26;D.&lt;/p&gt;
&lt;p&gt;One initial application for the Improbable technology is in gaming. Game developers have been trying to build virtual worlds for decades, but until now those worlds have been relatively small, usually running on only a handful of servers and relying on hacks to create the illusion of scale. With Improbable, developers can now create games with millions of persistent, complex, interacting entities. In addition, they can spend their time inventing game features instead of building back-end systems.&lt;/p&gt;
&lt;p&gt;Beyond gaming, Improbable is useful in any field that models complex systems — biology, economics, defense, urban planning, transportation, disease prevention, etc. Think of simulations as the flip side to “big data.” Data science is useful when you already have large data sets. Simulations are useful when you know how parts of the system work and want to generate data about the system as a whole. Simulations are especially well suited for asking hypothetical questions: what would happen to the world if we changed X and Y? How could we change X and Y to get the outcome we want?&lt;/p&gt;
&lt;p&gt;Improbable was started three years ago at Cambridge by Herman Narula and Rob Whitehead. They have since built an outstanding team of engineers and computer scientists from companies like Google and top UK computer science programs. They’ve done all of this on a small seed financing, supplemented by customer revenue and research grants. We are thrilled to partner with Improbable on their mission to develop and popularize simulated worlds.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["It all blossomed out of this tiny little seed"]]></title>
            <description><![CDATA[Steve Jobs in 1985: I felt it the first time when I visited a school. It was third and fourth graders, and they had a whole classroom full…]]></description>
            <link>https://cdixon.org/2015/03/13/it-all-blossomed-out-of-this-tiny-little-seed</link>
            <guid isPermaLink="false">https://cdixon.org/2015/03/13/it-all-blossomed-out-of-this-tiny-little-seed</guid>
            <pubDate>Fri, 13 Mar 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Steve Jobs in 1985:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;I felt it the first time when I visited a school. It was third and fourth graders, and they had a whole classroom full of Apple II’s. I spent a few hours there, and I saw these third and fourth graders growing up completely different than I grew up because of this machine.&lt;/p&gt;
&lt;p&gt;What hit me about it was that here was this machine that very few people designed — about four in the case of the Apple II — who gave it to some other people who didn&apos;t know how to design it but knew how to make it, to manufacture it. They could make a whole bunch of them. And then they give it some people that didn&apos;t know how to design it or manufacture it, but they knew how to distribute it. And then they gave it to some people that didn&apos;t knew how to design or manufacture or distribute it, but knew how to write software for it.&lt;/p&gt;
&lt;p&gt;Gradually this sort of inverse pyramid grew. It finally got into the hands of a lot of people -- and it all blossomed out of this tiny little seed.&lt;/p&gt;
&lt;p&gt;It seemed like an incredible amount of leverage. It all started with just an idea. Here was this idea, taken through all of these stages, resulting in a classroom full of kids growing up with some insights and fundamentally different experiences which, I thought, might be very beneficial to their lives. Because of this germ of an idea a few years ago.&lt;/p&gt;
&lt;p&gt;That&apos;s an incredible feeling to know that you had something to do with it, and to know it can be done, to know that you can plant something in the world and it will grow, and change the world, ever so slightly.&lt;/p&gt;
&lt;p&gt;— &lt;a href=&quot;https://www.youtube.com/watch?v=BNeXlJW70KQ&amp;#x26;start=1104&quot;&gt;Steve Jobs brainstorms with NeXT team 1985 (starting at minute 18:24)&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The idea maze for AI startups]]></title>
            <description><![CDATA[An “idea maze” is a map of all the key decisions and tradeoffs that startups in a given space need to make: A good founder is capable of…]]></description>
            <link>https://cdixon.org/2015/02/01/the-ai-startup-idea-maze</link>
            <guid isPermaLink="false">https://cdixon.org/2015/02/01/the-ai-startup-idea-maze</guid>
            <pubDate>Sun, 01 Feb 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;An “&lt;a href=&quot;http://cdixon.org/2013/08/04/the-idea-maze/&quot;&gt;idea maze&lt;/a&gt;” is a map of all the key decisions and tradeoffs that startups in a given space need to make:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;A good founder is capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions.&lt;/p&gt;
&lt;p&gt;- Balaji Srinivasan, “&lt;a href=&quot;https://spark-public.s3.amazonaws.com/startup/lecture_slides/lecture5-market-wireframing-design.pdf&quot;&gt;Market Research, Wireframing and Design&lt;/a&gt;”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I thought it would be interesting to show an example of an idea maze for an area that I’m interested in: AI startups. Here’s a sketch of the maze. I explain each step in detail below.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-02-01-at-11-51-53-am.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    &gt;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 02 01 at 11 51 53 am&quot;
        title=&quot;screen shot 2015 02 01 at 11 51 53 am&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“MVP with 80–90% accuracy.”&lt;/em&gt; The &lt;a href=&quot;http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/&quot;&gt;old saying&lt;/a&gt; in the machine learning community is that “machine learning is really good at partially solving just about any problem.” For most problems, it’s relatively easy to build a model that is accurate 80–90% of the time. After that, the returns on time, money, brainpower, data etc. rapidly diminish. As a rule of thumb, you’ll spend a few months getting to 80% and something between a few years and eternity getting the last 20%. (Incidentally, this is why when you see partial demos like Watson and self-driving cars, the demo itself doesn’t tell you much — what you need to see is how they handle the 10–20% of “edge cases” — the dog jumping out in front of the car in unusual lighting conditions, etc).&lt;/p&gt;
&lt;p&gt;At this point in the maze you have a choice. You can either 1) try to get the accuracy up to near 100%, or 2) build a product that is useful even though it is only partially accurate. You do this by building what I like to call a “fault tolerant UX.”&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“Create a fault tolerant UX.”&lt;/em&gt; Good examples of fault-tolerant UXs are iOS autocorrect and Google search’s “did you mean X?” feature. You could also argue Google search itself is a fault tolerant UX: showing 10 links instead of going straight to the top result lets the human override the machine when the machine gets the ranking wrong. Building a fault tolerant UX isn’t capitulation, but it does mean a very different set of product requirements. (In particular, latency is very important when you want the human and machine to work together—this generally affects your technical architecture).&lt;/p&gt;
&lt;p&gt;Ok so let’s suppose you decide to go for 100% accuracy. How do you get there? You won’t get the 10–20% through algorithms. You’ll only get there with lots more data for training your models. Data is the key to AI because 1) it’s the missing ingredient — we have great algorithms and virtually endless computational resources now, and 2) it’s the proprietary ingredient—algorithms are mostly a shared resource created by the research community. Public data sets, on the other hands, are generally not very good. The good data sets either don’t exist or are privately owned.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“Narrow the domain.”&lt;/em&gt; The amount of data you need is relative to the breadth of the problem you are trying to solve. So before you start collecting data you might want to narrow your domain. Instead of trying to build a virtual bot that can do anything (which would basically mean passing the Turing Test—good luck with that), build a bot that can just help someone with scheduling meetings. Instead of building a cloud service that predicts anything, build one that can predict when a transaction is fraudulent. Etc.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“Narrow domain even more.”&lt;/em&gt; After you are done narrowing the domain, try narrowing it even more! Even if your goal is to build X, sometimes building an MVP that is part of X is the best way to eventually get to X. My advice would be to keep narrowing your domain until you can’t narrow it anymore without making the product so narrow that no one wants to use it. You can always expand the scope later.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“How do you get the data?”&lt;/em&gt; Broadly speaking, there are two ways: build it yourself or crowdsource it. A good analogy here is Google Maps vs Waze. Google employs thousands of people driving around to map out roads, buildings, and traffic. Waze figured out how to get millions of people to do that for them. To do what Google does, you need far more capital (hundreds of millions, if not billions of dollars) than is generally available to pre-launch startups.&lt;/p&gt;
&lt;p&gt;Startups are left with two choices to get the data. 1) Try to mine it from publicly available sources. 2) Try to crowdsource it.&lt;/p&gt;
&lt;p&gt;The most common example of 1) is crawling the web, or big websites like Wikipedia. You could argue this is what the original Google search did by using links as ranking signals. Many startups have tried mining Wikipedia, an approach that hasn’t led to much success, as far as I know.&lt;/p&gt;
&lt;p&gt;The most viable approach for startups is crowdsourcing the data. This boils down to designing a service that provides the right incentives for users to give data back to the system to make it better. Building a crowdsourced product is its own topic (which is why that part of the idea maze points to another, nested idea maze), but I’ll give an example of one approach to doing this, which was tried by company called &lt;a href=&quot;http://wit.ai&quot;&gt;Wit.ai&lt;/a&gt; that we invested in last year. Wit’s idea was to provide a service for developers for doing speech-to-text and natural language processing. The v1.0 system gave the right answer most but not all of the time. But it also provided a dashboard and API where developers could correct errors to improve their results. For developers using the free version of the service, the training they performed would get fed back to make the overall system smarter. Facebook acquired Wit so their future will unfold now as part of a larger company. The approach they took was very clever and could apply to many other AI domains.&lt;/p&gt;
&lt;p&gt;This is a rough sketch of how I see the AI startup idea maze. A few caveats: 1) I could very well be mistaken or have overlooked other paths through the maze — idea mazes are meant to aid discussion, not serve as gospel, and 2) As Balaji says, new technological developments can “move walls and change assumptions.” Look out especially for new infrastructure technologies (internet, smartphones, cloud computing, bitcoin, etc) that can unlock new pathways in many different idea mazes, even ones that at first seem unrelated.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Come for the tool, stay for the network]]></title>
            <description><![CDATA[A popular strategy for bootstrapping networks is what I like to call “come for the tool, stay for the network.” The idea is to initially…]]></description>
            <link>https://cdixon.org/2015/01/31/come-for-the-tool-stay-for-the-network</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/31/come-for-the-tool-stay-for-the-network</guid>
            <pubDate>Sat, 31 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A popular strategy for bootstrapping networks is what I like to call “come for the tool, stay for the network.”&lt;/p&gt;
&lt;p&gt;The idea is to initially attract users with a &lt;a href=&quot;http://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes/&quot;&gt;single-player tool&lt;/a&gt; and then, over time, get them to participate in a network. The tool helps get to initial critical mass. The network creates the long term value for users, and defensibility for the company.&lt;/p&gt;
&lt;p&gt;Here are two historical examples: 1) &lt;em&gt;Delicious&lt;/em&gt;. The single-player tool was a cloud service for your bookmarks. The multiplayer network was a tagging system for discovering and sharing links. 2) &lt;em&gt;Instagram&lt;/em&gt;. Instagram’s initial hook was the innovative photo filters. At the time some other apps like Hipstamatic had filters but you had to pay for them. Instagram also made it easy to share your photos on other networks like Facebook and Twitter. But you could also share on Instagram’s network, which of course became the preferred way to use Instagram over time.&lt;/p&gt;
&lt;p&gt;The “come for the tool, stay for the network” strategy isn&apos;t the only way to build a network. Some networks never had single-player tools, including gigantic successes like Facebook and Twitter. But starting a network from scratch is very hard. Think of single-player tools as kindling.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Virtual reality: a new creative medium where the default state is belief]]></title>
            <description><![CDATA[The holy grail of virtual reality, the one that’s always been out of reach until now, is presence. In the VR community, “presence” is a term…]]></description>
            <link>https://cdixon.org/2015/01/24/virtual-reality-a-new-creative-medium-where-the-default-state-is-belief</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/24/virtual-reality-a-new-creative-medium-where-the-default-state-is-belief</guid>
            <pubDate>Sat, 24 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The holy grail of virtual reality, the one that’s always been out of reach until now, is presence.&lt;/p&gt;
&lt;p&gt;In the VR community, “presence” is a term of art. It’s the idea that once VR reaches a certain quality level your brain is actually tricked — at the lowest, most primal level — into believing that what you see in front of you is reality. Studies show that even if you rationally believe you’re not truly standing at the edge of a steep cliff, and even if you try with all your might to jump, your legs will buckle. Your low-level lizard brain won’t let you do it.&lt;/p&gt;
&lt;p&gt;With presence, your brain goes from feeling like you have a headset on to feeling like you’re immersed in a different world.&lt;/p&gt;
&lt;p&gt;Computer enthusiasts and science fiction writers have dreamed about VR for decades. But earlier attempts to develop it, especially in the 1990s, were disappointing. It turns out the technology wasn’t ready yet. What’s happening now — because of Moore’s Law, and also the rapid improvement of processors, screens, and accelerometers, driven by the smartphone boom — is that VR is finally ready to go mainstream.&lt;/p&gt;
&lt;p&gt;Once VR achieves presence, we start to believe.&lt;/p&gt;
&lt;p&gt;We use the phrase “suspension of disbelief” about the experience of watching TV or movies. This implies that our default state watching TV and movies is disbelief. We start to believe only when we become sufficiently immersed.&lt;/p&gt;
&lt;p&gt;With VR, the situation is reversed: we believe, by default, that what we see is real. As Chris Milk, an early VR pioneer, &lt;a href=&quot;https://stories.californiasunday.com/2014-10-05/virtual-reality-hollywood&quot;&gt;explains&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;You read a book; your brain reads letters printed in ink on paper and transforms that into a world. You watch a movie; you’re seeing imagery inside of a rectangle while you’re sitting inside a room, and your brain translates that into a world. And you connect to this even though you know it’s not real, but because you’re in the habit of suspending disbelief.&lt;/p&gt;
&lt;p&gt;With virtual reality, you’re essentially hacking the visual-audio system of your brain and feeding it a set of stimuli that’s close enough to the stimuli it expects that it sees it as truth. Instead of suspending your disbelief, you actually have to remind yourself not to believe.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This has implications for the kinds of software that will succeed in VR. The risk is not that it’s boring, but that it’s too intense. For example, a popular video game like Call of Duty ported to VR would be frightening and disorienting for most people.&lt;/p&gt;
&lt;p&gt;What will likely succeed instead are relatively simple experiences. Some examples: go back in time and walk around ancient Rome; overcome your fear of heights by climbing skyscrapers; execute precision moves as you train to safely land planes; return to places you “3D photographed” on your last vacation; have a picnic on a sunny afternoon with a long-lost friend; build trust with virtual work colleagues in a way that today you can only do in person.&lt;/p&gt;
&lt;p&gt;These experiences will be dreamt up by “experience makers” — the VR version of filmmakers. The next few decades of VR will be similar to the first few decades of film. Filmmakers had no idea what worked and what didn’t: how to write, how to shoot, how to edit, etc. After decades of experiments they established the grammar of film. We’re about to enter a similar period of exploration with VR.&lt;/p&gt;
&lt;p&gt;There will be great games made in VR, and gaming will &lt;a href=&quot;http://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality/&quot;&gt;probably&lt;/a&gt; dominate the VR narrative for the next few years. But longer term, we won’t think of games as essential to the medium. The original TV shows were newscasts and game shows, but today we think of TV screens as content-agnostic input-output devices.&lt;/p&gt;
&lt;p&gt;VR will be the ultimate input-output device. Some people call VR “the last medium” because any subsequent medium can be invented inside of VR, using software alone. Looking back, the movie and TV screens we use today will be seen as an intermediate step between the invention of electricity and the invention of VR. Kids will think it’s funny that their ancestors used to stare at glowing rectangles hoping to suspend disbelief.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;(originally posted on &lt;a href=&quot;http://a16z.com/2015/01/22/16-things/&quot;&gt;a16z&lt;/a&gt;)&lt;/em&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Stack Exchange]]></title>
            <description><![CDATA[Today we are announcing that A16z is leading a $40M investment in Stack Exchange, along with earlier investors USV, Bezos Expeditions, Spark…]]></description>
            <link>https://cdixon.org/2015/01/20/a16z-invests-in-stack-exchange</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/20/a16z-invests-in-stack-exchange</guid>
            <pubDate>Tue, 20 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Today we are announcing that &lt;a href=&quot;http://www.a16z.com&quot;&gt;A16z&lt;/a&gt; is leading a $40M investment in &lt;a href=&quot;http://stackexchange.com&quot;&gt;Stack Exchange&lt;/a&gt;, along with earlier investors USV, Bezos Expeditions, Spark, and Index.&lt;/p&gt;
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&lt;p&gt;Stack Exchange is a network of 133 &lt;a href=&quot;http://stackexchange.com/sites&quot;&gt;sites&lt;/a&gt; (and growing) where people can ask and answer questions about topics related to engineering, science, hobbies, and more. The biggest site on the network is Stack Overflow, which alone gets over 40 million unique visitors per month. The other sites cover a very wide variety of topics, including: &lt;a href=&quot;http://math.stackexchange.com&quot;&gt;math&lt;/a&gt;, &lt;a href=&quot;http://gardening.stackexchange.com&quot;&gt;gardening&lt;/a&gt;, &lt;a href=&quot;http://english.stackexchange.com&quot;&gt;English language usage&lt;/a&gt;, &lt;a href=&quot;http://graphicdesign.stackexchange.com&quot;&gt;graphic design&lt;/a&gt;, &lt;a href=&quot;http://physics.stackexchange.com&quot;&gt;physics&lt;/a&gt;, &lt;a href=&quot;http://crypto.stackexchange.com&quot;&gt;cryptography&lt;/a&gt;, &lt;a href=&quot;http://chess.stackexchange.com&quot;&gt;chess&lt;/a&gt;, &lt;a href=&quot;http://astronomy.stackexchange.com&quot;&gt;astronomy&lt;/a&gt;, &lt;a href=&quot;http://buddhism.stackexchange.com&quot;&gt;Buddhism&lt;/a&gt;, &lt;a href=&quot;http://datascience.stackexchange.com&quot;&gt;data science&lt;/a&gt;, &lt;a href=&quot;http://martialarts.stackexchange.com&quot;&gt;martial arts&lt;/a&gt;, &lt;a href=&quot;http://diy.stackexchange.com&quot;&gt;home improvement&lt;/a&gt;, &lt;a href=&quot;http://photo.stackexchange.com&quot;&gt;photography&lt;/a&gt;, &lt;a href=&quot;http://bicycles.stackexchange.com&quot;&gt;bicycles&lt;/a&gt;, &lt;a href=&quot;http://boardgames.stackexchange.com&quot;&gt;board games&lt;/a&gt;, &lt;a href=&quot;http://economics.stackexchange.com&quot;&gt;economics&lt;/a&gt;, to name a few. Most likely, you’ve used Stack Exchange without even knowing it —the network had over 300M unique visitors last year. Many users come in through Google, get their answer, and then leave, usually a little bit smarter.&lt;/p&gt;
&lt;p&gt;One of the major startup opportunities of the information age is: now that more than two billion people have internet-connected devices, how do we create &lt;a href=&quot;http://cdixon.org/2010/01/17/collective-knowledge-systems/&quot;&gt;systems&lt;/a&gt; to efficiently share and store their collective knowledge? Requirements for successful collective knowledge systems include: 1) users need to be given the proper incentives to contribute, 2) the contributions of helpful users need to make the system smarter (not just bigger), and 3) users with malicious intent can’t be allowed to hurt the system.&lt;/p&gt;
&lt;p&gt;Many entrepreneurs and inventors have tried and failed to solve this problem. As far as I know, only two organizations have succeeded at scale: Stack Exchange and Wikipedia. Stack isn’t as large as Wikipedia on the readership side — the topics are more specialized—but, on the contributor side, is closely comparable to Wikipedia. Last year, Stack had over 300 million unique visitors, and 3.8 million total registered users, who contributed over 3.1M questions, 4.5M answers, 2.7M edits, and 17M comments.&lt;/p&gt;
&lt;p&gt;Stack’s business model is based on job placement. Employers create company pages (&lt;a href=&quot;http://careers.stackoverflow.com/company/amazon-us&quot;&gt;here&lt;/a&gt; is Amazon’s—over 6000 companies have created pages) and then run targeted ad campaigns for open job opportunities. Revenue has grown quickly, and the company employs over 200 people. The HQ is in NYC, with offices in Denver and London, and remote workers in Israel, Brazil, Japan, Germany, Slovenia, France, and across the US.&lt;/p&gt;
&lt;p&gt;I believe Stack Exchange’s growth has now reached escape velocity. Not only will the existing topics continue to grow, but many new topics will emerge, until the network covers every topic that is amenable to objective Q&amp;#x26;A. As new generations of people grow up on the internet, old habits — searching through textbooks or how-to books, or asking friends—will fade away. People will come to expect that any objective question can be instantly answered with a Google search.&lt;/p&gt;
&lt;p&gt;I’ve been a personal investor in Stack since its initial funding, and it has always been one of my favorite investments. Stack’s cofounder &amp;#x26; CEO, Joel Spolsky, is an amazing entrepreneur and internet visionary. I’m very happy to back him again with this new investment.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Skydio]]></title>
            <description><![CDATA[I’m excited to announce today that Andreessen Horowitz is leading a $3M financing of Skydio, a startup developing artificial intelligence…]]></description>
            <link>https://cdixon.org/2015/01/15/skydio</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/15/skydio</guid>
            <pubDate>Thu, 15 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’m excited to announce today that Andreessen Horowitz is leading a $3M financing of &lt;a href=&quot;http://skyd.io&quot;&gt;Skydio&lt;/a&gt;, a startup developing artificial intelligence systems for drones.&lt;/p&gt;
&lt;p&gt;The Skydio team is awesomely qualified. They worked on drone vision systems at MIT and then co-founded a drone project at &lt;a href=&quot;http://en.wikipedia.org/wiki/Google_X&quot;&gt;Google[x]&lt;/a&gt; called Project Wing. The company’s mission is to create smart drones. As cofounder Adam Bry &lt;a href=&quot;http://skyd.io/blog/2015/01/takeoff/&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Drones are poised to have a transformative impact on how we see our world. They’ll enable us to film the best moments of our lives with professional quality cinematography and they’ll also change the way businesses think about monitoring their operations and infrastructure. This grand vision is starting to come into focus, but existing products are blind to the world around them. As a consequence, drones must fly high above the nearest structures or receive the constant attention of an expert operator. &lt;a href=&quot;http://www.wsj.com/articles/what-happens-when-your-drone-escapes-1418086281?autologin=y&quot;&gt;“Flyaways”&lt;/a&gt; and &lt;a href=&quot;https://www.youtube.com/watch?v=KgNQrGGxJrM&quot;&gt;crashes&lt;/a&gt; abound. These problems must be solved for the industry to move forward.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Smart drone operators will simply give high-level instructions like “map these fields” or “film me while I’m skiing” and the drone will carry out the mission. Safety and privacy regulations will be baked into the operating system and will always be the top priority.&lt;/p&gt;
&lt;p&gt;This is my second drone investment - the first one was &lt;a href=&quot;http://www.airware.com&quot;&gt;Airware&lt;/a&gt;. I see Airware and Skydio as complementary (and I’d like to make more drone investments - at any stage including seed investments - as long as they don’t compete with Airware or Skydio). You can think of Airware as the operating system and Skydio as the most important app on top of the operating system. The founders of both companies have deep expertise in both aviation and computer science, the key prerequisites for creating smart drones.&lt;/p&gt;
&lt;p&gt;Here’s a fun video of an early Skydio prototype in action: &lt;div class=&quot;gatsby-resp-iframe-wrapper&quot; style=&quot;padding-bottom: 56.53450807635829%; position: relative; height: 0; overflow: hidden; &quot; &gt; &lt;div class=&quot;embedVideo-container&quot;&gt; &lt;iframe src=&quot;https://www.youtube-nocookie.com/embed/rYhPDn48-Sg?rel=0&quot; class=&quot;embedVideo-iframe&quot; style=&quot;border:0; position: absolute; top: 0; left: 0; width: 100%; height: 100%; &quot; allowfullscreen&gt;&lt;/iframe&gt; &lt;/div&gt; &lt;/div&gt;&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[How We Got To Now]]></title>
            <description><![CDATA[I really enjoyed Steven Johnson's How We Got To Now. I read a lot of history and science books, but this book stood out because 1) the…]]></description>
            <link>https://cdixon.org/2015/01/12/how-we-got-to-now</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/12/how-we-got-to-now</guid>
            <pubDate>Mon, 12 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I really enjoyed Steven Johnson&apos;s &lt;a href=&quot;http://www.amazon.com/How-We-Got-Now-Innovations-ebook/dp/B00INIXU5I&quot;&gt;How We Got To Now&lt;/a&gt;. I read a lot of history and science books, but this book stood out because 1) the anecdotes were entertaining and relevant, and 2) it got the process of innovation right.&lt;/p&gt;
&lt;p&gt;I&apos;ll just pick one story here that I liked. &lt;a href=&quot;http://en.wikipedia.org/wiki/Frederic_Tudor&quot;&gt;Frederic Tudor&lt;/a&gt; was a Boston entrepreneur in the early 1800s who had the clever idea to ship ice from New England to the Caribbean:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The history of global trade had clearly demonstrated that vast fortunes could be made by transporting a commodity that was ubiquitous in one environment to a place where it was scarce. To the young Tudor, ice seemed to fit the equation perfectly: nearly worthless in Boston, ice would be priceless in Havana.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Not only was the ice almost free, but so was the shipping:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;His New England base gave him one crucial advantage, beyond the ice itself. Unlike the U.S. South, with its sugar plantations and cotton fields, the northeastern states were largely devoid of natural resources that could be sold elsewhere. This meant that ships tended to leave Boston harbor empty, heading off for the West Indies to fill their hulls with valuable cargo before returning to the wealthy markets of the eastern seaboard. Paying a crew to sail a ship with no cargo was effectively burning money. Any cargo was better than nothing, which meant that Tudor could negotiate cheaper rates for himself by loading his ice onto what would have otherwise been an empty ship, and thereby avoiding the need to buy and maintain his own vessels.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;He invested his life savings and years building his startup. Everyone thought he was crazy. The local paper wrote a snarky article about him: &quot;No joke. A vessel has cleared at the Custom House for Martinique with a cargo of ice. We hope this will not prove a slippery speculation.&quot; He even spent two years in prison when he went into debt (this was before one of the greatest legal inventions of all time- &lt;a href=&quot;http://en.wikipedia.org/wiki/Limited_liability#History&quot;&gt;limited liability&lt;/a&gt;). He finally got his ice delivered but failed to predict one thing:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Despite a number of weather-related delays, the ice survived the journey in remarkably good shape. The problem proved to be one that Tudor had never contemplated. The residents of Martinique had no interest in his exotic frozen bounty. They simply had no idea what to do with it.&lt;/p&gt;
&lt;p&gt;We take it for granted in the modern world that an ordinary day will involve exposure to a wide range of temperatures. We enjoy piping hot coffee in the morning and ice cream for dessert at the end of the day. Those of us who live in climates with hot summers expect to bounce back and forth between air-conditioned offices and brutal humidity where winter rules, we bundle up and venture out into the frigid streets, and turn up the thermostat when we return home. But the overwhelming majority of humans living in equatorial climes in 1800 would have literally never once experienced anything cold. The idea of frozen water would have been as fanciful to the residents of Martinique as an iPhone.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;There is a saying that entrepreneurs should create &quot;painkillers not vitamins&quot;. This is bad advice. Painkillers are not very interesting businesses. Lots of people create painkillers, and they either work or they don&apos;t, and nothing more is generated as a result. The really interesting companies create vitamins. You don&apos;t know you want ice until you figure out what to do with it. Once you do, you discover all sorts of things you couldn&apos;t imagine before, which in turn create new opportunities for invention and entrepreneurship.&lt;/p&gt;
&lt;p&gt;The stories in the book ultimately argue for public policies that support networked innovation:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[T]here are social and political implications to these kinds of stories. We know that one key driver of progress and standards of living is technological innovation. If we think that innovation comes from a lone genius inventing a new technology from scratch, that model naturally steers us toward certain policy decisions, like stronger patent protection. But if we think that innovation comes out of collaborative networks, then we want to support different policies and organizational forms.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;People who understand how innovation really works tend to support open standards, lenient immigration policies, well-funded university research, employee stock options, and significant &lt;a href=&quot;http://cdixon.org/2009/09/24/software-patents-should-be-abolished/&quot;&gt;restrictions&lt;/a&gt; of patents.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[VC investment vs Gartner hype cycle]]></title>
            <description><![CDATA[Here is total VC investment over time:  And here's the Gartner hype cycle:  One reading of this is that the advent of the internet was the…]]></description>
            <link>https://cdixon.org/2015/01/12/vc-investment-vs-gartner-hype-cycle</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/12/vc-investment-vs-gartner-hype-cycle</guid>
            <pubDate>Mon, 12 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Here is total &lt;a href=&quot;http://www.infocaptor.com/dashboard/venture-capital-investment-analytics-on-20-years-of-investment-data&quot;&gt;VC investment&lt;/a&gt; over time:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-01-12-at-10-38-00-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.058242843040475%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 01 12 at 10 38 00 pm&quot;
        title=&quot;screen shot 2015 01 12 at 10 38 00 pm&quot;
        src=&quot;/static/520bd1efe6538f6cbbea1d9520f4f617/94a55/screen-shot-2015-01-12-at-10-38-00-pm.png&quot;
        srcset=&quot;/static/520bd1efe6538f6cbbea1d9520f4f617/924ad/screen-shot-2015-01-12-at-10-38-00-pm.png 170w,
/static/520bd1efe6538f6cbbea1d9520f4f617/f570f/screen-shot-2015-01-12-at-10-38-00-pm.png 341w,
/static/520bd1efe6538f6cbbea1d9520f4f617/94a55/screen-shot-2015-01-12-at-10-38-00-pm.png 681w,
/static/520bd1efe6538f6cbbea1d9520f4f617/e8f76/screen-shot-2015-01-12-at-10-38-00-pm.png 1022w,
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/static/520bd1efe6538f6cbbea1d9520f4f617/986fe/screen-shot-2015-01-12-at-10-38-00-pm.png 2026w&quot;
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        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;And here&apos;s the Gartner hype cycle:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-01-12-at-10-38-22-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 65.19524617996603%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 01 12 at 10 38 22 pm&quot;
        title=&quot;screen shot 2015 01 12 at 10 38 22 pm&quot;
        src=&quot;/static/1f19902d067842cdfd32b07d42e21249/94a55/screen-shot-2015-01-12-at-10-38-22-pm.png&quot;
        srcset=&quot;/static/1f19902d067842cdfd32b07d42e21249/924ad/screen-shot-2015-01-12-at-10-38-22-pm.png 170w,
/static/1f19902d067842cdfd32b07d42e21249/f570f/screen-shot-2015-01-12-at-10-38-22-pm.png 341w,
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/static/1f19902d067842cdfd32b07d42e21249/e8f76/screen-shot-2015-01-12-at-10-38-22-pm.png 1022w,
/static/1f19902d067842cdfd32b07d42e21249/bcefc/screen-shot-2015-01-12-at-10-38-22-pm.png 1178w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;One reading of this is that the advent of the internet was the technology trigger, the dot-com crash was the trough of disillusionment, and 2004-present is the slope of enlightenment (with a mini-crash in 2008 due to the implosion on Wall Street). This reading would be consistent with Carlotta Perez&apos;s theory that we are now in the multi-decade &lt;a href=&quot;http://cdixon.org/2013/02/10/the-computing-deployment-phase/&quot;&gt;deployment phase&lt;/a&gt;.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Flow]]></title>
            <description><![CDATA[Mihaly Csikszentmihalyi in 1996 on the concept of Flow: [Flow] is being completely involved in an activity for its own sake. The ego falls…]]></description>
            <link>https://cdixon.org/2015/01/10/flow</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/10/flow</guid>
            <pubDate>Sat, 10 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Mihaly Csikszentmihalyi in 1996 on the concept of Flow:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[Flow] is being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you&apos;re using your skills to the utmost.&lt;/p&gt;
&lt;p&gt;Goals transform a random walk into a chase. You need clear goals that fit into a hierarchy, with little goals that build toward more meaningful, higher-level goals. Here you are, tracking the footprints of some animal you haven&apos;t seen. That&apos;s exhilarating. Then there&apos;s the question of feedback. Most Web sites don&apos;t very much care what you do. It would be much better if they said: &quot;You&apos;ve made some interesting choices&quot; or &quot;You&apos;re developing a knowledge of Picasso.&quot; There&apos;s also the ability to challenge. Competition is an easy way to get into flow.&lt;/p&gt;
&lt;p&gt;Realize that change and downtime are important. I found that if a painter relates to objects only through vision, his work is much less original than a painter who walks up to the object, smells it, throws it in the air, and manipulates it. The variety of sensory inputs allows you to create a visual image that has all kinds of dimensions bubbling up inside it. We are still a multimedia organism. If we want to push the envelope of complexity further, we have to use all of our devices for accessing information - not all of which are rational.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;- &lt;a href=&quot;http://archive.wired.com/wired/archive/4.09/czik_pr.html&quot;&gt;&quot;Go With the Flow,&quot;&lt;/a&gt; Wired Magazine&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The thin edge of the wedge for virtual reality]]></title>
            <description><![CDATA[Pius Uzamere argues that virtual reality will succeed first in business applications instead of gaming: The most interesting virtual reality…]]></description>
            <link>https://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality</link>
            <guid isPermaLink="false">https://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality</guid>
            <pubDate>Thu, 01 Jan 2015 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Pius Uzamere &lt;a href=&quot;https://www.theinformation.com/The-Best-VR-Startups-In-2015-Will-Go-Pro&quot;&gt;argues&lt;/a&gt; that virtual reality will succeed first in business applications instead of gaming:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The most interesting virtual reality software startups this year won&apos;t really be &quot;virtual reality&quot; companies at all; they&apos;ll be startups making amazing tools that just happen to use VR to bring them to life. This has already started to play out in fields like medicine where virtual reality is already being used to &lt;a href=&quot;http://icahn.mssm.edu/research/programs/brain-surgery-virtual-reality-simulation-program&quot;&gt;train brain surgeons&lt;/a&gt; at Mount Sinai.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The argument is roughly that 1) high-quality VR equipment will start out expensive, 2) business apps can be distributed via web, 3) toolchain for creating business VR content is better (3d scanning tools etc).&lt;/p&gt;
&lt;p&gt;Non-gaming VR applications are indeed underhyped. But gaming is important as an entry point. Critics tend to underestimate the scale and passion of the hardcore gaming community. For example: 32 million people &lt;a href=&quot;http://www.nytimes.com/2014/10/12/technology/riot-games-league-of-legends-main-attraction-esports.html&quot;&gt;watched&lt;/a&gt; the live steam of the championship of League of Legends, an extremely complicated game that is only available on PCs and Macs. VR has an unusually favorable market structure: a &lt;a href=&quot;http://cdixon.org/2010/12/27/the-thin-edge-of-the-wedge-strategy/&quot;&gt;thin edge of the wedge&lt;/a&gt; (hardcore gaming) and a thick edge of the wedge (replacing everything we now do on screens).&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["The Not So Global Internet"]]></title>
            <description><![CDATA[Fred Wilson writes about how frustrating it is when companies break the internet: We are in the caribbean this week celebrating the year end…]]></description>
            <link>https://cdixon.org/2014/12/27/the-not-so-global-internet</link>
            <guid isPermaLink="false">https://cdixon.org/2014/12/27/the-not-so-global-internet</guid>
            <pubDate>Sat, 27 Dec 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Fred Wilson &lt;a href=&quot;http://avc.com/2014/12/the-not-so-global-internet/&quot;&gt;writes&lt;/a&gt; about how frustrating it is when companies break the internet:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;We are in the caribbean this week celebrating the year end holiday with friends and family. Yesterday we installed a VPN client so that the Gotham Gal could do some online shopping on a website that only sells to users in the US. We also installed a bittorrent client so that a friend of my son could watch films he had rented on iTunes before he came down here.&lt;/p&gt;
&lt;p&gt;The latter experience was particularly frustrating. My son’s friend rented the films on iTunes in NYC, flew down here, then when he tried to play them, they would not play because of IP blocking, but the rental clock (24 hours) started ticking anyway and he lost the rental rights he had paid for.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I buy all my movies through Apple TV and am strongly opposed to piracy. But I bet many people who pirate would be happy to pay if it were easier to buy and download content.&lt;/p&gt;
&lt;p&gt;Here&apos;s a service I&apos;d love to see. For every Bittorrent file, create a corresponding Bitcoin wallet. When people download the torrent file, encourage them to pay a fee to the Bitcoin wallet. The creator of the content gets to take the Bitcoin. I bet this method would generate considerable revenue for content creators.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Two eras of the internet: pull and push]]></title>
            <description><![CDATA[The evolution of the internet is an extremely complex topic. Sometimes it is helpful to find broad patterns that make it easier to…]]></description>
            <link>https://cdixon.org/2014/12/21/two-eras-of-the-internet-pull-and-push</link>
            <guid isPermaLink="false">https://cdixon.org/2014/12/21/two-eras-of-the-internet-pull-and-push</guid>
            <pubDate>Sun, 21 Dec 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The evolution of the internet is an extremely complex topic. Sometimes it is helpful to find broad patterns that make it easier to understand. One simplifying pattern comes from the two types of actions internet users take: pull and push.&lt;/p&gt;
&lt;table&gt;
&lt;thead&gt;
&lt;tr&gt;
&lt;th&gt;&lt;/th&gt;
&lt;th&gt;Pull&lt;/th&gt;
&lt;th&gt;Push&lt;/th&gt;
&lt;/tr&gt;
&lt;/thead&gt;
&lt;tbody&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Dominant platform&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Search&lt;/td&gt;
&lt;td&gt;Social&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Dominant platform company&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Google&lt;/td&gt;
&lt;td&gt;Facebook&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Growth era&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;2000s&lt;/td&gt;
&lt;td&gt;2010s&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Successful content type&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Utilities&lt;/td&gt;
&lt;td&gt;Media&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Content durability&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Stock&lt;/td&gt;
&lt;td&gt;Flow&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Successful publishers&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;TripAdvisor, Wikipedia, Yelp, &amp;#x26; many more&lt;/td&gt;
&lt;td&gt;tbd&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Marketing activity&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;links and algorithms&lt;/td&gt;
&lt;td&gt;shares and people&lt;/td&gt;
&lt;/tr&gt;
&lt;/tbody&gt;
&lt;/table&gt;
&lt;p&gt;Pull is when you are seeking information, usually an answer to a question. You want to know the closing time of a restaurant, the description of a hotel where you are thinking about staying, the details of an historical event you heard about, etc. You go to your computer and pull the information. The killer app for pulling information was Google.&lt;/p&gt;
&lt;p&gt;Search grew exponentially in its heyday (roughly, the decade of the &lt;a href=&quot;http://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups/&quot;&gt;2000s&lt;/a&gt;) because it benefited from a positive feedback loop between the supply of and the demand for information. As search demand grew, websites developed content to meet that demand, which in turn further stoked demand.  The successful websites of this era were mostly information utilities such as Wikipedia, Yelp, and TripAdvisor.&lt;/p&gt;
&lt;p&gt;Push is when you are using the internet in a more passive way and content comes to you. The killer app for push is social networks, the most popular being Facebook. Information is pushed from user to user via likes, shares, tweets, etc. People tend to push things they find funny, interesting, moving, outrageous, etc which usually means they push media: articles, videos, lists, gifs, photos, etc.&lt;/p&gt;
&lt;p&gt;We are &lt;a href=&quot;http://www.nytimes.com/2014/08/13/upshot/why-buzzfeed-is-trying-to-shift-its-strategy.html?_r=3&amp;#x26;abt=0002&amp;#x26;abg=1&quot;&gt;currently&lt;/a&gt; experiencing a positive feedback loop between social networks and media publishers, analogous to last decade&apos;s search + information feedback loop. There are a few other key differences today:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Desktop vs mobile:&lt;/em&gt; The current era has an additional dimension of complexity due to a &lt;a href=&quot;https://twitter.com/cdixon/status/540987062610968577/photo/1&quot;&gt;simultaneous&lt;/a&gt; transition from desktop to mobile computing. Consequences include the rapid &lt;a href=&quot;http://cdixon.org/2014/04/07/the-decline-of-the-mobile-web/&quot;&gt;rise&lt;/a&gt; of native apps over websites, and a dramatic increase in the overall scale and reach of the internet.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Stock vs flow:&lt;/em&gt; Media tends to have a much shorter shelf life than informational content. The main defensible asset for last decade&apos;s publishers was the repository of content they accumulated. The defensible asset for media publishers is the machine - the combination of people, technology, practices, financial and other assets - that produces a constant flow content.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Bundled vs unbundled monetization:&lt;/em&gt; In the prior era, monetization usually meant placing ads on websites next to content. In the new era, atomized chunks of content are pushed through social networks and consumed on mobile phones. The most successful ads are funny, interesting, engaging, compelling, etc. on their own (so-called native ads) and don&apos;t rely on bundling.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;There will probably be a few big, successful companies that emerge from the push era. As in the pull era, the successful companies will reinforce the feedback loop: riding the trends instead of fighting them.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["The dawn of trustworthy computing"]]></title>
            <description><![CDATA[Nick Szabo: On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we…]]></description>
            <link>https://cdixon.org/2014/12/11/the-dawn-of-trustworthy-computing</link>
            <guid isPermaLink="false">https://cdixon.org/2014/12/11/the-dawn-of-trustworthy-computing</guid>
            <pubDate>Thu, 11 Dec 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Nick Szabo:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we have to fill out forms and make ourselves vulnerable to identity theft in order to participate in e-commerce, and it often is very difficult to prohibitive to conduct many kinds of commerce, even purely online kinds, across borders and other trust boundaries. Today&apos;s computers are not very trustworthy, but they are so astronomically faster than humans at so many important tasks that we use them heavily anyway. We reap the tremendous benefits of computers and public networks at large costs of identity fraud and other increasingly disastrous attacks.&lt;/p&gt;
&lt;p&gt;Recently developed and developing technology, often called &quot;the block chain&quot;, is starting to change this. A block chain computer is a virtual computer, a computer in the cloud, shared across many traditional computers and protected by cryptography and consensus technology. A Turing-complete block chain with large state gives us this shared computer. These block chain computers will allow us to put the most crucial parts of our online protocols on a far more reliable and secure footing, and make possible fiduciary interactions that we previously dared not do on a global network.&lt;/p&gt;
&lt;p&gt;— &quot;&lt;a href=&quot;http://unenumerated.blogspot.com/2014/12/the-dawn-of-trustworthy-computing.html&quot;&gt;The Dawn of Trustworthy Computing&lt;/a&gt;&quot;&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Top 10 websites]]></title>
            <description><![CDATA[Top 10 websites in the US according to Quantcast:  A few observations: As Josh Kopelman points out, 4 of the top 10 sites (YouTube, Facebook…]]></description>
            <link>https://cdixon.org/2014/12/06/1404</link>
            <guid isPermaLink="false">https://cdixon.org/2014/12/06/1404</guid>
            <pubDate>Sat, 06 Dec 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Top 10 websites in the US &lt;a href=&quot;https://www.quantcast.com/top-sites&quot;&gt;according&lt;/a&gt; to Quantcast:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2014-12-06-at-3-54-06-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 441px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 102.49433106575962%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2014 12 06 at 3 54 06 pm&quot;
        title=&quot;screen shot 2014 12 06 at 3 54 06 pm&quot;
        src=&quot;/static/fe9721a02d6006a9344e199c547823af/98017/screen-shot-2014-12-06-at-3-54-06-pm.png&quot;
        srcset=&quot;/static/fe9721a02d6006a9344e199c547823af/924ad/screen-shot-2014-12-06-at-3-54-06-pm.png 170w,
/static/fe9721a02d6006a9344e199c547823af/f570f/screen-shot-2014-12-06-at-3-54-06-pm.png 341w,
/static/fe9721a02d6006a9344e199c547823af/98017/screen-shot-2014-12-06-at-3-54-06-pm.png 441w&quot;
        sizes=&quot;(max-width: 441px) 100vw, 441px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;A few observations:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;As Josh Kopelman &lt;a href=&quot;https://twitter.com/joshk/status/541358855696166912&quot;&gt;points&lt;/a&gt; out, 4 of the top 10 sites (YouTube, Facebook, Twitter, Buzzfeed) didn&apos;t exist 10 years ago.&lt;/li&gt;
&lt;li&gt;On &lt;a href=&quot;https://twitter.com/cdixon/status/541353371018735616&quot;&gt;Twitter&lt;/a&gt;, people seemed surprised to see MSN and Microsoft on the list. I assume they are there because most versions of Windows still default users to MSN/Microsoft pages.&lt;/li&gt;
&lt;li&gt;Some people on Twitter were surprised that eBay is ahead of Amazon. I think this is because Amazon appeals more to the tech demographic. As they say: &quot;EBay is for people with more time than money. Amazon is for people with more money than time.&quot;&lt;/li&gt;
&lt;/ol&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["This business is like bird spotting"]]></title>
            <description><![CDATA[One of my favorite quotes about startups/VC, from legendary VC Mike Moritz of Sequoia: I rarely think about big themes. This business is…]]></description>
            <link>https://cdixon.org/2014/12/01/this-business-is-like-bird-spotting</link>
            <guid isPermaLink="false">https://cdixon.org/2014/12/01/this-business-is-like-bird-spotting</guid>
            <pubDate>Mon, 01 Dec 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of my favorite quotes about startups/VC, &lt;a href=&quot;http://andrewchen.co/why-i-doubted-facebook-could-build-a-billion-dollar-business-and-what-i-learned-from-being-horribly-wrong/&quot;&gt;from&lt;/a&gt; legendary VC Mike Moritz of Sequoia:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;I rarely think about big themes. This business is like bird spotting. I don’t try to pick out the flock. Each one is different and I try to find an interestingly complected bird in a flock rather than try to make an observation about an entire flock. For that reason, while other firms may avoid companies because they perceive a certain investment sector as being overplayed or already mature, Sequoia is careful not to redline neighborhoods.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In traditional business thinking, generalizations about &quot;flocks&quot; i.e. markets/categories/sectors can be very useful. But when your job is to identify exceptions, generalizations can be dangerous.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["The business plans of the next 10,000 startups are easy to forecast: Take X and add AI."]]></title>
            <description><![CDATA[Kevin Kelly thinks artificial intelligence is finally ready deliver on its promise: The AI on the horizon looks more like Amazon Web…]]></description>
            <link>https://cdixon.org/2014/11/23/the-business-plans-of-the-next-10000-startups-are-easy-to-forecast-take-x-and-add-ai</link>
            <guid isPermaLink="false">https://cdixon.org/2014/11/23/the-business-plans-of-the-next-10000-startups-are-easy-to-forecast-take-x-and-add-ai</guid>
            <pubDate>Sun, 23 Nov 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Kevin Kelly thinks artificial intelligence is finally ready deliver on its promise:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The AI on the horizon looks more like Amazon Web Services—cheap, reliable, industrial-grade digital smartness running behind everything, and almost invisible except when it blinks off. This common utility will serve you as much IQ as you want but no more than you need. Like all utilities, AI will be supremely boring, even as it transforms the Internet, the global economy, and civilization. It will enliven inert objects, much as electricity did more than a century ago. Everything that we formerly electrified we will now cognitize. This new utilitarian AI will also augment us individually as people (deepening our memory, speeding our recognition) and collectively as a species. There is almost nothing we can think of that cannot be made new, different, or interesting by infusing it with some extra IQ. In fact, the business plans of the next 10,000 startups are easy to forecast: Take X and add AI. This is a big deal, and now it&apos;s here.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;from Wired, &quot;&lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;The Three Breakthroughs that have finally unleashed AI on the world&lt;/a&gt;&quot;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["A man will be able to carry one in his vest pocket"]]></title>
            <description><![CDATA[Nikola Tesla predicted the development internet-connected smartphones back in 1926: From the inception of the wireless system, I saw that…]]></description>
            <link>https://cdixon.org/2014/11/19/a-man-will-be-able-to-carry-one-in-his-vest-pocket</link>
            <guid isPermaLink="false">https://cdixon.org/2014/11/19/a-man-will-be-able-to-carry-one-in-his-vest-pocket</guid>
            <pubDate>Wed, 19 Nov 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Nikola Tesla &lt;a href=&quot;http://www.tfcbooks.com/tesla/1926-01-30.htm&quot;&gt;predicted&lt;/a&gt; the development internet-connected smartphones back in 1926:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;From the inception of the wireless system, I saw that this new art of applied electricity would be of greater benefit to the human race than any other scientific discovery, for it virtually eliminates distance.  The majority of the ills from which humanity suffers are due to the immense extent of the terrestrial globe and the inability of individuals and nations to come into close contact.&lt;/p&gt;
&lt;p&gt;Wireless will achieve the closer contact through transmission of intelligence, transport of our bodies and materials and conveyance of energy.&lt;/p&gt;
&lt;p&gt;When wireless is perfectly applied the whole earth will be converted into a huge brain, which in fact it is, all things being particles of a real and rhythmic whole.  We shall be able to communicate with one another instantly, irrespective of distance.  Not only this, but through television and telephony we shall see and hear one another as perfectly as though we were face to face, despite intervening distances of thousands of miles; and the instruments through which we shall be able to do his will be amazingly simple compared with our present telephone.  A man will be able to carry one in his vest pocket.&lt;/p&gt;
&lt;p&gt;We shall be able to witness and hear events--the inauguration of a President, the playing of a world series game, the havoc of an earthquake or the terror of a battle--just as though we were present.&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["There's no way to tell where the border is between measurement and manipulation"]]></title>
            <description><![CDATA[Jaron Lanier discussing whether machine learning systems like Netflix recommendations, Facebook's newsfeed, Google search etc are…]]></description>
            <link>https://cdixon.org/2014/11/15/theres-no-way-to-tell-where-the-border-is-between-measurement-and-manipulation</link>
            <guid isPermaLink="false">https://cdixon.org/2014/11/15/theres-no-way-to-tell-where-the-border-is-between-measurement-and-manipulation</guid>
            <pubDate>Sat, 15 Nov 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Jaron Lanier &lt;a href=&quot;http://edge.org/conversation/the-myth-of-ai&quot;&gt;discussing&lt;/a&gt; whether machine learning systems like Netflix recommendations, Facebook&apos;s newsfeed, Google search etc are manipulative:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There&apos;s no way to tell where the border is between measurement and manipulation in these systems. For instance, if the theory is that you&apos;re getting big data by observing a lot of people who make choices, and then you&apos;re doing correlations to make suggestions to yet more people, if the preponderance of those people have grown up in the system and are responding to whatever choices it gave them, there&apos;s not enough new data coming into it for even the most ideal or intelligent recommendation engine to do anything meaningful.&lt;/p&gt;
&lt;p&gt;In other words, the only way for such a system to be legitimate would be for it to have an observatory that could observe in peace, not being sullied by its own recommendations. Otherwise, it simply turns into a system that measures which manipulations work, as opposed to which ones don&apos;t work, which is very different from a virginal and empirically careful system that&apos;s trying to tell what recommendations would work had it not intervened. That&apos;s a pretty clear thing. What&apos;s not clear is where the boundary is.&lt;/p&gt;
&lt;p&gt;If you ask: is a recommendation engine like Amazon more manipulative, or more of a legitimate measurement device? There&apos;s no way to know. At this point there&apos;s no way to know, because it&apos;s too universal. The same thing can be said for any other big data system that recommends courses of action to people, whether it&apos;s the Google ad business, or social networks like Facebook deciding what you see, or any of the myriad of dating apps. All of these things, there&apos;s no baseline, so we don&apos;t know to what degree they&apos;re measurement versus manipulation.&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The return of podcasting]]></title>
            <description><![CDATA[Kevin Roose recently wrote about the renaissance of podcasting: Sometime around 2009 or 2010, the podcast scene seemed to wither. The…]]></description>
            <link>https://cdixon.org/2014/11/14/the-return-of-podcasting</link>
            <guid isPermaLink="false">https://cdixon.org/2014/11/14/the-return-of-podcasting</guid>
            <pubDate>Fri, 14 Nov 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Kevin Roose recently &lt;a href=&quot;http://nymag.com/daily/intelligencer/2014/10/whats-behind-the-great-podcast-renaissance.html&quot;&gt;wrote&lt;/a&gt; about the renaissance of podcasting:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Sometime around 2009 or 2010, the podcast scene seemed to wither. The stalwarts (&quot;This American Life,&quot; &quot;Radiolab&quot;) stayed around at the top of the iTunes charts, but there wasn&apos;t much else happening. Download numbers fell. Interest waned. People moved on to online video and streaming music services as a way to pass the time... Today, a very different problem exists: There are &lt;em&gt;too&lt;/em&gt; many great podcasts to keep up with.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;He attributes this mainly to the rise of smartphone-connected cars:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Connected cars are a boon for the entire streaming audio industry, but they&apos;re especially exciting for podcast makers, whose shows are perfectly suited to in-car listening. Just as TV watchers can now choose Netflix or Amazon streams over surfing channels, radio listeners will soon have a bevy of on-demand options at their disposal.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I think that&apos;s right, but I also think there is another reason behind podcasting&apos;s renaissance. As other forms of social media have matured, they&apos;ve become less freewheeling and interesting. For example, the social media world I mostly inhabit - tech twitter - used to be exceptionally candid and direct. It felt like tech people chatting amongst themselves. Now it is mostly carefully crafted tweets designed to get retweeted and not cause trouble.&lt;/p&gt;
&lt;p&gt;Podcasting, on the other hand, feels fresh in the same way that other forms of social media did 5-10 years ago. No one knows what the right way to podcast is. Very few people have followings. The expectations are low. You are rewarded mostly for being fresh and experimental. It&apos;s the beginning of a new medium, and no one knows the rules. That&apos;s what makes it exciting and attracts pioneering creators.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["The Future of Reading Depends on the Future of Learning Difficult to Learn Things"]]></title>
            <description><![CDATA[Socrates’ complaints about writing included “Writing removes the need to remember”. He meant that a prosthetic brace on a healthy limb will…]]></description>
            <link>https://cdixon.org/2014/11/08/the-future-of-reading-depends-on-the-future-of-learning-difficult-to-learn-things</link>
            <guid isPermaLink="false">https://cdixon.org/2014/11/08/the-future-of-reading-depends-on-the-future-of-learning-difficult-to-learn-things</guid>
            <pubDate>Sat, 08 Nov 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;Socrates’ complaints about writing included “Writing removes the need to remember”. He meant that a prosthetic brace on a healthy limb will induce withering. On the other hand, if we think of new technologies as amplifiers that add or multiply to what we already have rather than replacing them—then we have the opportunity to use writing for its reach over time and space, its efficiencies, and its ability to hold forms of argument that don’t work in oral discourse. And we can still learn to remember all we’ve read! In other words, writing is not a good replacement for memories used in thinking—too inefficient—but is a great way to cover more ground, to cover different ground, and to have more to think about and with.&lt;/p&gt;
&lt;p&gt;...[McLuhan said] that new media which are adopted at all first take their content from older and more familiar media. For example, it was important that the printed Gutenberg Bible be a Bible, and also look like a hand-made manuscript copy. Gradually, if the new medium has powers of its own, these will start to be found and used. The real message of printing was not to imitate hand-written Bibles, but 150 years later to argue in new ways about science and political governance. These are what forever changed Europe, and then America.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;-Alan Kay, &quot;&lt;a href=&quot;http://www.vpri.org/pdf/future_of_reading.pdf&quot;&gt;The Future of Reading Depends on the Future of Learning Difficult to Learn Things&lt;/a&gt;&quot; (via &lt;a href=&quot;https://twitter.com/ibdknox&quot;&gt;Chris Granger&lt;/a&gt;)&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[We asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers]]></title>
            <description><![CDATA[Benedict Evans has a new presentation about the explosive growth of internet-connected smartphones. By 2020, 80% of adults on earth will…]]></description>
            <link>https://cdixon.org/2014/10/28/we-asked-for-flying-cars-and-all-we-got-was-the-entire-planet-communicating-instantly-via-pocket-supercomputers</link>
            <guid isPermaLink="false">https://cdixon.org/2014/10/28/we-asked-for-flying-cars-and-all-we-got-was-the-entire-planet-communicating-instantly-via-pocket-supercomputers</guid>
            <pubDate>Tue, 28 Oct 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Benedict Evans has a new &lt;a href=&quot;http://a16z.com/2014/10/28/mobile-is-eating-the-world/&quot;&gt;presentation&lt;/a&gt; about the explosive growth of internet-connected smartphones.&lt;/p&gt;
&lt;p&gt;By 2020, 80% of adults on earth will have a smartphone:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2014-10-28-at-5-39-38-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 619px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 65.26655896607431%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2014 10 28 at 5 39 38 pm&quot;
        title=&quot;screen shot 2014 10 28 at 5 39 38 pm&quot;
        src=&quot;/static/bd68699102ee843b9860e2569f344b88/030a8/screen-shot-2014-10-28-at-5-39-38-pm.png&quot;
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/static/bd68699102ee843b9860e2569f344b88/f570f/screen-shot-2014-10-28-at-5-39-38-pm.png 341w,
/static/bd68699102ee843b9860e2569f344b88/030a8/screen-shot-2014-10-28-at-5-39-38-pm.png 619w&quot;
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      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;And each of those phones is equivalent to what we used to call a supercomputer:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2014-10-28-at-5-39-26-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 602px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.810631229235874%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAAAyElEQVQoz5WRzQ6DIBCEff+HUxsPqDWCIv5V6yv0C0Rqihw6h8mAO+y4m2wnXnG4r1uAxKt9398BjuPwOmrGqbV+nmiapq5rWAgBt20LT9NE2b256zpKq6rChl9YlGWJnud5WZYw+dc8jiPNeR4BG2McD8OAGcb/Ez5xw+CWbA+LoijyPM+yDMERTYQ0TWGl1H1n3iaz+z3ShtOmMxGisfu+1ydcYC6NBXpd1+jAqKCtsmB4UkqEvIC292bnv271jz3H4NdzFR4f7bBUqu12eu8AAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2014 10 28 at 5 39 26 pm&quot;
        title=&quot;screen shot 2014 10 28 at 5 39 26 pm&quot;
        src=&quot;/static/9c62c6232dd26f1aea9db4c6055e541c/f0a9a/screen-shot-2014-10-28-at-5-39-26-pm.png&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;As Fraiser Speirs &lt;a href=&quot;https://twitter.com/fraserspeirs/status/384142114088427520&quot;&gt;tweeted&lt;/a&gt;, we asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers.&lt;/p&gt;</content:encoded>
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            <title><![CDATA["The great ideas have come from people who weren’t paid to have great ideas"]]></title>
            <description><![CDATA[It is only afterward that a new idea seems reasonable. To begin with, it usually seems unreasonable. It seems the height of unreason to…]]></description>
            <link>https://cdixon.org/2014/10/20/for-every-new-good-idea-you-have-there-ten-thousand-foolish-ones</link>
            <guid isPermaLink="false">https://cdixon.org/2014/10/20/for-every-new-good-idea-you-have-there-ten-thousand-foolish-ones</guid>
            <pubDate>Mon, 20 Oct 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;It is only afterward that a new idea seems reasonable. To begin with, it usually seems unreasonable. It seems the height of unreason to suppose the earth was round instead of flat, or that it moved instead of the sun, or that objects required a force to stop them when in motion, instead of a force to keep them moving, and so on.&lt;/p&gt;
&lt;p&gt;A person willing to fly in the face of reason, authority, and common sense must be a person of considerable self-assurance. Since he occurs only rarely, he must seem eccentric (in at least that respect) to the rest of us. A person eccentric in one respect is often eccentric in others.&lt;/p&gt;
&lt;p&gt;The presence of others can only inhibit [the creative] process, since creation is embarrassing. For every new good idea you have, there are a hundred, ten thousand foolish ones, which you naturally do not care to display.&lt;/p&gt;
&lt;p&gt;Probably more inhibiting than anything else is a feeling of responsibility. The great ideas of the ages have come from people who weren’t paid to have great ideas, but were paid to be teachers or patent clerks or petty officials, or were not paid at all.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;From Isaac Asimov&apos;s &lt;a href=&quot;http://www.technologyreview.com/view/531911/isaac-asimov-mulls-how-do-people-get-new-ideas/&quot;&gt;&quot;How do people get new ideas?&quot;&lt;/a&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA["A lot of the best tech startups are ideas that have been around for years"]]></title>
            <description><![CDATA[A lot of the best tech startups are ideas that have been around for years but the time is finally right. * Some people get jaded. "We tried…]]></description>
            <link>https://cdixon.org/2014/10/15/a-lot-of-the-best-tech-startups-are-ideas-that-have-been-around-for-years</link>
            <guid isPermaLink="false">https://cdixon.org/2014/10/15/a-lot-of-the-best-tech-startups-are-ideas-that-have-been-around-for-years</guid>
            <pubDate>Wed, 15 Oct 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A lot of the best tech startups are ideas that have been around for years but the time is finally right. &lt;a href=&quot;https://twitter.com/cdixon/status/522436019078320128&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Some people get jaded. &quot;We tried X years ago&quot; and summarily dismiss. But then eventually the time is right and it works. &lt;a href=&quot;https://twitter.com/cdixon/status/522436401011630080&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Examples include touch computing, virtual reality, and many areas of artificial intelligence. &lt;a href=&quot;https://twitter.com/cdixon/status/522436555118772224&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Or as pmarca &lt;a href=&quot;https://twitter.com/pmarca/status/526144120444555264&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;In tech, &quot;I tried that 20 years ago and it didn&apos;t work&quot; is a positive predictor, not a negative predictor&lt;/p&gt;</content:encoded>
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            <title><![CDATA["A standard protocol for machines to negotiate bitcoin payments for resources"]]></title>
            <description><![CDATA[Great idea from Brian Armstrong of Coinbase: 1/ Seems like there should be a standard protocol for machines to negotiate bitcoin payments…]]></description>
            <link>https://cdixon.org/2014/10/14/a-standard-protocol-for-machines-to-negotiate-bitcoin-payments-for-resources</link>
            <guid isPermaLink="false">https://cdixon.org/2014/10/14/a-standard-protocol-for-machines-to-negotiate-bitcoin-payments-for-resources</guid>
            <pubDate>Tue, 14 Oct 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Great idea from &lt;a href=&quot;https://twitter.com/brian_armstrong&quot;&gt;Brian Armstrong&lt;/a&gt; of Coinbase:&lt;/p&gt;
&lt;p&gt;1/ Seems like there should be a standard protocol for machines to negotiate bitcoin payments for resources.&lt;/p&gt;
&lt;p&gt;2/ Examples could be getting access to wifi hot spots, your car finding charging stations, mesh networks (net taker/giver).&lt;/p&gt;
&lt;p&gt;3/ Devices could be like vending machines, you drop them out somewhere, and they generate rent for providing resources to passing machines.&lt;/p&gt;
&lt;p&gt;4/ Sample protocol (a) i need X, anyone have it? (b) I have X for sale at Y (c) I accept, payment embedded (d) I reject, stop pinging me&lt;/p&gt;
&lt;p&gt;We are dying to fund people working on ideas like this, or like &lt;a href=&quot;http://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps/&quot;&gt;these&lt;/a&gt; or &lt;a href=&quot;http://blog.chain.com/post/99177371581/bitcoins-killer-apps&quot;&gt;these&lt;/a&gt;.&lt;/p&gt;</content:encoded>
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            <title><![CDATA["You actually have to remind yourself not to believe"]]></title>
            <description><![CDATA[[Virtual Reality] is the last medium. We’re at the very beginning of it, but version 147 is The Matrix or Total Recall. Our brain is no…]]></description>
            <link>https://cdixon.org/2014/10/09/the-last-medium</link>
            <guid isPermaLink="false">https://cdixon.org/2014/10/09/the-last-medium</guid>
            <pubDate>Thu, 09 Oct 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;[Virtual Reality] is the last medium. We’re at the very beginning of it, but version 147 is &lt;em&gt;The Matrix&lt;/em&gt; or &lt;em&gt;Total Recall&lt;/em&gt;. Our brain is no longer translating an approximation of the story. You read a book; your brain reads letters printed in ink on paper and transforms that into a world. You watch a movie; you’re seeing imagery inside of a rectangle while you’re sitting inside a room, and your brain translates that into a world. And you connect to this even though you know it’s not real, but because you’re in the habit of suspending disbelief.&lt;/p&gt;
&lt;p&gt;With virtual reality, you’re essentially hacking the visual-audio system of your brain and feeding it a set of stimuli that’s close enough to the stimuli it expects that it sees it as truth. Instead of suspending your disbelief, you actually have to remind yourself not to believe.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;-Chris Milk, from &lt;a href=&quot;https://stories.californiasunday.com/2014-10-05/virtual-reality-hollywood&quot;&gt;The Last Medium&lt;/a&gt; (the whole article is excellent)&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some ideas for native bitcoin apps]]></title>
            <description><![CDATA[Fred Wilson calls applications built using Bitcoin that couldn't have existed prior to Bitcoin "native Bitcoin apps". Most of the…]]></description>
            <link>https://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps</link>
            <guid isPermaLink="false">https://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps</guid>
            <pubDate>Sat, 04 Oct 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Fred Wilson calls applications built using Bitcoin that couldn&apos;t have existed prior to Bitcoin &quot;&lt;a href=&quot;http://avc.com/2014/09/the-bitcoin-hype-cycle/&quot;&gt;native Bitcoin apps&lt;/a&gt;&quot;. Most of the applications built so far on Bitcoin are not native by this definition. You can buy something at an e-commerce site using Bitcoin and it is cheaper than using a credit card but buying things online isn&apos;t a new activity.&lt;/p&gt;
&lt;p&gt;What will these native Bitcoin apps do? That is very hard to predict, just as it was hard to predict back in 1993 what the successful native Internet apps would be (try to find someone in 1993 who predicted Wikipedia, Twitter, blogging, etc). But we can make some guesses. Here are some of mine:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;strong&gt;International microfinance&lt;/strong&gt; - Soon 5 billion people will have internet-connected smartphones but most still won&apos;t have bank accounts, access to credit, etc. Bitcoin removes most of the cost and friction of cross-border transactions and allows anyone with internet access to participate in the global economy. Early examples of international microfinance services include P2P lending sites like &lt;a href=&quot;https://btcjam.com/&quot;&gt;BTCJam&lt;/a&gt; and &lt;a href=&quot;https://www.bitbond.net/&quot;&gt;Bitbond&lt;/a&gt;.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Allocating bandwidth, storage, compute&lt;/strong&gt;. Bitcoin could enable new ways to share and trade networked resources. For example, people have been trying for years to create mesh networks with only &lt;a href=&quot;http://www.nytimes.com/2014/08/24/nyregion/red-hooks-cutting-edge-wireless-network.html&quot;&gt;occasional&lt;/a&gt; success. It is possible that these systems mostly failed because they didn&apos;t offer the right incentives to share resources. Bitcoin provides a mechanism for network nodes to pay for resources at the protocol level.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Marketplaces -&lt;/strong&gt; Ask anyone who runs a marketplace and they&apos;ll tell you that paying out to people with bank accounts is a huge headache, and paying out to people without bank accounts is altogether impossible. Using Bitcoin, we could take ideas like crowdfunding and crowd labor services (oDesk, 99 Designs, Beacon Reader, Mechanical Turk) and open them up to anyone with a smartphone.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Micropayments&lt;/strong&gt; - The world just ran the first large-scale micropayments experiment - in-app payments on iOS and Android - and it was a huge success. In-app payments quickly became the dominant business model for mobile games, with some games generating billions a dollars a year using them. What would happen if we enabled micropayments on the web and not just for native mobile apps?&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Incentivized social software.&lt;/strong&gt; Up until now, social sites have had to rely on non-monetary currencies such as likes, followers, karma, upvotes, etc. With Bitcoin we can add actual monetary incentives to the mix. This is happening organically on Reddit where users are tipping each other using Bitcoin and Dogecoin. A good exercise would be to go back and look at the history of failed social sites and try to rethink them using financial incentives.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The first phase of Bitcoin was about laying the foundational infrastructure - gateways, consumer wallets, developer platforms, merchant services etc. The next phase will be about native Bitcoin apps - building new things that could never have been built before. These will likely be the applications that drive Bitcoin adoption into the mainstream.&lt;/p&gt;</content:encoded>
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            <title><![CDATA["Natural languages are adequate, but that doesn't mean they're optimal"]]></title>
            <description><![CDATA[Languages are something of a mess. They evolve over centuries through an unplanned, democratic process that leaves them teeming with…]]></description>
            <link>https://cdixon.org/2014/08/15/natural-languages-are-adequate-but-that-doesnt-mean-theyre-optimal-2</link>
            <guid isPermaLink="false">https://cdixon.org/2014/08/15/natural-languages-are-adequate-but-that-doesnt-mean-theyre-optimal-2</guid>
            <pubDate>Fri, 15 Aug 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;Languages are something of a mess. They evolve over centuries through an unplanned, democratic process that leaves them teeming with irregularities, quirks, and words like “knight.” No one who set out to design a form of communication would ever end up with anything like English, Mandarin, or any of the more than six thousand languages spoken today.&lt;/p&gt;
&lt;p&gt;“Natural languages are adequate, but that doesn’t mean they’re optimal,” John Quijada, a fifty-three-year-old former employee of the California State Department of Motor Vehicles, told me. In 2004, he published a monograph on the Internet that was titled “Ithkuil: A Philosophical Design for a Hypothetical Language.” Written like a linguistics textbook, the fourteen-page Web site ran to almost a hundred and sixty thousand words. It documented the grammar, syntax, and lexicon of a language that Quijada had spent three decades inventing in his spare time. Ithkuil had never been spoken by anyone other than Quijada, and he assumed that it never would be.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;From &lt;a href=&quot;http://www.newyorker.com/magazine/2012/12/24/utopian-for-beginners&quot;&gt;Utopian for Beginners&lt;/a&gt;, an excellent 2012 New Yorker article about constructed human languages.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Steve Jobs on problem solving]]></title>
            <description><![CDATA[When you start looking at a problem and it seems really simple,  you don’t really understand the complexity of the problem.  Then you get…]]></description>
            <link>https://cdixon.org/2014/08/15/steve-jobs-on-problem-solving</link>
            <guid isPermaLink="false">https://cdixon.org/2014/08/15/steve-jobs-on-problem-solving</guid>
            <pubDate>Fri, 15 Aug 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;When you start looking at a problem and it seems really simple,  you don’t really understand the complexity of the problem.  Then you get into the problem,  and you see that it’s really complicated,  and you come up with all these convoluted solutions.  That’s sort of the middle,  and that’s where most people stop… But the really great person will keep on going and find the key, the underlying principle of the problem — and come up with an elegant,  really beautiful solution that works.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;from &lt;a href=&quot;http://www.amazon.com/Insanely-Great-Macintosh-Computer-Everything/dp/0140291776&quot;&gt;Insanely Great&lt;/a&gt; (via &lt;a href=&quot;http://instagram.com/gmc3&quot;&gt;gmc&lt;/a&gt;)&lt;/p&gt;</content:encoded>
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            <title><![CDATA["Bitcoin is the currency the internet deserves and needs"]]></title>
            <description><![CDATA[George Gilder discusses the importance of Bitcoin in a very interesting interview: To have a civilization you need more than just bits and…]]></description>
            <link>https://cdixon.org/2014/08/13/bitcoin-is-the-currency-the-internet-deserves-and-needs</link>
            <guid isPermaLink="false">https://cdixon.org/2014/08/13/bitcoin-is-the-currency-the-internet-deserves-and-needs</guid>
            <pubDate>Wed, 13 Aug 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;George Gilder discusses the importance of Bitcoin in a very interesting &lt;a href=&quot;https://www.youtube.com/watch?v=V9hb0EKAcro&amp;#x26;list=UU0uVZd8N7FfIZnPu0y7o95A&quot;&gt;interview&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;To have a civilization you need more than just bits and bytes. You need contracts, transactions, provable facts, titles, notarization, identities etc. You need all these other factors thatcan&apos;t be accommodated very well on the existing internet. So you have to banks and all these other outside channels to conduct transactions. You have this comedy of bogus contracts to you are supposed to sign to proceed - click the button to accept the contract etc.&lt;/p&gt;
&lt;p&gt;The internet is full of junk. It pretends that a lot of that stuff is free which of course is a lie. So it’s full of lies. It’s a hustle. This is the result just having pure Shannon information. Shannon identifies information exclusively by its surprisal- the unexpected bits. That&apos;s how you measure information and bandwidth across the internet. Shannon’s a great genius. He created to perfect theory for the network layer. But as you know you need more than three layers on the network. You need a whole apparatus on top of the network layer.&lt;/p&gt;
&lt;p&gt;Bitcoin is a breakthrough in information theory that allows you - without reference to outside 3rd parties - to conduct provable, timestamped transactions that can’t be changed, can’t be faked, and can’t be duplicated. Bitcoin is the currency the internet deserves and needs.&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded>
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            <title><![CDATA[As elegantly produced as movies and as engaging as great novels]]></title>
            <description><![CDATA[MIT professor Woodie Flowers argues that higher education's current approach to online learning is misguided: We decided to assume that the…]]></description>
            <link>https://cdixon.org/2014/08/03/as-elegantly-produced-as-movies-and-as-engaging-as-great-novels</link>
            <guid isPermaLink="false">https://cdixon.org/2014/08/03/as-elegantly-produced-as-movies-and-as-engaging-as-great-novels</guid>
            <pubDate>Sun, 03 Aug 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;MIT professor Woodie Flowers &lt;a href=&quot;http://web.mit.edu/fnl/volume/243/flowers.html&quot;&gt;argues&lt;/a&gt; that higher education&apos;s current approach to online learning is misguided:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;We decided to assume that the world could hardly wait to see our huge pile of PDFs, PowerPoint presentations, classroom locations, teaching assistant lists, and other assorted bits of information about our courses.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Instead, universities should produce new learning materials specifically for the online world:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In their highly developed form, learning materials would be as elegantly produced as movies and video games and would be as engaging as a great novel. They would be ‘smart’ to both accommodate the learners’ varied styles and yield data to facilitate their continuous improvement.&lt;/p&gt;
&lt;p&gt;Each year, 600,000 first-year college students take calculus; 250,000 fail. At $2000/failed-course, that is half-a-billion dollars. That happens to be the approximate cost of the movie &lt;em&gt;Avatar&lt;/em&gt;, a movie that took a thousand people four years to make. Many of those involved in the movie were the best in their field. The present worth of losses of $500 million/year, especially at current discount rates, is an enormous number.... even a $100 million investment could cut the calculus failure rate in half.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Online courses are to offline courses as movies are to plays. The marginal cost of delivering online courses is minimal. The potential audience is everyone with a smartphones and an internet connection - about 1.5 billion people today and growing quickly. There is no reason we shouldn&apos;t be investing as much to produce online courses as we do to produce Hollywood movies.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Three levels of enthusiasm for technology]]></title>
            <description><![CDATA[Most businesses today believe that technology can dramatically improve the way they operate. But they embrace technology with varying levels…]]></description>
            <link>https://cdixon.org/2014/08/02/three-levels-of-enthusiasm-for-technology</link>
            <guid isPermaLink="false">https://cdixon.org/2014/08/02/three-levels-of-enthusiasm-for-technology</guid>
            <pubDate>Sat, 02 Aug 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Most businesses today believe that technology can dramatically improve the way they operate. But they embrace technology with varying levels of enthusiasm.&lt;/p&gt;
&lt;p&gt;The lowest level of enthusiasm is to adopt technologies made by other companies - email, customer services software, etc - and perhaps create an &quot;IT department&quot; to manage those technologies but nothing more. The next level of enthusiasm is to create an internal technology organization - a senior executive position like a CTO, a technology department, etc - and develop proprietary software. The highest level of enthusiasm is to have top management with technology backgrounds who see technology as core to every organizational function. For them, having a technology department would be like having a business department - redundant and strange.&lt;/p&gt;
&lt;p&gt;A lot of recent Silicon Valley startups look at first glance like non-technology companies, doing things like food delivery, home services, transportation, etc. The difference is that the founders often grew up with technology, have backgrounds developing software, and can&apos;t imagine anything other then a technology-centric worldview. They&apos;re betting that by putting technology at the core, they&apos;ll be able to create dramatically better products and services.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Bitcoin and volatility]]></title>
            <description><![CDATA[The beauty of software platforms is that you can solve almost any problem by writing more software. For example, one of the most common…]]></description>
            <link>https://cdixon.org/2014/07/19/bitcoin-and-volatility</link>
            <guid isPermaLink="false">https://cdixon.org/2014/07/19/bitcoin-and-volatility</guid>
            <pubDate>Sat, 19 Jul 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The beauty of software platforms is that you can solve almost any problem by writing more software.&lt;/p&gt;
&lt;p&gt;For example, one of the most common criticisms of Bitcoin is that it is too volatile and speculative to be used as a payment system.  Merchants want the stability of government-backed currencies. Buyers don&apos;t want their Bitcoin exposure to fluctuate whenever they transact in Bitcoin.&lt;/p&gt;
&lt;p&gt;Coinbase has solved this problem. &lt;a href=&quot;https://coinbase.com/merchants&quot;&gt;Merchants&lt;/a&gt; can instantly convert any Bitcoin they receive into dollars.  Buyers can &lt;a href=&quot;http://blog.coinbase.com/post/89402160917/buyback-bitcoin-after-checkout&quot;&gt;automatically replenish&lt;/a&gt; any Bitcoin they spend. Transactions that use Coinbase this way create zero net Bitcoin exposure for either party. Volatility is no longer an issue.&lt;/p&gt;</content:encoded>
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            <title><![CDATA["It's pretty difficult to solve big problems in four years"]]></title>
            <description><![CDATA[Larry Page: When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you're running Exxon, what do you…]]></description>
            <link>https://cdixon.org/2014/07/06/its-pretty-difficult-to-solve-big-problems-in-four-years</link>
            <guid isPermaLink="false">https://cdixon.org/2014/07/06/its-pretty-difficult-to-solve-big-problems-in-four-years</guid>
            <pubDate>Sun, 06 Jul 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;a href=&quot;http://www.khoslaventures.com/fireside-chat-with-google-co-founders-larry-page-and-sergey-brin&quot;&gt;Larry Page&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you&apos;re running Exxon, what do you do? Say you want to do something good with the most valuable company on earth. A lot of people think probably, it&apos;s not doing good things - worried about the environment and so on. But if the company has a lot of capabilities--worldwide operations and manufacturing, government relations, probably could do a lot different things, if you took a 20-year view.&lt;/p&gt;
&lt;p&gt;If you took a four-year view, that&apos;s a pretty hard question to answer. What are you doing in the next four years, which I think is about the average tenure of a Fortune 500 CEO. So if you&apos;re being measured quarterly-- obviously, it&apos;s good to have some pressure so you actually do things, make money and improve things. But I think the four-year horizon for leaders is pretty difficult.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;It&apos;s pretty difficult to solve big problems in four years. I think it&apos;s probably pretty easy to do it in 20 years. I think our whole system is setup in a way that makes it difficult for leaders of really big companies.&lt;/strong&gt; Eventually, what you&apos;re doing doesn&apos;t makes sense over time, for whatever reasons - environmental or social or whatever it is. I think companies have a big problem making a big transition, so leaders get replaced.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;A huge advantage of companies like Google, Facebook, and Amazon is that they have CEOs with the gravitas (and, sometimes, control provisions) to operate on a very long-time horizon.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The next twenty years are going to make this last twenty years just pale]]></title>
            <description><![CDATA[If we were sent back with a time machine, even 20 years, and reported to people what we have right now and describe what we were going to…]]></description>
            <link>https://cdixon.org/2014/06/15/the-next-twenty-years-are-going-to-make-this-last-twenty-years-just-pale</link>
            <guid isPermaLink="false">https://cdixon.org/2014/06/15/the-next-twenty-years-are-going-to-make-this-last-twenty-years-just-pale</guid>
            <pubDate>Sun, 15 Jun 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;If we were sent back with a time machine, even 20 years, and reported to people what we have right now and describe what we were going to get in this device in our pocket—we&apos;d have this free encyclopedia, and we&apos;d have street maps to most of the cities of the world, and we&apos;d have box scores in real time and stock quotes and weather reports, PDFs for every manual in the world—we&apos;d make this very, very, very long list of things that we would say we would have and we get on this device in our pocket, and then we would tell them that most of this content was free. You would simply be declared insane. They would say there is no economic model to make this. What is the economics of this? It doesn&apos;t make any sense, and it seems far-fetched and nearly impossible.&lt;/p&gt;
&lt;p&gt;But the next twenty years are going to make this last twenty years just pale. We&apos;re just at the beginning of the beginning of all these kind of changes. There&apos;s a sense that all the big things have happened, but relatively speaking, nothing big has happened yet.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;-&lt;a href=&quot;http://edge.org/conversation/the-technium&quot;&gt;The Technium: An Interview with Kevin Kelly&lt;/a&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Software eats software development]]></title>
            <description><![CDATA[Software is eating the world, and doing so using smaller and smaller teams. WhatsApp was able to disrupt the global SMS industry with only a…]]></description>
            <link>https://cdixon.org/2014/04/13/software-eats-software-development</link>
            <guid isPermaLink="false">https://cdixon.org/2014/04/13/software-eats-software-development</guid>
            <pubDate>Sun, 13 Apr 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Software is eating the world, and doing so using smaller and smaller teams. WhatsApp was able to disrupt the global SMS industry with only a few dozen engineers. Small teams can have a big impact because software development (and deployment) has improved dramatically over the past decade. Some improvements include:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;strong&gt;Infrastructure&lt;/strong&gt;. Deploying a commercial website ten years ago required significant upfront capital. Now you can spin up virtual servers in minutes. Upfront costs are close to zero and ongoing costs are orders of magnitude lower than before.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Services&lt;/strong&gt;. Startups created simple APIs that abstract away complex back ends. Examples: Stripe (payments), Twilio (communications), Firebase (databases), Sift Science (fraud).&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Open Source&lt;/strong&gt;. Open source dominates every level of the software stack, including operating systems (Linux), databases (MySql), web servers (Apache), and programming languages (Python, Ruby). These are not only free but generally also far higher quality than their commercial counterparts.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Programming languages&lt;/strong&gt;. Developers have steadily marched upwards from Assembly to C to Java to, today, scripting languages like Ruby and Python. Moore&apos;s Law gave us excess computing resources. We spent it making developers more effective.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Special-purpose tools for non-programmers&lt;/strong&gt;. These tools let non-programmers create software in certain pre-defined categories, thereby lowering costs and reducing the demand for developers. Examples: Shopify (e-commerce), Wordpress (blogging), and Weebly (small business websites).&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;General-purpose tools for non-programmers&lt;/strong&gt;. In the pre-Internet era, tools like Hypercard and Visual Basic allowed hundreds of millions of semi-technical people to become software developers. Since then, there hasn&apos;t been much work in these areas, but from what I&apos;ve seen that might change soon. By allowing more people to program, these tools act as a force multiplier for the software industry.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;In all likelihood, the demand for software development will continue to dramatically outpace the supply. If so, &quot;software eats software development&quot; will be an exciting area going forward, with lots of valuable startups created in the process.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The decline of the mobile web]]></title>
            <description><![CDATA[People are spending more time on mobile vs desktop:  And more of their mobile time using apps, not the web:  This is a worrisome trend for…]]></description>
            <link>https://cdixon.org/2014/04/07/the-decline-of-the-mobile-web</link>
            <guid isPermaLink="false">https://cdixon.org/2014/04/07/the-decline-of-the-mobile-web</guid>
            <pubDate>Mon, 07 Apr 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;People are spending more time on mobile vs desktop:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/086d22587892530dc055199fdd59c8ea/b3ee8/comscore-mobile-users-desktop-users-2014.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;comscore mobile users desktop users 2014&quot;
        title=&quot;comscore mobile users desktop users 2014&quot;
        src=&quot;/static/086d22587892530dc055199fdd59c8ea/d6856/comscore-mobile-users-desktop-users-2014.jpg&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;And more of their mobile time using apps, not the web:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/apps_dominate_hires-resized-600.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 600px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 84.83333333333333%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;apps dominate hires resized 600&quot;
        title=&quot;apps dominate hires resized 600&quot;
        src=&quot;/static/569a9f4c0cd234bb568a8983574d4fc3/34e8a/apps_dominate_hires-resized-600.png&quot;
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        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;This is a worrisome trend for the web. Mobile is the future. What wins mobile, wins the Internet. Right now, apps are winning and the web is losing.&lt;/p&gt;
&lt;p&gt;Moreover, there are signs that it will only get worse. Ask any web company and they will tell you that they value app users more than web users. This is why you see so many popups and banners on mobile websites that try to get you to download apps. It is also why so many mobile websites are &lt;a href=&quot;http://brokenmobile.tumblr.com/?utm_content=buffer010a0&amp;#x26;utm_medium=social&amp;#x26;utm_source=twitter.com&amp;#x26;utm_campaign=buffer&quot;&gt;broken&lt;/a&gt;. Resources are going to app development over web development. As the mobile web UX further deteriorates, the momentum toward apps will only increase.&lt;/p&gt;
&lt;p&gt;The likely end state is the web becomes a niche product used for things like 1) trying a service before you download the app, 2) consuming long tail content (e.g. link to a niche blog from Twitter or Facebook feed).&lt;/p&gt;
&lt;p&gt;This will hurt long-term innovation for a number of reasons:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Apps have a rich-get-richer dynamic that favors the status quo over new innovations. Popular apps get home screen placement, get used more, get ranked higher in app stores, make more money, can pay more for distribution, etc. The end state will probably be like cable TV - a few dominant channels/apps that sit on users&apos; home screens and everything else relegated to lower tiers or irrelevance.&lt;/li&gt;
&lt;li&gt;Apps are heavily controlled by the dominant app stores owners, Apple and Google. Google and Apple control what apps are allowed to exist, how apps are built, what apps get promoted, and charge a 30% tax on revenues.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Most worrisome: they reject entire classes of apps without stated reasons or allowing for recourse (e.g. Apple has rejected all apps related to Bitcoin). The open architecture of the web led to an incredible era of experimentation. Many startups were controversial when they were first founded.  What if AOL or some other central gatekeeper had controlled the web, and developers had to ask permission to create Google, Youtube, eBay, Paypal, Wikipedia, Twitter, Facebook, etc. Sadly, this is where we&apos;re headed on mobile.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Oculus]]></title>
            <description><![CDATA[I've seen a handful of technology demos in my life that made me feel like I was glimpsing into the future. The best ones were: the Apple II…]]></description>
            <link>https://cdixon.org/2014/03/25/oculus</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/25/oculus</guid>
            <pubDate>Tue, 25 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I&apos;ve seen a handful of technology demos in my life that made me feel like I was glimpsing into the future. The best ones were: the Apple II, the Macintosh, Netscape, Google, the iPhone, and - most recently - the &lt;a href=&quot;http://www.oculusvr.com/&quot;&gt;Oculus&lt;/a&gt; Rift.&lt;/p&gt;
&lt;p&gt;Virtual reality has long been a staple of science fiction. In real life, however, attempts to create virtual reality have consistently disappointed. Oculus was founded on the contrarian belief that the right people at the right time could finally deliver on the science fiction promise. Hardware components had become sufficiently powerful and inexpensive, and the pioneering engineers who invented 3D gaming were eager to explore a new frontier.&lt;/p&gt;
&lt;p&gt;Last year, my partner Gil Shafir and I spent time studying Oculus and virtual reality technology more generally. The more we learned, the more we became convinced that virtual reality would become central to the next great wave of computing. We were therefore thrilled when we got the chance to invest in Oculus later on.&lt;/p&gt;
&lt;p&gt;Today, Facebook &lt;a href=&quot;https://www.facebook.com/zuck/posts/10101319050523971?stream_ref=1&quot;&gt;announced&lt;/a&gt; that they are acquiring Oculus. Facebook&apos;s support will dramatically accelerate the development of the virtual reality ecosystem. While we are sad to no longer be working with Oculus, we are very happy to see virtual reality receive the support it deserves.&lt;/p&gt;
&lt;p&gt;I can&apos;t say enough about the Oculus team. Palmer, Brendan, John, Nate, and the rest of the team are true technology visionaries. They&apos;ve assembled an incredible group of creative technologists from diverse fields. It was awesome tagging along for the ride, and I can&apos;t wait to see what they do at Facebook.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["We leverage the billions of dollars spent on the consumer mobile phone business"]]></title>
            <description><![CDATA[NYTimes has an excellent profile of Planet Labs, a startup that makes low-cost satellites: These satellites are powered by batteries…]]></description>
            <link>https://cdixon.org/2014/03/17/we-leverage-the-billions-of-dollars-spent-on-the-consumer-mobile-phone-business</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/17/we-leverage-the-billions-of-dollars-spent-on-the-consumer-mobile-phone-business</guid>
            <pubDate>Mon, 17 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;NYTimes has an excellent &lt;a href=&quot;http://www.nytimes.com/2014/03/17/technology/start-ups-aim-to-conquer-space-market.html?_r=2&quot;&gt;profile&lt;/a&gt; of Planet Labs, a startup that makes low-cost satellites:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;These satellites are powered by batteries normally found in a laptop, with semiconductors similar to those in a smartphone. “Nothing here was prequalified to be in space,” Mr. Marshall said. “We bought most of our parts online.”&lt;/p&gt;
&lt;p&gt;Planet Labs will not disclose its manufacturing costs, but potential customers who have seen the products think the satellites are approximately 95 percent cheaper than most satellites, a figure Mr. Marshall would neither confirm nor dispute. “We leverage the billions of dollars spent on the consumer mobile phone business” for most of the company’s parts, he said.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Chris Anderson &lt;a href=&quot;http://www.foreignpolicy.com/articles/2013/04/29/epiphanies_from_chris_anderson&quot;&gt;calls&lt;/a&gt; this &quot;the peace dividend of the smartphone war.&quot; Across a wide range of sectors, startups are now tackling problems that previously required billions of dollars from governments or multinational corporations.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA["There's just a tremendous amount of craftsmanship in between a great idea and a great product"]]></title>
            <description><![CDATA[Steve Jobs in 1995: There's just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that…]]></description>
            <link>https://cdixon.org/2014/03/16/theres-just-a-tremendous-amount-of-craftsmanship-in-between-a-great-idea-and-a-great-product</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/16/theres-just-a-tremendous-amount-of-craftsmanship-in-between-a-great-idea-and-a-great-product</guid>
            <pubDate>Sun, 16 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Steve Jobs in &lt;a href=&quot;http://tech.fortune.cnn.com/2011/11/11/steve-jobs-the-parable-of-the-stones/&quot;&gt;1995&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There&apos;s just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that great idea, it changes and grows. It never comes out like it starts because you learn a lot more as you get into the subtleties of it. And you also find there are tremendous tradeoffs that you have to make. There are just certain things you can&apos;t make electrons do. There are certain things you can&apos;t make plastic do. Or glass do. Or factories do. Or robots do.&lt;/p&gt;
&lt;p&gt;Designing a product is keeping five thousand things in your brain and fitting them all together in new and different ways to get what you want. And every day you discover something new that is a new problem or a new opportunity to fit these things together a little differently.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This is why almost all successful startups have founders who understand business, design, and technology. Product development is the process of navigating a &lt;a href=&quot;http://www.cdixon.org/2013/08/04/the-idea-maze/&quot;&gt;maze&lt;/a&gt; - not three separate mazes, but a single maze that intersects all these functions. The people navigating the maze need the full authority of the company behind them.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Full stack startups]]></title>
            <description><![CDATA[Many of today's most exciting startups were tried before in a different form. Suppose you develop a new technology that is valuable to some…]]></description>
            <link>https://cdixon.org/2014/03/15/full-stack-startups</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/15/full-stack-startups</guid>
            <pubDate>Sat, 15 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Many of today&apos;s most exciting startups were tried before in a different form.&lt;/p&gt;
&lt;p&gt;Suppose you develop a new technology that is valuable to some industry. The old approach was to sell or license your technology to the existing companies in that industry. The new approach is to build a complete, end-to-end product or service that bypasses existing companies.&lt;/p&gt;
&lt;p&gt;Prominent examples of this &quot;full stack&quot; approach include Tesla, Warby Parker, Uber, Harry&apos;s, Nest, Buzzfeed, and Netflix. Most of these companies had &quot;partial stack&quot; antecedents that either failed or ended up being relatively small businesses. The problems with the partial stack approach include:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Bad product experience. Nest is great because of deep, Apple-like integration between software, hardware, design, services, etc, something they couldn&apos;t have achieved licensing to Honeywell etc.&lt;/li&gt;
&lt;li&gt;Cultural resistance to new technologies. The media industry is notoriously slow to adopt new technologies, so Netflix is (mostly) bypassing them.&lt;/li&gt;
&lt;li&gt;Unfavorable economics. Your slice of the stack might be quite valuable but without control of the end customer it&apos;s very hard to get paid accordingly.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;The full stack approach lets you bypass industry incumbents, completely control the customer experience, and capture a greater portion of the economic benefits you provide.&lt;/p&gt;
&lt;p&gt;The challenge with the full stack approach is you need to get good at many different things: software, hardware, design, consumer marketing, supply chain management, sales, partnerships, regulation, etc. The good news is that if you can pull this off, it is very hard for competitors to replicate so many interlocking pieces.&lt;/p&gt;
&lt;p&gt;My guess is we are still at the very beginning of the full stack movement. Many large industries remain relatively untouched by the information technology revolution. That will likely change now that startups have figured out the right approach.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Stored Hashcash]]></title>
            <description><![CDATA[One of the greatest inventions in the history of computer security is Hashcash. Internet blights like spam and denial-of-service attacks are…]]></description>
            <link>https://cdixon.org/2014/03/14/stored-hashcash</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/14/stored-hashcash</guid>
            <pubDate>Fri, 14 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the greatest inventions in the history of computer security is &lt;a href=&quot;http://en.wikipedia.org/wiki/Hashcash&quot;&gt;Hashcash&lt;/a&gt;. Internet blights like spam and &lt;a href=&quot;http://en.wikipedia.org/wiki/Denial-of-service_attack&quot;&gt;denial-of-service&lt;/a&gt; attacks are what economists call &quot;tragedy of the commons&quot; problems. They exploit the fact that it&apos;s free to send email and make web requests. At zero cost, you can have a profitable business even at extremely low success rates.&lt;/p&gt;
&lt;p&gt;One way to fix these problems is to impose tariffs that hurt bad actors without hurting good actors. For example, you could impose &quot;postage fees&quot; on every email and web request. Unfortunately, in practice, this is impossible, because you&apos;d have to set up billing relationships between every computer that wants to communicate.&lt;/p&gt;
&lt;p&gt;The brilliant idea behind Hashcash is to replace a monetary postage fee with a computational postage fee. In order to send an email, the sender first has to solve a math problem. Legitimate activities suffer an indiscernible delay, but illegitimate activities that require massive volume are hobbled.&lt;/p&gt;
&lt;p&gt;Hashcash is a great idea, but cumbersome in practice. For example, the cost imposed on senders varies widely depending on the performance of their email servers. It also hinders legitimate bulk emails like clubs and retailers sending updates to their mailing lists.&lt;/p&gt;
&lt;p&gt;The offline analogy to Hashcash is a postal system where senders are required to perform some work every time they want to send something. If you&apos;re a lawyer, you need to practice some law before you send mail. If you&apos;re a doctor, you need to cure something before you send mail. Etc. This of course would be a preposterous postal system.&lt;/p&gt;
&lt;p&gt;Adam Smith called money &quot;&lt;a href=&quot;https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book02/ch03.htm&quot;&gt;stored labor&lt;/a&gt;&quot;. You do your work and then store your labor as money, which you can later exchange for labor stored by other people. Storing labor in the form of money turns out to be a very flexible system for trading labor, and far superior to the barter system of performing work whenever your counterparty performs work.&lt;/p&gt;
&lt;p&gt;So Adam Smith&apos;s version of Hashcash is a system where you get credits for doing computation. You store your computational credits and spend them at your leisure. If you want to send an email, you can spend a little stored Hashcash. If I send you an email and you reply, we&apos;re even. If you send out a billion spam emails, it costs you a lot and undermines your spammy business model.&lt;/p&gt;
&lt;p&gt;There are other important problems that stored Hashcash could solve. Denial-of-service attacks are spam attacks except they happen on HTTP instead of SMTP and the payoff is ransom instead of spam offers. Computer scientists have long &lt;a href=&quot;http://link.springer.com/chapter/10.1007%2F978-3-642-30373-9_43#page-1&quot;&gt;believed&lt;/a&gt; that pricing schemes could dramatically reduce network congestion. Like every large-scale distributed system, the Internet benefits when scarce resources are efficiently allocated.&lt;/p&gt;
&lt;p&gt;It seems plausible that if a system like stored Hashcash were developed, some people would prefer to purchase stored Hashcash directly instead of generating it themselves. A market for stored Hashcash would emerge, with the value being some function of the supply and demand of scarce Internet resources.&lt;/p&gt;
&lt;p&gt;So here&apos;s my question: suppose someone invented a way to store Hashcash. It could dramatically reduce spam and denial-of-service attacks, and more efficiently allocate network bandwidth and other Internet resources. How valuable would stored Hashcash be?&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Four categories of Bitcoin-related projects]]></title>
            <description><![CDATA[New Bitcoin-related software projects are launching every day. From what I can tell these projects fall into four main categories: Bitcoin…]]></description>
            <link>https://cdixon.org/2014/03/13/four-categories-of-bitcoin-inspired-projects</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/13/four-categories-of-bitcoin-inspired-projects</guid>
            <pubDate>Thu, 13 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;New Bitcoin-related software projects are launching every day. From what I can tell these projects fall into four main categories:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Bitcoin apps and services&lt;/em&gt;: These try to make Bitcoin more accessible, stable, secure, and useful. Examples: wallets, merchant services, fiat-to-crypto exchanges, crypto-to-crypto exchanges, Bitcoin derivatives exchanges, tipping services, and merchant microtransaction services.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Bitcoin protocol extensions:&lt;/em&gt; These are applications that use the Bitcoin blockchain as a global, secure, single-instance database and generally ignore Bitcoin-as-a-currency. Examples: &lt;a href=&quot;http://www.mastercoin.org/&quot;&gt;Mastercoin&lt;/a&gt;, &lt;a href=&quot;http://coloredcoins.org/&quot;&gt;Colored Coins,&lt;/a&gt; and a Princeton project that is building a &lt;a href=&quot;http://dailyprincetonian.com/news/2014/01/u-researchers-develop-bitcoin-prediction-market/&quot;&gt;predictive market&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Altcoins&lt;/em&gt;: These are basically Bitcoin variants with branding and technical modifications (and their own blockchain). Like Bitcoin, the primary purpose is to allow the store and transfer of value. Examples: &lt;a href=&quot;https://litecoin.org/&quot;&gt;Litecoin&lt;/a&gt;, &lt;a href=&quot;http://dogecoin.com/&quot;&gt;Dogecoin&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Appcoins&lt;/em&gt;: These are new projects that are inspired by Bitcoin&apos;s architecture but are intended to do things besides storing/transferring value (they also use their own blockchain). Examples: &lt;a href=&quot;https://www.namecoin.org/&quot;&gt;Namecoin&lt;/a&gt;, &lt;a href=&quot;https://www.ethereum.org/&quot;&gt;Ethereum&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;To me, the first two categories are probably the most interesting. If there is one thing we&apos;ve learned from the development of Internet protocols like HTTP and SMTP, it&apos;s that network adoption is key. There will always be better protocols, but the combination of broad adoption and open extensibility generally wins. (Although Naval and Balaji make a compelling case for Appcoins &lt;a href=&quot;http://startupboy.com/2014/03/09/the-bitcoin-model-for-crowdfunding/&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;</content:encoded>
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            <title><![CDATA["I've come up with a set of rules that describe our reactions to technologies"]]></title>
            <description><![CDATA["I've come up with a set of rules that describe our reactions to technologies: 1. Anything that is in the world when you’re born is normal…]]></description>
            <link>https://cdixon.org/2014/03/13/ive-come-up-with-a-set-of-rules-that-describe-our-reactions-to-technologies</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/13/ive-come-up-with-a-set-of-rules-that-describe-our-reactions-to-technologies</guid>
            <pubDate>Thu, 13 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&quot;I&apos;ve come up with a set of rules that describe our reactions to technologies:&lt;/p&gt;
&lt;p&gt;1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.&lt;/p&gt;
&lt;p&gt;2. Anything that&apos;s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.&lt;/p&gt;
&lt;p&gt;3. Anything invented after you&apos;re thirty-five is against the natural order of things.&quot;&lt;/p&gt;
&lt;p&gt;- Douglas Adams (entire &lt;a href=&quot;http://www.douglasadams.com/dna/19990901-00-a.html&quot;&gt;original article&lt;/a&gt; is well worth reading)&lt;/p&gt;</content:encoded>
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            <title><![CDATA[If you asked people in 1989...]]></title>
            <description><![CDATA["If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said that a decentralized…]]></description>
            <link>https://cdixon.org/2014/03/12/433</link>
            <guid isPermaLink="false">https://cdixon.org/2014/03/12/433</guid>
            <pubDate>Wed, 12 Mar 2014 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&quot;If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said that a decentralized network of information nodes that are linked using hypertext.&quot;&lt;/p&gt;
&lt;p&gt;- &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer&lt;/a&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Coinbase]]></title>
            <description><![CDATA[One of the interesting things about Bitcoin is the contrast between how it is portrayed in the press and how it is understood by…]]></description>
            <link>https://cdixon.org/2013/12/12/coinbase</link>
            <guid isPermaLink="false">https://cdixon.org/2013/12/12/coinbase</guid>
            <pubDate>Thu, 12 Dec 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the interesting things about Bitcoin is the contrast between how it is portrayed in the press and how it is understood by technologists. The press tends to portray Bitcoin as either a speculative bubble or a scheme for supporting criminal activity. In Silicon Valley, by contrast, Bitcoin is generally &lt;a href=&quot;http://www.usv.com/posts/bitcoin-as-protocol&quot;&gt;viewed&lt;/a&gt; as a &lt;a href=&quot;http://startupboy.com/2013/11/07/bitcoin-the-internet-of-money/&quot;&gt;profound&lt;/a&gt; technological breakthrough.&lt;/p&gt;
&lt;p&gt;The Internet is based on a set of core protocols that specify how information such as text, photos, and code should be transmitted. The designers of the Web built &lt;a href=&quot;http://100pulse.com/http-statuscode/402.jsp&quot;&gt;placeholders&lt;/a&gt; for a system that moved money, but never successfully completed it. Bitcoin is the first plausible proposal for an economic protocol for the Internet.&lt;/p&gt;
&lt;p&gt;This matters for two reasons:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;It fixes serious problems with existing payment systems that depend on centralized services to verify the validity of transactions. These services are both expensive (roughly a 2.5% tax on all transactions) and prone to failure (Internet payment fraud is rampant).&lt;/li&gt;
&lt;li&gt;More importantly, Bitcoin is a platform upon which new technologies can be developed. Developers have created some &lt;a href=&quot;https://docs.google.com/document/d/1AnkP_cVZTCMLIzw4DvsW6M8Q2JC0lIzrTLuoWu2z1BE/edit&quot;&gt;early&lt;/a&gt; &lt;a href=&quot;http://www.proofofexistence.com/&quot;&gt;applications&lt;/a&gt;, and &lt;a href=&quot;https://www.mail-archive.com/[email protected]/msg10162.html&quot;&gt;speculated&lt;/a&gt; about future applications. Some potential applications include: a) micropayments as a replacement for banner ads or subscription fees, b) machine-to-machine payments to reduce spam and denial-of-service attacks, c) a way to offer low-cost financial services to people who, because of financial or political constraints, don’t have them today.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;But to proliferate widely, Bitcoin needs a killer app the same way HTTP had web browsers and SMTP had email clients. That’s why today I’m excited to announce that Andreessen Horowitz is leading a $25M financing of &lt;a href=&quot;https://coinbase.com/&quot;&gt;Coinbase&lt;/a&gt;, a service that provides an accessible interface to the Bitcoin protocol. Consumers can use Coinbase to convert to and from other currencies and to pay for goods and services. Merchants can use Coinbase to accept payments and convert currencies. Developers can build new services using Coinbase’s API.&lt;/p&gt;
&lt;p&gt;Coinbase has grown extremely fast and is now the most widely used Bitcoin service in the US. The founders of Coinbase, Brian Armstrong and Fred Ehrsam, have worked closely with banks and regulators to ensure that the service is safe and compliant. We think Coinbase can significantly accelerate Bitcoin’s proliferation, and as that happens the Internet will enter a new phase of invention and opportunity.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some thoughts on startup crowdfunding]]></title>
            <description><![CDATA[Like a lot of people, I’m excited about crowdfunding, and specifically the crowdfunding of startups now that’s it’s legal in the US. Based…]]></description>
            <link>https://cdixon.org/2013/09/28/some-thoughts-on-startup-crowdfunding</link>
            <guid isPermaLink="false">https://cdixon.org/2013/09/28/some-thoughts-on-startup-crowdfunding</guid>
            <pubDate>Sat, 28 Sep 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Like a lot of people, I’m excited about crowdfunding, and specifically the crowdfunding of startups now that’s it’s legal in the US. Based on my own experience investing in startups, here are some thoughts and issues that come to mind regarding startup crowdfunding.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Startup financings tend toward the extremes of being very oversubscribed or very undersubscribed. If you graphed out investor interest, it would look like a “U”. This is primarily the result of signaling – once a few investors commit (especially high quality ones), other investors pile on. If investors don’t commit, other investors start to wonder what’s wrong. So when you consider startup crowdfunding, it’s important to distinguish the oversubscribed cases from the undersubscribed cases. (Although one counter to this is that the U is the result of an inefficient market – when the crowds get involved valuations will float to their market clearing prices).&lt;/li&gt;
&lt;li&gt;Historically, startup investing returns have tended to obey power laws (Peter Thiel has a good discussion of this phenomenon &lt;a href=&quot;http://blakemasters.com/post/21869934240/peter-thiels-cs183-startup-class-7-notes-essay&quot;&gt;here&lt;/a&gt;). The vast majority of the returns came from the breakout hits. And if you go back and look at the early financings of breakout hits, a lot of them were hotly contested and oversubscribed. If amateur investors had been trying to invest in those startups via crowdfunding sites, they probably would have been squeezed out. If those amateurs were part of a syndicate, the syndicate lead would have felt pressure to drop them, at least for those hot deals. (Counterargument: the power law is caused by the myopia of traditional investors looking for the next Google. The crowd will be able to find new investments that greatly expand the set of successful startups)&lt;/li&gt;
&lt;li&gt;Crowdfunding works best when the backers have special knowledge about the project that leads them to fund things that otherwise would have been overlooked or undervalued by traditional investors. This happens, for example, in the Kickstarter video games category, where most of the backers are game enthusiasts. The most promising scenarios for startup crowdfunding are where the backers are potential customers of the product (e.g. HR managers backing new HR software). This could also solve the adverse selection problem, as the startup founders would probably favor these backers over traditional startups investors.&lt;/li&gt;
&lt;li&gt;When you look at the biggest crowdfunding markets – publicly traded stocks on NYSE, NASDAQ, etc – you find that a) In general, non-professional investors lose money when they try to pick individual stocks. This suggests that something similar to mutual funds would be the best mechanism for amateur participation. b) There is a constant cat-and-mouse game between regulators and sketchy market participants. If this happens with private financings, and more and more rules and regulations get added, many of the advantages of being a private company could go away.&lt;/li&gt;
&lt;li&gt;Most successful seed investors will say that it is mostly about investing in great people, and it is very hard to evaluate people even after multiple in-person meetings. If founders are going to be evaluated online without in-person meetings, great care has to be taken to make sure the evaluation mechanisms are sufficiently nuanced and reliable. (The counterargument is that this might be true when individual professional investors evaluate startups. In the aggregate, the crowd can outsmart individual professionals even with fewer direct interactions.)&lt;/li&gt;
&lt;li&gt;One way to look at startup crowdfunding is as the first step in a process that includes additional steps that prevent adverse selection, sketchy behavior etc. For example, a startup I know raised money recently from a single lead investor and then found additional investors via a crowdfunding site. They ended up rejecting many of the interested investors but found a few useful investors that they otherwise wouldn’t have found. In this model crowdfunding looks more like LinkedIn for investors – extremely useful for connecting, but only the first step of a process that includes interviews, reference checks, etc.&lt;/li&gt;
&lt;/ol&gt;</content:encoded>
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            <title><![CDATA[The Internet is for snacking]]></title>
            <description><![CDATA[Web products have followed a steady evolutionary path from the compound to the atomic. Today’s popular social sites are spin outs of…]]></description>
            <link>https://cdixon.org/2013/09/14/the-internet-is-for-snacking</link>
            <guid isPermaLink="false">https://cdixon.org/2013/09/14/the-internet-is-for-snacking</guid>
            <pubDate>Sat, 14 Sep 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Web products have followed a steady evolutionary path from the compound to the atomic. Today’s popular social sites are spin outs of behaviors that emerged from blogs and forums, the primordial soup of the early social web. Before there was Twitter, people were doing something similar to tweeting on so-called link blogs or micro blogs. Tumblr was a direct descendent of a particular strain of blogs known as tumble blogs.&lt;/p&gt;
&lt;p&gt;The successful products took big meals and converted them to snacks. The Internet likes snacks – simple, focused products that capture an atomic behavior and become compound only by linking in and out to other services. This has become even more so with the shift to mobile. People check their phones frequently, in short bursts, looking for nuggets of information.&lt;/p&gt;
&lt;p&gt;A notable exception to this pattern are online products that users pay for. The dominant payment systems (mainly, credit card systems) were designed to be offline systems and only much later awkwardly grafted onto the Internet. They are inefficient and prone to fraud. As a result, paying online means making a commitment of time and trust. That’s why one of the most valuable assets an online business can have is “credit cards on file”. It is also one of the reasons there is a rich-get-richer dynamic for paid products. Big companies like Amazon and Apple are the beneficiaries.&lt;/p&gt;
&lt;p&gt;The perverse result of this system is that products that are naturally suited to be “paid snacks” have to contort themselves to make money. News and music are good examples. Only a few news sites are popular enough to entice users to commit to paying, and even those have had only limited success with paywalls. Other news sites depend on intrusive ads to support themselves. Music is mainly purchased through aggregators like iTunes and Spotify who charge a hefty tariff. You need a comprehensive catalog to convince users to commit to a payment relationship.&lt;/p&gt;
&lt;p&gt;In-app payments on iOS and Android are the one place where paid snacks exist at scale. They have been wildly successful, quickly becoming the dominant business model for games, replacing up-front payments and banner ads. (There are individual games that generate over one billion dollars per year from in-app payments.) Outside of games, entrepreneurs have started building interesting new products that wouldn’t have been viable without in-app payments.&lt;/p&gt;
&lt;p&gt;This is one of the main reasons people are excited about new payment systems like Bitcoin. A broadly adopted form of “programmable money” has the potential to bring paid snacking to the rest of the Internet, and in doing so enable the save level of innovation in paid products that we’ve seen in the free and ad-supported products.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The idea maze]]></title>
            <description><![CDATA[The pop culture view of startups is that they’re all about coming up with a great product idea. After the eureka moment, the outcome is…]]></description>
            <link>https://cdixon.org/2013/08/04/the-idea-maze</link>
            <guid isPermaLink="false">https://cdixon.org/2013/08/04/the-idea-maze</guid>
            <pubDate>Sun, 04 Aug 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The pop culture view of startups is that they’re all about coming up with a great product idea. After the eureka moment, the outcome is preordained. This neglects the years of toil that entrepreneurs endure, and also the fact that the vast majority of startups change over time, often dramatically.&lt;/p&gt;
&lt;p&gt;In response to this pop culture misconception, it has become popular in the startup community to say things like “execution is everything” and “ideas don’t matter”.&lt;/p&gt;
&lt;p&gt;But the reality is that ideas do matter, just not in the narrow sense in which startup ideas are popularly defined. Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes. &lt;a href=&quot;https://www.coursera.org/course/startup&quot;&gt;Balaji Srinivasan&lt;/a&gt; calls this the &lt;a href=&quot;https://spark-public.s3.amazonaws.com/startup/lecture_slides/lecture5-market-wireframing-design.pdf&quot;&gt;idea maze&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;A good founder is capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Imagine, for example, that you were thinking of starting Netflix back when it was founded in 1997. How would content providers, distribution channels, and competitors respond? How soon would technology develop to open a hidden door and let you distribute online instead of by mail? Or consider Dropbox in 2007. Dozens of cloud storage companies had been started before. What mistakes had they made? How would incumbents like Amazon and Google respond? How would new platforms like mobile affect you?&lt;/p&gt;
&lt;p&gt;When you’re starting out, it’s impossible to completely map out the idea maze. But there are some places you can look for help:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;History. If your idea has been tried before (and almost all good ideas have), you should figure out what the previous attempts did right and wrong. A lot of this knowledge exists only in the brains of practitioners, which is one of many reasons why “&lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;stealth mode&lt;/a&gt;” is a bad idea. The benefits of learning about the maze generally far outweigh the risks of having your idea stolen.&lt;/li&gt;
&lt;li&gt;Analogy. You can also build the maze by analogy to similar businesses. If you are building a “peer economy” company it can be useful to look at what Airbnb did right. If you are building a marketplace you should understand eBay’s beginnings. Etc.&lt;/li&gt;
&lt;li&gt;Theories. There are now decades of historical data on tech startups, and smart observers have sifted through to develop theories that generalize that data. Some of these theories come from academia (e.g. Clay Christensen) but increasingly they come from investors and entrepreneurs on blogs.&lt;/li&gt;
&lt;li&gt;Direct experience. A lot of good startup founders figure out the maze through direct experience, often at work. The key here is to put yourself in interesting mazes and give yourself time to figure it out.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The metaphor of a maze also helps you think about competition. Competition from other startups is usually just a &lt;a href=&quot;http://cdixon.org/2010/06/26/competition-is-overrated/&quot;&gt;distraction&lt;/a&gt;. In all likelihood, they won’t take the same path, and the presence of others in your maze means you might be onto something. Your real competition – and what you should worry about – is the years you could waste going down the wrong path.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some thoughts on mobile]]></title>
            <description><![CDATA[People tend to lump smartphones and tablets together as “mobile”. This can be misleading. Ask people who run internet companies and they’ll…]]></description>
            <link>https://cdixon.org/2013/06/01/some-thoughts-on-mobile</link>
            <guid isPermaLink="false">https://cdixon.org/2013/06/01/some-thoughts-on-mobile</guid>
            <pubDate>Sat, 01 Jun 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;ul&gt;
&lt;li&gt;People tend to lump smartphones and tablets together as “mobile”. This can be misleading. Ask people who run internet companies and they’ll tell you that user behavior on tablets is far more similar to user behavior on desktops/laptops than it is to user behavior on smartphones. That said, the software on smartphones and tablets is similar, as are the discovery mechanisms (mostly app stores) and monetization techniques.&lt;/li&gt;
&lt;li&gt;Microsoft is running &lt;a href=&quot;http://tech2.in.com/news/tablets/new-windows-8-ad-takes-a-dig-at-ipad-using-siri/874112&quot;&gt;ads&lt;/a&gt; making fun of the iPad for being a “consumption” device. Here’s what Steve Jobs had to &lt;a href=&quot;http://news.cnet.com/8301-13860_3-20006442-56.html&quot;&gt;say&lt;/a&gt; back in 2010 about creation (“productivity”) on the iPad:&lt;/li&gt;
&lt;/ul&gt;
&lt;blockquote&gt;
&lt;p&gt;We are just scratching the surface on the kinds of apps for the iPad…I think there are lots of kinds of content that can be created on the iPad. When I am going to write that 35-page analyst report, I am going to want my Bluetooth keyboard. That’s 1 percent of the time. The software will get more powerful. I think your vision would have to be pretty short to think these can’t grow into machines that can do more things, like editing video, graphic arts, productivity. You can imagine all of these content creation possibilities on these kind of things. Time takes care of lots of these things.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;If you go back and look at the history of productivity apps you’ll see that each major user interface shift led to new classes of productivity apps. Back in the 70s and 80s, when computers had text-based interfaces, word processor applications like Wordperfect and spreadsheet applications like Lotus 1-2-3 were invented. In the 80s and 90s, when graphical interfaces became popular, presentation apps like Powerpoint and photo editing apps like Photoshop were invented. If the historical pattern repeats, productivity apps that are “native” to the tablet will be invented.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;App stores have had a few important effects: 1) They take 30% of revenue, which scares away most big companies (e.g. Microsoft) and also startups/venture capitalists. Not many businesses can survive an immediate 30% haircut. 2) They’ve led consumers to expect very low prices for software. It’s hard to imagine charging $30 let alone hundreds of dollars for software through app stores (although some mega-hit games do get near these levels with in-app purchases). This is why many big software vendors are scared. 3) The discovery mechanisms (e.g. top download charts) tend to have a rich-get-richer effect, making it very hard for software to grow from niches, as they often did in the past. Just as in the movie industry, the trend is toward creating blockbusters that appeal to everyone. The emergence of new app discovery mechanisms (e.g. FB &amp;#x26; Twitter) might alleviate this problem.&lt;/li&gt;
&lt;li&gt;The best entrepreneurs understand these dynamics and have been exploring “attach” business models, which basically means charging for something outside of the app store, like offline products/services (e.g. Square, Uber), online services (e.g. Spotify, Dropbox), and sometimes even hardware. Most of the companies that have succeeded (= generate real revenues/profits) on mobile were either desktop incumbents (e.g. eBay, Amazon, Facebook) or have attach business models.&lt;/li&gt;
&lt;li&gt;Fans of Apple and Google have been arguing lately about which company is winning mobile. Apple has more profits, but Android has more users. But what really matters is when and if developers switch over to developing for Android first, or even Android only. For now, iOS users tend to monetize much better than Android users, more than making up for the smaller user base. The switch to Android first hasn’t happened yet, but at least based on conversations I’ve had with entrepreneurs, it seems likely to happen in the next year or two.&lt;/li&gt;
&lt;li&gt;Mobile has had a big effect on b2b software. People want to use their personal iOS/Android devices at work, and many people now have computers with them all the time who didn’t before. This has created opportunities for 1) traditional b2b software that is mobile friendly, 2) companies that support mobile devices for businesses (e.g. mobile security, compliance etc), 3) brand new categories of software for users who previously used pencil and paper for various business tasks.&lt;/li&gt;
&lt;/ul&gt;</content:encoded>
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            <title><![CDATA[Hardware startups]]></title>
            <description><![CDATA[For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing. As Paul Graham says, there are many…]]></description>
            <link>https://cdixon.org/2013/04/30/hardware-startups</link>
            <guid isPermaLink="false">https://cdixon.org/2013/04/30/hardware-startups</guid>
            <pubDate>Tue, 30 Apr 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing. As Paul Graham &lt;a href=&quot;http://www.paulgraham.com/hw.html&quot;&gt;says&lt;/a&gt;, there are many reasons for this:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Hardware &lt;a href=&quot;http://bits.blogs.nytimes.com/2012/05/11/pebble-smartwatch-tops-out-at-10-million-on-kickstarter/&quot;&gt;does well&lt;/a&gt; on crowdfunding sites. The spread of &lt;a href=&quot;http://paulgraham.com/tablets.html&quot;&gt;tablets&lt;/a&gt; makes it possible to build new things &lt;a href=&quot;http://lockitron.com/&quot;&gt;controlled by&lt;/a&gt; and even &lt;a href=&quot;http://doublerobotics.com/&quot;&gt;incorporating&lt;/a&gt; them. &lt;a href=&quot;http://www.boostedboards.com/&quot;&gt;Electric motors&lt;/a&gt; have improved. Wireless connectivity of various types can now be taken for granted. It’s getting more straightforward to get things manufactured. Arduinos, 3D printing, laser cutters, and more accessible CNC milling are making hardware easier to prototype. Retailers are less of a bottleneck as customers increasingly buy online.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Another important factor is what Chris Anderson &lt;a href=&quot;http://www.foreignpolicy.com/articles/2013/04/29/epiphanies_from_chris_anderson&quot;&gt;calls&lt;/a&gt; “the peace dividend of the smartphone war”:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;All the components in a smartphone — the sensors, the GPS, the camera, the ARM core processors, the wireless, the memory, the battery — all that stuff, which is being driven by the incredible economies of scale and innovation machines at Apple, Google, and others, is available for a few dollars. They were essentially “unobtainium” 10 years ago. This is stuff that used to be military industrial technology; you can buy it at RadioShack now.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It also doesn’t hurt that the most valuable company in the world (Apple) and some of the most exciting startups (e.g., Nest, Jawbone, Leap Motion) make hardware.&lt;/p&gt;
&lt;p&gt;If you are thinking of doing a hardware startup, here are a few things to keep in mind:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;em&gt;Manufacturing&lt;/em&gt;. Many hardware startups stumble when they try to go from prototype to large-scale manufacturing. There is no AWS-equivalent for hardware. To get manufacturing right, entrepreneurs often end up living in China for months and even years. The difficulty of manufacturing is one reason that hardware entrepreneurs tend to have more work experience than software entrepreneurs.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Defensibility&lt;/em&gt;. Hardware companies generally have economies of scale but hardware products generally don’t have network effects. This means that as soon as you prove the market, you’ll face competition from lower cost manufacturers. The best startups complement hardware with software and services that have network or platform effects. Think of hardware as bringing the revenue and software/services as bringing the margin.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Planning&lt;/em&gt;. The build-test-iterate model that is popular in software startups doesn’t translate well to hardware startups. Proper planning is essential because mistakes can be unrecoverable. For example, you might create a design that fails environmental tests but only discover this years later when you are about to go to market. (See all those symbols on the back of your phone? Those are regulatory certifications).&lt;/li&gt;
&lt;li&gt;&lt;em&gt;B2C vs B2B&lt;/em&gt;. Consumer hardware tends to get more attention, but B2B hardware has a number of advantages. You’ll have fewer startup competitors, because entrepreneurs who have both hardware and business domain expertise are rare. You’ll also have fewer incumbent competitors, because B2B hardware usually requires local sales and service teams, making it harder for foreign competitors to copy you. Finally, manufacturing can be done locally because higher price points mean you can be less sensitive to labor costs.&lt;/li&gt;
&lt;/ul&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Technology predictions]]></title>
            <description><![CDATA[For those of us in the prediction business, it’s sometimes useful to go back and read past predictions to try to discern patterns in what…]]></description>
            <link>https://cdixon.org/2013/04/06/technology-predictions</link>
            <guid isPermaLink="false">https://cdixon.org/2013/04/06/technology-predictions</guid>
            <pubDate>Sat, 06 Apr 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;For those of us in the prediction business, it’s sometimes useful to go back and read past predictions to try to discern patterns in what they got right and wrong.&lt;/p&gt;
&lt;p&gt;Back in the early 90s, a lot of people thought the Internet was overhyped. &lt;a href=&quot;http://www.thedailybeast.com/newsweek/1995/02/26/the-internet-bah.html&quot;&gt;Here’s&lt;/a&gt; one example from Newsweek:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works…. What the Internet hucksters won’t tell you is tht the Internet is one big ocean of unedited data, without any pretense of completeness. Lacking editors, reviewers or critics, the Internet has become a wasteland of unfiltered data.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Today, it’s easy to find people expressing similar skepticism about emerging technologies like the Internet of things, robotics, 3D printing, Bitcoin, etc.&lt;/p&gt;
&lt;p&gt;What the skeptics overlook is that platforms that are open to third-party developers have the following characteristic: it’s hard to think of important use cases before they are built, and hard to find examples where important use cases weren’t developed after they were built.&lt;/p&gt;
&lt;p&gt;Just look at the founding years of top websites. Google: 1998. Wikipedia: 2001. YouTube: 2005. Twitter: 2006. No wonder it was so hard to imagine these services early on. It took years to imagine them even after the Internet had gone mainstream.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[What the smartest people do on the weekend is what everyone else will do during the week in ten years]]></title>
            <description><![CDATA[Many breakthrough technologies were hatched by hobbyists in garages and dorm rooms. Prominent examples include the PC, the web, blogs, and…]]></description>
            <link>https://cdixon.org/2013/03/02/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years</link>
            <guid isPermaLink="false">https://cdixon.org/2013/03/02/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years</guid>
            <pubDate>Sat, 02 Mar 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Many breakthrough technologies were hatched by hobbyists in garages and dorm rooms. Prominent examples include the PC, the web, blogs, and most open source software.&lt;/p&gt;
&lt;p&gt;The fact that flip-flop wearing hobbyists spawn large industries is commonly viewed as an amusing eccentricity of the technology industry. But there is a reason why hobbies are so important.&lt;/p&gt;
&lt;p&gt;Business people vote with their dollars, and are mostly trying to create near-term financial returns. Engineers vote with their time, and are mostly trying to invent interesting new things. Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.&lt;/p&gt;
&lt;p&gt;Today, the tech hobbies with momentum include: math-based currencies like Bitcoin, new software development tools like NoSQL databases, the internet of things, 3D printing, touch-free human/computer interfaces, and “artisanal” hardware like the kind you find on Kickstarter.&lt;/p&gt;
&lt;p&gt;It’s a good bet these present-day hobbies will seed future industries. What the smartest people do on the weekends is what everyone else will do during the week in ten years.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[“PCs are going to be like trucks”]]></title>
            <description><![CDATA[Steve Jobs in 2010: When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms. Cars became more…]]></description>
            <link>https://cdixon.org/2013/02/26/pcs-are-going-to-be-like-trucks</link>
            <guid isPermaLink="false">https://cdixon.org/2013/02/26/pcs-are-going-to-be-like-trucks</guid>
            <pubDate>Tue, 26 Feb 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Steve Jobs in &lt;a href=&quot;http://news.cnet.com/8301-13860_3-20006442-56.html&quot;&gt;2010&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms. Cars became more popular as cities rose, and things like power steering and automatic transmission became popular.&lt;/p&gt;
&lt;p&gt;PCs are going to be like trucks. They are still going to be around…they are going to be one out of x people.&lt;/p&gt;
&lt;p&gt;This transformation is going to make some people uneasy…because the PC has taken us a long ways. It’s brilliant. We like to talk about the post-PC era, but when it really starts to happen, it’s uncomfortable.&lt;/p&gt;
&lt;p&gt;We are just scratching the surface on the kinds of apps for the iPad…I think there are lots of kinds of content that can be created on the iPad.&lt;/p&gt;
&lt;p&gt;When I am going to write that 35-page analyst report, I am going to want my Bluetooth keyboard. That’s 1 percent of the time. The software will get more powerful. I think your vision would have to be pretty short to think these can’t grow into machines that can do more things, like editing video, graphic arts, productivity. You can imagine all of these content creation possibilities on these kind of things. Time takes care of lots of these things.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This year, about five times as many smartphones will be shipped versus PCs, and tablets will surpass PCs for the first time. According to Jobs, the right way to look at this isn’t that mobile devices are creating a new market. It’s that mobile devices are relegating PCs to special-purpose, mostly industrial devices.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The credentials trap]]></title>
            <description><![CDATA[I talk a lot to people who are deciding between startups and established companies. They’re usually early in their careers and have been…]]></description>
            <link>https://cdixon.org/2013/02/12/the-credentials-trap</link>
            <guid isPermaLink="false">https://cdixon.org/2013/02/12/the-credentials-trap</guid>
            <pubDate>Tue, 12 Feb 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I talk a lot to people who are deciding between startups and established companies. They’re usually early in their careers and have been exclusively affiliated with well-known schools and companies. As a result, they’re accustomed to praise from family and friends. Going to a startup is scary, as Jessica Livingstone, cofounder of Y Combinator, &lt;a href=&quot;http://www.foundersatwork.com/1/post/2012/10/what-goes-wrong.html&quot;&gt;describes&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Everyone you encounter will have doubts about what you’re doing—investors, potential employees, reporters, your family and friends. What you don’t realize until you start a startup is how much external validation you’ve gotten for the conservative choices you’ve made in the past. You go to college and everyone says, “Great!” Then you graduate get a job at Google and everyone says, “Great!”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;But optimizing for external validation is a dangerous trap. You’re fighting over a fixed pie against well-credentialed peers. The most likely outcome is a middle management job where you’ll have little impact and never seriously attempt to realize your ambitions. Peter Thiel’s personal experience &lt;a href=&quot;https://gist.github.com/harperreed/3201887&quot;&gt;illustrates&lt;/a&gt; this well:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;By graduation, students at Stanford Law and other elite law schools have been racking up credentials and awards for well over a dozen years. The pinnacle of post law school credentialism is landing a Supreme Court clerkship. After graduating from SLS in ’92 and clerking for a year on the 11th Circuit, Peter Thiel was one of the small handful of clerks who made it to the interview stage with two of the Justices. That capstone credential was within reach. Peter was so close to winning that last competition. There was a sense that, if only he’d get the nod, he’d be set for life. But he didn’t.&lt;/p&gt;
&lt;p&gt;Years later, after Peter built and sold PayPal, he reconnected with an old friend from SLS. The first thing the friend said was, “So, aren’t you glad you didn’t get that Supreme Court clerkship?” It was a funny question. At the time, it seemed much better to be chosen than not chosen. But there are many reasons to doubt whether winning that last competition would have been so good after all. Probably it would have meant a future of more insane competition. And no PayPal. The pithy, wry version of this is the line about Rhodes Scholars: they all had a great future in their past.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Great institutions can prepare you for great things. Credentials can open doors. But don’t let them become an end in themselves.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The computing deployment phase]]></title>
            <description><![CDATA[Technological revolutions happen in two main phases: the installation phase and the deployment phase. Here’s a chart (from this excellent…]]></description>
            <link>https://cdixon.org/2013/02/09/the-computing-deployment-phase</link>
            <guid isPermaLink="false">https://cdixon.org/2013/02/09/the-computing-deployment-phase</guid>
            <pubDate>Sat, 09 Feb 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Technological revolutions happen in two main phases: the installation phase and the deployment phase. Here’s a chart (from &lt;a href=&quot;http://www.amazon.com/Technological-Revolutions-Financial-Capital-Dynamics/dp/1843763311&quot;&gt;this&lt;/a&gt; excellent book by Carlota Perez &lt;a href=&quot;http://www.avc.com/a_vc/2011/05/technological-revolutions-and-financial-capital.html&quot;&gt;via&lt;/a&gt; Fred Wilson) showing the four previous technological revolutions and the first part of the current one:&lt;/p&gt;
&lt;p&gt;&lt;span
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&lt;p&gt;Each revolution begins with a financial bubble that propels the (irrationally) rapid “installation” of the new technology.  Then there’s a crash, followed by a recovery and then a long period of productive growth as the new technology is “deployed” throughout other industries as well as society more broadly. Eventually the revolution runs its course and a new technological revolution begins.&lt;/p&gt;
&lt;p&gt;In the transition from installation to deployment, the bulk of the entrepreneurial activity moves “up the stack”. For example, in the installation phase of the automobile revolution, the action was in building cars. In the deployment phase, the action shifted to the app layer: the highway system, shipping, suburbanization, big box retail, etc.&lt;/p&gt;
&lt;p&gt;This pattern is repeating itself in the computing/internet revolution. Most of the successful startups in the 90s built core infrastructure (e.g. optical switching) whereas most of the successful startups since then built applications on top of that infrastructure (e.g. search). The next phase should see startups higher in the stack. According to historical patterns, these would be ones that require deeper cultural change or deeper integration into existing industries.&lt;/p&gt;
&lt;p&gt;Some questions to consider:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;What industries are the best candidates for the next phase of deployment? The likely candidates are the information-intensive mega-industries that have been only superficially affected by the internet thus far: education, healthcare, and finance. Note that deployment doesn’t just mean creating, say, a healthcare or education app. It means refactoring an industry into its “optimal structure” – what the industry would look like if rebuilt from scratch using the new technology.&lt;/li&gt;
&lt;li&gt;How long will this deployment period last? Most people – at least in the tech industry – think it’s just getting started. From the inside, it looks like one big revolution with lots of smaller, internal revolutions (PC, internet, mobile, etc). Each smaller revolution extends the duration and impact of the core revolution.&lt;/li&gt;
&lt;li&gt;Where will this innovation take place? The historical pattern suggests it will become more geographically diffuse over time. Detroit was the main beneficiary of the first part of the automobile revolution. Lots of other places benefited from the second part. This is the main reason to be bullish on ”application layer” cities like New York and LA. It is also suggests that entrepreneurs will increasingly have multi-disciplinary expertise.&lt;/li&gt;
&lt;/ul&gt;</content:encoded>
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            <title><![CDATA[Samsung’s predicament]]></title>
            <description><![CDATA[In the past year, Samsung went from being a moderately successful electronics manufacturer to the leading non-iOS mobile device maker…]]></description>
            <link>https://cdixon.org/2013/01/20/samsungs-predicament</link>
            <guid isPermaLink="false">https://cdixon.org/2013/01/20/samsungs-predicament</guid>
            <pubDate>Sun, 20 Jan 2013 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In the past year, Samsung went from being a moderately successful electronics manufacturer to the leading non-iOS mobile device maker. Together, Apple and Samsung &lt;a href=&quot;http://www.visionmobile.com/blog/2012/12/the-apple-and-samsung-profit-recipe/&quot;&gt;earn&lt;/a&gt; 98% of the profits in the smartphone market. MG Siegler echoed a common sentiment when he &lt;a href=&quot;http://techcrunch.com/2013/01/05/the-fifth-horsemen-of-tech-samsung/&quot;&gt;wrote&lt;/a&gt; that Samsung is now the “fifth horseman” of tech, alongside Apple, Google, Amazon, and Facebook.&lt;/p&gt;
&lt;p&gt;The mobile device industry is still in its infancy. Samsung’s fate depends largely on how the industry evolves. If the computer-in-your-pocket (smartphone/tablet) business ends up being like the computer-on-your-desk (personal computer) business, Samsung is on track to be the modern Dell. Dell had a good run as the low-cost provider in a highly commoditized business, but the vast majority of the industry profits went to Microsoft.&lt;/p&gt;
&lt;p&gt;So the big questions for Samsung are:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Will the smartphone/tablet industry stratify the way the PC business did?&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The dominant view is that technology markets inevitably stratify. Clay Christensen is the most sophisticated proponent of this view. In his theory (more &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_innovation&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning/&quot;&gt;here&lt;/a&gt;), every tech market eventually “overshoots” the needs of its customers, at which point the benefits of horizontal specialization outweigh the benefits of vertical integration.&lt;/p&gt;
&lt;p&gt;A minority view, held mostly by Apple faithful, is that Christensen et al are guilty of over-theorizing. Apple lost the PC business simply because, when Steve Jobs was fired, they stopped innovating. When Jobs returned, Apple started gaining PC market share again. In this view, the future mobile industry structure mostly depends on whether Apple management is innovative enough to keep making superior vertically-integrated products.&lt;/p&gt;
&lt;ol start=&quot;2&quot;&gt;
&lt;li&gt;If the industry stratifies, will the lion’s share of the profits go to the OS and application layers as it did for PCs?&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Generally, technology businesses that are defensible have network effects, and network effects usually arise from products with significant software components. Samsung’s competitors like HTC are just one hit product line away from stealing Samsung’s position. Eventually, handset designs will converge and, as happened in the PC market, consumers will stop paying premiums for performance improvements (arguably, this has already started happening). The OS and apps layer, on the other hand, are very hard to replicate. If you invest enough money you can usually build or acquire decent software, but it takes more than just capital to build a vibrant developer ecosystem (just look at Microsoft).&lt;/p&gt;
&lt;p&gt;Samsung’s predicament is: their current strategy succeeds only in the scenario where both (a) the industry stratifies, and (b) significant profits flow to hardware. Samsung seems to understand the improbability of (b), which is why they’ve been &lt;a href=&quot;http://news.cnet.com/8301-1035_3-57564553-94/samsungs-secret-weapon-in-the-mobile-wars-tizen/&quot;&gt;hinting&lt;/a&gt; at throwing serious support behind a new OS. Getting traction with a new OS will be difficult, to put it mildly. Google and Apple have vastly more experience making software and a huge head start with developers. Moreover, Google’s &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;strategic position&lt;/a&gt; is even stronger today than Microsoft’s was in their heyday. Google makes so much money from web services (mostly search, for now) that they can afford to lose money on handsets and OSs indefinitely – a very scary fact for Samsung and everyone else in the mobile hardware business.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Plans are nothing, but planning is indispensable]]></title>
            <description><![CDATA[It is widely believed that writing a business plan is a waste of time, because: 1) very few people will read it, and 2) you’ll end up…]]></description>
            <link>https://cdixon.org/2012/12/18/plans-are-nothing-but-planning-is-indispensable</link>
            <guid isPermaLink="false">https://cdixon.org/2012/12/18/plans-are-nothing-but-planning-is-indispensable</guid>
            <pubDate>Tue, 18 Dec 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It is widely believed that writing a business plan is a waste of time, because: 1) very few people will read it, and 2) you’ll end up changing it along the way. This is all mostly true.&lt;/p&gt;
&lt;p&gt;However, before you commit yourself to working on a project for 5+ years, it’s prudent to think hard about what you are trying to build and some of the things that might go wrong. For many people, writing out a detailed business plan is the best way to enforce intellectual rigor.&lt;/p&gt;
&lt;p&gt;My cofounders and I wrote a fairly long business plan for our first company, SiteAdvisor. We wrote it iteratively while getting lots of candid feedback from entrepreneurs, VCs, and industry executives (one of many reason you &lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;shouldn’t keep your idea secret&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;I thought it might be useful to share our plan so I’ve embedded it below (at the time, we were temporarily calling the company InfiniTrust).&lt;/p&gt;
&lt;p&gt;In retrospect, some things in the plan look prescient, some look naive, and some look downright goofy. But writing it was an extremely useful exercise. It made us think through issues we would have otherwise glossed over, and helped us stay focused when shiny new things could have led us astray.&lt;/p&gt;
&lt;p&gt;As Eisenhower famously said: “plans are nothing, but planning is indispensable.”&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;***&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;InfiniTrust&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;January, 2005&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;InfiniTrust intends to create a new type of desktop security product that we call a “web reputation service.”  The product will benefit users who value both unrestricted web access and security — primarily consumers and small and medium businesses.  At the core of the product will be a database that classifies URLs, IP addresses, program downloads, ActiveX objects, and other “web entities” according to their degree of trustworthiness.  There will also be a downloadable application that protects the desktop according to the security classifications in the core database.  In addition, the company will provide plug-ins to firewalls, routers and web proxies (allowing for, among other things, the possibility of a fully managed outsourced web filtering service).&lt;/p&gt;
&lt;p&gt;We see InfiniTrust as having a large addressable market.  We believe the product will offer significant value to a large portion of the approximately 600M PCs in use today.  Pricing for comparable products ranges from $2-$20 per PC per year depending on the product and channel.  Since the marginal cost per customer will be extremely low (the main expense will be maintaining the database), we see the business as potentially having high gross margins.&lt;/p&gt;
&lt;p&gt;Desktop security has become one of the top issues for individuals and organizations in the last few years and the problem has been only getting worse.  We believe InfiniTrust represents a fundamentally new and important category of desktop security software, and if executed properly could become a leader in this emerging category much the same way Symantec and McAfee did in anti-virus or Brightmail and Postini did in anti-spam.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Problem&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The data security industry has consistently ignored a large class of desktop security threats that they have considered to be “social engineering” or “user education issues” and therefore not addressable through their usual defense methods.  Some examples are:&lt;/p&gt;
&lt;p&gt;A user is confronted with an ActiveX prompt that asks him whether he trusts a company he has never heard of called Claria.  The user knows that last time he saw a similar prompt on the ofoto.com website he said “No” the website failed to work properly, so this time he says “Yes,” enabling Claria’s Gator spyware software to take full control of his PC.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should educate himself as to when to answer “Yes” or “No” to such prompts or should disable ActiveX altogether thereby rendering many popular websites dysfunctional.&lt;/p&gt;
&lt;p&gt;A user receives a phishing email purporting to be from Citibank that is actually from a criminal in Uzbekistan trying to steal his credit card information.  Citibank detects that the phishing attack has occurred but has no effective way to propagate defensive information to customers.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should learn never to click on URLs in emails.&lt;/p&gt;
&lt;p&gt;A user spends time browsing a music sharing website that exploits an unpatched hole in Internet Explorer to insert spyware on the user’s machine.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should learn not to browse untrusted websites without modifying his browser security settings to restrict functionality like Javascript and ActiveX that enable most browser exploits.&lt;/p&gt;
&lt;p&gt;A user downloads Grokster, a popular P2P file-sharing application.  The user clicks “Agree” to Grokster’s 32-page End User License Agreement (EULA) without reading it carefully and therefore doesn’t realize that along with Grokster he is also downloading over a dozen different bundled spyware applications that will render his computer virtually unusable.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should read all EULA’s before downloading software.&lt;/p&gt;
&lt;p&gt;The data security industry has gotten very good at dealing with traditional security threats such as worms and viruses. These threats are characterized as 1) being unambiguously malicious and 2) having attack vectors that are primarily technical in nature.   With more and more non-technical users having direct access to remote counterparties via email and the web, a new class of threats has emerged that are characterized as 1) having attack vectors that are primarily “social” in nature,  and 2) not being clearly good or bad but instead involving tradeoffs on the part of the user.&lt;/p&gt;
&lt;p&gt;Related to this trend toward “social” and “grey-area” threats has been the rise of economically motivated hacking.  For example, spyware and phishing have quickly become big businesses.  Claria (maker of Gator) generated about $90M in ‘03, primarily due to their distribution relationship with Kazaa.  WhenU generated about $45M in revenue in ‘04, and there are literally dozens of other companies (e.g. 180Solutions, Direct Revenue) that are generating double digit millions in revenues.   Estimates of losses due to phishing vary, but the numbers seem to be conservatively in the hundred of millions.  In summary, there are literally billions of dollars generated every year by companies and criminals whose main “marketing” technique is exploiting the credulity and confusion of users.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Background on Spyware and Phishing&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Spyware is an increasingly serious threat to desktop computer users.  According to a recent study by Dell, 90% of computers are afflicted with spyware.  Spyware help calls are the #1 issue handled by Dell customer support, accounting for 20% of all calls.  Only 24% of computer users said they were knowledgeable about how to handle spyware.&lt;/p&gt;
&lt;p&gt;Somewhat more conservatively, IDC estimates that 67% of computers have some form of spyware and that the market for anti-spyware software will grow from $47M in 2004 to $305M in 2008 (we think these estimates are very low—we know of specific anti-spyware companies that combined generated far more than $47M in revenues in 2004).&lt;/p&gt;
&lt;p&gt;Phishing came almost out of nowhere in 2004 to become a major security threat.  According to Gartner Group, 57M Americans have or think they have received phishing emails.   Of those, 11% clicked on phishing links and 3% actually gave away sensitive information to attackers.  The growth rates of phishing attacks have consistently been in the double and even triple digits month-over-month.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;InfiniTrust Solution&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The main features of the InfiniTrust product are as follows:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Site Protection&lt;/em&gt;:  Adjusts the browser functionality dynamically according to the security rating of the website currently being browsed.  For example, scripting calls to vulnerable ActiveX objects are disabled on untrusted websites but enabled on trusted sites.  The point of this is to drastically reduce browser exploits that insert spyware and viruses, as well as eliminating “annoying” scripts such as pop ups, without reducing functionality of trusted sites.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Download Protection&lt;/em&gt;:  Uses a whitelist approach to program downloads to warn or block the user before downloading an untrustworthy program (in an enterprise version,policy settings could be created to automatically block untrusted downloads without prompting).&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Fraud Detection and Protection&lt;/em&gt;:  Redirects the user to a warning page if he visits a fraudulent website such as a phishing landing page.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;ActiveX Protection&lt;/em&gt;:  Allows only whitelisted ActiveX objects to download or execute.  Non-whitelisted objects are simply blocked, eliminating the need for user prompts.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Exploit Protection&lt;/em&gt;:  Filters out browser scripting code associated with known exploits.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Ecommerce Protection&lt;/em&gt;:  Warns the user about a poor security rating of a website before he enters his credit card information.  In v2.0 will notify the user of summarized business-practice information about the site (using information from sources such as BizRate).&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Privacy Protection (v2.0 only):&lt;/em&gt;  Warns the user about the trustworthiness of a website before he submits personal information such as an email address.  Also blocks cookies and other outbound transmissions of personal information to untrusted sites or ad networks.&lt;/p&gt;
&lt;p&gt;In light of the recent high profile adoption of the Firefox browser (albeit mostly by the technical “elite” so far) it is interesting to note which of the Infinitrust features are “IE” specific and which provide a more general web security. Features #1, #4 and #5 are primarily for IE users.  The other four features apply to users of all platforms and browsers.&lt;/p&gt;
&lt;p&gt;In the case where InfiniTrust is being used as software installed on the desktop (as opposed to the firewall or web proxy API), it will either take automatic action or prompt the user with an easy-to-understand prompt depending on what’s most appropriate in case at hand.  For example, when the user is browsing untrusted sites InfiniTrust will automatically restrict the browser’s functionality but when the user actively clicks on a downloadable program he will see a simple prompt explaining what, if any, malicious features the software contains.&lt;/p&gt;
&lt;p&gt;In the case of the enterprise version the need for prompting will be obviated through policy settings created by the system administrator.  Increasingly, many organizations are blocking all downloads and ActiveX controls altogether out of fear of getting spyware on the network.  InfiniTrust will give them an alternative by providing them with 100% spyware prevention through its whitelist approach to ActiveX and downloads (in addition to browser exploit blocking).&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Technology Plan&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;There are three main components to the InfiniTrust technology:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Data collection/analysis.&lt;/em&gt;  InfiniTrust will collect and analyze large amounts of disparate data sets to generate an “InfiniTrust Score” for every “web entity” (including downloadable programs, ActiveX objects, and website URLs/IPs).  Input data sources will include:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Static analysis of web-crawled HTML and JavaScript.&lt;/p&gt;
&lt;p&gt;Analyzed results of automated installations of downloadable software.&lt;/p&gt;
&lt;p&gt;Data gathered from third party deals (e.g. IP intelligence services, phishing blacklist feeds, website and program popularity data)&lt;/p&gt;
&lt;p&gt;Active and passive user feedback from users who opt-in to InfiniTrust’s product improvement program.&lt;/p&gt;
&lt;p&gt;Information mined from publicly available sources (e.g., whois data, public blacklists)&lt;/p&gt;
&lt;p&gt;Web site link analysis.  As companies like Google has shown, if site X links to site Y, that is in some sense an endorsement by site X of site Y.  Google uses this insight to rank the relevancy of sites, but it can also be applied to rank the trustworthiness of sites.  If site X links to known untrusted site Y, then site X is more likely to be untrusted itself.  Another way to put this idea is that the “dark alleys” of the web tend to be highly clustered in terms of link structure.&lt;/p&gt;
&lt;p&gt;All of this will be processed to determine the degree of trust that someone should have when going to a particular website, downloading a particular piece of software, or engaging in some sort of commercial relationship with an online entity.  Much of the true intellectual property of InfiniTrust will reside in the processes and tools for collecting and analyzing these input data sources.&lt;/p&gt;
&lt;p&gt;2)  &lt;em&gt;Data servers&lt;/em&gt;.  In order to balance load and decrease communication distances, the database will be replicated to a set of distributed data servers.  Desktop clients will connect to these data servers in order to query for the security ratings of particular entities, or to periodically download software updates.  The client software will include a caching mechanism to ensure that performance drag is negligible.  Data servers will also receive back-channel information from users who opt-in to the product improvement program.&lt;/p&gt;
&lt;ol start=&quot;3&quot;&gt;
&lt;li&gt;&lt;em&gt;Client agent&lt;/em&gt;.  The client side agent takes action on behalf of the user or provides the user with easy-to-understand, relevant information.  A client side agent consists of a core-agent that communicates with a data server, as well as an application-specific GUI agent that provides user-visible functionality.  Most of these GUI agents will be web browser extensions, but they could also be built in to web proxies, or the underlying OS to protect non-traditional applications (e.g. software update tools) that make use of HTTP.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;InfiniTrust plans to publish APIs and release an open source Linux/Firefox version of the client-side agents to facilitate partnerships with other software and equipment vendors.  Access to the data feeds will be controlled with encrypted certificates.&lt;/p&gt;
&lt;p&gt;In version 1.0, almost all of InfiniTrust’s data will be generated from public sources.  As the user base and revenues grow, InfiniTrust plans to seek out additional data licensing deals.  Examples could include phishing blacklists from anti-spam vendors and ecommerce data from companies like Bizrate.  With a sizable user base, InfiniTrust could also become an important enforcement mechanism for “self-regulating” (and therefore mostly ineffective) programs and protocols like Trust-e and P3P.  Down the road, we can also envision incorporating offshore manual labor into the data collection and analysis process.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Competition&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Overview:&lt;/em&gt;  We expect that in 2005-6 a lot of attention will be paid to problems like spyware and phishing.  This is both good and bad for InfiniTrust.  The risk is that other companies, especially large incumbents, either mitigate these threats significantly (less likely) or else create enough noise in the market to make the need for InfiniTrust less obvious (more likely).  The good news is that InfiniTrust is specifically designed to complement existing security bundles.  As pressure to differentiate security bundles increases, InfiniTrust could become an attractive add-on product or acquisition target.  The historical pattern is that most of the innovation in consumer security has come from startups.  For example, the software-based firewall was pioneered by ZoneLabs and anti-spyware was pioneered by companies like PestPatrol, Lavasoft and WebRoot.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Summary of existing anti-spyware technologies&lt;/em&gt;:  Almost all of the anti-spyware products that currently exist are for removing spyware, not preventing it.  It is widely believed that even the best anti-spyware removers achieve highly unsatisfactory success rates.  For this reason, most experts recommend that users run multiple spyware removers (in addition, users are repeatedly instructed to be very careful where they browse, what they download, etc).  This poor success rate is due mostly to the fact that once spyware takes control of a user’s PC and starts performing tricks like copying itself, changing the HOSTS file, disguising its signature etc, the technological problem of removing it becomes extremely difficult.&lt;/p&gt;
&lt;p&gt;There are a few existing anti-spyware programs that claim to have spyware prevention features (e.g. SpywareBlaster, Microsoft’s AntiSpyware) but in fact just use highly inaccurate behavior-based techniques (similar to Intrusion Prevention Systems).  In the near future, we expect security companies to develop blacklist-based preventative approaches to spyware.  Blacklist approaches have a number of problems:  1) it is extremely difficult to keep spyware blacklists up-to-date and even a single mistake can render a PC unusable, 2) they don’t properly address the many sources of spyware that are “grey area” downloads.   The problem of spyware is not nearly as black-and-white as problems like viruses and worms as most spyware comes through bundled adware where reasonable people can disagree about its maliciousness.  InfiniTrust believes the best way for users to be both protected and have a satisfying browsing experience is to 1) whitelist trusted programs, 2) blacklist purely malicious programs, and 3) inform users about the trade offs (and alternatives) in the grey area cases in a very easy-to-understand way.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Summary of existing anti-phishing technologies:&lt;/em&gt; There are three primary methods for stopping phishing attacks today.&lt;/p&gt;
&lt;p&gt;The first is simply for existing anti-spam companies to better filter phishing emails.  Anti-spam technologies have achieved 95+% accuracy but are not perfect.  Moreover, phishing emails can be particularly hard to detect as they often use zombie PC’s for delivery (thereby making IP-based blocking difficult) and contain content that looks very similar to legitimate content.&lt;/p&gt;
&lt;p&gt;The second approach is to try to shut down the email delivery or landing page machines in the midst of an attack.  A number of security companies do this on behalf of their customers who tend to be large financial institutions.  We believe these methods are limited as they succeed only after the critical first few (~6) hours of phishing attacks.  Moreover, from the desktop user’s perspective, even if these companies stop phishing attacks for, say, the top banks there are many other types of phishing attacks that these companies are not even trying to stop, such as the Tsunami-relief phishing attacks that were recently seen in large volumes.&lt;/p&gt;
&lt;p&gt;Client-side solutions:  These have the advantages of providing zero-hour defense and the ability to defend against fraud from all sources.   There have been a handful of client-side solutions released recently from companies like Earthlink, Netcraft, WebRoot, and GeoTrust.  InfiniTrust is a client-side solution that has distinct advantages over these client-side competitors.  For one, because InfiniTrust will be collecting a nearly comprehensive database of existing websites, it can take a (partial) whitelist approach to phishing detection.  The fact that a site clicked through to from an email doesn’t appear in InfiniTrust’s list of millions of legitimate websites is a strong indicator that the site is potentially fraudulent.  It also goes beyond these other solutions insofar as it prevents non-email based attacks (such as keyloggers inserted through browser exploits) and also more “grey-area” fraud such as dubious but not outright fake ecommerce sites.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Notes on primary competitors&lt;/em&gt;:&lt;/p&gt;
&lt;p&gt;Symantec:  Generated $1.87B in revenue in 2004, 47% of which came from consumer products.  Symantec has not yet released a spyware removal tool but is expected to in Q105.  They have no client side phishing product today but will likely release one sometime this year.&lt;/p&gt;
&lt;p&gt;McAfee:  McAfee is the #2 consumer security software bundle.  They currently have spyware detection but not removal.  It is likely they will release spyware removal sometime this year.&lt;/p&gt;
&lt;p&gt;ZoneLabs:  ZoneLabs was acquired by Checkpoint in 2004 for approximately $250M.  Their primary product is ZoneAlarm, a software-based firewall that had, as of 2004, at least 30M (free) users.  They also sell a complete security bundle that has at least 1M paying subscribers.  ZoneLabs built their business almost exclusively through a free downloadable version that became popular in the press and among technology enthusiasts.&lt;/p&gt;
&lt;p&gt;Computer Associates:  CA sells a traditional security bundle and recently added spyware removal tools through their acquisition of PestPatrol.&lt;/p&gt;
&lt;p&gt;Trend Micro:  Trend Micro has recently added spyware removal and has features they describe as anti-phishing (actually just an outgoing firewall that looks for personal info being sent from the PC).&lt;/p&gt;
&lt;p&gt;Microsoft:  Recently acquired an anti-spyware company (Giant) and an anti-virus company and is expected to release versions of each in Q105.  There have been conflicting reports about whether they plan to charge for these services.  Microsoft appears to see web-based security threats as a major headache.  Firefox has supposedly gotten 10% of the browser market in just the past 6 months due in large part to users’ frustration with Internet Explorer security issues.&lt;/p&gt;
&lt;p&gt;WebRoot:  WebRoot is widely considered to have a very good spyware removal tool.  Their rate of innovation has generally been very impressive.  WebRoot generated $16M in revenues in Q404 alone, evidence that point solution security products can thrive in the consumer market. We had thought Webroot was likely to be acquired but last week announced a $108mm financing event.&lt;/p&gt;
&lt;p&gt;Freeware:  Lavasoft’s Ad Aware and Spybot S&amp;#x26;D have been extremely popular free spyware removal tools.  For example, Ad Aware consistently gets more than 2M downloads per week on download.com alone (there is also a paid version of Ad Aware that is rumored to have generated significant revenues for the company).&lt;/p&gt;
&lt;p&gt;Websense:  Websense is a $1B market cap company that is considered to be the leader in so-called web filtering technology.  The primary focus of web filtering technology is to restrict corporate users from going to “bad topics” such as adult and gambling websites.  They have recently added an optional, add-on security module that basically works by altogether blocking access to large blocks of websites associated with insecure activity (e.g. Kazaa.com).  Websense severely restricts web access and is therefore only useful to (typically large) corporations that find such restrictions acceptable.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Would any of these competitors be likely to offer a product similar to InfiniTrust’s?&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Today, InfiniTrust’s closest competitor in terms of the product itself is probably Websense.  Websense has a database that in many ways is similar to InfiniTrust’s although much more focused on topics rather than security ratings.  Websense has built a high growth business ($100M revs, $36M EBITDA, $1.2B market cap) focusing almost solely on larger enterprises.  We see their entry into the consumer market as being unlikely but if they did enter it that could be a serious threat to InfiniTrust.&lt;/p&gt;
&lt;p&gt;Anti-spyware vendors could also conceivably take an approach like InfiniTrust’s, although it would mean a fundamental change in how they go about building their technology and database.  Right now their approaches are very similar to those of anti-virus technologies: they have databases of signatures they use to scan PC’s for existing infections (“parasites”), as opposed to InfiniTrust which has a database of all the “hosts” (websites, program downloads, ActiveX objects) that might carry those parasites.  Determining the trustworthiness of hosts is simply a different technology problem than detecting and removing the parasites.&lt;/p&gt;
&lt;p&gt;We see InfiniTrust as being fundamentally about providing secure, “unannoying” yet unrestricted web access, just as anti-spam companies try to provide secure, “unannoying” yet unrestricted email access.  Spyware and phishing happen to be two important and growing security threats that have mostly web-based attack vectors. They are therefore important to InfiniTrust’s value proposition but that does not mean that InfiniTrust is just another anti-spyware or anti-phishing company.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Marketing Plan&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The target market will be individuals and organizations that care about both security and unrestricted web browsing.  InfiniTrust sees this as encompassing a large percentage of consumers and, to a somewhat lesser extent, small and medium businesses.  Larger businesses tend to be satisfied with much “blunter” security instruments such as Websense that significantly restrict user web access.&lt;/p&gt;
&lt;p&gt;InfiniTrust plans to offer a limited-functionality free version that can be downloaded directly from infinitrust.com and will also be distributed through channels.   The current plan calls for the free version to offer the user basic defensive features but not have access to the full database. The free version will remind the user of its value by displaying periodic reminders of the specific dangers it has blocked or warned about.  The paid version will likely start at $30 per year for consumers (discounted strategically for different target populations) and something in the range of $5-20 per seat per year for enterprises with an upfront licensing fee for the admin console.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Distribution Partnerships&lt;/em&gt;:  ISPs, security software vendors, search engines, toolbar vendors and PC OEMs are natural distribution partners.&lt;/p&gt;
&lt;p&gt;ISPs (especially dialup providers where consumer choice is greater) are increasingly trying to differentiate their services through security software they give to their customers.  For example, security is the primary focus of recent television campaigns by AOL and Earthlink.  Additionally, these companies incur significant costs handling customer support calls resulting from phishing and spyware. For example, Earthlink says that customer support costs them $120K per phishing attack.  Deals with ISPs could either be pay per user (AOL pays McAfee $2 per user for anti-virus functionality alone which is generally considered a commodity) or unpaid distribution of the free product.&lt;/p&gt;
&lt;p&gt;Large consumer security software vendors try to provide a single package that includes every existing category of security software.  If InfiniTrust succeeds in convincing them that its product is complementary and useful, it could be seen as a critical addition to their bundles.&lt;/p&gt;
&lt;p&gt;Toolbar vendors such as Google, Yahoo, Earthlink, MSN and Ebay have recently been incorporating security features for anti-phishing and anti-spyware.  For example, Yahoo distributes PestPatrol and Earthlink distributes WebRoot.   Earthlink built its own anti-phishing functionality.  InfiniTrust’s data feed can make these toolbars significantly more powerful.&lt;/p&gt;
&lt;p&gt;PC OEMs receive numerous calls from customers about browser security issues. As mentioned earlier, 20% of Dell’s customer service calls are about spyware.  These companies are interested in not only reducing these costs but also differentiating their products.  Many of these companies have shown a willingness to work with startups (e.g. Dell distributes Sunbelt’s anti-spyware solution, generating a significant portion of Sunbelt’s $30M in revenue).&lt;/p&gt;
&lt;p&gt;A recent internal survey by InterActive Corp. of web search users showed that the safety of the sites they find was users’ #1 concern (cited by 77% of respondents as a “major concern”).  As search engines are increasingly the “gatekeepers of the web,” it is natural for them to provide filtering and ranking based on security.  At the simplest level, a partnership with a search engine could provide an InfiniTrust score next to search results in exchange for showing the InfiniTrust logo.&lt;/p&gt;
&lt;p&gt;Financial institutions affected by phishing have expressed interest in distributing client-side anti-phishing solutions such as InfiniTrust’s as a way to offer protection their customers.   For example, one recently developed anti-phishing toolbar, FraudEliminator, received business development cold calls from 3 major banks, Mastercard and Experian in just the past week despite having spent $0 on marketing.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;PR&lt;/em&gt;:   Desktop security was by far the #1 topic of discussion in the technology-related press in 2004.  The fact that InfiniTrust solves growing, high-visibility problems like phishing and spyware as well as older problems such as browser exploits in a new way provides a great opportunity to leverage this attention.  Initially, the technology press will be targeted, but the benefits of the product are widespread enough to attract mainstream media coverage.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Word of mouth&lt;/em&gt;:  Most “unsophisticated” users choose their security software based on the recommendations of 1) the media, 2) their PC manufacturer or ISP, and 3) technologically sophisticated friends and family.  Strategies for addressing 1) and 2) were discussed above.   The strategy for addressing 3) is, among other things, to make the product and message amenable to technology enthusiasts.  InfiniTrust’s client software will be mostly or completely open source, thereby showing goodwill toward the technology-enthusiast community and assuaging concerns that the client software might be in some way malicious (importantly, open sourcing the client will not jeopardize the business as the value lies primarily in the centralized database which will not be open).  In addition, the company will build Firefox, Linux and Mac versions relatively early on and expose popular portions of the database to the public via search engines.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Paid marketing&lt;/em&gt;:  In the past few years, online advertising channels such as search engines and banner ad networks have transformed the marketing possibilities for consumer software downloads and services.  In particular, it is now possible to target customers by demographic and context far more efficiently than in the past.  Moreover, startups are able to compete on a level playing field in keyword and banner auctions instead of having to, say, fight for shelf space in retail stores or suffer huge payouts to powerful distributors.  Some consumer software products and services that have built interesting businesses primarily through web-based advertising and had recent successful exits include Gotomypc (acquired by Citrix for $237M), ZoneLabs (acquired by Checkpoint for $250M), Classmates.com (acquired by United Online for $100M), TripAdvisor (acquired by IAC for $250M), and Shopping.com ($750M market cap).&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Risks&lt;/strong&gt;.&lt;/p&gt;
&lt;p&gt;Market risks:&lt;/p&gt;
&lt;p&gt;Competitive offerings: Companies such as Symantec, McAfee and Microsoft could improve their products enough to substantially solve the same problems that InfiniTrust is trying to solve. These companies have superior brand recognition and distribution so even if they merely solve the same problems, say, 75% as well as InfiniTrust does, they will likely succeed in the marketplace.&lt;/p&gt;
&lt;p&gt;Insufficient or inaccurate data:  InfiniTrust may launch with a data set that is simply not sufficient to show real benefits to early adopters. It may be that deeper or broader data is required in order to cover an acceptable percentage of actual user browsing.  Initial diligence, however, suggests this outcome to be unlikely because web browsing tends to be fairly highly concentrated.  It has been shown, for example, that 50% of page views on the web are for the top 5000 websites, and the top 2000 downloads account for over 95% of total downloads.&lt;/p&gt;
&lt;p&gt;Unwillingness to pay: While the InfiniTrust product may provide incremental value to users, there may not be a willingness to pay for it.&lt;/p&gt;
&lt;p&gt;Lack of awareness: Despite attempts to build distribution partnerships and generate PR, customers may simply not hear about InfiniTrust. The cost of running a concerted advertising or paid inclusion program may simply be too high for a start up to muster.&lt;/p&gt;
&lt;p&gt;Problems decrease for other reasons: Legal changes, software quality improvements or other external factors may lead to a reduction in the type of security problems that InfiniTrust solves, thereby reducing the need for the product.&lt;/p&gt;
&lt;p&gt;Technical risks:&lt;/p&gt;
&lt;p&gt;Data collection:  The data required to make InfiniTrust work can be difficult to collect.  Programs must be automatically installed, phishing attacks must be recognized, and web exploits must be discovered and analyzed. The company believes it has a solid plan for tackling these problems, but if it is wrong the product quality could suffer.&lt;/p&gt;
&lt;p&gt;“Arms race”: Once attackers realize how InfiniTrust operates they may put more effort into hiding their spyware, phishing attacks, web exploits etc.  This may result in a reduced data quality.  Since most of the “hackers” InfiniTrust is targeting are economically motivated, the company believes this will only happen when the company is quite successful distributing its product.  At that point the company expects to have the resources to fight back.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Budget&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The company is raising $2.7M, which would allow for a 12 month product development plan plus an additional 12 months of marketing, business development, and product refinement.  After the v1.0 product is built, the company would hire an additional team member to help with marketing and business development, and would also engage a PR firm and do online advertising to build market traction.  A summary of the budget plan is below.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-12-09-at-5-00-47-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 12 09 at 5 00 47 pm&quot;
        title=&quot;Screen Shot 2012-12-09 at 5.00.47 PM&quot;
        src=&quot;/static/cd27877b54c2c756167921e8126ea94e/b70fd/screen-shot-2012-12-09-at-5-00-47-pm.png&quot;
        srcset=&quot;/static/cd27877b54c2c756167921e8126ea94e/924ad/screen-shot-2012-12-09-at-5-00-47-pm.png 170w,
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        sizes=&quot;(max-width: 471px) 100vw, 471px&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-12-09 at 5.00.47 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The product lens]]></title>
            <description><![CDATA[There has been a lot of discussion lately about the markets for startup financing. Many of the discussions use words like “valuations…]]></description>
            <link>https://cdixon.org/2012/12/02/the-product-lens</link>
            <guid isPermaLink="false">https://cdixon.org/2012/12/02/the-product-lens</guid>
            <pubDate>Sun, 02 Dec 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There has been a lot of &lt;a href=&quot;http://pandodaily.com/2012/11/28/the-series-a-crunch-is-hitting-now-have-we-even-noticed/&quot;&gt;discussion&lt;/a&gt; lately about the markets for startup financing. Many of the discussions use words like “valuations” “bubble” “crunch” etc. Words like that generally mean the writer is discussing the world through the lens of finance. This is a useful lens, but I’d like to suggest there is another lens that is also useful: the product lens. First, some background.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Two markets&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Startups sit in the middle of two markets: one between VCs and startups, and one between startups and customers. These markets are correlated but only partially. When the financing supply is low but customer demand is high, entrepreneurs that are able to finagle funding generally do well. When financing and startup supply is high, customers do well, some startups do well, and VCs generally don’t. And so on.&lt;/p&gt;
&lt;p&gt;When VCs get too excited, people talk about a bubble. When VCs get too fearful, people talk about a crash. Historically, downturns were great times for startups that were able to raise money because competition was low but customer demand for new technology remained fairly steady. Downturns also tended to coincide with big platform shifts, which usually meant opportunities for entrepreneurs.&lt;/p&gt;
&lt;p&gt;These markets shift independently between different stages and sectors, although there are connections. The amount of financing available is relatively constant, because of the longevity of VC funds and the way most VCs are compensated (management fees). Less financing in one sector or stage usually leads to more financing in others.&lt;/p&gt;
&lt;p&gt;The stages are related because the early stages depend on the later stages for exits and financings. The result is a bullwhip effect where changes in later stages (the latest stage being public markets) lead to magnified changes in early stages.&lt;/p&gt;
&lt;p&gt;Smart VCs understand these dynamics and adjust their strategies accordingly. Smart entrepreneurs don’t need to think about these things very often. Fundraising is necessary (at least for companies that choose to go the VC route – many shouldn’t), but just one of the many things an entrepreneur needs to do. The best advice is simply to raise money when you can, and try to weather the vicissitudes of the financial markets.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The product lens&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Good entrepreneurs spend most of their time focusing on the other market: the one between their company and their customers. This means looking at the world through the lens of products and not financing. This lens is particularly important when you are initially developing your idea or when you are thinking about product expansions.&lt;/p&gt;
&lt;p&gt;The product lens suggests you should ask questions like: have the products in area X caught up to the best practices of the industry? Are they reaching their potential? Are they exciting? Are there big cultural/technological/economic changes happening that allow dramatically better products to be created? Sometimes the product lens guides you to the same conclusion as the finance lens and sometimes it doesn’t.&lt;/p&gt;
&lt;p&gt;For example, there has been a lot of hand wringing about a financing crunch for consumer internet startups. One theme is that investors are pivoting from consumer to enterprise. The finance lens says: for the last five years or so, consumer was overfunded and enterprise was underfunded – let’s correct this. It also helps that enterprise IPOs have performed much better than consumer IPOs in the last year or so.&lt;/p&gt;
&lt;p&gt;The product lens is tricky. My sense is that, at least for the non-mobile consumer internet, the product lens and financing lens agree. Anyone who has had the misfortune to use enterprise technology lately will tell you that the hardware and software they use at home (iPhone, Gmail, etc) is far and away more sophisticated and elegant than the software they use at work. It feels like the enterprise tech is way behind in the product upgrade cycle.&lt;/p&gt;
&lt;p&gt;Mobile seems like a case where the lenses disagree. The finance lens says: billions of dollars have been invested in mobile apps. It has become hit driven and there have been very few “venture-scale” startups created.&lt;/p&gt;
&lt;p&gt;The product lens says: the modern smartphone platform began about four years ago when the iOS app store launched. This is clearly a major new platform. Platforms and apps interact in a push-pull relationship that takes decades to play out. Innovative new apps, designs and technologies are created all the time. It would be surprising – and contrary to all the historical patterns – if the mobile product evolution were already played out.&lt;/p&gt;
&lt;p&gt;That is not to dismiss the finance lens. It could be painful along the way:  financing markets might dry up, and profits might accrue to the platforms over the apps. But clearly mobile is just getting started.&lt;/p&gt;
&lt;p&gt;Some of the biggest mistakes I’ve made as an angel investor stemmed from being beholden to the finance lens. The finance lens feels more scientific and therefore appeals to analytical types. It might sound unsophisticated to say “the products for X are crappy, and I have an idea for how to make them great.” But in many cases, it’s actually that simple.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some problems are so hard they need to be solved piece by piece]]></title>
            <description><![CDATA[Andrew Parker had a great post a few years ago where he sketched out all the startups going after pieces of Craigslist:  Startups that have…]]></description>
            <link>https://cdixon.org/2012/11/23/some-problems-are-so-hard-they-need-to-be-solved-piece-by-piece</link>
            <guid isPermaLink="false">https://cdixon.org/2012/11/23/some-problems-are-so-hard-they-need-to-be-solved-piece-by-piece</guid>
            <pubDate>Fri, 23 Nov 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Andrew Parker had a great &lt;a href=&quot;http://thegongshow.tumblr.com/post/345941486/the-spawn-of-craigslist-like-most-vcs-that-focus&quot;&gt;post&lt;/a&gt; a few years ago where he sketched out all the startups going after pieces of Craigslist:&lt;br&gt;
&lt;img src=&quot;https://lh4.googleusercontent.com/vl8LZu_6tICMl8YOT1_SvMY1805i7cQ-r7fNMNoGDeec2CgHQHte_WY_nwkQ70p8AcfgteX--nwH1T_A3fFIKl1JDIVJgRZhvJkIAU6viz9KDeTdVMx3&quot;&gt;&lt;/p&gt;
&lt;p&gt;Startups that have tried to go head-to-head against the entirety of Craigslist (the “horizontal approach”) have struggled. Startups that have tried to go up against pieces of Craigslist (the “vertical approach”) have been much more successful (e.g. StubHub, AirBnB).&lt;/p&gt;
&lt;p&gt;Recruiting looks like it’s going through a similar evolution. Last-generation products like LinkedIn are broad but not deep. Everyone I know who recruits uses LinkedIn, but none of them think it has solved their recruiting problems. Now we are seeing the rise of vertical solutions that are significantly better, e.g. Stack Overflow for developers and Behance for designers (at least that’s what I believe – I’m an angel investor in both).&lt;/p&gt;
&lt;p&gt;The benefits of focusing are: 1) you can create a dramatically better user experience when it’s tailored to a specific use, 2) you can do unscalable hacks when starting out (e.g. AirBnb paying photographers to take pictures of apartments), 3) you need far fewer users to get to minimum viable liquidity, and 4) brand building is easier when you solve a straightforward, narrow problem (e.g. “I need a place to stay this weekend”).&lt;/p&gt;
&lt;p&gt;This pattern – horizontal first, vertical second – is common. But you need to be careful. Back in 2003-2004, there was a lot of speculation that vertical search engines would eventually take down Google. A few categories worked (e.g. travel), but Google adapted in other categories (e.g. video, news) and lots of startups suffered.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[a16z]]></title>
            <description><![CDATA[VCs are experts at analyzing industries and identifying new opportunities, which is why it’s odd that the VC industry itself has so…]]></description>
            <link>https://cdixon.org/2012/11/19/a16z</link>
            <guid isPermaLink="false">https://cdixon.org/2012/11/19/a16z</guid>
            <pubDate>Mon, 19 Nov 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;VCs are experts at analyzing industries and identifying new opportunities, which is why it’s odd that the VC industry itself has so stubbornly resisted change.&lt;/p&gt;
&lt;p&gt;Two years ago I wrote a &lt;a href=&quot;http://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted/&quot;&gt;post&lt;/a&gt; where I argued that innovative new VC firms are finally starting to change this:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Top tier entrepreneurs are frequently selecting their investors, not vice versa. The VCs most sought after are mostly new firms: big firms like Andreessen Horowitz, Union Square Ventures, and First Round, and micro-VCs like Floodgate (fka Maples), Betaworks, and Ron Conway.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Since then, the trend has become even more pronounced. VC is only partly about investing. It is primarily a service business whose purpose is to help entrepreneurs.&lt;/p&gt;
&lt;p&gt;When Andreessen Horowitz (“&lt;a href=&quot;http://en.wikipedia.org/wiki/Internationalization_and_localization&quot;&gt;a16z&lt;/a&gt;”) started out three years ago, like a lot of people I thought “OK, really interesting entrepreneurial founders, but how will they be as investors?” Then I started hearing chatter among entrepreneurs that they really wanted to raise money from them. “We’re talking to X, Y, &amp;#x26; Z — but Andreessen is the firm we really want” became an increasingly common refrain.&lt;/p&gt;
&lt;p&gt;Earlier this year I got to meet the a16z team and observe the operation directly. There are over 60 people at the firm. Only six people do traditional VC activities: investing, joining boards, and helping out. The rest are exclusively focused on helping entrepreneurs.&lt;/p&gt;
&lt;p&gt;The “startup idea” behind a16z is: instead of spending the bulk of the fund fees on partner salaries, spend it on operations to help entrepreneurs. There is a marketing team (=helps you get noticed), a talent team (=helps you recruit), a market development team (=helps you get customers), and a research team (=helps you figure stuff out).&lt;/p&gt;
&lt;p&gt;Spending time there, I had the same feeling I have whenever I meet a great startup: “This is obviously the future, why didn’t someone do it before?”&lt;/p&gt;
&lt;p&gt;So I’m super excited to say that I’m joining a16z as their seventh General Partner. I’ll specialize in consumer internet investments but will be open to anything ambitious that involves technology. I’ll be based in California, but plan to do a lot of investing in NYC.&lt;/p&gt;
&lt;p&gt;I’ll miss seeing my Hunch colleagues on a daily basis. Many of us have been working together for eight years, through two startups. I’d also like to thank everyone at eBay for being so welcoming and supportive.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Agency problems]]></title>
            <description><![CDATA[“Agency problems” are what economists call situations where a person’s interests diverge from his or her firm’s interests. Large companies…]]></description>
            <link>https://cdixon.org/2012/10/19/agency-problems</link>
            <guid isPermaLink="false">https://cdixon.org/2012/10/19/agency-problems</guid>
            <pubDate>Fri, 19 Oct 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“&lt;a href=&quot;http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem&quot;&gt;Agency problems&lt;/a&gt;” are what economists call situations where a person’s interests diverge from his or her firm’s interests.&lt;/p&gt;
&lt;p&gt;Large companies are in a constant state of agency crisis. A primary role of senior management is to counter agency problems through organizational structures and incentive systems. For example, most big companies divide themselves into de facto smaller companies by creating business units with their own P&amp;#x26;L or similar metric upon which they are judged. (Apple is a striking counterexample: I once pitched Apple on a technology that could increase the number of iTunes downloads. I was told “nobody optimizes that. The only number we optimize here is P&amp;#x26;L in the CFO’s office”).&lt;/p&gt;
&lt;p&gt;If you are selling technology to large companies, you need to understand the incentives of the decision makers. As you go higher in the organization, the incentives are more aligned with the firm’s incentives. But knowledge and authority over operations often reside at lower levels. Deciding what level to target involves nuanced trade offs. Good sales people understand how to navigate these trade offs and shepherd a sale. The complexity and counter-intuitiveness of this task is why it’s so difficult for inexperienced entrepreneurs to sell to large companies.&lt;/p&gt;
&lt;p&gt;Agency problems also exist in startups, although they tend to be far less dramatic than at big companies. Simply having fewer people means everyone is, as they say in programming, “closer to the metal”. The emphasis on equity compensation also helps. But there are still issues. Some CEOs are more interested in saying they are CEOs at parties than in the day-to-day grind of building a successful company. Some designers are focused on building their portfolio. Some developers are only interested in intellectually stimulating projects. Every job has its own siren song.&lt;/p&gt;
&lt;p&gt;One of the reasons The Wire is such a great TV show is that it &lt;a href=&quot;http://cdixon.org/2010/01/30/institutional-failure/&quot;&gt;shows&lt;/a&gt; in realistic and persuasive detail how agency problems in large organizations consistently thwart well intentioned individual efforts. The depressing conclusion is that our major civic institutions are doomed to fail. Those of &lt;a href=&quot;http://www.avc.com/a_vc/2012/03/the-nature-of-the-firm-and-work-markets.html&quot;&gt;us&lt;/a&gt; who are technology optimists counter that the internet allows new networks to be created that eliminate the need for large organizations and their accompanying agency problems. Ideally, those networks recreate the power of large organizations but operate in concert like startups.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The economic logic behind tech and talent acquisitions]]></title>
            <description><![CDATA[There’s been a lot of speculation lately about why big companies spend millions of dollars acquiring startups for their technology or talent…]]></description>
            <link>https://cdixon.org/2012/10/18/the-economic-logic-behind-tech-and-talent-acquisitions</link>
            <guid isPermaLink="false">https://cdixon.org/2012/10/18/the-economic-logic-behind-tech-and-talent-acquisitions</guid>
            <pubDate>Thu, 18 Oct 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There’s been a lot of speculation lately about why big companies spend millions of dollars acquiring startups for their technology or talent. The answer lies in the economic logic that big companies use to make major project decisions.&lt;/p&gt;
&lt;p&gt;Here is a really simplified example. Suppose you are a large company generating $1B in revenue, and you have a market cap of $5B. You want to build an important new product that your CTO estimates will increase your revenue 10%. At a 5-1 price-to-revenue ratio, a 10% boost in revenue means a $500M boost in market cap. So you are willing to spend something less than $500M to have that product.&lt;/p&gt;
&lt;p&gt;You have two options: build or buy. Build means 1) recruiting a team and 2) building the product. There is a risk you’ll have significant delays or outright failure at either stage. You therefore need to estimate the cost of delay (delaying the 10% increase in revenue) and failure. Acquiring a relevant team takes away the recruiting risk. Acquiring a startup with the product (and team) takes away both stages of risk. Generally, if you assume 0% chance of failure or delay, building internally will be cheaper. But in real life the likelihood of delay or failure is much higher.&lt;/p&gt;
&lt;p&gt;Suppose you could build the product for $50M with a 50% chance of significant delays or failure. Then the upper bound of what you’d rationally pay to acquire would be $100M. That doesn’t mean you have to pay $100M. If there are multiple startups with sufficient product/talent you might be able to get a bargain. It all comes down to supply (number of relevant startups) and demand (number of interested acquirers).&lt;/p&gt;
&lt;p&gt;Every big company does calculations like these (albeit much more sophisticated ones). This is a part of what M&amp;#x26;A/Corp Dev groups do. If you want to sell your company – or simply understand acquisitions you read about in the press – it is important to understand how they think about these calculations.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Regulatory hacks]]></title>
            <description><![CDATA[A common way to think of business regulations is by analogy to sports: the rules are specified up front, and the players follow the rules…]]></description>
            <link>https://cdixon.org/2012/10/10/regulatory-hacks</link>
            <guid isPermaLink="false">https://cdixon.org/2012/10/10/regulatory-hacks</guid>
            <pubDate>Wed, 10 Oct 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A common way to think of business regulations is by analogy to sports: the rules are specified up front, and the players follow the rules. But real regulations don’t work that way. Regulations follow business as much as business follows regulations.&lt;/p&gt;
&lt;p&gt;Sometimes the businesses that change regulations are startups. Startups don’t have the resources to change regulations through lobbying. Instead, they need to start with regulatory hacks: “back door” experiments that demonstrate the benefits of their ideas. With luck, regulators are forced to follow.&lt;/p&gt;
&lt;p&gt;Nextel was one of the all-time great regulatory hacks. In the late 80s and early 90s, the FCC’s rules banned more than two cellular operators per city. As Nextel’s cofounder &lt;a href=&quot;http://www.rcrwireless.com/article/20090217/wireless/looking-back-while-going-forward-how-the-early-days-of-nextel-reflect-on-today/&quot;&gt;said&lt;/a&gt;, “the FCC thought a wireless duopoly was the perfect market structure”. Nextel (called Fleet Call at the time) circumvented these rules by acquiring local (e.g. taxi, pizza truck) dispatch radio companies, which they then connected to create a nationwide (non-dispatch) cell phone service.&lt;/p&gt;
&lt;p&gt;Predictably, the cellular incumbents tried to regulate Nextel out of existence. From a 1991 New York Times &lt;a href=&quot;http://www.nytimes.com/1991/02/13/business/threat-to-cellular-phone-services.html&quot;&gt;article&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In a move that could threaten cellular telephone companies, the Federal Communications Commission may decide on Wednesday to grant a small radio company’s request to provide a new form of mobile telephone service in six major cities, including New York. If the request is approved, the action could inject new competition into the industry. At the moment, Federal rules permit only two cellular systems to operate in any city. But the new proposal could open up a regulatory back door, allowing companies that provide private radio service for taxi fleets and delivery services to offer mobile telephone services to individuals…. The proposal has alarmed the industry, which has heatedly opposed it and enlisted support in Congress late last year to delay the F.C.C.’s decision.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The incumbents argued that Nextel’s service would interfere with public safety frequencies and therefore endanger the public. They also argued that Nextel’s service would be too expensive:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Some analysts contend that the radio handsets for Fleet Call and its imitators will be more expensive than cellular units. The technical features of cellular equipment are now standardized nationwide, making it possible to bring down costs through higher selling volumes. Specialized mobile services are currently different in each city.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;And their call quality would be inferior:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Some analysts contend that Fleet Call’s local service is likely to be inferior as well. “It is highly unlikely to be as good as cellular service,” said Denise Jevne, telecommunications analyst with T. Rowe Price Associates in Baltimore.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The FCC eventually decided not to block Nextel. Nextel grew to become a top five US cellular operators before it was acquired by Sprint in 2004 for $35B. Their service turned out to be cost-competitive, high quality, and safe. The only thing endangered were the incumbents’ profits.&lt;/p&gt;
&lt;p&gt;What Nextel faced in 1991 is very similar to what many startups face today. Uber is being threatened by the taxi industry, Aereo by the TV broadcasting industry, and Airbnb by the hotel industry. Some industries, like finance, are so heavily regulated that almost any new idea runs into regulatory objections.&lt;/p&gt;
&lt;p&gt;Of course regulations that truly protect the public interest are necessary. But many regulations are created by incumbents to protect their market position. To try new things, entrepreneurs need to find a back door. And when they succeed, it will all look obvious in retrospect. Today’s regulatory hack is tomorrow’s mainstream industry.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The rise of enterprise marketing]]></title>
            <description><![CDATA[Building an enterprise software company used to be largely about sales, because enterprise software was sourced and purchased by high-level…]]></description>
            <link>https://cdixon.org/2012/09/24/the-rise-of-enterprise-marketing</link>
            <guid isPermaLink="false">https://cdixon.org/2012/09/24/the-rise-of-enterprise-marketing</guid>
            <pubDate>Mon, 24 Sep 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Building an enterprise software company used to be largely about sales, because enterprise software was sourced and purchased by high-level business people. Those business people needed to be charmed and convinced, an activity that was distasteful to many technologists.&lt;/p&gt;
&lt;p&gt;Internet-based delivery (“SaaS”, “cloud”) dramatically lowered installation costs, letting individuals or small groups buy software on discretionary budgets or use basic versions for free. As adoption spread throughout the organization, the value of the software eventually percolated up to high-level business people who could write large checks to get features big companies need, such as administration, security, integration, compliance, and support. This ”bottom-up” approach was pioneered by Salesforce and open source companies like MySql. Recent enterprise success stories also follow this model, e.g. New Relic, Yammer, Twilio, and Github. Many of these companies have processes that would have seemed crazy ten years ago – e.g. sales people only handle inbound inquiries or only call customers who already use their product.&lt;/p&gt;
&lt;p&gt;Thus enterprise software went from being about sales (one-to-one) to being about marketing (one-to-many). Marketing requires crafting a compelling message, figuring out the right channels and then optimizing. But the most effective marketing is a compelling product that can be easily tried. As a result, as Benchmark’s Peter Fenton &lt;a href=&quot;http://vivekmohta.com/2012/09/16/the-underhyped-enterprise-market-and-consumerization-of-enterprise/&quot;&gt;said&lt;/a&gt; recently: ”We’re seeing a fundamental shift from sales-driven companies to product-driven companies. The companies that are leading the way there let this consumer and product focus permeate the culture of their companies.”&lt;/p&gt;
&lt;p&gt;One of the most visible manifestations of this shift is the refreshingly accessible language on modern enterprise websites. Sales-driven enterprise software companies speak the arcane language of CIOs. Marketing-driven companies talk directly to business users (e.g. &lt;a href=&quot;https://www.yammer.com/product/&quot;&gt;Yammer&lt;/a&gt;) or developers (e.g. &lt;a href=&quot;https://github.com/&quot;&gt;Github&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;This is good news all around. Enterprises are more likely to get software that incorporates the advances made over the last decade in consumer software. Startups get a shot at creating this software, and get to do so on a fairly level playing field. The product and marketing focus should also attract a lot more technologists who were turned off by sales. The only losers are incumbents who continue to pursue the old model.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Vanity milestones]]></title>
            <description><![CDATA[Eric Ries uses the phrase “vanity metrics” to refer to metrics that founders cite to demonstrate progress but that are actually false…]]></description>
            <link>https://cdixon.org/2012/09/11/vanity-milestones</link>
            <guid isPermaLink="false">https://cdixon.org/2012/09/11/vanity-milestones</guid>
            <pubDate>Tue, 11 Sep 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Eric Ries uses the phrase “&lt;a href=&quot;http://www.startuplessonslearned.com/2009/12/why-vanity-metrics-are-dangerous.html&quot;&gt;vanity metrics&lt;/a&gt;” to refer to metrics that founders cite to demonstrate progress but that are actually false signals. A related concept is “vanity milestones”: achievements that are more about making you feel good than helping your company. Vanity milestones include:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Raising money from famous people/firms who aren’t really going to help your company (e.g. Hollywood celebrities).&lt;/li&gt;
&lt;li&gt;Partnerships with brand name organizations that aren’t really going to help your company.&lt;/li&gt;
&lt;li&gt;Getting press (e.g top lists) that focuses on founders and not your company.&lt;/li&gt;
&lt;li&gt;Almost all tech press (unless your product targets developers or tech companies).&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;&lt;strong&gt;This doesn’t mean it’s bad to hit vanity milestones.&lt;/strong&gt; Good companies hit lots of vanity milestones along the way, and sometimes they can be a morale boost for employees. What is worrisome is when founders equate vanity milestones with success. The attention will go away very quickly if your company fails.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Notes on the acquisition process]]></title>
            <description><![CDATA[Ten years ago, startup financing was an insider’s game. Since then, the topic has been widely discussed on blogs, to the great benefit of…]]></description>
            <link>https://cdixon.org/2012/09/10/notes-on-the-acquisition-process</link>
            <guid isPermaLink="false">https://cdixon.org/2012/09/10/notes-on-the-acquisition-process</guid>
            <pubDate>Mon, 10 Sep 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Ten years ago, startup financing was an insider’s game. Since then, the topic has been widely discussed on blogs, to the great benefit of entrepreneurs. Comparatively little, however, has been written about the important transaction at the other end many startups’ life, acquisitions. Here are some things I’ve learned about the acquisition process over the years.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;There is an old saying that startups are bought not sold. Clearly it is better to be in high demand and have inbound interest. But for &lt;a href=&quot;http://cdixon.org/2011/12/10/three-types-of-acquisitions/&quot;&gt;product and tech&lt;/a&gt; acquisitions especially, it is often about getting the attention of the right people at the acquirer. Sometimes the right person is corp dev, other times product or business unit leads, and other times C-level management.&lt;/li&gt;
&lt;li&gt;Don’t use a banker unless your company is late stage and you are selling based on a multiple of profits or revenues. I’ve seen many acquisitions bungled by bankers who were either too aggressive on terms or upset the relationship between the startup and acquirer.&lt;/li&gt;
&lt;li&gt;Research the potential acquirer before the first meeting. Try to understand management’s priorities, especially as they relate to your company.  Talk to people who work in the same sector. Talk to industry analysts, investors, etc. If an acquirer is public, Wall Street analyst reports can be helpful.&lt;/li&gt;
&lt;li&gt;Develop relationships with key people – corp dev, management, product and business unit leads. The earlier the better.&lt;/li&gt;
&lt;li&gt;Don’t try to be cute. Leaking rumors to the press, creating a false sense of competition, etc. is generally a bad idea. Besides being ethically questionable, it can create ill will.&lt;/li&gt;
&lt;li&gt;What you tell employees is particularly tricky. Being open with employees can lead to press leaks and can annoy acquirers. Moreover, some public companies insist that you don’t talk to employees until the deal is closed or almost closed. Employees usually get a sense that something is going on and this can put you in the awkward situation of being forced to lie to them. I don’t know of a good solution to this problem.&lt;/li&gt;
&lt;li&gt;Understand the process and what each milestone along the way means. As with financings, acquisitions take a long time and involve lots of meetings and difficult decisions. Inexperienced entrepreneurs tend to get overly excited about a few good meetings.&lt;/li&gt;
&lt;li&gt;Strike while the iron is hot. Just as with &lt;a href=&quot;http://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed/&quot;&gt;financings&lt;/a&gt;, you need to be opportunistic. Waiting 6 months to hit another milestone might improve your fundamentals, but the acquirer’s interest might wane.&lt;/li&gt;
&lt;li&gt;There are two schools of thought on price negotiation: anchor early or wait until you’ve gotten strong interest. Obviously having multiple interested parties makes finding a fair price a lot easier.&lt;/li&gt;
&lt;li&gt;Deal structure: the cap table is an agreement between you and the shareholders that says, in effect: “If we sell the company, this is how we pay out founders, employees, and investors.” Acquirers have gotten increasingly aggressive about rewriting cap tables to 1) hold back key employee payouts for retention purposes, and 2) give a greater share of proceeds to employees/founders.  Some even go so far as to try to cut side deals with key employees to entice them to abandon the other employees and investors. In terms of ethics and reputations, it is important to be fair to all parties involved: the acquirer, founders, employees, and investors.&lt;/li&gt;
&lt;li&gt;Research the reputation of the acquirer, especially how they have behave between LOI and closing (good people to talk to: investors, other acquired startups, startup lawfirms). This is when acquirers have all the leverage and can mistreat you. Some acquirers treat LOIs the way VCs treat term sheets, as a contract they’ll honor unless they discover egregious issues like material misrepresentations. Others treat them as an opportunity to get free market intelligence.&lt;/li&gt;
&lt;li&gt;Certain terms beyond price can be deal killers. The most prominent one lately is “IP indemnification.” This is a complicated issue, but in short, as a response to patent trolls going after IP escrows, acquirers have been trying to get clawbacks from investors in case of IP claims. This term is a non-starter to institutional investors (and most individual investors). You need to understand all the potential deal-killer terms and hire an experienced startup law firm to help you.&lt;/li&gt;
&lt;li&gt;Ignore the cynical blog chatter about “acqui-hires” (or, as they used to be called, “talent acquisitions”). Only people who have been through the process understand that sometimes these outcomes are good for everyone involved (including users when the alternative is shutting down).&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;Finally, acquisitions should be thought of as partnerships that will last long after the deal closes. Besides the commitments you make as part of the deal, your professional reputation will be closely tied to the fate of the acquisition. This is one &lt;a href=&quot;http://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model/&quot;&gt;more&lt;/a&gt; reason why you should only raise money if you are prepared for a long-term commitment.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The time to eat the hors d’oeuvres is when they’re being passed]]></title>
            <description><![CDATA[The efficient market hypothesis is a widely taught financial theory that states, roughly, that under certain generally-held conditions…]]></description>
            <link>https://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed</link>
            <guid isPermaLink="false">https://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed</guid>
            <pubDate>Mon, 03 Sep 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The efficient market hypothesis is a widely taught financial theory that states, roughly, that under certain generally-held conditions, asset prices are an accurate reflection of the information available at the time. The arguments underlying it are mathematically elegant and have been widely &lt;a href=&quot;http://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street&quot;&gt;popularized&lt;/a&gt;. Its hardcore proponents argue that financial bubbles &lt;a href=&quot;http://krugman.blogs.nytimes.com/2009/07/19/ketchup-and-the-housing-bubble/&quot;&gt;do not (indeed cannot) exist&lt;/a&gt; and that government intervention in financial markets is unnecessary. While efficient market theory is dominant in academic circles, it is very hard to find active participants in financial markets who believe in it. In financial markets – like most complex human systems – the closer you get, the more nuance you discover.&lt;/p&gt;
&lt;p&gt;Venture capital markets are perhaps the most inefficient of mainstream financial markets. Complicating factors include: heavy reliance on comparables for valuations, desire of VCs to be associated with “hot” companies, tendency to overreact to macro changes, illiquidity of startup financings, illiquidity of financings for VCs themselves, perverse financial incentives of VCs, inability to short stocks, extreme uncertainty of startup financial projections, vagaries of the M&amp;#x26;A market, dependency on moods of downstream investors, concentration of capital among a small group of VCs, the &lt;a href=&quot;http://nonchalantrepreneur.com/post/29847134811/why-its-so-hard-to-build-investment-models-for&quot;&gt;difficulty&lt;/a&gt; of developing accurate financial models, rapid shifts of supply and demand across sectors and stages, and non-uniform distribution of accurate market data.&lt;/p&gt;
&lt;p&gt;The title of this post is an old venture capital adage (via &lt;a href=&quot;https://twitter.com/bgurley/status/228919212683448321&quot;&gt;Bill Gurley&lt;/a&gt;) that reflects a hard-earned truth about financing and M&amp;#x26;A markets. For social consumer startups, the hors d’oeurves were being passed in the build up to the Facebook IPO. They are being passed now for B2B and e-commerce companies. In the M&amp;#x26;A markets, the most extreme example is probably in adtech, where there were waves of acquisitions in ad exchanges (DoubleClick, RightMedia, Avenue A), then mobile ads (AdMob, Quattro), and then social advertising (Buddy Media, Wildfire). If you didn’t sell during these M&amp;#x26;A waves, you’re suddenly stuck with lots of powerful competitors and few potential acquirers/partners.&lt;/p&gt;
&lt;p&gt;It is common to hear entrepreneurs say things like “I am waiting 6 months to raise money/sell the company, when we’ve hit new milestones.” Of course milestones matter, and companies are ultimately valued based on fundamentals. But along the way you’ll likely need capital and sometimes need to exit, and for that you are dependent on highly inefficient markets.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[E-commerce startups]]></title>
            <description><![CDATA[Very few successful e-commerce companies were started in the 2000s. Since then, e-commerce startups have enjoyed a revival. Dozens of…]]></description>
            <link>https://cdixon.org/2012/08/15/e-commerce-startups</link>
            <guid isPermaLink="false">https://cdixon.org/2012/08/15/e-commerce-startups</guid>
            <pubDate>Wed, 15 Aug 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Very few successful e-commerce companies were started in the 2000s. Since then, e-commerce startups have enjoyed a revival. Dozens of companies have gotten traction and venture dollars have followed. Phrases like flash sales, social commerce, and subscription commerce have entered the startup lexicon.&lt;/p&gt;
&lt;p&gt;As Josh Kopelman &lt;a href=&quot;http://redeye.firstround.com/2010/03/some-more-thoughts-on-innovation-in-ecommerce.html&quot;&gt;points out&lt;/a&gt;, the list of the top 15 e-commerce companies has barely changed over the past decade, in sharp contrast to the list of overall top internet companies. This can be interpreted in one of two ways.&lt;/p&gt;
&lt;p&gt;The bull case is that startups neglected e-commerce and are now waking up to the opportunity. The key equation driving e-commerce is: profit = lifetime customer value minus customer acquisition costs. New marketing strategies (“content plus commerce”, social commerce, etc) lower acquisition costs enough to make startups competitive with incumbents.&lt;/p&gt;
&lt;p&gt;The bear case is that scale and brand effects make e-commerce incumbents nearly unbeatable. As one entrepreneur said, “If it has a UPC code, Amazon will beat you.” A lower price is just one search away. The only way to compete is to sell used stuff or make your own products (or provide a marketplace for those things). The fat head (large incumbents) and the long tail (artisanal shops) will thrive, but the middle of the distribution will suffer. (The public markets seem to agree with this assessment, e.g. Overstock trades at 0.2x revenues.)&lt;/p&gt;
&lt;p&gt;What most people agree on is that e-commerce as a whole will continue to grow rapidly and eat into offline commerce. In the steady state, offline commerce will serve only two purposes: immediacy (stuff you need right away), and experiences (showroom, fun venues). All other commerce will happen online.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Ten million users is the new one million users]]></title>
            <description><![CDATA[Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending…]]></description>
            <link>https://cdixon.org/2012/08/03/ten-million-is-the-new-one-million</link>
            <guid isPermaLink="false">https://cdixon.org/2012/08/03/ten-million-is-the-new-one-million</guid>
            <pubDate>Fri, 03 Aug 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Some observations:&lt;/em&gt;&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Thousands of early-stage consumer web/mobile companies were started and funded in last 24 months.&lt;/li&gt;
&lt;li&gt;There are only a few dozen VCs who actively write consumer Series A checks, and those VCs will only do a few deals a year.&lt;/li&gt;
&lt;li&gt;Facebook’s market cap is about half of what most tech investors expected before the IPO.&lt;/li&gt;
&lt;li&gt;A few breakout early-stage consumer hits (Instagram, Pinterest) have reached tens of millions of users in record time.&lt;/li&gt;
&lt;li&gt;Internet users have tens of thousands of services/apps to choose from but limited time and attention.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;&lt;em&gt;Some consequences:&lt;/em&gt;&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;For consumer startups with non-transactional models (ad-based or unknown business models), you need something closer to 10 million users versus 1 million users to get Series A funded.&lt;/li&gt;
&lt;li&gt;For consumer startups with transactional models, e.g. e-commerce, the number of users required is often far lower because revenue is the more important metric. Hence, many early-stage consumer startups are switching to transactional models.&lt;/li&gt;
&lt;li&gt;It’s becoming increasingly common for early-stage consumer startups to do bridge financings (raising more money from past investors, usually on terms similar to the prior round) instead of Series As.&lt;/li&gt;
&lt;li&gt;VCs are increasingly focusing on B2B for early-stage investments.&lt;/li&gt;
&lt;li&gt;There will be a lot more consumer talent acquisitions.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;&lt;em&gt;Some advice:&lt;/em&gt;&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;If you are thinking of starting a non-transactional consumer startup, be aware that you are entering what is perhaps the most competitive sector in tech in the last decade.&lt;/li&gt;
&lt;li&gt;If you can raise more money, do it. (Especially pre-launch: &lt;a href=&quot;http://www.twylah.com/joshk/tweets/782406922&quot;&gt;remember&lt;/a&gt;, there’s nothing like numbers to screw up a good story).&lt;/li&gt;
&lt;li&gt;Be prepared for lower valuations for non-transactional early-stage consumer startups (breakout later-stage companies, on the other hand, will likely continue to command high valuations).&lt;/li&gt;
&lt;/ul&gt;</content:encoded>
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            <title><![CDATA[Shoehorning startups into the VC model]]></title>
            <description><![CDATA[Tech startups go in an out of fashion. When they’re in fashion, as they are now, entrepreneurs and VCs get lots of attention. Most of this…]]></description>
            <link>https://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model</link>
            <guid isPermaLink="false">https://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model</guid>
            <pubDate>Thu, 19 Jul 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Tech startups go in an out of fashion. When they’re in fashion, as they are now, entrepreneurs and VCs get lots of attention. Most of this attention focuses on things that involve money, like financings and acquisitions. For some entrepreneurs, raising venture capital becomes a goal unto itself, instead of what it should be: a heavy burden that only makes sense in certain cases.&lt;/p&gt;
&lt;p&gt;A startup should raise venture capital (or “venture-style” angel/seed funding) only if: 1) the goal is to build a billion-dollar (valuation) company, and 2) raising millions of dollars is absolutely necessary or will significantly accelerate growth.&lt;/p&gt;
&lt;p&gt;There are lots of tech companies that are very successful but don’t fit the VC model. If they don’t raise VC, the founders can make money, create jobs, and work on something they love. If they raise VC, a wide range of outcomes that would otherwise be good become bad.&lt;/p&gt;
&lt;p&gt;Unfortunately, many of these startups graft VC-friendly narratives onto their plans and raise too much money. Short term it might seem like a good idea but long term it won’t.&lt;/p&gt;
&lt;p&gt;The best source of capital is customers. The next best is the founders (cash or forgone salaries), or investors who are less aggressive about returns than VCs. Every startup has its natural source of financing. Venture capital is the natural source of financing for only a small fraction of startups, despite what the press might lead you to believe.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Capabilities and sensibilities]]></title>
            <description><![CDATA[“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability…]]></description>
            <link>https://cdixon.org/2012/07/17/capabilities-and-sensibilities</link>
            <guid isPermaLink="false">https://cdixon.org/2012/07/17/capabilities-and-sensibilities</guid>
            <pubDate>Tue, 17 Jul 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” – F. Scott Fitzgerald&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;One reason running a startup is so interesting is the constant tension between opposing ways of thinking: short-term vs. long-term, internal vs. external, saving vs. investment, etc. At large companies, responsibility for these ways of thinking is often spread across multiple business units. In startups they fall on a few people, usually the founders.&lt;/p&gt;
&lt;p&gt;As a founder, the most important tension is between your capabilities and sensibilities. Capabilities are your talents and resources. Sensibilities are the way you see the world. Successful founders usually have an unlikely combination of capabilities and sensibilities. The right sensibilities without the right capabilities means a good vision, poorly executed. The right capabilities without the right sensibilities means building something your market doesn’t want. Getting both right creates &lt;a href=&quot;http://cdixon.org/2011/06/20/foundermarket-fit/&quot;&gt;founder-market fit&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;There are advantages and disadvantages to being an experienced entrepreneur. Disadvantages include the fact that, with age, you are more likely to have obligations outside of your startup. You also risk having calcified sensibilities. Counterbalancing this is greater self-awareness, and, ideally, the wisdom to choose markets that match your sensibilities and cofounders who augment your capabilities.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[How bundling benefits sellers and buyers]]></title>
            <description><![CDATA[There is a widespread belief in technology circles that bundling of cable TV, newspaper, magazine and other information goods will go away…]]></description>
            <link>https://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers</link>
            <guid isPermaLink="false">https://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers</guid>
            <pubDate>Sun, 08 Jul 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There is a widespread belief in technology circles that bundling of cable TV, newspaper, magazine and other information goods will go away now that those products can be distributed à la carte on the internet. The assumption seems to be that bundling is an artifact of another era when distribution was physical. But this reasoning misses the economic logic behind bundling: under assumptions that apply to most information-based businesses, bundling benefits buyers and sellers.&lt;/p&gt;
&lt;p&gt;Consider the following simple model for the willingness-to-pay of two cable buyers, the “sports lover” and the “history lover”:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-07-05-at-6-24-27-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 640px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.99999999999999%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsTAAALEwEAmpwYAAABcElEQVQoz22Sy46CUBBE+f8PYsHOFZCIIRDYaEwUeQQBGcEH8pg50CODyfQC+5Zd1V19rxLHcVmWl8sly7LT6VROUVXV9XolAQzDkGP5jq8pQCAq0L6naNsWlKSu6zRNqROQ5Ha7NU1D3nXd8/l8vV7keZ5/kIWw3+9Xq5Vpmn3fU02RZVmGYXiet91ubdvebDaO4zCRcj6fqUAMeeogiPAwDOCPxwOQnIbNIijDkcLoHO73OzPjGTMkGJYvzCAIBJxx8Tx2hsCcSJDwH2PTh85oixcBZ2tSwBePCsL48X1/t9uJZ1Q1TeNIzlACCq6qKl6EzLLGhR2PR9d18cCeRRjbUrHsDILWR+ckSbopKJrtLT3Pi/jHM+NxAcEUNMdq+45520uQYK7fbUPmGrk3Ji+KQqZar9cIk1MnL4dgBF3XWa0cR88QDocDD2DpGYLYm58dwXUyNnJ/5CiK+EGC14I2pRzlYcvbFpAC8QwoOcQfzNPdAyQqkrMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 07 05 at 6 24 27 pm&quot;
        title=&quot;Screen Shot 2012-07-05 at 6.24.27 PM&quot;
        src=&quot;/static/c601d3b93598848ebe85412716c9ae7b/e49a9/screen-shot-2012-07-05-at-6-24-27-pm.png&quot;
        srcset=&quot;/static/c601d3b93598848ebe85412716c9ae7b/924ad/screen-shot-2012-07-05-at-6-24-27-pm.png 170w,
/static/c601d3b93598848ebe85412716c9ae7b/f570f/screen-shot-2012-07-05-at-6-24-27-pm.png 341w,
/static/c601d3b93598848ebe85412716c9ae7b/e49a9/screen-shot-2012-07-05-at-6-24-27-pm.png 640w&quot;
        sizes=&quot;(max-width: 640px) 100vw, 640px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-07-05 at 6.24.27 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;What price should the cable companies charge to maximize revenues? Note that optimal prices are always somewhere below the buyers’ willingness-to-pay. Otherwise the buyer wouldn’t benefit from the purchase. For simplicity, assume prices are set 10% lower than willingness-to-pay. If ESPN and the History Channel were sold individually, the revenue maximizing price would be $9 ($10 with a 10% discount). Sports lovers would buy ESPN and history lovers would buy the History Channel. The cable company would get $18 in revenue.&lt;/p&gt;
&lt;p&gt;By bundling channels, the cable company can charge each customer $11.70 ($13 discounted 10%) for the bundle, yielding combined revenue of $23.40. The consumer surplus would be $2 in the non-bundle and $2.60 in the bundle. Thus both buyers and sellers benefit from bundling.&lt;/p&gt;
&lt;p&gt;This model is obviously dramatically oversimplified. In real life, bundling tends to flatten the demand curve (&lt;a href=&quot;http://cdixon.org/2012/07/04/pricing-to-the-demand-curve/&quot;&gt;here&lt;/a&gt; is some background on demand curves, and &lt;a href=&quot;http://hubcap.clemson.edu/~sauerr/seminar_papers/bundling.pdf&quot;&gt;here&lt;/a&gt; is academic paper that presents this argument in rigorous mathematical terms). Suppose the demand curves for ESPN and the History Channel look like this:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 464px;&quot;
    &gt;
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    &lt;span
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    style=&quot;padding-bottom: 134.26724137931035%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 07 05 at 6 38 02 pm&quot;
        title=&quot;Screen Shot 2012-07-05 at 6.38.02 PM&quot;
        src=&quot;/static/73cd89b05e4be31b5eefedba00ddcd54/74a01/screen-shot-2012-07-05-at-6-38-02-pm.png&quot;
        srcset=&quot;/static/73cd89b05e4be31b5eefedba00ddcd54/924ad/screen-shot-2012-07-05-at-6-38-02-pm.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-07-05 at 6.38.02 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The green boxes represent revenue for the seller. The deadweight loss areas to the right of the green boxes are transactions that would have benefited buyers and sellers but are not occurring because the revenue-maximizing prices are set too high.&lt;/p&gt;
&lt;p&gt;Now consider what happens when you bundle channels. The key assumption is that individual buyers lie on different x-axis points of the demand curves of different channels. Sports lovers lie on the left of the ESPN demand curve but on the right side of the History Channel curve. To aggregate demand curves, you don’t stack one on top of the other. You add consumers’ willingness-to-pay separately for each channel.&lt;/p&gt;
&lt;p&gt;Using the above simplified model, the two demand curves that go from $10 to $3 become one curve that stays flat at $13. In general, adding the individual demand curves creates a flatter demand curve:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 445px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
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    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 07 05 at 6 38 08 pm&quot;
        title=&quot;Screen Shot 2012-07-05 at 6.38.08 PM&quot;
        src=&quot;/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-07-05 at 6.38.08 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;A flatter demand curve lets sellers charge prices that capture larger areas under the curve and pass more surplus back to consumers. The only  loser is the deadweight loss area.&lt;/p&gt;
&lt;p&gt;Some things to note about bundled pricing:&lt;/p&gt;
&lt;p&gt;1. Bundled pricing is one reason why subscription models like Spotify should ultimately win out over à la carte models like iTunes. Subscription commerce can also be thought of as a form of bundling.&lt;/p&gt;
&lt;p&gt;2. There are other ways to get some of the benefits of bundled pricing – for example &lt;a href=&quot;http://www.inforules.com/models/m-version.pdf&quot;&gt;versioning&lt;/a&gt; goods, and offering bulk discounts.&lt;/p&gt;
&lt;p&gt;3. The benefits of bundled pricing are proportionate the buyers’ variance of preferences for the goods. Hence bundled pricing works best in highly “taste-based” goods like media, and wouldn’t have any benefit for fully commoditized goods (e.g. a bundle of stocks)&lt;/p&gt;
&lt;p&gt;4. Bundled pricing can also hurt consumers if it is used by incumbents to exploit their broader catalog to “deter entry” by new competitors. This was a common complaint against Microsoft in the 90′s when they bundled applications like Internet Explorer with Windows.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Pricing to the demand curve]]></title>
            <description><![CDATA[Many college microeconomics courses include the following exercise. The teacher offers the students an imaginary trip to Hawaii, and asks…]]></description>
            <link>https://cdixon.org/2012/07/04/pricing-to-the-demand-curve</link>
            <guid isPermaLink="false">https://cdixon.org/2012/07/04/pricing-to-the-demand-curve</guid>
            <pubDate>Wed, 04 Jul 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Many college microeconomics courses include the following exercise. The teacher offers the students an imaginary trip to Hawaii, and asks them to write down on notecards how much they are willing to pay for the trip. The teacher takes the notecards and graphs the bids. Here’s how the graph might look:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-06-29-at-9-26-10-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 460px;&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 06 29 at 9 26 10 pm&quot;
        title=&quot;Screen Shot 2012-06-29 at 9.26.10 PM&quot;
        src=&quot;/static/4a2efc10ea602b6c7340d50388e5ec4b/a9ee3/screen-shot-2012-06-29-at-9-26-10-pm.png&quot;
        srcset=&quot;/static/4a2efc10ea602b6c7340d50388e5ec4b/924ad/screen-shot-2012-06-29-at-9-26-10-pm.png 170w,
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-06-29 at 9.26.10 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;The y-axis is the students’ “willingness-to-pay” and the x-axis is the students sorted from highest to lowest bids. The line is known as the demand curve.&lt;/p&gt;
&lt;p&gt;Now imagine you’re the company selling these trips. For simplicity, suppose you’ve already bought the trips, so your marginal cost is zero. What’s the optimal price you should charge? If you set the price at, say, $500, then the students who are willing to pay above $500 would buy the trip, and the rest wouldn’t:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-06-29-at-9-24-53-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 457px;&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 06 29 at 9 24 53 pm&quot;
        title=&quot;Screen Shot 2012-06-29 at 9.24.53 PM&quot;
        src=&quot;/static/622db275908b51c270c316db64b89414/1ddc7/screen-shot-2012-06-29-at-9-24-53-pm.png&quot;
        srcset=&quot;/static/622db275908b51c270c316db64b89414/924ad/screen-shot-2012-06-29-at-9-24-53-pm.png 170w,
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-06-29 at 9.24.53 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Your total revenue and (assuming zero marginal cost) profit will be the area of the green square (revenue times quantity).&lt;/p&gt;
&lt;p&gt;Notice the sections under the curve to the right and above the green box. To the right are students who were willing to pay but were priced out. Those are missed sales opportunities. Above the green box are students who were willing to pay more than you charged. That is lost revenue. (Since the underpricing benefits customers, the area above the green box is called the &lt;a href=&quot;http://tutor2u.net/economics/revision-notes/as-markets-consumer-surplus.html&quot;&gt;consumer surplus&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;After you have chosen the right price, the only way to make the area under the curve greener is to charge different customers different prices. The theoretically optimal way to do this is to look at each notecard and offer to charge each student, say, 10% less than the prices he or she bid. In real life you can’t do this (although Priceline has gotten close by asking customers to enter their willingness to pay). Some companies – most famously &lt;a href=&quot;http://www.bizjournals.com/seattle/stories/2000/09/25/daily21.html&quot;&gt;Amazon&lt;/a&gt; - have attempted outright price discrimination, but this tends to anger customers and can even run afoul of the &lt;a href=&quot;http://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act&quot;&gt;law&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;So the goal of pricing is to capture as much area under the demand curve as possible. In practice, the best way to do this is to find proxies for willingness-to-pay that are easy to observe and that customers will accept.&lt;/p&gt;
&lt;p&gt;For example, airlines know that business customers will pay more than vacation travelers. They therefore look for acceptable proxies to segment business and vacation travelers and capture more of the area under the demand curve.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-06-29-at-9-32-47-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 06 29 at 9 32 47 pm&quot;
        title=&quot;Screen Shot 2012-06-29 at 9.32.47 PM&quot;
        src=&quot;/static/154ebdd3980c17c5d3257afa3cafd9e5/8ab6a/screen-shot-2012-06-29-at-9-32-47-pm.png&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-06-29 at 9.32.47 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;This is why flights are cheaper when you book early, stay over on weekends etc. The airline pricing models assume you are a vacation traveller.&lt;/p&gt;
&lt;p&gt;Book publishers would like to price their books according to customer enthusiasm. Hardcore fans will pay more for books when they are first published, and casual readers will wait. If publishers offer the same book at different prices at different times, their price discrimination will be too obvious (interestingly, time windowing for movies doesn’t provoke much outrage). So book publishers offer modestly better goods – hardcovers – to early buyers.&lt;/p&gt;
&lt;p&gt;Enterprise software companies price using proxies for the customer’s budget. Oracle databases are priced by the number of processors. Salesforce is priced by the number of end users (“seats”). Many enterprise software companies obfuscate the highest tier of pricing, telling sales prospects at that level to “call us.” What this really means is: “Call us, so our sales people can attempt to estimate your budget and price discriminate accordingly.”&lt;/p&gt;
&lt;p&gt;Sometimes, the search for pricing proxies can lead to absurdity. I once heard someone from a prominent hardware company tell a story about how his company had offered two versions of a printer. The cheaper model was identical to the more expensive one, except the cheaper one printed fewer pages per minute. To accomplish this, the cheaper printer had the same hardware as the expensive one, except the cheaper one had an additional chip that forced it to slow down. This made the cheaper printer more expensive to produce. Situations where &lt;a href=&quot;http://cdixon.org/2009/10/17/whats-the-relationship-between-cost-and-price/&quot;&gt;cost and price&lt;/a&gt; have zero or negative correlation are far more common than most people assume.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The real strategy behind tiered data plans]]></title>
            <description><![CDATA[Over the past year, Comcast and other broadband providers have been forcing tiered data plans on customers. The New York Times recently…]]></description>
            <link>https://cdixon.org/2012/06/27/the-real-strategy-behind-tiered-data-plans</link>
            <guid isPermaLink="false">https://cdixon.org/2012/06/27/the-real-strategy-behind-tiered-data-plans</guid>
            <pubDate>Wed, 27 Jun 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Over the past year, Comcast and other broadband providers have been forcing tiered data plans on customers. The New York Times recently &lt;a href=&quot;http://www.nytimes.com/2012/06/27/business/media/internet-providers-testing-metered-plans-for-broadband.html?ref=brianstelter&quot;&gt;speculated&lt;/a&gt; that these plans might be part of a strategy to stunt the growth of internet video.&lt;/p&gt;
&lt;p&gt;The best way to figure out what these companies are really doing is to read Wall Street analyst reports. For example, here’s what a prominent Wall Street analyst recently said:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Most cable companies we met with have embraced tiered data plans, with tiering starting to move to total monthly usage rather than tiered speeds. The minimum tiers are set higher enough at this point that they impact only 1%-2% of users. However, we believe the concept is to establish an early precedent of usage tiers and then let the average consumer usage patterns move in their direction over time, as usage is growing 60% per year. &lt;strong&gt;This puts in place an effective long-term hedge against internet video.&lt;/strong&gt; [emphasis added]&lt;/p&gt;
&lt;p&gt;&lt;em&gt;- Goldman Sachs research. “Americas: Communication Services”, May 23, 2012&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In 2011, Comcast generated $55B in revenue and $8.4B in pre-tax profits. Goldman rates the stock a “buy” because Comcast “pushed through rate hikes on both video and broadband access across two-thirds of the [customer] base in Q1 2102″ (&lt;em&gt;Goldman Sach, “Comcast Corp”, May 2, 2012&lt;/em&gt;).&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Why the integrated approach to mobile devices is winning]]></title>
            <description><![CDATA[Until last week’s announcement of the new Surface tablet, Microsoft had taken the same approach to mobile devices that they had with PCs…]]></description>
            <link>https://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning</link>
            <guid isPermaLink="false">https://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning</guid>
            <pubDate>Mon, 25 Jun 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Until last week’s announcement of the new Surface tablet, Microsoft had taken the same approach to mobile devices that they had with PCs: build the software themselves and let partners build the hardware. Google took a similar strategy with Android but then reversed course when they acquired Motorola. Apple’s integrated strategy was once widely ridiculed as a repeat of their losing 1990′s desktop computer strategy, but is now being copied throughout the industry.&lt;/p&gt;
&lt;p&gt;There is a trade off between integrated and non-integrated approaches to building devices. The non-integrated approach lowers costs, but adds friction between components that compromises performance. Consider this anecdote from Microsoft’s previous attempts to build tablets with hardware partners:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The H.P. tablet was thick, the Intel processor it used made the device hot, and the software and screen hardware did not work well together, causing delays whenever a user tried to perform a touch action on its screen. “It would be like driving a car, and the car not turning when you turn the wheel,” the former H.P. executive said.&lt;/p&gt;
&lt;p&gt;- ”&lt;a href=&quot;http://www.nytimes.com/2012/06/25/technology/companies/with-tablet-microsoft-takes-aim-at-hardware-missteps.html?_r=1&amp;#x26;pagewanted=2&quot;&gt;With Tablet, Microsoft Takes Aim at Hardware Missteps&lt;/a&gt;,” &lt;em&gt;New York Times&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;What is the difference between mobile devices today where the integrated approach is winning and desktops PCs in, say, 1995, when the non-integrated approach dominated? The best way to understand the difference is through the lens of Clay Christensen’s &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_innovation&quot;&gt;disruptive technology&lt;/a&gt; theory*. When a new category of device first launches, it is usually not “good enough” for most customers. Chistensen illustrates this with a famous graph:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/3ca1e18b1eb4b9e0d5caba3cb22271c3/filedisruptivetechnology.gif&quot; title=&quot;File:Disruptivetechnology&quot;&gt;&lt;/p&gt;
&lt;p&gt;According to Christensen, technology gets better at a faster rate than customers’ demands on technology do (in the graph, the black line goes up faster than the other lines). Eventually, new device categories become “good enough” (the black line crosses the purple/blue lines), and customers become unwilling to pay significantly higher prices for improved versions of the device. At this point it doesn’t make sense for manufacturers to invest in greater performance if customers won’t reward that investment. Instead, manufacturers should spend the “performance surplus” on making devices less expensive. The best way to do this is to let different companies produce the core software and hardware components, i.e. to switch from an integrated to non-integrated approach.&lt;/p&gt;
&lt;p&gt;If you believe Christensen’s theory (and most senior people at large technology companies do), the interesting question now is: when will smartphones and tablets be “good enough” (respectively) for non-integrated to beat integrated approaches? My guess is it will be at least 5-10 years before customers are no longer willing to pay significantly more for faster bandwidth, more features, longer battery life, increased storage, faster processors, etc. But no one really knows.&lt;/p&gt;
&lt;p&gt;It isn’t hard to see how Google, Microsoft and pretty much everyone but Apple missed the key difference between PCs and the new generation of mobile devices. Christensen himself missed it:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Christensen’s most embarassing prediction was that the iPhone would not succeed. Being a low-end guy, Christensen saw it as a fancy cellphone; it was only later that he saw it also being disruptive to laptops.&lt;/p&gt;
&lt;p&gt;- When Giants Fail: What Business has learned from Clayton Christensen, &lt;em&gt;The New Yorker.&lt;/em&gt; [&lt;a href=&quot;http://archives.newyorker.com/?i=2012-05-14#folio=084&quot;&gt;paywall&lt;/a&gt;]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Seen as high-end smartphones, iPhones were “sustaining” innovations (above the blue line) that would only appeal to the highest end of the market. Seen as low-end laptops, iPhones were disruptive innovations that would eventually subsume the PC business. With support from the iPad, they seem to be doing exactly that.&lt;/p&gt;
&lt;p&gt;* If you aren’t familiar with Clay Christensen, this &lt;a href=&quot;http://gartner.mediasite.com/mediasite/play/9cfe6bba5c7941e09bee95eb63f769421d?t=1320659595&quot;&gt;talk&lt;/a&gt; is a great way to learn about his theories.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Firing]]></title>
            <description><![CDATA[Firing is awful. You can try to avoid it, but even the most selective founders make serious mistakes. Here are a few things I’ve observed…]]></description>
            <link>https://cdixon.org/2012/06/19/firing</link>
            <guid isPermaLink="false">https://cdixon.org/2012/06/19/firing</guid>
            <pubDate>Tue, 19 Jun 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Firing is awful. You can try to avoid it, but even the most selective founders make serious mistakes. Here are a few things I’ve observed about firing:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;The good people bounce up, the bad ones bounce down.&lt;/em&gt; I was told this by my boss once when he was firing one of my friends. At the time, I thought this just made him feel better about himself. Over time, I’ve seen the wisdom in what he said. Some people who get fired react by fixing their weaknesses. Others spiral down.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Do it early.&lt;/em&gt; If you think you’re going to fire someone over the next six months, you probably will. Don’t wait too long. Too many founders do. It’s better for management and employees if it happens fast.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;It’s awful.&lt;/em&gt; You’re in control of a situation that will meaningfully hurt someone. It’s an awful place to be. The fired person will go home and tell his/her family about how terrible it was. It was your fault. Perhaps your mismanagement caused it. Who knows. You’ll question it, and perhaps you are right to do so.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;The other choice is firing everyone&lt;/em&gt;. You’re the founder of the company. If you run out of money, you’re forced to fire everyone. If you don’t fire the bad employees, you risk everyone else’s jobs. It’s an impossible situation.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;The feeling is more likely to be mutual than you think&lt;/em&gt;. Most of the time, the person getting fired was already about to quit. The antipathy you feel is likely reciprocated. It’s surprising how often this happens and management doesn’t see it coming.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;It would be great if startups were all about growth, hiring, and success. But the reality is that founding a company is a brutal job and lots of the pain gets passed down to employees. Creative destruction sounds nice in textbooks, but in the real world it means telling friends to go home, stop getting paid, and find new jobs.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Critics and practitioners]]></title>
            <description><![CDATA[“When art critics get together they talk about Form and Structure and Meaning. When artists get together they talk about where you can buy…]]></description>
            <link>https://cdixon.org/2012/06/16/critics-and-practitioners</link>
            <guid isPermaLink="false">https://cdixon.org/2012/06/16/critics-and-practitioners</guid>
            <pubDate>Sat, 16 Jun 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;“When art critics get together they talk about Form and Structure and Meaning. When artists get together they talk about where you can buy cheap turpentine.” – Picasso (via &lt;a href=&quot;http://www.ribbonfarm.com/2010/03/18/the-turpentine-effect/&quot;&gt;Ribbonfarm&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;When I was a kid, I tagged along with my grandfather who was an oboist in a big city symphony. I was struck by the dramatic discrepancy between the culture of the audience and the culture of the musicians. Before the show, the audience attended fancy events, and talked in abstract terms about classical music. After the show, the musicians played poker, told jokes, swigged bourbon, and traded tips about the best places to get parts for their instruments.&lt;/p&gt;
&lt;p&gt;In the context of startups, it’s convenient to read the Picasso quote as a tidy summarization of the difference between critics (VCs and the tech press) and practitioners (entrepreneurs). There is some truth to this. When entrepreneurs get together, they tend to talk about tactical details. VCs and the press talk about trends, markets, and other abstractions.&lt;/p&gt;
&lt;p&gt;But Picasso was just being modest. He thought about the meaning of his art far more deeply than his critics did. The same is true of great entrepreneurs. “Cheap turpentine” is important, but so is “Form and Structure and Meaning”. The best ideas emerge from the interplay between the two modes of thought.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Equity value]]></title>
            <description><![CDATA[Warren Buffet once said: Buy into a business that’s doing so well an idiot could run it, because sooner or later, one will. This is a useful…]]></description>
            <link>https://cdixon.org/2012/06/06/equity-value</link>
            <guid isPermaLink="false">https://cdixon.org/2012/06/06/equity-value</guid>
            <pubDate>Wed, 06 Jun 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Warren Buffet once said:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Buy into a business that’s doing so well an idiot could run it, because sooner or later, one will.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This is a useful way to understand the meaning of “equity value”. You learn in finance that equity value is the overall value of a the stock (i.e. equity) of a business, which in turn is the present value of all future profits. Of course with startups the future is extremely uncertain, leading to a huge variance in valuations.&lt;/p&gt;
&lt;p&gt;In perfectly competitive markets, all profit margins tend toward zero. So equity value is a function of the degree to which you can make your market inefficient by making your business hard to copy (so called “defensibility”). If your defensibility depends solely on having superior people, you have what VCs call a “service business.” In a competitve labor market, service businesses tend to have low margins and therefore low equity value. A popular saying about service businesses is “the equity value walks out of the building every night.”&lt;/p&gt;
&lt;p&gt;Different types of tech businesses exhibit different relationships between capital, revenue, profits, and equity value. Enterprise software companies tend to require lots of capital to get to scale but command high equity values once they do, partly because enterprises are risk averse and like to adopt the most popular technology, leading to winner-take-all dynamics. Adtech companies tend to be quick to revenue but slower to equity value, and sometimes risk becoming service businesses. The equity value of consumer internet companies vary widely, depending on their defensibility (usually networks effects and brand) and business models (e.g. transactional vs ad supported). Biotech companies require boatloads of capital for R&amp;#x26;D and regulatory approval but then can generate lots of equity value, with the defensibility coming primarily from patents. (Patents introduce market innefficiencies, but, proponents argue, are necessary to create sufficient incentives for entrepreneurs and investors). E-commerce companies generally require a lot of capital as well, since their defensibility comes mostly through brand and economies of scale.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Different types of risk]]></title>
            <description><![CDATA[The idea that founders take on “risk” is a misleading generalization. It is far more informative to separate the specific types of risks…]]></description>
            <link>https://cdixon.org/2012/06/05/different-types-of-risk</link>
            <guid isPermaLink="false">https://cdixon.org/2012/06/05/different-types-of-risk</guid>
            <pubDate>Tue, 05 Jun 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The idea that founders take on “risk” is a misleading generalization. It is far more informative to separate the specific types of risks that founders assume, including:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Financing risk: You can’t raise money at various stages because you haven’t hit &lt;a href=&quot;http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/&quot;&gt;accretive milestones&lt;/a&gt; or your space isn’t appealing to investors.&lt;/li&gt;
&lt;li&gt;Product risk: You can’t translate your concept into a working and compelling product.&lt;/li&gt;
&lt;li&gt;Technology risk: You can’t build a good enough or, if necessary, breakthrough technology.&lt;/li&gt;
&lt;li&gt;Business development risk: You can’t get deals with other companies that you depend on to build or distribute your product.&lt;/li&gt;
&lt;li&gt;Market risk: Customers or users won’t want your product.&lt;/li&gt;
&lt;li&gt;&lt;a href=&quot;http://cdixon.org/2010/11/07/timing-your-startup/&quot;&gt;Timing&lt;/a&gt; risk: You are too early or too late to the market.&lt;/li&gt;
&lt;li&gt;Margin risk: You build something people want but that you can’t defend, and therefore competitors will squeeze your margins.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;At the early stage, the main way to mitigate these risks is to recruit great people as cofounders or early employees. You shouldn’t recruit people that will give you a high likelihood of reducing these risks. You should recruit people that give you an unfair advantage. You should try to win the game before it starts.&lt;/p&gt;
&lt;p&gt;Startups are hard, and risky. But if you lump all the risks together, you are playing the lottery. Talented entrepreneurs identify specific risks and do everything they can to overcome them.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some thoughts on when to raise money, and the current financing environment]]></title>
            <description><![CDATA[A key question for founders is when they should try to raise money. More specifically, they often wonder whether to raise money now or wait…]]></description>
            <link>https://cdixon.org/2012/06/02/some-thoughts-on-when-to-raise-money-and-the-current-financing-environment</link>
            <guid isPermaLink="false">https://cdixon.org/2012/06/02/some-thoughts-on-when-to-raise-money-and-the-current-financing-environment</guid>
            <pubDate>Sat, 02 Jun 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A key question for founders is when they should try to raise money. More specifically, they often wonder whether to raise money now or wait, say, 6 months when their startup has made more progress. Here are some thoughts on this question generally along with some thoughts on today’s venture financing market.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;In the private markets, macro tends to dominate micro. Venture valuations have swung by roughly a factor of 4 over the last decade. In finance speak, venture tends to be high beta, moving as a multiple of the public markets, which themselves tend to move more dramatically than economic fundamentals. Hence, it is easy to imagine scenarios where the same private company will command 1/2 the valuation in 6 months due to macro events, but it’s rare for a company to increase their valuation 2x through operations alone in 6 months.&lt;/li&gt;
&lt;li&gt;Therefore, when it seems to be the top of a venture cycle, it’s almost always better to raise money sooner rather than later, unless you have a plausible story about how waiting will dramatically improve your company’s fundamentals.&lt;/li&gt;
&lt;li&gt;Prior to the Facebook IPO, the consensus seemed to be that private valuations were near the top of the cycle. Today, FB is valued at up to 50% below what private investors expected. Moreover, the financial crisis in Europe seems to have worsened, and unemployment numbers in the US suggest the possibility of a double dip recession.&lt;/li&gt;
&lt;li&gt;It takes many months to understand how macroeconomic and public market shifts affect private company valuations since (with the exception of secondary markets) private transactions happen slowly. So we don’t know yet what these recent events mean for private markets. According to a basic rule of finance, however, it is safe to assume that companies “comparable” to Facebook are worth up to 50% less than private investors thought they were worth a few weeks ago.&lt;/li&gt;
&lt;li&gt;The question then is what companies are comparable to Facebook. Clearly, other social media companies with business models that rely on display or feed based advertising are comparables. Internet companies that have other business models (freemium, marketplaces, commerce, hardware, enterprise software, direct response advertising, etc) are probably not comparables. The public markets seems to agree with this. Defensible companies with non-display-ad business models have maintained healthy public market valuations.&lt;/li&gt;
&lt;li&gt;One counterargument to the “all social media companies are now worth less” argument is the discrepency between how the smart Wall Street money and smart internet money views Facebook and social media companies generally. The smart Wall Street money thinks like Mary Meeker’s charts. They draw lines through dots and extrapoloate. This method would have worked very poorly in the past for trying to value tech companies at key inflection points (and tech investors know that what matters are exactly those inflection points). In Facebook’s case, Wall Street types look at revenue and margin growth and the trend toward mobile where monetization is considerably worse (for now). Smart internet investors, by contrast, look at Facebook in terms of its power and capabilities. They see a company that is rivaled only by Google and Apple in terms of their control of where users go and what they do on the internet. Smart internet investors are far more bullish than smart Wall Street investors on Facebook. Thus if you believe the internet perspective over the Wall Street perspective, you’d likely believe that Facebook and social media in general is undervalued by the public markets.&lt;/li&gt;
&lt;/ul&gt;</content:encoded>
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            <title><![CDATA[The experience economy]]></title>
            <description><![CDATA[Before World War 2, the middle-class in the developed world struggled to afford basic needs. In the post-war boom, standards of living rose…]]></description>
            <link>https://cdixon.org/2012/05/26/the-experience-economy</link>
            <guid isPermaLink="false">https://cdixon.org/2012/05/26/the-experience-economy</guid>
            <pubDate>Sat, 26 May 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Before World War 2, the middle-class in the developed world struggled to afford basic needs. In the post-war boom, standards of living rose dramatically, and people consumed far beyond what they needed. It was the age of conspicuous consumption: a race to own bigger cars and houses, and accumulate more stuff. The mean income in the developed world became sufficient to provide for a comfortable life.&lt;/p&gt;
&lt;p&gt;Today, people increasingly realize they own more than enough stuff, and don’t want to pay for feature-rich versions of that stuff. Four blades in your razors are enough. In the language of Clay Christensen’s &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_innovation&quot;&gt;disruptive innovation&lt;/a&gt; framework, the product economy overshot the mass market’s needs.&lt;/p&gt;
&lt;p&gt;An economy of experiences is emerging in its place. Experiences make people happier than products (a fact that scientific &lt;a href=&quot;http://www.wjh.harvard.edu/~dtg/DUNN%20GILBERT%20&amp;#x26;%20WILSON%20(2011).pdf&quot;&gt;studies&lt;/a&gt; support). The popularity of experiences like music concerts has &lt;a href=&quot;http://dataspace.princeton.edu/jspui/handle/88435/dsp01xs55mc05g&quot;&gt;skyrocketed&lt;/a&gt; compared to corresponding products like music recordings. Apple, the most valuable company in the world, maniacally focuses on product experiences, down to minute details like the experience of unboxing an iPhone. Customers want to know where their food and clothes come from, so they can understand the experiences surrounding them. The emphasis on experiences also helps explain other large trends like the migration to cities. Cities have always offered the trade-off of fewer goods and less space in exchange for better experiences.&lt;/p&gt;
&lt;p&gt;The trend toward experiences is important for technology startups. The &lt;a href=&quot;http://techcrunch.com/2011/11/14/rip-spec/&quot;&gt;era&lt;/a&gt; of competing over technical specifications is over. Users want better experiences from devices, applications, websites, and the offline services they enable. It is no coincidence that interaction design is &lt;a href=&quot;http://techcrunch.com/2012/05/25/benchmark-in-san-francisco/&quot;&gt;replacing&lt;/a&gt; technical prowess as the primary competency at startups. People who create great experiences will be the most valuable to startups, and startups that create great experiences will be the most valuable to users.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[When should you give up on an idea?]]></title>
            <description><![CDATA[Suppose you launch your new startup and don’t get the traction you were hoping for. How do you know whether to give up or keep going? This…]]></description>
            <link>https://cdixon.org/2012/05/24/when-should-you-give-up-on-an-idea</link>
            <guid isPermaLink="false">https://cdixon.org/2012/05/24/when-should-you-give-up-on-an-idea</guid>
            <pubDate>Thu, 24 May 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Suppose you launch your new startup and don’t get the traction you were hoping for. How do you know whether to give up or keep going? This is a tough question. There are lots of examples that support seemingly contradictory theories. Instagram pivoted before launch, and Pinterest &lt;a href=&quot;http://allthingsd.com/20120313/pinterest-ceo-ben-silbermanns-lesson-for-start-ups-go-your-own-way/&quot;&gt;refused&lt;/a&gt; to pivot for years. Many other startups pivoted too early or kept working on dead-end ideas for too long.&lt;/p&gt;
&lt;p&gt;If the pre-product/market-fit phase of a startup is about efficiently testing hypotheses, then continuing to test an idea only makes sense if you have a strong theory about what has gone wrong and how things will improve.&lt;/p&gt;
&lt;p&gt;Specifically, you should have a theory about: 1) how to modify your product, 2) how to modify your marketing/distribution strategy, and/or 3) how external events (a new technology wave, cultural events, regulatory change, etc) might make your product take off. In other words, you need a plausible argument as to why the future will be different than the past.&lt;/p&gt;
&lt;p&gt;Another way to think about this is using what Jeff Bezos &lt;a href=&quot;http://bijansabet.com/post/147533511/jeff-bezos-regret-minimization-framework&quot;&gt;calls&lt;/a&gt; the “regret-minimization framework.” Imagine you do give up on your idea. Have you explored most of its plausible implementations? Are you confident that another entrepreneur won’t come along and make it work? You’ll regret it more if you nearly created a big company than if you spent an extra six months iterating.&lt;/p&gt;
&lt;p&gt;Finally, beware of the temptation to get distracted by new shiny ideas. When you are deep in the weeds, new ideas seem refreshing but this is usually the false signal of “&lt;a href=&quot;http://viniciusvacanti.com/2010/08/03/new-ideas-can-kill-your-startup/&quot;&gt;uninformed optimism&lt;/a&gt;” that accompanies all new things.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Four types of mobile apps]]></title>
            <description><![CDATA[If you are a founder trying to create a new mobile app or an investor trying decide whether an app has enduring value, it is helpful to…]]></description>
            <link>https://cdixon.org/2012/05/21/four-types-of-mobile-apps</link>
            <guid isPermaLink="false">https://cdixon.org/2012/05/21/four-types-of-mobile-apps</guid>
            <pubDate>Mon, 21 May 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;If you are a founder trying to create a new mobile app or an investor trying decide whether an app has enduring value, it is helpful to separate the ways that people use apps into four categories.&lt;/p&gt;
&lt;p&gt;1. &lt;em&gt;Time wasters&lt;/em&gt;: Apps that can be used for short bursts when you are waiting in line, etc. The most popular time wasters are games. Some apps are used sometimes as time wasters and sometimes as utilities – e.g. Facebook is both a time waster (checking status updates few minutes) and a utility (sending Facebook messages).&lt;/p&gt;
&lt;p&gt;Time wasters tend to be faddish. It is easy to get hooked on new games and also easy to tire of them. If you want to build a big company that builds time wasters, you need to build a machine that builds, markets and monetizes apps, as Zynga has done.&lt;/p&gt;
&lt;p&gt;2. &lt;em&gt;Core utilities&lt;/em&gt;: As a rule of thumb, core utilities are the apps on your home screen: camera, phone, contacts, texting, calendar, etc. Core utilities map to deeply engrained use patterns that usually existed before modern smart phones. In the past people might have carried around a paper calendar, a standalone camera, etc. Core utilities tend to be very sticky – if you gain widespread adoption for a core utility you can build long-lasting value.&lt;/p&gt;
&lt;p&gt;One entry strategy for a startup is to replace a core utility. This is what Instagram did to the built-in camera app. It is unclear whether the “Instagram for video” companies are core utilities (video app replacements) or time wasters. Creating a new core utility that doesn’t replace an existing core utility is very hard. Foursquare seems to have done this for the users who regularly check-in.&lt;/p&gt;
&lt;p&gt;3. &lt;em&gt;Episodic utilities&lt;/em&gt;: Episodic utilities are apps that typically aren’t on the home screen but are extremely useful in certain situations. Some examples: Hipmunk when buying plane tickets, Uber when you need a car, and OpenTable for making restaurant reservations. Successful episodic utilities target a well-defined situation and then become deeply associated with that situation. Making an app that is too broad or has multiple use situations can hurt you. Because many of these situations involve purchasing, these apps tend to be monetizable.&lt;/p&gt;
&lt;p&gt;4. &lt;em&gt;Notification-driven apps&lt;/em&gt;: This is an emerging category. Android has had a good notification system for a while, but the iPhone only made notifications useful in IOS 5. People tend to enable notifications for communication apps like email, texting etc. Thus far, notifications for other apps haven’t gotten widespread adoption because, among other things: it is easy to annoy users by over-notifying them, and running non-communications apps in the background tends to drain battery life. Expect this category to grow as apps get smarter about when to notify, and battery life improves dramatically over the next year or two.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The default state of a startup is failure]]></title>
            <description><![CDATA[If you are starting a company and wondering why nothing good seems to happen unless you force it to happen, that’s because the world wants…]]></description>
            <link>https://cdixon.org/2012/05/18/the-default-state-of-a-startup-is-failure</link>
            <guid isPermaLink="false">https://cdixon.org/2012/05/18/the-default-state-of-a-startup-is-failure</guid>
            <pubDate>Fri, 18 May 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;If you are starting a company and wondering why nothing good seems to happen unless you force it to happen, that’s because the world wants to stay the way it is. Customers, partners, and most of all incumbents don’t want to think hard, try new things, or change in any way. The world is lazy and just wants to keep doing what it’s doing.&lt;/p&gt;
&lt;p&gt;A friend of mine got a job at a big company and was shocked to see his colleagues worked just a few productive hours a day. They didn’t seem to care about their work or have relevant expertise. My friend said: “Wow, this company is going under.” Then the company released its quarterly reports and profits rose to an all-time high. The momentum of the company’s brand and relationships was sufficient to propel it forward.&lt;/p&gt;
&lt;p&gt;On the flip side, first-time entrepreneurs often fail to realize that when you build something new, no one will care. People won’t use your product, won’t tell people about it, and almost certainly won’t pay for it. (There are exceptions – but these are as rare as winning the lottery). This doesn’t mean you’ll fail. It means you need to be smarter and harder working, and surround yourself with extraordinary people.&lt;/p&gt;
&lt;p&gt;The default state of the world is to stay the way it is, which means the default state of a startup is failure.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Blogging to learn]]></title>
            <description><![CDATA[People blog for all sorts of reasons. For me, it is mostly about learning. This wasn’t my original intention – it evolved over time. Now I…]]></description>
            <link>https://cdixon.org/2012/05/10/blogging-to-learn</link>
            <guid isPermaLink="false">https://cdixon.org/2012/05/10/blogging-to-learn</guid>
            <pubDate>Thu, 10 May 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;People blog for all sorts of reasons. For me, it is mostly about learning. This wasn’t my original intention – it evolved over time. Now I see blogging as part of a continuous learning process:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Start every morning by skimming through news, blogs, articles, etc. Much of this is tech related. I used to get tech news in the newspaper, then in Google Reader, and now mostly from Twitter. If someone I meet mentions something interesting that was published that I didn’t read, I go back and figure out how I missed it and change who I follow on Twitter so it doesn’t happen again.&lt;/li&gt;
&lt;li&gt;Try to meet with interesting people during the week. The reason being up on tech news is important is so that we can get the most out of the meetings. Often we’ll talk about whatever each of us is working on at the time but it’s also good to have news or blog posts as shared reference points. This makes the meetings more interesting for everyone.&lt;/li&gt;
&lt;li&gt;Try to learn at least one interesting thing each week and then blog about it. Then see how people react in comments, on Twitter etc. I guess some bloggers don’t like comments but for me they are the crucial so that I can get feedback on new hypotheses. Blogging new hypotheses also means a decent portion of your blog posts need to be ignored or ridiculed. Otherwise you are playing it too safe.&lt;/li&gt;
&lt;/ul&gt;</content:encoded>
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            <title><![CDATA[Is it a tech bubble?]]></title>
            <description><![CDATA[Every week a “we are in a tech bubble” article seems to come out in a major newspaper or blog. People who argue we aren’t in a bubble are…]]></description>
            <link>https://cdixon.org/2012/04/29/is-it-a-tech-bubble</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/29/is-it-a-tech-bubble</guid>
            <pubDate>Sun, 29 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Every week a “we are in a tech bubble” &lt;a href=&quot;http://bits.blogs.nytimes.com/author/nick-bilton/&quot;&gt;article&lt;/a&gt; seems to come out in a major newspaper or blog. People who argue we aren’t in a bubble are casually dismissed as promoting their own interests. I’d argue the situation is far more nuanced and that people who engage in this debate should consider the following:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Public tech companies: Anyone with an understanding of finance would have trouble arguing many large public tech companies are trading at “bubble valuations” – e.g. Apple (14 P/E), Google (18 P/E), eBay (16 P/E), Yahoo (17 P/E). You could certainly debate other public tech stock valuations (there are a number of companies that recently IPOd that many reasonable people think are overvalued), but on a market-cap weighted average the tech sector is trading at a very reasonable &lt;a href=&quot;http://biz.yahoo.com/p/8peeu.html&quot;&gt;17 P/E&lt;/a&gt;.&lt;/li&gt;
&lt;li&gt;Instagram seems to be the case study du jour for people arguing we are in a bubble. Reasonable people could disagree about Instagram’s exit price but in order to argue the price was too high you need to argue that either: 1) Facebook is overvalued at its expected IPO valuation of roughly $100B, 2) it was irrational for Facebook to spend 1% of its market cap to own what many people considered one of Facebook’s biggest threats (including Mark Zuckerberg – who I tend to think knows what is good for Facebook better than pundits).&lt;/li&gt;
&lt;li&gt;Certain stages of venture valuations do seem on average over-valued, in particular seed-stage valuations and (less obviously) later-stage “momentum valuations.” The high seed-stage valuations are driven by an influx of angel/seed investors (successful entrepreneurs/tech company employees, VC’s with seed funds, non-tech people who are chasing trends). The momentum-stage valuations are driven by a variety of things, including VC’s who want to be associated with marquee startup names, the desire to catch the next Facebook before it gets too big, and the desire of mega-sized VC funds to “put more money to work”.&lt;/li&gt;
&lt;li&gt;Certain stages – most notably the Series A – seem under valued. Many good companies are having trouble raising Series As and the valuations I’ve seen for the ones who do have been pretty reasonable. Unfortunately, since the financials and valuations of these companies aren’t disclosed, it is very difficult to have a public debate on this topic. But many investors I know are moving from seed to Series A precisely because they agree with this claim.&lt;/li&gt;
&lt;li&gt;No one can predict macro trends. The bear case includes: something bad happens to the economy (Euro collapses, US enters double dip recession). The warning sign here will be a drop in profits by marquee tech companies.  The bull case includes: economy is ok or improves, and tech continues to eat into other industries (the “software is eating the world” argument). Anyone who claims to know what will happen over the next 3 years at the macro level is blowing hot air. That’s why smart investors continue investing at a regular pace through ups and downs.&lt;/li&gt;
&lt;li&gt;The argument that sometimes startups get better valuations without revenue is somewhat true. As Josh Koppelman &lt;a href=&quot;http://www.twylah.com/joshk/tweets/782406922&quot;&gt;said&lt;/a&gt; “There’s nothing like numbers to screw up a good story.” This is driven by the psychology of venture investors who are sometimes able to justify a higher price to “buy the dream” than the same price to “buy the numbers.” This doesn’t mean the investors think they will invest and then get some greater fool to invest in the company again. For instance, at the seed stage, intelligent investors are quite aware that they are buying the dream but will need to have numbers to raise a Series A.&lt;/li&gt;
&lt;li&gt;No good venture investors invest in companies with the primary strategy being to flip them. This isn’t because they are altruistic – it is because it is a bad strategy. You are much better off investing in companies that have a good chance to build a big business. This creates many more options including the option to sell the company. Acquisitions depend heavily on the whims of acquirers and no good venture investors bet on that.&lt;/li&gt;
&lt;/ol&gt;</content:encoded>
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            <title><![CDATA[Incumbents die due to irrelevance or ineptitude]]></title>
            <description><![CDATA[Judging from the tech press, you’d think the biggest risk to successful companies is competition. But when you examine the history of…]]></description>
            <link>https://cdixon.org/2012/04/26/incumbents-die-due-to-irrelevance-or-ineptitude</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/26/incumbents-die-due-to-irrelevance-or-ineptitude</guid>
            <pubDate>Thu, 26 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Judging from the tech press, you’d think the biggest risk to successful companies is competition. But when you examine the history of technology, incumbents usually decline because the world changes and they lose relevance, or because they lose visionary founders and the organization decays. Some examples:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;strong&gt;Dell&lt;/strong&gt; thrived when PCs dominated the computer market and Dell was the low cost provider of commodity hardware products. The shift to mobile and tablet computing meant that hardware quality (not price) was once again the primary basis of competition. As a result, Dell’s laser-like focus on cost reduction became a liability.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;The New York Times&lt;/strong&gt; was, for many decades, one of the few premium channels through which brand and classified advertisers could reach mass consumers. Thus car companies and real estate brokers subsidized foreign reporting and investigative business journalism. The internet provided a vast alternative channel, and the Times became far less relevant. At the same time, the internet provided many new sources for breaking news, editorials etc, hurting the Times on the subscriber side.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Yahoo&lt;/strong&gt; didn’t lose because Google out-competed them on search. They lost because they didn’t really care about search – indeed, they &lt;a href=&quot;http://searchengineland.com/revisionist-history-bartz-claims-yahoo-was-never-a-search-company-23725&quot;&gt;outsourced&lt;/a&gt; algorithmic search to Alta Vista, Inktomi and then Google itself. The leading portals back in circa 2000 (Yahoo, Excite, Lycos etc) desperately wanted to keep &lt;a href=&quot;http://cdixon.org/2011/05/16/accurate-contrarian-theories/&quot;&gt;keep users on their site&lt;/a&gt; – the buzzword was “stickiness” – but Google knew better and focused on getting users off of Google to other places on the web. Yahoo became just another place to read celebrity gossip and use generic web services.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Netflix&lt;/strong&gt; thrived when they could simply ignore the movie companies and rely on the &lt;a href=&quot;http://en.wikipedia.org/wiki/First-sale_doctrine&quot;&gt;first-sale doctrine&lt;/a&gt; to get DVDs. The market shift to streaming video created a new and brutal dependency. They had to go make deals with content companies. Now they are even &lt;a href=&quot;http://gigaom.com/video/netflix-original-content-binge-viewing/&quot;&gt;trying&lt;/a&gt; to create their own content to lessen this dependency. They have a brilliant and visionary management team but this is a tough transition to make.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Sony&lt;/strong&gt; relied on its Steve-Jobs-like founder, Akio Morita, to &lt;a href=&quot;/2009/10/10/man-and-superman/&quot;&gt;repeatedly develop&lt;/a&gt; incredibly innovative products (among them: the first transistor radio, the first transistor television, the Walkman, the first video cassette recorder, the compact disc) that seemed to come out of nowhere and create massive new markets. Since he left, the company has floundered and the stock has fallen dramatically.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Google’s&lt;/strong&gt; biggest risk isn’t a direct competitor. Startups and incumbents who’ve tried to create better search engines have barely cut into Google’s market share. Google’s primary risk – and they seem to know this – is that they are no longer relevant when people find content through social sites, and where an ever increasing portion of the web is uncrawlable.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;Google released their “Dropbox-killer” a few days ago. I don’t know if Dropbox has yet achieved incumbent status, but they certainly seem to be the market leader. They also seem to have a very competent management team. So if history is a guide, Dropbox’s biggest risk isn’t a competitor but irrelevance – if, for example, files become less and less important in a web services world and Dropbox doesn’t adapt accordingly.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The risks of being a small investor in a private company]]></title>
            <description><![CDATA[With the passage of the JOBS act, it seems that many more Americans will soon be able to buy equity in private companies. I am no expert on…]]></description>
            <link>https://cdixon.org/2012/04/25/the-risks-of-being-a-small-investor-in-a-private-company</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/25/the-risks-of-being-a-small-investor-in-a-private-company</guid>
            <pubDate>Wed, 25 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;With the passage of the &lt;a href=&quot;http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act&quot;&gt;JOBS act&lt;/a&gt;, it seems that many more Americans will soon be able to buy equity in private companies. I am no expert on the law, but I have been investing in private companies for about a decade, and during that time I’ve seen many cases where large investors used financial engineering to artificially reduce the value of smaller investors’ equity. Here are a few examples.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Issuing of senior securities with multiple liquidation preferences. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Series A: Small investor invests in $1m round, getting 1x straight preferred&lt;/p&gt;
&lt;p&gt;Series B: Large investor invests $10m, getting 4x senior straight preferred&lt;/p&gt;
&lt;p&gt;Company gets sold for $30m. Management gets $3m carveout, Series B investors get $27m, and Series A investors get zero.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;ol start=&quot;2&quot;&gt;
&lt;li&gt;Issuing of massive option grant to management along with new financing at a below-market valuation. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Series A: Small investor invests in $1m round, getting 1x straight preferred for 10% of the company.&lt;/p&gt;
&lt;p&gt;Company is doing well and is offered a Series B at a significantly higher valuation. Instead, large investor invests $5m at below-market valuation, getting 40% of the company, and simultaneously issues options worth 50% of the company to management.&lt;/p&gt;
&lt;p&gt;Result: Series A investors are diluted from 10% to 1% of the company, even though the company was doing well and in a normal financing would have only been slightly diluted.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;ol start=&quot;3&quot;&gt;
&lt;li&gt;The company is actually multiple entities, with the smaller investor investing in the less valuable entity. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Company has entity 1 and 2. Small investors invest in entity 1 that licenses IP from entity 2. Value of IP increases and entity 2 is sold and eventually cancels entity 1′s license, making entity 1 worthless.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;ol start=&quot;4&quot;&gt;
&lt;li&gt;Pay-to-play or artificially low downrounds. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Series A: Small investor invests in $1m round, getting 1x straight preferred&lt;/p&gt;
&lt;p&gt;Series B: Large investor invests $10m in pay-to-play round (meaning any investor that doesn’t participate has their preferred shares converted to common). Smaller investor doesn’t have the cash to re-invest in Series B, but deeper pocketed investors do.&lt;/p&gt;
&lt;p&gt;Company sells for $10m. Series B investors get $10m. Series A investors get nothing.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;There are ways to protect against these shenanigans. Protections can be written into the Series A financings documents (pro-rata rights, ability to block senior financings, etc). There are also some legal protections all minority investors are granted under, say, Delaware or California law. But usually even when these protections exist (and they exist far less frequently these days than in the past), smaller investors usually can’t, say, invoke blocking rights by themselves (indeed, it’s often not economically viable for smaller investors to hire lawyers to review every financing document for every company they invest in). Another way smaller investors can protect themselves is to set aside capital amounting to, e.g. 30% of every investment made, in case they need it later for defensive purposes (&lt;a href=&quot;http://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds/#comment-486289000&quot;&gt;I do this&lt;/a&gt;). But in my experience this is all very complicated and difficult to execute in practice, even when the small investors are “professional” investors. I worry it will be even harder for “amateur” investors to protect themselves.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Outsource things you don’t care about]]></title>
            <description><![CDATA[A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things…]]></description>
            <link>https://cdixon.org/2012/04/22/outsource-things-you-dont-care-about</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/22/outsource-things-you-dont-care-about</guid>
            <pubDate>Sun, 22 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things that you don’t. At an early-stage technology company this means you do in house: product design, software and/or hardware development, PR, recruiting, and customer relations/community management. Ideally, most of these activities are led by founders. You should outsource legal, accounting, website hosting, website analytics etc. (Unless you are starting a company where one of those activities can give you a competitive advantage, e.g. a securities trading startup would need to have in-house legal).&lt;/p&gt;
&lt;p&gt;A lot of startups over outsource. A few years ago, you’d sometimes hear tech startups say they were going to outsource software development. Thankfully, founders have gotten smart about this and it rarely ever happens except as a stopgap. It is still common for startups to hire outside PR firms. If you decide to hire an outside PR firm, that means you don’t care about PR. Just because you are willing to spend some of money on it doesn’t mean you think it’s important. You probably shouldn’t hire an investment banker during an acquisition unless your company is later stage. And you might occasionally use an outside recruiter but the core recruiting activity needs be done by founders.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Offline first, mobile enabled]]></title>
            <description><![CDATA[One of the major trends in tech startups what Fred Wilson calls “Mobile first, web second.” Instagram is a great example of mobile first…]]></description>
            <link>https://cdixon.org/2012/04/20/offline-first-mobile-enabled</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/20/offline-first-mobile-enabled</guid>
            <pubDate>Fri, 20 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the major trends in tech startups what Fred Wilson calls “&lt;a href=&quot;http://www.avc.com/a_vc/2010/09/mobile-first-web-second.html&quot;&gt;Mobile first, web second&lt;/a&gt;.” Instagram is a great example of mobile first. They barely had a website – it was all about the mobile app.&lt;/p&gt;
&lt;p&gt;The excitement over mobile-first apps is justified. Smartphones have unleashed a wave of creativity, resulting in entirely new categories of applications. But to me an even more exciting trend is what people have been calling (for lack of a better phrase) ”offline first, mobile enabled” apps.&lt;/p&gt;
&lt;p&gt;For example, Foursquare is primarily about improving your offline experiences (meeting friends and finding new places to go). And it couldn’t exist without smartphones (ok, Dodgeball existed on feature phones but had a fraction of the utility). Similarly, Uber couldn’t exist without smartphones. The Uber apps (one for drivers and one for customers), while essential, are all about enabling for the car service. Square is about making payments more convenient and giving small businesses better analytics. The mobile app is just an enabler.&lt;/p&gt;
&lt;p&gt;It seems natural that the first wave of mobile apps would be about improving core smartphone apps (e.g. photo apps) or porting apps from other devices (e.g. games). And there is probably a lot of interesting innovation remaining there. But the really massive opportunity is dreaming up new ways that the little computers loaded with sensors that we carry around with us everywhere can improve our real-world experiences.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[“Meaningful” startups]]></title>
            <description><![CDATA[There is generally a lot of enthusiasm in the startup world these days. But some observers worry that too many startups are working on…]]></description>
            <link>https://cdixon.org/2012/04/18/meaningful-startups</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/18/meaningful-startups</guid>
            <pubDate>Wed, 18 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There is generally a lot of enthusiasm in the startup world these days. But some observers worry that too many startups are working on “features” instead of world-changing ideas. Founders Fund published a provocative &lt;a href=&quot;http://www.foundersfund.com/the-future&quot;&gt;article&lt;/a&gt; summed up by the subtitle: “We wanted flying cars, instead we got 140 characters”. Alexis Madrigal &lt;a href=&quot;http://www.theatlantic.com/technology/archive/2012/04/the-jig-is-up-time-to-get-past-facebook-and-invent-a-new-future/256046/&quot;&gt;writes&lt;/a&gt; in The Atlantic that “we need a fresh paradigm for startups”, and dismisses the significance of recent “hot” startups:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What we’ve seen have been evolutionary improvements on the patterns established five years ago. The platforms that have seemed hot in the last couple of years — Tumblr, Instagram, Pinterest — add a bit of design or mobile intelligence to the established ways of thinking.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;One thing these critics need to be careful about is that, as Clay Christensen has long argued, many important new inventions &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;start out looking like toys&lt;/a&gt;. Twitter (Founder Fund’s headline example of a “trivial” startup) started out looking like a toy but has since transformed the way information is distributed for tens of millions of people. Madrigal dismisses cloud computing as “a rebranding of the Internet” whose only effect has been to make “the lives of some IT managers easier,” overlooking that cloud-based services solve the “third party payer” problem of enterprise sales, thereby completely &lt;a href=&quot;http://cdixon.org/2011/12/04/the-enterprise-buyers-versus-users/&quot;&gt;changing&lt;/a&gt; how enterprises adopt new technology.&lt;/p&gt;
&lt;p&gt;That said, I generally agree with the sentiment that the startup world is too focused on chasing trends. I don’t think this is the fault of entrepreneurs. I meet entrepreneurs all the time who are working on ideas that seem quite meaningful to me. Some of them are building futuristic new technologies. Some are trying to disintermediate incumbents and thereby restructure large industries. Others are trying to solve stubborn problems in important sectors like education, healthcare, or energy.&lt;/p&gt;
&lt;p&gt;The problem I encounter is that many of these “meaningful” startups have trouble raising money from VCs. An entrepreneur working on groundbreaking robot technology recently joked to me that he’d have an easier time raising money if his robots were virtual and existed only on Facebook. He was only partly joking. His startup will require a lot of capital and doesn’t have an obvious near term acquirer. Only a small group of VCs today will even consider such an investment.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[There are two ways to make large datasets useful]]></title>
            <description><![CDATA[I’ve spent the majority of my career building technologies that try to do useful things with large datasets.* One of the most important…]]></description>
            <link>https://cdixon.org/2012/04/14/there-are-two-ways-to-make-large-datasets-useful</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/14/there-are-two-ways-to-make-large-datasets-useful</guid>
            <pubDate>Sat, 14 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve spent the majority of my career building technologies that try to do useful things with large datasets.*&lt;/p&gt;
&lt;p&gt;One of the most important lessons I’ve learned is that there are only two ways to make useful products out of large data sets. Algorithms that deal with large data sets tend to be accurate at best 80%-90% of the time (an old “joke” about &lt;a href=&quot;http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/&quot;&gt;machine learning is that it’s really good at partially solving any problem&lt;/a&gt;). Consequently, you either need to accept you’ll have some errors but deploy the system in a fault-tolerant context, &lt;em&gt;or&lt;/em&gt; you need to figure out how to get the remaining accuracy through manual labor.&lt;/p&gt;
&lt;p&gt;What do I mean by fault-tolerant context? If a search engine shows the most relevant result as the 2nd or 3rd result, users are still pretty happy. The same goes for recommendation systems that show multiple results (e.g. Netflix). Trading systems that hedge funds use are also often fault tolerant: if you make money 80% of the time and lose it 20% of the time, you can still usually have a profitable system.&lt;/p&gt;
&lt;p&gt;For fault-_in_tolerant contexts, you need to figure out how to scalably and cost-effectively produce the remaining accuracy through manual labor. When we were building SiteAdvisor, we knew that any inaccuracies would be a big problem: incorrectly rating a website as unsafe hurts the website, and incorrectly rating a website as safe hurts the user. Because we knew automation would only get us 80-90% accuracy, we built 1) systems to estimate confidence levels in our ratings so we would know what to manually review, and 2) a workflow system so that our staff, an offshore team we hired, and users could flag or fix inaccuracies.&lt;/p&gt;
&lt;p&gt;* &lt;em&gt;My first job was as a programmer at a hedge fund, where we built systems that analyzed large data sets to trade stock options. Later, I cofounded SiteAdvisor where the goal was to build a system to assign security safety ratings to tens of millions of websites. Then I cofounded Hunch, which was acquired by eBay – we are now working on new recommendation technologies for ebay.com and other eBay websites.&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Increasing velocity]]></title>
            <description><![CDATA[Two common discussions in the startup world right now are 1) the increasing speed at which new apps/websites can gain mass adoption…]]></description>
            <link>https://cdixon.org/2012/04/10/increasing-velocity</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/10/increasing-velocity</guid>
            <pubDate>Tue, 10 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Two common discussions in the startup world right now are 1) the increasing speed at which new apps/websites can gain mass adoption (Instagram, Pinterest, OMGPOP’s Draw Something, etc), and 2) the rise in seed stage valuations. These two trends are real and related.  An investor with a broad portfolio of companies might rationally invest at an average valuation of, say, 10m (which is historically considered very high for that stage) if they have a chance for one of the investments to become the next Instagram or Pinterest. A billion dollar hit pays for a lot of misses.&lt;/p&gt;
&lt;p&gt;The increasing velocity has &lt;a href=&quot;http://www.betabeat.com/2012/04/10/instagram-and-the-age-of-upsets/&quot;&gt;implications for the valuations of incumbent tech companies&lt;/a&gt;. Users have limited time, and while web and app usage are growing, hit startups are growing much faster and therefore gaining adoption, at least in part, at the expense of incumbents. It’s not clear this risk is priced into the valuations of companies like Facebook (P/E expected to be ~100) and Zynga (P/E ~31). In other words, faster velocity should lead to a narrower distribution of valuations from seed to late stages. We’ve seen the seed stage adjust but not the late stage.&lt;/p&gt;
&lt;p&gt;The current posture of big VCs seems to be to wait to see what takes off and then chase the winners. Tons of investors tried to invest in Instagram’s A and B rounds, and I’m sure VC interest in Pinterest is intense.&lt;/p&gt;
&lt;p&gt;The problem with this model of Series A and B investing is that, in reality, many of the companies with big hits &lt;a href=&quot;http://cdixon.org/2012/03/16/the-myth-of-the-overnight-success/&quot;&gt;weren’t overnight successes&lt;/a&gt;. Pinterest, OMGPOP, Twitter, and Tumblr were around for years before taking off and all benefited greatly from having patient investors. In the current financing environment, a lot of good companies won’t live to get Series As and Bs and big VCs will pay valuations on hits that are priced to perfection.&lt;/p&gt;
&lt;p&gt;Increasing velocity is great for users and for the winning companies and investors. But when good companies aren’t getting follow on rounds because they aren’t yet “hockeysticking”, the long term health of the startup ecosystem suffers.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Facebook’s response to Yahoo’s patent lawsuit]]></title>
            <description><![CDATA[Like many in tech, I believe all software patents should be abolished. That said, I think Facebook made the right move by filing a lawsuit…]]></description>
            <link>https://cdixon.org/2012/04/03/facebooks-response-to-yahoos-patent-lawsuit</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/03/facebooks-response-to-yahoos-patent-lawsuit</guid>
            <pubDate>Tue, 03 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Like many in tech, I believe all &lt;a href=&quot;http://cdixon.org/2009/09/24/software-patents-should-be-abolished/&quot;&gt;software patents should be abolished&lt;/a&gt;. That said, I think Facebook made the right move by filing a lawsuit against Yahoo’s patent attack.&lt;/p&gt;
&lt;p&gt;As I see it, Facebook had 4 choices:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Settle. Given their pending IPO, this would have been the easiest route. But, by rewarding Yahoo, settling would have encouraged more frivolous patent lawsuits.&lt;/li&gt;
&lt;li&gt;Defend without countersuing. On the surface this would have been the “principled” stance, but it would have severely weakened their legal position, and therefore would have made it more likely that Yahoo profited from the lawsuit.&lt;/li&gt;
&lt;li&gt;Countersue without signaling any aversion to patent lawsuits.&lt;/li&gt;
&lt;li&gt;Countersue &lt;em&gt;and&lt;/em&gt; signal that they are averse to patent lawsuits, which in turn signals that they will drop the lawsuit if Yahoo does. This seems to be what Facebook has done:&lt;/li&gt;
&lt;/ul&gt;
&lt;blockquote&gt;
&lt;p&gt;“From the outset, we said we would defend ourselves vigorously against Yahoo’s lawsuit,” Ted Ullyot, Facebook’s general counsel, said in a statement. “While we are asserting patent claims of our own, &lt;strong&gt;we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation&lt;/strong&gt;.” [emphasis added] – &lt;a href=&quot;http://dealbook.nytimes.com/2012/04/03/facebook-accuses-yahoo-of-infringing-on-patents/?hpw&quot;&gt;NYTimes&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Countersuing gives Facebook the best chance of fending off Yahoo’s lawsuit – and therefore not rewarding patent lawsuits. And signaling they are only doing so in response to Yahoo (hence might drop the suit if Yahoo does) keeps them on the right side of innovation.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Revisited: big VCs investing in seed rounds]]></title>
            <description><![CDATA[A few years ago, the trend of companies raising smaller seed rounds combined with the emergence of new seed funds caused many big VCs to…]]></description>
            <link>https://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds</link>
            <guid isPermaLink="false">https://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds</guid>
            <pubDate>Mon, 02 Apr 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A few years ago, the trend of companies raising smaller seed rounds combined with the emergence of new seed funds caused many big VCs to create seed investment programs. This triggered a debate among entrepreneurs and investors about whether it was risky for seed-stage companies to take small investments from large VCs. (I blogged about the issue &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money/&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Since then, enough founders have directly experienced the downside of taking seed money from big VCs that I think it’s safe to say there is no more room for debate. I can think of about 15 founders I’ve spoken to recently who tried or are trying to raise Series As but are seriously hampered by the fact that a big VC invested in the seed round but isn’t participating in the Series A. (I’d love to mention specific companies and firms but it wouldn’t be appropriate for me to do so – I guess I’ll just have to cite Jay Rosen’s “&lt;a href=&quot;http://pressthink.org/2012/03/im-there-youre-not-let-me-tell-you-about-it/&quot;&gt;I’m there, let me tell you what I see&lt;/a&gt;” principle of reporting).&lt;/p&gt;
&lt;p&gt;There are two important nuances to point out here. First, there are big VCs who invest in seed rounds the right way – with the genuine expectation to follow on and the intention to help out during the seed stage (some that I’ve invested with include USV, True, and Spark). One important sign of this is how much they want to invest. If a $300M fund wants to invest $100K, they are buying an option. If they want to invest $500K, they are more likely making an investment.&lt;/p&gt;
&lt;p&gt;The second nuance can be counterintuitive: the danger of taking seed money is positively correlated with the reputation of the firm. If a top VC invests in the seed round and then passes on the A, other VCs will have difficulty overlooking that the smartest money that knows the company the best isn’t following on. If the VC isn’t well respected, it is easier for other VCs to second guess them.&lt;/p&gt;
&lt;p&gt;I’m not revisiting this issue to criticize big VCs. A healthy startup environment requires smart, ethical investors at all stages. But I don’t think these big VC seed programs benefit anyone. And there are enough angry entrepreneurs out there that I expect the message will get through.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Give away the diagnostic, sell the remedy]]></title>
            <description><![CDATA[Companies that employ the “freemium” business model give away a product or service for free and then charge for additional features. The…]]></description>
            <link>https://cdixon.org/2012/03/26/give-away-the-diagnostic-sell-the-remedy</link>
            <guid isPermaLink="false">https://cdixon.org/2012/03/26/give-away-the-diagnostic-sell-the-remedy</guid>
            <pubDate>Mon, 26 Mar 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Companies that employ the “&lt;a href=&quot;http://www.avc.com/a_vc/2009/07/freemium-and-freeconomics.html&quot;&gt;freemium&lt;/a&gt;” business model give away a product or service for free and then charge for additional features. The freemium model has gotten more popular as the cost to deliver free services has dropped but the cost of employing sales and marketing people hasn’t. One of the hardest questions around freemium models is deciding how to &lt;a href=&quot;http://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products/&quot;&gt;divide&lt;/a&gt; free from paid features.&lt;/p&gt;
&lt;p&gt;One particularly effective version of freemium is: “give away the diagnostic, sell the remedy.” The best known example of this is anti-virus companies that give away free virus scans but charge for virus removers. In fact, this tactic works so well for anti-virus that it almost seems coercive (and has indeed been abused, for example, by “anti-spyware” software that deliberately conflates cookies and viruses). But, in general, giving away a diagnostic seems like a reasonable way to demonstrate the effectiveness of a product while still being able to sell valuable additional features.&lt;/p&gt;
&lt;p&gt;Selling the remedy has become increasingly popular with B2B companies. For example, a friend recently wanted to ensure that his company’s (non-spam) e-mails weren’t getting blocked by spam filters, so he contacted an “email delivery optimization” company. They ran a free test and reported that his emails weren’t getting filtered. Two months later they called back and said “uh oh, your emails are getting filtered.” Sure enough his open rates had dropped and his anecdotal tests confirmed that his emails were being inaccurately labelled as spam. Because of the free diagnostic, he had confidence in the company’s technology, and was willing to pay them to fix his problem. And the email optimization company had spent almost nothing to acquire a new customer.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The myth of the overnight success]]></title>
            <description><![CDATA[Angry Birds was Rovio’s 52nd game. They spent eight years and almost went bankrupt before finally creating their massive hit. Pinterest is…]]></description>
            <link>https://cdixon.org/2012/03/16/the-myth-of-the-overnight-success</link>
            <guid isPermaLink="false">https://cdixon.org/2012/03/16/the-myth-of-the-overnight-success</guid>
            <pubDate>Fri, 16 Mar 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Angry Birds was Rovio’s &lt;a href=&quot;http://www.wired.co.uk/magazine/archive/2011/04/features/how-rovio-made-angry-birds-a-winner?page=all&quot;&gt;52nd game&lt;/a&gt;. They spent eight years and almost went bankrupt before finally creating their massive hit. Pinterest is one of the fastest growing websites in history, but struggled for a long time. Pinterest’s CEO recently &lt;a href=&quot;http://allthingsd.com/20120313/pinterest-ceo-ben-silbermanns-lesson-for-start-ups-go-your-own-way/&quot;&gt;said&lt;/a&gt; that they had “catastrophically small numbers” in their first year after launch, and that if he had listened to popular startup advice he probably would have quit.&lt;/p&gt;
&lt;p&gt;You tend to hear about startups when they are successful but not when they are struggling. This creates a systematically distorted perception that companies succeed overnight. Almost always, when you learn the backstory, you find that behind every “overnight success” is a story of entrepreneurs toiling away for years, with very few people except themselves and perhaps a few friends, users, and investors supporting them.&lt;/p&gt;
&lt;p&gt;Startups are hard, but they can also go from difficult to great incredibly quickly. You just need to survive long enough and keep going so you can create your 52nd game.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some tips for interacting with the press]]></title>
            <description><![CDATA[Here are a few things I’ve learned over the years about the best ways for entrepreneurs to interact with the press (by press I mean blogs as…]]></description>
            <link>https://cdixon.org/2012/03/01/some-tips-for-interacting-with-the-press</link>
            <guid isPermaLink="false">https://cdixon.org/2012/03/01/some-tips-for-interacting-with-the-press</guid>
            <pubDate>Thu, 01 Mar 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Here are a few things I’ve learned over the years about the best ways for entrepreneurs to interact with the press (by press I mean blogs as well as traditional media).&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Don’t be afraid to ask what the rules are. Is this on or off the record? If they are writing an article about your company, do they require exclusivity? What is the angle of the story?&lt;/li&gt;
&lt;li&gt;Don’t use a PR firm unless you are so successful that you need someone to help you manage inbound press interest. Most journalists, when talking candidly, will tell you they’d vastly prefer getting an email from the founder of a startup than a PR firm. If you’re Bill Gates, it is understandable that you have someone reaching out for you. If you are a small startup, having a PR rep contact a journalist says “I’m not competent enough to reach you” or “I don’t respect your time enough to reach out directly.”&lt;/li&gt;
&lt;li&gt;Treat journalists with respect. Tech/business journalists often interact with rich and powerful people, some of whom treat them disrespectfully. Like entrepreneurs, journalists are usually interesting people with diverse interests. You’ll probably like them if you talk to them and might even become friends.&lt;/li&gt;
&lt;li&gt;Unless you’re a super hot startup, the existence of your company is not a news story. Exclusives of launches, financings and acquisitions are usually news stories. Trend stories that you are part of could be a news story. Relating your startup or data your startup generates to something already newsworthy (journalists call this “pegging”) can dramatically increase your chances of getting covered.&lt;/li&gt;
&lt;li&gt;Whether you like it or not, the press will put your company into a category, and might run “horserace” stories comparing how the companies in your category are doing. The best you can do here is to try to choose which category you’ll be put into. Arguing that you have no competitors or are creating a new category is pretty much impossible.&lt;/li&gt;
&lt;li&gt;Try to put yourself in the mindset of the journalist. How will this story get them on Techmeme or featured by their editors? What were their most successful recent stories? Do background research on any reporter before talking and read a bunch his/her articles.&lt;/li&gt;
&lt;li&gt;Don’t just contact reporters when you need them: try to be helpful even when you don’t. Sometimes, I get calls to talk about, say, the state of the venture market or asking for some background on a tech sector that is new to the journalist. My guess is they appreciate this and are more responsive when I contact them about a possible story.&lt;/li&gt;
&lt;/ul&gt;</content:encoded>
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            <title><![CDATA[The internet is reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams]]></title>
            <description><![CDATA[From Innovation and the Bell Labs Miracle in today NYTimes: Innovation is an important new product or process, deployed on a large scale and…]]></description>
            <link>https://cdixon.org/2012/02/26/the-internet-is-reshaping-our-economy-from-one-of-huge-corporations-with-lots-of-jobs-to-huge-platforms-with-lots-of-income-streams</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/26/the-internet-is-reshaping-our-economy-from-one-of-huge-corporations-with-lots-of-jobs-to-huge-platforms-with-lots-of-income-streams</guid>
            <pubDate>Sun, 26 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;From &lt;a href=&quot;http://www.nytimes.com/2012/02/26/opinion/sunday/innovation-and-the-bell-labs-miracle.html?ref=opinion&quot;&gt;Innovation and the Bell Labs Miracle&lt;/a&gt; in today NYTimes:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Innovation is an important new product or process, deployed on a large scale and having a significant impact on society and the economy, that can do a job “better, or cheaper, or both.” Regrettably, we now use the term to describe almost anything. It can describe a smartphone app or a social media tool; or it can describe the transistor or the blueprint for a cellphone system. The differences are immense. One type of innovation creates a handful of jobs and modest revenues; another, the type Mr. Kelly and his colleagues at Bell Labs repeatedly sought, creates millions of jobs and a long-lasting platform for society’s wealth and well-being.&lt;/p&gt;
&lt;p&gt;The conflation of these different kinds of innovations seems to be leading us toward a belief that small groups of profit-seeking entrepreneurs turning out innovative consumer products are as effective as our innovative forebears. History does not support this belief. The teams at Bell Labs that invented the laser, transistor and solar cell were not seeking profits. They were seeking understanding. Yet in the process they created not only new products but entirely new — and lucrative — industries.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Putting aside the obvious rebuttal that large companies like Intel, Microsoft, Apple and even AT&amp;#x26;T were once startups, the author seems to confuse “jobs” with “income streams”. For example, it would be easy to dismiss a website like Craigslist as a “social media tool” that has only created a few dozen jobs for its employees. But in fact it has created billions of dollars of income streams for people buying and selling things on its platform. The internet is increasingly reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Once you take money, the clock starts ticking]]></title>
            <description><![CDATA[One of the interesting things about having been investing in startups for a number of years is that at any moment you get an inside peek at…]]></description>
            <link>https://cdixon.org/2012/02/25/once-you-take-money-the-clock-starts-ticking</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/25/once-you-take-money-the-clock-starts-ticking</guid>
            <pubDate>Sat, 25 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the interesting things about having been investing in startups for a number of years is that at any moment you get an inside peek at startups at a variety of different stages. In the course of a few weeks, I might talk to people who are ideating around new business ideas, people raising seed rounds, people raising later (VC) rounds, people whose products are blowing up, people whose product are struggling, people getting acquired, people leaving acquirers to start new companies, etc. Sadly, there are also usually a few companies that are struggling and facing the serious possibility of running out of money and being forced to shut down.&lt;/p&gt;
&lt;p&gt;One side-by-side comparison struck me recently.  Company A is just now raising a seed round. The money they raised will last 12 months (personally, I strongly recommend raising &lt;a href=&quot;http://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank/&quot;&gt;18 months&lt;/a&gt; of runway – if you have the option to do so). Company A was also, in my opinion, not ready to raise money (they needed to work on their plan and team more). Company B raised a seed round about 10 months ago and is now struggling to raise more. Company B had the option to raise more money back then but chose to only raise 12 months runway in order to minimize dilution. Company B also made the mistake of having a large VC invest $100K in the round (a meaningless amount to a large VC). The large VC has since said they won’t support the company (despite the fact that the company made pretty good progress on the business) creating a massive &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;signaling&lt;/a&gt; problem.&lt;/p&gt;
&lt;p&gt;In the current “frothy” environment, where seed investors are aggressively offering money to entrepreneurs, it is easy for an entrepreneur to think “well, if I’m getting offered money this easily at the seed stage, I’ll get offered money easily later.” In fact, once you take professional investor money, the attitude of investors (both insiders and outsiders) changes dramatically: you’ve gone from planning mode to operations mode. When you do planning, research, experimenting etc. without having raised money, investors think you are prudent (I recently interviewed the Warby Parker founders for &lt;a href=&quot;http://techcrunch.com/2012/02/24/founder-stories-warby-parker-less-than-1-of-eyeglasses-were-sold-online/&quot;&gt;TechCrunch&lt;/a&gt; and they said they spent 1.5 years planning/researching before they raised money). When you do it with other people’s money, and don’t make what they perceive to be enough progress, the investors can quickly lose faith.&lt;/p&gt;
&lt;p&gt;The obvious lesson is well known by experienced entrepreneurs. Don’t raise money until you are ready, and when you do, raise enough to have a good shot at reaching “accretive milestones” so you can raise more money, become profitable, or whatever your goals might be.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Big timing]]></title>
            <description><![CDATA[“Big timing” is a phrase I’ve heard a lot lately which refers to people who are “higher ranking” acting disrespectfully toward people who…]]></description>
            <link>https://cdixon.org/2012/02/23/big-timing</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/23/big-timing</guid>
            <pubDate>Thu, 23 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“Big timing” is a phrase I’ve heard a lot lately which refers to people who are “higher ranking” acting disrespectfully toward people who are “lower ranking”. Example usage: “so and so VC partner big timed my associate,” meaning they talked down to him/her or didn’t meet with him/her or whatever.&lt;/p&gt;
&lt;p&gt;Big timing is a huge mistake. Why? 1) big timers vastly underestimate the degree to which senior people trust their junior people, 2) most non-jerks (no matter how successful) interpret big timing to be an insult to their firm and therefore to their senior people, 3) junior people are often far more active and informed than senior people and therefore great people to spend time with.&lt;/p&gt;
&lt;p&gt;It would be great to think that in the startup industry, people would realize that today’s junior person could become “big time” tomorrow, and that you should therefore be meritocratic and respectful to everyone. But that’s not my experience.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[“It is the human friction that makes the sparks”]]></title>
            <description><![CDATA[From Jonah Lehrer, Brainstorming Doesn’t Really Work (via Stowe Boyd): Building 20 [a scene of incredible innovation at MIT] and…]]></description>
            <link>https://cdixon.org/2012/02/19/it-is-the-human-friction-that-makes-the-sparks</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/19/it-is-the-human-friction-that-makes-the-sparks</guid>
            <pubDate>Sun, 19 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;From Jonah Lehrer, &lt;a href=&quot;http://www.newyorker.com/reporting/2012/01/30/120130fa_fact_lehrer?currentPage=5&quot;&gt;Brainstorming Doesn’t Really Work&lt;/a&gt; (via &lt;a href=&quot;http://tmblr.co/ZHrZFyGY_fqI&quot;&gt;Stowe Boyd&lt;/a&gt;):&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Building 20 [a scene of incredible innovation at MIT] and brainstorming came into being at almost exactly the same time. In the sixty years since then, if the studies are right, brainstorming has achieved nothing—or, at least, less than would have been achieved by six decades’ worth of brainstormers working quietly on their own. Building 20, though, ranks as one of the most creative environments of all time, a space with an almost uncanny ability to extract the best from people. Among M.I.T. people, it was referred to as “the magical incubator.”&lt;/p&gt;
&lt;p&gt;The fatal misconception behind brainstorming is that there is a particular script we should all follow in group interactions. The lesson of Building 20 is that when the composition of the group is right—enough people with different perspectives running into one another in unpredictable ways—the group dynamic will take care of itself. All these errant discussions add up. In fact, they may even be the most essential part of the creative process. Although such conversations will occasionally be unpleasant—not everyone is always in the mood for small talk or criticism—that doesn’t mean that they can be avoided. The most creative spaces are those which hurl us together. It is the human friction that makes the sparks.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I think this underscores one of the main reasons remote early-stage projects often fail. We mistakenly think of brainstorming as something you can do in meetings, and teaching as something you can perform through carefully composed documents or lectures.&lt;/p&gt;
&lt;p&gt;I was part of a number of failed remote R&amp;#x26;D attempts. The one time it worked was when we decided to abandon meetings, project documents, tracking tools, etc. Instead, we got a high quality speakerphone so everyone could overhear everyone else’s conversations, and we left it on all day, every day. It wasn’t the same as being together in person, but we did manage to get some of the human friction back.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Platform distribution risks]]></title>
            <description><![CDATA[When your product extends a platform’s functionality, one of the main risks you face is that the platform could embed your product’s key…]]></description>
            <link>https://cdixon.org/2012/02/14/platform-distribution-risks</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/14/platform-distribution-risks</guid>
            <pubDate>Tue, 14 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;When your product extends a platform’s functionality, one of the main risks you face is that the platform could embed your product’s key features within the platform – what is sometimes called &lt;a href=&quot;http://cdixon.org/2011/02/22/the-importance-of-predictability-for-platform-developers/&quot;&gt;subsumption risk&lt;/a&gt;. This happened to a lot of startups in the 90s that built products for the Windows platform.&lt;/p&gt;
&lt;p&gt;When you depend on a platform for &lt;em&gt;distribution&lt;/em&gt; (acquiring and retaining users), you take on different risks. Specifically:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Oversaturation&lt;/em&gt;. The risk that supply of products on the platform significantly outpaces demand. This seems to have happened recently to the iOS App Store: there are over 500,000 apps and counting, and popularity tends to be highly concentrated, making it very difficult for new apps to get noticed. Oversaturation also &lt;a href=&quot;http://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups/&quot;&gt;happened&lt;/a&gt; to Google (organic) results in most query categories in the last 2000′s.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Barriers to discovery&lt;/em&gt;. The risk that the discovery methods on the platform aren’t meritocratic. iOS apps depend upon appearing in iTunes’ Top 25 lists, leading to a “rich get richer” bias, along with aggressive attempts to game the system. Apple has other app discovery mechanisms like its Featured Apps and Genius features, but those seem to drive far fewer downloads than the top lists. Google search has increasingly been favoring Google’s own products and also seems to heavily favor older, well-entrenched websites, making it very hard for new sites to gain significant SEO traction. Currently, social networks like Twitter and Facebook seem to have the most meritocratic discovery mechanisms, which is one reason so many startups target them for distribution.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Throttling&lt;/em&gt;. The risk that the platform will throttle distribution or monetization (for apps that rely on paid advertising, throttled monetization also means throttled distribution). Facebook started out letting apps send unfiltered notifications to users’ timelines but then introduced algorithms that heavily filtered them (thereby entrenching the position of leading app makers like Zynga). Facebook also started out letting apps charge users directly, but later &lt;a href=&quot;http://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up/&quot;&gt;changed&lt;/a&gt; that policy and imposed a rev-share.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;If you are launching a new website or app, you should have a distribution strategy beyond just “people will love it and tell their friends about it”. Your strategy should probably involve at least one major platform. And you should think through the distribution characteristics of the platform and decide if they are a good fit for your product and how best to mitigate the risks.&lt;/p&gt;
&lt;p&gt;Finally, it is worth noting that some of the most successful startups grew by making bets on emerging platforms that were not yet saturated and where barriers to discovery were low. Today, the most interesting new platforms are probably Android tablets and emerging social networks like Foursquare and Tumblr. Betting on new platforms means you’ll likely fail if the platform fails, but also dramatically lowers the distribution risks described above.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Between failure and Facebook]]></title>
            <description><![CDATA[Recently, a friend was trying to recruit a programmer to join his early-stage startup. The programmer had just graduated from college and…]]></description>
            <link>https://cdixon.org/2012/02/13/between-failure-and-facebook</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/13/between-failure-and-facebook</guid>
            <pubDate>Mon, 13 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Recently, a friend was trying to recruit a programmer to join his early-stage startup. The programmer had just graduated from college and his impression of startups was shaped mostly by popular media. His main concern, he said, was: “What if we end up being the next MySpace instead of the next Facebook?”.&lt;/p&gt;
&lt;p&gt;Of course, for those of us immersed in startup world, creating the next MySpace would be considered a huge success. MySpace was once the &lt;a href=&quot;http://mashable.com/2006/07/11/myspace-americas-number-one/&quot;&gt;most visited website in the US&lt;/a&gt; and was &lt;a href=&quot;http://www.nytimes.com/2005/07/18/business/18cnd-newscorp.html&quot;&gt;acquired&lt;/a&gt; for $580M. It flamed out later under its corporate owner, but that happens to a lot of great startups.&lt;/p&gt;
&lt;p&gt;Mainstream culture seems to depict startups as either being complete failures where everyone loses their shirts or else huge hits like Facebook. But the reality, as usual, lies in the middle: in 2010, according to Dow Jones, there were &lt;a href=&quot;http://techcrunch.com/2012/01/03/report-522-exits-of-venture-backed-companies-netted-53-2-billion-in-2011/&quot;&gt;522 venture-backed exits&lt;/a&gt; with a combined exit value of $53 billion – implying an average exit price of around $100M.&lt;/p&gt;
&lt;p&gt;The best thing about startups is you get to work with great people on interesting projects, and can be successful by conventional metrics, even if no one outside of tech has ever heard of you or what you’ve built. There’s great stuff between failure and Facebook.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[eBay vs Amazon: decentralized vs centralized e-commerce]]></title>
            <description><![CDATA[Note: The company I cofounded, Hunch, was acquired by eBay in November 2011. I am now an eBay employee. But all the opinions expressed below…]]></description>
            <link>https://cdixon.org/2012/02/13/ebay-vs-amazon-decentralized-vs-centralized-e-commerce</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/13/ebay-vs-amazon-decentralized-vs-centralized-e-commerce</guid>
            <pubDate>Mon, 13 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;em&gt;Note: The company I cofounded, Hunch, was acquired by eBay in November 2011. I am now an eBay employee. But all the opinions expressed below are my own, and were developed prior to the Hunch acquisition, through my own research on e-commerce.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Amazon and eBay are the two largest e-commerce companies. As of this writing, Amazon has a market cap of about $87B, trading at a trailing twelve-month P/E of about 139. eBay has a market cap of about $42B, trading at a trailing P/E of about 13. Each company competes with many other companies in many different areas. For example, Amazon competes with Apple on tablets (Kindle vs iPad) and digital media (Amazon’s media store vs iTunes). Ebay’s Paypal unit competes with multiple payment companies, and its marketplaces division competes with other “peer-to-peer” e-commerce sites like Craigslist. But given the potential size of the e-commerce market (not to mention the online-to-offline commerce market), Amazon and eBay’s main competitors are each other. And to understand their large strategic moves (e.g. large acquisitions like GSI and Zappos), it is important to understand their fundamentally opposing strategic outlooks: eBay wants commerce to be more decentralized (around its GSI/Magento partners and eBay marketplaces sellers) and Amazon wants it to be more centralized (around itself).&lt;/p&gt;
&lt;p&gt;First, some background. During the dot-com boom, many largest offline brands debated how to best move their businesses online. Some tried to build their own websites from scratch. Others partnered with commerce technology providers. Toys ‘R’ Us took a novel approach and signed a “strategic alliance” to outsource all of their e-commerce operations to Amazon. Over the next few years this relationship soured – apparently Toys ‘R’ Us felt Amazon was competing too directly with them and &lt;a href=&quot;http://www.msnbc.msn.com/id/11641703/ns/business-us_business/t/toys-r-us-wins-suit-against-amazoncom/#.Tyysa2PC69I&quot;&gt;successfully sued&lt;/a&gt; to end the relationship.&lt;/p&gt;
&lt;p&gt;The end of the Toys ‘R’ Us – Amazon relationship marked a turning point for a company called GSI Commerce. GSI took an aggressively neutral approach to providing technology and marketing solutions to retailers. Their main appeal over Amazon is that they didn’t compete with their partners (but of course their partners competed with each other). This approach paid off: GSI now powers &lt;a href=&quot;http://gsicommerce.com/clients/&quot;&gt;over 500 large commerce sites&lt;/a&gt;, including Toys ‘R’ Us, Adidas, Ralph Lauren, and the commerce sites of all the large sports leagues like the NFL, MLB and NBA.&lt;/p&gt;
&lt;p&gt;Last year, eBay &lt;a href=&quot;http://dealbook.nytimes.com/2011/03/28/ebay-to-buy-gsi-commerce-for-2-4-billion-bid/&quot;&gt;paid $2.4B&lt;/a&gt; to acquire GSI Commerce. They also &lt;a href=&quot;http://www.magentocommerce.com/blog/comments/ebay-agrees-to-acquire-magento/&quot;&gt;acquired&lt;/a&gt; a smaller company called Magento that provides e-commerce technologies to smaller retailers. You can think of GSI as the leading commerce platform for the “fat head” of retailers, and Magento as the leader for the long tail.&lt;/p&gt;
&lt;p&gt;The key difference between eBay and Amazon isn’t auctions vs. fixed price sales (the majority of eBay sales aren’t auctions anymore). It is that eBay doesn’t take inventory, and prefers to be an intermediary that facilitates peer-to-peer commerce. This strategy wins if e-commerce becomes more decentralized, with the majority of commerce continuing flow through small to medium retailers. In this world, eBay makes money by sending traffic from eBay.com, from fees collected by GSI and Magento, and Paypal transaction fees. In a centralized world, Amazon grows its &lt;a href=&quot;http://cdixon.posterous.com/amazon&quot;&gt;current 9% e-commerce&lt;/a&gt; market share to a much larger percentage, taking advantage of its scale, efficiency, advanced technology, and the convenience of shopping in one place.&lt;/p&gt;
&lt;p&gt;One way to view this battle is to think of eBay as a platform a la Windows or Android and Amazon as an end-to-end solution a la Apple computers in the 90s or iOS devices today. Platforms tend to provide greater diversity. In the case of e-commerce, the platform approach could also have a price advantage. &lt;a href=&quot;http://techcrunch.com/2011/02/13/bye-bye-long-tail/&quot;&gt;As the CEO of TrialPay, Alex Rampell, argues&lt;/a&gt;: “Who can beat Amazon on price? The companies whose products are sold on Amazon”. End-to-end solutions like Amazon’s tend to provide greater convenience and a better user experience.&lt;/p&gt;
&lt;p&gt;I’m not arguing that one approach is superior to the other. My point is simply that when you understand that the battle is between centralized and decentralized commerce, the strategic moves of the two companies make a lot more sense.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some thoughts on the iPhone contact list controversy and app security]]></title>
            <description><![CDATA[1. I’ve heard rumors that lots of apps have been uploading user contact lists for years. One person who knows the iOS world well told me “if…]]></description>
            <link>https://cdixon.org/2012/02/12/some-thoughts-on-the-iphone-contact-list-controversy-and-app-security</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/12/some-thoughts-on-the-iphone-contact-list-controversy-and-app-security</guid>
            <pubDate>Sun, 12 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;1. I’ve heard rumors that lots of apps have been uploading user contact lists for years. One person who knows the iOS world well told me “if you download a lot of apps, your contact list is on 50 servers right now.” I don’t understand why Apple doesn’t have a permission dialog box for this (that said, I’m not sure that’s the best solution – see #4 below). Apple has dialogs for accessing location and for enabling push notifications. Accessing users’ contact lists seems like an obvious thing to ask permission for.&lt;/p&gt;
&lt;p&gt;2. I don’t know what the product design motivations are for uploading contacts, but I assume there are legitimate ones. &lt;em&gt;[commenters &lt;a href=&quot;http://cdixon.org/2012/02/12/the-iphone-contact-list-controversy-and-app-security/#comment-436995562&quot;&gt;suggest&lt;/a&gt; it is mainly to notify users when their friends join the service]&lt;/em&gt;.  If this or something similar is the goal, you could probably do it in a way that protects privacy by (&lt;a href=&quot;http://cdixon.posterous.com/bitcasa-and-convergent-encryption&quot;&gt;convergently&lt;/a&gt;?) encrypting the phone numbers on the client side (I’m assuming the useful info is the phone numbers and not the names associated with the phone numbers since the names would be inconsistent across users).&lt;/p&gt;
&lt;p&gt;3. Many commentators have &lt;a href=&quot;http://bits.blogs.nytimes.com/2012/02/12/disruptions-so-many-apologies-so-much-data-mining/&quot;&gt;suggested&lt;/a&gt; that a primary security risk is the fact that the data is transmitted in plain text. Encrypting over the wire is always a good idea but in reality “man-in-the-middle” attacks are extremely rare. I would worry primarily about the far more common cases of 1) someone (insider or outsider) stealing in the company’s database, 2) a government subpoena for the company’s database. The best protection against these risks is encrypting the data in such a way that hackers and the company itself can’t unencrypt it (or to not send the data to the servers in the first place).&lt;/p&gt;
&lt;p&gt;A bad outcome from this controversy would be to have companies encrypt sensitive data over the network and then not encrypt it on their servers (the simplest way to do this is to switch to https, a technology that is much more about security theater than security reality). This would make it impossible for 3rd parties (e.g. white-hat hackers) to detect that sensitive data is being sent over the network but would keep the data vulnerable to server side breaches / subpeonas. Unless Apple or someone else steps in, I worry that this is what apps will do next. It is the quickest way to preserve product features and minimize PR risk.&lt;/p&gt;
&lt;p&gt;4. I worry that by just adding tons of permission dialogs we are going back to the Microsoft IE/Active X model of security. With lots of permission popups, users get fatigued and confused and just end up clicking “Yes” to everything. And then the security model says: If the user says “yes”, and the app uses “best practices” like https, it can do whatever it wants. We saw how this played out with the spyware/adware epidemic on the web from 2001-2006 and it wasn’t pretty.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[And then, suddenly, it works]]></title>
            <description><![CDATA[The other day a friend was demoing a new app he was working on. My first reaction was: “Yeah, yeah. This is nicely executed version one of…]]></description>
            <link>https://cdixon.org/2012/02/11/and-then-suddenly-it-works</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/11/and-then-suddenly-it-works</guid>
            <pubDate>Sat, 11 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The other day a friend was demoing a new app he was working on. My first reaction was: “Yeah, yeah. This is nicely executed version one of those ideas I’ve seen 50 times.” My second reaction was: “But I could say that about pretty much every successful startup I’ve seen over the last 10 years.”&lt;/p&gt;
&lt;p&gt;Most of the time, important new ideas don’t succeed on the first attempt or even the first ten attempts. But then they do, and it seems to happen suddenly. It’s hard to tell why this is. It’s probably a combination of &lt;a href=&quot;http://cdixon.org/2010/11/07/timing-your-startup/&quot;&gt;timing&lt;/a&gt; (riding some fundamental shift in technology or culture), and execution (getting the product just right).&lt;/p&gt;
&lt;p&gt;An idea getting tried over and over tends to be a positive signal (which is one reason that &lt;a href=&quot;http://cdixon.org/2010/06/26/competition-is-overrated/&quot;&gt;competition is overrated&lt;/a&gt;). It’s very easy when you spend lots of time around startups to get cynical. You could tweet and blog predictions that every new startup will fail and how the ideas are derivative and you’d be right 95% of the time. The hard part – and what matters for founders and investors – is figuring out the right mix of timing and execution to finally get it right.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Bedrock programming]]></title>
            <description><![CDATA[“Bedrock programming” is a phrase used to describe a style of programming that favors building code from the ground up versus reusing…]]></description>
            <link>https://cdixon.org/2012/02/06/bedrock-programming</link>
            <guid isPermaLink="false">https://cdixon.org/2012/02/06/bedrock-programming</guid>
            <pubDate>Mon, 06 Feb 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“Bedrock programming” is a phrase used to describe a style of programming that favors building code from the ground up versus reusing existing open-source or proprietary code.&lt;/p&gt;
&lt;p&gt;In my first programming job out of college our bosses told us to entirely rebuild our product. The person in charge of the networking layer decided the best way to do this was to write our own low-level networking toolkit, using some new, relatively untested networking techniques. We also wrote our own versions of core Java libraries (because, it was said, the existing ones weren’t sufficiently thread safe). This decision ended up leading to repeated delays and bugs, and a codebase that most of the other employees didn’t understand. It also made it much harder to train new hires and find replacements for departed employees.&lt;/p&gt;
&lt;p&gt;A related issue is what is usually called the “bleeding edge” tendency: the desire to use the shiny &amp;#x26; new over the older &amp;#x26; battle-tested. Lately, I’ve personally been programming with MongoDB and love it. But I’m also an investor in a startup that made Mongo their main production database, and when their Mongo expert left unexpectedly it took them far longer to find a replacement than it would have to find a MySQL expert.&lt;/p&gt;
&lt;p&gt;Great programmers are intensely curious and inventive. They love to improve code and try new things. There will always be bedrock and bleeding edge tendencies within strong engineering teams. The key is to have a great VP Engineering/CTO who can balance those tendencies with the reality that talent, money, and time are scarce, especially in startups.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Who should learn to program?]]></title>
            <description><![CDATA[Recently, there’s been a lot of talk in the tech world and beyond about getting more people to learn computer programming. I think this is a…]]></description>
            <link>https://cdixon.org/2012/01/31/who-should-learn-to-program</link>
            <guid isPermaLink="false">https://cdixon.org/2012/01/31/who-should-learn-to-program</guid>
            <pubDate>Tue, 31 Jan 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Recently, there’s been a lot of talk in the tech world and beyond about getting more people to learn computer programming. I think this is a worthy goal*, but the question should be considered from various angles.&lt;/p&gt;
&lt;p&gt;1. &lt;strong&gt;Jobs &amp;#x26; the economy&lt;/strong&gt;. Businesses all over the world need more programmers. Every company I know is hiring engineers (e.g. see this &lt;a href=&quot;http://nytm.org/made/&quot;&gt;list&lt;/a&gt; of NY tech startups). Top programmers can make $100K+ right out of college. Yet there were only about 14,000 computer science (CS) majors &lt;a href=&quot;http://cdixon.posterous.com/computer-science-majors-by-year&quot;&gt;last year&lt;/a&gt;. Meanwhile about 40,000 people got &lt;a href=&quot;http://www.slate.com/articles/business/moneybox/2010/10/a_case_of_supply_v_demand.html&quot;&gt;law degrees&lt;/a&gt; even though demand for lawyers has been shrinking. America is suffering from what economists call &lt;a href=&quot;http://en.wikipedia.org/wiki/Structural_unemployment&quot;&gt;structural unemployment&lt;/a&gt;:  jobs are available but our labor force isn’t trained for those jobs.&lt;/p&gt;
&lt;p&gt;2. &lt;strong&gt;Programming is a great foundation for a tech/startup career&lt;/strong&gt;. CS is a great foundation to do other things in tech industry like starting a tech company (although I’d argue that design is an increasingly valuable foundation for web startups). I suspect one of the reasons for the low number of CS majors is people don’t realize all the non-programming opportunities that are opened up by a background in programming.&lt;/p&gt;
&lt;p&gt;3. &lt;strong&gt;Programming is an important part of being “culturally literate.”&lt;/strong&gt; Algorithmic thinking is as fundamental a type of thinking as mathematical thinking. For example, &lt;a href=&quot;http://ase.tufts.edu/cogstud/incbios/dennettd/dennettd.htm&quot;&gt;Daniel Dennett&lt;/a&gt; convincingly &lt;a href=&quot;http://en.wikipedia.org/wiki/Darwin&amp;#x27;s_Dangerous_Idea&quot;&gt;argues&lt;/a&gt; that the best way to understand Darwin’s theory of evolution is by thinking of it as an algorithm. (I haven’t read it yet but I’m told the premise of Stephen Wolfram’s &lt;a href=&quot;http://en.wikipedia.org/wiki/A_New_Kind_of_Science&quot;&gt;A New Kind of Science&lt;/a&gt; is that algorithmic methods should be applied much more broadly across the sciences). Teaching algorithmic thinking – which is what CS does – should be a core part of a liberal arts education.&lt;/p&gt;
&lt;p&gt;4. &lt;strong&gt;Programming is a great activity.&lt;/strong&gt;  Most people who program describe themselves as entering a mental &lt;a href=&quot;http://en.wikipedia.org/wiki/Flow_(psychology)&quot;&gt;flow state&lt;/a&gt; where they are intensely immersed and time seems to fly by. It feels similar to reading a great book. You also feel great afterwards – it is the mental equivalent of going to the gym.&lt;/p&gt;
&lt;p&gt;5. &lt;strong&gt;Should non-technical people at tech startups learn to code?&lt;/strong&gt; This is where I disagree with some of the conventional wisdom. Certainly it is worthwhile learning programming, at least for reasons 3 &amp;#x26; 4 above. You should realize, however, that to become a good programmer takes thousands of hours of practice. I’d also argue that if you are a non-technical person working at a web company the the first thing you should learn is internet architecture (DNS, http, html, web servers, database, TCP/UDP, IP, etc). Learning some programming is good too, to help relate to technical colleagues. But if your goal is to build a large-scale web service, your time as a non-technical person is better spent recruiting people who have been coding for years.&lt;/p&gt;
&lt;p&gt;* Disclosure: I’m an investor via Founder Collective in two companies related to teaching programming:  &lt;a href=&quot;http://www.codecademy.com/&quot;&gt;Codecademy&lt;/a&gt; and &lt;a href=&quot;http://www.hackerschool.com/&quot;&gt;Hacker School&lt;/a&gt;.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Chris Sacca on the implied user contract]]></title>
            <description><![CDATA[Chris Sacca nicely summarized today’s FB vs Google vs Twitter controversy: It comes down to what each company has promised its users…]]></description>
            <link>https://cdixon.org/2012/01/23/chris-sacca-on-the-implied-user-contract</link>
            <guid isPermaLink="false">https://cdixon.org/2012/01/23/chris-sacca-on-the-implied-user-contract</guid>
            <pubDate>Mon, 23 Jan 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Chris Sacca nicely &lt;a href=&quot;http://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed/#comment-419240267&quot;&gt;summarized&lt;/a&gt; today’s FB vs Google vs Twitter controversy:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;It comes down to what each company has promised its users. Facebook promised its users their stuff would be private, which is why users rightfully get pissed when that line blurs. Twitter has promised users, well, that it will stay up, and that is why users rightfully get pissed when the whale is back.&lt;/p&gt;
&lt;p&gt;Google has promised its users and the entire tech community, again and again, that it would put their interests first, and that is why Google users, rightfully get pissed when their results are deprecated to try to promote a lesser Google product instead.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It’s all about expectations.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[What’s not evil: ranking content fairly *and* letting public content get indexed]]></title>
            <description><![CDATA[Please see update at bottom Most websites spend massive amounts of time and money to get any of their pages index and ranked by Google’s…]]></description>
            <link>https://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed</link>
            <guid isPermaLink="false">https://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed</guid>
            <pubDate>Mon, 23 Jan 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;em&gt;Please see update at bottom&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Most websites spend massive amounts of time and money to get &lt;em&gt;any&lt;/em&gt; of their pages index and ranked by Google’s search engine. Indeed, there is a entire billion dollar industry (SEO) devoted to helping companies get their content indexed and ranked.&lt;/p&gt;
&lt;p&gt;Twitter and Facebook have decided to disallow Google from indexing 99.9% of their content. Twitter won’t let Google index tweets and Facebook won’t let Google index status updates and most other user and brand generated content. In Facebook’s case this makes sense for content that users have designated as non-public. In Twitter’s case, the vast majority of the blocked content is designated by users as public. Furthermore, Twitter’s own search function rarely works for tweets older than a week (from Twitter’s search &lt;a href=&quot;https://dev.twitter.com/docs/using-search&quot;&gt;documentation&lt;/a&gt;, they return “6-9 days of Tweets”).&lt;/p&gt;
&lt;p&gt;There is a &lt;a href=&quot;http://pandodaily.com/2012/01/23/google-do-yourself-a-favor-and-just-come-clean-already/&quot;&gt;debate&lt;/a&gt; going today in the tech world: Facebook and Twitter are upset that Google won’t highly rank the 0.1% of their content they make indexable. Facebook and Twitter even created something they call the &lt;a href=&quot;http://searchengineland.com/dont-be-evil-tool-google-108971&quot;&gt;“Don’t be evil” toolbar&lt;/a&gt; that reranks Google search results the way they’d like them to be ranked. The clear implication is that Google is violating their famous credo and acting “evil”.&lt;/p&gt;
&lt;p&gt;The vast majority of websites would dream of having the problem of being able to block Google from 99.9% of their content and have the remaining 0.1% rank at the top of results. What would be best for users – and least “evil” – would be to let all public content get indexed and have Google rank that content “fairly” without favoring their own content. Facebook and Twitter are right about Google’s rankings, but Google is right about Facebook and Twitter blocking public content from being indexed.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Update: after posting this I got a bunch of emails, tweets and comments telling me that Twitter does in fact allow Google to index all their tweets, and that any missing tweets are the fault of Google, not Twitter. A few people &lt;a href=&quot;https://twitter.com/#!/hershberg/status/161622294869983233&quot;&gt;suggested&lt;/a&gt; that without firehose access Google can’t be expected to index all tweets. At any rate, I think the “Why aren’t all tweets indexed?” issue is more nuanced than I argued above.&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Revenue vs margin]]></title>
            <description><![CDATA[Three years ago, Fred Wilson wrote a great blog post called When Talking About Business Models, Remember that Profits Equal Revenues Minus…]]></description>
            <link>https://cdixon.org/2012/01/22/revenue-vs-margin</link>
            <guid isPermaLink="false">https://cdixon.org/2012/01/22/revenue-vs-margin</guid>
            <pubDate>Sun, 22 Jan 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Three years ago, Fred Wilson wrote a great blog post called &lt;a href=&quot;http://www.avc.com/a_vc/2009/01/when-talking-about-business-models-remember-that-profits-equal-revenues-minus-costs.html&quot;&gt;When Talking About Business Models, Remember that Profits Equal Revenues Minus Costs&lt;/a&gt;. The point he made was both simple and profound. The simple part is summed up in the post’s title&lt;em&gt;[1]&lt;/em&gt;. The profound part is that high growth, early-stage tech companies often have a choice about how to become exceptionally valuable businesses: they can focus on growing revenues at the expense of margins, or margins at the expense of revenues.&lt;/p&gt;
&lt;p&gt;Most recent successful tech companies seem to have chosen the former: growing revenues at the expense of margins. Again and again, we see S-1 filings with revenues growing rapidly but profit margins that are low to negative. The same is true for the rumored financials of private companies. I think I understand why they made this choice, but wonder if it was a mistake.&lt;/p&gt;
&lt;p&gt;To understand why these companies made this choice, you need to look at their formative stages. Many of them raised money from VC’s at multi-hundred-million to multi-billion dollar valuations, often before the companies were profitable or had even settled on a business model. In most cases, the companies and investors were acting reasonably&lt;em&gt;[2].&lt;/em&gt; But the end results might have been to unwittingly commit themselves to revenue over margin growth.&lt;/p&gt;
&lt;p&gt;Why? Money has its own inertia and somehow always seems to get spent. Some of this spending is reasonable and even necessary (infrastructure, &lt;a href=&quot;http://www.pinspire.com&quot;&gt;defensive&lt;/a&gt; expansion to international markets). But then there are harder choices. For example, do you invest heavily in sales and marketing to grow your revenue faster? Do you stay open and try to become a platform and therefore force yourself to experiment with new business models? Or do you become closed to “own the user” and therefore benefit from existing business models like advertising? Fast revenue growth seems to be the best way to justify your valuation. But the next thing you know you have a high cost structure that requires you to raise even more money and grow revenue even faster.&lt;/p&gt;
&lt;p&gt;The root cause here is a deeply held belief throughout the business world that exceptional revenue growth is more likely than exceptional margins. For example, if you talk to professional public market investors and analysts you’ll often hear statements like “that’s a low margin industry” – implying that every industry has “natural” profit margins which companies can only defy for short periods of time. This belief is also reflected in public market valuations for recent tech IPOs: companies like Groupon that put revenue over margins command very healthy valuations.&lt;/p&gt;
&lt;p&gt;The problem is that this deeply held belief in “revenue exceptionalism” over “margin exceptionalism” is a hangover from the industrial era. Unlike industrial era companies, information businesses tend to be &lt;a href=&quot;http://www.bothsidesofthetable.com/2011/12/22/the-amazing-power-of-deflationary-economics-for-startups/&quot;&gt;deflationary&lt;/a&gt;, shrinking the overall revenue of an industry. They also tend to have network effects (and &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;complementary network effects&lt;/a&gt;), making them more defensible and therefore higher margin than non tech businesses. Given this, why do companies continue seeking revenue at the expense of margins? Fred made this same point in his original post, but people didn’t seem to listen.&lt;/p&gt;
&lt;p&gt;[1] Companies (like all cash generating assets) are ultimately valued at a multiple of present and projected future profits. The historical average P/E ratio of the DJIA is about 15, meaning that (on average) if a company is generating $100M in profit, it is valued at $1.5B (Fred prefers to use a 10 multiple, perhaps to be conservative?). One way to understand this is to imagine that companies dividend out all their profits every year. If you bought something for $1.5B and it dividended out $100M every year, that would be a 6.6% annual return.&lt;/p&gt;
&lt;p&gt;[2] Why are these high-priced financings reasonable? From the company’s perspective: your traffic is growing so fast you need to invest millions of dollars in infrastructure. Meanwhile copycats are popping up in other countries. You don’t know if the financial markets will suddenly dry up. Someone offers you, say, $50M for minimal dilution. Seems like a reasonable hedge. From the investor’s perspective: the history of venture capital shows that almost all the returns are generated from big hits like Amazon, eBay, Facebook and Google. (As Paul Graham once put it: “The difference between a bad VC fund and a great VC fund is one big hit”).&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Maximizing capacity utilization as a startup premise]]></title>
            <description><![CDATA[In stark contrast to other major airlines, Southwest has been profitable for 40 years. If Southwest had one core “startup premise” it was…]]></description>
            <link>https://cdixon.org/2012/01/05/maximizing-capacity-utilization-as-a-startup-premise</link>
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            <pubDate>Thu, 05 Jan 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In stark contrast to other major airlines, Southwest has been profitable for 40 years. If Southwest had one core “startup premise” it was this: for every second the planes sat on the ground, their airplanes and people were costing them money but not generating revenue. So Southwest designed an airline from the ground up that maximized &lt;a href=&quot;http://www.businessdictionary.com/definition/capacity-utilization.html&quot;&gt;capacity utilization&lt;/a&gt;. They avoided the hub-and-spoke system that led to cascading delays. They removed meals to reduce ground crew times, along with assigned seating so passengers would hurry onto the plane to get good seats. They used only one aircraft type to reduce maintenance times.&lt;/p&gt;
&lt;p&gt;Some of the most interesting startups today are founded on the same premise of maximizing capacity utilization. Being information technology startups, their method for doing so is generally by matching demand for capacity with supply of un-utilized capacity. AirBnB lets people rent out unused space, increasing the utilization of their homes. Uber lets drivers rent out their unused time, increasing the utilization of their cars and labor. Services like TaskRabbit are trying let people fully utilize their “labor capacity”. Over time, services that increase capacity utilization tend to drive prices down (even if, at first, they sometimes have higher prices).&lt;/p&gt;
&lt;p&gt;Whenever Southwest would begin servicing a new city, it drove prices down so dramatically that economists began referring to it as the “&lt;a href=&quot;http://en.wikipedia.org/wiki/The_Southwest_Effect&quot;&gt;Southwest Effect&lt;/a&gt;“. One particularly remarkable aspect of the Southwest Effect: when Southwest began servicing a city, it would stimulate new business activity – and thus air travel – to such an extent that even Southwest’s less efficient competitors ended up benefiting.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Building products from improvised user behaviors]]></title>
            <description><![CDATA[For a long time, there were niche communities of “lo-fi” camera enthusiasts: people who shared photos taken on old cameras that had…]]></description>
            <link>https://cdixon.org/2012/01/02/building-products-from-improvised-user-behaviors</link>
            <guid isPermaLink="false">https://cdixon.org/2012/01/02/building-products-from-improvised-user-behaviors</guid>
            <pubDate>Mon, 02 Jan 2012 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;For a long time, there were niche communities of &lt;a href=&quot;http://www.flickr.com/groups/tlfcc/&quot;&gt;“lo-fi” camera&lt;/a&gt; enthusiasts: people who shared photos taken on old cameras that had interesting ways of filtering shots. The iPhone app &lt;a href=&quot;http://en.wikipedia.org/wiki/Hipstamatic&quot;&gt;Hipstamatic&lt;/a&gt; popularized lo-fi filters, selling over 1M copies. Because Hipstamatic lacked sharing features, many users took pictures with Hipstamatic and then shared them using other apps. Then came Instagram, which combined lo-fi filters and easy sharing. Instagram has been downloaded 15M times and has apparently crossed over to mainstream users.&lt;/p&gt;
&lt;p&gt;Instagram built a product devoted to a &lt;a href=&quot;http://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform/&quot;&gt;job&lt;/a&gt; that users were previously performing improvisationally using multiple products. This is a common pattern for popular software and services. Before Twitter, people shared interesting links through email or “link round-up” blog posts. Tumblr’s short-form blogging/re-blogging was inspired by an “unintended” use of long-form blogging platforms like WordPress. Before Foursquare, power socializers sent out mass text messages with their locations (in fact, Foursquare’s predecessor Dodgeball did exactly that).&lt;/p&gt;
&lt;p&gt;New startup ideas are all around you, in the improvised behaviors of people you know. It takes a keen product eye, however, to notice these improvisational behaviors and recognize which ones are worthy of being developed into standalone products.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Recruiting programmers to your startup]]></title>
            <description><![CDATA[Here are some things I’ve learned over the years about recruiting programmers* to startups. This is a big topic: many of the points I make…]]></description>
            <link>https://cdixon.org/2011/12/29/recruiting-programmers-to-your-startup</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/29/recruiting-programmers-to-your-startup</guid>
            <pubDate>Thu, 29 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Here are some things I’ve learned over the years about recruiting programmers* to startups. This is a big topic: many of the points I make briefly here could warrant their own blog posts, and I’m sure I’ve omitted a lot.&lt;/p&gt;
&lt;p&gt;- The most important thing to understand is what motivates programmers. This is where having been a programmer yourself can be very helpful. In my experience programmers care about 1) working on interesting technical problems, 2) working with other talented people, 3) working in a friendly, creative environment, 4) working on software that ends up getting used by lots of people. Like everyone, compensation matters, but for programmers it is often a “threshold variable”. They want enough to not have to spend time worrying about money, but once an offer passes their minimum compensation threshold they’ll decide based on other factors.&lt;/p&gt;
&lt;p&gt;- Software development is a creative activity and needs to be treated as such. Sometimes a programmer can have an idea on, say, the subway that can save weeks of work or add some great new functionality. Business people who don’t understand this make the mistake of emphasizing mechanistic metrics like the number of hours in the office and the number of bugs fixed per week. This is demoralizing and counterproductive. Of course if you are running a company you need to have deadlines, but you can do so while also being very flexible about how people reach them.&lt;/p&gt;
&lt;p&gt;It is sometimes helpful to think of recruiting as 3 phases: finding candidates, screening candidates, and convincing candidates to join you.&lt;/p&gt;
&lt;p&gt;- Finding means making contact with good candidates. There are no shortcuts here. You need to &lt;a href=&quot;http://cdixon.org/2011/04/13/showing-up/&quot;&gt;show up&lt;/a&gt; to schools, hackathons, meetups – wherever great programmers hang out. If your existing employees love their jobs they will refer friends. Try to generate inbound contacts by creating buzz around your company. If you have trouble doing that (it’s hard), try simple things like blogging about topics that are interesting to programmers.&lt;/p&gt;
&lt;p&gt;- Screening. Great programmers love to program and will have created lots of software that wasn’t for their jobs or school homework. Have candidates meet and (bidirectionally) interview everyone they’ll potentially be working with. If the candidate has enough free time try to do a trial project. There are also more procedural things that can be useful like code tests (although they need to be done in a respectful way and they are more about getting to know how each side thinks than actually testing whether the candidate knows how to program (hopefully you know that by this stage)).&lt;/p&gt;
&lt;p&gt;- Convincing them to join you. This is the hardest part. Great programmers have tons of options, including cofounding their own company. The top thing you need to do is convince them what you hopefully already believe (and have been pitching investors, press etc): that your company is doing something important and impactful. The next thing you need to do is convince them that your company is one that values and takes care of employees. The best way to do this is to have a track record of treating people well and offer those past employees as references.&lt;/p&gt;
&lt;p&gt;A few things not to do: you will never beat, say, Google on perks or job security so don’t even bother to pitch those. You’ll never beat Wall Street banks or rich big companies on cash salary so don’t pitch that either. You’ll never beat cofounding a company on the equity grant, but you can make a good case that, with the right equity grant, the risk/reward trade off of less equity with you is worth it.&lt;/p&gt;
&lt;p&gt;Finally, I’ve &lt;a href=&quot;http://cdixon.org/2009/08/25/the-worst-time-to-join-a-startup-is-right-after-it-gets-initial-vc-financing/&quot;&gt;long believed&lt;/a&gt; that early-stage, funded startups systematically under-grant equity to employees. Programmers shouldn’t have to choose between owning a fraction of a percent of an early-stage funded company and owning 50% of an unfunded company they’ve cofounded. Naval Ravikant recently wrote a great &lt;a href=&quot;http://startupboy.com/2011/12/13/why-you-cant-hire/&quot;&gt;post&lt;/a&gt; about this:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Post-traction companies can use the old numbers – you can’t. Your first two engineers? They’re just late founders. Treat them as such. Expect as much.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Making those first engineers “late cofounders” will dramatically increase your chances of recruiting great people. This is a necessary (but not sufficient) condition for getting the recruiting flywheel spinning where great people beget more great people.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;* As someone who personally programmed for 20 years including about 10 years professionally, I preferred to call myself a “programmer.” Some people prefer other words like “hacker” “developer”, “engineer” etc. I think the difference is just uninteresting nomenclature but others seem to disagree.&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[What jobs are users hiring your product to perform?]]></title>
            <description><![CDATA[One of Clay Christensen’s favorite concepts is that instead of dividing your customers into segments and asking which features each segment…]]></description>
            <link>https://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform</link>
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            <pubDate>Wed, 21 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of &lt;a href=&quot;http://en.wikipedia.org/wiki/Clayton_M._Christensen&quot;&gt;Clay Christensen’s&lt;/a&gt; favorite concepts is that instead of dividing your customers into segments and asking which features each segment would like, you should think about what “job” the customers are “hiring” you product to perform. &lt;a href=&quot;http://hbswk.hbs.edu/item/6496.html&quot;&gt;Here&lt;/a&gt; is an example:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;A fast-food restaurant chain wanted to improve its milkshake sales. The company started by segmenting its market both by product (milkshakes) and by demographics (a marketer’s profile of a typical milkshake drinker). Next, the marketing department asked people who fit the demographic to list the characteristics of an ideal milkshake (thick, thin, chunky, smooth, fruity, chocolaty, etc.). The would-be customers answered as honestly as they could, and the company responded to the feedback. But alas, milkshake sales did not improve.&lt;/p&gt;
&lt;p&gt;The company then enlisted the help of one of Christensen’s fellow researchers, who approached the situation by trying to deduce the “job” that customers were “hiring” a milkshake to do. First, he spent a full day in one of the chain’s restaurants, carefully documenting who was buying milkshakes, when they bought them, and whether they drank them on the premises. He discovered that 40 percent of the milkshakes were purchased first thing in the morning, by commuters who ordered them to go.&lt;/p&gt;
&lt;p&gt;The next morning, he returned to the restaurant and interviewed customers who left with milkshake in hand, asking them what job they had hired the milkshake to do. “Most of them, it turned out, bought [the milkshake] to do a similar job,” he writes. “They faced a long, boring commute and needed something to keep that extra hand busy and to make the commute more interesting. They weren’t yet hungry, but knew that they’d be hungry by 10 a.m.; they wanted to consume something now that would stave off hunger until noon. And they faced constraints: They were in a hurry, they were wearing work clothes, and they had (at most) one free hand.”&lt;/p&gt;
&lt;p&gt;The milkshake was hired in lieu of a bagel or doughnut because it was relatively tidy and appetite-quenching, and because trying to suck a thick liquid through a thin straw gave customers something to do with their boring commute. Understanding the job to be done, the company could then respond by creating a morning milkshake that was even thicker (to last through a long commute) and more interesting (with chunks of fruit) than its predecessor. The chain could also respond to a separate job that customers needed milkshakes to do: serve as a special treat for young children—without making the parents wait a half hour as the children tried to work the milkshake through a straw. In that case, a different, thinner milkshake was in order.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;There are at least three obvious ways to apply this concept: 1) when searching for startup ideas, think about jobs people want done that they can’t currently get done, 2) when thinking about how to fix or improve your product, understand why existing users are hiring your product (or should be hiring your product) and try to improve those experiences, 3) when analyzing markets, segment companies by the jobs they are hired for. Sometimes products that might appear similar (e.g. two photo sharing apps) are actually hired for very different purposes, and are therefore misclassified as competitors.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Trusting platforms]]></title>
            <description><![CDATA[In response to my post yesterday about how an internet of people has enabled a new wave of web-based marketplaces, Nick Mango commented…]]></description>
            <link>https://cdixon.org/2011/12/20/trusting-platforms</link>
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            <pubDate>Tue, 20 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In response to my post yesterday about how an &lt;a href=&quot;http://cdixon.org/2011/12/19/an-internet-of-people/&quot;&gt;internet of people&lt;/a&gt; has enabled a new wave of web-based marketplaces, &lt;a href=&quot;http://twitter.com/#!/Alternate1985&quot;&gt;Nick Mango&lt;/a&gt; commented:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There’s actually 2 levels of trust here. The first is knowing and trusting the person you’re buying from. And if you don’t know who they are, then you must move on to the second level of trust, which is do you know and trust the platform the person is using.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The ability to have “second order trust” is one of many reasons the internet has made so many institutions obsolete. Take the SEC’s role in policing private companies that market themselves to potential investors. This was sensible consumer protection back when the government was arguably the only organization that had the means and incentives to identify fraudulent investment schemes. But today we have many examples of websites that’ve built mechanisms for reliably tracking the reputations of individuals and organizations. This means the SEC could – in theory – make the unit of regulation platforms instead of investors and startups (something the &lt;a href=&quot;http://venturebeat.com/2011/11/08/faq-what-the-new-u-s-crowdfunding-bill-means-for-entrepreneurs/&quot;&gt;crowdfunding bill&lt;/a&gt; being considered by Congress seems to do at least in part), which in turn could unleash a new wave of innovation among crowdfunding platforms and crowdfunded startups.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[An internet of people]]></title>
            <description><![CDATA[Over the past few years, a bunch of web-based marketplaces have gotten popular – Etsy, Kickstarter, AirBnb, to name a few. Many of these…]]></description>
            <link>https://cdixon.org/2011/12/19/an-internet-of-people</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/19/an-internet-of-people</guid>
            <pubDate>Mon, 19 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Over the past few years, a bunch of web-based marketplaces have gotten popular – Etsy, Kickstarter, AirBnb, to name a few. Many of these business ideas had been tried before but are succeeding only now.&lt;/p&gt;
&lt;p&gt;When a trend like this emerges, it’s always interesting to ask “&lt;a href=&quot;http://cdixon.org/2010/11/07/timing-your-startup/&quot;&gt;why now&lt;/a&gt;?” For example, for almost a decade, entrepreneurs tried to create video sharing services like YouTube, but only succeeded when certain key dependencies – broadband, digital video cameras, a version of Flash that “just worked” – became widespread.&lt;/p&gt;
&lt;p&gt;I asked &lt;a href=&quot;http://roelofbotha.tumblr.com/&quot;&gt;Roelof Botha&lt;/a&gt; the “why now” question regarding web-based marketplaces. He said something I thought was really interesting: marketplaces depend on trust, and trust requires knowing the reputation of a prospective counterparty. Today, for the first time, you can get background information on almost any prospective counterparty by searching Google, Facebook etc. Or put more simply: we finally have an internet of people.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Forces that affect whether a large company will buy your product (according to Marc Andreessen)]]></title>
            <description><![CDATA[From Marc Andreessen’s “Moby Dick Theory of Big Companies“: You can count on there being a whole host of impinging forces that will affect…]]></description>
            <link>https://cdixon.org/2011/12/14/forces-that-affect-whether-a-large-company-will-buy-your-product-according-to-marc-andreessen</link>
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            <pubDate>Wed, 14 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;From Marc Andreessen’s “&lt;a href=&quot;http://pmarca-archive.posterous.com/the-pmarca-guide-to-startups-part-5-the-moby&quot;&gt;Moby Dick Theory of Big Companies&lt;/a&gt;“:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;You can count on there being a whole host of impinging forces that will affect the dynamic of decision-making on any issue at a big company.&lt;/p&gt;
&lt;p&gt;The consensus building process, trade-offs, quids pro quo, politics, rivalries, arguments, mentorships, revenge for past wrongs, turf-building, engineering groups, product managers, product marketers, sales, corporate marketing, finance, HR, legal, channels, business development, the strategy team, the international divisions, investors, Wall Street analysts, industry analysts, good press, bad press, press articles being written that you don’t know about, customers, prospects, lost sales, prospects on the fence, partners, this quarter’s sales numbers, this quarter’s margins, the bond rating, the planning meeting that happened last week, the planning meeting that got cancelled this week, bonus programs, people joining the company, people leaving the company, people getting fired by the company, people getting promoted, people getting sidelined, people getting demoted, who’s sleeping with whom, which dinner party the CEO went to last night, the guy who prepares the Powerpoint presentation for the staff meeting accidentally putting your startup’s name in too small a font to be read from the back of the conference room…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Man, I wish Marc still blogged.  (ht &lt;a href=&quot;http://cdixon.org/2011/11/28/business-development-the-goldilocks-principle/#comment-375385575&quot;&gt;saul lieberman&lt;/a&gt;)&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Later-stage rounds and “setting the bar too high”]]></title>
            <description><![CDATA[I recently had a number of conversations with CEOs of later-stage startups (generating significant revenue) that went something like this…]]></description>
            <link>https://cdixon.org/2011/12/13/later-stage-rounds-and-setting-the-bar-too-high</link>
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            <pubDate>Tue, 13 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I recently had a number of conversations with CEOs of later-stage startups (generating significant revenue) that went something like this. They want to raise more money, and VCs are offering them money at a high valuation. The CEO is worried that taking money at that valuation will “set the bar too high” and make it difficult to sell the company – if the time comes when he/she thinks it makes sense to sell – at a price that isn’t a significant multiple of that valuation.&lt;/p&gt;
&lt;p&gt;These CEOs are worrying too much. VCs know what they are doing and almost always invest with a financial instrument – preferred shares – that protects them even when the valuation is very high. **Preferred shares behave like a stock on the upside and a bond on the downside.  **The only way investors actually lose money is if the company is sold for less than the amount of money raised (which is generally significantly lower than the valuation).&lt;/p&gt;
&lt;p&gt;Here is what the payout function looks like for common stock (for example, what you get when you buy stocks in public markets):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-12-13-at-1-39-17-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 392px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 74.23469387755102%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 12 13 at 1 39 17 pm&quot;
        title=&quot;Screen shot 2011-12-13 at 1.39.17 PM&quot;
        src=&quot;/static/aa98d4f29458f83ba6762ca34901d51d/2f47c/screen-shot-2011-12-13-at-1-39-17-pm.png&quot;
        srcset=&quot;/static/aa98d4f29458f83ba6762ca34901d51d/924ad/screen-shot-2011-12-13-at-1-39-17-pm.png 170w,
/static/aa98d4f29458f83ba6762ca34901d51d/f570f/screen-shot-2011-12-13-at-1-39-17-pm.png 341w,
/static/aa98d4f29458f83ba6762ca34901d51d/2f47c/screen-shot-2011-12-13-at-1-39-17-pm.png 392w&quot;
        sizes=&quot;(max-width: 392px) 100vw, 392px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-12-13 at 1.39.17 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;And here is what the payout function looks like for preferred shares:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-12-13-at-1-39-25-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 410px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 67.8048780487805%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAOCAIAAACgpqunAAAACXBIWXMAAAsTAAALEwEAmpwYAAABRUlEQVQoz31T2YqDQBD0/z9K8MUXQRFPjAY8VldF0CjGO6mkk3GIm60H6e7p6qNmFG4ctm3jXdd1FUWxbVtV1fP5zCeQIdy+I47jIAjCMPQ8ryiKY8JOXpYFeT8c0jTNsuz3CRgsDts0TeTv5GEYcABjXdeNA+/CpolkWZ7nWaAokdHhuPmHIsjxfb8sS+QLLBUO5vlGpmDTNIZhUInr9SqgjKZpiE7TRGSa7QhUBxNfIj8653kOMcHkO0MMrLS8AZuYl8uFCr3I5IzjiFuFvHTgOA4u1nsD051Op7qu2VwvMhOs73vIUFWVJElJklAhQtu2qBVFEQhMtr0zgNlwe+iA2sMT7IgimI51woIPwVgGzkRRpDdAQHP2QsjFKQ2FRSDT5/NEE1IIHbAFHrZlWXiksBFhKtLmwj8/BvF1Xe+67s/LvwO2CyDFyLzuIAAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 12 13 at 1 39 25 pm&quot;
        title=&quot;Screen shot 2011-12-13 at 1.39.25 PM&quot;
        src=&quot;/static/2d7ec38c20eddf2b18f63fdcb729faf4/9fff5/screen-shot-2011-12-13-at-1-39-25-pm.png&quot;
        srcset=&quot;/static/2d7ec38c20eddf2b18f63fdcb729faf4/924ad/screen-shot-2011-12-13-at-1-39-25-pm.png 170w,
/static/2d7ec38c20eddf2b18f63fdcb729faf4/f570f/screen-shot-2011-12-13-at-1-39-25-pm.png 341w,
/static/2d7ec38c20eddf2b18f63fdcb729faf4/9fff5/screen-shot-2011-12-13-at-1-39-25-pm.png 410w&quot;
        sizes=&quot;(max-width: 410px) 100vw, 410px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-12-13 at 1.39.25 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;So, to take a concrete example, Dropbox &lt;a href=&quot;http://articles.businessinsider.com/2011-08-30/tech/30056381_1_investors-term-sheets-rumors&quot;&gt;reportedly&lt;/a&gt; raised their last financing at a $4B valuation*. If you think of this as a public market valuation of common stock, you might think this means the VCs are betting $4B is the “fair value” of the company, and will lose money if Dropbox’s exit price ends up being less than $4B.  But in reality, assuming the standard preferred structure, the last round investors’ payout is as follows :&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;em&gt;Scenario 1&lt;/em&gt;: Dropbox exits for greater than $4B ==&gt; investors get a positive return (specifically, exit price divided by $4B)&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Scenario 2:&lt;/em&gt; Dropbox exits for between $257M (&lt;a href=&quot;http://www.crunchbase.com/company/dropbox&quot;&gt;total money raised&lt;/a&gt;) and $4B ==&gt; investors get their money back (possibly more if there is a preferred dividend)&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Scenario 3&lt;/em&gt;: Dropbox exits for less than $257M ==&gt; investors lose money&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;If reports are true that Dropbox is profitable and generating &gt;$100M in revenue, then scenario 3 – the money losing scenario – is extremely unlikely.&lt;/p&gt;
&lt;p&gt;Will investors be thrilled with scenario 2?  No, but they are pros who understand the risks they are taking.&lt;/p&gt;
&lt;p&gt;Going back to the entrepreneur’s perspective, in what sense is a high valuation “setting the bar high”?  In the preferred share payout model, there are two “bars”:  money raised and valuation.  I don’t see any reason why entrepreneurs shouldn’t be as aggressive as possible on valuation, especially if they are confident they won’t end up in scenario 3.&lt;/p&gt;
&lt;p&gt;An important point to keep in mind is that, in order to maintain flexibility, entrepreneurs shouldn’t give new investors the ability to block an exit or new financings. Investors can get this block in one of two ways – explicit blocking rights (under the “control provisions” section of a VC term sheet) or by controlling the board of directors. These are negotiable terms and startups with momentum should be very careful about giving them away.&lt;/p&gt;
&lt;p&gt;* Note that I have no connection to Dropbox so am just assuming standard deal structure and basing numbers on public reports. I am making various simplifying assumptions such as not distinguishing between pre-money and post-money valuation.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Three types of acquisitions]]></title>
            <description><![CDATA[There are three types of technology acquisitions: - Talent. When the acquirer just wants the team (generally just engineers and sometimes…]]></description>
            <link>https://cdixon.org/2011/12/10/three-types-of-acquisitions</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/10/three-types-of-acquisitions</guid>
            <pubDate>Sat, 10 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There are three types of technology acquisitions:&lt;/p&gt;
&lt;p&gt;- Talent. When the acquirer just wants the team (generally just engineers and sometimes designers). As a rule of thumb, these acquisitions are priced at approximately $1M/engineer.&lt;/p&gt;
&lt;p&gt;- Tech: When the acquirer wants the technology along with the team. Generally the prices for these acquisitions are significantly higher than talent acquisitions. Sometimes they are even in the hundreds of millions of dollars for fairly small teams (e.g. Siri). The calculation the acquirer uses to price tech acquisitions is usually “buy vs build”. An important component in this calculation is not just the actual cost to build the technology but the opportunity cost of the time it would take them to do so.&lt;/p&gt;
&lt;p&gt;- Business: When the company is either bought on a financial basis (the acquisition is “accretive”) or bought based on non-financial but highly defensible assets (Google buying YouTube which had minimal revenue at the time but a huge network of producers and consumers of video).&lt;/p&gt;
&lt;p&gt;As large companies mature they move from doing just talent acquisitions to doing talent and tech acquisitions to eventually doing all three types of acquisitions. Usually it takes a startup beating the large company in an important area for the large company to realize the necessity of business acquisitions. For example, Google seemed to dramatically change its attitude when YouTube crushed Google Video. Eventually every large company has a moment like this.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Technology and job creation]]></title>
            <description><![CDATA[In response to my recent post “Making industries ‘garage ready’ for startups“, venture capitalist Jordan Elpern-Waxman made an interesting…]]></description>
            <link>https://cdixon.org/2011/12/08/technology-and-job-creation</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/08/technology-and-job-creation</guid>
            <pubDate>Thu, 08 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In response to my recent post “&lt;a href=&quot;http://cdixon.org/2011/12/06/making-industries-garage-ready-for-startups/&quot;&gt;Making industries ‘garage ready’ for startups&lt;/a&gt;“, venture capitalist &lt;a href=&quot;http://about.me/jelpern&quot;&gt;Jordan Elpern-Waxman&lt;/a&gt; made an interesting comment:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;If I understand correctly, “garage-ready” essentially means separating design from manufacturing, i.e. “creativity-intensive” processes from capital-intensive ones. This may be an inevitable result of industry maturation and specialization, but there is a downside to it, at least for the so called “developed” nations. The result of differential costs for commodity labor, the fungibility and liquidity of capital, and the ease of transmitting both human and machine-readable information across arbitrary distances, means that capital-intensive processes – i.e. making things – migrate to locations with lower total cost of operations (which, Germany excepted, tend to be locations with lower labor costs). Another way of saying this is that nothing is fabless; the foundry is merely outsourced and moved to a cheaper location. This reality is great for the creative class and for the lower cost locations, but it’s less happy for the residents of the higher class locations that are not so lucky to be part of the creative class.&lt;/p&gt;
&lt;p&gt;I’m not ready to draw the conclusion that this is the cause of the economic inequality in the US and malaise across Europe and Japan, but there definitely appears to be some correlation. Again, I don’t know if these results of the “garagification” of an industry can be reversed or mitigated in the name of societal stability, but if anyone can find a way to do it it would be the creative class. Unfortunately, because techies and entrepreneurs are solidly part of the creative class and perhaps even *the* primary beneficiaries of the separation of design and manufacturing, we generally avoid acknowledging or discussing the negative aspects of this trend.&lt;/p&gt;
&lt;p&gt;Note that I said “reversed or mitigated.” Trying to reverse or stop these trends is probably a quixotic goal, but perhaps mitigation is in fact possible. For example, is it possible to create a country in which the entire labor force is “creative”? I myself have trouble seeing how such a possibility could be made real, but I’d like to see more intellectuals and entrepreneurs spend some brainpower on the question.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It is true that new technologies often lead, in the short term, to lower wages and fewer jobs. &lt;a href=&quot;http://craigslist.com&quot;&gt;Craigslist&lt;/a&gt;, for example, has about &lt;a href=&quot;http://www.craigslist.org/about/factsheet&quot;&gt;30 employees&lt;/a&gt; yet, by replacing the classified ad industry, eliminated many thousands of jobs (local newspaper reporters, classified ad salespeople, etc). The same could be said for almost every popular website.&lt;/p&gt;
&lt;p&gt;On the flip side, new technologies have driven down prices (Walmart and Amazon), led to massive increases in information productivity (Google and Wikipedia), and created new income sources (eBay and Craigslist). Greater productivity and lower prices at least partly compensate for part-time jobs and lower wages.&lt;/p&gt;
&lt;p&gt;Jordan is right that these are questions we – the technology community – should spend more time discussing.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Growth curves of startups]]></title>
            <description><![CDATA[Pick whatever metric you want for gauging the success of a particular startup: profits, revenues, pageviews, etc. A graph I’d love to see is…]]></description>
            <link>https://cdixon.org/2011/12/07/growth-curves-of-startups</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/07/growth-curves-of-startups</guid>
            <pubDate>Wed, 07 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Pick whatever metric you want for gauging the success of a particular startup: profits, revenues, pageviews, etc. A graph I’d love to see is those metrics, graphed over time, for a wide variety of startups. From my experience, you’d be surprised how often those graphs show sudden growth. Something happens in the world (an “exogenous shock”) and the startup suddenly takes off.&lt;/p&gt;
&lt;p&gt;I remember first observing this when I worked at &lt;a href=&quot;http://bvp.com/&quot;&gt;Bessemer&lt;/a&gt;. For example, there was a startup that supplied services to video websites. For years, the company soldiered along, barely growing. Then, suddenly, YouTube blew up and this company took off along with it.&lt;/p&gt;
&lt;p&gt;As a founder, these exogenous shocks are out of your control, but you can 1) understand what exogenous shocks you depend on, 2) try to guess when those shocks will hit, 3) manage your runway so you survive long enough for them to hit.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Always have 18 months of cash in the bank]]></title>
            <description><![CDATA[I was once told by an experienced entrepreneur (I can’t remember who) to always have at least 18 months of cash in the bank. The logic…]]></description>
            <link>https://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank</guid>
            <pubDate>Tue, 06 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I was once told by an experienced entrepreneur (I can’t remember who) to always have at least 18 months of cash in the bank. The logic behind this is: 1) as a rule of thumb it takes 3 months to raise money, 2) building/marketing/selling technology always takes longer than you think.  Subtracting 3 months for fundraising and 3 months for things taking longer than expected, this gives you 12 months to execute your plan. (Also you never want to raise money “with your back against the wall” – when you are near the end of your runway.)&lt;/p&gt;
&lt;p&gt;More adventurous entrepreneurs might argue 18 months is too conservative. It’s true that following the 18 month rule can be extra dilutive. At SiteAdvisor, we raised our Series A about three months before we were acquired. So we gave up equity for cash that we never spent. But in retrospect, given what we knew at the time, I think it was the right decision.&lt;/p&gt;
&lt;p&gt;The question of when to raise money is one of the few times that entrepreneurs and early-stage investors have somewhat divergent economic interests. If you control a large investment fund, you always have the option to extend a company’s runway. The entrepreneur doesn’t have this option. I’ve even heard some entrepreneurs whisper about Machiavellian VCs who deliberately try to get you to the end of your runway so they can negotiate harder. I think this is a bit of a conspiracy theory. Almost all VCs I know care primarily about the success of their companies and not about extracting every last point of equity.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Making industries “garage ready” for startups]]></title>
            <description><![CDATA[One of the most important events in the history of modern computing was the advent of “fabless” (“fabrication-less”) semiconductor companies…]]></description>
            <link>https://cdixon.org/2011/12/05/making-industries-garage-ready-for-startups</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/05/making-industries-garage-ready-for-startups</guid>
            <pubDate>Mon, 05 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the most important events in the history of modern computing was the advent of &lt;a href=&quot;http://en.wikipedia.org/wiki/Fabless_semiconductor_company&quot;&gt;“fabless”&lt;/a&gt; (“fabrication-less”) semiconductor companies.  The &lt;a href=&quot;http://cb.hbsp.harvard.edu/cb/product/609001-PDF-ENG&quot;&gt;story&lt;/a&gt; of fabless semis is similar to the recent history of internet startups: various forces led to an order-of-magnitude reduction of startup costs, which then led to a surge of innovation.&lt;/p&gt;
&lt;p&gt;Before the 1980s, if you wanted to invent a new semiconductor, you had to both design and manufacture it. This meant you had to build a large manufacturing plant, something only large companies like Intel, Motorola, and IBM could afford. Hence, semiconductor design was generally too expensive for venture-backed startups.&lt;/p&gt;
&lt;p&gt;In the 1979, two computer scientists published a &lt;a href=&quot;http://www.amazon.com/Introduction-VLSI-Systems-Carver-Mead/dp/0201043580&quot;&gt;seminal book&lt;/a&gt; that argued for the separation semiconductor design and manufacturing. Followed by years of investment by DARPA and others, an industry emerged where chip designers used software (“&lt;a href=&quot;http://en.wikipedia.org/wiki/Electronic_design_automation&quot;&gt;EDA&lt;/a&gt; software”) to design and test semiconductors, and then sent standardized specifications to “foundries” that did the manufacturing (most of which were located in Taiwan – the largest in the world to this day is &lt;a href=&quot;http://en.wikipedia.org/wiki/TSMC&quot;&gt;Taiwan Semiconductor Manufacturing Company&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;This dramatically lowered the cost of starting semiconductor design shops, and in turn led to a massive wave of startup innovation. These startups designed chips for cell phones (Qualcomm), Wifi (Atheros), computer graphics (Nvidia), and much more.  Most were funded by venture capitalists and located in Silicon Valley.&lt;/p&gt;
&lt;p&gt;Tech sectors tend to get really creative when they become “garage ready”:  a Steve Jobs and Steve Wozniak, or a Larry Page and Sergey Brin, can, with very little capital, change the world. It happened with semis in the 80s and happened in the 90s and 2000s for internet companies.&lt;/p&gt;
&lt;p&gt;Eventually every vertically integrated, capital-intensive sector becomes garage ready. Someday, for example, we will have “fabless” gadget design and biotech research, enabling a small shop in Brooklyn or SoMa to create an iPhone killer or next-generation cancer drug.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Why is enterprise tech so far behind consumer tech? Because it can be.]]></title>
            <description><![CDATA[Brian Manning put it nicely in a comment to my post yesterday about enterprise software: In my opinion, enterprise technology is WAY behind…]]></description>
            <link>https://cdixon.org/2011/12/04/why-is-enterprise-tech-so-far-behind-consumer-tech-because-it-can-be</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/04/why-is-enterprise-tech-so-far-behind-consumer-tech-because-it-can-be</guid>
            <pubDate>Sun, 04 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;a href=&quot;http://scalable.typepad.com/&quot;&gt;Brian Manning&lt;/a&gt; put it nicely in a &lt;a href=&quot;http://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users/#comment-378654383&quot;&gt;comment&lt;/a&gt; to my post yesterday about enterprise software:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In my opinion, enterprise technology is WAY behind consumer technology for one reason: because it can be.&lt;/p&gt;
&lt;p&gt;In a [B2B] transaction, one good salesperson (the “seller”) only has to sell one person (the “buyer”) on the value of the technology. Once the product is sold, the buyer forces their 50,000 employees to use that technology whether they like it or not. A good salesperson with a good deck can do this fairly reliably.&lt;/p&gt;
&lt;p&gt;And a good account manager can typically retain the client for a while; employees usually get used to the product and rarely complain enough for the buyer to cancel the contract and force the seller to improve the product. As a result, an enterprise product can suck and still flourish.&lt;/p&gt;
&lt;p&gt;With a B2C product, this is much, much more difficult. The seller has to sell 50,000 individual “users”, one by one, on the value of the product without the luxury of a face to face meeting or 18 holes on the golf course. The B2C model forces the seller’s product to “sell itself”. As a result, a consumer product can’t suck if it wants to flourish. It has be good. Much better than the enterprise product needs to be.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Fortunately, as I discussed &lt;a href=&quot;http://cdixon.org/2011/12/04/the-enterprise-buyers-versus-users/&quot;&gt;yesterday&lt;/a&gt;, trends like cloud-based delivery (aka SaaS) are starting to align the interests of enterprise users and buyers.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The enterprise: buyers versus users]]></title>
            <description><![CDATA[Why does most enterprise technology feel like it is a decade behind consumer technology? For the same reason our health care system is…]]></description>
            <link>https://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users</guid>
            <pubDate>Sat, 03 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Why does most enterprise technology feel like it is a decade behind consumer technology? For the same reason our health care system is broken. The “user” isn’t the same person as the “buyer”. In enterprise software the user is generally a non-IT person but the buyer is usually, at least in part, the IT department.* (In healthcare the “user” is the patient and the “buyer” is the doctor or insurance company).&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;https://news.ycombinator.com/item?id=3308398&quot;&gt;SAP bought SuccessFactors&lt;/a&gt; today, in a big win for “cloud” based enterprise software. The cloud might sound like a buzzword but is in fact a vastly superior architecture, not because it makes installation and updates easier (although that’s good too), but because it starts to remove IT from the purchasing process, meaning the user and the buyer are, increasingly, the same person.&lt;/p&gt;
&lt;p&gt;* A corollary to this is that IT-related enterprise software, i.e. infrastructure, is generally pretty good.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[“Otherwise do something else”]]></title>
            <description><![CDATA[I remember back when I started my first company, a friend said to me “get ready to have a knot in your stomach and feel nauseous for years…]]></description>
            <link>https://cdixon.org/2011/12/01/otherwise-do-something-else</link>
            <guid isPermaLink="false">https://cdixon.org/2011/12/01/otherwise-do-something-else</guid>
            <pubDate>Thu, 01 Dec 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I remember back when I started my first company, a friend said to me “get ready to have a knot in your stomach and feel nauseous for years.”  I laughed it off then, but it was probably the most accurate advice I’ve ever gotten.&lt;/p&gt;
&lt;p&gt;I haven’t slept well for years. Even now with my last startup sold, I stay up at night thinking about how to change the website, make payroll, raise more money, etc.&lt;/p&gt;
&lt;p&gt;In 1995, I was a graduate student studying philosophy at Columbia.  I was also doing computer programming on the side.  The programming was going well and I was getting some good job offers. I happened to get to have dinner with the philosopher Daniel Dennett, and I asked him what he thought I should do with my career.  He said: “If there is absolutely no way you can imagine being happy except studying philosophy, study philosophy. Otherwise do something else.”&lt;/p&gt;
&lt;p&gt;I’d say the same thing about starting companies.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Business development: the Goldilocks principle]]></title>
            <description><![CDATA[Background: At Hunch, we switched our focus (“pivoted“) about 14 months ago from B2C to B2B. Over that time, we pitched over 500 potential…]]></description>
            <link>https://cdixon.org/2011/11/28/business-development-the-goldilocks-principle</link>
            <guid isPermaLink="false">https://cdixon.org/2011/11/28/business-development-the-goldilocks-principle</guid>
            <pubDate>Mon, 28 Nov 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;em&gt;Background: At Hunch, we switched our focus (“&lt;a href=&quot;http://cdixon.org/2010/06/15/pivoting/&quot;&gt;pivoted&lt;/a&gt;“) about 14 months ago from B2C to B2B. Over that time, we pitched over 500 potential partners, trying to get them to use and eventually pay for our recommendation services. This process had its ups and downs, but eventually ended well when – after 8 months of grueling diligence – eBay decided to &lt;a href=&quot;http://blog.hunch.com/?p=56124&quot;&gt;acquire&lt;/a&gt; Hunch in what I expect will be a successful outcome for both companies. During this time, I got a crash course in B2B sales/business development. Here is the first in a series of blog posts based on what I learned.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Somewhat counterintuitively, the biggest problem we encountered when pitching Hunch technology to potential partners wasn’t that it &lt;em&gt;wasn’t&lt;/em&gt; interesting or useful to them, but that it was so interesting and useful that they considered it “strategic” or “core” and thus felt they needed to own and not rent it. The situation reminded me of the “&lt;a href=&quot;http://en.wikipedia.org/wiki/Goldilocks_principle&quot;&gt;Goldilocks principle&lt;/a&gt;” sometimes referred to in scientific contexts:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The &lt;strong&gt;Goldilocks principle&lt;/strong&gt; states that something must fall within certain margins, as opposed to reaching extremes. It is used, for example, in the &lt;a href=&quot;http://en.wikipedia.org/wiki/Rare_Earth_hypothesis&quot; title=&quot;Rare Earth hypothesis&quot;&gt;Rare Earth hypothesis&lt;/a&gt; to state that a &lt;a href=&quot;http://en.wikipedia.org/wiki/Planet&quot; title=&quot;Planet&quot;&gt;planet&lt;/a&gt; must neither be too far away from, nor too close to the &lt;a href=&quot;http://en.wikipedia.org/wiki/Sun&quot; title=&quot;Sun&quot;&gt;sun&lt;/a&gt; to support life.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Basically, if your technology is “too hot” – or, in business-speak, “strategic” or “core” – then there are three likely outcomes:&lt;/p&gt;
&lt;p&gt;1. The potential partner turns you down because they decide to build a similar product themselves. This happened to us a number of times. I think part of the reason was that there was a lot of market buzz around “big data” and machine learning which lead to the perception – rightly or wrongly – that those capabilities needed to be owned and not rented.&lt;/p&gt;
&lt;p&gt;2. The potential partner says yes because your assets are so defensible they can’t replicate them. I’m sure Zynga considers the social graph strategic but at least for now they have no choice but to partner with Facebook to access it. It is very rare for startups to have this kind of leverage, but ones that do are extremely valuable.&lt;/p&gt;
&lt;p&gt;3. The potential partner wants to own what you do, but thinks you have a sufficiently superior team and technology that acquiring you instead of replicating you makes more sense. This is only possible if the partner is large enough to acquire you and has a philosophy consistent with acquiring versus building everything in-house. (A common tech business term is “NIH” which stands for “Not Invented Here”. It refers to a set of companies that consider anything developed outside of their offices technologically inferior).&lt;/p&gt;
&lt;p&gt;At the other extreme, if your technology is “too cold” – perceived as not useful by potential partners – you’re going to have a lot of frustrating meetings.  In this case, it is probably wise to reconsider whether there is actually demand for your product.&lt;/p&gt;
&lt;p&gt;To build a long-term sustainable business, the best place to be is “just right” – useful to lots of partners but not so strategic that they are unwilling to rent it. This is where I wanted Hunch to be but we never got there.  Most companies I know use externally developed products (commercial or open source) for databases, web servers, web analytics, email delivery, payment processors, etc. These are often highly competitive markets but the companies that win in these markets tend to become large and independently sustainable. These “just right” companies – to extend the astronomy analogy – are the planets that support life.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some lessons learned]]></title>
            <description><![CDATA[Note: Google was kind enough to invite me to give a short talk at their Zeitgeist conference earlier this week. It was a really interesting…]]></description>
            <link>https://cdixon.org/2011/09/28/some-lessons-learned</link>
            <guid isPermaLink="false">https://cdixon.org/2011/09/28/some-lessons-learned</guid>
            <pubDate>Wed, 28 Sep 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;em&gt;Note: Google was kind enough to invite me to give a short talk at their Zeitgeist conference earlier this week. It was a really interesting conference and I got a chance to meet a lot of people I admire. For my talk, I decided to use material from some of my blog posts over the years that I thought might appeal to a broader audience. Unfortunately, I was still recovering from a nastly cold/flu so I didn’t deliver the talk as well as I’d like.  Below is the text.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Today, I wanted to talk about some of the most important lessons I’ve learned over the years from my experiences as an investor and entrepreneur.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;1. If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;My most humbling and educational career experience was when I was starting out in the tech world.  I applied to literally hundreds of jobs:  low-level VC roles, startup jobs, and various positions at big tech companies.  I had an unusual background: I was a philosophy undergrad and a self-taught programmer. I got rejected from every single job I applied to.&lt;/p&gt;
&lt;p&gt;The reason this experience was so useful was that it helped me to develop a thick skin.  I came to realize that employers weren’t really rejecting me as a person or on my potential – they were rejecting a resume.  As the process became depersonalized, I became bolder in my tactics. Eventually, I landed a job that led to my first startup getting funded.&lt;/p&gt;
&lt;p&gt;One of the great things about looking for a job is that your payoff is almost entirely a max function – the best of all outcomes – not an average. This is also generally true for lots of activities startups do: raising money, creating partnerships, hiring, marketing and so on.&lt;/p&gt;
&lt;p&gt;So, every day – to this day – I make it a point of trying something new and ambitious and getting rejected.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;2. Don’t climb the wrong hill&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;I spend a lot of time trying to recruit people to startups, and I’m surprised how often I see smart, ambitious people who get stuck in fields they don’t like because they sense they are making incremental, day-to-day progress.&lt;/p&gt;
&lt;p&gt;I think a good analogy for escaping this trap can be found in computer science, in what are known as hill climbing algorithms. Imagine a landscape with hills of varying heights.  You are dropped randomly somewhere on the landscape. How do you find the highest point?&lt;/p&gt;
&lt;p&gt;The lure of the current hill is strong.  There is a natural human tendency to make the next step an upward one.  People fall for a common trap highlighted by behavioral economists:  they tend to systematically overvalue near term over long term rewards.&lt;/p&gt;
&lt;p&gt;This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.&lt;/p&gt;
&lt;p&gt;The lesson from computer science is: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;3. The next big thing will start out looking like a toy&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;A majority of the top internet companies a decade ago are barely in existence today.  How did this happen?  These companies weren’t complacent – they were run by smart executives who were constantly aware that they could lose their lead.&lt;/p&gt;
&lt;p&gt;The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a toy.  This is one of the main insights of Clay Christensen’s “disruptive technology” theory, which has been widely studied but I think is still rarely applied because it is so counter-intuitive to conventional management practices.&lt;/p&gt;
&lt;p&gt;Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” their users’ needs. The first telephone could only carry voices a mile or two. The leading incumbent of the time, Western Union, chose not to acquire telephone technology because they didn’t see how it could be useful to businesses and railroads – their best customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve. The same was true of how mainframe companies viewed the PC, and how modern telecom companies viewed Skype.&lt;/p&gt;
&lt;p&gt;The list of top internet companies in 10 years will look very different than that same list does today. And the new ones on the list will be companies that snuck by the incumbents because people dismissed them as toys.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;4. Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The Internet has gone through fits and starts – a bubble, a crash, and now a revival.  Pundits are speculating that another crash is coming. Regardless of what happens in the near term, what we do know is that every year we will continue to see more and more industries succumb to the transformational power of the Internet.&lt;/p&gt;
&lt;p&gt;Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV &amp;#x26; movies, real estate, politics &amp;#x26; government. Soon to be transformed: healthcare, education, and energy, among others.&lt;/p&gt;
&lt;p&gt;Thus far the US has led Internet innovation. There are things the US can do to keep this lead, including: exporting the entrepreneurial ethos of Silicon Valley to the rest of the country, and allowing talented people to go where their skills are most needed – for example by changing US immigration policies.&lt;/p&gt;
&lt;p&gt;Most importantly, we have too many people pursuing careers in banking, law and consulting. I personally encounter this bias all the time when I go to college campuses to recruit for startups. We need to convince the upcoming generation to innovate and take risks in sectors that have a direct impact on the quality of peoples’ lives.&lt;/p&gt;
&lt;p&gt;So my advice is:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;get rejected more&lt;/li&gt;
&lt;li&gt;climb the right hill&lt;/li&gt;
&lt;li&gt;create an amazing toy&lt;/li&gt;
&lt;li&gt;grow that toy into something big that transforms an important industry&lt;/li&gt;
&lt;/ol&gt;</content:encoded>
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            <title><![CDATA[Owning equity in your company should be as common as owning equity in your home]]></title>
            <description><![CDATA[What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about…]]></description>
            <link>https://cdixon.org/2011/09/12/owning-equity-in-your-company-should-be-as-common-as-owning-equity-in-your-home</link>
            <guid isPermaLink="false">https://cdixon.org/2011/09/12/owning-equity-in-your-company-should-be-as-common-as-owning-equity-in-your-home</guid>
            <pubDate>Mon, 12 Sep 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about things common, or only so much as falls to each individually. – Aristotle &lt;a href=&quot;http://www.cato.org/special/ownership_society/boaz.html&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;A major policy goal of capitalist countries in the 20th century was to encourage home ownership. It is widely believed that owners take better care of their homes than renters as they have much more at stake financially. There is also &lt;a href=&quot;http://www.realtor.org/Research.nsf/files/05%20Social%20Benefits%20of%20Stable%20Housing.pdf/$FILE/05%20Social%20Benefits%20of%20Stable%20Housing.pdf&quot;&gt;evidence&lt;/a&gt; that home owners are happier, healthier, and participate more in civic and political life.&lt;/p&gt;
&lt;p&gt;The desire to create an “&lt;a href=&quot;http://en.wikipedia.org/wiki/Ownership_society&quot;&gt;ownership society&lt;/a&gt;” led to some smart policy decisions like the mortgage tax deduction and some bad decisions like hazardously low interest rates that contributed to the housing bubble. Home ownership is a noble goal even if home ownership fueled by excessive debt can be disastrous.&lt;/p&gt;
&lt;p&gt;Entrepreneurs figured out a long time ago that the benefits of having equity in your company are similar to the benefits of having equity in your house. Silicon Valley expanded this concept by making it standard to grant equity to non-founder employees. It’s no coincidence that Silicon Valley continues to innovate and create jobs while the rest of the economy is stagnant.&lt;/p&gt;
&lt;p&gt;Some people think we are in a startup bubble, and that once the bubble bursts people will run back to the supposed safety of non-startup jobs. I’d prefer to think we are at the beginning of a movement to create a true ownership society, where people own stakes not just in their space but also in their time.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Do you want to sell sugar water or do you want to change the world?]]></title>
            <description><![CDATA[“Do you want to sell sugar water for the rest of your life or come with me and change the world?” – Steve Jobs I sometimes wish that instead…]]></description>
            <link>https://cdixon.org/2011/08/28/do-you-want-to-sell-sugar-water-or-do-you-want-to-change-the-world</link>
            <guid isPermaLink="false">https://cdixon.org/2011/08/28/do-you-want-to-sell-sugar-water-or-do-you-want-to-change-the-world</guid>
            <pubDate>Sun, 28 Aug 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;“Do you want to sell sugar water for the rest of your life or come with me and change the world?” – Steve Jobs&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I sometimes wish that instead of working on internet and software projects, I worked on cleantech or biotech projects. That way, when I came home at night, I’d know that I had literally spent my day trying to cure cancer or prevent global warming.  But information technology is what I know, and it’s probably too late for me to learn a new field from scratch.&lt;/p&gt;
&lt;p&gt;That doesn’t mean information technology can’t improve people’s lives. Google’s search engine helps people find information, which, for example, makes cancer and cleantech researchers more productive. Skype allows companies to collaborate remotely, and connects people with friends and family around the world. In the area of information technology, we create infrastructure and hope that people use it for more good than bad.&lt;/p&gt;
&lt;p&gt;That said, the best entrepreneurs seem to follow a path of increasing gravitas. Scott Heiferman started out selling online ads and is now creating new communities. Jack Dorsey created Twitter and is now democratizing payments so sole proprietors can compete on a level playing field with large companies. Elon Musk started with online payments and is now developing electric cars and space programs.&lt;/p&gt;
&lt;p&gt;Founders of large companies sometimes also follow the path of increasing gravitas. Google is developing new energy technologies, self-driving cars and other world-changing technologies. Bill Gates devotes almost all of his time and money to charity.&lt;/p&gt;
&lt;p&gt;The tech press is preoccupied with investments, trends, exits, and other “inside baseball” topics. But these are all means to an end. Investments provide fuel for entrepreneurs to convert ideas into products. Trends shape the terrain that entrepreneurs navigate. Exits provide financial incentives for investors and entrepreneurs.&lt;/p&gt;
&lt;p&gt;Tim O’Reilly &lt;a href=&quot;http://www.informationweek.com/blog/229209677&quot;&gt;says&lt;/a&gt; that entrepreneurs should try to create more value than they capture. You can make money selling people obfuscated financial products, entertaining them with mind-numbing TV shows, or selling them sugar water decorated in elegant designs.&lt;/p&gt;
&lt;p&gt;Alternatively, you can make something that matters and — if you are lucky and smart — change the world.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[What the NYC startup world needs (and doesn’t need)]]></title>
            <description><![CDATA[Here’s what I think NYC needs to become a serious, long-term startup hub: Some extremely successful startups. We need PayPals – companies…]]></description>
            <link>https://cdixon.org/2011/08/02/what-the-nyc-startup-world-needs-and-doesnt-need</link>
            <guid isPermaLink="false">https://cdixon.org/2011/08/02/what-the-nyc-startup-world-needs-and-doesnt-need</guid>
            <pubDate>Tue, 02 Aug 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Here’s what I think NYC needs to become a serious, long-term startup hub:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Some extremely successful startups. We need PayPals – companies that spin out boatloads of talented entrepreneurs and “smart money” angel investors. Big successes also reinforce the “culture of equity” that is so strong in California – the idea that owning options in a startup is the best path to financial and career success.&lt;/li&gt;
&lt;li&gt;More web product design talent. This is the scarcest talent of all (more so than engineering). NYC has perhaps the best design community in the world, but most of the designers are trained in non-web design fields (e.g. print design).  Most of the good design schools don’t emphasize web product design (some exceptions – e.g. my friend &lt;a href=&quot;http://www.zachklein.com/&quot;&gt;Zach Klein&lt;/a&gt; taught an excellent class at the &lt;a href=&quot;http://www.schoolofvisualarts.edu/&quot;&gt;School of Visual Arts&lt;/a&gt; last semester on web product design). NYU’s &lt;a href=&quot;http://itp.nyu.edu/itp/&quot;&gt;ITP&lt;/a&gt; stands out as a program that focuses on the intersection of design and technology (e.g. the Foursquare team went to school there). CMU’s &lt;a href=&quot;http://www.hcii.cmu.edu/&quot;&gt;HCI&lt;/a&gt; program and MIT’s &lt;a href=&quot;http://www.media.mit.edu/&quot;&gt;Media Lab&lt;/a&gt; are also great. Other schools need similar programs.&lt;/li&gt;
&lt;li&gt;More engineers. However, this doesn’t mean we need more engineering schools (although that wouldn’t hurt). Like Silicon Valley, NYC is populated mostly by people who moved here from other places. For the right opportunity, it isn’t hard to convince, say, recent MIT grads to move to NYC.  The problem is that NYC startups are basically unknown to students at MIT, CMU, Penn, and even (shockingly) to engineering students at NYU and Columbia (big props to &lt;a href=&quot;http://hackny.org/a/&quot;&gt;HackNY&lt;/a&gt; for trying to fix this). East Coast CS students also view startups as a much &lt;a href=&quot;http://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think/&quot;&gt;riskier path than they actually are&lt;/a&gt;. I say this having been at dozens of events with East Coast students over the last year or so talking about startups. I’m constantly amazed that most of the students simply don’t realize startups are a viable option. What we have is primarily a marketing, not a supply, problem.&lt;/li&gt;
&lt;li&gt;High-speed internet throughout all the “startup areas” of Manhattan (Flatiron, Meat Packing, Soho etc) and Brooklyn (Williamsburg, Dumbo, etc). It’s amazing that we have such a fundamental infrastructure problem in a city as advanced as NYC, but I can’t tell you how many startups I know that struggle to get working high-speed internet access that has solid uptime.&lt;/li&gt;
&lt;li&gt;More marquee tech companies opening large tech offices here. Google has something like 1500 engineers here. This adds a lot of vibrancy to the tech culture and attracts more engineering and design talent to the city.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Some things we don’t need:&lt;/p&gt;
&lt;p&gt;1. Government or university organized events that introduce entrepreneurs to other entrepreneurs. There seems to be one such event each week. Entrepreneurs are by nature very good at meeting one another and it’s a small enough community that pretty much everyone already knows each other anyways.&lt;/p&gt;
&lt;p&gt;2. Expensive projects like &lt;a href=&quot;http://www.dnainfo.com/20110719/downtown/bloomberg-pledges-100m-towards-new-engineering-science-complex&quot;&gt;big engineering universities&lt;/a&gt;. Again, the more engineers and CS programs in the US the better (even better yet we need more CS majors – which probably means more CS education in high school and earlier), but I can think of far more productive ways to spend $100M to help the NYC startup and tech world.&lt;/p&gt;
&lt;p&gt;3. Lower rents. No doubt &lt;a href=&quot;http://www.rentistoodamnhigh.org/&quot;&gt;the rents are too damn high&lt;/a&gt; and lower rents would be great. I’ve been living here since college when my room for one year was a hallway in a friend’s apartment. I sympathize with people who say this. But the idea that NYC is unaffordable on a typical startup salary is a complete myth. You can rent a decent place in a cool part of town on a typical startup salary. As to commercial space, for venture-backed startups the difference between rent in NYC and rent in other cities is generally the difference between spending, say, 3% versus 4% of your total financing on rent.&lt;/p&gt;
&lt;p&gt;4. More early-stage investment capital. There are plenty of smart angels, seed funds, and VCs who are either based here or are based elsewhere but actively invest here.&lt;/p&gt;
&lt;p&gt;Most of all what we need is for our tech and startup scene to reach critical mass (and to sustain that critical mass even if a tech downturn comes). Facebook wasn’t started in Californa and lots of future big successes will be started in all sorts of random places.  NYC needs enough tech critical mass that the next Mark Zuckerberg seriously considers relocating to NYC.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Pivoting into a new corporate structure]]></title>
            <description><![CDATA[This hasn’t happened to me, but I keep hearing stories about situations like the following: 1) startup raises a seed financing round while…]]></description>
            <link>https://cdixon.org/2011/08/01/pivoting-into-a-new-corporate-structure</link>
            <guid isPermaLink="false">https://cdixon.org/2011/08/01/pivoting-into-a-new-corporate-structure</guid>
            <pubDate>Mon, 01 Aug 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;This hasn’t happened to me, but I keep hearing stories about situations like the following: 1) startup raises a seed financing round while working on a preliminary idea, 2) founders later “pivot” into a new idea that looks more promising and/or gains traction, 3) founders decide to raise a new round of financing, 4) founders argue that the new idea is so different from the original one that it should be part of a new company, and that the original seed investors shouldn’t own any part of it.&lt;/p&gt;
&lt;p&gt;At &lt;a href=&quot;http://foundercollective.com&quot;&gt;Founder Collective&lt;/a&gt;, we think of ourselves as investing primarily in people, and only secondarily in ideas or products. I have to admit that until I heard about these situations happening, I hadn’t even conceived of the possibility of “pivots into new corporate structures”. In retrospect, I suppose it was inevitable given the founder-friendly market and the rapidly evolving venture environment.&lt;/p&gt;
&lt;p&gt;As a legal matter, assuming the founders worked on the idea on the original company’s time and/or money, the seed investors probably have a strong claim. Founders and employees normally sign “invention assignment” agreements that would make the new ideas and products property of the original company (again, these aren’t situations I’m personally involved in so I am just speculating on the specifics).  The reality is that most professional seed investors aren’t going to sue founders and will likely instead try to work out some compromise.&lt;/p&gt;
&lt;p&gt;This is not to suggest, by the way, that founders are indentured servants to investors. It is perfectly fine, if an idea isn’t working out, to wind down the company, return the remaining capital, and go off and work on new ideas. If one of those new ideas shows promise, the founders are then (legally and morally) free to form a new corporate entity and raise new financing from whomever they choose. From news reports, it sounds like this is what the Odeo team did before they pivoted to Twitter. It’s the conventional and, in my view, correct way to handle these situations.&lt;/p&gt;
&lt;p&gt;Here’s what really worries me. If it becomes a norm for founders to jettison seed investors when their company’s focus changes, seed investors who invest “primarily in people” will stop doing so. I think that would be a real shame: we’d lose an important source of capital and a lot of innovative startups wouldn’t get funded.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The downside of accelerated investment decisions]]></title>
            <description><![CDATA[There has been a lot of talk about how early-stage valuations have risen dramatically over the past few years. Financially, this is probably…]]></description>
            <link>https://cdixon.org/2011/07/28/the-downside-of-accelerated-investment-decisions</link>
            <guid isPermaLink="false">https://cdixon.org/2011/07/28/the-downside-of-accelerated-investment-decisions</guid>
            <pubDate>Thu, 28 Jul 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There has been a lot of talk about how early-stage valuations have risen dramatically over the past few years. Financially, this is probably good for founders and bad for investors. But a side effect of this frothy market is that financings are occurring much faster. It is very common for investors to get introduced to founders with the proviso that a term sheet will be signed in the next few days. As a result, founders and investors are spending very little time getting to know each other before entering into long-term business contracts.&lt;/p&gt;
&lt;p&gt;This is bad news for everyone. Most significantly, founders often give up significant control to people they won’t get along with or even might &lt;a href=&quot;http://www.sethlevine.com/wp/2011/07/beware-of-asshole-vcs&quot;&gt;end up hating&lt;/a&gt;. Having bad investors might not matter if the company executes flawlessly and the financing market stays frothy. But most companies have difficult episodes, and the financing market will eventually return to normal. Sadly, founders with bad investors will likely face punishing down rounds, key employees being indiscriminately fired, and elaborate financial shenanigans engineered to dilute founders and seed investors.&lt;/p&gt;
&lt;p&gt;“It’s only when the tide goes out that you know who’s been swimming naked.” Warren Buffet likes to say this about investors, but it applies to founders as well. Taking on a new major investor should be treated with the same gravitas as taking on a new cofounder. You can’t do it in less time than it takes to really get to know someone, which is usually weeks or months. Quick financings might seem attractive but are actually fraught with risks.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The tragedy of the anticommons]]></title>
            <description><![CDATA[Seems very relevant to today’s music industry, and potentially relevant to the internet/software industry in the near future as patent…]]></description>
            <link>https://cdixon.org/2011/07/26/the-tragedy-of-the-anticommons</link>
            <guid isPermaLink="false">https://cdixon.org/2011/07/26/the-tragedy-of-the-anticommons</guid>
            <pubDate>Tue, 26 Jul 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Seems very relevant to today’s music industry, and potentially relevant to the internet/software industry in the near future as patent lawsuits become increasingly common:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The commons leads to overuse and destruction; the anticommons leads to underuse and waste. In the cultural sphere, ever tighter restrictions on copyright and fair use limit artists’ abilities to sample and build on older works of art. In biotechnology, the explosion of patenting over the past twenty-five years—particularly efforts to patent things like gene fragments—may be retarding drug development, by making it hard to create a new drug without licensing myriad previous patents. Even divided land ownership can have unforeseen consequences. Wind power, for instance, could reliably supply up to twenty per cent of America’s energy needs—but only if new transmission lines were built, allowing the efficient movement of power from the places where it’s generated to the places where it’s consumed. Don’t count on that happening anytime soon. Most of the land that the grid would pass through is owned by individuals, and nobody wants power lines running through his back yard.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;From &lt;a href=&quot;http://www.newyorker.com/talk/financial/2008/08/11/080811ta_talk_surowiecki&quot;&gt;The Permission Problem&lt;/a&gt;, James Surowiecki, The New Yorker Magazine.  A very worthwhile read.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Thomas Jefferson on Patents]]></title>
            <description><![CDATA[If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an…]]></description>
            <link>https://cdixon.org/2011/07/16/thomas-jefferson-on-patents</link>
            <guid isPermaLink="false">https://cdixon.org/2011/07/16/thomas-jefferson-on-patents</guid>
            <pubDate>Sat, 16 Jul 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.&lt;/p&gt;
&lt;p&gt;That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.&lt;/p&gt;
&lt;p&gt;Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;- Letter from &lt;a href=&quot;http://press-pubs.uchicago.edu/founders/documents/a1_8_8s12.html&quot;&gt;Thomas Jefferson to Isaac McPherson&lt;/a&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Founder/market fit]]></title>
            <description><![CDATA[An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen calls…]]></description>
            <link>https://cdixon.org/2011/06/19/foundermarket-fit</link>
            <guid isPermaLink="false">https://cdixon.org/2011/06/19/foundermarket-fit</guid>
            <pubDate>Sun, 19 Jun 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen &lt;a href=&quot;http://web.archive.org/web/20070701074943/http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html&quot;&gt;calls&lt;/a&gt; “product/market fit”, which he defines as “being in a good market with a product that can satisfy that market”. Andreessen argues persuasively that product/market fit is “the only thing that matters for a new startup” and that ”the life of any startup can be divided into two parts: &lt;em&gt;before product/market fit&lt;/em&gt; and &lt;em&gt;after product/market fit&lt;/em&gt;.”&lt;/p&gt;
&lt;p&gt;But it takes time to reach product/market fit. Founders have to choose a market long before they have any idea whether they will reach product/market fit. In my opinion, the best predictor of whether a startup will achieve product/market fit is whether there is what David Lee &lt;a href=&quot;http://techcrunch.com/2011/06/03/svangel-peak-age-old-entrpreneurs/&quot;&gt;calls&lt;/a&gt; “founder/market fit”. Founder/market fit means the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.”&lt;/p&gt;
&lt;p&gt;A few points about founder/market fit:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Founder/market fit can be developed through experience&lt;/em&gt;: No one is born with knowledge of the education market, online advertising, or clean energy technologies. You can learn about these markets by building test projects, working at relevant companies, or simply doing extensive research. I have a friend who decided to work in the magazine industry. He discovered some massive inefficiencies and built a very successful technology company that addressed them. My &lt;a href=&quot;http://foundercollective.com&quot;&gt;Founder Collective&lt;/a&gt; partners Eric Paley and Micah Rosenbloom spent many months/years becoming experts in the dental industry in order to create a breakthrough &lt;a href=&quot;http://www.flybridge.com/portfolio/Brontes&quot;&gt;dental technology company&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Founder/market fit is frequently overestimated&lt;/em&gt;: One way to have a deep understanding of your market is to develop product ideas that solve problems you personally have. This is why Paul Graham &lt;a href=&quot;http://www.paulgraham.com/organic.html&quot;&gt;says&lt;/a&gt; that “the best way to come up with startup ideas is to ask yourself the question: what do you wish someone would make for you?”  This is generally an excellent heuristic, but can also lead you astray. It is easy to think that because you like food you can create a better restaurant. It is an entirely different matter to rent and build a space, market your restaurant, manage inventory, inspire your staff, and do all the other difficult things it takes to create a successful restaurant. Similarly, just because you can imagine a website you’d like to use, doesn’t mean you have founder/market fit with the consumer internet market.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Founders need to be brutally honest with themselves.&lt;/em&gt; Good entrepreneurs are willing to make long lists of things at which they are have no ability. I have never built a sales team. I don’t manage people well. I have no particular knowledge of what college students today want to do on the internet. I could go on and on about my deficiencies. But hopefully being aware of these things helps me focus on areas where I can make a real contribution and also allows me to recruit people that complement those deficiencies.&lt;/p&gt;
&lt;p&gt;Most importantly, founders should realize that a startup is an endeavor that generally lasts many years. You should fit your market not only because you understand it, but because you love it — and will continue to love it as your product and market change over time.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Allocation investing and the social premium]]></title>
            <description><![CDATA[The rational way to invest in something – a startup, public company, venture capital firm, real estate project, etc. – is to base your…]]></description>
            <link>https://cdixon.org/2011/06/16/allocation-investing-and-the-social-premium</link>
            <guid isPermaLink="false">https://cdixon.org/2011/06/16/allocation-investing-and-the-social-premium</guid>
            <pubDate>Thu, 16 Jun 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The rational way to invest in something – a startup, public company, venture capital firm, real estate project, etc. – is to base your decision on an assessment of its fundamental value. The most common way to do this is to try to predict the asset’s &lt;a href=&quot;http://en.wikipedia.org/wiki/Discounted_cash_flow&quot;&gt;future profits&lt;/a&gt;. In reality, many of the largest pools of capital in the world – pensions, endowments, and mutual funds – think in terms of “allocations.” This means they start with a model for how to distribute their funds across a set of dimensions, including asset classes, industries, and geographies. This allocation mentality is based partly on prevalent academic theories (the “&lt;a href=&quot;http://en.wikipedia.org/wiki/Capital_asset_pricing_model&quot;&gt;Capital Asset Pricing Model&lt;/a&gt;” or “CAPM”) and partly on the success of certain famous money managers (the “&lt;a href=&quot;http://en.wikipedia.org/wiki/David_F._Swensen#The_Yale_.28or_Endowment.29_Model&quot;&gt;Yale Model&lt;/a&gt;“).&lt;/p&gt;
&lt;p&gt;Allocation investing has a number of perverse effects on financial markets. For example, in the 80s and 90s venture capital was deemed to be a successful, independent asset class. As a result, many funds decided to allocate some portion of their capital to VC. These pools of capital were so large that they caused the VC industry to grow orders of magnitude larger – many say &lt;a href=&quot;http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/&quot;&gt;larger than it should be&lt;/a&gt;. In turn, this led to many bad venture investments that drove down returns in the industry (these problems were further exacerbated by the &lt;a href=&quot;http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/&quot;&gt;fee structure of VC&lt;/a&gt; that encouraged funds to get large and rapidly “put money to work”).&lt;/p&gt;
&lt;p&gt;Another perverse effect caused by allocation investing happens in public stock markets when investors decide to allocate a portion of their funds to specific sectors. I recently heard some money managers saying they wanted to allocate portions of their funds to “social media”. Combining this “allocated” demand with a constrained supply (due to the &lt;a href=&quot;http://www.businessweek.com/news/2011-06-09/linkedin-inspired-low-float-ipos-threaten-to-bring-back-bubble.html&quot;&gt;small float&lt;/a&gt; of many of these IPOs) can lead to prices that are disconnected from fundamental values. In this scenario, supply will try to match demand, which means mediocre social media companies will go public and non-social media companies will reposition themselves as social media companies or acquire social media companies. They will be chasing the “social premium.”&lt;/p&gt;
&lt;p&gt;We saw this happen in the 90s with the rush of companies to reposition themselves as internet companies. In that case, many non-professional investors ended up owning shares in crappy companies when the music stopped. The primary difference now is that the flagship companies like LinkedIn and Facebook have excellent fundamentals. Hopefully this time the market will be discerning and value investing will win out over allocation investing.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Notes on raising seed financing]]></title>
            <description><![CDATA[Last night I taught a class via Skillshare (disclosure: Founder Collective is an investor) about how to raise a seed round.  After a long…]]></description>
            <link>https://cdixon.org/2011/06/09/notes-on-raising-seed-financing</link>
            <guid isPermaLink="false">https://cdixon.org/2011/06/09/notes-on-raising-seed-financing</guid>
            <pubDate>Thu, 09 Jun 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Last night I taught a &lt;a href=&quot;http://www.skillshare.com/Planting-the-Seed-How-to-Raise-Your-First-Round/1124114253/1124114253&quot;&gt;class&lt;/a&gt; via &lt;a href=&quot;http://www.skillshare.com&quot;&gt;Skillshare&lt;/a&gt; (disclosure: &lt;a href=&quot;http://foundercollective.com&quot;&gt;Founder Collective&lt;/a&gt; is an investor) about how to raise a seed round.  After a long day I wasn’t particularly looking forward to it, but it turned out to be a lot of fun and I stayed well past the scheduled end time.  I think it worked well because the audience was full of people actually starting companies, and they came well prepared (they were all avid readers of tech blogs and had seemed to have done a lot of research).&lt;/p&gt;
&lt;p&gt;I sketched some notes for the class which I’m posting below. I’ve written ad nauseum on this blog (see &lt;a href=&quot;http://cdixon.org/contents&quot;&gt;contents&lt;/a&gt; page) about venture financing so hadn’t planned to blog more on the topic.  But since I wrote up these notes already, here they are.&lt;/p&gt;
&lt;p&gt;***&lt;/p&gt;
&lt;p&gt;1. Best thing is to either never need to raise money or to raise money after you have a product, users, or customers.  Also helps a lot if you’ve started a successful business before or came from a senior position at a successful company.&lt;/p&gt;
&lt;p&gt;2. Assuming that’s not the case, it is very difficult to raise money, even when people (e.g. press) are saying it’s easy and “everyone is getting funded.”&lt;/p&gt;
&lt;p&gt;3. Fundraising is an extremely momentum-based process.  Hardest part is getting “anchor” investors.  These are people or institutions who commit significant capital (&gt;$100K) and are respected in the tech community or in the specific industry you are going after (e.g. successful fashion people investing in a fashion-related startup).&lt;/p&gt;
&lt;p&gt;4. Investors like to wait (“flip another card over”) while you want to hurry. Lots of investors like to wait until other investors they respect commit. Hence a sort of Catch-22. As Paul Graham &lt;a href=&quot;http://www.paulgraham.com/hiresfund.html&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;By far the biggest influence on investors’ opinions of a startup is the opinion of other investors. There are very, very few who simply decide for themselves. Any startup founder can tell you the most common question they hear from investors is not about the founders or the product, but “who else is investing?”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;5. Network like crazy:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Make sure you have good Google results (this is your first impression in tech). Have a good bio page (on your blog, linkedin and about.me) and blog/tweet to get Google juice.&lt;/li&gt;
&lt;li&gt;Get involved in your local tech community.  Join meetups. Help organize events.  Become a hub in the local tech social graph.&lt;/li&gt;
&lt;li&gt;Meet every entrepreneur and investor you can.  Entrepreneurs tend to be more accessible &amp;#x26; sympathetic and can often make warm intros to investors.&lt;/li&gt;
&lt;li&gt;Avoid anyone who asks you to pay for intros (even indirectly like committing to a law firm in exchange for intros).&lt;/li&gt;
&lt;li&gt;Don’t be afraid to (politely) overreach and &lt;a href=&quot;http://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough/&quot;&gt;get rejected&lt;/a&gt;.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;6. Get smart on the industry:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Read TechCrunch, Business Insider, GigaOm, Techmeme, HackerNews, Fred Wilson’s blog, Mark Suster’s blog, etc (and go back and read the archives).  Follow investor/startup people on Twitter (Sulia has some good lists to get you started &lt;a href=&quot;http://www.sulia.com/channel/venture-capital/&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://www.sulia.com/channel/startups/&quot;&gt;here&lt;/a&gt;).&lt;/li&gt;
&lt;li&gt;Research every investor and entrepreneur extensively before you meet them. Entrepreneurs love it when you’ve used their product and give them constructive feedback.  It’s like bringing a new parent a kid’s toy. Investors like it when you are smart about their portfolio and interests.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;6. How much to raise?  Enough to hit an accretive milestone plus some buffer. (&lt;a href=&quot;http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/&quot;&gt;more&lt;/a&gt;)&lt;/p&gt;
&lt;p&gt;7. What terms should you look for?  Here are &lt;a href=&quot;http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/&quot;&gt;ideal terms&lt;/a&gt;.  You need to understand all these terms and also the &lt;a href=&quot;http://cdixon.org/2010/08/31/converts-versus-equity-deals/&quot;&gt;difference between convertible notes and equity&lt;/a&gt;.  More generally, it’s a good idea to spend a few days getting smart about startup-related law – this is a &lt;a href=&quot;http://www.amazon.com/Entrepreneurs-Guide-Business-Law/dp/0324042914&quot;&gt;good book&lt;/a&gt; to start with.&lt;/p&gt;
&lt;p&gt;8. Types of capital:  strategic angels (industry experts), non-strategic angels (not industry experts, not tech investors), tech angels, seed funds, VCs.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;VCs can be less valuation sensitive and have deep pockets but are sometimes buying options so come with some risks (&lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;more&lt;/a&gt;).&lt;/li&gt;
&lt;li&gt;Industry experts can be really nice complements to tech investors (especially in b2b companies).  (&lt;a href=&quot;http://cdixon.org/2009/11/03/how-to-select-your-angel-investors/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Non-strategic angels (rich people with no relevant expertise) might not help as much but might be more patient and ok with “lifestyle businesses.”&lt;/li&gt;
&lt;li&gt;Tech angels and seed funds tend to be most valuation sensitive but can sometimes make up for it by helping in later financing rounds.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;9. Pitching:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Have a short slide deck, not a business plan. (&lt;a href=&quot;http://whohastimeforthis.blogspot.com/2005/11/how-to-not-write-business-plan.html&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Pitch yourself first, idea second. (&lt;a href=&quot;http://cdixon.org/2009/11/14/pitch-yourself-not-your-idea/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Pitch the upside, not the mean (&lt;a href=&quot;http://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Size markets using narratives, not numbers (&lt;a href=&quot;http://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;10.  Cofounders: they are good if for no other reason than moral support. Find ones that complement you. Decide on responsibilities, equity split etc early and document it.  (Legal documents don’t hurt friendships – they preserve them).&lt;/p&gt;
&lt;p&gt;11. Incubators like YC and Techstars can be great.  99% of the people I know who participated in them say it was worth it.&lt;/p&gt;
&lt;p&gt;12. To investors, the sexiest word in the English language is “oversubscribed.”  Sometimes it makes tactical sense to start out raising a smaller round than you actually want end up with.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Accurate contrarian theories]]></title>
            <description><![CDATA[When Google released its search engine in 1998, its search results were significantly better than its competitors’. Many people attribute…]]></description>
            <link>https://cdixon.org/2011/05/16/accurate-contrarian-theories</link>
            <guid isPermaLink="false">https://cdixon.org/2011/05/16/accurate-contrarian-theories</guid>
            <pubDate>Mon, 16 May 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;When Google released its search engine in 1998, its search results were significantly better than its competitors’. Many people attribute Google’s success to this breakthrough technology. But there was another key reason:  a stubborn refusal to accept the orthodox view at the time that “stickiness” was crucial to a website’s success. Here’s what happened when they tried to sell their technology to Excite (a leading portal/search engine in the late 90s):&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[Google] was too good. If Excite were to host a search engine that instantly gave people information they sought, [Excite&apos;s CEO] explained, the users would leave the site instantly. Since his ad revenue came from people staying on the site—“stickiness” was the most desired metric in websites at the time—using Google’s technology would be counterproductive. “He told us he wanted Excite’s search engine to be 80 percent as good as the other search engines,” … and we were like, “Wow, these guys don’t know what they’re talking about.” - Steven Levy, &lt;a href=&quot;http://www.amazon.com/Plex-Google-Thinks-Works-Shapes/dp/1416596585&quot;&gt;In The Plex&lt;/a&gt; (p. 30)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Famed investor/entrepreneur Reid Hoffman says world-changing startups need to be premised on “&lt;a href=&quot;http://www.kydoh.com/seeking-returns-as-an-accurate-contrarian-theorist/&quot;&gt;accurate contrarian theories&lt;/a&gt;.”  In Google’s case, it was true but non-contrarian to think users would prefer a better search engine. What was true and contrarian was to think it made &lt;a href=&quot;http://cdixon.org/2010/03/25/stickiness-is-bad-for-business/&quot;&gt;business sense&lt;/a&gt; to get users off their site as quickly as possible. The business model to support this contrarian theory wouldn’t emerge until years later, and by then Google would already have become the world’s most popular search engine.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Options]]></title>
            <description><![CDATA[The financial term “derivative“ refers to a security whose value is a function of another security such as a stock or bond.  The most common…]]></description>
            <link>https://cdixon.org/2011/05/12/options</link>
            <guid isPermaLink="false">https://cdixon.org/2011/05/12/options</guid>
            <pubDate>Thu, 12 May 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The financial term “&lt;a href=&quot;http://en.wikipedia.org/wiki/Derivative_(finance)&quot;&gt;derivative&lt;/a&gt;“ refers to a security whose value is a function of another security such as a stock or bond.  The most common types of derivatives are futures – the &lt;em&gt;obligation&lt;/em&gt; to buy a security at a future date at pre-agreed upon price – and options – the &lt;em&gt;right&lt;/em&gt; to buy something at a future date at pre-agreed upon price.&lt;/p&gt;
&lt;p&gt;In theory, the primary societal purpose of derivates is for businesses to hedge against “&lt;a href=&quot;http://en.wikipedia.org/wiki/Exogeny&quot;&gt;exogenous&lt;/a&gt;” risks.  For example. Southwest Airlines is famously prudent about buying futures on oil to mitigate the effect of fluctuating oil prices on their core business.&lt;/p&gt;
&lt;p&gt;In practice, most derivatives are bought and sold by speculators. One of the first speculators was a philosopher names Thales, who Aristotle described in his book _&lt;a href=&quot;http://classics.mit.edu/Aristotle/politics.mb.txt&quot;&gt;Politics&lt;/a&gt; (_Book 1, Part XI):&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There is the anecdote of Thales the Milesian and his financial device, which involves a principle of universal application, but is attributed to him on account of his reputation for wisdom. He was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. &lt;em&gt;Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Valuing options was a mystery until 1973 when the &lt;a href=&quot;http://en.wikipedia.org/wiki/Black%E2%80%93Scholes&quot;&gt;Black-Scholes&lt;/a&gt; model was invented. The main practical outcome of this model was the idea that the value of an option was determined mostly by the volatility of the underlying security.&lt;/p&gt;
&lt;p&gt;One way to understand the important of volatility is to think of options as the opposite of insurance policies. Suppose you are selling insurance on houses in one region that is prone to catastropic events and another that isn’t. Rational insurers would price insurance policies higher in the catastrophe-prone areas.&lt;/p&gt;
&lt;p&gt;Startups are inherently very volatile – their price can increase or decrease dramatically in short periods of time. Having an option on a startup is the economic opposite of selling insurance in a catastrophe-prone area.&lt;/p&gt;
&lt;p&gt;The US tax system has some rules related to startup options.  The first rule is that there is a special class of options called ISO options that can be granted to employees. ISO options are tax exempt until the options are exercised, which allows employees to receive them and not be liable for taxes until they actually realize cash gains. This rule only applies if the options are assigned a strike price equal to or greater than the “fair market value” of the company’s common shares. The fair market value is normally assessed by an outside valuation firm (a so-called 409A valuation) and usually ends up being significantly lower than the last round VC valuation (a rule of thumb for early-stage companies is the strike price will be approximately 20% of the last VC valuation).&lt;/p&gt;
&lt;p&gt;When you are granted options in a startup there are a couple of important things to keep in mind:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;You should know your &lt;a href=&quot;http://cdixon.org/2009/08/28/the-one-number-you-should-know-about-your-equity-grant/&quot;&gt;percentage ownership&lt;/a&gt; of the company’s “fully diluted” outstanding shares (number of shares of the company including the option pool).&lt;/li&gt;
&lt;li&gt;You should understand that if you leave the company, you normally have 90 days to “exercise” the options (purchase the shares you have the right to buy) before you forfeit your options. Normally the company has no obligation to inform you of this possible forfeiture, and in fact the standard practice is to hope the employee forgets and loses the options.&lt;/li&gt;
&lt;li&gt;You should know the “preferences” on the company.  The preferences normally equals the amount of money raised. If the company sells for near or less than that number the common shareholders, and hence the employees (who own options on common shares), will receive little or no money.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The strike price of the options is somewhat important but, if you study options theory, not nearly as important as the volatility of the underlying stock. Financially, what matters most is having a reasonable percentage of options in a company with lots of volatility (and hopefully a stock price that has an upward slope).&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Best practices for raising a VC round]]></title>
            <description><![CDATA[Having raised a number of VC rounds personally and observed many more as an investor or friend, I’ve come to think there are a set of…]]></description>
            <link>https://cdixon.org/2011/05/04/best-practices-for-raising-a-vc-round</link>
            <guid isPermaLink="false">https://cdixon.org/2011/05/04/best-practices-for-raising-a-vc-round</guid>
            <pubDate>Wed, 04 May 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Having raised a number of VC rounds personally and observed many more as an investor or friend, I’ve come to think there are a set of dominant best practices that entrepreneurs should follow.&lt;/p&gt;
&lt;p&gt;1. Valuation: Come up with what minimum valuation you’d be happy with but never share that number with any investor.  If the number is too low, you’ve set a low ceiling. If your number is too high, you scare people off. Just like on eBay, you only get to your desired price by starting lower and getting a competitive process going. When people ask about price, simply tell them your last round post-money valuation and talk about the progress you’ve made since then.&lt;/p&gt;
&lt;p&gt;2. Never tell VCs the names of other VCs that are interested.  Reasons: 1) if you are overplaying your hand that could send a negative signal.  Most VCs know each other and talk all the time. 2) it is possible they’ll get together and offer a two-handed deal in which case you have less competition.&lt;/p&gt;
&lt;p&gt;3. I think the optimal number of VCs to talk to seriously is about 5.  That is usually enough to get a sense of market but not so much that you get overwhelmed.  You should pick these VCs carefully – this is where trusted, experienced advisors are critical.&lt;/p&gt;
&lt;p&gt;4. If there is a VC you really like, have a “buy it now price” and if they hit that valuation (and other terms are &lt;a href=&quot;http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/&quot;&gt;clean&lt;/a&gt;) do the deal.  Otherwise, say you’d like to “run a process” and include them in it.&lt;/p&gt;
&lt;p&gt;5. Try to set timelines that are definite enough that investors feel some pressure to move but not so definite that you look dumb if you don’t have a term sheet by then.  (Investors have an incentive to wait – “to flip another card over” as they say – whereas entrepreneurs want to get the financing over with asap). Depending on where you are in the process, say things like “we’d like to wrap this up in the next few weeks.”&lt;/p&gt;
&lt;p&gt;6. Once you start pitching, the clock starts ticking on your deal looking “tired.”  I’d say from your first VC meeting you have about a month before this risk kicks in.  You could have a great company but if investors get a sense that other investors have passed, they assume something is wrong with your company and/or they can wait around and invest later at their leisure.&lt;/p&gt;
&lt;p&gt;7. The earlier stage your company is the more you should weight quality of investors vs valuation.  For a Series A, you are truly partnering with the VCs.  You should consider taking a lower valuation from a top tier firm over a non top tier firm (but probably any discount over 20% is too much). If you are doing a post-profitable “momentum round” I’d just optimize for valuation and deal terms.&lt;/p&gt;
&lt;p&gt;8. Term sheets:  talk about terms in detail over the phone.  Only accept a term sheet once you have decided that if it matches what was described you are prepared to sign it.  After sending a term sheet VCs get worried you’ll shop it and usually want it signed in 24 hours.&lt;/p&gt;
&lt;p&gt;9. Get to know the VCs.  Talk to their other portfolio companies, read their blogs, call references, etc.  You will be in business with this person for (hopefully) a long time.&lt;/p&gt;
&lt;p&gt;10. Timing.  While it’s ideal to raise money once you hit the milestones you set out initially, you also need to be opportunistic.  Right now, for example, seems to be a really good time to raise a VC round.  You could make a ton of progress over the next 6 months but the market could tank and end up in a worse place than you would be today.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[There are two kinds of people in the world]]></title>
            <description><![CDATA[You’ve either started a company or you haven’t.  ”Started” doesn’t mean joining as an early employee, or investing or advising or helping…]]></description>
            <link>https://cdixon.org/2011/04/26/there-are-two-kinds-of-people-in-the-world</link>
            <guid isPermaLink="false">https://cdixon.org/2011/04/26/there-are-two-kinds-of-people-in-the-world</guid>
            <pubDate>Tue, 26 Apr 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;You’ve either started a company or you haven’t.  ”Started” doesn’t mean joining as an early employee, or investing or advising or helping out.  It means starting with no money, no help, no one who believes in you (except perhaps your closest friends and family), and building an organization from a borrowed cubicle with credit card debt and nowhere to sleep except the office. It almost invariably means being dismissed by arrogant investors who show up a half hour late, totally unprepared and then instead of saying “no” give you non-committal rejections like “we invest at later stage companies.” It means looking prospective employees in the eyes and convincing them to leave safe jobs, quit everything and throw their lot in with you.  It means having pundits in the press and blogs who’ve never built anything criticize you and armchair quarterback your every mistake. It means lying awake at night worrying about running out of cash and having a constant knot in your stomach during the day fearing you’ll disappoint the few people who believed in you and validate your smug doubters.&lt;/p&gt;
&lt;p&gt;I don’t care if you succeed or fail, if you are Bill Gates or an unknown entrepreneur who gave everything to make it work but didn’t manage to pull through. The important distinction is whether you risked everything, put your life on the line, made commitments to investors, employees, customers and friends, and tried – against all the forces in the world that try to keep new ideas down – to make something new.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Inferring intent on mobile devices]]></title>
            <description><![CDATA[[Google CEO Eric] Schmidt said that while the Google Instant predictive search technology helps shave an average of 2 seconds off users…]]></description>
            <link>https://cdixon.org/2011/04/24/inferring-intent-on-mobile-devices</link>
            <guid isPermaLink="false">https://cdixon.org/2011/04/24/inferring-intent-on-mobile-devices</guid>
            <pubDate>Sun, 24 Apr 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;[Google CEO Eric] Schmidt said that while the Google Instant predictive search technology helps shave an average of 2 seconds off users’ queries, the next step is “autonomous search.” This means Google will conduct searches for users without them having to manually conduct searches. As an example, Schmidt said he could be walking down the streets of San Francisco and receive information about the places around him on his mobile phone without having to click any buttons. &lt;strong&gt;“Think of it as a serendipity engine,&lt;/strong&gt;” Schmidt said. “&lt;strong&gt;Think of it as a new way of thinking about traditional text search where you don’t even have to type.&lt;/strong&gt;”  - &lt;a href=&quot;http://www.eweek.com/c/a/Search-Engines/Google-CEO-Schmidt-Pitches-Autonomous-Search-Flirts-with-AI-259984/&quot;&gt;eWeek&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;When users type phrases into Google, they are searching, but also expressing intent. To create the “serendipity engine” that Eric Schmidt envisions would require a system that infers users’ intentions.&lt;/p&gt;
&lt;p&gt;Here are some of the input signals a mobile device could use to infer intent.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Context&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Location: It is helpful to break location down into layers, from the most concrete to the most abstract:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;lat / long – raw GPS coordinates&lt;/li&gt;
&lt;li&gt;venue – mapping of lat / long coordinates to a venue.&lt;/li&gt;
&lt;li&gt;venue relationship to user – is the user at home, at a friend’s house, at work, in her home city etc.&lt;/li&gt;
&lt;li&gt;user movement – locations the user has visited recently.&lt;/li&gt;
&lt;li&gt;inferred user activity – if the user is at work during a weekday, she is more likely in the midst of work. If she is walking around a shopping district on a Sunday away from her home city, she is more likely to want to buy something. If she is outside, close to home, and going to multiple locations, she is more likely to be running erands.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Weather: during inclement weather user is less likely to want to move far and more likely to prefer indoor activities.&lt;/p&gt;
&lt;p&gt;Time of day &amp;#x26; date: around mealtimes the user is more likely to be considering what to eat. On weekends the user is more likely to be doing non-work activities. Outside at night, the user is more likely to be looking for bar/club/movie etc.  Time of days also lets you know what venues are open &amp;#x26; closed.&lt;/p&gt;
&lt;p&gt;News events near the user: they are at the pro sporting event, an accident happened nearby, etc.&lt;/p&gt;
&lt;p&gt;Things around the user: knowing not just venues, but activities (soccer game), inventories (Madden 2011 is in stock at BestBuy across the street), events (concert you might like is nearby), etc.&lt;/p&gt;
&lt;p&gt;These are just a few of the contextual signals that could be included as input signals.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Taste&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The more you know about users’ tastes, the better you can infer their intent. It is silly to suggest a great Sushi restaurant to someone who dislikes Sushi. At &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; we model taste with a giant matrix. One axis is every known user (the system is agnostic about which ID system – it could be Facebook, Twitter, a mobile device, etc), the other axis is things, defined very broadly: product, person, place, activity, tag etc.  In the cells of the matrix are either the known or predicted affinity between the person and thing.  (Hunch’s matrix currently has about 500M people, 700M items, and 50B known affinity points).&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Past expressed intent&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- App actions:  e.g. user just opened Yelp, so is probably looking for a place to go.&lt;/p&gt;
&lt;p&gt;- Past search actions: user’s recent (desktop &amp;#x26; mobile) web searches could be indications of later intent.&lt;/p&gt;
&lt;p&gt;- Past “saved for later” actions:  user explicitly saved something for later e.g. using Foursquare’s “to do” functionality.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Behavior of other people&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- Friends:  The fact that a user’s friends are all gathered nearby might make her want to join them.&lt;/p&gt;
&lt;p&gt;- Tastemates: That someone with similar tastes just performed some actions suggests the user is more likely to want to perform the same actions.&lt;/p&gt;
&lt;p&gt;- Crowds: The user might prefer to go toward or avoid crowds, depending on mood and taste.&lt;/p&gt;
&lt;p&gt;How should an algorithm weight all these signals? It is difficult to imagine this being done effectively anyway except empirically through a feedback loop. So the system suggests some intent, the user gives feedback, and then the system learns by adjusting signal weightings and gets smarter.  With a machine learning system like this it is &lt;a href=&quot;http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/&quot;&gt;usually impossible&lt;/a&gt; to get to 100% accuracy, so the system would need a “fault tolerant” UI.  For example, pushing suggestions through modal dialogs could get very annoying without 100% accuracy, whereas making suggestions when the user opens an application or through subtle push alerts could be non-annoying and useful.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Financing risk]]></title>
            <description><![CDATA[Startups that raise seed funding face the risk of not being able to raise additional money. This is what is sometimes known as “financing…]]></description>
            <link>https://cdixon.org/2011/04/20/financing-risk</link>
            <guid isPermaLink="false">https://cdixon.org/2011/04/20/financing-risk</guid>
            <pubDate>Wed, 20 Apr 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Startups that raise seed funding face the risk of not being able to raise additional money. This is what is sometimes known as “financing risk.”&lt;/p&gt;
&lt;p&gt;If you are a company that just raising seed funding, financing risk should be top of mind.  Here are some tips for mitigating it:&lt;/p&gt;
&lt;p&gt;- &lt;em&gt;Start by thinking about the next round of financing and work backwards&lt;/em&gt;.  What milestones do you have to hit to get VC funded at an upround?  If you are a consumer internet company, the milestone probably involves getting a certain number of users.  If you are building hardcore tech, it probably means building a working prototype.  Basically you want to take the main risks that exist at the seed stage and eliminate as many as you can. A good way to discover what milestones you need to hit is to talk to as many VCs as possible. Experienced seed investors can also advise you on this.&lt;/p&gt;
&lt;p&gt;- &lt;em&gt;&lt;a href=&quot;http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/&quot;&gt;Raise enough seed money&lt;/a&gt;&lt;/em&gt;. How much money will it take to hit those milestones?  A good rule of thumb is 18 months – 3 months to get going, 12 months to execute, 3 more months to raise VC.  But it really depends on the specifics of the milestones, your operational plan, etc. which is why you need to figure those out first.&lt;/p&gt;
&lt;p&gt;- &lt;em&gt;Preserve cash&lt;/em&gt;.  Pay only subsistance wages but be generous with equity for great people (this also provides a screen for hiring people with the right startup mindset).  Keep legal fees low (try to keep incorporation and financing costs to $10K or lower – this is one reason I prefer &lt;a href=&quot;http://cdixon.org/2010/08/31/converts-versus-equity-deals/&quot;&gt;convertible notes&lt;/a&gt;).  Act like a &lt;a href=&quot;http://cdixon.tumblr.com/post/311546950/things-startups-do-and-dont-need&quot;&gt;scrappy startup&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;A rule of thumb is a successful Series A is one that is led by quality VCs with a pre-money at least 2x the post-money of the seed round.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Apple and the TV industry]]></title>
            <description><![CDATA[The TV industry is a major segment of the consumer electronics industry and Apple is the leading consumer electronics company in the world…]]></description>
            <link>https://cdixon.org/2011/04/17/apple-and-the-tv-industry</link>
            <guid isPermaLink="false">https://cdixon.org/2011/04/17/apple-and-the-tv-industry</guid>
            <pubDate>Sun, 17 Apr 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The TV industry is a major segment of the consumer electronics industry and Apple is the leading consumer electronics company in the world. Thus far Apple has entered the TV market with a stand-alone device, Apple TV. There has been &lt;a href=&quot;http://www.marco.org/2011/04/16/rumored-apple-hdtv&quot;&gt;speculation&lt;/a&gt; about whether Apple might enter the TV market by creating an actual TV. The most convincing objections to that idea cite the unfavorable industry structure: the power of the cable operators, the low margins on TVs, the infrequency of people buying new TVs, etc.&lt;/p&gt;
&lt;p&gt;I thought it would be interesting to go back and look at the reasoning analysts used to predict the failure of the iPhone before its launch in 2007. Some &lt;a href=&quot;http://news.cnet.com/The-Apple-phone-flop/2010-1041_3-6141607.html&quot;&gt;predicted&lt;/a&gt; it would fail because the other handset makers would successfully compete with Apple:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The iPod also conquered the problem of small screens and cheesy navigation. With its newfound popularity, the company was also able to get music publishers to agree to its terms. Unfortunately for Apple, problems like that don’t exist in the handset business. Cell phones aren’t clunky, inadequate devices. Instead, they are pretty good. Really good. Why do you think they call it a Crackberry? Because the lumpy design and confusing interface of the device is causing people to break into cars? No, it’s because people are addicted to it. Samsung has scoured the world’s design schools and hired artists on three continents to keep its phones looking good. Motorola has revived its fortunes with design. KDDI, a Japanese carrier, has a design showcase in the teen shopping area of Tokyo just to be close to trends. And Sharp doesn’t skimp when it comes to putting LCD TVs on its phones. &lt;strong&gt;Apple, in other words, won’t be competing against rather doltish, unstylish companies like the old Compaq. The handset companies move pretty quick and put out new models every few weeks.&lt;/strong&gt; [emphasis added]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Other analysts &lt;a href=&quot;http://www.theregister.co.uk/2006/12/23/iphone_will_fail/&quot;&gt;predicted&lt;/a&gt; Apple’s phone was doomed because of the mobile phone industry structure – mobile operators commanded so much power via subsidies, retail distribution etc:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Apple will launch a mobile phone in January, and it will become available during 2007. It will be a lovely bit of kit, a pleasure to behold, and its limited functionality will be easy to access and use. The Apple phone will be exclusive to one of the major networks in each territory and some customers will switch networks just to get it, but not as many as had been hoped. &lt;strong&gt;As customers start to realise that the competition offers better functionality at a lower price, by negotiating a better subsidy, sales will stagnate.&lt;/strong&gt; After a year a new version will be launched, but it will lack the innovation of the first and quickly vanish. The only question remaining is if, when the iPod phone fails, it will take the iPod with it.  [emphasis added]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I am not citing these analysts to mock them. Hindsight is 20/20 and it was quite reasonable at the time to assume that a new phone from Apple would confront the same issues that new phones from other companies confronted. What Apple ended up doing, however, was creating a phone that was so incredibly desirable to consumers that it &lt;a href=&quot;http://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry/&quot;&gt;completely restructured&lt;/a&gt; the industry, causing a massive shift of power away from the carriers.&lt;/p&gt;
&lt;p&gt;Regarding the TV industry, here is what Steve Jobs &lt;a href=&quot;http://d8.allthingsd.com/20100601/steve-jobs-session/&quot;&gt;said&lt;/a&gt; last year at AllThingsD:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;strong&gt;Q: Is it time to throw out the interface for TV? Does television need a new human interface.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;A: The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us… ask Google in a few months. The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there’s no way to do that….The TV is going to lose until there’s a viable go-to-market strategy. That’s the fundamental problem with the industry. It’s not a problem with the technology, it’s a problem with the go-to-market strategy….I’m sure smarter people than us will figure this out, but that’s why we say Apple TV is a hobby.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;So Jobs doesn’t believe an “additional box” is a viable strategy for seriously entering the TV industry. This leaves three places to enter: 1) integrating into set top boxes, 2) integrating into other TVs, or 3) Apple creating its own TV. Regarding #1, the last thing the cable operators want is for internet-delivered programming that bypasses their cable channels to become widespread – they see that as the fast track to become a dumb pipe. Re #2: This just seems very unlike Apple – the most vertically integrated company in tech, and famous for wanting to control every aspect of the product and user experience.&lt;/p&gt;
&lt;p&gt;Re #3, let’s imagine Apple develops a TV that is as groundbreaking as the iPhone was. The biggest problem “smart TVs” have today is that they need clunky IR transmitters to control set top boxes because the cable operators won’t willingly interoperate. So a new Apple TV would have to drum up such incredible consumer demand that the operators would feel compelled to support it. This does indeed seem harder in the TV than in the mobile industry. At least in the US you had 4 nationwide mobile operators at the time of the iPhone launch. In TV, consumers normally have at most two real choices for traditional cable programming – cable and satellite – and two real choices for two-way internet – cable and DSL/FIOS.&lt;/p&gt;
&lt;p&gt;Perhaps Apple won’t enter the market due to its structure. But that didn’t stop them in mobile phones where the structure was similarly difficult. The mistake analysts made about the iPhone was to assume the current industry structure would be sustained after Apple’s entry. I’d be wary of making the same assumption about the TV industry.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Showing up]]></title>
            <description><![CDATA[Mark Twain famously quipped that “80 percent of life is showing up.” Running a startup, I’d say it’s more like 90 percent. For example, I…]]></description>
            <link>https://cdixon.org/2011/04/12/showing-up</link>
            <guid isPermaLink="false">https://cdixon.org/2011/04/12/showing-up</guid>
            <pubDate>Tue, 12 Apr 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Mark Twain famously quipped that “80 percent of life is showing up.” Running a startup, I’d say it’s more like 90 percent. For example, I frequently hear from founders how it’s hard to recruit programmers. It is indeed hard. But great programmers are out there, and can be found in places where other people simply aren’t showing up.&lt;/p&gt;
&lt;p&gt;Back in 2005 when I was starting SiteAdvisor with &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; (one of my cofounders at my last two startups and &lt;a href=&quot;http://cdixon.posterous.com/mit-is-a-national-treasure&quot;&gt;non-graduate of high school&lt;/a&gt;) we were trying to recruit great programmers. At the time, startups were certainly not the hot thing, especially on the East Coast. We were based in Boston so decided to spend time at MIT where we figured there must be smart programmers. We went to places like the Media Lab and basically just sat ourselves down at lunch counters and awkwardly introduced ourselves: “Hi, my name is Chris Dixon and this is Tom Pinckney and we are starting a company and would love to talk to you about it.” Most students ignored us or thought we were annoying. I remember one student staring at us quizzically saying “startups still exist?” Most of our trips were fruitless. At one point after a failed trip we were on the Redline back to our office in downtown Boston and joked, depressingly, that we felt so out of place that people looked at us like time travelers from the dot-com bubble.&lt;/p&gt;
&lt;p&gt;Our first breakthough came after a series of trips when a particularly talented programmer/designer named &lt;a href=&quot;http://larifari.org/&quot;&gt;Hugo Liu&lt;/a&gt; re-approached us and said something like “hey, actually I thought about it and your idea doesn’t suck.” Then his friend &lt;a href=&quot;http://www.linkedin.com/profile/view?id=2104665&amp;#x26;authType=NAME_SEARCH&amp;#x26;authToken=xHpy&amp;#x26;locale=en_US&amp;#x26;srchid=6b2a8ef5-cf44-4377-ab54-7557dc9d5472-0&amp;#x26;srchindex=1&amp;#x26;srchtotal=8&amp;#x26;pvs=ps&amp;#x26;pohelp=&amp;#x26;goback=%2Efps_*1_David_Gatenby_*1_*1_*1_*1_*51_*1_Y_*1_*1_*1_false_1_R_true_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2&quot;&gt;David Gatenby&lt;/a&gt; talked to about joining us. We eventually recruited Hugo and David along with a brilliant undergraduate &lt;a href=&quot;http://mattgattis.com/about/&quot;&gt;Matt Gattis&lt;/a&gt;. We had finally broken through. Matt and Hugo now work with us at &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; along with some of their friends from MIT they brought along.&lt;/p&gt;
&lt;p&gt;People who say recruiting is easy are probably recruiting bad people. People who say recruiting is hard are right. People who say it is impossible just aren’t showing up enough.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Google’s social strategy]]></title>
            <description><![CDATA[It is widely believed that Facebook presents a significant competitive threat to Google. Google itself seems to believe this – Larry Page…]]></description>
            <link>https://cdixon.org/2011/04/10/googles-social-strategy</link>
            <guid isPermaLink="false">https://cdixon.org/2011/04/10/googles-social-strategy</guid>
            <pubDate>Sun, 10 Apr 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It is widely believed that Facebook presents a significant competitive threat to Google. Google itself seems to believe this – Larry Page recently &lt;a href=&quot;http://www.businessinsider.com/larry-page-just-tied-employee-bonuses-to-the-success-of-the-googles-social-strategy-2011-4&quot;&gt;said&lt;/a&gt; that all employees would have their bonuses tied to the success of Google’s social strategy.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Why does Facebook present a threat to Google?  A few reasons:&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- The utility of Google’s core product – web search – depends on the web remaining fragmented and crawlable.  Facebook has become the primary place web users spend their time and create content, and is mostly closed to Google’s crawlers.&lt;/p&gt;
&lt;p&gt;- Facebook controls a &lt;a href=&quot;http://blog.buysellads.com/2011/04/are-facebook-ads-a-threat-to-google-ads/&quot;&gt;large percentage&lt;/a&gt; of ad impressions and will likely launch an off-Facebook.com display ad network to compete directly with Google’s display ad business (built from its $3.1B &lt;a href=&quot;http://www.businessweek.com/technology/content/apr2007/tc20070414_675511.htm&quot;&gt;acquisition&lt;/a&gt; DoubleClick). It is generally &lt;a href=&quot;http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/&quot;&gt;thought&lt;/a&gt; that display ads will become a larger portion of online advertising spend (versus direct response text link ads) as more brand advertising moves online.&lt;/p&gt;
&lt;p&gt;- There are many other “wildcard” risks – e.g. Facebook competing with Google (and Apple, Paypal etc) in payments, Facebook gaining power on mobile (threatening Android), and the possibility of a greater share of internet &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;intent harvesting&lt;/a&gt; happening on Facebook through not-yet-released features like a search and/or shopping engine.&lt;/p&gt;
&lt;p&gt;When going after Facebook, Google has at least three key strategic choices to make:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Strategic choice #1:&lt;/strong&gt; Should Google try to make social networking commoditized or new profit center? (For more about what I mean by this, please see &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;this post&lt;/a&gt; on Google’s overall strategy and these posts on “commoditizing the complement” &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;The advantage of creating a new social networking profit center is obvious: if you win, you make lots of money. The advantage of commoditizing social networking is that although you forgo the potential direct profits, you open up a wider range of pricing and product options. For example:&lt;/p&gt;
&lt;p&gt;- When you try to commoditize a product, you can offer a product for free that other companies charge for. This is what Google did with Android vs iOS and Google Apps vs Microsoft Office. Of course, making social networking free &lt;em&gt;to users&lt;/em&gt; won’t work since Facebook doesn’t directly charge users (I say “directly” because they make money off advertising &amp;#x26; payment commissions, among other ways). However reducing the cost to zero for 3rd-party developers like Zynga who have to pay Facebook large commissions would entice them toward a Google platform (note that, not coincidentally, Google &lt;a href=&quot;http://techcrunch.com/2010/07/10/google-secretly-invested-100-million-in-zynga-preparing-to-launch-google-games/&quot;&gt;invested&lt;/a&gt; $100M in Zynga).&lt;/p&gt;
&lt;p&gt;- Interoperate / embrace open standards – &lt;a href=&quot;http://cdixon.org/2010/01/22/techies-and-normals/&quot;&gt;Normals&lt;/a&gt; don’t care whether a product uses open standards, but by interoperating with other social networks, messaging systems, check-in services, etc., Google could encourage 3rd-party developers to build on their platform. If Google chose, say, RSS for their messaging system, it would already work with tens of thousands of existing tools and websites and would be readily embraced by hackers in the open source community. The web itself (http/html) and email (smtp) are famous examples where the choice to open them unleashed huge waves of innovation and (eventually) killed off closed competitors like AOL.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Strategic choice #2:&lt;/strong&gt; How should Google tie its new social products into its existing products?&lt;/p&gt;
&lt;p&gt;Besides a mountain of cash (&lt;a href=&quot;http://finance.yahoo.com/q/ks?s=GOOG+Key+Statistics&quot;&gt;$30B net&lt;/a&gt;, generating $10B more per year), Google has many existing assets on top of which to build. Google Buzz tried to build off of the “implicit social network” of Gmail contacts, which hasn’t seemed to work so far and raised privacy concerns.&lt;/p&gt;
&lt;p&gt;Google’s recent mini-launch of its “+1″ button seems to be good use of the strategy known as “anchoring”. Google is apparently trying to create a federated network where websites embed +1 buttons  the way they embed Facebook’s Like button except the +1 button would be a signal into Google’s organic ranking algorithm (as an aside, this is where Gmail becomes useful as having millions of logged in users makes spamming +1 buttons much harder). Websites care &lt;strong&gt;a lot&lt;/strong&gt; about their Google organic search rankings (which is why, for example, helping websites improve their rankings is multibillion-dollar industry).  A button that improved search rankings &lt;a href=&quot;http://cdixon.posterous.com/1-button&quot;&gt;would likely get prominent placement by many websites&lt;/a&gt;. Making +1 appealing to users is another story.  The user value is much clearer for the Facebook Like and Twitter Tweet buttons – you send the link to your friends/followers. Providing value to users in addition to websites is a good reason for Google to acquire Twitter (something I think is inevitable if Google is serious about social – see below).&lt;/p&gt;
&lt;p&gt;Finally, Android and YouTube are intriguing potential anchors for a social strategy. I’ll leave it to smarter people to figure out exactly how, but products with such large footprints always present interesting tie-in opportunities.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Strategic Choice #3:&lt;/strong&gt; Should Google buy or build?&lt;/p&gt;
&lt;p&gt;Historically, it is very rare to see tech companies adjust their “DNA” from within. Google’s best new lines of business over the past few years came through the acquisitions of YouTube and Android. Moreover, these acquisition were unusual in that they were left as semi-independent business units. Facebook’s hold on social is incredibly strong – besides the super-strong network effects of its social graph, Facebook has made itself core infrastructure (e.g. Facebook Connect) throughout the web. If Google really wants to catch up, they’ll need to go back to the strategy they succeeded with in the past of acquiring relevant companies and letting them run as separate business units.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;* Disclosure: I’m an investor in a &lt;a href=&quot;http://foundercollective.com/people/Chris-Dixon&quot;&gt;bunch&lt;/a&gt; of &lt;a href=&quot;http://foundercollective.com/companies&quot;&gt;startups&lt;/a&gt;, so you could reasonably argue I’m highly biased here.&lt;/em&gt;&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[App store shenanigans]]></title>
            <description><![CDATA[I’ve downloaded and tested a few hundred iPhone and iPad apps.  One thing that I’ve noticed is that many of the top rated and ranked apps…]]></description>
            <link>https://cdixon.org/2011/04/01/app-store-shenanigans</link>
            <guid isPermaLink="false">https://cdixon.org/2011/04/01/app-store-shenanigans</guid>
            <pubDate>Fri, 01 Apr 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve downloaded and tested a few hundred iPhone and iPad apps.  One thing that I’ve noticed is that many of the top rated and ranked apps are pretty scammy.  Take for example “Night Vision.”&lt;/p&gt;
&lt;p&gt;It’s a top app in under Utilities for both paid and free iPhone apps.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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        title=&quot;Screen shot 2011-04-01 at 3.03.02 PM&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-04-01 at 3.03.02 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If you actually download and test the app, you’ll find it doesn’t work at all. In fact, I found it made objects darker, not brighter.  See these photos with and without the app of the exact same room in the exact same lighting.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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        src=&quot;/static/6884a56e75d8492a2888dde801cc167a/f544b/photo-200x300.jpg&quot;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;photo&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The app tries to get you to download other apparently scammy apps.  I’m guessing this kind of “cross selling” is how Night Vision got  most of its downloads.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &gt;
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    style=&quot;padding-bottom: 150.75376884422113%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;photo 1 199x300&quot;
        title=&quot;photo-1&quot;
        src=&quot;/static/d257c8f6a3be826d2e2e724e78799c94/f6261/photo-1-199x300.png&quot;
        srcset=&quot;/static/d257c8f6a3be826d2e2e724e78799c94/924ad/photo-1-199x300.png 170w,
/static/d257c8f6a3be826d2e2e724e78799c94/f6261/photo-1-199x300.png 199w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;photo-1&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Another clever trick they play is when you look at the app customer ratings on the iPhone App Store you see that it has 4.5 stars:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 200px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 150%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;photo 2 200x300&quot;
        title=&quot;photo-2&quot;
        src=&quot;/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png&quot;
        srcset=&quot;/static/93cdee423ea3017caf294af7c5a58e79/924ad/photo-2-200x300.png 170w,
/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png 200w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;photo-2&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;But when you look on the desktop web you see the overall ratings are vastly lower and that they seem to game the system by releasing “new versions” to reset their ratings and then probably paying people to write positive reviews:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 23.333333333333332%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAAo0lEQVQY03WP2w6CMAyGef9Xw2sORmPGhcrOdgyBQWeZmGiIX3rRJf3+tZkG3xonrL9KmBeMKxhxrSVB73lHGouZNvZ8YUVZV8cTYw0Xwise7k1QLcDDWouISqlbwiYAYJO7riuL4pDndVUxxkyaRsrG9U9q44fvfpNpMc455VGKc2569qTRylMI4zjuhR/Ze88TUkohZa/FAmYeBmM08b75Hy/v0SCFmHv+GgAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 04 01 at 3 03 39 pm 300x70&quot;
        title=&quot;Screen shot 2011-04-01 at 3.03.39 PM&quot;
        src=&quot;/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png&quot;
        srcset=&quot;/static/09fde74ec4d48c3c0a17076658894e9f/924ad/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png 170w,
/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png 300w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-04-01 at 3.03.39 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Companies like &lt;a href=&quot;https://www.tapjoy.com/&quot;&gt;TapJoy&lt;/a&gt; let you pay to get in the Top 25, and then once you are there you can get “organic” downloads by being on the toplists.&lt;/p&gt;
&lt;p&gt;Another platform, another way to game it.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[A few points about the “tech bubble” debate]]></title>
            <description><![CDATA[Pretty much every day now a major blog or newspaper writes an article asking whether we are experiencing another tech bubble (e.g. see today…]]></description>
            <link>https://cdixon.org/2011/03/27/a-few-points-about-the-tech-bubble-debate</link>
            <guid isPermaLink="false">https://cdixon.org/2011/03/27/a-few-points-about-the-tech-bubble-debate</guid>
            <pubDate>Sun, 27 Mar 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Pretty much every day now a major blog or newspaper writes an article asking whether we are experiencing another tech bubble (e.g. see today’s &lt;a href=&quot;http://www.nytimes.com/2011/03/28/technology/28bubble.html?_r=1&amp;#x26;ref=business&quot;&gt;NYTimes&lt;/a&gt;). I don’t know whether successful private companies like Groupon, Zynga, Facebook and Twitter are over or under priced since I don’t have access to their financials. Regarding public tech companies, it seems to me that incredibly innovative companies like Apple and Google trading at 19 and 22 P/Es respectively is pretty reasonable.&lt;/p&gt;
&lt;p&gt;Rather than take a side on the bubble debate, I mainly just wanted to make a few points that I think should be kept in mind in this discussion.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;A bubble is a decoupling of asset prices (valuations) from their underlying economic fundamentals (which is why the &lt;a href=&quot;http://www.nytimes.com/2011/03/28/technology/28bubble.html?_r=1&amp;#x26;ref=business&quot;&gt;graph&lt;/a&gt; at the top of the NYTimes article today is meaningless). During the housing bubble of 2001-2007, &lt;a href=&quot;http://www.frbsf.org/publications/economics/letter/2004/el2004-27.html&quot;&gt;smart economists&lt;/a&gt; noted that housing prices were significantly higher than their fundamental value (in housing, a common way to measure this is price-to-rent ratio, which is analogous to price-to-earnings in the stock market). During bubbles, investors stop valuing companies based on fundamentals and instead invest based on the expectation that prices will continue to rise and “greater fools” will buy the assets from them at a higher price. This process is unsustainable, which is why bubbles eventually pop.  But when the economic fundamentals are strong, the last buyer can always hold onto the asset and collect a return through the asset’s cash flows, thereby preventing a pop.&lt;/li&gt;
&lt;li&gt;The forces that drive the internet economy are strong and will probably only get stronger. I argue this regarding online advertising &lt;a href=&quot;http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/&quot;&gt;here&lt;/a&gt; so won’t repeat it. Since I wrote that post we’ve also seen a number of tech companies emerge that are generating significant revenues through non-advertising means – “freemium” (e.g Dropbox), paid mobile apps, virtual goods (e.g. Zynga), transaction fees (AirBnB), etc.&lt;/li&gt;
&lt;li&gt;I think it’s a good thing that the speculation on large private tech companies is happening in secondary markets where the risks are being taken by institutions or wealthy individuals. This is in stark contrast to the dot-com bubble of the 90s where many of the people holding the bag when bubble popped were non-rich people who bought stocks through public markets. Obviously this could change if we have a bunch of tech IPOs.&lt;/li&gt;
&lt;/ol&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Founder Stories]]></title>
            <description><![CDATA[Erick Schonfeld from TechCrunch asked me a few months ago if I’d be on a TechCrunch video show where we interviewed startup founders. I love…]]></description>
            <link>https://cdixon.org/2011/03/24/founder-stories</link>
            <guid isPermaLink="false">https://cdixon.org/2011/03/24/founder-stories</guid>
            <pubDate>Thu, 24 Mar 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Erick Schonfeld from TechCrunch asked me a few months ago if I’d be on a TechCrunch video show where we interviewed startup founders. I love startups. While other people watch sports on Sunday, I prefer to sit around with friends and chat about what new startups have launched, how they are doing, what product and marketing strategies are working, etc.&lt;/p&gt;
&lt;p&gt;Erick originally called the show “Startup Sherpa.” The word “sherpa” implied that I was giving people advice. The people we invited to the show were either my peers or people who knew far more than me, so I felt very uncomfortable with that title. I really like to hear “war stories” (a term used in venture capital) but calling it that would have been disrespectful to military people who fight actual wars versus the inconsequential battles we have amongst startups and investors. So we chose “Founder Stories” instead.&lt;/p&gt;
&lt;p&gt;I don’t get paid by TechCrunch and they don’t have a fancy editing budget so what you see is effectively live. I probably make an ass out of myself a lot. I actually haven’t brought myself to watch most of the episodes because I can’t stand all my verbal tics like saying “etc” and “you know.” The saving grace of the show is the incredible people we get to come on to share their stories. I think they participate mostly because it’s TechCrunch – the premier tech blog – and also because they know I love startups. I want to try to learn from the founders’ early experiences rather than ask questions about “hot topics” or “gotchas.” I like to think of “Founder Stories” as a show that I would have wanted to watch when I was a first-time entrepreneur. That’s how I explain the show to potential guests and also how I think about it when Erick and I come up with questions.&lt;/p&gt;
&lt;p&gt;The show is available as a free podcast on iTunes &lt;a href=&quot;http://itunes.apple.com/us/podcast/founder-stories/id423462670&quot;&gt;here&lt;/a&gt;. It’s also on TechCrunch &lt;a href=&quot;http://techcrunch.com/tag/founder-stories/&quot;&gt;here&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;I’ve never talked to Mike Arrington about this but I’d like to thank him for making long form and respectful content available to entrepreneurs and investors. Erick has also been great, along with Josh Zelman who is the AOL/TechCrunch video producer.&lt;/p&gt;
&lt;p&gt;I’d love to hear feedback and suggestions for how to improve the show.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[SEO is no longer a viable marketing strategy for startups]]></title>
            <description><![CDATA[Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial…]]></description>
            <link>https://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups</link>
            <guid isPermaLink="false">https://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups</guid>
            <pubDate>Sat, 05 Mar 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial growth. Their marketing strategy (whether deliberate or not) was roughly: 1) build a community of contributors that created high-quality content, 2) become the definitive place to link to for the topics they covered, 3) rank highly in organic search results.  This led to a virtuous cycle where SEO drew more users, leading to more contributors and more inbound links, leading to more SEO, and so on.  From roughly 2001-2008, SEO was the most effective marketing channel for high-quality informational sites.&lt;/p&gt;
&lt;p&gt;I talk to lots of startups and almost none that I know of post-2008 have gained significant traction through SEO (the rare exceptions tend to be focused on content areas that were previously un-monetizable). Google keeps its ranking algorithms secret, but it is widely believed that inbound links are the preeminent ranking factor.  This ends up rewarding sites that are 1) older and have built up years of inbound links 2) willing to engage in aggressive link building, or what is known as black-hat SEO. (It is also very likely that Google rewards sites for the simple fact that they are older. For educated guesses on which factors matter most for SEO, see SEOMoz’s excellent &lt;a href=&quot;http://www.seomoz.org/article/search-ranking-factors&quot;&gt;search engine ranking factors survey&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Consider, for example, the extremely lucrative category of hotel searches. Search Google for “Four Seasons New York” and this ad-riddled TripAdvisor page ranks highly:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-03-05-at-3-33-03-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.66666666666666%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 03 05 at 3 33 03 pm 300x194&quot;
        title=&quot;Screen shot 2011-03-05 at 3.33.03 PM&quot;
        src=&quot;/static/e26eb3bdd00ae79c155f7da6474ef6e7/135ae/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png&quot;
        srcset=&quot;/static/e26eb3bdd00ae79c155f7da6474ef6e7/924ad/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png 170w,
/static/e26eb3bdd00ae79c155f7da6474ef6e7/135ae/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png 300w&quot;
        sizes=&quot;(max-width: 300px) 100vw, 300px&quot;
        loading=&quot;lazy&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-03-05 at 3.33.03 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(TechCrunch had a very good &lt;a href=&quot;http://techcrunch.com/2010/11/12/tripadvisor-is-a-great-advertisement/&quot;&gt;article&lt;/a&gt; on the TripAdvisor’s decline in quality).&lt;/p&gt;
&lt;p&gt;In contrast, this cleaner and more informative page from the relatively new website &lt;a href=&quot;http://www.oyster.com&quot;&gt;Oyster&lt;/a&gt; ranks much lower in Google results:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-03-05-at-3-33-35-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.666666666666664%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 03 05 at 3 33 35 pm 300x173&quot;
        title=&quot;Screen shot 2011-03-05 at 3.33.35 PM&quot;
        src=&quot;/static/c6f96cbf33d6955f37c03454ff30baf5/135ae/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png&quot;
        srcset=&quot;/static/c6f96cbf33d6955f37c03454ff30baf5/924ad/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png 170w,
/static/c6f96cbf33d6955f37c03454ff30baf5/135ae/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png 300w&quot;
        sizes=&quot;(max-width: 300px) 100vw, 300px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-03-05 at 3.33.35 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;As a result, web users have a worse experience and startups are incentivized to clutter their pages with ads and use aggressive tactics to increase their SEO when they should just be focused on creating great user experiences.&lt;/p&gt;
&lt;p&gt;The web economy (ecommerce + advertising) is a multi-hundred billion dollar market.  Much of this revenue comes from traffic that comes from SEO. This has led to a multibillion-dollar SEO industry. Some of the SEO industry is “white hat,” which generally means consultants giving benign advice for making websites search-engine friendly. But there is also a huge industry of black-hat SEO consultants who trade and sell links, along with companies like content farms that promote their own low-quality content through aggressive SEO tactics.&lt;/p&gt;
&lt;p&gt;Google seems to be doing everything it can to improve its algorithms so that the best content rises to the top (the recent &lt;a href=&quot;http://www.wired.com/epicenter/2011/03/the-panda-that-hates-farms/&quot;&gt;“panda” update&lt;/a&gt; seems to be a step forward). But there are many billions of dollars and tens of thousands of people working to game SEO. And for now, at least, high-quality content seems to be losing. Until that changes, startups – who generally have small teams, small budgets, and the scruples to avoid black-hat tactics – should no longer consider SEO a viable marketing strategy.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The importance of predictability for platform developers]]></title>
            <description><![CDATA[A platform is a technology or product upon which many other technologies or products are built. Some platforms are controlled by a single…]]></description>
            <link>https://cdixon.org/2011/02/21/the-importance-of-predictability-for-platform-developers</link>
            <guid isPermaLink="false">https://cdixon.org/2011/02/21/the-importance-of-predictability-for-platform-developers</guid>
            <pubDate>Mon, 21 Feb 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A platform is a technology or product upon which many other technologies or products are built. Some platforms are controlled by a single corporation: e.g. Windows, iOS, and Facebook. Some are controlled by standards committees or groups of companies: e.g. the web (html/http), RSS, and email (smtp).&lt;/p&gt;
&lt;p&gt;Platforms succeed when they are 1) financially sustainable, and 2) have a sufficient number of developers that are financially sustainable. Fostering a successful developer community means convincing developers (and, possibly, investors in developers) that the platform is a worthwhile investment of time and money.&lt;/p&gt;
&lt;p&gt;Developers who create applications for platforms take on all the usual risks related to launching a new product, but in addition take on platform-specific risks, namely:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Platform decline: the platform will decline or go away entirely.&lt;/li&gt;
&lt;li&gt;Subsumption risk: the platform will subsume the functionality of the developer’s application.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The most successful platforms try to mitigate these risks for developers (not just the appearance of these risks). One way to mitigate platform decline risk is to launch the platform after the platform’s core product is already successful, as Facebook did with its app platform and Apple did with its iOS platform. Platforms that are not yet launched or established can use other methods to reassure developers; for example, when Microsoft launched the first Xbox they very publicly announced they would invest $1B in the platform.&lt;/p&gt;
&lt;p&gt;To mitigate subsumption risk, the platform should give developers predictability around the platform’s feature roadmap. Platforms can do this explicitly by divulging their product roadmap but more often do it implicitly by demonstrating predictable patterns of feature development. Developers and investors are willing to invest in the iOS platform because – although Apple will take 30% of the revenue – it is highly unlikely that Apple will, say, create games to compete with Angry Birds or news to compete with The New York Times. Similarly, Facebook has thus far stuck to “utility” features and not competed with game makers, dating apps, etc.&lt;/p&gt;
&lt;p&gt;Platforms that are controlled by for-profit businesses that don’t yet have established business models have special challenges. These companies are usually in highly experimental modes and therefore probably themselves don’t know their future core features. The best they can do to mitigate developers’ risks are 1) provide as much guidance as possible on future features, and 2) when developer subsumption is necessary, do so in a way that keeps the developer ecosystem financially healthy – for example, by acquiring the subsumed products.&lt;/p&gt;
&lt;p&gt;The least risky platforms to develop on are successful open platforms like the web, email, and Linux. These platforms tend to change slowly and have very public development roadmaps. In the rare case where a technology is subsumed by an open platform, it is usually apparent far in advance. For example, Adobe Flash might be subsumed by the canvas element in HTML5, but Adobe had years to see HTML5 approaching and adjust its strategy accordingly. The predictability of open platforms is the main reason that vast amounts of wealth have been created on top of them and investment around them continues unabated.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Selling pickaxes during a gold rush]]></title>
            <description><![CDATA[There is a saying in the startup world that “you can mine for gold or you can sell pickaxes.” This is of course an allusion to the…]]></description>
            <link>https://cdixon.org/2011/02/05/selling-pickaxes-during-a-gold-rush</link>
            <guid isPermaLink="false">https://cdixon.org/2011/02/05/selling-pickaxes-during-a-gold-rush</guid>
            <pubDate>Sat, 05 Feb 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There is a saying in the startup world that “you can mine for gold or you can sell pickaxes.” This is of course an allusion to the California Gold Rush where some of the most successful business people such as &lt;a href=&quot;http://en.wikipedia.org/wiki/Levi_Strauss&quot;&gt;Levi Strauss&lt;/a&gt; and &lt;a href=&quot;http://en.wikipedia.org/wiki/Samuel_Brannan&quot;&gt;Samuel Brannan&lt;/a&gt; didn’t mine for gold themselves but instead sold supplies to miners – wheelbarrows, tents, jeans, pickaxes etc. Mining for gold was the more glamorous path but actually turned out, in aggregate, to be a worse return on capital and labor than selling supplies.&lt;/p&gt;
&lt;p&gt;When a major new technology trend emerges – say, the rise of online video or social media – entrepreneurs can try to capitalize on the trend by creating a consumer product (mining for gold), or by creating tools to enable consumer products (selling pickaxes).  For most technology trends, the number of successful companies created in gold mining and pickaxes are comparable, yet the gold mining businesses tend to get much more attention. In online video, YouTube is often thought of as the big winner; however, to date, more money has been made by online video by infrastructure suppliers like &lt;a href=&quot;http://finance.yahoo.com/q/bc?s=AKAM&amp;#x26;t=my&amp;#x26;l=on&amp;#x26;z=l&amp;#x26;q=l&amp;#x26;c=&quot;&gt;Akamai&lt;/a&gt;. Y-combinator is known for their high-profile B2C startups but their &lt;a href=&quot;http://yclist.com/&quot;&gt;biggest exits&lt;/a&gt; to date have been in infrastructure (most recently Heroku which rode the popularity of Ruby on Rails to a &gt;$200M exit)*.&lt;/p&gt;
&lt;p&gt;When you start a company, the most important consideration should be working on a product you love (a startup can be a 5+ year endeavor so if you don’t love it you probably won’t be able to endure the ups and downs).  A secondary consideration should be matching the skills of the founders to the market.  Tools companies tend to require stronger technical and sales skills, whereas B2C companies tend to be more about predicting consumer tastes and marketing skills. A final consideration should be the supply-and-demand of startups in the space.  Because B2C companies tend to be “sexier” and get more press coverage, many entrepreneurs are drawn to them. This tends to lead to greater competition even though the market opportunities might not justify it.&lt;/p&gt;
&lt;p&gt;There are many exciting technology opportunities emerging today: some are horizontal like mobile, location, and local; others are vertical like fashion, art, real estate, education, finance and energy. If you are an entrepreneur thinking about starting a company around these trends, consider selling pickaxes.&lt;/p&gt;
&lt;p&gt;* Note that there are many great B2C YC companies, so the list of exits will no doubt change and probably skew more towards B2C over time.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.]]></title>
            <description><![CDATA[People love to focus on horse races:  NYC vs Silcon Valley, Facebook vs Twitter, IPO markets vs private exchanges, the valuation of some…]]></description>
            <link>https://cdixon.org/2011/01/12/predicting-the-future-of-the-internet-is-easy-anything-it-hasnt-yet-dramatically-transformed-it-will</link>
            <guid isPermaLink="false">https://cdixon.org/2011/01/12/predicting-the-future-of-the-internet-is-easy-anything-it-hasnt-yet-dramatically-transformed-it-will</guid>
            <pubDate>Wed, 12 Jan 2011 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;People love to focus on horse races:  NYC vs Silcon Valley, Facebook vs Twitter, IPO markets vs private exchanges, the valuation of some startup vs some other startup.  Like a lot of people in the tech industry, I’ve gotten inquiries recently on the meaning of Facebook’s “private” IPO with Goldman Sachs, whether VC valuations are indicative of a bubble, whether such-and-such startup is overvalued, and so on.&lt;/p&gt;
&lt;p&gt;These questions are all footnotes that will be forgotten in a few years.  The Internet has gone through fits and starts – in particular the dot com crash of 2000 disillusioned many – but every year we see it transform industries that previously sauntered along blissfully denying its existence.  Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV &amp;#x26; movies, real estate, politics &amp;#x26; government. Soon to be transformed (among many others): healthcare, education, energy.&lt;/p&gt;
&lt;p&gt;The modern economy runs primarily on information, and the Internet is by orders of magnitude the greatest information mechanism ever invented.  In a few years, we’ll look back in amazement that in 2011 we still used brokers to help us find houses, that doctors kept records scribbled on notepads, that government information was carefully spoon-fed to a compliant press corps, and that scarcity of information and tools was a primary inhibitor to education.&lt;/p&gt;
&lt;p&gt;Thus far the US has led Internet innovation. There are things the US can do to keep this lead, including: 1) exporting the entrepreneurial ethos of Silicon Valley to the rest of the country (including places like my home city, New York), 2) allowing talented people to go where their skills are most needed (e.g. by changing US immigration policies), 3) convincing the upcoming generation to innovate in sectors that have a direct impact on the quality of peoples’ lives (Internet, healthcare, energy, education) instead of wasting time on sectors that were historically prestigious (e.g. finance and law) but add little to negative economic and societal value.&lt;/p&gt;
&lt;p&gt;Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.  People, companies, investors and even countries can’t stop this transformation. The only choice you have is whether you join the side of innovation and progress or you don’t.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The “thin edge of the wedge” strategy]]></title>
            <description><![CDATA[Establishing relationships with new users is the hardest part of growing a startup.  For consumer products establishing relationships can…]]></description>
            <link>https://cdixon.org/2010/12/26/the-thin-edge-of-the-wedge-strategy</link>
            <guid isPermaLink="false">https://cdixon.org/2010/12/26/the-thin-edge-of-the-wedge-strategy</guid>
            <pubDate>Sun, 26 Dec 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Establishing relationships with new users is the hardest part of growing a startup.  For consumer products establishing relationships can mean many things: installs, registrations, purchases, or even just getting users to think of your website as a place to go for certain purposes.  For B2B products, establishing relationships means getting internal users or testers and eventually contracts and payments. For business development partners – for example API/widget partners – establishing relationships usually means getting functionality embedded in partners’ products (e.g. a widget on their website).&lt;/p&gt;
&lt;p&gt;One common strategy for establishing this initial relationship is what is sometimes known as the “thin edge of the wedge” strategy (aka the “tip of the spear” strategy).  This strategy is analogous to the &lt;a href=&quot;http://cdixon.org/2010/08/21/the-bowling-pin-strategy/&quot;&gt;bowling pin strategy&lt;/a&gt;: both are about attacking a smaller problem first and then expanding out.  The difference is that the wedge strategy is about product tactics while the bowling pin strategy is about marketing tactics.&lt;/p&gt;
&lt;p&gt;Sometimes the wedge can be a simple feature that existing companies overlooked or saw as inconsequential. The ability to share photos on social networks was (strangely) missing from the default iPhone camera app (and sharing was missing from many third-party camera apps like Hipstimatic that have popular features like &lt;a href=&quot;http://hunch.com/lo-fi-cameras/&quot;&gt;lo-fi camera&lt;/a&gt; filters), so Instagram and Picplz filled the void. &lt;a href=&quot;http://twitter.com/#!/rabois/status/3517058721517568&quot;&gt;Presumably&lt;/a&gt;, these startups are going to try to use mobile photo sharing as the wedge into larger products (perhaps full-fledged social networks?).&lt;/p&gt;
&lt;p&gt;Sometimes the wedge is a “&lt;a href=&quot;http://cdixon.org/2010/08/21/the-bowling-pin-strategy/&quot;&gt;single player mode&lt;/a&gt;” – a famous example is early adopters who used Delicious to store browser bookmarks in the cloud and then only later – once the user base hit critical mass – used its social bookmarking features. Other times the wedge lies on one side of a two-sided market, in which case the wedge strategy could be thought of as a variant of the &lt;a href=&quot;http://cdixon.org/2010/10/17/the-ladies-night-strategy/&quot;&gt;“ladies night” strategy&lt;/a&gt;. I’m told that OpenTable initially used the wedge strategy by providing restaurants with terminals that acted like simple, single-player CRM systems. Once they acquired a critical mass of restaurants in key cities (judiciously chosen using the bowling pin strategy), opentable.com had sufficient inventory to become useful as a one-stop shop for consumers.&lt;/p&gt;
&lt;p&gt;Critics sometimes confuse wedge features with final products. For example, some argue that mobile photo sharing is “just a feature,” or that game mechanics on geo apps like Foursquare are just faddish “&lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toys&lt;/a&gt;.” Some go so far as to argue that the tech startup world as a whole is going through a phase of just building “dinky” features and companies. Perhaps some startups have no plan and really are just building features, likely with the hope of flipping themselves to larger companies. Good startups, however, think about the whole wedge from the start. They build an initial user base with simple features and then quickly iterate to create products that are enduringly useful, thereby creating companies that have stand-alone, defensible value.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The interoperability of social networks]]></title>
            <description><![CDATA[Google recently added a caustic warning message when users attempt to export their Google Contacts to Facebook: Hold on a second. Are you…]]></description>
            <link>https://cdixon.org/2010/11/10/the-interoperability-of-social-networks</link>
            <guid isPermaLink="false">https://cdixon.org/2010/11/10/the-interoperability-of-social-networks</guid>
            <pubDate>Wed, 10 Nov 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Google recently added a caustic warning &lt;a href=&quot;http://www.google.com/mail/help/contacts_export_confirm.html&quot;&gt;message&lt;/a&gt; when users attempt to export their Google Contacts to Facebook:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Hold on a second. Are you super sure you want to import your contact information for your friends into a service that won’t let you get it out?&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Facebook allows users to download their personal information (photos, profile info, etc) but has been fiercely protective of the social graph (you can’t download friends, etc). The downloaded data arrives in a .zip file – hardly a serious attempt to interoperate using modern APIs (&lt;em&gt;update: Facebook employee corrects me/clarifies in comments&lt;/em&gt; &lt;a href=&quot;http://cdixon.org/2010/11/10/the-interoperability-of-social-networks/#comment-96196129&quot;&gt;&lt;em&gt;here&lt;/em&gt;&lt;/a&gt;). In contrast, Google has taken an aggressively open posture with respect to the social graph, calling Facebook’s policy “data protectionism.”&lt;/p&gt;
&lt;p&gt;The economic logic behind these positions is a straightforward application of &lt;a href=&quot;http://en.wikipedia.org/wiki/Metcalfe&amp;#x27;s_law&quot;&gt;Metcalf’s law&lt;/a&gt;, which states that the value of a network is the square of the number of nodes in the network*.  A corollary to Metcalf’s law is that when two networks connect or interoperate the smaller network benefits more than the larger network does. If network A has 10 users then according to Metcalf’s law its “value” is 100 (10*10).   If network B has 20 users than it’s value is 400 (20*20). If they interoperate, network A gains 400 in value but network B only gains 100 in value. Interoperating is generally good for end users, but assuming the two networks are directly competitive – one’s gain is the other’s loss – the larger network loses.&lt;/p&gt;
&lt;p&gt;A similar network interoperability battle happened last decade among Instant Messaging networks. AIM was the dominant network for many years and refused to interoperate with other networks. Google Chat adopted open standards (Jabber) and MSN and Yahoo were much more open to interoperating. Eventually this battle ended in a whimper — AIM never generated much revenue, and capitulated to aggregators and openness.  (Capitulating was probably a big mistake – they had the opportunity to be as financially successful as Skype or &lt;a href=&quot;http://en.wikipedia.org/wiki/Tencent_QQ&quot;&gt;Tencent&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Google might very well genuinely believe in openness. But it is also &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;strategically wise&lt;/a&gt; for them to be open in layers that are not strategic (mobile OS, social graph, Google docs) while remaining closed in layers that are strategic (search ranking algorithm, virtually all of their advertising services).&lt;/p&gt;
&lt;p&gt;When Google releases their long-awaited new social network, Google Me, expect an emphasis on openness. This could create a rich ecosystem around their social platform that could put pressure on Facebook to interoperate. True interoperability would be great for startups, innovation, and – most importantly – end users.&lt;/p&gt;
&lt;p&gt;* Metcalf’s law assumes that every node is connected to every node and each connection is equally valuable. Real world networks are normally not like this. In particular, social networks are much more clustered and therefore have somewhere between linear and exponential utility growth with each additional user.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Timing your startup]]></title>
            <description><![CDATA[I never had the opportunity to invest in YouTube but I have to admit that if I did I probably would have passed (which of course would have…]]></description>
            <link>https://cdixon.org/2010/11/07/timing-your-startup</link>
            <guid isPermaLink="false">https://cdixon.org/2010/11/07/timing-your-startup</guid>
            <pubDate>Sun, 07 Nov 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I never had the opportunity to invest in YouTube but I have to admit that if I did I probably would have passed (which of course would have been a huge mistake). I’d been around the web long enough to remember the dozens of companies before YouTube that tried to create crowdsourced video sites and failed. Based on “pattern recognition” (a dangerous thing to rely on), I was deeply skeptical of the space.&lt;/p&gt;
&lt;p&gt;What I failed to appreciate was that the prior crowdsourced video sites were ahead of their time. YouTube built a great product, but, more importantly, got the market timing just right. By 2005, all the pieces were in place to enable crowdsourced video – the proliferation of home broadband, digital camcorders, a version of Flash where videos “just worked,” copyrighted web content that could be exported to YouTube, and blogs that wanted to embed videos.&lt;/p&gt;
&lt;p&gt;Almost anything you build on the web has already been tried in one form or another. This should not deter you. Antecedents existed for Google, Facebook, Groupon, and almost every other tech startup that has succeeded since the dot-com bubble.&lt;/p&gt;
&lt;p&gt;Entrepreneurs should always ask themselves “why will I succeed where others failed?” If the answer is simply “I’m doing it right” or “I’m smarter,” you are probably underestimating your antecedents, which were probably run by competent or even great entrepreneurs who did everything possible to succeed. Instead your answer should include an explanation about why the timing is right – about some fundamental changes in the world that enable the idea you are pursuing to finally succeed. If the necessary conditions were in place, say, a year ago, that might still be ok – YouTube happened to nail their product out of the gate, but if they hadn’t a company started later might have succeeded in their place.&lt;/p&gt;
&lt;p&gt;Often the necessary conditions are only beginning to emerge and knowing when they will do so sufficiently is very hard to predict. We all know the internet will become fully social, personalized, mobile, location-based, interactive, etc. and lots of new, successful startups will be built as a result. What is very hard to know is when these things will happen at scale.&lt;/p&gt;
&lt;p&gt;One way to mitigate timing risk is to manage your cash accordingly. If you are trying to ride existing trends you should ramp up aggressively. If you are betting on emerging trends it is better to keep your burn low and runway long.  This takes discipline and patience but is also the way you hit it really big.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Instrumenting the offline world]]></title>
            <description><![CDATA[In the last decade there have been major advances in storing, analyzing, and acting upon extremely large data sets.  Data sets that were…]]></description>
            <link>https://cdixon.org/2010/10/29/instrumenting-the-offline-world</link>
            <guid isPermaLink="false">https://cdixon.org/2010/10/29/instrumenting-the-offline-world</guid>
            <pubDate>Fri, 29 Oct 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In the last decade there have been major advances in storing, analyzing, and acting upon extremely large data sets.  Data sets that were previously left dormant are now being put to (&lt;a href=&quot;http://cdixon.org/2010/10/22/online-privacy-whats-at-stake/&quot;&gt;mostly&lt;/a&gt;) constructive use. But the vast majority of information in the world isn’t available for analysis because it isn’t being electronically collected.&lt;/p&gt;
&lt;p&gt;This is changing rapidly as new data collection mechanisms are implemented – what engineers refer to as &lt;a href=&quot;http://en.wikipedia.org/wiki/Instrumentation&quot;&gt;instrumentation&lt;/a&gt;. Common examples of instrumentation include thermometers, public safety cameras, and heart rate monitors.&lt;/p&gt;
&lt;p&gt;Smart phones are one obvious new source of potential instrumentation.  A person’s location, activities, audio and visual environment – and probably many more things that haven’t been thought of yet – can now be monitored.  This of course raises privacy issues.  Hopefully these privacy issues will be solved by requiring explicit user opt-in.  If so, this will require creating incentives for people to do so.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.foursquare.com&quot;&gt;Foursquare&lt;/a&gt; instruments location in an opt-in way through the check in. The incentives are social and game-like, but the data produced could be useful for many more “serious” purposes.  &lt;a href=&quot;http://www.fitbit.com/&quot;&gt;Fitbit&lt;/a&gt; instruments a person’s health-related activity. The immediate incentive is to measure and improve your own health, but the aggregate data could be analyzed by medical researchers to benefit others.&lt;/p&gt;
&lt;p&gt;In manufacturing, there has been a lot of interesting &lt;a href=&quot;http://hpsweb.honeywell.com/Cultures/en-US/Products/wireless/SecondGenerationWireless/default.htm?gclid=CK-M6qCe-KQCFeJN5QodpxUjhw&quot;&gt;innovation&lt;/a&gt; around monitoring machinery, for example by using loosely joined, inexpensive &lt;a href=&quot;http://en.wikipedia.org/wiki/Mesh_networking&quot;&gt;mesh networks&lt;/a&gt;.  In homes, protocols like &lt;a href=&quot;http://www.zigbee.org/Markets/ZigBeeHomeAutomation/Overview.aspx&quot;&gt;ZigBee&lt;/a&gt; allow devices to communicate which allows, for example, automation of tedious tasks and improved energy efficiency.&lt;/p&gt;
&lt;p&gt;In the next decade, there will be a massive amount of innovation and opportunity around the &lt;a href=&quot;http://informationarbitrage.com/post/1359525958/big-ideas-around-big-problems-in-big-data&quot;&gt;big data&lt;/a&gt; stack. Instrumentation will be the foundational layer of that stack.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[You need to use social services to understand them]]></title>
            <description><![CDATA[I don’t know if Malcolm Gladwell is right when he claims “the revolution will not be tweeted,” but I can say with certainty that the Twitter…]]></description>
            <link>https://cdixon.org/2010/10/23/you-need-to-use-social-services-to-understand-them</link>
            <guid isPermaLink="false">https://cdixon.org/2010/10/23/you-need-to-use-social-services-to-understand-them</guid>
            <pubDate>Sat, 23 Oct 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I don’t know if Malcolm Gladwell is right when he claims “&lt;a href=&quot;http://www.newyorker.com/reporting/2010/10/04/101004fa_fact_gladwell&quot;&gt;the revolution will not be tweeted&lt;/a&gt;,” but I can say with certainty that the Twitter he describes is not the Twitter I know. Gladwell’s central argument is that Twitter creates weak ties but social movements require strong ties. I’ve made more strong ties through Twitter (and blogging) than I have through any communications medium I’ve ever used before. The relationships start off weak – a retweet, @ reply, or blog comment – but often strengthen through further discussions and eventually become new friendships and business relationships.&lt;/p&gt;
&lt;p&gt;I can see why Gladwell gets this wrong – he doesn’t &lt;a href=&quot;http://twitter.com/#!/gladwell&quot;&gt;seem&lt;/a&gt; to really use Twitter (he does &lt;a href=&quot;http://gladwell.typepad.com/&quot;&gt;blog&lt;/a&gt; occasionally). I barely tweeted or blogged for a long time too. I read blogs basically since their advent, but social services are fundamentally participatory: reading blogs/tweets is to social services as watching TV is to a real life conversations. I finally relented at the insistence of &lt;a href=&quot;http://www.caterina.net&quot;&gt;Caterina&lt;/a&gt;, who had the foresight to insist that everyone at &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; blog, tweet, contribute to open source projects, etc. I now get some of my best ideas from responses to tweets and blog posts, and have developed dozens of strong relationships through the experience.&lt;/p&gt;
&lt;p&gt;I made some &lt;a href=&quot;http://twitter.com/#!/cdixon/status/28051825694&quot;&gt;jokes&lt;/a&gt; on Twitter the past few days about Kleiner Perkins’ new social fund.  These were meant to be lighthearted: I only know one person at KP and from everything I’ve seen they seem to be smart, friendly people. But underneath the jokes lies a real issue: the partners there don’t seem to really participate in social services (something they only underscored by announcing their new fund at a press conference that targeted traditional media outlets).&lt;/p&gt;
&lt;p&gt;I’d love to engage in a debate with smart people like Gladwell about the impact of the social web on culture, politics, activism and so on. I also think it’s great to see savvy investors like KP allocate significant resources to the next wave of social web innovation. But it’s hard for me to take them seriously when they don’t seem to take their subject matter seriously.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Online privacy: what’s at stake]]></title>
            <description><![CDATA[It is widely believed that a flourishing democracy requires an independent, diverse, and financially solvent press.  With print newspapers…]]></description>
            <link>https://cdixon.org/2010/10/21/online-privacy-whats-at-stake</link>
            <guid isPermaLink="false">https://cdixon.org/2010/10/21/online-privacy-whats-at-stake</guid>
            <pubDate>Thu, 21 Oct 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It is widely believed that a flourishing democracy requires an independent, diverse, and financially solvent press.  With print newspapers set to &lt;a href=&quot;http://www.editorsweblog.org/newspaper/2010/09/arthur_sulzberger_on_charging_online_to.php&quot;&gt;disappear&lt;/a&gt; in the next few years, the future of quality journalism is highly uncertain. This year, the online version of the New York Times will &lt;a href=&quot;http://www.businessinsider.com/new-york-times-earnings-2010-10&quot;&gt;generate&lt;/a&gt; about $200M in revenue, a number that will need to approximately triple to support the current Times newsroom.&lt;/p&gt;
&lt;p&gt;Most people who understand Internet economics believe that the best hope for online journalism is online advertising. Luckily, online advertising has significant room for improvement. Most of the revenue of the Times’ online business is generated through display ads. The main metric used to price display ads is derived from the rate at which users click on the ads, a rate which today is dismally low.  Thus the Times could continue to support its current newsroom staff if display ads became even moderately effective.&lt;/p&gt;
&lt;p&gt;Lots of smart people are working on improving the efficacy of display advertising. Large companies like Google and Microsoft are investing billions in the problem. As usual, though, the best ideas are coming from startups. Companies like &lt;a href=&quot;http://bluekai.com/&quot;&gt;Blue Kai&lt;/a&gt; and &lt;a href=&quot;http://www.magnetic.is/&quot;&gt;Magnetic&lt;/a&gt; are bringing search intent (particularly &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt; – the core of Google’s profits) to display ads.  Companies like &lt;a href=&quot;http://media6degrees.com/&quot;&gt;Media6Degrees&lt;/a&gt; are using social relations to target ads based on the principle that “birds of a feather flock together” (Facebook will &lt;a href=&quot;http://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads/&quot;&gt;likely&lt;/a&gt; start doing this soon as well).  &lt;a href=&quot;http://www.solvemedia.com//index.html&quot;&gt;Solve Media&lt;/a&gt; turns the hassle of registration into an engaging marketing event.  &lt;a href=&quot;http://www.convertro.com&quot;&gt;Convertro&lt;/a&gt; is working on properly attributing online purchases “up the funnel” from sites that harvest intent (search, coupon sites) to sites that generate intent (media, commerce guides). All told, there are a few hundred well-funded ad tech startups developing clever methods to improve display advertising.&lt;/p&gt;
&lt;p&gt;Many of these targeting technologies rely on gathering information about users, something that inevitably raises concerns about privacy. Until recently, online privacy depended mostly on anonymity. There is a big difference between advertisers knowing, say, users’ sexual preferences and knowing users’ sexual preferences &lt;em&gt;plus&lt;/em&gt; personally identifiable information like their names.  Like most people, I don’t mind if it’s easy to find my real name along with my job history, but I do mind if it’s easy to discover other personal details about me. When I’m not anonymous (e.g. on Facebook) I want to control what is disclosed – to have some privacy – but when I’m anonymous I’m far less concerned about information gathered for marketing purposes.&lt;/p&gt;
&lt;p&gt;Before the rise of social networks, online ad targeting services (mostly) tracked people anonymously, through cookies that weren’t linked to personally identifiable information.  Social networks have provided the means to de-anonymize information that was previously anonymous. &lt;a href=&quot;http://gigaom.com/2010/10/21/rapleaf-web-startups/?utm_source=earth2tech&amp;#x26;utm_medium=specialtopics&quot;&gt;Apparently&lt;/a&gt;, the wall has been breached between 1) my real identity plus my self-moderated public information, and 2) my anonymous, non-self-moderated private information.&lt;/p&gt;
&lt;p&gt;The good news is that the things users want to keep secret are almost always the least important things to online advertisers. It turns out that knowing people are trying to buy new washing machines or plane tickets to Hawaii is vastly more monetizeable than their names, who they were dating, or the dumb things they did in college. Thus, there are probably a set of policies that allow ad targeting to succeed while also letting users control what is associated with their real identities.  Hopefully, we can have an informed and nuanced debate about what these policies might be. The stakes are high.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Note:  As with almost everything I write on this blog, I have a ton of conflicts of interest.  Among them: I’m an investor, directly or indirectly, in a bunch of technology startups.  Some of these – including some companies mentioned above – are trying to create new advertising technologies. I am currently the CEO &amp;#x26; Cofounder of&lt;/em&gt; &lt;a href=&quot;http://hunch.com&quot;&gt;&lt;em&gt;Hunch&lt;/em&gt;&lt;/a&gt;&lt;em&gt;, which among other things is trying to personalize the internet through an explicit user opt-in mechanism.&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Some thoughts on incumbents]]></title>
            <description><![CDATA[Reposted from Oct 7, 2010 from cdixon.posterous.com By “incumbents” I mean the big companies that are loosely competitive to your startup…]]></description>
            <link>https://cdixon.org/2010/10/07/some-thoughts-on-incumbents</link>
            <guid isPermaLink="false">https://cdixon.org/2010/10/07/some-thoughts-on-incumbents</guid>
            <pubDate>Thu, 07 Oct 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;&lt;em&gt;&lt;a href=&quot;http://cdixon.posterous.com/thoughts-on-incumbents-from-a-startups-perspe&quot;&gt;Reposted&lt;/a&gt; from Oct 7, 2010 from cdixon.posterous.com&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;By “incumbents” I mean the big companies that are loosely competitive to your startup.&lt;/p&gt;
&lt;p&gt;- The first thing to do is try to understand the incumbent’s strategy.  For example, see my &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;analysis&lt;/a&gt; of Google’s strategy.&lt;/p&gt;
&lt;p&gt;- Being on an incumbent’s strategic roadmap is a double-edged sword.  On the one hand, they might copy what you build or acquire a competitor.  On the other hand, if you build a valuable asset you could sell your company the acquirer at a “strategic premium.”&lt;/p&gt;
&lt;p&gt;- Incumbents that don’t yet have a successful business model (e.g. Twitter) might &lt;strong&gt;think&lt;/strong&gt; they have a strategy, but expect it to change as they figure out their business model.  An incumbent without a successful business model is like a drunk person firing an Uzi around the room.&lt;/p&gt;
&lt;p&gt;- Understand the incumbent’s acquisition philosophy. More mature companies like Cisco barely try to do R&amp;#x26;D and are happy to acquire startups at high prices.  Incumbents that are immature like Facebook only do “talent acquisitions” which are generally bad outcomes for VC-backed startups (but good for bootstrapped or lightly funded startups). Google is semi-mature, and does a combination of talent and strategic acquisitions.&lt;/p&gt;
&lt;p&gt;- Understand the incumbent’s partnership philosophy.  Yahoo and Microsoft are currently very open to partnerships with startups.  Google and Facebook like to either acquire or build internally. If you don’t intend to sell your company, don’t talk seriously about partnerships to incumbents that don’t seriously consider them.&lt;/p&gt;
&lt;p&gt;- Every incumbent has M&amp;#x26;A people who spend a lot of their time collecting market intelligence. Just because they call you and hint at acquisition doesn’t mean they want to buy you – they are likely just fishing for info. If they really want to buy you, they will aggressively pursue you and make an offer.  As VCs like to say, startups are bought, not sold.&lt;/p&gt;
&lt;p&gt;- Try to focus on features/technologies that the incumbents aren’t good at.  Facebook is good at social and social-related (hard-core) technology.  Thus far they’ve kept their features at the “utility level” an haven’t built non-utility features (e.g. games, virtual goods, game mechanics).  Google thus far has been weak at social and Apple has been weak at web services.&lt;/p&gt;
&lt;p&gt;- Try to focus on business arrangements that the incumbents aren’t good at.  Facebook and Google only do outbound deals with large companies.  With small companies (e.g. local venues, small publishers) they try to generate business via inbound/self service. Building business relationships that the incumbents don’t have can be a very valuable asset.&lt;/p&gt;
&lt;p&gt;- Be careful building on platforms where the incumbent has demonstrated an inconsistent attitude toward developers. Apple rejects apps somewhat arbitrarily and takes a healthy share of revenues, but is generally consistent with app developers.  You can pretty safely predict what they will will allow to flourish. Twitter has been wildly inconsistent and shouldn’t be trusted as a platform.  Facebook has been mostly consistent although recently changed the rules on companies like Zynga with their new payment platform (that said, they generally seem to understand the importance of partners thriving and seem to encourage it).&lt;/p&gt;
&lt;p&gt;- Take advantage of incumbents’ entrenched marketing positioning.  The masses think of Twitter as a place to share trivial things like what you had for lunch (even if most power users don’t use it this way) and Facebook as a place to talk to friends.  They are probably stuck with this positioning.  &lt;a href=&quot;http://cdixon.org/2010/01/22/techies-and-normals/&quot;&gt;Normals&lt;/a&gt; generally think of each website as having one primary use case so if you can carve out a new use case you can distinguish yourself.&lt;/p&gt;
&lt;p&gt;- Consider the &lt;a href=&quot;http://www.amazon.com/Judo-Strategy-Competitors-Strength-Advantage/dp/1578512530&quot;&gt;judo strategy&lt;/a&gt;.  When pushed, don’t push back.  When Facebook adds features like check-ins, groups, or likes, consider interoperating with those features and building layers on top of them.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The segmentation of the venture industry]]></title>
            <description><![CDATA[Ford Motors dominated the auto market in the early 20th century with a single car model, the Model T.  At the time, customers were seeking…]]></description>
            <link>https://cdixon.org/2010/09/26/the-segmentation-of-the-venture-industry</link>
            <guid isPermaLink="false">https://cdixon.org/2010/09/26/the-segmentation-of-the-venture-industry</guid>
            <pubDate>Sun, 26 Sep 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Ford Motors dominated the auto market in the early 20th century with a single car model, the Model T.  At the time, customers were seeking low-cost, functional cars, and were satisfied by an extremely standardized product (Ford famously quipped that “customers can choose it in any color, as long as it’s black”). But as technology improved and serious competitors emerged, customers began wanting cars that were tailored to their specific needs and desires. The basis of competition shifted from price and basic functionality to ”&lt;a href=&quot;http://en.wikipedia.org/wiki/History_of_General_Motors&quot;&gt;style, power, and prestige&lt;/a&gt;“. General Motors surpassed Ford by capitalizing on this desire for segmentation. They created Cadillacs for wealthy older folks, Pontiacs for hipsters, and so on.&lt;/p&gt;
&lt;p&gt;Today, the venture financing industry is going through a similar segmentation process. Venture capital has only existed in its modern form for about 35 years.  In the early days there were relatively few VCs. Entrepreneurs were happy simply getting money and general business guidance.  Today, there is a surplus of venture capital and entrepreneurs have become increasingly savvy “shoppers.”  As a result, competition amongst venture financiers has increased and their “customers” (entrepreneurs) have flocked to more specialized “products.”&lt;/p&gt;
&lt;p&gt;Some of this segmentation has been by industry (IT, cleantech, health care) and subindustry (iPhone apps, financial tech, etc). But more pronounced, especially lately, has been the segmentation by company stage.  Today at least four distinct types of venture financing “products” have become popular.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Mentorship programs like Y Combinator help startups ideate, form founding teams, and build initial products. I suspect many of the companies they hatch wouldn’t exist at all (and certainly wouldn’t be as savvy) if it weren’t for these programs.&lt;/li&gt;
&lt;li&gt;So-called super angels provide capital and guidance to a) hire non-founder employees, b) further product development c) market the initial product (usually to early adopters), and d) raise follow on VC funding. Often current or former entrepreneurs themselves, super angels have gone through this stage many times as founders and angel investors.&lt;/li&gt;
&lt;li&gt;Traditional VCs (Sequoia, Kleiner, etc) help companies scale and get to profitability. They often have broad networks to help with hiring, sales, bizdev and other scaling functions. They are also experts at selling companies and raising follow-on financing.&lt;/li&gt;
&lt;li&gt;Accelerator funds (most prominent recently is DST) focus on providing partial liquidity and preparing the company for an IPO or big M&amp;#x26;A exit.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;In the past, traditional VC’s played all of of these roles (hence they called themselves “lifecycle” investors). They incubated companies, provided smalls seed financings, and in some cases provided later stage liquidity. But mostly the mentorship and angel investing roles were played by entrepreneurs who had expertise but shallow pockets and limited time and infrastructure.&lt;/p&gt;
&lt;p&gt;What we are witnessing now is a the VC industry segmenting as it matures. Mentorship and angel funding are performed more effectively by specialized firms.  Entrepreneurs seem to realize this and prefer these specialized “products.”  There is a lot of angst and controversy on tech blogs that tends to focus on individual players and events. But this is just a (sometimes salacious) byproduct of the larger trends. The segmentation of the venture industry is healthy for startups and innovation at large, even if at the moment it might be uncomfortable and confusing for some of the people involved.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough]]></title>
            <description><![CDATA[My most useful career experience was about eight years ago when I was trying to break into the world of VC-backed startups. I applied to…]]></description>
            <link>https://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough</link>
            <guid isPermaLink="false">https://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough</guid>
            <pubDate>Sun, 12 Sep 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;My most useful career experience was about eight years ago when I was trying to break into the world of VC-backed startups. I applied to hundreds of jobs: low-level VC roles, startups jobs, even to big tech companies. I got rejected from every single one. Big companies rejected me outright or gave me a courtesy interview before rejecting me. VCs told me they wanted someone with VC experience. Startups at the time were laying people off. The economy was bad (particularly where I was looking – consumer internet) and I had a strange resume (computer programmer, small bootstrapped startups, degree in philosophy and mathematical logic).&lt;/p&gt;
&lt;p&gt;The reason this period was so useful was that it helped me develop a really thick skin. I came to realize that employers weren’t really rejecting me as a person or on my potential – they were rejecting a resume. As it became depersonalized, I became bolder in my tactics. I eventually landed a job at &lt;a href=&quot;http://www.bvp.com/&quot;&gt;Bessemer&lt;/a&gt; (thanks to their willingness to take chances and look beyond resumes), which led to getting my first VC-backed startup funded, and things got better from there.&lt;/p&gt;
&lt;p&gt;One of the great things about looking for a job is that your “payoff” is almost always a max function (the best of all attempts), not an average. This is also generally true for raising VC financing, doing bizdev partnerships, hiring programmers, finding good advisors/mentors, even blogging and marketing. I probably got rejected by someone once a day last week alone. In one case a friend who tried to help called me to console me. He seemed surprised when I told him: “no worries – this is a daily occurrence – we’ll just keep trying.” If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Web services should be both federated and extensible]]></title>
            <description><![CDATA[One of the most important developments of the web 2.0 era is the proliferation of full featured, bidirectional APIs.  APIs provide a way to…]]></description>
            <link>https://cdixon.org/2010/09/04/web-services-should-be-both-federated-and-extensible</link>
            <guid isPermaLink="false">https://cdixon.org/2010/09/04/web-services-should-be-both-federated-and-extensible</guid>
            <pubDate>Sat, 04 Sep 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the most important developments of the web 2.0 era is the proliferation of full featured, bidirectional APIs.  APIs provide a way to “federate” web services from a single website to a distributed network of 3rd party sites. Another important web 2.0 development is the proliferation of web Apps (e.g. Facebook Apps). Apps provide a way to make websites “extensible.”&lt;/p&gt;
&lt;p&gt;The next step in this evolution is to create web services that are &lt;em&gt;both&lt;/em&gt; federated (APIs) &lt;em&gt;and&lt;/em&gt; extensible (Apps).&lt;/p&gt;
&lt;p&gt;In my ideal world, the social graph would not be controlled by a private company. That said, Facebook, to its credit, has aggressively promoted a fairly open API through Facebook Connect. Facebook has also been a leader in promoting Apps. For Facebook, creating extensible, federated services would mean providing a framework for Facebook Connect Apps – apps that extend Facebook functionality but reside on non-Facebook.com websites.&lt;/p&gt;
&lt;p&gt;Consider the following scenario.  Imagine that in the future a geolocation data/algorithm provider like SimpleGeo takes Facebook Places check-in data and, using algorithms and non-Facebook data, produces new data sets, for example: map directions, venue recommendations, and location-based coupons. The combination of Facebook’s data (social graph and check-ins) and SimpleGeo data/algorithms would create much more advanced feature possibilities than either service acting alone.&lt;/p&gt;
&lt;p&gt;With today’s APIs, if, say, Gowalla wanted to integrate Facebook plus SimpleGeo into their app*, they would basically have 3 choices:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Embed Facebook widgets in Gowalla.  These are simple iframes (effectively separate little websites) that don’t interact with SimpleGeo.  Gowalla would just have to sit and wait and hope that Facebook decided to bake in SimpleGeo-like functionality.&lt;/li&gt;
&lt;li&gt;Pre-import SimpleGeo data. This significantly limits the size and dynamism of the SimpleGeo data sets and doesn’t incorporate SimpleGeo algorithms, thus severely limiting functionality.&lt;/li&gt;
&lt;li&gt;Host an instance of SimpleGeo’s servers internally.  This requires heavy technical integration, undermining the main benefit of APIs.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;In a world of extensible APIs (or “API Apps”), Gowalla could instead send Facebook data back to SimpleGeo.  The data flow would look something like this:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/datathreesome2.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;&lt;/span&gt;
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        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;datathreesome2&quot;
        title=&quot;datathreesome2&quot;
        src=&quot;/static/fbcb87e345265654cbee58452bf45caf/6164f/datathreesome2.png&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;datathreesome2&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(Note how there are three parties involved – &lt;a href=&quot;http://twitter.com/peretti&quot;&gt;@peretti&lt;/a&gt; calls this a “data threesome”). This configuration is much simpler to integrate – and potentially much more powerful and dynamic – than the other configurations listed above.  You could implement this today, but it would create user experience challenges.  For example, Gowalla would be sending Facebook data to a 3rd party (step 3), which might (depending on the data sent) require explicit user opt-in. Things become more onerous if SimpleGeo wanted to share its own user data with Gowalla. That would require an additional oAuth to SimpleGeo (authorizing step 4).&lt;/p&gt;
&lt;p&gt;Allowing websites to be federated and extensible will open up a whole new wave of innovation.  Ideally some spec like oAuth could include the multiple authorizations in a single authorization screen.  Facebook could also do this by allowing 3rd parties to be part of the Facebook Connect authorization process.  Inasmuch as Facebook’s seems to be trying to embed their social graph as deeply as possible into the core experiences of other websites, allowing extensible APIs would seem to be a smart move.&lt;/p&gt;
&lt;p&gt;* I have no connection to any of these companies (Facebook, Gowalla, SimpleGeo) and have no knowledge of their product plans beyond their public websites.  I am imagining functionality that Gowalla and SimpleGeo might include someday but for all I know they have no interest in these features – I just picked them somewhat arbitrarily as examples.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Converts versus equity deals]]></title>
            <description><![CDATA[There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts…]]></description>
            <link>https://cdixon.org/2010/08/31/converts-versus-equity-deals</link>
            <guid isPermaLink="false">https://cdixon.org/2010/08/31/converts-versus-equity-deals</guid>
            <pubDate>Tue, 31 Aug 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts). Paul Graham kicked it off by &lt;a href=&quot;http://twitter.com/paulg/status/22319113993&quot;&gt;noting&lt;/a&gt; that all the financings in the recent YC batch were converts. Prominent investors including &lt;a href=&quot;http://www.bothsidesofthetable.com/2010/08/30/is-convertible-debt-preferable-to-equity/&quot;&gt;Mark Suster&lt;/a&gt; and &lt;a href=&quot;http://www.sethlevine.com/wp/2010/08/has-convertible-debt-won-and-if-it-has-is-that-a-good-thing&quot;&gt;Seth Levine&lt;/a&gt; weighed in (I highly recommend reading their posts). While this debate might sound technical, at its core it is really about a difference in seed investing philosophy.&lt;/p&gt;
&lt;p&gt;I am a proponent of convertibles, but only with a cap (I’ve written about the problems of convertibles without caps &lt;a href=&quot;http://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes/&quot;&gt;before&lt;/a&gt; and never invest in them).  I believe that pretty much every other seed investor who advocates converts also assumes they have a cap.  So any discussion of convertibles without caps seems to me a red herring.&lt;/p&gt;
&lt;p&gt;There are two kind of rights that investors get when they put money in company.  The first are economic rights: basically that they make money when the investment is successful.  The second are control rights: board seats, the ability to block financings and acquisitions, the ability to change management, etc.  Converts give investors economics rights with basically zero control rights (legally it is just a loan with some special conversion provisions). Equity financings normally give investors explicit rights (most equity terms sheets specify board seats, specific blocking conditions, etc) in addition to standard shareholder rights under whatever state the company incorporated in (usually CA or Delaware).&lt;/p&gt;
&lt;p&gt;To the extent that I know anything about seed investing, I learned it from Ron Conway.  I remember one deal he showed me where the entire deal was done on a one page fax (not the term sheet – the entire deal).  Having learned about venture investing as a junior employee at a VC firm I was shocked. I asked him “what if X or Y happens and the entrepreneur screws you.”  Ron said something like “then I lose my money and never do business with that person again.”  It turned out he did very well on that company and has funded that entrepreneur repeatedly with great success.&lt;/p&gt;
&lt;p&gt;You can hire lawyers to try to cover every situation where founders or follow on investors try to screw you. But the reality is that if the founders want to screw you, you made a bet on bad people and will probably lose your money. You think legal documents will protect you? Imagine investors getting into a lawsuit with a two person early-stage team, or trying to fire and swap out the founders – the very thing they bet on.  And follow on investors (normally VCs) have a variety of ways to screw seed investors if they want to, whether the seed deal was a convert of equity.  So as a seed investor all you can really do is get economic rights and then make sure you pick good founders and VCs.&lt;/p&gt;
&lt;p&gt;Seed investing is a people business.  Good entrepreneurs understand this.  Ron was an investor in my last two companies and never had any control rights but had massive sway because he worked so hard to help us and gave such sage advice.  And most importantly, he carried great moral authority. We always knew he was speaking from deep experience and looking out for the company’s best interests – sometimes against his own economic interests.&lt;/p&gt;
&lt;p&gt;Like it or not, the seed investment world runs on trust and reputation – not legal documents.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Good bizdev cannibalizes itself]]></title>
            <description><![CDATA[A few successful websites were built almost entirely through viral growth. The vast majority, however, started off by partnering with other…]]></description>
            <link>https://cdixon.org/2010/08/28/good-bizdev-cannibalizes-itself</link>
            <guid isPermaLink="false">https://cdixon.org/2010/08/28/good-bizdev-cannibalizes-itself</guid>
            <pubDate>Sat, 28 Aug 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A few successful websites were built almost entirely through viral growth. The vast majority, however, started off by partnering with other, already successful websites. Even Google began by partnering with Yahoo. As superior as Google’s search algorithm was, it was very hard to get the masses to switch to a new search engine.&lt;/p&gt;
&lt;p&gt;In the web 1.0 world (approximately pre-2004), integrating two web services involved lots of manual work, such as negotiating legal contracts and custom technical integration. Creating these kinds of partnerships is usually referred to as “business development” or “BizDev” (personally, I usually just call it “BD”). In the web 2.0 world, it became common for websites to create fully functional, self-service API’s with standardized legal terms. This made it possible to drastically reduce the friction of integrating services. My &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; cofounder Caterina Fake &lt;a href=&quot;http://caterina.net/archive/000996.html&quot;&gt;coined&lt;/a&gt; the term “BizDev 2.0″ to refer to this idea (and of course Flickr was a pioneer of super robust APIs).&lt;/p&gt;
&lt;p&gt;There is no question that removing legal and technical hurdles is a win for everyone (except lawyers). However, unless your service is extremely high profile and its value is easily understood, it still needs to be marketed to potential partners. Many websites won’t consider using a self-service API until they’ve seen it working on other sites with measurable results. So how do you overcome this particular kind of chicken-and-egg problem?&lt;/p&gt;
&lt;p&gt;During his interview process, Hunch’s &lt;a href=&quot;http://hunch.com/people/shaival/&quot;&gt;Shaival Shah&lt;/a&gt;, said something that struck a chord with me: he didn’t want to be called “VP BizDev” because, he said, a good BizDev person makes BizDev irrelevant. The idea is to create a number of BizDev 1.0 partnerships while simultaneously building and marketing a full service API.  If you can do BizDev 1.0 with some number of (ideally high profile) websites and demonstrate that it is valuable to them (ideally quantitatively), you can then scale your service BizDev 2.0 style. Maybe this could be called BizDev 1.5.&lt;/p&gt;
&lt;p&gt;Shaival wrote up a much more detailed post on &lt;a href=&quot;http://shaival.posterous.com/cannabilize-business-development-by-populariz&quot;&gt;self-cannibalizing BizDev&lt;/a&gt; that is well worth reading.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The bowling pin strategy]]></title>
            <description><![CDATA[A huge challenge for user-generated websites is overcoming the chicken-and-egg problem: attracting users and contributors when you are…]]></description>
            <link>https://cdixon.org/2010/08/21/the-bowling-pin-strategy</link>
            <guid isPermaLink="false">https://cdixon.org/2010/08/21/the-bowling-pin-strategy</guid>
            <pubDate>Sat, 21 Aug 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A huge challenge for user-generated websites is overcoming the &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;chicken-and-egg problem&lt;/a&gt;: attracting users and contributors when you are starting with zero content. One way to approach this challenge is to use what Geoffrey Moore calls the &lt;a href=&quot;http://edgehopper.com/%E2%80%A8-what-geoff-recognized-was-that-there-is-more-to-this-curve-he-recognized-that-there-is-a-difference-between-disruptive-innovations-those-that-are-changing-the-game-altogether-and-gard/&quot;&gt;bowling pin&lt;/a&gt; strategy: find a niche where the chicken-and-egg problem is more easily overcome and then find ways to hop from that niche to other niches and eventually to the broader market.&lt;/p&gt;
&lt;p&gt;Facebook executed the bowling pin strategy brilliantly by starting at Harvard and then spreading out to other colleges and eventually the general public.  If Facebook started out with, say, 1000 users spread randomly across the world, it wouldn’t have been very useful to anyone.  But having the first 1000 users at Harvard made it extremely useful to Harvard students.  Those students in turn had friends at other colleges, allowing Facebook to hop from one school to another.&lt;/p&gt;
&lt;p&gt;Yelp also used a bowling pin strategy by focusing first on getting critical mass in one location – San Francisco – and then expanding out from there.  They also focused on activities that (at the time) social networking users favored: dining out, clubbing and shopping. Contrast this to their &lt;a href=&quot;http://www.nytimes.com/2006/08/05/business/yourmoney/05money.html?_r=2&amp;#x26;ref=business&amp;#x26;pagewanted=all&quot;&gt;direct competitors&lt;/a&gt; that were started around the same time, were equally well funded, yet have been far less successful.&lt;/p&gt;
&lt;p&gt;How do you identify a good initial niche?  First, it has to be a true community – people who have shared interests and frequently interact with one another.  They should also have a particularly strong need for your product to be willing to put up with an initial lack of content. Stack Overflow chose programmers as their first niche, presumably because that’s a community where the Stack Overflow founders were influential and where the competing websites weren’t satisfying demand. Quora chose technology investors and entrepreneurs, presumably also because that’s where the founders were influential and well connected. Both of these niches tend to be very active online and are likely to have have many other interests, hence the spillover potential into other niches is high. (Stack Overflow’s &lt;a href=&quot;http://cooking.stackexchange.com/&quot;&gt;cooking site&lt;/a&gt; is growing nicely – many of the initial users are programmers who crossed over).&lt;/p&gt;
&lt;p&gt;Location based services like Foursquare started out focused primarily on dense cities like New York City where users are more likely to serendipitously bump into friends or use tips to discover new things. Facebook has such massive scale that it is able to roll out its LBS product (Places) to 500M users at once and not bother with a niche strategy.  Presumably certain groups are more likely to use Facebook check-ins than others, but with Facebook’s scale they can let the users figure this out instead of having to plan it deliberately. That said, history suggests that big companies who rely on this “carpet bombing strategy” are often upended by focused startups who take over one niche at a time.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Graphs]]></title>
            <description><![CDATA[It has become customary to use “graph” to refer to the underlying data structures at social networks like Facebook. (Computer scientists…]]></description>
            <link>https://cdixon.org/2010/07/22/graphs</link>
            <guid isPermaLink="false">https://cdixon.org/2010/07/22/graphs</guid>
            <pubDate>Thu, 22 Jul 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It has become customary to use “&lt;a href=&quot;http://en.wikipedia.org/wiki/Graph_(mathematics)&quot;&gt;graph&lt;/a&gt;” to refer to the underlying data structures at social networks like Facebook. (Computer scientists call the study of graphs “&lt;a href=&quot;http://en.wikipedia.org/wiki/Network_theory&quot;&gt;network theory&lt;/a&gt;,” but on the web the word “network” is used to refer to the websites themselves).&lt;/p&gt;
&lt;p&gt;A graph consists of a set of nodes connected by edges. The original internet graph is the web itself, where webpages are nodes and links are edges. In social graphs, the nodes are people and the edges friendship. Edges are what mathematicians call &lt;a href=&quot;http://en.wikipedia.org/wiki/Binary_relation&quot;&gt;relations&lt;/a&gt;. Two important properties that relations can either have or not have are symmetry (if A ~ B then B ~ A) and transitivity (if A ~ B and B ~ C then A ~ C).&lt;/p&gt;
&lt;p&gt;Facebook’s social graph is symmetric (if I am friends with you then you are friends with me) but not transitive (I can be friends with you without being friends with your friend).  You could say friendship is probabilistically transitive in the sense that I am more likely to like someone who is a friend’s friend then I am a user chosen at random. This is basis of Facebook’s friend recommendations.&lt;/p&gt;
&lt;p&gt;Twitter’s graph is probably best thought of as an interest graph. One of Twitter’s central innovations was to discard symmetry: you can follow someone without them following you. This allowed Twitter to evolve into an extremely useful publishing platform, &lt;a href=&quot;http://cdixon.org/2009/09/30/twitter-killed-rss-and-thats-a-bad-thing/&quot;&gt;replacing RSS&lt;/a&gt; for many people. The Twitter graph isn’t transitive but one of its most powerful uses is retweeting, which gives the Twitter graph what might be called curated transitivity.&lt;/p&gt;
&lt;p&gt;Graphs can be implicitly or explicitly created by users. Facebook and Twitter’s graphs were explicitly created by users (although Twitter’s Suggested User List made much of the graph de facto implicit). Google Buzz attempted to create a social graph implicitly from users’ emailing patterns, which didn’t &lt;a href=&quot;http://www.readwriteweb.com/archives/google_gets_sued_why_it_should_have_said_please.php&quot;&gt;seem&lt;/a&gt; to work very well.&lt;/p&gt;
&lt;p&gt;Over the next few years we’ll see the rising importance of other types of graphs. Some examples:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Taste:&lt;/strong&gt; At &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; we’ve created what we call the taste graph. We created this implicitly from questions answered by users and other data sources. Our thesis is that for many activities – for example deciding what movie to see or blouse to buy – it’s more useful to have the neighbors on your graph be people with similar tastes versus people who are your friends.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Financial Trust:&lt;/strong&gt; Social payment startups like &lt;a href=&quot;https://squareup.com/&quot;&gt;Square&lt;/a&gt; and &lt;a href=&quot;http://www.venmo.com&quot;&gt;Venmo&lt;/a&gt; are creating financial graphs – the nodes are people and institutions and the relations are financial trust. These graphs are useful for preventing fraud, streamlining transactions, and lowering the barrier to accepting non-cash payments.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Endorsement:&lt;/strong&gt; An endorsement graph is one in which people endorse institutions, products, services or other people for a particular skill or activity. LinkedIn created a successful professional graph and a less successful endorsement graph. Facebook seems to be trying to layer an endorsement graph on its social graph with its Like feature. A general endorsement graph could be useful for purchasing decisions and hence highly &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;monetizable&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Local&lt;/strong&gt;: Location-based startups like &lt;a href=&quot;http://foursquare.com&quot;&gt;Foursquare&lt;/a&gt; let users create social graphs (which might evolve into better social graphs than what Facebook has since users seem to be more selective friending people in local apps). But probably more interesting are the people and venue graphs created by the check-in patterns. These local graphs could be useful for, among other things, recommendations, coupons, and advertising.&lt;/p&gt;
&lt;p&gt;Besides creating graphs, Facebook and Twitter (via Facebook Connect and OAuth) created identity systems that are extremely useful for the creation of 3rd party graphs. I expect we’ll look back on the next few years as the golden age of graph innovation.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[It’s not that seed investors are smarter – it’s that entrepreneurs are]]></title>
            <description><![CDATA[Paul Kedrosky recently speculated that there might be seed fund “crash” looming. Liz Gannes followed up by suggesting seed investors are a…]]></description>
            <link>https://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are</link>
            <guid isPermaLink="false">https://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are</guid>
            <pubDate>Mon, 05 Jul 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Paul Kedrosky recently &lt;a href=&quot;http://paul.kedrosky.com/archives/2010/06/the_coming_supe.html&quot;&gt;speculated&lt;/a&gt; that there might be seed fund “crash” looming. Liz Gannes followed up by &lt;a href=&quot;http://gigaom.com/2010/06/29/is-there-a-super-angel-crash-looming/&quot;&gt;suggesting&lt;/a&gt; seed investors are a fad akin to reality-TV celebrities:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In many ways, what [prominent seed funds] are saying is that they’re just smarter, and as such will outlast all the copycat and wannabe seed funders as well as the stale VCs with a fresh coat of paint. But then — Kim Kardashian is the only one who can make a living tweeting. At some point it will be quite obvious whether the super angels’ investments and strategy succeed or fail.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Here’s the key point these analyses overlook: &lt;em&gt;It’s not the seed investors who are smarter – it’s the entrepreneurs&lt;/em&gt;. Consider the case of the last company I co-founded, &lt;a href=&quot;http://www.siteadvisor.com&quot;&gt;SiteAdvisor&lt;/a&gt;. We raised our first round of $2.6M at a $2.5M pre-money valuation. After the first round of funding, investors owned 56% of the company. Moreover, the $2.6M came in 3 &lt;a href=&quot;http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/&quot;&gt;tranches&lt;/a&gt;: $500K, another $500K, and then $1.6K.  To get the 2nd and 3rd tranches we had to hit predefined milestones and re-pitch the VC partnerships. Had we instead raised the first $1M from seed funds, we would have been free to raise the remaining money at a higher valuation. In fact, after we spent less than $1M building the product, we raised more money at a $16M pre-money valuation. &lt;em&gt;We never even touched the $1.6M third tranche even though it caused us to take significant dilution\&lt;/em&gt;. This was a very common occurrence before the rise of seed funds, due to VCs pressuring entrepreneurs to raise more money than they needed so the VCs could “&lt;a href=&quot;http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/&quot;&gt;put more money to work&lt;/a&gt;.” When SiteAdvisor was eventually acquired, we had spent less than a third of the money we raised. Compare the dilution we actually took to what we could have taken had we raised seed before VC:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2010-07-05-at-3-55-44-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Professional seed funds barely existed back then, especially on the East Coast. And even if they did, I’m not sure I would have been savvy enough to opt for them over VCs. I thought the brands of the big VCs would help me and didn’t really understand the dynamics of fund raising.* Today, entrepreneurs are much savvier, thanks to the proliferation of good advice on blogs, via mentorship programs, and a generally more active and connected entrepreneur community. For example, &lt;a href=&quot;http://cdixon.org/2009/11/09/presenting-founder-collective/&quot;&gt;Founder Collective&lt;/a&gt; recently backed two Y-Combinator startups who decided to raise money exclusively from seed investors despite having top-tier VCs throwing money at them at higher valuations. These were “hot” companies who had plenty of options but realized they’d take less start-to-exit dilution by raising money from helpful seed investors first and VCs later.&lt;/p&gt;
&lt;p&gt;Will there be there a seed fund crash? Seed fund returns are highly correlated with VC returns which are highly correlated with public markets and the overall economy. I have no idea what the state of the overall economy will be over the next few years. Perhaps it will crash and take VCs and seed funds down with it. But I do have strong evidence that prominent seed funds will outperform top-tier VC funds, because I know the details of their investments, and that their portfolios contain the same companies as top-tier VCs &lt;em&gt;except the they invested in earlier rounds at significantly lower valuations&lt;/em&gt;.  So unless these prominent seed funds were incredibly unlucky picking companies (and since they are extremely diversified I highly doubt that), their returns will significantly beat top-tier VC returns.&lt;/p&gt;
&lt;p&gt;* Note that we have nothing but gratitude toward the SiteAdvisor VCs – Rob Stavis at Bessemer and Hemant Taneja at General Catalyst. They offered what was considered a market deal at the time and supported us when (&lt;a href=&quot;http://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are/#comment-60677689&quot;&gt;almost&lt;/a&gt;) no one else would.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Competition is overrated]]></title>
            <description><![CDATA[Your #1 competitor starting out will always be the BACK button, nothing else. – Garry Tan Suppose you have an idea for a startup, and then…]]></description>
            <link>https://cdixon.org/2010/06/26/competition-is-overrated</link>
            <guid isPermaLink="false">https://cdixon.org/2010/06/26/competition-is-overrated</guid>
            <pubDate>Sat, 26 Jun 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;Your #1 competitor starting out will always be the BACK button, nothing else. – &lt;a href=&quot;http://plank.ly/garrytan&quot;&gt;Garry Tan&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Suppose you have an idea for a startup, and then do some research only to discover there are already similar products on the market. You become disheartened and wonder if you should abandon your idea.&lt;/p&gt;
&lt;p&gt;In fact, the existence of competing products is a meaningful signal, but not necessarily a negative one.  Here are some things to consider.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Almost every good idea has already been built. Sometimes new ideas are just ahead of their time. There were probably 50 companies that tried to do viral video sharing before YouTube. Before 2005, when YouTube was founded, relatively few users had broadband and video cameras. YouTube also took advantage of the latest version of Flash that could play videos seamlessly.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Other times existing companies simply didn’t execute well. Google and Facebook launched long after their competitors, but executed incredibly well and focused on the right things. When Google launched, other search engines like Yahoo, Excite, and Lycos were focused on becoming multipurpose “portals” and had de-prioritized search (Yahoo even outsourced their search technology).&lt;/p&gt;
&lt;ol start=&quot;2&quot;&gt;
&lt;li&gt;The fact that other entrepreneurs thought the idea was good enough to build can be a positive signal. They probably went through some kind of vetting process like talking to target users and doing some market research. By launching later, you can piggyback off the work they’ve already done. That said, you do need to be careful not to get sucked into groupthink. For example, many techies follow the dictum “build something you would use yourself,” which leads to a glut of techie-centric products. There are tons Delicious and Digg clones even though it’s not clear those sites have appeal beyond their core techie audience.&lt;/li&gt;
&lt;li&gt;That other people tried your idea without success could imply it’s a bad idea or simply that the timing or execution was wrong. Distinguishing between these cases is hard and where you should apply serious thought. If you think your competitors executed poorly, you should develop a theory of what they did wrong and how you’ll do better. Group buying had been tried a hundred times, but Groupon was the first to succeed, specifically by using coupons to track sales and by acquiring the local merchants first and then getting users instead of vice versa. If you think your competitor’s timing was off, you should have a thesis about what’s changed to make now the right time. These changes could come in a variety of forms: for example, it could be that users have become more sophisticated, the prices of key inputs have dropped, or that prerequisite technologies have become widely adopted.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Startups are primarly competing against indifference, lack of awareness, and lack of understanding — not other startups. For web startups this means you should worry about users simply not coming to your site, or when they do come, hitting the BACK button.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Builders and extractors]]></title>
            <description><![CDATA[Tim O’Reilly poses a question every entrepreneur and investor should consider: are you creating more value for others than you capture for…]]></description>
            <link>https://cdixon.org/2010/06/19/builders-and-extractors</link>
            <guid isPermaLink="false">https://cdixon.org/2010/06/19/builders-and-extractors</guid>
            <pubDate>Sat, 19 Jun 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Tim O’Reilly &lt;a href=&quot;http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.html&quot;&gt;poses&lt;/a&gt; a question every entrepreneur and investor should consider: are you creating more value for others than you capture for yourself? Google makes billions of dollars in annual profits, but generates many times that in productivity gains for other people. Having a positive social contribution isn’t limited to non-profit organizations – non-profits just happen to have a zero in the “value capture” column of the ledger. Wall Street stands at the other extreme: boatloads of value capture and very little value creation.&lt;/p&gt;
&lt;p&gt;I &lt;a href=&quot;http://gigaom.com/2010/05/28/chris-dixon/&quot;&gt;think&lt;/a&gt; of people who aim to create more value than they capture as “builders” and people who don’t as “extractors.” Most entrepreneurs are natural-born builders. They want to create something from nothing and are happy to see the benefits of their labor spill over to others. Sadly, the builder mindset isn’t as widespread among investors. I recently heard a well-known Boston VC say: “There are 15 good deals a year and our job is to try to win those deals” – a statement that epitomizes the passive, extractor mindset. The problem with &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;VC seed programs&lt;/a&gt; is they not only fail to enlarge the pie, they actually shrink it by making otherwise fundable companies unfundable through negative &lt;a href=&quot;http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/&quot;&gt;signaling&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;The good news is there is a large – and growing – class of investors with the builder mindset. Y Combinator and similar mentorship programs are true builders: their startups probably wouldn’t have existed without them (and the founders might have ended up at &lt;a href=&quot;http://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies/&quot;&gt;big companies&lt;/a&gt;). There are also lots of angel and seed investors who are builders. A few that come to mind: Ron Conway, Chris Sacca, Mike Maples (Floodgate), Roger Ehrenberg, Keith Rabois, Ken Lehrer, Jeff Clavier, Betaworks, Steve Anderson, and Aydin Senkut. There are also VCs who are builders. Ones that I’ve worked with directly recently include Union Square, True, Bessemer, Khosla, Index, and First Round.&lt;/p&gt;
&lt;p&gt;Given that there is a surplus of venture money, entrepreneurs and seed investors now have the luxury of choosing to work with builders and avoid extractors. Hopefully over time this will weed out the extractors.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Pivoting]]></title>
            <description><![CDATA[My Hunch cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far…]]></description>
            <link>https://cdixon.org/2010/06/14/pivoting</link>
            <guid isPermaLink="false">https://cdixon.org/2010/06/14/pivoting</guid>
            <pubDate>Mon, 14 Jun 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;My &lt;a href=&quot;http://hunch.com/&quot;&gt;Hunch&lt;/a&gt; cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far?” This exercise is meant to counter a number of common cognitive biases, such as:&lt;/p&gt;
&lt;p&gt;1. The &lt;a href=&quot;http://en.wikipedia.org/wiki/Sunk_costs&quot;&gt;sunk costs&lt;/a&gt; trap.  People tend to overvalue past investments when making forward-looking investment decisions. From the rumors I’ve heard, Joost was a company that fell into the sunk costs trap. In the beginning, their p2p architecture was their main differentiator. Thus they invested a lot in building p2p infrastructure and required users to download a software client. When browser-based web video companies like Hulu and YouTube surpassed them, Joost switched to a browser-based client but still required a special plugin so they could maintain their p2p architecture. In fact, the problem the p2p architecture was solving – reducing bandwidth costs – had, in the meantime, become a secondary basis of competition.  By the time Joost finally discarded the p2p model, it was too late.&lt;/p&gt;
&lt;p&gt;2. The &lt;a href=&quot;http://views.washingtonpost.com/leadership/panelists/2009/02/the-bridge-on-the-river-kwai.html&quot;&gt;&lt;em&gt;Bridge on the River Kwai&lt;/em&gt; syndrome&lt;/a&gt;.  This is when entrepreneurs fall so in love with their engineering project qua engineering project that they lose site of the larger mission.  Former engineers (like me) are particularly susceptible to this as we often get excited about technology for its own sake. Many products can be built much more quickly and cheaply by settling for good technology plus a bunch of hacks – human editing, partnerships, using 3rd party software – versus creating a perfect technology from scratch. At my last company, SiteAdvisor, we made the decision up front to build a non-perfect system that did 99% of what a much more expensive, “perfect” technological solution would have done.  The software wasn’t always pretty – to the annoyance of some of our engineers – but it worked.&lt;/p&gt;
&lt;p&gt;3. Solving the wrong problem. Location-based social networks have been around for years. Foursquare came along just a year ago and has seemingly surpassed its predecessors. The other companies built elaborate infrastructures: e.g they partnered with wireless carriers so that users’ locations could be tracked in the background without having to “check-in”.  Foursquare built a relatively simple app that added some entertaining features like badges and mayorships. It turned out that requiring users to manually check in was not only easier to build but also appealing as users got more control over their privacy. Foursquare’s competitors were solving the wrong problem.&lt;/p&gt;
&lt;p&gt;Ask yourself: if you started over today, would you build the same product?  If not, consider significant changes to what you are building. The popular word for this today is “pivoting” and I think it is apropos. You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Designing products for single and multiplayer modes]]></title>
            <description><![CDATA[The first million people who bought VCRs bought them before there were any movies available to watch on them. They just wanted to “time…]]></description>
            <link>https://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes</link>
            <guid isPermaLink="false">https://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes</guid>
            <pubDate>Sat, 12 Jun 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The first million people who bought VCRs bought them before there were any movies available to watch on them. They just wanted to “time shift” TV shows – what we use DVRs for today. Once there were millions of VCR owners it became worthwhile for Hollywood to start selling and renting movies to watch on them. Eventually watching rented movies became the dominant use of VCRs, and time shifting a relatively niche use. Thus, a product that eventually had very strong network effects* got its initial traction from a “standalone use” – where no other VCR owners or complementary products needed to exist.&lt;/p&gt;
&lt;p&gt;I was talking to my friend &lt;a href=&quot;http://foundercollective.com/people/Zach-Klein&quot;&gt;Zach Klein&lt;/a&gt; recently who referred to products as having single player and multiplayer modes. I like Zach’s terminology because: 1) it is borrowed from video games where a lot of thought has gone into making these modes compelling in distinct ways, 2) the word “mode” reminds us that people can switch from moment to moment – that even when a product is primarily social or networked and has reached critical mass it might still be useful to offer a single player mode.&lt;/p&gt;
&lt;p&gt;Many products that we think of as strictly multiplayer also have single player modes. In many cases this single player mode helped adoption in the early stages when the network effects were not yet strong. For example, you could use Flickr just to store photos privately if you wanted to. I thought of Foursquare as strictly multiplayer until my &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; cofounder &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; told me he uses it solely to keep track of restaurants he’s gone to so he’ll remember which ones to go back to. For some products it’s really hard to imagine single player modes. This is true of pure communication products like Skype and perhaps also social networks like Facebook (although apps like games seem to have provided single player modes for Facebook).&lt;/p&gt;
&lt;p&gt;–&lt;/p&gt;
&lt;p&gt;* Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks.  Network effects can be your friend or your enemy depending on whether your product has reached critical mass.  Getting to critical mass in network effect markets is sometimes called overcoming the “chicken and egg problem.”  &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;More here.&lt;/a&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Inside versus outside financings: the nightclub effect]]></title>
            <description><![CDATA[At some point in the life of a venture-backed startup there typically arises a choice between doing an inside round, where the existing…]]></description>
            <link>https://cdixon.org/2010/06/08/inside-versus-outside-financings-the-nightclub-effect</link>
            <guid isPermaLink="false">https://cdixon.org/2010/06/08/inside-versus-outside-financings-the-nightclub-effect</guid>
            <pubDate>Tue, 08 Jun 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;At some point in the life of a venture-backed startup there typically arises a choice between doing an inside round, where the existing investors lead the new financing, or an outside round, where new investors lead the new financing. At this point interesting game-theoretic dynamics arise among management, existing investors, and prospective new investors.&lt;/p&gt;
&lt;p&gt;If the company made the mistake of including big VCs in their seed round, they’ll face this situation raising their Series A.  If the company was smart and only included true seed investors in their initial round, they won’t face this issue until their Series B.&lt;/p&gt;
&lt;p&gt;Here’s a typical situation. Say the startup raised a Series A at a $15M post-money valuation and is doing pretty well. The CEO offers the existing VCs the option of leading an inside round but the insiders are lukewarm and suggest the CEO go out to test the financing market.  The CEO does so and gets offers from top-tier VCs to invest at a significant step up, say, $30M pre. The insiders who previously didn’t want to do an inside round are suddenly really excited about the company because they see that other VCs are really excited about the company.&lt;/p&gt;
&lt;p&gt;This is what I call the &lt;a href=&quot;http://twitter.com/gideonyu/status/13933414669&quot;&gt;nightclub effect&lt;/a&gt;*. You think your date isn’t that attractive until you bring him/her to a nightclub and everyone in the club hits on him/her. Consequently, you now think your date is really attractive.&lt;/p&gt;
&lt;p&gt;Now the inside investors have 3 choices:  1) Lead the financing themselves. This makes the CEO look like a jerk that used the outsiders as stalking horses. It might also prevent the company from getting a helpful, new VC involved. 2) Do pro-rata (normally defined as: X% of round where X is the % ownership prior to round).  This is theoretically the best choice, although often in real life the math doesn’t work since a top-tier new VC will demand owning 15-20% of the company which is often impossible without raising a far bigger round than the company needs. (When you see head-scratchingly large Series B rounds, this is often the cause). 3) Do less than pro-rata. VCs hate this because they view pro-rata as an option they paid for and especially when the company is “hot” they want to exercise that right. The only way to get them down in this case is for management to wage an all out war to force them to. This can get quite ugly.&lt;/p&gt;
&lt;p&gt;I’ve come to think that the best solution to this is to get the insiders to explicitly commit ahead of time to either leading the round or being willing to back down from their pro-rata rights for the right new investor. This lets the CEO go out and find new investors in good faith without using them as stalking horses and without wasting everyone’s time.&lt;/p&gt;
&lt;p&gt;* don’t miss @peretti’s &lt;a href=&quot;http://twitter.com/cdixon/status/13934081578&quot;&gt;response&lt;/a&gt;.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Steve Jobs single-handedly restructured the mobile industry]]></title>
            <description><![CDATA[With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly…]]></description>
            <link>https://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry</link>
            <guid isPermaLink="false">https://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry</guid>
            <pubDate>Sun, 06 Jun 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly upended the power structure of a major industry.  In the US, before the iPhone, the carriers (Verizon, AT&amp;#x26;T, Sprint, T-Mobile) had an ironclad grip on the rest of the value chain – particularly, handset makers and app makers.&lt;/p&gt;
&lt;p&gt;Ask anyone who ran or invested in a mobile app startup pre-iPhone (I invested in one myself). Since the carriers had all the power, getting any distribution (which usually meant getting on the handset “deck”) meant doing a business development deal with the carriers. Business development in this case meant finding the right people at those companies, sending them iPods, taking them to baseball games, and basically figuring out ways to convince them to work with you instead of the 5,000 other people sending them iPods and baseball tickets.  The basis of competition was salesmanship and capital, not innovation or quality.&lt;/p&gt;
&lt;p&gt;The carriers had so much power because consumers made their purchasing decisions by choosing a carrier first and a handset second. Post-iPhone, tens of millions of people started choosing handsets over carriers. People like me suffer through AT&amp;#x26;T’s poor service and aggressive pricing because I love the iPhone so much.&lt;/p&gt;
&lt;p&gt;I’ve talked to a number of mobile app startups lately who say their former contacts at the carriers are shell shocked: no one is knocking on their doors anymore. I guess they have to buy their own iPods and baseball tickets now.&lt;/p&gt;
&lt;p&gt;Yes, Apple has rejected some apps for seemingly arbtrary or selfish reasons and imposed aggressive controls on developers. But the iPhone also paved the way for Android and a new wave of handset development. The people griping about Apple’s “closed system” are generally people who are new to the industry and didn’t realize how bad it was before.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[There are three New York Cities]]></title>
            <description><![CDATA[There are roughly three New Yorks. There is, first, the New York of the man or woman who was born here, who takes the city for granted and…]]></description>
            <link>https://cdixon.org/2010/06/04/there-are-three-new-york-cities</link>
            <guid isPermaLink="false">https://cdixon.org/2010/06/04/there-are-three-new-york-cities</guid>
            <pubDate>Fri, 04 Jun 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;There are roughly three New Yorks.&lt;/p&gt;
&lt;p&gt;There is, first, the New York of the man or woman who was born here, who takes the city for granted and accepts its size and turbulence as natural and inevitable.&lt;/p&gt;
&lt;p&gt;Second, there is the New York of the commuter—the city that is devoured by locusts each day and spat out each night.&lt;/p&gt;
&lt;p&gt;Third, there is the New York of the person who was born somewhere else and came to New York in quest of something. Of these three trembling cities the greatest is the last—the city of final destination, the city that is a goal. It is this third city that accounts for New York’s high-strung disposition, its poetical deportment, its dedication to the arts, and its incomparable achievements. Commuters give the city its tidal restlessness; natives give it solidity and continuity; but the settlers give it passion. And whether it is a farmer arriving from Italy to set up a small grocery store in a slum, or a young girl arriving from a small town in Mississippi to escape the indignity of being observed by her neighbors, or a boy arriving from the Corn Belt with a manuscript in his suitcase and a pain in his heart, it makes no difference: each embraces New York with the intense excitement of first love, each absorbs New York with the fresh eyes of an adventurer, each generates heat and light to dwarf the Consolidated Edison Company.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;em&gt;Here is New York&lt;/em&gt;, E. B. White, 1949&lt;/p&gt;</content:encoded>
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            <title><![CDATA[While Google fights on the edges, Amazon is attacking their core]]></title>
            <description><![CDATA[Google is fighting battles on almost every front:  social networking, mobile operating systems, web browsers, office apps, and so on.  Much…]]></description>
            <link>https://cdixon.org/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core</link>
            <guid isPermaLink="false">https://cdixon.org/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core</guid>
            <pubDate>Sat, 22 May 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Google is fighting battles on almost every front:  social networking, mobile operating systems, web browsers, office apps, and so on.  Much of this makes sense, inasmuch as it is &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;strategic for them to dominate or commoditize&lt;/a&gt; each layer that stands between human beings and online ads.  But while they are doing this, they are leaving their core business vulnerable, particularly to Amazon.&lt;/p&gt;
&lt;p&gt;When legendary VC John Doerr quit Amazon’s board a few months ago, savvy industry observers like TechCrunch &lt;a href=&quot;http://techcrunch.com/2010/03/17/choosing-sides-john-doerr-leaves-amazons-board-of-directors/&quot;&gt;speculated&lt;/a&gt; that Google might begin directly competing with Amazon:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[Google] competes with Amazon in a number of areas, particularly web services and big data. And down the road, Google may compete directly in other ways as well. Froogle was a flop, but don’t think Google doesn’t want a bigger chunk of ecommerce revenue from people who begin their product searches on their search engine.*&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In fact, Google and Amazon’s are already direct competitors in their core businesses. Like Amazon, Google makes the vast majority of its revenue from users who are &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;looking to make an online purchase&lt;/a&gt;. Other query types – searches related to news, blog posts, funny videos, etc. – are mostly a &lt;a href=&quot;http://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too/&quot;&gt;loss leaders for Google&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;The key risk for Google is that they are heavily dependent on&lt;/em&gt; &lt;em&gt;online purchasing being a two-stage process&lt;/em&gt;:  the user does a search on Google, and then clicks on an ad to buy something on another site. As long as the e-commerce world is sufficiently fragmented, users will prefer an intermediary like Google to help them find the right product or merchant. But as Amazon &lt;a href=&quot;http://www.businessinsider.com/chart-of-the-day-amazon-sales-vs-retail-2010-4?utm_source=feedburner&amp;#x26;utm_medium=feed&amp;#x26;utm_campaign=Feed%3A+typepad%2Falleyinsider%2Fsilicon_alley_insider+%28Silicon+Alley+Insider%29&quot;&gt;increasingly dominates&lt;/a&gt; the e-commerce market, this fragmentation could go away along with users’ need for an intermediary.**&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/13fbc2e5fab4fc9f9ea06bcffab273f5/chart-of-the-day-amazon-e-commerce-retail-sales-2003-2009-1.gif&quot; title=&quot;chart-of-the-day-amazon-e-commerce-retail-sales-2003-2009-1&quot;&gt;&lt;/p&gt;
&lt;p&gt;Moreover, Google’s algorithmic results for product searches are generally poor. (Try using Google to decide what &lt;a href=&quot;http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html&quot;&gt;dishwasher&lt;/a&gt; to buy). These poor results might actually lead to short term revenue increases since the sponsored links are superior to the unsponsored ones.  But long term if Google continues producing poor product search results and Amazon continues consolidating the e-commerce market, Google’s core business is at serious risk.&lt;/p&gt;
&lt;p&gt;—&lt;/p&gt;
&lt;p&gt;* Froogle (and Google Products) have been unsuccessful most likely because Google has had no incentive to make them better: they make plenty of money on these queries already on a CPC basis, and would likely make less if they moved to a CPA model.&lt;/p&gt;
&lt;p&gt;** Most Amazon Prime customers probably already do skip Google and go directly to Amazon.  I know I do.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Facebook is about to try to dominate display ads the way Google dominates text ads]]></title>
            <description><![CDATA[It is customary to divide online advertising into two categories: direct response and brand advertising. I prefer instead to divide it…]]></description>
            <link>https://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads</link>
            <guid isPermaLink="false">https://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads</guid>
            <pubDate>Sat, 15 May 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It is customary to divide online advertising into two categories: direct response and brand advertising. I prefer instead to divide it according to the mindset of users: whether or not they are actively looking to purchase something (i.e. they have &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;).*&lt;/p&gt;
&lt;p&gt;When users are actively looking to purchase something, they typically go to search engines or e-commerce sites. Through advertising or direct sales, these sites &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;harvest intent&lt;/a&gt;. Google and Amazon are the biggest financial beneficiaries of intent harvesting.&lt;/p&gt;
&lt;p&gt;When the user is not actively looking to buy something, the goal of an online ad is to generate intent. The intent generation market is still fairly fragmented and will grow rapidly over the next few years as brand advertising increasingly moves online. P&amp;#x26;G – which alone spends almost $4B/year on brand advertising – needs to convince the next generation of consumers that Crest is better than Colgate. This is why Google paid such a premium for Doubleclick, Yahoo for Right Media, and Microsoft for aQuantive (MS’s biggest acquisition ever).&lt;/p&gt;
&lt;p&gt;In 2003, Google introduced AdSense, a program to &lt;a href=&quot;http://www.google.com/press/pressrel/advertising.html&quot;&gt;syndicate&lt;/a&gt; their intent harvesting text ads beyond Google’s main property Google.com.  The playbook they followed was: use their popular website to build a critical mass of advertisers; then use that critical mass to run an off-property network that offers the highest payouts to publishers. AdSense became so dominant that competitors like Yahoo quit the syndicated ad business altogether. Today, Google has such a powerful position that they don’t disclose percentage revenue splits to publishers and extract the vast majority of the profits.&lt;/p&gt;
&lt;p&gt;It is widely believed that Facebook will soon follow the AdSense playbook by introducing an off-property ad network. They’ll try to use their strong base of advertisers to dominate intent generating ads the way AdSense dominated intent harvesting ads.&lt;/p&gt;
&lt;p&gt;But to win the intent generation ad battle, data is as important as a critical mass of advertisers. For intent harvesting, users simply type what they are looking for into a search box. For intent generating ads, you need to use data to make inferences about what might influence the user.&lt;/p&gt;
&lt;p&gt;This is what the introduction of the Facebook Like button is all about.  Intent generating ads – which mostly means displays ads – have notoriously low click through rates (well below 1%). Attempts to improve these numbers through demographics have basically failed. Many startups are having success using social data to target ads today. But the holy grail for targeting intent generating ads is taste data – which basically means what the user likes. Knowing, for example, that a user liked Avatar is an incredibly useful datapoint for targeting an Avatar 2 ad.&lt;/p&gt;
&lt;p&gt;Publishers who adopt Facebook’s Like feature may get more traffic and perhaps a better user experience as a result.  But they should hope the intent generation ad market doesn’t end up like the intent harvesting ad market – with one dominant player commanding the lion’s share of the profits.&lt;/p&gt;
&lt;p&gt;* Most text ads are about intent harvesting and most display ads are about intent generation, but they are not coreferential distinctions. For example, with techniques like “search retargeting” (you do a Google search for washing machines and the later on another site see a display ad for washing machines), sometimes intent harvesting is delivered through display ads.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Facebook, Zynga, and buyer-supplier hold up]]></title>
            <description><![CDATA[The brewing fight between Facebook and Zynga is what is known in economic strategy circles as “buyer-supplier hold up.” The classic…]]></description>
            <link>https://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up</link>
            <guid isPermaLink="false">https://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up</guid>
            <pubDate>Sat, 08 May 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The &lt;a href=&quot;http://techcrunch.com/2010/05/07/zynga-gunning-up-and-lawyering-up-for-war-against-facebook-with-zynga-live/&quot;&gt;brewing fight&lt;/a&gt; between Facebook and Zynga is what is known in economic strategy circles as “buyer-supplier &lt;a href=&quot;http://en.wikipedia.org/wiki/Hold-up_problem&quot;&gt;hold up&lt;/a&gt;.” The classic framework for analyzing a firm’s strategic position is Michael Porter’s &lt;a href=&quot;http://www.quickmba.com/strategy/porter.shtml&quot;&gt;Five Forces&lt;/a&gt;. In Porter’s framework, Zynga’s strategic weakness is extreme supplier concentration – they get almost all their traffic from Facebook.&lt;/p&gt;
&lt;p&gt;It is in Facebook’s economic interest to extract most of Zynga’s profits, leaving them just enough to keep investing in games and advertising. Last year’s &lt;a href=&quot;http://techcrunch.com/2009/10/28/d-day-for-facebook-app-developers/&quot;&gt;reduced notification change&lt;/a&gt; seemed like one move in this direction as it forced game makers to buy more ads instead of getting traffic organically. This probably hurt Zynga’s profitability but also helped them fend off less well-capitalized rivals. Facebook could also hold up Zynga by entering the games business itself, but this seemed unlikely since thus far Facebook has kept its features limited to things that are “utility like.”&lt;/p&gt;
&lt;p&gt;The way Facebook now seems to be holding up Zynga – requiring Zynga to use their payments system –  is particularly clever.  First, payments are still very much a “utility like” feature, and arguably one that benefits the platform, so it doesn’t come across as flagrant hold up. It is also clever because – assuming Facebook has insight into Zynga’s profitability – Facebook can charge whatever percentage gets them an optimal share of Zynga’s profits.&lt;/p&gt;
&lt;p&gt;The risk for Zynga is obvious — if they don’t diversify their traffic sources very soon, they are left with a choice between losing profits and losing their entire business.  But there is a risk for Facebook as well. If buyers of traffic (e.g. app makers) fear future hold up, they are less likely to make investments in the platform. The biggest mistake platforms make isn’t charging fees (Facebook) or competing with complements (Twitter), it’s being inconsistent.  Apple also charges 30% fees but they’ve been mostly consistent about it. App makers feel comfortable investing in the Apple platform and even having most of their business depend on them in a way they don’t on Facebook or Twitter.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Old VC firms: get ready to be disrupted]]></title>
            <description><![CDATA[If the U.S. economy were a company, the VC industry would be the R&D department. The financing for the VC industry comes from so-called LPs…]]></description>
            <link>https://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted</link>
            <guid isPermaLink="false">https://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted</guid>
            <pubDate>Sun, 02 May 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;If the U.S. economy were a company, the VC industry would be the R&amp;#x26;D department. The financing for the VC industry comes from so-called LPs (Limited Partners) – mostly university endowments, pension funds, family funds, and funds-of-funds.&lt;/p&gt;
&lt;p&gt;These LPs wield tremendous power, yet very few of them understand how startups or venture capital actually works. I was reminded of this recently when I saw this quote from a prominent fund-of-funds, &lt;a href=&quot;http://bits.blogs.nytimes.com/2010/03/11/battery-ventures-raises-a-fresh-750-million/&quot;&gt;justifying&lt;/a&gt; their investment in a 30-year old venture firm:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“As the amount of money raised by venture firms shrinks, older firms that were around before the dot-com bubble will benefit,” said Michael Taylor, a managing director at HarbourVest. “These firms have track records, brand names and knowledge about how to avoid making mistakes that younger firms do not necessarily have,” he said.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;These older firms do often have track records – they’ve survived precisely because at one point they delivered good returns.  But it’s a mistake to assume that — because VC brands and institutional knowledge persist – past returns will predict future returns.  Here’s why.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;VC brand names do not persist&lt;/strong&gt;.  From the perspective of VCs and entrepreneurs, VC brands rise and fall very quickly. Given the &lt;a href=&quot;http://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc/&quot;&gt;excess supply&lt;/a&gt; of venture dollars, top tier entrepreneurs are frequently selecting their investors, not vice versa.  The VCs most sought after are mostly new firms:  big firms like Andreesson Horowitz, Union Square Ventures, and First Round, and micro-VCs like Floodgate (fka Maples), Betaworks, and Ron Conway.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;VC firms don’t accrue institutional knowledge.&lt;/strong&gt; VC returns are driven by partners, not firms. &lt;a href=&quot;http://cdixon.org/2009/08/19/its-the-partner-not-the-firm/&quot;&gt;Studies&lt;/a&gt; have shown this, as will a quick perusal of the big exits at prominent VC firms. When key partners switch firms or become less active, VC firms retain very little residual value.  Some service firms — for example consulting firms like McKinsey — invest heavily in accruing institutional knowledge by developing proprietary methodologies and employee apprenticeship programs.  VCs develop no real IP and rarely have serious apprenticeship programs.&lt;/p&gt;
&lt;p&gt;There is an old saying among big company CIOs that “no one gets fired for buying IBM.”  It’s much easier for a fund-of-fund partner to defend investments based on a VC’s track records. It’s a safe but bad strategy.&lt;/p&gt;
&lt;p&gt;To intelligently invest in VC firms, you need to roll up your sleeves and dive deep into the startup world.  You need to learn about the startups themselves, assess the entrepreneurs, use their products, analyze market dynamics – all things that good VCs and entrepreneurs do. If you want to understand a VCs brand and abilities don’t look at their track record in the 90s – ask today’s entrepreneurs.  The answer will likely surprise you.&lt;/p&gt;
&lt;p&gt;Unfortunately, very few LPs do this.  As a result, a massive amount of R&amp;#x26;D capital is being misallocated.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The tradeoff between open and closed]]></title>
            <description><![CDATA[When having the “open vs closed” debate regarding a technology platform, a number of distinctions need to be made. First, what exactly is…]]></description>
            <link>https://cdixon.org/2010/04/25/the-tradeoff-between-open-and-closed</link>
            <guid isPermaLink="false">https://cdixon.org/2010/04/25/the-tradeoff-between-open-and-closed</guid>
            <pubDate>Sun, 25 Apr 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;When having the “open vs closed” debate regarding a technology platform, a number of distinctions need to be made. First, what exactly is meant by “open.” Here’s a great chart from a &lt;a href=&quot;http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264012&quot;&gt;paper&lt;/a&gt; by Harvard professor &lt;a href=&quot;http://twitter.com/TEisenmann&quot;&gt;Tom Eisenmann&lt;/a&gt; (et al).:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2010-04-25-at-11-18-00-am.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2010 04 25 at 11 18 00 am&quot;
        title=&quot;Screen shot 2010-04-25 at 11.18.00 AM&quot;
        src=&quot;/static/e086f487f25b15e213bd5dd0340f6eb1/94a55/screen-shot-2010-04-25-at-11-18-00-am.png&quot;
        srcset=&quot;/static/e086f487f25b15e213bd5dd0340f6eb1/924ad/screen-shot-2010-04-25-at-11-18-00-am.png 170w,
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2010-04-25 at 11.18.00 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(Eisenmann acknlowledges the iPhone isn’t fully open to the end user – in the US you need to use AT&amp;#x26;T, etc.  I would argue the iPhone is semi-open to the app developer and mobile app development was effectively closed prior to the iPhone. But the main point here is that platforms can be open &amp;#x26; closed in many different ways, at different levels, etc.)&lt;/p&gt;
&lt;p&gt;The next important distinction is whose interest you are considering when asking what and when to open or close things.  I think there are at least 3 interesting perspectives:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The company:&lt;/strong&gt; Lots of people have written about this topic (&lt;a href=&quot;http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996&quot;&gt;Clay Christensen&lt;/a&gt;, &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;Joel Spolsky&lt;/a&gt;, more Eisenmann &lt;a href=&quot;http://www.hbs.edu/research/facpubs/workingpapers/papers0607.html#07-105&quot;&gt;here&lt;/a&gt;).   In a nutshell, there are times when a company, acting solely in its self-interest, should close things and other times they should open things.  As a rule of thumb, a company should close their core assets and open/commoditize complementary assets. &lt;a href=&quot;http://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm/&quot;&gt;Google’s search engine is their core asset&lt;/a&gt; and therefore Google should want to keep it closed, whereas the operating system is a complement that they should commoditize (my full analysis of what Google should want to own vs commoditize is &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;here&lt;/a&gt;). Facebook’s social graph is their core asset so it’s optimal to close it and not interoperate with other graphs, whereas marking up web pages to be more social-network friendly (open graph protocol) is complementary hence optimal for FB to open.  (With respect to social graphs interoperating (e.g. Open Social), it’s generally in the interest of smaller graphs to interoperate and larger ones not to – the same is true of IM networks).  Note that I think there is absolutely nothing wrong with Google and Facebook or any other company keeping closed or trying to open things according to their own best interests.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The industry:&lt;/strong&gt; When I say “what is good for the industry” I mean what ultimately creates the most aggregate industry-wide shareholder value.  I assume (hope?) this also yields the maximum innovation.  As an active tech entrepreneur and investor I think my personal interests and the tech industry’s interests are mostly aligned (hence you could argue I’m &lt;a href=&quot;http://twitter.com/hankwilliams/status/12833901538&quot;&gt;talking my book&lt;/a&gt;).  Unfortunately it’s much easier to study open vs. closed strategies at the level of the firm than at the level of an industry, because there are far more “split test” cases to study.  What would the world be like if email (SMTP) were controlled by a single company?  I would tend to think a far less innovative and wealthy one. There are a number of multibillion dollar industries built on email: email clients, webmail systems, email marketing, anti-spam, etc.  The downside of openness is that it’s very hard to upgrade SMTP since you need to get so many parties to agree and coordinate.  So, for example, it has taken forever to add basic anti-spam authentication features to SMTP.  Twitter on the other hand can unilaterally add useful new things like their recent annotations feature.&lt;/p&gt;
&lt;p&gt;Here’s what Professor Eisenmann said when I asked him to summarize the state of economic thinking on the topic:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;With respect to your question about the impact of open vs closed on the economy, the hard-core economists cited in my &lt;a href=&quot;http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264012&quot;&gt;book chapter&lt;/a&gt; have a lot to say, but it all boils down to “it depends.” Closed platform provides more incentive for innovation because platform owner can collect and redistribute more rent and can ensure that there’s a manageable level of competition in any given application category. Open platform harnesses strong network effects, attracting more application developers, and  thus stimulates lots of competition. There’s some interesting recent work that suggests that markets may evolve in directions that favor the presence of one strong closed player plus one strong open player (consider: Windows + Linux; iPhone + Android). In this scenario, society/economy gets best of both approaches.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;strong&gt;Society&lt;/strong&gt;:  I tend to think what is good for the tech industry is generally good for society.  But others certainly have different views.  Advocates of openness are often &lt;a href=&quot;http://twitter.com/shervin/status/12802297481&quot;&gt;accused&lt;/a&gt; of being socialist hippies.  Maybe some are.  I am not.  I care about the tech industry.  I think it’s reasonable to question whether moves by large industry players are good or bad for the industry.  Unfortunately most of the debate I’ve seen so far seems driven by ideology and name calling.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Twitter and third-party Twitter developers]]></title>
            <description><![CDATA[I can’t remember the last time the tech world was so interesting. First, innovation is at an all time high.  Apple, Google, Facebook…]]></description>
            <link>https://cdixon.org/2010/04/10/twitter-and-third-party-twitter-developers</link>
            <guid isPermaLink="false">https://cdixon.org/2010/04/10/twitter-and-third-party-twitter-developers</guid>
            <pubDate>Sat, 10 Apr 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I can’t remember the last time the tech world was so interesting. First, innovation is at an all time high.  Apple, Google, Facebook, Twitter and even Microsoft (in the non-monopoly divisions) are making truly exciting products. Second, since the battles are between platforms, the strategic issues are complex, involving &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;complementary network effects&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Twitter’s moves this week were particular interesting.  A lot of third-party developers were &lt;a href=&quot;http://www.businessinsider.com/twitter-employees-cheer-lead-fred-wilsons-bombshell-developers-freak-out-2010-4&quot;&gt;unhappy&lt;/a&gt;. I think this is mainly a result of Twitter having sent mixed signals over the past few years. Twitter’s move into complementary areas was &lt;a href=&quot;http://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;entirely predictable&lt;/a&gt; – it happens with every platform provider. The real problem is that somehow Twitter had convinced the world they were going to “let a thousand flowers bloom” – as if they were a non-profit out to save the world, or that they would invent some fantastic new business model that didn’t encroach on third-party developers. This week Twitter finally started acting like what it is: a well-financed company run by smart capitalists.&lt;/p&gt;
&lt;p&gt;This mixed signaling has been exacerbated by the fact that Twitter has yet to figure out a business model (they sold data to Microsoft &amp;#x26; Google but this is likely just one-time R&amp;#x26;D purchases). Maybe Twitter thinks they know what their business model is and maybe they’ll even announce it soon. But whatever they think or announce will only truly be their business model when and if it delivers on their multi-billion dollar aspirations. It will likely be at least a year or two before that happens.&lt;/p&gt;
&lt;p&gt;Normally, when third parties try to predict whether their products will be subsumed by a platform, the question boils down to whether their products will be strategic to the platform. When the platform has an established business model, this analysis is fairly straightforward (for example, &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;here&lt;/a&gt; is my strategic analysis of Google’s platform).  If you make games for the iPhone, you are pretty certain Apple will take their 30% cut and leave you alone. Similarly, if you are a content website relying on SEO and Google Adsense you can be pretty confident Google will leave you alone. Until Twitter has a successful business model, they can’t have a consistent strategy and third parties should expect erratic behavior and even complete and sudden shifts in strategy.&lt;/p&gt;
&lt;p&gt;So what might Twitter’s business model eventually be?  I expect that Twitter search will monetize poorly because most searches on Twitter don’t have &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;.  Twitter’s move into mobile clients and &lt;a href=&quot;http://www.businessinsider.com/twitter-previews-the-redesign-that-will-make-you-not-want-to-use-a-desktop-client-2010-4&quot;&gt;hints&lt;/a&gt; about a more engaging website suggest they may be trying to mimic Facebook’s display ad model. (Facebook’s ad growth is being driven largely by companies like Zynga who are in turn monetizing users with social games and virtual goods.  Hence it’s no surprise that a Twitter investor is &lt;a href=&quot;http://www.avc.com/a_vc/2010/04/the-twitter-platform.html&quot;&gt;suggesting&lt;/a&gt; that developers create social games instead of “filling holes” with URL shorteners etc.) Facebook’s model depends on owning “eyeballs,” which is entirely contradictory to the pure API model Twitter has promoted thus far.  So if Twitter continues in this direction expect a lot of angst among third-party developers.&lt;/p&gt;
&lt;p&gt;Hopefully Twitter “fills holes” through acquisitions instead of internal development. Twitter was a hugely clever invention and has grown its user base at a staggering rate, but on the product development front has been underwhelming.  &lt;a href=&quot;http://gigaom.com/2010/04/09/twitter-buys-tweetie-adds-fuel-to-developer-fires/&quot;&gt;Buying Tweetie&lt;/a&gt; seemed to be a tacit acknowledgement of this weakness and an attempt to rectify it. Acquisitions also have the benefit of sending a positive signal to developers since least some of them are embraced and not just replaced.&lt;/p&gt;
&lt;p&gt;What’s Facebook doing during all of this?  Last year, Facebook seemed to be frantically copying Twitter – defaulting a lot of information to public, creating a canonical namespace, etc. Now that Twitter seems to be mimicing Facebook, Facebook’s best move is probably just to sit back and watch the Twitter ecosystem fight amongst itself.  As Facebooker Ivan Kirigin &lt;a href=&quot;http://twitter.com/ikirigin/status/11920666017&quot;&gt;tweeted&lt;/a&gt; yesterday: “I suppose when your competition is making huge mistakes, you should just stfu.”&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Disclosure: As with everything I write, I have a ton of conflicts of interest, some of which are listed&lt;/em&gt; &lt;a href=&quot;http://foundercollective.com/companies&quot;&gt;&lt;em&gt;here&lt;/em&gt;&lt;/a&gt;&lt;em&gt;.&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Underhyping your startup]]></title>
            <description><![CDATA[I recently tweeted: New early-stage start up trend: get big quietly, so you don’t tip off potential competitors. Chris Sacca agreed: @cdixon…]]></description>
            <link>https://cdixon.org/2010/04/06/underhyping-your-startup</link>
            <guid isPermaLink="false">https://cdixon.org/2010/04/06/underhyping-your-startup</guid>
            <pubDate>Tue, 06 Apr 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I recently tweeted:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;New early-stage start up trend: get big quietly, so you don’t tip off potential competitors.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Chris Sacca agreed:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;@&lt;a href=&quot;http://twitter.com/cdixon&quot;&gt;cdixon&lt;/a&gt; Agreed. As of this morning, I have four companies who don’t want investors mentioning that they’ve been funded.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Business Insider took these tweets to mean “&lt;a href=&quot;http://www.businessinsider.com/stealth-mode-is-back-2010-3&quot;&gt;Stealth mode is back&lt;/a&gt;.”  But that’s actually not what I meant.  The companies I’m referring to (and I think Chris is referring to) are publicly launched, acquiring users and generating revenue. They are modeling themselves after Groupon, where the first time the VC community / tech press gets excited about them, they are already so successful that it’s hard for competitors to jump in.&lt;/p&gt;
&lt;p&gt;This trend strikes me as a response to the fact that 1) raising money from certain investors can be such a &lt;a href=&quot;http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/&quot;&gt;strong signal&lt;/a&gt; that it triggers massive investor/tech press excitement, 2) things are “frothy” now – meaning lots of smart people are starting companies and easily raising lots of money, 3) word seems to travel faster than ever about interesting startups, and 4) there are big companies like Facebook and Google who are good at fast following.&lt;/p&gt;
&lt;p&gt;I don’t know what to call this but it’s not stealth mode.  Maybe “underhype” mode?&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Size markets using narratives, not numbers]]></title>
            <description><![CDATA[Anyone who has pitched VCs knows they are obsessed with market size.  If you can’t make the case that you’re addressing a possible billion…]]></description>
            <link>https://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers</link>
            <guid isPermaLink="false">https://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers</guid>
            <pubDate>Sat, 03 Apr 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Anyone who has pitched VCs knows they are &lt;a href=&quot;http://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean/&quot;&gt;obsessed with market size&lt;/a&gt;.  If you can’t make the case that you’re addressing a possible &lt;a href=&quot;http://www.sequoiacap.com/ideas&quot;&gt;billion dollar market&lt;/a&gt;, you’ll have difficulty getting VCs to invest. (Smaller, venture-style investors like angels and &lt;a href=&quot;http://foundercollective.com&quot;&gt;seed funds&lt;/a&gt; also prioritize market size but are usually more flexible – they’ll often invest when the market is “only” ~$100M).  This is perfectly rational since VC returns tend to be driven by a few big hits in big markets.&lt;/p&gt;
&lt;p&gt;For early-stage companies, you should never rely on quantitative analysis to estimate market size. Venture-style startups are bets on broad, secular trends. Good VCs understand this. Bad VCs don’t, and waste time on things like interviewing potential customers and building spreadsheets that estimate market size from the bottom-up.&lt;/p&gt;
&lt;p&gt;The only way to understand and predict large new markets is through narratives. Some popular current narratives include: people are spending more and more time online and somehow brand advertisers will find a way to effectively influence them; social link sharing is becoming an increasingly significant source of website traffic and somehow will be monetized; mobile devices are becoming powerful enough to replace laptops for most tasks and will unleash a flood of new applications and business models.&lt;/p&gt;
&lt;p&gt;As an entrepreneur, you shouldn’t raise VC unless you truly believe a narrative where your company is a billion dollar business. But deploying narratives is also an important tactic. VCs are financiers — quantitative analysis is their home turf. If you are arguing market size with a VC using a spreadsheet, you’ve already lost the debate.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Capitalism just like Adam Smith pictured it]]></title>
            <description><![CDATA[From far away, things that are very different look alike. I grew up in a family of musicians and English professors. To them, the entire…]]></description>
            <link>https://cdixon.org/2010/03/27/capitalism-just-like-adam-smith-pictured-it</link>
            <guid isPermaLink="false">https://cdixon.org/2010/03/27/capitalism-just-like-adam-smith-pictured-it</guid>
            <pubDate>Sat, 27 Mar 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;From far away, things that are very different look alike. I grew up in a family of musicians and English professors. To them, the entire financial industry seemed corrupt. When I worked in finance – first on Wall Street and then in venture capital – I saw that the reality was much more nuanced. Some finance is productive and useful and some is corrupt and parasitic.&lt;/p&gt;
&lt;p&gt;Most financial markets start out with a productive purpose. Derivatives like futures and options started out as a way for companies to reduce risk in non-core areas, for example for airlines to hedge their exposure to oil prices and transnationals to hedge their exposure to currency fluctuations. The sellers of these derivatives were aggregators who pooled risk, much like insurance companies do. The overall effect was a net reduction in risk to our economy without hampering growth and returns.&lt;/p&gt;
&lt;p&gt;Then speculators entered the market, creating more complicated derivative products and betting with borrowed money.  This was defended as a way to increase liquidity and efficiency. But it came at the cost of making the system more complicated and susceptible to abuse. Worst of all, these so-called innovations increased the overall risk to the system, something we saw quite vividly during the recent financial crisis.&lt;/p&gt;
&lt;p&gt;Venture capital is a shining example of capitalism just like Adam Smith pictured it, where private vice really does lead to public virtue.  Consider, for example, two of the largest areas of venture investment: biotech and cleantech.  Here we see the best and brightest – top science graduates from places like MIT and Stanford – devoting their lives to curing cancer and developing new energy sources.  These students may be motivated by good will, but need not be, since they will also get rich if they succeed.&lt;/p&gt;
&lt;p&gt;A strong case can be made that the financial industry needs significantly more regulation, particularly around big banks and derivatives markets. But it would be a tragic mistake to create &lt;a href=&quot;http://www.avc.com/a_vc/2010/03/startups-get-hit-by-shrapnel-in-the-banking-bill.html&quot;&gt;regulations&lt;/a&gt; that hinder angel investing and venture capital.  From the outside, VC and Wall Street might appear similar, but the closer you get, the more you understand how different they really are.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Stickiness is bad for business]]></title>
            <description><![CDATA[It is common to hear entrepreneurs and investors talk about the high level of engagement (what we used to call “stickiness”) of their…]]></description>
            <link>https://cdixon.org/2010/03/25/stickiness-is-bad-for-business</link>
            <guid isPermaLink="false">https://cdixon.org/2010/03/25/stickiness-is-bad-for-business</guid>
            <pubDate>Thu, 25 Mar 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It is common to hear entrepreneurs and investors talk about the high level of engagement (what we used to call “stickiness”) of their website.  They quite rightly believe that it’s better to have a more engaging user experience, as that generally means happy users. Unfortunately, the dominant advertising model on the web – Cost per Click (CPC) – rewards un-sticky websites.  As &lt;a href=&quot;http://blog.rlucas.net/tech_and_market_reflections/paradox_of_quality_site_visits/&quot;&gt;Randall Lucas&lt;/a&gt; &lt;a href=&quot;http://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars/?success#comment-35531015&quot;&gt;said&lt;/a&gt; in response to one of my earlier &lt;a href=&quot;http://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars/&quot;&gt;posts&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The paradox, it seems is this: in a pay-per-click driven world, site visitors who want to stay on your site — due to it having the once-much-lauded quality of “stickiness” — are worth &lt;em&gt;much less&lt;/em&gt; than those who want to flee your site because it’s clearly not valuable, and hence will click through to somewhere else.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Facebook recently became the most &lt;a href=&quot;http://money.cnn.com/2010/03/16/technology/facebook_most_visited/&quot;&gt;visited site&lt;/a&gt; on the web. Yet their revenues are rumored to around $1B – about 1/30 of what &lt;a href=&quot;http://finance.yahoo.com/q/ks?s=GOOG&quot;&gt;Google’s revenues&lt;/a&gt; will be this year. Google has the perfect revenue-generating combination:  people come to the site often, leave quickly, and often have &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;. Facebook has tons of visitors but they generally come to socialize, not to buy things, and they rarely click on ads that take them to other sites. &lt;strong&gt;Facebook is like a Starbucks where everyone hangs out for hours but almost never buys anything.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The revenue gap between sites like Facebook and Google should narrow over time.  Cost-per-click search ads are extremely good at &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;harvesting intent&lt;/a&gt;, but bad at generating intent.  The vast majority of money spent on intent-generating advertising — brand advertising — still happens offline. Eventually this &lt;a href=&quot;http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/&quot;&gt;money will have to go where people spend time&lt;/a&gt;, which is increasingly online, at sites like Facebook. Somehow Coke, Tide, Nike, Budweiser etc. will have to convince the next generation to buy their mostly commodity products. Expect the online Starbucks of the future to have a lot more – and more effective – ads.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Developing new startup ideas]]></title>
            <description><![CDATA[If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it.  Be the opposite…]]></description>
            <link>https://cdixon.org/2010/03/14/developing-new-startup-ideas</link>
            <guid isPermaLink="false">https://cdixon.org/2010/03/14/developing-new-startup-ideas</guid>
            <pubDate>Sun, 14 Mar 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it.  Be the &lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;opposite of secretive&lt;/a&gt;.  Create a Google spreadsheet where you list every idea you can think, even really half-baked ones.  Include ideas you hear about (make sure you keep track of who had which idea so you can credit them/include them later).&lt;/p&gt;
&lt;p&gt;Then take the spreadsheet and show it to every smart person you can get a meeting with and walk through each idea.  Talk to VCs, entrepreneurs, potential customers, and people working at big companies in relevant industries. You’ll be surprised how much you’ll learn.  The odds that someone will hear an idea and go start a competitor are close to zero.  The odds you’ll learn which ideas are good and bad and how to improve them are very high.&lt;/p&gt;
&lt;p&gt;Every conversation will contain some signal and some noise. Separating the two is tricky. Here are some broad rules of thumb I’ve developed for how to filter feedback based to the profession of the person giving it to you.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Employees at relevant big companies.&lt;/em&gt; These people are great at providing facts (“Google has 100 people working on that problem”) but their judgment about the quality of startup ideas is generally bad. They tend to have goggles on that makes them think every good idea in their industry is already being built within their company.  For example, every security industry person I talked to thought &lt;a href=&quot;http://siteadvisor.com&quot;&gt;SiteAdvisor&lt;/a&gt; was a bad idea.  (If it wasn’t, they think, someone at McAfee or Symantec company would have already built it!)&lt;/li&gt;
&lt;li&gt;&lt;em&gt;VCs.&lt;/em&gt; VCs are good at telling you about similar companies in the past and present and critiquing your idea in an “MBA-like” way:  will it scale? what are the economics? what is the best marketing strategy?  I would listen to them on these topics but pretty much ignore whether they think your idea is good or bad.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Potential customers&lt;/em&gt;.  If your product is B2B, remember you’ll be selling to that person 2-3 years from now and by then the world and their priorities will likely have radically changed.  If your product is B2C, it’s interesting to hear how regular consumers think about your product but often they really need to use it fully built and in the proper context to really judge it.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Entrepreneurs.&lt;/em&gt; This is the one group I listen to without a filter.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Even though I have no intention of starting a new company for a long time (if ever), I still keep my idea spreadsheet and update it periodically.  Some of the ideas I wrote down a few years ago are now companies started by other people (some successful, some not).  A few I had the chance to invest in. It’s interesting to compare my notes and ratings of each idea with how those companies have actually performed. I also keep a list of “on the beach” ideas in case I have time in between startups. These are mostly non-profit ideas.  I don’t know if I’ll ever get to those but they are particularly fun to think about.&lt;/p&gt;
&lt;p&gt;* Thanks to &lt;a href=&quot;http://www.cham.net/james&quot;&gt;James Cham&lt;/a&gt; for inspiring &amp;#x26; contributing ideas to this post!&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The importance of investor signaling in venture pricing]]></title>
            <description><![CDATA[Suppose there is a pre-profitable company that is raising venture financing. Simple, classical economic models would predict that although…]]></description>
            <link>https://cdixon.org/2010/03/11/the-importance-of-investor-signaling-in-venture-pricing</link>
            <guid isPermaLink="false">https://cdixon.org/2010/03/11/the-importance-of-investor-signaling-in-venture-pricing</guid>
            <pubDate>Thu, 11 Mar 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Suppose there is a pre-profitable company that is raising venture financing. Simple, classical economic models would predict that although there might be multiple VCs interested in investing, at the end of the financing process the valuation will rise to the clearing price where the demand for the company’s stock equals the supply (amount being issued).&lt;/p&gt;
&lt;p&gt;Actual venture financings work nothing like this simple model would predict.  In practice, the equilibrium states for venture financings are: 1) significantly oversubscribed at too low a valuation, or 2) significantly undersubscribed at too high a valuation.&lt;/p&gt;
&lt;p&gt;Why do venture markets function this way?  Pricing in any market is a function of the information available to investors. In the public stock markets, for example, the primary information inputs are “hard metrics” like company financials, industry dynamics, and general economic conditions. What makes venture pricing special is that there are so few hard metrics to rely on, &lt;em&gt;hence one of the primary valuation inputs is what other investors think about the company&lt;/em&gt;.&lt;/p&gt;
&lt;p&gt;This investor signaling has a huge effect on venture financing dynamics. If Sequoia wants to invest, so will every other investor.  If Sequoia gave you seed money before but now doesn’t want to follow on, you’re probably dead.&lt;/p&gt;
&lt;p&gt;Part of this is the so-called herd mentality for which VC’s often get ridiculed. But a lot of it is very rational. When you invest in early-stage companies you are forced to rely on very little information. Maybe you’ve used the product and spent a dozen hours with management, but that’s often about it. The signals from other investors who have access to information you don’t is an extremely valuable input.&lt;/p&gt;
&lt;p&gt;Smart entrepreneurs manage the investor signaling effect by following rules like:&lt;/p&gt;
&lt;p&gt;- &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;Don’t take seed money from big VCs&lt;/a&gt; – It doesn’t matter if the big VC invests under a different name or merely provides space and mentoring.  If a big VC has &lt;em&gt;any&lt;/em&gt; involvement with your company at the seed stage, their posture toward the next round has such strong signaling power that they can kill you and/or control the pricing of the round.&lt;/p&gt;
&lt;p&gt;- Don’t try to be clever and get an auction going (and &lt;a href=&quot;http://cdixon.org/2009/09/02/dont-shop-your-term-sheet/&quot;&gt;don’t shop your term sheet&lt;/a&gt;). If you do, once the price gets to the point where only one investor remains, that investor will look left and right and see no one there and might get cold feet and leave you with no deal at all. Save the auction for when you get acquired or IPO.&lt;/p&gt;
&lt;p&gt;- Don’t be perceived as being “on the market” too long.  Once you’ve pitched your first investor, the clock starts ticking. Word gets around quickly that you are out raising money. After a month or two, if you don’t have strong interest, you risk being perceived as damaged goods.&lt;/p&gt;
&lt;p&gt;- If you get a great investor to lead a follow-on round, expect your existing investors to want to invest pro-rata or more, even if they previously indicated otherwise.  This often creates complicated situations because the new investor usually has minimum ownership thresholds (15-20%) and combining this with pro-rata for existing investors usually means raising far more money than the company needs.&lt;/p&gt;
&lt;p&gt;Lastly, be very careful not to try to stimulate investor interest by overstating the interest of other investors. It’s a very small community and seed investors talk to each other all the time. If you are perceived to be overstating interest, you can lose credibility very quickly.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[News is a lousy business for Google too]]></title>
            <description><![CDATA[There is a widespread myth that search engines have taken profits away from news websites. A few months ago, Rupert Murdoch said: “Google…]]></description>
            <link>https://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too</link>
            <guid isPermaLink="false">https://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too</guid>
            <pubDate>Sun, 07 Mar 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There is a widespread myth that search engines have taken profits away from news websites. A few months ago, Rupert Murdoch &lt;a href=&quot;http://www.examiner.com/x-22639-Google-Trends-Examiner~y2009m11d19-Rupert-Murdoch-Google-profits-by-avoiding-newsgathering-costs&quot;&gt;said&lt;/a&gt;: “Google has devised a brilliant business model that avoids paying for news gathering yet profits off the search ads sold around that content.”&lt;/p&gt;
&lt;p&gt;The reality is that news is a lousy business. Period. Even Google doesn’t make money on it. For example, here are Google’s search results for the phrase “afghanistan war”:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2010-03-07-at-2-16-53-pm1.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2010 03 07 at 2 16 53 pm1 1024x642&quot;
        title=&quot;Screen shot 2010-03-07 at 2.16.53 PM&quot;
        src=&quot;/static/6534c90a73a87de11eaac0c582b74be2/94a55/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2010-03-07 at 2.16.53 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Notice there aren’t any ads on the page. This is because ads for “afghanistan war” generate such low revenues per query that Google doesn’t think it’s worth hurting the user experience with a cluttered page. Google can afford to do this on news queries (along with many other categories of queries) because their &lt;a href=&quot;http://cdixon.org/2009/12/14/search-and-the-social-graph/&quot;&gt;real business&lt;/a&gt; is selling ads on queries where the user likely has &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;. Big money-making categories include travel, consumer electronics and malpractice lawyers. News queries are loss leaders.&lt;/p&gt;
&lt;p&gt;It’s an historical accident that hard news categories like international and investigative reporting were part of profitable businesses. The internet upended this model by 1) providing a new delivery method for classified ads (mainly Craigslist), 2) increasing the supply of newspapers from 1-2 per location to thousands per location, thereby driving the willingness-to-pay for news dramatically down, and 3) unbundling news categories, making cross subsidization increasingly hard.&lt;/p&gt;
&lt;p&gt;The internet exposed hard news for what it is: a lousy standalone business. Google arguably contributed to this in many indirect ways, including by helping users find substitute news sources. But the idea that Google takes profits directly from newspapers is simply misinformed.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[It’s not East Coast vs West Coast, it’s about making more places like the Valley]]></title>
            <description><![CDATA[I’ve written a few times about what seems to be an exploding tech scene in NYC.  This is sometimes interpreted as arguing that NYC is a…]]></description>
            <link>https://cdixon.org/2010/02/27/its-not-east-coast-vs-west-coast-its-about-making-more-places-like-the-valley</link>
            <guid isPermaLink="false">https://cdixon.org/2010/02/27/its-not-east-coast-vs-west-coast-its-about-making-more-places-like-the-valley</guid>
            <pubDate>Sat, 27 Feb 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve written a few times about what seems to be an &lt;a href=&quot;http://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding/&quot;&gt;exploding&lt;/a&gt; tech scene in NYC.  This is sometimes interpreted as arguing that NYC is a better place to start a company than the Valley. Most recently, Matt Mireles seems to be &lt;a href=&quot;http://www.businessinsider.com/face-it-nyc-is-not-the-best-place-for-a-startup-2010-2&quot;&gt;addressing&lt;/a&gt; people like me with his critique of the NYC startup scene (he makes some good points as does Caterina Fake in her &lt;a href=&quot;http://www.caterina.net/archive/001227.html&quot;&gt;response&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;I’ve never meant my arguments to be about where it is better to start a company. California is a phenomenal place to start a tech company. NYC is a great place as well. (Note to Matt – it’s hard for first time founders &lt;em&gt;everywhere&lt;/em&gt;). To me, the important question isn’t which place is better, but rather how we import the things that make the Valley great into NYC. As I said &lt;a href=&quot;http://cdixon.org/2009/09/01/new-york-city-is-poised-for-a-tech-revival/&quot;&gt;last year&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself.   Silicon Valley will always be the mecca of technology, but now that people here are getting back to, as Obama says, &lt;em&gt;making things&lt;/em&gt;, New York City has a shot at becoming relevant again in the tech world.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I spent the past week in California and had the honor of meeting some legendary venture investors. I was deeply impressed: they are legends for a reason. Of course, they are incredibly smart and hard working and all of that, but most impressively, it was clear that they truly believe in making big bets on ambitious, seemingly wacky ideas &lt;em&gt;to try&lt;/em&gt; &lt;em&gt;to change the world&lt;/em&gt;. Every VC has this rhetoric on their website, but – at least in my experience – most just want to make incremental money on incremental technologies. (Side note: I noticed that the more powerful the VC, the more likely they were to pay close attention, show up on time, and not bring phones/computers into meetings.  I guess when you are changing the world, emails can wait an hour for a response).&lt;/p&gt;
&lt;p&gt;California should be NYC’s role model and ally. The enemy should be people and institutions who make money but don’t actually create anything useful. In NYC, this mostly means Wall Street, along with the Wall Street mindset that sometimes infects East Coast VC’s (emphasis on financial engineering, needing to see metrics &amp;#x26; “traction” vs betting on people and ideas, etc).&lt;/p&gt;
&lt;p&gt;Matt should do what’s best for his company. God knows it’s hard enough doing a startup – you don’t need to carry the weight of reinvigorating a region on your back as well. That might mean moving to California. Meanwhile, forward-thinking investors and founders in NYC will continue trying to &lt;em&gt;make things that change the world&lt;/em&gt; – in other words, trying to make NYC more like the Valley.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[A massive misallocation of online advertising dollars]]></title>
            <description><![CDATA[In an earlier blog post, I talked about how sites that generate purchasing intent (mainly “content” sites) are being under-allocated…]]></description>
            <link>https://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars</link>
            <guid isPermaLink="false">https://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars</guid>
            <pubDate>Fri, 19 Feb 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In an &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;earlier blog post&lt;/a&gt;, I talked about how sites that generate purchasing intent (mainly “content” sites) are being under-allocated advertising dollars versus sites that harvest purchasing intent (search engines, coupon sites, comparison shopping sites, etc).  As a result, most content sites are left haggling over CPM-based brand advertising instead of sponsored links for the bulk of their revenue.&lt;/p&gt;
&lt;p&gt;But there is an additional problem:  e&lt;em&gt;ven among sites that monetize via sponsored links there is a large overallocation of advertising spending on links that are near the “end of the purchasing process” (or “end of the funnel”).&lt;/em&gt; For example, an average camera buyer takes 30 days and clicks on approximately 3 sponsored links from the beginning of researching cameras to actually purchasing one.   Yet in most cases only the last click gets credit, by which I mean:  1) if it’s an affiliate (CPA) deal, it is literally usually the case that only the last affiliate (the site that drops the last cookie) gets paid, 2) if it’s a CPC or CPM deal, most advertisers don’t properly track the users across multiple site visits so simply attribute conversion to the most recent click, causing them to over-allocate to end-of-funnel links 3) if it’s a non-sponsored link (like Google natural search links) the advertiser might over-credit SEO when in fact the natural search click was just the final navigational step in a long process that involved sponsored links along the way.&lt;/p&gt;
&lt;p&gt;What this means is there are two huge misallocations of advertising dollars online: the first from intent generators to intent harvesters; the second from intent harvesters that are at the beginning or middle of the purchasing process to those at the end of the purchasing process.  This is not just a problem for internet advertisers and businesses – it affects all internet users.  Where advertising dollars flow, money gets invested. It is well known that content sites are suffering, many are even on their way to dying. Additionally, product/service sites that started off focusing on research are forced to move more and more toward end-of-funnel activities.  Take a look at how sites like &lt;a href=&quot;http://www.tripadvisor.com/Tourism-g28953-New_York-Vacations.html&quot;&gt;TripAdvisor&lt;/a&gt; and &lt;a href=&quot;http://reviews.cnet.com/digital-cameras/?tag=TOCleftColumn.0&quot;&gt;CNET&lt;/a&gt; have devoted increasing real estate to the final purchasing click instead of research.  For the most part, you don’t get paid for the actual research since it’s too high in the funnel.&lt;/p&gt;
&lt;p&gt;As with all large problems, this misallocation of advertising dollars also presents a number of opportunities.  One opportunity is for advertisers to correctly attribute their spending by tracking users through the entire purchasing process (in the case of cameras, the full 30 days and multiple sponsored clicks).  Very likely, these sites are currently overpaying end-of-funnel sites (e.g. coupon sites) and underpaying top-of-funnel sites (e.g. research sites). There is also an opportunity for companies that provide technology to help track this better. Finally, if over time advertising dollars do indeed shift to being correctly allocated, this will allow research sites to be pure research sites, content sites to be pure content sites, etc instead of everyone trying to clutter their sites with repetitive, “last click” functionality.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Don’t be creative about the wrong things]]></title>
            <description><![CDATA[When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should…]]></description>
            <link>https://cdixon.org/2010/02/16/dont-be-creative-about-the-wrong-things</link>
            <guid isPermaLink="false">https://cdixon.org/2010/02/16/dont-be-creative-about-the-wrong-things</guid>
            <pubDate>Tue, 16 Feb 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should be:  product, recruiting, marketing etc. One slightly disturbing trend I’ve noticed is founders trying to creative about stuff like legal terms that really are better left in their “default” form.&lt;/p&gt;
&lt;p&gt;Here’s my advice: hire a “default” law firm like &lt;a href=&quot;http://www.gunder.com/&quot;&gt;Gunderson&lt;/a&gt; and take their “default” advice. Yes, you should form a C corp in Delaware of CA or wherever they tell you; yes you should have 4 year vesting with a 1 year cliff; yes founders should have vesting; yes your deal terms should be &lt;a href=&quot;http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/&quot;&gt;plain vanilla&lt;/a&gt;. Etc. These things are time tested and you are far more likely to screw things up than create value by tinkering with them. Also, they are just not what you should be spending your time on.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Every time an engineer joins Google, a startup dies]]></title>
            <description><![CDATA[VC returns over the last decade have been poor. The cause is widely agreed to be an excess of venture capital dollars to worthy startups…]]></description>
            <link>https://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies</link>
            <guid isPermaLink="false">https://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies</guid>
            <pubDate>Thu, 11 Feb 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;VC returns over the last decade have been &lt;a href=&quot;http://azeemazhar.com/?p=383&quot;&gt;poor&lt;/a&gt;. The cause is widely agreed to be an excess of venture capital dollars to worthy startups. Observers seem to universally assume that the solution is for the VC industry to downsize.&lt;/p&gt;
&lt;p&gt;For example, Fred Wilson &lt;a href=&quot;http://www.avc.com/a_vc/2009/04/the-venture-capital-math-problem.html&quot;&gt;says&lt;/a&gt; about VC:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;You cannot invest $25bn per year and generate the kinds of returns investors seek from the asset class. If $100bn per year in exits is a steady state number, then we need to work back from that and determine how much the asset class can manage…. I think “back to the future” is the answer to most of the venture capital asset class problems. Less capital in the asset class, smaller fund sizes, smaller partnerships, smaller deals, and smaller exits&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Similarly, Bill Gurley &lt;a href=&quot;http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/&quot;&gt;writes&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There are many reasons to believe that a reduction in the size of the VC industry will be healthy for the industry overall and should lead to above average returns in the future.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;All of these analyses start with the assumption that aggregate venture-backed exits (acquisition and IPOs) will remain roughly constant. I don’t see why we need to accept that assumption. The aggregate value of venture-backed startups, like all valuations, is a function of profits generated (or predicted to be generated). In technology, profits are driven by innovation. I don’t see any reason we should assume venture-backed innovation can’t be dramatically increased.&lt;/p&gt;
&lt;p&gt;For example, innovation has varied widely across times and places – the most innovative region in the world for the last 50 years being Silicon Valley. What if, say, Steve Jobs hadn’t grown up in Silicon Valley? What if he had gone to work for another company? Does anyone really think Apple – and all the innovation and wealth it created – would exist if Jobs hadn’t happened to grow up in a culture that was so startup friendly? Jobs is obviously a remarkable person, but there are probably 100 Steve Jobs born every year. The vast majority just never have a chance or give a thought to starting a revolutionary new company.&lt;/p&gt;
&lt;p&gt;Some people blame our education system, or assume that there is some fixed number of entrepreneurs born every year. I think the problem is cultural. As much as we like to think of our culture as being entrepreneurial, the reality is 99% of our top talent doesn’t seriously contemplate starting companies. Colleges crank out tons of extremely smart and well-educated kids every year. The vast majority go into “administrative” careers that don’t really produce anything – law, banking and consulting. Most of the rest join big companies. As I’ve argued many times before, big companies (with a few &lt;a href=&quot;http://cdixon.org/2009/10/10/man-and-superman/&quot;&gt;notable exceptions&lt;/a&gt;) aren’t nearly as successful as startups at creating new products.  The bigger the company, the more likely it suffers from &lt;a href=&quot;http://cdixon.org/2010/01/30/institutional-failure/&quot;&gt;agency issues&lt;/a&gt;, &lt;a href=&quot;http://www.scripting.com/davenet/2001/04/30/strategyTax.html&quot;&gt;strategy taxes&lt;/a&gt;, and &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;myopia&lt;/a&gt;. But most of all: nothing is more motivating and inspiring than the sense of ownership and self-direction only a startup can provide.&lt;/p&gt;
&lt;p&gt;Whenever I see a brilliant kid decide to join Goldman Sachs, McKinsey, or Google, I think to myself: a startup just died, and as a result our world is a little less wealthy, innovative, and interesting.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Selling to enterprises]]></title>
            <description><![CDATA[For some reason when you are selling information technology, big companies are referred to as “enterprises.” I’m guessing the word was…]]></description>
            <link>https://cdixon.org/2010/02/06/selling-to-enterprises</link>
            <guid isPermaLink="false">https://cdixon.org/2010/02/06/selling-to-enterprises</guid>
            <pubDate>Sat, 06 Feb 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;For some reason when you are selling information technology, big companies are referred to as “enterprises.” I’m guessing the word was invented by a software vendor who was trying to justify a million-dollar price tag. As a rule of thumb, think of enterprise sales as products/services that cost $100K/year or more.&lt;/p&gt;
&lt;p&gt;I am by no means an expert in enterprise sales. Personally, I vastly prefer marketing (one-to-many) versus sales (one-to-one), hence only start companies making consumer or small business products (advertising based or sub-$5000 price tags). But I have been involved in a few enterprise companies over the years. Here’s the main thing I’ve observed. Almost every enterprise startup I’ve seen has a product that would solve a problem their prospective customers have. But that isn’t the key question. The key question is whether it solves a problem that is one of the prospective customer’s top immediate priorities. Getting an enterprise to cough up $100K+ requires the “buy in” of many people, most of whom would prefer to maintain the status quo. Only if your product is a top priority can you get powerful “champions” to cut through the red tape.&lt;/p&gt;
&lt;p&gt;My rule of thumb is that every enterprise (or large business unit within an enterprise) will, at best, buy 1-3 new enterprise products per year.  You can have the greatest hardware/software in the world, but if you aren’t one of their top three priorities, you won’t be able to profitably sell to them.&lt;/p&gt;
&lt;p&gt;One final note: enterprise-focused VC’s sometimes refer to products priced between (roughly) $5k and $100K as falling in the “valley of death.” Above $100K, you might be able to make a profit given the cost of sales. Below $5k you might be able to market your product, hence have a very low cost of sales. In between, you need to do sales but it’s hard to do it profitably. Your best bet is a “channel” strategy; however, for innovative new products that is often a lot like trying to push a string.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The NYC tech scene is exploding]]></title>
            <description><![CDATA[The pace of innovation in the New York area is very impressive right now. Some of the top entrepenuers in the country are building and…]]></description>
            <link>https://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding</link>
            <guid isPermaLink="false">https://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding</guid>
            <pubDate>Mon, 01 Feb 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;blockquote&gt;
&lt;p&gt;The pace of innovation in the New York area is very impressive right now. Some of the top entrepenuers in the country are building and scaling companies in the NY ecosystem - &lt;em&gt;Ron Conway, yesterday in an email to me (published with his permission)&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;With the announcement of Roger Ehrenberg’s new fund – &lt;a href=&quot;http://www.informationarbitrage.com/2010/01/ia-venture-strategies-building-a-better-mousetrap.html&quot;&gt;IA Venture Strategies&lt;/a&gt; – NYC now has another top-tier seed fund.  I’ve had the pleasure of investing with Roger a number of times. He’s not only a great investor but also a huge help to the companies he invests in. It’s great that he’s going to be even more active and I hope to work with him a lot more in the future.&lt;/p&gt;
&lt;p&gt;The NYC tech scene is exploding. There are tons of interesting startups. I’m an investor in a bunch and started one (&lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt;) so won’t even try to enumerate them as any list will be extremely biased (other people have &lt;a href=&quot;http://www.amny.com/urbanite-1.812039/amny-special-report-new-york-city-s-10-hottest-tech-startups-1.1724369&quot;&gt;tried&lt;/a&gt;). I will say that one interesting thing happening is the types of startups are diversifying beyond media (HuffPo, Gawker) to more “California-style” startups (Foursquare, Boxee, Hunch).&lt;/p&gt;
&lt;p&gt;In terms of investors, NYC now has a number of seed investors / micro-VCs:  &lt;a href=&quot;http://www.informationarbitrage.com/ia-capital-partners.html&quot;&gt;IA Capital Partners&lt;/a&gt;, &lt;a href=&quot;http://betaworks.com/&quot;&gt;Betaworks&lt;/a&gt;, and &lt;a href=&quot;http://foundercollective.com/&quot;&gt;Founder Collective&lt;/a&gt; (FC – which I am part of – has made 7 seed investments in NYC since we started last year).  The god of seed investing, Ron Conway, who I quote up top, has recently decided to become extremely active in NYC. One of the nice things about having small funds is we don’t need to invest millions of dollar per round so we all frequently invest together.&lt;/p&gt;
&lt;p&gt;NYC also has mid sized funds like Union Square (in my opinion and a lot of people in the industry they have surpassed Sequoia as the best VC in the country).  We also have First Round, who very smartly hired the excellent Charlie (“Chris”) O’Donnell as their NYC guy.&lt;/p&gt;
&lt;p&gt;Then we have the big VCs who have also been increasing their activity in NYC.  Locally, we have Bessemer (Skype, LinkedIn, Yelp) and RRE.  Boston firms that are very active and positive influences here include: Polaris (Dog Patch Labs), Spark, Matrix, General Catalyst, and Flybridge. Finally, some excellent California firms like True Ventures have made NYC their second home.&lt;/p&gt;
&lt;p&gt;The one thing we really need to complete the ecosystem is a couple of runaway succesesses. As California has seen with Paypal, Google, Facebook etc, the big successes spawn all sorts of interesting new startups when employees leave and start new companies. They also set an example for younger entrepreneurs who, say, start a social networking site at Harvard and then decide to move.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Institutional failure]]></title>
            <description><![CDATA[The TV show The Wire is an incredibly instructive lesson on how the modern world works (besides being a great work of art). The recurring…]]></description>
            <link>https://cdixon.org/2010/01/30/institutional-failure</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/30/institutional-failure</guid>
            <pubDate>Sat, 30 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The TV show &lt;em&gt;The Wire&lt;/em&gt; is an incredibly instructive lesson on how the modern world works (besides being a great work of art). The recurring theme is how individuals with good intentions are stymied by large institutions. As the show’s creator &lt;a href=&quot;http://kottke.org/07/09/summer-news-regarding-the-wire&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The Wire is a Greek tragedy in which the postmodern institutions are the Olympian forces. It’s the police department, or the drug economy, or the political structures, or the school administration, or the macroeconomics forces that are throwing the lightning bolts and hitting people in the ass for no reason. In much of television, and in a good deal of our stage drama, individuals are often portrayed as rising above institutions to achieve catharsis. In this drama, the institutions always prove larger, and those characters with hubris enough to challenge the postmodern construct of American empire are invariably mocked, marginalized, or crushed. Greek tragedy for the new millennium, so to speak.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;What’s amazing about the show is you see in a very realistic and compelling way how, say, 1) the well intentioned mayor needs to get the crime numbers down to get his school reform passed so 2) he pressures the (well-intentioned) police chief to do so, 3) who in turn cuts off a (well-intentioned) investigation that wasn’t going to yield short term metrics, 4) which emboldens the gang leader being investigated, 5) who recruits a sympathetic high school student into a life of crime. And so on.&lt;/p&gt;
&lt;p&gt;This blog is mostly about startups so let me tell a true Wire-like startup story. There is a large, publicly-traded company we’ll call BigCo. BigCo has a new CEO who is under heavy scrutiny and expected to get the stock price up over the next few fiscal quarters. Wall Street analysts who follow BigCo value the stock at a multiple of earnings, which are driven by Operating Expenses (“OpEx”), which are ongoing expenses versus “one time” expenses like acquisitions (called “CapEx”). (If you read analyst reports, you’ll see that stocks are generally considered, correctly or not, to have key financial drivers. The stock price is often those drivers times a “multiple” which in turn is often determined by the company’s expected growth rate). The “smart money” like hedge funds may or may not believe these analysts’ models, but they know other people believe them so place their bets according to how they think these numbers will move (see &lt;a href=&quot;http://en.wikipedia.org/wiki/Keynesian_beauty_contest&quot;&gt;Keynes on the stock market as a “beauty contest”&lt;/a&gt;). (Financial academics who believe in “&lt;a href=&quot;http://en.wikipedia.org/wiki/Efficient-market_hypothesis&quot;&gt;efficient markets&lt;/a&gt;” would say none of this is possible but anyone who’s actually participated in these markets knows the academics are living in fantasy land.)&lt;/p&gt;
&lt;p&gt;All this means the CEO is fixated on growing BigCo’s revenues while keeping operating expenses down. A great way to do this is through acquisitons, which analysts consider one-time expenses (CapEx). Let’s say BigCo is currently growing at 20%, but their multiple suggests they need to grow at 30%. So the M&amp;#x26;A team goes out and looks for companies they can acquire growing at, say, 50%, to get the average up. BigCo spends lavishly to buy these companies since the costs can be considered CapEx. They even have elaborate dinners and incur other large expenses that can be counted as part of the acquisition. Once the deal is closed they immediately start planning how to cut operating expenses from the newly acquired company. They decide the best way is to move the engineering offshore. This rips the heart out of the engineering-driven culture and as a result morale drops, product quality falls, and key people quit. But the short term revenues are up and operating expenses down, so BigCo’s CEO keeps her job and makes a lot of money off her stock options.&lt;/p&gt;
&lt;p&gt;The winners here are the people who understand the system and play it cynically (hedge funds, BigCo’s CEO &amp;#x26; board, perhaps the acquired company’s founders &amp;#x26; investors). The losers are everyone else – the company’s customers, the employees who lose their jobs, and the stock market investors who don’t understand the game is rigged.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Being friendly has become a competitive advantage in VC]]></title>
            <description><![CDATA[Over the last decade or two, the supply of venture capital dollars has increased dramatically at the same time as the cost of building tech…]]></description>
            <link>https://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc</guid>
            <pubDate>Fri, 29 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Over the last decade or two, the supply of venture capital dollars has &lt;a href=&quot;http://cdixon.org/2009/09/25/the-twitter-investment-and-the-decline-of-venture-capital/&quot;&gt;increased dramatically&lt;/a&gt; at the same time as the cost of building tech startups has sharply decreased.  As a result, the balance of power between capital and startups has shifted dramatically.&lt;/p&gt;
&lt;p&gt;Some VCs understand this. The ones that do try to stand out by, among other things, 1) going out and finding companies instead of expecting them to come to them, 2) working hard on behalf of existing investments to establish a good reputation, and 3) just being friendly, decent people.  Believe it or not, until recently, #3 was pretty rare.&lt;/p&gt;
&lt;p&gt;As a seed investor in about 30 companies, I’ve been part of many discussions with entrepreneurs about which VC’s they want to pitch for their next financing round.  More and more, I’ve heard entrepreneurs say something like “I don’t want to talk to that firm because they are such jerks.” In almost all cases these are well-known, older firms who come from the era when capital was scarce.&lt;/p&gt;
&lt;p&gt;Every experienced entrepreneur I know has a list of “toxic” VCs they won’t deal with. (Often because of horror stories like the “&lt;a href=&quot;http://cdixon.org/2009/08/27/pitching-the-vc-partnership/&quot;&gt;partner ambush&lt;/a&gt;“). There are so many VCs out there that you can do this and still have plenty of VCs to pitch to get a fair price for your company and only deal with decent, helpful investors. It sounds kind of crazy, but being a reasonably nice person has become a competitive advantage in venture capital.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Should Apple be more open?]]></title>
            <description><![CDATA[It is almost religious orthodoxy in the tech community that “open” is better than “closed.” For example, there have widespread complaints…]]></description>
            <link>https://cdixon.org/2010/01/28/should-apple-be-more-open</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/28/should-apple-be-more-open</guid>
            <pubDate>Thu, 28 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It is almost religious orthodoxy in the tech community that “open” is better than “closed.” For example, there have widespread complaints about Apple’s “closed” iPhone app approval process. People also argue Apple is making the same strategic mistake all over again versus Android that it made versus Windows*. The belief is that Android will eventually beat the iPhone OS with an “open” strategy (hardware-agnostic, no app approval process) just as Windows beat Apple’s OS in the 90′s.&lt;/p&gt;
&lt;p&gt;With respect to requiring apps to be approved, consider the current state of the iPhone platform. There are over 100,000 apps and thus far not a single virus, worm, spyware app etc. (I don’t count &lt;a href=&quot;http://www.tomshardware.com/news/iphone-virus-botnet-bank-details,9136.html&quot;&gt;utterly farfetched theoretical scenarios&lt;/a&gt;). As a would-be iPhone developer, I can report firsthand that the Apple approval process is a nightmare and should be overhauled. But what’s the alternative? Before the iPhone, getting your app on a phone meant doing complicated and expensive business development deals with wireless carriers. At the other end of the spectrum: If the iPhone OS were completely open, would we really have better apps?  What apps are we missing today besides viruses?&lt;/p&gt;
&lt;p&gt;With respect to the strategic issue of tightly integrating the iPhone/iPad software and hardware, a strong case can be made that Apple’s “closed” strategy is smart. Clay Christensen has given us the only serious &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_technology#The_theory&quot;&gt;theory&lt;/a&gt; I know of to predict when it’s optimal for a company to adopt an open versus closed strategy for (among other things) operating systems. The basic idea is that every new tech product starts out undershooting customer needs and then – because technology gets better faster than customers needs go up - eventually “overshoots” them. (PC’s have overshot today – most people don’t care if the processors get faster or Windows adds new features). Once a product overshoots, the basis of competition shifts from things like features and performance to things like price.&lt;/p&gt;
&lt;p&gt;The key difference today between desktop computers and mobile devices is that mobile devices still have a long way to go before customers don’t want more speed, more features, better battery life, smaller size, etc. Just look at all the &lt;a href=&quot;http://gizmodo.com/5458382/8-things-that-suck-about-the-ipad?skyline=true&amp;#x26;s=i&quot;&gt;complaints&lt;/a&gt; yesterday about the iPad - that it lacks multitasking, a camera, is too heavy, has poor battery life, etc. This despite the fact that Apple is now even &lt;em&gt;building their own semiconductors (!)&lt;/em&gt; to squeeze every last bit of performance out of the iPad. Until mobile devices compete mainly on price (probably a decade from now), tight vertical integration will produce the best device and is likely the best strategy.&lt;/p&gt;
&lt;p&gt;*It’s worth noting that &lt;a href=&quot;http://cdixon.org/2009/10/10/man-and-superman/&quot;&gt;Steve Jobs wasn’t the one who screwed up Apple&lt;/a&gt;. Jobs co-founded Apple in 1976. He was pushed out in in May 1985 when the company was valued at about $2.2B. He returned in 1996 when Apple was worth $3B. Today it is worth $187B.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Incumbents]]></title>
            <description><![CDATA[Almost every startup has big companies (“incumbents”) that are at some point potential acquirers or competitors.  For internet startups that…]]></description>
            <link>https://cdixon.org/2010/01/26/incumbents</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/26/incumbents</guid>
            <pubDate>Tue, 26 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Almost every startup has big companies (“incumbents”) that are at some point potential acquirers or competitors.  For internet startups that primarily means Google and Microsoft, and to a far lesser extent Yahoo and AOL.  (And likely more and more Apple, Facebook and even Twitter?).&lt;/p&gt;
&lt;p&gt;The first thing to try to figure out is whether what you are building will eventually be on the incumbent’s product roadmap. The best way to do predict this is to figure out whether what you are doing is strategic for the company. (I try to outline what I think is strategic for Google &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;here&lt;/a&gt;). Note that asking people who work at the incumbents isn’t very useful – even they don’t know what will be important to them in, say, two years.&lt;/p&gt;
&lt;p&gt;If what you are doing is strategic for the incumbents, be prepared for them to enter the market at some point. This could be good for you if you build a great product, recruit a great team, and are happy with a “product sale” or “trade sale” – usually sub $50M. If you are going for this size outcome, you should plan your financing strategy appropriately. Trade sales are generally great for bootstrapped or seed-funded companies but bad if you have raised lots of VC money.&lt;/p&gt;
&lt;p&gt;If your product is strategic for the incumbent and you’re shooting for a bigger outcome, you probably need to either 1) be far enough ahead of the curve that by the time the big guys get there you’re already entrenched, or 2) be doing something the big guys aren’t good at. Google has been good at a surprising number of things. One important area they haven’t been good at (yet) is software with a social component (Google Video vs YouTube, Orkut vs Facebook, Knol vs Wikipedia, etc).&lt;/p&gt;
&lt;p&gt;The final question to ask is whether your product is &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_technology&quot;&gt;disruptive&lt;/a&gt; or sustaining (in the Christensen sense).  If it’s disruptive, you most likely will go unnoticed by the incumbents for a long time (because it will &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;look like a toy&lt;/a&gt; to them). If the your technology is sustaining and you get noticed early you probably want to try to sell (and if you can’t, pivot). My last company, SiteAdvisor, was very much a sustaining technology, and the big guys literally told us if we didn’t sell they’d build it. In that case, the gig is up and you gotta sell.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[How to disrupt Wall Street]]></title>
            <description><![CDATA[Sarah Lacy has a very interesting post on TechCrunch where she argues that the internet is finally starting to disrupt Wall Street. I’d love…]]></description>
            <link>https://cdixon.org/2010/01/23/how-to-disrupt-wall-street</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/23/how-to-disrupt-wall-street</guid>
            <pubDate>Sat, 23 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Sarah Lacy has a very interesting &lt;a href=&quot;http://www.techcrunch.com/2010/01/14/is-the-internet-finally-robbing-the-greedy-financier%E2%80%99s-gravy-train/&quot;&gt;post&lt;/a&gt; on TechCrunch where she argues that the internet is finally starting to disrupt Wall Street. I’d love nothing more than to see Wall Street get disrupted by the Internet.&lt;/p&gt;
&lt;p&gt;While I agree on the big picture, I disagree with some of her specifics. She cites Mint and Square as examples of startups that potentially disrupt Wall Street. As I see it, these companies have merely built nice UI’s to Wall Street: Mint connects to your banks and Square to Visa and Mastercard and the bank that issued the credit card. If people at farmers’ markets use credit cards instead of cash, that means more money for Wall Street, not less.&lt;/p&gt;
&lt;p&gt;I would argue the best way to try to disrupt Wall Street is to look at how it currently makes money and attack it there. Here are some of the big sources of revenue.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Retail banks. Retail banks make money on fees and by paying low interest rates on deposits and then doing stuff with those deposits (buying stocks, mortgages, issuing credit cards, etc) that gets them a much higher return. To disrupt them you need to get people to stop depositing money in them. Zopa and Prosper are trying to do that. Unfortunately the regulatory system seems to strongly favor the incumbents.&lt;/li&gt;
&lt;li&gt;Credit cards. Charging 20% interest rates (banks) and skimming pennies off every transaction (Visa and Mastercard) is a very profitable business. Starting a new payment company that doesn’t depend on the existing banks and credit card companies could be disruptive. Paypal seems to have come the closest to doing this.&lt;/li&gt;
&lt;li&gt;Proprietary trading. A big trend over the last decade is for more of big banks’ profits to come from “proprietary trading” – which basically means operating big hedge funds inside banks (this trend is one of the main causes of the financial crisis and why the new “Volcker rule” is potentially a very good thing). For example, most of Goldman Sachs’ &lt;a href=&quot;http://marketplace.publicradio.org/display/web/2010/01/21/pm-goldman-q/&quot;&gt;recent massive profits&lt;/a&gt; came from proprietary trading. Basically what they do is hire lots of programmers and scientists to make money on fancy trading algorithms.  (Regrettably, I spent the first four years of my career writing software to help people like Goldman do this).  Given that the stock market was flat over the last decade and hedge funds made boatloads of money, the loser in this game are mostly unsophisticated investors (e.g. my parents in Ohio). Any website that encourages unsophisticated investors to buy specific stocks is helping Wall Street. Regular people should buy some treasury bonds or maybe an S&amp;#x26;P 500 ETF and be done with it. &lt;em&gt;That&lt;/em&gt; would be a huge blow to Wall Street.&lt;/li&gt;
&lt;li&gt;Trading. The more you trade stocks, the more Wall Street makes money. The obvious beneficiaries are the exchanges – NYSE, NASDAQ etc. There were attempts to build new exchanges in the 90′s like Island ECN. The next obvious beneficiaries are brokers like Fidelity or E-Trade. But the real beneficiaries aren’t the people who charge you explicit fees; it’s the people who make money on your trading in other ways.  For example, the hot thing on Wall Street is right now is high frequency “micro structure” trading strategies, which is basically a way to skim money off the “&lt;a href=&quot;http://en.wikipedia.org/wiki/Bid-offer_spread&quot;&gt;bid-ask spread&lt;/a&gt;” from trades made by less sophisticated investors.&lt;/li&gt;
&lt;li&gt;Investment banking. Banks make lots of money on “services” like IPOs and big mergers. A small way to attack this would be to convince tech companies (Facebook?) to IPO without going via Wall Street (this is what &lt;a href=&quot;http://www.internetnews.com/bus-news/article.php/363041/Wit+Capital+IPOs+for+Everyone.htm&quot;&gt;Wit Capital&lt;/a&gt; tried to do). Regarding mergers, there have been endless studies showing that big mergers only enrich CEOs and bankers, yet they continue unabated. This is part of the massive &lt;a href=&quot;http://en.wikipedia.org/wiki/Principal-agent_problem&quot;&gt;agency problem&lt;/a&gt; on Wall Street and can probably only change with a complete regulatory overhaul.&lt;/li&gt;
&lt;li&gt;Research. Historically, financial research was a loss leader used to sell investment banking services. After all the scandals of the 90′s, new regulations put in stronger walls between the research and banking. As a result, banks cut way back on research. In its place expert networks like Gerson Lehrman Group rose up. LinkedIn and Stocktwits are possible future disrupters here.&lt;/li&gt;
&lt;li&gt;Mutual fund management. Endless studies have shown that paying fees to mutual funds is a waste of money. Maybe websites that let your peers help you invest will disrupt these guys. I think a much better way to disrupt them is to either not invest in the stock market or just buy an ETF that gives you a low-fee way to buy the S&amp;#x26;P 500 index.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;This is by no means an exhaustive list and I have no idea how to solve most of these problems. But I’d love to see the financial industry be one of the next areas of internet innovation.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Techies and normals]]></title>
            <description><![CDATA[There are techies (if you are reading this blog you are almost certainly one of them) and there are mainstream users – some people call them…]]></description>
            <link>https://cdixon.org/2010/01/22/techies-and-normals</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/22/techies-and-normals</guid>
            <pubDate>Fri, 22 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There are techies (if you are reading this blog you are almost certainly one of them) and there are mainstream users – &lt;a href=&quot;http://www.businessinsider.com/nicholas-carlson&quot;&gt;some people&lt;/a&gt; call them “normals” (@&lt;a href=&quot;http://www.caterina.net/&quot;&gt;caterina&lt;/a&gt; suggested “muggles”). A lot of people call techies “early adopters” but I think this is a mistake: techies are only occasionally good predictors of which tech products normals will like.&lt;/p&gt;
&lt;p&gt;Techies are enthusiastic evangelists and can therefore give you lots of free marketing. Normals, on the other hand, are what you need to create a large company. There are three main ways that techies and normals can combine to embrace (or ignore) a startup.&lt;/p&gt;
&lt;p&gt;1. If you are loved first by techies and then by normals you get free marketing and also scale.  Google, Skype and YouTube all followed this chronology.  It is startup nirvana.&lt;/p&gt;
&lt;p&gt;2. The next best scenario is to be loved by normals but not by the techies. The vast majority of successful consumer businesses fall into this category. Usually the first time they get a lot of attention from the tech community is when they announce revenues or close a big financing. Some recent companies that fall in this category are Groupon, Zynga, and Gilt Group. Since these companies don’t start out with lots of free techie evangelizing they often acquire customers through paid marketing.&lt;/p&gt;
&lt;p&gt;(My last company – SiteAdvisor – was a product tech bloggers mostly dismissed even as normals embraced it.  When I left the company we had over 150 million downloads, yet the first time the word “SiteAdvisor” appeared on TechCrunch was a year after we were acquired when they &lt;a href=&quot;http://www.techcrunch.com/2007/07/10/site-advisor-20-haute-secure-launches-to-detect-and-block-malware/&quot;&gt;referred&lt;/a&gt; to another product as “SiteAdvisor 2.0″.)&lt;/p&gt;
&lt;p&gt;3. There are lots of products that are loved just by techies but not by normals. When something is getting hyped by techies, one of the hardest things to figure out is whether it will cross over to normals. The normals I know don’t want to vote on news, tag bookmarks, or annotate web pages.  I have no idea whether they want to “check in” to locations.  A year ago, I would have said they didn’t want to Twitter but obviously I was wrong. Knowing when something is techie-only versus techie-plus-normals is one of the hardest things to predict.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Collective knowledge systems]]></title>
            <description><![CDATA[I think you could make a strong argument that the most important technologies developed over the last decade are a set of systems that are…]]></description>
            <link>https://cdixon.org/2010/01/17/collective-knowledge-systems</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/17/collective-knowledge-systems</guid>
            <pubDate>Sun, 17 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I think you could make a strong argument that the most important technologies developed over the last decade are a set of systems that are sometimes called “collective knowledge systems”.&lt;/p&gt;
&lt;p&gt;The most successful collective knowledge system is the combination of Google plus the web. Of course Google was originally intended to be just a search engine, and the web just a collection of interlinked documents. But together they provide a very efficient system for surfacing the smartest thoughts on almost any topic from almost any person.&lt;/p&gt;
&lt;p&gt;The second most successful collective knowledge system is Wikipedia. Back in 2001, most people thought Wikipedia was a wacky project that would at best end up being a quirky “&lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toy&lt;/a&gt;” encyclopedia. Instead it has become a remarkably comprehensive and accurate resource that most internet users access every day.&lt;/p&gt;
&lt;p&gt;Other well-known and mostly successful collective knowledge systems include “answer” sites like Yahoo Answers, review sites like Yelp, and link sharing sites like Delicious.  My own company &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; is a collective knowledge system for recommendations, building on ideas originally developed by “collaborative filtering” pioneer &lt;a href=&quot;http://en.wikipedia.org/wiki/Firefly_(website)&quot;&gt;Firefly&lt;/a&gt; and the recommendation systems built into Amazon and Netflix.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Dealing with information overload&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;It has been widely &lt;a href=&quot;http://quod.lib.umich.edu/cgi/t/text/text-idx?c=jep;view=text;rgn=main;idno=3336451.0006.204&quot;&gt;noted&lt;/a&gt; that the amount of information in the world and in digital form has been growing &lt;a href=&quot;http://www.kk.org/thetechnium/archives/2006/02/the_speed_of_in.php&quot;&gt;exponentially&lt;/a&gt;. One way to make sense of all this information is to try to structure it after it is created. This method has proven to be, at best, partially effective (for a state-of-the-art attempt at doing simple information classification, try &lt;a href=&quot;http://www.google.com/squared/search?q=answer+websites&quot;&gt;Google Squared&lt;/a&gt;).&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;It turns out that imposing even minimal structure on information, especially &lt;em&gt;as it is being created&lt;/em&gt;, goes a long way. This is what successful collective knowledge systems do. Google would be vastly less effective if the web didn’t have tags and links. Wikipedia is highly structured, with an extensive organizational hierarchy and set of rules and norms. Yahoo Answers has a reputation and voting system that allows good answers to bubble up. Flickr and Delicious encourage user to explicitly tag items instead of trying to infer tags later via image recognition and text classification.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Importance of collective knowledge systems&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;There are very practical, pressing needs for better collective knowledge systems. For example, noted security researcher Bruce Schneier &lt;a href=&quot;http://www.schneier.com/blog/archives/2010/01/fixing_intellig.html&quot;&gt;argues&lt;/a&gt; that the United States’ biggest anti-terrorism intelligence challenge is to build a collective knowledge system across disconnected agencies:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What we need is an intelligence community that shares ideas and hunches and facts on their versions of Facebook, Twitter and wikis. We need the bottom-up organization that has made the Internet the greatest collection of human knowledge and ideas ever assembled.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The same could be said of every organization, large and small, formal and and informal, that wants to get maximum value from the knowledge of its members.&lt;/p&gt;
&lt;p&gt;Collective knowledge systems also have pure academic value. When Artificial Intelligence was first being seriously developed in the 1950′s, experts optimistically predicted they’d create machines that were as intelligent as humans in the near future.  In 1965, AI expert Herbert Simon &lt;a href=&quot;http://en.wikipedia.org/wiki/Strong_AI#History_of_mainstream_AI_research&quot;&gt;predicted&lt;/a&gt; that “machines will be capable, within twenty years, of doing any work a man can do.”&lt;/p&gt;
&lt;p&gt;While AI has had notable victories (e.g. chess), and produced an excellent set of tools that laid the groundwork for things like web search, it is nowhere close to achieving its goal of matching – let alone surpassing – human intelligence. If machines will ever be smart (and eventually try to &lt;a href=&quot;http://en.wikipedia.org/wiki/Skynet_(Terminator)&quot;&gt;destroy humanity&lt;/a&gt;?), collective knowledge systems are the best bet.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Design principles&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Should the US government just try putting up a wiki or micro-messaging service and see what happens? How should such a system be structured? Should users be assigned reputations and tagged by expertise? What is the unit of a “contribution”? How much structure should those contributions be required to have? Should there be incentives to contribute? How can the system be structured to “learn” most efficiently? How do you balance requiring up front structure with ease of use?&lt;/p&gt;
&lt;p&gt;These are the kind of questions you might think are being researched by academic computer scientists. Unfortunately, academic computer scientists still seem to model their field after the “hard sciences” instead of what they should modeling it after — social sciences like economics or sociology. As a result, computer scientists spend a lot of time dreaming up new programming languages, operating system architectures, and encryption schemes that, for the most part, sadly, nobody will every use.&lt;/p&gt;
&lt;p&gt;Meanwhile the really important questions related to information and computer science are mostly being ignored (there are notable exceptions, such as MIT’s &lt;a href=&quot;http://cci.mit.edu/&quot;&gt;Center for Collective Intelligence&lt;/a&gt;). Instead most of the work is being done informally and unsystematically by startups, research groups at large companies like Google, and a small group of multi-disciplinary academics like Clay Shirky and Duncan Watts.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Security through diversity]]></title>
            <description><![CDATA[Someone asked me the other day whether I thought the United States was vulnerable to a large scale “cyber” attack. While I have no doubt…]]></description>
            <link>https://cdixon.org/2010/01/12/security-through-diversity</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/12/security-through-diversity</guid>
            <pubDate>Tue, 12 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Someone asked me the other day whether I thought the United States was vulnerable to a large scale “cyber” attack. While I have no doubt that any particular organization can be compromised, what comforts me at the national level is the sheer diversity of our systems. We have – unintentionally – employed a very effective defensive strategy known as “security through diversity.”&lt;/p&gt;
&lt;p&gt;Every organization’s IT system is composed of multiple layers: credential systems, firewalls, intrusion detection systems, tripwires, databases, web servers, OS builds, encryption schemes, network topologies, etc.  Due to a variety of factors — competitive markets for IT products, lack of standards, diversity of IT managers’ preferences — most institutions make independent and varied choices at each layer. This, in turn, means that each insitution requires a customized attack in order to be penetrated. It is therefore virtually impossible for a single software program (virus, worm) to infiltrate a large portion of them.&lt;/p&gt;
&lt;p&gt;On the web, a particular form of uniformity that can be dangerous are the centralized login systems like Facebook Connect. But this is preferable to the current dominant “single sign on system”:  most regular people use the same weak password over and over for every site because it’s too hard to remember more than that (let along multiple strong passwords). This means attackers only need to penetrate one weak link (like the recent &lt;a href=&quot;http://www.computerworld.com/s/article/9142327/RockYou_hack_exposes_names_passwords_of_30M_accounts&quot;&gt;Rock You breach&lt;/a&gt;), and they get passwords that likely work on many other sites (including presumably banking and other “important” sites).  At least with Facebook Connect there is a well funded, technically savvy organization defending its centralized repository of passwords.&lt;/p&gt;
&lt;p&gt;I first heard the phrase “security through diversity” from &lt;a href=&quot;http://www.cs.unm.edu/~ackley/&quot;&gt;David Ackley&lt;/a&gt; who was working on creating operating systems that had randomly mutated instances (similar ideas have since become standard practice, e.g. &lt;a href=&quot;http://en.wikipedia.org/wiki/Address_space_layout_randomization&quot;&gt;stack and address space randomization&lt;/a&gt;). It struck me as a good idea and one that should be built into systems intentionally. But meanwhile we get many of the benefits unintentionally. The same factors that frustrate you when you try to transfer your medical records between doctors or network the devices in your house are also what help keep us safe.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Shutting down]]></title>
            <description><![CDATA[I’ve seen a number of situations recently where entrepreneurs decided to shut their startups down while they still had cash in the bank…]]></description>
            <link>https://cdixon.org/2010/01/09/shutting-down</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/09/shutting-down</guid>
            <pubDate>Sat, 09 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve seen a number of situations recently where entrepreneurs decided to shut their startups down while they still had cash in the bank. (Contrary to popular mythology, I’ve never seen a case where investors forced an early-stage startup to shut down before they ran out of cash — it has always been voluntary).  Shutting down is an incredibly hard thing to do.  It takes great maturity and intellectual honesty to realize things aren’t going the way you hoped and that it might be better to just close shop and do something else.&lt;/p&gt;
&lt;p&gt;How entrepreneurs handle shutting down is very important.  First, try to return as much capital to your investors as you can (after paying off employees and other important debts – but don’t waste money on an expensive legal process). Second, if you’ve developed IP, spend a few months trying to sell it to recover as much capital as you can (often investors will offer a “carve out” to incentivize entrepreneurs since the likely return to investors will be under total number of preferences).  Don’t go off starting a new venture before you’ve properly closed down your current one (I’ve seen this twice recently – very bad form).  Finally, for your own learning as well as your reputation, write a detailed post-mortem about what went right and wrong and send it to your investors, and then try to follow up with in-person discussions.&lt;/p&gt;
&lt;p&gt;Here’s the good news.  One of the great things about angel and venture investors is that failure is accepted, as long as you do it in the right way. Venture investors will often fund entrepreneurs who’ve lost their money in the past. They understand that if you build an interesting product and, say, market forces turn dramatically against you, that’s a risk they took — and the type of risk they will take a again. Also, entrepreneurs tend to be judged by their wins (max() function), not their average.  You’d be surprised how many entrepreneurs have failures in their past that no one remembers once they have some success.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The next big thing will start out looking like a toy]]></title>
            <description><![CDATA[One of the amazing things about the internet economy is how different the list of top internet properties today looks from the list ten…]]></description>
            <link>https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy</link>
            <guid isPermaLink="false">https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy</guid>
            <pubDate>Sun, 03 Jan 2010 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the amazing things about the internet economy is how different the list of top internet properties today looks from &lt;a href=&quot;http://technologizer.com/2009/04/23/whatever-happened-to-the-top-15-properties-of-april-1999/&quot;&gt;the list ten years ago&lt;/a&gt;.  It wasn’t as if those former top companies were complacent – most of them acquired and built products like crazy to avoid being displaced.&lt;/p&gt;
&lt;p&gt;The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.”  This is one of the main insights of Clay Christensen’s “disruptive technology” theory. This theory starts with the observation that technologies tend to get better at a faster rate than users’ needs increase. From this simple insight follows all kinds of interesting conclusions about how markets and products change over time.&lt;/p&gt;
&lt;p&gt;Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” user needs. The first telephone could only carry voices a mile or two. The leading telco of the time, Western Union, passed on acquiring the phone because they didn’t see how it could possibly be useful to businesses and railroads – their primary customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve (&lt;a href=&quot;http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;technology adoption is usually non-linear&lt;/a&gt; due to so-called complementary network effects). The same was true of how mainframe companies viewed the PC (microcomputer), and how modern telecom companies viewed Skype. (Christensen has many more examples in &lt;a href=&quot;http://www.amazon.com/Innovators-Solution-Creating-Sustaining-Successful/dp/1578518520/ref=pd_bxgy_b_img_b&quot;&gt;his&lt;/a&gt; &lt;a href=&quot;http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996&quot;&gt;books&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;This does not mean every product that looks like a toy will turn out to be the next big thing. To distinguish toys that are disruptive from toys that will remain just toys, you need to look at products as processes. Obviously, products get better inasmuch as the designer adds features, but this is a relatively weak force. Much more powerful are external forces: microchips getting cheaper, bandwidth becoming ubiquitous, mobile devices getting smarter, etc. For a product to be disruptive it needs to be designed to ride these changes up the utility curve.&lt;/p&gt;
&lt;p&gt;Social software is an interesting special case where the strongest forces of improvement are users’ actions. As Clay Shirky explains in &lt;a href=&quot;http://www.herecomeseverybody.org/&quot;&gt;his latest book&lt;/a&gt;, Wikipedia is literally a process – every day it is edited by spammers, vandals, wackos etc., yet every day the good guys make it better at a faster rate. If you had gone back to 2001 and analyzed Wikipedia as a static product it would have looked very much like a toy. The reason Wikipedia works so brilliantly are subtle design features that sculpt the torrent of user edits such that they yield a net improvement over time. Since users’ needs for encyclopedic information remains relatively steady, as long as Wikipedia got steadily better, it would eventually meet and surpass user needs.&lt;/p&gt;
&lt;p&gt;A product doesn’t have to be disruptive to be valuable. There are plenty of products that are useful from day one and continue being useful long term. These are what Christensen calls sustaining technologies. When startups build useful sustaining technologies, they are often quickly acquired or copied by incumbents. If your timing and execution is right, you can create a very successful business on the back of a sustaining technology.&lt;/p&gt;
&lt;p&gt;But startups with sustaining technologies are very unlikely to be the new ones we see on top lists in 2020. Those will be disruptive technologies – the ones that sneak by because people dismiss them as toys.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[What’s strategic for Google?]]></title>
            <description><![CDATA[Google seems to be releasing or acquiring new products almost daily. It’s one thing for a couple of programmers to hack together a side…]]></description>
            <link>https://cdixon.org/2009/12/30/whats-strategic-for-google</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/30/whats-strategic-for-google</guid>
            <pubDate>Wed, 30 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Google seems to be releasing or acquiring new products almost daily. It’s one thing for a couple of programmers to hack together a side project. It’s another thing for Google to put gobs of time and money behind it. The best way to predict how committed Google will be to a given project is to figure out whether it is “strategic” or not.&lt;/p&gt;
&lt;p&gt;Google makes 99% of their revenue &lt;a href=&quot;http://cdixon.org/2009/12/14/search-and-the-social-graph/&quot;&gt;selling text ads&lt;/a&gt; for things like airplane tickets, dvd players, and malpractice lawyers. &lt;strong&gt;A project is strategic for Google if it affects what sits between the person clicking on an ad and the company paying for the ad.&lt;/strong&gt; Here is my rough breakdown of the “layers in the stack” between humans and the money:&lt;/p&gt;
&lt;p&gt;Human - device – OS – browser – bandwidth –  websites - ads – ad tech – relationship to advertiser – $$$&lt;/p&gt;
&lt;p&gt;At each layer, Google either wants to dominate it or commoditize it. (For more on the strategic move known as commoditizing the complement, see &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;/non-linearity-of-technology-adoption/&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;here&lt;/a&gt;). Here’s my a brief analysis of the more interesting layers:&lt;/p&gt;
&lt;p&gt;Device: Desktop hardware already commoditized. Mobile hardware is not, hence Google Phone (Nexus One).&lt;/p&gt;
&lt;p&gt;OS: Not commoditized, and dominated by archenemy (Microsoft)!!   Hence Android/Google Chrome OS is very strategic. Google also needs to remove main reasons people choose Windows. Main reasons (rational ones – ignoring sociological reasons, organizational momentum etc) are Office (hence Google Apps), Outlook (hence Gmail etc), gaming (look for Google to support cross-OS gaming frameworks), and the long tail of Windows-only apps (these are moving to the web anyways but Google is trying to accelerate the trend with programming tools).&lt;/p&gt;
&lt;p&gt;Browser: Not commoditized, and dominated by arch enemy! Hence Chrome is strategic, as is alliance with Mozilla, as are strong cross-browser standards that maintain low switching costs.&lt;/p&gt;
&lt;p&gt;Bandwidth:  Dominated by wireless carriers, cable operators and telcos. Very hard for Google to dominate without massive infrastructure investment, hence Google is currently trying to commoditize/weaken via 1) more competition (WiMAX via Clearwire, free public Wi-Fi) 2) regulation (net neutrality).&lt;/p&gt;
&lt;p&gt;Websites/search (“ad inventory”): Search is obviously dominated by Google. Google’s syndicated ads (AdSense) are dominant because Google has the highest payouts since they have the most advertisers bidding. This in turn is due largely to their hugely valuable anchor property, Google.com. Acquired Youtube to be their anchor property for video/display ads, and DoubleClick to increase their publisher display footprint. On the emerging but fast growing mobile side, presumably they bought AdMob for their publisher relationships (versus advertiser relationships where Google is already dominant). The key risks on this layer are 1) people skip the ads altogether and go straight to, say, Amazon to buy things, 2) someone like Facebook or MS uses anchor property to aggressively compete in syndicated display market.&lt;/p&gt;
&lt;p&gt;Relationships to advertisers:  Google is dominant in non-local direct-response ads, both SMB self serve and big company serviced accounts.  They are much weaker in display. Local advertisers (which historically is half of the total ad market) is still a very underdeveloped channel – hence (I presume) the interest in acquiring Yelp.&lt;/p&gt;
&lt;p&gt;This doesn’t mean Google will always act strategically. Obviously the company is run by humans who are fallible, emotional, subject to whims, etc. But smart business should be practiced like smart chess: you should make moves that assume your opponents will respond by optimizing their interests.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[What’s the right amount of seed money to raise?]]></title>
            <description><![CDATA[Short answer:  enough to get your startup to an accretive milestone plus some fudge factor. “Accretive milestone” is a fancy way of saying…]]></description>
            <link>https://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise</guid>
            <pubDate>Mon, 28 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Short answer:  enough to get your startup to an accretive milestone plus some fudge factor.&lt;/p&gt;
&lt;p&gt;“Accretive milestone” is a fancy way of saying getting your company to a point at which you can raise money at a higher valuation.  As a rule of thumb, I would say a successful Series A is one where good VCs invest at a pre-money that is at least twice the post-money of the seed round.  So if for your seed round you raised $1M at $2M pre ($3M post-money valuation), for the Series A you should be shooting for a minimum of $6M pre (but hopefully you’ll get significantly higher).&lt;/p&gt;
&lt;p&gt;The worst thing a seed-stage company can do is raise too little money and only reach part way to a milestone. Pitching new investors in that case is very hard; often the only way keep the company alive is to get the existing investors to reinvest at the last round valuation (“reopen the last round”). The second worst thing you can do is raise too much money in the seed round (most likely because big funds pressure you to do so), hence taking too much dilution too soon.&lt;/p&gt;
&lt;p&gt;How do you determine what an accretive milestone is? The answer is partly determined by market conditions and partly by the nature of your startup. Knowing market conditions means knowing which VCs are currently aggressively investing, at what valuations, in what sectors, and how various milestones are being perceived.  This is where having active and connected advisors and seed investors can be extremely helpful.&lt;/p&gt;
&lt;p&gt;Aside from market conditions, you should try to answer the question: what is the biggest risk your startup is facing in the upcoming year and how can you eliminate that risk?  You should come up with your own answer but you should also talk to lots of smart people to get their take (yet another reason &lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;not to keep your idea secret&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;For consumer internet companies, eliminating the biggest risk almost always means getting “traction” – user growth, engagement, etc. Traction is also what you want if you are targeting SMBs (small/medium businesses). For online advertising companies you probably want revenues. If you are selling to enterprises you probably want to have a handful of credible beta customers.&lt;/p&gt;
&lt;p&gt;The biggest mistake founders make is thinking that building a product by itself will be perceived as an accretive milestone. Building a product is only accretive in cases where there is significant technical risk – e.g. you are building a new search engine or semiconductor.&lt;/p&gt;
&lt;p&gt;Now to the “fudge factor.”  Basically what I’d recommend here depends on what milestones you are going for and how experienced you are at developing and executing operating plans. If you are going for marketing traction, that almost always takes (a lot) longer than people expect.  You should think about a fudge factor of 50% (increasing the round size by 50%).  You should also have alternative operating plans where you can “cut the burn” to get more calendar time on your existing raise (“extend the runway”). If you are just going for product milestones and are super experienced at building products you might try a lower fudge factor.&lt;/p&gt;
&lt;p&gt;The most perverse thing that I see is big VC funds pushing companies to raise far more money than they need to (even at higher valuations), simply so they can “&lt;a href=&quot;http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/&quot;&gt;put more money to work&lt;/a&gt;“. This is one of &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;many reasons&lt;/a&gt; why angels or pure seed funds are preferable seed round investors (&lt;em&gt;bias alert:  I am &lt;a href=&quot;http://cdixon.org/2009/11/09/presenting-founder-collective/&quot;&gt;one of them&lt;/a&gt;!&lt;/em&gt;).&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Are people more willing to pay for digital goods on mobile devices?]]></title>
            <description><![CDATA[Mary Meeker’s [  ](images/screen-shot-2009-12-27-at-11-51-18-am.png) The assertion seems to be that there is something special about the…]]></description>
            <link>https://cdixon.org/2009/12/27/are-people-more-willing-to-pay-for-digital-goods-on-mobile-devices</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/27/are-people-more-willing-to-pay-for-digital-goods-on-mobile-devices</guid>
            <pubDate>Sun, 27 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Mary Meeker’s&lt;a href=&quot;images/screen-shot-2009-12-27-at-11-51-18-am.png&quot;&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;[&lt;/p&gt;
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&lt;p&gt;](images/screen-shot-2009-12-27-at-11-51-18-am.png)&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-27-at-11-51-18-am.png&quot;&gt;The assertion seems to be that there is something special about the mobile internet that compels people to pay for things they wouldn’t pay for on the desktop internet.  It is this same thinking that has newspapers and magazines hoping the Kindle or a &lt;/a&gt;&lt;a href=&quot;http://www.techcrunch.com/2009/12/02/time-inc-digital-magazine/&quot;&gt;tablet device&lt;/a&gt; might be their savior.&lt;/p&gt;
&lt;p&gt;It is certainly true that &lt;em&gt;today&lt;/em&gt; people are paying for things on iPhones and Kindles that they aren’t paying for on the desktop internet. Personally, I’ve bought a bunch of iPhone games that I would have expected to get for free online. I also paid for the New York Times and some magazines on my Kindle that I never paid for on my desktop.&lt;/p&gt;
&lt;p&gt;But longer term, the question is whether this is because of something fundamentally – and sustainably – different about mobile versus desktop or whether &lt;strong&gt;it is just good old fashioned supply and demand.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;I think we are in the AOL “walled garden” days of the mobile internet. Demand is far outpacing supply, so consumers are paying for digital goods. I don’t pay for news or simple games on the desktop internet because there are so many substitutes that my willingness to pay is driven down to zero.&lt;/p&gt;
&lt;p&gt;What are the arguments that the mobile internet is sustainably different than the desktop internet? One of the main ones I’ve heard is habit: digital goods providers made a mistake in the 90′s by giving stuff away for free. Now people are habituated to free stuff on the desktop internet. Mobile is a chance to start over.&lt;/p&gt;
&lt;p&gt;I think this habit argument is greatly overplayed. The same argument has been made for years by the music industry: “kids today think music should be free” and so on. Back in the 90s, I bought CDs, not because I was habituated to paying for music, but because there was no other reasonably convenient way to get it. If tomorrow you waved a magic wand and CD’s were once again the only way kids could buy the Jonas Brothers and Taylor Swift, they’d pay for them. It’s the fact that there are convenient and free substitutes that’s killing the music industry, not consumers’ habits.&lt;/p&gt;
&lt;p&gt;As the supply of mobile digital goods grows — the same way it did on the desktop internet — consumers’ willingness-to-pay will drop and either advertising will emerge as the key driver of mobile economic growth or the mobile economy will disappoint. I was going to buy a Chess app for my iPhone this morning but when I searched and found dozens of free ones I downloaded one of those.  At some point there will be lots of Tweetie, Red Laser, and Flight Control substitutes and they too will be free.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Why the web economy will continue growing rapidly]]></title>
            <description><![CDATA[Here’s the really good news for the web economy over the next decade.  Consumers are spending more and more time online, yet only about 1…]]></description>
            <link>https://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly</guid>
            <pubDate>Sat, 26 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Here’s the really good news for the web economy over the next decade.  Consumers are spending more and more time online, yet only about &lt;a href=&quot;http://www.emarketer.com/Report.aspx?code=emarketer_2000576&quot;&gt;10%&lt;/a&gt; of all advertising dollars are spent there.&lt;/p&gt;
&lt;p&gt;Let’s assume that, over time, ad spending on a medium becomes roughly proportional to the time consumers spend using that medium. I doubt there are any technologists reading this blog who doubt that in five years most people in industrialized countries will spend 50% or more of their “media time” on the web.  This means there are hundreds of billions of ad revenues waiting to move to the web.&lt;/p&gt;
&lt;p&gt;Advertising is usually divided into two categories: direct-response and brand advertising. Direct-response advertising tries to get users to take immediate action. Brand advertising tries to build up positive associations over time in people’s minds. In the past decade, we saw a massive shift of direct response advertising to the web. The main beneficiary of this shift has been Google. We saw far less of a shift of brand advertising to the web.&lt;/p&gt;
&lt;p&gt;It is therefore very likely that most of this new ad spending will be brand advertising.  This is why Google, Yahoo and Microsoft are all so intensely focused on display advertising. It is why they paid huge premiums to acquire Doubleclick, Right Media, and Avenue A.&lt;/p&gt;
&lt;p&gt;Right now there are lots of inhibitors to brand advertising dollars flowing onto the web. Among them 1) most of the brand dollars are controlled by ad agencies, who seem far more comfortable with traditional media channels, 2) it is hard to know where your online advertising is appearing and whether it is effective, 3) banner ads seem extremely ineffective and are often poorly targeted, 4) big brand advertisers seem scared of user-generated content, today’s major source of ad inventory growth.&lt;/p&gt;
&lt;p&gt;But economic logic suggests these problems will be figured out, because advertisers have no choice but to go where the consumers are.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Google should open source what actually matters: their search ranking algorithm]]></title>
            <description><![CDATA[Websites live or die based on how a small group of programmers at Google decide their sites should rank in Google’s main search results.  As…]]></description>
            <link>https://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm</guid>
            <pubDate>Tue, 22 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Websites live or die based on how a small group of programmers at Google decide their sites should rank in Google’s main search results.  As the “router” of the vast majority of traffic on the internet, Google’s secret ranking algorithm is probably is the most powerful piece of software code on the planet.&lt;/p&gt;
&lt;p&gt;Google &lt;a href=&quot;http://googleblog.blogspot.com/2009/12/meaning-of-open.html&quot;&gt;talks&lt;/a&gt; a lot about openness and their commitment to open source software. What they are really doing is practicing a classic business &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;strategy&lt;/a&gt; known as “commoditizing the &lt;a href=&quot;http://en.wikipedia.org/wiki/Complementary_good&quot;&gt;complement&lt;/a&gt;“*.&lt;/p&gt;
&lt;p&gt;Google makes 99% of their revenue by &lt;a href=&quot;/2009/12/14/search-and-the-social-graph/&quot;&gt;selling&lt;/a&gt; text ads for things like plane tickets, dvd players and malpractice lawyers. Many of these ads are syndicated to non-Google properties. But the anchor that gives Google their best “inventory” is the main search engine at Google.com.  And the secret sauce behind Google.com is the algorithm for ranking search results. If Google is really committed to openness, it is this algorithm that they need to open source.&lt;/p&gt;
&lt;p&gt;The alleged argument against doing so is that search spammers would be able to learn from the algorithm to improve their spamming methods. This form of argument is an old argument in the security community known as “&lt;a href=&quot;http://en.wikipedia.org/wiki/Security_through_obscurity&quot;&gt;security through obscurity&lt;/a&gt;.” Security through obscurity is a technique generally associated with companies like Microsoft and is generally opposed as ineffective and risky by security experts. When you open source something you give the bad guys more info, but you also enlist an army of good guys to help you fight them.&lt;/p&gt;
&lt;p&gt;Until Google open sources what really matters – their search ranking algorithm – you should dismiss all their other open-source talk as empty posturing. And millions of websites will have to continue blindly relying on a small group of anonymous engineers in charge of the secret algorithm that determines their fate.&lt;/p&gt;
&lt;p&gt;* You can understand a large portion of technology business strategy by understanding strategies around complements. One major point: companies generally try to reduce the price of their products complements (Joel Spolsky has an excellent discussion of the topic &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;). If you think of the consumer as having a willingness to pay a fixed N for product A plus complementary product B, then each side is fighting for a bigger piece of the pie. This is why, for example, cable companies and content companies are constantly battling. It is also why Google wants open source operating systems to win, and for broadband to be cheap and ubiquitous. [&lt;a href=&quot;/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;link to full post&lt;/a&gt;]&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Anatomy of a bad search result]]></title>
            <description><![CDATA[In a post last week, Paul Kedrosky noted his frustration when looking for a new dishwasher using Google.  I thought it might be interesting…]]></description>
            <link>https://cdixon.org/2009/12/19/anatomy-of-a-bad-search-result</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/19/anatomy-of-a-bad-search-result</guid>
            <pubDate>Sat, 19 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In a post last week, Paul Kedrosky &lt;a href=&quot;http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html&quot;&gt;noted&lt;/a&gt; his frustration when looking for a new dishwasher using Google.  I thought it might be interesting to do some forensics to see which sites rank highly and why.&lt;/p&gt;
&lt;p&gt;Paul started by querying Google with the phrase &lt;em&gt;dishwasher reviews&lt;/em&gt;:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-18-at-11-36-20-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 72.23950233281494%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 36 20 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.36.20 PM&quot;
        src=&quot;/static/9540dc2be44de4383fec321346731537/94a55/screen-shot-2009-12-18-at-11-36-20-pm.png&quot;
        srcset=&quot;/static/9540dc2be44de4383fec321346731537/924ad/screen-shot-2009-12-18-at-11-36-20-pm.png 170w,
/static/9540dc2be44de4383fec321346731537/f570f/screen-shot-2009-12-18-at-11-36-20-pm.png 341w,
/static/9540dc2be44de4383fec321346731537/94a55/screen-shot-2009-12-18-at-11-36-20-pm.png 681w,
/static/9540dc2be44de4383fec321346731537/e8f76/screen-shot-2009-12-18-at-11-36-20-pm.png 1022w,
/static/9540dc2be44de4383fec321346731537/05a72/screen-shot-2009-12-18-at-11-36-20-pm.png 1286w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.36.20 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Pretty much every link on this page has an interesting story to tell about the state of the web.  I’ll just focus here on the top organic (non-sponsored) result:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.consumersearch.com/dishwasher-reviews&quot;&gt;http://www.consumersearch.com/dishwasher-reviews&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;clicking through this link takes you here:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-18-at-11-41-17-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 86.5055387713998%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 41 17 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.41.17 PM&quot;
        src=&quot;/static/40e6374390beb1c7562aa872d7409637/94a55/screen-shot-2009-12-18-at-11-41-17-pm.png&quot;
        srcset=&quot;/static/40e6374390beb1c7562aa872d7409637/924ad/screen-shot-2009-12-18-at-11-41-17-pm.png 170w,
/static/40e6374390beb1c7562aa872d7409637/f570f/screen-shot-2009-12-18-at-11-41-17-pm.png 341w,
/static/40e6374390beb1c7562aa872d7409637/94a55/screen-shot-2009-12-18-at-11-41-17-pm.png 681w,
/static/40e6374390beb1c7562aa872d7409637/5648e/screen-shot-2009-12-18-at-11-41-17-pm.png 993w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.41.17 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Consumersearch is &lt;a href=&quot;http://www.searchengineworld.com/tech/3456378.htm&quot;&gt;owned&lt;/a&gt; by About.com, which in turn is owned by the New York Times.&lt;/p&gt;
&lt;p&gt;So how did consumersearch.com get the top organic spot? Most SEO experts I talk to (e.g. &lt;a href=&quot;http://www.seomoz.org/&quot;&gt;SEOMoz&lt;/a&gt;‘s Rand Fishkin) think inbound links from a large number of domains still matter far more than other factors. One of the best tools for finding inbound links is &lt;a href=&quot;http://siteexplorer.search.yahoo.com/&quot;&gt;Yahoo Site Explorer&lt;/a&gt; (which, sadly, is &lt;a href=&quot;http://www.seomoz.org/blog/8-predictions-for-seo-in-2010&quot;&gt;supposed&lt;/a&gt; to be killed soon). Using this tool, here’s one of the sites linking to the dishwasher section of Consumersearch:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.whirlpooldishwasher.net/&quot;&gt;http://www.whirlpooldishwasher.net/&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-18-at-11-50-38-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 110.74660633484163%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 50 38 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.50.38 PM&quot;
        src=&quot;/static/fdc98b07132ed44af805cbf1a11e105a/94a55/screen-shot-2009-12-18-at-11-50-38-pm.png&quot;
        srcset=&quot;/static/fdc98b07132ed44af805cbf1a11e105a/924ad/screen-shot-2009-12-18-at-11-50-38-pm.png 170w,
/static/fdc98b07132ed44af805cbf1a11e105a/f570f/screen-shot-2009-12-18-at-11-50-38-pm.png 341w,
/static/fdc98b07132ed44af805cbf1a11e105a/94a55/screen-shot-2009-12-18-at-11-50-38-pm.png 681w,
/static/fdc98b07132ed44af805cbf1a11e105a/e326c/screen-shot-2009-12-18-at-11-50-38-pm.png 884w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.50.38 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(Yes, this site’s CSS looks scarily like my own blog – that’s because we both use a generic WordPress template).&lt;/p&gt;
&lt;p&gt;This site appears has two goals: 1) fool Google into thinking it’s a blog about dishwashers and 2) link to consumersearch.com.&lt;/p&gt;
&lt;p&gt;Who owns this site?  The Whois records are private. (Supposedly the reason Google became a domain registrar a few years ago was to peer behind the domain name privacy veil and weed out sites like this.)&lt;/p&gt;
&lt;p&gt;I spent a little time analyzing the “blog” text (it’s actually pretty funny – I encourage you to read it).  It looks like the “blog posts” are fragments from places like Wikipedia run through some obfuscator (perhaps by machine translating from English to another language and back?).  The site was impressively assembled from various sources. For example, the “comments” to the “blog entries” were extracted from Yahoo Answers:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.14285714285714%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 57 33 pm2&quot;
        title=&quot;Screen shot 2009-12-18 at 11.57.33 PM&quot;
        src=&quot;/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png&quot;
        srcset=&quot;/static/8880f051d3f742d1742d303ba6cd814f/924ad/screen-shot-2009-12-18-at-11-57-33-pm2.png 170w,
/static/8880f051d3f742d1742d303ba6cd814f/f570f/screen-shot-2009-12-18-at-11-57-33-pm2.png 341w,
/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png 504w&quot;
        sizes=&quot;(max-width: 504px) 100vw, 504px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.57.33 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Here is the source of this text on Yahoo Answers:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a41fdafc0a98ec307ed89ffd214d94a1/79997/screen-shot-2009-12-18-at-11-57-58-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 26.495726495726498%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsTAAALEwEAmpwYAAAAxklEQVQY032PTQ+CMAyG+f9HTx79MZ6MBwFhE0gGJkTAOIbswwXYbA169EnTrW/bN2nwmt1VWjs7Y/RzRJRUSiuFDzLKUZtPLSXo2phpmvyHoOSP7W4jlKwYS5IkJQQSQjCyLIujqCjyM7bSy4XWdW2tXZf50B8Pe7BkjBFCKKVhFBJKYDSM4vgcn8IT6PCBCmBl6b8EznnnMaqqzIuiaW7g3Xat6MWACCF6znm/wkFalmVdxgQG3sNUd7/DzVprKcffYX94AwtYFRs9WFyfAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 57 58 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.57.58 PM&quot;
        src=&quot;/static/a41fdafc0a98ec307ed89ffd214d94a1/94a55/screen-shot-2009-12-18-at-11-57-58-pm.png&quot;
        srcset=&quot;/static/a41fdafc0a98ec307ed89ffd214d94a1/924ad/screen-shot-2009-12-18-at-11-57-58-pm.png 170w,
/static/a41fdafc0a98ec307ed89ffd214d94a1/f570f/screen-shot-2009-12-18-at-11-57-58-pm.png 341w,
/static/a41fdafc0a98ec307ed89ffd214d94a1/94a55/screen-shot-2009-12-18-at-11-57-58-pm.png 681w,
/static/a41fdafc0a98ec307ed89ffd214d94a1/79997/screen-shot-2009-12-18-at-11-57-58-pm.png 702w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.57.58 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The key is to have enough dishwaster-related text to look like it’s a blog about dishwashers, while also having enough text diversity to avoid being detected by Google as duplicative or automatically generated content.&lt;/p&gt;
&lt;p&gt;So who created this fake blog?  It could have been Consumersearch, or a “black hat” SEO consultant, or someone in an affiliate program that Consumersearch doesn’t even know. I’m not trying to imply that Consumersearch did anything wrong. The problem is systematic. When you have a &lt;a href=&quot;/2009/12/14/search-and-the-social-graph/&quot;&gt;multibillion dollar economy&lt;/a&gt; built around keywords and links, the ultimate “products” optimize for just that:  keywords and links. The incentive to create quality content diminishes.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Google’s feature creep]]></title>
            <description><![CDATA[Microsoft used to be considered the king of feature creep.  Here was Microsoft Word when it was most cluttered:  I don’t use any of…]]></description>
            <link>https://cdixon.org/2009/12/17/googles-feature-creep</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/17/googles-feature-creep</guid>
            <pubDate>Thu, 17 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Microsoft used to be considered the king of feature creep.  Here was Microsoft Word when it was most cluttered:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 500px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.800000000000004%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;thumb paperclipinterference&quot;
        title=&quot;thumb-paperclipinterference&quot;
        src=&quot;/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg&quot;
        srcset=&quot;/static/dc369cd7be3d488bdf587362d27914fc/c2e49/thumb-paperclipinterference.jpg 170w,
/static/dc369cd7be3d488bdf587362d27914fc/c2dc0/thumb-paperclipinterference.jpg 341w,
/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg 500w&quot;
        sizes=&quot;(max-width: 500px) 100vw, 500px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;thumb-paperclipinterference&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;I don’t use any of Microsoft’s software anymore, but from what I hear they’ve toned down the feature creep a lot in recent versions of Windows and Word.&lt;/p&gt;
&lt;p&gt;Google has been adding so many new features to its results page, they are starting to feel like the new Microsoft.  Here’s an approximation of what Google used to look like (I couldn’t find an image of actual Google 1998 SRPs — anyone have one?)&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 629px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.86486486486486%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;bbc google search&quot;
        title=&quot;bbc-google-search&quot;
        src=&quot;/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png&quot;
        srcset=&quot;/static/a83d84bfad8eab11fc5bd0af3fb58517/924ad/bbc-google-search.png 170w,
/static/a83d84bfad8eab11fc5bd0af3fb58517/f570f/bbc-google-search.png 341w,
/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png 629w&quot;
        sizes=&quot;(max-width: 629px) 100vw, 629px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;bbc-google-search&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And here is Google today:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e34907114e564a69993b4518ce729786/e9c61/screen-shot-2009-12-17-at-11-35-35-am.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 66.11111111111111%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 17 at 11 35 35 am&quot;
        title=&quot;Screen shot 2009-12-17 at 11.35.35 AM&quot;
        src=&quot;/static/e34907114e564a69993b4518ce729786/94a55/screen-shot-2009-12-17-at-11-35-35-am.png&quot;
        srcset=&quot;/static/e34907114e564a69993b4518ce729786/924ad/screen-shot-2009-12-17-at-11-35-35-am.png 170w,
/static/e34907114e564a69993b4518ce729786/f570f/screen-shot-2009-12-17-at-11-35-35-am.png 341w,
/static/e34907114e564a69993b4518ce729786/94a55/screen-shot-2009-12-17-at-11-35-35-am.png 681w,
/static/e34907114e564a69993b4518ce729786/e8f76/screen-shot-2009-12-17-at-11-35-35-am.png 1022w,
/static/e34907114e564a69993b4518ce729786/e9c61/screen-shot-2009-12-17-at-11-35-35-am.png 1080w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-17 at 11.35.35 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Options on the left, ads on top and on the right, news results up top, images, and buttons to vote results up/down and annotate them.  But worst of all are the new scrolling “real time” results.  The static image I’ve embedded doesn’t do justice to how annoying this is. Random, out-of-context, and mostly asinine fragments of conversations scrolling by.  I think it might be Google’s Clippy.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Search and the social graph]]></title>
            <description><![CDATA[Google has created a multibillion-dollar economy based on keywords.  We use keywords to find things and advertisers use keywords to find…]]></description>
            <link>https://cdixon.org/2009/12/14/search-and-the-social-graph</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/14/search-and-the-social-graph</guid>
            <pubDate>Mon, 14 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Google has created a multibillion-dollar economy based on keywords.  We use keywords to find things and advertisers use keywords to find customers.  As Michael Arrington &lt;a href=&quot;http://www.techcrunch.com/2009/12/13/the-end-of-hand-crafted-content/&quot;&gt;points out&lt;/a&gt;, this is leading to increasing amounts of low quality, keyword-stuffed content. The end result is a very spammy internet. (It was depressing to see Tim Armstrong &lt;a href=&quot;http://mediamemo.allthingsd.com/20091209/live-from-new-york-tim-armstrong-makes-one-last-pitch-for-aol/&quot;&gt;cite&lt;/a&gt; Demand Media, a giant &lt;a href=&quot;http://www.thedeal.com/dealscape/technology/3i/goldman-sachs-meet-demand-medi.php&quot;&gt;domain-name owner&lt;/a&gt; and robotic content factory, as a model for the new AOL.)&lt;/p&gt;
&lt;p&gt;Some people hope the social web — link sharing via Twitter, Facebook etc — will save us.  Fred Wilson argues that “&lt;a href=&quot;http://www.avc.com/a_vc/2009/12/why-social-beats-search.html&quot;&gt;social beats search&lt;/a&gt;” because it’s harder to game people’s social graph.  Cody Brown &lt;a href=&quot;http://twitter.com/CodyBrown/status/6638145908&quot;&gt;tweeted&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;On Twitter you have to ‘game’ people, not algorithms. Look how many followers @&lt;a href=&quot;http://twitter.com/demandmedia&quot;&gt;demandmedia&lt;/a&gt; has. A lot less then you guys: @&lt;a href=&quot;http://twitter.com/arrington&quot;&gt;arrington&lt;/a&gt; @&lt;a href=&quot;http://twitter.com/jason&quot;&gt;jason&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;These are both sound points. &lt;em&gt;Lost amid this discussion, however, is that the links people tend to share on social networks – news, blog posts, videos – are in categories Google barely makes money on.&lt;/em&gt; (The same point also seems lost on Rupert Murdoch and news organizations who accuse Google of profiting off their misery).&lt;/p&gt;
&lt;p&gt;Searches related to news, blog posts, funny videos, etc. are mostly a loss leaders for Google. &lt;em&gt;Google’s real business is selling ads for plane tickets, dvd players, and malpractice lawyers.&lt;/em&gt; (I realize this might be depressing to some internet idealists, but it’s a reality). Online advertising revenue is directly correlated with finding users who have &lt;a href=&quot;/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;. Google’s true primary competitive threats are product-related sites, especially Amazon. As it gets &lt;a href=&quot;http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html&quot;&gt;harder to find a washing machine&lt;/a&gt; on Google, people will skip search and go directly to Amazon and other product-related sites.&lt;/p&gt;
&lt;p&gt;This is not to say that the links shared on social networks can’t be extremely valuable.  But most likely they will be valuable as critical inputs to better search-ranking algorithms. Cody’s point that it’s harder to game humans than machines is very true, but remember that Google’s algorithm was always meant to be based on human-created links. As the spammers have become more sophisticated, the good guys have come to need new mechanisms to determine which links are from trustworthy humans. Social networks might be those new mechanisms, but that doesn’t mean they’ll displace search as the primary method for navigating the web.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Why did Skype succeed and Joost fail?]]></title>
            <description><![CDATA[Skype and Joost are interesting companies to compare – they are about as close as you can get to one of those sociological studies that…]]></description>
            <link>https://cdixon.org/2009/12/08/why-did-skype-succeed-and-joost-fail</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/08/why-did-skype-succeed-and-joost-fail</guid>
            <pubDate>Tue, 08 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Skype and Joost are interesting companies to compare – they are about as close as you can get to one of those sociological studies that track identical twins who are raised separately.  Skype was a spectacular success.   Joost never got traction and was shut down.  Both were started by Nicklas Zennstrom and Janus Friis, two of the great technology visionaries of our time.  Both were big ideas, trying to disrupt giant, slow-moving incumbents.&lt;/p&gt;
&lt;p&gt;There are likely multiple reasons for their different outcomes.  Joost had day-to-day management that didn’t have much startup experience.  The P2P technology that required a download made sense for chat but not for video.  The companies were started at different times:  Skype when there was far less investment in – and therefore competition among – consumer internet products.&lt;/p&gt;
&lt;p&gt;But the really important difference was that Joost’s product had a critical input that depended on a stubborn, backward-thinking industry – video content owners.  Whereas Skype could brazenly threaten the industry it sought to disrupt, Joost had to get their blessing.  Eventually the content companies licensed some content to Joost, but not nearly enough to make it competitive with cable TV or other new platforms like Hulu and iTunes.&lt;/p&gt;
&lt;p&gt;Real life, non-techie users care almost exclusively about “content.”  They want to watch American Idol and listen to Jay-Z. They don’t really care how that content is delivered or what platform it’s on. Which is why Joost failed, and why so many video and music-related startups have struggled. Skype, on the other hand, didn’t have significant dependencies on other companies – its content, like its technology, was truly peer to peer.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Does a VC’s brand matter?]]></title>
            <description><![CDATA[Suppose you are in the enviable position of choosing between offers from multiple VC firms.  How much should you weigh the brand of the VCs…]]></description>
            <link>https://cdixon.org/2009/12/05/does-a-vcs-brand-matter</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/05/does-a-vcs-brand-matter</guid>
            <pubDate>Sat, 05 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Suppose you are in the enviable position of choosing between offers from multiple VC firms.  How much should you weigh the brand of the VCs when making your decision?  I think the answer is:  a little, but a lot less than most people assume.&lt;/p&gt;
&lt;p&gt;First, let me say the quality of the individual partner making the offer &lt;a href=&quot;http://cdixon.org/?p=319&quot;&gt;matters a lot&lt;/a&gt;.  However, in my experience, there is a only rough correlation between a VC’s brand and the quality of the individual partners there.  There are toxic partners at brand name firms, and great partners at lesser known firms.&lt;/p&gt;
&lt;p&gt;There are only two situations I can think of where the firm’s brand really matters.   First, if you manage to raise money from a particular set of the top 5 or so firms, you are almost guaranteed to be able to raise money later at a higher valuation from other firms. In fact, there are VC firms whose explicit business model is simply to follow those top firms.&lt;/p&gt;
&lt;p&gt;The other way a VC firm’s brand can help is by giving you credibility when recruiting employees.  This matters especially if you are a first-time entrepreneur whose company is at an early stage.  It matters a lot less if you’re a proven entrepreneur or your company already has traction.&lt;/p&gt;
&lt;p&gt;In my opinion that’s about it in terms of the importance of the VC’s brand.  Too many entrepreneurs get seduced into thinking they’ve accomplished something significant by raising money from a name brand VC.  Also, remember that if you are raising a seed round, the better the firm is, the &lt;a href=&quot;http://cdixon.org/?p=256&quot;&gt;worse it can actually be for you&lt;/a&gt; if that firm decides not to participate in follow on rounds.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Some thoughts on SEO]]></title>
            <description><![CDATA[“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via organic search traffic.”  I don’t like…]]></description>
            <link>https://cdixon.org/2009/12/01/some-thoughts-on-seo</link>
            <guid isPermaLink="false">https://cdixon.org/2009/12/01/some-thoughts-on-seo</guid>
            <pubDate>Tue, 01 Dec 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via organic search traffic.”  I don’t like the term at all.  For one thing, it’s been frequently associated with illicit techniques like link trading and search engine spamming.  It is also associated with consultants who don’t do much beyond very basic stuff your own developers should be able to do.   But the most pernicious aspect to the phrase is that the word “optimization” suggests that SEO is a finishing touch, something you &lt;a href=&quot;http://redeye.firstround.com/2009/11/lets-just-add-in-a-little-virality.html&quot;&gt;bolt on&lt;/a&gt;, instead of central to the design and development of your site. Unfortunately, I think the term is so widespread that we are stuck with it.&lt;/p&gt;
&lt;p&gt;SEO is extremely important because normal users – those who don’t live and breath technology – only type a few of their favorite websites directly into the URL bar and for everything else go to search engines, most likely Google*.  In the 90s, people talked a lot about “home pages” and “site flow.” This matters if you are getting most of your traffic from people typing in your URL directly.  For most startups, however, this isn’t the case, at least for the first few years. Instead, the flow you should be thinking about is users going to Google, typing in a keyphrase and landing on one of your internal pages.&lt;/p&gt;
&lt;p&gt;The biggest choice you have to make when approaching SEO is whether you want to be a Google optimist or a Google pessimist**. Being an optimist means trusting that the smart people in the core algorithm team in Mountain View are doing their job well – that, in general, good content rises to the top.&lt;/p&gt;
&lt;p&gt;The best way to be a Google optimist is to think of search engines as information marketplaces – matchmakers between users “demanding” information and websites “supplying” it. This means thinking hard about what users are looking for today, what they will be looking for in the future, how they express those intentions through keyphrases, where there are gaps in the supply of that information, and how you can create content and an experience to fill those gaps.&lt;/p&gt;
&lt;p&gt;All this said, there does remain a technical, “optimization” side to SEO. Internal URL structure, text on your landing pages, and all those other things discussed by SEO consultants do matter.  Luckily, most good SEO practices are also good UI/UX practices.  Personally I like to do all of these things in house by asking our programmers and designers to include search sites like &lt;a href=&quot;http://www.seomoz.org/&quot;&gt;SEOMoz&lt;/a&gt;, &lt;a href=&quot;http://searchengineland.com/&quot;&gt;Search Engine Land&lt;/a&gt;, and &lt;a href=&quot;http://www.mattcutts.com/blog/&quot;&gt;Matt Cutts&lt;/a&gt; in their daily reading list&lt;/p&gt;
&lt;p&gt;* I’m just going to drop the illusion here that most people optimize for anything besides Google.  ComScore says Google has ~70% market share but everyone I know gets &gt;90% of their search traffic from Google.  At any rate, in my experience, if you optimize for Google, Bing/Yahoo will give you SEO love about a 1-6 months later.&lt;/p&gt;
&lt;p&gt;** Even if you choose to be a pessimist, I strongly recommend you stay far away from so-called black hat techniques, especially schemes like link trading and paid text ads that are meant to trick crawlers.  Among other things, this can get your site banned for life from Google.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The importance of institutional redundancy]]></title>
            <description><![CDATA[Every system built by a single institution has points of failure that can bring the entire system down.  Even in organizations that have…]]></description>
            <link>https://cdixon.org/2009/11/20/the-importance-of-institutional-redundancy</link>
            <guid isPermaLink="false">https://cdixon.org/2009/11/20/the-importance-of-institutional-redundancy</guid>
            <pubDate>Fri, 20 Nov 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Every system built by a single institution has points of failure that can bring the entire system down.  Even in organizations that have tried hard for internal redundancy – for example, Google and Amazon have extremely distributed infrastructures – there will always be system-wide shared components, architectures, or assumptions that are flawed.  The only way to guarantee there aren’t is to set up completely separate, competing organizations – in other words, new institutions.&lt;/p&gt;
&lt;p&gt;This insight has practical implications when building internet services.  One thing I learned from my &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; co-founder &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; is, if you really care about having a reliable website, always host your servers at two data centers, owned by different companies, on networks owned by different companies, on separate power grids, and so forth.  Our last company, SiteAdvisor, handled billions of requests per hour but never went down when the institutions we depended on went down – which was surprisingly often.  (We did have downtime, but it was due to our own flawed components, assumptions etc.).&lt;/p&gt;
&lt;p&gt;The importance of institutional redundancy is profoundly more important when applied to the internet at large. The US government originally designed the internet to be fully decentralized so as to withstand large-scale nuclear attack.  The core services built on top of the internet – the web (HTTP), email (SMTP), subscription messaging (RSS) – were made similarly open and therefore distributible across institutions.  This explains their remarkable system-wide reliability.  It also explains why we should be worried about reliability when core internet services are owned by a single company.&lt;/p&gt;
&lt;p&gt;The principle of not depending on single institutions applies beyond technology.  Every institution is opaque to outsiders, with single points of failure, human and otherwise.  For example, one of the primary lessons of the recent financial crisis is that the most important form of diversification is across institutions, not, as the experts have told us for decades, across asset classes.  The Madoff fraud was one extreme, but there were plenty of cases of lesser fraud and countless cases of poor financial management, most of which would have been almost impossible to anticipate by outsiders.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Pitch yourself, not your idea]]></title>
            <description><![CDATA[There is a widespread myth that the most important part of building a great company is coming up with a great idea.  This myth is reflected…]]></description>
            <link>https://cdixon.org/2009/11/14/pitch-yourself-not-your-idea</link>
            <guid isPermaLink="false">https://cdixon.org/2009/11/14/pitch-yourself-not-your-idea</guid>
            <pubDate>Sat, 14 Nov 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There is a widespread myth that the most important part of building a great company is coming up with a great idea.  This myth is reflected in popular movies and books: someone invents the Post-it note or cocktail umbrellas and becomes an overnight millionaire.  It is also perpetuated by experienced business people who, for the most part, don’t believe it. Venture capitalists often talk about “the best way to pitch your idea” and “honing your elevator pitch.”  Most business schools have business plan contests which are essentially beauty pageants for startup ideas.  All of this reinforces the myth that the idea is primary.&lt;/p&gt;
&lt;p&gt;The reality is ideas don’t matter that much.  First of all, in almost all startups, the idea changes – often dramatically – over time. Secondly, ideas are relatively abundant. For every decent idea there are very likely other people who’ve also thought of it, and, surprisingly often, are also actively pitching investors. At an early stage, ideas matter less for their own sake and more insofar as they reflect the creativity and thoughtfulness of the team.&lt;/p&gt;
&lt;p&gt;What you should really be focused on when pitching your early stage startup is pitching yourself and your team.  When you do this, remember that a startup is primarily about &lt;em&gt;building something&lt;/em&gt;.  Hence the most important aspect of your backgrounds is not the names of the schools you attended or companies you worked at – it’s what you’ve built.  This could mean coding a video game, creating a non-profit organization, designing a website, writing a book, bootstrapping a company – whatever.  The story you should tell is the story of someone who has been building stuff her whole life and now just needs some capital to take it to the next level.&lt;/p&gt;
&lt;p&gt;Of course a great way to show you can build stuff is to build a prototype of the product you are raising money for.  This is why so many VCs tell entrepreneurs to “come back when you have a demo.”  They aren’t wondering whether your product can be built – they are wondering whether you can build it.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Presenting Founder Collective]]></title>
            <description><![CDATA[As readers of this blog know, I’m a huge fan of the startup and venture capital world but also a sometimes critic of how the venture capital…]]></description>
            <link>https://cdixon.org/2009/11/09/presenting-founder-collective</link>
            <guid isPermaLink="false">https://cdixon.org/2009/11/09/presenting-founder-collective</guid>
            <pubDate>Mon, 09 Nov 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;As readers of this blog know, I’m a &lt;a href=&quot;http://www.cdixon.org/?cat=3&quot;&gt;huge fan&lt;/a&gt; of the startup and venture capital world but also a &lt;a href=&quot;http://www.cdixon.org/?p=443&quot;&gt;sometimes&lt;/a&gt; &lt;a href=&quot;http://www.cdixon.org/?p=259&quot;&gt;critic&lt;/a&gt; of how the venture capital industry works. For a long time I’ve wanted to do more than talk about this and actually start a new kind of venture firm, designed the right way from the ground up.&lt;/p&gt;
&lt;p&gt;Last year two friends of mine who are both very successful, serial entrepreneurs — &lt;a href=&quot;http://www.foundercollective.com/people/Eric-Paley&quot;&gt;Eric Paley&lt;/a&gt; and &lt;a href=&quot;http://www.foundercollective.com/people/David-Frankel&quot;&gt;Dave Frankel&lt;/a&gt; — were brainstorming ideas for what to do next when the thought occurred: why not make their next startup a new kind of venture firm, the kind we had wished existed back when we started our first companies?&lt;/p&gt;
&lt;p&gt;So this is what we, along with a bunch of other serial entrepreneurs, decided to do. We call our new firm &lt;a href=&quot;http://www.foundercollective.com/&quot;&gt;Founder Collective&lt;/a&gt;. Joining us are &lt;a href=&quot;http://www.foundercollective.com/people/Mark-Gerson&quot;&gt;Mark Gerson&lt;/a&gt; (founder of &lt;a href=&quot;http://www.foundercollective.com/companies/Gerson-Lehrman-Group&quot;&gt;Gerson Lehrman Group&lt;/a&gt;), &lt;a href=&quot;http://www.foundercollective.com/founders-Zach-Klein&quot;&gt;Zach Klein&lt;/a&gt; (co-founder of &lt;a href=&quot;http://www.foundercollective.com/companies/Vimeo&quot;&gt;Vimeo&lt;/a&gt;/Connected Ventures), &lt;a href=&quot;http://www.foundercollective.com/people/Bill-Trenchard&quot;&gt;Bill Trenchard&lt;/a&gt; (co-founder of &lt;a href=&quot;http://www.foundercollective.com/companies/LiveOps&quot;&gt;LiveOps&lt;/a&gt;), and &lt;a href=&quot;http://www.foundercollective.com/founders-Micah-Rosenbloom&quot;&gt;Micah Rosenbloom&lt;/a&gt; (co-founder of &lt;a href=&quot;http://www.foundercollective.com/companies/Brontes&quot;&gt;Brontes&lt;/a&gt;). We expect to add more founders over time.&lt;/p&gt;
&lt;p&gt;We think of ourselves as part of a new wave venture firms led by &lt;a href=&quot;http://ycombinator.com/&quot;&gt;Y Combinator&lt;/a&gt;, &lt;a href=&quot;http://www.firstround.com/&quot;&gt;First Round&lt;/a&gt;, &lt;a href=&quot;http://www.maplesinvestments.com/&quot;&gt;Maples&lt;/a&gt;, Ron Conway/Baseline, and &lt;a href=&quot;http://betaworks.com/&quot;&gt;Betaworks&lt;/a&gt;, among others, that have adapted to a world where venture capital is abundant but authentic seed capital and, more importantly, mentorship from experienced entrepreneurs, is scarce. We have many similarities to these firms and also some differences:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;We have a small fund – approximately $40M – and intend to keep it that way. This means seed investments are our entire business — they are not &lt;a href=&quot;http://www.cdixon.org/?p=256&quot;&gt;options on future financings&lt;/a&gt;. Hence our interests and the founders’ interests are aligned. This also means we are happy with smaller exits if that’s what the entrepreneur wants to do.&lt;/li&gt;
&lt;li&gt;Each person involved in Founder Collective is an entrepreneur, most of them currently running startups full time (my full-time job is CEO/co-founder of &lt;a href=&quot;http://www.hunch.com/&quot;&gt;Hunch&lt;/a&gt;).&lt;/li&gt;
&lt;li&gt;We believe the best people to predict the future — and create it — are fellow entrepreneurs, not former bankers drawing graphs and developing abstract theses.&lt;/li&gt;
&lt;li&gt;We try to be respectful. We’ve all sat in countless meetings where VCs show up late, email while you are presenting, and generally act arrogant and dismissive. We try really hard not to be like that.&lt;/li&gt;
&lt;li&gt;We’ll make investments anywhere in the world but tend to favor our home turf – New York City and Cambridge, MA. New York &lt;a href=&quot;http://www.avc.com/a_vc/2009/09/the-ny-startup-scene.html&quot;&gt;is&lt;/a&gt; a &lt;a href=&quot;http://www.cdixon.org/?p=281&quot;&gt;hotbed&lt;/a&gt; for online media and advertising startups. In Cambridge, there is a constant flow of ideas coming out of places like MIT that just need a little capital and guidance.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;We realize the word “Collective” sounds a bit radical, even socialist. This is deliberate. While we have an actual fund — we are not just a group of angel investors — we also have a unique structure where active entrepreneurs lead investments, work hard to help their investments succeed, and share in the profits when they do.&lt;/p&gt;
&lt;p&gt;Think of it as peer-to-peer venture capital.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[How to select your angel investors]]></title>
            <description><![CDATA[I’ve seen a number of situations recently that are something like the following.  A VC firm signs a term sheet with an early stage company…]]></description>
            <link>https://cdixon.org/2009/11/03/how-to-select-your-angel-investors</link>
            <guid isPermaLink="false">https://cdixon.org/2009/11/03/how-to-select-your-angel-investors</guid>
            <pubDate>Tue, 03 Nov 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve seen a number of situations recently that are something like the following.  A VC firm signs a term sheet with an early stage company. Let’s say it’s a $2M round.  The VC and entrepreneurs decide to set aside $500K for small investors (individual investors or micro-VCs). Because it’s a “hot” deal, there is way more small investor interest than there is capacity (the round is “oversubscribed”), and the entrepreneur needs to decide which investors are in and which are out.&lt;/p&gt;
&lt;p&gt;The most common mistake entrepreneurs make is to base their choice solely on the investors’ “celebrity” value (by “celebrity” I generally mean in the TechCrunch sense, not the People magazine sense).  Picking celebrity angels might help you get a little more buzz when you announce the financing and a few SUL tweets, but that’s about it.  A startup is a long trip — what you should care about is whether, through the ups and downs and after the buzz dies down, the investors will actually roll up their sleeves and help you.&lt;/p&gt;
&lt;p&gt;That isn’t to say that being a celebrity and being helpful are mutually exclusive.  Ron Conway is a celebrity (in the startup world) and is one of the hardest working investors I know. But there are other celebrity investors who I’m a co-investor with in a few companies who literally don’t respond to the founder’s emails.  And these are successful companies where the founder sends them only occasional emails about really important issues.&lt;/p&gt;
&lt;p&gt;The second biggest mistake is picking angels that benefit the lead VC.  A lot of times when VCs guide entrepreneurs to certain investors what they are really doing is “horse trading” – they want you to let in so and so, because so and so got them into another deal, or will help them get into future deals.&lt;/p&gt;
&lt;p&gt;It’s also smart to pick a varied group of people.  If you want a few celebrities to create some buzz, fine.  You should also pick some people who are connectors – who can introduce you to key people when you need it (varying connectors by geography and industry can also be helpful).  Also very important are active entrepreneurs who can (and will) give you practical advice about hiring, product development, financing etc.&lt;/p&gt;
&lt;p&gt;Finally, don’t spend too much time agonizing over this.  One particularly silly situation I was involved with was where the CTO had invited me to invest but then the CEO decided he wanted to put me through multiple interviews before he’d let me in.  He probably spent a day of his time deciding whether to give me some tiny fraction of the round. Eventually he dinged me because I wasn’t famous, but at that point I was frankly kind of relieved since the CEO seemed to have such a bad sense of how to prioritize his time.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Disclosure: This post is entirely self serving, as I consider myself a non-celebrity but hard working small investor.&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The most important question to ask before taking seed money]]></title>
            <description><![CDATA[There is a certain well respected venture capital firm (VC) that has a program for fledgling entrepreneurs.   The teams that are selected…]]></description>
            <link>https://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money</guid>
            <pubDate>Fri, 30 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There is a certain well respected venture capital firm (VC) that has a program for fledgling entrepreneurs.   The teams that are selected get a desk, a small stipend, and advice for a few months from experienced VCs.  I could imagine back when I was starting my first company thinking this was a great opportunity – especially the advice part.&lt;/p&gt;
&lt;p&gt;Here’s the problem.  A few years into the program, approximately 25 teams have gone through it.  The sponsoring VC funded one team and passed on the other 24.  None of those other 24 have gotten financing from anyone else.  Why?  Because once you go through the program and don’t get funded by the sponsoring VC, you are perceived by the rest of the investor community as damaged goods.&lt;/p&gt;
&lt;p&gt;Most early stage investors are bombarded with new deals.  There is no way they could meet with all of them, or even spend time seriously reading their investor materials.  In order to filter through it all, they rely heavily on signals.  The person referring you to them is a very big signal.  Your team’s bios is a very big signal. And if you were in the seed program of a VC who has a multi-hundred million dollar fund and who decided to pass, that is a huge signal.&lt;/p&gt;
&lt;p&gt;Meanwhile, the unsuspecting entrepreneurs think: “I was at a prestigious VC this summer – this will look great on our bios and company deck.”  The truth is exactly the opposite:  the better the VC, the stronger the negative signal when they pass.&lt;/p&gt;
&lt;p&gt;Thus, the most important question to ask before taking seed money is: &lt;strong&gt;How many companies that the sponsor passed on went on to raise money from other sources?&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The best programs don’t have sponsors who are even capable of further funding the company.  Y Combinator simply doesn’t do follow ons, so there is no way they can positively or negatively signal by their follow on actions. (Although now that they have taken money from Sequoia people are worried that Sequoia passing could be seen as a negative signal.  I just invested in a Y Combinator company and was reassured to see Sequoia co-investing).  Other seed programs lie somewhere in between — they aren’t officially run by big VCs but they do have big VCs associated with them so there is some signaling effect.   (I would call this the “hidden sponsor” problem.  I didn’t realize the extent of it until I got emails responding to my &lt;a href=&quot;http://www.cdixon.org/?p=256&quot;&gt;earlier seed program posts&lt;/a&gt; from entrepreneurs who had been burned by it).&lt;/p&gt;
&lt;p&gt;The most dangerous programs are the ones run by large VCs.  I would love for someone to prove me wrong, but from my (admittedly anecdotal) knowledge, no companies that have been in large VC seed programs where the VC then stopped supporting the company went on to raise more money from other sources.&lt;/p&gt;
&lt;p&gt;As has been widely noted, startups – especially internet-related ones – require far less capital today than they did a decade ago.  The VC industry has responded by keeping their &lt;a href=&quot;http://www.cdixon.org/?p=443&quot;&gt;funds huge&lt;/a&gt; but trying to get options on startups via seed programs.  Ultimately the VC industry will be forced to adapt by shrinking their funds, so they can invest in seed deals with the intention of actually making money on those investments, instead of just looking for &lt;a href=&quot;http://www.cdixon.org/?p=259&quot;&gt;options&lt;/a&gt; on companies in which they can invest “real money.”  In the meantime, however, a lot of young entrepreneurs are getting an unpleasant introduction to the rough-and-tumble world of venture capital.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Disclosure:  I am biased because as an early stage investor I sometimes compete with these programs.&lt;/em&gt;&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Embrace the medium]]></title>
            <description><![CDATA[An obvious but surprisingly under-practiced design principle is to “embrace the medium.”  Applied to software, this means building…]]></description>
            <link>https://cdixon.org/2009/10/27/embrace-the-medium</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/27/embrace-the-medium</guid>
            <pubDate>Tue, 27 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;An obvious but surprisingly under-practiced design principle is to “embrace the medium.”  Applied to software, this means building applications that take advantage of the strengths of the platform instead of trying to mimic the strengths of another platform.&lt;/p&gt;
&lt;p&gt;iPhone and Wii games provide many stark abuses of this principle. Call of Duty is perhaps the single best franchise on the XBox and PS3, but the Wii version is almost unplayable.   They basically just did a straight port of the game, with worse graphics and using the Wiimote as a shaky aiming device.  It’s not an accident that the best Wii games are made exclusively for the Wii (and that most of those games are made by Nintendo itself).&lt;/p&gt;
&lt;p&gt;iPhone games are perhaps even worse violators of the “embrace the medium” principle.  Recently I was thinking about downloading Madden 2010, but as soon as I saw the screenshots I knew I’d hate it:&lt;/p&gt;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-10-26 at 8.03.58 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;You can see they are trying to force the XBox/PS3 control scheme onto a device with completely different set strengths and weaknesses. The iPhone’s strengths are:  touchscreen, gestures, accelerometer, networked, always with you. Its weaknesses:  no buttons, small screen, poor graphics/processor (compared to consoles).  The best games – Flight Control, Spider, Rolando – are designed from scratch to take advantage of the iPhone’s strengths.  Take Flight Control as an example:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/62707ad6a6cb5645e60e286afd45c402/135ae/screen-shot-2009-10-26-at-8-10-04-am-300x201.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 10 26 at 8 10 04 am 300x201&quot;
        title=&quot;Screen shot 2009-10-26 at 8.10.04 AM&quot;
        src=&quot;/static/62707ad6a6cb5645e60e286afd45c402/135ae/screen-shot-2009-10-26-at-8-10-04-am-300x201.png&quot;
        srcset=&quot;/static/62707ad6a6cb5645e60e286afd45c402/924ad/screen-shot-2009-10-26-at-8-10-04-am-300x201.png 170w,
/static/62707ad6a6cb5645e60e286afd45c402/135ae/screen-shot-2009-10-26-at-8-10-04-am-300x201.png 300w&quot;
        sizes=&quot;(max-width: 300px) 100vw, 300px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-10-26 at 8.10.04 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;You guide the planes by mapping their routes with your finger.  It’s such a simple, elegant and fun game, and one that could only exist on the iPhone.  It embraces the iPhone-ness instead of fighting it.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Twelve months notice]]></title>
            <description><![CDATA[Generally speaking, there are two approaches to relating to other people in the business world. The first approach is transactional and…]]></description>
            <link>https://cdixon.org/2009/10/23/twelve-months-notice</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/23/twelve-months-notice</guid>
            <pubDate>Fri, 23 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Generally speaking, there are two approaches to relating to other people in the business world. The first approach is transactional and legalistic:  work is primarily an exchange of labor for money, and agreements are made via contracts.   Enforcement is provided by organizations, especially the legal system.  The second approach relies on trust, verbal agreements, reputation and norms, and looks to the community to provide enforcement when necessary.&lt;/p&gt;
&lt;p&gt;In the startup world, the latter approach dominates.  It is almost unheard of, for example, to see entrepreneurs or VCs sue each other.  The ones who do tend to leave the startup world, either by choice or by having ruined their reputation.  It is very rare to see someone in the startup world break a verbal agreement.  And, in most cases, employees and employers show loyalty far beyond what is seen in larger companies or what is economically “rational.”   (Most startups do spend considerable legal fees on financing, employee, and IP documents, but that is mostly because they know that those are necessary if they decide to sell themselves to a large company where the legalistic approach dominates.)&lt;/p&gt;
&lt;p&gt;For this reason, if you are an employee working at a startup where the managers are honest, inclusive and fair, you should disregard everything you’ve learned about proper behavior from people outside of the startup world.&lt;/p&gt;
&lt;p&gt;For example, let’s suppose you are a two years out of college and have a job at a startup.  You like your job but decide you want to go to graduate school.   The big company legalistic types will tell you to secretly send in your applications, and, if you get accepted and decide to attend, give your boss two weeks notice.&lt;/p&gt;
&lt;p&gt;What you should instead do is talk to your boss as soon as you are seriously considering graduate school.  Give them twelve months notice.  Any good startup manager won’t fire you, and in fact will go out of her way to help you get into school and get a good job afterwards.  They will appreciate your honesty and the fact that you gave them plenty of time to find a replacement.&lt;/p&gt;
&lt;p&gt;(Now don’t get me wrong:  if you work for bosses who have a legalistic, transactional mindset, by all means give two weeks notice.  I gave 4 months notice once to a boss with that mindset and was duly punished for it.  But hopefully if you are at a startup you work with people who have the startup, relationship-centric mindset.)&lt;/p&gt;
&lt;p&gt;This way of relating to other people is one of the main things people are talking about when they talk about “startup culture.”  It is why so many people coming from other industries have difficulty fitting into startups (especially people coming from Wall Street where the transactional mindset is at its most extreme).  I personally find the community approach a much nicer way to operate, and try to only professionally associate myself with people who prefer that approach as well.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The ideal startup career path]]></title>
            <description><![CDATA[For most people I know who join or start companies, the primary goal is not to get rich – it is to work on something they love, with people…]]></description>
            <link>https://cdixon.org/2009/10/22/the-ideal-startup-career-path</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/22/the-ideal-startup-career-path</guid>
            <pubDate>Thu, 22 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;For most people I know who join or start companies, the primary goal is not to get rich – it is to work on something they love, with people they respect, and to not be beholden to the vagaries of the market- in other words, to be independent.  The reality is being independent often means having made money and/or being able to raise money from others.&lt;/p&gt;
&lt;p&gt;A while back, I &lt;a href=&quot;http://www.cdixon.org/?p=467&quot;&gt;posted&lt;/a&gt; about how I recommend thinking about non-founder option grants.  In the comments, &lt;a href=&quot;http://twitter.com/aaronCohen&quot;&gt;Aaron Cohen&lt;/a&gt; &lt;a href=&quot;http://www.cdixon.org/?p=467#comment-1681&quot;&gt;made the point&lt;/a&gt; that given today’s “good” exit sizes and standard equity grants, most non-founders will not gain independence even in the (non-extreme) good cases:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Most startup employees need to realize they are on a journey and that in addition to making a few hundred thousand dollars on a good outcome they are learning how to become more senior at the next company. Real wealth creation will take founding, seniority, or staggeringly large exits.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As Aaron said, you shouldn’t think of joining a startup as just joining a company. You should think of it as joining the startup career path. This career path could mean starting a company as your first job.  It could also mean working at a few startups and then starting a company.   (In my view, if your goal is to start a company, it is mostly a waste of time to work anywhere but a startup – with the possible exception of a short stint in venture capital).&lt;/p&gt;
&lt;p&gt;Maybe you will make some money working at a startup, but more importantly you will hopefully work for founders and managers who are smart and willing to mentor you and eventually fund or help you fund your startup.&lt;/p&gt;
&lt;p&gt;The startup world is extremely small.  If you’re smart, work really hard, and act with integrity, people will notice.  Contrary to popular wisdom, you will actually have &lt;a href=&quot;http://www.cdixon.org/?p=181&quot;&gt;more job stability&lt;/a&gt; than working at a big company.  And hopefully you’ll go on to start your own company, gain independence, and then help others do the same.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The challenge of creating a new category]]></title>
            <description><![CDATA[One of the hardest things to do as a startup is to create a new category.  Bloggers and press have a natural tendency to “pigeonhole” – to…]]></description>
            <link>https://cdixon.org/2009/10/20/the-challenge-of-creating-a-new-category</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/20/the-challenge-of-creating-a-new-category</guid>
            <pubDate>Tue, 20 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the hardest things to do as a startup is to create a new category.  Bloggers and press have a natural tendency to “pigeonhole” – to group startups into cleanly delineated categories, and then do side-by-side comparisons, comment on the “horserace” between them, and so forth.&lt;/p&gt;
&lt;p&gt;At my last startup, SiteAdvisor, we were at first consistently pigeonholed as an anti-phishing toolbar, even though what we did was help search engine users avoid spyware, spam, and scams, which (for various technical reasons) had almost no functional overlap with anti-phishing toolbars. My co-founder at &lt;a href=&quot;http://www.hunch.com&quot;&gt;Hunch&lt;/a&gt;, Caterina Fake, had a similar experience at Flickr.  Early on, people compared Flickr to existing photo sharing websites – Shutterfly, Ofoto, SnapFish - and found Flickr lacking in features around buying prints, sending greeting cards, etc.&lt;/p&gt;
&lt;p&gt;Pigeonholing is one reason startups should actually welcome direct competitors.   It was only once a direct competitor to SiteAdvisor appeared that people started treating “web safety” as its own category (Walt Mossberg was the first one to legitimize the category with &lt;a href=&quot;http://www.cdixon.org/press1.html&quot;&gt;this&lt;/a&gt; article).&lt;/p&gt;
&lt;p&gt;At my current startup, Hunch, being pigeonholed as a so-called Answers site is one of our main marketing challenges.  &lt;a href=&quot;http://www.hunch.com/fact-sheet/&quot;&gt;Hunch is a user-generated website&lt;/a&gt; similar to Wikipedia except, instead of creating encyclopedia entries, contributors create decision trees that help other users make choices and decisions.  For example, about 50 computer enthusiasts came together to create &lt;a href=&quot;http://www.hunch.com/laptops/&quot;&gt;this decision tree about computer laptops&lt;/a&gt; that helps users with less expertise find the right laptop.  Hunch gets smarter over time as more people contribute to it.  So far, about 10,000 users have made 115,000 contributions to the site.  Last month, our third month after launch, over 600,000 unique visitors used those contributions to make decisions.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://mashable.com/2009/06/15/hunch-decisions/&quot;&gt;Many&lt;/a&gt; &lt;a href=&quot;http://searchengineland.com/hunch-a-real-decision-engine-20928&quot;&gt;of&lt;/a&gt; &lt;a href=&quot;http://digital.venturebeat.com/2009/03/27/after-trying-it-out-i-have-a-good-feeling-about-hunch/&quot;&gt;the&lt;/a&gt; &lt;a href=&quot;http://www.xconomy.com/national/2009/04/03/will-hunch-help-you-make-decisions-signs-point-to-yes/&quot;&gt;initial&lt;/a&gt; &lt;a href=&quot;http://www.techcrunch.com/2009/03/27/does-hunch-have-all-the-answers-we-take-flickr-founders-new-startup-for-a-spin/&quot;&gt;reviews&lt;/a&gt; of Hunch accurately reflected that Hunch is trying to create a new category of website.  Nevertheless, the tendency to pigeonhole Hunch as an Answers site remains. Answers sites allow users to ask a question and get back direct answers from other people.  There are many Answer sites including Yahoo Answers, Mahalo Answers, Vark, Answerbag, and ChaCha. These are all excellent and useful services – but have as much to do with Hunch as Ofoto had to do with Flickr.&lt;/p&gt;
&lt;p&gt;There is no easy solution to avoid being pigeonholed.  All you can do is consistently, straightforwardly describe what you do, and then keep beating that drum over and over until the message gets through.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[If Verizon’s Droid is good, that’s bad for the wireless ecosystem]]></title>
            <description><![CDATA[I carry around an iPhone and a Blackberry Tour.  I know that’s ridiculous. The iPhone is a great device on an awful network; the Tour is an…]]></description>
            <link>https://cdixon.org/2009/10/18/if-verizons-droid-is-good-thats-bad-for-the-wireless-ecosystem</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/18/if-verizons-droid-is-good-thats-bad-for-the-wireless-ecosystem</guid>
            <pubDate>Sun, 18 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I carry around an iPhone and a Blackberry Tour.  I know that’s ridiculous. The iPhone is a great device on an awful network; the Tour is an awful device on a great network.  If the &lt;a href=&quot;http://www.techcrunch.com/2009/10/18/verizon-droid-is-the-real-deal/&quot;&gt;rumors are true&lt;/a&gt; and the Verizon “Droid” is a great device on a great network, I’ll be the first in line to get one.  But for the wireless ecosystem as a whole, it would be a bad thing.&lt;/p&gt;
&lt;p&gt;Some people are saying a great Droid would mean more competition amongst handsets.  But you can’t really choose a handset – you choose a handset-carrier pair.  The real innovation inhibitor in the cellular world has been the power of the carriers to dictate what devices you can use and what apps go on those devices.  Just ask an entrepreneur who tried to create handsets or cellular apps.  They are completely beholden to the whims of the carriers.&lt;/p&gt;
&lt;p&gt;Apple has gotten very close to breaking the carrier stranglehold – just look at how many people put up with AT&amp;#x26;T’s atrocious network to have one.  Had Verizon capitulated and accepted Apple’s presumably stringent terms in order to carry the iPhone, we might have finally started to see a true decoupling of handsets from carriers.&lt;/p&gt;
&lt;p&gt;Finally, don’t think just because the Droid runs Android it’s going to be truly open.  Verizon knows a truly open OS – one that allows you to run Google Voice, Skype, 3rd party SMS apps – would make their network a dumb pipe.  They’ve shown in the past they won’t let that happen.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Dow 10,000 and economic reflexivity]]></title>
            <description><![CDATA[People who criticize Obama’s economic policies forget that, around the beginning of this year, a lot of serious people thought we were…]]></description>
            <link>https://cdixon.org/2009/10/17/dow-10000-and-economic-reflexivity</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/17/dow-10000-and-economic-reflexivity</guid>
            <pubDate>Sat, 17 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;People who criticize Obama’s economic policies forget that, around the beginning of this year, a lot of serious people thought we were entering a second Great Depression.  Here are the Google News &lt;a href=&quot;http://www.google.com/trends?q=great+depression%2C+economic+recovery&amp;#x26;ctab=0&amp;#x26;geo=us&amp;#x26;geor=all&amp;#x26;date=all&amp;#x26;sort=0&quot;&gt;mentions&lt;/a&gt; of the words “Great Depression” (in blue) and “economic recovery” (in red) over the last three years:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    rel=&quot;noopener&quot;
  &gt;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 10 17 at 4 16 11 pm1&quot;
        title=&quot;Screen shot 2009-10-17 at 4.16.11 PM&quot;
        src=&quot;/static/a2c5d742be2221545382af0df11723f4/e14eb/screen-shot-2009-10-17-at-4-16-11-pm1.png&quot;
        srcset=&quot;/static/a2c5d742be2221545382af0df11723f4/924ad/screen-shot-2009-10-17-at-4-16-11-pm1.png 170w,
/static/a2c5d742be2221545382af0df11723f4/e14eb/screen-shot-2009-10-17-at-4-16-11-pm1.png 278w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-10-17 at 4.16.11 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Moreover, most experts thought we were being led into a Great Depression not by “fundamentals” but by the collapse of the financial system.&lt;/p&gt;
&lt;p&gt;Back around when Obama proposed his bank bailout plan (which was mostly an extension of Bush and Bernanke’s plan) he was widely &lt;a href=&quot;http://dealbook.blogs.nytimes.com/2009/03/23/mixed-reactions-to-toxic-asset-plan/&quot;&gt;criticized&lt;/a&gt;.  The consensus criticism was succinctly &lt;a href=&quot;http://www.nytimes.com/2009/04/01/opinion/01stiglitz.html?_r=1&quot;&gt;summarized&lt;/a&gt; by Nobel Laureate Joseph Steiglitz:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Paying fair market values for the assets will not work. Only by overpaying for the assets will the banks be adequately recapitalized. But overpaying for the assets simply shifts the losses to the government. In other words, the Geithner plan works only if and when the taxpayer loses big time.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Around this time, I happened to bump into an old friend who was working at a hedge fund where his full-time job was trading these so-called toxic assets (CDSs, CDOs, etc).  I asked him the trillion dollar question:  what did he think the “fair market value” for these assets was? Were they worth, say, 80 cents on the dollar as the banks were claiming, or 20 cents on the dollar as the bidders in the market were offering.&lt;/p&gt;
&lt;p&gt;His answer:  &lt;em&gt;These assets are essentially bets on home mortgages, which in turn are dependent on housing prices, which in turn are dependent on the economy, which in turn is highly dependent on whether the banks stay solvent, which is dependent on what these assets are worth.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;This circularity is not unique to these particular assets.  As George Soros has argued for decades, all economic systems are profoundly circular, a property that he calls &lt;a href=&quot;http://en.wikipedia.org/wiki/George_Soros#Reflexivity.2C_financial_markets.2C_and_economic_theory&quot;&gt;reflexivity&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;The bank bailouts were extremely &lt;a href=&quot;http://www.nytimes.com/2009/10/17/business/economy/17wall.html?hpw&quot;&gt;distasteful&lt;/a&gt; in many ways.  Lots of underserving people got rich.  Institutions that should have failed didn’t.  Dangerous “moral hazard” precedents were set. But the fact remains:  by altering perceptions, the Bush/Obama/Bernanke plan seems to have turned the second Great Depression into “merely” a bad recession.&lt;/p&gt;
&lt;p&gt;The Dow passed the symbolic milestone of 10,000 recently.  People who say it’s an illusion and doesn’t reflect economic fundamentals don’t understand that in economics, perception and fundamentals are inextricably linked.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[What’s the relationship between cost and price?]]></title>
            <description><![CDATA[What’s the relationship between price – the ability to charge for your product – and cost – how much it costs you to produce it? Price is a…]]></description>
            <link>https://cdixon.org/2009/10/16/whats-the-relationship-between-cost-and-price</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/16/whats-the-relationship-between-cost-and-price</guid>
            <pubDate>Fri, 16 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;What’s the relationship between price – the ability to charge for your product – and cost – how much it costs you to produce it?&lt;/p&gt;
&lt;p&gt;Price is a function of supply and demand.  Notice the word “cost” doesn’t occur there.  It is true that cost is, over the long term, a lower bound for price – otherwise you’d go out of business.  It is also true that high upfront fixed costs can create barriers to entry and therefore lower supply.&lt;/p&gt;
&lt;p&gt;The only case in which price is determined by (variable) costs is in a commoditized market.  A market is commoditized when competing products are effectively interchangeable and therefore customers make decisions based solely on price.  In commoditized markets, price tends to converge toward cost.&lt;/p&gt;
&lt;p&gt;In non-commoditized markets, variable costs have no effect on price.  Most information technology companies are not commoditized, therefore variable cost and price are unrelated.  That is why there can exist companies like Google and Microsoft that are so insanely profitable.  If the cost of producing and distributing a copy of Microsoft Office dropped tomorrow, there is no reason to think that would affect their pricing.  The most profitable industry historically has been pharmaceuticals, because they are effectively granted monopolies, via patents, reducing the supply of a given drug to one.&lt;/p&gt;
&lt;p&gt;There are two ways people get confused about cost and price – a rudimentary way and a more advanced way.  The rudimentary way is confusing fixed and variable costs.  People who &lt;a href=&quot;http://gthing.net/the-true-price-of-sms-messages/&quot;&gt;gripe&lt;/a&gt; about the price/cost gap of SMS messages seem to not realize the telecom industry is like the movie industry in that they make huge upfront investments but have relatively low marginal costs.   I, for one, have always thought movies are a great deal – they spend $100M making a movie, I pay $12 to see it.  It would be silly to compare how much you pay to see a movie to the variable cost of projecting the movie.&lt;/p&gt;
&lt;p&gt;The more advanced way people get confused about cost and price is to think that because costs are dropping, prices will necessarily follow. For example, the cost of distributing newspapers has dropped almost to zero.  This is not the primary cause of the downfall of the newspaper industry.  The downfall of newspapers has been caused by a number of things – losing the classifieds business was huge – but mainly because when newspapers went online and were no longer able to partition the market geographically, supply in each region went up by orders of magnitudes.  Once the majority of newspapers go out of business causing supply to go way down, pricing power should return to the survivors.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[What carries you up will also bring you down]]></title>
            <description><![CDATA[In Rules of Thumb, Alan Weber quotes legendary venture capitalist John Doerr discussing the original business plans for companies he…]]></description>
            <link>https://cdixon.org/2009/10/13/what-carries-you-up-will-also-bring-you-down</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/13/what-carries-you-up-will-also-bring-you-down</guid>
            <pubDate>Tue, 13 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In &lt;em&gt;&lt;a href=&quot;http://www.amazon.com/Rules-Thumb-Winning-Business-Without/dp/0061721832&quot;&gt;Rules of Thumb&lt;/a&gt;&lt;/em&gt;, Alan Weber quotes legendary venture capitalist John Doerr discussing the original business plans for companies he invested in such as Google, Intuit, and Amazon:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In every case you can find the one sentence or paragraph that describes their unique business model advantage.  It could be their unique distribution system or the retailing model.  It’s the factor that accounts for their success. &lt;strong&gt;It turns out the factor that explains their success at the beginning is what accounts for their failure later.&lt;/strong&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As a former philosophy student, I was reminded of Aristotle’s concept of “&lt;a href=&quot;http://en.wikipedia.org/wiki/Hamartia&quot;&gt;hamartia&lt;/a&gt;,” sometimes known as a “fatal flaw”:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In Aristotle’s understanding, all tragic heroes have a “hamartia,” but this is not inherent in their characters, for then the audience would lose respect for them and be unable to pity them; likewise, if the hero’s failing were entirely accidental and involuntary, the audience would not fear for the hero. &lt;strong&gt;Instead, the character’s flaw must result from something that is also a central part of their virtue, which goes somewhat awry, usually due to a lack of knowledge.&lt;/strong&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It’s an interesting exercise to apply this principle to technology companies:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Google’s strength is its uber-engineering mindset.  This seems to increasingly be a liability as the web becomes ever more social.&lt;/li&gt;
&lt;li&gt;Yahoo’s strength was its breadth.  Now they call it the “&lt;a href=&quot;http://online.wsj.com/public/article/SB116379821933826657-0mbjXoHnQwDMFH_PVeb_jqe3Chk_20061125.html&quot;&gt;peanut butter&lt;/a&gt;” problem.&lt;/li&gt;
&lt;li&gt;AOL’s strength was being a closed garden.  As users became internet savvy, they were no longer afraid of venturing outside of it.&lt;/li&gt;
&lt;li&gt;Apple’s strength lies in its genius, authoritarian leader.  Apple’s decline will begin when he leaves (sadly).&lt;/li&gt;
&lt;li&gt;Facebook’s strength is authenticity and privacy – your friends are (mostly) your real friends, and only they see your activity.  Facebook has been trying to respond to Twitter’s rise with “open” features like the public micro-messaging.   It remains to be seen whether they can successfully go against their own core strengths.  I’m skeptical, but give them credit for trying.&lt;/li&gt;
&lt;li&gt;Twitter’s strength is its simplicity and openness.  Will its openness be its downfall?  For example, will Twitter end up &lt;a href=&quot;http://www.cdixon.org/?p=913&quot;&gt;fighting&lt;/a&gt; its apps?  Or will it be its simplicity?&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;This principle also implies how to use incumbents’ strengths against them (sometimes &lt;a href=&quot;http://harvardbusiness.org/product/judo-strategy-turning-your-competitors-strength-to/an/2530-HBK-ENG&quot;&gt;called&lt;/a&gt; the “Judo Strategy”).  In the chess game of competitive strategy, you can usually bet that incumbents won’t make moves that undermine their core strengths – until it’s too late.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Understanding your market]]></title>
            <description><![CDATA[Some startups become huge sensations without requiring any active marketing – YouTube, Skype, and Twitter come to mind. However, the vast…]]></description>
            <link>https://cdixon.org/2009/10/11/understanding-your-market</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/11/understanding-your-market</guid>
            <pubDate>Sun, 11 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Some startups become huge sensations without requiring any active marketing – YouTube, Skype, and Twitter come to mind. However, the vast majority of successful startups gained adoption through marketing:  PR, SEO, partnerships, paid marketing, and so on. My strong suggestion would be to hope for the former but plan for the latter.&lt;/p&gt;
&lt;p&gt;Marketing is a huge topic.  Here I just want to make the point that, for starters, you need to figure out two things:   1) how information and influence flows in your market, and 2) when and where people use and/or purchase your product.&lt;/p&gt;
&lt;p&gt;I’ll use my last startup, SiteAdvisor, as an example.  SiteAdvisor (now called &lt;a href=&quot;http://www.siteadvisor.com/&quot;&gt;McAfee SiteAdvisor&lt;/a&gt;) is a consumer security product.  Most consumers don’t learn about security products on their own.  Instead, they rely on their “family/friend sysadmin” (smartest computer person they know).  These family sysadmins read technical websites and magazines.  In order to reach this audience, we performed studies on data we had collected, which led to &lt;a href=&quot;http://www.cdixon.org/press2.html&quot;&gt;lots&lt;/a&gt; &lt;a href=&quot;http://developers.slashdot.org/article.pl?sid=06/01/15/0141236&quot;&gt;of&lt;/a&gt; &lt;a href=&quot;http://it.slashdot.org/article.pl?sid=06/05/12/1835215&quot;&gt;coverage&lt;/a&gt;, which raised our profile and bolstered our credibility.&lt;/p&gt;
&lt;p&gt;Now to when and where people buy security products.  Most people only think about security when 1) they buy a new computer, 2) they first get internet access, or 3) they get a virus or other security problem.  The last case is actually pretty rare, so most companies focus on 1 and 2.  How do you reach people at those moments?  Through “channels” – in particular PC makers (“OEMs”) and internet providers (“ISPs”).  (For public market people:  focusing on these two channels was McAfee’s big insight in the 2000′s and how they made a comeback versus Symantec who dominates retail).&lt;/p&gt;
&lt;p&gt;Most people don’t talk to their friends about security products so it’s very hard to do mass word-of-mouth marketing.  (Exceptions would be the beginning of the spyware epidemic around 2001-2 when AdAware got super popular via word of mouth).  So you have to understand and pitch to these channels.&lt;/p&gt;
&lt;p&gt;These observations are specific to consumer security, but every startup should have a similar theory of how to market their product.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Man and superman]]></title>
            <description><![CDATA[There are two broad philosophical approaches to explaining the forces that drive world events. The first one is sometimes called the Great…]]></description>
            <link>https://cdixon.org/2009/10/10/man-and-superman</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/10/man-and-superman</guid>
            <pubDate>Sat, 10 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There are two broad philosophical approaches to explaining the forces that drive world events. The first one is sometimes called &lt;a href=&quot;http://en.wikipedia.org/wiki/Great_man_theory&quot;&gt;the Great man theory&lt;/a&gt;, neatly summarized by the quote ”the history of the world is but the biography of great men.”  This view was famously espoused by the philosopher Hegel and later Nietzche, who called such great people &lt;em&gt;Ubermenchen&lt;/em&gt; (“supermen”).&lt;/p&gt;
&lt;p&gt;The alternative view argues that history is largely determined by a complex series of societal, political, institutional, technological and other forces.  This view argues that great people are more a product of their time than the times are a product of them.&lt;/p&gt;
&lt;p&gt;You can apply these theories to companies, in particular to the founders of technology companies who keep their companies great long after their “natural” life cycle.  Most successful companies start with one great product and ride its growth but fail to pull off a second act.&lt;/p&gt;
&lt;p&gt;The companies that defy this natural cycle are invariable run by “supermen” (or women).  Akio Morita founded Sony in 1946 and was a very active CEO until 1994.   At the time he left, Sony had a $40B market cap.  Today it is valued at $28B.  Akio had an incredible run of hit products: the first transistor radio, the first transistor television, the Walkman, the first video cassette recorder, and the compact disc. Akio ran Sony based on his intuitions.  For example, he ignored focus groups that &lt;a href=&quot;http://memehuffer.typepad.com/meme_huffer/2007/12/great-quotes-fo.html%20&quot;&gt;hated&lt;/a&gt; the Walkman, saying:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;em&gt;“\&lt;/em&gt;We don’t ask consumers what they want. They don’t know. Instead we apply our brain power to what they need, and _will_ want, and make sure we’re there, ready”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Steve Jobs co-founded Apple in 1976.  He was pushed out in in May 1985 when the company was valued at about $2.2B.  He returned in 1996 when Apple was worth $3B.  Today it is worth $169B.  Jobs famously micromanages every product detail and like Akio makes decisions based on intuitions.&lt;/p&gt;
&lt;p&gt;Bill Gates was the co-founder and CEO of Microsoft, building it to an astounding $470B market cap.  Under him, Microsoft had multiple acts, among them:  DOS, Windows, Office, and enterprise server software.  Since Steve Ballmer became CEO, the company’s value has declined to $223B. I’m sure Steve Ballmer is a smart and &lt;a href=&quot;http://www.youtube.com/watch?v=wvsboPUjrGc&quot;&gt;passionate&lt;/a&gt; guy, but he’s no superman.&lt;/p&gt;
&lt;p&gt;Some observers like the author Jim Collins think great companies are all about culture, not a singularly great leader.  Collin’s “built to last” case study companies included Circuit City and Fannie Mae, both of which have been catastrophic failures.  His “portfolio” &lt;a href=&quot;http://www.bloggingstocks.com/2009/02/23/from-good-to-great-to-bankruptcy-jim-collins-book-revisited/&quot;&gt;has&lt;/a&gt; underperformed to S&amp;#x26;P.&lt;/p&gt;
&lt;p&gt;It is convenient to think you can take greatness and bottle it up and sell it in a book.   In fact, life is unfair:  there are geniuses and then there are the rest of us.  When great leaders go away, so does the greatness of their companies.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The importance of asking people questions]]></title>
            <description><![CDATA[Andy Weissman’s blog has the tagline “Maximizing the serendipity around you.”  It’s a good philosophy.  I think one of the simplest ways to…]]></description>
            <link>https://cdixon.org/2009/10/06/the-importance-of-asking-people-questions</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/06/the-importance-of-asking-people-questions</guid>
            <pubDate>Tue, 06 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Andy Weissman’s &lt;a href=&quot;http://blog.aweissman.com/&quot;&gt;blog&lt;/a&gt; has the tagline “Maximizing the serendipity around you.”  It’s a good philosophy.  I think one of the simplest ways to do this is to ask people lots of questions when you meet them.  I’m surprised how often people fail to do this.  Besides being good manners, it’s also an efficient way to learn about the world and sometimes make important discoveries and connections.&lt;/p&gt;
&lt;p&gt;About 6 years ago, when I was working at &lt;a href=&quot;http://bvp.com/&quot;&gt;Bessemer&lt;/a&gt; as junior investor, I was at a dinner with a group of friends and acquaintances.  The guy sitting next to me was a business school student who spent most of the dinner talking about how he was trying to get a job in venture capital.  He never bothered to ask me what I did for a living and I never mentioned it.&lt;/p&gt;
&lt;p&gt;Now, I wasn’t a particularly important venture capitalist, but &lt;a href=&quot;http://www.cdixon.org/?p=732&quot;&gt;getting a job in the industry&lt;/a&gt; is all about meeting as many people who work in it as you can.  The fact that he happened to be sitting next to one was potentially serendipitous – had he only bothered to ask questions.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The problem with online “local” businesses]]></title>
            <description><![CDATA[One of the most popular areas for startups today is “local.”  I probably see a couple of business plans a week that involve local search…]]></description>
            <link>https://cdixon.org/2009/10/02/the-problem-with-online-local-businesses</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/02/the-problem-with-online-local-businesses</guid>
            <pubDate>Fri, 02 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the most popular areas for startups today is “local.”  I probably see a couple of business plans a week that involve local search, local news, local online advertising, etc.&lt;/p&gt;
&lt;p&gt;Here’s the biggest challenge with local.  Let’s say you create a great service that users love and it gets popular.  Yelp has done this. Maybe Foursquare, Loopt etc. will do this.  Now you want to make money. It’s very hard to charge users so you want to charge local businesses instead.&lt;/p&gt;
&lt;p&gt;The problem is that, for the most part, these local business either don’t think of the web as an important medium or don’t understand how to use it.  Ask you nearest restaurant owner or dry cleaner about online advertising.  They don’t see it as critical and/or are confused about it.  Even Google has barely monetized local.&lt;/p&gt;
&lt;p&gt;People who have been successful monetizing local have done it with outbound call centers.   The problem with that approach is it’s expensive.  Even if you succeed in getting local businesses to pay you, it often costs you more to acquire them than you earn over the lifetime of the relationship.&lt;/p&gt;
&lt;p&gt;To add insult to injury, local businesses often have very high churn rates.  I have heard that the average is as high as 40%.  Anyone who has done “lifetime customer value analysis” can tell you how that ruins the economics of recurring revenue businesses.&lt;/p&gt;
&lt;p&gt;Hopefully this will change in time as local businesses come to see the web as a critical advertising medium and understand how to make it work for them.  But for now, monetizing local is a really tough slog.&lt;/p&gt;
&lt;p&gt;* This is what I hear from industry sources.  If readers have better numbers or sources I’d love to hear them.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Why does it matter that Twitter is supplanting RSS?]]></title>
            <description><![CDATA[The other day I claimed that Twitter is supplanting RSS, and that long term that’s a bad thing.  Andrew Weissman had a very reasonable…]]></description>
            <link>https://cdixon.org/2009/10/01/why-does-it-matter-that-twitter-is-supplanting-rss</link>
            <guid isPermaLink="false">https://cdixon.org/2009/10/01/why-does-it-matter-that-twitter-is-supplanting-rss</guid>
            <pubDate>Thu, 01 Oct 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The other day &lt;a href=&quot;http://www.cdixon.org/?p=1284&quot;&gt;I claimed&lt;/a&gt; that Twitter is supplanting RSS, and that long term that’s a bad thing.  &lt;a href=&quot;http://blog.aweissman.com/&quot;&gt;Andrew Weissman&lt;/a&gt; had a very reasonable &lt;a href=&quot;http://www.cdixon.org/?p=1284#comment-17842697&quot;&gt;response&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Twitter is the most open application people are currently using. It’s open on the way in and the way out. The variety of applications using the Twitter api are astounding in that they cover many use cases.&lt;/p&gt;
&lt;p&gt;Given that, why will Ashton and Oprah someday care?&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The problem is Twitter isn’t really open.  &lt;strong&gt;For Twitter to be truly open, it would have to be possible to use “Twitter” without an any way involving Twitter the institution.&lt;/strong&gt; Instead, all data goes through Twitter’s centralized service.   Today’s dominant core internet services – the web (HTTP), email (SMTP), and subscription messaging (RSS) - are open protocols that are distributed across millions of institutions.  If Twitter supplants RSS, it will be the first core internet service that has a single, for-profit gatekeeper.&lt;/p&gt;
&lt;p&gt;Why would this matter to Ashton or Oprah?  Imagine if Microsoft Exchange server wasn’t just an instantiation of SMTP but was a centralized service that all email had to pass through.  A single institution is never as reliable as a system distributed across millions of institutions.   Nor is it as secure – for example, a distributed denial-of-service attack can much more easily bring down one service than the entire internet.&lt;/p&gt;
&lt;p&gt;But most importantly, having one company control a core internet service hinders competition and therefore innovation.  To continue the Microsoft Exchange analogy – do you think in that world we would have such a diverse email ecosystem if everyone had to go through Microsoft to build stuff?&lt;/p&gt;
&lt;p&gt;And this is all true while we are still living in the fantasy land where everything involving Twitter is free.  At some point Twitter will need to make lots of money to justify their valuation.  Then we can really assess the impact of having a single company control a core internet service.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Twitter killed RSS (and that’s a bad thing)]]></title>
            <description><![CDATA[I’ve used Google Reader religiously since it launched.  I’m a few days away from quitting it forever.  Pretty much every blog I read tweets…]]></description>
            <link>https://cdixon.org/2009/09/29/twitter-killed-rss-and-thats-a-bad-thing</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/29/twitter-killed-rss-and-thats-a-bad-thing</guid>
            <pubDate>Tue, 29 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve used Google Reader religiously since it launched.  I’m a few days away from quitting it forever.  Pretty much every blog I read tweets the titles of their posts along with a link.  Better yet, the people I follow retweet their favorite links, providing a very efficient way for me to discover new articles to read and publishers to follow.&lt;/p&gt;
&lt;p&gt;Contrary to all the uninformed handwringing about how Twitter is making people dumb, I find I’m reading more long form blog and newspaper content than ever.   And the stuff I’m reading is more interesting and relevant.  That’s a good thing.&lt;/p&gt;
&lt;p&gt;Meanwhile, Google Reader has been desperately adding social features such as sharing starred posts and automatically recommending blogs.  These features are clumsy and won’t save Reader, or RSS, from its inevitable decline.&lt;/p&gt;
&lt;p&gt;Although I’m generally happier as a user, I think all of this is bad for the internet.  Twitter isn’t an open protocol.   It’s a private company with a profit motive that has a history of unreliable service. Moreover, URL shorteners – a byproduct of Twitter – are effectively &lt;a href=&quot;http://joshua.schachter.org/2009/04/on-url-shorteners.html&quot;&gt;creating&lt;/a&gt; a second layer DNS service that is far less secure and reliable.&lt;/p&gt;
&lt;p&gt;I know that many people have been calling for an open alternative to Twitter for a long time.  I support them, but I’m afraid it’s too late. The network effects of Twitter’s social graph are just too strong.  Not to mention its brand momentum.  But the biggest reason Twitter has won is that mainstream users don’t care enough about these “principled” objections to switch.  Do you think Ashton or Oprah cares about open protocols?  I doubt it.&lt;/p&gt;
&lt;p&gt;But someday they will care – when the internet is less open, less reliable and less secure.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Why content sites are getting ripped off]]></title>
            <description><![CDATA[A commenter on my blog the other day (Tim Ogilvie) mentioned a distinction that I found really interesting between intent generation and…]]></description>
            <link>https://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off</guid>
            <pubDate>Tue, 29 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A commenter on my blog the other day (&lt;a href=&quot;http://www.cdixon.org/?p=1179#comment-17638191&quot;&gt;Tim Ogilvie&lt;/a&gt;) mentioned a distinction that I found really interesting between &lt;strong&gt;intent generation&lt;/strong&gt; and &lt;strong&gt;intent harvesting&lt;/strong&gt;.  This distinction is critical for understanding how internet advertising works and why it is broken.  It also helps explain why sites like the newspapers, blogs, and social networks are getting unfairly low advertising revenues.&lt;/p&gt;
&lt;p&gt;Today’s link economy is built around &lt;em&gt;purchasing intent harvesting&lt;/em&gt;.  (Worse still, it’s all based on &lt;em&gt;last click&lt;/em&gt; intent harvesting- but that is for another blog post).  Most of this happens on search engines or through affiliate programs.  Almost no one decides which products to buy based on Google searches or affiliate referrers.  &lt;a href=&quot;http://www.admonsters.com/blog/people-performance-not-pages-prices&quot;&gt;They decide based on content sites&lt;/a&gt; – Gizmodo, New York Times, Twitter, etc.  Those sites generate intent, which is the most important part of creating &lt;a href=&quot;http://www.cdixon.org/?p=1179&quot;&gt;purchasing intent&lt;/a&gt;, which is directly correlated to high advertising revenues.&lt;/p&gt;
&lt;p&gt;But content sites have no way to track their role in generating purchasing intent.  Often intent generation doesn’t involve a single trackable click.  Even if there were some direct way to measure intent generation, doing so would be seen by many today as a blurring of the the advertising/editorial line.  So content sites are left only with impression-based display ads, haggling over CPMs without a meaningful measurement of their impact on generating purchasing intent.&lt;/p&gt;
&lt;p&gt;All of this has caused a massive shift in revenues from the top to the bottom of the purchasing funnel – from intent generators to intent harvesters.  Somehow this needs to get fixed.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The new economy]]></title>
            <description><![CDATA[According to the Business Insider, Facebook is “‘Beating The S— Out Of Its Numbers’ Thanks To Zynga’s Virtual Goods.”  I wanted to try to…]]></description>
            <link>https://cdixon.org/2009/09/28/the-new-economy</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/28/the-new-economy</guid>
            <pubDate>Mon, 28 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;According to the &lt;a href=&quot;http://www.businessinsider.com/facebook-beating-the-s-out-of-its-numbers-thanks-to-zyngas-virtual-goods-2009-9&quot;&gt;Business Insider&lt;/a&gt;, Facebook is “‘Beating The S— Out Of Its Numbers’ Thanks To Zynga’s Virtual Goods.”  I wanted to try to understand this new, emerging economy.&lt;/p&gt;
&lt;p&gt;It all starts when a user sees an ad on Facebook:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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    href=&quot;/static/2a841e34dcaa3e2d64be5fd3f21f9d69/0b504/screen-shot-2009-09-28-at-1-40-41-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
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  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 129.58579881656803%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 40 41 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.40.41 PM&quot;
        src=&quot;/static/2a841e34dcaa3e2d64be5fd3f21f9d69/0b504/screen-shot-2009-09-28-at-1-40-41-pm.png&quot;
        srcset=&quot;/static/2a841e34dcaa3e2d64be5fd3f21f9d69/0b504/screen-shot-2009-09-28-at-1-40-41-pm.png 169w&quot;
        sizes=&quot;(max-width: 169px) 100vw, 169px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.40.41 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;After clicking and installing the app, she gets a little farm where she can grow tomatoes and such.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 296px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/3a4d91411958138f8427089d9a731f35/ffc89/screen-shot-2009-09-28-at-1-43-08-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 96.95945945945947%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 43 08 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.43.08 PM&quot;
        src=&quot;/static/3a4d91411958138f8427089d9a731f35/ffc89/screen-shot-2009-09-28-at-1-43-08-pm.png&quot;
        srcset=&quot;/static/3a4d91411958138f8427089d9a731f35/924ad/screen-shot-2009-09-28-at-1-43-08-pm.png 170w,
/static/3a4d91411958138f8427089d9a731f35/ffc89/screen-shot-2009-09-28-at-1-43-08-pm.png 296w&quot;
        sizes=&quot;(max-width: 296px) 100vw, 296px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.43.08 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Game seems pretty fun.  But she runs out of seeds, and wants more.  So she goes shopping for virtual goods.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a502a58a3427a5f4e7d49deb20482ceb/9fa2c/screen-shot-2009-09-28-at-1-39-17-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 48.92761394101877%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 39 17 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.39.17 PM&quot;
        src=&quot;/static/a502a58a3427a5f4e7d49deb20482ceb/94a55/screen-shot-2009-09-28-at-1-39-17-pm.png&quot;
        srcset=&quot;/static/a502a58a3427a5f4e7d49deb20482ceb/924ad/screen-shot-2009-09-28-at-1-39-17-pm.png 170w,
/static/a502a58a3427a5f4e7d49deb20482ceb/f570f/screen-shot-2009-09-28-at-1-39-17-pm.png 341w,
/static/a502a58a3427a5f4e7d49deb20482ceb/94a55/screen-shot-2009-09-28-at-1-39-17-pm.png 681w,
/static/a502a58a3427a5f4e7d49deb20482ceb/9fa2c/screen-shot-2009-09-28-at-1-39-17-pm.png 746w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.39.17 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Let’s say our protagonist is too young to have a credit card, so she decides instead to buy coins by signing up for a free offer.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 669px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 31.091180866965622%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 39 25 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.39.25 PM&quot;
        src=&quot;/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png&quot;
        srcset=&quot;/static/245282258c5c043e7ba048ded09b9434/924ad/screen-shot-2009-09-28-at-1-39-25-pm.png 170w,
/static/245282258c5c043e7ba048ded09b9434/f570f/screen-shot-2009-09-28-at-1-39-25-pm.png 341w,
/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png 669w&quot;
        sizes=&quot;(max-width: 669px) 100vw, 669px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.39.25 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;She decides to download a toolbar.  Free greeting cards seem like fun.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/d1578e6c0e0b64752f1e58a96ff56bdb/04907/screen-shot-2009-09-28-at-1-39-56-pm1.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 13.572343149807939%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAIAAAAcOLh5AAAACXBIWXMAAAsTAAALEwEAmpwYAAAAuklEQVQI1xXHaw+BUBgA4P7/TzBfzFziUFOG5DJLFOVyvM6OU1gskXIZm9ls+PY8HCwsAIuQyXxmYmKHkYeXtuuAwxYOw4zi7Ro+7+Aau9GJRqdVfGa32P03XHEZPiVVRFEs5YtIruQ0NYlQhud5hAqCIKSzJb3feT1osDd9z/B3hu8Nf95t9OhocbJcbtQltVlrt1WlLhVzCUWpAsz0sa0NDMMcETK9X4Auuw7tEdxaM+0WQ3iYvJ70CzMnkOZRnj9ZAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 39 56 pm1&quot;
        title=&quot;Screen shot 2009-09-28 at 1.39.56 PM&quot;
        src=&quot;/static/d1578e6c0e0b64752f1e58a96ff56bdb/94a55/screen-shot-2009-09-28-at-1-39-56-pm1.png&quot;
        srcset=&quot;/static/d1578e6c0e0b64752f1e58a96ff56bdb/924ad/screen-shot-2009-09-28-at-1-39-56-pm1.png 170w,
/static/d1578e6c0e0b64752f1e58a96ff56bdb/f570f/screen-shot-2009-09-28-at-1-39-56-pm1.png 341w,
/static/d1578e6c0e0b64752f1e58a96ff56bdb/94a55/screen-shot-2009-09-28-at-1-39-56-pm1.png 681w,
/static/d1578e6c0e0b64752f1e58a96ff56bdb/04907/screen-shot-2009-09-28-at-1-39-56-pm1.png 781w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.39.56 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The download puts an Ask.com search toolbar in the user’s browser.  Ask.com makes money off search ads.  Ask probably paid $1 to $2 for the install.  Some portion of that goes to Zynga, and then back to Facebook when Zynga advertises.&lt;/p&gt;
&lt;p&gt;Farmville apparently does not advertise on Ask.com:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a7aff6fe96497bd57856ee17060d2ede/3b243/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 39.55078125%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAICAIAAAB2/0i6AAAACXBIWXMAAAsSAAALEgHS3X78AAABB0lEQVQY042N23aCMBBF+f8PsX/St7bqQrxFMAIBDGZyTzApFF/b2tU958yal70myV4W+HikIIUduPFcWZDWOPd2YovXJm8NU0H7qH5LAh2luLxeGlp1lFChPChPwfXC93KQNggd5q1dcPf4LQmDO8pNVVtnwziO0zTFOJaNVybOdw930g3GxGH4nH6QtFStD+R4gboDqQVXggsRQpz+QVI18JHh5a7KS0JZ195a4GCt9d5ZY7TW3vunctO06Tbd7LboVGB8ngefH0UIYXyhtJdSPv9M4H1dZId6ualR0aOC7lF7pTcAEEIwxpRST+WyIqss3aL9apeiMsekvDHO2GxK/gD+kL8AII7FxRraFEMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 2 03 02 pm 1024x405&quot;
        title=&quot;Screen shot 2009-09-28 at 2.03.02 PM&quot;
        src=&quot;/static/a7aff6fe96497bd57856ee17060d2ede/94a55/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png&quot;
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/static/a7aff6fe96497bd57856ee17060d2ede/3b243/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 1024w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 2.03.02 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Thereby preventing the entire new internet economy from imploding in an endless cycle of circularity.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[What if online business model innovation is slowing down?]]></title>
            <description><![CDATA[There is a widely held assumption that new business models will continue to emerge online – that statements like “how will Twitter ever make…]]></description>
            <link>https://cdixon.org/2009/09/28/what-if-online-business-model-innovation-is-slowing-down</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/28/what-if-online-business-model-innovation-is-slowing-down</guid>
            <pubDate>Mon, 28 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There is a widely held assumption that new business models will continue to emerge online – that statements like “how will Twitter ever make money?” will look as silly in 10 years as similar &lt;a href=&quot;http://www.cdixon.org/?p=1179&quot;&gt;statements&lt;/a&gt; made 10 years ago about Google look now.&lt;/p&gt;
&lt;p&gt;There is no question that, if they wanted to, Twitter could make tens of millions of dollars tomorrow, by, say, running ads or by licensing data feeds.   The big question is whether Twitter and other social media sites will figure out how to make Google-scale money and not just Facebook-scale money.  Google and Facebook get (ballpark) the same number of monthly visits to their sites.  Facebook made hundreds of millions of dollars last year and reportedly lost money.   Google made over $22B last year with huge profit margins.&lt;/p&gt;
&lt;p&gt;The optimistic view (which I tend to hold myself) says that where people spend time, money will follow.  If people are spending all their time on Facebook and Twitter, the Proctor and Gamble’s of the world will eventually find an effective way to shift the bulk of their ad spending online.   The tacit assumption in this view is that the next 15 years will see as much business model innovation as the last 15 years.&lt;/p&gt;
&lt;p&gt;On the other hand, what if we are mostly done creating big new business models for the web? History suggests that business model innovation is rapid right after the advent of a new medium and then slows down considerably.   If indeed it is slowing down, social media could end up like instant messaging – incredibly popular but basically lousy at monetizing.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Online advertising is all about purchasing intent]]></title>
            <description><![CDATA[A while ago I dug up this quote from Business Week from 2000: But how will Google ever make money? There’s the rub. The company’s adamant…]]></description>
            <link>https://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent</guid>
            <pubDate>Sun, 27 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A while ago I &lt;a href=&quot;http://www.cdixon.org/?p=138&quot;&gt;dug up&lt;/a&gt; this quote from &lt;a href=&quot;http://www.businessweek.com/bwdaily/dnflash/dec2000/nf2000127_947.htm&quot;&gt;Business Week&lt;/a&gt; from 2000:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;But how will Google ever make money? There’s the rub. The company’s adamant refusal to use banner or other graphical ads eliminates what is the most lucrative income stream for rival search engines. Although Google does have other revenue sources, such as licensing and text-based advertisements, the privately held company’s business remains limited compared with its competitors’.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;We now know what people were missing back then and why Google generates such massive revenues from advertising.  The lesson is that the RPMs* of online ads are directly proportional to the degree** to which the user has &lt;strong&gt;purchasing intent&lt;/strong&gt;.  This is why when you search Google for “&lt;a href=&quot;http://www.google.com/search?client=safari&amp;#x26;rls=en&amp;#x26;q=cameras&amp;#x26;ie=UTF-8&amp;#x26;oe=UTF-8&quot;&gt;cameras&lt;/a&gt;” you’ll see ads everywhere (and those advertisers are paying high CPCs), but when you search for “&lt;a href=&quot;http://www.google.com/search?client=safari&amp;#x26;rls=en&amp;#x26;q=abraham+lincoln&amp;#x27;s+birthday&amp;#x26;ie=UTF-8&amp;#x26;oe=UTF-8&quot;&gt;Abraham Lincoln’s birthday&lt;/a&gt;” Google doesn’t even bother to show ads at all.&lt;/p&gt;
&lt;p&gt;This is also why Nextag will have revenues this year in the ballpark of Facebook’s revenues, even though Nextag gets a fraction of the visits:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 520px;&quot;
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    href=&quot;/static/22405b9ee3c6bcdf78ac3c6217635666/249e6/screen-shot-2009-09-27-at-9-33-10-am.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 60.57692307692308%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 27 at 9 33 10 am&quot;
        title=&quot;Screen shot 2009-09-27 at 9.33.10 AM&quot;
        src=&quot;/static/22405b9ee3c6bcdf78ac3c6217635666/249e6/screen-shot-2009-09-27-at-9-33-10-am.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-27 at 9.33.10 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;When people talk about search being a great business model (for, say, Twitter), they should distinguish between search with puchasing intent, which is an incredible business model, and search without purchasing intent, which is a terrible one.&lt;/p&gt;
&lt;p&gt;This may change as brand advertising moves to the web.  But for now web advertising is dominated by “direct response” ads, and those are all about purchasing intent.&lt;/p&gt;
&lt;p&gt;* RPMs = revenue per thousand impressions – can we please agree to start saying RPMs instead of CPMs or eCPMs?  :)&lt;/p&gt;
&lt;p&gt;** degree being how close the user is to actually purchasing multiplied by the profit margin on what they are purchasing&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Yahoo should invest in products, not advertising]]></title>
            <description><![CDATA[For 10 years, Yahoo was my default home page.  Now I can barely stand using the site.  I still use it for Finance and Flickr, but that’s it…]]></description>
            <link>https://cdixon.org/2009/09/26/yahoo-should-invest-in-products-not-advertising</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/26/yahoo-should-invest-in-products-not-advertising</guid>
            <pubDate>Sat, 26 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;For 10 years, Yahoo was my default home page.  Now I can barely stand using the site.  I still use it for Finance and Flickr, but that’s it. The &lt;a href=&quot;http://m.www.yahoo.com/&quot;&gt;new&lt;/a&gt; home page design has windows popping up everywhere and mind numbing celebrity gossip up top.&lt;/p&gt;
&lt;p&gt;Now we learn Yahoo is going to &lt;a href=&quot;http://www.guardian.co.uk/business/2009/sep/22/yahoo-100m-campaign-challenge-google&quot;&gt;spend $100 million&lt;/a&gt; on an advertising campaign.  The slogan is “It’s Y!ou” which sounds like one of those meaningless taglines invented by PR firms.  I’m quite sure no one will remember it and their money will be wasted (quick, name the tagline of any big tech company).&lt;/p&gt;
&lt;p&gt;By CEO Carol Bartz’s own &lt;a href=&quot;http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/22/BUQP19QVSI.DTL&amp;#x26;type=tech&quot;&gt;admission&lt;/a&gt;, Yahoo is incredibly well known, especially outside of techie circles:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;When you get outside of New York City and Silicon Valley, everybody loves Yahoo…. We do great things for [users] and we’re excited about what we are.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Yes, Yahoo has one of the best brands on the web. Which is precisely why they shouldn’t be spending $100M on branding.  That’s the last thing Yahoo needs.  What they need are new technologies, new revenue streams, and new products that people love.  If they can’t build those things themselves, then they should acquire them.  They’re coasting on inertia right now.  As we saw with AOL and countless other tech companies before them, that inertia will be lost if they fail to innovate.&lt;/p&gt;
&lt;p&gt;I think the Yahoo-Bing search deal is a great thing for startups as it potentially makes search competitive again.  But as a longtime Yahoo user it makes me kind of sad.  Between the branding campaign and the search deal, it feels like Yahoo has thrown in the towel.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Software patents should be abolished]]></title>
            <description><![CDATA[The alleged societal benefit of patent law is that it creates a financial incentive to innovate.  The societal drawback is that it reduces…]]></description>
            <link>https://cdixon.org/2009/09/24/software-patents-should-be-abolished</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/24/software-patents-should-be-abolished</guid>
            <pubDate>Thu, 24 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The alleged societal benefit of patent law is that it creates a financial incentive to innovate.  The societal drawback is that it reduces competition, reduces the spread of innovation, and creates deadweight legal costs.&lt;/p&gt;
&lt;p&gt;Perhaps patents are necessary in the pharmaceutical industry.  I know very little about that industry but it would seem that some sort of temporary grants of monopoly are necessary to compel companies to spend billions of dollars of upfront R&amp;#x26;D.&lt;/p&gt;
&lt;p&gt;What I do know about is the software/internet/hardware industry. And I am absolutely sure that if we got rid of patents tomorrow innovation wouldn’t be reduced at all, and the only losers would be lawyers and patent trolls.&lt;/p&gt;
&lt;p&gt;Ask any experienced software/internet/hardware entrepreneur if she wouldn’t have started her company if patent law didn’t exist.  Ask any experienced venture investor if the non-existence of patent law would have changed their views on investments they made.  The answer will invariably be no (unless their company was a patent troll or something related).&lt;/p&gt;
&lt;p&gt;Yes, most venture-backed companies file patents (I have filed them myself), but this is because 1) patents can have some defensive value, 2) they can grease the wheels of an acquisition (mostly because big companies want a large patent portfolio for defensive purposes), and 3) occasionally failed startups will get funded by investors whose intention is to go around suing people (hence providing “downside value” for the initial investors).&lt;/p&gt;
&lt;p&gt;Articles like &lt;a href=&quot;http://www.nytimes.com/2009/09/21/technology/21patent.html&quot;&gt;this&lt;/a&gt; recent one in New York Times promote the urban myth that the main beneficiary of patents are lone inventors whose idea is stolen by the big guys.  I have no special knowledge of the situation referred to, but I find it hard to believe in 1995 the idea of tying GPS to mobile devices wasn’t obvious to anyone in the field.   Almost all software and technology patents that I’ve ever come across are similarly obvious to practitioners at that time.  In theory obviousness is grounds for disallowing patents, but in practice patent examiners grants tons of &lt;a href=&quot;http://www.techdirt.com/articles/20090119/1449403453.shtml&quot;&gt;silly&lt;/a&gt; patents.&lt;/p&gt;
&lt;p&gt;Take the &lt;a href=&quot;http://money.cnn.com/2006/03/03/technology/rimm_ntp/&quot;&gt;case&lt;/a&gt; of Blackberry and NTP.   NTP is a “patent holding company” – a patent troll – whose sole purpose is to sue people.  Now, I’ve been around long enough to know that the idea of mobile email is as old as email itself.  What RIM did was &lt;em&gt;they actually went and made it a reality&lt;/em&gt;.  They figured out how to make a simple device that people loved, how to market it, and how to convince investors to give them money for what probably at the time seemed like an overwhelmingly difficult project.  The founders of RIM are the heroes of the story.   They didn’t need to sue anyone because they built a product and made money by actually selling a product people wanted.&lt;/p&gt;
&lt;p&gt;How did having patents help society here?  NTP never tried to build any products.  No one is claiming RIM took the idea from them.  The only beneficiaries here are a company that never built anything and a lot of lawyers.&lt;/p&gt;
&lt;p&gt;Software/internet/hardware patents have no benefit to society and should be abolished.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Climbing the wrong hill]]></title>
            <description><![CDATA[I know a brilliant young kid who graduated from college a year ago and now works at a large investment bank. He has decided he hates Wall…]]></description>
            <link>https://cdixon.org/2009/09/19/climbing-the-wrong-hill</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/19/climbing-the-wrong-hill</guid>
            <pubDate>Sat, 19 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I know a brilliant young kid who graduated from college a year ago and now works at a large investment bank. He has decided he hates Wall Street and wants to work at a tech startup (good!). He recently gave notice to his bosses, who responded by putting on a dog and pony show to convince him to stay. If he stays at the bank, the bosses tell him, he’ll get a raise and greater responsibility. Joining the technology industry, he’d be starting from scratch. He is now thinking that he’ll stay, despite his convincing declaration that he has no long term ambitions in finance.&lt;/p&gt;
&lt;p&gt;Over the years, I’ve run into many prospective employees in similar situations. When I ask them a very obvious question: “What do you want to be doing in 10 years?” The answer is invariably “working at or founding a tech startup” – yet most of them decide to remain on their present path and not join a startup. Then, a few years later, they finally quit their job, but only after having spent years in an industry they didn’t enjoy, and that didn’t really advance them toward their long term ambitions.&lt;/p&gt;
&lt;p&gt;How can smart, ambitious people stay working in an area where they have no long term ambitions? I think a good analogy for the mistake they are making can be found in computer science.&lt;/p&gt;
&lt;p&gt;A classic problem in computer science is &lt;a href=&quot;http://en.wikipedia.org/wiki/Hill_climbing&quot;&gt;hill climbing&lt;/a&gt;. Imagine you are dropped at a random spot on a hilly terrain, where you can only see a few feet in each direction (assume it’s foggy or something). The goal is to get to the highest hill.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 394px;&quot;
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    href=&quot;/static/19ece91728a130202a689551af6f0376/0306f/local_maximum1.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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        alt=&quot;local maximum1&quot;
        title=&quot;local maximum1&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Consider the simplest algorithm. At any given moment, take a step in the direction that takes you higher. The risk with this method is if you happen to start near the lower hill, you’ll end up at the top of that lower hill, not the top of the tallest hill.&lt;/p&gt;
&lt;p&gt;A more sophisticated version of this algorithm adds some randomness into your walk. You start out with lots of randomness and reduce the amount of randomness over time.  This gives you a better chance of meandering near the bigger hill before you start your focused, non-random climb.&lt;/p&gt;
&lt;p&gt;Another and generally better algorithm has you repeatedly drop yourself in random parts of the terrain, do simple hill climbing, and then after many such attempts step back and decide which of the hills were highest.&lt;/p&gt;
&lt;p&gt;Going back to the job candidate, he has the benefit of having a less foggy view of his terrain.   He knows (or at least believes) he wants to end up at the top of a different hill than he is presently climbing.  He can see that higher hill from where he stands.&lt;/p&gt;
&lt;p&gt;But the lure of the current hill is strong. There is a natural human tendency to make the next step an upward one. He ends up falling for a common trap &lt;a href=&quot;http://books.google.com/books?id=znbkHaC8QeMC&amp;#x26;lpg=PA256&amp;#x26;ots=a_8QX_rduF&amp;#x26;dq=thaler%20apple%20today&amp;#x26;pg=PA256#v=onepage&amp;#x26;q=thaler%20apple%20today&amp;#x26;f=false&quot;&gt;highlighted&lt;/a&gt; by behavioral economists: people tend to systematically overvalue near term over long term rewards.  This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.&lt;/p&gt;
&lt;p&gt;People early in their career should learn from computer science: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Thanks…]]></title>
            <description><![CDATA[I got my first computer (TRS-80 Model 1) in 1980 at the age of 8.   I got my second computer – an Atari 800 – two years later.   I was…]]></description>
            <link>https://cdixon.org/2009/09/17/thanks</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/17/thanks</guid>
            <pubDate>Thu, 17 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I got my first computer (&lt;a href=&quot;http://en.wikipedia.org/wiki/TRS-80#History&quot;&gt;TRS-80 Model 1&lt;/a&gt;) in 1980 at the age of 8.   I got my second computer – &lt;a href=&quot;http://en.wikipedia.org/wiki/Atari_8-bit_family#The_early_machines:_400_and_800&quot;&gt;an Atari 800&lt;/a&gt; – two years later.   I was living in Springfield, Ohio.  Very few people were interested in computers in that area then.   The only people that seemed to be were engineers at the nearby Air Force base, Wright Patterson.  Every month, I used to get my parents to drive me over to meet the engineers there for Atari “user group” meetings.&lt;/p&gt;
&lt;p&gt;Like most computer enthusiasts back then, I wanted to program video games.  This of course was pre-internet and before the PC boom, so information on computer programming was scarce.   At the user group meetings we would trade information as basic as what memory locations performed what functions, or new techniques people had developed (vsync interrupt, page 6 techniques – old school readers will know what I mean).  After a while I was increasingly frustrated by the lack of technical information so I decided to write a letter to Atari asking them for manuals.  I got a hand written letter back from &lt;a href=&quot;http://en.wikipedia.org/wiki/Alan_Kay&quot;&gt;Alan Kay&lt;/a&gt;, who was already quite famous at the time and was working at Atari, along with a giant box full of manuals and technical documentation.  I’ve never met the man but I give him a lot of credit for my lifelong interest in computers.&lt;/p&gt;
&lt;p&gt;I was reminded of this yesterday when I had the pleasure to meet with Om Malik.  Om took time to meet with me years ago when I was struggling to get SiteAdvisor off the ground.  No other popular bloggers would meet with me, but Om spent over an hour listening to me talk and giving me advice.  I was introduced to Om by Ron Conway who invested in my company despite the fact that the industry experts he introduced me to as part of diligence hated my idea.&lt;/p&gt;
&lt;p&gt;People never forget who helps them when they are struggling.  It’s a cliche, perhaps, but true – and a good thing to always keep in mind.  Thanks Alan, Om, and Ron.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[The inevitable showdown between Twitter and Twitter apps]]></title>
            <description><![CDATA[People usually think of business competition as occurring between substitutes – products that serve similar functions for the user.   Famous…]]></description>
            <link>https://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps</guid>
            <pubDate>Mon, 14 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;People usually think of business competition as occurring between &lt;a href=&quot;http://en.wikipedia.org/wiki/Substitute_good&quot;&gt;substitutes&lt;/a&gt; &lt;em&gt;–&lt;/em&gt; products that serve similar functions for the user.   Famous substitutes include Coke and Pepsi, and Macs and PCs.&lt;/p&gt;
&lt;p&gt;In fact, especially in the technology sector, some of the most brutal competition has occurred between &lt;a href=&quot;http://en.wikipedia.org/wiki/Complementary_good&quot;&gt;complements&lt;/a&gt;&lt;em&gt;.&lt;/em&gt; Products are complements when they are more valuable because of the existence of one another – e.g. hotdogs and hotdog buns, PCs and operating systems.&lt;/p&gt;
&lt;p&gt;There is inherent tension between complements.  If a customer is willing to pay $2 for a hotdog plus bun, the hotdog maker wants buns to be cheaper so he can capture more of the $2, or lower the price of the bundle and thereby increase demand.  (For a great primer on competition between complements, I highly recommend &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;this&lt;/a&gt; Joel Spolsky post.  I’ve also been writing about complements, &lt;a href=&quot;http://www.cdixon.org/?p=334&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://www.cdixon.org/?p=694&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Microsoft is famous for destroying companies that offer complementary products, either by bundling complementary apps with Windows (Windows Media Player, MSN Messenger, IE) or aggressively competing head-to-head against the most popular ones (Adobe, Intuit).  The surviving 3rd party apps are usually ones that are too small for Microsoft to care about.  The best (selfish) economic situation for a platform like Windows is lots of tiny complements that have little pricing power but that make the platform itself more valuable.&lt;/p&gt;
&lt;p&gt;One of Google’s main complements is the web browser and desktop operating systems, which is why they built and open sourced the Chrome browser and OS.  Google’s other big complement is broadband access – hence their excursions into public Wifi and cellular spectrum.&lt;/p&gt;
&lt;p&gt;So what does all of this have to do with Twitter?  At some point, significant (non-VC) money will enter the Twitter ecosystem.  I have no idea whether this is will be by charging consumers, charging businesses users, search advertising, sponsored tweets, licensing the twitter data feed, data from URL shorteners, or something else. But history suggests that where there is so much user engagement, dollars follow.&lt;/p&gt;
&lt;p&gt;For the sake of argument, let’s suppose Twitter’s eventual dominant business model is putting ads by search results.   Who gets the revenue when a user is searching on a 3rd party Twitter client?   Even if Twitter gets a portion of revenue from ads on 3rd party apps, there will always be an incentive for them to create their own client app, or to “&lt;a href=&quot;http://en.wikipedia.org/wiki/Commoditization#Business_and_economics&quot;&gt;commodotize&lt;/a&gt;” the client app by, say, promoting an open source version.&lt;/p&gt;
&lt;p&gt;I’m not saying this will happen in the immediate future.  First, Twitter and a lot of app makers* have raised a lot of money, so aren’t under (much) pressure yet to generate revenues.  Secondly, some of the lucky Twitter apps will get acquired by Twitter.  I think this is what many of their investors are hoping for.  But those that aren’t so lucky will eventually find their biggest competitor to be Twitter itself, not the substitute product they see themselves as competing against today.&lt;/p&gt;
&lt;p&gt;* when I say Twitter apps, I mean any product, website, or service that eventually makes money and depends on Twitter’s API.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Entrepreneurs need to learn some law]]></title>
            <description><![CDATA[I recently wrote a post where I said entrepreneurs need to understand term sheets on their own, without the assistance of lawyers.  I got…]]></description>
            <link>https://cdixon.org/2009/09/13/entrepreneurs-need-to-learn-some-law</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/13/entrepreneurs-need-to-learn-some-law</guid>
            <pubDate>Sun, 13 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I recently wrote a &lt;a href=&quot;http://www.cdixon.org/?p=655&quot;&gt;post&lt;/a&gt; where I said entrepreneurs need to understand term sheets on their own, without the assistance of lawyers.  I got quite a bit of criticism for this, e.g.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;@&lt;a href=&quot;http://twitter.com/rafer&quot;&gt;rafer&lt;/a&gt; Never ever sign a term sheet without your atty’s review. sry but thats &lt;strong&gt;crazy&lt;/strong&gt; talk &lt;strong&gt;&lt;a href=&quot;http://twitter.com/cdixon&quot;&gt;@cdixon&lt;/a&gt;&lt;/strong&gt; &lt;a href=&quot;http://bit.ly/UOgiC&quot;&gt;http://bit.ly/UOgiC&lt;/a&gt; myreblog &lt;a href=&quot;http://bit.ly/cJ9d0&quot;&gt;http://bit.ly/cJ9d0&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I’ll agree that entrepreneurs, especially first timers, should have lawyers review everything they sign.  But I stand behind my main point:  you can’t outsource the understanding of key financing and other legal documents to lawyers.&lt;/p&gt;
&lt;p&gt;Here’s just one of many examples of why.   A company I know was recently confronted with the following trade off.  Get a higher valuation with full ratchet anti-dilution or a lower valuation with weighted average anti-dilution.   The only way to assess this trade off is to understand what these terms mean and try to compute the expected value of the two offers.   In this particular case what matters is the likelihood of a future down round.  This is a business judgment, not a legal one, and the people best able to make it are business people.&lt;/p&gt;
&lt;p&gt;You also need to consider your personal utility function.  For example, as a founder, I don’t care very much about anti-dilution provisions because I figure in the cases where it matters I will already have been fired and my equity crammed down.&lt;/p&gt;
&lt;p&gt;My point is you can’t leave these judgements to lawyers.   They don’t have the expertise to make these expected value calculations nor do they understand how various scenarios affect the founders personally.&lt;/p&gt;
&lt;p&gt;Another common mistake entrepreneurs make is let their lawyers argue over terms that don’t matter.  This puts deals at risk and costs money.  You need to understand what they are arguing over to decide when it matters and when it doesn’t.&lt;/p&gt;
&lt;p&gt;You learn about these legal issues from experience, by talking to lawyers, by talking to experienced advisors, and by reading blogs and books (every entrepreneur should read &lt;a href=&quot;http://www.amazon.com/Entrepreneurs-Guide-Business-Law/dp/0324204930/ref=sr_1_1?ie=UTF8&amp;#x26;s=books&amp;#x26;qid=1252842726&amp;#x26;sr=8-1&quot;&gt;The Entrepreneur’s Guide to Business Law&lt;/a&gt;).&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Google and newspapers:  the false choice of opting out]]></title>
            <description><![CDATA[First let me say I love Google.  I think Google created one of the greatest inventions of the past century and continues to give back much…]]></description>
            <link>https://cdixon.org/2009/09/12/google-and-newspapers-the-false-choice-of-opting-out</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/12/google-and-newspapers-the-false-choice-of-opting-out</guid>
            <pubDate>Sat, 12 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;First let me say I love Google.  I think Google created one of the greatest inventions of the past century and continues to give back much more value to the world than they “capture” in revenue.&lt;/p&gt;
&lt;p&gt;Secondly, I think Google itself has almost nothing to do with the decline of newspapers.  That is due to, among other things, 1) the newspapers losing their classified business to Craigslist and others, 2) the internet making geography irrelevant and hence causing newspaper competition go from 1 or 2 papers per market to thousands.&lt;/p&gt;
&lt;p&gt;That said, I am bothered by the &lt;a href=&quot;http://www.techdirt.com/articles/20090421/0228024589.shtml&quot;&gt;arguments&lt;/a&gt; I hear in internet circles of the form:&lt;/p&gt;
&lt;p&gt;Premise 1:  X can stop working with Y at anytime.  (NYTimes could opt out of Google search results / Google news at any time)&lt;/p&gt;
&lt;p&gt;Premise 2:  X would lose out if it did that (NYTimes would lose traffic and revenue if they opted out of Google).&lt;/p&gt;
&lt;p&gt;Conclusion:   Hence Y is helping X.  (Google is helping the NYTimes and the NYTimes should stop whining.)&lt;/p&gt;
&lt;p&gt;The conclusion doesn’t follow from the premises.  The NYTimes might in fact be better off in a world without Google.  More specifically, they would be better off if the search engine market were genuinely competitive.&lt;/p&gt;
&lt;p&gt;The power dynamics between Google and the newspapers has the same dynamics of any buyer-supplier market.&lt;/p&gt;
&lt;p&gt;Newspapers, like all websites, are suppliers of content to Google.  In most markets, with genuinely competitive buyers and suppliers, the revenues are shared between buyers and suppliers in proportion to their relative bargaining power.  Their bargaining power depends on how fragmented each side of the market is – how many genuine alternatives each company has.&lt;/p&gt;
&lt;p&gt;Normally there is some reasonable level of interdependence between buyers and suppliers, hence the revenue split is positive and non-negligible. Pepsi and Coke are always jostling with their bottlers about the percentage split but in the end each side usually makes a profit.&lt;/p&gt;
&lt;p&gt;And in situations where the relative bargaining power is severely imbalanced, there are normally business mechanisms for correcting the imbalance.   For example, before Staples was founded, office supply stores were mostly mom-and-pop shops that were tiny relative to their suppliers, and hence had very little bargaining power.  The central business concept behind creating Staples was to “roll up” these shops and thereby increase their bargaining power with their suppliers.  In doing so, they were able lower their costs and increase their margins even while lowering their prices.   One of the primary reasons companies merge is to increase bargaining power with respect to buyers and suppliers.&lt;/p&gt;
&lt;p&gt;As a “buyer” of web content, Google has incredible dominance, so much so that the price they pay for that content is zero.  If the NYTimes decided to opt out of Google tomorrow, Google users would barely notice.  (Perhaps the only content site that would matter and hence in theory could bargain with Google would be Wikipedia – but even Wikipedia only accounts for ~2% of Google click throughs).  On the flip side, the NYTimes would see a massive decrease in traffic and hence ad revenues.  Google has so much power they can split 0% of the revenue for organic traffic (and of course charge for paid links).&lt;/p&gt;
&lt;p&gt;Now imagine a world where search engines are truly competitive.  I know it’s hard – but imagine there are say 20 search engines, each with 5% market share.  And suppose they differ primarily according to which content sites they index.  (I am not saying I’d prefer this world – I’d actually hate it – but please bear with me for the sake of argument).   On the content side, suppose there are only a couple of newspapers left – maybe the NYTimes, WSJ, USA Today, and the Financial Times (which, btw, will probably be the case in a few years).  In this situation the newspapers would have enough leverage to get the search engines to pay them for inclusion in their organic listings.  I know that in my own case if two search engines were nearly identical except one included my favorite newspaper and the other didn’t, I’d use the one that did.  I suspect a lot of other people would make the same decision.&lt;/p&gt;
&lt;p&gt;There is nothing inherently un-monetizable about newspaper content.  Like all goods and services, if newspaper content has value to people and is scarce (it’s not scarce today but as more newspapers go out of business will become increasingly so), they can eventually generate sustainable revenue (albeit probably operating at a much smaller scale).  The revenue can come either through consumers paying directly or buyers like Google sharing revenues, or some combination thereof.&lt;/p&gt;
&lt;p&gt;For the moment, and for the foreseeable future, newspapers (and all content sites) just happen to be in a dreadful bargaining position with respect to Google.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Non-linearity of technology adoption]]></title>
            <description><![CDATA[When I was in business school I remember a class where a partner from a big consulting firm was talking about how they had done extensive…]]></description>
            <link>https://cdixon.org/2009/09/10/non-linearity-of-technology-adoption</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/10/non-linearity-of-technology-adoption</guid>
            <pubDate>Thu, 10 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;When I was in business school I remember a class where a partner from a big consulting firm was talking about how they had done extensive research and concluded that broadband would never gain significant traction in the US without government subsidies.  His primary evidence was a survey of consumers they had done asking them if they were willing to pay for broadband access at various price points.&lt;/p&gt;
&lt;p&gt;Of course the flaw in this reasoning is that, at the time, there weren’t many websites or apps that made good use of broadband.   This was 2002 – before YouTube, Skype, Ajax-enabled web apps and so on.  In the language of economics, broadband and broadband apps are complementary goods – the existence of one makes the other more valuable.  Broadband didn’t have complements yet so it wasn’t that valuable.&lt;/p&gt;
&lt;p&gt;Complement effects are one of the main reasons that technology adoption is non-linear. There are other reasons, including network effects, viral product features, and plain old faddishness.&lt;/p&gt;
&lt;p&gt;Twitter has network effects – it is more valuable to me when more people use it.  By opening up the API they also gained complement effects – there are tons of interesting Twitter-related products that make it more useful.  Facebook also has network effects and with its app program and Facebook Connect gets complement effects.&lt;/p&gt;
&lt;p&gt;You can understand a large portion of technology business strategy by understanding strategies around complements.  One major point:  companies generally try to reduce the price of their products complements (Joel Spolsky has an excellent discussion of the topic &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;).   If you think of the consumer as having a willingness to pay a fixed N for product A plus complementary product B, then each side is fighting for a bigger piece of the pie. This is why, for example, cable companies and content companies are constantly battling.  It is also why Google wants open source operating systems to win, and for broadband to be cheap and ubiquitous.&lt;/p&gt;
&lt;p&gt;Clay Christensen has a really interesting theory about how technology “value chains” evolve over time.  Basically they typically start out with a single company creating the whole thing, or most of it.  (Think of mobile phones or the PC).  This is because early products require tight integration to squeeze out maximum performance and usability.  Over time, standard “APIs” start to develop between layers, and the whole product gains performance/usability to spare.   Thus the chain begins to stratify and adjacent sections start fighting to commoditize one another.   In the early days it’s not at all obvious which segments of the chain will win.  That is why, for example, IBM let Microsoft own DOS.  They bet on the hardware.   One of Christensen’s interesting observations is, in the steady state, you usually end up with alternating commoditized and non-commoditized segments of the chain.&lt;/p&gt;
&lt;p&gt;Microsoft Windows &amp;#x26; Office was the big non-commoditized winner of the PC. Dell did very well precisely because they saw early on that hardware was becoming commodotized.  In a commoditized market you can still make money but your strategy should be based on lowering costs.&lt;/p&gt;
&lt;p&gt;Be wary of analysts and consultants who draw lines to extrapolate technology trends.  You are much better off thinking about complements, network effects, and studying how technology markets have evolved in the past.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Getting a job in venture capital]]></title>
            <description><![CDATA[Getting a job in venture capital is extremely hard.  There are a lot of really smart, well qualified, eager people who want to work in VC…]]></description>
            <link>https://cdixon.org/2009/09/08/getting-a-job-in-venture-capital</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/08/getting-a-job-in-venture-capital</guid>
            <pubDate>Tue, 08 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Getting a job in venture capital is extremely hard.  There are a lot of really smart, well qualified, eager people who want to work in VC, and very few jobs.  And it’s likely to only get harder as the &lt;a href=&quot;http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/&quot;&gt;industry contracts&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;If you look at the backgrounds of partners in VC firms, they generally either came in as a partner after being a successful entrepreneur or worked their way up in VC.  There are books written on how to become a successful entrepreneur, so here I’ll just focus on the other common path – career VCs.&lt;/p&gt;
&lt;p&gt;First, you should understand how VC firms are structured.  Every firm is different, some have no junior people, some have just a few, and some have a lot.&lt;/p&gt;
&lt;p&gt;The key distinction between junior and senior people is whether they can write checks – meaning they can independently lead a deal.  If you can’t write checks, you have to get a check writer to sponsor an investment you like.  Check writers get almost all the credit and blame for an investment.&lt;/p&gt;
&lt;p&gt;The hierarchy within VC firms is basically as follows:  (There has been a wave of title inflation in VC lately, so I’ll put the inflated titles in parentheses).&lt;/p&gt;
&lt;p&gt;Partners – Owners of the firm.  Get the most of the management and carry fees.  Can write checks.&lt;/p&gt;
&lt;p&gt;Principals – Usually get small piece of carry.  Can write checks.  (Inflated title:  Partner;  in which case it’s hard to tell the “real” partners from the principals).&lt;/p&gt;
&lt;p&gt;Associates – Usually post-MBA or 4-6 years work experience.   Usually get little to no carry and can’t write checks.  (Inflated title:  Sr. Associates or Vice President).&lt;/p&gt;
&lt;p&gt;Analyst – Usually right out of college.   They do research or cold call companies.   No carry and obviously can’t write checks.   (Inflated title:  they just don’t list a title or say something vague like “investment professional”).&lt;/p&gt;
&lt;p&gt;As you can see with the title inflation this is all pretty confusing.  It’s meant to be.  VCs want entrepreneurs to take their junior people seriously.  (Which, by the way, entrepreneurs always should:  even though they can’t directly write checks, they can be extremely influential)&lt;/p&gt;
&lt;p&gt;You can break down working your way up in VC into 3 challenges:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Getting a job in the first place.  The two most common places to break into VC as a junior person are after undergrad or business school.  VCs are heavily biased toward certain top schools.  On the MBA side, the industry is dominated by Harvard and Stanford.  Undergrad, the VCs I know only recruit from Wharton, Harvard, Stanford and maybe a few other elite schools.  (Please don’t accuse me of elitism-I’m just reporting on elitism, not promoting it). Even if you go to one of these fancy schools it’s still not easy to get a job.  You need to network like crazy.  I did a whole bunch of volunteer research projects for VCs when I was in business school.  I came up with lists of investment ideas so when I got a few minutes with a VC, I could show them I was obsessed with this stuff.  Other things that help you:  computer science or other relevant technology background.  Single best thing is to have started a company (even if it didn’t succeed).&lt;/li&gt;
&lt;li&gt;Going from non-check writer to check writer.  This might even be harder than breaking into VC.   There is kind of a Catch-22 here:  you can only gain credibility by having led deals, yet you can’t lead deals until you’ve gotten credibility.  Some partners are nice and let high level junior people “virtually” lead deals, join boards etc so they can get credit.  My advice here is to try to get your hands on a checkbook, even if it means leaving a top tier VC and going to a second tier one. Too many junior people hang around top tier firms waiting to get promoted.&lt;/li&gt;
&lt;li&gt;Once you get your hands on a checkbook, then you just need to find the next Google/Facebook and invest before anyone else figures it out. ! ;)&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;If you really want to break into VC and aren’t just now graduating from a top school, my top suggestion would be to go start a company.  If you don’t have the stomach for that, the next best thing is to work in a VC-backed portfolio company, hopefully in a role where you get some VC exposure.&lt;/p&gt;
&lt;p&gt;And, finally, if you just want to work in finance, try to get a job at a hedge fund or a big bank.   Breaking into VC so hard that it’s only worth it if you really love startups.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Is now a good time to start a company?]]></title>
            <description><![CDATA[Back in 2006, my co-founder at Hunch, Caterina Fake, wrote a blog post called “It’s a bad time to start a company.”  There were no doubt…]]></description>
            <link>https://cdixon.org/2009/09/07/is-now-a-good-time-to-start-a-company</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/07/is-now-a-good-time-to-start-a-company</guid>
            <pubDate>Mon, 07 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Back in 2006, my co-founder at &lt;a href=&quot;http://www.hunch.com/&quot;&gt;Hunch&lt;/a&gt;, Caterina Fake, wrote a blog post called &lt;a href=&quot;http://www.caterina.net/archive/000965.html&quot;&gt;“It’s a bad time to start a company&lt;/a&gt;.”  There were no doubt some great consumer internet companies started then (note she was only talking about consumer internet – which is what I’m also talking about), but on average I’m guessing she was probably right.&lt;/p&gt;
&lt;p&gt;Now I’m sure Caterina would agree with me that if you want to start a company, you should just go do it immediately, as she herself has done repeatedly, so no one is trying to discourage entrepreneurs.   But the reality is the fate of your company is partially dependent on things you can’t control, including what is happening in the tech market as a whole, which tends to be extremely cyclical.&lt;/p&gt;
&lt;p&gt;One way to look at this is from the venture capital side.  VC returns are extremely cyclical.  For example, 1996 funds (or “vintages” as VCs say) returned an &lt;a href=&quot;http://www.hbstech.org/article.html?aid=135&quot;&gt;average of 95%&lt;/a&gt; while 1999 funds returned an average of -3%.  I don’t think this decade had such extreme swings but most people agree 2002-2005 were great times to invest in consumer internet and afterwards probably not as great.&lt;/p&gt;
&lt;p&gt;Venture returns are a function of two things:  great opportunities and low valuations.  Low valuations are obviously not good for entrepreneurs from a dilution perspective but they do indicate that investors are fearful, which means we are probably at the down part of the business cycle, which has historically been a great time to start a company.&lt;/p&gt;
&lt;p&gt;People are fearful now, and people with a shallow understanding of technology are &lt;a href=&quot;http://online.wsj.com/article/SB124784696163158721.html&quot;&gt;declaring&lt;/a&gt; the internet over.  I’ve been saying for years that the best time to start a company and invest in startups will be when people start declaring Google (and online advertising in general) a “mature” business, which seems to be happening now.  It feels a little like 2003 when people mocked “dot coms” as profitless sock puppets.   In retrospect, 2003 was a great time to start a company.&lt;/p&gt;
&lt;p&gt;On the other hand, there were massive amounts of money invested in consumer internet startups over the last few years.  You know when hedge funds and mutual funds start investing in early stage startups, as they were in 2007-8, we’ve reached the peak of the cycle.  It takes a long time for that kind of money to work itself out of the system, so at least for another year or two you are still going to see some crazy money being spent on marketing, salaries etc, making it harder for us mortals to compete.&lt;/p&gt;
&lt;p&gt;All that said, I wouldn’t try to over think timing.  It’s pretty much impossible to predict what will happen in the near term.  You should instead focus on solving a big problem and let the chips fall where they may.  Be cautious about falling into starting something around the latest fad, e.g. online video, facebook apps, twitter apps.  I love the audaciousness behind &lt;a href=&quot;http://www.businessinsider.com/2009/1/andy-grove-on-web-20-and-the-valley-slackers&quot;&gt;this&lt;/a&gt; Andy Grove interview:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What really infuriates him is the concept of the “exit strategy.” That’s when leaders of startup companies make plans to sell out to the highest bidder rather than trying to build important companies over a long period. “Intel never had an exit strategy,” he tells me. “These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can’t build an empire out of this kind of concoction. You don’t even try.”&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What really infuriates him is the concept of the “exit strategy.” That’s when leaders of startup companies make plans to sell out to the highest bidder rather than trying to build important companies over a long period. “Intel never had an exit strategy,” he tells me. “These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can’t build an empire out of this kind of concoction. You don’t even try.”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;/blockquote&gt;
&lt;p&gt;Benjamin Graham famously said that the stock market is a voting machine in the short run and weighing machine in the long run.  The same is true of startups.  Make something weighty – try to build an empire – and you’ll be far less vulnerable to the ups and downs of the market.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The only college major that matters]]></title>
            <description><![CDATA[If you want to work in venture capital focusing on internet/software companies, or start one of those companies, or work as an employee in…]]></description>
            <link>https://cdixon.org/2009/09/06/the-only-college-major-that-matters</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/06/the-only-college-major-that-matters</guid>
            <pubDate>Sun, 06 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;If you want to work in venture capital focusing on internet/software companies, or start one of those companies, or work as an employee in any role at one of those companies, &lt;strong&gt;there is only one undergraduate major you should consider:  computer science.*&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;I’m not saying you need a computer science degree, but I am saying it’s incredibly helpful to know computer science.  Lots of great computer scientists are self taught. But almost all of them started coding in their teens.  If you are a coder already and want to spend your college years majoring in something else for the heck of it, great.  I spent my whole childhood coding, and worked during college as a programmer, so decided to major in Philosophy because I thought it was interesting.&lt;/p&gt;
&lt;p&gt;Why is it so much better to learn computer science in college (or before)?  Because after college it’s very hard to find the time and discipline to teach yourself coding.  On the other hand, it’s pretty easy to pick up business skills, economics and all sorts of other skills on the job or in grad school.&lt;/p&gt;
&lt;p&gt;Why is a computer science degree so important to VC and startups?  I would estimate in about half the conversations I have at my own startup, with tech founders, and with venture capitalists, there is a moment in the conversation when we start getting technical.  Sometimes someone will even ask “Are you technical?” before starting down a topic.  The non-technical people in the room just sit there like we are speaking Greek.&lt;/p&gt;
&lt;p&gt;It’s a shame that student enrollment in computer science is &lt;a href=&quot;http://www.cra.org/wp/index.php?p=126&quot;&gt;in decline&lt;/a&gt;.  The thinking apparently is that computer programming is increasingly moving overseas.  What these students fail to realize is you don’t need to be a professional coder all your life to find computer science an incredibly valuable major.&lt;/p&gt;
&lt;p&gt;* There is a whole separate world of VC and startups in energy and healthcare.  In those areas I’d recommend analogous technical undergraduate majors.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Which VC firm should I pitch?]]></title>
            <description><![CDATA[A friend asked me the other day “Which VC firms should I pitch?” and I started to respond to him, but then realized that most of my…]]></description>
            <link>https://cdixon.org/2009/09/05/which-vc-firm-should-i-pitch</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/05/which-vc-firm-should-i-pitch</guid>
            <pubDate>Sat, 05 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A friend asked me the other day “Which VC firms should I pitch?” and I started to respond to him, but then realized that most of my knowledge of VC firms is already available online in the &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/&quot;&gt;Which VC firm should I pitch?&lt;/a&gt; Hunch decision topic. That is the idea behind &lt;a href=&quot;http://www.hunch.com&quot;&gt;Hunch&lt;/a&gt;: to crowdsource the creation of decision trees, so that a group of knowledgeable people can get together and create a “virtual expert” that can be accessed by anyone.&lt;/p&gt;
&lt;p&gt;Here is the VC chooser topic in embedded widget form (anything you create on Hunch can be embedded anywhere):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/&quot;&gt;Which VC firm should I pitch?&lt;/a&gt; – make thousands more decisions on &lt;a href=&quot;http://www.hunch.com/&quot;&gt;Hunch.com&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Like everything on Hunch, this topic is completely user generated (“topic” is our word for what some people would call a “decision tree”). Users have full control over the questions it asks, the results (in this case VC firms), the descriptions, and a lot of more advanced functionality for “sculpting” the decision tree. If you go to the VC topic’s &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/about/&quot;&gt;About page&lt;/a&gt; you can see that so far 7 people have contributed 86 firms and 5 questions to this topic (other topics have a much wider range of contributers, &lt;a href=&quot;http://www.hunch.com/tv-shows/about/&quot;&gt;this one&lt;/a&gt; for example). The VC topic has been played (used by non contributors) 506 times, many of those users coming in via Google organic results for phrases related to pitching VC firms.&lt;/p&gt;
&lt;p&gt;In addition, the results are all “trained” to be associated with responses to questions – meaning users have taught Hunch what to “believe” about each of the firms. For example, in red is what Hunch believes about Union Square Ventures:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/5d1d4b19fd44f32e54ad8915ce6ffa47/cac76/picture-23.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 78.63984674329501%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;picture 23&quot;
        title=&quot;picture 23&quot;
        src=&quot;/static/5d1d4b19fd44f32e54ad8915ce6ffa47/94a55/picture-23.png&quot;
        srcset=&quot;/static/5d1d4b19fd44f32e54ad8915ce6ffa47/924ad/picture-23.png 170w,
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        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;br&gt;
Users who find mistakes can just click and fix them, similar to how you fix things on Wikipedia.&lt;/p&gt;
&lt;p&gt;So if you see anything missing or that you’d like to change, feel free to do so. I was one main people who worked on this particular topic so it is biased toward my tastes (e.g. Hunch’s own VCs – &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/bessemer-venture-partners/999484/&quot;&gt;Bessemer&lt;/a&gt; and &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/general-catalyst-partners/999084/&quot;&gt;General Catalyst&lt;/a&gt; – rank extremely high).&lt;/p&gt;
&lt;p&gt;If you don’t like Hunch’s Q&amp;#x26;A process you can jump directly to the &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/all/&quot;&gt;See All page&lt;/a&gt;, and then using the filters on the left to drill down.&lt;/p&gt;
&lt;p&gt;If you are not logged into Hunch, the VC firms you see will be ranked by their popularity amongst all Hunch users. Hunch personalizes the rankings specifically for you if you &lt;a href=&quot;http://www.hunch.com/people/create-account/&quot;&gt;create an account&lt;/a&gt; and answer what we call “Teach Hunch About You” questions. For example, when I am logged in and go to the Hunch page for &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/bessemer-venture-partners/999484/&quot;&gt;Bessemer&lt;/a&gt; I see this on the right sidebar:&lt;br&gt;
&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 282px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 32.97872340425532%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsTAAALEwEAmpwYAAABJElEQVQY021Q7U7CMBTdi5uob+CbGGVEtwEmEvxhAAXm8I8KrOvaDZn7btd23m2RROPJzc3paU/bc7U8z+u6llJyzhnnwEEpikK2UEoxxoDU/0G7NUzDGgyGA8s0DcN6Xq7G9+M7yxxPHubTGezc9PtxksJRuOivGUTBCmhAJGdKcNW+WVUV9LIsgajfAF200CzHHb3i4dobrpHloMkbTbL88LmPogj7BCIkaZpmGbQkTgBZkyrvgminvRnUmT4/1+cnV9OLkUP2h+3mfbfdLGw7oBRj7GHfQwi5iBDfJzQIAsaa6WjXRPXa0om6xPIxrpP4y3mxd9uPp+WKUuJhDEYf4zCgYAzD0EUIPtKYs0oeK61kIZoJd4HFD45LKVqxEt3wvgG2F4NpY5B+rwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;picture 22&quot;
        title=&quot;picture 22&quot;
        src=&quot;/static/160c30937dffca50e483c0e9eed18e48/2a195/picture-22.png&quot;
        srcset=&quot;/static/160c30937dffca50e483c0e9eed18e48/924ad/picture-22.png 170w,
/static/160c30937dffca50e483c0e9eed18e48/2a195/picture-22.png 282w&quot;
        sizes=&quot;(max-width: 282px) 100vw, 282px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;br&gt;
Meaning that Hunch has learned to statistically correlate the questions I’ve answered about myself with liking Bessemer. At this point Hunch has statistically significant data (over 40M user feedbacks total) in most of our ~5000 topics so it usually works really well.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Dividing free and paid features in “freemium” products]]></title>
            <description><![CDATA[One of the most difficult decisions to make when developing a “freemium” product is how to divide the product between free and paid features…]]></description>
            <link>https://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products</guid>
            <pubDate>Fri, 04 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One of the most difficult decisions to make when developing a “&lt;a href=&quot;http://en.wikipedia.org/wiki/Freemium&quot;&gt;freemium&lt;/a&gt;” product is how to divide the product between free and paid features.&lt;/p&gt;
&lt;p&gt;Assume you’ve come up with the “ultimate” product – the complete set of product features including both free and paid versions. Given this, many people think they need to make the following trade off:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;more features in free version –&gt; more users&lt;/li&gt;
&lt;li&gt;fewer features in free version –&gt; higher conversion rate from free to paid&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;So for example, if your consumer storage software gives away tons of free storage, the assumption is you will get more users but a lower conversion rate, as compared to a competitive product that gives away less free storage.&lt;/p&gt;
&lt;p&gt;Actually this not the whole story, because tilting toward #2 – more features in the paid version – opens up new marketing channels that can actually get you more users. If you have a compelling paid product that isn’t undermined by a nearly as compelling free product, you can potentially profitably market through affiliate networks, SEM, display ads, bizdev partnerships and so forth. Lots of websites that reach large user bases are only interested in promoting paid products. For example, from my experience, OEMs (PC makers like Dell &amp;#x26; HP) are only interested in offering security software that they can charge for in order to generate additional revenue.&lt;/p&gt;
&lt;p&gt;In terms of the user experience, it is often very difficult to draw the line. In the old shareware days, software would nag you with popups or expire after a certain number of days. I don’t like either of these approaches. Nagging is obviously just annoying. And expiration schemes end up tossing out users who are potential future customers. Why not keep them around and preserve future opportunities to offer them something they find useful enough to buy?&lt;/p&gt;
&lt;p&gt;The ideal division allows the free product to be an independently useful, non-annoying, non-expiring standalone product, while still leaving room for the paid version to offer sufficient additional value that some acceptable percentage of your users will upgrade.&lt;/p&gt;
&lt;p&gt;Some products are fortunate enough to have a natural division point. For example, in security software, “remedial” products like anti-virus and anti-spyware often give away a free scan, and charge for clean up if your PC is infected.  What’s nice about this division is that the free product has non-annoying, genuine standalone value, and if you actually do have an infection the upgrade is extremely compelling. (The bad news is that this division encouraged companies to hype the risks of innocuous things like browser cookies).&lt;/p&gt;
&lt;p&gt;Preventive security products are trickier to divide than remedial security products. Preventive security products include firewalls like ZoneAlarm and my prior startup, &lt;a href=&quot;http://www.siteadvisor.com/&quot;&gt;SiteAdvisor&lt;/a&gt; (and now SiteAdvisor competitors like &lt;a href=&quot;http://safeweb.norton.com/&quot;&gt;Norton’s SafeWeb&lt;/a&gt; and &lt;a href=&quot;http://www.trendsecure.com/portal2.1/en-US/free_security_tools/trendprotect.php&quot;&gt;Trend Micro’s TrendProtect&lt;/a&gt;). The problem with preventative security products is that the only features you can remove end up opening up a vulnerability, which just feels like a huge disservice to the user.&lt;/p&gt;
&lt;p&gt;Skype figured out a nice division point: free for Skype-to-Skype calls, pay for calls to regular phones. It’s not clear how sustainable this is as the cost of long distance drops to zero and the distinction between software phones and “regular” phones goes away.&lt;/p&gt;
&lt;p&gt;Online storage products usually divide things by the &lt;a href=&quot;http://www.getdropbox.com/pricing&quot;&gt;amount of storage&lt;/a&gt;. The nice thing about this is 1) you can test a bunch of different prices/storage levels, 2) you get to have a free version plus multiple tiers of paid, which means your pricing can more granularly track customers’ willingness-to-pay. The goal of all revenue maximizing pricing structures is to minimize what economists call “&lt;a href=&quot;http://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus&quot;&gt;consumer surplus&lt;/a&gt;.” Since you can’t gaze into the mind of the user to see what she is willing to pay, and attempts at explicit price discrimination are usually met with outrage, you have to look for proxies for willingness-to-pay. With stock quotes, professionals can’t wait 15 minutes. With books, avid readers don’t want to wait for the paperback version. With databases, wealthier companies have more servers. And with online storage, professionals and hardcore consumers are generally more likely to need more storage space.&lt;/p&gt;
&lt;p&gt;The New York Times’ TimesSelect was one of the more interesting attempts at the freemium model. It was free to read the regular news but you had to pay for the op-eds. Personally I usually read one or two of their op-eds every day, but part of the attraction is that I know my friends do and someone will say “Did you read the Krugman piece today?” and then we might chat about it. So in a way op-ed’s have network effects. Putting them behind a paywall doesn’t just reduce their readership, it reduces their influence – the very influence that compels people to read them in the first place.&lt;/p&gt;
&lt;p&gt;A final thought:  when in doubt, err on the side of putting more features on the paid side of the divide.   It’s easy to add features to the free side;  however, removing features from the free side is a recipe for trouble.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Incubators]]></title>
            <description><![CDATA[It seems like every successful entrepreneur I know at one point or another kicks around the idea of creating an incubator. The appeal is the…]]></description>
            <link>https://cdixon.org/2009/09/04/incubators</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/04/incubators</guid>
            <pubDate>Fri, 04 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;It seems like every successful entrepreneur I know at one point or another kicks around the idea of creating an incubator. The appeal is the idea that you can do not just one startup but many, and just focus on the “fun stuff” in each one (idea generation, product features, strategy, etc).&lt;/p&gt;
&lt;p&gt;History has shown that incubators are really hard to pull off. In fact, the results from incubators in the 90s were apparently bad enough that the word itself carries a bad connotation in VC/startup circles.&lt;/p&gt;
&lt;p&gt;Here’s why incubators are so hard to make work. Every successful startup requires a great entrepreneur focused solely on that company’s success. You can’t just take a great idea and have a great entrepreneur work on it for a while and then pass it off to a mediocre entrepreneur. It just won’t work. Maybe you can do that after the product is launched and gaining traction. But this is hardly an incubator. It’s more just like an early-stage entrepreneur transitioning to an advisory role – a pretty common practice a few years into a venture.&lt;/p&gt;
&lt;p&gt;And maybe you can find exclusively great entrepreneurs to take over the companies, but then what you are doing is much more like active advising/investing, or “hatching” companies, as some VC’s now call it, presumably to avoid the dreaded I-word.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[New York City needs a tech startup blog]]></title>
            <description><![CDATA[At first it seemed like Silicon Alley Insider would be this, but they seem to have moved away from covering NYC startups. The New York Times…]]></description>
            <link>https://cdixon.org/2009/09/03/new-york-city-needs-a-tech-startup-blog</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/03/new-york-city-needs-a-tech-startup-blog</guid>
            <pubDate>Thu, 03 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;At first it seemed like &lt;a href=&quot;http://www.businessinsider.com/alleyinsider&quot;&gt;Silicon Alley Insider&lt;/a&gt; would be this, but they seem to have moved away from covering NYC startups.&lt;/p&gt;
&lt;p&gt;The New York Times covers national tech, as does the WSJ. The majority of their tech articles are about CA companies.&lt;/p&gt;
&lt;p&gt;I think for the NYC tech startup ecosystem to really become as vibrant as CA’s, we need a &lt;a href=&quot;http://www.techcrunch.com/&quot;&gt;TechCrunch&lt;/a&gt; equivalent. I hope someone starts one.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Don’t shop your term sheet]]></title>
            <description><![CDATA[There are all sorts of protocols in the VC world. Most of them make sense upon further examination, but if you’re a first time entrepreneur…]]></description>
            <link>https://cdixon.org/2009/09/02/dont-shop-your-term-sheet</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/02/dont-shop-your-term-sheet</guid>
            <pubDate>Wed, 02 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There are all sorts of protocols in the VC world. Most of them make sense upon further examination, but if you’re a first time entrepreneur, they aren’t obvious, and it’s very easy to mess them up. Here’s one of them.&lt;/p&gt;
&lt;p&gt;From VC’s perspective, one of the most annoying things an entrepreneur can do is “shop” a term sheet.  That means after they’ve offered you a term sheet in writing you take it to other investors to try to get a better deal. Most VCs I know won’t even send anything in writing until you have verbally agreed on all essential terms precisely to avoid this possibility.&lt;/p&gt;
&lt;p&gt;Why are investors so sensitive to this?  First of all, no investor wants to think they are “just money” – the idea that you want to get an explicit auction going suggests that.&lt;/p&gt;
&lt;p&gt;More importantly, what often happens is that once a VC has offered you a term sheet – especially if that VC is well respected – other VCs suddenly become interested.  It is pretty much guaranteed that if Sequoia offered you $4M pre, there are many other investors who, simply because of Sequoia’s offer, would offer you a higher price.  So if Sequoia allowed their term sheets to be shopped they’d never get deals done.&lt;/p&gt;
&lt;p&gt;Some entrepreneurs think they are being savvy by shopping a term sheet but I would strongly caution against it.  The VC/startup community is extremely small and this will usually come back to bite you.&lt;/p&gt;
&lt;p&gt;Note that I am &lt;strong&gt;not&lt;/strong&gt; saying an entrepreneur shouldn’t get a competitive process going and try to get the best deal with the highest quality investors.  You just need to do it in the right way.  Discuss things verbally and only accept a term sheet when you have agreed on all significant terms.  At that point, assuming the term sheet agrees with what you said, you should sign it and return it within a day or two.  (Don’t say you need to wait for you lawyer to review it – if you want to be an startup CEO you need to learn how to review and evaluate term sheets.  Have your lawyer teach you about term sheets before you receive them.).&lt;/p&gt;
&lt;p&gt;Also, don’t shop a verbal offer.  You can’t go to, say, Greylock and tell them Accel offered you 4 pre.  First of all they might collude.  Secondly it’s very likely to get back to Accel (they all know each other) and you might lose both deals.  What you can say is “I’m planning to wrap things up by X day and I have a lot of interest” and see what Greylock does.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Question from a reader]]></title>
            <description><![CDATA[I’ve gotten some emails recently from readers of this blog with questions about early stage startups.  I’m sorry if I haven’t responded to…]]></description>
            <link>https://cdixon.org/2009/09/02/question-from-a-reader</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/02/question-from-a-reader</guid>
            <pubDate>Wed, 02 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve gotten some emails recently from readers of this blog with questions about early stage startups.  I’m sorry if I haven’t responded to all of them yet.  I’m happy to try to answer questions but would generally prefer to do them on the blog so they can be shared/discussed.&lt;/p&gt;
&lt;p&gt;Here’s one I got recently:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;So you’re joining a startup as one of the first, or the first, non-founding members.  At the moment, the company generates little or even no revenue, but they do have a working first version of their product and a few early users.  To this point the company has been surviving on a modest amount of “friends and family” capital, which has largely been used to support the founders as they built the company and their product.  The founders, however, are convinced that a significant investment is imminent and you will be receiving a reasonable salary in short order.  They are equally certain that their product and their plan is ready to take off.&lt;/p&gt;
&lt;p&gt;Determining a fair equity grant at this time is tricky enough; there seem to be far fewer established norms and guidelines for determining compensation in a pre-investment startup than there are following such a milestone.  To further complicate this situation, fast forward 6, 9, even 12 months into the future.  That “imminent” investment has not yet materialized and you have yet to receive any salary (though perhaps the founders have continued to subsidize themselves from the earlier friends and family investment).  The original product has been slow to build traction.  The product has undergone significant upgrades, and one or more new products have been developed, all with your input and assistance.&lt;/p&gt;
&lt;p&gt;At this time, both sides decide to sit down and more formally address the issue of your equity grant, but by now the boundaries of your role have become even more blurred than when you first joined the startup.  To be sure, you are not one of the founders, but it seems the founders were not as far along as they believed when they brought you in.  Of course both sides are still likely to overvalue their contributions, so what guidelines and norms can you and the founders possibly look to in order to reach a fair and reasonable agreement on your equity grant?&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Honestly, I’m not sure my top worry would be my equity grant at this point.  If I understand correctly, you’ve been working for a year with no written equity grant, no salary, for a company that has gotten little traction, and for founders who were way overly optimistic about their chances of raising money…? (perhaps even misleadingly so?)  I guess if you really love the vision or have no other options then you stay, but otherwise I’d recommend looking for a new job.  At an absolute minimum you should be given an option grant in writing ASAP, and I think that given your sacrifice and the uncertainty of raising any money beyond friends and family that grant should be significant.  If your skills are as important to the company’s as the founders, I’d say it should be at or around founder level.&lt;/p&gt;
&lt;p&gt;I worked for a startup once where my equity grant wasn’t in writing.  Needless to say, when the company was sold, I got nothing.  &lt;strong&gt;Always, always get your equity grant in writing.&lt;/strong&gt; Quality entrepreneurs will simply give you your grant in writing without you even needing to ask.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Information is the (other) currency of venture capital]]></title>
            <description><![CDATA[Many seasoned entrepreneurs have had the following experience.  A VC eagerly wants to meet with you.  You have what seems like a very good…]]></description>
            <link>https://cdixon.org/2009/09/01/information-is-the-other-currency-of-venture-capital</link>
            <guid isPermaLink="false">https://cdixon.org/2009/09/01/information-is-the-other-currency-of-venture-capital</guid>
            <pubDate>Tue, 01 Sep 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Many seasoned entrepreneurs have had the following experience.  A VC eagerly wants to meet with you.  You have what seems like a very good meeting, and yet the VC’s excitement level drops noticeably in follow up conversations. Then he says &lt;a href=&quot;http://bryc3.com/post/172703130/i-ganked-this-slide-from-joe-beninatos&quot;&gt;“No” in VC language&lt;/a&gt;.  What just happened?&lt;/p&gt;
&lt;p&gt;The answer is that besides cold hard cash the other currency in venture capital is information.  A VC will meet with pretty much anyone they deem “serious” in order to gather more information, which they can then use to discover interesting investments, do better diligence on potential investments, impress entrepreneurs and other VCs with their knowledge, gossip with other VCs about recent deals and trends, and give seemingly informed advice to their portfolio companies.&lt;/p&gt;
&lt;p&gt;I’m not saying VCs are trying to take your trade secrets and give them to competitors.  The vast majority of VCs would never do this.  Instead, they are after much more general, innocuous information, like the rough valuations of recent financings, what companies and markets are “hot,” what products are getting popular, what marketing tactics are proving successful, and so on.&lt;/p&gt;
&lt;p&gt;Imagine you were a professional sports bettor but none of the existing information sources – Internet, TV, etc – existed.   The only way you could get information was by talking to people who actually saw the sporting events live. This is kind of what it’s like to work in venture and why VCs are so desperate for information.  There is very little publicly written about what’s really going behind this scenes. Occasionally juicy tidbits will come out on blogs like &lt;a href=&quot;http://www.techcrunch.com&quot;&gt;TechCrunch&lt;/a&gt;, and some moderately useful stuff appears daily in &lt;a href=&quot;http://www.pehub.com&quot;&gt;peHUB&lt;/a&gt; and other VC newswires – but crucially missing are the valuations, cap tables, competitive offers, companies’ performance, and pretty much everything else people really want to know.&lt;/p&gt;
&lt;p&gt;In the way they cross-polinate information, VCs play a role with startups similar to what consulting firms like McKinsey play in the Fortune 1000 world.  They spread best practices around from one firm to another, in the end, on average, making everyone more efficient and informed, while also reducing informational advantages&lt;/p&gt;
&lt;p&gt;My advice to entrepreneurs is not to run and hide.  Instead, you need to learn to play the game.  Meet with as many VCs as you can.  They are great sources of high level information.  Such and such assets are cheap right now.   Startups are having success with a such and such marketing channel.  A certain venture firm is eager to deals in your space.  Staying in the information flow is one of the main reasons many serial entrepreneurs angel invest on the side.&lt;/p&gt;
&lt;p&gt;Just go to these meetings with the proper expectations – the VC’s eagerness probably has more to do with gathering information than investing in your company.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[New York City is poised for a tech revival]]></title>
            <description><![CDATA[One thing that was puzzling about the “web 2.0 boom” from 2003-2008 was how irrelevant the East Coast, and particular New York City, was…]]></description>
            <link>https://cdixon.org/2009/08/31/new-york-city-is-poised-for-a-tech-revival</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/31/new-york-city-is-poised-for-a-tech-revival</guid>
            <pubDate>Mon, 31 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;One thing that was puzzling about the “web 2.0 boom” from 2003-2008 was how irrelevant the East Coast, and particular New York City, was compared to the first dot-com boom.  There were a few big hits – Right Media comes to mind – and a big near miss – Facebook – which started in Boston but moved to the West Coast.&lt;/p&gt;
&lt;p&gt;I was mostly checked out of the internet scene in the 90s (in perpetual grad school), but from everything I’ve read and heard, New York City and the East Coast in general was much more competitive with the West Coast.  One interesting supporting data point: Matrix Partners in Boston had the best return of any VC fund in the 90s (&lt;a href=&quot;http://www.matrixpartners.com/site/press_detail/63/&quot;&gt;an astounding 516% IRR&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;I think it’s fairly easy to explain what happened to Boston in the 2000′s.   In the 90′s much of the action was around infrastructure and enterprise software – and Boston (led by MIT) tends to be very infrastructure and enterprise oriented.   I am told Boston is still relevant in biotech and cleantech, and perhaps infrastructure and enterprise IT will have a resurgence, although even those areas seem to now be dominated by the West Coast.&lt;/p&gt;
&lt;p&gt;But the question that has puzzled me is:  why did New York City lag behind the West Coast this decade so much more than last decade?  Especially since the internet in the 2000′s has been more than ever about consumers, media, and advertising – traditional New York City strengths?&lt;/p&gt;
&lt;p&gt;I think the only explanation is that the finance bubble of 2003-2008 was a giant talent suck on the East Coast.  The people I knew graduating out of top engineering or business programs on the East Cast were all trying to work at hedge funds or big banks or else felt like fish out of water and moved west.   Money was flowing so freely in the finance world that there was no way the risk/reward trade off of startups could compete.  Eventually it just became downright idiosyncratic to be a startup person on the East Coast.  The Larry and Sergey of the East Coast were probably inventing high frequency trading algorithms at Goldman Sachs.&lt;/p&gt;
&lt;p&gt;But this is why New York City now seems poised for a technology startup boom. The finance bubble has burst and the industry will hopefully return to its historical norm, about half its bubble size.  The traditional advertising and media businesses are in disarray.  The people who work in them will no doubt find new applications for their talents.&lt;/p&gt;
&lt;p&gt;There is also a nice ecosystem developing in New York City.  Union Square Ventures is one of the best VC’s in the country, with early stage investments in companies like Twitter and Etsy (that were followed on by top West Coast VCs at significant markups).   Bessemer is an old firm that has a managed to stay relevant with investments in Yelp, Skype, and LinkedIn among others.  There is also a new wave of scrappy Boston firms spending a lot of time in New York City – specifically Spark, General Catalyst, Flybridge, and Bain Ventures.  First Round Capital out of Philadelphia is extremely active in early stage investing in New York.  There are a bunch of veteran entrepreneurs actively investing in and mentoring seed stage startups.  Google has a big office here and many people seem to be leaving to go start companies.&lt;/p&gt;
&lt;p&gt;But most importantly, the engine of the startup economy, young engineers, will be returning to doing something besides shuffling money around.  As Obama said:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;…Wall Street will remain a big, important part of our economy, just as it was in the ’70s and the ’80s. It just won’t be half of our economy. And that means that more talent, more resources will be going to other sectors of the economy. And I actually think that’s healthy. We don’t want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;That’s why I don’t just want to see more college graduates; I also want to specifically see more math and science graduates, I specifically want to see more folks in engineering. I think part of the postbubble economy that I’m describing is one in which we are restoring a balance between making things and providing services…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself.   Silicon Valley will always be the mecca of technology, but now that people here are getting back to, as Obama says, &lt;em&gt;making things&lt;/em&gt;, New York City has a shot at becoming relevant again in the tech world.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[VC’s care about the upside case, not the mean]]></title>
            <description><![CDATA[The biggest mistake entrepreneurs make when pitching VCs is to argue that their startup is likely to succeed.  Instead, they should argue…]]></description>
            <link>https://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean</guid>
            <pubDate>Mon, 31 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The biggest mistake entrepreneurs make when pitching VCs is to argue that their startup is likely to succeed.  Instead, they should argue that there is a small probability their startup could be a billion dollar or greater exit.  There is a big difference between these arguments – the mean of the return distributions might be the same but what VCs care about is right side tail of the distribution.&lt;/p&gt;
&lt;p&gt;Investor sentiment, the old saying goes, is a horse race between fear and greed.  The fear and greed in venture capital is all about investing in or missing out on the next Google.  No VC stays up at night worrying about missing the next startup that’s flipped to Google.  The way you get VCs interested is to convince them there’s a small but non-negligible chance you’ll create a billion dollar (valuation) business.&lt;/p&gt;
&lt;p&gt;I’ve learned this lesson first hand on both sides of the table.  One example:  A good friend of mine was starting a company a few years ago.  I was excited about the idea and tried to help him raise venture money.  After the entrepreneur pitched some VC friends of mine, I was surprised when the they came back to me to say they are passing because “it seems like a smallish, ‘lifestyle’ business.”&lt;/p&gt;
&lt;p&gt;The entrepreneur had made a very good pitch for why his product was valuable, why he could create a profitable business, that he was very smart and well prepared, and so on.   What he needed but failed to do was leave the VC with the nagging thought that this could be the “the next big thing.” Part of this was because of the entrepreneur’s natural modesty.  Some people don’t have the chutzpah to aggressively assert that their idea is the next big thing, even when, deep down, they truly believe it.  In everyday life, this kind of modesty is a virtue. When pitching VC’s, it is the single worst thing you can do.  (If deep down, you don’t believe your idea will be the next big thing – don’t raise VC money.  Once you raise VC you are committed to going for the billion dollar exit whether you like it or not.)&lt;/p&gt;
&lt;p&gt;I don’t know if this obsession with the upside outlier case is a good strategy from the VC’s perspective or not.  Granular VC return data is hard to come by.  I tend to think it is a good strategy – one Google or Facebook (and a lot of other billion dollar exits that aren’t nearly as famous) can make up for a ton of misfires.  And the anecdotal return numbers I’ve heard from VCs suggests it works.   But I don’t really know.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[To make smarter systems, it’s all about the data]]></title>
            <description><![CDATA[As this article by Alex Wright in the New York Times last week reminded me, when the mainstream press talks about artificial intelligence…]]></description>
            <link>https://cdixon.org/2009/08/30/to-make-smarter-systems-its-all-about-the-data</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/30/to-make-smarter-systems-its-all-about-the-data</guid>
            <pubDate>Sun, 30 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;As &lt;a href=&quot;http://www.nytimes.com/2009/08/24/technology/internet/24emotion.html?_r=1&amp;#x26;ref=start-ups&quot;&gt;this&lt;/a&gt; article by Alex Wright in the New York Times last week reminded me, when the mainstream press talks about artificial intelligence – machine learning, natural language processing, sentiment analysis, and so on – they talk as if it’s all about algorithmic breakthroughs.  The implication is it’s primarily a matter of developing new equations or techniques in order to build systems that are significantly smarter than the status quo.&lt;/p&gt;
&lt;p&gt;What I think this view misses (but I suspect the companies covered in the article understand) is that &lt;strong&gt;significant AI breakthroughs come from identifying or creating new sources of data, not inventing new algorithms.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Google’s &lt;a href=&quot;http://infolab.stanford.edu/~backrub/google.html&quot;&gt;PageRank&lt;/a&gt; was probably the greatest AI-related invention ever brought to market by a startup.  It was one of very few cases where a new system was really an order of magnitude smarter than existing ones.  The Google founders are &lt;a href=&quot;http://citeseerx.ist.psu.edu/stats/articles&quot;&gt;widely recognized&lt;/a&gt; for their algorithmic work.  Their most important insight, however, in my opinion, was to identify a previously untapped and incredibly valuable data source – links – and then build a (brilliant) algorithm to optimally harness that new data source.&lt;/p&gt;
&lt;p&gt;Modern AI algorithms are very powerful, but the reality is there are thousands of programmers/researchers who can implement them with about the same level of success.  The Netflix Challenge demonstrated that a massive, world-wide effort only improves on an in-house algorithm by approximately 10%. &lt;a href=&quot;http://www.cs.unb.ca/profs/hzhang/publications/FLAIRS04ZhangH.pdf&quot;&gt;Studies&lt;/a&gt; have shown that &lt;a href=&quot;http://en.wikipedia.org/wiki/Naive_Bayes_classifier&quot;&gt;naive bayes&lt;/a&gt; is as good or better than fancy algorithms in a surprising number of real world cases.  It’s relatively easy to build systems that are right &lt;a href=&quot;http://www.cdixon.org/?p=342&quot;&gt;80% of the time&lt;/a&gt;, but very hard to go beyond that.&lt;/p&gt;
&lt;p&gt;Algorithms are, as they say in business school, “commoditized.”  The order of magnitude breakthroughs (and companies with real competitive advantages) are going to come from those who identify or create new data sources.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Thales the Milesian]]></title>
            <description><![CDATA[Like a lot of things we think are obvious today, financial options were first invented by a philosopher: There is the anecdote of Thales the…]]></description>
            <link>https://cdixon.org/2009/08/29/thales-the-milesian</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/29/thales-the-milesian</guid>
            <pubDate>Sat, 29 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Like a lot of things we think are obvious today, financial options were first invented by a philosopher:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There is the anecdote of Thales the Milesian and his financial device, which involves a principle of universal application, but is attributed to him on account of his reputation for wisdom. He was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;- Aristotle, &lt;em&gt;&lt;a href=&quot;http://classics.mit.edu/Aristotle/politics.mb.txt&quot;&gt;Politics&lt;/a&gt;&lt;/em&gt;, Book 1, Part XI&lt;/p&gt;</content:encoded>
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            <title><![CDATA[function my_exit_payout(…)]]></title>
            <description><![CDATA[/* aggregateoptionsstrike_price = your options strike price per share * number of shares you own company sale price is 1) if private…]]></description>
            <link>https://cdixon.org/2009/08/28/function-my_exit_payout</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/28/function-my_exit_payout</guid>
            <pubDate>Fri, 28 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;/* aggregate&lt;em&gt;options&lt;/em&gt;strike_price = your options strike price per share * number of shares you own&lt;br&gt;
company sale price is 1) if private transaction: amount paid by acquirer plus any funds in startup returned to investors,  2) if IPO = market capitalization.&lt;br&gt;
note: if you assume all financings were 1x preferred, investor preferences == total amount of money the company has raised&lt;br&gt;
to do:  add condition for participating preferred, graph various scenarios&lt;/p&gt;
&lt;p&gt;*/&lt;/p&gt;
&lt;p&gt;function my&lt;em&gt;exit&lt;/em&gt;payout(  company&lt;em&gt;sale&lt;/em&gt;price, your&lt;em&gt;percent&lt;/em&gt;ownership, your&lt;em&gt;aggregate&lt;/em&gt;options&lt;em&gt;strike&lt;/em&gt;price, investor&lt;em&gt;preferences, investors&lt;/em&gt;ownership_percent)&lt;br&gt;
{&lt;/p&gt;
&lt;p&gt;if (investors&lt;em&gt;ownership&lt;/em&gt;percent * company&lt;em&gt;sale&lt;/em&gt;price &amp;#x3C; investor&lt;em&gt;preferences) investor&lt;/em&gt;converts=FALSE;&lt;br&gt;
else investor_converts=TRUE;&lt;/p&gt;
&lt;p&gt;if (investor&lt;em&gt;converts) return your&lt;/em&gt;percent&lt;em&gt;ownership * company&lt;/em&gt;sale&lt;em&gt;price – your&lt;/em&gt;aggregate&lt;em&gt;options&lt;/em&gt;strike&lt;em&gt;price;&lt;br&gt;
else {&lt;br&gt;
common&lt;/em&gt;stock&lt;em&gt;proceeds = company&lt;/em&gt;sale&lt;em&gt;price – investors&lt;/em&gt;preferences.&lt;br&gt;
your&lt;em&gt;percent&lt;/em&gt;common = your&lt;em&gt;percent&lt;/em&gt;ownership / ( 1 – investor&lt;em&gt;ownership&lt;/em&gt;percent );&lt;br&gt;
return common&lt;em&gt;stock&lt;/em&gt;proceeds * your&lt;em&gt;percent&lt;/em&gt;common – your&lt;em&gt;aggregate&lt;/em&gt;options&lt;em&gt;strike&lt;/em&gt;price;&lt;br&gt;
}&lt;/p&gt;
&lt;p&gt;}&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Pitching the VC partnership]]></title>
            <description><![CDATA[The last step to raising venture capital is normally a 1 hour pitch to the whole partnership during their weekly monday meeting.  This is…]]></description>
            <link>https://cdixon.org/2009/08/27/pitching-the-vc-partnership</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/27/pitching-the-vc-partnership</guid>
            <pubDate>Thu, 27 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The last step to raising venture capital is normally a 1 hour pitch to the whole partnership during their weekly monday meeting.  This is often described to entrepreneurs as a formality, but at least in my experience, for early stage deals, I would say there is probably a 25% chance of you getting a term sheet afterwards and a 75% chance of you getting rejected (although it will &lt;a href=&quot;http://bryc3.com/post/172703130/i-ganked-this-slide-from-joe-beninatos&quot;&gt;rarely&lt;/a&gt; come in the form of an actual “no”) .&lt;/p&gt;
&lt;p&gt;The reason the odds of you getting dinged are that high are:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;In most VC firms all it takes is one partner to say “This is really stupid – I hate it” to kill a deal.&lt;/li&gt;
&lt;li&gt;Although by the time you pitch, the lead partner has probably told the other partners about you and probably sent around a memo, the non-lead partners probably didn’t pay attention, and only really do when you are presenting.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Good VCs have a much lower post-partnership ding ratio, because they work hard to socialize a deal and really get their partners to focus on it before asking the entrepreneur to present.   For example, I used to work for &lt;a href=&quot;http://www.bvp.com/Team/robert-stavis.aspx&quot;&gt;Rob Stavis&lt;/a&gt; at Bessemer and he had a much lower post-meeting ding rate.  This was because he spent a lot of time talking to his partners beforehand (“socializing the deal”), and if they had good objections he got them early on.  (Ps. Hopefully the VC will work extra hard to pre-sell the deal if they ask the entrepreneur to drop everything and fly across the country.)&lt;/p&gt;
&lt;p&gt;The very worst thing that can happen in a partnership meeting is what I call the “partner ambush.”  Basically this is when the partner who brought you in (the “lead” partner), who you’ve met with for many hours and fully understands your company and is excited about investing in it, realizes midway through the meeting things are going badly and decides to try to save face by turning on the entrepreneur.&lt;/p&gt;
&lt;p&gt;I had this happen to me when I was raising money for my last startup, SiteAdvisor.   Basically what happened is me and my co-founder &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; walked into this big, well known VC firm at 4pm to a room of very tired looking guys (yes, they are all male) who had been hearing back-to-back pitches all day (side note:  always try to present in the morning).  No one introduced themselves or said hello, which was a bit unnerving.   The first questions were clearly hostile to the very idea of a consumer security startups (for a bunch of bad reasons, most VCs vastly prefer enterprise to consumer security – especially on the east coast and back in 2005).   One of them literally laughed at the idea of marketing via search engines (this is the east coast – believe it or not many VCs our here still don’t know what (white hat) SEO is and how important it can be).   Then the partner who brought me in said “Well, Chris, why not make SiteAdvisor into an enterprise product” basically turning on me and the whole concept of the company.  Things went downward from there.  To add insult and injury, the lead partner never even bothered to call me to ding me afterwards – in fact I haven’t heard from him to this day.&lt;/p&gt;
&lt;p&gt;In retrospect, that would have actually have been a very good investment for the VC if they had actually given our pitch a fair hearing.  Which gets me to my final point:  I think VCs are making a mistake by putting so much emphasis on the partnership pitch.  There is some positive correlation between presenting to a room full of (sometimes hostile) VCs and building a successful startup, but not a very high one.&lt;/p&gt;
&lt;p&gt;Besides missing good investments, the emphasis on the partner pitch leads VCs to invest in bad companies.  An investor friend of mine was recently talking about a failed startup he invested in:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Toward the end of the company, when things were going very badly, I went in and spent a day sitting with the entrepreneur and watching him work.  At that point I realized his one skill in life was pitching investors.  He had no idea how to manage people, build a product, get stuff done, etc.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The current early-stage VC process is optimized to favor people who are good at pitching partnerships, not necessarily people good at creating successful startups.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[The one number you should know about your equity grant]]></title>
            <description><![CDATA[The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever…]]></description>
            <link>https://cdixon.org/2009/08/27/the-one-number-you-should-know-about-your-equity-grant</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/27/the-one-number-you-should-know-about-your-equity-grant</guid>
            <pubDate>Thu, 27 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever – it doesn’t matter – just the % matters).&lt;/p&gt;
&lt;p&gt;Number of shares:  meaningless.&lt;/p&gt;
&lt;p&gt;Price of shares:  meaningless.&lt;/p&gt;
&lt;p&gt;Percent of the outstanding option pool:  meaningless.&lt;/p&gt;
&lt;p&gt;Your equity in relation to other employees:  meaningless.&lt;/p&gt;
&lt;p&gt;Strike price of options: meaningless.&lt;/p&gt;
&lt;p&gt;The only thing that matters in terms of your equity when you join a startup is what percent of the company they are giving you.  If management tells you the number of shares and not the total shares outstanding so you can’t compute the percent you own – &lt;strong&gt;don’t join the company!&lt;/strong&gt; They are dishonest and are tricking you and will trick you again many times.&lt;/p&gt;
&lt;p&gt;I find it really depressing how often employees, especially engineers who are so smart about other mathematical issues, don’t get this.  I felt forced to post this after talking to a friend today who told me about how a prominent NYC startup has been telling hires the number of shares they are granted but won’t tell them the percent those shares represented (“it is company policy”), or the number you need to compute the percent – the total outstanding shares.  It’s really amazing people are getting away with this simple and incredibly cynical trick.&lt;/p&gt;
&lt;p&gt;I’ve seen many companies “split the stock” 10-1 so that instead of, say, 10M shares there are 100M shares outstanding so the absolute number of shares granted sounds really big to naive hires who don’t understand that all that matters is the percent they own.&lt;/p&gt;
&lt;p&gt;I think every engineering school in the country should have a week-long course on the basics of the capitalization of startups.  There are other things that matter too, but far less (like the number of preferences outstanding).   I’ll try to write about these other things in later posts.&lt;/p&gt;
&lt;p&gt;Engineers – here’s how equity is paid out in a normal company sale/IPO (assuming a “good” outcome – in the downside cases it’s more complicated as investors have preferences which act like a max() function).  You get the percent you own multiplied times the price the company was sold for (or the market cap after IPO).  That is why percent ownership is the only equity number that matters.  Don’t work for someone who tells you otherwise or won’t tell you what percent you own.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Six strategies for overcoming “chicken and egg” problems]]></title>
            <description><![CDATA[Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks…]]></description>
            <link>https://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems</guid>
            <pubDate>Tue, 25 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks.&lt;/p&gt;
&lt;p&gt;“Complementary network effects” refer to situations where a product gets more valuable as more people use the product’s &lt;strong&gt;complement(s).&lt;/strong&gt; Two products are complementary when they are more (or only) useful together – for example, a video game and video game console, or an OS and an application for that OS.  Microsoft Windows gets more valuable the more apps are made for it, which in turn makes Windows more popular, which in turn leads to more apps, and so on.  Microsoft Windows is not more valuable simply because there are more copies of Microsoft Windows in the world, but because there are more complements to Windows in the world.&lt;/p&gt;
&lt;p&gt;Network effects can be your friend or your enemy depending on whether your product has reached critical mass.  Getting to critical mass in complementary network effect markets is sometimes called overcoming the “chicken and egg problem.”  Back in graduate school (2003), my friend Jeff Rhodes and I wrote a paper titled “Six Strategies for Overcoming the ‘Chicken and Egg’ Problem in Complement-Based Network Effects Markets.”  This is a frequent challenge when launching technology products, yet at least at the time we had seen very few people try to systematically document strategies for overcoming it.  Some of our examples are a bit dated now, but if you are interested in this topic you might like the &lt;a href=&quot;http://cdixon.org/mnb-paper.html&quot;&gt;full paper&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Here is a high level summary of the 6 strategies we describe with a few updated examples.  I’d love to hear from any readers who have more strategies and/or example products.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;1. Signal long-term commitment to platform success and competitive pricing&lt;/strong&gt;.   When Microsoft launched the original Xbox,  they made a big deal of publicly committing to spending $500M promoting the platform, thereby signalling that they were fully committed for the long haul and giving comfort to 3rd party game developers.   Another way to give comfort that your platform isn’t going away is to open source it – this way third parties know that even if the company stops supporting the product, independent developers can continue to do so (e.g. Google Android and Chrome).  Open sourcing also gives comfort that the company isn’t going to raise prices once they’ve reached critical mass.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;2. Use backwards and sideways compatibility to benefit from existing complements.&lt;/strong&gt; Microsoft of course has used backward compatibility very successfully for decades with DOS and then Windows, as have many game console makers.  In our paper we argue that the successful early bill pay (“bill presentment”) companies provided backward compatibility by sending snail mail checks to merchants who had yet to sign on to their electronic platform.&lt;/p&gt;
&lt;p&gt;Virtual machines and Bootcamp gave Apple’s hardware some sideways compatibility with Windows.  Sun’s invention of Java could be seen as an attempt to introduce sideways compatibility between its shrinking server market and its competitors (Windows, Linux) by introducing a new, cross-platform programming layer.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;3. Exploit irregular network topologies.&lt;/strong&gt; In the last 90s, most people assumed that dating websites was a “winner take all market” and Match.com had won it, until a swath of niche competitors arose (e.g. Jdate) that succeeded because certain groups of people tend to date others from that same group.  Real-life networks are often very different from the idealized, uniformly distributed networks pictured in economics textbooks.  Facebook exploited the fact that social connections are highly clustered at colleges as a “beachhead” to challenge much bigger incumbents (Friendster).  By finding clusters in the network smaller companies can reach critical mass within those sub-clusters and then expand beyond.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;4. Influence the firms that produce vital complements.  Sony and Philips, the companies that oversaw the successful launch of the compact disc technology in the early 1980′s, followed the CD launch with the introduction of the digital audiotape (DAT) in 1987. The DAT offered CD sound quality and, in a significant improvement over CD technology, it also offered the ability to record music.  Despite these improvements, the DAT never gained significant consumer adoption and ended as an embarrassing failure for Sony and Philips.  DAT failed because Sony and Philips failed to reassure record companies who were concerned that the recording capabilities of DAT would lead to widespread piracy.  Sony finally reached an anti-piracy agreement with record companies in 1992, but by that time consumer expectations for the DAT platform were dampened sufficiently to doom the platform.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;On the other hand, when Sony and Philips launched the CD, they succeeded because they did a significantly better job influencing complement producers. Most importantly, they addressed the record companies’ primary concern by making CDs piracy resistant (or so it seemed at the time). In addition, Philips was able to influence Polygram, a major record label, to release music in the CD format because Philips owned a 50 percent stake in Polygram. Finally, Sony and Philips provided the record companies with access to their manufacturing technology and plant in order to ensure an adequate supply of complementary products. As a result, nearly 650 music titles were available in CD format when the first CD players were released and the CD format went on to become the most popular music format.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;5. Provide standalone value for the base product.  Philips introduced the videodisc player (VDP) in 1979 as a competitor to the VCR. VDPs had slightly better picture quality than VCRs and had potentially lower hardware and software costs, owing to a simpler manufacturing process. However, the VCR had a 3-4 year head start on the VDP and had already developed an installed base of over one million units.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Providing a stand-alone use is the strategy that VCR producers used to achieve a successful launch and avoid fighting the difficult chicken and egg startup problem. Unlike the VDP, the VCR offered the ability to time-shift television programming. In fact, when the VCR was launched this was the only application available because the market for pre-recorded videocassettes had not yet developed. The standalone value for the VCR “time-shifting television programming” was sufficiently strong to get over a million people to purchase the product in the first 3-4 years after its launch. This installed user base of the VCR as a base product was sufficient to entice entrepreneurs to develop a market for pre-recorded videocassettes as complementary products in the late 1970′s. The complement-based network effect that resulted improved the value of the base product, increased sales velocity for the base and complementary products, and ensured that the VCR would be a common feature in most American homes.&lt;/p&gt;
&lt;p&gt;A good modern example of this would be del.icio.us, which had stand alone value by storing your bookmarks in the cloud, and also had network effects with its social features.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;6. Integrate vertically into critical complements when supply is not certain.  To overcome the chicken and egg problem, companies must find a way to ensure an adequate supply, variety, and quality of complementary goods. By vertically integrating into the complement product as well as the base product, a company can attempt to ensure an adequate supply of both goods.  Nintendo is the leading developer of games for its consoles, and Microsoft and Sony fund many of their most popular games.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Vertical integration is risky – as witnessed by the Apple computer in the late 80s and early 90s. By remaining tightly integrated, Apple precluded market competition from providing the necessary variety of price-competitive complements and base products.&lt;/p&gt;
&lt;p&gt;**&lt;/p&gt;
&lt;p&gt;Many of the above strategies (especially 3 &amp;#x26; 5) apply to regular (non-complementary) network effect products.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Dividing equity between founders]]></title>
            <description><![CDATA[A friend asked me recently if I knew of any good guidelines for dividing up equity between founders, and specifically what to do in the case…]]></description>
            <link>https://cdixon.org/2009/08/23/dividing-equity-between-founders</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/23/dividing-equity-between-founders</guid>
            <pubDate>Sun, 23 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A friend asked me recently if I knew of any good guidelines for dividing up equity between founders, and specifically what to do in the case when a co-founder provides seed capital.&lt;/p&gt;
&lt;p&gt;The truth is I don’t know of any great guidelines – this is seems to me a very case-by-case decison.&lt;/p&gt;
&lt;p&gt;Obviously the main consideration should be the relative importance of each founder to the future prospects of the venture.  And, as in any negotiation, the alternatives each person has will also factor in.&lt;/p&gt;
&lt;p&gt;Probably way too many founders divide things evenly just to avoid a difficult conversation.  Most likely, this will lead to a difficult conversation down the road (or worse).&lt;/p&gt;
&lt;p&gt;(As an aside – you should also figure out titles early on.  When founders say “we are co-CEOs” or “we don’t have titles” that more often than not means there is a big fight looming.  Startups are little dictatorships for good reason.)&lt;/p&gt;
&lt;p&gt;One thing I’ve also noticed is people tend to overvalue past contributions (coming up with the idea, spending time developing it, building a prototype, etc) and undervalue future contributions.  Remember that an equity grant is typically for the next 4 years of work (hence 4 years of vesting).  Imagine yourself 2 years from now after working day and night, and ask yourself in that situation if the split still seems fair.&lt;/p&gt;
&lt;p&gt;Another consideration is if one founder has had greater career success and will therefore significantly improve the odds of getting financed at an attractive valuation.  One way to figure out how much this is worth is to estimate how much having that founder increases your valuation at the next financing and then, say, split the difference.  So if having her means you can raise $2M by giving away 30% of your company instead of 40% of your company, let that founder have an extra 5%.&lt;/p&gt;
&lt;p&gt;If one founder had the idea for the company, it is sometimes reasonable to give that person additional equity.  If that idea involves a bona fide technology breakthrough, they could be entitled to considerably more equity, say 10-20% (or you may have to give some of that to a university or other IP owner). But if the idea is more abstract and doesn’t have real IP behind it (“User generated X” “A marketplace for Y”) that should only earn a few extra points of equity, if any.&lt;/p&gt;
&lt;p&gt;If one founder is providing seed capital, assuming there are no other investors involved, the best way to do this is a simple interest bearing (say 5% annual rate), non-convertible loan to the company. I did this once and just had my partner write an IOU on a single sheet of paper, without using lawyers.  When you raise further money the best thing is to have that loan convert into equity at the same terms as the rest of the investors (it looks a somewhat bad to investors to take their fresh capital and pay it right out to a founder – unless the founder is in dire financial straights).&lt;/p&gt;
&lt;p&gt;The reason you want to avoid granting equity for a founder’s seed capital is 1) it would cost a lot more in legal fees and 2) you would have to come up with a valuation without a 3rd party, arms length offer.&lt;/p&gt;
&lt;p&gt;If there are multiple seed investors, including non-founders, things get more complicated and you might have to resort to a convertible note or full blown equity round.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Why you shouldn’t keep your startup idea secret]]></title>
            <description><![CDATA[A frequent question entrepreneurs have when they are just starting their company is:  how secretive should I be about my idea?  My answer…]]></description>
            <link>https://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret</guid>
            <pubDate>Sat, 22 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A frequent question entrepreneurs have when they are just starting their company is:  how secretive should I be about my idea?  My answer:  you should talk about it to almost anyone who will listen.  This includes investors, entrepreneurs, people who work in similar areas, friends, people on the street, the bartender, etc.&lt;/p&gt;
&lt;p&gt;There are lots of benefits to talking to people.  You’ll get suggestions for improvements.  You’ll discover flaws and hopefully correct them.   You’ll learn a lot more about the sector/industry.  You’ll learn about competitive products that exist or are being built.  You’ll gauge people’s excitement level for the product and for various features.  You’ll refine your sales and investor pitch.  You might even discover your idea is a bad idea and save yourself years of hitting your head against the wall.&lt;/p&gt;
&lt;p&gt;In terms of the risk of someone stealing your idea, there are at best a handful of people in the world who might actually drop everything and copy your idea.&lt;/p&gt;
&lt;p&gt;First of all, most people will probably think your idea is stupid.  This does not mean your idea is stupid.  In fact, if everyone loves your idea, I might be worried that it’s not forward thinking enough.&lt;/p&gt;
&lt;p&gt;People at large related companies almost always think they have already built or are in the process of building all the good ideas – so your idea is either something they are already building (which is a good thing to discover early) or else they will dismiss it as a bad idea.  (I have a personal diligence rule that when speaking to people at large companies, the facts that they tell you are very useful but their opinions about startup ideas no more valuable than any other smart person’s opinions).&lt;/p&gt;
&lt;p&gt;In terms of speaking to other entrepreneurs, the vast majority are already working on something and are highly unlikely to drop everything and copy you.  Even if they are in the idea generation phase, high integrity entrepreneurs wouldn’t copy your idea anyways.&lt;/p&gt;
&lt;p&gt;VC’s will either not like your idea, or else like it and possibly want to fund you.  They vastly prefer funding an existing team than taking an idea and building a team.  The one risk is if they have entrepreneurs they are working with in a similar area (see next paragraph).  Most VCs have enough integrity to disclose this and let you decide how much detail to go into.&lt;/p&gt;
&lt;p&gt;The handful of people in the world who might copy your idea are entrepreneurs just starting up with a very similar idea.  You can probably just explicitly avoid these people, although by talking to lots of people your ideas will likely seep through to them.&lt;/p&gt;
&lt;p&gt;Even if your idea gets in the wrong hands, they will probably just get the high level “elevator pitch” which isn’t worth much anyways. Hopefully by that time you’ve developed the idea much further and in much greater detail – by talking to as many people as possible.&lt;/p&gt;
&lt;p&gt;A note about NDAs:  1) almost no experienced entrepreneurs/VCs will sign them (in fact, you asking them too is widely considered a sign of inexperience), 2) It’s not clear they have any real value – are you really going to spend years suing someone who signed an NDA?  I’ve personally never heard of it happening.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Machine learning is really good at partially solving just about any problem]]></title>
            <description><![CDATA[There’s a saying in artificial intelligence circles that techniques like machine learning (and NLP) can very quickly get you, say, 80% of…]]></description>
            <link>https://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem</guid>
            <pubDate>Thu, 20 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;There’s a saying in artificial intelligence circles that techniques like &lt;a href=&quot;http://en.wikipedia.org/wiki/Machine_learning&quot;&gt;machine learning&lt;/a&gt; (and &lt;a href=&quot;http://en.wikipedia.org/wiki/Natural_language_processing&quot;&gt;NLP&lt;/a&gt;) can very quickly get you, say, 80% of the way to solving just about any (real world) problem, but going beyond 80% is extremely hard, maybe even impossible.  The Netflix Challenge is a case in point: hundreds of the best researchers in the world worked on the problem for 2 years and the (apparent) winning team got a 10% improvement over Netflix’s in-house algorithm.  This is consistent with my own experience, having spent many years and dollars on machine learning projects.&lt;/p&gt;
&lt;p&gt;This doesn’t mean machine learning isn’t useful – it just means you need to apply it to contexts that are fault tolerant:  for example, online ad targeting, ranking search results, recommendations, and spam filtering.  Areas where people aren’t so fault tolerant and machine learning usually disappoints include machine translation, speech recognition, and image recognition.&lt;/p&gt;
&lt;p&gt;That’s not to say you can’t use machine learning to attack these non-fault tolorant problems, but just that you need to realize the limits of automation and build mechanisms to compensate for those limits.  One great thing about most machine learning algorithms is you can infer confidence levels and then, say, ship low confidence results to a manual process.&lt;/p&gt;
&lt;p&gt;A corollary of all of the above is that it is very rare for startup companies to ever have a competitive advantage because of their machine learning algorithms.  If a worldwide concerted effort can only improve Netflix’s algorithm by 10%, how likely are 4 people in an R+D department in a startup going to have a significant breakthrough.  Modern ML algorithms are the product of thousands of academics and billions of dollars of R+D and are generally only improved upon at the margins by individual companies.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Options on early stage companies]]></title>
            <description><![CDATA[I believe that what I’m about to say is accepted by venture capitalists as fact, even trivially obvious fact, yet very few entrepreneurs I…]]></description>
            <link>https://cdixon.org/2009/08/17/options-on-early-stage-companies</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/17/options-on-early-stage-companies</guid>
            <pubDate>Mon, 17 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I believe that what I’m about to say is accepted by venture capitalists as fact, even trivially obvious fact, yet very few entrepreneurs I meet seem to understand it.&lt;/p&gt;
&lt;p&gt;An option on a share of stock of an early stage company is (for all practical purposes) equal in value to a share in that early stage company.  Not less, as most entrepreneurs seem to believe (and god forbid you think “the VCs have the option to put in more money” is economically advantageous to you).&lt;/p&gt;
&lt;p&gt;Here’s why.  Black and Scholes (and Merton) won a Nobel prize for inventing the Black-Scholes model, which was the first model that somewhat accurately modeled options pricing.  Using this model, and making a few reasonable assumptions (the option is “near the money,” the maturity is sufficiently far away), the key driver of an option’s value is &lt;a href=&quot;http://en.wikipedia.org/wiki/Volatility_(finance)&quot;&gt;volatility&lt;/a&gt; (in fact, if you listen to option traders talk, they actually talk about prices in “vols”).   In public markets, options are usually priced at some fraction of the share price.  This is because public stocks under normal circumstances have volatilities around, say, 20% (at least they used to 10 years ago when I was programming options pricing algorithms).&lt;/p&gt;
&lt;p&gt;The volatility of the value of a seed stage startup is incredibly high.  I don’t know if any data exists for what volatility estimate would be good to use, but for an informal analysis suppose the average volatility of a seed stage startup is 300%.  Then try putting 300% into the volatility field of a Black-Scholes &lt;a href=&quot;http://www.erieri.com/scripts23/blackscholes/blackscholes.exe/Calculate&quot;&gt;calculator&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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        class=&quot;gatsby-resp-image-image&quot;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;picture-20&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;So if your share price is $1, an option (European Call is a fancy word for options similar to what are given out in startups) is worth $0.9993 dollars.&lt;/p&gt;
&lt;p&gt;This is good news for start up employees, directors, and advisors who are awarded stock options.  Their options are economically as valuable as stock but have better tax treatment.&lt;/p&gt;
&lt;p&gt;Here’s the bad news.  At least since I’ve been observing early stage deals (since 2003), &lt;strong&gt;so-called financial innovation in venture capital has been all about creating new kinds of options for investors, each one more obfuscatory than the last.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- The first way they create options is by simply doing nothing – telling the entrepreneur “great idea, come back in a few months when you’ve made more progress.”  The logic is: why would you invest now when you could invest in, say, 3 months with more information? (as VCs say, why not “flip another card over”).  This is obviously perfectly within their rights and logical, but ultimately, in my opinion, penny wise and pound foolish.   While the VCs might be successful with this strategy on a specific deal, in the long run they are hurting themselves reputationally and also probably by letting some good deals slip away.&lt;/p&gt;
&lt;p&gt;- Next there is tranching – this is pretty literally an option.  Even if the pre-negotiated future valuations are higher, the option has basically the same value as a share at the current price.  Try the Black-Scholes calculator but changing the strike price to 10 (simulating the idea that the seed round is $1M pre and future valuation is $10m pre):&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The point is with the super high volatility of startups, you can structure the option in almost any way and it’s still like giving someone shares.  (I discuss the problems with tranching in more detail &lt;a href=&quot;http://www.cdixon.org/?p=261&quot;&gt;here&lt;/a&gt;.)&lt;/p&gt;
&lt;p&gt;- Next there was “warrant coverage.”  This is perfectly legitimate in many cases (e.g. as a “kicker” in a venture debt round, as part of an important strategic partnership), as long as the entrepreneur understands 1 warrant basically equals 1 share.  One mistake entrepreneurs often make is to focus so intently on nominal valuation that they don’t realize their “effective valuation” with warrants is much lower.  For example, if the valuation is $10M pre and you give 100% warrant coverage, the valuation is really $5M pre.&lt;/p&gt;
&lt;p&gt;- Over the past few years with big VCs starting “seed programs” we’ve seen the emergence of situations where there is no contractual option but the signaling value of the VC’s potential non-participation gives them option-like value.  I discuss why I dislike these deals &lt;a href=&quot;http://www.cdixon.org/?p=256&quot;&gt;here&lt;/a&gt;.  (This might be one point on which &lt;a href=&quot;http://www.avc.com/&quot;&gt;Fred&lt;/a&gt; and I disagree…?).&lt;/p&gt;
&lt;p&gt;- Super pro rata rights.  This is a new term that’s popped up lately.  Pro-rata rights are options, but seem like reasonable ones.  If as an investor I bought 5% of your company, pro rata rights give me the right to invest 5% in the next round.  They are arguably a reasonable reward for taking a risk early on.  &lt;strong&gt;Super&lt;/strong&gt; pro rata rights mean if I buy 5% of your company now I have the right to invest, say, 50% of the next round.  This is a really expensive deal for the entrepreneur.  If an investors puts in $250K for 5% of your company now with super pro rata rights on 50% of the next round, I’d just for simplicity assume you sold ~20% (assuming the next round sells 30% and the VC does half of that) of your company for $250K.  (The actual analysis of the value of super rata rights seems tricky – maybe some finance PhD will figure out how to price them at some point).&lt;/p&gt;
&lt;p&gt;Good VCs don’t mess around with this stuff.  They realize that real value is created when you invest in great people and innovate around technology, not finance.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[Ideal first round funding terms]]></title>
            <description><![CDATA[My last 2 posts were about things to avoid, so I thought it might be helpful to follow up with something more positive.  Having been part of…]]></description>
            <link>https://cdixon.org/2009/08/16/ideal-first-round-funding-terms</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/16/ideal-first-round-funding-terms</guid>
            <pubDate>Sun, 16 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;My last 2 posts were about things to avoid, so I thought it might be helpful to follow up with something more positive.  Having been part of or observed about 50 early stage deals, I have come to believe there is a clearly dominant set of deal terms.   Here they are:&lt;/p&gt;
&lt;p&gt;- Investors get either common stock or 1x non-participating preferred stock.  Anything more than that (participating preferred, multiple liquidation preferences) divide incentives of investors and the entrepreneurs.  Also, this sort of crud tends to get amplified in follow on rounds.&lt;/p&gt;
&lt;p&gt;- Pro rata rights for investors.   Not super pro rata rights (explaining why this new trendy term is a bad idea requires a separate blog post).  This means basically that investors have the right to put more money in follow on rounds.  This should include &lt;strong&gt;all&lt;/strong&gt; investors – including small angels when they are investing alongside big VCs.  There are two reasons this term is important 1) it seems fair that investors have the option to reinvest in good companies – they took a risk at the early stage after all 2) in certain situations it lets investors “protect” their investments from possible valuation manipulation (this has never happened to me but more experienced investors tell me horror stories about stuff that went on in the last downturn – 2001-2004).&lt;/p&gt;
&lt;p&gt;- Founder vesting w/ acceleration on change of control.  I talk about this in detail &lt;a href=&quot;http://www.cdixon.org/?p=164&quot;&gt;here&lt;/a&gt;.   If your lawyer tries to talk you out of founder vesting (as some seem to be doing lately), I suggest you get a new lawyer.&lt;/p&gt;
&lt;p&gt;- This stuff is all so standard that there is no reason you should pay more than $10K for the financing (including both sides).  I personally use &lt;a href=&quot;http://www.gunder.com/&quot;&gt;Gunderson&lt;/a&gt; and think they are great.   Whoever you choose, I strongly recommend you go with a “standard” startup lawfirm (Gunderson, Wilson Sonsini, Fenwick etc).   I tried going with a non-standard one once and the results were disastrous.  Also, when you go with a standard firm and get their standard docs it can expedite later rounds as VCs are familiar with them.&lt;/p&gt;
&lt;p&gt;- A board consisting of 1 investor, 1 management and 1 mutually agreed upon independent director.  (Or 2 VCs, 2 mgmt and 1 indy).  As an entrepreneur, the way I think of this is if both my investors and an independent director who I approved want to fire me, I must be doing a pretty crappy job and deserve it.&lt;/p&gt;
&lt;p&gt;- Founder salaries – these should be “subsistence” level and no more.  If the founders are wealthy, the number should be zero.  If they aren’t, it should be whatever lets them not worry about money but not save any.  This is very, very important.  Peter Thiel said it best &lt;a href=&quot;http://www.techcrunch.com/2008/09/08/peter-thiel-best-predictor-of-startup-success-is-low-ceo-pay/&quot;&gt;here&lt;/a&gt;.  (I would actually go further and say this should be true of all employees at all non-profitable startups – but that is a longer topic).&lt;/p&gt;
&lt;p&gt;- If small angels are investing alongside big VCs, they should get all the same economic rights as the VCs but no control rights.  Economics rights means share price, any warrants if there are any (hopefully there aren’t), and pro-rata rights.  Control rights means things like the right to block later financings, selling the company etc.  I once had to track down a tiny investor in the mountains of Italy to get a signature.  It’s a real pain and unnecessary.&lt;/p&gt;
&lt;p&gt;- Option pool – normally 10-20%.  This comes out of the pre-money so founders should be aware that the number is very important in terms of their dilution.  Ideally the % should be based on a hiring plan and not just a deal point.   (Side note to entrepreneurs – whenever you want to debate something with a VC, frame it in operational terms since it’s hard for them to argue with that).&lt;/p&gt;
&lt;p&gt;- All the other stuff (registration rights, dividends etc) should be standard NVCA terms.&lt;/p&gt;
&lt;p&gt;- Valuation &amp;#x26; amount- My preference is to keep all terms as above and only negotiate over 2 things – valuation and amount raised.  The amount raised should be enough to hit whatever milestones you think will get the company further financing, plus some fudge factor of, say, 50% because things always take longer and cost more than you think.  The valuation is obviously a matter of market conditions, how competitive the deal is etc.   One thing I would say is if you expect to raise more money (and you should expect to), make sure your post-money valuation is one that you will be able to “beat” in your next round.  There is nothing more dilutive and morale crushing than a down round.&lt;/p&gt;</content:encoded>
        </item>
        <item>
            <title><![CDATA[The problem with tranched VC investments]]></title>
            <description><![CDATA[In venture capital, tranching refers to investments where portions of the money are released over time when certain pre-negotiated…]]></description>
            <link>https://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments</guid>
            <pubDate>Sat, 15 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;In venture capital, tranching refers to investments where portions of the money are released over time when certain pre-negotiated milestones are hit.  Usually it will all be part of one Series of investment, so a company might raise, say, $5M in the Series A but actually only receive, say, half up front and half when they’ve hit certain milestones.  Sometimes something similar to tranching is simulated, for example when a VC makes a seed investment and pre-negotiates the Series A valuation, along with milestones necessary to trigger it.&lt;/p&gt;
&lt;p&gt;In theory, tranching gives the VC’s a way to mitigate risk and the entrepreneur the comfort of not having to do a roadshow for the next round of financing.  In practice, I’ve found tranching to be a really bad idea.&lt;/p&gt;
&lt;p&gt;First of all, the entrepreneur should realize that the milestones written in the document are merely guidelines and ultimately the VC has complete control over whether to fund the follow on tranches.  Imagine a scenario where the entrepreneur hits the milestones but for whatever reason the VC gets cold feet and doesn’t want to fund the follow on tranche.  What is the entrepreneur going to do – sue the VC?  First of all they have vastly deeper pockets than you, so at best you will get tied up in court for a long time while your startup goes down the tubes.  Not to mention that it would effectively blacklist you in the VC community.  So just realize that contracts are the right to sue and nothing more.  The only money you can depend on is the money sitting in your bank account.&lt;/p&gt;
&lt;p&gt;Here are some other reasons both entrepreneurs and investors should dislike tranching:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Makes hiring more difficult: Hiring is super critical at an early stage.  A very reasonable question prospective employees often (and should) ask  is “How many months of cash do you have in the bank?”  How do you respond if the money is tranched?  In my first startup, our full round gave us 18 months of cash but the first trance only a few months.  Should I have said what I had in the bank- just a few months – and scare the prospective hire?  Or should I have tried to explain “Oh, we have 18 months, but there is this thing called tranching, blah blah blah, and I’m sure the VCs will pony up.”  Not very reassuring either way.&lt;/li&gt;
&lt;li&gt;Distracts the entrepreneur:  The entrepreneur is forced to spend time making sure she gets the follow-on tranches.  In many cases, she even has to go present to the VC partnership multiple times (each time requiring lots of prep time).  Also, savvy entrepreneurs will prepare multiple options in case the VC decides not to fund, so will spend time talking to other potential investors to keep them warm.  So basically tranching adds 10-20% overhead for the founders that could otherwise be spent on the product, marketing etc.&lt;/li&gt;
&lt;li&gt;Milestones change anyways:  At the early stage you often realize that what milestones you originally thought were important actually were the wrong milestones.   So you either have to renegotiate the milestones or the entrepreneur ends up targeting the wrong things just to get the money.&lt;/li&gt;
&lt;li&gt;Hurts VC-entrepreneur relations.  Specifically, it encourages the entrepreneur to “manage” the investors.    One of the great things about properly financed early stage startups is that everyone involved has the same incentives – to help the company succeed.  In good companies, the investors and entrepreneurs really do work as a team and share information completely and honestly.  When the deal is tranched, the entrepreneurs has a strong incentive to control the information that goes to the investors and make things appear rosy.  The VC in turn usually recognizes this and feels manipulated.  I’ve been on both sides of this and have felt its insidious effect.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;There are better ways for investors to mitigate risk – e.g. lower the valuation, smaller round size.  But don’t tranche.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Why seed investors don’t like convertible notes]]></title>
            <description><![CDATA[A popular option in seed round financing is a convertible note instead of setting a valuation in an equity financing.  A convertible note is…]]></description>
            <link>https://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes</link>
            <guid isPermaLink="false">https://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes</guid>
            <pubDate>Wed, 12 Aug 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;A popular option in seed round financing is a convertible note instead of setting a valuation in an equity financing.  A convertible note is basically a loan where the investors convert the debt into equity in the next round of financing at a step up.  A common step up is 20%, which means for every dollar the investors lend, they get $1.20 worth of shares in the subsequent round.&lt;/p&gt;
&lt;p&gt;The appeal of convertible notes is 1) it defers the negotiation about valuation to the next round 2) it is often much cheaper in terms of legal fees (~$5k versus $20-40K).&lt;/p&gt;
&lt;p&gt;Here’s why a lot of seed investors don’t like convertible notes:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Most importantly, they split the entrepreneur’s and investors’ incentives – for the subsequent round, the entrepreneur benefits from a higher valuation, the investor from a low one.   Most investors work hard despite this to help the company, but nevertheless the note creates friction between people who should be working in tandem.&lt;/li&gt;
&lt;li&gt;On more than a few occasions VCs in subsequent rounds have said “I don’t want to give the seed investors a 20% step up.”  Sure, the step up is in a contract, but the investor in the subsequent round can always make their investment contingent upon modifying that contract.  In the end, it ends up pitting seed investors who wants their step up versus entrepreneur who wants to get the financing done, and the seed investor is forced to choose between getting the step up they deserve and being “the bad guy” who spoils the financing.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;One increasingly popular compromise is to do a “convertible with a cap.”  What this mean is that you set a cap of $N million dollars valuation and a step up of M%, and on the subsequent round the seed investor gets the better of the two.  If the cap is low enough, this mostly rectifies #1 above since the investor has the economic incentive to increase the valuation above the cap.  It doesn’t rectify #2, however, but does have the benefit of being significantly cheaper in terms of legal fees than a proper equity financing.   There is nothing worse than spending 5%-10% of your seed round on lawyers.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[The myth of the Eureka moment]]></title>
            <description><![CDATA[I’ve been involved in the development of a number startups over the years, including three I co-founded.   I have also observed the idea…]]></description>
            <link>https://cdixon.org/2009/05/15/the-myth-of-the-eureka-moment</link>
            <guid isPermaLink="false">https://cdixon.org/2009/05/15/the-myth-of-the-eureka-moment</guid>
            <pubDate>Fri, 15 May 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;I’ve been involved in the development of a number startups over the years, including three I co-founded.   I have also observed the idea development process from the outside many times.  In the 10 years or so I’ve been involved with startups, I have never seen a “Eureka” moment where someone suddenly comes up with a great idea.  Instead, I have always found idea development to be a wrenching and often meandering process that is guided mostly by instinct.&lt;/p&gt;
&lt;p&gt;I think the first step to developing an idea is picking a general “space” that you think has interesting things going on (picking the right space and the right co-founders are in my view the only really important things you do at the beginning of a startup).  Maybe you have experience in the space or maybe you just sense something interesting is going on there.&lt;/p&gt;
&lt;p&gt;Here’s my experience developing the idea for &lt;a href=&quot;http://www.siteadvisor.com&quot;&gt;SiteAdvisor&lt;/a&gt;.  At the time, I had never worked in computer security but had always found it interesting.  When I worked at &lt;a href=&quot;http://www.bvp.com&quot;&gt;Bessemer&lt;/a&gt;, I spent as much time as I could talking to &lt;a href=&quot;http://whohastimeforthis.blogspot.com/&quot;&gt;David Cowan&lt;/a&gt; and other security experts.  One thing that was apparent was that, on average, every few years a new type of security threat would come along and usually with each wave of threats some interesting startups were built (e.g. viruses-&gt;mcafee &amp;#x26; symantec, spam-&gt;brightmail &amp;#x26; postini, spyware-&gt;webroot).  So in 2003 when phishing began to emerge, a friend and I created an anti-phishing toolbar.  It wasn’t a particularly special piece of software – there were a couple of other anti-phishing toolbars around at the time that had similar functionality.  We just figured something interesting was going on so let’s throw our hat in the ring and maybe something good will emerge.&lt;/p&gt;
&lt;p&gt;Think back to 2003, before Firefox.  It was a pretty bad time on the web.  Venturing off the major websites, you’d get bombarded with popups and spyware and ActiveX warnings.  It occurred to us:   if we are warning users about phishing sites, why don’t we warn them about sites that do other bad things?  In other words, we realized that phishing was just a special case of a more general problem – the web needed a reputation system for websites.  Two years later, by the time we actually released SiteAdvisor, phishing was just an afterthought (in fact the first version of SiteAdvisor didn’t even include anti-phishing since we were focused on “Safe Search” and phishing sites don’t show up in search results for various technical reasons).&lt;/p&gt;
&lt;p&gt;Today &lt;a href=&quot;http://www.siteadvisor.com&quot;&gt;every&lt;/a&gt; &lt;a href=&quot;http://safeweb.norton.com/&quot;&gt;major&lt;/a&gt; &lt;a href=&quot;http://www.trendsecure.com/portal/en-US/tools/security_tools/trendprotect&quot;&gt;security&lt;/a&gt; company has a “safe search product.”  It seems kind of obvious now.  But in retrospect, I don’t see how we would ever have developed the idea without having already “thrown our hat in the ring.”  Even if we had thought of the idea, we probably would have dismissed it as too obvious.  When you aren’t actively engaged in an space you can’t see the gaps.&lt;/p&gt;
&lt;p&gt;I think a lot of people who are interested in starting companies think they shouldn’t do it until they have a Eureka moment.  I’d say that instead they should focus on finding an area that “feels interesting” and then get ready to bob and weave.&lt;/p&gt;</content:encoded>
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            <title><![CDATA[Joining a startup is far less risky than most people think]]></title>
            <description><![CDATA[Joining a startup is far less risky than most people seem to think.  In fact, I don’t know if anyone has ever studied this systematically…]]></description>
            <link>https://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think</link>
            <guid isPermaLink="false">https://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think</guid>
            <pubDate>Mon, 11 May 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;Joining a startup is far less risky than most people seem to think.  In fact, I don’t know if anyone has ever studied this systematically, but I would bet that people who join startups have greater job security than people who join large companies, and certainly have better risk-adjusted returns.&lt;/p&gt;
&lt;p&gt;Here’s why:&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Big companies aren’t as stable as you think:&lt;/strong&gt;  I graduated business school 6 years ago.  Very few people in my class created or joined startups, instead opting for “safe” companies like… Bear Stearns, Lehman Brothers, Ford, hedge funds that no longer exist, etc.  Meanwhile, everyone I know who went the startup route has had job security and been successful – in some cases spectacularly so.&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Big companies aren’t loyal to employees:&lt;/strong&gt;  When there are cuts at big companies, they tend to just use a hacksaw and not consider how loyal you’ve been or how hard you worked.  The people who survive are often the ones who happen to be in certain favored divisions or are good at playing politics.&lt;/p&gt;
&lt;p&gt;On the flip side:&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Startups that have financing pay pretty well:&lt;/strong&gt;  If the startup you found or join is VC backed, you usually make market or near-market wages (in addition to the potential upside you get with equity).   Even if things go south you will probably have broken even financially and learned valuable skills.&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Startups tend to be much more loyal to employees&lt;/strong&gt;:  For example, in the recent downturn I know of a number of startups where management took pay cuts (in some cases took their pay to zero) before laying anyone off.  Experienced startup managers know how devastating layoffs can be to morale and to their own reputation and tend to avoid them at all costs.  Moreover, even when there are layoffs they tend to be based on merit and loyalty.&lt;/p&gt;
&lt;p&gt;**- When you join a startup, you are also joining a network –  **You aren’t just joining a company – you are joining a network of employees and investors who – regardless of the fate of the startup you join – will inevitably go on to do interesting and successful ventures.  If you impress them, they will bring you along.  I know of many cases where startups failed but employees went on to flourish at the founders’ next startup or another company their VCs invested in.&lt;/p&gt;
&lt;p&gt;In short, just because startups tend to fail more than big companies doesn’t mean joining a startup is riskier than joining a big company.&lt;/p&gt;</content:encoded>
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        <item>
            <title><![CDATA[Founder vesting]]></title>
            <description><![CDATA[The most important term in a startup term sheet that no one seems to think carefully about is founder vesting.   There are two key points…]]></description>
            <link>https://cdixon.org/2009/04/21/founder-vesting</link>
            <guid isPermaLink="false">https://cdixon.org/2009/04/21/founder-vesting</guid>
            <pubDate>Tue, 21 Apr 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The most important term in a startup term sheet that no one seems to think carefully about is &lt;em&gt;founder vesting&lt;/em&gt;.   There are two key points about vesting:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;All startup employees – including founders! – should vest over 4 years from their start date (with a one year “cliff”).  When I used to work in VC I can’t tell you how many companies I saw where some random former founder who was long gone from the company and was only there for some short period of time owned some big chunk of the company.  Not only is this just plain unfair, it also means there is a lot less room for giving equity to employees and for raising new capital.  Even if you are founding a company with your best friend – actually, &lt;strong&gt;especially&lt;/strong&gt; if you are founding a company with your best friend – everyone should have vesting.   If you have a lawyer who tells you otherwise, get a new lawyer.&lt;/li&gt;
&lt;li&gt;Founders should always have acceleration on change of control!  In particular, you should have full acceleration on “double trigger” (company is acquired and you are fired).  In addition you should have partial acceleration on “single trigger” (company is acquired and you remain at company).  I prefer a structure where you accelerate such that you have N months remaining (N=12 is a good number).  This gives the acquirer comfort that the key people will be around for a reasonable period of time but also lets the founders get the equity they deserve without spending years and years at the acquirer.  Consider the scenario where your company gets acquired 1 year after founding and you have 3 years of vesting remaining.   Suppose further that you just aren’t a big company type and leave after 1 year.  In that case you would forgo half your equity.  It’s always surprising to me how much time founders spending focusing on valuation that might change their ownership by a few points when vesting acceleration (albeit under certain circumstances – but I have seen this happen) can have a far larger impact on their ultimate equity ownership.&lt;/li&gt;
&lt;/ol&gt;</content:encoded>
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            <title><![CDATA[Naming your startup]]></title>
            <description><![CDATA[The Name Inspector has a good post today regarding 6 naming myths to ignore. I think it’s generally right on.   Naming is so important and…]]></description>
            <link>https://cdixon.org/2009/04/18/naming-your-startup</link>
            <guid isPermaLink="false">https://cdixon.org/2009/04/18/naming-your-startup</guid>
            <pubDate>Sat, 18 Apr 2009 00:00:00 GMT</pubDate>
            <content:encoded>&lt;p&gt;The Name Inspector has a good post today regarding &lt;a href=&quot;http://www.thenameinspector.com/six-naming-myths-to-ignore/&quot;&gt;6 naming myths to ignore.&lt;/a&gt; I think it’s generally right on.   Naming is so important and so incredibly hard, especially for consumer internet companies that not only have to find a good name but also get the URL.   I am convinced that a big part of Twitter’s success, for example, is it has such a great name.  Simple word, easy to spell, great imagery, and also evocative of what the product does without being overly literal.&lt;/p&gt;
&lt;p&gt;I have been involved in naming a number of startups, including my two most recent companies:  Hunch and SiteAdvisor.  Each time it was a long and painful process.  Here are some things I’ve learned along the way.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Probably the most important thing is that the name be easy to spell after someone hears it pronounced.  I was involved in one startup before where every time you said the name the person says “what?” and then you have to spell it.  Trust me, it becomes really tedious and also adds friction to word-of-mouth buzz.&lt;/li&gt;
&lt;li&gt;You should have different naming goals for different products.  For example, SiteAdvisor was a security product.  You really can’t make security “cool” so we didn’t even try to bother to do that with the name.  Instead we went for a name that helped explain in a very literal way what the product did.  Before we came up with the name SiteAdvisor, I probably had 100 meetings where people said “I don’t understand what you are building – is it an anti-phishing toolbar, a spyware blocker or what?”.   This included meetings with VC’s who focus on security and other experts.  I knew the name SiteAdvisor was a winner when my father in law wrote the name on a high school blackboard and asked the kids what they thought the company did and one kid said “They advise you about websites” (and then he said ” … or construction sites” :) ).   Also we liked the name because we imagined in the future doing more than just security – for example warning about adult content.  (Alas, we never got that far).&lt;/li&gt;
&lt;li&gt;I tend to disagree with The Name Inspector about name length.  Shorter is definitely better.  In particular the number of syllables is important.  SiteAdvisor, while good at describing the product, is really clunky to pronounce.   I also tend to really dislike Latin-y portmanteau names like “Integra” “Omnitrust” etc.  Sounds like a pharmaceutical product.&lt;/li&gt;
&lt;li&gt;A few things I’ve learned about methodology.  I think it’s very rare to have an epiphany where you come up with a great name.  First of all, even if you do, the domain is probably taken and too expensive.  For systematically brainstorming, I really like the &lt;a href=&quot;http://www.rhymezone.com/r/rhyme.cgi?Word=intuition&amp;#x26;typeofrhyme=rel&amp;#x26;org1=syl&amp;#x26;org2=l&quot;&gt;Related Words function on RhymeZone&lt;/a&gt;.  I try to make lists of words that are sort of related to the product and then look at all the related words, look at all those words’ related words, etc, making lists of words and word fragments that sounds good.  Then I have a systematic process for checking domains to see if they are buyable.  If you are super lucky (and picked a multiword domain name) you might get it retail, but at this point almost all .com names (yes, I think you still need to own the .com) are owned by someone and the question becomes whether they will sell it at a reasonable price.  The best case is usually that it’s owned by a professional domainer and it’s not very monetizable via Adsense (domainers make a lot of money from Adsense on sites like candy.com so you’d need to offer them a tons of money to sell it).&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Naming is tough!&lt;/p&gt;</content:encoded>
        </item>
    </channel>
</rss>

<?xml version="1.0" encoding="UTF-8"?><rss xmlns:dc="http://purl.org/dc/elements/1.1/" xmlns:content="http://purl.org/rss/1.0/modules/content/" xmlns:atom="http://www.w3.org/2005/Atom" version="2.0"><channel><title><![CDATA[cdixon.org RSS Feed]]></title><description><![CDATA[Chris Dixon's blog.]]></description><link>https://cdixon.org</link><generator>GatsbyJS</generator><lastBuildDate>Thu, 22 Jun 2023 16:19:56 GMT</lastBuildDate><item><title><![CDATA[I wrote a book: Read Write Own]]></title><description><![CDATA[I wrote a book: Read Write Own I believe blockchains and the software movement around them – typically called crypto or web3 – provide the…]]></description><link>https://cdixon.org/2023/06/22/read-write-own</link><guid isPermaLink="false">https://cdixon.org/2023/06/22/read-write-own</guid><pubDate>Thu, 22 Jun 2023 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I wrote a book: &lt;em&gt;Read Write Own&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;I believe blockchains and the software movement around them – typically called crypto or web3 – provide the only plausible path to sustaining the original vision of the internet as an open platform that incentivizes creativity and entrepreneurship. I’ve been investing behind this thesis for years, and advocating for it through writing and speaking and by talking to business leaders, journalists, and policymakers both here and around the world.&lt;/p&gt;
&lt;p&gt;Through all that, it became clear that we need a comprehensive book that clearly explains new technologies like blockchains and the services built on top of them; how they fit into the history of the internet; and why they should matter to founders, developers, creators, and anyone interested in the history and evolution of business, technology, and innovation.&lt;/p&gt;
&lt;p&gt;So I wrote that book: &lt;em&gt;Read Write Own: Building the Next Era of the Internet.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;My thesis is that seemingly small initial decisions around software and network design can have profound downstream consequences on the control and economics of digital services. The book walks through the history of the internet, showing how it has gone through three major design eras: the first focused on democratizing information (read), the second on democratizing publishing (write), and the third on democratizing ownership (own).&lt;/p&gt;
&lt;p&gt;We are on the cusp of the third era – own – so I explain the key concepts underlying it, including blockchains and digital services built on top of blockchains. The book therefore answers a common question I hear: “&lt;em&gt;What problems do blockchains solve?&lt;/em&gt;” Blockchains solve the same problems that other digital services solve, but with better outcomes. They can connect people in social networks, while empowering users over corporate interests. They can underpin marketplaces and payment systems that facilitate commerce, but with persistently lower take rates. They can enable new forms of monetizable media, interoperable and immersive digital worlds, and artificial intelligence services that compensate – rather than cannibalize – creators and communities.&lt;/p&gt;
&lt;p&gt;The book takes controversial questions head on, including policy and regulatory topics, and the harmful “casino” culture that has developed around crypto that hurts public perception and undermines its potential. And I go deeper into intersecting topics like artificial intelligence, social networks, finance, media businesses, collaborative creation, video games, and virtual worlds.&lt;/p&gt;
&lt;p&gt;Inspired by modern tech classics like &lt;em&gt;Zero to One&lt;/em&gt; and &lt;em&gt;The Hard Thing About Hard Things&lt;/em&gt;, I wrote the book to be succinct, thorough, and accessible. I also distill cutting-edge thinking from technologists and founders to make it useful to practitioners. My goal was to make it accessible without watering it down. The book is meant for a range of audiences, including entrepreneurs, technologists, company leaders, policymakers, journalists, business thinkers, artists, community builders, and people who are simply curious about new technologies, culture, and the future of the internet.&lt;/p&gt;
&lt;p&gt;I love reading books but believe that tech and business topics usually work better in shorter formats, which is why in the past I’ve stuck to blogging and tweeting. But accomplishing all of the above warranted a longer treatment, bringing new and different ideas together in one place. So I spent much of the last year doing this. Many of the ideas I’ve thought about for a long time but never took the time to write. &lt;/p&gt;
&lt;p&gt;&lt;em&gt;Read Write Own: Building the Next Era of the Internet&lt;/em&gt; will be published by Random House on March 12, 2024. You can pre-order it &lt;a href=&quot;https://readwriteown.com&quot;&gt;here&lt;/a&gt;. &lt;/p&gt;
&lt;p&gt;Sign up for more book updates &lt;a href=&quot;https://cdixon.substack.com&quot;&gt;here&lt;/a&gt;. &lt;/p&gt;
&lt;hr&gt;
&lt;p&gt;[more about the term and title &quot;Read Write Own&quot; &lt;a href=&quot;https://readwriteown.com/terminologyhistory/&quot;&gt;here&lt;/a&gt;]&lt;/p&gt;</content:encoded></item><item><title><![CDATA[NFTs and A Thousand True Fans]]></title><description><![CDATA[In his classic 2008 essay “1000 True Fans,” Kevin Kelly predicted that the internet would transform the economics of creative activities: To…]]></description><link>https://cdixon.org/2021/02/27/NFTs-and-a-thousand-true-fans</link><guid isPermaLink="false">https://cdixon.org/2021/02/27/NFTs-and-a-thousand-true-fans</guid><pubDate>Sat, 27 Feb 2021 00:00:00 GMT</pubDate><content:encoded>&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 400px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 58.50000000000001%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/png;base64,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&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;nfts&quot; title=&quot;nfts&quot; src=&quot;/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png&quot; srcset=&quot;/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/924ad/nfts.png 170w,
/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/f570f/nfts.png 341w,
/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png 400w&quot; sizes=&quot;(max-width: 400px) 100vw, 400px&quot; loading=&quot;lazy&quot;&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
 
&lt;p&gt;In his classic 2008 essay “&lt;a href=&quot;https://kk.org/thetechnium/1000-true-fans/&quot;&gt;1000 True Fans&lt;/a&gt;,” Kevin Kelly predicted that the internet would transform the economics of creative activities:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;To be a successful creator you don’t need millions. You don’t need millions of dollars or millions of customers, millions of clients or millions of fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;A true fan is defined as a fan that will buy anything you produce. These diehard fans will drive 200 miles to see you sing; they will buy the hardback and paperback and audible versions of your book; they will purchase your next figurine sight unseen; they will pay for the “best-of” DVD version of your free YouTube channel; they will come to your chef’s table once a month.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Kelly’s vision was that the internet was the ultimate matchmaker, enabling 21st century patronage. Creators, no matter how seemingly niche, could now discover their true fans, who would in turn demonstrate their enthusiasm through direct financial support.&lt;/p&gt;
&lt;p&gt;But the internet took a detour. Centralized social platforms became the dominant way for creators and fans to connect. The platforms used this power to become the new intermediaries — inserting ads and algorithmic recommendations between creators and users while keeping most of the revenue for themselves.&lt;/p&gt;
&lt;p&gt;The good news is that the internet is trending back to Kelly’s vision. For example, many top writers on Substack earn far more than they did at salaried jobs. The economics of low take rates plus enthusiastic fandom does wonders. On Substack, 1,000 newsletter subscribers paying $10/month nets over $100K/year to the writer.&lt;/p&gt;
&lt;p&gt;Crypto, and specifically &lt;a href=&quot;https://variant.mirror.xyz/T8kdtZRIgy_srXB5B06L8vBqFHYlEBcv6ae2zR6Y_eo&quot;&gt;NFTs&lt;/a&gt; (non-fungible tokens), can accelerate the trend of creators monetizing directly with their fans. Social platforms will continue to be useful for building audiences (although these too should probably be replaced with superior &lt;a href=&quot;https://cdixon.org/2018/02/18/why-decentralization-matters&quot;&gt;decentralized&lt;/a&gt; alternatives), but creators can increasingly rely on other methods including NFTs and crypto-enabled economies to make money.&lt;/p&gt;
&lt;p&gt;NFTs are blockchain-based records that uniquely represent pieces of media. The media can be anything digital, including art, videos, music, gifs, games, text, memes, and code. NFTs contain highly trustworthy documentation of their history and origin, and can have code attached to do almost anything programmers dream up (one popular feature is code that ensures that the original creator receives royalties from secondary sales). NFTs are secured by the same technology that enabled Bitcoin to be owned by hundreds of millions of people around the world and represent hundreds of billions of dollars of value.&lt;/p&gt;
&lt;p&gt;NFTs have received a lot of attention lately because of high sales volumes. In the past 30 days there has been over &lt;a href=&quot;http://cryptoslam.io&quot;&gt;$300M&lt;/a&gt; in NFT sales:&lt;/p&gt;
&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 500px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 43.8%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/png;base64,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&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;pic1&quot; title=&quot;pic1&quot; src=&quot;/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png&quot; srcset=&quot;/static/a80ec982b7e8b39e8f1437e9c12f20ed/924ad/pic1.png 170w,
/static/a80ec982b7e8b39e8f1437e9c12f20ed/f570f/pic1.png 341w,
/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png 500w&quot; sizes=&quot;(max-width: 500px) 100vw, 500px&quot; loading=&quot;lazy&quot;&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
&lt;p&gt;Crypto has a history of boom and bust cycles, and it’s very possible NFTs will have their own ups and downs. &lt;/p&gt;
&lt;p&gt;That said, there are three important reasons why NFTs offer fundamentally better economics for creators. The first, already alluded to above, is by removing rent-seeking intermediaries. The logic of blockchains is once you purchase an NFT it is yours to fully control, just like when you buy books or sneakers in the real world. There are and will continue to be NFT platforms and marketplaces, but they will be constrained in what they can charge because blockchain-based ownership shifts the power back to creators and users — you can shop around and force the marketplace to earn its fees. (Note that lowering the intermediary fees can have a multiplier effect on creator disposable income. For example, if you make $100K in revenue and have $80K in costs, cutting out a 50% take rate increases your revenue to $200K, multiplying your disposable income 6x, from $20K to $120K.)&lt;/p&gt;
&lt;p&gt;The second way NFTs change creator economics is by enabling granular price tiering. In ad-based models, revenue is generated more or less uniformly regardless of the fan’s enthusiasm level. As with Substack, NFTs allow the creator to “cream skim” the most passionate users by offering them special items which cost more. But NFTs go farther than non-crypto products in that they are easily sliced and diced into a descending series of pricing tiers. NBA Top Shot cards range from over $100K to a few dollars. Fan of Bitcoin? You can buy as much or little as you want, down to 8 decimal points, depending on your level of enthusiasm. Crypto’s fine-grained granularity lets creators capture a much larger area under the demand curve.&lt;/p&gt;
&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/007c807f7f779bad96bcb007eca8611d/e11df/pic2.png&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 20.9%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAECAYAAACOXx+WAAAACXBIWXMAABYlAAAWJQFJUiTwAAAA3UlEQVQY0z1Pu27DMAz0/39C5k6dAnRrt6JA0KJLhwQI7AZFYlPyQ3Ikx49Asa8i0fSEA6kTjxSTruvgnINSCkSEqqowDAOMMSBF0FqLzuSaoihgbRtp5c7vzKZpwL2SsiwRbgFLPPMyI4SYL4sYO3fBHawxp2lCdsii8Kezb54l548l/aVH7BMLrxLvUIbwpd9l2DiOMkwQw0f+irw/IEw3hGv49/BmCZkcZE/YZVukxz1O5gf6TPhMN1hvH3B2raxU1zVsa2HrFi+7JzymK7zlz/jWe3jn4b0Hb/sLBkQuy0nVp9sAAAAASUVORK5CYII=&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;pic2&quot; title=&quot;pic2&quot; src=&quot;/static/007c807f7f779bad96bcb007eca8611d/94a55/pic2.png&quot; srcset=&quot;/static/007c807f7f779bad96bcb007eca8611d/924ad/pic2.png 170w,
/static/007c807f7f779bad96bcb007eca8611d/f570f/pic2.png 341w,
/static/007c807f7f779bad96bcb007eca8611d/94a55/pic2.png 681w,
/static/007c807f7f779bad96bcb007eca8611d/e11df/pic2.png 1000w&quot; sizes=&quot;(max-width: 681px) 100vw, 681px&quot; loading=&quot;lazy&quot;&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
&lt;p&gt;The third and most important way NFTs change creator economics is by making users owners, thereby reducing customer acquisition costs to near zero. Open any tech S-1 filing and you’ll see massive user/customer acquisition costs, usually going to online ads or sales staff. Crypto, by contrast, has grown to over a trillion dollars in aggregate market capitalization with almost no marketing spend. Bitcoin and Ethereum don’t have organizations behind them let alone marketing budgets, yet are used, owned, and loved by tens of millions of people.&lt;/p&gt;
&lt;p&gt;The highest revenue NFT project to date, &lt;a href=&quot;https://www.nbatopshot.com/&quot;&gt;NBA Top Shot&lt;/a&gt;, has generated $200M in gross sales in just the past month while spending very little on marketing. It’s been able to grow so efficiently because users feel like owners — they have skin in the game. It’s true peer-to-peer marketing, fueled by community, &lt;a href=&quot;https://twitter.com/ROSGO21/status/1364724500642689027?s=20&quot;&gt;excitement&lt;/a&gt;, and ownership. &lt;/p&gt;
&lt;p align=&quot;center&quot;&gt;&lt;span class=&quot;gatsby-resp-image-wrapper&quot; style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 400px;&quot;&gt;
      &lt;a class=&quot;gatsby-resp-image-link&quot; href=&quot;/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg&quot; style=&quot;display: block&quot; target=&quot;_blank&quot; rel=&quot;noopener&quot;&gt;
    &lt;span class=&quot;gatsby-resp-image-background-image&quot; style=&quot;padding-bottom: 35.50000000000001%; position: relative; bottom: 0; left: 0; background-image: url(&amp;apos;data:image/jpeg;base64,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&amp;apos;); background-size: cover; display: block;&quot;&gt;&lt;/span&gt;
  &lt;img class=&quot;gatsby-resp-image-image&quot; alt=&quot;pic3&quot; title=&quot;pic3&quot; src=&quot;/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg&quot; srcset=&quot;/static/02d87ce135354a8c8f9b7d470f6118a0/c2e49/pic3.jpg 170w,
/static/02d87ce135354a8c8f9b7d470f6118a0/c2dc0/pic3.jpg 341w,
/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg 400w&quot; sizes=&quot;(max-width: 400px) 100vw, 400px&quot; loading=&quot;lazy&quot;&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt; 
&lt;p&gt;NFTs are still early, and will evolve. Their utility will increase as digital experiences are built around them, including marketplaces, social networks, showcases, games, and virtual worlds. It’s also likely that other consumer-facing crypto products emerge that pair with NFTs. Modern video games like Fortnite contain sophisticated economies that mix fungible tokens like V-Bucks with NFTs/virtual goods like skins. Someday every internet community might have its own micro-economy, including NFTs and fungible tokens that users can use, own, and collect.&lt;/p&gt;
&lt;p&gt;The thousand true fans thesis builds on the original ideals of the internet: users and creators globally connected, unconstrained by intermediaries, sharing ideas and economic upside. Incumbent social media platforms sidetracked this vision by locking creators into a bundle of distribution and monetization. There are, correspondingly, two ways to challenge them: take the users, or take the money. Crypto and NFTs give us a new way to take the money. Let’s make it happen.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;(Image: CryptoPunks — Larva Labs)&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Doing old things better vs doing brand new things]]></title><description><![CDATA[New technologies enable activities that fall into one of two categories: 1) doing things you could already do but can now do better because…]]></description><link>https://cdixon.org/2020/10/19/doing-old-things-better-vs-doing-brand-new-things</link><guid isPermaLink="false">https://cdixon.org/2020/10/19/doing-old-things-better-vs-doing-brand-new-things</guid><pubDate>Mon, 19 Oct 2020 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;New technologies enable activities that fall into one of two categories: 1) doing things you could already do but can now do better because they are faster, cheaper, easier, higher quality, etc. 2) doing brand new things that you simply couldn’t do before. Early in the development of new technologies, the first category tends to get more attention, but it’s the second that ends up having more impact on the world.&lt;/p&gt;
&lt;p&gt;Doing old things better tends to get more attention early on because it’s easier to imagine what to build. Early films were shot like plays — they were effectively plays with a better distribution model — until filmmakers realized that movies had their own visual grammar. The early electrical grid delivered light better than gas and candles. It took decades before we got an electricity “app store” — a rich ecosystem of appliances that connected to the grid. The early web was mostly digital adaptations of pre-internet things like letter writing and mail-order commerce. It wasn’t until the 2000s that entrepreneurs started exploring “internet native” ideas like social networking, crowdfunding, cryptocurrency, crowdsourced knowledge bases, and so on.&lt;/p&gt;
&lt;p&gt;The most common mistake people make when evaluating new technologies is to focus too much on the “doing old things better” category. For example, when evaluating the potential of blockchains, people sometimes focus on things like cheaper and faster global payments, which are important and necessary but only the beginning. What’s even more exciting are the new things you simply couldn’t create before, like internet services that are &lt;a href=&quot;https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations&quot;&gt;owned and operated by their users&lt;/a&gt; instead of by companies. Another example is business productivity apps architected as web services. Early products like Salesforce were easier to access and cheaper to maintain than their on-premise counterparts. Modern productivity apps like Google Docs, Figma, and Slack focus on things you simply couldn’t do before, like real-time collaboration and deep integrations with other apps.&lt;/p&gt;
&lt;p&gt;Entrepreneurs who create products in the “brand new things” category usually spend many years deeply immersed in the underlying technology before they have their key insights. The products they create often &lt;a href=&quot;https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy&quot;&gt;start out looking toy-like&lt;/a&gt;, &lt;a href=&quot;https://cdixon.org/2019/01/08/strong-and-weak-technologies&quot;&gt;strange, unserious, expensive&lt;/a&gt;, and sometimes even dangerous. Over time, the products steadily improve and the world gradually embraces them. &lt;/p&gt;
&lt;p&gt;It can take decades for this process to play out. It’s clear that we are early in the development of emerging technologies like cryptocurrencies, machine learning, and virtual reality. It is also possible we are still early in the development of more established technologies like mobile devices, cloud hosting, social networks, and perhaps even the internet itself. If so, new categories of native products built on top of these technologies will continue to be invented in the coming years.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Computers that can make commitments]]></title><description><![CDATA[Blockchains are computers that can make commitments. Traditional computers are ultimately controlled by people, either directly in the case…]]></description><link>https://cdixon.org/2020/01/26/computers-that-can-make-commitments</link><guid isPermaLink="false">https://cdixon.org/2020/01/26/computers-that-can-make-commitments</guid><pubDate>Sun, 26 Jan 2020 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Blockchains are computers that can make commitments. Traditional computers are ultimately controlled by people, either directly in the case of personal computers or indirectly through organizations. Blockchains invert this power relationship, putting the code in charge. A game theoretic mechanism — a so-called consensus mechanism — makes blockchains resilient to modifications to their underlying physical components, effectively making them resilient to human intervention.  &lt;/p&gt;
&lt;p&gt;As a result, a properly designed blockchain provides strong guarantees that the code it runs will continue to operate as designed. For the first time, a computer system can be truly autonomous: self-governed, by its own code, instead of by people. Autonomous computers can be relied on and trusted in ways that human-governed computers can’t.&lt;/p&gt;
&lt;p&gt;Computers that make commitments can be useful in finance. The most famous example of this is Bitcoin, which makes various commitments, including that there will never be more than 21 million bitcoins, a commitment that makes bitcoins scarce and therefore capable of being valuable. Without a blockchain, this commitment could have been made by a person or a business, but it is unlikely that other people would have really trusted that commitment, since people and businesses change their minds all the time. Prior to Bitcoin, besides precious metals which are naturally scarce, the only credible commitments to monetary scarcity came from governments.&lt;/p&gt;
&lt;p&gt;Ethereum was the first blockchain to support a general-purpose programming language, allowing for the creation of arbitrarily complex software that makes commitments. Two early applications built on Ethereum are &lt;a href=&quot;https://compound.finance/&quot;&gt;Compound&lt;/a&gt; and &lt;a href=&quot;https://makerdao.com/en/&quot;&gt;Maker Dao&lt;/a&gt;. Compound makes the commitment that it will act as a neutral, low-fee lending protocol. Maker Dao makes a commitment to maintain the price stability of a currency called Dai that can be used for stable payments and value store. As of today, users have locked up hundreds of millions of dollars in these applications, a testament to the credibility of their commitments.&lt;/p&gt;
&lt;p&gt;Applications like Compound and Maker can do things that pre-blockchain software simply couldn’t, such as hold funds that reside in the code itself, as opposed to traditional payment systems which only hold pointers to offline bank accounts. This removes the need to trust anything other than code, and makes the system end-to-end transparent and extensible. Blockchain applications do this autonomously — every human involved in creating these projects could disappear and the software would go on doing what it does, keeping its commitments, indefinitely.&lt;/p&gt;
&lt;p&gt;What else can you do with computers that make commitments? One fertile area being explored is re-architecting popular internet services like social networks and marketplaces so that they make strong, positive commitments to their communities. For example, users can get commitments baked into the code that their data will be kept private and that they won’t get de-platformed without due process. Third-party developers can safely invest in their businesses knowing that the rules are baked into the network and can’t change, protecting them from &lt;a href=&quot;https://cdixon.org/2018/02/18/why-decentralization-matters&quot;&gt;platform risk&lt;/a&gt;. Using the financial features of blockchains, users and developers can receive tokens in order to participate in the upside of the network as it grows. &lt;/p&gt;
&lt;p&gt;Blockchains have arrived at an opportune time. Internet services have become central to our economic, political, and cultural lives, yet the trust between users and the people who run these services is breaking down. At the same time, industries like finance that have traditionally depended on trust have resisted modernization. The next few years will be exciting — we are only beginning to explore the &lt;a href=&quot;https://cdixon.org/2013/08/04/the-idea-maze&quot;&gt;idea maze&lt;/a&gt; unlocked by this new kind of computer.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Inside-out vs. outside-in: the adoption of new technologies]]></title><description><![CDATA[There are broadly two adoption paths for new computing technologies: inside-out and outside-in. Inside-out technologies are pioneered by…]]></description><link>https://cdixon.org/2020/01/17/inside-out-vs-outside-in</link><guid isPermaLink="false">https://cdixon.org/2020/01/17/inside-out-vs-outside-in</guid><pubDate>Fri, 17 Jan 2020 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There are broadly two adoption paths for new computing technologies: inside-out and outside-in. Inside-out technologies are pioneered by established institutions and later proliferate outward to the mainstream. Apple (followed by Google and others) pioneered the modern touchscreen smartphone, university and corporate research labs pioneered machine learning, and big tech companies like Amazon pioneered cloud computing.&lt;/p&gt;
&lt;p&gt;Outside-in technologies, by contrast, start out on the fringes and only later move inward to established institutions. Open-source software started out as a niche anti-copyright movement. The web was invented at a physics lab and then built out by hobbyists and entrepreneurs. Social media began as a movement of idealistic blogging enthusiasts.&lt;/p&gt;
&lt;p&gt;Inside-out technologies tend to require significant capital and formally trained technical expertise. They also tend to be technologies that most people would recognize as valuable even before they exist. It wasn’t very hard to imagine that affordable, easy-to-use, internet-connected pocket supercomputers would be popular, or that machines that could learn to behave intelligently could do all sorts of useful tasks.&lt;/p&gt;
&lt;p&gt;Outside-in technologies tend to require less capital and less formally trained technical skills, creating a much more level playing field between insiders and outsiders. In many cases the value of outside-in technologies is not only unclear before they’re invented, but remains unclear for many years after they’re invented.&lt;/p&gt;
&lt;p&gt;Take the example of social media. Early on, blogs and services like Twitter were mostly used to discuss niche tech topics and share mundane personal events. This led many sophisticated observers to &lt;a href=&quot;https://www.nytimes.com/2007/04/22/business/yourmoney/22stream.html&quot;&gt;dismiss&lt;/a&gt; them as toys or passing fads. At its core, however, social media was about the creation of curated information networks. Today, this is easy to see -- billions of people rely on services like Twitter and Facebook for their news -- but back then you had to cut through the noise generated by the eccentricities of early adopters. Social media is a technology for creating global media networks that arrived disguised as a way to share what you had for lunch. &lt;/p&gt;
&lt;p&gt;Both inside-out and outside-in technologies are important, and in fact they’re often mutually reinforcing. Mobile, social, and cloud powered the growth of computing over the last decade: mobile (inside-out) brought computers to billions of people, social (outside-in) drove usage and monetization, and cloud (inside-out) allowed back-end services to scale. Most likely the next major wave in computing will also be driven by a mutually reinforcing combination of technologies, some developed at established institutions and some developed by enthusiastic and possibly misunderstood outsiders. &lt;/p&gt;</content:encoded></item><item><title><![CDATA[Strong and weak technologies]]></title><description><![CDATA[During a media tour in 2007 in which Steve Jobs showed the device to reporters, there was one instance in which a journalist criticized the…]]></description><link>https://cdixon.org/2019/01/08/strong-and-weak-technologies</link><guid isPermaLink="false">https://cdixon.org/2019/01/08/strong-and-weak-technologies</guid><pubDate>Tue, 08 Jan 2019 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;&lt;em&gt;During a &lt;a href=&quot;https://www.businessinsider.com/steve-jobs-reaction-first-iphone-2015-9&quot;&gt;media tour&lt;/a&gt; in 2007 in which Steve Jobs showed the device to reporters, there was one instance in which a journalist criticized the iPhone’s touch-screen keyboard.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“It doesn’t work,” the reporter said.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Jobs stopped for a moment and tilted his head. The reporter said he or she kept making typos and the keys were too small for his or her thumbs.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Jobs smiled and then replied: “Your thumbs will learn.”&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;When the iPhone was introduced in 2007, it &lt;a href=&quot;https://www.wsj.com/articles/behind-the-rise-and-fall-of-blackberry-1432311912&quot;&gt;mystified&lt;/a&gt; its competitors, because it wasn’t built for the world as it existed. Wireless networks were too slow. Smartphone users only knew how to use physical keyboards. There were no software developers making apps for touchscreen phones. It frequently dropped phone calls.&lt;/p&gt;
&lt;p&gt;But the iPhone was such a remarkable device — fans called it “The Jesus Phone” — that the world adapted to it. Carriers built more wireless capacity. Developers invented new apps and interfaces. Users learned how to rapidly type on touchscreens. Apple kept releasing better versions, fixing problems and adding new capabilities.&lt;/p&gt;
&lt;p&gt;Smartphones are a good example of a broader historical pattern: technologies usually arrive in pairs, a strong form and a weak form. Here are some examples:&lt;/p&gt;
&lt;table&gt;
&lt;thead&gt;
&lt;tr&gt;
&lt;th&gt;&lt;strong&gt;Strong&lt;/strong&gt;&lt;/th&gt;
&lt;th&gt;&lt;strong&gt;Weak&lt;/strong&gt;&lt;/th&gt;
&lt;/tr&gt;
&lt;/thead&gt;
&lt;tbody&gt;
&lt;tr&gt;
&lt;td&gt;Public internet&lt;/td&gt;
&lt;td&gt;Private intranets&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Consumer web&lt;/td&gt;
&lt;td&gt;Interactive TV&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Crowdsourced encyclopedia (Wikipedia)&lt;/td&gt;
&lt;td&gt;Expert-curated encyclopedia (e.g. Nupedia, Encarta)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Crowdsourced video (YouTube)&lt;/td&gt;
&lt;td&gt;Video tech for media companies (e.g. RealPlayer)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Internet video chat (Skype)&lt;/td&gt;
&lt;td&gt;Voice-over-IP (e.g. Vonage)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Streaming music (Spotify)&lt;/td&gt;
&lt;td&gt;MP3 downloads (e.g. iTunes)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Touchscreen smartphones with full operating system and app store (iPhone)&lt;/td&gt;
&lt;td&gt;Limited-app smartphones with physical keyboards (e.g. Blackberry)&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Fully electric cars (Tesla)&lt;/td&gt;
&lt;td&gt;Hybrid cars&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Permissionless blockchains powered by cryptocurrencies&lt;/td&gt;
&lt;td&gt;Permissioned/private blockchains&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Public cloud&lt;/td&gt;
&lt;td&gt;Private / hybrid cloud&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;App-based media companies (e.g. Netflix)&lt;/td&gt;
&lt;td&gt;Video on demand delivered by cable companies&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;Virtual realty&lt;/td&gt;
&lt;td&gt;Augmented reality&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;E-sports&lt;/td&gt;
&lt;td&gt;Traditional sports delivered over the internet&lt;/td&gt;
&lt;/tr&gt;
&lt;/tbody&gt;
&lt;/table&gt;
&lt;p&gt;Strong technologies capture the imaginations of technology enthusiasts. That is why many important technologies start out as weekend hobbies. &lt;a href=&quot;http://cdixon.org/2013/03/03/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years/&quot;&gt;Enthusiasts vote with their time&lt;/a&gt;, and, unlike most of the business world, have long-term horizons. They build from first principles, making full use of the available resources to design technologies as they ought to exist. Sometimes these enthusiasts run large companies, in which case they are often, like Steve Jobs, founders who have the gravitas and vision to make big, long-term bets.&lt;/p&gt;
&lt;p&gt;The mainstream technology world notices the excitement and wants to join in, but isn’t willing to go all the way and embrace the strong technology. To them, the strong technology appears to be some combination of strange, &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toy-like&lt;/a&gt;, unserious, expensive, and sometimes even dangerous. So they embrace the weak form, a compromised version that seems more familiar, productive, serious, and safe.&lt;/p&gt;
&lt;p&gt;Strong technologies often develop according to the Perez/Gartner hype cycle:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
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  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;researchmethodology illustration hype cycle&quot;
        title=&quot;researchmethodology illustration hype cycle&quot;
        src=&quot;/static/153f5948062ac4cc6f9e4f79607be64b/d6856/researchmethodology-illustration-hype-cycle.jpg&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;During the trough of disillusionment, entrepreneurs and others who invested in strong technologies sometimes lose faith and switch their focus to weak technologies, because the weak technologies appear nearer to mainstream adoption. This is usually a mistake.&lt;/p&gt;
&lt;p&gt;That said, weak forms of technology can be successful. For example, it is very likely that augmented reality will be important, watching traditional sports on the internet will be popular, and so on.&lt;/p&gt;
&lt;p&gt;But it’s strong technologies that end up defining new eras. What George Bernard Shaw said about people also applies to technologies:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Weak technologies adapt to the world as it currently exists. Strong technologies adapt the world to themselves. Progress depends on strong technologies. Your thumbs will learn.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Who will control the software that powers the Internet?]]></title><description><![CDATA[Originally published by Wired. As the internet has evolved over its 35-year lifespan, control over its most important services has gradually…]]></description><link>https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations</link><guid isPermaLink="false">https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations</guid><pubDate>Fri, 04 Jan 2019 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;em&gt;Originally published by &lt;a href=&quot;https://www.wired.com/story/how-blockchain-can-wrest-the-internet-from-corporations/&quot;&gt;Wired&lt;/a&gt;.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;As the internet has evolved over its 35-year lifespan, control over its most important services has gradually shifted from open source protocols maintained by non-profit communities to proprietary services operated by large tech companies. As a result, billions of people got access to amazing, free technologies. But that shift also created serious problems.&lt;/p&gt;
&lt;p&gt;Millions of users have had their private data misused or stolen. Creators and businesses that rely on internet platforms are subject to sudden rule changes that take away their audiences and profits. But there is a growing movement—emerging from the blockchain and cryptocurrency world—to build new internet services that combine the power of modern, centralized services with the community-led ethos of the original internet. We should embrace it.&lt;/p&gt;
&lt;p&gt;From the 1980s through the early 2000s, the dominant internet services were built on open protocols that the internet community controlled. For example, the Domain Name System, the internet’s “phone book,” is controlled by a distributed network of people and organizations, using rules that are created and administered in the open. This means that anyone who adheres to community standards can own a domain name and establish an internet presence. It also means that the power of companies operating web and email hosting is kept in check—if they misbehave, customers can port their domain names to competing providers.&lt;/p&gt;
&lt;p&gt;From the mid 2000s to the present, trust in open protocols was replaced by trust in corporate management teams. As companies like Google, Twitter, and Facebook built software and services that surpassed the capabilities of open protocols, users migrated to these more sophisticated platforms. But their code was proprietary, and their governing principles could change on a whim.&lt;/p&gt;
&lt;p&gt;How do social networks decide which users to &lt;a href=&quot;https://www.wired.com/story/how-right-wing-social-media-site-gab-got-back-online/&quot;&gt;verify&lt;/a&gt; or &lt;a href=&quot;https://www.wired.com/story/tumblrs-porn-ban-reveals-controls-we-see-online/&quot;&gt;ban&lt;/a&gt;? How do search engines decide how to rank websites? One minute social networks court media organizations and small businesses, the next minute they de-prioritize their content or change the revenue split. The power of these platforms has created widespread societal tensions, as seen in debates over fake news, state-sponsored bots, privacy laws, and algorithmic biases.&lt;/p&gt;
&lt;p&gt;That’s why the pendulum is swinging back to an internet governed by open, community-controlled services. This has only recently become possible, thanks to technologies arising from the blockchain and cryptocurrencies.&lt;/p&gt;
&lt;p&gt;There has been a lot of talk in the past few years about blockchains, which are heavily hyped but poorly understood. Blockchains are networks of physical computers that work together in concert to form a single virtual computer. The benefit is that, unlike a traditional computer, a blockchain computer can offer strong trust guarantees, rooted in the mathematical and game-theoretic properties of the system. A user or developer can trust that a piece of code running on a blockchain computer will continue to behave as designed, even if individual participants in the network change their motivations or try to subvert the system. This means that the control of a blockchain computer can be placed in the hands of a community.&lt;/p&gt;
&lt;p&gt;Users who depend on proprietary platforms, on the other hand, have to worry about data getting stolen or misused, privacy policies changing, intrusive advertising, and more. Proprietary platforms may suddenly change the rules for developers and businesses, the way Facebook &lt;a href=&quot;https://venturebeat.com/2016/06/30/facebook-kicked-zynga-to-the-curb-publishers-are-next/&quot;&gt;famously did to Zynga&lt;/a&gt; and Google &lt;a href=&quot;https://www.nytimes.com/2017/07/01/technology/yelp-google-european-union-antitrust.html&quot;&gt;did to Yelp&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;The idea that corporate-owned services could be replaced by community-owned services may sound far-fetched, but there is a strong historical precedent in the transformation of software over the past twenty years. In the 1990s, computing was dominated by proprietary, closed-source software, most notably Windows. Today, billions of Android phones run on the open source operating system Linux. Much of the software running on an Apple device is open source, as is almost all modern cloud data centers including Amazon’s. The recent acquisitions of &lt;a href=&quot;https://www.wired.com/story/microsofts-github-deal-is-its-latest-shift-from-windows/&quot;&gt;Github by Microsoft&lt;/a&gt; and &lt;a href=&quot;https://www.wired.com/story/ibm-buying-open-source-specialist-red-hat-34-billion/&quot;&gt;Red Hat by IBM&lt;/a&gt; underscore how dominant open source has become.&lt;/p&gt;
&lt;p&gt;As open source has grown in importance, technology companies have shifted their business models from selling software to delivering cloud-based services. Google, Facebook, Amazon, and Netflix are all services companies. Even Microsoft is now primarily a services company. This has allowed these companies to outpace the growth of open source software and maintain control of critical internet infrastructure.&lt;/p&gt;
&lt;p&gt;A core insight in the design of blockchains is that the open source model can be extended beyond software to cloud-based services by adding financial incentives to the mix. Cryptocurrencies—coins and tokens built into specific blockchains—provide a way to incentivize individuals and groups to participate in, maintain, and build services.&lt;/p&gt;
&lt;p&gt;The idea that an internet service could have an associated coin or token may be a novel concept, but the blockchain and cryptocurrencies can do for cloud-based services what open source did for software. It took twenty years for open source software to supplant proprietary software, and it could take just as long for open services to supplant proprietary services. But the benefits of such a shift will be immense. Instead of placing our trust in corporations, we can place our trust in community-owned and -operated software, transforming the internet’s governing principle from “don’t be evil” back to “can’t be evil.”&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why decentralization matters]]></title><description><![CDATA[The first two eras of the internet During the first era of the internet — from the 1980s through the early 2000s — internet services were…]]></description><link>https://cdixon.org/2018/02/18/why-decentralization-matters</link><guid isPermaLink="false">https://cdixon.org/2018/02/18/why-decentralization-matters</guid><pubDate>Sun, 18 Feb 2018 00:00:00 GMT</pubDate><content:encoded>&lt;h2&gt;The first two eras of the internet&lt;/h2&gt;
&lt;p&gt;During the first era of the internet — from the 1980s through the early 2000s — internet services were built on open protocols that were controlled by the internet community. This meant that people or organizations could grow their internet presence knowing the rules of the game wouldn’t change later on. Huge web properties were started during this era including Yahoo, Google, Amazon, Facebook, LinkedIn, and YouTube. In the process, the importance of centralized platforms like AOL greatly diminished.&lt;/p&gt;
&lt;p&gt;During the second era of the internet, from the mid 2000s to the present, for-profit tech companies — most notably Google, Apple, Facebook, and Amazon (GAFA) — built software and services that rapidly outpaced the capabilities of open protocols. The explosive growth of smartphones accelerated this trend as mobile apps became the majority of internet use. Eventually users migrated from open services to these more sophisticated, centralized services. Even when users still accessed open protocols like the web, they would typically do so mediated by GAFA software and services.&lt;/p&gt;
&lt;p&gt;The good news is that billions of people got access to amazing technologies, many of which were free to use. The bad news is that it became much harder for startups, creators, and other groups to grow their internet presence without worrying about centralized platforms changing the rules on them, taking away their audiences and profits. This in turn stifled innovation, making the internet less interesting and dynamic. Centralization has also created broader societal tensions, which we see in the debates over subjects like fake news, state sponsored bots, “no platforming” of users, EU privacy laws, and algorithmic biases. These debates will only intensify in the coming years.&lt;/p&gt;
&lt;h2&gt;“Web 3”: the third era of the internet&lt;/h2&gt;
&lt;p&gt;One response to this centralization is to impose government regulation on large internet companies. This response assumes that the internet is similar to past communication networks like the phone, radio, and TV networks. But the hardware-based networks of the past are fundamentally different than the internet, a software-based network. Once hardware-based networks are built, they are nearly impossible to rearchitect. Software-based networks can be rearchitected through entrepreneurial innovation and market forces.&lt;/p&gt;
&lt;p&gt;The internet is the ultimate software-based network, consisting of a relatively simple &lt;a href=&quot;https://en.wikipedia.org/wiki/Internet_Protocol&quot;&gt;core layer&lt;/a&gt; connecting billions of fully programmable computers at the edge. Software is simply the encoding of human thought, and as such has an almost unbounded design space. Computers connected to the internet are, by and large, free to run whatever software their owners choose. Whatever can be dreamt up, with the right set of incentives, can quickly propagate across the internet. Internet architecture is where technical creativity and incentive design intersect.&lt;/p&gt;
&lt;p&gt;The internet is still early in its evolution: the core internet services will likely be almost entirely rearchitected in the coming decades. This will be enabled by crypto-economic networks, a generalization of the ideas first introduced in &lt;a href=&quot;https://bitcoin.org/bitcoin.pdf&quot;&gt;Bitcoin&lt;/a&gt; and further developed in &lt;a href=&quot;https://github.com/ethereum/wiki/wiki/White-Paper&quot;&gt;Ethereum&lt;/a&gt;. Cryptonetworks combine the best features of the first two internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services.&lt;/p&gt;
&lt;h2&gt;Why decentralization?&lt;/h2&gt;
&lt;p&gt;Decentralization is a commonly misunderstood concept. For example, it is sometimes said that the reason cryptonetwork advocates favor decentralization is to resist government censorship, or because of libertarian political views. These are not the main reasons decentralization is important.&lt;/p&gt;
&lt;p&gt;Let’s look at the problems with centralized platforms. Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.&lt;/p&gt;
&lt;p&gt;&lt;span
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&lt;p&gt;When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits. Historical examples of this are Microsoft vs. Netscape, Google vs. Yelp, Facebook vs. Zynga, and Twitter vs. its 3rd-party clients. Operating systems like iOS and Android have behaved better, although still take a healthy 30% tax, reject apps for seemingly arbitrary reasons, and subsume the functionality of 3rd-party apps at will.&lt;/p&gt;
&lt;p&gt;For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment. In addition, users give up privacy, control of their data, and become vulnerable to security breaches. These problems with centralized platforms will likely become even more pronounced in the future.&lt;/p&gt;
&lt;h2&gt;Enter cryptonetworks&lt;/h2&gt;
&lt;p&gt;Cryptonetworks are networks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants. Some cryptonetworks, such as Ethereum, are general programming platforms that can be used for almost any purpose. Other cryptonetworks are special purpose, for example Bitcoin is intended primarily for storing value, &lt;a href=&quot;https://golem.network/&quot;&gt;Golem&lt;/a&gt; for performing computations, and &lt;a href=&quot;https://filecoin.io/&quot;&gt;Filecoin&lt;/a&gt; for decentralized file storage.&lt;/p&gt;
&lt;p&gt;Early internet protocols were technical specifications created by working groups or non-profit organizations that relied on the alignment of interests in the internet community to gain adoption. This method worked well during the very early stages of the internet but since the early 1990s very few new protocols have gained widespread adoption. &lt;a href=&quot;2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design&quot;&gt;Cryptonetworks fix&lt;/a&gt; these problems by providing economics incentives to developers, maintainers, and other network participants in the form of tokens. They are also much more technically robust. For example, they are able to keep state and do arbitrary transformations on that state, something past protocols could never do.&lt;/p&gt;
&lt;p&gt;Cryptonetworks use multiple mechanisms to ensure that they stay neutral as they grow, preventing the bait-and-switch of centralized platforms. First, the contract between cryptonetworks and their participants is enforced in open source code. Second, they are kept in check through mechanisms for &lt;a href=&quot;https://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty&quot;&gt;“voice” and “exit.”&lt;/a&gt; Participants are given voice through community governance, both “on chain” (via the protocol) and “off chain” (via the social structures around the protocol). Participants can exit either by leaving the network and selling their coins, or in the extreme case by forking the protocol.&lt;/p&gt;
&lt;p&gt;In short, cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy skeptics and flourish, even while new cryptonetworks like Ethereum have grown alongside it.&lt;/p&gt;
&lt;p&gt;Today’s cryptonetworks suffer from limitations that keep them from seriously challenging centralized incumbents. The most severe limitations are around performance and scalability. The next few years will be about fixing these limitations and building networks that form the infrastructure layer of the crypto stack. After that, most of the energy will turn to building applications on top of that infrastructure.&lt;/p&gt;
&lt;h2&gt;How decentralization wins&lt;/h2&gt;
&lt;p&gt;It’s one thing to say decentralized networks should win, and another thing to say they will win. Let’s look at specific reasons to be optimistic about this.&lt;/p&gt;
&lt;p&gt;Software and web services are built by developers. There are millions of highly skilled developers in the world. Only a small fraction work at large technology companies, and only a small fraction of those work on new product development. Many of the most important software projects in history were created by startups or by communities of independent developers.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“No matter who you are, most of the smartest people work for someone else.” — &lt;a href=&quot;https://en.wikipedia.org/wiki/Joy%27s_law_(management)&quot;&gt;Bill Joy&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Decentralized networks can win the third era of the internet for the same reason they won the first era: by winning the hearts and minds of entrepreneurs and developers.&lt;/p&gt;
&lt;p&gt;An illustrative analogy is the rivalry in the 2000s between Wikipedia and its centralized competitors like Encarta. If you compared the two products in the early 2000s, Encarta was a far better product, with better topic coverage and higher accuracy. But Wikipedia improved at a much faster rate, because it had an active community of volunteer contributors who were attracted to its decentralized, community-governed ethos. By 2005, Wikipedia was the most &lt;a href=&quot;https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b&quot;&gt;popular&lt;/a&gt; reference site on the internet. Encarta was shut down in 2009.&lt;/p&gt;
&lt;p&gt;The lesson is that when you compare centralized and decentralized systems you need to consider them dynamically, as processes, instead of statically, as rigid products. Centralized systems often start out fully baked, but only get better at the rate at which employees at the sponsoring company improve them. Decentralized systems start out half-baked but, under the right conditions, grow exponentially as they attract new contributors.&lt;/p&gt;
&lt;p&gt;In the case of cryptonetworks, there are multiple, compounding feedback loops involving developers of the core protocol, developers of complementary cryptonetworks, developers of 3rd party applications, and service providers who operate the network. These feedback loops are further amplified by the incentives of the associated token, which — as we’ve seen with Bitcoin and Ethereum — can supercharge the rate at which crypto communities develop (and sometimes lead to negative outcomes, as with the excessive electricity consumed by Bitcoin mining).&lt;/p&gt;
&lt;p&gt;The question of whether decentralized or centralized systems will win the next era of the internet reduces to who will build the most compelling products, which in turn reduces to who will get more high quality developers and entrepreneurs on their side. GAFA has many advantages, including cash reserves, large user bases, and operational infrastructure. Cryptonetworks have a significantly more attractive value proposition to developers and entrepreneurs. If they can win their hearts and minds, they can mobilize far more resources than GAFA, and rapidly outpace their product development.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.” — &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Centralized platforms often come bundled at launch with compelling apps: Facebook had its core socializing features and the iPhone had a number of key apps. Decentralized platforms, by contrast, often launch half-baked and without clear use cases. As a result, they need to go through two phases of product-market fit: 1) product-market fit between the platform and the developers/entrepreneurs who will finish the platform and build out the ecosystem, and 2) product-market fit between the platform/ecosystem and end users. This two-stage process is what causes many people — including sophisticated technologists — to consistently underestimate the potential of decentralized platforms.&lt;/p&gt;
&lt;h2&gt;The next era of the internet&lt;/h2&gt;
&lt;p&gt;Decentralized networks aren’t a silver bullet that will fix all the problems on the internet. But they offer a much better approach than centralized systems.&lt;/p&gt;
&lt;p&gt;Compare the problem of Twitter spam to the problem of email spam. Since Twitter &lt;a href=&quot;https://www.theverge.com/2012/8/23/3263481/twitter-api-third-party-developers&quot;&gt;closed&lt;/a&gt; their network to 3rd-party developers, the only company working on Twitter spam has been Twitter itself. By contrast, there were hundreds of companies that tried to fight email spam, financed by billions of dollars in venture capital and corporate funding. Email spam isn’t solved, but it’s a lot better now, because 3rd parties knew that the &lt;a href=&quot;https://en.wikipedia.org/wiki/Simple_Mail_Transfer_Protocol&quot;&gt;email protocol&lt;/a&gt; was decentralized, so they could build businesses on top of it without worrying about the rules of the game changing later on.&lt;/p&gt;
&lt;p&gt;Or consider the problem of network governance. Today, unaccountable groups of employees at large platforms decide how information gets ranked and filtered, which users get promoted and which get banned, and other important governance decisions. In cryptonetworks, these decisions are made by the community, using open and transparent mechanisms. As we know from the offline world, democratic systems aren’t perfect, but they are a lot better than the alternatives.&lt;/p&gt;
&lt;p&gt;Centralized platforms have been dominant for so long that many people have forgotten there is a better way to build internet services. Cryptonetworks are a powerful way to develop community-owned networks and provide a level playing field for 3rd-party developers, creators, and businesses. We saw the value of decentralized systems in the first era of the internet. Hopefully we’ll get to see it again in the next.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Originally published on &lt;a href=&quot;https://medium.com/s/story/why-decentralization-matters-5e3f79f7638e&quot;&gt;Medium&lt;/a&gt;.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Crypto token roundup]]></title><description><![CDATA[Roundup of lots of recent posts on crypto tokens: Balaji S. Srinivasan — Thoughts on Tokens Fred Wilson — ICOs and VCs here, Ethereum in 2…]]></description><link>https://cdixon.org/2017/06/06/crypto-token-roundup</link><guid isPermaLink="false">https://cdixon.org/2017/06/06/crypto-token-roundup</guid><pubDate>Tue, 06 Jun 2017 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Roundup of lots of recent posts on crypto tokens:&lt;/p&gt;
&lt;p&gt;Balaji S. Srinivasan — &lt;a href=&quot;https://medium.com/@balajis/thoughts-on-tokens-436109aabcbe&quot;&gt;Thoughts on Tokens&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Fred Wilson — &lt;a href=&quot;http://avc.com/2017/06/icos-and-vcs/&quot;&gt;ICOs and VCs&lt;/a&gt; &lt;a href=&quot;http://avc.com/2017/06/icos-and-vcs/&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://avc.com/2017/05/video-of-the-week-ethereum-in-25-minutes/&quot;&gt;Ethereum in 25 minutes&lt;/a&gt;, &lt;a href=&quot;http://avc.com/2017/04/polychain/&quot;&gt;Polychain&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Joel Monegro — &lt;a href=&quot;https://www.usv.com/blog/fat-protocols&quot;&gt;Fat Protocols&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Nick Tomaino — &lt;a href=&quot;https://thecontrol.co/cryptoeconomics-101-e5c883e9a8ff&quot;&gt;Cryptoeconomics 101 &lt;/a&gt;, &lt;a href=&quot;https://thecontrol.co/some-blockchain-reading-1d98ec6b2f39&quot;&gt;Some Blockchain Reading&lt;/a&gt;, &lt;a href=&quot;https://thecontrol.co/tokens-tokens-and-more-tokens-d4b177fbb443&quot;&gt;Tokens, Tokens and More Tokens&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Fred Ehrsam — &lt;a href=&quot;https://medium.com/@FEhrsam/the-dapp-developer-stack-the-blockchain-industry-barometer-8d55ec1c7d4&quot;&gt;The dApp Developer Stack&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Albert Wenger — &lt;a href=&quot;http://continuations.com/post/148098927445/crypto-tokens-and-the-coming-age-of-protocol&quot;&gt;Crypto Tokens and the Coming Age of Protocol Innovation&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;My post and podcasts — &lt;a href=&quot;https://medium.com/@cdixon/crypto-tokens-a-breakthrough-in-open-network-design-e600975be2ef&quot;&gt;Crypto Tokens: A Breakthrough in Open Network Design&lt;/a&gt;, &lt;a href=&quot;https://a16z.com/2016/08/28/ethereum/&quot;&gt;podcast with Vitalik Buterin&lt;/a&gt;, &lt;a href=&quot;http://a16z.com/2017/04/03/cryptocurrencies-protocols-appcoins/&quot;&gt;podcast with Olaf Carlson-Wee&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Regulatory discussions — &lt;a href=&quot;https://coincenter.org/report&quot;&gt;Coincenter&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Crypto Tokens: A Breakthrough in Open Network Design]]></title><description><![CDATA[It is a wonderful accident of history that the internet and web were created as open platforms that anyone — users, developers…]]></description><link>https://cdixon.org/2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design</link><guid isPermaLink="false">https://cdixon.org/2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design</guid><pubDate>Sat, 27 May 2017 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It is a wonderful accident of history that the internet and web were created as open platforms that anyone — users, developers, organizations — could access equally. Among other things, this allowed independent developers to build products that quickly gained widespread adoption. Google started in a Menlo Park garage and Facebook started in a Harvard dorm room. They competed on a level playing field because they were built on decentralized networks governed by open protocols.&lt;/p&gt;
&lt;p&gt;Today, tech companies like Facebook, Google, Amazon, and Apple are &lt;a href=&quot;https://medium.com/@cdixon/the-internet-economy-fc43f3eff58a&quot;&gt;stronger&lt;/a&gt; than ever, whether measured by &lt;a href=&quot;http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/&quot;&gt;market cap&lt;/a&gt;, share of top mobile apps, or pretty much any other common measure.&lt;/p&gt;
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  &lt;img
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        alt=&quot;Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)&quot;
        title=&quot;Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)&quot;
        src=&quot;/static/947f1b1248d2dc4d69cd8a63fc8e4884/94a55/11LduvqPVCAVsy-rQ2qlhvg.png&quot;
        srcset=&quot;/static/947f1b1248d2dc4d69cd8a63fc8e4884/924ad/11LduvqPVCAVsy-rQ2qlhvg.png 170w,
/static/947f1b1248d2dc4d69cd8a63fc8e4884/f570f/11LduvqPVCAVsy-rQ2qlhvg.png 341w,
/static/947f1b1248d2dc4d69cd8a63fc8e4884/94a55/11LduvqPVCAVsy-rQ2qlhvg.png 681w,
/static/947f1b1248d2dc4d69cd8a63fc8e4884/9fa53/11LduvqPVCAVsy-rQ2qlhvg.png 718w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;These companies also control massive proprietary developer platforms. The dominant operating systems — iOS and Android — charge 30% payment fees and exert heavy influence over app distribution. The dominant social networks tightly restrict access, hindering the ability of third-party developers to scale. Startups and independent developers are increasingly competing from a disadvantaged position.&lt;/p&gt;
&lt;p&gt;A potential way to reverse this trend are &lt;a href=&quot;http://continuations.com/post/148098927445/crypto-tokens-and-the-coming-age-of-protocol&quot;&gt;crypto tokens&lt;/a&gt; — a new way to design open networks that arose from the cryptocurrency movement that began with the introduction of Bitcoin in 2008 and accelerated with the introduction of Ethereum in 2014. Tokens are a breakthrough in open network design that enable: 1) the creation of open, decentralized networks that combine the best architectural properties of open and proprietary networks, and 2) new ways to incentivize open network participants, including users, developers, investors, and service providers. By enabling the development of new open networks, tokens could help reverse the centralization of the internet, thereby keeping it accessible, vibrant and fair, and resulting in greater innovation.&lt;/p&gt;
&lt;h2&gt;Crypto tokens: unbundling Bitcoin&lt;/h2&gt;
&lt;p&gt;Bitcoin was introduced in 2008 with the publication of &lt;a href=&quot;https://en.wikipedia.org/wiki/Satoshi_Nakamoto&quot;&gt;Satoshi Nakamoto’s&lt;/a&gt; landmark &lt;a href=&quot;https://bitcoin.org/bitcoin.pdf&quot;&gt;paper&lt;/a&gt; that proposed a novel, decentralized payment system built on an underlying technology now known as a &lt;a href=&quot;https://en.wikipedia.org/wiki/Blockchain&quot;&gt;blockchain&lt;/a&gt;. Most fans of Bitcoin (including &lt;a href=&quot;/2013/12/31/why-im-interested-in-bitcoin/&quot;&gt;me&lt;/a&gt;) mistakenly thought Bitcoin was solely a breakthrough in financial technology. (It was easy to make this mistake: Nakamoto himself called it a “p2p payment system.”)&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 61.342592592592595%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;2009: Satoshi Nakamoto’s (post) announcing Bitcoin&quot;
        title=&quot;2009: Satoshi Nakamoto’s (post) announcing Bitcoin&quot;
        src=&quot;/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg&quot;
        srcset=&quot;/static/a48b63f4b03d22f29cb6edd6bf50f717/c2e49/1MQ68XZTGHQG7E6ut5UimEw.jpg 170w,
/static/a48b63f4b03d22f29cb6edd6bf50f717/c2dc0/1MQ68XZTGHQG7E6ut5UimEw.jpg 341w,
/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;2009: Satoshi Nakamoto’s (post) announcing Bitcoin&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;In retrospect, Bitcoin was really two innovations: 1) a &lt;a href=&quot;https://en.wikipedia.org/wiki/Store_of_value&quot;&gt;store of value&lt;/a&gt; for people who wanted an alternative to the existing financial system, and 2) a new way to develop open networks. Tokens unbundle the latter innovation from the former, providing a general method for designing and growing open networks.&lt;/p&gt;
&lt;p&gt;Networks — computing networks, developer platforms, marketplaces, social networks, etc — have always been a powerful part of the promise of the internet. Tens of thousands of networks have been incubated by developers and entrepreneurs, yet only a very small percentage of those have survived, and most of those were owned and controlled by private companies. The current state of the art of network development is very crude. It often involves raising money (venture capital is a common source of funding) and then spending it on paid marketing and other channels to overcome the “bootstrap problem” — the problem that networks tend to only become useful when they reach a critical mass of users. In the rare cases where networks succeed, the financial returns tend to accrue to the relatively small number of people who own equity in the network. Tokens offer a better way.&lt;/p&gt;
&lt;p&gt;Ethereum, introduced in 2014 and launched in 2015, was the first major non-Bitcoin token network. The lead developer, &lt;a href=&quot;https://a16z.com/2016/08/28/ethereum/&quot;&gt;Vitalik Buterin&lt;/a&gt;, had previously tried to create smart contract languages on top of the Bitcoin blockchain. Eventually he realized that (by design, mostly) Bitcoin was too limited, so a new approach was needed.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 576px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 41.14583333333333%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;2014: Vitalik Buterin’s (forum post) announcing Ethereum&quot;
        title=&quot;2014: Vitalik Buterin’s (forum post) announcing Ethereum&quot;
        src=&quot;/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png&quot;
        srcset=&quot;/static/0f4f3db516b79d9d910990abb1c077fd/924ad/1Crmcqo6mdF1okzHt4Bdp4g.png 170w,
/static/0f4f3db516b79d9d910990abb1c077fd/f570f/1Crmcqo6mdF1okzHt4Bdp4g.png 341w,
/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png 576w&quot;
        sizes=&quot;(max-width: 576px) 100vw, 576px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;2014: Vitalik Buterin’s (forum post) announcing Ethereum&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Ethereum is a network that allows developers to run “smart contracts” — snippets of &lt;a href=&quot;https://en.wikipedia.org/wiki/Ethereum#Smart_contracts&quot;&gt;code&lt;/a&gt; submitted by developers that are executed by a distributed network of computers. Ethereum has a corresponding token called Ether that can be purchased, either to hold for financial purposes or to use by purchasing computing power (known as “&lt;a href=&quot;https://ethereum.stackexchange.com/questions/3/what-is-gas-and-transaction-fee-in-ethereum&quot;&gt;gas&lt;/a&gt;”) on the network. Tokens are also given out to “miners” which are the computers on the decentralized network that execute smart contract code (you can think of miners as playing the role of cloud hosting services like &lt;a href=&quot;https://en.wikipedia.org/wiki/Amazon_Web_Services&quot;&gt;AWS&lt;/a&gt;). Third-party developers can write their own &lt;a href=&quot;https://dapps.ethercasts.com/&quot;&gt;applications&lt;/a&gt; that live on the network, and can charge Ether to generate revenue.&lt;/p&gt;
&lt;p&gt;Ethereum is inspiring a new wave of token networks. (It also provided a simple way for new token networks to launch on top of the Ethereum network, using a standard known as &lt;a href=&quot;https://github.com/ethereum/EIPs/issues/20&quot;&gt;ERC20&lt;/a&gt;). Developers are building token networks for a wide range of use cases, including distributed &lt;a href=&quot;http://filecoin.io/&quot;&gt;computing&lt;/a&gt; &lt;a href=&quot;https://golem.network/&quot;&gt;platforms&lt;/a&gt;, &lt;a href=&quot;https://augur.net/&quot;&gt;prediction&lt;/a&gt; and financial markets, incentivized &lt;a href=&quot;https://steem.io/&quot;&gt;content creation networks&lt;/a&gt;, and &lt;a href=&quot;https://basicattentiontoken.org/&quot;&gt;attention and advertising networks&lt;/a&gt;. Many more networks will be invented and launched in the coming months and years.&lt;/p&gt;
&lt;p&gt;Below I walk through the two main benefits of the token model, the first architectural and the second involving incentives.&lt;/p&gt;
&lt;h2&gt;Tokens enable the management and financing of open services&lt;/h2&gt;
&lt;p&gt;Proponents of open systems never had an effective way to manage and fund operating services, leading to a significant architectural disadvantage compared to their proprietary counterparts. This was particularly evident during the last internet mega-battle between open and closed networks: the social wars of the late 2000s. As Alexis Madrigal recently &lt;a href=&quot;https://www.theatlantic.com/technology/archive/2017/05/a-very-brief-history-of-the-last-10-years-in-technology/526767/?utm_source=atltw&quot;&gt;wrote&lt;/a&gt;, back in 2007 it looked like open networks would dominate going forward:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In 2007, the web people were triumphant. Sure, the dot-com boom had busted, but empires were being built out of the remnant swivel chairs and fiber optic cables and unemployed developers. Web 2.0 was not just a temporal description, but an ethos. The web would be open. A myriad of services would be built, communicating through APIs, to provide the overall internet experience.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;But with the launch of the iPhone and the rise of smartphones, proprietary networks quickly won out:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;As that world-historical explosion began, a platform war came with it. The Open Web lost out quickly and decisively. By 2013, Americans spent about as much of their time on their phones &lt;a href=&quot;http://www.marketingcharts.com/online/smart-device-users-spend-as-much-time-on-facebook-as-the-mobile-web-28422/&quot;&gt;looking at Facebook&lt;/a&gt; as they did the whole rest of the open web.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Why did open social protocols get so decisively defeated by proprietary social networks? The rise of smartphones was only part of the story. Some open protocols — like email and the web — survived the transition to the mobile era. Open protocols relating to social networks were high quality and abundant (e.g. &lt;a href=&quot;https://en.wikipedia.org/wiki/RSS&quot;&gt;RSS&lt;/a&gt;, &lt;a href=&quot;http://xmlns.com/foaf/spec/&quot;&gt;FOAF&lt;/a&gt;, &lt;a href=&quot;https://en.wikipedia.org/wiki/XHTML_Friends_Network&quot;&gt;XFN&lt;/a&gt;, &lt;a href=&quot;http://openid.net/&quot;&gt;OpenID&lt;/a&gt;). What the open side lacked was a mechanism for encapsulating software, databases, and protocols together into easy-to-use services.&lt;/p&gt;
&lt;p&gt;For example, in 2007, Wired magazine ran an &lt;a href=&quot;https://www.wired.com/2007/08/open-social-net/&quot;&gt;article&lt;/a&gt; in which they tried to create their own social network using open tools:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;For the last couple of weeks, Wired News tried to roll its own Facebook using free web tools and widgets. We came close, but we ultimately failed. We were able to recreate maybe 90 percent of Facebook’s functionality, but not the most important part — a way to link people and declare the nature of the relationship.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Some developers &lt;a href=&quot;http://bradfitz.com/social-graph-problem/&quot;&gt;proposed&lt;/a&gt; solving this problem by creating a database of social graphs run by a non-profit organization:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;strong&gt;Establish a non-profit and open source software&lt;/strong&gt; (with copyrights held by the non-profit) which collects, merges, and redistributes the graphs from all other social network sites into one global aggregated graph. This is then made available to other sites (or users) via both public APIs (for small/casual users) and downloadable data dumps, with an update stream / APIs, to get iterative updates to the graph (for larger users).&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;These open schemes required widespread coordination among standards bodies, server operators, app developers, and sponsoring organizations to mimic the functionality that proprietary services could provide all by themselves. As a result, proprietary services were able to create better user experiences and iterate much faster. This led to faster growth, which in turn led to greater investment and revenue, which then fed back into product development and further growth. Thus began a flywheel that drove the meteoric rise of proprietary social networks like Facebook and Twitter.&lt;/p&gt;
&lt;p&gt;Had the token model for network development existed back in 2007, the playing field would have been much more level. First, tokens provide a way not only to define a protocol, but to fund the operating expenses required to host it as a service. Bitcoin and Ethereum have tens of thousands of servers around the world (“miners”) that run their networks. They cover the hosting costs with built-in mechanisms that automatically distribute token rewards to computers on the network (“mining rewards”).&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.092592592592595%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;There are over 20,000 Ethereum nodes around the world (source)&quot;
        title=&quot;There are over 20,000 Ethereum nodes around the world (source)&quot;
        src=&quot;/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png&quot;
        srcset=&quot;/static/cc7fc235606a1a2f9a369f35ef63d3ff/924ad/1-lu1cuJeeDIFPsDpPPo8lw.png 170w,
/static/cc7fc235606a1a2f9a369f35ef63d3ff/f570f/1-lu1cuJeeDIFPsDpPPo8lw.png 341w,
/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;There are over 20,000 Ethereum nodes around the world (source)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Second, tokens provide a model for creating shared computing resources (&lt;a href=&quot;https://medium.com/@FEhrsam/the-dapp-developer-stack-the-blockchain-industry-barometer-8d55ec1c7d4&quot;&gt;including&lt;/a&gt; databases, compute, and file storage) while keeping the control of those resources decentralized (and without requiring an organization to maintain them). This is the blockchain technology that has been talked about &lt;a href=&quot;https://trends.google.com/trends/explore?q=blockchain&quot;&gt;so much&lt;/a&gt;. Blockchains would have allowed shared social graphs to be stored on a decentralized network. It would have been easy for the Wired author to create an open social network using the tools available today.&lt;/p&gt;
&lt;h2&gt;Tokens align incentives among network participants&lt;/h2&gt;
&lt;p&gt;Some of the &lt;a href=&quot;/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;fiercest battles&lt;/a&gt; in tech are between &lt;a href=&quot;https://en.wikipedia.org/wiki/Complementary_good&quot;&gt;complements&lt;/a&gt;. There were, for example, hundreds of startups that tried to build businesses on the APIs of social networks only to have the terms change later on, forcing them to pivot or shut down. Microsoft’s battles with complements like Netscape and Intuit are legendary. Battles within ecosystems are so common and drain so much energy that business books are full of frameworks for how one company can squeeze profits from adjacent businesses (e.g. Porter’s &lt;a href=&quot;https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis&quot;&gt;five forces&lt;/a&gt; model).&lt;/p&gt;
&lt;p&gt;Token networks remove this friction by aligning network participants to work together toward a common goal— the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy &lt;a href=&quot;https://99bitcoins.com/bitcoinobituaries/&quot;&gt;skeptics&lt;/a&gt; and flourish, even while new token networks like Ethereum have grown along side it.&lt;/p&gt;
&lt;p&gt;Moreover, well-designed token networks include an efficient mechanism to incentivize network participants to overcome the bootstrap problem that bedevils traditional network development. For example, &lt;a href=&quot;https://steemit.com/&quot;&gt;Steemit&lt;/a&gt; is a decentralized Reddit-like token network that makes payments to users who post and upvote articles. When Steemit launched last year, the community was &lt;a href=&quot;https://coinreport.net/social-network-steemit-distributes-1-3-million-first-cryptocurrency-payout-users/&quot;&gt;pleasantly surprised&lt;/a&gt; when they made their first significant payout to users.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 576px;&quot;
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      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Tokens help overcome the bootstrap problem by adding financial utility when application utility is low&quot;
        title=&quot;Tokens help overcome the bootstrap problem by adding financial utility when application utility is low&quot;
        src=&quot;/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png&quot;
        srcset=&quot;/static/5b04980dfae9d027698ea230a794feca/924ad/1mi0v6PNlGnjL9QH-AWZxAA.png 170w,
/static/5b04980dfae9d027698ea230a794feca/f570f/1mi0v6PNlGnjL9QH-AWZxAA.png 341w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Tokens help overcome the bootstrap problem by adding financial utility when application utility is low&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;This in turn led to the appreciation of Steemit tokens, which increased future payouts, leading to a &lt;a href=&quot;https://www.usv.com/blog/fat-protocols&quot;&gt;virtuous cycle&lt;/a&gt; where more users led to more investment, and vice versa. Steemit is still a beta project and has since had mixed results, but was an interesting experiment in how to generalize the mutually reinforcing interaction between users and investors that Bitcoin and Ethereum first demonstrated.&lt;/p&gt;
&lt;p&gt;A lot of attention has been paid to token pre-sales (so-called “ICOs”), but they are just one of multiple ways in which the token model innovates on network incentives. A well-designed token network carefully manages the distribution of tokens across all five groups of network participants (users, core developers, third-party developers, investors, service providers) to maximize the growth of the network.&lt;/p&gt;
&lt;p&gt;One way to think about the token model is to imagine if the internet and web hadn’t been funded by governments and universities, but instead by a company that raised money by selling off domain names. People could buy domain names either to use them or as an investment (collectively, domain names are worth tens of billions of dollars today). Similarly, domain names could have been given out as rewards to service providers who agreed to run hosting services, and to third-party developers who supported the network. This would have provided an alternative way to finance and accelerate the development of the internet while also aligning the incentives of the various network participants.&lt;/p&gt;
&lt;h2&gt;The open network movement&lt;/h2&gt;
&lt;p&gt;The cryptocurrency movement is the spiritual heir to previous open computing movements, including the open source software movement led most visibly by Linux, and the open information movement led most visibly by Wikipedia.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/ac3acb338ebc31e660f966ff99f85d32/f5059/1U0B5FlpNVXSXeIcqodktLQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 25.05330490405117%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAA0UlEQVQY02WPW3KFIBBE3f/SbnaQSpS3vBIQQRBEM14/c6rna6qnewbOmJxnRqm11nvvnAsh1Fqv6+q9Y0Kc89eb3s81biEWHza3pLTtw4+15kFrpXS8SfeklHN+vT7GCSGEv0bEuVhzA+W9llKO4xgIrCZMMJm5oIQKISilGGFOGVwgmIZ11doIzpU0MeZSWq0HFDnPc4DC0zhxxiFYSqkg/Q300cZ/Y5vLbn8X59enOQh4HhlCWLxftFSQzCiDcPCnm+h8/BxN3HJrDTzXP/4Ah3QY3Y9kIOMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)&quot;
        title=&quot;1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)&quot;
        src=&quot;/static/ac3acb338ebc31e660f966ff99f85d32/94a55/1U0B5FlpNVXSXeIcqodktLQ.png&quot;
        srcset=&quot;/static/ac3acb338ebc31e660f966ff99f85d32/924ad/1U0B5FlpNVXSXeIcqodktLQ.png 170w,
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/static/ac3acb338ebc31e660f966ff99f85d32/94a55/1U0B5FlpNVXSXeIcqodktLQ.png 681w,
/static/ac3acb338ebc31e660f966ff99f85d32/f5059/1U0B5FlpNVXSXeIcqodktLQ.png 938w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Both of these movements were once niche and &lt;a href=&quot;https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b&quot;&gt;controversial&lt;/a&gt;. Today Linux is the dominant worldwide operating system, and Wikipedia is the most popular informational website in the world.&lt;/p&gt;
&lt;p&gt;Crypto tokens are currently niche and controversial. If present trends continue, they will soon be seen as a breakthrough in the design and development of open networks, combining the societal benefits of open protocols with the financial and architectural benefits of proprietary networks. They are also an extremely promising development for those hoping to keep the internet accessible to entrepreneurs, developers, and other independent creators.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[How Aristotle Created the Computer]]></title><description><![CDATA[The philosophers he influenced set the stage for the technological revolution that remade our world. Originally published by The Atlantic…]]></description><link>https://cdixon.org/2017/02/20/aristotle-computer</link><guid isPermaLink="false">https://cdixon.org/2017/02/20/aristotle-computer</guid><pubDate>Mon, 20 Feb 2017 00:00:00 GMT</pubDate><content:encoded>&lt;h2&gt;The philosophers he influenced set the stage for the technological revolution that remade our world.&lt;/h2&gt;
&lt;p&gt;&lt;em&gt;Originally published by &lt;a href=&quot;https://www.theatlantic.com/technology/archive/2017/03/aristotle-computer/518697/&quot;&gt;The Atlantic&lt;/a&gt;.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;The history of computers is often told as a history of objects, from the abacus to the Babbage engine up through the code-breaking machines of World War II. In fact, it is better understood as a history of ideas, mainly ideas that emerged from mathematical logic, an obscure and cult-like discipline that first developed in the 19th century. Mathematical logic was pioneered by philosopher-mathematicians, most notably George Boole and Gottlob Frege, who were themselves inspired by Leibniz’s dream of a universal “concept language,” and the ancient logical system of Aristotle.&lt;/p&gt;
&lt;p&gt;Mathematical logic was initially considered a hopelessly abstract subject with no conceivable applications. As one computer scientist &lt;a href=&quot;http://bactra.org/notebooks/mathematical-logic.html&quot;&gt;commented&lt;/a&gt;: “If, in 1901, a talented and sympathetic outsider had been called upon to survey the sciences and name the branch which would be least fruitful in [the] century ahead, his choice might well have settled upon mathematical logic.” And yet, it would provide the foundation for a field that would have more impact on the modern world than any other.&lt;/p&gt;
&lt;p&gt;The evolution of computer science from mathematical logic culminated in the 1930s, with two landmark papers: Claude Shannon’s “&lt;a href=&quot;http://www.ccapitalia.net/descarga/docs/1938-shannon-analysis-relay-switching-circuits.pdf&quot;&gt;A Symbolic Analysis of Switching and Relay Circuits&lt;/a&gt;,” and Alan Turing’s “&lt;a href=&quot;http://www.dna.caltech.edu/courses/cs129/caltech_restricted/Turing_1936_IBID.pdf&quot;&gt;On Computable Numbers, With an Application to the &lt;em&gt;Entscheidungsproblem&lt;/em&gt;&lt;/a&gt;.” In the history of computer science, Shannon and Turing are towering figures, but the importance of the philosophers and logicians who preceded them is frequently overlooked.&lt;/p&gt;
&lt;p&gt;A well-known history of computer science describes Shannon’s paper as “possibly the most important, and also the most noted, master’s thesis of the century.” Shannon wrote it as an electrical engineering student at MIT. His adviser, Vannevar Bush, built a prototype computer known as the &lt;a href=&quot;http://www.mit.edu/~klund/analyzer/&quot;&gt;Differential Analyzer&lt;/a&gt; that could rapidly calculate differential equations. The device was mostly mechanical, with subsystems controlled by electrical relays, which were organized in an ad hoc manner as there was not yet a systematic theory underlying circuit design. Shannon’s thesis topic came about when Bush recommended he try to discover such a theory.&lt;/p&gt;
&lt;p&gt;Shannon’s paper is in many ways a typical electrical-engineering paper, filled with equations and diagrams of electrical circuits. What is unusual is that the primary reference was a 90-year-old work of mathematical philosophy, George Boole’s &lt;em&gt;The Laws of Thought&lt;/em&gt;.&lt;/p&gt;
&lt;p&gt;Today, Boole’s name is well known to computer scientists (many programming languages have a basic data type called a Boolean), but in 1938 he was rarely read outside of philosophy departments. Shannon himself encountered Boole’s work in an undergraduate philosophy class. “It just happened that no one else was familiar with both fields at the same time,” he &lt;a href=&quot;http://georgeboole.com/boole/legacy/engineering/&quot;&gt;commented&lt;/a&gt; later.&lt;/p&gt;
&lt;p&gt;Boole is often described as a mathematician, but he saw himself as a philosopher, following in the footsteps of Aristotle. The Laws of Thought begins with a description of his goals, to investigate the fundamental laws of the operation of the human mind:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The design of the following treatise is to investigate the fundamental laws of those operations of the mind by which reasoning is performed; to give expression to them in the symbolical language of a Calculus, and upon this foundation to establish the science of Logic ... and, finally, to collect ... some probable intimations concerning the nature and constitution of the human mind.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;He then pays tribute to Aristotle, the inventor of logic, and the primary influence on &lt;a href=&quot;http://www.gutenberg.org/files/15114/15114-pdf.pdf&quot;&gt;his own work&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In its ancient and scholastic form, indeed, the subject of Logic stands almost exclusively associated with the great name of Aristotle. As it was presented to ancient Greece in the partly technical, partly metaphysical disquisitions of The Organon, such, with scarcely any essential change, it has continued to the present day.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Trying to improve on the logical work of Aristotle was an intellectually daring move. Aristotle’s logic, presented in his six-part book &lt;em&gt;The Organon&lt;/em&gt;, occupied a central place in the scholarly canon for more than 2,000 years. It was widely believed that Aristotle had written almost all there was to say on the topic. The great philosopher Immanuel Kant &lt;a href=&quot;https://books.google.com/books?id=WJVYp0C0taYC&amp;#x26;pg=PA36&amp;#x26;lpg=PA36&amp;#x26;dq=unable+to+take+a+single+step+forward,+and+therefore+seems+to+all+appearance+to+be+finished+and+complete&amp;#x26;source=bl&amp;#x26;ots=W4Lrt9I80J&amp;#x26;sig=KpZlOd-Yc9brgTksIJJZcxUD-Mg&amp;#x26;hl=en&amp;#x26;sa=X&amp;#x26;ved=0ahUKEwjeg8i1iLvQAhVH6IMKHTMXDMgQ6AEIHTAA#v=onepage&amp;#x26;q=unable%20to%20take%20a%20single%20step%20forward%2C%20and%20therefore%20seems%20to%20all%20appearance%20to%20be%20finished%20and%20complete&amp;#x26;f=false&quot;&gt;commented&lt;/a&gt; that, since Aristotle, logic had been “unable to take a single step forward, and therefore seems to all appearance to be finished and complete.”&lt;/p&gt;
&lt;p&gt;Aristotle’s central observation was that arguments were valid or not based on their logical structure, independent of the non-logical words involved. The most famous argument schema he discussed is known as the syllogism:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;All men are mortal.&lt;/li&gt;
&lt;li&gt;Socrates is a man.&lt;/li&gt;
&lt;li&gt;Therefore, Socrates is mortal.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;You can replace “Socrates” with any other object, and “mortal” with any other predicate, and the argument remains valid. The validity of the argument is determined solely by the logical structure. The logical words — “all,” “is,” are,” and “therefore” — are doing all the work.&lt;/p&gt;
&lt;p&gt;Aristotle also defined a set of basic axioms from which he derived the rest of his logical system:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;An object is what it is (Law of Identity)&lt;/li&gt;
&lt;li&gt;No statement can be both true and false (Law of Non-contradiction)&lt;/li&gt;
&lt;li&gt;Every statement is either true or false (Law of the Excluded Middle)&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;These axioms weren’t meant to describe how people actually think (that would be the realm of psychology), but how an idealized, perfectly rational person ought to think.&lt;/p&gt;
&lt;p&gt;Aristotle’s axiomatic method influenced an even more famous book, Euclid’s &lt;em&gt;Elements&lt;/em&gt;, which is &lt;a href=&quot;https://en.wikipedia.org/wiki/Euclid%27s_Elements&quot;&gt;estimated&lt;/a&gt; to be second only to the Bible in the number of editions printed.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 630px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;A fragment of the Elements (Wikimedia Commons)&quot;
        title=&quot;A fragment of the Elements (Wikimedia Commons)&quot;
        src=&quot;/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png&quot;
        srcset=&quot;/static/2c8ad9d68abd743af2370247bda0f885/924ad/2c8ad9d68.png 170w,
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/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png 630w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;A fragment of the Elements (Wikimedia Commons)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Although ostensibly about geometry, the &lt;em&gt;Elements&lt;/em&gt; became a standard textbook for teaching rigorous deductive reasoning. (Abraham Lincoln once said that he learned sound legal argumentation from studying Euclid.) In Euclid’s system, geometric ideas were represented as spatial diagrams. Geometry continued to be practiced this way until René Descartes, in the 1630s, showed that geometry could instead be represented as formulas. His &lt;em&gt;Discourse on Method&lt;/em&gt; was the &lt;a href=&quot;http://www.storyofmathematics.com/17th_descartes.html&quot;&gt;first&lt;/a&gt; mathematics text in the West to popularize what is now standard algebraic notation — x, y, z for variables, a, b, c for known quantities, and so on.&lt;/p&gt;
&lt;p&gt;Descartes’s algebra allowed mathematicians to move beyond spatial intuitions to manipulate symbols using precisely defined formal rules. This shifted the dominant mode of mathematics from diagrams to formulas, leading to, among other things, the development of calculus, invented roughly 30 years after Descartes by, independently, Isaac Newton and Gottfried Leibniz.&lt;/p&gt;
&lt;p&gt;Boole’s goal was to do for Aristotelean logic what Descartes had done for Euclidean geometry: free it from the limits of human intuition by giving it a precise algebraic notation. To give a simple example, when Aristotle wrote:&lt;/p&gt;
&lt;p&gt;All men are mortal.&lt;/p&gt;
&lt;p&gt;Boole replaced the words “men” and “mortal” with variables, and the logical words “all” and “are” with arithmetical operators:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;x = x * y&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Which could be interpreted as “Everything in the set &lt;em&gt;x&lt;/em&gt; is also in the set &lt;em&gt;y&lt;/em&gt;.”&lt;/p&gt;
&lt;p&gt;The &lt;em&gt;Laws of Thought&lt;/em&gt; created a new scholarly field—mathematical logic—which in the following years became one of the most active areas of research for mathematicians and philosophers. Bertrand Russell called the &lt;em&gt;Laws of Thought&lt;/em&gt; “the work in which pure mathematics was discovered.”&lt;/p&gt;
&lt;p&gt;Shannon’s insight was that Boole’s system could be mapped directly onto electrical circuits. At the time, electrical circuits had no systematic theory governing their design. Shannon realized that the right theory would be “exactly analogous to the calculus of propositions used in the symbolic study of logic.”&lt;/p&gt;
&lt;p&gt;He showed the correspondence between electrical circuits and Boolean operations in a simple chart:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)&quot;
        title=&quot;Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)&quot;
        src=&quot;/static/99df968e4a381af54b90ef8d287fb9de/07a90/99df968e4.png&quot;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;This correspondence allowed computer scientists to import decades of work in logic and mathematics by Boole and subsequent logicians. In the second half of his paper, Shannon showed how Boolean logic could be used to create a circuit for adding two binary digits.&lt;/p&gt;
&lt;p&gt;By stringing these adder circuits together, arbitrarily complex arithmetical operations could be constructed. These circuits would become the basic building blocks of what are now known as &lt;a href=&quot;https://en.wikipedia.org/wiki/Arithmetic_logic_unit&quot;&gt;arithmetical logic units&lt;/a&gt;, a key component in modern computers.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Shannon’s adder circuit (University of Virginia)&quot;
        title=&quot;Shannon’s adder circuit (University of Virginia)&quot;
        src=&quot;/static/2b88e5a1a506c0c6476f9b8658ae8c1f/24b80/2b88e5a1a.png&quot;
        srcset=&quot;/static/2b88e5a1a506c0c6476f9b8658ae8c1f/924ad/2b88e5a1a.png 170w,
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Shannon’s adder circuit (University of Virginia)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Another way to characterize Shannon’s achievement is that he was first to distinguish between the logical and the physical layer of computers. (This distinction has become so fundamental to computer science that it might seem surprising to modern readers how insightful it was at the time—a reminder of the adage that “the philosophy of one century is the common sense of the next.”)&lt;/p&gt;
&lt;p&gt;Since Shannon’s paper, a vast amount of progress has been made on the physical layer of computers, including the invention of the transistor in 1947 by William Shockley and his colleagues at Bell Labs. Transistors are dramatically improved versions of Shannon’s electrical relays — the best known way to physically encode Boolean operations. Over the next 70 years, the semiconductor industry packed more and more transistors into smaller spaces. A 2016 iPhone &lt;a href=&quot;http://www.macrumors.com/2016/09/12/cpu-improvements-iphone-7-apple-watch/&quot;&gt;has&lt;/a&gt; about 3.3 billion transistors, each one a “relay switch” like those pictured in Shannon’s diagrams.&lt;/p&gt;
&lt;p&gt;While Shannon showed how to map logic onto the physical world, Turing showed how to design computers in the language of mathematical logic. When Turing wrote his paper, in 1936, he was trying to solve “the decision problem,” first identified by the mathematician David Hilbert, who asked whether there was an algorithm that could determine whether an arbitrary mathematical statement is true or false. In contrast to Shannon’s paper, Turing’s paper is highly technical. Its primary historical significance lies not in its answer to the decision problem,  but in the template for computer design it provided along the way.&lt;/p&gt;
&lt;p&gt;Turing was working in a tradition stretching back to Gottfried Leibniz, the philosophical giant who developed calculus independently of Newton. Among Leibniz’s many contributions to modern thought, one of the most intriguing was the idea of a new language he called the “&lt;a href=&quot;https://en.wikipedia.org/wiki/Characteristica_universalis&quot;&gt;universal characteristic&lt;/a&gt;” that, he imagined, could represent all possible mathematical and scientific knowledge. Inspired in part by the 13th-century religious philosopher &lt;a href=&quot;https://en.wikipedia.org/wiki/Ramon_Llull&quot;&gt;Ramon Llull&lt;/a&gt;, Leibniz postulated that the language would be ideographic like Egyptian hieroglyphics, except characters would correspond to “atomic” concepts of math and science. He argued this language would give humankind an “instrument” that could enhance human reason “to a far greater extent than optical instruments” like the microscope and telescope.&lt;/p&gt;
&lt;p&gt;He also &lt;a href=&quot;http://publicdomainreview.org/2016/11/10/let-us-calculate-leibniz-llull-and-computational-imagination/&quot;&gt;imagined&lt;/a&gt; a machine that could process the language, which he called the calculus ratiocinator.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;If controversies were to arise, there would be no more need of disputation between two philosophers than between two accountants. For it would suffice to take their pencils in their hands, and say to each other: Calculemus—Let us calculate.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Leibniz didn’t get the opportunity to develop his universal language or the corresponding machine (although he did invent a relatively simple calculating machine, the &lt;a href=&quot;https://en.wikipedia.org/wiki/Stepped_reckoner&quot;&gt;stepped reckoner&lt;/a&gt;). The first credible attempt to realize Leibniz’s dream came in 1879, when the German philosopher Gottlob Frege published his landmark logic treatise &lt;em&gt;&lt;a href=&quot;https://en.wikipedia.org/wiki/Begriffsschrift&quot;&gt;Begriffsschrift&lt;/a&gt;&lt;/em&gt;. Inspired by Boole’s attempt to improve Aristotle’s logic, Frege developed a much more advanced logical system. The logic taught in philosophy and computer-science classes today—first-order or predicate logic—is only a slight modification of Frege’s system.&lt;/p&gt;
&lt;p&gt;Frege is generally considered one of the most important philosophers of the 19th century. Among other things, he is credited with catalyzing what noted philosopher Richard Rorty called the “&lt;a href=&quot;https://en.wikipedia.org/wiki/Linguistic_turn&quot;&gt;linguistic turn&lt;/a&gt;” in philosophy. As Enlightenment philosophy was obsessed with questions of knowledge, philosophy after Frege became obsessed with questions of language. His disciples included two of the most important philosophers of the 20th century—Bertrand Russell and Ludwig Wittgenstein.&lt;/p&gt;
&lt;p&gt;The major innovation of Frege’s logic is that it much more accurately represented the logical structure of ordinary language. Among other things, Frege was the first to use quantifiers (“for every,” “there exists”) and to separate objects from predicates. He was also the first to develop what today are fundamental concepts in computer science like recursive functions and variables with scope and binding.&lt;/p&gt;
&lt;p&gt;Frege’s formal language — what he called his “concept-script” — is made up of meaningless symbols that are manipulated by well-defined rules. The language is only given meaning by an interpretation, which is specified separately (this distinction would later come to be called syntax versus semantics). This turned logic into what the eminent computer scientists Allan Newell and Herbert Simon called “the symbol game,” “played with meaningless tokens according to certain purely syntactic rules.”&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;All meaning had been purged. One had a mechanical system about which various things could be proved. Thus progress was first made by walking away from all that seemed relevant to meaning and human symbols.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As Bertrand Russell famously quipped: “Mathematics may be defined as the subject in which we never know what we are talking about, nor whether what we are saying is true.”&lt;/p&gt;
&lt;p&gt;An unexpected consequence of Frege’s work was the discovery of weaknesses in the foundations of mathematics. For example, Euclid’s &lt;em&gt;Elements&lt;/em&gt; — considered the gold standard of logical rigor for thousands of years — turned out to be full of logical mistakes. Because Euclid used ordinary words like “line” and “point,” he — and centuries of readers — deceived themselves into making assumptions about sentences that contained those words. To give one relatively simple example, in ordinary usage, the word “line” implies that if you are given three distinct points on a line, one point must be between the other two. But when you define “line” using formal logic, it turns out “between-ness” also needs to be defined—something Euclid overlooked. Formal logic makes gaps like this easy to spot.&lt;/p&gt;
&lt;p&gt;This realization created a &lt;a href=&quot;https://en.wikipedia.org/wiki/Foundations_of_mathematics#Foundational_crisis&quot;&gt;crisis&lt;/a&gt; in the foundation of mathematics. If the &lt;em&gt;Elements&lt;/em&gt; — the bible of mathematics — contained logical mistakes, what other fields of mathematics did too? What about sciences like physics that were built on top of mathematics?&lt;/p&gt;
&lt;p&gt;The good news is that the same logical methods used to uncover these errors could also be used to correct them. Mathematicians started rebuilding the foundations of mathematics from the bottom up. In 1889, Giuseppe Peano &lt;a href=&quot;https://en.wikipedia.org/wiki/Peano_axioms&quot;&gt;developed&lt;/a&gt; axioms for arithmetic, and in 1899, David Hilbert &lt;a href=&quot;https://en.wikipedia.org/wiki/Hilbert%27s_axioms&quot;&gt;did&lt;/a&gt; the same for geometry. Hilbert also outlined a program to formalize the remainder of mathematics, with specific requirements that any such attempt should satisfy, including:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;em&gt;Completeness&lt;/em&gt;: There should be a proof that all true mathematical statements can be proved in the formal system.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Decidability&lt;/em&gt;: There should be an algorithm for deciding the truth or falsity of any mathematical statement. (This is the “&lt;em&gt;Entscheidungsproblem&lt;/em&gt;” or “decision problem” referenced in Turing’s paper.)&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;Rebuilding mathematics in a way that satisfied these requirements became known as Hilbert’s program. Up through the 1930s, this was the focus of a core group of logicians including Hilbert, Russell, Kurt Gödel, John Von Neumann, Alonzo Church, and, of course, Alan Turing.&lt;/p&gt;
&lt;p&gt;Hilbert’s program proceeded on at least two fronts. On the first front, logicians created logical systems that tried to prove Hilbert’s requirements either satisfiable or not.&lt;/p&gt;
&lt;p&gt;On the second front, mathematicians used logical concepts to rebuild classical mathematics. For example, Peano’s system for arithmetic starts with a simple function called the successor function which increases any number by one. He uses the successor function to recursively define &lt;a href=&quot;https://en.wikipedia.org/wiki/Peano_axioms#Addition&quot;&gt;addition&lt;/a&gt;, uses addition to recursively define &lt;a href=&quot;https://en.wikipedia.org/wiki/Peano_axioms#Multiplication&quot;&gt;multiplication&lt;/a&gt;, and so on, until all the operations of number theory are defined. He then uses those definitions, along with formal logic, to prove theorems about arithmetic.&lt;/p&gt;
&lt;p&gt;The historian Thomas Kuhn once observed that “in science, novelty emerges only with difficulty.” Logic in the era of Hilbert’s program was a tumultuous process of creation and destruction. One logician would build up an elaborate system and another would tear it down.&lt;/p&gt;
&lt;p&gt;The favored tool of destruction was the construction of self-referential, paradoxical statements that showed the axioms from which they were derived to be inconsistent. A simple form of this  “liar’s paradox” is the sentence:&lt;/p&gt;
&lt;p&gt;This sentence is false.&lt;/p&gt;
&lt;p&gt;If it is true then it is false, and if it is false then it is true, leading to an endless loop of self-contradiction.&lt;/p&gt;
&lt;p&gt;Russell made the first notable use of the liar’s paradox in mathematical logic. He showed that Frege’s system allowed self-contradicting sets to be derived:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Let &lt;em&gt;R&lt;/em&gt; be the set of all sets that are not members of themselves. If &lt;em&gt;R&lt;/em&gt; is not a member of itself, then its definition dictates that it must contain itself, and if it contains itself, then it contradicts its own definition as the set of all sets that are not members of themselves.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This became known as Russell’s paradox and was seen as a serious flaw in Frege’s achievement. (Frege himself was shocked by this discovery. He replied to Russell: “Your discovery of the contradiction caused me the greatest surprise and, I would almost say, consternation, since it has shaken the basis on which I intended to build my arithmetic.”)&lt;/p&gt;
&lt;p&gt;Russell and his colleague Alfred North Whitehead put forth the most ambitious attempt to complete Hilbert’s program with the &lt;em&gt;Principia Mathematica&lt;/em&gt;, published in three volumes between 1910 and 1913. The &lt;em&gt;Principia’s&lt;/em&gt; method was so detailed that it took over 300 pages to get to the proof that 1+1=2.&lt;/p&gt;
&lt;p&gt;Russell and Whitehead tried to resolve Frege’s paradox by introducing what they called type theory. The idea was to partition formal languages into multiple levels or types. Each level could make reference to levels below, but not to their own or higher levels. This resolved self-referential paradoxes by, in effect, banning self-reference. (This solution was not popular with logicians, but it did influence computer science — most modern computer languages have features inspired by type theory.)&lt;/p&gt;
&lt;p&gt;Self-referential paradoxes ultimately showed that Hilbert’s program could never be successful. The first blow came in 1931, when Gödel published his now famous incompleteness theorem, which proved that any consistent logical system powerful enough to encompass arithmetic must also contain statements that are true but cannot be proven to be true. (Gödel’s incompleteness theorem is one of the few logical results that has been broadly popularized, thanks to books like &lt;a href=&quot;https://en.wikipedia.org/wiki/G%C3%B6del,_Escher,_Bach&quot;&gt;Gödel, Escher, Bach&lt;/a&gt; and &lt;a href=&quot;https://www.amazon.com/dp/B00ARGXG7Q/ref=dp-kindle-redirect?_encoding=UTF8&amp;#x26;btkr=1&quot;&gt;The Emperor’s New Mind&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;The final blow came when Turing and Alonzo Church independently proved that no algorithm could exist that determined whether an arbitrary mathematical statement was true or false. (Church did this by inventing an entirely different system called the &lt;a href=&quot;https://en.wikipedia.org/wiki/Lambda_calculus&quot;&gt;lambda calculus&lt;/a&gt;, which would later inspire computer languages like &lt;a href=&quot;https://en.wikipedia.org/wiki/Lisp_%28programming_language%29&quot;&gt;Lisp&lt;/a&gt;.) The answer to the decision problem was negative.&lt;/p&gt;
&lt;p&gt;Turing’s key insight came in the first section of his famous 1936 paper, “On Computable Numbers, With an Application to the &lt;em&gt;Entscheidungsproblem&lt;/em&gt;.” In order to rigorously formulate the decision problem (the “&lt;em&gt;Entscheidungsproblem&lt;/em&gt;”), Turing first created a mathematical model of what it means to be a computer (today, machines that fit this model are known as “universal Turing machines”). As the logician Martin Davis describes it:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Turing knew that an algorithm is typically specified by a list of rules that a person can follow in a precise mechanical manner, like a recipe in a cookbook. He was able to show that such a person could be limited to a few extremely simple basic actions without changing the final outcome of the computation.&lt;/p&gt;
&lt;p&gt;Then, by proving that no machine performing only those basic actions could determine whether or not a given proposed conclusion follows from given premises using Frege’s rules, he was able to conclude that no algorithm for the Entscheidungsproblem exists.&lt;/p&gt;
&lt;p&gt;As a byproduct, he found a mathematical model of an all-purpose computing machine.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Next, Turing showed how a program could be stored inside a computer alongside the data upon which it operates. In today’s vocabulary, we’d say that he invented the “stored-program” architecture that underlies most modern computers:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Before Turing, the general supposition was that in dealing with such machines the three categories — machine, program, and data — were entirely separate entities. The machine was a physical object; today we would call it hardware. The program was the plan for doing a computation, perhaps embodied in punched cards or connections of cables in a plugboard. Finally, the data was the numerical input. Turing’s universal machine showed that the distinctness of these three categories is an illusion.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This was the first rigorous demonstration that any computing logic that could be encoded in hardware could also be encoded in software. The architecture Turing described was later dubbed the “Von Neumann architecture” — but modern historians generally agree it came from Turing, as, apparently, did Von Neumann &lt;a href=&quot;https://en.wikipedia.org/wiki/Alan_Turing#cite_note-36&quot;&gt;himself&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Although, on a technical level, Hilbert’s program was a failure, the efforts along the way demonstrated that large swaths of mathematics could be constructed from logic. And after Shannon and Turing’s insights—showing the connections between electronics, logic and computing—it was now possible to export this new conceptual machinery over to computer design.&lt;/p&gt;
&lt;p&gt;During World War II, this theoretical work was put into practice, when government labs conscripted a number of elite logicians. Von Neumann joined the atomic bomb project at Los Alamos, where he worked on computer design to support physics research. In 1945, he wrote the &lt;a href=&quot;http://www.virtualtravelog.net/wp/wp-content/media/2003-08-TheFirstDraft.pdf&quot;&gt;specification&lt;/a&gt; of the EDVAC—the first stored-program, logic-based computer—which is generally considered the definitive source guide for modern computer design.&lt;/p&gt;
&lt;p&gt;Turing joined a secret unit at Bletchley Park, northwest of London, where he helped design computers that were instrumental in breaking German codes. His most enduring contribution to practical computer design was his specification of the ACE, or Automatic Computing Engine.&lt;/p&gt;
&lt;p&gt;As the first computers to be based on Boolean logic and stored-program architectures, the ACE and the EDVAC were similar in many ways. But they also had interesting differences, some of which foreshadowed modern debates in computer design. Von Neumann’s favored designs were similar to modern CISC (“complex”) processors, baking rich functionality into hardware. Turing’s design was more like modern RISC (“reduced”) processors, minimizing hardware complexity and pushing more work to software.&lt;/p&gt;
&lt;p&gt;Von Neumann thought computer programming would be a tedious, clerical job. Turing, by contrast, said computer programming “should be very fascinating. There need be no real danger of it ever becoming a drudge, for any processes that are quite mechanical may be turned over to the machine itself.”&lt;/p&gt;
&lt;p&gt;Since the 1940s, computer programming has become significantly more sophisticated. One thing that hasn’t changed is that it still primarily consists of programmers specifying rules for computers to follow. In philosophical terms, we’d say that computer programming has followed in the tradition of deductive logic, the branch of logic discussed above, which deals with the manipulation of symbols according to formal rules.&lt;/p&gt;
&lt;p&gt;In the past decade or so, programming has started to change with the growing popularity of machine learning, which involves creating frameworks for machines to learn via statistical inference. This has brought programming closer to the other main branch of logic, inductive logic, which deals with inferring rules from specific instances.&lt;/p&gt;
&lt;p&gt;Today’s most promising machine learning techniques use neural networks, which were first &lt;a href=&quot;http://www.cse.chalmers.se/~coquand/AUTOMATA/mcp.pdf&quot;&gt;invented&lt;/a&gt; in 1940s by Warren McCulloch and Walter Pitts, whose idea was to develop a calculus for neurons that could, like Boolean logic, be used to construct computer circuits. Neural networks remained esoteric until decades later when they were combined with statistical techniques, which allowed them to improve as they were fed more data. Recently, as computers have become increasingly adept at handling large data sets, these techniques have produced remarkable results. Programming in the future will likely mean exposing neural networks to the world and letting them learn.&lt;/p&gt;
&lt;p&gt;This would be a fitting second act to the story of computers. Logic began as a way to understand the laws of thought. It then helped create machines that could reason according to the rules of deductive logic. Today, deductive and inductive logic are being combined to create machines that both reason and learn. What began, in Boole’s words, with an investigation “concerning the nature and constitution of the human mind,” could result in the creation of new minds—artificial minds—that might someday match or even exceed our own.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Gadgets and Computers]]></title><description><![CDATA[From Benedict Evans’ Cars as Feature Phones: This is a common theme in many classes of device: you start with a product that has a few…]]></description><link>https://cdixon.org/2017/01/16/gadgets-and-computers</link><guid isPermaLink="false">https://cdixon.org/2017/01/16/gadgets-and-computers</guid><pubDate>Mon, 16 Jan 2017 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;From Benedict Evans’ &lt;a href=&quot;http://ben-evans.com/benedictevans/2017/01/10/cars-as-featurephones&quot;&gt;Cars as Feature Phones&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;This is a common theme in many classes of device: you start with a product that has a few electronic functions added, and then those functions are delivered with chips, and perhaps they gain an interface and then a screen, and more and more functions (and probably multi-function buttons) — and then, somehow, you’ve built a little weird custom computer without actually meaning to, and all the little silos of features and functions become unmanageable, both at an interface level and also at a fundamental engineering level, and the whole thing gets replaced by a real computer with a real software platform. And this new computer is almost certainly made by a different company.
You could see this problem very clearly at Motorola, which developed as many as two dozen ‘operating systems’ — for phones, pagers, satellite phones, car-control, industrial devices, chip evaluation boards and so on and so on, and picked them for each device out of a metaphorical parts bin just as you’d choose a sensor or battery or any other component. And boy, they really knew how to write operating systems — they had dozens! With, probably, ‘&lt;a href=&quot;https://www.technologyreview.com/s/508231/many-cars-have-a-hundred-million-lines-of-code/&quot;&gt;millions of lines of code&lt;/a&gt;’. This was exactly the right approach in 1995, but in 2005, again, the whole thing collapsed under its own weight, because they needed software as a platform rather than as a one-off component, and instead &lt;a href=&quot;http://www.theregister.co.uk/Print/2012/11/29/rockman_on_motorola/&quot;&gt;they had a mess&lt;/a&gt;.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The iPhone was the first mainstream cell phone that was also a proper computer. It had a full-fledged operating system and a (mostly) open developer platform. We are likely seeing the same pattern play out across the &lt;a href=&quot;https://medium.com/software-is-eating-the-world/what-s-next-in-computing-e54b870b80cc#.bmdmkoc13&quot;&gt;next generation of computers&lt;/a&gt;: not only cars, but drones, IoT devices, wearables, etc. In the beginning, hardware-focused companies make gadgets with ever increasing laundry lists of features. Then a company with strong software expertise (often a new market entrant) comes along that replaces these feature-packed gadgets with full-fledged computers. These computers have proper (usually Unix-like) operating systems, open developer platforms, and streamlined user interfaces (increasingly, powered by AI).&lt;/p&gt;
&lt;p&gt;This process takes time to play out. Apple waited more than a decade from the initial popularity of cell phones to the release of the first iPhone. And sometimes you don’t know the significance of a new computing device until many years later. It wasn’t obvious until around 2012 that iOS and Android smartphones would become the dominant form of computing (recall Facebook’s “&lt;a href=&quot;https://techcrunch.com/2012/10/19/facebook-mobile-first/&quot;&gt;pivot to mobile&lt;/a&gt;” in 2012). Some people (including me) believe we’ve already entered the “computer phase” of consumer IoT with voice assistants like Alexa, but it will probably take years before we understand the enduring mainstream appeal of these devices.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[As [Edwin] Land ultimately recognized, the adoption of his [polarized headlight] system was fatally…]]></title><description><![CDATA[As Edwin Land ultimately recognized, the adoption of his polarized headlight system was fatally hampered by the fact that there was no…]]></description><link>https://cdixon.org/2016/09/25/as-edwin-land-ultimately-recognized-the-adoption-of-his-polarized-headlight-system-was-fatally</link><guid isPermaLink="false">https://cdixon.org/2016/09/25/as-edwin-land-ultimately-recognized-the-adoption-of-his-polarized-headlight-system-was-fatally</guid><pubDate>Sun, 25 Sep 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;As [Edwin] Land ultimately recognized, the adoption of his [polarized headlight] system was fatally hampered by the fact that there was no competitive advantage for any car company in using it first. Since all cars needed to incorporate the technology as simultaneously as possible, it was either going to be all, either voluntarily or as directed by the government, or none. No state or federal governmental agency ever stepped in to direct the adoption of the technology in the way that seat belts would be required decades later. Herbert Nichols, a journalist with the Christian Science Monitor who had followed the story, believed that the industry killed the idea even though the demonstrations clearly showed that the system worked. According to Nichols, the industry concluded that it “just didn’t need anything to sell automobiles. They realized they could sell all the automobiles they could make.” Thus, with no economic or competitive incentive, why bother with a system that clearly added costs and admittedly presented implementation issues? After more than two decades, Land reluctantly gave up the fight.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;But he learned one very important lesson. “I knew then that I would never go into a commercial field that put a barrier between us and the customer.” Rather than deal with other companies as intermediaries, he would market his innovative products directly to the public. He believed “that the role of industry is to sense a deep human need, then bring science and technology to bear on filling that need. Any market already existing is inherently boring and dull.” Land, like Steve Jobs many decades later, believed that his company should “give people products they do not even know they want.” Fortunately, he already had such a product in mind.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;— &lt;em&gt;&lt;a href=&quot;https://www.amazon.com/dp/B00OHRYYFO/&quot;&gt;A Triumph of Genius: Edwin Land, Polaroid, and the Kodak Patent War&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Eleven Reasons To Be Excited About The Future of Technology]]></title><description><![CDATA[“The strongest force propelling human progress has been the swift advance and wide diffusion of technology.” — The Economist In the year…]]></description><link>https://cdixon.org/2016/08/18/eleven-reasons-to-be-excited-about-the-future-of-technology</link><guid isPermaLink="false">https://cdixon.org/2016/08/18/eleven-reasons-to-be-excited-about-the-future-of-technology</guid><pubDate>Thu, 18 Aug 2016 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;“The strongest force propelling human progress has been the swift advance and wide diffusion of technology.” — &lt;a href=&quot;http://www.economist.com/node/841842&quot;&gt;The Economist&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In the year 1820, a person could &lt;a href=&quot;https://ourworldindata.org/life-expectancy/&quot;&gt;expect to live&lt;/a&gt; less than 35 years, 94% of the global population &lt;a href=&quot;https://ourworldindata.org/world-poverty/&quot;&gt;lived in extreme poverty&lt;/a&gt;, and less that 20% of the population was literate. Today, human life expectancy is over 70 years, less that 10% of the global population lives in extreme poverty, and &lt;a href=&quot;http://www.oecd.org/statistics/How-was-life.pdf&quot;&gt;over 80% of people&lt;/a&gt; are literate. These improvements are due mainly to advances in technology, beginning in the industrial age and continuing today in the information age.&lt;/p&gt;
&lt;p&gt;There are many exciting new technologies that will continue to transform the world and improve human welfare. Here are eleven of them.&lt;/p&gt;
&lt;h2&gt;1. Self-Driving Cars&lt;/h2&gt;
&lt;p&gt;Self-driving cars exist today that are safer than human-driven cars in most driving conditions. Over the next 3–5 years they‘ll get even safer, and will begin to go mainstream.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/9095391e908f6d180dfe446b3c85d104/1_HfoJs9tCyyr6VeLvD45wyQ.gif&quot;&gt;&lt;/p&gt;
&lt;p&gt;The &lt;a href=&quot;http://www.who.int/mediacentre/factsheets/fs358/en/&quot;&gt;World Health Organization estimates&lt;/a&gt; that 1.25 million people die from car-related injuries per year. Half of the deaths are pedestrians, bicyclists, and motorcyclists hit by cars. Cars are the leading cause of death for people ages 15–29 years old.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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        class=&quot;gatsby-resp-image-image&quot;
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        src=&quot;/static/b1331e887bede1ec31bb4ddd87d920f3/fd7a0/1_SNGdeK4GNUhjL6wlh7sfJw.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Just as cars reshaped the world in the 20th century, so will self-driving cars in the 21st century. In most cities, &lt;a href=&quot;http://oldurbanist.blogspot.com.es/2011/12/we-are-25-looking-at-street-area.html&quot;&gt;between 20–30%&lt;/a&gt; of usable space is taken up by parking spaces, and most cars are parked &lt;a href=&quot;http://www.reinventingparking.org/2013/02/cars-are-parked-95-of-time-lets-check.html&quot;&gt;about 95%&lt;/a&gt; of the time. Self-driving cars will be in almost continuous use (most likely hailed from a smartphone app), thereby dramatically reducing the need for parking. Cars will communicate with one another to avoid accidents and traffic jams, and riders will be able to spend commuting time on other activities like work, education, and socializing.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;&quot;
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    href=&quot;/static/e38574048864fdccbafce0305e175014/1654f/1_k6w2wkkREpVeu9_cS2xxtg.png&quot;
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  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 74.4047619047619%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)&quot;
        title=&quot;Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)&quot;
        src=&quot;/static/e38574048864fdccbafce0305e175014/1654f/1_k6w2wkkREpVeu9_cS2xxtg.png&quot;
        srcset=&quot;/static/e38574048864fdccbafce0305e175014/924ad/1_k6w2wkkREpVeu9_cS2xxtg.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;2. Clean Energy&lt;/h2&gt;
&lt;p&gt;Attempts to fight climate change by reducing the demand for energy &lt;a href=&quot;https://en.wikipedia.org/wiki/World_energy_consumption&quot;&gt;haven’t worked&lt;/a&gt;. Fortunately, scientists, engineers, and entrepreneurs have been working hard on the supply side to make clean energy convenient and cost-effective.&lt;/p&gt;
&lt;p&gt;Due to steady technological and manufacturing advances, the price of solar cells has &lt;a href=&quot;http://www.saskwind.ca/wind-cost-decline/&quot;&gt;dropped 99.5% since 1977&lt;/a&gt;. Solar will soon be more cost efficient than fossil fuels. The cost of wind energy has also dropped to an all-time low, and in the last decade represented about a &lt;a href=&quot;http://energy.gov/articles/top-10-things-you-didnt-know-about-wind-power&quot;&gt;third of newly installed&lt;/a&gt; US energy capacity.&lt;/p&gt;
&lt;p&gt;Forward thinking organizations are taking advantage of this. For example, in India there is an initiative to convert airports to self-sustaining clean energy.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 314px;&quot;
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    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 76.43312101910827%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))&quot;
        title=&quot;Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))&quot;
        src=&quot;/static/4cf0c503c956282e349bc8751260c793/808c1/1_idAW1ONI_iIeevzPaUv-pg.png&quot;
        srcset=&quot;/static/4cf0c503c956282e349bc8751260c793/924ad/1_idAW1ONI_iIeevzPaUv-pg.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Tesla is making high-performance, affordable electric cars, and &lt;a href=&quot;http://www.treehugger.com/cars/tesla-built-858-new-charging-stations-us-over-past-12-months.html&quot;&gt;installing&lt;/a&gt; electric charging stations &lt;a href=&quot;http://mashable.com/2016/04/01/tesla-supercharger-expansion/#v93tzyDFl5qR&quot;&gt;worldwide&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    style=&quot;display: block&quot;
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  &gt;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Tesla Model 3 and US supercharger locations&quot;
        title=&quot;Tesla Model 3 and US supercharger locations&quot;
        src=&quot;/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png&quot;
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/static/12dcb7e7db7e072104c07a6c4a11ef4e/f570f/1_YwcTRiWETVn4aXiZhEJtcg.png 341w,
/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png 416w&quot;
        sizes=&quot;(max-width: 416px) 100vw, 416px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Tesla Model 3 and US supercharger locations&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;There are hopeful signs that clean energy could soon be reaching a tipping point. For example, in Japan, there are now more electric charging stations than gas stations.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 530px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 23.584905660377355%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAABAUlEQVQY02WOTUvDQBiE9wf7Q/SkJz0UQUUELx60Km1TI7S1khSbrNmGtTSxNZvdtEk3H5ZIILvGFC/6HF7mHYZhwP6tftwxzlR40UPxJpdSlqX4R1n5ef5J6Wwduc4yfRkZ9pSAveaooZhHrfGp+so3X1VICPkHUVtpTPHb88B6vzaL1smBOsRgST7SeB1HIY9WjFHGmO/7hBDP8yoRBAGl1HXdxXy+YFEPzq6gVJp33cuG4kig6TpCE9M0J7ZtGIZlWQihSkAIq4osy5IkWYUhD4NpIO4Hdv989+lw56Y97mAJshrOeVKzTW/foih+Z/8ckspHzdW67QcsFCyHjvwGCIMIwPGdYIMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)&quot;
        title=&quot;Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)&quot;
        src=&quot;/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png&quot;
        srcset=&quot;/static/f0656d499ee525e25ff757b8185f167f/924ad/1_RNmY6abYWA2n2W6EgP3lcA.png 170w,
/static/f0656d499ee525e25ff757b8185f167f/f570f/1_RNmY6abYWA2n2W6EgP3lcA.png 341w,
/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png 530w&quot;
        sizes=&quot;(max-width: 530px) 100vw, 530px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And Germany produces so much renewable energy, it sometimes produces even more than it can use.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 567px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 20.987654320987655%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAECAIAAAABPYjBAAAACXBIWXMAAAsSAAALEgHS3X78AAAA30lEQVQI12PYcebV1M33+zfc7Vx9u2Lh9c377/yZP/vTxIlfuru+r171Hwj+gQCMRgCgCMPFe193nPmw9ui7Gdue9mx6cvjoo5+Bvl+Dg764uXwrLABp/vv3PxL4h2QWw7mLFzdu2zlvxabJCza0TFq0dvOOowcPHt637+ihg4cOHjx69OjevXsPHz4MZBwEc0+fPn327Nljx47du3ePYemiztb6uK7WlO7W1OrSsHWrpp85d+HYyROnzpw5eeo0UPWJEyeAGi5dunTgwIHbt2///Pnz27dvX758+fXrFwCsor9lnxcDKAAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)&quot;
        title=&quot;Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)&quot;
        src=&quot;/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png&quot;
        srcset=&quot;/static/9661ec8ec5964b9e1bfa2b363ac66891/924ad/1_wETYiSDThJ5fQYIVWuw8aA.png 170w,
/static/9661ec8ec5964b9e1bfa2b363ac66891/f570f/1_wETYiSDThJ5fQYIVWuw8aA.png 341w,
/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png 567w&quot;
        sizes=&quot;(max-width: 567px) 100vw, 567px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;3. Virtual and Augmented Reality&lt;/h2&gt;
&lt;p&gt;Computer processors only recently became fast enough to power comfortable and convincing virtual and augmented reality experiences. Companies like Facebook, Google, Apple, and Microsoft are investing billions of dollars to make VR and AR more immersive, comfortable, and affordable.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/1350b5689fa0fbce6dfb550fa4c19d0a/1_6cmd8P-bPYRU1olrJHsvfw.gif&quot; alt=&quot;Toybox demo from Oculus&quot;&gt;&lt;/p&gt;
&lt;p&gt;People sometimes think VR and AR will be used only for gaming, but over time they will be used for all sorts of activities. For example, we’ll use them to manipulate 3-D objects:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.111111111111114%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))&quot;
        title=&quot;Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))&quot;
        src=&quot;/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg&quot;
        srcset=&quot;/static/0afbba4f3da17a3da9c74f36d4c413fd/c2e49/1_q_pqQCTcTETf4G-ARUm00A.jpg 170w,
/static/0afbba4f3da17a3da9c74f36d4c413fd/c2dc0/1_q_pqQCTcTETf4G-ARUm00A.jpg 341w,
/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;To meet with friends and colleagues from around the world:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.25%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,/9j/2wBDABALDA4MChAODQ4SERATGCgaGBYWGDEjJR0oOjM9PDkzODdASFxOQERXRTc4UG1RV19iZ2hnPk1xeXBkeFxlZ2P/2wBDARESEhgVGC8aGi9jQjhCY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2NjY2P/wgARCAALABQDASIAAhEBAxEB/8QAGAAAAgMAAAAAAAAAAAAAAAAAAAMBBAX/xAAWAQEBAQAAAAAAAAAAAAAAAAAAAQL/2gAMAwEAAhADEAAAAcoROTSuV//EABsQAAEEAwAAAAAAAAAAAAAAAAIAARIhAxET/9oACAEBAAEFAudNjshaUyUyW3X/xAAUEQEAAAAAAAAAAAAAAAAAAAAQ/9oACAEDAQE/AT//xAAVEQEBAAAAAAAAAAAAAAAAAAAQIf/aAAgBAgEBPwGn/8QAGRAAAgMBAAAAAAAAAAAAAAAAADEBEBJh/9oACAEBAAY/AjhOUMdf/8QAGhAAAgMBAQAAAAAAAAAAAAAAACEBEWEQUf/aAAgBAQABPyGkxVIgll6ExdjRz7H/2gAMAwEAAgADAAAAEMz/AP/EABYRAQEBAAAAAAAAAAAAAAAAAAAhEf/aAAgBAwEBPxCYj//EABYRAQEBAAAAAAAAAAAAAAAAAAARAf/aAAgBAgEBPxCE1//EAB0QAAICAgMBAAAAAAAAAAAAAAERADEhQWGBkfD/2gAIAQEAAT8QYw4sX9uBoE4qPcJQMJGuIABYhFUXggA0nU//2Q==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))&quot;
        title=&quot;Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))&quot;
        src=&quot;/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg&quot;
        srcset=&quot;/static/88d7e722ff6d193076d4febc8176a940/c2e49/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 170w,
/static/88d7e722ff6d193076d4febc8176a940/c2dc0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 341w,
/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And even for medical applications, like treating phobias or helping rehabilitate paralysis victims:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 442px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 44.11764705882353%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)&quot;
        title=&quot;Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)&quot;
        src=&quot;/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png&quot;
        srcset=&quot;/static/10a331bba9e4617d902cefb39e581824/924ad/1_q_J7Ql2iVfdDYc5t6hM98Q.png 170w,
/static/10a331bba9e4617d902cefb39e581824/f570f/1_q_J7Ql2iVfdDYc5t6hM98Q.png 341w,
/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png 442w&quot;
        sizes=&quot;(max-width: 442px) 100vw, 442px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;VR and AR have been dreamed about by science fiction fans for decades. In the next few years, they’ll finally become a mainstream reality.&lt;/p&gt;
&lt;h2&gt;4. Drones and Flying Cars&lt;/h2&gt;
&lt;blockquote&gt;
&lt;p&gt;“Roads? Where we’re going we don’t need… roads.” — Dr. Emmet Brown&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;GPS started out as a military technology but is now used to hail taxis, get mapping directions, and hunt Pokémon. Likewise, drones started out as a military technology, but are increasingly being used for a wide range of consumer and commercial applications.&lt;/p&gt;
&lt;p&gt;For example, drones are being used to inspect critical infrastructure like bridges and power lines, to survey areas struck by natural disasters, and many other creative uses like fighting animal poaching.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 280px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 86.42857142857143%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAARCAIAAABSJhvpAAAACXBIWXMAAAsSAAALEgHS3X78AAAEGElEQVQ4ywENBPL7ANvb2rO0tLKysZiYmampqr++v7SztJiXlr2/v7W1tbi4ua+urqqpq7y8vL69voqIiKqqqLOzs8TFxvb3+ADf3dyvr6/DxMS8uru9vLu0s7LJyMbNy8e0srKysrO7u7y4tbTLy8zMy8zRzsu0s7XFxca2tbbn5+j///8A1ebxqc7ks9Tpt9nvudvyutnxut36vOH/v972vNvyweH6wN/2vd31v93ztru+sre1tsnVsL3Fo6iq3d3bAMHZ5n2uzo+72Y241YqvyJC/5KK6y7bErIairY2uxpK30Z7J657L7Z3G5pWmsYaKiJCntpWptW51dc7W3ADK3eiRuNCgw9qau9GIn6mRr8KBiX6MgUmUnJOascCducqw0vCv0e+qxtuhpaaSmJeOpLObr7t9eG/Iy8sAztzml7fNpcLWpsLWp8XcjaCtd4yOd4aGmKGdtdHqtdTwtdPur8XYpLK7oq2zqsLXo621hoR+amdhwL24ANTf6KW7zrPG1rTG2rLH25yrt52stqS0wbXJ3r3Q577R6b7S6rzP5b3N4b/V7rjM4rC2vqSdlmVXSsPBvgDIzdCQnaWjrLKmrLGosLiuvMe3yNixxNOpuMO9y9rAz+LB0eS+z+G6ydutucWioqKpsbuptMCDeGvTzcUAsq+hWU80b2FKZltGal5KbmdMaGlWdHBWeWxSin1oiYBrjoVyiX9qfXJaXV4/UlRCfIN7lJmRcWBL0srCALSwoV1PMGpeQ1tUPFdSNmJXOGxcPXhmQ3VpRXdsRGhkN1taN3FfO25bNlRRMUE/KUxFKHBjOGNLLtHGugCspptHQClRSjZQSTNQTTJlWD19aUh1YkljXDxkYTFJUixNTy9qWTdYTTFQTC9AOyg7OiaCb0hwVjfFv7QAoJuUKCESR0MsVUwwSUItWlI2Y1o5WU80bl05e2E7VE8tX1EzZk81WUcwRT0kKigYKSUZSj4rZUsvv7mwAIeHhBMMAUtHKDUxHlBBLWBONEE9K1BILmZTMnJWM29YO19ON1hFMF9JNUs8KU89J006KEw+KU43I8W7sgCalpEWExFNQzOqgl3Wn2yxg1kzLS1dSjWTbT2GZTxYRDN2XEOJaUqEZElcSzuAYUeoe1SEZkaEXDbWxbcAo5qSAAAAiF094J9ipHFDtYBNmnBKjF87q3NBhF05TDIiflc4flc4VTopHhIRBQACIBENZEUtvoFF5c+7ALuwqEk5Ma2HZsWZb4xvWK+KZsGVb4xvWIlwVmpaTX9rU3JfUGpYS3hjUWVTR1dLRExFP2JUSaCDX9vQxgD///7+/fv7+/r8+/r6+vr7+vr9/Pv4+fn6+/r9/fz+/vz8+/v8/Pv9/fz+/f3+/vz///39/Pv5+vr9/f1rGkZ/xX7/XAAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)&quot;
        title=&quot;Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)&quot;
        src=&quot;/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png&quot;
        srcset=&quot;/static/a94118042c235b69dba7ef47f6e8ccd3/924ad/1_hLhAdWXECMyNLwrHfad6pA.png 170w,
/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png 280w&quot;
        sizes=&quot;(max-width: 280px) 100vw, 280px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Amazon and Google are building drones to deliver household items.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/3c01e2971f2a14802ded27e094f4306f/1_s1eQciCtoaD_AaovzJouAA.gif&quot; alt=&quot;Amazon delivery drone&quot;&gt;&lt;/p&gt;
&lt;p&gt;The startup &lt;a href=&quot;http://flyzipline.com/product/&quot;&gt;Zipline&lt;/a&gt; uses drones to deliver medical supplies to remote villages that can’t be accessed by roads.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 403px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 78.66004962779157%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)&quot;
        title=&quot;Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)&quot;
        src=&quot;/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png&quot;
        srcset=&quot;/static/6a0a0088057af583180f5eb158a62e93/924ad/1_BDepNtZOTWXNOi5F4Dk3Dg.png 170w,
/static/6a0a0088057af583180f5eb158a62e93/f570f/1_BDepNtZOTWXNOi5F4Dk3Dg.png 341w,
/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png 403w&quot;
        sizes=&quot;(max-width: 403px) 100vw, 403px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;There is also a new wave of startups working on flying cars (including &lt;a href=&quot;http://www.bloomberg.com/news/articles/2016-06-09/welcome-to-larry-page-s-secret-flying-car-factories&quot;&gt;two&lt;/a&gt; funded by the cofounder of Google, Larry Page).&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 42.01388888888889%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))&quot;
        title=&quot;The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))&quot;
        src=&quot;/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png&quot;
        srcset=&quot;/static/0416750c29ed2c774eaf1a7cbe8e13c3/924ad/1_FJyVIp3MI_k7mVM5obpSsA.png 170w,
/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Flying cars use the same advanced technology used in drones but are large enough to carry people. Due to advances in materials, batteries, and software, flying cars will be significantly more affordable and convenient than today’s planes and helicopters.&lt;/p&gt;
&lt;h2&gt;5. Artificial Intelligence&lt;/h2&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 192px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/18eb617fbac070d37985e2d5b3c81aca/5bcd3/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.29166666666667%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1 I2dRn7D8ZZM7nI2IvvMFDw&quot;
        title=&quot;1 I2dRn7D8ZZM7nI2IvvMFDw&quot;
        src=&quot;/static/18eb617fbac070d37985e2d5b3c81aca/5bcd3/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg&quot;
        srcset=&quot;/static/18eb617fbac070d37985e2d5b3c81aca/c2e49/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;‘’It may be a hundred years before a computer beats humans at Go — maybe even longer.” — &lt;a href=&quot;http://www.nytimes.com/1997/07/29/science/to-test-a-powerful-computer-play-an-ancient-game.html?pagewanted=all&quot;&gt;New York Times, 1997&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;“Master of Go Board Game Is Walloped by Google Computer Program” —&lt;a href=&quot;http://www.nytimes.com/2016/03/10/world/asia/google-alphago-lee-se-dol.html&quot;&gt; New York Times, 2016&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Artificial intelligence has made rapid advances in the last decade, due to new algorithms and massive increases in data collection and computing power.&lt;/p&gt;
&lt;p&gt;AI can be applied to almost any field. For example, in photography an AI technique called artistic style transfer transforms photographs into the style of a given painter:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 40.27777777777778%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)&quot;
        title=&quot;[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)&quot;
        src=&quot;/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png&quot;
        srcset=&quot;/static/2515b9fb2936c39f47ae0fa4c4a985ed/924ad/1_aHFJuj-jhnP4zHY1dD7tRA.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Google built an AI system that controls its datacenter power systems, saving hundreds of millions of dollars in energy costs.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 439px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 33.029612756264235%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABFUlEQVQY0z1P26qCUBT0/1+CwA8QrCdRMZI0xUTDx+gDfLC85T2vKKRnjpuah83stWbNmkVZlnU4HE6n0/V6VRTFMAzTNEVRRNG2bYZhBEGQZVmSpOPxuN/vN5vNbrfbbrf3+51SVZVlWZqmNU3jeR5SXddhASnHcej6vv9c4bqu53lhGGZZBlIUxf8wjLEKyx3HQZDz+Xy5XLAfFrfbbVmWz+ezfDHP8+9Lvd/vuq7btu37Hhx+TdMMw1CWJepVVWFn+MXr9YrjOEkSxIGAejweQRAgBl60SUhwQiBFEV/IyLy/Ar5d11FgRBqsIFK8GIui6DdANNhJZAg4jiOVpmme56iCZCtApmkip+JCcuePkGtJ6w+g7WoFFJ2DrwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)&quot;
        title=&quot;Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)&quot;
        src=&quot;/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png&quot;
        srcset=&quot;/static/a32709cc2124ea0694736d54e82621c5/924ad/1_HpTNGOsV1a0PpqjQZNXKEQ.png 170w,
/static/a32709cc2124ea0694736d54e82621c5/f570f/1_HpTNGOsV1a0PpqjQZNXKEQ.png 341w,
/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png 439w&quot;
        sizes=&quot;(max-width: 439px) 100vw, 439px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The broad promise of AI is to liberate people from repetitive mental tasks the same way the industrial revolution liberated people from repetitive physical tasks.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“If AI can help humans become better chess players, it stands to reason that it can help us become better pilots, better doctors, better judges, better teachers.” — &lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;Kevin Kelly&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Some people worry that AI will destroy jobs. History has shown that while new technology does indeed eliminate jobs, it also creates new and better jobs to replace them. For example, with advent of the personal computer, the number of typographer jobs dropped, but the increase in graphic designer jobs more than made up for it.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.19444444444444%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)&quot;
        title=&quot;Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)&quot;
        src=&quot;/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png&quot;
        srcset=&quot;/static/0809ccab1e05badc59f9f26a966354ac/924ad/1_c_lt2s5TuSoOfmPb_Rv46w.png 170w,
/static/0809ccab1e05badc59f9f26a966354ac/f570f/1_c_lt2s5TuSoOfmPb_Rv46w.png 341w,
/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;It is much easier to imagine jobs that will go away than new jobs that will be created. Today millions of people work as app developers, ride-sharing drivers, drone operators, and social media marketers— jobs that didn’t exist and would have been difficult to even imagine ten years ago.&lt;/p&gt;
&lt;h2&gt;6. Pocket Supercomputers for Everyone&lt;/h2&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 529px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 37.051039697542535%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAAA90lEQVQY042O3W6DMAyFef+XmfYA024m7Wa9qYoKBJIQ/hpGoAXa8BOcGSZVkzZp/WRFR3bOsR0ACwDGGLizwNb8s8BubP+sM4F9e34KXHfvHveHw8duV9f199j+opusp8yxMkW/4ArnqufXl3cu8lyWSV4UssS2hXs8/BTjDO0Il2Hpxs28LEulKkJIvMIZpTyOKWMkCj3fp5RGlKKIYxEQEoZhFBLf96Q8bWdPM8E54wEJUXh+IEQiyzJJU8Z5mmWYhS8iEpHlOcOYJNFa4yHOPJtP1VTNWTVnFKdStV1vH2DdjGY9DP31dmm7m9YYISsF/7OavwCqwozCGI2I1AAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1 5tt6F Cxnf5n7J5v6Lx0Ug&quot;
        title=&quot;1 5tt6F Cxnf5n7J5v6Lx0Ug&quot;
        src=&quot;/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png&quot;
        srcset=&quot;/static/05b15a9d75ac41ca6699faf70f2e3a00/924ad/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 170w,
/static/05b15a9d75ac41ca6699faf70f2e3a00/f570f/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 341w,
/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 529w&quot;
        sizes=&quot;(max-width: 529px) 100vw, 529px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;By 2020, 80% of adults on earth &lt;a href=&quot;&quot;&gt;will have&lt;/a&gt; an internet-connected smartphone. An iPhone 6 has about 2 billion transistors, roughly 625 times more transistors than a 1995 Intel Pentium computer. Today’s smartphones are what used to be considered supercomputers.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 100.92592592592592%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))&quot;
        title=&quot;Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))&quot;
        src=&quot;/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png&quot;
        srcset=&quot;/static/e0f88db9f4e1e8e291fb0383c2d37dbc/924ad/1_vovBLv3ePKce3dPrU3q9Lg.png 170w,
/static/e0f88db9f4e1e8e291fb0383c2d37dbc/f570f/1_vovBLv3ePKce3dPrU3q9Lg.png 341w,
/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Internet-connected smartphones give ordinary people abilities that, just a short time ago, were only available to an elite few:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“Right now, a Masai warrior on a mobile phone in the middle of Kenya has better mobile communications than the president did 25 years ago. If he’s on a smart phone using Google, he has access to more information than the U.S. president did just 15 years ago.” — &lt;a href=&quot;http://edition.cnn.com/2012/05/06/opinion/diamandis-abundance-innovation/&quot;&gt;Peter Diamandis&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;h2&gt;7. Cryptocurrencies and Blockchains&lt;/h2&gt;
&lt;blockquote&gt;
&lt;p&gt;“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.” — &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Protocols are the plumbing of the internet. Most of the protocols we use today were developed decades ago by academia and government. Since then, protocol development mostly stopped as energy shifted to developing proprietary systems like social networks and messaging apps.&lt;/p&gt;
&lt;p&gt;Cryptocurrency and blockchain technologies are &lt;a href=&quot;http://avc.com/2016/07/the-golden-age-of-open-protocols/&quot;&gt;changing this&lt;/a&gt; by providing a new business model for internet protocols. This year alone, &lt;a href=&quot;https://medium.com/the-coinbase-blog/app-coins-and-the-dawn-of-the-decentralized-business-model-8b8c951e734f#.2atvp1cxd&quot;&gt;hundreds of millions of dollars&lt;/a&gt; were raised for a broad range of innovative blockchain-based protocols.&lt;/p&gt;
&lt;p&gt;Protocols based on blockchains also have capabilities that previous protocols didn’t. For example, &lt;a href=&quot;https://en.wikipedia.org/wiki/Ethereum&quot;&gt;Ethereum&lt;/a&gt; is a new blockchain-based protocol that can be used to create smart contracts and trusted databases that are immune to corruption and censorship.&lt;/p&gt;
&lt;h2&gt;8. High-Quality Online Education&lt;/h2&gt;
&lt;p&gt;While college tuition &lt;a href=&quot;http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html&quot;&gt;skyrockets&lt;/a&gt;, anyone with a smartphone can study almost any topic online, accessing educational content that is mostly free and increasingly high-quality.&lt;/p&gt;
&lt;p&gt;Encyclopedia Britannica &lt;a href=&quot;http://www.csmonitor.com/Business/Latest-News-Wires/2012/0314/Encyclopaedia-Britannica-After-244-years-in-print-only-digital-copies-sold&quot;&gt;used to cost $1,400&lt;/a&gt;. Now anyone with a smartphone can instantly access Wikipedia. You used to have to go to school or buy programming books to learn computer programming. Now you can learn from a community of over 40 million programmers at &lt;a href=&quot;http://stackoverflow.com&quot;&gt;Stack Overflow&lt;/a&gt;. YouTube has millions of hours of free tutorials and lectures, many of which are produced by top professors and universities.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9405b4c60e322f888759a2953fd92459/9fa53/1_NZTqnqYbOPv6sf7gCVLz8g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 17.270194986072422%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAIAAAAcOLh5AAAACXBIWXMAAAsSAAALEgHS3X78AAAAn0lEQVQI11WMywqCQBiFfVIJ7GFSS0gqpL1DBkG01WhRTxERMZPM7zTgZZEzNU2p1KKPc4GzOMbEHy+jaJskcZwMbTsMEc0F5SXOCsJKyO+0qCGvX1q//9FaG/PAv2B8PJ0RWvRM03MdzjnGmBByTVMAyBhrBdmNtQDQrllVVYbnDXb7w2q9cdyRZfWD2bR5FUI8Ox5fpJStfymbSSn1AYQXmXaw3HgjAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&amp;amp;view=0&amp;amp;flow=list)&quot;
        title=&quot;UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&amp;amp;view=0&amp;amp;flow=list)&quot;
        src=&quot;/static/9405b4c60e322f888759a2953fd92459/94a55/1_NZTqnqYbOPv6sf7gCVLz8g.png&quot;
        srcset=&quot;/static/9405b4c60e322f888759a2953fd92459/924ad/1_NZTqnqYbOPv6sf7gCVLz8g.png 170w,
/static/9405b4c60e322f888759a2953fd92459/f570f/1_NZTqnqYbOPv6sf7gCVLz8g.png 341w,
/static/9405b4c60e322f888759a2953fd92459/94a55/1_NZTqnqYbOPv6sf7gCVLz8g.png 681w,
/static/9405b4c60e322f888759a2953fd92459/9fa53/1_NZTqnqYbOPv6sf7gCVLz8g.png 718w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&amp;amp;view=0&amp;amp;flow=list)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The quality of online education is getting better all the time. For the last 15 years, &lt;a href=&quot;http://ocw.mit.edu/index.htm&quot;&gt;MIT has been recording lectures&lt;/a&gt; and compiling materials that cover over 2000 courses.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“The idea is simple: to publish all of our course materials online and make them widely available to everyone.” — Dick K.P. Yue, Professor, MIT School of Engineering&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As perhaps the greatest research university in the world, MIT has always been ahead of the trends. Over the next decade, expect many other schools to follow MIT’s lead.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 529px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 44.234404536862%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)&quot;
        title=&quot;Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)&quot;
        src=&quot;/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png&quot;
        srcset=&quot;/static/9b407de166883dc7d0827adc1d32f609/924ad/1_W-i0QTotXS-K4MU9qbpylQ.png 170w,
/static/9b407de166883dc7d0827adc1d32f609/f570f/1_W-i0QTotXS-K4MU9qbpylQ.png 341w,
/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png 529w&quot;
        sizes=&quot;(max-width: 529px) 100vw, 529px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;9. Better Food through Science&lt;/h2&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 149.53703703703704%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)&quot;
        title=&quot;Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)&quot;
        src=&quot;/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png&quot;
        srcset=&quot;/static/9a4613065b3002711b5234dfc25907a6/924ad/1_O5VQyJRhI2-sHYzZPrHSBQ.png 170w,
/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Earth is running out of farmable land and fresh water. This is partly because our food production systems are incredibly inefficient. It takes an astounding 1799 gallons of water to produce 1 pound of beef.&lt;/p&gt;
&lt;p&gt;Fortunately, a variety of new technologies are being developed to improve our food system.&lt;/p&gt;
&lt;p&gt;For example, entrepreneurs are developing new food products that are tasty and nutritious substitutes for traditional foods but far more environmentally friendly. The startup &lt;a href=&quot;http://www.impossiblefoods.com/&quot;&gt;Impossible Foods&lt;/a&gt; invented meat products that look and taste like the real thing but are actually made of plants.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.75925925925925%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))&quot;
        title=&quot;Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))&quot;
        src=&quot;/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png&quot;
        srcset=&quot;/static/1c41f64865a3586233d3edc29a00e879/924ad/1_bUV4b3Xp0mvvdA8dp1hMtA.png 170w,
/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Their burger &lt;a href=&quot;http://www.impossiblefoods.com/our-burger&quot;&gt;uses&lt;/a&gt; 95% less land, 74% less water, and produces 87% less greenhouse gas emissions than traditional burgers. Other startups are creating plant-based replacements for &lt;a href=&quot;http://ripplefoods.com/&quot;&gt;milk&lt;/a&gt;, &lt;a href=&quot;https://www.hamptoncreek.com/&quot;&gt;eggs&lt;/a&gt;, and other common foods. &lt;a href=&quot;http://soylent.com/&quot;&gt;Soylent&lt;/a&gt; is a healthy, inexpensive meal replacement that uses advanced engineered &lt;a href=&quot;http://terravia.com/Terravia_Sustainability.pdf&quot;&gt;ingredients&lt;/a&gt; that are much friendlier to the environment than traditional ingredients.&lt;/p&gt;
&lt;p&gt;Some of these products are developed using genetic modification, a powerful scientific technique that has been widely mischaracterized as dangerous. According to a &lt;a href=&quot;https://www.geneticliteracyproject.org/2015/01/29/pewaaas-study-scientific-consensus-on-gmo-safety-stronger-than-for-global-warming/&quot;&gt;study&lt;/a&gt; by the Pew Organization, 88% of scientists think genetically modified foods are safe.&lt;/p&gt;
&lt;p&gt;Another exciting development in food production is automated indoor farming. Due to advances in solar energy, sensors, lighting, robotics, and artificial intelligence, indoor farms have become viable alternatives to traditional outdoor farms.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.055555555555564%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))&quot;
        title=&quot;Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))&quot;
        src=&quot;/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png&quot;
        srcset=&quot;/static/c78fe388501ae55323a669e8a24e6d74/924ad/1_0Jyjlgj1KU2yfBqo7quCLQ.png 170w,
/static/c78fe388501ae55323a669e8a24e6d74/f570f/1_0Jyjlgj1KU2yfBqo7quCLQ.png 341w,
/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Compared to traditional farms, automated indoor farms use roughly 10 times less water and land. Crops are harvested many more times per year, there is no dependency on weather, and no need to use pesticides.&lt;/p&gt;
&lt;h2&gt;10. Computerized Medicine&lt;/h2&gt;
&lt;p&gt;Until recently, computers have only been at the periphery of medicine, used primarily for research and record keeping. Today, the combination of computer science and medicine is leading to a variety of breakthroughs.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.55555555555556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1 IjKrWZdlbB2ksis Dmia5A&quot;
        title=&quot;1 IjKrWZdlbB2ksis Dmia5A&quot;
        src=&quot;/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png&quot;
        srcset=&quot;/static/11092e974a0ba17d284bbe0de86d63c7/924ad/1_IjKrWZdlbB2ksis_Dmia5A.png 170w,
/static/11092e974a0ba17d284bbe0de86d63c7/f570f/1_IjKrWZdlbB2ksis_Dmia5A.png 341w,
/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;For example, just fifteen years ago, it cost $3B to sequence a human genome. Today, the cost is about a thousand dollars and continues to drop. Genetic sequencing will soon be a routine part of medicine.&lt;/p&gt;
&lt;p&gt;Genetic sequencing generates massive amounts of data that can be analyzed using powerful data analysis software. One application is analyzing &lt;a href=&quot;http://a16z.com/2016/06/09/freenome/&quot;&gt;blood samples&lt;/a&gt; for early detection of cancer. Further genetic analysis can help determine the &lt;a href=&quot;http://www.businessinsider.com/super-cheap-genome-sequencing-by-2020-2014-10&quot;&gt;best course&lt;/a&gt; of treatment.&lt;/p&gt;
&lt;p&gt;Another application of computers to medicine is in prosthetic limbs. Here a young girl is using prosthetic hands she controls using her upper-arm muscles:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/50c3c36ca4ab13bede47dbec74e587c4/1_jVH1wxchOJ5qJzT46s907A.gif&quot; alt=&quot;Source: [Open Bionics](https://twitter.com/openbionics/status/755691739147538432)&quot;&gt;&lt;/p&gt;
&lt;p&gt;Soon we’ll have the technology to control prothetic limbs with just our thoughts using &lt;a href=&quot;http://news.uci.edu/feature/to-walk-again/&quot;&gt;brain-to-machine interfaces&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Computers are also becoming increasingly effective at diagnosing diseases. An artificial intelligence system recently diagnosed a rare disease that human doctors failed to diagnose by finding hidden patterns in 20 million cancer records.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 26.944444444444443%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAAzElEQVQY041Oy46DMAzk/z+r2gM0gbKEFiHS5um4oUJwJ5S67A/sHMae0cjjrCgKpZTW5lLXnDOSVVmdz6wVLedciKb5bRivqrK8toLz8nq7nU4/eZ4/Y8wYY33fd103SKm1ds4Nw0DHxhg9+HF8GW2sdQFgmiaAEGOUUpI1L0tWC0FtVELpfd9TSu8Da0rbtqWDSdJY13U7mOTfkt1D1Or+UNpa673HgMTOA3gPIQRAegcR4TAwgHcuIFLi+7Yzljyj1bzM1ExX93/jA2AaDy3dq/c4AAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)&quot;
        title=&quot;Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)&quot;
        src=&quot;/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png&quot;
        srcset=&quot;/static/1d53d8a4853677abbec06825ca25a55c/924ad/1_OEgWlj9sp2mCV0PrT9yp8A.png 170w,
/static/1d53d8a4853677abbec06825ca25a55c/f570f/1_OEgWlj9sp2mCV0PrT9yp8A.png 341w,
/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;h2&gt;11. A New Space Age&lt;/h2&gt;
&lt;p&gt;Since the beginning of the space age in the 1950s, the vast majority of space funding has come from governments. But that funding has been in decline: for example, NASA’s budget &lt;a href=&quot;https://en.wikipedia.org/wiki/Budget_of_NASA&quot;&gt;dropped&lt;/a&gt; from about 4.5% of the federal budget in the 1960s to about 0.5% of the federal budget today.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 351px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 75.78347578347578%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)&quot;
        title=&quot;Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)&quot;
        src=&quot;/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png&quot;
        srcset=&quot;/static/dc1015e8f9aafcf2420d7c943cf5a7fd/924ad/1_paniidrx59zPQjq_q6rUHA.png 170w,
/static/dc1015e8f9aafcf2420d7c943cf5a7fd/f570f/1_paniidrx59zPQjq_q6rUHA.png 341w,
/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png 351w&quot;
        sizes=&quot;(max-width: 351px) 100vw, 351px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The good news is that private space companies have started filling the void. These companies provide a wide range of products and services, including rocket launches, scientific research, communications and imaging satellites, and emerging speculative business models like asteroid mining.&lt;/p&gt;
&lt;p&gt;The most famous private space company is Elon Musk’s SpaceX, which successfully sent rockets into space that can return home to be reused.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/48e0750d49b2935902966ac3547d7769/1_5iiaQsTBu1tQ_hTy8fupXg.gif&quot; alt=&quot;SpaceX Falcon 9 [landing](https://www.youtube.com/watch?v=_ZXu_rYF51M)&quot;&gt;&lt;/p&gt;
&lt;p&gt;Perhaps the most intriguing private space company is &lt;a href=&quot;http://www.planetaryresources.com/&quot;&gt;Planetary Resources&lt;/a&gt;, which is trying to pioneer a new industry: mining minerals from asteroids.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 407px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 71.4987714987715%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)&quot;
        title=&quot;[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)&quot;
        src=&quot;/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png&quot;
        srcset=&quot;/static/262cc9197f91446c777da68102288c42/924ad/1_6zvea6z14lJ6inZQsVBsBA.png 170w,
/static/262cc9197f91446c777da68102288c42/f570f/1_6zvea6z14lJ6inZQsVBsBA.png 341w,
/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png 407w&quot;
        sizes=&quot;(max-width: 407px) 100vw, 407px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If successful, asteroid mining could lead to a new gold rush in outer space. Like previous gold rushes, this could lead to speculative excess, but also dramatically increased funding for new technologies and infrastructure.&lt;/p&gt;
&lt;hr&gt;
&lt;p&gt;These are just a few of the amazing technologies we’ll see developed in the coming decades. 2016 is just the beginning of a new age of wonders. As futurist Kevin Kelly &lt;a href=&quot;https://www.linkedin.com/pulse/internet-still-beginning-its-kevin-kelly&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;If we could climb into a time machine, journey 30 years into the future, and from that vantage look back to today, we’d realize that most of the greatest products running the lives of citizens in 2050 were not invented until after 2016. People in the future will look at their holodecks and wearable virtual reality contact lenses and downloadable avatars and AI interfaces and say, “Oh, you didn’t really have the internet” — or whatever they’ll call it — “back then.”&lt;/p&gt;
&lt;p&gt;So, the truth: Right now, today, in 2016 is the best time to start up. There has never been a better day in the whole history of the world to invent something. There has never been a better time with more opportunities, more openings, lower barriers, higher benefit/ risk ratios, better returns, greater upside than now. Right now, this minute. This is the moment that folks in the future will look back at and say, “Oh, to have been alive and well back then!”&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded></item><item><title><![CDATA[“Ether is a necessary element — a fuel — for operating the distributed application platform…]]></title><description><![CDATA[“Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by the…]]></description><link>https://cdixon.org/2016/08/07/source-ethereum-org</link><guid isPermaLink="false">https://cdixon.org/2016/08/07/source-ethereum-org</guid><pubDate>Sun, 07 Aug 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. To put it another way, ether is the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources).&lt;/p&gt;
&lt;p&gt;Ether is to be treated as “crypto-fuel”, a token whose purpose is to pay for computation, and is not intended to be used as or considered a currency, asset, share or anything else.”&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Source: &lt;a href=&quot;https://ethereum.org/ether&quot;&gt;ethereum.org&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the…]]></title><description><![CDATA[“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the next big thing — to listen for the…]]></description><link>https://cdixon.org/2016/08/07/steve-jobs-supposedly-said-returning-to-apple-that-his-plan-was-to-stay-alive-and-grab-onto-the</link><guid isPermaLink="false">https://cdixon.org/2016/08/07/steve-jobs-supposedly-said-returning-to-apple-that-his-plan-was-to-stay-alive-and-grab-onto-the</guid><pubDate>Sun, 07 Aug 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the next big thing — to listen for the footsteps. He tried video, and a few other things, but he got there in the end. But he might not have.”&lt;/p&gt;
&lt;p&gt;From: &lt;a href=&quot;http://ben-evans.com/benedictevans/2016/5/2/inevitability-in-technology&quot;&gt;Inevitability in technology&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[“If you asked people in 1989 what they needed to make their life better, it was unlikely that they…]]></title><description><![CDATA[“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network…]]></description><link>https://cdixon.org/2016/07/30/if-you-asked-people-in-1989-what-they-needed-to-make-their-life-better-it-was-unlikely-that-they</link><guid isPermaLink="false">https://cdixon.org/2016/07/30/if-you-asked-people-in-1989-what-they-needed-to-make-their-life-better-it-was-unlikely-that-they</guid><pubDate>Sat, 30 Jul 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.”&lt;/p&gt;
&lt;p&gt;— &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer
&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[“The typical path of how people respond to life-changing inventions]]></title><description><![CDATA[I’ve never heard of it. I’ve heard of it but don’t understand it. I understand it, but I don’t see how it’s useful. I see how it could be…]]></description><link>https://cdixon.org/2016/05/11/the-typical-path-of-how-people-respond-to-life-changing-inventions</link><guid isPermaLink="false">https://cdixon.org/2016/05/11/the-typical-path-of-how-people-respond-to-life-changing-inventions</guid><pubDate>Wed, 11 May 2016 00:00:00 GMT</pubDate><content:encoded>&lt;ol&gt;
&lt;li&gt;I’ve never heard of it.&lt;/li&gt;
&lt;li&gt;I’ve heard of it but don’t understand it.&lt;/li&gt;
&lt;li&gt;I understand it, but I don’t see how it’s useful.&lt;/li&gt;
&lt;li&gt;I see how it could be fun for rich people, but not me.&lt;/li&gt;
&lt;li&gt;I use it, but it’s just a toy.&lt;/li&gt;
&lt;li&gt;It’s becoming more useful for me.&lt;/li&gt;
&lt;li&gt;I use it all the time.&lt;/li&gt;
&lt;li&gt;I could not imagine life without it.&lt;/li&gt;
&lt;li&gt;Seriously, people lived without it?&lt;/li&gt;
&lt;li&gt;It’s too powerful and needs to be regulated”&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;em&gt;Credits:&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;#1–#9 by &lt;a href=&quot;http://time.com/author/morgan-housel-the-motley-fool/&quot;&gt;Morgan Housel&lt;/a&gt;, &lt;a href=&quot;http://time.com/money/3940273/innovation-isnt-dead/&quot;&gt;Time&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;#10 by &lt;a href=&quot;https://twitter.com/peterpeirce/status/616664561068994560?lang=en&quot;&gt;@peterpeirce&lt;/a&gt;&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Comma.ai]]></title><description><![CDATA[I wrote a blog post last month highlighting some of the exciting trends in the computing industry. One trend I discussed is the rapid…]]></description><link>https://cdixon.org/2016/04/02/comma-ai</link><guid isPermaLink="false">https://cdixon.org/2016/04/02/comma-ai</guid><pubDate>Sat, 02 Apr 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I wrote a blog post last month highlighting some of the exciting trends in the computing industry. One trend I discussed is the rapid progress in a branch of artificial intelligence called deep learning. Big tech companies are making significant investments in deep learning, but there are also opportunities for startups:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Many of the papers, &lt;a href=&quot;https://code.google.com/archive/p/word2vec/&quot;&gt;data&lt;/a&gt; &lt;a href=&quot;http://image-net.org/download-images&quot;&gt;sets&lt;/a&gt;, and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;software&lt;/a&gt; &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;tools&lt;/a&gt; related to deep learning have been open sourced. This has had a democratizing effect, allowing individuals and small organizations to build powerful applications. WhatsApp was able to build a global messaging system that &lt;a href=&quot;http://www.wired.com/2015/09/whatsapp-serves-900-million-users-50-engineers/&quot;&gt;served 900M users with just 50 engineers&lt;/a&gt;, compared to the thousands of engineers that were needed for prior generations of messaging systems. This “&lt;a href=&quot;https://twitter.com/cdixon/status/473221599189954562&quot;&gt;WhatsApp effect&lt;/a&gt;” is now happening in AI. Software tools like &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;Theano&lt;/a&gt; and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;TensorFlow&lt;/a&gt;, combined with cloud data centers for training, and inexpensive GPUs for deployment, allow small teams of engineers to build state-of-the-art AI systems.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;You might have seen &lt;a href=&quot;http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/&quot;&gt;recent press&lt;/a&gt; coverage of a software developer named George Hotz who built his own self-driving car.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/3e4557898d50fca6b58438ec68613e09/8f8c6/1U00Hr0kDEBcGUf87W4iPcQ.png&quot;
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  &gt;&lt;/span&gt;
  &lt;img
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        src=&quot;/static/3e4557898d50fca6b58438ec68613e09/8f8c6/1U00Hr0kDEBcGUf87W4iPcQ.png&quot;
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    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;I first met George a few months ago, and, like a lot of people who had seen the press coverage, I was skeptical. How could someone build such an advanced system all by himself? After spending time with George, my skepticism turned into enthusiasm. I tested his car, and, along with some of my colleagues and friends with AI expertise, dug into the details of the deep learning system he’d developed.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/aeeb093ae3647c097d49dfcdb2a4fab6/1xJP7l8qL4IbNyJnwHYNwdA.gif&quot; alt=&quot;Comma’s self-driving car&quot;&gt;&lt;/p&gt;
&lt;p&gt;I came away convinced that George’s system is a textbook example of the “WhatsApp effect” happening to AI.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    href=&quot;/static/b6e0f8789aee57b10c68f840d630159b/59a95/1d9qMneOOvDP2WHCxgakQkw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.25%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;George with test car #1&quot;
        title=&quot;George with test car #1&quot;
        src=&quot;/static/b6e0f8789aee57b10c68f840d630159b/59a95/1d9qMneOOvDP2WHCxgakQkw.png&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;George with test car #1&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;George is certainly brilliant (he’s a &lt;a href=&quot;https://en.wikipedia.org/wiki/George_Hotz&quot;&gt;famous hacker&lt;/a&gt; for a reason), and he’s no longer alone: he’s now working with a small team of machine learning experts. But he’s also riding a wave of exponentially improving hardware, software, and, most importantly, data. The more his system gets used, the more data it collects, and the smarter it becomes.&lt;/p&gt;
&lt;p&gt;Today we are announcing that &lt;a href=&quot;http://a16z.com/&quot;&gt;a16z&lt;/a&gt; is leading a $3.1M investment in George’s company, &lt;a href=&quot;http://comma.ai/&quot;&gt;Comma.ai&lt;/a&gt;. This investment will help them continue to build their team (they’re &lt;a href=&quot;http://comma.ai/hiring.html&quot;&gt;hiring&lt;/a&gt;), and bring their technology to market. Expect more announcements from Comma in the next few months. We are very excited to support George and his team on this ambitious project.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The Internet Economy]]></title><description><![CDATA[We are living in an era of bundling. The big five consumer tech companies — Google, Apple, Facebook, Amazon, and Microsoft — have moved far…]]></description><link>https://cdixon.org/2016/03/13/the-internet-economy</link><guid isPermaLink="false">https://cdixon.org/2016/03/13/the-internet-economy</guid><pubDate>Sun, 13 Mar 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;We are living in an era of bundling. The big five consumer tech companies — Google, Apple, Facebook, Amazon, and Microsoft — have moved far beyond their original product lines into all sorts of hardware, software, and services that overlap and compete with one another. But their revenues and profits still depend heavily on external technologies that are outside of their control. One way to visualize these external dependencies is to consider the path of a typical internet session, from the user to some revenue-generating action, and then (in some cases) back again to the user:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;
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  &gt;&lt;/span&gt;
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        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1bUnzLePRb7E25uoUEMYQgA&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;When evaluating an internet company’s strategic position (the defensibility of its profit &lt;a href=&quot;http://www.investopedia.com/terms/e/economicmoat.asp&quot;&gt;moat&lt;/a&gt;), you need to consider: 1) how the company generates revenue and profits, 2) the loop in its entirety, not just the layers in which the company has products.&lt;/p&gt;
&lt;p&gt;For example, it might seem counterintuitive that Amazon is a &lt;a href=&quot;/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core/&quot;&gt;major threat&lt;/a&gt; to Google’s core search business. But you can see this by following the money through the loop: a &lt;a href=&quot;http://www.wordstream.com/articles/google-earnings&quot;&gt;significant portion&lt;/a&gt; of Google’s revenue comes from search queries for things that can be bought on Amazon, and the buying experience on Amazon (from initial purchasing intent to consumption/unboxing) is significantly better than the buying experience on most non-Amazon e-commerce sites you find via Google searches. After a while, shoppers learn to skip Google and go straight to Amazon.&lt;/p&gt;
&lt;p&gt;Think of the internet economic loop as a model train track. Positions in front of you can redirect traffic around you. Positions after you can build new tracks that bypass you. New technologies come along (which often look &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toy-like&lt;/a&gt; and unthreatening at first) that create entirely new tracks that render the previous tracks obsolete.&lt;/p&gt;
&lt;p&gt;There are interesting developments happening at each layer of the loop (and there are many smaller, offshoot loops not depicted in the chart above), but at any given time certain layers are industry flash points. The most prominent recent battle was between mobile devices and operating systems. That battle seems to be over, with Android software and iOS devices having won. Possible future flash points include:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The automation of logistics.&lt;/strong&gt; Today’s logistics network is a patchwork of ships, planes, trucks, warehouses, and people. Tomorrow’s network will include significantly more automation, from robotic warehouses to autonomous cars, trucks, drones, and &lt;a href=&quot;http://fortune.com/2016/04/06/dispatch-carry-delivery-robot/&quot;&gt;delivery bots&lt;/a&gt;. This transition will happen in stages, depending on the economics of specific goods and customers, along with geographic and regulatory factors. Amazon of course has a huge advantage in logistics. Google has tried repeatedly to get into logistics with &lt;a href=&quot;http://recode.net/2015/08/19/google-express-plans-to-shut-down-its-two-delivery-hubs/&quot;&gt;little success&lt;/a&gt;. On-demand ride-sharing and delivery startups could play an interesting role here. The logistics layer is critical for e-commerce, which in turn is critical for monetizing search. Amazon’s dominance in logistics gives it a very strong strategic moat as e-commerce continues to take market share from traditional retail.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Web vs apps&lt;/strong&gt;. The mobile web &lt;a href=&quot;/2014/04/07/the-decline-of-the-mobile-web/&quot;&gt;is&lt;/a&gt; &lt;a href=&quot;http://daringfireball.net/2014/04/rethinking_what_we_mean_by_mobile_web&quot;&gt;arguably&lt;/a&gt; in decline: users are spending more time on mobile devices, and more time in apps instead of web browsers. Apple has joined the app side of this battle (e.g. allowing ad blockers in Safari, encouraging app install &lt;a href=&quot;https://developer.apple.com/library/ios/documentation/AppleApplications/Reference/SafariWebContent/PromotingAppswithAppBanners/PromotingAppswithAppBanners.html&quot;&gt;smart banners&lt;/a&gt; above websites). Facebook has also taken the app side (e.g. encouraging publishers to use &lt;a href=&quot;https://instantarticles.fb.com/&quot;&gt;Instant Articles&lt;/a&gt; instead of web views). Google of course needs a vibrant web for its search engine to remain useful, so has joined the web side of the battle (e.g. &lt;a href=&quot;http://techcrunch.com/2015/09/01/death-to-app-install-interstitials/&quot;&gt;punishing websites&lt;/a&gt; that have interstitial app ads, developing &lt;a href=&quot;https://www.ampproject.org/&quot;&gt;technologies&lt;/a&gt; that reduce website loading times). The realistic danger isn’t that the web disappears, but that it gets marginalized, and that the bulk of monetizable internet activities happen in apps or other interfaces like voice or messaging bots. This shift could have a significant effect on web publishers who rely on older business models like non-native ads, and could make it harder for small startups to grow beyond niche use cases.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Video: from TV to mobile devices.&lt;/strong&gt; Internet companies are betting that video consumption will continue to shift from TV to mobile devices. The hope is that this will not only create compelling user experiences, but also unlock access to the tens of billions of ad dollars that are currently spent on TV.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“I think video is a mega trend, almost as big as mobile.” — &lt;a href=&quot;https://twitter.com/cdixon/status/706198805922902018&quot;&gt;Mark Zuckerberg&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Last decade, the internet won the market for ads that harvest purchasing intent (ads that used to appear in newspapers and yellow pages), with most of the winnings going to Google. The question for the next decade is who will win the market for ads that generate purchasing intent (so far the winner is Facebook, followed by Google). Most likely this will depend on who controls the user flow to video advertising. Today, the biggest video platforms are Facebook and YouTube, but expect video to get embedded into almost every internet service, similar to how the internet transitioned from text-heavy to image-heavy services last decade.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Voice: baking search into the OS.&lt;/strong&gt; Voice bots like Siri, Google Now, and Alexa embed search-like capabilities directly into the operating system. Today, the quality of voice interfaces isn’t good enough to replace visual computing interfaces for most activities. However, artificial intelligence is &lt;a href=&quot;https://medium.com/software-is-eating-the-world/what-s-next-in-computing-e54b870b80cc#.kyn1qnbvj&quot;&gt;improving&lt;/a&gt; rapidly. Voice bots should be be able to handle much more nuanced and interactive conversations in the near future.&lt;/p&gt;
&lt;p&gt;Amazon’s &lt;a href=&quot;https://developer.amazon.com/public/solutions/alexa/alexa-voice-service&quot;&gt;vision&lt;/a&gt; here is the most ambitious: to embed voice services in every possible device, thereby reducing the importance of the device, OS, and application layers (it’s no coincidence that those are also the layers in which Amazon is the weakest). But all the big tech companies are investing heavily in voice and AI. As Google CEO Sundar Pichai recently &lt;a href=&quot;https://googleblog.blogspot.com/2016/04/this-years-founders-letter.html&quot;&gt;said&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The next big step will be for the very concept of the “device” to fade away. Over time, the computer itself — whatever its form factor — will be an intelligent assistant helping you through your day. We will move from mobile first to an AI first world.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This would mean that AI interfaces — which in most cases will mean voice interfaces — could become the master routers of the internet economic loop, rendering many of the other layers interchangeable or irrelevant. Voice is mostly a novelty today, but in technology the &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;next big thing&lt;/a&gt; often starts out looking that way.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What’s Next in Computing?]]></title><description><![CDATA[The computing industry progresses in two mostly independent cycles: financial and product cycles. There has been a lot of handwringing…]]></description><link>https://cdixon.org/2016/02/21/what-s-next-in-computing</link><guid isPermaLink="false">https://cdixon.org/2016/02/21/what-s-next-in-computing</guid><pubDate>Sun, 21 Feb 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The computing industry progresses in two mostly independent cycles: financial and product cycles. There has been a lot of handwringing lately about where we are in the financial cycle. Financial markets get a lot of attention. They tend to fluctuate unpredictably and sometimes wildly. The product cycle by comparison gets relatively little attention, even though it is what actually drives the computing industry forward. We can try to understand and predict the product cycle by studying the past and extrapolating into the future.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 470px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 35.95744680851064%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;New computing eras have occurred every 10–15 years&quot;
        title=&quot;New computing eras have occurred every 10–15 years&quot;
        src=&quot;/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png&quot;
        srcset=&quot;/static/cc45282778cf70cf803a653453e04996/924ad/1_Gzmn-yCmeOGEVPrrq9esMA.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;New computing eras have occurred every 10–15 years&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Tech product cycles are mutually reinforcing interactions between platforms and applications. New platforms enable new applications, which in turn make the new platforms more valuable, creating a positive feedback loop. Smaller, offshoot tech cycles happen all the time, but every once in a while — historically, about every 10 to 15 years — major new cycles begin that completely reshape the computing landscape.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2204db0d3cfd69ab9733517942f7fae5/6f6e3/1_oOZjdUvjYRlrFtYUKLIMGg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.661991584852736%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Financial and product cycles evolve mostly independently&quot;
        title=&quot;Financial and product cycles evolve mostly independently&quot;
        src=&quot;/static/2204db0d3cfd69ab9733517942f7fae5/94a55/1_oOZjdUvjYRlrFtYUKLIMGg.png&quot;
        srcset=&quot;/static/2204db0d3cfd69ab9733517942f7fae5/924ad/1_oOZjdUvjYRlrFtYUKLIMGg.png 170w,
/static/2204db0d3cfd69ab9733517942f7fae5/f570f/1_oOZjdUvjYRlrFtYUKLIMGg.png 341w,
/static/2204db0d3cfd69ab9733517942f7fae5/94a55/1_oOZjdUvjYRlrFtYUKLIMGg.png 681w,
/static/2204db0d3cfd69ab9733517942f7fae5/6f6e3/1_oOZjdUvjYRlrFtYUKLIMGg.png 713w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Financial and product cycles evolve mostly independently&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The PC enabled entrepreneurs to create word processors, spreadsheets, and many other desktop applications. The internet enabled search engines, e-commerce, e-mail and messaging, social networking, SaaS business applications, and many other services. Smartphones enabled mobile messaging, mobile social networking, and on-demand services like ride sharing. Today, we are in the middle of the mobile era. It is likely that many more mobile innovations are still to come.&lt;/p&gt;
&lt;p&gt;Each product era can be divided into two phases: 1) &lt;em&gt;the gestation phase&lt;/em&gt;, when the new platform is first introduced but is expensive, incomplete, and/or difficult to use, 2) &lt;em&gt;the growth phase&lt;/em&gt;, when a new product comes along that solves those problems, kicking off a period of exponential growth.&lt;/p&gt;
&lt;p&gt;The Apple II was released in 1977 (and the Altair in 1975), but it was the release of the IBM PC in 1981 that kicked off the PC growth phase.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 48.611111111111114%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137&quot;
        title=&quot;PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137&quot;
        src=&quot;/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png&quot;
        srcset=&quot;/static/b5098181472b3ff3803631cb20ad549a/924ad/1_vfatwon6YWQGRvYad2ggqw.png 170w,
/static/b5098181472b3ff3803631cb20ad549a/f570f/1_vfatwon6YWQGRvYad2ggqw.png 341w,
/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The internet’s gestation phase took place in the &lt;a href=&quot;https://en.wikipedia.org/wiki/National_Science_Foundation_Network&quot;&gt;80s and early 90s&lt;/a&gt; when it was mostly a text-based tool used by academia and government. The release of the Mosaic web browser in 1993 started the growth phase, which has continued ever since.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 44.72222222222222%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Worldwide internet users, source: http://churchm.ag/numbers-internet-use/&quot;
        title=&quot;Worldwide internet users, source: http://churchm.ag/numbers-internet-use/&quot;
        src=&quot;/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png&quot;
        srcset=&quot;/static/069843001450b5e3756c2f2fb7607f29/924ad/1_6jgrfjHpBKlObla1x0NYtg.png 170w,
/static/069843001450b5e3756c2f2fb7607f29/f570f/1_6jgrfjHpBKlObla1x0NYtg.png 341w,
/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png 360w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Worldwide internet users, source: http://churchm.ag/numbers-internet-use/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;There were feature phones in the 90s and early smartphones like the Sidekick and Blackberry in the early 2000s, but the smartphone growth phase really started in 2007–8 with the release of the iPhone and then Android. Smartphone adoption has since exploded: about 2B people have smartphones today. By 2020, &lt;a href=&quot;http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world&quot;&gt;80% of the global population&lt;/a&gt; will have one.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.75925925925925%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Worldwide smartphone sales per year (millions)&quot;
        title=&quot;Worldwide smartphone sales per year (millions)&quot;
        src=&quot;/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png&quot;
        srcset=&quot;/static/b400fb4c8927bce57a546334ecf465e0/924ad/1_8o0-IQSyDQ0KRxSVV2njdA.png 170w,
/static/b400fb4c8927bce57a546334ecf465e0/f570f/1_8o0-IQSyDQ0KRxSVV2njdA.png 341w,
/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Worldwide smartphone sales per year (millions)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If the 10–15 year pattern repeats itself, the next computing era should enter its growth phase in the next few years. In that scenario, we should already be in the gestation phase. There are a number of important trends in both hardware and software that give us a glimpse into what the next era of computing might be. Here I talk about those trends and then make some suggestions about what the future might look like.&lt;/p&gt;
&lt;h2&gt;Hardware: small, cheap, and ubiquitous&lt;/h2&gt;
&lt;p&gt;In the mainframe era, only large organizations could afford a computer. Minicomputers were affordable by smaller organization, PCs by homes and offices, and smartphones by individuals.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 74.76851851851852%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAPCAIAAABr+ngCAAAACXBIWXMAAAsSAAALEgHS3X78AAAB3UlEQVQoz32S64+TQBDA7/80MZ5/lRpzn/2giZ4xMcZLjV40JlefXCkUKIVur+0esDz2AeyyLiztVWqcTMgwO7+d155IJZRRd5G5c4JSWdYiRiJKZPflrca8N3Z6G6tT2TQnLUxY5QU/L78+PTsbj69qzmvBU0wyTNVhc6xNI9N8B9MyNx26Whum/fjRk5cvns9cT10ohJA6dCADuJg6BNwoMwDbiWkxSsuq7hqq4jQf8gOY2B5etjDnIsno2/cf7j14OPp4yWpRVdX/M7MOXilTl3ox+nT/9NSfz/ceFY8p60vQsOhghlL021Q96wMdAZM0x+zbxJz4NsSRDzZgE/+VWcM0TuB3YwdLXbwSmOTPzl+/unhjhQ4ry+au6gO4TvPUsAi4g/dDLghdbWAYJcsI5QURx2W3A7P6nmVzOJf2J8vJ+ejzuy9j7alq9Q7EAUwYNl09bXm01DZ/jsEN5JyjDCdpoTri0cELw+asCEBf0nAvrUdt+9r2CS3V/r1wnYGNcvZw7YREZ/6X6PsUGa6gD7YoxxJlu7IxrZygWsM+c5eq0UanrYjWqWa27HLKtNjDjNmL5dUP5oP1r0nhLKBhYS/YGhay3MicxVMnmTrw2iocX9lo6m5NW3F/ALU7Vfm9YvcEAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338&quot;
        title=&quot;Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338&quot;
        src=&quot;/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png&quot;
        srcset=&quot;/static/446eff6d101af863b1d5852b1fef5c0d/924ad/1_gZQE6-shm1dqgJAbmNn6ww.png 170w,
/static/446eff6d101af863b1d5852b1fef5c0d/f570f/1_gZQE6-shm1dqgJAbmNn6ww.png 341w,
/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;We are now entering an era in which processors and sensors are getting so small and cheap that there will be many more computers than there are people.&lt;/p&gt;
&lt;p&gt;There are two reasons for this. One is the steady progress of the semiconductor industry over the past 50 years (&lt;a href=&quot;https://en.wikipedia.org/wiki/Moore%27s_law&quot;&gt;Moore’s law&lt;/a&gt;). The second is what Chris Anderson &lt;a href=&quot;http://foreignpolicy.com/2013/04/29/epiphanies-from-chris-anderson/&quot;&gt;calls&lt;/a&gt; “the peace dividend of the smartphone war”: the runaway success of smartphones led to massive investments in processors and sensors. If you disassemble a modern drone, VR headset, or IoT devices, you’ll find mostly smartphone components.&lt;/p&gt;
&lt;p&gt;In the modern semiconductor era, the focus has shifted from standalone CPUs to &lt;a href=&quot;https://medium.com/@magicsilicon/how-the-soc-is-displacing-the-cpu-49bc7503edab#.h6wfmbk8n&quot;&gt;bundles&lt;/a&gt; of specialized chips known as systems-on-a-chip.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 68.05555555555554%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C&quot;
        title=&quot;Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C&quot;
        src=&quot;/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png&quot;
        srcset=&quot;/static/95b5d17871f51d25b3fab9ad1416c465/924ad/1_SwUUpb2cjLIPFa3-8U9LzQ.png 170w,
/static/95b5d17871f51d25b3fab9ad1416c465/f570f/1_SwUUpb2cjLIPFa3-8U9LzQ.png 341w,
/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Typical systems-on-a-chip bundle energy-efficient ARM CPUs plus specialized chips for graphics processing, communications, power management, video processing, and more.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 257px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 76.26459143968872%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Raspberry Pi Zero: 1 GHz Linux computer for $5&quot;
        title=&quot;Raspberry Pi Zero: 1 GHz Linux computer for $5&quot;
        src=&quot;/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg&quot;
        srcset=&quot;/static/43a41d31e86aa75bc4249f5debc78aed/c2e49/1_Wz-CMXmQFd64yFKWFfHefQ.jpg 170w,
/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg 257w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Raspberry Pi Zero: 1 GHz Linux computer for $5&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;This new architecture has dropped the price of basic computing systems from about $100 to about $10. The &lt;a href=&quot;https://www.raspberrypi.org/blog/raspberry-pi-zero/&quot;&gt;Raspberry Pi Zero&lt;/a&gt; is a 1 GHz Linux computer that you can buy for $5. For a similar price you can buy a &lt;a href=&quot;http://makezine.com/2015/04/01/esp8266-5-microcontroller-wi-fi-now-arduino-compatible/&quot;&gt;wifi-enabled microcontroller&lt;/a&gt; that runs a version of Python. Soon these chips will cost less than a dollar. It will be cost-effective to embed a computer in almost anything.&lt;/p&gt;
&lt;p&gt;Meanwhile, there are still impressive performance improvements happening in high-end processors. Of particular importance are GPUs (graphics processors), the best of which are made by Nvidia. GPUs are useful not only for traditional graphics processing, but also for machine learning algorithms and virtual/augmented reality devices. Nvidia’s &lt;a href=&quot;http://www.extremetech.com/gaming/201417-nvidias-2016-roadmap-shows-huge-performance-gains-from-upcoming-pascal-architecture&quot;&gt;roadmap&lt;/a&gt; promises significant performance improvements in the coming years.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 286px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 49.65034965034965%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/&quot;
        title=&quot;Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/&quot;
        src=&quot;/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png&quot;
        srcset=&quot;/static/aa40193bdc30d5a4b923fa0e2648552c/924ad/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png 170w,
/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png 286w&quot;
        sizes=&quot;(max-width: 286px) 100vw, 286px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;A wildcard technology is quantum computing, which today exists mostly in laboratories but if made commercially viable could lead to orders-of-magnitude performance improvements for certain classes of algorithms in fields like biology and artificial intelligence.&lt;/p&gt;
&lt;h2&gt;Software: the golden age of AI&lt;/h2&gt;
&lt;p&gt;There are many exciting things happening in software today. Distributed systems is one good example. As the number of devices has grown exponentially, it has become increasingly important to 1) parallelize tasks across multiple machines 2) communicate and coordinate among devices. Interesting distributed systems technologies include systems like &lt;a href=&quot;http://hadoop.apache.org/&quot;&gt;Hadoop&lt;/a&gt; and &lt;a href=&quot;https://amplab.cs.berkeley.edu/projects/spark-lightning-fast-cluster-computing/&quot;&gt;Spark&lt;/a&gt; for parallelizing big data problems, and Bitcoin/blockchain for securing data and assets.&lt;/p&gt;
&lt;p&gt;But perhaps the most exciting software breakthroughs are happening in artificial intelligence (AI). AI has a long history of hype and disappointment. Alan Turing himself &lt;a href=&quot;http://loebner.net/Prizef/TuringArticle.html&quot;&gt;predicted&lt;/a&gt; that machines would be able to successfully imitate humans by the year 2000. However, there are good reasons to think that AI might now finally be entering a golden age.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“Machine learning is a core, transformative way by which we’re rethinking everything we’re doing.” — Google CEO, Sundar Pichai&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;A lot of the excitement in AI has focused on deep learning, a machine learning technique that was &lt;a href=&quot;http://www.nytimes.com/2012/06/26/technology/in-a-big-network-of-computers-evidence-of-machine-learning.html?pagewanted=all&quot;&gt;popularized&lt;/a&gt; by a now famous 2012 Google project that used a giant cluster of computers to learn to identify cats in YouTube videos. Deep learning is a descendent of neural networks, a technology that &lt;a href=&quot;https://en.wikipedia.org/wiki/Artificial_neural_network#History&quot;&gt;dates back&lt;/a&gt; to the 1940s. It was brought back to life by a &lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;combination&lt;/a&gt; of factors, including new algorithms, cheap parallel computation, and the widespread availability of large data sets.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 386px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e07807f2b8b6bba160ba923346426218/398bb/1_P4BXse9pJYAUbasCEkQanA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.73575129533679%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)&quot;
        title=&quot;ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)&quot;
        src=&quot;/static/e07807f2b8b6bba160ba923346426218/398bb/1_P4BXse9pJYAUbasCEkQanA.png&quot;
        srcset=&quot;/static/e07807f2b8b6bba160ba923346426218/924ad/1_P4BXse9pJYAUbasCEkQanA.png 170w,
/static/e07807f2b8b6bba160ba923346426218/f570f/1_P4BXse9pJYAUbasCEkQanA.png 341w,
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        sizes=&quot;(max-width: 386px) 100vw, 386px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;It’s tempting to dismiss deep learning as another Silicon Valley buzzword. The excitement, however, is supported by impressive theoretical and real-world results. For example, the error rates for the winners of the &lt;a href=&quot;http://image-net.org/challenges/LSVRC/2015/&quot;&gt;ImageNet challenge&lt;/a&gt; — a popular machine vision contest — were in the 20–30% range prior to the use of deep learning. Using deep learning, the accuracy of the winning algorithms has steadily improved, and in 2015 surpassed human performance.&lt;/p&gt;
&lt;p&gt;Many of the papers, &lt;a href=&quot;https://code.google.com/archive/p/word2vec/&quot;&gt;data&lt;/a&gt; &lt;a href=&quot;http://image-net.org/download-images&quot;&gt;sets&lt;/a&gt;, and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;software&lt;/a&gt; &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;tools&lt;/a&gt; related to deep learning have been open sourced. This has had a democratizing effect, allowing individuals and small organizations to build powerful applications. WhatsApp was able to build a global messaging system that &lt;a href=&quot;http://www.wired.com/2015/09/whatsapp-serves-900-million-users-50-engineers/&quot;&gt;served 900M users with just 50 engineers&lt;/a&gt;, compared to the thousands of engineers that were needed for prior generations of messaging systems. This “&lt;a href=&quot;https://twitter.com/cdixon/status/473221599189954562&quot;&gt;WhatsApp effect&lt;/a&gt;” is now happening in AI. Software tools like &lt;a href=&quot;http://deeplearning.net/software/theano/&quot;&gt;Theano&lt;/a&gt; and &lt;a href=&quot;https://www.tensorflow.org/&quot;&gt;TensorFlow&lt;/a&gt;, combined with cloud data centers for training, and inexpensive GPUs for deployment, allow small teams of engineers to build state-of-the-art AI systems.&lt;/p&gt;
&lt;p&gt;For example, here a &lt;a href=&quot;http://tinyclouds.org/colorize/&quot;&gt;solo programmer&lt;/a&gt; working on a side project used TensorFlow to colorize black-and-white photos:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/3961e4658cda043618a76fad7bb54647/300a7/1_L6cT-HQMC-mc34kJ450pdA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 32.985074626865675%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/&quot;
        title=&quot;Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/&quot;
        src=&quot;/static/3961e4658cda043618a76fad7bb54647/94a55/1_L6cT-HQMC-mc34kJ450pdA.png&quot;
        srcset=&quot;/static/3961e4658cda043618a76fad7bb54647/924ad/1_L6cT-HQMC-mc34kJ450pdA.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And here a small startup created a real-time object classifier:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/1bf0017b1448eaf0208ca9d6953f755c/1_cAtej8oZh2u80cii--YgTw.gif&quot; alt=&quot;Teradeep real-time object classifier, source: https://www.youtube.com/watch?v=_wXHR-lad-Q &quot;&gt;&lt;/p&gt;
&lt;p&gt;Which of course is reminiscent of a famous scene from a sci-fi movie:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/d2a582498ade91504ee02f106ad719bd/1_wiG-xc456HpdBkRTQi84Eg.gif&quot; alt=&quot;The Terminator (1984), source: https://www.youtube.com/watch?v=YvRb9jZ9wFk&quot;&gt;&lt;/p&gt;
&lt;p&gt;One of the first applications of deep learning released by a big tech company is the search function in Google Photos, which is &lt;a href=&quot;http://gizmodo.com/google-photos-hands-on-so-good-im-creeped-out-1707566376&quot;&gt;shockingly&lt;/a&gt; smart.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/af124f61d4fa799fad054f8de7401d8b/1_N1K_Wv2M-QDMF7FeOmJfcw.gif&quot; alt=&quot;User searches photos (w/o metadata) for “big ben”&quot;&gt;&lt;/p&gt;
&lt;p&gt;We’ll soon see significant upgrades to the intelligence of all sorts of products, including: voice assistants, search engines, &lt;a href=&quot;http://www.wired.com/2015/08/how-facebook-m-works/&quot;&gt;chat bots&lt;/a&gt;, 3D &lt;a href=&quot;https://www.google.com/atap/project-tango/&quot;&gt;scanners&lt;/a&gt;, language translators, automobiles, drones, medical imaging systems, and much more.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The business plans of the next 10,000 startups are easy to forecast: Take X and add AI. This is a big deal, and now it’s here. — &lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;Kevin Kelly&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Startups building AI products will need to stay laser focused on specific applications to compete against the big tech companies who have made AI a top priority. AI systems get better as more data is collected, which means it’s possible to create a virtuous flywheel of &lt;a href=&quot;http://mattturck.com/2016/01/04/the-power-of-data-network-effects/&quot;&gt;data network effects&lt;/a&gt; (more users → more data → better products → more users). The mapping startup Waze &lt;a href=&quot;https://digit.hbs.org/submission/waze-generating-better-maps-through-its-network-of-users/&quot;&gt;used&lt;/a&gt; data network effects to produce better maps than its vastly better capitalized competitors. Successful AI startups will follow a &lt;a href=&quot;/2015/02/01/the-ai-startup-idea-maze/&quot;&gt;similar&lt;/a&gt; strategy.&lt;/p&gt;
&lt;h2&gt;Software + hardware: the new computers&lt;/h2&gt;
&lt;p&gt;There are a variety of new computing platforms currently in the gestation phase that will soon get much better — and possibly enter the growth phase — as they incorporate recent advances in hardware and software. Although they are designed and packaged very differently, they share a common theme: they give us new and augmented abilities by embedding a smart virtualization layer on top of the world. Here is a brief overview of some of the new platforms:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Cars&lt;/strong&gt;. Big tech companies like Google, Apple, Uber, and Tesla are investing significant resources in autonomous cars. Semi-autonomous cars like the Tesla Model S are already publicly available and will improve quickly. Full autonomy will take longer but is probably not more than 5 years away. There already exist fully autonomous cars that are almost as good as human drivers. However, for cultural and regulatory reasons, fully autonomous cars will likely need to be significantly better than human drivers before they are widely permitted.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/3e2056b76d877d2ae8629bffc0b8af07/1_nJjPHXo_qBtzvoH8OLx9hQ.gif&quot; alt=&quot;Autonomous car mapping its environment&quot;&gt;&lt;/p&gt;
&lt;p&gt;Expect to see a lot more investment in autonomous cars. In addition to the big tech companies, the big auto makers &lt;a href=&quot;http://www.cnet.com/roadshow/news/gm-new-team-electric-autonomous-cars/&quot;&gt;are&lt;/a&gt; &lt;a href=&quot;http://spectrum.ieee.org/automaton/robotics/industrial-robots/toyota-to-invest-1-billion-in-ai-and-robotics-rd&quot;&gt;starting&lt;/a&gt; &lt;a href=&quot;https://media.ford.com/content/fordmedia/fna/us/en/news/2016/01/05/ford-tripling-autonomous-vehicle-development-fleet--accelerating.html&quot;&gt;to&lt;/a&gt; take autonomy very seriously. You’ll even see some interesting products made by startups. Deep learning software tools have gotten so good that a &lt;a href=&quot;http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/&quot;&gt;solo programmer&lt;/a&gt; was able to make a semi-autonomous car:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/c644e896d35381c2fc1a48fba97664ef/1_z442b_u8RfSqBEyI-1AkxQ.gif&quot; alt=&quot;Homebrew self-driving car, source: https://www.youtube.com/watch?v=KTrgRYa2wbI&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Drones&lt;/strong&gt;. Today’s consumer drones contain modern hardware (mostly smartphone components plus mechanical parts), but relatively simple software. In the near future, we’ll see drones that incorporate advanced computer vision and other AI to make them safer, easier to pilot, and more useful. Recreational videography will continue to be popular, but there will also be important &lt;a href=&quot;http://www.airware.com&quot;&gt;commercial&lt;/a&gt; use cases. There are tens of millions of &lt;a href=&quot;http://www.psmag.com/politics-and-law/cell-tower-climbers-die-78374&quot;&gt;dangerous&lt;/a&gt; jobs that involve climbing buildings, towers, and other structures that can be performed much more safely and effectively using drones.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/54d3f2063791db1e9364b090526a0a12/1_N7SlK3WKwkfZ6v50JFLkCg.gif&quot; alt=&quot;Fully autonomous drone flight. source: https://www.youtube.com/watch?v=rYhPDn48-Sg&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Internet of Things&lt;/strong&gt;. The obvious use cases for IoT devices are energy savings, security, and convenience. &lt;a href=&quot;https://nest.com/thermostat/meet-nest-thermostat/&quot;&gt;Nest&lt;/a&gt; and &lt;a href=&quot;https://nest.com/camera/meet-nest-cam/&quot;&gt;Dropcam&lt;/a&gt; are popular examples of the first two categories. One of the most interesting products in the convenience category is Amazon’s &lt;a href=&quot;http://www.amazon.com/Amazon-SK705DI-Echo/dp/B00X4WHP5E&quot;&gt;Echo&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 348px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.7471264367816%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAAA40lEQVQoz2P4jwP8+/cPSN64eWfV6k0/fnyHiyADBkxt3759e/To0dOnzx89uO4VPU9Eb8L2rRuB4n/+/CGsGagIqP/Dh48/f3yta5oaHld+984toPjfv38Ja0Z29ocPb548vovVzTht/v3798+fP4HsiRMnxyckgQ37T0AzxPiPHz/eBwOgIfPmL0hITCLWZogiIAnx4ekzZ7Zu3YbLawT8/O79h7v3HxClGajhx48fED9//w6K2w0bN6Vl5WINaiyaH4MB0MO3bt0C6l+zZm14eCRRmpEBRPXFi5eWLluOK8AAnOlzCisJJFsAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Three main uses cases for IoT&quot;
        title=&quot;Three main uses cases for IoT&quot;
        src=&quot;/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png&quot;
        srcset=&quot;/static/5ca197c2fdbd18c0039d8b90c43133bd/924ad/1_bsxhmUfI-7biIF-dW8a80w.png 170w,
/static/5ca197c2fdbd18c0039d8b90c43133bd/f570f/1_bsxhmUfI-7biIF-dW8a80w.png 341w,
/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png 348w&quot;
        sizes=&quot;(max-width: 348px) 100vw, 348px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Three main uses cases for IoT&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Most people think Echo is a gimmick until they try it and then they are &lt;a href=&quot;http://qz.com/611026/amazon-echo-is-a-sleeper-hit-and-the-rest-of-america-is-about-find-out-about-it-for-the-first-time/&quot;&gt;surprised&lt;/a&gt; at how useful it is. It’s a great &lt;a href=&quot;https://500ish.com/alexa-5f7924bffcf3#.iou9jsaj4&quot;&gt;demo&lt;/a&gt; of how effective always-on voice can be as a user interface. It will be a while before we have bots with generalized intelligence that can carry on full conversations. But, as Echo shows, voice can succeed today in constrained contexts. Language understanding should improve quickly as recent breakthroughs in deep learning make their way into production devices.&lt;/p&gt;
&lt;p&gt;IoT will also be adopted in business contexts. For example, devices with sensors and network connections are extremely &lt;a href=&quot;https://www.samsara.com/&quot;&gt;useful&lt;/a&gt; for monitoring industrial equipment.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Wearables.&lt;/strong&gt; Today’s wearable computers are constrained along multiple dimensions, including battery, communications, and processing. The ones that have succeeded have focused on narrow applications like fitness monitoring. As hardware components continue to improve, wearables will support rich applications the way smartphones do, unlocking a wide range of new applications. As with IoT, voice will probably be the main user interface.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/a8271f926bbf193ab70125a08af973ca/1__4r-bIpz7jWMYiLnxKFCJQ.gif&quot; alt=&quot;Wearable, super intelligent AI earpiece in the movie “*Her”*&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Virtual Reality.&lt;/strong&gt; 2016 is an exciting year for VR: the launch of the &lt;a href=&quot;https://www.oculus.com/en-us/rift/&quot;&gt;Oculus Rift&lt;/a&gt; and HTC/Valve &lt;a href=&quot;https://www.htcvive.com/us/&quot;&gt;Vive&lt;/a&gt; (and, possibly, the Sony Playstation VR), means that comfortable and immersive VR systems will finally be publicly available. VR systems need to be really good to avoid the “&lt;a href=&quot;https://en.wikipedia.org/wiki/Uncanny_valley&quot;&gt;uncanny valley&lt;/a&gt;” trap. Proper VR requires special screens (high resolution, high refresh rate, low persistence), powerful graphics cards, and the ability to track the precise position of the user (previously released VR systems could only track the rotation of the user’s head). This year, the public will for the first time get to experience what is known as “&lt;a href=&quot;http://a16z.com/2015/01/22/virtual-reality/&quot;&gt;presence&lt;/a&gt;” — when your senses are sufficiently tricked that you feel fully transported into the virtual world.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/a5e9dac7f584d81d959842c82b7c674a/1_bcHvjQwlLxyORwjHFH87Qg.gif&quot; alt=&quot;Oculus Rift Toybox [demo](https://www.youtube.com/watch?v=dbYP4bhKr2M)&quot;&gt;&lt;/p&gt;
&lt;p&gt;VR headsets will continue to improve and get more affordable. Major areas of research will include: 1) new tools for creating rendered and/or &lt;a href=&quot;https://www.lytro.com/&quot;&gt;filmed&lt;/a&gt; VR content, 2) machine vision for &lt;a href=&quot;http://venturebeat.com/2016/02/08/oculus-vr-guru-john-carmack-leads-crucial-position-tracking-development-for-mobile-vr/&quot;&gt;tracking&lt;/a&gt; and scanning directly from phones and headsets, and 3) distributed back-end &lt;a href=&quot;/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds/&quot;&gt;systems&lt;/a&gt; for hosting large &lt;a href=&quot;https://twitter.com/cdixon/status/662836035508940800&quot;&gt;virtual environments&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/f0b9361f08011696d616fe6efe4747e6/1_Fv9_4fCAOHoEA3dxjMf2jw.gif&quot; alt=&quot;3D world creation in [room-scale VR](https://www.youtube.com/watch?v=JKO9fEjNiio)&quot;&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Augmented Reality&lt;/strong&gt;. AR will likely arrive after VR because AR requires most of what VR requires plus additional new technologies. For example, AR requires advanced, low-latency machine vision in order to convincingly combine real and virtual objects in the same interactive scene.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 600px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.333333333333336%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Real and virtual combined (from *The Kingsmen*)&quot;
        title=&quot;Real and virtual combined (from *The Kingsmen*)&quot;
        src=&quot;/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg&quot;
        srcset=&quot;/static/87e0d14dc73016bf6ebca9396c14a960/c2e49/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 170w,
/static/87e0d14dc73016bf6ebca9396c14a960/c2dc0/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 341w,
/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 600w&quot;
        sizes=&quot;(max-width: 600px) 100vw, 600px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Real and virtual combined (from *The Kingsmen*)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;That said, AR is probably coming sooner than you think. This demo video was shot directly through &lt;a href=&quot;http://www.magicleap.com/#/home&quot;&gt;Magic Leap’s&lt;/a&gt; AR device:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/4b0d7fe5166ee726a724228c68df0a36/1_7jbz4N1GZTFm0wDzDEmQ1Q.gif&quot; alt=&quot;Magic Leap demo: real environment, virtual character&quot;&gt;&lt;/p&gt;
&lt;h2&gt;What’s next?&lt;/h2&gt;
&lt;p&gt;It is possible that the pattern of 10–15 year computing cycles has ended and mobile is the final era. It is also possible the next era won’t arrive for a while, or that only a subset of the new computing categories discussed above will end up being important.&lt;/p&gt;
&lt;p&gt;I tend to think we are on the cusp of not one but multiple new eras. The “peace dividend of the smartphone war” created a Cambrian explosion of new devices, and developments in software, especially AI, will make those devices smart and useful. Many of the futuristic technologies discussed above exist today, and will be broadly accessible in the near future.&lt;/p&gt;
&lt;p&gt;Observers have noted that many of these new devices are in their “&lt;a href=&quot;http://www.nytimes.com/2016/01/07/technology/on-display-at-ces-tech-ideas-in-their-awkward-adolescence.html?_r=0&quot;&gt;awkward adolescence&lt;/a&gt;.” That is because they are in their gestation phase. Like PCs in the 70s, the internet in the 80s, and smartphones in the early 2000s, we are seeing pieces of a future that isn’t quite here. But the future is coming: markets go up and down, and excitement ebbs and flows, but computing technology marches steadily forward.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of…]]></title><description><![CDATA[If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of spectacular superorganisms to choose from…]]></description><link>https://cdixon.org/2016/02/11/if-an-alien-film-crew-chose-to-feature-our-species-in-a-nature-documentary-they-d-have-plenty-of</link><guid isPermaLink="false">https://cdixon.org/2016/02/11/if-an-alien-film-crew-chose-to-feature-our-species-in-a-nature-documentary-they-d-have-plenty-of</guid><pubDate>Thu, 11 Feb 2016 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of spectacular superorganisms to choose from. Perhaps they’d spotlight the U.S. military, the most powerful superorganism ever to arise on our humble planet. Or the Catholic Church, a superorganism that’s managed to survive, with awe-inspiring continuity, for nearly two millennia. Meanwhile, impressive at smaller scales, the Boston Symphony Orchestra coordinates muscle movements to a precision of millimeters and milliseconds. And improv troupes like the Upright Citizens Brigade manage to arrange themselves into compelling scenes at the drop of a hat, all without any explicit coordination. Then there’s the superorganism responsible for the stable, secure, 20-million-line codebase that powers much of the world’s computing infrastructure — a loose affiliation of some 5,000 individuals,mostly strangers, who have somehow managed to assemble one of the most intricate artifacts ever built. As you might have guessed, I’m referring to the developers of the Linux kernel.&lt;/p&gt;
&lt;p&gt;— &lt;a href=&quot;http://www.ribbonfarm.com/2016/02/11/minimum-viable-superorganism/&quot;&gt;Minimal Viable Superorganism&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Nine reasons screenshots are awesome]]></title><description><![CDATA[By taking a screenshot, you can “export” from any app on any device. You can “import” screenshots back into any app that imports photos…]]></description><link>https://cdixon.org/2015/11/13/nine-reasons-screenshots-are-awesome</link><guid isPermaLink="false">https://cdixon.org/2015/11/13/nine-reasons-screenshots-are-awesome</guid><pubDate>Fri, 13 Nov 2015 00:00:00 GMT</pubDate><content:encoded>&lt;ol&gt;
&lt;li&gt;By taking a screenshot, you can “export” from any app on any device.&lt;/li&gt;
&lt;li&gt;You can “import” screenshots back into any app that imports photos (most apps).&lt;/li&gt;
&lt;li&gt;For these reasons, screenshots act like a universal file type on mobile. As &lt;a href=&quot;http://twitter.com/artypapers&quot;&gt;@artypapers&lt;/a&gt; says:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 568px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 54.22535211267606%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)&quot;
        title=&quot;tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)&quot;
        src=&quot;/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png&quot;
        srcset=&quot;/static/0ba4fbd003eb13531173f39e8f18ba87/924ad/1fcFNUN55yNgnbY1ZKaU4bA.png 170w,
/static/0ba4fbd003eb13531173f39e8f18ba87/f570f/1fcFNUN55yNgnbY1ZKaU4bA.png 341w,
/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png 568w&quot;
        sizes=&quot;(max-width: 568px) 100vw, 568px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;4&quot;&gt;
&lt;li&gt;Screenshots let you circumvent restrictions like file format incompatibilities, service non-interoperability, character limits, etc&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 82.29166666666666%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Much higher engagement when text is inline&quot;
        title=&quot;Much higher engagement when text is inline&quot;
        src=&quot;/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png&quot;
        srcset=&quot;/static/95734049b48ea09f2e5585f03318595a/924ad/1523dJ35IDTth7yIxY1O85w.png 170w,
/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Much higher engagement when text is inline&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;5&quot;&gt;
&lt;li&gt;You can easily edit screenshots using simple tools that are bundled with most desktop and mobile operating systems:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 93.05555555555556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;You can’t do this with embeds&quot;
        title=&quot;You can’t do this with embeds&quot;
        src=&quot;/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png&quot;
        srcset=&quot;/static/434a6a3f83cb4f6ae53511626b4c3953/924ad/1XyUJT8xhd-i0YPGuJ7WpDQ.png 170w,
/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;You can’t do this with embeds&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;6&quot;&gt;
&lt;li&gt;It’s easy to annotate screenshots:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 248px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 152.01612903225805%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1i 4InKrSJoQfwpfOtKwtiQ&quot;
        title=&quot;1i 4InKrSJoQfwpfOtKwtiQ&quot;
        src=&quot;/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png&quot;
        srcset=&quot;/static/2424bae772bcbde995c949fd7d8049bd/924ad/1i_4InKrSJoQfwpfOtKwtiQ.png 170w,
/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png 248w&quot;
        sizes=&quot;(max-width: 248px) 100vw, 248px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;ol start=&quot;7&quot;&gt;
&lt;li&gt;On mobile, the photo roll where screenshots are kept is similar to a file system. You can delete photos, edit them, back them up to the cloud, etc.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 150.46296296296296%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1YZi7TPYylq 2s1q9zwhJJw&quot;
        title=&quot;1YZi7TPYylq 2s1q9zwhJJw&quot;
        src=&quot;/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png&quot;
        srcset=&quot;/static/0314b36561b6757d79d25f28bd76df0f/924ad/1YZi7TPYylq-2s1q9zwhJJw.png 170w,
/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;ol start=&quot;8&quot;&gt;
&lt;li&gt;You can combine otherwise incompatible formats in a single screenshot&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 147.91666666666669%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)&quot;
        title=&quot;The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)&quot;
        src=&quot;/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png&quot;
        srcset=&quot;/static/bcd79cb3b12cdd53f1678b96ac6c9af4/924ad/1ZQVVeKcjUqk8wRJUd3duFw.png 170w,
/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;ol start=&quot;9&quot;&gt;
&lt;li&gt;Screenshots persist even when the thing screenshotted disappears:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 15.625%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAYAAACTWi8uAAAACXBIWXMAAAsSAAALEgHS3X78AAAAuklEQVQI1x2OWXKEMBBDuf85MhThg2BCwCzGNuBZMlMUHCDkJo90+GuV9FqKuq4jhAnvPG3bcg0B7z3WOpZlofwqGYaBqtas6yqew4gOYWYaPXmec3/c6buGff8l8uMosMH0hs+iYNs2jOmxAmVZdt7OubNgnEYGO6C1lvKG5/dDGMU8z1RVyc++E/2H4ziRFRZdV7wniTz64PV8USjF2+Uifoyz9gSVyqXMUOtG1tozn6Yp4XbjOA7+APBQwRWs/+gPAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1TQa0p6EzFb2CaJmd0 o87g&quot;
        title=&quot;1TQa0p6EzFb2CaJmd0 o87g&quot;
        src=&quot;/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png&quot;
        srcset=&quot;/static/4ab560f0052888e059906ec7f154bafb/924ad/1TQa0p6EzFb2CaJmd0-o87g.png 170w,
/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.18055555555556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1vsqP1ZQvd0M0vFdGPWzkOA&quot;
        title=&quot;1vsqP1ZQvd0M0vFdGPWzkOA&quot;
        src=&quot;/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png&quot;
        srcset=&quot;/static/8755b722217e371387c8a3ffec6ee12f/924ad/1vsqP1ZQvd0M0vFdGPWzkOA.png 170w,
/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;And more:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 537px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 37.243947858473%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1G9eixRmfjvIITvw5Jl4Bdg&quot;
        title=&quot;1G9eixRmfjvIITvw5Jl4Bdg&quot;
        src=&quot;/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png&quot;
        srcset=&quot;/static/66109310819c0dd0781d28282a0b3095/924ad/1G9eixRmfjvIITvw5Jl4Bdg.png 170w,
/static/66109310819c0dd0781d28282a0b3095/f570f/1G9eixRmfjvIITvw5Jl4Bdg.png 341w,
/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png 537w&quot;
        sizes=&quot;(max-width: 537px) 100vw, 537px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 601px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 33.94342762063228%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABHUlEQVQY042RPU/DMBCG888ZmFgRG2JiROInwFYhPkSVkLqOHceOieO4sdMmqWjTxMEpSweQeHXD3eme+9B5w9Bba8f/6dDbdmebL7vvJsS7v7sEYP7uL4IgmPs+RKjvB3vUcCprm7W5fa3PHurzx/pq1k7wzfVFyrEsS6nUSpt91/06cxpkB1weZnT3lO4CMZV523Js1Ng1Y9tspSyEyAu1co4siizLEspoQstSxyRx+bbenHb0WKximGdM50JGESIkCUOAcOwMLOHzy1u4AH7wgY9hCKBrnkupq/UEL5YAQJByhmMHYCFEhDCMMIQo5VwWShvDeVZV60KpT7eMEFpr8wOThDHGjTaEUEKpMcYVuCVhhDZ1PV369y++Ae+Egwj2IUk6AAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1bI apTKjUaOPV8TVyTq2gg&quot;
        title=&quot;1bI apTKjUaOPV8TVyTq2gg&quot;
        src=&quot;/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png&quot;
        srcset=&quot;/static/b642c197248ad3ba35c80f0e99bf2f9a/924ad/1bI_apTKjUaOPV8TVyTq2gg.png 170w,
/static/b642c197248ad3ba35c80f0e99bf2f9a/f570f/1bI_apTKjUaOPV8TVyTq2gg.png 341w,
/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png 601w&quot;
        sizes=&quot;(max-width: 601px) 100vw, 601px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;What are some other reasons screenshots are awesome?&lt;/p&gt;</content:encoded></item><item><title><![CDATA[It’s hard to believe today, but 10 years ago Wikipedia was widely considered a doomed experiment…]]></title><description><![CDATA[Today, Wikipedia is widely considered an invaluable resource. There are occasional errors and controversies, but for the most part it…]]></description><link>https://cdixon.org/2015/10/31/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment</link><guid isPermaLink="false">https://cdixon.org/2015/10/31/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment</guid><pubDate>Sat, 31 Oct 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Today, Wikipedia is widely considered an invaluable resource. There are occasional errors and controversies, but for the most part it provides accurate, comprehensive information to billions of people every day.&lt;/p&gt;
&lt;p&gt;Wikipedia was &lt;a href=&quot;https://en.wikipedia.org/wiki/History_of_Wikipedia&quot;&gt;founded&lt;/a&gt; in 2001, and for the first few years was mostly treated as curiosity by those outside of the Wikipedia “movement.” But Wikipedia grew in popularity, and in 2005 became the most &lt;a href=&quot;https://en.wikipedia.org/wiki/History_of_Wikipedia#2005&quot;&gt;popular reference&lt;/a&gt; site on the internet. Popularity led to intense media scrutiny. Most commentators considered Wikipedia a doomed experiment run by utopian radicals. To give a sense of this for those who weren’t following the controversy at the time or don’t remember, here are some examples of popular critiques of Wikipedia from 2005.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“One day Wikipedia may well be the most amazing reference work the world has ever seen, lauded for its quality. &lt;strong&gt;But to get from here to there it will need real experts and top quality writing — it won’t get there by hoping that its whizzy technical processes remedy such deficiencies.&lt;/strong&gt; In other words, it will resemble today’s traditional encyclopedias far more than it does today.” (&lt;a href=&quot;http://www.theregister.co.uk/2005/10/18/wikipedia_quality_problem/&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;“The Seigenthaler affair points up a crucial condition of the Internet’s information ecology: &lt;strong&gt;It’s a system that doesn’t select for truth. Currency, controversy, charisma, fascination — these count much more in determining the vitality and survivability of online articles, facts, or ‘’memes.’’&lt;/strong&gt; In the 21st century’s networked knowledge environment, truth will be less and less identified by the imprimatur of expert writers and invisible, omnicompetent editors, but by readers who understand the principles of networked information.” (&lt;a href=&quot;http://www.boston.com/news/globe/ideas/articles/2005/12/18/the_wiki_effect/?page=full&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;“If you read anything about Web 2.0, you’ll inevitably find praise heaped upon Wikipedia as a glorious manifestation of “the age of participation.” Wikipedia is an open-source encyclopedia; anyone who wants to contribute can add an entry or edit an existing one. O’Reilly, in a &lt;a href=&quot;http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html&quot;&gt;new essay&lt;/a&gt; on Web 2.0, says that Wikipedia marks “a profound change in the dynamics of content creation” — a leap beyond the Web 1.0 model of Britannica Online. To Kevin Kelly, Wikipedia shows how the Web is allowing us to pool our individual brains into a great collective mind. It’s a harbinger of the Machine. In theory, Wikipedia is a beautiful thing — it &lt;em&gt;has&lt;/em&gt; to be a beautiful thing if the Web is leading us to a higher consciousness. In reality, though, Wikipedia isn’t very good at all. Certainly, it’s useful — I regularly consult it to get a quick gloss on a subject. &lt;strong&gt;But at a factual level it’s unreliable, and the writing is often appalling. I wouldn’t depend on it as a source, and I certainly wouldn’t recommend it to a student writing a research paper&lt;/strong&gt;.” (&lt;a href=&quot;http://www.roughtype.com/?p=110&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;“To many guardians of the knowledge cathedral — librarians, lexicographers, academics — that’s precisely the problem. Who died and made this guy professor? No pedigreed scholars scrutinize his work. No research assistants check his facts. Should we trust an encyclopedia that allows anyone with a pulse and a mousepad to opine about Jackson Pollock’s place in postmodernism? What’s more, the software that made Wikipedia so easy to build also makes it easy to manipulate and deface. &lt;strong&gt;A former editor at the venerable Encyclopedia Britannica recently likened the site to a public rest room: You never know who used it last.”&lt;/strong&gt; (&lt;a href=&quot;http://www.wired.com/2005/03/wiki/?tw=wn_tophead_5&quot;&gt;source&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Wikipedia is a classic example of how &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;the next big thing often starts out looking like a toy.&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Lessons from the PC video game industry]]></title><description><![CDATA[The future of media is here — it’s just not evenly distributed The success or failure of tech and media products depends on complicated…]]></description><link>https://cdixon.org/2015/10/31/lessons-from-the-pc-video-game-industry</link><guid isPermaLink="false">https://cdixon.org/2015/10/31/lessons-from-the-pc-video-game-industry</guid><pubDate>Sat, 31 Oct 2015 00:00:00 GMT</pubDate><content:encoded>&lt;h2&gt;The future of media is here — it’s just not evenly distributed&lt;/h2&gt;
&lt;p&gt;The success or failure of tech and media products depends on complicated interactions between products, economics, technology, and culture. It’s very hard to predict what will work and what won’t. Today, billions of people carry internet-connected supercomputers in their pockets, the largest knowledge repository in the world is a massive &lt;a href=&quot;https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b&quot;&gt;crowdsourced encyclopedia&lt;/a&gt;, and a social network is one of the &lt;a href=&quot;http://moneymorning.com/2015/06/23/facebook-nasdaq-fb-joins-top-10-companies-by-market-cap/&quot;&gt;10 most valuable companies&lt;/a&gt; in the world. Ten years ago, someone who predicted these things would have seemed crazy.&lt;/p&gt;
&lt;p&gt;The subtitle to this post is a variation of William Gibson’s famous remark: “The future is already here — it’s just not very evenly distributed.” An obvious follow up question is: &lt;em&gt;if the future is already here, where can I find it&lt;/em&gt;? There is no easy answer, but history shows there are characteristic patterns. For example, it’s often useful to look at what the &lt;a href=&quot;/2013/03/03/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years/&quot;&gt;smartest people work on in their free time&lt;/a&gt;, or things that are growing rapidly but &lt;a href=&quot;/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;widely dismissed as toys&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png&quot;
    style=&quot;display: block&quot;
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  &gt;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;An example idea maze (source: startup.stanford.edu)&quot;
        title=&quot;An example idea maze (source: startup.stanford.edu)&quot;
        src=&quot;/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png&quot;
        srcset=&quot;/static/46820c30039bf9890f62289655c2338a/924ad/1luou1d-WIS3t-_oMboptGA.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;An example idea maze (source: startup.stanford.edu)&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Another clue to the future is to look for communities that embrace rapid, Darwinian experimentation. Entrepreneurs are in the business of running experiments (and VCs are in the business of funding experiments). Experiments are how we collectively navigate through the startup &lt;a href=&quot;/2013/08/04/the-idea-maze/&quot;&gt;idea maze&lt;/a&gt; to discover products and business models that work.&lt;/p&gt;
&lt;p&gt;Even if you have no interest in video games, if you are interested in media, you should be interested in &lt;a href=&quot;https://en.wikipedia.org/wiki/PC_game&quot;&gt;PC gaming&lt;/a&gt;. Over the past decade, PC gaming has, for a variety of reasons, become a hotbed of experimentation. These experiments have resulted in a new practices and business models — some of them surprising and counterintuitive — that provide valuable lessons for the rest of the media industry.&lt;/p&gt;
&lt;h2&gt;PC games are way bigger than you think&lt;/h2&gt;
&lt;p&gt;A lot of PC gaming happens on &lt;a href=&quot;http://www.valvesoftware.com/&quot;&gt;Valve Software’s&lt;/a&gt; &lt;a href=&quot;http://store.steampowered.com/&quot;&gt;Steam&lt;/a&gt; platform, which has over &lt;a href=&quot;https://www.vg247.com/2015/02/24/steam-has-over-125-million-active-users-8-9m-concurrent-peak/&quot;&gt;125 million active users&lt;/a&gt;. If you aren’t a gamer, you may not have even heard of Steam, and probably haven’t heard of many it’s roughly 4,500 games, even the most popular ones.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;The types of games on Steam vary widely, as do the business models. The most popular game, &lt;a href=&quot;http://blog.dota2.com/&quot;&gt;Dota 2&lt;/a&gt;, is free. It makes money selling in-app items, mostly “cosmetic items” that alter the appearance of characters.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 591px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/d58a864e3b0ecb58bf4db97637ec326f/a615a/1vgeYrK2Z0GZNm_GljOIibA.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
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    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.28257191201353%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Dota 2&quot;
        title=&quot;Dota 2&quot;
        src=&quot;/static/d58a864e3b0ecb58bf4db97637ec326f/a615a/1vgeYrK2Z0GZNm_GljOIibA.png&quot;
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/static/d58a864e3b0ecb58bf4db97637ec326f/f570f/1vgeYrK2Z0GZNm_GljOIibA.png 341w,
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Dota 2&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Steam takes a revenue share (&lt;a href=&quot;http://forums.steampowered.com/forums/archive/index.php/t-2073030.html&quot;&gt;roughly&lt;/a&gt; 30%) from the games it hosts, and &lt;a href=&quot;http://www.tweaktown.com/news/46666/report-valve-rakes-1-5-billion-revenue-steam-sales-2014/index.html&quot;&gt;reportedly&lt;/a&gt; made $1.5B from its cut last year. (Valve also makes its own games, including some of Steam’s most popular games like Dota 2).&lt;/p&gt;
&lt;p&gt;PC games are a global phenomenon. They are particularly popular in Asia, and above all in South Korea, where they are so popular that the government passed a &lt;a href=&quot;https://en.wikipedia.org/wiki/Shutdown_law&quot;&gt;law&lt;/a&gt; restricting the hours kids could play games, and runs PSAs warning about the dangers of video game addiction:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/73ca87440d60439c88c37c22c11fed27/1hUJ-0zXUe-EZqZUgefY38w.gif&quot;&gt;&lt;/p&gt;
&lt;h2&gt;Putting the “free” back in freemium&lt;/h2&gt;
&lt;p&gt;We’re all familiar with the &lt;a href=&quot;http://avc.com/2006/03/the_freemium_bu/&quot;&gt;freemium&lt;/a&gt; business model popularized by companies like Dropbox: give away something useful, and then charge highly engaged users who want more storage, time, features, etc.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
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    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 49.722222222222214%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;South Park’s take on freemium&quot;
        title=&quot;South Park’s take on freemium&quot;
        src=&quot;/static/066da48a04f9eb5be1c8fa5061620513/8f8c6/12rSlVSIYJjGMEn6m_slbjA.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;South Park’s take on freemium&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The PC gaming world has taken the freemium model to the extreme. In contrast to smartphone games like Candy Crush that are “free-to-play,” PC games like Dota 2 are “free-to-win.” You can’t spend money to get better at the game — that would be seen as corrupting the spirit of fair competition. (PC gamers, like South Park, generally view the smartphone gaming business model as cynical and manipulative). The things you can buy are &lt;a href=&quot;http://www.theverge.com/2015/2/16/8045369/valve-dota-2-in-game-augmentation-pay-to-win&quot;&gt;mostly&lt;/a&gt; cosmetic, like new outfits for your characters or new background soundtracks. &lt;a href=&quot;https://en.wikipedia.org/wiki/League_of_Legends&quot;&gt;League of Legends&lt;/a&gt; (the most popular PC game not on Steam) is estimated to have made &lt;a href=&quot;http://www.pcgamer.com/league-of-legends-has-made-almost-1-billion-in-microtransactions/&quot;&gt;over $1B&lt;/a&gt; last year selling these kinds of cosmetic items.&lt;/p&gt;
&lt;p&gt;PC games are so popular they can also make money from live events. Live gaming competitions have become huge: over 32M people watched the League of Legends championship this year, almost double the number of people who &lt;a href=&quot;http://www.statista.com/statistics/240377/nba-finals-tv-viewership-in-the-united-states/&quot;&gt;watched&lt;/a&gt; the NBA finals.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.03644646924829%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;2014 League of Legends championship&quot;
        title=&quot;2014 League of Legends championship&quot;
        src=&quot;/static/b899945e932959da5aa463eecffac9b3/d6856/18FTKMln2S-EsV7HVhRG_fg.jpg&quot;
        srcset=&quot;/static/b899945e932959da5aa463eecffac9b3/c2e49/18FTKMln2S-EsV7HVhRG_fg.jpg 170w,
/static/b899945e932959da5aa463eecffac9b3/c2dc0/18FTKMln2S-EsV7HVhRG_fg.jpg 341w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;2014 League of Legends championship&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Watching these events online is free, but offline tickets cost $50–$100 each. This is similar to the trend in the music business where concerts have become an increasingly important source of income for musicians. Concert ticket prices have &lt;a href=&quot;https://www.whitehouse.gov/blog/2013/06/12/rock-and-roll-economics-and-rebuilding-middle-class&quot;&gt;increased&lt;/a&gt; dramatically while digital music prices have dropped.&lt;/p&gt;
&lt;p&gt;What the PC game industry figured out is that in a world of abundant media, users have endless choices; instead of fighting for scarcity, fight for attention. Maximize user engagement and money will — with enough experiments — inevitably follow.&lt;/p&gt;
&lt;h2&gt;&lt;strong&gt;Embracing remixes and mods&lt;/strong&gt;&lt;/h2&gt;
&lt;p&gt;In the gaming world, “mods” are user created versions of games or elements of games. Steam has about 4500 games but about &lt;a href=&quot;https://www.vg247.com/2015/02/24/steam-has-over-125-million-active-users-8-9m-concurrent-peak/&quot;&gt;400 million pieces&lt;/a&gt; of user-generated content. Dota itself was &lt;a href=&quot;https://en.wikipedia.org/wiki/Defense_of_the_Ancients#Development&quot;&gt;originally&lt;/a&gt; a user-created mod of another game, &lt;a href=&quot;https://en.wikipedia.org/wiki/Warcraft_III:_Reign_of_Chaos&quot;&gt;Warcraft 3&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Contrast this to the music industry, which relies on litigation to aggressively stifle remixing and experimentation. Large music labels have effectively become law firms devoted to protecting their back catalog. Sometimes this means suing their peers, and sometimes this means suing communities of users.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 665px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 26.466165413533837%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAABIElEQVQY0zVPPUvDUBR90l8guOrQSRAqpTjrpoPiIKUuijiIldqlq7sIFTd/gDj4WxJMYmgSQjXNe9o0oYkmeWkM5uN5o/TAPZwL5x7ORQQTgrE5MrFpgnAch4aU4zhJkjiel17kwUARRVGWZVVVFUUBHg6HgiBgjJFlTQxMHNebep++77ueRynVNE3XdeGZd+xxnmdZlqcwf0jTtCiKf42ue73bs+P7bvvm/KLdPDrcO3h6eGSM/YApi1n2xfIZbKxI8zkgDAwQgTbWavWFSmt58aRaXUIVhNBlpwsVDMMg5MMeG649mk5erfc36EnmsG07CALU2W/urqy26rWr7Z3TxubWeuOu36dRBPdRidgPKJ1901KXFMcx/BWGYZIkv6Ww7M+AwIWqAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1rF9a0NBeGKzovQO059iqIg&quot;
        title=&quot;1rF9a0NBeGKzovQO059iqIg&quot;
        src=&quot;/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png&quot;
        srcset=&quot;/static/7436e93d8bc87e0495eae8133c6ccc35/924ad/1rF9a0NBeGKzovQO059iqIg.png 170w,
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        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;The end result is a strong chilling effect on new experiments. Almost all new music-related tech products are minor variations of preceding products. It’s too risky and expensive to try something genuinely new.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.33333333333333%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;A live DJ session in Turntable.fm&quot;
        title=&quot;A live DJ session in Turntable.fm&quot;
        src=&quot;/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png&quot;
        srcset=&quot;/static/47d4d6dd2b1555909f82675e12ecf0e9/924ad/1aFc0sYHcJ-pTxwD6ddj28A.png 170w,
/static/47d4d6dd2b1555909f82675e12ecf0e9/f570f/1aFc0sYHcJ-pTxwD6ddj28A.png 341w,
/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;A live DJ session in Turntable.fm&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;For example, one of the best music-related experiments in recent history was &lt;a href=&quot;https://en.wikipedia.org/wiki/Turntable.fm&quot;&gt;Turntable.fm&lt;/a&gt;, which invented a brand new way to curate and enjoy music.&lt;/p&gt;
&lt;p&gt;Here’s what the founder said &lt;a href=&quot;https://medium.com/@billychasen/shutting-down-7958dae1d27b&quot;&gt;when the company shut down&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Ultimately, I didn’t heed the lessons of so many failed music startups. It’s an incredibly expensive venture to pursue and a hard industry to work with. We spent more than a quarter of our cash on lawyers, royalties and services related to supporting music. It’s restrictive. We had to shut down our growth because we couldn’t launch internationally. It’s a long road. It took years to get label deals in place and it also took months of engineering time to properly support them (time which could have been spent on product).&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 92.0138888888889%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;One Direction fan fiction on Wattpad&quot;
        title=&quot;One Direction fan fiction on Wattpad&quot;
        src=&quot;/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg&quot;
        srcset=&quot;/static/8df4505f43f950da2b797514199ced65/c2e49/1RDKsjy_D9pZatN1Ef1smZQ.jpg 170w,
/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg 288w&quot;
        sizes=&quot;(max-width: 288px) 100vw, 288px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;One Direction fan fiction on Wattpad&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Remixing books is popular on services like Wattpad where users write fanfiction inspired by books, celebrities, movies, etc. From a &lt;a href=&quot;https://en.wikipedia.org/wiki/Legal_issues_with_fan_fiction&quot;&gt;legal perspective&lt;/a&gt;, some fanfiction could be seen as copyright or trademark infringement. From a business perspective, the book industry would be smart to learn from the PC gaming business. Instead of fighting over pieces of a &lt;a href=&quot;http://mic.com/articles/91697/you-ll-be-shocked-at-how-much-time-young-people-spend-reading-each-day#.CeR7XhAsn&quot;&gt;shrinking pie&lt;/a&gt;, try to grow the pie by getting more people to read and write books.&lt;/p&gt;
&lt;p&gt;Another form of video game remixing happens on broadcasting sites like &lt;a href=&quot;http://www.twitch.tv/&quot;&gt;Twitch&lt;/a&gt;, where you can watch live videos of people playing games (while they chat with the audience — the end result is an interesting mix between video games and talk radio).&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.27777777777778%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAACAElEQVQozy2RS3PTMBSFvWGAJLKkK8l6y4rt2I6bJk3btCHtMAPtsKD0tWYLW2bYs+Iv8IeRKTNn7oyO7qd7JGW07Hm9SXUGUPR7ffpZn3ySR9dQLuXywKtj0WzsyYd49Zxq0Z3Jfmc27/3Fl3h4ysAvkDBIyBklWHnWnPqLe7ncE1267Q3YmsWu6Hbl5UM8PKrhUh9f+8v7Ufv7jJmQAyCASY5fTycTjEW9SgAvW320R4wjrrAuZX+uVlei3erVoXz3YLY3dnubUWNBGyJkzlg6AgtBlaJKg3W5EGMioZOmXKWKCotNpL4mKlDfZCOpNfOeWUuUpsrQ5CiDpSYm5irM/mNmKsyMqSmTE8oQk1TZjFmXhlDjwAVwnmpP1bgk2r7AYzeM4ZG0xFbElFiGpDQ842UPoQVXp1asQtqjOhIdqKvpPzPnBeYSJQn9kpbFgZUdNSGjtk7vgaVPZMqWbkV0BFexsAAbU35EECKzHOgYgclcWqodaAvKZDT1xV7Ml7waRsVOzFseKuYj81XiMS8Qnr5C+MfXj7++372hghnHQgMuZkU9FIuVaNayPlLNIOYNDxESWTaiWqZvE7GXziPOf3+7/fPz+W3hxWJtDo+i32V83hbDTrSnqmrNvIYw52XFqiE5vD1X7YlpVrbquNJPt2f7dZObCN2O9+cQF38BFG5MYezAfKMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Fallout 4 player on Twitch.tv&quot;
        title=&quot;Fallout 4 player on Twitch.tv&quot;
        src=&quot;/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png&quot;
        srcset=&quot;/static/fb7cfa48decc89695a87f9f61905cb47/924ad/1tc2aabGj2sMt9A4lAOzO7g.png 170w,
/static/fb7cfa48decc89695a87f9f61905cb47/f570f/1tc2aabGj2sMt9A4lAOzO7g.png 341w,
/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png 360w&quot;
        sizes=&quot;(max-width: 360px) 100vw, 360px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Fallout 4 player on Twitch.tv&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If you ask people who watch Twitch why they do so, many will say that it’s easier and cheaper than playing the game themselves. Legally, it would probably be easy for the games industry to crack down on broadcasting, but instead they have encouraged it, seeing it as a new way to engage users and generate revenue.&lt;/p&gt;
&lt;h2&gt;Crowdfunding and user feedback&lt;/h2&gt;
&lt;p&gt;PC gaming has enthusiastically embraced crowdfunding. On Kickstarter, video games (most of of which PC games) is the &lt;a href=&quot;https://www.kickstarter.com/help/stats&quot;&gt;highest-funded category&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 503px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e923419242b1efcc9bc17ae40c549422/d6c85/1NIzpyJz5DoKssFW71_nIoQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 46.918489065606366%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1NIzpyJz5DoKssFW71 nIoQ&quot;
        title=&quot;1NIzpyJz5DoKssFW71 nIoQ&quot;
        src=&quot;/static/e923419242b1efcc9bc17ae40c549422/d6c85/1NIzpyJz5DoKssFW71_nIoQ.png&quot;
        srcset=&quot;/static/e923419242b1efcc9bc17ae40c549422/924ad/1NIzpyJz5DoKssFW71_nIoQ.png 170w,
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;And this doesn’t count all the games crowdfunded elsewhere, including the largest crowdfunding project ever: a PC game called &lt;a href=&quot;https://robertsspaceindustries.com/&quot;&gt;Star Citizen&lt;/a&gt; that has raised over $94 million from over 1 million users.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/041851246586ebdb96a40839336e645e/2bff6/1_LGj50-ex36_uGEqRsWw_A.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.19444444444444%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Star Citizen has 4M comments in its user forums&quot;
        title=&quot;Star Citizen has 4M comments in its user forums&quot;
        src=&quot;/static/041851246586ebdb96a40839336e645e/2bff6/1_LGj50-ex36_uGEqRsWw_A.png&quot;
        srcset=&quot;/static/041851246586ebdb96a40839336e645e/924ad/1_LGj50-ex36_uGEqRsWw_A.png 170w,
/static/041851246586ebdb96a40839336e645e/f570f/1_LGj50-ex36_uGEqRsWw_A.png 341w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Star Citizen has 4M comments in its user forums&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The money that comes from crowdfunding is obviously important, but just as important is the user participation it fosters. Almost all crowdfunded video game projects are accompanied by extremely active user discussion forums.&lt;/p&gt;
&lt;p&gt;A close cousin to crowdfunding is the trend of pre-releasing games before they are finished. Minecraft is probably the most famous PC game that succeeded during pre-release, selling over a million copies while &lt;a href=&quot;https://en.wikipedia.org/wiki/Minecraft#Reception&quot;&gt;still in beta&lt;/a&gt;. In 2015, &lt;a href=&quot;http://www.gamesindustry.biz/articles/2015-09-02-half-of-steams-million-sellers-in-2015-are-on-early-access?utm_source=newsletter&amp;#x26;utm_medium=email&amp;#x26;utm_campaign=european-daily&quot;&gt;three of the six top selling games&lt;/a&gt; on Steam were pre-release (these three games were not free-to-play, which means users paid $10-$20 to buy them despite the games being incomplete and buggy). The developers get the benefit of continuous user feedback, and users get to play and contribute to games they love.&lt;/p&gt;
&lt;p&gt;Another way to describe what’s going on here is a shift from a &lt;em&gt;wholesale&lt;/em&gt; to a &lt;em&gt;retail&lt;/em&gt; media model. As Buzzfeed’s Jonah Peretti &lt;a href=&quot;https://www.youtube.com/watch?v=8N5jJYswREM&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The big problem with traditional media is you create content and get back money, but you don’t have any relationship with the consumer that gives you back knowledge or data to get better over time. We like to be in places where the model is to have ideas and be able to test those ideas with real audiences. It’s both an art and science — you learn and get better. That means thinking of media as a service and not just a product. Tech companies tend to think of themselves as retailers where they know what is the customer doing. Traditional media company think themselves wholesalers. They will essentially sell into any window — whoever pays them the most. A retailer wants to understand the customer and wants understand their experience.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Companies like BuzzFeed pioneered the retail model for ad-supported media. The PC games industry pioneered the retail model for transaction-supported media.&lt;/p&gt;
&lt;h2&gt;Peeking into the future&lt;/h2&gt;
&lt;p&gt;Software is &lt;a href=&quot;http://www.wsj.com/articles/SB10001424053111903480904576512250915629460&quot;&gt;eating&lt;/a&gt; the world, and the internet is &lt;a href=&quot;http://qz.com/416416/we-now-spend-more-than-eight-hours-a-day-consuming-media/&quot;&gt;eating media&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/67f3329b3d28aa438930b751a8c69fe9/2bff6/1K4ItafU0ybT5arlf3P_8hw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 48.611111111111114%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1K4ItafU0ybT5arlf3P 8hw&quot;
        title=&quot;1K4ItafU0ybT5arlf3P 8hw&quot;
        src=&quot;/static/67f3329b3d28aa438930b751a8c69fe9/2bff6/1K4ItafU0ybT5arlf3P_8hw.png&quot;
        srcset=&quot;/static/67f3329b3d28aa438930b751a8c69fe9/924ad/1K4ItafU0ybT5arlf3P_8hw.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Older forms of media — TV, movies, books, music, etc — can thrive in this new world. By 2020, four billion people worldwide &lt;a href=&quot;http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world&quot;&gt;will have&lt;/a&gt; internet-connected smartphones. The addressable market for media companies is orders-of-magnitude larger than ever before.&lt;/p&gt;
&lt;p&gt;It is possible for companies to adapt even within industries dominated by old models. For example, Netflix has successfully applied the retail media model to an industry segment dominated by wholesalers:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“We are just a learning machine. Every time we put out a new show, we are analyzing it, figuring out what worked and what didn’t so we get better next time.” — &lt;a href=&quot;http://www.businessinsider.com/netflix-ceo-says-all-tv-will-be-on-internet-in-10-to-20-years-2015-9&quot;&gt;Reed Hastings, Netflix&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The internet renders business models focused on scarcity and litigation obsolete. But, as the PC gaming market shows, it also unlocks lucrative new business models, and lets creators connect with consumers in new and exciting ways.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Gordon Moore on self-driving cars]]></title><description><![CDATA[“I never thought I’d see autonomous automobiles driving on the freeways. It wasn’t many years ago they put out a request to see who could…]]></description><link>https://cdixon.org/2015/10/23/gordon-moore-on-self-driving-cars</link><guid isPermaLink="false">https://cdixon.org/2015/10/23/gordon-moore-on-self-driving-cars</guid><pubDate>Fri, 23 Oct 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“I never thought I’d see autonomous automobiles driving on the freeways. It wasn’t many years ago [they] put out a request to see who could build a car that could go across the Mojave Desert to Las Vegas from a place in Southern California, and several engineering teams across the country set out to do this. Nobody got more than about 300 yards before there was a problem. Two years later, they made the full 25-mile trip across this desert track, and which I thought was a huge achievement, and from that it was just a blink before they were driving on the freeways.”&lt;/p&gt;
&lt;p&gt;source: &lt;a href=&quot;http://www.nytimes.com/2015/05/13/opinion/thomas-friedman-moores-law-turns-50.html?mabReward=CTM&amp;#x26;action=click&amp;#x26;pgtype=Homepage&amp;#x26;region=CColumn&amp;#x26;module=Recommendation&amp;#x26;src=rechp&amp;#x26;WT.nav=RecEngine&amp;#x26;_r=1&quot;&gt;NYTimes&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[One man came to Mozart and asked him how to write a symphony.]]></title><description><![CDATA[One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You…]]></description><link>https://cdixon.org/2015/10/17/one-man-came-to-mozart-and-asked-him-how-to-write-a-symphony</link><guid isPermaLink="false">https://cdixon.org/2015/10/17/one-man-came-to-mozart-and-asked-him-how-to-write-a-symphony</guid><pubDate>Sat, 17 Oct 2015 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You were writing symphonies when you were 10 years of age, and I am 21.” Mozart said, “Yes, but I didn’t run around asking people how to do it.”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;a href=&quot;http://25iq.com/2015/10/10/a-dozen-things-ive-learned-from-charlie-munger-about-moats/&quot;&gt;source&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Keybase: bringing public-key cryptography to mainstream users]]></title><description><![CDATA[Today I’m excited to announce that a16z is leading a $10.8M Series A financing of Keybase, a company that is trying to make the internet…]]></description><link>https://cdixon.org/2015/06/27/keybase-bringing-public-key-cryptography-to-mainstream-users</link><guid isPermaLink="false">https://cdixon.org/2015/06/27/keybase-bringing-public-key-cryptography-to-mainstream-users</guid><pubDate>Sat, 27 Jun 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Today I’m excited to &lt;a href=&quot;https://keybase.io/blog/2015-07-15/keybase-raises-series-a&quot;&gt;announce&lt;/a&gt; that &lt;a href=&quot;http://www.a16z.com&quot;&gt;a16z&lt;/a&gt; is leading a $10.8M Series A financing of &lt;a href=&quot;http://www.keybase.io&quot;&gt;Keybase&lt;/a&gt;, a company that is trying to make the internet more secure by making public-key cryptography accessible to mainstream internet users. I’ll be joining Keybase’s board.&lt;/p&gt;
&lt;p&gt;Almost every day we read about another major internet security breach. Recent examples include the &lt;a href=&quot;https://en.wikipedia.org/wiki/Sony_Pictures_Entertainment_hack&quot;&gt;Sony Pictures hack&lt;/a&gt;, in which confidential business emails were stolen and made public, and the &lt;a href=&quot;https://en.wikipedia.org/wiki/2014_celebrity_photo_hack&quot;&gt;Apple iCloud hack&lt;/a&gt;, in which private celebrity photos were stolen and made public.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 571px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 31.698774080560423%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Major security breaches have become frighteningly common&quot;
        title=&quot;Major security breaches have become frighteningly common&quot;
        src=&quot;/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png&quot;
        srcset=&quot;/static/1b25886d5c0baf31e8b217c7a5709e5e/924ad/15bwgo_w6Ppmx1hZBY-UqaQ.png 170w,
/static/1b25886d5c0baf31e8b217c7a5709e5e/f570f/15bwgo_w6Ppmx1hZBY-UqaQ.png 341w,
/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png 571w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Major security breaches have become frighteningly common&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Hackers are increasingly sophisticated, with the skills and resources to penetrate security systems that were developed mostly for a prior generation of threats. People are — quite justifiably — starting to question whether they can trust technology companies with their private information.&lt;/p&gt;
&lt;p&gt;This is happening despite the fact that technology exists that can provide complete end-to-end security: public-key cryptography. Public-key cryptography was invented by mathematicians and computer scientists in the 1970s. It is hard to overstate the significance of this invention. As MIT computer science professor &lt;a href=&quot;http://www.scottaaronson.com/&quot;&gt;Scott Aaronson&lt;/a&gt; &lt;a href=&quot;http://www.scottaaronson.com/democritus/lec8.html&quot;&gt;explains&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Even though cryptography has influenced human affairs for millennia, developments over the last thirty years have completely — yes, completely — changed our understanding of it. If you plotted when the basic mathematical discoveries in cryptography were made, you’d see a few in antiquity, maybe a few from the Middle Ages till the 1800&apos;s, one in the 1920&apos;s (the one-time pad), a few more around World War II, and then, after the birth of computational complexity theory in the 1970&apos;s, &lt;strong&gt;boom boom boom boom boom boom boom&lt;/strong&gt;…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Using public-key cryptography, person A can send person B a message that &lt;em&gt;nobody else in the world&lt;/em&gt; except person B can decrypt, even though persons A and B have never communicated before. Person A simply needs to know person B’s “public key” (a long number that can be listed in public) and use that to encrypt the message. Person B uses a “private key” (another long number that has a mathematical relationship to the public key and is kept private) to decrypt the m tessage.&lt;/p&gt;
&lt;p&gt;Public-key cryptography means you don’t need to trust email providers, messaging companies, social networks, search engines, ISPs, cellular carriers, venture capitalists, tech startups, politicians, legal agreements, IT departments, and so on. You just need to trust math.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 144px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 100%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1zKRxnaArGgVXMV4daSk5nA&quot;
        title=&quot;1zKRxnaArGgVXMV4daSk5nA&quot;
        src=&quot;/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg&quot;
        srcset=&quot;/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg 144w&quot;
        sizes=&quot;(max-width: 144px) 100vw, 144px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;So why isn’t public-key cryptography widely used? It is, but in diluted form: various forms of cryptography are baked into almost every popular internet service. Yet the hacks and data breaches continue, mainly because the otherwise invulnerable cryptographic protocols are embedded within larger systems in which vulnerabilities are introduced by software bugs, employee mistakes, product design tradeoffs, legal constraints, management decisions, etc.&lt;/p&gt;
&lt;p&gt;The ideal solution would be for users to adopt public-key cryptography themselves, in its pure, unadulterated form, without having to trust third-party service providers. Today, you’ll see this being done on occasion by more tech-savvy internet users. For example, here is &lt;a href=&quot;https://twitter.com/kashhill&quot;&gt;Kashmir Hill&lt;/a&gt;, an investigative journalist for &lt;a href=&quot;http://fusion.net/&quot;&gt;Fusion&lt;/a&gt;, publishing her &lt;a href=&quot;https://twitter.com/kashhill/status/583653381408849921&quot;&gt;public key&lt;/a&gt; on Twitter:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 31.25%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;A journalist publishing her public key&quot;
        title=&quot;A journalist publishing her public key&quot;
        src=&quot;/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png&quot;
        srcset=&quot;/static/1ffc538e44e9b6ce30a2b84c2e0f85de/924ad/1x40yC4iozcm4U_GeKtQFsw.png 170w,
/static/1ffc538e44e9b6ce30a2b84c2e0f85de/f570f/1x40yC4iozcm4U_GeKtQFsw.png 341w,
/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png 432w&quot;
        sizes=&quot;(max-width: 432px) 100vw, 432px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;A journalist publishing her public key&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;To send her an encrypted message, however, you’d have use software tools that are generally too complicated and cumbersome for mainstream internet users. As a result, public-key cryptography is mostly limited to a small circle of tech savvy security enthusiasts.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 180px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 134.44444444444446%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;xkcd.com/1269/&quot;
        title=&quot;xkcd.com/1269/&quot;
        src=&quot;/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png&quot;
        srcset=&quot;/static/063e3b69a7ec2d6b291dce71fe66bd43/924ad/1h4wTN_yogOBTiUJp8fj1FQ.png 170w,
/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png 180w&quot;
        sizes=&quot;(max-width: 180px) 100vw, 180px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;xkcd.com/1269/&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The idea behind Keybase is to make public-key cryptography accessible to everyday internet users. Keybase is, at its core, a database that connects people’s social media identities to their public cryptographic keys. For example, here’s the Keybase profile for &lt;a href=&quot;http://www.stripe.com&quot;&gt;Stripe&lt;/a&gt; co-founder &lt;a href=&quot;http://www.keybase.io/pc&quot;&gt;Patrick Collison&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 45.238095238095234%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Patrick’s keybase profile&quot;
        title=&quot;Patrick’s keybase profile&quot;
        src=&quot;/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png&quot;
        srcset=&quot;/static/df9215941e799a4d7e6271855d2998fe/924ad/1OQich6uTLM8k7Hc1aBlWNg.png 170w,
/static/df9215941e799a4d7e6271855d2998fe/f570f/1OQich6uTLM8k7Hc1aBlWNg.png 341w,
/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png 504w&quot;
        sizes=&quot;(max-width: 504px) 100vw, 504px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Patrick’s keybase profile&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Each identity listed on his profile has been cryptographically verified to be owned by Patrick (other people can verify this for themselves by following the links on the page). So if you interact with Patrick as, say, &lt;em&gt;patrickc&lt;/em&gt; on Twitter, you know the public key listed here is owned by the same person.&lt;/p&gt;
&lt;p&gt;There are many things you can do with public-key cryptography besides sending messages. You can share files with individuals or with groups. You can verify that a file was created by the stated author and wasn’t altered (this use case is common with software developers who want to verify code they download doesn’t contain malware). In the future, you should also be able to use public-key cryptography to login to websites instead of having to remember passwords (this is already common behavior among developers who use cryptographic methods to login to servers)&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 23.61111111111111%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Keybase is developing native apps&quot;
        title=&quot;Keybase is developing native apps&quot;
        src=&quot;/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png&quot;
        srcset=&quot;/static/357754298b0e01ebae9cd8a6b321fade/924ad/12RYi_5_AA0Q2il0DPTk-kQ.png 170w,
/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png 216w&quot;
        sizes=&quot;(max-width: 216px) 100vw, 216px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Keybase is developing native apps&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;A database by itself is useful to only the most tech savvy users. So Keybase is also building a set of applications to complement the database. These include native software clients for all the major platforms (iOS, Android, OS X, Linux, and Windows) that make it easy to do secure messaging and file sharing using the Keybase directory. Keybase will remain in invite-only private beta until the client software is ready.&lt;/p&gt;
&lt;p&gt;A key design principle of Keybase is: &lt;em&gt;you don’t have to trust Keybase&lt;/em&gt;. All the relevant software is open source and therefore independently auditable, fork-able, etc. The keybase directory is fully public and therefore also fully auditable, fork-able, etc. Everything you need to verify that you can trust the end-to-end cryptography is open and auditable. Keybase could get hacked or acquired or shut down and it wouldn’t affect the security of anything that uses Keybase. You don’t need to trust Keybase. &lt;strong&gt;You only need to trust math.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 144px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 84.72222222222221%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;Chris and Max&quot;
        title=&quot;Chris and Max&quot;
        src=&quot;/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png&quot;
        srcset=&quot;/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png 144w&quot;
        sizes=&quot;(max-width: 144px) 100vw, 144px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Chris and Max&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The founders of Keybase, &lt;a href=&quot;https://keybase.io/chris&quot;&gt;Chris Coyne&lt;/a&gt; and &lt;a href=&quot;https://keybase.io/max&quot;&gt;Max Krohn&lt;/a&gt;, met at Harvard where they studied math and computer science and started their first company, &lt;a href=&quot;https://en.wikipedia.org/wiki/SparkNotes&quot;&gt;SparkNotes&lt;/a&gt;. Max also got his PhD from MIT where he &lt;a href=&quot;http://pdos.csail.mit.edu/~max/pubs/&quot;&gt;focused&lt;/a&gt; on security and file systems. Chris and Max and two other friends then founded &lt;a href=&quot;https://en.wikipedia.org/wiki/OkCupid&quot;&gt;OKCupid&lt;/a&gt;, where Chris and Max ran product and technology up until the company was acquired by Match.com in 2011. Chris and Max have both technical depth and consumer design savvy, an ideal combination for a project like Keybase.&lt;/p&gt;
&lt;p&gt;Many of the best internet services were derived from ideas that came from Unix and the Unix-related academic and open-source communities:&lt;/p&gt;
&lt;p&gt;Entrepreneurs have had considerable success adapting these amazing tools for mainstream use. Public-key cryptography has been cloistered within niche technical communities for too long. The time is right to bring it to the mainstream. We are thrilled to back the Keybase team on their mission to make that happen.&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;1n7G6jdQsTC9NeaMsLy7SyQ&quot;
        title=&quot;1n7G6jdQsTC9NeaMsLy7SyQ&quot;
        src=&quot;/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png&quot;
        srcset=&quot;/static/2c96826c661493d83d7e4577316b381f/924ad/1n7G6jdQsTC9NeaMsLy7SyQ.png 170w,
/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png 288w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Keybase is hiring — more info &lt;a href=&quot;https://keybase.io/jobs&quot;&gt;here&lt;/a&gt;.&lt;/strong&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The Babe Ruth Effect in Venture Capital]]></title><description><![CDATA["How to hit home runs: I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can…]]></description><link>https://cdixon.org/2015/06/07/the-babe-ruth-effect-in-venture-capital</link><guid isPermaLink="false">https://cdixon.org/2015/06/07/the-babe-ruth-effect-in-venture-capital</guid><pubDate>Sun, 07 Jun 2015 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;&quot;How to hit home runs: I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can swing it through the ball, and the farther the ball will go. I swing big, with everything I&apos;ve got. I hit big or I miss big.&quot;&lt;/p&gt;
&lt;p&gt;— Babe Ruth&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;One of the hardest concepts to internalize for those new to VC is what is known as the “Babe Ruth effect”:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Building a portfolio that can deliver superior performance requires that you evaluate each investment using expected value analysis. What is striking is that the leading thinkers across varied fields — including horse betting, casino gambling, and investing — all emphasize the same point. We call it the Babe Ruth effect: even though Ruth struck out a lot, he was one of baseball’s greatest hitters.&lt;/p&gt;
&lt;p&gt;— &quot;The Babe Ruth Effect: Frequency vs Magnitude” [&lt;a href=&quot;http://turtletrader.com/pdfs/babe-ruth.pdf&quot;&gt;pdf&lt;/a&gt;]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The Babe Ruth effect occurs in many categories of investing, but is especially pronounced in VC. As Peter Thiel &lt;a href=&quot;http://25iq.com/2014/07/13/a-dozen-things-ive-learned-from-peter-thiel/&quot;&gt;observes&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Actual [venture capital] returns are incredibly skewed. The more a VC understands this skew pattern, the better the VC. Bad VCs tend to think the dashed line is flat, i.e. that all companies are created equal, and some just fail, spin wheels, or grow. In reality you get a power law distribution.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The Babe Ruth effect is hard to internalize because people are generally predisposed to avoid losses. Behavioral economists have famously &lt;a href=&quot;http://en.wikipedia.org/wiki/Loss_aversion&quot;&gt;demonstrated&lt;/a&gt; that people feel a lot worse about losses of a given size than they feel good about gains of the same size. Losing money feels bad, even if it is part of an investment strategy that succeeds in aggregate.&lt;/p&gt;
&lt;p&gt;People usually cite anecdotal cases when discussing this topic, because it&apos;s difficult to get access to comprehensive VC performance data. &lt;a href=&quot;http://www.horsleybridge.com/&quot;&gt;Horsley Bridge&lt;/a&gt;, a highly respected investor (Limited Partner) in many VC funds, was kind enough to share with me aggregated, anonymous historical data on the distribution of investment returns across the hundreds of VC funds they&apos;ve invested in since 1985.&lt;/p&gt;
&lt;p&gt;As expected, the returns are highly concentrated: about ~6% of investments representing 4.5% of dollars invested generated ~60% of the total returns. Let&apos;s dig into the data a little more to see what separates good VC funds from bad VC funds.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Home runs:&lt;/em&gt; As expected, successful funds have more &quot;home run&quot; investments (defined as investments that return &gt;10x):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screenshot-2015-06-06-11-55-45.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 65.44240400667779%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screenshot 2015 06 06 11 55 45&quot;
        title=&quot;screenshot 2015 06 06 11 55 45&quot;
        src=&quot;/static/0f6e844996f72f89dbefb507ac6e0945/94a55/screenshot-2015-06-06-11-55-45.png&quot;
        srcset=&quot;/static/0f6e844996f72f89dbefb507ac6e0945/924ad/screenshot-2015-06-06-11-55-45.png 170w,
/static/0f6e844996f72f89dbefb507ac6e0945/f570f/screenshot-2015-06-06-11-55-45.png 341w,
/static/0f6e844996f72f89dbefb507ac6e0945/94a55/screenshot-2015-06-06-11-55-45.png 681w,
/static/0f6e844996f72f89dbefb507ac6e0945/e8f76/screenshot-2015-06-06-11-55-45.png 1022w,
/static/0f6e844996f72f89dbefb507ac6e0945/2b6f6/screenshot-2015-06-06-11-55-45.png 1198w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
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      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(For all the charts shown, the X-axis is the performance of the VC funds: great VC funds are on the right and bad funds are on the left.)&lt;/p&gt;
&lt;p&gt;Great funds not only have more home runs, they have home runs of greater magnitude. Here&apos;s a chart that looks at the average performance of the &quot;home run&quot; (&gt;10x) investments:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screenshot-2015-06-06-11-55-55.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 60.930232558139544%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAABG0lEQVQoz41S23KEIAz1//+uD+1DZ6drZQXFsnSVcAcbL+OsPnQNDHO4nJyQpBjHMedsrR1PG75fQHHYv6CN0zOmysHLlZxSijGelNVBUfW1eCmEEIQQrfUZZszxNlxCcmvYjLGqql5Gvki1QJT/3bYF57yua+fcgZxnSzim8+lK2o7DbZcwDPt/5ZSjS4ZrcpFvm+ZKbhpWlqWPFnxvApigByd1GHRUP5peH+8tVFzfpOXo4uC38N4HH4VqyfApDMNZPj4a+Ja2RRf4w5jD87d35OecrHPDaQ4bUxwjlnNKwWzHJlEKpLwbowEUpbW4C2tN3/eUUgDA/uu6DjFW1BiDacJ112GbP9RBHEJAAhYCy4EYT7ZGWvQR/AFDIL9s6Bn47QAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screenshot 2015 06 06 11 55 55&quot;
        title=&quot;screenshot 2015 06 06 11 55 55&quot;
        src=&quot;/static/38e297c82eed5b8ebfad830f87fa5251/94a55/screenshot-2015-06-06-11-55-55.png&quot;
        srcset=&quot;/static/38e297c82eed5b8ebfad830f87fa5251/924ad/screenshot-2015-06-06-11-55-55.png 170w,
/static/38e297c82eed5b8ebfad830f87fa5251/f570f/screenshot-2015-06-06-11-55-55.png 341w,
/static/38e297c82eed5b8ebfad830f87fa5251/94a55/screenshot-2015-06-06-11-55-55.png 681w,
/static/38e297c82eed5b8ebfad830f87fa5251/e8f76/screenshot-2015-06-06-11-55-55.png 1022w,
/static/38e297c82eed5b8ebfad830f87fa5251/8d6e5/screenshot-2015-06-06-11-55-55.png 1290w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;The home runs for good funds are around 20x, but the home runs for great funds are almost 70x. As Bill Gurley &lt;a href=&quot;http://25iq.com/2013/09/09/a-dozen-things-ive-learned-from-bill-gurley-about-investing-and-business/&quot;&gt;says&lt;/a&gt;: “Venture capital is not even a home run business. It’s a grand slam business.&quot;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Strikeouts:&lt;/em&gt; The Y-axis on the this chart is the percentage of investments that lose money:&lt;a href=&quot;images/screen-shot-2015-05-25-at-9-48-04-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 65.43859649122807%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 25 at 9 48 04 pm&quot;
        title=&quot;screen shot 2015 05 25 at 9 48 04 pm&quot;
        src=&quot;/static/2c25c398e5f89ee7ab732eae076e0a54/94a55/screen-shot-2015-05-25-at-9-48-04-pm.png&quot;
        srcset=&quot;/static/2c25c398e5f89ee7ab732eae076e0a54/924ad/screen-shot-2015-05-25-at-9-48-04-pm.png 170w,
/static/2c25c398e5f89ee7ab732eae076e0a54/f570f/screen-shot-2015-05-25-at-9-48-04-pm.png 341w,
/static/2c25c398e5f89ee7ab732eae076e0a54/94a55/screen-shot-2015-05-25-at-9-48-04-pm.png 681w,
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        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;This is the same chart with the Y-axis weighted by dollars invested per investment:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/4ce52870185b61838bc37f4e0d0a560f/4db5f/screen-shot-2015-05-25-at-9-45-05-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.64646464646465%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 25 at 9 45 05 pm&quot;
        title=&quot;screen shot 2015 05 25 at 9 45 05 pm&quot;
        src=&quot;/static/4ce52870185b61838bc37f4e0d0a560f/94a55/screen-shot-2015-05-25-at-9-45-05-pm.png&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;As expected, lots of investments lose money. Venture capital is a risky business.&lt;/p&gt;
&lt;p&gt;Notice that the curves are U-shaped. It isn&apos;t surprising that the bad funds lose money a lot, or that the good funds lose money less often than the bad funds. What is interesting and perhaps surprising is that the great funds lose money more often than good funds do&lt;em&gt;.&lt;/em&gt; The best VCs funds truly do exemplify the Babe Ruth effect: they swing hard, and either hit big or miss big. You can&apos;t have grand slams without a lot of strikeouts.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Exponential curves feel gradual and then sudden]]></title><description><![CDATA["How did you go bankrupt?" "Two ways. Gradually, then suddenly.” – Ernest Hemingway, The Sun Also Rises The core growth process in the…]]></description><link>https://cdixon.org/2015/05/12/exponential-curves-feel-gradual-and-then-sudden</link><guid isPermaLink="false">https://cdixon.org/2015/05/12/exponential-curves-feel-gradual-and-then-sudden</guid><pubDate>Tue, 12 May 2015 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;&quot;How did you go bankrupt?&quot; &quot;Two ways. Gradually, then suddenly.”&lt;/p&gt;
&lt;p&gt;– Ernest Hemingway, The Sun Also Rises&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The core &lt;a href=&quot;http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;growth&lt;/a&gt; &lt;a href=&quot;https://twitter.com/cdixon/status/551943341563457538&quot;&gt;process&lt;/a&gt; in the technology business is a mutually reinforcing, multi-step, positive feedback loop between platforms and applications.  This leads to exponential growth curves (Peter Thiel calls them &lt;a href=&quot;http://blakemasters.com/post/21869934240/peter-thiels-cs183-startup-class-7-notes-essay&quot;&gt;power law&lt;/a&gt; curves), which in idealized form look like:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-5-46-11-pm1.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 59.227467811158796%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAAAu0lEQVQoz52S6QqEIBSFe/8njHSElH7Zhpn7MjdhYoYYyC4XUTnH76A2Oef0qMDY5PpKIeTTXIGLEfS678O+PyEn5zQh9eSCdeNoGCvHpLrYIFYYRWNSSXE7dnE6zk9sRexD5v3ettH7VCw3yCD6OBVCfl1P7C8ZJqUv9uSWBZhuno9ljH8+CexZG7WOSkEHKS1j8DCGUti/xmoU5xulchgEIaLrBEIbxseIkMAvPU1GSg9XBWWt+yowvwFQFcPtyt2pjwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 5 46 11 pm1&quot;
        title=&quot;screen shot 2015 05 12 at 5 46 11 pm1&quot;
        src=&quot;/static/1d6abd11f72e426e83625e0d5a2592cc/94a55/screen-shot-2015-05-12-at-5-46-11-pm1.png&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;The most prominent recent &lt;a href=&quot;http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world&quot;&gt;example&lt;/a&gt; of this was the positive feedback loop between smartphones (iOS and Android phones) and smartphone apps (FB, WhatsApp, etc):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-6-05-30-pm1.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 55.047318611987386%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 6 05 30 pm1&quot;
        title=&quot;screen shot 2015 05 12 at 6 05 30 pm1&quot;
        src=&quot;/static/f44307318457ff0b7d5fed7eccfed059/94a55/screen-shot-2015-05-12-at-6-05-30-pm1.png&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;After the fact, exponential curves look relatively smooth. When you are in the midst of them, however, they feel like they are divided into two stages: gradual and sudden.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-5-48-37-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 634px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 61.82965299684543%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAABHUlEQVQoz5VSy4qDMBT1/3/HzVDGdjEIU5y6cNdqq9U0KW1KpI8kJkbnasCRUhx6kMs193FODnFMj+Z9tG3raK1t9hJQGm+3+VB1lFJ1XU8zPMFIqSj9n5lznuc5xpgxBjFNU1oykRe6LKeYrTxK6WKx8H0/iiLP81zXDcPwniRtX31Hdp/ry6U6HOxvNzxtGKy2hlnfHnEMd35tGDTYbpsMk02vUyJUEdItHWRPMI8Fq/OZ73bj427YemNXbOL4cz7/Wa2+g+DL9z9msyAMQafY70WWtU+PRGltYF4I+BrOS0KK9Rpvt0kUoU2cBEGxXMos04wNEv6YdV3L2+1xPPLT6Y6QQEgRIjGGCK6a69VUFfRoAxQd4F3YCHp/AZ0dt1RGdfEdAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 5 48 37 pm&quot;
        title=&quot;screen shot 2015 05 12 at 5 48 37 pm&quot;
        src=&quot;/static/ab2268105f124d6bee4cbf8d62639d62/24a49/screen-shot-2015-05-12-at-5-48-37-pm.png&quot;
        srcset=&quot;/static/ab2268105f124d6bee4cbf8d62639d62/924ad/screen-shot-2015-05-12-at-5-48-37-pm.png 170w,
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      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Singularity University &lt;a href=&quot;http://www.evolutionpartners.com.au/exponential-growth-vs-linear-thinking-in-management-teams.html&quot;&gt;calls&lt;/a&gt; this the &quot;deception of linear vs exponential growth&quot;:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/3125e31111d353e83b375066eb7fce95/3b243/linear-vs-exponential-1024x658-1.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.2578125%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;linear vs exponential 1024x658 1&quot;
        title=&quot;linear vs exponential 1024x658 1&quot;
        src=&quot;/static/3125e31111d353e83b375066eb7fce95/94a55/linear-vs-exponential-1024x658-1.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Today, smartphone growth seems obviously exponential. But just a few years ago many people thought smartphones were growing linearly. Even Mark Zuckerberg underestimated the importance of mobile in the &quot;feels gradual&quot; phase. In 2011 or so, he realized what we were experiencing was actually an exponential curve, and consequently dramatically increased Facebook&apos;s investment in mobile:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-05-12-at-6-19-33-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 56.31825273010921%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 05 12 at 6 19 33 pm&quot;
        title=&quot;screen shot 2015 05 12 at 6 19 33 pm&quot;
        src=&quot;/static/07acec0e2013aa43c6f5c609f2003eb8/94a55/screen-shot-2015-05-12-at-6-19-33-pm.png&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Exponential growth curves in the &quot;feels gradual&quot; phase are deceptive. There are many things happening today in technology that feel gradual and disappointing but will soon feel sudden and amazing.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Proprietary services vs open protocols]]></title><link>https://cdixon.org/2015/04/12/proprietary-services-vs-open-protocols</link><guid isPermaLink="false">https://cdixon.org/2015/04/12/proprietary-services-vs-open-protocols</guid><pubDate>Sun, 12 Apr 2015 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote class=&quot;twitter-tweet&quot; data-lang=&quot;en&quot;&gt;&lt;p lang=&quot;en&quot; dir=&quot;ltr&quot;&gt;1/ the history of the internet is a series of battles between proprietary services and open protocols&lt;/p&gt;&amp;mdash; Chris Dixon (@cdixon) &lt;a href=&quot;https://twitter.com/cdixon/status/587373396805160961?ref_src=twsrc%5Etfw&quot;&gt;April 12, 2015&lt;/a&gt;&lt;/blockquote&gt;</content:encoded></item><item><title><![CDATA[Improbable: enabling the development of large-scale simulated worlds]]></title><description><![CDATA[Over the past decade, computing resources that were previously available only to large organizations became available to almost anyone…]]></description><link>https://cdixon.org/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds</link><guid isPermaLink="false">https://cdixon.org/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds</guid><pubDate>Tue, 24 Mar 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Over the past decade, computing resources that were previously available only to large organizations became available to almost anyone. Using cloud-scale development platforms like Amazon Web Services, developers can write software that runs on hundreds or even thousands of servers, and do so relatively cheaply.&lt;/p&gt;
&lt;p&gt;But it is still difficult to write software that makes efficient use of this abundant computing. For some projects, like creating websites, there are well-known software architectures that work reasonably well. In other areas, there&apos;s been progress building generalized tools (for example, Hadoop in data processing). For the most part, however, developers need to solve the parallelization problem over and over again for each application they develop. New tools that help them do this are sorely needed.&lt;/p&gt;
&lt;p&gt;Today, I am excited to announce that a16z is investing $20M in &lt;a href=&quot;http://improbable.io/&quot;&gt;Improbable&lt;/a&gt;, a London-based company that was founded by a group of computer scientists from the University of Cambridge. Improbable’s technology solves the parallelization problem for an important class of problems: anything that can be defined as a set of entities that interact in space. This basically means any problem where you want to build a simulated world. Developers who use Improbable can write code as if it will run on only one machine (using whatever simulation software they prefer, including popular gaming/physics engines like Unity and Unreal), without having to think about parallelization. Improbable automatically distributes their code across hundreds or even thousands of machines, which then work together to create a seamlessly integrated, simulated world.&lt;/p&gt;
&lt;p&gt;The Improbable team had to solve multiple hard problems to make this work. Think of their tech as a “spatial operating system”: for every object in the world — a person, a car, a microbe —the system assigns “ownership” of different parts of that entity to various worker programs. As entities move around (according to whatever controls them  -- code, humans, real-world sensors) they interact with other entities. Often these interactions happen across machines, so Improbable needs to handle inter-machine messaging. Sometimes entities need to be reassigned to new hardware to load balance. When hardware fails or network conditions degrade, Improbable automatically reassigns the workload and adjusts the network flow. Getting the system to work at scale under real-world conditions is a very hard problem that took the Improbable team years of R&amp;#x26;D.&lt;/p&gt;
&lt;p&gt;One initial application for the Improbable technology is in gaming. Game developers have been trying to build virtual worlds for decades, but until now those worlds have been relatively small, usually running on only a handful of servers and relying on hacks to create the illusion of scale. With Improbable, developers can now create games with millions of persistent, complex, interacting entities. In addition, they can spend their time inventing game features instead of building back-end systems.&lt;/p&gt;
&lt;p&gt;Beyond gaming, Improbable is useful in any field that models complex systems — biology, economics, defense, urban planning, transportation, disease prevention, etc. Think of simulations as the flip side to “big data.” Data science is useful when you already have large data sets. Simulations are useful when you know how parts of the system work and want to generate data about the system as a whole. Simulations are especially well suited for asking hypothetical questions: what would happen to the world if we changed X and Y? How could we change X and Y to get the outcome we want?&lt;/p&gt;
&lt;p&gt;Improbable was started three years ago at Cambridge by Herman Narula and Rob Whitehead. They have since built an outstanding team of engineers and computer scientists from companies like Google and top UK computer science programs. They’ve done all of this on a small seed financing, supplemented by customer revenue and research grants. We are thrilled to partner with Improbable on their mission to develop and popularize simulated worlds.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["It all blossomed out of this tiny little seed"]]></title><description><![CDATA[Steve Jobs in 1985: I felt it the first time when I visited a school. It was third and fourth graders, and they had a whole classroom full…]]></description><link>https://cdixon.org/2015/03/13/it-all-blossomed-out-of-this-tiny-little-seed</link><guid isPermaLink="false">https://cdixon.org/2015/03/13/it-all-blossomed-out-of-this-tiny-little-seed</guid><pubDate>Fri, 13 Mar 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Steve Jobs in 1985:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;I felt it the first time when I visited a school. It was third and fourth graders, and they had a whole classroom full of Apple II’s. I spent a few hours there, and I saw these third and fourth graders growing up completely different than I grew up because of this machine.&lt;/p&gt;
&lt;p&gt;What hit me about it was that here was this machine that very few people designed — about four in the case of the Apple II — who gave it to some other people who didn&apos;t know how to design it but knew how to make it, to manufacture it. They could make a whole bunch of them. And then they give it some people that didn&apos;t know how to design it or manufacture it, but they knew how to distribute it. And then they gave it to some people that didn&apos;t knew how to design or manufacture or distribute it, but knew how to write software for it.&lt;/p&gt;
&lt;p&gt;Gradually this sort of inverse pyramid grew. It finally got into the hands of a lot of people -- and it all blossomed out of this tiny little seed.&lt;/p&gt;
&lt;p&gt;It seemed like an incredible amount of leverage. It all started with just an idea. Here was this idea, taken through all of these stages, resulting in a classroom full of kids growing up with some insights and fundamentally different experiences which, I thought, might be very beneficial to their lives. Because of this germ of an idea a few years ago.&lt;/p&gt;
&lt;p&gt;That&apos;s an incredible feeling to know that you had something to do with it, and to know it can be done, to know that you can plant something in the world and it will grow, and change the world, ever so slightly.&lt;/p&gt;
&lt;p&gt;— &lt;a href=&quot;https://www.youtube.com/watch?v=BNeXlJW70KQ&amp;#x26;start=1104&quot;&gt;Steve Jobs brainstorms with NeXT team 1985 (starting at minute 18:24)&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded></item><item><title><![CDATA[The idea maze for AI startups]]></title><description><![CDATA[An “idea maze” is a map of all the key decisions and tradeoffs that startups in a given space need to make: A good founder is capable of…]]></description><link>https://cdixon.org/2015/02/01/the-ai-startup-idea-maze</link><guid isPermaLink="false">https://cdixon.org/2015/02/01/the-ai-startup-idea-maze</guid><pubDate>Sun, 01 Feb 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;An “&lt;a href=&quot;http://cdixon.org/2013/08/04/the-idea-maze/&quot;&gt;idea maze&lt;/a&gt;” is a map of all the key decisions and tradeoffs that startups in a given space need to make:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;A good founder is capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions.&lt;/p&gt;
&lt;p&gt;- Balaji Srinivasan, “&lt;a href=&quot;https://spark-public.s3.amazonaws.com/startup/lecture_slides/lecture5-market-wireframing-design.pdf&quot;&gt;Market Research, Wireframing and Design&lt;/a&gt;”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I thought it would be interesting to show an example of an idea maze for an area that I’m interested in: AI startups. Here’s a sketch of the maze. I explain each step in detail below.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-02-01-at-11-51-53-am.png&quot;&gt;&lt;span
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&lt;p&gt;&lt;em&gt;“MVP with 80–90% accuracy.”&lt;/em&gt; The &lt;a href=&quot;http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/&quot;&gt;old saying&lt;/a&gt; in the machine learning community is that “machine learning is really good at partially solving just about any problem.” For most problems, it’s relatively easy to build a model that is accurate 80–90% of the time. After that, the returns on time, money, brainpower, data etc. rapidly diminish. As a rule of thumb, you’ll spend a few months getting to 80% and something between a few years and eternity getting the last 20%. (Incidentally, this is why when you see partial demos like Watson and self-driving cars, the demo itself doesn’t tell you much — what you need to see is how they handle the 10–20% of “edge cases” — the dog jumping out in front of the car in unusual lighting conditions, etc).&lt;/p&gt;
&lt;p&gt;At this point in the maze you have a choice. You can either 1) try to get the accuracy up to near 100%, or 2) build a product that is useful even though it is only partially accurate. You do this by building what I like to call a “fault tolerant UX.”&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“Create a fault tolerant UX.”&lt;/em&gt; Good examples of fault-tolerant UXs are iOS autocorrect and Google search’s “did you mean X?” feature. You could also argue Google search itself is a fault tolerant UX: showing 10 links instead of going straight to the top result lets the human override the machine when the machine gets the ranking wrong. Building a fault tolerant UX isn’t capitulation, but it does mean a very different set of product requirements. (In particular, latency is very important when you want the human and machine to work together—this generally affects your technical architecture).&lt;/p&gt;
&lt;p&gt;Ok so let’s suppose you decide to go for 100% accuracy. How do you get there? You won’t get the 10–20% through algorithms. You’ll only get there with lots more data for training your models. Data is the key to AI because 1) it’s the missing ingredient — we have great algorithms and virtually endless computational resources now, and 2) it’s the proprietary ingredient—algorithms are mostly a shared resource created by the research community. Public data sets, on the other hands, are generally not very good. The good data sets either don’t exist or are privately owned.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“Narrow the domain.”&lt;/em&gt; The amount of data you need is relative to the breadth of the problem you are trying to solve. So before you start collecting data you might want to narrow your domain. Instead of trying to build a virtual bot that can do anything (which would basically mean passing the Turing Test—good luck with that), build a bot that can just help someone with scheduling meetings. Instead of building a cloud service that predicts anything, build one that can predict when a transaction is fraudulent. Etc.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“Narrow domain even more.”&lt;/em&gt; After you are done narrowing the domain, try narrowing it even more! Even if your goal is to build X, sometimes building an MVP that is part of X is the best way to eventually get to X. My advice would be to keep narrowing your domain until you can’t narrow it anymore without making the product so narrow that no one wants to use it. You can always expand the scope later.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;“How do you get the data?”&lt;/em&gt; Broadly speaking, there are two ways: build it yourself or crowdsource it. A good analogy here is Google Maps vs Waze. Google employs thousands of people driving around to map out roads, buildings, and traffic. Waze figured out how to get millions of people to do that for them. To do what Google does, you need far more capital (hundreds of millions, if not billions of dollars) than is generally available to pre-launch startups.&lt;/p&gt;
&lt;p&gt;Startups are left with two choices to get the data. 1) Try to mine it from publicly available sources. 2) Try to crowdsource it.&lt;/p&gt;
&lt;p&gt;The most common example of 1) is crawling the web, or big websites like Wikipedia. You could argue this is what the original Google search did by using links as ranking signals. Many startups have tried mining Wikipedia, an approach that hasn’t led to much success, as far as I know.&lt;/p&gt;
&lt;p&gt;The most viable approach for startups is crowdsourcing the data. This boils down to designing a service that provides the right incentives for users to give data back to the system to make it better. Building a crowdsourced product is its own topic (which is why that part of the idea maze points to another, nested idea maze), but I’ll give an example of one approach to doing this, which was tried by company called &lt;a href=&quot;http://wit.ai&quot;&gt;Wit.ai&lt;/a&gt; that we invested in last year. Wit’s idea was to provide a service for developers for doing speech-to-text and natural language processing. The v1.0 system gave the right answer most but not all of the time. But it also provided a dashboard and API where developers could correct errors to improve their results. For developers using the free version of the service, the training they performed would get fed back to make the overall system smarter. Facebook acquired Wit so their future will unfold now as part of a larger company. The approach they took was very clever and could apply to many other AI domains.&lt;/p&gt;
&lt;p&gt;This is a rough sketch of how I see the AI startup idea maze. A few caveats: 1) I could very well be mistaken or have overlooked other paths through the maze — idea mazes are meant to aid discussion, not serve as gospel, and 2) As Balaji says, new technological developments can “move walls and change assumptions.” Look out especially for new infrastructure technologies (internet, smartphones, cloud computing, bitcoin, etc) that can unlock new pathways in many different idea mazes, even ones that at first seem unrelated.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Come for the tool, stay for the network]]></title><description><![CDATA[A popular strategy for bootstrapping networks is what I like to call “come for the tool, stay for the network.” The idea is to initially…]]></description><link>https://cdixon.org/2015/01/31/come-for-the-tool-stay-for-the-network</link><guid isPermaLink="false">https://cdixon.org/2015/01/31/come-for-the-tool-stay-for-the-network</guid><pubDate>Sat, 31 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A popular strategy for bootstrapping networks is what I like to call “come for the tool, stay for the network.”&lt;/p&gt;
&lt;p&gt;The idea is to initially attract users with a &lt;a href=&quot;http://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes/&quot;&gt;single-player tool&lt;/a&gt; and then, over time, get them to participate in a network. The tool helps get to initial critical mass. The network creates the long term value for users, and defensibility for the company.&lt;/p&gt;
&lt;p&gt;Here are two historical examples: 1) &lt;em&gt;Delicious&lt;/em&gt;. The single-player tool was a cloud service for your bookmarks. The multiplayer network was a tagging system for discovering and sharing links. 2) &lt;em&gt;Instagram&lt;/em&gt;. Instagram’s initial hook was the innovative photo filters. At the time some other apps like Hipstamatic had filters but you had to pay for them. Instagram also made it easy to share your photos on other networks like Facebook and Twitter. But you could also share on Instagram’s network, which of course became the preferred way to use Instagram over time.&lt;/p&gt;
&lt;p&gt;The “come for the tool, stay for the network” strategy isn&apos;t the only way to build a network. Some networks never had single-player tools, including gigantic successes like Facebook and Twitter. But starting a network from scratch is very hard. Think of single-player tools as kindling.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Virtual reality: a new creative medium where the default state is belief]]></title><description><![CDATA[The holy grail of virtual reality, the one that’s always been out of reach until now, is presence. In the VR community, “presence” is a term…]]></description><link>https://cdixon.org/2015/01/24/virtual-reality-a-new-creative-medium-where-the-default-state-is-belief</link><guid isPermaLink="false">https://cdixon.org/2015/01/24/virtual-reality-a-new-creative-medium-where-the-default-state-is-belief</guid><pubDate>Sat, 24 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The holy grail of virtual reality, the one that’s always been out of reach until now, is presence.&lt;/p&gt;
&lt;p&gt;In the VR community, “presence” is a term of art. It’s the idea that once VR reaches a certain quality level your brain is actually tricked — at the lowest, most primal level — into believing that what you see in front of you is reality. Studies show that even if you rationally believe you’re not truly standing at the edge of a steep cliff, and even if you try with all your might to jump, your legs will buckle. Your low-level lizard brain won’t let you do it.&lt;/p&gt;
&lt;p&gt;With presence, your brain goes from feeling like you have a headset on to feeling like you’re immersed in a different world.&lt;/p&gt;
&lt;p&gt;Computer enthusiasts and science fiction writers have dreamed about VR for decades. But earlier attempts to develop it, especially in the 1990s, were disappointing. It turns out the technology wasn’t ready yet. What’s happening now — because of Moore’s Law, and also the rapid improvement of processors, screens, and accelerometers, driven by the smartphone boom — is that VR is finally ready to go mainstream.&lt;/p&gt;
&lt;p&gt;Once VR achieves presence, we start to believe.&lt;/p&gt;
&lt;p&gt;We use the phrase “suspension of disbelief” about the experience of watching TV or movies. This implies that our default state watching TV and movies is disbelief. We start to believe only when we become sufficiently immersed.&lt;/p&gt;
&lt;p&gt;With VR, the situation is reversed: we believe, by default, that what we see is real. As Chris Milk, an early VR pioneer, &lt;a href=&quot;https://stories.californiasunday.com/2014-10-05/virtual-reality-hollywood&quot;&gt;explains&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;You read a book; your brain reads letters printed in ink on paper and transforms that into a world. You watch a movie; you’re seeing imagery inside of a rectangle while you’re sitting inside a room, and your brain translates that into a world. And you connect to this even though you know it’s not real, but because you’re in the habit of suspending disbelief.&lt;/p&gt;
&lt;p&gt;With virtual reality, you’re essentially hacking the visual-audio system of your brain and feeding it a set of stimuli that’s close enough to the stimuli it expects that it sees it as truth. Instead of suspending your disbelief, you actually have to remind yourself not to believe.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This has implications for the kinds of software that will succeed in VR. The risk is not that it’s boring, but that it’s too intense. For example, a popular video game like Call of Duty ported to VR would be frightening and disorienting for most people.&lt;/p&gt;
&lt;p&gt;What will likely succeed instead are relatively simple experiences. Some examples: go back in time and walk around ancient Rome; overcome your fear of heights by climbing skyscrapers; execute precision moves as you train to safely land planes; return to places you “3D photographed” on your last vacation; have a picnic on a sunny afternoon with a long-lost friend; build trust with virtual work colleagues in a way that today you can only do in person.&lt;/p&gt;
&lt;p&gt;These experiences will be dreamt up by “experience makers” — the VR version of filmmakers. The next few decades of VR will be similar to the first few decades of film. Filmmakers had no idea what worked and what didn’t: how to write, how to shoot, how to edit, etc. After decades of experiments they established the grammar of film. We’re about to enter a similar period of exploration with VR.&lt;/p&gt;
&lt;p&gt;There will be great games made in VR, and gaming will &lt;a href=&quot;http://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality/&quot;&gt;probably&lt;/a&gt; dominate the VR narrative for the next few years. But longer term, we won’t think of games as essential to the medium. The original TV shows were newscasts and game shows, but today we think of TV screens as content-agnostic input-output devices.&lt;/p&gt;
&lt;p&gt;VR will be the ultimate input-output device. Some people call VR “the last medium” because any subsequent medium can be invented inside of VR, using software alone. Looking back, the movie and TV screens we use today will be seen as an intermediate step between the invention of electricity and the invention of VR. Kids will think it’s funny that their ancestors used to stare at glowing rectangles hoping to suspend disbelief.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;(originally posted on &lt;a href=&quot;http://a16z.com/2015/01/22/16-things/&quot;&gt;a16z&lt;/a&gt;)&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Stack Exchange]]></title><description><![CDATA[Today we are announcing that A16z is leading a $40M investment in Stack Exchange, along with earlier investors USV, Bezos Expeditions, Spark…]]></description><link>https://cdixon.org/2015/01/20/a16z-invests-in-stack-exchange</link><guid isPermaLink="false">https://cdixon.org/2015/01/20/a16z-invests-in-stack-exchange</guid><pubDate>Tue, 20 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Today we are announcing that &lt;a href=&quot;http://www.a16z.com&quot;&gt;A16z&lt;/a&gt; is leading a $40M investment in &lt;a href=&quot;http://stackexchange.com&quot;&gt;Stack Exchange&lt;/a&gt;, along with earlier investors USV, Bezos Expeditions, Spark, and Index.&lt;/p&gt;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;Stack Exchange is a network of 133 &lt;a href=&quot;http://stackexchange.com/sites&quot;&gt;sites&lt;/a&gt; (and growing) where people can ask and answer questions about topics related to engineering, science, hobbies, and more. The biggest site on the network is Stack Overflow, which alone gets over 40 million unique visitors per month. The other sites cover a very wide variety of topics, including: &lt;a href=&quot;http://math.stackexchange.com&quot;&gt;math&lt;/a&gt;, &lt;a href=&quot;http://gardening.stackexchange.com&quot;&gt;gardening&lt;/a&gt;, &lt;a href=&quot;http://english.stackexchange.com&quot;&gt;English language usage&lt;/a&gt;, &lt;a href=&quot;http://graphicdesign.stackexchange.com&quot;&gt;graphic design&lt;/a&gt;, &lt;a href=&quot;http://physics.stackexchange.com&quot;&gt;physics&lt;/a&gt;, &lt;a href=&quot;http://crypto.stackexchange.com&quot;&gt;cryptography&lt;/a&gt;, &lt;a href=&quot;http://chess.stackexchange.com&quot;&gt;chess&lt;/a&gt;, &lt;a href=&quot;http://astronomy.stackexchange.com&quot;&gt;astronomy&lt;/a&gt;, &lt;a href=&quot;http://buddhism.stackexchange.com&quot;&gt;Buddhism&lt;/a&gt;, &lt;a href=&quot;http://datascience.stackexchange.com&quot;&gt;data science&lt;/a&gt;, &lt;a href=&quot;http://martialarts.stackexchange.com&quot;&gt;martial arts&lt;/a&gt;, &lt;a href=&quot;http://diy.stackexchange.com&quot;&gt;home improvement&lt;/a&gt;, &lt;a href=&quot;http://photo.stackexchange.com&quot;&gt;photography&lt;/a&gt;, &lt;a href=&quot;http://bicycles.stackexchange.com&quot;&gt;bicycles&lt;/a&gt;, &lt;a href=&quot;http://boardgames.stackexchange.com&quot;&gt;board games&lt;/a&gt;, &lt;a href=&quot;http://economics.stackexchange.com&quot;&gt;economics&lt;/a&gt;, to name a few. Most likely, you’ve used Stack Exchange without even knowing it —the network had over 300M unique visitors last year. Many users come in through Google, get their answer, and then leave, usually a little bit smarter.&lt;/p&gt;
&lt;p&gt;One of the major startup opportunities of the information age is: now that more than two billion people have internet-connected devices, how do we create &lt;a href=&quot;http://cdixon.org/2010/01/17/collective-knowledge-systems/&quot;&gt;systems&lt;/a&gt; to efficiently share and store their collective knowledge? Requirements for successful collective knowledge systems include: 1) users need to be given the proper incentives to contribute, 2) the contributions of helpful users need to make the system smarter (not just bigger), and 3) users with malicious intent can’t be allowed to hurt the system.&lt;/p&gt;
&lt;p&gt;Many entrepreneurs and inventors have tried and failed to solve this problem. As far as I know, only two organizations have succeeded at scale: Stack Exchange and Wikipedia. Stack isn’t as large as Wikipedia on the readership side — the topics are more specialized—but, on the contributor side, is closely comparable to Wikipedia. Last year, Stack had over 300 million unique visitors, and 3.8 million total registered users, who contributed over 3.1M questions, 4.5M answers, 2.7M edits, and 17M comments.&lt;/p&gt;
&lt;p&gt;Stack’s business model is based on job placement. Employers create company pages (&lt;a href=&quot;http://careers.stackoverflow.com/company/amazon-us&quot;&gt;here&lt;/a&gt; is Amazon’s—over 6000 companies have created pages) and then run targeted ad campaigns for open job opportunities. Revenue has grown quickly, and the company employs over 200 people. The HQ is in NYC, with offices in Denver and London, and remote workers in Israel, Brazil, Japan, Germany, Slovenia, France, and across the US.&lt;/p&gt;
&lt;p&gt;I believe Stack Exchange’s growth has now reached escape velocity. Not only will the existing topics continue to grow, but many new topics will emerge, until the network covers every topic that is amenable to objective Q&amp;#x26;A. As new generations of people grow up on the internet, old habits — searching through textbooks or how-to books, or asking friends—will fade away. People will come to expect that any objective question can be instantly answered with a Google search.&lt;/p&gt;
&lt;p&gt;I’ve been a personal investor in Stack since its initial funding, and it has always been one of my favorite investments. Stack’s cofounder &amp;#x26; CEO, Joel Spolsky, is an amazing entrepreneur and internet visionary. I’m very happy to back him again with this new investment.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Skydio]]></title><description><![CDATA[I’m excited to announce today that Andreessen Horowitz is leading a $3M financing of Skydio, a startup developing artificial intelligence…]]></description><link>https://cdixon.org/2015/01/15/skydio</link><guid isPermaLink="false">https://cdixon.org/2015/01/15/skydio</guid><pubDate>Thu, 15 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’m excited to announce today that Andreessen Horowitz is leading a $3M financing of &lt;a href=&quot;http://skyd.io&quot;&gt;Skydio&lt;/a&gt;, a startup developing artificial intelligence systems for drones.&lt;/p&gt;
&lt;p&gt;The Skydio team is awesomely qualified. They worked on drone vision systems at MIT and then co-founded a drone project at &lt;a href=&quot;http://en.wikipedia.org/wiki/Google_X&quot;&gt;Google[x]&lt;/a&gt; called Project Wing. The company’s mission is to create smart drones. As cofounder Adam Bry &lt;a href=&quot;http://skyd.io/blog/2015/01/takeoff/&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Drones are poised to have a transformative impact on how we see our world. They’ll enable us to film the best moments of our lives with professional quality cinematography and they’ll also change the way businesses think about monitoring their operations and infrastructure. This grand vision is starting to come into focus, but existing products are blind to the world around them. As a consequence, drones must fly high above the nearest structures or receive the constant attention of an expert operator. &lt;a href=&quot;http://www.wsj.com/articles/what-happens-when-your-drone-escapes-1418086281?autologin=y&quot;&gt;“Flyaways”&lt;/a&gt; and &lt;a href=&quot;https://www.youtube.com/watch?v=KgNQrGGxJrM&quot;&gt;crashes&lt;/a&gt; abound. These problems must be solved for the industry to move forward.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Smart drone operators will simply give high-level instructions like “map these fields” or “film me while I’m skiing” and the drone will carry out the mission. Safety and privacy regulations will be baked into the operating system and will always be the top priority.&lt;/p&gt;
&lt;p&gt;This is my second drone investment - the first one was &lt;a href=&quot;http://www.airware.com&quot;&gt;Airware&lt;/a&gt;. I see Airware and Skydio as complementary (and I’d like to make more drone investments - at any stage including seed investments - as long as they don’t compete with Airware or Skydio). You can think of Airware as the operating system and Skydio as the most important app on top of the operating system. The founders of both companies have deep expertise in both aviation and computer science, the key prerequisites for creating smart drones.&lt;/p&gt;
&lt;p&gt;Here’s a fun video of an early Skydio prototype in action: &lt;div class=&quot;gatsby-resp-iframe-wrapper&quot; style=&quot;padding-bottom: 56.53450807635829%; position: relative; height: 0; overflow: hidden; &quot; &gt; &lt;div class=&quot;embedVideo-container&quot;&gt; &lt;iframe src=&quot;https://www.youtube-nocookie.com/embed/rYhPDn48-Sg?rel=0&quot; class=&quot;embedVideo-iframe&quot; style=&quot;border:0; position: absolute; top: 0; left: 0; width: 100%; height: 100%; &quot; allowfullscreen&gt;&lt;/iframe&gt; &lt;/div&gt; &lt;/div&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[How We Got To Now]]></title><description><![CDATA[I really enjoyed Steven Johnson's How We Got To Now. I read a lot of history and science books, but this book stood out because 1) the…]]></description><link>https://cdixon.org/2015/01/12/how-we-got-to-now</link><guid isPermaLink="false">https://cdixon.org/2015/01/12/how-we-got-to-now</guid><pubDate>Mon, 12 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I really enjoyed Steven Johnson&apos;s &lt;a href=&quot;http://www.amazon.com/How-We-Got-Now-Innovations-ebook/dp/B00INIXU5I&quot;&gt;How We Got To Now&lt;/a&gt;. I read a lot of history and science books, but this book stood out because 1) the anecdotes were entertaining and relevant, and 2) it got the process of innovation right.&lt;/p&gt;
&lt;p&gt;I&apos;ll just pick one story here that I liked. &lt;a href=&quot;http://en.wikipedia.org/wiki/Frederic_Tudor&quot;&gt;Frederic Tudor&lt;/a&gt; was a Boston entrepreneur in the early 1800s who had the clever idea to ship ice from New England to the Caribbean:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The history of global trade had clearly demonstrated that vast fortunes could be made by transporting a commodity that was ubiquitous in one environment to a place where it was scarce. To the young Tudor, ice seemed to fit the equation perfectly: nearly worthless in Boston, ice would be priceless in Havana.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Not only was the ice almost free, but so was the shipping:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;His New England base gave him one crucial advantage, beyond the ice itself. Unlike the U.S. South, with its sugar plantations and cotton fields, the northeastern states were largely devoid of natural resources that could be sold elsewhere. This meant that ships tended to leave Boston harbor empty, heading off for the West Indies to fill their hulls with valuable cargo before returning to the wealthy markets of the eastern seaboard. Paying a crew to sail a ship with no cargo was effectively burning money. Any cargo was better than nothing, which meant that Tudor could negotiate cheaper rates for himself by loading his ice onto what would have otherwise been an empty ship, and thereby avoiding the need to buy and maintain his own vessels.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;He invested his life savings and years building his startup. Everyone thought he was crazy. The local paper wrote a snarky article about him: &quot;No joke. A vessel has cleared at the Custom House for Martinique with a cargo of ice. We hope this will not prove a slippery speculation.&quot; He even spent two years in prison when he went into debt (this was before one of the greatest legal inventions of all time- &lt;a href=&quot;http://en.wikipedia.org/wiki/Limited_liability#History&quot;&gt;limited liability&lt;/a&gt;). He finally got his ice delivered but failed to predict one thing:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Despite a number of weather-related delays, the ice survived the journey in remarkably good shape. The problem proved to be one that Tudor had never contemplated. The residents of Martinique had no interest in his exotic frozen bounty. They simply had no idea what to do with it.&lt;/p&gt;
&lt;p&gt;We take it for granted in the modern world that an ordinary day will involve exposure to a wide range of temperatures. We enjoy piping hot coffee in the morning and ice cream for dessert at the end of the day. Those of us who live in climates with hot summers expect to bounce back and forth between air-conditioned offices and brutal humidity where winter rules, we bundle up and venture out into the frigid streets, and turn up the thermostat when we return home. But the overwhelming majority of humans living in equatorial climes in 1800 would have literally never once experienced anything cold. The idea of frozen water would have been as fanciful to the residents of Martinique as an iPhone.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;There is a saying that entrepreneurs should create &quot;painkillers not vitamins&quot;. This is bad advice. Painkillers are not very interesting businesses. Lots of people create painkillers, and they either work or they don&apos;t, and nothing more is generated as a result. The really interesting companies create vitamins. You don&apos;t know you want ice until you figure out what to do with it. Once you do, you discover all sorts of things you couldn&apos;t imagine before, which in turn create new opportunities for invention and entrepreneurship.&lt;/p&gt;
&lt;p&gt;The stories in the book ultimately argue for public policies that support networked innovation:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[T]here are social and political implications to these kinds of stories. We know that one key driver of progress and standards of living is technological innovation. If we think that innovation comes from a lone genius inventing a new technology from scratch, that model naturally steers us toward certain policy decisions, like stronger patent protection. But if we think that innovation comes out of collaborative networks, then we want to support different policies and organizational forms.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;People who understand how innovation really works tend to support open standards, lenient immigration policies, well-funded university research, employee stock options, and significant &lt;a href=&quot;http://cdixon.org/2009/09/24/software-patents-should-be-abolished/&quot;&gt;restrictions&lt;/a&gt; of patents.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[VC investment vs Gartner hype cycle]]></title><description><![CDATA[Here is total VC investment over time:  And here's the Gartner hype cycle:  One reading of this is that the advent of the internet was the…]]></description><link>https://cdixon.org/2015/01/12/vc-investment-vs-gartner-hype-cycle</link><guid isPermaLink="false">https://cdixon.org/2015/01/12/vc-investment-vs-gartner-hype-cycle</guid><pubDate>Mon, 12 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Here is total &lt;a href=&quot;http://www.infocaptor.com/dashboard/venture-capital-investment-analytics-on-20-years-of-investment-data&quot;&gt;VC investment&lt;/a&gt; over time:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-01-12-at-10-38-00-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.058242843040475%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 01 12 at 10 38 00 pm&quot;
        title=&quot;screen shot 2015 01 12 at 10 38 00 pm&quot;
        src=&quot;/static/520bd1efe6538f6cbbea1d9520f4f617/94a55/screen-shot-2015-01-12-at-10-38-00-pm.png&quot;
        srcset=&quot;/static/520bd1efe6538f6cbbea1d9520f4f617/924ad/screen-shot-2015-01-12-at-10-38-00-pm.png 170w,
/static/520bd1efe6538f6cbbea1d9520f4f617/f570f/screen-shot-2015-01-12-at-10-38-00-pm.png 341w,
/static/520bd1efe6538f6cbbea1d9520f4f617/94a55/screen-shot-2015-01-12-at-10-38-00-pm.png 681w,
/static/520bd1efe6538f6cbbea1d9520f4f617/e8f76/screen-shot-2015-01-12-at-10-38-00-pm.png 1022w,
/static/520bd1efe6538f6cbbea1d9520f4f617/c20f6/screen-shot-2015-01-12-at-10-38-00-pm.png 1362w,
/static/520bd1efe6538f6cbbea1d9520f4f617/986fe/screen-shot-2015-01-12-at-10-38-00-pm.png 2026w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;And here&apos;s the Gartner hype cycle:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2015-01-12-at-10-38-22-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 65.19524617996603%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2015 01 12 at 10 38 22 pm&quot;
        title=&quot;screen shot 2015 01 12 at 10 38 22 pm&quot;
        src=&quot;/static/1f19902d067842cdfd32b07d42e21249/94a55/screen-shot-2015-01-12-at-10-38-22-pm.png&quot;
        srcset=&quot;/static/1f19902d067842cdfd32b07d42e21249/924ad/screen-shot-2015-01-12-at-10-38-22-pm.png 170w,
/static/1f19902d067842cdfd32b07d42e21249/f570f/screen-shot-2015-01-12-at-10-38-22-pm.png 341w,
/static/1f19902d067842cdfd32b07d42e21249/94a55/screen-shot-2015-01-12-at-10-38-22-pm.png 681w,
/static/1f19902d067842cdfd32b07d42e21249/e8f76/screen-shot-2015-01-12-at-10-38-22-pm.png 1022w,
/static/1f19902d067842cdfd32b07d42e21249/bcefc/screen-shot-2015-01-12-at-10-38-22-pm.png 1178w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;One reading of this is that the advent of the internet was the technology trigger, the dot-com crash was the trough of disillusionment, and 2004-present is the slope of enlightenment (with a mini-crash in 2008 due to the implosion on Wall Street). This reading would be consistent with Carlotta Perez&apos;s theory that we are now in the multi-decade &lt;a href=&quot;http://cdixon.org/2013/02/10/the-computing-deployment-phase/&quot;&gt;deployment phase&lt;/a&gt;.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Flow]]></title><description><![CDATA[Mihaly Csikszentmihalyi in 1996 on the concept of Flow: [Flow] is being completely involved in an activity for its own sake. The ego falls…]]></description><link>https://cdixon.org/2015/01/10/flow</link><guid isPermaLink="false">https://cdixon.org/2015/01/10/flow</guid><pubDate>Sat, 10 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Mihaly Csikszentmihalyi in 1996 on the concept of Flow:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[Flow] is being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you&apos;re using your skills to the utmost.&lt;/p&gt;
&lt;p&gt;Goals transform a random walk into a chase. You need clear goals that fit into a hierarchy, with little goals that build toward more meaningful, higher-level goals. Here you are, tracking the footprints of some animal you haven&apos;t seen. That&apos;s exhilarating. Then there&apos;s the question of feedback. Most Web sites don&apos;t very much care what you do. It would be much better if they said: &quot;You&apos;ve made some interesting choices&quot; or &quot;You&apos;re developing a knowledge of Picasso.&quot; There&apos;s also the ability to challenge. Competition is an easy way to get into flow.&lt;/p&gt;
&lt;p&gt;Realize that change and downtime are important. I found that if a painter relates to objects only through vision, his work is much less original than a painter who walks up to the object, smells it, throws it in the air, and manipulates it. The variety of sensory inputs allows you to create a visual image that has all kinds of dimensions bubbling up inside it. We are still a multimedia organism. If we want to push the envelope of complexity further, we have to use all of our devices for accessing information - not all of which are rational.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;- &lt;a href=&quot;http://archive.wired.com/wired/archive/4.09/czik_pr.html&quot;&gt;&quot;Go With the Flow,&quot;&lt;/a&gt; Wired Magazine&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The thin edge of the wedge for virtual reality]]></title><description><![CDATA[Pius Uzamere argues that virtual reality will succeed first in business applications instead of gaming: The most interesting virtual reality…]]></description><link>https://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality</link><guid isPermaLink="false">https://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality</guid><pubDate>Thu, 01 Jan 2015 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Pius Uzamere &lt;a href=&quot;https://www.theinformation.com/The-Best-VR-Startups-In-2015-Will-Go-Pro&quot;&gt;argues&lt;/a&gt; that virtual reality will succeed first in business applications instead of gaming:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The most interesting virtual reality software startups this year won&apos;t really be &quot;virtual reality&quot; companies at all; they&apos;ll be startups making amazing tools that just happen to use VR to bring them to life. This has already started to play out in fields like medicine where virtual reality is already being used to &lt;a href=&quot;http://icahn.mssm.edu/research/programs/brain-surgery-virtual-reality-simulation-program&quot;&gt;train brain surgeons&lt;/a&gt; at Mount Sinai.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The argument is roughly that 1) high-quality VR equipment will start out expensive, 2) business apps can be distributed via web, 3) toolchain for creating business VR content is better (3d scanning tools etc).&lt;/p&gt;
&lt;p&gt;Non-gaming VR applications are indeed underhyped. But gaming is important as an entry point. Critics tend to underestimate the scale and passion of the hardcore gaming community. For example: 32 million people &lt;a href=&quot;http://www.nytimes.com/2014/10/12/technology/riot-games-league-of-legends-main-attraction-esports.html&quot;&gt;watched&lt;/a&gt; the live steam of the championship of League of Legends, an extremely complicated game that is only available on PCs and Macs. VR has an unusually favorable market structure: a &lt;a href=&quot;http://cdixon.org/2010/12/27/the-thin-edge-of-the-wedge-strategy/&quot;&gt;thin edge of the wedge&lt;/a&gt; (hardcore gaming) and a thick edge of the wedge (replacing everything we now do on screens).&lt;/p&gt;</content:encoded></item><item><title><![CDATA["The Not So Global Internet"]]></title><description><![CDATA[Fred Wilson writes about how frustrating it is when companies break the internet: We are in the caribbean this week celebrating the year end…]]></description><link>https://cdixon.org/2014/12/27/the-not-so-global-internet</link><guid isPermaLink="false">https://cdixon.org/2014/12/27/the-not-so-global-internet</guid><pubDate>Sat, 27 Dec 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Fred Wilson &lt;a href=&quot;http://avc.com/2014/12/the-not-so-global-internet/&quot;&gt;writes&lt;/a&gt; about how frustrating it is when companies break the internet:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;We are in the caribbean this week celebrating the year end holiday with friends and family. Yesterday we installed a VPN client so that the Gotham Gal could do some online shopping on a website that only sells to users in the US. We also installed a bittorrent client so that a friend of my son could watch films he had rented on iTunes before he came down here.&lt;/p&gt;
&lt;p&gt;The latter experience was particularly frustrating. My son’s friend rented the films on iTunes in NYC, flew down here, then when he tried to play them, they would not play because of IP blocking, but the rental clock (24 hours) started ticking anyway and he lost the rental rights he had paid for.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I buy all my movies through Apple TV and am strongly opposed to piracy. But I bet many people who pirate would be happy to pay if it were easier to buy and download content.&lt;/p&gt;
&lt;p&gt;Here&apos;s a service I&apos;d love to see. For every Bittorrent file, create a corresponding Bitcoin wallet. When people download the torrent file, encourage them to pay a fee to the Bitcoin wallet. The creator of the content gets to take the Bitcoin. I bet this method would generate considerable revenue for content creators.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Two eras of the internet: pull and push]]></title><description><![CDATA[The evolution of the internet is an extremely complex topic. Sometimes it is helpful to find broad patterns that make it easier to…]]></description><link>https://cdixon.org/2014/12/21/two-eras-of-the-internet-pull-and-push</link><guid isPermaLink="false">https://cdixon.org/2014/12/21/two-eras-of-the-internet-pull-and-push</guid><pubDate>Sun, 21 Dec 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The evolution of the internet is an extremely complex topic. Sometimes it is helpful to find broad patterns that make it easier to understand. One simplifying pattern comes from the two types of actions internet users take: pull and push.&lt;/p&gt;
&lt;table&gt;
&lt;thead&gt;
&lt;tr&gt;
&lt;th&gt;&lt;/th&gt;
&lt;th&gt;Pull&lt;/th&gt;
&lt;th&gt;Push&lt;/th&gt;
&lt;/tr&gt;
&lt;/thead&gt;
&lt;tbody&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Dominant platform&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Search&lt;/td&gt;
&lt;td&gt;Social&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Dominant platform company&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Google&lt;/td&gt;
&lt;td&gt;Facebook&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Growth era&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;2000s&lt;/td&gt;
&lt;td&gt;2010s&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Successful content type&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Utilities&lt;/td&gt;
&lt;td&gt;Media&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Content durability&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;Stock&lt;/td&gt;
&lt;td&gt;Flow&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Successful publishers&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;TripAdvisor, Wikipedia, Yelp, &amp;#x26; many more&lt;/td&gt;
&lt;td&gt;tbd&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
&lt;td&gt;&lt;strong&gt;Marketing activity&lt;/strong&gt;&lt;/td&gt;
&lt;td&gt;links and algorithms&lt;/td&gt;
&lt;td&gt;shares and people&lt;/td&gt;
&lt;/tr&gt;
&lt;/tbody&gt;
&lt;/table&gt;
&lt;p&gt;Pull is when you are seeking information, usually an answer to a question. You want to know the closing time of a restaurant, the description of a hotel where you are thinking about staying, the details of an historical event you heard about, etc. You go to your computer and pull the information. The killer app for pulling information was Google.&lt;/p&gt;
&lt;p&gt;Search grew exponentially in its heyday (roughly, the decade of the &lt;a href=&quot;http://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups/&quot;&gt;2000s&lt;/a&gt;) because it benefited from a positive feedback loop between the supply of and the demand for information. As search demand grew, websites developed content to meet that demand, which in turn further stoked demand.  The successful websites of this era were mostly information utilities such as Wikipedia, Yelp, and TripAdvisor.&lt;/p&gt;
&lt;p&gt;Push is when you are using the internet in a more passive way and content comes to you. The killer app for push is social networks, the most popular being Facebook. Information is pushed from user to user via likes, shares, tweets, etc. People tend to push things they find funny, interesting, moving, outrageous, etc which usually means they push media: articles, videos, lists, gifs, photos, etc.&lt;/p&gt;
&lt;p&gt;We are &lt;a href=&quot;http://www.nytimes.com/2014/08/13/upshot/why-buzzfeed-is-trying-to-shift-its-strategy.html?_r=3&amp;#x26;abt=0002&amp;#x26;abg=1&quot;&gt;currently&lt;/a&gt; experiencing a positive feedback loop between social networks and media publishers, analogous to last decade&apos;s search + information feedback loop. There are a few other key differences today:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Desktop vs mobile:&lt;/em&gt; The current era has an additional dimension of complexity due to a &lt;a href=&quot;https://twitter.com/cdixon/status/540987062610968577/photo/1&quot;&gt;simultaneous&lt;/a&gt; transition from desktop to mobile computing. Consequences include the rapid &lt;a href=&quot;http://cdixon.org/2014/04/07/the-decline-of-the-mobile-web/&quot;&gt;rise&lt;/a&gt; of native apps over websites, and a dramatic increase in the overall scale and reach of the internet.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Stock vs flow:&lt;/em&gt; Media tends to have a much shorter shelf life than informational content. The main defensible asset for last decade&apos;s publishers was the repository of content they accumulated. The defensible asset for media publishers is the machine - the combination of people, technology, practices, financial and other assets - that produces a constant flow content.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Bundled vs unbundled monetization:&lt;/em&gt; In the prior era, monetization usually meant placing ads on websites next to content. In the new era, atomized chunks of content are pushed through social networks and consumed on mobile phones. The most successful ads are funny, interesting, engaging, compelling, etc. on their own (so-called native ads) and don&apos;t rely on bundling.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;There will probably be a few big, successful companies that emerge from the push era. As in the pull era, the successful companies will reinforce the feedback loop: riding the trends instead of fighting them.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["The dawn of trustworthy computing"]]></title><description><![CDATA[Nick Szabo: On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we…]]></description><link>https://cdixon.org/2014/12/11/the-dawn-of-trustworthy-computing</link><guid isPermaLink="false">https://cdixon.org/2014/12/11/the-dawn-of-trustworthy-computing</guid><pubDate>Thu, 11 Dec 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Nick Szabo:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we have to fill out forms and make ourselves vulnerable to identity theft in order to participate in e-commerce, and it often is very difficult to prohibitive to conduct many kinds of commerce, even purely online kinds, across borders and other trust boundaries. Today&apos;s computers are not very trustworthy, but they are so astronomically faster than humans at so many important tasks that we use them heavily anyway. We reap the tremendous benefits of computers and public networks at large costs of identity fraud and other increasingly disastrous attacks.&lt;/p&gt;
&lt;p&gt;Recently developed and developing technology, often called &quot;the block chain&quot;, is starting to change this. A block chain computer is a virtual computer, a computer in the cloud, shared across many traditional computers and protected by cryptography and consensus technology. A Turing-complete block chain with large state gives us this shared computer. These block chain computers will allow us to put the most crucial parts of our online protocols on a far more reliable and secure footing, and make possible fiduciary interactions that we previously dared not do on a global network.&lt;/p&gt;
&lt;p&gt;— &quot;&lt;a href=&quot;http://unenumerated.blogspot.com/2014/12/the-dawn-of-trustworthy-computing.html&quot;&gt;The Dawn of Trustworthy Computing&lt;/a&gt;&quot;&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded></item><item><title><![CDATA[Top 10 websites]]></title><description><![CDATA[Top 10 websites in the US according to Quantcast:  A few observations: As Josh Kopelman points out, 4 of the top 10 sites (YouTube, Facebook…]]></description><link>https://cdixon.org/2014/12/06/1404</link><guid isPermaLink="false">https://cdixon.org/2014/12/06/1404</guid><pubDate>Sat, 06 Dec 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Top 10 websites in the US &lt;a href=&quot;https://www.quantcast.com/top-sites&quot;&gt;according&lt;/a&gt; to Quantcast:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2014-12-06-at-3-54-06-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 441px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 102.49433106575962%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2014 12 06 at 3 54 06 pm&quot;
        title=&quot;screen shot 2014 12 06 at 3 54 06 pm&quot;
        src=&quot;/static/fe9721a02d6006a9344e199c547823af/98017/screen-shot-2014-12-06-at-3-54-06-pm.png&quot;
        srcset=&quot;/static/fe9721a02d6006a9344e199c547823af/924ad/screen-shot-2014-12-06-at-3-54-06-pm.png 170w,
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/static/fe9721a02d6006a9344e199c547823af/98017/screen-shot-2014-12-06-at-3-54-06-pm.png 441w&quot;
        sizes=&quot;(max-width: 441px) 100vw, 441px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;A few observations:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;As Josh Kopelman &lt;a href=&quot;https://twitter.com/joshk/status/541358855696166912&quot;&gt;points&lt;/a&gt; out, 4 of the top 10 sites (YouTube, Facebook, Twitter, Buzzfeed) didn&apos;t exist 10 years ago.&lt;/li&gt;
&lt;li&gt;On &lt;a href=&quot;https://twitter.com/cdixon/status/541353371018735616&quot;&gt;Twitter&lt;/a&gt;, people seemed surprised to see MSN and Microsoft on the list. I assume they are there because most versions of Windows still default users to MSN/Microsoft pages.&lt;/li&gt;
&lt;li&gt;Some people on Twitter were surprised that eBay is ahead of Amazon. I think this is because Amazon appeals more to the tech demographic. As they say: &quot;EBay is for people with more time than money. Amazon is for people with more money than time.&quot;&lt;/li&gt;
&lt;/ol&gt;</content:encoded></item><item><title><![CDATA["This business is like bird spotting"]]></title><description><![CDATA[One of my favorite quotes about startups/VC, from legendary VC Mike Moritz of Sequoia: I rarely think about big themes. This business is…]]></description><link>https://cdixon.org/2014/12/01/this-business-is-like-bird-spotting</link><guid isPermaLink="false">https://cdixon.org/2014/12/01/this-business-is-like-bird-spotting</guid><pubDate>Mon, 01 Dec 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of my favorite quotes about startups/VC, &lt;a href=&quot;http://andrewchen.co/why-i-doubted-facebook-could-build-a-billion-dollar-business-and-what-i-learned-from-being-horribly-wrong/&quot;&gt;from&lt;/a&gt; legendary VC Mike Moritz of Sequoia:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;I rarely think about big themes. This business is like bird spotting. I don’t try to pick out the flock. Each one is different and I try to find an interestingly complected bird in a flock rather than try to make an observation about an entire flock. For that reason, while other firms may avoid companies because they perceive a certain investment sector as being overplayed or already mature, Sequoia is careful not to redline neighborhoods.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In traditional business thinking, generalizations about &quot;flocks&quot; i.e. markets/categories/sectors can be very useful. But when your job is to identify exceptions, generalizations can be dangerous.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["The business plans of the next 10,000 startups are easy to forecast: Take X and add AI."]]></title><description><![CDATA[Kevin Kelly thinks artificial intelligence is finally ready deliver on its promise: The AI on the horizon looks more like Amazon Web…]]></description><link>https://cdixon.org/2014/11/23/the-business-plans-of-the-next-10000-startups-are-easy-to-forecast-take-x-and-add-ai</link><guid isPermaLink="false">https://cdixon.org/2014/11/23/the-business-plans-of-the-next-10000-startups-are-easy-to-forecast-take-x-and-add-ai</guid><pubDate>Sun, 23 Nov 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Kevin Kelly thinks artificial intelligence is finally ready deliver on its promise:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The AI on the horizon looks more like Amazon Web Services—cheap, reliable, industrial-grade digital smartness running behind everything, and almost invisible except when it blinks off. This common utility will serve you as much IQ as you want but no more than you need. Like all utilities, AI will be supremely boring, even as it transforms the Internet, the global economy, and civilization. It will enliven inert objects, much as electricity did more than a century ago. Everything that we formerly electrified we will now cognitize. This new utilitarian AI will also augment us individually as people (deepening our memory, speeding our recognition) and collectively as a species. There is almost nothing we can think of that cannot be made new, different, or interesting by infusing it with some extra IQ. In fact, the business plans of the next 10,000 startups are easy to forecast: Take X and add AI. This is a big deal, and now it&apos;s here.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;from Wired, &quot;&lt;a href=&quot;http://www.wired.com/2014/10/future-of-artificial-intelligence/&quot;&gt;The Three Breakthroughs that have finally unleashed AI on the world&lt;/a&gt;&quot;&lt;/p&gt;</content:encoded></item><item><title><![CDATA["A man will be able to carry one in his vest pocket"]]></title><description><![CDATA[Nikola Tesla predicted the development internet-connected smartphones back in 1926: From the inception of the wireless system, I saw that…]]></description><link>https://cdixon.org/2014/11/19/a-man-will-be-able-to-carry-one-in-his-vest-pocket</link><guid isPermaLink="false">https://cdixon.org/2014/11/19/a-man-will-be-able-to-carry-one-in-his-vest-pocket</guid><pubDate>Wed, 19 Nov 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Nikola Tesla &lt;a href=&quot;http://www.tfcbooks.com/tesla/1926-01-30.htm&quot;&gt;predicted&lt;/a&gt; the development internet-connected smartphones back in 1926:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;From the inception of the wireless system, I saw that this new art of applied electricity would be of greater benefit to the human race than any other scientific discovery, for it virtually eliminates distance.  The majority of the ills from which humanity suffers are due to the immense extent of the terrestrial globe and the inability of individuals and nations to come into close contact.&lt;/p&gt;
&lt;p&gt;Wireless will achieve the closer contact through transmission of intelligence, transport of our bodies and materials and conveyance of energy.&lt;/p&gt;
&lt;p&gt;When wireless is perfectly applied the whole earth will be converted into a huge brain, which in fact it is, all things being particles of a real and rhythmic whole.  We shall be able to communicate with one another instantly, irrespective of distance.  Not only this, but through television and telephony we shall see and hear one another as perfectly as though we were face to face, despite intervening distances of thousands of miles; and the instruments through which we shall be able to do his will be amazingly simple compared with our present telephone.  A man will be able to carry one in his vest pocket.&lt;/p&gt;
&lt;p&gt;We shall be able to witness and hear events--the inauguration of a President, the playing of a world series game, the havoc of an earthquake or the terror of a battle--just as though we were present.&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded></item><item><title><![CDATA["There's no way to tell where the border is between measurement and manipulation"]]></title><description><![CDATA[Jaron Lanier discussing whether machine learning systems like Netflix recommendations, Facebook's newsfeed, Google search etc are…]]></description><link>https://cdixon.org/2014/11/15/theres-no-way-to-tell-where-the-border-is-between-measurement-and-manipulation</link><guid isPermaLink="false">https://cdixon.org/2014/11/15/theres-no-way-to-tell-where-the-border-is-between-measurement-and-manipulation</guid><pubDate>Sat, 15 Nov 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Jaron Lanier &lt;a href=&quot;http://edge.org/conversation/the-myth-of-ai&quot;&gt;discussing&lt;/a&gt; whether machine learning systems like Netflix recommendations, Facebook&apos;s newsfeed, Google search etc are manipulative:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There&apos;s no way to tell where the border is between measurement and manipulation in these systems. For instance, if the theory is that you&apos;re getting big data by observing a lot of people who make choices, and then you&apos;re doing correlations to make suggestions to yet more people, if the preponderance of those people have grown up in the system and are responding to whatever choices it gave them, there&apos;s not enough new data coming into it for even the most ideal or intelligent recommendation engine to do anything meaningful.&lt;/p&gt;
&lt;p&gt;In other words, the only way for such a system to be legitimate would be for it to have an observatory that could observe in peace, not being sullied by its own recommendations. Otherwise, it simply turns into a system that measures which manipulations work, as opposed to which ones don&apos;t work, which is very different from a virginal and empirically careful system that&apos;s trying to tell what recommendations would work had it not intervened. That&apos;s a pretty clear thing. What&apos;s not clear is where the boundary is.&lt;/p&gt;
&lt;p&gt;If you ask: is a recommendation engine like Amazon more manipulative, or more of a legitimate measurement device? There&apos;s no way to know. At this point there&apos;s no way to know, because it&apos;s too universal. The same thing can be said for any other big data system that recommends courses of action to people, whether it&apos;s the Google ad business, or social networks like Facebook deciding what you see, or any of the myriad of dating apps. All of these things, there&apos;s no baseline, so we don&apos;t know to what degree they&apos;re measurement versus manipulation.&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded></item><item><title><![CDATA[The return of podcasting]]></title><description><![CDATA[Kevin Roose recently wrote about the renaissance of podcasting: Sometime around 2009 or 2010, the podcast scene seemed to wither. The…]]></description><link>https://cdixon.org/2014/11/14/the-return-of-podcasting</link><guid isPermaLink="false">https://cdixon.org/2014/11/14/the-return-of-podcasting</guid><pubDate>Fri, 14 Nov 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Kevin Roose recently &lt;a href=&quot;http://nymag.com/daily/intelligencer/2014/10/whats-behind-the-great-podcast-renaissance.html&quot;&gt;wrote&lt;/a&gt; about the renaissance of podcasting:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Sometime around 2009 or 2010, the podcast scene seemed to wither. The stalwarts (&quot;This American Life,&quot; &quot;Radiolab&quot;) stayed around at the top of the iTunes charts, but there wasn&apos;t much else happening. Download numbers fell. Interest waned. People moved on to online video and streaming music services as a way to pass the time... Today, a very different problem exists: There are &lt;em&gt;too&lt;/em&gt; many great podcasts to keep up with.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;He attributes this mainly to the rise of smartphone-connected cars:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Connected cars are a boon for the entire streaming audio industry, but they&apos;re especially exciting for podcast makers, whose shows are perfectly suited to in-car listening. Just as TV watchers can now choose Netflix or Amazon streams over surfing channels, radio listeners will soon have a bevy of on-demand options at their disposal.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I think that&apos;s right, but I also think there is another reason behind podcasting&apos;s renaissance. As other forms of social media have matured, they&apos;ve become less freewheeling and interesting. For example, the social media world I mostly inhabit - tech twitter - used to be exceptionally candid and direct. It felt like tech people chatting amongst themselves. Now it is mostly carefully crafted tweets designed to get retweeted and not cause trouble.&lt;/p&gt;
&lt;p&gt;Podcasting, on the other hand, feels fresh in the same way that other forms of social media did 5-10 years ago. No one knows what the right way to podcast is. Very few people have followings. The expectations are low. You are rewarded mostly for being fresh and experimental. It&apos;s the beginning of a new medium, and no one knows the rules. That&apos;s what makes it exciting and attracts pioneering creators.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["The Future of Reading Depends on the Future of Learning Difficult to Learn Things"]]></title><description><![CDATA[Socrates’ complaints about writing included “Writing removes the need to remember”. He meant that a prosthetic brace on a healthy limb will…]]></description><link>https://cdixon.org/2014/11/08/the-future-of-reading-depends-on-the-future-of-learning-difficult-to-learn-things</link><guid isPermaLink="false">https://cdixon.org/2014/11/08/the-future-of-reading-depends-on-the-future-of-learning-difficult-to-learn-things</guid><pubDate>Sat, 08 Nov 2014 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;Socrates’ complaints about writing included “Writing removes the need to remember”. He meant that a prosthetic brace on a healthy limb will induce withering. On the other hand, if we think of new technologies as amplifiers that add or multiply to what we already have rather than replacing them—then we have the opportunity to use writing for its reach over time and space, its efficiencies, and its ability to hold forms of argument that don’t work in oral discourse. And we can still learn to remember all we’ve read! In other words, writing is not a good replacement for memories used in thinking—too inefficient—but is a great way to cover more ground, to cover different ground, and to have more to think about and with.&lt;/p&gt;
&lt;p&gt;...[McLuhan said] that new media which are adopted at all first take their content from older and more familiar media. For example, it was important that the printed Gutenberg Bible be a Bible, and also look like a hand-made manuscript copy. Gradually, if the new medium has powers of its own, these will start to be found and used. The real message of printing was not to imitate hand-written Bibles, but 150 years later to argue in new ways about science and political governance. These are what forever changed Europe, and then America.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;-Alan Kay, &quot;&lt;a href=&quot;http://www.vpri.org/pdf/future_of_reading.pdf&quot;&gt;The Future of Reading Depends on the Future of Learning Difficult to Learn Things&lt;/a&gt;&quot; (via &lt;a href=&quot;https://twitter.com/ibdknox&quot;&gt;Chris Granger&lt;/a&gt;)&lt;/p&gt;</content:encoded></item><item><title><![CDATA[We asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers]]></title><description><![CDATA[Benedict Evans has a new presentation about the explosive growth of internet-connected smartphones. By 2020, 80% of adults on earth will…]]></description><link>https://cdixon.org/2014/10/28/we-asked-for-flying-cars-and-all-we-got-was-the-entire-planet-communicating-instantly-via-pocket-supercomputers</link><guid isPermaLink="false">https://cdixon.org/2014/10/28/we-asked-for-flying-cars-and-all-we-got-was-the-entire-planet-communicating-instantly-via-pocket-supercomputers</guid><pubDate>Tue, 28 Oct 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Benedict Evans has a new &lt;a href=&quot;http://a16z.com/2014/10/28/mobile-is-eating-the-world/&quot;&gt;presentation&lt;/a&gt; about the explosive growth of internet-connected smartphones.&lt;/p&gt;
&lt;p&gt;By 2020, 80% of adults on earth will have a smartphone:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2014-10-28-at-5-39-38-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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    &gt;
      &lt;span
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    style=&quot;padding-bottom: 65.26655896607431%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
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        alt=&quot;screen shot 2014 10 28 at 5 39 38 pm&quot;
        title=&quot;screen shot 2014 10 28 at 5 39 38 pm&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;And each of those phones is equivalent to what we used to call a supercomputer:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2014-10-28-at-5-39-26-pm.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 602px;&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2014 10 28 at 5 39 26 pm&quot;
        title=&quot;screen shot 2014 10 28 at 5 39 26 pm&quot;
        src=&quot;/static/9c62c6232dd26f1aea9db4c6055e541c/f0a9a/screen-shot-2014-10-28-at-5-39-26-pm.png&quot;
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    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;As Fraiser Speirs &lt;a href=&quot;https://twitter.com/fraserspeirs/status/384142114088427520&quot;&gt;tweeted&lt;/a&gt;, we asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["The great ideas have come from people who weren’t paid to have great ideas"]]></title><description><![CDATA[It is only afterward that a new idea seems reasonable. To begin with, it usually seems unreasonable. It seems the height of unreason to…]]></description><link>https://cdixon.org/2014/10/20/for-every-new-good-idea-you-have-there-ten-thousand-foolish-ones</link><guid isPermaLink="false">https://cdixon.org/2014/10/20/for-every-new-good-idea-you-have-there-ten-thousand-foolish-ones</guid><pubDate>Mon, 20 Oct 2014 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;It is only afterward that a new idea seems reasonable. To begin with, it usually seems unreasonable. It seems the height of unreason to suppose the earth was round instead of flat, or that it moved instead of the sun, or that objects required a force to stop them when in motion, instead of a force to keep them moving, and so on.&lt;/p&gt;
&lt;p&gt;A person willing to fly in the face of reason, authority, and common sense must be a person of considerable self-assurance. Since he occurs only rarely, he must seem eccentric (in at least that respect) to the rest of us. A person eccentric in one respect is often eccentric in others.&lt;/p&gt;
&lt;p&gt;The presence of others can only inhibit [the creative] process, since creation is embarrassing. For every new good idea you have, there are a hundred, ten thousand foolish ones, which you naturally do not care to display.&lt;/p&gt;
&lt;p&gt;Probably more inhibiting than anything else is a feeling of responsibility. The great ideas of the ages have come from people who weren’t paid to have great ideas, but were paid to be teachers or patent clerks or petty officials, or were not paid at all.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;From Isaac Asimov&apos;s &lt;a href=&quot;http://www.technologyreview.com/view/531911/isaac-asimov-mulls-how-do-people-get-new-ideas/&quot;&gt;&quot;How do people get new ideas?&quot;&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA["A lot of the best tech startups are ideas that have been around for years"]]></title><description><![CDATA[A lot of the best tech startups are ideas that have been around for years but the time is finally right. * Some people get jaded. "We tried…]]></description><link>https://cdixon.org/2014/10/15/a-lot-of-the-best-tech-startups-are-ideas-that-have-been-around-for-years</link><guid isPermaLink="false">https://cdixon.org/2014/10/15/a-lot-of-the-best-tech-startups-are-ideas-that-have-been-around-for-years</guid><pubDate>Wed, 15 Oct 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A lot of the best tech startups are ideas that have been around for years but the time is finally right. &lt;a href=&quot;https://twitter.com/cdixon/status/522436019078320128&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Some people get jaded. &quot;We tried X years ago&quot; and summarily dismiss. But then eventually the time is right and it works. &lt;a href=&quot;https://twitter.com/cdixon/status/522436401011630080&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Examples include touch computing, virtual reality, and many areas of artificial intelligence. &lt;a href=&quot;https://twitter.com/cdixon/status/522436555118772224&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Or as pmarca &lt;a href=&quot;https://twitter.com/pmarca/status/526144120444555264&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;In tech, &quot;I tried that 20 years ago and it didn&apos;t work&quot; is a positive predictor, not a negative predictor&lt;/p&gt;</content:encoded></item><item><title><![CDATA["A standard protocol for machines to negotiate bitcoin payments for resources"]]></title><description><![CDATA[Great idea from Brian Armstrong of Coinbase: 1/ Seems like there should be a standard protocol for machines to negotiate bitcoin payments…]]></description><link>https://cdixon.org/2014/10/14/a-standard-protocol-for-machines-to-negotiate-bitcoin-payments-for-resources</link><guid isPermaLink="false">https://cdixon.org/2014/10/14/a-standard-protocol-for-machines-to-negotiate-bitcoin-payments-for-resources</guid><pubDate>Tue, 14 Oct 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Great idea from &lt;a href=&quot;https://twitter.com/brian_armstrong&quot;&gt;Brian Armstrong&lt;/a&gt; of Coinbase:&lt;/p&gt;
&lt;p&gt;1/ Seems like there should be a standard protocol for machines to negotiate bitcoin payments for resources.&lt;/p&gt;
&lt;p&gt;2/ Examples could be getting access to wifi hot spots, your car finding charging stations, mesh networks (net taker/giver).&lt;/p&gt;
&lt;p&gt;3/ Devices could be like vending machines, you drop them out somewhere, and they generate rent for providing resources to passing machines.&lt;/p&gt;
&lt;p&gt;4/ Sample protocol (a) i need X, anyone have it? (b) I have X for sale at Y (c) I accept, payment embedded (d) I reject, stop pinging me&lt;/p&gt;
&lt;p&gt;We are dying to fund people working on ideas like this, or like &lt;a href=&quot;http://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps/&quot;&gt;these&lt;/a&gt; or &lt;a href=&quot;http://blog.chain.com/post/99177371581/bitcoins-killer-apps&quot;&gt;these&lt;/a&gt;.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["You actually have to remind yourself not to believe"]]></title><description><![CDATA[[Virtual Reality] is the last medium. We’re at the very beginning of it, but version 147 is The Matrix or Total Recall. Our brain is no…]]></description><link>https://cdixon.org/2014/10/09/the-last-medium</link><guid isPermaLink="false">https://cdixon.org/2014/10/09/the-last-medium</guid><pubDate>Thu, 09 Oct 2014 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;[Virtual Reality] is the last medium. We’re at the very beginning of it, but version 147 is &lt;em&gt;The Matrix&lt;/em&gt; or &lt;em&gt;Total Recall&lt;/em&gt;. Our brain is no longer translating an approximation of the story. You read a book; your brain reads letters printed in ink on paper and transforms that into a world. You watch a movie; you’re seeing imagery inside of a rectangle while you’re sitting inside a room, and your brain translates that into a world. And you connect to this even though you know it’s not real, but because you’re in the habit of suspending disbelief.&lt;/p&gt;
&lt;p&gt;With virtual reality, you’re essentially hacking the visual-audio system of your brain and feeding it a set of stimuli that’s close enough to the stimuli it expects that it sees it as truth. Instead of suspending your disbelief, you actually have to remind yourself not to believe.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;-Chris Milk, from &lt;a href=&quot;https://stories.californiasunday.com/2014-10-05/virtual-reality-hollywood&quot;&gt;The Last Medium&lt;/a&gt; (the whole article is excellent)&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some ideas for native bitcoin apps]]></title><description><![CDATA[Fred Wilson calls applications built using Bitcoin that couldn't have existed prior to Bitcoin "native Bitcoin apps". Most of the…]]></description><link>https://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps</link><guid isPermaLink="false">https://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps</guid><pubDate>Sat, 04 Oct 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Fred Wilson calls applications built using Bitcoin that couldn&apos;t have existed prior to Bitcoin &quot;&lt;a href=&quot;http://avc.com/2014/09/the-bitcoin-hype-cycle/&quot;&gt;native Bitcoin apps&lt;/a&gt;&quot;. Most of the applications built so far on Bitcoin are not native by this definition. You can buy something at an e-commerce site using Bitcoin and it is cheaper than using a credit card but buying things online isn&apos;t a new activity.&lt;/p&gt;
&lt;p&gt;What will these native Bitcoin apps do? That is very hard to predict, just as it was hard to predict back in 1993 what the successful native Internet apps would be (try to find someone in 1993 who predicted Wikipedia, Twitter, blogging, etc). But we can make some guesses. Here are some of mine:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;strong&gt;International microfinance&lt;/strong&gt; - Soon 5 billion people will have internet-connected smartphones but most still won&apos;t have bank accounts, access to credit, etc. Bitcoin removes most of the cost and friction of cross-border transactions and allows anyone with internet access to participate in the global economy. Early examples of international microfinance services include P2P lending sites like &lt;a href=&quot;https://btcjam.com/&quot;&gt;BTCJam&lt;/a&gt; and &lt;a href=&quot;https://www.bitbond.net/&quot;&gt;Bitbond&lt;/a&gt;.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Allocating bandwidth, storage, compute&lt;/strong&gt;. Bitcoin could enable new ways to share and trade networked resources. For example, people have been trying for years to create mesh networks with only &lt;a href=&quot;http://www.nytimes.com/2014/08/24/nyregion/red-hooks-cutting-edge-wireless-network.html&quot;&gt;occasional&lt;/a&gt; success. It is possible that these systems mostly failed because they didn&apos;t offer the right incentives to share resources. Bitcoin provides a mechanism for network nodes to pay for resources at the protocol level.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Marketplaces -&lt;/strong&gt; Ask anyone who runs a marketplace and they&apos;ll tell you that paying out to people with bank accounts is a huge headache, and paying out to people without bank accounts is altogether impossible. Using Bitcoin, we could take ideas like crowdfunding and crowd labor services (oDesk, 99 Designs, Beacon Reader, Mechanical Turk) and open them up to anyone with a smartphone.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Micropayments&lt;/strong&gt; - The world just ran the first large-scale micropayments experiment - in-app payments on iOS and Android - and it was a huge success. In-app payments quickly became the dominant business model for mobile games, with some games generating billions a dollars a year using them. What would happen if we enabled micropayments on the web and not just for native mobile apps?&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Incentivized social software.&lt;/strong&gt; Up until now, social sites have had to rely on non-monetary currencies such as likes, followers, karma, upvotes, etc. With Bitcoin we can add actual monetary incentives to the mix. This is happening organically on Reddit where users are tipping each other using Bitcoin and Dogecoin. A good exercise would be to go back and look at the history of failed social sites and try to rethink them using financial incentives.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The first phase of Bitcoin was about laying the foundational infrastructure - gateways, consumer wallets, developer platforms, merchant services etc. The next phase will be about native Bitcoin apps - building new things that could never have been built before. These will likely be the applications that drive Bitcoin adoption into the mainstream.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["Natural languages are adequate, but that doesn't mean they're optimal"]]></title><description><![CDATA[Languages are something of a mess. They evolve over centuries through an unplanned, democratic process that leaves them teeming with…]]></description><link>https://cdixon.org/2014/08/15/natural-languages-are-adequate-but-that-doesnt-mean-theyre-optimal-2</link><guid isPermaLink="false">https://cdixon.org/2014/08/15/natural-languages-are-adequate-but-that-doesnt-mean-theyre-optimal-2</guid><pubDate>Fri, 15 Aug 2014 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;Languages are something of a mess. They evolve over centuries through an unplanned, democratic process that leaves them teeming with irregularities, quirks, and words like “knight.” No one who set out to design a form of communication would ever end up with anything like English, Mandarin, or any of the more than six thousand languages spoken today.&lt;/p&gt;
&lt;p&gt;“Natural languages are adequate, but that doesn’t mean they’re optimal,” John Quijada, a fifty-three-year-old former employee of the California State Department of Motor Vehicles, told me. In 2004, he published a monograph on the Internet that was titled “Ithkuil: A Philosophical Design for a Hypothetical Language.” Written like a linguistics textbook, the fourteen-page Web site ran to almost a hundred and sixty thousand words. It documented the grammar, syntax, and lexicon of a language that Quijada had spent three decades inventing in his spare time. Ithkuil had never been spoken by anyone other than Quijada, and he assumed that it never would be.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;From &lt;a href=&quot;http://www.newyorker.com/magazine/2012/12/24/utopian-for-beginners&quot;&gt;Utopian for Beginners&lt;/a&gt;, an excellent 2012 New Yorker article about constructed human languages.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Steve Jobs on problem solving]]></title><description><![CDATA[When you start looking at a problem and it seems really simple,  you don’t really understand the complexity of the problem.  Then you get…]]></description><link>https://cdixon.org/2014/08/15/steve-jobs-on-problem-solving</link><guid isPermaLink="false">https://cdixon.org/2014/08/15/steve-jobs-on-problem-solving</guid><pubDate>Fri, 15 Aug 2014 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;When you start looking at a problem and it seems really simple,  you don’t really understand the complexity of the problem.  Then you get into the problem,  and you see that it’s really complicated,  and you come up with all these convoluted solutions.  That’s sort of the middle,  and that’s where most people stop… But the really great person will keep on going and find the key, the underlying principle of the problem — and come up with an elegant,  really beautiful solution that works.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;from &lt;a href=&quot;http://www.amazon.com/Insanely-Great-Macintosh-Computer-Everything/dp/0140291776&quot;&gt;Insanely Great&lt;/a&gt; (via &lt;a href=&quot;http://instagram.com/gmc3&quot;&gt;gmc&lt;/a&gt;)&lt;/p&gt;</content:encoded></item><item><title><![CDATA["Bitcoin is the currency the internet deserves and needs"]]></title><description><![CDATA[George Gilder discusses the importance of Bitcoin in a very interesting interview: To have a civilization you need more than just bits and…]]></description><link>https://cdixon.org/2014/08/13/bitcoin-is-the-currency-the-internet-deserves-and-needs</link><guid isPermaLink="false">https://cdixon.org/2014/08/13/bitcoin-is-the-currency-the-internet-deserves-and-needs</guid><pubDate>Wed, 13 Aug 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;George Gilder discusses the importance of Bitcoin in a very interesting &lt;a href=&quot;https://www.youtube.com/watch?v=V9hb0EKAcro&amp;#x26;list=UU0uVZd8N7FfIZnPu0y7o95A&quot;&gt;interview&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;To have a civilization you need more than just bits and bytes. You need contracts, transactions, provable facts, titles, notarization, identities etc. You need all these other factors thatcan&apos;t be accommodated very well on the existing internet. So you have to banks and all these other outside channels to conduct transactions. You have this comedy of bogus contracts to you are supposed to sign to proceed - click the button to accept the contract etc.&lt;/p&gt;
&lt;p&gt;The internet is full of junk. It pretends that a lot of that stuff is free which of course is a lie. So it’s full of lies. It’s a hustle. This is the result just having pure Shannon information. Shannon identifies information exclusively by its surprisal- the unexpected bits. That&apos;s how you measure information and bandwidth across the internet. Shannon’s a great genius. He created to perfect theory for the network layer. But as you know you need more than three layers on the network. You need a whole apparatus on top of the network layer.&lt;/p&gt;
&lt;p&gt;Bitcoin is a breakthrough in information theory that allows you - without reference to outside 3rd parties - to conduct provable, timestamped transactions that can’t be changed, can’t be faked, and can’t be duplicated. Bitcoin is the currency the internet deserves and needs.&lt;/p&gt;
&lt;/blockquote&gt;</content:encoded></item><item><title><![CDATA[As elegantly produced as movies and as engaging as great novels]]></title><description><![CDATA[MIT professor Woodie Flowers argues that higher education's current approach to online learning is misguided: We decided to assume that the…]]></description><link>https://cdixon.org/2014/08/03/as-elegantly-produced-as-movies-and-as-engaging-as-great-novels</link><guid isPermaLink="false">https://cdixon.org/2014/08/03/as-elegantly-produced-as-movies-and-as-engaging-as-great-novels</guid><pubDate>Sun, 03 Aug 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;MIT professor Woodie Flowers &lt;a href=&quot;http://web.mit.edu/fnl/volume/243/flowers.html&quot;&gt;argues&lt;/a&gt; that higher education&apos;s current approach to online learning is misguided:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;We decided to assume that the world could hardly wait to see our huge pile of PDFs, PowerPoint presentations, classroom locations, teaching assistant lists, and other assorted bits of information about our courses.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Instead, universities should produce new learning materials specifically for the online world:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In their highly developed form, learning materials would be as elegantly produced as movies and video games and would be as engaging as a great novel. They would be ‘smart’ to both accommodate the learners’ varied styles and yield data to facilitate their continuous improvement.&lt;/p&gt;
&lt;p&gt;Each year, 600,000 first-year college students take calculus; 250,000 fail. At $2000/failed-course, that is half-a-billion dollars. That happens to be the approximate cost of the movie &lt;em&gt;Avatar&lt;/em&gt;, a movie that took a thousand people four years to make. Many of those involved in the movie were the best in their field. The present worth of losses of $500 million/year, especially at current discount rates, is an enormous number.... even a $100 million investment could cut the calculus failure rate in half.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Online courses are to offline courses as movies are to plays. The marginal cost of delivering online courses is minimal. The potential audience is everyone with a smartphones and an internet connection - about 1.5 billion people today and growing quickly. There is no reason we shouldn&apos;t be investing as much to produce online courses as we do to produce Hollywood movies.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Three levels of enthusiasm for technology]]></title><description><![CDATA[Most businesses today believe that technology can dramatically improve the way they operate. But they embrace technology with varying levels…]]></description><link>https://cdixon.org/2014/08/02/three-levels-of-enthusiasm-for-technology</link><guid isPermaLink="false">https://cdixon.org/2014/08/02/three-levels-of-enthusiasm-for-technology</guid><pubDate>Sat, 02 Aug 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Most businesses today believe that technology can dramatically improve the way they operate. But they embrace technology with varying levels of enthusiasm.&lt;/p&gt;
&lt;p&gt;The lowest level of enthusiasm is to adopt technologies made by other companies - email, customer services software, etc - and perhaps create an &quot;IT department&quot; to manage those technologies but nothing more. The next level of enthusiasm is to create an internal technology organization - a senior executive position like a CTO, a technology department, etc - and develop proprietary software. The highest level of enthusiasm is to have top management with technology backgrounds who see technology as core to every organizational function. For them, having a technology department would be like having a business department - redundant and strange.&lt;/p&gt;
&lt;p&gt;A lot of recent Silicon Valley startups look at first glance like non-technology companies, doing things like food delivery, home services, transportation, etc. The difference is that the founders often grew up with technology, have backgrounds developing software, and can&apos;t imagine anything other then a technology-centric worldview. They&apos;re betting that by putting technology at the core, they&apos;ll be able to create dramatically better products and services.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Bitcoin and volatility]]></title><description><![CDATA[The beauty of software platforms is that you can solve almost any problem by writing more software. For example, one of the most common…]]></description><link>https://cdixon.org/2014/07/19/bitcoin-and-volatility</link><guid isPermaLink="false">https://cdixon.org/2014/07/19/bitcoin-and-volatility</guid><pubDate>Sat, 19 Jul 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The beauty of software platforms is that you can solve almost any problem by writing more software.&lt;/p&gt;
&lt;p&gt;For example, one of the most common criticisms of Bitcoin is that it is too volatile and speculative to be used as a payment system.  Merchants want the stability of government-backed currencies. Buyers don&apos;t want their Bitcoin exposure to fluctuate whenever they transact in Bitcoin.&lt;/p&gt;
&lt;p&gt;Coinbase has solved this problem. &lt;a href=&quot;https://coinbase.com/merchants&quot;&gt;Merchants&lt;/a&gt; can instantly convert any Bitcoin they receive into dollars.  Buyers can &lt;a href=&quot;http://blog.coinbase.com/post/89402160917/buyback-bitcoin-after-checkout&quot;&gt;automatically replenish&lt;/a&gt; any Bitcoin they spend. Transactions that use Coinbase this way create zero net Bitcoin exposure for either party. Volatility is no longer an issue.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["It's pretty difficult to solve big problems in four years"]]></title><description><![CDATA[Larry Page: When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you're running Exxon, what do you…]]></description><link>https://cdixon.org/2014/07/06/its-pretty-difficult-to-solve-big-problems-in-four-years</link><guid isPermaLink="false">https://cdixon.org/2014/07/06/its-pretty-difficult-to-solve-big-problems-in-four-years</guid><pubDate>Sun, 06 Jul 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;a href=&quot;http://www.khoslaventures.com/fireside-chat-with-google-co-founders-larry-page-and-sergey-brin&quot;&gt;Larry Page&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you&apos;re running Exxon, what do you do? Say you want to do something good with the most valuable company on earth. A lot of people think probably, it&apos;s not doing good things - worried about the environment and so on. But if the company has a lot of capabilities--worldwide operations and manufacturing, government relations, probably could do a lot different things, if you took a 20-year view.&lt;/p&gt;
&lt;p&gt;If you took a four-year view, that&apos;s a pretty hard question to answer. What are you doing in the next four years, which I think is about the average tenure of a Fortune 500 CEO. So if you&apos;re being measured quarterly-- obviously, it&apos;s good to have some pressure so you actually do things, make money and improve things. But I think the four-year horizon for leaders is pretty difficult.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;It&apos;s pretty difficult to solve big problems in four years. I think it&apos;s probably pretty easy to do it in 20 years. I think our whole system is setup in a way that makes it difficult for leaders of really big companies.&lt;/strong&gt; Eventually, what you&apos;re doing doesn&apos;t makes sense over time, for whatever reasons - environmental or social or whatever it is. I think companies have a big problem making a big transition, so leaders get replaced.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;A huge advantage of companies like Google, Facebook, and Amazon is that they have CEOs with the gravitas (and, sometimes, control provisions) to operate on a very long-time horizon.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The next twenty years are going to make this last twenty years just pale]]></title><description><![CDATA[If we were sent back with a time machine, even 20 years, and reported to people what we have right now and describe what we were going to…]]></description><link>https://cdixon.org/2014/06/15/the-next-twenty-years-are-going-to-make-this-last-twenty-years-just-pale</link><guid isPermaLink="false">https://cdixon.org/2014/06/15/the-next-twenty-years-are-going-to-make-this-last-twenty-years-just-pale</guid><pubDate>Sun, 15 Jun 2014 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;If we were sent back with a time machine, even 20 years, and reported to people what we have right now and describe what we were going to get in this device in our pocket—we&apos;d have this free encyclopedia, and we&apos;d have street maps to most of the cities of the world, and we&apos;d have box scores in real time and stock quotes and weather reports, PDFs for every manual in the world—we&apos;d make this very, very, very long list of things that we would say we would have and we get on this device in our pocket, and then we would tell them that most of this content was free. You would simply be declared insane. They would say there is no economic model to make this. What is the economics of this? It doesn&apos;t make any sense, and it seems far-fetched and nearly impossible.&lt;/p&gt;
&lt;p&gt;But the next twenty years are going to make this last twenty years just pale. We&apos;re just at the beginning of the beginning of all these kind of changes. There&apos;s a sense that all the big things have happened, but relatively speaking, nothing big has happened yet.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;-&lt;a href=&quot;http://edge.org/conversation/the-technium&quot;&gt;The Technium: An Interview with Kevin Kelly&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Software eats software development]]></title><description><![CDATA[Software is eating the world, and doing so using smaller and smaller teams. WhatsApp was able to disrupt the global SMS industry with only a…]]></description><link>https://cdixon.org/2014/04/13/software-eats-software-development</link><guid isPermaLink="false">https://cdixon.org/2014/04/13/software-eats-software-development</guid><pubDate>Sun, 13 Apr 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Software is eating the world, and doing so using smaller and smaller teams. WhatsApp was able to disrupt the global SMS industry with only a few dozen engineers. Small teams can have a big impact because software development (and deployment) has improved dramatically over the past decade. Some improvements include:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;strong&gt;Infrastructure&lt;/strong&gt;. Deploying a commercial website ten years ago required significant upfront capital. Now you can spin up virtual servers in minutes. Upfront costs are close to zero and ongoing costs are orders of magnitude lower than before.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Services&lt;/strong&gt;. Startups created simple APIs that abstract away complex back ends. Examples: Stripe (payments), Twilio (communications), Firebase (databases), Sift Science (fraud).&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Open Source&lt;/strong&gt;. Open source dominates every level of the software stack, including operating systems (Linux), databases (MySql), web servers (Apache), and programming languages (Python, Ruby). These are not only free but generally also far higher quality than their commercial counterparts.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Programming languages&lt;/strong&gt;. Developers have steadily marched upwards from Assembly to C to Java to, today, scripting languages like Ruby and Python. Moore&apos;s Law gave us excess computing resources. We spent it making developers more effective.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Special-purpose tools for non-programmers&lt;/strong&gt;. These tools let non-programmers create software in certain pre-defined categories, thereby lowering costs and reducing the demand for developers. Examples: Shopify (e-commerce), Wordpress (blogging), and Weebly (small business websites).&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;General-purpose tools for non-programmers&lt;/strong&gt;. In the pre-Internet era, tools like Hypercard and Visual Basic allowed hundreds of millions of semi-technical people to become software developers. Since then, there hasn&apos;t been much work in these areas, but from what I&apos;ve seen that might change soon. By allowing more people to program, these tools act as a force multiplier for the software industry.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;In all likelihood, the demand for software development will continue to dramatically outpace the supply. If so, &quot;software eats software development&quot; will be an exciting area going forward, with lots of valuable startups created in the process.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The decline of the mobile web]]></title><description><![CDATA[People are spending more time on mobile vs desktop:  And more of their mobile time using apps, not the web:  This is a worrisome trend for…]]></description><link>https://cdixon.org/2014/04/07/the-decline-of-the-mobile-web</link><guid isPermaLink="false">https://cdixon.org/2014/04/07/the-decline-of-the-mobile-web</guid><pubDate>Mon, 07 Apr 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;People are spending more time on mobile vs desktop:&lt;/p&gt;
&lt;p&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/086d22587892530dc055199fdd59c8ea/b3ee8/comscore-mobile-users-desktop-users-2014.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 73.02083333333333%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;comscore mobile users desktop users 2014&quot;
        title=&quot;comscore mobile users desktop users 2014&quot;
        src=&quot;/static/086d22587892530dc055199fdd59c8ea/d6856/comscore-mobile-users-desktop-users-2014.jpg&quot;
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        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;&lt;/p&gt;
&lt;p&gt;And more of their mobile time using apps, not the web:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/apps_dominate_hires-resized-600.png&quot;&gt;&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 600px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 84.83333333333333%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;apps dominate hires resized 600&quot;
        title=&quot;apps dominate hires resized 600&quot;
        src=&quot;/static/569a9f4c0cd234bb568a8983574d4fc3/34e8a/apps_dominate_hires-resized-600.png&quot;
        srcset=&quot;/static/569a9f4c0cd234bb568a8983574d4fc3/924ad/apps_dominate_hires-resized-600.png 170w,
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        sizes=&quot;(max-width: 600px) 100vw, 600px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;This is a worrisome trend for the web. Mobile is the future. What wins mobile, wins the Internet. Right now, apps are winning and the web is losing.&lt;/p&gt;
&lt;p&gt;Moreover, there are signs that it will only get worse. Ask any web company and they will tell you that they value app users more than web users. This is why you see so many popups and banners on mobile websites that try to get you to download apps. It is also why so many mobile websites are &lt;a href=&quot;http://brokenmobile.tumblr.com/?utm_content=buffer010a0&amp;#x26;utm_medium=social&amp;#x26;utm_source=twitter.com&amp;#x26;utm_campaign=buffer&quot;&gt;broken&lt;/a&gt;. Resources are going to app development over web development. As the mobile web UX further deteriorates, the momentum toward apps will only increase.&lt;/p&gt;
&lt;p&gt;The likely end state is the web becomes a niche product used for things like 1) trying a service before you download the app, 2) consuming long tail content (e.g. link to a niche blog from Twitter or Facebook feed).&lt;/p&gt;
&lt;p&gt;This will hurt long-term innovation for a number of reasons:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Apps have a rich-get-richer dynamic that favors the status quo over new innovations. Popular apps get home screen placement, get used more, get ranked higher in app stores, make more money, can pay more for distribution, etc. The end state will probably be like cable TV - a few dominant channels/apps that sit on users&apos; home screens and everything else relegated to lower tiers or irrelevance.&lt;/li&gt;
&lt;li&gt;Apps are heavily controlled by the dominant app stores owners, Apple and Google. Google and Apple control what apps are allowed to exist, how apps are built, what apps get promoted, and charge a 30% tax on revenues.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Most worrisome: they reject entire classes of apps without stated reasons or allowing for recourse (e.g. Apple has rejected all apps related to Bitcoin). The open architecture of the web led to an incredible era of experimentation. Many startups were controversial when they were first founded.  What if AOL or some other central gatekeeper had controlled the web, and developers had to ask permission to create Google, Youtube, eBay, Paypal, Wikipedia, Twitter, Facebook, etc. Sadly, this is where we&apos;re headed on mobile.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Oculus]]></title><description><![CDATA[I've seen a handful of technology demos in my life that made me feel like I was glimpsing into the future. The best ones were: the Apple II…]]></description><link>https://cdixon.org/2014/03/25/oculus</link><guid isPermaLink="false">https://cdixon.org/2014/03/25/oculus</guid><pubDate>Tue, 25 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I&apos;ve seen a handful of technology demos in my life that made me feel like I was glimpsing into the future. The best ones were: the Apple II, the Macintosh, Netscape, Google, the iPhone, and - most recently - the &lt;a href=&quot;http://www.oculusvr.com/&quot;&gt;Oculus&lt;/a&gt; Rift.&lt;/p&gt;
&lt;p&gt;Virtual reality has long been a staple of science fiction. In real life, however, attempts to create virtual reality have consistently disappointed. Oculus was founded on the contrarian belief that the right people at the right time could finally deliver on the science fiction promise. Hardware components had become sufficiently powerful and inexpensive, and the pioneering engineers who invented 3D gaming were eager to explore a new frontier.&lt;/p&gt;
&lt;p&gt;Last year, my partner Gil Shafir and I spent time studying Oculus and virtual reality technology more generally. The more we learned, the more we became convinced that virtual reality would become central to the next great wave of computing. We were therefore thrilled when we got the chance to invest in Oculus later on.&lt;/p&gt;
&lt;p&gt;Today, Facebook &lt;a href=&quot;https://www.facebook.com/zuck/posts/10101319050523971?stream_ref=1&quot;&gt;announced&lt;/a&gt; that they are acquiring Oculus. Facebook&apos;s support will dramatically accelerate the development of the virtual reality ecosystem. While we are sad to no longer be working with Oculus, we are very happy to see virtual reality receive the support it deserves.&lt;/p&gt;
&lt;p&gt;I can&apos;t say enough about the Oculus team. Palmer, Brendan, John, Nate, and the rest of the team are true technology visionaries. They&apos;ve assembled an incredible group of creative technologists from diverse fields. It was awesome tagging along for the ride, and I can&apos;t wait to see what they do at Facebook.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["We leverage the billions of dollars spent on the consumer mobile phone business"]]></title><description><![CDATA[NYTimes has an excellent profile of Planet Labs, a startup that makes low-cost satellites: These satellites are powered by batteries…]]></description><link>https://cdixon.org/2014/03/17/we-leverage-the-billions-of-dollars-spent-on-the-consumer-mobile-phone-business</link><guid isPermaLink="false">https://cdixon.org/2014/03/17/we-leverage-the-billions-of-dollars-spent-on-the-consumer-mobile-phone-business</guid><pubDate>Mon, 17 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;NYTimes has an excellent &lt;a href=&quot;http://www.nytimes.com/2014/03/17/technology/start-ups-aim-to-conquer-space-market.html?_r=2&quot;&gt;profile&lt;/a&gt; of Planet Labs, a startup that makes low-cost satellites:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;These satellites are powered by batteries normally found in a laptop, with semiconductors similar to those in a smartphone. “Nothing here was prequalified to be in space,” Mr. Marshall said. “We bought most of our parts online.”&lt;/p&gt;
&lt;p&gt;Planet Labs will not disclose its manufacturing costs, but potential customers who have seen the products think the satellites are approximately 95 percent cheaper than most satellites, a figure Mr. Marshall would neither confirm nor dispute. “We leverage the billions of dollars spent on the consumer mobile phone business” for most of the company’s parts, he said.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Chris Anderson &lt;a href=&quot;http://www.foreignpolicy.com/articles/2013/04/29/epiphanies_from_chris_anderson&quot;&gt;calls&lt;/a&gt; this &quot;the peace dividend of the smartphone war.&quot; Across a wide range of sectors, startups are now tackling problems that previously required billions of dollars from governments or multinational corporations.&lt;/p&gt;</content:encoded></item><item><title><![CDATA["There's just a tremendous amount of craftsmanship in between a great idea and a great product"]]></title><description><![CDATA[Steve Jobs in 1995: There's just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that…]]></description><link>https://cdixon.org/2014/03/16/theres-just-a-tremendous-amount-of-craftsmanship-in-between-a-great-idea-and-a-great-product</link><guid isPermaLink="false">https://cdixon.org/2014/03/16/theres-just-a-tremendous-amount-of-craftsmanship-in-between-a-great-idea-and-a-great-product</guid><pubDate>Sun, 16 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Steve Jobs in &lt;a href=&quot;http://tech.fortune.cnn.com/2011/11/11/steve-jobs-the-parable-of-the-stones/&quot;&gt;1995&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There&apos;s just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that great idea, it changes and grows. It never comes out like it starts because you learn a lot more as you get into the subtleties of it. And you also find there are tremendous tradeoffs that you have to make. There are just certain things you can&apos;t make electrons do. There are certain things you can&apos;t make plastic do. Or glass do. Or factories do. Or robots do.&lt;/p&gt;
&lt;p&gt;Designing a product is keeping five thousand things in your brain and fitting them all together in new and different ways to get what you want. And every day you discover something new that is a new problem or a new opportunity to fit these things together a little differently.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This is why almost all successful startups have founders who understand business, design, and technology. Product development is the process of navigating a &lt;a href=&quot;http://www.cdixon.org/2013/08/04/the-idea-maze/&quot;&gt;maze&lt;/a&gt; - not three separate mazes, but a single maze that intersects all these functions. The people navigating the maze need the full authority of the company behind them.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Full stack startups]]></title><description><![CDATA[Many of today's most exciting startups were tried before in a different form. Suppose you develop a new technology that is valuable to some…]]></description><link>https://cdixon.org/2014/03/15/full-stack-startups</link><guid isPermaLink="false">https://cdixon.org/2014/03/15/full-stack-startups</guid><pubDate>Sat, 15 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Many of today&apos;s most exciting startups were tried before in a different form.&lt;/p&gt;
&lt;p&gt;Suppose you develop a new technology that is valuable to some industry. The old approach was to sell or license your technology to the existing companies in that industry. The new approach is to build a complete, end-to-end product or service that bypasses existing companies.&lt;/p&gt;
&lt;p&gt;Prominent examples of this &quot;full stack&quot; approach include Tesla, Warby Parker, Uber, Harry&apos;s, Nest, Buzzfeed, and Netflix. Most of these companies had &quot;partial stack&quot; antecedents that either failed or ended up being relatively small businesses. The problems with the partial stack approach include:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Bad product experience. Nest is great because of deep, Apple-like integration between software, hardware, design, services, etc, something they couldn&apos;t have achieved licensing to Honeywell etc.&lt;/li&gt;
&lt;li&gt;Cultural resistance to new technologies. The media industry is notoriously slow to adopt new technologies, so Netflix is (mostly) bypassing them.&lt;/li&gt;
&lt;li&gt;Unfavorable economics. Your slice of the stack might be quite valuable but without control of the end customer it&apos;s very hard to get paid accordingly.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;The full stack approach lets you bypass industry incumbents, completely control the customer experience, and capture a greater portion of the economic benefits you provide.&lt;/p&gt;
&lt;p&gt;The challenge with the full stack approach is you need to get good at many different things: software, hardware, design, consumer marketing, supply chain management, sales, partnerships, regulation, etc. The good news is that if you can pull this off, it is very hard for competitors to replicate so many interlocking pieces.&lt;/p&gt;
&lt;p&gt;My guess is we are still at the very beginning of the full stack movement. Many large industries remain relatively untouched by the information technology revolution. That will likely change now that startups have figured out the right approach.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Stored Hashcash]]></title><description><![CDATA[One of the greatest inventions in the history of computer security is Hashcash. Internet blights like spam and denial-of-service attacks are…]]></description><link>https://cdixon.org/2014/03/14/stored-hashcash</link><guid isPermaLink="false">https://cdixon.org/2014/03/14/stored-hashcash</guid><pubDate>Fri, 14 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the greatest inventions in the history of computer security is &lt;a href=&quot;http://en.wikipedia.org/wiki/Hashcash&quot;&gt;Hashcash&lt;/a&gt;. Internet blights like spam and &lt;a href=&quot;http://en.wikipedia.org/wiki/Denial-of-service_attack&quot;&gt;denial-of-service&lt;/a&gt; attacks are what economists call &quot;tragedy of the commons&quot; problems. They exploit the fact that it&apos;s free to send email and make web requests. At zero cost, you can have a profitable business even at extremely low success rates.&lt;/p&gt;
&lt;p&gt;One way to fix these problems is to impose tariffs that hurt bad actors without hurting good actors. For example, you could impose &quot;postage fees&quot; on every email and web request. Unfortunately, in practice, this is impossible, because you&apos;d have to set up billing relationships between every computer that wants to communicate.&lt;/p&gt;
&lt;p&gt;The brilliant idea behind Hashcash is to replace a monetary postage fee with a computational postage fee. In order to send an email, the sender first has to solve a math problem. Legitimate activities suffer an indiscernible delay, but illegitimate activities that require massive volume are hobbled.&lt;/p&gt;
&lt;p&gt;Hashcash is a great idea, but cumbersome in practice. For example, the cost imposed on senders varies widely depending on the performance of their email servers. It also hinders legitimate bulk emails like clubs and retailers sending updates to their mailing lists.&lt;/p&gt;
&lt;p&gt;The offline analogy to Hashcash is a postal system where senders are required to perform some work every time they want to send something. If you&apos;re a lawyer, you need to practice some law before you send mail. If you&apos;re a doctor, you need to cure something before you send mail. Etc. This of course would be a preposterous postal system.&lt;/p&gt;
&lt;p&gt;Adam Smith called money &quot;&lt;a href=&quot;https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book02/ch03.htm&quot;&gt;stored labor&lt;/a&gt;&quot;. You do your work and then store your labor as money, which you can later exchange for labor stored by other people. Storing labor in the form of money turns out to be a very flexible system for trading labor, and far superior to the barter system of performing work whenever your counterparty performs work.&lt;/p&gt;
&lt;p&gt;So Adam Smith&apos;s version of Hashcash is a system where you get credits for doing computation. You store your computational credits and spend them at your leisure. If you want to send an email, you can spend a little stored Hashcash. If I send you an email and you reply, we&apos;re even. If you send out a billion spam emails, it costs you a lot and undermines your spammy business model.&lt;/p&gt;
&lt;p&gt;There are other important problems that stored Hashcash could solve. Denial-of-service attacks are spam attacks except they happen on HTTP instead of SMTP and the payoff is ransom instead of spam offers. Computer scientists have long &lt;a href=&quot;http://link.springer.com/chapter/10.1007%2F978-3-642-30373-9_43#page-1&quot;&gt;believed&lt;/a&gt; that pricing schemes could dramatically reduce network congestion. Like every large-scale distributed system, the Internet benefits when scarce resources are efficiently allocated.&lt;/p&gt;
&lt;p&gt;It seems plausible that if a system like stored Hashcash were developed, some people would prefer to purchase stored Hashcash directly instead of generating it themselves. A market for stored Hashcash would emerge, with the value being some function of the supply and demand of scarce Internet resources.&lt;/p&gt;
&lt;p&gt;So here&apos;s my question: suppose someone invented a way to store Hashcash. It could dramatically reduce spam and denial-of-service attacks, and more efficiently allocate network bandwidth and other Internet resources. How valuable would stored Hashcash be?&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Four categories of Bitcoin-related projects]]></title><description><![CDATA[New Bitcoin-related software projects are launching every day. From what I can tell these projects fall into four main categories: Bitcoin…]]></description><link>https://cdixon.org/2014/03/13/four-categories-of-bitcoin-inspired-projects</link><guid isPermaLink="false">https://cdixon.org/2014/03/13/four-categories-of-bitcoin-inspired-projects</guid><pubDate>Thu, 13 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;New Bitcoin-related software projects are launching every day. From what I can tell these projects fall into four main categories:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Bitcoin apps and services&lt;/em&gt;: These try to make Bitcoin more accessible, stable, secure, and useful. Examples: wallets, merchant services, fiat-to-crypto exchanges, crypto-to-crypto exchanges, Bitcoin derivatives exchanges, tipping services, and merchant microtransaction services.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Bitcoin protocol extensions:&lt;/em&gt; These are applications that use the Bitcoin blockchain as a global, secure, single-instance database and generally ignore Bitcoin-as-a-currency. Examples: &lt;a href=&quot;http://www.mastercoin.org/&quot;&gt;Mastercoin&lt;/a&gt;, &lt;a href=&quot;http://coloredcoins.org/&quot;&gt;Colored Coins,&lt;/a&gt; and a Princeton project that is building a &lt;a href=&quot;http://dailyprincetonian.com/news/2014/01/u-researchers-develop-bitcoin-prediction-market/&quot;&gt;predictive market&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Altcoins&lt;/em&gt;: These are basically Bitcoin variants with branding and technical modifications (and their own blockchain). Like Bitcoin, the primary purpose is to allow the store and transfer of value. Examples: &lt;a href=&quot;https://litecoin.org/&quot;&gt;Litecoin&lt;/a&gt;, &lt;a href=&quot;http://dogecoin.com/&quot;&gt;Dogecoin&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Appcoins&lt;/em&gt;: These are new projects that are inspired by Bitcoin&apos;s architecture but are intended to do things besides storing/transferring value (they also use their own blockchain). Examples: &lt;a href=&quot;https://www.namecoin.org/&quot;&gt;Namecoin&lt;/a&gt;, &lt;a href=&quot;https://www.ethereum.org/&quot;&gt;Ethereum&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;To me, the first two categories are probably the most interesting. If there is one thing we&apos;ve learned from the development of Internet protocols like HTTP and SMTP, it&apos;s that network adoption is key. There will always be better protocols, but the combination of broad adoption and open extensibility generally wins. (Although Naval and Balaji make a compelling case for Appcoins &lt;a href=&quot;http://startupboy.com/2014/03/09/the-bitcoin-model-for-crowdfunding/&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;</content:encoded></item><item><title><![CDATA["I've come up with a set of rules that describe our reactions to technologies"]]></title><description><![CDATA["I've come up with a set of rules that describe our reactions to technologies: 1. Anything that is in the world when you’re born is normal…]]></description><link>https://cdixon.org/2014/03/13/ive-come-up-with-a-set-of-rules-that-describe-our-reactions-to-technologies</link><guid isPermaLink="false">https://cdixon.org/2014/03/13/ive-come-up-with-a-set-of-rules-that-describe-our-reactions-to-technologies</guid><pubDate>Thu, 13 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&quot;I&apos;ve come up with a set of rules that describe our reactions to technologies:&lt;/p&gt;
&lt;p&gt;1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.&lt;/p&gt;
&lt;p&gt;2. Anything that&apos;s invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.&lt;/p&gt;
&lt;p&gt;3. Anything invented after you&apos;re thirty-five is against the natural order of things.&quot;&lt;/p&gt;
&lt;p&gt;- Douglas Adams (entire &lt;a href=&quot;http://www.douglasadams.com/dna/19990901-00-a.html&quot;&gt;original article&lt;/a&gt; is well worth reading)&lt;/p&gt;</content:encoded></item><item><title><![CDATA[If you asked people in 1989...]]></title><description><![CDATA["If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said that a decentralized…]]></description><link>https://cdixon.org/2014/03/12/433</link><guid isPermaLink="false">https://cdixon.org/2014/03/12/433</guid><pubDate>Wed, 12 Mar 2014 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&quot;If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said that a decentralized network of information nodes that are linked using hypertext.&quot;&lt;/p&gt;
&lt;p&gt;- &lt;a href=&quot;http://farmerandfarmer.org/mastery/builder.html&quot;&gt;Farmer &amp;#x26; Farmer&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Coinbase]]></title><description><![CDATA[One of the interesting things about Bitcoin is the contrast between how it is portrayed in the press and how it is understood by…]]></description><link>https://cdixon.org/2013/12/12/coinbase</link><guid isPermaLink="false">https://cdixon.org/2013/12/12/coinbase</guid><pubDate>Thu, 12 Dec 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the interesting things about Bitcoin is the contrast between how it is portrayed in the press and how it is understood by technologists. The press tends to portray Bitcoin as either a speculative bubble or a scheme for supporting criminal activity. In Silicon Valley, by contrast, Bitcoin is generally &lt;a href=&quot;http://www.usv.com/posts/bitcoin-as-protocol&quot;&gt;viewed&lt;/a&gt; as a &lt;a href=&quot;http://startupboy.com/2013/11/07/bitcoin-the-internet-of-money/&quot;&gt;profound&lt;/a&gt; technological breakthrough.&lt;/p&gt;
&lt;p&gt;The Internet is based on a set of core protocols that specify how information such as text, photos, and code should be transmitted. The designers of the Web built &lt;a href=&quot;http://100pulse.com/http-statuscode/402.jsp&quot;&gt;placeholders&lt;/a&gt; for a system that moved money, but never successfully completed it. Bitcoin is the first plausible proposal for an economic protocol for the Internet.&lt;/p&gt;
&lt;p&gt;This matters for two reasons:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;It fixes serious problems with existing payment systems that depend on centralized services to verify the validity of transactions. These services are both expensive (roughly a 2.5% tax on all transactions) and prone to failure (Internet payment fraud is rampant).&lt;/li&gt;
&lt;li&gt;More importantly, Bitcoin is a platform upon which new technologies can be developed. Developers have created some &lt;a href=&quot;https://docs.google.com/document/d/1AnkP_cVZTCMLIzw4DvsW6M8Q2JC0lIzrTLuoWu2z1BE/edit&quot;&gt;early&lt;/a&gt; &lt;a href=&quot;http://www.proofofexistence.com/&quot;&gt;applications&lt;/a&gt;, and &lt;a href=&quot;https://www.mail-archive.com/[email protected]/msg10162.html&quot;&gt;speculated&lt;/a&gt; about future applications. Some potential applications include: a) micropayments as a replacement for banner ads or subscription fees, b) machine-to-machine payments to reduce spam and denial-of-service attacks, c) a way to offer low-cost financial services to people who, because of financial or political constraints, don’t have them today.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;But to proliferate widely, Bitcoin needs a killer app the same way HTTP had web browsers and SMTP had email clients. That’s why today I’m excited to announce that Andreessen Horowitz is leading a $25M financing of &lt;a href=&quot;https://coinbase.com/&quot;&gt;Coinbase&lt;/a&gt;, a service that provides an accessible interface to the Bitcoin protocol. Consumers can use Coinbase to convert to and from other currencies and to pay for goods and services. Merchants can use Coinbase to accept payments and convert currencies. Developers can build new services using Coinbase’s API.&lt;/p&gt;
&lt;p&gt;Coinbase has grown extremely fast and is now the most widely used Bitcoin service in the US. The founders of Coinbase, Brian Armstrong and Fred Ehrsam, have worked closely with banks and regulators to ensure that the service is safe and compliant. We think Coinbase can significantly accelerate Bitcoin’s proliferation, and as that happens the Internet will enter a new phase of invention and opportunity.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some thoughts on startup crowdfunding]]></title><description><![CDATA[Like a lot of people, I’m excited about crowdfunding, and specifically the crowdfunding of startups now that’s it’s legal in the US. Based…]]></description><link>https://cdixon.org/2013/09/28/some-thoughts-on-startup-crowdfunding</link><guid isPermaLink="false">https://cdixon.org/2013/09/28/some-thoughts-on-startup-crowdfunding</guid><pubDate>Sat, 28 Sep 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Like a lot of people, I’m excited about crowdfunding, and specifically the crowdfunding of startups now that’s it’s legal in the US. Based on my own experience investing in startups, here are some thoughts and issues that come to mind regarding startup crowdfunding.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Startup financings tend toward the extremes of being very oversubscribed or very undersubscribed. If you graphed out investor interest, it would look like a “U”. This is primarily the result of signaling – once a few investors commit (especially high quality ones), other investors pile on. If investors don’t commit, other investors start to wonder what’s wrong. So when you consider startup crowdfunding, it’s important to distinguish the oversubscribed cases from the undersubscribed cases. (Although one counter to this is that the U is the result of an inefficient market – when the crowds get involved valuations will float to their market clearing prices).&lt;/li&gt;
&lt;li&gt;Historically, startup investing returns have tended to obey power laws (Peter Thiel has a good discussion of this phenomenon &lt;a href=&quot;http://blakemasters.com/post/21869934240/peter-thiels-cs183-startup-class-7-notes-essay&quot;&gt;here&lt;/a&gt;). The vast majority of the returns came from the breakout hits. And if you go back and look at the early financings of breakout hits, a lot of them were hotly contested and oversubscribed. If amateur investors had been trying to invest in those startups via crowdfunding sites, they probably would have been squeezed out. If those amateurs were part of a syndicate, the syndicate lead would have felt pressure to drop them, at least for those hot deals. (Counterargument: the power law is caused by the myopia of traditional investors looking for the next Google. The crowd will be able to find new investments that greatly expand the set of successful startups)&lt;/li&gt;
&lt;li&gt;Crowdfunding works best when the backers have special knowledge about the project that leads them to fund things that otherwise would have been overlooked or undervalued by traditional investors. This happens, for example, in the Kickstarter video games category, where most of the backers are game enthusiasts. The most promising scenarios for startup crowdfunding are where the backers are potential customers of the product (e.g. HR managers backing new HR software). This could also solve the adverse selection problem, as the startup founders would probably favor these backers over traditional startups investors.&lt;/li&gt;
&lt;li&gt;When you look at the biggest crowdfunding markets – publicly traded stocks on NYSE, NASDAQ, etc – you find that a) In general, non-professional investors lose money when they try to pick individual stocks. This suggests that something similar to mutual funds would be the best mechanism for amateur participation. b) There is a constant cat-and-mouse game between regulators and sketchy market participants. If this happens with private financings, and more and more rules and regulations get added, many of the advantages of being a private company could go away.&lt;/li&gt;
&lt;li&gt;Most successful seed investors will say that it is mostly about investing in great people, and it is very hard to evaluate people even after multiple in-person meetings. If founders are going to be evaluated online without in-person meetings, great care has to be taken to make sure the evaluation mechanisms are sufficiently nuanced and reliable. (The counterargument is that this might be true when individual professional investors evaluate startups. In the aggregate, the crowd can outsmart individual professionals even with fewer direct interactions.)&lt;/li&gt;
&lt;li&gt;One way to look at startup crowdfunding is as the first step in a process that includes additional steps that prevent adverse selection, sketchy behavior etc. For example, a startup I know raised money recently from a single lead investor and then found additional investors via a crowdfunding site. They ended up rejecting many of the interested investors but found a few useful investors that they otherwise wouldn’t have found. In this model crowdfunding looks more like LinkedIn for investors – extremely useful for connecting, but only the first step of a process that includes interviews, reference checks, etc.&lt;/li&gt;
&lt;/ol&gt;</content:encoded></item><item><title><![CDATA[The Internet is for snacking]]></title><description><![CDATA[Web products have followed a steady evolutionary path from the compound to the atomic. Today’s popular social sites are spin outs of…]]></description><link>https://cdixon.org/2013/09/14/the-internet-is-for-snacking</link><guid isPermaLink="false">https://cdixon.org/2013/09/14/the-internet-is-for-snacking</guid><pubDate>Sat, 14 Sep 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Web products have followed a steady evolutionary path from the compound to the atomic. Today’s popular social sites are spin outs of behaviors that emerged from blogs and forums, the primordial soup of the early social web. Before there was Twitter, people were doing something similar to tweeting on so-called link blogs or micro blogs. Tumblr was a direct descendent of a particular strain of blogs known as tumble blogs.&lt;/p&gt;
&lt;p&gt;The successful products took big meals and converted them to snacks. The Internet likes snacks – simple, focused products that capture an atomic behavior and become compound only by linking in and out to other services. This has become even more so with the shift to mobile. People check their phones frequently, in short bursts, looking for nuggets of information.&lt;/p&gt;
&lt;p&gt;A notable exception to this pattern are online products that users pay for. The dominant payment systems (mainly, credit card systems) were designed to be offline systems and only much later awkwardly grafted onto the Internet. They are inefficient and prone to fraud. As a result, paying online means making a commitment of time and trust. That’s why one of the most valuable assets an online business can have is “credit cards on file”. It is also one of the reasons there is a rich-get-richer dynamic for paid products. Big companies like Amazon and Apple are the beneficiaries.&lt;/p&gt;
&lt;p&gt;The perverse result of this system is that products that are naturally suited to be “paid snacks” have to contort themselves to make money. News and music are good examples. Only a few news sites are popular enough to entice users to commit to paying, and even those have had only limited success with paywalls. Other news sites depend on intrusive ads to support themselves. Music is mainly purchased through aggregators like iTunes and Spotify who charge a hefty tariff. You need a comprehensive catalog to convince users to commit to a payment relationship.&lt;/p&gt;
&lt;p&gt;In-app payments on iOS and Android are the one place where paid snacks exist at scale. They have been wildly successful, quickly becoming the dominant business model for games, replacing up-front payments and banner ads. (There are individual games that generate over one billion dollars per year from in-app payments.) Outside of games, entrepreneurs have started building interesting new products that wouldn’t have been viable without in-app payments.&lt;/p&gt;
&lt;p&gt;This is one of the main reasons people are excited about new payment systems like Bitcoin. A broadly adopted form of “programmable money” has the potential to bring paid snacking to the rest of the Internet, and in doing so enable the save level of innovation in paid products that we’ve seen in the free and ad-supported products.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The idea maze]]></title><description><![CDATA[The pop culture view of startups is that they’re all about coming up with a great product idea. After the eureka moment, the outcome is…]]></description><link>https://cdixon.org/2013/08/04/the-idea-maze</link><guid isPermaLink="false">https://cdixon.org/2013/08/04/the-idea-maze</guid><pubDate>Sun, 04 Aug 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The pop culture view of startups is that they’re all about coming up with a great product idea. After the eureka moment, the outcome is preordained. This neglects the years of toil that entrepreneurs endure, and also the fact that the vast majority of startups change over time, often dramatically.&lt;/p&gt;
&lt;p&gt;In response to this pop culture misconception, it has become popular in the startup community to say things like “execution is everything” and “ideas don’t matter”.&lt;/p&gt;
&lt;p&gt;But the reality is that ideas do matter, just not in the narrow sense in which startup ideas are popularly defined. Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes. &lt;a href=&quot;https://www.coursera.org/course/startup&quot;&gt;Balaji Srinivasan&lt;/a&gt; calls this the &lt;a href=&quot;https://spark-public.s3.amazonaws.com/startup/lecture_slides/lecture5-market-wireframing-design.pdf&quot;&gt;idea maze&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;A good founder is capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Imagine, for example, that you were thinking of starting Netflix back when it was founded in 1997. How would content providers, distribution channels, and competitors respond? How soon would technology develop to open a hidden door and let you distribute online instead of by mail? Or consider Dropbox in 2007. Dozens of cloud storage companies had been started before. What mistakes had they made? How would incumbents like Amazon and Google respond? How would new platforms like mobile affect you?&lt;/p&gt;
&lt;p&gt;When you’re starting out, it’s impossible to completely map out the idea maze. But there are some places you can look for help:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;History. If your idea has been tried before (and almost all good ideas have), you should figure out what the previous attempts did right and wrong. A lot of this knowledge exists only in the brains of practitioners, which is one of many reasons why “&lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;stealth mode&lt;/a&gt;” is a bad idea. The benefits of learning about the maze generally far outweigh the risks of having your idea stolen.&lt;/li&gt;
&lt;li&gt;Analogy. You can also build the maze by analogy to similar businesses. If you are building a “peer economy” company it can be useful to look at what Airbnb did right. If you are building a marketplace you should understand eBay’s beginnings. Etc.&lt;/li&gt;
&lt;li&gt;Theories. There are now decades of historical data on tech startups, and smart observers have sifted through to develop theories that generalize that data. Some of these theories come from academia (e.g. Clay Christensen) but increasingly they come from investors and entrepreneurs on blogs.&lt;/li&gt;
&lt;li&gt;Direct experience. A lot of good startup founders figure out the maze through direct experience, often at work. The key here is to put yourself in interesting mazes and give yourself time to figure it out.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The metaphor of a maze also helps you think about competition. Competition from other startups is usually just a &lt;a href=&quot;http://cdixon.org/2010/06/26/competition-is-overrated/&quot;&gt;distraction&lt;/a&gt;. In all likelihood, they won’t take the same path, and the presence of others in your maze means you might be onto something. Your real competition – and what you should worry about – is the years you could waste going down the wrong path.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some thoughts on mobile]]></title><description><![CDATA[People tend to lump smartphones and tablets together as “mobile”. This can be misleading. Ask people who run internet companies and they’ll…]]></description><link>https://cdixon.org/2013/06/01/some-thoughts-on-mobile</link><guid isPermaLink="false">https://cdixon.org/2013/06/01/some-thoughts-on-mobile</guid><pubDate>Sat, 01 Jun 2013 00:00:00 GMT</pubDate><content:encoded>&lt;ul&gt;
&lt;li&gt;People tend to lump smartphones and tablets together as “mobile”. This can be misleading. Ask people who run internet companies and they’ll tell you that user behavior on tablets is far more similar to user behavior on desktops/laptops than it is to user behavior on smartphones. That said, the software on smartphones and tablets is similar, as are the discovery mechanisms (mostly app stores) and monetization techniques.&lt;/li&gt;
&lt;li&gt;Microsoft is running &lt;a href=&quot;http://tech2.in.com/news/tablets/new-windows-8-ad-takes-a-dig-at-ipad-using-siri/874112&quot;&gt;ads&lt;/a&gt; making fun of the iPad for being a “consumption” device. Here’s what Steve Jobs had to &lt;a href=&quot;http://news.cnet.com/8301-13860_3-20006442-56.html&quot;&gt;say&lt;/a&gt; back in 2010 about creation (“productivity”) on the iPad:&lt;/li&gt;
&lt;/ul&gt;
&lt;blockquote&gt;
&lt;p&gt;We are just scratching the surface on the kinds of apps for the iPad…I think there are lots of kinds of content that can be created on the iPad. When I am going to write that 35-page analyst report, I am going to want my Bluetooth keyboard. That’s 1 percent of the time. The software will get more powerful. I think your vision would have to be pretty short to think these can’t grow into machines that can do more things, like editing video, graphic arts, productivity. You can imagine all of these content creation possibilities on these kind of things. Time takes care of lots of these things.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;If you go back and look at the history of productivity apps you’ll see that each major user interface shift led to new classes of productivity apps. Back in the 70s and 80s, when computers had text-based interfaces, word processor applications like Wordperfect and spreadsheet applications like Lotus 1-2-3 were invented. In the 80s and 90s, when graphical interfaces became popular, presentation apps like Powerpoint and photo editing apps like Photoshop were invented. If the historical pattern repeats, productivity apps that are “native” to the tablet will be invented.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;App stores have had a few important effects: 1) They take 30% of revenue, which scares away most big companies (e.g. Microsoft) and also startups/venture capitalists. Not many businesses can survive an immediate 30% haircut. 2) They’ve led consumers to expect very low prices for software. It’s hard to imagine charging $30 let alone hundreds of dollars for software through app stores (although some mega-hit games do get near these levels with in-app purchases). This is why many big software vendors are scared. 3) The discovery mechanisms (e.g. top download charts) tend to have a rich-get-richer effect, making it very hard for software to grow from niches, as they often did in the past. Just as in the movie industry, the trend is toward creating blockbusters that appeal to everyone. The emergence of new app discovery mechanisms (e.g. FB &amp;#x26; Twitter) might alleviate this problem.&lt;/li&gt;
&lt;li&gt;The best entrepreneurs understand these dynamics and have been exploring “attach” business models, which basically means charging for something outside of the app store, like offline products/services (e.g. Square, Uber), online services (e.g. Spotify, Dropbox), and sometimes even hardware. Most of the companies that have succeeded (= generate real revenues/profits) on mobile were either desktop incumbents (e.g. eBay, Amazon, Facebook) or have attach business models.&lt;/li&gt;
&lt;li&gt;Fans of Apple and Google have been arguing lately about which company is winning mobile. Apple has more profits, but Android has more users. But what really matters is when and if developers switch over to developing for Android first, or even Android only. For now, iOS users tend to monetize much better than Android users, more than making up for the smaller user base. The switch to Android first hasn’t happened yet, but at least based on conversations I’ve had with entrepreneurs, it seems likely to happen in the next year or two.&lt;/li&gt;
&lt;li&gt;Mobile has had a big effect on b2b software. People want to use their personal iOS/Android devices at work, and many people now have computers with them all the time who didn’t before. This has created opportunities for 1) traditional b2b software that is mobile friendly, 2) companies that support mobile devices for businesses (e.g. mobile security, compliance etc), 3) brand new categories of software for users who previously used pencil and paper for various business tasks.&lt;/li&gt;
&lt;/ul&gt;</content:encoded></item><item><title><![CDATA[Hardware startups]]></title><description><![CDATA[For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing. As Paul Graham says, there are many…]]></description><link>https://cdixon.org/2013/04/30/hardware-startups</link><guid isPermaLink="false">https://cdixon.org/2013/04/30/hardware-startups</guid><pubDate>Tue, 30 Apr 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing. As Paul Graham &lt;a href=&quot;http://www.paulgraham.com/hw.html&quot;&gt;says&lt;/a&gt;, there are many reasons for this:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Hardware &lt;a href=&quot;http://bits.blogs.nytimes.com/2012/05/11/pebble-smartwatch-tops-out-at-10-million-on-kickstarter/&quot;&gt;does well&lt;/a&gt; on crowdfunding sites. The spread of &lt;a href=&quot;http://paulgraham.com/tablets.html&quot;&gt;tablets&lt;/a&gt; makes it possible to build new things &lt;a href=&quot;http://lockitron.com/&quot;&gt;controlled by&lt;/a&gt; and even &lt;a href=&quot;http://doublerobotics.com/&quot;&gt;incorporating&lt;/a&gt; them. &lt;a href=&quot;http://www.boostedboards.com/&quot;&gt;Electric motors&lt;/a&gt; have improved. Wireless connectivity of various types can now be taken for granted. It’s getting more straightforward to get things manufactured. Arduinos, 3D printing, laser cutters, and more accessible CNC milling are making hardware easier to prototype. Retailers are less of a bottleneck as customers increasingly buy online.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Another important factor is what Chris Anderson &lt;a href=&quot;http://www.foreignpolicy.com/articles/2013/04/29/epiphanies_from_chris_anderson&quot;&gt;calls&lt;/a&gt; “the peace dividend of the smartphone war”:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;All the components in a smartphone — the sensors, the GPS, the camera, the ARM core processors, the wireless, the memory, the battery — all that stuff, which is being driven by the incredible economies of scale and innovation machines at Apple, Google, and others, is available for a few dollars. They were essentially “unobtainium” 10 years ago. This is stuff that used to be military industrial technology; you can buy it at RadioShack now.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It also doesn’t hurt that the most valuable company in the world (Apple) and some of the most exciting startups (e.g., Nest, Jawbone, Leap Motion) make hardware.&lt;/p&gt;
&lt;p&gt;If you are thinking of doing a hardware startup, here are a few things to keep in mind:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;em&gt;Manufacturing&lt;/em&gt;. Many hardware startups stumble when they try to go from prototype to large-scale manufacturing. There is no AWS-equivalent for hardware. To get manufacturing right, entrepreneurs often end up living in China for months and even years. The difficulty of manufacturing is one reason that hardware entrepreneurs tend to have more work experience than software entrepreneurs.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Defensibility&lt;/em&gt;. Hardware companies generally have economies of scale but hardware products generally don’t have network effects. This means that as soon as you prove the market, you’ll face competition from lower cost manufacturers. The best startups complement hardware with software and services that have network or platform effects. Think of hardware as bringing the revenue and software/services as bringing the margin.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Planning&lt;/em&gt;. The build-test-iterate model that is popular in software startups doesn’t translate well to hardware startups. Proper planning is essential because mistakes can be unrecoverable. For example, you might create a design that fails environmental tests but only discover this years later when you are about to go to market. (See all those symbols on the back of your phone? Those are regulatory certifications).&lt;/li&gt;
&lt;li&gt;&lt;em&gt;B2C vs B2B&lt;/em&gt;. Consumer hardware tends to get more attention, but B2B hardware has a number of advantages. You’ll have fewer startup competitors, because entrepreneurs who have both hardware and business domain expertise are rare. You’ll also have fewer incumbent competitors, because B2B hardware usually requires local sales and service teams, making it harder for foreign competitors to copy you. Finally, manufacturing can be done locally because higher price points mean you can be less sensitive to labor costs.&lt;/li&gt;
&lt;/ul&gt;</content:encoded></item><item><title><![CDATA[Technology predictions]]></title><description><![CDATA[For those of us in the prediction business, it’s sometimes useful to go back and read past predictions to try to discern patterns in what…]]></description><link>https://cdixon.org/2013/04/06/technology-predictions</link><guid isPermaLink="false">https://cdixon.org/2013/04/06/technology-predictions</guid><pubDate>Sat, 06 Apr 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;For those of us in the prediction business, it’s sometimes useful to go back and read past predictions to try to discern patterns in what they got right and wrong.&lt;/p&gt;
&lt;p&gt;Back in the early 90s, a lot of people thought the Internet was overhyped. &lt;a href=&quot;http://www.thedailybeast.com/newsweek/1995/02/26/the-internet-bah.html&quot;&gt;Here’s&lt;/a&gt; one example from Newsweek:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works…. What the Internet hucksters won’t tell you is tht the Internet is one big ocean of unedited data, without any pretense of completeness. Lacking editors, reviewers or critics, the Internet has become a wasteland of unfiltered data.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Today, it’s easy to find people expressing similar skepticism about emerging technologies like the Internet of things, robotics, 3D printing, Bitcoin, etc.&lt;/p&gt;
&lt;p&gt;What the skeptics overlook is that platforms that are open to third-party developers have the following characteristic: it’s hard to think of important use cases before they are built, and hard to find examples where important use cases weren’t developed after they were built.&lt;/p&gt;
&lt;p&gt;Just look at the founding years of top websites. Google: 1998. Wikipedia: 2001. YouTube: 2005. Twitter: 2006. No wonder it was so hard to imagine these services early on. It took years to imagine them even after the Internet had gone mainstream.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What the smartest people do on the weekend is what everyone else will do during the week in ten years]]></title><description><![CDATA[Many breakthrough technologies were hatched by hobbyists in garages and dorm rooms. Prominent examples include the PC, the web, blogs, and…]]></description><link>https://cdixon.org/2013/03/02/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years</link><guid isPermaLink="false">https://cdixon.org/2013/03/02/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years</guid><pubDate>Sat, 02 Mar 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Many breakthrough technologies were hatched by hobbyists in garages and dorm rooms. Prominent examples include the PC, the web, blogs, and most open source software.&lt;/p&gt;
&lt;p&gt;The fact that flip-flop wearing hobbyists spawn large industries is commonly viewed as an amusing eccentricity of the technology industry. But there is a reason why hobbies are so important.&lt;/p&gt;
&lt;p&gt;Business people vote with their dollars, and are mostly trying to create near-term financial returns. Engineers vote with their time, and are mostly trying to invent interesting new things. Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.&lt;/p&gt;
&lt;p&gt;Today, the tech hobbies with momentum include: math-based currencies like Bitcoin, new software development tools like NoSQL databases, the internet of things, 3D printing, touch-free human/computer interfaces, and “artisanal” hardware like the kind you find on Kickstarter.&lt;/p&gt;
&lt;p&gt;It’s a good bet these present-day hobbies will seed future industries. What the smartest people do on the weekends is what everyone else will do during the week in ten years.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[“PCs are going to be like trucks”]]></title><description><![CDATA[Steve Jobs in 2010: When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms. Cars became more…]]></description><link>https://cdixon.org/2013/02/26/pcs-are-going-to-be-like-trucks</link><guid isPermaLink="false">https://cdixon.org/2013/02/26/pcs-are-going-to-be-like-trucks</guid><pubDate>Tue, 26 Feb 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Steve Jobs in &lt;a href=&quot;http://news.cnet.com/8301-13860_3-20006442-56.html&quot;&gt;2010&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms. Cars became more popular as cities rose, and things like power steering and automatic transmission became popular.&lt;/p&gt;
&lt;p&gt;PCs are going to be like trucks. They are still going to be around…they are going to be one out of x people.&lt;/p&gt;
&lt;p&gt;This transformation is going to make some people uneasy…because the PC has taken us a long ways. It’s brilliant. We like to talk about the post-PC era, but when it really starts to happen, it’s uncomfortable.&lt;/p&gt;
&lt;p&gt;We are just scratching the surface on the kinds of apps for the iPad…I think there are lots of kinds of content that can be created on the iPad.&lt;/p&gt;
&lt;p&gt;When I am going to write that 35-page analyst report, I am going to want my Bluetooth keyboard. That’s 1 percent of the time. The software will get more powerful. I think your vision would have to be pretty short to think these can’t grow into machines that can do more things, like editing video, graphic arts, productivity. You can imagine all of these content creation possibilities on these kind of things. Time takes care of lots of these things.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This year, about five times as many smartphones will be shipped versus PCs, and tablets will surpass PCs for the first time. According to Jobs, the right way to look at this isn’t that mobile devices are creating a new market. It’s that mobile devices are relegating PCs to special-purpose, mostly industrial devices.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The credentials trap]]></title><description><![CDATA[I talk a lot to people who are deciding between startups and established companies. They’re usually early in their careers and have been…]]></description><link>https://cdixon.org/2013/02/12/the-credentials-trap</link><guid isPermaLink="false">https://cdixon.org/2013/02/12/the-credentials-trap</guid><pubDate>Tue, 12 Feb 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I talk a lot to people who are deciding between startups and established companies. They’re usually early in their careers and have been exclusively affiliated with well-known schools and companies. As a result, they’re accustomed to praise from family and friends. Going to a startup is scary, as Jessica Livingstone, cofounder of Y Combinator, &lt;a href=&quot;http://www.foundersatwork.com/1/post/2012/10/what-goes-wrong.html&quot;&gt;describes&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Everyone you encounter will have doubts about what you’re doing—investors, potential employees, reporters, your family and friends. What you don’t realize until you start a startup is how much external validation you’ve gotten for the conservative choices you’ve made in the past. You go to college and everyone says, “Great!” Then you graduate get a job at Google and everyone says, “Great!”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;But optimizing for external validation is a dangerous trap. You’re fighting over a fixed pie against well-credentialed peers. The most likely outcome is a middle management job where you’ll have little impact and never seriously attempt to realize your ambitions. Peter Thiel’s personal experience &lt;a href=&quot;https://gist.github.com/harperreed/3201887&quot;&gt;illustrates&lt;/a&gt; this well:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;By graduation, students at Stanford Law and other elite law schools have been racking up credentials and awards for well over a dozen years. The pinnacle of post law school credentialism is landing a Supreme Court clerkship. After graduating from SLS in ’92 and clerking for a year on the 11th Circuit, Peter Thiel was one of the small handful of clerks who made it to the interview stage with two of the Justices. That capstone credential was within reach. Peter was so close to winning that last competition. There was a sense that, if only he’d get the nod, he’d be set for life. But he didn’t.&lt;/p&gt;
&lt;p&gt;Years later, after Peter built and sold PayPal, he reconnected with an old friend from SLS. The first thing the friend said was, “So, aren’t you glad you didn’t get that Supreme Court clerkship?” It was a funny question. At the time, it seemed much better to be chosen than not chosen. But there are many reasons to doubt whether winning that last competition would have been so good after all. Probably it would have meant a future of more insane competition. And no PayPal. The pithy, wry version of this is the line about Rhodes Scholars: they all had a great future in their past.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Great institutions can prepare you for great things. Credentials can open doors. But don’t let them become an end in themselves.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The computing deployment phase]]></title><description><![CDATA[Technological revolutions happen in two main phases: the installation phase and the deployment phase. Here’s a chart (from this excellent…]]></description><link>https://cdixon.org/2013/02/09/the-computing-deployment-phase</link><guid isPermaLink="false">https://cdixon.org/2013/02/09/the-computing-deployment-phase</guid><pubDate>Sat, 09 Feb 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Technological revolutions happen in two main phases: the installation phase and the deployment phase. Here’s a chart (from &lt;a href=&quot;http://www.amazon.com/Technological-Revolutions-Financial-Capital-Dynamics/dp/1843763311&quot;&gt;this&lt;/a&gt; excellent book by Carlota Perez &lt;a href=&quot;http://www.avc.com/a_vc/2011/05/technological-revolutions-and-financial-capital.html&quot;&gt;via&lt;/a&gt; Fred Wilson) showing the four previous technological revolutions and the first part of the current one:&lt;/p&gt;
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&lt;p&gt;Each revolution begins with a financial bubble that propels the (irrationally) rapid “installation” of the new technology.  Then there’s a crash, followed by a recovery and then a long period of productive growth as the new technology is “deployed” throughout other industries as well as society more broadly. Eventually the revolution runs its course and a new technological revolution begins.&lt;/p&gt;
&lt;p&gt;In the transition from installation to deployment, the bulk of the entrepreneurial activity moves “up the stack”. For example, in the installation phase of the automobile revolution, the action was in building cars. In the deployment phase, the action shifted to the app layer: the highway system, shipping, suburbanization, big box retail, etc.&lt;/p&gt;
&lt;p&gt;This pattern is repeating itself in the computing/internet revolution. Most of the successful startups in the 90s built core infrastructure (e.g. optical switching) whereas most of the successful startups since then built applications on top of that infrastructure (e.g. search). The next phase should see startups higher in the stack. According to historical patterns, these would be ones that require deeper cultural change or deeper integration into existing industries.&lt;/p&gt;
&lt;p&gt;Some questions to consider:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;What industries are the best candidates for the next phase of deployment? The likely candidates are the information-intensive mega-industries that have been only superficially affected by the internet thus far: education, healthcare, and finance. Note that deployment doesn’t just mean creating, say, a healthcare or education app. It means refactoring an industry into its “optimal structure” – what the industry would look like if rebuilt from scratch using the new technology.&lt;/li&gt;
&lt;li&gt;How long will this deployment period last? Most people – at least in the tech industry – think it’s just getting started. From the inside, it looks like one big revolution with lots of smaller, internal revolutions (PC, internet, mobile, etc). Each smaller revolution extends the duration and impact of the core revolution.&lt;/li&gt;
&lt;li&gt;Where will this innovation take place? The historical pattern suggests it will become more geographically diffuse over time. Detroit was the main beneficiary of the first part of the automobile revolution. Lots of other places benefited from the second part. This is the main reason to be bullish on ”application layer” cities like New York and LA. It is also suggests that entrepreneurs will increasingly have multi-disciplinary expertise.&lt;/li&gt;
&lt;/ul&gt;</content:encoded></item><item><title><![CDATA[Samsung’s predicament]]></title><description><![CDATA[In the past year, Samsung went from being a moderately successful electronics manufacturer to the leading non-iOS mobile device maker…]]></description><link>https://cdixon.org/2013/01/20/samsungs-predicament</link><guid isPermaLink="false">https://cdixon.org/2013/01/20/samsungs-predicament</guid><pubDate>Sun, 20 Jan 2013 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In the past year, Samsung went from being a moderately successful electronics manufacturer to the leading non-iOS mobile device maker. Together, Apple and Samsung &lt;a href=&quot;http://www.visionmobile.com/blog/2012/12/the-apple-and-samsung-profit-recipe/&quot;&gt;earn&lt;/a&gt; 98% of the profits in the smartphone market. MG Siegler echoed a common sentiment when he &lt;a href=&quot;http://techcrunch.com/2013/01/05/the-fifth-horsemen-of-tech-samsung/&quot;&gt;wrote&lt;/a&gt; that Samsung is now the “fifth horseman” of tech, alongside Apple, Google, Amazon, and Facebook.&lt;/p&gt;
&lt;p&gt;The mobile device industry is still in its infancy. Samsung’s fate depends largely on how the industry evolves. If the computer-in-your-pocket (smartphone/tablet) business ends up being like the computer-on-your-desk (personal computer) business, Samsung is on track to be the modern Dell. Dell had a good run as the low-cost provider in a highly commoditized business, but the vast majority of the industry profits went to Microsoft.&lt;/p&gt;
&lt;p&gt;So the big questions for Samsung are:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Will the smartphone/tablet industry stratify the way the PC business did?&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The dominant view is that technology markets inevitably stratify. Clay Christensen is the most sophisticated proponent of this view. In his theory (more &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_innovation&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning/&quot;&gt;here&lt;/a&gt;), every tech market eventually “overshoots” the needs of its customers, at which point the benefits of horizontal specialization outweigh the benefits of vertical integration.&lt;/p&gt;
&lt;p&gt;A minority view, held mostly by Apple faithful, is that Christensen et al are guilty of over-theorizing. Apple lost the PC business simply because, when Steve Jobs was fired, they stopped innovating. When Jobs returned, Apple started gaining PC market share again. In this view, the future mobile industry structure mostly depends on whether Apple management is innovative enough to keep making superior vertically-integrated products.&lt;/p&gt;
&lt;ol start=&quot;2&quot;&gt;
&lt;li&gt;If the industry stratifies, will the lion’s share of the profits go to the OS and application layers as it did for PCs?&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Generally, technology businesses that are defensible have network effects, and network effects usually arise from products with significant software components. Samsung’s competitors like HTC are just one hit product line away from stealing Samsung’s position. Eventually, handset designs will converge and, as happened in the PC market, consumers will stop paying premiums for performance improvements (arguably, this has already started happening). The OS and apps layer, on the other hand, are very hard to replicate. If you invest enough money you can usually build or acquire decent software, but it takes more than just capital to build a vibrant developer ecosystem (just look at Microsoft).&lt;/p&gt;
&lt;p&gt;Samsung’s predicament is: their current strategy succeeds only in the scenario where both (a) the industry stratifies, and (b) significant profits flow to hardware. Samsung seems to understand the improbability of (b), which is why they’ve been &lt;a href=&quot;http://news.cnet.com/8301-1035_3-57564553-94/samsungs-secret-weapon-in-the-mobile-wars-tizen/&quot;&gt;hinting&lt;/a&gt; at throwing serious support behind a new OS. Getting traction with a new OS will be difficult, to put it mildly. Google and Apple have vastly more experience making software and a huge head start with developers. Moreover, Google’s &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;strategic position&lt;/a&gt; is even stronger today than Microsoft’s was in their heyday. Google makes so much money from web services (mostly search, for now) that they can afford to lose money on handsets and OSs indefinitely – a very scary fact for Samsung and everyone else in the mobile hardware business.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Plans are nothing, but planning is indispensable]]></title><description><![CDATA[It is widely believed that writing a business plan is a waste of time, because: 1) very few people will read it, and 2) you’ll end up…]]></description><link>https://cdixon.org/2012/12/18/plans-are-nothing-but-planning-is-indispensable</link><guid isPermaLink="false">https://cdixon.org/2012/12/18/plans-are-nothing-but-planning-is-indispensable</guid><pubDate>Tue, 18 Dec 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It is widely believed that writing a business plan is a waste of time, because: 1) very few people will read it, and 2) you’ll end up changing it along the way. This is all mostly true.&lt;/p&gt;
&lt;p&gt;However, before you commit yourself to working on a project for 5+ years, it’s prudent to think hard about what you are trying to build and some of the things that might go wrong. For many people, writing out a detailed business plan is the best way to enforce intellectual rigor.&lt;/p&gt;
&lt;p&gt;My cofounders and I wrote a fairly long business plan for our first company, SiteAdvisor. We wrote it iteratively while getting lots of candid feedback from entrepreneurs, VCs, and industry executives (one of many reason you &lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;shouldn’t keep your idea secret&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;I thought it might be useful to share our plan so I’ve embedded it below (at the time, we were temporarily calling the company InfiniTrust).&lt;/p&gt;
&lt;p&gt;In retrospect, some things in the plan look prescient, some look naive, and some look downright goofy. But writing it was an extremely useful exercise. It made us think through issues we would have otherwise glossed over, and helped us stay focused when shiny new things could have led us astray.&lt;/p&gt;
&lt;p&gt;As Eisenhower famously said: “plans are nothing, but planning is indispensable.”&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;***&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;InfiniTrust&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;January, 2005&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;InfiniTrust intends to create a new type of desktop security product that we call a “web reputation service.”  The product will benefit users who value both unrestricted web access and security — primarily consumers and small and medium businesses.  At the core of the product will be a database that classifies URLs, IP addresses, program downloads, ActiveX objects, and other “web entities” according to their degree of trustworthiness.  There will also be a downloadable application that protects the desktop according to the security classifications in the core database.  In addition, the company will provide plug-ins to firewalls, routers and web proxies (allowing for, among other things, the possibility of a fully managed outsourced web filtering service).&lt;/p&gt;
&lt;p&gt;We see InfiniTrust as having a large addressable market.  We believe the product will offer significant value to a large portion of the approximately 600M PCs in use today.  Pricing for comparable products ranges from $2-$20 per PC per year depending on the product and channel.  Since the marginal cost per customer will be extremely low (the main expense will be maintaining the database), we see the business as potentially having high gross margins.&lt;/p&gt;
&lt;p&gt;Desktop security has become one of the top issues for individuals and organizations in the last few years and the problem has been only getting worse.  We believe InfiniTrust represents a fundamentally new and important category of desktop security software, and if executed properly could become a leader in this emerging category much the same way Symantec and McAfee did in anti-virus or Brightmail and Postini did in anti-spam.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Problem&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The data security industry has consistently ignored a large class of desktop security threats that they have considered to be “social engineering” or “user education issues” and therefore not addressable through their usual defense methods.  Some examples are:&lt;/p&gt;
&lt;p&gt;A user is confronted with an ActiveX prompt that asks him whether he trusts a company he has never heard of called Claria.  The user knows that last time he saw a similar prompt on the ofoto.com website he said “No” the website failed to work properly, so this time he says “Yes,” enabling Claria’s Gator spyware software to take full control of his PC.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should educate himself as to when to answer “Yes” or “No” to such prompts or should disable ActiveX altogether thereby rendering many popular websites dysfunctional.&lt;/p&gt;
&lt;p&gt;A user receives a phishing email purporting to be from Citibank that is actually from a criminal in Uzbekistan trying to steal his credit card information.  Citibank detects that the phishing attack has occurred but has no effective way to propagate defensive information to customers.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should learn never to click on URLs in emails.&lt;/p&gt;
&lt;p&gt;A user spends time browsing a music sharing website that exploits an unpatched hole in Internet Explorer to insert spyware on the user’s machine.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should learn not to browse untrusted websites without modifying his browser security settings to restrict functionality like Javascript and ActiveX that enable most browser exploits.&lt;/p&gt;
&lt;p&gt;A user downloads Grokster, a popular P2P file-sharing application.  The user clicks “Agree” to Grokster’s 32-page End User License Agreement (EULA) without reading it carefully and therefore doesn’t realize that along with Grokster he is also downloading over a dozen different bundled spyware applications that will render his computer virtually unusable.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Typical industry response&lt;/em&gt;:  The user should read all EULA’s before downloading software.&lt;/p&gt;
&lt;p&gt;The data security industry has gotten very good at dealing with traditional security threats such as worms and viruses. These threats are characterized as 1) being unambiguously malicious and 2) having attack vectors that are primarily technical in nature.   With more and more non-technical users having direct access to remote counterparties via email and the web, a new class of threats has emerged that are characterized as 1) having attack vectors that are primarily “social” in nature,  and 2) not being clearly good or bad but instead involving tradeoffs on the part of the user.&lt;/p&gt;
&lt;p&gt;Related to this trend toward “social” and “grey-area” threats has been the rise of economically motivated hacking.  For example, spyware and phishing have quickly become big businesses.  Claria (maker of Gator) generated about $90M in ‘03, primarily due to their distribution relationship with Kazaa.  WhenU generated about $45M in revenue in ‘04, and there are literally dozens of other companies (e.g. 180Solutions, Direct Revenue) that are generating double digit millions in revenues.   Estimates of losses due to phishing vary, but the numbers seem to be conservatively in the hundred of millions.  In summary, there are literally billions of dollars generated every year by companies and criminals whose main “marketing” technique is exploiting the credulity and confusion of users.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Background on Spyware and Phishing&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Spyware is an increasingly serious threat to desktop computer users.  According to a recent study by Dell, 90% of computers are afflicted with spyware.  Spyware help calls are the #1 issue handled by Dell customer support, accounting for 20% of all calls.  Only 24% of computer users said they were knowledgeable about how to handle spyware.&lt;/p&gt;
&lt;p&gt;Somewhat more conservatively, IDC estimates that 67% of computers have some form of spyware and that the market for anti-spyware software will grow from $47M in 2004 to $305M in 2008 (we think these estimates are very low—we know of specific anti-spyware companies that combined generated far more than $47M in revenues in 2004).&lt;/p&gt;
&lt;p&gt;Phishing came almost out of nowhere in 2004 to become a major security threat.  According to Gartner Group, 57M Americans have or think they have received phishing emails.   Of those, 11% clicked on phishing links and 3% actually gave away sensitive information to attackers.  The growth rates of phishing attacks have consistently been in the double and even triple digits month-over-month.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;InfiniTrust Solution&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The main features of the InfiniTrust product are as follows:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Site Protection&lt;/em&gt;:  Adjusts the browser functionality dynamically according to the security rating of the website currently being browsed.  For example, scripting calls to vulnerable ActiveX objects are disabled on untrusted websites but enabled on trusted sites.  The point of this is to drastically reduce browser exploits that insert spyware and viruses, as well as eliminating “annoying” scripts such as pop ups, without reducing functionality of trusted sites.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Download Protection&lt;/em&gt;:  Uses a whitelist approach to program downloads to warn or block the user before downloading an untrustworthy program (in an enterprise version,policy settings could be created to automatically block untrusted downloads without prompting).&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Fraud Detection and Protection&lt;/em&gt;:  Redirects the user to a warning page if he visits a fraudulent website such as a phishing landing page.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;ActiveX Protection&lt;/em&gt;:  Allows only whitelisted ActiveX objects to download or execute.  Non-whitelisted objects are simply blocked, eliminating the need for user prompts.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Exploit Protection&lt;/em&gt;:  Filters out browser scripting code associated with known exploits.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Ecommerce Protection&lt;/em&gt;:  Warns the user about a poor security rating of a website before he enters his credit card information.  In v2.0 will notify the user of summarized business-practice information about the site (using information from sources such as BizRate).&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Privacy Protection (v2.0 only):&lt;/em&gt;  Warns the user about the trustworthiness of a website before he submits personal information such as an email address.  Also blocks cookies and other outbound transmissions of personal information to untrusted sites or ad networks.&lt;/p&gt;
&lt;p&gt;In light of the recent high profile adoption of the Firefox browser (albeit mostly by the technical “elite” so far) it is interesting to note which of the Infinitrust features are “IE” specific and which provide a more general web security. Features #1, #4 and #5 are primarily for IE users.  The other four features apply to users of all platforms and browsers.&lt;/p&gt;
&lt;p&gt;In the case where InfiniTrust is being used as software installed on the desktop (as opposed to the firewall or web proxy API), it will either take automatic action or prompt the user with an easy-to-understand prompt depending on what’s most appropriate in case at hand.  For example, when the user is browsing untrusted sites InfiniTrust will automatically restrict the browser’s functionality but when the user actively clicks on a downloadable program he will see a simple prompt explaining what, if any, malicious features the software contains.&lt;/p&gt;
&lt;p&gt;In the case of the enterprise version the need for prompting will be obviated through policy settings created by the system administrator.  Increasingly, many organizations are blocking all downloads and ActiveX controls altogether out of fear of getting spyware on the network.  InfiniTrust will give them an alternative by providing them with 100% spyware prevention through its whitelist approach to ActiveX and downloads (in addition to browser exploit blocking).&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Technology Plan&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;There are three main components to the InfiniTrust technology:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Data collection/analysis.&lt;/em&gt;  InfiniTrust will collect and analyze large amounts of disparate data sets to generate an “InfiniTrust Score” for every “web entity” (including downloadable programs, ActiveX objects, and website URLs/IPs).  Input data sources will include:&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Static analysis of web-crawled HTML and JavaScript.&lt;/p&gt;
&lt;p&gt;Analyzed results of automated installations of downloadable software.&lt;/p&gt;
&lt;p&gt;Data gathered from third party deals (e.g. IP intelligence services, phishing blacklist feeds, website and program popularity data)&lt;/p&gt;
&lt;p&gt;Active and passive user feedback from users who opt-in to InfiniTrust’s product improvement program.&lt;/p&gt;
&lt;p&gt;Information mined from publicly available sources (e.g., whois data, public blacklists)&lt;/p&gt;
&lt;p&gt;Web site link analysis.  As companies like Google has shown, if site X links to site Y, that is in some sense an endorsement by site X of site Y.  Google uses this insight to rank the relevancy of sites, but it can also be applied to rank the trustworthiness of sites.  If site X links to known untrusted site Y, then site X is more likely to be untrusted itself.  Another way to put this idea is that the “dark alleys” of the web tend to be highly clustered in terms of link structure.&lt;/p&gt;
&lt;p&gt;All of this will be processed to determine the degree of trust that someone should have when going to a particular website, downloading a particular piece of software, or engaging in some sort of commercial relationship with an online entity.  Much of the true intellectual property of InfiniTrust will reside in the processes and tools for collecting and analyzing these input data sources.&lt;/p&gt;
&lt;p&gt;2)  &lt;em&gt;Data servers&lt;/em&gt;.  In order to balance load and decrease communication distances, the database will be replicated to a set of distributed data servers.  Desktop clients will connect to these data servers in order to query for the security ratings of particular entities, or to periodically download software updates.  The client software will include a caching mechanism to ensure that performance drag is negligible.  Data servers will also receive back-channel information from users who opt-in to the product improvement program.&lt;/p&gt;
&lt;ol start=&quot;3&quot;&gt;
&lt;li&gt;&lt;em&gt;Client agent&lt;/em&gt;.  The client side agent takes action on behalf of the user or provides the user with easy-to-understand, relevant information.  A client side agent consists of a core-agent that communicates with a data server, as well as an application-specific GUI agent that provides user-visible functionality.  Most of these GUI agents will be web browser extensions, but they could also be built in to web proxies, or the underlying OS to protect non-traditional applications (e.g. software update tools) that make use of HTTP.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;InfiniTrust plans to publish APIs and release an open source Linux/Firefox version of the client-side agents to facilitate partnerships with other software and equipment vendors.  Access to the data feeds will be controlled with encrypted certificates.&lt;/p&gt;
&lt;p&gt;In version 1.0, almost all of InfiniTrust’s data will be generated from public sources.  As the user base and revenues grow, InfiniTrust plans to seek out additional data licensing deals.  Examples could include phishing blacklists from anti-spam vendors and ecommerce data from companies like Bizrate.  With a sizable user base, InfiniTrust could also become an important enforcement mechanism for “self-regulating” (and therefore mostly ineffective) programs and protocols like Trust-e and P3P.  Down the road, we can also envision incorporating offshore manual labor into the data collection and analysis process.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Competition&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Overview:&lt;/em&gt;  We expect that in 2005-6 a lot of attention will be paid to problems like spyware and phishing.  This is both good and bad for InfiniTrust.  The risk is that other companies, especially large incumbents, either mitigate these threats significantly (less likely) or else create enough noise in the market to make the need for InfiniTrust less obvious (more likely).  The good news is that InfiniTrust is specifically designed to complement existing security bundles.  As pressure to differentiate security bundles increases, InfiniTrust could become an attractive add-on product or acquisition target.  The historical pattern is that most of the innovation in consumer security has come from startups.  For example, the software-based firewall was pioneered by ZoneLabs and anti-spyware was pioneered by companies like PestPatrol, Lavasoft and WebRoot.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Summary of existing anti-spyware technologies&lt;/em&gt;:  Almost all of the anti-spyware products that currently exist are for removing spyware, not preventing it.  It is widely believed that even the best anti-spyware removers achieve highly unsatisfactory success rates.  For this reason, most experts recommend that users run multiple spyware removers (in addition, users are repeatedly instructed to be very careful where they browse, what they download, etc).  This poor success rate is due mostly to the fact that once spyware takes control of a user’s PC and starts performing tricks like copying itself, changing the HOSTS file, disguising its signature etc, the technological problem of removing it becomes extremely difficult.&lt;/p&gt;
&lt;p&gt;There are a few existing anti-spyware programs that claim to have spyware prevention features (e.g. SpywareBlaster, Microsoft’s AntiSpyware) but in fact just use highly inaccurate behavior-based techniques (similar to Intrusion Prevention Systems).  In the near future, we expect security companies to develop blacklist-based preventative approaches to spyware.  Blacklist approaches have a number of problems:  1) it is extremely difficult to keep spyware blacklists up-to-date and even a single mistake can render a PC unusable, 2) they don’t properly address the many sources of spyware that are “grey area” downloads.   The problem of spyware is not nearly as black-and-white as problems like viruses and worms as most spyware comes through bundled adware where reasonable people can disagree about its maliciousness.  InfiniTrust believes the best way for users to be both protected and have a satisfying browsing experience is to 1) whitelist trusted programs, 2) blacklist purely malicious programs, and 3) inform users about the trade offs (and alternatives) in the grey area cases in a very easy-to-understand way.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Summary of existing anti-phishing technologies:&lt;/em&gt; There are three primary methods for stopping phishing attacks today.&lt;/p&gt;
&lt;p&gt;The first is simply for existing anti-spam companies to better filter phishing emails.  Anti-spam technologies have achieved 95+% accuracy but are not perfect.  Moreover, phishing emails can be particularly hard to detect as they often use zombie PC’s for delivery (thereby making IP-based blocking difficult) and contain content that looks very similar to legitimate content.&lt;/p&gt;
&lt;p&gt;The second approach is to try to shut down the email delivery or landing page machines in the midst of an attack.  A number of security companies do this on behalf of their customers who tend to be large financial institutions.  We believe these methods are limited as they succeed only after the critical first few (~6) hours of phishing attacks.  Moreover, from the desktop user’s perspective, even if these companies stop phishing attacks for, say, the top banks there are many other types of phishing attacks that these companies are not even trying to stop, such as the Tsunami-relief phishing attacks that were recently seen in large volumes.&lt;/p&gt;
&lt;p&gt;Client-side solutions:  These have the advantages of providing zero-hour defense and the ability to defend against fraud from all sources.   There have been a handful of client-side solutions released recently from companies like Earthlink, Netcraft, WebRoot, and GeoTrust.  InfiniTrust is a client-side solution that has distinct advantages over these client-side competitors.  For one, because InfiniTrust will be collecting a nearly comprehensive database of existing websites, it can take a (partial) whitelist approach to phishing detection.  The fact that a site clicked through to from an email doesn’t appear in InfiniTrust’s list of millions of legitimate websites is a strong indicator that the site is potentially fraudulent.  It also goes beyond these other solutions insofar as it prevents non-email based attacks (such as keyloggers inserted through browser exploits) and also more “grey-area” fraud such as dubious but not outright fake ecommerce sites.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Notes on primary competitors&lt;/em&gt;:&lt;/p&gt;
&lt;p&gt;Symantec:  Generated $1.87B in revenue in 2004, 47% of which came from consumer products.  Symantec has not yet released a spyware removal tool but is expected to in Q105.  They have no client side phishing product today but will likely release one sometime this year.&lt;/p&gt;
&lt;p&gt;McAfee:  McAfee is the #2 consumer security software bundle.  They currently have spyware detection but not removal.  It is likely they will release spyware removal sometime this year.&lt;/p&gt;
&lt;p&gt;ZoneLabs:  ZoneLabs was acquired by Checkpoint in 2004 for approximately $250M.  Their primary product is ZoneAlarm, a software-based firewall that had, as of 2004, at least 30M (free) users.  They also sell a complete security bundle that has at least 1M paying subscribers.  ZoneLabs built their business almost exclusively through a free downloadable version that became popular in the press and among technology enthusiasts.&lt;/p&gt;
&lt;p&gt;Computer Associates:  CA sells a traditional security bundle and recently added spyware removal tools through their acquisition of PestPatrol.&lt;/p&gt;
&lt;p&gt;Trend Micro:  Trend Micro has recently added spyware removal and has features they describe as anti-phishing (actually just an outgoing firewall that looks for personal info being sent from the PC).&lt;/p&gt;
&lt;p&gt;Microsoft:  Recently acquired an anti-spyware company (Giant) and an anti-virus company and is expected to release versions of each in Q105.  There have been conflicting reports about whether they plan to charge for these services.  Microsoft appears to see web-based security threats as a major headache.  Firefox has supposedly gotten 10% of the browser market in just the past 6 months due in large part to users’ frustration with Internet Explorer security issues.&lt;/p&gt;
&lt;p&gt;WebRoot:  WebRoot is widely considered to have a very good spyware removal tool.  Their rate of innovation has generally been very impressive.  WebRoot generated $16M in revenues in Q404 alone, evidence that point solution security products can thrive in the consumer market. We had thought Webroot was likely to be acquired but last week announced a $108mm financing event.&lt;/p&gt;
&lt;p&gt;Freeware:  Lavasoft’s Ad Aware and Spybot S&amp;#x26;D have been extremely popular free spyware removal tools.  For example, Ad Aware consistently gets more than 2M downloads per week on download.com alone (there is also a paid version of Ad Aware that is rumored to have generated significant revenues for the company).&lt;/p&gt;
&lt;p&gt;Websense:  Websense is a $1B market cap company that is considered to be the leader in so-called web filtering technology.  The primary focus of web filtering technology is to restrict corporate users from going to “bad topics” such as adult and gambling websites.  They have recently added an optional, add-on security module that basically works by altogether blocking access to large blocks of websites associated with insecure activity (e.g. Kazaa.com).  Websense severely restricts web access and is therefore only useful to (typically large) corporations that find such restrictions acceptable.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Would any of these competitors be likely to offer a product similar to InfiniTrust’s?&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Today, InfiniTrust’s closest competitor in terms of the product itself is probably Websense.  Websense has a database that in many ways is similar to InfiniTrust’s although much more focused on topics rather than security ratings.  Websense has built a high growth business ($100M revs, $36M EBITDA, $1.2B market cap) focusing almost solely on larger enterprises.  We see their entry into the consumer market as being unlikely but if they did enter it that could be a serious threat to InfiniTrust.&lt;/p&gt;
&lt;p&gt;Anti-spyware vendors could also conceivably take an approach like InfiniTrust’s, although it would mean a fundamental change in how they go about building their technology and database.  Right now their approaches are very similar to those of anti-virus technologies: they have databases of signatures they use to scan PC’s for existing infections (“parasites”), as opposed to InfiniTrust which has a database of all the “hosts” (websites, program downloads, ActiveX objects) that might carry those parasites.  Determining the trustworthiness of hosts is simply a different technology problem than detecting and removing the parasites.&lt;/p&gt;
&lt;p&gt;We see InfiniTrust as being fundamentally about providing secure, “unannoying” yet unrestricted web access, just as anti-spam companies try to provide secure, “unannoying” yet unrestricted email access.  Spyware and phishing happen to be two important and growing security threats that have mostly web-based attack vectors. They are therefore important to InfiniTrust’s value proposition but that does not mean that InfiniTrust is just another anti-spyware or anti-phishing company.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Marketing Plan&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The target market will be individuals and organizations that care about both security and unrestricted web browsing.  InfiniTrust sees this as encompassing a large percentage of consumers and, to a somewhat lesser extent, small and medium businesses.  Larger businesses tend to be satisfied with much “blunter” security instruments such as Websense that significantly restrict user web access.&lt;/p&gt;
&lt;p&gt;InfiniTrust plans to offer a limited-functionality free version that can be downloaded directly from infinitrust.com and will also be distributed through channels.   The current plan calls for the free version to offer the user basic defensive features but not have access to the full database. The free version will remind the user of its value by displaying periodic reminders of the specific dangers it has blocked or warned about.  The paid version will likely start at $30 per year for consumers (discounted strategically for different target populations) and something in the range of $5-20 per seat per year for enterprises with an upfront licensing fee for the admin console.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Distribution Partnerships&lt;/em&gt;:  ISPs, security software vendors, search engines, toolbar vendors and PC OEMs are natural distribution partners.&lt;/p&gt;
&lt;p&gt;ISPs (especially dialup providers where consumer choice is greater) are increasingly trying to differentiate their services through security software they give to their customers.  For example, security is the primary focus of recent television campaigns by AOL and Earthlink.  Additionally, these companies incur significant costs handling customer support calls resulting from phishing and spyware. For example, Earthlink says that customer support costs them $120K per phishing attack.  Deals with ISPs could either be pay per user (AOL pays McAfee $2 per user for anti-virus functionality alone which is generally considered a commodity) or unpaid distribution of the free product.&lt;/p&gt;
&lt;p&gt;Large consumer security software vendors try to provide a single package that includes every existing category of security software.  If InfiniTrust succeeds in convincing them that its product is complementary and useful, it could be seen as a critical addition to their bundles.&lt;/p&gt;
&lt;p&gt;Toolbar vendors such as Google, Yahoo, Earthlink, MSN and Ebay have recently been incorporating security features for anti-phishing and anti-spyware.  For example, Yahoo distributes PestPatrol and Earthlink distributes WebRoot.   Earthlink built its own anti-phishing functionality.  InfiniTrust’s data feed can make these toolbars significantly more powerful.&lt;/p&gt;
&lt;p&gt;PC OEMs receive numerous calls from customers about browser security issues. As mentioned earlier, 20% of Dell’s customer service calls are about spyware.  These companies are interested in not only reducing these costs but also differentiating their products.  Many of these companies have shown a willingness to work with startups (e.g. Dell distributes Sunbelt’s anti-spyware solution, generating a significant portion of Sunbelt’s $30M in revenue).&lt;/p&gt;
&lt;p&gt;A recent internal survey by InterActive Corp. of web search users showed that the safety of the sites they find was users’ #1 concern (cited by 77% of respondents as a “major concern”).  As search engines are increasingly the “gatekeepers of the web,” it is natural for them to provide filtering and ranking based on security.  At the simplest level, a partnership with a search engine could provide an InfiniTrust score next to search results in exchange for showing the InfiniTrust logo.&lt;/p&gt;
&lt;p&gt;Financial institutions affected by phishing have expressed interest in distributing client-side anti-phishing solutions such as InfiniTrust’s as a way to offer protection their customers.   For example, one recently developed anti-phishing toolbar, FraudEliminator, received business development cold calls from 3 major banks, Mastercard and Experian in just the past week despite having spent $0 on marketing.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;PR&lt;/em&gt;:   Desktop security was by far the #1 topic of discussion in the technology-related press in 2004.  The fact that InfiniTrust solves growing, high-visibility problems like phishing and spyware as well as older problems such as browser exploits in a new way provides a great opportunity to leverage this attention.  Initially, the technology press will be targeted, but the benefits of the product are widespread enough to attract mainstream media coverage.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Word of mouth&lt;/em&gt;:  Most “unsophisticated” users choose their security software based on the recommendations of 1) the media, 2) their PC manufacturer or ISP, and 3) technologically sophisticated friends and family.  Strategies for addressing 1) and 2) were discussed above.   The strategy for addressing 3) is, among other things, to make the product and message amenable to technology enthusiasts.  InfiniTrust’s client software will be mostly or completely open source, thereby showing goodwill toward the technology-enthusiast community and assuaging concerns that the client software might be in some way malicious (importantly, open sourcing the client will not jeopardize the business as the value lies primarily in the centralized database which will not be open).  In addition, the company will build Firefox, Linux and Mac versions relatively early on and expose popular portions of the database to the public via search engines.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Paid marketing&lt;/em&gt;:  In the past few years, online advertising channels such as search engines and banner ad networks have transformed the marketing possibilities for consumer software downloads and services.  In particular, it is now possible to target customers by demographic and context far more efficiently than in the past.  Moreover, startups are able to compete on a level playing field in keyword and banner auctions instead of having to, say, fight for shelf space in retail stores or suffer huge payouts to powerful distributors.  Some consumer software products and services that have built interesting businesses primarily through web-based advertising and had recent successful exits include Gotomypc (acquired by Citrix for $237M), ZoneLabs (acquired by Checkpoint for $250M), Classmates.com (acquired by United Online for $100M), TripAdvisor (acquired by IAC for $250M), and Shopping.com ($750M market cap).&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Risks&lt;/strong&gt;.&lt;/p&gt;
&lt;p&gt;Market risks:&lt;/p&gt;
&lt;p&gt;Competitive offerings: Companies such as Symantec, McAfee and Microsoft could improve their products enough to substantially solve the same problems that InfiniTrust is trying to solve. These companies have superior brand recognition and distribution so even if they merely solve the same problems, say, 75% as well as InfiniTrust does, they will likely succeed in the marketplace.&lt;/p&gt;
&lt;p&gt;Insufficient or inaccurate data:  InfiniTrust may launch with a data set that is simply not sufficient to show real benefits to early adopters. It may be that deeper or broader data is required in order to cover an acceptable percentage of actual user browsing.  Initial diligence, however, suggests this outcome to be unlikely because web browsing tends to be fairly highly concentrated.  It has been shown, for example, that 50% of page views on the web are for the top 5000 websites, and the top 2000 downloads account for over 95% of total downloads.&lt;/p&gt;
&lt;p&gt;Unwillingness to pay: While the InfiniTrust product may provide incremental value to users, there may not be a willingness to pay for it.&lt;/p&gt;
&lt;p&gt;Lack of awareness: Despite attempts to build distribution partnerships and generate PR, customers may simply not hear about InfiniTrust. The cost of running a concerted advertising or paid inclusion program may simply be too high for a start up to muster.&lt;/p&gt;
&lt;p&gt;Problems decrease for other reasons: Legal changes, software quality improvements or other external factors may lead to a reduction in the type of security problems that InfiniTrust solves, thereby reducing the need for the product.&lt;/p&gt;
&lt;p&gt;Technical risks:&lt;/p&gt;
&lt;p&gt;Data collection:  The data required to make InfiniTrust work can be difficult to collect.  Programs must be automatically installed, phishing attacks must be recognized, and web exploits must be discovered and analyzed. The company believes it has a solid plan for tackling these problems, but if it is wrong the product quality could suffer.&lt;/p&gt;
&lt;p&gt;“Arms race”: Once attackers realize how InfiniTrust operates they may put more effort into hiding their spyware, phishing attacks, web exploits etc.  This may result in a reduced data quality.  Since most of the “hackers” InfiniTrust is targeting are economically motivated, the company believes this will only happen when the company is quite successful distributing its product.  At that point the company expects to have the resources to fight back.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Budget&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The company is raising $2.7M, which would allow for a 12 month product development plan plus an additional 12 months of marketing, business development, and product refinement.  After the v1.0 product is built, the company would hire an additional team member to help with marketing and business development, and would also engage a PR firm and do online advertising to build market traction.  A summary of the budget plan is below.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-12-09-at-5-00-47-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 12 09 at 5 00 47 pm&quot;
        title=&quot;Screen Shot 2012-12-09 at 5.00.47 PM&quot;
        src=&quot;/static/cd27877b54c2c756167921e8126ea94e/b70fd/screen-shot-2012-12-09-at-5-00-47-pm.png&quot;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-12-09 at 5.00.47 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The product lens]]></title><description><![CDATA[There has been a lot of discussion lately about the markets for startup financing. Many of the discussions use words like “valuations…]]></description><link>https://cdixon.org/2012/12/02/the-product-lens</link><guid isPermaLink="false">https://cdixon.org/2012/12/02/the-product-lens</guid><pubDate>Sun, 02 Dec 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There has been a lot of &lt;a href=&quot;http://pandodaily.com/2012/11/28/the-series-a-crunch-is-hitting-now-have-we-even-noticed/&quot;&gt;discussion&lt;/a&gt; lately about the markets for startup financing. Many of the discussions use words like “valuations” “bubble” “crunch” etc. Words like that generally mean the writer is discussing the world through the lens of finance. This is a useful lens, but I’d like to suggest there is another lens that is also useful: the product lens. First, some background.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Two markets&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Startups sit in the middle of two markets: one between VCs and startups, and one between startups and customers. These markets are correlated but only partially. When the financing supply is low but customer demand is high, entrepreneurs that are able to finagle funding generally do well. When financing and startup supply is high, customers do well, some startups do well, and VCs generally don’t. And so on.&lt;/p&gt;
&lt;p&gt;When VCs get too excited, people talk about a bubble. When VCs get too fearful, people talk about a crash. Historically, downturns were great times for startups that were able to raise money because competition was low but customer demand for new technology remained fairly steady. Downturns also tended to coincide with big platform shifts, which usually meant opportunities for entrepreneurs.&lt;/p&gt;
&lt;p&gt;These markets shift independently between different stages and sectors, although there are connections. The amount of financing available is relatively constant, because of the longevity of VC funds and the way most VCs are compensated (management fees). Less financing in one sector or stage usually leads to more financing in others.&lt;/p&gt;
&lt;p&gt;The stages are related because the early stages depend on the later stages for exits and financings. The result is a bullwhip effect where changes in later stages (the latest stage being public markets) lead to magnified changes in early stages.&lt;/p&gt;
&lt;p&gt;Smart VCs understand these dynamics and adjust their strategies accordingly. Smart entrepreneurs don’t need to think about these things very often. Fundraising is necessary (at least for companies that choose to go the VC route – many shouldn’t), but just one of the many things an entrepreneur needs to do. The best advice is simply to raise money when you can, and try to weather the vicissitudes of the financial markets.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The product lens&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Good entrepreneurs spend most of their time focusing on the other market: the one between their company and their customers. This means looking at the world through the lens of products and not financing. This lens is particularly important when you are initially developing your idea or when you are thinking about product expansions.&lt;/p&gt;
&lt;p&gt;The product lens suggests you should ask questions like: have the products in area X caught up to the best practices of the industry? Are they reaching their potential? Are they exciting? Are there big cultural/technological/economic changes happening that allow dramatically better products to be created? Sometimes the product lens guides you to the same conclusion as the finance lens and sometimes it doesn’t.&lt;/p&gt;
&lt;p&gt;For example, there has been a lot of hand wringing about a financing crunch for consumer internet startups. One theme is that investors are pivoting from consumer to enterprise. The finance lens says: for the last five years or so, consumer was overfunded and enterprise was underfunded – let’s correct this. It also helps that enterprise IPOs have performed much better than consumer IPOs in the last year or so.&lt;/p&gt;
&lt;p&gt;The product lens is tricky. My sense is that, at least for the non-mobile consumer internet, the product lens and financing lens agree. Anyone who has had the misfortune to use enterprise technology lately will tell you that the hardware and software they use at home (iPhone, Gmail, etc) is far and away more sophisticated and elegant than the software they use at work. It feels like the enterprise tech is way behind in the product upgrade cycle.&lt;/p&gt;
&lt;p&gt;Mobile seems like a case where the lenses disagree. The finance lens says: billions of dollars have been invested in mobile apps. It has become hit driven and there have been very few “venture-scale” startups created.&lt;/p&gt;
&lt;p&gt;The product lens says: the modern smartphone platform began about four years ago when the iOS app store launched. This is clearly a major new platform. Platforms and apps interact in a push-pull relationship that takes decades to play out. Innovative new apps, designs and technologies are created all the time. It would be surprising – and contrary to all the historical patterns – if the mobile product evolution were already played out.&lt;/p&gt;
&lt;p&gt;That is not to dismiss the finance lens. It could be painful along the way:  financing markets might dry up, and profits might accrue to the platforms over the apps. But clearly mobile is just getting started.&lt;/p&gt;
&lt;p&gt;Some of the biggest mistakes I’ve made as an angel investor stemmed from being beholden to the finance lens. The finance lens feels more scientific and therefore appeals to analytical types. It might sound unsophisticated to say “the products for X are crappy, and I have an idea for how to make them great.” But in many cases, it’s actually that simple.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some problems are so hard they need to be solved piece by piece]]></title><description><![CDATA[Andrew Parker had a great post a few years ago where he sketched out all the startups going after pieces of Craigslist:  Startups that have…]]></description><link>https://cdixon.org/2012/11/23/some-problems-are-so-hard-they-need-to-be-solved-piece-by-piece</link><guid isPermaLink="false">https://cdixon.org/2012/11/23/some-problems-are-so-hard-they-need-to-be-solved-piece-by-piece</guid><pubDate>Fri, 23 Nov 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Andrew Parker had a great &lt;a href=&quot;http://thegongshow.tumblr.com/post/345941486/the-spawn-of-craigslist-like-most-vcs-that-focus&quot;&gt;post&lt;/a&gt; a few years ago where he sketched out all the startups going after pieces of Craigslist:&lt;br&gt;
&lt;img src=&quot;https://lh4.googleusercontent.com/vl8LZu_6tICMl8YOT1_SvMY1805i7cQ-r7fNMNoGDeec2CgHQHte_WY_nwkQ70p8AcfgteX--nwH1T_A3fFIKl1JDIVJgRZhvJkIAU6viz9KDeTdVMx3&quot;&gt;&lt;/p&gt;
&lt;p&gt;Startups that have tried to go head-to-head against the entirety of Craigslist (the “horizontal approach”) have struggled. Startups that have tried to go up against pieces of Craigslist (the “vertical approach”) have been much more successful (e.g. StubHub, AirBnB).&lt;/p&gt;
&lt;p&gt;Recruiting looks like it’s going through a similar evolution. Last-generation products like LinkedIn are broad but not deep. Everyone I know who recruits uses LinkedIn, but none of them think it has solved their recruiting problems. Now we are seeing the rise of vertical solutions that are significantly better, e.g. Stack Overflow for developers and Behance for designers (at least that’s what I believe – I’m an angel investor in both).&lt;/p&gt;
&lt;p&gt;The benefits of focusing are: 1) you can create a dramatically better user experience when it’s tailored to a specific use, 2) you can do unscalable hacks when starting out (e.g. AirBnb paying photographers to take pictures of apartments), 3) you need far fewer users to get to minimum viable liquidity, and 4) brand building is easier when you solve a straightforward, narrow problem (e.g. “I need a place to stay this weekend”).&lt;/p&gt;
&lt;p&gt;This pattern – horizontal first, vertical second – is common. But you need to be careful. Back in 2003-2004, there was a lot of speculation that vertical search engines would eventually take down Google. A few categories worked (e.g. travel), but Google adapted in other categories (e.g. video, news) and lots of startups suffered.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[a16z]]></title><description><![CDATA[VCs are experts at analyzing industries and identifying new opportunities, which is why it’s odd that the VC industry itself has so…]]></description><link>https://cdixon.org/2012/11/19/a16z</link><guid isPermaLink="false">https://cdixon.org/2012/11/19/a16z</guid><pubDate>Mon, 19 Nov 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;VCs are experts at analyzing industries and identifying new opportunities, which is why it’s odd that the VC industry itself has so stubbornly resisted change.&lt;/p&gt;
&lt;p&gt;Two years ago I wrote a &lt;a href=&quot;http://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted/&quot;&gt;post&lt;/a&gt; where I argued that innovative new VC firms are finally starting to change this:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Top tier entrepreneurs are frequently selecting their investors, not vice versa. The VCs most sought after are mostly new firms: big firms like Andreessen Horowitz, Union Square Ventures, and First Round, and micro-VCs like Floodgate (fka Maples), Betaworks, and Ron Conway.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Since then, the trend has become even more pronounced. VC is only partly about investing. It is primarily a service business whose purpose is to help entrepreneurs.&lt;/p&gt;
&lt;p&gt;When Andreessen Horowitz (“&lt;a href=&quot;http://en.wikipedia.org/wiki/Internationalization_and_localization&quot;&gt;a16z&lt;/a&gt;”) started out three years ago, like a lot of people I thought “OK, really interesting entrepreneurial founders, but how will they be as investors?” Then I started hearing chatter among entrepreneurs that they really wanted to raise money from them. “We’re talking to X, Y, &amp;#x26; Z — but Andreessen is the firm we really want” became an increasingly common refrain.&lt;/p&gt;
&lt;p&gt;Earlier this year I got to meet the a16z team and observe the operation directly. There are over 60 people at the firm. Only six people do traditional VC activities: investing, joining boards, and helping out. The rest are exclusively focused on helping entrepreneurs.&lt;/p&gt;
&lt;p&gt;The “startup idea” behind a16z is: instead of spending the bulk of the fund fees on partner salaries, spend it on operations to help entrepreneurs. There is a marketing team (=helps you get noticed), a talent team (=helps you recruit), a market development team (=helps you get customers), and a research team (=helps you figure stuff out).&lt;/p&gt;
&lt;p&gt;Spending time there, I had the same feeling I have whenever I meet a great startup: “This is obviously the future, why didn’t someone do it before?”&lt;/p&gt;
&lt;p&gt;So I’m super excited to say that I’m joining a16z as their seventh General Partner. I’ll specialize in consumer internet investments but will be open to anything ambitious that involves technology. I’ll be based in California, but plan to do a lot of investing in NYC.&lt;/p&gt;
&lt;p&gt;I’ll miss seeing my Hunch colleagues on a daily basis. Many of us have been working together for eight years, through two startups. I’d also like to thank everyone at eBay for being so welcoming and supportive.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Agency problems]]></title><description><![CDATA[“Agency problems” are what economists call situations where a person’s interests diverge from his or her firm’s interests. Large companies…]]></description><link>https://cdixon.org/2012/10/19/agency-problems</link><guid isPermaLink="false">https://cdixon.org/2012/10/19/agency-problems</guid><pubDate>Fri, 19 Oct 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“&lt;a href=&quot;http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem&quot;&gt;Agency problems&lt;/a&gt;” are what economists call situations where a person’s interests diverge from his or her firm’s interests.&lt;/p&gt;
&lt;p&gt;Large companies are in a constant state of agency crisis. A primary role of senior management is to counter agency problems through organizational structures and incentive systems. For example, most big companies divide themselves into de facto smaller companies by creating business units with their own P&amp;#x26;L or similar metric upon which they are judged. (Apple is a striking counterexample: I once pitched Apple on a technology that could increase the number of iTunes downloads. I was told “nobody optimizes that. The only number we optimize here is P&amp;#x26;L in the CFO’s office”).&lt;/p&gt;
&lt;p&gt;If you are selling technology to large companies, you need to understand the incentives of the decision makers. As you go higher in the organization, the incentives are more aligned with the firm’s incentives. But knowledge and authority over operations often reside at lower levels. Deciding what level to target involves nuanced trade offs. Good sales people understand how to navigate these trade offs and shepherd a sale. The complexity and counter-intuitiveness of this task is why it’s so difficult for inexperienced entrepreneurs to sell to large companies.&lt;/p&gt;
&lt;p&gt;Agency problems also exist in startups, although they tend to be far less dramatic than at big companies. Simply having fewer people means everyone is, as they say in programming, “closer to the metal”. The emphasis on equity compensation also helps. But there are still issues. Some CEOs are more interested in saying they are CEOs at parties than in the day-to-day grind of building a successful company. Some designers are focused on building their portfolio. Some developers are only interested in intellectually stimulating projects. Every job has its own siren song.&lt;/p&gt;
&lt;p&gt;One of the reasons The Wire is such a great TV show is that it &lt;a href=&quot;http://cdixon.org/2010/01/30/institutional-failure/&quot;&gt;shows&lt;/a&gt; in realistic and persuasive detail how agency problems in large organizations consistently thwart well intentioned individual efforts. The depressing conclusion is that our major civic institutions are doomed to fail. Those of &lt;a href=&quot;http://www.avc.com/a_vc/2012/03/the-nature-of-the-firm-and-work-markets.html&quot;&gt;us&lt;/a&gt; who are technology optimists counter that the internet allows new networks to be created that eliminate the need for large organizations and their accompanying agency problems. Ideally, those networks recreate the power of large organizations but operate in concert like startups.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The economic logic behind tech and talent acquisitions]]></title><description><![CDATA[There’s been a lot of speculation lately about why big companies spend millions of dollars acquiring startups for their technology or talent…]]></description><link>https://cdixon.org/2012/10/18/the-economic-logic-behind-tech-and-talent-acquisitions</link><guid isPermaLink="false">https://cdixon.org/2012/10/18/the-economic-logic-behind-tech-and-talent-acquisitions</guid><pubDate>Thu, 18 Oct 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There’s been a lot of speculation lately about why big companies spend millions of dollars acquiring startups for their technology or talent. The answer lies in the economic logic that big companies use to make major project decisions.&lt;/p&gt;
&lt;p&gt;Here is a really simplified example. Suppose you are a large company generating $1B in revenue, and you have a market cap of $5B. You want to build an important new product that your CTO estimates will increase your revenue 10%. At a 5-1 price-to-revenue ratio, a 10% boost in revenue means a $500M boost in market cap. So you are willing to spend something less than $500M to have that product.&lt;/p&gt;
&lt;p&gt;You have two options: build or buy. Build means 1) recruiting a team and 2) building the product. There is a risk you’ll have significant delays or outright failure at either stage. You therefore need to estimate the cost of delay (delaying the 10% increase in revenue) and failure. Acquiring a relevant team takes away the recruiting risk. Acquiring a startup with the product (and team) takes away both stages of risk. Generally, if you assume 0% chance of failure or delay, building internally will be cheaper. But in real life the likelihood of delay or failure is much higher.&lt;/p&gt;
&lt;p&gt;Suppose you could build the product for $50M with a 50% chance of significant delays or failure. Then the upper bound of what you’d rationally pay to acquire would be $100M. That doesn’t mean you have to pay $100M. If there are multiple startups with sufficient product/talent you might be able to get a bargain. It all comes down to supply (number of relevant startups) and demand (number of interested acquirers).&lt;/p&gt;
&lt;p&gt;Every big company does calculations like these (albeit much more sophisticated ones). This is a part of what M&amp;#x26;A/Corp Dev groups do. If you want to sell your company – or simply understand acquisitions you read about in the press – it is important to understand how they think about these calculations.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Regulatory hacks]]></title><description><![CDATA[A common way to think of business regulations is by analogy to sports: the rules are specified up front, and the players follow the rules…]]></description><link>https://cdixon.org/2012/10/10/regulatory-hacks</link><guid isPermaLink="false">https://cdixon.org/2012/10/10/regulatory-hacks</guid><pubDate>Wed, 10 Oct 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A common way to think of business regulations is by analogy to sports: the rules are specified up front, and the players follow the rules. But real regulations don’t work that way. Regulations follow business as much as business follows regulations.&lt;/p&gt;
&lt;p&gt;Sometimes the businesses that change regulations are startups. Startups don’t have the resources to change regulations through lobbying. Instead, they need to start with regulatory hacks: “back door” experiments that demonstrate the benefits of their ideas. With luck, regulators are forced to follow.&lt;/p&gt;
&lt;p&gt;Nextel was one of the all-time great regulatory hacks. In the late 80s and early 90s, the FCC’s rules banned more than two cellular operators per city. As Nextel’s cofounder &lt;a href=&quot;http://www.rcrwireless.com/article/20090217/wireless/looking-back-while-going-forward-how-the-early-days-of-nextel-reflect-on-today/&quot;&gt;said&lt;/a&gt;, “the FCC thought a wireless duopoly was the perfect market structure”. Nextel (called Fleet Call at the time) circumvented these rules by acquiring local (e.g. taxi, pizza truck) dispatch radio companies, which they then connected to create a nationwide (non-dispatch) cell phone service.&lt;/p&gt;
&lt;p&gt;Predictably, the cellular incumbents tried to regulate Nextel out of existence. From a 1991 New York Times &lt;a href=&quot;http://www.nytimes.com/1991/02/13/business/threat-to-cellular-phone-services.html&quot;&gt;article&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In a move that could threaten cellular telephone companies, the Federal Communications Commission may decide on Wednesday to grant a small radio company’s request to provide a new form of mobile telephone service in six major cities, including New York. If the request is approved, the action could inject new competition into the industry. At the moment, Federal rules permit only two cellular systems to operate in any city. But the new proposal could open up a regulatory back door, allowing companies that provide private radio service for taxi fleets and delivery services to offer mobile telephone services to individuals…. The proposal has alarmed the industry, which has heatedly opposed it and enlisted support in Congress late last year to delay the F.C.C.’s decision.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The incumbents argued that Nextel’s service would interfere with public safety frequencies and therefore endanger the public. They also argued that Nextel’s service would be too expensive:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Some analysts contend that the radio handsets for Fleet Call and its imitators will be more expensive than cellular units. The technical features of cellular equipment are now standardized nationwide, making it possible to bring down costs through higher selling volumes. Specialized mobile services are currently different in each city.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;And their call quality would be inferior:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Some analysts contend that Fleet Call’s local service is likely to be inferior as well. “It is highly unlikely to be as good as cellular service,” said Denise Jevne, telecommunications analyst with T. Rowe Price Associates in Baltimore.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The FCC eventually decided not to block Nextel. Nextel grew to become a top five US cellular operators before it was acquired by Sprint in 2004 for $35B. Their service turned out to be cost-competitive, high quality, and safe. The only thing endangered were the incumbents’ profits.&lt;/p&gt;
&lt;p&gt;What Nextel faced in 1991 is very similar to what many startups face today. Uber is being threatened by the taxi industry, Aereo by the TV broadcasting industry, and Airbnb by the hotel industry. Some industries, like finance, are so heavily regulated that almost any new idea runs into regulatory objections.&lt;/p&gt;
&lt;p&gt;Of course regulations that truly protect the public interest are necessary. But many regulations are created by incumbents to protect their market position. To try new things, entrepreneurs need to find a back door. And when they succeed, it will all look obvious in retrospect. Today’s regulatory hack is tomorrow’s mainstream industry.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The rise of enterprise marketing]]></title><description><![CDATA[Building an enterprise software company used to be largely about sales, because enterprise software was sourced and purchased by high-level…]]></description><link>https://cdixon.org/2012/09/24/the-rise-of-enterprise-marketing</link><guid isPermaLink="false">https://cdixon.org/2012/09/24/the-rise-of-enterprise-marketing</guid><pubDate>Mon, 24 Sep 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Building an enterprise software company used to be largely about sales, because enterprise software was sourced and purchased by high-level business people. Those business people needed to be charmed and convinced, an activity that was distasteful to many technologists.&lt;/p&gt;
&lt;p&gt;Internet-based delivery (“SaaS”, “cloud”) dramatically lowered installation costs, letting individuals or small groups buy software on discretionary budgets or use basic versions for free. As adoption spread throughout the organization, the value of the software eventually percolated up to high-level business people who could write large checks to get features big companies need, such as administration, security, integration, compliance, and support. This ”bottom-up” approach was pioneered by Salesforce and open source companies like MySql. Recent enterprise success stories also follow this model, e.g. New Relic, Yammer, Twilio, and Github. Many of these companies have processes that would have seemed crazy ten years ago – e.g. sales people only handle inbound inquiries or only call customers who already use their product.&lt;/p&gt;
&lt;p&gt;Thus enterprise software went from being about sales (one-to-one) to being about marketing (one-to-many). Marketing requires crafting a compelling message, figuring out the right channels and then optimizing. But the most effective marketing is a compelling product that can be easily tried. As a result, as Benchmark’s Peter Fenton &lt;a href=&quot;http://vivekmohta.com/2012/09/16/the-underhyped-enterprise-market-and-consumerization-of-enterprise/&quot;&gt;said&lt;/a&gt; recently: ”We’re seeing a fundamental shift from sales-driven companies to product-driven companies. The companies that are leading the way there let this consumer and product focus permeate the culture of their companies.”&lt;/p&gt;
&lt;p&gt;One of the most visible manifestations of this shift is the refreshingly accessible language on modern enterprise websites. Sales-driven enterprise software companies speak the arcane language of CIOs. Marketing-driven companies talk directly to business users (e.g. &lt;a href=&quot;https://www.yammer.com/product/&quot;&gt;Yammer&lt;/a&gt;) or developers (e.g. &lt;a href=&quot;https://github.com/&quot;&gt;Github&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;This is good news all around. Enterprises are more likely to get software that incorporates the advances made over the last decade in consumer software. Startups get a shot at creating this software, and get to do so on a fairly level playing field. The product and marketing focus should also attract a lot more technologists who were turned off by sales. The only losers are incumbents who continue to pursue the old model.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Vanity milestones]]></title><description><![CDATA[Eric Ries uses the phrase “vanity metrics” to refer to metrics that founders cite to demonstrate progress but that are actually false…]]></description><link>https://cdixon.org/2012/09/11/vanity-milestones</link><guid isPermaLink="false">https://cdixon.org/2012/09/11/vanity-milestones</guid><pubDate>Tue, 11 Sep 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Eric Ries uses the phrase “&lt;a href=&quot;http://www.startuplessonslearned.com/2009/12/why-vanity-metrics-are-dangerous.html&quot;&gt;vanity metrics&lt;/a&gt;” to refer to metrics that founders cite to demonstrate progress but that are actually false signals. A related concept is “vanity milestones”: achievements that are more about making you feel good than helping your company. Vanity milestones include:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Raising money from famous people/firms who aren’t really going to help your company (e.g. Hollywood celebrities).&lt;/li&gt;
&lt;li&gt;Partnerships with brand name organizations that aren’t really going to help your company.&lt;/li&gt;
&lt;li&gt;Getting press (e.g top lists) that focuses on founders and not your company.&lt;/li&gt;
&lt;li&gt;Almost all tech press (unless your product targets developers or tech companies).&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;&lt;strong&gt;This doesn’t mean it’s bad to hit vanity milestones.&lt;/strong&gt; Good companies hit lots of vanity milestones along the way, and sometimes they can be a morale boost for employees. What is worrisome is when founders equate vanity milestones with success. The attention will go away very quickly if your company fails.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Notes on the acquisition process]]></title><description><![CDATA[Ten years ago, startup financing was an insider’s game. Since then, the topic has been widely discussed on blogs, to the great benefit of…]]></description><link>https://cdixon.org/2012/09/10/notes-on-the-acquisition-process</link><guid isPermaLink="false">https://cdixon.org/2012/09/10/notes-on-the-acquisition-process</guid><pubDate>Mon, 10 Sep 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Ten years ago, startup financing was an insider’s game. Since then, the topic has been widely discussed on blogs, to the great benefit of entrepreneurs. Comparatively little, however, has been written about the important transaction at the other end many startups’ life, acquisitions. Here are some things I’ve learned about the acquisition process over the years.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;There is an old saying that startups are bought not sold. Clearly it is better to be in high demand and have inbound interest. But for &lt;a href=&quot;http://cdixon.org/2011/12/10/three-types-of-acquisitions/&quot;&gt;product and tech&lt;/a&gt; acquisitions especially, it is often about getting the attention of the right people at the acquirer. Sometimes the right person is corp dev, other times product or business unit leads, and other times C-level management.&lt;/li&gt;
&lt;li&gt;Don’t use a banker unless your company is late stage and you are selling based on a multiple of profits or revenues. I’ve seen many acquisitions bungled by bankers who were either too aggressive on terms or upset the relationship between the startup and acquirer.&lt;/li&gt;
&lt;li&gt;Research the potential acquirer before the first meeting. Try to understand management’s priorities, especially as they relate to your company.  Talk to people who work in the same sector. Talk to industry analysts, investors, etc. If an acquirer is public, Wall Street analyst reports can be helpful.&lt;/li&gt;
&lt;li&gt;Develop relationships with key people – corp dev, management, product and business unit leads. The earlier the better.&lt;/li&gt;
&lt;li&gt;Don’t try to be cute. Leaking rumors to the press, creating a false sense of competition, etc. is generally a bad idea. Besides being ethically questionable, it can create ill will.&lt;/li&gt;
&lt;li&gt;What you tell employees is particularly tricky. Being open with employees can lead to press leaks and can annoy acquirers. Moreover, some public companies insist that you don’t talk to employees until the deal is closed or almost closed. Employees usually get a sense that something is going on and this can put you in the awkward situation of being forced to lie to them. I don’t know of a good solution to this problem.&lt;/li&gt;
&lt;li&gt;Understand the process and what each milestone along the way means. As with financings, acquisitions take a long time and involve lots of meetings and difficult decisions. Inexperienced entrepreneurs tend to get overly excited about a few good meetings.&lt;/li&gt;
&lt;li&gt;Strike while the iron is hot. Just as with &lt;a href=&quot;http://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed/&quot;&gt;financings&lt;/a&gt;, you need to be opportunistic. Waiting 6 months to hit another milestone might improve your fundamentals, but the acquirer’s interest might wane.&lt;/li&gt;
&lt;li&gt;There are two schools of thought on price negotiation: anchor early or wait until you’ve gotten strong interest. Obviously having multiple interested parties makes finding a fair price a lot easier.&lt;/li&gt;
&lt;li&gt;Deal structure: the cap table is an agreement between you and the shareholders that says, in effect: “If we sell the company, this is how we pay out founders, employees, and investors.” Acquirers have gotten increasingly aggressive about rewriting cap tables to 1) hold back key employee payouts for retention purposes, and 2) give a greater share of proceeds to employees/founders.  Some even go so far as to try to cut side deals with key employees to entice them to abandon the other employees and investors. In terms of ethics and reputations, it is important to be fair to all parties involved: the acquirer, founders, employees, and investors.&lt;/li&gt;
&lt;li&gt;Research the reputation of the acquirer, especially how they have behave between LOI and closing (good people to talk to: investors, other acquired startups, startup lawfirms). This is when acquirers have all the leverage and can mistreat you. Some acquirers treat LOIs the way VCs treat term sheets, as a contract they’ll honor unless they discover egregious issues like material misrepresentations. Others treat them as an opportunity to get free market intelligence.&lt;/li&gt;
&lt;li&gt;Certain terms beyond price can be deal killers. The most prominent one lately is “IP indemnification.” This is a complicated issue, but in short, as a response to patent trolls going after IP escrows, acquirers have been trying to get clawbacks from investors in case of IP claims. This term is a non-starter to institutional investors (and most individual investors). You need to understand all the potential deal-killer terms and hire an experienced startup law firm to help you.&lt;/li&gt;
&lt;li&gt;Ignore the cynical blog chatter about “acqui-hires” (or, as they used to be called, “talent acquisitions”). Only people who have been through the process understand that sometimes these outcomes are good for everyone involved (including users when the alternative is shutting down).&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;Finally, acquisitions should be thought of as partnerships that will last long after the deal closes. Besides the commitments you make as part of the deal, your professional reputation will be closely tied to the fate of the acquisition. This is one &lt;a href=&quot;http://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model/&quot;&gt;more&lt;/a&gt; reason why you should only raise money if you are prepared for a long-term commitment.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The time to eat the hors d’oeuvres is when they’re being passed]]></title><description><![CDATA[The efficient market hypothesis is a widely taught financial theory that states, roughly, that under certain generally-held conditions…]]></description><link>https://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed</link><guid isPermaLink="false">https://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed</guid><pubDate>Mon, 03 Sep 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The efficient market hypothesis is a widely taught financial theory that states, roughly, that under certain generally-held conditions, asset prices are an accurate reflection of the information available at the time. The arguments underlying it are mathematically elegant and have been widely &lt;a href=&quot;http://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street&quot;&gt;popularized&lt;/a&gt;. Its hardcore proponents argue that financial bubbles &lt;a href=&quot;http://krugman.blogs.nytimes.com/2009/07/19/ketchup-and-the-housing-bubble/&quot;&gt;do not (indeed cannot) exist&lt;/a&gt; and that government intervention in financial markets is unnecessary. While efficient market theory is dominant in academic circles, it is very hard to find active participants in financial markets who believe in it. In financial markets – like most complex human systems – the closer you get, the more nuance you discover.&lt;/p&gt;
&lt;p&gt;Venture capital markets are perhaps the most inefficient of mainstream financial markets. Complicating factors include: heavy reliance on comparables for valuations, desire of VCs to be associated with “hot” companies, tendency to overreact to macro changes, illiquidity of startup financings, illiquidity of financings for VCs themselves, perverse financial incentives of VCs, inability to short stocks, extreme uncertainty of startup financial projections, vagaries of the M&amp;#x26;A market, dependency on moods of downstream investors, concentration of capital among a small group of VCs, the &lt;a href=&quot;http://nonchalantrepreneur.com/post/29847134811/why-its-so-hard-to-build-investment-models-for&quot;&gt;difficulty&lt;/a&gt; of developing accurate financial models, rapid shifts of supply and demand across sectors and stages, and non-uniform distribution of accurate market data.&lt;/p&gt;
&lt;p&gt;The title of this post is an old venture capital adage (via &lt;a href=&quot;https://twitter.com/bgurley/status/228919212683448321&quot;&gt;Bill Gurley&lt;/a&gt;) that reflects a hard-earned truth about financing and M&amp;#x26;A markets. For social consumer startups, the hors d’oeurves were being passed in the build up to the Facebook IPO. They are being passed now for B2B and e-commerce companies. In the M&amp;#x26;A markets, the most extreme example is probably in adtech, where there were waves of acquisitions in ad exchanges (DoubleClick, RightMedia, Avenue A), then mobile ads (AdMob, Quattro), and then social advertising (Buddy Media, Wildfire). If you didn’t sell during these M&amp;#x26;A waves, you’re suddenly stuck with lots of powerful competitors and few potential acquirers/partners.&lt;/p&gt;
&lt;p&gt;It is common to hear entrepreneurs say things like “I am waiting 6 months to raise money/sell the company, when we’ve hit new milestones.” Of course milestones matter, and companies are ultimately valued based on fundamentals. But along the way you’ll likely need capital and sometimes need to exit, and for that you are dependent on highly inefficient markets.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[E-commerce startups]]></title><description><![CDATA[Very few successful e-commerce companies were started in the 2000s. Since then, e-commerce startups have enjoyed a revival. Dozens of…]]></description><link>https://cdixon.org/2012/08/15/e-commerce-startups</link><guid isPermaLink="false">https://cdixon.org/2012/08/15/e-commerce-startups</guid><pubDate>Wed, 15 Aug 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Very few successful e-commerce companies were started in the 2000s. Since then, e-commerce startups have enjoyed a revival. Dozens of companies have gotten traction and venture dollars have followed. Phrases like flash sales, social commerce, and subscription commerce have entered the startup lexicon.&lt;/p&gt;
&lt;p&gt;As Josh Kopelman &lt;a href=&quot;http://redeye.firstround.com/2010/03/some-more-thoughts-on-innovation-in-ecommerce.html&quot;&gt;points out&lt;/a&gt;, the list of the top 15 e-commerce companies has barely changed over the past decade, in sharp contrast to the list of overall top internet companies. This can be interpreted in one of two ways.&lt;/p&gt;
&lt;p&gt;The bull case is that startups neglected e-commerce and are now waking up to the opportunity. The key equation driving e-commerce is: profit = lifetime customer value minus customer acquisition costs. New marketing strategies (“content plus commerce”, social commerce, etc) lower acquisition costs enough to make startups competitive with incumbents.&lt;/p&gt;
&lt;p&gt;The bear case is that scale and brand effects make e-commerce incumbents nearly unbeatable. As one entrepreneur said, “If it has a UPC code, Amazon will beat you.” A lower price is just one search away. The only way to compete is to sell used stuff or make your own products (or provide a marketplace for those things). The fat head (large incumbents) and the long tail (artisanal shops) will thrive, but the middle of the distribution will suffer. (The public markets seem to agree with this assessment, e.g. Overstock trades at 0.2x revenues.)&lt;/p&gt;
&lt;p&gt;What most people agree on is that e-commerce as a whole will continue to grow rapidly and eat into offline commerce. In the steady state, offline commerce will serve only two purposes: immediacy (stuff you need right away), and experiences (showroom, fun venues). All other commerce will happen online.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Ten million users is the new one million users]]></title><description><![CDATA[Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending…]]></description><link>https://cdixon.org/2012/08/03/ten-million-is-the-new-one-million</link><guid isPermaLink="false">https://cdixon.org/2012/08/03/ten-million-is-the-new-one-million</guid><pubDate>Fri, 03 Aug 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Some observations:&lt;/em&gt;&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Thousands of early-stage consumer web/mobile companies were started and funded in last 24 months.&lt;/li&gt;
&lt;li&gt;There are only a few dozen VCs who actively write consumer Series A checks, and those VCs will only do a few deals a year.&lt;/li&gt;
&lt;li&gt;Facebook’s market cap is about half of what most tech investors expected before the IPO.&lt;/li&gt;
&lt;li&gt;A few breakout early-stage consumer hits (Instagram, Pinterest) have reached tens of millions of users in record time.&lt;/li&gt;
&lt;li&gt;Internet users have tens of thousands of services/apps to choose from but limited time and attention.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;&lt;em&gt;Some consequences:&lt;/em&gt;&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;For consumer startups with non-transactional models (ad-based or unknown business models), you need something closer to 10 million users versus 1 million users to get Series A funded.&lt;/li&gt;
&lt;li&gt;For consumer startups with transactional models, e.g. e-commerce, the number of users required is often far lower because revenue is the more important metric. Hence, many early-stage consumer startups are switching to transactional models.&lt;/li&gt;
&lt;li&gt;It’s becoming increasingly common for early-stage consumer startups to do bridge financings (raising more money from past investors, usually on terms similar to the prior round) instead of Series As.&lt;/li&gt;
&lt;li&gt;VCs are increasingly focusing on B2B for early-stage investments.&lt;/li&gt;
&lt;li&gt;There will be a lot more consumer talent acquisitions.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;&lt;em&gt;Some advice:&lt;/em&gt;&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;If you are thinking of starting a non-transactional consumer startup, be aware that you are entering what is perhaps the most competitive sector in tech in the last decade.&lt;/li&gt;
&lt;li&gt;If you can raise more money, do it. (Especially pre-launch: &lt;a href=&quot;http://www.twylah.com/joshk/tweets/782406922&quot;&gt;remember&lt;/a&gt;, there’s nothing like numbers to screw up a good story).&lt;/li&gt;
&lt;li&gt;Be prepared for lower valuations for non-transactional early-stage consumer startups (breakout later-stage companies, on the other hand, will likely continue to command high valuations).&lt;/li&gt;
&lt;/ul&gt;</content:encoded></item><item><title><![CDATA[Shoehorning startups into the VC model]]></title><description><![CDATA[Tech startups go in an out of fashion. When they’re in fashion, as they are now, entrepreneurs and VCs get lots of attention. Most of this…]]></description><link>https://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model</link><guid isPermaLink="false">https://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model</guid><pubDate>Thu, 19 Jul 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Tech startups go in an out of fashion. When they’re in fashion, as they are now, entrepreneurs and VCs get lots of attention. Most of this attention focuses on things that involve money, like financings and acquisitions. For some entrepreneurs, raising venture capital becomes a goal unto itself, instead of what it should be: a heavy burden that only makes sense in certain cases.&lt;/p&gt;
&lt;p&gt;A startup should raise venture capital (or “venture-style” angel/seed funding) only if: 1) the goal is to build a billion-dollar (valuation) company, and 2) raising millions of dollars is absolutely necessary or will significantly accelerate growth.&lt;/p&gt;
&lt;p&gt;There are lots of tech companies that are very successful but don’t fit the VC model. If they don’t raise VC, the founders can make money, create jobs, and work on something they love. If they raise VC, a wide range of outcomes that would otherwise be good become bad.&lt;/p&gt;
&lt;p&gt;Unfortunately, many of these startups graft VC-friendly narratives onto their plans and raise too much money. Short term it might seem like a good idea but long term it won’t.&lt;/p&gt;
&lt;p&gt;The best source of capital is customers. The next best is the founders (cash or forgone salaries), or investors who are less aggressive about returns than VCs. Every startup has its natural source of financing. Venture capital is the natural source of financing for only a small fraction of startups, despite what the press might lead you to believe.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Capabilities and sensibilities]]></title><description><![CDATA[“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability…]]></description><link>https://cdixon.org/2012/07/17/capabilities-and-sensibilities</link><guid isPermaLink="false">https://cdixon.org/2012/07/17/capabilities-and-sensibilities</guid><pubDate>Tue, 17 Jul 2012 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” – F. Scott Fitzgerald&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;One reason running a startup is so interesting is the constant tension between opposing ways of thinking: short-term vs. long-term, internal vs. external, saving vs. investment, etc. At large companies, responsibility for these ways of thinking is often spread across multiple business units. In startups they fall on a few people, usually the founders.&lt;/p&gt;
&lt;p&gt;As a founder, the most important tension is between your capabilities and sensibilities. Capabilities are your talents and resources. Sensibilities are the way you see the world. Successful founders usually have an unlikely combination of capabilities and sensibilities. The right sensibilities without the right capabilities means a good vision, poorly executed. The right capabilities without the right sensibilities means building something your market doesn’t want. Getting both right creates &lt;a href=&quot;http://cdixon.org/2011/06/20/foundermarket-fit/&quot;&gt;founder-market fit&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;There are advantages and disadvantages to being an experienced entrepreneur. Disadvantages include the fact that, with age, you are more likely to have obligations outside of your startup. You also risk having calcified sensibilities. Counterbalancing this is greater self-awareness, and, ideally, the wisdom to choose markets that match your sensibilities and cofounders who augment your capabilities.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[How bundling benefits sellers and buyers]]></title><description><![CDATA[There is a widespread belief in technology circles that bundling of cable TV, newspaper, magazine and other information goods will go away…]]></description><link>https://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers</link><guid isPermaLink="false">https://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers</guid><pubDate>Sun, 08 Jul 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There is a widespread belief in technology circles that bundling of cable TV, newspaper, magazine and other information goods will go away now that those products can be distributed à la carte on the internet. The assumption seems to be that bundling is an artifact of another era when distribution was physical. But this reasoning misses the economic logic behind bundling: under assumptions that apply to most information-based businesses, bundling benefits buyers and sellers.&lt;/p&gt;
&lt;p&gt;Consider the following simple model for the willingness-to-pay of two cable buyers, the “sports lover” and the “history lover”:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-07-05-at-6-24-27-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 640px;&quot;
    &gt;
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    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 07 05 at 6 24 27 pm&quot;
        title=&quot;Screen Shot 2012-07-05 at 6.24.27 PM&quot;
        src=&quot;/static/c601d3b93598848ebe85412716c9ae7b/e49a9/screen-shot-2012-07-05-at-6-24-27-pm.png&quot;
        srcset=&quot;/static/c601d3b93598848ebe85412716c9ae7b/924ad/screen-shot-2012-07-05-at-6-24-27-pm.png 170w,
/static/c601d3b93598848ebe85412716c9ae7b/f570f/screen-shot-2012-07-05-at-6-24-27-pm.png 341w,
/static/c601d3b93598848ebe85412716c9ae7b/e49a9/screen-shot-2012-07-05-at-6-24-27-pm.png 640w&quot;
        sizes=&quot;(max-width: 640px) 100vw, 640px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-07-05 at 6.24.27 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;What price should the cable companies charge to maximize revenues? Note that optimal prices are always somewhere below the buyers’ willingness-to-pay. Otherwise the buyer wouldn’t benefit from the purchase. For simplicity, assume prices are set 10% lower than willingness-to-pay. If ESPN and the History Channel were sold individually, the revenue maximizing price would be $9 ($10 with a 10% discount). Sports lovers would buy ESPN and history lovers would buy the History Channel. The cable company would get $18 in revenue.&lt;/p&gt;
&lt;p&gt;By bundling channels, the cable company can charge each customer $11.70 ($13 discounted 10%) for the bundle, yielding combined revenue of $23.40. The consumer surplus would be $2 in the non-bundle and $2.60 in the bundle. Thus both buyers and sellers benefit from bundling.&lt;/p&gt;
&lt;p&gt;This model is obviously dramatically oversimplified. In real life, bundling tends to flatten the demand curve (&lt;a href=&quot;http://cdixon.org/2012/07/04/pricing-to-the-demand-curve/&quot;&gt;here&lt;/a&gt; is some background on demand curves, and &lt;a href=&quot;http://hubcap.clemson.edu/~sauerr/seminar_papers/bundling.pdf&quot;&gt;here&lt;/a&gt; is academic paper that presents this argument in rigorous mathematical terms). Suppose the demand curves for ESPN and the History Channel look like this:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 464px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/73cd89b05e4be31b5eefedba00ddcd54/74a01/screen-shot-2012-07-05-at-6-38-02-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 134.26724137931035%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 07 05 at 6 38 02 pm&quot;
        title=&quot;Screen Shot 2012-07-05 at 6.38.02 PM&quot;
        src=&quot;/static/73cd89b05e4be31b5eefedba00ddcd54/74a01/screen-shot-2012-07-05-at-6-38-02-pm.png&quot;
        srcset=&quot;/static/73cd89b05e4be31b5eefedba00ddcd54/924ad/screen-shot-2012-07-05-at-6-38-02-pm.png 170w,
/static/73cd89b05e4be31b5eefedba00ddcd54/f570f/screen-shot-2012-07-05-at-6-38-02-pm.png 341w,
/static/73cd89b05e4be31b5eefedba00ddcd54/74a01/screen-shot-2012-07-05-at-6-38-02-pm.png 464w&quot;
        sizes=&quot;(max-width: 464px) 100vw, 464px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-07-05 at 6.38.02 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The green boxes represent revenue for the seller. The deadweight loss areas to the right of the green boxes are transactions that would have benefited buyers and sellers but are not occurring because the revenue-maximizing prices are set too high.&lt;/p&gt;
&lt;p&gt;Now consider what happens when you bundle channels. The key assumption is that individual buyers lie on different x-axis points of the demand curves of different channels. Sports lovers lie on the left of the ESPN demand curve but on the right side of the History Channel curve. To aggregate demand curves, you don’t stack one on top of the other. You add consumers’ willingness-to-pay separately for each channel.&lt;/p&gt;
&lt;p&gt;Using the above simplified model, the two demand curves that go from $10 to $3 become one curve that stays flat at $13. In general, adding the individual demand curves creates a flatter demand curve:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 445px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 70.33707865168539%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 07 05 at 6 38 08 pm&quot;
        title=&quot;Screen Shot 2012-07-05 at 6.38.08 PM&quot;
        src=&quot;/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png&quot;
        srcset=&quot;/static/f6f997c0752f81839e527e89dad68758/924ad/screen-shot-2012-07-05-at-6-38-08-pm.png 170w,
/static/f6f997c0752f81839e527e89dad68758/f570f/screen-shot-2012-07-05-at-6-38-08-pm.png 341w,
/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png 445w&quot;
        sizes=&quot;(max-width: 445px) 100vw, 445px&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-07-05 at 6.38.08 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;A flatter demand curve lets sellers charge prices that capture larger areas under the curve and pass more surplus back to consumers. The only  loser is the deadweight loss area.&lt;/p&gt;
&lt;p&gt;Some things to note about bundled pricing:&lt;/p&gt;
&lt;p&gt;1. Bundled pricing is one reason why subscription models like Spotify should ultimately win out over à la carte models like iTunes. Subscription commerce can also be thought of as a form of bundling.&lt;/p&gt;
&lt;p&gt;2. There are other ways to get some of the benefits of bundled pricing – for example &lt;a href=&quot;http://www.inforules.com/models/m-version.pdf&quot;&gt;versioning&lt;/a&gt; goods, and offering bulk discounts.&lt;/p&gt;
&lt;p&gt;3. The benefits of bundled pricing are proportionate the buyers’ variance of preferences for the goods. Hence bundled pricing works best in highly “taste-based” goods like media, and wouldn’t have any benefit for fully commoditized goods (e.g. a bundle of stocks)&lt;/p&gt;
&lt;p&gt;4. Bundled pricing can also hurt consumers if it is used by incumbents to exploit their broader catalog to “deter entry” by new competitors. This was a common complaint against Microsoft in the 90′s when they bundled applications like Internet Explorer with Windows.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Pricing to the demand curve]]></title><description><![CDATA[Many college microeconomics courses include the following exercise. The teacher offers the students an imaginary trip to Hawaii, and asks…]]></description><link>https://cdixon.org/2012/07/04/pricing-to-the-demand-curve</link><guid isPermaLink="false">https://cdixon.org/2012/07/04/pricing-to-the-demand-curve</guid><pubDate>Wed, 04 Jul 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Many college microeconomics courses include the following exercise. The teacher offers the students an imaginary trip to Hawaii, and asks them to write down on notecards how much they are willing to pay for the trip. The teacher takes the notecards and graphs the bids. Here’s how the graph might look:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-06-29-at-9-26-10-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 460px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 67.17391304347827%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsSAAALEgHS3X78AAABG0lEQVQoz42S646DIBCFff+3s0k1225jE9EKCIKoBQXcsTa627WX8wuZ+ebMOAR5nidJso/3WZ7hAhefCShKaUAoAWYX71jNxnH03o8fyDkHJYI5mxByLs6611PAO/9O1lqM8R2mhDbXBpXpYIfJf/RvnVcYTvDdmS6l6Xzzuv8/MLQ9DJNn3dWoRK1uZ/5ZiUcYxlgCOcu4Yi/Mt+EFqFSFGKoUt87+n+Kp8/LDzGBkK2CK620L99AEeKi4MfOyDFjYnA0lgMcCi0bMu1idgSnLEk6/nR8n9K63vdKKSEIl5Yp3upseiTEGIQTOjDEhBBSiW2I3cc4xxRd8OSRf8JTXtsMwjOMYMsyWtNbQYyWqKIqOh+Pp+ySl/AFsPO566dCKUwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 06 29 at 9 26 10 pm&quot;
        title=&quot;Screen Shot 2012-06-29 at 9.26.10 PM&quot;
        src=&quot;/static/4a2efc10ea602b6c7340d50388e5ec4b/a9ee3/screen-shot-2012-06-29-at-9-26-10-pm.png&quot;
        srcset=&quot;/static/4a2efc10ea602b6c7340d50388e5ec4b/924ad/screen-shot-2012-06-29-at-9-26-10-pm.png 170w,
/static/4a2efc10ea602b6c7340d50388e5ec4b/f570f/screen-shot-2012-06-29-at-9-26-10-pm.png 341w,
/static/4a2efc10ea602b6c7340d50388e5ec4b/a9ee3/screen-shot-2012-06-29-at-9-26-10-pm.png 460w&quot;
        sizes=&quot;(max-width: 460px) 100vw, 460px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-06-29 at 9.26.10 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;The y-axis is the students’ “willingness-to-pay” and the x-axis is the students sorted from highest to lowest bids. The line is known as the demand curve.&lt;/p&gt;
&lt;p&gt;Now imagine you’re the company selling these trips. For simplicity, suppose you’ve already bought the trips, so your marginal cost is zero. What’s the optimal price you should charge? If you set the price at, say, $500, then the students who are willing to pay above $500 would buy the trip, and the rest wouldn’t:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-06-29-at-9-24-53-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 457px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 69.36542669584246%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2012 06 29 at 9 24 53 pm&quot;
        title=&quot;Screen Shot 2012-06-29 at 9.24.53 PM&quot;
        src=&quot;/static/622db275908b51c270c316db64b89414/1ddc7/screen-shot-2012-06-29-at-9-24-53-pm.png&quot;
        srcset=&quot;/static/622db275908b51c270c316db64b89414/924ad/screen-shot-2012-06-29-at-9-24-53-pm.png 170w,
/static/622db275908b51c270c316db64b89414/f570f/screen-shot-2012-06-29-at-9-24-53-pm.png 341w,
/static/622db275908b51c270c316db64b89414/1ddc7/screen-shot-2012-06-29-at-9-24-53-pm.png 457w&quot;
        sizes=&quot;(max-width: 457px) 100vw, 457px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen Shot 2012-06-29 at 9.24.53 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Your total revenue and (assuming zero marginal cost) profit will be the area of the green square (revenue times quantity).&lt;/p&gt;
&lt;p&gt;Notice the sections under the curve to the right and above the green box. To the right are students who were willing to pay but were priced out. Those are missed sales opportunities. Above the green box are students who were willing to pay more than you charged. That is lost revenue. (Since the underpricing benefits customers, the area above the green box is called the &lt;a href=&quot;http://tutor2u.net/economics/revision-notes/as-markets-consumer-surplus.html&quot;&gt;consumer surplus&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;After you have chosen the right price, the only way to make the area under the curve greener is to charge different customers different prices. The theoretically optimal way to do this is to look at each notecard and offer to charge each student, say, 10% less than the prices he or she bid. In real life you can’t do this (although Priceline has gotten close by asking customers to enter their willingness to pay). Some companies – most famously &lt;a href=&quot;http://www.bizjournals.com/seattle/stories/2000/09/25/daily21.html&quot;&gt;Amazon&lt;/a&gt; - have attempted outright price discrimination, but this tends to anger customers and can even run afoul of the &lt;a href=&quot;http://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act&quot;&gt;law&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;So the goal of pricing is to capture as much area under the demand curve as possible. In practice, the best way to do this is to find proxies for willingness-to-pay that are easy to observe and that customers will accept.&lt;/p&gt;
&lt;p&gt;For example, airlines know that business customers will pay more than vacation travelers. They therefore look for acceptable proxies to segment business and vacation travelers and capture more of the area under the demand curve.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2012-06-29-at-9-32-47-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 452px;&quot;
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  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;This is why flights are cheaper when you book early, stay over on weekends etc. The airline pricing models assume you are a vacation traveller.&lt;/p&gt;
&lt;p&gt;Book publishers would like to price their books according to customer enthusiasm. Hardcore fans will pay more for books when they are first published, and casual readers will wait. If publishers offer the same book at different prices at different times, their price discrimination will be too obvious (interestingly, time windowing for movies doesn’t provoke much outrage). So book publishers offer modestly better goods – hardcovers – to early buyers.&lt;/p&gt;
&lt;p&gt;Enterprise software companies price using proxies for the customer’s budget. Oracle databases are priced by the number of processors. Salesforce is priced by the number of end users (“seats”). Many enterprise software companies obfuscate the highest tier of pricing, telling sales prospects at that level to “call us.” What this really means is: “Call us, so our sales people can attempt to estimate your budget and price discriminate accordingly.”&lt;/p&gt;
&lt;p&gt;Sometimes, the search for pricing proxies can lead to absurdity. I once heard someone from a prominent hardware company tell a story about how his company had offered two versions of a printer. The cheaper model was identical to the more expensive one, except the cheaper one printed fewer pages per minute. To accomplish this, the cheaper printer had the same hardware as the expensive one, except the cheaper one had an additional chip that forced it to slow down. This made the cheaper printer more expensive to produce. Situations where &lt;a href=&quot;http://cdixon.org/2009/10/17/whats-the-relationship-between-cost-and-price/&quot;&gt;cost and price&lt;/a&gt; have zero or negative correlation are far more common than most people assume.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The real strategy behind tiered data plans]]></title><description><![CDATA[Over the past year, Comcast and other broadband providers have been forcing tiered data plans on customers. The New York Times recently…]]></description><link>https://cdixon.org/2012/06/27/the-real-strategy-behind-tiered-data-plans</link><guid isPermaLink="false">https://cdixon.org/2012/06/27/the-real-strategy-behind-tiered-data-plans</guid><pubDate>Wed, 27 Jun 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Over the past year, Comcast and other broadband providers have been forcing tiered data plans on customers. The New York Times recently &lt;a href=&quot;http://www.nytimes.com/2012/06/27/business/media/internet-providers-testing-metered-plans-for-broadband.html?ref=brianstelter&quot;&gt;speculated&lt;/a&gt; that these plans might be part of a strategy to stunt the growth of internet video.&lt;/p&gt;
&lt;p&gt;The best way to figure out what these companies are really doing is to read Wall Street analyst reports. For example, here’s what a prominent Wall Street analyst recently said:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Most cable companies we met with have embraced tiered data plans, with tiering starting to move to total monthly usage rather than tiered speeds. The minimum tiers are set higher enough at this point that they impact only 1%-2% of users. However, we believe the concept is to establish an early precedent of usage tiers and then let the average consumer usage patterns move in their direction over time, as usage is growing 60% per year. &lt;strong&gt;This puts in place an effective long-term hedge against internet video.&lt;/strong&gt; [emphasis added]&lt;/p&gt;
&lt;p&gt;&lt;em&gt;- Goldman Sachs research. “Americas: Communication Services”, May 23, 2012&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In 2011, Comcast generated $55B in revenue and $8.4B in pre-tax profits. Goldman rates the stock a “buy” because Comcast “pushed through rate hikes on both video and broadband access across two-thirds of the [customer] base in Q1 2102″ (&lt;em&gt;Goldman Sach, “Comcast Corp”, May 2, 2012&lt;/em&gt;).&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why the integrated approach to mobile devices is winning]]></title><description><![CDATA[Until last week’s announcement of the new Surface tablet, Microsoft had taken the same approach to mobile devices that they had with PCs…]]></description><link>https://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning</link><guid isPermaLink="false">https://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning</guid><pubDate>Mon, 25 Jun 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Until last week’s announcement of the new Surface tablet, Microsoft had taken the same approach to mobile devices that they had with PCs: build the software themselves and let partners build the hardware. Google took a similar strategy with Android but then reversed course when they acquired Motorola. Apple’s integrated strategy was once widely ridiculed as a repeat of their losing 1990′s desktop computer strategy, but is now being copied throughout the industry.&lt;/p&gt;
&lt;p&gt;There is a trade off between integrated and non-integrated approaches to building devices. The non-integrated approach lowers costs, but adds friction between components that compromises performance. Consider this anecdote from Microsoft’s previous attempts to build tablets with hardware partners:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The H.P. tablet was thick, the Intel processor it used made the device hot, and the software and screen hardware did not work well together, causing delays whenever a user tried to perform a touch action on its screen. “It would be like driving a car, and the car not turning when you turn the wheel,” the former H.P. executive said.&lt;/p&gt;
&lt;p&gt;- ”&lt;a href=&quot;http://www.nytimes.com/2012/06/25/technology/companies/with-tablet-microsoft-takes-aim-at-hardware-missteps.html?_r=1&amp;#x26;pagewanted=2&quot;&gt;With Tablet, Microsoft Takes Aim at Hardware Missteps&lt;/a&gt;,” &lt;em&gt;New York Times&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;What is the difference between mobile devices today where the integrated approach is winning and desktops PCs in, say, 1995, when the non-integrated approach dominated? The best way to understand the difference is through the lens of Clay Christensen’s &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_innovation&quot;&gt;disruptive technology&lt;/a&gt; theory*. When a new category of device first launches, it is usually not “good enough” for most customers. Chistensen illustrates this with a famous graph:&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/3ca1e18b1eb4b9e0d5caba3cb22271c3/filedisruptivetechnology.gif&quot; title=&quot;File:Disruptivetechnology&quot;&gt;&lt;/p&gt;
&lt;p&gt;According to Christensen, technology gets better at a faster rate than customers’ demands on technology do (in the graph, the black line goes up faster than the other lines). Eventually, new device categories become “good enough” (the black line crosses the purple/blue lines), and customers become unwilling to pay significantly higher prices for improved versions of the device. At this point it doesn’t make sense for manufacturers to invest in greater performance if customers won’t reward that investment. Instead, manufacturers should spend the “performance surplus” on making devices less expensive. The best way to do this is to let different companies produce the core software and hardware components, i.e. to switch from an integrated to non-integrated approach.&lt;/p&gt;
&lt;p&gt;If you believe Christensen’s theory (and most senior people at large technology companies do), the interesting question now is: when will smartphones and tablets be “good enough” (respectively) for non-integrated to beat integrated approaches? My guess is it will be at least 5-10 years before customers are no longer willing to pay significantly more for faster bandwidth, more features, longer battery life, increased storage, faster processors, etc. But no one really knows.&lt;/p&gt;
&lt;p&gt;It isn’t hard to see how Google, Microsoft and pretty much everyone but Apple missed the key difference between PCs and the new generation of mobile devices. Christensen himself missed it:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Christensen’s most embarassing prediction was that the iPhone would not succeed. Being a low-end guy, Christensen saw it as a fancy cellphone; it was only later that he saw it also being disruptive to laptops.&lt;/p&gt;
&lt;p&gt;- When Giants Fail: What Business has learned from Clayton Christensen, &lt;em&gt;The New Yorker.&lt;/em&gt; [&lt;a href=&quot;http://archives.newyorker.com/?i=2012-05-14#folio=084&quot;&gt;paywall&lt;/a&gt;]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Seen as high-end smartphones, iPhones were “sustaining” innovations (above the blue line) that would only appeal to the highest end of the market. Seen as low-end laptops, iPhones were disruptive innovations that would eventually subsume the PC business. With support from the iPad, they seem to be doing exactly that.&lt;/p&gt;
&lt;p&gt;* If you aren’t familiar with Clay Christensen, this &lt;a href=&quot;http://gartner.mediasite.com/mediasite/play/9cfe6bba5c7941e09bee95eb63f769421d?t=1320659595&quot;&gt;talk&lt;/a&gt; is a great way to learn about his theories.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Firing]]></title><description><![CDATA[Firing is awful. You can try to avoid it, but even the most selective founders make serious mistakes. Here are a few things I’ve observed…]]></description><link>https://cdixon.org/2012/06/19/firing</link><guid isPermaLink="false">https://cdixon.org/2012/06/19/firing</guid><pubDate>Tue, 19 Jun 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Firing is awful. You can try to avoid it, but even the most selective founders make serious mistakes. Here are a few things I’ve observed about firing:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;The good people bounce up, the bad ones bounce down.&lt;/em&gt; I was told this by my boss once when he was firing one of my friends. At the time, I thought this just made him feel better about himself. Over time, I’ve seen the wisdom in what he said. Some people who get fired react by fixing their weaknesses. Others spiral down.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Do it early.&lt;/em&gt; If you think you’re going to fire someone over the next six months, you probably will. Don’t wait too long. Too many founders do. It’s better for management and employees if it happens fast.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;It’s awful.&lt;/em&gt; You’re in control of a situation that will meaningfully hurt someone. It’s an awful place to be. The fired person will go home and tell his/her family about how terrible it was. It was your fault. Perhaps your mismanagement caused it. Who knows. You’ll question it, and perhaps you are right to do so.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;The other choice is firing everyone&lt;/em&gt;. You’re the founder of the company. If you run out of money, you’re forced to fire everyone. If you don’t fire the bad employees, you risk everyone else’s jobs. It’s an impossible situation.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;The feeling is more likely to be mutual than you think&lt;/em&gt;. Most of the time, the person getting fired was already about to quit. The antipathy you feel is likely reciprocated. It’s surprising how often this happens and management doesn’t see it coming.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;It would be great if startups were all about growth, hiring, and success. But the reality is that founding a company is a brutal job and lots of the pain gets passed down to employees. Creative destruction sounds nice in textbooks, but in the real world it means telling friends to go home, stop getting paid, and find new jobs.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Critics and practitioners]]></title><description><![CDATA[“When art critics get together they talk about Form and Structure and Meaning. When artists get together they talk about where you can buy…]]></description><link>https://cdixon.org/2012/06/16/critics-and-practitioners</link><guid isPermaLink="false">https://cdixon.org/2012/06/16/critics-and-practitioners</guid><pubDate>Sat, 16 Jun 2012 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;“When art critics get together they talk about Form and Structure and Meaning. When artists get together they talk about where you can buy cheap turpentine.” – Picasso (via &lt;a href=&quot;http://www.ribbonfarm.com/2010/03/18/the-turpentine-effect/&quot;&gt;Ribbonfarm&lt;/a&gt;)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;When I was a kid, I tagged along with my grandfather who was an oboist in a big city symphony. I was struck by the dramatic discrepancy between the culture of the audience and the culture of the musicians. Before the show, the audience attended fancy events, and talked in abstract terms about classical music. After the show, the musicians played poker, told jokes, swigged bourbon, and traded tips about the best places to get parts for their instruments.&lt;/p&gt;
&lt;p&gt;In the context of startups, it’s convenient to read the Picasso quote as a tidy summarization of the difference between critics (VCs and the tech press) and practitioners (entrepreneurs). There is some truth to this. When entrepreneurs get together, they tend to talk about tactical details. VCs and the press talk about trends, markets, and other abstractions.&lt;/p&gt;
&lt;p&gt;But Picasso was just being modest. He thought about the meaning of his art far more deeply than his critics did. The same is true of great entrepreneurs. “Cheap turpentine” is important, but so is “Form and Structure and Meaning”. The best ideas emerge from the interplay between the two modes of thought.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Equity value]]></title><description><![CDATA[Warren Buffet once said: Buy into a business that’s doing so well an idiot could run it, because sooner or later, one will. This is a useful…]]></description><link>https://cdixon.org/2012/06/06/equity-value</link><guid isPermaLink="false">https://cdixon.org/2012/06/06/equity-value</guid><pubDate>Wed, 06 Jun 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Warren Buffet once said:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Buy into a business that’s doing so well an idiot could run it, because sooner or later, one will.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;This is a useful way to understand the meaning of “equity value”. You learn in finance that equity value is the overall value of a the stock (i.e. equity) of a business, which in turn is the present value of all future profits. Of course with startups the future is extremely uncertain, leading to a huge variance in valuations.&lt;/p&gt;
&lt;p&gt;In perfectly competitive markets, all profit margins tend toward zero. So equity value is a function of the degree to which you can make your market inefficient by making your business hard to copy (so called “defensibility”). If your defensibility depends solely on having superior people, you have what VCs call a “service business.” In a competitve labor market, service businesses tend to have low margins and therefore low equity value. A popular saying about service businesses is “the equity value walks out of the building every night.”&lt;/p&gt;
&lt;p&gt;Different types of tech businesses exhibit different relationships between capital, revenue, profits, and equity value. Enterprise software companies tend to require lots of capital to get to scale but command high equity values once they do, partly because enterprises are risk averse and like to adopt the most popular technology, leading to winner-take-all dynamics. Adtech companies tend to be quick to revenue but slower to equity value, and sometimes risk becoming service businesses. The equity value of consumer internet companies vary widely, depending on their defensibility (usually networks effects and brand) and business models (e.g. transactional vs ad supported). Biotech companies require boatloads of capital for R&amp;#x26;D and regulatory approval but then can generate lots of equity value, with the defensibility coming primarily from patents. (Patents introduce market innefficiencies, but, proponents argue, are necessary to create sufficient incentives for entrepreneurs and investors). E-commerce companies generally require a lot of capital as well, since their defensibility comes mostly through brand and economies of scale.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Different types of risk]]></title><description><![CDATA[The idea that founders take on “risk” is a misleading generalization. It is far more informative to separate the specific types of risks…]]></description><link>https://cdixon.org/2012/06/05/different-types-of-risk</link><guid isPermaLink="false">https://cdixon.org/2012/06/05/different-types-of-risk</guid><pubDate>Tue, 05 Jun 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The idea that founders take on “risk” is a misleading generalization. It is far more informative to separate the specific types of risks that founders assume, including:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Financing risk: You can’t raise money at various stages because you haven’t hit &lt;a href=&quot;http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/&quot;&gt;accretive milestones&lt;/a&gt; or your space isn’t appealing to investors.&lt;/li&gt;
&lt;li&gt;Product risk: You can’t translate your concept into a working and compelling product.&lt;/li&gt;
&lt;li&gt;Technology risk: You can’t build a good enough or, if necessary, breakthrough technology.&lt;/li&gt;
&lt;li&gt;Business development risk: You can’t get deals with other companies that you depend on to build or distribute your product.&lt;/li&gt;
&lt;li&gt;Market risk: Customers or users won’t want your product.&lt;/li&gt;
&lt;li&gt;&lt;a href=&quot;http://cdixon.org/2010/11/07/timing-your-startup/&quot;&gt;Timing&lt;/a&gt; risk: You are too early or too late to the market.&lt;/li&gt;
&lt;li&gt;Margin risk: You build something people want but that you can’t defend, and therefore competitors will squeeze your margins.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;At the early stage, the main way to mitigate these risks is to recruit great people as cofounders or early employees. You shouldn’t recruit people that will give you a high likelihood of reducing these risks. You should recruit people that give you an unfair advantage. You should try to win the game before it starts.&lt;/p&gt;
&lt;p&gt;Startups are hard, and risky. But if you lump all the risks together, you are playing the lottery. Talented entrepreneurs identify specific risks and do everything they can to overcome them.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some thoughts on when to raise money, and the current financing environment]]></title><description><![CDATA[A key question for founders is when they should try to raise money. More specifically, they often wonder whether to raise money now or wait…]]></description><link>https://cdixon.org/2012/06/02/some-thoughts-on-when-to-raise-money-and-the-current-financing-environment</link><guid isPermaLink="false">https://cdixon.org/2012/06/02/some-thoughts-on-when-to-raise-money-and-the-current-financing-environment</guid><pubDate>Sat, 02 Jun 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A key question for founders is when they should try to raise money. More specifically, they often wonder whether to raise money now or wait, say, 6 months when their startup has made more progress. Here are some thoughts on this question generally along with some thoughts on today’s venture financing market.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;In the private markets, macro tends to dominate micro. Venture valuations have swung by roughly a factor of 4 over the last decade. In finance speak, venture tends to be high beta, moving as a multiple of the public markets, which themselves tend to move more dramatically than economic fundamentals. Hence, it is easy to imagine scenarios where the same private company will command 1/2 the valuation in 6 months due to macro events, but it’s rare for a company to increase their valuation 2x through operations alone in 6 months.&lt;/li&gt;
&lt;li&gt;Therefore, when it seems to be the top of a venture cycle, it’s almost always better to raise money sooner rather than later, unless you have a plausible story about how waiting will dramatically improve your company’s fundamentals.&lt;/li&gt;
&lt;li&gt;Prior to the Facebook IPO, the consensus seemed to be that private valuations were near the top of the cycle. Today, FB is valued at up to 50% below what private investors expected. Moreover, the financial crisis in Europe seems to have worsened, and unemployment numbers in the US suggest the possibility of a double dip recession.&lt;/li&gt;
&lt;li&gt;It takes many months to understand how macroeconomic and public market shifts affect private company valuations since (with the exception of secondary markets) private transactions happen slowly. So we don’t know yet what these recent events mean for private markets. According to a basic rule of finance, however, it is safe to assume that companies “comparable” to Facebook are worth up to 50% less than private investors thought they were worth a few weeks ago.&lt;/li&gt;
&lt;li&gt;The question then is what companies are comparable to Facebook. Clearly, other social media companies with business models that rely on display or feed based advertising are comparables. Internet companies that have other business models (freemium, marketplaces, commerce, hardware, enterprise software, direct response advertising, etc) are probably not comparables. The public markets seems to agree with this. Defensible companies with non-display-ad business models have maintained healthy public market valuations.&lt;/li&gt;
&lt;li&gt;One counterargument to the “all social media companies are now worth less” argument is the discrepency between how the smart Wall Street money and smart internet money views Facebook and social media companies generally. The smart Wall Street money thinks like Mary Meeker’s charts. They draw lines through dots and extrapoloate. This method would have worked very poorly in the past for trying to value tech companies at key inflection points (and tech investors know that what matters are exactly those inflection points). In Facebook’s case, Wall Street types look at revenue and margin growth and the trend toward mobile where monetization is considerably worse (for now). Smart internet investors, by contrast, look at Facebook in terms of its power and capabilities. They see a company that is rivaled only by Google and Apple in terms of their control of where users go and what they do on the internet. Smart internet investors are far more bullish than smart Wall Street investors on Facebook. Thus if you believe the internet perspective over the Wall Street perspective, you’d likely believe that Facebook and social media in general is undervalued by the public markets.&lt;/li&gt;
&lt;/ul&gt;</content:encoded></item><item><title><![CDATA[The experience economy]]></title><description><![CDATA[Before World War 2, the middle-class in the developed world struggled to afford basic needs. In the post-war boom, standards of living rose…]]></description><link>https://cdixon.org/2012/05/26/the-experience-economy</link><guid isPermaLink="false">https://cdixon.org/2012/05/26/the-experience-economy</guid><pubDate>Sat, 26 May 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Before World War 2, the middle-class in the developed world struggled to afford basic needs. In the post-war boom, standards of living rose dramatically, and people consumed far beyond what they needed. It was the age of conspicuous consumption: a race to own bigger cars and houses, and accumulate more stuff. The mean income in the developed world became sufficient to provide for a comfortable life.&lt;/p&gt;
&lt;p&gt;Today, people increasingly realize they own more than enough stuff, and don’t want to pay for feature-rich versions of that stuff. Four blades in your razors are enough. In the language of Clay Christensen’s &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_innovation&quot;&gt;disruptive innovation&lt;/a&gt; framework, the product economy overshot the mass market’s needs.&lt;/p&gt;
&lt;p&gt;An economy of experiences is emerging in its place. Experiences make people happier than products (a fact that scientific &lt;a href=&quot;http://www.wjh.harvard.edu/~dtg/DUNN%20GILBERT%20&amp;#x26;%20WILSON%20(2011).pdf&quot;&gt;studies&lt;/a&gt; support). The popularity of experiences like music concerts has &lt;a href=&quot;http://dataspace.princeton.edu/jspui/handle/88435/dsp01xs55mc05g&quot;&gt;skyrocketed&lt;/a&gt; compared to corresponding products like music recordings. Apple, the most valuable company in the world, maniacally focuses on product experiences, down to minute details like the experience of unboxing an iPhone. Customers want to know where their food and clothes come from, so they can understand the experiences surrounding them. The emphasis on experiences also helps explain other large trends like the migration to cities. Cities have always offered the trade-off of fewer goods and less space in exchange for better experiences.&lt;/p&gt;
&lt;p&gt;The trend toward experiences is important for technology startups. The &lt;a href=&quot;http://techcrunch.com/2011/11/14/rip-spec/&quot;&gt;era&lt;/a&gt; of competing over technical specifications is over. Users want better experiences from devices, applications, websites, and the offline services they enable. It is no coincidence that interaction design is &lt;a href=&quot;http://techcrunch.com/2012/05/25/benchmark-in-san-francisco/&quot;&gt;replacing&lt;/a&gt; technical prowess as the primary competency at startups. People who create great experiences will be the most valuable to startups, and startups that create great experiences will be the most valuable to users.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[When should you give up on an idea?]]></title><description><![CDATA[Suppose you launch your new startup and don’t get the traction you were hoping for. How do you know whether to give up or keep going? This…]]></description><link>https://cdixon.org/2012/05/24/when-should-you-give-up-on-an-idea</link><guid isPermaLink="false">https://cdixon.org/2012/05/24/when-should-you-give-up-on-an-idea</guid><pubDate>Thu, 24 May 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Suppose you launch your new startup and don’t get the traction you were hoping for. How do you know whether to give up or keep going? This is a tough question. There are lots of examples that support seemingly contradictory theories. Instagram pivoted before launch, and Pinterest &lt;a href=&quot;http://allthingsd.com/20120313/pinterest-ceo-ben-silbermanns-lesson-for-start-ups-go-your-own-way/&quot;&gt;refused&lt;/a&gt; to pivot for years. Many other startups pivoted too early or kept working on dead-end ideas for too long.&lt;/p&gt;
&lt;p&gt;If the pre-product/market-fit phase of a startup is about efficiently testing hypotheses, then continuing to test an idea only makes sense if you have a strong theory about what has gone wrong and how things will improve.&lt;/p&gt;
&lt;p&gt;Specifically, you should have a theory about: 1) how to modify your product, 2) how to modify your marketing/distribution strategy, and/or 3) how external events (a new technology wave, cultural events, regulatory change, etc) might make your product take off. In other words, you need a plausible argument as to why the future will be different than the past.&lt;/p&gt;
&lt;p&gt;Another way to think about this is using what Jeff Bezos &lt;a href=&quot;http://bijansabet.com/post/147533511/jeff-bezos-regret-minimization-framework&quot;&gt;calls&lt;/a&gt; the “regret-minimization framework.” Imagine you do give up on your idea. Have you explored most of its plausible implementations? Are you confident that another entrepreneur won’t come along and make it work? You’ll regret it more if you nearly created a big company than if you spent an extra six months iterating.&lt;/p&gt;
&lt;p&gt;Finally, beware of the temptation to get distracted by new shiny ideas. When you are deep in the weeds, new ideas seem refreshing but this is usually the false signal of “&lt;a href=&quot;http://viniciusvacanti.com/2010/08/03/new-ideas-can-kill-your-startup/&quot;&gt;uninformed optimism&lt;/a&gt;” that accompanies all new things.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Four types of mobile apps]]></title><description><![CDATA[If you are a founder trying to create a new mobile app or an investor trying decide whether an app has enduring value, it is helpful to…]]></description><link>https://cdixon.org/2012/05/21/four-types-of-mobile-apps</link><guid isPermaLink="false">https://cdixon.org/2012/05/21/four-types-of-mobile-apps</guid><pubDate>Mon, 21 May 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;If you are a founder trying to create a new mobile app or an investor trying decide whether an app has enduring value, it is helpful to separate the ways that people use apps into four categories.&lt;/p&gt;
&lt;p&gt;1. &lt;em&gt;Time wasters&lt;/em&gt;: Apps that can be used for short bursts when you are waiting in line, etc. The most popular time wasters are games. Some apps are used sometimes as time wasters and sometimes as utilities – e.g. Facebook is both a time waster (checking status updates few minutes) and a utility (sending Facebook messages).&lt;/p&gt;
&lt;p&gt;Time wasters tend to be faddish. It is easy to get hooked on new games and also easy to tire of them. If you want to build a big company that builds time wasters, you need to build a machine that builds, markets and monetizes apps, as Zynga has done.&lt;/p&gt;
&lt;p&gt;2. &lt;em&gt;Core utilities&lt;/em&gt;: As a rule of thumb, core utilities are the apps on your home screen: camera, phone, contacts, texting, calendar, etc. Core utilities map to deeply engrained use patterns that usually existed before modern smart phones. In the past people might have carried around a paper calendar, a standalone camera, etc. Core utilities tend to be very sticky – if you gain widespread adoption for a core utility you can build long-lasting value.&lt;/p&gt;
&lt;p&gt;One entry strategy for a startup is to replace a core utility. This is what Instagram did to the built-in camera app. It is unclear whether the “Instagram for video” companies are core utilities (video app replacements) or time wasters. Creating a new core utility that doesn’t replace an existing core utility is very hard. Foursquare seems to have done this for the users who regularly check-in.&lt;/p&gt;
&lt;p&gt;3. &lt;em&gt;Episodic utilities&lt;/em&gt;: Episodic utilities are apps that typically aren’t on the home screen but are extremely useful in certain situations. Some examples: Hipmunk when buying plane tickets, Uber when you need a car, and OpenTable for making restaurant reservations. Successful episodic utilities target a well-defined situation and then become deeply associated with that situation. Making an app that is too broad or has multiple use situations can hurt you. Because many of these situations involve purchasing, these apps tend to be monetizable.&lt;/p&gt;
&lt;p&gt;4. &lt;em&gt;Notification-driven apps&lt;/em&gt;: This is an emerging category. Android has had a good notification system for a while, but the iPhone only made notifications useful in IOS 5. People tend to enable notifications for communication apps like email, texting etc. Thus far, notifications for other apps haven’t gotten widespread adoption because, among other things: it is easy to annoy users by over-notifying them, and running non-communications apps in the background tends to drain battery life. Expect this category to grow as apps get smarter about when to notify, and battery life improves dramatically over the next year or two.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The default state of a startup is failure]]></title><description><![CDATA[If you are starting a company and wondering why nothing good seems to happen unless you force it to happen, that’s because the world wants…]]></description><link>https://cdixon.org/2012/05/18/the-default-state-of-a-startup-is-failure</link><guid isPermaLink="false">https://cdixon.org/2012/05/18/the-default-state-of-a-startup-is-failure</guid><pubDate>Fri, 18 May 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;If you are starting a company and wondering why nothing good seems to happen unless you force it to happen, that’s because the world wants to stay the way it is. Customers, partners, and most of all incumbents don’t want to think hard, try new things, or change in any way. The world is lazy and just wants to keep doing what it’s doing.&lt;/p&gt;
&lt;p&gt;A friend of mine got a job at a big company and was shocked to see his colleagues worked just a few productive hours a day. They didn’t seem to care about their work or have relevant expertise. My friend said: “Wow, this company is going under.” Then the company released its quarterly reports and profits rose to an all-time high. The momentum of the company’s brand and relationships was sufficient to propel it forward.&lt;/p&gt;
&lt;p&gt;On the flip side, first-time entrepreneurs often fail to realize that when you build something new, no one will care. People won’t use your product, won’t tell people about it, and almost certainly won’t pay for it. (There are exceptions – but these are as rare as winning the lottery). This doesn’t mean you’ll fail. It means you need to be smarter and harder working, and surround yourself with extraordinary people.&lt;/p&gt;
&lt;p&gt;The default state of the world is to stay the way it is, which means the default state of a startup is failure.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Blogging to learn]]></title><description><![CDATA[People blog for all sorts of reasons. For me, it is mostly about learning. This wasn’t my original intention – it evolved over time. Now I…]]></description><link>https://cdixon.org/2012/05/10/blogging-to-learn</link><guid isPermaLink="false">https://cdixon.org/2012/05/10/blogging-to-learn</guid><pubDate>Thu, 10 May 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;People blog for all sorts of reasons. For me, it is mostly about learning. This wasn’t my original intention – it evolved over time. Now I see blogging as part of a continuous learning process:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Start every morning by skimming through news, blogs, articles, etc. Much of this is tech related. I used to get tech news in the newspaper, then in Google Reader, and now mostly from Twitter. If someone I meet mentions something interesting that was published that I didn’t read, I go back and figure out how I missed it and change who I follow on Twitter so it doesn’t happen again.&lt;/li&gt;
&lt;li&gt;Try to meet with interesting people during the week. The reason being up on tech news is important is so that we can get the most out of the meetings. Often we’ll talk about whatever each of us is working on at the time but it’s also good to have news or blog posts as shared reference points. This makes the meetings more interesting for everyone.&lt;/li&gt;
&lt;li&gt;Try to learn at least one interesting thing each week and then blog about it. Then see how people react in comments, on Twitter etc. I guess some bloggers don’t like comments but for me they are the crucial so that I can get feedback on new hypotheses. Blogging new hypotheses also means a decent portion of your blog posts need to be ignored or ridiculed. Otherwise you are playing it too safe.&lt;/li&gt;
&lt;/ul&gt;</content:encoded></item><item><title><![CDATA[Is it a tech bubble?]]></title><description><![CDATA[Every week a “we are in a tech bubble” article seems to come out in a major newspaper or blog. People who argue we aren’t in a bubble are…]]></description><link>https://cdixon.org/2012/04/29/is-it-a-tech-bubble</link><guid isPermaLink="false">https://cdixon.org/2012/04/29/is-it-a-tech-bubble</guid><pubDate>Sun, 29 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Every week a “we are in a tech bubble” &lt;a href=&quot;http://bits.blogs.nytimes.com/author/nick-bilton/&quot;&gt;article&lt;/a&gt; seems to come out in a major newspaper or blog. People who argue we aren’t in a bubble are casually dismissed as promoting their own interests. I’d argue the situation is far more nuanced and that people who engage in this debate should consider the following:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Public tech companies: Anyone with an understanding of finance would have trouble arguing many large public tech companies are trading at “bubble valuations” – e.g. Apple (14 P/E), Google (18 P/E), eBay (16 P/E), Yahoo (17 P/E). You could certainly debate other public tech stock valuations (there are a number of companies that recently IPOd that many reasonable people think are overvalued), but on a market-cap weighted average the tech sector is trading at a very reasonable &lt;a href=&quot;http://biz.yahoo.com/p/8peeu.html&quot;&gt;17 P/E&lt;/a&gt;.&lt;/li&gt;
&lt;li&gt;Instagram seems to be the case study du jour for people arguing we are in a bubble. Reasonable people could disagree about Instagram’s exit price but in order to argue the price was too high you need to argue that either: 1) Facebook is overvalued at its expected IPO valuation of roughly $100B, 2) it was irrational for Facebook to spend 1% of its market cap to own what many people considered one of Facebook’s biggest threats (including Mark Zuckerberg – who I tend to think knows what is good for Facebook better than pundits).&lt;/li&gt;
&lt;li&gt;Certain stages of venture valuations do seem on average over-valued, in particular seed-stage valuations and (less obviously) later-stage “momentum valuations.” The high seed-stage valuations are driven by an influx of angel/seed investors (successful entrepreneurs/tech company employees, VC’s with seed funds, non-tech people who are chasing trends). The momentum-stage valuations are driven by a variety of things, including VC’s who want to be associated with marquee startup names, the desire to catch the next Facebook before it gets too big, and the desire of mega-sized VC funds to “put more money to work”.&lt;/li&gt;
&lt;li&gt;Certain stages – most notably the Series A – seem under valued. Many good companies are having trouble raising Series As and the valuations I’ve seen for the ones who do have been pretty reasonable. Unfortunately, since the financials and valuations of these companies aren’t disclosed, it is very difficult to have a public debate on this topic. But many investors I know are moving from seed to Series A precisely because they agree with this claim.&lt;/li&gt;
&lt;li&gt;No one can predict macro trends. The bear case includes: something bad happens to the economy (Euro collapses, US enters double dip recession). The warning sign here will be a drop in profits by marquee tech companies.  The bull case includes: economy is ok or improves, and tech continues to eat into other industries (the “software is eating the world” argument). Anyone who claims to know what will happen over the next 3 years at the macro level is blowing hot air. That’s why smart investors continue investing at a regular pace through ups and downs.&lt;/li&gt;
&lt;li&gt;The argument that sometimes startups get better valuations without revenue is somewhat true. As Josh Koppelman &lt;a href=&quot;http://www.twylah.com/joshk/tweets/782406922&quot;&gt;said&lt;/a&gt; “There’s nothing like numbers to screw up a good story.” This is driven by the psychology of venture investors who are sometimes able to justify a higher price to “buy the dream” than the same price to “buy the numbers.” This doesn’t mean the investors think they will invest and then get some greater fool to invest in the company again. For instance, at the seed stage, intelligent investors are quite aware that they are buying the dream but will need to have numbers to raise a Series A.&lt;/li&gt;
&lt;li&gt;No good venture investors invest in companies with the primary strategy being to flip them. This isn’t because they are altruistic – it is because it is a bad strategy. You are much better off investing in companies that have a good chance to build a big business. This creates many more options including the option to sell the company. Acquisitions depend heavily on the whims of acquirers and no good venture investors bet on that.&lt;/li&gt;
&lt;/ol&gt;</content:encoded></item><item><title><![CDATA[Incumbents die due to irrelevance or ineptitude]]></title><description><![CDATA[Judging from the tech press, you’d think the biggest risk to successful companies is competition. But when you examine the history of…]]></description><link>https://cdixon.org/2012/04/26/incumbents-die-due-to-irrelevance-or-ineptitude</link><guid isPermaLink="false">https://cdixon.org/2012/04/26/incumbents-die-due-to-irrelevance-or-ineptitude</guid><pubDate>Thu, 26 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Judging from the tech press, you’d think the biggest risk to successful companies is competition. But when you examine the history of technology, incumbents usually decline because the world changes and they lose relevance, or because they lose visionary founders and the organization decays. Some examples:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;&lt;strong&gt;Dell&lt;/strong&gt; thrived when PCs dominated the computer market and Dell was the low cost provider of commodity hardware products. The shift to mobile and tablet computing meant that hardware quality (not price) was once again the primary basis of competition. As a result, Dell’s laser-like focus on cost reduction became a liability.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;The New York Times&lt;/strong&gt; was, for many decades, one of the few premium channels through which brand and classified advertisers could reach mass consumers. Thus car companies and real estate brokers subsidized foreign reporting and investigative business journalism. The internet provided a vast alternative channel, and the Times became far less relevant. At the same time, the internet provided many new sources for breaking news, editorials etc, hurting the Times on the subscriber side.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Yahoo&lt;/strong&gt; didn’t lose because Google out-competed them on search. They lost because they didn’t really care about search – indeed, they &lt;a href=&quot;http://searchengineland.com/revisionist-history-bartz-claims-yahoo-was-never-a-search-company-23725&quot;&gt;outsourced&lt;/a&gt; algorithmic search to Alta Vista, Inktomi and then Google itself. The leading portals back in circa 2000 (Yahoo, Excite, Lycos etc) desperately wanted to keep &lt;a href=&quot;http://cdixon.org/2011/05/16/accurate-contrarian-theories/&quot;&gt;keep users on their site&lt;/a&gt; – the buzzword was “stickiness” – but Google knew better and focused on getting users off of Google to other places on the web. Yahoo became just another place to read celebrity gossip and use generic web services.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Netflix&lt;/strong&gt; thrived when they could simply ignore the movie companies and rely on the &lt;a href=&quot;http://en.wikipedia.org/wiki/First-sale_doctrine&quot;&gt;first-sale doctrine&lt;/a&gt; to get DVDs. The market shift to streaming video created a new and brutal dependency. They had to go make deals with content companies. Now they are even &lt;a href=&quot;http://gigaom.com/video/netflix-original-content-binge-viewing/&quot;&gt;trying&lt;/a&gt; to create their own content to lessen this dependency. They have a brilliant and visionary management team but this is a tough transition to make.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Sony&lt;/strong&gt; relied on its Steve-Jobs-like founder, Akio Morita, to &lt;a href=&quot;/2009/10/10/man-and-superman/&quot;&gt;repeatedly develop&lt;/a&gt; incredibly innovative products (among them: the first transistor radio, the first transistor television, the Walkman, the first video cassette recorder, the compact disc) that seemed to come out of nowhere and create massive new markets. Since he left, the company has floundered and the stock has fallen dramatically.&lt;/li&gt;
&lt;li&gt;&lt;strong&gt;Google’s&lt;/strong&gt; biggest risk isn’t a direct competitor. Startups and incumbents who’ve tried to create better search engines have barely cut into Google’s market share. Google’s primary risk – and they seem to know this – is that they are no longer relevant when people find content through social sites, and where an ever increasing portion of the web is uncrawlable.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;Google released their “Dropbox-killer” a few days ago. I don’t know if Dropbox has yet achieved incumbent status, but they certainly seem to be the market leader. They also seem to have a very competent management team. So if history is a guide, Dropbox’s biggest risk isn’t a competitor but irrelevance – if, for example, files become less and less important in a web services world and Dropbox doesn’t adapt accordingly.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The risks of being a small investor in a private company]]></title><description><![CDATA[With the passage of the JOBS act, it seems that many more Americans will soon be able to buy equity in private companies. I am no expert on…]]></description><link>https://cdixon.org/2012/04/25/the-risks-of-being-a-small-investor-in-a-private-company</link><guid isPermaLink="false">https://cdixon.org/2012/04/25/the-risks-of-being-a-small-investor-in-a-private-company</guid><pubDate>Wed, 25 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;With the passage of the &lt;a href=&quot;http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act&quot;&gt;JOBS act&lt;/a&gt;, it seems that many more Americans will soon be able to buy equity in private companies. I am no expert on the law, but I have been investing in private companies for about a decade, and during that time I’ve seen many cases where large investors used financial engineering to artificially reduce the value of smaller investors’ equity. Here are a few examples.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Issuing of senior securities with multiple liquidation preferences. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Series A: Small investor invests in $1m round, getting 1x straight preferred&lt;/p&gt;
&lt;p&gt;Series B: Large investor invests $10m, getting 4x senior straight preferred&lt;/p&gt;
&lt;p&gt;Company gets sold for $30m. Management gets $3m carveout, Series B investors get $27m, and Series A investors get zero.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;ol start=&quot;2&quot;&gt;
&lt;li&gt;Issuing of massive option grant to management along with new financing at a below-market valuation. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Series A: Small investor invests in $1m round, getting 1x straight preferred for 10% of the company.&lt;/p&gt;
&lt;p&gt;Company is doing well and is offered a Series B at a significantly higher valuation. Instead, large investor invests $5m at below-market valuation, getting 40% of the company, and simultaneously issues options worth 50% of the company to management.&lt;/p&gt;
&lt;p&gt;Result: Series A investors are diluted from 10% to 1% of the company, even though the company was doing well and in a normal financing would have only been slightly diluted.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;ol start=&quot;3&quot;&gt;
&lt;li&gt;The company is actually multiple entities, with the smaller investor investing in the less valuable entity. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Company has entity 1 and 2. Small investors invest in entity 1 that licenses IP from entity 2. Value of IP increases and entity 2 is sold and eventually cancels entity 1′s license, making entity 1 worthless.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;ol start=&quot;4&quot;&gt;
&lt;li&gt;Pay-to-play or artificially low downrounds. Example:&lt;/li&gt;
&lt;/ol&gt;
&lt;blockquote&gt;
&lt;p&gt;Series A: Small investor invests in $1m round, getting 1x straight preferred&lt;/p&gt;
&lt;p&gt;Series B: Large investor invests $10m in pay-to-play round (meaning any investor that doesn’t participate has their preferred shares converted to common). Smaller investor doesn’t have the cash to re-invest in Series B, but deeper pocketed investors do.&lt;/p&gt;
&lt;p&gt;Company sells for $10m. Series B investors get $10m. Series A investors get nothing.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;There are ways to protect against these shenanigans. Protections can be written into the Series A financings documents (pro-rata rights, ability to block senior financings, etc). There are also some legal protections all minority investors are granted under, say, Delaware or California law. But usually even when these protections exist (and they exist far less frequently these days than in the past), smaller investors usually can’t, say, invoke blocking rights by themselves (indeed, it’s often not economically viable for smaller investors to hire lawyers to review every financing document for every company they invest in). Another way smaller investors can protect themselves is to set aside capital amounting to, e.g. 30% of every investment made, in case they need it later for defensive purposes (&lt;a href=&quot;http://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds/#comment-486289000&quot;&gt;I do this&lt;/a&gt;). But in my experience this is all very complicated and difficult to execute in practice, even when the small investors are “professional” investors. I worry it will be even harder for “amateur” investors to protect themselves.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Outsource things you don’t care about]]></title><description><![CDATA[A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things…]]></description><link>https://cdixon.org/2012/04/22/outsource-things-you-dont-care-about</link><guid isPermaLink="false">https://cdixon.org/2012/04/22/outsource-things-you-dont-care-about</guid><pubDate>Sun, 22 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things that you don’t. At an early-stage technology company this means you do in house: product design, software and/or hardware development, PR, recruiting, and customer relations/community management. Ideally, most of these activities are led by founders. You should outsource legal, accounting, website hosting, website analytics etc. (Unless you are starting a company where one of those activities can give you a competitive advantage, e.g. a securities trading startup would need to have in-house legal).&lt;/p&gt;
&lt;p&gt;A lot of startups over outsource. A few years ago, you’d sometimes hear tech startups say they were going to outsource software development. Thankfully, founders have gotten smart about this and it rarely ever happens except as a stopgap. It is still common for startups to hire outside PR firms. If you decide to hire an outside PR firm, that means you don’t care about PR. Just because you are willing to spend some of money on it doesn’t mean you think it’s important. You probably shouldn’t hire an investment banker during an acquisition unless your company is later stage. And you might occasionally use an outside recruiter but the core recruiting activity needs be done by founders.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Offline first, mobile enabled]]></title><description><![CDATA[One of the major trends in tech startups what Fred Wilson calls “Mobile first, web second.” Instagram is a great example of mobile first…]]></description><link>https://cdixon.org/2012/04/20/offline-first-mobile-enabled</link><guid isPermaLink="false">https://cdixon.org/2012/04/20/offline-first-mobile-enabled</guid><pubDate>Fri, 20 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the major trends in tech startups what Fred Wilson calls “&lt;a href=&quot;http://www.avc.com/a_vc/2010/09/mobile-first-web-second.html&quot;&gt;Mobile first, web second&lt;/a&gt;.” Instagram is a great example of mobile first. They barely had a website – it was all about the mobile app.&lt;/p&gt;
&lt;p&gt;The excitement over mobile-first apps is justified. Smartphones have unleashed a wave of creativity, resulting in entirely new categories of applications. But to me an even more exciting trend is what people have been calling (for lack of a better phrase) ”offline first, mobile enabled” apps.&lt;/p&gt;
&lt;p&gt;For example, Foursquare is primarily about improving your offline experiences (meeting friends and finding new places to go). And it couldn’t exist without smartphones (ok, Dodgeball existed on feature phones but had a fraction of the utility). Similarly, Uber couldn’t exist without smartphones. The Uber apps (one for drivers and one for customers), while essential, are all about enabling for the car service. Square is about making payments more convenient and giving small businesses better analytics. The mobile app is just an enabler.&lt;/p&gt;
&lt;p&gt;It seems natural that the first wave of mobile apps would be about improving core smartphone apps (e.g. photo apps) or porting apps from other devices (e.g. games). And there is probably a lot of interesting innovation remaining there. But the really massive opportunity is dreaming up new ways that the little computers loaded with sensors that we carry around with us everywhere can improve our real-world experiences.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[“Meaningful” startups]]></title><description><![CDATA[There is generally a lot of enthusiasm in the startup world these days. But some observers worry that too many startups are working on…]]></description><link>https://cdixon.org/2012/04/18/meaningful-startups</link><guid isPermaLink="false">https://cdixon.org/2012/04/18/meaningful-startups</guid><pubDate>Wed, 18 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There is generally a lot of enthusiasm in the startup world these days. But some observers worry that too many startups are working on “features” instead of world-changing ideas. Founders Fund published a provocative &lt;a href=&quot;http://www.foundersfund.com/the-future&quot;&gt;article&lt;/a&gt; summed up by the subtitle: “We wanted flying cars, instead we got 140 characters”. Alexis Madrigal &lt;a href=&quot;http://www.theatlantic.com/technology/archive/2012/04/the-jig-is-up-time-to-get-past-facebook-and-invent-a-new-future/256046/&quot;&gt;writes&lt;/a&gt; in The Atlantic that “we need a fresh paradigm for startups”, and dismisses the significance of recent “hot” startups:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What we’ve seen have been evolutionary improvements on the patterns established five years ago. The platforms that have seemed hot in the last couple of years — Tumblr, Instagram, Pinterest — add a bit of design or mobile intelligence to the established ways of thinking.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;One thing these critics need to be careful about is that, as Clay Christensen has long argued, many important new inventions &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;start out looking like toys&lt;/a&gt;. Twitter (Founder Fund’s headline example of a “trivial” startup) started out looking like a toy but has since transformed the way information is distributed for tens of millions of people. Madrigal dismisses cloud computing as “a rebranding of the Internet” whose only effect has been to make “the lives of some IT managers easier,” overlooking that cloud-based services solve the “third party payer” problem of enterprise sales, thereby completely &lt;a href=&quot;http://cdixon.org/2011/12/04/the-enterprise-buyers-versus-users/&quot;&gt;changing&lt;/a&gt; how enterprises adopt new technology.&lt;/p&gt;
&lt;p&gt;That said, I generally agree with the sentiment that the startup world is too focused on chasing trends. I don’t think this is the fault of entrepreneurs. I meet entrepreneurs all the time who are working on ideas that seem quite meaningful to me. Some of them are building futuristic new technologies. Some are trying to disintermediate incumbents and thereby restructure large industries. Others are trying to solve stubborn problems in important sectors like education, healthcare, or energy.&lt;/p&gt;
&lt;p&gt;The problem I encounter is that many of these “meaningful” startups have trouble raising money from VCs. An entrepreneur working on groundbreaking robot technology recently joked to me that he’d have an easier time raising money if his robots were virtual and existed only on Facebook. He was only partly joking. His startup will require a lot of capital and doesn’t have an obvious near term acquirer. Only a small group of VCs today will even consider such an investment.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[There are two ways to make large datasets useful]]></title><description><![CDATA[I’ve spent the majority of my career building technologies that try to do useful things with large datasets.* One of the most important…]]></description><link>https://cdixon.org/2012/04/14/there-are-two-ways-to-make-large-datasets-useful</link><guid isPermaLink="false">https://cdixon.org/2012/04/14/there-are-two-ways-to-make-large-datasets-useful</guid><pubDate>Sat, 14 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve spent the majority of my career building technologies that try to do useful things with large datasets.*&lt;/p&gt;
&lt;p&gt;One of the most important lessons I’ve learned is that there are only two ways to make useful products out of large data sets. Algorithms that deal with large data sets tend to be accurate at best 80%-90% of the time (an old “joke” about &lt;a href=&quot;http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/&quot;&gt;machine learning is that it’s really good at partially solving any problem&lt;/a&gt;). Consequently, you either need to accept you’ll have some errors but deploy the system in a fault-tolerant context, &lt;em&gt;or&lt;/em&gt; you need to figure out how to get the remaining accuracy through manual labor.&lt;/p&gt;
&lt;p&gt;What do I mean by fault-tolerant context? If a search engine shows the most relevant result as the 2nd or 3rd result, users are still pretty happy. The same goes for recommendation systems that show multiple results (e.g. Netflix). Trading systems that hedge funds use are also often fault tolerant: if you make money 80% of the time and lose it 20% of the time, you can still usually have a profitable system.&lt;/p&gt;
&lt;p&gt;For fault-_in_tolerant contexts, you need to figure out how to scalably and cost-effectively produce the remaining accuracy through manual labor. When we were building SiteAdvisor, we knew that any inaccuracies would be a big problem: incorrectly rating a website as unsafe hurts the website, and incorrectly rating a website as safe hurts the user. Because we knew automation would only get us 80-90% accuracy, we built 1) systems to estimate confidence levels in our ratings so we would know what to manually review, and 2) a workflow system so that our staff, an offshore team we hired, and users could flag or fix inaccuracies.&lt;/p&gt;
&lt;p&gt;* &lt;em&gt;My first job was as a programmer at a hedge fund, where we built systems that analyzed large data sets to trade stock options. Later, I cofounded SiteAdvisor where the goal was to build a system to assign security safety ratings to tens of millions of websites. Then I cofounded Hunch, which was acquired by eBay – we are now working on new recommendation technologies for ebay.com and other eBay websites.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Increasing velocity]]></title><description><![CDATA[Two common discussions in the startup world right now are 1) the increasing speed at which new apps/websites can gain mass adoption…]]></description><link>https://cdixon.org/2012/04/10/increasing-velocity</link><guid isPermaLink="false">https://cdixon.org/2012/04/10/increasing-velocity</guid><pubDate>Tue, 10 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Two common discussions in the startup world right now are 1) the increasing speed at which new apps/websites can gain mass adoption (Instagram, Pinterest, OMGPOP’s Draw Something, etc), and 2) the rise in seed stage valuations. These two trends are real and related.  An investor with a broad portfolio of companies might rationally invest at an average valuation of, say, 10m (which is historically considered very high for that stage) if they have a chance for one of the investments to become the next Instagram or Pinterest. A billion dollar hit pays for a lot of misses.&lt;/p&gt;
&lt;p&gt;The increasing velocity has &lt;a href=&quot;http://www.betabeat.com/2012/04/10/instagram-and-the-age-of-upsets/&quot;&gt;implications for the valuations of incumbent tech companies&lt;/a&gt;. Users have limited time, and while web and app usage are growing, hit startups are growing much faster and therefore gaining adoption, at least in part, at the expense of incumbents. It’s not clear this risk is priced into the valuations of companies like Facebook (P/E expected to be ~100) and Zynga (P/E ~31). In other words, faster velocity should lead to a narrower distribution of valuations from seed to late stages. We’ve seen the seed stage adjust but not the late stage.&lt;/p&gt;
&lt;p&gt;The current posture of big VCs seems to be to wait to see what takes off and then chase the winners. Tons of investors tried to invest in Instagram’s A and B rounds, and I’m sure VC interest in Pinterest is intense.&lt;/p&gt;
&lt;p&gt;The problem with this model of Series A and B investing is that, in reality, many of the companies with big hits &lt;a href=&quot;http://cdixon.org/2012/03/16/the-myth-of-the-overnight-success/&quot;&gt;weren’t overnight successes&lt;/a&gt;. Pinterest, OMGPOP, Twitter, and Tumblr were around for years before taking off and all benefited greatly from having patient investors. In the current financing environment, a lot of good companies won’t live to get Series As and Bs and big VCs will pay valuations on hits that are priced to perfection.&lt;/p&gt;
&lt;p&gt;Increasing velocity is great for users and for the winning companies and investors. But when good companies aren’t getting follow on rounds because they aren’t yet “hockeysticking”, the long term health of the startup ecosystem suffers.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Facebook’s response to Yahoo’s patent lawsuit]]></title><description><![CDATA[Like many in tech, I believe all software patents should be abolished. That said, I think Facebook made the right move by filing a lawsuit…]]></description><link>https://cdixon.org/2012/04/03/facebooks-response-to-yahoos-patent-lawsuit</link><guid isPermaLink="false">https://cdixon.org/2012/04/03/facebooks-response-to-yahoos-patent-lawsuit</guid><pubDate>Tue, 03 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Like many in tech, I believe all &lt;a href=&quot;http://cdixon.org/2009/09/24/software-patents-should-be-abolished/&quot;&gt;software patents should be abolished&lt;/a&gt;. That said, I think Facebook made the right move by filing a lawsuit against Yahoo’s patent attack.&lt;/p&gt;
&lt;p&gt;As I see it, Facebook had 4 choices:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Settle. Given their pending IPO, this would have been the easiest route. But, by rewarding Yahoo, settling would have encouraged more frivolous patent lawsuits.&lt;/li&gt;
&lt;li&gt;Defend without countersuing. On the surface this would have been the “principled” stance, but it would have severely weakened their legal position, and therefore would have made it more likely that Yahoo profited from the lawsuit.&lt;/li&gt;
&lt;li&gt;Countersue without signaling any aversion to patent lawsuits.&lt;/li&gt;
&lt;li&gt;Countersue &lt;em&gt;and&lt;/em&gt; signal that they are averse to patent lawsuits, which in turn signals that they will drop the lawsuit if Yahoo does. This seems to be what Facebook has done:&lt;/li&gt;
&lt;/ul&gt;
&lt;blockquote&gt;
&lt;p&gt;“From the outset, we said we would defend ourselves vigorously against Yahoo’s lawsuit,” Ted Ullyot, Facebook’s general counsel, said in a statement. “While we are asserting patent claims of our own, &lt;strong&gt;we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation&lt;/strong&gt;.” [emphasis added] – &lt;a href=&quot;http://dealbook.nytimes.com/2012/04/03/facebook-accuses-yahoo-of-infringing-on-patents/?hpw&quot;&gt;NYTimes&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Countersuing gives Facebook the best chance of fending off Yahoo’s lawsuit – and therefore not rewarding patent lawsuits. And signaling they are only doing so in response to Yahoo (hence might drop the suit if Yahoo does) keeps them on the right side of innovation.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Revisited: big VCs investing in seed rounds]]></title><description><![CDATA[A few years ago, the trend of companies raising smaller seed rounds combined with the emergence of new seed funds caused many big VCs to…]]></description><link>https://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds</link><guid isPermaLink="false">https://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds</guid><pubDate>Mon, 02 Apr 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A few years ago, the trend of companies raising smaller seed rounds combined with the emergence of new seed funds caused many big VCs to create seed investment programs. This triggered a debate among entrepreneurs and investors about whether it was risky for seed-stage companies to take small investments from large VCs. (I blogged about the issue &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money/&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Since then, enough founders have directly experienced the downside of taking seed money from big VCs that I think it’s safe to say there is no more room for debate. I can think of about 15 founders I’ve spoken to recently who tried or are trying to raise Series As but are seriously hampered by the fact that a big VC invested in the seed round but isn’t participating in the Series A. (I’d love to mention specific companies and firms but it wouldn’t be appropriate for me to do so – I guess I’ll just have to cite Jay Rosen’s “&lt;a href=&quot;http://pressthink.org/2012/03/im-there-youre-not-let-me-tell-you-about-it/&quot;&gt;I’m there, let me tell you what I see&lt;/a&gt;” principle of reporting).&lt;/p&gt;
&lt;p&gt;There are two important nuances to point out here. First, there are big VCs who invest in seed rounds the right way – with the genuine expectation to follow on and the intention to help out during the seed stage (some that I’ve invested with include USV, True, and Spark). One important sign of this is how much they want to invest. If a $300M fund wants to invest $100K, they are buying an option. If they want to invest $500K, they are more likely making an investment.&lt;/p&gt;
&lt;p&gt;The second nuance can be counterintuitive: the danger of taking seed money is positively correlated with the reputation of the firm. If a top VC invests in the seed round and then passes on the A, other VCs will have difficulty overlooking that the smartest money that knows the company the best isn’t following on. If the VC isn’t well respected, it is easier for other VCs to second guess them.&lt;/p&gt;
&lt;p&gt;I’m not revisiting this issue to criticize big VCs. A healthy startup environment requires smart, ethical investors at all stages. But I don’t think these big VC seed programs benefit anyone. And there are enough angry entrepreneurs out there that I expect the message will get through.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Give away the diagnostic, sell the remedy]]></title><description><![CDATA[Companies that employ the “freemium” business model give away a product or service for free and then charge for additional features. The…]]></description><link>https://cdixon.org/2012/03/26/give-away-the-diagnostic-sell-the-remedy</link><guid isPermaLink="false">https://cdixon.org/2012/03/26/give-away-the-diagnostic-sell-the-remedy</guid><pubDate>Mon, 26 Mar 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Companies that employ the “&lt;a href=&quot;http://www.avc.com/a_vc/2009/07/freemium-and-freeconomics.html&quot;&gt;freemium&lt;/a&gt;” business model give away a product or service for free and then charge for additional features. The freemium model has gotten more popular as the cost to deliver free services has dropped but the cost of employing sales and marketing people hasn’t. One of the hardest questions around freemium models is deciding how to &lt;a href=&quot;http://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products/&quot;&gt;divide&lt;/a&gt; free from paid features.&lt;/p&gt;
&lt;p&gt;One particularly effective version of freemium is: “give away the diagnostic, sell the remedy.” The best known example of this is anti-virus companies that give away free virus scans but charge for virus removers. In fact, this tactic works so well for anti-virus that it almost seems coercive (and has indeed been abused, for example, by “anti-spyware” software that deliberately conflates cookies and viruses). But, in general, giving away a diagnostic seems like a reasonable way to demonstrate the effectiveness of a product while still being able to sell valuable additional features.&lt;/p&gt;
&lt;p&gt;Selling the remedy has become increasingly popular with B2B companies. For example, a friend recently wanted to ensure that his company’s (non-spam) e-mails weren’t getting blocked by spam filters, so he contacted an “email delivery optimization” company. They ran a free test and reported that his emails weren’t getting filtered. Two months later they called back and said “uh oh, your emails are getting filtered.” Sure enough his open rates had dropped and his anecdotal tests confirmed that his emails were being inaccurately labelled as spam. Because of the free diagnostic, he had confidence in the company’s technology, and was willing to pay them to fix his problem. And the email optimization company had spent almost nothing to acquire a new customer.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The myth of the overnight success]]></title><description><![CDATA[Angry Birds was Rovio’s 52nd game. They spent eight years and almost went bankrupt before finally creating their massive hit. Pinterest is…]]></description><link>https://cdixon.org/2012/03/16/the-myth-of-the-overnight-success</link><guid isPermaLink="false">https://cdixon.org/2012/03/16/the-myth-of-the-overnight-success</guid><pubDate>Fri, 16 Mar 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Angry Birds was Rovio’s &lt;a href=&quot;http://www.wired.co.uk/magazine/archive/2011/04/features/how-rovio-made-angry-birds-a-winner?page=all&quot;&gt;52nd game&lt;/a&gt;. They spent eight years and almost went bankrupt before finally creating their massive hit. Pinterest is one of the fastest growing websites in history, but struggled for a long time. Pinterest’s CEO recently &lt;a href=&quot;http://allthingsd.com/20120313/pinterest-ceo-ben-silbermanns-lesson-for-start-ups-go-your-own-way/&quot;&gt;said&lt;/a&gt; that they had “catastrophically small numbers” in their first year after launch, and that if he had listened to popular startup advice he probably would have quit.&lt;/p&gt;
&lt;p&gt;You tend to hear about startups when they are successful but not when they are struggling. This creates a systematically distorted perception that companies succeed overnight. Almost always, when you learn the backstory, you find that behind every “overnight success” is a story of entrepreneurs toiling away for years, with very few people except themselves and perhaps a few friends, users, and investors supporting them.&lt;/p&gt;
&lt;p&gt;Startups are hard, but they can also go from difficult to great incredibly quickly. You just need to survive long enough and keep going so you can create your 52nd game.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some tips for interacting with the press]]></title><description><![CDATA[Here are a few things I’ve learned over the years about the best ways for entrepreneurs to interact with the press (by press I mean blogs as…]]></description><link>https://cdixon.org/2012/03/01/some-tips-for-interacting-with-the-press</link><guid isPermaLink="false">https://cdixon.org/2012/03/01/some-tips-for-interacting-with-the-press</guid><pubDate>Thu, 01 Mar 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Here are a few things I’ve learned over the years about the best ways for entrepreneurs to interact with the press (by press I mean blogs as well as traditional media).&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Don’t be afraid to ask what the rules are. Is this on or off the record? If they are writing an article about your company, do they require exclusivity? What is the angle of the story?&lt;/li&gt;
&lt;li&gt;Don’t use a PR firm unless you are so successful that you need someone to help you manage inbound press interest. Most journalists, when talking candidly, will tell you they’d vastly prefer getting an email from the founder of a startup than a PR firm. If you’re Bill Gates, it is understandable that you have someone reaching out for you. If you are a small startup, having a PR rep contact a journalist says “I’m not competent enough to reach you” or “I don’t respect your time enough to reach out directly.”&lt;/li&gt;
&lt;li&gt;Treat journalists with respect. Tech/business journalists often interact with rich and powerful people, some of whom treat them disrespectfully. Like entrepreneurs, journalists are usually interesting people with diverse interests. You’ll probably like them if you talk to them and might even become friends.&lt;/li&gt;
&lt;li&gt;Unless you’re a super hot startup, the existence of your company is not a news story. Exclusives of launches, financings and acquisitions are usually news stories. Trend stories that you are part of could be a news story. Relating your startup or data your startup generates to something already newsworthy (journalists call this “pegging”) can dramatically increase your chances of getting covered.&lt;/li&gt;
&lt;li&gt;Whether you like it or not, the press will put your company into a category, and might run “horserace” stories comparing how the companies in your category are doing. The best you can do here is to try to choose which category you’ll be put into. Arguing that you have no competitors or are creating a new category is pretty much impossible.&lt;/li&gt;
&lt;li&gt;Try to put yourself in the mindset of the journalist. How will this story get them on Techmeme or featured by their editors? What were their most successful recent stories? Do background research on any reporter before talking and read a bunch his/her articles.&lt;/li&gt;
&lt;li&gt;Don’t just contact reporters when you need them: try to be helpful even when you don’t. Sometimes, I get calls to talk about, say, the state of the venture market or asking for some background on a tech sector that is new to the journalist. My guess is they appreciate this and are more responsive when I contact them about a possible story.&lt;/li&gt;
&lt;/ul&gt;</content:encoded></item><item><title><![CDATA[The internet is reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams]]></title><description><![CDATA[From Innovation and the Bell Labs Miracle in today NYTimes: Innovation is an important new product or process, deployed on a large scale and…]]></description><link>https://cdixon.org/2012/02/26/the-internet-is-reshaping-our-economy-from-one-of-huge-corporations-with-lots-of-jobs-to-huge-platforms-with-lots-of-income-streams</link><guid isPermaLink="false">https://cdixon.org/2012/02/26/the-internet-is-reshaping-our-economy-from-one-of-huge-corporations-with-lots-of-jobs-to-huge-platforms-with-lots-of-income-streams</guid><pubDate>Sun, 26 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;From &lt;a href=&quot;http://www.nytimes.com/2012/02/26/opinion/sunday/innovation-and-the-bell-labs-miracle.html?ref=opinion&quot;&gt;Innovation and the Bell Labs Miracle&lt;/a&gt; in today NYTimes:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Innovation is an important new product or process, deployed on a large scale and having a significant impact on society and the economy, that can do a job “better, or cheaper, or both.” Regrettably, we now use the term to describe almost anything. It can describe a smartphone app or a social media tool; or it can describe the transistor or the blueprint for a cellphone system. The differences are immense. One type of innovation creates a handful of jobs and modest revenues; another, the type Mr. Kelly and his colleagues at Bell Labs repeatedly sought, creates millions of jobs and a long-lasting platform for society’s wealth and well-being.&lt;/p&gt;
&lt;p&gt;The conflation of these different kinds of innovations seems to be leading us toward a belief that small groups of profit-seeking entrepreneurs turning out innovative consumer products are as effective as our innovative forebears. History does not support this belief. The teams at Bell Labs that invented the laser, transistor and solar cell were not seeking profits. They were seeking understanding. Yet in the process they created not only new products but entirely new — and lucrative — industries.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Putting aside the obvious rebuttal that large companies like Intel, Microsoft, Apple and even AT&amp;#x26;T were once startups, the author seems to confuse “jobs” with “income streams”. For example, it would be easy to dismiss a website like Craigslist as a “social media tool” that has only created a few dozen jobs for its employees. But in fact it has created billions of dollars of income streams for people buying and selling things on its platform. The internet is increasingly reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Once you take money, the clock starts ticking]]></title><description><![CDATA[One of the interesting things about having been investing in startups for a number of years is that at any moment you get an inside peek at…]]></description><link>https://cdixon.org/2012/02/25/once-you-take-money-the-clock-starts-ticking</link><guid isPermaLink="false">https://cdixon.org/2012/02/25/once-you-take-money-the-clock-starts-ticking</guid><pubDate>Sat, 25 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the interesting things about having been investing in startups for a number of years is that at any moment you get an inside peek at startups at a variety of different stages. In the course of a few weeks, I might talk to people who are ideating around new business ideas, people raising seed rounds, people raising later (VC) rounds, people whose products are blowing up, people whose product are struggling, people getting acquired, people leaving acquirers to start new companies, etc. Sadly, there are also usually a few companies that are struggling and facing the serious possibility of running out of money and being forced to shut down.&lt;/p&gt;
&lt;p&gt;One side-by-side comparison struck me recently.  Company A is just now raising a seed round. The money they raised will last 12 months (personally, I strongly recommend raising &lt;a href=&quot;http://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank/&quot;&gt;18 months&lt;/a&gt; of runway – if you have the option to do so). Company A was also, in my opinion, not ready to raise money (they needed to work on their plan and team more). Company B raised a seed round about 10 months ago and is now struggling to raise more. Company B had the option to raise more money back then but chose to only raise 12 months runway in order to minimize dilution. Company B also made the mistake of having a large VC invest $100K in the round (a meaningless amount to a large VC). The large VC has since said they won’t support the company (despite the fact that the company made pretty good progress on the business) creating a massive &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;signaling&lt;/a&gt; problem.&lt;/p&gt;
&lt;p&gt;In the current “frothy” environment, where seed investors are aggressively offering money to entrepreneurs, it is easy for an entrepreneur to think “well, if I’m getting offered money this easily at the seed stage, I’ll get offered money easily later.” In fact, once you take professional investor money, the attitude of investors (both insiders and outsiders) changes dramatically: you’ve gone from planning mode to operations mode. When you do planning, research, experimenting etc. without having raised money, investors think you are prudent (I recently interviewed the Warby Parker founders for &lt;a href=&quot;http://techcrunch.com/2012/02/24/founder-stories-warby-parker-less-than-1-of-eyeglasses-were-sold-online/&quot;&gt;TechCrunch&lt;/a&gt; and they said they spent 1.5 years planning/researching before they raised money). When you do it with other people’s money, and don’t make what they perceive to be enough progress, the investors can quickly lose faith.&lt;/p&gt;
&lt;p&gt;The obvious lesson is well known by experienced entrepreneurs. Don’t raise money until you are ready, and when you do, raise enough to have a good shot at reaching “accretive milestones” so you can raise more money, become profitable, or whatever your goals might be.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Big timing]]></title><description><![CDATA[“Big timing” is a phrase I’ve heard a lot lately which refers to people who are “higher ranking” acting disrespectfully toward people who…]]></description><link>https://cdixon.org/2012/02/23/big-timing</link><guid isPermaLink="false">https://cdixon.org/2012/02/23/big-timing</guid><pubDate>Thu, 23 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“Big timing” is a phrase I’ve heard a lot lately which refers to people who are “higher ranking” acting disrespectfully toward people who are “lower ranking”. Example usage: “so and so VC partner big timed my associate,” meaning they talked down to him/her or didn’t meet with him/her or whatever.&lt;/p&gt;
&lt;p&gt;Big timing is a huge mistake. Why? 1) big timers vastly underestimate the degree to which senior people trust their junior people, 2) most non-jerks (no matter how successful) interpret big timing to be an insult to their firm and therefore to their senior people, 3) junior people are often far more active and informed than senior people and therefore great people to spend time with.&lt;/p&gt;
&lt;p&gt;It would be great to think that in the startup industry, people would realize that today’s junior person could become “big time” tomorrow, and that you should therefore be meritocratic and respectful to everyone. But that’s not my experience.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[“It is the human friction that makes the sparks”]]></title><description><![CDATA[From Jonah Lehrer, Brainstorming Doesn’t Really Work (via Stowe Boyd): Building 20 [a scene of incredible innovation at MIT] and…]]></description><link>https://cdixon.org/2012/02/19/it-is-the-human-friction-that-makes-the-sparks</link><guid isPermaLink="false">https://cdixon.org/2012/02/19/it-is-the-human-friction-that-makes-the-sparks</guid><pubDate>Sun, 19 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;From Jonah Lehrer, &lt;a href=&quot;http://www.newyorker.com/reporting/2012/01/30/120130fa_fact_lehrer?currentPage=5&quot;&gt;Brainstorming Doesn’t Really Work&lt;/a&gt; (via &lt;a href=&quot;http://tmblr.co/ZHrZFyGY_fqI&quot;&gt;Stowe Boyd&lt;/a&gt;):&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Building 20 [a scene of incredible innovation at MIT] and brainstorming came into being at almost exactly the same time. In the sixty years since then, if the studies are right, brainstorming has achieved nothing—or, at least, less than would have been achieved by six decades’ worth of brainstormers working quietly on their own. Building 20, though, ranks as one of the most creative environments of all time, a space with an almost uncanny ability to extract the best from people. Among M.I.T. people, it was referred to as “the magical incubator.”&lt;/p&gt;
&lt;p&gt;The fatal misconception behind brainstorming is that there is a particular script we should all follow in group interactions. The lesson of Building 20 is that when the composition of the group is right—enough people with different perspectives running into one another in unpredictable ways—the group dynamic will take care of itself. All these errant discussions add up. In fact, they may even be the most essential part of the creative process. Although such conversations will occasionally be unpleasant—not everyone is always in the mood for small talk or criticism—that doesn’t mean that they can be avoided. The most creative spaces are those which hurl us together. It is the human friction that makes the sparks.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I think this underscores one of the main reasons remote early-stage projects often fail. We mistakenly think of brainstorming as something you can do in meetings, and teaching as something you can perform through carefully composed documents or lectures.&lt;/p&gt;
&lt;p&gt;I was part of a number of failed remote R&amp;#x26;D attempts. The one time it worked was when we decided to abandon meetings, project documents, tracking tools, etc. Instead, we got a high quality speakerphone so everyone could overhear everyone else’s conversations, and we left it on all day, every day. It wasn’t the same as being together in person, but we did manage to get some of the human friction back.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Platform distribution risks]]></title><description><![CDATA[When your product extends a platform’s functionality, one of the main risks you face is that the platform could embed your product’s key…]]></description><link>https://cdixon.org/2012/02/14/platform-distribution-risks</link><guid isPermaLink="false">https://cdixon.org/2012/02/14/platform-distribution-risks</guid><pubDate>Tue, 14 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;When your product extends a platform’s functionality, one of the main risks you face is that the platform could embed your product’s key features within the platform – what is sometimes called &lt;a href=&quot;http://cdixon.org/2011/02/22/the-importance-of-predictability-for-platform-developers/&quot;&gt;subsumption risk&lt;/a&gt;. This happened to a lot of startups in the 90s that built products for the Windows platform.&lt;/p&gt;
&lt;p&gt;When you depend on a platform for &lt;em&gt;distribution&lt;/em&gt; (acquiring and retaining users), you take on different risks. Specifically:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Oversaturation&lt;/em&gt;. The risk that supply of products on the platform significantly outpaces demand. This seems to have happened recently to the iOS App Store: there are over 500,000 apps and counting, and popularity tends to be highly concentrated, making it very difficult for new apps to get noticed. Oversaturation also &lt;a href=&quot;http://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups/&quot;&gt;happened&lt;/a&gt; to Google (organic) results in most query categories in the last 2000′s.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Barriers to discovery&lt;/em&gt;. The risk that the discovery methods on the platform aren’t meritocratic. iOS apps depend upon appearing in iTunes’ Top 25 lists, leading to a “rich get richer” bias, along with aggressive attempts to game the system. Apple has other app discovery mechanisms like its Featured Apps and Genius features, but those seem to drive far fewer downloads than the top lists. Google search has increasingly been favoring Google’s own products and also seems to heavily favor older, well-entrenched websites, making it very hard for new sites to gain significant SEO traction. Currently, social networks like Twitter and Facebook seem to have the most meritocratic discovery mechanisms, which is one reason so many startups target them for distribution.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Throttling&lt;/em&gt;. The risk that the platform will throttle distribution or monetization (for apps that rely on paid advertising, throttled monetization also means throttled distribution). Facebook started out letting apps send unfiltered notifications to users’ timelines but then introduced algorithms that heavily filtered them (thereby entrenching the position of leading app makers like Zynga). Facebook also started out letting apps charge users directly, but later &lt;a href=&quot;http://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up/&quot;&gt;changed&lt;/a&gt; that policy and imposed a rev-share.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;If you are launching a new website or app, you should have a distribution strategy beyond just “people will love it and tell their friends about it”. Your strategy should probably involve at least one major platform. And you should think through the distribution characteristics of the platform and decide if they are a good fit for your product and how best to mitigate the risks.&lt;/p&gt;
&lt;p&gt;Finally, it is worth noting that some of the most successful startups grew by making bets on emerging platforms that were not yet saturated and where barriers to discovery were low. Today, the most interesting new platforms are probably Android tablets and emerging social networks like Foursquare and Tumblr. Betting on new platforms means you’ll likely fail if the platform fails, but also dramatically lowers the distribution risks described above.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Between failure and Facebook]]></title><description><![CDATA[Recently, a friend was trying to recruit a programmer to join his early-stage startup. The programmer had just graduated from college and…]]></description><link>https://cdixon.org/2012/02/13/between-failure-and-facebook</link><guid isPermaLink="false">https://cdixon.org/2012/02/13/between-failure-and-facebook</guid><pubDate>Mon, 13 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Recently, a friend was trying to recruit a programmer to join his early-stage startup. The programmer had just graduated from college and his impression of startups was shaped mostly by popular media. His main concern, he said, was: “What if we end up being the next MySpace instead of the next Facebook?”.&lt;/p&gt;
&lt;p&gt;Of course, for those of us immersed in startup world, creating the next MySpace would be considered a huge success. MySpace was once the &lt;a href=&quot;http://mashable.com/2006/07/11/myspace-americas-number-one/&quot;&gt;most visited website in the US&lt;/a&gt; and was &lt;a href=&quot;http://www.nytimes.com/2005/07/18/business/18cnd-newscorp.html&quot;&gt;acquired&lt;/a&gt; for $580M. It flamed out later under its corporate owner, but that happens to a lot of great startups.&lt;/p&gt;
&lt;p&gt;Mainstream culture seems to depict startups as either being complete failures where everyone loses their shirts or else huge hits like Facebook. But the reality, as usual, lies in the middle: in 2010, according to Dow Jones, there were &lt;a href=&quot;http://techcrunch.com/2012/01/03/report-522-exits-of-venture-backed-companies-netted-53-2-billion-in-2011/&quot;&gt;522 venture-backed exits&lt;/a&gt; with a combined exit value of $53 billion – implying an average exit price of around $100M.&lt;/p&gt;
&lt;p&gt;The best thing about startups is you get to work with great people on interesting projects, and can be successful by conventional metrics, even if no one outside of tech has ever heard of you or what you’ve built. There’s great stuff between failure and Facebook.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[eBay vs Amazon: decentralized vs centralized e-commerce]]></title><description><![CDATA[Note: The company I cofounded, Hunch, was acquired by eBay in November 2011. I am now an eBay employee. But all the opinions expressed below…]]></description><link>https://cdixon.org/2012/02/13/ebay-vs-amazon-decentralized-vs-centralized-e-commerce</link><guid isPermaLink="false">https://cdixon.org/2012/02/13/ebay-vs-amazon-decentralized-vs-centralized-e-commerce</guid><pubDate>Mon, 13 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;em&gt;Note: The company I cofounded, Hunch, was acquired by eBay in November 2011. I am now an eBay employee. But all the opinions expressed below are my own, and were developed prior to the Hunch acquisition, through my own research on e-commerce.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Amazon and eBay are the two largest e-commerce companies. As of this writing, Amazon has a market cap of about $87B, trading at a trailing twelve-month P/E of about 139. eBay has a market cap of about $42B, trading at a trailing P/E of about 13. Each company competes with many other companies in many different areas. For example, Amazon competes with Apple on tablets (Kindle vs iPad) and digital media (Amazon’s media store vs iTunes). Ebay’s Paypal unit competes with multiple payment companies, and its marketplaces division competes with other “peer-to-peer” e-commerce sites like Craigslist. But given the potential size of the e-commerce market (not to mention the online-to-offline commerce market), Amazon and eBay’s main competitors are each other. And to understand their large strategic moves (e.g. large acquisitions like GSI and Zappos), it is important to understand their fundamentally opposing strategic outlooks: eBay wants commerce to be more decentralized (around its GSI/Magento partners and eBay marketplaces sellers) and Amazon wants it to be more centralized (around itself).&lt;/p&gt;
&lt;p&gt;First, some background. During the dot-com boom, many largest offline brands debated how to best move their businesses online. Some tried to build their own websites from scratch. Others partnered with commerce technology providers. Toys ‘R’ Us took a novel approach and signed a “strategic alliance” to outsource all of their e-commerce operations to Amazon. Over the next few years this relationship soured – apparently Toys ‘R’ Us felt Amazon was competing too directly with them and &lt;a href=&quot;http://www.msnbc.msn.com/id/11641703/ns/business-us_business/t/toys-r-us-wins-suit-against-amazoncom/#.Tyysa2PC69I&quot;&gt;successfully sued&lt;/a&gt; to end the relationship.&lt;/p&gt;
&lt;p&gt;The end of the Toys ‘R’ Us – Amazon relationship marked a turning point for a company called GSI Commerce. GSI took an aggressively neutral approach to providing technology and marketing solutions to retailers. Their main appeal over Amazon is that they didn’t compete with their partners (but of course their partners competed with each other). This approach paid off: GSI now powers &lt;a href=&quot;http://gsicommerce.com/clients/&quot;&gt;over 500 large commerce sites&lt;/a&gt;, including Toys ‘R’ Us, Adidas, Ralph Lauren, and the commerce sites of all the large sports leagues like the NFL, MLB and NBA.&lt;/p&gt;
&lt;p&gt;Last year, eBay &lt;a href=&quot;http://dealbook.nytimes.com/2011/03/28/ebay-to-buy-gsi-commerce-for-2-4-billion-bid/&quot;&gt;paid $2.4B&lt;/a&gt; to acquire GSI Commerce. They also &lt;a href=&quot;http://www.magentocommerce.com/blog/comments/ebay-agrees-to-acquire-magento/&quot;&gt;acquired&lt;/a&gt; a smaller company called Magento that provides e-commerce technologies to smaller retailers. You can think of GSI as the leading commerce platform for the “fat head” of retailers, and Magento as the leader for the long tail.&lt;/p&gt;
&lt;p&gt;The key difference between eBay and Amazon isn’t auctions vs. fixed price sales (the majority of eBay sales aren’t auctions anymore). It is that eBay doesn’t take inventory, and prefers to be an intermediary that facilitates peer-to-peer commerce. This strategy wins if e-commerce becomes more decentralized, with the majority of commerce continuing flow through small to medium retailers. In this world, eBay makes money by sending traffic from eBay.com, from fees collected by GSI and Magento, and Paypal transaction fees. In a centralized world, Amazon grows its &lt;a href=&quot;http://cdixon.posterous.com/amazon&quot;&gt;current 9% e-commerce&lt;/a&gt; market share to a much larger percentage, taking advantage of its scale, efficiency, advanced technology, and the convenience of shopping in one place.&lt;/p&gt;
&lt;p&gt;One way to view this battle is to think of eBay as a platform a la Windows or Android and Amazon as an end-to-end solution a la Apple computers in the 90s or iOS devices today. Platforms tend to provide greater diversity. In the case of e-commerce, the platform approach could also have a price advantage. &lt;a href=&quot;http://techcrunch.com/2011/02/13/bye-bye-long-tail/&quot;&gt;As the CEO of TrialPay, Alex Rampell, argues&lt;/a&gt;: “Who can beat Amazon on price? The companies whose products are sold on Amazon”. End-to-end solutions like Amazon’s tend to provide greater convenience and a better user experience.&lt;/p&gt;
&lt;p&gt;I’m not arguing that one approach is superior to the other. My point is simply that when you understand that the battle is between centralized and decentralized commerce, the strategic moves of the two companies make a lot more sense.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some thoughts on the iPhone contact list controversy and app security]]></title><description><![CDATA[1. I’ve heard rumors that lots of apps have been uploading user contact lists for years. One person who knows the iOS world well told me “if…]]></description><link>https://cdixon.org/2012/02/12/some-thoughts-on-the-iphone-contact-list-controversy-and-app-security</link><guid isPermaLink="false">https://cdixon.org/2012/02/12/some-thoughts-on-the-iphone-contact-list-controversy-and-app-security</guid><pubDate>Sun, 12 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;1. I’ve heard rumors that lots of apps have been uploading user contact lists for years. One person who knows the iOS world well told me “if you download a lot of apps, your contact list is on 50 servers right now.” I don’t understand why Apple doesn’t have a permission dialog box for this (that said, I’m not sure that’s the best solution – see #4 below). Apple has dialogs for accessing location and for enabling push notifications. Accessing users’ contact lists seems like an obvious thing to ask permission for.&lt;/p&gt;
&lt;p&gt;2. I don’t know what the product design motivations are for uploading contacts, but I assume there are legitimate ones. &lt;em&gt;[commenters &lt;a href=&quot;http://cdixon.org/2012/02/12/the-iphone-contact-list-controversy-and-app-security/#comment-436995562&quot;&gt;suggest&lt;/a&gt; it is mainly to notify users when their friends join the service]&lt;/em&gt;.  If this or something similar is the goal, you could probably do it in a way that protects privacy by (&lt;a href=&quot;http://cdixon.posterous.com/bitcasa-and-convergent-encryption&quot;&gt;convergently&lt;/a&gt;?) encrypting the phone numbers on the client side (I’m assuming the useful info is the phone numbers and not the names associated with the phone numbers since the names would be inconsistent across users).&lt;/p&gt;
&lt;p&gt;3. Many commentators have &lt;a href=&quot;http://bits.blogs.nytimes.com/2012/02/12/disruptions-so-many-apologies-so-much-data-mining/&quot;&gt;suggested&lt;/a&gt; that a primary security risk is the fact that the data is transmitted in plain text. Encrypting over the wire is always a good idea but in reality “man-in-the-middle” attacks are extremely rare. I would worry primarily about the far more common cases of 1) someone (insider or outsider) stealing in the company’s database, 2) a government subpoena for the company’s database. The best protection against these risks is encrypting the data in such a way that hackers and the company itself can’t unencrypt it (or to not send the data to the servers in the first place).&lt;/p&gt;
&lt;p&gt;A bad outcome from this controversy would be to have companies encrypt sensitive data over the network and then not encrypt it on their servers (the simplest way to do this is to switch to https, a technology that is much more about security theater than security reality). This would make it impossible for 3rd parties (e.g. white-hat hackers) to detect that sensitive data is being sent over the network but would keep the data vulnerable to server side breaches / subpeonas. Unless Apple or someone else steps in, I worry that this is what apps will do next. It is the quickest way to preserve product features and minimize PR risk.&lt;/p&gt;
&lt;p&gt;4. I worry that by just adding tons of permission dialogs we are going back to the Microsoft IE/Active X model of security. With lots of permission popups, users get fatigued and confused and just end up clicking “Yes” to everything. And then the security model says: If the user says “yes”, and the app uses “best practices” like https, it can do whatever it wants. We saw how this played out with the spyware/adware epidemic on the web from 2001-2006 and it wasn’t pretty.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[And then, suddenly, it works]]></title><description><![CDATA[The other day a friend was demoing a new app he was working on. My first reaction was: “Yeah, yeah. This is nicely executed version one of…]]></description><link>https://cdixon.org/2012/02/11/and-then-suddenly-it-works</link><guid isPermaLink="false">https://cdixon.org/2012/02/11/and-then-suddenly-it-works</guid><pubDate>Sat, 11 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The other day a friend was demoing a new app he was working on. My first reaction was: “Yeah, yeah. This is nicely executed version one of those ideas I’ve seen 50 times.” My second reaction was: “But I could say that about pretty much every successful startup I’ve seen over the last 10 years.”&lt;/p&gt;
&lt;p&gt;Most of the time, important new ideas don’t succeed on the first attempt or even the first ten attempts. But then they do, and it seems to happen suddenly. It’s hard to tell why this is. It’s probably a combination of &lt;a href=&quot;http://cdixon.org/2010/11/07/timing-your-startup/&quot;&gt;timing&lt;/a&gt; (riding some fundamental shift in technology or culture), and execution (getting the product just right).&lt;/p&gt;
&lt;p&gt;An idea getting tried over and over tends to be a positive signal (which is one reason that &lt;a href=&quot;http://cdixon.org/2010/06/26/competition-is-overrated/&quot;&gt;competition is overrated&lt;/a&gt;). It’s very easy when you spend lots of time around startups to get cynical. You could tweet and blog predictions that every new startup will fail and how the ideas are derivative and you’d be right 95% of the time. The hard part – and what matters for founders and investors – is figuring out the right mix of timing and execution to finally get it right.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Bedrock programming]]></title><description><![CDATA[“Bedrock programming” is a phrase used to describe a style of programming that favors building code from the ground up versus reusing…]]></description><link>https://cdixon.org/2012/02/06/bedrock-programming</link><guid isPermaLink="false">https://cdixon.org/2012/02/06/bedrock-programming</guid><pubDate>Mon, 06 Feb 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“Bedrock programming” is a phrase used to describe a style of programming that favors building code from the ground up versus reusing existing open-source or proprietary code.&lt;/p&gt;
&lt;p&gt;In my first programming job out of college our bosses told us to entirely rebuild our product. The person in charge of the networking layer decided the best way to do this was to write our own low-level networking toolkit, using some new, relatively untested networking techniques. We also wrote our own versions of core Java libraries (because, it was said, the existing ones weren’t sufficiently thread safe). This decision ended up leading to repeated delays and bugs, and a codebase that most of the other employees didn’t understand. It also made it much harder to train new hires and find replacements for departed employees.&lt;/p&gt;
&lt;p&gt;A related issue is what is usually called the “bleeding edge” tendency: the desire to use the shiny &amp;#x26; new over the older &amp;#x26; battle-tested. Lately, I’ve personally been programming with MongoDB and love it. But I’m also an investor in a startup that made Mongo their main production database, and when their Mongo expert left unexpectedly it took them far longer to find a replacement than it would have to find a MySQL expert.&lt;/p&gt;
&lt;p&gt;Great programmers are intensely curious and inventive. They love to improve code and try new things. There will always be bedrock and bleeding edge tendencies within strong engineering teams. The key is to have a great VP Engineering/CTO who can balance those tendencies with the reality that talent, money, and time are scarce, especially in startups.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Who should learn to program?]]></title><description><![CDATA[Recently, there’s been a lot of talk in the tech world and beyond about getting more people to learn computer programming. I think this is a…]]></description><link>https://cdixon.org/2012/01/31/who-should-learn-to-program</link><guid isPermaLink="false">https://cdixon.org/2012/01/31/who-should-learn-to-program</guid><pubDate>Tue, 31 Jan 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Recently, there’s been a lot of talk in the tech world and beyond about getting more people to learn computer programming. I think this is a worthy goal*, but the question should be considered from various angles.&lt;/p&gt;
&lt;p&gt;1. &lt;strong&gt;Jobs &amp;#x26; the economy&lt;/strong&gt;. Businesses all over the world need more programmers. Every company I know is hiring engineers (e.g. see this &lt;a href=&quot;http://nytm.org/made/&quot;&gt;list&lt;/a&gt; of NY tech startups). Top programmers can make $100K+ right out of college. Yet there were only about 14,000 computer science (CS) majors &lt;a href=&quot;http://cdixon.posterous.com/computer-science-majors-by-year&quot;&gt;last year&lt;/a&gt;. Meanwhile about 40,000 people got &lt;a href=&quot;http://www.slate.com/articles/business/moneybox/2010/10/a_case_of_supply_v_demand.html&quot;&gt;law degrees&lt;/a&gt; even though demand for lawyers has been shrinking. America is suffering from what economists call &lt;a href=&quot;http://en.wikipedia.org/wiki/Structural_unemployment&quot;&gt;structural unemployment&lt;/a&gt;:  jobs are available but our labor force isn’t trained for those jobs.&lt;/p&gt;
&lt;p&gt;2. &lt;strong&gt;Programming is a great foundation for a tech/startup career&lt;/strong&gt;. CS is a great foundation to do other things in tech industry like starting a tech company (although I’d argue that design is an increasingly valuable foundation for web startups). I suspect one of the reasons for the low number of CS majors is people don’t realize all the non-programming opportunities that are opened up by a background in programming.&lt;/p&gt;
&lt;p&gt;3. &lt;strong&gt;Programming is an important part of being “culturally literate.”&lt;/strong&gt; Algorithmic thinking is as fundamental a type of thinking as mathematical thinking. For example, &lt;a href=&quot;http://ase.tufts.edu/cogstud/incbios/dennettd/dennettd.htm&quot;&gt;Daniel Dennett&lt;/a&gt; convincingly &lt;a href=&quot;http://en.wikipedia.org/wiki/Darwin&amp;#x27;s_Dangerous_Idea&quot;&gt;argues&lt;/a&gt; that the best way to understand Darwin’s theory of evolution is by thinking of it as an algorithm. (I haven’t read it yet but I’m told the premise of Stephen Wolfram’s &lt;a href=&quot;http://en.wikipedia.org/wiki/A_New_Kind_of_Science&quot;&gt;A New Kind of Science&lt;/a&gt; is that algorithmic methods should be applied much more broadly across the sciences). Teaching algorithmic thinking – which is what CS does – should be a core part of a liberal arts education.&lt;/p&gt;
&lt;p&gt;4. &lt;strong&gt;Programming is a great activity.&lt;/strong&gt;  Most people who program describe themselves as entering a mental &lt;a href=&quot;http://en.wikipedia.org/wiki/Flow_(psychology)&quot;&gt;flow state&lt;/a&gt; where they are intensely immersed and time seems to fly by. It feels similar to reading a great book. You also feel great afterwards – it is the mental equivalent of going to the gym.&lt;/p&gt;
&lt;p&gt;5. &lt;strong&gt;Should non-technical people at tech startups learn to code?&lt;/strong&gt; This is where I disagree with some of the conventional wisdom. Certainly it is worthwhile learning programming, at least for reasons 3 &amp;#x26; 4 above. You should realize, however, that to become a good programmer takes thousands of hours of practice. I’d also argue that if you are a non-technical person working at a web company the the first thing you should learn is internet architecture (DNS, http, html, web servers, database, TCP/UDP, IP, etc). Learning some programming is good too, to help relate to technical colleagues. But if your goal is to build a large-scale web service, your time as a non-technical person is better spent recruiting people who have been coding for years.&lt;/p&gt;
&lt;p&gt;* Disclosure: I’m an investor via Founder Collective in two companies related to teaching programming:  &lt;a href=&quot;http://www.codecademy.com/&quot;&gt;Codecademy&lt;/a&gt; and &lt;a href=&quot;http://www.hackerschool.com/&quot;&gt;Hacker School&lt;/a&gt;.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Chris Sacca on the implied user contract]]></title><description><![CDATA[Chris Sacca nicely summarized today’s FB vs Google vs Twitter controversy: It comes down to what each company has promised its users…]]></description><link>https://cdixon.org/2012/01/23/chris-sacca-on-the-implied-user-contract</link><guid isPermaLink="false">https://cdixon.org/2012/01/23/chris-sacca-on-the-implied-user-contract</guid><pubDate>Mon, 23 Jan 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Chris Sacca nicely &lt;a href=&quot;http://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed/#comment-419240267&quot;&gt;summarized&lt;/a&gt; today’s FB vs Google vs Twitter controversy:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;It comes down to what each company has promised its users. Facebook promised its users their stuff would be private, which is why users rightfully get pissed when that line blurs. Twitter has promised users, well, that it will stay up, and that is why users rightfully get pissed when the whale is back.&lt;/p&gt;
&lt;p&gt;Google has promised its users and the entire tech community, again and again, that it would put their interests first, and that is why Google users, rightfully get pissed when their results are deprecated to try to promote a lesser Google product instead.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It’s all about expectations.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What’s not evil: ranking content fairly *and* letting public content get indexed]]></title><description><![CDATA[Please see update at bottom Most websites spend massive amounts of time and money to get any of their pages index and ranked by Google’s…]]></description><link>https://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed</link><guid isPermaLink="false">https://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed</guid><pubDate>Mon, 23 Jan 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;em&gt;Please see update at bottom&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Most websites spend massive amounts of time and money to get &lt;em&gt;any&lt;/em&gt; of their pages index and ranked by Google’s search engine. Indeed, there is a entire billion dollar industry (SEO) devoted to helping companies get their content indexed and ranked.&lt;/p&gt;
&lt;p&gt;Twitter and Facebook have decided to disallow Google from indexing 99.9% of their content. Twitter won’t let Google index tweets and Facebook won’t let Google index status updates and most other user and brand generated content. In Facebook’s case this makes sense for content that users have designated as non-public. In Twitter’s case, the vast majority of the blocked content is designated by users as public. Furthermore, Twitter’s own search function rarely works for tweets older than a week (from Twitter’s search &lt;a href=&quot;https://dev.twitter.com/docs/using-search&quot;&gt;documentation&lt;/a&gt;, they return “6-9 days of Tweets”).&lt;/p&gt;
&lt;p&gt;There is a &lt;a href=&quot;http://pandodaily.com/2012/01/23/google-do-yourself-a-favor-and-just-come-clean-already/&quot;&gt;debate&lt;/a&gt; going today in the tech world: Facebook and Twitter are upset that Google won’t highly rank the 0.1% of their content they make indexable. Facebook and Twitter even created something they call the &lt;a href=&quot;http://searchengineland.com/dont-be-evil-tool-google-108971&quot;&gt;“Don’t be evil” toolbar&lt;/a&gt; that reranks Google search results the way they’d like them to be ranked. The clear implication is that Google is violating their famous credo and acting “evil”.&lt;/p&gt;
&lt;p&gt;The vast majority of websites would dream of having the problem of being able to block Google from 99.9% of their content and have the remaining 0.1% rank at the top of results. What would be best for users – and least “evil” – would be to let all public content get indexed and have Google rank that content “fairly” without favoring their own content. Facebook and Twitter are right about Google’s rankings, but Google is right about Facebook and Twitter blocking public content from being indexed.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Update: after posting this I got a bunch of emails, tweets and comments telling me that Twitter does in fact allow Google to index all their tweets, and that any missing tweets are the fault of Google, not Twitter. A few people &lt;a href=&quot;https://twitter.com/#!/hershberg/status/161622294869983233&quot;&gt;suggested&lt;/a&gt; that without firehose access Google can’t be expected to index all tweets. At any rate, I think the “Why aren’t all tweets indexed?” issue is more nuanced than I argued above.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Revenue vs margin]]></title><description><![CDATA[Three years ago, Fred Wilson wrote a great blog post called When Talking About Business Models, Remember that Profits Equal Revenues Minus…]]></description><link>https://cdixon.org/2012/01/22/revenue-vs-margin</link><guid isPermaLink="false">https://cdixon.org/2012/01/22/revenue-vs-margin</guid><pubDate>Sun, 22 Jan 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Three years ago, Fred Wilson wrote a great blog post called &lt;a href=&quot;http://www.avc.com/a_vc/2009/01/when-talking-about-business-models-remember-that-profits-equal-revenues-minus-costs.html&quot;&gt;When Talking About Business Models, Remember that Profits Equal Revenues Minus Costs&lt;/a&gt;. The point he made was both simple and profound. The simple part is summed up in the post’s title&lt;em&gt;[1]&lt;/em&gt;. The profound part is that high growth, early-stage tech companies often have a choice about how to become exceptionally valuable businesses: they can focus on growing revenues at the expense of margins, or margins at the expense of revenues.&lt;/p&gt;
&lt;p&gt;Most recent successful tech companies seem to have chosen the former: growing revenues at the expense of margins. Again and again, we see S-1 filings with revenues growing rapidly but profit margins that are low to negative. The same is true for the rumored financials of private companies. I think I understand why they made this choice, but wonder if it was a mistake.&lt;/p&gt;
&lt;p&gt;To understand why these companies made this choice, you need to look at their formative stages. Many of them raised money from VC’s at multi-hundred-million to multi-billion dollar valuations, often before the companies were profitable or had even settled on a business model. In most cases, the companies and investors were acting reasonably&lt;em&gt;[2].&lt;/em&gt; But the end results might have been to unwittingly commit themselves to revenue over margin growth.&lt;/p&gt;
&lt;p&gt;Why? Money has its own inertia and somehow always seems to get spent. Some of this spending is reasonable and even necessary (infrastructure, &lt;a href=&quot;http://www.pinspire.com&quot;&gt;defensive&lt;/a&gt; expansion to international markets). But then there are harder choices. For example, do you invest heavily in sales and marketing to grow your revenue faster? Do you stay open and try to become a platform and therefore force yourself to experiment with new business models? Or do you become closed to “own the user” and therefore benefit from existing business models like advertising? Fast revenue growth seems to be the best way to justify your valuation. But the next thing you know you have a high cost structure that requires you to raise even more money and grow revenue even faster.&lt;/p&gt;
&lt;p&gt;The root cause here is a deeply held belief throughout the business world that exceptional revenue growth is more likely than exceptional margins. For example, if you talk to professional public market investors and analysts you’ll often hear statements like “that’s a low margin industry” – implying that every industry has “natural” profit margins which companies can only defy for short periods of time. This belief is also reflected in public market valuations for recent tech IPOs: companies like Groupon that put revenue over margins command very healthy valuations.&lt;/p&gt;
&lt;p&gt;The problem is that this deeply held belief in “revenue exceptionalism” over “margin exceptionalism” is a hangover from the industrial era. Unlike industrial era companies, information businesses tend to be &lt;a href=&quot;http://www.bothsidesofthetable.com/2011/12/22/the-amazing-power-of-deflationary-economics-for-startups/&quot;&gt;deflationary&lt;/a&gt;, shrinking the overall revenue of an industry. They also tend to have network effects (and &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;complementary network effects&lt;/a&gt;), making them more defensible and therefore higher margin than non tech businesses. Given this, why do companies continue seeking revenue at the expense of margins? Fred made this same point in his original post, but people didn’t seem to listen.&lt;/p&gt;
&lt;p&gt;[1] Companies (like all cash generating assets) are ultimately valued at a multiple of present and projected future profits. The historical average P/E ratio of the DJIA is about 15, meaning that (on average) if a company is generating $100M in profit, it is valued at $1.5B (Fred prefers to use a 10 multiple, perhaps to be conservative?). One way to understand this is to imagine that companies dividend out all their profits every year. If you bought something for $1.5B and it dividended out $100M every year, that would be a 6.6% annual return.&lt;/p&gt;
&lt;p&gt;[2] Why are these high-priced financings reasonable? From the company’s perspective: your traffic is growing so fast you need to invest millions of dollars in infrastructure. Meanwhile copycats are popping up in other countries. You don’t know if the financial markets will suddenly dry up. Someone offers you, say, $50M for minimal dilution. Seems like a reasonable hedge. From the investor’s perspective: the history of venture capital shows that almost all the returns are generated from big hits like Amazon, eBay, Facebook and Google. (As Paul Graham once put it: “The difference between a bad VC fund and a great VC fund is one big hit”).&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Maximizing capacity utilization as a startup premise]]></title><description><![CDATA[In stark contrast to other major airlines, Southwest has been profitable for 40 years. If Southwest had one core “startup premise” it was…]]></description><link>https://cdixon.org/2012/01/05/maximizing-capacity-utilization-as-a-startup-premise</link><guid isPermaLink="false">https://cdixon.org/2012/01/05/maximizing-capacity-utilization-as-a-startup-premise</guid><pubDate>Thu, 05 Jan 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In stark contrast to other major airlines, Southwest has been profitable for 40 years. If Southwest had one core “startup premise” it was this: for every second the planes sat on the ground, their airplanes and people were costing them money but not generating revenue. So Southwest designed an airline from the ground up that maximized &lt;a href=&quot;http://www.businessdictionary.com/definition/capacity-utilization.html&quot;&gt;capacity utilization&lt;/a&gt;. They avoided the hub-and-spoke system that led to cascading delays. They removed meals to reduce ground crew times, along with assigned seating so passengers would hurry onto the plane to get good seats. They used only one aircraft type to reduce maintenance times.&lt;/p&gt;
&lt;p&gt;Some of the most interesting startups today are founded on the same premise of maximizing capacity utilization. Being information technology startups, their method for doing so is generally by matching demand for capacity with supply of un-utilized capacity. AirBnB lets people rent out unused space, increasing the utilization of their homes. Uber lets drivers rent out their unused time, increasing the utilization of their cars and labor. Services like TaskRabbit are trying let people fully utilize their “labor capacity”. Over time, services that increase capacity utilization tend to drive prices down (even if, at first, they sometimes have higher prices).&lt;/p&gt;
&lt;p&gt;Whenever Southwest would begin servicing a new city, it drove prices down so dramatically that economists began referring to it as the “&lt;a href=&quot;http://en.wikipedia.org/wiki/The_Southwest_Effect&quot;&gt;Southwest Effect&lt;/a&gt;“. One particularly remarkable aspect of the Southwest Effect: when Southwest began servicing a city, it would stimulate new business activity – and thus air travel – to such an extent that even Southwest’s less efficient competitors ended up benefiting.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Building products from improvised user behaviors]]></title><description><![CDATA[For a long time, there were niche communities of “lo-fi” camera enthusiasts: people who shared photos taken on old cameras that had…]]></description><link>https://cdixon.org/2012/01/02/building-products-from-improvised-user-behaviors</link><guid isPermaLink="false">https://cdixon.org/2012/01/02/building-products-from-improvised-user-behaviors</guid><pubDate>Mon, 02 Jan 2012 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;For a long time, there were niche communities of &lt;a href=&quot;http://www.flickr.com/groups/tlfcc/&quot;&gt;“lo-fi” camera&lt;/a&gt; enthusiasts: people who shared photos taken on old cameras that had interesting ways of filtering shots. The iPhone app &lt;a href=&quot;http://en.wikipedia.org/wiki/Hipstamatic&quot;&gt;Hipstamatic&lt;/a&gt; popularized lo-fi filters, selling over 1M copies. Because Hipstamatic lacked sharing features, many users took pictures with Hipstamatic and then shared them using other apps. Then came Instagram, which combined lo-fi filters and easy sharing. Instagram has been downloaded 15M times and has apparently crossed over to mainstream users.&lt;/p&gt;
&lt;p&gt;Instagram built a product devoted to a &lt;a href=&quot;http://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform/&quot;&gt;job&lt;/a&gt; that users were previously performing improvisationally using multiple products. This is a common pattern for popular software and services. Before Twitter, people shared interesting links through email or “link round-up” blog posts. Tumblr’s short-form blogging/re-blogging was inspired by an “unintended” use of long-form blogging platforms like WordPress. Before Foursquare, power socializers sent out mass text messages with their locations (in fact, Foursquare’s predecessor Dodgeball did exactly that).&lt;/p&gt;
&lt;p&gt;New startup ideas are all around you, in the improvised behaviors of people you know. It takes a keen product eye, however, to notice these improvisational behaviors and recognize which ones are worthy of being developed into standalone products.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Recruiting programmers to your startup]]></title><description><![CDATA[Here are some things I’ve learned over the years about recruiting programmers* to startups. This is a big topic: many of the points I make…]]></description><link>https://cdixon.org/2011/12/29/recruiting-programmers-to-your-startup</link><guid isPermaLink="false">https://cdixon.org/2011/12/29/recruiting-programmers-to-your-startup</guid><pubDate>Thu, 29 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Here are some things I’ve learned over the years about recruiting programmers* to startups. This is a big topic: many of the points I make briefly here could warrant their own blog posts, and I’m sure I’ve omitted a lot.&lt;/p&gt;
&lt;p&gt;- The most important thing to understand is what motivates programmers. This is where having been a programmer yourself can be very helpful. In my experience programmers care about 1) working on interesting technical problems, 2) working with other talented people, 3) working in a friendly, creative environment, 4) working on software that ends up getting used by lots of people. Like everyone, compensation matters, but for programmers it is often a “threshold variable”. They want enough to not have to spend time worrying about money, but once an offer passes their minimum compensation threshold they’ll decide based on other factors.&lt;/p&gt;
&lt;p&gt;- Software development is a creative activity and needs to be treated as such. Sometimes a programmer can have an idea on, say, the subway that can save weeks of work or add some great new functionality. Business people who don’t understand this make the mistake of emphasizing mechanistic metrics like the number of hours in the office and the number of bugs fixed per week. This is demoralizing and counterproductive. Of course if you are running a company you need to have deadlines, but you can do so while also being very flexible about how people reach them.&lt;/p&gt;
&lt;p&gt;It is sometimes helpful to think of recruiting as 3 phases: finding candidates, screening candidates, and convincing candidates to join you.&lt;/p&gt;
&lt;p&gt;- Finding means making contact with good candidates. There are no shortcuts here. You need to &lt;a href=&quot;http://cdixon.org/2011/04/13/showing-up/&quot;&gt;show up&lt;/a&gt; to schools, hackathons, meetups – wherever great programmers hang out. If your existing employees love their jobs they will refer friends. Try to generate inbound contacts by creating buzz around your company. If you have trouble doing that (it’s hard), try simple things like blogging about topics that are interesting to programmers.&lt;/p&gt;
&lt;p&gt;- Screening. Great programmers love to program and will have created lots of software that wasn’t for their jobs or school homework. Have candidates meet and (bidirectionally) interview everyone they’ll potentially be working with. If the candidate has enough free time try to do a trial project. There are also more procedural things that can be useful like code tests (although they need to be done in a respectful way and they are more about getting to know how each side thinks than actually testing whether the candidate knows how to program (hopefully you know that by this stage)).&lt;/p&gt;
&lt;p&gt;- Convincing them to join you. This is the hardest part. Great programmers have tons of options, including cofounding their own company. The top thing you need to do is convince them what you hopefully already believe (and have been pitching investors, press etc): that your company is doing something important and impactful. The next thing you need to do is convince them that your company is one that values and takes care of employees. The best way to do this is to have a track record of treating people well and offer those past employees as references.&lt;/p&gt;
&lt;p&gt;A few things not to do: you will never beat, say, Google on perks or job security so don’t even bother to pitch those. You’ll never beat Wall Street banks or rich big companies on cash salary so don’t pitch that either. You’ll never beat cofounding a company on the equity grant, but you can make a good case that, with the right equity grant, the risk/reward trade off of less equity with you is worth it.&lt;/p&gt;
&lt;p&gt;Finally, I’ve &lt;a href=&quot;http://cdixon.org/2009/08/25/the-worst-time-to-join-a-startup-is-right-after-it-gets-initial-vc-financing/&quot;&gt;long believed&lt;/a&gt; that early-stage, funded startups systematically under-grant equity to employees. Programmers shouldn’t have to choose between owning a fraction of a percent of an early-stage funded company and owning 50% of an unfunded company they’ve cofounded. Naval Ravikant recently wrote a great &lt;a href=&quot;http://startupboy.com/2011/12/13/why-you-cant-hire/&quot;&gt;post&lt;/a&gt; about this:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Post-traction companies can use the old numbers – you can’t. Your first two engineers? They’re just late founders. Treat them as such. Expect as much.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Making those first engineers “late cofounders” will dramatically increase your chances of recruiting great people. This is a necessary (but not sufficient) condition for getting the recruiting flywheel spinning where great people beget more great people.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;* As someone who personally programmed for 20 years including about 10 years professionally, I preferred to call myself a “programmer.” Some people prefer other words like “hacker” “developer”, “engineer” etc. I think the difference is just uninteresting nomenclature but others seem to disagree.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What jobs are users hiring your product to perform?]]></title><description><![CDATA[One of Clay Christensen’s favorite concepts is that instead of dividing your customers into segments and asking which features each segment…]]></description><link>https://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform</link><guid isPermaLink="false">https://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform</guid><pubDate>Wed, 21 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of &lt;a href=&quot;http://en.wikipedia.org/wiki/Clayton_M._Christensen&quot;&gt;Clay Christensen’s&lt;/a&gt; favorite concepts is that instead of dividing your customers into segments and asking which features each segment would like, you should think about what “job” the customers are “hiring” you product to perform. &lt;a href=&quot;http://hbswk.hbs.edu/item/6496.html&quot;&gt;Here&lt;/a&gt; is an example:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;A fast-food restaurant chain wanted to improve its milkshake sales. The company started by segmenting its market both by product (milkshakes) and by demographics (a marketer’s profile of a typical milkshake drinker). Next, the marketing department asked people who fit the demographic to list the characteristics of an ideal milkshake (thick, thin, chunky, smooth, fruity, chocolaty, etc.). The would-be customers answered as honestly as they could, and the company responded to the feedback. But alas, milkshake sales did not improve.&lt;/p&gt;
&lt;p&gt;The company then enlisted the help of one of Christensen’s fellow researchers, who approached the situation by trying to deduce the “job” that customers were “hiring” a milkshake to do. First, he spent a full day in one of the chain’s restaurants, carefully documenting who was buying milkshakes, when they bought them, and whether they drank them on the premises. He discovered that 40 percent of the milkshakes were purchased first thing in the morning, by commuters who ordered them to go.&lt;/p&gt;
&lt;p&gt;The next morning, he returned to the restaurant and interviewed customers who left with milkshake in hand, asking them what job they had hired the milkshake to do. “Most of them, it turned out, bought [the milkshake] to do a similar job,” he writes. “They faced a long, boring commute and needed something to keep that extra hand busy and to make the commute more interesting. They weren’t yet hungry, but knew that they’d be hungry by 10 a.m.; they wanted to consume something now that would stave off hunger until noon. And they faced constraints: They were in a hurry, they were wearing work clothes, and they had (at most) one free hand.”&lt;/p&gt;
&lt;p&gt;The milkshake was hired in lieu of a bagel or doughnut because it was relatively tidy and appetite-quenching, and because trying to suck a thick liquid through a thin straw gave customers something to do with their boring commute. Understanding the job to be done, the company could then respond by creating a morning milkshake that was even thicker (to last through a long commute) and more interesting (with chunks of fruit) than its predecessor. The chain could also respond to a separate job that customers needed milkshakes to do: serve as a special treat for young children—without making the parents wait a half hour as the children tried to work the milkshake through a straw. In that case, a different, thinner milkshake was in order.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;There are at least three obvious ways to apply this concept: 1) when searching for startup ideas, think about jobs people want done that they can’t currently get done, 2) when thinking about how to fix or improve your product, understand why existing users are hiring your product (or should be hiring your product) and try to improve those experiences, 3) when analyzing markets, segment companies by the jobs they are hired for. Sometimes products that might appear similar (e.g. two photo sharing apps) are actually hired for very different purposes, and are therefore misclassified as competitors.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Trusting platforms]]></title><description><![CDATA[In response to my post yesterday about how an internet of people has enabled a new wave of web-based marketplaces, Nick Mango commented…]]></description><link>https://cdixon.org/2011/12/20/trusting-platforms</link><guid isPermaLink="false">https://cdixon.org/2011/12/20/trusting-platforms</guid><pubDate>Tue, 20 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In response to my post yesterday about how an &lt;a href=&quot;http://cdixon.org/2011/12/19/an-internet-of-people/&quot;&gt;internet of people&lt;/a&gt; has enabled a new wave of web-based marketplaces, &lt;a href=&quot;http://twitter.com/#!/Alternate1985&quot;&gt;Nick Mango&lt;/a&gt; commented:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There’s actually 2 levels of trust here. The first is knowing and trusting the person you’re buying from. And if you don’t know who they are, then you must move on to the second level of trust, which is do you know and trust the platform the person is using.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The ability to have “second order trust” is one of many reasons the internet has made so many institutions obsolete. Take the SEC’s role in policing private companies that market themselves to potential investors. This was sensible consumer protection back when the government was arguably the only organization that had the means and incentives to identify fraudulent investment schemes. But today we have many examples of websites that’ve built mechanisms for reliably tracking the reputations of individuals and organizations. This means the SEC could – in theory – make the unit of regulation platforms instead of investors and startups (something the &lt;a href=&quot;http://venturebeat.com/2011/11/08/faq-what-the-new-u-s-crowdfunding-bill-means-for-entrepreneurs/&quot;&gt;crowdfunding bill&lt;/a&gt; being considered by Congress seems to do at least in part), which in turn could unleash a new wave of innovation among crowdfunding platforms and crowdfunded startups.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[An internet of people]]></title><description><![CDATA[Over the past few years, a bunch of web-based marketplaces have gotten popular – Etsy, Kickstarter, AirBnb, to name a few. Many of these…]]></description><link>https://cdixon.org/2011/12/19/an-internet-of-people</link><guid isPermaLink="false">https://cdixon.org/2011/12/19/an-internet-of-people</guid><pubDate>Mon, 19 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Over the past few years, a bunch of web-based marketplaces have gotten popular – Etsy, Kickstarter, AirBnb, to name a few. Many of these business ideas had been tried before but are succeeding only now.&lt;/p&gt;
&lt;p&gt;When a trend like this emerges, it’s always interesting to ask “&lt;a href=&quot;http://cdixon.org/2010/11/07/timing-your-startup/&quot;&gt;why now&lt;/a&gt;?” For example, for almost a decade, entrepreneurs tried to create video sharing services like YouTube, but only succeeded when certain key dependencies – broadband, digital video cameras, a version of Flash that “just worked” – became widespread.&lt;/p&gt;
&lt;p&gt;I asked &lt;a href=&quot;http://roelofbotha.tumblr.com/&quot;&gt;Roelof Botha&lt;/a&gt; the “why now” question regarding web-based marketplaces. He said something I thought was really interesting: marketplaces depend on trust, and trust requires knowing the reputation of a prospective counterparty. Today, for the first time, you can get background information on almost any prospective counterparty by searching Google, Facebook etc. Or put more simply: we finally have an internet of people.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Forces that affect whether a large company will buy your product (according to Marc Andreessen)]]></title><description><![CDATA[From Marc Andreessen’s “Moby Dick Theory of Big Companies“: You can count on there being a whole host of impinging forces that will affect…]]></description><link>https://cdixon.org/2011/12/14/forces-that-affect-whether-a-large-company-will-buy-your-product-according-to-marc-andreessen</link><guid isPermaLink="false">https://cdixon.org/2011/12/14/forces-that-affect-whether-a-large-company-will-buy-your-product-according-to-marc-andreessen</guid><pubDate>Wed, 14 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;From Marc Andreessen’s “&lt;a href=&quot;http://pmarca-archive.posterous.com/the-pmarca-guide-to-startups-part-5-the-moby&quot;&gt;Moby Dick Theory of Big Companies&lt;/a&gt;“:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;You can count on there being a whole host of impinging forces that will affect the dynamic of decision-making on any issue at a big company.&lt;/p&gt;
&lt;p&gt;The consensus building process, trade-offs, quids pro quo, politics, rivalries, arguments, mentorships, revenge for past wrongs, turf-building, engineering groups, product managers, product marketers, sales, corporate marketing, finance, HR, legal, channels, business development, the strategy team, the international divisions, investors, Wall Street analysts, industry analysts, good press, bad press, press articles being written that you don’t know about, customers, prospects, lost sales, prospects on the fence, partners, this quarter’s sales numbers, this quarter’s margins, the bond rating, the planning meeting that happened last week, the planning meeting that got cancelled this week, bonus programs, people joining the company, people leaving the company, people getting fired by the company, people getting promoted, people getting sidelined, people getting demoted, who’s sleeping with whom, which dinner party the CEO went to last night, the guy who prepares the Powerpoint presentation for the staff meeting accidentally putting your startup’s name in too small a font to be read from the back of the conference room…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Man, I wish Marc still blogged.  (ht &lt;a href=&quot;http://cdixon.org/2011/11/28/business-development-the-goldilocks-principle/#comment-375385575&quot;&gt;saul lieberman&lt;/a&gt;)&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Later-stage rounds and “setting the bar too high”]]></title><description><![CDATA[I recently had a number of conversations with CEOs of later-stage startups (generating significant revenue) that went something like this…]]></description><link>https://cdixon.org/2011/12/13/later-stage-rounds-and-setting-the-bar-too-high</link><guid isPermaLink="false">https://cdixon.org/2011/12/13/later-stage-rounds-and-setting-the-bar-too-high</guid><pubDate>Tue, 13 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I recently had a number of conversations with CEOs of later-stage startups (generating significant revenue) that went something like this. They want to raise more money, and VCs are offering them money at a high valuation. The CEO is worried that taking money at that valuation will “set the bar too high” and make it difficult to sell the company – if the time comes when he/she thinks it makes sense to sell – at a price that isn’t a significant multiple of that valuation.&lt;/p&gt;
&lt;p&gt;These CEOs are worrying too much. VCs know what they are doing and almost always invest with a financial instrument – preferred shares – that protects them even when the valuation is very high. **Preferred shares behave like a stock on the upside and a bond on the downside.  **The only way investors actually lose money is if the company is sold for less than the amount of money raised (which is generally significantly lower than the valuation).&lt;/p&gt;
&lt;p&gt;Here is what the payout function looks like for common stock (for example, what you get when you buy stocks in public markets):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-12-13-at-1-39-17-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 392px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 74.23469387755102%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 12 13 at 1 39 17 pm&quot;
        title=&quot;Screen shot 2011-12-13 at 1.39.17 PM&quot;
        src=&quot;/static/aa98d4f29458f83ba6762ca34901d51d/2f47c/screen-shot-2011-12-13-at-1-39-17-pm.png&quot;
        srcset=&quot;/static/aa98d4f29458f83ba6762ca34901d51d/924ad/screen-shot-2011-12-13-at-1-39-17-pm.png 170w,
/static/aa98d4f29458f83ba6762ca34901d51d/f570f/screen-shot-2011-12-13-at-1-39-17-pm.png 341w,
/static/aa98d4f29458f83ba6762ca34901d51d/2f47c/screen-shot-2011-12-13-at-1-39-17-pm.png 392w&quot;
        sizes=&quot;(max-width: 392px) 100vw, 392px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-12-13 at 1.39.17 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;And here is what the payout function looks like for preferred shares:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-12-13-at-1-39-25-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 410px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 67.8048780487805%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 12 13 at 1 39 25 pm&quot;
        title=&quot;Screen shot 2011-12-13 at 1.39.25 PM&quot;
        src=&quot;/static/2d7ec38c20eddf2b18f63fdcb729faf4/9fff5/screen-shot-2011-12-13-at-1-39-25-pm.png&quot;
        srcset=&quot;/static/2d7ec38c20eddf2b18f63fdcb729faf4/924ad/screen-shot-2011-12-13-at-1-39-25-pm.png 170w,
/static/2d7ec38c20eddf2b18f63fdcb729faf4/f570f/screen-shot-2011-12-13-at-1-39-25-pm.png 341w,
/static/2d7ec38c20eddf2b18f63fdcb729faf4/9fff5/screen-shot-2011-12-13-at-1-39-25-pm.png 410w&quot;
        sizes=&quot;(max-width: 410px) 100vw, 410px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-12-13 at 1.39.25 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;So, to take a concrete example, Dropbox &lt;a href=&quot;http://articles.businessinsider.com/2011-08-30/tech/30056381_1_investors-term-sheets-rumors&quot;&gt;reportedly&lt;/a&gt; raised their last financing at a $4B valuation*. If you think of this as a public market valuation of common stock, you might think this means the VCs are betting $4B is the “fair value” of the company, and will lose money if Dropbox’s exit price ends up being less than $4B.  But in reality, assuming the standard preferred structure, the last round investors’ payout is as follows :&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;em&gt;Scenario 1&lt;/em&gt;: Dropbox exits for greater than $4B ==&gt; investors get a positive return (specifically, exit price divided by $4B)&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Scenario 2:&lt;/em&gt; Dropbox exits for between $257M (&lt;a href=&quot;http://www.crunchbase.com/company/dropbox&quot;&gt;total money raised&lt;/a&gt;) and $4B ==&gt; investors get their money back (possibly more if there is a preferred dividend)&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Scenario 3&lt;/em&gt;: Dropbox exits for less than $257M ==&gt; investors lose money&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;If reports are true that Dropbox is profitable and generating &gt;$100M in revenue, then scenario 3 – the money losing scenario – is extremely unlikely.&lt;/p&gt;
&lt;p&gt;Will investors be thrilled with scenario 2?  No, but they are pros who understand the risks they are taking.&lt;/p&gt;
&lt;p&gt;Going back to the entrepreneur’s perspective, in what sense is a high valuation “setting the bar high”?  In the preferred share payout model, there are two “bars”:  money raised and valuation.  I don’t see any reason why entrepreneurs shouldn’t be as aggressive as possible on valuation, especially if they are confident they won’t end up in scenario 3.&lt;/p&gt;
&lt;p&gt;An important point to keep in mind is that, in order to maintain flexibility, entrepreneurs shouldn’t give new investors the ability to block an exit or new financings. Investors can get this block in one of two ways – explicit blocking rights (under the “control provisions” section of a VC term sheet) or by controlling the board of directors. These are negotiable terms and startups with momentum should be very careful about giving them away.&lt;/p&gt;
&lt;p&gt;* Note that I have no connection to Dropbox so am just assuming standard deal structure and basing numbers on public reports. I am making various simplifying assumptions such as not distinguishing between pre-money and post-money valuation.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Three types of acquisitions]]></title><description><![CDATA[There are three types of technology acquisitions: - Talent. When the acquirer just wants the team (generally just engineers and sometimes…]]></description><link>https://cdixon.org/2011/12/10/three-types-of-acquisitions</link><guid isPermaLink="false">https://cdixon.org/2011/12/10/three-types-of-acquisitions</guid><pubDate>Sat, 10 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There are three types of technology acquisitions:&lt;/p&gt;
&lt;p&gt;- Talent. When the acquirer just wants the team (generally just engineers and sometimes designers). As a rule of thumb, these acquisitions are priced at approximately $1M/engineer.&lt;/p&gt;
&lt;p&gt;- Tech: When the acquirer wants the technology along with the team. Generally the prices for these acquisitions are significantly higher than talent acquisitions. Sometimes they are even in the hundreds of millions of dollars for fairly small teams (e.g. Siri). The calculation the acquirer uses to price tech acquisitions is usually “buy vs build”. An important component in this calculation is not just the actual cost to build the technology but the opportunity cost of the time it would take them to do so.&lt;/p&gt;
&lt;p&gt;- Business: When the company is either bought on a financial basis (the acquisition is “accretive”) or bought based on non-financial but highly defensible assets (Google buying YouTube which had minimal revenue at the time but a huge network of producers and consumers of video).&lt;/p&gt;
&lt;p&gt;As large companies mature they move from doing just talent acquisitions to doing talent and tech acquisitions to eventually doing all three types of acquisitions. Usually it takes a startup beating the large company in an important area for the large company to realize the necessity of business acquisitions. For example, Google seemed to dramatically change its attitude when YouTube crushed Google Video. Eventually every large company has a moment like this.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Technology and job creation]]></title><description><![CDATA[In response to my recent post “Making industries ‘garage ready’ for startups“, venture capitalist Jordan Elpern-Waxman made an interesting…]]></description><link>https://cdixon.org/2011/12/08/technology-and-job-creation</link><guid isPermaLink="false">https://cdixon.org/2011/12/08/technology-and-job-creation</guid><pubDate>Thu, 08 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In response to my recent post “&lt;a href=&quot;http://cdixon.org/2011/12/06/making-industries-garage-ready-for-startups/&quot;&gt;Making industries ‘garage ready’ for startups&lt;/a&gt;“, venture capitalist &lt;a href=&quot;http://about.me/jelpern&quot;&gt;Jordan Elpern-Waxman&lt;/a&gt; made an interesting comment:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;If I understand correctly, “garage-ready” essentially means separating design from manufacturing, i.e. “creativity-intensive” processes from capital-intensive ones. This may be an inevitable result of industry maturation and specialization, but there is a downside to it, at least for the so called “developed” nations. The result of differential costs for commodity labor, the fungibility and liquidity of capital, and the ease of transmitting both human and machine-readable information across arbitrary distances, means that capital-intensive processes – i.e. making things – migrate to locations with lower total cost of operations (which, Germany excepted, tend to be locations with lower labor costs). Another way of saying this is that nothing is fabless; the foundry is merely outsourced and moved to a cheaper location. This reality is great for the creative class and for the lower cost locations, but it’s less happy for the residents of the higher class locations that are not so lucky to be part of the creative class.&lt;/p&gt;
&lt;p&gt;I’m not ready to draw the conclusion that this is the cause of the economic inequality in the US and malaise across Europe and Japan, but there definitely appears to be some correlation. Again, I don’t know if these results of the “garagification” of an industry can be reversed or mitigated in the name of societal stability, but if anyone can find a way to do it it would be the creative class. Unfortunately, because techies and entrepreneurs are solidly part of the creative class and perhaps even *the* primary beneficiaries of the separation of design and manufacturing, we generally avoid acknowledging or discussing the negative aspects of this trend.&lt;/p&gt;
&lt;p&gt;Note that I said “reversed or mitigated.” Trying to reverse or stop these trends is probably a quixotic goal, but perhaps mitigation is in fact possible. For example, is it possible to create a country in which the entire labor force is “creative”? I myself have trouble seeing how such a possibility could be made real, but I’d like to see more intellectuals and entrepreneurs spend some brainpower on the question.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It is true that new technologies often lead, in the short term, to lower wages and fewer jobs. &lt;a href=&quot;http://craigslist.com&quot;&gt;Craigslist&lt;/a&gt;, for example, has about &lt;a href=&quot;http://www.craigslist.org/about/factsheet&quot;&gt;30 employees&lt;/a&gt; yet, by replacing the classified ad industry, eliminated many thousands of jobs (local newspaper reporters, classified ad salespeople, etc). The same could be said for almost every popular website.&lt;/p&gt;
&lt;p&gt;On the flip side, new technologies have driven down prices (Walmart and Amazon), led to massive increases in information productivity (Google and Wikipedia), and created new income sources (eBay and Craigslist). Greater productivity and lower prices at least partly compensate for part-time jobs and lower wages.&lt;/p&gt;
&lt;p&gt;Jordan is right that these are questions we – the technology community – should spend more time discussing.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Growth curves of startups]]></title><description><![CDATA[Pick whatever metric you want for gauging the success of a particular startup: profits, revenues, pageviews, etc. A graph I’d love to see is…]]></description><link>https://cdixon.org/2011/12/07/growth-curves-of-startups</link><guid isPermaLink="false">https://cdixon.org/2011/12/07/growth-curves-of-startups</guid><pubDate>Wed, 07 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Pick whatever metric you want for gauging the success of a particular startup: profits, revenues, pageviews, etc. A graph I’d love to see is those metrics, graphed over time, for a wide variety of startups. From my experience, you’d be surprised how often those graphs show sudden growth. Something happens in the world (an “exogenous shock”) and the startup suddenly takes off.&lt;/p&gt;
&lt;p&gt;I remember first observing this when I worked at &lt;a href=&quot;http://bvp.com/&quot;&gt;Bessemer&lt;/a&gt;. For example, there was a startup that supplied services to video websites. For years, the company soldiered along, barely growing. Then, suddenly, YouTube blew up and this company took off along with it.&lt;/p&gt;
&lt;p&gt;As a founder, these exogenous shocks are out of your control, but you can 1) understand what exogenous shocks you depend on, 2) try to guess when those shocks will hit, 3) manage your runway so you survive long enough for them to hit.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Always have 18 months of cash in the bank]]></title><description><![CDATA[I was once told by an experienced entrepreneur (I can’t remember who) to always have at least 18 months of cash in the bank. The logic…]]></description><link>https://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank</link><guid isPermaLink="false">https://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank</guid><pubDate>Tue, 06 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I was once told by an experienced entrepreneur (I can’t remember who) to always have at least 18 months of cash in the bank. The logic behind this is: 1) as a rule of thumb it takes 3 months to raise money, 2) building/marketing/selling technology always takes longer than you think.  Subtracting 3 months for fundraising and 3 months for things taking longer than expected, this gives you 12 months to execute your plan. (Also you never want to raise money “with your back against the wall” – when you are near the end of your runway.)&lt;/p&gt;
&lt;p&gt;More adventurous entrepreneurs might argue 18 months is too conservative. It’s true that following the 18 month rule can be extra dilutive. At SiteAdvisor, we raised our Series A about three months before we were acquired. So we gave up equity for cash that we never spent. But in retrospect, given what we knew at the time, I think it was the right decision.&lt;/p&gt;
&lt;p&gt;The question of when to raise money is one of the few times that entrepreneurs and early-stage investors have somewhat divergent economic interests. If you control a large investment fund, you always have the option to extend a company’s runway. The entrepreneur doesn’t have this option. I’ve even heard some entrepreneurs whisper about Machiavellian VCs who deliberately try to get you to the end of your runway so they can negotiate harder. I think this is a bit of a conspiracy theory. Almost all VCs I know care primarily about the success of their companies and not about extracting every last point of equity.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Making industries “garage ready” for startups]]></title><description><![CDATA[One of the most important events in the history of modern computing was the advent of “fabless” (“fabrication-less”) semiconductor companies…]]></description><link>https://cdixon.org/2011/12/05/making-industries-garage-ready-for-startups</link><guid isPermaLink="false">https://cdixon.org/2011/12/05/making-industries-garage-ready-for-startups</guid><pubDate>Mon, 05 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the most important events in the history of modern computing was the advent of &lt;a href=&quot;http://en.wikipedia.org/wiki/Fabless_semiconductor_company&quot;&gt;“fabless”&lt;/a&gt; (“fabrication-less”) semiconductor companies.  The &lt;a href=&quot;http://cb.hbsp.harvard.edu/cb/product/609001-PDF-ENG&quot;&gt;story&lt;/a&gt; of fabless semis is similar to the recent history of internet startups: various forces led to an order-of-magnitude reduction of startup costs, which then led to a surge of innovation.&lt;/p&gt;
&lt;p&gt;Before the 1980s, if you wanted to invent a new semiconductor, you had to both design and manufacture it. This meant you had to build a large manufacturing plant, something only large companies like Intel, Motorola, and IBM could afford. Hence, semiconductor design was generally too expensive for venture-backed startups.&lt;/p&gt;
&lt;p&gt;In the 1979, two computer scientists published a &lt;a href=&quot;http://www.amazon.com/Introduction-VLSI-Systems-Carver-Mead/dp/0201043580&quot;&gt;seminal book&lt;/a&gt; that argued for the separation semiconductor design and manufacturing. Followed by years of investment by DARPA and others, an industry emerged where chip designers used software (“&lt;a href=&quot;http://en.wikipedia.org/wiki/Electronic_design_automation&quot;&gt;EDA&lt;/a&gt; software”) to design and test semiconductors, and then sent standardized specifications to “foundries” that did the manufacturing (most of which were located in Taiwan – the largest in the world to this day is &lt;a href=&quot;http://en.wikipedia.org/wiki/TSMC&quot;&gt;Taiwan Semiconductor Manufacturing Company&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;This dramatically lowered the cost of starting semiconductor design shops, and in turn led to a massive wave of startup innovation. These startups designed chips for cell phones (Qualcomm), Wifi (Atheros), computer graphics (Nvidia), and much more.  Most were funded by venture capitalists and located in Silicon Valley.&lt;/p&gt;
&lt;p&gt;Tech sectors tend to get really creative when they become “garage ready”:  a Steve Jobs and Steve Wozniak, or a Larry Page and Sergey Brin, can, with very little capital, change the world. It happened with semis in the 80s and happened in the 90s and 2000s for internet companies.&lt;/p&gt;
&lt;p&gt;Eventually every vertically integrated, capital-intensive sector becomes garage ready. Someday, for example, we will have “fabless” gadget design and biotech research, enabling a small shop in Brooklyn or SoMa to create an iPhone killer or next-generation cancer drug.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why is enterprise tech so far behind consumer tech? Because it can be.]]></title><description><![CDATA[Brian Manning put it nicely in a comment to my post yesterday about enterprise software: In my opinion, enterprise technology is WAY behind…]]></description><link>https://cdixon.org/2011/12/04/why-is-enterprise-tech-so-far-behind-consumer-tech-because-it-can-be</link><guid isPermaLink="false">https://cdixon.org/2011/12/04/why-is-enterprise-tech-so-far-behind-consumer-tech-because-it-can-be</guid><pubDate>Sun, 04 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;a href=&quot;http://scalable.typepad.com/&quot;&gt;Brian Manning&lt;/a&gt; put it nicely in a &lt;a href=&quot;http://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users/#comment-378654383&quot;&gt;comment&lt;/a&gt; to my post yesterday about enterprise software:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In my opinion, enterprise technology is WAY behind consumer technology for one reason: because it can be.&lt;/p&gt;
&lt;p&gt;In a [B2B] transaction, one good salesperson (the “seller”) only has to sell one person (the “buyer”) on the value of the technology. Once the product is sold, the buyer forces their 50,000 employees to use that technology whether they like it or not. A good salesperson with a good deck can do this fairly reliably.&lt;/p&gt;
&lt;p&gt;And a good account manager can typically retain the client for a while; employees usually get used to the product and rarely complain enough for the buyer to cancel the contract and force the seller to improve the product. As a result, an enterprise product can suck and still flourish.&lt;/p&gt;
&lt;p&gt;With a B2C product, this is much, much more difficult. The seller has to sell 50,000 individual “users”, one by one, on the value of the product without the luxury of a face to face meeting or 18 holes on the golf course. The B2C model forces the seller’s product to “sell itself”. As a result, a consumer product can’t suck if it wants to flourish. It has be good. Much better than the enterprise product needs to be.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Fortunately, as I discussed &lt;a href=&quot;http://cdixon.org/2011/12/04/the-enterprise-buyers-versus-users/&quot;&gt;yesterday&lt;/a&gt;, trends like cloud-based delivery (aka SaaS) are starting to align the interests of enterprise users and buyers.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The enterprise: buyers versus users]]></title><description><![CDATA[Why does most enterprise technology feel like it is a decade behind consumer technology? For the same reason our health care system is…]]></description><link>https://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users</link><guid isPermaLink="false">https://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users</guid><pubDate>Sat, 03 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Why does most enterprise technology feel like it is a decade behind consumer technology? For the same reason our health care system is broken. The “user” isn’t the same person as the “buyer”. In enterprise software the user is generally a non-IT person but the buyer is usually, at least in part, the IT department.* (In healthcare the “user” is the patient and the “buyer” is the doctor or insurance company).&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;https://news.ycombinator.com/item?id=3308398&quot;&gt;SAP bought SuccessFactors&lt;/a&gt; today, in a big win for “cloud” based enterprise software. The cloud might sound like a buzzword but is in fact a vastly superior architecture, not because it makes installation and updates easier (although that’s good too), but because it starts to remove IT from the purchasing process, meaning the user and the buyer are, increasingly, the same person.&lt;/p&gt;
&lt;p&gt;* A corollary to this is that IT-related enterprise software, i.e. infrastructure, is generally pretty good.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[“Otherwise do something else”]]></title><description><![CDATA[I remember back when I started my first company, a friend said to me “get ready to have a knot in your stomach and feel nauseous for years…]]></description><link>https://cdixon.org/2011/12/01/otherwise-do-something-else</link><guid isPermaLink="false">https://cdixon.org/2011/12/01/otherwise-do-something-else</guid><pubDate>Thu, 01 Dec 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I remember back when I started my first company, a friend said to me “get ready to have a knot in your stomach and feel nauseous for years.”  I laughed it off then, but it was probably the most accurate advice I’ve ever gotten.&lt;/p&gt;
&lt;p&gt;I haven’t slept well for years. Even now with my last startup sold, I stay up at night thinking about how to change the website, make payroll, raise more money, etc.&lt;/p&gt;
&lt;p&gt;In 1995, I was a graduate student studying philosophy at Columbia.  I was also doing computer programming on the side.  The programming was going well and I was getting some good job offers. I happened to get to have dinner with the philosopher Daniel Dennett, and I asked him what he thought I should do with my career.  He said: “If there is absolutely no way you can imagine being happy except studying philosophy, study philosophy. Otherwise do something else.”&lt;/p&gt;
&lt;p&gt;I’d say the same thing about starting companies.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Business development: the Goldilocks principle]]></title><description><![CDATA[Background: At Hunch, we switched our focus (“pivoted“) about 14 months ago from B2C to B2B. Over that time, we pitched over 500 potential…]]></description><link>https://cdixon.org/2011/11/28/business-development-the-goldilocks-principle</link><guid isPermaLink="false">https://cdixon.org/2011/11/28/business-development-the-goldilocks-principle</guid><pubDate>Mon, 28 Nov 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;em&gt;Background: At Hunch, we switched our focus (“&lt;a href=&quot;http://cdixon.org/2010/06/15/pivoting/&quot;&gt;pivoted&lt;/a&gt;“) about 14 months ago from B2C to B2B. Over that time, we pitched over 500 potential partners, trying to get them to use and eventually pay for our recommendation services. This process had its ups and downs, but eventually ended well when – after 8 months of grueling diligence – eBay decided to &lt;a href=&quot;http://blog.hunch.com/?p=56124&quot;&gt;acquire&lt;/a&gt; Hunch in what I expect will be a successful outcome for both companies. During this time, I got a crash course in B2B sales/business development. Here is the first in a series of blog posts based on what I learned.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Somewhat counterintuitively, the biggest problem we encountered when pitching Hunch technology to potential partners wasn’t that it &lt;em&gt;wasn’t&lt;/em&gt; interesting or useful to them, but that it was so interesting and useful that they considered it “strategic” or “core” and thus felt they needed to own and not rent it. The situation reminded me of the “&lt;a href=&quot;http://en.wikipedia.org/wiki/Goldilocks_principle&quot;&gt;Goldilocks principle&lt;/a&gt;” sometimes referred to in scientific contexts:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The &lt;strong&gt;Goldilocks principle&lt;/strong&gt; states that something must fall within certain margins, as opposed to reaching extremes. It is used, for example, in the &lt;a href=&quot;http://en.wikipedia.org/wiki/Rare_Earth_hypothesis&quot; title=&quot;Rare Earth hypothesis&quot;&gt;Rare Earth hypothesis&lt;/a&gt; to state that a &lt;a href=&quot;http://en.wikipedia.org/wiki/Planet&quot; title=&quot;Planet&quot;&gt;planet&lt;/a&gt; must neither be too far away from, nor too close to the &lt;a href=&quot;http://en.wikipedia.org/wiki/Sun&quot; title=&quot;Sun&quot;&gt;sun&lt;/a&gt; to support life.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Basically, if your technology is “too hot” – or, in business-speak, “strategic” or “core” – then there are three likely outcomes:&lt;/p&gt;
&lt;p&gt;1. The potential partner turns you down because they decide to build a similar product themselves. This happened to us a number of times. I think part of the reason was that there was a lot of market buzz around “big data” and machine learning which lead to the perception – rightly or wrongly – that those capabilities needed to be owned and not rented.&lt;/p&gt;
&lt;p&gt;2. The potential partner says yes because your assets are so defensible they can’t replicate them. I’m sure Zynga considers the social graph strategic but at least for now they have no choice but to partner with Facebook to access it. It is very rare for startups to have this kind of leverage, but ones that do are extremely valuable.&lt;/p&gt;
&lt;p&gt;3. The potential partner wants to own what you do, but thinks you have a sufficiently superior team and technology that acquiring you instead of replicating you makes more sense. This is only possible if the partner is large enough to acquire you and has a philosophy consistent with acquiring versus building everything in-house. (A common tech business term is “NIH” which stands for “Not Invented Here”. It refers to a set of companies that consider anything developed outside of their offices technologically inferior).&lt;/p&gt;
&lt;p&gt;At the other extreme, if your technology is “too cold” – perceived as not useful by potential partners – you’re going to have a lot of frustrating meetings.  In this case, it is probably wise to reconsider whether there is actually demand for your product.&lt;/p&gt;
&lt;p&gt;To build a long-term sustainable business, the best place to be is “just right” – useful to lots of partners but not so strategic that they are unwilling to rent it. This is where I wanted Hunch to be but we never got there.  Most companies I know use externally developed products (commercial or open source) for databases, web servers, web analytics, email delivery, payment processors, etc. These are often highly competitive markets but the companies that win in these markets tend to become large and independently sustainable. These “just right” companies – to extend the astronomy analogy – are the planets that support life.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some lessons learned]]></title><description><![CDATA[Note: Google was kind enough to invite me to give a short talk at their Zeitgeist conference earlier this week. It was a really interesting…]]></description><link>https://cdixon.org/2011/09/28/some-lessons-learned</link><guid isPermaLink="false">https://cdixon.org/2011/09/28/some-lessons-learned</guid><pubDate>Wed, 28 Sep 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;em&gt;Note: Google was kind enough to invite me to give a short talk at their Zeitgeist conference earlier this week. It was a really interesting conference and I got a chance to meet a lot of people I admire. For my talk, I decided to use material from some of my blog posts over the years that I thought might appeal to a broader audience. Unfortunately, I was still recovering from a nastly cold/flu so I didn’t deliver the talk as well as I’d like.  Below is the text.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;Today, I wanted to talk about some of the most important lessons I’ve learned over the years from my experiences as an investor and entrepreneur.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;1. If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;My most humbling and educational career experience was when I was starting out in the tech world.  I applied to literally hundreds of jobs:  low-level VC roles, startup jobs, and various positions at big tech companies.  I had an unusual background: I was a philosophy undergrad and a self-taught programmer. I got rejected from every single job I applied to.&lt;/p&gt;
&lt;p&gt;The reason this experience was so useful was that it helped me to develop a thick skin.  I came to realize that employers weren’t really rejecting me as a person or on my potential – they were rejecting a resume.  As the process became depersonalized, I became bolder in my tactics. Eventually, I landed a job that led to my first startup getting funded.&lt;/p&gt;
&lt;p&gt;One of the great things about looking for a job is that your payoff is almost entirely a max function – the best of all outcomes – not an average. This is also generally true for lots of activities startups do: raising money, creating partnerships, hiring, marketing and so on.&lt;/p&gt;
&lt;p&gt;So, every day – to this day – I make it a point of trying something new and ambitious and getting rejected.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;2. Don’t climb the wrong hill&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;I spend a lot of time trying to recruit people to startups, and I’m surprised how often I see smart, ambitious people who get stuck in fields they don’t like because they sense they are making incremental, day-to-day progress.&lt;/p&gt;
&lt;p&gt;I think a good analogy for escaping this trap can be found in computer science, in what are known as hill climbing algorithms. Imagine a landscape with hills of varying heights.  You are dropped randomly somewhere on the landscape. How do you find the highest point?&lt;/p&gt;
&lt;p&gt;The lure of the current hill is strong.  There is a natural human tendency to make the next step an upward one.  People fall for a common trap highlighted by behavioral economists:  they tend to systematically overvalue near term over long term rewards.&lt;/p&gt;
&lt;p&gt;This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.&lt;/p&gt;
&lt;p&gt;The lesson from computer science is: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;3. The next big thing will start out looking like a toy&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;A majority of the top internet companies a decade ago are barely in existence today.  How did this happen?  These companies weren’t complacent – they were run by smart executives who were constantly aware that they could lose their lead.&lt;/p&gt;
&lt;p&gt;The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a toy.  This is one of the main insights of Clay Christensen’s “disruptive technology” theory, which has been widely studied but I think is still rarely applied because it is so counter-intuitive to conventional management practices.&lt;/p&gt;
&lt;p&gt;Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” their users’ needs. The first telephone could only carry voices a mile or two. The leading incumbent of the time, Western Union, chose not to acquire telephone technology because they didn’t see how it could be useful to businesses and railroads – their best customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve. The same was true of how mainframe companies viewed the PC, and how modern telecom companies viewed Skype.&lt;/p&gt;
&lt;p&gt;The list of top internet companies in 10 years will look very different than that same list does today. And the new ones on the list will be companies that snuck by the incumbents because people dismissed them as toys.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;4. Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The Internet has gone through fits and starts – a bubble, a crash, and now a revival.  Pundits are speculating that another crash is coming. Regardless of what happens in the near term, what we do know is that every year we will continue to see more and more industries succumb to the transformational power of the Internet.&lt;/p&gt;
&lt;p&gt;Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV &amp;#x26; movies, real estate, politics &amp;#x26; government. Soon to be transformed: healthcare, education, and energy, among others.&lt;/p&gt;
&lt;p&gt;Thus far the US has led Internet innovation. There are things the US can do to keep this lead, including: exporting the entrepreneurial ethos of Silicon Valley to the rest of the country, and allowing talented people to go where their skills are most needed – for example by changing US immigration policies.&lt;/p&gt;
&lt;p&gt;Most importantly, we have too many people pursuing careers in banking, law and consulting. I personally encounter this bias all the time when I go to college campuses to recruit for startups. We need to convince the upcoming generation to innovate and take risks in sectors that have a direct impact on the quality of peoples’ lives.&lt;/p&gt;
&lt;p&gt;So my advice is:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;get rejected more&lt;/li&gt;
&lt;li&gt;climb the right hill&lt;/li&gt;
&lt;li&gt;create an amazing toy&lt;/li&gt;
&lt;li&gt;grow that toy into something big that transforms an important industry&lt;/li&gt;
&lt;/ol&gt;</content:encoded></item><item><title><![CDATA[Owning equity in your company should be as common as owning equity in your home]]></title><description><![CDATA[What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about…]]></description><link>https://cdixon.org/2011/09/12/owning-equity-in-your-company-should-be-as-common-as-owning-equity-in-your-home</link><guid isPermaLink="false">https://cdixon.org/2011/09/12/owning-equity-in-your-company-should-be-as-common-as-owning-equity-in-your-home</guid><pubDate>Mon, 12 Sep 2011 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about things common, or only so much as falls to each individually. – Aristotle &lt;a href=&quot;http://www.cato.org/special/ownership_society/boaz.html&quot;&gt;*&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;A major policy goal of capitalist countries in the 20th century was to encourage home ownership. It is widely believed that owners take better care of their homes than renters as they have much more at stake financially. There is also &lt;a href=&quot;http://www.realtor.org/Research.nsf/files/05%20Social%20Benefits%20of%20Stable%20Housing.pdf/$FILE/05%20Social%20Benefits%20of%20Stable%20Housing.pdf&quot;&gt;evidence&lt;/a&gt; that home owners are happier, healthier, and participate more in civic and political life.&lt;/p&gt;
&lt;p&gt;The desire to create an “&lt;a href=&quot;http://en.wikipedia.org/wiki/Ownership_society&quot;&gt;ownership society&lt;/a&gt;” led to some smart policy decisions like the mortgage tax deduction and some bad decisions like hazardously low interest rates that contributed to the housing bubble. Home ownership is a noble goal even if home ownership fueled by excessive debt can be disastrous.&lt;/p&gt;
&lt;p&gt;Entrepreneurs figured out a long time ago that the benefits of having equity in your company are similar to the benefits of having equity in your house. Silicon Valley expanded this concept by making it standard to grant equity to non-founder employees. It’s no coincidence that Silicon Valley continues to innovate and create jobs while the rest of the economy is stagnant.&lt;/p&gt;
&lt;p&gt;Some people think we are in a startup bubble, and that once the bubble bursts people will run back to the supposed safety of non-startup jobs. I’d prefer to think we are at the beginning of a movement to create a true ownership society, where people own stakes not just in their space but also in their time.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Do you want to sell sugar water or do you want to change the world?]]></title><description><![CDATA[“Do you want to sell sugar water for the rest of your life or come with me and change the world?” – Steve Jobs I sometimes wish that instead…]]></description><link>https://cdixon.org/2011/08/28/do-you-want-to-sell-sugar-water-or-do-you-want-to-change-the-world</link><guid isPermaLink="false">https://cdixon.org/2011/08/28/do-you-want-to-sell-sugar-water-or-do-you-want-to-change-the-world</guid><pubDate>Sun, 28 Aug 2011 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;“Do you want to sell sugar water for the rest of your life or come with me and change the world?” – Steve Jobs&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I sometimes wish that instead of working on internet and software projects, I worked on cleantech or biotech projects. That way, when I came home at night, I’d know that I had literally spent my day trying to cure cancer or prevent global warming.  But information technology is what I know, and it’s probably too late for me to learn a new field from scratch.&lt;/p&gt;
&lt;p&gt;That doesn’t mean information technology can’t improve people’s lives. Google’s search engine helps people find information, which, for example, makes cancer and cleantech researchers more productive. Skype allows companies to collaborate remotely, and connects people with friends and family around the world. In the area of information technology, we create infrastructure and hope that people use it for more good than bad.&lt;/p&gt;
&lt;p&gt;That said, the best entrepreneurs seem to follow a path of increasing gravitas. Scott Heiferman started out selling online ads and is now creating new communities. Jack Dorsey created Twitter and is now democratizing payments so sole proprietors can compete on a level playing field with large companies. Elon Musk started with online payments and is now developing electric cars and space programs.&lt;/p&gt;
&lt;p&gt;Founders of large companies sometimes also follow the path of increasing gravitas. Google is developing new energy technologies, self-driving cars and other world-changing technologies. Bill Gates devotes almost all of his time and money to charity.&lt;/p&gt;
&lt;p&gt;The tech press is preoccupied with investments, trends, exits, and other “inside baseball” topics. But these are all means to an end. Investments provide fuel for entrepreneurs to convert ideas into products. Trends shape the terrain that entrepreneurs navigate. Exits provide financial incentives for investors and entrepreneurs.&lt;/p&gt;
&lt;p&gt;Tim O’Reilly &lt;a href=&quot;http://www.informationweek.com/blog/229209677&quot;&gt;says&lt;/a&gt; that entrepreneurs should try to create more value than they capture. You can make money selling people obfuscated financial products, entertaining them with mind-numbing TV shows, or selling them sugar water decorated in elegant designs.&lt;/p&gt;
&lt;p&gt;Alternatively, you can make something that matters and — if you are lucky and smart — change the world.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What the NYC startup world needs (and doesn’t need)]]></title><description><![CDATA[Here’s what I think NYC needs to become a serious, long-term startup hub: Some extremely successful startups. We need PayPals – companies…]]></description><link>https://cdixon.org/2011/08/02/what-the-nyc-startup-world-needs-and-doesnt-need</link><guid isPermaLink="false">https://cdixon.org/2011/08/02/what-the-nyc-startup-world-needs-and-doesnt-need</guid><pubDate>Tue, 02 Aug 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Here’s what I think NYC needs to become a serious, long-term startup hub:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Some extremely successful startups. We need PayPals – companies that spin out boatloads of talented entrepreneurs and “smart money” angel investors. Big successes also reinforce the “culture of equity” that is so strong in California – the idea that owning options in a startup is the best path to financial and career success.&lt;/li&gt;
&lt;li&gt;More web product design talent. This is the scarcest talent of all (more so than engineering). NYC has perhaps the best design community in the world, but most of the designers are trained in non-web design fields (e.g. print design).  Most of the good design schools don’t emphasize web product design (some exceptions – e.g. my friend &lt;a href=&quot;http://www.zachklein.com/&quot;&gt;Zach Klein&lt;/a&gt; taught an excellent class at the &lt;a href=&quot;http://www.schoolofvisualarts.edu/&quot;&gt;School of Visual Arts&lt;/a&gt; last semester on web product design). NYU’s &lt;a href=&quot;http://itp.nyu.edu/itp/&quot;&gt;ITP&lt;/a&gt; stands out as a program that focuses on the intersection of design and technology (e.g. the Foursquare team went to school there). CMU’s &lt;a href=&quot;http://www.hcii.cmu.edu/&quot;&gt;HCI&lt;/a&gt; program and MIT’s &lt;a href=&quot;http://www.media.mit.edu/&quot;&gt;Media Lab&lt;/a&gt; are also great. Other schools need similar programs.&lt;/li&gt;
&lt;li&gt;More engineers. However, this doesn’t mean we need more engineering schools (although that wouldn’t hurt). Like Silicon Valley, NYC is populated mostly by people who moved here from other places. For the right opportunity, it isn’t hard to convince, say, recent MIT grads to move to NYC.  The problem is that NYC startups are basically unknown to students at MIT, CMU, Penn, and even (shockingly) to engineering students at NYU and Columbia (big props to &lt;a href=&quot;http://hackny.org/a/&quot;&gt;HackNY&lt;/a&gt; for trying to fix this). East Coast CS students also view startups as a much &lt;a href=&quot;http://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think/&quot;&gt;riskier path than they actually are&lt;/a&gt;. I say this having been at dozens of events with East Coast students over the last year or so talking about startups. I’m constantly amazed that most of the students simply don’t realize startups are a viable option. What we have is primarily a marketing, not a supply, problem.&lt;/li&gt;
&lt;li&gt;High-speed internet throughout all the “startup areas” of Manhattan (Flatiron, Meat Packing, Soho etc) and Brooklyn (Williamsburg, Dumbo, etc). It’s amazing that we have such a fundamental infrastructure problem in a city as advanced as NYC, but I can’t tell you how many startups I know that struggle to get working high-speed internet access that has solid uptime.&lt;/li&gt;
&lt;li&gt;More marquee tech companies opening large tech offices here. Google has something like 1500 engineers here. This adds a lot of vibrancy to the tech culture and attracts more engineering and design talent to the city.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Some things we don’t need:&lt;/p&gt;
&lt;p&gt;1. Government or university organized events that introduce entrepreneurs to other entrepreneurs. There seems to be one such event each week. Entrepreneurs are by nature very good at meeting one another and it’s a small enough community that pretty much everyone already knows each other anyways.&lt;/p&gt;
&lt;p&gt;2. Expensive projects like &lt;a href=&quot;http://www.dnainfo.com/20110719/downtown/bloomberg-pledges-100m-towards-new-engineering-science-complex&quot;&gt;big engineering universities&lt;/a&gt;. Again, the more engineers and CS programs in the US the better (even better yet we need more CS majors – which probably means more CS education in high school and earlier), but I can think of far more productive ways to spend $100M to help the NYC startup and tech world.&lt;/p&gt;
&lt;p&gt;3. Lower rents. No doubt &lt;a href=&quot;http://www.rentistoodamnhigh.org/&quot;&gt;the rents are too damn high&lt;/a&gt; and lower rents would be great. I’ve been living here since college when my room for one year was a hallway in a friend’s apartment. I sympathize with people who say this. But the idea that NYC is unaffordable on a typical startup salary is a complete myth. You can rent a decent place in a cool part of town on a typical startup salary. As to commercial space, for venture-backed startups the difference between rent in NYC and rent in other cities is generally the difference between spending, say, 3% versus 4% of your total financing on rent.&lt;/p&gt;
&lt;p&gt;4. More early-stage investment capital. There are plenty of smart angels, seed funds, and VCs who are either based here or are based elsewhere but actively invest here.&lt;/p&gt;
&lt;p&gt;Most of all what we need is for our tech and startup scene to reach critical mass (and to sustain that critical mass even if a tech downturn comes). Facebook wasn’t started in Californa and lots of future big successes will be started in all sorts of random places.  NYC needs enough tech critical mass that the next Mark Zuckerberg seriously considers relocating to NYC.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Pivoting into a new corporate structure]]></title><description><![CDATA[This hasn’t happened to me, but I keep hearing stories about situations like the following: 1) startup raises a seed financing round while…]]></description><link>https://cdixon.org/2011/08/01/pivoting-into-a-new-corporate-structure</link><guid isPermaLink="false">https://cdixon.org/2011/08/01/pivoting-into-a-new-corporate-structure</guid><pubDate>Mon, 01 Aug 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;This hasn’t happened to me, but I keep hearing stories about situations like the following: 1) startup raises a seed financing round while working on a preliminary idea, 2) founders later “pivot” into a new idea that looks more promising and/or gains traction, 3) founders decide to raise a new round of financing, 4) founders argue that the new idea is so different from the original one that it should be part of a new company, and that the original seed investors shouldn’t own any part of it.&lt;/p&gt;
&lt;p&gt;At &lt;a href=&quot;http://foundercollective.com&quot;&gt;Founder Collective&lt;/a&gt;, we think of ourselves as investing primarily in people, and only secondarily in ideas or products. I have to admit that until I heard about these situations happening, I hadn’t even conceived of the possibility of “pivots into new corporate structures”. In retrospect, I suppose it was inevitable given the founder-friendly market and the rapidly evolving venture environment.&lt;/p&gt;
&lt;p&gt;As a legal matter, assuming the founders worked on the idea on the original company’s time and/or money, the seed investors probably have a strong claim. Founders and employees normally sign “invention assignment” agreements that would make the new ideas and products property of the original company (again, these aren’t situations I’m personally involved in so I am just speculating on the specifics).  The reality is that most professional seed investors aren’t going to sue founders and will likely instead try to work out some compromise.&lt;/p&gt;
&lt;p&gt;This is not to suggest, by the way, that founders are indentured servants to investors. It is perfectly fine, if an idea isn’t working out, to wind down the company, return the remaining capital, and go off and work on new ideas. If one of those new ideas shows promise, the founders are then (legally and morally) free to form a new corporate entity and raise new financing from whomever they choose. From news reports, it sounds like this is what the Odeo team did before they pivoted to Twitter. It’s the conventional and, in my view, correct way to handle these situations.&lt;/p&gt;
&lt;p&gt;Here’s what really worries me. If it becomes a norm for founders to jettison seed investors when their company’s focus changes, seed investors who invest “primarily in people” will stop doing so. I think that would be a real shame: we’d lose an important source of capital and a lot of innovative startups wouldn’t get funded.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The downside of accelerated investment decisions]]></title><description><![CDATA[There has been a lot of talk about how early-stage valuations have risen dramatically over the past few years. Financially, this is probably…]]></description><link>https://cdixon.org/2011/07/28/the-downside-of-accelerated-investment-decisions</link><guid isPermaLink="false">https://cdixon.org/2011/07/28/the-downside-of-accelerated-investment-decisions</guid><pubDate>Thu, 28 Jul 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There has been a lot of talk about how early-stage valuations have risen dramatically over the past few years. Financially, this is probably good for founders and bad for investors. But a side effect of this frothy market is that financings are occurring much faster. It is very common for investors to get introduced to founders with the proviso that a term sheet will be signed in the next few days. As a result, founders and investors are spending very little time getting to know each other before entering into long-term business contracts.&lt;/p&gt;
&lt;p&gt;This is bad news for everyone. Most significantly, founders often give up significant control to people they won’t get along with or even might &lt;a href=&quot;http://www.sethlevine.com/wp/2011/07/beware-of-asshole-vcs&quot;&gt;end up hating&lt;/a&gt;. Having bad investors might not matter if the company executes flawlessly and the financing market stays frothy. But most companies have difficult episodes, and the financing market will eventually return to normal. Sadly, founders with bad investors will likely face punishing down rounds, key employees being indiscriminately fired, and elaborate financial shenanigans engineered to dilute founders and seed investors.&lt;/p&gt;
&lt;p&gt;“It’s only when the tide goes out that you know who’s been swimming naked.” Warren Buffet likes to say this about investors, but it applies to founders as well. Taking on a new major investor should be treated with the same gravitas as taking on a new cofounder. You can’t do it in less time than it takes to really get to know someone, which is usually weeks or months. Quick financings might seem attractive but are actually fraught with risks.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The tragedy of the anticommons]]></title><description><![CDATA[Seems very relevant to today’s music industry, and potentially relevant to the internet/software industry in the near future as patent…]]></description><link>https://cdixon.org/2011/07/26/the-tragedy-of-the-anticommons</link><guid isPermaLink="false">https://cdixon.org/2011/07/26/the-tragedy-of-the-anticommons</guid><pubDate>Tue, 26 Jul 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Seems very relevant to today’s music industry, and potentially relevant to the internet/software industry in the near future as patent lawsuits become increasingly common:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The commons leads to overuse and destruction; the anticommons leads to underuse and waste. In the cultural sphere, ever tighter restrictions on copyright and fair use limit artists’ abilities to sample and build on older works of art. In biotechnology, the explosion of patenting over the past twenty-five years—particularly efforts to patent things like gene fragments—may be retarding drug development, by making it hard to create a new drug without licensing myriad previous patents. Even divided land ownership can have unforeseen consequences. Wind power, for instance, could reliably supply up to twenty per cent of America’s energy needs—but only if new transmission lines were built, allowing the efficient movement of power from the places where it’s generated to the places where it’s consumed. Don’t count on that happening anytime soon. Most of the land that the grid would pass through is owned by individuals, and nobody wants power lines running through his back yard.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;From &lt;a href=&quot;http://www.newyorker.com/talk/financial/2008/08/11/080811ta_talk_surowiecki&quot;&gt;The Permission Problem&lt;/a&gt;, James Surowiecki, The New Yorker Magazine.  A very worthwhile read.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Thomas Jefferson on Patents]]></title><description><![CDATA[If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an…]]></description><link>https://cdixon.org/2011/07/16/thomas-jefferson-on-patents</link><guid isPermaLink="false">https://cdixon.org/2011/07/16/thomas-jefferson-on-patents</guid><pubDate>Sat, 16 Jul 2011 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.&lt;/p&gt;
&lt;p&gt;That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.&lt;/p&gt;
&lt;p&gt;Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;- Letter from &lt;a href=&quot;http://press-pubs.uchicago.edu/founders/documents/a1_8_8s12.html&quot;&gt;Thomas Jefferson to Isaac McPherson&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Founder/market fit]]></title><description><![CDATA[An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen calls…]]></description><link>https://cdixon.org/2011/06/19/foundermarket-fit</link><guid isPermaLink="false">https://cdixon.org/2011/06/19/foundermarket-fit</guid><pubDate>Sun, 19 Jun 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen &lt;a href=&quot;http://web.archive.org/web/20070701074943/http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html&quot;&gt;calls&lt;/a&gt; “product/market fit”, which he defines as “being in a good market with a product that can satisfy that market”. Andreessen argues persuasively that product/market fit is “the only thing that matters for a new startup” and that ”the life of any startup can be divided into two parts: &lt;em&gt;before product/market fit&lt;/em&gt; and &lt;em&gt;after product/market fit&lt;/em&gt;.”&lt;/p&gt;
&lt;p&gt;But it takes time to reach product/market fit. Founders have to choose a market long before they have any idea whether they will reach product/market fit. In my opinion, the best predictor of whether a startup will achieve product/market fit is whether there is what David Lee &lt;a href=&quot;http://techcrunch.com/2011/06/03/svangel-peak-age-old-entrpreneurs/&quot;&gt;calls&lt;/a&gt; “founder/market fit”. Founder/market fit means the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.”&lt;/p&gt;
&lt;p&gt;A few points about founder/market fit:&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Founder/market fit can be developed through experience&lt;/em&gt;: No one is born with knowledge of the education market, online advertising, or clean energy technologies. You can learn about these markets by building test projects, working at relevant companies, or simply doing extensive research. I have a friend who decided to work in the magazine industry. He discovered some massive inefficiencies and built a very successful technology company that addressed them. My &lt;a href=&quot;http://foundercollective.com&quot;&gt;Founder Collective&lt;/a&gt; partners Eric Paley and Micah Rosenbloom spent many months/years becoming experts in the dental industry in order to create a breakthrough &lt;a href=&quot;http://www.flybridge.com/portfolio/Brontes&quot;&gt;dental technology company&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Founder/market fit is frequently overestimated&lt;/em&gt;: One way to have a deep understanding of your market is to develop product ideas that solve problems you personally have. This is why Paul Graham &lt;a href=&quot;http://www.paulgraham.com/organic.html&quot;&gt;says&lt;/a&gt; that “the best way to come up with startup ideas is to ask yourself the question: what do you wish someone would make for you?”  This is generally an excellent heuristic, but can also lead you astray. It is easy to think that because you like food you can create a better restaurant. It is an entirely different matter to rent and build a space, market your restaurant, manage inventory, inspire your staff, and do all the other difficult things it takes to create a successful restaurant. Similarly, just because you can imagine a website you’d like to use, doesn’t mean you have founder/market fit with the consumer internet market.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Founders need to be brutally honest with themselves.&lt;/em&gt; Good entrepreneurs are willing to make long lists of things at which they are have no ability. I have never built a sales team. I don’t manage people well. I have no particular knowledge of what college students today want to do on the internet. I could go on and on about my deficiencies. But hopefully being aware of these things helps me focus on areas where I can make a real contribution and also allows me to recruit people that complement those deficiencies.&lt;/p&gt;
&lt;p&gt;Most importantly, founders should realize that a startup is an endeavor that generally lasts many years. You should fit your market not only because you understand it, but because you love it — and will continue to love it as your product and market change over time.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Allocation investing and the social premium]]></title><description><![CDATA[The rational way to invest in something – a startup, public company, venture capital firm, real estate project, etc. – is to base your…]]></description><link>https://cdixon.org/2011/06/16/allocation-investing-and-the-social-premium</link><guid isPermaLink="false">https://cdixon.org/2011/06/16/allocation-investing-and-the-social-premium</guid><pubDate>Thu, 16 Jun 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The rational way to invest in something – a startup, public company, venture capital firm, real estate project, etc. – is to base your decision on an assessment of its fundamental value. The most common way to do this is to try to predict the asset’s &lt;a href=&quot;http://en.wikipedia.org/wiki/Discounted_cash_flow&quot;&gt;future profits&lt;/a&gt;. In reality, many of the largest pools of capital in the world – pensions, endowments, and mutual funds – think in terms of “allocations.” This means they start with a model for how to distribute their funds across a set of dimensions, including asset classes, industries, and geographies. This allocation mentality is based partly on prevalent academic theories (the “&lt;a href=&quot;http://en.wikipedia.org/wiki/Capital_asset_pricing_model&quot;&gt;Capital Asset Pricing Model&lt;/a&gt;” or “CAPM”) and partly on the success of certain famous money managers (the “&lt;a href=&quot;http://en.wikipedia.org/wiki/David_F._Swensen#The_Yale_.28or_Endowment.29_Model&quot;&gt;Yale Model&lt;/a&gt;“).&lt;/p&gt;
&lt;p&gt;Allocation investing has a number of perverse effects on financial markets. For example, in the 80s and 90s venture capital was deemed to be a successful, independent asset class. As a result, many funds decided to allocate some portion of their capital to VC. These pools of capital were so large that they caused the VC industry to grow orders of magnitude larger – many say &lt;a href=&quot;http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/&quot;&gt;larger than it should be&lt;/a&gt;. In turn, this led to many bad venture investments that drove down returns in the industry (these problems were further exacerbated by the &lt;a href=&quot;http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/&quot;&gt;fee structure of VC&lt;/a&gt; that encouraged funds to get large and rapidly “put money to work”).&lt;/p&gt;
&lt;p&gt;Another perverse effect caused by allocation investing happens in public stock markets when investors decide to allocate a portion of their funds to specific sectors. I recently heard some money managers saying they wanted to allocate portions of their funds to “social media”. Combining this “allocated” demand with a constrained supply (due to the &lt;a href=&quot;http://www.businessweek.com/news/2011-06-09/linkedin-inspired-low-float-ipos-threaten-to-bring-back-bubble.html&quot;&gt;small float&lt;/a&gt; of many of these IPOs) can lead to prices that are disconnected from fundamental values. In this scenario, supply will try to match demand, which means mediocre social media companies will go public and non-social media companies will reposition themselves as social media companies or acquire social media companies. They will be chasing the “social premium.”&lt;/p&gt;
&lt;p&gt;We saw this happen in the 90s with the rush of companies to reposition themselves as internet companies. In that case, many non-professional investors ended up owning shares in crappy companies when the music stopped. The primary difference now is that the flagship companies like LinkedIn and Facebook have excellent fundamentals. Hopefully this time the market will be discerning and value investing will win out over allocation investing.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Notes on raising seed financing]]></title><description><![CDATA[Last night I taught a class via Skillshare (disclosure: Founder Collective is an investor) about how to raise a seed round.  After a long…]]></description><link>https://cdixon.org/2011/06/09/notes-on-raising-seed-financing</link><guid isPermaLink="false">https://cdixon.org/2011/06/09/notes-on-raising-seed-financing</guid><pubDate>Thu, 09 Jun 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Last night I taught a &lt;a href=&quot;http://www.skillshare.com/Planting-the-Seed-How-to-Raise-Your-First-Round/1124114253/1124114253&quot;&gt;class&lt;/a&gt; via &lt;a href=&quot;http://www.skillshare.com&quot;&gt;Skillshare&lt;/a&gt; (disclosure: &lt;a href=&quot;http://foundercollective.com&quot;&gt;Founder Collective&lt;/a&gt; is an investor) about how to raise a seed round.  After a long day I wasn’t particularly looking forward to it, but it turned out to be a lot of fun and I stayed well past the scheduled end time.  I think it worked well because the audience was full of people actually starting companies, and they came well prepared (they were all avid readers of tech blogs and had seemed to have done a lot of research).&lt;/p&gt;
&lt;p&gt;I sketched some notes for the class which I’m posting below. I’ve written ad nauseum on this blog (see &lt;a href=&quot;http://cdixon.org/contents&quot;&gt;contents&lt;/a&gt; page) about venture financing so hadn’t planned to blog more on the topic.  But since I wrote up these notes already, here they are.&lt;/p&gt;
&lt;p&gt;***&lt;/p&gt;
&lt;p&gt;1. Best thing is to either never need to raise money or to raise money after you have a product, users, or customers.  Also helps a lot if you’ve started a successful business before or came from a senior position at a successful company.&lt;/p&gt;
&lt;p&gt;2. Assuming that’s not the case, it is very difficult to raise money, even when people (e.g. press) are saying it’s easy and “everyone is getting funded.”&lt;/p&gt;
&lt;p&gt;3. Fundraising is an extremely momentum-based process.  Hardest part is getting “anchor” investors.  These are people or institutions who commit significant capital (&gt;$100K) and are respected in the tech community or in the specific industry you are going after (e.g. successful fashion people investing in a fashion-related startup).&lt;/p&gt;
&lt;p&gt;4. Investors like to wait (“flip another card over”) while you want to hurry. Lots of investors like to wait until other investors they respect commit. Hence a sort of Catch-22. As Paul Graham &lt;a href=&quot;http://www.paulgraham.com/hiresfund.html&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;By far the biggest influence on investors’ opinions of a startup is the opinion of other investors. There are very, very few who simply decide for themselves. Any startup founder can tell you the most common question they hear from investors is not about the founders or the product, but “who else is investing?”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;5. Network like crazy:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Make sure you have good Google results (this is your first impression in tech). Have a good bio page (on your blog, linkedin and about.me) and blog/tweet to get Google juice.&lt;/li&gt;
&lt;li&gt;Get involved in your local tech community.  Join meetups. Help organize events.  Become a hub in the local tech social graph.&lt;/li&gt;
&lt;li&gt;Meet every entrepreneur and investor you can.  Entrepreneurs tend to be more accessible &amp;#x26; sympathetic and can often make warm intros to investors.&lt;/li&gt;
&lt;li&gt;Avoid anyone who asks you to pay for intros (even indirectly like committing to a law firm in exchange for intros).&lt;/li&gt;
&lt;li&gt;Don’t be afraid to (politely) overreach and &lt;a href=&quot;http://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough/&quot;&gt;get rejected&lt;/a&gt;.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;6. Get smart on the industry:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Read TechCrunch, Business Insider, GigaOm, Techmeme, HackerNews, Fred Wilson’s blog, Mark Suster’s blog, etc (and go back and read the archives).  Follow investor/startup people on Twitter (Sulia has some good lists to get you started &lt;a href=&quot;http://www.sulia.com/channel/venture-capital/&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://www.sulia.com/channel/startups/&quot;&gt;here&lt;/a&gt;).&lt;/li&gt;
&lt;li&gt;Research every investor and entrepreneur extensively before you meet them. Entrepreneurs love it when you’ve used their product and give them constructive feedback.  It’s like bringing a new parent a kid’s toy. Investors like it when you are smart about their portfolio and interests.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;6. How much to raise?  Enough to hit an accretive milestone plus some buffer. (&lt;a href=&quot;http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/&quot;&gt;more&lt;/a&gt;)&lt;/p&gt;
&lt;p&gt;7. What terms should you look for?  Here are &lt;a href=&quot;http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/&quot;&gt;ideal terms&lt;/a&gt;.  You need to understand all these terms and also the &lt;a href=&quot;http://cdixon.org/2010/08/31/converts-versus-equity-deals/&quot;&gt;difference between convertible notes and equity&lt;/a&gt;.  More generally, it’s a good idea to spend a few days getting smart about startup-related law – this is a &lt;a href=&quot;http://www.amazon.com/Entrepreneurs-Guide-Business-Law/dp/0324042914&quot;&gt;good book&lt;/a&gt; to start with.&lt;/p&gt;
&lt;p&gt;8. Types of capital:  strategic angels (industry experts), non-strategic angels (not industry experts, not tech investors), tech angels, seed funds, VCs.&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;VCs can be less valuation sensitive and have deep pockets but are sometimes buying options so come with some risks (&lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;more&lt;/a&gt;).&lt;/li&gt;
&lt;li&gt;Industry experts can be really nice complements to tech investors (especially in b2b companies).  (&lt;a href=&quot;http://cdixon.org/2009/11/03/how-to-select-your-angel-investors/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Non-strategic angels (rich people with no relevant expertise) might not help as much but might be more patient and ok with “lifestyle businesses.”&lt;/li&gt;
&lt;li&gt;Tech angels and seed funds tend to be most valuation sensitive but can sometimes make up for it by helping in later financing rounds.&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;9. Pitching:&lt;/p&gt;
&lt;ul&gt;
&lt;li&gt;Have a short slide deck, not a business plan. (&lt;a href=&quot;http://whohastimeforthis.blogspot.com/2005/11/how-to-not-write-business-plan.html&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Pitch yourself first, idea second. (&lt;a href=&quot;http://cdixon.org/2009/11/14/pitch-yourself-not-your-idea/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Pitch the upside, not the mean (&lt;a href=&quot;http://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;li&gt;Size markets using narratives, not numbers (&lt;a href=&quot;http://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers/&quot;&gt;more&lt;/a&gt;)&lt;/li&gt;
&lt;/ul&gt;
&lt;p&gt;10.  Cofounders: they are good if for no other reason than moral support. Find ones that complement you. Decide on responsibilities, equity split etc early and document it.  (Legal documents don’t hurt friendships – they preserve them).&lt;/p&gt;
&lt;p&gt;11. Incubators like YC and Techstars can be great.  99% of the people I know who participated in them say it was worth it.&lt;/p&gt;
&lt;p&gt;12. To investors, the sexiest word in the English language is “oversubscribed.”  Sometimes it makes tactical sense to start out raising a smaller round than you actually want end up with.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Accurate contrarian theories]]></title><description><![CDATA[When Google released its search engine in 1998, its search results were significantly better than its competitors’. Many people attribute…]]></description><link>https://cdixon.org/2011/05/16/accurate-contrarian-theories</link><guid isPermaLink="false">https://cdixon.org/2011/05/16/accurate-contrarian-theories</guid><pubDate>Mon, 16 May 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;When Google released its search engine in 1998, its search results were significantly better than its competitors’. Many people attribute Google’s success to this breakthrough technology. But there was another key reason:  a stubborn refusal to accept the orthodox view at the time that “stickiness” was crucial to a website’s success. Here’s what happened when they tried to sell their technology to Excite (a leading portal/search engine in the late 90s):&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[Google] was too good. If Excite were to host a search engine that instantly gave people information they sought, [Excite&apos;s CEO] explained, the users would leave the site instantly. Since his ad revenue came from people staying on the site—“stickiness” was the most desired metric in websites at the time—using Google’s technology would be counterproductive. “He told us he wanted Excite’s search engine to be 80 percent as good as the other search engines,” … and we were like, “Wow, these guys don’t know what they’re talking about.” - Steven Levy, &lt;a href=&quot;http://www.amazon.com/Plex-Google-Thinks-Works-Shapes/dp/1416596585&quot;&gt;In The Plex&lt;/a&gt; (p. 30)&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Famed investor/entrepreneur Reid Hoffman says world-changing startups need to be premised on “&lt;a href=&quot;http://www.kydoh.com/seeking-returns-as-an-accurate-contrarian-theorist/&quot;&gt;accurate contrarian theories&lt;/a&gt;.”  In Google’s case, it was true but non-contrarian to think users would prefer a better search engine. What was true and contrarian was to think it made &lt;a href=&quot;http://cdixon.org/2010/03/25/stickiness-is-bad-for-business/&quot;&gt;business sense&lt;/a&gt; to get users off their site as quickly as possible. The business model to support this contrarian theory wouldn’t emerge until years later, and by then Google would already have become the world’s most popular search engine.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Options]]></title><description><![CDATA[The financial term “derivative“ refers to a security whose value is a function of another security such as a stock or bond.  The most common…]]></description><link>https://cdixon.org/2011/05/12/options</link><guid isPermaLink="false">https://cdixon.org/2011/05/12/options</guid><pubDate>Thu, 12 May 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The financial term “&lt;a href=&quot;http://en.wikipedia.org/wiki/Derivative_(finance)&quot;&gt;derivative&lt;/a&gt;“ refers to a security whose value is a function of another security such as a stock or bond.  The most common types of derivatives are futures – the &lt;em&gt;obligation&lt;/em&gt; to buy a security at a future date at pre-agreed upon price – and options – the &lt;em&gt;right&lt;/em&gt; to buy something at a future date at pre-agreed upon price.&lt;/p&gt;
&lt;p&gt;In theory, the primary societal purpose of derivates is for businesses to hedge against “&lt;a href=&quot;http://en.wikipedia.org/wiki/Exogeny&quot;&gt;exogenous&lt;/a&gt;” risks.  For example. Southwest Airlines is famously prudent about buying futures on oil to mitigate the effect of fluctuating oil prices on their core business.&lt;/p&gt;
&lt;p&gt;In practice, most derivatives are bought and sold by speculators. One of the first speculators was a philosopher names Thales, who Aristotle described in his book _&lt;a href=&quot;http://classics.mit.edu/Aristotle/politics.mb.txt&quot;&gt;Politics&lt;/a&gt; (_Book 1, Part XI):&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There is the anecdote of Thales the Milesian and his financial device, which involves a principle of universal application, but is attributed to him on account of his reputation for wisdom. He was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. &lt;em&gt;Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Valuing options was a mystery until 1973 when the &lt;a href=&quot;http://en.wikipedia.org/wiki/Black%E2%80%93Scholes&quot;&gt;Black-Scholes&lt;/a&gt; model was invented. The main practical outcome of this model was the idea that the value of an option was determined mostly by the volatility of the underlying security.&lt;/p&gt;
&lt;p&gt;One way to understand the important of volatility is to think of options as the opposite of insurance policies. Suppose you are selling insurance on houses in one region that is prone to catastropic events and another that isn’t. Rational insurers would price insurance policies higher in the catastrophe-prone areas.&lt;/p&gt;
&lt;p&gt;Startups are inherently very volatile – their price can increase or decrease dramatically in short periods of time. Having an option on a startup is the economic opposite of selling insurance in a catastrophe-prone area.&lt;/p&gt;
&lt;p&gt;The US tax system has some rules related to startup options.  The first rule is that there is a special class of options called ISO options that can be granted to employees. ISO options are tax exempt until the options are exercised, which allows employees to receive them and not be liable for taxes until they actually realize cash gains. This rule only applies if the options are assigned a strike price equal to or greater than the “fair market value” of the company’s common shares. The fair market value is normally assessed by an outside valuation firm (a so-called 409A valuation) and usually ends up being significantly lower than the last round VC valuation (a rule of thumb for early-stage companies is the strike price will be approximately 20% of the last VC valuation).&lt;/p&gt;
&lt;p&gt;When you are granted options in a startup there are a couple of important things to keep in mind:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;You should know your &lt;a href=&quot;http://cdixon.org/2009/08/28/the-one-number-you-should-know-about-your-equity-grant/&quot;&gt;percentage ownership&lt;/a&gt; of the company’s “fully diluted” outstanding shares (number of shares of the company including the option pool).&lt;/li&gt;
&lt;li&gt;You should understand that if you leave the company, you normally have 90 days to “exercise” the options (purchase the shares you have the right to buy) before you forfeit your options. Normally the company has no obligation to inform you of this possible forfeiture, and in fact the standard practice is to hope the employee forgets and loses the options.&lt;/li&gt;
&lt;li&gt;You should know the “preferences” on the company.  The preferences normally equals the amount of money raised. If the company sells for near or less than that number the common shareholders, and hence the employees (who own options on common shares), will receive little or no money.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The strike price of the options is somewhat important but, if you study options theory, not nearly as important as the volatility of the underlying stock. Financially, what matters most is having a reasonable percentage of options in a company with lots of volatility (and hopefully a stock price that has an upward slope).&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Best practices for raising a VC round]]></title><description><![CDATA[Having raised a number of VC rounds personally and observed many more as an investor or friend, I’ve come to think there are a set of…]]></description><link>https://cdixon.org/2011/05/04/best-practices-for-raising-a-vc-round</link><guid isPermaLink="false">https://cdixon.org/2011/05/04/best-practices-for-raising-a-vc-round</guid><pubDate>Wed, 04 May 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Having raised a number of VC rounds personally and observed many more as an investor or friend, I’ve come to think there are a set of dominant best practices that entrepreneurs should follow.&lt;/p&gt;
&lt;p&gt;1. Valuation: Come up with what minimum valuation you’d be happy with but never share that number with any investor.  If the number is too low, you’ve set a low ceiling. If your number is too high, you scare people off. Just like on eBay, you only get to your desired price by starting lower and getting a competitive process going. When people ask about price, simply tell them your last round post-money valuation and talk about the progress you’ve made since then.&lt;/p&gt;
&lt;p&gt;2. Never tell VCs the names of other VCs that are interested.  Reasons: 1) if you are overplaying your hand that could send a negative signal.  Most VCs know each other and talk all the time. 2) it is possible they’ll get together and offer a two-handed deal in which case you have less competition.&lt;/p&gt;
&lt;p&gt;3. I think the optimal number of VCs to talk to seriously is about 5.  That is usually enough to get a sense of market but not so much that you get overwhelmed.  You should pick these VCs carefully – this is where trusted, experienced advisors are critical.&lt;/p&gt;
&lt;p&gt;4. If there is a VC you really like, have a “buy it now price” and if they hit that valuation (and other terms are &lt;a href=&quot;http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/&quot;&gt;clean&lt;/a&gt;) do the deal.  Otherwise, say you’d like to “run a process” and include them in it.&lt;/p&gt;
&lt;p&gt;5. Try to set timelines that are definite enough that investors feel some pressure to move but not so definite that you look dumb if you don’t have a term sheet by then.  (Investors have an incentive to wait – “to flip another card over” as they say – whereas entrepreneurs want to get the financing over with asap). Depending on where you are in the process, say things like “we’d like to wrap this up in the next few weeks.”&lt;/p&gt;
&lt;p&gt;6. Once you start pitching, the clock starts ticking on your deal looking “tired.”  I’d say from your first VC meeting you have about a month before this risk kicks in.  You could have a great company but if investors get a sense that other investors have passed, they assume something is wrong with your company and/or they can wait around and invest later at their leisure.&lt;/p&gt;
&lt;p&gt;7. The earlier stage your company is the more you should weight quality of investors vs valuation.  For a Series A, you are truly partnering with the VCs.  You should consider taking a lower valuation from a top tier firm over a non top tier firm (but probably any discount over 20% is too much). If you are doing a post-profitable “momentum round” I’d just optimize for valuation and deal terms.&lt;/p&gt;
&lt;p&gt;8. Term sheets:  talk about terms in detail over the phone.  Only accept a term sheet once you have decided that if it matches what was described you are prepared to sign it.  After sending a term sheet VCs get worried you’ll shop it and usually want it signed in 24 hours.&lt;/p&gt;
&lt;p&gt;9. Get to know the VCs.  Talk to their other portfolio companies, read their blogs, call references, etc.  You will be in business with this person for (hopefully) a long time.&lt;/p&gt;
&lt;p&gt;10. Timing.  While it’s ideal to raise money once you hit the milestones you set out initially, you also need to be opportunistic.  Right now, for example, seems to be a really good time to raise a VC round.  You could make a ton of progress over the next 6 months but the market could tank and end up in a worse place than you would be today.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[There are two kinds of people in the world]]></title><description><![CDATA[You’ve either started a company or you haven’t.  ”Started” doesn’t mean joining as an early employee, or investing or advising or helping…]]></description><link>https://cdixon.org/2011/04/26/there-are-two-kinds-of-people-in-the-world</link><guid isPermaLink="false">https://cdixon.org/2011/04/26/there-are-two-kinds-of-people-in-the-world</guid><pubDate>Tue, 26 Apr 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;You’ve either started a company or you haven’t.  ”Started” doesn’t mean joining as an early employee, or investing or advising or helping out.  It means starting with no money, no help, no one who believes in you (except perhaps your closest friends and family), and building an organization from a borrowed cubicle with credit card debt and nowhere to sleep except the office. It almost invariably means being dismissed by arrogant investors who show up a half hour late, totally unprepared and then instead of saying “no” give you non-committal rejections like “we invest at later stage companies.” It means looking prospective employees in the eyes and convincing them to leave safe jobs, quit everything and throw their lot in with you.  It means having pundits in the press and blogs who’ve never built anything criticize you and armchair quarterback your every mistake. It means lying awake at night worrying about running out of cash and having a constant knot in your stomach during the day fearing you’ll disappoint the few people who believed in you and validate your smug doubters.&lt;/p&gt;
&lt;p&gt;I don’t care if you succeed or fail, if you are Bill Gates or an unknown entrepreneur who gave everything to make it work but didn’t manage to pull through. The important distinction is whether you risked everything, put your life on the line, made commitments to investors, employees, customers and friends, and tried – against all the forces in the world that try to keep new ideas down – to make something new.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Inferring intent on mobile devices]]></title><description><![CDATA[[Google CEO Eric] Schmidt said that while the Google Instant predictive search technology helps shave an average of 2 seconds off users…]]></description><link>https://cdixon.org/2011/04/24/inferring-intent-on-mobile-devices</link><guid isPermaLink="false">https://cdixon.org/2011/04/24/inferring-intent-on-mobile-devices</guid><pubDate>Sun, 24 Apr 2011 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;[Google CEO Eric] Schmidt said that while the Google Instant predictive search technology helps shave an average of 2 seconds off users’ queries, the next step is “autonomous search.” This means Google will conduct searches for users without them having to manually conduct searches. As an example, Schmidt said he could be walking down the streets of San Francisco and receive information about the places around him on his mobile phone without having to click any buttons. &lt;strong&gt;“Think of it as a serendipity engine,&lt;/strong&gt;” Schmidt said. “&lt;strong&gt;Think of it as a new way of thinking about traditional text search where you don’t even have to type.&lt;/strong&gt;”  - &lt;a href=&quot;http://www.eweek.com/c/a/Search-Engines/Google-CEO-Schmidt-Pitches-Autonomous-Search-Flirts-with-AI-259984/&quot;&gt;eWeek&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;When users type phrases into Google, they are searching, but also expressing intent. To create the “serendipity engine” that Eric Schmidt envisions would require a system that infers users’ intentions.&lt;/p&gt;
&lt;p&gt;Here are some of the input signals a mobile device could use to infer intent.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Context&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Location: It is helpful to break location down into layers, from the most concrete to the most abstract:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;lat / long – raw GPS coordinates&lt;/li&gt;
&lt;li&gt;venue – mapping of lat / long coordinates to a venue.&lt;/li&gt;
&lt;li&gt;venue relationship to user – is the user at home, at a friend’s house, at work, in her home city etc.&lt;/li&gt;
&lt;li&gt;user movement – locations the user has visited recently.&lt;/li&gt;
&lt;li&gt;inferred user activity – if the user is at work during a weekday, she is more likely in the midst of work. If she is walking around a shopping district on a Sunday away from her home city, she is more likely to want to buy something. If she is outside, close to home, and going to multiple locations, she is more likely to be running erands.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Weather: during inclement weather user is less likely to want to move far and more likely to prefer indoor activities.&lt;/p&gt;
&lt;p&gt;Time of day &amp;#x26; date: around mealtimes the user is more likely to be considering what to eat. On weekends the user is more likely to be doing non-work activities. Outside at night, the user is more likely to be looking for bar/club/movie etc.  Time of days also lets you know what venues are open &amp;#x26; closed.&lt;/p&gt;
&lt;p&gt;News events near the user: they are at the pro sporting event, an accident happened nearby, etc.&lt;/p&gt;
&lt;p&gt;Things around the user: knowing not just venues, but activities (soccer game), inventories (Madden 2011 is in stock at BestBuy across the street), events (concert you might like is nearby), etc.&lt;/p&gt;
&lt;p&gt;These are just a few of the contextual signals that could be included as input signals.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Taste&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The more you know about users’ tastes, the better you can infer their intent. It is silly to suggest a great Sushi restaurant to someone who dislikes Sushi. At &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; we model taste with a giant matrix. One axis is every known user (the system is agnostic about which ID system – it could be Facebook, Twitter, a mobile device, etc), the other axis is things, defined very broadly: product, person, place, activity, tag etc.  In the cells of the matrix are either the known or predicted affinity between the person and thing.  (Hunch’s matrix currently has about 500M people, 700M items, and 50B known affinity points).&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Past expressed intent&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- App actions:  e.g. user just opened Yelp, so is probably looking for a place to go.&lt;/p&gt;
&lt;p&gt;- Past search actions: user’s recent (desktop &amp;#x26; mobile) web searches could be indications of later intent.&lt;/p&gt;
&lt;p&gt;- Past “saved for later” actions:  user explicitly saved something for later e.g. using Foursquare’s “to do” functionality.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Behavior of other people&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- Friends:  The fact that a user’s friends are all gathered nearby might make her want to join them.&lt;/p&gt;
&lt;p&gt;- Tastemates: That someone with similar tastes just performed some actions suggests the user is more likely to want to perform the same actions.&lt;/p&gt;
&lt;p&gt;- Crowds: The user might prefer to go toward or avoid crowds, depending on mood and taste.&lt;/p&gt;
&lt;p&gt;How should an algorithm weight all these signals? It is difficult to imagine this being done effectively anyway except empirically through a feedback loop. So the system suggests some intent, the user gives feedback, and then the system learns by adjusting signal weightings and gets smarter.  With a machine learning system like this it is &lt;a href=&quot;http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/&quot;&gt;usually impossible&lt;/a&gt; to get to 100% accuracy, so the system would need a “fault tolerant” UI.  For example, pushing suggestions through modal dialogs could get very annoying without 100% accuracy, whereas making suggestions when the user opens an application or through subtle push alerts could be non-annoying and useful.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Financing risk]]></title><description><![CDATA[Startups that raise seed funding face the risk of not being able to raise additional money. This is what is sometimes known as “financing…]]></description><link>https://cdixon.org/2011/04/20/financing-risk</link><guid isPermaLink="false">https://cdixon.org/2011/04/20/financing-risk</guid><pubDate>Wed, 20 Apr 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Startups that raise seed funding face the risk of not being able to raise additional money. This is what is sometimes known as “financing risk.”&lt;/p&gt;
&lt;p&gt;If you are a company that just raising seed funding, financing risk should be top of mind.  Here are some tips for mitigating it:&lt;/p&gt;
&lt;p&gt;- &lt;em&gt;Start by thinking about the next round of financing and work backwards&lt;/em&gt;.  What milestones do you have to hit to get VC funded at an upround?  If you are a consumer internet company, the milestone probably involves getting a certain number of users.  If you are building hardcore tech, it probably means building a working prototype.  Basically you want to take the main risks that exist at the seed stage and eliminate as many as you can. A good way to discover what milestones you need to hit is to talk to as many VCs as possible. Experienced seed investors can also advise you on this.&lt;/p&gt;
&lt;p&gt;- &lt;em&gt;&lt;a href=&quot;http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/&quot;&gt;Raise enough seed money&lt;/a&gt;&lt;/em&gt;. How much money will it take to hit those milestones?  A good rule of thumb is 18 months – 3 months to get going, 12 months to execute, 3 more months to raise VC.  But it really depends on the specifics of the milestones, your operational plan, etc. which is why you need to figure those out first.&lt;/p&gt;
&lt;p&gt;- &lt;em&gt;Preserve cash&lt;/em&gt;.  Pay only subsistance wages but be generous with equity for great people (this also provides a screen for hiring people with the right startup mindset).  Keep legal fees low (try to keep incorporation and financing costs to $10K or lower – this is one reason I prefer &lt;a href=&quot;http://cdixon.org/2010/08/31/converts-versus-equity-deals/&quot;&gt;convertible notes&lt;/a&gt;).  Act like a &lt;a href=&quot;http://cdixon.tumblr.com/post/311546950/things-startups-do-and-dont-need&quot;&gt;scrappy startup&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;A rule of thumb is a successful Series A is one that is led by quality VCs with a pre-money at least 2x the post-money of the seed round.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Apple and the TV industry]]></title><description><![CDATA[The TV industry is a major segment of the consumer electronics industry and Apple is the leading consumer electronics company in the world…]]></description><link>https://cdixon.org/2011/04/17/apple-and-the-tv-industry</link><guid isPermaLink="false">https://cdixon.org/2011/04/17/apple-and-the-tv-industry</guid><pubDate>Sun, 17 Apr 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The TV industry is a major segment of the consumer electronics industry and Apple is the leading consumer electronics company in the world. Thus far Apple has entered the TV market with a stand-alone device, Apple TV. There has been &lt;a href=&quot;http://www.marco.org/2011/04/16/rumored-apple-hdtv&quot;&gt;speculation&lt;/a&gt; about whether Apple might enter the TV market by creating an actual TV. The most convincing objections to that idea cite the unfavorable industry structure: the power of the cable operators, the low margins on TVs, the infrequency of people buying new TVs, etc.&lt;/p&gt;
&lt;p&gt;I thought it would be interesting to go back and look at the reasoning analysts used to predict the failure of the iPhone before its launch in 2007. Some &lt;a href=&quot;http://news.cnet.com/The-Apple-phone-flop/2010-1041_3-6141607.html&quot;&gt;predicted&lt;/a&gt; it would fail because the other handset makers would successfully compete with Apple:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The iPod also conquered the problem of small screens and cheesy navigation. With its newfound popularity, the company was also able to get music publishers to agree to its terms. Unfortunately for Apple, problems like that don’t exist in the handset business. Cell phones aren’t clunky, inadequate devices. Instead, they are pretty good. Really good. Why do you think they call it a Crackberry? Because the lumpy design and confusing interface of the device is causing people to break into cars? No, it’s because people are addicted to it. Samsung has scoured the world’s design schools and hired artists on three continents to keep its phones looking good. Motorola has revived its fortunes with design. KDDI, a Japanese carrier, has a design showcase in the teen shopping area of Tokyo just to be close to trends. And Sharp doesn’t skimp when it comes to putting LCD TVs on its phones. &lt;strong&gt;Apple, in other words, won’t be competing against rather doltish, unstylish companies like the old Compaq. The handset companies move pretty quick and put out new models every few weeks.&lt;/strong&gt; [emphasis added]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Other analysts &lt;a href=&quot;http://www.theregister.co.uk/2006/12/23/iphone_will_fail/&quot;&gt;predicted&lt;/a&gt; Apple’s phone was doomed because of the mobile phone industry structure – mobile operators commanded so much power via subsidies, retail distribution etc:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Apple will launch a mobile phone in January, and it will become available during 2007. It will be a lovely bit of kit, a pleasure to behold, and its limited functionality will be easy to access and use. The Apple phone will be exclusive to one of the major networks in each territory and some customers will switch networks just to get it, but not as many as had been hoped. &lt;strong&gt;As customers start to realise that the competition offers better functionality at a lower price, by negotiating a better subsidy, sales will stagnate.&lt;/strong&gt; After a year a new version will be launched, but it will lack the innovation of the first and quickly vanish. The only question remaining is if, when the iPod phone fails, it will take the iPod with it.  [emphasis added]&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I am not citing these analysts to mock them. Hindsight is 20/20 and it was quite reasonable at the time to assume that a new phone from Apple would confront the same issues that new phones from other companies confronted. What Apple ended up doing, however, was creating a phone that was so incredibly desirable to consumers that it &lt;a href=&quot;http://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry/&quot;&gt;completely restructured&lt;/a&gt; the industry, causing a massive shift of power away from the carriers.&lt;/p&gt;
&lt;p&gt;Regarding the TV industry, here is what Steve Jobs &lt;a href=&quot;http://d8.allthingsd.com/20100601/steve-jobs-session/&quot;&gt;said&lt;/a&gt; last year at AllThingsD:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;strong&gt;Q: Is it time to throw out the interface for TV? Does television need a new human interface.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;A: The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us… ask Google in a few months. The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there’s no way to do that….The TV is going to lose until there’s a viable go-to-market strategy. That’s the fundamental problem with the industry. It’s not a problem with the technology, it’s a problem with the go-to-market strategy….I’m sure smarter people than us will figure this out, but that’s why we say Apple TV is a hobby.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;So Jobs doesn’t believe an “additional box” is a viable strategy for seriously entering the TV industry. This leaves three places to enter: 1) integrating into set top boxes, 2) integrating into other TVs, or 3) Apple creating its own TV. Regarding #1, the last thing the cable operators want is for internet-delivered programming that bypasses their cable channels to become widespread – they see that as the fast track to become a dumb pipe. Re #2: This just seems very unlike Apple – the most vertically integrated company in tech, and famous for wanting to control every aspect of the product and user experience.&lt;/p&gt;
&lt;p&gt;Re #3, let’s imagine Apple develops a TV that is as groundbreaking as the iPhone was. The biggest problem “smart TVs” have today is that they need clunky IR transmitters to control set top boxes because the cable operators won’t willingly interoperate. So a new Apple TV would have to drum up such incredible consumer demand that the operators would feel compelled to support it. This does indeed seem harder in the TV than in the mobile industry. At least in the US you had 4 nationwide mobile operators at the time of the iPhone launch. In TV, consumers normally have at most two real choices for traditional cable programming – cable and satellite – and two real choices for two-way internet – cable and DSL/FIOS.&lt;/p&gt;
&lt;p&gt;Perhaps Apple won’t enter the market due to its structure. But that didn’t stop them in mobile phones where the structure was similarly difficult. The mistake analysts made about the iPhone was to assume the current industry structure would be sustained after Apple’s entry. I’d be wary of making the same assumption about the TV industry.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Showing up]]></title><description><![CDATA[Mark Twain famously quipped that “80 percent of life is showing up.” Running a startup, I’d say it’s more like 90 percent. For example, I…]]></description><link>https://cdixon.org/2011/04/12/showing-up</link><guid isPermaLink="false">https://cdixon.org/2011/04/12/showing-up</guid><pubDate>Tue, 12 Apr 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Mark Twain famously quipped that “80 percent of life is showing up.” Running a startup, I’d say it’s more like 90 percent. For example, I frequently hear from founders how it’s hard to recruit programmers. It is indeed hard. But great programmers are out there, and can be found in places where other people simply aren’t showing up.&lt;/p&gt;
&lt;p&gt;Back in 2005 when I was starting SiteAdvisor with &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; (one of my cofounders at my last two startups and &lt;a href=&quot;http://cdixon.posterous.com/mit-is-a-national-treasure&quot;&gt;non-graduate of high school&lt;/a&gt;) we were trying to recruit great programmers. At the time, startups were certainly not the hot thing, especially on the East Coast. We were based in Boston so decided to spend time at MIT where we figured there must be smart programmers. We went to places like the Media Lab and basically just sat ourselves down at lunch counters and awkwardly introduced ourselves: “Hi, my name is Chris Dixon and this is Tom Pinckney and we are starting a company and would love to talk to you about it.” Most students ignored us or thought we were annoying. I remember one student staring at us quizzically saying “startups still exist?” Most of our trips were fruitless. At one point after a failed trip we were on the Redline back to our office in downtown Boston and joked, depressingly, that we felt so out of place that people looked at us like time travelers from the dot-com bubble.&lt;/p&gt;
&lt;p&gt;Our first breakthough came after a series of trips when a particularly talented programmer/designer named &lt;a href=&quot;http://larifari.org/&quot;&gt;Hugo Liu&lt;/a&gt; re-approached us and said something like “hey, actually I thought about it and your idea doesn’t suck.” Then his friend &lt;a href=&quot;http://www.linkedin.com/profile/view?id=2104665&amp;#x26;authType=NAME_SEARCH&amp;#x26;authToken=xHpy&amp;#x26;locale=en_US&amp;#x26;srchid=6b2a8ef5-cf44-4377-ab54-7557dc9d5472-0&amp;#x26;srchindex=1&amp;#x26;srchtotal=8&amp;#x26;pvs=ps&amp;#x26;pohelp=&amp;#x26;goback=%2Efps_*1_David_Gatenby_*1_*1_*1_*1_*51_*1_Y_*1_*1_*1_false_1_R_true_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2&quot;&gt;David Gatenby&lt;/a&gt; talked to about joining us. We eventually recruited Hugo and David along with a brilliant undergraduate &lt;a href=&quot;http://mattgattis.com/about/&quot;&gt;Matt Gattis&lt;/a&gt;. We had finally broken through. Matt and Hugo now work with us at &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; along with some of their friends from MIT they brought along.&lt;/p&gt;
&lt;p&gt;People who say recruiting is easy are probably recruiting bad people. People who say recruiting is hard are right. People who say it is impossible just aren’t showing up enough.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Google’s social strategy]]></title><description><![CDATA[It is widely believed that Facebook presents a significant competitive threat to Google. Google itself seems to believe this – Larry Page…]]></description><link>https://cdixon.org/2011/04/10/googles-social-strategy</link><guid isPermaLink="false">https://cdixon.org/2011/04/10/googles-social-strategy</guid><pubDate>Sun, 10 Apr 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It is widely believed that Facebook presents a significant competitive threat to Google. Google itself seems to believe this – Larry Page recently &lt;a href=&quot;http://www.businessinsider.com/larry-page-just-tied-employee-bonuses-to-the-success-of-the-googles-social-strategy-2011-4&quot;&gt;said&lt;/a&gt; that all employees would have their bonuses tied to the success of Google’s social strategy.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Why does Facebook present a threat to Google?  A few reasons:&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- The utility of Google’s core product – web search – depends on the web remaining fragmented and crawlable.  Facebook has become the primary place web users spend their time and create content, and is mostly closed to Google’s crawlers.&lt;/p&gt;
&lt;p&gt;- Facebook controls a &lt;a href=&quot;http://blog.buysellads.com/2011/04/are-facebook-ads-a-threat-to-google-ads/&quot;&gt;large percentage&lt;/a&gt; of ad impressions and will likely launch an off-Facebook.com display ad network to compete directly with Google’s display ad business (built from its $3.1B &lt;a href=&quot;http://www.businessweek.com/technology/content/apr2007/tc20070414_675511.htm&quot;&gt;acquisition&lt;/a&gt; DoubleClick). It is generally &lt;a href=&quot;http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/&quot;&gt;thought&lt;/a&gt; that display ads will become a larger portion of online advertising spend (versus direct response text link ads) as more brand advertising moves online.&lt;/p&gt;
&lt;p&gt;- There are many other “wildcard” risks – e.g. Facebook competing with Google (and Apple, Paypal etc) in payments, Facebook gaining power on mobile (threatening Android), and the possibility of a greater share of internet &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;intent harvesting&lt;/a&gt; happening on Facebook through not-yet-released features like a search and/or shopping engine.&lt;/p&gt;
&lt;p&gt;When going after Facebook, Google has at least three key strategic choices to make:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Strategic choice #1:&lt;/strong&gt; Should Google try to make social networking commoditized or new profit center? (For more about what I mean by this, please see &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;this post&lt;/a&gt; on Google’s overall strategy and these posts on “commoditizing the complement” &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;The advantage of creating a new social networking profit center is obvious: if you win, you make lots of money. The advantage of commoditizing social networking is that although you forgo the potential direct profits, you open up a wider range of pricing and product options. For example:&lt;/p&gt;
&lt;p&gt;- When you try to commoditize a product, you can offer a product for free that other companies charge for. This is what Google did with Android vs iOS and Google Apps vs Microsoft Office. Of course, making social networking free &lt;em&gt;to users&lt;/em&gt; won’t work since Facebook doesn’t directly charge users (I say “directly” because they make money off advertising &amp;#x26; payment commissions, among other ways). However reducing the cost to zero for 3rd-party developers like Zynga who have to pay Facebook large commissions would entice them toward a Google platform (note that, not coincidentally, Google &lt;a href=&quot;http://techcrunch.com/2010/07/10/google-secretly-invested-100-million-in-zynga-preparing-to-launch-google-games/&quot;&gt;invested&lt;/a&gt; $100M in Zynga).&lt;/p&gt;
&lt;p&gt;- Interoperate / embrace open standards – &lt;a href=&quot;http://cdixon.org/2010/01/22/techies-and-normals/&quot;&gt;Normals&lt;/a&gt; don’t care whether a product uses open standards, but by interoperating with other social networks, messaging systems, check-in services, etc., Google could encourage 3rd-party developers to build on their platform. If Google chose, say, RSS for their messaging system, it would already work with tens of thousands of existing tools and websites and would be readily embraced by hackers in the open source community. The web itself (http/html) and email (smtp) are famous examples where the choice to open them unleashed huge waves of innovation and (eventually) killed off closed competitors like AOL.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Strategic choice #2:&lt;/strong&gt; How should Google tie its new social products into its existing products?&lt;/p&gt;
&lt;p&gt;Besides a mountain of cash (&lt;a href=&quot;http://finance.yahoo.com/q/ks?s=GOOG+Key+Statistics&quot;&gt;$30B net&lt;/a&gt;, generating $10B more per year), Google has many existing assets on top of which to build. Google Buzz tried to build off of the “implicit social network” of Gmail contacts, which hasn’t seemed to work so far and raised privacy concerns.&lt;/p&gt;
&lt;p&gt;Google’s recent mini-launch of its “+1″ button seems to be good use of the strategy known as “anchoring”. Google is apparently trying to create a federated network where websites embed +1 buttons  the way they embed Facebook’s Like button except the +1 button would be a signal into Google’s organic ranking algorithm (as an aside, this is where Gmail becomes useful as having millions of logged in users makes spamming +1 buttons much harder). Websites care &lt;strong&gt;a lot&lt;/strong&gt; about their Google organic search rankings (which is why, for example, helping websites improve their rankings is multibillion-dollar industry).  A button that improved search rankings &lt;a href=&quot;http://cdixon.posterous.com/1-button&quot;&gt;would likely get prominent placement by many websites&lt;/a&gt;. Making +1 appealing to users is another story.  The user value is much clearer for the Facebook Like and Twitter Tweet buttons – you send the link to your friends/followers. Providing value to users in addition to websites is a good reason for Google to acquire Twitter (something I think is inevitable if Google is serious about social – see below).&lt;/p&gt;
&lt;p&gt;Finally, Android and YouTube are intriguing potential anchors for a social strategy. I’ll leave it to smarter people to figure out exactly how, but products with such large footprints always present interesting tie-in opportunities.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Strategic Choice #3:&lt;/strong&gt; Should Google buy or build?&lt;/p&gt;
&lt;p&gt;Historically, it is very rare to see tech companies adjust their “DNA” from within. Google’s best new lines of business over the past few years came through the acquisitions of YouTube and Android. Moreover, these acquisition were unusual in that they were left as semi-independent business units. Facebook’s hold on social is incredibly strong – besides the super-strong network effects of its social graph, Facebook has made itself core infrastructure (e.g. Facebook Connect) throughout the web. If Google really wants to catch up, they’ll need to go back to the strategy they succeeded with in the past of acquiring relevant companies and letting them run as separate business units.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;* Disclosure: I’m an investor in a &lt;a href=&quot;http://foundercollective.com/people/Chris-Dixon&quot;&gt;bunch&lt;/a&gt; of &lt;a href=&quot;http://foundercollective.com/companies&quot;&gt;startups&lt;/a&gt;, so you could reasonably argue I’m highly biased here.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[App store shenanigans]]></title><description><![CDATA[I’ve downloaded and tested a few hundred iPhone and iPad apps.  One thing that I’ve noticed is that many of the top rated and ranked apps…]]></description><link>https://cdixon.org/2011/04/01/app-store-shenanigans</link><guid isPermaLink="false">https://cdixon.org/2011/04/01/app-store-shenanigans</guid><pubDate>Fri, 01 Apr 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve downloaded and tested a few hundred iPhone and iPad apps.  One thing that I’ve noticed is that many of the top rated and ranked apps are pretty scammy.  Take for example “Night Vision.”&lt;/p&gt;
&lt;p&gt;It’s a top app in under Utilities for both paid and free iPhone apps.&lt;/p&gt;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-04-01 at 3.03.02 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;If you actually download and test the app, you’ll find it doesn’t work at all. In fact, I found it made objects darker, not brighter.  See these photos with and without the app of the exact same room in the exact same lighting.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;photo&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The app tries to get you to download other apparently scammy apps.  I’m guessing this kind of “cross selling” is how Night Vision got  most of its downloads.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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    style=&quot;padding-bottom: 150.75376884422113%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;photo 1 199x300&quot;
        title=&quot;photo-1&quot;
        src=&quot;/static/d257c8f6a3be826d2e2e724e78799c94/f6261/photo-1-199x300.png&quot;
        srcset=&quot;/static/d257c8f6a3be826d2e2e724e78799c94/924ad/photo-1-199x300.png 170w,
/static/d257c8f6a3be826d2e2e724e78799c94/f6261/photo-1-199x300.png 199w&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;photo-1&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Another clever trick they play is when you look at the app customer ratings on the iPhone App Store you see that it has 4.5 stars:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 200px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;photo 2 200x300&quot;
        title=&quot;photo-2&quot;
        src=&quot;/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png&quot;
        srcset=&quot;/static/93cdee423ea3017caf294af7c5a58e79/924ad/photo-2-200x300.png 170w,
/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png 200w&quot;
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;photo-2&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;But when you look on the desktop web you see the overall ratings are vastly lower and that they seem to game the system by releasing “new versions” to reset their ratings and then probably paying people to write positive reviews:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 23.333333333333332%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAAo0lEQVQY03WP2w6CMAyGef9Xw2sORmPGhcrOdgyBQWeZmGiIX3rRJf3+tZkG3xonrL9KmBeMKxhxrSVB73lHGouZNvZ8YUVZV8cTYw0Xwise7k1QLcDDWouISqlbwiYAYJO7riuL4pDndVUxxkyaRsrG9U9q44fvfpNpMc455VGKc2569qTRylMI4zjuhR/Ze88TUkohZa/FAmYeBmM08b75Hy/v0SCFmHv+GgAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 04 01 at 3 03 39 pm 300x70&quot;
        title=&quot;Screen shot 2011-04-01 at 3.03.39 PM&quot;
        src=&quot;/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png&quot;
        srcset=&quot;/static/09fde74ec4d48c3c0a17076658894e9f/924ad/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png 170w,
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        sizes=&quot;(max-width: 300px) 100vw, 300px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-04-01 at 3.03.39 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Companies like &lt;a href=&quot;https://www.tapjoy.com/&quot;&gt;TapJoy&lt;/a&gt; let you pay to get in the Top 25, and then once you are there you can get “organic” downloads by being on the toplists.&lt;/p&gt;
&lt;p&gt;Another platform, another way to game it.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[A few points about the “tech bubble” debate]]></title><description><![CDATA[Pretty much every day now a major blog or newspaper writes an article asking whether we are experiencing another tech bubble (e.g. see today…]]></description><link>https://cdixon.org/2011/03/27/a-few-points-about-the-tech-bubble-debate</link><guid isPermaLink="false">https://cdixon.org/2011/03/27/a-few-points-about-the-tech-bubble-debate</guid><pubDate>Sun, 27 Mar 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Pretty much every day now a major blog or newspaper writes an article asking whether we are experiencing another tech bubble (e.g. see today’s &lt;a href=&quot;http://www.nytimes.com/2011/03/28/technology/28bubble.html?_r=1&amp;#x26;ref=business&quot;&gt;NYTimes&lt;/a&gt;). I don’t know whether successful private companies like Groupon, Zynga, Facebook and Twitter are over or under priced since I don’t have access to their financials. Regarding public tech companies, it seems to me that incredibly innovative companies like Apple and Google trading at 19 and 22 P/Es respectively is pretty reasonable.&lt;/p&gt;
&lt;p&gt;Rather than take a side on the bubble debate, I mainly just wanted to make a few points that I think should be kept in mind in this discussion.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;A bubble is a decoupling of asset prices (valuations) from their underlying economic fundamentals (which is why the &lt;a href=&quot;http://www.nytimes.com/2011/03/28/technology/28bubble.html?_r=1&amp;#x26;ref=business&quot;&gt;graph&lt;/a&gt; at the top of the NYTimes article today is meaningless). During the housing bubble of 2001-2007, &lt;a href=&quot;http://www.frbsf.org/publications/economics/letter/2004/el2004-27.html&quot;&gt;smart economists&lt;/a&gt; noted that housing prices were significantly higher than their fundamental value (in housing, a common way to measure this is price-to-rent ratio, which is analogous to price-to-earnings in the stock market). During bubbles, investors stop valuing companies based on fundamentals and instead invest based on the expectation that prices will continue to rise and “greater fools” will buy the assets from them at a higher price. This process is unsustainable, which is why bubbles eventually pop.  But when the economic fundamentals are strong, the last buyer can always hold onto the asset and collect a return through the asset’s cash flows, thereby preventing a pop.&lt;/li&gt;
&lt;li&gt;The forces that drive the internet economy are strong and will probably only get stronger. I argue this regarding online advertising &lt;a href=&quot;http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/&quot;&gt;here&lt;/a&gt; so won’t repeat it. Since I wrote that post we’ve also seen a number of tech companies emerge that are generating significant revenues through non-advertising means – “freemium” (e.g Dropbox), paid mobile apps, virtual goods (e.g. Zynga), transaction fees (AirBnB), etc.&lt;/li&gt;
&lt;li&gt;I think it’s a good thing that the speculation on large private tech companies is happening in secondary markets where the risks are being taken by institutions or wealthy individuals. This is in stark contrast to the dot-com bubble of the 90s where many of the people holding the bag when bubble popped were non-rich people who bought stocks through public markets. Obviously this could change if we have a bunch of tech IPOs.&lt;/li&gt;
&lt;/ol&gt;</content:encoded></item><item><title><![CDATA[Founder Stories]]></title><description><![CDATA[Erick Schonfeld from TechCrunch asked me a few months ago if I’d be on a TechCrunch video show where we interviewed startup founders. I love…]]></description><link>https://cdixon.org/2011/03/24/founder-stories</link><guid isPermaLink="false">https://cdixon.org/2011/03/24/founder-stories</guid><pubDate>Thu, 24 Mar 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Erick Schonfeld from TechCrunch asked me a few months ago if I’d be on a TechCrunch video show where we interviewed startup founders. I love startups. While other people watch sports on Sunday, I prefer to sit around with friends and chat about what new startups have launched, how they are doing, what product and marketing strategies are working, etc.&lt;/p&gt;
&lt;p&gt;Erick originally called the show “Startup Sherpa.” The word “sherpa” implied that I was giving people advice. The people we invited to the show were either my peers or people who knew far more than me, so I felt very uncomfortable with that title. I really like to hear “war stories” (a term used in venture capital) but calling it that would have been disrespectful to military people who fight actual wars versus the inconsequential battles we have amongst startups and investors. So we chose “Founder Stories” instead.&lt;/p&gt;
&lt;p&gt;I don’t get paid by TechCrunch and they don’t have a fancy editing budget so what you see is effectively live. I probably make an ass out of myself a lot. I actually haven’t brought myself to watch most of the episodes because I can’t stand all my verbal tics like saying “etc” and “you know.” The saving grace of the show is the incredible people we get to come on to share their stories. I think they participate mostly because it’s TechCrunch – the premier tech blog – and also because they know I love startups. I want to try to learn from the founders’ early experiences rather than ask questions about “hot topics” or “gotchas.” I like to think of “Founder Stories” as a show that I would have wanted to watch when I was a first-time entrepreneur. That’s how I explain the show to potential guests and also how I think about it when Erick and I come up with questions.&lt;/p&gt;
&lt;p&gt;The show is available as a free podcast on iTunes &lt;a href=&quot;http://itunes.apple.com/us/podcast/founder-stories/id423462670&quot;&gt;here&lt;/a&gt;. It’s also on TechCrunch &lt;a href=&quot;http://techcrunch.com/tag/founder-stories/&quot;&gt;here&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;I’ve never talked to Mike Arrington about this but I’d like to thank him for making long form and respectful content available to entrepreneurs and investors. Erick has also been great, along with Josh Zelman who is the AOL/TechCrunch video producer.&lt;/p&gt;
&lt;p&gt;I’d love to hear feedback and suggestions for how to improve the show.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[SEO is no longer a viable marketing strategy for startups]]></title><description><![CDATA[Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial…]]></description><link>https://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups</link><guid isPermaLink="false">https://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups</guid><pubDate>Sat, 05 Mar 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial growth. Their marketing strategy (whether deliberate or not) was roughly: 1) build a community of contributors that created high-quality content, 2) become the definitive place to link to for the topics they covered, 3) rank highly in organic search results.  This led to a virtuous cycle where SEO drew more users, leading to more contributors and more inbound links, leading to more SEO, and so on.  From roughly 2001-2008, SEO was the most effective marketing channel for high-quality informational sites.&lt;/p&gt;
&lt;p&gt;I talk to lots of startups and almost none that I know of post-2008 have gained significant traction through SEO (the rare exceptions tend to be focused on content areas that were previously un-monetizable). Google keeps its ranking algorithms secret, but it is widely believed that inbound links are the preeminent ranking factor.  This ends up rewarding sites that are 1) older and have built up years of inbound links 2) willing to engage in aggressive link building, or what is known as black-hat SEO. (It is also very likely that Google rewards sites for the simple fact that they are older. For educated guesses on which factors matter most for SEO, see SEOMoz’s excellent &lt;a href=&quot;http://www.seomoz.org/article/search-ranking-factors&quot;&gt;search engine ranking factors survey&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Consider, for example, the extremely lucrative category of hotel searches. Search Google for “Four Seasons New York” and this ad-riddled TripAdvisor page ranks highly:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-03-05-at-3-33-03-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.66666666666666%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsSAAALEgHS3X78AAACwUlEQVQozz1Sy27TUBD1B/Ar7PgDtuxYsEWwgC9AICQkKK9FkZBYIPpgAWoFQX1AS1tCUSHpKy2Jm8Z26kfia/vm2rl+XtuxHT9aXIQYHR3NjDQ6ZzRDkcAVOZ7rsorRj9Jx+0ulU3n1dWN15UAmdmjoxHHScFSclXH6F2dnxel5WaW/UJvtteWdT4v1ykJtbq21NDP38Nnk1cez916sTK03Zn+05n/xX/f7PzY7Cx93pufrU/P1NyV/2Hk7VZ2kvh+93+rMfWtNd5Q6tEEXMwfaLrAZedhi4G8O/mbU/WOlQbPrB1y1wf9q9eptZa/sV3ZmqKNe7UiqN8UqNERZBizHioIg9SSW4/i/iQLR0A48EsRRHgZhNBplWVra/kYvU8hE2HSCIAp8/0Q4kQCnIoAMHekDPyBZkY6zJC8yXujS3UMAAVCh6bhFcbbeXKQEyAiQU03JH1mmZWLL0IdYUZEG0UDHURym6agoMrZXa4s/DXOgIaDpIMvyc+Wu2uaUjmbJQTjYeHXjw93L25WnAEGgiqLE8gItCEfjsYOs3gFTkxWZFySX2KXt9eYCJUFGhrxhadgUH1y/dOXihennt73BPhI+G/LuKMaEoCSxLIL7UHG8mPhpKVsOb7QWKQa0WPmYRKaisZMPr925eWny0S2dX5Iary2thi0t8NE4tYgfqKo7HHoeiRx3dJqXw0vntnmNCxJbN4SF2XsvJ249mbivDQ0DQzd02S6NsZymdhj6lu2VBkomQfhPWUKs7aNRamFT3VxdXVlcknpMnjlxhJPYLLcdJ3YU47xITyM/JZZnmcYQp3FepT9TJ0p7gGXsqg7BzTY4ZkCS2HGM/yOKh+OkPITY7W9rsKmAQ1VrOWb5d+8oETKS1tUt4BHjhOewaSSJmyReXPLYK1EmeR4gtbO1tcrQNdRvDPr73oBe25v5A7zllt6IXtevAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 03 05 at 3 33 03 pm 300x194&quot;
        title=&quot;Screen shot 2011-03-05 at 3.33.03 PM&quot;
        src=&quot;/static/e26eb3bdd00ae79c155f7da6474ef6e7/135ae/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png&quot;
        srcset=&quot;/static/e26eb3bdd00ae79c155f7da6474ef6e7/924ad/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png 170w,
/static/e26eb3bdd00ae79c155f7da6474ef6e7/135ae/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png 300w&quot;
        sizes=&quot;(max-width: 300px) 100vw, 300px&quot;
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      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-03-05 at 3.33.03 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(TechCrunch had a very good &lt;a href=&quot;http://techcrunch.com/2010/11/12/tripadvisor-is-a-great-advertisement/&quot;&gt;article&lt;/a&gt; on the TripAdvisor’s decline in quality).&lt;/p&gt;
&lt;p&gt;In contrast, this cleaner and more informative page from the relatively new website &lt;a href=&quot;http://www.oyster.com&quot;&gt;Oyster&lt;/a&gt; ranks much lower in Google results:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2011-03-05-at-3-33-35-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.666666666666664%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2011 03 05 at 3 33 35 pm 300x173&quot;
        title=&quot;Screen shot 2011-03-05 at 3.33.35 PM&quot;
        src=&quot;/static/c6f96cbf33d6955f37c03454ff30baf5/135ae/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png&quot;
        srcset=&quot;/static/c6f96cbf33d6955f37c03454ff30baf5/924ad/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png 170w,
/static/c6f96cbf33d6955f37c03454ff30baf5/135ae/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png 300w&quot;
        sizes=&quot;(max-width: 300px) 100vw, 300px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2011-03-05 at 3.33.35 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;As a result, web users have a worse experience and startups are incentivized to clutter their pages with ads and use aggressive tactics to increase their SEO when they should just be focused on creating great user experiences.&lt;/p&gt;
&lt;p&gt;The web economy (ecommerce + advertising) is a multi-hundred billion dollar market.  Much of this revenue comes from traffic that comes from SEO. This has led to a multibillion-dollar SEO industry. Some of the SEO industry is “white hat,” which generally means consultants giving benign advice for making websites search-engine friendly. But there is also a huge industry of black-hat SEO consultants who trade and sell links, along with companies like content farms that promote their own low-quality content through aggressive SEO tactics.&lt;/p&gt;
&lt;p&gt;Google seems to be doing everything it can to improve its algorithms so that the best content rises to the top (the recent &lt;a href=&quot;http://www.wired.com/epicenter/2011/03/the-panda-that-hates-farms/&quot;&gt;“panda” update&lt;/a&gt; seems to be a step forward). But there are many billions of dollars and tens of thousands of people working to game SEO. And for now, at least, high-quality content seems to be losing. Until that changes, startups – who generally have small teams, small budgets, and the scruples to avoid black-hat tactics – should no longer consider SEO a viable marketing strategy.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The importance of predictability for platform developers]]></title><description><![CDATA[A platform is a technology or product upon which many other technologies or products are built. Some platforms are controlled by a single…]]></description><link>https://cdixon.org/2011/02/21/the-importance-of-predictability-for-platform-developers</link><guid isPermaLink="false">https://cdixon.org/2011/02/21/the-importance-of-predictability-for-platform-developers</guid><pubDate>Mon, 21 Feb 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A platform is a technology or product upon which many other technologies or products are built. Some platforms are controlled by a single corporation: e.g. Windows, iOS, and Facebook. Some are controlled by standards committees or groups of companies: e.g. the web (html/http), RSS, and email (smtp).&lt;/p&gt;
&lt;p&gt;Platforms succeed when they are 1) financially sustainable, and 2) have a sufficient number of developers that are financially sustainable. Fostering a successful developer community means convincing developers (and, possibly, investors in developers) that the platform is a worthwhile investment of time and money.&lt;/p&gt;
&lt;p&gt;Developers who create applications for platforms take on all the usual risks related to launching a new product, but in addition take on platform-specific risks, namely:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Platform decline: the platform will decline or go away entirely.&lt;/li&gt;
&lt;li&gt;Subsumption risk: the platform will subsume the functionality of the developer’s application.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;The most successful platforms try to mitigate these risks for developers (not just the appearance of these risks). One way to mitigate platform decline risk is to launch the platform after the platform’s core product is already successful, as Facebook did with its app platform and Apple did with its iOS platform. Platforms that are not yet launched or established can use other methods to reassure developers; for example, when Microsoft launched the first Xbox they very publicly announced they would invest $1B in the platform.&lt;/p&gt;
&lt;p&gt;To mitigate subsumption risk, the platform should give developers predictability around the platform’s feature roadmap. Platforms can do this explicitly by divulging their product roadmap but more often do it implicitly by demonstrating predictable patterns of feature development. Developers and investors are willing to invest in the iOS platform because – although Apple will take 30% of the revenue – it is highly unlikely that Apple will, say, create games to compete with Angry Birds or news to compete with The New York Times. Similarly, Facebook has thus far stuck to “utility” features and not competed with game makers, dating apps, etc.&lt;/p&gt;
&lt;p&gt;Platforms that are controlled by for-profit businesses that don’t yet have established business models have special challenges. These companies are usually in highly experimental modes and therefore probably themselves don’t know their future core features. The best they can do to mitigate developers’ risks are 1) provide as much guidance as possible on future features, and 2) when developer subsumption is necessary, do so in a way that keeps the developer ecosystem financially healthy – for example, by acquiring the subsumed products.&lt;/p&gt;
&lt;p&gt;The least risky platforms to develop on are successful open platforms like the web, email, and Linux. These platforms tend to change slowly and have very public development roadmaps. In the rare case where a technology is subsumed by an open platform, it is usually apparent far in advance. For example, Adobe Flash might be subsumed by the canvas element in HTML5, but Adobe had years to see HTML5 approaching and adjust its strategy accordingly. The predictability of open platforms is the main reason that vast amounts of wealth have been created on top of them and investment around them continues unabated.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Selling pickaxes during a gold rush]]></title><description><![CDATA[There is a saying in the startup world that “you can mine for gold or you can sell pickaxes.” This is of course an allusion to the…]]></description><link>https://cdixon.org/2011/02/05/selling-pickaxes-during-a-gold-rush</link><guid isPermaLink="false">https://cdixon.org/2011/02/05/selling-pickaxes-during-a-gold-rush</guid><pubDate>Sat, 05 Feb 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There is a saying in the startup world that “you can mine for gold or you can sell pickaxes.” This is of course an allusion to the California Gold Rush where some of the most successful business people such as &lt;a href=&quot;http://en.wikipedia.org/wiki/Levi_Strauss&quot;&gt;Levi Strauss&lt;/a&gt; and &lt;a href=&quot;http://en.wikipedia.org/wiki/Samuel_Brannan&quot;&gt;Samuel Brannan&lt;/a&gt; didn’t mine for gold themselves but instead sold supplies to miners – wheelbarrows, tents, jeans, pickaxes etc. Mining for gold was the more glamorous path but actually turned out, in aggregate, to be a worse return on capital and labor than selling supplies.&lt;/p&gt;
&lt;p&gt;When a major new technology trend emerges – say, the rise of online video or social media – entrepreneurs can try to capitalize on the trend by creating a consumer product (mining for gold), or by creating tools to enable consumer products (selling pickaxes).  For most technology trends, the number of successful companies created in gold mining and pickaxes are comparable, yet the gold mining businesses tend to get much more attention. In online video, YouTube is often thought of as the big winner; however, to date, more money has been made by online video by infrastructure suppliers like &lt;a href=&quot;http://finance.yahoo.com/q/bc?s=AKAM&amp;#x26;t=my&amp;#x26;l=on&amp;#x26;z=l&amp;#x26;q=l&amp;#x26;c=&quot;&gt;Akamai&lt;/a&gt;. Y-combinator is known for their high-profile B2C startups but their &lt;a href=&quot;http://yclist.com/&quot;&gt;biggest exits&lt;/a&gt; to date have been in infrastructure (most recently Heroku which rode the popularity of Ruby on Rails to a &gt;$200M exit)*.&lt;/p&gt;
&lt;p&gt;When you start a company, the most important consideration should be working on a product you love (a startup can be a 5+ year endeavor so if you don’t love it you probably won’t be able to endure the ups and downs).  A secondary consideration should be matching the skills of the founders to the market.  Tools companies tend to require stronger technical and sales skills, whereas B2C companies tend to be more about predicting consumer tastes and marketing skills. A final consideration should be the supply-and-demand of startups in the space.  Because B2C companies tend to be “sexier” and get more press coverage, many entrepreneurs are drawn to them. This tends to lead to greater competition even though the market opportunities might not justify it.&lt;/p&gt;
&lt;p&gt;There are many exciting technology opportunities emerging today: some are horizontal like mobile, location, and local; others are vertical like fashion, art, real estate, education, finance and energy. If you are an entrepreneur thinking about starting a company around these trends, consider selling pickaxes.&lt;/p&gt;
&lt;p&gt;* Note that there are many great B2C YC companies, so the list of exits will no doubt change and probably skew more towards B2C over time.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.]]></title><description><![CDATA[People love to focus on horse races:  NYC vs Silcon Valley, Facebook vs Twitter, IPO markets vs private exchanges, the valuation of some…]]></description><link>https://cdixon.org/2011/01/12/predicting-the-future-of-the-internet-is-easy-anything-it-hasnt-yet-dramatically-transformed-it-will</link><guid isPermaLink="false">https://cdixon.org/2011/01/12/predicting-the-future-of-the-internet-is-easy-anything-it-hasnt-yet-dramatically-transformed-it-will</guid><pubDate>Wed, 12 Jan 2011 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;People love to focus on horse races:  NYC vs Silcon Valley, Facebook vs Twitter, IPO markets vs private exchanges, the valuation of some startup vs some other startup.  Like a lot of people in the tech industry, I’ve gotten inquiries recently on the meaning of Facebook’s “private” IPO with Goldman Sachs, whether VC valuations are indicative of a bubble, whether such-and-such startup is overvalued, and so on.&lt;/p&gt;
&lt;p&gt;These questions are all footnotes that will be forgotten in a few years.  The Internet has gone through fits and starts – in particular the dot com crash of 2000 disillusioned many – but every year we see it transform industries that previously sauntered along blissfully denying its existence.  Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV &amp;#x26; movies, real estate, politics &amp;#x26; government. Soon to be transformed (among many others): healthcare, education, energy.&lt;/p&gt;
&lt;p&gt;The modern economy runs primarily on information, and the Internet is by orders of magnitude the greatest information mechanism ever invented.  In a few years, we’ll look back in amazement that in 2011 we still used brokers to help us find houses, that doctors kept records scribbled on notepads, that government information was carefully spoon-fed to a compliant press corps, and that scarcity of information and tools was a primary inhibitor to education.&lt;/p&gt;
&lt;p&gt;Thus far the US has led Internet innovation. There are things the US can do to keep this lead, including: 1) exporting the entrepreneurial ethos of Silicon Valley to the rest of the country (including places like my home city, New York), 2) allowing talented people to go where their skills are most needed (e.g. by changing US immigration policies), 3) convincing the upcoming generation to innovate in sectors that have a direct impact on the quality of peoples’ lives (Internet, healthcare, energy, education) instead of wasting time on sectors that were historically prestigious (e.g. finance and law) but add little to negative economic and societal value.&lt;/p&gt;
&lt;p&gt;Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.  People, companies, investors and even countries can’t stop this transformation. The only choice you have is whether you join the side of innovation and progress or you don’t.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The “thin edge of the wedge” strategy]]></title><description><![CDATA[Establishing relationships with new users is the hardest part of growing a startup.  For consumer products establishing relationships can…]]></description><link>https://cdixon.org/2010/12/26/the-thin-edge-of-the-wedge-strategy</link><guid isPermaLink="false">https://cdixon.org/2010/12/26/the-thin-edge-of-the-wedge-strategy</guid><pubDate>Sun, 26 Dec 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Establishing relationships with new users is the hardest part of growing a startup.  For consumer products establishing relationships can mean many things: installs, registrations, purchases, or even just getting users to think of your website as a place to go for certain purposes.  For B2B products, establishing relationships means getting internal users or testers and eventually contracts and payments. For business development partners – for example API/widget partners – establishing relationships usually means getting functionality embedded in partners’ products (e.g. a widget on their website).&lt;/p&gt;
&lt;p&gt;One common strategy for establishing this initial relationship is what is sometimes known as the “thin edge of the wedge” strategy (aka the “tip of the spear” strategy).  This strategy is analogous to the &lt;a href=&quot;http://cdixon.org/2010/08/21/the-bowling-pin-strategy/&quot;&gt;bowling pin strategy&lt;/a&gt;: both are about attacking a smaller problem first and then expanding out.  The difference is that the wedge strategy is about product tactics while the bowling pin strategy is about marketing tactics.&lt;/p&gt;
&lt;p&gt;Sometimes the wedge can be a simple feature that existing companies overlooked or saw as inconsequential. The ability to share photos on social networks was (strangely) missing from the default iPhone camera app (and sharing was missing from many third-party camera apps like Hipstimatic that have popular features like &lt;a href=&quot;http://hunch.com/lo-fi-cameras/&quot;&gt;lo-fi camera&lt;/a&gt; filters), so Instagram and Picplz filled the void. &lt;a href=&quot;http://twitter.com/#!/rabois/status/3517058721517568&quot;&gt;Presumably&lt;/a&gt;, these startups are going to try to use mobile photo sharing as the wedge into larger products (perhaps full-fledged social networks?).&lt;/p&gt;
&lt;p&gt;Sometimes the wedge is a “&lt;a href=&quot;http://cdixon.org/2010/08/21/the-bowling-pin-strategy/&quot;&gt;single player mode&lt;/a&gt;” – a famous example is early adopters who used Delicious to store browser bookmarks in the cloud and then only later – once the user base hit critical mass – used its social bookmarking features. Other times the wedge lies on one side of a two-sided market, in which case the wedge strategy could be thought of as a variant of the &lt;a href=&quot;http://cdixon.org/2010/10/17/the-ladies-night-strategy/&quot;&gt;“ladies night” strategy&lt;/a&gt;. I’m told that OpenTable initially used the wedge strategy by providing restaurants with terminals that acted like simple, single-player CRM systems. Once they acquired a critical mass of restaurants in key cities (judiciously chosen using the bowling pin strategy), opentable.com had sufficient inventory to become useful as a one-stop shop for consumers.&lt;/p&gt;
&lt;p&gt;Critics sometimes confuse wedge features with final products. For example, some argue that mobile photo sharing is “just a feature,” or that game mechanics on geo apps like Foursquare are just faddish “&lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toys&lt;/a&gt;.” Some go so far as to argue that the tech startup world as a whole is going through a phase of just building “dinky” features and companies. Perhaps some startups have no plan and really are just building features, likely with the hope of flipping themselves to larger companies. Good startups, however, think about the whole wedge from the start. They build an initial user base with simple features and then quickly iterate to create products that are enduringly useful, thereby creating companies that have stand-alone, defensible value.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The interoperability of social networks]]></title><description><![CDATA[Google recently added a caustic warning message when users attempt to export their Google Contacts to Facebook: Hold on a second. Are you…]]></description><link>https://cdixon.org/2010/11/10/the-interoperability-of-social-networks</link><guid isPermaLink="false">https://cdixon.org/2010/11/10/the-interoperability-of-social-networks</guid><pubDate>Wed, 10 Nov 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Google recently added a caustic warning &lt;a href=&quot;http://www.google.com/mail/help/contacts_export_confirm.html&quot;&gt;message&lt;/a&gt; when users attempt to export their Google Contacts to Facebook:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Hold on a second. Are you super sure you want to import your contact information for your friends into a service that won’t let you get it out?&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Facebook allows users to download their personal information (photos, profile info, etc) but has been fiercely protective of the social graph (you can’t download friends, etc). The downloaded data arrives in a .zip file – hardly a serious attempt to interoperate using modern APIs (&lt;em&gt;update: Facebook employee corrects me/clarifies in comments&lt;/em&gt; &lt;a href=&quot;http://cdixon.org/2010/11/10/the-interoperability-of-social-networks/#comment-96196129&quot;&gt;&lt;em&gt;here&lt;/em&gt;&lt;/a&gt;). In contrast, Google has taken an aggressively open posture with respect to the social graph, calling Facebook’s policy “data protectionism.”&lt;/p&gt;
&lt;p&gt;The economic logic behind these positions is a straightforward application of &lt;a href=&quot;http://en.wikipedia.org/wiki/Metcalfe&amp;#x27;s_law&quot;&gt;Metcalf’s law&lt;/a&gt;, which states that the value of a network is the square of the number of nodes in the network*.  A corollary to Metcalf’s law is that when two networks connect or interoperate the smaller network benefits more than the larger network does. If network A has 10 users then according to Metcalf’s law its “value” is 100 (10*10).   If network B has 20 users than it’s value is 400 (20*20). If they interoperate, network A gains 400 in value but network B only gains 100 in value. Interoperating is generally good for end users, but assuming the two networks are directly competitive – one’s gain is the other’s loss – the larger network loses.&lt;/p&gt;
&lt;p&gt;A similar network interoperability battle happened last decade among Instant Messaging networks. AIM was the dominant network for many years and refused to interoperate with other networks. Google Chat adopted open standards (Jabber) and MSN and Yahoo were much more open to interoperating. Eventually this battle ended in a whimper — AIM never generated much revenue, and capitulated to aggregators and openness.  (Capitulating was probably a big mistake – they had the opportunity to be as financially successful as Skype or &lt;a href=&quot;http://en.wikipedia.org/wiki/Tencent_QQ&quot;&gt;Tencent&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Google might very well genuinely believe in openness. But it is also &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;strategically wise&lt;/a&gt; for them to be open in layers that are not strategic (mobile OS, social graph, Google docs) while remaining closed in layers that are strategic (search ranking algorithm, virtually all of their advertising services).&lt;/p&gt;
&lt;p&gt;When Google releases their long-awaited new social network, Google Me, expect an emphasis on openness. This could create a rich ecosystem around their social platform that could put pressure on Facebook to interoperate. True interoperability would be great for startups, innovation, and – most importantly – end users.&lt;/p&gt;
&lt;p&gt;* Metcalf’s law assumes that every node is connected to every node and each connection is equally valuable. Real world networks are normally not like this. In particular, social networks are much more clustered and therefore have somewhere between linear and exponential utility growth with each additional user.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Timing your startup]]></title><description><![CDATA[I never had the opportunity to invest in YouTube but I have to admit that if I did I probably would have passed (which of course would have…]]></description><link>https://cdixon.org/2010/11/07/timing-your-startup</link><guid isPermaLink="false">https://cdixon.org/2010/11/07/timing-your-startup</guid><pubDate>Sun, 07 Nov 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I never had the opportunity to invest in YouTube but I have to admit that if I did I probably would have passed (which of course would have been a huge mistake). I’d been around the web long enough to remember the dozens of companies before YouTube that tried to create crowdsourced video sites and failed. Based on “pattern recognition” (a dangerous thing to rely on), I was deeply skeptical of the space.&lt;/p&gt;
&lt;p&gt;What I failed to appreciate was that the prior crowdsourced video sites were ahead of their time. YouTube built a great product, but, more importantly, got the market timing just right. By 2005, all the pieces were in place to enable crowdsourced video – the proliferation of home broadband, digital camcorders, a version of Flash where videos “just worked,” copyrighted web content that could be exported to YouTube, and blogs that wanted to embed videos.&lt;/p&gt;
&lt;p&gt;Almost anything you build on the web has already been tried in one form or another. This should not deter you. Antecedents existed for Google, Facebook, Groupon, and almost every other tech startup that has succeeded since the dot-com bubble.&lt;/p&gt;
&lt;p&gt;Entrepreneurs should always ask themselves “why will I succeed where others failed?” If the answer is simply “I’m doing it right” or “I’m smarter,” you are probably underestimating your antecedents, which were probably run by competent or even great entrepreneurs who did everything possible to succeed. Instead your answer should include an explanation about why the timing is right – about some fundamental changes in the world that enable the idea you are pursuing to finally succeed. If the necessary conditions were in place, say, a year ago, that might still be ok – YouTube happened to nail their product out of the gate, but if they hadn’t a company started later might have succeeded in their place.&lt;/p&gt;
&lt;p&gt;Often the necessary conditions are only beginning to emerge and knowing when they will do so sufficiently is very hard to predict. We all know the internet will become fully social, personalized, mobile, location-based, interactive, etc. and lots of new, successful startups will be built as a result. What is very hard to know is when these things will happen at scale.&lt;/p&gt;
&lt;p&gt;One way to mitigate timing risk is to manage your cash accordingly. If you are trying to ride existing trends you should ramp up aggressively. If you are betting on emerging trends it is better to keep your burn low and runway long.  This takes discipline and patience but is also the way you hit it really big.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Instrumenting the offline world]]></title><description><![CDATA[In the last decade there have been major advances in storing, analyzing, and acting upon extremely large data sets.  Data sets that were…]]></description><link>https://cdixon.org/2010/10/29/instrumenting-the-offline-world</link><guid isPermaLink="false">https://cdixon.org/2010/10/29/instrumenting-the-offline-world</guid><pubDate>Fri, 29 Oct 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In the last decade there have been major advances in storing, analyzing, and acting upon extremely large data sets.  Data sets that were previously left dormant are now being put to (&lt;a href=&quot;http://cdixon.org/2010/10/22/online-privacy-whats-at-stake/&quot;&gt;mostly&lt;/a&gt;) constructive use. But the vast majority of information in the world isn’t available for analysis because it isn’t being electronically collected.&lt;/p&gt;
&lt;p&gt;This is changing rapidly as new data collection mechanisms are implemented – what engineers refer to as &lt;a href=&quot;http://en.wikipedia.org/wiki/Instrumentation&quot;&gt;instrumentation&lt;/a&gt;. Common examples of instrumentation include thermometers, public safety cameras, and heart rate monitors.&lt;/p&gt;
&lt;p&gt;Smart phones are one obvious new source of potential instrumentation.  A person’s location, activities, audio and visual environment – and probably many more things that haven’t been thought of yet – can now be monitored.  This of course raises privacy issues.  Hopefully these privacy issues will be solved by requiring explicit user opt-in.  If so, this will require creating incentives for people to do so.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.foursquare.com&quot;&gt;Foursquare&lt;/a&gt; instruments location in an opt-in way through the check in. The incentives are social and game-like, but the data produced could be useful for many more “serious” purposes.  &lt;a href=&quot;http://www.fitbit.com/&quot;&gt;Fitbit&lt;/a&gt; instruments a person’s health-related activity. The immediate incentive is to measure and improve your own health, but the aggregate data could be analyzed by medical researchers to benefit others.&lt;/p&gt;
&lt;p&gt;In manufacturing, there has been a lot of interesting &lt;a href=&quot;http://hpsweb.honeywell.com/Cultures/en-US/Products/wireless/SecondGenerationWireless/default.htm?gclid=CK-M6qCe-KQCFeJN5QodpxUjhw&quot;&gt;innovation&lt;/a&gt; around monitoring machinery, for example by using loosely joined, inexpensive &lt;a href=&quot;http://en.wikipedia.org/wiki/Mesh_networking&quot;&gt;mesh networks&lt;/a&gt;.  In homes, protocols like &lt;a href=&quot;http://www.zigbee.org/Markets/ZigBeeHomeAutomation/Overview.aspx&quot;&gt;ZigBee&lt;/a&gt; allow devices to communicate which allows, for example, automation of tedious tasks and improved energy efficiency.&lt;/p&gt;
&lt;p&gt;In the next decade, there will be a massive amount of innovation and opportunity around the &lt;a href=&quot;http://informationarbitrage.com/post/1359525958/big-ideas-around-big-problems-in-big-data&quot;&gt;big data&lt;/a&gt; stack. Instrumentation will be the foundational layer of that stack.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[You need to use social services to understand them]]></title><description><![CDATA[I don’t know if Malcolm Gladwell is right when he claims “the revolution will not be tweeted,” but I can say with certainty that the Twitter…]]></description><link>https://cdixon.org/2010/10/23/you-need-to-use-social-services-to-understand-them</link><guid isPermaLink="false">https://cdixon.org/2010/10/23/you-need-to-use-social-services-to-understand-them</guid><pubDate>Sat, 23 Oct 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I don’t know if Malcolm Gladwell is right when he claims “&lt;a href=&quot;http://www.newyorker.com/reporting/2010/10/04/101004fa_fact_gladwell&quot;&gt;the revolution will not be tweeted&lt;/a&gt;,” but I can say with certainty that the Twitter he describes is not the Twitter I know. Gladwell’s central argument is that Twitter creates weak ties but social movements require strong ties. I’ve made more strong ties through Twitter (and blogging) than I have through any communications medium I’ve ever used before. The relationships start off weak – a retweet, @ reply, or blog comment – but often strengthen through further discussions and eventually become new friendships and business relationships.&lt;/p&gt;
&lt;p&gt;I can see why Gladwell gets this wrong – he doesn’t &lt;a href=&quot;http://twitter.com/#!/gladwell&quot;&gt;seem&lt;/a&gt; to really use Twitter (he does &lt;a href=&quot;http://gladwell.typepad.com/&quot;&gt;blog&lt;/a&gt; occasionally). I barely tweeted or blogged for a long time too. I read blogs basically since their advent, but social services are fundamentally participatory: reading blogs/tweets is to social services as watching TV is to a real life conversations. I finally relented at the insistence of &lt;a href=&quot;http://www.caterina.net&quot;&gt;Caterina&lt;/a&gt;, who had the foresight to insist that everyone at &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; blog, tweet, contribute to open source projects, etc. I now get some of my best ideas from responses to tweets and blog posts, and have developed dozens of strong relationships through the experience.&lt;/p&gt;
&lt;p&gt;I made some &lt;a href=&quot;http://twitter.com/#!/cdixon/status/28051825694&quot;&gt;jokes&lt;/a&gt; on Twitter the past few days about Kleiner Perkins’ new social fund.  These were meant to be lighthearted: I only know one person at KP and from everything I’ve seen they seem to be smart, friendly people. But underneath the jokes lies a real issue: the partners there don’t seem to really participate in social services (something they only underscored by announcing their new fund at a press conference that targeted traditional media outlets).&lt;/p&gt;
&lt;p&gt;I’d love to engage in a debate with smart people like Gladwell about the impact of the social web on culture, politics, activism and so on. I also think it’s great to see savvy investors like KP allocate significant resources to the next wave of social web innovation. But it’s hard for me to take them seriously when they don’t seem to take their subject matter seriously.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Online privacy: what’s at stake]]></title><description><![CDATA[It is widely believed that a flourishing democracy requires an independent, diverse, and financially solvent press.  With print newspapers…]]></description><link>https://cdixon.org/2010/10/21/online-privacy-whats-at-stake</link><guid isPermaLink="false">https://cdixon.org/2010/10/21/online-privacy-whats-at-stake</guid><pubDate>Thu, 21 Oct 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It is widely believed that a flourishing democracy requires an independent, diverse, and financially solvent press.  With print newspapers set to &lt;a href=&quot;http://www.editorsweblog.org/newspaper/2010/09/arthur_sulzberger_on_charging_online_to.php&quot;&gt;disappear&lt;/a&gt; in the next few years, the future of quality journalism is highly uncertain. This year, the online version of the New York Times will &lt;a href=&quot;http://www.businessinsider.com/new-york-times-earnings-2010-10&quot;&gt;generate&lt;/a&gt; about $200M in revenue, a number that will need to approximately triple to support the current Times newsroom.&lt;/p&gt;
&lt;p&gt;Most people who understand Internet economics believe that the best hope for online journalism is online advertising. Luckily, online advertising has significant room for improvement. Most of the revenue of the Times’ online business is generated through display ads. The main metric used to price display ads is derived from the rate at which users click on the ads, a rate which today is dismally low.  Thus the Times could continue to support its current newsroom staff if display ads became even moderately effective.&lt;/p&gt;
&lt;p&gt;Lots of smart people are working on improving the efficacy of display advertising. Large companies like Google and Microsoft are investing billions in the problem. As usual, though, the best ideas are coming from startups. Companies like &lt;a href=&quot;http://bluekai.com/&quot;&gt;Blue Kai&lt;/a&gt; and &lt;a href=&quot;http://www.magnetic.is/&quot;&gt;Magnetic&lt;/a&gt; are bringing search intent (particularly &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt; – the core of Google’s profits) to display ads.  Companies like &lt;a href=&quot;http://media6degrees.com/&quot;&gt;Media6Degrees&lt;/a&gt; are using social relations to target ads based on the principle that “birds of a feather flock together” (Facebook will &lt;a href=&quot;http://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads/&quot;&gt;likely&lt;/a&gt; start doing this soon as well).  &lt;a href=&quot;http://www.solvemedia.com//index.html&quot;&gt;Solve Media&lt;/a&gt; turns the hassle of registration into an engaging marketing event.  &lt;a href=&quot;http://www.convertro.com&quot;&gt;Convertro&lt;/a&gt; is working on properly attributing online purchases “up the funnel” from sites that harvest intent (search, coupon sites) to sites that generate intent (media, commerce guides). All told, there are a few hundred well-funded ad tech startups developing clever methods to improve display advertising.&lt;/p&gt;
&lt;p&gt;Many of these targeting technologies rely on gathering information about users, something that inevitably raises concerns about privacy. Until recently, online privacy depended mostly on anonymity. There is a big difference between advertisers knowing, say, users’ sexual preferences and knowing users’ sexual preferences &lt;em&gt;plus&lt;/em&gt; personally identifiable information like their names.  Like most people, I don’t mind if it’s easy to find my real name along with my job history, but I do mind if it’s easy to discover other personal details about me. When I’m not anonymous (e.g. on Facebook) I want to control what is disclosed – to have some privacy – but when I’m anonymous I’m far less concerned about information gathered for marketing purposes.&lt;/p&gt;
&lt;p&gt;Before the rise of social networks, online ad targeting services (mostly) tracked people anonymously, through cookies that weren’t linked to personally identifiable information.  Social networks have provided the means to de-anonymize information that was previously anonymous. &lt;a href=&quot;http://gigaom.com/2010/10/21/rapleaf-web-startups/?utm_source=earth2tech&amp;#x26;utm_medium=specialtopics&quot;&gt;Apparently&lt;/a&gt;, the wall has been breached between 1) my real identity plus my self-moderated public information, and 2) my anonymous, non-self-moderated private information.&lt;/p&gt;
&lt;p&gt;The good news is that the things users want to keep secret are almost always the least important things to online advertisers. It turns out that knowing people are trying to buy new washing machines or plane tickets to Hawaii is vastly more monetizeable than their names, who they were dating, or the dumb things they did in college. Thus, there are probably a set of policies that allow ad targeting to succeed while also letting users control what is associated with their real identities.  Hopefully, we can have an informed and nuanced debate about what these policies might be. The stakes are high.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Note:  As with almost everything I write on this blog, I have a ton of conflicts of interest.  Among them: I’m an investor, directly or indirectly, in a bunch of technology startups.  Some of these – including some companies mentioned above – are trying to create new advertising technologies. I am currently the CEO &amp;#x26; Cofounder of&lt;/em&gt; &lt;a href=&quot;http://hunch.com&quot;&gt;&lt;em&gt;Hunch&lt;/em&gt;&lt;/a&gt;&lt;em&gt;, which among other things is trying to personalize the internet through an explicit user opt-in mechanism.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some thoughts on incumbents]]></title><description><![CDATA[Reposted from Oct 7, 2010 from cdixon.posterous.com By “incumbents” I mean the big companies that are loosely competitive to your startup…]]></description><link>https://cdixon.org/2010/10/07/some-thoughts-on-incumbents</link><guid isPermaLink="false">https://cdixon.org/2010/10/07/some-thoughts-on-incumbents</guid><pubDate>Thu, 07 Oct 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;&lt;em&gt;&lt;a href=&quot;http://cdixon.posterous.com/thoughts-on-incumbents-from-a-startups-perspe&quot;&gt;Reposted&lt;/a&gt; from Oct 7, 2010 from cdixon.posterous.com&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;By “incumbents” I mean the big companies that are loosely competitive to your startup.&lt;/p&gt;
&lt;p&gt;- The first thing to do is try to understand the incumbent’s strategy.  For example, see my &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;analysis&lt;/a&gt; of Google’s strategy.&lt;/p&gt;
&lt;p&gt;- Being on an incumbent’s strategic roadmap is a double-edged sword.  On the one hand, they might copy what you build or acquire a competitor.  On the other hand, if you build a valuable asset you could sell your company the acquirer at a “strategic premium.”&lt;/p&gt;
&lt;p&gt;- Incumbents that don’t yet have a successful business model (e.g. Twitter) might &lt;strong&gt;think&lt;/strong&gt; they have a strategy, but expect it to change as they figure out their business model.  An incumbent without a successful business model is like a drunk person firing an Uzi around the room.&lt;/p&gt;
&lt;p&gt;- Understand the incumbent’s acquisition philosophy. More mature companies like Cisco barely try to do R&amp;#x26;D and are happy to acquire startups at high prices.  Incumbents that are immature like Facebook only do “talent acquisitions” which are generally bad outcomes for VC-backed startups (but good for bootstrapped or lightly funded startups). Google is semi-mature, and does a combination of talent and strategic acquisitions.&lt;/p&gt;
&lt;p&gt;- Understand the incumbent’s partnership philosophy.  Yahoo and Microsoft are currently very open to partnerships with startups.  Google and Facebook like to either acquire or build internally. If you don’t intend to sell your company, don’t talk seriously about partnerships to incumbents that don’t seriously consider them.&lt;/p&gt;
&lt;p&gt;- Every incumbent has M&amp;#x26;A people who spend a lot of their time collecting market intelligence. Just because they call you and hint at acquisition doesn’t mean they want to buy you – they are likely just fishing for info. If they really want to buy you, they will aggressively pursue you and make an offer.  As VCs like to say, startups are bought, not sold.&lt;/p&gt;
&lt;p&gt;- Try to focus on features/technologies that the incumbents aren’t good at.  Facebook is good at social and social-related (hard-core) technology.  Thus far they’ve kept their features at the “utility level” an haven’t built non-utility features (e.g. games, virtual goods, game mechanics).  Google thus far has been weak at social and Apple has been weak at web services.&lt;/p&gt;
&lt;p&gt;- Try to focus on business arrangements that the incumbents aren’t good at.  Facebook and Google only do outbound deals with large companies.  With small companies (e.g. local venues, small publishers) they try to generate business via inbound/self service. Building business relationships that the incumbents don’t have can be a very valuable asset.&lt;/p&gt;
&lt;p&gt;- Be careful building on platforms where the incumbent has demonstrated an inconsistent attitude toward developers. Apple rejects apps somewhat arbitrarily and takes a healthy share of revenues, but is generally consistent with app developers.  You can pretty safely predict what they will will allow to flourish. Twitter has been wildly inconsistent and shouldn’t be trusted as a platform.  Facebook has been mostly consistent although recently changed the rules on companies like Zynga with their new payment platform (that said, they generally seem to understand the importance of partners thriving and seem to encourage it).&lt;/p&gt;
&lt;p&gt;- Take advantage of incumbents’ entrenched marketing positioning.  The masses think of Twitter as a place to share trivial things like what you had for lunch (even if most power users don’t use it this way) and Facebook as a place to talk to friends.  They are probably stuck with this positioning.  &lt;a href=&quot;http://cdixon.org/2010/01/22/techies-and-normals/&quot;&gt;Normals&lt;/a&gt; generally think of each website as having one primary use case so if you can carve out a new use case you can distinguish yourself.&lt;/p&gt;
&lt;p&gt;- Consider the &lt;a href=&quot;http://www.amazon.com/Judo-Strategy-Competitors-Strength-Advantage/dp/1578512530&quot;&gt;judo strategy&lt;/a&gt;.  When pushed, don’t push back.  When Facebook adds features like check-ins, groups, or likes, consider interoperating with those features and building layers on top of them.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The segmentation of the venture industry]]></title><description><![CDATA[Ford Motors dominated the auto market in the early 20th century with a single car model, the Model T.  At the time, customers were seeking…]]></description><link>https://cdixon.org/2010/09/26/the-segmentation-of-the-venture-industry</link><guid isPermaLink="false">https://cdixon.org/2010/09/26/the-segmentation-of-the-venture-industry</guid><pubDate>Sun, 26 Sep 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Ford Motors dominated the auto market in the early 20th century with a single car model, the Model T.  At the time, customers were seeking low-cost, functional cars, and were satisfied by an extremely standardized product (Ford famously quipped that “customers can choose it in any color, as long as it’s black”). But as technology improved and serious competitors emerged, customers began wanting cars that were tailored to their specific needs and desires. The basis of competition shifted from price and basic functionality to ”&lt;a href=&quot;http://en.wikipedia.org/wiki/History_of_General_Motors&quot;&gt;style, power, and prestige&lt;/a&gt;“. General Motors surpassed Ford by capitalizing on this desire for segmentation. They created Cadillacs for wealthy older folks, Pontiacs for hipsters, and so on.&lt;/p&gt;
&lt;p&gt;Today, the venture financing industry is going through a similar segmentation process. Venture capital has only existed in its modern form for about 35 years.  In the early days there were relatively few VCs. Entrepreneurs were happy simply getting money and general business guidance.  Today, there is a surplus of venture capital and entrepreneurs have become increasingly savvy “shoppers.”  As a result, competition amongst venture financiers has increased and their “customers” (entrepreneurs) have flocked to more specialized “products.”&lt;/p&gt;
&lt;p&gt;Some of this segmentation has been by industry (IT, cleantech, health care) and subindustry (iPhone apps, financial tech, etc). But more pronounced, especially lately, has been the segmentation by company stage.  Today at least four distinct types of venture financing “products” have become popular.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Mentorship programs like Y Combinator help startups ideate, form founding teams, and build initial products. I suspect many of the companies they hatch wouldn’t exist at all (and certainly wouldn’t be as savvy) if it weren’t for these programs.&lt;/li&gt;
&lt;li&gt;So-called super angels provide capital and guidance to a) hire non-founder employees, b) further product development c) market the initial product (usually to early adopters), and d) raise follow on VC funding. Often current or former entrepreneurs themselves, super angels have gone through this stage many times as founders and angel investors.&lt;/li&gt;
&lt;li&gt;Traditional VCs (Sequoia, Kleiner, etc) help companies scale and get to profitability. They often have broad networks to help with hiring, sales, bizdev and other scaling functions. They are also experts at selling companies and raising follow-on financing.&lt;/li&gt;
&lt;li&gt;Accelerator funds (most prominent recently is DST) focus on providing partial liquidity and preparing the company for an IPO or big M&amp;#x26;A exit.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;In the past, traditional VC’s played all of of these roles (hence they called themselves “lifecycle” investors). They incubated companies, provided smalls seed financings, and in some cases provided later stage liquidity. But mostly the mentorship and angel investing roles were played by entrepreneurs who had expertise but shallow pockets and limited time and infrastructure.&lt;/p&gt;
&lt;p&gt;What we are witnessing now is a the VC industry segmenting as it matures. Mentorship and angel funding are performed more effectively by specialized firms.  Entrepreneurs seem to realize this and prefer these specialized “products.”  There is a lot of angst and controversy on tech blogs that tends to focus on individual players and events. But this is just a (sometimes salacious) byproduct of the larger trends. The segmentation of the venture industry is healthy for startups and innovation at large, even if at the moment it might be uncomfortable and confusing for some of the people involved.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough]]></title><description><![CDATA[My most useful career experience was about eight years ago when I was trying to break into the world of VC-backed startups. I applied to…]]></description><link>https://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough</link><guid isPermaLink="false">https://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough</guid><pubDate>Sun, 12 Sep 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;My most useful career experience was about eight years ago when I was trying to break into the world of VC-backed startups. I applied to hundreds of jobs: low-level VC roles, startups jobs, even to big tech companies. I got rejected from every single one. Big companies rejected me outright or gave me a courtesy interview before rejecting me. VCs told me they wanted someone with VC experience. Startups at the time were laying people off. The economy was bad (particularly where I was looking – consumer internet) and I had a strange resume (computer programmer, small bootstrapped startups, degree in philosophy and mathematical logic).&lt;/p&gt;
&lt;p&gt;The reason this period was so useful was that it helped me develop a really thick skin. I came to realize that employers weren’t really rejecting me as a person or on my potential – they were rejecting a resume. As it became depersonalized, I became bolder in my tactics. I eventually landed a job at &lt;a href=&quot;http://www.bvp.com/&quot;&gt;Bessemer&lt;/a&gt; (thanks to their willingness to take chances and look beyond resumes), which led to getting my first VC-backed startup funded, and things got better from there.&lt;/p&gt;
&lt;p&gt;One of the great things about looking for a job is that your “payoff” is almost always a max function (the best of all attempts), not an average. This is also generally true for raising VC financing, doing bizdev partnerships, hiring programmers, finding good advisors/mentors, even blogging and marketing. I probably got rejected by someone once a day last week alone. In one case a friend who tried to help called me to console me. He seemed surprised when I told him: “no worries – this is a daily occurrence – we’ll just keep trying.” If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Web services should be both federated and extensible]]></title><description><![CDATA[One of the most important developments of the web 2.0 era is the proliferation of full featured, bidirectional APIs.  APIs provide a way to…]]></description><link>https://cdixon.org/2010/09/04/web-services-should-be-both-federated-and-extensible</link><guid isPermaLink="false">https://cdixon.org/2010/09/04/web-services-should-be-both-federated-and-extensible</guid><pubDate>Sat, 04 Sep 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the most important developments of the web 2.0 era is the proliferation of full featured, bidirectional APIs.  APIs provide a way to “federate” web services from a single website to a distributed network of 3rd party sites. Another important web 2.0 development is the proliferation of web Apps (e.g. Facebook Apps). Apps provide a way to make websites “extensible.”&lt;/p&gt;
&lt;p&gt;The next step in this evolution is to create web services that are &lt;em&gt;both&lt;/em&gt; federated (APIs) &lt;em&gt;and&lt;/em&gt; extensible (Apps).&lt;/p&gt;
&lt;p&gt;In my ideal world, the social graph would not be controlled by a private company. That said, Facebook, to its credit, has aggressively promoted a fairly open API through Facebook Connect. Facebook has also been a leader in promoting Apps. For Facebook, creating extensible, federated services would mean providing a framework for Facebook Connect Apps – apps that extend Facebook functionality but reside on non-Facebook.com websites.&lt;/p&gt;
&lt;p&gt;Consider the following scenario.  Imagine that in the future a geolocation data/algorithm provider like SimpleGeo takes Facebook Places check-in data and, using algorithms and non-Facebook data, produces new data sets, for example: map directions, venue recommendations, and location-based coupons. The combination of Facebook’s data (social graph and check-ins) and SimpleGeo data/algorithms would create much more advanced feature possibilities than either service acting alone.&lt;/p&gt;
&lt;p&gt;With today’s APIs, if, say, Gowalla wanted to integrate Facebook plus SimpleGeo into their app*, they would basically have 3 choices:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Embed Facebook widgets in Gowalla.  These are simple iframes (effectively separate little websites) that don’t interact with SimpleGeo.  Gowalla would just have to sit and wait and hope that Facebook decided to bake in SimpleGeo-like functionality.&lt;/li&gt;
&lt;li&gt;Pre-import SimpleGeo data. This significantly limits the size and dynamism of the SimpleGeo data sets and doesn’t incorporate SimpleGeo algorithms, thus severely limiting functionality.&lt;/li&gt;
&lt;li&gt;Host an instance of SimpleGeo’s servers internally.  This requires heavy technical integration, undermining the main benefit of APIs.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;In a world of extensible APIs (or “API Apps”), Gowalla could instead send Facebook data back to SimpleGeo.  The data flow would look something like this:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/datathreesome2.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 658px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.829787234042556%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;datathreesome2&quot;
        title=&quot;datathreesome2&quot;
        src=&quot;/static/fbcb87e345265654cbee58452bf45caf/6164f/datathreesome2.png&quot;
        srcset=&quot;/static/fbcb87e345265654cbee58452bf45caf/924ad/datathreesome2.png 170w,
/static/fbcb87e345265654cbee58452bf45caf/f570f/datathreesome2.png 341w,
/static/fbcb87e345265654cbee58452bf45caf/6164f/datathreesome2.png 658w&quot;
        sizes=&quot;(max-width: 658px) 100vw, 658px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;datathreesome2&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(Note how there are three parties involved – &lt;a href=&quot;http://twitter.com/peretti&quot;&gt;@peretti&lt;/a&gt; calls this a “data threesome”). This configuration is much simpler to integrate – and potentially much more powerful and dynamic – than the other configurations listed above.  You could implement this today, but it would create user experience challenges.  For example, Gowalla would be sending Facebook data to a 3rd party (step 3), which might (depending on the data sent) require explicit user opt-in. Things become more onerous if SimpleGeo wanted to share its own user data with Gowalla. That would require an additional oAuth to SimpleGeo (authorizing step 4).&lt;/p&gt;
&lt;p&gt;Allowing websites to be federated and extensible will open up a whole new wave of innovation.  Ideally some spec like oAuth could include the multiple authorizations in a single authorization screen.  Facebook could also do this by allowing 3rd parties to be part of the Facebook Connect authorization process.  Inasmuch as Facebook’s seems to be trying to embed their social graph as deeply as possible into the core experiences of other websites, allowing extensible APIs would seem to be a smart move.&lt;/p&gt;
&lt;p&gt;* I have no connection to any of these companies (Facebook, Gowalla, SimpleGeo) and have no knowledge of their product plans beyond their public websites.  I am imagining functionality that Gowalla and SimpleGeo might include someday but for all I know they have no interest in these features – I just picked them somewhat arbitrarily as examples.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Converts versus equity deals]]></title><description><![CDATA[There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts…]]></description><link>https://cdixon.org/2010/08/31/converts-versus-equity-deals</link><guid isPermaLink="false">https://cdixon.org/2010/08/31/converts-versus-equity-deals</guid><pubDate>Tue, 31 Aug 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts). Paul Graham kicked it off by &lt;a href=&quot;http://twitter.com/paulg/status/22319113993&quot;&gt;noting&lt;/a&gt; that all the financings in the recent YC batch were converts. Prominent investors including &lt;a href=&quot;http://www.bothsidesofthetable.com/2010/08/30/is-convertible-debt-preferable-to-equity/&quot;&gt;Mark Suster&lt;/a&gt; and &lt;a href=&quot;http://www.sethlevine.com/wp/2010/08/has-convertible-debt-won-and-if-it-has-is-that-a-good-thing&quot;&gt;Seth Levine&lt;/a&gt; weighed in (I highly recommend reading their posts). While this debate might sound technical, at its core it is really about a difference in seed investing philosophy.&lt;/p&gt;
&lt;p&gt;I am a proponent of convertibles, but only with a cap (I’ve written about the problems of convertibles without caps &lt;a href=&quot;http://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes/&quot;&gt;before&lt;/a&gt; and never invest in them).  I believe that pretty much every other seed investor who advocates converts also assumes they have a cap.  So any discussion of convertibles without caps seems to me a red herring.&lt;/p&gt;
&lt;p&gt;There are two kind of rights that investors get when they put money in company.  The first are economic rights: basically that they make money when the investment is successful.  The second are control rights: board seats, the ability to block financings and acquisitions, the ability to change management, etc.  Converts give investors economics rights with basically zero control rights (legally it is just a loan with some special conversion provisions). Equity financings normally give investors explicit rights (most equity terms sheets specify board seats, specific blocking conditions, etc) in addition to standard shareholder rights under whatever state the company incorporated in (usually CA or Delaware).&lt;/p&gt;
&lt;p&gt;To the extent that I know anything about seed investing, I learned it from Ron Conway.  I remember one deal he showed me where the entire deal was done on a one page fax (not the term sheet – the entire deal).  Having learned about venture investing as a junior employee at a VC firm I was shocked. I asked him “what if X or Y happens and the entrepreneur screws you.”  Ron said something like “then I lose my money and never do business with that person again.”  It turned out he did very well on that company and has funded that entrepreneur repeatedly with great success.&lt;/p&gt;
&lt;p&gt;You can hire lawyers to try to cover every situation where founders or follow on investors try to screw you. But the reality is that if the founders want to screw you, you made a bet on bad people and will probably lose your money. You think legal documents will protect you? Imagine investors getting into a lawsuit with a two person early-stage team, or trying to fire and swap out the founders – the very thing they bet on.  And follow on investors (normally VCs) have a variety of ways to screw seed investors if they want to, whether the seed deal was a convert of equity.  So as a seed investor all you can really do is get economic rights and then make sure you pick good founders and VCs.&lt;/p&gt;
&lt;p&gt;Seed investing is a people business.  Good entrepreneurs understand this.  Ron was an investor in my last two companies and never had any control rights but had massive sway because he worked so hard to help us and gave such sage advice.  And most importantly, he carried great moral authority. We always knew he was speaking from deep experience and looking out for the company’s best interests – sometimes against his own economic interests.&lt;/p&gt;
&lt;p&gt;Like it or not, the seed investment world runs on trust and reputation – not legal documents.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Good bizdev cannibalizes itself]]></title><description><![CDATA[A few successful websites were built almost entirely through viral growth. The vast majority, however, started off by partnering with other…]]></description><link>https://cdixon.org/2010/08/28/good-bizdev-cannibalizes-itself</link><guid isPermaLink="false">https://cdixon.org/2010/08/28/good-bizdev-cannibalizes-itself</guid><pubDate>Sat, 28 Aug 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A few successful websites were built almost entirely through viral growth. The vast majority, however, started off by partnering with other, already successful websites. Even Google began by partnering with Yahoo. As superior as Google’s search algorithm was, it was very hard to get the masses to switch to a new search engine.&lt;/p&gt;
&lt;p&gt;In the web 1.0 world (approximately pre-2004), integrating two web services involved lots of manual work, such as negotiating legal contracts and custom technical integration. Creating these kinds of partnerships is usually referred to as “business development” or “BizDev” (personally, I usually just call it “BD”). In the web 2.0 world, it became common for websites to create fully functional, self-service API’s with standardized legal terms. This made it possible to drastically reduce the friction of integrating services. My &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; cofounder Caterina Fake &lt;a href=&quot;http://caterina.net/archive/000996.html&quot;&gt;coined&lt;/a&gt; the term “BizDev 2.0″ to refer to this idea (and of course Flickr was a pioneer of super robust APIs).&lt;/p&gt;
&lt;p&gt;There is no question that removing legal and technical hurdles is a win for everyone (except lawyers). However, unless your service is extremely high profile and its value is easily understood, it still needs to be marketed to potential partners. Many websites won’t consider using a self-service API until they’ve seen it working on other sites with measurable results. So how do you overcome this particular kind of chicken-and-egg problem?&lt;/p&gt;
&lt;p&gt;During his interview process, Hunch’s &lt;a href=&quot;http://hunch.com/people/shaival/&quot;&gt;Shaival Shah&lt;/a&gt;, said something that struck a chord with me: he didn’t want to be called “VP BizDev” because, he said, a good BizDev person makes BizDev irrelevant. The idea is to create a number of BizDev 1.0 partnerships while simultaneously building and marketing a full service API.  If you can do BizDev 1.0 with some number of (ideally high profile) websites and demonstrate that it is valuable to them (ideally quantitatively), you can then scale your service BizDev 2.0 style. Maybe this could be called BizDev 1.5.&lt;/p&gt;
&lt;p&gt;Shaival wrote up a much more detailed post on &lt;a href=&quot;http://shaival.posterous.com/cannabilize-business-development-by-populariz&quot;&gt;self-cannibalizing BizDev&lt;/a&gt; that is well worth reading.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The bowling pin strategy]]></title><description><![CDATA[A huge challenge for user-generated websites is overcoming the chicken-and-egg problem: attracting users and contributors when you are…]]></description><link>https://cdixon.org/2010/08/21/the-bowling-pin-strategy</link><guid isPermaLink="false">https://cdixon.org/2010/08/21/the-bowling-pin-strategy</guid><pubDate>Sat, 21 Aug 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A huge challenge for user-generated websites is overcoming the &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;chicken-and-egg problem&lt;/a&gt;: attracting users and contributors when you are starting with zero content. One way to approach this challenge is to use what Geoffrey Moore calls the &lt;a href=&quot;http://edgehopper.com/%E2%80%A8-what-geoff-recognized-was-that-there-is-more-to-this-curve-he-recognized-that-there-is-a-difference-between-disruptive-innovations-those-that-are-changing-the-game-altogether-and-gard/&quot;&gt;bowling pin&lt;/a&gt; strategy: find a niche where the chicken-and-egg problem is more easily overcome and then find ways to hop from that niche to other niches and eventually to the broader market.&lt;/p&gt;
&lt;p&gt;Facebook executed the bowling pin strategy brilliantly by starting at Harvard and then spreading out to other colleges and eventually the general public.  If Facebook started out with, say, 1000 users spread randomly across the world, it wouldn’t have been very useful to anyone.  But having the first 1000 users at Harvard made it extremely useful to Harvard students.  Those students in turn had friends at other colleges, allowing Facebook to hop from one school to another.&lt;/p&gt;
&lt;p&gt;Yelp also used a bowling pin strategy by focusing first on getting critical mass in one location – San Francisco – and then expanding out from there.  They also focused on activities that (at the time) social networking users favored: dining out, clubbing and shopping. Contrast this to their &lt;a href=&quot;http://www.nytimes.com/2006/08/05/business/yourmoney/05money.html?_r=2&amp;#x26;ref=business&amp;#x26;pagewanted=all&quot;&gt;direct competitors&lt;/a&gt; that were started around the same time, were equally well funded, yet have been far less successful.&lt;/p&gt;
&lt;p&gt;How do you identify a good initial niche?  First, it has to be a true community – people who have shared interests and frequently interact with one another.  They should also have a particularly strong need for your product to be willing to put up with an initial lack of content. Stack Overflow chose programmers as their first niche, presumably because that’s a community where the Stack Overflow founders were influential and where the competing websites weren’t satisfying demand. Quora chose technology investors and entrepreneurs, presumably also because that’s where the founders were influential and well connected. Both of these niches tend to be very active online and are likely to have have many other interests, hence the spillover potential into other niches is high. (Stack Overflow’s &lt;a href=&quot;http://cooking.stackexchange.com/&quot;&gt;cooking site&lt;/a&gt; is growing nicely – many of the initial users are programmers who crossed over).&lt;/p&gt;
&lt;p&gt;Location based services like Foursquare started out focused primarily on dense cities like New York City where users are more likely to serendipitously bump into friends or use tips to discover new things. Facebook has such massive scale that it is able to roll out its LBS product (Places) to 500M users at once and not bother with a niche strategy.  Presumably certain groups are more likely to use Facebook check-ins than others, but with Facebook’s scale they can let the users figure this out instead of having to plan it deliberately. That said, history suggests that big companies who rely on this “carpet bombing strategy” are often upended by focused startups who take over one niche at a time.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Graphs]]></title><description><![CDATA[It has become customary to use “graph” to refer to the underlying data structures at social networks like Facebook. (Computer scientists…]]></description><link>https://cdixon.org/2010/07/22/graphs</link><guid isPermaLink="false">https://cdixon.org/2010/07/22/graphs</guid><pubDate>Thu, 22 Jul 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It has become customary to use “&lt;a href=&quot;http://en.wikipedia.org/wiki/Graph_(mathematics)&quot;&gt;graph&lt;/a&gt;” to refer to the underlying data structures at social networks like Facebook. (Computer scientists call the study of graphs “&lt;a href=&quot;http://en.wikipedia.org/wiki/Network_theory&quot;&gt;network theory&lt;/a&gt;,” but on the web the word “network” is used to refer to the websites themselves).&lt;/p&gt;
&lt;p&gt;A graph consists of a set of nodes connected by edges. The original internet graph is the web itself, where webpages are nodes and links are edges. In social graphs, the nodes are people and the edges friendship. Edges are what mathematicians call &lt;a href=&quot;http://en.wikipedia.org/wiki/Binary_relation&quot;&gt;relations&lt;/a&gt;. Two important properties that relations can either have or not have are symmetry (if A ~ B then B ~ A) and transitivity (if A ~ B and B ~ C then A ~ C).&lt;/p&gt;
&lt;p&gt;Facebook’s social graph is symmetric (if I am friends with you then you are friends with me) but not transitive (I can be friends with you without being friends with your friend).  You could say friendship is probabilistically transitive in the sense that I am more likely to like someone who is a friend’s friend then I am a user chosen at random. This is basis of Facebook’s friend recommendations.&lt;/p&gt;
&lt;p&gt;Twitter’s graph is probably best thought of as an interest graph. One of Twitter’s central innovations was to discard symmetry: you can follow someone without them following you. This allowed Twitter to evolve into an extremely useful publishing platform, &lt;a href=&quot;http://cdixon.org/2009/09/30/twitter-killed-rss-and-thats-a-bad-thing/&quot;&gt;replacing RSS&lt;/a&gt; for many people. The Twitter graph isn’t transitive but one of its most powerful uses is retweeting, which gives the Twitter graph what might be called curated transitivity.&lt;/p&gt;
&lt;p&gt;Graphs can be implicitly or explicitly created by users. Facebook and Twitter’s graphs were explicitly created by users (although Twitter’s Suggested User List made much of the graph de facto implicit). Google Buzz attempted to create a social graph implicitly from users’ emailing patterns, which didn’t &lt;a href=&quot;http://www.readwriteweb.com/archives/google_gets_sued_why_it_should_have_said_please.php&quot;&gt;seem&lt;/a&gt; to work very well.&lt;/p&gt;
&lt;p&gt;Over the next few years we’ll see the rising importance of other types of graphs. Some examples:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Taste:&lt;/strong&gt; At &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; we’ve created what we call the taste graph. We created this implicitly from questions answered by users and other data sources. Our thesis is that for many activities – for example deciding what movie to see or blouse to buy – it’s more useful to have the neighbors on your graph be people with similar tastes versus people who are your friends.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Financial Trust:&lt;/strong&gt; Social payment startups like &lt;a href=&quot;https://squareup.com/&quot;&gt;Square&lt;/a&gt; and &lt;a href=&quot;http://www.venmo.com&quot;&gt;Venmo&lt;/a&gt; are creating financial graphs – the nodes are people and institutions and the relations are financial trust. These graphs are useful for preventing fraud, streamlining transactions, and lowering the barrier to accepting non-cash payments.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Endorsement:&lt;/strong&gt; An endorsement graph is one in which people endorse institutions, products, services or other people for a particular skill or activity. LinkedIn created a successful professional graph and a less successful endorsement graph. Facebook seems to be trying to layer an endorsement graph on its social graph with its Like feature. A general endorsement graph could be useful for purchasing decisions and hence highly &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;monetizable&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Local&lt;/strong&gt;: Location-based startups like &lt;a href=&quot;http://foursquare.com&quot;&gt;Foursquare&lt;/a&gt; let users create social graphs (which might evolve into better social graphs than what Facebook has since users seem to be more selective friending people in local apps). But probably more interesting are the people and venue graphs created by the check-in patterns. These local graphs could be useful for, among other things, recommendations, coupons, and advertising.&lt;/p&gt;
&lt;p&gt;Besides creating graphs, Facebook and Twitter (via Facebook Connect and OAuth) created identity systems that are extremely useful for the creation of 3rd party graphs. I expect we’ll look back on the next few years as the golden age of graph innovation.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[It’s not that seed investors are smarter – it’s that entrepreneurs are]]></title><description><![CDATA[Paul Kedrosky recently speculated that there might be seed fund “crash” looming. Liz Gannes followed up by suggesting seed investors are a…]]></description><link>https://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are</link><guid isPermaLink="false">https://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are</guid><pubDate>Mon, 05 Jul 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Paul Kedrosky recently &lt;a href=&quot;http://paul.kedrosky.com/archives/2010/06/the_coming_supe.html&quot;&gt;speculated&lt;/a&gt; that there might be seed fund “crash” looming. Liz Gannes followed up by &lt;a href=&quot;http://gigaom.com/2010/06/29/is-there-a-super-angel-crash-looming/&quot;&gt;suggesting&lt;/a&gt; seed investors are a fad akin to reality-TV celebrities:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In many ways, what [prominent seed funds] are saying is that they’re just smarter, and as such will outlast all the copycat and wannabe seed funders as well as the stale VCs with a fresh coat of paint. But then — Kim Kardashian is the only one who can make a living tweeting. At some point it will be quite obvious whether the super angels’ investments and strategy succeed or fail.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Here’s the key point these analyses overlook: &lt;em&gt;It’s not the seed investors who are smarter – it’s the entrepreneurs&lt;/em&gt;. Consider the case of the last company I co-founded, &lt;a href=&quot;http://www.siteadvisor.com&quot;&gt;SiteAdvisor&lt;/a&gt;. We raised our first round of $2.6M at a $2.5M pre-money valuation. After the first round of funding, investors owned 56% of the company. Moreover, the $2.6M came in 3 &lt;a href=&quot;http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/&quot;&gt;tranches&lt;/a&gt;: $500K, another $500K, and then $1.6K.  To get the 2nd and 3rd tranches we had to hit predefined milestones and re-pitch the VC partnerships. Had we instead raised the first $1M from seed funds, we would have been free to raise the remaining money at a higher valuation. In fact, after we spent less than $1M building the product, we raised more money at a $16M pre-money valuation. &lt;em&gt;We never even touched the $1.6M third tranche even though it caused us to take significant dilution\&lt;/em&gt;. This was a very common occurrence before the rise of seed funds, due to VCs pressuring entrepreneurs to raise more money than they needed so the VCs could “&lt;a href=&quot;http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/&quot;&gt;put more money to work&lt;/a&gt;.” When SiteAdvisor was eventually acquired, we had spent less than a third of the money we raised. Compare the dilution we actually took to what we could have taken had we raised seed before VC:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2010-07-05-at-3-55-44-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &gt;&lt;/span&gt;
  &lt;img
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        title=&quot;Screen shot 2010-07-05 at 3.55.44 PM&quot;
        src=&quot;/static/18281dacf6465f9d56f2db97bcc0afe4/6e872/screen-shot-2010-07-05-at-3-55-44-pm.png&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2010-07-05 at 3.55.44 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Professional seed funds barely existed back then, especially on the East Coast. And even if they did, I’m not sure I would have been savvy enough to opt for them over VCs. I thought the brands of the big VCs would help me and didn’t really understand the dynamics of fund raising.* Today, entrepreneurs are much savvier, thanks to the proliferation of good advice on blogs, via mentorship programs, and a generally more active and connected entrepreneur community. For example, &lt;a href=&quot;http://cdixon.org/2009/11/09/presenting-founder-collective/&quot;&gt;Founder Collective&lt;/a&gt; recently backed two Y-Combinator startups who decided to raise money exclusively from seed investors despite having top-tier VCs throwing money at them at higher valuations. These were “hot” companies who had plenty of options but realized they’d take less start-to-exit dilution by raising money from helpful seed investors first and VCs later.&lt;/p&gt;
&lt;p&gt;Will there be there a seed fund crash? Seed fund returns are highly correlated with VC returns which are highly correlated with public markets and the overall economy. I have no idea what the state of the overall economy will be over the next few years. Perhaps it will crash and take VCs and seed funds down with it. But I do have strong evidence that prominent seed funds will outperform top-tier VC funds, because I know the details of their investments, and that their portfolios contain the same companies as top-tier VCs &lt;em&gt;except the they invested in earlier rounds at significantly lower valuations&lt;/em&gt;.  So unless these prominent seed funds were incredibly unlucky picking companies (and since they are extremely diversified I highly doubt that), their returns will significantly beat top-tier VC returns.&lt;/p&gt;
&lt;p&gt;* Note that we have nothing but gratitude toward the SiteAdvisor VCs – Rob Stavis at Bessemer and Hemant Taneja at General Catalyst. They offered what was considered a market deal at the time and supported us when (&lt;a href=&quot;http://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are/#comment-60677689&quot;&gt;almost&lt;/a&gt;) no one else would.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Competition is overrated]]></title><description><![CDATA[Your #1 competitor starting out will always be the BACK button, nothing else. – Garry Tan Suppose you have an idea for a startup, and then…]]></description><link>https://cdixon.org/2010/06/26/competition-is-overrated</link><guid isPermaLink="false">https://cdixon.org/2010/06/26/competition-is-overrated</guid><pubDate>Sat, 26 Jun 2010 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;Your #1 competitor starting out will always be the BACK button, nothing else. – &lt;a href=&quot;http://plank.ly/garrytan&quot;&gt;Garry Tan&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Suppose you have an idea for a startup, and then do some research only to discover there are already similar products on the market. You become disheartened and wonder if you should abandon your idea.&lt;/p&gt;
&lt;p&gt;In fact, the existence of competing products is a meaningful signal, but not necessarily a negative one.  Here are some things to consider.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Almost every good idea has already been built. Sometimes new ideas are just ahead of their time. There were probably 50 companies that tried to do viral video sharing before YouTube. Before 2005, when YouTube was founded, relatively few users had broadband and video cameras. YouTube also took advantage of the latest version of Flash that could play videos seamlessly.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Other times existing companies simply didn’t execute well. Google and Facebook launched long after their competitors, but executed incredibly well and focused on the right things. When Google launched, other search engines like Yahoo, Excite, and Lycos were focused on becoming multipurpose “portals” and had de-prioritized search (Yahoo even outsourced their search technology).&lt;/p&gt;
&lt;ol start=&quot;2&quot;&gt;
&lt;li&gt;The fact that other entrepreneurs thought the idea was good enough to build can be a positive signal. They probably went through some kind of vetting process like talking to target users and doing some market research. By launching later, you can piggyback off the work they’ve already done. That said, you do need to be careful not to get sucked into groupthink. For example, many techies follow the dictum “build something you would use yourself,” which leads to a glut of techie-centric products. There are tons Delicious and Digg clones even though it’s not clear those sites have appeal beyond their core techie audience.&lt;/li&gt;
&lt;li&gt;That other people tried your idea without success could imply it’s a bad idea or simply that the timing or execution was wrong. Distinguishing between these cases is hard and where you should apply serious thought. If you think your competitors executed poorly, you should develop a theory of what they did wrong and how you’ll do better. Group buying had been tried a hundred times, but Groupon was the first to succeed, specifically by using coupons to track sales and by acquiring the local merchants first and then getting users instead of vice versa. If you think your competitor’s timing was off, you should have a thesis about what’s changed to make now the right time. These changes could come in a variety of forms: for example, it could be that users have become more sophisticated, the prices of key inputs have dropped, or that prerequisite technologies have become widely adopted.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Startups are primarly competing against indifference, lack of awareness, and lack of understanding — not other startups. For web startups this means you should worry about users simply not coming to your site, or when they do come, hitting the BACK button.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Builders and extractors]]></title><description><![CDATA[Tim O’Reilly poses a question every entrepreneur and investor should consider: are you creating more value for others than you capture for…]]></description><link>https://cdixon.org/2010/06/19/builders-and-extractors</link><guid isPermaLink="false">https://cdixon.org/2010/06/19/builders-and-extractors</guid><pubDate>Sat, 19 Jun 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Tim O’Reilly &lt;a href=&quot;http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.html&quot;&gt;poses&lt;/a&gt; a question every entrepreneur and investor should consider: are you creating more value for others than you capture for yourself? Google makes billions of dollars in annual profits, but generates many times that in productivity gains for other people. Having a positive social contribution isn’t limited to non-profit organizations – non-profits just happen to have a zero in the “value capture” column of the ledger. Wall Street stands at the other extreme: boatloads of value capture and very little value creation.&lt;/p&gt;
&lt;p&gt;I &lt;a href=&quot;http://gigaom.com/2010/05/28/chris-dixon/&quot;&gt;think&lt;/a&gt; of people who aim to create more value than they capture as “builders” and people who don’t as “extractors.” Most entrepreneurs are natural-born builders. They want to create something from nothing and are happy to see the benefits of their labor spill over to others. Sadly, the builder mindset isn’t as widespread among investors. I recently heard a well-known Boston VC say: “There are 15 good deals a year and our job is to try to win those deals” – a statement that epitomizes the passive, extractor mindset. The problem with &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;VC seed programs&lt;/a&gt; is they not only fail to enlarge the pie, they actually shrink it by making otherwise fundable companies unfundable through negative &lt;a href=&quot;http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/&quot;&gt;signaling&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;The good news is there is a large – and growing – class of investors with the builder mindset. Y Combinator and similar mentorship programs are true builders: their startups probably wouldn’t have existed without them (and the founders might have ended up at &lt;a href=&quot;http://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies/&quot;&gt;big companies&lt;/a&gt;). There are also lots of angel and seed investors who are builders. A few that come to mind: Ron Conway, Chris Sacca, Mike Maples (Floodgate), Roger Ehrenberg, Keith Rabois, Ken Lehrer, Jeff Clavier, Betaworks, Steve Anderson, and Aydin Senkut. There are also VCs who are builders. Ones that I’ve worked with directly recently include Union Square, True, Bessemer, Khosla, Index, and First Round.&lt;/p&gt;
&lt;p&gt;Given that there is a surplus of venture money, entrepreneurs and seed investors now have the luxury of choosing to work with builders and avoid extractors. Hopefully over time this will weed out the extractors.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Pivoting]]></title><description><![CDATA[My Hunch cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far…]]></description><link>https://cdixon.org/2010/06/14/pivoting</link><guid isPermaLink="false">https://cdixon.org/2010/06/14/pivoting</guid><pubDate>Mon, 14 Jun 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;My &lt;a href=&quot;http://hunch.com/&quot;&gt;Hunch&lt;/a&gt; cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far?” This exercise is meant to counter a number of common cognitive biases, such as:&lt;/p&gt;
&lt;p&gt;1. The &lt;a href=&quot;http://en.wikipedia.org/wiki/Sunk_costs&quot;&gt;sunk costs&lt;/a&gt; trap.  People tend to overvalue past investments when making forward-looking investment decisions. From the rumors I’ve heard, Joost was a company that fell into the sunk costs trap. In the beginning, their p2p architecture was their main differentiator. Thus they invested a lot in building p2p infrastructure and required users to download a software client. When browser-based web video companies like Hulu and YouTube surpassed them, Joost switched to a browser-based client but still required a special plugin so they could maintain their p2p architecture. In fact, the problem the p2p architecture was solving – reducing bandwidth costs – had, in the meantime, become a secondary basis of competition.  By the time Joost finally discarded the p2p model, it was too late.&lt;/p&gt;
&lt;p&gt;2. The &lt;a href=&quot;http://views.washingtonpost.com/leadership/panelists/2009/02/the-bridge-on-the-river-kwai.html&quot;&gt;&lt;em&gt;Bridge on the River Kwai&lt;/em&gt; syndrome&lt;/a&gt;.  This is when entrepreneurs fall so in love with their engineering project qua engineering project that they lose site of the larger mission.  Former engineers (like me) are particularly susceptible to this as we often get excited about technology for its own sake. Many products can be built much more quickly and cheaply by settling for good technology plus a bunch of hacks – human editing, partnerships, using 3rd party software – versus creating a perfect technology from scratch. At my last company, SiteAdvisor, we made the decision up front to build a non-perfect system that did 99% of what a much more expensive, “perfect” technological solution would have done.  The software wasn’t always pretty – to the annoyance of some of our engineers – but it worked.&lt;/p&gt;
&lt;p&gt;3. Solving the wrong problem. Location-based social networks have been around for years. Foursquare came along just a year ago and has seemingly surpassed its predecessors. The other companies built elaborate infrastructures: e.g they partnered with wireless carriers so that users’ locations could be tracked in the background without having to “check-in”.  Foursquare built a relatively simple app that added some entertaining features like badges and mayorships. It turned out that requiring users to manually check in was not only easier to build but also appealing as users got more control over their privacy. Foursquare’s competitors were solving the wrong problem.&lt;/p&gt;
&lt;p&gt;Ask yourself: if you started over today, would you build the same product?  If not, consider significant changes to what you are building. The popular word for this today is “pivoting” and I think it is apropos. You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Designing products for single and multiplayer modes]]></title><description><![CDATA[The first million people who bought VCRs bought them before there were any movies available to watch on them. They just wanted to “time…]]></description><link>https://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes</link><guid isPermaLink="false">https://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes</guid><pubDate>Sat, 12 Jun 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The first million people who bought VCRs bought them before there were any movies available to watch on them. They just wanted to “time shift” TV shows – what we use DVRs for today. Once there were millions of VCR owners it became worthwhile for Hollywood to start selling and renting movies to watch on them. Eventually watching rented movies became the dominant use of VCRs, and time shifting a relatively niche use. Thus, a product that eventually had very strong network effects* got its initial traction from a “standalone use” – where no other VCR owners or complementary products needed to exist.&lt;/p&gt;
&lt;p&gt;I was talking to my friend &lt;a href=&quot;http://foundercollective.com/people/Zach-Klein&quot;&gt;Zach Klein&lt;/a&gt; recently who referred to products as having single player and multiplayer modes. I like Zach’s terminology because: 1) it is borrowed from video games where a lot of thought has gone into making these modes compelling in distinct ways, 2) the word “mode” reminds us that people can switch from moment to moment – that even when a product is primarily social or networked and has reached critical mass it might still be useful to offer a single player mode.&lt;/p&gt;
&lt;p&gt;Many products that we think of as strictly multiplayer also have single player modes. In many cases this single player mode helped adoption in the early stages when the network effects were not yet strong. For example, you could use Flickr just to store photos privately if you wanted to. I thought of Foursquare as strictly multiplayer until my &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; cofounder &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; told me he uses it solely to keep track of restaurants he’s gone to so he’ll remember which ones to go back to. For some products it’s really hard to imagine single player modes. This is true of pure communication products like Skype and perhaps also social networks like Facebook (although apps like games seem to have provided single player modes for Facebook).&lt;/p&gt;
&lt;p&gt;–&lt;/p&gt;
&lt;p&gt;* Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks.  Network effects can be your friend or your enemy depending on whether your product has reached critical mass.  Getting to critical mass in network effect markets is sometimes called overcoming the “chicken and egg problem.”  &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;More here.&lt;/a&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Inside versus outside financings: the nightclub effect]]></title><description><![CDATA[At some point in the life of a venture-backed startup there typically arises a choice between doing an inside round, where the existing…]]></description><link>https://cdixon.org/2010/06/08/inside-versus-outside-financings-the-nightclub-effect</link><guid isPermaLink="false">https://cdixon.org/2010/06/08/inside-versus-outside-financings-the-nightclub-effect</guid><pubDate>Tue, 08 Jun 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;At some point in the life of a venture-backed startup there typically arises a choice between doing an inside round, where the existing investors lead the new financing, or an outside round, where new investors lead the new financing. At this point interesting game-theoretic dynamics arise among management, existing investors, and prospective new investors.&lt;/p&gt;
&lt;p&gt;If the company made the mistake of including big VCs in their seed round, they’ll face this situation raising their Series A.  If the company was smart and only included true seed investors in their initial round, they won’t face this issue until their Series B.&lt;/p&gt;
&lt;p&gt;Here’s a typical situation. Say the startup raised a Series A at a $15M post-money valuation and is doing pretty well. The CEO offers the existing VCs the option of leading an inside round but the insiders are lukewarm and suggest the CEO go out to test the financing market.  The CEO does so and gets offers from top-tier VCs to invest at a significant step up, say, $30M pre. The insiders who previously didn’t want to do an inside round are suddenly really excited about the company because they see that other VCs are really excited about the company.&lt;/p&gt;
&lt;p&gt;This is what I call the &lt;a href=&quot;http://twitter.com/gideonyu/status/13933414669&quot;&gt;nightclub effect&lt;/a&gt;*. You think your date isn’t that attractive until you bring him/her to a nightclub and everyone in the club hits on him/her. Consequently, you now think your date is really attractive.&lt;/p&gt;
&lt;p&gt;Now the inside investors have 3 choices:  1) Lead the financing themselves. This makes the CEO look like a jerk that used the outsiders as stalking horses. It might also prevent the company from getting a helpful, new VC involved. 2) Do pro-rata (normally defined as: X% of round where X is the % ownership prior to round).  This is theoretically the best choice, although often in real life the math doesn’t work since a top-tier new VC will demand owning 15-20% of the company which is often impossible without raising a far bigger round than the company needs. (When you see head-scratchingly large Series B rounds, this is often the cause). 3) Do less than pro-rata. VCs hate this because they view pro-rata as an option they paid for and especially when the company is “hot” they want to exercise that right. The only way to get them down in this case is for management to wage an all out war to force them to. This can get quite ugly.&lt;/p&gt;
&lt;p&gt;I’ve come to think that the best solution to this is to get the insiders to explicitly commit ahead of time to either leading the round or being willing to back down from their pro-rata rights for the right new investor. This lets the CEO go out and find new investors in good faith without using them as stalking horses and without wasting everyone’s time.&lt;/p&gt;
&lt;p&gt;* don’t miss @peretti’s &lt;a href=&quot;http://twitter.com/cdixon/status/13934081578&quot;&gt;response&lt;/a&gt;.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Steve Jobs single-handedly restructured the mobile industry]]></title><description><![CDATA[With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly…]]></description><link>https://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry</link><guid isPermaLink="false">https://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry</guid><pubDate>Sun, 06 Jun 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly upended the power structure of a major industry.  In the US, before the iPhone, the carriers (Verizon, AT&amp;#x26;T, Sprint, T-Mobile) had an ironclad grip on the rest of the value chain – particularly, handset makers and app makers.&lt;/p&gt;
&lt;p&gt;Ask anyone who ran or invested in a mobile app startup pre-iPhone (I invested in one myself). Since the carriers had all the power, getting any distribution (which usually meant getting on the handset “deck”) meant doing a business development deal with the carriers. Business development in this case meant finding the right people at those companies, sending them iPods, taking them to baseball games, and basically figuring out ways to convince them to work with you instead of the 5,000 other people sending them iPods and baseball tickets.  The basis of competition was salesmanship and capital, not innovation or quality.&lt;/p&gt;
&lt;p&gt;The carriers had so much power because consumers made their purchasing decisions by choosing a carrier first and a handset second. Post-iPhone, tens of millions of people started choosing handsets over carriers. People like me suffer through AT&amp;#x26;T’s poor service and aggressive pricing because I love the iPhone so much.&lt;/p&gt;
&lt;p&gt;I’ve talked to a number of mobile app startups lately who say their former contacts at the carriers are shell shocked: no one is knocking on their doors anymore. I guess they have to buy their own iPods and baseball tickets now.&lt;/p&gt;
&lt;p&gt;Yes, Apple has rejected some apps for seemingly arbtrary or selfish reasons and imposed aggressive controls on developers. But the iPhone also paved the way for Android and a new wave of handset development. The people griping about Apple’s “closed system” are generally people who are new to the industry and didn’t realize how bad it was before.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[There are three New York Cities]]></title><description><![CDATA[There are roughly three New Yorks. There is, first, the New York of the man or woman who was born here, who takes the city for granted and…]]></description><link>https://cdixon.org/2010/06/04/there-are-three-new-york-cities</link><guid isPermaLink="false">https://cdixon.org/2010/06/04/there-are-three-new-york-cities</guid><pubDate>Fri, 04 Jun 2010 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;There are roughly three New Yorks.&lt;/p&gt;
&lt;p&gt;There is, first, the New York of the man or woman who was born here, who takes the city for granted and accepts its size and turbulence as natural and inevitable.&lt;/p&gt;
&lt;p&gt;Second, there is the New York of the commuter—the city that is devoured by locusts each day and spat out each night.&lt;/p&gt;
&lt;p&gt;Third, there is the New York of the person who was born somewhere else and came to New York in quest of something. Of these three trembling cities the greatest is the last—the city of final destination, the city that is a goal. It is this third city that accounts for New York’s high-strung disposition, its poetical deportment, its dedication to the arts, and its incomparable achievements. Commuters give the city its tidal restlessness; natives give it solidity and continuity; but the settlers give it passion. And whether it is a farmer arriving from Italy to set up a small grocery store in a slum, or a young girl arriving from a small town in Mississippi to escape the indignity of being observed by her neighbors, or a boy arriving from the Corn Belt with a manuscript in his suitcase and a pain in his heart, it makes no difference: each embraces New York with the intense excitement of first love, each absorbs New York with the fresh eyes of an adventurer, each generates heat and light to dwarf the Consolidated Edison Company.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;em&gt;Here is New York&lt;/em&gt;, E. B. White, 1949&lt;/p&gt;</content:encoded></item><item><title><![CDATA[While Google fights on the edges, Amazon is attacking their core]]></title><description><![CDATA[Google is fighting battles on almost every front:  social networking, mobile operating systems, web browsers, office apps, and so on.  Much…]]></description><link>https://cdixon.org/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core</link><guid isPermaLink="false">https://cdixon.org/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core</guid><pubDate>Sat, 22 May 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Google is fighting battles on almost every front:  social networking, mobile operating systems, web browsers, office apps, and so on.  Much of this makes sense, inasmuch as it is &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;strategic for them to dominate or commoditize&lt;/a&gt; each layer that stands between human beings and online ads.  But while they are doing this, they are leaving their core business vulnerable, particularly to Amazon.&lt;/p&gt;
&lt;p&gt;When legendary VC John Doerr quit Amazon’s board a few months ago, savvy industry observers like TechCrunch &lt;a href=&quot;http://techcrunch.com/2010/03/17/choosing-sides-john-doerr-leaves-amazons-board-of-directors/&quot;&gt;speculated&lt;/a&gt; that Google might begin directly competing with Amazon:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;[Google] competes with Amazon in a number of areas, particularly web services and big data. And down the road, Google may compete directly in other ways as well. Froogle was a flop, but don’t think Google doesn’t want a bigger chunk of ecommerce revenue from people who begin their product searches on their search engine.*&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;In fact, Google and Amazon’s are already direct competitors in their core businesses. Like Amazon, Google makes the vast majority of its revenue from users who are &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;looking to make an online purchase&lt;/a&gt;. Other query types – searches related to news, blog posts, funny videos, etc. – are mostly a &lt;a href=&quot;http://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too/&quot;&gt;loss leaders for Google&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;The key risk for Google is that they are heavily dependent on&lt;/em&gt; &lt;em&gt;online purchasing being a two-stage process&lt;/em&gt;:  the user does a search on Google, and then clicks on an ad to buy something on another site. As long as the e-commerce world is sufficiently fragmented, users will prefer an intermediary like Google to help them find the right product or merchant. But as Amazon &lt;a href=&quot;http://www.businessinsider.com/chart-of-the-day-amazon-sales-vs-retail-2010-4?utm_source=feedburner&amp;#x26;utm_medium=feed&amp;#x26;utm_campaign=Feed%3A+typepad%2Falleyinsider%2Fsilicon_alley_insider+%28Silicon+Alley+Insider%29&quot;&gt;increasingly dominates&lt;/a&gt; the e-commerce market, this fragmentation could go away along with users’ need for an intermediary.**&lt;/p&gt;
&lt;p&gt;&lt;img src=&quot;/13fbc2e5fab4fc9f9ea06bcffab273f5/chart-of-the-day-amazon-e-commerce-retail-sales-2003-2009-1.gif&quot; title=&quot;chart-of-the-day-amazon-e-commerce-retail-sales-2003-2009-1&quot;&gt;&lt;/p&gt;
&lt;p&gt;Moreover, Google’s algorithmic results for product searches are generally poor. (Try using Google to decide what &lt;a href=&quot;http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html&quot;&gt;dishwasher&lt;/a&gt; to buy). These poor results might actually lead to short term revenue increases since the sponsored links are superior to the unsponsored ones.  But long term if Google continues producing poor product search results and Amazon continues consolidating the e-commerce market, Google’s core business is at serious risk.&lt;/p&gt;
&lt;p&gt;—&lt;/p&gt;
&lt;p&gt;* Froogle (and Google Products) have been unsuccessful most likely because Google has had no incentive to make them better: they make plenty of money on these queries already on a CPC basis, and would likely make less if they moved to a CPA model.&lt;/p&gt;
&lt;p&gt;** Most Amazon Prime customers probably already do skip Google and go directly to Amazon.  I know I do.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Facebook is about to try to dominate display ads the way Google dominates text ads]]></title><description><![CDATA[It is customary to divide online advertising into two categories: direct response and brand advertising. I prefer instead to divide it…]]></description><link>https://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads</link><guid isPermaLink="false">https://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads</guid><pubDate>Sat, 15 May 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It is customary to divide online advertising into two categories: direct response and brand advertising. I prefer instead to divide it according to the mindset of users: whether or not they are actively looking to purchase something (i.e. they have &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;).*&lt;/p&gt;
&lt;p&gt;When users are actively looking to purchase something, they typically go to search engines or e-commerce sites. Through advertising or direct sales, these sites &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;harvest intent&lt;/a&gt;. Google and Amazon are the biggest financial beneficiaries of intent harvesting.&lt;/p&gt;
&lt;p&gt;When the user is not actively looking to buy something, the goal of an online ad is to generate intent. The intent generation market is still fairly fragmented and will grow rapidly over the next few years as brand advertising increasingly moves online. P&amp;#x26;G – which alone spends almost $4B/year on brand advertising – needs to convince the next generation of consumers that Crest is better than Colgate. This is why Google paid such a premium for Doubleclick, Yahoo for Right Media, and Microsoft for aQuantive (MS’s biggest acquisition ever).&lt;/p&gt;
&lt;p&gt;In 2003, Google introduced AdSense, a program to &lt;a href=&quot;http://www.google.com/press/pressrel/advertising.html&quot;&gt;syndicate&lt;/a&gt; their intent harvesting text ads beyond Google’s main property Google.com.  The playbook they followed was: use their popular website to build a critical mass of advertisers; then use that critical mass to run an off-property network that offers the highest payouts to publishers. AdSense became so dominant that competitors like Yahoo quit the syndicated ad business altogether. Today, Google has such a powerful position that they don’t disclose percentage revenue splits to publishers and extract the vast majority of the profits.&lt;/p&gt;
&lt;p&gt;It is widely believed that Facebook will soon follow the AdSense playbook by introducing an off-property ad network. They’ll try to use their strong base of advertisers to dominate intent generating ads the way AdSense dominated intent harvesting ads.&lt;/p&gt;
&lt;p&gt;But to win the intent generation ad battle, data is as important as a critical mass of advertisers. For intent harvesting, users simply type what they are looking for into a search box. For intent generating ads, you need to use data to make inferences about what might influence the user.&lt;/p&gt;
&lt;p&gt;This is what the introduction of the Facebook Like button is all about.  Intent generating ads – which mostly means displays ads – have notoriously low click through rates (well below 1%). Attempts to improve these numbers through demographics have basically failed. Many startups are having success using social data to target ads today. But the holy grail for targeting intent generating ads is taste data – which basically means what the user likes. Knowing, for example, that a user liked Avatar is an incredibly useful datapoint for targeting an Avatar 2 ad.&lt;/p&gt;
&lt;p&gt;Publishers who adopt Facebook’s Like feature may get more traffic and perhaps a better user experience as a result.  But they should hope the intent generation ad market doesn’t end up like the intent harvesting ad market – with one dominant player commanding the lion’s share of the profits.&lt;/p&gt;
&lt;p&gt;* Most text ads are about intent harvesting and most display ads are about intent generation, but they are not coreferential distinctions. For example, with techniques like “search retargeting” (you do a Google search for washing machines and the later on another site see a display ad for washing machines), sometimes intent harvesting is delivered through display ads.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Facebook, Zynga, and buyer-supplier hold up]]></title><description><![CDATA[The brewing fight between Facebook and Zynga is what is known in economic strategy circles as “buyer-supplier hold up.” The classic…]]></description><link>https://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up</link><guid isPermaLink="false">https://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up</guid><pubDate>Sat, 08 May 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The &lt;a href=&quot;http://techcrunch.com/2010/05/07/zynga-gunning-up-and-lawyering-up-for-war-against-facebook-with-zynga-live/&quot;&gt;brewing fight&lt;/a&gt; between Facebook and Zynga is what is known in economic strategy circles as “buyer-supplier &lt;a href=&quot;http://en.wikipedia.org/wiki/Hold-up_problem&quot;&gt;hold up&lt;/a&gt;.” The classic framework for analyzing a firm’s strategic position is Michael Porter’s &lt;a href=&quot;http://www.quickmba.com/strategy/porter.shtml&quot;&gt;Five Forces&lt;/a&gt;. In Porter’s framework, Zynga’s strategic weakness is extreme supplier concentration – they get almost all their traffic from Facebook.&lt;/p&gt;
&lt;p&gt;It is in Facebook’s economic interest to extract most of Zynga’s profits, leaving them just enough to keep investing in games and advertising. Last year’s &lt;a href=&quot;http://techcrunch.com/2009/10/28/d-day-for-facebook-app-developers/&quot;&gt;reduced notification change&lt;/a&gt; seemed like one move in this direction as it forced game makers to buy more ads instead of getting traffic organically. This probably hurt Zynga’s profitability but also helped them fend off less well-capitalized rivals. Facebook could also hold up Zynga by entering the games business itself, but this seemed unlikely since thus far Facebook has kept its features limited to things that are “utility like.”&lt;/p&gt;
&lt;p&gt;The way Facebook now seems to be holding up Zynga – requiring Zynga to use their payments system –  is particularly clever.  First, payments are still very much a “utility like” feature, and arguably one that benefits the platform, so it doesn’t come across as flagrant hold up. It is also clever because – assuming Facebook has insight into Zynga’s profitability – Facebook can charge whatever percentage gets them an optimal share of Zynga’s profits.&lt;/p&gt;
&lt;p&gt;The risk for Zynga is obvious — if they don’t diversify their traffic sources very soon, they are left with a choice between losing profits and losing their entire business.  But there is a risk for Facebook as well. If buyers of traffic (e.g. app makers) fear future hold up, they are less likely to make investments in the platform. The biggest mistake platforms make isn’t charging fees (Facebook) or competing with complements (Twitter), it’s being inconsistent.  Apple also charges 30% fees but they’ve been mostly consistent about it. App makers feel comfortable investing in the Apple platform and even having most of their business depend on them in a way they don’t on Facebook or Twitter.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Old VC firms: get ready to be disrupted]]></title><description><![CDATA[If the U.S. economy were a company, the VC industry would be the R&D department. The financing for the VC industry comes from so-called LPs…]]></description><link>https://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted</link><guid isPermaLink="false">https://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted</guid><pubDate>Sun, 02 May 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;If the U.S. economy were a company, the VC industry would be the R&amp;#x26;D department. The financing for the VC industry comes from so-called LPs (Limited Partners) – mostly university endowments, pension funds, family funds, and funds-of-funds.&lt;/p&gt;
&lt;p&gt;These LPs wield tremendous power, yet very few of them understand how startups or venture capital actually works. I was reminded of this recently when I saw this quote from a prominent fund-of-funds, &lt;a href=&quot;http://bits.blogs.nytimes.com/2010/03/11/battery-ventures-raises-a-fresh-750-million/&quot;&gt;justifying&lt;/a&gt; their investment in a 30-year old venture firm:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;“As the amount of money raised by venture firms shrinks, older firms that were around before the dot-com bubble will benefit,” said Michael Taylor, a managing director at HarbourVest. “These firms have track records, brand names and knowledge about how to avoid making mistakes that younger firms do not necessarily have,” he said.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;These older firms do often have track records – they’ve survived precisely because at one point they delivered good returns.  But it’s a mistake to assume that — because VC brands and institutional knowledge persist – past returns will predict future returns.  Here’s why.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;VC brand names do not persist&lt;/strong&gt;.  From the perspective of VCs and entrepreneurs, VC brands rise and fall very quickly. Given the &lt;a href=&quot;http://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc/&quot;&gt;excess supply&lt;/a&gt; of venture dollars, top tier entrepreneurs are frequently selecting their investors, not vice versa.  The VCs most sought after are mostly new firms:  big firms like Andreesson Horowitz, Union Square Ventures, and First Round, and micro-VCs like Floodgate (fka Maples), Betaworks, and Ron Conway.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;VC firms don’t accrue institutional knowledge.&lt;/strong&gt; VC returns are driven by partners, not firms. &lt;a href=&quot;http://cdixon.org/2009/08/19/its-the-partner-not-the-firm/&quot;&gt;Studies&lt;/a&gt; have shown this, as will a quick perusal of the big exits at prominent VC firms. When key partners switch firms or become less active, VC firms retain very little residual value.  Some service firms — for example consulting firms like McKinsey — invest heavily in accruing institutional knowledge by developing proprietary methodologies and employee apprenticeship programs.  VCs develop no real IP and rarely have serious apprenticeship programs.&lt;/p&gt;
&lt;p&gt;There is an old saying among big company CIOs that “no one gets fired for buying IBM.”  It’s much easier for a fund-of-fund partner to defend investments based on a VC’s track records. It’s a safe but bad strategy.&lt;/p&gt;
&lt;p&gt;To intelligently invest in VC firms, you need to roll up your sleeves and dive deep into the startup world.  You need to learn about the startups themselves, assess the entrepreneurs, use their products, analyze market dynamics – all things that good VCs and entrepreneurs do. If you want to understand a VCs brand and abilities don’t look at their track record in the 90s – ask today’s entrepreneurs.  The answer will likely surprise you.&lt;/p&gt;
&lt;p&gt;Unfortunately, very few LPs do this.  As a result, a massive amount of R&amp;#x26;D capital is being misallocated.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The tradeoff between open and closed]]></title><description><![CDATA[When having the “open vs closed” debate regarding a technology platform, a number of distinctions need to be made. First, what exactly is…]]></description><link>https://cdixon.org/2010/04/25/the-tradeoff-between-open-and-closed</link><guid isPermaLink="false">https://cdixon.org/2010/04/25/the-tradeoff-between-open-and-closed</guid><pubDate>Sun, 25 Apr 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;When having the “open vs closed” debate regarding a technology platform, a number of distinctions need to be made. First, what exactly is meant by “open.” Here’s a great chart from a &lt;a href=&quot;http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264012&quot;&gt;paper&lt;/a&gt; by Harvard professor &lt;a href=&quot;http://twitter.com/TEisenmann&quot;&gt;Tom Eisenmann&lt;/a&gt; (et al).:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2010-04-25-at-11-18-00-am.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2010 04 25 at 11 18 00 am&quot;
        title=&quot;Screen shot 2010-04-25 at 11.18.00 AM&quot;
        src=&quot;/static/e086f487f25b15e213bd5dd0340f6eb1/94a55/screen-shot-2010-04-25-at-11-18-00-am.png&quot;
        srcset=&quot;/static/e086f487f25b15e213bd5dd0340f6eb1/924ad/screen-shot-2010-04-25-at-11-18-00-am.png 170w,
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2010-04-25 at 11.18.00 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(Eisenmann acknlowledges the iPhone isn’t fully open to the end user – in the US you need to use AT&amp;#x26;T, etc.  I would argue the iPhone is semi-open to the app developer and mobile app development was effectively closed prior to the iPhone. But the main point here is that platforms can be open &amp;#x26; closed in many different ways, at different levels, etc.)&lt;/p&gt;
&lt;p&gt;The next important distinction is whose interest you are considering when asking what and when to open or close things.  I think there are at least 3 interesting perspectives:&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The company:&lt;/strong&gt; Lots of people have written about this topic (&lt;a href=&quot;http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996&quot;&gt;Clay Christensen&lt;/a&gt;, &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;Joel Spolsky&lt;/a&gt;, more Eisenmann &lt;a href=&quot;http://www.hbs.edu/research/facpubs/workingpapers/papers0607.html#07-105&quot;&gt;here&lt;/a&gt;).   In a nutshell, there are times when a company, acting solely in its self-interest, should close things and other times they should open things.  As a rule of thumb, a company should close their core assets and open/commoditize complementary assets. &lt;a href=&quot;http://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm/&quot;&gt;Google’s search engine is their core asset&lt;/a&gt; and therefore Google should want to keep it closed, whereas the operating system is a complement that they should commoditize (my full analysis of what Google should want to own vs commoditize is &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;here&lt;/a&gt;). Facebook’s social graph is their core asset so it’s optimal to close it and not interoperate with other graphs, whereas marking up web pages to be more social-network friendly (open graph protocol) is complementary hence optimal for FB to open.  (With respect to social graphs interoperating (e.g. Open Social), it’s generally in the interest of smaller graphs to interoperate and larger ones not to – the same is true of IM networks).  Note that I think there is absolutely nothing wrong with Google and Facebook or any other company keeping closed or trying to open things according to their own best interests.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;The industry:&lt;/strong&gt; When I say “what is good for the industry” I mean what ultimately creates the most aggregate industry-wide shareholder value.  I assume (hope?) this also yields the maximum innovation.  As an active tech entrepreneur and investor I think my personal interests and the tech industry’s interests are mostly aligned (hence you could argue I’m &lt;a href=&quot;http://twitter.com/hankwilliams/status/12833901538&quot;&gt;talking my book&lt;/a&gt;).  Unfortunately it’s much easier to study open vs. closed strategies at the level of the firm than at the level of an industry, because there are far more “split test” cases to study.  What would the world be like if email (SMTP) were controlled by a single company?  I would tend to think a far less innovative and wealthy one. There are a number of multibillion dollar industries built on email: email clients, webmail systems, email marketing, anti-spam, etc.  The downside of openness is that it’s very hard to upgrade SMTP since you need to get so many parties to agree and coordinate.  So, for example, it has taken forever to add basic anti-spam authentication features to SMTP.  Twitter on the other hand can unilaterally add useful new things like their recent annotations feature.&lt;/p&gt;
&lt;p&gt;Here’s what Professor Eisenmann said when I asked him to summarize the state of economic thinking on the topic:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;With respect to your question about the impact of open vs closed on the economy, the hard-core economists cited in my &lt;a href=&quot;http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264012&quot;&gt;book chapter&lt;/a&gt; have a lot to say, but it all boils down to “it depends.” Closed platform provides more incentive for innovation because platform owner can collect and redistribute more rent and can ensure that there’s a manageable level of competition in any given application category. Open platform harnesses strong network effects, attracting more application developers, and  thus stimulates lots of competition. There’s some interesting recent work that suggests that markets may evolve in directions that favor the presence of one strong closed player plus one strong open player (consider: Windows + Linux; iPhone + Android). In this scenario, society/economy gets best of both approaches.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;&lt;strong&gt;Society&lt;/strong&gt;:  I tend to think what is good for the tech industry is generally good for society.  But others certainly have different views.  Advocates of openness are often &lt;a href=&quot;http://twitter.com/shervin/status/12802297481&quot;&gt;accused&lt;/a&gt; of being socialist hippies.  Maybe some are.  I am not.  I care about the tech industry.  I think it’s reasonable to question whether moves by large industry players are good or bad for the industry.  Unfortunately most of the debate I’ve seen so far seems driven by ideology and name calling.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Twitter and third-party Twitter developers]]></title><description><![CDATA[I can’t remember the last time the tech world was so interesting. First, innovation is at an all time high.  Apple, Google, Facebook…]]></description><link>https://cdixon.org/2010/04/10/twitter-and-third-party-twitter-developers</link><guid isPermaLink="false">https://cdixon.org/2010/04/10/twitter-and-third-party-twitter-developers</guid><pubDate>Sat, 10 Apr 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I can’t remember the last time the tech world was so interesting. First, innovation is at an all time high.  Apple, Google, Facebook, Twitter and even Microsoft (in the non-monopoly divisions) are making truly exciting products. Second, since the battles are between platforms, the strategic issues are complex, involving &lt;a href=&quot;http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/&quot;&gt;complementary network effects&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Twitter’s moves this week were particular interesting.  A lot of third-party developers were &lt;a href=&quot;http://www.businessinsider.com/twitter-employees-cheer-lead-fred-wilsons-bombshell-developers-freak-out-2010-4&quot;&gt;unhappy&lt;/a&gt;. I think this is mainly a result of Twitter having sent mixed signals over the past few years. Twitter’s move into complementary areas was &lt;a href=&quot;http://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;entirely predictable&lt;/a&gt; – it happens with every platform provider. The real problem is that somehow Twitter had convinced the world they were going to “let a thousand flowers bloom” – as if they were a non-profit out to save the world, or that they would invent some fantastic new business model that didn’t encroach on third-party developers. This week Twitter finally started acting like what it is: a well-financed company run by smart capitalists.&lt;/p&gt;
&lt;p&gt;This mixed signaling has been exacerbated by the fact that Twitter has yet to figure out a business model (they sold data to Microsoft &amp;#x26; Google but this is likely just one-time R&amp;#x26;D purchases). Maybe Twitter thinks they know what their business model is and maybe they’ll even announce it soon. But whatever they think or announce will only truly be their business model when and if it delivers on their multi-billion dollar aspirations. It will likely be at least a year or two before that happens.&lt;/p&gt;
&lt;p&gt;Normally, when third parties try to predict whether their products will be subsumed by a platform, the question boils down to whether their products will be strategic to the platform. When the platform has an established business model, this analysis is fairly straightforward (for example, &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;here&lt;/a&gt; is my strategic analysis of Google’s platform).  If you make games for the iPhone, you are pretty certain Apple will take their 30% cut and leave you alone. Similarly, if you are a content website relying on SEO and Google Adsense you can be pretty confident Google will leave you alone. Until Twitter has a successful business model, they can’t have a consistent strategy and third parties should expect erratic behavior and even complete and sudden shifts in strategy.&lt;/p&gt;
&lt;p&gt;So what might Twitter’s business model eventually be?  I expect that Twitter search will monetize poorly because most searches on Twitter don’t have &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;.  Twitter’s move into mobile clients and &lt;a href=&quot;http://www.businessinsider.com/twitter-previews-the-redesign-that-will-make-you-not-want-to-use-a-desktop-client-2010-4&quot;&gt;hints&lt;/a&gt; about a more engaging website suggest they may be trying to mimic Facebook’s display ad model. (Facebook’s ad growth is being driven largely by companies like Zynga who are in turn monetizing users with social games and virtual goods.  Hence it’s no surprise that a Twitter investor is &lt;a href=&quot;http://www.avc.com/a_vc/2010/04/the-twitter-platform.html&quot;&gt;suggesting&lt;/a&gt; that developers create social games instead of “filling holes” with URL shorteners etc.) Facebook’s model depends on owning “eyeballs,” which is entirely contradictory to the pure API model Twitter has promoted thus far.  So if Twitter continues in this direction expect a lot of angst among third-party developers.&lt;/p&gt;
&lt;p&gt;Hopefully Twitter “fills holes” through acquisitions instead of internal development. Twitter was a hugely clever invention and has grown its user base at a staggering rate, but on the product development front has been underwhelming.  &lt;a href=&quot;http://gigaom.com/2010/04/09/twitter-buys-tweetie-adds-fuel-to-developer-fires/&quot;&gt;Buying Tweetie&lt;/a&gt; seemed to be a tacit acknowledgement of this weakness and an attempt to rectify it. Acquisitions also have the benefit of sending a positive signal to developers since least some of them are embraced and not just replaced.&lt;/p&gt;
&lt;p&gt;What’s Facebook doing during all of this?  Last year, Facebook seemed to be frantically copying Twitter – defaulting a lot of information to public, creating a canonical namespace, etc. Now that Twitter seems to be mimicing Facebook, Facebook’s best move is probably just to sit back and watch the Twitter ecosystem fight amongst itself.  As Facebooker Ivan Kirigin &lt;a href=&quot;http://twitter.com/ikirigin/status/11920666017&quot;&gt;tweeted&lt;/a&gt; yesterday: “I suppose when your competition is making huge mistakes, you should just stfu.”&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Disclosure: As with everything I write, I have a ton of conflicts of interest, some of which are listed&lt;/em&gt; &lt;a href=&quot;http://foundercollective.com/companies&quot;&gt;&lt;em&gt;here&lt;/em&gt;&lt;/a&gt;&lt;em&gt;.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Underhyping your startup]]></title><description><![CDATA[I recently tweeted: New early-stage start up trend: get big quietly, so you don’t tip off potential competitors. Chris Sacca agreed: @cdixon…]]></description><link>https://cdixon.org/2010/04/06/underhyping-your-startup</link><guid isPermaLink="false">https://cdixon.org/2010/04/06/underhyping-your-startup</guid><pubDate>Tue, 06 Apr 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I recently tweeted:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;New early-stage start up trend: get big quietly, so you don’t tip off potential competitors.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Chris Sacca agreed:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;@&lt;a href=&quot;http://twitter.com/cdixon&quot;&gt;cdixon&lt;/a&gt; Agreed. As of this morning, I have four companies who don’t want investors mentioning that they’ve been funded.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Business Insider took these tweets to mean “&lt;a href=&quot;http://www.businessinsider.com/stealth-mode-is-back-2010-3&quot;&gt;Stealth mode is back&lt;/a&gt;.”  But that’s actually not what I meant.  The companies I’m referring to (and I think Chris is referring to) are publicly launched, acquiring users and generating revenue. They are modeling themselves after Groupon, where the first time the VC community / tech press gets excited about them, they are already so successful that it’s hard for competitors to jump in.&lt;/p&gt;
&lt;p&gt;This trend strikes me as a response to the fact that 1) raising money from certain investors can be such a &lt;a href=&quot;http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/&quot;&gt;strong signal&lt;/a&gt; that it triggers massive investor/tech press excitement, 2) things are “frothy” now – meaning lots of smart people are starting companies and easily raising lots of money, 3) word seems to travel faster than ever about interesting startups, and 4) there are big companies like Facebook and Google who are good at fast following.&lt;/p&gt;
&lt;p&gt;I don’t know what to call this but it’s not stealth mode.  Maybe “underhype” mode?&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Size markets using narratives, not numbers]]></title><description><![CDATA[Anyone who has pitched VCs knows they are obsessed with market size.  If you can’t make the case that you’re addressing a possible billion…]]></description><link>https://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers</link><guid isPermaLink="false">https://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers</guid><pubDate>Sat, 03 Apr 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Anyone who has pitched VCs knows they are &lt;a href=&quot;http://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean/&quot;&gt;obsessed with market size&lt;/a&gt;.  If you can’t make the case that you’re addressing a possible &lt;a href=&quot;http://www.sequoiacap.com/ideas&quot;&gt;billion dollar market&lt;/a&gt;, you’ll have difficulty getting VCs to invest. (Smaller, venture-style investors like angels and &lt;a href=&quot;http://foundercollective.com&quot;&gt;seed funds&lt;/a&gt; also prioritize market size but are usually more flexible – they’ll often invest when the market is “only” ~$100M).  This is perfectly rational since VC returns tend to be driven by a few big hits in big markets.&lt;/p&gt;
&lt;p&gt;For early-stage companies, you should never rely on quantitative analysis to estimate market size. Venture-style startups are bets on broad, secular trends. Good VCs understand this. Bad VCs don’t, and waste time on things like interviewing potential customers and building spreadsheets that estimate market size from the bottom-up.&lt;/p&gt;
&lt;p&gt;The only way to understand and predict large new markets is through narratives. Some popular current narratives include: people are spending more and more time online and somehow brand advertisers will find a way to effectively influence them; social link sharing is becoming an increasingly significant source of website traffic and somehow will be monetized; mobile devices are becoming powerful enough to replace laptops for most tasks and will unleash a flood of new applications and business models.&lt;/p&gt;
&lt;p&gt;As an entrepreneur, you shouldn’t raise VC unless you truly believe a narrative where your company is a billion dollar business. But deploying narratives is also an important tactic. VCs are financiers — quantitative analysis is their home turf. If you are arguing market size with a VC using a spreadsheet, you’ve already lost the debate.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Capitalism just like Adam Smith pictured it]]></title><description><![CDATA[From far away, things that are very different look alike. I grew up in a family of musicians and English professors. To them, the entire…]]></description><link>https://cdixon.org/2010/03/27/capitalism-just-like-adam-smith-pictured-it</link><guid isPermaLink="false">https://cdixon.org/2010/03/27/capitalism-just-like-adam-smith-pictured-it</guid><pubDate>Sat, 27 Mar 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;From far away, things that are very different look alike. I grew up in a family of musicians and English professors. To them, the entire financial industry seemed corrupt. When I worked in finance – first on Wall Street and then in venture capital – I saw that the reality was much more nuanced. Some finance is productive and useful and some is corrupt and parasitic.&lt;/p&gt;
&lt;p&gt;Most financial markets start out with a productive purpose. Derivatives like futures and options started out as a way for companies to reduce risk in non-core areas, for example for airlines to hedge their exposure to oil prices and transnationals to hedge their exposure to currency fluctuations. The sellers of these derivatives were aggregators who pooled risk, much like insurance companies do. The overall effect was a net reduction in risk to our economy without hampering growth and returns.&lt;/p&gt;
&lt;p&gt;Then speculators entered the market, creating more complicated derivative products and betting with borrowed money.  This was defended as a way to increase liquidity and efficiency. But it came at the cost of making the system more complicated and susceptible to abuse. Worst of all, these so-called innovations increased the overall risk to the system, something we saw quite vividly during the recent financial crisis.&lt;/p&gt;
&lt;p&gt;Venture capital is a shining example of capitalism just like Adam Smith pictured it, where private vice really does lead to public virtue.  Consider, for example, two of the largest areas of venture investment: biotech and cleantech.  Here we see the best and brightest – top science graduates from places like MIT and Stanford – devoting their lives to curing cancer and developing new energy sources.  These students may be motivated by good will, but need not be, since they will also get rich if they succeed.&lt;/p&gt;
&lt;p&gt;A strong case can be made that the financial industry needs significantly more regulation, particularly around big banks and derivatives markets. But it would be a tragic mistake to create &lt;a href=&quot;http://www.avc.com/a_vc/2010/03/startups-get-hit-by-shrapnel-in-the-banking-bill.html&quot;&gt;regulations&lt;/a&gt; that hinder angel investing and venture capital.  From the outside, VC and Wall Street might appear similar, but the closer you get, the more you understand how different they really are.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Stickiness is bad for business]]></title><description><![CDATA[It is common to hear entrepreneurs and investors talk about the high level of engagement (what we used to call “stickiness”) of their…]]></description><link>https://cdixon.org/2010/03/25/stickiness-is-bad-for-business</link><guid isPermaLink="false">https://cdixon.org/2010/03/25/stickiness-is-bad-for-business</guid><pubDate>Thu, 25 Mar 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It is common to hear entrepreneurs and investors talk about the high level of engagement (what we used to call “stickiness”) of their website.  They quite rightly believe that it’s better to have a more engaging user experience, as that generally means happy users. Unfortunately, the dominant advertising model on the web – Cost per Click (CPC) – rewards un-sticky websites.  As &lt;a href=&quot;http://blog.rlucas.net/tech_and_market_reflections/paradox_of_quality_site_visits/&quot;&gt;Randall Lucas&lt;/a&gt; &lt;a href=&quot;http://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars/?success#comment-35531015&quot;&gt;said&lt;/a&gt; in response to one of my earlier &lt;a href=&quot;http://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars/&quot;&gt;posts&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The paradox, it seems is this: in a pay-per-click driven world, site visitors who want to stay on your site — due to it having the once-much-lauded quality of “stickiness” — are worth &lt;em&gt;much less&lt;/em&gt; than those who want to flee your site because it’s clearly not valuable, and hence will click through to somewhere else.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Facebook recently became the most &lt;a href=&quot;http://money.cnn.com/2010/03/16/technology/facebook_most_visited/&quot;&gt;visited site&lt;/a&gt; on the web. Yet their revenues are rumored to around $1B – about 1/30 of what &lt;a href=&quot;http://finance.yahoo.com/q/ks?s=GOOG&quot;&gt;Google’s revenues&lt;/a&gt; will be this year. Google has the perfect revenue-generating combination:  people come to the site often, leave quickly, and often have &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;. Facebook has tons of visitors but they generally come to socialize, not to buy things, and they rarely click on ads that take them to other sites. &lt;strong&gt;Facebook is like a Starbucks where everyone hangs out for hours but almost never buys anything.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The revenue gap between sites like Facebook and Google should narrow over time.  Cost-per-click search ads are extremely good at &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;harvesting intent&lt;/a&gt;, but bad at generating intent.  The vast majority of money spent on intent-generating advertising — brand advertising — still happens offline. Eventually this &lt;a href=&quot;http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/&quot;&gt;money will have to go where people spend time&lt;/a&gt;, which is increasingly online, at sites like Facebook. Somehow Coke, Tide, Nike, Budweiser etc. will have to convince the next generation to buy their mostly commodity products. Expect the online Starbucks of the future to have a lot more – and more effective – ads.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Developing new startup ideas]]></title><description><![CDATA[If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it.  Be the opposite…]]></description><link>https://cdixon.org/2010/03/14/developing-new-startup-ideas</link><guid isPermaLink="false">https://cdixon.org/2010/03/14/developing-new-startup-ideas</guid><pubDate>Sun, 14 Mar 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it.  Be the &lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;opposite of secretive&lt;/a&gt;.  Create a Google spreadsheet where you list every idea you can think, even really half-baked ones.  Include ideas you hear about (make sure you keep track of who had which idea so you can credit them/include them later).&lt;/p&gt;
&lt;p&gt;Then take the spreadsheet and show it to every smart person you can get a meeting with and walk through each idea.  Talk to VCs, entrepreneurs, potential customers, and people working at big companies in relevant industries. You’ll be surprised how much you’ll learn.  The odds that someone will hear an idea and go start a competitor are close to zero.  The odds you’ll learn which ideas are good and bad and how to improve them are very high.&lt;/p&gt;
&lt;p&gt;Every conversation will contain some signal and some noise. Separating the two is tricky. Here are some broad rules of thumb I’ve developed for how to filter feedback based to the profession of the person giving it to you.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;&lt;em&gt;Employees at relevant big companies.&lt;/em&gt; These people are great at providing facts (“Google has 100 people working on that problem”) but their judgment about the quality of startup ideas is generally bad. They tend to have goggles on that makes them think every good idea in their industry is already being built within their company.  For example, every security industry person I talked to thought &lt;a href=&quot;http://siteadvisor.com&quot;&gt;SiteAdvisor&lt;/a&gt; was a bad idea.  (If it wasn’t, they think, someone at McAfee or Symantec company would have already built it!)&lt;/li&gt;
&lt;li&gt;&lt;em&gt;VCs.&lt;/em&gt; VCs are good at telling you about similar companies in the past and present and critiquing your idea in an “MBA-like” way:  will it scale? what are the economics? what is the best marketing strategy?  I would listen to them on these topics but pretty much ignore whether they think your idea is good or bad.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Potential customers&lt;/em&gt;.  If your product is B2B, remember you’ll be selling to that person 2-3 years from now and by then the world and their priorities will likely have radically changed.  If your product is B2C, it’s interesting to hear how regular consumers think about your product but often they really need to use it fully built and in the proper context to really judge it.&lt;/li&gt;
&lt;li&gt;&lt;em&gt;Entrepreneurs.&lt;/em&gt; This is the one group I listen to without a filter.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Even though I have no intention of starting a new company for a long time (if ever), I still keep my idea spreadsheet and update it periodically.  Some of the ideas I wrote down a few years ago are now companies started by other people (some successful, some not).  A few I had the chance to invest in. It’s interesting to compare my notes and ratings of each idea with how those companies have actually performed. I also keep a list of “on the beach” ideas in case I have time in between startups. These are mostly non-profit ideas.  I don’t know if I’ll ever get to those but they are particularly fun to think about.&lt;/p&gt;
&lt;p&gt;* Thanks to &lt;a href=&quot;http://www.cham.net/james&quot;&gt;James Cham&lt;/a&gt; for inspiring &amp;#x26; contributing ideas to this post!&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The importance of investor signaling in venture pricing]]></title><description><![CDATA[Suppose there is a pre-profitable company that is raising venture financing. Simple, classical economic models would predict that although…]]></description><link>https://cdixon.org/2010/03/11/the-importance-of-investor-signaling-in-venture-pricing</link><guid isPermaLink="false">https://cdixon.org/2010/03/11/the-importance-of-investor-signaling-in-venture-pricing</guid><pubDate>Thu, 11 Mar 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Suppose there is a pre-profitable company that is raising venture financing. Simple, classical economic models would predict that although there might be multiple VCs interested in investing, at the end of the financing process the valuation will rise to the clearing price where the demand for the company’s stock equals the supply (amount being issued).&lt;/p&gt;
&lt;p&gt;Actual venture financings work nothing like this simple model would predict.  In practice, the equilibrium states for venture financings are: 1) significantly oversubscribed at too low a valuation, or 2) significantly undersubscribed at too high a valuation.&lt;/p&gt;
&lt;p&gt;Why do venture markets function this way?  Pricing in any market is a function of the information available to investors. In the public stock markets, for example, the primary information inputs are “hard metrics” like company financials, industry dynamics, and general economic conditions. What makes venture pricing special is that there are so few hard metrics to rely on, &lt;em&gt;hence one of the primary valuation inputs is what other investors think about the company&lt;/em&gt;.&lt;/p&gt;
&lt;p&gt;This investor signaling has a huge effect on venture financing dynamics. If Sequoia wants to invest, so will every other investor.  If Sequoia gave you seed money before but now doesn’t want to follow on, you’re probably dead.&lt;/p&gt;
&lt;p&gt;Part of this is the so-called herd mentality for which VC’s often get ridiculed. But a lot of it is very rational. When you invest in early-stage companies you are forced to rely on very little information. Maybe you’ve used the product and spent a dozen hours with management, but that’s often about it. The signals from other investors who have access to information you don’t is an extremely valuable input.&lt;/p&gt;
&lt;p&gt;Smart entrepreneurs manage the investor signaling effect by following rules like:&lt;/p&gt;
&lt;p&gt;- &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;Don’t take seed money from big VCs&lt;/a&gt; – It doesn’t matter if the big VC invests under a different name or merely provides space and mentoring.  If a big VC has &lt;em&gt;any&lt;/em&gt; involvement with your company at the seed stage, their posture toward the next round has such strong signaling power that they can kill you and/or control the pricing of the round.&lt;/p&gt;
&lt;p&gt;- Don’t try to be clever and get an auction going (and &lt;a href=&quot;http://cdixon.org/2009/09/02/dont-shop-your-term-sheet/&quot;&gt;don’t shop your term sheet&lt;/a&gt;). If you do, once the price gets to the point where only one investor remains, that investor will look left and right and see no one there and might get cold feet and leave you with no deal at all. Save the auction for when you get acquired or IPO.&lt;/p&gt;
&lt;p&gt;- Don’t be perceived as being “on the market” too long.  Once you’ve pitched your first investor, the clock starts ticking. Word gets around quickly that you are out raising money. After a month or two, if you don’t have strong interest, you risk being perceived as damaged goods.&lt;/p&gt;
&lt;p&gt;- If you get a great investor to lead a follow-on round, expect your existing investors to want to invest pro-rata or more, even if they previously indicated otherwise.  This often creates complicated situations because the new investor usually has minimum ownership thresholds (15-20%) and combining this with pro-rata for existing investors usually means raising far more money than the company needs.&lt;/p&gt;
&lt;p&gt;Lastly, be very careful not to try to stimulate investor interest by overstating the interest of other investors. It’s a very small community and seed investors talk to each other all the time. If you are perceived to be overstating interest, you can lose credibility very quickly.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[News is a lousy business for Google too]]></title><description><![CDATA[There is a widespread myth that search engines have taken profits away from news websites. A few months ago, Rupert Murdoch said: “Google…]]></description><link>https://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too</link><guid isPermaLink="false">https://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too</guid><pubDate>Sun, 07 Mar 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There is a widespread myth that search engines have taken profits away from news websites. A few months ago, Rupert Murdoch &lt;a href=&quot;http://www.examiner.com/x-22639-Google-Trends-Examiner~y2009m11d19-Rupert-Murdoch-Google-profits-by-avoiding-newsgathering-costs&quot;&gt;said&lt;/a&gt;: “Google has devised a brilliant business model that avoids paying for news gathering yet profits off the search ads sold around that content.”&lt;/p&gt;
&lt;p&gt;The reality is that news is a lousy business. Period. Even Google doesn’t make money on it. For example, here are Google’s search results for the phrase “afghanistan war”:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2010-03-07-at-2-16-53-pm1.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2010 03 07 at 2 16 53 pm1 1024x642&quot;
        title=&quot;Screen shot 2010-03-07 at 2.16.53 PM&quot;
        src=&quot;/static/6534c90a73a87de11eaac0c582b74be2/94a55/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2010-03-07 at 2.16.53 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Notice there aren’t any ads on the page. This is because ads for “afghanistan war” generate such low revenues per query that Google doesn’t think it’s worth hurting the user experience with a cluttered page. Google can afford to do this on news queries (along with many other categories of queries) because their &lt;a href=&quot;http://cdixon.org/2009/12/14/search-and-the-social-graph/&quot;&gt;real business&lt;/a&gt; is selling ads on queries where the user likely has &lt;a href=&quot;http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;. Big money-making categories include travel, consumer electronics and malpractice lawyers. News queries are loss leaders.&lt;/p&gt;
&lt;p&gt;It’s an historical accident that hard news categories like international and investigative reporting were part of profitable businesses. The internet upended this model by 1) providing a new delivery method for classified ads (mainly Craigslist), 2) increasing the supply of newspapers from 1-2 per location to thousands per location, thereby driving the willingness-to-pay for news dramatically down, and 3) unbundling news categories, making cross subsidization increasingly hard.&lt;/p&gt;
&lt;p&gt;The internet exposed hard news for what it is: a lousy standalone business. Google arguably contributed to this in many indirect ways, including by helping users find substitute news sources. But the idea that Google takes profits directly from newspapers is simply misinformed.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[It’s not East Coast vs West Coast, it’s about making more places like the Valley]]></title><description><![CDATA[I’ve written a few times about what seems to be an exploding tech scene in NYC.  This is sometimes interpreted as arguing that NYC is a…]]></description><link>https://cdixon.org/2010/02/27/its-not-east-coast-vs-west-coast-its-about-making-more-places-like-the-valley</link><guid isPermaLink="false">https://cdixon.org/2010/02/27/its-not-east-coast-vs-west-coast-its-about-making-more-places-like-the-valley</guid><pubDate>Sat, 27 Feb 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve written a few times about what seems to be an &lt;a href=&quot;http://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding/&quot;&gt;exploding&lt;/a&gt; tech scene in NYC.  This is sometimes interpreted as arguing that NYC is a better place to start a company than the Valley. Most recently, Matt Mireles seems to be &lt;a href=&quot;http://www.businessinsider.com/face-it-nyc-is-not-the-best-place-for-a-startup-2010-2&quot;&gt;addressing&lt;/a&gt; people like me with his critique of the NYC startup scene (he makes some good points as does Caterina Fake in her &lt;a href=&quot;http://www.caterina.net/archive/001227.html&quot;&gt;response&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;I’ve never meant my arguments to be about where it is better to start a company. California is a phenomenal place to start a tech company. NYC is a great place as well. (Note to Matt – it’s hard for first time founders &lt;em&gt;everywhere&lt;/em&gt;). To me, the important question isn’t which place is better, but rather how we import the things that make the Valley great into NYC. As I said &lt;a href=&quot;http://cdixon.org/2009/09/01/new-york-city-is-poised-for-a-tech-revival/&quot;&gt;last year&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself.   Silicon Valley will always be the mecca of technology, but now that people here are getting back to, as Obama says, &lt;em&gt;making things&lt;/em&gt;, New York City has a shot at becoming relevant again in the tech world.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I spent the past week in California and had the honor of meeting some legendary venture investors. I was deeply impressed: they are legends for a reason. Of course, they are incredibly smart and hard working and all of that, but most impressively, it was clear that they truly believe in making big bets on ambitious, seemingly wacky ideas &lt;em&gt;to try&lt;/em&gt; &lt;em&gt;to change the world&lt;/em&gt;. Every VC has this rhetoric on their website, but – at least in my experience – most just want to make incremental money on incremental technologies. (Side note: I noticed that the more powerful the VC, the more likely they were to pay close attention, show up on time, and not bring phones/computers into meetings.  I guess when you are changing the world, emails can wait an hour for a response).&lt;/p&gt;
&lt;p&gt;California should be NYC’s role model and ally. The enemy should be people and institutions who make money but don’t actually create anything useful. In NYC, this mostly means Wall Street, along with the Wall Street mindset that sometimes infects East Coast VC’s (emphasis on financial engineering, needing to see metrics &amp;#x26; “traction” vs betting on people and ideas, etc).&lt;/p&gt;
&lt;p&gt;Matt should do what’s best for his company. God knows it’s hard enough doing a startup – you don’t need to carry the weight of reinvigorating a region on your back as well. That might mean moving to California. Meanwhile, forward-thinking investors and founders in NYC will continue trying to &lt;em&gt;make things that change the world&lt;/em&gt; – in other words, trying to make NYC more like the Valley.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[A massive misallocation of online advertising dollars]]></title><description><![CDATA[In an earlier blog post, I talked about how sites that generate purchasing intent (mainly “content” sites) are being under-allocated…]]></description><link>https://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars</link><guid isPermaLink="false">https://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars</guid><pubDate>Fri, 19 Feb 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In an &lt;a href=&quot;http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/&quot;&gt;earlier blog post&lt;/a&gt;, I talked about how sites that generate purchasing intent (mainly “content” sites) are being under-allocated advertising dollars versus sites that harvest purchasing intent (search engines, coupon sites, comparison shopping sites, etc).  As a result, most content sites are left haggling over CPM-based brand advertising instead of sponsored links for the bulk of their revenue.&lt;/p&gt;
&lt;p&gt;But there is an additional problem:  e&lt;em&gt;ven among sites that monetize via sponsored links there is a large overallocation of advertising spending on links that are near the “end of the purchasing process” (or “end of the funnel”).&lt;/em&gt; For example, an average camera buyer takes 30 days and clicks on approximately 3 sponsored links from the beginning of researching cameras to actually purchasing one.   Yet in most cases only the last click gets credit, by which I mean:  1) if it’s an affiliate (CPA) deal, it is literally usually the case that only the last affiliate (the site that drops the last cookie) gets paid, 2) if it’s a CPC or CPM deal, most advertisers don’t properly track the users across multiple site visits so simply attribute conversion to the most recent click, causing them to over-allocate to end-of-funnel links 3) if it’s a non-sponsored link (like Google natural search links) the advertiser might over-credit SEO when in fact the natural search click was just the final navigational step in a long process that involved sponsored links along the way.&lt;/p&gt;
&lt;p&gt;What this means is there are two huge misallocations of advertising dollars online: the first from intent generators to intent harvesters; the second from intent harvesters that are at the beginning or middle of the purchasing process to those at the end of the purchasing process.  This is not just a problem for internet advertisers and businesses – it affects all internet users.  Where advertising dollars flow, money gets invested. It is well known that content sites are suffering, many are even on their way to dying. Additionally, product/service sites that started off focusing on research are forced to move more and more toward end-of-funnel activities.  Take a look at how sites like &lt;a href=&quot;http://www.tripadvisor.com/Tourism-g28953-New_York-Vacations.html&quot;&gt;TripAdvisor&lt;/a&gt; and &lt;a href=&quot;http://reviews.cnet.com/digital-cameras/?tag=TOCleftColumn.0&quot;&gt;CNET&lt;/a&gt; have devoted increasing real estate to the final purchasing click instead of research.  For the most part, you don’t get paid for the actual research since it’s too high in the funnel.&lt;/p&gt;
&lt;p&gt;As with all large problems, this misallocation of advertising dollars also presents a number of opportunities.  One opportunity is for advertisers to correctly attribute their spending by tracking users through the entire purchasing process (in the case of cameras, the full 30 days and multiple sponsored clicks).  Very likely, these sites are currently overpaying end-of-funnel sites (e.g. coupon sites) and underpaying top-of-funnel sites (e.g. research sites). There is also an opportunity for companies that provide technology to help track this better. Finally, if over time advertising dollars do indeed shift to being correctly allocated, this will allow research sites to be pure research sites, content sites to be pure content sites, etc instead of everyone trying to clutter their sites with repetitive, “last click” functionality.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Don’t be creative about the wrong things]]></title><description><![CDATA[When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should…]]></description><link>https://cdixon.org/2010/02/16/dont-be-creative-about-the-wrong-things</link><guid isPermaLink="false">https://cdixon.org/2010/02/16/dont-be-creative-about-the-wrong-things</guid><pubDate>Tue, 16 Feb 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should be:  product, recruiting, marketing etc. One slightly disturbing trend I’ve noticed is founders trying to creative about stuff like legal terms that really are better left in their “default” form.&lt;/p&gt;
&lt;p&gt;Here’s my advice: hire a “default” law firm like &lt;a href=&quot;http://www.gunder.com/&quot;&gt;Gunderson&lt;/a&gt; and take their “default” advice. Yes, you should form a C corp in Delaware of CA or wherever they tell you; yes you should have 4 year vesting with a 1 year cliff; yes founders should have vesting; yes your deal terms should be &lt;a href=&quot;http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/&quot;&gt;plain vanilla&lt;/a&gt;. Etc. These things are time tested and you are far more likely to screw things up than create value by tinkering with them. Also, they are just not what you should be spending your time on.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Every time an engineer joins Google, a startup dies]]></title><description><![CDATA[VC returns over the last decade have been poor. The cause is widely agreed to be an excess of venture capital dollars to worthy startups…]]></description><link>https://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies</link><guid isPermaLink="false">https://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies</guid><pubDate>Thu, 11 Feb 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;VC returns over the last decade have been &lt;a href=&quot;http://azeemazhar.com/?p=383&quot;&gt;poor&lt;/a&gt;. The cause is widely agreed to be an excess of venture capital dollars to worthy startups. Observers seem to universally assume that the solution is for the VC industry to downsize.&lt;/p&gt;
&lt;p&gt;For example, Fred Wilson &lt;a href=&quot;http://www.avc.com/a_vc/2009/04/the-venture-capital-math-problem.html&quot;&gt;says&lt;/a&gt; about VC:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;You cannot invest $25bn per year and generate the kinds of returns investors seek from the asset class. If $100bn per year in exits is a steady state number, then we need to work back from that and determine how much the asset class can manage…. I think “back to the future” is the answer to most of the venture capital asset class problems. Less capital in the asset class, smaller fund sizes, smaller partnerships, smaller deals, and smaller exits&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Similarly, Bill Gurley &lt;a href=&quot;http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/&quot;&gt;writes&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There are many reasons to believe that a reduction in the size of the VC industry will be healthy for the industry overall and should lead to above average returns in the future.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;All of these analyses start with the assumption that aggregate venture-backed exits (acquisition and IPOs) will remain roughly constant. I don’t see why we need to accept that assumption. The aggregate value of venture-backed startups, like all valuations, is a function of profits generated (or predicted to be generated). In technology, profits are driven by innovation. I don’t see any reason we should assume venture-backed innovation can’t be dramatically increased.&lt;/p&gt;
&lt;p&gt;For example, innovation has varied widely across times and places – the most innovative region in the world for the last 50 years being Silicon Valley. What if, say, Steve Jobs hadn’t grown up in Silicon Valley? What if he had gone to work for another company? Does anyone really think Apple – and all the innovation and wealth it created – would exist if Jobs hadn’t happened to grow up in a culture that was so startup friendly? Jobs is obviously a remarkable person, but there are probably 100 Steve Jobs born every year. The vast majority just never have a chance or give a thought to starting a revolutionary new company.&lt;/p&gt;
&lt;p&gt;Some people blame our education system, or assume that there is some fixed number of entrepreneurs born every year. I think the problem is cultural. As much as we like to think of our culture as being entrepreneurial, the reality is 99% of our top talent doesn’t seriously contemplate starting companies. Colleges crank out tons of extremely smart and well-educated kids every year. The vast majority go into “administrative” careers that don’t really produce anything – law, banking and consulting. Most of the rest join big companies. As I’ve argued many times before, big companies (with a few &lt;a href=&quot;http://cdixon.org/2009/10/10/man-and-superman/&quot;&gt;notable exceptions&lt;/a&gt;) aren’t nearly as successful as startups at creating new products.  The bigger the company, the more likely it suffers from &lt;a href=&quot;http://cdixon.org/2010/01/30/institutional-failure/&quot;&gt;agency issues&lt;/a&gt;, &lt;a href=&quot;http://www.scripting.com/davenet/2001/04/30/strategyTax.html&quot;&gt;strategy taxes&lt;/a&gt;, and &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;myopia&lt;/a&gt;. But most of all: nothing is more motivating and inspiring than the sense of ownership and self-direction only a startup can provide.&lt;/p&gt;
&lt;p&gt;Whenever I see a brilliant kid decide to join Goldman Sachs, McKinsey, or Google, I think to myself: a startup just died, and as a result our world is a little less wealthy, innovative, and interesting.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Selling to enterprises]]></title><description><![CDATA[For some reason when you are selling information technology, big companies are referred to as “enterprises.” I’m guessing the word was…]]></description><link>https://cdixon.org/2010/02/06/selling-to-enterprises</link><guid isPermaLink="false">https://cdixon.org/2010/02/06/selling-to-enterprises</guid><pubDate>Sat, 06 Feb 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;For some reason when you are selling information technology, big companies are referred to as “enterprises.” I’m guessing the word was invented by a software vendor who was trying to justify a million-dollar price tag. As a rule of thumb, think of enterprise sales as products/services that cost $100K/year or more.&lt;/p&gt;
&lt;p&gt;I am by no means an expert in enterprise sales. Personally, I vastly prefer marketing (one-to-many) versus sales (one-to-one), hence only start companies making consumer or small business products (advertising based or sub-$5000 price tags). But I have been involved in a few enterprise companies over the years. Here’s the main thing I’ve observed. Almost every enterprise startup I’ve seen has a product that would solve a problem their prospective customers have. But that isn’t the key question. The key question is whether it solves a problem that is one of the prospective customer’s top immediate priorities. Getting an enterprise to cough up $100K+ requires the “buy in” of many people, most of whom would prefer to maintain the status quo. Only if your product is a top priority can you get powerful “champions” to cut through the red tape.&lt;/p&gt;
&lt;p&gt;My rule of thumb is that every enterprise (or large business unit within an enterprise) will, at best, buy 1-3 new enterprise products per year.  You can have the greatest hardware/software in the world, but if you aren’t one of their top three priorities, you won’t be able to profitably sell to them.&lt;/p&gt;
&lt;p&gt;One final note: enterprise-focused VC’s sometimes refer to products priced between (roughly) $5k and $100K as falling in the “valley of death.” Above $100K, you might be able to make a profit given the cost of sales. Below $5k you might be able to market your product, hence have a very low cost of sales. In between, you need to do sales but it’s hard to do it profitably. Your best bet is a “channel” strategy; however, for innovative new products that is often a lot like trying to push a string.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The NYC tech scene is exploding]]></title><description><![CDATA[The pace of innovation in the New York area is very impressive right now. Some of the top entrepenuers in the country are building and…]]></description><link>https://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding</link><guid isPermaLink="false">https://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding</guid><pubDate>Mon, 01 Feb 2010 00:00:00 GMT</pubDate><content:encoded>&lt;blockquote&gt;
&lt;p&gt;The pace of innovation in the New York area is very impressive right now. Some of the top entrepenuers in the country are building and scaling companies in the NY ecosystem - &lt;em&gt;Ron Conway, yesterday in an email to me (published with his permission)&lt;/em&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;With the announcement of Roger Ehrenberg’s new fund – &lt;a href=&quot;http://www.informationarbitrage.com/2010/01/ia-venture-strategies-building-a-better-mousetrap.html&quot;&gt;IA Venture Strategies&lt;/a&gt; – NYC now has another top-tier seed fund.  I’ve had the pleasure of investing with Roger a number of times. He’s not only a great investor but also a huge help to the companies he invests in. It’s great that he’s going to be even more active and I hope to work with him a lot more in the future.&lt;/p&gt;
&lt;p&gt;The NYC tech scene is exploding. There are tons of interesting startups. I’m an investor in a bunch and started one (&lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt;) so won’t even try to enumerate them as any list will be extremely biased (other people have &lt;a href=&quot;http://www.amny.com/urbanite-1.812039/amny-special-report-new-york-city-s-10-hottest-tech-startups-1.1724369&quot;&gt;tried&lt;/a&gt;). I will say that one interesting thing happening is the types of startups are diversifying beyond media (HuffPo, Gawker) to more “California-style” startups (Foursquare, Boxee, Hunch).&lt;/p&gt;
&lt;p&gt;In terms of investors, NYC now has a number of seed investors / micro-VCs:  &lt;a href=&quot;http://www.informationarbitrage.com/ia-capital-partners.html&quot;&gt;IA Capital Partners&lt;/a&gt;, &lt;a href=&quot;http://betaworks.com/&quot;&gt;Betaworks&lt;/a&gt;, and &lt;a href=&quot;http://foundercollective.com/&quot;&gt;Founder Collective&lt;/a&gt; (FC – which I am part of – has made 7 seed investments in NYC since we started last year).  The god of seed investing, Ron Conway, who I quote up top, has recently decided to become extremely active in NYC. One of the nice things about having small funds is we don’t need to invest millions of dollar per round so we all frequently invest together.&lt;/p&gt;
&lt;p&gt;NYC also has mid sized funds like Union Square (in my opinion and a lot of people in the industry they have surpassed Sequoia as the best VC in the country).  We also have First Round, who very smartly hired the excellent Charlie (“Chris”) O’Donnell as their NYC guy.&lt;/p&gt;
&lt;p&gt;Then we have the big VCs who have also been increasing their activity in NYC.  Locally, we have Bessemer (Skype, LinkedIn, Yelp) and RRE.  Boston firms that are very active and positive influences here include: Polaris (Dog Patch Labs), Spark, Matrix, General Catalyst, and Flybridge. Finally, some excellent California firms like True Ventures have made NYC their second home.&lt;/p&gt;
&lt;p&gt;The one thing we really need to complete the ecosystem is a couple of runaway succesesses. As California has seen with Paypal, Google, Facebook etc, the big successes spawn all sorts of interesting new startups when employees leave and start new companies. They also set an example for younger entrepreneurs who, say, start a social networking site at Harvard and then decide to move.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Institutional failure]]></title><description><![CDATA[The TV show The Wire is an incredibly instructive lesson on how the modern world works (besides being a great work of art). The recurring…]]></description><link>https://cdixon.org/2010/01/30/institutional-failure</link><guid isPermaLink="false">https://cdixon.org/2010/01/30/institutional-failure</guid><pubDate>Sat, 30 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The TV show &lt;em&gt;The Wire&lt;/em&gt; is an incredibly instructive lesson on how the modern world works (besides being a great work of art). The recurring theme is how individuals with good intentions are stymied by large institutions. As the show’s creator &lt;a href=&quot;http://kottke.org/07/09/summer-news-regarding-the-wire&quot;&gt;says&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;The Wire is a Greek tragedy in which the postmodern institutions are the Olympian forces. It’s the police department, or the drug economy, or the political structures, or the school administration, or the macroeconomics forces that are throwing the lightning bolts and hitting people in the ass for no reason. In much of television, and in a good deal of our stage drama, individuals are often portrayed as rising above institutions to achieve catharsis. In this drama, the institutions always prove larger, and those characters with hubris enough to challenge the postmodern construct of American empire are invariably mocked, marginalized, or crushed. Greek tragedy for the new millennium, so to speak.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;What’s amazing about the show is you see in a very realistic and compelling way how, say, 1) the well intentioned mayor needs to get the crime numbers down to get his school reform passed so 2) he pressures the (well-intentioned) police chief to do so, 3) who in turn cuts off a (well-intentioned) investigation that wasn’t going to yield short term metrics, 4) which emboldens the gang leader being investigated, 5) who recruits a sympathetic high school student into a life of crime. And so on.&lt;/p&gt;
&lt;p&gt;This blog is mostly about startups so let me tell a true Wire-like startup story. There is a large, publicly-traded company we’ll call BigCo. BigCo has a new CEO who is under heavy scrutiny and expected to get the stock price up over the next few fiscal quarters. Wall Street analysts who follow BigCo value the stock at a multiple of earnings, which are driven by Operating Expenses (“OpEx”), which are ongoing expenses versus “one time” expenses like acquisitions (called “CapEx”). (If you read analyst reports, you’ll see that stocks are generally considered, correctly or not, to have key financial drivers. The stock price is often those drivers times a “multiple” which in turn is often determined by the company’s expected growth rate). The “smart money” like hedge funds may or may not believe these analysts’ models, but they know other people believe them so place their bets according to how they think these numbers will move (see &lt;a href=&quot;http://en.wikipedia.org/wiki/Keynesian_beauty_contest&quot;&gt;Keynes on the stock market as a “beauty contest”&lt;/a&gt;). (Financial academics who believe in “&lt;a href=&quot;http://en.wikipedia.org/wiki/Efficient-market_hypothesis&quot;&gt;efficient markets&lt;/a&gt;” would say none of this is possible but anyone who’s actually participated in these markets knows the academics are living in fantasy land.)&lt;/p&gt;
&lt;p&gt;All this means the CEO is fixated on growing BigCo’s revenues while keeping operating expenses down. A great way to do this is through acquisitons, which analysts consider one-time expenses (CapEx). Let’s say BigCo is currently growing at 20%, but their multiple suggests they need to grow at 30%. So the M&amp;#x26;A team goes out and looks for companies they can acquire growing at, say, 50%, to get the average up. BigCo spends lavishly to buy these companies since the costs can be considered CapEx. They even have elaborate dinners and incur other large expenses that can be counted as part of the acquisition. Once the deal is closed they immediately start planning how to cut operating expenses from the newly acquired company. They decide the best way is to move the engineering offshore. This rips the heart out of the engineering-driven culture and as a result morale drops, product quality falls, and key people quit. But the short term revenues are up and operating expenses down, so BigCo’s CEO keeps her job and makes a lot of money off her stock options.&lt;/p&gt;
&lt;p&gt;The winners here are the people who understand the system and play it cynically (hedge funds, BigCo’s CEO &amp;#x26; board, perhaps the acquired company’s founders &amp;#x26; investors). The losers are everyone else – the company’s customers, the employees who lose their jobs, and the stock market investors who don’t understand the game is rigged.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Being friendly has become a competitive advantage in VC]]></title><description><![CDATA[Over the last decade or two, the supply of venture capital dollars has increased dramatically at the same time as the cost of building tech…]]></description><link>https://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc</link><guid isPermaLink="false">https://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc</guid><pubDate>Fri, 29 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Over the last decade or two, the supply of venture capital dollars has &lt;a href=&quot;http://cdixon.org/2009/09/25/the-twitter-investment-and-the-decline-of-venture-capital/&quot;&gt;increased dramatically&lt;/a&gt; at the same time as the cost of building tech startups has sharply decreased.  As a result, the balance of power between capital and startups has shifted dramatically.&lt;/p&gt;
&lt;p&gt;Some VCs understand this. The ones that do try to stand out by, among other things, 1) going out and finding companies instead of expecting them to come to them, 2) working hard on behalf of existing investments to establish a good reputation, and 3) just being friendly, decent people.  Believe it or not, until recently, #3 was pretty rare.&lt;/p&gt;
&lt;p&gt;As a seed investor in about 30 companies, I’ve been part of many discussions with entrepreneurs about which VC’s they want to pitch for their next financing round.  More and more, I’ve heard entrepreneurs say something like “I don’t want to talk to that firm because they are such jerks.” In almost all cases these are well-known, older firms who come from the era when capital was scarce.&lt;/p&gt;
&lt;p&gt;Every experienced entrepreneur I know has a list of “toxic” VCs they won’t deal with. (Often because of horror stories like the “&lt;a href=&quot;http://cdixon.org/2009/08/27/pitching-the-vc-partnership/&quot;&gt;partner ambush&lt;/a&gt;“). There are so many VCs out there that you can do this and still have plenty of VCs to pitch to get a fair price for your company and only deal with decent, helpful investors. It sounds kind of crazy, but being a reasonably nice person has become a competitive advantage in venture capital.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Should Apple be more open?]]></title><description><![CDATA[It is almost religious orthodoxy in the tech community that “open” is better than “closed.” For example, there have widespread complaints…]]></description><link>https://cdixon.org/2010/01/28/should-apple-be-more-open</link><guid isPermaLink="false">https://cdixon.org/2010/01/28/should-apple-be-more-open</guid><pubDate>Thu, 28 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It is almost religious orthodoxy in the tech community that “open” is better than “closed.” For example, there have widespread complaints about Apple’s “closed” iPhone app approval process. People also argue Apple is making the same strategic mistake all over again versus Android that it made versus Windows*. The belief is that Android will eventually beat the iPhone OS with an “open” strategy (hardware-agnostic, no app approval process) just as Windows beat Apple’s OS in the 90′s.&lt;/p&gt;
&lt;p&gt;With respect to requiring apps to be approved, consider the current state of the iPhone platform. There are over 100,000 apps and thus far not a single virus, worm, spyware app etc. (I don’t count &lt;a href=&quot;http://www.tomshardware.com/news/iphone-virus-botnet-bank-details,9136.html&quot;&gt;utterly farfetched theoretical scenarios&lt;/a&gt;). As a would-be iPhone developer, I can report firsthand that the Apple approval process is a nightmare and should be overhauled. But what’s the alternative? Before the iPhone, getting your app on a phone meant doing complicated and expensive business development deals with wireless carriers. At the other end of the spectrum: If the iPhone OS were completely open, would we really have better apps?  What apps are we missing today besides viruses?&lt;/p&gt;
&lt;p&gt;With respect to the strategic issue of tightly integrating the iPhone/iPad software and hardware, a strong case can be made that Apple’s “closed” strategy is smart. Clay Christensen has given us the only serious &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_technology#The_theory&quot;&gt;theory&lt;/a&gt; I know of to predict when it’s optimal for a company to adopt an open versus closed strategy for (among other things) operating systems. The basic idea is that every new tech product starts out undershooting customer needs and then – because technology gets better faster than customers needs go up - eventually “overshoots” them. (PC’s have overshot today – most people don’t care if the processors get faster or Windows adds new features). Once a product overshoots, the basis of competition shifts from things like features and performance to things like price.&lt;/p&gt;
&lt;p&gt;The key difference today between desktop computers and mobile devices is that mobile devices still have a long way to go before customers don’t want more speed, more features, better battery life, smaller size, etc. Just look at all the &lt;a href=&quot;http://gizmodo.com/5458382/8-things-that-suck-about-the-ipad?skyline=true&amp;#x26;s=i&quot;&gt;complaints&lt;/a&gt; yesterday about the iPad - that it lacks multitasking, a camera, is too heavy, has poor battery life, etc. This despite the fact that Apple is now even &lt;em&gt;building their own semiconductors (!)&lt;/em&gt; to squeeze every last bit of performance out of the iPad. Until mobile devices compete mainly on price (probably a decade from now), tight vertical integration will produce the best device and is likely the best strategy.&lt;/p&gt;
&lt;p&gt;*It’s worth noting that &lt;a href=&quot;http://cdixon.org/2009/10/10/man-and-superman/&quot;&gt;Steve Jobs wasn’t the one who screwed up Apple&lt;/a&gt;. Jobs co-founded Apple in 1976. He was pushed out in in May 1985 when the company was valued at about $2.2B. He returned in 1996 when Apple was worth $3B. Today it is worth $187B.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Incumbents]]></title><description><![CDATA[Almost every startup has big companies (“incumbents”) that are at some point potential acquirers or competitors.  For internet startups that…]]></description><link>https://cdixon.org/2010/01/26/incumbents</link><guid isPermaLink="false">https://cdixon.org/2010/01/26/incumbents</guid><pubDate>Tue, 26 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Almost every startup has big companies (“incumbents”) that are at some point potential acquirers or competitors.  For internet startups that primarily means Google and Microsoft, and to a far lesser extent Yahoo and AOL.  (And likely more and more Apple, Facebook and even Twitter?).&lt;/p&gt;
&lt;p&gt;The first thing to try to figure out is whether what you are building will eventually be on the incumbent’s product roadmap. The best way to do predict this is to figure out whether what you are doing is strategic for the company. (I try to outline what I think is strategic for Google &lt;a href=&quot;http://cdixon.org/2009/12/30/whats-strategic-for-google/&quot;&gt;here&lt;/a&gt;). Note that asking people who work at the incumbents isn’t very useful – even they don’t know what will be important to them in, say, two years.&lt;/p&gt;
&lt;p&gt;If what you are doing is strategic for the incumbents, be prepared for them to enter the market at some point. This could be good for you if you build a great product, recruit a great team, and are happy with a “product sale” or “trade sale” – usually sub $50M. If you are going for this size outcome, you should plan your financing strategy appropriately. Trade sales are generally great for bootstrapped or seed-funded companies but bad if you have raised lots of VC money.&lt;/p&gt;
&lt;p&gt;If your product is strategic for the incumbent and you’re shooting for a bigger outcome, you probably need to either 1) be far enough ahead of the curve that by the time the big guys get there you’re already entrenched, or 2) be doing something the big guys aren’t good at. Google has been good at a surprising number of things. One important area they haven’t been good at (yet) is software with a social component (Google Video vs YouTube, Orkut vs Facebook, Knol vs Wikipedia, etc).&lt;/p&gt;
&lt;p&gt;The final question to ask is whether your product is &lt;a href=&quot;http://en.wikipedia.org/wiki/Disruptive_technology&quot;&gt;disruptive&lt;/a&gt; or sustaining (in the Christensen sense).  If it’s disruptive, you most likely will go unnoticed by the incumbents for a long time (because it will &lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;look like a toy&lt;/a&gt; to them). If the your technology is sustaining and you get noticed early you probably want to try to sell (and if you can’t, pivot). My last company, SiteAdvisor, was very much a sustaining technology, and the big guys literally told us if we didn’t sell they’d build it. In that case, the gig is up and you gotta sell.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[How to disrupt Wall Street]]></title><description><![CDATA[Sarah Lacy has a very interesting post on TechCrunch where she argues that the internet is finally starting to disrupt Wall Street. I’d love…]]></description><link>https://cdixon.org/2010/01/23/how-to-disrupt-wall-street</link><guid isPermaLink="false">https://cdixon.org/2010/01/23/how-to-disrupt-wall-street</guid><pubDate>Sat, 23 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Sarah Lacy has a very interesting &lt;a href=&quot;http://www.techcrunch.com/2010/01/14/is-the-internet-finally-robbing-the-greedy-financier%E2%80%99s-gravy-train/&quot;&gt;post&lt;/a&gt; on TechCrunch where she argues that the internet is finally starting to disrupt Wall Street. I’d love nothing more than to see Wall Street get disrupted by the Internet.&lt;/p&gt;
&lt;p&gt;While I agree on the big picture, I disagree with some of her specifics. She cites Mint and Square as examples of startups that potentially disrupt Wall Street. As I see it, these companies have merely built nice UI’s to Wall Street: Mint connects to your banks and Square to Visa and Mastercard and the bank that issued the credit card. If people at farmers’ markets use credit cards instead of cash, that means more money for Wall Street, not less.&lt;/p&gt;
&lt;p&gt;I would argue the best way to try to disrupt Wall Street is to look at how it currently makes money and attack it there. Here are some of the big sources of revenue.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Retail banks. Retail banks make money on fees and by paying low interest rates on deposits and then doing stuff with those deposits (buying stocks, mortgages, issuing credit cards, etc) that gets them a much higher return. To disrupt them you need to get people to stop depositing money in them. Zopa and Prosper are trying to do that. Unfortunately the regulatory system seems to strongly favor the incumbents.&lt;/li&gt;
&lt;li&gt;Credit cards. Charging 20% interest rates (banks) and skimming pennies off every transaction (Visa and Mastercard) is a very profitable business. Starting a new payment company that doesn’t depend on the existing banks and credit card companies could be disruptive. Paypal seems to have come the closest to doing this.&lt;/li&gt;
&lt;li&gt;Proprietary trading. A big trend over the last decade is for more of big banks’ profits to come from “proprietary trading” – which basically means operating big hedge funds inside banks (this trend is one of the main causes of the financial crisis and why the new “Volcker rule” is potentially a very good thing). For example, most of Goldman Sachs’ &lt;a href=&quot;http://marketplace.publicradio.org/display/web/2010/01/21/pm-goldman-q/&quot;&gt;recent massive profits&lt;/a&gt; came from proprietary trading. Basically what they do is hire lots of programmers and scientists to make money on fancy trading algorithms.  (Regrettably, I spent the first four years of my career writing software to help people like Goldman do this).  Given that the stock market was flat over the last decade and hedge funds made boatloads of money, the loser in this game are mostly unsophisticated investors (e.g. my parents in Ohio). Any website that encourages unsophisticated investors to buy specific stocks is helping Wall Street. Regular people should buy some treasury bonds or maybe an S&amp;#x26;P 500 ETF and be done with it. &lt;em&gt;That&lt;/em&gt; would be a huge blow to Wall Street.&lt;/li&gt;
&lt;li&gt;Trading. The more you trade stocks, the more Wall Street makes money. The obvious beneficiaries are the exchanges – NYSE, NASDAQ etc. There were attempts to build new exchanges in the 90′s like Island ECN. The next obvious beneficiaries are brokers like Fidelity or E-Trade. But the real beneficiaries aren’t the people who charge you explicit fees; it’s the people who make money on your trading in other ways.  For example, the hot thing on Wall Street is right now is high frequency “micro structure” trading strategies, which is basically a way to skim money off the “&lt;a href=&quot;http://en.wikipedia.org/wiki/Bid-offer_spread&quot;&gt;bid-ask spread&lt;/a&gt;” from trades made by less sophisticated investors.&lt;/li&gt;
&lt;li&gt;Investment banking. Banks make lots of money on “services” like IPOs and big mergers. A small way to attack this would be to convince tech companies (Facebook?) to IPO without going via Wall Street (this is what &lt;a href=&quot;http://www.internetnews.com/bus-news/article.php/363041/Wit+Capital+IPOs+for+Everyone.htm&quot;&gt;Wit Capital&lt;/a&gt; tried to do). Regarding mergers, there have been endless studies showing that big mergers only enrich CEOs and bankers, yet they continue unabated. This is part of the massive &lt;a href=&quot;http://en.wikipedia.org/wiki/Principal-agent_problem&quot;&gt;agency problem&lt;/a&gt; on Wall Street and can probably only change with a complete regulatory overhaul.&lt;/li&gt;
&lt;li&gt;Research. Historically, financial research was a loss leader used to sell investment banking services. After all the scandals of the 90′s, new regulations put in stronger walls between the research and banking. As a result, banks cut way back on research. In its place expert networks like Gerson Lehrman Group rose up. LinkedIn and Stocktwits are possible future disrupters here.&lt;/li&gt;
&lt;li&gt;Mutual fund management. Endless studies have shown that paying fees to mutual funds is a waste of money. Maybe websites that let your peers help you invest will disrupt these guys. I think a much better way to disrupt them is to either not invest in the stock market or just buy an ETF that gives you a low-fee way to buy the S&amp;#x26;P 500 index.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;This is by no means an exhaustive list and I have no idea how to solve most of these problems. But I’d love to see the financial industry be one of the next areas of internet innovation.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Techies and normals]]></title><description><![CDATA[There are techies (if you are reading this blog you are almost certainly one of them) and there are mainstream users – some people call them…]]></description><link>https://cdixon.org/2010/01/22/techies-and-normals</link><guid isPermaLink="false">https://cdixon.org/2010/01/22/techies-and-normals</guid><pubDate>Fri, 22 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There are techies (if you are reading this blog you are almost certainly one of them) and there are mainstream users – &lt;a href=&quot;http://www.businessinsider.com/nicholas-carlson&quot;&gt;some people&lt;/a&gt; call them “normals” (@&lt;a href=&quot;http://www.caterina.net/&quot;&gt;caterina&lt;/a&gt; suggested “muggles”). A lot of people call techies “early adopters” but I think this is a mistake: techies are only occasionally good predictors of which tech products normals will like.&lt;/p&gt;
&lt;p&gt;Techies are enthusiastic evangelists and can therefore give you lots of free marketing. Normals, on the other hand, are what you need to create a large company. There are three main ways that techies and normals can combine to embrace (or ignore) a startup.&lt;/p&gt;
&lt;p&gt;1. If you are loved first by techies and then by normals you get free marketing and also scale.  Google, Skype and YouTube all followed this chronology.  It is startup nirvana.&lt;/p&gt;
&lt;p&gt;2. The next best scenario is to be loved by normals but not by the techies. The vast majority of successful consumer businesses fall into this category. Usually the first time they get a lot of attention from the tech community is when they announce revenues or close a big financing. Some recent companies that fall in this category are Groupon, Zynga, and Gilt Group. Since these companies don’t start out with lots of free techie evangelizing they often acquire customers through paid marketing.&lt;/p&gt;
&lt;p&gt;(My last company – SiteAdvisor – was a product tech bloggers mostly dismissed even as normals embraced it.  When I left the company we had over 150 million downloads, yet the first time the word “SiteAdvisor” appeared on TechCrunch was a year after we were acquired when they &lt;a href=&quot;http://www.techcrunch.com/2007/07/10/site-advisor-20-haute-secure-launches-to-detect-and-block-malware/&quot;&gt;referred&lt;/a&gt; to another product as “SiteAdvisor 2.0″.)&lt;/p&gt;
&lt;p&gt;3. There are lots of products that are loved just by techies but not by normals. When something is getting hyped by techies, one of the hardest things to figure out is whether it will cross over to normals. The normals I know don’t want to vote on news, tag bookmarks, or annotate web pages.  I have no idea whether they want to “check in” to locations.  A year ago, I would have said they didn’t want to Twitter but obviously I was wrong. Knowing when something is techie-only versus techie-plus-normals is one of the hardest things to predict.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Collective knowledge systems]]></title><description><![CDATA[I think you could make a strong argument that the most important technologies developed over the last decade are a set of systems that are…]]></description><link>https://cdixon.org/2010/01/17/collective-knowledge-systems</link><guid isPermaLink="false">https://cdixon.org/2010/01/17/collective-knowledge-systems</guid><pubDate>Sun, 17 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I think you could make a strong argument that the most important technologies developed over the last decade are a set of systems that are sometimes called “collective knowledge systems”.&lt;/p&gt;
&lt;p&gt;The most successful collective knowledge system is the combination of Google plus the web. Of course Google was originally intended to be just a search engine, and the web just a collection of interlinked documents. But together they provide a very efficient system for surfacing the smartest thoughts on almost any topic from almost any person.&lt;/p&gt;
&lt;p&gt;The second most successful collective knowledge system is Wikipedia. Back in 2001, most people thought Wikipedia was a wacky project that would at best end up being a quirky “&lt;a href=&quot;http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/&quot;&gt;toy&lt;/a&gt;” encyclopedia. Instead it has become a remarkably comprehensive and accurate resource that most internet users access every day.&lt;/p&gt;
&lt;p&gt;Other well-known and mostly successful collective knowledge systems include “answer” sites like Yahoo Answers, review sites like Yelp, and link sharing sites like Delicious.  My own company &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; is a collective knowledge system for recommendations, building on ideas originally developed by “collaborative filtering” pioneer &lt;a href=&quot;http://en.wikipedia.org/wiki/Firefly_(website)&quot;&gt;Firefly&lt;/a&gt; and the recommendation systems built into Amazon and Netflix.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Dealing with information overload&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;It has been widely &lt;a href=&quot;http://quod.lib.umich.edu/cgi/t/text/text-idx?c=jep;view=text;rgn=main;idno=3336451.0006.204&quot;&gt;noted&lt;/a&gt; that the amount of information in the world and in digital form has been growing &lt;a href=&quot;http://www.kk.org/thetechnium/archives/2006/02/the_speed_of_in.php&quot;&gt;exponentially&lt;/a&gt;. One way to make sense of all this information is to try to structure it after it is created. This method has proven to be, at best, partially effective (for a state-of-the-art attempt at doing simple information classification, try &lt;a href=&quot;http://www.google.com/squared/search?q=answer+websites&quot;&gt;Google Squared&lt;/a&gt;).&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;It turns out that imposing even minimal structure on information, especially &lt;em&gt;as it is being created&lt;/em&gt;, goes a long way. This is what successful collective knowledge systems do. Google would be vastly less effective if the web didn’t have tags and links. Wikipedia is highly structured, with an extensive organizational hierarchy and set of rules and norms. Yahoo Answers has a reputation and voting system that allows good answers to bubble up. Flickr and Delicious encourage user to explicitly tag items instead of trying to infer tags later via image recognition and text classification.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Importance of collective knowledge systems&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;There are very practical, pressing needs for better collective knowledge systems. For example, noted security researcher Bruce Schneier &lt;a href=&quot;http://www.schneier.com/blog/archives/2010/01/fixing_intellig.html&quot;&gt;argues&lt;/a&gt; that the United States’ biggest anti-terrorism intelligence challenge is to build a collective knowledge system across disconnected agencies:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What we need is an intelligence community that shares ideas and hunches and facts on their versions of Facebook, Twitter and wikis. We need the bottom-up organization that has made the Internet the greatest collection of human knowledge and ideas ever assembled.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The same could be said of every organization, large and small, formal and and informal, that wants to get maximum value from the knowledge of its members.&lt;/p&gt;
&lt;p&gt;Collective knowledge systems also have pure academic value. When Artificial Intelligence was first being seriously developed in the 1950′s, experts optimistically predicted they’d create machines that were as intelligent as humans in the near future.  In 1965, AI expert Herbert Simon &lt;a href=&quot;http://en.wikipedia.org/wiki/Strong_AI#History_of_mainstream_AI_research&quot;&gt;predicted&lt;/a&gt; that “machines will be capable, within twenty years, of doing any work a man can do.”&lt;/p&gt;
&lt;p&gt;While AI has had notable victories (e.g. chess), and produced an excellent set of tools that laid the groundwork for things like web search, it is nowhere close to achieving its goal of matching – let alone surpassing – human intelligence. If machines will ever be smart (and eventually try to &lt;a href=&quot;http://en.wikipedia.org/wiki/Skynet_(Terminator)&quot;&gt;destroy humanity&lt;/a&gt;?), collective knowledge systems are the best bet.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;Design principles&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Should the US government just try putting up a wiki or micro-messaging service and see what happens? How should such a system be structured? Should users be assigned reputations and tagged by expertise? What is the unit of a “contribution”? How much structure should those contributions be required to have? Should there be incentives to contribute? How can the system be structured to “learn” most efficiently? How do you balance requiring up front structure with ease of use?&lt;/p&gt;
&lt;p&gt;These are the kind of questions you might think are being researched by academic computer scientists. Unfortunately, academic computer scientists still seem to model their field after the “hard sciences” instead of what they should modeling it after — social sciences like economics or sociology. As a result, computer scientists spend a lot of time dreaming up new programming languages, operating system architectures, and encryption schemes that, for the most part, sadly, nobody will every use.&lt;/p&gt;
&lt;p&gt;Meanwhile the really important questions related to information and computer science are mostly being ignored (there are notable exceptions, such as MIT’s &lt;a href=&quot;http://cci.mit.edu/&quot;&gt;Center for Collective Intelligence&lt;/a&gt;). Instead most of the work is being done informally and unsystematically by startups, research groups at large companies like Google, and a small group of multi-disciplinary academics like Clay Shirky and Duncan Watts.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Security through diversity]]></title><description><![CDATA[Someone asked me the other day whether I thought the United States was vulnerable to a large scale “cyber” attack. While I have no doubt…]]></description><link>https://cdixon.org/2010/01/12/security-through-diversity</link><guid isPermaLink="false">https://cdixon.org/2010/01/12/security-through-diversity</guid><pubDate>Tue, 12 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Someone asked me the other day whether I thought the United States was vulnerable to a large scale “cyber” attack. While I have no doubt that any particular organization can be compromised, what comforts me at the national level is the sheer diversity of our systems. We have – unintentionally – employed a very effective defensive strategy known as “security through diversity.”&lt;/p&gt;
&lt;p&gt;Every organization’s IT system is composed of multiple layers: credential systems, firewalls, intrusion detection systems, tripwires, databases, web servers, OS builds, encryption schemes, network topologies, etc.  Due to a variety of factors — competitive markets for IT products, lack of standards, diversity of IT managers’ preferences — most institutions make independent and varied choices at each layer. This, in turn, means that each insitution requires a customized attack in order to be penetrated. It is therefore virtually impossible for a single software program (virus, worm) to infiltrate a large portion of them.&lt;/p&gt;
&lt;p&gt;On the web, a particular form of uniformity that can be dangerous are the centralized login systems like Facebook Connect. But this is preferable to the current dominant “single sign on system”:  most regular people use the same weak password over and over for every site because it’s too hard to remember more than that (let along multiple strong passwords). This means attackers only need to penetrate one weak link (like the recent &lt;a href=&quot;http://www.computerworld.com/s/article/9142327/RockYou_hack_exposes_names_passwords_of_30M_accounts&quot;&gt;Rock You breach&lt;/a&gt;), and they get passwords that likely work on many other sites (including presumably banking and other “important” sites).  At least with Facebook Connect there is a well funded, technically savvy organization defending its centralized repository of passwords.&lt;/p&gt;
&lt;p&gt;I first heard the phrase “security through diversity” from &lt;a href=&quot;http://www.cs.unm.edu/~ackley/&quot;&gt;David Ackley&lt;/a&gt; who was working on creating operating systems that had randomly mutated instances (similar ideas have since become standard practice, e.g. &lt;a href=&quot;http://en.wikipedia.org/wiki/Address_space_layout_randomization&quot;&gt;stack and address space randomization&lt;/a&gt;). It struck me as a good idea and one that should be built into systems intentionally. But meanwhile we get many of the benefits unintentionally. The same factors that frustrate you when you try to transfer your medical records between doctors or network the devices in your house are also what help keep us safe.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Shutting down]]></title><description><![CDATA[I’ve seen a number of situations recently where entrepreneurs decided to shut their startups down while they still had cash in the bank…]]></description><link>https://cdixon.org/2010/01/09/shutting-down</link><guid isPermaLink="false">https://cdixon.org/2010/01/09/shutting-down</guid><pubDate>Sat, 09 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve seen a number of situations recently where entrepreneurs decided to shut their startups down while they still had cash in the bank. (Contrary to popular mythology, I’ve never seen a case where investors forced an early-stage startup to shut down before they ran out of cash — it has always been voluntary).  Shutting down is an incredibly hard thing to do.  It takes great maturity and intellectual honesty to realize things aren’t going the way you hoped and that it might be better to just close shop and do something else.&lt;/p&gt;
&lt;p&gt;How entrepreneurs handle shutting down is very important.  First, try to return as much capital to your investors as you can (after paying off employees and other important debts – but don’t waste money on an expensive legal process). Second, if you’ve developed IP, spend a few months trying to sell it to recover as much capital as you can (often investors will offer a “carve out” to incentivize entrepreneurs since the likely return to investors will be under total number of preferences).  Don’t go off starting a new venture before you’ve properly closed down your current one (I’ve seen this twice recently – very bad form).  Finally, for your own learning as well as your reputation, write a detailed post-mortem about what went right and wrong and send it to your investors, and then try to follow up with in-person discussions.&lt;/p&gt;
&lt;p&gt;Here’s the good news.  One of the great things about angel and venture investors is that failure is accepted, as long as you do it in the right way. Venture investors will often fund entrepreneurs who’ve lost their money in the past. They understand that if you build an interesting product and, say, market forces turn dramatically against you, that’s a risk they took — and the type of risk they will take a again. Also, entrepreneurs tend to be judged by their wins (max() function), not their average.  You’d be surprised how many entrepreneurs have failures in their past that no one remembers once they have some success.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The next big thing will start out looking like a toy]]></title><description><![CDATA[One of the amazing things about the internet economy is how different the list of top internet properties today looks from the list ten…]]></description><link>https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy</link><guid isPermaLink="false">https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy</guid><pubDate>Sun, 03 Jan 2010 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the amazing things about the internet economy is how different the list of top internet properties today looks from &lt;a href=&quot;http://technologizer.com/2009/04/23/whatever-happened-to-the-top-15-properties-of-april-1999/&quot;&gt;the list ten years ago&lt;/a&gt;.  It wasn’t as if those former top companies were complacent – most of them acquired and built products like crazy to avoid being displaced.&lt;/p&gt;
&lt;p&gt;The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.”  This is one of the main insights of Clay Christensen’s “disruptive technology” theory. This theory starts with the observation that technologies tend to get better at a faster rate than users’ needs increase. From this simple insight follows all kinds of interesting conclusions about how markets and products change over time.&lt;/p&gt;
&lt;p&gt;Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” user needs. The first telephone could only carry voices a mile or two. The leading telco of the time, Western Union, passed on acquiring the phone because they didn’t see how it could possibly be useful to businesses and railroads – their primary customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve (&lt;a href=&quot;http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;technology adoption is usually non-linear&lt;/a&gt; due to so-called complementary network effects). The same was true of how mainframe companies viewed the PC (microcomputer), and how modern telecom companies viewed Skype. (Christensen has many more examples in &lt;a href=&quot;http://www.amazon.com/Innovators-Solution-Creating-Sustaining-Successful/dp/1578518520/ref=pd_bxgy_b_img_b&quot;&gt;his&lt;/a&gt; &lt;a href=&quot;http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996&quot;&gt;books&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;This does not mean every product that looks like a toy will turn out to be the next big thing. To distinguish toys that are disruptive from toys that will remain just toys, you need to look at products as processes. Obviously, products get better inasmuch as the designer adds features, but this is a relatively weak force. Much more powerful are external forces: microchips getting cheaper, bandwidth becoming ubiquitous, mobile devices getting smarter, etc. For a product to be disruptive it needs to be designed to ride these changes up the utility curve.&lt;/p&gt;
&lt;p&gt;Social software is an interesting special case where the strongest forces of improvement are users’ actions. As Clay Shirky explains in &lt;a href=&quot;http://www.herecomeseverybody.org/&quot;&gt;his latest book&lt;/a&gt;, Wikipedia is literally a process – every day it is edited by spammers, vandals, wackos etc., yet every day the good guys make it better at a faster rate. If you had gone back to 2001 and analyzed Wikipedia as a static product it would have looked very much like a toy. The reason Wikipedia works so brilliantly are subtle design features that sculpt the torrent of user edits such that they yield a net improvement over time. Since users’ needs for encyclopedic information remains relatively steady, as long as Wikipedia got steadily better, it would eventually meet and surpass user needs.&lt;/p&gt;
&lt;p&gt;A product doesn’t have to be disruptive to be valuable. There are plenty of products that are useful from day one and continue being useful long term. These are what Christensen calls sustaining technologies. When startups build useful sustaining technologies, they are often quickly acquired or copied by incumbents. If your timing and execution is right, you can create a very successful business on the back of a sustaining technology.&lt;/p&gt;
&lt;p&gt;But startups with sustaining technologies are very unlikely to be the new ones we see on top lists in 2020. Those will be disruptive technologies – the ones that sneak by because people dismiss them as toys.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What’s strategic for Google?]]></title><description><![CDATA[Google seems to be releasing or acquiring new products almost daily. It’s one thing for a couple of programmers to hack together a side…]]></description><link>https://cdixon.org/2009/12/30/whats-strategic-for-google</link><guid isPermaLink="false">https://cdixon.org/2009/12/30/whats-strategic-for-google</guid><pubDate>Wed, 30 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Google seems to be releasing or acquiring new products almost daily. It’s one thing for a couple of programmers to hack together a side project. It’s another thing for Google to put gobs of time and money behind it. The best way to predict how committed Google will be to a given project is to figure out whether it is “strategic” or not.&lt;/p&gt;
&lt;p&gt;Google makes 99% of their revenue &lt;a href=&quot;http://cdixon.org/2009/12/14/search-and-the-social-graph/&quot;&gt;selling text ads&lt;/a&gt; for things like airplane tickets, dvd players, and malpractice lawyers. &lt;strong&gt;A project is strategic for Google if it affects what sits between the person clicking on an ad and the company paying for the ad.&lt;/strong&gt; Here is my rough breakdown of the “layers in the stack” between humans and the money:&lt;/p&gt;
&lt;p&gt;Human - device – OS – browser – bandwidth –  websites - ads – ad tech – relationship to advertiser – $$$&lt;/p&gt;
&lt;p&gt;At each layer, Google either wants to dominate it or commoditize it. (For more on the strategic move known as commoditizing the complement, see &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;, &lt;a href=&quot;/non-linearity-of-technology-adoption/&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/&quot;&gt;here&lt;/a&gt;). Here’s my a brief analysis of the more interesting layers:&lt;/p&gt;
&lt;p&gt;Device: Desktop hardware already commoditized. Mobile hardware is not, hence Google Phone (Nexus One).&lt;/p&gt;
&lt;p&gt;OS: Not commoditized, and dominated by archenemy (Microsoft)!!   Hence Android/Google Chrome OS is very strategic. Google also needs to remove main reasons people choose Windows. Main reasons (rational ones – ignoring sociological reasons, organizational momentum etc) are Office (hence Google Apps), Outlook (hence Gmail etc), gaming (look for Google to support cross-OS gaming frameworks), and the long tail of Windows-only apps (these are moving to the web anyways but Google is trying to accelerate the trend with programming tools).&lt;/p&gt;
&lt;p&gt;Browser: Not commoditized, and dominated by arch enemy! Hence Chrome is strategic, as is alliance with Mozilla, as are strong cross-browser standards that maintain low switching costs.&lt;/p&gt;
&lt;p&gt;Bandwidth:  Dominated by wireless carriers, cable operators and telcos. Very hard for Google to dominate without massive infrastructure investment, hence Google is currently trying to commoditize/weaken via 1) more competition (WiMAX via Clearwire, free public Wi-Fi) 2) regulation (net neutrality).&lt;/p&gt;
&lt;p&gt;Websites/search (“ad inventory”): Search is obviously dominated by Google. Google’s syndicated ads (AdSense) are dominant because Google has the highest payouts since they have the most advertisers bidding. This in turn is due largely to their hugely valuable anchor property, Google.com. Acquired Youtube to be their anchor property for video/display ads, and DoubleClick to increase their publisher display footprint. On the emerging but fast growing mobile side, presumably they bought AdMob for their publisher relationships (versus advertiser relationships where Google is already dominant). The key risks on this layer are 1) people skip the ads altogether and go straight to, say, Amazon to buy things, 2) someone like Facebook or MS uses anchor property to aggressively compete in syndicated display market.&lt;/p&gt;
&lt;p&gt;Relationships to advertisers:  Google is dominant in non-local direct-response ads, both SMB self serve and big company serviced accounts.  They are much weaker in display. Local advertisers (which historically is half of the total ad market) is still a very underdeveloped channel – hence (I presume) the interest in acquiring Yelp.&lt;/p&gt;
&lt;p&gt;This doesn’t mean Google will always act strategically. Obviously the company is run by humans who are fallible, emotional, subject to whims, etc. But smart business should be practiced like smart chess: you should make moves that assume your opponents will respond by optimizing their interests.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What’s the right amount of seed money to raise?]]></title><description><![CDATA[Short answer:  enough to get your startup to an accretive milestone plus some fudge factor. “Accretive milestone” is a fancy way of saying…]]></description><link>https://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise</link><guid isPermaLink="false">https://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise</guid><pubDate>Mon, 28 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Short answer:  enough to get your startup to an accretive milestone plus some fudge factor.&lt;/p&gt;
&lt;p&gt;“Accretive milestone” is a fancy way of saying getting your company to a point at which you can raise money at a higher valuation.  As a rule of thumb, I would say a successful Series A is one where good VCs invest at a pre-money that is at least twice the post-money of the seed round.  So if for your seed round you raised $1M at $2M pre ($3M post-money valuation), for the Series A you should be shooting for a minimum of $6M pre (but hopefully you’ll get significantly higher).&lt;/p&gt;
&lt;p&gt;The worst thing a seed-stage company can do is raise too little money and only reach part way to a milestone. Pitching new investors in that case is very hard; often the only way keep the company alive is to get the existing investors to reinvest at the last round valuation (“reopen the last round”). The second worst thing you can do is raise too much money in the seed round (most likely because big funds pressure you to do so), hence taking too much dilution too soon.&lt;/p&gt;
&lt;p&gt;How do you determine what an accretive milestone is? The answer is partly determined by market conditions and partly by the nature of your startup. Knowing market conditions means knowing which VCs are currently aggressively investing, at what valuations, in what sectors, and how various milestones are being perceived.  This is where having active and connected advisors and seed investors can be extremely helpful.&lt;/p&gt;
&lt;p&gt;Aside from market conditions, you should try to answer the question: what is the biggest risk your startup is facing in the upcoming year and how can you eliminate that risk?  You should come up with your own answer but you should also talk to lots of smart people to get their take (yet another reason &lt;a href=&quot;http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/&quot;&gt;not to keep your idea secret&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;For consumer internet companies, eliminating the biggest risk almost always means getting “traction” – user growth, engagement, etc. Traction is also what you want if you are targeting SMBs (small/medium businesses). For online advertising companies you probably want revenues. If you are selling to enterprises you probably want to have a handful of credible beta customers.&lt;/p&gt;
&lt;p&gt;The biggest mistake founders make is thinking that building a product by itself will be perceived as an accretive milestone. Building a product is only accretive in cases where there is significant technical risk – e.g. you are building a new search engine or semiconductor.&lt;/p&gt;
&lt;p&gt;Now to the “fudge factor.”  Basically what I’d recommend here depends on what milestones you are going for and how experienced you are at developing and executing operating plans. If you are going for marketing traction, that almost always takes (a lot) longer than people expect.  You should think about a fudge factor of 50% (increasing the round size by 50%).  You should also have alternative operating plans where you can “cut the burn” to get more calendar time on your existing raise (“extend the runway”). If you are just going for product milestones and are super experienced at building products you might try a lower fudge factor.&lt;/p&gt;
&lt;p&gt;The most perverse thing that I see is big VC funds pushing companies to raise far more money than they need to (even at higher valuations), simply so they can “&lt;a href=&quot;http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/&quot;&gt;put more money to work&lt;/a&gt;“. This is one of &lt;a href=&quot;http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/&quot;&gt;many reasons&lt;/a&gt; why angels or pure seed funds are preferable seed round investors (&lt;em&gt;bias alert:  I am &lt;a href=&quot;http://cdixon.org/2009/11/09/presenting-founder-collective/&quot;&gt;one of them&lt;/a&gt;!&lt;/em&gt;).&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Are people more willing to pay for digital goods on mobile devices?]]></title><description><![CDATA[Mary Meeker’s [  ](images/screen-shot-2009-12-27-at-11-51-18-am.png) The assertion seems to be that there is something special about the…]]></description><link>https://cdixon.org/2009/12/27/are-people-more-willing-to-pay-for-digital-goods-on-mobile-devices</link><guid isPermaLink="false">https://cdixon.org/2009/12/27/are-people-more-willing-to-pay-for-digital-goods-on-mobile-devices</guid><pubDate>Sun, 27 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Mary Meeker’s&lt;a href=&quot;images/screen-shot-2009-12-27-at-11-51-18-am.png&quot;&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;[&lt;/p&gt;
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  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;](images/screen-shot-2009-12-27-at-11-51-18-am.png)&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-27-at-11-51-18-am.png&quot;&gt;The assertion seems to be that there is something special about the mobile internet that compels people to pay for things they wouldn’t pay for on the desktop internet.  It is this same thinking that has newspapers and magazines hoping the Kindle or a &lt;/a&gt;&lt;a href=&quot;http://www.techcrunch.com/2009/12/02/time-inc-digital-magazine/&quot;&gt;tablet device&lt;/a&gt; might be their savior.&lt;/p&gt;
&lt;p&gt;It is certainly true that &lt;em&gt;today&lt;/em&gt; people are paying for things on iPhones and Kindles that they aren’t paying for on the desktop internet. Personally, I’ve bought a bunch of iPhone games that I would have expected to get for free online. I also paid for the New York Times and some magazines on my Kindle that I never paid for on my desktop.&lt;/p&gt;
&lt;p&gt;But longer term, the question is whether this is because of something fundamentally – and sustainably – different about mobile versus desktop or whether &lt;strong&gt;it is just good old fashioned supply and demand.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;I think we are in the AOL “walled garden” days of the mobile internet. Demand is far outpacing supply, so consumers are paying for digital goods. I don’t pay for news or simple games on the desktop internet because there are so many substitutes that my willingness to pay is driven down to zero.&lt;/p&gt;
&lt;p&gt;What are the arguments that the mobile internet is sustainably different than the desktop internet? One of the main ones I’ve heard is habit: digital goods providers made a mistake in the 90′s by giving stuff away for free. Now people are habituated to free stuff on the desktop internet. Mobile is a chance to start over.&lt;/p&gt;
&lt;p&gt;I think this habit argument is greatly overplayed. The same argument has been made for years by the music industry: “kids today think music should be free” and so on. Back in the 90s, I bought CDs, not because I was habituated to paying for music, but because there was no other reasonably convenient way to get it. If tomorrow you waved a magic wand and CD’s were once again the only way kids could buy the Jonas Brothers and Taylor Swift, they’d pay for them. It’s the fact that there are convenient and free substitutes that’s killing the music industry, not consumers’ habits.&lt;/p&gt;
&lt;p&gt;As the supply of mobile digital goods grows — the same way it did on the desktop internet — consumers’ willingness-to-pay will drop and either advertising will emerge as the key driver of mobile economic growth or the mobile economy will disappoint. I was going to buy a Chess app for my iPhone this morning but when I searched and found dozens of free ones I downloaded one of those.  At some point there will be lots of Tweetie, Red Laser, and Flight Control substitutes and they too will be free.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why the web economy will continue growing rapidly]]></title><description><![CDATA[Here’s the really good news for the web economy over the next decade.  Consumers are spending more and more time online, yet only about 1…]]></description><link>https://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly</link><guid isPermaLink="false">https://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly</guid><pubDate>Sat, 26 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Here’s the really good news for the web economy over the next decade.  Consumers are spending more and more time online, yet only about &lt;a href=&quot;http://www.emarketer.com/Report.aspx?code=emarketer_2000576&quot;&gt;10%&lt;/a&gt; of all advertising dollars are spent there.&lt;/p&gt;
&lt;p&gt;Let’s assume that, over time, ad spending on a medium becomes roughly proportional to the time consumers spend using that medium. I doubt there are any technologists reading this blog who doubt that in five years most people in industrialized countries will spend 50% or more of their “media time” on the web.  This means there are hundreds of billions of ad revenues waiting to move to the web.&lt;/p&gt;
&lt;p&gt;Advertising is usually divided into two categories: direct-response and brand advertising. Direct-response advertising tries to get users to take immediate action. Brand advertising tries to build up positive associations over time in people’s minds. In the past decade, we saw a massive shift of direct response advertising to the web. The main beneficiary of this shift has been Google. We saw far less of a shift of brand advertising to the web.&lt;/p&gt;
&lt;p&gt;It is therefore very likely that most of this new ad spending will be brand advertising.  This is why Google, Yahoo and Microsoft are all so intensely focused on display advertising. It is why they paid huge premiums to acquire Doubleclick, Right Media, and Avenue A.&lt;/p&gt;
&lt;p&gt;Right now there are lots of inhibitors to brand advertising dollars flowing onto the web. Among them 1) most of the brand dollars are controlled by ad agencies, who seem far more comfortable with traditional media channels, 2) it is hard to know where your online advertising is appearing and whether it is effective, 3) banner ads seem extremely ineffective and are often poorly targeted, 4) big brand advertisers seem scared of user-generated content, today’s major source of ad inventory growth.&lt;/p&gt;
&lt;p&gt;But economic logic suggests these problems will be figured out, because advertisers have no choice but to go where the consumers are.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Google should open source what actually matters: their search ranking algorithm]]></title><description><![CDATA[Websites live or die based on how a small group of programmers at Google decide their sites should rank in Google’s main search results.  As…]]></description><link>https://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm</link><guid isPermaLink="false">https://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm</guid><pubDate>Tue, 22 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Websites live or die based on how a small group of programmers at Google decide their sites should rank in Google’s main search results.  As the “router” of the vast majority of traffic on the internet, Google’s secret ranking algorithm is probably is the most powerful piece of software code on the planet.&lt;/p&gt;
&lt;p&gt;Google &lt;a href=&quot;http://googleblog.blogspot.com/2009/12/meaning-of-open.html&quot;&gt;talks&lt;/a&gt; a lot about openness and their commitment to open source software. What they are really doing is practicing a classic business &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;strategy&lt;/a&gt; known as “commoditizing the &lt;a href=&quot;http://en.wikipedia.org/wiki/Complementary_good&quot;&gt;complement&lt;/a&gt;“*.&lt;/p&gt;
&lt;p&gt;Google makes 99% of their revenue by &lt;a href=&quot;/2009/12/14/search-and-the-social-graph/&quot;&gt;selling&lt;/a&gt; text ads for things like plane tickets, dvd players and malpractice lawyers. Many of these ads are syndicated to non-Google properties. But the anchor that gives Google their best “inventory” is the main search engine at Google.com.  And the secret sauce behind Google.com is the algorithm for ranking search results. If Google is really committed to openness, it is this algorithm that they need to open source.&lt;/p&gt;
&lt;p&gt;The alleged argument against doing so is that search spammers would be able to learn from the algorithm to improve their spamming methods. This form of argument is an old argument in the security community known as “&lt;a href=&quot;http://en.wikipedia.org/wiki/Security_through_obscurity&quot;&gt;security through obscurity&lt;/a&gt;.” Security through obscurity is a technique generally associated with companies like Microsoft and is generally opposed as ineffective and risky by security experts. When you open source something you give the bad guys more info, but you also enlist an army of good guys to help you fight them.&lt;/p&gt;
&lt;p&gt;Until Google open sources what really matters – their search ranking algorithm – you should dismiss all their other open-source talk as empty posturing. And millions of websites will have to continue blindly relying on a small group of anonymous engineers in charge of the secret algorithm that determines their fate.&lt;/p&gt;
&lt;p&gt;* You can understand a large portion of technology business strategy by understanding strategies around complements. One major point: companies generally try to reduce the price of their products complements (Joel Spolsky has an excellent discussion of the topic &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;). If you think of the consumer as having a willingness to pay a fixed N for product A plus complementary product B, then each side is fighting for a bigger piece of the pie. This is why, for example, cable companies and content companies are constantly battling. It is also why Google wants open source operating systems to win, and for broadband to be cheap and ubiquitous. [&lt;a href=&quot;/2009/09/10/non-linearity-of-technology-adoption/&quot;&gt;link to full post&lt;/a&gt;]&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Anatomy of a bad search result]]></title><description><![CDATA[In a post last week, Paul Kedrosky noted his frustration when looking for a new dishwasher using Google.  I thought it might be interesting…]]></description><link>https://cdixon.org/2009/12/19/anatomy-of-a-bad-search-result</link><guid isPermaLink="false">https://cdixon.org/2009/12/19/anatomy-of-a-bad-search-result</guid><pubDate>Sat, 19 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In a post last week, Paul Kedrosky &lt;a href=&quot;http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html&quot;&gt;noted&lt;/a&gt; his frustration when looking for a new dishwasher using Google.  I thought it might be interesting to do some forensics to see which sites rank highly and why.&lt;/p&gt;
&lt;p&gt;Paul started by querying Google with the phrase &lt;em&gt;dishwasher reviews&lt;/em&gt;:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-18-at-11-36-20-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 72.23950233281494%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 36 20 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.36.20 PM&quot;
        src=&quot;/static/9540dc2be44de4383fec321346731537/94a55/screen-shot-2009-12-18-at-11-36-20-pm.png&quot;
        srcset=&quot;/static/9540dc2be44de4383fec321346731537/924ad/screen-shot-2009-12-18-at-11-36-20-pm.png 170w,
/static/9540dc2be44de4383fec321346731537/f570f/screen-shot-2009-12-18-at-11-36-20-pm.png 341w,
/static/9540dc2be44de4383fec321346731537/94a55/screen-shot-2009-12-18-at-11-36-20-pm.png 681w,
/static/9540dc2be44de4383fec321346731537/e8f76/screen-shot-2009-12-18-at-11-36-20-pm.png 1022w,
/static/9540dc2be44de4383fec321346731537/05a72/screen-shot-2009-12-18-at-11-36-20-pm.png 1286w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.36.20 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Pretty much every link on this page has an interesting story to tell about the state of the web.  I’ll just focus here on the top organic (non-sponsored) result:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.consumersearch.com/dishwasher-reviews&quot;&gt;http://www.consumersearch.com/dishwasher-reviews&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;clicking through this link takes you here:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-18-at-11-41-17-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 86.5055387713998%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 41 17 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.41.17 PM&quot;
        src=&quot;/static/40e6374390beb1c7562aa872d7409637/94a55/screen-shot-2009-12-18-at-11-41-17-pm.png&quot;
        srcset=&quot;/static/40e6374390beb1c7562aa872d7409637/924ad/screen-shot-2009-12-18-at-11-41-17-pm.png 170w,
/static/40e6374390beb1c7562aa872d7409637/f570f/screen-shot-2009-12-18-at-11-41-17-pm.png 341w,
/static/40e6374390beb1c7562aa872d7409637/94a55/screen-shot-2009-12-18-at-11-41-17-pm.png 681w,
/static/40e6374390beb1c7562aa872d7409637/5648e/screen-shot-2009-12-18-at-11-41-17-pm.png 993w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.41.17 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Consumersearch is &lt;a href=&quot;http://www.searchengineworld.com/tech/3456378.htm&quot;&gt;owned&lt;/a&gt; by About.com, which in turn is owned by the New York Times.&lt;/p&gt;
&lt;p&gt;So how did consumersearch.com get the top organic spot? Most SEO experts I talk to (e.g. &lt;a href=&quot;http://www.seomoz.org/&quot;&gt;SEOMoz&lt;/a&gt;‘s Rand Fishkin) think inbound links from a large number of domains still matter far more than other factors. One of the best tools for finding inbound links is &lt;a href=&quot;http://siteexplorer.search.yahoo.com/&quot;&gt;Yahoo Site Explorer&lt;/a&gt; (which, sadly, is &lt;a href=&quot;http://www.seomoz.org/blog/8-predictions-for-seo-in-2010&quot;&gt;supposed&lt;/a&gt; to be killed soon). Using this tool, here’s one of the sites linking to the dishwasher section of Consumersearch:&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.whirlpooldishwasher.net/&quot;&gt;http://www.whirlpooldishwasher.net/&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;images/screen-shot-2009-12-18-at-11-50-38-pm.png&quot;&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 110.74660633484163%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 50 38 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.50.38 PM&quot;
        src=&quot;/static/fdc98b07132ed44af805cbf1a11e105a/94a55/screen-shot-2009-12-18-at-11-50-38-pm.png&quot;
        srcset=&quot;/static/fdc98b07132ed44af805cbf1a11e105a/924ad/screen-shot-2009-12-18-at-11-50-38-pm.png 170w,
/static/fdc98b07132ed44af805cbf1a11e105a/f570f/screen-shot-2009-12-18-at-11-50-38-pm.png 341w,
/static/fdc98b07132ed44af805cbf1a11e105a/94a55/screen-shot-2009-12-18-at-11-50-38-pm.png 681w,
/static/fdc98b07132ed44af805cbf1a11e105a/e326c/screen-shot-2009-12-18-at-11-50-38-pm.png 884w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.50.38 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;(Yes, this site’s CSS looks scarily like my own blog – that’s because we both use a generic WordPress template).&lt;/p&gt;
&lt;p&gt;This site appears has two goals: 1) fool Google into thinking it’s a blog about dishwashers and 2) link to consumersearch.com.&lt;/p&gt;
&lt;p&gt;Who owns this site?  The Whois records are private. (Supposedly the reason Google became a domain registrar a few years ago was to peer behind the domain name privacy veil and weed out sites like this.)&lt;/p&gt;
&lt;p&gt;I spent a little time analyzing the “blog” text (it’s actually pretty funny – I encourage you to read it).  It looks like the “blog posts” are fragments from places like Wikipedia run through some obfuscator (perhaps by machine translating from English to another language and back?).  The site was impressively assembled from various sources. For example, the “comments” to the “blog entries” were extracted from Yahoo Answers:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 57.14285714285714%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 57 33 pm2&quot;
        title=&quot;Screen shot 2009-12-18 at 11.57.33 PM&quot;
        src=&quot;/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png&quot;
        srcset=&quot;/static/8880f051d3f742d1742d303ba6cd814f/924ad/screen-shot-2009-12-18-at-11-57-33-pm2.png 170w,
/static/8880f051d3f742d1742d303ba6cd814f/f570f/screen-shot-2009-12-18-at-11-57-33-pm2.png 341w,
/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png 504w&quot;
        sizes=&quot;(max-width: 504px) 100vw, 504px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.57.33 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Here is the source of this text on Yahoo Answers:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a41fdafc0a98ec307ed89ffd214d94a1/79997/screen-shot-2009-12-18-at-11-57-58-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 26.495726495726498%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsTAAALEwEAmpwYAAAAxklEQVQY032PTQ+CMAyG+f9HTx79MZ6MBwFhE0gGJkTAOIbswwXYbA169EnTrW/bN2nwmt1VWjs7Y/RzRJRUSiuFDzLKUZtPLSXo2phpmvyHoOSP7W4jlKwYS5IkJQQSQjCyLIujqCjyM7bSy4XWdW2tXZf50B8Pe7BkjBFCKKVhFBJKYDSM4vgcn8IT6PCBCmBl6b8EznnnMaqqzIuiaW7g3Xat6MWACCF6znm/wkFalmVdxgQG3sNUd7/DzVprKcffYX94AwtYFRs9WFyfAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 18 at 11 57 58 pm&quot;
        title=&quot;Screen shot 2009-12-18 at 11.57.58 PM&quot;
        src=&quot;/static/a41fdafc0a98ec307ed89ffd214d94a1/94a55/screen-shot-2009-12-18-at-11-57-58-pm.png&quot;
        srcset=&quot;/static/a41fdafc0a98ec307ed89ffd214d94a1/924ad/screen-shot-2009-12-18-at-11-57-58-pm.png 170w,
/static/a41fdafc0a98ec307ed89ffd214d94a1/f570f/screen-shot-2009-12-18-at-11-57-58-pm.png 341w,
/static/a41fdafc0a98ec307ed89ffd214d94a1/94a55/screen-shot-2009-12-18-at-11-57-58-pm.png 681w,
/static/a41fdafc0a98ec307ed89ffd214d94a1/79997/screen-shot-2009-12-18-at-11-57-58-pm.png 702w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-18 at 11.57.58 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The key is to have enough dishwaster-related text to look like it’s a blog about dishwashers, while also having enough text diversity to avoid being detected by Google as duplicative or automatically generated content.&lt;/p&gt;
&lt;p&gt;So who created this fake blog?  It could have been Consumersearch, or a “black hat” SEO consultant, or someone in an affiliate program that Consumersearch doesn’t even know. I’m not trying to imply that Consumersearch did anything wrong. The problem is systematic. When you have a &lt;a href=&quot;/2009/12/14/search-and-the-social-graph/&quot;&gt;multibillion dollar economy&lt;/a&gt; built around keywords and links, the ultimate “products” optimize for just that:  keywords and links. The incentive to create quality content diminishes.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Google’s feature creep]]></title><description><![CDATA[Microsoft used to be considered the king of feature creep.  Here was Microsoft Word when it was most cluttered:  I don’t use any of…]]></description><link>https://cdixon.org/2009/12/17/googles-feature-creep</link><guid isPermaLink="false">https://cdixon.org/2009/12/17/googles-feature-creep</guid><pubDate>Thu, 17 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Microsoft used to be considered the king of feature creep.  Here was Microsoft Word when it was most cluttered:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 500px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 63.800000000000004%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/jpeg;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;thumb paperclipinterference&quot;
        title=&quot;thumb-paperclipinterference&quot;
        src=&quot;/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg&quot;
        srcset=&quot;/static/dc369cd7be3d488bdf587362d27914fc/c2e49/thumb-paperclipinterference.jpg 170w,
/static/dc369cd7be3d488bdf587362d27914fc/c2dc0/thumb-paperclipinterference.jpg 341w,
/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg 500w&quot;
        sizes=&quot;(max-width: 500px) 100vw, 500px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;thumb-paperclipinterference&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;I don’t use any of Microsoft’s software anymore, but from what I hear they’ve toned down the feature creep a lot in recent versions of Windows and Word.&lt;/p&gt;
&lt;p&gt;Google has been adding so many new features to its results page, they are starting to feel like the new Microsoft.  Here’s an approximation of what Google used to look like (I couldn’t find an image of actual Google 1998 SRPs — anyone have one?)&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 629px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 64.86486486486486%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;bbc google search&quot;
        title=&quot;bbc-google-search&quot;
        src=&quot;/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png&quot;
        srcset=&quot;/static/a83d84bfad8eab11fc5bd0af3fb58517/924ad/bbc-google-search.png 170w,
/static/a83d84bfad8eab11fc5bd0af3fb58517/f570f/bbc-google-search.png 341w,
/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png 629w&quot;
        sizes=&quot;(max-width: 629px) 100vw, 629px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;bbc-google-search&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;And here is Google today:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/e34907114e564a69993b4518ce729786/e9c61/screen-shot-2009-12-17-at-11-35-35-am.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 66.11111111111111%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsTAAALEwEAmpwYAAACVElEQVQoz2VSua7bMBDU56cOkB9IkyplijQpEiTv2ZZ1y9ZhyaZu6iApkbqv0O8hVQYLckjscAfcFXKIC9gWeQ+zNkvbHHaEzMu6rdu2rOs4TfO8L8v+P7Z9F2jDsizGhCCMMMGUUX47zeu8bP0wplmOyUTpPE7zOE7vMfAnp3nbNiEvEYgortembUtcV7hGGHcDbnvMOoJJkRcRzKMg9BKY5VVVkZpQxlduT7g5BKGW27Dsx1lytHNkSI/AAzAKaxQxErM6mnq4LxXBSFWBpoUXMx36mUsE+zowunL25fPXTx8+no7gdApefj+Or6Ghp44TAACSJKOsw4TJmv8q2urF7fvhKQ4B99FxlieJfHz5oxmqdZeV9HTIDR1lKSW4o7TbtrVC9Ky6ouy5btwy9hQ7V+bdes7adsN4Na1Kk6l4qK0LK8uxqSeMxr6beEJR1EfROivu5RrP87MBwt1rHKvh/SgLLgg9LwriFMIKY/6DjNKGEMwxjAuvLCr2QbqKit91z3pCEtfeDXEG4kK/Bo4T+SBFiAwDG8eBx/oGnlBhKqm2pvqOFZflUyK4NpHFnI9BEBaK8rjoiXXJTD1WlfDxSNM0b5r23WRZUVnxJcUPo+x9ToQA1De37LopCJGqRaYZX6zUNDNDg75XhgGBGa2b5k1cH+Xrr4P246cWBm+Vrwb9/i2/ez1qKlm/SdpN1jy+6npk6JFjwbuPHQt17Ugaqlue7QfOHaRF8RRX5QL8cZ523gxZ1Y9n5XCSTrIq8oPmAJBGYRaADMJi3fjY7ivf/uEvHMnHF2XvGpEAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 12 17 at 11 35 35 am&quot;
        title=&quot;Screen shot 2009-12-17 at 11.35.35 AM&quot;
        src=&quot;/static/e34907114e564a69993b4518ce729786/94a55/screen-shot-2009-12-17-at-11-35-35-am.png&quot;
        srcset=&quot;/static/e34907114e564a69993b4518ce729786/924ad/screen-shot-2009-12-17-at-11-35-35-am.png 170w,
/static/e34907114e564a69993b4518ce729786/f570f/screen-shot-2009-12-17-at-11-35-35-am.png 341w,
/static/e34907114e564a69993b4518ce729786/94a55/screen-shot-2009-12-17-at-11-35-35-am.png 681w,
/static/e34907114e564a69993b4518ce729786/e8f76/screen-shot-2009-12-17-at-11-35-35-am.png 1022w,
/static/e34907114e564a69993b4518ce729786/e9c61/screen-shot-2009-12-17-at-11-35-35-am.png 1080w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-12-17 at 11.35.35 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Options on the left, ads on top and on the right, news results up top, images, and buttons to vote results up/down and annotate them.  But worst of all are the new scrolling “real time” results.  The static image I’ve embedded doesn’t do justice to how annoying this is. Random, out-of-context, and mostly asinine fragments of conversations scrolling by.  I think it might be Google’s Clippy.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Search and the social graph]]></title><description><![CDATA[Google has created a multibillion-dollar economy based on keywords.  We use keywords to find things and advertisers use keywords to find…]]></description><link>https://cdixon.org/2009/12/14/search-and-the-social-graph</link><guid isPermaLink="false">https://cdixon.org/2009/12/14/search-and-the-social-graph</guid><pubDate>Mon, 14 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Google has created a multibillion-dollar economy based on keywords.  We use keywords to find things and advertisers use keywords to find customers.  As Michael Arrington &lt;a href=&quot;http://www.techcrunch.com/2009/12/13/the-end-of-hand-crafted-content/&quot;&gt;points out&lt;/a&gt;, this is leading to increasing amounts of low quality, keyword-stuffed content. The end result is a very spammy internet. (It was depressing to see Tim Armstrong &lt;a href=&quot;http://mediamemo.allthingsd.com/20091209/live-from-new-york-tim-armstrong-makes-one-last-pitch-for-aol/&quot;&gt;cite&lt;/a&gt; Demand Media, a giant &lt;a href=&quot;http://www.thedeal.com/dealscape/technology/3i/goldman-sachs-meet-demand-medi.php&quot;&gt;domain-name owner&lt;/a&gt; and robotic content factory, as a model for the new AOL.)&lt;/p&gt;
&lt;p&gt;Some people hope the social web — link sharing via Twitter, Facebook etc — will save us.  Fred Wilson argues that “&lt;a href=&quot;http://www.avc.com/a_vc/2009/12/why-social-beats-search.html&quot;&gt;social beats search&lt;/a&gt;” because it’s harder to game people’s social graph.  Cody Brown &lt;a href=&quot;http://twitter.com/CodyBrown/status/6638145908&quot;&gt;tweeted&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;On Twitter you have to ‘game’ people, not algorithms. Look how many followers @&lt;a href=&quot;http://twitter.com/demandmedia&quot;&gt;demandmedia&lt;/a&gt; has. A lot less then you guys: @&lt;a href=&quot;http://twitter.com/arrington&quot;&gt;arrington&lt;/a&gt; @&lt;a href=&quot;http://twitter.com/jason&quot;&gt;jason&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;These are both sound points. &lt;em&gt;Lost amid this discussion, however, is that the links people tend to share on social networks – news, blog posts, videos – are in categories Google barely makes money on.&lt;/em&gt; (The same point also seems lost on Rupert Murdoch and news organizations who accuse Google of profiting off their misery).&lt;/p&gt;
&lt;p&gt;Searches related to news, blog posts, funny videos, etc. are mostly a loss leaders for Google. &lt;em&gt;Google’s real business is selling ads for plane tickets, dvd players, and malpractice lawyers.&lt;/em&gt; (I realize this might be depressing to some internet idealists, but it’s a reality). Online advertising revenue is directly correlated with finding users who have &lt;a href=&quot;/2009/09/27/online-advertising-is-all-about-purchasing-intent/&quot;&gt;purchasing intent&lt;/a&gt;. Google’s true primary competitive threats are product-related sites, especially Amazon. As it gets &lt;a href=&quot;http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html&quot;&gt;harder to find a washing machine&lt;/a&gt; on Google, people will skip search and go directly to Amazon and other product-related sites.&lt;/p&gt;
&lt;p&gt;This is not to say that the links shared on social networks can’t be extremely valuable.  But most likely they will be valuable as critical inputs to better search-ranking algorithms. Cody’s point that it’s harder to game humans than machines is very true, but remember that Google’s algorithm was always meant to be based on human-created links. As the spammers have become more sophisticated, the good guys have come to need new mechanisms to determine which links are from trustworthy humans. Social networks might be those new mechanisms, but that doesn’t mean they’ll displace search as the primary method for navigating the web.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why did Skype succeed and Joost fail?]]></title><description><![CDATA[Skype and Joost are interesting companies to compare – they are about as close as you can get to one of those sociological studies that…]]></description><link>https://cdixon.org/2009/12/08/why-did-skype-succeed-and-joost-fail</link><guid isPermaLink="false">https://cdixon.org/2009/12/08/why-did-skype-succeed-and-joost-fail</guid><pubDate>Tue, 08 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Skype and Joost are interesting companies to compare – they are about as close as you can get to one of those sociological studies that track identical twins who are raised separately.  Skype was a spectacular success.   Joost never got traction and was shut down.  Both were started by Nicklas Zennstrom and Janus Friis, two of the great technology visionaries of our time.  Both were big ideas, trying to disrupt giant, slow-moving incumbents.&lt;/p&gt;
&lt;p&gt;There are likely multiple reasons for their different outcomes.  Joost had day-to-day management that didn’t have much startup experience.  The P2P technology that required a download made sense for chat but not for video.  The companies were started at different times:  Skype when there was far less investment in – and therefore competition among – consumer internet products.&lt;/p&gt;
&lt;p&gt;But the really important difference was that Joost’s product had a critical input that depended on a stubborn, backward-thinking industry – video content owners.  Whereas Skype could brazenly threaten the industry it sought to disrupt, Joost had to get their blessing.  Eventually the content companies licensed some content to Joost, but not nearly enough to make it competitive with cable TV or other new platforms like Hulu and iTunes.&lt;/p&gt;
&lt;p&gt;Real life, non-techie users care almost exclusively about “content.”  They want to watch American Idol and listen to Jay-Z. They don’t really care how that content is delivered or what platform it’s on. Which is why Joost failed, and why so many video and music-related startups have struggled. Skype, on the other hand, didn’t have significant dependencies on other companies – its content, like its technology, was truly peer to peer.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Does a VC’s brand matter?]]></title><description><![CDATA[Suppose you are in the enviable position of choosing between offers from multiple VC firms.  How much should you weigh the brand of the VCs…]]></description><link>https://cdixon.org/2009/12/05/does-a-vcs-brand-matter</link><guid isPermaLink="false">https://cdixon.org/2009/12/05/does-a-vcs-brand-matter</guid><pubDate>Sat, 05 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Suppose you are in the enviable position of choosing between offers from multiple VC firms.  How much should you weigh the brand of the VCs when making your decision?  I think the answer is:  a little, but a lot less than most people assume.&lt;/p&gt;
&lt;p&gt;First, let me say the quality of the individual partner making the offer &lt;a href=&quot;http://cdixon.org/?p=319&quot;&gt;matters a lot&lt;/a&gt;.  However, in my experience, there is a only rough correlation between a VC’s brand and the quality of the individual partners there.  There are toxic partners at brand name firms, and great partners at lesser known firms.&lt;/p&gt;
&lt;p&gt;There are only two situations I can think of where the firm’s brand really matters.   First, if you manage to raise money from a particular set of the top 5 or so firms, you are almost guaranteed to be able to raise money later at a higher valuation from other firms. In fact, there are VC firms whose explicit business model is simply to follow those top firms.&lt;/p&gt;
&lt;p&gt;The other way a VC firm’s brand can help is by giving you credibility when recruiting employees.  This matters especially if you are a first-time entrepreneur whose company is at an early stage.  It matters a lot less if you’re a proven entrepreneur or your company already has traction.&lt;/p&gt;
&lt;p&gt;In my opinion that’s about it in terms of the importance of the VC’s brand.  Too many entrepreneurs get seduced into thinking they’ve accomplished something significant by raising money from a name brand VC.  Also, remember that if you are raising a seed round, the better the firm is, the &lt;a href=&quot;http://cdixon.org/?p=256&quot;&gt;worse it can actually be for you&lt;/a&gt; if that firm decides not to participate in follow on rounds.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Some thoughts on SEO]]></title><description><![CDATA[“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via organic search traffic.”  I don’t like…]]></description><link>https://cdixon.org/2009/12/01/some-thoughts-on-seo</link><guid isPermaLink="false">https://cdixon.org/2009/12/01/some-thoughts-on-seo</guid><pubDate>Tue, 01 Dec 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via organic search traffic.”  I don’t like the term at all.  For one thing, it’s been frequently associated with illicit techniques like link trading and search engine spamming.  It is also associated with consultants who don’t do much beyond very basic stuff your own developers should be able to do.   But the most pernicious aspect to the phrase is that the word “optimization” suggests that SEO is a finishing touch, something you &lt;a href=&quot;http://redeye.firstround.com/2009/11/lets-just-add-in-a-little-virality.html&quot;&gt;bolt on&lt;/a&gt;, instead of central to the design and development of your site. Unfortunately, I think the term is so widespread that we are stuck with it.&lt;/p&gt;
&lt;p&gt;SEO is extremely important because normal users – those who don’t live and breath technology – only type a few of their favorite websites directly into the URL bar and for everything else go to search engines, most likely Google*.  In the 90s, people talked a lot about “home pages” and “site flow.” This matters if you are getting most of your traffic from people typing in your URL directly.  For most startups, however, this isn’t the case, at least for the first few years. Instead, the flow you should be thinking about is users going to Google, typing in a keyphrase and landing on one of your internal pages.&lt;/p&gt;
&lt;p&gt;The biggest choice you have to make when approaching SEO is whether you want to be a Google optimist or a Google pessimist**. Being an optimist means trusting that the smart people in the core algorithm team in Mountain View are doing their job well – that, in general, good content rises to the top.&lt;/p&gt;
&lt;p&gt;The best way to be a Google optimist is to think of search engines as information marketplaces – matchmakers between users “demanding” information and websites “supplying” it. This means thinking hard about what users are looking for today, what they will be looking for in the future, how they express those intentions through keyphrases, where there are gaps in the supply of that information, and how you can create content and an experience to fill those gaps.&lt;/p&gt;
&lt;p&gt;All this said, there does remain a technical, “optimization” side to SEO. Internal URL structure, text on your landing pages, and all those other things discussed by SEO consultants do matter.  Luckily, most good SEO practices are also good UI/UX practices.  Personally I like to do all of these things in house by asking our programmers and designers to include search sites like &lt;a href=&quot;http://www.seomoz.org/&quot;&gt;SEOMoz&lt;/a&gt;, &lt;a href=&quot;http://searchengineland.com/&quot;&gt;Search Engine Land&lt;/a&gt;, and &lt;a href=&quot;http://www.mattcutts.com/blog/&quot;&gt;Matt Cutts&lt;/a&gt; in their daily reading list&lt;/p&gt;
&lt;p&gt;* I’m just going to drop the illusion here that most people optimize for anything besides Google.  ComScore says Google has ~70% market share but everyone I know gets &gt;90% of their search traffic from Google.  At any rate, in my experience, if you optimize for Google, Bing/Yahoo will give you SEO love about a 1-6 months later.&lt;/p&gt;
&lt;p&gt;** Even if you choose to be a pessimist, I strongly recommend you stay far away from so-called black hat techniques, especially schemes like link trading and paid text ads that are meant to trick crawlers.  Among other things, this can get your site banned for life from Google.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The importance of institutional redundancy]]></title><description><![CDATA[Every system built by a single institution has points of failure that can bring the entire system down.  Even in organizations that have…]]></description><link>https://cdixon.org/2009/11/20/the-importance-of-institutional-redundancy</link><guid isPermaLink="false">https://cdixon.org/2009/11/20/the-importance-of-institutional-redundancy</guid><pubDate>Fri, 20 Nov 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Every system built by a single institution has points of failure that can bring the entire system down.  Even in organizations that have tried hard for internal redundancy – for example, Google and Amazon have extremely distributed infrastructures – there will always be system-wide shared components, architectures, or assumptions that are flawed.  The only way to guarantee there aren’t is to set up completely separate, competing organizations – in other words, new institutions.&lt;/p&gt;
&lt;p&gt;This insight has practical implications when building internet services.  One thing I learned from my &lt;a href=&quot;http://hunch.com&quot;&gt;Hunch&lt;/a&gt; co-founder &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; is, if you really care about having a reliable website, always host your servers at two data centers, owned by different companies, on networks owned by different companies, on separate power grids, and so forth.  Our last company, SiteAdvisor, handled billions of requests per hour but never went down when the institutions we depended on went down – which was surprisingly often.  (We did have downtime, but it was due to our own flawed components, assumptions etc.).&lt;/p&gt;
&lt;p&gt;The importance of institutional redundancy is profoundly more important when applied to the internet at large. The US government originally designed the internet to be fully decentralized so as to withstand large-scale nuclear attack.  The core services built on top of the internet – the web (HTTP), email (SMTP), subscription messaging (RSS) – were made similarly open and therefore distributible across institutions.  This explains their remarkable system-wide reliability.  It also explains why we should be worried about reliability when core internet services are owned by a single company.&lt;/p&gt;
&lt;p&gt;The principle of not depending on single institutions applies beyond technology.  Every institution is opaque to outsiders, with single points of failure, human and otherwise.  For example, one of the primary lessons of the recent financial crisis is that the most important form of diversification is across institutions, not, as the experts have told us for decades, across asset classes.  The Madoff fraud was one extreme, but there were plenty of cases of lesser fraud and countless cases of poor financial management, most of which would have been almost impossible to anticipate by outsiders.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Pitch yourself, not your idea]]></title><description><![CDATA[There is a widespread myth that the most important part of building a great company is coming up with a great idea.  This myth is reflected…]]></description><link>https://cdixon.org/2009/11/14/pitch-yourself-not-your-idea</link><guid isPermaLink="false">https://cdixon.org/2009/11/14/pitch-yourself-not-your-idea</guid><pubDate>Sat, 14 Nov 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There is a widespread myth that the most important part of building a great company is coming up with a great idea.  This myth is reflected in popular movies and books: someone invents the Post-it note or cocktail umbrellas and becomes an overnight millionaire.  It is also perpetuated by experienced business people who, for the most part, don’t believe it. Venture capitalists often talk about “the best way to pitch your idea” and “honing your elevator pitch.”  Most business schools have business plan contests which are essentially beauty pageants for startup ideas.  All of this reinforces the myth that the idea is primary.&lt;/p&gt;
&lt;p&gt;The reality is ideas don’t matter that much.  First of all, in almost all startups, the idea changes – often dramatically – over time. Secondly, ideas are relatively abundant. For every decent idea there are very likely other people who’ve also thought of it, and, surprisingly often, are also actively pitching investors. At an early stage, ideas matter less for their own sake and more insofar as they reflect the creativity and thoughtfulness of the team.&lt;/p&gt;
&lt;p&gt;What you should really be focused on when pitching your early stage startup is pitching yourself and your team.  When you do this, remember that a startup is primarily about &lt;em&gt;building something&lt;/em&gt;.  Hence the most important aspect of your backgrounds is not the names of the schools you attended or companies you worked at – it’s what you’ve built.  This could mean coding a video game, creating a non-profit organization, designing a website, writing a book, bootstrapping a company – whatever.  The story you should tell is the story of someone who has been building stuff her whole life and now just needs some capital to take it to the next level.&lt;/p&gt;
&lt;p&gt;Of course a great way to show you can build stuff is to build a prototype of the product you are raising money for.  This is why so many VCs tell entrepreneurs to “come back when you have a demo.”  They aren’t wondering whether your product can be built – they are wondering whether you can build it.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Presenting Founder Collective]]></title><description><![CDATA[As readers of this blog know, I’m a huge fan of the startup and venture capital world but also a sometimes critic of how the venture capital…]]></description><link>https://cdixon.org/2009/11/09/presenting-founder-collective</link><guid isPermaLink="false">https://cdixon.org/2009/11/09/presenting-founder-collective</guid><pubDate>Mon, 09 Nov 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;As readers of this blog know, I’m a &lt;a href=&quot;http://www.cdixon.org/?cat=3&quot;&gt;huge fan&lt;/a&gt; of the startup and venture capital world but also a &lt;a href=&quot;http://www.cdixon.org/?p=443&quot;&gt;sometimes&lt;/a&gt; &lt;a href=&quot;http://www.cdixon.org/?p=259&quot;&gt;critic&lt;/a&gt; of how the venture capital industry works. For a long time I’ve wanted to do more than talk about this and actually start a new kind of venture firm, designed the right way from the ground up.&lt;/p&gt;
&lt;p&gt;Last year two friends of mine who are both very successful, serial entrepreneurs — &lt;a href=&quot;http://www.foundercollective.com/people/Eric-Paley&quot;&gt;Eric Paley&lt;/a&gt; and &lt;a href=&quot;http://www.foundercollective.com/people/David-Frankel&quot;&gt;Dave Frankel&lt;/a&gt; — were brainstorming ideas for what to do next when the thought occurred: why not make their next startup a new kind of venture firm, the kind we had wished existed back when we started our first companies?&lt;/p&gt;
&lt;p&gt;So this is what we, along with a bunch of other serial entrepreneurs, decided to do. We call our new firm &lt;a href=&quot;http://www.foundercollective.com/&quot;&gt;Founder Collective&lt;/a&gt;. Joining us are &lt;a href=&quot;http://www.foundercollective.com/people/Mark-Gerson&quot;&gt;Mark Gerson&lt;/a&gt; (founder of &lt;a href=&quot;http://www.foundercollective.com/companies/Gerson-Lehrman-Group&quot;&gt;Gerson Lehrman Group&lt;/a&gt;), &lt;a href=&quot;http://www.foundercollective.com/founders-Zach-Klein&quot;&gt;Zach Klein&lt;/a&gt; (co-founder of &lt;a href=&quot;http://www.foundercollective.com/companies/Vimeo&quot;&gt;Vimeo&lt;/a&gt;/Connected Ventures), &lt;a href=&quot;http://www.foundercollective.com/people/Bill-Trenchard&quot;&gt;Bill Trenchard&lt;/a&gt; (co-founder of &lt;a href=&quot;http://www.foundercollective.com/companies/LiveOps&quot;&gt;LiveOps&lt;/a&gt;), and &lt;a href=&quot;http://www.foundercollective.com/founders-Micah-Rosenbloom&quot;&gt;Micah Rosenbloom&lt;/a&gt; (co-founder of &lt;a href=&quot;http://www.foundercollective.com/companies/Brontes&quot;&gt;Brontes&lt;/a&gt;). We expect to add more founders over time.&lt;/p&gt;
&lt;p&gt;We think of ourselves as part of a new wave venture firms led by &lt;a href=&quot;http://ycombinator.com/&quot;&gt;Y Combinator&lt;/a&gt;, &lt;a href=&quot;http://www.firstround.com/&quot;&gt;First Round&lt;/a&gt;, &lt;a href=&quot;http://www.maplesinvestments.com/&quot;&gt;Maples&lt;/a&gt;, Ron Conway/Baseline, and &lt;a href=&quot;http://betaworks.com/&quot;&gt;Betaworks&lt;/a&gt;, among others, that have adapted to a world where venture capital is abundant but authentic seed capital and, more importantly, mentorship from experienced entrepreneurs, is scarce. We have many similarities to these firms and also some differences:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;We have a small fund – approximately $40M – and intend to keep it that way. This means seed investments are our entire business — they are not &lt;a href=&quot;http://www.cdixon.org/?p=256&quot;&gt;options on future financings&lt;/a&gt;. Hence our interests and the founders’ interests are aligned. This also means we are happy with smaller exits if that’s what the entrepreneur wants to do.&lt;/li&gt;
&lt;li&gt;Each person involved in Founder Collective is an entrepreneur, most of them currently running startups full time (my full-time job is CEO/co-founder of &lt;a href=&quot;http://www.hunch.com/&quot;&gt;Hunch&lt;/a&gt;).&lt;/li&gt;
&lt;li&gt;We believe the best people to predict the future — and create it — are fellow entrepreneurs, not former bankers drawing graphs and developing abstract theses.&lt;/li&gt;
&lt;li&gt;We try to be respectful. We’ve all sat in countless meetings where VCs show up late, email while you are presenting, and generally act arrogant and dismissive. We try really hard not to be like that.&lt;/li&gt;
&lt;li&gt;We’ll make investments anywhere in the world but tend to favor our home turf – New York City and Cambridge, MA. New York &lt;a href=&quot;http://www.avc.com/a_vc/2009/09/the-ny-startup-scene.html&quot;&gt;is&lt;/a&gt; a &lt;a href=&quot;http://www.cdixon.org/?p=281&quot;&gt;hotbed&lt;/a&gt; for online media and advertising startups. In Cambridge, there is a constant flow of ideas coming out of places like MIT that just need a little capital and guidance.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;We realize the word “Collective” sounds a bit radical, even socialist. This is deliberate. While we have an actual fund — we are not just a group of angel investors — we also have a unique structure where active entrepreneurs lead investments, work hard to help their investments succeed, and share in the profits when they do.&lt;/p&gt;
&lt;p&gt;Think of it as peer-to-peer venture capital.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[How to select your angel investors]]></title><description><![CDATA[I’ve seen a number of situations recently that are something like the following.  A VC firm signs a term sheet with an early stage company…]]></description><link>https://cdixon.org/2009/11/03/how-to-select-your-angel-investors</link><guid isPermaLink="false">https://cdixon.org/2009/11/03/how-to-select-your-angel-investors</guid><pubDate>Tue, 03 Nov 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve seen a number of situations recently that are something like the following.  A VC firm signs a term sheet with an early stage company. Let’s say it’s a $2M round.  The VC and entrepreneurs decide to set aside $500K for small investors (individual investors or micro-VCs). Because it’s a “hot” deal, there is way more small investor interest than there is capacity (the round is “oversubscribed”), and the entrepreneur needs to decide which investors are in and which are out.&lt;/p&gt;
&lt;p&gt;The most common mistake entrepreneurs make is to base their choice solely on the investors’ “celebrity” value (by “celebrity” I generally mean in the TechCrunch sense, not the People magazine sense).  Picking celebrity angels might help you get a little more buzz when you announce the financing and a few SUL tweets, but that’s about it.  A startup is a long trip — what you should care about is whether, through the ups and downs and after the buzz dies down, the investors will actually roll up their sleeves and help you.&lt;/p&gt;
&lt;p&gt;That isn’t to say that being a celebrity and being helpful are mutually exclusive.  Ron Conway is a celebrity (in the startup world) and is one of the hardest working investors I know. But there are other celebrity investors who I’m a co-investor with in a few companies who literally don’t respond to the founder’s emails.  And these are successful companies where the founder sends them only occasional emails about really important issues.&lt;/p&gt;
&lt;p&gt;The second biggest mistake is picking angels that benefit the lead VC.  A lot of times when VCs guide entrepreneurs to certain investors what they are really doing is “horse trading” – they want you to let in so and so, because so and so got them into another deal, or will help them get into future deals.&lt;/p&gt;
&lt;p&gt;It’s also smart to pick a varied group of people.  If you want a few celebrities to create some buzz, fine.  You should also pick some people who are connectors – who can introduce you to key people when you need it (varying connectors by geography and industry can also be helpful).  Also very important are active entrepreneurs who can (and will) give you practical advice about hiring, product development, financing etc.&lt;/p&gt;
&lt;p&gt;Finally, don’t spend too much time agonizing over this.  One particularly silly situation I was involved with was where the CTO had invited me to invest but then the CEO decided he wanted to put me through multiple interviews before he’d let me in.  He probably spent a day of his time deciding whether to give me some tiny fraction of the round. Eventually he dinged me because I wasn’t famous, but at that point I was frankly kind of relieved since the CEO seemed to have such a bad sense of how to prioritize his time.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Disclosure: This post is entirely self serving, as I consider myself a non-celebrity but hard working small investor.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The most important question to ask before taking seed money]]></title><description><![CDATA[There is a certain well respected venture capital firm (VC) that has a program for fledgling entrepreneurs.   The teams that are selected…]]></description><link>https://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money</link><guid isPermaLink="false">https://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money</guid><pubDate>Fri, 30 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There is a certain well respected venture capital firm (VC) that has a program for fledgling entrepreneurs.   The teams that are selected get a desk, a small stipend, and advice for a few months from experienced VCs.  I could imagine back when I was starting my first company thinking this was a great opportunity – especially the advice part.&lt;/p&gt;
&lt;p&gt;Here’s the problem.  A few years into the program, approximately 25 teams have gone through it.  The sponsoring VC funded one team and passed on the other 24.  None of those other 24 have gotten financing from anyone else.  Why?  Because once you go through the program and don’t get funded by the sponsoring VC, you are perceived by the rest of the investor community as damaged goods.&lt;/p&gt;
&lt;p&gt;Most early stage investors are bombarded with new deals.  There is no way they could meet with all of them, or even spend time seriously reading their investor materials.  In order to filter through it all, they rely heavily on signals.  The person referring you to them is a very big signal.  Your team’s bios is a very big signal. And if you were in the seed program of a VC who has a multi-hundred million dollar fund and who decided to pass, that is a huge signal.&lt;/p&gt;
&lt;p&gt;Meanwhile, the unsuspecting entrepreneurs think: “I was at a prestigious VC this summer – this will look great on our bios and company deck.”  The truth is exactly the opposite:  the better the VC, the stronger the negative signal when they pass.&lt;/p&gt;
&lt;p&gt;Thus, the most important question to ask before taking seed money is: &lt;strong&gt;How many companies that the sponsor passed on went on to raise money from other sources?&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;The best programs don’t have sponsors who are even capable of further funding the company.  Y Combinator simply doesn’t do follow ons, so there is no way they can positively or negatively signal by their follow on actions. (Although now that they have taken money from Sequoia people are worried that Sequoia passing could be seen as a negative signal.  I just invested in a Y Combinator company and was reassured to see Sequoia co-investing).  Other seed programs lie somewhere in between — they aren’t officially run by big VCs but they do have big VCs associated with them so there is some signaling effect.   (I would call this the “hidden sponsor” problem.  I didn’t realize the extent of it until I got emails responding to my &lt;a href=&quot;http://www.cdixon.org/?p=256&quot;&gt;earlier seed program posts&lt;/a&gt; from entrepreneurs who had been burned by it).&lt;/p&gt;
&lt;p&gt;The most dangerous programs are the ones run by large VCs.  I would love for someone to prove me wrong, but from my (admittedly anecdotal) knowledge, no companies that have been in large VC seed programs where the VC then stopped supporting the company went on to raise more money from other sources.&lt;/p&gt;
&lt;p&gt;As has been widely noted, startups – especially internet-related ones – require far less capital today than they did a decade ago.  The VC industry has responded by keeping their &lt;a href=&quot;http://www.cdixon.org/?p=443&quot;&gt;funds huge&lt;/a&gt; but trying to get options on startups via seed programs.  Ultimately the VC industry will be forced to adapt by shrinking their funds, so they can invest in seed deals with the intention of actually making money on those investments, instead of just looking for &lt;a href=&quot;http://www.cdixon.org/?p=259&quot;&gt;options&lt;/a&gt; on companies in which they can invest “real money.”  In the meantime, however, a lot of young entrepreneurs are getting an unpleasant introduction to the rough-and-tumble world of venture capital.&lt;/p&gt;
&lt;p&gt;&lt;em&gt;Disclosure:  I am biased because as an early stage investor I sometimes compete with these programs.&lt;/em&gt;&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Embrace the medium]]></title><description><![CDATA[An obvious but surprisingly under-practiced design principle is to “embrace the medium.”  Applied to software, this means building…]]></description><link>https://cdixon.org/2009/10/27/embrace-the-medium</link><guid isPermaLink="false">https://cdixon.org/2009/10/27/embrace-the-medium</guid><pubDate>Tue, 27 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;An obvious but surprisingly under-practiced design principle is to “embrace the medium.”  Applied to software, this means building applications that take advantage of the strengths of the platform instead of trying to mimic the strengths of another platform.&lt;/p&gt;
&lt;p&gt;iPhone and Wii games provide many stark abuses of this principle. Call of Duty is perhaps the single best franchise on the XBox and PS3, but the Wii version is almost unplayable.   They basically just did a straight port of the game, with worse graphics and using the Wiimote as a shaky aiming device.  It’s not an accident that the best Wii games are made exclusively for the Wii (and that most of those games are made by Nintendo itself).&lt;/p&gt;
&lt;p&gt;iPhone games are perhaps even worse violators of the “embrace the medium” principle.  Recently I was thinking about downloading Madden 2010, but as soon as I saw the screenshots I knew I’d hate it:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 10 26 at 8 03 58 am 300x196&quot;
        title=&quot;Screen shot 2009-10-26 at 8.03.58 AM&quot;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-10-26 at 8.03.58 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;You can see they are trying to force the XBox/PS3 control scheme onto a device with completely different set strengths and weaknesses. The iPhone’s strengths are:  touchscreen, gestures, accelerometer, networked, always with you. Its weaknesses:  no buttons, small screen, poor graphics/processor (compared to consoles).  The best games – Flight Control, Spider, Rolando – are designed from scratch to take advantage of the iPhone’s strengths.  Take Flight Control as an example:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &gt;&lt;/span&gt;
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        alt=&quot;screen shot 2009 10 26 at 8 10 04 am 300x201&quot;
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        src=&quot;/static/62707ad6a6cb5645e60e286afd45c402/135ae/screen-shot-2009-10-26-at-8-10-04-am-300x201.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-10-26 at 8.10.04 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;You guide the planes by mapping their routes with your finger.  It’s such a simple, elegant and fun game, and one that could only exist on the iPhone.  It embraces the iPhone-ness instead of fighting it.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Twelve months notice]]></title><description><![CDATA[Generally speaking, there are two approaches to relating to other people in the business world. The first approach is transactional and…]]></description><link>https://cdixon.org/2009/10/23/twelve-months-notice</link><guid isPermaLink="false">https://cdixon.org/2009/10/23/twelve-months-notice</guid><pubDate>Fri, 23 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Generally speaking, there are two approaches to relating to other people in the business world. The first approach is transactional and legalistic:  work is primarily an exchange of labor for money, and agreements are made via contracts.   Enforcement is provided by organizations, especially the legal system.  The second approach relies on trust, verbal agreements, reputation and norms, and looks to the community to provide enforcement when necessary.&lt;/p&gt;
&lt;p&gt;In the startup world, the latter approach dominates.  It is almost unheard of, for example, to see entrepreneurs or VCs sue each other.  The ones who do tend to leave the startup world, either by choice or by having ruined their reputation.  It is very rare to see someone in the startup world break a verbal agreement.  And, in most cases, employees and employers show loyalty far beyond what is seen in larger companies or what is economically “rational.”   (Most startups do spend considerable legal fees on financing, employee, and IP documents, but that is mostly because they know that those are necessary if they decide to sell themselves to a large company where the legalistic approach dominates.)&lt;/p&gt;
&lt;p&gt;For this reason, if you are an employee working at a startup where the managers are honest, inclusive and fair, you should disregard everything you’ve learned about proper behavior from people outside of the startup world.&lt;/p&gt;
&lt;p&gt;For example, let’s suppose you are a two years out of college and have a job at a startup.  You like your job but decide you want to go to graduate school.   The big company legalistic types will tell you to secretly send in your applications, and, if you get accepted and decide to attend, give your boss two weeks notice.&lt;/p&gt;
&lt;p&gt;What you should instead do is talk to your boss as soon as you are seriously considering graduate school.  Give them twelve months notice.  Any good startup manager won’t fire you, and in fact will go out of her way to help you get into school and get a good job afterwards.  They will appreciate your honesty and the fact that you gave them plenty of time to find a replacement.&lt;/p&gt;
&lt;p&gt;(Now don’t get me wrong:  if you work for bosses who have a legalistic, transactional mindset, by all means give two weeks notice.  I gave 4 months notice once to a boss with that mindset and was duly punished for it.  But hopefully if you are at a startup you work with people who have the startup, relationship-centric mindset.)&lt;/p&gt;
&lt;p&gt;This way of relating to other people is one of the main things people are talking about when they talk about “startup culture.”  It is why so many people coming from other industries have difficulty fitting into startups (especially people coming from Wall Street where the transactional mindset is at its most extreme).  I personally find the community approach a much nicer way to operate, and try to only professionally associate myself with people who prefer that approach as well.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The ideal startup career path]]></title><description><![CDATA[For most people I know who join or start companies, the primary goal is not to get rich – it is to work on something they love, with people…]]></description><link>https://cdixon.org/2009/10/22/the-ideal-startup-career-path</link><guid isPermaLink="false">https://cdixon.org/2009/10/22/the-ideal-startup-career-path</guid><pubDate>Thu, 22 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;For most people I know who join or start companies, the primary goal is not to get rich – it is to work on something they love, with people they respect, and to not be beholden to the vagaries of the market- in other words, to be independent.  The reality is being independent often means having made money and/or being able to raise money from others.&lt;/p&gt;
&lt;p&gt;A while back, I &lt;a href=&quot;http://www.cdixon.org/?p=467&quot;&gt;posted&lt;/a&gt; about how I recommend thinking about non-founder option grants.  In the comments, &lt;a href=&quot;http://twitter.com/aaronCohen&quot;&gt;Aaron Cohen&lt;/a&gt; &lt;a href=&quot;http://www.cdixon.org/?p=467#comment-1681&quot;&gt;made the point&lt;/a&gt; that given today’s “good” exit sizes and standard equity grants, most non-founders will not gain independence even in the (non-extreme) good cases:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Most startup employees need to realize they are on a journey and that in addition to making a few hundred thousand dollars on a good outcome they are learning how to become more senior at the next company. Real wealth creation will take founding, seniority, or staggeringly large exits.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As Aaron said, you shouldn’t think of joining a startup as just joining a company. You should think of it as joining the startup career path. This career path could mean starting a company as your first job.  It could also mean working at a few startups and then starting a company.   (In my view, if your goal is to start a company, it is mostly a waste of time to work anywhere but a startup – with the possible exception of a short stint in venture capital).&lt;/p&gt;
&lt;p&gt;Maybe you will make some money working at a startup, but more importantly you will hopefully work for founders and managers who are smart and willing to mentor you and eventually fund or help you fund your startup.&lt;/p&gt;
&lt;p&gt;The startup world is extremely small.  If you’re smart, work really hard, and act with integrity, people will notice.  Contrary to popular wisdom, you will actually have &lt;a href=&quot;http://www.cdixon.org/?p=181&quot;&gt;more job stability&lt;/a&gt; than working at a big company.  And hopefully you’ll go on to start your own company, gain independence, and then help others do the same.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The challenge of creating a new category]]></title><description><![CDATA[One of the hardest things to do as a startup is to create a new category.  Bloggers and press have a natural tendency to “pigeonhole” – to…]]></description><link>https://cdixon.org/2009/10/20/the-challenge-of-creating-a-new-category</link><guid isPermaLink="false">https://cdixon.org/2009/10/20/the-challenge-of-creating-a-new-category</guid><pubDate>Tue, 20 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the hardest things to do as a startup is to create a new category.  Bloggers and press have a natural tendency to “pigeonhole” – to group startups into cleanly delineated categories, and then do side-by-side comparisons, comment on the “horserace” between them, and so forth.&lt;/p&gt;
&lt;p&gt;At my last startup, SiteAdvisor, we were at first consistently pigeonholed as an anti-phishing toolbar, even though what we did was help search engine users avoid spyware, spam, and scams, which (for various technical reasons) had almost no functional overlap with anti-phishing toolbars. My co-founder at &lt;a href=&quot;http://www.hunch.com&quot;&gt;Hunch&lt;/a&gt;, Caterina Fake, had a similar experience at Flickr.  Early on, people compared Flickr to existing photo sharing websites – Shutterfly, Ofoto, SnapFish - and found Flickr lacking in features around buying prints, sending greeting cards, etc.&lt;/p&gt;
&lt;p&gt;Pigeonholing is one reason startups should actually welcome direct competitors.   It was only once a direct competitor to SiteAdvisor appeared that people started treating “web safety” as its own category (Walt Mossberg was the first one to legitimize the category with &lt;a href=&quot;http://www.cdixon.org/press1.html&quot;&gt;this&lt;/a&gt; article).&lt;/p&gt;
&lt;p&gt;At my current startup, Hunch, being pigeonholed as a so-called Answers site is one of our main marketing challenges.  &lt;a href=&quot;http://www.hunch.com/fact-sheet/&quot;&gt;Hunch is a user-generated website&lt;/a&gt; similar to Wikipedia except, instead of creating encyclopedia entries, contributors create decision trees that help other users make choices and decisions.  For example, about 50 computer enthusiasts came together to create &lt;a href=&quot;http://www.hunch.com/laptops/&quot;&gt;this decision tree about computer laptops&lt;/a&gt; that helps users with less expertise find the right laptop.  Hunch gets smarter over time as more people contribute to it.  So far, about 10,000 users have made 115,000 contributions to the site.  Last month, our third month after launch, over 600,000 unique visitors used those contributions to make decisions.&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://mashable.com/2009/06/15/hunch-decisions/&quot;&gt;Many&lt;/a&gt; &lt;a href=&quot;http://searchengineland.com/hunch-a-real-decision-engine-20928&quot;&gt;of&lt;/a&gt; &lt;a href=&quot;http://digital.venturebeat.com/2009/03/27/after-trying-it-out-i-have-a-good-feeling-about-hunch/&quot;&gt;the&lt;/a&gt; &lt;a href=&quot;http://www.xconomy.com/national/2009/04/03/will-hunch-help-you-make-decisions-signs-point-to-yes/&quot;&gt;initial&lt;/a&gt; &lt;a href=&quot;http://www.techcrunch.com/2009/03/27/does-hunch-have-all-the-answers-we-take-flickr-founders-new-startup-for-a-spin/&quot;&gt;reviews&lt;/a&gt; of Hunch accurately reflected that Hunch is trying to create a new category of website.  Nevertheless, the tendency to pigeonhole Hunch as an Answers site remains. Answers sites allow users to ask a question and get back direct answers from other people.  There are many Answer sites including Yahoo Answers, Mahalo Answers, Vark, Answerbag, and ChaCha. These are all excellent and useful services – but have as much to do with Hunch as Ofoto had to do with Flickr.&lt;/p&gt;
&lt;p&gt;There is no easy solution to avoid being pigeonholed.  All you can do is consistently, straightforwardly describe what you do, and then keep beating that drum over and over until the message gets through.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[If Verizon’s Droid is good, that’s bad for the wireless ecosystem]]></title><description><![CDATA[I carry around an iPhone and a Blackberry Tour.  I know that’s ridiculous. The iPhone is a great device on an awful network; the Tour is an…]]></description><link>https://cdixon.org/2009/10/18/if-verizons-droid-is-good-thats-bad-for-the-wireless-ecosystem</link><guid isPermaLink="false">https://cdixon.org/2009/10/18/if-verizons-droid-is-good-thats-bad-for-the-wireless-ecosystem</guid><pubDate>Sun, 18 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I carry around an iPhone and a Blackberry Tour.  I know that’s ridiculous. The iPhone is a great device on an awful network; the Tour is an awful device on a great network.  If the &lt;a href=&quot;http://www.techcrunch.com/2009/10/18/verizon-droid-is-the-real-deal/&quot;&gt;rumors are true&lt;/a&gt; and the Verizon “Droid” is a great device on a great network, I’ll be the first in line to get one.  But for the wireless ecosystem as a whole, it would be a bad thing.&lt;/p&gt;
&lt;p&gt;Some people are saying a great Droid would mean more competition amongst handsets.  But you can’t really choose a handset – you choose a handset-carrier pair.  The real innovation inhibitor in the cellular world has been the power of the carriers to dictate what devices you can use and what apps go on those devices.  Just ask an entrepreneur who tried to create handsets or cellular apps.  They are completely beholden to the whims of the carriers.&lt;/p&gt;
&lt;p&gt;Apple has gotten very close to breaking the carrier stranglehold – just look at how many people put up with AT&amp;#x26;T’s atrocious network to have one.  Had Verizon capitulated and accepted Apple’s presumably stringent terms in order to carry the iPhone, we might have finally started to see a true decoupling of handsets from carriers.&lt;/p&gt;
&lt;p&gt;Finally, don’t think just because the Droid runs Android it’s going to be truly open.  Verizon knows a truly open OS – one that allows you to run Google Voice, Skype, 3rd party SMS apps – would make their network a dumb pipe.  They’ve shown in the past they won’t let that happen.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Dow 10,000 and economic reflexivity]]></title><description><![CDATA[People who criticize Obama’s economic policies forget that, around the beginning of this year, a lot of serious people thought we were…]]></description><link>https://cdixon.org/2009/10/17/dow-10000-and-economic-reflexivity</link><guid isPermaLink="false">https://cdixon.org/2009/10/17/dow-10000-and-economic-reflexivity</guid><pubDate>Sat, 17 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;People who criticize Obama’s economic policies forget that, around the beginning of this year, a lot of serious people thought we were entering a second Great Depression.  Here are the Google News &lt;a href=&quot;http://www.google.com/trends?q=great+depression%2C+economic+recovery&amp;#x26;ctab=0&amp;#x26;geo=us&amp;#x26;geor=all&amp;#x26;date=all&amp;#x26;sort=0&quot;&gt;mentions&lt;/a&gt; of the words “Great Depression” (in blue) and “economic recovery” (in red) over the last three years:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-10-17 at 4.16.11 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Moreover, most experts thought we were being led into a Great Depression not by “fundamentals” but by the collapse of the financial system.&lt;/p&gt;
&lt;p&gt;Back around when Obama proposed his bank bailout plan (which was mostly an extension of Bush and Bernanke’s plan) he was widely &lt;a href=&quot;http://dealbook.blogs.nytimes.com/2009/03/23/mixed-reactions-to-toxic-asset-plan/&quot;&gt;criticized&lt;/a&gt;.  The consensus criticism was succinctly &lt;a href=&quot;http://www.nytimes.com/2009/04/01/opinion/01stiglitz.html?_r=1&quot;&gt;summarized&lt;/a&gt; by Nobel Laureate Joseph Steiglitz:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Paying fair market values for the assets will not work. Only by overpaying for the assets will the banks be adequately recapitalized. But overpaying for the assets simply shifts the losses to the government. In other words, the Geithner plan works only if and when the taxpayer loses big time.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Around this time, I happened to bump into an old friend who was working at a hedge fund where his full-time job was trading these so-called toxic assets (CDSs, CDOs, etc).  I asked him the trillion dollar question:  what did he think the “fair market value” for these assets was? Were they worth, say, 80 cents on the dollar as the banks were claiming, or 20 cents on the dollar as the bidders in the market were offering.&lt;/p&gt;
&lt;p&gt;His answer:  &lt;em&gt;These assets are essentially bets on home mortgages, which in turn are dependent on housing prices, which in turn are dependent on the economy, which in turn is highly dependent on whether the banks stay solvent, which is dependent on what these assets are worth.&lt;/em&gt;&lt;/p&gt;
&lt;p&gt;This circularity is not unique to these particular assets.  As George Soros has argued for decades, all economic systems are profoundly circular, a property that he calls &lt;a href=&quot;http://en.wikipedia.org/wiki/George_Soros#Reflexivity.2C_financial_markets.2C_and_economic_theory&quot;&gt;reflexivity&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;The bank bailouts were extremely &lt;a href=&quot;http://www.nytimes.com/2009/10/17/business/economy/17wall.html?hpw&quot;&gt;distasteful&lt;/a&gt; in many ways.  Lots of underserving people got rich.  Institutions that should have failed didn’t.  Dangerous “moral hazard” precedents were set. But the fact remains:  by altering perceptions, the Bush/Obama/Bernanke plan seems to have turned the second Great Depression into “merely” a bad recession.&lt;/p&gt;
&lt;p&gt;The Dow passed the symbolic milestone of 10,000 recently.  People who say it’s an illusion and doesn’t reflect economic fundamentals don’t understand that in economics, perception and fundamentals are inextricably linked.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What’s the relationship between cost and price?]]></title><description><![CDATA[What’s the relationship between price – the ability to charge for your product – and cost – how much it costs you to produce it? Price is a…]]></description><link>https://cdixon.org/2009/10/16/whats-the-relationship-between-cost-and-price</link><guid isPermaLink="false">https://cdixon.org/2009/10/16/whats-the-relationship-between-cost-and-price</guid><pubDate>Fri, 16 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;What’s the relationship between price – the ability to charge for your product – and cost – how much it costs you to produce it?&lt;/p&gt;
&lt;p&gt;Price is a function of supply and demand.  Notice the word “cost” doesn’t occur there.  It is true that cost is, over the long term, a lower bound for price – otherwise you’d go out of business.  It is also true that high upfront fixed costs can create barriers to entry and therefore lower supply.&lt;/p&gt;
&lt;p&gt;The only case in which price is determined by (variable) costs is in a commoditized market.  A market is commoditized when competing products are effectively interchangeable and therefore customers make decisions based solely on price.  In commoditized markets, price tends to converge toward cost.&lt;/p&gt;
&lt;p&gt;In non-commoditized markets, variable costs have no effect on price.  Most information technology companies are not commoditized, therefore variable cost and price are unrelated.  That is why there can exist companies like Google and Microsoft that are so insanely profitable.  If the cost of producing and distributing a copy of Microsoft Office dropped tomorrow, there is no reason to think that would affect their pricing.  The most profitable industry historically has been pharmaceuticals, because they are effectively granted monopolies, via patents, reducing the supply of a given drug to one.&lt;/p&gt;
&lt;p&gt;There are two ways people get confused about cost and price – a rudimentary way and a more advanced way.  The rudimentary way is confusing fixed and variable costs.  People who &lt;a href=&quot;http://gthing.net/the-true-price-of-sms-messages/&quot;&gt;gripe&lt;/a&gt; about the price/cost gap of SMS messages seem to not realize the telecom industry is like the movie industry in that they make huge upfront investments but have relatively low marginal costs.   I, for one, have always thought movies are a great deal – they spend $100M making a movie, I pay $12 to see it.  It would be silly to compare how much you pay to see a movie to the variable cost of projecting the movie.&lt;/p&gt;
&lt;p&gt;The more advanced way people get confused about cost and price is to think that because costs are dropping, prices will necessarily follow. For example, the cost of distributing newspapers has dropped almost to zero.  This is not the primary cause of the downfall of the newspaper industry.  The downfall of newspapers has been caused by a number of things – losing the classifieds business was huge – but mainly because when newspapers went online and were no longer able to partition the market geographically, supply in each region went up by orders of magnitudes.  Once the majority of newspapers go out of business causing supply to go way down, pricing power should return to the survivors.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What carries you up will also bring you down]]></title><description><![CDATA[In Rules of Thumb, Alan Weber quotes legendary venture capitalist John Doerr discussing the original business plans for companies he…]]></description><link>https://cdixon.org/2009/10/13/what-carries-you-up-will-also-bring-you-down</link><guid isPermaLink="false">https://cdixon.org/2009/10/13/what-carries-you-up-will-also-bring-you-down</guid><pubDate>Tue, 13 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In &lt;em&gt;&lt;a href=&quot;http://www.amazon.com/Rules-Thumb-Winning-Business-Without/dp/0061721832&quot;&gt;Rules of Thumb&lt;/a&gt;&lt;/em&gt;, Alan Weber quotes legendary venture capitalist John Doerr discussing the original business plans for companies he invested in such as Google, Intuit, and Amazon:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In every case you can find the one sentence or paragraph that describes their unique business model advantage.  It could be their unique distribution system or the retailing model.  It’s the factor that accounts for their success. &lt;strong&gt;It turns out the factor that explains their success at the beginning is what accounts for their failure later.&lt;/strong&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;As a former philosophy student, I was reminded of Aristotle’s concept of “&lt;a href=&quot;http://en.wikipedia.org/wiki/Hamartia&quot;&gt;hamartia&lt;/a&gt;,” sometimes known as a “fatal flaw”:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;In Aristotle’s understanding, all tragic heroes have a “hamartia,” but this is not inherent in their characters, for then the audience would lose respect for them and be unable to pity them; likewise, if the hero’s failing were entirely accidental and involuntary, the audience would not fear for the hero. &lt;strong&gt;Instead, the character’s flaw must result from something that is also a central part of their virtue, which goes somewhat awry, usually due to a lack of knowledge.&lt;/strong&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;It’s an interesting exercise to apply this principle to technology companies:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Google’s strength is its uber-engineering mindset.  This seems to increasingly be a liability as the web becomes ever more social.&lt;/li&gt;
&lt;li&gt;Yahoo’s strength was its breadth.  Now they call it the “&lt;a href=&quot;http://online.wsj.com/public/article/SB116379821933826657-0mbjXoHnQwDMFH_PVeb_jqe3Chk_20061125.html&quot;&gt;peanut butter&lt;/a&gt;” problem.&lt;/li&gt;
&lt;li&gt;AOL’s strength was being a closed garden.  As users became internet savvy, they were no longer afraid of venturing outside of it.&lt;/li&gt;
&lt;li&gt;Apple’s strength lies in its genius, authoritarian leader.  Apple’s decline will begin when he leaves (sadly).&lt;/li&gt;
&lt;li&gt;Facebook’s strength is authenticity and privacy – your friends are (mostly) your real friends, and only they see your activity.  Facebook has been trying to respond to Twitter’s rise with “open” features like the public micro-messaging.   It remains to be seen whether they can successfully go against their own core strengths.  I’m skeptical, but give them credit for trying.&lt;/li&gt;
&lt;li&gt;Twitter’s strength is its simplicity and openness.  Will its openness be its downfall?  For example, will Twitter end up &lt;a href=&quot;http://www.cdixon.org/?p=913&quot;&gt;fighting&lt;/a&gt; its apps?  Or will it be its simplicity?&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;This principle also implies how to use incumbents’ strengths against them (sometimes &lt;a href=&quot;http://harvardbusiness.org/product/judo-strategy-turning-your-competitors-strength-to/an/2530-HBK-ENG&quot;&gt;called&lt;/a&gt; the “Judo Strategy”).  In the chess game of competitive strategy, you can usually bet that incumbents won’t make moves that undermine their core strengths – until it’s too late.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Understanding your market]]></title><description><![CDATA[Some startups become huge sensations without requiring any active marketing – YouTube, Skype, and Twitter come to mind. However, the vast…]]></description><link>https://cdixon.org/2009/10/11/understanding-your-market</link><guid isPermaLink="false">https://cdixon.org/2009/10/11/understanding-your-market</guid><pubDate>Sun, 11 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Some startups become huge sensations without requiring any active marketing – YouTube, Skype, and Twitter come to mind. However, the vast majority of successful startups gained adoption through marketing:  PR, SEO, partnerships, paid marketing, and so on. My strong suggestion would be to hope for the former but plan for the latter.&lt;/p&gt;
&lt;p&gt;Marketing is a huge topic.  Here I just want to make the point that, for starters, you need to figure out two things:   1) how information and influence flows in your market, and 2) when and where people use and/or purchase your product.&lt;/p&gt;
&lt;p&gt;I’ll use my last startup, SiteAdvisor, as an example.  SiteAdvisor (now called &lt;a href=&quot;http://www.siteadvisor.com/&quot;&gt;McAfee SiteAdvisor&lt;/a&gt;) is a consumer security product.  Most consumers don’t learn about security products on their own.  Instead, they rely on their “family/friend sysadmin” (smartest computer person they know).  These family sysadmins read technical websites and magazines.  In order to reach this audience, we performed studies on data we had collected, which led to &lt;a href=&quot;http://www.cdixon.org/press2.html&quot;&gt;lots&lt;/a&gt; &lt;a href=&quot;http://developers.slashdot.org/article.pl?sid=06/01/15/0141236&quot;&gt;of&lt;/a&gt; &lt;a href=&quot;http://it.slashdot.org/article.pl?sid=06/05/12/1835215&quot;&gt;coverage&lt;/a&gt;, which raised our profile and bolstered our credibility.&lt;/p&gt;
&lt;p&gt;Now to when and where people buy security products.  Most people only think about security when 1) they buy a new computer, 2) they first get internet access, or 3) they get a virus or other security problem.  The last case is actually pretty rare, so most companies focus on 1 and 2.  How do you reach people at those moments?  Through “channels” – in particular PC makers (“OEMs”) and internet providers (“ISPs”).  (For public market people:  focusing on these two channels was McAfee’s big insight in the 2000′s and how they made a comeback versus Symantec who dominates retail).&lt;/p&gt;
&lt;p&gt;Most people don’t talk to their friends about security products so it’s very hard to do mass word-of-mouth marketing.  (Exceptions would be the beginning of the spyware epidemic around 2001-2 when AdAware got super popular via word of mouth).  So you have to understand and pitch to these channels.&lt;/p&gt;
&lt;p&gt;These observations are specific to consumer security, but every startup should have a similar theory of how to market their product.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Man and superman]]></title><description><![CDATA[There are two broad philosophical approaches to explaining the forces that drive world events. The first one is sometimes called the Great…]]></description><link>https://cdixon.org/2009/10/10/man-and-superman</link><guid isPermaLink="false">https://cdixon.org/2009/10/10/man-and-superman</guid><pubDate>Sat, 10 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There are two broad philosophical approaches to explaining the forces that drive world events. The first one is sometimes called &lt;a href=&quot;http://en.wikipedia.org/wiki/Great_man_theory&quot;&gt;the Great man theory&lt;/a&gt;, neatly summarized by the quote ”the history of the world is but the biography of great men.”  This view was famously espoused by the philosopher Hegel and later Nietzche, who called such great people &lt;em&gt;Ubermenchen&lt;/em&gt; (“supermen”).&lt;/p&gt;
&lt;p&gt;The alternative view argues that history is largely determined by a complex series of societal, political, institutional, technological and other forces.  This view argues that great people are more a product of their time than the times are a product of them.&lt;/p&gt;
&lt;p&gt;You can apply these theories to companies, in particular to the founders of technology companies who keep their companies great long after their “natural” life cycle.  Most successful companies start with one great product and ride its growth but fail to pull off a second act.&lt;/p&gt;
&lt;p&gt;The companies that defy this natural cycle are invariable run by “supermen” (or women).  Akio Morita founded Sony in 1946 and was a very active CEO until 1994.   At the time he left, Sony had a $40B market cap.  Today it is valued at $28B.  Akio had an incredible run of hit products: the first transistor radio, the first transistor television, the Walkman, the first video cassette recorder, and the compact disc. Akio ran Sony based on his intuitions.  For example, he ignored focus groups that &lt;a href=&quot;http://memehuffer.typepad.com/meme_huffer/2007/12/great-quotes-fo.html%20&quot;&gt;hated&lt;/a&gt; the Walkman, saying:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;&lt;em&gt;“\&lt;/em&gt;We don’t ask consumers what they want. They don’t know. Instead we apply our brain power to what they need, and _will_ want, and make sure we’re there, ready”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Steve Jobs co-founded Apple in 1976.  He was pushed out in in May 1985 when the company was valued at about $2.2B.  He returned in 1996 when Apple was worth $3B.  Today it is worth $169B.  Jobs famously micromanages every product detail and like Akio makes decisions based on intuitions.&lt;/p&gt;
&lt;p&gt;Bill Gates was the co-founder and CEO of Microsoft, building it to an astounding $470B market cap.  Under him, Microsoft had multiple acts, among them:  DOS, Windows, Office, and enterprise server software.  Since Steve Ballmer became CEO, the company’s value has declined to $223B. I’m sure Steve Ballmer is a smart and &lt;a href=&quot;http://www.youtube.com/watch?v=wvsboPUjrGc&quot;&gt;passionate&lt;/a&gt; guy, but he’s no superman.&lt;/p&gt;
&lt;p&gt;Some observers like the author Jim Collins think great companies are all about culture, not a singularly great leader.  Collin’s “built to last” case study companies included Circuit City and Fannie Mae, both of which have been catastrophic failures.  His “portfolio” &lt;a href=&quot;http://www.bloggingstocks.com/2009/02/23/from-good-to-great-to-bankruptcy-jim-collins-book-revisited/&quot;&gt;has&lt;/a&gt; underperformed to S&amp;#x26;P.&lt;/p&gt;
&lt;p&gt;It is convenient to think you can take greatness and bottle it up and sell it in a book.   In fact, life is unfair:  there are geniuses and then there are the rest of us.  When great leaders go away, so does the greatness of their companies.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The importance of asking people questions]]></title><description><![CDATA[Andy Weissman’s blog has the tagline “Maximizing the serendipity around you.”  It’s a good philosophy.  I think one of the simplest ways to…]]></description><link>https://cdixon.org/2009/10/06/the-importance-of-asking-people-questions</link><guid isPermaLink="false">https://cdixon.org/2009/10/06/the-importance-of-asking-people-questions</guid><pubDate>Tue, 06 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Andy Weissman’s &lt;a href=&quot;http://blog.aweissman.com/&quot;&gt;blog&lt;/a&gt; has the tagline “Maximizing the serendipity around you.”  It’s a good philosophy.  I think one of the simplest ways to do this is to ask people lots of questions when you meet them.  I’m surprised how often people fail to do this.  Besides being good manners, it’s also an efficient way to learn about the world and sometimes make important discoveries and connections.&lt;/p&gt;
&lt;p&gt;About 6 years ago, when I was working at &lt;a href=&quot;http://bvp.com/&quot;&gt;Bessemer&lt;/a&gt; as junior investor, I was at a dinner with a group of friends and acquaintances.  The guy sitting next to me was a business school student who spent most of the dinner talking about how he was trying to get a job in venture capital.  He never bothered to ask me what I did for a living and I never mentioned it.&lt;/p&gt;
&lt;p&gt;Now, I wasn’t a particularly important venture capitalist, but &lt;a href=&quot;http://www.cdixon.org/?p=732&quot;&gt;getting a job in the industry&lt;/a&gt; is all about meeting as many people who work in it as you can.  The fact that he happened to be sitting next to one was potentially serendipitous – had he only bothered to ask questions.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The problem with online “local” businesses]]></title><description><![CDATA[One of the most popular areas for startups today is “local.”  I probably see a couple of business plans a week that involve local search…]]></description><link>https://cdixon.org/2009/10/02/the-problem-with-online-local-businesses</link><guid isPermaLink="false">https://cdixon.org/2009/10/02/the-problem-with-online-local-businesses</guid><pubDate>Fri, 02 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the most popular areas for startups today is “local.”  I probably see a couple of business plans a week that involve local search, local news, local online advertising, etc.&lt;/p&gt;
&lt;p&gt;Here’s the biggest challenge with local.  Let’s say you create a great service that users love and it gets popular.  Yelp has done this. Maybe Foursquare, Loopt etc. will do this.  Now you want to make money. It’s very hard to charge users so you want to charge local businesses instead.&lt;/p&gt;
&lt;p&gt;The problem is that, for the most part, these local business either don’t think of the web as an important medium or don’t understand how to use it.  Ask you nearest restaurant owner or dry cleaner about online advertising.  They don’t see it as critical and/or are confused about it.  Even Google has barely monetized local.&lt;/p&gt;
&lt;p&gt;People who have been successful monetizing local have done it with outbound call centers.   The problem with that approach is it’s expensive.  Even if you succeed in getting local businesses to pay you, it often costs you more to acquire them than you earn over the lifetime of the relationship.&lt;/p&gt;
&lt;p&gt;To add insult to injury, local businesses often have very high churn rates.  I have heard that the average is as high as 40%.  Anyone who has done “lifetime customer value analysis” can tell you how that ruins the economics of recurring revenue businesses.&lt;/p&gt;
&lt;p&gt;Hopefully this will change in time as local businesses come to see the web as a critical advertising medium and understand how to make it work for them.  But for now, monetizing local is a really tough slog.&lt;/p&gt;
&lt;p&gt;* This is what I hear from industry sources.  If readers have better numbers or sources I’d love to hear them.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why does it matter that Twitter is supplanting RSS?]]></title><description><![CDATA[The other day I claimed that Twitter is supplanting RSS, and that long term that’s a bad thing.  Andrew Weissman had a very reasonable…]]></description><link>https://cdixon.org/2009/10/01/why-does-it-matter-that-twitter-is-supplanting-rss</link><guid isPermaLink="false">https://cdixon.org/2009/10/01/why-does-it-matter-that-twitter-is-supplanting-rss</guid><pubDate>Thu, 01 Oct 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The other day &lt;a href=&quot;http://www.cdixon.org/?p=1284&quot;&gt;I claimed&lt;/a&gt; that Twitter is supplanting RSS, and that long term that’s a bad thing.  &lt;a href=&quot;http://blog.aweissman.com/&quot;&gt;Andrew Weissman&lt;/a&gt; had a very reasonable &lt;a href=&quot;http://www.cdixon.org/?p=1284#comment-17842697&quot;&gt;response&lt;/a&gt;:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Twitter is the most open application people are currently using. It’s open on the way in and the way out. The variety of applications using the Twitter api are astounding in that they cover many use cases.&lt;/p&gt;
&lt;p&gt;Given that, why will Ashton and Oprah someday care?&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The problem is Twitter isn’t really open.  &lt;strong&gt;For Twitter to be truly open, it would have to be possible to use “Twitter” without an any way involving Twitter the institution.&lt;/strong&gt; Instead, all data goes through Twitter’s centralized service.   Today’s dominant core internet services – the web (HTTP), email (SMTP), and subscription messaging (RSS) - are open protocols that are distributed across millions of institutions.  If Twitter supplants RSS, it will be the first core internet service that has a single, for-profit gatekeeper.&lt;/p&gt;
&lt;p&gt;Why would this matter to Ashton or Oprah?  Imagine if Microsoft Exchange server wasn’t just an instantiation of SMTP but was a centralized service that all email had to pass through.  A single institution is never as reliable as a system distributed across millions of institutions.   Nor is it as secure – for example, a distributed denial-of-service attack can much more easily bring down one service than the entire internet.&lt;/p&gt;
&lt;p&gt;But most importantly, having one company control a core internet service hinders competition and therefore innovation.  To continue the Microsoft Exchange analogy – do you think in that world we would have such a diverse email ecosystem if everyone had to go through Microsoft to build stuff?&lt;/p&gt;
&lt;p&gt;And this is all true while we are still living in the fantasy land where everything involving Twitter is free.  At some point Twitter will need to make lots of money to justify their valuation.  Then we can really assess the impact of having a single company control a core internet service.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Twitter killed RSS (and that’s a bad thing)]]></title><description><![CDATA[I’ve used Google Reader religiously since it launched.  I’m a few days away from quitting it forever.  Pretty much every blog I read tweets…]]></description><link>https://cdixon.org/2009/09/29/twitter-killed-rss-and-thats-a-bad-thing</link><guid isPermaLink="false">https://cdixon.org/2009/09/29/twitter-killed-rss-and-thats-a-bad-thing</guid><pubDate>Tue, 29 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve used Google Reader religiously since it launched.  I’m a few days away from quitting it forever.  Pretty much every blog I read tweets the titles of their posts along with a link.  Better yet, the people I follow retweet their favorite links, providing a very efficient way for me to discover new articles to read and publishers to follow.&lt;/p&gt;
&lt;p&gt;Contrary to all the uninformed handwringing about how Twitter is making people dumb, I find I’m reading more long form blog and newspaper content than ever.   And the stuff I’m reading is more interesting and relevant.  That’s a good thing.&lt;/p&gt;
&lt;p&gt;Meanwhile, Google Reader has been desperately adding social features such as sharing starred posts and automatically recommending blogs.  These features are clumsy and won’t save Reader, or RSS, from its inevitable decline.&lt;/p&gt;
&lt;p&gt;Although I’m generally happier as a user, I think all of this is bad for the internet.  Twitter isn’t an open protocol.   It’s a private company with a profit motive that has a history of unreliable service. Moreover, URL shorteners – a byproduct of Twitter – are effectively &lt;a href=&quot;http://joshua.schachter.org/2009/04/on-url-shorteners.html&quot;&gt;creating&lt;/a&gt; a second layer DNS service that is far less secure and reliable.&lt;/p&gt;
&lt;p&gt;I know that many people have been calling for an open alternative to Twitter for a long time.  I support them, but I’m afraid it’s too late. The network effects of Twitter’s social graph are just too strong.  Not to mention its brand momentum.  But the biggest reason Twitter has won is that mainstream users don’t care enough about these “principled” objections to switch.  Do you think Ashton or Oprah cares about open protocols?  I doubt it.&lt;/p&gt;
&lt;p&gt;But someday they will care – when the internet is less open, less reliable and less secure.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why content sites are getting ripped off]]></title><description><![CDATA[A commenter on my blog the other day (Tim Ogilvie) mentioned a distinction that I found really interesting between intent generation and…]]></description><link>https://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off</link><guid isPermaLink="false">https://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off</guid><pubDate>Tue, 29 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A commenter on my blog the other day (&lt;a href=&quot;http://www.cdixon.org/?p=1179#comment-17638191&quot;&gt;Tim Ogilvie&lt;/a&gt;) mentioned a distinction that I found really interesting between &lt;strong&gt;intent generation&lt;/strong&gt; and &lt;strong&gt;intent harvesting&lt;/strong&gt;.  This distinction is critical for understanding how internet advertising works and why it is broken.  It also helps explain why sites like the newspapers, blogs, and social networks are getting unfairly low advertising revenues.&lt;/p&gt;
&lt;p&gt;Today’s link economy is built around &lt;em&gt;purchasing intent harvesting&lt;/em&gt;.  (Worse still, it’s all based on &lt;em&gt;last click&lt;/em&gt; intent harvesting- but that is for another blog post).  Most of this happens on search engines or through affiliate programs.  Almost no one decides which products to buy based on Google searches or affiliate referrers.  &lt;a href=&quot;http://www.admonsters.com/blog/people-performance-not-pages-prices&quot;&gt;They decide based on content sites&lt;/a&gt; – Gizmodo, New York Times, Twitter, etc.  Those sites generate intent, which is the most important part of creating &lt;a href=&quot;http://www.cdixon.org/?p=1179&quot;&gt;purchasing intent&lt;/a&gt;, which is directly correlated to high advertising revenues.&lt;/p&gt;
&lt;p&gt;But content sites have no way to track their role in generating purchasing intent.  Often intent generation doesn’t involve a single trackable click.  Even if there were some direct way to measure intent generation, doing so would be seen by many today as a blurring of the the advertising/editorial line.  So content sites are left only with impression-based display ads, haggling over CPMs without a meaningful measurement of their impact on generating purchasing intent.&lt;/p&gt;
&lt;p&gt;All of this has caused a massive shift in revenues from the top to the bottom of the purchasing funnel – from intent generators to intent harvesters.  Somehow this needs to get fixed.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The new economy]]></title><description><![CDATA[According to the Business Insider, Facebook is “‘Beating The S— Out Of Its Numbers’ Thanks To Zynga’s Virtual Goods.”  I wanted to try to…]]></description><link>https://cdixon.org/2009/09/28/the-new-economy</link><guid isPermaLink="false">https://cdixon.org/2009/09/28/the-new-economy</guid><pubDate>Mon, 28 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;According to the &lt;a href=&quot;http://www.businessinsider.com/facebook-beating-the-s-out-of-its-numbers-thanks-to-zyngas-virtual-goods-2009-9&quot;&gt;Business Insider&lt;/a&gt;, Facebook is “‘Beating The S— Out Of Its Numbers’ Thanks To Zynga’s Virtual Goods.”  I wanted to try to understand this new, emerging economy.&lt;/p&gt;
&lt;p&gt;It all starts when a user sees an ad on Facebook:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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  &gt;&lt;/span&gt;
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        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 40 41 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.40.41 PM&quot;
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  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.40.41 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;After clicking and installing the app, she gets a little farm where she can grow tomatoes and such.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 96.95945945945947%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 43 08 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.43.08 PM&quot;
        src=&quot;/static/3a4d91411958138f8427089d9a731f35/ffc89/screen-shot-2009-09-28-at-1-43-08-pm.png&quot;
        srcset=&quot;/static/3a4d91411958138f8427089d9a731f35/924ad/screen-shot-2009-09-28-at-1-43-08-pm.png 170w,
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        sizes=&quot;(max-width: 296px) 100vw, 296px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.43.08 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Game seems pretty fun.  But she runs out of seeds, and wants more.  So she goes shopping for virtual goods.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a502a58a3427a5f4e7d49deb20482ceb/9fa2c/screen-shot-2009-09-28-at-1-39-17-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 48.92761394101877%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 39 17 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.39.17 PM&quot;
        src=&quot;/static/a502a58a3427a5f4e7d49deb20482ceb/94a55/screen-shot-2009-09-28-at-1-39-17-pm.png&quot;
        srcset=&quot;/static/a502a58a3427a5f4e7d49deb20482ceb/924ad/screen-shot-2009-09-28-at-1-39-17-pm.png 170w,
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/static/a502a58a3427a5f4e7d49deb20482ceb/9fa2c/screen-shot-2009-09-28-at-1-39-17-pm.png 746w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.39.17 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Let’s say our protagonist is too young to have a credit card, so she decides instead to buy coins by signing up for a free offer.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 669px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 31.091180866965622%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,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&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 39 25 pm&quot;
        title=&quot;Screen shot 2009-09-28 at 1.39.25 PM&quot;
        src=&quot;/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png&quot;
        srcset=&quot;/static/245282258c5c043e7ba048ded09b9434/924ad/screen-shot-2009-09-28-at-1-39-25-pm.png 170w,
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      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.39.25 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;She decides to download a toolbar.  Free greeting cards seem like fun.&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/d1578e6c0e0b64752f1e58a96ff56bdb/04907/screen-shot-2009-09-28-at-1-39-56-pm1.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 13.572343149807939%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAIAAAAcOLh5AAAACXBIWXMAAAsTAAALEwEAmpwYAAAAuklEQVQI1xXHaw+BUBgA4P7/TzBfzFziUFOG5DJLFOVyvM6OU1gskXIZm9ls+PY8HCwsAIuQyXxmYmKHkYeXtuuAwxYOw4zi7Ro+7+Aau9GJRqdVfGa32P03XHEZPiVVRFEs5YtIruQ0NYlQhud5hAqCIKSzJb3feT1osDd9z/B3hu8Nf95t9OhocbJcbtQltVlrt1WlLhVzCUWpAsz0sa0NDMMcETK9X4Auuw7tEdxaM+0WQ3iYvJ70CzMnkOZRnj9ZAAAAAElFTkSuQmCC&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 1 39 56 pm1&quot;
        title=&quot;Screen shot 2009-09-28 at 1.39.56 PM&quot;
        src=&quot;/static/d1578e6c0e0b64752f1e58a96ff56bdb/94a55/screen-shot-2009-09-28-at-1-39-56-pm1.png&quot;
        srcset=&quot;/static/d1578e6c0e0b64752f1e58a96ff56bdb/924ad/screen-shot-2009-09-28-at-1-39-56-pm1.png 170w,
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        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 1.39.56 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The download puts an Ask.com search toolbar in the user’s browser.  Ask.com makes money off search ads.  Ask probably paid $1 to $2 for the install.  Some portion of that goes to Zynga, and then back to Facebook when Zynga advertises.&lt;/p&gt;
&lt;p&gt;Farmville apparently does not advertise on Ask.com:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
    &gt;
      &lt;a
    class=&quot;gatsby-resp-image-link&quot;
    href=&quot;/static/a7aff6fe96497bd57856ee17060d2ede/3b243/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png&quot;
    style=&quot;display: block&quot;
    target=&quot;_blank&quot;
    rel=&quot;noopener&quot;
  &gt;
    &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 39.55078125%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAICAIAAAB2/0i6AAAACXBIWXMAAAsSAAALEgHS3X78AAABB0lEQVQY042N23aCMBBF+f8PsX/St7bqQrxFMAIBDGZyTzApFF/b2tU958yal70myV4W+HikIIUduPFcWZDWOPd2YovXJm8NU0H7qH5LAh2luLxeGlp1lFChPChPwfXC93KQNggd5q1dcPf4LQmDO8pNVVtnwziO0zTFOJaNVybOdw930g3GxGH4nH6QtFStD+R4gboDqQVXggsRQpz+QVI18JHh5a7KS0JZ195a4GCt9d5ZY7TW3vunctO06Tbd7LboVGB8ngefH0UIYXyhtJdSPv9M4H1dZId6ualR0aOC7lF7pTcAEEIwxpRST+WyIqss3aL9apeiMsekvDHO2GxK/gD+kL8AII7FxRraFEMAAAAASUVORK5CYII=&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;screen shot 2009 09 28 at 2 03 02 pm 1024x405&quot;
        title=&quot;Screen shot 2009-09-28 at 2.03.02 PM&quot;
        src=&quot;/static/a7aff6fe96497bd57856ee17060d2ede/94a55/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png&quot;
        srcset=&quot;/static/a7aff6fe96497bd57856ee17060d2ede/924ad/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 170w,
/static/a7aff6fe96497bd57856ee17060d2ede/f570f/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 341w,
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/static/a7aff6fe96497bd57856ee17060d2ede/3b243/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 1024w&quot;
        sizes=&quot;(max-width: 681px) 100vw, 681px&quot;
        loading=&quot;lazy&quot;
      /&gt;
  &lt;/a&gt;
    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-28 at 2.03.02 PM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;Thereby preventing the entire new internet economy from imploding in an endless cycle of circularity.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[What if online business model innovation is slowing down?]]></title><description><![CDATA[There is a widely held assumption that new business models will continue to emerge online – that statements like “how will Twitter ever make…]]></description><link>https://cdixon.org/2009/09/28/what-if-online-business-model-innovation-is-slowing-down</link><guid isPermaLink="false">https://cdixon.org/2009/09/28/what-if-online-business-model-innovation-is-slowing-down</guid><pubDate>Mon, 28 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There is a widely held assumption that new business models will continue to emerge online – that statements like “how will Twitter ever make money?” will look as silly in 10 years as similar &lt;a href=&quot;http://www.cdixon.org/?p=1179&quot;&gt;statements&lt;/a&gt; made 10 years ago about Google look now.&lt;/p&gt;
&lt;p&gt;There is no question that, if they wanted to, Twitter could make tens of millions of dollars tomorrow, by, say, running ads or by licensing data feeds.   The big question is whether Twitter and other social media sites will figure out how to make Google-scale money and not just Facebook-scale money.  Google and Facebook get (ballpark) the same number of monthly visits to their sites.  Facebook made hundreds of millions of dollars last year and reportedly lost money.   Google made over $22B last year with huge profit margins.&lt;/p&gt;
&lt;p&gt;The optimistic view (which I tend to hold myself) says that where people spend time, money will follow.  If people are spending all their time on Facebook and Twitter, the Proctor and Gamble’s of the world will eventually find an effective way to shift the bulk of their ad spending online.   The tacit assumption in this view is that the next 15 years will see as much business model innovation as the last 15 years.&lt;/p&gt;
&lt;p&gt;On the other hand, what if we are mostly done creating big new business models for the web? History suggests that business model innovation is rapid right after the advent of a new medium and then slows down considerably.   If indeed it is slowing down, social media could end up like instant messaging – incredibly popular but basically lousy at monetizing.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Online advertising is all about purchasing intent]]></title><description><![CDATA[A while ago I dug up this quote from Business Week from 2000: But how will Google ever make money? There’s the rub. The company’s adamant…]]></description><link>https://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent</link><guid isPermaLink="false">https://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent</guid><pubDate>Sun, 27 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A while ago I &lt;a href=&quot;http://www.cdixon.org/?p=138&quot;&gt;dug up&lt;/a&gt; this quote from &lt;a href=&quot;http://www.businessweek.com/bwdaily/dnflash/dec2000/nf2000127_947.htm&quot;&gt;Business Week&lt;/a&gt; from 2000:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;But how will Google ever make money? There’s the rub. The company’s adamant refusal to use banner or other graphical ads eliminates what is the most lucrative income stream for rival search engines. Although Google does have other revenue sources, such as licensing and text-based advertisements, the privately held company’s business remains limited compared with its competitors’.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;We now know what people were missing back then and why Google generates such massive revenues from advertising.  The lesson is that the RPMs* of online ads are directly proportional to the degree** to which the user has &lt;strong&gt;purchasing intent&lt;/strong&gt;.  This is why when you search Google for “&lt;a href=&quot;http://www.google.com/search?client=safari&amp;#x26;rls=en&amp;#x26;q=cameras&amp;#x26;ie=UTF-8&amp;#x26;oe=UTF-8&quot;&gt;cameras&lt;/a&gt;” you’ll see ads everywhere (and those advertisers are paying high CPCs), but when you search for “&lt;a href=&quot;http://www.google.com/search?client=safari&amp;#x26;rls=en&amp;#x26;q=abraham+lincoln&amp;#x27;s+birthday&amp;#x26;ie=UTF-8&amp;#x26;oe=UTF-8&quot;&gt;Abraham Lincoln’s birthday&lt;/a&gt;” Google doesn’t even bother to show ads at all.&lt;/p&gt;
&lt;p&gt;This is also why Nextag will have revenues this year in the ballpark of Facebook’s revenues, even though Nextag gets a fraction of the visits:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
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  &gt;&lt;/span&gt;
  &lt;img
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        alt=&quot;screen shot 2009 09 27 at 9 33 10 am&quot;
        title=&quot;Screen shot 2009-09-27 at 9.33.10 AM&quot;
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;Screen shot 2009-09-27 at 9.33.10 AM&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;When people talk about search being a great business model (for, say, Twitter), they should distinguish between search with puchasing intent, which is an incredible business model, and search without purchasing intent, which is a terrible one.&lt;/p&gt;
&lt;p&gt;This may change as brand advertising moves to the web.  But for now web advertising is dominated by “direct response” ads, and those are all about purchasing intent.&lt;/p&gt;
&lt;p&gt;* RPMs = revenue per thousand impressions – can we please agree to start saying RPMs instead of CPMs or eCPMs?  :)&lt;/p&gt;
&lt;p&gt;** degree being how close the user is to actually purchasing multiplied by the profit margin on what they are purchasing&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Yahoo should invest in products, not advertising]]></title><description><![CDATA[For 10 years, Yahoo was my default home page.  Now I can barely stand using the site.  I still use it for Finance and Flickr, but that’s it…]]></description><link>https://cdixon.org/2009/09/26/yahoo-should-invest-in-products-not-advertising</link><guid isPermaLink="false">https://cdixon.org/2009/09/26/yahoo-should-invest-in-products-not-advertising</guid><pubDate>Sat, 26 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;For 10 years, Yahoo was my default home page.  Now I can barely stand using the site.  I still use it for Finance and Flickr, but that’s it. The &lt;a href=&quot;http://m.www.yahoo.com/&quot;&gt;new&lt;/a&gt; home page design has windows popping up everywhere and mind numbing celebrity gossip up top.&lt;/p&gt;
&lt;p&gt;Now we learn Yahoo is going to &lt;a href=&quot;http://www.guardian.co.uk/business/2009/sep/22/yahoo-100m-campaign-challenge-google&quot;&gt;spend $100 million&lt;/a&gt; on an advertising campaign.  The slogan is “It’s Y!ou” which sounds like one of those meaningless taglines invented by PR firms.  I’m quite sure no one will remember it and their money will be wasted (quick, name the tagline of any big tech company).&lt;/p&gt;
&lt;p&gt;By CEO Carol Bartz’s own &lt;a href=&quot;http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/22/BUQP19QVSI.DTL&amp;#x26;type=tech&quot;&gt;admission&lt;/a&gt;, Yahoo is incredibly well known, especially outside of techie circles:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;When you get outside of New York City and Silicon Valley, everybody loves Yahoo…. We do great things for [users] and we’re excited about what we are.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Yes, Yahoo has one of the best brands on the web. Which is precisely why they shouldn’t be spending $100M on branding.  That’s the last thing Yahoo needs.  What they need are new technologies, new revenue streams, and new products that people love.  If they can’t build those things themselves, then they should acquire them.  They’re coasting on inertia right now.  As we saw with AOL and countless other tech companies before them, that inertia will be lost if they fail to innovate.&lt;/p&gt;
&lt;p&gt;I think the Yahoo-Bing search deal is a great thing for startups as it potentially makes search competitive again.  But as a longtime Yahoo user it makes me kind of sad.  Between the branding campaign and the search deal, it feels like Yahoo has thrown in the towel.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Software patents should be abolished]]></title><description><![CDATA[The alleged societal benefit of patent law is that it creates a financial incentive to innovate.  The societal drawback is that it reduces…]]></description><link>https://cdixon.org/2009/09/24/software-patents-should-be-abolished</link><guid isPermaLink="false">https://cdixon.org/2009/09/24/software-patents-should-be-abolished</guid><pubDate>Thu, 24 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The alleged societal benefit of patent law is that it creates a financial incentive to innovate.  The societal drawback is that it reduces competition, reduces the spread of innovation, and creates deadweight legal costs.&lt;/p&gt;
&lt;p&gt;Perhaps patents are necessary in the pharmaceutical industry.  I know very little about that industry but it would seem that some sort of temporary grants of monopoly are necessary to compel companies to spend billions of dollars of upfront R&amp;#x26;D.&lt;/p&gt;
&lt;p&gt;What I do know about is the software/internet/hardware industry. And I am absolutely sure that if we got rid of patents tomorrow innovation wouldn’t be reduced at all, and the only losers would be lawyers and patent trolls.&lt;/p&gt;
&lt;p&gt;Ask any experienced software/internet/hardware entrepreneur if she wouldn’t have started her company if patent law didn’t exist.  Ask any experienced venture investor if the non-existence of patent law would have changed their views on investments they made.  The answer will invariably be no (unless their company was a patent troll or something related).&lt;/p&gt;
&lt;p&gt;Yes, most venture-backed companies file patents (I have filed them myself), but this is because 1) patents can have some defensive value, 2) they can grease the wheels of an acquisition (mostly because big companies want a large patent portfolio for defensive purposes), and 3) occasionally failed startups will get funded by investors whose intention is to go around suing people (hence providing “downside value” for the initial investors).&lt;/p&gt;
&lt;p&gt;Articles like &lt;a href=&quot;http://www.nytimes.com/2009/09/21/technology/21patent.html&quot;&gt;this&lt;/a&gt; recent one in New York Times promote the urban myth that the main beneficiary of patents are lone inventors whose idea is stolen by the big guys.  I have no special knowledge of the situation referred to, but I find it hard to believe in 1995 the idea of tying GPS to mobile devices wasn’t obvious to anyone in the field.   Almost all software and technology patents that I’ve ever come across are similarly obvious to practitioners at that time.  In theory obviousness is grounds for disallowing patents, but in practice patent examiners grants tons of &lt;a href=&quot;http://www.techdirt.com/articles/20090119/1449403453.shtml&quot;&gt;silly&lt;/a&gt; patents.&lt;/p&gt;
&lt;p&gt;Take the &lt;a href=&quot;http://money.cnn.com/2006/03/03/technology/rimm_ntp/&quot;&gt;case&lt;/a&gt; of Blackberry and NTP.   NTP is a “patent holding company” – a patent troll – whose sole purpose is to sue people.  Now, I’ve been around long enough to know that the idea of mobile email is as old as email itself.  What RIM did was &lt;em&gt;they actually went and made it a reality&lt;/em&gt;.  They figured out how to make a simple device that people loved, how to market it, and how to convince investors to give them money for what probably at the time seemed like an overwhelmingly difficult project.  The founders of RIM are the heroes of the story.   They didn’t need to sue anyone because they built a product and made money by actually selling a product people wanted.&lt;/p&gt;
&lt;p&gt;How did having patents help society here?  NTP never tried to build any products.  No one is claiming RIM took the idea from them.  The only beneficiaries here are a company that never built anything and a lot of lawyers.&lt;/p&gt;
&lt;p&gt;Software/internet/hardware patents have no benefit to society and should be abolished.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Climbing the wrong hill]]></title><description><![CDATA[I know a brilliant young kid who graduated from college a year ago and now works at a large investment bank. He has decided he hates Wall…]]></description><link>https://cdixon.org/2009/09/19/climbing-the-wrong-hill</link><guid isPermaLink="false">https://cdixon.org/2009/09/19/climbing-the-wrong-hill</guid><pubDate>Sat, 19 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I know a brilliant young kid who graduated from college a year ago and now works at a large investment bank. He has decided he hates Wall Street and wants to work at a tech startup (good!). He recently gave notice to his bosses, who responded by putting on a dog and pony show to convince him to stay. If he stays at the bank, the bosses tell him, he’ll get a raise and greater responsibility. Joining the technology industry, he’d be starting from scratch. He is now thinking that he’ll stay, despite his convincing declaration that he has no long term ambitions in finance.&lt;/p&gt;
&lt;p&gt;Over the years, I’ve run into many prospective employees in similar situations. When I ask them a very obvious question: “What do you want to be doing in 10 years?” The answer is invariably “working at or founding a tech startup” – yet most of them decide to remain on their present path and not join a startup. Then, a few years later, they finally quit their job, but only after having spent years in an industry they didn’t enjoy, and that didn’t really advance them toward their long term ambitions.&lt;/p&gt;
&lt;p&gt;How can smart, ambitious people stay working in an area where they have no long term ambitions? I think a good analogy for the mistake they are making can be found in computer science.&lt;/p&gt;
&lt;p&gt;A classic problem in computer science is &lt;a href=&quot;http://en.wikipedia.org/wiki/Hill_climbing&quot;&gt;hill climbing&lt;/a&gt;. Imagine you are dropped at a random spot on a hilly terrain, where you can only see a few feet in each direction (assume it’s foggy or something). The goal is to get to the highest hill.&lt;/p&gt;
&lt;p&gt;&lt;span
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&lt;p&gt;Consider the simplest algorithm. At any given moment, take a step in the direction that takes you higher. The risk with this method is if you happen to start near the lower hill, you’ll end up at the top of that lower hill, not the top of the tallest hill.&lt;/p&gt;
&lt;p&gt;A more sophisticated version of this algorithm adds some randomness into your walk. You start out with lots of randomness and reduce the amount of randomness over time.  This gives you a better chance of meandering near the bigger hill before you start your focused, non-random climb.&lt;/p&gt;
&lt;p&gt;Another and generally better algorithm has you repeatedly drop yourself in random parts of the terrain, do simple hill climbing, and then after many such attempts step back and decide which of the hills were highest.&lt;/p&gt;
&lt;p&gt;Going back to the job candidate, he has the benefit of having a less foggy view of his terrain.   He knows (or at least believes) he wants to end up at the top of a different hill than he is presently climbing.  He can see that higher hill from where he stands.&lt;/p&gt;
&lt;p&gt;But the lure of the current hill is strong. There is a natural human tendency to make the next step an upward one. He ends up falling for a common trap &lt;a href=&quot;http://books.google.com/books?id=znbkHaC8QeMC&amp;#x26;lpg=PA256&amp;#x26;ots=a_8QX_rduF&amp;#x26;dq=thaler%20apple%20today&amp;#x26;pg=PA256#v=onepage&amp;#x26;q=thaler%20apple%20today&amp;#x26;f=false&quot;&gt;highlighted&lt;/a&gt; by behavioral economists: people tend to systematically overvalue near term over long term rewards.  This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.&lt;/p&gt;
&lt;p&gt;People early in their career should learn from computer science: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Thanks…]]></title><description><![CDATA[I got my first computer (TRS-80 Model 1) in 1980 at the age of 8.   I got my second computer – an Atari 800 – two years later.   I was…]]></description><link>https://cdixon.org/2009/09/17/thanks</link><guid isPermaLink="false">https://cdixon.org/2009/09/17/thanks</guid><pubDate>Thu, 17 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I got my first computer (&lt;a href=&quot;http://en.wikipedia.org/wiki/TRS-80#History&quot;&gt;TRS-80 Model 1&lt;/a&gt;) in 1980 at the age of 8.   I got my second computer – &lt;a href=&quot;http://en.wikipedia.org/wiki/Atari_8-bit_family#The_early_machines:_400_and_800&quot;&gt;an Atari 800&lt;/a&gt; – two years later.   I was living in Springfield, Ohio.  Very few people were interested in computers in that area then.   The only people that seemed to be were engineers at the nearby Air Force base, Wright Patterson.  Every month, I used to get my parents to drive me over to meet the engineers there for Atari “user group” meetings.&lt;/p&gt;
&lt;p&gt;Like most computer enthusiasts back then, I wanted to program video games.  This of course was pre-internet and before the PC boom, so information on computer programming was scarce.   At the user group meetings we would trade information as basic as what memory locations performed what functions, or new techniques people had developed (vsync interrupt, page 6 techniques – old school readers will know what I mean).  After a while I was increasingly frustrated by the lack of technical information so I decided to write a letter to Atari asking them for manuals.  I got a hand written letter back from &lt;a href=&quot;http://en.wikipedia.org/wiki/Alan_Kay&quot;&gt;Alan Kay&lt;/a&gt;, who was already quite famous at the time and was working at Atari, along with a giant box full of manuals and technical documentation.  I’ve never met the man but I give him a lot of credit for my lifelong interest in computers.&lt;/p&gt;
&lt;p&gt;I was reminded of this yesterday when I had the pleasure to meet with Om Malik.  Om took time to meet with me years ago when I was struggling to get SiteAdvisor off the ground.  No other popular bloggers would meet with me, but Om spent over an hour listening to me talk and giving me advice.  I was introduced to Om by Ron Conway who invested in my company despite the fact that the industry experts he introduced me to as part of diligence hated my idea.&lt;/p&gt;
&lt;p&gt;People never forget who helps them when they are struggling.  It’s a cliche, perhaps, but true – and a good thing to always keep in mind.  Thanks Alan, Om, and Ron.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The inevitable showdown between Twitter and Twitter apps]]></title><description><![CDATA[People usually think of business competition as occurring between substitutes – products that serve similar functions for the user.   Famous…]]></description><link>https://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps</link><guid isPermaLink="false">https://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps</guid><pubDate>Mon, 14 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;People usually think of business competition as occurring between &lt;a href=&quot;http://en.wikipedia.org/wiki/Substitute_good&quot;&gt;substitutes&lt;/a&gt; &lt;em&gt;–&lt;/em&gt; products that serve similar functions for the user.   Famous substitutes include Coke and Pepsi, and Macs and PCs.&lt;/p&gt;
&lt;p&gt;In fact, especially in the technology sector, some of the most brutal competition has occurred between &lt;a href=&quot;http://en.wikipedia.org/wiki/Complementary_good&quot;&gt;complements&lt;/a&gt;&lt;em&gt;.&lt;/em&gt; Products are complements when they are more valuable because of the existence of one another – e.g. hotdogs and hotdog buns, PCs and operating systems.&lt;/p&gt;
&lt;p&gt;There is inherent tension between complements.  If a customer is willing to pay $2 for a hotdog plus bun, the hotdog maker wants buns to be cheaper so he can capture more of the $2, or lower the price of the bundle and thereby increase demand.  (For a great primer on competition between complements, I highly recommend &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;this&lt;/a&gt; Joel Spolsky post.  I’ve also been writing about complements, &lt;a href=&quot;http://www.cdixon.org/?p=334&quot;&gt;here&lt;/a&gt; and &lt;a href=&quot;http://www.cdixon.org/?p=694&quot;&gt;here&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;Microsoft is famous for destroying companies that offer complementary products, either by bundling complementary apps with Windows (Windows Media Player, MSN Messenger, IE) or aggressively competing head-to-head against the most popular ones (Adobe, Intuit).  The surviving 3rd party apps are usually ones that are too small for Microsoft to care about.  The best (selfish) economic situation for a platform like Windows is lots of tiny complements that have little pricing power but that make the platform itself more valuable.&lt;/p&gt;
&lt;p&gt;One of Google’s main complements is the web browser and desktop operating systems, which is why they built and open sourced the Chrome browser and OS.  Google’s other big complement is broadband access – hence their excursions into public Wifi and cellular spectrum.&lt;/p&gt;
&lt;p&gt;So what does all of this have to do with Twitter?  At some point, significant (non-VC) money will enter the Twitter ecosystem.  I have no idea whether this is will be by charging consumers, charging businesses users, search advertising, sponsored tweets, licensing the twitter data feed, data from URL shorteners, or something else. But history suggests that where there is so much user engagement, dollars follow.&lt;/p&gt;
&lt;p&gt;For the sake of argument, let’s suppose Twitter’s eventual dominant business model is putting ads by search results.   Who gets the revenue when a user is searching on a 3rd party Twitter client?   Even if Twitter gets a portion of revenue from ads on 3rd party apps, there will always be an incentive for them to create their own client app, or to “&lt;a href=&quot;http://en.wikipedia.org/wiki/Commoditization#Business_and_economics&quot;&gt;commodotize&lt;/a&gt;” the client app by, say, promoting an open source version.&lt;/p&gt;
&lt;p&gt;I’m not saying this will happen in the immediate future.  First, Twitter and a lot of app makers* have raised a lot of money, so aren’t under (much) pressure yet to generate revenues.  Secondly, some of the lucky Twitter apps will get acquired by Twitter.  I think this is what many of their investors are hoping for.  But those that aren’t so lucky will eventually find their biggest competitor to be Twitter itself, not the substitute product they see themselves as competing against today.&lt;/p&gt;
&lt;p&gt;* when I say Twitter apps, I mean any product, website, or service that eventually makes money and depends on Twitter’s API.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Entrepreneurs need to learn some law]]></title><description><![CDATA[I recently wrote a post where I said entrepreneurs need to understand term sheets on their own, without the assistance of lawyers.  I got…]]></description><link>https://cdixon.org/2009/09/13/entrepreneurs-need-to-learn-some-law</link><guid isPermaLink="false">https://cdixon.org/2009/09/13/entrepreneurs-need-to-learn-some-law</guid><pubDate>Sun, 13 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I recently wrote a &lt;a href=&quot;http://www.cdixon.org/?p=655&quot;&gt;post&lt;/a&gt; where I said entrepreneurs need to understand term sheets on their own, without the assistance of lawyers.  I got quite a bit of criticism for this, e.g.&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;@&lt;a href=&quot;http://twitter.com/rafer&quot;&gt;rafer&lt;/a&gt; Never ever sign a term sheet without your atty’s review. sry but thats &lt;strong&gt;crazy&lt;/strong&gt; talk &lt;strong&gt;&lt;a href=&quot;http://twitter.com/cdixon&quot;&gt;@cdixon&lt;/a&gt;&lt;/strong&gt; &lt;a href=&quot;http://bit.ly/UOgiC&quot;&gt;http://bit.ly/UOgiC&lt;/a&gt; myreblog &lt;a href=&quot;http://bit.ly/cJ9d0&quot;&gt;http://bit.ly/cJ9d0&lt;/a&gt;&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;I’ll agree that entrepreneurs, especially first timers, should have lawyers review everything they sign.  But I stand behind my main point:  you can’t outsource the understanding of key financing and other legal documents to lawyers.&lt;/p&gt;
&lt;p&gt;Here’s just one of many examples of why.   A company I know was recently confronted with the following trade off.  Get a higher valuation with full ratchet anti-dilution or a lower valuation with weighted average anti-dilution.   The only way to assess this trade off is to understand what these terms mean and try to compute the expected value of the two offers.   In this particular case what matters is the likelihood of a future down round.  This is a business judgment, not a legal one, and the people best able to make it are business people.&lt;/p&gt;
&lt;p&gt;You also need to consider your personal utility function.  For example, as a founder, I don’t care very much about anti-dilution provisions because I figure in the cases where it matters I will already have been fired and my equity crammed down.&lt;/p&gt;
&lt;p&gt;My point is you can’t leave these judgements to lawyers.   They don’t have the expertise to make these expected value calculations nor do they understand how various scenarios affect the founders personally.&lt;/p&gt;
&lt;p&gt;Another common mistake entrepreneurs make is let their lawyers argue over terms that don’t matter.  This puts deals at risk and costs money.  You need to understand what they are arguing over to decide when it matters and when it doesn’t.&lt;/p&gt;
&lt;p&gt;You learn about these legal issues from experience, by talking to lawyers, by talking to experienced advisors, and by reading blogs and books (every entrepreneur should read &lt;a href=&quot;http://www.amazon.com/Entrepreneurs-Guide-Business-Law/dp/0324204930/ref=sr_1_1?ie=UTF8&amp;#x26;s=books&amp;#x26;qid=1252842726&amp;#x26;sr=8-1&quot;&gt;The Entrepreneur’s Guide to Business Law&lt;/a&gt;).&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Google and newspapers:  the false choice of opting out]]></title><description><![CDATA[First let me say I love Google.  I think Google created one of the greatest inventions of the past century and continues to give back much…]]></description><link>https://cdixon.org/2009/09/12/google-and-newspapers-the-false-choice-of-opting-out</link><guid isPermaLink="false">https://cdixon.org/2009/09/12/google-and-newspapers-the-false-choice-of-opting-out</guid><pubDate>Sat, 12 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;First let me say I love Google.  I think Google created one of the greatest inventions of the past century and continues to give back much more value to the world than they “capture” in revenue.&lt;/p&gt;
&lt;p&gt;Secondly, I think Google itself has almost nothing to do with the decline of newspapers.  That is due to, among other things, 1) the newspapers losing their classified business to Craigslist and others, 2) the internet making geography irrelevant and hence causing newspaper competition go from 1 or 2 papers per market to thousands.&lt;/p&gt;
&lt;p&gt;That said, I am bothered by the &lt;a href=&quot;http://www.techdirt.com/articles/20090421/0228024589.shtml&quot;&gt;arguments&lt;/a&gt; I hear in internet circles of the form:&lt;/p&gt;
&lt;p&gt;Premise 1:  X can stop working with Y at anytime.  (NYTimes could opt out of Google search results / Google news at any time)&lt;/p&gt;
&lt;p&gt;Premise 2:  X would lose out if it did that (NYTimes would lose traffic and revenue if they opted out of Google).&lt;/p&gt;
&lt;p&gt;Conclusion:   Hence Y is helping X.  (Google is helping the NYTimes and the NYTimes should stop whining.)&lt;/p&gt;
&lt;p&gt;The conclusion doesn’t follow from the premises.  The NYTimes might in fact be better off in a world without Google.  More specifically, they would be better off if the search engine market were genuinely competitive.&lt;/p&gt;
&lt;p&gt;The power dynamics between Google and the newspapers has the same dynamics of any buyer-supplier market.&lt;/p&gt;
&lt;p&gt;Newspapers, like all websites, are suppliers of content to Google.  In most markets, with genuinely competitive buyers and suppliers, the revenues are shared between buyers and suppliers in proportion to their relative bargaining power.  Their bargaining power depends on how fragmented each side of the market is – how many genuine alternatives each company has.&lt;/p&gt;
&lt;p&gt;Normally there is some reasonable level of interdependence between buyers and suppliers, hence the revenue split is positive and non-negligible. Pepsi and Coke are always jostling with their bottlers about the percentage split but in the end each side usually makes a profit.&lt;/p&gt;
&lt;p&gt;And in situations where the relative bargaining power is severely imbalanced, there are normally business mechanisms for correcting the imbalance.   For example, before Staples was founded, office supply stores were mostly mom-and-pop shops that were tiny relative to their suppliers, and hence had very little bargaining power.  The central business concept behind creating Staples was to “roll up” these shops and thereby increase their bargaining power with their suppliers.  In doing so, they were able lower their costs and increase their margins even while lowering their prices.   One of the primary reasons companies merge is to increase bargaining power with respect to buyers and suppliers.&lt;/p&gt;
&lt;p&gt;As a “buyer” of web content, Google has incredible dominance, so much so that the price they pay for that content is zero.  If the NYTimes decided to opt out of Google tomorrow, Google users would barely notice.  (Perhaps the only content site that would matter and hence in theory could bargain with Google would be Wikipedia – but even Wikipedia only accounts for ~2% of Google click throughs).  On the flip side, the NYTimes would see a massive decrease in traffic and hence ad revenues.  Google has so much power they can split 0% of the revenue for organic traffic (and of course charge for paid links).&lt;/p&gt;
&lt;p&gt;Now imagine a world where search engines are truly competitive.  I know it’s hard – but imagine there are say 20 search engines, each with 5% market share.  And suppose they differ primarily according to which content sites they index.  (I am not saying I’d prefer this world – I’d actually hate it – but please bear with me for the sake of argument).   On the content side, suppose there are only a couple of newspapers left – maybe the NYTimes, WSJ, USA Today, and the Financial Times (which, btw, will probably be the case in a few years).  In this situation the newspapers would have enough leverage to get the search engines to pay them for inclusion in their organic listings.  I know that in my own case if two search engines were nearly identical except one included my favorite newspaper and the other didn’t, I’d use the one that did.  I suspect a lot of other people would make the same decision.&lt;/p&gt;
&lt;p&gt;There is nothing inherently un-monetizable about newspaper content.  Like all goods and services, if newspaper content has value to people and is scarce (it’s not scarce today but as more newspapers go out of business will become increasingly so), they can eventually generate sustainable revenue (albeit probably operating at a much smaller scale).  The revenue can come either through consumers paying directly or buyers like Google sharing revenues, or some combination thereof.&lt;/p&gt;
&lt;p&gt;For the moment, and for the foreseeable future, newspapers (and all content sites) just happen to be in a dreadful bargaining position with respect to Google.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Non-linearity of technology adoption]]></title><description><![CDATA[When I was in business school I remember a class where a partner from a big consulting firm was talking about how they had done extensive…]]></description><link>https://cdixon.org/2009/09/10/non-linearity-of-technology-adoption</link><guid isPermaLink="false">https://cdixon.org/2009/09/10/non-linearity-of-technology-adoption</guid><pubDate>Thu, 10 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;When I was in business school I remember a class where a partner from a big consulting firm was talking about how they had done extensive research and concluded that broadband would never gain significant traction in the US without government subsidies.  His primary evidence was a survey of consumers they had done asking them if they were willing to pay for broadband access at various price points.&lt;/p&gt;
&lt;p&gt;Of course the flaw in this reasoning is that, at the time, there weren’t many websites or apps that made good use of broadband.   This was 2002 – before YouTube, Skype, Ajax-enabled web apps and so on.  In the language of economics, broadband and broadband apps are complementary goods – the existence of one makes the other more valuable.  Broadband didn’t have complements yet so it wasn’t that valuable.&lt;/p&gt;
&lt;p&gt;Complement effects are one of the main reasons that technology adoption is non-linear. There are other reasons, including network effects, viral product features, and plain old faddishness.&lt;/p&gt;
&lt;p&gt;Twitter has network effects – it is more valuable to me when more people use it.  By opening up the API they also gained complement effects – there are tons of interesting Twitter-related products that make it more useful.  Facebook also has network effects and with its app program and Facebook Connect gets complement effects.&lt;/p&gt;
&lt;p&gt;You can understand a large portion of technology business strategy by understanding strategies around complements.  One major point:  companies generally try to reduce the price of their products complements (Joel Spolsky has an excellent discussion of the topic &lt;a href=&quot;http://www.joelonsoftware.com/articles/StrategyLetterV.html&quot;&gt;here&lt;/a&gt;).   If you think of the consumer as having a willingness to pay a fixed N for product A plus complementary product B, then each side is fighting for a bigger piece of the pie. This is why, for example, cable companies and content companies are constantly battling.  It is also why Google wants open source operating systems to win, and for broadband to be cheap and ubiquitous.&lt;/p&gt;
&lt;p&gt;Clay Christensen has a really interesting theory about how technology “value chains” evolve over time.  Basically they typically start out with a single company creating the whole thing, or most of it.  (Think of mobile phones or the PC).  This is because early products require tight integration to squeeze out maximum performance and usability.  Over time, standard “APIs” start to develop between layers, and the whole product gains performance/usability to spare.   Thus the chain begins to stratify and adjacent sections start fighting to commoditize one another.   In the early days it’s not at all obvious which segments of the chain will win.  That is why, for example, IBM let Microsoft own DOS.  They bet on the hardware.   One of Christensen’s interesting observations is, in the steady state, you usually end up with alternating commoditized and non-commoditized segments of the chain.&lt;/p&gt;
&lt;p&gt;Microsoft Windows &amp;#x26; Office was the big non-commoditized winner of the PC. Dell did very well precisely because they saw early on that hardware was becoming commodotized.  In a commoditized market you can still make money but your strategy should be based on lowering costs.&lt;/p&gt;
&lt;p&gt;Be wary of analysts and consultants who draw lines to extrapolate technology trends.  You are much better off thinking about complements, network effects, and studying how technology markets have evolved in the past.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Getting a job in venture capital]]></title><description><![CDATA[Getting a job in venture capital is extremely hard.  There are a lot of really smart, well qualified, eager people who want to work in VC…]]></description><link>https://cdixon.org/2009/09/08/getting-a-job-in-venture-capital</link><guid isPermaLink="false">https://cdixon.org/2009/09/08/getting-a-job-in-venture-capital</guid><pubDate>Tue, 08 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Getting a job in venture capital is extremely hard.  There are a lot of really smart, well qualified, eager people who want to work in VC, and very few jobs.  And it’s likely to only get harder as the &lt;a href=&quot;http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/&quot;&gt;industry contracts&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;If you look at the backgrounds of partners in VC firms, they generally either came in as a partner after being a successful entrepreneur or worked their way up in VC.  There are books written on how to become a successful entrepreneur, so here I’ll just focus on the other common path – career VCs.&lt;/p&gt;
&lt;p&gt;First, you should understand how VC firms are structured.  Every firm is different, some have no junior people, some have just a few, and some have a lot.&lt;/p&gt;
&lt;p&gt;The key distinction between junior and senior people is whether they can write checks – meaning they can independently lead a deal.  If you can’t write checks, you have to get a check writer to sponsor an investment you like.  Check writers get almost all the credit and blame for an investment.&lt;/p&gt;
&lt;p&gt;The hierarchy within VC firms is basically as follows:  (There has been a wave of title inflation in VC lately, so I’ll put the inflated titles in parentheses).&lt;/p&gt;
&lt;p&gt;Partners – Owners of the firm.  Get the most of the management and carry fees.  Can write checks.&lt;/p&gt;
&lt;p&gt;Principals – Usually get small piece of carry.  Can write checks.  (Inflated title:  Partner;  in which case it’s hard to tell the “real” partners from the principals).&lt;/p&gt;
&lt;p&gt;Associates – Usually post-MBA or 4-6 years work experience.   Usually get little to no carry and can’t write checks.  (Inflated title:  Sr. Associates or Vice President).&lt;/p&gt;
&lt;p&gt;Analyst – Usually right out of college.   They do research or cold call companies.   No carry and obviously can’t write checks.   (Inflated title:  they just don’t list a title or say something vague like “investment professional”).&lt;/p&gt;
&lt;p&gt;As you can see with the title inflation this is all pretty confusing.  It’s meant to be.  VCs want entrepreneurs to take their junior people seriously.  (Which, by the way, entrepreneurs always should:  even though they can’t directly write checks, they can be extremely influential)&lt;/p&gt;
&lt;p&gt;You can break down working your way up in VC into 3 challenges:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Getting a job in the first place.  The two most common places to break into VC as a junior person are after undergrad or business school.  VCs are heavily biased toward certain top schools.  On the MBA side, the industry is dominated by Harvard and Stanford.  Undergrad, the VCs I know only recruit from Wharton, Harvard, Stanford and maybe a few other elite schools.  (Please don’t accuse me of elitism-I’m just reporting on elitism, not promoting it). Even if you go to one of these fancy schools it’s still not easy to get a job.  You need to network like crazy.  I did a whole bunch of volunteer research projects for VCs when I was in business school.  I came up with lists of investment ideas so when I got a few minutes with a VC, I could show them I was obsessed with this stuff.  Other things that help you:  computer science or other relevant technology background.  Single best thing is to have started a company (even if it didn’t succeed).&lt;/li&gt;
&lt;li&gt;Going from non-check writer to check writer.  This might even be harder than breaking into VC.   There is kind of a Catch-22 here:  you can only gain credibility by having led deals, yet you can’t lead deals until you’ve gotten credibility.  Some partners are nice and let high level junior people “virtually” lead deals, join boards etc so they can get credit.  My advice here is to try to get your hands on a checkbook, even if it means leaving a top tier VC and going to a second tier one. Too many junior people hang around top tier firms waiting to get promoted.&lt;/li&gt;
&lt;li&gt;Once you get your hands on a checkbook, then you just need to find the next Google/Facebook and invest before anyone else figures it out. ! ;)&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;If you really want to break into VC and aren’t just now graduating from a top school, my top suggestion would be to go start a company.  If you don’t have the stomach for that, the next best thing is to work in a VC-backed portfolio company, hopefully in a role where you get some VC exposure.&lt;/p&gt;
&lt;p&gt;And, finally, if you just want to work in finance, try to get a job at a hedge fund or a big bank.   Breaking into VC so hard that it’s only worth it if you really love startups.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Is now a good time to start a company?]]></title><description><![CDATA[Back in 2006, my co-founder at Hunch, Caterina Fake, wrote a blog post called “It’s a bad time to start a company.”  There were no doubt…]]></description><link>https://cdixon.org/2009/09/07/is-now-a-good-time-to-start-a-company</link><guid isPermaLink="false">https://cdixon.org/2009/09/07/is-now-a-good-time-to-start-a-company</guid><pubDate>Mon, 07 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Back in 2006, my co-founder at &lt;a href=&quot;http://www.hunch.com/&quot;&gt;Hunch&lt;/a&gt;, Caterina Fake, wrote a blog post called &lt;a href=&quot;http://www.caterina.net/archive/000965.html&quot;&gt;“It’s a bad time to start a company&lt;/a&gt;.”  There were no doubt some great consumer internet companies started then (note she was only talking about consumer internet – which is what I’m also talking about), but on average I’m guessing she was probably right.&lt;/p&gt;
&lt;p&gt;Now I’m sure Caterina would agree with me that if you want to start a company, you should just go do it immediately, as she herself has done repeatedly, so no one is trying to discourage entrepreneurs.   But the reality is the fate of your company is partially dependent on things you can’t control, including what is happening in the tech market as a whole, which tends to be extremely cyclical.&lt;/p&gt;
&lt;p&gt;One way to look at this is from the venture capital side.  VC returns are extremely cyclical.  For example, 1996 funds (or “vintages” as VCs say) returned an &lt;a href=&quot;http://www.hbstech.org/article.html?aid=135&quot;&gt;average of 95%&lt;/a&gt; while 1999 funds returned an average of -3%.  I don’t think this decade had such extreme swings but most people agree 2002-2005 were great times to invest in consumer internet and afterwards probably not as great.&lt;/p&gt;
&lt;p&gt;Venture returns are a function of two things:  great opportunities and low valuations.  Low valuations are obviously not good for entrepreneurs from a dilution perspective but they do indicate that investors are fearful, which means we are probably at the down part of the business cycle, which has historically been a great time to start a company.&lt;/p&gt;
&lt;p&gt;People are fearful now, and people with a shallow understanding of technology are &lt;a href=&quot;http://online.wsj.com/article/SB124784696163158721.html&quot;&gt;declaring&lt;/a&gt; the internet over.  I’ve been saying for years that the best time to start a company and invest in startups will be when people start declaring Google (and online advertising in general) a “mature” business, which seems to be happening now.  It feels a little like 2003 when people mocked “dot coms” as profitless sock puppets.   In retrospect, 2003 was a great time to start a company.&lt;/p&gt;
&lt;p&gt;On the other hand, there were massive amounts of money invested in consumer internet startups over the last few years.  You know when hedge funds and mutual funds start investing in early stage startups, as they were in 2007-8, we’ve reached the peak of the cycle.  It takes a long time for that kind of money to work itself out of the system, so at least for another year or two you are still going to see some crazy money being spent on marketing, salaries etc, making it harder for us mortals to compete.&lt;/p&gt;
&lt;p&gt;All that said, I wouldn’t try to over think timing.  It’s pretty much impossible to predict what will happen in the near term.  You should instead focus on solving a big problem and let the chips fall where they may.  Be cautious about falling into starting something around the latest fad, e.g. online video, facebook apps, twitter apps.  I love the audaciousness behind &lt;a href=&quot;http://www.businessinsider.com/2009/1/andy-grove-on-web-20-and-the-valley-slackers&quot;&gt;this&lt;/a&gt; Andy Grove interview:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What really infuriates him is the concept of the “exit strategy.” That’s when leaders of startup companies make plans to sell out to the highest bidder rather than trying to build important companies over a long period. “Intel never had an exit strategy,” he tells me. “These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can’t build an empire out of this kind of concoction. You don’t even try.”&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;What really infuriates him is the concept of the “exit strategy.” That’s when leaders of startup companies make plans to sell out to the highest bidder rather than trying to build important companies over a long period. “Intel never had an exit strategy,” he tells me. “These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can’t build an empire out of this kind of concoction. You don’t even try.”&lt;/p&gt;
&lt;/blockquote&gt;
&lt;/blockquote&gt;
&lt;p&gt;Benjamin Graham famously said that the stock market is a voting machine in the short run and weighing machine in the long run.  The same is true of startups.  Make something weighty – try to build an empire – and you’ll be far less vulnerable to the ups and downs of the market.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The only college major that matters]]></title><description><![CDATA[If you want to work in venture capital focusing on internet/software companies, or start one of those companies, or work as an employee in…]]></description><link>https://cdixon.org/2009/09/06/the-only-college-major-that-matters</link><guid isPermaLink="false">https://cdixon.org/2009/09/06/the-only-college-major-that-matters</guid><pubDate>Sun, 06 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;If you want to work in venture capital focusing on internet/software companies, or start one of those companies, or work as an employee in any role at one of those companies, &lt;strong&gt;there is only one undergraduate major you should consider:  computer science.*&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;I’m not saying you need a computer science degree, but I am saying it’s incredibly helpful to know computer science.  Lots of great computer scientists are self taught. But almost all of them started coding in their teens.  If you are a coder already and want to spend your college years majoring in something else for the heck of it, great.  I spent my whole childhood coding, and worked during college as a programmer, so decided to major in Philosophy because I thought it was interesting.&lt;/p&gt;
&lt;p&gt;Why is it so much better to learn computer science in college (or before)?  Because after college it’s very hard to find the time and discipline to teach yourself coding.  On the other hand, it’s pretty easy to pick up business skills, economics and all sorts of other skills on the job or in grad school.&lt;/p&gt;
&lt;p&gt;Why is a computer science degree so important to VC and startups?  I would estimate in about half the conversations I have at my own startup, with tech founders, and with venture capitalists, there is a moment in the conversation when we start getting technical.  Sometimes someone will even ask “Are you technical?” before starting down a topic.  The non-technical people in the room just sit there like we are speaking Greek.&lt;/p&gt;
&lt;p&gt;It’s a shame that student enrollment in computer science is &lt;a href=&quot;http://www.cra.org/wp/index.php?p=126&quot;&gt;in decline&lt;/a&gt;.  The thinking apparently is that computer programming is increasingly moving overseas.  What these students fail to realize is you don’t need to be a professional coder all your life to find computer science an incredibly valuable major.&lt;/p&gt;
&lt;p&gt;* There is a whole separate world of VC and startups in energy and healthcare.  In those areas I’d recommend analogous technical undergraduate majors.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Which VC firm should I pitch?]]></title><description><![CDATA[A friend asked me the other day “Which VC firms should I pitch?” and I started to respond to him, but then realized that most of my…]]></description><link>https://cdixon.org/2009/09/05/which-vc-firm-should-i-pitch</link><guid isPermaLink="false">https://cdixon.org/2009/09/05/which-vc-firm-should-i-pitch</guid><pubDate>Sat, 05 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A friend asked me the other day “Which VC firms should I pitch?” and I started to respond to him, but then realized that most of my knowledge of VC firms is already available online in the &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/&quot;&gt;Which VC firm should I pitch?&lt;/a&gt; Hunch decision topic. That is the idea behind &lt;a href=&quot;http://www.hunch.com&quot;&gt;Hunch&lt;/a&gt;: to crowdsource the creation of decision trees, so that a group of knowledgeable people can get together and create a “virtual expert” that can be accessed by anyone.&lt;/p&gt;
&lt;p&gt;Here is the VC chooser topic in embedded widget form (anything you create on Hunch can be embedded anywhere):&lt;/p&gt;
&lt;p&gt;&lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/&quot;&gt;Which VC firm should I pitch?&lt;/a&gt; – make thousands more decisions on &lt;a href=&quot;http://www.hunch.com/&quot;&gt;Hunch.com&lt;/a&gt;&lt;/p&gt;
&lt;p&gt;Like everything on Hunch, this topic is completely user generated (“topic” is our word for what some people would call a “decision tree”). Users have full control over the questions it asks, the results (in this case VC firms), the descriptions, and a lot of more advanced functionality for “sculpting” the decision tree. If you go to the VC topic’s &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/about/&quot;&gt;About page&lt;/a&gt; you can see that so far 7 people have contributed 86 firms and 5 questions to this topic (other topics have a much wider range of contributers, &lt;a href=&quot;http://www.hunch.com/tv-shows/about/&quot;&gt;this one&lt;/a&gt; for example). The VC topic has been played (used by non contributors) 506 times, many of those users coming in via Google organic results for phrases related to pitching VC firms.&lt;/p&gt;
&lt;p&gt;In addition, the results are all “trained” to be associated with responses to questions – meaning users have taught Hunch what to “believe” about each of the firms. For example, in red is what Hunch believes about Union Square Ventures:&lt;/p&gt;
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        title=&quot;picture 23&quot;
        src=&quot;/static/5d1d4b19fd44f32e54ad8915ce6ffa47/94a55/picture-23.png&quot;
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  &lt;/a&gt;
    &lt;/span&gt;&lt;br&gt;
Users who find mistakes can just click and fix them, similar to how you fix things on Wikipedia.&lt;/p&gt;
&lt;p&gt;So if you see anything missing or that you’d like to change, feel free to do so. I was one main people who worked on this particular topic so it is biased toward my tastes (e.g. Hunch’s own VCs – &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/bessemer-venture-partners/999484/&quot;&gt;Bessemer&lt;/a&gt; and &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/general-catalyst-partners/999084/&quot;&gt;General Catalyst&lt;/a&gt; – rank extremely high).&lt;/p&gt;
&lt;p&gt;If you don’t like Hunch’s Q&amp;#x26;A process you can jump directly to the &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/all/&quot;&gt;See All page&lt;/a&gt;, and then using the filters on the left to drill down.&lt;/p&gt;
&lt;p&gt;If you are not logged into Hunch, the VC firms you see will be ranked by their popularity amongst all Hunch users. Hunch personalizes the rankings specifically for you if you &lt;a href=&quot;http://www.hunch.com/people/create-account/&quot;&gt;create an account&lt;/a&gt; and answer what we call “Teach Hunch About You” questions. For example, when I am logged in and go to the Hunch page for &lt;a href=&quot;http://www.hunch.com/which-vc-firm-should-i-pitch/bessemer-venture-partners/999484/&quot;&gt;Bessemer&lt;/a&gt; I see this on the right sidebar:&lt;br&gt;
&lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 282px;&quot;
    &gt;
      &lt;span
    class=&quot;gatsby-resp-image-background-image&quot;
    style=&quot;padding-bottom: 32.97872340425532%; position: relative; bottom: 0; left: 0; background-image: url(&apos;data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsTAAALEwEAmpwYAAABJElEQVQY021Q7U7CMBTdi5uob+CbGGVEtwEmEvxhAAXm8I8KrOvaDZn7btd23m2RROPJzc3paU/bc7U8z+u6llJyzhnnwEEpikK2UEoxxoDU/0G7NUzDGgyGA8s0DcN6Xq7G9+M7yxxPHubTGezc9PtxksJRuOivGUTBCmhAJGdKcNW+WVUV9LIsgajfAF200CzHHb3i4dobrpHloMkbTbL88LmPogj7BCIkaZpmGbQkTgBZkyrvgminvRnUmT4/1+cnV9OLkUP2h+3mfbfdLGw7oBRj7GHfQwi5iBDfJzQIAsaa6WjXRPXa0om6xPIxrpP4y3mxd9uPp+WKUuJhDEYf4zCgYAzD0EUIPtKYs0oeK61kIZoJd4HFD45LKVqxEt3wvgG2F4NpY5B+rwAAAABJRU5ErkJggg==&apos;); background-size: cover; display: block;&quot;
  &gt;&lt;/span&gt;
  &lt;img
        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;picture 22&quot;
        title=&quot;picture 22&quot;
        src=&quot;/static/160c30937dffca50e483c0e9eed18e48/2a195/picture-22.png&quot;
        srcset=&quot;/static/160c30937dffca50e483c0e9eed18e48/924ad/picture-22.png 170w,
/static/160c30937dffca50e483c0e9eed18e48/2a195/picture-22.png 282w&quot;
        sizes=&quot;(max-width: 282px) 100vw, 282px&quot;
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    &lt;/span&gt;&lt;br&gt;
Meaning that Hunch has learned to statistically correlate the questions I’ve answered about myself with liking Bessemer. At this point Hunch has statistically significant data (over 40M user feedbacks total) in most of our ~5000 topics so it usually works really well.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Dividing free and paid features in “freemium” products]]></title><description><![CDATA[One of the most difficult decisions to make when developing a “freemium” product is how to divide the product between free and paid features…]]></description><link>https://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products</link><guid isPermaLink="false">https://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products</guid><pubDate>Fri, 04 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One of the most difficult decisions to make when developing a “&lt;a href=&quot;http://en.wikipedia.org/wiki/Freemium&quot;&gt;freemium&lt;/a&gt;” product is how to divide the product between free and paid features.&lt;/p&gt;
&lt;p&gt;Assume you’ve come up with the “ultimate” product – the complete set of product features including both free and paid versions. Given this, many people think they need to make the following trade off:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;more features in free version –&gt; more users&lt;/li&gt;
&lt;li&gt;fewer features in free version –&gt; higher conversion rate from free to paid&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;So for example, if your consumer storage software gives away tons of free storage, the assumption is you will get more users but a lower conversion rate, as compared to a competitive product that gives away less free storage.&lt;/p&gt;
&lt;p&gt;Actually this not the whole story, because tilting toward #2 – more features in the paid version – opens up new marketing channels that can actually get you more users. If you have a compelling paid product that isn’t undermined by a nearly as compelling free product, you can potentially profitably market through affiliate networks, SEM, display ads, bizdev partnerships and so forth. Lots of websites that reach large user bases are only interested in promoting paid products. For example, from my experience, OEMs (PC makers like Dell &amp;#x26; HP) are only interested in offering security software that they can charge for in order to generate additional revenue.&lt;/p&gt;
&lt;p&gt;In terms of the user experience, it is often very difficult to draw the line. In the old shareware days, software would nag you with popups or expire after a certain number of days. I don’t like either of these approaches. Nagging is obviously just annoying. And expiration schemes end up tossing out users who are potential future customers. Why not keep them around and preserve future opportunities to offer them something they find useful enough to buy?&lt;/p&gt;
&lt;p&gt;The ideal division allows the free product to be an independently useful, non-annoying, non-expiring standalone product, while still leaving room for the paid version to offer sufficient additional value that some acceptable percentage of your users will upgrade.&lt;/p&gt;
&lt;p&gt;Some products are fortunate enough to have a natural division point. For example, in security software, “remedial” products like anti-virus and anti-spyware often give away a free scan, and charge for clean up if your PC is infected.  What’s nice about this division is that the free product has non-annoying, genuine standalone value, and if you actually do have an infection the upgrade is extremely compelling. (The bad news is that this division encouraged companies to hype the risks of innocuous things like browser cookies).&lt;/p&gt;
&lt;p&gt;Preventive security products are trickier to divide than remedial security products. Preventive security products include firewalls like ZoneAlarm and my prior startup, &lt;a href=&quot;http://www.siteadvisor.com/&quot;&gt;SiteAdvisor&lt;/a&gt; (and now SiteAdvisor competitors like &lt;a href=&quot;http://safeweb.norton.com/&quot;&gt;Norton’s SafeWeb&lt;/a&gt; and &lt;a href=&quot;http://www.trendsecure.com/portal2.1/en-US/free_security_tools/trendprotect.php&quot;&gt;Trend Micro’s TrendProtect&lt;/a&gt;). The problem with preventative security products is that the only features you can remove end up opening up a vulnerability, which just feels like a huge disservice to the user.&lt;/p&gt;
&lt;p&gt;Skype figured out a nice division point: free for Skype-to-Skype calls, pay for calls to regular phones. It’s not clear how sustainable this is as the cost of long distance drops to zero and the distinction between software phones and “regular” phones goes away.&lt;/p&gt;
&lt;p&gt;Online storage products usually divide things by the &lt;a href=&quot;http://www.getdropbox.com/pricing&quot;&gt;amount of storage&lt;/a&gt;. The nice thing about this is 1) you can test a bunch of different prices/storage levels, 2) you get to have a free version plus multiple tiers of paid, which means your pricing can more granularly track customers’ willingness-to-pay. The goal of all revenue maximizing pricing structures is to minimize what economists call “&lt;a href=&quot;http://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus&quot;&gt;consumer surplus&lt;/a&gt;.” Since you can’t gaze into the mind of the user to see what she is willing to pay, and attempts at explicit price discrimination are usually met with outrage, you have to look for proxies for willingness-to-pay. With stock quotes, professionals can’t wait 15 minutes. With books, avid readers don’t want to wait for the paperback version. With databases, wealthier companies have more servers. And with online storage, professionals and hardcore consumers are generally more likely to need more storage space.&lt;/p&gt;
&lt;p&gt;The New York Times’ TimesSelect was one of the more interesting attempts at the freemium model. It was free to read the regular news but you had to pay for the op-eds. Personally I usually read one or two of their op-eds every day, but part of the attraction is that I know my friends do and someone will say “Did you read the Krugman piece today?” and then we might chat about it. So in a way op-ed’s have network effects. Putting them behind a paywall doesn’t just reduce their readership, it reduces their influence – the very influence that compels people to read them in the first place.&lt;/p&gt;
&lt;p&gt;A final thought:  when in doubt, err on the side of putting more features on the paid side of the divide.   It’s easy to add features to the free side;  however, removing features from the free side is a recipe for trouble.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Incubators]]></title><description><![CDATA[It seems like every successful entrepreneur I know at one point or another kicks around the idea of creating an incubator. The appeal is the…]]></description><link>https://cdixon.org/2009/09/04/incubators</link><guid isPermaLink="false">https://cdixon.org/2009/09/04/incubators</guid><pubDate>Fri, 04 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;It seems like every successful entrepreneur I know at one point or another kicks around the idea of creating an incubator. The appeal is the idea that you can do not just one startup but many, and just focus on the “fun stuff” in each one (idea generation, product features, strategy, etc).&lt;/p&gt;
&lt;p&gt;History has shown that incubators are really hard to pull off. In fact, the results from incubators in the 90s were apparently bad enough that the word itself carries a bad connotation in VC/startup circles.&lt;/p&gt;
&lt;p&gt;Here’s why incubators are so hard to make work. Every successful startup requires a great entrepreneur focused solely on that company’s success. You can’t just take a great idea and have a great entrepreneur work on it for a while and then pass it off to a mediocre entrepreneur. It just won’t work. Maybe you can do that after the product is launched and gaining traction. But this is hardly an incubator. It’s more just like an early-stage entrepreneur transitioning to an advisory role – a pretty common practice a few years into a venture.&lt;/p&gt;
&lt;p&gt;And maybe you can find exclusively great entrepreneurs to take over the companies, but then what you are doing is much more like active advising/investing, or “hatching” companies, as some VC’s now call it, presumably to avoid the dreaded I-word.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[New York City needs a tech startup blog]]></title><description><![CDATA[At first it seemed like Silicon Alley Insider would be this, but they seem to have moved away from covering NYC startups. The New York Times…]]></description><link>https://cdixon.org/2009/09/03/new-york-city-needs-a-tech-startup-blog</link><guid isPermaLink="false">https://cdixon.org/2009/09/03/new-york-city-needs-a-tech-startup-blog</guid><pubDate>Thu, 03 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;At first it seemed like &lt;a href=&quot;http://www.businessinsider.com/alleyinsider&quot;&gt;Silicon Alley Insider&lt;/a&gt; would be this, but they seem to have moved away from covering NYC startups.&lt;/p&gt;
&lt;p&gt;The New York Times covers national tech, as does the WSJ. The majority of their tech articles are about CA companies.&lt;/p&gt;
&lt;p&gt;I think for the NYC tech startup ecosystem to really become as vibrant as CA’s, we need a &lt;a href=&quot;http://www.techcrunch.com/&quot;&gt;TechCrunch&lt;/a&gt; equivalent. I hope someone starts one.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Don’t shop your term sheet]]></title><description><![CDATA[There are all sorts of protocols in the VC world. Most of them make sense upon further examination, but if you’re a first time entrepreneur…]]></description><link>https://cdixon.org/2009/09/02/dont-shop-your-term-sheet</link><guid isPermaLink="false">https://cdixon.org/2009/09/02/dont-shop-your-term-sheet</guid><pubDate>Wed, 02 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There are all sorts of protocols in the VC world. Most of them make sense upon further examination, but if you’re a first time entrepreneur, they aren’t obvious, and it’s very easy to mess them up. Here’s one of them.&lt;/p&gt;
&lt;p&gt;From VC’s perspective, one of the most annoying things an entrepreneur can do is “shop” a term sheet.  That means after they’ve offered you a term sheet in writing you take it to other investors to try to get a better deal. Most VCs I know won’t even send anything in writing until you have verbally agreed on all essential terms precisely to avoid this possibility.&lt;/p&gt;
&lt;p&gt;Why are investors so sensitive to this?  First of all, no investor wants to think they are “just money” – the idea that you want to get an explicit auction going suggests that.&lt;/p&gt;
&lt;p&gt;More importantly, what often happens is that once a VC has offered you a term sheet – especially if that VC is well respected – other VCs suddenly become interested.  It is pretty much guaranteed that if Sequoia offered you $4M pre, there are many other investors who, simply because of Sequoia’s offer, would offer you a higher price.  So if Sequoia allowed their term sheets to be shopped they’d never get deals done.&lt;/p&gt;
&lt;p&gt;Some entrepreneurs think they are being savvy by shopping a term sheet but I would strongly caution against it.  The VC/startup community is extremely small and this will usually come back to bite you.&lt;/p&gt;
&lt;p&gt;Note that I am &lt;strong&gt;not&lt;/strong&gt; saying an entrepreneur shouldn’t get a competitive process going and try to get the best deal with the highest quality investors.  You just need to do it in the right way.  Discuss things verbally and only accept a term sheet when you have agreed on all significant terms.  At that point, assuming the term sheet agrees with what you said, you should sign it and return it within a day or two.  (Don’t say you need to wait for you lawyer to review it – if you want to be an startup CEO you need to learn how to review and evaluate term sheets.  Have your lawyer teach you about term sheets before you receive them.).&lt;/p&gt;
&lt;p&gt;Also, don’t shop a verbal offer.  You can’t go to, say, Greylock and tell them Accel offered you 4 pre.  First of all they might collude.  Secondly it’s very likely to get back to Accel (they all know each other) and you might lose both deals.  What you can say is “I’m planning to wrap things up by X day and I have a lot of interest” and see what Greylock does.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Question from a reader]]></title><description><![CDATA[I’ve gotten some emails recently from readers of this blog with questions about early stage startups.  I’m sorry if I haven’t responded to…]]></description><link>https://cdixon.org/2009/09/02/question-from-a-reader</link><guid isPermaLink="false">https://cdixon.org/2009/09/02/question-from-a-reader</guid><pubDate>Wed, 02 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve gotten some emails recently from readers of this blog with questions about early stage startups.  I’m sorry if I haven’t responded to all of them yet.  I’m happy to try to answer questions but would generally prefer to do them on the blog so they can be shared/discussed.&lt;/p&gt;
&lt;p&gt;Here’s one I got recently:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;So you’re joining a startup as one of the first, or the first, non-founding members.  At the moment, the company generates little or even no revenue, but they do have a working first version of their product and a few early users.  To this point the company has been surviving on a modest amount of “friends and family” capital, which has largely been used to support the founders as they built the company and their product.  The founders, however, are convinced that a significant investment is imminent and you will be receiving a reasonable salary in short order.  They are equally certain that their product and their plan is ready to take off.&lt;/p&gt;
&lt;p&gt;Determining a fair equity grant at this time is tricky enough; there seem to be far fewer established norms and guidelines for determining compensation in a pre-investment startup than there are following such a milestone.  To further complicate this situation, fast forward 6, 9, even 12 months into the future.  That “imminent” investment has not yet materialized and you have yet to receive any salary (though perhaps the founders have continued to subsidize themselves from the earlier friends and family investment).  The original product has been slow to build traction.  The product has undergone significant upgrades, and one or more new products have been developed, all with your input and assistance.&lt;/p&gt;
&lt;p&gt;At this time, both sides decide to sit down and more formally address the issue of your equity grant, but by now the boundaries of your role have become even more blurred than when you first joined the startup.  To be sure, you are not one of the founders, but it seems the founders were not as far along as they believed when they brought you in.  Of course both sides are still likely to overvalue their contributions, so what guidelines and norms can you and the founders possibly look to in order to reach a fair and reasonable agreement on your equity grant?&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;Honestly, I’m not sure my top worry would be my equity grant at this point.  If I understand correctly, you’ve been working for a year with no written equity grant, no salary, for a company that has gotten little traction, and for founders who were way overly optimistic about their chances of raising money…? (perhaps even misleadingly so?)  I guess if you really love the vision or have no other options then you stay, but otherwise I’d recommend looking for a new job.  At an absolute minimum you should be given an option grant in writing ASAP, and I think that given your sacrifice and the uncertainty of raising any money beyond friends and family that grant should be significant.  If your skills are as important to the company’s as the founders, I’d say it should be at or around founder level.&lt;/p&gt;
&lt;p&gt;I worked for a startup once where my equity grant wasn’t in writing.  Needless to say, when the company was sold, I got nothing.  &lt;strong&gt;Always, always get your equity grant in writing.&lt;/strong&gt; Quality entrepreneurs will simply give you your grant in writing without you even needing to ask.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Information is the (other) currency of venture capital]]></title><description><![CDATA[Many seasoned entrepreneurs have had the following experience.  A VC eagerly wants to meet with you.  You have what seems like a very good…]]></description><link>https://cdixon.org/2009/09/01/information-is-the-other-currency-of-venture-capital</link><guid isPermaLink="false">https://cdixon.org/2009/09/01/information-is-the-other-currency-of-venture-capital</guid><pubDate>Tue, 01 Sep 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Many seasoned entrepreneurs have had the following experience.  A VC eagerly wants to meet with you.  You have what seems like a very good meeting, and yet the VC’s excitement level drops noticeably in follow up conversations. Then he says &lt;a href=&quot;http://bryc3.com/post/172703130/i-ganked-this-slide-from-joe-beninatos&quot;&gt;“No” in VC language&lt;/a&gt;.  What just happened?&lt;/p&gt;
&lt;p&gt;The answer is that besides cold hard cash the other currency in venture capital is information.  A VC will meet with pretty much anyone they deem “serious” in order to gather more information, which they can then use to discover interesting investments, do better diligence on potential investments, impress entrepreneurs and other VCs with their knowledge, gossip with other VCs about recent deals and trends, and give seemingly informed advice to their portfolio companies.&lt;/p&gt;
&lt;p&gt;I’m not saying VCs are trying to take your trade secrets and give them to competitors.  The vast majority of VCs would never do this.  Instead, they are after much more general, innocuous information, like the rough valuations of recent financings, what companies and markets are “hot,” what products are getting popular, what marketing tactics are proving successful, and so on.&lt;/p&gt;
&lt;p&gt;Imagine you were a professional sports bettor but none of the existing information sources – Internet, TV, etc – existed.   The only way you could get information was by talking to people who actually saw the sporting events live. This is kind of what it’s like to work in venture and why VCs are so desperate for information.  There is very little publicly written about what’s really going behind this scenes. Occasionally juicy tidbits will come out on blogs like &lt;a href=&quot;http://www.techcrunch.com&quot;&gt;TechCrunch&lt;/a&gt;, and some moderately useful stuff appears daily in &lt;a href=&quot;http://www.pehub.com&quot;&gt;peHUB&lt;/a&gt; and other VC newswires – but crucially missing are the valuations, cap tables, competitive offers, companies’ performance, and pretty much everything else people really want to know.&lt;/p&gt;
&lt;p&gt;In the way they cross-polinate information, VCs play a role with startups similar to what consulting firms like McKinsey play in the Fortune 1000 world.  They spread best practices around from one firm to another, in the end, on average, making everyone more efficient and informed, while also reducing informational advantages&lt;/p&gt;
&lt;p&gt;My advice to entrepreneurs is not to run and hide.  Instead, you need to learn to play the game.  Meet with as many VCs as you can.  They are great sources of high level information.  Such and such assets are cheap right now.   Startups are having success with a such and such marketing channel.  A certain venture firm is eager to deals in your space.  Staying in the information flow is one of the main reasons many serial entrepreneurs angel invest on the side.&lt;/p&gt;
&lt;p&gt;Just go to these meetings with the proper expectations – the VC’s eagerness probably has more to do with gathering information than investing in your company.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[New York City is poised for a tech revival]]></title><description><![CDATA[One thing that was puzzling about the “web 2.0 boom” from 2003-2008 was how irrelevant the East Coast, and particular New York City, was…]]></description><link>https://cdixon.org/2009/08/31/new-york-city-is-poised-for-a-tech-revival</link><guid isPermaLink="false">https://cdixon.org/2009/08/31/new-york-city-is-poised-for-a-tech-revival</guid><pubDate>Mon, 31 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;One thing that was puzzling about the “web 2.0 boom” from 2003-2008 was how irrelevant the East Coast, and particular New York City, was compared to the first dot-com boom.  There were a few big hits – Right Media comes to mind – and a big near miss – Facebook – which started in Boston but moved to the West Coast.&lt;/p&gt;
&lt;p&gt;I was mostly checked out of the internet scene in the 90s (in perpetual grad school), but from everything I’ve read and heard, New York City and the East Coast in general was much more competitive with the West Coast.  One interesting supporting data point: Matrix Partners in Boston had the best return of any VC fund in the 90s (&lt;a href=&quot;http://www.matrixpartners.com/site/press_detail/63/&quot;&gt;an astounding 516% IRR&lt;/a&gt;).&lt;/p&gt;
&lt;p&gt;I think it’s fairly easy to explain what happened to Boston in the 2000′s.   In the 90′s much of the action was around infrastructure and enterprise software – and Boston (led by MIT) tends to be very infrastructure and enterprise oriented.   I am told Boston is still relevant in biotech and cleantech, and perhaps infrastructure and enterprise IT will have a resurgence, although even those areas seem to now be dominated by the West Coast.&lt;/p&gt;
&lt;p&gt;But the question that has puzzled me is:  why did New York City lag behind the West Coast this decade so much more than last decade?  Especially since the internet in the 2000′s has been more than ever about consumers, media, and advertising – traditional New York City strengths?&lt;/p&gt;
&lt;p&gt;I think the only explanation is that the finance bubble of 2003-2008 was a giant talent suck on the East Coast.  The people I knew graduating out of top engineering or business programs on the East Cast were all trying to work at hedge funds or big banks or else felt like fish out of water and moved west.   Money was flowing so freely in the finance world that there was no way the risk/reward trade off of startups could compete.  Eventually it just became downright idiosyncratic to be a startup person on the East Coast.  The Larry and Sergey of the East Coast were probably inventing high frequency trading algorithms at Goldman Sachs.&lt;/p&gt;
&lt;p&gt;But this is why New York City now seems poised for a technology startup boom. The finance bubble has burst and the industry will hopefully return to its historical norm, about half its bubble size.  The traditional advertising and media businesses are in disarray.  The people who work in them will no doubt find new applications for their talents.&lt;/p&gt;
&lt;p&gt;There is also a nice ecosystem developing in New York City.  Union Square Ventures is one of the best VC’s in the country, with early stage investments in companies like Twitter and Etsy (that were followed on by top West Coast VCs at significant markups).   Bessemer is an old firm that has a managed to stay relevant with investments in Yelp, Skype, and LinkedIn among others.  There is also a new wave of scrappy Boston firms spending a lot of time in New York City – specifically Spark, General Catalyst, Flybridge, and Bain Ventures.  First Round Capital out of Philadelphia is extremely active in early stage investing in New York.  There are a bunch of veteran entrepreneurs actively investing in and mentoring seed stage startups.  Google has a big office here and many people seem to be leaving to go start companies.&lt;/p&gt;
&lt;p&gt;But most importantly, the engine of the startup economy, young engineers, will be returning to doing something besides shuffling money around.  As Obama said:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;…Wall Street will remain a big, important part of our economy, just as it was in the ’70s and the ’80s. It just won’t be half of our economy. And that means that more talent, more resources will be going to other sectors of the economy. And I actually think that’s healthy. We don’t want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;blockquote&gt;
&lt;p&gt;That’s why I don’t just want to see more college graduates; I also want to specifically see more math and science graduates, I specifically want to see more folks in engineering. I think part of the postbubble economy that I’m describing is one in which we are restoring a balance between making things and providing services…&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself.   Silicon Valley will always be the mecca of technology, but now that people here are getting back to, as Obama says, &lt;em&gt;making things&lt;/em&gt;, New York City has a shot at becoming relevant again in the tech world.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[VC’s care about the upside case, not the mean]]></title><description><![CDATA[The biggest mistake entrepreneurs make when pitching VCs is to argue that their startup is likely to succeed.  Instead, they should argue…]]></description><link>https://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean</link><guid isPermaLink="false">https://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean</guid><pubDate>Mon, 31 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The biggest mistake entrepreneurs make when pitching VCs is to argue that their startup is likely to succeed.  Instead, they should argue that there is a small probability their startup could be a billion dollar or greater exit.  There is a big difference between these arguments – the mean of the return distributions might be the same but what VCs care about is right side tail of the distribution.&lt;/p&gt;
&lt;p&gt;Investor sentiment, the old saying goes, is a horse race between fear and greed.  The fear and greed in venture capital is all about investing in or missing out on the next Google.  No VC stays up at night worrying about missing the next startup that’s flipped to Google.  The way you get VCs interested is to convince them there’s a small but non-negligible chance you’ll create a billion dollar (valuation) business.&lt;/p&gt;
&lt;p&gt;I’ve learned this lesson first hand on both sides of the table.  One example:  A good friend of mine was starting a company a few years ago.  I was excited about the idea and tried to help him raise venture money.  After the entrepreneur pitched some VC friends of mine, I was surprised when the they came back to me to say they are passing because “it seems like a smallish, ‘lifestyle’ business.”&lt;/p&gt;
&lt;p&gt;The entrepreneur had made a very good pitch for why his product was valuable, why he could create a profitable business, that he was very smart and well prepared, and so on.   What he needed but failed to do was leave the VC with the nagging thought that this could be the “the next big thing.” Part of this was because of the entrepreneur’s natural modesty.  Some people don’t have the chutzpah to aggressively assert that their idea is the next big thing, even when, deep down, they truly believe it.  In everyday life, this kind of modesty is a virtue. When pitching VC’s, it is the single worst thing you can do.  (If deep down, you don’t believe your idea will be the next big thing – don’t raise VC money.  Once you raise VC you are committed to going for the billion dollar exit whether you like it or not.)&lt;/p&gt;
&lt;p&gt;I don’t know if this obsession with the upside outlier case is a good strategy from the VC’s perspective or not.  Granular VC return data is hard to come by.  I tend to think it is a good strategy – one Google or Facebook (and a lot of other billion dollar exits that aren’t nearly as famous) can make up for a ton of misfires.  And the anecdotal return numbers I’ve heard from VCs suggests it works.   But I don’t really know.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[To make smarter systems, it’s all about the data]]></title><description><![CDATA[As this article by Alex Wright in the New York Times last week reminded me, when the mainstream press talks about artificial intelligence…]]></description><link>https://cdixon.org/2009/08/30/to-make-smarter-systems-its-all-about-the-data</link><guid isPermaLink="false">https://cdixon.org/2009/08/30/to-make-smarter-systems-its-all-about-the-data</guid><pubDate>Sun, 30 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;As &lt;a href=&quot;http://www.nytimes.com/2009/08/24/technology/internet/24emotion.html?_r=1&amp;#x26;ref=start-ups&quot;&gt;this&lt;/a&gt; article by Alex Wright in the New York Times last week reminded me, when the mainstream press talks about artificial intelligence – machine learning, natural language processing, sentiment analysis, and so on – they talk as if it’s all about algorithmic breakthroughs.  The implication is it’s primarily a matter of developing new equations or techniques in order to build systems that are significantly smarter than the status quo.&lt;/p&gt;
&lt;p&gt;What I think this view misses (but I suspect the companies covered in the article understand) is that &lt;strong&gt;significant AI breakthroughs come from identifying or creating new sources of data, not inventing new algorithms.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Google’s &lt;a href=&quot;http://infolab.stanford.edu/~backrub/google.html&quot;&gt;PageRank&lt;/a&gt; was probably the greatest AI-related invention ever brought to market by a startup.  It was one of very few cases where a new system was really an order of magnitude smarter than existing ones.  The Google founders are &lt;a href=&quot;http://citeseerx.ist.psu.edu/stats/articles&quot;&gt;widely recognized&lt;/a&gt; for their algorithmic work.  Their most important insight, however, in my opinion, was to identify a previously untapped and incredibly valuable data source – links – and then build a (brilliant) algorithm to optimally harness that new data source.&lt;/p&gt;
&lt;p&gt;Modern AI algorithms are very powerful, but the reality is there are thousands of programmers/researchers who can implement them with about the same level of success.  The Netflix Challenge demonstrated that a massive, world-wide effort only improves on an in-house algorithm by approximately 10%. &lt;a href=&quot;http://www.cs.unb.ca/profs/hzhang/publications/FLAIRS04ZhangH.pdf&quot;&gt;Studies&lt;/a&gt; have shown that &lt;a href=&quot;http://en.wikipedia.org/wiki/Naive_Bayes_classifier&quot;&gt;naive bayes&lt;/a&gt; is as good or better than fancy algorithms in a surprising number of real world cases.  It’s relatively easy to build systems that are right &lt;a href=&quot;http://www.cdixon.org/?p=342&quot;&gt;80% of the time&lt;/a&gt;, but very hard to go beyond that.&lt;/p&gt;
&lt;p&gt;Algorithms are, as they say in business school, “commoditized.”  The order of magnitude breakthroughs (and companies with real competitive advantages) are going to come from those who identify or create new data sources.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Thales the Milesian]]></title><description><![CDATA[Like a lot of things we think are obvious today, financial options were first invented by a philosopher: There is the anecdote of Thales the…]]></description><link>https://cdixon.org/2009/08/29/thales-the-milesian</link><guid isPermaLink="false">https://cdixon.org/2009/08/29/thales-the-milesian</guid><pubDate>Sat, 29 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Like a lot of things we think are obvious today, financial options were first invented by a philosopher:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;There is the anecdote of Thales the Milesian and his financial device, which involves a principle of universal application, but is attributed to him on account of his reputation for wisdom. He was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;- Aristotle, &lt;em&gt;&lt;a href=&quot;http://classics.mit.edu/Aristotle/politics.mb.txt&quot;&gt;Politics&lt;/a&gt;&lt;/em&gt;, Book 1, Part XI&lt;/p&gt;</content:encoded></item><item><title><![CDATA[function my_exit_payout(…)]]></title><description><![CDATA[/* aggregateoptionsstrike_price = your options strike price per share * number of shares you own company sale price is 1) if private…]]></description><link>https://cdixon.org/2009/08/28/function-my_exit_payout</link><guid isPermaLink="false">https://cdixon.org/2009/08/28/function-my_exit_payout</guid><pubDate>Fri, 28 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;/* aggregate&lt;em&gt;options&lt;/em&gt;strike_price = your options strike price per share * number of shares you own&lt;br&gt;
company sale price is 1) if private transaction: amount paid by acquirer plus any funds in startup returned to investors,  2) if IPO = market capitalization.&lt;br&gt;
note: if you assume all financings were 1x preferred, investor preferences == total amount of money the company has raised&lt;br&gt;
to do:  add condition for participating preferred, graph various scenarios&lt;/p&gt;
&lt;p&gt;*/&lt;/p&gt;
&lt;p&gt;function my&lt;em&gt;exit&lt;/em&gt;payout(  company&lt;em&gt;sale&lt;/em&gt;price, your&lt;em&gt;percent&lt;/em&gt;ownership, your&lt;em&gt;aggregate&lt;/em&gt;options&lt;em&gt;strike&lt;/em&gt;price, investor&lt;em&gt;preferences, investors&lt;/em&gt;ownership_percent)&lt;br&gt;
{&lt;/p&gt;
&lt;p&gt;if (investors&lt;em&gt;ownership&lt;/em&gt;percent * company&lt;em&gt;sale&lt;/em&gt;price &amp;#x3C; investor&lt;em&gt;preferences) investor&lt;/em&gt;converts=FALSE;&lt;br&gt;
else investor_converts=TRUE;&lt;/p&gt;
&lt;p&gt;if (investor&lt;em&gt;converts) return your&lt;/em&gt;percent&lt;em&gt;ownership * company&lt;/em&gt;sale&lt;em&gt;price – your&lt;/em&gt;aggregate&lt;em&gt;options&lt;/em&gt;strike&lt;em&gt;price;&lt;br&gt;
else {&lt;br&gt;
common&lt;/em&gt;stock&lt;em&gt;proceeds = company&lt;/em&gt;sale&lt;em&gt;price – investors&lt;/em&gt;preferences.&lt;br&gt;
your&lt;em&gt;percent&lt;/em&gt;common = your&lt;em&gt;percent&lt;/em&gt;ownership / ( 1 – investor&lt;em&gt;ownership&lt;/em&gt;percent );&lt;br&gt;
return common&lt;em&gt;stock&lt;/em&gt;proceeds * your&lt;em&gt;percent&lt;/em&gt;common – your&lt;em&gt;aggregate&lt;/em&gt;options&lt;em&gt;strike&lt;/em&gt;price;&lt;br&gt;
}&lt;/p&gt;
&lt;p&gt;}&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Pitching the VC partnership]]></title><description><![CDATA[The last step to raising venture capital is normally a 1 hour pitch to the whole partnership during their weekly monday meeting.  This is…]]></description><link>https://cdixon.org/2009/08/27/pitching-the-vc-partnership</link><guid isPermaLink="false">https://cdixon.org/2009/08/27/pitching-the-vc-partnership</guid><pubDate>Thu, 27 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The last step to raising venture capital is normally a 1 hour pitch to the whole partnership during their weekly monday meeting.  This is often described to entrepreneurs as a formality, but at least in my experience, for early stage deals, I would say there is probably a 25% chance of you getting a term sheet afterwards and a 75% chance of you getting rejected (although it will &lt;a href=&quot;http://bryc3.com/post/172703130/i-ganked-this-slide-from-joe-beninatos&quot;&gt;rarely&lt;/a&gt; come in the form of an actual “no”) .&lt;/p&gt;
&lt;p&gt;The reason the odds of you getting dinged are that high are:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;In most VC firms all it takes is one partner to say “This is really stupid – I hate it” to kill a deal.&lt;/li&gt;
&lt;li&gt;Although by the time you pitch, the lead partner has probably told the other partners about you and probably sent around a memo, the non-lead partners probably didn’t pay attention, and only really do when you are presenting.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Good VCs have a much lower post-partnership ding ratio, because they work hard to socialize a deal and really get their partners to focus on it before asking the entrepreneur to present.   For example, I used to work for &lt;a href=&quot;http://www.bvp.com/Team/robert-stavis.aspx&quot;&gt;Rob Stavis&lt;/a&gt; at Bessemer and he had a much lower post-meeting ding rate.  This was because he spent a lot of time talking to his partners beforehand (“socializing the deal”), and if they had good objections he got them early on.  (Ps. Hopefully the VC will work extra hard to pre-sell the deal if they ask the entrepreneur to drop everything and fly across the country.)&lt;/p&gt;
&lt;p&gt;The very worst thing that can happen in a partnership meeting is what I call the “partner ambush.”  Basically this is when the partner who brought you in (the “lead” partner), who you’ve met with for many hours and fully understands your company and is excited about investing in it, realizes midway through the meeting things are going badly and decides to try to save face by turning on the entrepreneur.&lt;/p&gt;
&lt;p&gt;I had this happen to me when I was raising money for my last startup, SiteAdvisor.   Basically what happened is me and my co-founder &lt;a href=&quot;http://www.tompinckney.com/&quot;&gt;Tom Pinckney&lt;/a&gt; walked into this big, well known VC firm at 4pm to a room of very tired looking guys (yes, they are all male) who had been hearing back-to-back pitches all day (side note:  always try to present in the morning).  No one introduced themselves or said hello, which was a bit unnerving.   The first questions were clearly hostile to the very idea of a consumer security startups (for a bunch of bad reasons, most VCs vastly prefer enterprise to consumer security – especially on the east coast and back in 2005).   One of them literally laughed at the idea of marketing via search engines (this is the east coast – believe it or not many VCs our here still don’t know what (white hat) SEO is and how important it can be).   Then the partner who brought me in said “Well, Chris, why not make SiteAdvisor into an enterprise product” basically turning on me and the whole concept of the company.  Things went downward from there.  To add insult and injury, the lead partner never even bothered to call me to ding me afterwards – in fact I haven’t heard from him to this day.&lt;/p&gt;
&lt;p&gt;In retrospect, that would have actually have been a very good investment for the VC if they had actually given our pitch a fair hearing.  Which gets me to my final point:  I think VCs are making a mistake by putting so much emphasis on the partnership pitch.  There is some positive correlation between presenting to a room full of (sometimes hostile) VCs and building a successful startup, but not a very high one.&lt;/p&gt;
&lt;p&gt;Besides missing good investments, the emphasis on the partner pitch leads VCs to invest in bad companies.  An investor friend of mine was recently talking about a failed startup he invested in:&lt;/p&gt;
&lt;blockquote&gt;
&lt;p&gt;Toward the end of the company, when things were going very badly, I went in and spent a day sitting with the entrepreneur and watching him work.  At that point I realized his one skill in life was pitching investors.  He had no idea how to manage people, build a product, get stuff done, etc.&lt;/p&gt;
&lt;/blockquote&gt;
&lt;p&gt;The current early-stage VC process is optimized to favor people who are good at pitching partnerships, not necessarily people good at creating successful startups.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The one number you should know about your equity grant]]></title><description><![CDATA[The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever…]]></description><link>https://cdixon.org/2009/08/27/the-one-number-you-should-know-about-your-equity-grant</link><guid isPermaLink="false">https://cdixon.org/2009/08/27/the-one-number-you-should-know-about-your-equity-grant</guid><pubDate>Thu, 27 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever – it doesn’t matter – just the % matters).&lt;/p&gt;
&lt;p&gt;Number of shares:  meaningless.&lt;/p&gt;
&lt;p&gt;Price of shares:  meaningless.&lt;/p&gt;
&lt;p&gt;Percent of the outstanding option pool:  meaningless.&lt;/p&gt;
&lt;p&gt;Your equity in relation to other employees:  meaningless.&lt;/p&gt;
&lt;p&gt;Strike price of options: meaningless.&lt;/p&gt;
&lt;p&gt;The only thing that matters in terms of your equity when you join a startup is what percent of the company they are giving you.  If management tells you the number of shares and not the total shares outstanding so you can’t compute the percent you own – &lt;strong&gt;don’t join the company!&lt;/strong&gt; They are dishonest and are tricking you and will trick you again many times.&lt;/p&gt;
&lt;p&gt;I find it really depressing how often employees, especially engineers who are so smart about other mathematical issues, don’t get this.  I felt forced to post this after talking to a friend today who told me about how a prominent NYC startup has been telling hires the number of shares they are granted but won’t tell them the percent those shares represented (“it is company policy”), or the number you need to compute the percent – the total outstanding shares.  It’s really amazing people are getting away with this simple and incredibly cynical trick.&lt;/p&gt;
&lt;p&gt;I’ve seen many companies “split the stock” 10-1 so that instead of, say, 10M shares there are 100M shares outstanding so the absolute number of shares granted sounds really big to naive hires who don’t understand that all that matters is the percent they own.&lt;/p&gt;
&lt;p&gt;I think every engineering school in the country should have a week-long course on the basics of the capitalization of startups.  There are other things that matter too, but far less (like the number of preferences outstanding).   I’ll try to write about these other things in later posts.&lt;/p&gt;
&lt;p&gt;Engineers – here’s how equity is paid out in a normal company sale/IPO (assuming a “good” outcome – in the downside cases it’s more complicated as investors have preferences which act like a max() function).  You get the percent you own multiplied times the price the company was sold for (or the market cap after IPO).  That is why percent ownership is the only equity number that matters.  Don’t work for someone who tells you otherwise or won’t tell you what percent you own.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Six strategies for overcoming “chicken and egg” problems]]></title><description><![CDATA[Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks…]]></description><link>https://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems</link><guid isPermaLink="false">https://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems</guid><pubDate>Tue, 25 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks.&lt;/p&gt;
&lt;p&gt;“Complementary network effects” refer to situations where a product gets more valuable as more people use the product’s &lt;strong&gt;complement(s).&lt;/strong&gt; Two products are complementary when they are more (or only) useful together – for example, a video game and video game console, or an OS and an application for that OS.  Microsoft Windows gets more valuable the more apps are made for it, which in turn makes Windows more popular, which in turn leads to more apps, and so on.  Microsoft Windows is not more valuable simply because there are more copies of Microsoft Windows in the world, but because there are more complements to Windows in the world.&lt;/p&gt;
&lt;p&gt;Network effects can be your friend or your enemy depending on whether your product has reached critical mass.  Getting to critical mass in complementary network effect markets is sometimes called overcoming the “chicken and egg problem.”  Back in graduate school (2003), my friend Jeff Rhodes and I wrote a paper titled “Six Strategies for Overcoming the ‘Chicken and Egg’ Problem in Complement-Based Network Effects Markets.”  This is a frequent challenge when launching technology products, yet at least at the time we had seen very few people try to systematically document strategies for overcoming it.  Some of our examples are a bit dated now, but if you are interested in this topic you might like the &lt;a href=&quot;http://cdixon.org/mnb-paper.html&quot;&gt;full paper&lt;/a&gt;.&lt;/p&gt;
&lt;p&gt;Here is a high level summary of the 6 strategies we describe with a few updated examples.  I’d love to hear from any readers who have more strategies and/or example products.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;1. Signal long-term commitment to platform success and competitive pricing&lt;/strong&gt;.   When Microsoft launched the original Xbox,  they made a big deal of publicly committing to spending $500M promoting the platform, thereby signalling that they were fully committed for the long haul and giving comfort to 3rd party game developers.   Another way to give comfort that your platform isn’t going away is to open source it – this way third parties know that even if the company stops supporting the product, independent developers can continue to do so (e.g. Google Android and Chrome).  Open sourcing also gives comfort that the company isn’t going to raise prices once they’ve reached critical mass.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;2. Use backwards and sideways compatibility to benefit from existing complements.&lt;/strong&gt; Microsoft of course has used backward compatibility very successfully for decades with DOS and then Windows, as have many game console makers.  In our paper we argue that the successful early bill pay (“bill presentment”) companies provided backward compatibility by sending snail mail checks to merchants who had yet to sign on to their electronic platform.&lt;/p&gt;
&lt;p&gt;Virtual machines and Bootcamp gave Apple’s hardware some sideways compatibility with Windows.  Sun’s invention of Java could be seen as an attempt to introduce sideways compatibility between its shrinking server market and its competitors (Windows, Linux) by introducing a new, cross-platform programming layer.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;3. Exploit irregular network topologies.&lt;/strong&gt; In the last 90s, most people assumed that dating websites was a “winner take all market” and Match.com had won it, until a swath of niche competitors arose (e.g. Jdate) that succeeded because certain groups of people tend to date others from that same group.  Real-life networks are often very different from the idealized, uniformly distributed networks pictured in economics textbooks.  Facebook exploited the fact that social connections are highly clustered at colleges as a “beachhead” to challenge much bigger incumbents (Friendster).  By finding clusters in the network smaller companies can reach critical mass within those sub-clusters and then expand beyond.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;4. Influence the firms that produce vital complements.  Sony and Philips, the companies that oversaw the successful launch of the compact disc technology in the early 1980′s, followed the CD launch with the introduction of the digital audiotape (DAT) in 1987. The DAT offered CD sound quality and, in a significant improvement over CD technology, it also offered the ability to record music.  Despite these improvements, the DAT never gained significant consumer adoption and ended as an embarrassing failure for Sony and Philips.  DAT failed because Sony and Philips failed to reassure record companies who were concerned that the recording capabilities of DAT would lead to widespread piracy.  Sony finally reached an anti-piracy agreement with record companies in 1992, but by that time consumer expectations for the DAT platform were dampened sufficiently to doom the platform.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;On the other hand, when Sony and Philips launched the CD, they succeeded because they did a significantly better job influencing complement producers. Most importantly, they addressed the record companies’ primary concern by making CDs piracy resistant (or so it seemed at the time). In addition, Philips was able to influence Polygram, a major record label, to release music in the CD format because Philips owned a 50 percent stake in Polygram. Finally, Sony and Philips provided the record companies with access to their manufacturing technology and plant in order to ensure an adequate supply of complementary products. As a result, nearly 650 music titles were available in CD format when the first CD players were released and the CD format went on to become the most popular music format.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;5. Provide standalone value for the base product.  Philips introduced the videodisc player (VDP) in 1979 as a competitor to the VCR. VDPs had slightly better picture quality than VCRs and had potentially lower hardware and software costs, owing to a simpler manufacturing process. However, the VCR had a 3-4 year head start on the VDP and had already developed an installed base of over one million units.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Providing a stand-alone use is the strategy that VCR producers used to achieve a successful launch and avoid fighting the difficult chicken and egg startup problem. Unlike the VDP, the VCR offered the ability to time-shift television programming. In fact, when the VCR was launched this was the only application available because the market for pre-recorded videocassettes had not yet developed. The standalone value for the VCR “time-shifting television programming” was sufficiently strong to get over a million people to purchase the product in the first 3-4 years after its launch. This installed user base of the VCR as a base product was sufficient to entice entrepreneurs to develop a market for pre-recorded videocassettes as complementary products in the late 1970′s. The complement-based network effect that resulted improved the value of the base product, increased sales velocity for the base and complementary products, and ensured that the VCR would be a common feature in most American homes.&lt;/p&gt;
&lt;p&gt;A good modern example of this would be del.icio.us, which had stand alone value by storing your bookmarks in the cloud, and also had network effects with its social features.&lt;/p&gt;
&lt;p&gt;&lt;strong&gt;6. Integrate vertically into critical complements when supply is not certain.  To overcome the chicken and egg problem, companies must find a way to ensure an adequate supply, variety, and quality of complementary goods. By vertically integrating into the complement product as well as the base product, a company can attempt to ensure an adequate supply of both goods.  Nintendo is the leading developer of games for its consoles, and Microsoft and Sony fund many of their most popular games.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;Vertical integration is risky – as witnessed by the Apple computer in the late 80s and early 90s. By remaining tightly integrated, Apple precluded market competition from providing the necessary variety of price-competitive complements and base products.&lt;/p&gt;
&lt;p&gt;**&lt;/p&gt;
&lt;p&gt;Many of the above strategies (especially 3 &amp;#x26; 5) apply to regular (non-complementary) network effect products.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Dividing equity between founders]]></title><description><![CDATA[A friend asked me recently if I knew of any good guidelines for dividing up equity between founders, and specifically what to do in the case…]]></description><link>https://cdixon.org/2009/08/23/dividing-equity-between-founders</link><guid isPermaLink="false">https://cdixon.org/2009/08/23/dividing-equity-between-founders</guid><pubDate>Sun, 23 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A friend asked me recently if I knew of any good guidelines for dividing up equity between founders, and specifically what to do in the case when a co-founder provides seed capital.&lt;/p&gt;
&lt;p&gt;The truth is I don’t know of any great guidelines – this is seems to me a very case-by-case decison.&lt;/p&gt;
&lt;p&gt;Obviously the main consideration should be the relative importance of each founder to the future prospects of the venture.  And, as in any negotiation, the alternatives each person has will also factor in.&lt;/p&gt;
&lt;p&gt;Probably way too many founders divide things evenly just to avoid a difficult conversation.  Most likely, this will lead to a difficult conversation down the road (or worse).&lt;/p&gt;
&lt;p&gt;(As an aside – you should also figure out titles early on.  When founders say “we are co-CEOs” or “we don’t have titles” that more often than not means there is a big fight looming.  Startups are little dictatorships for good reason.)&lt;/p&gt;
&lt;p&gt;One thing I’ve also noticed is people tend to overvalue past contributions (coming up with the idea, spending time developing it, building a prototype, etc) and undervalue future contributions.  Remember that an equity grant is typically for the next 4 years of work (hence 4 years of vesting).  Imagine yourself 2 years from now after working day and night, and ask yourself in that situation if the split still seems fair.&lt;/p&gt;
&lt;p&gt;Another consideration is if one founder has had greater career success and will therefore significantly improve the odds of getting financed at an attractive valuation.  One way to figure out how much this is worth is to estimate how much having that founder increases your valuation at the next financing and then, say, split the difference.  So if having her means you can raise $2M by giving away 30% of your company instead of 40% of your company, let that founder have an extra 5%.&lt;/p&gt;
&lt;p&gt;If one founder had the idea for the company, it is sometimes reasonable to give that person additional equity.  If that idea involves a bona fide technology breakthrough, they could be entitled to considerably more equity, say 10-20% (or you may have to give some of that to a university or other IP owner). But if the idea is more abstract and doesn’t have real IP behind it (“User generated X” “A marketplace for Y”) that should only earn a few extra points of equity, if any.&lt;/p&gt;
&lt;p&gt;If one founder is providing seed capital, assuming there are no other investors involved, the best way to do this is a simple interest bearing (say 5% annual rate), non-convertible loan to the company. I did this once and just had my partner write an IOU on a single sheet of paper, without using lawyers.  When you raise further money the best thing is to have that loan convert into equity at the same terms as the rest of the investors (it looks a somewhat bad to investors to take their fresh capital and pay it right out to a founder – unless the founder is in dire financial straights).&lt;/p&gt;
&lt;p&gt;The reason you want to avoid granting equity for a founder’s seed capital is 1) it would cost a lot more in legal fees and 2) you would have to come up with a valuation without a 3rd party, arms length offer.&lt;/p&gt;
&lt;p&gt;If there are multiple seed investors, including non-founders, things get more complicated and you might have to resort to a convertible note or full blown equity round.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why you shouldn’t keep your startup idea secret]]></title><description><![CDATA[A frequent question entrepreneurs have when they are just starting their company is:  how secretive should I be about my idea?  My answer…]]></description><link>https://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret</link><guid isPermaLink="false">https://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret</guid><pubDate>Sat, 22 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A frequent question entrepreneurs have when they are just starting their company is:  how secretive should I be about my idea?  My answer:  you should talk about it to almost anyone who will listen.  This includes investors, entrepreneurs, people who work in similar areas, friends, people on the street, the bartender, etc.&lt;/p&gt;
&lt;p&gt;There are lots of benefits to talking to people.  You’ll get suggestions for improvements.  You’ll discover flaws and hopefully correct them.   You’ll learn a lot more about the sector/industry.  You’ll learn about competitive products that exist or are being built.  You’ll gauge people’s excitement level for the product and for various features.  You’ll refine your sales and investor pitch.  You might even discover your idea is a bad idea and save yourself years of hitting your head against the wall.&lt;/p&gt;
&lt;p&gt;In terms of the risk of someone stealing your idea, there are at best a handful of people in the world who might actually drop everything and copy your idea.&lt;/p&gt;
&lt;p&gt;First of all, most people will probably think your idea is stupid.  This does not mean your idea is stupid.  In fact, if everyone loves your idea, I might be worried that it’s not forward thinking enough.&lt;/p&gt;
&lt;p&gt;People at large related companies almost always think they have already built or are in the process of building all the good ideas – so your idea is either something they are already building (which is a good thing to discover early) or else they will dismiss it as a bad idea.  (I have a personal diligence rule that when speaking to people at large companies, the facts that they tell you are very useful but their opinions about startup ideas no more valuable than any other smart person’s opinions).&lt;/p&gt;
&lt;p&gt;In terms of speaking to other entrepreneurs, the vast majority are already working on something and are highly unlikely to drop everything and copy you.  Even if they are in the idea generation phase, high integrity entrepreneurs wouldn’t copy your idea anyways.&lt;/p&gt;
&lt;p&gt;VC’s will either not like your idea, or else like it and possibly want to fund you.  They vastly prefer funding an existing team than taking an idea and building a team.  The one risk is if they have entrepreneurs they are working with in a similar area (see next paragraph).  Most VCs have enough integrity to disclose this and let you decide how much detail to go into.&lt;/p&gt;
&lt;p&gt;The handful of people in the world who might copy your idea are entrepreneurs just starting up with a very similar idea.  You can probably just explicitly avoid these people, although by talking to lots of people your ideas will likely seep through to them.&lt;/p&gt;
&lt;p&gt;Even if your idea gets in the wrong hands, they will probably just get the high level “elevator pitch” which isn’t worth much anyways. Hopefully by that time you’ve developed the idea much further and in much greater detail – by talking to as many people as possible.&lt;/p&gt;
&lt;p&gt;A note about NDAs:  1) almost no experienced entrepreneurs/VCs will sign them (in fact, you asking them too is widely considered a sign of inexperience), 2) It’s not clear they have any real value – are you really going to spend years suing someone who signed an NDA?  I’ve personally never heard of it happening.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Machine learning is really good at partially solving just about any problem]]></title><description><![CDATA[There’s a saying in artificial intelligence circles that techniques like machine learning (and NLP) can very quickly get you, say, 80% of…]]></description><link>https://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem</link><guid isPermaLink="false">https://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem</guid><pubDate>Thu, 20 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;There’s a saying in artificial intelligence circles that techniques like &lt;a href=&quot;http://en.wikipedia.org/wiki/Machine_learning&quot;&gt;machine learning&lt;/a&gt; (and &lt;a href=&quot;http://en.wikipedia.org/wiki/Natural_language_processing&quot;&gt;NLP&lt;/a&gt;) can very quickly get you, say, 80% of the way to solving just about any (real world) problem, but going beyond 80% is extremely hard, maybe even impossible.  The Netflix Challenge is a case in point: hundreds of the best researchers in the world worked on the problem for 2 years and the (apparent) winning team got a 10% improvement over Netflix’s in-house algorithm.  This is consistent with my own experience, having spent many years and dollars on machine learning projects.&lt;/p&gt;
&lt;p&gt;This doesn’t mean machine learning isn’t useful – it just means you need to apply it to contexts that are fault tolerant:  for example, online ad targeting, ranking search results, recommendations, and spam filtering.  Areas where people aren’t so fault tolerant and machine learning usually disappoints include machine translation, speech recognition, and image recognition.&lt;/p&gt;
&lt;p&gt;That’s not to say you can’t use machine learning to attack these non-fault tolorant problems, but just that you need to realize the limits of automation and build mechanisms to compensate for those limits.  One great thing about most machine learning algorithms is you can infer confidence levels and then, say, ship low confidence results to a manual process.&lt;/p&gt;
&lt;p&gt;A corollary of all of the above is that it is very rare for startup companies to ever have a competitive advantage because of their machine learning algorithms.  If a worldwide concerted effort can only improve Netflix’s algorithm by 10%, how likely are 4 people in an R+D department in a startup going to have a significant breakthrough.  Modern ML algorithms are the product of thousands of academics and billions of dollars of R+D and are generally only improved upon at the margins by individual companies.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Options on early stage companies]]></title><description><![CDATA[I believe that what I’m about to say is accepted by venture capitalists as fact, even trivially obvious fact, yet very few entrepreneurs I…]]></description><link>https://cdixon.org/2009/08/17/options-on-early-stage-companies</link><guid isPermaLink="false">https://cdixon.org/2009/08/17/options-on-early-stage-companies</guid><pubDate>Mon, 17 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I believe that what I’m about to say is accepted by venture capitalists as fact, even trivially obvious fact, yet very few entrepreneurs I meet seem to understand it.&lt;/p&gt;
&lt;p&gt;An option on a share of stock of an early stage company is (for all practical purposes) equal in value to a share in that early stage company.  Not less, as most entrepreneurs seem to believe (and god forbid you think “the VCs have the option to put in more money” is economically advantageous to you).&lt;/p&gt;
&lt;p&gt;Here’s why.  Black and Scholes (and Merton) won a Nobel prize for inventing the Black-Scholes model, which was the first model that somewhat accurately modeled options pricing.  Using this model, and making a few reasonable assumptions (the option is “near the money,” the maturity is sufficiently far away), the key driver of an option’s value is &lt;a href=&quot;http://en.wikipedia.org/wiki/Volatility_(finance)&quot;&gt;volatility&lt;/a&gt; (in fact, if you listen to option traders talk, they actually talk about prices in “vols”).   In public markets, options are usually priced at some fraction of the share price.  This is because public stocks under normal circumstances have volatilities around, say, 20% (at least they used to 10 years ago when I was programming options pricing algorithms).&lt;/p&gt;
&lt;p&gt;The volatility of the value of a seed stage startup is incredibly high.  I don’t know if any data exists for what volatility estimate would be good to use, but for an informal analysis suppose the average volatility of a seed stage startup is 300%.  Then try putting 300% into the volatility field of a Black-Scholes &lt;a href=&quot;http://www.erieri.com/scripts23/blackscholes/blackscholes.exe/Calculate&quot;&gt;calculator&lt;/a&gt;:&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
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      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 658px;&quot;
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    class=&quot;gatsby-resp-image-link&quot;
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        class=&quot;gatsby-resp-image-image&quot;
        alt=&quot;picture 20&quot;
        title=&quot;picture-20&quot;
        src=&quot;/static/9656efda61973b989764fe608c4a7a35/6164f/picture-20.png&quot;
        srcset=&quot;/static/9656efda61973b989764fe608c4a7a35/924ad/picture-20.png 170w,
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    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;picture-20&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;So if your share price is $1, an option (European Call is a fancy word for options similar to what are given out in startups) is worth $0.9993 dollars.&lt;/p&gt;
&lt;p&gt;This is good news for start up employees, directors, and advisors who are awarded stock options.  Their options are economically as valuable as stock but have better tax treatment.&lt;/p&gt;
&lt;p&gt;Here’s the bad news.  At least since I’ve been observing early stage deals (since 2003), &lt;strong&gt;so-called financial innovation in venture capital has been all about creating new kinds of options for investors, each one more obfuscatory than the last.&lt;/strong&gt;&lt;/p&gt;
&lt;p&gt;- The first way they create options is by simply doing nothing – telling the entrepreneur “great idea, come back in a few months when you’ve made more progress.”  The logic is: why would you invest now when you could invest in, say, 3 months with more information? (as VCs say, why not “flip another card over”).  This is obviously perfectly within their rights and logical, but ultimately, in my opinion, penny wise and pound foolish.   While the VCs might be successful with this strategy on a specific deal, in the long run they are hurting themselves reputationally and also probably by letting some good deals slip away.&lt;/p&gt;
&lt;p&gt;- Next there is tranching – this is pretty literally an option.  Even if the pre-negotiated future valuations are higher, the option has basically the same value as a share at the current price.  Try the Black-Scholes calculator but changing the strike price to 10 (simulating the idea that the seed round is $1M pre and future valuation is $10m pre):&lt;/p&gt;
&lt;p&gt;&lt;figure class=&quot;gatsby-resp-image-figure&quot; style=&quot;&quot;&gt;
    &lt;span
      class=&quot;gatsby-resp-image-wrapper&quot;
      style=&quot;position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;&quot;
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    rel=&quot;noopener&quot;
  &gt;
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        alt=&quot;picture 211&quot;
        title=&quot;picture-211&quot;
        src=&quot;/static/4877b070acefce900b537e88250ee0d4/94a55/picture-211.png&quot;
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    &lt;/span&gt;
    &lt;figcaption class=&quot;gatsby-resp-image-figcaption&quot;&gt;picture-211&lt;/figcaption&gt;
  &lt;/figure&gt;&lt;/p&gt;
&lt;p&gt;The point is with the super high volatility of startups, you can structure the option in almost any way and it’s still like giving someone shares.  (I discuss the problems with tranching in more detail &lt;a href=&quot;http://www.cdixon.org/?p=261&quot;&gt;here&lt;/a&gt;.)&lt;/p&gt;
&lt;p&gt;- Next there was “warrant coverage.”  This is perfectly legitimate in many cases (e.g. as a “kicker” in a venture debt round, as part of an important strategic partnership), as long as the entrepreneur understands 1 warrant basically equals 1 share.  One mistake entrepreneurs often make is to focus so intently on nominal valuation that they don’t realize their “effective valuation” with warrants is much lower.  For example, if the valuation is $10M pre and you give 100% warrant coverage, the valuation is really $5M pre.&lt;/p&gt;
&lt;p&gt;- Over the past few years with big VCs starting “seed programs” we’ve seen the emergence of situations where there is no contractual option but the signaling value of the VC’s potential non-participation gives them option-like value.  I discuss why I dislike these deals &lt;a href=&quot;http://www.cdixon.org/?p=256&quot;&gt;here&lt;/a&gt;.  (This might be one point on which &lt;a href=&quot;http://www.avc.com/&quot;&gt;Fred&lt;/a&gt; and I disagree…?).&lt;/p&gt;
&lt;p&gt;- Super pro rata rights.  This is a new term that’s popped up lately.  Pro-rata rights are options, but seem like reasonable ones.  If as an investor I bought 5% of your company, pro rata rights give me the right to invest 5% in the next round.  They are arguably a reasonable reward for taking a risk early on.  &lt;strong&gt;Super&lt;/strong&gt; pro rata rights mean if I buy 5% of your company now I have the right to invest, say, 50% of the next round.  This is a really expensive deal for the entrepreneur.  If an investors puts in $250K for 5% of your company now with super pro rata rights on 50% of the next round, I’d just for simplicity assume you sold ~20% (assuming the next round sells 30% and the VC does half of that) of your company for $250K.  (The actual analysis of the value of super rata rights seems tricky – maybe some finance PhD will figure out how to price them at some point).&lt;/p&gt;
&lt;p&gt;Good VCs don’t mess around with this stuff.  They realize that real value is created when you invest in great people and innovate around technology, not finance.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Ideal first round funding terms]]></title><description><![CDATA[My last 2 posts were about things to avoid, so I thought it might be helpful to follow up with something more positive.  Having been part of…]]></description><link>https://cdixon.org/2009/08/16/ideal-first-round-funding-terms</link><guid isPermaLink="false">https://cdixon.org/2009/08/16/ideal-first-round-funding-terms</guid><pubDate>Sun, 16 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;My last 2 posts were about things to avoid, so I thought it might be helpful to follow up with something more positive.  Having been part of or observed about 50 early stage deals, I have come to believe there is a clearly dominant set of deal terms.   Here they are:&lt;/p&gt;
&lt;p&gt;- Investors get either common stock or 1x non-participating preferred stock.  Anything more than that (participating preferred, multiple liquidation preferences) divide incentives of investors and the entrepreneurs.  Also, this sort of crud tends to get amplified in follow on rounds.&lt;/p&gt;
&lt;p&gt;- Pro rata rights for investors.   Not super pro rata rights (explaining why this new trendy term is a bad idea requires a separate blog post).  This means basically that investors have the right to put more money in follow on rounds.  This should include &lt;strong&gt;all&lt;/strong&gt; investors – including small angels when they are investing alongside big VCs.  There are two reasons this term is important 1) it seems fair that investors have the option to reinvest in good companies – they took a risk at the early stage after all 2) in certain situations it lets investors “protect” their investments from possible valuation manipulation (this has never happened to me but more experienced investors tell me horror stories about stuff that went on in the last downturn – 2001-2004).&lt;/p&gt;
&lt;p&gt;- Founder vesting w/ acceleration on change of control.  I talk about this in detail &lt;a href=&quot;http://www.cdixon.org/?p=164&quot;&gt;here&lt;/a&gt;.   If your lawyer tries to talk you out of founder vesting (as some seem to be doing lately), I suggest you get a new lawyer.&lt;/p&gt;
&lt;p&gt;- This stuff is all so standard that there is no reason you should pay more than $10K for the financing (including both sides).  I personally use &lt;a href=&quot;http://www.gunder.com/&quot;&gt;Gunderson&lt;/a&gt; and think they are great.   Whoever you choose, I strongly recommend you go with a “standard” startup lawfirm (Gunderson, Wilson Sonsini, Fenwick etc).   I tried going with a non-standard one once and the results were disastrous.  Also, when you go with a standard firm and get their standard docs it can expedite later rounds as VCs are familiar with them.&lt;/p&gt;
&lt;p&gt;- A board consisting of 1 investor, 1 management and 1 mutually agreed upon independent director.  (Or 2 VCs, 2 mgmt and 1 indy).  As an entrepreneur, the way I think of this is if both my investors and an independent director who I approved want to fire me, I must be doing a pretty crappy job and deserve it.&lt;/p&gt;
&lt;p&gt;- Founder salaries – these should be “subsistence” level and no more.  If the founders are wealthy, the number should be zero.  If they aren’t, it should be whatever lets them not worry about money but not save any.  This is very, very important.  Peter Thiel said it best &lt;a href=&quot;http://www.techcrunch.com/2008/09/08/peter-thiel-best-predictor-of-startup-success-is-low-ceo-pay/&quot;&gt;here&lt;/a&gt;.  (I would actually go further and say this should be true of all employees at all non-profitable startups – but that is a longer topic).&lt;/p&gt;
&lt;p&gt;- If small angels are investing alongside big VCs, they should get all the same economic rights as the VCs but no control rights.  Economics rights means share price, any warrants if there are any (hopefully there aren’t), and pro-rata rights.  Control rights means things like the right to block later financings, selling the company etc.  I once had to track down a tiny investor in the mountains of Italy to get a signature.  It’s a real pain and unnecessary.&lt;/p&gt;
&lt;p&gt;- Option pool – normally 10-20%.  This comes out of the pre-money so founders should be aware that the number is very important in terms of their dilution.  Ideally the % should be based on a hiring plan and not just a deal point.   (Side note to entrepreneurs – whenever you want to debate something with a VC, frame it in operational terms since it’s hard for them to argue with that).&lt;/p&gt;
&lt;p&gt;- All the other stuff (registration rights, dividends etc) should be standard NVCA terms.&lt;/p&gt;
&lt;p&gt;- Valuation &amp;#x26; amount- My preference is to keep all terms as above and only negotiate over 2 things – valuation and amount raised.  The amount raised should be enough to hit whatever milestones you think will get the company further financing, plus some fudge factor of, say, 50% because things always take longer and cost more than you think.  The valuation is obviously a matter of market conditions, how competitive the deal is etc.   One thing I would say is if you expect to raise more money (and you should expect to), make sure your post-money valuation is one that you will be able to “beat” in your next round.  There is nothing more dilutive and morale crushing than a down round.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The problem with tranched VC investments]]></title><description><![CDATA[In venture capital, tranching refers to investments where portions of the money are released over time when certain pre-negotiated…]]></description><link>https://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments</link><guid isPermaLink="false">https://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments</guid><pubDate>Sat, 15 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;In venture capital, tranching refers to investments where portions of the money are released over time when certain pre-negotiated milestones are hit.  Usually it will all be part of one Series of investment, so a company might raise, say, $5M in the Series A but actually only receive, say, half up front and half when they’ve hit certain milestones.  Sometimes something similar to tranching is simulated, for example when a VC makes a seed investment and pre-negotiates the Series A valuation, along with milestones necessary to trigger it.&lt;/p&gt;
&lt;p&gt;In theory, tranching gives the VC’s a way to mitigate risk and the entrepreneur the comfort of not having to do a roadshow for the next round of financing.  In practice, I’ve found tranching to be a really bad idea.&lt;/p&gt;
&lt;p&gt;First of all, the entrepreneur should realize that the milestones written in the document are merely guidelines and ultimately the VC has complete control over whether to fund the follow on tranches.  Imagine a scenario where the entrepreneur hits the milestones but for whatever reason the VC gets cold feet and doesn’t want to fund the follow on tranche.  What is the entrepreneur going to do – sue the VC?  First of all they have vastly deeper pockets than you, so at best you will get tied up in court for a long time while your startup goes down the tubes.  Not to mention that it would effectively blacklist you in the VC community.  So just realize that contracts are the right to sue and nothing more.  The only money you can depend on is the money sitting in your bank account.&lt;/p&gt;
&lt;p&gt;Here are some other reasons both entrepreneurs and investors should dislike tranching:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Makes hiring more difficult: Hiring is super critical at an early stage.  A very reasonable question prospective employees often (and should) ask  is “How many months of cash do you have in the bank?”  How do you respond if the money is tranched?  In my first startup, our full round gave us 18 months of cash but the first trance only a few months.  Should I have said what I had in the bank- just a few months – and scare the prospective hire?  Or should I have tried to explain “Oh, we have 18 months, but there is this thing called tranching, blah blah blah, and I’m sure the VCs will pony up.”  Not very reassuring either way.&lt;/li&gt;
&lt;li&gt;Distracts the entrepreneur:  The entrepreneur is forced to spend time making sure she gets the follow-on tranches.  In many cases, she even has to go present to the VC partnership multiple times (each time requiring lots of prep time).  Also, savvy entrepreneurs will prepare multiple options in case the VC decides not to fund, so will spend time talking to other potential investors to keep them warm.  So basically tranching adds 10-20% overhead for the founders that could otherwise be spent on the product, marketing etc.&lt;/li&gt;
&lt;li&gt;Milestones change anyways:  At the early stage you often realize that what milestones you originally thought were important actually were the wrong milestones.   So you either have to renegotiate the milestones or the entrepreneur ends up targeting the wrong things just to get the money.&lt;/li&gt;
&lt;li&gt;Hurts VC-entrepreneur relations.  Specifically, it encourages the entrepreneur to “manage” the investors.    One of the great things about properly financed early stage startups is that everyone involved has the same incentives – to help the company succeed.  In good companies, the investors and entrepreneurs really do work as a team and share information completely and honestly.  When the deal is tranched, the entrepreneurs has a strong incentive to control the information that goes to the investors and make things appear rosy.  The VC in turn usually recognizes this and feels manipulated.  I’ve been on both sides of this and have felt its insidious effect.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;There are better ways for investors to mitigate risk – e.g. lower the valuation, smaller round size.  But don’t tranche.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Why seed investors don’t like convertible notes]]></title><description><![CDATA[A popular option in seed round financing is a convertible note instead of setting a valuation in an equity financing.  A convertible note is…]]></description><link>https://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes</link><guid isPermaLink="false">https://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes</guid><pubDate>Wed, 12 Aug 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;A popular option in seed round financing is a convertible note instead of setting a valuation in an equity financing.  A convertible note is basically a loan where the investors convert the debt into equity in the next round of financing at a step up.  A common step up is 20%, which means for every dollar the investors lend, they get $1.20 worth of shares in the subsequent round.&lt;/p&gt;
&lt;p&gt;The appeal of convertible notes is 1) it defers the negotiation about valuation to the next round 2) it is often much cheaper in terms of legal fees (~$5k versus $20-40K).&lt;/p&gt;
&lt;p&gt;Here’s why a lot of seed investors don’t like convertible notes:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Most importantly, they split the entrepreneur’s and investors’ incentives – for the subsequent round, the entrepreneur benefits from a higher valuation, the investor from a low one.   Most investors work hard despite this to help the company, but nevertheless the note creates friction between people who should be working in tandem.&lt;/li&gt;
&lt;li&gt;On more than a few occasions VCs in subsequent rounds have said “I don’t want to give the seed investors a 20% step up.”  Sure, the step up is in a contract, but the investor in the subsequent round can always make their investment contingent upon modifying that contract.  In the end, it ends up pitting seed investors who wants their step up versus entrepreneur who wants to get the financing done, and the seed investor is forced to choose between getting the step up they deserve and being “the bad guy” who spoils the financing.&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;One increasingly popular compromise is to do a “convertible with a cap.”  What this mean is that you set a cap of $N million dollars valuation and a step up of M%, and on the subsequent round the seed investor gets the better of the two.  If the cap is low enough, this mostly rectifies #1 above since the investor has the economic incentive to increase the valuation above the cap.  It doesn’t rectify #2, however, but does have the benefit of being significantly cheaper in terms of legal fees than a proper equity financing.   There is nothing worse than spending 5%-10% of your seed round on lawyers.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[The myth of the Eureka moment]]></title><description><![CDATA[I’ve been involved in the development of a number startups over the years, including three I co-founded.   I have also observed the idea…]]></description><link>https://cdixon.org/2009/05/15/the-myth-of-the-eureka-moment</link><guid isPermaLink="false">https://cdixon.org/2009/05/15/the-myth-of-the-eureka-moment</guid><pubDate>Fri, 15 May 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;I’ve been involved in the development of a number startups over the years, including three I co-founded.   I have also observed the idea development process from the outside many times.  In the 10 years or so I’ve been involved with startups, I have never seen a “Eureka” moment where someone suddenly comes up with a great idea.  Instead, I have always found idea development to be a wrenching and often meandering process that is guided mostly by instinct.&lt;/p&gt;
&lt;p&gt;I think the first step to developing an idea is picking a general “space” that you think has interesting things going on (picking the right space and the right co-founders are in my view the only really important things you do at the beginning of a startup).  Maybe you have experience in the space or maybe you just sense something interesting is going on there.&lt;/p&gt;
&lt;p&gt;Here’s my experience developing the idea for &lt;a href=&quot;http://www.siteadvisor.com&quot;&gt;SiteAdvisor&lt;/a&gt;.  At the time, I had never worked in computer security but had always found it interesting.  When I worked at &lt;a href=&quot;http://www.bvp.com&quot;&gt;Bessemer&lt;/a&gt;, I spent as much time as I could talking to &lt;a href=&quot;http://whohastimeforthis.blogspot.com/&quot;&gt;David Cowan&lt;/a&gt; and other security experts.  One thing that was apparent was that, on average, every few years a new type of security threat would come along and usually with each wave of threats some interesting startups were built (e.g. viruses-&gt;mcafee &amp;#x26; symantec, spam-&gt;brightmail &amp;#x26; postini, spyware-&gt;webroot).  So in 2003 when phishing began to emerge, a friend and I created an anti-phishing toolbar.  It wasn’t a particularly special piece of software – there were a couple of other anti-phishing toolbars around at the time that had similar functionality.  We just figured something interesting was going on so let’s throw our hat in the ring and maybe something good will emerge.&lt;/p&gt;
&lt;p&gt;Think back to 2003, before Firefox.  It was a pretty bad time on the web.  Venturing off the major websites, you’d get bombarded with popups and spyware and ActiveX warnings.  It occurred to us:   if we are warning users about phishing sites, why don’t we warn them about sites that do other bad things?  In other words, we realized that phishing was just a special case of a more general problem – the web needed a reputation system for websites.  Two years later, by the time we actually released SiteAdvisor, phishing was just an afterthought (in fact the first version of SiteAdvisor didn’t even include anti-phishing since we were focused on “Safe Search” and phishing sites don’t show up in search results for various technical reasons).&lt;/p&gt;
&lt;p&gt;Today &lt;a href=&quot;http://www.siteadvisor.com&quot;&gt;every&lt;/a&gt; &lt;a href=&quot;http://safeweb.norton.com/&quot;&gt;major&lt;/a&gt; &lt;a href=&quot;http://www.trendsecure.com/portal/en-US/tools/security_tools/trendprotect&quot;&gt;security&lt;/a&gt; company has a “safe search product.”  It seems kind of obvious now.  But in retrospect, I don’t see how we would ever have developed the idea without having already “thrown our hat in the ring.”  Even if we had thought of the idea, we probably would have dismissed it as too obvious.  When you aren’t actively engaged in an space you can’t see the gaps.&lt;/p&gt;
&lt;p&gt;I think a lot of people who are interested in starting companies think they shouldn’t do it until they have a Eureka moment.  I’d say that instead they should focus on finding an area that “feels interesting” and then get ready to bob and weave.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Joining a startup is far less risky than most people think]]></title><description><![CDATA[Joining a startup is far less risky than most people seem to think.  In fact, I don’t know if anyone has ever studied this systematically…]]></description><link>https://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think</link><guid isPermaLink="false">https://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think</guid><pubDate>Mon, 11 May 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;Joining a startup is far less risky than most people seem to think.  In fact, I don’t know if anyone has ever studied this systematically, but I would bet that people who join startups have greater job security than people who join large companies, and certainly have better risk-adjusted returns.&lt;/p&gt;
&lt;p&gt;Here’s why:&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Big companies aren’t as stable as you think:&lt;/strong&gt;  I graduated business school 6 years ago.  Very few people in my class created or joined startups, instead opting for “safe” companies like… Bear Stearns, Lehman Brothers, Ford, hedge funds that no longer exist, etc.  Meanwhile, everyone I know who went the startup route has had job security and been successful – in some cases spectacularly so.&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Big companies aren’t loyal to employees:&lt;/strong&gt;  When there are cuts at big companies, they tend to just use a hacksaw and not consider how loyal you’ve been or how hard you worked.  The people who survive are often the ones who happen to be in certain favored divisions or are good at playing politics.&lt;/p&gt;
&lt;p&gt;On the flip side:&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Startups that have financing pay pretty well:&lt;/strong&gt;  If the startup you found or join is VC backed, you usually make market or near-market wages (in addition to the potential upside you get with equity).   Even if things go south you will probably have broken even financially and learned valuable skills.&lt;/p&gt;
&lt;p&gt;- &lt;strong&gt;Startups tend to be much more loyal to employees&lt;/strong&gt;:  For example, in the recent downturn I know of a number of startups where management took pay cuts (in some cases took their pay to zero) before laying anyone off.  Experienced startup managers know how devastating layoffs can be to morale and to their own reputation and tend to avoid them at all costs.  Moreover, even when there are layoffs they tend to be based on merit and loyalty.&lt;/p&gt;
&lt;p&gt;**- When you join a startup, you are also joining a network –  **You aren’t just joining a company – you are joining a network of employees and investors who – regardless of the fate of the startup you join – will inevitably go on to do interesting and successful ventures.  If you impress them, they will bring you along.  I know of many cases where startups failed but employees went on to flourish at the founders’ next startup or another company their VCs invested in.&lt;/p&gt;
&lt;p&gt;In short, just because startups tend to fail more than big companies doesn’t mean joining a startup is riskier than joining a big company.&lt;/p&gt;</content:encoded></item><item><title><![CDATA[Founder vesting]]></title><description><![CDATA[The most important term in a startup term sheet that no one seems to think carefully about is founder vesting.   There are two key points…]]></description><link>https://cdixon.org/2009/04/21/founder-vesting</link><guid isPermaLink="false">https://cdixon.org/2009/04/21/founder-vesting</guid><pubDate>Tue, 21 Apr 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The most important term in a startup term sheet that no one seems to think carefully about is &lt;em&gt;founder vesting&lt;/em&gt;.   There are two key points about vesting:&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;All startup employees – including founders! – should vest over 4 years from their start date (with a one year “cliff”).  When I used to work in VC I can’t tell you how many companies I saw where some random former founder who was long gone from the company and was only there for some short period of time owned some big chunk of the company.  Not only is this just plain unfair, it also means there is a lot less room for giving equity to employees and for raising new capital.  Even if you are founding a company with your best friend – actually, &lt;strong&gt;especially&lt;/strong&gt; if you are founding a company with your best friend – everyone should have vesting.   If you have a lawyer who tells you otherwise, get a new lawyer.&lt;/li&gt;
&lt;li&gt;Founders should always have acceleration on change of control!  In particular, you should have full acceleration on “double trigger” (company is acquired and you are fired).  In addition you should have partial acceleration on “single trigger” (company is acquired and you remain at company).  I prefer a structure where you accelerate such that you have N months remaining (N=12 is a good number).  This gives the acquirer comfort that the key people will be around for a reasonable period of time but also lets the founders get the equity they deserve without spending years and years at the acquirer.  Consider the scenario where your company gets acquired 1 year after founding and you have 3 years of vesting remaining.   Suppose further that you just aren’t a big company type and leave after 1 year.  In that case you would forgo half your equity.  It’s always surprising to me how much time founders spending focusing on valuation that might change their ownership by a few points when vesting acceleration (albeit under certain circumstances – but I have seen this happen) can have a far larger impact on their ultimate equity ownership.&lt;/li&gt;
&lt;/ol&gt;</content:encoded></item><item><title><![CDATA[Naming your startup]]></title><description><![CDATA[The Name Inspector has a good post today regarding 6 naming myths to ignore. I think it’s generally right on.   Naming is so important and…]]></description><link>https://cdixon.org/2009/04/18/naming-your-startup</link><guid isPermaLink="false">https://cdixon.org/2009/04/18/naming-your-startup</guid><pubDate>Sat, 18 Apr 2009 00:00:00 GMT</pubDate><content:encoded>&lt;p&gt;The Name Inspector has a good post today regarding &lt;a href=&quot;http://www.thenameinspector.com/six-naming-myths-to-ignore/&quot;&gt;6 naming myths to ignore.&lt;/a&gt; I think it’s generally right on.   Naming is so important and so incredibly hard, especially for consumer internet companies that not only have to find a good name but also get the URL.   I am convinced that a big part of Twitter’s success, for example, is it has such a great name.  Simple word, easy to spell, great imagery, and also evocative of what the product does without being overly literal.&lt;/p&gt;
&lt;p&gt;I have been involved in naming a number of startups, including my two most recent companies:  Hunch and SiteAdvisor.  Each time it was a long and painful process.  Here are some things I’ve learned along the way.&lt;/p&gt;
&lt;ol&gt;
&lt;li&gt;Probably the most important thing is that the name be easy to spell after someone hears it pronounced.  I was involved in one startup before where every time you said the name the person says “what?” and then you have to spell it.  Trust me, it becomes really tedious and also adds friction to word-of-mouth buzz.&lt;/li&gt;
&lt;li&gt;You should have different naming goals for different products.  For example, SiteAdvisor was a security product.  You really can’t make security “cool” so we didn’t even try to bother to do that with the name.  Instead we went for a name that helped explain in a very literal way what the product did.  Before we came up with the name SiteAdvisor, I probably had 100 meetings where people said “I don’t understand what you are building – is it an anti-phishing toolbar, a spyware blocker or what?”.   This included meetings with VC’s who focus on security and other experts.  I knew the name SiteAdvisor was a winner when my father in law wrote the name on a high school blackboard and asked the kids what they thought the company did and one kid said “They advise you about websites” (and then he said ” … or construction sites” :) ).   Also we liked the name because we imagined in the future doing more than just security – for example warning about adult content.  (Alas, we never got that far).&lt;/li&gt;
&lt;li&gt;I tend to disagree with The Name Inspector about name length.  Shorter is definitely better.  In particular the number of syllables is important.  SiteAdvisor, while good at describing the product, is really clunky to pronounce.   I also tend to really dislike Latin-y portmanteau names like “Integra” “Omnitrust” etc.  Sounds like a pharmaceutical product.&lt;/li&gt;
&lt;li&gt;A few things I’ve learned about methodology.  I think it’s very rare to have an epiphany where you come up with a great name.  First of all, even if you do, the domain is probably taken and too expensive.  For systematically brainstorming, I really like the &lt;a href=&quot;http://www.rhymezone.com/r/rhyme.cgi?Word=intuition&amp;#x26;typeofrhyme=rel&amp;#x26;org1=syl&amp;#x26;org2=l&quot;&gt;Related Words function on RhymeZone&lt;/a&gt;.  I try to make lists of words that are sort of related to the product and then look at all the related words, look at all those words’ related words, etc, making lists of words and word fragments that sounds good.  Then I have a systematic process for checking domains to see if they are buyable.  If you are super lucky (and picked a multiword domain name) you might get it retail, but at this point almost all .com names (yes, I think you still need to own the .com) are owned by someone and the question becomes whether they will sell it at a reasonable price.  The best case is usually that it’s owned by a professional domainer and it’s not very monetizable via Adsense (domainers make a lot of money from Adsense on sites like candy.com so you’d need to offer them a tons of money to sell it).&lt;/li&gt;
&lt;/ol&gt;
&lt;p&gt;Naming is tough!&lt;/p&gt;</content:encoded></item></channel></rss>

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      "content": "<p>I wrote a book: <em>Read Write Own</em></p>\n<p>I believe blockchains and the software movement around them – typically called crypto or web3 – provide the only plausible path to sustaining the original vision of the internet as an open platform that incentivizes creativity and entrepreneurship. I’ve been investing behind this thesis for years, and advocating for it through writing and speaking and by talking to business leaders, journalists, and policymakers both here and around the world.</p>\n<p>Through all that, it became clear that we need a comprehensive book that clearly explains new technologies like blockchains and the services built on top of them; how they fit into the history of the internet; and why they should matter to founders, developers, creators, and anyone interested in the history and evolution of business, technology, and innovation.</p>\n<p>So I wrote that book: <em>Read Write Own: Building the Next Era of the Internet.</em></p>\n<p>My thesis is that seemingly small initial decisions around software and network design can have profound downstream consequences on the control and economics of digital services. The book walks through the history of the internet, showing how it has gone through three major design eras: the first focused on democratizing information (read), the second on democratizing publishing (write), and the third on democratizing ownership (own).</p>\n<p>We are on the cusp of the third era – own – so I explain the key concepts underlying it, including blockchains and digital services built on top of blockchains. The book therefore answers a common question I hear: “<em>What problems do blockchains solve?</em>” Blockchains solve the same problems that other digital services solve, but with better outcomes. They can connect people in social networks, while empowering users over corporate interests. They can underpin marketplaces and payment systems that facilitate commerce, but with persistently lower take rates. They can enable new forms of monetizable media, interoperable and immersive digital worlds, and artificial intelligence services that compensate – rather than cannibalize – creators and communities.</p>\n<p>The book takes controversial questions head on, including policy and regulatory topics, and the harmful “casino” culture that has developed around crypto that hurts public perception and undermines its potential. And I go deeper into intersecting topics like artificial intelligence, social networks, finance, media businesses, collaborative creation, video games, and virtual worlds.</p>\n<p>Inspired by modern tech classics like <em>Zero to One</em> and <em>The Hard Thing About Hard Things</em>, I wrote the book to be succinct, thorough, and accessible. I also distill cutting-edge thinking from technologists and founders to make it useful to practitioners. My goal was to make it accessible without watering it down. The book is meant for a range of audiences, including entrepreneurs, technologists, company leaders, policymakers, journalists, business thinkers, artists, community builders, and people who are simply curious about new technologies, culture, and the future of the internet.</p>\n<p>I love reading books but believe that tech and business topics usually work better in shorter formats, which is why in the past I’ve stuck to blogging and tweeting. But accomplishing all of the above warranted a longer treatment, bringing new and different ideas together in one place. So I spent much of the last year doing this. Many of the ideas I’ve thought about for a long time but never took the time to write. </p>\n<p><em>Read Write Own: Building the Next Era of the Internet</em> will be published by Random House on March 12, 2024. You can pre-order it <a href=\"https://readwriteown.com\">here</a>. </p>\n<p>Sign up for more book updates <a href=\"https://cdixon.substack.com\">here</a>. </p>\n<hr>\n<p>[more about the term and title \"Read Write Own\" <a href=\"https://readwriteown.com/terminologyhistory/\">here</a>]</p>",
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      "published": "2021-02-27T00:00:00.000Z",
      "updated": "2021-02-27T00:00:00.000Z",
      "content": "<p align=\"center\"><span class=\"gatsby-resp-image-wrapper\" style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 400px;\">\n      <a class=\"gatsby-resp-image-link\" href=\"/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png\" style=\"display: block\" target=\"_blank\" rel=\"noopener\">\n    <span class=\"gatsby-resp-image-background-image\" style=\"padding-bottom: 58.50000000000001%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"></span>\n  <img class=\"gatsby-resp-image-image\" alt=\"nfts\" title=\"nfts\" src=\"/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png\" srcset=\"/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/924ad/nfts.png 170w,\n/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/f570f/nfts.png 341w,\n/static/fbd4dd4cb7fd6c004298f28b0cb24b8f/c7805/nfts.png 400w\" sizes=\"(max-width: 400px) 100vw, 400px\" loading=\"lazy\">\n  </a>\n    </span></p> \n \n<p>In his classic 2008 essay “<a href=\"https://kk.org/thetechnium/1000-true-fans/\">1000 True Fans</a>,” Kevin Kelly predicted that the internet would transform the economics of creative activities:</p>\n<blockquote>\n<p>To be a successful creator you don’t need millions. You don’t need millions of dollars or millions of customers, millions of clients or millions of fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.</p>\n</blockquote>\n<blockquote>\n<p>A true fan is defined as a fan that will buy anything you produce. These diehard fans will drive 200 miles to see you sing; they will buy the hardback and paperback and audible versions of your book; they will purchase your next figurine sight unseen; they will pay for the “best-of” DVD version of your free YouTube channel; they will come to your chef’s table once a month.</p>\n</blockquote>\n<p>Kelly’s vision was that the internet was the ultimate matchmaker, enabling 21st century patronage. Creators, no matter how seemingly niche, could now discover their true fans, who would in turn demonstrate their enthusiasm through direct financial support.</p>\n<p>But the internet took a detour. Centralized social platforms became the dominant way for creators and fans to connect. The platforms used this power to become the new intermediaries — inserting ads and algorithmic recommendations between creators and users while keeping most of the revenue for themselves.</p>\n<p>The good news is that the internet is trending back to Kelly’s vision. For example, many top writers on Substack earn far more than they did at salaried jobs. The economics of low take rates plus enthusiastic fandom does wonders. On Substack, 1,000 newsletter subscribers paying $10/month nets over $100K/year to the writer.</p>\n<p>Crypto, and specifically <a href=\"https://variant.mirror.xyz/T8kdtZRIgy_srXB5B06L8vBqFHYlEBcv6ae2zR6Y_eo\">NFTs</a> (non-fungible tokens), can accelerate the trend of creators monetizing directly with their fans. Social platforms will continue to be useful for building audiences (although these too should probably be replaced with superior <a href=\"https://cdixon.org/2018/02/18/why-decentralization-matters\">decentralized</a> alternatives), but creators can increasingly rely on other methods including NFTs and crypto-enabled economies to make money.</p>\n<p>NFTs are blockchain-based records that uniquely represent pieces of media. The media can be anything digital, including art, videos, music, gifs, games, text, memes, and code. NFTs contain highly trustworthy documentation of their history and origin, and can have code attached to do almost anything programmers dream up (one popular feature is code that ensures that the original creator receives royalties from secondary sales). NFTs are secured by the same technology that enabled Bitcoin to be owned by hundreds of millions of people around the world and represent hundreds of billions of dollars of value.</p>\n<p>NFTs have received a lot of attention lately because of high sales volumes. In the past 30 days there has been over <a href=\"http://cryptoslam.io\">$300M</a> in NFT sales:</p>\n<p align=\"center\"><span class=\"gatsby-resp-image-wrapper\" style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 500px;\">\n      <a class=\"gatsby-resp-image-link\" href=\"/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png\" style=\"display: block\" target=\"_blank\" rel=\"noopener\">\n    <span class=\"gatsby-resp-image-background-image\" style=\"padding-bottom: 43.8%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"></span>\n  <img class=\"gatsby-resp-image-image\" alt=\"pic1\" title=\"pic1\" src=\"/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png\" srcset=\"/static/a80ec982b7e8b39e8f1437e9c12f20ed/924ad/pic1.png 170w,\n/static/a80ec982b7e8b39e8f1437e9c12f20ed/f570f/pic1.png 341w,\n/static/a80ec982b7e8b39e8f1437e9c12f20ed/d19c0/pic1.png 500w\" sizes=\"(max-width: 500px) 100vw, 500px\" loading=\"lazy\">\n  </a>\n    </span></p> \n<p>Crypto has a history of boom and bust cycles, and it’s very possible NFTs will have their own ups and downs. </p>\n<p>That said, there are three important reasons why NFTs offer fundamentally better economics for creators. The first, already alluded to above, is by removing rent-seeking intermediaries. The logic of blockchains is once you purchase an NFT it is yours to fully control, just like when you buy books or sneakers in the real world. There are and will continue to be NFT platforms and marketplaces, but they will be constrained in what they can charge because blockchain-based ownership shifts the power back to creators and users — you can shop around and force the marketplace to earn its fees. (Note that lowering the intermediary fees can have a multiplier effect on creator disposable income. For example, if you make $100K in revenue and have $80K in costs, cutting out a 50% take rate increases your revenue to $200K, multiplying your disposable income 6x, from $20K to $120K.)</p>\n<p>The second way NFTs change creator economics is by enabling granular price tiering. In ad-based models, revenue is generated more or less uniformly regardless of the fan’s enthusiasm level. As with Substack, NFTs allow the creator to “cream skim” the most passionate users by offering them special items which cost more. But NFTs go farther than non-crypto products in that they are easily sliced and diced into a descending series of pricing tiers. NBA Top Shot cards range from over $100K to a few dollars. Fan of Bitcoin? You can buy as much or little as you want, down to 8 decimal points, depending on your level of enthusiasm. Crypto’s fine-grained granularity lets creators capture a much larger area under the demand curve.</p>\n<p align=\"center\"><span class=\"gatsby-resp-image-wrapper\" style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\">\n      <a class=\"gatsby-resp-image-link\" href=\"/static/007c807f7f779bad96bcb007eca8611d/e11df/pic2.png\" style=\"display: block\" target=\"_blank\" rel=\"noopener\">\n    <span class=\"gatsby-resp-image-background-image\" style=\"padding-bottom: 20.9%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAECAYAAACOXx+WAAAACXBIWXMAABYlAAAWJQFJUiTwAAAA3UlEQVQY0z1Pu27DMAz0/39C5k6dAnRrt6JA0KJLhwQI7AZFYlPyQ3Ikx49Asa8i0fSEA6kTjxSTruvgnINSCkSEqqowDAOMMSBF0FqLzuSaoihgbRtp5c7vzKZpwL2SsiwRbgFLPPMyI4SYL4sYO3fBHawxp2lCdsii8Kezb54l548l/aVH7BMLrxLvUIbwpd9l2DiOMkwQw0f+irw/IEw3hGv49/BmCZkcZE/YZVukxz1O5gf6TPhMN1hvH3B2raxU1zVsa2HrFi+7JzymK7zlz/jWe3jn4b0Hb/sLBkQuy0nVp9sAAAAASUVORK5CYII='); background-size: cover; display: block;\"></span>\n  <img class=\"gatsby-resp-image-image\" alt=\"pic2\" title=\"pic2\" src=\"/static/007c807f7f779bad96bcb007eca8611d/94a55/pic2.png\" srcset=\"/static/007c807f7f779bad96bcb007eca8611d/924ad/pic2.png 170w,\n/static/007c807f7f779bad96bcb007eca8611d/f570f/pic2.png 341w,\n/static/007c807f7f779bad96bcb007eca8611d/94a55/pic2.png 681w,\n/static/007c807f7f779bad96bcb007eca8611d/e11df/pic2.png 1000w\" sizes=\"(max-width: 681px) 100vw, 681px\" loading=\"lazy\">\n  </a>\n    </span></p> \n<p>The third and most important way NFTs change creator economics is by making users owners, thereby reducing customer acquisition costs to near zero. Open any tech S-1 filing and you’ll see massive user/customer acquisition costs, usually going to online ads or sales staff. Crypto, by contrast, has grown to over a trillion dollars in aggregate market capitalization with almost no marketing spend. Bitcoin and Ethereum don’t have organizations behind them let alone marketing budgets, yet are used, owned, and loved by tens of millions of people.</p>\n<p>The highest revenue NFT project to date, <a href=\"https://www.nbatopshot.com/\">NBA Top Shot</a>, has generated $200M in gross sales in just the past month while spending very little on marketing. It’s been able to grow so efficiently because users feel like owners — they have skin in the game. It’s true peer-to-peer marketing, fueled by community, <a href=\"https://twitter.com/ROSGO21/status/1364724500642689027?s=20\">excitement</a>, and ownership. </p>\n<p align=\"center\"><span class=\"gatsby-resp-image-wrapper\" style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 400px;\">\n      <a class=\"gatsby-resp-image-link\" href=\"/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg\" style=\"display: block\" target=\"_blank\" rel=\"noopener\">\n    <span class=\"gatsby-resp-image-background-image\" style=\"padding-bottom: 35.50000000000001%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"></span>\n  <img class=\"gatsby-resp-image-image\" alt=\"pic3\" title=\"pic3\" src=\"/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg\" srcset=\"/static/02d87ce135354a8c8f9b7d470f6118a0/c2e49/pic3.jpg 170w,\n/static/02d87ce135354a8c8f9b7d470f6118a0/c2dc0/pic3.jpg 341w,\n/static/02d87ce135354a8c8f9b7d470f6118a0/41689/pic3.jpg 400w\" sizes=\"(max-width: 400px) 100vw, 400px\" loading=\"lazy\">\n  </a>\n    </span></p> \n<p>NFTs are still early, and will evolve. Their utility will increase as digital experiences are built around them, including marketplaces, social networks, showcases, games, and virtual worlds. It’s also likely that other consumer-facing crypto products emerge that pair with NFTs. Modern video games like Fortnite contain sophisticated economies that mix fungible tokens like V-Bucks with NFTs/virtual goods like skins. Someday every internet community might have its own micro-economy, including NFTs and fungible tokens that users can use, own, and collect.</p>\n<p>The thousand true fans thesis builds on the original ideals of the internet: users and creators globally connected, unconstrained by intermediaries, sharing ideas and economic upside. Incumbent social media platforms sidetracked this vision by locking creators into a bundle of distribution and monetization. There are, correspondingly, two ways to challenge them: take the users, or take the money. Crypto and NFTs give us a new way to take the money. Let’s make it happen.</p>\n<p><em>(Image: CryptoPunks — Larva Labs)</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2020/10/19/doing-old-things-better-vs-doing-brand-new-things",
      "title": "Doing old things better vs doing brand new things",
      "description": "New technologies enable activities that fall into one of two categories: 1) doing things you could already do but can now do better because…",
      "url": "https://cdixon.org/2020/10/19/doing-old-things-better-vs-doing-brand-new-things",
      "published": "2020-10-19T00:00:00.000Z",
      "updated": "2020-10-19T00:00:00.000Z",
      "content": "<p>New technologies enable activities that fall into one of two categories: 1) doing things you could already do but can now do better because they are faster, cheaper, easier, higher quality, etc. 2) doing brand new things that you simply couldn’t do before. Early in the development of new technologies, the first category tends to get more attention, but it’s the second that ends up having more impact on the world.</p>\n<p>Doing old things better tends to get more attention early on because it’s easier to imagine what to build. Early films were shot like plays — they were effectively plays with a better distribution model — until filmmakers realized that movies had their own visual grammar. The early electrical grid delivered light better than gas and candles. It took decades before we got an electricity “app store” — a rich ecosystem of appliances that connected to the grid. The early web was mostly digital adaptations of pre-internet things like letter writing and mail-order commerce. It wasn’t until the 2000s that entrepreneurs started exploring “internet native” ideas like social networking, crowdfunding, cryptocurrency, crowdsourced knowledge bases, and so on.</p>\n<p>The most common mistake people make when evaluating new technologies is to focus too much on the “doing old things better” category. For example, when evaluating the potential of blockchains, people sometimes focus on things like cheaper and faster global payments, which are important and necessary but only the beginning. What’s even more exciting are the new things you simply couldn’t create before, like internet services that are <a href=\"https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations\">owned and operated by their users</a> instead of by companies. Another example is business productivity apps architected as web services. Early products like Salesforce were easier to access and cheaper to maintain than their on-premise counterparts. Modern productivity apps like Google Docs, Figma, and Slack focus on things you simply couldn’t do before, like real-time collaboration and deep integrations with other apps.</p>\n<p>Entrepreneurs who create products in the “brand new things” category usually spend many years deeply immersed in the underlying technology before they have their key insights. The products they create often <a href=\"https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy\">start out looking toy-like</a>, <a href=\"https://cdixon.org/2019/01/08/strong-and-weak-technologies\">strange, unserious, expensive</a>, and sometimes even dangerous. Over time, the products steadily improve and the world gradually embraces them. </p>\n<p>It can take decades for this process to play out. It’s clear that we are early in the development of emerging technologies like cryptocurrencies, machine learning, and virtual reality. It is also possible we are still early in the development of more established technologies like mobile devices, cloud hosting, social networks, and perhaps even the internet itself. If so, new categories of native products built on top of these technologies will continue to be invented in the coming years.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2020/01/26/computers-that-can-make-commitments",
      "title": "Computers that can make commitments",
      "description": "Blockchains are computers that can make commitments. Traditional computers are ultimately controlled by people, either directly in the case…",
      "url": "https://cdixon.org/2020/01/26/computers-that-can-make-commitments",
      "published": "2020-01-26T00:00:00.000Z",
      "updated": "2020-01-26T00:00:00.000Z",
      "content": "<p>Blockchains are computers that can make commitments. Traditional computers are ultimately controlled by people, either directly in the case of personal computers or indirectly through organizations. Blockchains invert this power relationship, putting the code in charge. A game theoretic mechanism — a so-called consensus mechanism — makes blockchains resilient to modifications to their underlying physical components, effectively making them resilient to human intervention.  </p>\n<p>As a result, a properly designed blockchain provides strong guarantees that the code it runs will continue to operate as designed. For the first time, a computer system can be truly autonomous: self-governed, by its own code, instead of by people. Autonomous computers can be relied on and trusted in ways that human-governed computers can’t.</p>\n<p>Computers that make commitments can be useful in finance. The most famous example of this is Bitcoin, which makes various commitments, including that there will never be more than 21 million bitcoins, a commitment that makes bitcoins scarce and therefore capable of being valuable. Without a blockchain, this commitment could have been made by a person or a business, but it is unlikely that other people would have really trusted that commitment, since people and businesses change their minds all the time. Prior to Bitcoin, besides precious metals which are naturally scarce, the only credible commitments to monetary scarcity came from governments.</p>\n<p>Ethereum was the first blockchain to support a general-purpose programming language, allowing for the creation of arbitrarily complex software that makes commitments. Two early applications built on Ethereum are <a href=\"https://compound.finance/\">Compound</a> and <a href=\"https://makerdao.com/en/\">Maker Dao</a>. Compound makes the commitment that it will act as a neutral, low-fee lending protocol. Maker Dao makes a commitment to maintain the price stability of a currency called Dai that can be used for stable payments and value store. As of today, users have locked up hundreds of millions of dollars in these applications, a testament to the credibility of their commitments.</p>\n<p>Applications like Compound and Maker can do things that pre-blockchain software simply couldn’t, such as hold funds that reside in the code itself, as opposed to traditional payment systems which only hold pointers to offline bank accounts. This removes the need to trust anything other than code, and makes the system end-to-end transparent and extensible. Blockchain applications do this autonomously — every human involved in creating these projects could disappear and the software would go on doing what it does, keeping its commitments, indefinitely.</p>\n<p>What else can you do with computers that make commitments? One fertile area being explored is re-architecting popular internet services like social networks and marketplaces so that they make strong, positive commitments to their communities. For example, users can get commitments baked into the code that their data will be kept private and that they won’t get de-platformed without due process. Third-party developers can safely invest in their businesses knowing that the rules are baked into the network and can’t change, protecting them from <a href=\"https://cdixon.org/2018/02/18/why-decentralization-matters\">platform risk</a>. Using the financial features of blockchains, users and developers can receive tokens in order to participate in the upside of the network as it grows. </p>\n<p>Blockchains have arrived at an opportune time. Internet services have become central to our economic, political, and cultural lives, yet the trust between users and the people who run these services is breaking down. At the same time, industries like finance that have traditionally depended on trust have resisted modernization. The next few years will be exciting — we are only beginning to explore the <a href=\"https://cdixon.org/2013/08/04/the-idea-maze\">idea maze</a> unlocked by this new kind of computer.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2020/01/17/inside-out-vs-outside-in",
      "title": "Inside-out vs. outside-in: the adoption of new technologies",
      "description": "There are broadly two adoption paths for new computing technologies: inside-out and outside-in. Inside-out technologies are pioneered by…",
      "url": "https://cdixon.org/2020/01/17/inside-out-vs-outside-in",
      "published": "2020-01-17T00:00:00.000Z",
      "updated": "2020-01-17T00:00:00.000Z",
      "content": "<p>There are broadly two adoption paths for new computing technologies: inside-out and outside-in. Inside-out technologies are pioneered by established institutions and later proliferate outward to the mainstream. Apple (followed by Google and others) pioneered the modern touchscreen smartphone, university and corporate research labs pioneered machine learning, and big tech companies like Amazon pioneered cloud computing.</p>\n<p>Outside-in technologies, by contrast, start out on the fringes and only later move inward to established institutions. Open-source software started out as a niche anti-copyright movement. The web was invented at a physics lab and then built out by hobbyists and entrepreneurs. Social media began as a movement of idealistic blogging enthusiasts.</p>\n<p>Inside-out technologies tend to require significant capital and formally trained technical expertise. They also tend to be technologies that most people would recognize as valuable even before they exist. It wasn’t very hard to imagine that affordable, easy-to-use, internet-connected pocket supercomputers would be popular, or that machines that could learn to behave intelligently could do all sorts of useful tasks.</p>\n<p>Outside-in technologies tend to require less capital and less formally trained technical skills, creating a much more level playing field between insiders and outsiders. In many cases the value of outside-in technologies is not only unclear before they’re invented, but remains unclear for many years after they’re invented.</p>\n<p>Take the example of social media. Early on, blogs and services like Twitter were mostly used to discuss niche tech topics and share mundane personal events. This led many sophisticated observers to <a href=\"https://www.nytimes.com/2007/04/22/business/yourmoney/22stream.html\">dismiss</a> them as toys or passing fads. At its core, however, social media was about the creation of curated information networks. Today, this is easy to see -- billions of people rely on services like Twitter and Facebook for their news -- but back then you had to cut through the noise generated by the eccentricities of early adopters. Social media is a technology for creating global media networks that arrived disguised as a way to share what you had for lunch. </p>\n<p>Both inside-out and outside-in technologies are important, and in fact they’re often mutually reinforcing. Mobile, social, and cloud powered the growth of computing over the last decade: mobile (inside-out) brought computers to billions of people, social (outside-in) drove usage and monetization, and cloud (inside-out) allowed back-end services to scale. Most likely the next major wave in computing will also be driven by a mutually reinforcing combination of technologies, some developed at established institutions and some developed by enthusiastic and possibly misunderstood outsiders. </p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2019/01/08/strong-and-weak-technologies",
      "title": "Strong and weak technologies",
      "description": "During a media tour in 2007 in which Steve Jobs showed the device to reporters, there was one instance in which a journalist criticized the…",
      "url": "https://cdixon.org/2019/01/08/strong-and-weak-technologies",
      "published": "2019-01-08T00:00:00.000Z",
      "updated": "2019-01-08T00:00:00.000Z",
      "content": "<blockquote>\n<p><em>During a <a href=\"https://www.businessinsider.com/steve-jobs-reaction-first-iphone-2015-9\">media tour</a> in 2007 in which Steve Jobs showed the device to reporters, there was one instance in which a journalist criticized the iPhone’s touch-screen keyboard.</em></p>\n<p><em>“It doesn’t work,” the reporter said.</em></p>\n<p><em>Jobs stopped for a moment and tilted his head. The reporter said he or she kept making typos and the keys were too small for his or her thumbs.</em></p>\n<p><em>Jobs smiled and then replied: “Your thumbs will learn.”</em></p>\n</blockquote>\n<p>When the iPhone was introduced in 2007, it <a href=\"https://www.wsj.com/articles/behind-the-rise-and-fall-of-blackberry-1432311912\">mystified</a> its competitors, because it wasn’t built for the world as it existed. Wireless networks were too slow. Smartphone users only knew how to use physical keyboards. There were no software developers making apps for touchscreen phones. It frequently dropped phone calls.</p>\n<p>But the iPhone was such a remarkable device — fans called it “The Jesus Phone” — that the world adapted to it. Carriers built more wireless capacity. Developers invented new apps and interfaces. Users learned how to rapidly type on touchscreens. Apple kept releasing better versions, fixing problems and adding new capabilities.</p>\n<p>Smartphones are a good example of a broader historical pattern: technologies usually arrive in pairs, a strong form and a weak form. Here are some examples:</p>\n<table>\n<thead>\n<tr>\n<th><strong>Strong</strong></th>\n<th><strong>Weak</strong></th>\n</tr>\n</thead>\n<tbody>\n<tr>\n<td>Public internet</td>\n<td>Private intranets</td>\n</tr>\n<tr>\n<td>Consumer web</td>\n<td>Interactive TV</td>\n</tr>\n<tr>\n<td>Crowdsourced encyclopedia (Wikipedia)</td>\n<td>Expert-curated encyclopedia (e.g. Nupedia, Encarta)</td>\n</tr>\n<tr>\n<td>Crowdsourced video (YouTube)</td>\n<td>Video tech for media companies (e.g. RealPlayer)</td>\n</tr>\n<tr>\n<td>Internet video chat (Skype)</td>\n<td>Voice-over-IP (e.g. Vonage)</td>\n</tr>\n<tr>\n<td>Streaming music (Spotify)</td>\n<td>MP3 downloads (e.g. iTunes)</td>\n</tr>\n<tr>\n<td>Touchscreen smartphones with full operating system and app store (iPhone)</td>\n<td>Limited-app smartphones with physical keyboards (e.g. Blackberry)</td>\n</tr>\n<tr>\n<td>Fully electric cars (Tesla)</td>\n<td>Hybrid cars</td>\n</tr>\n<tr>\n<td>Permissionless blockchains powered by cryptocurrencies</td>\n<td>Permissioned/private blockchains</td>\n</tr>\n<tr>\n<td>Public cloud</td>\n<td>Private / hybrid cloud</td>\n</tr>\n<tr>\n<td>App-based media companies (e.g. Netflix)</td>\n<td>Video on demand delivered by cable companies</td>\n</tr>\n<tr>\n<td>Virtual realty</td>\n<td>Augmented reality</td>\n</tr>\n<tr>\n<td>E-sports</td>\n<td>Traditional sports delivered over the internet</td>\n</tr>\n</tbody>\n</table>\n<p>Strong technologies capture the imaginations of technology enthusiasts. That is why many important technologies start out as weekend hobbies. <a href=\"http://cdixon.org/2013/03/03/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years/\">Enthusiasts vote with their time</a>, and, unlike most of the business world, have long-term horizons. They build from first principles, making full use of the available resources to design technologies as they ought to exist. Sometimes these enthusiasts run large companies, in which case they are often, like Steve Jobs, founders who have the gravitas and vision to make big, long-term bets.</p>\n<p>The mainstream technology world notices the excitement and wants to join in, but isn’t willing to go all the way and embrace the strong technology. To them, the strong technology appears to be some combination of strange, <a href=\"http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">toy-like</a>, unserious, expensive, and sometimes even dangerous. So they embrace the weak form, a compromised version that seems more familiar, productive, serious, and safe.</p>\n<p>Strong technologies often develop according to the Perez/Gartner hype cycle:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/153f5948062ac4cc6f9e4f79607be64b/58232/researchmethodology-illustration-hype-cycle.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 66.57509157509158%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"researchmethodology illustration hype cycle\"\n        title=\"researchmethodology illustration hype cycle\"\n        src=\"/static/153f5948062ac4cc6f9e4f79607be64b/d6856/researchmethodology-illustration-hype-cycle.jpg\"\n        srcset=\"/static/153f5948062ac4cc6f9e4f79607be64b/c2e49/researchmethodology-illustration-hype-cycle.jpg 170w,\n/static/153f5948062ac4cc6f9e4f79607be64b/c2dc0/researchmethodology-illustration-hype-cycle.jpg 341w,\n/static/153f5948062ac4cc6f9e4f79607be64b/d6856/researchmethodology-illustration-hype-cycle.jpg 681w,\n/static/153f5948062ac4cc6f9e4f79607be64b/4108d/researchmethodology-illustration-hype-cycle.jpg 1022w,\n/static/153f5948062ac4cc6f9e4f79607be64b/58232/researchmethodology-illustration-hype-cycle.jpg 1092w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>During the trough of disillusionment, entrepreneurs and others who invested in strong technologies sometimes lose faith and switch their focus to weak technologies, because the weak technologies appear nearer to mainstream adoption. This is usually a mistake.</p>\n<p>That said, weak forms of technology can be successful. For example, it is very likely that augmented reality will be important, watching traditional sports on the internet will be popular, and so on.</p>\n<p>But it’s strong technologies that end up defining new eras. What George Bernard Shaw said about people also applies to technologies:</p>\n<blockquote>\n<p>The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.</p>\n</blockquote>\n<p>Weak technologies adapt to the world as it currently exists. Strong technologies adapt the world to themselves. Progress depends on strong technologies. Your thumbs will learn.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations",
      "title": "Who will control the software that powers the Internet?",
      "description": "Originally published by Wired. As the internet has evolved over its 35-year lifespan, control over its most important services has gradually…",
      "url": "https://cdixon.org/2019/01/04/how-blockchain-can-wrest-the-internet-from-corporations",
      "published": "2019-01-04T00:00:00.000Z",
      "updated": "2019-01-04T00:00:00.000Z",
      "content": "<p><em>Originally published by <a href=\"https://www.wired.com/story/how-blockchain-can-wrest-the-internet-from-corporations/\">Wired</a>.</em></p>\n<p>As the internet has evolved over its 35-year lifespan, control over its most important services has gradually shifted from open source protocols maintained by non-profit communities to proprietary services operated by large tech companies. As a result, billions of people got access to amazing, free technologies. But that shift also created serious problems.</p>\n<p>Millions of users have had their private data misused or stolen. Creators and businesses that rely on internet platforms are subject to sudden rule changes that take away their audiences and profits. But there is a growing movement—emerging from the blockchain and cryptocurrency world—to build new internet services that combine the power of modern, centralized services with the community-led ethos of the original internet. We should embrace it.</p>\n<p>From the 1980s through the early 2000s, the dominant internet services were built on open protocols that the internet community controlled. For example, the Domain Name System, the internet’s “phone book,” is controlled by a distributed network of people and organizations, using rules that are created and administered in the open. This means that anyone who adheres to community standards can own a domain name and establish an internet presence. It also means that the power of companies operating web and email hosting is kept in check—if they misbehave, customers can port their domain names to competing providers.</p>\n<p>From the mid 2000s to the present, trust in open protocols was replaced by trust in corporate management teams. As companies like Google, Twitter, and Facebook built software and services that surpassed the capabilities of open protocols, users migrated to these more sophisticated platforms. But their code was proprietary, and their governing principles could change on a whim.</p>\n<p>How do social networks decide which users to <a href=\"https://www.wired.com/story/how-right-wing-social-media-site-gab-got-back-online/\">verify</a> or <a href=\"https://www.wired.com/story/tumblrs-porn-ban-reveals-controls-we-see-online/\">ban</a>? How do search engines decide how to rank websites? One minute social networks court media organizations and small businesses, the next minute they de-prioritize their content or change the revenue split. The power of these platforms has created widespread societal tensions, as seen in debates over fake news, state-sponsored bots, privacy laws, and algorithmic biases.</p>\n<p>That’s why the pendulum is swinging back to an internet governed by open, community-controlled services. This has only recently become possible, thanks to technologies arising from the blockchain and cryptocurrencies.</p>\n<p>There has been a lot of talk in the past few years about blockchains, which are heavily hyped but poorly understood. Blockchains are networks of physical computers that work together in concert to form a single virtual computer. The benefit is that, unlike a traditional computer, a blockchain computer can offer strong trust guarantees, rooted in the mathematical and game-theoretic properties of the system. A user or developer can trust that a piece of code running on a blockchain computer will continue to behave as designed, even if individual participants in the network change their motivations or try to subvert the system. This means that the control of a blockchain computer can be placed in the hands of a community.</p>\n<p>Users who depend on proprietary platforms, on the other hand, have to worry about data getting stolen or misused, privacy policies changing, intrusive advertising, and more. Proprietary platforms may suddenly change the rules for developers and businesses, the way Facebook <a href=\"https://venturebeat.com/2016/06/30/facebook-kicked-zynga-to-the-curb-publishers-are-next/\">famously did to Zynga</a> and Google <a href=\"https://www.nytimes.com/2017/07/01/technology/yelp-google-european-union-antitrust.html\">did to Yelp</a>.</p>\n<p>The idea that corporate-owned services could be replaced by community-owned services may sound far-fetched, but there is a strong historical precedent in the transformation of software over the past twenty years. In the 1990s, computing was dominated by proprietary, closed-source software, most notably Windows. Today, billions of Android phones run on the open source operating system Linux. Much of the software running on an Apple device is open source, as is almost all modern cloud data centers including Amazon’s. The recent acquisitions of <a href=\"https://www.wired.com/story/microsofts-github-deal-is-its-latest-shift-from-windows/\">Github by Microsoft</a> and <a href=\"https://www.wired.com/story/ibm-buying-open-source-specialist-red-hat-34-billion/\">Red Hat by IBM</a> underscore how dominant open source has become.</p>\n<p>As open source has grown in importance, technology companies have shifted their business models from selling software to delivering cloud-based services. Google, Facebook, Amazon, and Netflix are all services companies. Even Microsoft is now primarily a services company. This has allowed these companies to outpace the growth of open source software and maintain control of critical internet infrastructure.</p>\n<p>A core insight in the design of blockchains is that the open source model can be extended beyond software to cloud-based services by adding financial incentives to the mix. Cryptocurrencies—coins and tokens built into specific blockchains—provide a way to incentivize individuals and groups to participate in, maintain, and build services.</p>\n<p>The idea that an internet service could have an associated coin or token may be a novel concept, but the blockchain and cryptocurrencies can do for cloud-based services what open source did for software. It took twenty years for open source software to supplant proprietary software, and it could take just as long for open services to supplant proprietary services. But the benefits of such a shift will be immense. Instead of placing our trust in corporations, we can place our trust in community-owned and -operated software, transforming the internet’s governing principle from “don’t be evil” back to “can’t be evil.”</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2018/02/18/why-decentralization-matters",
      "title": "Why decentralization matters",
      "description": "The first two eras of the internet During the first era of the internet — from the 1980s through the early 2000s — internet services were…",
      "url": "https://cdixon.org/2018/02/18/why-decentralization-matters",
      "published": "2018-02-18T00:00:00.000Z",
      "updated": "2018-02-18T00:00:00.000Z",
      "content": "<h2>The first two eras of the internet</h2>\n<p>During the first era of the internet — from the 1980s through the early 2000s — internet services were built on open protocols that were controlled by the internet community. This meant that people or organizations could grow their internet presence knowing the rules of the game wouldn’t change later on. Huge web properties were started during this era including Yahoo, Google, Amazon, Facebook, LinkedIn, and YouTube. In the process, the importance of centralized platforms like AOL greatly diminished.</p>\n<p>During the second era of the internet, from the mid 2000s to the present, for-profit tech companies — most notably Google, Apple, Facebook, and Amazon (GAFA) — built software and services that rapidly outpaced the capabilities of open protocols. The explosive growth of smartphones accelerated this trend as mobile apps became the majority of internet use. Eventually users migrated from open services to these more sophisticated, centralized services. Even when users still accessed open protocols like the web, they would typically do so mediated by GAFA software and services.</p>\n<p>The good news is that billions of people got access to amazing technologies, many of which were free to use. The bad news is that it became much harder for startups, creators, and other groups to grow their internet presence without worrying about centralized platforms changing the rules on them, taking away their audiences and profits. This in turn stifled innovation, making the internet less interesting and dynamic. Centralization has also created broader societal tensions, which we see in the debates over subjects like fake news, state sponsored bots, “no platforming” of users, EU privacy laws, and algorithmic biases. These debates will only intensify in the coming years.</p>\n<h2>“Web 3”: the third era of the internet</h2>\n<p>One response to this centralization is to impose government regulation on large internet companies. This response assumes that the internet is similar to past communication networks like the phone, radio, and TV networks. But the hardware-based networks of the past are fundamentally different than the internet, a software-based network. Once hardware-based networks are built, they are nearly impossible to rearchitect. Software-based networks can be rearchitected through entrepreneurial innovation and market forces.</p>\n<p>The internet is the ultimate software-based network, consisting of a relatively simple <a href=\"https://en.wikipedia.org/wiki/Internet_Protocol\">core layer</a> connecting billions of fully programmable computers at the edge. Software is simply the encoding of human thought, and as such has an almost unbounded design space. Computers connected to the internet are, by and large, free to run whatever software their owners choose. Whatever can be dreamt up, with the right set of incentives, can quickly propagate across the internet. Internet architecture is where technical creativity and incentive design intersect.</p>\n<p>The internet is still early in its evolution: the core internet services will likely be almost entirely rearchitected in the coming decades. This will be enabled by crypto-economic networks, a generalization of the ideas first introduced in <a href=\"https://bitcoin.org/bitcoin.pdf\">Bitcoin</a> and further developed in <a href=\"https://github.com/ethereum/wiki/wiki/White-Paper\">Ethereum</a>. Cryptonetworks combine the best features of the first two internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services.</p>\n<h2>Why decentralization?</h2>\n<p>Decentralization is a commonly misunderstood concept. For example, it is sometimes said that the reason cryptonetwork advocates favor decentralization is to resist government censorship, or because of libertarian political views. These are not the main reasons decentralization is important.</p>\n<p>Let’s look at the problems with centralized platforms. Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations. They do this to make their services more valuable, as platforms (by definition) are systems with multi-sided network effects. As platforms move up the adoption S-curve, their power over users and 3rd parties steadily grows.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/6acb0932610c3553e96e9b2e7766cc29/e1c95/07lrwGIDbAYk6q7zG.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 43.05912596401028%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAJCAIAAAC9o5sfAAAACXBIWXMAAAsSAAALEgHS3X78AAABGElEQVQoz02R2a6CQAyG5/3fiCvuuUQgJEdZhCAuyI5sgt+hhtiESWfaf2lR67oWReE4zvF4PBwOtm2TvN/vdYtlWaTBsizeXdc1TTMIAqkqvnEc27ZNkoTC/X4fhkEwnNM0Xa9X3/cNw9B1XdM0TgRo7rpOgVx/Apbn8/l6vcj7vs/zHFnwJE3T3G43iDzP44WqgntHPh6Puq55meeZKxaqqtrNCxcTyfXftogQ2CjLcm8lIIrjmEQAWZYJ6d6joN9lxcWyhdCxgn0coRaiL1gA2EPnV1YWKY8kyP6WvrbtLc7nMyKIsx62EoYhDumOouhvCzZEQ74FuexCMdXlchFxfAKgzD7lL8AFdZqmGCSHkTFPpxMNVD8LMf+0Ho6ZqQAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"07lrwGIDbAYk6q7zG\"\n        title=\"07lrwGIDbAYk6q7zG\"\n        src=\"/static/6acb0932610c3553e96e9b2e7766cc29/94a55/07lrwGIDbAYk6q7zG.png\"\n        srcset=\"/static/6acb0932610c3553e96e9b2e7766cc29/924ad/07lrwGIDbAYk6q7zG.png 170w,\n/static/6acb0932610c3553e96e9b2e7766cc29/f570f/07lrwGIDbAYk6q7zG.png 341w,\n/static/6acb0932610c3553e96e9b2e7766cc29/94a55/07lrwGIDbAYk6q7zG.png 681w,\n/static/6acb0932610c3553e96e9b2e7766cc29/e8f76/07lrwGIDbAYk6q7zG.png 1022w,\n/static/6acb0932610c3553e96e9b2e7766cc29/c20f6/07lrwGIDbAYk6q7zG.png 1362w,\n/static/6acb0932610c3553e96e9b2e7766cc29/e1c95/07lrwGIDbAYk6q7zG.png 1556w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>When they hit the top of the S-curve, their relationships with network participants change from positive-sum to zero-sum. The easiest way to continue growing lies in extracting data from users and competing with complements over audiences and profits. Historical examples of this are Microsoft vs. Netscape, Google vs. Yelp, Facebook vs. Zynga, and Twitter vs. its 3rd-party clients. Operating systems like iOS and Android have behaved better, although still take a healthy 30% tax, reject apps for seemingly arbitrary reasons, and subsume the functionality of 3rd-party apps at will.</p>\n<p>For 3rd parties, this transition from cooperation to competition feels like a bait-and-switch. Over time, the best entrepreneurs, developers, and investors have become wary of building on top of centralized platforms. We now have decades of evidence that doing so will end in disappointment. In addition, users give up privacy, control of their data, and become vulnerable to security breaches. These problems with centralized platforms will likely become even more pronounced in the future.</p>\n<h2>Enter cryptonetworks</h2>\n<p>Cryptonetworks are networks built on top of the internet that 1) use consensus mechanisms such as blockchains to maintain and update state, 2) use cryptocurrencies (coins/tokens) to incentivize consensus participants (miners/validators) and other network participants. Some cryptonetworks, such as Ethereum, are general programming platforms that can be used for almost any purpose. Other cryptonetworks are special purpose, for example Bitcoin is intended primarily for storing value, <a href=\"https://golem.network/\">Golem</a> for performing computations, and <a href=\"https://filecoin.io/\">Filecoin</a> for decentralized file storage.</p>\n<p>Early internet protocols were technical specifications created by working groups or non-profit organizations that relied on the alignment of interests in the internet community to gain adoption. This method worked well during the very early stages of the internet but since the early 1990s very few new protocols have gained widespread adoption. <a href=\"2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design\">Cryptonetworks fix</a> these problems by providing economics incentives to developers, maintainers, and other network participants in the form of tokens. They are also much more technically robust. For example, they are able to keep state and do arbitrary transformations on that state, something past protocols could never do.</p>\n<p>Cryptonetworks use multiple mechanisms to ensure that they stay neutral as they grow, preventing the bait-and-switch of centralized platforms. First, the contract between cryptonetworks and their participants is enforced in open source code. Second, they are kept in check through mechanisms for <a href=\"https://en.wikipedia.org/wiki/Exit,_Voice,_and_Loyalty\">“voice” and “exit.”</a> Participants are given voice through community governance, both “on chain” (via the protocol) and “off chain” (via the social structures around the protocol). Participants can exit either by leaving the network and selling their coins, or in the extreme case by forking the protocol.</p>\n<p>In short, cryptonetworks align network participants to work together toward a common goal — the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy skeptics and flourish, even while new cryptonetworks like Ethereum have grown alongside it.</p>\n<p>Today’s cryptonetworks suffer from limitations that keep them from seriously challenging centralized incumbents. The most severe limitations are around performance and scalability. The next few years will be about fixing these limitations and building networks that form the infrastructure layer of the crypto stack. After that, most of the energy will turn to building applications on top of that infrastructure.</p>\n<h2>How decentralization wins</h2>\n<p>It’s one thing to say decentralized networks should win, and another thing to say they will win. Let’s look at specific reasons to be optimistic about this.</p>\n<p>Software and web services are built by developers. There are millions of highly skilled developers in the world. Only a small fraction work at large technology companies, and only a small fraction of those work on new product development. Many of the most important software projects in history were created by startups or by communities of independent developers.</p>\n<blockquote>\n<p>“No matter who you are, most of the smartest people work for someone else.” — <a href=\"https://en.wikipedia.org/wiki/Joy%27s_law_(management)\">Bill Joy</a></p>\n</blockquote>\n<p>Decentralized networks can win the third era of the internet for the same reason they won the first era: by winning the hearts and minds of entrepreneurs and developers.</p>\n<p>An illustrative analogy is the rivalry in the 2000s between Wikipedia and its centralized competitors like Encarta. If you compared the two products in the early 2000s, Encarta was a far better product, with better topic coverage and higher accuracy. But Wikipedia improved at a much faster rate, because it had an active community of volunteer contributors who were attracted to its decentralized, community-governed ethos. By 2005, Wikipedia was the most <a href=\"https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b\">popular</a> reference site on the internet. Encarta was shut down in 2009.</p>\n<p>The lesson is that when you compare centralized and decentralized systems you need to consider them dynamically, as processes, instead of statically, as rigid products. Centralized systems often start out fully baked, but only get better at the rate at which employees at the sponsoring company improve them. Decentralized systems start out half-baked but, under the right conditions, grow exponentially as they attract new contributors.</p>\n<p>In the case of cryptonetworks, there are multiple, compounding feedback loops involving developers of the core protocol, developers of complementary cryptonetworks, developers of 3rd party applications, and service providers who operate the network. These feedback loops are further amplified by the incentives of the associated token, which — as we’ve seen with Bitcoin and Ethereum — can supercharge the rate at which crypto communities develop (and sometimes lead to negative outcomes, as with the excessive electricity consumed by Bitcoin mining).</p>\n<p>The question of whether decentralized or centralized systems will win the next era of the internet reduces to who will build the most compelling products, which in turn reduces to who will get more high quality developers and entrepreneurs on their side. GAFA has many advantages, including cash reserves, large user bases, and operational infrastructure. Cryptonetworks have a significantly more attractive value proposition to developers and entrepreneurs. If they can win their hearts and minds, they can mobilize far more resources than GAFA, and rapidly outpace their product development.</p>\n<blockquote>\n<p>“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.” — <a href=\"http://farmerandfarmer.org/mastery/builder.html\">Farmer & Farmer</a></p>\n</blockquote>\n<p>Centralized platforms often come bundled at launch with compelling apps: Facebook had its core socializing features and the iPhone had a number of key apps. Decentralized platforms, by contrast, often launch half-baked and without clear use cases. As a result, they need to go through two phases of product-market fit: 1) product-market fit between the platform and the developers/entrepreneurs who will finish the platform and build out the ecosystem, and 2) product-market fit between the platform/ecosystem and end users. This two-stage process is what causes many people — including sophisticated technologists — to consistently underestimate the potential of decentralized platforms.</p>\n<h2>The next era of the internet</h2>\n<p>Decentralized networks aren’t a silver bullet that will fix all the problems on the internet. But they offer a much better approach than centralized systems.</p>\n<p>Compare the problem of Twitter spam to the problem of email spam. Since Twitter <a href=\"https://www.theverge.com/2012/8/23/3263481/twitter-api-third-party-developers\">closed</a> their network to 3rd-party developers, the only company working on Twitter spam has been Twitter itself. By contrast, there were hundreds of companies that tried to fight email spam, financed by billions of dollars in venture capital and corporate funding. Email spam isn’t solved, but it’s a lot better now, because 3rd parties knew that the <a href=\"https://en.wikipedia.org/wiki/Simple_Mail_Transfer_Protocol\">email protocol</a> was decentralized, so they could build businesses on top of it without worrying about the rules of the game changing later on.</p>\n<p>Or consider the problem of network governance. Today, unaccountable groups of employees at large platforms decide how information gets ranked and filtered, which users get promoted and which get banned, and other important governance decisions. In cryptonetworks, these decisions are made by the community, using open and transparent mechanisms. As we know from the offline world, democratic systems aren’t perfect, but they are a lot better than the alternatives.</p>\n<p>Centralized platforms have been dominant for so long that many people have forgotten there is a better way to build internet services. Cryptonetworks are a powerful way to develop community-owned networks and provide a level playing field for 3rd-party developers, creators, and businesses. We saw the value of decentralized systems in the first era of the internet. Hopefully we’ll get to see it again in the next.</p>\n<p><em>Originally published on <a href=\"https://medium.com/s/story/why-decentralization-matters-5e3f79f7638e\">Medium</a>.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2017/06/06/crypto-token-roundup",
      "title": "Crypto token roundup",
      "description": "Roundup of lots of recent posts on crypto tokens: Balaji S. Srinivasan — Thoughts on Tokens Fred Wilson — ICOs and VCs here, Ethereum in 2…",
      "url": "https://cdixon.org/2017/06/06/crypto-token-roundup",
      "published": "2017-06-06T00:00:00.000Z",
      "updated": "2017-06-06T00:00:00.000Z",
      "content": "<p>Roundup of lots of recent posts on crypto tokens:</p>\n<p>Balaji S. Srinivasan — <a href=\"https://medium.com/@balajis/thoughts-on-tokens-436109aabcbe\">Thoughts on Tokens</a></p>\n<p>Fred Wilson — <a href=\"http://avc.com/2017/06/icos-and-vcs/\">ICOs and VCs</a> <a href=\"http://avc.com/2017/06/icos-and-vcs/\">here</a>, <a href=\"http://avc.com/2017/05/video-of-the-week-ethereum-in-25-minutes/\">Ethereum in 25 minutes</a>, <a href=\"http://avc.com/2017/04/polychain/\">Polychain</a></p>\n<p>Joel Monegro — <a href=\"https://www.usv.com/blog/fat-protocols\">Fat Protocols</a></p>\n<p>Nick Tomaino — <a href=\"https://thecontrol.co/cryptoeconomics-101-e5c883e9a8ff\">Cryptoeconomics 101 </a>, <a href=\"https://thecontrol.co/some-blockchain-reading-1d98ec6b2f39\">Some Blockchain Reading</a>, <a href=\"https://thecontrol.co/tokens-tokens-and-more-tokens-d4b177fbb443\">Tokens, Tokens and More Tokens</a></p>\n<p>Fred Ehrsam — <a href=\"https://medium.com/@FEhrsam/the-dapp-developer-stack-the-blockchain-industry-barometer-8d55ec1c7d4\">The dApp Developer Stack</a></p>\n<p>Albert Wenger — <a href=\"http://continuations.com/post/148098927445/crypto-tokens-and-the-coming-age-of-protocol\">Crypto Tokens and the Coming Age of Protocol Innovation</a></p>\n<p>My post and podcasts — <a href=\"https://medium.com/@cdixon/crypto-tokens-a-breakthrough-in-open-network-design-e600975be2ef\">Crypto Tokens: A Breakthrough in Open Network Design</a>, <a href=\"https://a16z.com/2016/08/28/ethereum/\">podcast with Vitalik Buterin</a>, <a href=\"http://a16z.com/2017/04/03/cryptocurrencies-protocols-appcoins/\">podcast with Olaf Carlson-Wee</a></p>\n<p>Regulatory discussions — <a href=\"https://coincenter.org/report\">Coincenter</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design",
      "title": "Crypto Tokens: A Breakthrough in Open Network Design",
      "description": "It is a wonderful accident of history that the internet and web were created as open platforms that anyone — users, developers…",
      "url": "https://cdixon.org/2017/05/27/crypto-tokens-a-breakthrough-in-open-network-design",
      "published": "2017-05-27T00:00:00.000Z",
      "updated": "2017-05-27T00:00:00.000Z",
      "content": "<p>It is a wonderful accident of history that the internet and web were created as open platforms that anyone — users, developers, organizations — could access equally. Among other things, this allowed independent developers to build products that quickly gained widespread adoption. Google started in a Menlo Park garage and Facebook started in a Harvard dorm room. They competed on a level playing field because they were built on decentralized networks governed by open protocols.</p>\n<p>Today, tech companies like Facebook, Google, Amazon, and Apple are <a href=\"https://medium.com/@cdixon/the-internet-economy-fc43f3eff58a\">stronger</a> than ever, whether measured by <a href=\"http://www.visualcapitalist.com/chart-largest-companies-market-cap-15-years/\">market cap</a>, share of top mobile apps, or pretty much any other common measure.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/947f1b1248d2dc4d69cd8a63fc8e4884/9fa53/11LduvqPVCAVsy-rQ2qlhvg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 37.88300835654596%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)\"\n        title=\"Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)\"\n        src=\"/static/947f1b1248d2dc4d69cd8a63fc8e4884/94a55/11LduvqPVCAVsy-rQ2qlhvg.png\"\n        srcset=\"/static/947f1b1248d2dc4d69cd8a63fc8e4884/924ad/11LduvqPVCAVsy-rQ2qlhvg.png 170w,\n/static/947f1b1248d2dc4d69cd8a63fc8e4884/f570f/11LduvqPVCAVsy-rQ2qlhvg.png 341w,\n/static/947f1b1248d2dc4d69cd8a63fc8e4884/94a55/11LduvqPVCAVsy-rQ2qlhvg.png 681w,\n/static/947f1b1248d2dc4d69cd8a63fc8e4884/9fa53/11LduvqPVCAVsy-rQ2qlhvg.png 718w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Big 4 tech companies dominate smartphone apps (source); while their market caps continue to rise (source)</figcaption>\n  </figure></p>\n<p>These companies also control massive proprietary developer platforms. The dominant operating systems — iOS and Android — charge 30% payment fees and exert heavy influence over app distribution. The dominant social networks tightly restrict access, hindering the ability of third-party developers to scale. Startups and independent developers are increasingly competing from a disadvantaged position.</p>\n<p>A potential way to reverse this trend are <a href=\"http://continuations.com/post/148098927445/crypto-tokens-and-the-coming-age-of-protocol\">crypto tokens</a> — a new way to design open networks that arose from the cryptocurrency movement that began with the introduction of Bitcoin in 2008 and accelerated with the introduction of Ethereum in 2014. Tokens are a breakthrough in open network design that enable: 1) the creation of open, decentralized networks that combine the best architectural properties of open and proprietary networks, and 2) new ways to incentivize open network participants, including users, developers, investors, and service providers. By enabling the development of new open networks, tokens could help reverse the centralization of the internet, thereby keeping it accessible, vibrant and fair, and resulting in greater innovation.</p>\n<h2>Crypto tokens: unbundling Bitcoin</h2>\n<p>Bitcoin was introduced in 2008 with the publication of <a href=\"https://en.wikipedia.org/wiki/Satoshi_Nakamoto\">Satoshi Nakamoto’s</a> landmark <a href=\"https://bitcoin.org/bitcoin.pdf\">paper</a> that proposed a novel, decentralized payment system built on an underlying technology now known as a <a href=\"https://en.wikipedia.org/wiki/Blockchain\">blockchain</a>. Most fans of Bitcoin (including <a href=\"/2013/12/31/why-im-interested-in-bitcoin/\">me</a>) mistakenly thought Bitcoin was solely a breakthrough in financial technology. (It was easy to make this mistake: Nakamoto himself called it a “p2p payment system.”)</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 61.342592592592595%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"2009: Satoshi Nakamoto’s (post) announcing Bitcoin\"\n        title=\"2009: Satoshi Nakamoto’s (post) announcing Bitcoin\"\n        src=\"/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg\"\n        srcset=\"/static/a48b63f4b03d22f29cb6edd6bf50f717/c2e49/1MQ68XZTGHQG7E6ut5UimEw.jpg 170w,\n/static/a48b63f4b03d22f29cb6edd6bf50f717/c2dc0/1MQ68XZTGHQG7E6ut5UimEw.jpg 341w,\n/static/a48b63f4b03d22f29cb6edd6bf50f717/a40c0/1MQ68XZTGHQG7E6ut5UimEw.jpg 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">2009: Satoshi Nakamoto’s (post) announcing Bitcoin</figcaption>\n  </figure></p>\n<p>In retrospect, Bitcoin was really two innovations: 1) a <a href=\"https://en.wikipedia.org/wiki/Store_of_value\">store of value</a> for people who wanted an alternative to the existing financial system, and 2) a new way to develop open networks. Tokens unbundle the latter innovation from the former, providing a general method for designing and growing open networks.</p>\n<p>Networks — computing networks, developer platforms, marketplaces, social networks, etc — have always been a powerful part of the promise of the internet. Tens of thousands of networks have been incubated by developers and entrepreneurs, yet only a very small percentage of those have survived, and most of those were owned and controlled by private companies. The current state of the art of network development is very crude. It often involves raising money (venture capital is a common source of funding) and then spending it on paid marketing and other channels to overcome the “bootstrap problem” — the problem that networks tend to only become useful when they reach a critical mass of users. In the rare cases where networks succeed, the financial returns tend to accrue to the relatively small number of people who own equity in the network. Tokens offer a better way.</p>\n<p>Ethereum, introduced in 2014 and launched in 2015, was the first major non-Bitcoin token network. The lead developer, <a href=\"https://a16z.com/2016/08/28/ethereum/\">Vitalik Buterin</a>, had previously tried to create smart contract languages on top of the Bitcoin blockchain. Eventually he realized that (by design, mostly) Bitcoin was too limited, so a new approach was needed.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 576px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 41.14583333333333%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"2014: Vitalik Buterin’s (forum post) announcing Ethereum\"\n        title=\"2014: Vitalik Buterin’s (forum post) announcing Ethereum\"\n        src=\"/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png\"\n        srcset=\"/static/0f4f3db516b79d9d910990abb1c077fd/924ad/1Crmcqo6mdF1okzHt4Bdp4g.png 170w,\n/static/0f4f3db516b79d9d910990abb1c077fd/f570f/1Crmcqo6mdF1okzHt4Bdp4g.png 341w,\n/static/0f4f3db516b79d9d910990abb1c077fd/9b31d/1Crmcqo6mdF1okzHt4Bdp4g.png 576w\"\n        sizes=\"(max-width: 576px) 100vw, 576px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">2014: Vitalik Buterin’s (forum post) announcing Ethereum</figcaption>\n  </figure></p>\n<p>Ethereum is a network that allows developers to run “smart contracts” — snippets of <a href=\"https://en.wikipedia.org/wiki/Ethereum#Smart_contracts\">code</a> submitted by developers that are executed by a distributed network of computers. Ethereum has a corresponding token called Ether that can be purchased, either to hold for financial purposes or to use by purchasing computing power (known as “<a href=\"https://ethereum.stackexchange.com/questions/3/what-is-gas-and-transaction-fee-in-ethereum\">gas</a>”) on the network. Tokens are also given out to “miners” which are the computers on the decentralized network that execute smart contract code (you can think of miners as playing the role of cloud hosting services like <a href=\"https://en.wikipedia.org/wiki/Amazon_Web_Services\">AWS</a>). Third-party developers can write their own <a href=\"https://dapps.ethercasts.com/\">applications</a> that live on the network, and can charge Ether to generate revenue.</p>\n<p>Ethereum is inspiring a new wave of token networks. (It also provided a simple way for new token networks to launch on top of the Ethereum network, using a standard known as <a href=\"https://github.com/ethereum/EIPs/issues/20\">ERC20</a>). Developers are building token networks for a wide range of use cases, including distributed <a href=\"http://filecoin.io/\">computing</a> <a href=\"https://golem.network/\">platforms</a>, <a href=\"https://augur.net/\">prediction</a> and financial markets, incentivized <a href=\"https://steem.io/\">content creation networks</a>, and <a href=\"https://basicattentiontoken.org/\">attention and advertising networks</a>. Many more networks will be invented and launched in the coming months and years.</p>\n<p>Below I walk through the two main benefits of the token model, the first architectural and the second involving incentives.</p>\n<h2>Tokens enable the management and financing of open services</h2>\n<p>Proponents of open systems never had an effective way to manage and fund operating services, leading to a significant architectural disadvantage compared to their proprietary counterparts. This was particularly evident during the last internet mega-battle between open and closed networks: the social wars of the late 2000s. As Alexis Madrigal recently <a href=\"https://www.theatlantic.com/technology/archive/2017/05/a-very-brief-history-of-the-last-10-years-in-technology/526767/?utm_source=atltw\">wrote</a>, back in 2007 it looked like open networks would dominate going forward:</p>\n<blockquote>\n<p>In 2007, the web people were triumphant. Sure, the dot-com boom had busted, but empires were being built out of the remnant swivel chairs and fiber optic cables and unemployed developers. Web 2.0 was not just a temporal description, but an ethos. The web would be open. A myriad of services would be built, communicating through APIs, to provide the overall internet experience.</p>\n</blockquote>\n<p>But with the launch of the iPhone and the rise of smartphones, proprietary networks quickly won out:</p>\n<blockquote>\n<p>As that world-historical explosion began, a platform war came with it. The Open Web lost out quickly and decisively. By 2013, Americans spent about as much of their time on their phones <a href=\"http://www.marketingcharts.com/online/smart-device-users-spend-as-much-time-on-facebook-as-the-mobile-web-28422/\">looking at Facebook</a> as they did the whole rest of the open web.</p>\n</blockquote>\n<p>Why did open social protocols get so decisively defeated by proprietary social networks? The rise of smartphones was only part of the story. Some open protocols — like email and the web — survived the transition to the mobile era. Open protocols relating to social networks were high quality and abundant (e.g. <a href=\"https://en.wikipedia.org/wiki/RSS\">RSS</a>, <a href=\"http://xmlns.com/foaf/spec/\">FOAF</a>, <a href=\"https://en.wikipedia.org/wiki/XHTML_Friends_Network\">XFN</a>, <a href=\"http://openid.net/\">OpenID</a>). What the open side lacked was a mechanism for encapsulating software, databases, and protocols together into easy-to-use services.</p>\n<p>For example, in 2007, Wired magazine ran an <a href=\"https://www.wired.com/2007/08/open-social-net/\">article</a> in which they tried to create their own social network using open tools:</p>\n<blockquote>\n<p>For the last couple of weeks, Wired News tried to roll its own Facebook using free web tools and widgets. We came close, but we ultimately failed. We were able to recreate maybe 90 percent of Facebook’s functionality, but not the most important part — a way to link people and declare the nature of the relationship.</p>\n</blockquote>\n<p>Some developers <a href=\"http://bradfitz.com/social-graph-problem/\">proposed</a> solving this problem by creating a database of social graphs run by a non-profit organization:</p>\n<blockquote>\n<p><strong>Establish a non-profit and open source software</strong> (with copyrights held by the non-profit) which collects, merges, and redistributes the graphs from all other social network sites into one global aggregated graph. This is then made available to other sites (or users) via both public APIs (for small/casual users) and downloadable data dumps, with an update stream / APIs, to get iterative updates to the graph (for larger users).</p>\n</blockquote>\n<p>These open schemes required widespread coordination among standards bodies, server operators, app developers, and sponsoring organizations to mimic the functionality that proprietary services could provide all by themselves. As a result, proprietary services were able to create better user experiences and iterate much faster. This led to faster growth, which in turn led to greater investment and revenue, which then fed back into product development and further growth. Thus began a flywheel that drove the meteoric rise of proprietary social networks like Facebook and Twitter.</p>\n<p>Had the token model for network development existed back in 2007, the playing field would have been much more level. First, tokens provide a way not only to define a protocol, but to fund the operating expenses required to host it as a service. Bitcoin and Ethereum have tens of thousands of servers around the world (“miners”) that run their networks. They cover the hosting costs with built-in mechanisms that automatically distribute token rewards to computers on the network (“mining rewards”).</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 55.092592592592595%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"There are over 20,000 Ethereum nodes around the world (source)\"\n        title=\"There are over 20,000 Ethereum nodes around the world (source)\"\n        src=\"/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png\"\n        srcset=\"/static/cc7fc235606a1a2f9a369f35ef63d3ff/924ad/1-lu1cuJeeDIFPsDpPPo8lw.png 170w,\n/static/cc7fc235606a1a2f9a369f35ef63d3ff/f570f/1-lu1cuJeeDIFPsDpPPo8lw.png 341w,\n/static/cc7fc235606a1a2f9a369f35ef63d3ff/2bff6/1-lu1cuJeeDIFPsDpPPo8lw.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">There are over 20,000 Ethereum nodes around the world (source)</figcaption>\n  </figure></p>\n<p>Second, tokens provide a model for creating shared computing resources (<a href=\"https://medium.com/@FEhrsam/the-dapp-developer-stack-the-blockchain-industry-barometer-8d55ec1c7d4\">including</a> databases, compute, and file storage) while keeping the control of those resources decentralized (and without requiring an organization to maintain them). This is the blockchain technology that has been talked about <a href=\"https://trends.google.com/trends/explore?q=blockchain\">so much</a>. Blockchains would have allowed shared social graphs to be stored on a decentralized network. It would have been easy for the Wired author to create an open social network using the tools available today.</p>\n<h2>Tokens align incentives among network participants</h2>\n<p>Some of the <a href=\"/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/\">fiercest battles</a> in tech are between <a href=\"https://en.wikipedia.org/wiki/Complementary_good\">complements</a>. There were, for example, hundreds of startups that tried to build businesses on the APIs of social networks only to have the terms change later on, forcing them to pivot or shut down. Microsoft’s battles with complements like Netscape and Intuit are legendary. Battles within ecosystems are so common and drain so much energy that business books are full of frameworks for how one company can squeeze profits from adjacent businesses (e.g. Porter’s <a href=\"https://en.wikipedia.org/wiki/Porter%27s_five_forces_analysis\">five forces</a> model).</p>\n<p>Token networks remove this friction by aligning network participants to work together toward a common goal— the growth of the network and the appreciation of the token. This alignment is one of the main reasons Bitcoin continues to defy <a href=\"https://99bitcoins.com/bitcoinobituaries/\">skeptics</a> and flourish, even while new token networks like Ethereum have grown along side it.</p>\n<p>Moreover, well-designed token networks include an efficient mechanism to incentivize network participants to overcome the bootstrap problem that bedevils traditional network development. For example, <a href=\"https://steemit.com/\">Steemit</a> is a decentralized Reddit-like token network that makes payments to users who post and upvote articles. When Steemit launched last year, the community was <a href=\"https://coinreport.net/social-network-steemit-distributes-1-3-million-first-cryptocurrency-payout-users/\">pleasantly surprised</a> when they made their first significant payout to users.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 576px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 50.86805555555556%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Tokens help overcome the bootstrap problem by adding financial utility when application utility is low\"\n        title=\"Tokens help overcome the bootstrap problem by adding financial utility when application utility is low\"\n        src=\"/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png\"\n        srcset=\"/static/5b04980dfae9d027698ea230a794feca/924ad/1mi0v6PNlGnjL9QH-AWZxAA.png 170w,\n/static/5b04980dfae9d027698ea230a794feca/f570f/1mi0v6PNlGnjL9QH-AWZxAA.png 341w,\n/static/5b04980dfae9d027698ea230a794feca/9b31d/1mi0v6PNlGnjL9QH-AWZxAA.png 576w\"\n        sizes=\"(max-width: 576px) 100vw, 576px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Tokens help overcome the bootstrap problem by adding financial utility when application utility is low</figcaption>\n  </figure></p>\n<p>This in turn led to the appreciation of Steemit tokens, which increased future payouts, leading to a <a href=\"https://www.usv.com/blog/fat-protocols\">virtuous cycle</a> where more users led to more investment, and vice versa. Steemit is still a beta project and has since had mixed results, but was an interesting experiment in how to generalize the mutually reinforcing interaction between users and investors that Bitcoin and Ethereum first demonstrated.</p>\n<p>A lot of attention has been paid to token pre-sales (so-called “ICOs”), but they are just one of multiple ways in which the token model innovates on network incentives. A well-designed token network carefully manages the distribution of tokens across all five groups of network participants (users, core developers, third-party developers, investors, service providers) to maximize the growth of the network.</p>\n<p>One way to think about the token model is to imagine if the internet and web hadn’t been funded by governments and universities, but instead by a company that raised money by selling off domain names. People could buy domain names either to use them or as an investment (collectively, domain names are worth tens of billions of dollars today). Similarly, domain names could have been given out as rewards to service providers who agreed to run hosting services, and to third-party developers who supported the network. This would have provided an alternative way to finance and accelerate the development of the internet while also aligning the incentives of the various network participants.</p>\n<h2>The open network movement</h2>\n<p>The cryptocurrency movement is the spiritual heir to previous open computing movements, including the open source software movement led most visibly by Linux, and the open information movement led most visibly by Wikipedia.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/ac3acb338ebc31e660f966ff99f85d32/f5059/1U0B5FlpNVXSXeIcqodktLQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 25.05330490405117%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAA0UlEQVQY02WPW3KFIBBE3f/SbnaQSpS3vBIQQRBEM14/c6rna6qnewbOmJxnRqm11nvvnAsh1Fqv6+q9Y0Kc89eb3s81biEWHza3pLTtw4+15kFrpXS8SfeklHN+vT7GCSGEv0bEuVhzA+W9llKO4xgIrCZMMJm5oIQKISilGGFOGVwgmIZ11doIzpU0MeZSWq0HFDnPc4DC0zhxxiFYSqkg/Q300cZ/Y5vLbn8X59enOQh4HhlCWLxftFSQzCiDcPCnm+h8/BxN3HJrDTzXP/4Ah3QY3Y9kIOMAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)\"\n        title=\"1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)\"\n        src=\"/static/ac3acb338ebc31e660f966ff99f85d32/94a55/1U0B5FlpNVXSXeIcqodktLQ.png\"\n        srcset=\"/static/ac3acb338ebc31e660f966ff99f85d32/924ad/1U0B5FlpNVXSXeIcqodktLQ.png 170w,\n/static/ac3acb338ebc31e660f966ff99f85d32/f570f/1U0B5FlpNVXSXeIcqodktLQ.png 341w,\n/static/ac3acb338ebc31e660f966ff99f85d32/94a55/1U0B5FlpNVXSXeIcqodktLQ.png 681w,\n/static/ac3acb338ebc31e660f966ff99f85d32/f5059/1U0B5FlpNVXSXeIcqodktLQ.png 938w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">1991: Linus Torvalds’ forum (post) announcing Linux; 2001: the first Wikipedia (page)</figcaption>\n  </figure></p>\n<p>Both of these movements were once niche and <a href=\"https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b\">controversial</a>. Today Linux is the dominant worldwide operating system, and Wikipedia is the most popular informational website in the world.</p>\n<p>Crypto tokens are currently niche and controversial. If present trends continue, they will soon be seen as a breakthrough in the design and development of open networks, combining the societal benefits of open protocols with the financial and architectural benefits of proprietary networks. They are also an extremely promising development for those hoping to keep the internet accessible to entrepreneurs, developers, and other independent creators.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2017/02/20/aristotle-computer",
      "title": "How Aristotle Created the Computer",
      "description": "The philosophers he influenced set the stage for the technological revolution that remade our world. Originally published by The Atlantic…",
      "url": "https://cdixon.org/2017/02/20/aristotle-computer",
      "published": "2017-02-20T00:00:00.000Z",
      "updated": "2017-02-20T00:00:00.000Z",
      "content": "<h2>The philosophers he influenced set the stage for the technological revolution that remade our world.</h2>\n<p><em>Originally published by <a href=\"https://www.theatlantic.com/technology/archive/2017/03/aristotle-computer/518697/\">The Atlantic</a>.</em></p>\n<p>The history of computers is often told as a history of objects, from the abacus to the Babbage engine up through the code-breaking machines of World War II. In fact, it is better understood as a history of ideas, mainly ideas that emerged from mathematical logic, an obscure and cult-like discipline that first developed in the 19th century. Mathematical logic was pioneered by philosopher-mathematicians, most notably George Boole and Gottlob Frege, who were themselves inspired by Leibniz’s dream of a universal “concept language,” and the ancient logical system of Aristotle.</p>\n<p>Mathematical logic was initially considered a hopelessly abstract subject with no conceivable applications. As one computer scientist <a href=\"http://bactra.org/notebooks/mathematical-logic.html\">commented</a>: “If, in 1901, a talented and sympathetic outsider had been called upon to survey the sciences and name the branch which would be least fruitful in [the] century ahead, his choice might well have settled upon mathematical logic.” And yet, it would provide the foundation for a field that would have more impact on the modern world than any other.</p>\n<p>The evolution of computer science from mathematical logic culminated in the 1930s, with two landmark papers: Claude Shannon’s “<a href=\"http://www.ccapitalia.net/descarga/docs/1938-shannon-analysis-relay-switching-circuits.pdf\">A Symbolic Analysis of Switching and Relay Circuits</a>,” and Alan Turing’s “<a href=\"http://www.dna.caltech.edu/courses/cs129/caltech_restricted/Turing_1936_IBID.pdf\">On Computable Numbers, With an Application to the <em>Entscheidungsproblem</em></a>.” In the history of computer science, Shannon and Turing are towering figures, but the importance of the philosophers and logicians who preceded them is frequently overlooked.</p>\n<p>A well-known history of computer science describes Shannon’s paper as “possibly the most important, and also the most noted, master’s thesis of the century.” Shannon wrote it as an electrical engineering student at MIT. His adviser, Vannevar Bush, built a prototype computer known as the <a href=\"http://www.mit.edu/~klund/analyzer/\">Differential Analyzer</a> that could rapidly calculate differential equations. The device was mostly mechanical, with subsystems controlled by electrical relays, which were organized in an ad hoc manner as there was not yet a systematic theory underlying circuit design. Shannon’s thesis topic came about when Bush recommended he try to discover such a theory.</p>\n<p>Shannon’s paper is in many ways a typical electrical-engineering paper, filled with equations and diagrams of electrical circuits. What is unusual is that the primary reference was a 90-year-old work of mathematical philosophy, George Boole’s <em>The Laws of Thought</em>.</p>\n<p>Today, Boole’s name is well known to computer scientists (many programming languages have a basic data type called a Boolean), but in 1938 he was rarely read outside of philosophy departments. Shannon himself encountered Boole’s work in an undergraduate philosophy class. “It just happened that no one else was familiar with both fields at the same time,” he <a href=\"http://georgeboole.com/boole/legacy/engineering/\">commented</a> later.</p>\n<p>Boole is often described as a mathematician, but he saw himself as a philosopher, following in the footsteps of Aristotle. The Laws of Thought begins with a description of his goals, to investigate the fundamental laws of the operation of the human mind:</p>\n<blockquote>\n<p>The design of the following treatise is to investigate the fundamental laws of those operations of the mind by which reasoning is performed; to give expression to them in the symbolical language of a Calculus, and upon this foundation to establish the science of Logic ... and, finally, to collect ... some probable intimations concerning the nature and constitution of the human mind.</p>\n</blockquote>\n<p>He then pays tribute to Aristotle, the inventor of logic, and the primary influence on <a href=\"http://www.gutenberg.org/files/15114/15114-pdf.pdf\">his own work</a>:</p>\n<blockquote>\n<p>In its ancient and scholastic form, indeed, the subject of Logic stands almost exclusively associated with the great name of Aristotle. As it was presented to ancient Greece in the partly technical, partly metaphysical disquisitions of The Organon, such, with scarcely any essential change, it has continued to the present day.</p>\n</blockquote>\n<p>Trying to improve on the logical work of Aristotle was an intellectually daring move. Aristotle’s logic, presented in his six-part book <em>The Organon</em>, occupied a central place in the scholarly canon for more than 2,000 years. It was widely believed that Aristotle had written almost all there was to say on the topic. The great philosopher Immanuel Kant <a href=\"https://books.google.com/books?id=WJVYp0C0taYC&pg=PA36&lpg=PA36&dq=unable+to+take+a+single+step+forward,+and+therefore+seems+to+all+appearance+to+be+finished+and+complete&source=bl&ots=W4Lrt9I80J&sig=KpZlOd-Yc9brgTksIJJZcxUD-Mg&hl=en&sa=X&ved=0ahUKEwjeg8i1iLvQAhVH6IMKHTMXDMgQ6AEIHTAA#v=onepage&q=unable%20to%20take%20a%20single%20step%20forward%2C%20and%20therefore%20seems%20to%20all%20appearance%20to%20be%20finished%20and%20complete&f=false\">commented</a> that, since Aristotle, logic had been “unable to take a single step forward, and therefore seems to all appearance to be finished and complete.”</p>\n<p>Aristotle’s central observation was that arguments were valid or not based on their logical structure, independent of the non-logical words involved. The most famous argument schema he discussed is known as the syllogism:</p>\n<ul>\n<li>All men are mortal.</li>\n<li>Socrates is a man.</li>\n<li>Therefore, Socrates is mortal.</li>\n</ul>\n<p>You can replace “Socrates” with any other object, and “mortal” with any other predicate, and the argument remains valid. The validity of the argument is determined solely by the logical structure. The logical words — “all,” “is,” are,” and “therefore” — are doing all the work.</p>\n<p>Aristotle also defined a set of basic axioms from which he derived the rest of his logical system:</p>\n<ul>\n<li>An object is what it is (Law of Identity)</li>\n<li>No statement can be both true and false (Law of Non-contradiction)</li>\n<li>Every statement is either true or false (Law of the Excluded Middle)</li>\n</ul>\n<p>These axioms weren’t meant to describe how people actually think (that would be the realm of psychology), but how an idealized, perfectly rational person ought to think.</p>\n<p>Aristotle’s axiomatic method influenced an even more famous book, Euclid’s <em>Elements</em>, which is <a href=\"https://en.wikipedia.org/wiki/Euclid%27s_Elements\">estimated</a> to be second only to the Bible in the number of editions printed.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 630px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 60.79365079365079%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"A fragment of the Elements (Wikimedia Commons)\"\n        title=\"A fragment of the Elements (Wikimedia Commons)\"\n        src=\"/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png\"\n        srcset=\"/static/2c8ad9d68abd743af2370247bda0f885/924ad/2c8ad9d68.png 170w,\n/static/2c8ad9d68abd743af2370247bda0f885/f570f/2c8ad9d68.png 341w,\n/static/2c8ad9d68abd743af2370247bda0f885/b2a12/2c8ad9d68.png 630w\"\n        sizes=\"(max-width: 630px) 100vw, 630px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">A fragment of the Elements (Wikimedia Commons)</figcaption>\n  </figure></p>\n<p>Although ostensibly about geometry, the <em>Elements</em> became a standard textbook for teaching rigorous deductive reasoning. (Abraham Lincoln once said that he learned sound legal argumentation from studying Euclid.) In Euclid’s system, geometric ideas were represented as spatial diagrams. Geometry continued to be practiced this way until René Descartes, in the 1630s, showed that geometry could instead be represented as formulas. His <em>Discourse on Method</em> was the <a href=\"http://www.storyofmathematics.com/17th_descartes.html\">first</a> mathematics text in the West to popularize what is now standard algebraic notation — x, y, z for variables, a, b, c for known quantities, and so on.</p>\n<p>Descartes’s algebra allowed mathematicians to move beyond spatial intuitions to manipulate symbols using precisely defined formal rules. This shifted the dominant mode of mathematics from diagrams to formulas, leading to, among other things, the development of calculus, invented roughly 30 years after Descartes by, independently, Isaac Newton and Gottfried Leibniz.</p>\n<p>Boole’s goal was to do for Aristotelean logic what Descartes had done for Euclidean geometry: free it from the limits of human intuition by giving it a precise algebraic notation. To give a simple example, when Aristotle wrote:</p>\n<p>All men are mortal.</p>\n<p>Boole replaced the words “men” and “mortal” with variables, and the logical words “all” and “are” with arithmetical operators:</p>\n<p><em>x = x * y</em></p>\n<p>Which could be interpreted as “Everything in the set <em>x</em> is also in the set <em>y</em>.”</p>\n<p>The <em>Laws of Thought</em> created a new scholarly field—mathematical logic—which in the following years became one of the most active areas of research for mathematicians and philosophers. Bertrand Russell called the <em>Laws of Thought</em> “the work in which pure mathematics was discovered.”</p>\n<p>Shannon’s insight was that Boole’s system could be mapped directly onto electrical circuits. At the time, electrical circuits had no systematic theory governing their design. Shannon realized that the right theory would be “exactly analogous to the calculus of propositions used in the symbolic study of logic.”</p>\n<p>He showed the correspondence between electrical circuits and Boolean operations in a simple chart:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 414px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/99df968e4a381af54b90ef8d287fb9de/07a90/99df968e4.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 42.7536231884058%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAJCAYAAAAywQxIAAAACXBIWXMAAAsSAAALEgHS3X78AAABWUlEQVQozz2SCa+CMBCE+///GUbUCOKBElHxVrwVPPblm6SvyaTb7nZ3ZsCt12ubTCaWZZn1+33tnOfzuaVpqvN4PLbBYKDY341GI8HHZVkay3U6HVutVkKz2RS4a7fbQhRFtt1uNaTRaCjf6/VUE4ahdbtdC4JA58fjYe71etnz+RSj2Wxmp9PJ6roW3u+3wDqfzzYcDsUWVvf7/T9PbVVV9v1+zf1+PyWZlCSJpi8WCzX5fD4CC0mtVkusqUM6jHhPDc0k+Xa7iSGS8jwXA9judjvD381mI9bX61XNGAhDQA6rqN/v92LroMqEw+Ggy8vlohhGx+NRjZGLNZjPY87kGMQbYoYj3dGMYDqdCkzGSwBjPgjFMERqHMe2XC6tKAo1xx5U0gP5Dt0c8IRfg0eYT+ylwACf2WEPYM4wL5WlhkjBXBIU4QvwMR7xECuIYedruGeHof/Kf4QWnRYLqyazAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)\"\n        title=\"Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)\"\n        src=\"/static/99df968e4a381af54b90ef8d287fb9de/07a90/99df968e4.png\"\n        srcset=\"/static/99df968e4a381af54b90ef8d287fb9de/924ad/99df968e4.png 170w,\n/static/99df968e4a381af54b90ef8d287fb9de/f570f/99df968e4.png 341w,\n/static/99df968e4a381af54b90ef8d287fb9de/07a90/99df968e4.png 414w\"\n        sizes=\"(max-width: 414px) 100vw, 414px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Shannon’s mapping from electrical circuits to symbolic logic (University of Virginia)</figcaption>\n  </figure></p>\n<p>This correspondence allowed computer scientists to import decades of work in logic and mathematics by Boole and subsequent logicians. In the second half of his paper, Shannon showed how Boolean logic could be used to create a circuit for adding two binary digits.</p>\n<p>By stringing these adder circuits together, arbitrarily complex arithmetical operations could be constructed. These circuits would become the basic building blocks of what are now known as <a href=\"https://en.wikipedia.org/wiki/Arithmetic_logic_unit\">arithmetical logic units</a>, a key component in modern computers.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 371px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2b88e5a1a506c0c6476f9b8658ae8c1f/24b80/2b88e5a1a.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 46.091644204851754%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Shannon’s adder circuit (University of Virginia)\"\n        title=\"Shannon’s adder circuit (University of Virginia)\"\n        src=\"/static/2b88e5a1a506c0c6476f9b8658ae8c1f/24b80/2b88e5a1a.png\"\n        srcset=\"/static/2b88e5a1a506c0c6476f9b8658ae8c1f/924ad/2b88e5a1a.png 170w,\n/static/2b88e5a1a506c0c6476f9b8658ae8c1f/f570f/2b88e5a1a.png 341w,\n/static/2b88e5a1a506c0c6476f9b8658ae8c1f/24b80/2b88e5a1a.png 371w\"\n        sizes=\"(max-width: 371px) 100vw, 371px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Shannon’s adder circuit (University of Virginia)</figcaption>\n  </figure></p>\n<p>Another way to characterize Shannon’s achievement is that he was first to distinguish between the logical and the physical layer of computers. (This distinction has become so fundamental to computer science that it might seem surprising to modern readers how insightful it was at the time—a reminder of the adage that “the philosophy of one century is the common sense of the next.”)</p>\n<p>Since Shannon’s paper, a vast amount of progress has been made on the physical layer of computers, including the invention of the transistor in 1947 by William Shockley and his colleagues at Bell Labs. Transistors are dramatically improved versions of Shannon’s electrical relays — the best known way to physically encode Boolean operations. Over the next 70 years, the semiconductor industry packed more and more transistors into smaller spaces. A 2016 iPhone <a href=\"http://www.macrumors.com/2016/09/12/cpu-improvements-iphone-7-apple-watch/\">has</a> about 3.3 billion transistors, each one a “relay switch” like those pictured in Shannon’s diagrams.</p>\n<p>While Shannon showed how to map logic onto the physical world, Turing showed how to design computers in the language of mathematical logic. When Turing wrote his paper, in 1936, he was trying to solve “the decision problem,” first identified by the mathematician David Hilbert, who asked whether there was an algorithm that could determine whether an arbitrary mathematical statement is true or false. In contrast to Shannon’s paper, Turing’s paper is highly technical. Its primary historical significance lies not in its answer to the decision problem,  but in the template for computer design it provided along the way.</p>\n<p>Turing was working in a tradition stretching back to Gottfried Leibniz, the philosophical giant who developed calculus independently of Newton. Among Leibniz’s many contributions to modern thought, one of the most intriguing was the idea of a new language he called the “<a href=\"https://en.wikipedia.org/wiki/Characteristica_universalis\">universal characteristic</a>” that, he imagined, could represent all possible mathematical and scientific knowledge. Inspired in part by the 13th-century religious philosopher <a href=\"https://en.wikipedia.org/wiki/Ramon_Llull\">Ramon Llull</a>, Leibniz postulated that the language would be ideographic like Egyptian hieroglyphics, except characters would correspond to “atomic” concepts of math and science. He argued this language would give humankind an “instrument” that could enhance human reason “to a far greater extent than optical instruments” like the microscope and telescope.</p>\n<p>He also <a href=\"http://publicdomainreview.org/2016/11/10/let-us-calculate-leibniz-llull-and-computational-imagination/\">imagined</a> a machine that could process the language, which he called the calculus ratiocinator.</p>\n<blockquote>\n<p>If controversies were to arise, there would be no more need of disputation between two philosophers than between two accountants. For it would suffice to take their pencils in their hands, and say to each other: Calculemus—Let us calculate.</p>\n</blockquote>\n<p>Leibniz didn’t get the opportunity to develop his universal language or the corresponding machine (although he did invent a relatively simple calculating machine, the <a href=\"https://en.wikipedia.org/wiki/Stepped_reckoner\">stepped reckoner</a>). The first credible attempt to realize Leibniz’s dream came in 1879, when the German philosopher Gottlob Frege published his landmark logic treatise <em><a href=\"https://en.wikipedia.org/wiki/Begriffsschrift\">Begriffsschrift</a></em>. Inspired by Boole’s attempt to improve Aristotle’s logic, Frege developed a much more advanced logical system. The logic taught in philosophy and computer-science classes today—first-order or predicate logic—is only a slight modification of Frege’s system.</p>\n<p>Frege is generally considered one of the most important philosophers of the 19th century. Among other things, he is credited with catalyzing what noted philosopher Richard Rorty called the “<a href=\"https://en.wikipedia.org/wiki/Linguistic_turn\">linguistic turn</a>” in philosophy. As Enlightenment philosophy was obsessed with questions of knowledge, philosophy after Frege became obsessed with questions of language. His disciples included two of the most important philosophers of the 20th century—Bertrand Russell and Ludwig Wittgenstein.</p>\n<p>The major innovation of Frege’s logic is that it much more accurately represented the logical structure of ordinary language. Among other things, Frege was the first to use quantifiers (“for every,” “there exists”) and to separate objects from predicates. He was also the first to develop what today are fundamental concepts in computer science like recursive functions and variables with scope and binding.</p>\n<p>Frege’s formal language — what he called his “concept-script” — is made up of meaningless symbols that are manipulated by well-defined rules. The language is only given meaning by an interpretation, which is specified separately (this distinction would later come to be called syntax versus semantics). This turned logic into what the eminent computer scientists Allan Newell and Herbert Simon called “the symbol game,” “played with meaningless tokens according to certain purely syntactic rules.”</p>\n<blockquote>\n<p>All meaning had been purged. One had a mechanical system about which various things could be proved. Thus progress was first made by walking away from all that seemed relevant to meaning and human symbols.</p>\n</blockquote>\n<p>As Bertrand Russell famously quipped: “Mathematics may be defined as the subject in which we never know what we are talking about, nor whether what we are saying is true.”</p>\n<p>An unexpected consequence of Frege’s work was the discovery of weaknesses in the foundations of mathematics. For example, Euclid’s <em>Elements</em> — considered the gold standard of logical rigor for thousands of years — turned out to be full of logical mistakes. Because Euclid used ordinary words like “line” and “point,” he — and centuries of readers — deceived themselves into making assumptions about sentences that contained those words. To give one relatively simple example, in ordinary usage, the word “line” implies that if you are given three distinct points on a line, one point must be between the other two. But when you define “line” using formal logic, it turns out “between-ness” also needs to be defined—something Euclid overlooked. Formal logic makes gaps like this easy to spot.</p>\n<p>This realization created a <a href=\"https://en.wikipedia.org/wiki/Foundations_of_mathematics#Foundational_crisis\">crisis</a> in the foundation of mathematics. If the <em>Elements</em> — the bible of mathematics — contained logical mistakes, what other fields of mathematics did too? What about sciences like physics that were built on top of mathematics?</p>\n<p>The good news is that the same logical methods used to uncover these errors could also be used to correct them. Mathematicians started rebuilding the foundations of mathematics from the bottom up. In 1889, Giuseppe Peano <a href=\"https://en.wikipedia.org/wiki/Peano_axioms\">developed</a> axioms for arithmetic, and in 1899, David Hilbert <a href=\"https://en.wikipedia.org/wiki/Hilbert%27s_axioms\">did</a> the same for geometry. Hilbert also outlined a program to formalize the remainder of mathematics, with specific requirements that any such attempt should satisfy, including:</p>\n<ul>\n<li><em>Completeness</em>: There should be a proof that all true mathematical statements can be proved in the formal system.</li>\n<li><em>Decidability</em>: There should be an algorithm for deciding the truth or falsity of any mathematical statement. (This is the “<em>Entscheidungsproblem</em>” or “decision problem” referenced in Turing’s paper.)</li>\n</ul>\n<p>Rebuilding mathematics in a way that satisfied these requirements became known as Hilbert’s program. Up through the 1930s, this was the focus of a core group of logicians including Hilbert, Russell, Kurt Gödel, John Von Neumann, Alonzo Church, and, of course, Alan Turing.</p>\n<p>Hilbert’s program proceeded on at least two fronts. On the first front, logicians created logical systems that tried to prove Hilbert’s requirements either satisfiable or not.</p>\n<p>On the second front, mathematicians used logical concepts to rebuild classical mathematics. For example, Peano’s system for arithmetic starts with a simple function called the successor function which increases any number by one. He uses the successor function to recursively define <a href=\"https://en.wikipedia.org/wiki/Peano_axioms#Addition\">addition</a>, uses addition to recursively define <a href=\"https://en.wikipedia.org/wiki/Peano_axioms#Multiplication\">multiplication</a>, and so on, until all the operations of number theory are defined. He then uses those definitions, along with formal logic, to prove theorems about arithmetic.</p>\n<p>The historian Thomas Kuhn once observed that “in science, novelty emerges only with difficulty.” Logic in the era of Hilbert’s program was a tumultuous process of creation and destruction. One logician would build up an elaborate system and another would tear it down.</p>\n<p>The favored tool of destruction was the construction of self-referential, paradoxical statements that showed the axioms from which they were derived to be inconsistent. A simple form of this  “liar’s paradox” is the sentence:</p>\n<p>This sentence is false.</p>\n<p>If it is true then it is false, and if it is false then it is true, leading to an endless loop of self-contradiction.</p>\n<p>Russell made the first notable use of the liar’s paradox in mathematical logic. He showed that Frege’s system allowed self-contradicting sets to be derived:</p>\n<blockquote>\n<p>Let <em>R</em> be the set of all sets that are not members of themselves. If <em>R</em> is not a member of itself, then its definition dictates that it must contain itself, and if it contains itself, then it contradicts its own definition as the set of all sets that are not members of themselves.</p>\n</blockquote>\n<p>This became known as Russell’s paradox and was seen as a serious flaw in Frege’s achievement. (Frege himself was shocked by this discovery. He replied to Russell: “Your discovery of the contradiction caused me the greatest surprise and, I would almost say, consternation, since it has shaken the basis on which I intended to build my arithmetic.”)</p>\n<p>Russell and his colleague Alfred North Whitehead put forth the most ambitious attempt to complete Hilbert’s program with the <em>Principia Mathematica</em>, published in three volumes between 1910 and 1913. The <em>Principia’s</em> method was so detailed that it took over 300 pages to get to the proof that 1+1=2.</p>\n<p>Russell and Whitehead tried to resolve Frege’s paradox by introducing what they called type theory. The idea was to partition formal languages into multiple levels or types. Each level could make reference to levels below, but not to their own or higher levels. This resolved self-referential paradoxes by, in effect, banning self-reference. (This solution was not popular with logicians, but it did influence computer science — most modern computer languages have features inspired by type theory.)</p>\n<p>Self-referential paradoxes ultimately showed that Hilbert’s program could never be successful. The first blow came in 1931, when Gödel published his now famous incompleteness theorem, which proved that any consistent logical system powerful enough to encompass arithmetic must also contain statements that are true but cannot be proven to be true. (Gödel’s incompleteness theorem is one of the few logical results that has been broadly popularized, thanks to books like <a href=\"https://en.wikipedia.org/wiki/G%C3%B6del,_Escher,_Bach\">Gödel, Escher, Bach</a> and <a href=\"https://www.amazon.com/dp/B00ARGXG7Q/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1\">The Emperor’s New Mind</a>).</p>\n<p>The final blow came when Turing and Alonzo Church independently proved that no algorithm could exist that determined whether an arbitrary mathematical statement was true or false. (Church did this by inventing an entirely different system called the <a href=\"https://en.wikipedia.org/wiki/Lambda_calculus\">lambda calculus</a>, which would later inspire computer languages like <a href=\"https://en.wikipedia.org/wiki/Lisp_%28programming_language%29\">Lisp</a>.) The answer to the decision problem was negative.</p>\n<p>Turing’s key insight came in the first section of his famous 1936 paper, “On Computable Numbers, With an Application to the <em>Entscheidungsproblem</em>.” In order to rigorously formulate the decision problem (the “<em>Entscheidungsproblem</em>”), Turing first created a mathematical model of what it means to be a computer (today, machines that fit this model are known as “universal Turing machines”). As the logician Martin Davis describes it:</p>\n<blockquote>\n<p>Turing knew that an algorithm is typically specified by a list of rules that a person can follow in a precise mechanical manner, like a recipe in a cookbook. He was able to show that such a person could be limited to a few extremely simple basic actions without changing the final outcome of the computation.</p>\n<p>Then, by proving that no machine performing only those basic actions could determine whether or not a given proposed conclusion follows from given premises using Frege’s rules, he was able to conclude that no algorithm for the Entscheidungsproblem exists.</p>\n<p>As a byproduct, he found a mathematical model of an all-purpose computing machine.</p>\n</blockquote>\n<p>Next, Turing showed how a program could be stored inside a computer alongside the data upon which it operates. In today’s vocabulary, we’d say that he invented the “stored-program” architecture that underlies most modern computers:</p>\n<blockquote>\n<p>Before Turing, the general supposition was that in dealing with such machines the three categories — machine, program, and data — were entirely separate entities. The machine was a physical object; today we would call it hardware. The program was the plan for doing a computation, perhaps embodied in punched cards or connections of cables in a plugboard. Finally, the data was the numerical input. Turing’s universal machine showed that the distinctness of these three categories is an illusion.</p>\n</blockquote>\n<p>This was the first rigorous demonstration that any computing logic that could be encoded in hardware could also be encoded in software. The architecture Turing described was later dubbed the “Von Neumann architecture” — but modern historians generally agree it came from Turing, as, apparently, did Von Neumann <a href=\"https://en.wikipedia.org/wiki/Alan_Turing#cite_note-36\">himself</a>.</p>\n<p>Although, on a technical level, Hilbert’s program was a failure, the efforts along the way demonstrated that large swaths of mathematics could be constructed from logic. And after Shannon and Turing’s insights—showing the connections between electronics, logic and computing—it was now possible to export this new conceptual machinery over to computer design.</p>\n<p>During World War II, this theoretical work was put into practice, when government labs conscripted a number of elite logicians. Von Neumann joined the atomic bomb project at Los Alamos, where he worked on computer design to support physics research. In 1945, he wrote the <a href=\"http://www.virtualtravelog.net/wp/wp-content/media/2003-08-TheFirstDraft.pdf\">specification</a> of the EDVAC—the first stored-program, logic-based computer—which is generally considered the definitive source guide for modern computer design.</p>\n<p>Turing joined a secret unit at Bletchley Park, northwest of London, where he helped design computers that were instrumental in breaking German codes. His most enduring contribution to practical computer design was his specification of the ACE, or Automatic Computing Engine.</p>\n<p>As the first computers to be based on Boolean logic and stored-program architectures, the ACE and the EDVAC were similar in many ways. But they also had interesting differences, some of which foreshadowed modern debates in computer design. Von Neumann’s favored designs were similar to modern CISC (“complex”) processors, baking rich functionality into hardware. Turing’s design was more like modern RISC (“reduced”) processors, minimizing hardware complexity and pushing more work to software.</p>\n<p>Von Neumann thought computer programming would be a tedious, clerical job. Turing, by contrast, said computer programming “should be very fascinating. There need be no real danger of it ever becoming a drudge, for any processes that are quite mechanical may be turned over to the machine itself.”</p>\n<p>Since the 1940s, computer programming has become significantly more sophisticated. One thing that hasn’t changed is that it still primarily consists of programmers specifying rules for computers to follow. In philosophical terms, we’d say that computer programming has followed in the tradition of deductive logic, the branch of logic discussed above, which deals with the manipulation of symbols according to formal rules.</p>\n<p>In the past decade or so, programming has started to change with the growing popularity of machine learning, which involves creating frameworks for machines to learn via statistical inference. This has brought programming closer to the other main branch of logic, inductive logic, which deals with inferring rules from specific instances.</p>\n<p>Today’s most promising machine learning techniques use neural networks, which were first <a href=\"http://www.cse.chalmers.se/~coquand/AUTOMATA/mcp.pdf\">invented</a> in 1940s by Warren McCulloch and Walter Pitts, whose idea was to develop a calculus for neurons that could, like Boolean logic, be used to construct computer circuits. Neural networks remained esoteric until decades later when they were combined with statistical techniques, which allowed them to improve as they were fed more data. Recently, as computers have become increasingly adept at handling large data sets, these techniques have produced remarkable results. Programming in the future will likely mean exposing neural networks to the world and letting them learn.</p>\n<p>This would be a fitting second act to the story of computers. Logic began as a way to understand the laws of thought. It then helped create machines that could reason according to the rules of deductive logic. Today, deductive and inductive logic are being combined to create machines that both reason and learn. What began, in Boole’s words, with an investigation “concerning the nature and constitution of the human mind,” could result in the creation of new minds—artificial minds—that might someday match or even exceed our own.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2017/01/16/gadgets-and-computers",
      "title": "Gadgets and Computers",
      "description": "From Benedict Evans’ Cars as Feature Phones: This is a common theme in many classes of device: you start with a product that has a few…",
      "url": "https://cdixon.org/2017/01/16/gadgets-and-computers",
      "published": "2017-01-16T00:00:00.000Z",
      "updated": "2017-01-16T00:00:00.000Z",
      "content": "<p>From Benedict Evans’ <a href=\"http://ben-evans.com/benedictevans/2017/01/10/cars-as-featurephones\">Cars as Feature Phones</a>:</p>\n<blockquote>\n<p>This is a common theme in many classes of device: you start with a product that has a few electronic functions added, and then those functions are delivered with chips, and perhaps they gain an interface and then a screen, and more and more functions (and probably multi-function buttons) — and then, somehow, you’ve built a little weird custom computer without actually meaning to, and all the little silos of features and functions become unmanageable, both at an interface level and also at a fundamental engineering level, and the whole thing gets replaced by a real computer with a real software platform. And this new computer is almost certainly made by a different company.\nYou could see this problem very clearly at Motorola, which developed as many as two dozen ‘operating systems’ — for phones, pagers, satellite phones, car-control, industrial devices, chip evaluation boards and so on and so on, and picked them for each device out of a metaphorical parts bin just as you’d choose a sensor or battery or any other component. And boy, they really knew how to write operating systems — they had dozens! With, probably, ‘<a href=\"https://www.technologyreview.com/s/508231/many-cars-have-a-hundred-million-lines-of-code/\">millions of lines of code</a>’. This was exactly the right approach in 1995, but in 2005, again, the whole thing collapsed under its own weight, because they needed software as a platform rather than as a one-off component, and instead <a href=\"http://www.theregister.co.uk/Print/2012/11/29/rockman_on_motorola/\">they had a mess</a>.</p>\n</blockquote>\n<p>The iPhone was the first mainstream cell phone that was also a proper computer. It had a full-fledged operating system and a (mostly) open developer platform. We are likely seeing the same pattern play out across the <a href=\"https://medium.com/software-is-eating-the-world/what-s-next-in-computing-e54b870b80cc#.bmdmkoc13\">next generation of computers</a>: not only cars, but drones, IoT devices, wearables, etc. In the beginning, hardware-focused companies make gadgets with ever increasing laundry lists of features. Then a company with strong software expertise (often a new market entrant) comes along that replaces these feature-packed gadgets with full-fledged computers. These computers have proper (usually Unix-like) operating systems, open developer platforms, and streamlined user interfaces (increasingly, powered by AI).</p>\n<p>This process takes time to play out. Apple waited more than a decade from the initial popularity of cell phones to the release of the first iPhone. And sometimes you don’t know the significance of a new computing device until many years later. It wasn’t obvious until around 2012 that iOS and Android smartphones would become the dominant form of computing (recall Facebook’s “<a href=\"https://techcrunch.com/2012/10/19/facebook-mobile-first/\">pivot to mobile</a>” in 2012). Some people (including me) believe we’ve already entered the “computer phase” of consumer IoT with voice assistants like Alexa, but it will probably take years before we understand the enduring mainstream appeal of these devices.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/09/25/as-edwin-land-ultimately-recognized-the-adoption-of-his-polarized-headlight-system-was-fatally",
      "title": "As [Edwin] Land ultimately recognized, the adoption of his [polarized headlight] system was fatally…",
      "description": "As Edwin Land ultimately recognized, the adoption of his polarized headlight system was fatally hampered by the fact that there was no…",
      "url": "https://cdixon.org/2016/09/25/as-edwin-land-ultimately-recognized-the-adoption-of-his-polarized-headlight-system-was-fatally",
      "published": "2016-09-25T00:00:00.000Z",
      "updated": "2016-09-25T00:00:00.000Z",
      "content": "<p>As [Edwin] Land ultimately recognized, the adoption of his [polarized headlight] system was fatally hampered by the fact that there was no competitive advantage for any car company in using it first. Since all cars needed to incorporate the technology as simultaneously as possible, it was either going to be all, either voluntarily or as directed by the government, or none. No state or federal governmental agency ever stepped in to direct the adoption of the technology in the way that seat belts would be required decades later. Herbert Nichols, a journalist with the Christian Science Monitor who had followed the story, believed that the industry killed the idea even though the demonstrations clearly showed that the system worked. According to Nichols, the industry concluded that it “just didn’t need anything to sell automobiles. They realized they could sell all the automobiles they could make.” Thus, with no economic or competitive incentive, why bother with a system that clearly added costs and admittedly presented implementation issues? After more than two decades, Land reluctantly gave up the fight.</p>\n<p><strong>But he learned one very important lesson. “I knew then that I would never go into a commercial field that put a barrier between us and the customer.” Rather than deal with other companies as intermediaries, he would market his innovative products directly to the public. He believed “that the role of industry is to sense a deep human need, then bring science and technology to bear on filling that need. Any market already existing is inherently boring and dull.” Land, like Steve Jobs many decades later, believed that his company should “give people products they do not even know they want.” Fortunately, he already had such a product in mind.</strong></p>\n<p>— <em><a href=\"https://www.amazon.com/dp/B00OHRYYFO/\">A Triumph of Genius: Edwin Land, Polaroid, and the Kodak Patent War</a></em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/08/18/eleven-reasons-to-be-excited-about-the-future-of-technology",
      "title": "Eleven Reasons To Be Excited About The Future of Technology",
      "description": "“The strongest force propelling human progress has been the swift advance and wide diffusion of technology.” — The Economist In the year…",
      "url": "https://cdixon.org/2016/08/18/eleven-reasons-to-be-excited-about-the-future-of-technology",
      "published": "2016-08-18T00:00:00.000Z",
      "updated": "2016-08-18T00:00:00.000Z",
      "content": "<blockquote>\n<p>“The strongest force propelling human progress has been the swift advance and wide diffusion of technology.” — <a href=\"http://www.economist.com/node/841842\">The Economist</a></p>\n</blockquote>\n<p>In the year 1820, a person could <a href=\"https://ourworldindata.org/life-expectancy/\">expect to live</a> less than 35 years, 94% of the global population <a href=\"https://ourworldindata.org/world-poverty/\">lived in extreme poverty</a>, and less that 20% of the population was literate. Today, human life expectancy is over 70 years, less that 10% of the global population lives in extreme poverty, and <a href=\"http://www.oecd.org/statistics/How-was-life.pdf\">over 80% of people</a> are literate. These improvements are due mainly to advances in technology, beginning in the industrial age and continuing today in the information age.</p>\n<p>There are many exciting new technologies that will continue to transform the world and improve human welfare. Here are eleven of them.</p>\n<h2>1. Self-Driving Cars</h2>\n<p>Self-driving cars exist today that are safer than human-driven cars in most driving conditions. Over the next 3–5 years they‘ll get even safer, and will begin to go mainstream.</p>\n<p><img src=\"/9095391e908f6d180dfe446b3c85d104/1_HfoJs9tCyyr6VeLvD45wyQ.gif\"></p>\n<p>The <a href=\"http://www.who.int/mediacentre/factsheets/fs358/en/\">World Health Organization estimates</a> that 1.25 million people die from car-related injuries per year. Half of the deaths are pedestrians, bicyclists, and motorcyclists hit by cars. Cars are the leading cause of death for people ages 15–29 years old.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 535px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/b1331e887bede1ec31bb4ddd87d920f3/fd7a0/1_SNGdeK4GNUhjL6wlh7sfJw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 44.48598130841121%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAJCAIAAAC9o5sfAAAACXBIWXMAAAsSAAALEgHS3X78AAABGElEQVQoz4VR23KCMBT0/7+iT+2/9KWt1SoSIHKLoCAQopAbXcSZTrWXnUzmnMnuZk8yM8b2RitrtdKAUqrve62NtcP9MlMxXGpjZ704Pzw+PbuL15e398Vy7WzWjiOEGEYGaN/QSrs+6NVBhbUexUpKMp/vWJJm+zTLd/leSqkvQISpRjEZKWO5tE1v4YIUM5yxPA+2W9/3A0rjJCHEczYbl5AwitDGUZQyBtpNCthBbMCjlBLPJ56HzEFAsXuePzJ+Cv8lNsaAF4YRLMYLXXf5AazQIvPwO65izJnusv2hiFOWsKwoyq7rOOf3UW/FSmneiqrhZVUfq6Y81nlR1rwd/sN1ZujxruLUnTs8r4JXK074ib8BwifMWQP6XlWXAAAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1 SNGdeK4GNUhjL6wlh7sfJw\"\n        title=\"1 SNGdeK4GNUhjL6wlh7sfJw\"\n        src=\"/static/b1331e887bede1ec31bb4ddd87d920f3/fd7a0/1_SNGdeK4GNUhjL6wlh7sfJw.png\"\n        srcset=\"/static/b1331e887bede1ec31bb4ddd87d920f3/924ad/1_SNGdeK4GNUhjL6wlh7sfJw.png 170w,\n/static/b1331e887bede1ec31bb4ddd87d920f3/f570f/1_SNGdeK4GNUhjL6wlh7sfJw.png 341w,\n/static/b1331e887bede1ec31bb4ddd87d920f3/fd7a0/1_SNGdeK4GNUhjL6wlh7sfJw.png 535w\"\n        sizes=\"(max-width: 535px) 100vw, 535px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>Just as cars reshaped the world in the 20th century, so will self-driving cars in the 21st century. In most cities, <a href=\"http://oldurbanist.blogspot.com.es/2011/12/we-are-25-looking-at-street-area.html\">between 20–30%</a> of usable space is taken up by parking spaces, and most cars are parked <a href=\"http://www.reinventingparking.org/2013/02/cars-are-parked-95-of-time-lets-check.html\">about 95%</a> of the time. Self-driving cars will be in almost continuous use (most likely hailed from a smartphone app), thereby dramatically reducing the need for parking. Cars will communicate with one another to avoid accidents and traffic jams, and riders will be able to spend commuting time on other activities like work, education, and socializing.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/e38574048864fdccbafce0305e175014/1654f/1_k6w2wkkREpVeu9_cS2xxtg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 74.4047619047619%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)\"\n        title=\"Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)\"\n        src=\"/static/e38574048864fdccbafce0305e175014/1654f/1_k6w2wkkREpVeu9_cS2xxtg.png\"\n        srcset=\"/static/e38574048864fdccbafce0305e175014/924ad/1_k6w2wkkREpVeu9_cS2xxtg.png 170w,\n/static/e38574048864fdccbafce0305e175014/f570f/1_k6w2wkkREpVeu9_cS2xxtg.png 341w,\n/static/e38574048864fdccbafce0305e175014/1654f/1_k6w2wkkREpVeu9_cS2xxtg.png 504w\"\n        sizes=\"(max-width: 504px) 100vw, 504px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [Tech Insider](http://www.techinsider.io/chris-dixon-future-of-self-driving-cars-interview-2016-6)</figcaption>\n  </figure></p>\n<h2>2. Clean Energy</h2>\n<p>Attempts to fight climate change by reducing the demand for energy <a href=\"https://en.wikipedia.org/wiki/World_energy_consumption\">haven’t worked</a>. Fortunately, scientists, engineers, and entrepreneurs have been working hard on the supply side to make clean energy convenient and cost-effective.</p>\n<p>Due to steady technological and manufacturing advances, the price of solar cells has <a href=\"http://www.saskwind.ca/wind-cost-decline/\">dropped 99.5% since 1977</a>. Solar will soon be more cost efficient than fossil fuels. The cost of wind energy has also dropped to an all-time low, and in the last decade represented about a <a href=\"http://energy.gov/articles/top-10-things-you-didnt-know-about-wind-power\">third of newly installed</a> US energy capacity.</p>\n<p>Forward thinking organizations are taking advantage of this. For example, in India there is an initiative to convert airports to self-sustaining clean energy.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 314px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/4cf0c503c956282e349bc8751260c793/808c1/1_idAW1ONI_iIeevzPaUv-pg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 76.43312101910827%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))\"\n        title=\"Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))\"\n        src=\"/static/4cf0c503c956282e349bc8751260c793/808c1/1_idAW1ONI_iIeevzPaUv-pg.png\"\n        srcset=\"/static/4cf0c503c956282e349bc8751260c793/924ad/1_idAW1ONI_iIeevzPaUv-pg.png 170w,\n/static/4cf0c503c956282e349bc8751260c793/808c1/1_idAW1ONI_iIeevzPaUv-pg.png 314w\"\n        sizes=\"(max-width: 314px) 100vw, 314px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Airport in Kochi, India (source: [Clean Technica](http://cleantechnica.com/2015/08/21/1st-airport-world-go-100-solar-india/))</figcaption>\n  </figure></p>\n<p>Tesla is making high-performance, affordable electric cars, and <a href=\"http://www.treehugger.com/cars/tesla-built-858-new-charging-stations-us-over-past-12-months.html\">installing</a> electric charging stations <a href=\"http://mashable.com/2016/04/01/tesla-supercharger-expansion/#v93tzyDFl5qR\">worldwide</a>.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 416px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 32.45192307692308%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Tesla Model 3 and US supercharger locations\"\n        title=\"Tesla Model 3 and US supercharger locations\"\n        src=\"/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png\"\n        srcset=\"/static/12dcb7e7db7e072104c07a6c4a11ef4e/924ad/1_YwcTRiWETVn4aXiZhEJtcg.png 170w,\n/static/12dcb7e7db7e072104c07a6c4a11ef4e/f570f/1_YwcTRiWETVn4aXiZhEJtcg.png 341w,\n/static/12dcb7e7db7e072104c07a6c4a11ef4e/59a95/1_YwcTRiWETVn4aXiZhEJtcg.png 416w\"\n        sizes=\"(max-width: 416px) 100vw, 416px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Tesla Model 3 and US supercharger locations</figcaption>\n  </figure></p>\n<p>There are hopeful signs that clean energy could soon be reaching a tipping point. For example, in Japan, there are now more electric charging stations than gas stations.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 530px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 23.584905660377355%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAABAUlEQVQY02WOTUvDQBiE9wf7Q/SkJz0UQUUELx60Km1TI7S1khSbrNmGtTSxNZvdtEk3H5ZIILvGFC/6HF7mHYZhwP6tftwxzlR40UPxJpdSlqX4R1n5ef5J6Wwduc4yfRkZ9pSAveaooZhHrfGp+so3X1VICPkHUVtpTPHb88B6vzaL1smBOsRgST7SeB1HIY9WjFHGmO/7hBDP8yoRBAGl1HXdxXy+YFEPzq6gVJp33cuG4kig6TpCE9M0J7ZtGIZlWQihSkAIq4osy5IkWYUhD4NpIO4Hdv989+lw56Y97mAJshrOeVKzTW/foih+Z/8ckspHzdW67QcsFCyHjvwGCIMIwPGdYIMAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)\"\n        title=\"Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)\"\n        src=\"/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png\"\n        srcset=\"/static/f0656d499ee525e25ff757b8185f167f/924ad/1_RNmY6abYWA2n2W6EgP3lcA.png 170w,\n/static/f0656d499ee525e25ff757b8185f167f/f570f/1_RNmY6abYWA2n2W6EgP3lcA.png 341w,\n/static/f0656d499ee525e25ff757b8185f167f/3e6fd/1_RNmY6abYWA2n2W6EgP3lcA.png 530w\"\n        sizes=\"(max-width: 530px) 100vw, 530px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [The Guardian](https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations)</figcaption>\n  </figure></p>\n<p>And Germany produces so much renewable energy, it sometimes produces even more than it can use.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 567px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 20.987654320987655%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAECAIAAAABPYjBAAAACXBIWXMAAAsSAAALEgHS3X78AAAA30lEQVQI12PYcebV1M33+zfc7Vx9u2Lh9c377/yZP/vTxIlfuru+r171Hwj+gQCMRgCgCMPFe193nPmw9ui7Gdue9mx6cvjoo5+Bvl+Dg764uXwrLABp/vv3PxL4h2QWw7mLFzdu2zlvxabJCza0TFq0dvOOowcPHt637+ihg4cOHjx69OjevXsPHz4MZBwEc0+fPn327Nljx47du3ePYemiztb6uK7WlO7W1OrSsHWrpp85d+HYyROnzpw5eeo0UPWJEyeAGi5dunTgwIHbt2///Pnz27dvX758+fXrFwCsor9lnxcDKAAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)\"\n        title=\"Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)\"\n        src=\"/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png\"\n        srcset=\"/static/9661ec8ec5964b9e1bfa2b363ac66891/924ad/1_wETYiSDThJ5fQYIVWuw8aA.png 170w,\n/static/9661ec8ec5964b9e1bfa2b363ac66891/f570f/1_wETYiSDThJ5fQYIVWuw8aA.png 341w,\n/static/9661ec8ec5964b9e1bfa2b363ac66891/0d08a/1_wETYiSDThJ5fQYIVWuw8aA.png 567w\"\n        sizes=\"(max-width: 567px) 100vw, 567px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [Time Magazine](http://time.com/4325882/german-renewable-energy-high/)</figcaption>\n  </figure></p>\n<h2>3. Virtual and Augmented Reality</h2>\n<p>Computer processors only recently became fast enough to power comfortable and convincing virtual and augmented reality experiences. Companies like Facebook, Google, Apple, and Microsoft are investing billions of dollars to make VR and AR more immersive, comfortable, and affordable.</p>\n<p><img src=\"/1350b5689fa0fbce6dfb550fa4c19d0a/1_6cmd8P-bPYRU1olrJHsvfw.gif\" alt=\"Toybox demo from Oculus\"></p>\n<p>People sometimes think VR and AR will be used only for gaming, but over time they will be used for all sorts of activities. For example, we’ll use them to manipulate 3-D objects:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.111111111111114%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))\"\n        title=\"Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))\"\n        src=\"/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg\"\n        srcset=\"/static/0afbba4f3da17a3da9c74f36d4c413fd/c2e49/1_q_pqQCTcTETf4G-ARUm00A.jpg 170w,\n/static/0afbba4f3da17a3da9c74f36d4c413fd/c2dc0/1_q_pqQCTcTETf4G-ARUm00A.jpg 341w,\n/static/0afbba4f3da17a3da9c74f36d4c413fd/419d9/1_q_pqQCTcTETf4G-ARUm00A.jpg 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Augmented reality computer interface (from [Iron Man](http://www.imdb.com/title/tt0371746/))</figcaption>\n  </figure></p>\n<p>To meet with friends and colleagues from around the world:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.25%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))\"\n        title=\"Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))\"\n        src=\"/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg\"\n        srcset=\"/static/88d7e722ff6d193076d4febc8176a940/c2e49/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 170w,\n/static/88d7e722ff6d193076d4febc8176a940/c2dc0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 341w,\n/static/88d7e722ff6d193076d4febc8176a940/a40c0/1_MJcHcqCWEzGxDIVDGpcHcA.jpg 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Augmented reality teleconference (from [The Kingsman](http://www.imdb.com/title/tt2802144/))</figcaption>\n  </figure></p>\n<p>And even for medical applications, like treating phobias or helping rehabilitate paralysis victims:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 442px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 44.11764705882353%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)\"\n        title=\"Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)\"\n        src=\"/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png\"\n        srcset=\"/static/10a331bba9e4617d902cefb39e581824/924ad/1_q_J7Ql2iVfdDYc5t6hM98Q.png 170w,\n/static/10a331bba9e4617d902cefb39e581824/f570f/1_q_J7Ql2iVfdDYc5t6hM98Q.png 341w,\n/static/10a331bba9e4617d902cefb39e581824/b9ee5/1_q_J7Ql2iVfdDYc5t6hM98Q.png 442w\"\n        sizes=\"(max-width: 442px) 100vw, 442px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [New Scientist](https://www.newscientist.com/article/2100780-virtual-reality-helps-eight-paralysed-people-feel-their-legs/)</figcaption>\n  </figure></p>\n<p>VR and AR have been dreamed about by science fiction fans for decades. In the next few years, they’ll finally become a mainstream reality.</p>\n<h2>4. Drones and Flying Cars</h2>\n<blockquote>\n<p>“Roads? Where we’re going we don’t need… roads.” — Dr. Emmet Brown</p>\n</blockquote>\n<p>GPS started out as a military technology but is now used to hail taxis, get mapping directions, and hunt Pokémon. Likewise, drones started out as a military technology, but are increasingly being used for a wide range of consumer and commercial applications.</p>\n<p>For example, drones are being used to inspect critical infrastructure like bridges and power lines, to survey areas struck by natural disasters, and many other creative uses like fighting animal poaching.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 280px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 86.42857142857143%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)\"\n        title=\"Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)\"\n        src=\"/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png\"\n        srcset=\"/static/a94118042c235b69dba7ef47f6e8ccd3/924ad/1_hLhAdWXECMyNLwrHfad6pA.png 170w,\n/static/a94118042c235b69dba7ef47f6e8ccd3/8af66/1_hLhAdWXECMyNLwrHfad6pA.png 280w\"\n        sizes=\"(max-width: 280px) 100vw, 280px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [NBC News](http://www.nbcnews.com/news/world/air-shepherd-uses-drones-stop-elephant-rhino-poachers-africa-n335801)</figcaption>\n  </figure></p>\n<p>Amazon and Google are building drones to deliver household items.</p>\n<p><img src=\"/3c01e2971f2a14802ded27e094f4306f/1_s1eQciCtoaD_AaovzJouAA.gif\" alt=\"Amazon delivery drone\"></p>\n<p>The startup <a href=\"http://flyzipline.com/product/\">Zipline</a> uses drones to deliver medical supplies to remote villages that can’t be accessed by roads.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 403px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 78.66004962779157%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAQCAIAAACZeshMAAAACXBIWXMAAAsSAAALEgHS3X78AAAC0ElEQVQoz3WR/08SYRzH72/ql/pJEnPzCwJmm5uWy2pTEQPhILJytX7IuVXm5lpbLU0RhOA4vglkagjT1tIDyTsD5MvxbbqxdJMvd3D0HNZS0+d57dl7n/u8P5/P8xy0u7eHb+M4QURjEYLA/YENLBDAMCwS2/Gsrvr8PrD8GLa+gYENMn3+zQSZqLCLgZKp5OLS53nH/IrX4/V6/f7vtnmbw2Ff/boWjcXT6XQqlQqFgslkKk7GM5lMjCR/7e9XzRUom81iPl8wGMSJ7Z+hUCJBVqeIxskERZdK5TKAYRiaLpWZCl2NFCk6l8sXKQqiqUIxf0AVDwu5A7p4CIZhYUpMmSpRh0y5QBdzDJ0vUTmmXARnmQYUmFK+wtDQOpGe0H2btPjemtbfm7FZJz7j2FIDnPisi/iDkz3VrmrEiWtcxAf7D+daBJq0Bi50TV8R62tFulrR3OVeLadXe/kkHBZNTd+R0Nb2zV28NdMz4oI0Lpwr0l1ToUKFCdCqPIf7NqEKbVUiQLfdQxulBsX4MgQmrOnRCmCEJzOejdzEl2j43S8apPpm2MyTGfhypF6sH3y5dNrcIv9XpaoRgcLU8QhpF09IhsY7lOqmQSMfRuoH9LKxZQg8ADCDgUHqefBhQ+uQWSh503bnuUCq5StQ8EZStjMw984JlUdm45lmnhxpkhsbFWiz0lKthXQOoyNTXrYzB5hBZxjlydAW2TE/jJzQsPHvV2PfMzuysMmawU+6qrI2D0x2PZgWqmzgtnzYdIpqQ1YIFGyh7ifWWRsGaV0EePf2h/YWyUxnz9NOhYavtIBbCJXo/7Sp0K7HVtGoAx77hCwEoCnb1qXbmgaJoe4uyrn+qu7mBHcA4fbruP36uuOIP4IISLsxbB599+W12mt0+aDtWNawGLSu7JjdIdQTRT0R1B1EgXaHzO4w6g6bj2FZCa/5SSKcCUV2yWT2N6EZXga9Uj4QAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)\"\n        title=\"Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)\"\n        src=\"/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png\"\n        srcset=\"/static/6a0a0088057af583180f5eb158a62e93/924ad/1_BDepNtZOTWXNOi5F4Dk3Dg.png 170w,\n/static/6a0a0088057af583180f5eb158a62e93/f570f/1_BDepNtZOTWXNOi5F4Dk3Dg.png 341w,\n/static/6a0a0088057af583180f5eb158a62e93/6fdc2/1_BDepNtZOTWXNOi5F4Dk3Dg.png 403w\"\n        sizes=\"(max-width: 403px) 100vw, 403px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [The Verge](http://www.theverge.com/2016/8/2/12350274/zipline-drone-delivery-us-launch-blood-medicine)</figcaption>\n  </figure></p>\n<p>There is also a new wave of startups working on flying cars (including <a href=\"http://www.bloomberg.com/news/articles/2016-06-09/welcome-to-larry-page-s-secret-flying-car-factories\">two</a> funded by the cofounder of Google, Larry Page).</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 42.01388888888889%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))\"\n        title=\"The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))\"\n        src=\"/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png\"\n        srcset=\"/static/0416750c29ed2c774eaf1a7cbe8e13c3/924ad/1_FJyVIp3MI_k7mVM5obpSsA.png 170w,\n/static/0416750c29ed2c774eaf1a7cbe8e13c3/337b6/1_FJyVIp3MI_k7mVM5obpSsA.png 288w\"\n        sizes=\"(max-width: 288px) 100vw, 288px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">The Terrafugia TF-X flying car ([source](https://thestack.com/world/2015/12/18/flying-car-receives-u-s-airspace-approval-for-testing/))</figcaption>\n  </figure></p>\n<p>Flying cars use the same advanced technology used in drones but are large enough to carry people. Due to advances in materials, batteries, and software, flying cars will be significantly more affordable and convenient than today’s planes and helicopters.</p>\n<h2>5. Artificial Intelligence</h2>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 192px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/18eb617fbac070d37985e2d5b3c81aca/5bcd3/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 57.29166666666667%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1 I2dRn7D8ZZM7nI2IvvMFDw\"\n        title=\"1 I2dRn7D8ZZM7nI2IvvMFDw\"\n        src=\"/static/18eb617fbac070d37985e2d5b3c81aca/5bcd3/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg\"\n        srcset=\"/static/18eb617fbac070d37985e2d5b3c81aca/c2e49/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg 170w,\n/static/18eb617fbac070d37985e2d5b3c81aca/5bcd3/1_I2dRn7D8ZZM7nI2IvvMFDw.jpg 192w\"\n        sizes=\"(max-width: 192px) 100vw, 192px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<blockquote>\n<p>‘’It may be a hundred years before a computer beats humans at Go — maybe even longer.” — <a href=\"http://www.nytimes.com/1997/07/29/science/to-test-a-powerful-computer-play-an-ancient-game.html?pagewanted=all\">New York Times, 1997</a></p>\n<p>“Master of Go Board Game Is Walloped by Google Computer Program” —<a href=\"http://www.nytimes.com/2016/03/10/world/asia/google-alphago-lee-se-dol.html\"> New York Times, 2016</a></p>\n</blockquote>\n<p>Artificial intelligence has made rapid advances in the last decade, due to new algorithms and massive increases in data collection and computing power.</p>\n<p>AI can be applied to almost any field. For example, in photography an AI technique called artistic style transfer transforms photographs into the style of a given painter:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 40.27777777777778%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)\"\n        title=\"[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)\"\n        src=\"/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png\"\n        srcset=\"/static/2515b9fb2936c39f47ae0fa4c4a985ed/924ad/1_aHFJuj-jhnP4zHY1dD7tRA.png 170w,\n/static/2515b9fb2936c39f47ae0fa4c4a985ed/f570f/1_aHFJuj-jhnP4zHY1dD7tRA.png 341w,\n/static/2515b9fb2936c39f47ae0fa4c4a985ed/2bff6/1_aHFJuj-jhnP4zHY1dD7tRA.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">[Source](https://no2147483647.wordpress.com/2015/12/21/deep-learning-for-hackers-with-mxnet-2/)</figcaption>\n  </figure></p>\n<p>Google built an AI system that controls its datacenter power systems, saving hundreds of millions of dollars in energy costs.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 439px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 33.029612756264235%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABFUlEQVQY0z1P26qCUBT0/1+CwA8QrCdRMZI0xUTDx+gDfLC85T2vKKRnjpuah83stWbNmkVZlnU4HE6n0/V6VRTFMAzTNEVRRNG2bYZhBEGQZVmSpOPxuN/vN5vNbrfbbrf3+51SVZVlWZqmNU3jeR5SXddhASnHcej6vv9c4bqu53lhGGZZBlIUxf8wjLEKyx3HQZDz+Xy5XLAfFrfbbVmWz+ezfDHP8+9Lvd/vuq7btu37Hhx+TdMMw1CWJepVVWFn+MXr9YrjOEkSxIGAejweQRAgBl60SUhwQiBFEV/IyLy/Ar5d11FgRBqsIFK8GIui6DdANNhJZAg4jiOVpmme56iCZCtApmkip+JCcuePkGtJ6w+g7WoFFJ2DrwAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)\"\n        title=\"Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)\"\n        src=\"/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png\"\n        srcset=\"/static/a32709cc2124ea0694736d54e82621c5/924ad/1_HpTNGOsV1a0PpqjQZNXKEQ.png 170w,\n/static/a32709cc2124ea0694736d54e82621c5/f570f/1_HpTNGOsV1a0PpqjQZNXKEQ.png 341w,\n/static/a32709cc2124ea0694736d54e82621c5/6d3bc/1_HpTNGOsV1a0PpqjQZNXKEQ.png 439w\"\n        sizes=\"(max-width: 439px) 100vw, 439px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [Bloomberg](http://www.bloomberg.com/news/articles/2016-07-19/google-cuts-its-giant-electricity-bill-with-deepmind-powered-ai)</figcaption>\n  </figure></p>\n<p>The broad promise of AI is to liberate people from repetitive mental tasks the same way the industrial revolution liberated people from repetitive physical tasks.</p>\n<blockquote>\n<p>“If AI can help humans become better chess players, it stands to reason that it can help us become better pilots, better doctors, better judges, better teachers.” — <a href=\"http://www.wired.com/2014/10/future-of-artificial-intelligence/\">Kevin Kelly</a></p>\n</blockquote>\n<p>Some people worry that AI will destroy jobs. History has shown that while new technology does indeed eliminate jobs, it also creates new and better jobs to replace them. For example, with advent of the personal computer, the number of typographer jobs dropped, but the increase in graphic designer jobs more than made up for it.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 63.19444444444444%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)\"\n        title=\"Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)\"\n        src=\"/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png\"\n        srcset=\"/static/0809ccab1e05badc59f9f26a966354ac/924ad/1_c_lt2s5TuSoOfmPb_Rv46w.png 170w,\n/static/0809ccab1e05badc59f9f26a966354ac/f570f/1_c_lt2s5TuSoOfmPb_Rv46w.png 341w,\n/static/0809ccab1e05badc59f9f26a966354ac/2bff6/1_c_lt2s5TuSoOfmPb_Rv46w.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [Harvard Business Review](https://hbr.org/2016/03/computers-dont-kill-jobs-but-do-increase-inequality)</figcaption>\n  </figure></p>\n<p>It is much easier to imagine jobs that will go away than new jobs that will be created. Today millions of people work as app developers, ride-sharing drivers, drone operators, and social media marketers— jobs that didn’t exist and would have been difficult to even imagine ten years ago.</p>\n<h2>6. Pocket Supercomputers for Everyone</h2>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 529px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 37.051039697542535%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAAA90lEQVQY042O3W6DMAyFef+XmfYA024m7Wa9qYoKBJIQ/hpGoAXa8BOcGSZVkzZp/WRFR3bOsR0ACwDGGLizwNb8s8BubP+sM4F9e34KXHfvHveHw8duV9f199j+opusp8yxMkW/4ArnqufXl3cu8lyWSV4UssS2hXs8/BTjDO0Il2Hpxs28LEulKkJIvMIZpTyOKWMkCj3fp5RGlKKIYxEQEoZhFBLf96Q8bWdPM8E54wEJUXh+IEQiyzJJU8Z5mmWYhS8iEpHlOcOYJNFa4yHOPJtP1VTNWTVnFKdStV1vH2DdjGY9DP31dmm7m9YYISsF/7OavwCqwozCGI2I1AAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1 5tt6F Cxnf5n7J5v6Lx0Ug\"\n        title=\"1 5tt6F Cxnf5n7J5v6Lx0Ug\"\n        src=\"/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png\"\n        srcset=\"/static/05b15a9d75ac41ca6699faf70f2e3a00/924ad/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 170w,\n/static/05b15a9d75ac41ca6699faf70f2e3a00/f570f/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 341w,\n/static/05b15a9d75ac41ca6699faf70f2e3a00/a2eea/1_5tt6F_Cxnf5n7J5v6Lx0Ug.png 529w\"\n        sizes=\"(max-width: 529px) 100vw, 529px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>By 2020, 80% of adults on earth <a href=\"\">will have</a> an internet-connected smartphone. An iPhone 6 has about 2 billion transistors, roughly 625 times more transistors than a 1995 Intel Pentium computer. Today’s smartphones are what used to be considered supercomputers.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 100.92592592592592%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAUCAIAAAAC64paAAAACXBIWXMAAAsSAAALEgHS3X78AAAEt0lEQVQ4yw3S+U9TBwDA8afQUgqUXtC7jx6+vt70eL1LD9rSE9rSC3pIW0or0JW7ImdRFLCUIUZhTqdxU1l000ynybJsi1uyH/3BJWa/7fo/5s/ffH77At9u+B/MOe1SZlJLeb5qe7rSv5PRPttJP3342ZOv7r189uj+0c6Xu9U/37//969/fnh09/3zvfrFoaPGyq9P7gHzUUNQK/DKOCmzMGVXxvt6w1pR1KzKRYMT8dBkMjExEiuPRFaKFz5dXatXZ08u5mpZ3/xEbm+hDCy4jUGTEqZTvGo4opMkbUjUJPchoqBO4ldByT5Fwa316pT5AdNEwDk77J4ddmb9jrDdPBkLAWMySMgB4xblqLU3ZRaNGoQZsyik5rl6+Wm9oGCTlgNai5ivF3D7xHybVBAzyEb7FAk7MjVoBtwInLZJ3DKeuVcyrIN8qnMaLsMq5LkVsOYcaBby8v1qi5hnF7K8Co5DIdJy2S4JN2IUW4RsAOHQDBDdoZbDIEvBIttFLBaFquCDx2vTgT5Dv4z34UW9khpxqeBCPBDSw2wSQUhnSNg9HBL+I6Ze8Kh0EljEARE+M2aW7xf718YGtj8pDuoVXCrp55O5qWQs57e8uduwiXp0AhAkkKQsesWvBMTdnWYY9BqV2Ca0kEYaQuCyAxLQuyQgvRWF4dEodAJeyOUvuiTXygW7UqpkktUQJ2GSOQV0ACJidRA75e0rR5FXN6bfnp5Mj4aaAGBALRkJBlrONtkhigFihiTdPz4+Hh9J4AAA4fUUfV5hJwrwKoV6qdhpQP54PPXhm9p/73558XnjRjV2Z3vx7XfPzKreSStc9Ojq8+G/f7ufDwfsSrFFZ8p4nBGzBjDB3DGn9IvN4Kub2ZdHuXev67+/2Du9Xb2xVXly5/D2wc7B9srNzcr9y7mfTg9v1aarOf/+2tRMNqIWQYBDQsx7BLWS9eDS8L2r2b1Zz8FisBQ1VYrpxrWNq8vlxpWV3bnYXsX39GS9Xs3Wiv6j1bGtmchspg9YLKSWy4Xr6wsrM5OVYn7YBMcGTOvL1cvzpaPt5ePGlavLM/sbSw8Oa5vzpYVSZunC+a2N1f3t9cOtWSBqkSdd2qXz7nLCU/CpHefaS0P6amF4IRe+MhU+vbV+azW/OR2vjoc2Cv7j1WR60Doe7A+ZZbkhHaDooSBcyscJbFK2T0q2w8SMDb6YGTAKqDC1wyWnTjqgjYjmoOy5lNCZZJyAUZy1ygIK0KVgAgwaya+iPVxyxa0CiE3ZzSD94u60SzMgZ7utSGF00KviNUb5X9dCa3FZMWIXMagppyplEY37VACfR+LRCVlTdz1nzlg5cwGBXcyMGwVhhNZo7L75/vWEWzyo44zbORQS0SDlmIT0oJ4RQlg+ORcgEbAMKpGIw9kEBJCEwaBRNjm34JHdznNLCe9kxOZVEHHtrWAXDoVG49tanVx8FwZNI7Z3YlEAm9bFZNDkAj4eh29Go9uwrQBwBt/RRiN1pgNWvRxqbmo+cxal6cF14TCkznYJDqvpJnR1E/AdWMBq1IbDIQ6D0oJGtWLQHW0YMgHHIOHEIBZiN/dQm/FtmA5sCxnX8rFSiR1CBhkk4pkUvB0m/w9VIFiuzE4ZXgAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))\"\n        title=\"Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))\"\n        src=\"/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png\"\n        srcset=\"/static/e0f88db9f4e1e8e291fb0383c2d37dbc/924ad/1_vovBLv3ePKce3dPrU3q9Lg.png 170w,\n/static/e0f88db9f4e1e8e291fb0383c2d37dbc/f570f/1_vovBLv3ePKce3dPrU3q9Lg.png 341w,\n/static/e0f88db9f4e1e8e291fb0383c2d37dbc/2bff6/1_vovBLv3ePKce3dPrU3q9Lg.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Visitors to the pope (source: [Business Insider](http://www.businessinsider.com/vatican-square-2005-and-2013-2013-3))</figcaption>\n  </figure></p>\n<p>Internet-connected smartphones give ordinary people abilities that, just a short time ago, were only available to an elite few:</p>\n<blockquote>\n<p>“Right now, a Masai warrior on a mobile phone in the middle of Kenya has better mobile communications than the president did 25 years ago. If he’s on a smart phone using Google, he has access to more information than the U.S. president did just 15 years ago.” — <a href=\"http://edition.cnn.com/2012/05/06/opinion/diamandis-abundance-innovation/\">Peter Diamandis</a></p>\n</blockquote>\n<h2>7. Cryptocurrencies and Blockchains</h2>\n<blockquote>\n<p>“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.” — <a href=\"http://farmerandfarmer.org/mastery/builder.html\">Farmer & Farmer</a></p>\n</blockquote>\n<p>Protocols are the plumbing of the internet. Most of the protocols we use today were developed decades ago by academia and government. Since then, protocol development mostly stopped as energy shifted to developing proprietary systems like social networks and messaging apps.</p>\n<p>Cryptocurrency and blockchain technologies are <a href=\"http://avc.com/2016/07/the-golden-age-of-open-protocols/\">changing this</a> by providing a new business model for internet protocols. This year alone, <a href=\"https://medium.com/the-coinbase-blog/app-coins-and-the-dawn-of-the-decentralized-business-model-8b8c951e734f#.2atvp1cxd\">hundreds of millions of dollars</a> were raised for a broad range of innovative blockchain-based protocols.</p>\n<p>Protocols based on blockchains also have capabilities that previous protocols didn’t. For example, <a href=\"https://en.wikipedia.org/wiki/Ethereum\">Ethereum</a> is a new blockchain-based protocol that can be used to create smart contracts and trusted databases that are immune to corruption and censorship.</p>\n<h2>8. High-Quality Online Education</h2>\n<p>While college tuition <a href=\"http://www.cnbc.com/2015/06/16/why-college-costs-are-so-high-and-rising.html\">skyrockets</a>, anyone with a smartphone can study almost any topic online, accessing educational content that is mostly free and increasingly high-quality.</p>\n<p>Encyclopedia Britannica <a href=\"http://www.csmonitor.com/Business/Latest-News-Wires/2012/0314/Encyclopaedia-Britannica-After-244-years-in-print-only-digital-copies-sold\">used to cost $1,400</a>. Now anyone with a smartphone can instantly access Wikipedia. You used to have to go to school or buy programming books to learn computer programming. Now you can learn from a community of over 40 million programmers at <a href=\"http://stackoverflow.com\">Stack Overflow</a>. YouTube has millions of hours of free tutorials and lectures, many of which are produced by top professors and universities.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/9405b4c60e322f888759a2953fd92459/9fa53/1_NZTqnqYbOPv6sf7gCVLz8g.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 17.270194986072422%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAIAAAAcOLh5AAAACXBIWXMAAAsSAAALEgHS3X78AAAAn0lEQVQI11WMywqCQBiFfVIJ7GFSS0gqpL1DBkG01WhRTxERMZPM7zTgZZEzNU2p1KKPc4GzOMbEHy+jaJskcZwMbTsMEc0F5SXOCsJKyO+0qCGvX1q//9FaG/PAv2B8PJ0RWvRM03MdzjnGmBByTVMAyBhrBdmNtQDQrllVVYbnDXb7w2q9cdyRZfWD2bR5FUI8Ox5fpJStfymbSSn1AYQXmXaw3HgjAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&view=0&flow=list)\"\n        title=\"UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&view=0&flow=list)\"\n        src=\"/static/9405b4c60e322f888759a2953fd92459/94a55/1_NZTqnqYbOPv6sf7gCVLz8g.png\"\n        srcset=\"/static/9405b4c60e322f888759a2953fd92459/924ad/1_NZTqnqYbOPv6sf7gCVLz8g.png 170w,\n/static/9405b4c60e322f888759a2953fd92459/f570f/1_NZTqnqYbOPv6sf7gCVLz8g.png 341w,\n/static/9405b4c60e322f888759a2953fd92459/94a55/1_NZTqnqYbOPv6sf7gCVLz8g.png 681w,\n/static/9405b4c60e322f888759a2953fd92459/9fa53/1_NZTqnqYbOPv6sf7gCVLz8g.png 718w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">UC Berkeley Physics on [Youtube](https://www.youtube.com/user/UCBerkeley/videos?sort=p&view=0&flow=list)</figcaption>\n  </figure></p>\n<p>The quality of online education is getting better all the time. For the last 15 years, <a href=\"http://ocw.mit.edu/index.htm\">MIT has been recording lectures</a> and compiling materials that cover over 2000 courses.</p>\n<blockquote>\n<p>“The idea is simple: to publish all of our course materials online and make them widely available to everyone.” — Dick K.P. Yue, Professor, MIT School of Engineering</p>\n</blockquote>\n<p>As perhaps the greatest research university in the world, MIT has always been ahead of the trends. Over the next decade, expect many other schools to follow MIT’s lead.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 529px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 44.234404536862%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)\"\n        title=\"Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)\"\n        src=\"/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png\"\n        srcset=\"/static/9b407de166883dc7d0827adc1d32f609/924ad/1_W-i0QTotXS-K4MU9qbpylQ.png 170w,\n/static/9b407de166883dc7d0827adc1d32f609/f570f/1_W-i0QTotXS-K4MU9qbpylQ.png 341w,\n/static/9b407de166883dc7d0827adc1d32f609/a2eea/1_W-i0QTotXS-K4MU9qbpylQ.png 529w\"\n        sizes=\"(max-width: 529px) 100vw, 529px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [Futurism](http://futurism.com/free-ivy-league-education-access-over-2000-classes-from-mit-for-nothing/)</figcaption>\n  </figure></p>\n<h2>9. Better Food through Science</h2>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 149.53703703703704%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)\"\n        title=\"Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)\"\n        src=\"/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png\"\n        srcset=\"/static/9a4613065b3002711b5234dfc25907a6/924ad/1_O5VQyJRhI2-sHYzZPrHSBQ.png 170w,\n/static/9a4613065b3002711b5234dfc25907a6/2914c/1_O5VQyJRhI2-sHYzZPrHSBQ.png 216w\"\n        sizes=\"(max-width: 216px) 100vw, 216px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [National Geographic](http://environment.nationalgeographic.com/environment/freshwater/embedded-water/)</figcaption>\n  </figure></p>\n<p>Earth is running out of farmable land and fresh water. This is partly because our food production systems are incredibly inefficient. It takes an astounding 1799 gallons of water to produce 1 pound of beef.</p>\n<p>Fortunately, a variety of new technologies are being developed to improve our food system.</p>\n<p>For example, entrepreneurs are developing new food products that are tasty and nutritious substitutes for traditional foods but far more environmentally friendly. The startup <a href=\"http://www.impossiblefoods.com/\">Impossible Foods</a> invented meat products that look and taste like the real thing but are actually made of plants.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 46.75925925925925%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))\"\n        title=\"Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))\"\n        src=\"/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png\"\n        srcset=\"/static/1c41f64865a3586233d3edc29a00e879/924ad/1_bUV4b3Xp0mvvdA8dp1hMtA.png 170w,\n/static/1c41f64865a3586233d3edc29a00e879/2914c/1_bUV4b3Xp0mvvdA8dp1hMtA.png 216w\"\n        sizes=\"(max-width: 216px) 100vw, 216px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Impossible Food’s plant-based burger (source: [Tech Insider](http://www.techinsider.io/the-impossible-foods-burger-review-vegetarian-2016-8))</figcaption>\n  </figure></p>\n<p>Their burger <a href=\"http://www.impossiblefoods.com/our-burger\">uses</a> 95% less land, 74% less water, and produces 87% less greenhouse gas emissions than traditional burgers. Other startups are creating plant-based replacements for <a href=\"http://ripplefoods.com/\">milk</a>, <a href=\"https://www.hamptoncreek.com/\">eggs</a>, and other common foods. <a href=\"http://soylent.com/\">Soylent</a> is a healthy, inexpensive meal replacement that uses advanced engineered <a href=\"http://terravia.com/Terravia_Sustainability.pdf\">ingredients</a> that are much friendlier to the environment than traditional ingredients.</p>\n<p>Some of these products are developed using genetic modification, a powerful scientific technique that has been widely mischaracterized as dangerous. According to a <a href=\"https://www.geneticliteracyproject.org/2015/01/29/pewaaas-study-scientific-consensus-on-gmo-safety-stronger-than-for-global-warming/\">study</a> by the Pew Organization, 88% of scientists think genetically modified foods are safe.</p>\n<p>Another exciting development in food production is automated indoor farming. Due to advances in solar energy, sensors, lighting, robotics, and artificial intelligence, indoor farms have become viable alternatives to traditional outdoor farms.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 63.055555555555564%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))\"\n        title=\"Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))\"\n        src=\"/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png\"\n        srcset=\"/static/c78fe388501ae55323a669e8a24e6d74/924ad/1_0Jyjlgj1KU2yfBqo7quCLQ.png 170w,\n/static/c78fe388501ae55323a669e8a24e6d74/f570f/1_0Jyjlgj1KU2yfBqo7quCLQ.png 341w,\n/static/c78fe388501ae55323a669e8a24e6d74/8f8c6/1_0Jyjlgj1KU2yfBqo7quCLQ.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Aerofarms indoor farm (Source: [New York Times](http://www.nytimes.com/2016/07/24/nyregion/food-produced-by-the-high-tech-urban-farming-reaches-new-heights.html?_r=1))</figcaption>\n  </figure></p>\n<p>Compared to traditional farms, automated indoor farms use roughly 10 times less water and land. Crops are harvested many more times per year, there is no dependency on weather, and no need to use pesticides.</p>\n<h2>10. Computerized Medicine</h2>\n<p>Until recently, computers have only been at the periphery of medicine, used primarily for research and record keeping. Today, the combination of computer science and medicine is leading to a variety of breakthroughs.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 55.55555555555556%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1 IjKrWZdlbB2ksis Dmia5A\"\n        title=\"1 IjKrWZdlbB2ksis Dmia5A\"\n        src=\"/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png\"\n        srcset=\"/static/11092e974a0ba17d284bbe0de86d63c7/924ad/1_IjKrWZdlbB2ksis_Dmia5A.png 170w,\n/static/11092e974a0ba17d284bbe0de86d63c7/f570f/1_IjKrWZdlbB2ksis_Dmia5A.png 341w,\n/static/11092e974a0ba17d284bbe0de86d63c7/2bff6/1_IjKrWZdlbB2ksis_Dmia5A.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>For example, just fifteen years ago, it cost $3B to sequence a human genome. Today, the cost is about a thousand dollars and continues to drop. Genetic sequencing will soon be a routine part of medicine.</p>\n<p>Genetic sequencing generates massive amounts of data that can be analyzed using powerful data analysis software. One application is analyzing <a href=\"http://a16z.com/2016/06/09/freenome/\">blood samples</a> for early detection of cancer. Further genetic analysis can help determine the <a href=\"http://www.businessinsider.com/super-cheap-genome-sequencing-by-2020-2014-10\">best course</a> of treatment.</p>\n<p>Another application of computers to medicine is in prosthetic limbs. Here a young girl is using prosthetic hands she controls using her upper-arm muscles:</p>\n<p><img src=\"/50c3c36ca4ab13bede47dbec74e587c4/1_jVH1wxchOJ5qJzT46s907A.gif\" alt=\"Source: [Open Bionics](https://twitter.com/openbionics/status/755691739147538432)\"></p>\n<p>Soon we’ll have the technology to control prothetic limbs with just our thoughts using <a href=\"http://news.uci.edu/feature/to-walk-again/\">brain-to-machine interfaces</a>.</p>\n<p>Computers are also becoming increasingly effective at diagnosing diseases. An artificial intelligence system recently diagnosed a rare disease that human doctors failed to diagnose by finding hidden patterns in 20 million cancer records.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 26.944444444444443%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAAzElEQVQY041Oy46DMAzk/z+r2gM0gbKEFiHS5um4oUJwJ5S67A/sHMae0cjjrCgKpZTW5lLXnDOSVVmdz6wVLedciKb5bRivqrK8toLz8nq7nU4/eZ4/Y8wYY33fd103SKm1ds4Nw0DHxhg9+HF8GW2sdQFgmiaAEGOUUpI1L0tWC0FtVELpfd9TSu8Da0rbtqWDSdJY13U7mOTfkt1D1Or+UNpa673HgMTOA3gPIQRAegcR4TAwgHcuIFLi+7Yzljyj1bzM1ExX93/jA2AaDy3dq/c4AAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)\"\n        title=\"Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)\"\n        src=\"/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png\"\n        srcset=\"/static/1d53d8a4853677abbec06825ca25a55c/924ad/1_OEgWlj9sp2mCV0PrT9yp8A.png 170w,\n/static/1d53d8a4853677abbec06825ca25a55c/f570f/1_OEgWlj9sp2mCV0PrT9yp8A.png 341w,\n/static/1d53d8a4853677abbec06825ca25a55c/8f8c6/1_OEgWlj9sp2mCV0PrT9yp8A.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [International Business Times](http://www.ibtimes.co.uk/ibms-watson-cracks-medical-mystery-life-saving-diagnosis-patient-who-baffled-doctors-1574963)</figcaption>\n  </figure></p>\n<h2>11. A New Space Age</h2>\n<p>Since the beginning of the space age in the 1950s, the vast majority of space funding has come from governments. But that funding has been in decline: for example, NASA’s budget <a href=\"https://en.wikipedia.org/wiki/Budget_of_NASA\">dropped</a> from about 4.5% of the federal budget in the 1960s to about 0.5% of the federal budget today.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 351px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 75.78347578347578%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAPCAIAAABr+ngCAAAACXBIWXMAAAsSAAALEgHS3X78AAABu0lEQVQoz02R166CYBCEef93MmgiibEFJHYEBMFebiyJguf7mUjOXsDWmdn9re12OxqNdrtdEATr9TrPc5w0TZfL5WAwiKKITJZl+/1+Pp+vVqskSY7H4/f7LcvSoua6Lq2e500r6/V6s9kMp91uKzkcDnEWi0Wj0QCR6v1+N8OQtFotauPxuNPphGEYxzEhPCBOJhO+EIKIQISgi2Hbti+Xi0V3t9slpuY4Dsrxfd8nhJNhQjiBbjab/X4fB/L3+22YT6cTA3FlkGw2GzbkBCTpA5q92BNyaeELOZOsbZ3PZ/oo6zY4hFyRMVAIcUAkQ8iXNjKPx6MoCut6vcJJKqmMMsN0c17OodsSyme+hobVMOuR9BJkAWJPEEUe/Ix5GnQzml+vl2FmkiY0A0mHyAnx9cJwMnA4HKQcXBwjm4vXUukGUh2EuhBJAUFLEiCGObM5GD9q9WIUAEor0wkwbStRKjFinkqymYRE+lVmYVrRLFBKMOs5CLmUkX273TSMSJ5XD07IkiIERcP6iuDz+RjZDAsMQzxX+a85rEyrpj9DzvP5NMPIRrAOKIduJNDEq2SVaQtC3V8SIP8D1aYZNiOkL2gAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)\"\n        title=\"Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)\"\n        src=\"/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png\"\n        srcset=\"/static/dc1015e8f9aafcf2420d7c943cf5a7fd/924ad/1_paniidrx59zPQjq_q6rUHA.png 170w,\n/static/dc1015e8f9aafcf2420d7c943cf5a7fd/f570f/1_paniidrx59zPQjq_q6rUHA.png 341w,\n/static/dc1015e8f9aafcf2420d7c943cf5a7fd/9488f/1_paniidrx59zPQjq_q6rUHA.png 351w\"\n        sizes=\"(max-width: 351px) 100vw, 351px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Source: [Fortune](http://fortune.com/2016/02/22/vcs-invested-more-in-space-startups-last-year/)</figcaption>\n  </figure></p>\n<p>The good news is that private space companies have started filling the void. These companies provide a wide range of products and services, including rocket launches, scientific research, communications and imaging satellites, and emerging speculative business models like asteroid mining.</p>\n<p>The most famous private space company is Elon Musk’s SpaceX, which successfully sent rockets into space that can return home to be reused.</p>\n<p><img src=\"/48e0750d49b2935902966ac3547d7769/1_5iiaQsTBu1tQ_hTy8fupXg.gif\" alt=\"SpaceX Falcon 9 [landing](https://www.youtube.com/watch?v=_ZXu_rYF51M)\"></p>\n<p>Perhaps the most intriguing private space company is <a href=\"http://www.planetaryresources.com/\">Planetary Resources</a>, which is trying to pioneer a new industry: mining minerals from asteroids.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 407px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 71.4987714987715%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)\"\n        title=\"[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)\"\n        src=\"/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png\"\n        srcset=\"/static/262cc9197f91446c777da68102288c42/924ad/1_6zvea6z14lJ6inZQsVBsBA.png 170w,\n/static/262cc9197f91446c777da68102288c42/f570f/1_6zvea6z14lJ6inZQsVBsBA.png 341w,\n/static/262cc9197f91446c777da68102288c42/8eeed/1_6zvea6z14lJ6inZQsVBsBA.png 407w\"\n        sizes=\"(max-width: 407px) 100vw, 407px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">[Asteroid mining](https://www.youtube.com/watch?v=n9EMcyfGMDA)</figcaption>\n  </figure></p>\n<p>If successful, asteroid mining could lead to a new gold rush in outer space. Like previous gold rushes, this could lead to speculative excess, but also dramatically increased funding for new technologies and infrastructure.</p>\n<hr>\n<p>These are just a few of the amazing technologies we’ll see developed in the coming decades. 2016 is just the beginning of a new age of wonders. As futurist Kevin Kelly <a href=\"https://www.linkedin.com/pulse/internet-still-beginning-its-kevin-kelly\">says</a>:</p>\n<blockquote>\n<p>If we could climb into a time machine, journey 30 years into the future, and from that vantage look back to today, we’d realize that most of the greatest products running the lives of citizens in 2050 were not invented until after 2016. People in the future will look at their holodecks and wearable virtual reality contact lenses and downloadable avatars and AI interfaces and say, “Oh, you didn’t really have the internet” — or whatever they’ll call it — “back then.”</p>\n<p>So, the truth: Right now, today, in 2016 is the best time to start up. There has never been a better day in the whole history of the world to invent something. There has never been a better time with more opportunities, more openings, lower barriers, higher benefit/ risk ratios, better returns, greater upside than now. Right now, this minute. This is the moment that folks in the future will look back at and say, “Oh, to have been alive and well back then!”</p>\n</blockquote>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/08/07/source-ethereum-org",
      "title": "“Ether is a necessary element — a fuel — for operating the distributed application platform…",
      "description": "“Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by the…",
      "url": "https://cdixon.org/2016/08/07/source-ethereum-org",
      "published": "2016-08-07T00:00:00.000Z",
      "updated": "2016-08-07T00:00:00.000Z",
      "content": "<p>“Ether is a necessary element — a fuel — for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations. To put it another way, ether is the incentive ensuring that developers write quality applications (wasteful code costs more), and that the network remains healthy (people are compensated for their contributed resources).</p>\n<p>Ether is to be treated as “crypto-fuel”, a token whose purpose is to pay for computation, and is not intended to be used as or considered a currency, asset, share or anything else.”</p>\n<p><em>Source: <a href=\"https://ethereum.org/ether\">ethereum.org</a></em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/08/07/steve-jobs-supposedly-said-returning-to-apple-that-his-plan-was-to-stay-alive-and-grab-onto-the",
      "title": "“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the…",
      "description": "“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the next big thing — to listen for the…",
      "url": "https://cdixon.org/2016/08/07/steve-jobs-supposedly-said-returning-to-apple-that-his-plan-was-to-stay-alive-and-grab-onto-the",
      "published": "2016-08-07T00:00:00.000Z",
      "updated": "2016-08-07T00:00:00.000Z",
      "content": "<p>“Steve Jobs supposedly said, returning to Apple, that his plan was to stay alive and grab onto the next big thing — to listen for the footsteps. He tried video, and a few other things, but he got there in the end. But he might not have.”</p>\n<p>From: <a href=\"http://ben-evans.com/benedictevans/2016/5/2/inevitability-in-technology\">Inevitability in technology</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/07/30/if-you-asked-people-in-1989-what-they-needed-to-make-their-life-better-it-was-unlikely-that-they",
      "title": "“If you asked people in 1989 what they needed to make their life better, it was unlikely that they…",
      "description": "“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network…",
      "url": "https://cdixon.org/2016/07/30/if-you-asked-people-in-1989-what-they-needed-to-make-their-life-better-it-was-unlikely-that-they",
      "published": "2016-07-30T00:00:00.000Z",
      "updated": "2016-07-30T00:00:00.000Z",
      "content": "<p>“If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said a decentralized network of information nodes that are linked using hypertext.”</p>\n<p>— <a href=\"http://farmerandfarmer.org/mastery/builder.html\">Farmer & Farmer\n</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/05/11/the-typical-path-of-how-people-respond-to-life-changing-inventions",
      "title": "“The typical path of how people respond to life-changing inventions",
      "description": "I’ve never heard of it. I’ve heard of it but don’t understand it. I understand it, but I don’t see how it’s useful. I see how it could be…",
      "url": "https://cdixon.org/2016/05/11/the-typical-path-of-how-people-respond-to-life-changing-inventions",
      "published": "2016-05-11T00:00:00.000Z",
      "updated": "2016-05-11T00:00:00.000Z",
      "content": "<ol>\n<li>I’ve never heard of it.</li>\n<li>I’ve heard of it but don’t understand it.</li>\n<li>I understand it, but I don’t see how it’s useful.</li>\n<li>I see how it could be fun for rich people, but not me.</li>\n<li>I use it, but it’s just a toy.</li>\n<li>It’s becoming more useful for me.</li>\n<li>I use it all the time.</li>\n<li>I could not imagine life without it.</li>\n<li>Seriously, people lived without it?</li>\n<li>It’s too powerful and needs to be regulated”</li>\n</ol>\n<p><em>Credits:</em></p>\n<p><em>#1–#9 by <a href=\"http://time.com/author/morgan-housel-the-motley-fool/\">Morgan Housel</a>, <a href=\"http://time.com/money/3940273/innovation-isnt-dead/\">Time</a></em></p>\n<p><em>#10 by <a href=\"https://twitter.com/peterpeirce/status/616664561068994560?lang=en\">@peterpeirce</a></em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/04/02/comma-ai",
      "title": "Comma.ai",
      "description": "I wrote a blog post last month highlighting some of the exciting trends in the computing industry. One trend I discussed is the rapid…",
      "url": "https://cdixon.org/2016/04/02/comma-ai",
      "published": "2016-04-02T00:00:00.000Z",
      "updated": "2016-04-02T00:00:00.000Z",
      "content": "<p>I wrote a blog post last month highlighting some of the exciting trends in the computing industry. One trend I discussed is the rapid progress in a branch of artificial intelligence called deep learning. Big tech companies are making significant investments in deep learning, but there are also opportunities for startups:</p>\n<blockquote>\n<p>Many of the papers, <a href=\"https://code.google.com/archive/p/word2vec/\">data</a> <a href=\"http://image-net.org/download-images\">sets</a>, and <a href=\"https://www.tensorflow.org/\">software</a> <a href=\"http://deeplearning.net/software/theano/\">tools</a> related to deep learning have been open sourced. This has had a democratizing effect, allowing individuals and small organizations to build powerful applications. WhatsApp was able to build a global messaging system that <a href=\"http://www.wired.com/2015/09/whatsapp-serves-900-million-users-50-engineers/\">served 900M users with just 50 engineers</a>, compared to the thousands of engineers that were needed for prior generations of messaging systems. This “<a href=\"https://twitter.com/cdixon/status/473221599189954562\">WhatsApp effect</a>” is now happening in AI. Software tools like <a href=\"http://deeplearning.net/software/theano/\">Theano</a> and <a href=\"https://www.tensorflow.org/\">TensorFlow</a>, combined with cloud data centers for training, and inexpensive GPUs for deployment, allow small teams of engineers to build state-of-the-art AI systems.</p>\n</blockquote>\n<p>You might have seen <a href=\"http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/\">recent press</a> coverage of a software developer named George Hotz who built his own self-driving car.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/3e4557898d50fca6b58438ec68613e09/8f8c6/1U00Hr0kDEBcGUf87W4iPcQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 53.888888888888886%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1U00Hr0kDEBcGUf87W4iPcQ\"\n        title=\"1U00Hr0kDEBcGUf87W4iPcQ\"\n        src=\"/static/3e4557898d50fca6b58438ec68613e09/8f8c6/1U00Hr0kDEBcGUf87W4iPcQ.png\"\n        srcset=\"/static/3e4557898d50fca6b58438ec68613e09/924ad/1U00Hr0kDEBcGUf87W4iPcQ.png 170w,\n/static/3e4557898d50fca6b58438ec68613e09/f570f/1U00Hr0kDEBcGUf87W4iPcQ.png 341w,\n/static/3e4557898d50fca6b58438ec68613e09/8f8c6/1U00Hr0kDEBcGUf87W4iPcQ.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>I first met George a few months ago, and, like a lot of people who had seen the press coverage, I was skeptical. How could someone build such an advanced system all by himself? After spending time with George, my skepticism turned into enthusiasm. I tested his car, and, along with some of my colleagues and friends with AI expertise, dug into the details of the deep learning system he’d developed.</p>\n<p><img src=\"/aeeb093ae3647c097d49dfcdb2a4fab6/1xJP7l8qL4IbNyJnwHYNwdA.gif\" alt=\"Comma’s self-driving car\"></p>\n<p>I came away convinced that George’s system is a textbook example of the “WhatsApp effect” happening to AI.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 416px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/b6e0f8789aee57b10c68f840d630159b/59a95/1d9qMneOOvDP2WHCxgakQkw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.25%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"George with test car #1\"\n        title=\"George with test car #1\"\n        src=\"/static/b6e0f8789aee57b10c68f840d630159b/59a95/1d9qMneOOvDP2WHCxgakQkw.png\"\n        srcset=\"/static/b6e0f8789aee57b10c68f840d630159b/924ad/1d9qMneOOvDP2WHCxgakQkw.png 170w,\n/static/b6e0f8789aee57b10c68f840d630159b/f570f/1d9qMneOOvDP2WHCxgakQkw.png 341w,\n/static/b6e0f8789aee57b10c68f840d630159b/59a95/1d9qMneOOvDP2WHCxgakQkw.png 416w\"\n        sizes=\"(max-width: 416px) 100vw, 416px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">George with test car #1</figcaption>\n  </figure></p>\n<p>George is certainly brilliant (he’s a <a href=\"https://en.wikipedia.org/wiki/George_Hotz\">famous hacker</a> for a reason), and he’s no longer alone: he’s now working with a small team of machine learning experts. But he’s also riding a wave of exponentially improving hardware, software, and, most importantly, data. The more his system gets used, the more data it collects, and the smarter it becomes.</p>\n<p>Today we are announcing that <a href=\"http://a16z.com/\">a16z</a> is leading a $3.1M investment in George’s company, <a href=\"http://comma.ai/\">Comma.ai</a>. This investment will help them continue to build their team (they’re <a href=\"http://comma.ai/hiring.html\">hiring</a>), and bring their technology to market. Expect more announcements from Comma in the next few months. We are very excited to support George and his team on this ambitious project.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/03/13/the-internet-economy",
      "title": "The Internet Economy",
      "description": "We are living in an era of bundling. The big five consumer tech companies — Google, Apple, Facebook, Amazon, and Microsoft — have moved far…",
      "url": "https://cdixon.org/2016/03/13/the-internet-economy",
      "published": "2016-03-13T00:00:00.000Z",
      "updated": "2016-03-13T00:00:00.000Z",
      "content": "<p>We are living in an era of bundling. The big five consumer tech companies — Google, Apple, Facebook, Amazon, and Microsoft — have moved far beyond their original product lines into all sorts of hardware, software, and services that overlap and compete with one another. But their revenues and profits still depend heavily on external technologies that are outside of their control. One way to visualize these external dependencies is to consider the path of a typical internet session, from the user to some revenue-generating action, and then (in some cases) back again to the user:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2d687eb2390234b8bb3b73d648402bd5/629b7/1bUnzLePRb7E25uoUEMYQgA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 49.537426408746846%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1bUnzLePRb7E25uoUEMYQgA\"\n        title=\"1bUnzLePRb7E25uoUEMYQgA\"\n        src=\"/static/2d687eb2390234b8bb3b73d648402bd5/94a55/1bUnzLePRb7E25uoUEMYQgA.png\"\n        srcset=\"/static/2d687eb2390234b8bb3b73d648402bd5/924ad/1bUnzLePRb7E25uoUEMYQgA.png 170w,\n/static/2d687eb2390234b8bb3b73d648402bd5/f570f/1bUnzLePRb7E25uoUEMYQgA.png 341w,\n/static/2d687eb2390234b8bb3b73d648402bd5/94a55/1bUnzLePRb7E25uoUEMYQgA.png 681w,\n/static/2d687eb2390234b8bb3b73d648402bd5/e8f76/1bUnzLePRb7E25uoUEMYQgA.png 1022w,\n/static/2d687eb2390234b8bb3b73d648402bd5/629b7/1bUnzLePRb7E25uoUEMYQgA.png 1189w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>When evaluating an internet company’s strategic position (the defensibility of its profit <a href=\"http://www.investopedia.com/terms/e/economicmoat.asp\">moat</a>), you need to consider: 1) how the company generates revenue and profits, 2) the loop in its entirety, not just the layers in which the company has products.</p>\n<p>For example, it might seem counterintuitive that Amazon is a <a href=\"/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core/\">major threat</a> to Google’s core search business. But you can see this by following the money through the loop: a <a href=\"http://www.wordstream.com/articles/google-earnings\">significant portion</a> of Google’s revenue comes from search queries for things that can be bought on Amazon, and the buying experience on Amazon (from initial purchasing intent to consumption/unboxing) is significantly better than the buying experience on most non-Amazon e-commerce sites you find via Google searches. After a while, shoppers learn to skip Google and go straight to Amazon.</p>\n<p>Think of the internet economic loop as a model train track. Positions in front of you can redirect traffic around you. Positions after you can build new tracks that bypass you. New technologies come along (which often look <a href=\"/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">toy-like</a> and unthreatening at first) that create entirely new tracks that render the previous tracks obsolete.</p>\n<p>There are interesting developments happening at each layer of the loop (and there are many smaller, offshoot loops not depicted in the chart above), but at any given time certain layers are industry flash points. The most prominent recent battle was between mobile devices and operating systems. That battle seems to be over, with Android software and iOS devices having won. Possible future flash points include:</p>\n<p><strong>The automation of logistics.</strong> Today’s logistics network is a patchwork of ships, planes, trucks, warehouses, and people. Tomorrow’s network will include significantly more automation, from robotic warehouses to autonomous cars, trucks, drones, and <a href=\"http://fortune.com/2016/04/06/dispatch-carry-delivery-robot/\">delivery bots</a>. This transition will happen in stages, depending on the economics of specific goods and customers, along with geographic and regulatory factors. Amazon of course has a huge advantage in logistics. Google has tried repeatedly to get into logistics with <a href=\"http://recode.net/2015/08/19/google-express-plans-to-shut-down-its-two-delivery-hubs/\">little success</a>. On-demand ride-sharing and delivery startups could play an interesting role here. The logistics layer is critical for e-commerce, which in turn is critical for monetizing search. Amazon’s dominance in logistics gives it a very strong strategic moat as e-commerce continues to take market share from traditional retail.</p>\n<p><strong>Web vs apps</strong>. The mobile web <a href=\"/2014/04/07/the-decline-of-the-mobile-web/\">is</a> <a href=\"http://daringfireball.net/2014/04/rethinking_what_we_mean_by_mobile_web\">arguably</a> in decline: users are spending more time on mobile devices, and more time in apps instead of web browsers. Apple has joined the app side of this battle (e.g. allowing ad blockers in Safari, encouraging app install <a href=\"https://developer.apple.com/library/ios/documentation/AppleApplications/Reference/SafariWebContent/PromotingAppswithAppBanners/PromotingAppswithAppBanners.html\">smart banners</a> above websites). Facebook has also taken the app side (e.g. encouraging publishers to use <a href=\"https://instantarticles.fb.com/\">Instant Articles</a> instead of web views). Google of course needs a vibrant web for its search engine to remain useful, so has joined the web side of the battle (e.g. <a href=\"http://techcrunch.com/2015/09/01/death-to-app-install-interstitials/\">punishing websites</a> that have interstitial app ads, developing <a href=\"https://www.ampproject.org/\">technologies</a> that reduce website loading times). The realistic danger isn’t that the web disappears, but that it gets marginalized, and that the bulk of monetizable internet activities happen in apps or other interfaces like voice or messaging bots. This shift could have a significant effect on web publishers who rely on older business models like non-native ads, and could make it harder for small startups to grow beyond niche use cases.</p>\n<p><strong>Video: from TV to mobile devices.</strong> Internet companies are betting that video consumption will continue to shift from TV to mobile devices. The hope is that this will not only create compelling user experiences, but also unlock access to the tens of billions of ad dollars that are currently spent on TV.</p>\n<blockquote>\n<p>“I think video is a mega trend, almost as big as mobile.” — <a href=\"https://twitter.com/cdixon/status/706198805922902018\">Mark Zuckerberg</a></p>\n</blockquote>\n<p>Last decade, the internet won the market for ads that harvest purchasing intent (ads that used to appear in newspapers and yellow pages), with most of the winnings going to Google. The question for the next decade is who will win the market for ads that generate purchasing intent (so far the winner is Facebook, followed by Google). Most likely this will depend on who controls the user flow to video advertising. Today, the biggest video platforms are Facebook and YouTube, but expect video to get embedded into almost every internet service, similar to how the internet transitioned from text-heavy to image-heavy services last decade.</p>\n<p><strong>Voice: baking search into the OS.</strong> Voice bots like Siri, Google Now, and Alexa embed search-like capabilities directly into the operating system. Today, the quality of voice interfaces isn’t good enough to replace visual computing interfaces for most activities. However, artificial intelligence is <a href=\"https://medium.com/software-is-eating-the-world/what-s-next-in-computing-e54b870b80cc#.kyn1qnbvj\">improving</a> rapidly. Voice bots should be be able to handle much more nuanced and interactive conversations in the near future.</p>\n<p>Amazon’s <a href=\"https://developer.amazon.com/public/solutions/alexa/alexa-voice-service\">vision</a> here is the most ambitious: to embed voice services in every possible device, thereby reducing the importance of the device, OS, and application layers (it’s no coincidence that those are also the layers in which Amazon is the weakest). But all the big tech companies are investing heavily in voice and AI. As Google CEO Sundar Pichai recently <a href=\"https://googleblog.blogspot.com/2016/04/this-years-founders-letter.html\">said</a>:</p>\n<blockquote>\n<p>The next big step will be for the very concept of the “device” to fade away. Over time, the computer itself — whatever its form factor — will be an intelligent assistant helping you through your day. We will move from mobile first to an AI first world.</p>\n</blockquote>\n<p>This would mean that AI interfaces — which in most cases will mean voice interfaces — could become the master routers of the internet economic loop, rendering many of the other layers interchangeable or irrelevant. Voice is mostly a novelty today, but in technology the <a href=\"/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">next big thing</a> often starts out looking that way.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/02/21/what-s-next-in-computing",
      "title": "What’s Next in Computing?",
      "description": "The computing industry progresses in two mostly independent cycles: financial and product cycles. There has been a lot of handwringing…",
      "url": "https://cdixon.org/2016/02/21/what-s-next-in-computing",
      "published": "2016-02-21T00:00:00.000Z",
      "updated": "2016-02-21T00:00:00.000Z",
      "content": "<p>The computing industry progresses in two mostly independent cycles: financial and product cycles. There has been a lot of handwringing lately about where we are in the financial cycle. Financial markets get a lot of attention. They tend to fluctuate unpredictably and sometimes wildly. The product cycle by comparison gets relatively little attention, even though it is what actually drives the computing industry forward. We can try to understand and predict the product cycle by studying the past and extrapolating into the future.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 470px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 35.95744680851064%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"New computing eras have occurred every 10–15 years\"\n        title=\"New computing eras have occurred every 10–15 years\"\n        src=\"/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png\"\n        srcset=\"/static/cc45282778cf70cf803a653453e04996/924ad/1_Gzmn-yCmeOGEVPrrq9esMA.png 170w,\n/static/cc45282778cf70cf803a653453e04996/f570f/1_Gzmn-yCmeOGEVPrrq9esMA.png 341w,\n/static/cc45282778cf70cf803a653453e04996/1ee5b/1_Gzmn-yCmeOGEVPrrq9esMA.png 470w\"\n        sizes=\"(max-width: 470px) 100vw, 470px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">New computing eras have occurred every 10–15 years</figcaption>\n  </figure></p>\n<p>Tech product cycles are mutually reinforcing interactions between platforms and applications. New platforms enable new applications, which in turn make the new platforms more valuable, creating a positive feedback loop. Smaller, offshoot tech cycles happen all the time, but every once in a while — historically, about every 10 to 15 years — major new cycles begin that completely reshape the computing landscape.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2204db0d3cfd69ab9733517942f7fae5/6f6e3/1_oOZjdUvjYRlrFtYUKLIMGg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.661991584852736%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Financial and product cycles evolve mostly independently\"\n        title=\"Financial and product cycles evolve mostly independently\"\n        src=\"/static/2204db0d3cfd69ab9733517942f7fae5/94a55/1_oOZjdUvjYRlrFtYUKLIMGg.png\"\n        srcset=\"/static/2204db0d3cfd69ab9733517942f7fae5/924ad/1_oOZjdUvjYRlrFtYUKLIMGg.png 170w,\n/static/2204db0d3cfd69ab9733517942f7fae5/f570f/1_oOZjdUvjYRlrFtYUKLIMGg.png 341w,\n/static/2204db0d3cfd69ab9733517942f7fae5/94a55/1_oOZjdUvjYRlrFtYUKLIMGg.png 681w,\n/static/2204db0d3cfd69ab9733517942f7fae5/6f6e3/1_oOZjdUvjYRlrFtYUKLIMGg.png 713w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Financial and product cycles evolve mostly independently</figcaption>\n  </figure></p>\n<p>The PC enabled entrepreneurs to create word processors, spreadsheets, and many other desktop applications. The internet enabled search engines, e-commerce, e-mail and messaging, social networking, SaaS business applications, and many other services. Smartphones enabled mobile messaging, mobile social networking, and on-demand services like ride sharing. Today, we are in the middle of the mobile era. It is likely that many more mobile innovations are still to come.</p>\n<p>Each product era can be divided into two phases: 1) <em>the gestation phase</em>, when the new platform is first introduced but is expensive, incomplete, and/or difficult to use, 2) <em>the growth phase</em>, when a new product comes along that solves those problems, kicking off a period of exponential growth.</p>\n<p>The Apple II was released in 1977 (and the Altair in 1975), but it was the release of the IBM PC in 1981 that kicked off the PC growth phase.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 48.611111111111114%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137\"\n        title=\"PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137\"\n        src=\"/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png\"\n        srcset=\"/static/b5098181472b3ff3803631cb20ad549a/924ad/1_vfatwon6YWQGRvYad2ggqw.png 170w,\n/static/b5098181472b3ff3803631cb20ad549a/f570f/1_vfatwon6YWQGRvYad2ggqw.png 341w,\n/static/b5098181472b3ff3803631cb20ad549a/2bff6/1_vfatwon6YWQGRvYad2ggqw.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">PC sales per year (thousands), source: http://jeremyreimer.com/m-item.lsp?i=137</figcaption>\n  </figure></p>\n<p>The internet’s gestation phase took place in the <a href=\"https://en.wikipedia.org/wiki/National_Science_Foundation_Network\">80s and early 90s</a> when it was mostly a text-based tool used by academia and government. The release of the Mosaic web browser in 1993 started the growth phase, which has continued ever since.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 44.72222222222222%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Worldwide internet users, source: http://churchm.ag/numbers-internet-use/\"\n        title=\"Worldwide internet users, source: http://churchm.ag/numbers-internet-use/\"\n        src=\"/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png\"\n        srcset=\"/static/069843001450b5e3756c2f2fb7607f29/924ad/1_6jgrfjHpBKlObla1x0NYtg.png 170w,\n/static/069843001450b5e3756c2f2fb7607f29/f570f/1_6jgrfjHpBKlObla1x0NYtg.png 341w,\n/static/069843001450b5e3756c2f2fb7607f29/8f8c6/1_6jgrfjHpBKlObla1x0NYtg.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Worldwide internet users, source: http://churchm.ag/numbers-internet-use/</figcaption>\n  </figure></p>\n<p>There were feature phones in the 90s and early smartphones like the Sidekick and Blackberry in the early 2000s, but the smartphone growth phase really started in 2007–8 with the release of the iPhone and then Android. Smartphone adoption has since exploded: about 2B people have smartphones today. By 2020, <a href=\"http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world\">80% of the global population</a> will have one.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 46.75925925925925%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Worldwide smartphone sales per year (millions)\"\n        title=\"Worldwide smartphone sales per year (millions)\"\n        src=\"/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png\"\n        srcset=\"/static/b400fb4c8927bce57a546334ecf465e0/924ad/1_8o0-IQSyDQ0KRxSVV2njdA.png 170w,\n/static/b400fb4c8927bce57a546334ecf465e0/f570f/1_8o0-IQSyDQ0KRxSVV2njdA.png 341w,\n/static/b400fb4c8927bce57a546334ecf465e0/2bff6/1_8o0-IQSyDQ0KRxSVV2njdA.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Worldwide smartphone sales per year (millions)</figcaption>\n  </figure></p>\n<p>If the 10–15 year pattern repeats itself, the next computing era should enter its growth phase in the next few years. In that scenario, we should already be in the gestation phase. There are a number of important trends in both hardware and software that give us a glimpse into what the next era of computing might be. Here I talk about those trends and then make some suggestions about what the future might look like.</p>\n<h2>Hardware: small, cheap, and ubiquitous</h2>\n<p>In the mainframe era, only large organizations could afford a computer. Minicomputers were affordable by smaller organization, PCs by homes and offices, and smartphones by individuals.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 74.76851851851852%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338\"\n        title=\"Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338\"\n        src=\"/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png\"\n        srcset=\"/static/446eff6d101af863b1d5852b1fef5c0d/924ad/1_gZQE6-shm1dqgJAbmNn6ww.png 170w,\n/static/446eff6d101af863b1d5852b1fef5c0d/f570f/1_gZQE6-shm1dqgJAbmNn6ww.png 341w,\n/static/446eff6d101af863b1d5852b1fef5c0d/2bff6/1_gZQE6-shm1dqgJAbmNn6ww.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Computers are getting steadily smaller, source: http://www.nature.com/news/the-chips-are-down-for-moore-s-law-1.19338</figcaption>\n  </figure></p>\n<p>We are now entering an era in which processors and sensors are getting so small and cheap that there will be many more computers than there are people.</p>\n<p>There are two reasons for this. One is the steady progress of the semiconductor industry over the past 50 years (<a href=\"https://en.wikipedia.org/wiki/Moore%27s_law\">Moore’s law</a>). The second is what Chris Anderson <a href=\"http://foreignpolicy.com/2013/04/29/epiphanies-from-chris-anderson/\">calls</a> “the peace dividend of the smartphone war”: the runaway success of smartphones led to massive investments in processors and sensors. If you disassemble a modern drone, VR headset, or IoT devices, you’ll find mostly smartphone components.</p>\n<p>In the modern semiconductor era, the focus has shifted from standalone CPUs to <a href=\"https://medium.com/@magicsilicon/how-the-soc-is-displacing-the-cpu-49bc7503edab#.h6wfmbk8n\">bundles</a> of specialized chips known as systems-on-a-chip.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 68.05555555555554%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C\"\n        title=\"Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C\"\n        src=\"/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png\"\n        srcset=\"/static/95b5d17871f51d25b3fab9ad1416c465/924ad/1_SwUUpb2cjLIPFa3-8U9LzQ.png 170w,\n/static/95b5d17871f51d25b3fab9ad1416c465/f570f/1_SwUUpb2cjLIPFa3-8U9LzQ.png 341w,\n/static/95b5d17871f51d25b3fab9ad1416c465/2bff6/1_SwUUpb2cjLIPFa3-8U9LzQ.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Computer prices have been steadily dropping, souce: https://medium.com/@magicsilicon/computing-transitions-22c07b9c457a#.j4cm9m6qu%5C</figcaption>\n  </figure></p>\n<p>Typical systems-on-a-chip bundle energy-efficient ARM CPUs plus specialized chips for graphics processing, communications, power management, video processing, and more.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 257px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 76.26459143968872%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Raspberry Pi Zero: 1 GHz Linux computer for $5\"\n        title=\"Raspberry Pi Zero: 1 GHz Linux computer for $5\"\n        src=\"/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg\"\n        srcset=\"/static/43a41d31e86aa75bc4249f5debc78aed/c2e49/1_Wz-CMXmQFd64yFKWFfHefQ.jpg 170w,\n/static/43a41d31e86aa75bc4249f5debc78aed/4cf87/1_Wz-CMXmQFd64yFKWFfHefQ.jpg 257w\"\n        sizes=\"(max-width: 257px) 100vw, 257px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Raspberry Pi Zero: 1 GHz Linux computer for $5</figcaption>\n  </figure></p>\n<p>This new architecture has dropped the price of basic computing systems from about $100 to about $10. The <a href=\"https://www.raspberrypi.org/blog/raspberry-pi-zero/\">Raspberry Pi Zero</a> is a 1 GHz Linux computer that you can buy for $5. For a similar price you can buy a <a href=\"http://makezine.com/2015/04/01/esp8266-5-microcontroller-wi-fi-now-arduino-compatible/\">wifi-enabled microcontroller</a> that runs a version of Python. Soon these chips will cost less than a dollar. It will be cost-effective to embed a computer in almost anything.</p>\n<p>Meanwhile, there are still impressive performance improvements happening in high-end processors. Of particular importance are GPUs (graphics processors), the best of which are made by Nvidia. GPUs are useful not only for traditional graphics processing, but also for machine learning algorithms and virtual/augmented reality devices. Nvidia’s <a href=\"http://www.extremetech.com/gaming/201417-nvidias-2016-roadmap-shows-huge-performance-gains-from-upcoming-pascal-architecture\">roadmap</a> promises significant performance improvements in the coming years.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 286px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 49.65034965034965%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/\"\n        title=\"Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/\"\n        src=\"/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png\"\n        srcset=\"/static/aa40193bdc30d5a4b923fa0e2648552c/924ad/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png 170w,\n/static/aa40193bdc30d5a4b923fa0e2648552c/1b92c/1_jSQ-qKGSVgW4rSwA0dk9ZQ.png 286w\"\n        sizes=\"(max-width: 286px) 100vw, 286px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Google’s quantum computer, source: https://www.technologyreview.com/s/544421/googles-quantum-dream-machine/</figcaption>\n  </figure></p>\n<p>A wildcard technology is quantum computing, which today exists mostly in laboratories but if made commercially viable could lead to orders-of-magnitude performance improvements for certain classes of algorithms in fields like biology and artificial intelligence.</p>\n<h2>Software: the golden age of AI</h2>\n<p>There are many exciting things happening in software today. Distributed systems is one good example. As the number of devices has grown exponentially, it has become increasingly important to 1) parallelize tasks across multiple machines 2) communicate and coordinate among devices. Interesting distributed systems technologies include systems like <a href=\"http://hadoop.apache.org/\">Hadoop</a> and <a href=\"https://amplab.cs.berkeley.edu/projects/spark-lightning-fast-cluster-computing/\">Spark</a> for parallelizing big data problems, and Bitcoin/blockchain for securing data and assets.</p>\n<p>But perhaps the most exciting software breakthroughs are happening in artificial intelligence (AI). AI has a long history of hype and disappointment. Alan Turing himself <a href=\"http://loebner.net/Prizef/TuringArticle.html\">predicted</a> that machines would be able to successfully imitate humans by the year 2000. However, there are good reasons to think that AI might now finally be entering a golden age.</p>\n<blockquote>\n<p>“Machine learning is a core, transformative way by which we’re rethinking everything we’re doing.” — Google CEO, Sundar Pichai</p>\n</blockquote>\n<p>A lot of the excitement in AI has focused on deep learning, a machine learning technique that was <a href=\"http://www.nytimes.com/2012/06/26/technology/in-a-big-network-of-computers-evidence-of-machine-learning.html?pagewanted=all\">popularized</a> by a now famous 2012 Google project that used a giant cluster of computers to learn to identify cats in YouTube videos. Deep learning is a descendent of neural networks, a technology that <a href=\"https://en.wikipedia.org/wiki/Artificial_neural_network#History\">dates back</a> to the 1940s. It was brought back to life by a <a href=\"http://www.wired.com/2014/10/future-of-artificial-intelligence/\">combination</a> of factors, including new algorithms, cheap parallel computation, and the widespread availability of large data sets.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 386px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/e07807f2b8b6bba160ba923346426218/398bb/1_P4BXse9pJYAUbasCEkQanA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.73575129533679%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)\"\n        title=\"ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)\"\n        src=\"/static/e07807f2b8b6bba160ba923346426218/398bb/1_P4BXse9pJYAUbasCEkQanA.png\"\n        srcset=\"/static/e07807f2b8b6bba160ba923346426218/924ad/1_P4BXse9pJYAUbasCEkQanA.png 170w,\n/static/e07807f2b8b6bba160ba923346426218/f570f/1_P4BXse9pJYAUbasCEkQanA.png 341w,\n/static/e07807f2b8b6bba160ba923346426218/398bb/1_P4BXse9pJYAUbasCEkQanA.png 386w\"\n        sizes=\"(max-width: 386px) 100vw, 386px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">ImageNet challenge error rates, souce: http://www.slideshare.net/nervanasys/sd-meetup-12215 (red line = human performance)</figcaption>\n  </figure></p>\n<p>It’s tempting to dismiss deep learning as another Silicon Valley buzzword. The excitement, however, is supported by impressive theoretical and real-world results. For example, the error rates for the winners of the <a href=\"http://image-net.org/challenges/LSVRC/2015/\">ImageNet challenge</a> — a popular machine vision contest — were in the 20–30% range prior to the use of deep learning. Using deep learning, the accuracy of the winning algorithms has steadily improved, and in 2015 surpassed human performance.</p>\n<p>Many of the papers, <a href=\"https://code.google.com/archive/p/word2vec/\">data</a> <a href=\"http://image-net.org/download-images\">sets</a>, and <a href=\"https://www.tensorflow.org/\">software</a> <a href=\"http://deeplearning.net/software/theano/\">tools</a> related to deep learning have been open sourced. This has had a democratizing effect, allowing individuals and small organizations to build powerful applications. WhatsApp was able to build a global messaging system that <a href=\"http://www.wired.com/2015/09/whatsapp-serves-900-million-users-50-engineers/\">served 900M users with just 50 engineers</a>, compared to the thousands of engineers that were needed for prior generations of messaging systems. This “<a href=\"https://twitter.com/cdixon/status/473221599189954562\">WhatsApp effect</a>” is now happening in AI. Software tools like <a href=\"http://deeplearning.net/software/theano/\">Theano</a> and <a href=\"https://www.tensorflow.org/\">TensorFlow</a>, combined with cloud data centers for training, and inexpensive GPUs for deployment, allow small teams of engineers to build state-of-the-art AI systems.</p>\n<p>For example, here a <a href=\"http://tinyclouds.org/colorize/\">solo programmer</a> working on a side project used TensorFlow to colorize black-and-white photos:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/3961e4658cda043618a76fad7bb54647/300a7/1_L6cT-HQMC-mc34kJ450pdA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 32.985074626865675%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/\"\n        title=\"Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/\"\n        src=\"/static/3961e4658cda043618a76fad7bb54647/94a55/1_L6cT-HQMC-mc34kJ450pdA.png\"\n        srcset=\"/static/3961e4658cda043618a76fad7bb54647/924ad/1_L6cT-HQMC-mc34kJ450pdA.png 170w,\n/static/3961e4658cda043618a76fad7bb54647/f570f/1_L6cT-HQMC-mc34kJ450pdA.png 341w,\n/static/3961e4658cda043618a76fad7bb54647/94a55/1_L6cT-HQMC-mc34kJ450pdA.png 681w,\n/static/3961e4658cda043618a76fad7bb54647/e8f76/1_L6cT-HQMC-mc34kJ450pdA.png 1022w,\n/static/3961e4658cda043618a76fad7bb54647/300a7/1_L6cT-HQMC-mc34kJ450pdA.png 1340w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Left: black and white. Middle: automatically colorized. Right: true color. source: http://tinyclouds.org/colorize/</figcaption>\n  </figure></p>\n<p>And here a small startup created a real-time object classifier:</p>\n<p><img src=\"/1bf0017b1448eaf0208ca9d6953f755c/1_cAtej8oZh2u80cii--YgTw.gif\" alt=\"Teradeep real-time object classifier, source: https://www.youtube.com/watch?v=_wXHR-lad-Q \"></p>\n<p>Which of course is reminiscent of a famous scene from a sci-fi movie:</p>\n<p><img src=\"/d2a582498ade91504ee02f106ad719bd/1_wiG-xc456HpdBkRTQi84Eg.gif\" alt=\"The Terminator (1984), source: https://www.youtube.com/watch?v=YvRb9jZ9wFk\"></p>\n<p>One of the first applications of deep learning released by a big tech company is the search function in Google Photos, which is <a href=\"http://gizmodo.com/google-photos-hands-on-so-good-im-creeped-out-1707566376\">shockingly</a> smart.</p>\n<p><img src=\"/af124f61d4fa799fad054f8de7401d8b/1_N1K_Wv2M-QDMF7FeOmJfcw.gif\" alt=\"User searches photos (w/o metadata) for “big ben”\"></p>\n<p>We’ll soon see significant upgrades to the intelligence of all sorts of products, including: voice assistants, search engines, <a href=\"http://www.wired.com/2015/08/how-facebook-m-works/\">chat bots</a>, 3D <a href=\"https://www.google.com/atap/project-tango/\">scanners</a>, language translators, automobiles, drones, medical imaging systems, and much more.</p>\n<blockquote>\n<p>The business plans of the next 10,000 startups are easy to forecast: Take X and add AI. This is a big deal, and now it’s here. — <a href=\"http://www.wired.com/2014/10/future-of-artificial-intelligence/\">Kevin Kelly</a></p>\n</blockquote>\n<p>Startups building AI products will need to stay laser focused on specific applications to compete against the big tech companies who have made AI a top priority. AI systems get better as more data is collected, which means it’s possible to create a virtuous flywheel of <a href=\"http://mattturck.com/2016/01/04/the-power-of-data-network-effects/\">data network effects</a> (more users → more data → better products → more users). The mapping startup Waze <a href=\"https://digit.hbs.org/submission/waze-generating-better-maps-through-its-network-of-users/\">used</a> data network effects to produce better maps than its vastly better capitalized competitors. Successful AI startups will follow a <a href=\"/2015/02/01/the-ai-startup-idea-maze/\">similar</a> strategy.</p>\n<h2>Software + hardware: the new computers</h2>\n<p>There are a variety of new computing platforms currently in the gestation phase that will soon get much better — and possibly enter the growth phase — as they incorporate recent advances in hardware and software. Although they are designed and packaged very differently, they share a common theme: they give us new and augmented abilities by embedding a smart virtualization layer on top of the world. Here is a brief overview of some of the new platforms:</p>\n<p><strong>Cars</strong>. Big tech companies like Google, Apple, Uber, and Tesla are investing significant resources in autonomous cars. Semi-autonomous cars like the Tesla Model S are already publicly available and will improve quickly. Full autonomy will take longer but is probably not more than 5 years away. There already exist fully autonomous cars that are almost as good as human drivers. However, for cultural and regulatory reasons, fully autonomous cars will likely need to be significantly better than human drivers before they are widely permitted.</p>\n<p><img src=\"/3e2056b76d877d2ae8629bffc0b8af07/1_nJjPHXo_qBtzvoH8OLx9hQ.gif\" alt=\"Autonomous car mapping its environment\"></p>\n<p>Expect to see a lot more investment in autonomous cars. In addition to the big tech companies, the big auto makers <a href=\"http://www.cnet.com/roadshow/news/gm-new-team-electric-autonomous-cars/\">are</a> <a href=\"http://spectrum.ieee.org/automaton/robotics/industrial-robots/toyota-to-invest-1-billion-in-ai-and-robotics-rd\">starting</a> <a href=\"https://media.ford.com/content/fordmedia/fna/us/en/news/2016/01/05/ford-tripling-autonomous-vehicle-development-fleet--accelerating.html\">to</a> take autonomy very seriously. You’ll even see some interesting products made by startups. Deep learning software tools have gotten so good that a <a href=\"http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/\">solo programmer</a> was able to make a semi-autonomous car:</p>\n<p><img src=\"/c644e896d35381c2fc1a48fba97664ef/1_z442b_u8RfSqBEyI-1AkxQ.gif\" alt=\"Homebrew self-driving car, source: https://www.youtube.com/watch?v=KTrgRYa2wbI\"></p>\n<p><strong>Drones</strong>. Today’s consumer drones contain modern hardware (mostly smartphone components plus mechanical parts), but relatively simple software. In the near future, we’ll see drones that incorporate advanced computer vision and other AI to make them safer, easier to pilot, and more useful. Recreational videography will continue to be popular, but there will also be important <a href=\"http://www.airware.com\">commercial</a> use cases. There are tens of millions of <a href=\"http://www.psmag.com/politics-and-law/cell-tower-climbers-die-78374\">dangerous</a> jobs that involve climbing buildings, towers, and other structures that can be performed much more safely and effectively using drones.</p>\n<p><img src=\"/54d3f2063791db1e9364b090526a0a12/1_N7SlK3WKwkfZ6v50JFLkCg.gif\" alt=\"Fully autonomous drone flight. source: https://www.youtube.com/watch?v=rYhPDn48-Sg\"></p>\n<p><strong>Internet of Things</strong>. The obvious use cases for IoT devices are energy savings, security, and convenience. <a href=\"https://nest.com/thermostat/meet-nest-thermostat/\">Nest</a> and <a href=\"https://nest.com/camera/meet-nest-cam/\">Dropcam</a> are popular examples of the first two categories. One of the most interesting products in the convenience category is Amazon’s <a href=\"http://www.amazon.com/Amazon-SK705DI-Echo/dp/B00X4WHP5E\">Echo</a>.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 348px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 55.7471264367816%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAAA40lEQVQoz2P4jwP8+/cPSN64eWfV6k0/fnyHiyADBkxt3759e/To0dOnzx89uO4VPU9Eb8L2rRuB4n/+/CGsGagIqP/Dh48/f3yta5oaHld+984toPjfv38Ja0Z29ocPb548vovVzTht/v3798+fP4HsiRMnxyckgQ37T0AzxPiPHz/eBwOgIfPmL0hITCLWZogiIAnx4ekzZ7Zu3YbLawT8/O79h7v3HxClGajhx48fED9//w6K2w0bN6Vl5WINaiyaH4MB0MO3bt0C6l+zZm14eCRRmpEBRPXFi5eWLluOK8AAnOlzCisJJFsAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Three main uses cases for IoT\"\n        title=\"Three main uses cases for IoT\"\n        src=\"/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png\"\n        srcset=\"/static/5ca197c2fdbd18c0039d8b90c43133bd/924ad/1_bsxhmUfI-7biIF-dW8a80w.png 170w,\n/static/5ca197c2fdbd18c0039d8b90c43133bd/f570f/1_bsxhmUfI-7biIF-dW8a80w.png 341w,\n/static/5ca197c2fdbd18c0039d8b90c43133bd/8f6cc/1_bsxhmUfI-7biIF-dW8a80w.png 348w\"\n        sizes=\"(max-width: 348px) 100vw, 348px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Three main uses cases for IoT</figcaption>\n  </figure></p>\n<p>Most people think Echo is a gimmick until they try it and then they are <a href=\"http://qz.com/611026/amazon-echo-is-a-sleeper-hit-and-the-rest-of-america-is-about-find-out-about-it-for-the-first-time/\">surprised</a> at how useful it is. It’s a great <a href=\"https://500ish.com/alexa-5f7924bffcf3#.iou9jsaj4\">demo</a> of how effective always-on voice can be as a user interface. It will be a while before we have bots with generalized intelligence that can carry on full conversations. But, as Echo shows, voice can succeed today in constrained contexts. Language understanding should improve quickly as recent breakthroughs in deep learning make their way into production devices.</p>\n<p>IoT will also be adopted in business contexts. For example, devices with sensors and network connections are extremely <a href=\"https://www.samsara.com/\">useful</a> for monitoring industrial equipment.</p>\n<p><strong>Wearables.</strong> Today’s wearable computers are constrained along multiple dimensions, including battery, communications, and processing. The ones that have succeeded have focused on narrow applications like fitness monitoring. As hardware components continue to improve, wearables will support rich applications the way smartphones do, unlocking a wide range of new applications. As with IoT, voice will probably be the main user interface.</p>\n<p><img src=\"/a8271f926bbf193ab70125a08af973ca/1__4r-bIpz7jWMYiLnxKFCJQ.gif\" alt=\"Wearable, super intelligent AI earpiece in the movie “*Her”*\"></p>\n<p><strong>Virtual Reality.</strong> 2016 is an exciting year for VR: the launch of the <a href=\"https://www.oculus.com/en-us/rift/\">Oculus Rift</a> and HTC/Valve <a href=\"https://www.htcvive.com/us/\">Vive</a> (and, possibly, the Sony Playstation VR), means that comfortable and immersive VR systems will finally be publicly available. VR systems need to be really good to avoid the “<a href=\"https://en.wikipedia.org/wiki/Uncanny_valley\">uncanny valley</a>” trap. Proper VR requires special screens (high resolution, high refresh rate, low persistence), powerful graphics cards, and the ability to track the precise position of the user (previously released VR systems could only track the rotation of the user’s head). This year, the public will for the first time get to experience what is known as “<a href=\"http://a16z.com/2015/01/22/virtual-reality/\">presence</a>” — when your senses are sufficiently tricked that you feel fully transported into the virtual world.</p>\n<p><img src=\"/a5e9dac7f584d81d959842c82b7c674a/1_bcHvjQwlLxyORwjHFH87Qg.gif\" alt=\"Oculus Rift Toybox [demo](https://www.youtube.com/watch?v=dbYP4bhKr2M)\"></p>\n<p>VR headsets will continue to improve and get more affordable. Major areas of research will include: 1) new tools for creating rendered and/or <a href=\"https://www.lytro.com/\">filmed</a> VR content, 2) machine vision for <a href=\"http://venturebeat.com/2016/02/08/oculus-vr-guru-john-carmack-leads-crucial-position-tracking-development-for-mobile-vr/\">tracking</a> and scanning directly from phones and headsets, and 3) distributed back-end <a href=\"/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds/\">systems</a> for hosting large <a href=\"https://twitter.com/cdixon/status/662836035508940800\">virtual environments</a>.</p>\n<p><img src=\"/f0b9361f08011696d616fe6efe4747e6/1_Fv9_4fCAOHoEA3dxjMf2jw.gif\" alt=\"3D world creation in [room-scale VR](https://www.youtube.com/watch?v=JKO9fEjNiio)\"></p>\n<p><strong>Augmented Reality</strong>. AR will likely arrive after VR because AR requires most of what VR requires plus additional new technologies. For example, AR requires advanced, low-latency machine vision in order to convincingly combine real and virtual objects in the same interactive scene.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 600px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.333333333333336%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Real and virtual combined (from *The Kingsmen*)\"\n        title=\"Real and virtual combined (from *The Kingsmen*)\"\n        src=\"/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg\"\n        srcset=\"/static/87e0d14dc73016bf6ebca9396c14a960/c2e49/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 170w,\n/static/87e0d14dc73016bf6ebca9396c14a960/c2dc0/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 341w,\n/static/87e0d14dc73016bf6ebca9396c14a960/82472/1_HpWBUZD_kKAoTa2yuxqnTQ.jpg 600w\"\n        sizes=\"(max-width: 600px) 100vw, 600px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Real and virtual combined (from *The Kingsmen*)</figcaption>\n  </figure></p>\n<p>That said, AR is probably coming sooner than you think. This demo video was shot directly through <a href=\"http://www.magicleap.com/#/home\">Magic Leap’s</a> AR device:</p>\n<p><img src=\"/4b0d7fe5166ee726a724228c68df0a36/1_7jbz4N1GZTFm0wDzDEmQ1Q.gif\" alt=\"Magic Leap demo: real environment, virtual character\"></p>\n<h2>What’s next?</h2>\n<p>It is possible that the pattern of 10–15 year computing cycles has ended and mobile is the final era. It is also possible the next era won’t arrive for a while, or that only a subset of the new computing categories discussed above will end up being important.</p>\n<p>I tend to think we are on the cusp of not one but multiple new eras. The “peace dividend of the smartphone war” created a Cambrian explosion of new devices, and developments in software, especially AI, will make those devices smart and useful. Many of the futuristic technologies discussed above exist today, and will be broadly accessible in the near future.</p>\n<p>Observers have noted that many of these new devices are in their “<a href=\"http://www.nytimes.com/2016/01/07/technology/on-display-at-ces-tech-ideas-in-their-awkward-adolescence.html?_r=0\">awkward adolescence</a>.” That is because they are in their gestation phase. Like PCs in the 70s, the internet in the 80s, and smartphones in the early 2000s, we are seeing pieces of a future that isn’t quite here. But the future is coming: markets go up and down, and excitement ebbs and flows, but computing technology marches steadily forward.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2016/02/11/if-an-alien-film-crew-chose-to-feature-our-species-in-a-nature-documentary-they-d-have-plenty-of",
      "title": "If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of…",
      "description": "If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of spectacular superorganisms to choose from…",
      "url": "https://cdixon.org/2016/02/11/if-an-alien-film-crew-chose-to-feature-our-species-in-a-nature-documentary-they-d-have-plenty-of",
      "published": "2016-02-11T00:00:00.000Z",
      "updated": "2016-02-11T00:00:00.000Z",
      "content": "<p>If an alien film crew chose to feature our species in a nature documentary, they’d have plenty of spectacular superorganisms to choose from. Perhaps they’d spotlight the U.S. military, the most powerful superorganism ever to arise on our humble planet. Or the Catholic Church, a superorganism that’s managed to survive, with awe-inspiring continuity, for nearly two millennia. Meanwhile, impressive at smaller scales, the Boston Symphony Orchestra coordinates muscle movements to a precision of millimeters and milliseconds. And improv troupes like the Upright Citizens Brigade manage to arrange themselves into compelling scenes at the drop of a hat, all without any explicit coordination. Then there’s the superorganism responsible for the stable, secure, 20-million-line codebase that powers much of the world’s computing infrastructure — a loose affiliation of some 5,000 individuals,mostly strangers, who have somehow managed to assemble one of the most intricate artifacts ever built. As you might have guessed, I’m referring to the developers of the Linux kernel.</p>\n<p>— <a href=\"http://www.ribbonfarm.com/2016/02/11/minimum-viable-superorganism/\">Minimal Viable Superorganism</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/11/13/nine-reasons-screenshots-are-awesome",
      "title": "Nine reasons screenshots are awesome",
      "description": "By taking a screenshot, you can “export” from any app on any device. You can “import” screenshots back into any app that imports photos…",
      "url": "https://cdixon.org/2015/11/13/nine-reasons-screenshots-are-awesome",
      "published": "2015-11-13T00:00:00.000Z",
      "updated": "2015-11-13T00:00:00.000Z",
      "content": "<ol>\n<li>By taking a screenshot, you can “export” from any app on any device.</li>\n<li>You can “import” screenshots back into any app that imports photos (most apps).</li>\n<li>For these reasons, screenshots act like a universal file type on mobile. As <a href=\"http://twitter.com/artypapers\">@artypapers</a> says:</li>\n</ol>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 568px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 54.22535211267606%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAABxElEQVQoz3VRO2/UQBD2T6UjDT0g2lQUSBQgpaIhEQjRIQQdQkIKBYQ7++78vrMvfmB7d722922HOee6hE+fZmdGmtmZ+awvH95+//qJS11WNaG0Z0wpZYzRBygFnEOplDhAcs4hvJlhPXl08ubs1XWWL2zHdlYb11/aq9Xa9fwgCEPXC/wghGxRlgjjpsFVVUGPY3HNlDCjlBIC3Ddtj+EnQnshpdZGaT1Nk57tzR1Yy8Xvtb1A3VDUqEQIUcqE6hkHCxyEBAtL9Vx0A4etOsa50kIZoPX44YPXL55HaXb568/Cce21t/LCpes7brDxgqulA5mNH13Z6216He72edUMh6YHWt9+/HS8oMEtJl2Sp7t839SkcLwiK3OYpUYVIn8RKRtMB8GkHoTuYbSZFtUT1+O+6YqWB2WdEWrgBHRQUiszzpxuKbUBwrS3DtDCTIIU4EFXrkZt7jnM/2BdnL38/PEdnDdO0qwoqrqmtGtbSloAbWmHMbgUIUzmFAgmpToWnz57+v78vCirMIp3SRKE0XaX+GEE4eymIHgcb8FG8bal0I6CfsdiwrXQhs+6M3ikGs3Y9YMZYQVYfwSFx9neHfsf6Cdj0bMXpjoAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)\"\n        title=\"tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)\"\n        src=\"/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png\"\n        srcset=\"/static/0ba4fbd003eb13531173f39e8f18ba87/924ad/1fcFNUN55yNgnbY1ZKaU4bA.png 170w,\n/static/0ba4fbd003eb13531173f39e8f18ba87/f570f/1fcFNUN55yNgnbY1ZKaU4bA.png 341w,\n/static/0ba4fbd003eb13531173f39e8f18ba87/0e1a6/1fcFNUN55yNgnbY1ZKaU4bA.png 568w\"\n        sizes=\"(max-width: 568px) 100vw, 568px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">tweetstorm [https://twitter.com/artypapers/status/664846647797481472](https://twitter.com/artypapers/status/664846647797481472)</figcaption>\n  </figure></p>\n<ol start=\"4\">\n<li>Screenshots let you circumvent restrictions like file format incompatibilities, service non-interoperability, character limits, etc</li>\n</ol>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 82.29166666666666%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Much higher engagement when text is inline\"\n        title=\"Much higher engagement when text is inline\"\n        src=\"/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png\"\n        srcset=\"/static/95734049b48ea09f2e5585f03318595a/924ad/1523dJ35IDTth7yIxY1O85w.png 170w,\n/static/95734049b48ea09f2e5585f03318595a/337b6/1523dJ35IDTth7yIxY1O85w.png 288w\"\n        sizes=\"(max-width: 288px) 100vw, 288px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Much higher engagement when text is inline</figcaption>\n  </figure></p>\n<ol start=\"5\">\n<li>You can easily edit screenshots using simple tools that are bundled with most desktop and mobile operating systems:</li>\n</ol>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 93.05555555555556%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"You can’t do this with embeds\"\n        title=\"You can’t do this with embeds\"\n        src=\"/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png\"\n        srcset=\"/static/434a6a3f83cb4f6ae53511626b4c3953/924ad/1XyUJT8xhd-i0YPGuJ7WpDQ.png 170w,\n/static/434a6a3f83cb4f6ae53511626b4c3953/2914c/1XyUJT8xhd-i0YPGuJ7WpDQ.png 216w\"\n        sizes=\"(max-width: 216px) 100vw, 216px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">You can’t do this with embeds</figcaption>\n  </figure></p>\n<ol start=\"6\">\n<li>It’s easy to annotate screenshots:</li>\n</ol>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 248px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 152.01612903225805%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAeCAIAAACjcKk8AAAACXBIWXMAAAsSAAALEgHS3X78AAAGF0lEQVQ4y11US28jWRWuX4BmCQt+DGKFWPAPkBCsWSAEM0gs0IiBgWZoulEzzTCou0N7MnEe3Ykd2/G74me5XFV2vW5V3Vvv98uPdMdO4thTQWLD1dnc7+rofPc73znYP0vTPzYvXvWNz0/4x18TX5zDF/XwbKjRlc+e/+Ppk8ef9tvluY9UkfIMvk8dvWk8L5eftJ7++uW/fov9Cccf9f7+jG7WmetXbbfJzQmwNCxOF0vf/s53P/jgWxzRfRfbiWc6Ds+planTQfm/Ln/zM/7FJ1hHC75gDsaGsNvtFtc32+1me7+539xl1ydPn/7l0aPt/fa/yOb+Pnu6z/CZJisvnswghynJ7v0skjguQ7ebu83t3c3t5mqxvI3T3Xb3f2e7fYDcIFQ083b1DgPceHZ9F6928WIdL6+j+Wy1imOKDEnCJ4deF09Hw5WmrT1v7brrq8Vqdb26vlrdXoehg+GNcuf8ZeFSzlO7E/Kqfll1lJ5TL2smr2oMEkcmnAT82B/hAdnx+y2v03A6NWt0qQxwrMDtyoR9WTlolfLMqBTrQ9cw0kEr7bdnF4VFu5bi1bjfDJlh1Kkn7cqsXkouzmKBit8eYufM+niyO+du2VEVNX4HJnhMFIzRQGmUUT4nvz00cnt2sxozA+eiqB0eo+Nj+bIFVEV7c4wVJ7dn9Pqgv4OgH2qEPL30Tz50Ks9lOEUSCzjKgJyjCpEte6YMVQgBKwtTeUprhbcPtPPMbo+WaPgfVaU8D6JOLXz9yyUi55ad+GroQd9RAlOKHSW2xMQCkQsTcZyOu1iFCHI962z6DEjVOlduwQpO/Ztt/k3s55XeSTLqWZ2afFngmAsTjH1TMk3ZDzRfpAMCx0rDRZHuS9JhpJu+LnlIcBGLLJHVB323FgEm5sfBpI/wrwP8XG63xngnpTohXgu4EXY03h0r7QSdw1/83OmVghBCnnIhb8tCSzo3EZ/RTnwtcVHoKpEmhDwZCVTEDBIbYifk9kjYN+S88YdPbKYlo6EG6MRRfAuQVlMHU1cTPE2wIWsj3kKCqQNTEwxVdDQRO6auq3IlNSu6yocWCAzJNUBqqcghJXcYGZnIAPI0Sw84ZghYkqe7gKW5UVtpP8MKQtoVKs6gCIg2IrvWlAwsaW6poj1QnFFqotCWQisLORPc04XQ5D3+LBl/CdsvsANmfiq+mcF+pMNYA4kuB7qUGlCwCckm57aa5fwvxMAErgYMNNIHuaO2gR3R74sgT1lnlNfj3a7hTJIFDD2+quNTFfrmBGl9U8l8wmc+yX5uIXEhj4aN0mtihxXodxxb9yxCkhjVpPryxU8/+nF1cjIJOrGJTJ1CkEACHRjT0AQSN/RsNJ9cNKqNfXqHEYI5M0qRhUzEaCLDDns/+N73BbK78LWMZOpkC4ixFCYw2NCULZ2JVDlmSiWcz2fJBwPfg6XQ0lydTXwEJv2PP/294lrpg05yZEmewdlGlvwgm4f4bDwjIlemF4fUFjsa+gE6T2zFlMaONGG6tY8+/BXLjHwkWCatasPUhmGmliXY6ljhGJevCsPzwnR3NL7DiqQcqRlt1UWcCRiR6tUKhx6cZCZ1DS4jHOqSY7KORqs8aevywhg16u3caHfK3GI1ik60cmDrsQMjR54Heuoqng6uQiN10cMk6oCfdhDf87NGempictRo8NVw85bZYGeXUxdReL24v/dlpXC4v/d57uBxqfz6ZP9l8c1B6TRfOj2sFo4zwbORTH0t22E365Xo3jzQZsGrxKKJXq3TLEKRFJkeZGuQPWmVvqKG+JS8JDpVjurGrhLo4P0ysR23Xq+ubzcF5gYjpsWlNYw9c+ah1OYjS7a5pj1t2RJtS0zGPPVQnNnDmDgGHTpwuXw/ny+cYJYn1hg/yaWo5CHS1fjA4EMDOJA2ZcZBnA0nvpFZUtIBLYgNETSRMEg8YZsKVOcilzlsypZDpaJxJXbcMeAk61lkKb4BsiZndXxLyEZt5mTFpdAGsQ326trHe0KuCg8zk6igmBrjWDs1EKcB0tWFzFhZxI7q2IJvSwbiPV0MLeXKB8e48sM/L3/yfPmjx1f50fobCKvUJEYtuC8AAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1i 4InKrSJoQfwpfOtKwtiQ\"\n        title=\"1i 4InKrSJoQfwpfOtKwtiQ\"\n        src=\"/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png\"\n        srcset=\"/static/2424bae772bcbde995c949fd7d8049bd/924ad/1i_4InKrSJoQfwpfOtKwtiQ.png 170w,\n/static/2424bae772bcbde995c949fd7d8049bd/f77a2/1i_4InKrSJoQfwpfOtKwtiQ.png 248w\"\n        sizes=\"(max-width: 248px) 100vw, 248px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<ol start=\"7\">\n<li>On mobile, the photo roll where screenshots are kept is similar to a file system. You can delete photos, edit them, back them up to the cloud, etc.</li>\n</ol>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 150.46296296296296%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1YZi7TPYylq 2s1q9zwhJJw\"\n        title=\"1YZi7TPYylq 2s1q9zwhJJw\"\n        src=\"/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png\"\n        srcset=\"/static/0314b36561b6757d79d25f28bd76df0f/924ad/1YZi7TPYylq-2s1q9zwhJJw.png 170w,\n/static/0314b36561b6757d79d25f28bd76df0f/2914c/1YZi7TPYylq-2s1q9zwhJJw.png 216w\"\n        sizes=\"(max-width: 216px) 100vw, 216px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<ol start=\"8\">\n<li>You can combine otherwise incompatible formats in a single screenshot</li>\n</ol>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 147.91666666666669%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAeCAIAAACjcKk8AAAACXBIWXMAAAsSAAALEgHS3X78AAAFsUlEQVQ4y32VCVATZxTHd6qjdTywto50vHUQFUEsWEUqIqBioSDBsfWkHIJVqQoCgiCKOmgRC6gV79JqtRzWg6iAKFaw1UGO3Mnu5oAkJOSAJJtsdhNNXyIzddDxTWbz9tv3e//37fvygpitNG2zK3u0hMnc06PU9GosZgtpIY0Go8ViefWO2V0GDknZEAJgu93hcBAEUXi0sKmxSSKWdnfJxbgYEjneMcBsNhs4A7DNBZMk+fjRky5ZNyiDrI22Wa1WwkTAx0yYoQpYNBlNNE2/yULSA/AruLHZ7CIhyuro7GxnsVkcdie77WU7OHDL4/JZneyONuej/v7+AZh6C7ZaKQ6LK8GlIiGGiTABT4ijuFAgEmNiVIRLxVIcFYsxCZ8rgFoGw5SV6mhj8XkCPpff3tYJUqwOdkd7J4/LA03wQRYcSAobfAemKDaLi4lwVIhy2FwQEfJFAp6Ax+GDmkiActk8VIjptLr3lm2FHULloOnU5wmc4i6fx+HBtrlcWBWyWWx4ee+BuWwul8OHVsGbE/KFGIqDIPAoikEh7E6OTCKjaAq69T9M0c6+PWlqWhEWHrY8YlNcfOruPXGJW5LTk7KL0kori6///cflxt+vPKsqv3/1+LXzHSI+xFso2glbKWfrbt6uGTpk+PCRY32X+/stXrgwcHp4QtD20wm7SuKjEkLTzu3OvnIgr2RnSlbUw5aHEG+2Ui7Y1ff7Tcw5X3hOnjQjeE1IyvaNz6p/zs1fG5UcmnlkI2NdQOjqwICARRuSGdmZ0S+a7zqVB2CXck31TffP3YOWr4yMjT1RmC5kXs7MiIla/83ximLvBV4eM2bM8vBYxVgZvyOuvu7+W8ou+M8bVaNHfLI4KDAxbl1t+f7mC3mNlcfzD++N3hyxZJn/3NmeXnPnhK1atmPPj8x7jYPhqqpqtxGf+gYuKS7YxrxUxmq5JWx50lxzeU1M8Lx5M729po76eFx4VHhq1g8NjQ2D4fq7d4YjY3wW+ZUeSj57rODR8+flNU/v/Fq4bVPkVyGBqUlhYUsWTJk8k7GBwbz3wAmT1JtWOeHmBuZnI8dPnTh93izPvbt2tb5ouX215OKxpAAf35UhwWdL886V5cdFL12fGNv0mDlYuaH29nT3cRMmjB/rNmb9xrT6v5i1NeWll34KXRHs7zllc0zo4cMHT549vy4mvLaq4m1l5yGBc3e65GTpqbLyX87cqK5ta27lC3htnNbKquulxaXXKi41Payrq3/028XzQgHP1SoagTFEWimVRi+Q90o1BlSlN5IUPHv92vFhcw4DgC0WUirvaWGJXvKwVj7ewsZ4qFTRLZfKuiQSmVgshfEixiUSiRR+UhiKaTQau80+oAzH3G63GQwGGEB6nc5MEDBx7DZa36tWKxVGvZa0WFQ9KqVCodVqgYQYgK20HQGUyXyQvidj5/bUvNz8nJy83LxD+zKzC06UF164VVJxt+DMjdz8oxl7szIy9mVl5qSnZ+bkHDhWWISJpQhUz4hdO99n/takFARBhg4ZtSx41ST3KR9NDthy5Pqpyqc+3+YPGz0x8utoWEeQYdOmzd6xM83NbULtvTonvG//wfDwyKTE5FkeXr6+X0ZEMAIXL/VbHZdSVFV0tTFyd9mCRSFrGd/Fxm7w9vYPWhoa//1Wf7+Apy3/IrDbfx7c4bS3K3tUsG0Yjiq1WqPR9hmMar1RoenXGgi9vk8Fq+pecKQKDQeX491qk4VGND3KnIRN3I52q82u0/eZXSPmA2agHXLCITc5zLQDgVGIYbhcoYDUKnVvr0YL4gaY7wTR19dvNJpMJqKvHxynp9Pp4G2DD3EQg1hJsqtLhuPOPioUClyMi0QiFEVxsRi+OBwOXyAAH64qlQpaqNFCdgOoQC6EomilSi3tkvdqdTK5QiLr6lYoSZeZzWaIgCv8H4Dam7n3tv0Ha91N6Wta6Z4AAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)\"\n        title=\"The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)\"\n        src=\"/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png\"\n        srcset=\"/static/bcd79cb3b12cdd53f1678b96ac6c9af4/924ad/1ZQVVeKcjUqk8wRJUd3duFw.png 170w,\n/static/bcd79cb3b12cdd53f1678b96ac6c9af4/337b6/1ZQVVeKcjUqk8wRJUd3duFw.png 288w\"\n        sizes=\"(max-width: 288px) 100vw, 288px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">The Awl calls these “shitpics” [http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic](http://www.theawl.com/2014/12/the-triumphant-rise-of-the-shitpic)</figcaption>\n  </figure></p>\n<ol start=\"9\">\n<li>Screenshots persist even when the thing screenshotted disappears:</li>\n</ol>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 15.625%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAYAAACTWi8uAAAACXBIWXMAAAsSAAALEgHS3X78AAAAuklEQVQI1x2OWXKEMBBDuf85MhThg2BCwCzGNuBZMlMUHCDkJo90+GuV9FqKuq4jhAnvPG3bcg0B7z3WOpZlofwqGYaBqtas6yqew4gOYWYaPXmec3/c6buGff8l8uMosMH0hs+iYNs2jOmxAmVZdt7OubNgnEYGO6C1lvKG5/dDGMU8z1RVyc++E/2H4ziRFRZdV7wniTz64PV8USjF2+Uifoyz9gSVyqXMUOtG1tozn6Yp4XbjOA7+APBQwRWs/+gPAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1TQa0p6EzFb2CaJmd0 o87g\"\n        title=\"1TQa0p6EzFb2CaJmd0 o87g\"\n        src=\"/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png\"\n        srcset=\"/static/4ab560f0052888e059906ec7f154bafb/924ad/1TQa0p6EzFb2CaJmd0-o87g.png 170w,\n/static/4ab560f0052888e059906ec7f154bafb/337b6/1TQa0p6EzFb2CaJmd0-o87g.png 288w\"\n        sizes=\"(max-width: 288px) 100vw, 288px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 46.18055555555556%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1vsqP1ZQvd0M0vFdGPWzkOA\"\n        title=\"1vsqP1ZQvd0M0vFdGPWzkOA\"\n        src=\"/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png\"\n        srcset=\"/static/8755b722217e371387c8a3ffec6ee12f/924ad/1vsqP1ZQvd0M0vFdGPWzkOA.png 170w,\n/static/8755b722217e371387c8a3ffec6ee12f/337b6/1vsqP1ZQvd0M0vFdGPWzkOA.png 288w\"\n        sizes=\"(max-width: 288px) 100vw, 288px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>And more:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 537px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 37.243947858473%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1G9eixRmfjvIITvw5Jl4Bdg\"\n        title=\"1G9eixRmfjvIITvw5Jl4Bdg\"\n        src=\"/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png\"\n        srcset=\"/static/66109310819c0dd0781d28282a0b3095/924ad/1G9eixRmfjvIITvw5Jl4Bdg.png 170w,\n/static/66109310819c0dd0781d28282a0b3095/f570f/1G9eixRmfjvIITvw5Jl4Bdg.png 341w,\n/static/66109310819c0dd0781d28282a0b3095/140c6/1G9eixRmfjvIITvw5Jl4Bdg.png 537w\"\n        sizes=\"(max-width: 537px) 100vw, 537px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 601px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 33.94342762063228%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABHUlEQVQY042RPU/DMBCG888ZmFgRG2JiROInwFYhPkSVkLqOHceOieO4sdMmqWjTxMEpSweQeHXD3eme+9B5w9Bba8f/6dDbdmebL7vvJsS7v7sEYP7uL4IgmPs+RKjvB3vUcCprm7W5fa3PHurzx/pq1k7wzfVFyrEsS6nUSpt91/06cxpkB1weZnT3lO4CMZV523Js1Ng1Y9tspSyEyAu1co4siizLEspoQstSxyRx+bbenHb0WKximGdM50JGESIkCUOAcOwMLOHzy1u4AH7wgY9hCKBrnkupq/UEL5YAQJByhmMHYCFEhDCMMIQo5VwWShvDeVZV60KpT7eMEFpr8wOThDHGjTaEUEKpMcYVuCVhhDZ1PV369y++Ae+Egwj2IUk6AAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1bI apTKjUaOPV8TVyTq2gg\"\n        title=\"1bI apTKjUaOPV8TVyTq2gg\"\n        src=\"/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png\"\n        srcset=\"/static/b642c197248ad3ba35c80f0e99bf2f9a/924ad/1bI_apTKjUaOPV8TVyTq2gg.png 170w,\n/static/b642c197248ad3ba35c80f0e99bf2f9a/f570f/1bI_apTKjUaOPV8TVyTq2gg.png 341w,\n/static/b642c197248ad3ba35c80f0e99bf2f9a/448d4/1bI_apTKjUaOPV8TVyTq2gg.png 601w\"\n        sizes=\"(max-width: 601px) 100vw, 601px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>What are some other reasons screenshots are awesome?</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/10/31/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment",
      "title": "It’s hard to believe today, but 10 years ago Wikipedia was widely considered a doomed experiment…",
      "description": "Today, Wikipedia is widely considered an invaluable resource. There are occasional errors and controversies, but for the most part it…",
      "url": "https://cdixon.org/2015/10/31/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment",
      "published": "2015-10-31T00:00:00.000Z",
      "updated": "2015-10-31T00:00:00.000Z",
      "content": "<p>Today, Wikipedia is widely considered an invaluable resource. There are occasional errors and controversies, but for the most part it provides accurate, comprehensive information to billions of people every day.</p>\n<p>Wikipedia was <a href=\"https://en.wikipedia.org/wiki/History_of_Wikipedia\">founded</a> in 2001, and for the first few years was mostly treated as curiosity by those outside of the Wikipedia “movement.” But Wikipedia grew in popularity, and in 2005 became the most <a href=\"https://en.wikipedia.org/wiki/History_of_Wikipedia#2005\">popular reference</a> site on the internet. Popularity led to intense media scrutiny. Most commentators considered Wikipedia a doomed experiment run by utopian radicals. To give a sense of this for those who weren’t following the controversy at the time or don’t remember, here are some examples of popular critiques of Wikipedia from 2005.</p>\n<blockquote>\n<p>“One day Wikipedia may well be the most amazing reference work the world has ever seen, lauded for its quality. <strong>But to get from here to there it will need real experts and top quality writing — it won’t get there by hoping that its whizzy technical processes remedy such deficiencies.</strong> In other words, it will resemble today’s traditional encyclopedias far more than it does today.” (<a href=\"http://www.theregister.co.uk/2005/10/18/wikipedia_quality_problem/\">source</a>)</p>\n</blockquote>\n<blockquote>\n<p>“The Seigenthaler affair points up a crucial condition of the Internet’s information ecology: <strong>It’s a system that doesn’t select for truth. Currency, controversy, charisma, fascination — these count much more in determining the vitality and survivability of online articles, facts, or ‘’memes.’’</strong> In the 21st century’s networked knowledge environment, truth will be less and less identified by the imprimatur of expert writers and invisible, omnicompetent editors, but by readers who understand the principles of networked information.” (<a href=\"http://www.boston.com/news/globe/ideas/articles/2005/12/18/the_wiki_effect/?page=full\">source</a>)</p>\n</blockquote>\n<blockquote>\n<p>“If you read anything about Web 2.0, you’ll inevitably find praise heaped upon Wikipedia as a glorious manifestation of “the age of participation.” Wikipedia is an open-source encyclopedia; anyone who wants to contribute can add an entry or edit an existing one. O’Reilly, in a <a href=\"http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html\">new essay</a> on Web 2.0, says that Wikipedia marks “a profound change in the dynamics of content creation” — a leap beyond the Web 1.0 model of Britannica Online. To Kevin Kelly, Wikipedia shows how the Web is allowing us to pool our individual brains into a great collective mind. It’s a harbinger of the Machine. In theory, Wikipedia is a beautiful thing — it <em>has</em> to be a beautiful thing if the Web is leading us to a higher consciousness. In reality, though, Wikipedia isn’t very good at all. Certainly, it’s useful — I regularly consult it to get a quick gloss on a subject. <strong>But at a factual level it’s unreliable, and the writing is often appalling. I wouldn’t depend on it as a source, and I certainly wouldn’t recommend it to a student writing a research paper</strong>.” (<a href=\"http://www.roughtype.com/?p=110\">source</a>)</p>\n</blockquote>\n<blockquote>\n<p>“To many guardians of the knowledge cathedral — librarians, lexicographers, academics — that’s precisely the problem. Who died and made this guy professor? No pedigreed scholars scrutinize his work. No research assistants check his facts. Should we trust an encyclopedia that allows anyone with a pulse and a mousepad to opine about Jackson Pollock’s place in postmodernism? What’s more, the software that made Wikipedia so easy to build also makes it easy to manipulate and deface. <strong>A former editor at the venerable Encyclopedia Britannica recently likened the site to a public rest room: You never know who used it last.”</strong> (<a href=\"http://www.wired.com/2005/03/wiki/?tw=wn_tophead_5\">source</a>)</p>\n</blockquote>\n<p>Wikipedia is a classic example of how <a href=\"/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">the next big thing often starts out looking like a toy.</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/10/31/lessons-from-the-pc-video-game-industry",
      "title": "Lessons from the PC video game industry",
      "description": "The future of media is here — it’s just not evenly distributed The success or failure of tech and media products depends on complicated…",
      "url": "https://cdixon.org/2015/10/31/lessons-from-the-pc-video-game-industry",
      "published": "2015-10-31T00:00:00.000Z",
      "updated": "2015-10-31T00:00:00.000Z",
      "content": "<h2>The future of media is here — it’s just not evenly distributed</h2>\n<p>The success or failure of tech and media products depends on complicated interactions between products, economics, technology, and culture. It’s very hard to predict what will work and what won’t. Today, billions of people carry internet-connected supercomputers in their pockets, the largest knowledge repository in the world is a massive <a href=\"https://medium.com/@cdixon/it-s-hard-to-believe-today-but-10-years-ago-wikipedia-was-widely-considered-a-doomed-experiment-a7a0dfd27b8b\">crowdsourced encyclopedia</a>, and a social network is one of the <a href=\"http://moneymorning.com/2015/06/23/facebook-nasdaq-fb-joins-top-10-companies-by-market-cap/\">10 most valuable companies</a> in the world. Ten years ago, someone who predicted these things would have seemed crazy.</p>\n<p>The subtitle to this post is a variation of William Gibson’s famous remark: “The future is already here — it’s just not very evenly distributed.” An obvious follow up question is: <em>if the future is already here, where can I find it</em>? There is no easy answer, but history shows there are characteristic patterns. For example, it’s often useful to look at what the <a href=\"/2013/03/03/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years/\">smartest people work on in their free time</a>, or things that are growing rapidly but <a href=\"/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">widely dismissed as toys</a>.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 62.26851851851851%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"An example idea maze (source: startup.stanford.edu)\"\n        title=\"An example idea maze (source: startup.stanford.edu)\"\n        src=\"/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png\"\n        srcset=\"/static/46820c30039bf9890f62289655c2338a/924ad/1luou1d-WIS3t-_oMboptGA.png 170w,\n/static/46820c30039bf9890f62289655c2338a/f570f/1luou1d-WIS3t-_oMboptGA.png 341w,\n/static/46820c30039bf9890f62289655c2338a/2bff6/1luou1d-WIS3t-_oMboptGA.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">An example idea maze (source: startup.stanford.edu)</figcaption>\n  </figure></p>\n<p>Another clue to the future is to look for communities that embrace rapid, Darwinian experimentation. Entrepreneurs are in the business of running experiments (and VCs are in the business of funding experiments). Experiments are how we collectively navigate through the startup <a href=\"/2013/08/04/the-idea-maze/\">idea maze</a> to discover products and business models that work.</p>\n<p>Even if you have no interest in video games, if you are interested in media, you should be interested in <a href=\"https://en.wikipedia.org/wiki/PC_game\">PC gaming</a>. Over the past decade, PC gaming has, for a variety of reasons, become a hotbed of experimentation. These experiments have resulted in a new practices and business models — some of them surprising and counterintuitive — that provide valuable lessons for the rest of the media industry.</p>\n<h2>PC games are way bigger than you think</h2>\n<p>A lot of PC gaming happens on <a href=\"http://www.valvesoftware.com/\">Valve Software’s</a> <a href=\"http://store.steampowered.com/\">Steam</a> platform, which has over <a href=\"https://www.vg247.com/2015/02/24/steam-has-over-125-million-active-users-8-9m-concurrent-peak/\">125 million active users</a>. If you aren’t a gamer, you may not have even heard of Steam, and probably haven’t heard of many it’s roughly 4,500 games, even the most popular ones.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/5edda99c038aee503bebd13853ee9891/8f8c6/19ImGNbCQwMpdjIMEx9AGFw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 80.27777777777779%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"19ImGNbCQwMpdjIMEx9AGFw\"\n        title=\"19ImGNbCQwMpdjIMEx9AGFw\"\n        src=\"/static/5edda99c038aee503bebd13853ee9891/8f8c6/19ImGNbCQwMpdjIMEx9AGFw.png\"\n        srcset=\"/static/5edda99c038aee503bebd13853ee9891/924ad/19ImGNbCQwMpdjIMEx9AGFw.png 170w,\n/static/5edda99c038aee503bebd13853ee9891/f570f/19ImGNbCQwMpdjIMEx9AGFw.png 341w,\n/static/5edda99c038aee503bebd13853ee9891/8f8c6/19ImGNbCQwMpdjIMEx9AGFw.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>The types of games on Steam vary widely, as do the business models. The most popular game, <a href=\"http://blog.dota2.com/\">Dota 2</a>, is free. It makes money selling in-app items, mostly “cosmetic items” that alter the appearance of characters.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 591px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/d58a864e3b0ecb58bf4db97637ec326f/a615a/1vgeYrK2Z0GZNm_GljOIibA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 63.28257191201353%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Dota 2\"\n        title=\"Dota 2\"\n        src=\"/static/d58a864e3b0ecb58bf4db97637ec326f/a615a/1vgeYrK2Z0GZNm_GljOIibA.png\"\n        srcset=\"/static/d58a864e3b0ecb58bf4db97637ec326f/924ad/1vgeYrK2Z0GZNm_GljOIibA.png 170w,\n/static/d58a864e3b0ecb58bf4db97637ec326f/f570f/1vgeYrK2Z0GZNm_GljOIibA.png 341w,\n/static/d58a864e3b0ecb58bf4db97637ec326f/a615a/1vgeYrK2Z0GZNm_GljOIibA.png 591w\"\n        sizes=\"(max-width: 591px) 100vw, 591px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Dota 2</figcaption>\n  </figure></p>\n<p>Steam takes a revenue share (<a href=\"http://forums.steampowered.com/forums/archive/index.php/t-2073030.html\">roughly</a> 30%) from the games it hosts, and <a href=\"http://www.tweaktown.com/news/46666/report-valve-rakes-1-5-billion-revenue-steam-sales-2014/index.html\">reportedly</a> made $1.5B from its cut last year. (Valve also makes its own games, including some of Steam’s most popular games like Dota 2).</p>\n<p>PC games are a global phenomenon. They are particularly popular in Asia, and above all in South Korea, where they are so popular that the government passed a <a href=\"https://en.wikipedia.org/wiki/Shutdown_law\">law</a> restricting the hours kids could play games, and runs PSAs warning about the dangers of video game addiction:</p>\n<p><img src=\"/73ca87440d60439c88c37c22c11fed27/1hUJ-0zXUe-EZqZUgefY38w.gif\"></p>\n<h2>Putting the “free” back in freemium</h2>\n<p>We’re all familiar with the <a href=\"http://avc.com/2006/03/the_freemium_bu/\">freemium</a> business model popularized by companies like Dropbox: give away something useful, and then charge highly engaged users who want more storage, time, features, etc.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/066da48a04f9eb5be1c8fa5061620513/8f8c6/12rSlVSIYJjGMEn6m_slbjA.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 49.722222222222214%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"South Park’s take on freemium\"\n        title=\"South Park’s take on freemium\"\n        src=\"/static/066da48a04f9eb5be1c8fa5061620513/8f8c6/12rSlVSIYJjGMEn6m_slbjA.png\"\n        srcset=\"/static/066da48a04f9eb5be1c8fa5061620513/924ad/12rSlVSIYJjGMEn6m_slbjA.png 170w,\n/static/066da48a04f9eb5be1c8fa5061620513/f570f/12rSlVSIYJjGMEn6m_slbjA.png 341w,\n/static/066da48a04f9eb5be1c8fa5061620513/8f8c6/12rSlVSIYJjGMEn6m_slbjA.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">South Park’s take on freemium</figcaption>\n  </figure></p>\n<p>The PC gaming world has taken the freemium model to the extreme. In contrast to smartphone games like Candy Crush that are “free-to-play,” PC games like Dota 2 are “free-to-win.” You can’t spend money to get better at the game — that would be seen as corrupting the spirit of fair competition. (PC gamers, like South Park, generally view the smartphone gaming business model as cynical and manipulative). The things you can buy are <a href=\"http://www.theverge.com/2015/2/16/8045369/valve-dota-2-in-game-augmentation-pay-to-win\">mostly</a> cosmetic, like new outfits for your characters or new background soundtracks. <a href=\"https://en.wikipedia.org/wiki/League_of_Legends\">League of Legends</a> (the most popular PC game not on Steam) is estimated to have made <a href=\"http://www.pcgamer.com/league-of-legends-has-made-almost-1-billion-in-microtransactions/\">over $1B</a> last year selling these kinds of cosmetic items.</p>\n<p>PC games are so popular they can also make money from live events. Live gaming competitions have become huge: over 32M people watched the League of Legends championship this year, almost double the number of people who <a href=\"http://www.statista.com/statistics/240377/nba-finals-tv-viewership-in-the-united-states/\">watched</a> the NBA finals.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/b899945e932959da5aa463eecffac9b3/04c30/18FTKMln2S-EsV7HVhRG_fg.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.03644646924829%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"2014 League of Legends championship\"\n        title=\"2014 League of Legends championship\"\n        src=\"/static/b899945e932959da5aa463eecffac9b3/d6856/18FTKMln2S-EsV7HVhRG_fg.jpg\"\n        srcset=\"/static/b899945e932959da5aa463eecffac9b3/c2e49/18FTKMln2S-EsV7HVhRG_fg.jpg 170w,\n/static/b899945e932959da5aa463eecffac9b3/c2dc0/18FTKMln2S-EsV7HVhRG_fg.jpg 341w,\n/static/b899945e932959da5aa463eecffac9b3/d6856/18FTKMln2S-EsV7HVhRG_fg.jpg 681w,\n/static/b899945e932959da5aa463eecffac9b3/04c30/18FTKMln2S-EsV7HVhRG_fg.jpg 878w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">2014 League of Legends championship</figcaption>\n  </figure></p>\n<p>Watching these events online is free, but offline tickets cost $50–$100 each. This is similar to the trend in the music business where concerts have become an increasingly important source of income for musicians. Concert ticket prices have <a href=\"https://www.whitehouse.gov/blog/2013/06/12/rock-and-roll-economics-and-rebuilding-middle-class\">increased</a> dramatically while digital music prices have dropped.</p>\n<p>What the PC game industry figured out is that in a world of abundant media, users have endless choices; instead of fighting for scarcity, fight for attention. Maximize user engagement and money will — with enough experiments — inevitably follow.</p>\n<h2><strong>Embracing remixes and mods</strong></h2>\n<p>In the gaming world, “mods” are user created versions of games or elements of games. Steam has about 4500 games but about <a href=\"https://www.vg247.com/2015/02/24/steam-has-over-125-million-active-users-8-9m-concurrent-peak/\">400 million pieces</a> of user-generated content. Dota itself was <a href=\"https://en.wikipedia.org/wiki/Defense_of_the_Ancients#Development\">originally</a> a user-created mod of another game, <a href=\"https://en.wikipedia.org/wiki/Warcraft_III:_Reign_of_Chaos\">Warcraft 3</a>.</p>\n<p>Contrast this to the music industry, which relies on litigation to aggressively stifle remixing and experimentation. Large music labels have effectively become law firms devoted to protecting their back catalog. Sometimes this means suing their peers, and sometimes this means suing communities of users.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 665px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 26.466165413533837%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAABIElEQVQY0zVPPUvDUBR90l8guOrQSRAqpTjrpoPiIKUuijiIldqlq7sIFTd/gDj4WxJMYmgSQjXNe9o0oYkmeWkM5uN5o/TAPZwL5x7ORQQTgrE5MrFpgnAch4aU4zhJkjiel17kwUARRVGWZVVVFUUBHg6HgiBgjJFlTQxMHNebep++77ueRynVNE3XdeGZd+xxnmdZlqcwf0jTtCiKf42ue73bs+P7bvvm/KLdPDrcO3h6eGSM/YApi1n2xfIZbKxI8zkgDAwQgTbWavWFSmt58aRaXUIVhNBlpwsVDMMg5MMeG649mk5erfc36EnmsG07CALU2W/urqy26rWr7Z3TxubWeuOu36dRBPdRidgPKJ1901KXFMcx/BWGYZIkv6Ww7M+AwIWqAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1rF9a0NBeGKzovQO059iqIg\"\n        title=\"1rF9a0NBeGKzovQO059iqIg\"\n        src=\"/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png\"\n        srcset=\"/static/7436e93d8bc87e0495eae8133c6ccc35/924ad/1rF9a0NBeGKzovQO059iqIg.png 170w,\n/static/7436e93d8bc87e0495eae8133c6ccc35/f570f/1rF9a0NBeGKzovQO059iqIg.png 341w,\n/static/7436e93d8bc87e0495eae8133c6ccc35/7176f/1rF9a0NBeGKzovQO059iqIg.png 665w\"\n        sizes=\"(max-width: 665px) 100vw, 665px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>The end result is a strong chilling effect on new experiments. Almost all new music-related tech products are minor variations of preceding products. It’s too risky and expensive to try something genuinely new.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 63.33333333333333%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"A live DJ session in Turntable.fm\"\n        title=\"A live DJ session in Turntable.fm\"\n        src=\"/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png\"\n        srcset=\"/static/47d4d6dd2b1555909f82675e12ecf0e9/924ad/1aFc0sYHcJ-pTxwD6ddj28A.png 170w,\n/static/47d4d6dd2b1555909f82675e12ecf0e9/f570f/1aFc0sYHcJ-pTxwD6ddj28A.png 341w,\n/static/47d4d6dd2b1555909f82675e12ecf0e9/8f8c6/1aFc0sYHcJ-pTxwD6ddj28A.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">A live DJ session in Turntable.fm</figcaption>\n  </figure></p>\n<p>For example, one of the best music-related experiments in recent history was <a href=\"https://en.wikipedia.org/wiki/Turntable.fm\">Turntable.fm</a>, which invented a brand new way to curate and enjoy music.</p>\n<p>Here’s what the founder said <a href=\"https://medium.com/@billychasen/shutting-down-7958dae1d27b\">when the company shut down</a>:</p>\n<blockquote>\n<p>Ultimately, I didn’t heed the lessons of so many failed music startups. It’s an incredibly expensive venture to pursue and a hard industry to work with. We spent more than a quarter of our cash on lawyers, royalties and services related to supporting music. It’s restrictive. We had to shut down our growth because we couldn’t launch internationally. It’s a long road. It took years to get label deals in place and it also took months of engineering time to properly support them (time which could have been spent on product).</p>\n</blockquote>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 92.0138888888889%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"One Direction fan fiction on Wattpad\"\n        title=\"One Direction fan fiction on Wattpad\"\n        src=\"/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg\"\n        srcset=\"/static/8df4505f43f950da2b797514199ced65/c2e49/1RDKsjy_D9pZatN1Ef1smZQ.jpg 170w,\n/static/8df4505f43f950da2b797514199ced65/f03e0/1RDKsjy_D9pZatN1Ef1smZQ.jpg 288w\"\n        sizes=\"(max-width: 288px) 100vw, 288px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">One Direction fan fiction on Wattpad</figcaption>\n  </figure></p>\n<p>Remixing books is popular on services like Wattpad where users write fanfiction inspired by books, celebrities, movies, etc. From a <a href=\"https://en.wikipedia.org/wiki/Legal_issues_with_fan_fiction\">legal perspective</a>, some fanfiction could be seen as copyright or trademark infringement. From a business perspective, the book industry would be smart to learn from the PC gaming business. Instead of fighting over pieces of a <a href=\"http://mic.com/articles/91697/you-ll-be-shocked-at-how-much-time-young-people-spend-reading-each-day#.CeR7XhAsn\">shrinking pie</a>, try to grow the pie by getting more people to read and write books.</p>\n<p>Another form of video game remixing happens on broadcasting sites like <a href=\"http://www.twitch.tv/\">Twitch</a>, where you can watch live videos of people playing games (while they chat with the audience — the end result is an interesting mix between video games and talk radio).</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 360px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 55.27777777777778%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Fallout 4 player on Twitch.tv\"\n        title=\"Fallout 4 player on Twitch.tv\"\n        src=\"/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png\"\n        srcset=\"/static/fb7cfa48decc89695a87f9f61905cb47/924ad/1tc2aabGj2sMt9A4lAOzO7g.png 170w,\n/static/fb7cfa48decc89695a87f9f61905cb47/f570f/1tc2aabGj2sMt9A4lAOzO7g.png 341w,\n/static/fb7cfa48decc89695a87f9f61905cb47/8f8c6/1tc2aabGj2sMt9A4lAOzO7g.png 360w\"\n        sizes=\"(max-width: 360px) 100vw, 360px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Fallout 4 player on Twitch.tv</figcaption>\n  </figure></p>\n<p>If you ask people who watch Twitch why they do so, many will say that it’s easier and cheaper than playing the game themselves. Legally, it would probably be easy for the games industry to crack down on broadcasting, but instead they have encouraged it, seeing it as a new way to engage users and generate revenue.</p>\n<h2>Crowdfunding and user feedback</h2>\n<p>PC gaming has enthusiastically embraced crowdfunding. On Kickstarter, video games (most of of which PC games) is the <a href=\"https://www.kickstarter.com/help/stats\">highest-funded category</a>:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 503px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/e923419242b1efcc9bc17ae40c549422/d6c85/1NIzpyJz5DoKssFW71_nIoQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 46.918489065606366%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1NIzpyJz5DoKssFW71 nIoQ\"\n        title=\"1NIzpyJz5DoKssFW71 nIoQ\"\n        src=\"/static/e923419242b1efcc9bc17ae40c549422/d6c85/1NIzpyJz5DoKssFW71_nIoQ.png\"\n        srcset=\"/static/e923419242b1efcc9bc17ae40c549422/924ad/1NIzpyJz5DoKssFW71_nIoQ.png 170w,\n/static/e923419242b1efcc9bc17ae40c549422/f570f/1NIzpyJz5DoKssFW71_nIoQ.png 341w,\n/static/e923419242b1efcc9bc17ae40c549422/d6c85/1NIzpyJz5DoKssFW71_nIoQ.png 503w\"\n        sizes=\"(max-width: 503px) 100vw, 503px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>And this doesn’t count all the games crowdfunded elsewhere, including the largest crowdfunding project ever: a PC game called <a href=\"https://robertsspaceindustries.com/\">Star Citizen</a> that has raised over $94 million from over 1 million users.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/041851246586ebdb96a40839336e645e/2bff6/1_LGj50-ex36_uGEqRsWw_A.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 63.19444444444444%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Star Citizen has 4M comments in its user forums\"\n        title=\"Star Citizen has 4M comments in its user forums\"\n        src=\"/static/041851246586ebdb96a40839336e645e/2bff6/1_LGj50-ex36_uGEqRsWw_A.png\"\n        srcset=\"/static/041851246586ebdb96a40839336e645e/924ad/1_LGj50-ex36_uGEqRsWw_A.png 170w,\n/static/041851246586ebdb96a40839336e645e/f570f/1_LGj50-ex36_uGEqRsWw_A.png 341w,\n/static/041851246586ebdb96a40839336e645e/2bff6/1_LGj50-ex36_uGEqRsWw_A.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Star Citizen has 4M comments in its user forums</figcaption>\n  </figure></p>\n<p>The money that comes from crowdfunding is obviously important, but just as important is the user participation it fosters. Almost all crowdfunded video game projects are accompanied by extremely active user discussion forums.</p>\n<p>A close cousin to crowdfunding is the trend of pre-releasing games before they are finished. Minecraft is probably the most famous PC game that succeeded during pre-release, selling over a million copies while <a href=\"https://en.wikipedia.org/wiki/Minecraft#Reception\">still in beta</a>. In 2015, <a href=\"http://www.gamesindustry.biz/articles/2015-09-02-half-of-steams-million-sellers-in-2015-are-on-early-access?utm_source=newsletter&utm_medium=email&utm_campaign=european-daily\">three of the six top selling games</a> on Steam were pre-release (these three games were not free-to-play, which means users paid $10-$20 to buy them despite the games being incomplete and buggy). The developers get the benefit of continuous user feedback, and users get to play and contribute to games they love.</p>\n<p>Another way to describe what’s going on here is a shift from a <em>wholesale</em> to a <em>retail</em> media model. As Buzzfeed’s Jonah Peretti <a href=\"https://www.youtube.com/watch?v=8N5jJYswREM\">says</a>:</p>\n<blockquote>\n<p>The big problem with traditional media is you create content and get back money, but you don’t have any relationship with the consumer that gives you back knowledge or data to get better over time. We like to be in places where the model is to have ideas and be able to test those ideas with real audiences. It’s both an art and science — you learn and get better. That means thinking of media as a service and not just a product. Tech companies tend to think of themselves as retailers where they know what is the customer doing. Traditional media company think themselves wholesalers. They will essentially sell into any window — whoever pays them the most. A retailer wants to understand the customer and wants understand their experience.</p>\n</blockquote>\n<p>Companies like BuzzFeed pioneered the retail model for ad-supported media. The PC games industry pioneered the retail model for transaction-supported media.</p>\n<h2>Peeking into the future</h2>\n<p>Software is <a href=\"http://www.wsj.com/articles/SB10001424053111903480904576512250915629460\">eating</a> the world, and the internet is <a href=\"http://qz.com/416416/we-now-spend-more-than-eight-hours-a-day-consuming-media/\">eating media</a>:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/67f3329b3d28aa438930b751a8c69fe9/2bff6/1K4ItafU0ybT5arlf3P_8hw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 48.611111111111114%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1K4ItafU0ybT5arlf3P 8hw\"\n        title=\"1K4ItafU0ybT5arlf3P 8hw\"\n        src=\"/static/67f3329b3d28aa438930b751a8c69fe9/2bff6/1K4ItafU0ybT5arlf3P_8hw.png\"\n        srcset=\"/static/67f3329b3d28aa438930b751a8c69fe9/924ad/1K4ItafU0ybT5arlf3P_8hw.png 170w,\n/static/67f3329b3d28aa438930b751a8c69fe9/f570f/1K4ItafU0ybT5arlf3P_8hw.png 341w,\n/static/67f3329b3d28aa438930b751a8c69fe9/2bff6/1K4ItafU0ybT5arlf3P_8hw.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>Older forms of media — TV, movies, books, music, etc — can thrive in this new world. By 2020, four billion people worldwide <a href=\"http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world\">will have</a> internet-connected smartphones. The addressable market for media companies is orders-of-magnitude larger than ever before.</p>\n<p>It is possible for companies to adapt even within industries dominated by old models. For example, Netflix has successfully applied the retail media model to an industry segment dominated by wholesalers:</p>\n<blockquote>\n<p>“We are just a learning machine. Every time we put out a new show, we are analyzing it, figuring out what worked and what didn’t so we get better next time.” — <a href=\"http://www.businessinsider.com/netflix-ceo-says-all-tv-will-be-on-internet-in-10-to-20-years-2015-9\">Reed Hastings, Netflix</a></p>\n</blockquote>\n<p>The internet renders business models focused on scarcity and litigation obsolete. But, as the PC gaming market shows, it also unlocks lucrative new business models, and lets creators connect with consumers in new and exciting ways.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/10/23/gordon-moore-on-self-driving-cars",
      "title": "Gordon Moore on self-driving cars",
      "description": "“I never thought I’d see autonomous automobiles driving on the freeways. It wasn’t many years ago they put out a request to see who could…",
      "url": "https://cdixon.org/2015/10/23/gordon-moore-on-self-driving-cars",
      "published": "2015-10-23T00:00:00.000Z",
      "updated": "2015-10-23T00:00:00.000Z",
      "content": "<p>“I never thought I’d see autonomous automobiles driving on the freeways. It wasn’t many years ago [they] put out a request to see who could build a car that could go across the Mojave Desert to Las Vegas from a place in Southern California, and several engineering teams across the country set out to do this. Nobody got more than about 300 yards before there was a problem. Two years later, they made the full 25-mile trip across this desert track, and which I thought was a huge achievement, and from that it was just a blink before they were driving on the freeways.”</p>\n<p>source: <a href=\"http://www.nytimes.com/2015/05/13/opinion/thomas-friedman-moores-law-turns-50.html?mabReward=CTM&action=click&pgtype=Homepage&region=CColumn&module=Recommendation&src=rechp&WT.nav=RecEngine&_r=1\">NYTimes</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/10/17/one-man-came-to-mozart-and-asked-him-how-to-write-a-symphony",
      "title": "One man came to Mozart and asked him how to write a symphony.",
      "description": "One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You…",
      "url": "https://cdixon.org/2015/10/17/one-man-came-to-mozart-and-asked-him-how-to-write-a-symphony",
      "published": "2015-10-17T00:00:00.000Z",
      "updated": "2015-10-17T00:00:00.000Z",
      "content": "<blockquote>\n<p>One man came to Mozart and asked him how to write a symphony. Mozart replied, “You are too young to write a symphony.” The man said, “You were writing symphonies when you were 10 years of age, and I am 21.” Mozart said, “Yes, but I didn’t run around asking people how to do it.”</p>\n</blockquote>\n<p><a href=\"http://25iq.com/2015/10/10/a-dozen-things-ive-learned-from-charlie-munger-about-moats/\">source</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/06/27/keybase-bringing-public-key-cryptography-to-mainstream-users",
      "title": "Keybase: bringing public-key cryptography to mainstream users",
      "description": "Today I’m excited to announce that a16z is leading a $10.8M Series A financing of Keybase, a company that is trying to make the internet…",
      "url": "https://cdixon.org/2015/06/27/keybase-bringing-public-key-cryptography-to-mainstream-users",
      "published": "2015-06-27T00:00:00.000Z",
      "updated": "2015-06-27T00:00:00.000Z",
      "content": "<p>Today I’m excited to <a href=\"https://keybase.io/blog/2015-07-15/keybase-raises-series-a\">announce</a> that <a href=\"http://www.a16z.com\">a16z</a> is leading a $10.8M Series A financing of <a href=\"http://www.keybase.io\">Keybase</a>, a company that is trying to make the internet more secure by making public-key cryptography accessible to mainstream internet users. I’ll be joining Keybase’s board.</p>\n<p>Almost every day we read about another major internet security breach. Recent examples include the <a href=\"https://en.wikipedia.org/wiki/Sony_Pictures_Entertainment_hack\">Sony Pictures hack</a>, in which confidential business emails were stolen and made public, and the <a href=\"https://en.wikipedia.org/wiki/2014_celebrity_photo_hack\">Apple iCloud hack</a>, in which private celebrity photos were stolen and made public.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 571px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 31.698774080560423%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Major security breaches have become frighteningly common\"\n        title=\"Major security breaches have become frighteningly common\"\n        src=\"/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png\"\n        srcset=\"/static/1b25886d5c0baf31e8b217c7a5709e5e/924ad/15bwgo_w6Ppmx1hZBY-UqaQ.png 170w,\n/static/1b25886d5c0baf31e8b217c7a5709e5e/f570f/15bwgo_w6Ppmx1hZBY-UqaQ.png 341w,\n/static/1b25886d5c0baf31e8b217c7a5709e5e/0b5d2/15bwgo_w6Ppmx1hZBY-UqaQ.png 571w\"\n        sizes=\"(max-width: 571px) 100vw, 571px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Major security breaches have become frighteningly common</figcaption>\n  </figure></p>\n<p>Hackers are increasingly sophisticated, with the skills and resources to penetrate security systems that were developed mostly for a prior generation of threats. People are — quite justifiably — starting to question whether they can trust technology companies with their private information.</p>\n<p>This is happening despite the fact that technology exists that can provide complete end-to-end security: public-key cryptography. Public-key cryptography was invented by mathematicians and computer scientists in the 1970s. It is hard to overstate the significance of this invention. As MIT computer science professor <a href=\"http://www.scottaaronson.com/\">Scott Aaronson</a> <a href=\"http://www.scottaaronson.com/democritus/lec8.html\">explains</a>:</p>\n<blockquote>\n<p>Even though cryptography has influenced human affairs for millennia, developments over the last thirty years have completely — yes, completely — changed our understanding of it. If you plotted when the basic mathematical discoveries in cryptography were made, you’d see a few in antiquity, maybe a few from the Middle Ages till the 1800's, one in the 1920's (the one-time pad), a few more around World War II, and then, after the birth of computational complexity theory in the 1970's, <strong>boom boom boom boom boom boom boom</strong>…</p>\n</blockquote>\n<p>Using public-key cryptography, person A can send person B a message that <em>nobody else in the world</em> except person B can decrypt, even though persons A and B have never communicated before. Person A simply needs to know person B’s “public key” (a long number that can be listed in public) and use that to encrypt the message. Person B uses a “private key” (another long number that has a mathematical relationship to the public key and is kept private) to decrypt the m tessage.</p>\n<p>Public-key cryptography means you don’t need to trust email providers, messaging companies, social networks, search engines, ISPs, cellular carriers, venture capitalists, tech startups, politicians, legal agreements, IT departments, and so on. You just need to trust math.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 144px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 100%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1zKRxnaArGgVXMV4daSk5nA\"\n        title=\"1zKRxnaArGgVXMV4daSk5nA\"\n        src=\"/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg\"\n        srcset=\"/static/d81f7199bc33942849177c49e470be41/bb9ce/1zKRxnaArGgVXMV4daSk5nA.jpg 144w\"\n        sizes=\"(max-width: 144px) 100vw, 144px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>So why isn’t public-key cryptography widely used? It is, but in diluted form: various forms of cryptography are baked into almost every popular internet service. Yet the hacks and data breaches continue, mainly because the otherwise invulnerable cryptographic protocols are embedded within larger systems in which vulnerabilities are introduced by software bugs, employee mistakes, product design tradeoffs, legal constraints, management decisions, etc.</p>\n<p>The ideal solution would be for users to adopt public-key cryptography themselves, in its pure, unadulterated form, without having to trust third-party service providers. Today, you’ll see this being done on occasion by more tech-savvy internet users. For example, here is <a href=\"https://twitter.com/kashhill\">Kashmir Hill</a>, an investigative journalist for <a href=\"http://fusion.net/\">Fusion</a>, publishing her <a href=\"https://twitter.com/kashhill/status/583653381408849921\">public key</a> on Twitter:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 432px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 31.25%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"A journalist publishing her public key\"\n        title=\"A journalist publishing her public key\"\n        src=\"/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png\"\n        srcset=\"/static/1ffc538e44e9b6ce30a2b84c2e0f85de/924ad/1x40yC4iozcm4U_GeKtQFsw.png 170w,\n/static/1ffc538e44e9b6ce30a2b84c2e0f85de/f570f/1x40yC4iozcm4U_GeKtQFsw.png 341w,\n/static/1ffc538e44e9b6ce30a2b84c2e0f85de/2bff6/1x40yC4iozcm4U_GeKtQFsw.png 432w\"\n        sizes=\"(max-width: 432px) 100vw, 432px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">A journalist publishing her public key</figcaption>\n  </figure></p>\n<p>To send her an encrypted message, however, you’d have use software tools that are generally too complicated and cumbersome for mainstream internet users. As a result, public-key cryptography is mostly limited to a small circle of tech savvy security enthusiasts.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 180px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 134.44444444444446%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"xkcd.com/1269/\"\n        title=\"xkcd.com/1269/\"\n        src=\"/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png\"\n        srcset=\"/static/063e3b69a7ec2d6b291dce71fe66bd43/924ad/1h4wTN_yogOBTiUJp8fj1FQ.png 170w,\n/static/063e3b69a7ec2d6b291dce71fe66bd43/b059c/1h4wTN_yogOBTiUJp8fj1FQ.png 180w\"\n        sizes=\"(max-width: 180px) 100vw, 180px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">xkcd.com/1269/</figcaption>\n  </figure></p>\n<p>The idea behind Keybase is to make public-key cryptography accessible to everyday internet users. Keybase is, at its core, a database that connects people’s social media identities to their public cryptographic keys. For example, here’s the Keybase profile for <a href=\"http://www.stripe.com\">Stripe</a> co-founder <a href=\"http://www.keybase.io/pc\">Patrick Collison</a>:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 45.238095238095234%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Patrick’s keybase profile\"\n        title=\"Patrick’s keybase profile\"\n        src=\"/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png\"\n        srcset=\"/static/df9215941e799a4d7e6271855d2998fe/924ad/1OQich6uTLM8k7Hc1aBlWNg.png 170w,\n/static/df9215941e799a4d7e6271855d2998fe/f570f/1OQich6uTLM8k7Hc1aBlWNg.png 341w,\n/static/df9215941e799a4d7e6271855d2998fe/1654f/1OQich6uTLM8k7Hc1aBlWNg.png 504w\"\n        sizes=\"(max-width: 504px) 100vw, 504px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Patrick’s keybase profile</figcaption>\n  </figure></p>\n<p>Each identity listed on his profile has been cryptographically verified to be owned by Patrick (other people can verify this for themselves by following the links on the page). So if you interact with Patrick as, say, <em>patrickc</em> on Twitter, you know the public key listed here is owned by the same person.</p>\n<p>There are many things you can do with public-key cryptography besides sending messages. You can share files with individuals or with groups. You can verify that a file was created by the stated author and wasn’t altered (this use case is common with software developers who want to verify code they download doesn’t contain malware). In the future, you should also be able to use public-key cryptography to login to websites instead of having to remember passwords (this is already common behavior among developers who use cryptographic methods to login to servers)</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 216px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 23.61111111111111%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Keybase is developing native apps\"\n        title=\"Keybase is developing native apps\"\n        src=\"/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png\"\n        srcset=\"/static/357754298b0e01ebae9cd8a6b321fade/924ad/12RYi_5_AA0Q2il0DPTk-kQ.png 170w,\n/static/357754298b0e01ebae9cd8a6b321fade/2914c/12RYi_5_AA0Q2il0DPTk-kQ.png 216w\"\n        sizes=\"(max-width: 216px) 100vw, 216px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Keybase is developing native apps</figcaption>\n  </figure></p>\n<p>A database by itself is useful to only the most tech savvy users. So Keybase is also building a set of applications to complement the database. These include native software clients for all the major platforms (iOS, Android, OS X, Linux, and Windows) that make it easy to do secure messaging and file sharing using the Keybase directory. Keybase will remain in invite-only private beta until the client software is ready.</p>\n<p>A key design principle of Keybase is: <em>you don’t have to trust Keybase</em>. All the relevant software is open source and therefore independently auditable, fork-able, etc. The keybase directory is fully public and therefore also fully auditable, fork-able, etc. Everything you need to verify that you can trust the end-to-end cryptography is open and auditable. Keybase could get hacked or acquired or shut down and it wouldn’t affect the security of anything that uses Keybase. You don’t need to trust Keybase. <strong>You only need to trust math.</strong></p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 144px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 84.72222222222221%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"Chris and Max\"\n        title=\"Chris and Max\"\n        src=\"/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png\"\n        srcset=\"/static/c569f020a504cf70b8877f0cd418d0aa/b6dc4/1xx_B0AAVl3jWKshZr-zqvQ.png 144w\"\n        sizes=\"(max-width: 144px) 100vw, 144px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Chris and Max</figcaption>\n  </figure></p>\n<p>The founders of Keybase, <a href=\"https://keybase.io/chris\">Chris Coyne</a> and <a href=\"https://keybase.io/max\">Max Krohn</a>, met at Harvard where they studied math and computer science and started their first company, <a href=\"https://en.wikipedia.org/wiki/SparkNotes\">SparkNotes</a>. Max also got his PhD from MIT where he <a href=\"http://pdos.csail.mit.edu/~max/pubs/\">focused</a> on security and file systems. Chris and Max and two other friends then founded <a href=\"https://en.wikipedia.org/wiki/OkCupid\">OKCupid</a>, where Chris and Max ran product and technology up until the company was acquired by Match.com in 2011. Chris and Max have both technical depth and consumer design savvy, an ideal combination for a project like Keybase.</p>\n<p>Many of the best internet services were derived from ideas that came from Unix and the Unix-related academic and open-source communities:</p>\n<p>Entrepreneurs have had considerable success adapting these amazing tools for mainstream use. Public-key cryptography has been cloistered within niche technical communities for too long. The time is right to bring it to the mainstream. We are thrilled to back the Keybase team on their mission to make that happen.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 288px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 26.38888888888889%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1n7G6jdQsTC9NeaMsLy7SyQ\"\n        title=\"1n7G6jdQsTC9NeaMsLy7SyQ\"\n        src=\"/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png\"\n        srcset=\"/static/2c96826c661493d83d7e4577316b381f/924ad/1n7G6jdQsTC9NeaMsLy7SyQ.png 170w,\n/static/2c96826c661493d83d7e4577316b381f/337b6/1n7G6jdQsTC9NeaMsLy7SyQ.png 288w\"\n        sizes=\"(max-width: 288px) 100vw, 288px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p><strong>Keybase is hiring — more info <a href=\"https://keybase.io/jobs\">here</a>.</strong></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/06/07/the-babe-ruth-effect-in-venture-capital",
      "title": "The Babe Ruth Effect in Venture Capital",
      "description": "\"How to hit home runs: I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can…",
      "url": "https://cdixon.org/2015/06/07/the-babe-ruth-effect-in-venture-capital",
      "published": "2015-06-07T00:00:00.000Z",
      "updated": "2015-06-07T00:00:00.000Z",
      "content": "<blockquote>\n<p>\"How to hit home runs: I swing as hard as I can, and I try to swing right through the ball... The harder you grip the bat, the more you can swing it through the ball, and the farther the ball will go. I swing big, with everything I've got. I hit big or I miss big.\"</p>\n<p>— Babe Ruth</p>\n</blockquote>\n<p>One of the hardest concepts to internalize for those new to VC is what is known as the “Babe Ruth effect”:</p>\n<blockquote>\n<p>Building a portfolio that can deliver superior performance requires that you evaluate each investment using expected value analysis. What is striking is that the leading thinkers across varied fields — including horse betting, casino gambling, and investing — all emphasize the same point. We call it the Babe Ruth effect: even though Ruth struck out a lot, he was one of baseball’s greatest hitters.</p>\n<p>— \"The Babe Ruth Effect: Frequency vs Magnitude” [<a href=\"http://turtletrader.com/pdfs/babe-ruth.pdf\">pdf</a>]</p>\n</blockquote>\n<p>The Babe Ruth effect occurs in many categories of investing, but is especially pronounced in VC. As Peter Thiel <a href=\"http://25iq.com/2014/07/13/a-dozen-things-ive-learned-from-peter-thiel/\">observes</a>:</p>\n<blockquote>\n<p>Actual [venture capital] returns are incredibly skewed. The more a VC understands this skew pattern, the better the VC. Bad VCs tend to think the dashed line is flat, i.e. that all companies are created equal, and some just fail, spin wheels, or grow. In reality you get a power law distribution.</p>\n</blockquote>\n<p>The Babe Ruth effect is hard to internalize because people are generally predisposed to avoid losses. Behavioral economists have famously <a href=\"http://en.wikipedia.org/wiki/Loss_aversion\">demonstrated</a> that people feel a lot worse about losses of a given size than they feel good about gains of the same size. Losing money feels bad, even if it is part of an investment strategy that succeeds in aggregate.</p>\n<p>People usually cite anecdotal cases when discussing this topic, because it's difficult to get access to comprehensive VC performance data. <a href=\"http://www.horsleybridge.com/\">Horsley Bridge</a>, a highly respected investor (Limited Partner) in many VC funds, was kind enough to share with me aggregated, anonymous historical data on the distribution of investment returns across the hundreds of VC funds they've invested in since 1985.</p>\n<p>As expected, the returns are highly concentrated: about ~6% of investments representing 4.5% of dollars invested generated ~60% of the total returns. Let's dig into the data a little more to see what separates good VC funds from bad VC funds.</p>\n<p><em>Home runs:</em> As expected, successful funds have more \"home run\" investments (defined as investments that return >10x):</p>\n<p><a href=\"images/screenshot-2015-06-06-11-55-45.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 65.44240400667779%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAABYlAAAWJQFJUiTwAAABOklEQVQoz42SiY6DIBRF+f9fmw+YdlJrXOtSNxYRFOxVGmNN0+kjEiLvcu7jQeZ5nqZJCDF/HdZatyBOzBhzfz+HsQZpTDUpuy7iuq6VUl8i8Y1GhezMx24Rl2XZ933XdZ/JYMLsaMaI/knN15MsqaoK4n9qXJmYE3YRI91ckCRJwjDUWr/VLcA1T03yVP8wVb9cWJqmvu8D/s6nXfVT2Scx89rhvtDXeIrzPIfztz4RN+EH9ERXoHO+zyNZlqHJUsqlDXbedoWmCfdiehmNdv6dlxcyxIvSmO0auO5Sfs1FoM1wMHIIMgwDNpWR6F4mwpT5IT03qtib3GhHsuOVVeHdfhmjspfVvSmykgveNE0URbgU1IW3FMdx27ZYY3bvgjyP2VWLtikMrSELggCNpJQiDR5ddZjdo3wA+1j4kiK0bjUAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screenshot 2015 06 06 11 55 45\"\n        title=\"screenshot 2015 06 06 11 55 45\"\n        src=\"/static/0f6e844996f72f89dbefb507ac6e0945/94a55/screenshot-2015-06-06-11-55-45.png\"\n        srcset=\"/static/0f6e844996f72f89dbefb507ac6e0945/924ad/screenshot-2015-06-06-11-55-45.png 170w,\n/static/0f6e844996f72f89dbefb507ac6e0945/f570f/screenshot-2015-06-06-11-55-45.png 341w,\n/static/0f6e844996f72f89dbefb507ac6e0945/94a55/screenshot-2015-06-06-11-55-45.png 681w,\n/static/0f6e844996f72f89dbefb507ac6e0945/e8f76/screenshot-2015-06-06-11-55-45.png 1022w,\n/static/0f6e844996f72f89dbefb507ac6e0945/2b6f6/screenshot-2015-06-06-11-55-45.png 1198w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>(For all the charts shown, the X-axis is the performance of the VC funds: great VC funds are on the right and bad funds are on the left.)</p>\n<p>Great funds not only have more home runs, they have home runs of greater magnitude. Here's a chart that looks at the average performance of the \"home run\" (>10x) investments:</p>\n<p><a href=\"images/screenshot-2015-06-06-11-55-55.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 60.930232558139544%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAABG0lEQVQoz41S23KEIAz1//+uD+1DZ6drZQXFsnSVcAcbL+OsPnQNDHO4nJyQpBjHMedsrR1PG75fQHHYv6CN0zOmysHLlZxSijGelNVBUfW1eCmEEIQQrfUZZszxNlxCcmvYjLGqql5Gvki1QJT/3bYF57yua+fcgZxnSzim8+lK2o7DbZcwDPt/5ZSjS4ZrcpFvm+ZKbhpWlqWPFnxvApigByd1GHRUP5peH+8tVFzfpOXo4uC38N4HH4VqyfApDMNZPj4a+Ja2RRf4w5jD87d35OecrHPDaQ4bUxwjlnNKwWzHJlEKpLwbowEUpbW4C2tN3/eUUgDA/uu6DjFW1BiDacJ112GbP9RBHEJAAhYCy4EYT7ZGWvQR/AFDIL9s6Bn47QAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screenshot 2015 06 06 11 55 55\"\n        title=\"screenshot 2015 06 06 11 55 55\"\n        src=\"/static/38e297c82eed5b8ebfad830f87fa5251/94a55/screenshot-2015-06-06-11-55-55.png\"\n        srcset=\"/static/38e297c82eed5b8ebfad830f87fa5251/924ad/screenshot-2015-06-06-11-55-55.png 170w,\n/static/38e297c82eed5b8ebfad830f87fa5251/f570f/screenshot-2015-06-06-11-55-55.png 341w,\n/static/38e297c82eed5b8ebfad830f87fa5251/94a55/screenshot-2015-06-06-11-55-55.png 681w,\n/static/38e297c82eed5b8ebfad830f87fa5251/e8f76/screenshot-2015-06-06-11-55-55.png 1022w,\n/static/38e297c82eed5b8ebfad830f87fa5251/8d6e5/screenshot-2015-06-06-11-55-55.png 1290w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>The home runs for good funds are around 20x, but the home runs for great funds are almost 70x. As Bill Gurley <a href=\"http://25iq.com/2013/09/09/a-dozen-things-ive-learned-from-bill-gurley-about-investing-and-business/\">says</a>: “Venture capital is not even a home run business. It’s a grand slam business.\"</p>\n<p><em>Strikeouts:</em> The Y-axis on the this chart is the percentage of investments that lose money:<a href=\"images/screen-shot-2015-05-25-at-9-48-04-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 65.43859649122807%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 05 25 at 9 48 04 pm\"\n        title=\"screen shot 2015 05 25 at 9 48 04 pm\"\n        src=\"/static/2c25c398e5f89ee7ab732eae076e0a54/94a55/screen-shot-2015-05-25-at-9-48-04-pm.png\"\n        srcset=\"/static/2c25c398e5f89ee7ab732eae076e0a54/924ad/screen-shot-2015-05-25-at-9-48-04-pm.png 170w,\n/static/2c25c398e5f89ee7ab732eae076e0a54/f570f/screen-shot-2015-05-25-at-9-48-04-pm.png 341w,\n/static/2c25c398e5f89ee7ab732eae076e0a54/94a55/screen-shot-2015-05-25-at-9-48-04-pm.png 681w,\n/static/2c25c398e5f89ee7ab732eae076e0a54/e8f76/screen-shot-2015-05-25-at-9-48-04-pm.png 1022w,\n/static/2c25c398e5f89ee7ab732eae076e0a54/f4f98/screen-shot-2015-05-25-at-9-48-04-pm.png 1140w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a>This is the same chart with the Y-axis weighted by dollars invested per investment:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/4ce52870185b61838bc37f4e0d0a560f/4db5f/screen-shot-2015-05-25-at-9-45-05-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 64.64646464646465%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 05 25 at 9 45 05 pm\"\n        title=\"screen shot 2015 05 25 at 9 45 05 pm\"\n        src=\"/static/4ce52870185b61838bc37f4e0d0a560f/94a55/screen-shot-2015-05-25-at-9-45-05-pm.png\"\n        srcset=\"/static/4ce52870185b61838bc37f4e0d0a560f/924ad/screen-shot-2015-05-25-at-9-45-05-pm.png 170w,\n/static/4ce52870185b61838bc37f4e0d0a560f/f570f/screen-shot-2015-05-25-at-9-45-05-pm.png 341w,\n/static/4ce52870185b61838bc37f4e0d0a560f/94a55/screen-shot-2015-05-25-at-9-45-05-pm.png 681w,\n/static/4ce52870185b61838bc37f4e0d0a560f/e8f76/screen-shot-2015-05-25-at-9-45-05-pm.png 1022w,\n/static/4ce52870185b61838bc37f4e0d0a560f/4db5f/screen-shot-2015-05-25-at-9-45-05-pm.png 1188w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>As expected, lots of investments lose money. Venture capital is a risky business.</p>\n<p>Notice that the curves are U-shaped. It isn't surprising that the bad funds lose money a lot, or that the good funds lose money less often than the bad funds. What is interesting and perhaps surprising is that the great funds lose money more often than good funds do<em>.</em> The best VCs funds truly do exemplify the Babe Ruth effect: they swing hard, and either hit big or miss big. You can't have grand slams without a lot of strikeouts.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/05/12/exponential-curves-feel-gradual-and-then-sudden",
      "title": "Exponential curves feel gradual and then sudden",
      "description": "\"How did you go bankrupt?\" \"Two ways. Gradually, then suddenly.” – Ernest Hemingway, The Sun Also Rises The core growth process in the…",
      "url": "https://cdixon.org/2015/05/12/exponential-curves-feel-gradual-and-then-sudden",
      "published": "2015-05-12T00:00:00.000Z",
      "updated": "2015-05-12T00:00:00.000Z",
      "content": "<blockquote>\n<p>\"How did you go bankrupt?\" \"Two ways. Gradually, then suddenly.”</p>\n<p>– Ernest Hemingway, The Sun Also Rises</p>\n</blockquote>\n<p>The core <a href=\"http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/\">growth</a> <a href=\"https://twitter.com/cdixon/status/551943341563457538\">process</a> in the technology business is a mutually reinforcing, multi-step, positive feedback loop between platforms and applications.  This leads to exponential growth curves (Peter Thiel calls them <a href=\"http://blakemasters.com/post/21869934240/peter-thiels-cs183-startup-class-7-notes-essay\">power law</a> curves), which in idealized form look like:</p>\n<p><a href=\"images/screen-shot-2015-05-12-at-5-46-11-pm1.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 59.227467811158796%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAAAu0lEQVQoz52S6QqEIBSFe/8njHSElH7Zhpn7MjdhYoYYyC4XUTnH76A2Oef0qMDY5PpKIeTTXIGLEfS678O+PyEn5zQh9eSCdeNoGCvHpLrYIFYYRWNSSXE7dnE6zk9sRexD5v3ettH7VCw3yCD6OBVCfl1P7C8ZJqUv9uSWBZhuno9ljH8+CexZG7WOSkEHKS1j8DCGUti/xmoU5xulchgEIaLrBEIbxseIkMAvPU1GSg9XBWWt+yowvwFQFcPtyt2pjwAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 05 12 at 5 46 11 pm1\"\n        title=\"screen shot 2015 05 12 at 5 46 11 pm1\"\n        src=\"/static/1d6abd11f72e426e83625e0d5a2592cc/94a55/screen-shot-2015-05-12-at-5-46-11-pm1.png\"\n        srcset=\"/static/1d6abd11f72e426e83625e0d5a2592cc/924ad/screen-shot-2015-05-12-at-5-46-11-pm1.png 170w,\n/static/1d6abd11f72e426e83625e0d5a2592cc/f570f/screen-shot-2015-05-12-at-5-46-11-pm1.png 341w,\n/static/1d6abd11f72e426e83625e0d5a2592cc/94a55/screen-shot-2015-05-12-at-5-46-11-pm1.png 681w,\n/static/1d6abd11f72e426e83625e0d5a2592cc/2c3d7/screen-shot-2015-05-12-at-5-46-11-pm1.png 932w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>The most prominent recent <a href=\"http://ben-evans.com/benedictevans/2014/10/28/presentation-mobile-is-eating-the-world\">example</a> of this was the positive feedback loop between smartphones (iOS and Android phones) and smartphone apps (FB, WhatsApp, etc):</p>\n<p><a href=\"images/screen-shot-2015-05-12-at-6-05-30-pm1.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 55.047318611987386%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAABYlAAAWJQFJUiTwAAABKUlEQVQoz3WS7ZKDIAxFef8ntLttsVRRiAoCtmp/dK+4op3ZPYOZTELMF+y9Mc9z13UhBMimaay13nsTcc7B2LYt7OM4phCWNFivnN9utyzLLpcL5zzP868I9NPpBCmEGIZhD369XnNkmiY4Ho/HKgEsybVKkO4DZqxFVagQdWqtiDRQCgr5yOp1kaRAxcd0Vai6RkfWGjTsD7h/8bYlZw1br/d9j8H0nxyvH6296YwqvfMsJVmn+nci70PYygrBUuV7C2UPjrv59ftPkA9LImqUplLwIj9T0y49H4ObDQys2pBSQqrFJKkuu/pujdFE+CNLpWFsgp/FFedbilyV97oUSt6haFlQVehSLAeLiAmWzNjfeqZpPOoTHs3y7Tyfz4A3EMIQu4fhB9jVbDp9bFSNAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 05 12 at 6 05 30 pm1\"\n        title=\"screen shot 2015 05 12 at 6 05 30 pm1\"\n        src=\"/static/f44307318457ff0b7d5fed7eccfed059/94a55/screen-shot-2015-05-12-at-6-05-30-pm1.png\"\n        srcset=\"/static/f44307318457ff0b7d5fed7eccfed059/924ad/screen-shot-2015-05-12-at-6-05-30-pm1.png 170w,\n/static/f44307318457ff0b7d5fed7eccfed059/f570f/screen-shot-2015-05-12-at-6-05-30-pm1.png 341w,\n/static/f44307318457ff0b7d5fed7eccfed059/94a55/screen-shot-2015-05-12-at-6-05-30-pm1.png 681w,\n/static/f44307318457ff0b7d5fed7eccfed059/e8f76/screen-shot-2015-05-12-at-6-05-30-pm1.png 1022w,\n/static/f44307318457ff0b7d5fed7eccfed059/70e11/screen-shot-2015-05-12-at-6-05-30-pm1.png 1268w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>After the fact, exponential curves look relatively smooth. When you are in the midst of them, however, they feel like they are divided into two stages: gradual and sudden.</p>\n<p><a href=\"images/screen-shot-2015-05-12-at-5-48-37-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 634px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 61.82965299684543%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAMCAIAAADtbgqsAAAACXBIWXMAABYlAAAWJQFJUiTwAAABHUlEQVQoz5VSy4qDMBT1/3/HzVDGdjEIU5y6cNdqq9U0KW1KpI8kJkbnasCRUhx6kMs193FODnFMj+Z9tG3raK1t9hJQGm+3+VB1lFJ1XU8zPMFIqSj9n5lznuc5xpgxBjFNU1oykRe6LKeYrTxK6WKx8H0/iiLP81zXDcPwniRtX31Hdp/ry6U6HOxvNzxtGKy2hlnfHnEMd35tGDTYbpsMk02vUyJUEdItHWRPMI8Fq/OZ73bj427YemNXbOL4cz7/Wa2+g+DL9z9msyAMQafY70WWtU+PRGltYF4I+BrOS0KK9Rpvt0kUoU2cBEGxXMos04wNEv6YdV3L2+1xPPLT6Y6QQEgRIjGGCK6a69VUFfRoAxQd4F3YCHp/AZ0dt1RGdfEdAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 05 12 at 5 48 37 pm\"\n        title=\"screen shot 2015 05 12 at 5 48 37 pm\"\n        src=\"/static/ab2268105f124d6bee4cbf8d62639d62/24a49/screen-shot-2015-05-12-at-5-48-37-pm.png\"\n        srcset=\"/static/ab2268105f124d6bee4cbf8d62639d62/924ad/screen-shot-2015-05-12-at-5-48-37-pm.png 170w,\n/static/ab2268105f124d6bee4cbf8d62639d62/f570f/screen-shot-2015-05-12-at-5-48-37-pm.png 341w,\n/static/ab2268105f124d6bee4cbf8d62639d62/24a49/screen-shot-2015-05-12-at-5-48-37-pm.png 634w\"\n        sizes=\"(max-width: 634px) 100vw, 634px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>Singularity University <a href=\"http://www.evolutionpartners.com.au/exponential-growth-vs-linear-thinking-in-management-teams.html\">calls</a> this the \"deception of linear vs exponential growth\":</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/3125e31111d353e83b375066eb7fce95/3b243/linear-vs-exponential-1024x658-1.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 64.2578125%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"linear vs exponential 1024x658 1\"\n        title=\"linear vs exponential 1024x658 1\"\n        src=\"/static/3125e31111d353e83b375066eb7fce95/94a55/linear-vs-exponential-1024x658-1.png\"\n        srcset=\"/static/3125e31111d353e83b375066eb7fce95/924ad/linear-vs-exponential-1024x658-1.png 170w,\n/static/3125e31111d353e83b375066eb7fce95/f570f/linear-vs-exponential-1024x658-1.png 341w,\n/static/3125e31111d353e83b375066eb7fce95/94a55/linear-vs-exponential-1024x658-1.png 681w,\n/static/3125e31111d353e83b375066eb7fce95/e8f76/linear-vs-exponential-1024x658-1.png 1022w,\n/static/3125e31111d353e83b375066eb7fce95/3b243/linear-vs-exponential-1024x658-1.png 1024w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>Today, smartphone growth seems obviously exponential. But just a few years ago many people thought smartphones were growing linearly. Even Mark Zuckerberg underestimated the importance of mobile in the \"feels gradual\" phase. In 2011 or so, he realized what we were experiencing was actually an exponential curve, and consequently dramatically increased Facebook's investment in mobile:</p>\n<p><a href=\"images/screen-shot-2015-05-12-at-6-19-33-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.31825273010921%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 05 12 at 6 19 33 pm\"\n        title=\"screen shot 2015 05 12 at 6 19 33 pm\"\n        src=\"/static/07acec0e2013aa43c6f5c609f2003eb8/94a55/screen-shot-2015-05-12-at-6-19-33-pm.png\"\n        srcset=\"/static/07acec0e2013aa43c6f5c609f2003eb8/924ad/screen-shot-2015-05-12-at-6-19-33-pm.png 170w,\n/static/07acec0e2013aa43c6f5c609f2003eb8/f570f/screen-shot-2015-05-12-at-6-19-33-pm.png 341w,\n/static/07acec0e2013aa43c6f5c609f2003eb8/94a55/screen-shot-2015-05-12-at-6-19-33-pm.png 681w,\n/static/07acec0e2013aa43c6f5c609f2003eb8/e8f76/screen-shot-2015-05-12-at-6-19-33-pm.png 1022w,\n/static/07acec0e2013aa43c6f5c609f2003eb8/6f6d0/screen-shot-2015-05-12-at-6-19-33-pm.png 1282w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>Exponential growth curves in the \"feels gradual\" phase are deceptive. There are many things happening today in technology that feel gradual and disappointing but will soon feel sudden and amazing.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/04/12/proprietary-services-vs-open-protocols",
      "title": "Proprietary services vs open protocols",
      "description": null,
      "url": "https://cdixon.org/2015/04/12/proprietary-services-vs-open-protocols",
      "published": "2015-04-12T00:00:00.000Z",
      "updated": "2015-04-12T00:00:00.000Z",
      "content": "<blockquote class=\"twitter-tweet\" data-lang=\"en\"><p lang=\"en\" dir=\"ltr\">1/ the history of the internet is a series of battles between proprietary services and open protocols</p>— Chris Dixon (@cdixon) <a href=\"https://twitter.com/cdixon/status/587373396805160961?ref_src=twsrc%5Etfw\">April 12, 2015</a></blockquote>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds",
      "title": "Improbable: enabling the development of large-scale simulated worlds",
      "description": "Over the past decade, computing resources that were previously available only to large organizations became available to almost anyone…",
      "url": "https://cdixon.org/2015/03/24/improbable-enabling-the-development-of-large-scale-simulated-worlds",
      "published": "2015-03-24T00:00:00.000Z",
      "updated": "2015-03-24T00:00:00.000Z",
      "content": "<p>Over the past decade, computing resources that were previously available only to large organizations became available to almost anyone. Using cloud-scale development platforms like Amazon Web Services, developers can write software that runs on hundreds or even thousands of servers, and do so relatively cheaply.</p>\n<p>But it is still difficult to write software that makes efficient use of this abundant computing. For some projects, like creating websites, there are well-known software architectures that work reasonably well. In other areas, there's been progress building generalized tools (for example, Hadoop in data processing). For the most part, however, developers need to solve the parallelization problem over and over again for each application they develop. New tools that help them do this are sorely needed.</p>\n<p>Today, I am excited to announce that a16z is investing $20M in <a href=\"http://improbable.io/\">Improbable</a>, a London-based company that was founded by a group of computer scientists from the University of Cambridge. Improbable’s technology solves the parallelization problem for an important class of problems: anything that can be defined as a set of entities that interact in space. This basically means any problem where you want to build a simulated world. Developers who use Improbable can write code as if it will run on only one machine (using whatever simulation software they prefer, including popular gaming/physics engines like Unity and Unreal), without having to think about parallelization. Improbable automatically distributes their code across hundreds or even thousands of machines, which then work together to create a seamlessly integrated, simulated world.</p>\n<p>The Improbable team had to solve multiple hard problems to make this work. Think of their tech as a “spatial operating system”: for every object in the world — a person, a car, a microbe —the system assigns “ownership” of different parts of that entity to various worker programs. As entities move around (according to whatever controls them  -- code, humans, real-world sensors) they interact with other entities. Often these interactions happen across machines, so Improbable needs to handle inter-machine messaging. Sometimes entities need to be reassigned to new hardware to load balance. When hardware fails or network conditions degrade, Improbable automatically reassigns the workload and adjusts the network flow. Getting the system to work at scale under real-world conditions is a very hard problem that took the Improbable team years of R&D.</p>\n<p>One initial application for the Improbable technology is in gaming. Game developers have been trying to build virtual worlds for decades, but until now those worlds have been relatively small, usually running on only a handful of servers and relying on hacks to create the illusion of scale. With Improbable, developers can now create games with millions of persistent, complex, interacting entities. In addition, they can spend their time inventing game features instead of building back-end systems.</p>\n<p>Beyond gaming, Improbable is useful in any field that models complex systems — biology, economics, defense, urban planning, transportation, disease prevention, etc. Think of simulations as the flip side to “big data.” Data science is useful when you already have large data sets. Simulations are useful when you know how parts of the system work and want to generate data about the system as a whole. Simulations are especially well suited for asking hypothetical questions: what would happen to the world if we changed X and Y? How could we change X and Y to get the outcome we want?</p>\n<p>Improbable was started three years ago at Cambridge by Herman Narula and Rob Whitehead. They have since built an outstanding team of engineers and computer scientists from companies like Google and top UK computer science programs. They’ve done all of this on a small seed financing, supplemented by customer revenue and research grants. We are thrilled to partner with Improbable on their mission to develop and popularize simulated worlds.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/03/13/it-all-blossomed-out-of-this-tiny-little-seed",
      "title": "\"It all blossomed out of this tiny little seed\"",
      "description": "Steve Jobs in 1985: I felt it the first time when I visited a school. It was third and fourth graders, and they had a whole classroom full…",
      "url": "https://cdixon.org/2015/03/13/it-all-blossomed-out-of-this-tiny-little-seed",
      "published": "2015-03-13T00:00:00.000Z",
      "updated": "2015-03-13T00:00:00.000Z",
      "content": "<p>Steve Jobs in 1985:</p>\n<blockquote>\n<p>I felt it the first time when I visited a school. It was third and fourth graders, and they had a whole classroom full of Apple II’s. I spent a few hours there, and I saw these third and fourth graders growing up completely different than I grew up because of this machine.</p>\n<p>What hit me about it was that here was this machine that very few people designed — about four in the case of the Apple II — who gave it to some other people who didn't know how to design it but knew how to make it, to manufacture it. They could make a whole bunch of them. And then they give it some people that didn't know how to design it or manufacture it, but they knew how to distribute it. And then they gave it to some people that didn't knew how to design or manufacture or distribute it, but knew how to write software for it.</p>\n<p>Gradually this sort of inverse pyramid grew. It finally got into the hands of a lot of people -- and it all blossomed out of this tiny little seed.</p>\n<p>It seemed like an incredible amount of leverage. It all started with just an idea. Here was this idea, taken through all of these stages, resulting in a classroom full of kids growing up with some insights and fundamentally different experiences which, I thought, might be very beneficial to their lives. Because of this germ of an idea a few years ago.</p>\n<p>That's an incredible feeling to know that you had something to do with it, and to know it can be done, to know that you can plant something in the world and it will grow, and change the world, ever so slightly.</p>\n<p>— <a href=\"https://www.youtube.com/watch?v=BNeXlJW70KQ&start=1104\">Steve Jobs brainstorms with NeXT team 1985 (starting at minute 18:24)</a></p>\n</blockquote>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/02/01/the-ai-startup-idea-maze",
      "title": "The idea maze for AI startups",
      "description": "An “idea maze” is a map of all the key decisions and tradeoffs that startups in a given space need to make: A good founder is capable of…",
      "url": "https://cdixon.org/2015/02/01/the-ai-startup-idea-maze",
      "published": "2015-02-01T00:00:00.000Z",
      "updated": "2015-02-01T00:00:00.000Z",
      "content": "<p>An “<a href=\"http://cdixon.org/2013/08/04/the-idea-maze/\">idea maze</a>” is a map of all the key decisions and tradeoffs that startups in a given space need to make:</p>\n<blockquote>\n<p>A good founder is capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions.</p>\n<p>- Balaji Srinivasan, “<a href=\"https://spark-public.s3.amazonaws.com/startup/lecture_slides/lecture5-market-wireframing-design.pdf\">Market Research, Wireframing and Design</a>”</p>\n</blockquote>\n<p>I thought it would be interesting to show an example of an idea maze for an area that I’m interested in: AI startups. Here’s a sketch of the maze. I explain each step in detail below.</p>\n<p><a href=\"images/screen-shot-2015-02-01-at-11-51-53-am.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 64.26592797783933%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 02 01 at 11 51 53 am\"\n        title=\"screen shot 2015 02 01 at 11 51 53 am\"\n        src=\"/static/0cb154dbd8fb0f2b3b29a97385793623/94a55/screen-shot-2015-02-01-at-11-51-53-am.png\"\n        srcset=\"/static/0cb154dbd8fb0f2b3b29a97385793623/924ad/screen-shot-2015-02-01-at-11-51-53-am.png 170w,\n/static/0cb154dbd8fb0f2b3b29a97385793623/f570f/screen-shot-2015-02-01-at-11-51-53-am.png 341w,\n/static/0cb154dbd8fb0f2b3b29a97385793623/94a55/screen-shot-2015-02-01-at-11-51-53-am.png 681w,\n/static/0cb154dbd8fb0f2b3b29a97385793623/e8f76/screen-shot-2015-02-01-at-11-51-53-am.png 1022w,\n/static/0cb154dbd8fb0f2b3b29a97385793623/c20f6/screen-shot-2015-02-01-at-11-51-53-am.png 1362w,\n/static/0cb154dbd8fb0f2b3b29a97385793623/232f1/screen-shot-2015-02-01-at-11-51-53-am.png 1444w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p><em>“MVP with 80–90% accuracy.”</em> The <a href=\"http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/\">old saying</a> in the machine learning community is that “machine learning is really good at partially solving just about any problem.” For most problems, it’s relatively easy to build a model that is accurate 80–90% of the time. After that, the returns on time, money, brainpower, data etc. rapidly diminish. As a rule of thumb, you’ll spend a few months getting to 80% and something between a few years and eternity getting the last 20%. (Incidentally, this is why when you see partial demos like Watson and self-driving cars, the demo itself doesn’t tell you much — what you need to see is how they handle the 10–20% of “edge cases” — the dog jumping out in front of the car in unusual lighting conditions, etc).</p>\n<p>At this point in the maze you have a choice. You can either 1) try to get the accuracy up to near 100%, or 2) build a product that is useful even though it is only partially accurate. You do this by building what I like to call a “fault tolerant UX.”</p>\n<p><em>“Create a fault tolerant UX.”</em> Good examples of fault-tolerant UXs are iOS autocorrect and Google search’s “did you mean X?” feature. You could also argue Google search itself is a fault tolerant UX: showing 10 links instead of going straight to the top result lets the human override the machine when the machine gets the ranking wrong. Building a fault tolerant UX isn’t capitulation, but it does mean a very different set of product requirements. (In particular, latency is very important when you want the human and machine to work together—this generally affects your technical architecture).</p>\n<p>Ok so let’s suppose you decide to go for 100% accuracy. How do you get there? You won’t get the 10–20% through algorithms. You’ll only get there with lots more data for training your models. Data is the key to AI because 1) it’s the missing ingredient — we have great algorithms and virtually endless computational resources now, and 2) it’s the proprietary ingredient—algorithms are mostly a shared resource created by the research community. Public data sets, on the other hands, are generally not very good. The good data sets either don’t exist or are privately owned.</p>\n<p><em>“Narrow the domain.”</em> The amount of data you need is relative to the breadth of the problem you are trying to solve. So before you start collecting data you might want to narrow your domain. Instead of trying to build a virtual bot that can do anything (which would basically mean passing the Turing Test—good luck with that), build a bot that can just help someone with scheduling meetings. Instead of building a cloud service that predicts anything, build one that can predict when a transaction is fraudulent. Etc.</p>\n<p><em>“Narrow domain even more.”</em> After you are done narrowing the domain, try narrowing it even more! Even if your goal is to build X, sometimes building an MVP that is part of X is the best way to eventually get to X. My advice would be to keep narrowing your domain until you can’t narrow it anymore without making the product so narrow that no one wants to use it. You can always expand the scope later.</p>\n<p><em>“How do you get the data?”</em> Broadly speaking, there are two ways: build it yourself or crowdsource it. A good analogy here is Google Maps vs Waze. Google employs thousands of people driving around to map out roads, buildings, and traffic. Waze figured out how to get millions of people to do that for them. To do what Google does, you need far more capital (hundreds of millions, if not billions of dollars) than is generally available to pre-launch startups.</p>\n<p>Startups are left with two choices to get the data. 1) Try to mine it from publicly available sources. 2) Try to crowdsource it.</p>\n<p>The most common example of 1) is crawling the web, or big websites like Wikipedia. You could argue this is what the original Google search did by using links as ranking signals. Many startups have tried mining Wikipedia, an approach that hasn’t led to much success, as far as I know.</p>\n<p>The most viable approach for startups is crowdsourcing the data. This boils down to designing a service that provides the right incentives for users to give data back to the system to make it better. Building a crowdsourced product is its own topic (which is why that part of the idea maze points to another, nested idea maze), but I’ll give an example of one approach to doing this, which was tried by company called <a href=\"http://wit.ai\">Wit.ai</a> that we invested in last year. Wit’s idea was to provide a service for developers for doing speech-to-text and natural language processing. The v1.0 system gave the right answer most but not all of the time. But it also provided a dashboard and API where developers could correct errors to improve their results. For developers using the free version of the service, the training they performed would get fed back to make the overall system smarter. Facebook acquired Wit so their future will unfold now as part of a larger company. The approach they took was very clever and could apply to many other AI domains.</p>\n<p>This is a rough sketch of how I see the AI startup idea maze. A few caveats: 1) I could very well be mistaken or have overlooked other paths through the maze — idea mazes are meant to aid discussion, not serve as gospel, and 2) As Balaji says, new technological developments can “move walls and change assumptions.” Look out especially for new infrastructure technologies (internet, smartphones, cloud computing, bitcoin, etc) that can unlock new pathways in many different idea mazes, even ones that at first seem unrelated.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/31/come-for-the-tool-stay-for-the-network",
      "title": "Come for the tool, stay for the network",
      "description": "A popular strategy for bootstrapping networks is what I like to call “come for the tool, stay for the network.” The idea is to initially…",
      "url": "https://cdixon.org/2015/01/31/come-for-the-tool-stay-for-the-network",
      "published": "2015-01-31T00:00:00.000Z",
      "updated": "2015-01-31T00:00:00.000Z",
      "content": "<p>A popular strategy for bootstrapping networks is what I like to call “come for the tool, stay for the network.”</p>\n<p>The idea is to initially attract users with a <a href=\"http://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes/\">single-player tool</a> and then, over time, get them to participate in a network. The tool helps get to initial critical mass. The network creates the long term value for users, and defensibility for the company.</p>\n<p>Here are two historical examples: 1) <em>Delicious</em>. The single-player tool was a cloud service for your bookmarks. The multiplayer network was a tagging system for discovering and sharing links. 2) <em>Instagram</em>. Instagram’s initial hook was the innovative photo filters. At the time some other apps like Hipstamatic had filters but you had to pay for them. Instagram also made it easy to share your photos on other networks like Facebook and Twitter. But you could also share on Instagram’s network, which of course became the preferred way to use Instagram over time.</p>\n<p>The “come for the tool, stay for the network” strategy isn't the only way to build a network. Some networks never had single-player tools, including gigantic successes like Facebook and Twitter. But starting a network from scratch is very hard. Think of single-player tools as kindling.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/24/virtual-reality-a-new-creative-medium-where-the-default-state-is-belief",
      "title": "Virtual reality: a new creative medium where the default state is belief",
      "description": "The holy grail of virtual reality, the one that’s always been out of reach until now, is presence. In the VR community, “presence” is a term…",
      "url": "https://cdixon.org/2015/01/24/virtual-reality-a-new-creative-medium-where-the-default-state-is-belief",
      "published": "2015-01-24T00:00:00.000Z",
      "updated": "2015-01-24T00:00:00.000Z",
      "content": "<p>The holy grail of virtual reality, the one that’s always been out of reach until now, is presence.</p>\n<p>In the VR community, “presence” is a term of art. It’s the idea that once VR reaches a certain quality level your brain is actually tricked — at the lowest, most primal level — into believing that what you see in front of you is reality. Studies show that even if you rationally believe you’re not truly standing at the edge of a steep cliff, and even if you try with all your might to jump, your legs will buckle. Your low-level lizard brain won’t let you do it.</p>\n<p>With presence, your brain goes from feeling like you have a headset on to feeling like you’re immersed in a different world.</p>\n<p>Computer enthusiasts and science fiction writers have dreamed about VR for decades. But earlier attempts to develop it, especially in the 1990s, were disappointing. It turns out the technology wasn’t ready yet. What’s happening now — because of Moore’s Law, and also the rapid improvement of processors, screens, and accelerometers, driven by the smartphone boom — is that VR is finally ready to go mainstream.</p>\n<p>Once VR achieves presence, we start to believe.</p>\n<p>We use the phrase “suspension of disbelief” about the experience of watching TV or movies. This implies that our default state watching TV and movies is disbelief. We start to believe only when we become sufficiently immersed.</p>\n<p>With VR, the situation is reversed: we believe, by default, that what we see is real. As Chris Milk, an early VR pioneer, <a href=\"https://stories.californiasunday.com/2014-10-05/virtual-reality-hollywood\">explains</a>:</p>\n<blockquote>\n<p>You read a book; your brain reads letters printed in ink on paper and transforms that into a world. You watch a movie; you’re seeing imagery inside of a rectangle while you’re sitting inside a room, and your brain translates that into a world. And you connect to this even though you know it’s not real, but because you’re in the habit of suspending disbelief.</p>\n<p>With virtual reality, you’re essentially hacking the visual-audio system of your brain and feeding it a set of stimuli that’s close enough to the stimuli it expects that it sees it as truth. Instead of suspending your disbelief, you actually have to remind yourself not to believe.</p>\n</blockquote>\n<p>This has implications for the kinds of software that will succeed in VR. The risk is not that it’s boring, but that it’s too intense. For example, a popular video game like Call of Duty ported to VR would be frightening and disorienting for most people.</p>\n<p>What will likely succeed instead are relatively simple experiences. Some examples: go back in time and walk around ancient Rome; overcome your fear of heights by climbing skyscrapers; execute precision moves as you train to safely land planes; return to places you “3D photographed” on your last vacation; have a picnic on a sunny afternoon with a long-lost friend; build trust with virtual work colleagues in a way that today you can only do in person.</p>\n<p>These experiences will be dreamt up by “experience makers” — the VR version of filmmakers. The next few decades of VR will be similar to the first few decades of film. Filmmakers had no idea what worked and what didn’t: how to write, how to shoot, how to edit, etc. After decades of experiments they established the grammar of film. We’re about to enter a similar period of exploration with VR.</p>\n<p>There will be great games made in VR, and gaming will <a href=\"http://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality/\">probably</a> dominate the VR narrative for the next few years. But longer term, we won’t think of games as essential to the medium. The original TV shows were newscasts and game shows, but today we think of TV screens as content-agnostic input-output devices.</p>\n<p>VR will be the ultimate input-output device. Some people call VR “the last medium” because any subsequent medium can be invented inside of VR, using software alone. Looking back, the movie and TV screens we use today will be seen as an intermediate step between the invention of electricity and the invention of VR. Kids will think it’s funny that their ancestors used to stare at glowing rectangles hoping to suspend disbelief.</p>\n<p><em>(originally posted on <a href=\"http://a16z.com/2015/01/22/16-things/\">a16z</a>)</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/20/a16z-invests-in-stack-exchange",
      "title": "Stack Exchange",
      "description": "Today we are announcing that A16z is leading a $40M investment in Stack Exchange, along with earlier investors USV, Bezos Expeditions, Spark…",
      "url": "https://cdixon.org/2015/01/20/a16z-invests-in-stack-exchange",
      "published": "2015-01-20T00:00:00.000Z",
      "updated": "2015-01-20T00:00:00.000Z",
      "content": "<p>Today we are announcing that <a href=\"http://www.a16z.com\">A16z</a> is leading a $40M investment in <a href=\"http://stackexchange.com\">Stack Exchange</a>, along with earlier investors USV, Bezos Expeditions, Spark, and Index.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/dbaa84663cd5d25d65ee4ff449bce520/6ff5e/1*5dOUhQl1ati7FpCfQehhrQ.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 50.24999999999999%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"1 5dOUhQl1ati7FpCfQehhrQ\"\n        title=\"1 5dOUhQl1ati7FpCfQehhrQ\"\n        src=\"/static/dbaa84663cd5d25d65ee4ff449bce520/94a55/1*5dOUhQl1ati7FpCfQehhrQ.png\"\n        srcset=\"/static/dbaa84663cd5d25d65ee4ff449bce520/924ad/1*5dOUhQl1ati7FpCfQehhrQ.png 170w,\n/static/dbaa84663cd5d25d65ee4ff449bce520/f570f/1*5dOUhQl1ati7FpCfQehhrQ.png 341w,\n/static/dbaa84663cd5d25d65ee4ff449bce520/94a55/1*5dOUhQl1ati7FpCfQehhrQ.png 681w,\n/static/dbaa84663cd5d25d65ee4ff449bce520/e8f76/1*5dOUhQl1ati7FpCfQehhrQ.png 1022w,\n/static/dbaa84663cd5d25d65ee4ff449bce520/6ff5e/1*5dOUhQl1ati7FpCfQehhrQ.png 1200w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>Stack Exchange is a network of 133 <a href=\"http://stackexchange.com/sites\">sites</a> (and growing) where people can ask and answer questions about topics related to engineering, science, hobbies, and more. The biggest site on the network is Stack Overflow, which alone gets over 40 million unique visitors per month. The other sites cover a very wide variety of topics, including: <a href=\"http://math.stackexchange.com\">math</a>, <a href=\"http://gardening.stackexchange.com\">gardening</a>, <a href=\"http://english.stackexchange.com\">English language usage</a>, <a href=\"http://graphicdesign.stackexchange.com\">graphic design</a>, <a href=\"http://physics.stackexchange.com\">physics</a>, <a href=\"http://crypto.stackexchange.com\">cryptography</a>, <a href=\"http://chess.stackexchange.com\">chess</a>, <a href=\"http://astronomy.stackexchange.com\">astronomy</a>, <a href=\"http://buddhism.stackexchange.com\">Buddhism</a>, <a href=\"http://datascience.stackexchange.com\">data science</a>, <a href=\"http://martialarts.stackexchange.com\">martial arts</a>, <a href=\"http://diy.stackexchange.com\">home improvement</a>, <a href=\"http://photo.stackexchange.com\">photography</a>, <a href=\"http://bicycles.stackexchange.com\">bicycles</a>, <a href=\"http://boardgames.stackexchange.com\">board games</a>, <a href=\"http://economics.stackexchange.com\">economics</a>, to name a few. Most likely, you’ve used Stack Exchange without even knowing it —the network had over 300M unique visitors last year. Many users come in through Google, get their answer, and then leave, usually a little bit smarter.</p>\n<p>One of the major startup opportunities of the information age is: now that more than two billion people have internet-connected devices, how do we create <a href=\"http://cdixon.org/2010/01/17/collective-knowledge-systems/\">systems</a> to efficiently share and store their collective knowledge? Requirements for successful collective knowledge systems include: 1) users need to be given the proper incentives to contribute, 2) the contributions of helpful users need to make the system smarter (not just bigger), and 3) users with malicious intent can’t be allowed to hurt the system.</p>\n<p>Many entrepreneurs and inventors have tried and failed to solve this problem. As far as I know, only two organizations have succeeded at scale: Stack Exchange and Wikipedia. Stack isn’t as large as Wikipedia on the readership side — the topics are more specialized—but, on the contributor side, is closely comparable to Wikipedia. Last year, Stack had over 300 million unique visitors, and 3.8 million total registered users, who contributed over 3.1M questions, 4.5M answers, 2.7M edits, and 17M comments.</p>\n<p>Stack’s business model is based on job placement. Employers create company pages (<a href=\"http://careers.stackoverflow.com/company/amazon-us\">here</a> is Amazon’s—over 6000 companies have created pages) and then run targeted ad campaigns for open job opportunities. Revenue has grown quickly, and the company employs over 200 people. The HQ is in NYC, with offices in Denver and London, and remote workers in Israel, Brazil, Japan, Germany, Slovenia, France, and across the US.</p>\n<p>I believe Stack Exchange’s growth has now reached escape velocity. Not only will the existing topics continue to grow, but many new topics will emerge, until the network covers every topic that is amenable to objective Q&A. As new generations of people grow up on the internet, old habits — searching through textbooks or how-to books, or asking friends—will fade away. People will come to expect that any objective question can be instantly answered with a Google search.</p>\n<p>I’ve been a personal investor in Stack since its initial funding, and it has always been one of my favorite investments. Stack’s cofounder & CEO, Joel Spolsky, is an amazing entrepreneur and internet visionary. I’m very happy to back him again with this new investment.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/15/skydio",
      "title": "Skydio",
      "description": "I’m excited to announce today that Andreessen Horowitz is leading a $3M financing of Skydio, a startup developing artificial intelligence…",
      "url": "https://cdixon.org/2015/01/15/skydio",
      "published": "2015-01-15T00:00:00.000Z",
      "updated": "2015-01-15T00:00:00.000Z",
      "content": "<p>I’m excited to announce today that Andreessen Horowitz is leading a $3M financing of <a href=\"http://skyd.io\">Skydio</a>, a startup developing artificial intelligence systems for drones.</p>\n<p>The Skydio team is awesomely qualified. They worked on drone vision systems at MIT and then co-founded a drone project at <a href=\"http://en.wikipedia.org/wiki/Google_X\">Google[x]</a> called Project Wing. The company’s mission is to create smart drones. As cofounder Adam Bry <a href=\"http://skyd.io/blog/2015/01/takeoff/\">says</a>:</p>\n<blockquote>\n<p>Drones are poised to have a transformative impact on how we see our world. They’ll enable us to film the best moments of our lives with professional quality cinematography and they’ll also change the way businesses think about monitoring their operations and infrastructure. This grand vision is starting to come into focus, but existing products are blind to the world around them. As a consequence, drones must fly high above the nearest structures or receive the constant attention of an expert operator. <a href=\"http://www.wsj.com/articles/what-happens-when-your-drone-escapes-1418086281?autologin=y\">“Flyaways”</a> and <a href=\"https://www.youtube.com/watch?v=KgNQrGGxJrM\">crashes</a> abound. These problems must be solved for the industry to move forward.</p>\n</blockquote>\n<p>Smart drone operators will simply give high-level instructions like “map these fields” or “film me while I’m skiing” and the drone will carry out the mission. Safety and privacy regulations will be baked into the operating system and will always be the top priority.</p>\n<p>This is my second drone investment - the first one was <a href=\"http://www.airware.com\">Airware</a>. I see Airware and Skydio as complementary (and I’d like to make more drone investments - at any stage including seed investments - as long as they don’t compete with Airware or Skydio). You can think of Airware as the operating system and Skydio as the most important app on top of the operating system. The founders of both companies have deep expertise in both aviation and computer science, the key prerequisites for creating smart drones.</p>\n<p>Here’s a fun video of an early Skydio prototype in action: <div class=\"gatsby-resp-iframe-wrapper\" style=\"padding-bottom: 56.53450807635829%; position: relative; height: 0; overflow: hidden; \" > <div class=\"embedVideo-container\"> <iframe src=\"https://www.youtube-nocookie.com/embed/rYhPDn48-Sg?rel=0\" class=\"embedVideo-iframe\" style=\"border:0; position: absolute; top: 0; left: 0; width: 100%; height: 100%; \" allowfullscreen></iframe> </div> </div></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/12/how-we-got-to-now",
      "title": "How We Got To Now",
      "description": "I really enjoyed Steven Johnson's How We Got To Now. I read a lot of history and science books, but this book stood out because 1) the…",
      "url": "https://cdixon.org/2015/01/12/how-we-got-to-now",
      "published": "2015-01-12T00:00:00.000Z",
      "updated": "2015-01-12T00:00:00.000Z",
      "content": "<p>I really enjoyed Steven Johnson's <a href=\"http://www.amazon.com/How-We-Got-Now-Innovations-ebook/dp/B00INIXU5I\">How We Got To Now</a>. I read a lot of history and science books, but this book stood out because 1) the anecdotes were entertaining and relevant, and 2) it got the process of innovation right.</p>\n<p>I'll just pick one story here that I liked. <a href=\"http://en.wikipedia.org/wiki/Frederic_Tudor\">Frederic Tudor</a> was a Boston entrepreneur in the early 1800s who had the clever idea to ship ice from New England to the Caribbean:</p>\n<blockquote>\n<p>The history of global trade had clearly demonstrated that vast fortunes could be made by transporting a commodity that was ubiquitous in one environment to a place where it was scarce. To the young Tudor, ice seemed to fit the equation perfectly: nearly worthless in Boston, ice would be priceless in Havana.</p>\n</blockquote>\n<p>Not only was the ice almost free, but so was the shipping:</p>\n<blockquote>\n<p>His New England base gave him one crucial advantage, beyond the ice itself. Unlike the U.S. South, with its sugar plantations and cotton fields, the northeastern states were largely devoid of natural resources that could be sold elsewhere. This meant that ships tended to leave Boston harbor empty, heading off for the West Indies to fill their hulls with valuable cargo before returning to the wealthy markets of the eastern seaboard. Paying a crew to sail a ship with no cargo was effectively burning money. Any cargo was better than nothing, which meant that Tudor could negotiate cheaper rates for himself by loading his ice onto what would have otherwise been an empty ship, and thereby avoiding the need to buy and maintain his own vessels.</p>\n</blockquote>\n<p>He invested his life savings and years building his startup. Everyone thought he was crazy. The local paper wrote a snarky article about him: \"No joke. A vessel has cleared at the Custom House for Martinique with a cargo of ice. We hope this will not prove a slippery speculation.\" He even spent two years in prison when he went into debt (this was before one of the greatest legal inventions of all time- <a href=\"http://en.wikipedia.org/wiki/Limited_liability#History\">limited liability</a>). He finally got his ice delivered but failed to predict one thing:</p>\n<blockquote>\n<p>Despite a number of weather-related delays, the ice survived the journey in remarkably good shape. The problem proved to be one that Tudor had never contemplated. The residents of Martinique had no interest in his exotic frozen bounty. They simply had no idea what to do with it.</p>\n<p>We take it for granted in the modern world that an ordinary day will involve exposure to a wide range of temperatures. We enjoy piping hot coffee in the morning and ice cream for dessert at the end of the day. Those of us who live in climates with hot summers expect to bounce back and forth between air-conditioned offices and brutal humidity where winter rules, we bundle up and venture out into the frigid streets, and turn up the thermostat when we return home. But the overwhelming majority of humans living in equatorial climes in 1800 would have literally never once experienced anything cold. The idea of frozen water would have been as fanciful to the residents of Martinique as an iPhone.</p>\n</blockquote>\n<p>There is a saying that entrepreneurs should create \"painkillers not vitamins\". This is bad advice. Painkillers are not very interesting businesses. Lots of people create painkillers, and they either work or they don't, and nothing more is generated as a result. The really interesting companies create vitamins. You don't know you want ice until you figure out what to do with it. Once you do, you discover all sorts of things you couldn't imagine before, which in turn create new opportunities for invention and entrepreneurship.</p>\n<p>The stories in the book ultimately argue for public policies that support networked innovation:</p>\n<blockquote>\n<p>[T]here are social and political implications to these kinds of stories. We know that one key driver of progress and standards of living is technological innovation. If we think that innovation comes from a lone genius inventing a new technology from scratch, that model naturally steers us toward certain policy decisions, like stronger patent protection. But if we think that innovation comes out of collaborative networks, then we want to support different policies and organizational forms.</p>\n</blockquote>\n<p>People who understand how innovation really works tend to support open standards, lenient immigration policies, well-funded university research, employee stock options, and significant <a href=\"http://cdixon.org/2009/09/24/software-patents-should-be-abolished/\">restrictions</a> of patents.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/12/vc-investment-vs-gartner-hype-cycle",
      "title": "VC investment vs Gartner hype cycle",
      "description": "Here is total VC investment over time:  And here's the Gartner hype cycle:  One reading of this is that the advent of the internet was the…",
      "url": "https://cdixon.org/2015/01/12/vc-investment-vs-gartner-hype-cycle",
      "published": "2015-01-12T00:00:00.000Z",
      "updated": "2015-01-12T00:00:00.000Z",
      "content": "<p>Here is total <a href=\"http://www.infocaptor.com/dashboard/venture-capital-investment-analytics-on-20-years-of-investment-data\">VC investment</a> over time:</p>\n<p><a href=\"images/screen-shot-2015-01-12-at-10-38-00-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 57.058242843040475%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 01 12 at 10 38 00 pm\"\n        title=\"screen shot 2015 01 12 at 10 38 00 pm\"\n        src=\"/static/520bd1efe6538f6cbbea1d9520f4f617/94a55/screen-shot-2015-01-12-at-10-38-00-pm.png\"\n        srcset=\"/static/520bd1efe6538f6cbbea1d9520f4f617/924ad/screen-shot-2015-01-12-at-10-38-00-pm.png 170w,\n/static/520bd1efe6538f6cbbea1d9520f4f617/f570f/screen-shot-2015-01-12-at-10-38-00-pm.png 341w,\n/static/520bd1efe6538f6cbbea1d9520f4f617/94a55/screen-shot-2015-01-12-at-10-38-00-pm.png 681w,\n/static/520bd1efe6538f6cbbea1d9520f4f617/e8f76/screen-shot-2015-01-12-at-10-38-00-pm.png 1022w,\n/static/520bd1efe6538f6cbbea1d9520f4f617/c20f6/screen-shot-2015-01-12-at-10-38-00-pm.png 1362w,\n/static/520bd1efe6538f6cbbea1d9520f4f617/986fe/screen-shot-2015-01-12-at-10-38-00-pm.png 2026w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>And here's the Gartner hype cycle:</p>\n<p><a href=\"images/screen-shot-2015-01-12-at-10-38-22-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 65.19524617996603%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2015 01 12 at 10 38 22 pm\"\n        title=\"screen shot 2015 01 12 at 10 38 22 pm\"\n        src=\"/static/1f19902d067842cdfd32b07d42e21249/94a55/screen-shot-2015-01-12-at-10-38-22-pm.png\"\n        srcset=\"/static/1f19902d067842cdfd32b07d42e21249/924ad/screen-shot-2015-01-12-at-10-38-22-pm.png 170w,\n/static/1f19902d067842cdfd32b07d42e21249/f570f/screen-shot-2015-01-12-at-10-38-22-pm.png 341w,\n/static/1f19902d067842cdfd32b07d42e21249/94a55/screen-shot-2015-01-12-at-10-38-22-pm.png 681w,\n/static/1f19902d067842cdfd32b07d42e21249/e8f76/screen-shot-2015-01-12-at-10-38-22-pm.png 1022w,\n/static/1f19902d067842cdfd32b07d42e21249/bcefc/screen-shot-2015-01-12-at-10-38-22-pm.png 1178w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>One reading of this is that the advent of the internet was the technology trigger, the dot-com crash was the trough of disillusionment, and 2004-present is the slope of enlightenment (with a mini-crash in 2008 due to the implosion on Wall Street). This reading would be consistent with Carlotta Perez's theory that we are now in the multi-decade <a href=\"http://cdixon.org/2013/02/10/the-computing-deployment-phase/\">deployment phase</a>.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/10/flow",
      "title": "Flow",
      "description": "Mihaly Csikszentmihalyi in 1996 on the concept of Flow: [Flow] is being completely involved in an activity for its own sake. The ego falls…",
      "url": "https://cdixon.org/2015/01/10/flow",
      "published": "2015-01-10T00:00:00.000Z",
      "updated": "2015-01-10T00:00:00.000Z",
      "content": "<p>Mihaly Csikszentmihalyi in 1996 on the concept of Flow:</p>\n<blockquote>\n<p>[Flow] is being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you're using your skills to the utmost.</p>\n<p>Goals transform a random walk into a chase. You need clear goals that fit into a hierarchy, with little goals that build toward more meaningful, higher-level goals. Here you are, tracking the footprints of some animal you haven't seen. That's exhilarating. Then there's the question of feedback. Most Web sites don't very much care what you do. It would be much better if they said: \"You've made some interesting choices\" or \"You're developing a knowledge of Picasso.\" There's also the ability to challenge. Competition is an easy way to get into flow.</p>\n<p>Realize that change and downtime are important. I found that if a painter relates to objects only through vision, his work is much less original than a painter who walks up to the object, smells it, throws it in the air, and manipulates it. The variety of sensory inputs allows you to create a visual image that has all kinds of dimensions bubbling up inside it. We are still a multimedia organism. If we want to push the envelope of complexity further, we have to use all of our devices for accessing information - not all of which are rational.</p>\n</blockquote>\n<p>- <a href=\"http://archive.wired.com/wired/archive/4.09/czik_pr.html\">\"Go With the Flow,\"</a> Wired Magazine</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality",
      "title": "The thin edge of the wedge for virtual reality",
      "description": "Pius Uzamere argues that virtual reality will succeed first in business applications instead of gaming: The most interesting virtual reality…",
      "url": "https://cdixon.org/2015/01/01/the-thin-edge-the-wedge-for-virtual-reality",
      "published": "2015-01-01T00:00:00.000Z",
      "updated": "2015-01-01T00:00:00.000Z",
      "content": "<p>Pius Uzamere <a href=\"https://www.theinformation.com/The-Best-VR-Startups-In-2015-Will-Go-Pro\">argues</a> that virtual reality will succeed first in business applications instead of gaming:</p>\n<blockquote>\n<p>The most interesting virtual reality software startups this year won't really be \"virtual reality\" companies at all; they'll be startups making amazing tools that just happen to use VR to bring them to life. This has already started to play out in fields like medicine where virtual reality is already being used to <a href=\"http://icahn.mssm.edu/research/programs/brain-surgery-virtual-reality-simulation-program\">train brain surgeons</a> at Mount Sinai.</p>\n</blockquote>\n<p>The argument is roughly that 1) high-quality VR equipment will start out expensive, 2) business apps can be distributed via web, 3) toolchain for creating business VR content is better (3d scanning tools etc).</p>\n<p>Non-gaming VR applications are indeed underhyped. But gaming is important as an entry point. Critics tend to underestimate the scale and passion of the hardcore gaming community. For example: 32 million people <a href=\"http://www.nytimes.com/2014/10/12/technology/riot-games-league-of-legends-main-attraction-esports.html\">watched</a> the live steam of the championship of League of Legends, an extremely complicated game that is only available on PCs and Macs. VR has an unusually favorable market structure: a <a href=\"http://cdixon.org/2010/12/27/the-thin-edge-of-the-wedge-strategy/\">thin edge of the wedge</a> (hardcore gaming) and a thick edge of the wedge (replacing everything we now do on screens).</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/12/27/the-not-so-global-internet",
      "title": "\"The Not So Global Internet\"",
      "description": "Fred Wilson writes about how frustrating it is when companies break the internet: We are in the caribbean this week celebrating the year end…",
      "url": "https://cdixon.org/2014/12/27/the-not-so-global-internet",
      "published": "2014-12-27T00:00:00.000Z",
      "updated": "2014-12-27T00:00:00.000Z",
      "content": "<p>Fred Wilson <a href=\"http://avc.com/2014/12/the-not-so-global-internet/\">writes</a> about how frustrating it is when companies break the internet:</p>\n<blockquote>\n<p>We are in the caribbean this week celebrating the year end holiday with friends and family. Yesterday we installed a VPN client so that the Gotham Gal could do some online shopping on a website that only sells to users in the US. We also installed a bittorrent client so that a friend of my son could watch films he had rented on iTunes before he came down here.</p>\n<p>The latter experience was particularly frustrating. My son’s friend rented the films on iTunes in NYC, flew down here, then when he tried to play them, they would not play because of IP blocking, but the rental clock (24 hours) started ticking anyway and he lost the rental rights he had paid for.</p>\n</blockquote>\n<p>I buy all my movies through Apple TV and am strongly opposed to piracy. But I bet many people who pirate would be happy to pay if it were easier to buy and download content.</p>\n<p>Here's a service I'd love to see. For every Bittorrent file, create a corresponding Bitcoin wallet. When people download the torrent file, encourage them to pay a fee to the Bitcoin wallet. The creator of the content gets to take the Bitcoin. I bet this method would generate considerable revenue for content creators.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/12/21/two-eras-of-the-internet-pull-and-push",
      "title": "Two eras of the internet: pull and push",
      "description": "The evolution of the internet is an extremely complex topic. Sometimes it is helpful to find broad patterns that make it easier to…",
      "url": "https://cdixon.org/2014/12/21/two-eras-of-the-internet-pull-and-push",
      "published": "2014-12-21T00:00:00.000Z",
      "updated": "2014-12-21T00:00:00.000Z",
      "content": "<p>The evolution of the internet is an extremely complex topic. Sometimes it is helpful to find broad patterns that make it easier to understand. One simplifying pattern comes from the two types of actions internet users take: pull and push.</p>\n<table>\n<thead>\n<tr>\n<th></th>\n<th>Pull</th>\n<th>Push</th>\n</tr>\n</thead>\n<tbody>\n<tr>\n<td><strong>Dominant platform</strong></td>\n<td>Search</td>\n<td>Social</td>\n</tr>\n<tr>\n<td><strong>Dominant platform company</strong></td>\n<td>Google</td>\n<td>Facebook</td>\n</tr>\n<tr>\n<td><strong>Growth era</strong></td>\n<td>2000s</td>\n<td>2010s</td>\n</tr>\n<tr>\n<td><strong>Successful content type</strong></td>\n<td>Utilities</td>\n<td>Media</td>\n</tr>\n<tr>\n<td><strong>Content durability</strong></td>\n<td>Stock</td>\n<td>Flow</td>\n</tr>\n<tr>\n<td><strong>Successful publishers</strong></td>\n<td>TripAdvisor, Wikipedia, Yelp, & many more</td>\n<td>tbd</td>\n</tr>\n<tr>\n<td><strong>Marketing activity</strong></td>\n<td>links and algorithms</td>\n<td>shares and people</td>\n</tr>\n</tbody>\n</table>\n<p>Pull is when you are seeking information, usually an answer to a question. You want to know the closing time of a restaurant, the description of a hotel where you are thinking about staying, the details of an historical event you heard about, etc. You go to your computer and pull the information. The killer app for pulling information was Google.</p>\n<p>Search grew exponentially in its heyday (roughly, the decade of the <a href=\"http://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups/\">2000s</a>) because it benefited from a positive feedback loop between the supply of and the demand for information. As search demand grew, websites developed content to meet that demand, which in turn further stoked demand.  The successful websites of this era were mostly information utilities such as Wikipedia, Yelp, and TripAdvisor.</p>\n<p>Push is when you are using the internet in a more passive way and content comes to you. The killer app for push is social networks, the most popular being Facebook. Information is pushed from user to user via likes, shares, tweets, etc. People tend to push things they find funny, interesting, moving, outrageous, etc which usually means they push media: articles, videos, lists, gifs, photos, etc.</p>\n<p>We are <a href=\"http://www.nytimes.com/2014/08/13/upshot/why-buzzfeed-is-trying-to-shift-its-strategy.html?_r=3&abt=0002&abg=1\">currently</a> experiencing a positive feedback loop between social networks and media publishers, analogous to last decade's search + information feedback loop. There are a few other key differences today:</p>\n<ol>\n<li><em>Desktop vs mobile:</em> The current era has an additional dimension of complexity due to a <a href=\"https://twitter.com/cdixon/status/540987062610968577/photo/1\">simultaneous</a> transition from desktop to mobile computing. Consequences include the rapid <a href=\"http://cdixon.org/2014/04/07/the-decline-of-the-mobile-web/\">rise</a> of native apps over websites, and a dramatic increase in the overall scale and reach of the internet.</li>\n<li><em>Stock vs flow:</em> Media tends to have a much shorter shelf life than informational content. The main defensible asset for last decade's publishers was the repository of content they accumulated. The defensible asset for media publishers is the machine - the combination of people, technology, practices, financial and other assets - that produces a constant flow content.</li>\n<li><em>Bundled vs unbundled monetization:</em> In the prior era, monetization usually meant placing ads on websites next to content. In the new era, atomized chunks of content are pushed through social networks and consumed on mobile phones. The most successful ads are funny, interesting, engaging, compelling, etc. on their own (so-called native ads) and don't rely on bundling.</li>\n</ol>\n<p>There will probably be a few big, successful companies that emerge from the push era. As in the pull era, the successful companies will reinforce the feedback loop: riding the trends instead of fighting them.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/12/11/the-dawn-of-trustworthy-computing",
      "title": "\"The dawn of trustworthy computing\"",
      "description": "Nick Szabo: On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we…",
      "url": "https://cdixon.org/2014/12/11/the-dawn-of-trustworthy-computing",
      "published": "2014-12-11T00:00:00.000Z",
      "updated": "2014-12-11T00:00:00.000Z",
      "content": "<p>Nick Szabo:</p>\n<blockquote>\n<p>On the Internet, instead of securely and reliably handing over cash and getting our goods or services, or at least a ticket, we have to fill out forms and make ourselves vulnerable to identity theft in order to participate in e-commerce, and it often is very difficult to prohibitive to conduct many kinds of commerce, even purely online kinds, across borders and other trust boundaries. Today's computers are not very trustworthy, but they are so astronomically faster than humans at so many important tasks that we use them heavily anyway. We reap the tremendous benefits of computers and public networks at large costs of identity fraud and other increasingly disastrous attacks.</p>\n<p>Recently developed and developing technology, often called \"the block chain\", is starting to change this. A block chain computer is a virtual computer, a computer in the cloud, shared across many traditional computers and protected by cryptography and consensus technology. A Turing-complete block chain with large state gives us this shared computer. These block chain computers will allow us to put the most crucial parts of our online protocols on a far more reliable and secure footing, and make possible fiduciary interactions that we previously dared not do on a global network.</p>\n<p>— \"<a href=\"http://unenumerated.blogspot.com/2014/12/the-dawn-of-trustworthy-computing.html\">The Dawn of Trustworthy Computing</a>\"</p>\n</blockquote>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/12/06/1404",
      "title": "Top 10 websites",
      "description": "Top 10 websites in the US according to Quantcast:  A few observations: As Josh Kopelman points out, 4 of the top 10 sites (YouTube, Facebook…",
      "url": "https://cdixon.org/2014/12/06/1404",
      "published": "2014-12-06T00:00:00.000Z",
      "updated": "2014-12-06T00:00:00.000Z",
      "content": "<p>Top 10 websites in the US <a href=\"https://www.quantcast.com/top-sites\">according</a> to Quantcast:</p>\n<p><a href=\"images/screen-shot-2014-12-06-at-3-54-06-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 441px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 102.49433106575962%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2014 12 06 at 3 54 06 pm\"\n        title=\"screen shot 2014 12 06 at 3 54 06 pm\"\n        src=\"/static/fe9721a02d6006a9344e199c547823af/98017/screen-shot-2014-12-06-at-3-54-06-pm.png\"\n        srcset=\"/static/fe9721a02d6006a9344e199c547823af/924ad/screen-shot-2014-12-06-at-3-54-06-pm.png 170w,\n/static/fe9721a02d6006a9344e199c547823af/f570f/screen-shot-2014-12-06-at-3-54-06-pm.png 341w,\n/static/fe9721a02d6006a9344e199c547823af/98017/screen-shot-2014-12-06-at-3-54-06-pm.png 441w\"\n        sizes=\"(max-width: 441px) 100vw, 441px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>A few observations:</p>\n<ol>\n<li>As Josh Kopelman <a href=\"https://twitter.com/joshk/status/541358855696166912\">points</a> out, 4 of the top 10 sites (YouTube, Facebook, Twitter, Buzzfeed) didn't exist 10 years ago.</li>\n<li>On <a href=\"https://twitter.com/cdixon/status/541353371018735616\">Twitter</a>, people seemed surprised to see MSN and Microsoft on the list. I assume they are there because most versions of Windows still default users to MSN/Microsoft pages.</li>\n<li>Some people on Twitter were surprised that eBay is ahead of Amazon. I think this is because Amazon appeals more to the tech demographic. As they say: \"EBay is for people with more time than money. Amazon is for people with more money than time.\"</li>\n</ol>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/12/01/this-business-is-like-bird-spotting",
      "title": "\"This business is like bird spotting\"",
      "description": "One of my favorite quotes about startups/VC, from legendary VC Mike Moritz of Sequoia: I rarely think about big themes. This business is…",
      "url": "https://cdixon.org/2014/12/01/this-business-is-like-bird-spotting",
      "published": "2014-12-01T00:00:00.000Z",
      "updated": "2014-12-01T00:00:00.000Z",
      "content": "<p>One of my favorite quotes about startups/VC, <a href=\"http://andrewchen.co/why-i-doubted-facebook-could-build-a-billion-dollar-business-and-what-i-learned-from-being-horribly-wrong/\">from</a> legendary VC Mike Moritz of Sequoia:</p>\n<blockquote>\n<p>I rarely think about big themes. This business is like bird spotting. I don’t try to pick out the flock. Each one is different and I try to find an interestingly complected bird in a flock rather than try to make an observation about an entire flock. For that reason, while other firms may avoid companies because they perceive a certain investment sector as being overplayed or already mature, Sequoia is careful not to redline neighborhoods.</p>\n</blockquote>\n<p>In traditional business thinking, generalizations about \"flocks\" i.e. markets/categories/sectors can be very useful. But when your job is to identify exceptions, generalizations can be dangerous.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/11/23/the-business-plans-of-the-next-10000-startups-are-easy-to-forecast-take-x-and-add-ai",
      "title": "\"The business plans of the next 10,000 startups are easy to forecast: Take X and add AI.\"",
      "description": "Kevin Kelly thinks artificial intelligence is finally ready deliver on its promise: The AI on the horizon looks more like Amazon Web…",
      "url": "https://cdixon.org/2014/11/23/the-business-plans-of-the-next-10000-startups-are-easy-to-forecast-take-x-and-add-ai",
      "published": "2014-11-23T00:00:00.000Z",
      "updated": "2014-11-23T00:00:00.000Z",
      "content": "<p>Kevin Kelly thinks artificial intelligence is finally ready deliver on its promise:</p>\n<blockquote>\n<p>The AI on the horizon looks more like Amazon Web Services—cheap, reliable, industrial-grade digital smartness running behind everything, and almost invisible except when it blinks off. This common utility will serve you as much IQ as you want but no more than you need. Like all utilities, AI will be supremely boring, even as it transforms the Internet, the global economy, and civilization. It will enliven inert objects, much as electricity did more than a century ago. Everything that we formerly electrified we will now cognitize. This new utilitarian AI will also augment us individually as people (deepening our memory, speeding our recognition) and collectively as a species. There is almost nothing we can think of that cannot be made new, different, or interesting by infusing it with some extra IQ. In fact, the business plans of the next 10,000 startups are easy to forecast: Take X and add AI. This is a big deal, and now it's here.</p>\n</blockquote>\n<p>from Wired, \"<a href=\"http://www.wired.com/2014/10/future-of-artificial-intelligence/\">The Three Breakthroughs that have finally unleashed AI on the world</a>\"</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/11/19/a-man-will-be-able-to-carry-one-in-his-vest-pocket",
      "title": "\"A man will be able to carry one in his vest pocket\"",
      "description": "Nikola Tesla predicted the development internet-connected smartphones back in 1926: From the inception of the wireless system, I saw that…",
      "url": "https://cdixon.org/2014/11/19/a-man-will-be-able-to-carry-one-in-his-vest-pocket",
      "published": "2014-11-19T00:00:00.000Z",
      "updated": "2014-11-19T00:00:00.000Z",
      "content": "<p>Nikola Tesla <a href=\"http://www.tfcbooks.com/tesla/1926-01-30.htm\">predicted</a> the development internet-connected smartphones back in 1926:</p>\n<blockquote>\n<p>From the inception of the wireless system, I saw that this new art of applied electricity would be of greater benefit to the human race than any other scientific discovery, for it virtually eliminates distance.  The majority of the ills from which humanity suffers are due to the immense extent of the terrestrial globe and the inability of individuals and nations to come into close contact.</p>\n<p>Wireless will achieve the closer contact through transmission of intelligence, transport of our bodies and materials and conveyance of energy.</p>\n<p>When wireless is perfectly applied the whole earth will be converted into a huge brain, which in fact it is, all things being particles of a real and rhythmic whole.  We shall be able to communicate with one another instantly, irrespective of distance.  Not only this, but through television and telephony we shall see and hear one another as perfectly as though we were face to face, despite intervening distances of thousands of miles; and the instruments through which we shall be able to do his will be amazingly simple compared with our present telephone.  A man will be able to carry one in his vest pocket.</p>\n<p>We shall be able to witness and hear events--the inauguration of a President, the playing of a world series game, the havoc of an earthquake or the terror of a battle--just as though we were present.</p>\n</blockquote>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/11/15/theres-no-way-to-tell-where-the-border-is-between-measurement-and-manipulation",
      "title": "\"There's no way to tell where the border is between measurement and manipulation\"",
      "description": "Jaron Lanier discussing whether machine learning systems like Netflix recommendations, Facebook's newsfeed, Google search etc are…",
      "url": "https://cdixon.org/2014/11/15/theres-no-way-to-tell-where-the-border-is-between-measurement-and-manipulation",
      "published": "2014-11-15T00:00:00.000Z",
      "updated": "2014-11-15T00:00:00.000Z",
      "content": "<p>Jaron Lanier <a href=\"http://edge.org/conversation/the-myth-of-ai\">discussing</a> whether machine learning systems like Netflix recommendations, Facebook's newsfeed, Google search etc are manipulative:</p>\n<blockquote>\n<p>There's no way to tell where the border is between measurement and manipulation in these systems. For instance, if the theory is that you're getting big data by observing a lot of people who make choices, and then you're doing correlations to make suggestions to yet more people, if the preponderance of those people have grown up in the system and are responding to whatever choices it gave them, there's not enough new data coming into it for even the most ideal or intelligent recommendation engine to do anything meaningful.</p>\n<p>In other words, the only way for such a system to be legitimate would be for it to have an observatory that could observe in peace, not being sullied by its own recommendations. Otherwise, it simply turns into a system that measures which manipulations work, as opposed to which ones don't work, which is very different from a virginal and empirically careful system that's trying to tell what recommendations would work had it not intervened. That's a pretty clear thing. What's not clear is where the boundary is.</p>\n<p>If you ask: is a recommendation engine like Amazon more manipulative, or more of a legitimate measurement device? There's no way to know. At this point there's no way to know, because it's too universal. The same thing can be said for any other big data system that recommends courses of action to people, whether it's the Google ad business, or social networks like Facebook deciding what you see, or any of the myriad of dating apps. All of these things, there's no baseline, so we don't know to what degree they're measurement versus manipulation.</p>\n</blockquote>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/11/14/the-return-of-podcasting",
      "title": "The return of podcasting",
      "description": "Kevin Roose recently wrote about the renaissance of podcasting: Sometime around 2009 or 2010, the podcast scene seemed to wither. The…",
      "url": "https://cdixon.org/2014/11/14/the-return-of-podcasting",
      "published": "2014-11-14T00:00:00.000Z",
      "updated": "2014-11-14T00:00:00.000Z",
      "content": "<p>Kevin Roose recently <a href=\"http://nymag.com/daily/intelligencer/2014/10/whats-behind-the-great-podcast-renaissance.html\">wrote</a> about the renaissance of podcasting:</p>\n<blockquote>\n<p>Sometime around 2009 or 2010, the podcast scene seemed to wither. The stalwarts (\"This American Life,\" \"Radiolab\") stayed around at the top of the iTunes charts, but there wasn't much else happening. Download numbers fell. Interest waned. People moved on to online video and streaming music services as a way to pass the time... Today, a very different problem exists: There are <em>too</em> many great podcasts to keep up with.</p>\n</blockquote>\n<p>He attributes this mainly to the rise of smartphone-connected cars:</p>\n<blockquote>\n<p>Connected cars are a boon for the entire streaming audio industry, but they're especially exciting for podcast makers, whose shows are perfectly suited to in-car listening. Just as TV watchers can now choose Netflix or Amazon streams over surfing channels, radio listeners will soon have a bevy of on-demand options at their disposal.</p>\n</blockquote>\n<p>I think that's right, but I also think there is another reason behind podcasting's renaissance. As other forms of social media have matured, they've become less freewheeling and interesting. For example, the social media world I mostly inhabit - tech twitter - used to be exceptionally candid and direct. It felt like tech people chatting amongst themselves. Now it is mostly carefully crafted tweets designed to get retweeted and not cause trouble.</p>\n<p>Podcasting, on the other hand, feels fresh in the same way that other forms of social media did 5-10 years ago. No one knows what the right way to podcast is. Very few people have followings. The expectations are low. You are rewarded mostly for being fresh and experimental. It's the beginning of a new medium, and no one knows the rules. That's what makes it exciting and attracts pioneering creators.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/11/08/the-future-of-reading-depends-on-the-future-of-learning-difficult-to-learn-things",
      "title": "\"The Future of Reading Depends on the Future of Learning Difficult to Learn Things\"",
      "description": "Socrates’ complaints about writing included “Writing removes the need to remember”. He meant that a prosthetic brace on a healthy limb will…",
      "url": "https://cdixon.org/2014/11/08/the-future-of-reading-depends-on-the-future-of-learning-difficult-to-learn-things",
      "published": "2014-11-08T00:00:00.000Z",
      "updated": "2014-11-08T00:00:00.000Z",
      "content": "<blockquote>\n<p>Socrates’ complaints about writing included “Writing removes the need to remember”. He meant that a prosthetic brace on a healthy limb will induce withering. On the other hand, if we think of new technologies as amplifiers that add or multiply to what we already have rather than replacing them—then we have the opportunity to use writing for its reach over time and space, its efficiencies, and its ability to hold forms of argument that don’t work in oral discourse. And we can still learn to remember all we’ve read! In other words, writing is not a good replacement for memories used in thinking—too inefficient—but is a great way to cover more ground, to cover different ground, and to have more to think about and with.</p>\n<p>...[McLuhan said] that new media which are adopted at all first take their content from older and more familiar media. For example, it was important that the printed Gutenberg Bible be a Bible, and also look like a hand-made manuscript copy. Gradually, if the new medium has powers of its own, these will start to be found and used. The real message of printing was not to imitate hand-written Bibles, but 150 years later to argue in new ways about science and political governance. These are what forever changed Europe, and then America.</p>\n</blockquote>\n<p>-Alan Kay, \"<a href=\"http://www.vpri.org/pdf/future_of_reading.pdf\">The Future of Reading Depends on the Future of Learning Difficult to Learn Things</a>\" (via <a href=\"https://twitter.com/ibdknox\">Chris Granger</a>)</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/10/28/we-asked-for-flying-cars-and-all-we-got-was-the-entire-planet-communicating-instantly-via-pocket-supercomputers",
      "title": "We asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers",
      "description": "Benedict Evans has a new presentation about the explosive growth of internet-connected smartphones. By 2020, 80% of adults on earth will…",
      "url": "https://cdixon.org/2014/10/28/we-asked-for-flying-cars-and-all-we-got-was-the-entire-planet-communicating-instantly-via-pocket-supercomputers",
      "published": "2014-10-28T00:00:00.000Z",
      "updated": "2014-10-28T00:00:00.000Z",
      "content": "<p>Benedict Evans has a new <a href=\"http://a16z.com/2014/10/28/mobile-is-eating-the-world/\">presentation</a> about the explosive growth of internet-connected smartphones.</p>\n<p>By 2020, 80% of adults on earth will have a smartphone:</p>\n<p><a href=\"images/screen-shot-2014-10-28-at-5-39-38-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 619px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 65.26655896607431%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsSAAALEgHS3X78AAABoElEQVQoz5WSWU/CQBSF+/9/gvpCtFZEAk18EYLEJcWCkUBboFJqrSCmsnSmZWll8cCEpmJ88Mvk5s6dOXfOtMOtd4RhOBgMCCGO4yAOh8Ner4fi+m+4KAuCwLKsF2BZb92ubdvtdhvtfN93XXc8Hi+Xy30xNGGIEc7nc2yilPpbMMXSJAarxOHQczQaoTGUSOC53+8z54DGIL/g3ntdbIXY8/zH29zHe3cehFhgVhlufOxAO45SDyCDsaPDA01V7I7OlKhgyZ9MqOcTb0JYJG5kioss4Z4nPC/LD8IpX6vVrq+LsnT/3GqaTzfOqz54UT7tZ8dqEeozTz/EOIffiOWLdFqSpGw2m0qlymX5jD+uSoX7S8GUxFbxPFiuKXGxeV+cSCRKpVIymUQURTGTyVQqFUEQbu/u0hnxplgo5K9y+Tx+oWEYmw8WfTrcs1qtmqapqmqn09E0DeYxrdfrhtHWVLXRbOq6rigKngKawjn3FQPPYLFYICJHwoqr1Wqxgz2K2Ww2nU43/7kRA6ftRZZEOUzBiLIFRU7+D+UYmH4DMty3G9vmq/gAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2014 10 28 at 5 39 38 pm\"\n        title=\"screen shot 2014 10 28 at 5 39 38 pm\"\n        src=\"/static/bd68699102ee843b9860e2569f344b88/030a8/screen-shot-2014-10-28-at-5-39-38-pm.png\"\n        srcset=\"/static/bd68699102ee843b9860e2569f344b88/924ad/screen-shot-2014-10-28-at-5-39-38-pm.png 170w,\n/static/bd68699102ee843b9860e2569f344b88/f570f/screen-shot-2014-10-28-at-5-39-38-pm.png 341w,\n/static/bd68699102ee843b9860e2569f344b88/030a8/screen-shot-2014-10-28-at-5-39-38-pm.png 619w\"\n        sizes=\"(max-width: 619px) 100vw, 619px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>And each of those phones is equivalent to what we used to call a supercomputer:</p>\n<p><a href=\"images/screen-shot-2014-10-28-at-5-39-26-pm.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 602px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 56.810631229235874%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAALCAIAAADwazoUAAAACXBIWXMAAAsSAAALEgHS3X78AAAAyElEQVQoz5WRzQ6DIBCEff+HUxsPqDWCIv5V6yv0C0Rqihw6h8mAO+y4m2wnXnG4r1uAxKt9398BjuPwOmrGqbV+nmiapq5rWAgBt20LT9NE2b256zpKq6rChl9YlGWJnud5WZYw+dc8jiPNeR4BG2McD8OAGcb/Ez5xw+CWbA+LoijyPM+yDMERTYQ0TWGl1H1n3iaz+z3ShtOmMxGisfu+1ydcYC6NBXpd1+jAqKCtsmB4UkqEvIC292bnv271jz3H4NdzFR4f7bBUqu12eu8AAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2014 10 28 at 5 39 26 pm\"\n        title=\"screen shot 2014 10 28 at 5 39 26 pm\"\n        src=\"/static/9c62c6232dd26f1aea9db4c6055e541c/f0a9a/screen-shot-2014-10-28-at-5-39-26-pm.png\"\n        srcset=\"/static/9c62c6232dd26f1aea9db4c6055e541c/924ad/screen-shot-2014-10-28-at-5-39-26-pm.png 170w,\n/static/9c62c6232dd26f1aea9db4c6055e541c/f570f/screen-shot-2014-10-28-at-5-39-26-pm.png 341w,\n/static/9c62c6232dd26f1aea9db4c6055e541c/f0a9a/screen-shot-2014-10-28-at-5-39-26-pm.png 602w\"\n        sizes=\"(max-width: 602px) 100vw, 602px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>As Fraiser Speirs <a href=\"https://twitter.com/fraserspeirs/status/384142114088427520\">tweeted</a>, we asked for flying cars and all we got was the entire planet communicating instantly via pocket supercomputers.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/10/20/for-every-new-good-idea-you-have-there-ten-thousand-foolish-ones",
      "title": "\"The great ideas have come from people who weren’t paid to have great ideas\"",
      "description": "It is only afterward that a new idea seems reasonable. To begin with, it usually seems unreasonable. It seems the height of unreason to…",
      "url": "https://cdixon.org/2014/10/20/for-every-new-good-idea-you-have-there-ten-thousand-foolish-ones",
      "published": "2014-10-20T00:00:00.000Z",
      "updated": "2014-10-20T00:00:00.000Z",
      "content": "<blockquote>\n<p>It is only afterward that a new idea seems reasonable. To begin with, it usually seems unreasonable. It seems the height of unreason to suppose the earth was round instead of flat, or that it moved instead of the sun, or that objects required a force to stop them when in motion, instead of a force to keep them moving, and so on.</p>\n<p>A person willing to fly in the face of reason, authority, and common sense must be a person of considerable self-assurance. Since he occurs only rarely, he must seem eccentric (in at least that respect) to the rest of us. A person eccentric in one respect is often eccentric in others.</p>\n<p>The presence of others can only inhibit [the creative] process, since creation is embarrassing. For every new good idea you have, there are a hundred, ten thousand foolish ones, which you naturally do not care to display.</p>\n<p>Probably more inhibiting than anything else is a feeling of responsibility. The great ideas of the ages have come from people who weren’t paid to have great ideas, but were paid to be teachers or patent clerks or petty officials, or were not paid at all.</p>\n</blockquote>\n<p>From Isaac Asimov's <a href=\"http://www.technologyreview.com/view/531911/isaac-asimov-mulls-how-do-people-get-new-ideas/\">\"How do people get new ideas?\"</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/10/15/a-lot-of-the-best-tech-startups-are-ideas-that-have-been-around-for-years",
      "title": "\"A lot of the best tech startups are ideas that have been around for years\"",
      "description": "A lot of the best tech startups are ideas that have been around for years but the time is finally right. * Some people get jaded. \"We tried…",
      "url": "https://cdixon.org/2014/10/15/a-lot-of-the-best-tech-startups-are-ideas-that-have-been-around-for-years",
      "published": "2014-10-15T00:00:00.000Z",
      "updated": "2014-10-15T00:00:00.000Z",
      "content": "<p>A lot of the best tech startups are ideas that have been around for years but the time is finally right. <a href=\"https://twitter.com/cdixon/status/522436019078320128\">*</a></p>\n<p>Some people get jaded. \"We tried X years ago\" and summarily dismiss. But then eventually the time is right and it works. <a href=\"https://twitter.com/cdixon/status/522436401011630080\">*</a></p>\n<p>Examples include touch computing, virtual reality, and many areas of artificial intelligence. <a href=\"https://twitter.com/cdixon/status/522436555118772224\">*</a></p>\n<p>Or as pmarca <a href=\"https://twitter.com/pmarca/status/526144120444555264\">says</a>:</p>\n<p>In tech, \"I tried that 20 years ago and it didn't work\" is a positive predictor, not a negative predictor</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/10/14/a-standard-protocol-for-machines-to-negotiate-bitcoin-payments-for-resources",
      "title": "\"A standard protocol for machines to negotiate bitcoin payments for resources\"",
      "description": "Great idea from Brian Armstrong of Coinbase: 1/ Seems like there should be a standard protocol for machines to negotiate bitcoin payments…",
      "url": "https://cdixon.org/2014/10/14/a-standard-protocol-for-machines-to-negotiate-bitcoin-payments-for-resources",
      "published": "2014-10-14T00:00:00.000Z",
      "updated": "2014-10-14T00:00:00.000Z",
      "content": "<p>Great idea from <a href=\"https://twitter.com/brian_armstrong\">Brian Armstrong</a> of Coinbase:</p>\n<p>1/ Seems like there should be a standard protocol for machines to negotiate bitcoin payments for resources.</p>\n<p>2/ Examples could be getting access to wifi hot spots, your car finding charging stations, mesh networks (net taker/giver).</p>\n<p>3/ Devices could be like vending machines, you drop them out somewhere, and they generate rent for providing resources to passing machines.</p>\n<p>4/ Sample protocol (a) i need X, anyone have it? (b) I have X for sale at Y (c) I accept, payment embedded (d) I reject, stop pinging me</p>\n<p>We are dying to fund people working on ideas like this, or like <a href=\"http://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps/\">these</a> or <a href=\"http://blog.chain.com/post/99177371581/bitcoins-killer-apps\">these</a>.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/10/09/the-last-medium",
      "title": "\"You actually have to remind yourself not to believe\"",
      "description": "[Virtual Reality] is the last medium. We’re at the very beginning of it, but version 147 is The Matrix or Total Recall. Our brain is no…",
      "url": "https://cdixon.org/2014/10/09/the-last-medium",
      "published": "2014-10-09T00:00:00.000Z",
      "updated": "2014-10-09T00:00:00.000Z",
      "content": "<blockquote>\n<p>[Virtual Reality] is the last medium. We’re at the very beginning of it, but version 147 is <em>The Matrix</em> or <em>Total Recall</em>. Our brain is no longer translating an approximation of the story. You read a book; your brain reads letters printed in ink on paper and transforms that into a world. You watch a movie; you’re seeing imagery inside of a rectangle while you’re sitting inside a room, and your brain translates that into a world. And you connect to this even though you know it’s not real, but because you’re in the habit of suspending disbelief.</p>\n<p>With virtual reality, you’re essentially hacking the visual-audio system of your brain and feeding it a set of stimuli that’s close enough to the stimuli it expects that it sees it as truth. Instead of suspending your disbelief, you actually have to remind yourself not to believe.</p>\n</blockquote>\n<p>-Chris Milk, from <a href=\"https://stories.californiasunday.com/2014-10-05/virtual-reality-hollywood\">The Last Medium</a> (the whole article is excellent)</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps",
      "title": "Some ideas for native bitcoin apps",
      "description": "Fred Wilson calls applications built using Bitcoin that couldn't have existed prior to Bitcoin \"native Bitcoin apps\". Most of the…",
      "url": "https://cdixon.org/2014/10/04/some-ideas-for-native-bitcoin-apps",
      "published": "2014-10-04T00:00:00.000Z",
      "updated": "2014-10-04T00:00:00.000Z",
      "content": "<p>Fred Wilson calls applications built using Bitcoin that couldn't have existed prior to Bitcoin \"<a href=\"http://avc.com/2014/09/the-bitcoin-hype-cycle/\">native Bitcoin apps</a>\". Most of the applications built so far on Bitcoin are not native by this definition. You can buy something at an e-commerce site using Bitcoin and it is cheaper than using a credit card but buying things online isn't a new activity.</p>\n<p>What will these native Bitcoin apps do? That is very hard to predict, just as it was hard to predict back in 1993 what the successful native Internet apps would be (try to find someone in 1993 who predicted Wikipedia, Twitter, blogging, etc). But we can make some guesses. Here are some of mine:</p>\n<ol>\n<li><strong>International microfinance</strong> - Soon 5 billion people will have internet-connected smartphones but most still won't have bank accounts, access to credit, etc. Bitcoin removes most of the cost and friction of cross-border transactions and allows anyone with internet access to participate in the global economy. Early examples of international microfinance services include P2P lending sites like <a href=\"https://btcjam.com/\">BTCJam</a> and <a href=\"https://www.bitbond.net/\">Bitbond</a>.</li>\n<li><strong>Allocating bandwidth, storage, compute</strong>. Bitcoin could enable new ways to share and trade networked resources. For example, people have been trying for years to create mesh networks with only <a href=\"http://www.nytimes.com/2014/08/24/nyregion/red-hooks-cutting-edge-wireless-network.html\">occasional</a> success. It is possible that these systems mostly failed because they didn't offer the right incentives to share resources. Bitcoin provides a mechanism for network nodes to pay for resources at the protocol level.</li>\n<li><strong>Marketplaces -</strong> Ask anyone who runs a marketplace and they'll tell you that paying out to people with bank accounts is a huge headache, and paying out to people without bank accounts is altogether impossible. Using Bitcoin, we could take ideas like crowdfunding and crowd labor services (oDesk, 99 Designs, Beacon Reader, Mechanical Turk) and open them up to anyone with a smartphone.</li>\n<li><strong>Micropayments</strong> - The world just ran the first large-scale micropayments experiment - in-app payments on iOS and Android - and it was a huge success. In-app payments quickly became the dominant business model for mobile games, with some games generating billions a dollars a year using them. What would happen if we enabled micropayments on the web and not just for native mobile apps?</li>\n<li><strong>Incentivized social software.</strong> Up until now, social sites have had to rely on non-monetary currencies such as likes, followers, karma, upvotes, etc. With Bitcoin we can add actual monetary incentives to the mix. This is happening organically on Reddit where users are tipping each other using Bitcoin and Dogecoin. A good exercise would be to go back and look at the history of failed social sites and try to rethink them using financial incentives.</li>\n</ol>\n<p>The first phase of Bitcoin was about laying the foundational infrastructure - gateways, consumer wallets, developer platforms, merchant services etc. The next phase will be about native Bitcoin apps - building new things that could never have been built before. These will likely be the applications that drive Bitcoin adoption into the mainstream.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/08/15/natural-languages-are-adequate-but-that-doesnt-mean-theyre-optimal-2",
      "title": "\"Natural languages are adequate, but that doesn't mean they're optimal\"",
      "description": "Languages are something of a mess. They evolve over centuries through an unplanned, democratic process that leaves them teeming with…",
      "url": "https://cdixon.org/2014/08/15/natural-languages-are-adequate-but-that-doesnt-mean-theyre-optimal-2",
      "published": "2014-08-15T00:00:00.000Z",
      "updated": "2014-08-15T00:00:00.000Z",
      "content": "<blockquote>\n<p>Languages are something of a mess. They evolve over centuries through an unplanned, democratic process that leaves them teeming with irregularities, quirks, and words like “knight.” No one who set out to design a form of communication would ever end up with anything like English, Mandarin, or any of the more than six thousand languages spoken today.</p>\n<p>“Natural languages are adequate, but that doesn’t mean they’re optimal,” John Quijada, a fifty-three-year-old former employee of the California State Department of Motor Vehicles, told me. In 2004, he published a monograph on the Internet that was titled “Ithkuil: A Philosophical Design for a Hypothetical Language.” Written like a linguistics textbook, the fourteen-page Web site ran to almost a hundred and sixty thousand words. It documented the grammar, syntax, and lexicon of a language that Quijada had spent three decades inventing in his spare time. Ithkuil had never been spoken by anyone other than Quijada, and he assumed that it never would be.</p>\n</blockquote>\n<p>From <a href=\"http://www.newyorker.com/magazine/2012/12/24/utopian-for-beginners\">Utopian for Beginners</a>, an excellent 2012 New Yorker article about constructed human languages.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/08/15/steve-jobs-on-problem-solving",
      "title": "Steve Jobs on problem solving",
      "description": "When you start looking at a problem and it seems really simple,  you don’t really understand the complexity of the problem.  Then you get…",
      "url": "https://cdixon.org/2014/08/15/steve-jobs-on-problem-solving",
      "published": "2014-08-15T00:00:00.000Z",
      "updated": "2014-08-15T00:00:00.000Z",
      "content": "<blockquote>\n<p>When you start looking at a problem and it seems really simple,  you don’t really understand the complexity of the problem.  Then you get into the problem,  and you see that it’s really complicated,  and you come up with all these convoluted solutions.  That’s sort of the middle,  and that’s where most people stop… But the really great person will keep on going and find the key, the underlying principle of the problem — and come up with an elegant,  really beautiful solution that works.</p>\n</blockquote>\n<p>from <a href=\"http://www.amazon.com/Insanely-Great-Macintosh-Computer-Everything/dp/0140291776\">Insanely Great</a> (via <a href=\"http://instagram.com/gmc3\">gmc</a>)</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/08/13/bitcoin-is-the-currency-the-internet-deserves-and-needs",
      "title": "\"Bitcoin is the currency the internet deserves and needs\"",
      "description": "George Gilder discusses the importance of Bitcoin in a very interesting interview: To have a civilization you need more than just bits and…",
      "url": "https://cdixon.org/2014/08/13/bitcoin-is-the-currency-the-internet-deserves-and-needs",
      "published": "2014-08-13T00:00:00.000Z",
      "updated": "2014-08-13T00:00:00.000Z",
      "content": "<p>George Gilder discusses the importance of Bitcoin in a very interesting <a href=\"https://www.youtube.com/watch?v=V9hb0EKAcro&list=UU0uVZd8N7FfIZnPu0y7o95A\">interview</a>:</p>\n<blockquote>\n<p>To have a civilization you need more than just bits and bytes. You need contracts, transactions, provable facts, titles, notarization, identities etc. You need all these other factors thatcan't be accommodated very well on the existing internet. So you have to banks and all these other outside channels to conduct transactions. You have this comedy of bogus contracts to you are supposed to sign to proceed - click the button to accept the contract etc.</p>\n<p>The internet is full of junk. It pretends that a lot of that stuff is free which of course is a lie. So it’s full of lies. It’s a hustle. This is the result just having pure Shannon information. Shannon identifies information exclusively by its surprisal- the unexpected bits. That's how you measure information and bandwidth across the internet. Shannon’s a great genius. He created to perfect theory for the network layer. But as you know you need more than three layers on the network. You need a whole apparatus on top of the network layer.</p>\n<p>Bitcoin is a breakthrough in information theory that allows you - without reference to outside 3rd parties - to conduct provable, timestamped transactions that can’t be changed, can’t be faked, and can’t be duplicated. Bitcoin is the currency the internet deserves and needs.</p>\n</blockquote>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/08/03/as-elegantly-produced-as-movies-and-as-engaging-as-great-novels",
      "title": "As elegantly produced as movies and as engaging as great novels",
      "description": "MIT professor Woodie Flowers argues that higher education's current approach to online learning is misguided: We decided to assume that the…",
      "url": "https://cdixon.org/2014/08/03/as-elegantly-produced-as-movies-and-as-engaging-as-great-novels",
      "published": "2014-08-03T00:00:00.000Z",
      "updated": "2014-08-03T00:00:00.000Z",
      "content": "<p>MIT professor Woodie Flowers <a href=\"http://web.mit.edu/fnl/volume/243/flowers.html\">argues</a> that higher education's current approach to online learning is misguided:</p>\n<blockquote>\n<p>We decided to assume that the world could hardly wait to see our huge pile of PDFs, PowerPoint presentations, classroom locations, teaching assistant lists, and other assorted bits of information about our courses.</p>\n</blockquote>\n<p>Instead, universities should produce new learning materials specifically for the online world:</p>\n<blockquote>\n<p>In their highly developed form, learning materials would be as elegantly produced as movies and video games and would be as engaging as a great novel. They would be ‘smart’ to both accommodate the learners’ varied styles and yield data to facilitate their continuous improvement.</p>\n<p>Each year, 600,000 first-year college students take calculus; 250,000 fail. At $2000/failed-course, that is half-a-billion dollars. That happens to be the approximate cost of the movie <em>Avatar</em>, a movie that took a thousand people four years to make. Many of those involved in the movie were the best in their field. The present worth of losses of $500 million/year, especially at current discount rates, is an enormous number.... even a $100 million investment could cut the calculus failure rate in half.</p>\n</blockquote>\n<p>Online courses are to offline courses as movies are to plays. The marginal cost of delivering online courses is minimal. The potential audience is everyone with a smartphones and an internet connection - about 1.5 billion people today and growing quickly. There is no reason we shouldn't be investing as much to produce online courses as we do to produce Hollywood movies.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/08/02/three-levels-of-enthusiasm-for-technology",
      "title": "Three levels of enthusiasm for technology",
      "description": "Most businesses today believe that technology can dramatically improve the way they operate. But they embrace technology with varying levels…",
      "url": "https://cdixon.org/2014/08/02/three-levels-of-enthusiasm-for-technology",
      "published": "2014-08-02T00:00:00.000Z",
      "updated": "2014-08-02T00:00:00.000Z",
      "content": "<p>Most businesses today believe that technology can dramatically improve the way they operate. But they embrace technology with varying levels of enthusiasm.</p>\n<p>The lowest level of enthusiasm is to adopt technologies made by other companies - email, customer services software, etc - and perhaps create an \"IT department\" to manage those technologies but nothing more. The next level of enthusiasm is to create an internal technology organization - a senior executive position like a CTO, a technology department, etc - and develop proprietary software. The highest level of enthusiasm is to have top management with technology backgrounds who see technology as core to every organizational function. For them, having a technology department would be like having a business department - redundant and strange.</p>\n<p>A lot of recent Silicon Valley startups look at first glance like non-technology companies, doing things like food delivery, home services, transportation, etc. The difference is that the founders often grew up with technology, have backgrounds developing software, and can't imagine anything other then a technology-centric worldview. They're betting that by putting technology at the core, they'll be able to create dramatically better products and services.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/07/19/bitcoin-and-volatility",
      "title": "Bitcoin and volatility",
      "description": "The beauty of software platforms is that you can solve almost any problem by writing more software. For example, one of the most common…",
      "url": "https://cdixon.org/2014/07/19/bitcoin-and-volatility",
      "published": "2014-07-19T00:00:00.000Z",
      "updated": "2014-07-19T00:00:00.000Z",
      "content": "<p>The beauty of software platforms is that you can solve almost any problem by writing more software.</p>\n<p>For example, one of the most common criticisms of Bitcoin is that it is too volatile and speculative to be used as a payment system.  Merchants want the stability of government-backed currencies. Buyers don't want their Bitcoin exposure to fluctuate whenever they transact in Bitcoin.</p>\n<p>Coinbase has solved this problem. <a href=\"https://coinbase.com/merchants\">Merchants</a> can instantly convert any Bitcoin they receive into dollars.  Buyers can <a href=\"http://blog.coinbase.com/post/89402160917/buyback-bitcoin-after-checkout\">automatically replenish</a> any Bitcoin they spend. Transactions that use Coinbase this way create zero net Bitcoin exposure for either party. Volatility is no longer an issue.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/07/06/its-pretty-difficult-to-solve-big-problems-in-four-years",
      "title": "\"It's pretty difficult to solve big problems in four years\"",
      "description": "Larry Page: When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you're running Exxon, what do you…",
      "url": "https://cdixon.org/2014/07/06/its-pretty-difficult-to-solve-big-problems-in-four-years",
      "published": "2014-07-06T00:00:00.000Z",
      "updated": "2014-07-06T00:00:00.000Z",
      "content": "<p><a href=\"http://www.khoslaventures.com/fireside-chat-with-google-co-founders-larry-page-and-sergey-brin\">Larry Page</a>:</p>\n<blockquote>\n<p>When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you're running Exxon, what do you do? Say you want to do something good with the most valuable company on earth. A lot of people think probably, it's not doing good things - worried about the environment and so on. But if the company has a lot of capabilities--worldwide operations and manufacturing, government relations, probably could do a lot different things, if you took a 20-year view.</p>\n<p>If you took a four-year view, that's a pretty hard question to answer. What are you doing in the next four years, which I think is about the average tenure of a Fortune 500 CEO. So if you're being measured quarterly-- obviously, it's good to have some pressure so you actually do things, make money and improve things. But I think the four-year horizon for leaders is pretty difficult.</p>\n<p><strong>It's pretty difficult to solve big problems in four years. I think it's probably pretty easy to do it in 20 years. I think our whole system is setup in a way that makes it difficult for leaders of really big companies.</strong> Eventually, what you're doing doesn't makes sense over time, for whatever reasons - environmental or social or whatever it is. I think companies have a big problem making a big transition, so leaders get replaced.</p>\n</blockquote>\n<p>A huge advantage of companies like Google, Facebook, and Amazon is that they have CEOs with the gravitas (and, sometimes, control provisions) to operate on a very long-time horizon.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/06/15/the-next-twenty-years-are-going-to-make-this-last-twenty-years-just-pale",
      "title": "The next twenty years are going to make this last twenty years just pale",
      "description": "If we were sent back with a time machine, even 20 years, and reported to people what we have right now and describe what we were going to…",
      "url": "https://cdixon.org/2014/06/15/the-next-twenty-years-are-going-to-make-this-last-twenty-years-just-pale",
      "published": "2014-06-15T00:00:00.000Z",
      "updated": "2014-06-15T00:00:00.000Z",
      "content": "<blockquote>\n<p>If we were sent back with a time machine, even 20 years, and reported to people what we have right now and describe what we were going to get in this device in our pocket—we'd have this free encyclopedia, and we'd have street maps to most of the cities of the world, and we'd have box scores in real time and stock quotes and weather reports, PDFs for every manual in the world—we'd make this very, very, very long list of things that we would say we would have and we get on this device in our pocket, and then we would tell them that most of this content was free. You would simply be declared insane. They would say there is no economic model to make this. What is the economics of this? It doesn't make any sense, and it seems far-fetched and nearly impossible.</p>\n<p>But the next twenty years are going to make this last twenty years just pale. We're just at the beginning of the beginning of all these kind of changes. There's a sense that all the big things have happened, but relatively speaking, nothing big has happened yet.</p>\n</blockquote>\n<p>-<a href=\"http://edge.org/conversation/the-technium\">The Technium: An Interview with Kevin Kelly</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/04/13/software-eats-software-development",
      "title": "Software eats software development",
      "description": "Software is eating the world, and doing so using smaller and smaller teams. WhatsApp was able to disrupt the global SMS industry with only a…",
      "url": "https://cdixon.org/2014/04/13/software-eats-software-development",
      "published": "2014-04-13T00:00:00.000Z",
      "updated": "2014-04-13T00:00:00.000Z",
      "content": "<p>Software is eating the world, and doing so using smaller and smaller teams. WhatsApp was able to disrupt the global SMS industry with only a few dozen engineers. Small teams can have a big impact because software development (and deployment) has improved dramatically over the past decade. Some improvements include:</p>\n<ul>\n<li><strong>Infrastructure</strong>. Deploying a commercial website ten years ago required significant upfront capital. Now you can spin up virtual servers in minutes. Upfront costs are close to zero and ongoing costs are orders of magnitude lower than before.</li>\n<li><strong>Services</strong>. Startups created simple APIs that abstract away complex back ends. Examples: Stripe (payments), Twilio (communications), Firebase (databases), Sift Science (fraud).</li>\n<li><strong>Open Source</strong>. Open source dominates every level of the software stack, including operating systems (Linux), databases (MySql), web servers (Apache), and programming languages (Python, Ruby). These are not only free but generally also far higher quality than their commercial counterparts.</li>\n<li><strong>Programming languages</strong>. Developers have steadily marched upwards from Assembly to C to Java to, today, scripting languages like Ruby and Python. Moore's Law gave us excess computing resources. We spent it making developers more effective.</li>\n<li><strong>Special-purpose tools for non-programmers</strong>. These tools let non-programmers create software in certain pre-defined categories, thereby lowering costs and reducing the demand for developers. Examples: Shopify (e-commerce), Wordpress (blogging), and Weebly (small business websites).</li>\n<li><strong>General-purpose tools for non-programmers</strong>. In the pre-Internet era, tools like Hypercard and Visual Basic allowed hundreds of millions of semi-technical people to become software developers. Since then, there hasn't been much work in these areas, but from what I've seen that might change soon. By allowing more people to program, these tools act as a force multiplier for the software industry.</li>\n</ul>\n<p>In all likelihood, the demand for software development will continue to dramatically outpace the supply. If so, \"software eats software development\" will be an exciting area going forward, with lots of valuable startups created in the process.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/04/07/the-decline-of-the-mobile-web",
      "title": "The decline of the mobile web",
      "description": "People are spending more time on mobile vs desktop:  And more of their mobile time using apps, not the web:  This is a worrisome trend for…",
      "url": "https://cdixon.org/2014/04/07/the-decline-of-the-mobile-web",
      "published": "2014-04-07T00:00:00.000Z",
      "updated": "2014-04-07T00:00:00.000Z",
      "content": "<p>People are spending more time on mobile vs desktop:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/086d22587892530dc055199fdd59c8ea/b3ee8/comscore-mobile-users-desktop-users-2014.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 73.02083333333333%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"comscore mobile users desktop users 2014\"\n        title=\"comscore mobile users desktop users 2014\"\n        src=\"/static/086d22587892530dc055199fdd59c8ea/d6856/comscore-mobile-users-desktop-users-2014.jpg\"\n        srcset=\"/static/086d22587892530dc055199fdd59c8ea/c2e49/comscore-mobile-users-desktop-users-2014.jpg 170w,\n/static/086d22587892530dc055199fdd59c8ea/c2dc0/comscore-mobile-users-desktop-users-2014.jpg 341w,\n/static/086d22587892530dc055199fdd59c8ea/d6856/comscore-mobile-users-desktop-users-2014.jpg 681w,\n/static/086d22587892530dc055199fdd59c8ea/b3ee8/comscore-mobile-users-desktop-users-2014.jpg 960w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>And more of their mobile time using apps, not the web:</p>\n<p><a href=\"images/apps_dominate_hires-resized-600.png\"><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 600px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 84.83333333333333%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"apps dominate hires resized 600\"\n        title=\"apps dominate hires resized 600\"\n        src=\"/static/569a9f4c0cd234bb568a8983574d4fc3/34e8a/apps_dominate_hires-resized-600.png\"\n        srcset=\"/static/569a9f4c0cd234bb568a8983574d4fc3/924ad/apps_dominate_hires-resized-600.png 170w,\n/static/569a9f4c0cd234bb568a8983574d4fc3/f570f/apps_dominate_hires-resized-600.png 341w,\n/static/569a9f4c0cd234bb568a8983574d4fc3/34e8a/apps_dominate_hires-resized-600.png 600w\"\n        sizes=\"(max-width: 600px) 100vw, 600px\"\n        loading=\"lazy\"\n      />\n    </span></a></p>\n<p>This is a worrisome trend for the web. Mobile is the future. What wins mobile, wins the Internet. Right now, apps are winning and the web is losing.</p>\n<p>Moreover, there are signs that it will only get worse. Ask any web company and they will tell you that they value app users more than web users. This is why you see so many popups and banners on mobile websites that try to get you to download apps. It is also why so many mobile websites are <a href=\"http://brokenmobile.tumblr.com/?utm_content=buffer010a0&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer\">broken</a>. Resources are going to app development over web development. As the mobile web UX further deteriorates, the momentum toward apps will only increase.</p>\n<p>The likely end state is the web becomes a niche product used for things like 1) trying a service before you download the app, 2) consuming long tail content (e.g. link to a niche blog from Twitter or Facebook feed).</p>\n<p>This will hurt long-term innovation for a number of reasons:</p>\n<ol>\n<li>Apps have a rich-get-richer dynamic that favors the status quo over new innovations. Popular apps get home screen placement, get used more, get ranked higher in app stores, make more money, can pay more for distribution, etc. The end state will probably be like cable TV - a few dominant channels/apps that sit on users' home screens and everything else relegated to lower tiers or irrelevance.</li>\n<li>Apps are heavily controlled by the dominant app stores owners, Apple and Google. Google and Apple control what apps are allowed to exist, how apps are built, what apps get promoted, and charge a 30% tax on revenues.</li>\n</ol>\n<p>Most worrisome: they reject entire classes of apps without stated reasons or allowing for recourse (e.g. Apple has rejected all apps related to Bitcoin). The open architecture of the web led to an incredible era of experimentation. Many startups were controversial when they were first founded.  What if AOL or some other central gatekeeper had controlled the web, and developers had to ask permission to create Google, Youtube, eBay, Paypal, Wikipedia, Twitter, Facebook, etc. Sadly, this is where we're headed on mobile.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/25/oculus",
      "title": "Oculus",
      "description": "I've seen a handful of technology demos in my life that made me feel like I was glimpsing into the future. The best ones were: the Apple II…",
      "url": "https://cdixon.org/2014/03/25/oculus",
      "published": "2014-03-25T00:00:00.000Z",
      "updated": "2014-03-25T00:00:00.000Z",
      "content": "<p>I've seen a handful of technology demos in my life that made me feel like I was glimpsing into the future. The best ones were: the Apple II, the Macintosh, Netscape, Google, the iPhone, and - most recently - the <a href=\"http://www.oculusvr.com/\">Oculus</a> Rift.</p>\n<p>Virtual reality has long been a staple of science fiction. In real life, however, attempts to create virtual reality have consistently disappointed. Oculus was founded on the contrarian belief that the right people at the right time could finally deliver on the science fiction promise. Hardware components had become sufficiently powerful and inexpensive, and the pioneering engineers who invented 3D gaming were eager to explore a new frontier.</p>\n<p>Last year, my partner Gil Shafir and I spent time studying Oculus and virtual reality technology more generally. The more we learned, the more we became convinced that virtual reality would become central to the next great wave of computing. We were therefore thrilled when we got the chance to invest in Oculus later on.</p>\n<p>Today, Facebook <a href=\"https://www.facebook.com/zuck/posts/10101319050523971?stream_ref=1\">announced</a> that they are acquiring Oculus. Facebook's support will dramatically accelerate the development of the virtual reality ecosystem. While we are sad to no longer be working with Oculus, we are very happy to see virtual reality receive the support it deserves.</p>\n<p>I can't say enough about the Oculus team. Palmer, Brendan, John, Nate, and the rest of the team are true technology visionaries. They've assembled an incredible group of creative technologists from diverse fields. It was awesome tagging along for the ride, and I can't wait to see what they do at Facebook.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/17/we-leverage-the-billions-of-dollars-spent-on-the-consumer-mobile-phone-business",
      "title": "\"We leverage the billions of dollars spent on the consumer mobile phone business\"",
      "description": "NYTimes has an excellent profile of Planet Labs, a startup that makes low-cost satellites: These satellites are powered by batteries…",
      "url": "https://cdixon.org/2014/03/17/we-leverage-the-billions-of-dollars-spent-on-the-consumer-mobile-phone-business",
      "published": "2014-03-17T00:00:00.000Z",
      "updated": "2014-03-17T00:00:00.000Z",
      "content": "<p>NYTimes has an excellent <a href=\"http://www.nytimes.com/2014/03/17/technology/start-ups-aim-to-conquer-space-market.html?_r=2\">profile</a> of Planet Labs, a startup that makes low-cost satellites:</p>\n<blockquote>\n<p>These satellites are powered by batteries normally found in a laptop, with semiconductors similar to those in a smartphone. “Nothing here was prequalified to be in space,” Mr. Marshall said. “We bought most of our parts online.”</p>\n<p>Planet Labs will not disclose its manufacturing costs, but potential customers who have seen the products think the satellites are approximately 95 percent cheaper than most satellites, a figure Mr. Marshall would neither confirm nor dispute. “We leverage the billions of dollars spent on the consumer mobile phone business” for most of the company’s parts, he said.</p>\n</blockquote>\n<p>Chris Anderson <a href=\"http://www.foreignpolicy.com/articles/2013/04/29/epiphanies_from_chris_anderson\">calls</a> this \"the peace dividend of the smartphone war.\" Across a wide range of sectors, startups are now tackling problems that previously required billions of dollars from governments or multinational corporations.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/16/theres-just-a-tremendous-amount-of-craftsmanship-in-between-a-great-idea-and-a-great-product",
      "title": "\"There's just a tremendous amount of craftsmanship in between a great idea and a great product\"",
      "description": "Steve Jobs in 1995: There's just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that…",
      "url": "https://cdixon.org/2014/03/16/theres-just-a-tremendous-amount-of-craftsmanship-in-between-a-great-idea-and-a-great-product",
      "published": "2014-03-16T00:00:00.000Z",
      "updated": "2014-03-16T00:00:00.000Z",
      "content": "<p>Steve Jobs in <a href=\"http://tech.fortune.cnn.com/2011/11/11/steve-jobs-the-parable-of-the-stones/\">1995</a>:</p>\n<blockquote>\n<p>There's just a tremendous amount of craftsmanship in between a great idea and a great product. And as you evolve that great idea, it changes and grows. It never comes out like it starts because you learn a lot more as you get into the subtleties of it. And you also find there are tremendous tradeoffs that you have to make. There are just certain things you can't make electrons do. There are certain things you can't make plastic do. Or glass do. Or factories do. Or robots do.</p>\n<p>Designing a product is keeping five thousand things in your brain and fitting them all together in new and different ways to get what you want. And every day you discover something new that is a new problem or a new opportunity to fit these things together a little differently.</p>\n</blockquote>\n<p>This is why almost all successful startups have founders who understand business, design, and technology. Product development is the process of navigating a <a href=\"http://www.cdixon.org/2013/08/04/the-idea-maze/\">maze</a> - not three separate mazes, but a single maze that intersects all these functions. The people navigating the maze need the full authority of the company behind them.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/15/full-stack-startups",
      "title": "Full stack startups",
      "description": "Many of today's most exciting startups were tried before in a different form. Suppose you develop a new technology that is valuable to some…",
      "url": "https://cdixon.org/2014/03/15/full-stack-startups",
      "published": "2014-03-15T00:00:00.000Z",
      "updated": "2014-03-15T00:00:00.000Z",
      "content": "<p>Many of today's most exciting startups were tried before in a different form.</p>\n<p>Suppose you develop a new technology that is valuable to some industry. The old approach was to sell or license your technology to the existing companies in that industry. The new approach is to build a complete, end-to-end product or service that bypasses existing companies.</p>\n<p>Prominent examples of this \"full stack\" approach include Tesla, Warby Parker, Uber, Harry's, Nest, Buzzfeed, and Netflix. Most of these companies had \"partial stack\" antecedents that either failed or ended up being relatively small businesses. The problems with the partial stack approach include:</p>\n<ul>\n<li>Bad product experience. Nest is great because of deep, Apple-like integration between software, hardware, design, services, etc, something they couldn't have achieved licensing to Honeywell etc.</li>\n<li>Cultural resistance to new technologies. The media industry is notoriously slow to adopt new technologies, so Netflix is (mostly) bypassing them.</li>\n<li>Unfavorable economics. Your slice of the stack might be quite valuable but without control of the end customer it's very hard to get paid accordingly.</li>\n</ul>\n<p>The full stack approach lets you bypass industry incumbents, completely control the customer experience, and capture a greater portion of the economic benefits you provide.</p>\n<p>The challenge with the full stack approach is you need to get good at many different things: software, hardware, design, consumer marketing, supply chain management, sales, partnerships, regulation, etc. The good news is that if you can pull this off, it is very hard for competitors to replicate so many interlocking pieces.</p>\n<p>My guess is we are still at the very beginning of the full stack movement. Many large industries remain relatively untouched by the information technology revolution. That will likely change now that startups have figured out the right approach.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/14/stored-hashcash",
      "title": "Stored Hashcash",
      "description": "One of the greatest inventions in the history of computer security is Hashcash. Internet blights like spam and denial-of-service attacks are…",
      "url": "https://cdixon.org/2014/03/14/stored-hashcash",
      "published": "2014-03-14T00:00:00.000Z",
      "updated": "2014-03-14T00:00:00.000Z",
      "content": "<p>One of the greatest inventions in the history of computer security is <a href=\"http://en.wikipedia.org/wiki/Hashcash\">Hashcash</a>. Internet blights like spam and <a href=\"http://en.wikipedia.org/wiki/Denial-of-service_attack\">denial-of-service</a> attacks are what economists call \"tragedy of the commons\" problems. They exploit the fact that it's free to send email and make web requests. At zero cost, you can have a profitable business even at extremely low success rates.</p>\n<p>One way to fix these problems is to impose tariffs that hurt bad actors without hurting good actors. For example, you could impose \"postage fees\" on every email and web request. Unfortunately, in practice, this is impossible, because you'd have to set up billing relationships between every computer that wants to communicate.</p>\n<p>The brilliant idea behind Hashcash is to replace a monetary postage fee with a computational postage fee. In order to send an email, the sender first has to solve a math problem. Legitimate activities suffer an indiscernible delay, but illegitimate activities that require massive volume are hobbled.</p>\n<p>Hashcash is a great idea, but cumbersome in practice. For example, the cost imposed on senders varies widely depending on the performance of their email servers. It also hinders legitimate bulk emails like clubs and retailers sending updates to their mailing lists.</p>\n<p>The offline analogy to Hashcash is a postal system where senders are required to perform some work every time they want to send something. If you're a lawyer, you need to practice some law before you send mail. If you're a doctor, you need to cure something before you send mail. Etc. This of course would be a preposterous postal system.</p>\n<p>Adam Smith called money \"<a href=\"https://www.marxists.org/reference/archive/smith-adam/works/wealth-of-nations/book02/ch03.htm\">stored labor</a>\". You do your work and then store your labor as money, which you can later exchange for labor stored by other people. Storing labor in the form of money turns out to be a very flexible system for trading labor, and far superior to the barter system of performing work whenever your counterparty performs work.</p>\n<p>So Adam Smith's version of Hashcash is a system where you get credits for doing computation. You store your computational credits and spend them at your leisure. If you want to send an email, you can spend a little stored Hashcash. If I send you an email and you reply, we're even. If you send out a billion spam emails, it costs you a lot and undermines your spammy business model.</p>\n<p>There are other important problems that stored Hashcash could solve. Denial-of-service attacks are spam attacks except they happen on HTTP instead of SMTP and the payoff is ransom instead of spam offers. Computer scientists have long <a href=\"http://link.springer.com/chapter/10.1007%2F978-3-642-30373-9_43#page-1\">believed</a> that pricing schemes could dramatically reduce network congestion. Like every large-scale distributed system, the Internet benefits when scarce resources are efficiently allocated.</p>\n<p>It seems plausible that if a system like stored Hashcash were developed, some people would prefer to purchase stored Hashcash directly instead of generating it themselves. A market for stored Hashcash would emerge, with the value being some function of the supply and demand of scarce Internet resources.</p>\n<p>So here's my question: suppose someone invented a way to store Hashcash. It could dramatically reduce spam and denial-of-service attacks, and more efficiently allocate network bandwidth and other Internet resources. How valuable would stored Hashcash be?</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/13/four-categories-of-bitcoin-inspired-projects",
      "title": "Four categories of Bitcoin-related projects",
      "description": "New Bitcoin-related software projects are launching every day. From what I can tell these projects fall into four main categories: Bitcoin…",
      "url": "https://cdixon.org/2014/03/13/four-categories-of-bitcoin-inspired-projects",
      "published": "2014-03-13T00:00:00.000Z",
      "updated": "2014-03-13T00:00:00.000Z",
      "content": "<p>New Bitcoin-related software projects are launching every day. From what I can tell these projects fall into four main categories:</p>\n<p><em>Bitcoin apps and services</em>: These try to make Bitcoin more accessible, stable, secure, and useful. Examples: wallets, merchant services, fiat-to-crypto exchanges, crypto-to-crypto exchanges, Bitcoin derivatives exchanges, tipping services, and merchant microtransaction services.</p>\n<p><em>Bitcoin protocol extensions:</em> These are applications that use the Bitcoin blockchain as a global, secure, single-instance database and generally ignore Bitcoin-as-a-currency. Examples: <a href=\"http://www.mastercoin.org/\">Mastercoin</a>, <a href=\"http://coloredcoins.org/\">Colored Coins,</a> and a Princeton project that is building a <a href=\"http://dailyprincetonian.com/news/2014/01/u-researchers-develop-bitcoin-prediction-market/\">predictive market</a>.</p>\n<p><em>Altcoins</em>: These are basically Bitcoin variants with branding and technical modifications (and their own blockchain). Like Bitcoin, the primary purpose is to allow the store and transfer of value. Examples: <a href=\"https://litecoin.org/\">Litecoin</a>, <a href=\"http://dogecoin.com/\">Dogecoin</a>.</p>\n<p><em>Appcoins</em>: These are new projects that are inspired by Bitcoin's architecture but are intended to do things besides storing/transferring value (they also use their own blockchain). Examples: <a href=\"https://www.namecoin.org/\">Namecoin</a>, <a href=\"https://www.ethereum.org/\">Ethereum</a>.</p>\n<p>To me, the first two categories are probably the most interesting. If there is one thing we've learned from the development of Internet protocols like HTTP and SMTP, it's that network adoption is key. There will always be better protocols, but the combination of broad adoption and open extensibility generally wins. (Although Naval and Balaji make a compelling case for Appcoins <a href=\"http://startupboy.com/2014/03/09/the-bitcoin-model-for-crowdfunding/\">here</a>).</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/13/ive-come-up-with-a-set-of-rules-that-describe-our-reactions-to-technologies",
      "title": "\"I've come up with a set of rules that describe our reactions to technologies\"",
      "description": "\"I've come up with a set of rules that describe our reactions to technologies: 1. Anything that is in the world when you’re born is normal…",
      "url": "https://cdixon.org/2014/03/13/ive-come-up-with-a-set-of-rules-that-describe-our-reactions-to-technologies",
      "published": "2014-03-13T00:00:00.000Z",
      "updated": "2014-03-13T00:00:00.000Z",
      "content": "<p>\"I've come up with a set of rules that describe our reactions to technologies:</p>\n<p>1. Anything that is in the world when you’re born is normal and ordinary and is just a natural part of the way the world works.</p>\n<p>2. Anything that's invented between when you’re fifteen and thirty-five is new and exciting and revolutionary and you can probably get a career in it.</p>\n<p>3. Anything invented after you're thirty-five is against the natural order of things.\"</p>\n<p>- Douglas Adams (entire <a href=\"http://www.douglasadams.com/dna/19990901-00-a.html\">original article</a> is well worth reading)</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2014/03/12/433",
      "title": "If you asked people in 1989...",
      "description": "\"If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said that a decentralized…",
      "url": "https://cdixon.org/2014/03/12/433",
      "published": "2014-03-12T00:00:00.000Z",
      "updated": "2014-03-12T00:00:00.000Z",
      "content": "<p>\"If you asked people in 1989 what they needed to make their life better, it was unlikely that they would have said that a decentralized network of information nodes that are linked using hypertext.\"</p>\n<p>- <a href=\"http://farmerandfarmer.org/mastery/builder.html\">Farmer & Farmer</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/12/12/coinbase",
      "title": "Coinbase",
      "description": "One of the interesting things about Bitcoin is the contrast between how it is portrayed in the press and how it is understood by…",
      "url": "https://cdixon.org/2013/12/12/coinbase",
      "published": "2013-12-12T00:00:00.000Z",
      "updated": "2013-12-12T00:00:00.000Z",
      "content": "<p>One of the interesting things about Bitcoin is the contrast between how it is portrayed in the press and how it is understood by technologists. The press tends to portray Bitcoin as either a speculative bubble or a scheme for supporting criminal activity. In Silicon Valley, by contrast, Bitcoin is generally <a href=\"http://www.usv.com/posts/bitcoin-as-protocol\">viewed</a> as a <a href=\"http://startupboy.com/2013/11/07/bitcoin-the-internet-of-money/\">profound</a> technological breakthrough.</p>\n<p>The Internet is based on a set of core protocols that specify how information such as text, photos, and code should be transmitted. The designers of the Web built <a href=\"http://100pulse.com/http-statuscode/402.jsp\">placeholders</a> for a system that moved money, but never successfully completed it. Bitcoin is the first plausible proposal for an economic protocol for the Internet.</p>\n<p>This matters for two reasons:</p>\n<ol>\n<li>It fixes serious problems with existing payment systems that depend on centralized services to verify the validity of transactions. These services are both expensive (roughly a 2.5% tax on all transactions) and prone to failure (Internet payment fraud is rampant).</li>\n<li>More importantly, Bitcoin is a platform upon which new technologies can be developed. Developers have created some <a href=\"https://docs.google.com/document/d/1AnkP_cVZTCMLIzw4DvsW6M8Q2JC0lIzrTLuoWu2z1BE/edit\">early</a> <a href=\"http://www.proofofexistence.com/\">applications</a>, and <a href=\"https://www.mail-archive.com/[email protected]/msg10162.html\">speculated</a> about future applications. Some potential applications include: a) micropayments as a replacement for banner ads or subscription fees, b) machine-to-machine payments to reduce spam and denial-of-service attacks, c) a way to offer low-cost financial services to people who, because of financial or political constraints, don’t have them today.</li>\n</ol>\n<p>But to proliferate widely, Bitcoin needs a killer app the same way HTTP had web browsers and SMTP had email clients. That’s why today I’m excited to announce that Andreessen Horowitz is leading a $25M financing of <a href=\"https://coinbase.com/\">Coinbase</a>, a service that provides an accessible interface to the Bitcoin protocol. Consumers can use Coinbase to convert to and from other currencies and to pay for goods and services. Merchants can use Coinbase to accept payments and convert currencies. Developers can build new services using Coinbase’s API.</p>\n<p>Coinbase has grown extremely fast and is now the most widely used Bitcoin service in the US. The founders of Coinbase, Brian Armstrong and Fred Ehrsam, have worked closely with banks and regulators to ensure that the service is safe and compliant. We think Coinbase can significantly accelerate Bitcoin’s proliferation, and as that happens the Internet will enter a new phase of invention and opportunity.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/09/28/some-thoughts-on-startup-crowdfunding",
      "title": "Some thoughts on startup crowdfunding",
      "description": "Like a lot of people, I’m excited about crowdfunding, and specifically the crowdfunding of startups now that’s it’s legal in the US. Based…",
      "url": "https://cdixon.org/2013/09/28/some-thoughts-on-startup-crowdfunding",
      "published": "2013-09-28T00:00:00.000Z",
      "updated": "2013-09-28T00:00:00.000Z",
      "content": "<p>Like a lot of people, I’m excited about crowdfunding, and specifically the crowdfunding of startups now that’s it’s legal in the US. Based on my own experience investing in startups, here are some thoughts and issues that come to mind regarding startup crowdfunding.</p>\n<ol>\n<li>Startup financings tend toward the extremes of being very oversubscribed or very undersubscribed. If you graphed out investor interest, it would look like a “U”. This is primarily the result of signaling – once a few investors commit (especially high quality ones), other investors pile on. If investors don’t commit, other investors start to wonder what’s wrong. So when you consider startup crowdfunding, it’s important to distinguish the oversubscribed cases from the undersubscribed cases. (Although one counter to this is that the U is the result of an inefficient market – when the crowds get involved valuations will float to their market clearing prices).</li>\n<li>Historically, startup investing returns have tended to obey power laws (Peter Thiel has a good discussion of this phenomenon <a href=\"http://blakemasters.com/post/21869934240/peter-thiels-cs183-startup-class-7-notes-essay\">here</a>). The vast majority of the returns came from the breakout hits. And if you go back and look at the early financings of breakout hits, a lot of them were hotly contested and oversubscribed. If amateur investors had been trying to invest in those startups via crowdfunding sites, they probably would have been squeezed out. If those amateurs were part of a syndicate, the syndicate lead would have felt pressure to drop them, at least for those hot deals. (Counterargument: the power law is caused by the myopia of traditional investors looking for the next Google. The crowd will be able to find new investments that greatly expand the set of successful startups)</li>\n<li>Crowdfunding works best when the backers have special knowledge about the project that leads them to fund things that otherwise would have been overlooked or undervalued by traditional investors. This happens, for example, in the Kickstarter video games category, where most of the backers are game enthusiasts. The most promising scenarios for startup crowdfunding are where the backers are potential customers of the product (e.g. HR managers backing new HR software). This could also solve the adverse selection problem, as the startup founders would probably favor these backers over traditional startups investors.</li>\n<li>When you look at the biggest crowdfunding markets – publicly traded stocks on NYSE, NASDAQ, etc – you find that a) In general, non-professional investors lose money when they try to pick individual stocks. This suggests that something similar to mutual funds would be the best mechanism for amateur participation. b) There is a constant cat-and-mouse game between regulators and sketchy market participants. If this happens with private financings, and more and more rules and regulations get added, many of the advantages of being a private company could go away.</li>\n<li>Most successful seed investors will say that it is mostly about investing in great people, and it is very hard to evaluate people even after multiple in-person meetings. If founders are going to be evaluated online without in-person meetings, great care has to be taken to make sure the evaluation mechanisms are sufficiently nuanced and reliable. (The counterargument is that this might be true when individual professional investors evaluate startups. In the aggregate, the crowd can outsmart individual professionals even with fewer direct interactions.)</li>\n<li>One way to look at startup crowdfunding is as the first step in a process that includes additional steps that prevent adverse selection, sketchy behavior etc. For example, a startup I know raised money recently from a single lead investor and then found additional investors via a crowdfunding site. They ended up rejecting many of the interested investors but found a few useful investors that they otherwise wouldn’t have found. In this model crowdfunding looks more like LinkedIn for investors – extremely useful for connecting, but only the first step of a process that includes interviews, reference checks, etc.</li>\n</ol>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/09/14/the-internet-is-for-snacking",
      "title": "The Internet is for snacking",
      "description": "Web products have followed a steady evolutionary path from the compound to the atomic. Today’s popular social sites are spin outs of…",
      "url": "https://cdixon.org/2013/09/14/the-internet-is-for-snacking",
      "published": "2013-09-14T00:00:00.000Z",
      "updated": "2013-09-14T00:00:00.000Z",
      "content": "<p>Web products have followed a steady evolutionary path from the compound to the atomic. Today’s popular social sites are spin outs of behaviors that emerged from blogs and forums, the primordial soup of the early social web. Before there was Twitter, people were doing something similar to tweeting on so-called link blogs or micro blogs. Tumblr was a direct descendent of a particular strain of blogs known as tumble blogs.</p>\n<p>The successful products took big meals and converted them to snacks. The Internet likes snacks – simple, focused products that capture an atomic behavior and become compound only by linking in and out to other services. This has become even more so with the shift to mobile. People check their phones frequently, in short bursts, looking for nuggets of information.</p>\n<p>A notable exception to this pattern are online products that users pay for. The dominant payment systems (mainly, credit card systems) were designed to be offline systems and only much later awkwardly grafted onto the Internet. They are inefficient and prone to fraud. As a result, paying online means making a commitment of time and trust. That’s why one of the most valuable assets an online business can have is “credit cards on file”. It is also one of the reasons there is a rich-get-richer dynamic for paid products. Big companies like Amazon and Apple are the beneficiaries.</p>\n<p>The perverse result of this system is that products that are naturally suited to be “paid snacks” have to contort themselves to make money. News and music are good examples. Only a few news sites are popular enough to entice users to commit to paying, and even those have had only limited success with paywalls. Other news sites depend on intrusive ads to support themselves. Music is mainly purchased through aggregators like iTunes and Spotify who charge a hefty tariff. You need a comprehensive catalog to convince users to commit to a payment relationship.</p>\n<p>In-app payments on iOS and Android are the one place where paid snacks exist at scale. They have been wildly successful, quickly becoming the dominant business model for games, replacing up-front payments and banner ads. (There are individual games that generate over one billion dollars per year from in-app payments.) Outside of games, entrepreneurs have started building interesting new products that wouldn’t have been viable without in-app payments.</p>\n<p>This is one of the main reasons people are excited about new payment systems like Bitcoin. A broadly adopted form of “programmable money” has the potential to bring paid snacking to the rest of the Internet, and in doing so enable the save level of innovation in paid products that we’ve seen in the free and ad-supported products.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/08/04/the-idea-maze",
      "title": "The idea maze",
      "description": "The pop culture view of startups is that they’re all about coming up with a great product idea. After the eureka moment, the outcome is…",
      "url": "https://cdixon.org/2013/08/04/the-idea-maze",
      "published": "2013-08-04T00:00:00.000Z",
      "updated": "2013-08-04T00:00:00.000Z",
      "content": "<p>The pop culture view of startups is that they’re all about coming up with a great product idea. After the eureka moment, the outcome is preordained. This neglects the years of toil that entrepreneurs endure, and also the fact that the vast majority of startups change over time, often dramatically.</p>\n<p>In response to this pop culture misconception, it has become popular in the startup community to say things like “execution is everything” and “ideas don’t matter”.</p>\n<p>But the reality is that ideas do matter, just not in the narrow sense in which startup ideas are popularly defined. Good startup ideas are well developed, multi-year plans that contemplate many possible paths according to how the world changes. <a href=\"https://www.coursera.org/course/startup\">Balaji Srinivasan</a> calls this the <a href=\"https://spark-public.s3.amazonaws.com/startup/lecture_slides/lecture5-market-wireframing-design.pdf\">idea maze</a>:</p>\n<blockquote>\n<p>A good founder is capable of anticipating which turns lead to treasure and which lead to certain death. A bad founder is just running to the entrance of (say) the “movies/music/filesharing/P2P” maze or the “photosharing” maze without any sense for the history of the industry, the players in the maze, the casualties of the past, and the technologies that are likely to move walls and change assumptions.</p>\n</blockquote>\n<p>Imagine, for example, that you were thinking of starting Netflix back when it was founded in 1997. How would content providers, distribution channels, and competitors respond? How soon would technology develop to open a hidden door and let you distribute online instead of by mail? Or consider Dropbox in 2007. Dozens of cloud storage companies had been started before. What mistakes had they made? How would incumbents like Amazon and Google respond? How would new platforms like mobile affect you?</p>\n<p>When you’re starting out, it’s impossible to completely map out the idea maze. But there are some places you can look for help:</p>\n<ol>\n<li>History. If your idea has been tried before (and almost all good ideas have), you should figure out what the previous attempts did right and wrong. A lot of this knowledge exists only in the brains of practitioners, which is one of many reasons why “<a href=\"http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/\">stealth mode</a>” is a bad idea. The benefits of learning about the maze generally far outweigh the risks of having your idea stolen.</li>\n<li>Analogy. You can also build the maze by analogy to similar businesses. If you are building a “peer economy” company it can be useful to look at what Airbnb did right. If you are building a marketplace you should understand eBay’s beginnings. Etc.</li>\n<li>Theories. There are now decades of historical data on tech startups, and smart observers have sifted through to develop theories that generalize that data. Some of these theories come from academia (e.g. Clay Christensen) but increasingly they come from investors and entrepreneurs on blogs.</li>\n<li>Direct experience. A lot of good startup founders figure out the maze through direct experience, often at work. The key here is to put yourself in interesting mazes and give yourself time to figure it out.</li>\n</ol>\n<p>The metaphor of a maze also helps you think about competition. Competition from other startups is usually just a <a href=\"http://cdixon.org/2010/06/26/competition-is-overrated/\">distraction</a>. In all likelihood, they won’t take the same path, and the presence of others in your maze means you might be onto something. Your real competition – and what you should worry about – is the years you could waste going down the wrong path.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/06/01/some-thoughts-on-mobile",
      "title": "Some thoughts on mobile",
      "description": "People tend to lump smartphones and tablets together as “mobile”. This can be misleading. Ask people who run internet companies and they’ll…",
      "url": "https://cdixon.org/2013/06/01/some-thoughts-on-mobile",
      "published": "2013-06-01T00:00:00.000Z",
      "updated": "2013-06-01T00:00:00.000Z",
      "content": "<ul>\n<li>People tend to lump smartphones and tablets together as “mobile”. This can be misleading. Ask people who run internet companies and they’ll tell you that user behavior on tablets is far more similar to user behavior on desktops/laptops than it is to user behavior on smartphones. That said, the software on smartphones and tablets is similar, as are the discovery mechanisms (mostly app stores) and monetization techniques.</li>\n<li>Microsoft is running <a href=\"http://tech2.in.com/news/tablets/new-windows-8-ad-takes-a-dig-at-ipad-using-siri/874112\">ads</a> making fun of the iPad for being a “consumption” device. Here’s what Steve Jobs had to <a href=\"http://news.cnet.com/8301-13860_3-20006442-56.html\">say</a> back in 2010 about creation (“productivity”) on the iPad:</li>\n</ul>\n<blockquote>\n<p>We are just scratching the surface on the kinds of apps for the iPad…I think there are lots of kinds of content that can be created on the iPad. When I am going to write that 35-page analyst report, I am going to want my Bluetooth keyboard. That’s 1 percent of the time. The software will get more powerful. I think your vision would have to be pretty short to think these can’t grow into machines that can do more things, like editing video, graphic arts, productivity. You can imagine all of these content creation possibilities on these kind of things. Time takes care of lots of these things.</p>\n</blockquote>\n<p>If you go back and look at the history of productivity apps you’ll see that each major user interface shift led to new classes of productivity apps. Back in the 70s and 80s, when computers had text-based interfaces, word processor applications like Wordperfect and spreadsheet applications like Lotus 1-2-3 were invented. In the 80s and 90s, when graphical interfaces became popular, presentation apps like Powerpoint and photo editing apps like Photoshop were invented. If the historical pattern repeats, productivity apps that are “native” to the tablet will be invented.</p>\n<ul>\n<li>App stores have had a few important effects: 1) They take 30% of revenue, which scares away most big companies (e.g. Microsoft) and also startups/venture capitalists. Not many businesses can survive an immediate 30% haircut. 2) They’ve led consumers to expect very low prices for software. It’s hard to imagine charging $30 let alone hundreds of dollars for software through app stores (although some mega-hit games do get near these levels with in-app purchases). This is why many big software vendors are scared. 3) The discovery mechanisms (e.g. top download charts) tend to have a rich-get-richer effect, making it very hard for software to grow from niches, as they often did in the past. Just as in the movie industry, the trend is toward creating blockbusters that appeal to everyone. The emergence of new app discovery mechanisms (e.g. FB & Twitter) might alleviate this problem.</li>\n<li>The best entrepreneurs understand these dynamics and have been exploring “attach” business models, which basically means charging for something outside of the app store, like offline products/services (e.g. Square, Uber), online services (e.g. Spotify, Dropbox), and sometimes even hardware. Most of the companies that have succeeded (= generate real revenues/profits) on mobile were either desktop incumbents (e.g. eBay, Amazon, Facebook) or have attach business models.</li>\n<li>Fans of Apple and Google have been arguing lately about which company is winning mobile. Apple has more profits, but Android has more users. But what really matters is when and if developers switch over to developing for Android first, or even Android only. For now, iOS users tend to monetize much better than Android users, more than making up for the smaller user base. The switch to Android first hasn’t happened yet, but at least based on conversations I’ve had with entrepreneurs, it seems likely to happen in the next year or two.</li>\n<li>Mobile has had a big effect on b2b software. People want to use their personal iOS/Android devices at work, and many people now have computers with them all the time who didn’t before. This has created opportunities for 1) traditional b2b software that is mobile friendly, 2) companies that support mobile devices for businesses (e.g. mobile security, compliance etc), 3) brand new categories of software for users who previously used pencil and paper for various business tasks.</li>\n</ul>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/04/30/hardware-startups",
      "title": "Hardware startups",
      "description": "For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing. As Paul Graham says, there are many…",
      "url": "https://cdixon.org/2013/04/30/hardware-startups",
      "published": "2013-04-30T00:00:00.000Z",
      "updated": "2013-04-30T00:00:00.000Z",
      "content": "<p>For a long time, entrepreneurs and investors shied away from hardware. This seems to be changing. As Paul Graham <a href=\"http://www.paulgraham.com/hw.html\">says</a>, there are many reasons for this:</p>\n<blockquote>\n<p>Hardware <a href=\"http://bits.blogs.nytimes.com/2012/05/11/pebble-smartwatch-tops-out-at-10-million-on-kickstarter/\">does well</a> on crowdfunding sites. The spread of <a href=\"http://paulgraham.com/tablets.html\">tablets</a> makes it possible to build new things <a href=\"http://lockitron.com/\">controlled by</a> and even <a href=\"http://doublerobotics.com/\">incorporating</a> them. <a href=\"http://www.boostedboards.com/\">Electric motors</a> have improved. Wireless connectivity of various types can now be taken for granted. It’s getting more straightforward to get things manufactured. Arduinos, 3D printing, laser cutters, and more accessible CNC milling are making hardware easier to prototype. Retailers are less of a bottleneck as customers increasingly buy online.</p>\n</blockquote>\n<p>Another important factor is what Chris Anderson <a href=\"http://www.foreignpolicy.com/articles/2013/04/29/epiphanies_from_chris_anderson\">calls</a> “the peace dividend of the smartphone war”:</p>\n<blockquote>\n<p>All the components in a smartphone — the sensors, the GPS, the camera, the ARM core processors, the wireless, the memory, the battery — all that stuff, which is being driven by the incredible economies of scale and innovation machines at Apple, Google, and others, is available for a few dollars. They were essentially “unobtainium” 10 years ago. This is stuff that used to be military industrial technology; you can buy it at RadioShack now.</p>\n</blockquote>\n<p>It also doesn’t hurt that the most valuable company in the world (Apple) and some of the most exciting startups (e.g., Nest, Jawbone, Leap Motion) make hardware.</p>\n<p>If you are thinking of doing a hardware startup, here are a few things to keep in mind:</p>\n<ul>\n<li><em>Manufacturing</em>. Many hardware startups stumble when they try to go from prototype to large-scale manufacturing. There is no AWS-equivalent for hardware. To get manufacturing right, entrepreneurs often end up living in China for months and even years. The difficulty of manufacturing is one reason that hardware entrepreneurs tend to have more work experience than software entrepreneurs.</li>\n<li><em>Defensibility</em>. Hardware companies generally have economies of scale but hardware products generally don’t have network effects. This means that as soon as you prove the market, you’ll face competition from lower cost manufacturers. The best startups complement hardware with software and services that have network or platform effects. Think of hardware as bringing the revenue and software/services as bringing the margin.</li>\n<li><em>Planning</em>. The build-test-iterate model that is popular in software startups doesn’t translate well to hardware startups. Proper planning is essential because mistakes can be unrecoverable. For example, you might create a design that fails environmental tests but only discover this years later when you are about to go to market. (See all those symbols on the back of your phone? Those are regulatory certifications).</li>\n<li><em>B2C vs B2B</em>. Consumer hardware tends to get more attention, but B2B hardware has a number of advantages. You’ll have fewer startup competitors, because entrepreneurs who have both hardware and business domain expertise are rare. You’ll also have fewer incumbent competitors, because B2B hardware usually requires local sales and service teams, making it harder for foreign competitors to copy you. Finally, manufacturing can be done locally because higher price points mean you can be less sensitive to labor costs.</li>\n</ul>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/04/06/technology-predictions",
      "title": "Technology predictions",
      "description": "For those of us in the prediction business, it’s sometimes useful to go back and read past predictions to try to discern patterns in what…",
      "url": "https://cdixon.org/2013/04/06/technology-predictions",
      "published": "2013-04-06T00:00:00.000Z",
      "updated": "2013-04-06T00:00:00.000Z",
      "content": "<p>For those of us in the prediction business, it’s sometimes useful to go back and read past predictions to try to discern patterns in what they got right and wrong.</p>\n<p>Back in the early 90s, a lot of people thought the Internet was overhyped. <a href=\"http://www.thedailybeast.com/newsweek/1995/02/26/the-internet-bah.html\">Here’s</a> one example from Newsweek:</p>\n<blockquote>\n<p>Do our computer pundits lack all common sense? The truth in no online database will replace your daily newspaper, no CD-ROM can take the place of a competent teacher and no computer network will change the way government works…. What the Internet hucksters won’t tell you is tht the Internet is one big ocean of unedited data, without any pretense of completeness. Lacking editors, reviewers or critics, the Internet has become a wasteland of unfiltered data.</p>\n</blockquote>\n<p>Today, it’s easy to find people expressing similar skepticism about emerging technologies like the Internet of things, robotics, 3D printing, Bitcoin, etc.</p>\n<p>What the skeptics overlook is that platforms that are open to third-party developers have the following characteristic: it’s hard to think of important use cases before they are built, and hard to find examples where important use cases weren’t developed after they were built.</p>\n<p>Just look at the founding years of top websites. Google: 1998. Wikipedia: 2001. YouTube: 2005. Twitter: 2006. No wonder it was so hard to imagine these services early on. It took years to imagine them even after the Internet had gone mainstream.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/03/02/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years",
      "title": "What the smartest people do on the weekend is what everyone else will do during the week in ten years",
      "description": "Many breakthrough technologies were hatched by hobbyists in garages and dorm rooms. Prominent examples include the PC, the web, blogs, and…",
      "url": "https://cdixon.org/2013/03/02/what-the-smartest-people-do-on-the-weekend-is-what-everyone-else-will-do-during-the-week-in-ten-years",
      "published": "2013-03-02T00:00:00.000Z",
      "updated": "2013-03-02T00:00:00.000Z",
      "content": "<p>Many breakthrough technologies were hatched by hobbyists in garages and dorm rooms. Prominent examples include the PC, the web, blogs, and most open source software.</p>\n<p>The fact that flip-flop wearing hobbyists spawn large industries is commonly viewed as an amusing eccentricity of the technology industry. But there is a reason why hobbies are so important.</p>\n<p>Business people vote with their dollars, and are mostly trying to create near-term financial returns. Engineers vote with their time, and are mostly trying to invent interesting new things. Hobbies are what the smartest people spend their time on when they aren’t constrained by near-term financial goals.</p>\n<p>Today, the tech hobbies with momentum include: math-based currencies like Bitcoin, new software development tools like NoSQL databases, the internet of things, 3D printing, touch-free human/computer interfaces, and “artisanal” hardware like the kind you find on Kickstarter.</p>\n<p>It’s a good bet these present-day hobbies will seed future industries. What the smartest people do on the weekends is what everyone else will do during the week in ten years.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/02/26/pcs-are-going-to-be-like-trucks",
      "title": "“PCs are going to be like trucks”",
      "description": "Steve Jobs in 2010: When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms. Cars became more…",
      "url": "https://cdixon.org/2013/02/26/pcs-are-going-to-be-like-trucks",
      "published": "2013-02-26T00:00:00.000Z",
      "updated": "2013-02-26T00:00:00.000Z",
      "content": "<p>Steve Jobs in <a href=\"http://news.cnet.com/8301-13860_3-20006442-56.html\">2010</a>:</p>\n<blockquote>\n<p>When we were an agrarian nation, all cars were trucks because that’s what you needed on the farms. Cars became more popular as cities rose, and things like power steering and automatic transmission became popular.</p>\n<p>PCs are going to be like trucks. They are still going to be around…they are going to be one out of x people.</p>\n<p>This transformation is going to make some people uneasy…because the PC has taken us a long ways. It’s brilliant. We like to talk about the post-PC era, but when it really starts to happen, it’s uncomfortable.</p>\n<p>We are just scratching the surface on the kinds of apps for the iPad…I think there are lots of kinds of content that can be created on the iPad.</p>\n<p>When I am going to write that 35-page analyst report, I am going to want my Bluetooth keyboard. That’s 1 percent of the time. The software will get more powerful. I think your vision would have to be pretty short to think these can’t grow into machines that can do more things, like editing video, graphic arts, productivity. You can imagine all of these content creation possibilities on these kind of things. Time takes care of lots of these things.</p>\n</blockquote>\n<p>This year, about five times as many smartphones will be shipped versus PCs, and tablets will surpass PCs for the first time. According to Jobs, the right way to look at this isn’t that mobile devices are creating a new market. It’s that mobile devices are relegating PCs to special-purpose, mostly industrial devices.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/02/12/the-credentials-trap",
      "title": "The credentials trap",
      "description": "I talk a lot to people who are deciding between startups and established companies. They’re usually early in their careers and have been…",
      "url": "https://cdixon.org/2013/02/12/the-credentials-trap",
      "published": "2013-02-12T00:00:00.000Z",
      "updated": "2013-02-12T00:00:00.000Z",
      "content": "<p>I talk a lot to people who are deciding between startups and established companies. They’re usually early in their careers and have been exclusively affiliated with well-known schools and companies. As a result, they’re accustomed to praise from family and friends. Going to a startup is scary, as Jessica Livingstone, cofounder of Y Combinator, <a href=\"http://www.foundersatwork.com/1/post/2012/10/what-goes-wrong.html\">describes</a>:</p>\n<blockquote>\n<p>Everyone you encounter will have doubts about what you’re doing—investors, potential employees, reporters, your family and friends. What you don’t realize until you start a startup is how much external validation you’ve gotten for the conservative choices you’ve made in the past. You go to college and everyone says, “Great!” Then you graduate get a job at Google and everyone says, “Great!”</p>\n</blockquote>\n<p>But optimizing for external validation is a dangerous trap. You’re fighting over a fixed pie against well-credentialed peers. The most likely outcome is a middle management job where you’ll have little impact and never seriously attempt to realize your ambitions. Peter Thiel’s personal experience <a href=\"https://gist.github.com/harperreed/3201887\">illustrates</a> this well:</p>\n<blockquote>\n<p>By graduation, students at Stanford Law and other elite law schools have been racking up credentials and awards for well over a dozen years. The pinnacle of post law school credentialism is landing a Supreme Court clerkship. After graduating from SLS in ’92 and clerking for a year on the 11th Circuit, Peter Thiel was one of the small handful of clerks who made it to the interview stage with two of the Justices. That capstone credential was within reach. Peter was so close to winning that last competition. There was a sense that, if only he’d get the nod, he’d be set for life. But he didn’t.</p>\n<p>Years later, after Peter built and sold PayPal, he reconnected with an old friend from SLS. The first thing the friend said was, “So, aren’t you glad you didn’t get that Supreme Court clerkship?” It was a funny question. At the time, it seemed much better to be chosen than not chosen. But there are many reasons to doubt whether winning that last competition would have been so good after all. Probably it would have meant a future of more insane competition. And no PayPal. The pithy, wry version of this is the line about Rhodes Scholars: they all had a great future in their past.</p>\n</blockquote>\n<p>Great institutions can prepare you for great things. Credentials can open doors. But don’t let them become an end in themselves.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/02/09/the-computing-deployment-phase",
      "title": "The computing deployment phase",
      "description": "Technological revolutions happen in two main phases: the installation phase and the deployment phase. Here’s a chart (from this excellent…",
      "url": "https://cdixon.org/2013/02/09/the-computing-deployment-phase",
      "published": "2013-02-09T00:00:00.000Z",
      "updated": "2013-02-09T00:00:00.000Z",
      "content": "<p>Technological revolutions happen in two main phases: the installation phase and the deployment phase. Here’s a chart (from <a href=\"http://www.amazon.com/Technological-Revolutions-Financial-Capital-Dynamics/dp/1843763311\">this</a> excellent book by Carlota Perez <a href=\"http://www.avc.com/a_vc/2011/05/technological-revolutions-and-financial-capital.html\">via</a> Fred Wilson) showing the four previous technological revolutions and the first part of the current one:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 500px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/0aa87136b7f25c1f4eb0a0ca91659915/d19c0/url.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 55.60000000000001%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"url\"\n        title=\"url\"\n        src=\"/static/0aa87136b7f25c1f4eb0a0ca91659915/d19c0/url.png\"\n        srcset=\"/static/0aa87136b7f25c1f4eb0a0ca91659915/924ad/url.png 170w,\n/static/0aa87136b7f25c1f4eb0a0ca91659915/f570f/url.png 341w,\n/static/0aa87136b7f25c1f4eb0a0ca91659915/d19c0/url.png 500w\"\n        sizes=\"(max-width: 500px) 100vw, 500px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>Each revolution begins with a financial bubble that propels the (irrationally) rapid “installation” of the new technology.  Then there’s a crash, followed by a recovery and then a long period of productive growth as the new technology is “deployed” throughout other industries as well as society more broadly. Eventually the revolution runs its course and a new technological revolution begins.</p>\n<p>In the transition from installation to deployment, the bulk of the entrepreneurial activity moves “up the stack”. For example, in the installation phase of the automobile revolution, the action was in building cars. In the deployment phase, the action shifted to the app layer: the highway system, shipping, suburbanization, big box retail, etc.</p>\n<p>This pattern is repeating itself in the computing/internet revolution. Most of the successful startups in the 90s built core infrastructure (e.g. optical switching) whereas most of the successful startups since then built applications on top of that infrastructure (e.g. search). The next phase should see startups higher in the stack. According to historical patterns, these would be ones that require deeper cultural change or deeper integration into existing industries.</p>\n<p>Some questions to consider:</p>\n<ul>\n<li>What industries are the best candidates for the next phase of deployment? The likely candidates are the information-intensive mega-industries that have been only superficially affected by the internet thus far: education, healthcare, and finance. Note that deployment doesn’t just mean creating, say, a healthcare or education app. It means refactoring an industry into its “optimal structure” – what the industry would look like if rebuilt from scratch using the new technology.</li>\n<li>How long will this deployment period last? Most people – at least in the tech industry – think it’s just getting started. From the inside, it looks like one big revolution with lots of smaller, internal revolutions (PC, internet, mobile, etc). Each smaller revolution extends the duration and impact of the core revolution.</li>\n<li>Where will this innovation take place? The historical pattern suggests it will become more geographically diffuse over time. Detroit was the main beneficiary of the first part of the automobile revolution. Lots of other places benefited from the second part. This is the main reason to be bullish on ”application layer” cities like New York and LA. It is also suggests that entrepreneurs will increasingly have multi-disciplinary expertise.</li>\n</ul>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2013/01/20/samsungs-predicament",
      "title": "Samsung’s predicament",
      "description": "In the past year, Samsung went from being a moderately successful electronics manufacturer to the leading non-iOS mobile device maker…",
      "url": "https://cdixon.org/2013/01/20/samsungs-predicament",
      "published": "2013-01-20T00:00:00.000Z",
      "updated": "2013-01-20T00:00:00.000Z",
      "content": "<p>In the past year, Samsung went from being a moderately successful electronics manufacturer to the leading non-iOS mobile device maker. Together, Apple and Samsung <a href=\"http://www.visionmobile.com/blog/2012/12/the-apple-and-samsung-profit-recipe/\">earn</a> 98% of the profits in the smartphone market. MG Siegler echoed a common sentiment when he <a href=\"http://techcrunch.com/2013/01/05/the-fifth-horsemen-of-tech-samsung/\">wrote</a> that Samsung is now the “fifth horseman” of tech, alongside Apple, Google, Amazon, and Facebook.</p>\n<p>The mobile device industry is still in its infancy. Samsung’s fate depends largely on how the industry evolves. If the computer-in-your-pocket (smartphone/tablet) business ends up being like the computer-on-your-desk (personal computer) business, Samsung is on track to be the modern Dell. Dell had a good run as the low-cost provider in a highly commoditized business, but the vast majority of the industry profits went to Microsoft.</p>\n<p>So the big questions for Samsung are:</p>\n<ol>\n<li>Will the smartphone/tablet industry stratify the way the PC business did?</li>\n</ol>\n<p>The dominant view is that technology markets inevitably stratify. Clay Christensen is the most sophisticated proponent of this view. In his theory (more <a href=\"http://en.wikipedia.org/wiki/Disruptive_innovation\">here</a> and <a href=\"http://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning/\">here</a>), every tech market eventually “overshoots” the needs of its customers, at which point the benefits of horizontal specialization outweigh the benefits of vertical integration.</p>\n<p>A minority view, held mostly by Apple faithful, is that Christensen et al are guilty of over-theorizing. Apple lost the PC business simply because, when Steve Jobs was fired, they stopped innovating. When Jobs returned, Apple started gaining PC market share again. In this view, the future mobile industry structure mostly depends on whether Apple management is innovative enough to keep making superior vertically-integrated products.</p>\n<ol start=\"2\">\n<li>If the industry stratifies, will the lion’s share of the profits go to the OS and application layers as it did for PCs?</li>\n</ol>\n<p>Generally, technology businesses that are defensible have network effects, and network effects usually arise from products with significant software components. Samsung’s competitors like HTC are just one hit product line away from stealing Samsung’s position. Eventually, handset designs will converge and, as happened in the PC market, consumers will stop paying premiums for performance improvements (arguably, this has already started happening). The OS and apps layer, on the other hand, are very hard to replicate. If you invest enough money you can usually build or acquire decent software, but it takes more than just capital to build a vibrant developer ecosystem (just look at Microsoft).</p>\n<p>Samsung’s predicament is: their current strategy succeeds only in the scenario where both (a) the industry stratifies, and (b) significant profits flow to hardware. Samsung seems to understand the improbability of (b), which is why they’ve been <a href=\"http://news.cnet.com/8301-1035_3-57564553-94/samsungs-secret-weapon-in-the-mobile-wars-tizen/\">hinting</a> at throwing serious support behind a new OS. Getting traction with a new OS will be difficult, to put it mildly. Google and Apple have vastly more experience making software and a huge head start with developers. Moreover, Google’s <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">strategic position</a> is even stronger today than Microsoft’s was in their heyday. Google makes so much money from web services (mostly search, for now) that they can afford to lose money on handsets and OSs indefinitely – a very scary fact for Samsung and everyone else in the mobile hardware business.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/12/18/plans-are-nothing-but-planning-is-indispensable",
      "title": "Plans are nothing, but planning is indispensable",
      "description": "It is widely believed that writing a business plan is a waste of time, because: 1) very few people will read it, and 2) you’ll end up…",
      "url": "https://cdixon.org/2012/12/18/plans-are-nothing-but-planning-is-indispensable",
      "published": "2012-12-18T00:00:00.000Z",
      "updated": "2012-12-18T00:00:00.000Z",
      "content": "<p>It is widely believed that writing a business plan is a waste of time, because: 1) very few people will read it, and 2) you’ll end up changing it along the way. This is all mostly true.</p>\n<p>However, before you commit yourself to working on a project for 5+ years, it’s prudent to think hard about what you are trying to build and some of the things that might go wrong. For many people, writing out a detailed business plan is the best way to enforce intellectual rigor.</p>\n<p>My cofounders and I wrote a fairly long business plan for our first company, SiteAdvisor. We wrote it iteratively while getting lots of candid feedback from entrepreneurs, VCs, and industry executives (one of many reason you <a href=\"http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/\">shouldn’t keep your idea secret</a>).</p>\n<p>I thought it might be useful to share our plan so I’ve embedded it below (at the time, we were temporarily calling the company InfiniTrust).</p>\n<p>In retrospect, some things in the plan look prescient, some look naive, and some look downright goofy. But writing it was an extremely useful exercise. It made us think through issues we would have otherwise glossed over, and helped us stay focused when shiny new things could have led us astray.</p>\n<p>As Eisenhower famously said: “plans are nothing, but planning is indispensable.”</p>\n<p><strong>***</strong></p>\n<p><strong>InfiniTrust</strong></p>\n<p><strong>January, 2005</strong></p>\n<p>InfiniTrust intends to create a new type of desktop security product that we call a “web reputation service.”  The product will benefit users who value both unrestricted web access and security — primarily consumers and small and medium businesses.  At the core of the product will be a database that classifies URLs, IP addresses, program downloads, ActiveX objects, and other “web entities” according to their degree of trustworthiness.  There will also be a downloadable application that protects the desktop according to the security classifications in the core database.  In addition, the company will provide plug-ins to firewalls, routers and web proxies (allowing for, among other things, the possibility of a fully managed outsourced web filtering service).</p>\n<p>We see InfiniTrust as having a large addressable market.  We believe the product will offer significant value to a large portion of the approximately 600M PCs in use today.  Pricing for comparable products ranges from $2-$20 per PC per year depending on the product and channel.  Since the marginal cost per customer will be extremely low (the main expense will be maintaining the database), we see the business as potentially having high gross margins.</p>\n<p>Desktop security has become one of the top issues for individuals and organizations in the last few years and the problem has been only getting worse.  We believe InfiniTrust represents a fundamentally new and important category of desktop security software, and if executed properly could become a leader in this emerging category much the same way Symantec and McAfee did in anti-virus or Brightmail and Postini did in anti-spam.</p>\n<p><strong>Problem</strong></p>\n<p>The data security industry has consistently ignored a large class of desktop security threats that they have considered to be “social engineering” or “user education issues” and therefore not addressable through their usual defense methods.  Some examples are:</p>\n<p>A user is confronted with an ActiveX prompt that asks him whether he trusts a company he has never heard of called Claria.  The user knows that last time he saw a similar prompt on the ofoto.com website he said “No” the website failed to work properly, so this time he says “Yes,” enabling Claria’s Gator spyware software to take full control of his PC.</p>\n<p><em>Typical industry response</em>:  The user should educate himself as to when to answer “Yes” or “No” to such prompts or should disable ActiveX altogether thereby rendering many popular websites dysfunctional.</p>\n<p>A user receives a phishing email purporting to be from Citibank that is actually from a criminal in Uzbekistan trying to steal his credit card information.  Citibank detects that the phishing attack has occurred but has no effective way to propagate defensive information to customers.</p>\n<p><em>Typical industry response</em>:  The user should learn never to click on URLs in emails.</p>\n<p>A user spends time browsing a music sharing website that exploits an unpatched hole in Internet Explorer to insert spyware on the user’s machine.</p>\n<p><em>Typical industry response</em>:  The user should learn not to browse untrusted websites without modifying his browser security settings to restrict functionality like Javascript and ActiveX that enable most browser exploits.</p>\n<p>A user downloads Grokster, a popular P2P file-sharing application.  The user clicks “Agree” to Grokster’s 32-page End User License Agreement (EULA) without reading it carefully and therefore doesn’t realize that along with Grokster he is also downloading over a dozen different bundled spyware applications that will render his computer virtually unusable.</p>\n<p><em>Typical industry response</em>:  The user should read all EULA’s before downloading software.</p>\n<p>The data security industry has gotten very good at dealing with traditional security threats such as worms and viruses. These threats are characterized as 1) being unambiguously malicious and 2) having attack vectors that are primarily technical in nature.   With more and more non-technical users having direct access to remote counterparties via email and the web, a new class of threats has emerged that are characterized as 1) having attack vectors that are primarily “social” in nature,  and 2) not being clearly good or bad but instead involving tradeoffs on the part of the user.</p>\n<p>Related to this trend toward “social” and “grey-area” threats has been the rise of economically motivated hacking.  For example, spyware and phishing have quickly become big businesses.  Claria (maker of Gator) generated about $90M in ‘03, primarily due to their distribution relationship with Kazaa.  WhenU generated about $45M in revenue in ‘04, and there are literally dozens of other companies (e.g. 180Solutions, Direct Revenue) that are generating double digit millions in revenues.   Estimates of losses due to phishing vary, but the numbers seem to be conservatively in the hundred of millions.  In summary, there are literally billions of dollars generated every year by companies and criminals whose main “marketing” technique is exploiting the credulity and confusion of users.</p>\n<p><strong>Background on Spyware and Phishing</strong></p>\n<p>Spyware is an increasingly serious threat to desktop computer users.  According to a recent study by Dell, 90% of computers are afflicted with spyware.  Spyware help calls are the #1 issue handled by Dell customer support, accounting for 20% of all calls.  Only 24% of computer users said they were knowledgeable about how to handle spyware.</p>\n<p>Somewhat more conservatively, IDC estimates that 67% of computers have some form of spyware and that the market for anti-spyware software will grow from $47M in 2004 to $305M in 2008 (we think these estimates are very low—we know of specific anti-spyware companies that combined generated far more than $47M in revenues in 2004).</p>\n<p>Phishing came almost out of nowhere in 2004 to become a major security threat.  According to Gartner Group, 57M Americans have or think they have received phishing emails.   Of those, 11% clicked on phishing links and 3% actually gave away sensitive information to attackers.  The growth rates of phishing attacks have consistently been in the double and even triple digits month-over-month.</p>\n<p><strong>InfiniTrust Solution</strong></p>\n<p>The main features of the InfiniTrust product are as follows:</p>\n<p><em>Site Protection</em>:  Adjusts the browser functionality dynamically according to the security rating of the website currently being browsed.  For example, scripting calls to vulnerable ActiveX objects are disabled on untrusted websites but enabled on trusted sites.  The point of this is to drastically reduce browser exploits that insert spyware and viruses, as well as eliminating “annoying” scripts such as pop ups, without reducing functionality of trusted sites.</p>\n<p><em>Download Protection</em>:  Uses a whitelist approach to program downloads to warn or block the user before downloading an untrustworthy program (in an enterprise version,policy settings could be created to automatically block untrusted downloads without prompting).</p>\n<p><em>Fraud Detection and Protection</em>:  Redirects the user to a warning page if he visits a fraudulent website such as a phishing landing page.</p>\n<p><em>ActiveX Protection</em>:  Allows only whitelisted ActiveX objects to download or execute.  Non-whitelisted objects are simply blocked, eliminating the need for user prompts.</p>\n<p><em>Exploit Protection</em>:  Filters out browser scripting code associated with known exploits.</p>\n<p><em>Ecommerce Protection</em>:  Warns the user about a poor security rating of a website before he enters his credit card information.  In v2.0 will notify the user of summarized business-practice information about the site (using information from sources such as BizRate).</p>\n<p><em>Privacy Protection (v2.0 only):</em>  Warns the user about the trustworthiness of a website before he submits personal information such as an email address.  Also blocks cookies and other outbound transmissions of personal information to untrusted sites or ad networks.</p>\n<p>In light of the recent high profile adoption of the Firefox browser (albeit mostly by the technical “elite” so far) it is interesting to note which of the Infinitrust features are “IE” specific and which provide a more general web security. Features #1, #4 and #5 are primarily for IE users.  The other four features apply to users of all platforms and browsers.</p>\n<p>In the case where InfiniTrust is being used as software installed on the desktop (as opposed to the firewall or web proxy API), it will either take automatic action or prompt the user with an easy-to-understand prompt depending on what’s most appropriate in case at hand.  For example, when the user is browsing untrusted sites InfiniTrust will automatically restrict the browser’s functionality but when the user actively clicks on a downloadable program he will see a simple prompt explaining what, if any, malicious features the software contains.</p>\n<p>In the case of the enterprise version the need for prompting will be obviated through policy settings created by the system administrator.  Increasingly, many organizations are blocking all downloads and ActiveX controls altogether out of fear of getting spyware on the network.  InfiniTrust will give them an alternative by providing them with 100% spyware prevention through its whitelist approach to ActiveX and downloads (in addition to browser exploit blocking).</p>\n<p><strong>Technology Plan</strong></p>\n<p>There are three main components to the InfiniTrust technology:</p>\n<ol>\n<li><em>Data collection/analysis.</em>  InfiniTrust will collect and analyze large amounts of disparate data sets to generate an “InfiniTrust Score” for every “web entity” (including downloadable programs, ActiveX objects, and website URLs/IPs).  Input data sources will include:</li>\n</ol>\n<p>Static analysis of web-crawled HTML and JavaScript.</p>\n<p>Analyzed results of automated installations of downloadable software.</p>\n<p>Data gathered from third party deals (e.g. IP intelligence services, phishing blacklist feeds, website and program popularity data)</p>\n<p>Active and passive user feedback from users who opt-in to InfiniTrust’s product improvement program.</p>\n<p>Information mined from publicly available sources (e.g., whois data, public blacklists)</p>\n<p>Web site link analysis.  As companies like Google has shown, if site X links to site Y, that is in some sense an endorsement by site X of site Y.  Google uses this insight to rank the relevancy of sites, but it can also be applied to rank the trustworthiness of sites.  If site X links to known untrusted site Y, then site X is more likely to be untrusted itself.  Another way to put this idea is that the “dark alleys” of the web tend to be highly clustered in terms of link structure.</p>\n<p>All of this will be processed to determine the degree of trust that someone should have when going to a particular website, downloading a particular piece of software, or engaging in some sort of commercial relationship with an online entity.  Much of the true intellectual property of InfiniTrust will reside in the processes and tools for collecting and analyzing these input data sources.</p>\n<p>2)  <em>Data servers</em>.  In order to balance load and decrease communication distances, the database will be replicated to a set of distributed data servers.  Desktop clients will connect to these data servers in order to query for the security ratings of particular entities, or to periodically download software updates.  The client software will include a caching mechanism to ensure that performance drag is negligible.  Data servers will also receive back-channel information from users who opt-in to the product improvement program.</p>\n<ol start=\"3\">\n<li><em>Client agent</em>.  The client side agent takes action on behalf of the user or provides the user with easy-to-understand, relevant information.  A client side agent consists of a core-agent that communicates with a data server, as well as an application-specific GUI agent that provides user-visible functionality.  Most of these GUI agents will be web browser extensions, but they could also be built in to web proxies, or the underlying OS to protect non-traditional applications (e.g. software update tools) that make use of HTTP.</li>\n</ol>\n<p>InfiniTrust plans to publish APIs and release an open source Linux/Firefox version of the client-side agents to facilitate partnerships with other software and equipment vendors.  Access to the data feeds will be controlled with encrypted certificates.</p>\n<p>In version 1.0, almost all of InfiniTrust’s data will be generated from public sources.  As the user base and revenues grow, InfiniTrust plans to seek out additional data licensing deals.  Examples could include phishing blacklists from anti-spam vendors and ecommerce data from companies like Bizrate.  With a sizable user base, InfiniTrust could also become an important enforcement mechanism for “self-regulating” (and therefore mostly ineffective) programs and protocols like Trust-e and P3P.  Down the road, we can also envision incorporating offshore manual labor into the data collection and analysis process.</p>\n<p><strong>Competition</strong></p>\n<p><em>Overview:</em>  We expect that in 2005-6 a lot of attention will be paid to problems like spyware and phishing.  This is both good and bad for InfiniTrust.  The risk is that other companies, especially large incumbents, either mitigate these threats significantly (less likely) or else create enough noise in the market to make the need for InfiniTrust less obvious (more likely).  The good news is that InfiniTrust is specifically designed to complement existing security bundles.  As pressure to differentiate security bundles increases, InfiniTrust could become an attractive add-on product or acquisition target.  The historical pattern is that most of the innovation in consumer security has come from startups.  For example, the software-based firewall was pioneered by ZoneLabs and anti-spyware was pioneered by companies like PestPatrol, Lavasoft and WebRoot.</p>\n<p><em>Summary of existing anti-spyware technologies</em>:  Almost all of the anti-spyware products that currently exist are for removing spyware, not preventing it.  It is widely believed that even the best anti-spyware removers achieve highly unsatisfactory success rates.  For this reason, most experts recommend that users run multiple spyware removers (in addition, users are repeatedly instructed to be very careful where they browse, what they download, etc).  This poor success rate is due mostly to the fact that once spyware takes control of a user’s PC and starts performing tricks like copying itself, changing the HOSTS file, disguising its signature etc, the technological problem of removing it becomes extremely difficult.</p>\n<p>There are a few existing anti-spyware programs that claim to have spyware prevention features (e.g. SpywareBlaster, Microsoft’s AntiSpyware) but in fact just use highly inaccurate behavior-based techniques (similar to Intrusion Prevention Systems).  In the near future, we expect security companies to develop blacklist-based preventative approaches to spyware.  Blacklist approaches have a number of problems:  1) it is extremely difficult to keep spyware blacklists up-to-date and even a single mistake can render a PC unusable, 2) they don’t properly address the many sources of spyware that are “grey area” downloads.   The problem of spyware is not nearly as black-and-white as problems like viruses and worms as most spyware comes through bundled adware where reasonable people can disagree about its maliciousness.  InfiniTrust believes the best way for users to be both protected and have a satisfying browsing experience is to 1) whitelist trusted programs, 2) blacklist purely malicious programs, and 3) inform users about the trade offs (and alternatives) in the grey area cases in a very easy-to-understand way.</p>\n<p><em>Summary of existing anti-phishing technologies:</em> There are three primary methods for stopping phishing attacks today.</p>\n<p>The first is simply for existing anti-spam companies to better filter phishing emails.  Anti-spam technologies have achieved 95+% accuracy but are not perfect.  Moreover, phishing emails can be particularly hard to detect as they often use zombie PC’s for delivery (thereby making IP-based blocking difficult) and contain content that looks very similar to legitimate content.</p>\n<p>The second approach is to try to shut down the email delivery or landing page machines in the midst of an attack.  A number of security companies do this on behalf of their customers who tend to be large financial institutions.  We believe these methods are limited as they succeed only after the critical first few (~6) hours of phishing attacks.  Moreover, from the desktop user’s perspective, even if these companies stop phishing attacks for, say, the top banks there are many other types of phishing attacks that these companies are not even trying to stop, such as the Tsunami-relief phishing attacks that were recently seen in large volumes.</p>\n<p>Client-side solutions:  These have the advantages of providing zero-hour defense and the ability to defend against fraud from all sources.   There have been a handful of client-side solutions released recently from companies like Earthlink, Netcraft, WebRoot, and GeoTrust.  InfiniTrust is a client-side solution that has distinct advantages over these client-side competitors.  For one, because InfiniTrust will be collecting a nearly comprehensive database of existing websites, it can take a (partial) whitelist approach to phishing detection.  The fact that a site clicked through to from an email doesn’t appear in InfiniTrust’s list of millions of legitimate websites is a strong indicator that the site is potentially fraudulent.  It also goes beyond these other solutions insofar as it prevents non-email based attacks (such as keyloggers inserted through browser exploits) and also more “grey-area” fraud such as dubious but not outright fake ecommerce sites.</p>\n<p><em>Notes on primary competitors</em>:</p>\n<p>Symantec:  Generated $1.87B in revenue in 2004, 47% of which came from consumer products.  Symantec has not yet released a spyware removal tool but is expected to in Q105.  They have no client side phishing product today but will likely release one sometime this year.</p>\n<p>McAfee:  McAfee is the #2 consumer security software bundle.  They currently have spyware detection but not removal.  It is likely they will release spyware removal sometime this year.</p>\n<p>ZoneLabs:  ZoneLabs was acquired by Checkpoint in 2004 for approximately $250M.  Their primary product is ZoneAlarm, a software-based firewall that had, as of 2004, at least 30M (free) users.  They also sell a complete security bundle that has at least 1M paying subscribers.  ZoneLabs built their business almost exclusively through a free downloadable version that became popular in the press and among technology enthusiasts.</p>\n<p>Computer Associates:  CA sells a traditional security bundle and recently added spyware removal tools through their acquisition of PestPatrol.</p>\n<p>Trend Micro:  Trend Micro has recently added spyware removal and has features they describe as anti-phishing (actually just an outgoing firewall that looks for personal info being sent from the PC).</p>\n<p>Microsoft:  Recently acquired an anti-spyware company (Giant) and an anti-virus company and is expected to release versions of each in Q105.  There have been conflicting reports about whether they plan to charge for these services.  Microsoft appears to see web-based security threats as a major headache.  Firefox has supposedly gotten 10% of the browser market in just the past 6 months due in large part to users’ frustration with Internet Explorer security issues.</p>\n<p>WebRoot:  WebRoot is widely considered to have a very good spyware removal tool.  Their rate of innovation has generally been very impressive.  WebRoot generated $16M in revenues in Q404 alone, evidence that point solution security products can thrive in the consumer market. We had thought Webroot was likely to be acquired but last week announced a $108mm financing event.</p>\n<p>Freeware:  Lavasoft’s Ad Aware and Spybot S&D have been extremely popular free spyware removal tools.  For example, Ad Aware consistently gets more than 2M downloads per week on download.com alone (there is also a paid version of Ad Aware that is rumored to have generated significant revenues for the company).</p>\n<p>Websense:  Websense is a $1B market cap company that is considered to be the leader in so-called web filtering technology.  The primary focus of web filtering technology is to restrict corporate users from going to “bad topics” such as adult and gambling websites.  They have recently added an optional, add-on security module that basically works by altogether blocking access to large blocks of websites associated with insecure activity (e.g. Kazaa.com).  Websense severely restricts web access and is therefore only useful to (typically large) corporations that find such restrictions acceptable.</p>\n<p><em>Would any of these competitors be likely to offer a product similar to InfiniTrust’s?</em></p>\n<p>Today, InfiniTrust’s closest competitor in terms of the product itself is probably Websense.  Websense has a database that in many ways is similar to InfiniTrust’s although much more focused on topics rather than security ratings.  Websense has built a high growth business ($100M revs, $36M EBITDA, $1.2B market cap) focusing almost solely on larger enterprises.  We see their entry into the consumer market as being unlikely but if they did enter it that could be a serious threat to InfiniTrust.</p>\n<p>Anti-spyware vendors could also conceivably take an approach like InfiniTrust’s, although it would mean a fundamental change in how they go about building their technology and database.  Right now their approaches are very similar to those of anti-virus technologies: they have databases of signatures they use to scan PC’s for existing infections (“parasites”), as opposed to InfiniTrust which has a database of all the “hosts” (websites, program downloads, ActiveX objects) that might carry those parasites.  Determining the trustworthiness of hosts is simply a different technology problem than detecting and removing the parasites.</p>\n<p>We see InfiniTrust as being fundamentally about providing secure, “unannoying” yet unrestricted web access, just as anti-spam companies try to provide secure, “unannoying” yet unrestricted email access.  Spyware and phishing happen to be two important and growing security threats that have mostly web-based attack vectors. They are therefore important to InfiniTrust’s value proposition but that does not mean that InfiniTrust is just another anti-spyware or anti-phishing company.</p>\n<p><strong>Marketing Plan</strong></p>\n<p>The target market will be individuals and organizations that care about both security and unrestricted web browsing.  InfiniTrust sees this as encompassing a large percentage of consumers and, to a somewhat lesser extent, small and medium businesses.  Larger businesses tend to be satisfied with much “blunter” security instruments such as Websense that significantly restrict user web access.</p>\n<p>InfiniTrust plans to offer a limited-functionality free version that can be downloaded directly from infinitrust.com and will also be distributed through channels.   The current plan calls for the free version to offer the user basic defensive features but not have access to the full database. The free version will remind the user of its value by displaying periodic reminders of the specific dangers it has blocked or warned about.  The paid version will likely start at $30 per year for consumers (discounted strategically for different target populations) and something in the range of $5-20 per seat per year for enterprises with an upfront licensing fee for the admin console.</p>\n<p><em>Distribution Partnerships</em>:  ISPs, security software vendors, search engines, toolbar vendors and PC OEMs are natural distribution partners.</p>\n<p>ISPs (especially dialup providers where consumer choice is greater) are increasingly trying to differentiate their services through security software they give to their customers.  For example, security is the primary focus of recent television campaigns by AOL and Earthlink.  Additionally, these companies incur significant costs handling customer support calls resulting from phishing and spyware. For example, Earthlink says that customer support costs them $120K per phishing attack.  Deals with ISPs could either be pay per user (AOL pays McAfee $2 per user for anti-virus functionality alone which is generally considered a commodity) or unpaid distribution of the free product.</p>\n<p>Large consumer security software vendors try to provide a single package that includes every existing category of security software.  If InfiniTrust succeeds in convincing them that its product is complementary and useful, it could be seen as a critical addition to their bundles.</p>\n<p>Toolbar vendors such as Google, Yahoo, Earthlink, MSN and Ebay have recently been incorporating security features for anti-phishing and anti-spyware.  For example, Yahoo distributes PestPatrol and Earthlink distributes WebRoot.   Earthlink built its own anti-phishing functionality.  InfiniTrust’s data feed can make these toolbars significantly more powerful.</p>\n<p>PC OEMs receive numerous calls from customers about browser security issues. As mentioned earlier, 20% of Dell’s customer service calls are about spyware.  These companies are interested in not only reducing these costs but also differentiating their products.  Many of these companies have shown a willingness to work with startups (e.g. Dell distributes Sunbelt’s anti-spyware solution, generating a significant portion of Sunbelt’s $30M in revenue).</p>\n<p>A recent internal survey by InterActive Corp. of web search users showed that the safety of the sites they find was users’ #1 concern (cited by 77% of respondents as a “major concern”).  As search engines are increasingly the “gatekeepers of the web,” it is natural for them to provide filtering and ranking based on security.  At the simplest level, a partnership with a search engine could provide an InfiniTrust score next to search results in exchange for showing the InfiniTrust logo.</p>\n<p>Financial institutions affected by phishing have expressed interest in distributing client-side anti-phishing solutions such as InfiniTrust’s as a way to offer protection their customers.   For example, one recently developed anti-phishing toolbar, FraudEliminator, received business development cold calls from 3 major banks, Mastercard and Experian in just the past week despite having spent $0 on marketing.</p>\n<p><em>PR</em>:   Desktop security was by far the #1 topic of discussion in the technology-related press in 2004.  The fact that InfiniTrust solves growing, high-visibility problems like phishing and spyware as well as older problems such as browser exploits in a new way provides a great opportunity to leverage this attention.  Initially, the technology press will be targeted, but the benefits of the product are widespread enough to attract mainstream media coverage.</p>\n<p><em>Word of mouth</em>:  Most “unsophisticated” users choose their security software based on the recommendations of 1) the media, 2) their PC manufacturer or ISP, and 3) technologically sophisticated friends and family.  Strategies for addressing 1) and 2) were discussed above.   The strategy for addressing 3) is, among other things, to make the product and message amenable to technology enthusiasts.  InfiniTrust’s client software will be mostly or completely open source, thereby showing goodwill toward the technology-enthusiast community and assuaging concerns that the client software might be in some way malicious (importantly, open sourcing the client will not jeopardize the business as the value lies primarily in the centralized database which will not be open).  In addition, the company will build Firefox, Linux and Mac versions relatively early on and expose popular portions of the database to the public via search engines.</p>\n<p><em>Paid marketing</em>:  In the past few years, online advertising channels such as search engines and banner ad networks have transformed the marketing possibilities for consumer software downloads and services.  In particular, it is now possible to target customers by demographic and context far more efficiently than in the past.  Moreover, startups are able to compete on a level playing field in keyword and banner auctions instead of having to, say, fight for shelf space in retail stores or suffer huge payouts to powerful distributors.  Some consumer software products and services that have built interesting businesses primarily through web-based advertising and had recent successful exits include Gotomypc (acquired by Citrix for $237M), ZoneLabs (acquired by Checkpoint for $250M), Classmates.com (acquired by United Online for $100M), TripAdvisor (acquired by IAC for $250M), and Shopping.com ($750M market cap).</p>\n<p><strong>Risks</strong>.</p>\n<p>Market risks:</p>\n<p>Competitive offerings: Companies such as Symantec, McAfee and Microsoft could improve their products enough to substantially solve the same problems that InfiniTrust is trying to solve. These companies have superior brand recognition and distribution so even if they merely solve the same problems, say, 75% as well as InfiniTrust does, they will likely succeed in the marketplace.</p>\n<p>Insufficient or inaccurate data:  InfiniTrust may launch with a data set that is simply not sufficient to show real benefits to early adopters. It may be that deeper or broader data is required in order to cover an acceptable percentage of actual user browsing.  Initial diligence, however, suggests this outcome to be unlikely because web browsing tends to be fairly highly concentrated.  It has been shown, for example, that 50% of page views on the web are for the top 5000 websites, and the top 2000 downloads account for over 95% of total downloads.</p>\n<p>Unwillingness to pay: While the InfiniTrust product may provide incremental value to users, there may not be a willingness to pay for it.</p>\n<p>Lack of awareness: Despite attempts to build distribution partnerships and generate PR, customers may simply not hear about InfiniTrust. The cost of running a concerted advertising or paid inclusion program may simply be too high for a start up to muster.</p>\n<p>Problems decrease for other reasons: Legal changes, software quality improvements or other external factors may lead to a reduction in the type of security problems that InfiniTrust solves, thereby reducing the need for the product.</p>\n<p>Technical risks:</p>\n<p>Data collection:  The data required to make InfiniTrust work can be difficult to collect.  Programs must be automatically installed, phishing attacks must be recognized, and web exploits must be discovered and analyzed. The company believes it has a solid plan for tackling these problems, but if it is wrong the product quality could suffer.</p>\n<p>“Arms race”: Once attackers realize how InfiniTrust operates they may put more effort into hiding their spyware, phishing attacks, web exploits etc.  This may result in a reduced data quality.  Since most of the “hackers” InfiniTrust is targeting are economically motivated, the company believes this will only happen when the company is quite successful distributing its product.  At that point the company expects to have the resources to fight back.</p>\n<p><strong>Budget</strong></p>\n<p>The company is raising $2.7M, which would allow for a 12 month product development plan plus an additional 12 months of marketing, business development, and product refinement.  After the v1.0 product is built, the company would hire an additional team member to help with marketing and business development, and would also engage a PR firm and do online advertising to build market traction.  A summary of the budget plan is below.</p>\n<p><a href=\"images/screen-shot-2012-12-09-at-5-00-47-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 471px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 34.81953290870488%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsSAAALEgHS3X78AAABF0lEQVQY01VQ2U7DMBD0/38U8AZ5KxWCF9Tm9H2t3dbpkYYhQQL2YTUe7czOmu33tXXuvtQ8z5fLZZqmUsbfPpY/TLlP0/m8zhR2PByc99frdV4KLFx++u0GZjX93+cVs7Zpm309DBzvsRQlVSIy2kQfnHXBowBsCNFqk1ICjiEapYkS2263VVU9PTwOXIyn08fbe/R+97nTUta7xhrdt72SAh08RZJCDN0AU1izzea1en5p6vp4PCG8lopi7Jr2kDPveUokuMA2JLJaQ+C/sTRaYznrui5GWg8+j2OilFMyxiK8dz6GEFywBrEDBDnnhYzARMQ4H6RQt+VvciIlJObg662DBuG99YjqrBecQyy5gJ73PW7+AhXSiNyZS3jrAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2012 12 09 at 5 00 47 pm\"\n        title=\"Screen Shot 2012-12-09 at 5.00.47 PM\"\n        src=\"/static/cd27877b54c2c756167921e8126ea94e/b70fd/screen-shot-2012-12-09-at-5-00-47-pm.png\"\n        srcset=\"/static/cd27877b54c2c756167921e8126ea94e/924ad/screen-shot-2012-12-09-at-5-00-47-pm.png 170w,\n/static/cd27877b54c2c756167921e8126ea94e/f570f/screen-shot-2012-12-09-at-5-00-47-pm.png 341w,\n/static/cd27877b54c2c756167921e8126ea94e/b70fd/screen-shot-2012-12-09-at-5-00-47-pm.png 471w\"\n        sizes=\"(max-width: 471px) 100vw, 471px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen Shot 2012-12-09 at 5.00.47 PM</figcaption>\n  </figure></a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/12/02/the-product-lens",
      "title": "The product lens",
      "description": "There has been a lot of discussion lately about the markets for startup financing. Many of the discussions use words like “valuations…",
      "url": "https://cdixon.org/2012/12/02/the-product-lens",
      "published": "2012-12-02T00:00:00.000Z",
      "updated": "2012-12-02T00:00:00.000Z",
      "content": "<p>There has been a lot of <a href=\"http://pandodaily.com/2012/11/28/the-series-a-crunch-is-hitting-now-have-we-even-noticed/\">discussion</a> lately about the markets for startup financing. Many of the discussions use words like “valuations” “bubble” “crunch” etc. Words like that generally mean the writer is discussing the world through the lens of finance. This is a useful lens, but I’d like to suggest there is another lens that is also useful: the product lens. First, some background.</p>\n<p><strong>Two markets</strong></p>\n<p>Startups sit in the middle of two markets: one between VCs and startups, and one between startups and customers. These markets are correlated but only partially. When the financing supply is low but customer demand is high, entrepreneurs that are able to finagle funding generally do well. When financing and startup supply is high, customers do well, some startups do well, and VCs generally don’t. And so on.</p>\n<p>When VCs get too excited, people talk about a bubble. When VCs get too fearful, people talk about a crash. Historically, downturns were great times for startups that were able to raise money because competition was low but customer demand for new technology remained fairly steady. Downturns also tended to coincide with big platform shifts, which usually meant opportunities for entrepreneurs.</p>\n<p>These markets shift independently between different stages and sectors, although there are connections. The amount of financing available is relatively constant, because of the longevity of VC funds and the way most VCs are compensated (management fees). Less financing in one sector or stage usually leads to more financing in others.</p>\n<p>The stages are related because the early stages depend on the later stages for exits and financings. The result is a bullwhip effect where changes in later stages (the latest stage being public markets) lead to magnified changes in early stages.</p>\n<p>Smart VCs understand these dynamics and adjust their strategies accordingly. Smart entrepreneurs don’t need to think about these things very often. Fundraising is necessary (at least for companies that choose to go the VC route – many shouldn’t), but just one of the many things an entrepreneur needs to do. The best advice is simply to raise money when you can, and try to weather the vicissitudes of the financial markets.</p>\n<p><strong>The product lens</strong></p>\n<p>Good entrepreneurs spend most of their time focusing on the other market: the one between their company and their customers. This means looking at the world through the lens of products and not financing. This lens is particularly important when you are initially developing your idea or when you are thinking about product expansions.</p>\n<p>The product lens suggests you should ask questions like: have the products in area X caught up to the best practices of the industry? Are they reaching their potential? Are they exciting? Are there big cultural/technological/economic changes happening that allow dramatically better products to be created? Sometimes the product lens guides you to the same conclusion as the finance lens and sometimes it doesn’t.</p>\n<p>For example, there has been a lot of hand wringing about a financing crunch for consumer internet startups. One theme is that investors are pivoting from consumer to enterprise. The finance lens says: for the last five years or so, consumer was overfunded and enterprise was underfunded – let’s correct this. It also helps that enterprise IPOs have performed much better than consumer IPOs in the last year or so.</p>\n<p>The product lens is tricky. My sense is that, at least for the non-mobile consumer internet, the product lens and financing lens agree. Anyone who has had the misfortune to use enterprise technology lately will tell you that the hardware and software they use at home (iPhone, Gmail, etc) is far and away more sophisticated and elegant than the software they use at work. It feels like the enterprise tech is way behind in the product upgrade cycle.</p>\n<p>Mobile seems like a case where the lenses disagree. The finance lens says: billions of dollars have been invested in mobile apps. It has become hit driven and there have been very few “venture-scale” startups created.</p>\n<p>The product lens says: the modern smartphone platform began about four years ago when the iOS app store launched. This is clearly a major new platform. Platforms and apps interact in a push-pull relationship that takes decades to play out. Innovative new apps, designs and technologies are created all the time. It would be surprising – and contrary to all the historical patterns – if the mobile product evolution were already played out.</p>\n<p>That is not to dismiss the finance lens. It could be painful along the way:  financing markets might dry up, and profits might accrue to the platforms over the apps. But clearly mobile is just getting started.</p>\n<p>Some of the biggest mistakes I’ve made as an angel investor stemmed from being beholden to the finance lens. The finance lens feels more scientific and therefore appeals to analytical types. It might sound unsophisticated to say “the products for X are crappy, and I have an idea for how to make them great.” But in many cases, it’s actually that simple.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/11/23/some-problems-are-so-hard-they-need-to-be-solved-piece-by-piece",
      "title": "Some problems are so hard they need to be solved piece by piece",
      "description": "Andrew Parker had a great post a few years ago where he sketched out all the startups going after pieces of Craigslist:  Startups that have…",
      "url": "https://cdixon.org/2012/11/23/some-problems-are-so-hard-they-need-to-be-solved-piece-by-piece",
      "published": "2012-11-23T00:00:00.000Z",
      "updated": "2012-11-23T00:00:00.000Z",
      "content": "<p>Andrew Parker had a great <a href=\"http://thegongshow.tumblr.com/post/345941486/the-spawn-of-craigslist-like-most-vcs-that-focus\">post</a> a few years ago where he sketched out all the startups going after pieces of Craigslist:<br>\n<img src=\"https://lh4.googleusercontent.com/vl8LZu_6tICMl8YOT1_SvMY1805i7cQ-r7fNMNoGDeec2CgHQHte_WY_nwkQ70p8AcfgteX--nwH1T_A3fFIKl1JDIVJgRZhvJkIAU6viz9KDeTdVMx3\"></p>\n<p>Startups that have tried to go head-to-head against the entirety of Craigslist (the “horizontal approach”) have struggled. Startups that have tried to go up against pieces of Craigslist (the “vertical approach”) have been much more successful (e.g. StubHub, AirBnB).</p>\n<p>Recruiting looks like it’s going through a similar evolution. Last-generation products like LinkedIn are broad but not deep. Everyone I know who recruits uses LinkedIn, but none of them think it has solved their recruiting problems. Now we are seeing the rise of vertical solutions that are significantly better, e.g. Stack Overflow for developers and Behance for designers (at least that’s what I believe – I’m an angel investor in both).</p>\n<p>The benefits of focusing are: 1) you can create a dramatically better user experience when it’s tailored to a specific use, 2) you can do unscalable hacks when starting out (e.g. AirBnb paying photographers to take pictures of apartments), 3) you need far fewer users to get to minimum viable liquidity, and 4) brand building is easier when you solve a straightforward, narrow problem (e.g. “I need a place to stay this weekend”).</p>\n<p>This pattern – horizontal first, vertical second – is common. But you need to be careful. Back in 2003-2004, there was a lot of speculation that vertical search engines would eventually take down Google. A few categories worked (e.g. travel), but Google adapted in other categories (e.g. video, news) and lots of startups suffered.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/11/19/a16z",
      "title": "a16z",
      "description": "VCs are experts at analyzing industries and identifying new opportunities, which is why it’s odd that the VC industry itself has so…",
      "url": "https://cdixon.org/2012/11/19/a16z",
      "published": "2012-11-19T00:00:00.000Z",
      "updated": "2012-11-19T00:00:00.000Z",
      "content": "<p>VCs are experts at analyzing industries and identifying new opportunities, which is why it’s odd that the VC industry itself has so stubbornly resisted change.</p>\n<p>Two years ago I wrote a <a href=\"http://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted/\">post</a> where I argued that innovative new VC firms are finally starting to change this:</p>\n<blockquote>\n<p>Top tier entrepreneurs are frequently selecting their investors, not vice versa. The VCs most sought after are mostly new firms: big firms like Andreessen Horowitz, Union Square Ventures, and First Round, and micro-VCs like Floodgate (fka Maples), Betaworks, and Ron Conway.</p>\n</blockquote>\n<p>Since then, the trend has become even more pronounced. VC is only partly about investing. It is primarily a service business whose purpose is to help entrepreneurs.</p>\n<p>When Andreessen Horowitz (“<a href=\"http://en.wikipedia.org/wiki/Internationalization_and_localization\">a16z</a>”) started out three years ago, like a lot of people I thought “OK, really interesting entrepreneurial founders, but how will they be as investors?” Then I started hearing chatter among entrepreneurs that they really wanted to raise money from them. “We’re talking to X, Y, & Z — but Andreessen is the firm we really want” became an increasingly common refrain.</p>\n<p>Earlier this year I got to meet the a16z team and observe the operation directly. There are over 60 people at the firm. Only six people do traditional VC activities: investing, joining boards, and helping out. The rest are exclusively focused on helping entrepreneurs.</p>\n<p>The “startup idea” behind a16z is: instead of spending the bulk of the fund fees on partner salaries, spend it on operations to help entrepreneurs. There is a marketing team (=helps you get noticed), a talent team (=helps you recruit), a market development team (=helps you get customers), and a research team (=helps you figure stuff out).</p>\n<p>Spending time there, I had the same feeling I have whenever I meet a great startup: “This is obviously the future, why didn’t someone do it before?”</p>\n<p>So I’m super excited to say that I’m joining a16z as their seventh General Partner. I’ll specialize in consumer internet investments but will be open to anything ambitious that involves technology. I’ll be based in California, but plan to do a lot of investing in NYC.</p>\n<p>I’ll miss seeing my Hunch colleagues on a daily basis. Many of us have been working together for eight years, through two startups. I’d also like to thank everyone at eBay for being so welcoming and supportive.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/10/19/agency-problems",
      "title": "Agency problems",
      "description": "“Agency problems” are what economists call situations where a person’s interests diverge from his or her firm’s interests. Large companies…",
      "url": "https://cdixon.org/2012/10/19/agency-problems",
      "published": "2012-10-19T00:00:00.000Z",
      "updated": "2012-10-19T00:00:00.000Z",
      "content": "<p>“<a href=\"http://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem\">Agency problems</a>” are what economists call situations where a person’s interests diverge from his or her firm’s interests.</p>\n<p>Large companies are in a constant state of agency crisis. A primary role of senior management is to counter agency problems through organizational structures and incentive systems. For example, most big companies divide themselves into de facto smaller companies by creating business units with their own P&L or similar metric upon which they are judged. (Apple is a striking counterexample: I once pitched Apple on a technology that could increase the number of iTunes downloads. I was told “nobody optimizes that. The only number we optimize here is P&L in the CFO’s office”).</p>\n<p>If you are selling technology to large companies, you need to understand the incentives of the decision makers. As you go higher in the organization, the incentives are more aligned with the firm’s incentives. But knowledge and authority over operations often reside at lower levels. Deciding what level to target involves nuanced trade offs. Good sales people understand how to navigate these trade offs and shepherd a sale. The complexity and counter-intuitiveness of this task is why it’s so difficult for inexperienced entrepreneurs to sell to large companies.</p>\n<p>Agency problems also exist in startups, although they tend to be far less dramatic than at big companies. Simply having fewer people means everyone is, as they say in programming, “closer to the metal”. The emphasis on equity compensation also helps. But there are still issues. Some CEOs are more interested in saying they are CEOs at parties than in the day-to-day grind of building a successful company. Some designers are focused on building their portfolio. Some developers are only interested in intellectually stimulating projects. Every job has its own siren song.</p>\n<p>One of the reasons The Wire is such a great TV show is that it <a href=\"http://cdixon.org/2010/01/30/institutional-failure/\">shows</a> in realistic and persuasive detail how agency problems in large organizations consistently thwart well intentioned individual efforts. The depressing conclusion is that our major civic institutions are doomed to fail. Those of <a href=\"http://www.avc.com/a_vc/2012/03/the-nature-of-the-firm-and-work-markets.html\">us</a> who are technology optimists counter that the internet allows new networks to be created that eliminate the need for large organizations and their accompanying agency problems. Ideally, those networks recreate the power of large organizations but operate in concert like startups.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/10/18/the-economic-logic-behind-tech-and-talent-acquisitions",
      "title": "The economic logic behind tech and talent acquisitions",
      "description": "There’s been a lot of speculation lately about why big companies spend millions of dollars acquiring startups for their technology or talent…",
      "url": "https://cdixon.org/2012/10/18/the-economic-logic-behind-tech-and-talent-acquisitions",
      "published": "2012-10-18T00:00:00.000Z",
      "updated": "2012-10-18T00:00:00.000Z",
      "content": "<p>There’s been a lot of speculation lately about why big companies spend millions of dollars acquiring startups for their technology or talent. The answer lies in the economic logic that big companies use to make major project decisions.</p>\n<p>Here is a really simplified example. Suppose you are a large company generating $1B in revenue, and you have a market cap of $5B. You want to build an important new product that your CTO estimates will increase your revenue 10%. At a 5-1 price-to-revenue ratio, a 10% boost in revenue means a $500M boost in market cap. So you are willing to spend something less than $500M to have that product.</p>\n<p>You have two options: build or buy. Build means 1) recruiting a team and 2) building the product. There is a risk you’ll have significant delays or outright failure at either stage. You therefore need to estimate the cost of delay (delaying the 10% increase in revenue) and failure. Acquiring a relevant team takes away the recruiting risk. Acquiring a startup with the product (and team) takes away both stages of risk. Generally, if you assume 0% chance of failure or delay, building internally will be cheaper. But in real life the likelihood of delay or failure is much higher.</p>\n<p>Suppose you could build the product for $50M with a 50% chance of significant delays or failure. Then the upper bound of what you’d rationally pay to acquire would be $100M. That doesn’t mean you have to pay $100M. If there are multiple startups with sufficient product/talent you might be able to get a bargain. It all comes down to supply (number of relevant startups) and demand (number of interested acquirers).</p>\n<p>Every big company does calculations like these (albeit much more sophisticated ones). This is a part of what M&A/Corp Dev groups do. If you want to sell your company – or simply understand acquisitions you read about in the press – it is important to understand how they think about these calculations.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/10/10/regulatory-hacks",
      "title": "Regulatory hacks",
      "description": "A common way to think of business regulations is by analogy to sports: the rules are specified up front, and the players follow the rules…",
      "url": "https://cdixon.org/2012/10/10/regulatory-hacks",
      "published": "2012-10-10T00:00:00.000Z",
      "updated": "2012-10-10T00:00:00.000Z",
      "content": "<p>A common way to think of business regulations is by analogy to sports: the rules are specified up front, and the players follow the rules. But real regulations don’t work that way. Regulations follow business as much as business follows regulations.</p>\n<p>Sometimes the businesses that change regulations are startups. Startups don’t have the resources to change regulations through lobbying. Instead, they need to start with regulatory hacks: “back door” experiments that demonstrate the benefits of their ideas. With luck, regulators are forced to follow.</p>\n<p>Nextel was one of the all-time great regulatory hacks. In the late 80s and early 90s, the FCC’s rules banned more than two cellular operators per city. As Nextel’s cofounder <a href=\"http://www.rcrwireless.com/article/20090217/wireless/looking-back-while-going-forward-how-the-early-days-of-nextel-reflect-on-today/\">said</a>, “the FCC thought a wireless duopoly was the perfect market structure”. Nextel (called Fleet Call at the time) circumvented these rules by acquiring local (e.g. taxi, pizza truck) dispatch radio companies, which they then connected to create a nationwide (non-dispatch) cell phone service.</p>\n<p>Predictably, the cellular incumbents tried to regulate Nextel out of existence. From a 1991 New York Times <a href=\"http://www.nytimes.com/1991/02/13/business/threat-to-cellular-phone-services.html\">article</a>:</p>\n<blockquote>\n<p>In a move that could threaten cellular telephone companies, the Federal Communications Commission may decide on Wednesday to grant a small radio company’s request to provide a new form of mobile telephone service in six major cities, including New York. If the request is approved, the action could inject new competition into the industry. At the moment, Federal rules permit only two cellular systems to operate in any city. But the new proposal could open up a regulatory back door, allowing companies that provide private radio service for taxi fleets and delivery services to offer mobile telephone services to individuals…. The proposal has alarmed the industry, which has heatedly opposed it and enlisted support in Congress late last year to delay the F.C.C.’s decision.</p>\n</blockquote>\n<p>The incumbents argued that Nextel’s service would interfere with public safety frequencies and therefore endanger the public. They also argued that Nextel’s service would be too expensive:</p>\n<blockquote>\n<p>Some analysts contend that the radio handsets for Fleet Call and its imitators will be more expensive than cellular units. The technical features of cellular equipment are now standardized nationwide, making it possible to bring down costs through higher selling volumes. Specialized mobile services are currently different in each city.</p>\n</blockquote>\n<p>And their call quality would be inferior:</p>\n<blockquote>\n<p>Some analysts contend that Fleet Call’s local service is likely to be inferior as well. “It is highly unlikely to be as good as cellular service,” said Denise Jevne, telecommunications analyst with T. Rowe Price Associates in Baltimore.</p>\n</blockquote>\n<p>The FCC eventually decided not to block Nextel. Nextel grew to become a top five US cellular operators before it was acquired by Sprint in 2004 for $35B. Their service turned out to be cost-competitive, high quality, and safe. The only thing endangered were the incumbents’ profits.</p>\n<p>What Nextel faced in 1991 is very similar to what many startups face today. Uber is being threatened by the taxi industry, Aereo by the TV broadcasting industry, and Airbnb by the hotel industry. Some industries, like finance, are so heavily regulated that almost any new idea runs into regulatory objections.</p>\n<p>Of course regulations that truly protect the public interest are necessary. But many regulations are created by incumbents to protect their market position. To try new things, entrepreneurs need to find a back door. And when they succeed, it will all look obvious in retrospect. Today’s regulatory hack is tomorrow’s mainstream industry.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/09/24/the-rise-of-enterprise-marketing",
      "title": "The rise of enterprise marketing",
      "description": "Building an enterprise software company used to be largely about sales, because enterprise software was sourced and purchased by high-level…",
      "url": "https://cdixon.org/2012/09/24/the-rise-of-enterprise-marketing",
      "published": "2012-09-24T00:00:00.000Z",
      "updated": "2012-09-24T00:00:00.000Z",
      "content": "<p>Building an enterprise software company used to be largely about sales, because enterprise software was sourced and purchased by high-level business people. Those business people needed to be charmed and convinced, an activity that was distasteful to many technologists.</p>\n<p>Internet-based delivery (“SaaS”, “cloud”) dramatically lowered installation costs, letting individuals or small groups buy software on discretionary budgets or use basic versions for free. As adoption spread throughout the organization, the value of the software eventually percolated up to high-level business people who could write large checks to get features big companies need, such as administration, security, integration, compliance, and support. This ”bottom-up” approach was pioneered by Salesforce and open source companies like MySql. Recent enterprise success stories also follow this model, e.g. New Relic, Yammer, Twilio, and Github. Many of these companies have processes that would have seemed crazy ten years ago – e.g. sales people only handle inbound inquiries or only call customers who already use their product.</p>\n<p>Thus enterprise software went from being about sales (one-to-one) to being about marketing (one-to-many). Marketing requires crafting a compelling message, figuring out the right channels and then optimizing. But the most effective marketing is a compelling product that can be easily tried. As a result, as Benchmark’s Peter Fenton <a href=\"http://vivekmohta.com/2012/09/16/the-underhyped-enterprise-market-and-consumerization-of-enterprise/\">said</a> recently: ”We’re seeing a fundamental shift from sales-driven companies to product-driven companies. The companies that are leading the way there let this consumer and product focus permeate the culture of their companies.”</p>\n<p>One of the most visible manifestations of this shift is the refreshingly accessible language on modern enterprise websites. Sales-driven enterprise software companies speak the arcane language of CIOs. Marketing-driven companies talk directly to business users (e.g. <a href=\"https://www.yammer.com/product/\">Yammer</a>) or developers (e.g. <a href=\"https://github.com/\">Github</a>).</p>\n<p>This is good news all around. Enterprises are more likely to get software that incorporates the advances made over the last decade in consumer software. Startups get a shot at creating this software, and get to do so on a fairly level playing field. The product and marketing focus should also attract a lot more technologists who were turned off by sales. The only losers are incumbents who continue to pursue the old model.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/09/11/vanity-milestones",
      "title": "Vanity milestones",
      "description": "Eric Ries uses the phrase “vanity metrics” to refer to metrics that founders cite to demonstrate progress but that are actually false…",
      "url": "https://cdixon.org/2012/09/11/vanity-milestones",
      "published": "2012-09-11T00:00:00.000Z",
      "updated": "2012-09-11T00:00:00.000Z",
      "content": "<p>Eric Ries uses the phrase “<a href=\"http://www.startuplessonslearned.com/2009/12/why-vanity-metrics-are-dangerous.html\">vanity metrics</a>” to refer to metrics that founders cite to demonstrate progress but that are actually false signals. A related concept is “vanity milestones”: achievements that are more about making you feel good than helping your company. Vanity milestones include:</p>\n<ul>\n<li>Raising money from famous people/firms who aren’t really going to help your company (e.g. Hollywood celebrities).</li>\n<li>Partnerships with brand name organizations that aren’t really going to help your company.</li>\n<li>Getting press (e.g top lists) that focuses on founders and not your company.</li>\n<li>Almost all tech press (unless your product targets developers or tech companies).</li>\n</ul>\n<p><strong>This doesn’t mean it’s bad to hit vanity milestones.</strong> Good companies hit lots of vanity milestones along the way, and sometimes they can be a morale boost for employees. What is worrisome is when founders equate vanity milestones with success. The attention will go away very quickly if your company fails.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/09/10/notes-on-the-acquisition-process",
      "title": "Notes on the acquisition process",
      "description": "Ten years ago, startup financing was an insider’s game. Since then, the topic has been widely discussed on blogs, to the great benefit of…",
      "url": "https://cdixon.org/2012/09/10/notes-on-the-acquisition-process",
      "published": "2012-09-10T00:00:00.000Z",
      "updated": "2012-09-10T00:00:00.000Z",
      "content": "<p>Ten years ago, startup financing was an insider’s game. Since then, the topic has been widely discussed on blogs, to the great benefit of entrepreneurs. Comparatively little, however, has been written about the important transaction at the other end many startups’ life, acquisitions. Here are some things I’ve learned about the acquisition process over the years.</p>\n<ul>\n<li>There is an old saying that startups are bought not sold. Clearly it is better to be in high demand and have inbound interest. But for <a href=\"http://cdixon.org/2011/12/10/three-types-of-acquisitions/\">product and tech</a> acquisitions especially, it is often about getting the attention of the right people at the acquirer. Sometimes the right person is corp dev, other times product or business unit leads, and other times C-level management.</li>\n<li>Don’t use a banker unless your company is late stage and you are selling based on a multiple of profits or revenues. I’ve seen many acquisitions bungled by bankers who were either too aggressive on terms or upset the relationship between the startup and acquirer.</li>\n<li>Research the potential acquirer before the first meeting. Try to understand management’s priorities, especially as they relate to your company.  Talk to people who work in the same sector. Talk to industry analysts, investors, etc. If an acquirer is public, Wall Street analyst reports can be helpful.</li>\n<li>Develop relationships with key people – corp dev, management, product and business unit leads. The earlier the better.</li>\n<li>Don’t try to be cute. Leaking rumors to the press, creating a false sense of competition, etc. is generally a bad idea. Besides being ethically questionable, it can create ill will.</li>\n<li>What you tell employees is particularly tricky. Being open with employees can lead to press leaks and can annoy acquirers. Moreover, some public companies insist that you don’t talk to employees until the deal is closed or almost closed. Employees usually get a sense that something is going on and this can put you in the awkward situation of being forced to lie to them. I don’t know of a good solution to this problem.</li>\n<li>Understand the process and what each milestone along the way means. As with financings, acquisitions take a long time and involve lots of meetings and difficult decisions. Inexperienced entrepreneurs tend to get overly excited about a few good meetings.</li>\n<li>Strike while the iron is hot. Just as with <a href=\"http://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed/\">financings</a>, you need to be opportunistic. Waiting 6 months to hit another milestone might improve your fundamentals, but the acquirer’s interest might wane.</li>\n<li>There are two schools of thought on price negotiation: anchor early or wait until you’ve gotten strong interest. Obviously having multiple interested parties makes finding a fair price a lot easier.</li>\n<li>Deal structure: the cap table is an agreement between you and the shareholders that says, in effect: “If we sell the company, this is how we pay out founders, employees, and investors.” Acquirers have gotten increasingly aggressive about rewriting cap tables to 1) hold back key employee payouts for retention purposes, and 2) give a greater share of proceeds to employees/founders.  Some even go so far as to try to cut side deals with key employees to entice them to abandon the other employees and investors. In terms of ethics and reputations, it is important to be fair to all parties involved: the acquirer, founders, employees, and investors.</li>\n<li>Research the reputation of the acquirer, especially how they have behave between LOI and closing (good people to talk to: investors, other acquired startups, startup lawfirms). This is when acquirers have all the leverage and can mistreat you. Some acquirers treat LOIs the way VCs treat term sheets, as a contract they’ll honor unless they discover egregious issues like material misrepresentations. Others treat them as an opportunity to get free market intelligence.</li>\n<li>Certain terms beyond price can be deal killers. The most prominent one lately is “IP indemnification.” This is a complicated issue, but in short, as a response to patent trolls going after IP escrows, acquirers have been trying to get clawbacks from investors in case of IP claims. This term is a non-starter to institutional investors (and most individual investors). You need to understand all the potential deal-killer terms and hire an experienced startup law firm to help you.</li>\n<li>Ignore the cynical blog chatter about “acqui-hires” (or, as they used to be called, “talent acquisitions”). Only people who have been through the process understand that sometimes these outcomes are good for everyone involved (including users when the alternative is shutting down).</li>\n</ul>\n<p>Finally, acquisitions should be thought of as partnerships that will last long after the deal closes. Besides the commitments you make as part of the deal, your professional reputation will be closely tied to the fate of the acquisition. This is one <a href=\"http://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model/\">more</a> reason why you should only raise money if you are prepared for a long-term commitment.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed",
      "title": "The time to eat the hors d’oeuvres is when they’re being passed",
      "description": "The efficient market hypothesis is a widely taught financial theory that states, roughly, that under certain generally-held conditions…",
      "url": "https://cdixon.org/2012/09/03/the-time-to-eat-the-hors-doeuvres-is-when-theyre-being-passed",
      "published": "2012-09-03T00:00:00.000Z",
      "updated": "2012-09-03T00:00:00.000Z",
      "content": "<p>The efficient market hypothesis is a widely taught financial theory that states, roughly, that under certain generally-held conditions, asset prices are an accurate reflection of the information available at the time. The arguments underlying it are mathematically elegant and have been widely <a href=\"http://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street\">popularized</a>. Its hardcore proponents argue that financial bubbles <a href=\"http://krugman.blogs.nytimes.com/2009/07/19/ketchup-and-the-housing-bubble/\">do not (indeed cannot) exist</a> and that government intervention in financial markets is unnecessary. While efficient market theory is dominant in academic circles, it is very hard to find active participants in financial markets who believe in it. In financial markets – like most complex human systems – the closer you get, the more nuance you discover.</p>\n<p>Venture capital markets are perhaps the most inefficient of mainstream financial markets. Complicating factors include: heavy reliance on comparables for valuations, desire of VCs to be associated with “hot” companies, tendency to overreact to macro changes, illiquidity of startup financings, illiquidity of financings for VCs themselves, perverse financial incentives of VCs, inability to short stocks, extreme uncertainty of startup financial projections, vagaries of the M&A market, dependency on moods of downstream investors, concentration of capital among a small group of VCs, the <a href=\"http://nonchalantrepreneur.com/post/29847134811/why-its-so-hard-to-build-investment-models-for\">difficulty</a> of developing accurate financial models, rapid shifts of supply and demand across sectors and stages, and non-uniform distribution of accurate market data.</p>\n<p>The title of this post is an old venture capital adage (via <a href=\"https://twitter.com/bgurley/status/228919212683448321\">Bill Gurley</a>) that reflects a hard-earned truth about financing and M&A markets. For social consumer startups, the hors d’oeurves were being passed in the build up to the Facebook IPO. They are being passed now for B2B and e-commerce companies. In the M&A markets, the most extreme example is probably in adtech, where there were waves of acquisitions in ad exchanges (DoubleClick, RightMedia, Avenue A), then mobile ads (AdMob, Quattro), and then social advertising (Buddy Media, Wildfire). If you didn’t sell during these M&A waves, you’re suddenly stuck with lots of powerful competitors and few potential acquirers/partners.</p>\n<p>It is common to hear entrepreneurs say things like “I am waiting 6 months to raise money/sell the company, when we’ve hit new milestones.” Of course milestones matter, and companies are ultimately valued based on fundamentals. But along the way you’ll likely need capital and sometimes need to exit, and for that you are dependent on highly inefficient markets.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/08/15/e-commerce-startups",
      "title": "E-commerce startups",
      "description": "Very few successful e-commerce companies were started in the 2000s. Since then, e-commerce startups have enjoyed a revival. Dozens of…",
      "url": "https://cdixon.org/2012/08/15/e-commerce-startups",
      "published": "2012-08-15T00:00:00.000Z",
      "updated": "2012-08-15T00:00:00.000Z",
      "content": "<p>Very few successful e-commerce companies were started in the 2000s. Since then, e-commerce startups have enjoyed a revival. Dozens of companies have gotten traction and venture dollars have followed. Phrases like flash sales, social commerce, and subscription commerce have entered the startup lexicon.</p>\n<p>As Josh Kopelman <a href=\"http://redeye.firstround.com/2010/03/some-more-thoughts-on-innovation-in-ecommerce.html\">points out</a>, the list of the top 15 e-commerce companies has barely changed over the past decade, in sharp contrast to the list of overall top internet companies. This can be interpreted in one of two ways.</p>\n<p>The bull case is that startups neglected e-commerce and are now waking up to the opportunity. The key equation driving e-commerce is: profit = lifetime customer value minus customer acquisition costs. New marketing strategies (“content plus commerce”, social commerce, etc) lower acquisition costs enough to make startups competitive with incumbents.</p>\n<p>The bear case is that scale and brand effects make e-commerce incumbents nearly unbeatable. As one entrepreneur said, “If it has a UPC code, Amazon will beat you.” A lower price is just one search away. The only way to compete is to sell used stuff or make your own products (or provide a marketplace for those things). The fat head (large incumbents) and the long tail (artisanal shops) will thrive, but the middle of the distribution will suffer. (The public markets seem to agree with this assessment, e.g. Overstock trades at 0.2x revenues.)</p>\n<p>What most people agree on is that e-commerce as a whole will continue to grow rapidly and eat into offline commerce. In the steady state, offline commerce will serve only two purposes: immediacy (stuff you need right away), and experiences (showroom, fun venues). All other commerce will happen online.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/08/03/ten-million-is-the-new-one-million",
      "title": "Ten million users is the new one million users",
      "description": "Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending…",
      "url": "https://cdixon.org/2012/08/03/ten-million-is-the-new-one-million",
      "published": "2012-08-03T00:00:00.000Z",
      "updated": "2012-08-03T00:00:00.000Z",
      "content": "<p>Entrepreneurs and investors have been enamored with consumer internet startups for the last few years. But there are signs this is ending.</p>\n<p><em>Some observations:</em></p>\n<ul>\n<li>Thousands of early-stage consumer web/mobile companies were started and funded in last 24 months.</li>\n<li>There are only a few dozen VCs who actively write consumer Series A checks, and those VCs will only do a few deals a year.</li>\n<li>Facebook’s market cap is about half of what most tech investors expected before the IPO.</li>\n<li>A few breakout early-stage consumer hits (Instagram, Pinterest) have reached tens of millions of users in record time.</li>\n<li>Internet users have tens of thousands of services/apps to choose from but limited time and attention.</li>\n</ul>\n<p><em>Some consequences:</em></p>\n<ul>\n<li>For consumer startups with non-transactional models (ad-based or unknown business models), you need something closer to 10 million users versus 1 million users to get Series A funded.</li>\n<li>For consumer startups with transactional models, e.g. e-commerce, the number of users required is often far lower because revenue is the more important metric. Hence, many early-stage consumer startups are switching to transactional models.</li>\n<li>It’s becoming increasingly common for early-stage consumer startups to do bridge financings (raising more money from past investors, usually on terms similar to the prior round) instead of Series As.</li>\n<li>VCs are increasingly focusing on B2B for early-stage investments.</li>\n<li>There will be a lot more consumer talent acquisitions.</li>\n</ul>\n<p><em>Some advice:</em></p>\n<ul>\n<li>If you are thinking of starting a non-transactional consumer startup, be aware that you are entering what is perhaps the most competitive sector in tech in the last decade.</li>\n<li>If you can raise more money, do it. (Especially pre-launch: <a href=\"http://www.twylah.com/joshk/tweets/782406922\">remember</a>, there’s nothing like numbers to screw up a good story).</li>\n<li>Be prepared for lower valuations for non-transactional early-stage consumer startups (breakout later-stage companies, on the other hand, will likely continue to command high valuations).</li>\n</ul>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model",
      "title": "Shoehorning startups into the VC model",
      "description": "Tech startups go in an out of fashion. When they’re in fashion, as they are now, entrepreneurs and VCs get lots of attention. Most of this…",
      "url": "https://cdixon.org/2012/07/19/shoehorning-startups-into-the-vc-model",
      "published": "2012-07-19T00:00:00.000Z",
      "updated": "2012-07-19T00:00:00.000Z",
      "content": "<p>Tech startups go in an out of fashion. When they’re in fashion, as they are now, entrepreneurs and VCs get lots of attention. Most of this attention focuses on things that involve money, like financings and acquisitions. For some entrepreneurs, raising venture capital becomes a goal unto itself, instead of what it should be: a heavy burden that only makes sense in certain cases.</p>\n<p>A startup should raise venture capital (or “venture-style” angel/seed funding) only if: 1) the goal is to build a billion-dollar (valuation) company, and 2) raising millions of dollars is absolutely necessary or will significantly accelerate growth.</p>\n<p>There are lots of tech companies that are very successful but don’t fit the VC model. If they don’t raise VC, the founders can make money, create jobs, and work on something they love. If they raise VC, a wide range of outcomes that would otherwise be good become bad.</p>\n<p>Unfortunately, many of these startups graft VC-friendly narratives onto their plans and raise too much money. Short term it might seem like a good idea but long term it won’t.</p>\n<p>The best source of capital is customers. The next best is the founders (cash or forgone salaries), or investors who are less aggressive about returns than VCs. Every startup has its natural source of financing. Venture capital is the natural source of financing for only a small fraction of startups, despite what the press might lead you to believe.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/07/17/capabilities-and-sensibilities",
      "title": "Capabilities and sensibilities",
      "description": "“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability…",
      "url": "https://cdixon.org/2012/07/17/capabilities-and-sensibilities",
      "published": "2012-07-17T00:00:00.000Z",
      "updated": "2012-07-17T00:00:00.000Z",
      "content": "<blockquote>\n<p>“The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” – F. Scott Fitzgerald</p>\n</blockquote>\n<p>One reason running a startup is so interesting is the constant tension between opposing ways of thinking: short-term vs. long-term, internal vs. external, saving vs. investment, etc. At large companies, responsibility for these ways of thinking is often spread across multiple business units. In startups they fall on a few people, usually the founders.</p>\n<p>As a founder, the most important tension is between your capabilities and sensibilities. Capabilities are your talents and resources. Sensibilities are the way you see the world. Successful founders usually have an unlikely combination of capabilities and sensibilities. The right sensibilities without the right capabilities means a good vision, poorly executed. The right capabilities without the right sensibilities means building something your market doesn’t want. Getting both right creates <a href=\"http://cdixon.org/2011/06/20/foundermarket-fit/\">founder-market fit</a>.</p>\n<p>There are advantages and disadvantages to being an experienced entrepreneur. Disadvantages include the fact that, with age, you are more likely to have obligations outside of your startup. You also risk having calcified sensibilities. Counterbalancing this is greater self-awareness, and, ideally, the wisdom to choose markets that match your sensibilities and cofounders who augment your capabilities.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers",
      "title": "How bundling benefits sellers and buyers",
      "description": "There is a widespread belief in technology circles that bundling of cable TV, newspaper, magazine and other information goods will go away…",
      "url": "https://cdixon.org/2012/07/08/how-bundling-benefits-sellers-and-buyers",
      "published": "2012-07-08T00:00:00.000Z",
      "updated": "2012-07-08T00:00:00.000Z",
      "content": "<p>There is a widespread belief in technology circles that bundling of cable TV, newspaper, magazine and other information goods will go away now that those products can be distributed à la carte on the internet. The assumption seems to be that bundling is an artifact of another era when distribution was physical. But this reasoning misses the economic logic behind bundling: under assumptions that apply to most information-based businesses, bundling benefits buyers and sellers.</p>\n<p>Consider the following simple model for the willingness-to-pay of two cable buyers, the “sports lover” and the “history lover”:</p>\n<p><a href=\"images/screen-shot-2012-07-05-at-6-24-27-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 640px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 64.99999999999999%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2012 07 05 at 6 24 27 pm\"\n        title=\"Screen Shot 2012-07-05 at 6.24.27 PM\"\n        src=\"/static/c601d3b93598848ebe85412716c9ae7b/e49a9/screen-shot-2012-07-05-at-6-24-27-pm.png\"\n        srcset=\"/static/c601d3b93598848ebe85412716c9ae7b/924ad/screen-shot-2012-07-05-at-6-24-27-pm.png 170w,\n/static/c601d3b93598848ebe85412716c9ae7b/f570f/screen-shot-2012-07-05-at-6-24-27-pm.png 341w,\n/static/c601d3b93598848ebe85412716c9ae7b/e49a9/screen-shot-2012-07-05-at-6-24-27-pm.png 640w\"\n        sizes=\"(max-width: 640px) 100vw, 640px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen Shot 2012-07-05 at 6.24.27 PM</figcaption>\n  </figure></a></p>\n<p>What price should the cable companies charge to maximize revenues? Note that optimal prices are always somewhere below the buyers’ willingness-to-pay. Otherwise the buyer wouldn’t benefit from the purchase. For simplicity, assume prices are set 10% lower than willingness-to-pay. If ESPN and the History Channel were sold individually, the revenue maximizing price would be $9 ($10 with a 10% discount). Sports lovers would buy ESPN and history lovers would buy the History Channel. The cable company would get $18 in revenue.</p>\n<p>By bundling channels, the cable company can charge each customer $11.70 ($13 discounted 10%) for the bundle, yielding combined revenue of $23.40. The consumer surplus would be $2 in the non-bundle and $2.60 in the bundle. Thus both buyers and sellers benefit from bundling.</p>\n<p>This model is obviously dramatically oversimplified. In real life, bundling tends to flatten the demand curve (<a href=\"http://cdixon.org/2012/07/04/pricing-to-the-demand-curve/\">here</a> is some background on demand curves, and <a href=\"http://hubcap.clemson.edu/~sauerr/seminar_papers/bundling.pdf\">here</a> is academic paper that presents this argument in rigorous mathematical terms). Suppose the demand curves for ESPN and the History Channel look like this:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 464px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/73cd89b05e4be31b5eefedba00ddcd54/74a01/screen-shot-2012-07-05-at-6-38-02-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 134.26724137931035%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2012 07 05 at 6 38 02 pm\"\n        title=\"Screen Shot 2012-07-05 at 6.38.02 PM\"\n        src=\"/static/73cd89b05e4be31b5eefedba00ddcd54/74a01/screen-shot-2012-07-05-at-6-38-02-pm.png\"\n        srcset=\"/static/73cd89b05e4be31b5eefedba00ddcd54/924ad/screen-shot-2012-07-05-at-6-38-02-pm.png 170w,\n/static/73cd89b05e4be31b5eefedba00ddcd54/f570f/screen-shot-2012-07-05-at-6-38-02-pm.png 341w,\n/static/73cd89b05e4be31b5eefedba00ddcd54/74a01/screen-shot-2012-07-05-at-6-38-02-pm.png 464w\"\n        sizes=\"(max-width: 464px) 100vw, 464px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen Shot 2012-07-05 at 6.38.02 PM</figcaption>\n  </figure></p>\n<p>The green boxes represent revenue for the seller. The deadweight loss areas to the right of the green boxes are transactions that would have benefited buyers and sellers but are not occurring because the revenue-maximizing prices are set too high.</p>\n<p>Now consider what happens when you bundle channels. The key assumption is that individual buyers lie on different x-axis points of the demand curves of different channels. Sports lovers lie on the left of the ESPN demand curve but on the right side of the History Channel curve. To aggregate demand curves, you don’t stack one on top of the other. You add consumers’ willingness-to-pay separately for each channel.</p>\n<p>Using the above simplified model, the two demand curves that go from $10 to $3 become one curve that stays flat at $13. In general, adding the individual demand curves creates a flatter demand curve:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 445px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 70.33707865168539%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2012 07 05 at 6 38 08 pm\"\n        title=\"Screen Shot 2012-07-05 at 6.38.08 PM\"\n        src=\"/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png\"\n        srcset=\"/static/f6f997c0752f81839e527e89dad68758/924ad/screen-shot-2012-07-05-at-6-38-08-pm.png 170w,\n/static/f6f997c0752f81839e527e89dad68758/f570f/screen-shot-2012-07-05-at-6-38-08-pm.png 341w,\n/static/f6f997c0752f81839e527e89dad68758/8d7ba/screen-shot-2012-07-05-at-6-38-08-pm.png 445w\"\n        sizes=\"(max-width: 445px) 100vw, 445px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen Shot 2012-07-05 at 6.38.08 PM</figcaption>\n  </figure></p>\n<p>A flatter demand curve lets sellers charge prices that capture larger areas under the curve and pass more surplus back to consumers. The only  loser is the deadweight loss area.</p>\n<p>Some things to note about bundled pricing:</p>\n<p>1. Bundled pricing is one reason why subscription models like Spotify should ultimately win out over à la carte models like iTunes. Subscription commerce can also be thought of as a form of bundling.</p>\n<p>2. There are other ways to get some of the benefits of bundled pricing – for example <a href=\"http://www.inforules.com/models/m-version.pdf\">versioning</a> goods, and offering bulk discounts.</p>\n<p>3. The benefits of bundled pricing are proportionate the buyers’ variance of preferences for the goods. Hence bundled pricing works best in highly “taste-based” goods like media, and wouldn’t have any benefit for fully commoditized goods (e.g. a bundle of stocks)</p>\n<p>4. Bundled pricing can also hurt consumers if it is used by incumbents to exploit their broader catalog to “deter entry” by new competitors. This was a common complaint against Microsoft in the 90′s when they bundled applications like Internet Explorer with Windows.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/07/04/pricing-to-the-demand-curve",
      "title": "Pricing to the demand curve",
      "description": "Many college microeconomics courses include the following exercise. The teacher offers the students an imaginary trip to Hawaii, and asks…",
      "url": "https://cdixon.org/2012/07/04/pricing-to-the-demand-curve",
      "published": "2012-07-04T00:00:00.000Z",
      "updated": "2012-07-04T00:00:00.000Z",
      "content": "<p>Many college microeconomics courses include the following exercise. The teacher offers the students an imaginary trip to Hawaii, and asks them to write down on notecards how much they are willing to pay for the trip. The teacher takes the notecards and graphs the bids. Here’s how the graph might look:</p>\n<p><a href=\"images/screen-shot-2012-06-29-at-9-26-10-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 460px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 67.17391304347827%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsSAAALEgHS3X78AAABG0lEQVQoz42S646DIBCFff+3s0k1225jE9EKCIKoBQXcsTa627WX8wuZ+ebMOAR5nidJso/3WZ7hAhefCShKaUAoAWYX71jNxnH03o8fyDkHJYI5mxByLs6611PAO/9O1lqM8R2mhDbXBpXpYIfJf/RvnVcYTvDdmS6l6Xzzuv8/MLQ9DJNn3dWoRK1uZ/5ZiUcYxlgCOcu4Yi/Mt+EFqFSFGKoUt87+n+Kp8/LDzGBkK2CK620L99AEeKi4MfOyDFjYnA0lgMcCi0bMu1idgSnLEk6/nR8n9K63vdKKSEIl5Yp3upseiTEGIQTOjDEhBBSiW2I3cc4xxRd8OSRf8JTXtsMwjOMYMsyWtNbQYyWqKIqOh+Pp+ySl/AFsPO566dCKUwAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2012 06 29 at 9 26 10 pm\"\n        title=\"Screen Shot 2012-06-29 at 9.26.10 PM\"\n        src=\"/static/4a2efc10ea602b6c7340d50388e5ec4b/a9ee3/screen-shot-2012-06-29-at-9-26-10-pm.png\"\n        srcset=\"/static/4a2efc10ea602b6c7340d50388e5ec4b/924ad/screen-shot-2012-06-29-at-9-26-10-pm.png 170w,\n/static/4a2efc10ea602b6c7340d50388e5ec4b/f570f/screen-shot-2012-06-29-at-9-26-10-pm.png 341w,\n/static/4a2efc10ea602b6c7340d50388e5ec4b/a9ee3/screen-shot-2012-06-29-at-9-26-10-pm.png 460w\"\n        sizes=\"(max-width: 460px) 100vw, 460px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen Shot 2012-06-29 at 9.26.10 PM</figcaption>\n  </figure></a></p>\n<p>The y-axis is the students’ “willingness-to-pay” and the x-axis is the students sorted from highest to lowest bids. The line is known as the demand curve.</p>\n<p>Now imagine you’re the company selling these trips. For simplicity, suppose you’ve already bought the trips, so your marginal cost is zero. What’s the optimal price you should charge? If you set the price at, say, $500, then the students who are willing to pay above $500 would buy the trip, and the rest wouldn’t:</p>\n<p><a href=\"images/screen-shot-2012-06-29-at-9-24-53-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 457px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 69.36542669584246%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2012 06 29 at 9 24 53 pm\"\n        title=\"Screen Shot 2012-06-29 at 9.24.53 PM\"\n        src=\"/static/622db275908b51c270c316db64b89414/1ddc7/screen-shot-2012-06-29-at-9-24-53-pm.png\"\n        srcset=\"/static/622db275908b51c270c316db64b89414/924ad/screen-shot-2012-06-29-at-9-24-53-pm.png 170w,\n/static/622db275908b51c270c316db64b89414/f570f/screen-shot-2012-06-29-at-9-24-53-pm.png 341w,\n/static/622db275908b51c270c316db64b89414/1ddc7/screen-shot-2012-06-29-at-9-24-53-pm.png 457w\"\n        sizes=\"(max-width: 457px) 100vw, 457px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen Shot 2012-06-29 at 9.24.53 PM</figcaption>\n  </figure></a></p>\n<p>Your total revenue and (assuming zero marginal cost) profit will be the area of the green square (revenue times quantity).</p>\n<p>Notice the sections under the curve to the right and above the green box. To the right are students who were willing to pay but were priced out. Those are missed sales opportunities. Above the green box are students who were willing to pay more than you charged. That is lost revenue. (Since the underpricing benefits customers, the area above the green box is called the <a href=\"http://tutor2u.net/economics/revision-notes/as-markets-consumer-surplus.html\">consumer surplus</a>).</p>\n<p>After you have chosen the right price, the only way to make the area under the curve greener is to charge different customers different prices. The theoretically optimal way to do this is to look at each notecard and offer to charge each student, say, 10% less than the prices he or she bid. In real life you can’t do this (although Priceline has gotten close by asking customers to enter their willingness to pay). Some companies – most famously <a href=\"http://www.bizjournals.com/seattle/stories/2000/09/25/daily21.html\">Amazon</a> - have attempted outright price discrimination, but this tends to anger customers and can even run afoul of the <a href=\"http://en.wikipedia.org/wiki/Robinson%E2%80%93Patman_Act\">law</a>.</p>\n<p>So the goal of pricing is to capture as much area under the demand curve as possible. In practice, the best way to do this is to find proxies for willingness-to-pay that are easy to observe and that customers will accept.</p>\n<p>For example, airlines know that business customers will pay more than vacation travelers. They therefore look for acceptable proxies to segment business and vacation travelers and capture more of the area under the demand curve.</p>\n<p><a href=\"images/screen-shot-2012-06-29-at-9-32-47-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 452px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 62.61061946902655%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsSAAALEgHS3X78AAABtElEQVQoz5WRzUsbQRjG9yIVsUkl6daoSSVWC9b2EGhpxBCK4L8k9BBJTFp7KfTvKT15sngoSTc0my37kd2Z/ZqwOzHsxt2Z7S4pomiLeQ8vLzPvj+eZZxjDMCRZMmYv0zQZoS+cnp0iF5GQ+L4/uUfFa0EQcBzHRFEEIFBMhVAS3a8opXHv9XoJHHtwLxwNaVcXM8AQwrgjbMNhMtCIzgDruk5I4tl0TcMxpv7/Y+EGLAMZ+cgJHBziAR78BB3v0ptauDOIG/AX8HlnuLk3el12SuVxad+odEAbj/H11X/CTbv+cDJXCNh8mGVJ6uV4S8ayNlQ5tSNZYjh9RYLQWzCNTobNjL749Hwl/2M5r7I77uaB+q6K31bwm6q629W4+Fev+58G9Ff5E2o9wenir3zhPLdu5l6Nnm/Lz9j2Uvb7oxfClj7WoQ0BAnGW3sS70ud5nkEiaqDag4BZJunH4WImWihgdgOuLakLqe58Ea46oZOoUeIHPhrZFrZsbLmey3U5Blv4m/31vXbY1OsNcNQwah/k449SKx4aVu1EbfXF/kAZKIqiqRrQgCiJvMALv4X45A/BWZ0Irl73CgAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2012 06 29 at 9 32 47 pm\"\n        title=\"Screen Shot 2012-06-29 at 9.32.47 PM\"\n        src=\"/static/154ebdd3980c17c5d3257afa3cafd9e5/8ab6a/screen-shot-2012-06-29-at-9-32-47-pm.png\"\n        srcset=\"/static/154ebdd3980c17c5d3257afa3cafd9e5/924ad/screen-shot-2012-06-29-at-9-32-47-pm.png 170w,\n/static/154ebdd3980c17c5d3257afa3cafd9e5/f570f/screen-shot-2012-06-29-at-9-32-47-pm.png 341w,\n/static/154ebdd3980c17c5d3257afa3cafd9e5/8ab6a/screen-shot-2012-06-29-at-9-32-47-pm.png 452w\"\n        sizes=\"(max-width: 452px) 100vw, 452px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen Shot 2012-06-29 at 9.32.47 PM</figcaption>\n  </figure></a></p>\n<p>This is why flights are cheaper when you book early, stay over on weekends etc. The airline pricing models assume you are a vacation traveller.</p>\n<p>Book publishers would like to price their books according to customer enthusiasm. Hardcore fans will pay more for books when they are first published, and casual readers will wait. If publishers offer the same book at different prices at different times, their price discrimination will be too obvious (interestingly, time windowing for movies doesn’t provoke much outrage). So book publishers offer modestly better goods – hardcovers – to early buyers.</p>\n<p>Enterprise software companies price using proxies for the customer’s budget. Oracle databases are priced by the number of processors. Salesforce is priced by the number of end users (“seats”). Many enterprise software companies obfuscate the highest tier of pricing, telling sales prospects at that level to “call us.” What this really means is: “Call us, so our sales people can attempt to estimate your budget and price discriminate accordingly.”</p>\n<p>Sometimes, the search for pricing proxies can lead to absurdity. I once heard someone from a prominent hardware company tell a story about how his company had offered two versions of a printer. The cheaper model was identical to the more expensive one, except the cheaper one printed fewer pages per minute. To accomplish this, the cheaper printer had the same hardware as the expensive one, except the cheaper one had an additional chip that forced it to slow down. This made the cheaper printer more expensive to produce. Situations where <a href=\"http://cdixon.org/2009/10/17/whats-the-relationship-between-cost-and-price/\">cost and price</a> have zero or negative correlation are far more common than most people assume.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/06/27/the-real-strategy-behind-tiered-data-plans",
      "title": "The real strategy behind tiered data plans",
      "description": "Over the past year, Comcast and other broadband providers have been forcing tiered data plans on customers. The New York Times recently…",
      "url": "https://cdixon.org/2012/06/27/the-real-strategy-behind-tiered-data-plans",
      "published": "2012-06-27T00:00:00.000Z",
      "updated": "2012-06-27T00:00:00.000Z",
      "content": "<p>Over the past year, Comcast and other broadband providers have been forcing tiered data plans on customers. The New York Times recently <a href=\"http://www.nytimes.com/2012/06/27/business/media/internet-providers-testing-metered-plans-for-broadband.html?ref=brianstelter\">speculated</a> that these plans might be part of a strategy to stunt the growth of internet video.</p>\n<p>The best way to figure out what these companies are really doing is to read Wall Street analyst reports. For example, here’s what a prominent Wall Street analyst recently said:</p>\n<blockquote>\n<p>Most cable companies we met with have embraced tiered data plans, with tiering starting to move to total monthly usage rather than tiered speeds. The minimum tiers are set higher enough at this point that they impact only 1%-2% of users. However, we believe the concept is to establish an early precedent of usage tiers and then let the average consumer usage patterns move in their direction over time, as usage is growing 60% per year. <strong>This puts in place an effective long-term hedge against internet video.</strong> [emphasis added]</p>\n<p><em>- Goldman Sachs research. “Americas: Communication Services”, May 23, 2012</em></p>\n</blockquote>\n<p>In 2011, Comcast generated $55B in revenue and $8.4B in pre-tax profits. Goldman rates the stock a “buy” because Comcast “pushed through rate hikes on both video and broadband access across two-thirds of the [customer] base in Q1 2102″ (<em>Goldman Sach, “Comcast Corp”, May 2, 2012</em>).</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning",
      "title": "Why the integrated approach to mobile devices is winning",
      "description": "Until last week’s announcement of the new Surface tablet, Microsoft had taken the same approach to mobile devices that they had with PCs…",
      "url": "https://cdixon.org/2012/06/25/why-the-integrated-approach-to-mobile-devices-is-winning",
      "published": "2012-06-25T00:00:00.000Z",
      "updated": "2012-06-25T00:00:00.000Z",
      "content": "<p>Until last week’s announcement of the new Surface tablet, Microsoft had taken the same approach to mobile devices that they had with PCs: build the software themselves and let partners build the hardware. Google took a similar strategy with Android but then reversed course when they acquired Motorola. Apple’s integrated strategy was once widely ridiculed as a repeat of their losing 1990′s desktop computer strategy, but is now being copied throughout the industry.</p>\n<p>There is a trade off between integrated and non-integrated approaches to building devices. The non-integrated approach lowers costs, but adds friction between components that compromises performance. Consider this anecdote from Microsoft’s previous attempts to build tablets with hardware partners:</p>\n<blockquote>\n<p>The H.P. tablet was thick, the Intel processor it used made the device hot, and the software and screen hardware did not work well together, causing delays whenever a user tried to perform a touch action on its screen. “It would be like driving a car, and the car not turning when you turn the wheel,” the former H.P. executive said.</p>\n<p>- ”<a href=\"http://www.nytimes.com/2012/06/25/technology/companies/with-tablet-microsoft-takes-aim-at-hardware-missteps.html?_r=1&pagewanted=2\">With Tablet, Microsoft Takes Aim at Hardware Missteps</a>,” <em>New York Times</em></p>\n</blockquote>\n<p>What is the difference between mobile devices today where the integrated approach is winning and desktops PCs in, say, 1995, when the non-integrated approach dominated? The best way to understand the difference is through the lens of Clay Christensen’s <a href=\"http://en.wikipedia.org/wiki/Disruptive_innovation\">disruptive technology</a> theory*. When a new category of device first launches, it is usually not “good enough” for most customers. Chistensen illustrates this with a famous graph:</p>\n<p><img src=\"/3ca1e18b1eb4b9e0d5caba3cb22271c3/filedisruptivetechnology.gif\" title=\"File:Disruptivetechnology\"></p>\n<p>According to Christensen, technology gets better at a faster rate than customers’ demands on technology do (in the graph, the black line goes up faster than the other lines). Eventually, new device categories become “good enough” (the black line crosses the purple/blue lines), and customers become unwilling to pay significantly higher prices for improved versions of the device. At this point it doesn’t make sense for manufacturers to invest in greater performance if customers won’t reward that investment. Instead, manufacturers should spend the “performance surplus” on making devices less expensive. The best way to do this is to let different companies produce the core software and hardware components, i.e. to switch from an integrated to non-integrated approach.</p>\n<p>If you believe Christensen’s theory (and most senior people at large technology companies do), the interesting question now is: when will smartphones and tablets be “good enough” (respectively) for non-integrated to beat integrated approaches? My guess is it will be at least 5-10 years before customers are no longer willing to pay significantly more for faster bandwidth, more features, longer battery life, increased storage, faster processors, etc. But no one really knows.</p>\n<p>It isn’t hard to see how Google, Microsoft and pretty much everyone but Apple missed the key difference between PCs and the new generation of mobile devices. Christensen himself missed it:</p>\n<blockquote>\n<p>Christensen’s most embarassing prediction was that the iPhone would not succeed. Being a low-end guy, Christensen saw it as a fancy cellphone; it was only later that he saw it also being disruptive to laptops.</p>\n<p>- When Giants Fail: What Business has learned from Clayton Christensen, <em>The New Yorker.</em> [<a href=\"http://archives.newyorker.com/?i=2012-05-14#folio=084\">paywall</a>]</p>\n</blockquote>\n<p>Seen as high-end smartphones, iPhones were “sustaining” innovations (above the blue line) that would only appeal to the highest end of the market. Seen as low-end laptops, iPhones were disruptive innovations that would eventually subsume the PC business. With support from the iPad, they seem to be doing exactly that.</p>\n<p>* If you aren’t familiar with Clay Christensen, this <a href=\"http://gartner.mediasite.com/mediasite/play/9cfe6bba5c7941e09bee95eb63f769421d?t=1320659595\">talk</a> is a great way to learn about his theories.</p>",
      "image": null,
      "media": [],
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      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/06/19/firing",
      "title": "Firing",
      "description": "Firing is awful. You can try to avoid it, but even the most selective founders make serious mistakes. Here are a few things I’ve observed…",
      "url": "https://cdixon.org/2012/06/19/firing",
      "published": "2012-06-19T00:00:00.000Z",
      "updated": "2012-06-19T00:00:00.000Z",
      "content": "<p>Firing is awful. You can try to avoid it, but even the most selective founders make serious mistakes. Here are a few things I’ve observed about firing:</p>\n<ol>\n<li><em>The good people bounce up, the bad ones bounce down.</em> I was told this by my boss once when he was firing one of my friends. At the time, I thought this just made him feel better about himself. Over time, I’ve seen the wisdom in what he said. Some people who get fired react by fixing their weaknesses. Others spiral down.</li>\n<li><em>Do it early.</em> If you think you’re going to fire someone over the next six months, you probably will. Don’t wait too long. Too many founders do. It’s better for management and employees if it happens fast.</li>\n<li><em>It’s awful.</em> You’re in control of a situation that will meaningfully hurt someone. It’s an awful place to be. The fired person will go home and tell his/her family about how terrible it was. It was your fault. Perhaps your mismanagement caused it. Who knows. You’ll question it, and perhaps you are right to do so.</li>\n<li><em>The other choice is firing everyone</em>. You’re the founder of the company. If you run out of money, you’re forced to fire everyone. If you don’t fire the bad employees, you risk everyone else’s jobs. It’s an impossible situation.</li>\n<li><em>The feeling is more likely to be mutual than you think</em>. Most of the time, the person getting fired was already about to quit. The antipathy you feel is likely reciprocated. It’s surprising how often this happens and management doesn’t see it coming.</li>\n</ol>\n<p>It would be great if startups were all about growth, hiring, and success. But the reality is that founding a company is a brutal job and lots of the pain gets passed down to employees. Creative destruction sounds nice in textbooks, but in the real world it means telling friends to go home, stop getting paid, and find new jobs.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/06/16/critics-and-practitioners",
      "title": "Critics and practitioners",
      "description": "“When art critics get together they talk about Form and Structure and Meaning. When artists get together they talk about where you can buy…",
      "url": "https://cdixon.org/2012/06/16/critics-and-practitioners",
      "published": "2012-06-16T00:00:00.000Z",
      "updated": "2012-06-16T00:00:00.000Z",
      "content": "<blockquote>\n<p>“When art critics get together they talk about Form and Structure and Meaning. When artists get together they talk about where you can buy cheap turpentine.” – Picasso (via <a href=\"http://www.ribbonfarm.com/2010/03/18/the-turpentine-effect/\">Ribbonfarm</a>)</p>\n</blockquote>\n<p>When I was a kid, I tagged along with my grandfather who was an oboist in a big city symphony. I was struck by the dramatic discrepancy between the culture of the audience and the culture of the musicians. Before the show, the audience attended fancy events, and talked in abstract terms about classical music. After the show, the musicians played poker, told jokes, swigged bourbon, and traded tips about the best places to get parts for their instruments.</p>\n<p>In the context of startups, it’s convenient to read the Picasso quote as a tidy summarization of the difference between critics (VCs and the tech press) and practitioners (entrepreneurs). There is some truth to this. When entrepreneurs get together, they tend to talk about tactical details. VCs and the press talk about trends, markets, and other abstractions.</p>\n<p>But Picasso was just being modest. He thought about the meaning of his art far more deeply than his critics did. The same is true of great entrepreneurs. “Cheap turpentine” is important, but so is “Form and Structure and Meaning”. The best ideas emerge from the interplay between the two modes of thought.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/06/06/equity-value",
      "title": "Equity value",
      "description": "Warren Buffet once said: Buy into a business that’s doing so well an idiot could run it, because sooner or later, one will. This is a useful…",
      "url": "https://cdixon.org/2012/06/06/equity-value",
      "published": "2012-06-06T00:00:00.000Z",
      "updated": "2012-06-06T00:00:00.000Z",
      "content": "<p>Warren Buffet once said:</p>\n<blockquote>\n<p>Buy into a business that’s doing so well an idiot could run it, because sooner or later, one will.</p>\n</blockquote>\n<p>This is a useful way to understand the meaning of “equity value”. You learn in finance that equity value is the overall value of a the stock (i.e. equity) of a business, which in turn is the present value of all future profits. Of course with startups the future is extremely uncertain, leading to a huge variance in valuations.</p>\n<p>In perfectly competitive markets, all profit margins tend toward zero. So equity value is a function of the degree to which you can make your market inefficient by making your business hard to copy (so called “defensibility”). If your defensibility depends solely on having superior people, you have what VCs call a “service business.” In a competitve labor market, service businesses tend to have low margins and therefore low equity value. A popular saying about service businesses is “the equity value walks out of the building every night.”</p>\n<p>Different types of tech businesses exhibit different relationships between capital, revenue, profits, and equity value. Enterprise software companies tend to require lots of capital to get to scale but command high equity values once they do, partly because enterprises are risk averse and like to adopt the most popular technology, leading to winner-take-all dynamics. Adtech companies tend to be quick to revenue but slower to equity value, and sometimes risk becoming service businesses. The equity value of consumer internet companies vary widely, depending on their defensibility (usually networks effects and brand) and business models (e.g. transactional vs ad supported). Biotech companies require boatloads of capital for R&D and regulatory approval but then can generate lots of equity value, with the defensibility coming primarily from patents. (Patents introduce market innefficiencies, but, proponents argue, are necessary to create sufficient incentives for entrepreneurs and investors). E-commerce companies generally require a lot of capital as well, since their defensibility comes mostly through brand and economies of scale.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/06/05/different-types-of-risk",
      "title": "Different types of risk",
      "description": "The idea that founders take on “risk” is a misleading generalization. It is far more informative to separate the specific types of risks…",
      "url": "https://cdixon.org/2012/06/05/different-types-of-risk",
      "published": "2012-06-05T00:00:00.000Z",
      "updated": "2012-06-05T00:00:00.000Z",
      "content": "<p>The idea that founders take on “risk” is a misleading generalization. It is far more informative to separate the specific types of risks that founders assume, including:</p>\n<ul>\n<li>Financing risk: You can’t raise money at various stages because you haven’t hit <a href=\"http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/\">accretive milestones</a> or your space isn’t appealing to investors.</li>\n<li>Product risk: You can’t translate your concept into a working and compelling product.</li>\n<li>Technology risk: You can’t build a good enough or, if necessary, breakthrough technology.</li>\n<li>Business development risk: You can’t get deals with other companies that you depend on to build or distribute your product.</li>\n<li>Market risk: Customers or users won’t want your product.</li>\n<li><a href=\"http://cdixon.org/2010/11/07/timing-your-startup/\">Timing</a> risk: You are too early or too late to the market.</li>\n<li>Margin risk: You build something people want but that you can’t defend, and therefore competitors will squeeze your margins.</li>\n</ul>\n<p>At the early stage, the main way to mitigate these risks is to recruit great people as cofounders or early employees. You shouldn’t recruit people that will give you a high likelihood of reducing these risks. You should recruit people that give you an unfair advantage. You should try to win the game before it starts.</p>\n<p>Startups are hard, and risky. But if you lump all the risks together, you are playing the lottery. Talented entrepreneurs identify specific risks and do everything they can to overcome them.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/06/02/some-thoughts-on-when-to-raise-money-and-the-current-financing-environment",
      "title": "Some thoughts on when to raise money, and the current financing environment",
      "description": "A key question for founders is when they should try to raise money. More specifically, they often wonder whether to raise money now or wait…",
      "url": "https://cdixon.org/2012/06/02/some-thoughts-on-when-to-raise-money-and-the-current-financing-environment",
      "published": "2012-06-02T00:00:00.000Z",
      "updated": "2012-06-02T00:00:00.000Z",
      "content": "<p>A key question for founders is when they should try to raise money. More specifically, they often wonder whether to raise money now or wait, say, 6 months when their startup has made more progress. Here are some thoughts on this question generally along with some thoughts on today’s venture financing market.</p>\n<ul>\n<li>In the private markets, macro tends to dominate micro. Venture valuations have swung by roughly a factor of 4 over the last decade. In finance speak, venture tends to be high beta, moving as a multiple of the public markets, which themselves tend to move more dramatically than economic fundamentals. Hence, it is easy to imagine scenarios where the same private company will command 1/2 the valuation in 6 months due to macro events, but it’s rare for a company to increase their valuation 2x through operations alone in 6 months.</li>\n<li>Therefore, when it seems to be the top of a venture cycle, it’s almost always better to raise money sooner rather than later, unless you have a plausible story about how waiting will dramatically improve your company’s fundamentals.</li>\n<li>Prior to the Facebook IPO, the consensus seemed to be that private valuations were near the top of the cycle. Today, FB is valued at up to 50% below what private investors expected. Moreover, the financial crisis in Europe seems to have worsened, and unemployment numbers in the US suggest the possibility of a double dip recession.</li>\n<li>It takes many months to understand how macroeconomic and public market shifts affect private company valuations since (with the exception of secondary markets) private transactions happen slowly. So we don’t know yet what these recent events mean for private markets. According to a basic rule of finance, however, it is safe to assume that companies “comparable” to Facebook are worth up to 50% less than private investors thought they were worth a few weeks ago.</li>\n<li>The question then is what companies are comparable to Facebook. Clearly, other social media companies with business models that rely on display or feed based advertising are comparables. Internet companies that have other business models (freemium, marketplaces, commerce, hardware, enterprise software, direct response advertising, etc) are probably not comparables. The public markets seems to agree with this. Defensible companies with non-display-ad business models have maintained healthy public market valuations.</li>\n<li>One counterargument to the “all social media companies are now worth less” argument is the discrepency between how the smart Wall Street money and smart internet money views Facebook and social media companies generally. The smart Wall Street money thinks like Mary Meeker’s charts. They draw lines through dots and extrapoloate. This method would have worked very poorly in the past for trying to value tech companies at key inflection points (and tech investors know that what matters are exactly those inflection points). In Facebook’s case, Wall Street types look at revenue and margin growth and the trend toward mobile where monetization is considerably worse (for now). Smart internet investors, by contrast, look at Facebook in terms of its power and capabilities. They see a company that is rivaled only by Google and Apple in terms of their control of where users go and what they do on the internet. Smart internet investors are far more bullish than smart Wall Street investors on Facebook. Thus if you believe the internet perspective over the Wall Street perspective, you’d likely believe that Facebook and social media in general is undervalued by the public markets.</li>\n</ul>",
      "image": null,
      "media": [],
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      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/05/26/the-experience-economy",
      "title": "The experience economy",
      "description": "Before World War 2, the middle-class in the developed world struggled to afford basic needs. In the post-war boom, standards of living rose…",
      "url": "https://cdixon.org/2012/05/26/the-experience-economy",
      "published": "2012-05-26T00:00:00.000Z",
      "updated": "2012-05-26T00:00:00.000Z",
      "content": "<p>Before World War 2, the middle-class in the developed world struggled to afford basic needs. In the post-war boom, standards of living rose dramatically, and people consumed far beyond what they needed. It was the age of conspicuous consumption: a race to own bigger cars and houses, and accumulate more stuff. The mean income in the developed world became sufficient to provide for a comfortable life.</p>\n<p>Today, people increasingly realize they own more than enough stuff, and don’t want to pay for feature-rich versions of that stuff. Four blades in your razors are enough. In the language of Clay Christensen’s <a href=\"http://en.wikipedia.org/wiki/Disruptive_innovation\">disruptive innovation</a> framework, the product economy overshot the mass market’s needs.</p>\n<p>An economy of experiences is emerging in its place. Experiences make people happier than products (a fact that scientific <a href=\"http://www.wjh.harvard.edu/~dtg/DUNN%20GILBERT%20&%20WILSON%20(2011).pdf\">studies</a> support). The popularity of experiences like music concerts has <a href=\"http://dataspace.princeton.edu/jspui/handle/88435/dsp01xs55mc05g\">skyrocketed</a> compared to corresponding products like music recordings. Apple, the most valuable company in the world, maniacally focuses on product experiences, down to minute details like the experience of unboxing an iPhone. Customers want to know where their food and clothes come from, so they can understand the experiences surrounding them. The emphasis on experiences also helps explain other large trends like the migration to cities. Cities have always offered the trade-off of fewer goods and less space in exchange for better experiences.</p>\n<p>The trend toward experiences is important for technology startups. The <a href=\"http://techcrunch.com/2011/11/14/rip-spec/\">era</a> of competing over technical specifications is over. Users want better experiences from devices, applications, websites, and the offline services they enable. It is no coincidence that interaction design is <a href=\"http://techcrunch.com/2012/05/25/benchmark-in-san-francisco/\">replacing</a> technical prowess as the primary competency at startups. People who create great experiences will be the most valuable to startups, and startups that create great experiences will be the most valuable to users.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/05/24/when-should-you-give-up-on-an-idea",
      "title": "When should you give up on an idea?",
      "description": "Suppose you launch your new startup and don’t get the traction you were hoping for. How do you know whether to give up or keep going? This…",
      "url": "https://cdixon.org/2012/05/24/when-should-you-give-up-on-an-idea",
      "published": "2012-05-24T00:00:00.000Z",
      "updated": "2012-05-24T00:00:00.000Z",
      "content": "<p>Suppose you launch your new startup and don’t get the traction you were hoping for. How do you know whether to give up or keep going? This is a tough question. There are lots of examples that support seemingly contradictory theories. Instagram pivoted before launch, and Pinterest <a href=\"http://allthingsd.com/20120313/pinterest-ceo-ben-silbermanns-lesson-for-start-ups-go-your-own-way/\">refused</a> to pivot for years. Many other startups pivoted too early or kept working on dead-end ideas for too long.</p>\n<p>If the pre-product/market-fit phase of a startup is about efficiently testing hypotheses, then continuing to test an idea only makes sense if you have a strong theory about what has gone wrong and how things will improve.</p>\n<p>Specifically, you should have a theory about: 1) how to modify your product, 2) how to modify your marketing/distribution strategy, and/or 3) how external events (a new technology wave, cultural events, regulatory change, etc) might make your product take off. In other words, you need a plausible argument as to why the future will be different than the past.</p>\n<p>Another way to think about this is using what Jeff Bezos <a href=\"http://bijansabet.com/post/147533511/jeff-bezos-regret-minimization-framework\">calls</a> the “regret-minimization framework.” Imagine you do give up on your idea. Have you explored most of its plausible implementations? Are you confident that another entrepreneur won’t come along and make it work? You’ll regret it more if you nearly created a big company than if you spent an extra six months iterating.</p>\n<p>Finally, beware of the temptation to get distracted by new shiny ideas. When you are deep in the weeds, new ideas seem refreshing but this is usually the false signal of “<a href=\"http://viniciusvacanti.com/2010/08/03/new-ideas-can-kill-your-startup/\">uninformed optimism</a>” that accompanies all new things.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/05/21/four-types-of-mobile-apps",
      "title": "Four types of mobile apps",
      "description": "If you are a founder trying to create a new mobile app or an investor trying decide whether an app has enduring value, it is helpful to…",
      "url": "https://cdixon.org/2012/05/21/four-types-of-mobile-apps",
      "published": "2012-05-21T00:00:00.000Z",
      "updated": "2012-05-21T00:00:00.000Z",
      "content": "<p>If you are a founder trying to create a new mobile app or an investor trying decide whether an app has enduring value, it is helpful to separate the ways that people use apps into four categories.</p>\n<p>1. <em>Time wasters</em>: Apps that can be used for short bursts when you are waiting in line, etc. The most popular time wasters are games. Some apps are used sometimes as time wasters and sometimes as utilities – e.g. Facebook is both a time waster (checking status updates few minutes) and a utility (sending Facebook messages).</p>\n<p>Time wasters tend to be faddish. It is easy to get hooked on new games and also easy to tire of them. If you want to build a big company that builds time wasters, you need to build a machine that builds, markets and monetizes apps, as Zynga has done.</p>\n<p>2. <em>Core utilities</em>: As a rule of thumb, core utilities are the apps on your home screen: camera, phone, contacts, texting, calendar, etc. Core utilities map to deeply engrained use patterns that usually existed before modern smart phones. In the past people might have carried around a paper calendar, a standalone camera, etc. Core utilities tend to be very sticky – if you gain widespread adoption for a core utility you can build long-lasting value.</p>\n<p>One entry strategy for a startup is to replace a core utility. This is what Instagram did to the built-in camera app. It is unclear whether the “Instagram for video” companies are core utilities (video app replacements) or time wasters. Creating a new core utility that doesn’t replace an existing core utility is very hard. Foursquare seems to have done this for the users who regularly check-in.</p>\n<p>3. <em>Episodic utilities</em>: Episodic utilities are apps that typically aren’t on the home screen but are extremely useful in certain situations. Some examples: Hipmunk when buying plane tickets, Uber when you need a car, and OpenTable for making restaurant reservations. Successful episodic utilities target a well-defined situation and then become deeply associated with that situation. Making an app that is too broad or has multiple use situations can hurt you. Because many of these situations involve purchasing, these apps tend to be monetizable.</p>\n<p>4. <em>Notification-driven apps</em>: This is an emerging category. Android has had a good notification system for a while, but the iPhone only made notifications useful in IOS 5. People tend to enable notifications for communication apps like email, texting etc. Thus far, notifications for other apps haven’t gotten widespread adoption because, among other things: it is easy to annoy users by over-notifying them, and running non-communications apps in the background tends to drain battery life. Expect this category to grow as apps get smarter about when to notify, and battery life improves dramatically over the next year or two.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/05/18/the-default-state-of-a-startup-is-failure",
      "title": "The default state of a startup is failure",
      "description": "If you are starting a company and wondering why nothing good seems to happen unless you force it to happen, that’s because the world wants…",
      "url": "https://cdixon.org/2012/05/18/the-default-state-of-a-startup-is-failure",
      "published": "2012-05-18T00:00:00.000Z",
      "updated": "2012-05-18T00:00:00.000Z",
      "content": "<p>If you are starting a company and wondering why nothing good seems to happen unless you force it to happen, that’s because the world wants to stay the way it is. Customers, partners, and most of all incumbents don’t want to think hard, try new things, or change in any way. The world is lazy and just wants to keep doing what it’s doing.</p>\n<p>A friend of mine got a job at a big company and was shocked to see his colleagues worked just a few productive hours a day. They didn’t seem to care about their work or have relevant expertise. My friend said: “Wow, this company is going under.” Then the company released its quarterly reports and profits rose to an all-time high. The momentum of the company’s brand and relationships was sufficient to propel it forward.</p>\n<p>On the flip side, first-time entrepreneurs often fail to realize that when you build something new, no one will care. People won’t use your product, won’t tell people about it, and almost certainly won’t pay for it. (There are exceptions – but these are as rare as winning the lottery). This doesn’t mean you’ll fail. It means you need to be smarter and harder working, and surround yourself with extraordinary people.</p>\n<p>The default state of the world is to stay the way it is, which means the default state of a startup is failure.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/05/10/blogging-to-learn",
      "title": "Blogging to learn",
      "description": "People blog for all sorts of reasons. For me, it is mostly about learning. This wasn’t my original intention – it evolved over time. Now I…",
      "url": "https://cdixon.org/2012/05/10/blogging-to-learn",
      "published": "2012-05-10T00:00:00.000Z",
      "updated": "2012-05-10T00:00:00.000Z",
      "content": "<p>People blog for all sorts of reasons. For me, it is mostly about learning. This wasn’t my original intention – it evolved over time. Now I see blogging as part of a continuous learning process:</p>\n<ul>\n<li>Start every morning by skimming through news, blogs, articles, etc. Much of this is tech related. I used to get tech news in the newspaper, then in Google Reader, and now mostly from Twitter. If someone I meet mentions something interesting that was published that I didn’t read, I go back and figure out how I missed it and change who I follow on Twitter so it doesn’t happen again.</li>\n<li>Try to meet with interesting people during the week. The reason being up on tech news is important is so that we can get the most out of the meetings. Often we’ll talk about whatever each of us is working on at the time but it’s also good to have news or blog posts as shared reference points. This makes the meetings more interesting for everyone.</li>\n<li>Try to learn at least one interesting thing each week and then blog about it. Then see how people react in comments, on Twitter etc. I guess some bloggers don’t like comments but for me they are the crucial so that I can get feedback on new hypotheses. Blogging new hypotheses also means a decent portion of your blog posts need to be ignored or ridiculed. Otherwise you are playing it too safe.</li>\n</ul>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/29/is-it-a-tech-bubble",
      "title": "Is it a tech bubble?",
      "description": "Every week a “we are in a tech bubble” article seems to come out in a major newspaper or blog. People who argue we aren’t in a bubble are…",
      "url": "https://cdixon.org/2012/04/29/is-it-a-tech-bubble",
      "published": "2012-04-29T00:00:00.000Z",
      "updated": "2012-04-29T00:00:00.000Z",
      "content": "<p>Every week a “we are in a tech bubble” <a href=\"http://bits.blogs.nytimes.com/author/nick-bilton/\">article</a> seems to come out in a major newspaper or blog. People who argue we aren’t in a bubble are casually dismissed as promoting their own interests. I’d argue the situation is far more nuanced and that people who engage in this debate should consider the following:</p>\n<ol>\n<li>Public tech companies: Anyone with an understanding of finance would have trouble arguing many large public tech companies are trading at “bubble valuations” – e.g. Apple (14 P/E), Google (18 P/E), eBay (16 P/E), Yahoo (17 P/E). You could certainly debate other public tech stock valuations (there are a number of companies that recently IPOd that many reasonable people think are overvalued), but on a market-cap weighted average the tech sector is trading at a very reasonable <a href=\"http://biz.yahoo.com/p/8peeu.html\">17 P/E</a>.</li>\n<li>Instagram seems to be the case study du jour for people arguing we are in a bubble. Reasonable people could disagree about Instagram’s exit price but in order to argue the price was too high you need to argue that either: 1) Facebook is overvalued at its expected IPO valuation of roughly $100B, 2) it was irrational for Facebook to spend 1% of its market cap to own what many people considered one of Facebook’s biggest threats (including Mark Zuckerberg – who I tend to think knows what is good for Facebook better than pundits).</li>\n<li>Certain stages of venture valuations do seem on average over-valued, in particular seed-stage valuations and (less obviously) later-stage “momentum valuations.” The high seed-stage valuations are driven by an influx of angel/seed investors (successful entrepreneurs/tech company employees, VC’s with seed funds, non-tech people who are chasing trends). The momentum-stage valuations are driven by a variety of things, including VC’s who want to be associated with marquee startup names, the desire to catch the next Facebook before it gets too big, and the desire of mega-sized VC funds to “put more money to work”.</li>\n<li>Certain stages – most notably the Series A – seem under valued. Many good companies are having trouble raising Series As and the valuations I’ve seen for the ones who do have been pretty reasonable. Unfortunately, since the financials and valuations of these companies aren’t disclosed, it is very difficult to have a public debate on this topic. But many investors I know are moving from seed to Series A precisely because they agree with this claim.</li>\n<li>No one can predict macro trends. The bear case includes: something bad happens to the economy (Euro collapses, US enters double dip recession). The warning sign here will be a drop in profits by marquee tech companies.  The bull case includes: economy is ok or improves, and tech continues to eat into other industries (the “software is eating the world” argument). Anyone who claims to know what will happen over the next 3 years at the macro level is blowing hot air. That’s why smart investors continue investing at a regular pace through ups and downs.</li>\n<li>The argument that sometimes startups get better valuations without revenue is somewhat true. As Josh Koppelman <a href=\"http://www.twylah.com/joshk/tweets/782406922\">said</a> “There’s nothing like numbers to screw up a good story.” This is driven by the psychology of venture investors who are sometimes able to justify a higher price to “buy the dream” than the same price to “buy the numbers.” This doesn’t mean the investors think they will invest and then get some greater fool to invest in the company again. For instance, at the seed stage, intelligent investors are quite aware that they are buying the dream but will need to have numbers to raise a Series A.</li>\n<li>No good venture investors invest in companies with the primary strategy being to flip them. This isn’t because they are altruistic – it is because it is a bad strategy. You are much better off investing in companies that have a good chance to build a big business. This creates many more options including the option to sell the company. Acquisitions depend heavily on the whims of acquirers and no good venture investors bet on that.</li>\n</ol>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/26/incumbents-die-due-to-irrelevance-or-ineptitude",
      "title": "Incumbents die due to irrelevance or ineptitude",
      "description": "Judging from the tech press, you’d think the biggest risk to successful companies is competition. But when you examine the history of…",
      "url": "https://cdixon.org/2012/04/26/incumbents-die-due-to-irrelevance-or-ineptitude",
      "published": "2012-04-26T00:00:00.000Z",
      "updated": "2012-04-26T00:00:00.000Z",
      "content": "<p>Judging from the tech press, you’d think the biggest risk to successful companies is competition. But when you examine the history of technology, incumbents usually decline because the world changes and they lose relevance, or because they lose visionary founders and the organization decays. Some examples:</p>\n<ul>\n<li><strong>Dell</strong> thrived when PCs dominated the computer market and Dell was the low cost provider of commodity hardware products. The shift to mobile and tablet computing meant that hardware quality (not price) was once again the primary basis of competition. As a result, Dell’s laser-like focus on cost reduction became a liability.</li>\n<li><strong>The New York Times</strong> was, for many decades, one of the few premium channels through which brand and classified advertisers could reach mass consumers. Thus car companies and real estate brokers subsidized foreign reporting and investigative business journalism. The internet provided a vast alternative channel, and the Times became far less relevant. At the same time, the internet provided many new sources for breaking news, editorials etc, hurting the Times on the subscriber side.</li>\n<li><strong>Yahoo</strong> didn’t lose because Google out-competed them on search. They lost because they didn’t really care about search – indeed, they <a href=\"http://searchengineland.com/revisionist-history-bartz-claims-yahoo-was-never-a-search-company-23725\">outsourced</a> algorithmic search to Alta Vista, Inktomi and then Google itself. The leading portals back in circa 2000 (Yahoo, Excite, Lycos etc) desperately wanted to keep <a href=\"http://cdixon.org/2011/05/16/accurate-contrarian-theories/\">keep users on their site</a> – the buzzword was “stickiness” – but Google knew better and focused on getting users off of Google to other places on the web. Yahoo became just another place to read celebrity gossip and use generic web services.</li>\n<li><strong>Netflix</strong> thrived when they could simply ignore the movie companies and rely on the <a href=\"http://en.wikipedia.org/wiki/First-sale_doctrine\">first-sale doctrine</a> to get DVDs. The market shift to streaming video created a new and brutal dependency. They had to go make deals with content companies. Now they are even <a href=\"http://gigaom.com/video/netflix-original-content-binge-viewing/\">trying</a> to create their own content to lessen this dependency. They have a brilliant and visionary management team but this is a tough transition to make.</li>\n<li><strong>Sony</strong> relied on its Steve-Jobs-like founder, Akio Morita, to <a href=\"/2009/10/10/man-and-superman/\">repeatedly develop</a> incredibly innovative products (among them: the first transistor radio, the first transistor television, the Walkman, the first video cassette recorder, the compact disc) that seemed to come out of nowhere and create massive new markets. Since he left, the company has floundered and the stock has fallen dramatically.</li>\n<li><strong>Google’s</strong> biggest risk isn’t a direct competitor. Startups and incumbents who’ve tried to create better search engines have barely cut into Google’s market share. Google’s primary risk – and they seem to know this – is that they are no longer relevant when people find content through social sites, and where an ever increasing portion of the web is uncrawlable.</li>\n</ul>\n<p>Google released their “Dropbox-killer” a few days ago. I don’t know if Dropbox has yet achieved incumbent status, but they certainly seem to be the market leader. They also seem to have a very competent management team. So if history is a guide, Dropbox’s biggest risk isn’t a competitor but irrelevance – if, for example, files become less and less important in a web services world and Dropbox doesn’t adapt accordingly.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/25/the-risks-of-being-a-small-investor-in-a-private-company",
      "title": "The risks of being a small investor in a private company",
      "description": "With the passage of the JOBS act, it seems that many more Americans will soon be able to buy equity in private companies. I am no expert on…",
      "url": "https://cdixon.org/2012/04/25/the-risks-of-being-a-small-investor-in-a-private-company",
      "published": "2012-04-25T00:00:00.000Z",
      "updated": "2012-04-25T00:00:00.000Z",
      "content": "<p>With the passage of the <a href=\"http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act\">JOBS act</a>, it seems that many more Americans will soon be able to buy equity in private companies. I am no expert on the law, but I have been investing in private companies for about a decade, and during that time I’ve seen many cases where large investors used financial engineering to artificially reduce the value of smaller investors’ equity. Here are a few examples.</p>\n<ol>\n<li>Issuing of senior securities with multiple liquidation preferences. Example:</li>\n</ol>\n<blockquote>\n<p>Series A: Small investor invests in $1m round, getting 1x straight preferred</p>\n<p>Series B: Large investor invests $10m, getting 4x senior straight preferred</p>\n<p>Company gets sold for $30m. Management gets $3m carveout, Series B investors get $27m, and Series A investors get zero.</p>\n</blockquote>\n<ol start=\"2\">\n<li>Issuing of massive option grant to management along with new financing at a below-market valuation. Example:</li>\n</ol>\n<blockquote>\n<p>Series A: Small investor invests in $1m round, getting 1x straight preferred for 10% of the company.</p>\n<p>Company is doing well and is offered a Series B at a significantly higher valuation. Instead, large investor invests $5m at below-market valuation, getting 40% of the company, and simultaneously issues options worth 50% of the company to management.</p>\n<p>Result: Series A investors are diluted from 10% to 1% of the company, even though the company was doing well and in a normal financing would have only been slightly diluted.</p>\n</blockquote>\n<ol start=\"3\">\n<li>The company is actually multiple entities, with the smaller investor investing in the less valuable entity. Example:</li>\n</ol>\n<blockquote>\n<p>Company has entity 1 and 2. Small investors invest in entity 1 that licenses IP from entity 2. Value of IP increases and entity 2 is sold and eventually cancels entity 1′s license, making entity 1 worthless.</p>\n</blockquote>\n<ol start=\"4\">\n<li>Pay-to-play or artificially low downrounds. Example:</li>\n</ol>\n<blockquote>\n<p>Series A: Small investor invests in $1m round, getting 1x straight preferred</p>\n<p>Series B: Large investor invests $10m in pay-to-play round (meaning any investor that doesn’t participate has their preferred shares converted to common). Smaller investor doesn’t have the cash to re-invest in Series B, but deeper pocketed investors do.</p>\n<p>Company sells for $10m. Series B investors get $10m. Series A investors get nothing.</p>\n</blockquote>\n<p>There are ways to protect against these shenanigans. Protections can be written into the Series A financings documents (pro-rata rights, ability to block senior financings, etc). There are also some legal protections all minority investors are granted under, say, Delaware or California law. But usually even when these protections exist (and they exist far less frequently these days than in the past), smaller investors usually can’t, say, invoke blocking rights by themselves (indeed, it’s often not economically viable for smaller investors to hire lawyers to review every financing document for every company they invest in). Another way smaller investors can protect themselves is to set aside capital amounting to, e.g. 30% of every investment made, in case they need it later for defensive purposes (<a href=\"http://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds/#comment-486289000\">I do this</a>). But in my experience this is all very complicated and difficult to execute in practice, even when the small investors are “professional” investors. I worry it will be even harder for “amateur” investors to protect themselves.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/22/outsource-things-you-dont-care-about",
      "title": "Outsource things you don’t care about",
      "description": "A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things…",
      "url": "https://cdixon.org/2012/04/22/outsource-things-you-dont-care-about",
      "published": "2012-04-22T00:00:00.000Z",
      "updated": "2012-04-22T00:00:00.000Z",
      "content": "<p>A fundamental principle of business is that you do things in house that you think can give you a competitive advantage and outsource things that you don’t. At an early-stage technology company this means you do in house: product design, software and/or hardware development, PR, recruiting, and customer relations/community management. Ideally, most of these activities are led by founders. You should outsource legal, accounting, website hosting, website analytics etc. (Unless you are starting a company where one of those activities can give you a competitive advantage, e.g. a securities trading startup would need to have in-house legal).</p>\n<p>A lot of startups over outsource. A few years ago, you’d sometimes hear tech startups say they were going to outsource software development. Thankfully, founders have gotten smart about this and it rarely ever happens except as a stopgap. It is still common for startups to hire outside PR firms. If you decide to hire an outside PR firm, that means you don’t care about PR. Just because you are willing to spend some of money on it doesn’t mean you think it’s important. You probably shouldn’t hire an investment banker during an acquisition unless your company is later stage. And you might occasionally use an outside recruiter but the core recruiting activity needs be done by founders.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/20/offline-first-mobile-enabled",
      "title": "Offline first, mobile enabled",
      "description": "One of the major trends in tech startups what Fred Wilson calls “Mobile first, web second.” Instagram is a great example of mobile first…",
      "url": "https://cdixon.org/2012/04/20/offline-first-mobile-enabled",
      "published": "2012-04-20T00:00:00.000Z",
      "updated": "2012-04-20T00:00:00.000Z",
      "content": "<p>One of the major trends in tech startups what Fred Wilson calls “<a href=\"http://www.avc.com/a_vc/2010/09/mobile-first-web-second.html\">Mobile first, web second</a>.” Instagram is a great example of mobile first. They barely had a website – it was all about the mobile app.</p>\n<p>The excitement over mobile-first apps is justified. Smartphones have unleashed a wave of creativity, resulting in entirely new categories of applications. But to me an even more exciting trend is what people have been calling (for lack of a better phrase) ”offline first, mobile enabled” apps.</p>\n<p>For example, Foursquare is primarily about improving your offline experiences (meeting friends and finding new places to go). And it couldn’t exist without smartphones (ok, Dodgeball existed on feature phones but had a fraction of the utility). Similarly, Uber couldn’t exist without smartphones. The Uber apps (one for drivers and one for customers), while essential, are all about enabling for the car service. Square is about making payments more convenient and giving small businesses better analytics. The mobile app is just an enabler.</p>\n<p>It seems natural that the first wave of mobile apps would be about improving core smartphone apps (e.g. photo apps) or porting apps from other devices (e.g. games). And there is probably a lot of interesting innovation remaining there. But the really massive opportunity is dreaming up new ways that the little computers loaded with sensors that we carry around with us everywhere can improve our real-world experiences.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/18/meaningful-startups",
      "title": "“Meaningful” startups",
      "description": "There is generally a lot of enthusiasm in the startup world these days. But some observers worry that too many startups are working on…",
      "url": "https://cdixon.org/2012/04/18/meaningful-startups",
      "published": "2012-04-18T00:00:00.000Z",
      "updated": "2012-04-18T00:00:00.000Z",
      "content": "<p>There is generally a lot of enthusiasm in the startup world these days. But some observers worry that too many startups are working on “features” instead of world-changing ideas. Founders Fund published a provocative <a href=\"http://www.foundersfund.com/the-future\">article</a> summed up by the subtitle: “We wanted flying cars, instead we got 140 characters”. Alexis Madrigal <a href=\"http://www.theatlantic.com/technology/archive/2012/04/the-jig-is-up-time-to-get-past-facebook-and-invent-a-new-future/256046/\">writes</a> in The Atlantic that “we need a fresh paradigm for startups”, and dismisses the significance of recent “hot” startups:</p>\n<blockquote>\n<p>What we’ve seen have been evolutionary improvements on the patterns established five years ago. The platforms that have seemed hot in the last couple of years — Tumblr, Instagram, Pinterest — add a bit of design or mobile intelligence to the established ways of thinking.</p>\n</blockquote>\n<p>One thing these critics need to be careful about is that, as Clay Christensen has long argued, many important new inventions <a href=\"http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">start out looking like toys</a>. Twitter (Founder Fund’s headline example of a “trivial” startup) started out looking like a toy but has since transformed the way information is distributed for tens of millions of people. Madrigal dismisses cloud computing as “a rebranding of the Internet” whose only effect has been to make “the lives of some IT managers easier,” overlooking that cloud-based services solve the “third party payer” problem of enterprise sales, thereby completely <a href=\"http://cdixon.org/2011/12/04/the-enterprise-buyers-versus-users/\">changing</a> how enterprises adopt new technology.</p>\n<p>That said, I generally agree with the sentiment that the startup world is too focused on chasing trends. I don’t think this is the fault of entrepreneurs. I meet entrepreneurs all the time who are working on ideas that seem quite meaningful to me. Some of them are building futuristic new technologies. Some are trying to disintermediate incumbents and thereby restructure large industries. Others are trying to solve stubborn problems in important sectors like education, healthcare, or energy.</p>\n<p>The problem I encounter is that many of these “meaningful” startups have trouble raising money from VCs. An entrepreneur working on groundbreaking robot technology recently joked to me that he’d have an easier time raising money if his robots were virtual and existed only on Facebook. He was only partly joking. His startup will require a lot of capital and doesn’t have an obvious near term acquirer. Only a small group of VCs today will even consider such an investment.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/14/there-are-two-ways-to-make-large-datasets-useful",
      "title": "There are two ways to make large datasets useful",
      "description": "I’ve spent the majority of my career building technologies that try to do useful things with large datasets.* One of the most important…",
      "url": "https://cdixon.org/2012/04/14/there-are-two-ways-to-make-large-datasets-useful",
      "published": "2012-04-14T00:00:00.000Z",
      "updated": "2012-04-14T00:00:00.000Z",
      "content": "<p>I’ve spent the majority of my career building technologies that try to do useful things with large datasets.*</p>\n<p>One of the most important lessons I’ve learned is that there are only two ways to make useful products out of large data sets. Algorithms that deal with large data sets tend to be accurate at best 80%-90% of the time (an old “joke” about <a href=\"http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/\">machine learning is that it’s really good at partially solving any problem</a>). Consequently, you either need to accept you’ll have some errors but deploy the system in a fault-tolerant context, <em>or</em> you need to figure out how to get the remaining accuracy through manual labor.</p>\n<p>What do I mean by fault-tolerant context? If a search engine shows the most relevant result as the 2nd or 3rd result, users are still pretty happy. The same goes for recommendation systems that show multiple results (e.g. Netflix). Trading systems that hedge funds use are also often fault tolerant: if you make money 80% of the time and lose it 20% of the time, you can still usually have a profitable system.</p>\n<p>For fault-_in_tolerant contexts, you need to figure out how to scalably and cost-effectively produce the remaining accuracy through manual labor. When we were building SiteAdvisor, we knew that any inaccuracies would be a big problem: incorrectly rating a website as unsafe hurts the website, and incorrectly rating a website as safe hurts the user. Because we knew automation would only get us 80-90% accuracy, we built 1) systems to estimate confidence levels in our ratings so we would know what to manually review, and 2) a workflow system so that our staff, an offshore team we hired, and users could flag or fix inaccuracies.</p>\n<p>* <em>My first job was as a programmer at a hedge fund, where we built systems that analyzed large data sets to trade stock options. Later, I cofounded SiteAdvisor where the goal was to build a system to assign security safety ratings to tens of millions of websites. Then I cofounded Hunch, which was acquired by eBay – we are now working on new recommendation technologies for ebay.com and other eBay websites.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/10/increasing-velocity",
      "title": "Increasing velocity",
      "description": "Two common discussions in the startup world right now are 1) the increasing speed at which new apps/websites can gain mass adoption…",
      "url": "https://cdixon.org/2012/04/10/increasing-velocity",
      "published": "2012-04-10T00:00:00.000Z",
      "updated": "2012-04-10T00:00:00.000Z",
      "content": "<p>Two common discussions in the startup world right now are 1) the increasing speed at which new apps/websites can gain mass adoption (Instagram, Pinterest, OMGPOP’s Draw Something, etc), and 2) the rise in seed stage valuations. These two trends are real and related.  An investor with a broad portfolio of companies might rationally invest at an average valuation of, say, 10m (which is historically considered very high for that stage) if they have a chance for one of the investments to become the next Instagram or Pinterest. A billion dollar hit pays for a lot of misses.</p>\n<p>The increasing velocity has <a href=\"http://www.betabeat.com/2012/04/10/instagram-and-the-age-of-upsets/\">implications for the valuations of incumbent tech companies</a>. Users have limited time, and while web and app usage are growing, hit startups are growing much faster and therefore gaining adoption, at least in part, at the expense of incumbents. It’s not clear this risk is priced into the valuations of companies like Facebook (P/E expected to be ~100) and Zynga (P/E ~31). In other words, faster velocity should lead to a narrower distribution of valuations from seed to late stages. We’ve seen the seed stage adjust but not the late stage.</p>\n<p>The current posture of big VCs seems to be to wait to see what takes off and then chase the winners. Tons of investors tried to invest in Instagram’s A and B rounds, and I’m sure VC interest in Pinterest is intense.</p>\n<p>The problem with this model of Series A and B investing is that, in reality, many of the companies with big hits <a href=\"http://cdixon.org/2012/03/16/the-myth-of-the-overnight-success/\">weren’t overnight successes</a>. Pinterest, OMGPOP, Twitter, and Tumblr were around for years before taking off and all benefited greatly from having patient investors. In the current financing environment, a lot of good companies won’t live to get Series As and Bs and big VCs will pay valuations on hits that are priced to perfection.</p>\n<p>Increasing velocity is great for users and for the winning companies and investors. But when good companies aren’t getting follow on rounds because they aren’t yet “hockeysticking”, the long term health of the startup ecosystem suffers.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/03/facebooks-response-to-yahoos-patent-lawsuit",
      "title": "Facebook’s response to Yahoo’s patent lawsuit",
      "description": "Like many in tech, I believe all software patents should be abolished. That said, I think Facebook made the right move by filing a lawsuit…",
      "url": "https://cdixon.org/2012/04/03/facebooks-response-to-yahoos-patent-lawsuit",
      "published": "2012-04-03T00:00:00.000Z",
      "updated": "2012-04-03T00:00:00.000Z",
      "content": "<p>Like many in tech, I believe all <a href=\"http://cdixon.org/2009/09/24/software-patents-should-be-abolished/\">software patents should be abolished</a>. That said, I think Facebook made the right move by filing a lawsuit against Yahoo’s patent attack.</p>\n<p>As I see it, Facebook had 4 choices:</p>\n<ul>\n<li>Settle. Given their pending IPO, this would have been the easiest route. But, by rewarding Yahoo, settling would have encouraged more frivolous patent lawsuits.</li>\n<li>Defend without countersuing. On the surface this would have been the “principled” stance, but it would have severely weakened their legal position, and therefore would have made it more likely that Yahoo profited from the lawsuit.</li>\n<li>Countersue without signaling any aversion to patent lawsuits.</li>\n<li>Countersue <em>and</em> signal that they are averse to patent lawsuits, which in turn signals that they will drop the lawsuit if Yahoo does. This seems to be what Facebook has done:</li>\n</ul>\n<blockquote>\n<p>“From the outset, we said we would defend ourselves vigorously against Yahoo’s lawsuit,” Ted Ullyot, Facebook’s general counsel, said in a statement. “While we are asserting patent claims of our own, <strong>we do so in response to Yahoo’s short-sighted decision to attack one of its partners and prioritize litigation over innovation</strong>.” [emphasis added] – <a href=\"http://dealbook.nytimes.com/2012/04/03/facebook-accuses-yahoo-of-infringing-on-patents/?hpw\">NYTimes</a></p>\n</blockquote>\n<p>Countersuing gives Facebook the best chance of fending off Yahoo’s lawsuit – and therefore not rewarding patent lawsuits. And signaling they are only doing so in response to Yahoo (hence might drop the suit if Yahoo does) keeps them on the right side of innovation.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds",
      "title": "Revisited: big VCs investing in seed rounds",
      "description": "A few years ago, the trend of companies raising smaller seed rounds combined with the emergence of new seed funds caused many big VCs to…",
      "url": "https://cdixon.org/2012/04/02/revisited-big-vcs-investing-in-seed-rounds",
      "published": "2012-04-02T00:00:00.000Z",
      "updated": "2012-04-02T00:00:00.000Z",
      "content": "<p>A few years ago, the trend of companies raising smaller seed rounds combined with the emergence of new seed funds caused many big VCs to create seed investment programs. This triggered a debate among entrepreneurs and investors about whether it was risky for seed-stage companies to take small investments from large VCs. (I blogged about the issue <a href=\"http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/\">here</a>, <a href=\"http://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money/\">here</a>, <a href=\"http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/\">here</a>).</p>\n<p>Since then, enough founders have directly experienced the downside of taking seed money from big VCs that I think it’s safe to say there is no more room for debate. I can think of about 15 founders I’ve spoken to recently who tried or are trying to raise Series As but are seriously hampered by the fact that a big VC invested in the seed round but isn’t participating in the Series A. (I’d love to mention specific companies and firms but it wouldn’t be appropriate for me to do so – I guess I’ll just have to cite Jay Rosen’s “<a href=\"http://pressthink.org/2012/03/im-there-youre-not-let-me-tell-you-about-it/\">I’m there, let me tell you what I see</a>” principle of reporting).</p>\n<p>There are two important nuances to point out here. First, there are big VCs who invest in seed rounds the right way – with the genuine expectation to follow on and the intention to help out during the seed stage (some that I’ve invested with include USV, True, and Spark). One important sign of this is how much they want to invest. If a $300M fund wants to invest $100K, they are buying an option. If they want to invest $500K, they are more likely making an investment.</p>\n<p>The second nuance can be counterintuitive: the danger of taking seed money is positively correlated with the reputation of the firm. If a top VC invests in the seed round and then passes on the A, other VCs will have difficulty overlooking that the smartest money that knows the company the best isn’t following on. If the VC isn’t well respected, it is easier for other VCs to second guess them.</p>\n<p>I’m not revisiting this issue to criticize big VCs. A healthy startup environment requires smart, ethical investors at all stages. But I don’t think these big VC seed programs benefit anyone. And there are enough angry entrepreneurs out there that I expect the message will get through.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/03/26/give-away-the-diagnostic-sell-the-remedy",
      "title": "Give away the diagnostic, sell the remedy",
      "description": "Companies that employ the “freemium” business model give away a product or service for free and then charge for additional features. The…",
      "url": "https://cdixon.org/2012/03/26/give-away-the-diagnostic-sell-the-remedy",
      "published": "2012-03-26T00:00:00.000Z",
      "updated": "2012-03-26T00:00:00.000Z",
      "content": "<p>Companies that employ the “<a href=\"http://www.avc.com/a_vc/2009/07/freemium-and-freeconomics.html\">freemium</a>” business model give away a product or service for free and then charge for additional features. The freemium model has gotten more popular as the cost to deliver free services has dropped but the cost of employing sales and marketing people hasn’t. One of the hardest questions around freemium models is deciding how to <a href=\"http://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products/\">divide</a> free from paid features.</p>\n<p>One particularly effective version of freemium is: “give away the diagnostic, sell the remedy.” The best known example of this is anti-virus companies that give away free virus scans but charge for virus removers. In fact, this tactic works so well for anti-virus that it almost seems coercive (and has indeed been abused, for example, by “anti-spyware” software that deliberately conflates cookies and viruses). But, in general, giving away a diagnostic seems like a reasonable way to demonstrate the effectiveness of a product while still being able to sell valuable additional features.</p>\n<p>Selling the remedy has become increasingly popular with B2B companies. For example, a friend recently wanted to ensure that his company’s (non-spam) e-mails weren’t getting blocked by spam filters, so he contacted an “email delivery optimization” company. They ran a free test and reported that his emails weren’t getting filtered. Two months later they called back and said “uh oh, your emails are getting filtered.” Sure enough his open rates had dropped and his anecdotal tests confirmed that his emails were being inaccurately labelled as spam. Because of the free diagnostic, he had confidence in the company’s technology, and was willing to pay them to fix his problem. And the email optimization company had spent almost nothing to acquire a new customer.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/03/16/the-myth-of-the-overnight-success",
      "title": "The myth of the overnight success",
      "description": "Angry Birds was Rovio’s 52nd game. They spent eight years and almost went bankrupt before finally creating their massive hit. Pinterest is…",
      "url": "https://cdixon.org/2012/03/16/the-myth-of-the-overnight-success",
      "published": "2012-03-16T00:00:00.000Z",
      "updated": "2012-03-16T00:00:00.000Z",
      "content": "<p>Angry Birds was Rovio’s <a href=\"http://www.wired.co.uk/magazine/archive/2011/04/features/how-rovio-made-angry-birds-a-winner?page=all\">52nd game</a>. They spent eight years and almost went bankrupt before finally creating their massive hit. Pinterest is one of the fastest growing websites in history, but struggled for a long time. Pinterest’s CEO recently <a href=\"http://allthingsd.com/20120313/pinterest-ceo-ben-silbermanns-lesson-for-start-ups-go-your-own-way/\">said</a> that they had “catastrophically small numbers” in their first year after launch, and that if he had listened to popular startup advice he probably would have quit.</p>\n<p>You tend to hear about startups when they are successful but not when they are struggling. This creates a systematically distorted perception that companies succeed overnight. Almost always, when you learn the backstory, you find that behind every “overnight success” is a story of entrepreneurs toiling away for years, with very few people except themselves and perhaps a few friends, users, and investors supporting them.</p>\n<p>Startups are hard, but they can also go from difficult to great incredibly quickly. You just need to survive long enough and keep going so you can create your 52nd game.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/03/01/some-tips-for-interacting-with-the-press",
      "title": "Some tips for interacting with the press",
      "description": "Here are a few things I’ve learned over the years about the best ways for entrepreneurs to interact with the press (by press I mean blogs as…",
      "url": "https://cdixon.org/2012/03/01/some-tips-for-interacting-with-the-press",
      "published": "2012-03-01T00:00:00.000Z",
      "updated": "2012-03-01T00:00:00.000Z",
      "content": "<p>Here are a few things I’ve learned over the years about the best ways for entrepreneurs to interact with the press (by press I mean blogs as well as traditional media).</p>\n<ul>\n<li>Don’t be afraid to ask what the rules are. Is this on or off the record? If they are writing an article about your company, do they require exclusivity? What is the angle of the story?</li>\n<li>Don’t use a PR firm unless you are so successful that you need someone to help you manage inbound press interest. Most journalists, when talking candidly, will tell you they’d vastly prefer getting an email from the founder of a startup than a PR firm. If you’re Bill Gates, it is understandable that you have someone reaching out for you. If you are a small startup, having a PR rep contact a journalist says “I’m not competent enough to reach you” or “I don’t respect your time enough to reach out directly.”</li>\n<li>Treat journalists with respect. Tech/business journalists often interact with rich and powerful people, some of whom treat them disrespectfully. Like entrepreneurs, journalists are usually interesting people with diverse interests. You’ll probably like them if you talk to them and might even become friends.</li>\n<li>Unless you’re a super hot startup, the existence of your company is not a news story. Exclusives of launches, financings and acquisitions are usually news stories. Trend stories that you are part of could be a news story. Relating your startup or data your startup generates to something already newsworthy (journalists call this “pegging”) can dramatically increase your chances of getting covered.</li>\n<li>Whether you like it or not, the press will put your company into a category, and might run “horserace” stories comparing how the companies in your category are doing. The best you can do here is to try to choose which category you’ll be put into. Arguing that you have no competitors or are creating a new category is pretty much impossible.</li>\n<li>Try to put yourself in the mindset of the journalist. How will this story get them on Techmeme or featured by their editors? What were their most successful recent stories? Do background research on any reporter before talking and read a bunch his/her articles.</li>\n<li>Don’t just contact reporters when you need them: try to be helpful even when you don’t. Sometimes, I get calls to talk about, say, the state of the venture market or asking for some background on a tech sector that is new to the journalist. My guess is they appreciate this and are more responsive when I contact them about a possible story.</li>\n</ul>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/26/the-internet-is-reshaping-our-economy-from-one-of-huge-corporations-with-lots-of-jobs-to-huge-platforms-with-lots-of-income-streams",
      "title": "The internet is reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams",
      "description": "From Innovation and the Bell Labs Miracle in today NYTimes: Innovation is an important new product or process, deployed on a large scale and…",
      "url": "https://cdixon.org/2012/02/26/the-internet-is-reshaping-our-economy-from-one-of-huge-corporations-with-lots-of-jobs-to-huge-platforms-with-lots-of-income-streams",
      "published": "2012-02-26T00:00:00.000Z",
      "updated": "2012-02-26T00:00:00.000Z",
      "content": "<p>From <a href=\"http://www.nytimes.com/2012/02/26/opinion/sunday/innovation-and-the-bell-labs-miracle.html?ref=opinion\">Innovation and the Bell Labs Miracle</a> in today NYTimes:</p>\n<blockquote>\n<p>Innovation is an important new product or process, deployed on a large scale and having a significant impact on society and the economy, that can do a job “better, or cheaper, or both.” Regrettably, we now use the term to describe almost anything. It can describe a smartphone app or a social media tool; or it can describe the transistor or the blueprint for a cellphone system. The differences are immense. One type of innovation creates a handful of jobs and modest revenues; another, the type Mr. Kelly and his colleagues at Bell Labs repeatedly sought, creates millions of jobs and a long-lasting platform for society’s wealth and well-being.</p>\n<p>The conflation of these different kinds of innovations seems to be leading us toward a belief that small groups of profit-seeking entrepreneurs turning out innovative consumer products are as effective as our innovative forebears. History does not support this belief. The teams at Bell Labs that invented the laser, transistor and solar cell were not seeking profits. They were seeking understanding. Yet in the process they created not only new products but entirely new — and lucrative — industries.</p>\n</blockquote>\n<p>Putting aside the obvious rebuttal that large companies like Intel, Microsoft, Apple and even AT&T were once startups, the author seems to confuse “jobs” with “income streams”. For example, it would be easy to dismiss a website like Craigslist as a “social media tool” that has only created a few dozen jobs for its employees. But in fact it has created billions of dollars of income streams for people buying and selling things on its platform. The internet is increasingly reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/25/once-you-take-money-the-clock-starts-ticking",
      "title": "Once you take money, the clock starts ticking",
      "description": "One of the interesting things about having been investing in startups for a number of years is that at any moment you get an inside peek at…",
      "url": "https://cdixon.org/2012/02/25/once-you-take-money-the-clock-starts-ticking",
      "published": "2012-02-25T00:00:00.000Z",
      "updated": "2012-02-25T00:00:00.000Z",
      "content": "<p>One of the interesting things about having been investing in startups for a number of years is that at any moment you get an inside peek at startups at a variety of different stages. In the course of a few weeks, I might talk to people who are ideating around new business ideas, people raising seed rounds, people raising later (VC) rounds, people whose products are blowing up, people whose product are struggling, people getting acquired, people leaving acquirers to start new companies, etc. Sadly, there are also usually a few companies that are struggling and facing the serious possibility of running out of money and being forced to shut down.</p>\n<p>One side-by-side comparison struck me recently.  Company A is just now raising a seed round. The money they raised will last 12 months (personally, I strongly recommend raising <a href=\"http://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank/\">18 months</a> of runway – if you have the option to do so). Company A was also, in my opinion, not ready to raise money (they needed to work on their plan and team more). Company B raised a seed round about 10 months ago and is now struggling to raise more. Company B had the option to raise more money back then but chose to only raise 12 months runway in order to minimize dilution. Company B also made the mistake of having a large VC invest $100K in the round (a meaningless amount to a large VC). The large VC has since said they won’t support the company (despite the fact that the company made pretty good progress on the business) creating a massive <a href=\"http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/\">signaling</a> problem.</p>\n<p>In the current “frothy” environment, where seed investors are aggressively offering money to entrepreneurs, it is easy for an entrepreneur to think “well, if I’m getting offered money this easily at the seed stage, I’ll get offered money easily later.” In fact, once you take professional investor money, the attitude of investors (both insiders and outsiders) changes dramatically: you’ve gone from planning mode to operations mode. When you do planning, research, experimenting etc. without having raised money, investors think you are prudent (I recently interviewed the Warby Parker founders for <a href=\"http://techcrunch.com/2012/02/24/founder-stories-warby-parker-less-than-1-of-eyeglasses-were-sold-online/\">TechCrunch</a> and they said they spent 1.5 years planning/researching before they raised money). When you do it with other people’s money, and don’t make what they perceive to be enough progress, the investors can quickly lose faith.</p>\n<p>The obvious lesson is well known by experienced entrepreneurs. Don’t raise money until you are ready, and when you do, raise enough to have a good shot at reaching “accretive milestones” so you can raise more money, become profitable, or whatever your goals might be.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/23/big-timing",
      "title": "Big timing",
      "description": "“Big timing” is a phrase I’ve heard a lot lately which refers to people who are “higher ranking” acting disrespectfully toward people who…",
      "url": "https://cdixon.org/2012/02/23/big-timing",
      "published": "2012-02-23T00:00:00.000Z",
      "updated": "2012-02-23T00:00:00.000Z",
      "content": "<p>“Big timing” is a phrase I’ve heard a lot lately which refers to people who are “higher ranking” acting disrespectfully toward people who are “lower ranking”. Example usage: “so and so VC partner big timed my associate,” meaning they talked down to him/her or didn’t meet with him/her or whatever.</p>\n<p>Big timing is a huge mistake. Why? 1) big timers vastly underestimate the degree to which senior people trust their junior people, 2) most non-jerks (no matter how successful) interpret big timing to be an insult to their firm and therefore to their senior people, 3) junior people are often far more active and informed than senior people and therefore great people to spend time with.</p>\n<p>It would be great to think that in the startup industry, people would realize that today’s junior person could become “big time” tomorrow, and that you should therefore be meritocratic and respectful to everyone. But that’s not my experience.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/19/it-is-the-human-friction-that-makes-the-sparks",
      "title": "“It is the human friction that makes the sparks”",
      "description": "From Jonah Lehrer, Brainstorming Doesn’t Really Work (via Stowe Boyd): Building 20 [a scene of incredible innovation at MIT] and…",
      "url": "https://cdixon.org/2012/02/19/it-is-the-human-friction-that-makes-the-sparks",
      "published": "2012-02-19T00:00:00.000Z",
      "updated": "2012-02-19T00:00:00.000Z",
      "content": "<p>From Jonah Lehrer, <a href=\"http://www.newyorker.com/reporting/2012/01/30/120130fa_fact_lehrer?currentPage=5\">Brainstorming Doesn’t Really Work</a> (via <a href=\"http://tmblr.co/ZHrZFyGY_fqI\">Stowe Boyd</a>):</p>\n<blockquote>\n<p>Building 20 [a scene of incredible innovation at MIT] and brainstorming came into being at almost exactly the same time. In the sixty years since then, if the studies are right, brainstorming has achieved nothing—or, at least, less than would have been achieved by six decades’ worth of brainstormers working quietly on their own. Building 20, though, ranks as one of the most creative environments of all time, a space with an almost uncanny ability to extract the best from people. Among M.I.T. people, it was referred to as “the magical incubator.”</p>\n<p>The fatal misconception behind brainstorming is that there is a particular script we should all follow in group interactions. The lesson of Building 20 is that when the composition of the group is right—enough people with different perspectives running into one another in unpredictable ways—the group dynamic will take care of itself. All these errant discussions add up. In fact, they may even be the most essential part of the creative process. Although such conversations will occasionally be unpleasant—not everyone is always in the mood for small talk or criticism—that doesn’t mean that they can be avoided. The most creative spaces are those which hurl us together. It is the human friction that makes the sparks.</p>\n</blockquote>\n<p>I think this underscores one of the main reasons remote early-stage projects often fail. We mistakenly think of brainstorming as something you can do in meetings, and teaching as something you can perform through carefully composed documents or lectures.</p>\n<p>I was part of a number of failed remote R&D attempts. The one time it worked was when we decided to abandon meetings, project documents, tracking tools, etc. Instead, we got a high quality speakerphone so everyone could overhear everyone else’s conversations, and we left it on all day, every day. It wasn’t the same as being together in person, but we did manage to get some of the human friction back.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/14/platform-distribution-risks",
      "title": "Platform distribution risks",
      "description": "When your product extends a platform’s functionality, one of the main risks you face is that the platform could embed your product’s key…",
      "url": "https://cdixon.org/2012/02/14/platform-distribution-risks",
      "published": "2012-02-14T00:00:00.000Z",
      "updated": "2012-02-14T00:00:00.000Z",
      "content": "<p>When your product extends a platform’s functionality, one of the main risks you face is that the platform could embed your product’s key features within the platform – what is sometimes called <a href=\"http://cdixon.org/2011/02/22/the-importance-of-predictability-for-platform-developers/\">subsumption risk</a>. This happened to a lot of startups in the 90s that built products for the Windows platform.</p>\n<p>When you depend on a platform for <em>distribution</em> (acquiring and retaining users), you take on different risks. Specifically:</p>\n<ol>\n<li><em>Oversaturation</em>. The risk that supply of products on the platform significantly outpaces demand. This seems to have happened recently to the iOS App Store: there are over 500,000 apps and counting, and popularity tends to be highly concentrated, making it very difficult for new apps to get noticed. Oversaturation also <a href=\"http://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups/\">happened</a> to Google (organic) results in most query categories in the last 2000′s.</li>\n<li><em>Barriers to discovery</em>. The risk that the discovery methods on the platform aren’t meritocratic. iOS apps depend upon appearing in iTunes’ Top 25 lists, leading to a “rich get richer” bias, along with aggressive attempts to game the system. Apple has other app discovery mechanisms like its Featured Apps and Genius features, but those seem to drive far fewer downloads than the top lists. Google search has increasingly been favoring Google’s own products and also seems to heavily favor older, well-entrenched websites, making it very hard for new sites to gain significant SEO traction. Currently, social networks like Twitter and Facebook seem to have the most meritocratic discovery mechanisms, which is one reason so many startups target them for distribution.</li>\n<li><em>Throttling</em>. The risk that the platform will throttle distribution or monetization (for apps that rely on paid advertising, throttled monetization also means throttled distribution). Facebook started out letting apps send unfiltered notifications to users’ timelines but then introduced algorithms that heavily filtered them (thereby entrenching the position of leading app makers like Zynga). Facebook also started out letting apps charge users directly, but later <a href=\"http://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up/\">changed</a> that policy and imposed a rev-share.</li>\n</ol>\n<p>If you are launching a new website or app, you should have a distribution strategy beyond just “people will love it and tell their friends about it”. Your strategy should probably involve at least one major platform. And you should think through the distribution characteristics of the platform and decide if they are a good fit for your product and how best to mitigate the risks.</p>\n<p>Finally, it is worth noting that some of the most successful startups grew by making bets on emerging platforms that were not yet saturated and where barriers to discovery were low. Today, the most interesting new platforms are probably Android tablets and emerging social networks like Foursquare and Tumblr. Betting on new platforms means you’ll likely fail if the platform fails, but also dramatically lowers the distribution risks described above.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/13/between-failure-and-facebook",
      "title": "Between failure and Facebook",
      "description": "Recently, a friend was trying to recruit a programmer to join his early-stage startup. The programmer had just graduated from college and…",
      "url": "https://cdixon.org/2012/02/13/between-failure-and-facebook",
      "published": "2012-02-13T00:00:00.000Z",
      "updated": "2012-02-13T00:00:00.000Z",
      "content": "<p>Recently, a friend was trying to recruit a programmer to join his early-stage startup. The programmer had just graduated from college and his impression of startups was shaped mostly by popular media. His main concern, he said, was: “What if we end up being the next MySpace instead of the next Facebook?”.</p>\n<p>Of course, for those of us immersed in startup world, creating the next MySpace would be considered a huge success. MySpace was once the <a href=\"http://mashable.com/2006/07/11/myspace-americas-number-one/\">most visited website in the US</a> and was <a href=\"http://www.nytimes.com/2005/07/18/business/18cnd-newscorp.html\">acquired</a> for $580M. It flamed out later under its corporate owner, but that happens to a lot of great startups.</p>\n<p>Mainstream culture seems to depict startups as either being complete failures where everyone loses their shirts or else huge hits like Facebook. But the reality, as usual, lies in the middle: in 2010, according to Dow Jones, there were <a href=\"http://techcrunch.com/2012/01/03/report-522-exits-of-venture-backed-companies-netted-53-2-billion-in-2011/\">522 venture-backed exits</a> with a combined exit value of $53 billion – implying an average exit price of around $100M.</p>\n<p>The best thing about startups is you get to work with great people on interesting projects, and can be successful by conventional metrics, even if no one outside of tech has ever heard of you or what you’ve built. There’s great stuff between failure and Facebook.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/13/ebay-vs-amazon-decentralized-vs-centralized-e-commerce",
      "title": "eBay vs Amazon: decentralized vs centralized e-commerce",
      "description": "Note: The company I cofounded, Hunch, was acquired by eBay in November 2011. I am now an eBay employee. But all the opinions expressed below…",
      "url": "https://cdixon.org/2012/02/13/ebay-vs-amazon-decentralized-vs-centralized-e-commerce",
      "published": "2012-02-13T00:00:00.000Z",
      "updated": "2012-02-13T00:00:00.000Z",
      "content": "<p><em>Note: The company I cofounded, Hunch, was acquired by eBay in November 2011. I am now an eBay employee. But all the opinions expressed below are my own, and were developed prior to the Hunch acquisition, through my own research on e-commerce.</em></p>\n<p>Amazon and eBay are the two largest e-commerce companies. As of this writing, Amazon has a market cap of about $87B, trading at a trailing twelve-month P/E of about 139. eBay has a market cap of about $42B, trading at a trailing P/E of about 13. Each company competes with many other companies in many different areas. For example, Amazon competes with Apple on tablets (Kindle vs iPad) and digital media (Amazon’s media store vs iTunes). Ebay’s Paypal unit competes with multiple payment companies, and its marketplaces division competes with other “peer-to-peer” e-commerce sites like Craigslist. But given the potential size of the e-commerce market (not to mention the online-to-offline commerce market), Amazon and eBay’s main competitors are each other. And to understand their large strategic moves (e.g. large acquisitions like GSI and Zappos), it is important to understand their fundamentally opposing strategic outlooks: eBay wants commerce to be more decentralized (around its GSI/Magento partners and eBay marketplaces sellers) and Amazon wants it to be more centralized (around itself).</p>\n<p>First, some background. During the dot-com boom, many largest offline brands debated how to best move their businesses online. Some tried to build their own websites from scratch. Others partnered with commerce technology providers. Toys ‘R’ Us took a novel approach and signed a “strategic alliance” to outsource all of their e-commerce operations to Amazon. Over the next few years this relationship soured – apparently Toys ‘R’ Us felt Amazon was competing too directly with them and <a href=\"http://www.msnbc.msn.com/id/11641703/ns/business-us_business/t/toys-r-us-wins-suit-against-amazoncom/#.Tyysa2PC69I\">successfully sued</a> to end the relationship.</p>\n<p>The end of the Toys ‘R’ Us – Amazon relationship marked a turning point for a company called GSI Commerce. GSI took an aggressively neutral approach to providing technology and marketing solutions to retailers. Their main appeal over Amazon is that they didn’t compete with their partners (but of course their partners competed with each other). This approach paid off: GSI now powers <a href=\"http://gsicommerce.com/clients/\">over 500 large commerce sites</a>, including Toys ‘R’ Us, Adidas, Ralph Lauren, and the commerce sites of all the large sports leagues like the NFL, MLB and NBA.</p>\n<p>Last year, eBay <a href=\"http://dealbook.nytimes.com/2011/03/28/ebay-to-buy-gsi-commerce-for-2-4-billion-bid/\">paid $2.4B</a> to acquire GSI Commerce. They also <a href=\"http://www.magentocommerce.com/blog/comments/ebay-agrees-to-acquire-magento/\">acquired</a> a smaller company called Magento that provides e-commerce technologies to smaller retailers. You can think of GSI as the leading commerce platform for the “fat head” of retailers, and Magento as the leader for the long tail.</p>\n<p>The key difference between eBay and Amazon isn’t auctions vs. fixed price sales (the majority of eBay sales aren’t auctions anymore). It is that eBay doesn’t take inventory, and prefers to be an intermediary that facilitates peer-to-peer commerce. This strategy wins if e-commerce becomes more decentralized, with the majority of commerce continuing flow through small to medium retailers. In this world, eBay makes money by sending traffic from eBay.com, from fees collected by GSI and Magento, and Paypal transaction fees. In a centralized world, Amazon grows its <a href=\"http://cdixon.posterous.com/amazon\">current 9% e-commerce</a> market share to a much larger percentage, taking advantage of its scale, efficiency, advanced technology, and the convenience of shopping in one place.</p>\n<p>One way to view this battle is to think of eBay as a platform a la Windows or Android and Amazon as an end-to-end solution a la Apple computers in the 90s or iOS devices today. Platforms tend to provide greater diversity. In the case of e-commerce, the platform approach could also have a price advantage. <a href=\"http://techcrunch.com/2011/02/13/bye-bye-long-tail/\">As the CEO of TrialPay, Alex Rampell, argues</a>: “Who can beat Amazon on price? The companies whose products are sold on Amazon”. End-to-end solutions like Amazon’s tend to provide greater convenience and a better user experience.</p>\n<p>I’m not arguing that one approach is superior to the other. My point is simply that when you understand that the battle is between centralized and decentralized commerce, the strategic moves of the two companies make a lot more sense.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/12/some-thoughts-on-the-iphone-contact-list-controversy-and-app-security",
      "title": "Some thoughts on the iPhone contact list controversy and app security",
      "description": "1. I’ve heard rumors that lots of apps have been uploading user contact lists for years. One person who knows the iOS world well told me “if…",
      "url": "https://cdixon.org/2012/02/12/some-thoughts-on-the-iphone-contact-list-controversy-and-app-security",
      "published": "2012-02-12T00:00:00.000Z",
      "updated": "2012-02-12T00:00:00.000Z",
      "content": "<p>1. I’ve heard rumors that lots of apps have been uploading user contact lists for years. One person who knows the iOS world well told me “if you download a lot of apps, your contact list is on 50 servers right now.” I don’t understand why Apple doesn’t have a permission dialog box for this (that said, I’m not sure that’s the best solution – see #4 below). Apple has dialogs for accessing location and for enabling push notifications. Accessing users’ contact lists seems like an obvious thing to ask permission for.</p>\n<p>2. I don’t know what the product design motivations are for uploading contacts, but I assume there are legitimate ones. <em>[commenters <a href=\"http://cdixon.org/2012/02/12/the-iphone-contact-list-controversy-and-app-security/#comment-436995562\">suggest</a> it is mainly to notify users when their friends join the service]</em>.  If this or something similar is the goal, you could probably do it in a way that protects privacy by (<a href=\"http://cdixon.posterous.com/bitcasa-and-convergent-encryption\">convergently</a>?) encrypting the phone numbers on the client side (I’m assuming the useful info is the phone numbers and not the names associated with the phone numbers since the names would be inconsistent across users).</p>\n<p>3. Many commentators have <a href=\"http://bits.blogs.nytimes.com/2012/02/12/disruptions-so-many-apologies-so-much-data-mining/\">suggested</a> that a primary security risk is the fact that the data is transmitted in plain text. Encrypting over the wire is always a good idea but in reality “man-in-the-middle” attacks are extremely rare. I would worry primarily about the far more common cases of 1) someone (insider or outsider) stealing in the company’s database, 2) a government subpoena for the company’s database. The best protection against these risks is encrypting the data in such a way that hackers and the company itself can’t unencrypt it (or to not send the data to the servers in the first place).</p>\n<p>A bad outcome from this controversy would be to have companies encrypt sensitive data over the network and then not encrypt it on their servers (the simplest way to do this is to switch to https, a technology that is much more about security theater than security reality). This would make it impossible for 3rd parties (e.g. white-hat hackers) to detect that sensitive data is being sent over the network but would keep the data vulnerable to server side breaches / subpeonas. Unless Apple or someone else steps in, I worry that this is what apps will do next. It is the quickest way to preserve product features and minimize PR risk.</p>\n<p>4. I worry that by just adding tons of permission dialogs we are going back to the Microsoft IE/Active X model of security. With lots of permission popups, users get fatigued and confused and just end up clicking “Yes” to everything. And then the security model says: If the user says “yes”, and the app uses “best practices” like https, it can do whatever it wants. We saw how this played out with the spyware/adware epidemic on the web from 2001-2006 and it wasn’t pretty.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/11/and-then-suddenly-it-works",
      "title": "And then, suddenly, it works",
      "description": "The other day a friend was demoing a new app he was working on. My first reaction was: “Yeah, yeah. This is nicely executed version one of…",
      "url": "https://cdixon.org/2012/02/11/and-then-suddenly-it-works",
      "published": "2012-02-11T00:00:00.000Z",
      "updated": "2012-02-11T00:00:00.000Z",
      "content": "<p>The other day a friend was demoing a new app he was working on. My first reaction was: “Yeah, yeah. This is nicely executed version one of those ideas I’ve seen 50 times.” My second reaction was: “But I could say that about pretty much every successful startup I’ve seen over the last 10 years.”</p>\n<p>Most of the time, important new ideas don’t succeed on the first attempt or even the first ten attempts. But then they do, and it seems to happen suddenly. It’s hard to tell why this is. It’s probably a combination of <a href=\"http://cdixon.org/2010/11/07/timing-your-startup/\">timing</a> (riding some fundamental shift in technology or culture), and execution (getting the product just right).</p>\n<p>An idea getting tried over and over tends to be a positive signal (which is one reason that <a href=\"http://cdixon.org/2010/06/26/competition-is-overrated/\">competition is overrated</a>). It’s very easy when you spend lots of time around startups to get cynical. You could tweet and blog predictions that every new startup will fail and how the ideas are derivative and you’d be right 95% of the time. The hard part – and what matters for founders and investors – is figuring out the right mix of timing and execution to finally get it right.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/02/06/bedrock-programming",
      "title": "Bedrock programming",
      "description": "“Bedrock programming” is a phrase used to describe a style of programming that favors building code from the ground up versus reusing…",
      "url": "https://cdixon.org/2012/02/06/bedrock-programming",
      "published": "2012-02-06T00:00:00.000Z",
      "updated": "2012-02-06T00:00:00.000Z",
      "content": "<p>“Bedrock programming” is a phrase used to describe a style of programming that favors building code from the ground up versus reusing existing open-source or proprietary code.</p>\n<p>In my first programming job out of college our bosses told us to entirely rebuild our product. The person in charge of the networking layer decided the best way to do this was to write our own low-level networking toolkit, using some new, relatively untested networking techniques. We also wrote our own versions of core Java libraries (because, it was said, the existing ones weren’t sufficiently thread safe). This decision ended up leading to repeated delays and bugs, and a codebase that most of the other employees didn’t understand. It also made it much harder to train new hires and find replacements for departed employees.</p>\n<p>A related issue is what is usually called the “bleeding edge” tendency: the desire to use the shiny & new over the older & battle-tested. Lately, I’ve personally been programming with MongoDB and love it. But I’m also an investor in a startup that made Mongo their main production database, and when their Mongo expert left unexpectedly it took them far longer to find a replacement than it would have to find a MySQL expert.</p>\n<p>Great programmers are intensely curious and inventive. They love to improve code and try new things. There will always be bedrock and bleeding edge tendencies within strong engineering teams. The key is to have a great VP Engineering/CTO who can balance those tendencies with the reality that talent, money, and time are scarce, especially in startups.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/01/31/who-should-learn-to-program",
      "title": "Who should learn to program?",
      "description": "Recently, there’s been a lot of talk in the tech world and beyond about getting more people to learn computer programming. I think this is a…",
      "url": "https://cdixon.org/2012/01/31/who-should-learn-to-program",
      "published": "2012-01-31T00:00:00.000Z",
      "updated": "2012-01-31T00:00:00.000Z",
      "content": "<p>Recently, there’s been a lot of talk in the tech world and beyond about getting more people to learn computer programming. I think this is a worthy goal*, but the question should be considered from various angles.</p>\n<p>1. <strong>Jobs & the economy</strong>. Businesses all over the world need more programmers. Every company I know is hiring engineers (e.g. see this <a href=\"http://nytm.org/made/\">list</a> of NY tech startups). Top programmers can make $100K+ right out of college. Yet there were only about 14,000 computer science (CS) majors <a href=\"http://cdixon.posterous.com/computer-science-majors-by-year\">last year</a>. Meanwhile about 40,000 people got <a href=\"http://www.slate.com/articles/business/moneybox/2010/10/a_case_of_supply_v_demand.html\">law degrees</a> even though demand for lawyers has been shrinking. America is suffering from what economists call <a href=\"http://en.wikipedia.org/wiki/Structural_unemployment\">structural unemployment</a>:  jobs are available but our labor force isn’t trained for those jobs.</p>\n<p>2. <strong>Programming is a great foundation for a tech/startup career</strong>. CS is a great foundation to do other things in tech industry like starting a tech company (although I’d argue that design is an increasingly valuable foundation for web startups). I suspect one of the reasons for the low number of CS majors is people don’t realize all the non-programming opportunities that are opened up by a background in programming.</p>\n<p>3. <strong>Programming is an important part of being “culturally literate.”</strong> Algorithmic thinking is as fundamental a type of thinking as mathematical thinking. For example, <a href=\"http://ase.tufts.edu/cogstud/incbios/dennettd/dennettd.htm\">Daniel Dennett</a> convincingly <a href=\"http://en.wikipedia.org/wiki/Darwin's_Dangerous_Idea\">argues</a> that the best way to understand Darwin’s theory of evolution is by thinking of it as an algorithm. (I haven’t read it yet but I’m told the premise of Stephen Wolfram’s <a href=\"http://en.wikipedia.org/wiki/A_New_Kind_of_Science\">A New Kind of Science</a> is that algorithmic methods should be applied much more broadly across the sciences). Teaching algorithmic thinking – which is what CS does – should be a core part of a liberal arts education.</p>\n<p>4. <strong>Programming is a great activity.</strong>  Most people who program describe themselves as entering a mental <a href=\"http://en.wikipedia.org/wiki/Flow_(psychology)\">flow state</a> where they are intensely immersed and time seems to fly by. It feels similar to reading a great book. You also feel great afterwards – it is the mental equivalent of going to the gym.</p>\n<p>5. <strong>Should non-technical people at tech startups learn to code?</strong> This is where I disagree with some of the conventional wisdom. Certainly it is worthwhile learning programming, at least for reasons 3 & 4 above. You should realize, however, that to become a good programmer takes thousands of hours of practice. I’d also argue that if you are a non-technical person working at a web company the the first thing you should learn is internet architecture (DNS, http, html, web servers, database, TCP/UDP, IP, etc). Learning some programming is good too, to help relate to technical colleagues. But if your goal is to build a large-scale web service, your time as a non-technical person is better spent recruiting people who have been coding for years.</p>\n<p>* Disclosure: I’m an investor via Founder Collective in two companies related to teaching programming:  <a href=\"http://www.codecademy.com/\">Codecademy</a> and <a href=\"http://www.hackerschool.com/\">Hacker School</a>.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/01/23/chris-sacca-on-the-implied-user-contract",
      "title": "Chris Sacca on the implied user contract",
      "description": "Chris Sacca nicely summarized today’s FB vs Google vs Twitter controversy: It comes down to what each company has promised its users…",
      "url": "https://cdixon.org/2012/01/23/chris-sacca-on-the-implied-user-contract",
      "published": "2012-01-23T00:00:00.000Z",
      "updated": "2012-01-23T00:00:00.000Z",
      "content": "<p>Chris Sacca nicely <a href=\"http://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed/#comment-419240267\">summarized</a> today’s FB vs Google vs Twitter controversy:</p>\n<blockquote>\n<p>It comes down to what each company has promised its users. Facebook promised its users their stuff would be private, which is why users rightfully get pissed when that line blurs. Twitter has promised users, well, that it will stay up, and that is why users rightfully get pissed when the whale is back.</p>\n<p>Google has promised its users and the entire tech community, again and again, that it would put their interests first, and that is why Google users, rightfully get pissed when their results are deprecated to try to promote a lesser Google product instead.</p>\n</blockquote>\n<p>It’s all about expectations.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed",
      "title": "What’s not evil: ranking content fairly *and* letting public content get indexed",
      "description": "Please see update at bottom Most websites spend massive amounts of time and money to get any of their pages index and ranked by Google’s…",
      "url": "https://cdixon.org/2012/01/23/whats-not-evil-ranking-content-fairly-and-letting-public-content-get-indexed",
      "published": "2012-01-23T00:00:00.000Z",
      "updated": "2012-01-23T00:00:00.000Z",
      "content": "<p><em>Please see update at bottom</em></p>\n<p>Most websites spend massive amounts of time and money to get <em>any</em> of their pages index and ranked by Google’s search engine. Indeed, there is a entire billion dollar industry (SEO) devoted to helping companies get their content indexed and ranked.</p>\n<p>Twitter and Facebook have decided to disallow Google from indexing 99.9% of their content. Twitter won’t let Google index tweets and Facebook won’t let Google index status updates and most other user and brand generated content. In Facebook’s case this makes sense for content that users have designated as non-public. In Twitter’s case, the vast majority of the blocked content is designated by users as public. Furthermore, Twitter’s own search function rarely works for tweets older than a week (from Twitter’s search <a href=\"https://dev.twitter.com/docs/using-search\">documentation</a>, they return “6-9 days of Tweets”).</p>\n<p>There is a <a href=\"http://pandodaily.com/2012/01/23/google-do-yourself-a-favor-and-just-come-clean-already/\">debate</a> going today in the tech world: Facebook and Twitter are upset that Google won’t highly rank the 0.1% of their content they make indexable. Facebook and Twitter even created something they call the <a href=\"http://searchengineland.com/dont-be-evil-tool-google-108971\">“Don’t be evil” toolbar</a> that reranks Google search results the way they’d like them to be ranked. The clear implication is that Google is violating their famous credo and acting “evil”.</p>\n<p>The vast majority of websites would dream of having the problem of being able to block Google from 99.9% of their content and have the remaining 0.1% rank at the top of results. What would be best for users – and least “evil” – would be to let all public content get indexed and have Google rank that content “fairly” without favoring their own content. Facebook and Twitter are right about Google’s rankings, but Google is right about Facebook and Twitter blocking public content from being indexed.</p>\n<p><em>Update: after posting this I got a bunch of emails, tweets and comments telling me that Twitter does in fact allow Google to index all their tweets, and that any missing tweets are the fault of Google, not Twitter. A few people <a href=\"https://twitter.com/#!/hershberg/status/161622294869983233\">suggested</a> that without firehose access Google can’t be expected to index all tweets. At any rate, I think the “Why aren’t all tweets indexed?” issue is more nuanced than I argued above.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/01/22/revenue-vs-margin",
      "title": "Revenue vs margin",
      "description": "Three years ago, Fred Wilson wrote a great blog post called When Talking About Business Models, Remember that Profits Equal Revenues Minus…",
      "url": "https://cdixon.org/2012/01/22/revenue-vs-margin",
      "published": "2012-01-22T00:00:00.000Z",
      "updated": "2012-01-22T00:00:00.000Z",
      "content": "<p>Three years ago, Fred Wilson wrote a great blog post called <a href=\"http://www.avc.com/a_vc/2009/01/when-talking-about-business-models-remember-that-profits-equal-revenues-minus-costs.html\">When Talking About Business Models, Remember that Profits Equal Revenues Minus Costs</a>. The point he made was both simple and profound. The simple part is summed up in the post’s title<em>[1]</em>. The profound part is that high growth, early-stage tech companies often have a choice about how to become exceptionally valuable businesses: they can focus on growing revenues at the expense of margins, or margins at the expense of revenues.</p>\n<p>Most recent successful tech companies seem to have chosen the former: growing revenues at the expense of margins. Again and again, we see S-1 filings with revenues growing rapidly but profit margins that are low to negative. The same is true for the rumored financials of private companies. I think I understand why they made this choice, but wonder if it was a mistake.</p>\n<p>To understand why these companies made this choice, you need to look at their formative stages. Many of them raised money from VC’s at multi-hundred-million to multi-billion dollar valuations, often before the companies were profitable or had even settled on a business model. In most cases, the companies and investors were acting reasonably<em>[2].</em> But the end results might have been to unwittingly commit themselves to revenue over margin growth.</p>\n<p>Why? Money has its own inertia and somehow always seems to get spent. Some of this spending is reasonable and even necessary (infrastructure, <a href=\"http://www.pinspire.com\">defensive</a> expansion to international markets). But then there are harder choices. For example, do you invest heavily in sales and marketing to grow your revenue faster? Do you stay open and try to become a platform and therefore force yourself to experiment with new business models? Or do you become closed to “own the user” and therefore benefit from existing business models like advertising? Fast revenue growth seems to be the best way to justify your valuation. But the next thing you know you have a high cost structure that requires you to raise even more money and grow revenue even faster.</p>\n<p>The root cause here is a deeply held belief throughout the business world that exceptional revenue growth is more likely than exceptional margins. For example, if you talk to professional public market investors and analysts you’ll often hear statements like “that’s a low margin industry” – implying that every industry has “natural” profit margins which companies can only defy for short periods of time. This belief is also reflected in public market valuations for recent tech IPOs: companies like Groupon that put revenue over margins command very healthy valuations.</p>\n<p>The problem is that this deeply held belief in “revenue exceptionalism” over “margin exceptionalism” is a hangover from the industrial era. Unlike industrial era companies, information businesses tend to be <a href=\"http://www.bothsidesofthetable.com/2011/12/22/the-amazing-power-of-deflationary-economics-for-startups/\">deflationary</a>, shrinking the overall revenue of an industry. They also tend to have network effects (and <a href=\"http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/\">complementary network effects</a>), making them more defensible and therefore higher margin than non tech businesses. Given this, why do companies continue seeking revenue at the expense of margins? Fred made this same point in his original post, but people didn’t seem to listen.</p>\n<p>[1] Companies (like all cash generating assets) are ultimately valued at a multiple of present and projected future profits. The historical average P/E ratio of the DJIA is about 15, meaning that (on average) if a company is generating $100M in profit, it is valued at $1.5B (Fred prefers to use a 10 multiple, perhaps to be conservative?). One way to understand this is to imagine that companies dividend out all their profits every year. If you bought something for $1.5B and it dividended out $100M every year, that would be a 6.6% annual return.</p>\n<p>[2] Why are these high-priced financings reasonable? From the company’s perspective: your traffic is growing so fast you need to invest millions of dollars in infrastructure. Meanwhile copycats are popping up in other countries. You don’t know if the financial markets will suddenly dry up. Someone offers you, say, $50M for minimal dilution. Seems like a reasonable hedge. From the investor’s perspective: the history of venture capital shows that almost all the returns are generated from big hits like Amazon, eBay, Facebook and Google. (As Paul Graham once put it: “The difference between a bad VC fund and a great VC fund is one big hit”).</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/01/05/maximizing-capacity-utilization-as-a-startup-premise",
      "title": "Maximizing capacity utilization as a startup premise",
      "description": "In stark contrast to other major airlines, Southwest has been profitable for 40 years. If Southwest had one core “startup premise” it was…",
      "url": "https://cdixon.org/2012/01/05/maximizing-capacity-utilization-as-a-startup-premise",
      "published": "2012-01-05T00:00:00.000Z",
      "updated": "2012-01-05T00:00:00.000Z",
      "content": "<p>In stark contrast to other major airlines, Southwest has been profitable for 40 years. If Southwest had one core “startup premise” it was this: for every second the planes sat on the ground, their airplanes and people were costing them money but not generating revenue. So Southwest designed an airline from the ground up that maximized <a href=\"http://www.businessdictionary.com/definition/capacity-utilization.html\">capacity utilization</a>. They avoided the hub-and-spoke system that led to cascading delays. They removed meals to reduce ground crew times, along with assigned seating so passengers would hurry onto the plane to get good seats. They used only one aircraft type to reduce maintenance times.</p>\n<p>Some of the most interesting startups today are founded on the same premise of maximizing capacity utilization. Being information technology startups, their method for doing so is generally by matching demand for capacity with supply of un-utilized capacity. AirBnB lets people rent out unused space, increasing the utilization of their homes. Uber lets drivers rent out their unused time, increasing the utilization of their cars and labor. Services like TaskRabbit are trying let people fully utilize their “labor capacity”. Over time, services that increase capacity utilization tend to drive prices down (even if, at first, they sometimes have higher prices).</p>\n<p>Whenever Southwest would begin servicing a new city, it drove prices down so dramatically that economists began referring to it as the “<a href=\"http://en.wikipedia.org/wiki/The_Southwest_Effect\">Southwest Effect</a>“. One particularly remarkable aspect of the Southwest Effect: when Southwest began servicing a city, it would stimulate new business activity – and thus air travel – to such an extent that even Southwest’s less efficient competitors ended up benefiting.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2012/01/02/building-products-from-improvised-user-behaviors",
      "title": "Building products from improvised user behaviors",
      "description": "For a long time, there were niche communities of “lo-fi” camera enthusiasts: people who shared photos taken on old cameras that had…",
      "url": "https://cdixon.org/2012/01/02/building-products-from-improvised-user-behaviors",
      "published": "2012-01-02T00:00:00.000Z",
      "updated": "2012-01-02T00:00:00.000Z",
      "content": "<p>For a long time, there were niche communities of <a href=\"http://www.flickr.com/groups/tlfcc/\">“lo-fi” camera</a> enthusiasts: people who shared photos taken on old cameras that had interesting ways of filtering shots. The iPhone app <a href=\"http://en.wikipedia.org/wiki/Hipstamatic\">Hipstamatic</a> popularized lo-fi filters, selling over 1M copies. Because Hipstamatic lacked sharing features, many users took pictures with Hipstamatic and then shared them using other apps. Then came Instagram, which combined lo-fi filters and easy sharing. Instagram has been downloaded 15M times and has apparently crossed over to mainstream users.</p>\n<p>Instagram built a product devoted to a <a href=\"http://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform/\">job</a> that users were previously performing improvisationally using multiple products. This is a common pattern for popular software and services. Before Twitter, people shared interesting links through email or “link round-up” blog posts. Tumblr’s short-form blogging/re-blogging was inspired by an “unintended” use of long-form blogging platforms like WordPress. Before Foursquare, power socializers sent out mass text messages with their locations (in fact, Foursquare’s predecessor Dodgeball did exactly that).</p>\n<p>New startup ideas are all around you, in the improvised behaviors of people you know. It takes a keen product eye, however, to notice these improvisational behaviors and recognize which ones are worthy of being developed into standalone products.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/29/recruiting-programmers-to-your-startup",
      "title": "Recruiting programmers to your startup",
      "description": "Here are some things I’ve learned over the years about recruiting programmers* to startups. This is a big topic: many of the points I make…",
      "url": "https://cdixon.org/2011/12/29/recruiting-programmers-to-your-startup",
      "published": "2011-12-29T00:00:00.000Z",
      "updated": "2011-12-29T00:00:00.000Z",
      "content": "<p>Here are some things I’ve learned over the years about recruiting programmers* to startups. This is a big topic: many of the points I make briefly here could warrant their own blog posts, and I’m sure I’ve omitted a lot.</p>\n<p>- The most important thing to understand is what motivates programmers. This is where having been a programmer yourself can be very helpful. In my experience programmers care about 1) working on interesting technical problems, 2) working with other talented people, 3) working in a friendly, creative environment, 4) working on software that ends up getting used by lots of people. Like everyone, compensation matters, but for programmers it is often a “threshold variable”. They want enough to not have to spend time worrying about money, but once an offer passes their minimum compensation threshold they’ll decide based on other factors.</p>\n<p>- Software development is a creative activity and needs to be treated as such. Sometimes a programmer can have an idea on, say, the subway that can save weeks of work or add some great new functionality. Business people who don’t understand this make the mistake of emphasizing mechanistic metrics like the number of hours in the office and the number of bugs fixed per week. This is demoralizing and counterproductive. Of course if you are running a company you need to have deadlines, but you can do so while also being very flexible about how people reach them.</p>\n<p>It is sometimes helpful to think of recruiting as 3 phases: finding candidates, screening candidates, and convincing candidates to join you.</p>\n<p>- Finding means making contact with good candidates. There are no shortcuts here. You need to <a href=\"http://cdixon.org/2011/04/13/showing-up/\">show up</a> to schools, hackathons, meetups – wherever great programmers hang out. If your existing employees love their jobs they will refer friends. Try to generate inbound contacts by creating buzz around your company. If you have trouble doing that (it’s hard), try simple things like blogging about topics that are interesting to programmers.</p>\n<p>- Screening. Great programmers love to program and will have created lots of software that wasn’t for their jobs or school homework. Have candidates meet and (bidirectionally) interview everyone they’ll potentially be working with. If the candidate has enough free time try to do a trial project. There are also more procedural things that can be useful like code tests (although they need to be done in a respectful way and they are more about getting to know how each side thinks than actually testing whether the candidate knows how to program (hopefully you know that by this stage)).</p>\n<p>- Convincing them to join you. This is the hardest part. Great programmers have tons of options, including cofounding their own company. The top thing you need to do is convince them what you hopefully already believe (and have been pitching investors, press etc): that your company is doing something important and impactful. The next thing you need to do is convince them that your company is one that values and takes care of employees. The best way to do this is to have a track record of treating people well and offer those past employees as references.</p>\n<p>A few things not to do: you will never beat, say, Google on perks or job security so don’t even bother to pitch those. You’ll never beat Wall Street banks or rich big companies on cash salary so don’t pitch that either. You’ll never beat cofounding a company on the equity grant, but you can make a good case that, with the right equity grant, the risk/reward trade off of less equity with you is worth it.</p>\n<p>Finally, I’ve <a href=\"http://cdixon.org/2009/08/25/the-worst-time-to-join-a-startup-is-right-after-it-gets-initial-vc-financing/\">long believed</a> that early-stage, funded startups systematically under-grant equity to employees. Programmers shouldn’t have to choose between owning a fraction of a percent of an early-stage funded company and owning 50% of an unfunded company they’ve cofounded. Naval Ravikant recently wrote a great <a href=\"http://startupboy.com/2011/12/13/why-you-cant-hire/\">post</a> about this:</p>\n<blockquote>\n<p>Post-traction companies can use the old numbers – you can’t. Your first two engineers? They’re just late founders. Treat them as such. Expect as much.</p>\n</blockquote>\n<p>Making those first engineers “late cofounders” will dramatically increase your chances of recruiting great people. This is a necessary (but not sufficient) condition for getting the recruiting flywheel spinning where great people beget more great people.</p>\n<p><em>* As someone who personally programmed for 20 years including about 10 years professionally, I preferred to call myself a “programmer.” Some people prefer other words like “hacker” “developer”, “engineer” etc. I think the difference is just uninteresting nomenclature but others seem to disagree.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform",
      "title": "What jobs are users hiring your product to perform?",
      "description": "One of Clay Christensen’s favorite concepts is that instead of dividing your customers into segments and asking which features each segment…",
      "url": "https://cdixon.org/2011/12/21/what-jobs-are-users-hiring-your-product-to-perform",
      "published": "2011-12-21T00:00:00.000Z",
      "updated": "2011-12-21T00:00:00.000Z",
      "content": "<p>One of <a href=\"http://en.wikipedia.org/wiki/Clayton_M._Christensen\">Clay Christensen’s</a> favorite concepts is that instead of dividing your customers into segments and asking which features each segment would like, you should think about what “job” the customers are “hiring” you product to perform. <a href=\"http://hbswk.hbs.edu/item/6496.html\">Here</a> is an example:</p>\n<blockquote>\n<p>A fast-food restaurant chain wanted to improve its milkshake sales. The company started by segmenting its market both by product (milkshakes) and by demographics (a marketer’s profile of a typical milkshake drinker). Next, the marketing department asked people who fit the demographic to list the characteristics of an ideal milkshake (thick, thin, chunky, smooth, fruity, chocolaty, etc.). The would-be customers answered as honestly as they could, and the company responded to the feedback. But alas, milkshake sales did not improve.</p>\n<p>The company then enlisted the help of one of Christensen’s fellow researchers, who approached the situation by trying to deduce the “job” that customers were “hiring” a milkshake to do. First, he spent a full day in one of the chain’s restaurants, carefully documenting who was buying milkshakes, when they bought them, and whether they drank them on the premises. He discovered that 40 percent of the milkshakes were purchased first thing in the morning, by commuters who ordered them to go.</p>\n<p>The next morning, he returned to the restaurant and interviewed customers who left with milkshake in hand, asking them what job they had hired the milkshake to do. “Most of them, it turned out, bought [the milkshake] to do a similar job,” he writes. “They faced a long, boring commute and needed something to keep that extra hand busy and to make the commute more interesting. They weren’t yet hungry, but knew that they’d be hungry by 10 a.m.; they wanted to consume something now that would stave off hunger until noon. And they faced constraints: They were in a hurry, they were wearing work clothes, and they had (at most) one free hand.”</p>\n<p>The milkshake was hired in lieu of a bagel or doughnut because it was relatively tidy and appetite-quenching, and because trying to suck a thick liquid through a thin straw gave customers something to do with their boring commute. Understanding the job to be done, the company could then respond by creating a morning milkshake that was even thicker (to last through a long commute) and more interesting (with chunks of fruit) than its predecessor. The chain could also respond to a separate job that customers needed milkshakes to do: serve as a special treat for young children—without making the parents wait a half hour as the children tried to work the milkshake through a straw. In that case, a different, thinner milkshake was in order.</p>\n</blockquote>\n<p>There are at least three obvious ways to apply this concept: 1) when searching for startup ideas, think about jobs people want done that they can’t currently get done, 2) when thinking about how to fix or improve your product, understand why existing users are hiring your product (or should be hiring your product) and try to improve those experiences, 3) when analyzing markets, segment companies by the jobs they are hired for. Sometimes products that might appear similar (e.g. two photo sharing apps) are actually hired for very different purposes, and are therefore misclassified as competitors.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/20/trusting-platforms",
      "title": "Trusting platforms",
      "description": "In response to my post yesterday about how an internet of people has enabled a new wave of web-based marketplaces, Nick Mango commented…",
      "url": "https://cdixon.org/2011/12/20/trusting-platforms",
      "published": "2011-12-20T00:00:00.000Z",
      "updated": "2011-12-20T00:00:00.000Z",
      "content": "<p>In response to my post yesterday about how an <a href=\"http://cdixon.org/2011/12/19/an-internet-of-people/\">internet of people</a> has enabled a new wave of web-based marketplaces, <a href=\"http://twitter.com/#!/Alternate1985\">Nick Mango</a> commented:</p>\n<blockquote>\n<p>There’s actually 2 levels of trust here. The first is knowing and trusting the person you’re buying from. And if you don’t know who they are, then you must move on to the second level of trust, which is do you know and trust the platform the person is using.</p>\n</blockquote>\n<p>The ability to have “second order trust” is one of many reasons the internet has made so many institutions obsolete. Take the SEC’s role in policing private companies that market themselves to potential investors. This was sensible consumer protection back when the government was arguably the only organization that had the means and incentives to identify fraudulent investment schemes. But today we have many examples of websites that’ve built mechanisms for reliably tracking the reputations of individuals and organizations. This means the SEC could – in theory – make the unit of regulation platforms instead of investors and startups (something the <a href=\"http://venturebeat.com/2011/11/08/faq-what-the-new-u-s-crowdfunding-bill-means-for-entrepreneurs/\">crowdfunding bill</a> being considered by Congress seems to do at least in part), which in turn could unleash a new wave of innovation among crowdfunding platforms and crowdfunded startups.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/19/an-internet-of-people",
      "title": "An internet of people",
      "description": "Over the past few years, a bunch of web-based marketplaces have gotten popular – Etsy, Kickstarter, AirBnb, to name a few. Many of these…",
      "url": "https://cdixon.org/2011/12/19/an-internet-of-people",
      "published": "2011-12-19T00:00:00.000Z",
      "updated": "2011-12-19T00:00:00.000Z",
      "content": "<p>Over the past few years, a bunch of web-based marketplaces have gotten popular – Etsy, Kickstarter, AirBnb, to name a few. Many of these business ideas had been tried before but are succeeding only now.</p>\n<p>When a trend like this emerges, it’s always interesting to ask “<a href=\"http://cdixon.org/2010/11/07/timing-your-startup/\">why now</a>?” For example, for almost a decade, entrepreneurs tried to create video sharing services like YouTube, but only succeeded when certain key dependencies – broadband, digital video cameras, a version of Flash that “just worked” – became widespread.</p>\n<p>I asked <a href=\"http://roelofbotha.tumblr.com/\">Roelof Botha</a> the “why now” question regarding web-based marketplaces. He said something I thought was really interesting: marketplaces depend on trust, and trust requires knowing the reputation of a prospective counterparty. Today, for the first time, you can get background information on almost any prospective counterparty by searching Google, Facebook etc. Or put more simply: we finally have an internet of people.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/14/forces-that-affect-whether-a-large-company-will-buy-your-product-according-to-marc-andreessen",
      "title": "Forces that affect whether a large company will buy your product (according to Marc Andreessen)",
      "description": "From Marc Andreessen’s “Moby Dick Theory of Big Companies“: You can count on there being a whole host of impinging forces that will affect…",
      "url": "https://cdixon.org/2011/12/14/forces-that-affect-whether-a-large-company-will-buy-your-product-according-to-marc-andreessen",
      "published": "2011-12-14T00:00:00.000Z",
      "updated": "2011-12-14T00:00:00.000Z",
      "content": "<p>From Marc Andreessen’s “<a href=\"http://pmarca-archive.posterous.com/the-pmarca-guide-to-startups-part-5-the-moby\">Moby Dick Theory of Big Companies</a>“:</p>\n<blockquote>\n<p>You can count on there being a whole host of impinging forces that will affect the dynamic of decision-making on any issue at a big company.</p>\n<p>The consensus building process, trade-offs, quids pro quo, politics, rivalries, arguments, mentorships, revenge for past wrongs, turf-building, engineering groups, product managers, product marketers, sales, corporate marketing, finance, HR, legal, channels, business development, the strategy team, the international divisions, investors, Wall Street analysts, industry analysts, good press, bad press, press articles being written that you don’t know about, customers, prospects, lost sales, prospects on the fence, partners, this quarter’s sales numbers, this quarter’s margins, the bond rating, the planning meeting that happened last week, the planning meeting that got cancelled this week, bonus programs, people joining the company, people leaving the company, people getting fired by the company, people getting promoted, people getting sidelined, people getting demoted, who’s sleeping with whom, which dinner party the CEO went to last night, the guy who prepares the Powerpoint presentation for the staff meeting accidentally putting your startup’s name in too small a font to be read from the back of the conference room…</p>\n</blockquote>\n<p>Man, I wish Marc still blogged.  (ht <a href=\"http://cdixon.org/2011/11/28/business-development-the-goldilocks-principle/#comment-375385575\">saul lieberman</a>)</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/13/later-stage-rounds-and-setting-the-bar-too-high",
      "title": "Later-stage rounds and “setting the bar too high”",
      "description": "I recently had a number of conversations with CEOs of later-stage startups (generating significant revenue) that went something like this…",
      "url": "https://cdixon.org/2011/12/13/later-stage-rounds-and-setting-the-bar-too-high",
      "published": "2011-12-13T00:00:00.000Z",
      "updated": "2011-12-13T00:00:00.000Z",
      "content": "<p>I recently had a number of conversations with CEOs of later-stage startups (generating significant revenue) that went something like this. They want to raise more money, and VCs are offering them money at a high valuation. The CEO is worried that taking money at that valuation will “set the bar too high” and make it difficult to sell the company – if the time comes when he/she thinks it makes sense to sell – at a price that isn’t a significant multiple of that valuation.</p>\n<p>These CEOs are worrying too much. VCs know what they are doing and almost always invest with a financial instrument – preferred shares – that protects them even when the valuation is very high. **Preferred shares behave like a stock on the upside and a bond on the downside.  **The only way investors actually lose money is if the company is sold for less than the amount of money raised (which is generally significantly lower than the valuation).</p>\n<p>Here is what the payout function looks like for common stock (for example, what you get when you buy stocks in public markets):</p>\n<p><a href=\"images/screen-shot-2011-12-13-at-1-39-17-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 392px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 74.23469387755102%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAPCAIAAABr+ngCAAAACXBIWXMAAAsTAAALEwEAmpwYAAABSElEQVQoz4WT246CUAxF+f//IiEQJVFEH0QBGbkZJygwcpGZJSfikajTB9LTdnf3hvL7Xi6XS1EUZVmi5Hl+vV5HAYr86LpOVsIwVFVV0zTDMFBINLi6XpQPzESnaXo6nb57adt2SC1SPIEdxwmC4OsuMMdxHPYSRZEwEnA4HHRdn8/nDzAt7Xa7UReyDDUnSWKaJokUOZT3hy4EEtrFYsEIKUcpe6nrGmZK+ow8Ho+z2Qy9qqr9fq9st1vmSW/43oEFMssykE3TiC3emFkgrf704vu+vDAZeT6fQUIojCg3sPBRs+d5THsEFjoE0+kU/GB5gIdJvhwYFdq2jWu1Wm02G54PsLwq13W5hOYu6MxyMpkwJwKEhS+RotmnI6Fy+Ug4DMuyIGQ9hA525gzNE/PLgkm3XC7X6zWY/3+MkbB/jgladMAj7x+41V7MqmrgMgAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2011 12 13 at 1 39 17 pm\"\n        title=\"Screen shot 2011-12-13 at 1.39.17 PM\"\n        src=\"/static/aa98d4f29458f83ba6762ca34901d51d/2f47c/screen-shot-2011-12-13-at-1-39-17-pm.png\"\n        srcset=\"/static/aa98d4f29458f83ba6762ca34901d51d/924ad/screen-shot-2011-12-13-at-1-39-17-pm.png 170w,\n/static/aa98d4f29458f83ba6762ca34901d51d/f570f/screen-shot-2011-12-13-at-1-39-17-pm.png 341w,\n/static/aa98d4f29458f83ba6762ca34901d51d/2f47c/screen-shot-2011-12-13-at-1-39-17-pm.png 392w\"\n        sizes=\"(max-width: 392px) 100vw, 392px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2011-12-13 at 1.39.17 PM</figcaption>\n  </figure></a></p>\n<p>And here is what the payout function looks like for preferred shares:</p>\n<p><a href=\"images/screen-shot-2011-12-13-at-1-39-25-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 410px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 67.8048780487805%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2011 12 13 at 1 39 25 pm\"\n        title=\"Screen shot 2011-12-13 at 1.39.25 PM\"\n        src=\"/static/2d7ec38c20eddf2b18f63fdcb729faf4/9fff5/screen-shot-2011-12-13-at-1-39-25-pm.png\"\n        srcset=\"/static/2d7ec38c20eddf2b18f63fdcb729faf4/924ad/screen-shot-2011-12-13-at-1-39-25-pm.png 170w,\n/static/2d7ec38c20eddf2b18f63fdcb729faf4/f570f/screen-shot-2011-12-13-at-1-39-25-pm.png 341w,\n/static/2d7ec38c20eddf2b18f63fdcb729faf4/9fff5/screen-shot-2011-12-13-at-1-39-25-pm.png 410w\"\n        sizes=\"(max-width: 410px) 100vw, 410px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2011-12-13 at 1.39.25 PM</figcaption>\n  </figure></a></p>\n<p>So, to take a concrete example, Dropbox <a href=\"http://articles.businessinsider.com/2011-08-30/tech/30056381_1_investors-term-sheets-rumors\">reportedly</a> raised their last financing at a $4B valuation*. If you think of this as a public market valuation of common stock, you might think this means the VCs are betting $4B is the “fair value” of the company, and will lose money if Dropbox’s exit price ends up being less than $4B.  But in reality, assuming the standard preferred structure, the last round investors’ payout is as follows :</p>\n<blockquote>\n<p><em>Scenario 1</em>: Dropbox exits for greater than $4B ==> investors get a positive return (specifically, exit price divided by $4B)</p>\n<p><em>Scenario 2:</em> Dropbox exits for between $257M (<a href=\"http://www.crunchbase.com/company/dropbox\">total money raised</a>) and $4B ==> investors get their money back (possibly more if there is a preferred dividend)</p>\n<p><em>Scenario 3</em>: Dropbox exits for less than $257M ==> investors lose money</p>\n</blockquote>\n<p>If reports are true that Dropbox is profitable and generating >$100M in revenue, then scenario 3 – the money losing scenario – is extremely unlikely.</p>\n<p>Will investors be thrilled with scenario 2?  No, but they are pros who understand the risks they are taking.</p>\n<p>Going back to the entrepreneur’s perspective, in what sense is a high valuation “setting the bar high”?  In the preferred share payout model, there are two “bars”:  money raised and valuation.  I don’t see any reason why entrepreneurs shouldn’t be as aggressive as possible on valuation, especially if they are confident they won’t end up in scenario 3.</p>\n<p>An important point to keep in mind is that, in order to maintain flexibility, entrepreneurs shouldn’t give new investors the ability to block an exit or new financings. Investors can get this block in one of two ways – explicit blocking rights (under the “control provisions” section of a VC term sheet) or by controlling the board of directors. These are negotiable terms and startups with momentum should be very careful about giving them away.</p>\n<p>* Note that I have no connection to Dropbox so am just assuming standard deal structure and basing numbers on public reports. I am making various simplifying assumptions such as not distinguishing between pre-money and post-money valuation.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/10/three-types-of-acquisitions",
      "title": "Three types of acquisitions",
      "description": "There are three types of technology acquisitions: - Talent. When the acquirer just wants the team (generally just engineers and sometimes…",
      "url": "https://cdixon.org/2011/12/10/three-types-of-acquisitions",
      "published": "2011-12-10T00:00:00.000Z",
      "updated": "2011-12-10T00:00:00.000Z",
      "content": "<p>There are three types of technology acquisitions:</p>\n<p>- Talent. When the acquirer just wants the team (generally just engineers and sometimes designers). As a rule of thumb, these acquisitions are priced at approximately $1M/engineer.</p>\n<p>- Tech: When the acquirer wants the technology along with the team. Generally the prices for these acquisitions are significantly higher than talent acquisitions. Sometimes they are even in the hundreds of millions of dollars for fairly small teams (e.g. Siri). The calculation the acquirer uses to price tech acquisitions is usually “buy vs build”. An important component in this calculation is not just the actual cost to build the technology but the opportunity cost of the time it would take them to do so.</p>\n<p>- Business: When the company is either bought on a financial basis (the acquisition is “accretive”) or bought based on non-financial but highly defensible assets (Google buying YouTube which had minimal revenue at the time but a huge network of producers and consumers of video).</p>\n<p>As large companies mature they move from doing just talent acquisitions to doing talent and tech acquisitions to eventually doing all three types of acquisitions. Usually it takes a startup beating the large company in an important area for the large company to realize the necessity of business acquisitions. For example, Google seemed to dramatically change its attitude when YouTube crushed Google Video. Eventually every large company has a moment like this.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/08/technology-and-job-creation",
      "title": "Technology and job creation",
      "description": "In response to my recent post “Making industries ‘garage ready’ for startups“, venture capitalist Jordan Elpern-Waxman made an interesting…",
      "url": "https://cdixon.org/2011/12/08/technology-and-job-creation",
      "published": "2011-12-08T00:00:00.000Z",
      "updated": "2011-12-08T00:00:00.000Z",
      "content": "<p>In response to my recent post “<a href=\"http://cdixon.org/2011/12/06/making-industries-garage-ready-for-startups/\">Making industries ‘garage ready’ for startups</a>“, venture capitalist <a href=\"http://about.me/jelpern\">Jordan Elpern-Waxman</a> made an interesting comment:</p>\n<blockquote>\n<p>If I understand correctly, “garage-ready” essentially means separating design from manufacturing, i.e. “creativity-intensive” processes from capital-intensive ones. This may be an inevitable result of industry maturation and specialization, but there is a downside to it, at least for the so called “developed” nations. The result of differential costs for commodity labor, the fungibility and liquidity of capital, and the ease of transmitting both human and machine-readable information across arbitrary distances, means that capital-intensive processes – i.e. making things – migrate to locations with lower total cost of operations (which, Germany excepted, tend to be locations with lower labor costs). Another way of saying this is that nothing is fabless; the foundry is merely outsourced and moved to a cheaper location. This reality is great for the creative class and for the lower cost locations, but it’s less happy for the residents of the higher class locations that are not so lucky to be part of the creative class.</p>\n<p>I’m not ready to draw the conclusion that this is the cause of the economic inequality in the US and malaise across Europe and Japan, but there definitely appears to be some correlation. Again, I don’t know if these results of the “garagification” of an industry can be reversed or mitigated in the name of societal stability, but if anyone can find a way to do it it would be the creative class. Unfortunately, because techies and entrepreneurs are solidly part of the creative class and perhaps even *the* primary beneficiaries of the separation of design and manufacturing, we generally avoid acknowledging or discussing the negative aspects of this trend.</p>\n<p>Note that I said “reversed or mitigated.” Trying to reverse or stop these trends is probably a quixotic goal, but perhaps mitigation is in fact possible. For example, is it possible to create a country in which the entire labor force is “creative”? I myself have trouble seeing how such a possibility could be made real, but I’d like to see more intellectuals and entrepreneurs spend some brainpower on the question.</p>\n</blockquote>\n<p>It is true that new technologies often lead, in the short term, to lower wages and fewer jobs. <a href=\"http://craigslist.com\">Craigslist</a>, for example, has about <a href=\"http://www.craigslist.org/about/factsheet\">30 employees</a> yet, by replacing the classified ad industry, eliminated many thousands of jobs (local newspaper reporters, classified ad salespeople, etc). The same could be said for almost every popular website.</p>\n<p>On the flip side, new technologies have driven down prices (Walmart and Amazon), led to massive increases in information productivity (Google and Wikipedia), and created new income sources (eBay and Craigslist). Greater productivity and lower prices at least partly compensate for part-time jobs and lower wages.</p>\n<p>Jordan is right that these are questions we – the technology community – should spend more time discussing.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/07/growth-curves-of-startups",
      "title": "Growth curves of startups",
      "description": "Pick whatever metric you want for gauging the success of a particular startup: profits, revenues, pageviews, etc. A graph I’d love to see is…",
      "url": "https://cdixon.org/2011/12/07/growth-curves-of-startups",
      "published": "2011-12-07T00:00:00.000Z",
      "updated": "2011-12-07T00:00:00.000Z",
      "content": "<p>Pick whatever metric you want for gauging the success of a particular startup: profits, revenues, pageviews, etc. A graph I’d love to see is those metrics, graphed over time, for a wide variety of startups. From my experience, you’d be surprised how often those graphs show sudden growth. Something happens in the world (an “exogenous shock”) and the startup suddenly takes off.</p>\n<p>I remember first observing this when I worked at <a href=\"http://bvp.com/\">Bessemer</a>. For example, there was a startup that supplied services to video websites. For years, the company soldiered along, barely growing. Then, suddenly, YouTube blew up and this company took off along with it.</p>\n<p>As a founder, these exogenous shocks are out of your control, but you can 1) understand what exogenous shocks you depend on, 2) try to guess when those shocks will hit, 3) manage your runway so you survive long enough for them to hit.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank",
      "title": "Always have 18 months of cash in the bank",
      "description": "I was once told by an experienced entrepreneur (I can’t remember who) to always have at least 18 months of cash in the bank. The logic…",
      "url": "https://cdixon.org/2011/12/06/always-have-18-months-of-cash-in-the-bank",
      "published": "2011-12-06T00:00:00.000Z",
      "updated": "2011-12-06T00:00:00.000Z",
      "content": "<p>I was once told by an experienced entrepreneur (I can’t remember who) to always have at least 18 months of cash in the bank. The logic behind this is: 1) as a rule of thumb it takes 3 months to raise money, 2) building/marketing/selling technology always takes longer than you think.  Subtracting 3 months for fundraising and 3 months for things taking longer than expected, this gives you 12 months to execute your plan. (Also you never want to raise money “with your back against the wall” – when you are near the end of your runway.)</p>\n<p>More adventurous entrepreneurs might argue 18 months is too conservative. It’s true that following the 18 month rule can be extra dilutive. At SiteAdvisor, we raised our Series A about three months before we were acquired. So we gave up equity for cash that we never spent. But in retrospect, given what we knew at the time, I think it was the right decision.</p>\n<p>The question of when to raise money is one of the few times that entrepreneurs and early-stage investors have somewhat divergent economic interests. If you control a large investment fund, you always have the option to extend a company’s runway. The entrepreneur doesn’t have this option. I’ve even heard some entrepreneurs whisper about Machiavellian VCs who deliberately try to get you to the end of your runway so they can negotiate harder. I think this is a bit of a conspiracy theory. Almost all VCs I know care primarily about the success of their companies and not about extracting every last point of equity.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/05/making-industries-garage-ready-for-startups",
      "title": "Making industries “garage ready” for startups",
      "description": "One of the most important events in the history of modern computing was the advent of “fabless” (“fabrication-less”) semiconductor companies…",
      "url": "https://cdixon.org/2011/12/05/making-industries-garage-ready-for-startups",
      "published": "2011-12-05T00:00:00.000Z",
      "updated": "2011-12-05T00:00:00.000Z",
      "content": "<p>One of the most important events in the history of modern computing was the advent of <a href=\"http://en.wikipedia.org/wiki/Fabless_semiconductor_company\">“fabless”</a> (“fabrication-less”) semiconductor companies.  The <a href=\"http://cb.hbsp.harvard.edu/cb/product/609001-PDF-ENG\">story</a> of fabless semis is similar to the recent history of internet startups: various forces led to an order-of-magnitude reduction of startup costs, which then led to a surge of innovation.</p>\n<p>Before the 1980s, if you wanted to invent a new semiconductor, you had to both design and manufacture it. This meant you had to build a large manufacturing plant, something only large companies like Intel, Motorola, and IBM could afford. Hence, semiconductor design was generally too expensive for venture-backed startups.</p>\n<p>In the 1979, two computer scientists published a <a href=\"http://www.amazon.com/Introduction-VLSI-Systems-Carver-Mead/dp/0201043580\">seminal book</a> that argued for the separation semiconductor design and manufacturing. Followed by years of investment by DARPA and others, an industry emerged where chip designers used software (“<a href=\"http://en.wikipedia.org/wiki/Electronic_design_automation\">EDA</a> software”) to design and test semiconductors, and then sent standardized specifications to “foundries” that did the manufacturing (most of which were located in Taiwan – the largest in the world to this day is <a href=\"http://en.wikipedia.org/wiki/TSMC\">Taiwan Semiconductor Manufacturing Company</a>).</p>\n<p>This dramatically lowered the cost of starting semiconductor design shops, and in turn led to a massive wave of startup innovation. These startups designed chips for cell phones (Qualcomm), Wifi (Atheros), computer graphics (Nvidia), and much more.  Most were funded by venture capitalists and located in Silicon Valley.</p>\n<p>Tech sectors tend to get really creative when they become “garage ready”:  a Steve Jobs and Steve Wozniak, or a Larry Page and Sergey Brin, can, with very little capital, change the world. It happened with semis in the 80s and happened in the 90s and 2000s for internet companies.</p>\n<p>Eventually every vertically integrated, capital-intensive sector becomes garage ready. Someday, for example, we will have “fabless” gadget design and biotech research, enabling a small shop in Brooklyn or SoMa to create an iPhone killer or next-generation cancer drug.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/04/why-is-enterprise-tech-so-far-behind-consumer-tech-because-it-can-be",
      "title": "Why is enterprise tech so far behind consumer tech? Because it can be.",
      "description": "Brian Manning put it nicely in a comment to my post yesterday about enterprise software: In my opinion, enterprise technology is WAY behind…",
      "url": "https://cdixon.org/2011/12/04/why-is-enterprise-tech-so-far-behind-consumer-tech-because-it-can-be",
      "published": "2011-12-04T00:00:00.000Z",
      "updated": "2011-12-04T00:00:00.000Z",
      "content": "<p><a href=\"http://scalable.typepad.com/\">Brian Manning</a> put it nicely in a <a href=\"http://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users/#comment-378654383\">comment</a> to my post yesterday about enterprise software:</p>\n<blockquote>\n<p>In my opinion, enterprise technology is WAY behind consumer technology for one reason: because it can be.</p>\n<p>In a [B2B] transaction, one good salesperson (the “seller”) only has to sell one person (the “buyer”) on the value of the technology. Once the product is sold, the buyer forces their 50,000 employees to use that technology whether they like it or not. A good salesperson with a good deck can do this fairly reliably.</p>\n<p>And a good account manager can typically retain the client for a while; employees usually get used to the product and rarely complain enough for the buyer to cancel the contract and force the seller to improve the product. As a result, an enterprise product can suck and still flourish.</p>\n<p>With a B2C product, this is much, much more difficult. The seller has to sell 50,000 individual “users”, one by one, on the value of the product without the luxury of a face to face meeting or 18 holes on the golf course. The B2C model forces the seller’s product to “sell itself”. As a result, a consumer product can’t suck if it wants to flourish. It has be good. Much better than the enterprise product needs to be.</p>\n</blockquote>\n<p>Fortunately, as I discussed <a href=\"http://cdixon.org/2011/12/04/the-enterprise-buyers-versus-users/\">yesterday</a>, trends like cloud-based delivery (aka SaaS) are starting to align the interests of enterprise users and buyers.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users",
      "title": "The enterprise: buyers versus users",
      "description": "Why does most enterprise technology feel like it is a decade behind consumer technology? For the same reason our health care system is…",
      "url": "https://cdixon.org/2011/12/03/the-enterprise-buyers-versus-users",
      "published": "2011-12-03T00:00:00.000Z",
      "updated": "2011-12-03T00:00:00.000Z",
      "content": "<p>Why does most enterprise technology feel like it is a decade behind consumer technology? For the same reason our health care system is broken. The “user” isn’t the same person as the “buyer”. In enterprise software the user is generally a non-IT person but the buyer is usually, at least in part, the IT department.* (In healthcare the “user” is the patient and the “buyer” is the doctor or insurance company).</p>\n<p><a href=\"https://news.ycombinator.com/item?id=3308398\">SAP bought SuccessFactors</a> today, in a big win for “cloud” based enterprise software. The cloud might sound like a buzzword but is in fact a vastly superior architecture, not because it makes installation and updates easier (although that’s good too), but because it starts to remove IT from the purchasing process, meaning the user and the buyer are, increasingly, the same person.</p>\n<p>* A corollary to this is that IT-related enterprise software, i.e. infrastructure, is generally pretty good.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/12/01/otherwise-do-something-else",
      "title": "“Otherwise do something else”",
      "description": "I remember back when I started my first company, a friend said to me “get ready to have a knot in your stomach and feel nauseous for years…",
      "url": "https://cdixon.org/2011/12/01/otherwise-do-something-else",
      "published": "2011-12-01T00:00:00.000Z",
      "updated": "2011-12-01T00:00:00.000Z",
      "content": "<p>I remember back when I started my first company, a friend said to me “get ready to have a knot in your stomach and feel nauseous for years.”  I laughed it off then, but it was probably the most accurate advice I’ve ever gotten.</p>\n<p>I haven’t slept well for years. Even now with my last startup sold, I stay up at night thinking about how to change the website, make payroll, raise more money, etc.</p>\n<p>In 1995, I was a graduate student studying philosophy at Columbia.  I was also doing computer programming on the side.  The programming was going well and I was getting some good job offers. I happened to get to have dinner with the philosopher Daniel Dennett, and I asked him what he thought I should do with my career.  He said: “If there is absolutely no way you can imagine being happy except studying philosophy, study philosophy. Otherwise do something else.”</p>\n<p>I’d say the same thing about starting companies.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/11/28/business-development-the-goldilocks-principle",
      "title": "Business development: the Goldilocks principle",
      "description": "Background: At Hunch, we switched our focus (“pivoted“) about 14 months ago from B2C to B2B. Over that time, we pitched over 500 potential…",
      "url": "https://cdixon.org/2011/11/28/business-development-the-goldilocks-principle",
      "published": "2011-11-28T00:00:00.000Z",
      "updated": "2011-11-28T00:00:00.000Z",
      "content": "<p><em>Background: At Hunch, we switched our focus (“<a href=\"http://cdixon.org/2010/06/15/pivoting/\">pivoted</a>“) about 14 months ago from B2C to B2B. Over that time, we pitched over 500 potential partners, trying to get them to use and eventually pay for our recommendation services. This process had its ups and downs, but eventually ended well when – after 8 months of grueling diligence – eBay decided to <a href=\"http://blog.hunch.com/?p=56124\">acquire</a> Hunch in what I expect will be a successful outcome for both companies. During this time, I got a crash course in B2B sales/business development. Here is the first in a series of blog posts based on what I learned.</em></p>\n<p>Somewhat counterintuitively, the biggest problem we encountered when pitching Hunch technology to potential partners wasn’t that it <em>wasn’t</em> interesting or useful to them, but that it was so interesting and useful that they considered it “strategic” or “core” and thus felt they needed to own and not rent it. The situation reminded me of the “<a href=\"http://en.wikipedia.org/wiki/Goldilocks_principle\">Goldilocks principle</a>” sometimes referred to in scientific contexts:</p>\n<blockquote>\n<p>The <strong>Goldilocks principle</strong> states that something must fall within certain margins, as opposed to reaching extremes. It is used, for example, in the <a href=\"http://en.wikipedia.org/wiki/Rare_Earth_hypothesis\" title=\"Rare Earth hypothesis\">Rare Earth hypothesis</a> to state that a <a href=\"http://en.wikipedia.org/wiki/Planet\" title=\"Planet\">planet</a> must neither be too far away from, nor too close to the <a href=\"http://en.wikipedia.org/wiki/Sun\" title=\"Sun\">sun</a> to support life.</p>\n</blockquote>\n<p>Basically, if your technology is “too hot” – or, in business-speak, “strategic” or “core” – then there are three likely outcomes:</p>\n<p>1. The potential partner turns you down because they decide to build a similar product themselves. This happened to us a number of times. I think part of the reason was that there was a lot of market buzz around “big data” and machine learning which lead to the perception – rightly or wrongly – that those capabilities needed to be owned and not rented.</p>\n<p>2. The potential partner says yes because your assets are so defensible they can’t replicate them. I’m sure Zynga considers the social graph strategic but at least for now they have no choice but to partner with Facebook to access it. It is very rare for startups to have this kind of leverage, but ones that do are extremely valuable.</p>\n<p>3. The potential partner wants to own what you do, but thinks you have a sufficiently superior team and technology that acquiring you instead of replicating you makes more sense. This is only possible if the partner is large enough to acquire you and has a philosophy consistent with acquiring versus building everything in-house. (A common tech business term is “NIH” which stands for “Not Invented Here”. It refers to a set of companies that consider anything developed outside of their offices technologically inferior).</p>\n<p>At the other extreme, if your technology is “too cold” – perceived as not useful by potential partners – you’re going to have a lot of frustrating meetings.  In this case, it is probably wise to reconsider whether there is actually demand for your product.</p>\n<p>To build a long-term sustainable business, the best place to be is “just right” – useful to lots of partners but not so strategic that they are unwilling to rent it. This is where I wanted Hunch to be but we never got there.  Most companies I know use externally developed products (commercial or open source) for databases, web servers, web analytics, email delivery, payment processors, etc. These are often highly competitive markets but the companies that win in these markets tend to become large and independently sustainable. These “just right” companies – to extend the astronomy analogy – are the planets that support life.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/09/28/some-lessons-learned",
      "title": "Some lessons learned",
      "description": "Note: Google was kind enough to invite me to give a short talk at their Zeitgeist conference earlier this week. It was a really interesting…",
      "url": "https://cdixon.org/2011/09/28/some-lessons-learned",
      "published": "2011-09-28T00:00:00.000Z",
      "updated": "2011-09-28T00:00:00.000Z",
      "content": "<p><em>Note: Google was kind enough to invite me to give a short talk at their Zeitgeist conference earlier this week. It was a really interesting conference and I got a chance to meet a lot of people I admire. For my talk, I decided to use material from some of my blog posts over the years that I thought might appeal to a broader audience. Unfortunately, I was still recovering from a nastly cold/flu so I didn’t deliver the talk as well as I’d like.  Below is the text.</em></p>\n<p>Today, I wanted to talk about some of the most important lessons I’ve learned over the years from my experiences as an investor and entrepreneur.</p>\n<p><strong>1. If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough</strong></p>\n<p>My most humbling and educational career experience was when I was starting out in the tech world.  I applied to literally hundreds of jobs:  low-level VC roles, startup jobs, and various positions at big tech companies.  I had an unusual background: I was a philosophy undergrad and a self-taught programmer. I got rejected from every single job I applied to.</p>\n<p>The reason this experience was so useful was that it helped me to develop a thick skin.  I came to realize that employers weren’t really rejecting me as a person or on my potential – they were rejecting a resume.  As the process became depersonalized, I became bolder in my tactics. Eventually, I landed a job that led to my first startup getting funded.</p>\n<p>One of the great things about looking for a job is that your payoff is almost entirely a max function – the best of all outcomes – not an average. This is also generally true for lots of activities startups do: raising money, creating partnerships, hiring, marketing and so on.</p>\n<p>So, every day – to this day – I make it a point of trying something new and ambitious and getting rejected.</p>\n<p><strong>2. Don’t climb the wrong hill</strong></p>\n<p>I spend a lot of time trying to recruit people to startups, and I’m surprised how often I see smart, ambitious people who get stuck in fields they don’t like because they sense they are making incremental, day-to-day progress.</p>\n<p>I think a good analogy for escaping this trap can be found in computer science, in what are known as hill climbing algorithms. Imagine a landscape with hills of varying heights.  You are dropped randomly somewhere on the landscape. How do you find the highest point?</p>\n<p>The lure of the current hill is strong.  There is a natural human tendency to make the next step an upward one.  People fall for a common trap highlighted by behavioral economists:  they tend to systematically overvalue near term over long term rewards.</p>\n<p>This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.</p>\n<p>The lesson from computer science is: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.</p>\n<p><strong>3. The next big thing will start out looking like a toy</strong></p>\n<p>A majority of the top internet companies a decade ago are barely in existence today.  How did this happen?  These companies weren’t complacent – they were run by smart executives who were constantly aware that they could lose their lead.</p>\n<p>The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a toy.  This is one of the main insights of Clay Christensen’s “disruptive technology” theory, which has been widely studied but I think is still rarely applied because it is so counter-intuitive to conventional management practices.</p>\n<p>Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” their users’ needs. The first telephone could only carry voices a mile or two. The leading incumbent of the time, Western Union, chose not to acquire telephone technology because they didn’t see how it could be useful to businesses and railroads – their best customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve. The same was true of how mainframe companies viewed the PC, and how modern telecom companies viewed Skype.</p>\n<p>The list of top internet companies in 10 years will look very different than that same list does today. And the new ones on the list will be companies that snuck by the incumbents because people dismissed them as toys.</p>\n<p><strong>4. Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.</strong></p>\n<p>The Internet has gone through fits and starts – a bubble, a crash, and now a revival.  Pundits are speculating that another crash is coming. Regardless of what happens in the near term, what we do know is that every year we will continue to see more and more industries succumb to the transformational power of the Internet.</p>\n<p>Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV & movies, real estate, politics & government. Soon to be transformed: healthcare, education, and energy, among others.</p>\n<p>Thus far the US has led Internet innovation. There are things the US can do to keep this lead, including: exporting the entrepreneurial ethos of Silicon Valley to the rest of the country, and allowing talented people to go where their skills are most needed – for example by changing US immigration policies.</p>\n<p>Most importantly, we have too many people pursuing careers in banking, law and consulting. I personally encounter this bias all the time when I go to college campuses to recruit for startups. We need to convince the upcoming generation to innovate and take risks in sectors that have a direct impact on the quality of peoples’ lives.</p>\n<p>So my advice is:</p>\n<ol>\n<li>get rejected more</li>\n<li>climb the right hill</li>\n<li>create an amazing toy</li>\n<li>grow that toy into something big that transforms an important industry</li>\n</ol>",
      "image": null,
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    },
    {
      "id": "https://cdixon.org/2011/09/12/owning-equity-in-your-company-should-be-as-common-as-owning-equity-in-your-home",
      "title": "Owning equity in your company should be as common as owning equity in your home",
      "description": "What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about…",
      "url": "https://cdixon.org/2011/09/12/owning-equity-in-your-company-should-be-as-common-as-owning-equity-in-your-home",
      "published": "2011-09-12T00:00:00.000Z",
      "updated": "2011-09-12T00:00:00.000Z",
      "content": "<blockquote>\n<p>What belongs in common to the most people is accorded the least care: they take thought for their own things above all, and less about things common, or only so much as falls to each individually. – Aristotle <a href=\"http://www.cato.org/special/ownership_society/boaz.html\">*</a></p>\n</blockquote>\n<p>A major policy goal of capitalist countries in the 20th century was to encourage home ownership. It is widely believed that owners take better care of their homes than renters as they have much more at stake financially. There is also <a href=\"http://www.realtor.org/Research.nsf/files/05%20Social%20Benefits%20of%20Stable%20Housing.pdf/$FILE/05%20Social%20Benefits%20of%20Stable%20Housing.pdf\">evidence</a> that home owners are happier, healthier, and participate more in civic and political life.</p>\n<p>The desire to create an “<a href=\"http://en.wikipedia.org/wiki/Ownership_society\">ownership society</a>” led to some smart policy decisions like the mortgage tax deduction and some bad decisions like hazardously low interest rates that contributed to the housing bubble. Home ownership is a noble goal even if home ownership fueled by excessive debt can be disastrous.</p>\n<p>Entrepreneurs figured out a long time ago that the benefits of having equity in your company are similar to the benefits of having equity in your house. Silicon Valley expanded this concept by making it standard to grant equity to non-founder employees. It’s no coincidence that Silicon Valley continues to innovate and create jobs while the rest of the economy is stagnant.</p>\n<p>Some people think we are in a startup bubble, and that once the bubble bursts people will run back to the supposed safety of non-startup jobs. I’d prefer to think we are at the beginning of a movement to create a true ownership society, where people own stakes not just in their space but also in their time.</p>",
      "image": null,
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    },
    {
      "id": "https://cdixon.org/2011/08/28/do-you-want-to-sell-sugar-water-or-do-you-want-to-change-the-world",
      "title": "Do you want to sell sugar water or do you want to change the world?",
      "description": "“Do you want to sell sugar water for the rest of your life or come with me and change the world?” – Steve Jobs I sometimes wish that instead…",
      "url": "https://cdixon.org/2011/08/28/do-you-want-to-sell-sugar-water-or-do-you-want-to-change-the-world",
      "published": "2011-08-28T00:00:00.000Z",
      "updated": "2011-08-28T00:00:00.000Z",
      "content": "<blockquote>\n<p>“Do you want to sell sugar water for the rest of your life or come with me and change the world?” – Steve Jobs</p>\n</blockquote>\n<p>I sometimes wish that instead of working on internet and software projects, I worked on cleantech or biotech projects. That way, when I came home at night, I’d know that I had literally spent my day trying to cure cancer or prevent global warming.  But information technology is what I know, and it’s probably too late for me to learn a new field from scratch.</p>\n<p>That doesn’t mean information technology can’t improve people’s lives. Google’s search engine helps people find information, which, for example, makes cancer and cleantech researchers more productive. Skype allows companies to collaborate remotely, and connects people with friends and family around the world. In the area of information technology, we create infrastructure and hope that people use it for more good than bad.</p>\n<p>That said, the best entrepreneurs seem to follow a path of increasing gravitas. Scott Heiferman started out selling online ads and is now creating new communities. Jack Dorsey created Twitter and is now democratizing payments so sole proprietors can compete on a level playing field with large companies. Elon Musk started with online payments and is now developing electric cars and space programs.</p>\n<p>Founders of large companies sometimes also follow the path of increasing gravitas. Google is developing new energy technologies, self-driving cars and other world-changing technologies. Bill Gates devotes almost all of his time and money to charity.</p>\n<p>The tech press is preoccupied with investments, trends, exits, and other “inside baseball” topics. But these are all means to an end. Investments provide fuel for entrepreneurs to convert ideas into products. Trends shape the terrain that entrepreneurs navigate. Exits provide financial incentives for investors and entrepreneurs.</p>\n<p>Tim O’Reilly <a href=\"http://www.informationweek.com/blog/229209677\">says</a> that entrepreneurs should try to create more value than they capture. You can make money selling people obfuscated financial products, entertaining them with mind-numbing TV shows, or selling them sugar water decorated in elegant designs.</p>\n<p>Alternatively, you can make something that matters and — if you are lucky and smart — change the world.</p>",
      "image": null,
      "media": [],
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    },
    {
      "id": "https://cdixon.org/2011/08/02/what-the-nyc-startup-world-needs-and-doesnt-need",
      "title": "What the NYC startup world needs (and doesn’t need)",
      "description": "Here’s what I think NYC needs to become a serious, long-term startup hub: Some extremely successful startups. We need PayPals – companies…",
      "url": "https://cdixon.org/2011/08/02/what-the-nyc-startup-world-needs-and-doesnt-need",
      "published": "2011-08-02T00:00:00.000Z",
      "updated": "2011-08-02T00:00:00.000Z",
      "content": "<p>Here’s what I think NYC needs to become a serious, long-term startup hub:</p>\n<ol>\n<li>Some extremely successful startups. We need PayPals – companies that spin out boatloads of talented entrepreneurs and “smart money” angel investors. Big successes also reinforce the “culture of equity” that is so strong in California – the idea that owning options in a startup is the best path to financial and career success.</li>\n<li>More web product design talent. This is the scarcest talent of all (more so than engineering). NYC has perhaps the best design community in the world, but most of the designers are trained in non-web design fields (e.g. print design).  Most of the good design schools don’t emphasize web product design (some exceptions – e.g. my friend <a href=\"http://www.zachklein.com/\">Zach Klein</a> taught an excellent class at the <a href=\"http://www.schoolofvisualarts.edu/\">School of Visual Arts</a> last semester on web product design). NYU’s <a href=\"http://itp.nyu.edu/itp/\">ITP</a> stands out as a program that focuses on the intersection of design and technology (e.g. the Foursquare team went to school there). CMU’s <a href=\"http://www.hcii.cmu.edu/\">HCI</a> program and MIT’s <a href=\"http://www.media.mit.edu/\">Media Lab</a> are also great. Other schools need similar programs.</li>\n<li>More engineers. However, this doesn’t mean we need more engineering schools (although that wouldn’t hurt). Like Silicon Valley, NYC is populated mostly by people who moved here from other places. For the right opportunity, it isn’t hard to convince, say, recent MIT grads to move to NYC.  The problem is that NYC startups are basically unknown to students at MIT, CMU, Penn, and even (shockingly) to engineering students at NYU and Columbia (big props to <a href=\"http://hackny.org/a/\">HackNY</a> for trying to fix this). East Coast CS students also view startups as a much <a href=\"http://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think/\">riskier path than they actually are</a>. I say this having been at dozens of events with East Coast students over the last year or so talking about startups. I’m constantly amazed that most of the students simply don’t realize startups are a viable option. What we have is primarily a marketing, not a supply, problem.</li>\n<li>High-speed internet throughout all the “startup areas” of Manhattan (Flatiron, Meat Packing, Soho etc) and Brooklyn (Williamsburg, Dumbo, etc). It’s amazing that we have such a fundamental infrastructure problem in a city as advanced as NYC, but I can’t tell you how many startups I know that struggle to get working high-speed internet access that has solid uptime.</li>\n<li>More marquee tech companies opening large tech offices here. Google has something like 1500 engineers here. This adds a lot of vibrancy to the tech culture and attracts more engineering and design talent to the city.</li>\n</ol>\n<p>Some things we don’t need:</p>\n<p>1. Government or university organized events that introduce entrepreneurs to other entrepreneurs. There seems to be one such event each week. Entrepreneurs are by nature very good at meeting one another and it’s a small enough community that pretty much everyone already knows each other anyways.</p>\n<p>2. Expensive projects like <a href=\"http://www.dnainfo.com/20110719/downtown/bloomberg-pledges-100m-towards-new-engineering-science-complex\">big engineering universities</a>. Again, the more engineers and CS programs in the US the better (even better yet we need more CS majors – which probably means more CS education in high school and earlier), but I can think of far more productive ways to spend $100M to help the NYC startup and tech world.</p>\n<p>3. Lower rents. No doubt <a href=\"http://www.rentistoodamnhigh.org/\">the rents are too damn high</a> and lower rents would be great. I’ve been living here since college when my room for one year was a hallway in a friend’s apartment. I sympathize with people who say this. But the idea that NYC is unaffordable on a typical startup salary is a complete myth. You can rent a decent place in a cool part of town on a typical startup salary. As to commercial space, for venture-backed startups the difference between rent in NYC and rent in other cities is generally the difference between spending, say, 3% versus 4% of your total financing on rent.</p>\n<p>4. More early-stage investment capital. There are plenty of smart angels, seed funds, and VCs who are either based here or are based elsewhere but actively invest here.</p>\n<p>Most of all what we need is for our tech and startup scene to reach critical mass (and to sustain that critical mass even if a tech downturn comes). Facebook wasn’t started in Californa and lots of future big successes will be started in all sorts of random places.  NYC needs enough tech critical mass that the next Mark Zuckerberg seriously considers relocating to NYC.</p>",
      "image": null,
      "media": [],
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    },
    {
      "id": "https://cdixon.org/2011/08/01/pivoting-into-a-new-corporate-structure",
      "title": "Pivoting into a new corporate structure",
      "description": "This hasn’t happened to me, but I keep hearing stories about situations like the following: 1) startup raises a seed financing round while…",
      "url": "https://cdixon.org/2011/08/01/pivoting-into-a-new-corporate-structure",
      "published": "2011-08-01T00:00:00.000Z",
      "updated": "2011-08-01T00:00:00.000Z",
      "content": "<p>This hasn’t happened to me, but I keep hearing stories about situations like the following: 1) startup raises a seed financing round while working on a preliminary idea, 2) founders later “pivot” into a new idea that looks more promising and/or gains traction, 3) founders decide to raise a new round of financing, 4) founders argue that the new idea is so different from the original one that it should be part of a new company, and that the original seed investors shouldn’t own any part of it.</p>\n<p>At <a href=\"http://foundercollective.com\">Founder Collective</a>, we think of ourselves as investing primarily in people, and only secondarily in ideas or products. I have to admit that until I heard about these situations happening, I hadn’t even conceived of the possibility of “pivots into new corporate structures”. In retrospect, I suppose it was inevitable given the founder-friendly market and the rapidly evolving venture environment.</p>\n<p>As a legal matter, assuming the founders worked on the idea on the original company’s time and/or money, the seed investors probably have a strong claim. Founders and employees normally sign “invention assignment” agreements that would make the new ideas and products property of the original company (again, these aren’t situations I’m personally involved in so I am just speculating on the specifics).  The reality is that most professional seed investors aren’t going to sue founders and will likely instead try to work out some compromise.</p>\n<p>This is not to suggest, by the way, that founders are indentured servants to investors. It is perfectly fine, if an idea isn’t working out, to wind down the company, return the remaining capital, and go off and work on new ideas. If one of those new ideas shows promise, the founders are then (legally and morally) free to form a new corporate entity and raise new financing from whomever they choose. From news reports, it sounds like this is what the Odeo team did before they pivoted to Twitter. It’s the conventional and, in my view, correct way to handle these situations.</p>\n<p>Here’s what really worries me. If it becomes a norm for founders to jettison seed investors when their company’s focus changes, seed investors who invest “primarily in people” will stop doing so. I think that would be a real shame: we’d lose an important source of capital and a lot of innovative startups wouldn’t get funded.</p>",
      "image": null,
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    },
    {
      "id": "https://cdixon.org/2011/07/28/the-downside-of-accelerated-investment-decisions",
      "title": "The downside of accelerated investment decisions",
      "description": "There has been a lot of talk about how early-stage valuations have risen dramatically over the past few years. Financially, this is probably…",
      "url": "https://cdixon.org/2011/07/28/the-downside-of-accelerated-investment-decisions",
      "published": "2011-07-28T00:00:00.000Z",
      "updated": "2011-07-28T00:00:00.000Z",
      "content": "<p>There has been a lot of talk about how early-stage valuations have risen dramatically over the past few years. Financially, this is probably good for founders and bad for investors. But a side effect of this frothy market is that financings are occurring much faster. It is very common for investors to get introduced to founders with the proviso that a term sheet will be signed in the next few days. As a result, founders and investors are spending very little time getting to know each other before entering into long-term business contracts.</p>\n<p>This is bad news for everyone. Most significantly, founders often give up significant control to people they won’t get along with or even might <a href=\"http://www.sethlevine.com/wp/2011/07/beware-of-asshole-vcs\">end up hating</a>. Having bad investors might not matter if the company executes flawlessly and the financing market stays frothy. But most companies have difficult episodes, and the financing market will eventually return to normal. Sadly, founders with bad investors will likely face punishing down rounds, key employees being indiscriminately fired, and elaborate financial shenanigans engineered to dilute founders and seed investors.</p>\n<p>“It’s only when the tide goes out that you know who’s been swimming naked.” Warren Buffet likes to say this about investors, but it applies to founders as well. Taking on a new major investor should be treated with the same gravitas as taking on a new cofounder. You can’t do it in less time than it takes to really get to know someone, which is usually weeks or months. Quick financings might seem attractive but are actually fraught with risks.</p>",
      "image": null,
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    },
    {
      "id": "https://cdixon.org/2011/07/26/the-tragedy-of-the-anticommons",
      "title": "The tragedy of the anticommons",
      "description": "Seems very relevant to today’s music industry, and potentially relevant to the internet/software industry in the near future as patent…",
      "url": "https://cdixon.org/2011/07/26/the-tragedy-of-the-anticommons",
      "published": "2011-07-26T00:00:00.000Z",
      "updated": "2011-07-26T00:00:00.000Z",
      "content": "<p>Seems very relevant to today’s music industry, and potentially relevant to the internet/software industry in the near future as patent lawsuits become increasingly common:</p>\n<blockquote>\n<p>The commons leads to overuse and destruction; the anticommons leads to underuse and waste. In the cultural sphere, ever tighter restrictions on copyright and fair use limit artists’ abilities to sample and build on older works of art. In biotechnology, the explosion of patenting over the past twenty-five years—particularly efforts to patent things like gene fragments—may be retarding drug development, by making it hard to create a new drug without licensing myriad previous patents. Even divided land ownership can have unforeseen consequences. Wind power, for instance, could reliably supply up to twenty per cent of America’s energy needs—but only if new transmission lines were built, allowing the efficient movement of power from the places where it’s generated to the places where it’s consumed. Don’t count on that happening anytime soon. Most of the land that the grid would pass through is owned by individuals, and nobody wants power lines running through his back yard.</p>\n</blockquote>\n<p>From <a href=\"http://www.newyorker.com/talk/financial/2008/08/11/080811ta_talk_surowiecki\">The Permission Problem</a>, James Surowiecki, The New Yorker Magazine.  A very worthwhile read.</p>",
      "image": null,
      "media": [],
      "authors": [],
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    },
    {
      "id": "https://cdixon.org/2011/07/16/thomas-jefferson-on-patents",
      "title": "Thomas Jefferson on Patents",
      "description": "If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an…",
      "url": "https://cdixon.org/2011/07/16/thomas-jefferson-on-patents",
      "published": "2011-07-16T00:00:00.000Z",
      "updated": "2011-07-16T00:00:00.000Z",
      "content": "<blockquote>\n<p>If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.</p>\n<p>That ideas should freely spread from one to another over the globe, for the moral and mutual instruction of man, and improvement of his condition, seems to have been peculiarly and benevolently designed by nature, when she made them, like fire, expansible over all space, without lessening their density in any point, and like the air in which we breathe, move, and have our physical being, incapable of confinement or exclusive appropriation. Inventions then cannot, in nature, be a subject of property.</p>\n<p>Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility, but this may or may not be done, according to the will and convenience of the society, without claim or complaint from anybody. Accordingly, it is a fact, as far as I am informed, that England was, until we copied her, the only country on earth which ever, by a general law, gave a legal right to the exclusive use of an idea. In some other countries it is sometimes done, in a great case, and by a special and personal act, but, generally speaking, other nations have thought that these monopolies produce more embarrassment than advantage to society; and it may be observed that the nations which refuse monopolies of invention, are as fruitful as England in new and useful devices.</p>\n</blockquote>\n<p>- Letter from <a href=\"http://press-pubs.uchicago.edu/founders/documents/a1_8_8s12.html\">Thomas Jefferson to Isaac McPherson</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/06/19/foundermarket-fit",
      "title": "Founder/market fit",
      "description": "An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen calls…",
      "url": "https://cdixon.org/2011/06/19/foundermarket-fit",
      "published": "2011-06-19T00:00:00.000Z",
      "updated": "2011-06-19T00:00:00.000Z",
      "content": "<p>An extremely useful concept that has grown popular among startup founders is what eminent entrepreneur and investor Marc Andreessen <a href=\"http://web.archive.org/web/20070701074943/http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html\">calls</a> “product/market fit”, which he defines as “being in a good market with a product that can satisfy that market”. Andreessen argues persuasively that product/market fit is “the only thing that matters for a new startup” and that ”the life of any startup can be divided into two parts: <em>before product/market fit</em> and <em>after product/market fit</em>.”</p>\n<p>But it takes time to reach product/market fit. Founders have to choose a market long before they have any idea whether they will reach product/market fit. In my opinion, the best predictor of whether a startup will achieve product/market fit is whether there is what David Lee <a href=\"http://techcrunch.com/2011/06/03/svangel-peak-age-old-entrpreneurs/\">calls</a> “founder/market fit”. Founder/market fit means the founders have a deep understanding of the market they are entering, and are people who “personify their product, business and ultimately their company.”</p>\n<p>A few points about founder/market fit:</p>\n<p><em>Founder/market fit can be developed through experience</em>: No one is born with knowledge of the education market, online advertising, or clean energy technologies. You can learn about these markets by building test projects, working at relevant companies, or simply doing extensive research. I have a friend who decided to work in the magazine industry. He discovered some massive inefficiencies and built a very successful technology company that addressed them. My <a href=\"http://foundercollective.com\">Founder Collective</a> partners Eric Paley and Micah Rosenbloom spent many months/years becoming experts in the dental industry in order to create a breakthrough <a href=\"http://www.flybridge.com/portfolio/Brontes\">dental technology company</a>.</p>\n<p><em>Founder/market fit is frequently overestimated</em>: One way to have a deep understanding of your market is to develop product ideas that solve problems you personally have. This is why Paul Graham <a href=\"http://www.paulgraham.com/organic.html\">says</a> that “the best way to come up with startup ideas is to ask yourself the question: what do you wish someone would make for you?”  This is generally an excellent heuristic, but can also lead you astray. It is easy to think that because you like food you can create a better restaurant. It is an entirely different matter to rent and build a space, market your restaurant, manage inventory, inspire your staff, and do all the other difficult things it takes to create a successful restaurant. Similarly, just because you can imagine a website you’d like to use, doesn’t mean you have founder/market fit with the consumer internet market.</p>\n<p><em>Founders need to be brutally honest with themselves.</em> Good entrepreneurs are willing to make long lists of things at which they are have no ability. I have never built a sales team. I don’t manage people well. I have no particular knowledge of what college students today want to do on the internet. I could go on and on about my deficiencies. But hopefully being aware of these things helps me focus on areas where I can make a real contribution and also allows me to recruit people that complement those deficiencies.</p>\n<p>Most importantly, founders should realize that a startup is an endeavor that generally lasts many years. You should fit your market not only because you understand it, but because you love it — and will continue to love it as your product and market change over time.</p>",
      "image": null,
      "media": [],
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      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/06/16/allocation-investing-and-the-social-premium",
      "title": "Allocation investing and the social premium",
      "description": "The rational way to invest in something – a startup, public company, venture capital firm, real estate project, etc. – is to base your…",
      "url": "https://cdixon.org/2011/06/16/allocation-investing-and-the-social-premium",
      "published": "2011-06-16T00:00:00.000Z",
      "updated": "2011-06-16T00:00:00.000Z",
      "content": "<p>The rational way to invest in something – a startup, public company, venture capital firm, real estate project, etc. – is to base your decision on an assessment of its fundamental value. The most common way to do this is to try to predict the asset’s <a href=\"http://en.wikipedia.org/wiki/Discounted_cash_flow\">future profits</a>. In reality, many of the largest pools of capital in the world – pensions, endowments, and mutual funds – think in terms of “allocations.” This means they start with a model for how to distribute their funds across a set of dimensions, including asset classes, industries, and geographies. This allocation mentality is based partly on prevalent academic theories (the “<a href=\"http://en.wikipedia.org/wiki/Capital_asset_pricing_model\">Capital Asset Pricing Model</a>” or “CAPM”) and partly on the success of certain famous money managers (the “<a href=\"http://en.wikipedia.org/wiki/David_F._Swensen#The_Yale_.28or_Endowment.29_Model\">Yale Model</a>“).</p>\n<p>Allocation investing has a number of perverse effects on financial markets. For example, in the 80s and 90s venture capital was deemed to be a successful, independent asset class. As a result, many funds decided to allocate some portion of their capital to VC. These pools of capital were so large that they caused the VC industry to grow orders of magnitude larger – many say <a href=\"http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/\">larger than it should be</a>. In turn, this led to many bad venture investments that drove down returns in the industry (these problems were further exacerbated by the <a href=\"http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/\">fee structure of VC</a> that encouraged funds to get large and rapidly “put money to work”).</p>\n<p>Another perverse effect caused by allocation investing happens in public stock markets when investors decide to allocate a portion of their funds to specific sectors. I recently heard some money managers saying they wanted to allocate portions of their funds to “social media”. Combining this “allocated” demand with a constrained supply (due to the <a href=\"http://www.businessweek.com/news/2011-06-09/linkedin-inspired-low-float-ipos-threaten-to-bring-back-bubble.html\">small float</a> of many of these IPOs) can lead to prices that are disconnected from fundamental values. In this scenario, supply will try to match demand, which means mediocre social media companies will go public and non-social media companies will reposition themselves as social media companies or acquire social media companies. They will be chasing the “social premium.”</p>\n<p>We saw this happen in the 90s with the rush of companies to reposition themselves as internet companies. In that case, many non-professional investors ended up owning shares in crappy companies when the music stopped. The primary difference now is that the flagship companies like LinkedIn and Facebook have excellent fundamentals. Hopefully this time the market will be discerning and value investing will win out over allocation investing.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/06/09/notes-on-raising-seed-financing",
      "title": "Notes on raising seed financing",
      "description": "Last night I taught a class via Skillshare (disclosure: Founder Collective is an investor) about how to raise a seed round.  After a long…",
      "url": "https://cdixon.org/2011/06/09/notes-on-raising-seed-financing",
      "published": "2011-06-09T00:00:00.000Z",
      "updated": "2011-06-09T00:00:00.000Z",
      "content": "<p>Last night I taught a <a href=\"http://www.skillshare.com/Planting-the-Seed-How-to-Raise-Your-First-Round/1124114253/1124114253\">class</a> via <a href=\"http://www.skillshare.com\">Skillshare</a> (disclosure: <a href=\"http://foundercollective.com\">Founder Collective</a> is an investor) about how to raise a seed round.  After a long day I wasn’t particularly looking forward to it, but it turned out to be a lot of fun and I stayed well past the scheduled end time.  I think it worked well because the audience was full of people actually starting companies, and they came well prepared (they were all avid readers of tech blogs and had seemed to have done a lot of research).</p>\n<p>I sketched some notes for the class which I’m posting below. I’ve written ad nauseum on this blog (see <a href=\"http://cdixon.org/contents\">contents</a> page) about venture financing so hadn’t planned to blog more on the topic.  But since I wrote up these notes already, here they are.</p>\n<p>***</p>\n<p>1. Best thing is to either never need to raise money or to raise money after you have a product, users, or customers.  Also helps a lot if you’ve started a successful business before or came from a senior position at a successful company.</p>\n<p>2. Assuming that’s not the case, it is very difficult to raise money, even when people (e.g. press) are saying it’s easy and “everyone is getting funded.”</p>\n<p>3. Fundraising is an extremely momentum-based process.  Hardest part is getting “anchor” investors.  These are people or institutions who commit significant capital (>$100K) and are respected in the tech community or in the specific industry you are going after (e.g. successful fashion people investing in a fashion-related startup).</p>\n<p>4. Investors like to wait (“flip another card over”) while you want to hurry. Lots of investors like to wait until other investors they respect commit. Hence a sort of Catch-22. As Paul Graham <a href=\"http://www.paulgraham.com/hiresfund.html\">says</a>:</p>\n<blockquote>\n<p>By far the biggest influence on investors’ opinions of a startup is the opinion of other investors. There are very, very few who simply decide for themselves. Any startup founder can tell you the most common question they hear from investors is not about the founders or the product, but “who else is investing?”</p>\n</blockquote>\n<p>5. Network like crazy:</p>\n<ul>\n<li>Make sure you have good Google results (this is your first impression in tech). Have a good bio page (on your blog, linkedin and about.me) and blog/tweet to get Google juice.</li>\n<li>Get involved in your local tech community.  Join meetups. Help organize events.  Become a hub in the local tech social graph.</li>\n<li>Meet every entrepreneur and investor you can.  Entrepreneurs tend to be more accessible & sympathetic and can often make warm intros to investors.</li>\n<li>Avoid anyone who asks you to pay for intros (even indirectly like committing to a law firm in exchange for intros).</li>\n<li>Don’t be afraid to (politely) overreach and <a href=\"http://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough/\">get rejected</a>.</li>\n</ul>\n<p>6. Get smart on the industry:</p>\n<ul>\n<li>Read TechCrunch, Business Insider, GigaOm, Techmeme, HackerNews, Fred Wilson’s blog, Mark Suster’s blog, etc (and go back and read the archives).  Follow investor/startup people on Twitter (Sulia has some good lists to get you started <a href=\"http://www.sulia.com/channel/venture-capital/\">here</a> and <a href=\"http://www.sulia.com/channel/startups/\">here</a>).</li>\n<li>Research every investor and entrepreneur extensively before you meet them. Entrepreneurs love it when you’ve used their product and give them constructive feedback.  It’s like bringing a new parent a kid’s toy. Investors like it when you are smart about their portfolio and interests.</li>\n</ul>\n<p>6. How much to raise?  Enough to hit an accretive milestone plus some buffer. (<a href=\"http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/\">more</a>)</p>\n<p>7. What terms should you look for?  Here are <a href=\"http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/\">ideal terms</a>.  You need to understand all these terms and also the <a href=\"http://cdixon.org/2010/08/31/converts-versus-equity-deals/\">difference between convertible notes and equity</a>.  More generally, it’s a good idea to spend a few days getting smart about startup-related law – this is a <a href=\"http://www.amazon.com/Entrepreneurs-Guide-Business-Law/dp/0324042914\">good book</a> to start with.</p>\n<p>8. Types of capital:  strategic angels (industry experts), non-strategic angels (not industry experts, not tech investors), tech angels, seed funds, VCs.</p>\n<ul>\n<li>VCs can be less valuation sensitive and have deep pockets but are sometimes buying options so come with some risks (<a href=\"http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/\">more</a>).</li>\n<li>Industry experts can be really nice complements to tech investors (especially in b2b companies).  (<a href=\"http://cdixon.org/2009/11/03/how-to-select-your-angel-investors/\">more</a>)</li>\n<li>Non-strategic angels (rich people with no relevant expertise) might not help as much but might be more patient and ok with “lifestyle businesses.”</li>\n<li>Tech angels and seed funds tend to be most valuation sensitive but can sometimes make up for it by helping in later financing rounds.</li>\n</ul>\n<p>9. Pitching:</p>\n<ul>\n<li>Have a short slide deck, not a business plan. (<a href=\"http://whohastimeforthis.blogspot.com/2005/11/how-to-not-write-business-plan.html\">more</a>)</li>\n<li>Pitch yourself first, idea second. (<a href=\"http://cdixon.org/2009/11/14/pitch-yourself-not-your-idea/\">more</a>)</li>\n<li>Pitch the upside, not the mean (<a href=\"http://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean/\">more</a>)</li>\n<li>Size markets using narratives, not numbers (<a href=\"http://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers/\">more</a>)</li>\n</ul>\n<p>10.  Cofounders: they are good if for no other reason than moral support. Find ones that complement you. Decide on responsibilities, equity split etc early and document it.  (Legal documents don’t hurt friendships – they preserve them).</p>\n<p>11. Incubators like YC and Techstars can be great.  99% of the people I know who participated in them say it was worth it.</p>\n<p>12. To investors, the sexiest word in the English language is “oversubscribed.”  Sometimes it makes tactical sense to start out raising a smaller round than you actually want end up with.</p>",
      "image": null,
      "media": [],
      "authors": [],
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    },
    {
      "id": "https://cdixon.org/2011/05/16/accurate-contrarian-theories",
      "title": "Accurate contrarian theories",
      "description": "When Google released its search engine in 1998, its search results were significantly better than its competitors’. Many people attribute…",
      "url": "https://cdixon.org/2011/05/16/accurate-contrarian-theories",
      "published": "2011-05-16T00:00:00.000Z",
      "updated": "2011-05-16T00:00:00.000Z",
      "content": "<p>When Google released its search engine in 1998, its search results were significantly better than its competitors’. Many people attribute Google’s success to this breakthrough technology. But there was another key reason:  a stubborn refusal to accept the orthodox view at the time that “stickiness” was crucial to a website’s success. Here’s what happened when they tried to sell their technology to Excite (a leading portal/search engine in the late 90s):</p>\n<blockquote>\n<p>[Google] was too good. If Excite were to host a search engine that instantly gave people information they sought, [Excite's CEO] explained, the users would leave the site instantly. Since his ad revenue came from people staying on the site—“stickiness” was the most desired metric in websites at the time—using Google’s technology would be counterproductive. “He told us he wanted Excite’s search engine to be 80 percent as good as the other search engines,” … and we were like, “Wow, these guys don’t know what they’re talking about.” - Steven Levy, <a href=\"http://www.amazon.com/Plex-Google-Thinks-Works-Shapes/dp/1416596585\">In The Plex</a> (p. 30)</p>\n</blockquote>\n<p>Famed investor/entrepreneur Reid Hoffman says world-changing startups need to be premised on “<a href=\"http://www.kydoh.com/seeking-returns-as-an-accurate-contrarian-theorist/\">accurate contrarian theories</a>.”  In Google’s case, it was true but non-contrarian to think users would prefer a better search engine. What was true and contrarian was to think it made <a href=\"http://cdixon.org/2010/03/25/stickiness-is-bad-for-business/\">business sense</a> to get users off their site as quickly as possible. The business model to support this contrarian theory wouldn’t emerge until years later, and by then Google would already have become the world’s most popular search engine.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/05/12/options",
      "title": "Options",
      "description": "The financial term “derivative“ refers to a security whose value is a function of another security such as a stock or bond.  The most common…",
      "url": "https://cdixon.org/2011/05/12/options",
      "published": "2011-05-12T00:00:00.000Z",
      "updated": "2011-05-12T00:00:00.000Z",
      "content": "<p>The financial term “<a href=\"http://en.wikipedia.org/wiki/Derivative_(finance)\">derivative</a>“ refers to a security whose value is a function of another security such as a stock or bond.  The most common types of derivatives are futures – the <em>obligation</em> to buy a security at a future date at pre-agreed upon price – and options – the <em>right</em> to buy something at a future date at pre-agreed upon price.</p>\n<p>In theory, the primary societal purpose of derivates is for businesses to hedge against “<a href=\"http://en.wikipedia.org/wiki/Exogeny\">exogenous</a>” risks.  For example. Southwest Airlines is famously prudent about buying futures on oil to mitigate the effect of fluctuating oil prices on their core business.</p>\n<p>In practice, most derivatives are bought and sold by speculators. One of the first speculators was a philosopher names Thales, who Aristotle described in his book _<a href=\"http://classics.mit.edu/Aristotle/politics.mb.txt\">Politics</a> (_Book 1, Part XI):</p>\n<blockquote>\n<p>There is the anecdote of Thales the Milesian and his financial device, which involves a principle of universal application, but is attributed to him on account of his reputation for wisdom. He was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. <em>Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.</em></p>\n</blockquote>\n<p>Valuing options was a mystery until 1973 when the <a href=\"http://en.wikipedia.org/wiki/Black%E2%80%93Scholes\">Black-Scholes</a> model was invented. The main practical outcome of this model was the idea that the value of an option was determined mostly by the volatility of the underlying security.</p>\n<p>One way to understand the important of volatility is to think of options as the opposite of insurance policies. Suppose you are selling insurance on houses in one region that is prone to catastropic events and another that isn’t. Rational insurers would price insurance policies higher in the catastrophe-prone areas.</p>\n<p>Startups are inherently very volatile – their price can increase or decrease dramatically in short periods of time. Having an option on a startup is the economic opposite of selling insurance in a catastrophe-prone area.</p>\n<p>The US tax system has some rules related to startup options.  The first rule is that there is a special class of options called ISO options that can be granted to employees. ISO options are tax exempt until the options are exercised, which allows employees to receive them and not be liable for taxes until they actually realize cash gains. This rule only applies if the options are assigned a strike price equal to or greater than the “fair market value” of the company’s common shares. The fair market value is normally assessed by an outside valuation firm (a so-called 409A valuation) and usually ends up being significantly lower than the last round VC valuation (a rule of thumb for early-stage companies is the strike price will be approximately 20% of the last VC valuation).</p>\n<p>When you are granted options in a startup there are a couple of important things to keep in mind:</p>\n<ol>\n<li>You should know your <a href=\"http://cdixon.org/2009/08/28/the-one-number-you-should-know-about-your-equity-grant/\">percentage ownership</a> of the company’s “fully diluted” outstanding shares (number of shares of the company including the option pool).</li>\n<li>You should understand that if you leave the company, you normally have 90 days to “exercise” the options (purchase the shares you have the right to buy) before you forfeit your options. Normally the company has no obligation to inform you of this possible forfeiture, and in fact the standard practice is to hope the employee forgets and loses the options.</li>\n<li>You should know the “preferences” on the company.  The preferences normally equals the amount of money raised. If the company sells for near or less than that number the common shareholders, and hence the employees (who own options on common shares), will receive little or no money.</li>\n</ol>\n<p>The strike price of the options is somewhat important but, if you study options theory, not nearly as important as the volatility of the underlying stock. Financially, what matters most is having a reasonable percentage of options in a company with lots of volatility (and hopefully a stock price that has an upward slope).</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/05/04/best-practices-for-raising-a-vc-round",
      "title": "Best practices for raising a VC round",
      "description": "Having raised a number of VC rounds personally and observed many more as an investor or friend, I’ve come to think there are a set of…",
      "url": "https://cdixon.org/2011/05/04/best-practices-for-raising-a-vc-round",
      "published": "2011-05-04T00:00:00.000Z",
      "updated": "2011-05-04T00:00:00.000Z",
      "content": "<p>Having raised a number of VC rounds personally and observed many more as an investor or friend, I’ve come to think there are a set of dominant best practices that entrepreneurs should follow.</p>\n<p>1. Valuation: Come up with what minimum valuation you’d be happy with but never share that number with any investor.  If the number is too low, you’ve set a low ceiling. If your number is too high, you scare people off. Just like on eBay, you only get to your desired price by starting lower and getting a competitive process going. When people ask about price, simply tell them your last round post-money valuation and talk about the progress you’ve made since then.</p>\n<p>2. Never tell VCs the names of other VCs that are interested.  Reasons: 1) if you are overplaying your hand that could send a negative signal.  Most VCs know each other and talk all the time. 2) it is possible they’ll get together and offer a two-handed deal in which case you have less competition.</p>\n<p>3. I think the optimal number of VCs to talk to seriously is about 5.  That is usually enough to get a sense of market but not so much that you get overwhelmed.  You should pick these VCs carefully – this is where trusted, experienced advisors are critical.</p>\n<p>4. If there is a VC you really like, have a “buy it now price” and if they hit that valuation (and other terms are <a href=\"http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/\">clean</a>) do the deal.  Otherwise, say you’d like to “run a process” and include them in it.</p>\n<p>5. Try to set timelines that are definite enough that investors feel some pressure to move but not so definite that you look dumb if you don’t have a term sheet by then.  (Investors have an incentive to wait – “to flip another card over” as they say – whereas entrepreneurs want to get the financing over with asap). Depending on where you are in the process, say things like “we’d like to wrap this up in the next few weeks.”</p>\n<p>6. Once you start pitching, the clock starts ticking on your deal looking “tired.”  I’d say from your first VC meeting you have about a month before this risk kicks in.  You could have a great company but if investors get a sense that other investors have passed, they assume something is wrong with your company and/or they can wait around and invest later at their leisure.</p>\n<p>7. The earlier stage your company is the more you should weight quality of investors vs valuation.  For a Series A, you are truly partnering with the VCs.  You should consider taking a lower valuation from a top tier firm over a non top tier firm (but probably any discount over 20% is too much). If you are doing a post-profitable “momentum round” I’d just optimize for valuation and deal terms.</p>\n<p>8. Term sheets:  talk about terms in detail over the phone.  Only accept a term sheet once you have decided that if it matches what was described you are prepared to sign it.  After sending a term sheet VCs get worried you’ll shop it and usually want it signed in 24 hours.</p>\n<p>9. Get to know the VCs.  Talk to their other portfolio companies, read their blogs, call references, etc.  You will be in business with this person for (hopefully) a long time.</p>\n<p>10. Timing.  While it’s ideal to raise money once you hit the milestones you set out initially, you also need to be opportunistic.  Right now, for example, seems to be a really good time to raise a VC round.  You could make a ton of progress over the next 6 months but the market could tank and end up in a worse place than you would be today.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/04/26/there-are-two-kinds-of-people-in-the-world",
      "title": "There are two kinds of people in the world",
      "description": "You’ve either started a company or you haven’t.  ”Started” doesn’t mean joining as an early employee, or investing or advising or helping…",
      "url": "https://cdixon.org/2011/04/26/there-are-two-kinds-of-people-in-the-world",
      "published": "2011-04-26T00:00:00.000Z",
      "updated": "2011-04-26T00:00:00.000Z",
      "content": "<p>You’ve either started a company or you haven’t.  ”Started” doesn’t mean joining as an early employee, or investing or advising or helping out.  It means starting with no money, no help, no one who believes in you (except perhaps your closest friends and family), and building an organization from a borrowed cubicle with credit card debt and nowhere to sleep except the office. It almost invariably means being dismissed by arrogant investors who show up a half hour late, totally unprepared and then instead of saying “no” give you non-committal rejections like “we invest at later stage companies.” It means looking prospective employees in the eyes and convincing them to leave safe jobs, quit everything and throw their lot in with you.  It means having pundits in the press and blogs who’ve never built anything criticize you and armchair quarterback your every mistake. It means lying awake at night worrying about running out of cash and having a constant knot in your stomach during the day fearing you’ll disappoint the few people who believed in you and validate your smug doubters.</p>\n<p>I don’t care if you succeed or fail, if you are Bill Gates or an unknown entrepreneur who gave everything to make it work but didn’t manage to pull through. The important distinction is whether you risked everything, put your life on the line, made commitments to investors, employees, customers and friends, and tried – against all the forces in the world that try to keep new ideas down – to make something new.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/04/24/inferring-intent-on-mobile-devices",
      "title": "Inferring intent on mobile devices",
      "description": "[Google CEO Eric] Schmidt said that while the Google Instant predictive search technology helps shave an average of 2 seconds off users…",
      "url": "https://cdixon.org/2011/04/24/inferring-intent-on-mobile-devices",
      "published": "2011-04-24T00:00:00.000Z",
      "updated": "2011-04-24T00:00:00.000Z",
      "content": "<blockquote>\n<p>[Google CEO Eric] Schmidt said that while the Google Instant predictive search technology helps shave an average of 2 seconds off users’ queries, the next step is “autonomous search.” This means Google will conduct searches for users without them having to manually conduct searches. As an example, Schmidt said he could be walking down the streets of San Francisco and receive information about the places around him on his mobile phone without having to click any buttons. <strong>“Think of it as a serendipity engine,</strong>” Schmidt said. “<strong>Think of it as a new way of thinking about traditional text search where you don’t even have to type.</strong>”  - <a href=\"http://www.eweek.com/c/a/Search-Engines/Google-CEO-Schmidt-Pitches-Autonomous-Search-Flirts-with-AI-259984/\">eWeek</a></p>\n</blockquote>\n<p>When users type phrases into Google, they are searching, but also expressing intent. To create the “serendipity engine” that Eric Schmidt envisions would require a system that infers users’ intentions.</p>\n<p>Here are some of the input signals a mobile device could use to infer intent.</p>\n<p><strong>Context</strong></p>\n<p>Location: It is helpful to break location down into layers, from the most concrete to the most abstract:</p>\n<ol>\n<li>lat / long – raw GPS coordinates</li>\n<li>venue – mapping of lat / long coordinates to a venue.</li>\n<li>venue relationship to user – is the user at home, at a friend’s house, at work, in her home city etc.</li>\n<li>user movement – locations the user has visited recently.</li>\n<li>inferred user activity – if the user is at work during a weekday, she is more likely in the midst of work. If she is walking around a shopping district on a Sunday away from her home city, she is more likely to want to buy something. If she is outside, close to home, and going to multiple locations, she is more likely to be running erands.</li>\n</ol>\n<p>Weather: during inclement weather user is less likely to want to move far and more likely to prefer indoor activities.</p>\n<p>Time of day & date: around mealtimes the user is more likely to be considering what to eat. On weekends the user is more likely to be doing non-work activities. Outside at night, the user is more likely to be looking for bar/club/movie etc.  Time of days also lets you know what venues are open & closed.</p>\n<p>News events near the user: they are at the pro sporting event, an accident happened nearby, etc.</p>\n<p>Things around the user: knowing not just venues, but activities (soccer game), inventories (Madden 2011 is in stock at BestBuy across the street), events (concert you might like is nearby), etc.</p>\n<p>These are just a few of the contextual signals that could be included as input signals.</p>\n<p><strong>Taste</strong></p>\n<p>The more you know about users’ tastes, the better you can infer their intent. It is silly to suggest a great Sushi restaurant to someone who dislikes Sushi. At <a href=\"http://hunch.com\">Hunch</a> we model taste with a giant matrix. One axis is every known user (the system is agnostic about which ID system – it could be Facebook, Twitter, a mobile device, etc), the other axis is things, defined very broadly: product, person, place, activity, tag etc.  In the cells of the matrix are either the known or predicted affinity between the person and thing.  (Hunch’s matrix currently has about 500M people, 700M items, and 50B known affinity points).</p>\n<p><strong>Past expressed intent</strong></p>\n<p>- App actions:  e.g. user just opened Yelp, so is probably looking for a place to go.</p>\n<p>- Past search actions: user’s recent (desktop & mobile) web searches could be indications of later intent.</p>\n<p>- Past “saved for later” actions:  user explicitly saved something for later e.g. using Foursquare’s “to do” functionality.</p>\n<p><strong>Behavior of other people</strong></p>\n<p>- Friends:  The fact that a user’s friends are all gathered nearby might make her want to join them.</p>\n<p>- Tastemates: That someone with similar tastes just performed some actions suggests the user is more likely to want to perform the same actions.</p>\n<p>- Crowds: The user might prefer to go toward or avoid crowds, depending on mood and taste.</p>\n<p>How should an algorithm weight all these signals? It is difficult to imagine this being done effectively anyway except empirically through a feedback loop. So the system suggests some intent, the user gives feedback, and then the system learns by adjusting signal weightings and gets smarter.  With a machine learning system like this it is <a href=\"http://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem/\">usually impossible</a> to get to 100% accuracy, so the system would need a “fault tolerant” UI.  For example, pushing suggestions through modal dialogs could get very annoying without 100% accuracy, whereas making suggestions when the user opens an application or through subtle push alerts could be non-annoying and useful.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/04/20/financing-risk",
      "title": "Financing risk",
      "description": "Startups that raise seed funding face the risk of not being able to raise additional money. This is what is sometimes known as “financing…",
      "url": "https://cdixon.org/2011/04/20/financing-risk",
      "published": "2011-04-20T00:00:00.000Z",
      "updated": "2011-04-20T00:00:00.000Z",
      "content": "<p>Startups that raise seed funding face the risk of not being able to raise additional money. This is what is sometimes known as “financing risk.”</p>\n<p>If you are a company that just raising seed funding, financing risk should be top of mind.  Here are some tips for mitigating it:</p>\n<p>- <em>Start by thinking about the next round of financing and work backwards</em>.  What milestones do you have to hit to get VC funded at an upround?  If you are a consumer internet company, the milestone probably involves getting a certain number of users.  If you are building hardcore tech, it probably means building a working prototype.  Basically you want to take the main risks that exist at the seed stage and eliminate as many as you can. A good way to discover what milestones you need to hit is to talk to as many VCs as possible. Experienced seed investors can also advise you on this.</p>\n<p>- <em><a href=\"http://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise/\">Raise enough seed money</a></em>. How much money will it take to hit those milestones?  A good rule of thumb is 18 months – 3 months to get going, 12 months to execute, 3 more months to raise VC.  But it really depends on the specifics of the milestones, your operational plan, etc. which is why you need to figure those out first.</p>\n<p>- <em>Preserve cash</em>.  Pay only subsistance wages but be generous with equity for great people (this also provides a screen for hiring people with the right startup mindset).  Keep legal fees low (try to keep incorporation and financing costs to $10K or lower – this is one reason I prefer <a href=\"http://cdixon.org/2010/08/31/converts-versus-equity-deals/\">convertible notes</a>).  Act like a <a href=\"http://cdixon.tumblr.com/post/311546950/things-startups-do-and-dont-need\">scrappy startup</a>.</p>\n<p>A rule of thumb is a successful Series A is one that is led by quality VCs with a pre-money at least 2x the post-money of the seed round.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/04/17/apple-and-the-tv-industry",
      "title": "Apple and the TV industry",
      "description": "The TV industry is a major segment of the consumer electronics industry and Apple is the leading consumer electronics company in the world…",
      "url": "https://cdixon.org/2011/04/17/apple-and-the-tv-industry",
      "published": "2011-04-17T00:00:00.000Z",
      "updated": "2011-04-17T00:00:00.000Z",
      "content": "<p>The TV industry is a major segment of the consumer electronics industry and Apple is the leading consumer electronics company in the world. Thus far Apple has entered the TV market with a stand-alone device, Apple TV. There has been <a href=\"http://www.marco.org/2011/04/16/rumored-apple-hdtv\">speculation</a> about whether Apple might enter the TV market by creating an actual TV. The most convincing objections to that idea cite the unfavorable industry structure: the power of the cable operators, the low margins on TVs, the infrequency of people buying new TVs, etc.</p>\n<p>I thought it would be interesting to go back and look at the reasoning analysts used to predict the failure of the iPhone before its launch in 2007. Some <a href=\"http://news.cnet.com/The-Apple-phone-flop/2010-1041_3-6141607.html\">predicted</a> it would fail because the other handset makers would successfully compete with Apple:</p>\n<blockquote>\n<p>The iPod also conquered the problem of small screens and cheesy navigation. With its newfound popularity, the company was also able to get music publishers to agree to its terms. Unfortunately for Apple, problems like that don’t exist in the handset business. Cell phones aren’t clunky, inadequate devices. Instead, they are pretty good. Really good. Why do you think they call it a Crackberry? Because the lumpy design and confusing interface of the device is causing people to break into cars? No, it’s because people are addicted to it. Samsung has scoured the world’s design schools and hired artists on three continents to keep its phones looking good. Motorola has revived its fortunes with design. KDDI, a Japanese carrier, has a design showcase in the teen shopping area of Tokyo just to be close to trends. And Sharp doesn’t skimp when it comes to putting LCD TVs on its phones. <strong>Apple, in other words, won’t be competing against rather doltish, unstylish companies like the old Compaq. The handset companies move pretty quick and put out new models every few weeks.</strong> [emphasis added]</p>\n</blockquote>\n<p>Other analysts <a href=\"http://www.theregister.co.uk/2006/12/23/iphone_will_fail/\">predicted</a> Apple’s phone was doomed because of the mobile phone industry structure – mobile operators commanded so much power via subsidies, retail distribution etc:</p>\n<blockquote>\n<p>Apple will launch a mobile phone in January, and it will become available during 2007. It will be a lovely bit of kit, a pleasure to behold, and its limited functionality will be easy to access and use. The Apple phone will be exclusive to one of the major networks in each territory and some customers will switch networks just to get it, but not as many as had been hoped. <strong>As customers start to realise that the competition offers better functionality at a lower price, by negotiating a better subsidy, sales will stagnate.</strong> After a year a new version will be launched, but it will lack the innovation of the first and quickly vanish. The only question remaining is if, when the iPod phone fails, it will take the iPod with it.  [emphasis added]</p>\n</blockquote>\n<p>I am not citing these analysts to mock them. Hindsight is 20/20 and it was quite reasonable at the time to assume that a new phone from Apple would confront the same issues that new phones from other companies confronted. What Apple ended up doing, however, was creating a phone that was so incredibly desirable to consumers that it <a href=\"http://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry/\">completely restructured</a> the industry, causing a massive shift of power away from the carriers.</p>\n<p>Regarding the TV industry, here is what Steve Jobs <a href=\"http://d8.allthingsd.com/20100601/steve-jobs-session/\">said</a> last year at AllThingsD:</p>\n<blockquote>\n<p><strong>Q: Is it time to throw out the interface for TV? Does television need a new human interface.</strong></p>\n<p>A: The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us… ask Google in a few months. The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there’s no way to do that….The TV is going to lose until there’s a viable go-to-market strategy. That’s the fundamental problem with the industry. It’s not a problem with the technology, it’s a problem with the go-to-market strategy….I’m sure smarter people than us will figure this out, but that’s why we say Apple TV is a hobby.</p>\n</blockquote>\n<p>So Jobs doesn’t believe an “additional box” is a viable strategy for seriously entering the TV industry. This leaves three places to enter: 1) integrating into set top boxes, 2) integrating into other TVs, or 3) Apple creating its own TV. Regarding #1, the last thing the cable operators want is for internet-delivered programming that bypasses their cable channels to become widespread – they see that as the fast track to become a dumb pipe. Re #2: This just seems very unlike Apple – the most vertically integrated company in tech, and famous for wanting to control every aspect of the product and user experience.</p>\n<p>Re #3, let’s imagine Apple develops a TV that is as groundbreaking as the iPhone was. The biggest problem “smart TVs” have today is that they need clunky IR transmitters to control set top boxes because the cable operators won’t willingly interoperate. So a new Apple TV would have to drum up such incredible consumer demand that the operators would feel compelled to support it. This does indeed seem harder in the TV than in the mobile industry. At least in the US you had 4 nationwide mobile operators at the time of the iPhone launch. In TV, consumers normally have at most two real choices for traditional cable programming – cable and satellite – and two real choices for two-way internet – cable and DSL/FIOS.</p>\n<p>Perhaps Apple won’t enter the market due to its structure. But that didn’t stop them in mobile phones where the structure was similarly difficult. The mistake analysts made about the iPhone was to assume the current industry structure would be sustained after Apple’s entry. I’d be wary of making the same assumption about the TV industry.</p>",
      "image": null,
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    },
    {
      "id": "https://cdixon.org/2011/04/12/showing-up",
      "title": "Showing up",
      "description": "Mark Twain famously quipped that “80 percent of life is showing up.” Running a startup, I’d say it’s more like 90 percent. For example, I…",
      "url": "https://cdixon.org/2011/04/12/showing-up",
      "published": "2011-04-12T00:00:00.000Z",
      "updated": "2011-04-12T00:00:00.000Z",
      "content": "<p>Mark Twain famously quipped that “80 percent of life is showing up.” Running a startup, I’d say it’s more like 90 percent. For example, I frequently hear from founders how it’s hard to recruit programmers. It is indeed hard. But great programmers are out there, and can be found in places where other people simply aren’t showing up.</p>\n<p>Back in 2005 when I was starting SiteAdvisor with <a href=\"http://www.tompinckney.com/\">Tom Pinckney</a> (one of my cofounders at my last two startups and <a href=\"http://cdixon.posterous.com/mit-is-a-national-treasure\">non-graduate of high school</a>) we were trying to recruit great programmers. At the time, startups were certainly not the hot thing, especially on the East Coast. We were based in Boston so decided to spend time at MIT where we figured there must be smart programmers. We went to places like the Media Lab and basically just sat ourselves down at lunch counters and awkwardly introduced ourselves: “Hi, my name is Chris Dixon and this is Tom Pinckney and we are starting a company and would love to talk to you about it.” Most students ignored us or thought we were annoying. I remember one student staring at us quizzically saying “startups still exist?” Most of our trips were fruitless. At one point after a failed trip we were on the Redline back to our office in downtown Boston and joked, depressingly, that we felt so out of place that people looked at us like time travelers from the dot-com bubble.</p>\n<p>Our first breakthough came after a series of trips when a particularly talented programmer/designer named <a href=\"http://larifari.org/\">Hugo Liu</a> re-approached us and said something like “hey, actually I thought about it and your idea doesn’t suck.” Then his friend <a href=\"http://www.linkedin.com/profile/view?id=2104665&authType=NAME_SEARCH&authToken=xHpy&locale=en_US&srchid=6b2a8ef5-cf44-4377-ab54-7557dc9d5472-0&srchindex=1&srchtotal=8&pvs=ps&pohelp=&goback=%2Efps_*1_David_Gatenby_*1_*1_*1_*1_*51_*1_Y_*1_*1_*1_false_1_R_true_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2_*2\">David Gatenby</a> talked to about joining us. We eventually recruited Hugo and David along with a brilliant undergraduate <a href=\"http://mattgattis.com/about/\">Matt Gattis</a>. We had finally broken through. Matt and Hugo now work with us at <a href=\"http://hunch.com\">Hunch</a> along with some of their friends from MIT they brought along.</p>\n<p>People who say recruiting is easy are probably recruiting bad people. People who say recruiting is hard are right. People who say it is impossible just aren’t showing up enough.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/04/10/googles-social-strategy",
      "title": "Google’s social strategy",
      "description": "It is widely believed that Facebook presents a significant competitive threat to Google. Google itself seems to believe this – Larry Page…",
      "url": "https://cdixon.org/2011/04/10/googles-social-strategy",
      "published": "2011-04-10T00:00:00.000Z",
      "updated": "2011-04-10T00:00:00.000Z",
      "content": "<p>It is widely believed that Facebook presents a significant competitive threat to Google. Google itself seems to believe this – Larry Page recently <a href=\"http://www.businessinsider.com/larry-page-just-tied-employee-bonuses-to-the-success-of-the-googles-social-strategy-2011-4\">said</a> that all employees would have their bonuses tied to the success of Google’s social strategy.</p>\n<p><strong>Why does Facebook present a threat to Google?  A few reasons:</strong></p>\n<p>- The utility of Google’s core product – web search – depends on the web remaining fragmented and crawlable.  Facebook has become the primary place web users spend their time and create content, and is mostly closed to Google’s crawlers.</p>\n<p>- Facebook controls a <a href=\"http://blog.buysellads.com/2011/04/are-facebook-ads-a-threat-to-google-ads/\">large percentage</a> of ad impressions and will likely launch an off-Facebook.com display ad network to compete directly with Google’s display ad business (built from its $3.1B <a href=\"http://www.businessweek.com/technology/content/apr2007/tc20070414_675511.htm\">acquisition</a> DoubleClick). It is generally <a href=\"http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/\">thought</a> that display ads will become a larger portion of online advertising spend (versus direct response text link ads) as more brand advertising moves online.</p>\n<p>- There are many other “wildcard” risks – e.g. Facebook competing with Google (and Apple, Paypal etc) in payments, Facebook gaining power on mobile (threatening Android), and the possibility of a greater share of internet <a href=\"http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/\">intent harvesting</a> happening on Facebook through not-yet-released features like a search and/or shopping engine.</p>\n<p>When going after Facebook, Google has at least three key strategic choices to make:</p>\n<p><strong>Strategic choice #1:</strong> Should Google try to make social networking commoditized or new profit center? (For more about what I mean by this, please see <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">this post</a> on Google’s overall strategy and these posts on “commoditizing the complement” <a href=\"http://www.joelonsoftware.com/articles/StrategyLetterV.html\">here</a>, <a href=\"http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/\">here</a> and <a href=\"http://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/\">here</a>).</p>\n<p>The advantage of creating a new social networking profit center is obvious: if you win, you make lots of money. The advantage of commoditizing social networking is that although you forgo the potential direct profits, you open up a wider range of pricing and product options. For example:</p>\n<p>- When you try to commoditize a product, you can offer a product for free that other companies charge for. This is what Google did with Android vs iOS and Google Apps vs Microsoft Office. Of course, making social networking free <em>to users</em> won’t work since Facebook doesn’t directly charge users (I say “directly” because they make money off advertising & payment commissions, among other ways). However reducing the cost to zero for 3rd-party developers like Zynga who have to pay Facebook large commissions would entice them toward a Google platform (note that, not coincidentally, Google <a href=\"http://techcrunch.com/2010/07/10/google-secretly-invested-100-million-in-zynga-preparing-to-launch-google-games/\">invested</a> $100M in Zynga).</p>\n<p>- Interoperate / embrace open standards – <a href=\"http://cdixon.org/2010/01/22/techies-and-normals/\">Normals</a> don’t care whether a product uses open standards, but by interoperating with other social networks, messaging systems, check-in services, etc., Google could encourage 3rd-party developers to build on their platform. If Google chose, say, RSS for their messaging system, it would already work with tens of thousands of existing tools and websites and would be readily embraced by hackers in the open source community. The web itself (http/html) and email (smtp) are famous examples where the choice to open them unleashed huge waves of innovation and (eventually) killed off closed competitors like AOL.</p>\n<p><strong>Strategic choice #2:</strong> How should Google tie its new social products into its existing products?</p>\n<p>Besides a mountain of cash (<a href=\"http://finance.yahoo.com/q/ks?s=GOOG+Key+Statistics\">$30B net</a>, generating $10B more per year), Google has many existing assets on top of which to build. Google Buzz tried to build off of the “implicit social network” of Gmail contacts, which hasn’t seemed to work so far and raised privacy concerns.</p>\n<p>Google’s recent mini-launch of its “+1″ button seems to be good use of the strategy known as “anchoring”. Google is apparently trying to create a federated network where websites embed +1 buttons  the way they embed Facebook’s Like button except the +1 button would be a signal into Google’s organic ranking algorithm (as an aside, this is where Gmail becomes useful as having millions of logged in users makes spamming +1 buttons much harder). Websites care <strong>a lot</strong> about their Google organic search rankings (which is why, for example, helping websites improve their rankings is multibillion-dollar industry).  A button that improved search rankings <a href=\"http://cdixon.posterous.com/1-button\">would likely get prominent placement by many websites</a>. Making +1 appealing to users is another story.  The user value is much clearer for the Facebook Like and Twitter Tweet buttons – you send the link to your friends/followers. Providing value to users in addition to websites is a good reason for Google to acquire Twitter (something I think is inevitable if Google is serious about social – see below).</p>\n<p>Finally, Android and YouTube are intriguing potential anchors for a social strategy. I’ll leave it to smarter people to figure out exactly how, but products with such large footprints always present interesting tie-in opportunities.</p>\n<p><strong>Strategic Choice #3:</strong> Should Google buy or build?</p>\n<p>Historically, it is very rare to see tech companies adjust their “DNA” from within. Google’s best new lines of business over the past few years came through the acquisitions of YouTube and Android. Moreover, these acquisition were unusual in that they were left as semi-independent business units. Facebook’s hold on social is incredibly strong – besides the super-strong network effects of its social graph, Facebook has made itself core infrastructure (e.g. Facebook Connect) throughout the web. If Google really wants to catch up, they’ll need to go back to the strategy they succeeded with in the past of acquiring relevant companies and letting them run as separate business units.</p>\n<p><em>* Disclosure: I’m an investor in a <a href=\"http://foundercollective.com/people/Chris-Dixon\">bunch</a> of <a href=\"http://foundercollective.com/companies\">startups</a>, so you could reasonably argue I’m highly biased here.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/04/01/app-store-shenanigans",
      "title": "App store shenanigans",
      "description": "I’ve downloaded and tested a few hundred iPhone and iPad apps.  One thing that I’ve noticed is that many of the top rated and ranked apps…",
      "url": "https://cdixon.org/2011/04/01/app-store-shenanigans",
      "published": "2011-04-01T00:00:00.000Z",
      "updated": "2011-04-01T00:00:00.000Z",
      "content": "<p>I’ve downloaded and tested a few hundred iPhone and iPad apps.  One thing that I’ve noticed is that many of the top rated and ranked apps are pretty scammy.  Take for example “Night Vision.”</p>\n<p>It’s a top app in under Utilities for both paid and free iPhone apps.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 142px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/72b00066d9099e90962669a10a08080d/2aa2d/screen-shot-2011-04-01-at-3-03-02-pm-142x300.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 211.26760563380282%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2011 04 01 at 3 03 02 pm 142x300\"\n        title=\"Screen shot 2011-04-01 at 3.03.02 PM\"\n        src=\"/static/72b00066d9099e90962669a10a08080d/2aa2d/screen-shot-2011-04-01-at-3-03-02-pm-142x300.png\"\n        srcset=\"/static/72b00066d9099e90962669a10a08080d/2aa2d/screen-shot-2011-04-01-at-3-03-02-pm-142x300.png 142w\"\n        sizes=\"(max-width: 142px) 100vw, 142px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2011-04-01 at 3.03.02 PM</figcaption>\n  </figure></p>\n<p>If you actually download and test the app, you’ll find it doesn’t work at all. In fact, I found it made objects darker, not brighter.  See these photos with and without the app of the exact same room in the exact same lighting.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 200px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/6884a56e75d8492a2888dde801cc167a/f544b/photo-200x300.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 150%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"photo 200x300\"\n        title=\"photo\"\n        src=\"/static/6884a56e75d8492a2888dde801cc167a/f544b/photo-200x300.jpg\"\n        srcset=\"/static/6884a56e75d8492a2888dde801cc167a/c2e49/photo-200x300.jpg 170w,\n/static/6884a56e75d8492a2888dde801cc167a/f544b/photo-200x300.jpg 200w\"\n        sizes=\"(max-width: 200px) 100vw, 200px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">photo</figcaption>\n  </figure></p>\n<p>The app tries to get you to download other apparently scammy apps.  I’m guessing this kind of “cross selling” is how Night Vision got  most of its downloads.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 199px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/d257c8f6a3be826d2e2e724e78799c94/f6261/photo-1-199x300.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 150.75376884422113%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"photo 1 199x300\"\n        title=\"photo-1\"\n        src=\"/static/d257c8f6a3be826d2e2e724e78799c94/f6261/photo-1-199x300.png\"\n        srcset=\"/static/d257c8f6a3be826d2e2e724e78799c94/924ad/photo-1-199x300.png 170w,\n/static/d257c8f6a3be826d2e2e724e78799c94/f6261/photo-1-199x300.png 199w\"\n        sizes=\"(max-width: 199px) 100vw, 199px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">photo-1</figcaption>\n  </figure></p>\n<p>Another clever trick they play is when you look at the app customer ratings on the iPhone App Store you see that it has 4.5 stars:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 200px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 150%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"photo 2 200x300\"\n        title=\"photo-2\"\n        src=\"/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png\"\n        srcset=\"/static/93cdee423ea3017caf294af7c5a58e79/924ad/photo-2-200x300.png 170w,\n/static/93cdee423ea3017caf294af7c5a58e79/9ec3c/photo-2-200x300.png 200w\"\n        sizes=\"(max-width: 200px) 100vw, 200px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">photo-2</figcaption>\n  </figure></p>\n<p>But when you look on the desktop web you see the overall ratings are vastly lower and that they seem to game the system by releasing “new versions” to reset their ratings and then probably paying people to write positive reviews:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 23.333333333333332%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsSAAALEgHS3X78AAAAo0lEQVQY03WP2w6CMAyGef9Xw2sORmPGhcrOdgyBQWeZmGiIX3rRJf3+tZkG3xonrL9KmBeMKxhxrSVB73lHGouZNvZ8YUVZV8cTYw0Xwise7k1QLcDDWouISqlbwiYAYJO7riuL4pDndVUxxkyaRsrG9U9q44fvfpNpMc455VGKc2569qTRylMI4zjuhR/Ze88TUkohZa/FAmYeBmM08b75Hy/v0SCFmHv+GgAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2011 04 01 at 3 03 39 pm 300x70\"\n        title=\"Screen shot 2011-04-01 at 3.03.39 PM\"\n        src=\"/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png\"\n        srcset=\"/static/09fde74ec4d48c3c0a17076658894e9f/924ad/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png 170w,\n/static/09fde74ec4d48c3c0a17076658894e9f/135ae/screen-shot-2011-04-01-at-3-03-39-pm-300x70.png 300w\"\n        sizes=\"(max-width: 300px) 100vw, 300px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2011-04-01 at 3.03.39 PM</figcaption>\n  </figure></p>\n<p>Companies like <a href=\"https://www.tapjoy.com/\">TapJoy</a> let you pay to get in the Top 25, and then once you are there you can get “organic” downloads by being on the toplists.</p>\n<p>Another platform, another way to game it.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/03/27/a-few-points-about-the-tech-bubble-debate",
      "title": "A few points about the “tech bubble” debate",
      "description": "Pretty much every day now a major blog or newspaper writes an article asking whether we are experiencing another tech bubble (e.g. see today…",
      "url": "https://cdixon.org/2011/03/27/a-few-points-about-the-tech-bubble-debate",
      "published": "2011-03-27T00:00:00.000Z",
      "updated": "2011-03-27T00:00:00.000Z",
      "content": "<p>Pretty much every day now a major blog or newspaper writes an article asking whether we are experiencing another tech bubble (e.g. see today’s <a href=\"http://www.nytimes.com/2011/03/28/technology/28bubble.html?_r=1&ref=business\">NYTimes</a>). I don’t know whether successful private companies like Groupon, Zynga, Facebook and Twitter are over or under priced since I don’t have access to their financials. Regarding public tech companies, it seems to me that incredibly innovative companies like Apple and Google trading at 19 and 22 P/Es respectively is pretty reasonable.</p>\n<p>Rather than take a side on the bubble debate, I mainly just wanted to make a few points that I think should be kept in mind in this discussion.</p>\n<ol>\n<li>A bubble is a decoupling of asset prices (valuations) from their underlying economic fundamentals (which is why the <a href=\"http://www.nytimes.com/2011/03/28/technology/28bubble.html?_r=1&ref=business\">graph</a> at the top of the NYTimes article today is meaningless). During the housing bubble of 2001-2007, <a href=\"http://www.frbsf.org/publications/economics/letter/2004/el2004-27.html\">smart economists</a> noted that housing prices were significantly higher than their fundamental value (in housing, a common way to measure this is price-to-rent ratio, which is analogous to price-to-earnings in the stock market). During bubbles, investors stop valuing companies based on fundamentals and instead invest based on the expectation that prices will continue to rise and “greater fools” will buy the assets from them at a higher price. This process is unsustainable, which is why bubbles eventually pop.  But when the economic fundamentals are strong, the last buyer can always hold onto the asset and collect a return through the asset’s cash flows, thereby preventing a pop.</li>\n<li>The forces that drive the internet economy are strong and will probably only get stronger. I argue this regarding online advertising <a href=\"http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/\">here</a> so won’t repeat it. Since I wrote that post we’ve also seen a number of tech companies emerge that are generating significant revenues through non-advertising means – “freemium” (e.g Dropbox), paid mobile apps, virtual goods (e.g. Zynga), transaction fees (AirBnB), etc.</li>\n<li>I think it’s a good thing that the speculation on large private tech companies is happening in secondary markets where the risks are being taken by institutions or wealthy individuals. This is in stark contrast to the dot-com bubble of the 90s where many of the people holding the bag when bubble popped were non-rich people who bought stocks through public markets. Obviously this could change if we have a bunch of tech IPOs.</li>\n</ol>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/03/24/founder-stories",
      "title": "Founder Stories",
      "description": "Erick Schonfeld from TechCrunch asked me a few months ago if I’d be on a TechCrunch video show where we interviewed startup founders. I love…",
      "url": "https://cdixon.org/2011/03/24/founder-stories",
      "published": "2011-03-24T00:00:00.000Z",
      "updated": "2011-03-24T00:00:00.000Z",
      "content": "<p>Erick Schonfeld from TechCrunch asked me a few months ago if I’d be on a TechCrunch video show where we interviewed startup founders. I love startups. While other people watch sports on Sunday, I prefer to sit around with friends and chat about what new startups have launched, how they are doing, what product and marketing strategies are working, etc.</p>\n<p>Erick originally called the show “Startup Sherpa.” The word “sherpa” implied that I was giving people advice. The people we invited to the show were either my peers or people who knew far more than me, so I felt very uncomfortable with that title. I really like to hear “war stories” (a term used in venture capital) but calling it that would have been disrespectful to military people who fight actual wars versus the inconsequential battles we have amongst startups and investors. So we chose “Founder Stories” instead.</p>\n<p>I don’t get paid by TechCrunch and they don’t have a fancy editing budget so what you see is effectively live. I probably make an ass out of myself a lot. I actually haven’t brought myself to watch most of the episodes because I can’t stand all my verbal tics like saying “etc” and “you know.” The saving grace of the show is the incredible people we get to come on to share their stories. I think they participate mostly because it’s TechCrunch – the premier tech blog – and also because they know I love startups. I want to try to learn from the founders’ early experiences rather than ask questions about “hot topics” or “gotchas.” I like to think of “Founder Stories” as a show that I would have wanted to watch when I was a first-time entrepreneur. That’s how I explain the show to potential guests and also how I think about it when Erick and I come up with questions.</p>\n<p>The show is available as a free podcast on iTunes <a href=\"http://itunes.apple.com/us/podcast/founder-stories/id423462670\">here</a>. It’s also on TechCrunch <a href=\"http://techcrunch.com/tag/founder-stories/\">here</a>.</p>\n<p>I’ve never talked to Mike Arrington about this but I’d like to thank him for making long form and respectful content available to entrepreneurs and investors. Erick has also been great, along with Josh Zelman who is the AOL/TechCrunch video producer.</p>\n<p>I’d love to hear feedback and suggestions for how to improve the show.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups",
      "title": "SEO is no longer a viable marketing strategy for startups",
      "description": "Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial…",
      "url": "https://cdixon.org/2011/03/05/seo-is-no-longer-a-viable-marketing-strategy-for-startups",
      "published": "2011-03-05T00:00:00.000Z",
      "updated": "2011-03-05T00:00:00.000Z",
      "content": "<p>Many of the today’s most successful informational sites such as Yelp, Wikipedia and TripAdvisor relied heavily on SEO for their initial growth. Their marketing strategy (whether deliberate or not) was roughly: 1) build a community of contributors that created high-quality content, 2) become the definitive place to link to for the topics they covered, 3) rank highly in organic search results.  This led to a virtuous cycle where SEO drew more users, leading to more contributors and more inbound links, leading to more SEO, and so on.  From roughly 2001-2008, SEO was the most effective marketing channel for high-quality informational sites.</p>\n<p>I talk to lots of startups and almost none that I know of post-2008 have gained significant traction through SEO (the rare exceptions tend to be focused on content areas that were previously un-monetizable). Google keeps its ranking algorithms secret, but it is widely believed that inbound links are the preeminent ranking factor.  This ends up rewarding sites that are 1) older and have built up years of inbound links 2) willing to engage in aggressive link building, or what is known as black-hat SEO. (It is also very likely that Google rewards sites for the simple fact that they are older. For educated guesses on which factors matter most for SEO, see SEOMoz’s excellent <a href=\"http://www.seomoz.org/article/search-ranking-factors\">search engine ranking factors survey</a>).</p>\n<p>Consider, for example, the extremely lucrative category of hotel searches. Search Google for “Four Seasons New York” and this ad-riddled TripAdvisor page ranks highly:</p>\n<p><a href=\"images/screen-shot-2011-03-05-at-3-33-03-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 64.66666666666666%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2011 03 05 at 3 33 03 pm 300x194\"\n        title=\"Screen shot 2011-03-05 at 3.33.03 PM\"\n        src=\"/static/e26eb3bdd00ae79c155f7da6474ef6e7/135ae/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png\"\n        srcset=\"/static/e26eb3bdd00ae79c155f7da6474ef6e7/924ad/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png 170w,\n/static/e26eb3bdd00ae79c155f7da6474ef6e7/135ae/screen-shot-2011-03-05-at-3-33-03-pm-300x194.png 300w\"\n        sizes=\"(max-width: 300px) 100vw, 300px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2011-03-05 at 3.33.03 PM</figcaption>\n  </figure></a></p>\n<p>(TechCrunch had a very good <a href=\"http://techcrunch.com/2010/11/12/tripadvisor-is-a-great-advertisement/\">article</a> on the TripAdvisor’s decline in quality).</p>\n<p>In contrast, this cleaner and more informative page from the relatively new website <a href=\"http://www.oyster.com\">Oyster</a> ranks much lower in Google results:</p>\n<p><a href=\"images/screen-shot-2011-03-05-at-3-33-35-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 57.666666666666664%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2011 03 05 at 3 33 35 pm 300x173\"\n        title=\"Screen shot 2011-03-05 at 3.33.35 PM\"\n        src=\"/static/c6f96cbf33d6955f37c03454ff30baf5/135ae/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png\"\n        srcset=\"/static/c6f96cbf33d6955f37c03454ff30baf5/924ad/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png 170w,\n/static/c6f96cbf33d6955f37c03454ff30baf5/135ae/screen-shot-2011-03-05-at-3-33-35-pm-300x173.png 300w\"\n        sizes=\"(max-width: 300px) 100vw, 300px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2011-03-05 at 3.33.35 PM</figcaption>\n  </figure></a></p>\n<p>As a result, web users have a worse experience and startups are incentivized to clutter their pages with ads and use aggressive tactics to increase their SEO when they should just be focused on creating great user experiences.</p>\n<p>The web economy (ecommerce + advertising) is a multi-hundred billion dollar market.  Much of this revenue comes from traffic that comes from SEO. This has led to a multibillion-dollar SEO industry. Some of the SEO industry is “white hat,” which generally means consultants giving benign advice for making websites search-engine friendly. But there is also a huge industry of black-hat SEO consultants who trade and sell links, along with companies like content farms that promote their own low-quality content through aggressive SEO tactics.</p>\n<p>Google seems to be doing everything it can to improve its algorithms so that the best content rises to the top (the recent <a href=\"http://www.wired.com/epicenter/2011/03/the-panda-that-hates-farms/\">“panda” update</a> seems to be a step forward). But there are many billions of dollars and tens of thousands of people working to game SEO. And for now, at least, high-quality content seems to be losing. Until that changes, startups – who generally have small teams, small budgets, and the scruples to avoid black-hat tactics – should no longer consider SEO a viable marketing strategy.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/02/21/the-importance-of-predictability-for-platform-developers",
      "title": "The importance of predictability for platform developers",
      "description": "A platform is a technology or product upon which many other technologies or products are built. Some platforms are controlled by a single…",
      "url": "https://cdixon.org/2011/02/21/the-importance-of-predictability-for-platform-developers",
      "published": "2011-02-21T00:00:00.000Z",
      "updated": "2011-02-21T00:00:00.000Z",
      "content": "<p>A platform is a technology or product upon which many other technologies or products are built. Some platforms are controlled by a single corporation: e.g. Windows, iOS, and Facebook. Some are controlled by standards committees or groups of companies: e.g. the web (html/http), RSS, and email (smtp).</p>\n<p>Platforms succeed when they are 1) financially sustainable, and 2) have a sufficient number of developers that are financially sustainable. Fostering a successful developer community means convincing developers (and, possibly, investors in developers) that the platform is a worthwhile investment of time and money.</p>\n<p>Developers who create applications for platforms take on all the usual risks related to launching a new product, but in addition take on platform-specific risks, namely:</p>\n<ol>\n<li>Platform decline: the platform will decline or go away entirely.</li>\n<li>Subsumption risk: the platform will subsume the functionality of the developer’s application.</li>\n</ol>\n<p>The most successful platforms try to mitigate these risks for developers (not just the appearance of these risks). One way to mitigate platform decline risk is to launch the platform after the platform’s core product is already successful, as Facebook did with its app platform and Apple did with its iOS platform. Platforms that are not yet launched or established can use other methods to reassure developers; for example, when Microsoft launched the first Xbox they very publicly announced they would invest $1B in the platform.</p>\n<p>To mitigate subsumption risk, the platform should give developers predictability around the platform’s feature roadmap. Platforms can do this explicitly by divulging their product roadmap but more often do it implicitly by demonstrating predictable patterns of feature development. Developers and investors are willing to invest in the iOS platform because – although Apple will take 30% of the revenue – it is highly unlikely that Apple will, say, create games to compete with Angry Birds or news to compete with The New York Times. Similarly, Facebook has thus far stuck to “utility” features and not competed with game makers, dating apps, etc.</p>\n<p>Platforms that are controlled by for-profit businesses that don’t yet have established business models have special challenges. These companies are usually in highly experimental modes and therefore probably themselves don’t know their future core features. The best they can do to mitigate developers’ risks are 1) provide as much guidance as possible on future features, and 2) when developer subsumption is necessary, do so in a way that keeps the developer ecosystem financially healthy – for example, by acquiring the subsumed products.</p>\n<p>The least risky platforms to develop on are successful open platforms like the web, email, and Linux. These platforms tend to change slowly and have very public development roadmaps. In the rare case where a technology is subsumed by an open platform, it is usually apparent far in advance. For example, Adobe Flash might be subsumed by the canvas element in HTML5, but Adobe had years to see HTML5 approaching and adjust its strategy accordingly. The predictability of open platforms is the main reason that vast amounts of wealth have been created on top of them and investment around them continues unabated.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/02/05/selling-pickaxes-during-a-gold-rush",
      "title": "Selling pickaxes during a gold rush",
      "description": "There is a saying in the startup world that “you can mine for gold or you can sell pickaxes.” This is of course an allusion to the…",
      "url": "https://cdixon.org/2011/02/05/selling-pickaxes-during-a-gold-rush",
      "published": "2011-02-05T00:00:00.000Z",
      "updated": "2011-02-05T00:00:00.000Z",
      "content": "<p>There is a saying in the startup world that “you can mine for gold or you can sell pickaxes.” This is of course an allusion to the California Gold Rush where some of the most successful business people such as <a href=\"http://en.wikipedia.org/wiki/Levi_Strauss\">Levi Strauss</a> and <a href=\"http://en.wikipedia.org/wiki/Samuel_Brannan\">Samuel Brannan</a> didn’t mine for gold themselves but instead sold supplies to miners – wheelbarrows, tents, jeans, pickaxes etc. Mining for gold was the more glamorous path but actually turned out, in aggregate, to be a worse return on capital and labor than selling supplies.</p>\n<p>When a major new technology trend emerges – say, the rise of online video or social media – entrepreneurs can try to capitalize on the trend by creating a consumer product (mining for gold), or by creating tools to enable consumer products (selling pickaxes).  For most technology trends, the number of successful companies created in gold mining and pickaxes are comparable, yet the gold mining businesses tend to get much more attention. In online video, YouTube is often thought of as the big winner; however, to date, more money has been made by online video by infrastructure suppliers like <a href=\"http://finance.yahoo.com/q/bc?s=AKAM&t=my&l=on&z=l&q=l&c=\">Akamai</a>. Y-combinator is known for their high-profile B2C startups but their <a href=\"http://yclist.com/\">biggest exits</a> to date have been in infrastructure (most recently Heroku which rode the popularity of Ruby on Rails to a >$200M exit)*.</p>\n<p>When you start a company, the most important consideration should be working on a product you love (a startup can be a 5+ year endeavor so if you don’t love it you probably won’t be able to endure the ups and downs).  A secondary consideration should be matching the skills of the founders to the market.  Tools companies tend to require stronger technical and sales skills, whereas B2C companies tend to be more about predicting consumer tastes and marketing skills. A final consideration should be the supply-and-demand of startups in the space.  Because B2C companies tend to be “sexier” and get more press coverage, many entrepreneurs are drawn to them. This tends to lead to greater competition even though the market opportunities might not justify it.</p>\n<p>There are many exciting technology opportunities emerging today: some are horizontal like mobile, location, and local; others are vertical like fashion, art, real estate, education, finance and energy. If you are an entrepreneur thinking about starting a company around these trends, consider selling pickaxes.</p>\n<p>* Note that there are many great B2C YC companies, so the list of exits will no doubt change and probably skew more towards B2C over time.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2011/01/12/predicting-the-future-of-the-internet-is-easy-anything-it-hasnt-yet-dramatically-transformed-it-will",
      "title": "Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.",
      "description": "People love to focus on horse races:  NYC vs Silcon Valley, Facebook vs Twitter, IPO markets vs private exchanges, the valuation of some…",
      "url": "https://cdixon.org/2011/01/12/predicting-the-future-of-the-internet-is-easy-anything-it-hasnt-yet-dramatically-transformed-it-will",
      "published": "2011-01-12T00:00:00.000Z",
      "updated": "2011-01-12T00:00:00.000Z",
      "content": "<p>People love to focus on horse races:  NYC vs Silcon Valley, Facebook vs Twitter, IPO markets vs private exchanges, the valuation of some startup vs some other startup.  Like a lot of people in the tech industry, I’ve gotten inquiries recently on the meaning of Facebook’s “private” IPO with Goldman Sachs, whether VC valuations are indicative of a bubble, whether such-and-such startup is overvalued, and so on.</p>\n<p>These questions are all footnotes that will be forgotten in a few years.  The Internet has gone through fits and starts – in particular the dot com crash of 2000 disillusioned many – but every year we see it transform industries that previously sauntered along blissfully denying its existence.  Already transformed: music, news, advertising, telecom. Being transformed: finance, commerce, TV & movies, real estate, politics & government. Soon to be transformed (among many others): healthcare, education, energy.</p>\n<p>The modern economy runs primarily on information, and the Internet is by orders of magnitude the greatest information mechanism ever invented.  In a few years, we’ll look back in amazement that in 2011 we still used brokers to help us find houses, that doctors kept records scribbled on notepads, that government information was carefully spoon-fed to a compliant press corps, and that scarcity of information and tools was a primary inhibitor to education.</p>\n<p>Thus far the US has led Internet innovation. There are things the US can do to keep this lead, including: 1) exporting the entrepreneurial ethos of Silicon Valley to the rest of the country (including places like my home city, New York), 2) allowing talented people to go where their skills are most needed (e.g. by changing US immigration policies), 3) convincing the upcoming generation to innovate in sectors that have a direct impact on the quality of peoples’ lives (Internet, healthcare, energy, education) instead of wasting time on sectors that were historically prestigious (e.g. finance and law) but add little to negative economic and societal value.</p>\n<p>Predicting the future of the Internet is easy: anything it hasn’t yet dramatically transformed, it will.  People, companies, investors and even countries can’t stop this transformation. The only choice you have is whether you join the side of innovation and progress or you don’t.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/12/26/the-thin-edge-of-the-wedge-strategy",
      "title": "The “thin edge of the wedge” strategy",
      "description": "Establishing relationships with new users is the hardest part of growing a startup.  For consumer products establishing relationships can…",
      "url": "https://cdixon.org/2010/12/26/the-thin-edge-of-the-wedge-strategy",
      "published": "2010-12-26T00:00:00.000Z",
      "updated": "2010-12-26T00:00:00.000Z",
      "content": "<p>Establishing relationships with new users is the hardest part of growing a startup.  For consumer products establishing relationships can mean many things: installs, registrations, purchases, or even just getting users to think of your website as a place to go for certain purposes.  For B2B products, establishing relationships means getting internal users or testers and eventually contracts and payments. For business development partners – for example API/widget partners – establishing relationships usually means getting functionality embedded in partners’ products (e.g. a widget on their website).</p>\n<p>One common strategy for establishing this initial relationship is what is sometimes known as the “thin edge of the wedge” strategy (aka the “tip of the spear” strategy).  This strategy is analogous to the <a href=\"http://cdixon.org/2010/08/21/the-bowling-pin-strategy/\">bowling pin strategy</a>: both are about attacking a smaller problem first and then expanding out.  The difference is that the wedge strategy is about product tactics while the bowling pin strategy is about marketing tactics.</p>\n<p>Sometimes the wedge can be a simple feature that existing companies overlooked or saw as inconsequential. The ability to share photos on social networks was (strangely) missing from the default iPhone camera app (and sharing was missing from many third-party camera apps like Hipstimatic that have popular features like <a href=\"http://hunch.com/lo-fi-cameras/\">lo-fi camera</a> filters), so Instagram and Picplz filled the void. <a href=\"http://twitter.com/#!/rabois/status/3517058721517568\">Presumably</a>, these startups are going to try to use mobile photo sharing as the wedge into larger products (perhaps full-fledged social networks?).</p>\n<p>Sometimes the wedge is a “<a href=\"http://cdixon.org/2010/08/21/the-bowling-pin-strategy/\">single player mode</a>” – a famous example is early adopters who used Delicious to store browser bookmarks in the cloud and then only later – once the user base hit critical mass – used its social bookmarking features. Other times the wedge lies on one side of a two-sided market, in which case the wedge strategy could be thought of as a variant of the <a href=\"http://cdixon.org/2010/10/17/the-ladies-night-strategy/\">“ladies night” strategy</a>. I’m told that OpenTable initially used the wedge strategy by providing restaurants with terminals that acted like simple, single-player CRM systems. Once they acquired a critical mass of restaurants in key cities (judiciously chosen using the bowling pin strategy), opentable.com had sufficient inventory to become useful as a one-stop shop for consumers.</p>\n<p>Critics sometimes confuse wedge features with final products. For example, some argue that mobile photo sharing is “just a feature,” or that game mechanics on geo apps like Foursquare are just faddish “<a href=\"http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">toys</a>.” Some go so far as to argue that the tech startup world as a whole is going through a phase of just building “dinky” features and companies. Perhaps some startups have no plan and really are just building features, likely with the hope of flipping themselves to larger companies. Good startups, however, think about the whole wedge from the start. They build an initial user base with simple features and then quickly iterate to create products that are enduringly useful, thereby creating companies that have stand-alone, defensible value.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/11/10/the-interoperability-of-social-networks",
      "title": "The interoperability of social networks",
      "description": "Google recently added a caustic warning message when users attempt to export their Google Contacts to Facebook: Hold on a second. Are you…",
      "url": "https://cdixon.org/2010/11/10/the-interoperability-of-social-networks",
      "published": "2010-11-10T00:00:00.000Z",
      "updated": "2010-11-10T00:00:00.000Z",
      "content": "<p>Google recently added a caustic warning <a href=\"http://www.google.com/mail/help/contacts_export_confirm.html\">message</a> when users attempt to export their Google Contacts to Facebook:</p>\n<blockquote>\n<p>Hold on a second. Are you super sure you want to import your contact information for your friends into a service that won’t let you get it out?</p>\n</blockquote>\n<p>Facebook allows users to download their personal information (photos, profile info, etc) but has been fiercely protective of the social graph (you can’t download friends, etc). The downloaded data arrives in a .zip file – hardly a serious attempt to interoperate using modern APIs (<em>update: Facebook employee corrects me/clarifies in comments</em> <a href=\"http://cdixon.org/2010/11/10/the-interoperability-of-social-networks/#comment-96196129\"><em>here</em></a>). In contrast, Google has taken an aggressively open posture with respect to the social graph, calling Facebook’s policy “data protectionism.”</p>\n<p>The economic logic behind these positions is a straightforward application of <a href=\"http://en.wikipedia.org/wiki/Metcalfe's_law\">Metcalf’s law</a>, which states that the value of a network is the square of the number of nodes in the network*.  A corollary to Metcalf’s law is that when two networks connect or interoperate the smaller network benefits more than the larger network does. If network A has 10 users then according to Metcalf’s law its “value” is 100 (10*10).   If network B has 20 users than it’s value is 400 (20*20). If they interoperate, network A gains 400 in value but network B only gains 100 in value. Interoperating is generally good for end users, but assuming the two networks are directly competitive – one’s gain is the other’s loss – the larger network loses.</p>\n<p>A similar network interoperability battle happened last decade among Instant Messaging networks. AIM was the dominant network for many years and refused to interoperate with other networks. Google Chat adopted open standards (Jabber) and MSN and Yahoo were much more open to interoperating. Eventually this battle ended in a whimper — AIM never generated much revenue, and capitulated to aggregators and openness.  (Capitulating was probably a big mistake – they had the opportunity to be as financially successful as Skype or <a href=\"http://en.wikipedia.org/wiki/Tencent_QQ\">Tencent</a>).</p>\n<p>Google might very well genuinely believe in openness. But it is also <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">strategically wise</a> for them to be open in layers that are not strategic (mobile OS, social graph, Google docs) while remaining closed in layers that are strategic (search ranking algorithm, virtually all of their advertising services).</p>\n<p>When Google releases their long-awaited new social network, Google Me, expect an emphasis on openness. This could create a rich ecosystem around their social platform that could put pressure on Facebook to interoperate. True interoperability would be great for startups, innovation, and – most importantly – end users.</p>\n<p>* Metcalf’s law assumes that every node is connected to every node and each connection is equally valuable. Real world networks are normally not like this. In particular, social networks are much more clustered and therefore have somewhere between linear and exponential utility growth with each additional user.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/11/07/timing-your-startup",
      "title": "Timing your startup",
      "description": "I never had the opportunity to invest in YouTube but I have to admit that if I did I probably would have passed (which of course would have…",
      "url": "https://cdixon.org/2010/11/07/timing-your-startup",
      "published": "2010-11-07T00:00:00.000Z",
      "updated": "2010-11-07T00:00:00.000Z",
      "content": "<p>I never had the opportunity to invest in YouTube but I have to admit that if I did I probably would have passed (which of course would have been a huge mistake). I’d been around the web long enough to remember the dozens of companies before YouTube that tried to create crowdsourced video sites and failed. Based on “pattern recognition” (a dangerous thing to rely on), I was deeply skeptical of the space.</p>\n<p>What I failed to appreciate was that the prior crowdsourced video sites were ahead of their time. YouTube built a great product, but, more importantly, got the market timing just right. By 2005, all the pieces were in place to enable crowdsourced video – the proliferation of home broadband, digital camcorders, a version of Flash where videos “just worked,” copyrighted web content that could be exported to YouTube, and blogs that wanted to embed videos.</p>\n<p>Almost anything you build on the web has already been tried in one form or another. This should not deter you. Antecedents existed for Google, Facebook, Groupon, and almost every other tech startup that has succeeded since the dot-com bubble.</p>\n<p>Entrepreneurs should always ask themselves “why will I succeed where others failed?” If the answer is simply “I’m doing it right” or “I’m smarter,” you are probably underestimating your antecedents, which were probably run by competent or even great entrepreneurs who did everything possible to succeed. Instead your answer should include an explanation about why the timing is right – about some fundamental changes in the world that enable the idea you are pursuing to finally succeed. If the necessary conditions were in place, say, a year ago, that might still be ok – YouTube happened to nail their product out of the gate, but if they hadn’t a company started later might have succeeded in their place.</p>\n<p>Often the necessary conditions are only beginning to emerge and knowing when they will do so sufficiently is very hard to predict. We all know the internet will become fully social, personalized, mobile, location-based, interactive, etc. and lots of new, successful startups will be built as a result. What is very hard to know is when these things will happen at scale.</p>\n<p>One way to mitigate timing risk is to manage your cash accordingly. If you are trying to ride existing trends you should ramp up aggressively. If you are betting on emerging trends it is better to keep your burn low and runway long.  This takes discipline and patience but is also the way you hit it really big.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/10/29/instrumenting-the-offline-world",
      "title": "Instrumenting the offline world",
      "description": "In the last decade there have been major advances in storing, analyzing, and acting upon extremely large data sets.  Data sets that were…",
      "url": "https://cdixon.org/2010/10/29/instrumenting-the-offline-world",
      "published": "2010-10-29T00:00:00.000Z",
      "updated": "2010-10-29T00:00:00.000Z",
      "content": "<p>In the last decade there have been major advances in storing, analyzing, and acting upon extremely large data sets.  Data sets that were previously left dormant are now being put to (<a href=\"http://cdixon.org/2010/10/22/online-privacy-whats-at-stake/\">mostly</a>) constructive use. But the vast majority of information in the world isn’t available for analysis because it isn’t being electronically collected.</p>\n<p>This is changing rapidly as new data collection mechanisms are implemented – what engineers refer to as <a href=\"http://en.wikipedia.org/wiki/Instrumentation\">instrumentation</a>. Common examples of instrumentation include thermometers, public safety cameras, and heart rate monitors.</p>\n<p>Smart phones are one obvious new source of potential instrumentation.  A person’s location, activities, audio and visual environment – and probably many more things that haven’t been thought of yet – can now be monitored.  This of course raises privacy issues.  Hopefully these privacy issues will be solved by requiring explicit user opt-in.  If so, this will require creating incentives for people to do so.</p>\n<p><a href=\"http://www.foursquare.com\">Foursquare</a> instruments location in an opt-in way through the check in. The incentives are social and game-like, but the data produced could be useful for many more “serious” purposes.  <a href=\"http://www.fitbit.com/\">Fitbit</a> instruments a person’s health-related activity. The immediate incentive is to measure and improve your own health, but the aggregate data could be analyzed by medical researchers to benefit others.</p>\n<p>In manufacturing, there has been a lot of interesting <a href=\"http://hpsweb.honeywell.com/Cultures/en-US/Products/wireless/SecondGenerationWireless/default.htm?gclid=CK-M6qCe-KQCFeJN5QodpxUjhw\">innovation</a> around monitoring machinery, for example by using loosely joined, inexpensive <a href=\"http://en.wikipedia.org/wiki/Mesh_networking\">mesh networks</a>.  In homes, protocols like <a href=\"http://www.zigbee.org/Markets/ZigBeeHomeAutomation/Overview.aspx\">ZigBee</a> allow devices to communicate which allows, for example, automation of tedious tasks and improved energy efficiency.</p>\n<p>In the next decade, there will be a massive amount of innovation and opportunity around the <a href=\"http://informationarbitrage.com/post/1359525958/big-ideas-around-big-problems-in-big-data\">big data</a> stack. Instrumentation will be the foundational layer of that stack.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/10/23/you-need-to-use-social-services-to-understand-them",
      "title": "You need to use social services to understand them",
      "description": "I don’t know if Malcolm Gladwell is right when he claims “the revolution will not be tweeted,” but I can say with certainty that the Twitter…",
      "url": "https://cdixon.org/2010/10/23/you-need-to-use-social-services-to-understand-them",
      "published": "2010-10-23T00:00:00.000Z",
      "updated": "2010-10-23T00:00:00.000Z",
      "content": "<p>I don’t know if Malcolm Gladwell is right when he claims “<a href=\"http://www.newyorker.com/reporting/2010/10/04/101004fa_fact_gladwell\">the revolution will not be tweeted</a>,” but I can say with certainty that the Twitter he describes is not the Twitter I know. Gladwell’s central argument is that Twitter creates weak ties but social movements require strong ties. I’ve made more strong ties through Twitter (and blogging) than I have through any communications medium I’ve ever used before. The relationships start off weak – a retweet, @ reply, or blog comment – but often strengthen through further discussions and eventually become new friendships and business relationships.</p>\n<p>I can see why Gladwell gets this wrong – he doesn’t <a href=\"http://twitter.com/#!/gladwell\">seem</a> to really use Twitter (he does <a href=\"http://gladwell.typepad.com/\">blog</a> occasionally). I barely tweeted or blogged for a long time too. I read blogs basically since their advent, but social services are fundamentally participatory: reading blogs/tweets is to social services as watching TV is to a real life conversations. I finally relented at the insistence of <a href=\"http://www.caterina.net\">Caterina</a>, who had the foresight to insist that everyone at <a href=\"http://hunch.com\">Hunch</a> blog, tweet, contribute to open source projects, etc. I now get some of my best ideas from responses to tweets and blog posts, and have developed dozens of strong relationships through the experience.</p>\n<p>I made some <a href=\"http://twitter.com/#!/cdixon/status/28051825694\">jokes</a> on Twitter the past few days about Kleiner Perkins’ new social fund.  These were meant to be lighthearted: I only know one person at KP and from everything I’ve seen they seem to be smart, friendly people. But underneath the jokes lies a real issue: the partners there don’t seem to really participate in social services (something they only underscored by announcing their new fund at a press conference that targeted traditional media outlets).</p>\n<p>I’d love to engage in a debate with smart people like Gladwell about the impact of the social web on culture, politics, activism and so on. I also think it’s great to see savvy investors like KP allocate significant resources to the next wave of social web innovation. But it’s hard for me to take them seriously when they don’t seem to take their subject matter seriously.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/10/21/online-privacy-whats-at-stake",
      "title": "Online privacy: what’s at stake",
      "description": "It is widely believed that a flourishing democracy requires an independent, diverse, and financially solvent press.  With print newspapers…",
      "url": "https://cdixon.org/2010/10/21/online-privacy-whats-at-stake",
      "published": "2010-10-21T00:00:00.000Z",
      "updated": "2010-10-21T00:00:00.000Z",
      "content": "<p>It is widely believed that a flourishing democracy requires an independent, diverse, and financially solvent press.  With print newspapers set to <a href=\"http://www.editorsweblog.org/newspaper/2010/09/arthur_sulzberger_on_charging_online_to.php\">disappear</a> in the next few years, the future of quality journalism is highly uncertain. This year, the online version of the New York Times will <a href=\"http://www.businessinsider.com/new-york-times-earnings-2010-10\">generate</a> about $200M in revenue, a number that will need to approximately triple to support the current Times newsroom.</p>\n<p>Most people who understand Internet economics believe that the best hope for online journalism is online advertising. Luckily, online advertising has significant room for improvement. Most of the revenue of the Times’ online business is generated through display ads. The main metric used to price display ads is derived from the rate at which users click on the ads, a rate which today is dismally low.  Thus the Times could continue to support its current newsroom staff if display ads became even moderately effective.</p>\n<p>Lots of smart people are working on improving the efficacy of display advertising. Large companies like Google and Microsoft are investing billions in the problem. As usual, though, the best ideas are coming from startups. Companies like <a href=\"http://bluekai.com/\">Blue Kai</a> and <a href=\"http://www.magnetic.is/\">Magnetic</a> are bringing search intent (particularly <a href=\"http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">purchasing intent</a> – the core of Google’s profits) to display ads.  Companies like <a href=\"http://media6degrees.com/\">Media6Degrees</a> are using social relations to target ads based on the principle that “birds of a feather flock together” (Facebook will <a href=\"http://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads/\">likely</a> start doing this soon as well).  <a href=\"http://www.solvemedia.com//index.html\">Solve Media</a> turns the hassle of registration into an engaging marketing event.  <a href=\"http://www.convertro.com\">Convertro</a> is working on properly attributing online purchases “up the funnel” from sites that harvest intent (search, coupon sites) to sites that generate intent (media, commerce guides). All told, there are a few hundred well-funded ad tech startups developing clever methods to improve display advertising.</p>\n<p>Many of these targeting technologies rely on gathering information about users, something that inevitably raises concerns about privacy. Until recently, online privacy depended mostly on anonymity. There is a big difference between advertisers knowing, say, users’ sexual preferences and knowing users’ sexual preferences <em>plus</em> personally identifiable information like their names.  Like most people, I don’t mind if it’s easy to find my real name along with my job history, but I do mind if it’s easy to discover other personal details about me. When I’m not anonymous (e.g. on Facebook) I want to control what is disclosed – to have some privacy – but when I’m anonymous I’m far less concerned about information gathered for marketing purposes.</p>\n<p>Before the rise of social networks, online ad targeting services (mostly) tracked people anonymously, through cookies that weren’t linked to personally identifiable information.  Social networks have provided the means to de-anonymize information that was previously anonymous. <a href=\"http://gigaom.com/2010/10/21/rapleaf-web-startups/?utm_source=earth2tech&utm_medium=specialtopics\">Apparently</a>, the wall has been breached between 1) my real identity plus my self-moderated public information, and 2) my anonymous, non-self-moderated private information.</p>\n<p>The good news is that the things users want to keep secret are almost always the least important things to online advertisers. It turns out that knowing people are trying to buy new washing machines or plane tickets to Hawaii is vastly more monetizeable than their names, who they were dating, or the dumb things they did in college. Thus, there are probably a set of policies that allow ad targeting to succeed while also letting users control what is associated with their real identities.  Hopefully, we can have an informed and nuanced debate about what these policies might be. The stakes are high.</p>\n<p><em>Note:  As with almost everything I write on this blog, I have a ton of conflicts of interest.  Among them: I’m an investor, directly or indirectly, in a bunch of technology startups.  Some of these – including some companies mentioned above – are trying to create new advertising technologies. I am currently the CEO & Cofounder of</em> <a href=\"http://hunch.com\"><em>Hunch</em></a><em>, which among other things is trying to personalize the internet through an explicit user opt-in mechanism.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/10/07/some-thoughts-on-incumbents",
      "title": "Some thoughts on incumbents",
      "description": "Reposted from Oct 7, 2010 from cdixon.posterous.com By “incumbents” I mean the big companies that are loosely competitive to your startup…",
      "url": "https://cdixon.org/2010/10/07/some-thoughts-on-incumbents",
      "published": "2010-10-07T00:00:00.000Z",
      "updated": "2010-10-07T00:00:00.000Z",
      "content": "<p><em><a href=\"http://cdixon.posterous.com/thoughts-on-incumbents-from-a-startups-perspe\">Reposted</a> from Oct 7, 2010 from cdixon.posterous.com</em></p>\n<p>By “incumbents” I mean the big companies that are loosely competitive to your startup.</p>\n<p>- The first thing to do is try to understand the incumbent’s strategy.  For example, see my <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">analysis</a> of Google’s strategy.</p>\n<p>- Being on an incumbent’s strategic roadmap is a double-edged sword.  On the one hand, they might copy what you build or acquire a competitor.  On the other hand, if you build a valuable asset you could sell your company the acquirer at a “strategic premium.”</p>\n<p>- Incumbents that don’t yet have a successful business model (e.g. Twitter) might <strong>think</strong> they have a strategy, but expect it to change as they figure out their business model.  An incumbent without a successful business model is like a drunk person firing an Uzi around the room.</p>\n<p>- Understand the incumbent’s acquisition philosophy. More mature companies like Cisco barely try to do R&D and are happy to acquire startups at high prices.  Incumbents that are immature like Facebook only do “talent acquisitions” which are generally bad outcomes for VC-backed startups (but good for bootstrapped or lightly funded startups). Google is semi-mature, and does a combination of talent and strategic acquisitions.</p>\n<p>- Understand the incumbent’s partnership philosophy.  Yahoo and Microsoft are currently very open to partnerships with startups.  Google and Facebook like to either acquire or build internally. If you don’t intend to sell your company, don’t talk seriously about partnerships to incumbents that don’t seriously consider them.</p>\n<p>- Every incumbent has M&A people who spend a lot of their time collecting market intelligence. Just because they call you and hint at acquisition doesn’t mean they want to buy you – they are likely just fishing for info. If they really want to buy you, they will aggressively pursue you and make an offer.  As VCs like to say, startups are bought, not sold.</p>\n<p>- Try to focus on features/technologies that the incumbents aren’t good at.  Facebook is good at social and social-related (hard-core) technology.  Thus far they’ve kept their features at the “utility level” an haven’t built non-utility features (e.g. games, virtual goods, game mechanics).  Google thus far has been weak at social and Apple has been weak at web services.</p>\n<p>- Try to focus on business arrangements that the incumbents aren’t good at.  Facebook and Google only do outbound deals with large companies.  With small companies (e.g. local venues, small publishers) they try to generate business via inbound/self service. Building business relationships that the incumbents don’t have can be a very valuable asset.</p>\n<p>- Be careful building on platforms where the incumbent has demonstrated an inconsistent attitude toward developers. Apple rejects apps somewhat arbitrarily and takes a healthy share of revenues, but is generally consistent with app developers.  You can pretty safely predict what they will will allow to flourish. Twitter has been wildly inconsistent and shouldn’t be trusted as a platform.  Facebook has been mostly consistent although recently changed the rules on companies like Zynga with their new payment platform (that said, they generally seem to understand the importance of partners thriving and seem to encourage it).</p>\n<p>- Take advantage of incumbents’ entrenched marketing positioning.  The masses think of Twitter as a place to share trivial things like what you had for lunch (even if most power users don’t use it this way) and Facebook as a place to talk to friends.  They are probably stuck with this positioning.  <a href=\"http://cdixon.org/2010/01/22/techies-and-normals/\">Normals</a> generally think of each website as having one primary use case so if you can carve out a new use case you can distinguish yourself.</p>\n<p>- Consider the <a href=\"http://www.amazon.com/Judo-Strategy-Competitors-Strength-Advantage/dp/1578512530\">judo strategy</a>.  When pushed, don’t push back.  When Facebook adds features like check-ins, groups, or likes, consider interoperating with those features and building layers on top of them.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/09/26/the-segmentation-of-the-venture-industry",
      "title": "The segmentation of the venture industry",
      "description": "Ford Motors dominated the auto market in the early 20th century with a single car model, the Model T.  At the time, customers were seeking…",
      "url": "https://cdixon.org/2010/09/26/the-segmentation-of-the-venture-industry",
      "published": "2010-09-26T00:00:00.000Z",
      "updated": "2010-09-26T00:00:00.000Z",
      "content": "<p>Ford Motors dominated the auto market in the early 20th century with a single car model, the Model T.  At the time, customers were seeking low-cost, functional cars, and were satisfied by an extremely standardized product (Ford famously quipped that “customers can choose it in any color, as long as it’s black”). But as technology improved and serious competitors emerged, customers began wanting cars that were tailored to their specific needs and desires. The basis of competition shifted from price and basic functionality to ”<a href=\"http://en.wikipedia.org/wiki/History_of_General_Motors\">style, power, and prestige</a>“. General Motors surpassed Ford by capitalizing on this desire for segmentation. They created Cadillacs for wealthy older folks, Pontiacs for hipsters, and so on.</p>\n<p>Today, the venture financing industry is going through a similar segmentation process. Venture capital has only existed in its modern form for about 35 years.  In the early days there were relatively few VCs. Entrepreneurs were happy simply getting money and general business guidance.  Today, there is a surplus of venture capital and entrepreneurs have become increasingly savvy “shoppers.”  As a result, competition amongst venture financiers has increased and their “customers” (entrepreneurs) have flocked to more specialized “products.”</p>\n<p>Some of this segmentation has been by industry (IT, cleantech, health care) and subindustry (iPhone apps, financial tech, etc). But more pronounced, especially lately, has been the segmentation by company stage.  Today at least four distinct types of venture financing “products” have become popular.</p>\n<ol>\n<li>Mentorship programs like Y Combinator help startups ideate, form founding teams, and build initial products. I suspect many of the companies they hatch wouldn’t exist at all (and certainly wouldn’t be as savvy) if it weren’t for these programs.</li>\n<li>So-called super angels provide capital and guidance to a) hire non-founder employees, b) further product development c) market the initial product (usually to early adopters), and d) raise follow on VC funding. Often current or former entrepreneurs themselves, super angels have gone through this stage many times as founders and angel investors.</li>\n<li>Traditional VCs (Sequoia, Kleiner, etc) help companies scale and get to profitability. They often have broad networks to help with hiring, sales, bizdev and other scaling functions. They are also experts at selling companies and raising follow-on financing.</li>\n<li>Accelerator funds (most prominent recently is DST) focus on providing partial liquidity and preparing the company for an IPO or big M&A exit.</li>\n</ol>\n<p>In the past, traditional VC’s played all of of these roles (hence they called themselves “lifecycle” investors). They incubated companies, provided smalls seed financings, and in some cases provided later stage liquidity. But mostly the mentorship and angel investing roles were played by entrepreneurs who had expertise but shallow pockets and limited time and infrastructure.</p>\n<p>What we are witnessing now is a the VC industry segmenting as it matures. Mentorship and angel funding are performed more effectively by specialized firms.  Entrepreneurs seem to realize this and prefer these specialized “products.”  There is a lot of angst and controversy on tech blogs that tends to focus on individual players and events. But this is just a (sometimes salacious) byproduct of the larger trends. The segmentation of the venture industry is healthy for startups and innovation at large, even if at the moment it might be uncomfortable and confusing for some of the people involved.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough",
      "title": "If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough",
      "description": "My most useful career experience was about eight years ago when I was trying to break into the world of VC-backed startups. I applied to…",
      "url": "https://cdixon.org/2010/09/12/if-you-arent-getting-rejected-on-a-daily-basis-your-goals-arent-ambitious-enough",
      "published": "2010-09-12T00:00:00.000Z",
      "updated": "2010-09-12T00:00:00.000Z",
      "content": "<p>My most useful career experience was about eight years ago when I was trying to break into the world of VC-backed startups. I applied to hundreds of jobs: low-level VC roles, startups jobs, even to big tech companies. I got rejected from every single one. Big companies rejected me outright or gave me a courtesy interview before rejecting me. VCs told me they wanted someone with VC experience. Startups at the time were laying people off. The economy was bad (particularly where I was looking – consumer internet) and I had a strange resume (computer programmer, small bootstrapped startups, degree in philosophy and mathematical logic).</p>\n<p>The reason this period was so useful was that it helped me develop a really thick skin. I came to realize that employers weren’t really rejecting me as a person or on my potential – they were rejecting a resume. As it became depersonalized, I became bolder in my tactics. I eventually landed a job at <a href=\"http://www.bvp.com/\">Bessemer</a> (thanks to their willingness to take chances and look beyond resumes), which led to getting my first VC-backed startup funded, and things got better from there.</p>\n<p>One of the great things about looking for a job is that your “payoff” is almost always a max function (the best of all attempts), not an average. This is also generally true for raising VC financing, doing bizdev partnerships, hiring programmers, finding good advisors/mentors, even blogging and marketing. I probably got rejected by someone once a day last week alone. In one case a friend who tried to help called me to console me. He seemed surprised when I told him: “no worries – this is a daily occurrence – we’ll just keep trying.” If you aren’t getting rejected on a daily basis, your goals aren’t ambitious enough.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/09/04/web-services-should-be-both-federated-and-extensible",
      "title": "Web services should be both federated and extensible",
      "description": "One of the most important developments of the web 2.0 era is the proliferation of full featured, bidirectional APIs.  APIs provide a way to…",
      "url": "https://cdixon.org/2010/09/04/web-services-should-be-both-federated-and-extensible",
      "published": "2010-09-04T00:00:00.000Z",
      "updated": "2010-09-04T00:00:00.000Z",
      "content": "<p>One of the most important developments of the web 2.0 era is the proliferation of full featured, bidirectional APIs.  APIs provide a way to “federate” web services from a single website to a distributed network of 3rd party sites. Another important web 2.0 development is the proliferation of web Apps (e.g. Facebook Apps). Apps provide a way to make websites “extensible.”</p>\n<p>The next step in this evolution is to create web services that are <em>both</em> federated (APIs) <em>and</em> extensible (Apps).</p>\n<p>In my ideal world, the social graph would not be controlled by a private company. That said, Facebook, to its credit, has aggressively promoted a fairly open API through Facebook Connect. Facebook has also been a leader in promoting Apps. For Facebook, creating extensible, federated services would mean providing a framework for Facebook Connect Apps – apps that extend Facebook functionality but reside on non-Facebook.com websites.</p>\n<p>Consider the following scenario.  Imagine that in the future a geolocation data/algorithm provider like SimpleGeo takes Facebook Places check-in data and, using algorithms and non-Facebook data, produces new data sets, for example: map directions, venue recommendations, and location-based coupons. The combination of Facebook’s data (social graph and check-ins) and SimpleGeo data/algorithms would create much more advanced feature possibilities than either service acting alone.</p>\n<p>With today’s APIs, if, say, Gowalla wanted to integrate Facebook plus SimpleGeo into their app*, they would basically have 3 choices:</p>\n<ol>\n<li>Embed Facebook widgets in Gowalla.  These are simple iframes (effectively separate little websites) that don’t interact with SimpleGeo.  Gowalla would just have to sit and wait and hope that Facebook decided to bake in SimpleGeo-like functionality.</li>\n<li>Pre-import SimpleGeo data. This significantly limits the size and dynamism of the SimpleGeo data sets and doesn’t incorporate SimpleGeo algorithms, thus severely limiting functionality.</li>\n<li>Host an instance of SimpleGeo’s servers internally.  This requires heavy technical integration, undermining the main benefit of APIs.</li>\n</ol>\n<p>In a world of extensible APIs (or “API Apps”), Gowalla could instead send Facebook data back to SimpleGeo.  The data flow would look something like this:</p>\n<p><a href=\"images/datathreesome2.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 658px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 63.829787234042556%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"datathreesome2\"\n        title=\"datathreesome2\"\n        src=\"/static/fbcb87e345265654cbee58452bf45caf/6164f/datathreesome2.png\"\n        srcset=\"/static/fbcb87e345265654cbee58452bf45caf/924ad/datathreesome2.png 170w,\n/static/fbcb87e345265654cbee58452bf45caf/f570f/datathreesome2.png 341w,\n/static/fbcb87e345265654cbee58452bf45caf/6164f/datathreesome2.png 658w\"\n        sizes=\"(max-width: 658px) 100vw, 658px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">datathreesome2</figcaption>\n  </figure></a></p>\n<p>(Note how there are three parties involved – <a href=\"http://twitter.com/peretti\">@peretti</a> calls this a “data threesome”). This configuration is much simpler to integrate – and potentially much more powerful and dynamic – than the other configurations listed above.  You could implement this today, but it would create user experience challenges.  For example, Gowalla would be sending Facebook data to a 3rd party (step 3), which might (depending on the data sent) require explicit user opt-in. Things become more onerous if SimpleGeo wanted to share its own user data with Gowalla. That would require an additional oAuth to SimpleGeo (authorizing step 4).</p>\n<p>Allowing websites to be federated and extensible will open up a whole new wave of innovation.  Ideally some spec like oAuth could include the multiple authorizations in a single authorization screen.  Facebook could also do this by allowing 3rd parties to be part of the Facebook Connect authorization process.  Inasmuch as Facebook’s seems to be trying to embed their social graph as deeply as possible into the core experiences of other websites, allowing extensible APIs would seem to be a smart move.</p>\n<p>* I have no connection to any of these companies (Facebook, Gowalla, SimpleGeo) and have no knowledge of their product plans beyond their public websites.  I am imagining functionality that Gowalla and SimpleGeo might include someday but for all I know they have no interest in these features – I just picked them somewhat arbitrarily as examples.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/08/31/converts-versus-equity-deals",
      "title": "Converts versus equity deals",
      "description": "There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts…",
      "url": "https://cdixon.org/2010/08/31/converts-versus-equity-deals",
      "published": "2010-08-31T00:00:00.000Z",
      "updated": "2010-08-31T00:00:00.000Z",
      "content": "<p>There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts). Paul Graham kicked it off by <a href=\"http://twitter.com/paulg/status/22319113993\">noting</a> that all the financings in the recent YC batch were converts. Prominent investors including <a href=\"http://www.bothsidesofthetable.com/2010/08/30/is-convertible-debt-preferable-to-equity/\">Mark Suster</a> and <a href=\"http://www.sethlevine.com/wp/2010/08/has-convertible-debt-won-and-if-it-has-is-that-a-good-thing\">Seth Levine</a> weighed in (I highly recommend reading their posts). While this debate might sound technical, at its core it is really about a difference in seed investing philosophy.</p>\n<p>I am a proponent of convertibles, but only with a cap (I’ve written about the problems of convertibles without caps <a href=\"http://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes/\">before</a> and never invest in them).  I believe that pretty much every other seed investor who advocates converts also assumes they have a cap.  So any discussion of convertibles without caps seems to me a red herring.</p>\n<p>There are two kind of rights that investors get when they put money in company.  The first are economic rights: basically that they make money when the investment is successful.  The second are control rights: board seats, the ability to block financings and acquisitions, the ability to change management, etc.  Converts give investors economics rights with basically zero control rights (legally it is just a loan with some special conversion provisions). Equity financings normally give investors explicit rights (most equity terms sheets specify board seats, specific blocking conditions, etc) in addition to standard shareholder rights under whatever state the company incorporated in (usually CA or Delaware).</p>\n<p>To the extent that I know anything about seed investing, I learned it from Ron Conway.  I remember one deal he showed me where the entire deal was done on a one page fax (not the term sheet – the entire deal).  Having learned about venture investing as a junior employee at a VC firm I was shocked. I asked him “what if X or Y happens and the entrepreneur screws you.”  Ron said something like “then I lose my money and never do business with that person again.”  It turned out he did very well on that company and has funded that entrepreneur repeatedly with great success.</p>\n<p>You can hire lawyers to try to cover every situation where founders or follow on investors try to screw you. But the reality is that if the founders want to screw you, you made a bet on bad people and will probably lose your money. You think legal documents will protect you? Imagine investors getting into a lawsuit with a two person early-stage team, or trying to fire and swap out the founders – the very thing they bet on.  And follow on investors (normally VCs) have a variety of ways to screw seed investors if they want to, whether the seed deal was a convert of equity.  So as a seed investor all you can really do is get economic rights and then make sure you pick good founders and VCs.</p>\n<p>Seed investing is a people business.  Good entrepreneurs understand this.  Ron was an investor in my last two companies and never had any control rights but had massive sway because he worked so hard to help us and gave such sage advice.  And most importantly, he carried great moral authority. We always knew he was speaking from deep experience and looking out for the company’s best interests – sometimes against his own economic interests.</p>\n<p>Like it or not, the seed investment world runs on trust and reputation – not legal documents.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/08/28/good-bizdev-cannibalizes-itself",
      "title": "Good bizdev cannibalizes itself",
      "description": "A few successful websites were built almost entirely through viral growth. The vast majority, however, started off by partnering with other…",
      "url": "https://cdixon.org/2010/08/28/good-bizdev-cannibalizes-itself",
      "published": "2010-08-28T00:00:00.000Z",
      "updated": "2010-08-28T00:00:00.000Z",
      "content": "<p>A few successful websites were built almost entirely through viral growth. The vast majority, however, started off by partnering with other, already successful websites. Even Google began by partnering with Yahoo. As superior as Google’s search algorithm was, it was very hard to get the masses to switch to a new search engine.</p>\n<p>In the web 1.0 world (approximately pre-2004), integrating two web services involved lots of manual work, such as negotiating legal contracts and custom technical integration. Creating these kinds of partnerships is usually referred to as “business development” or “BizDev” (personally, I usually just call it “BD”). In the web 2.0 world, it became common for websites to create fully functional, self-service API’s with standardized legal terms. This made it possible to drastically reduce the friction of integrating services. My <a href=\"http://hunch.com\">Hunch</a> cofounder Caterina Fake <a href=\"http://caterina.net/archive/000996.html\">coined</a> the term “BizDev 2.0″ to refer to this idea (and of course Flickr was a pioneer of super robust APIs).</p>\n<p>There is no question that removing legal and technical hurdles is a win for everyone (except lawyers). However, unless your service is extremely high profile and its value is easily understood, it still needs to be marketed to potential partners. Many websites won’t consider using a self-service API until they’ve seen it working on other sites with measurable results. So how do you overcome this particular kind of chicken-and-egg problem?</p>\n<p>During his interview process, Hunch’s <a href=\"http://hunch.com/people/shaival/\">Shaival Shah</a>, said something that struck a chord with me: he didn’t want to be called “VP BizDev” because, he said, a good BizDev person makes BizDev irrelevant. The idea is to create a number of BizDev 1.0 partnerships while simultaneously building and marketing a full service API.  If you can do BizDev 1.0 with some number of (ideally high profile) websites and demonstrate that it is valuable to them (ideally quantitatively), you can then scale your service BizDev 2.0 style. Maybe this could be called BizDev 1.5.</p>\n<p>Shaival wrote up a much more detailed post on <a href=\"http://shaival.posterous.com/cannabilize-business-development-by-populariz\">self-cannibalizing BizDev</a> that is well worth reading.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/08/21/the-bowling-pin-strategy",
      "title": "The bowling pin strategy",
      "description": "A huge challenge for user-generated websites is overcoming the chicken-and-egg problem: attracting users and contributors when you are…",
      "url": "https://cdixon.org/2010/08/21/the-bowling-pin-strategy",
      "published": "2010-08-21T00:00:00.000Z",
      "updated": "2010-08-21T00:00:00.000Z",
      "content": "<p>A huge challenge for user-generated websites is overcoming the <a href=\"http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/\">chicken-and-egg problem</a>: attracting users and contributors when you are starting with zero content. One way to approach this challenge is to use what Geoffrey Moore calls the <a href=\"http://edgehopper.com/%E2%80%A8-what-geoff-recognized-was-that-there-is-more-to-this-curve-he-recognized-that-there-is-a-difference-between-disruptive-innovations-those-that-are-changing-the-game-altogether-and-gard/\">bowling pin</a> strategy: find a niche where the chicken-and-egg problem is more easily overcome and then find ways to hop from that niche to other niches and eventually to the broader market.</p>\n<p>Facebook executed the bowling pin strategy brilliantly by starting at Harvard and then spreading out to other colleges and eventually the general public.  If Facebook started out with, say, 1000 users spread randomly across the world, it wouldn’t have been very useful to anyone.  But having the first 1000 users at Harvard made it extremely useful to Harvard students.  Those students in turn had friends at other colleges, allowing Facebook to hop from one school to another.</p>\n<p>Yelp also used a bowling pin strategy by focusing first on getting critical mass in one location – San Francisco – and then expanding out from there.  They also focused on activities that (at the time) social networking users favored: dining out, clubbing and shopping. Contrast this to their <a href=\"http://www.nytimes.com/2006/08/05/business/yourmoney/05money.html?_r=2&ref=business&pagewanted=all\">direct competitors</a> that were started around the same time, were equally well funded, yet have been far less successful.</p>\n<p>How do you identify a good initial niche?  First, it has to be a true community – people who have shared interests and frequently interact with one another.  They should also have a particularly strong need for your product to be willing to put up with an initial lack of content. Stack Overflow chose programmers as their first niche, presumably because that’s a community where the Stack Overflow founders were influential and where the competing websites weren’t satisfying demand. Quora chose technology investors and entrepreneurs, presumably also because that’s where the founders were influential and well connected. Both of these niches tend to be very active online and are likely to have have many other interests, hence the spillover potential into other niches is high. (Stack Overflow’s <a href=\"http://cooking.stackexchange.com/\">cooking site</a> is growing nicely – many of the initial users are programmers who crossed over).</p>\n<p>Location based services like Foursquare started out focused primarily on dense cities like New York City where users are more likely to serendipitously bump into friends or use tips to discover new things. Facebook has such massive scale that it is able to roll out its LBS product (Places) to 500M users at once and not bother with a niche strategy.  Presumably certain groups are more likely to use Facebook check-ins than others, but with Facebook’s scale they can let the users figure this out instead of having to plan it deliberately. That said, history suggests that big companies who rely on this “carpet bombing strategy” are often upended by focused startups who take over one niche at a time.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/07/22/graphs",
      "title": "Graphs",
      "description": "It has become customary to use “graph” to refer to the underlying data structures at social networks like Facebook. (Computer scientists…",
      "url": "https://cdixon.org/2010/07/22/graphs",
      "published": "2010-07-22T00:00:00.000Z",
      "updated": "2010-07-22T00:00:00.000Z",
      "content": "<p>It has become customary to use “<a href=\"http://en.wikipedia.org/wiki/Graph_(mathematics)\">graph</a>” to refer to the underlying data structures at social networks like Facebook. (Computer scientists call the study of graphs “<a href=\"http://en.wikipedia.org/wiki/Network_theory\">network theory</a>,” but on the web the word “network” is used to refer to the websites themselves).</p>\n<p>A graph consists of a set of nodes connected by edges. The original internet graph is the web itself, where webpages are nodes and links are edges. In social graphs, the nodes are people and the edges friendship. Edges are what mathematicians call <a href=\"http://en.wikipedia.org/wiki/Binary_relation\">relations</a>. Two important properties that relations can either have or not have are symmetry (if A ~ B then B ~ A) and transitivity (if A ~ B and B ~ C then A ~ C).</p>\n<p>Facebook’s social graph is symmetric (if I am friends with you then you are friends with me) but not transitive (I can be friends with you without being friends with your friend).  You could say friendship is probabilistically transitive in the sense that I am more likely to like someone who is a friend’s friend then I am a user chosen at random. This is basis of Facebook’s friend recommendations.</p>\n<p>Twitter’s graph is probably best thought of as an interest graph. One of Twitter’s central innovations was to discard symmetry: you can follow someone without them following you. This allowed Twitter to evolve into an extremely useful publishing platform, <a href=\"http://cdixon.org/2009/09/30/twitter-killed-rss-and-thats-a-bad-thing/\">replacing RSS</a> for many people. The Twitter graph isn’t transitive but one of its most powerful uses is retweeting, which gives the Twitter graph what might be called curated transitivity.</p>\n<p>Graphs can be implicitly or explicitly created by users. Facebook and Twitter’s graphs were explicitly created by users (although Twitter’s Suggested User List made much of the graph de facto implicit). Google Buzz attempted to create a social graph implicitly from users’ emailing patterns, which didn’t <a href=\"http://www.readwriteweb.com/archives/google_gets_sued_why_it_should_have_said_please.php\">seem</a> to work very well.</p>\n<p>Over the next few years we’ll see the rising importance of other types of graphs. Some examples:</p>\n<p><strong>Taste:</strong> At <a href=\"http://hunch.com\">Hunch</a> we’ve created what we call the taste graph. We created this implicitly from questions answered by users and other data sources. Our thesis is that for many activities – for example deciding what movie to see or blouse to buy – it’s more useful to have the neighbors on your graph be people with similar tastes versus people who are your friends.</p>\n<p><strong>Financial Trust:</strong> Social payment startups like <a href=\"https://squareup.com/\">Square</a> and <a href=\"http://www.venmo.com\">Venmo</a> are creating financial graphs – the nodes are people and institutions and the relations are financial trust. These graphs are useful for preventing fraud, streamlining transactions, and lowering the barrier to accepting non-cash payments.</p>\n<p><strong>Endorsement:</strong> An endorsement graph is one in which people endorse institutions, products, services or other people for a particular skill or activity. LinkedIn created a successful professional graph and a less successful endorsement graph. Facebook seems to be trying to layer an endorsement graph on its social graph with its Like feature. A general endorsement graph could be useful for purchasing decisions and hence highly <a href=\"http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">monetizable</a>.</p>\n<p><strong>Local</strong>: Location-based startups like <a href=\"http://foursquare.com\">Foursquare</a> let users create social graphs (which might evolve into better social graphs than what Facebook has since users seem to be more selective friending people in local apps). But probably more interesting are the people and venue graphs created by the check-in patterns. These local graphs could be useful for, among other things, recommendations, coupons, and advertising.</p>\n<p>Besides creating graphs, Facebook and Twitter (via Facebook Connect and OAuth) created identity systems that are extremely useful for the creation of 3rd party graphs. I expect we’ll look back on the next few years as the golden age of graph innovation.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are",
      "title": "It’s not that seed investors are smarter – it’s that entrepreneurs are",
      "description": "Paul Kedrosky recently speculated that there might be seed fund “crash” looming. Liz Gannes followed up by suggesting seed investors are a…",
      "url": "https://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are",
      "published": "2010-07-05T00:00:00.000Z",
      "updated": "2010-07-05T00:00:00.000Z",
      "content": "<p>Paul Kedrosky recently <a href=\"http://paul.kedrosky.com/archives/2010/06/the_coming_supe.html\">speculated</a> that there might be seed fund “crash” looming. Liz Gannes followed up by <a href=\"http://gigaom.com/2010/06/29/is-there-a-super-angel-crash-looming/\">suggesting</a> seed investors are a fad akin to reality-TV celebrities:</p>\n<blockquote>\n<p>In many ways, what [prominent seed funds] are saying is that they’re just smarter, and as such will outlast all the copycat and wannabe seed funders as well as the stale VCs with a fresh coat of paint. But then — Kim Kardashian is the only one who can make a living tweeting. At some point it will be quite obvious whether the super angels’ investments and strategy succeed or fail.</p>\n</blockquote>\n<p>Here’s the key point these analyses overlook: <em>It’s not the seed investors who are smarter – it’s the entrepreneurs</em>. Consider the case of the last company I co-founded, <a href=\"http://www.siteadvisor.com\">SiteAdvisor</a>. We raised our first round of $2.6M at a $2.5M pre-money valuation. After the first round of funding, investors owned 56% of the company. Moreover, the $2.6M came in 3 <a href=\"http://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments/\">tranches</a>: $500K, another $500K, and then $1.6K.  To get the 2nd and 3rd tranches we had to hit predefined milestones and re-pitch the VC partnerships. Had we instead raised the first $1M from seed funds, we would have been free to raise the remaining money at a higher valuation. In fact, after we spent less than $1M building the product, we raised more money at a $16M pre-money valuation. <em>We never even touched the $1.6M third tranche even though it caused us to take significant dilution\\</em>. This was a very common occurrence before the rise of seed funds, due to VCs pressuring entrepreneurs to raise more money than they needed so the VCs could “<a href=\"http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/\">put more money to work</a>.” When SiteAdvisor was eventually acquired, we had spent less than a third of the money we raised. Compare the dilution we actually took to what we could have taken had we raised seed before VC:</p>\n<p><a href=\"images/screen-shot-2010-07-05-at-3-55-44-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 448px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 51.5625%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2010 07 05 at 3 55 44 pm\"\n        title=\"Screen shot 2010-07-05 at 3.55.44 PM\"\n        src=\"/static/18281dacf6465f9d56f2db97bcc0afe4/6e872/screen-shot-2010-07-05-at-3-55-44-pm.png\"\n        srcset=\"/static/18281dacf6465f9d56f2db97bcc0afe4/924ad/screen-shot-2010-07-05-at-3-55-44-pm.png 170w,\n/static/18281dacf6465f9d56f2db97bcc0afe4/f570f/screen-shot-2010-07-05-at-3-55-44-pm.png 341w,\n/static/18281dacf6465f9d56f2db97bcc0afe4/6e872/screen-shot-2010-07-05-at-3-55-44-pm.png 448w\"\n        sizes=\"(max-width: 448px) 100vw, 448px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2010-07-05 at 3.55.44 PM</figcaption>\n  </figure></a></p>\n<p>Professional seed funds barely existed back then, especially on the East Coast. And even if they did, I’m not sure I would have been savvy enough to opt for them over VCs. I thought the brands of the big VCs would help me and didn’t really understand the dynamics of fund raising.* Today, entrepreneurs are much savvier, thanks to the proliferation of good advice on blogs, via mentorship programs, and a generally more active and connected entrepreneur community. For example, <a href=\"http://cdixon.org/2009/11/09/presenting-founder-collective/\">Founder Collective</a> recently backed two Y-Combinator startups who decided to raise money exclusively from seed investors despite having top-tier VCs throwing money at them at higher valuations. These were “hot” companies who had plenty of options but realized they’d take less start-to-exit dilution by raising money from helpful seed investors first and VCs later.</p>\n<p>Will there be there a seed fund crash? Seed fund returns are highly correlated with VC returns which are highly correlated with public markets and the overall economy. I have no idea what the state of the overall economy will be over the next few years. Perhaps it will crash and take VCs and seed funds down with it. But I do have strong evidence that prominent seed funds will outperform top-tier VC funds, because I know the details of their investments, and that their portfolios contain the same companies as top-tier VCs <em>except the they invested in earlier rounds at significantly lower valuations</em>.  So unless these prominent seed funds were incredibly unlucky picking companies (and since they are extremely diversified I highly doubt that), their returns will significantly beat top-tier VC returns.</p>\n<p>* Note that we have nothing but gratitude toward the SiteAdvisor VCs – Rob Stavis at Bessemer and Hemant Taneja at General Catalyst. They offered what was considered a market deal at the time and supported us when (<a href=\"http://cdixon.org/2010/07/05/its-not-that-seed-investors-are-smarter-its-that-entrepreneurs-are/#comment-60677689\">almost</a>) no one else would.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/06/26/competition-is-overrated",
      "title": "Competition is overrated",
      "description": "Your #1 competitor starting out will always be the BACK button, nothing else. – Garry Tan Suppose you have an idea for a startup, and then…",
      "url": "https://cdixon.org/2010/06/26/competition-is-overrated",
      "published": "2010-06-26T00:00:00.000Z",
      "updated": "2010-06-26T00:00:00.000Z",
      "content": "<blockquote>\n<p>Your #1 competitor starting out will always be the BACK button, nothing else. – <a href=\"http://plank.ly/garrytan\">Garry Tan</a></p>\n</blockquote>\n<p>Suppose you have an idea for a startup, and then do some research only to discover there are already similar products on the market. You become disheartened and wonder if you should abandon your idea.</p>\n<p>In fact, the existence of competing products is a meaningful signal, but not necessarily a negative one.  Here are some things to consider.</p>\n<ol>\n<li>Almost every good idea has already been built. Sometimes new ideas are just ahead of their time. There were probably 50 companies that tried to do viral video sharing before YouTube. Before 2005, when YouTube was founded, relatively few users had broadband and video cameras. YouTube also took advantage of the latest version of Flash that could play videos seamlessly.</li>\n</ol>\n<p>Other times existing companies simply didn’t execute well. Google and Facebook launched long after their competitors, but executed incredibly well and focused on the right things. When Google launched, other search engines like Yahoo, Excite, and Lycos were focused on becoming multipurpose “portals” and had de-prioritized search (Yahoo even outsourced their search technology).</p>\n<ol start=\"2\">\n<li>The fact that other entrepreneurs thought the idea was good enough to build can be a positive signal. They probably went through some kind of vetting process like talking to target users and doing some market research. By launching later, you can piggyback off the work they’ve already done. That said, you do need to be careful not to get sucked into groupthink. For example, many techies follow the dictum “build something you would use yourself,” which leads to a glut of techie-centric products. There are tons Delicious and Digg clones even though it’s not clear those sites have appeal beyond their core techie audience.</li>\n<li>That other people tried your idea without success could imply it’s a bad idea or simply that the timing or execution was wrong. Distinguishing between these cases is hard and where you should apply serious thought. If you think your competitors executed poorly, you should develop a theory of what they did wrong and how you’ll do better. Group buying had been tried a hundred times, but Groupon was the first to succeed, specifically by using coupons to track sales and by acquiring the local merchants first and then getting users instead of vice versa. If you think your competitor’s timing was off, you should have a thesis about what’s changed to make now the right time. These changes could come in a variety of forms: for example, it could be that users have become more sophisticated, the prices of key inputs have dropped, or that prerequisite technologies have become widely adopted.</li>\n</ol>\n<p>Startups are primarly competing against indifference, lack of awareness, and lack of understanding — not other startups. For web startups this means you should worry about users simply not coming to your site, or when they do come, hitting the BACK button.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/06/19/builders-and-extractors",
      "title": "Builders and extractors",
      "description": "Tim O’Reilly poses a question every entrepreneur and investor should consider: are you creating more value for others than you capture for…",
      "url": "https://cdixon.org/2010/06/19/builders-and-extractors",
      "published": "2010-06-19T00:00:00.000Z",
      "updated": "2010-06-19T00:00:00.000Z",
      "content": "<p>Tim O’Reilly <a href=\"http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.html\">poses</a> a question every entrepreneur and investor should consider: are you creating more value for others than you capture for yourself? Google makes billions of dollars in annual profits, but generates many times that in productivity gains for other people. Having a positive social contribution isn’t limited to non-profit organizations – non-profits just happen to have a zero in the “value capture” column of the ledger. Wall Street stands at the other extreme: boatloads of value capture and very little value creation.</p>\n<p>I <a href=\"http://gigaom.com/2010/05/28/chris-dixon/\">think</a> of people who aim to create more value than they capture as “builders” and people who don’t as “extractors.” Most entrepreneurs are natural-born builders. They want to create something from nothing and are happy to see the benefits of their labor spill over to others. Sadly, the builder mindset isn’t as widespread among investors. I recently heard a well-known Boston VC say: “There are 15 good deals a year and our job is to try to win those deals” – a statement that epitomizes the passive, extractor mindset. The problem with <a href=\"http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/\">VC seed programs</a> is they not only fail to enlarge the pie, they actually shrink it by making otherwise fundable companies unfundable through negative <a href=\"http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/\">signaling</a>.</p>\n<p>The good news is there is a large – and growing – class of investors with the builder mindset. Y Combinator and similar mentorship programs are true builders: their startups probably wouldn’t have existed without them (and the founders might have ended up at <a href=\"http://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies/\">big companies</a>). There are also lots of angel and seed investors who are builders. A few that come to mind: Ron Conway, Chris Sacca, Mike Maples (Floodgate), Roger Ehrenberg, Keith Rabois, Ken Lehrer, Jeff Clavier, Betaworks, Steve Anderson, and Aydin Senkut. There are also VCs who are builders. Ones that I’ve worked with directly recently include Union Square, True, Bessemer, Khosla, Index, and First Round.</p>\n<p>Given that there is a surplus of venture money, entrepreneurs and seed investors now have the luxury of choosing to work with builders and avoid extractors. Hopefully over time this will weed out the extractors.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/06/14/pivoting",
      "title": "Pivoting",
      "description": "My Hunch cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far…",
      "url": "https://cdixon.org/2010/06/14/pivoting",
      "published": "2010-06-14T00:00:00.000Z",
      "updated": "2010-06-14T00:00:00.000Z",
      "content": "<p>My <a href=\"http://hunch.com/\">Hunch</a> cofounders and I frequently ask ourselves: “If we were to start over today, would we build our product the same way we had so far?” This exercise is meant to counter a number of common cognitive biases, such as:</p>\n<p>1. The <a href=\"http://en.wikipedia.org/wiki/Sunk_costs\">sunk costs</a> trap.  People tend to overvalue past investments when making forward-looking investment decisions. From the rumors I’ve heard, Joost was a company that fell into the sunk costs trap. In the beginning, their p2p architecture was their main differentiator. Thus they invested a lot in building p2p infrastructure and required users to download a software client. When browser-based web video companies like Hulu and YouTube surpassed them, Joost switched to a browser-based client but still required a special plugin so they could maintain their p2p architecture. In fact, the problem the p2p architecture was solving – reducing bandwidth costs – had, in the meantime, become a secondary basis of competition.  By the time Joost finally discarded the p2p model, it was too late.</p>\n<p>2. The <a href=\"http://views.washingtonpost.com/leadership/panelists/2009/02/the-bridge-on-the-river-kwai.html\"><em>Bridge on the River Kwai</em> syndrome</a>.  This is when entrepreneurs fall so in love with their engineering project qua engineering project that they lose site of the larger mission.  Former engineers (like me) are particularly susceptible to this as we often get excited about technology for its own sake. Many products can be built much more quickly and cheaply by settling for good technology plus a bunch of hacks – human editing, partnerships, using 3rd party software – versus creating a perfect technology from scratch. At my last company, SiteAdvisor, we made the decision up front to build a non-perfect system that did 99% of what a much more expensive, “perfect” technological solution would have done.  The software wasn’t always pretty – to the annoyance of some of our engineers – but it worked.</p>\n<p>3. Solving the wrong problem. Location-based social networks have been around for years. Foursquare came along just a year ago and has seemingly surpassed its predecessors. The other companies built elaborate infrastructures: e.g they partnered with wireless carriers so that users’ locations could be tracked in the background without having to “check-in”.  Foursquare built a relatively simple app that added some entertaining features like badges and mayorships. It turned out that requiring users to manually check in was not only easier to build but also appealing as users got more control over their privacy. Foursquare’s competitors were solving the wrong problem.</p>\n<p>Ask yourself: if you started over today, would you build the same product?  If not, consider significant changes to what you are building. The popular word for this today is “pivoting” and I think it is apropos. You aren’t throwing away what you’ve learned or the good things you’ve built. You are keeping your strong leg grounded and adjusting your weak leg to move in a new direction.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes",
      "title": "Designing products for single and multiplayer modes",
      "description": "The first million people who bought VCRs bought them before there were any movies available to watch on them. They just wanted to “time…",
      "url": "https://cdixon.org/2010/06/12/designing-products-for-single-and-multiplayer-modes",
      "published": "2010-06-12T00:00:00.000Z",
      "updated": "2010-06-12T00:00:00.000Z",
      "content": "<p>The first million people who bought VCRs bought them before there were any movies available to watch on them. They just wanted to “time shift” TV shows – what we use DVRs for today. Once there were millions of VCR owners it became worthwhile for Hollywood to start selling and renting movies to watch on them. Eventually watching rented movies became the dominant use of VCRs, and time shifting a relatively niche use. Thus, a product that eventually had very strong network effects* got its initial traction from a “standalone use” – where no other VCR owners or complementary products needed to exist.</p>\n<p>I was talking to my friend <a href=\"http://foundercollective.com/people/Zach-Klein\">Zach Klein</a> recently who referred to products as having single player and multiplayer modes. I like Zach’s terminology because: 1) it is borrowed from video games where a lot of thought has gone into making these modes compelling in distinct ways, 2) the word “mode” reminds us that people can switch from moment to moment – that even when a product is primarily social or networked and has reached critical mass it might still be useful to offer a single player mode.</p>\n<p>Many products that we think of as strictly multiplayer also have single player modes. In many cases this single player mode helped adoption in the early stages when the network effects were not yet strong. For example, you could use Flickr just to store photos privately if you wanted to. I thought of Foursquare as strictly multiplayer until my <a href=\"http://hunch.com\">Hunch</a> cofounder <a href=\"http://www.tompinckney.com/\">Tom Pinckney</a> told me he uses it solely to keep track of restaurants he’s gone to so he’ll remember which ones to go back to. For some products it’s really hard to imagine single player modes. This is true of pure communication products like Skype and perhaps also social networks like Facebook (although apps like games seem to have provided single player modes for Facebook).</p>\n<p>–</p>\n<p>* Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks.  Network effects can be your friend or your enemy depending on whether your product has reached critical mass.  Getting to critical mass in network effect markets is sometimes called overcoming the “chicken and egg problem.”  <a href=\"http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/\">More here.</a></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/06/08/inside-versus-outside-financings-the-nightclub-effect",
      "title": "Inside versus outside financings: the nightclub effect",
      "description": "At some point in the life of a venture-backed startup there typically arises a choice between doing an inside round, where the existing…",
      "url": "https://cdixon.org/2010/06/08/inside-versus-outside-financings-the-nightclub-effect",
      "published": "2010-06-08T00:00:00.000Z",
      "updated": "2010-06-08T00:00:00.000Z",
      "content": "<p>At some point in the life of a venture-backed startup there typically arises a choice between doing an inside round, where the existing investors lead the new financing, or an outside round, where new investors lead the new financing. At this point interesting game-theoretic dynamics arise among management, existing investors, and prospective new investors.</p>\n<p>If the company made the mistake of including big VCs in their seed round, they’ll face this situation raising their Series A.  If the company was smart and only included true seed investors in their initial round, they won’t face this issue until their Series B.</p>\n<p>Here’s a typical situation. Say the startup raised a Series A at a $15M post-money valuation and is doing pretty well. The CEO offers the existing VCs the option of leading an inside round but the insiders are lukewarm and suggest the CEO go out to test the financing market.  The CEO does so and gets offers from top-tier VCs to invest at a significant step up, say, $30M pre. The insiders who previously didn’t want to do an inside round are suddenly really excited about the company because they see that other VCs are really excited about the company.</p>\n<p>This is what I call the <a href=\"http://twitter.com/gideonyu/status/13933414669\">nightclub effect</a>*. You think your date isn’t that attractive until you bring him/her to a nightclub and everyone in the club hits on him/her. Consequently, you now think your date is really attractive.</p>\n<p>Now the inside investors have 3 choices:  1) Lead the financing themselves. This makes the CEO look like a jerk that used the outsiders as stalking horses. It might also prevent the company from getting a helpful, new VC involved. 2) Do pro-rata (normally defined as: X% of round where X is the % ownership prior to round).  This is theoretically the best choice, although often in real life the math doesn’t work since a top-tier new VC will demand owning 15-20% of the company which is often impossible without raising a far bigger round than the company needs. (When you see head-scratchingly large Series B rounds, this is often the cause). 3) Do less than pro-rata. VCs hate this because they view pro-rata as an option they paid for and especially when the company is “hot” they want to exercise that right. The only way to get them down in this case is for management to wage an all out war to force them to. This can get quite ugly.</p>\n<p>I’ve come to think that the best solution to this is to get the insiders to explicitly commit ahead of time to either leading the round or being willing to back down from their pro-rata rights for the right new investor. This lets the CEO go out and find new investors in good faith without using them as stalking horses and without wasting everyone’s time.</p>\n<p>* don’t miss @peretti’s <a href=\"http://twitter.com/cdixon/status/13934081578\">response</a>.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry",
      "title": "Steve Jobs single-handedly restructured the mobile industry",
      "description": "With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly…",
      "url": "https://cdixon.org/2010/06/06/steve-jobs-single-handedly-restructured-the-mobile-industry",
      "published": "2010-06-06T00:00:00.000Z",
      "updated": "2010-06-06T00:00:00.000Z",
      "content": "<p>With the introduction of the iPhone, Steve Jobs achieved something that might be unique in the history of business: he single-handedly upended the power structure of a major industry.  In the US, before the iPhone, the carriers (Verizon, AT&T, Sprint, T-Mobile) had an ironclad grip on the rest of the value chain – particularly, handset makers and app makers.</p>\n<p>Ask anyone who ran or invested in a mobile app startup pre-iPhone (I invested in one myself). Since the carriers had all the power, getting any distribution (which usually meant getting on the handset “deck”) meant doing a business development deal with the carriers. Business development in this case meant finding the right people at those companies, sending them iPods, taking them to baseball games, and basically figuring out ways to convince them to work with you instead of the 5,000 other people sending them iPods and baseball tickets.  The basis of competition was salesmanship and capital, not innovation or quality.</p>\n<p>The carriers had so much power because consumers made their purchasing decisions by choosing a carrier first and a handset second. Post-iPhone, tens of millions of people started choosing handsets over carriers. People like me suffer through AT&T’s poor service and aggressive pricing because I love the iPhone so much.</p>\n<p>I’ve talked to a number of mobile app startups lately who say their former contacts at the carriers are shell shocked: no one is knocking on their doors anymore. I guess they have to buy their own iPods and baseball tickets now.</p>\n<p>Yes, Apple has rejected some apps for seemingly arbtrary or selfish reasons and imposed aggressive controls on developers. But the iPhone also paved the way for Android and a new wave of handset development. The people griping about Apple’s “closed system” are generally people who are new to the industry and didn’t realize how bad it was before.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/06/04/there-are-three-new-york-cities",
      "title": "There are three New York Cities",
      "description": "There are roughly three New Yorks. There is, first, the New York of the man or woman who was born here, who takes the city for granted and…",
      "url": "https://cdixon.org/2010/06/04/there-are-three-new-york-cities",
      "published": "2010-06-04T00:00:00.000Z",
      "updated": "2010-06-04T00:00:00.000Z",
      "content": "<blockquote>\n<p>There are roughly three New Yorks.</p>\n<p>There is, first, the New York of the man or woman who was born here, who takes the city for granted and accepts its size and turbulence as natural and inevitable.</p>\n<p>Second, there is the New York of the commuter—the city that is devoured by locusts each day and spat out each night.</p>\n<p>Third, there is the New York of the person who was born somewhere else and came to New York in quest of something. Of these three trembling cities the greatest is the last—the city of final destination, the city that is a goal. It is this third city that accounts for New York’s high-strung disposition, its poetical deportment, its dedication to the arts, and its incomparable achievements. Commuters give the city its tidal restlessness; natives give it solidity and continuity; but the settlers give it passion. And whether it is a farmer arriving from Italy to set up a small grocery store in a slum, or a young girl arriving from a small town in Mississippi to escape the indignity of being observed by her neighbors, or a boy arriving from the Corn Belt with a manuscript in his suitcase and a pain in his heart, it makes no difference: each embraces New York with the intense excitement of first love, each absorbs New York with the fresh eyes of an adventurer, each generates heat and light to dwarf the Consolidated Edison Company.</p>\n</blockquote>\n<p><em>Here is New York</em>, E. B. White, 1949</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core",
      "title": "While Google fights on the edges, Amazon is attacking their core",
      "description": "Google is fighting battles on almost every front:  social networking, mobile operating systems, web browsers, office apps, and so on.  Much…",
      "url": "https://cdixon.org/2010/05/22/while-google-fights-on-the-edges-amazon-is-attacking-their-core",
      "published": "2010-05-22T00:00:00.000Z",
      "updated": "2010-05-22T00:00:00.000Z",
      "content": "<p>Google is fighting battles on almost every front:  social networking, mobile operating systems, web browsers, office apps, and so on.  Much of this makes sense, inasmuch as it is <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">strategic for them to dominate or commoditize</a> each layer that stands between human beings and online ads.  But while they are doing this, they are leaving their core business vulnerable, particularly to Amazon.</p>\n<p>When legendary VC John Doerr quit Amazon’s board a few months ago, savvy industry observers like TechCrunch <a href=\"http://techcrunch.com/2010/03/17/choosing-sides-john-doerr-leaves-amazons-board-of-directors/\">speculated</a> that Google might begin directly competing with Amazon:</p>\n<blockquote>\n<p>[Google] competes with Amazon in a number of areas, particularly web services and big data. And down the road, Google may compete directly in other ways as well. Froogle was a flop, but don’t think Google doesn’t want a bigger chunk of ecommerce revenue from people who begin their product searches on their search engine.*</p>\n</blockquote>\n<p>In fact, Google and Amazon’s are already direct competitors in their core businesses. Like Amazon, Google makes the vast majority of its revenue from users who are <a href=\"http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">looking to make an online purchase</a>. Other query types – searches related to news, blog posts, funny videos, etc. – are mostly a <a href=\"http://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too/\">loss leaders for Google</a>.</p>\n<p><em>The key risk for Google is that they are heavily dependent on</em> <em>online purchasing being a two-stage process</em>:  the user does a search on Google, and then clicks on an ad to buy something on another site. As long as the e-commerce world is sufficiently fragmented, users will prefer an intermediary like Google to help them find the right product or merchant. But as Amazon <a href=\"http://www.businessinsider.com/chart-of-the-day-amazon-sales-vs-retail-2010-4?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+typepad%2Falleyinsider%2Fsilicon_alley_insider+%28Silicon+Alley+Insider%29\">increasingly dominates</a> the e-commerce market, this fragmentation could go away along with users’ need for an intermediary.**</p>\n<p><img src=\"/13fbc2e5fab4fc9f9ea06bcffab273f5/chart-of-the-day-amazon-e-commerce-retail-sales-2003-2009-1.gif\" title=\"chart-of-the-day-amazon-e-commerce-retail-sales-2003-2009-1\"></p>\n<p>Moreover, Google’s algorithmic results for product searches are generally poor. (Try using Google to decide what <a href=\"http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html\">dishwasher</a> to buy). These poor results might actually lead to short term revenue increases since the sponsored links are superior to the unsponsored ones.  But long term if Google continues producing poor product search results and Amazon continues consolidating the e-commerce market, Google’s core business is at serious risk.</p>\n<p>—</p>\n<p>* Froogle (and Google Products) have been unsuccessful most likely because Google has had no incentive to make them better: they make plenty of money on these queries already on a CPC basis, and would likely make less if they moved to a CPA model.</p>\n<p>** Most Amazon Prime customers probably already do skip Google and go directly to Amazon.  I know I do.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads",
      "title": "Facebook is about to try to dominate display ads the way Google dominates text ads",
      "description": "It is customary to divide online advertising into two categories: direct response and brand advertising. I prefer instead to divide it…",
      "url": "https://cdixon.org/2010/05/15/facebook-is-about-to-try-to-dominate-display-ads-the-way-google-dominates-text-ads",
      "published": "2010-05-15T00:00:00.000Z",
      "updated": "2010-05-15T00:00:00.000Z",
      "content": "<p>It is customary to divide online advertising into two categories: direct response and brand advertising. I prefer instead to divide it according to the mindset of users: whether or not they are actively looking to purchase something (i.e. they have <a href=\"http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">purchasing intent</a>).*</p>\n<p>When users are actively looking to purchase something, they typically go to search engines or e-commerce sites. Through advertising or direct sales, these sites <a href=\"http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/\">harvest intent</a>. Google and Amazon are the biggest financial beneficiaries of intent harvesting.</p>\n<p>When the user is not actively looking to buy something, the goal of an online ad is to generate intent. The intent generation market is still fairly fragmented and will grow rapidly over the next few years as brand advertising increasingly moves online. P&G – which alone spends almost $4B/year on brand advertising – needs to convince the next generation of consumers that Crest is better than Colgate. This is why Google paid such a premium for Doubleclick, Yahoo for Right Media, and Microsoft for aQuantive (MS’s biggest acquisition ever).</p>\n<p>In 2003, Google introduced AdSense, a program to <a href=\"http://www.google.com/press/pressrel/advertising.html\">syndicate</a> their intent harvesting text ads beyond Google’s main property Google.com.  The playbook they followed was: use their popular website to build a critical mass of advertisers; then use that critical mass to run an off-property network that offers the highest payouts to publishers. AdSense became so dominant that competitors like Yahoo quit the syndicated ad business altogether. Today, Google has such a powerful position that they don’t disclose percentage revenue splits to publishers and extract the vast majority of the profits.</p>\n<p>It is widely believed that Facebook will soon follow the AdSense playbook by introducing an off-property ad network. They’ll try to use their strong base of advertisers to dominate intent generating ads the way AdSense dominated intent harvesting ads.</p>\n<p>But to win the intent generation ad battle, data is as important as a critical mass of advertisers. For intent harvesting, users simply type what they are looking for into a search box. For intent generating ads, you need to use data to make inferences about what might influence the user.</p>\n<p>This is what the introduction of the Facebook Like button is all about.  Intent generating ads – which mostly means displays ads – have notoriously low click through rates (well below 1%). Attempts to improve these numbers through demographics have basically failed. Many startups are having success using social data to target ads today. But the holy grail for targeting intent generating ads is taste data – which basically means what the user likes. Knowing, for example, that a user liked Avatar is an incredibly useful datapoint for targeting an Avatar 2 ad.</p>\n<p>Publishers who adopt Facebook’s Like feature may get more traffic and perhaps a better user experience as a result.  But they should hope the intent generation ad market doesn’t end up like the intent harvesting ad market – with one dominant player commanding the lion’s share of the profits.</p>\n<p>* Most text ads are about intent harvesting and most display ads are about intent generation, but they are not coreferential distinctions. For example, with techniques like “search retargeting” (you do a Google search for washing machines and the later on another site see a display ad for washing machines), sometimes intent harvesting is delivered through display ads.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up",
      "title": "Facebook, Zynga, and buyer-supplier hold up",
      "description": "The brewing fight between Facebook and Zynga is what is known in economic strategy circles as “buyer-supplier hold up.” The classic…",
      "url": "https://cdixon.org/2010/05/08/facebook-zynga-and-buyer-supplier-hold-up",
      "published": "2010-05-08T00:00:00.000Z",
      "updated": "2010-05-08T00:00:00.000Z",
      "content": "<p>The <a href=\"http://techcrunch.com/2010/05/07/zynga-gunning-up-and-lawyering-up-for-war-against-facebook-with-zynga-live/\">brewing fight</a> between Facebook and Zynga is what is known in economic strategy circles as “buyer-supplier <a href=\"http://en.wikipedia.org/wiki/Hold-up_problem\">hold up</a>.” The classic framework for analyzing a firm’s strategic position is Michael Porter’s <a href=\"http://www.quickmba.com/strategy/porter.shtml\">Five Forces</a>. In Porter’s framework, Zynga’s strategic weakness is extreme supplier concentration – they get almost all their traffic from Facebook.</p>\n<p>It is in Facebook’s economic interest to extract most of Zynga’s profits, leaving them just enough to keep investing in games and advertising. Last year’s <a href=\"http://techcrunch.com/2009/10/28/d-day-for-facebook-app-developers/\">reduced notification change</a> seemed like one move in this direction as it forced game makers to buy more ads instead of getting traffic organically. This probably hurt Zynga’s profitability but also helped them fend off less well-capitalized rivals. Facebook could also hold up Zynga by entering the games business itself, but this seemed unlikely since thus far Facebook has kept its features limited to things that are “utility like.”</p>\n<p>The way Facebook now seems to be holding up Zynga – requiring Zynga to use their payments system –  is particularly clever.  First, payments are still very much a “utility like” feature, and arguably one that benefits the platform, so it doesn’t come across as flagrant hold up. It is also clever because – assuming Facebook has insight into Zynga’s profitability – Facebook can charge whatever percentage gets them an optimal share of Zynga’s profits.</p>\n<p>The risk for Zynga is obvious — if they don’t diversify their traffic sources very soon, they are left with a choice between losing profits and losing their entire business.  But there is a risk for Facebook as well. If buyers of traffic (e.g. app makers) fear future hold up, they are less likely to make investments in the platform. The biggest mistake platforms make isn’t charging fees (Facebook) or competing with complements (Twitter), it’s being inconsistent.  Apple also charges 30% fees but they’ve been mostly consistent about it. App makers feel comfortable investing in the Apple platform and even having most of their business depend on them in a way they don’t on Facebook or Twitter.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted",
      "title": "Old VC firms: get ready to be disrupted",
      "description": "If the U.S. economy were a company, the VC industry would be the R&D department. The financing for the VC industry comes from so-called LPs…",
      "url": "https://cdixon.org/2010/05/02/old-vc-firms-get-ready-to-be-disrupted",
      "published": "2010-05-02T00:00:00.000Z",
      "updated": "2010-05-02T00:00:00.000Z",
      "content": "<p>If the U.S. economy were a company, the VC industry would be the R&D department. The financing for the VC industry comes from so-called LPs (Limited Partners) – mostly university endowments, pension funds, family funds, and funds-of-funds.</p>\n<p>These LPs wield tremendous power, yet very few of them understand how startups or venture capital actually works. I was reminded of this recently when I saw this quote from a prominent fund-of-funds, <a href=\"http://bits.blogs.nytimes.com/2010/03/11/battery-ventures-raises-a-fresh-750-million/\">justifying</a> their investment in a 30-year old venture firm:</p>\n<blockquote>\n<p>“As the amount of money raised by venture firms shrinks, older firms that were around before the dot-com bubble will benefit,” said Michael Taylor, a managing director at HarbourVest. “These firms have track records, brand names and knowledge about how to avoid making mistakes that younger firms do not necessarily have,” he said.</p>\n</blockquote>\n<p>These older firms do often have track records – they’ve survived precisely because at one point they delivered good returns.  But it’s a mistake to assume that — because VC brands and institutional knowledge persist – past returns will predict future returns.  Here’s why.</p>\n<p><strong>VC brand names do not persist</strong>.  From the perspective of VCs and entrepreneurs, VC brands rise and fall very quickly. Given the <a href=\"http://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc/\">excess supply</a> of venture dollars, top tier entrepreneurs are frequently selecting their investors, not vice versa.  The VCs most sought after are mostly new firms:  big firms like Andreesson Horowitz, Union Square Ventures, and First Round, and micro-VCs like Floodgate (fka Maples), Betaworks, and Ron Conway.</p>\n<p><strong>VC firms don’t accrue institutional knowledge.</strong> VC returns are driven by partners, not firms. <a href=\"http://cdixon.org/2009/08/19/its-the-partner-not-the-firm/\">Studies</a> have shown this, as will a quick perusal of the big exits at prominent VC firms. When key partners switch firms or become less active, VC firms retain very little residual value.  Some service firms — for example consulting firms like McKinsey — invest heavily in accruing institutional knowledge by developing proprietary methodologies and employee apprenticeship programs.  VCs develop no real IP and rarely have serious apprenticeship programs.</p>\n<p>There is an old saying among big company CIOs that “no one gets fired for buying IBM.”  It’s much easier for a fund-of-fund partner to defend investments based on a VC’s track records. It’s a safe but bad strategy.</p>\n<p>To intelligently invest in VC firms, you need to roll up your sleeves and dive deep into the startup world.  You need to learn about the startups themselves, assess the entrepreneurs, use their products, analyze market dynamics – all things that good VCs and entrepreneurs do. If you want to understand a VCs brand and abilities don’t look at their track record in the 90s – ask today’s entrepreneurs.  The answer will likely surprise you.</p>\n<p>Unfortunately, very few LPs do this.  As a result, a massive amount of R&D capital is being misallocated.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/04/25/the-tradeoff-between-open-and-closed",
      "title": "The tradeoff between open and closed",
      "description": "When having the “open vs closed” debate regarding a technology platform, a number of distinctions need to be made. First, what exactly is…",
      "url": "https://cdixon.org/2010/04/25/the-tradeoff-between-open-and-closed",
      "published": "2010-04-25T00:00:00.000Z",
      "updated": "2010-04-25T00:00:00.000Z",
      "content": "<p>When having the “open vs closed” debate regarding a technology platform, a number of distinctions need to be made. First, what exactly is meant by “open.” Here’s a great chart from a <a href=\"http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264012\">paper</a> by Harvard professor <a href=\"http://twitter.com/TEisenmann\">Tom Eisenmann</a> (et al).:</p>\n<p><a href=\"images/screen-shot-2010-04-25-at-11-18-00-am.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 31.45654834761322%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAGCAIAAABM9SnKAAAACXBIWXMAAAsTAAALEwEAmpwYAAABGUlEQVQY0yVQ246CMBDl/7/JxJisQQkCVRdYcNOWSpVWSyleQI3ZE3eeTibnNuPdP3O9Xi+XC8DwGQClmqoS4zCUZflTFM65cldmWdb3vZRyt/sF16v3NSEkz3NKqev7x+MxjuPtdlNK1bUc7gOolRDYHKRkjMNYayVlDaZXVXw2m63CVVEUnXOv1+v5fCLc2tacDYw6a89ngyX0XefQMU1T5GmtPcboZDKZf82n0yll7F+M2q0xWp9g77qubVto4P6dZkKI5WKJPADveDwkCdlstus1UfoEJdJAhdiYFqfCnVImxD4IAt/30zSL42ix8LHx0H4ZBKixCkN8CCHv9xt6PMa53lq7JiSKYs452iZJwjkDiKOoaZo/Da9DLdcRzCEAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2010 04 25 at 11 18 00 am\"\n        title=\"Screen shot 2010-04-25 at 11.18.00 AM\"\n        src=\"/static/e086f487f25b15e213bd5dd0340f6eb1/94a55/screen-shot-2010-04-25-at-11-18-00-am.png\"\n        srcset=\"/static/e086f487f25b15e213bd5dd0340f6eb1/924ad/screen-shot-2010-04-25-at-11-18-00-am.png 170w,\n/static/e086f487f25b15e213bd5dd0340f6eb1/f570f/screen-shot-2010-04-25-at-11-18-00-am.png 341w,\n/static/e086f487f25b15e213bd5dd0340f6eb1/94a55/screen-shot-2010-04-25-at-11-18-00-am.png 681w,\n/static/e086f487f25b15e213bd5dd0340f6eb1/72501/screen-shot-2010-04-25-at-11-18-00-am.png 817w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2010-04-25 at 11.18.00 AM</figcaption>\n  </figure></a></p>\n<p>(Eisenmann acknlowledges the iPhone isn’t fully open to the end user – in the US you need to use AT&T, etc.  I would argue the iPhone is semi-open to the app developer and mobile app development was effectively closed prior to the iPhone. But the main point here is that platforms can be open & closed in many different ways, at different levels, etc.)</p>\n<p>The next important distinction is whose interest you are considering when asking what and when to open or close things.  I think there are at least 3 interesting perspectives:</p>\n<p><strong>The company:</strong> Lots of people have written about this topic (<a href=\"http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996\">Clay Christensen</a>, <a href=\"http://www.joelonsoftware.com/articles/StrategyLetterV.html\">Joel Spolsky</a>, more Eisenmann <a href=\"http://www.hbs.edu/research/facpubs/workingpapers/papers0607.html#07-105\">here</a>).   In a nutshell, there are times when a company, acting solely in its self-interest, should close things and other times they should open things.  As a rule of thumb, a company should close their core assets and open/commoditize complementary assets. <a href=\"http://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm/\">Google’s search engine is their core asset</a> and therefore Google should want to keep it closed, whereas the operating system is a complement that they should commoditize (my full analysis of what Google should want to own vs commoditize is <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">here</a>). Facebook’s social graph is their core asset so it’s optimal to close it and not interoperate with other graphs, whereas marking up web pages to be more social-network friendly (open graph protocol) is complementary hence optimal for FB to open.  (With respect to social graphs interoperating (e.g. Open Social), it’s generally in the interest of smaller graphs to interoperate and larger ones not to – the same is true of IM networks).  Note that I think there is absolutely nothing wrong with Google and Facebook or any other company keeping closed or trying to open things according to their own best interests.</p>\n<p><strong>The industry:</strong> When I say “what is good for the industry” I mean what ultimately creates the most aggregate industry-wide shareholder value.  I assume (hope?) this also yields the maximum innovation.  As an active tech entrepreneur and investor I think my personal interests and the tech industry’s interests are mostly aligned (hence you could argue I’m <a href=\"http://twitter.com/hankwilliams/status/12833901538\">talking my book</a>).  Unfortunately it’s much easier to study open vs. closed strategies at the level of the firm than at the level of an industry, because there are far more “split test” cases to study.  What would the world be like if email (SMTP) were controlled by a single company?  I would tend to think a far less innovative and wealthy one. There are a number of multibillion dollar industries built on email: email clients, webmail systems, email marketing, anti-spam, etc.  The downside of openness is that it’s very hard to upgrade SMTP since you need to get so many parties to agree and coordinate.  So, for example, it has taken forever to add basic anti-spam authentication features to SMTP.  Twitter on the other hand can unilaterally add useful new things like their recent annotations feature.</p>\n<p>Here’s what Professor Eisenmann said when I asked him to summarize the state of economic thinking on the topic:</p>\n<blockquote>\n<p>With respect to your question about the impact of open vs closed on the economy, the hard-core economists cited in my <a href=\"http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264012\">book chapter</a> have a lot to say, but it all boils down to “it depends.” Closed platform provides more incentive for innovation because platform owner can collect and redistribute more rent and can ensure that there’s a manageable level of competition in any given application category. Open platform harnesses strong network effects, attracting more application developers, and  thus stimulates lots of competition. There’s some interesting recent work that suggests that markets may evolve in directions that favor the presence of one strong closed player plus one strong open player (consider: Windows + Linux; iPhone + Android). In this scenario, society/economy gets best of both approaches.</p>\n</blockquote>\n<p><strong>Society</strong>:  I tend to think what is good for the tech industry is generally good for society.  But others certainly have different views.  Advocates of openness are often <a href=\"http://twitter.com/shervin/status/12802297481\">accused</a> of being socialist hippies.  Maybe some are.  I am not.  I care about the tech industry.  I think it’s reasonable to question whether moves by large industry players are good or bad for the industry.  Unfortunately most of the debate I’ve seen so far seems driven by ideology and name calling.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/04/10/twitter-and-third-party-twitter-developers",
      "title": "Twitter and third-party Twitter developers",
      "description": "I can’t remember the last time the tech world was so interesting. First, innovation is at an all time high.  Apple, Google, Facebook…",
      "url": "https://cdixon.org/2010/04/10/twitter-and-third-party-twitter-developers",
      "published": "2010-04-10T00:00:00.000Z",
      "updated": "2010-04-10T00:00:00.000Z",
      "content": "<p>I can’t remember the last time the tech world was so interesting. First, innovation is at an all time high.  Apple, Google, Facebook, Twitter and even Microsoft (in the non-monopoly divisions) are making truly exciting products. Second, since the battles are between platforms, the strategic issues are complex, involving <a href=\"http://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems/\">complementary network effects</a>.</p>\n<p>Twitter’s moves this week were particular interesting.  A lot of third-party developers were <a href=\"http://www.businessinsider.com/twitter-employees-cheer-lead-fred-wilsons-bombshell-developers-freak-out-2010-4\">unhappy</a>. I think this is mainly a result of Twitter having sent mixed signals over the past few years. Twitter’s move into complementary areas was <a href=\"http://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/\">entirely predictable</a> – it happens with every platform provider. The real problem is that somehow Twitter had convinced the world they were going to “let a thousand flowers bloom” – as if they were a non-profit out to save the world, or that they would invent some fantastic new business model that didn’t encroach on third-party developers. This week Twitter finally started acting like what it is: a well-financed company run by smart capitalists.</p>\n<p>This mixed signaling has been exacerbated by the fact that Twitter has yet to figure out a business model (they sold data to Microsoft & Google but this is likely just one-time R&D purchases). Maybe Twitter thinks they know what their business model is and maybe they’ll even announce it soon. But whatever they think or announce will only truly be their business model when and if it delivers on their multi-billion dollar aspirations. It will likely be at least a year or two before that happens.</p>\n<p>Normally, when third parties try to predict whether their products will be subsumed by a platform, the question boils down to whether their products will be strategic to the platform. When the platform has an established business model, this analysis is fairly straightforward (for example, <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">here</a> is my strategic analysis of Google’s platform).  If you make games for the iPhone, you are pretty certain Apple will take their 30% cut and leave you alone. Similarly, if you are a content website relying on SEO and Google Adsense you can be pretty confident Google will leave you alone. Until Twitter has a successful business model, they can’t have a consistent strategy and third parties should expect erratic behavior and even complete and sudden shifts in strategy.</p>\n<p>So what might Twitter’s business model eventually be?  I expect that Twitter search will monetize poorly because most searches on Twitter don’t have <a href=\"http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">purchasing intent</a>.  Twitter’s move into mobile clients and <a href=\"http://www.businessinsider.com/twitter-previews-the-redesign-that-will-make-you-not-want-to-use-a-desktop-client-2010-4\">hints</a> about a more engaging website suggest they may be trying to mimic Facebook’s display ad model. (Facebook’s ad growth is being driven largely by companies like Zynga who are in turn monetizing users with social games and virtual goods.  Hence it’s no surprise that a Twitter investor is <a href=\"http://www.avc.com/a_vc/2010/04/the-twitter-platform.html\">suggesting</a> that developers create social games instead of “filling holes” with URL shorteners etc.) Facebook’s model depends on owning “eyeballs,” which is entirely contradictory to the pure API model Twitter has promoted thus far.  So if Twitter continues in this direction expect a lot of angst among third-party developers.</p>\n<p>Hopefully Twitter “fills holes” through acquisitions instead of internal development. Twitter was a hugely clever invention and has grown its user base at a staggering rate, but on the product development front has been underwhelming.  <a href=\"http://gigaom.com/2010/04/09/twitter-buys-tweetie-adds-fuel-to-developer-fires/\">Buying Tweetie</a> seemed to be a tacit acknowledgement of this weakness and an attempt to rectify it. Acquisitions also have the benefit of sending a positive signal to developers since least some of them are embraced and not just replaced.</p>\n<p>What’s Facebook doing during all of this?  Last year, Facebook seemed to be frantically copying Twitter – defaulting a lot of information to public, creating a canonical namespace, etc. Now that Twitter seems to be mimicing Facebook, Facebook’s best move is probably just to sit back and watch the Twitter ecosystem fight amongst itself.  As Facebooker Ivan Kirigin <a href=\"http://twitter.com/ikirigin/status/11920666017\">tweeted</a> yesterday: “I suppose when your competition is making huge mistakes, you should just stfu.”</p>\n<p><em>Disclosure: As with everything I write, I have a ton of conflicts of interest, some of which are listed</em> <a href=\"http://foundercollective.com/companies\"><em>here</em></a><em>.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/04/06/underhyping-your-startup",
      "title": "Underhyping your startup",
      "description": "I recently tweeted: New early-stage start up trend: get big quietly, so you don’t tip off potential competitors. Chris Sacca agreed: @cdixon…",
      "url": "https://cdixon.org/2010/04/06/underhyping-your-startup",
      "published": "2010-04-06T00:00:00.000Z",
      "updated": "2010-04-06T00:00:00.000Z",
      "content": "<p>I recently tweeted:</p>\n<blockquote>\n<p>New early-stage start up trend: get big quietly, so you don’t tip off potential competitors.</p>\n</blockquote>\n<p>Chris Sacca agreed:</p>\n<blockquote>\n<p>@<a href=\"http://twitter.com/cdixon\">cdixon</a> Agreed. As of this morning, I have four companies who don’t want investors mentioning that they’ve been funded.</p>\n</blockquote>\n<p>Business Insider took these tweets to mean “<a href=\"http://www.businessinsider.com/stealth-mode-is-back-2010-3\">Stealth mode is back</a>.”  But that’s actually not what I meant.  The companies I’m referring to (and I think Chris is referring to) are publicly launched, acquiring users and generating revenue. They are modeling themselves after Groupon, where the first time the VC community / tech press gets excited about them, they are already so successful that it’s hard for competitors to jump in.</p>\n<p>This trend strikes me as a response to the fact that 1) raising money from certain investors can be such a <a href=\"http://cdixon.org/2010/03/12/the-importance-of-investor-signaling-in-venture-pricing/\">strong signal</a> that it triggers massive investor/tech press excitement, 2) things are “frothy” now – meaning lots of smart people are starting companies and easily raising lots of money, 3) word seems to travel faster than ever about interesting startups, and 4) there are big companies like Facebook and Google who are good at fast following.</p>\n<p>I don’t know what to call this but it’s not stealth mode.  Maybe “underhype” mode?</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers",
      "title": "Size markets using narratives, not numbers",
      "description": "Anyone who has pitched VCs knows they are obsessed with market size.  If you can’t make the case that you’re addressing a possible billion…",
      "url": "https://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers",
      "published": "2010-04-03T00:00:00.000Z",
      "updated": "2010-04-03T00:00:00.000Z",
      "content": "<p>Anyone who has pitched VCs knows they are <a href=\"http://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean/\">obsessed with market size</a>.  If you can’t make the case that you’re addressing a possible <a href=\"http://www.sequoiacap.com/ideas\">billion dollar market</a>, you’ll have difficulty getting VCs to invest. (Smaller, venture-style investors like angels and <a href=\"http://foundercollective.com\">seed funds</a> also prioritize market size but are usually more flexible – they’ll often invest when the market is “only” ~$100M).  This is perfectly rational since VC returns tend to be driven by a few big hits in big markets.</p>\n<p>For early-stage companies, you should never rely on quantitative analysis to estimate market size. Venture-style startups are bets on broad, secular trends. Good VCs understand this. Bad VCs don’t, and waste time on things like interviewing potential customers and building spreadsheets that estimate market size from the bottom-up.</p>\n<p>The only way to understand and predict large new markets is through narratives. Some popular current narratives include: people are spending more and more time online and somehow brand advertisers will find a way to effectively influence them; social link sharing is becoming an increasingly significant source of website traffic and somehow will be monetized; mobile devices are becoming powerful enough to replace laptops for most tasks and will unleash a flood of new applications and business models.</p>\n<p>As an entrepreneur, you shouldn’t raise VC unless you truly believe a narrative where your company is a billion dollar business. But deploying narratives is also an important tactic. VCs are financiers — quantitative analysis is their home turf. If you are arguing market size with a VC using a spreadsheet, you’ve already lost the debate.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/03/27/capitalism-just-like-adam-smith-pictured-it",
      "title": "Capitalism just like Adam Smith pictured it",
      "description": "From far away, things that are very different look alike. I grew up in a family of musicians and English professors. To them, the entire…",
      "url": "https://cdixon.org/2010/03/27/capitalism-just-like-adam-smith-pictured-it",
      "published": "2010-03-27T00:00:00.000Z",
      "updated": "2010-03-27T00:00:00.000Z",
      "content": "<p>From far away, things that are very different look alike. I grew up in a family of musicians and English professors. To them, the entire financial industry seemed corrupt. When I worked in finance – first on Wall Street and then in venture capital – I saw that the reality was much more nuanced. Some finance is productive and useful and some is corrupt and parasitic.</p>\n<p>Most financial markets start out with a productive purpose. Derivatives like futures and options started out as a way for companies to reduce risk in non-core areas, for example for airlines to hedge their exposure to oil prices and transnationals to hedge their exposure to currency fluctuations. The sellers of these derivatives were aggregators who pooled risk, much like insurance companies do. The overall effect was a net reduction in risk to our economy without hampering growth and returns.</p>\n<p>Then speculators entered the market, creating more complicated derivative products and betting with borrowed money.  This was defended as a way to increase liquidity and efficiency. But it came at the cost of making the system more complicated and susceptible to abuse. Worst of all, these so-called innovations increased the overall risk to the system, something we saw quite vividly during the recent financial crisis.</p>\n<p>Venture capital is a shining example of capitalism just like Adam Smith pictured it, where private vice really does lead to public virtue.  Consider, for example, two of the largest areas of venture investment: biotech and cleantech.  Here we see the best and brightest – top science graduates from places like MIT and Stanford – devoting their lives to curing cancer and developing new energy sources.  These students may be motivated by good will, but need not be, since they will also get rich if they succeed.</p>\n<p>A strong case can be made that the financial industry needs significantly more regulation, particularly around big banks and derivatives markets. But it would be a tragic mistake to create <a href=\"http://www.avc.com/a_vc/2010/03/startups-get-hit-by-shrapnel-in-the-banking-bill.html\">regulations</a> that hinder angel investing and venture capital.  From the outside, VC and Wall Street might appear similar, but the closer you get, the more you understand how different they really are.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/03/25/stickiness-is-bad-for-business",
      "title": "Stickiness is bad for business",
      "description": "It is common to hear entrepreneurs and investors talk about the high level of engagement (what we used to call “stickiness”) of their…",
      "url": "https://cdixon.org/2010/03/25/stickiness-is-bad-for-business",
      "published": "2010-03-25T00:00:00.000Z",
      "updated": "2010-03-25T00:00:00.000Z",
      "content": "<p>It is common to hear entrepreneurs and investors talk about the high level of engagement (what we used to call “stickiness”) of their website.  They quite rightly believe that it’s better to have a more engaging user experience, as that generally means happy users. Unfortunately, the dominant advertising model on the web – Cost per Click (CPC) – rewards un-sticky websites.  As <a href=\"http://blog.rlucas.net/tech_and_market_reflections/paradox_of_quality_site_visits/\">Randall Lucas</a> <a href=\"http://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars/?success#comment-35531015\">said</a> in response to one of my earlier <a href=\"http://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars/\">posts</a>:</p>\n<blockquote>\n<p>The paradox, it seems is this: in a pay-per-click driven world, site visitors who want to stay on your site — due to it having the once-much-lauded quality of “stickiness” — are worth <em>much less</em> than those who want to flee your site because it’s clearly not valuable, and hence will click through to somewhere else.</p>\n</blockquote>\n<p>Facebook recently became the most <a href=\"http://money.cnn.com/2010/03/16/technology/facebook_most_visited/\">visited site</a> on the web. Yet their revenues are rumored to around $1B – about 1/30 of what <a href=\"http://finance.yahoo.com/q/ks?s=GOOG\">Google’s revenues</a> will be this year. Google has the perfect revenue-generating combination:  people come to the site often, leave quickly, and often have <a href=\"http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">purchasing intent</a>. Facebook has tons of visitors but they generally come to socialize, not to buy things, and they rarely click on ads that take them to other sites. <strong>Facebook is like a Starbucks where everyone hangs out for hours but almost never buys anything.</strong></p>\n<p>The revenue gap between sites like Facebook and Google should narrow over time.  Cost-per-click search ads are extremely good at <a href=\"http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/\">harvesting intent</a>, but bad at generating intent.  The vast majority of money spent on intent-generating advertising — brand advertising — still happens offline. Eventually this <a href=\"http://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly/\">money will have to go where people spend time</a>, which is increasingly online, at sites like Facebook. Somehow Coke, Tide, Nike, Budweiser etc. will have to convince the next generation to buy their mostly commodity products. Expect the online Starbucks of the future to have a lot more – and more effective – ads.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/03/14/developing-new-startup-ideas",
      "title": "Developing new startup ideas",
      "description": "If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it.  Be the opposite…",
      "url": "https://cdixon.org/2010/03/14/developing-new-startup-ideas",
      "published": "2010-03-14T00:00:00.000Z",
      "updated": "2010-03-14T00:00:00.000Z",
      "content": "<p>If you want to start a company and are working on new ideas, here’s how I’ve always done it and how I recommend you do it.  Be the <a href=\"http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/\">opposite of secretive</a>.  Create a Google spreadsheet where you list every idea you can think, even really half-baked ones.  Include ideas you hear about (make sure you keep track of who had which idea so you can credit them/include them later).</p>\n<p>Then take the spreadsheet and show it to every smart person you can get a meeting with and walk through each idea.  Talk to VCs, entrepreneurs, potential customers, and people working at big companies in relevant industries. You’ll be surprised how much you’ll learn.  The odds that someone will hear an idea and go start a competitor are close to zero.  The odds you’ll learn which ideas are good and bad and how to improve them are very high.</p>\n<p>Every conversation will contain some signal and some noise. Separating the two is tricky. Here are some broad rules of thumb I’ve developed for how to filter feedback based to the profession of the person giving it to you.</p>\n<ol>\n<li><em>Employees at relevant big companies.</em> These people are great at providing facts (“Google has 100 people working on that problem”) but their judgment about the quality of startup ideas is generally bad. They tend to have goggles on that makes them think every good idea in their industry is already being built within their company.  For example, every security industry person I talked to thought <a href=\"http://siteadvisor.com\">SiteAdvisor</a> was a bad idea.  (If it wasn’t, they think, someone at McAfee or Symantec company would have already built it!)</li>\n<li><em>VCs.</em> VCs are good at telling you about similar companies in the past and present and critiquing your idea in an “MBA-like” way:  will it scale? what are the economics? what is the best marketing strategy?  I would listen to them on these topics but pretty much ignore whether they think your idea is good or bad.</li>\n<li><em>Potential customers</em>.  If your product is B2B, remember you’ll be selling to that person 2-3 years from now and by then the world and their priorities will likely have radically changed.  If your product is B2C, it’s interesting to hear how regular consumers think about your product but often they really need to use it fully built and in the proper context to really judge it.</li>\n<li><em>Entrepreneurs.</em> This is the one group I listen to without a filter.</li>\n</ol>\n<p>Even though I have no intention of starting a new company for a long time (if ever), I still keep my idea spreadsheet and update it periodically.  Some of the ideas I wrote down a few years ago are now companies started by other people (some successful, some not).  A few I had the chance to invest in. It’s interesting to compare my notes and ratings of each idea with how those companies have actually performed. I also keep a list of “on the beach” ideas in case I have time in between startups. These are mostly non-profit ideas.  I don’t know if I’ll ever get to those but they are particularly fun to think about.</p>\n<p>* Thanks to <a href=\"http://www.cham.net/james\">James Cham</a> for inspiring & contributing ideas to this post!</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/03/11/the-importance-of-investor-signaling-in-venture-pricing",
      "title": "The importance of investor signaling in venture pricing",
      "description": "Suppose there is a pre-profitable company that is raising venture financing. Simple, classical economic models would predict that although…",
      "url": "https://cdixon.org/2010/03/11/the-importance-of-investor-signaling-in-venture-pricing",
      "published": "2010-03-11T00:00:00.000Z",
      "updated": "2010-03-11T00:00:00.000Z",
      "content": "<p>Suppose there is a pre-profitable company that is raising venture financing. Simple, classical economic models would predict that although there might be multiple VCs interested in investing, at the end of the financing process the valuation will rise to the clearing price where the demand for the company’s stock equals the supply (amount being issued).</p>\n<p>Actual venture financings work nothing like this simple model would predict.  In practice, the equilibrium states for venture financings are: 1) significantly oversubscribed at too low a valuation, or 2) significantly undersubscribed at too high a valuation.</p>\n<p>Why do venture markets function this way?  Pricing in any market is a function of the information available to investors. In the public stock markets, for example, the primary information inputs are “hard metrics” like company financials, industry dynamics, and general economic conditions. What makes venture pricing special is that there are so few hard metrics to rely on, <em>hence one of the primary valuation inputs is what other investors think about the company</em>.</p>\n<p>This investor signaling has a huge effect on venture financing dynamics. If Sequoia wants to invest, so will every other investor.  If Sequoia gave you seed money before but now doesn’t want to follow on, you’re probably dead.</p>\n<p>Part of this is the so-called herd mentality for which VC’s often get ridiculed. But a lot of it is very rational. When you invest in early-stage companies you are forced to rely on very little information. Maybe you’ve used the product and spent a dozen hours with management, but that’s often about it. The signals from other investors who have access to information you don’t is an extremely valuable input.</p>\n<p>Smart entrepreneurs manage the investor signaling effect by following rules like:</p>\n<p>- <a href=\"http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/\">Don’t take seed money from big VCs</a> – It doesn’t matter if the big VC invests under a different name or merely provides space and mentoring.  If a big VC has <em>any</em> involvement with your company at the seed stage, their posture toward the next round has such strong signaling power that they can kill you and/or control the pricing of the round.</p>\n<p>- Don’t try to be clever and get an auction going (and <a href=\"http://cdixon.org/2009/09/02/dont-shop-your-term-sheet/\">don’t shop your term sheet</a>). If you do, once the price gets to the point where only one investor remains, that investor will look left and right and see no one there and might get cold feet and leave you with no deal at all. Save the auction for when you get acquired or IPO.</p>\n<p>- Don’t be perceived as being “on the market” too long.  Once you’ve pitched your first investor, the clock starts ticking. Word gets around quickly that you are out raising money. After a month or two, if you don’t have strong interest, you risk being perceived as damaged goods.</p>\n<p>- If you get a great investor to lead a follow-on round, expect your existing investors to want to invest pro-rata or more, even if they previously indicated otherwise.  This often creates complicated situations because the new investor usually has minimum ownership thresholds (15-20%) and combining this with pro-rata for existing investors usually means raising far more money than the company needs.</p>\n<p>Lastly, be very careful not to try to stimulate investor interest by overstating the interest of other investors. It’s a very small community and seed investors talk to each other all the time. If you are perceived to be overstating interest, you can lose credibility very quickly.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too",
      "title": "News is a lousy business for Google too",
      "description": "There is a widespread myth that search engines have taken profits away from news websites. A few months ago, Rupert Murdoch said: “Google…",
      "url": "https://cdixon.org/2010/03/07/news-is-a-lousy-business-for-google-too",
      "published": "2010-03-07T00:00:00.000Z",
      "updated": "2010-03-07T00:00:00.000Z",
      "content": "<p>There is a widespread myth that search engines have taken profits away from news websites. A few months ago, Rupert Murdoch <a href=\"http://www.examiner.com/x-22639-Google-Trends-Examiner~y2009m11d19-Rupert-Murdoch-Google-profits-by-avoiding-newsgathering-costs\">said</a>: “Google has devised a brilliant business model that avoids paying for news gathering yet profits off the search ads sold around that content.”</p>\n<p>The reality is that news is a lousy business. Period. Even Google doesn’t make money on it. For example, here are Google’s search results for the phrase “afghanistan war”:</p>\n<p><a href=\"images/screen-shot-2010-03-07-at-2-16-53-pm1.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 62.6953125%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2010 03 07 at 2 16 53 pm1 1024x642\"\n        title=\"Screen shot 2010-03-07 at 2.16.53 PM\"\n        src=\"/static/6534c90a73a87de11eaac0c582b74be2/94a55/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png\"\n        srcset=\"/static/6534c90a73a87de11eaac0c582b74be2/924ad/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png 170w,\n/static/6534c90a73a87de11eaac0c582b74be2/f570f/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png 341w,\n/static/6534c90a73a87de11eaac0c582b74be2/94a55/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png 681w,\n/static/6534c90a73a87de11eaac0c582b74be2/e8f76/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png 1022w,\n/static/6534c90a73a87de11eaac0c582b74be2/3b243/screen-shot-2010-03-07-at-2-16-53-pm1-1024x642.png 1024w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2010-03-07 at 2.16.53 PM</figcaption>\n  </figure></a></p>\n<p>Notice there aren’t any ads on the page. This is because ads for “afghanistan war” generate such low revenues per query that Google doesn’t think it’s worth hurting the user experience with a cluttered page. Google can afford to do this on news queries (along with many other categories of queries) because their <a href=\"http://cdixon.org/2009/12/14/search-and-the-social-graph/\">real business</a> is selling ads on queries where the user likely has <a href=\"http://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">purchasing intent</a>. Big money-making categories include travel, consumer electronics and malpractice lawyers. News queries are loss leaders.</p>\n<p>It’s an historical accident that hard news categories like international and investigative reporting were part of profitable businesses. The internet upended this model by 1) providing a new delivery method for classified ads (mainly Craigslist), 2) increasing the supply of newspapers from 1-2 per location to thousands per location, thereby driving the willingness-to-pay for news dramatically down, and 3) unbundling news categories, making cross subsidization increasingly hard.</p>\n<p>The internet exposed hard news for what it is: a lousy standalone business. Google arguably contributed to this in many indirect ways, including by helping users find substitute news sources. But the idea that Google takes profits directly from newspapers is simply misinformed.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/02/27/its-not-east-coast-vs-west-coast-its-about-making-more-places-like-the-valley",
      "title": "It’s not East Coast vs West Coast, it’s about making more places like the Valley",
      "description": "I’ve written a few times about what seems to be an exploding tech scene in NYC.  This is sometimes interpreted as arguing that NYC is a…",
      "url": "https://cdixon.org/2010/02/27/its-not-east-coast-vs-west-coast-its-about-making-more-places-like-the-valley",
      "published": "2010-02-27T00:00:00.000Z",
      "updated": "2010-02-27T00:00:00.000Z",
      "content": "<p>I’ve written a few times about what seems to be an <a href=\"http://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding/\">exploding</a> tech scene in NYC.  This is sometimes interpreted as arguing that NYC is a better place to start a company than the Valley. Most recently, Matt Mireles seems to be <a href=\"http://www.businessinsider.com/face-it-nyc-is-not-the-best-place-for-a-startup-2010-2\">addressing</a> people like me with his critique of the NYC startup scene (he makes some good points as does Caterina Fake in her <a href=\"http://www.caterina.net/archive/001227.html\">response</a>).</p>\n<p>I’ve never meant my arguments to be about where it is better to start a company. California is a phenomenal place to start a tech company. NYC is a great place as well. (Note to Matt – it’s hard for first time founders <em>everywhere</em>). To me, the important question isn’t which place is better, but rather how we import the things that make the Valley great into NYC. As I said <a href=\"http://cdixon.org/2009/09/01/new-york-city-is-poised-for-a-tech-revival/\">last year</a>:</p>\n<blockquote>\n<p>New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself.   Silicon Valley will always be the mecca of technology, but now that people here are getting back to, as Obama says, <em>making things</em>, New York City has a shot at becoming relevant again in the tech world.</p>\n</blockquote>\n<p>I spent the past week in California and had the honor of meeting some legendary venture investors. I was deeply impressed: they are legends for a reason. Of course, they are incredibly smart and hard working and all of that, but most impressively, it was clear that they truly believe in making big bets on ambitious, seemingly wacky ideas <em>to try</em> <em>to change the world</em>. Every VC has this rhetoric on their website, but – at least in my experience – most just want to make incremental money on incremental technologies. (Side note: I noticed that the more powerful the VC, the more likely they were to pay close attention, show up on time, and not bring phones/computers into meetings.  I guess when you are changing the world, emails can wait an hour for a response).</p>\n<p>California should be NYC’s role model and ally. The enemy should be people and institutions who make money but don’t actually create anything useful. In NYC, this mostly means Wall Street, along with the Wall Street mindset that sometimes infects East Coast VC’s (emphasis on financial engineering, needing to see metrics & “traction” vs betting on people and ideas, etc).</p>\n<p>Matt should do what’s best for his company. God knows it’s hard enough doing a startup – you don’t need to carry the weight of reinvigorating a region on your back as well. That might mean moving to California. Meanwhile, forward-thinking investors and founders in NYC will continue trying to <em>make things that change the world</em> – in other words, trying to make NYC more like the Valley.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars",
      "title": "A massive misallocation of online advertising dollars",
      "description": "In an earlier blog post, I talked about how sites that generate purchasing intent (mainly “content” sites) are being under-allocated…",
      "url": "https://cdixon.org/2010/02/19/a-massive-misallocation-of-online-advertising-dollars",
      "published": "2010-02-19T00:00:00.000Z",
      "updated": "2010-02-19T00:00:00.000Z",
      "content": "<p>In an <a href=\"http://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off/\">earlier blog post</a>, I talked about how sites that generate purchasing intent (mainly “content” sites) are being under-allocated advertising dollars versus sites that harvest purchasing intent (search engines, coupon sites, comparison shopping sites, etc).  As a result, most content sites are left haggling over CPM-based brand advertising instead of sponsored links for the bulk of their revenue.</p>\n<p>But there is an additional problem:  e<em>ven among sites that monetize via sponsored links there is a large overallocation of advertising spending on links that are near the “end of the purchasing process” (or “end of the funnel”).</em> For example, an average camera buyer takes 30 days and clicks on approximately 3 sponsored links from the beginning of researching cameras to actually purchasing one.   Yet in most cases only the last click gets credit, by which I mean:  1) if it’s an affiliate (CPA) deal, it is literally usually the case that only the last affiliate (the site that drops the last cookie) gets paid, 2) if it’s a CPC or CPM deal, most advertisers don’t properly track the users across multiple site visits so simply attribute conversion to the most recent click, causing them to over-allocate to end-of-funnel links 3) if it’s a non-sponsored link (like Google natural search links) the advertiser might over-credit SEO when in fact the natural search click was just the final navigational step in a long process that involved sponsored links along the way.</p>\n<p>What this means is there are two huge misallocations of advertising dollars online: the first from intent generators to intent harvesters; the second from intent harvesters that are at the beginning or middle of the purchasing process to those at the end of the purchasing process.  This is not just a problem for internet advertisers and businesses – it affects all internet users.  Where advertising dollars flow, money gets invested. It is well known that content sites are suffering, many are even on their way to dying. Additionally, product/service sites that started off focusing on research are forced to move more and more toward end-of-funnel activities.  Take a look at how sites like <a href=\"http://www.tripadvisor.com/Tourism-g28953-New_York-Vacations.html\">TripAdvisor</a> and <a href=\"http://reviews.cnet.com/digital-cameras/?tag=TOCleftColumn.0\">CNET</a> have devoted increasing real estate to the final purchasing click instead of research.  For the most part, you don’t get paid for the actual research since it’s too high in the funnel.</p>\n<p>As with all large problems, this misallocation of advertising dollars also presents a number of opportunities.  One opportunity is for advertisers to correctly attribute their spending by tracking users through the entire purchasing process (in the case of cameras, the full 30 days and multiple sponsored clicks).  Very likely, these sites are currently overpaying end-of-funnel sites (e.g. coupon sites) and underpaying top-of-funnel sites (e.g. research sites). There is also an opportunity for companies that provide technology to help track this better. Finally, if over time advertising dollars do indeed shift to being correctly allocated, this will allow research sites to be pure research sites, content sites to be pure content sites, etc instead of everyone trying to clutter their sites with repetitive, “last click” functionality.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/02/16/dont-be-creative-about-the-wrong-things",
      "title": "Don’t be creative about the wrong things",
      "description": "When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should…",
      "url": "https://cdixon.org/2010/02/16/dont-be-creative-about-the-wrong-things",
      "published": "2010-02-16T00:00:00.000Z",
      "updated": "2010-02-16T00:00:00.000Z",
      "content": "<p>When founding a tech startup, there are certain areas where you should spend time trying to be creative/innovative. Generally these should be:  product, recruiting, marketing etc. One slightly disturbing trend I’ve noticed is founders trying to creative about stuff like legal terms that really are better left in their “default” form.</p>\n<p>Here’s my advice: hire a “default” law firm like <a href=\"http://www.gunder.com/\">Gunderson</a> and take their “default” advice. Yes, you should form a C corp in Delaware of CA or wherever they tell you; yes you should have 4 year vesting with a 1 year cliff; yes founders should have vesting; yes your deal terms should be <a href=\"http://cdixon.org/2009/08/16/ideal-first-round-funding-terms/\">plain vanilla</a>. Etc. These things are time tested and you are far more likely to screw things up than create value by tinkering with them. Also, they are just not what you should be spending your time on.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies",
      "title": "Every time an engineer joins Google, a startup dies",
      "description": "VC returns over the last decade have been poor. The cause is widely agreed to be an excess of venture capital dollars to worthy startups…",
      "url": "https://cdixon.org/2010/02/11/every-time-an-engineer-joins-google-a-startup-dies",
      "published": "2010-02-11T00:00:00.000Z",
      "updated": "2010-02-11T00:00:00.000Z",
      "content": "<p>VC returns over the last decade have been <a href=\"http://azeemazhar.com/?p=383\">poor</a>. The cause is widely agreed to be an excess of venture capital dollars to worthy startups. Observers seem to universally assume that the solution is for the VC industry to downsize.</p>\n<p>For example, Fred Wilson <a href=\"http://www.avc.com/a_vc/2009/04/the-venture-capital-math-problem.html\">says</a> about VC:</p>\n<blockquote>\n<p>You cannot invest $25bn per year and generate the kinds of returns investors seek from the asset class. If $100bn per year in exits is a steady state number, then we need to work back from that and determine how much the asset class can manage…. I think “back to the future” is the answer to most of the venture capital asset class problems. Less capital in the asset class, smaller fund sizes, smaller partnerships, smaller deals, and smaller exits</p>\n</blockquote>\n<p>Similarly, Bill Gurley <a href=\"http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/\">writes</a>:</p>\n<blockquote>\n<p>There are many reasons to believe that a reduction in the size of the VC industry will be healthy for the industry overall and should lead to above average returns in the future.</p>\n</blockquote>\n<p>All of these analyses start with the assumption that aggregate venture-backed exits (acquisition and IPOs) will remain roughly constant. I don’t see why we need to accept that assumption. The aggregate value of venture-backed startups, like all valuations, is a function of profits generated (or predicted to be generated). In technology, profits are driven by innovation. I don’t see any reason we should assume venture-backed innovation can’t be dramatically increased.</p>\n<p>For example, innovation has varied widely across times and places – the most innovative region in the world for the last 50 years being Silicon Valley. What if, say, Steve Jobs hadn’t grown up in Silicon Valley? What if he had gone to work for another company? Does anyone really think Apple – and all the innovation and wealth it created – would exist if Jobs hadn’t happened to grow up in a culture that was so startup friendly? Jobs is obviously a remarkable person, but there are probably 100 Steve Jobs born every year. The vast majority just never have a chance or give a thought to starting a revolutionary new company.</p>\n<p>Some people blame our education system, or assume that there is some fixed number of entrepreneurs born every year. I think the problem is cultural. As much as we like to think of our culture as being entrepreneurial, the reality is 99% of our top talent doesn’t seriously contemplate starting companies. Colleges crank out tons of extremely smart and well-educated kids every year. The vast majority go into “administrative” careers that don’t really produce anything – law, banking and consulting. Most of the rest join big companies. As I’ve argued many times before, big companies (with a few <a href=\"http://cdixon.org/2009/10/10/man-and-superman/\">notable exceptions</a>) aren’t nearly as successful as startups at creating new products.  The bigger the company, the more likely it suffers from <a href=\"http://cdixon.org/2010/01/30/institutional-failure/\">agency issues</a>, <a href=\"http://www.scripting.com/davenet/2001/04/30/strategyTax.html\">strategy taxes</a>, and <a href=\"http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">myopia</a>. But most of all: nothing is more motivating and inspiring than the sense of ownership and self-direction only a startup can provide.</p>\n<p>Whenever I see a brilliant kid decide to join Goldman Sachs, McKinsey, or Google, I think to myself: a startup just died, and as a result our world is a little less wealthy, innovative, and interesting.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/02/06/selling-to-enterprises",
      "title": "Selling to enterprises",
      "description": "For some reason when you are selling information technology, big companies are referred to as “enterprises.” I’m guessing the word was…",
      "url": "https://cdixon.org/2010/02/06/selling-to-enterprises",
      "published": "2010-02-06T00:00:00.000Z",
      "updated": "2010-02-06T00:00:00.000Z",
      "content": "<p>For some reason when you are selling information technology, big companies are referred to as “enterprises.” I’m guessing the word was invented by a software vendor who was trying to justify a million-dollar price tag. As a rule of thumb, think of enterprise sales as products/services that cost $100K/year or more.</p>\n<p>I am by no means an expert in enterprise sales. Personally, I vastly prefer marketing (one-to-many) versus sales (one-to-one), hence only start companies making consumer or small business products (advertising based or sub-$5000 price tags). But I have been involved in a few enterprise companies over the years. Here’s the main thing I’ve observed. Almost every enterprise startup I’ve seen has a product that would solve a problem their prospective customers have. But that isn’t the key question. The key question is whether it solves a problem that is one of the prospective customer’s top immediate priorities. Getting an enterprise to cough up $100K+ requires the “buy in” of many people, most of whom would prefer to maintain the status quo. Only if your product is a top priority can you get powerful “champions” to cut through the red tape.</p>\n<p>My rule of thumb is that every enterprise (or large business unit within an enterprise) will, at best, buy 1-3 new enterprise products per year.  You can have the greatest hardware/software in the world, but if you aren’t one of their top three priorities, you won’t be able to profitably sell to them.</p>\n<p>One final note: enterprise-focused VC’s sometimes refer to products priced between (roughly) $5k and $100K as falling in the “valley of death.” Above $100K, you might be able to make a profit given the cost of sales. Below $5k you might be able to market your product, hence have a very low cost of sales. In between, you need to do sales but it’s hard to do it profitably. Your best bet is a “channel” strategy; however, for innovative new products that is often a lot like trying to push a string.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding",
      "title": "The NYC tech scene is exploding",
      "description": "The pace of innovation in the New York area is very impressive right now. Some of the top entrepenuers in the country are building and…",
      "url": "https://cdixon.org/2010/02/01/the-nyc-tech-scene-is-exploding",
      "published": "2010-02-01T00:00:00.000Z",
      "updated": "2010-02-01T00:00:00.000Z",
      "content": "<blockquote>\n<p>The pace of innovation in the New York area is very impressive right now. Some of the top entrepenuers in the country are building and scaling companies in the NY ecosystem - <em>Ron Conway, yesterday in an email to me (published with his permission)</em></p>\n</blockquote>\n<p>With the announcement of Roger Ehrenberg’s new fund – <a href=\"http://www.informationarbitrage.com/2010/01/ia-venture-strategies-building-a-better-mousetrap.html\">IA Venture Strategies</a> – NYC now has another top-tier seed fund.  I’ve had the pleasure of investing with Roger a number of times. He’s not only a great investor but also a huge help to the companies he invests in. It’s great that he’s going to be even more active and I hope to work with him a lot more in the future.</p>\n<p>The NYC tech scene is exploding. There are tons of interesting startups. I’m an investor in a bunch and started one (<a href=\"http://hunch.com\">Hunch</a>) so won’t even try to enumerate them as any list will be extremely biased (other people have <a href=\"http://www.amny.com/urbanite-1.812039/amny-special-report-new-york-city-s-10-hottest-tech-startups-1.1724369\">tried</a>). I will say that one interesting thing happening is the types of startups are diversifying beyond media (HuffPo, Gawker) to more “California-style” startups (Foursquare, Boxee, Hunch).</p>\n<p>In terms of investors, NYC now has a number of seed investors / micro-VCs:  <a href=\"http://www.informationarbitrage.com/ia-capital-partners.html\">IA Capital Partners</a>, <a href=\"http://betaworks.com/\">Betaworks</a>, and <a href=\"http://foundercollective.com/\">Founder Collective</a> (FC – which I am part of – has made 7 seed investments in NYC since we started last year).  The god of seed investing, Ron Conway, who I quote up top, has recently decided to become extremely active in NYC. One of the nice things about having small funds is we don’t need to invest millions of dollar per round so we all frequently invest together.</p>\n<p>NYC also has mid sized funds like Union Square (in my opinion and a lot of people in the industry they have surpassed Sequoia as the best VC in the country).  We also have First Round, who very smartly hired the excellent Charlie (“Chris”) O’Donnell as their NYC guy.</p>\n<p>Then we have the big VCs who have also been increasing their activity in NYC.  Locally, we have Bessemer (Skype, LinkedIn, Yelp) and RRE.  Boston firms that are very active and positive influences here include: Polaris (Dog Patch Labs), Spark, Matrix, General Catalyst, and Flybridge. Finally, some excellent California firms like True Ventures have made NYC their second home.</p>\n<p>The one thing we really need to complete the ecosystem is a couple of runaway succesesses. As California has seen with Paypal, Google, Facebook etc, the big successes spawn all sorts of interesting new startups when employees leave and start new companies. They also set an example for younger entrepreneurs who, say, start a social networking site at Harvard and then decide to move.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/30/institutional-failure",
      "title": "Institutional failure",
      "description": "The TV show The Wire is an incredibly instructive lesson on how the modern world works (besides being a great work of art). The recurring…",
      "url": "https://cdixon.org/2010/01/30/institutional-failure",
      "published": "2010-01-30T00:00:00.000Z",
      "updated": "2010-01-30T00:00:00.000Z",
      "content": "<p>The TV show <em>The Wire</em> is an incredibly instructive lesson on how the modern world works (besides being a great work of art). The recurring theme is how individuals with good intentions are stymied by large institutions. As the show’s creator <a href=\"http://kottke.org/07/09/summer-news-regarding-the-wire\">says</a>:</p>\n<blockquote>\n<p>The Wire is a Greek tragedy in which the postmodern institutions are the Olympian forces. It’s the police department, or the drug economy, or the political structures, or the school administration, or the macroeconomics forces that are throwing the lightning bolts and hitting people in the ass for no reason. In much of television, and in a good deal of our stage drama, individuals are often portrayed as rising above institutions to achieve catharsis. In this drama, the institutions always prove larger, and those characters with hubris enough to challenge the postmodern construct of American empire are invariably mocked, marginalized, or crushed. Greek tragedy for the new millennium, so to speak.</p>\n</blockquote>\n<p>What’s amazing about the show is you see in a very realistic and compelling way how, say, 1) the well intentioned mayor needs to get the crime numbers down to get his school reform passed so 2) he pressures the (well-intentioned) police chief to do so, 3) who in turn cuts off a (well-intentioned) investigation that wasn’t going to yield short term metrics, 4) which emboldens the gang leader being investigated, 5) who recruits a sympathetic high school student into a life of crime. And so on.</p>\n<p>This blog is mostly about startups so let me tell a true Wire-like startup story. There is a large, publicly-traded company we’ll call BigCo. BigCo has a new CEO who is under heavy scrutiny and expected to get the stock price up over the next few fiscal quarters. Wall Street analysts who follow BigCo value the stock at a multiple of earnings, which are driven by Operating Expenses (“OpEx”), which are ongoing expenses versus “one time” expenses like acquisitions (called “CapEx”). (If you read analyst reports, you’ll see that stocks are generally considered, correctly or not, to have key financial drivers. The stock price is often those drivers times a “multiple” which in turn is often determined by the company’s expected growth rate). The “smart money” like hedge funds may or may not believe these analysts’ models, but they know other people believe them so place their bets according to how they think these numbers will move (see <a href=\"http://en.wikipedia.org/wiki/Keynesian_beauty_contest\">Keynes on the stock market as a “beauty contest”</a>). (Financial academics who believe in “<a href=\"http://en.wikipedia.org/wiki/Efficient-market_hypothesis\">efficient markets</a>” would say none of this is possible but anyone who’s actually participated in these markets knows the academics are living in fantasy land.)</p>\n<p>All this means the CEO is fixated on growing BigCo’s revenues while keeping operating expenses down. A great way to do this is through acquisitons, which analysts consider one-time expenses (CapEx). Let’s say BigCo is currently growing at 20%, but their multiple suggests they need to grow at 30%. So the M&A team goes out and looks for companies they can acquire growing at, say, 50%, to get the average up. BigCo spends lavishly to buy these companies since the costs can be considered CapEx. They even have elaborate dinners and incur other large expenses that can be counted as part of the acquisition. Once the deal is closed they immediately start planning how to cut operating expenses from the newly acquired company. They decide the best way is to move the engineering offshore. This rips the heart out of the engineering-driven culture and as a result morale drops, product quality falls, and key people quit. But the short term revenues are up and operating expenses down, so BigCo’s CEO keeps her job and makes a lot of money off her stock options.</p>\n<p>The winners here are the people who understand the system and play it cynically (hedge funds, BigCo’s CEO & board, perhaps the acquired company’s founders & investors). The losers are everyone else – the company’s customers, the employees who lose their jobs, and the stock market investors who don’t understand the game is rigged.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc",
      "title": "Being friendly has become a competitive advantage in VC",
      "description": "Over the last decade or two, the supply of venture capital dollars has increased dramatically at the same time as the cost of building tech…",
      "url": "https://cdixon.org/2010/01/29/being-friendly-has-become-a-competitive-advantage-in-vc",
      "published": "2010-01-29T00:00:00.000Z",
      "updated": "2010-01-29T00:00:00.000Z",
      "content": "<p>Over the last decade or two, the supply of venture capital dollars has <a href=\"http://cdixon.org/2009/09/25/the-twitter-investment-and-the-decline-of-venture-capital/\">increased dramatically</a> at the same time as the cost of building tech startups has sharply decreased.  As a result, the balance of power between capital and startups has shifted dramatically.</p>\n<p>Some VCs understand this. The ones that do try to stand out by, among other things, 1) going out and finding companies instead of expecting them to come to them, 2) working hard on behalf of existing investments to establish a good reputation, and 3) just being friendly, decent people.  Believe it or not, until recently, #3 was pretty rare.</p>\n<p>As a seed investor in about 30 companies, I’ve been part of many discussions with entrepreneurs about which VC’s they want to pitch for their next financing round.  More and more, I’ve heard entrepreneurs say something like “I don’t want to talk to that firm because they are such jerks.” In almost all cases these are well-known, older firms who come from the era when capital was scarce.</p>\n<p>Every experienced entrepreneur I know has a list of “toxic” VCs they won’t deal with. (Often because of horror stories like the “<a href=\"http://cdixon.org/2009/08/27/pitching-the-vc-partnership/\">partner ambush</a>“). There are so many VCs out there that you can do this and still have plenty of VCs to pitch to get a fair price for your company and only deal with decent, helpful investors. It sounds kind of crazy, but being a reasonably nice person has become a competitive advantage in venture capital.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/28/should-apple-be-more-open",
      "title": "Should Apple be more open?",
      "description": "It is almost religious orthodoxy in the tech community that “open” is better than “closed.” For example, there have widespread complaints…",
      "url": "https://cdixon.org/2010/01/28/should-apple-be-more-open",
      "published": "2010-01-28T00:00:00.000Z",
      "updated": "2010-01-28T00:00:00.000Z",
      "content": "<p>It is almost religious orthodoxy in the tech community that “open” is better than “closed.” For example, there have widespread complaints about Apple’s “closed” iPhone app approval process. People also argue Apple is making the same strategic mistake all over again versus Android that it made versus Windows*. The belief is that Android will eventually beat the iPhone OS with an “open” strategy (hardware-agnostic, no app approval process) just as Windows beat Apple’s OS in the 90′s.</p>\n<p>With respect to requiring apps to be approved, consider the current state of the iPhone platform. There are over 100,000 apps and thus far not a single virus, worm, spyware app etc. (I don’t count <a href=\"http://www.tomshardware.com/news/iphone-virus-botnet-bank-details,9136.html\">utterly farfetched theoretical scenarios</a>). As a would-be iPhone developer, I can report firsthand that the Apple approval process is a nightmare and should be overhauled. But what’s the alternative? Before the iPhone, getting your app on a phone meant doing complicated and expensive business development deals with wireless carriers. At the other end of the spectrum: If the iPhone OS were completely open, would we really have better apps?  What apps are we missing today besides viruses?</p>\n<p>With respect to the strategic issue of tightly integrating the iPhone/iPad software and hardware, a strong case can be made that Apple’s “closed” strategy is smart. Clay Christensen has given us the only serious <a href=\"http://en.wikipedia.org/wiki/Disruptive_technology#The_theory\">theory</a> I know of to predict when it’s optimal for a company to adopt an open versus closed strategy for (among other things) operating systems. The basic idea is that every new tech product starts out undershooting customer needs and then – because technology gets better faster than customers needs go up - eventually “overshoots” them. (PC’s have overshot today – most people don’t care if the processors get faster or Windows adds new features). Once a product overshoots, the basis of competition shifts from things like features and performance to things like price.</p>\n<p>The key difference today between desktop computers and mobile devices is that mobile devices still have a long way to go before customers don’t want more speed, more features, better battery life, smaller size, etc. Just look at all the <a href=\"http://gizmodo.com/5458382/8-things-that-suck-about-the-ipad?skyline=true&s=i\">complaints</a> yesterday about the iPad - that it lacks multitasking, a camera, is too heavy, has poor battery life, etc. This despite the fact that Apple is now even <em>building their own semiconductors (!)</em> to squeeze every last bit of performance out of the iPad. Until mobile devices compete mainly on price (probably a decade from now), tight vertical integration will produce the best device and is likely the best strategy.</p>\n<p>*It’s worth noting that <a href=\"http://cdixon.org/2009/10/10/man-and-superman/\">Steve Jobs wasn’t the one who screwed up Apple</a>. Jobs co-founded Apple in 1976. He was pushed out in in May 1985 when the company was valued at about $2.2B. He returned in 1996 when Apple was worth $3B. Today it is worth $187B.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/26/incumbents",
      "title": "Incumbents",
      "description": "Almost every startup has big companies (“incumbents”) that are at some point potential acquirers or competitors.  For internet startups that…",
      "url": "https://cdixon.org/2010/01/26/incumbents",
      "published": "2010-01-26T00:00:00.000Z",
      "updated": "2010-01-26T00:00:00.000Z",
      "content": "<p>Almost every startup has big companies (“incumbents”) that are at some point potential acquirers or competitors.  For internet startups that primarily means Google and Microsoft, and to a far lesser extent Yahoo and AOL.  (And likely more and more Apple, Facebook and even Twitter?).</p>\n<p>The first thing to try to figure out is whether what you are building will eventually be on the incumbent’s product roadmap. The best way to do predict this is to figure out whether what you are doing is strategic for the company. (I try to outline what I think is strategic for Google <a href=\"http://cdixon.org/2009/12/30/whats-strategic-for-google/\">here</a>). Note that asking people who work at the incumbents isn’t very useful – even they don’t know what will be important to them in, say, two years.</p>\n<p>If what you are doing is strategic for the incumbents, be prepared for them to enter the market at some point. This could be good for you if you build a great product, recruit a great team, and are happy with a “product sale” or “trade sale” – usually sub $50M. If you are going for this size outcome, you should plan your financing strategy appropriately. Trade sales are generally great for bootstrapped or seed-funded companies but bad if you have raised lots of VC money.</p>\n<p>If your product is strategic for the incumbent and you’re shooting for a bigger outcome, you probably need to either 1) be far enough ahead of the curve that by the time the big guys get there you’re already entrenched, or 2) be doing something the big guys aren’t good at. Google has been good at a surprising number of things. One important area they haven’t been good at (yet) is software with a social component (Google Video vs YouTube, Orkut vs Facebook, Knol vs Wikipedia, etc).</p>\n<p>The final question to ask is whether your product is <a href=\"http://en.wikipedia.org/wiki/Disruptive_technology\">disruptive</a> or sustaining (in the Christensen sense).  If it’s disruptive, you most likely will go unnoticed by the incumbents for a long time (because it will <a href=\"http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">look like a toy</a> to them). If the your technology is sustaining and you get noticed early you probably want to try to sell (and if you can’t, pivot). My last company, SiteAdvisor, was very much a sustaining technology, and the big guys literally told us if we didn’t sell they’d build it. In that case, the gig is up and you gotta sell.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/23/how-to-disrupt-wall-street",
      "title": "How to disrupt Wall Street",
      "description": "Sarah Lacy has a very interesting post on TechCrunch where she argues that the internet is finally starting to disrupt Wall Street. I’d love…",
      "url": "https://cdixon.org/2010/01/23/how-to-disrupt-wall-street",
      "published": "2010-01-23T00:00:00.000Z",
      "updated": "2010-01-23T00:00:00.000Z",
      "content": "<p>Sarah Lacy has a very interesting <a href=\"http://www.techcrunch.com/2010/01/14/is-the-internet-finally-robbing-the-greedy-financier%E2%80%99s-gravy-train/\">post</a> on TechCrunch where she argues that the internet is finally starting to disrupt Wall Street. I’d love nothing more than to see Wall Street get disrupted by the Internet.</p>\n<p>While I agree on the big picture, I disagree with some of her specifics. She cites Mint and Square as examples of startups that potentially disrupt Wall Street. As I see it, these companies have merely built nice UI’s to Wall Street: Mint connects to your banks and Square to Visa and Mastercard and the bank that issued the credit card. If people at farmers’ markets use credit cards instead of cash, that means more money for Wall Street, not less.</p>\n<p>I would argue the best way to try to disrupt Wall Street is to look at how it currently makes money and attack it there. Here are some of the big sources of revenue.</p>\n<ol>\n<li>Retail banks. Retail banks make money on fees and by paying low interest rates on deposits and then doing stuff with those deposits (buying stocks, mortgages, issuing credit cards, etc) that gets them a much higher return. To disrupt them you need to get people to stop depositing money in them. Zopa and Prosper are trying to do that. Unfortunately the regulatory system seems to strongly favor the incumbents.</li>\n<li>Credit cards. Charging 20% interest rates (banks) and skimming pennies off every transaction (Visa and Mastercard) is a very profitable business. Starting a new payment company that doesn’t depend on the existing banks and credit card companies could be disruptive. Paypal seems to have come the closest to doing this.</li>\n<li>Proprietary trading. A big trend over the last decade is for more of big banks’ profits to come from “proprietary trading” – which basically means operating big hedge funds inside banks (this trend is one of the main causes of the financial crisis and why the new “Volcker rule” is potentially a very good thing). For example, most of Goldman Sachs’ <a href=\"http://marketplace.publicradio.org/display/web/2010/01/21/pm-goldman-q/\">recent massive profits</a> came from proprietary trading. Basically what they do is hire lots of programmers and scientists to make money on fancy trading algorithms.  (Regrettably, I spent the first four years of my career writing software to help people like Goldman do this).  Given that the stock market was flat over the last decade and hedge funds made boatloads of money, the loser in this game are mostly unsophisticated investors (e.g. my parents in Ohio). Any website that encourages unsophisticated investors to buy specific stocks is helping Wall Street. Regular people should buy some treasury bonds or maybe an S&P 500 ETF and be done with it. <em>That</em> would be a huge blow to Wall Street.</li>\n<li>Trading. The more you trade stocks, the more Wall Street makes money. The obvious beneficiaries are the exchanges – NYSE, NASDAQ etc. There were attempts to build new exchanges in the 90′s like Island ECN. The next obvious beneficiaries are brokers like Fidelity or E-Trade. But the real beneficiaries aren’t the people who charge you explicit fees; it’s the people who make money on your trading in other ways.  For example, the hot thing on Wall Street is right now is high frequency “micro structure” trading strategies, which is basically a way to skim money off the “<a href=\"http://en.wikipedia.org/wiki/Bid-offer_spread\">bid-ask spread</a>” from trades made by less sophisticated investors.</li>\n<li>Investment banking. Banks make lots of money on “services” like IPOs and big mergers. A small way to attack this would be to convince tech companies (Facebook?) to IPO without going via Wall Street (this is what <a href=\"http://www.internetnews.com/bus-news/article.php/363041/Wit+Capital+IPOs+for+Everyone.htm\">Wit Capital</a> tried to do). Regarding mergers, there have been endless studies showing that big mergers only enrich CEOs and bankers, yet they continue unabated. This is part of the massive <a href=\"http://en.wikipedia.org/wiki/Principal-agent_problem\">agency problem</a> on Wall Street and can probably only change with a complete regulatory overhaul.</li>\n<li>Research. Historically, financial research was a loss leader used to sell investment banking services. After all the scandals of the 90′s, new regulations put in stronger walls between the research and banking. As a result, banks cut way back on research. In its place expert networks like Gerson Lehrman Group rose up. LinkedIn and Stocktwits are possible future disrupters here.</li>\n<li>Mutual fund management. Endless studies have shown that paying fees to mutual funds is a waste of money. Maybe websites that let your peers help you invest will disrupt these guys. I think a much better way to disrupt them is to either not invest in the stock market or just buy an ETF that gives you a low-fee way to buy the S&P 500 index.</li>\n</ol>\n<p>This is by no means an exhaustive list and I have no idea how to solve most of these problems. But I’d love to see the financial industry be one of the next areas of internet innovation.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/22/techies-and-normals",
      "title": "Techies and normals",
      "description": "There are techies (if you are reading this blog you are almost certainly one of them) and there are mainstream users – some people call them…",
      "url": "https://cdixon.org/2010/01/22/techies-and-normals",
      "published": "2010-01-22T00:00:00.000Z",
      "updated": "2010-01-22T00:00:00.000Z",
      "content": "<p>There are techies (if you are reading this blog you are almost certainly one of them) and there are mainstream users – <a href=\"http://www.businessinsider.com/nicholas-carlson\">some people</a> call them “normals” (@<a href=\"http://www.caterina.net/\">caterina</a> suggested “muggles”). A lot of people call techies “early adopters” but I think this is a mistake: techies are only occasionally good predictors of which tech products normals will like.</p>\n<p>Techies are enthusiastic evangelists and can therefore give you lots of free marketing. Normals, on the other hand, are what you need to create a large company. There are three main ways that techies and normals can combine to embrace (or ignore) a startup.</p>\n<p>1. If you are loved first by techies and then by normals you get free marketing and also scale.  Google, Skype and YouTube all followed this chronology.  It is startup nirvana.</p>\n<p>2. The next best scenario is to be loved by normals but not by the techies. The vast majority of successful consumer businesses fall into this category. Usually the first time they get a lot of attention from the tech community is when they announce revenues or close a big financing. Some recent companies that fall in this category are Groupon, Zynga, and Gilt Group. Since these companies don’t start out with lots of free techie evangelizing they often acquire customers through paid marketing.</p>\n<p>(My last company – SiteAdvisor – was a product tech bloggers mostly dismissed even as normals embraced it.  When I left the company we had over 150 million downloads, yet the first time the word “SiteAdvisor” appeared on TechCrunch was a year after we were acquired when they <a href=\"http://www.techcrunch.com/2007/07/10/site-advisor-20-haute-secure-launches-to-detect-and-block-malware/\">referred</a> to another product as “SiteAdvisor 2.0″.)</p>\n<p>3. There are lots of products that are loved just by techies but not by normals. When something is getting hyped by techies, one of the hardest things to figure out is whether it will cross over to normals. The normals I know don’t want to vote on news, tag bookmarks, or annotate web pages.  I have no idea whether they want to “check in” to locations.  A year ago, I would have said they didn’t want to Twitter but obviously I was wrong. Knowing when something is techie-only versus techie-plus-normals is one of the hardest things to predict.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/17/collective-knowledge-systems",
      "title": "Collective knowledge systems",
      "description": "I think you could make a strong argument that the most important technologies developed over the last decade are a set of systems that are…",
      "url": "https://cdixon.org/2010/01/17/collective-knowledge-systems",
      "published": "2010-01-17T00:00:00.000Z",
      "updated": "2010-01-17T00:00:00.000Z",
      "content": "<p>I think you could make a strong argument that the most important technologies developed over the last decade are a set of systems that are sometimes called “collective knowledge systems”.</p>\n<p>The most successful collective knowledge system is the combination of Google plus the web. Of course Google was originally intended to be just a search engine, and the web just a collection of interlinked documents. But together they provide a very efficient system for surfacing the smartest thoughts on almost any topic from almost any person.</p>\n<p>The second most successful collective knowledge system is Wikipedia. Back in 2001, most people thought Wikipedia was a wacky project that would at best end up being a quirky “<a href=\"http://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy/\">toy</a>” encyclopedia. Instead it has become a remarkably comprehensive and accurate resource that most internet users access every day.</p>\n<p>Other well-known and mostly successful collective knowledge systems include “answer” sites like Yahoo Answers, review sites like Yelp, and link sharing sites like Delicious.  My own company <a href=\"http://hunch.com\">Hunch</a> is a collective knowledge system for recommendations, building on ideas originally developed by “collaborative filtering” pioneer <a href=\"http://en.wikipedia.org/wiki/Firefly_(website)\">Firefly</a> and the recommendation systems built into Amazon and Netflix.</p>\n<p><strong>Dealing with information overload</strong></p>\n<p><strong>It has been widely <a href=\"http://quod.lib.umich.edu/cgi/t/text/text-idx?c=jep;view=text;rgn=main;idno=3336451.0006.204\">noted</a> that the amount of information in the world and in digital form has been growing <a href=\"http://www.kk.org/thetechnium/archives/2006/02/the_speed_of_in.php\">exponentially</a>. One way to make sense of all this information is to try to structure it after it is created. This method has proven to be, at best, partially effective (for a state-of-the-art attempt at doing simple information classification, try <a href=\"http://www.google.com/squared/search?q=answer+websites\">Google Squared</a>).</strong></p>\n<p>It turns out that imposing even minimal structure on information, especially <em>as it is being created</em>, goes a long way. This is what successful collective knowledge systems do. Google would be vastly less effective if the web didn’t have tags and links. Wikipedia is highly structured, with an extensive organizational hierarchy and set of rules and norms. Yahoo Answers has a reputation and voting system that allows good answers to bubble up. Flickr and Delicious encourage user to explicitly tag items instead of trying to infer tags later via image recognition and text classification.</p>\n<p><strong>Importance of collective knowledge systems</strong></p>\n<p>There are very practical, pressing needs for better collective knowledge systems. For example, noted security researcher Bruce Schneier <a href=\"http://www.schneier.com/blog/archives/2010/01/fixing_intellig.html\">argues</a> that the United States’ biggest anti-terrorism intelligence challenge is to build a collective knowledge system across disconnected agencies:</p>\n<blockquote>\n<p>What we need is an intelligence community that shares ideas and hunches and facts on their versions of Facebook, Twitter and wikis. We need the bottom-up organization that has made the Internet the greatest collection of human knowledge and ideas ever assembled.</p>\n</blockquote>\n<p>The same could be said of every organization, large and small, formal and and informal, that wants to get maximum value from the knowledge of its members.</p>\n<p>Collective knowledge systems also have pure academic value. When Artificial Intelligence was first being seriously developed in the 1950′s, experts optimistically predicted they’d create machines that were as intelligent as humans in the near future.  In 1965, AI expert Herbert Simon <a href=\"http://en.wikipedia.org/wiki/Strong_AI#History_of_mainstream_AI_research\">predicted</a> that “machines will be capable, within twenty years, of doing any work a man can do.”</p>\n<p>While AI has had notable victories (e.g. chess), and produced an excellent set of tools that laid the groundwork for things like web search, it is nowhere close to achieving its goal of matching – let alone surpassing – human intelligence. If machines will ever be smart (and eventually try to <a href=\"http://en.wikipedia.org/wiki/Skynet_(Terminator)\">destroy humanity</a>?), collective knowledge systems are the best bet.</p>\n<p><strong>Design principles</strong></p>\n<p>Should the US government just try putting up a wiki or micro-messaging service and see what happens? How should such a system be structured? Should users be assigned reputations and tagged by expertise? What is the unit of a “contribution”? How much structure should those contributions be required to have? Should there be incentives to contribute? How can the system be structured to “learn” most efficiently? How do you balance requiring up front structure with ease of use?</p>\n<p>These are the kind of questions you might think are being researched by academic computer scientists. Unfortunately, academic computer scientists still seem to model their field after the “hard sciences” instead of what they should modeling it after — social sciences like economics or sociology. As a result, computer scientists spend a lot of time dreaming up new programming languages, operating system architectures, and encryption schemes that, for the most part, sadly, nobody will every use.</p>\n<p>Meanwhile the really important questions related to information and computer science are mostly being ignored (there are notable exceptions, such as MIT’s <a href=\"http://cci.mit.edu/\">Center for Collective Intelligence</a>). Instead most of the work is being done informally and unsystematically by startups, research groups at large companies like Google, and a small group of multi-disciplinary academics like Clay Shirky and Duncan Watts.</p>",
      "image": null,
      "media": [],
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    },
    {
      "id": "https://cdixon.org/2010/01/12/security-through-diversity",
      "title": "Security through diversity",
      "description": "Someone asked me the other day whether I thought the United States was vulnerable to a large scale “cyber” attack. While I have no doubt…",
      "url": "https://cdixon.org/2010/01/12/security-through-diversity",
      "published": "2010-01-12T00:00:00.000Z",
      "updated": "2010-01-12T00:00:00.000Z",
      "content": "<p>Someone asked me the other day whether I thought the United States was vulnerable to a large scale “cyber” attack. While I have no doubt that any particular organization can be compromised, what comforts me at the national level is the sheer diversity of our systems. We have – unintentionally – employed a very effective defensive strategy known as “security through diversity.”</p>\n<p>Every organization’s IT system is composed of multiple layers: credential systems, firewalls, intrusion detection systems, tripwires, databases, web servers, OS builds, encryption schemes, network topologies, etc.  Due to a variety of factors — competitive markets for IT products, lack of standards, diversity of IT managers’ preferences — most institutions make independent and varied choices at each layer. This, in turn, means that each insitution requires a customized attack in order to be penetrated. It is therefore virtually impossible for a single software program (virus, worm) to infiltrate a large portion of them.</p>\n<p>On the web, a particular form of uniformity that can be dangerous are the centralized login systems like Facebook Connect. But this is preferable to the current dominant “single sign on system”:  most regular people use the same weak password over and over for every site because it’s too hard to remember more than that (let along multiple strong passwords). This means attackers only need to penetrate one weak link (like the recent <a href=\"http://www.computerworld.com/s/article/9142327/RockYou_hack_exposes_names_passwords_of_30M_accounts\">Rock You breach</a>), and they get passwords that likely work on many other sites (including presumably banking and other “important” sites).  At least with Facebook Connect there is a well funded, technically savvy organization defending its centralized repository of passwords.</p>\n<p>I first heard the phrase “security through diversity” from <a href=\"http://www.cs.unm.edu/~ackley/\">David Ackley</a> who was working on creating operating systems that had randomly mutated instances (similar ideas have since become standard practice, e.g. <a href=\"http://en.wikipedia.org/wiki/Address_space_layout_randomization\">stack and address space randomization</a>). It struck me as a good idea and one that should be built into systems intentionally. But meanwhile we get many of the benefits unintentionally. The same factors that frustrate you when you try to transfer your medical records between doctors or network the devices in your house are also what help keep us safe.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/09/shutting-down",
      "title": "Shutting down",
      "description": "I’ve seen a number of situations recently where entrepreneurs decided to shut their startups down while they still had cash in the bank…",
      "url": "https://cdixon.org/2010/01/09/shutting-down",
      "published": "2010-01-09T00:00:00.000Z",
      "updated": "2010-01-09T00:00:00.000Z",
      "content": "<p>I’ve seen a number of situations recently where entrepreneurs decided to shut their startups down while they still had cash in the bank. (Contrary to popular mythology, I’ve never seen a case where investors forced an early-stage startup to shut down before they ran out of cash — it has always been voluntary).  Shutting down is an incredibly hard thing to do.  It takes great maturity and intellectual honesty to realize things aren’t going the way you hoped and that it might be better to just close shop and do something else.</p>\n<p>How entrepreneurs handle shutting down is very important.  First, try to return as much capital to your investors as you can (after paying off employees and other important debts – but don’t waste money on an expensive legal process). Second, if you’ve developed IP, spend a few months trying to sell it to recover as much capital as you can (often investors will offer a “carve out” to incentivize entrepreneurs since the likely return to investors will be under total number of preferences).  Don’t go off starting a new venture before you’ve properly closed down your current one (I’ve seen this twice recently – very bad form).  Finally, for your own learning as well as your reputation, write a detailed post-mortem about what went right and wrong and send it to your investors, and then try to follow up with in-person discussions.</p>\n<p>Here’s the good news.  One of the great things about angel and venture investors is that failure is accepted, as long as you do it in the right way. Venture investors will often fund entrepreneurs who’ve lost their money in the past. They understand that if you build an interesting product and, say, market forces turn dramatically against you, that’s a risk they took — and the type of risk they will take a again. Also, entrepreneurs tend to be judged by their wins (max() function), not their average.  You’d be surprised how many entrepreneurs have failures in their past that no one remembers once they have some success.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy",
      "title": "The next big thing will start out looking like a toy",
      "description": "One of the amazing things about the internet economy is how different the list of top internet properties today looks from the list ten…",
      "url": "https://cdixon.org/2010/01/03/the-next-big-thing-will-start-out-looking-like-a-toy",
      "published": "2010-01-03T00:00:00.000Z",
      "updated": "2010-01-03T00:00:00.000Z",
      "content": "<p>One of the amazing things about the internet economy is how different the list of top internet properties today looks from <a href=\"http://technologizer.com/2009/04/23/whatever-happened-to-the-top-15-properties-of-april-1999/\">the list ten years ago</a>.  It wasn’t as if those former top companies were complacent – most of them acquired and built products like crazy to avoid being displaced.</p>\n<p>The reason big new things sneak by incumbents is that the next big thing always starts out being dismissed as a “toy.”  This is one of the main insights of Clay Christensen’s “disruptive technology” theory. This theory starts with the observation that technologies tend to get better at a faster rate than users’ needs increase. From this simple insight follows all kinds of interesting conclusions about how markets and products change over time.</p>\n<p>Disruptive technologies are dismissed as toys because when they are first launched they “undershoot” user needs. The first telephone could only carry voices a mile or two. The leading telco of the time, Western Union, passed on acquiring the phone because they didn’t see how it could possibly be useful to businesses and railroads – their primary customers. What they failed to anticipate was how rapidly telephone technology and infrastructure would improve (<a href=\"http://cdixon.org/2009/09/10/non-linearity-of-technology-adoption/\">technology adoption is usually non-linear</a> due to so-called complementary network effects). The same was true of how mainframe companies viewed the PC (microcomputer), and how modern telecom companies viewed Skype. (Christensen has many more examples in <a href=\"http://www.amazon.com/Innovators-Solution-Creating-Sustaining-Successful/dp/1578518520/ref=pd_bxgy_b_img_b\">his</a> <a href=\"http://www.amazon.com/Innovators-Dilemma-Revolutionary-Business-Essentials/dp/0060521996\">books</a>).</p>\n<p>This does not mean every product that looks like a toy will turn out to be the next big thing. To distinguish toys that are disruptive from toys that will remain just toys, you need to look at products as processes. Obviously, products get better inasmuch as the designer adds features, but this is a relatively weak force. Much more powerful are external forces: microchips getting cheaper, bandwidth becoming ubiquitous, mobile devices getting smarter, etc. For a product to be disruptive it needs to be designed to ride these changes up the utility curve.</p>\n<p>Social software is an interesting special case where the strongest forces of improvement are users’ actions. As Clay Shirky explains in <a href=\"http://www.herecomeseverybody.org/\">his latest book</a>, Wikipedia is literally a process – every day it is edited by spammers, vandals, wackos etc., yet every day the good guys make it better at a faster rate. If you had gone back to 2001 and analyzed Wikipedia as a static product it would have looked very much like a toy. The reason Wikipedia works so brilliantly are subtle design features that sculpt the torrent of user edits such that they yield a net improvement over time. Since users’ needs for encyclopedic information remains relatively steady, as long as Wikipedia got steadily better, it would eventually meet and surpass user needs.</p>\n<p>A product doesn’t have to be disruptive to be valuable. There are plenty of products that are useful from day one and continue being useful long term. These are what Christensen calls sustaining technologies. When startups build useful sustaining technologies, they are often quickly acquired or copied by incumbents. If your timing and execution is right, you can create a very successful business on the back of a sustaining technology.</p>\n<p>But startups with sustaining technologies are very unlikely to be the new ones we see on top lists in 2020. Those will be disruptive technologies – the ones that sneak by because people dismiss them as toys.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/30/whats-strategic-for-google",
      "title": "What’s strategic for Google?",
      "description": "Google seems to be releasing or acquiring new products almost daily. It’s one thing for a couple of programmers to hack together a side…",
      "url": "https://cdixon.org/2009/12/30/whats-strategic-for-google",
      "published": "2009-12-30T00:00:00.000Z",
      "updated": "2009-12-30T00:00:00.000Z",
      "content": "<p>Google seems to be releasing or acquiring new products almost daily. It’s one thing for a couple of programmers to hack together a side project. It’s another thing for Google to put gobs of time and money behind it. The best way to predict how committed Google will be to a given project is to figure out whether it is “strategic” or not.</p>\n<p>Google makes 99% of their revenue <a href=\"http://cdixon.org/2009/12/14/search-and-the-social-graph/\">selling text ads</a> for things like airplane tickets, dvd players, and malpractice lawyers. <strong>A project is strategic for Google if it affects what sits between the person clicking on an ad and the company paying for the ad.</strong> Here is my rough breakdown of the “layers in the stack” between humans and the money:</p>\n<p>Human - device – OS – browser – bandwidth –  websites - ads – ad tech – relationship to advertiser – $$$</p>\n<p>At each layer, Google either wants to dominate it or commoditize it. (For more on the strategic move known as commoditizing the complement, see <a href=\"http://www.joelonsoftware.com/articles/StrategyLetterV.html\">here</a>, <a href=\"/non-linearity-of-technology-adoption/\">here</a> and <a href=\"/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps/\">here</a>). Here’s my a brief analysis of the more interesting layers:</p>\n<p>Device: Desktop hardware already commoditized. Mobile hardware is not, hence Google Phone (Nexus One).</p>\n<p>OS: Not commoditized, and dominated by archenemy (Microsoft)!!   Hence Android/Google Chrome OS is very strategic. Google also needs to remove main reasons people choose Windows. Main reasons (rational ones – ignoring sociological reasons, organizational momentum etc) are Office (hence Google Apps), Outlook (hence Gmail etc), gaming (look for Google to support cross-OS gaming frameworks), and the long tail of Windows-only apps (these are moving to the web anyways but Google is trying to accelerate the trend with programming tools).</p>\n<p>Browser: Not commoditized, and dominated by arch enemy! Hence Chrome is strategic, as is alliance with Mozilla, as are strong cross-browser standards that maintain low switching costs.</p>\n<p>Bandwidth:  Dominated by wireless carriers, cable operators and telcos. Very hard for Google to dominate without massive infrastructure investment, hence Google is currently trying to commoditize/weaken via 1) more competition (WiMAX via Clearwire, free public Wi-Fi) 2) regulation (net neutrality).</p>\n<p>Websites/search (“ad inventory”): Search is obviously dominated by Google. Google’s syndicated ads (AdSense) are dominant because Google has the highest payouts since they have the most advertisers bidding. This in turn is due largely to their hugely valuable anchor property, Google.com. Acquired Youtube to be their anchor property for video/display ads, and DoubleClick to increase their publisher display footprint. On the emerging but fast growing mobile side, presumably they bought AdMob for their publisher relationships (versus advertiser relationships where Google is already dominant). The key risks on this layer are 1) people skip the ads altogether and go straight to, say, Amazon to buy things, 2) someone like Facebook or MS uses anchor property to aggressively compete in syndicated display market.</p>\n<p>Relationships to advertisers:  Google is dominant in non-local direct-response ads, both SMB self serve and big company serviced accounts.  They are much weaker in display. Local advertisers (which historically is half of the total ad market) is still a very underdeveloped channel – hence (I presume) the interest in acquiring Yelp.</p>\n<p>This doesn’t mean Google will always act strategically. Obviously the company is run by humans who are fallible, emotional, subject to whims, etc. But smart business should be practiced like smart chess: you should make moves that assume your opponents will respond by optimizing their interests.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise",
      "title": "What’s the right amount of seed money to raise?",
      "description": "Short answer:  enough to get your startup to an accretive milestone plus some fudge factor. “Accretive milestone” is a fancy way of saying…",
      "url": "https://cdixon.org/2009/12/28/whats-the-right-amount-of-seed-money-to-raise",
      "published": "2009-12-28T00:00:00.000Z",
      "updated": "2009-12-28T00:00:00.000Z",
      "content": "<p>Short answer:  enough to get your startup to an accretive milestone plus some fudge factor.</p>\n<p>“Accretive milestone” is a fancy way of saying getting your company to a point at which you can raise money at a higher valuation.  As a rule of thumb, I would say a successful Series A is one where good VCs invest at a pre-money that is at least twice the post-money of the seed round.  So if for your seed round you raised $1M at $2M pre ($3M post-money valuation), for the Series A you should be shooting for a minimum of $6M pre (but hopefully you’ll get significantly higher).</p>\n<p>The worst thing a seed-stage company can do is raise too little money and only reach part way to a milestone. Pitching new investors in that case is very hard; often the only way keep the company alive is to get the existing investors to reinvest at the last round valuation (“reopen the last round”). The second worst thing you can do is raise too much money in the seed round (most likely because big funds pressure you to do so), hence taking too much dilution too soon.</p>\n<p>How do you determine what an accretive milestone is? The answer is partly determined by market conditions and partly by the nature of your startup. Knowing market conditions means knowing which VCs are currently aggressively investing, at what valuations, in what sectors, and how various milestones are being perceived.  This is where having active and connected advisors and seed investors can be extremely helpful.</p>\n<p>Aside from market conditions, you should try to answer the question: what is the biggest risk your startup is facing in the upcoming year and how can you eliminate that risk?  You should come up with your own answer but you should also talk to lots of smart people to get their take (yet another reason <a href=\"http://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret/\">not to keep your idea secret</a>).</p>\n<p>For consumer internet companies, eliminating the biggest risk almost always means getting “traction” – user growth, engagement, etc. Traction is also what you want if you are targeting SMBs (small/medium businesses). For online advertising companies you probably want revenues. If you are selling to enterprises you probably want to have a handful of credible beta customers.</p>\n<p>The biggest mistake founders make is thinking that building a product by itself will be perceived as an accretive milestone. Building a product is only accretive in cases where there is significant technical risk – e.g. you are building a new search engine or semiconductor.</p>\n<p>Now to the “fudge factor.”  Basically what I’d recommend here depends on what milestones you are going for and how experienced you are at developing and executing operating plans. If you are going for marketing traction, that almost always takes (a lot) longer than people expect.  You should think about a fudge factor of 50% (increasing the round size by 50%).  You should also have alternative operating plans where you can “cut the burn” to get more calendar time on your existing raise (“extend the runway”). If you are just going for product milestones and are super experienced at building products you might try a lower fudge factor.</p>\n<p>The most perverse thing that I see is big VC funds pushing companies to raise far more money than they need to (even at higher valuations), simply so they can “<a href=\"http://cdixon.org/2009/08/26/the-other-problem-with-venture-capital-management-fees/\">put more money to work</a>“. This is one of <a href=\"http://cdixon.org/2009/08/14/the-problem-with-taking-seed-money-from-big-vcs/\">many reasons</a> why angels or pure seed funds are preferable seed round investors (<em>bias alert:  I am <a href=\"http://cdixon.org/2009/11/09/presenting-founder-collective/\">one of them</a>!</em>).</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/27/are-people-more-willing-to-pay-for-digital-goods-on-mobile-devices",
      "title": "Are people more willing to pay for digital goods on mobile devices?",
      "description": "Mary Meeker’s [  ](images/screen-shot-2009-12-27-at-11-51-18-am.png) The assertion seems to be that there is something special about the…",
      "url": "https://cdixon.org/2009/12/27/are-people-more-willing-to-pay-for-digital-goods-on-mobile-devices",
      "published": "2009-12-27T00:00:00.000Z",
      "updated": "2009-12-27T00:00:00.000Z",
      "content": "<p>Mary Meeker’s<a href=\"images/screen-shot-2009-12-27-at-11-51-18-am.png\"></a></p>\n<p>[</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 624px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/547cc7a832f67ea1915c9fccbdd2928e/857ee/screen-shot-2009-12-27-at-11-51-24-am.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 75%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 12 27 at 11 51 24 am\"\n        title=\"Screen shot 2009-12-27 at 11.51.24 AM\"\n        src=\"/static/547cc7a832f67ea1915c9fccbdd2928e/857ee/screen-shot-2009-12-27-at-11-51-24-am.png\"\n        srcset=\"/static/547cc7a832f67ea1915c9fccbdd2928e/924ad/screen-shot-2009-12-27-at-11-51-24-am.png 170w,\n/static/547cc7a832f67ea1915c9fccbdd2928e/f570f/screen-shot-2009-12-27-at-11-51-24-am.png 341w,\n/static/547cc7a832f67ea1915c9fccbdd2928e/857ee/screen-shot-2009-12-27-at-11-51-24-am.png 624w\"\n        sizes=\"(max-width: 624px) 100vw, 624px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-12-27 at 11.51.24 AM</figcaption>\n  </figure></p>\n<p>](images/screen-shot-2009-12-27-at-11-51-18-am.png)</p>\n<p><a href=\"images/screen-shot-2009-12-27-at-11-51-18-am.png\">The assertion seems to be that there is something special about the mobile internet that compels people to pay for things they wouldn’t pay for on the desktop internet.  It is this same thinking that has newspapers and magazines hoping the Kindle or a </a><a href=\"http://www.techcrunch.com/2009/12/02/time-inc-digital-magazine/\">tablet device</a> might be their savior.</p>\n<p>It is certainly true that <em>today</em> people are paying for things on iPhones and Kindles that they aren’t paying for on the desktop internet. Personally, I’ve bought a bunch of iPhone games that I would have expected to get for free online. I also paid for the New York Times and some magazines on my Kindle that I never paid for on my desktop.</p>\n<p>But longer term, the question is whether this is because of something fundamentally – and sustainably – different about mobile versus desktop or whether <strong>it is just good old fashioned supply and demand.</strong></p>\n<p>I think we are in the AOL “walled garden” days of the mobile internet. Demand is far outpacing supply, so consumers are paying for digital goods. I don’t pay for news or simple games on the desktop internet because there are so many substitutes that my willingness to pay is driven down to zero.</p>\n<p>What are the arguments that the mobile internet is sustainably different than the desktop internet? One of the main ones I’ve heard is habit: digital goods providers made a mistake in the 90′s by giving stuff away for free. Now people are habituated to free stuff on the desktop internet. Mobile is a chance to start over.</p>\n<p>I think this habit argument is greatly overplayed. The same argument has been made for years by the music industry: “kids today think music should be free” and so on. Back in the 90s, I bought CDs, not because I was habituated to paying for music, but because there was no other reasonably convenient way to get it. If tomorrow you waved a magic wand and CD’s were once again the only way kids could buy the Jonas Brothers and Taylor Swift, they’d pay for them. It’s the fact that there are convenient and free substitutes that’s killing the music industry, not consumers’ habits.</p>\n<p>As the supply of mobile digital goods grows — the same way it did on the desktop internet — consumers’ willingness-to-pay will drop and either advertising will emerge as the key driver of mobile economic growth or the mobile economy will disappoint. I was going to buy a Chess app for my iPhone this morning but when I searched and found dozens of free ones I downloaded one of those.  At some point there will be lots of Tweetie, Red Laser, and Flight Control substitutes and they too will be free.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly",
      "title": "Why the web economy will continue growing rapidly",
      "description": "Here’s the really good news for the web economy over the next decade.  Consumers are spending more and more time online, yet only about 1…",
      "url": "https://cdixon.org/2009/12/26/why-the-web-economy-will-continue-growing-rapidly",
      "published": "2009-12-26T00:00:00.000Z",
      "updated": "2009-12-26T00:00:00.000Z",
      "content": "<p>Here’s the really good news for the web economy over the next decade.  Consumers are spending more and more time online, yet only about <a href=\"http://www.emarketer.com/Report.aspx?code=emarketer_2000576\">10%</a> of all advertising dollars are spent there.</p>\n<p>Let’s assume that, over time, ad spending on a medium becomes roughly proportional to the time consumers spend using that medium. I doubt there are any technologists reading this blog who doubt that in five years most people in industrialized countries will spend 50% or more of their “media time” on the web.  This means there are hundreds of billions of ad revenues waiting to move to the web.</p>\n<p>Advertising is usually divided into two categories: direct-response and brand advertising. Direct-response advertising tries to get users to take immediate action. Brand advertising tries to build up positive associations over time in people’s minds. In the past decade, we saw a massive shift of direct response advertising to the web. The main beneficiary of this shift has been Google. We saw far less of a shift of brand advertising to the web.</p>\n<p>It is therefore very likely that most of this new ad spending will be brand advertising.  This is why Google, Yahoo and Microsoft are all so intensely focused on display advertising. It is why they paid huge premiums to acquire Doubleclick, Right Media, and Avenue A.</p>\n<p>Right now there are lots of inhibitors to brand advertising dollars flowing onto the web. Among them 1) most of the brand dollars are controlled by ad agencies, who seem far more comfortable with traditional media channels, 2) it is hard to know where your online advertising is appearing and whether it is effective, 3) banner ads seem extremely ineffective and are often poorly targeted, 4) big brand advertisers seem scared of user-generated content, today’s major source of ad inventory growth.</p>\n<p>But economic logic suggests these problems will be figured out, because advertisers have no choice but to go where the consumers are.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm",
      "title": "Google should open source what actually matters: their search ranking algorithm",
      "description": "Websites live or die based on how a small group of programmers at Google decide their sites should rank in Google’s main search results.  As…",
      "url": "https://cdixon.org/2009/12/22/google-should-open-source-what-actually-matters-their-search-ranking-algorithm",
      "published": "2009-12-22T00:00:00.000Z",
      "updated": "2009-12-22T00:00:00.000Z",
      "content": "<p>Websites live or die based on how a small group of programmers at Google decide their sites should rank in Google’s main search results.  As the “router” of the vast majority of traffic on the internet, Google’s secret ranking algorithm is probably is the most powerful piece of software code on the planet.</p>\n<p>Google <a href=\"http://googleblog.blogspot.com/2009/12/meaning-of-open.html\">talks</a> a lot about openness and their commitment to open source software. What they are really doing is practicing a classic business <a href=\"http://www.joelonsoftware.com/articles/StrategyLetterV.html\">strategy</a> known as “commoditizing the <a href=\"http://en.wikipedia.org/wiki/Complementary_good\">complement</a>“*.</p>\n<p>Google makes 99% of their revenue by <a href=\"/2009/12/14/search-and-the-social-graph/\">selling</a> text ads for things like plane tickets, dvd players and malpractice lawyers. Many of these ads are syndicated to non-Google properties. But the anchor that gives Google their best “inventory” is the main search engine at Google.com.  And the secret sauce behind Google.com is the algorithm for ranking search results. If Google is really committed to openness, it is this algorithm that they need to open source.</p>\n<p>The alleged argument against doing so is that search spammers would be able to learn from the algorithm to improve their spamming methods. This form of argument is an old argument in the security community known as “<a href=\"http://en.wikipedia.org/wiki/Security_through_obscurity\">security through obscurity</a>.” Security through obscurity is a technique generally associated with companies like Microsoft and is generally opposed as ineffective and risky by security experts. When you open source something you give the bad guys more info, but you also enlist an army of good guys to help you fight them.</p>\n<p>Until Google open sources what really matters – their search ranking algorithm – you should dismiss all their other open-source talk as empty posturing. And millions of websites will have to continue blindly relying on a small group of anonymous engineers in charge of the secret algorithm that determines their fate.</p>\n<p>* You can understand a large portion of technology business strategy by understanding strategies around complements. One major point: companies generally try to reduce the price of their products complements (Joel Spolsky has an excellent discussion of the topic <a href=\"http://www.joelonsoftware.com/articles/StrategyLetterV.html\">here</a>). If you think of the consumer as having a willingness to pay a fixed N for product A plus complementary product B, then each side is fighting for a bigger piece of the pie. This is why, for example, cable companies and content companies are constantly battling. It is also why Google wants open source operating systems to win, and for broadband to be cheap and ubiquitous. [<a href=\"/2009/09/10/non-linearity-of-technology-adoption/\">link to full post</a>]</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/19/anatomy-of-a-bad-search-result",
      "title": "Anatomy of a bad search result",
      "description": "In a post last week, Paul Kedrosky noted his frustration when looking for a new dishwasher using Google.  I thought it might be interesting…",
      "url": "https://cdixon.org/2009/12/19/anatomy-of-a-bad-search-result",
      "published": "2009-12-19T00:00:00.000Z",
      "updated": "2009-12-19T00:00:00.000Z",
      "content": "<p>In a post last week, Paul Kedrosky <a href=\"http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html\">noted</a> his frustration when looking for a new dishwasher using Google.  I thought it might be interesting to do some forensics to see which sites rank highly and why.</p>\n<p>Paul started by querying Google with the phrase <em>dishwasher reviews</em>:</p>\n<p><a href=\"images/screen-shot-2009-12-18-at-11-36-20-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 72.23950233281494%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 12 18 at 11 36 20 pm\"\n        title=\"Screen shot 2009-12-18 at 11.36.20 PM\"\n        src=\"/static/9540dc2be44de4383fec321346731537/94a55/screen-shot-2009-12-18-at-11-36-20-pm.png\"\n        srcset=\"/static/9540dc2be44de4383fec321346731537/924ad/screen-shot-2009-12-18-at-11-36-20-pm.png 170w,\n/static/9540dc2be44de4383fec321346731537/f570f/screen-shot-2009-12-18-at-11-36-20-pm.png 341w,\n/static/9540dc2be44de4383fec321346731537/94a55/screen-shot-2009-12-18-at-11-36-20-pm.png 681w,\n/static/9540dc2be44de4383fec321346731537/e8f76/screen-shot-2009-12-18-at-11-36-20-pm.png 1022w,\n/static/9540dc2be44de4383fec321346731537/05a72/screen-shot-2009-12-18-at-11-36-20-pm.png 1286w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-12-18 at 11.36.20 PM</figcaption>\n  </figure></a></p>\n<p>Pretty much every link on this page has an interesting story to tell about the state of the web.  I’ll just focus here on the top organic (non-sponsored) result:</p>\n<p><a href=\"http://www.consumersearch.com/dishwasher-reviews\">http://www.consumersearch.com/dishwasher-reviews</a></p>\n<p>clicking through this link takes you here:</p>\n<p><a href=\"images/screen-shot-2009-12-18-at-11-41-17-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 86.5055387713998%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 12 18 at 11 41 17 pm\"\n        title=\"Screen shot 2009-12-18 at 11.41.17 PM\"\n        src=\"/static/40e6374390beb1c7562aa872d7409637/94a55/screen-shot-2009-12-18-at-11-41-17-pm.png\"\n        srcset=\"/static/40e6374390beb1c7562aa872d7409637/924ad/screen-shot-2009-12-18-at-11-41-17-pm.png 170w,\n/static/40e6374390beb1c7562aa872d7409637/f570f/screen-shot-2009-12-18-at-11-41-17-pm.png 341w,\n/static/40e6374390beb1c7562aa872d7409637/94a55/screen-shot-2009-12-18-at-11-41-17-pm.png 681w,\n/static/40e6374390beb1c7562aa872d7409637/5648e/screen-shot-2009-12-18-at-11-41-17-pm.png 993w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-12-18 at 11.41.17 PM</figcaption>\n  </figure></a></p>\n<p>Consumersearch is <a href=\"http://www.searchengineworld.com/tech/3456378.htm\">owned</a> by About.com, which in turn is owned by the New York Times.</p>\n<p>So how did consumersearch.com get the top organic spot? Most SEO experts I talk to (e.g. <a href=\"http://www.seomoz.org/\">SEOMoz</a>‘s Rand Fishkin) think inbound links from a large number of domains still matter far more than other factors. One of the best tools for finding inbound links is <a href=\"http://siteexplorer.search.yahoo.com/\">Yahoo Site Explorer</a> (which, sadly, is <a href=\"http://www.seomoz.org/blog/8-predictions-for-seo-in-2010\">supposed</a> to be killed soon). Using this tool, here’s one of the sites linking to the dishwasher section of Consumersearch:</p>\n<p><a href=\"http://www.whirlpooldishwasher.net/\">http://www.whirlpooldishwasher.net/</a></p>\n<p><a href=\"images/screen-shot-2009-12-18-at-11-50-38-pm.png\"><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 110.74660633484163%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 12 18 at 11 50 38 pm\"\n        title=\"Screen shot 2009-12-18 at 11.50.38 PM\"\n        src=\"/static/fdc98b07132ed44af805cbf1a11e105a/94a55/screen-shot-2009-12-18-at-11-50-38-pm.png\"\n        srcset=\"/static/fdc98b07132ed44af805cbf1a11e105a/924ad/screen-shot-2009-12-18-at-11-50-38-pm.png 170w,\n/static/fdc98b07132ed44af805cbf1a11e105a/f570f/screen-shot-2009-12-18-at-11-50-38-pm.png 341w,\n/static/fdc98b07132ed44af805cbf1a11e105a/94a55/screen-shot-2009-12-18-at-11-50-38-pm.png 681w,\n/static/fdc98b07132ed44af805cbf1a11e105a/e326c/screen-shot-2009-12-18-at-11-50-38-pm.png 884w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-12-18 at 11.50.38 PM</figcaption>\n  </figure></a></p>\n<p>(Yes, this site’s CSS looks scarily like my own blog – that’s because we both use a generic WordPress template).</p>\n<p>This site appears has two goals: 1) fool Google into thinking it’s a blog about dishwashers and 2) link to consumersearch.com.</p>\n<p>Who owns this site?  The Whois records are private. (Supposedly the reason Google became a domain registrar a few years ago was to peer behind the domain name privacy veil and weed out sites like this.)</p>\n<p>I spent a little time analyzing the “blog” text (it’s actually pretty funny – I encourage you to read it).  It looks like the “blog posts” are fragments from places like Wikipedia run through some obfuscator (perhaps by machine translating from English to another language and back?).  The site was impressively assembled from various sources. For example, the “comments” to the “blog entries” were extracted from Yahoo Answers:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 504px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 57.14285714285714%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 12 18 at 11 57 33 pm2\"\n        title=\"Screen shot 2009-12-18 at 11.57.33 PM\"\n        src=\"/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png\"\n        srcset=\"/static/8880f051d3f742d1742d303ba6cd814f/924ad/screen-shot-2009-12-18-at-11-57-33-pm2.png 170w,\n/static/8880f051d3f742d1742d303ba6cd814f/f570f/screen-shot-2009-12-18-at-11-57-33-pm2.png 341w,\n/static/8880f051d3f742d1742d303ba6cd814f/1654f/screen-shot-2009-12-18-at-11-57-33-pm2.png 504w\"\n        sizes=\"(max-width: 504px) 100vw, 504px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-12-18 at 11.57.33 PM</figcaption>\n  </figure></p>\n<p>Here is the source of this text on Yahoo Answers:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a41fdafc0a98ec307ed89ffd214d94a1/79997/screen-shot-2009-12-18-at-11-57-58-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 26.495726495726498%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAFCAIAAADKYVtkAAAACXBIWXMAAAsTAAALEwEAmpwYAAAAxklEQVQY032PTQ+CMAyG+f9HTx79MZ6MBwFhE0gGJkTAOIbswwXYbA169EnTrW/bN2nwmt1VWjs7Y/RzRJRUSiuFDzLKUZtPLSXo2phpmvyHoOSP7W4jlKwYS5IkJQQSQjCyLIujqCjyM7bSy4XWdW2tXZf50B8Pe7BkjBFCKKVhFBJKYDSM4vgcn8IT6PCBCmBl6b8EznnnMaqqzIuiaW7g3Xat6MWACCF6znm/wkFalmVdxgQG3sNUd7/DzVprKcffYX94AwtYFRs9WFyfAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 12 18 at 11 57 58 pm\"\n        title=\"Screen shot 2009-12-18 at 11.57.58 PM\"\n        src=\"/static/a41fdafc0a98ec307ed89ffd214d94a1/94a55/screen-shot-2009-12-18-at-11-57-58-pm.png\"\n        srcset=\"/static/a41fdafc0a98ec307ed89ffd214d94a1/924ad/screen-shot-2009-12-18-at-11-57-58-pm.png 170w,\n/static/a41fdafc0a98ec307ed89ffd214d94a1/f570f/screen-shot-2009-12-18-at-11-57-58-pm.png 341w,\n/static/a41fdafc0a98ec307ed89ffd214d94a1/94a55/screen-shot-2009-12-18-at-11-57-58-pm.png 681w,\n/static/a41fdafc0a98ec307ed89ffd214d94a1/79997/screen-shot-2009-12-18-at-11-57-58-pm.png 702w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-12-18 at 11.57.58 PM</figcaption>\n  </figure></p>\n<p>The key is to have enough dishwaster-related text to look like it’s a blog about dishwashers, while also having enough text diversity to avoid being detected by Google as duplicative or automatically generated content.</p>\n<p>So who created this fake blog?  It could have been Consumersearch, or a “black hat” SEO consultant, or someone in an affiliate program that Consumersearch doesn’t even know. I’m not trying to imply that Consumersearch did anything wrong. The problem is systematic. When you have a <a href=\"/2009/12/14/search-and-the-social-graph/\">multibillion dollar economy</a> built around keywords and links, the ultimate “products” optimize for just that:  keywords and links. The incentive to create quality content diminishes.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/17/googles-feature-creep",
      "title": "Google’s feature creep",
      "description": "Microsoft used to be considered the king of feature creep.  Here was Microsoft Word when it was most cluttered:  I don’t use any of…",
      "url": "https://cdixon.org/2009/12/17/googles-feature-creep",
      "published": "2009-12-17T00:00:00.000Z",
      "updated": "2009-12-17T00:00:00.000Z",
      "content": "<p>Microsoft used to be considered the king of feature creep.  Here was Microsoft Word when it was most cluttered:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 500px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 63.800000000000004%; position: relative; bottom: 0; left: 0; background-image: url('data:image/jpeg;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"thumb paperclipinterference\"\n        title=\"thumb-paperclipinterference\"\n        src=\"/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg\"\n        srcset=\"/static/dc369cd7be3d488bdf587362d27914fc/c2e49/thumb-paperclipinterference.jpg 170w,\n/static/dc369cd7be3d488bdf587362d27914fc/c2dc0/thumb-paperclipinterference.jpg 341w,\n/static/dc369cd7be3d488bdf587362d27914fc/48a11/thumb-paperclipinterference.jpg 500w\"\n        sizes=\"(max-width: 500px) 100vw, 500px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">thumb-paperclipinterference</figcaption>\n  </figure></p>\n<p>I don’t use any of Microsoft’s software anymore, but from what I hear they’ve toned down the feature creep a lot in recent versions of Windows and Word.</p>\n<p>Google has been adding so many new features to its results page, they are starting to feel like the new Microsoft.  Here’s an approximation of what Google used to look like (I couldn’t find an image of actual Google 1998 SRPs — anyone have one?)</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 629px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 64.86486486486486%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"bbc google search\"\n        title=\"bbc-google-search\"\n        src=\"/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png\"\n        srcset=\"/static/a83d84bfad8eab11fc5bd0af3fb58517/924ad/bbc-google-search.png 170w,\n/static/a83d84bfad8eab11fc5bd0af3fb58517/f570f/bbc-google-search.png 341w,\n/static/a83d84bfad8eab11fc5bd0af3fb58517/89f99/bbc-google-search.png 629w\"\n        sizes=\"(max-width: 629px) 100vw, 629px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">bbc-google-search</figcaption>\n  </figure></p>\n<p>And here is Google today:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/e34907114e564a69993b4518ce729786/e9c61/screen-shot-2009-12-17-at-11-35-35-am.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 66.11111111111111%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsTAAALEwEAmpwYAAACVElEQVQoz2VSua7bMBDU56cOkB9IkyplijQpEiTv2ZZ1y9ZhyaZu6iApkbqv0O8hVQYLckjscAfcFXKIC9gWeQ+zNkvbHHaEzMu6rdu2rOs4TfO8L8v+P7Z9F2jDsizGhCCMMMGUUX47zeu8bP0wplmOyUTpPE7zOE7vMfAnp3nbNiEvEYgortembUtcV7hGGHcDbnvMOoJJkRcRzKMg9BKY5VVVkZpQxlduT7g5BKGW27Dsx1lytHNkSI/AAzAKaxQxErM6mnq4LxXBSFWBpoUXMx36mUsE+zowunL25fPXTx8+no7gdApefj+Or6Ghp44TAACSJKOsw4TJmv8q2urF7fvhKQ4B99FxlieJfHz5oxmqdZeV9HTIDR1lKSW4o7TbtrVC9Ky6ouy5btwy9hQ7V+bdes7adsN4Na1Kk6l4qK0LK8uxqSeMxr6beEJR1EfROivu5RrP87MBwt1rHKvh/SgLLgg9LwriFMIKY/6DjNKGEMwxjAuvLCr2QbqKit91z3pCEtfeDXEG4kK/Bo4T+SBFiAwDG8eBx/oGnlBhKqm2pvqOFZflUyK4NpHFnI9BEBaK8rjoiXXJTD1WlfDxSNM0b5r23WRZUVnxJcUPo+x9ToQA1De37LopCJGqRaYZX6zUNDNDg75XhgGBGa2b5k1cH+Xrr4P246cWBm+Vrwb9/i2/ez1qKlm/SdpN1jy+6npk6JFjwbuPHQt17Ugaqlue7QfOHaRF8RRX5QL8cZ523gxZ1Y9n5XCSTrIq8oPmAJBGYRaADMJi3fjY7ivf/uEvHMnHF2XvGpEAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 12 17 at 11 35 35 am\"\n        title=\"Screen shot 2009-12-17 at 11.35.35 AM\"\n        src=\"/static/e34907114e564a69993b4518ce729786/94a55/screen-shot-2009-12-17-at-11-35-35-am.png\"\n        srcset=\"/static/e34907114e564a69993b4518ce729786/924ad/screen-shot-2009-12-17-at-11-35-35-am.png 170w,\n/static/e34907114e564a69993b4518ce729786/f570f/screen-shot-2009-12-17-at-11-35-35-am.png 341w,\n/static/e34907114e564a69993b4518ce729786/94a55/screen-shot-2009-12-17-at-11-35-35-am.png 681w,\n/static/e34907114e564a69993b4518ce729786/e8f76/screen-shot-2009-12-17-at-11-35-35-am.png 1022w,\n/static/e34907114e564a69993b4518ce729786/e9c61/screen-shot-2009-12-17-at-11-35-35-am.png 1080w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-12-17 at 11.35.35 AM</figcaption>\n  </figure></p>\n<p>Options on the left, ads on top and on the right, news results up top, images, and buttons to vote results up/down and annotate them.  But worst of all are the new scrolling “real time” results.  The static image I’ve embedded doesn’t do justice to how annoying this is. Random, out-of-context, and mostly asinine fragments of conversations scrolling by.  I think it might be Google’s Clippy.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/14/search-and-the-social-graph",
      "title": "Search and the social graph",
      "description": "Google has created a multibillion-dollar economy based on keywords.  We use keywords to find things and advertisers use keywords to find…",
      "url": "https://cdixon.org/2009/12/14/search-and-the-social-graph",
      "published": "2009-12-14T00:00:00.000Z",
      "updated": "2009-12-14T00:00:00.000Z",
      "content": "<p>Google has created a multibillion-dollar economy based on keywords.  We use keywords to find things and advertisers use keywords to find customers.  As Michael Arrington <a href=\"http://www.techcrunch.com/2009/12/13/the-end-of-hand-crafted-content/\">points out</a>, this is leading to increasing amounts of low quality, keyword-stuffed content. The end result is a very spammy internet. (It was depressing to see Tim Armstrong <a href=\"http://mediamemo.allthingsd.com/20091209/live-from-new-york-tim-armstrong-makes-one-last-pitch-for-aol/\">cite</a> Demand Media, a giant <a href=\"http://www.thedeal.com/dealscape/technology/3i/goldman-sachs-meet-demand-medi.php\">domain-name owner</a> and robotic content factory, as a model for the new AOL.)</p>\n<p>Some people hope the social web — link sharing via Twitter, Facebook etc — will save us.  Fred Wilson argues that “<a href=\"http://www.avc.com/a_vc/2009/12/why-social-beats-search.html\">social beats search</a>” because it’s harder to game people’s social graph.  Cody Brown <a href=\"http://twitter.com/CodyBrown/status/6638145908\">tweeted</a>:</p>\n<blockquote>\n<p>On Twitter you have to ‘game’ people, not algorithms. Look how many followers @<a href=\"http://twitter.com/demandmedia\">demandmedia</a> has. A lot less then you guys: @<a href=\"http://twitter.com/arrington\">arrington</a> @<a href=\"http://twitter.com/jason\">jason</a></p>\n</blockquote>\n<p>These are both sound points. <em>Lost amid this discussion, however, is that the links people tend to share on social networks – news, blog posts, videos – are in categories Google barely makes money on.</em> (The same point also seems lost on Rupert Murdoch and news organizations who accuse Google of profiting off their misery).</p>\n<p>Searches related to news, blog posts, funny videos, etc. are mostly a loss leaders for Google. <em>Google’s real business is selling ads for plane tickets, dvd players, and malpractice lawyers.</em> (I realize this might be depressing to some internet idealists, but it’s a reality). Online advertising revenue is directly correlated with finding users who have <a href=\"/2009/09/27/online-advertising-is-all-about-purchasing-intent/\">purchasing intent</a>. Google’s true primary competitive threats are product-related sites, especially Amazon. As it gets <a href=\"http://paul.kedrosky.com/archives/2009/12/dishwashers_dem.html\">harder to find a washing machine</a> on Google, people will skip search and go directly to Amazon and other product-related sites.</p>\n<p>This is not to say that the links shared on social networks can’t be extremely valuable.  But most likely they will be valuable as critical inputs to better search-ranking algorithms. Cody’s point that it’s harder to game humans than machines is very true, but remember that Google’s algorithm was always meant to be based on human-created links. As the spammers have become more sophisticated, the good guys have come to need new mechanisms to determine which links are from trustworthy humans. Social networks might be those new mechanisms, but that doesn’t mean they’ll displace search as the primary method for navigating the web.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/08/why-did-skype-succeed-and-joost-fail",
      "title": "Why did Skype succeed and Joost fail?",
      "description": "Skype and Joost are interesting companies to compare – they are about as close as you can get to one of those sociological studies that…",
      "url": "https://cdixon.org/2009/12/08/why-did-skype-succeed-and-joost-fail",
      "published": "2009-12-08T00:00:00.000Z",
      "updated": "2009-12-08T00:00:00.000Z",
      "content": "<p>Skype and Joost are interesting companies to compare – they are about as close as you can get to one of those sociological studies that track identical twins who are raised separately.  Skype was a spectacular success.   Joost never got traction and was shut down.  Both were started by Nicklas Zennstrom and Janus Friis, two of the great technology visionaries of our time.  Both were big ideas, trying to disrupt giant, slow-moving incumbents.</p>\n<p>There are likely multiple reasons for their different outcomes.  Joost had day-to-day management that didn’t have much startup experience.  The P2P technology that required a download made sense for chat but not for video.  The companies were started at different times:  Skype when there was far less investment in – and therefore competition among – consumer internet products.</p>\n<p>But the really important difference was that Joost’s product had a critical input that depended on a stubborn, backward-thinking industry – video content owners.  Whereas Skype could brazenly threaten the industry it sought to disrupt, Joost had to get their blessing.  Eventually the content companies licensed some content to Joost, but not nearly enough to make it competitive with cable TV or other new platforms like Hulu and iTunes.</p>\n<p>Real life, non-techie users care almost exclusively about “content.”  They want to watch American Idol and listen to Jay-Z. They don’t really care how that content is delivered or what platform it’s on. Which is why Joost failed, and why so many video and music-related startups have struggled. Skype, on the other hand, didn’t have significant dependencies on other companies – its content, like its technology, was truly peer to peer.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/05/does-a-vcs-brand-matter",
      "title": "Does a VC’s brand matter?",
      "description": "Suppose you are in the enviable position of choosing between offers from multiple VC firms.  How much should you weigh the brand of the VCs…",
      "url": "https://cdixon.org/2009/12/05/does-a-vcs-brand-matter",
      "published": "2009-12-05T00:00:00.000Z",
      "updated": "2009-12-05T00:00:00.000Z",
      "content": "<p>Suppose you are in the enviable position of choosing between offers from multiple VC firms.  How much should you weigh the brand of the VCs when making your decision?  I think the answer is:  a little, but a lot less than most people assume.</p>\n<p>First, let me say the quality of the individual partner making the offer <a href=\"http://cdixon.org/?p=319\">matters a lot</a>.  However, in my experience, there is a only rough correlation between a VC’s brand and the quality of the individual partners there.  There are toxic partners at brand name firms, and great partners at lesser known firms.</p>\n<p>There are only two situations I can think of where the firm’s brand really matters.   First, if you manage to raise money from a particular set of the top 5 or so firms, you are almost guaranteed to be able to raise money later at a higher valuation from other firms. In fact, there are VC firms whose explicit business model is simply to follow those top firms.</p>\n<p>The other way a VC firm’s brand can help is by giving you credibility when recruiting employees.  This matters especially if you are a first-time entrepreneur whose company is at an early stage.  It matters a lot less if you’re a proven entrepreneur or your company already has traction.</p>\n<p>In my opinion that’s about it in terms of the importance of the VC’s brand.  Too many entrepreneurs get seduced into thinking they’ve accomplished something significant by raising money from a name brand VC.  Also, remember that if you are raising a seed round, the better the firm is, the <a href=\"http://cdixon.org/?p=256\">worse it can actually be for you</a> if that firm decides not to participate in follow on rounds.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/12/01/some-thoughts-on-seo",
      "title": "Some thoughts on SEO",
      "description": "“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via organic search traffic.”  I don’t like…",
      "url": "https://cdixon.org/2009/12/01/some-thoughts-on-seo",
      "published": "2009-12-01T00:00:00.000Z",
      "updated": "2009-12-01T00:00:00.000Z",
      "content": "<p>“SEO” (==”Search Engine Optimization”) is a term widely used to mean “getting users to your site via organic search traffic.”  I don’t like the term at all.  For one thing, it’s been frequently associated with illicit techniques like link trading and search engine spamming.  It is also associated with consultants who don’t do much beyond very basic stuff your own developers should be able to do.   But the most pernicious aspect to the phrase is that the word “optimization” suggests that SEO is a finishing touch, something you <a href=\"http://redeye.firstround.com/2009/11/lets-just-add-in-a-little-virality.html\">bolt on</a>, instead of central to the design and development of your site. Unfortunately, I think the term is so widespread that we are stuck with it.</p>\n<p>SEO is extremely important because normal users – those who don’t live and breath technology – only type a few of their favorite websites directly into the URL bar and for everything else go to search engines, most likely Google*.  In the 90s, people talked a lot about “home pages” and “site flow.” This matters if you are getting most of your traffic from people typing in your URL directly.  For most startups, however, this isn’t the case, at least for the first few years. Instead, the flow you should be thinking about is users going to Google, typing in a keyphrase and landing on one of your internal pages.</p>\n<p>The biggest choice you have to make when approaching SEO is whether you want to be a Google optimist or a Google pessimist**. Being an optimist means trusting that the smart people in the core algorithm team in Mountain View are doing their job well – that, in general, good content rises to the top.</p>\n<p>The best way to be a Google optimist is to think of search engines as information marketplaces – matchmakers between users “demanding” information and websites “supplying” it. This means thinking hard about what users are looking for today, what they will be looking for in the future, how they express those intentions through keyphrases, where there are gaps in the supply of that information, and how you can create content and an experience to fill those gaps.</p>\n<p>All this said, there does remain a technical, “optimization” side to SEO. Internal URL structure, text on your landing pages, and all those other things discussed by SEO consultants do matter.  Luckily, most good SEO practices are also good UI/UX practices.  Personally I like to do all of these things in house by asking our programmers and designers to include search sites like <a href=\"http://www.seomoz.org/\">SEOMoz</a>, <a href=\"http://searchengineland.com/\">Search Engine Land</a>, and <a href=\"http://www.mattcutts.com/blog/\">Matt Cutts</a> in their daily reading list</p>\n<p>* I’m just going to drop the illusion here that most people optimize for anything besides Google.  ComScore says Google has ~70% market share but everyone I know gets >90% of their search traffic from Google.  At any rate, in my experience, if you optimize for Google, Bing/Yahoo will give you SEO love about a 1-6 months later.</p>\n<p>** Even if you choose to be a pessimist, I strongly recommend you stay far away from so-called black hat techniques, especially schemes like link trading and paid text ads that are meant to trick crawlers.  Among other things, this can get your site banned for life from Google.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/11/20/the-importance-of-institutional-redundancy",
      "title": "The importance of institutional redundancy",
      "description": "Every system built by a single institution has points of failure that can bring the entire system down.  Even in organizations that have…",
      "url": "https://cdixon.org/2009/11/20/the-importance-of-institutional-redundancy",
      "published": "2009-11-20T00:00:00.000Z",
      "updated": "2009-11-20T00:00:00.000Z",
      "content": "<p>Every system built by a single institution has points of failure that can bring the entire system down.  Even in organizations that have tried hard for internal redundancy – for example, Google and Amazon have extremely distributed infrastructures – there will always be system-wide shared components, architectures, or assumptions that are flawed.  The only way to guarantee there aren’t is to set up completely separate, competing organizations – in other words, new institutions.</p>\n<p>This insight has practical implications when building internet services.  One thing I learned from my <a href=\"http://hunch.com\">Hunch</a> co-founder <a href=\"http://www.tompinckney.com/\">Tom Pinckney</a> is, if you really care about having a reliable website, always host your servers at two data centers, owned by different companies, on networks owned by different companies, on separate power grids, and so forth.  Our last company, SiteAdvisor, handled billions of requests per hour but never went down when the institutions we depended on went down – which was surprisingly often.  (We did have downtime, but it was due to our own flawed components, assumptions etc.).</p>\n<p>The importance of institutional redundancy is profoundly more important when applied to the internet at large. The US government originally designed the internet to be fully decentralized so as to withstand large-scale nuclear attack.  The core services built on top of the internet – the web (HTTP), email (SMTP), subscription messaging (RSS) – were made similarly open and therefore distributible across institutions.  This explains their remarkable system-wide reliability.  It also explains why we should be worried about reliability when core internet services are owned by a single company.</p>\n<p>The principle of not depending on single institutions applies beyond technology.  Every institution is opaque to outsiders, with single points of failure, human and otherwise.  For example, one of the primary lessons of the recent financial crisis is that the most important form of diversification is across institutions, not, as the experts have told us for decades, across asset classes.  The Madoff fraud was one extreme, but there were plenty of cases of lesser fraud and countless cases of poor financial management, most of which would have been almost impossible to anticipate by outsiders.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/11/14/pitch-yourself-not-your-idea",
      "title": "Pitch yourself, not your idea",
      "description": "There is a widespread myth that the most important part of building a great company is coming up with a great idea.  This myth is reflected…",
      "url": "https://cdixon.org/2009/11/14/pitch-yourself-not-your-idea",
      "published": "2009-11-14T00:00:00.000Z",
      "updated": "2009-11-14T00:00:00.000Z",
      "content": "<p>There is a widespread myth that the most important part of building a great company is coming up with a great idea.  This myth is reflected in popular movies and books: someone invents the Post-it note or cocktail umbrellas and becomes an overnight millionaire.  It is also perpetuated by experienced business people who, for the most part, don’t believe it. Venture capitalists often talk about “the best way to pitch your idea” and “honing your elevator pitch.”  Most business schools have business plan contests which are essentially beauty pageants for startup ideas.  All of this reinforces the myth that the idea is primary.</p>\n<p>The reality is ideas don’t matter that much.  First of all, in almost all startups, the idea changes – often dramatically – over time. Secondly, ideas are relatively abundant. For every decent idea there are very likely other people who’ve also thought of it, and, surprisingly often, are also actively pitching investors. At an early stage, ideas matter less for their own sake and more insofar as they reflect the creativity and thoughtfulness of the team.</p>\n<p>What you should really be focused on when pitching your early stage startup is pitching yourself and your team.  When you do this, remember that a startup is primarily about <em>building something</em>.  Hence the most important aspect of your backgrounds is not the names of the schools you attended or companies you worked at – it’s what you’ve built.  This could mean coding a video game, creating a non-profit organization, designing a website, writing a book, bootstrapping a company – whatever.  The story you should tell is the story of someone who has been building stuff her whole life and now just needs some capital to take it to the next level.</p>\n<p>Of course a great way to show you can build stuff is to build a prototype of the product you are raising money for.  This is why so many VCs tell entrepreneurs to “come back when you have a demo.”  They aren’t wondering whether your product can be built – they are wondering whether you can build it.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/11/09/presenting-founder-collective",
      "title": "Presenting Founder Collective",
      "description": "As readers of this blog know, I’m a huge fan of the startup and venture capital world but also a sometimes critic of how the venture capital…",
      "url": "https://cdixon.org/2009/11/09/presenting-founder-collective",
      "published": "2009-11-09T00:00:00.000Z",
      "updated": "2009-11-09T00:00:00.000Z",
      "content": "<p>As readers of this blog know, I’m a <a href=\"http://www.cdixon.org/?cat=3\">huge fan</a> of the startup and venture capital world but also a <a href=\"http://www.cdixon.org/?p=443\">sometimes</a> <a href=\"http://www.cdixon.org/?p=259\">critic</a> of how the venture capital industry works. For a long time I’ve wanted to do more than talk about this and actually start a new kind of venture firm, designed the right way from the ground up.</p>\n<p>Last year two friends of mine who are both very successful, serial entrepreneurs — <a href=\"http://www.foundercollective.com/people/Eric-Paley\">Eric Paley</a> and <a href=\"http://www.foundercollective.com/people/David-Frankel\">Dave Frankel</a> — were brainstorming ideas for what to do next when the thought occurred: why not make their next startup a new kind of venture firm, the kind we had wished existed back when we started our first companies?</p>\n<p>So this is what we, along with a bunch of other serial entrepreneurs, decided to do. We call our new firm <a href=\"http://www.foundercollective.com/\">Founder Collective</a>. Joining us are <a href=\"http://www.foundercollective.com/people/Mark-Gerson\">Mark Gerson</a> (founder of <a href=\"http://www.foundercollective.com/companies/Gerson-Lehrman-Group\">Gerson Lehrman Group</a>), <a href=\"http://www.foundercollective.com/founders-Zach-Klein\">Zach Klein</a> (co-founder of <a href=\"http://www.foundercollective.com/companies/Vimeo\">Vimeo</a>/Connected Ventures), <a href=\"http://www.foundercollective.com/people/Bill-Trenchard\">Bill Trenchard</a> (co-founder of <a href=\"http://www.foundercollective.com/companies/LiveOps\">LiveOps</a>), and <a href=\"http://www.foundercollective.com/founders-Micah-Rosenbloom\">Micah Rosenbloom</a> (co-founder of <a href=\"http://www.foundercollective.com/companies/Brontes\">Brontes</a>). We expect to add more founders over time.</p>\n<p>We think of ourselves as part of a new wave venture firms led by <a href=\"http://ycombinator.com/\">Y Combinator</a>, <a href=\"http://www.firstround.com/\">First Round</a>, <a href=\"http://www.maplesinvestments.com/\">Maples</a>, Ron Conway/Baseline, and <a href=\"http://betaworks.com/\">Betaworks</a>, among others, that have adapted to a world where venture capital is abundant but authentic seed capital and, more importantly, mentorship from experienced entrepreneurs, is scarce. We have many similarities to these firms and also some differences:</p>\n<ol>\n<li>We have a small fund – approximately $40M – and intend to keep it that way. This means seed investments are our entire business — they are not <a href=\"http://www.cdixon.org/?p=256\">options on future financings</a>. Hence our interests and the founders’ interests are aligned. This also means we are happy with smaller exits if that’s what the entrepreneur wants to do.</li>\n<li>Each person involved in Founder Collective is an entrepreneur, most of them currently running startups full time (my full-time job is CEO/co-founder of <a href=\"http://www.hunch.com/\">Hunch</a>).</li>\n<li>We believe the best people to predict the future — and create it — are fellow entrepreneurs, not former bankers drawing graphs and developing abstract theses.</li>\n<li>We try to be respectful. We’ve all sat in countless meetings where VCs show up late, email while you are presenting, and generally act arrogant and dismissive. We try really hard not to be like that.</li>\n<li>We’ll make investments anywhere in the world but tend to favor our home turf – New York City and Cambridge, MA. New York <a href=\"http://www.avc.com/a_vc/2009/09/the-ny-startup-scene.html\">is</a> a <a href=\"http://www.cdixon.org/?p=281\">hotbed</a> for online media and advertising startups. In Cambridge, there is a constant flow of ideas coming out of places like MIT that just need a little capital and guidance.</li>\n</ol>\n<p>We realize the word “Collective” sounds a bit radical, even socialist. This is deliberate. While we have an actual fund — we are not just a group of angel investors — we also have a unique structure where active entrepreneurs lead investments, work hard to help their investments succeed, and share in the profits when they do.</p>\n<p>Think of it as peer-to-peer venture capital.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/11/03/how-to-select-your-angel-investors",
      "title": "How to select your angel investors",
      "description": "I’ve seen a number of situations recently that are something like the following.  A VC firm signs a term sheet with an early stage company…",
      "url": "https://cdixon.org/2009/11/03/how-to-select-your-angel-investors",
      "published": "2009-11-03T00:00:00.000Z",
      "updated": "2009-11-03T00:00:00.000Z",
      "content": "<p>I’ve seen a number of situations recently that are something like the following.  A VC firm signs a term sheet with an early stage company. Let’s say it’s a $2M round.  The VC and entrepreneurs decide to set aside $500K for small investors (individual investors or micro-VCs). Because it’s a “hot” deal, there is way more small investor interest than there is capacity (the round is “oversubscribed”), and the entrepreneur needs to decide which investors are in and which are out.</p>\n<p>The most common mistake entrepreneurs make is to base their choice solely on the investors’ “celebrity” value (by “celebrity” I generally mean in the TechCrunch sense, not the People magazine sense).  Picking celebrity angels might help you get a little more buzz when you announce the financing and a few SUL tweets, but that’s about it.  A startup is a long trip — what you should care about is whether, through the ups and downs and after the buzz dies down, the investors will actually roll up their sleeves and help you.</p>\n<p>That isn’t to say that being a celebrity and being helpful are mutually exclusive.  Ron Conway is a celebrity (in the startup world) and is one of the hardest working investors I know. But there are other celebrity investors who I’m a co-investor with in a few companies who literally don’t respond to the founder’s emails.  And these are successful companies where the founder sends them only occasional emails about really important issues.</p>\n<p>The second biggest mistake is picking angels that benefit the lead VC.  A lot of times when VCs guide entrepreneurs to certain investors what they are really doing is “horse trading” – they want you to let in so and so, because so and so got them into another deal, or will help them get into future deals.</p>\n<p>It’s also smart to pick a varied group of people.  If you want a few celebrities to create some buzz, fine.  You should also pick some people who are connectors – who can introduce you to key people when you need it (varying connectors by geography and industry can also be helpful).  Also very important are active entrepreneurs who can (and will) give you practical advice about hiring, product development, financing etc.</p>\n<p>Finally, don’t spend too much time agonizing over this.  One particularly silly situation I was involved with was where the CTO had invited me to invest but then the CEO decided he wanted to put me through multiple interviews before he’d let me in.  He probably spent a day of his time deciding whether to give me some tiny fraction of the round. Eventually he dinged me because I wasn’t famous, but at that point I was frankly kind of relieved since the CEO seemed to have such a bad sense of how to prioritize his time.</p>\n<p><em>Disclosure: This post is entirely self serving, as I consider myself a non-celebrity but hard working small investor.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money",
      "title": "The most important question to ask before taking seed money",
      "description": "There is a certain well respected venture capital firm (VC) that has a program for fledgling entrepreneurs.   The teams that are selected…",
      "url": "https://cdixon.org/2009/10/30/the-most-important-question-to-ask-before-taking-seed-money",
      "published": "2009-10-30T00:00:00.000Z",
      "updated": "2009-10-30T00:00:00.000Z",
      "content": "<p>There is a certain well respected venture capital firm (VC) that has a program for fledgling entrepreneurs.   The teams that are selected get a desk, a small stipend, and advice for a few months from experienced VCs.  I could imagine back when I was starting my first company thinking this was a great opportunity – especially the advice part.</p>\n<p>Here’s the problem.  A few years into the program, approximately 25 teams have gone through it.  The sponsoring VC funded one team and passed on the other 24.  None of those other 24 have gotten financing from anyone else.  Why?  Because once you go through the program and don’t get funded by the sponsoring VC, you are perceived by the rest of the investor community as damaged goods.</p>\n<p>Most early stage investors are bombarded with new deals.  There is no way they could meet with all of them, or even spend time seriously reading their investor materials.  In order to filter through it all, they rely heavily on signals.  The person referring you to them is a very big signal.  Your team’s bios is a very big signal. And if you were in the seed program of a VC who has a multi-hundred million dollar fund and who decided to pass, that is a huge signal.</p>\n<p>Meanwhile, the unsuspecting entrepreneurs think: “I was at a prestigious VC this summer – this will look great on our bios and company deck.”  The truth is exactly the opposite:  the better the VC, the stronger the negative signal when they pass.</p>\n<p>Thus, the most important question to ask before taking seed money is: <strong>How many companies that the sponsor passed on went on to raise money from other sources?</strong></p>\n<p>The best programs don’t have sponsors who are even capable of further funding the company.  Y Combinator simply doesn’t do follow ons, so there is no way they can positively or negatively signal by their follow on actions. (Although now that they have taken money from Sequoia people are worried that Sequoia passing could be seen as a negative signal.  I just invested in a Y Combinator company and was reassured to see Sequoia co-investing).  Other seed programs lie somewhere in between — they aren’t officially run by big VCs but they do have big VCs associated with them so there is some signaling effect.   (I would call this the “hidden sponsor” problem.  I didn’t realize the extent of it until I got emails responding to my <a href=\"http://www.cdixon.org/?p=256\">earlier seed program posts</a> from entrepreneurs who had been burned by it).</p>\n<p>The most dangerous programs are the ones run by large VCs.  I would love for someone to prove me wrong, but from my (admittedly anecdotal) knowledge, no companies that have been in large VC seed programs where the VC then stopped supporting the company went on to raise more money from other sources.</p>\n<p>As has been widely noted, startups – especially internet-related ones – require far less capital today than they did a decade ago.  The VC industry has responded by keeping their <a href=\"http://www.cdixon.org/?p=443\">funds huge</a> but trying to get options on startups via seed programs.  Ultimately the VC industry will be forced to adapt by shrinking their funds, so they can invest in seed deals with the intention of actually making money on those investments, instead of just looking for <a href=\"http://www.cdixon.org/?p=259\">options</a> on companies in which they can invest “real money.”  In the meantime, however, a lot of young entrepreneurs are getting an unpleasant introduction to the rough-and-tumble world of venture capital.</p>\n<p><em>Disclosure:  I am biased because as an early stage investor I sometimes compete with these programs.</em></p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/27/embrace-the-medium",
      "title": "Embrace the medium",
      "description": "An obvious but surprisingly under-practiced design principle is to “embrace the medium.”  Applied to software, this means building…",
      "url": "https://cdixon.org/2009/10/27/embrace-the-medium",
      "published": "2009-10-27T00:00:00.000Z",
      "updated": "2009-10-27T00:00:00.000Z",
      "content": "<p>An obvious but surprisingly under-practiced design principle is to “embrace the medium.”  Applied to software, this means building applications that take advantage of the strengths of the platform instead of trying to mimic the strengths of another platform.</p>\n<p>iPhone and Wii games provide many stark abuses of this principle. Call of Duty is perhaps the single best franchise on the XBox and PS3, but the Wii version is almost unplayable.   They basically just did a straight port of the game, with worse graphics and using the Wiimote as a shaky aiming device.  It’s not an accident that the best Wii games are made exclusively for the Wii (and that most of those games are made by Nintendo itself).</p>\n<p>iPhone games are perhaps even worse violators of the “embrace the medium” principle.  Recently I was thinking about downloading Madden 2010, but as soon as I saw the screenshots I knew I’d hate it:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/323f2db6180833421a4448ace2a1685a/135ae/screen-shot-2009-10-26-at-8-03-58-am-300x196.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 65.33333333333333%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAANCAIAAAAmMtkJAAAACXBIWXMAAAsSAAALEgHS3X78AAADAUlEQVQozwXBy2/adgAA4J+iHbfLTpsqrepEO0JaAoSXw8N2AAeIPd4GQ4DwsrGxMdiAaQjQQEghZBCPrqRbEq29bLdpWiblUq077P/a94HFh4ftzBwrDuBEzUJUdiNVe4jGcgolL2L8nGCm/uIpTk9cZHPLQxkDRzokuYUVHuMnGCUAd2UJdod7MTafKxnNqNmCvtBDMPo9y7fZWosTG6LUZPlOIJjU6202u8dmdZvc8Q3vfCvUBgFh9Rk82IsfCTJDlak0TWW5TKIcdxNee9BzQPpDmeBuwOeP4zkmQxbjuUKCyBU33ENTtAUwdgGsHeo01fuw37n1tW5h6dbZ/AXu/pSRLvM1dZ9bQ4J60FwVuLWtpSZaayQ5DABbbycqAx89A6Z6rB+rrZHSEi0tEPrK++pOOFa7zNkRvQyWVXf1MizLJD/1iauB0ENSqBdYmjthEfjKZ0BPewSkPHcUpmhxhiZP9YUTXLo6To201NhMndlTM0fBs5P261JTeDDO52EKbJctkTpA832wmc2N0uu/pNlvXPsG51a7VTUtXvWKlwX2DVZfvFCmX3Tkb7snxpJqWb6vsRMGaLO2CA8cpAS+I7vr7mSpVBtl5c2heOdk3yrM7FX7us++Q8eq9XjASy1P5/QlP073X4+SIgU0UShSA2aCAboIXsV9mMsAaRO0j1HdlWsD87ONubGUri3d18/mU4Rta4UR1/hhfzJziLLR7H3sIUvA4D3c0ASwgitGIVjMlOUD3I8O/r2Vv9LJk0eN8SOp/7ReJ4bnzovVcngBnc3CFc705XM7HGWBBibBEz/UgLKTUKpNBlpQbG7ILKHoSB/uPo28fHLY0DBN/1HHdP7uun3uV+bpnOIC3yCuBAdoqyf/9TanNbFaHWdzNnGieRCpw14Bwep+gscI2bvXwxFuz8dhgapxp6v7qqrRxT9/1gulgRoO/7q5dfPccLe5/Tse/rMq3PPi3zT3UGE/itKndvej2Po0PP9HUv5VTh5SuT+c+/e+4L3T/d/F/H9tqB1UXyNA/wAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 10 26 at 8 03 58 am 300x196\"\n        title=\"Screen shot 2009-10-26 at 8.03.58 AM\"\n        src=\"/static/323f2db6180833421a4448ace2a1685a/135ae/screen-shot-2009-10-26-at-8-03-58-am-300x196.png\"\n        srcset=\"/static/323f2db6180833421a4448ace2a1685a/924ad/screen-shot-2009-10-26-at-8-03-58-am-300x196.png 170w,\n/static/323f2db6180833421a4448ace2a1685a/135ae/screen-shot-2009-10-26-at-8-03-58-am-300x196.png 300w\"\n        sizes=\"(max-width: 300px) 100vw, 300px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-10-26 at 8.03.58 AM</figcaption>\n  </figure></p>\n<p>You can see they are trying to force the XBox/PS3 control scheme onto a device with completely different set strengths and weaknesses. The iPhone’s strengths are:  touchscreen, gestures, accelerometer, networked, always with you. Its weaknesses:  no buttons, small screen, poor graphics/processor (compared to consoles).  The best games – Flight Control, Spider, Rolando – are designed from scratch to take advantage of the iPhone’s strengths.  Take Flight Control as an example:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 300px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/62707ad6a6cb5645e60e286afd45c402/135ae/screen-shot-2009-10-26-at-8-10-04-am-300x201.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 67%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 10 26 at 8 10 04 am 300x201\"\n        title=\"Screen shot 2009-10-26 at 8.10.04 AM\"\n        src=\"/static/62707ad6a6cb5645e60e286afd45c402/135ae/screen-shot-2009-10-26-at-8-10-04-am-300x201.png\"\n        srcset=\"/static/62707ad6a6cb5645e60e286afd45c402/924ad/screen-shot-2009-10-26-at-8-10-04-am-300x201.png 170w,\n/static/62707ad6a6cb5645e60e286afd45c402/135ae/screen-shot-2009-10-26-at-8-10-04-am-300x201.png 300w\"\n        sizes=\"(max-width: 300px) 100vw, 300px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-10-26 at 8.10.04 AM</figcaption>\n  </figure></p>\n<p>You guide the planes by mapping their routes with your finger.  It’s such a simple, elegant and fun game, and one that could only exist on the iPhone.  It embraces the iPhone-ness instead of fighting it.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/23/twelve-months-notice",
      "title": "Twelve months notice",
      "description": "Generally speaking, there are two approaches to relating to other people in the business world. The first approach is transactional and…",
      "url": "https://cdixon.org/2009/10/23/twelve-months-notice",
      "published": "2009-10-23T00:00:00.000Z",
      "updated": "2009-10-23T00:00:00.000Z",
      "content": "<p>Generally speaking, there are two approaches to relating to other people in the business world. The first approach is transactional and legalistic:  work is primarily an exchange of labor for money, and agreements are made via contracts.   Enforcement is provided by organizations, especially the legal system.  The second approach relies on trust, verbal agreements, reputation and norms, and looks to the community to provide enforcement when necessary.</p>\n<p>In the startup world, the latter approach dominates.  It is almost unheard of, for example, to see entrepreneurs or VCs sue each other.  The ones who do tend to leave the startup world, either by choice or by having ruined their reputation.  It is very rare to see someone in the startup world break a verbal agreement.  And, in most cases, employees and employers show loyalty far beyond what is seen in larger companies or what is economically “rational.”   (Most startups do spend considerable legal fees on financing, employee, and IP documents, but that is mostly because they know that those are necessary if they decide to sell themselves to a large company where the legalistic approach dominates.)</p>\n<p>For this reason, if you are an employee working at a startup where the managers are honest, inclusive and fair, you should disregard everything you’ve learned about proper behavior from people outside of the startup world.</p>\n<p>For example, let’s suppose you are a two years out of college and have a job at a startup.  You like your job but decide you want to go to graduate school.   The big company legalistic types will tell you to secretly send in your applications, and, if you get accepted and decide to attend, give your boss two weeks notice.</p>\n<p>What you should instead do is talk to your boss as soon as you are seriously considering graduate school.  Give them twelve months notice.  Any good startup manager won’t fire you, and in fact will go out of her way to help you get into school and get a good job afterwards.  They will appreciate your honesty and the fact that you gave them plenty of time to find a replacement.</p>\n<p>(Now don’t get me wrong:  if you work for bosses who have a legalistic, transactional mindset, by all means give two weeks notice.  I gave 4 months notice once to a boss with that mindset and was duly punished for it.  But hopefully if you are at a startup you work with people who have the startup, relationship-centric mindset.)</p>\n<p>This way of relating to other people is one of the main things people are talking about when they talk about “startup culture.”  It is why so many people coming from other industries have difficulty fitting into startups (especially people coming from Wall Street where the transactional mindset is at its most extreme).  I personally find the community approach a much nicer way to operate, and try to only professionally associate myself with people who prefer that approach as well.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/22/the-ideal-startup-career-path",
      "title": "The ideal startup career path",
      "description": "For most people I know who join or start companies, the primary goal is not to get rich – it is to work on something they love, with people…",
      "url": "https://cdixon.org/2009/10/22/the-ideal-startup-career-path",
      "published": "2009-10-22T00:00:00.000Z",
      "updated": "2009-10-22T00:00:00.000Z",
      "content": "<p>For most people I know who join or start companies, the primary goal is not to get rich – it is to work on something they love, with people they respect, and to not be beholden to the vagaries of the market- in other words, to be independent.  The reality is being independent often means having made money and/or being able to raise money from others.</p>\n<p>A while back, I <a href=\"http://www.cdixon.org/?p=467\">posted</a> about how I recommend thinking about non-founder option grants.  In the comments, <a href=\"http://twitter.com/aaronCohen\">Aaron Cohen</a> <a href=\"http://www.cdixon.org/?p=467#comment-1681\">made the point</a> that given today’s “good” exit sizes and standard equity grants, most non-founders will not gain independence even in the (non-extreme) good cases:</p>\n<blockquote>\n<p>Most startup employees need to realize they are on a journey and that in addition to making a few hundred thousand dollars on a good outcome they are learning how to become more senior at the next company. Real wealth creation will take founding, seniority, or staggeringly large exits.</p>\n</blockquote>\n<p>As Aaron said, you shouldn’t think of joining a startup as just joining a company. You should think of it as joining the startup career path. This career path could mean starting a company as your first job.  It could also mean working at a few startups and then starting a company.   (In my view, if your goal is to start a company, it is mostly a waste of time to work anywhere but a startup – with the possible exception of a short stint in venture capital).</p>\n<p>Maybe you will make some money working at a startup, but more importantly you will hopefully work for founders and managers who are smart and willing to mentor you and eventually fund or help you fund your startup.</p>\n<p>The startup world is extremely small.  If you’re smart, work really hard, and act with integrity, people will notice.  Contrary to popular wisdom, you will actually have <a href=\"http://www.cdixon.org/?p=181\">more job stability</a> than working at a big company.  And hopefully you’ll go on to start your own company, gain independence, and then help others do the same.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/20/the-challenge-of-creating-a-new-category",
      "title": "The challenge of creating a new category",
      "description": "One of the hardest things to do as a startup is to create a new category.  Bloggers and press have a natural tendency to “pigeonhole” – to…",
      "url": "https://cdixon.org/2009/10/20/the-challenge-of-creating-a-new-category",
      "published": "2009-10-20T00:00:00.000Z",
      "updated": "2009-10-20T00:00:00.000Z",
      "content": "<p>One of the hardest things to do as a startup is to create a new category.  Bloggers and press have a natural tendency to “pigeonhole” – to group startups into cleanly delineated categories, and then do side-by-side comparisons, comment on the “horserace” between them, and so forth.</p>\n<p>At my last startup, SiteAdvisor, we were at first consistently pigeonholed as an anti-phishing toolbar, even though what we did was help search engine users avoid spyware, spam, and scams, which (for various technical reasons) had almost no functional overlap with anti-phishing toolbars. My co-founder at <a href=\"http://www.hunch.com\">Hunch</a>, Caterina Fake, had a similar experience at Flickr.  Early on, people compared Flickr to existing photo sharing websites – Shutterfly, Ofoto, SnapFish - and found Flickr lacking in features around buying prints, sending greeting cards, etc.</p>\n<p>Pigeonholing is one reason startups should actually welcome direct competitors.   It was only once a direct competitor to SiteAdvisor appeared that people started treating “web safety” as its own category (Walt Mossberg was the first one to legitimize the category with <a href=\"http://www.cdixon.org/press1.html\">this</a> article).</p>\n<p>At my current startup, Hunch, being pigeonholed as a so-called Answers site is one of our main marketing challenges.  <a href=\"http://www.hunch.com/fact-sheet/\">Hunch is a user-generated website</a> similar to Wikipedia except, instead of creating encyclopedia entries, contributors create decision trees that help other users make choices and decisions.  For example, about 50 computer enthusiasts came together to create <a href=\"http://www.hunch.com/laptops/\">this decision tree about computer laptops</a> that helps users with less expertise find the right laptop.  Hunch gets smarter over time as more people contribute to it.  So far, about 10,000 users have made 115,000 contributions to the site.  Last month, our third month after launch, over 600,000 unique visitors used those contributions to make decisions.</p>\n<p><a href=\"http://mashable.com/2009/06/15/hunch-decisions/\">Many</a> <a href=\"http://searchengineland.com/hunch-a-real-decision-engine-20928\">of</a> <a href=\"http://digital.venturebeat.com/2009/03/27/after-trying-it-out-i-have-a-good-feeling-about-hunch/\">the</a> <a href=\"http://www.xconomy.com/national/2009/04/03/will-hunch-help-you-make-decisions-signs-point-to-yes/\">initial</a> <a href=\"http://www.techcrunch.com/2009/03/27/does-hunch-have-all-the-answers-we-take-flickr-founders-new-startup-for-a-spin/\">reviews</a> of Hunch accurately reflected that Hunch is trying to create a new category of website.  Nevertheless, the tendency to pigeonhole Hunch as an Answers site remains. Answers sites allow users to ask a question and get back direct answers from other people.  There are many Answer sites including Yahoo Answers, Mahalo Answers, Vark, Answerbag, and ChaCha. These are all excellent and useful services – but have as much to do with Hunch as Ofoto had to do with Flickr.</p>\n<p>There is no easy solution to avoid being pigeonholed.  All you can do is consistently, straightforwardly describe what you do, and then keep beating that drum over and over until the message gets through.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/18/if-verizons-droid-is-good-thats-bad-for-the-wireless-ecosystem",
      "title": "If Verizon’s Droid is good, that’s bad for the wireless ecosystem",
      "description": "I carry around an iPhone and a Blackberry Tour.  I know that’s ridiculous. The iPhone is a great device on an awful network; the Tour is an…",
      "url": "https://cdixon.org/2009/10/18/if-verizons-droid-is-good-thats-bad-for-the-wireless-ecosystem",
      "published": "2009-10-18T00:00:00.000Z",
      "updated": "2009-10-18T00:00:00.000Z",
      "content": "<p>I carry around an iPhone and a Blackberry Tour.  I know that’s ridiculous. The iPhone is a great device on an awful network; the Tour is an awful device on a great network.  If the <a href=\"http://www.techcrunch.com/2009/10/18/verizon-droid-is-the-real-deal/\">rumors are true</a> and the Verizon “Droid” is a great device on a great network, I’ll be the first in line to get one.  But for the wireless ecosystem as a whole, it would be a bad thing.</p>\n<p>Some people are saying a great Droid would mean more competition amongst handsets.  But you can’t really choose a handset – you choose a handset-carrier pair.  The real innovation inhibitor in the cellular world has been the power of the carriers to dictate what devices you can use and what apps go on those devices.  Just ask an entrepreneur who tried to create handsets or cellular apps.  They are completely beholden to the whims of the carriers.</p>\n<p>Apple has gotten very close to breaking the carrier stranglehold – just look at how many people put up with AT&T’s atrocious network to have one.  Had Verizon capitulated and accepted Apple’s presumably stringent terms in order to carry the iPhone, we might have finally started to see a true decoupling of handsets from carriers.</p>\n<p>Finally, don’t think just because the Droid runs Android it’s going to be truly open.  Verizon knows a truly open OS – one that allows you to run Google Voice, Skype, 3rd party SMS apps – would make their network a dumb pipe.  They’ve shown in the past they won’t let that happen.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/17/dow-10000-and-economic-reflexivity",
      "title": "Dow 10,000 and economic reflexivity",
      "description": "People who criticize Obama’s economic policies forget that, around the beginning of this year, a lot of serious people thought we were…",
      "url": "https://cdixon.org/2009/10/17/dow-10000-and-economic-reflexivity",
      "published": "2009-10-17T00:00:00.000Z",
      "updated": "2009-10-17T00:00:00.000Z",
      "content": "<p>People who criticize Obama’s economic policies forget that, around the beginning of this year, a lot of serious people thought we were entering a second Great Depression.  Here are the Google News <a href=\"http://www.google.com/trends?q=great+depression%2C+economic+recovery&ctab=0&geo=us&geor=all&date=all&sort=0\">mentions</a> of the words “Great Depression” (in blue) and “economic recovery” (in red) over the last three years:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 278px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a2c5d742be2221545382af0df11723f4/e14eb/screen-shot-2009-10-17-at-4-16-11-pm1.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 32.73381294964029%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsTAAALEwEAmpwYAAABIElEQVQY022OS0+DQBSF+f+/wIVx4caYuDGxqy5M2oCWZzFtMylEKbRQBAYCw3NmGK+tK9uTydwvJ+fcXCnP8yiKFEVxHAcYYxwEQZIkRVG4rivLsud54Kdp6vt+lmWWZamqCgFwpKqq6roGapoGGH6InpkQAmkYwF3X4SwDH7ZDoCpLUteSuBBjTFzTP5/TQWIX6vueUnpmMTJcsSgfIN3Ge5bHsKCLgwaZ6fPtb5mf3knQ4XAho3QcGR0olINk0DyOG3GYPO4ebvrFSzt7omuFV1i6fqEQJf3jiAgvqtW7+6OxWM0Nc6qsY/HuCeWTS3i7ydEKo4/Y1kPbcm10WJrLmTadaF+6tZYNNH8j5muHdHLcw66w5Nuw3333Ydr+ABXdha4b1kMaAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 10 17 at 4 16 11 pm1\"\n        title=\"Screen shot 2009-10-17 at 4.16.11 PM\"\n        src=\"/static/a2c5d742be2221545382af0df11723f4/e14eb/screen-shot-2009-10-17-at-4-16-11-pm1.png\"\n        srcset=\"/static/a2c5d742be2221545382af0df11723f4/924ad/screen-shot-2009-10-17-at-4-16-11-pm1.png 170w,\n/static/a2c5d742be2221545382af0df11723f4/e14eb/screen-shot-2009-10-17-at-4-16-11-pm1.png 278w\"\n        sizes=\"(max-width: 278px) 100vw, 278px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-10-17 at 4.16.11 PM</figcaption>\n  </figure></p>\n<p>Moreover, most experts thought we were being led into a Great Depression not by “fundamentals” but by the collapse of the financial system.</p>\n<p>Back around when Obama proposed his bank bailout plan (which was mostly an extension of Bush and Bernanke’s plan) he was widely <a href=\"http://dealbook.blogs.nytimes.com/2009/03/23/mixed-reactions-to-toxic-asset-plan/\">criticized</a>.  The consensus criticism was succinctly <a href=\"http://www.nytimes.com/2009/04/01/opinion/01stiglitz.html?_r=1\">summarized</a> by Nobel Laureate Joseph Steiglitz:</p>\n<blockquote>\n<p>Paying fair market values for the assets will not work. Only by overpaying for the assets will the banks be adequately recapitalized. But overpaying for the assets simply shifts the losses to the government. In other words, the Geithner plan works only if and when the taxpayer loses big time.</p>\n</blockquote>\n<p>Around this time, I happened to bump into an old friend who was working at a hedge fund where his full-time job was trading these so-called toxic assets (CDSs, CDOs, etc).  I asked him the trillion dollar question:  what did he think the “fair market value” for these assets was? Were they worth, say, 80 cents on the dollar as the banks were claiming, or 20 cents on the dollar as the bidders in the market were offering.</p>\n<p>His answer:  <em>These assets are essentially bets on home mortgages, which in turn are dependent on housing prices, which in turn are dependent on the economy, which in turn is highly dependent on whether the banks stay solvent, which is dependent on what these assets are worth.</em></p>\n<p>This circularity is not unique to these particular assets.  As George Soros has argued for decades, all economic systems are profoundly circular, a property that he calls <a href=\"http://en.wikipedia.org/wiki/George_Soros#Reflexivity.2C_financial_markets.2C_and_economic_theory\">reflexivity</a>.</p>\n<p>The bank bailouts were extremely <a href=\"http://www.nytimes.com/2009/10/17/business/economy/17wall.html?hpw\">distasteful</a> in many ways.  Lots of underserving people got rich.  Institutions that should have failed didn’t.  Dangerous “moral hazard” precedents were set. But the fact remains:  by altering perceptions, the Bush/Obama/Bernanke plan seems to have turned the second Great Depression into “merely” a bad recession.</p>\n<p>The Dow passed the symbolic milestone of 10,000 recently.  People who say it’s an illusion and doesn’t reflect economic fundamentals don’t understand that in economics, perception and fundamentals are inextricably linked.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/16/whats-the-relationship-between-cost-and-price",
      "title": "What’s the relationship between cost and price?",
      "description": "What’s the relationship between price – the ability to charge for your product – and cost – how much it costs you to produce it? Price is a…",
      "url": "https://cdixon.org/2009/10/16/whats-the-relationship-between-cost-and-price",
      "published": "2009-10-16T00:00:00.000Z",
      "updated": "2009-10-16T00:00:00.000Z",
      "content": "<p>What’s the relationship between price – the ability to charge for your product – and cost – how much it costs you to produce it?</p>\n<p>Price is a function of supply and demand.  Notice the word “cost” doesn’t occur there.  It is true that cost is, over the long term, a lower bound for price – otherwise you’d go out of business.  It is also true that high upfront fixed costs can create barriers to entry and therefore lower supply.</p>\n<p>The only case in which price is determined by (variable) costs is in a commoditized market.  A market is commoditized when competing products are effectively interchangeable and therefore customers make decisions based solely on price.  In commoditized markets, price tends to converge toward cost.</p>\n<p>In non-commoditized markets, variable costs have no effect on price.  Most information technology companies are not commoditized, therefore variable cost and price are unrelated.  That is why there can exist companies like Google and Microsoft that are so insanely profitable.  If the cost of producing and distributing a copy of Microsoft Office dropped tomorrow, there is no reason to think that would affect their pricing.  The most profitable industry historically has been pharmaceuticals, because they are effectively granted monopolies, via patents, reducing the supply of a given drug to one.</p>\n<p>There are two ways people get confused about cost and price – a rudimentary way and a more advanced way.  The rudimentary way is confusing fixed and variable costs.  People who <a href=\"http://gthing.net/the-true-price-of-sms-messages/\">gripe</a> about the price/cost gap of SMS messages seem to not realize the telecom industry is like the movie industry in that they make huge upfront investments but have relatively low marginal costs.   I, for one, have always thought movies are a great deal – they spend $100M making a movie, I pay $12 to see it.  It would be silly to compare how much you pay to see a movie to the variable cost of projecting the movie.</p>\n<p>The more advanced way people get confused about cost and price is to think that because costs are dropping, prices will necessarily follow. For example, the cost of distributing newspapers has dropped almost to zero.  This is not the primary cause of the downfall of the newspaper industry.  The downfall of newspapers has been caused by a number of things – losing the classifieds business was huge – but mainly because when newspapers went online and were no longer able to partition the market geographically, supply in each region went up by orders of magnitudes.  Once the majority of newspapers go out of business causing supply to go way down, pricing power should return to the survivors.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/13/what-carries-you-up-will-also-bring-you-down",
      "title": "What carries you up will also bring you down",
      "description": "In Rules of Thumb, Alan Weber quotes legendary venture capitalist John Doerr discussing the original business plans for companies he…",
      "url": "https://cdixon.org/2009/10/13/what-carries-you-up-will-also-bring-you-down",
      "published": "2009-10-13T00:00:00.000Z",
      "updated": "2009-10-13T00:00:00.000Z",
      "content": "<p>In <em><a href=\"http://www.amazon.com/Rules-Thumb-Winning-Business-Without/dp/0061721832\">Rules of Thumb</a></em>, Alan Weber quotes legendary venture capitalist John Doerr discussing the original business plans for companies he invested in such as Google, Intuit, and Amazon:</p>\n<blockquote>\n<p>In every case you can find the one sentence or paragraph that describes their unique business model advantage.  It could be their unique distribution system or the retailing model.  It’s the factor that accounts for their success. <strong>It turns out the factor that explains their success at the beginning is what accounts for their failure later.</strong></p>\n</blockquote>\n<p>As a former philosophy student, I was reminded of Aristotle’s concept of “<a href=\"http://en.wikipedia.org/wiki/Hamartia\">hamartia</a>,” sometimes known as a “fatal flaw”:</p>\n<blockquote>\n<p>In Aristotle’s understanding, all tragic heroes have a “hamartia,” but this is not inherent in their characters, for then the audience would lose respect for them and be unable to pity them; likewise, if the hero’s failing were entirely accidental and involuntary, the audience would not fear for the hero. <strong>Instead, the character’s flaw must result from something that is also a central part of their virtue, which goes somewhat awry, usually due to a lack of knowledge.</strong></p>\n</blockquote>\n<p>It’s an interesting exercise to apply this principle to technology companies:</p>\n<ol>\n<li>Google’s strength is its uber-engineering mindset.  This seems to increasingly be a liability as the web becomes ever more social.</li>\n<li>Yahoo’s strength was its breadth.  Now they call it the “<a href=\"http://online.wsj.com/public/article/SB116379821933826657-0mbjXoHnQwDMFH_PVeb_jqe3Chk_20061125.html\">peanut butter</a>” problem.</li>\n<li>AOL’s strength was being a closed garden.  As users became internet savvy, they were no longer afraid of venturing outside of it.</li>\n<li>Apple’s strength lies in its genius, authoritarian leader.  Apple’s decline will begin when he leaves (sadly).</li>\n<li>Facebook’s strength is authenticity and privacy – your friends are (mostly) your real friends, and only they see your activity.  Facebook has been trying to respond to Twitter’s rise with “open” features like the public micro-messaging.   It remains to be seen whether they can successfully go against their own core strengths.  I’m skeptical, but give them credit for trying.</li>\n<li>Twitter’s strength is its simplicity and openness.  Will its openness be its downfall?  For example, will Twitter end up <a href=\"http://www.cdixon.org/?p=913\">fighting</a> its apps?  Or will it be its simplicity?</li>\n</ol>\n<p>This principle also implies how to use incumbents’ strengths against them (sometimes <a href=\"http://harvardbusiness.org/product/judo-strategy-turning-your-competitors-strength-to/an/2530-HBK-ENG\">called</a> the “Judo Strategy”).  In the chess game of competitive strategy, you can usually bet that incumbents won’t make moves that undermine their core strengths – until it’s too late.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/11/understanding-your-market",
      "title": "Understanding your market",
      "description": "Some startups become huge sensations without requiring any active marketing – YouTube, Skype, and Twitter come to mind. However, the vast…",
      "url": "https://cdixon.org/2009/10/11/understanding-your-market",
      "published": "2009-10-11T00:00:00.000Z",
      "updated": "2009-10-11T00:00:00.000Z",
      "content": "<p>Some startups become huge sensations without requiring any active marketing – YouTube, Skype, and Twitter come to mind. However, the vast majority of successful startups gained adoption through marketing:  PR, SEO, partnerships, paid marketing, and so on. My strong suggestion would be to hope for the former but plan for the latter.</p>\n<p>Marketing is a huge topic.  Here I just want to make the point that, for starters, you need to figure out two things:   1) how information and influence flows in your market, and 2) when and where people use and/or purchase your product.</p>\n<p>I’ll use my last startup, SiteAdvisor, as an example.  SiteAdvisor (now called <a href=\"http://www.siteadvisor.com/\">McAfee SiteAdvisor</a>) is a consumer security product.  Most consumers don’t learn about security products on their own.  Instead, they rely on their “family/friend sysadmin” (smartest computer person they know).  These family sysadmins read technical websites and magazines.  In order to reach this audience, we performed studies on data we had collected, which led to <a href=\"http://www.cdixon.org/press2.html\">lots</a> <a href=\"http://developers.slashdot.org/article.pl?sid=06/01/15/0141236\">of</a> <a href=\"http://it.slashdot.org/article.pl?sid=06/05/12/1835215\">coverage</a>, which raised our profile and bolstered our credibility.</p>\n<p>Now to when and where people buy security products.  Most people only think about security when 1) they buy a new computer, 2) they first get internet access, or 3) they get a virus or other security problem.  The last case is actually pretty rare, so most companies focus on 1 and 2.  How do you reach people at those moments?  Through “channels” – in particular PC makers (“OEMs”) and internet providers (“ISPs”).  (For public market people:  focusing on these two channels was McAfee’s big insight in the 2000′s and how they made a comeback versus Symantec who dominates retail).</p>\n<p>Most people don’t talk to their friends about security products so it’s very hard to do mass word-of-mouth marketing.  (Exceptions would be the beginning of the spyware epidemic around 2001-2 when AdAware got super popular via word of mouth).  So you have to understand and pitch to these channels.</p>\n<p>These observations are specific to consumer security, but every startup should have a similar theory of how to market their product.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/10/man-and-superman",
      "title": "Man and superman",
      "description": "There are two broad philosophical approaches to explaining the forces that drive world events. The first one is sometimes called the Great…",
      "url": "https://cdixon.org/2009/10/10/man-and-superman",
      "published": "2009-10-10T00:00:00.000Z",
      "updated": "2009-10-10T00:00:00.000Z",
      "content": "<p>There are two broad philosophical approaches to explaining the forces that drive world events. The first one is sometimes called <a href=\"http://en.wikipedia.org/wiki/Great_man_theory\">the Great man theory</a>, neatly summarized by the quote ”the history of the world is but the biography of great men.”  This view was famously espoused by the philosopher Hegel and later Nietzche, who called such great people <em>Ubermenchen</em> (“supermen”).</p>\n<p>The alternative view argues that history is largely determined by a complex series of societal, political, institutional, technological and other forces.  This view argues that great people are more a product of their time than the times are a product of them.</p>\n<p>You can apply these theories to companies, in particular to the founders of technology companies who keep their companies great long after their “natural” life cycle.  Most successful companies start with one great product and ride its growth but fail to pull off a second act.</p>\n<p>The companies that defy this natural cycle are invariable run by “supermen” (or women).  Akio Morita founded Sony in 1946 and was a very active CEO until 1994.   At the time he left, Sony had a $40B market cap.  Today it is valued at $28B.  Akio had an incredible run of hit products: the first transistor radio, the first transistor television, the Walkman, the first video cassette recorder, and the compact disc. Akio ran Sony based on his intuitions.  For example, he ignored focus groups that <a href=\"http://memehuffer.typepad.com/meme_huffer/2007/12/great-quotes-fo.html%20\">hated</a> the Walkman, saying:</p>\n<blockquote>\n<p><em>“\\</em>We don’t ask consumers what they want. They don’t know. Instead we apply our brain power to what they need, and _will_ want, and make sure we’re there, ready”</p>\n</blockquote>\n<p>Steve Jobs co-founded Apple in 1976.  He was pushed out in in May 1985 when the company was valued at about $2.2B.  He returned in 1996 when Apple was worth $3B.  Today it is worth $169B.  Jobs famously micromanages every product detail and like Akio makes decisions based on intuitions.</p>\n<p>Bill Gates was the co-founder and CEO of Microsoft, building it to an astounding $470B market cap.  Under him, Microsoft had multiple acts, among them:  DOS, Windows, Office, and enterprise server software.  Since Steve Ballmer became CEO, the company’s value has declined to $223B. I’m sure Steve Ballmer is a smart and <a href=\"http://www.youtube.com/watch?v=wvsboPUjrGc\">passionate</a> guy, but he’s no superman.</p>\n<p>Some observers like the author Jim Collins think great companies are all about culture, not a singularly great leader.  Collin’s “built to last” case study companies included Circuit City and Fannie Mae, both of which have been catastrophic failures.  His “portfolio” <a href=\"http://www.bloggingstocks.com/2009/02/23/from-good-to-great-to-bankruptcy-jim-collins-book-revisited/\">has</a> underperformed to S&P.</p>\n<p>It is convenient to think you can take greatness and bottle it up and sell it in a book.   In fact, life is unfair:  there are geniuses and then there are the rest of us.  When great leaders go away, so does the greatness of their companies.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/06/the-importance-of-asking-people-questions",
      "title": "The importance of asking people questions",
      "description": "Andy Weissman’s blog has the tagline “Maximizing the serendipity around you.”  It’s a good philosophy.  I think one of the simplest ways to…",
      "url": "https://cdixon.org/2009/10/06/the-importance-of-asking-people-questions",
      "published": "2009-10-06T00:00:00.000Z",
      "updated": "2009-10-06T00:00:00.000Z",
      "content": "<p>Andy Weissman’s <a href=\"http://blog.aweissman.com/\">blog</a> has the tagline “Maximizing the serendipity around you.”  It’s a good philosophy.  I think one of the simplest ways to do this is to ask people lots of questions when you meet them.  I’m surprised how often people fail to do this.  Besides being good manners, it’s also an efficient way to learn about the world and sometimes make important discoveries and connections.</p>\n<p>About 6 years ago, when I was working at <a href=\"http://bvp.com/\">Bessemer</a> as junior investor, I was at a dinner with a group of friends and acquaintances.  The guy sitting next to me was a business school student who spent most of the dinner talking about how he was trying to get a job in venture capital.  He never bothered to ask me what I did for a living and I never mentioned it.</p>\n<p>Now, I wasn’t a particularly important venture capitalist, but <a href=\"http://www.cdixon.org/?p=732\">getting a job in the industry</a> is all about meeting as many people who work in it as you can.  The fact that he happened to be sitting next to one was potentially serendipitous – had he only bothered to ask questions.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/02/the-problem-with-online-local-businesses",
      "title": "The problem with online “local” businesses",
      "description": "One of the most popular areas for startups today is “local.”  I probably see a couple of business plans a week that involve local search…",
      "url": "https://cdixon.org/2009/10/02/the-problem-with-online-local-businesses",
      "published": "2009-10-02T00:00:00.000Z",
      "updated": "2009-10-02T00:00:00.000Z",
      "content": "<p>One of the most popular areas for startups today is “local.”  I probably see a couple of business plans a week that involve local search, local news, local online advertising, etc.</p>\n<p>Here’s the biggest challenge with local.  Let’s say you create a great service that users love and it gets popular.  Yelp has done this. Maybe Foursquare, Loopt etc. will do this.  Now you want to make money. It’s very hard to charge users so you want to charge local businesses instead.</p>\n<p>The problem is that, for the most part, these local business either don’t think of the web as an important medium or don’t understand how to use it.  Ask you nearest restaurant owner or dry cleaner about online advertising.  They don’t see it as critical and/or are confused about it.  Even Google has barely monetized local.</p>\n<p>People who have been successful monetizing local have done it with outbound call centers.   The problem with that approach is it’s expensive.  Even if you succeed in getting local businesses to pay you, it often costs you more to acquire them than you earn over the lifetime of the relationship.</p>\n<p>To add insult to injury, local businesses often have very high churn rates.  I have heard that the average is as high as 40%.  Anyone who has done “lifetime customer value analysis” can tell you how that ruins the economics of recurring revenue businesses.</p>\n<p>Hopefully this will change in time as local businesses come to see the web as a critical advertising medium and understand how to make it work for them.  But for now, monetizing local is a really tough slog.</p>\n<p>* This is what I hear from industry sources.  If readers have better numbers or sources I’d love to hear them.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/10/01/why-does-it-matter-that-twitter-is-supplanting-rss",
      "title": "Why does it matter that Twitter is supplanting RSS?",
      "description": "The other day I claimed that Twitter is supplanting RSS, and that long term that’s a bad thing.  Andrew Weissman had a very reasonable…",
      "url": "https://cdixon.org/2009/10/01/why-does-it-matter-that-twitter-is-supplanting-rss",
      "published": "2009-10-01T00:00:00.000Z",
      "updated": "2009-10-01T00:00:00.000Z",
      "content": "<p>The other day <a href=\"http://www.cdixon.org/?p=1284\">I claimed</a> that Twitter is supplanting RSS, and that long term that’s a bad thing.  <a href=\"http://blog.aweissman.com/\">Andrew Weissman</a> had a very reasonable <a href=\"http://www.cdixon.org/?p=1284#comment-17842697\">response</a>:</p>\n<blockquote>\n<p>Twitter is the most open application people are currently using. It’s open on the way in and the way out. The variety of applications using the Twitter api are astounding in that they cover many use cases.</p>\n<p>Given that, why will Ashton and Oprah someday care?</p>\n</blockquote>\n<p>The problem is Twitter isn’t really open.  <strong>For Twitter to be truly open, it would have to be possible to use “Twitter” without an any way involving Twitter the institution.</strong> Instead, all data goes through Twitter’s centralized service.   Today’s dominant core internet services – the web (HTTP), email (SMTP), and subscription messaging (RSS) - are open protocols that are distributed across millions of institutions.  If Twitter supplants RSS, it will be the first core internet service that has a single, for-profit gatekeeper.</p>\n<p>Why would this matter to Ashton or Oprah?  Imagine if Microsoft Exchange server wasn’t just an instantiation of SMTP but was a centralized service that all email had to pass through.  A single institution is never as reliable as a system distributed across millions of institutions.   Nor is it as secure – for example, a distributed denial-of-service attack can much more easily bring down one service than the entire internet.</p>\n<p>But most importantly, having one company control a core internet service hinders competition and therefore innovation.  To continue the Microsoft Exchange analogy – do you think in that world we would have such a diverse email ecosystem if everyone had to go through Microsoft to build stuff?</p>\n<p>And this is all true while we are still living in the fantasy land where everything involving Twitter is free.  At some point Twitter will need to make lots of money to justify their valuation.  Then we can really assess the impact of having a single company control a core internet service.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/29/twitter-killed-rss-and-thats-a-bad-thing",
      "title": "Twitter killed RSS (and that’s a bad thing)",
      "description": "I’ve used Google Reader religiously since it launched.  I’m a few days away from quitting it forever.  Pretty much every blog I read tweets…",
      "url": "https://cdixon.org/2009/09/29/twitter-killed-rss-and-thats-a-bad-thing",
      "published": "2009-09-29T00:00:00.000Z",
      "updated": "2009-09-29T00:00:00.000Z",
      "content": "<p>I’ve used Google Reader religiously since it launched.  I’m a few days away from quitting it forever.  Pretty much every blog I read tweets the titles of their posts along with a link.  Better yet, the people I follow retweet their favorite links, providing a very efficient way for me to discover new articles to read and publishers to follow.</p>\n<p>Contrary to all the uninformed handwringing about how Twitter is making people dumb, I find I’m reading more long form blog and newspaper content than ever.   And the stuff I’m reading is more interesting and relevant.  That’s a good thing.</p>\n<p>Meanwhile, Google Reader has been desperately adding social features such as sharing starred posts and automatically recommending blogs.  These features are clumsy and won’t save Reader, or RSS, from its inevitable decline.</p>\n<p>Although I’m generally happier as a user, I think all of this is bad for the internet.  Twitter isn’t an open protocol.   It’s a private company with a profit motive that has a history of unreliable service. Moreover, URL shorteners – a byproduct of Twitter – are effectively <a href=\"http://joshua.schachter.org/2009/04/on-url-shorteners.html\">creating</a> a second layer DNS service that is far less secure and reliable.</p>\n<p>I know that many people have been calling for an open alternative to Twitter for a long time.  I support them, but I’m afraid it’s too late. The network effects of Twitter’s social graph are just too strong.  Not to mention its brand momentum.  But the biggest reason Twitter has won is that mainstream users don’t care enough about these “principled” objections to switch.  Do you think Ashton or Oprah cares about open protocols?  I doubt it.</p>\n<p>But someday they will care – when the internet is less open, less reliable and less secure.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off",
      "title": "Why content sites are getting ripped off",
      "description": "A commenter on my blog the other day (Tim Ogilvie) mentioned a distinction that I found really interesting between intent generation and…",
      "url": "https://cdixon.org/2009/09/29/why-content-sites-are-getting-ripped-off",
      "published": "2009-09-29T00:00:00.000Z",
      "updated": "2009-09-29T00:00:00.000Z",
      "content": "<p>A commenter on my blog the other day (<a href=\"http://www.cdixon.org/?p=1179#comment-17638191\">Tim Ogilvie</a>) mentioned a distinction that I found really interesting between <strong>intent generation</strong> and <strong>intent harvesting</strong>.  This distinction is critical for understanding how internet advertising works and why it is broken.  It also helps explain why sites like the newspapers, blogs, and social networks are getting unfairly low advertising revenues.</p>\n<p>Today’s link economy is built around <em>purchasing intent harvesting</em>.  (Worse still, it’s all based on <em>last click</em> intent harvesting- but that is for another blog post).  Most of this happens on search engines or through affiliate programs.  Almost no one decides which products to buy based on Google searches or affiliate referrers.  <a href=\"http://www.admonsters.com/blog/people-performance-not-pages-prices\">They decide based on content sites</a> – Gizmodo, New York Times, Twitter, etc.  Those sites generate intent, which is the most important part of creating <a href=\"http://www.cdixon.org/?p=1179\">purchasing intent</a>, which is directly correlated to high advertising revenues.</p>\n<p>But content sites have no way to track their role in generating purchasing intent.  Often intent generation doesn’t involve a single trackable click.  Even if there were some direct way to measure intent generation, doing so would be seen by many today as a blurring of the the advertising/editorial line.  So content sites are left only with impression-based display ads, haggling over CPMs without a meaningful measurement of their impact on generating purchasing intent.</p>\n<p>All of this has caused a massive shift in revenues from the top to the bottom of the purchasing funnel – from intent generators to intent harvesters.  Somehow this needs to get fixed.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/28/the-new-economy",
      "title": "The new economy",
      "description": "According to the Business Insider, Facebook is “‘Beating The S— Out Of Its Numbers’ Thanks To Zynga’s Virtual Goods.”  I wanted to try to…",
      "url": "https://cdixon.org/2009/09/28/the-new-economy",
      "published": "2009-09-28T00:00:00.000Z",
      "updated": "2009-09-28T00:00:00.000Z",
      "content": "<p>According to the <a href=\"http://www.businessinsider.com/facebook-beating-the-s-out-of-its-numbers-thanks-to-zyngas-virtual-goods-2009-9\">Business Insider</a>, Facebook is “‘Beating The S— Out Of Its Numbers’ Thanks To Zynga’s Virtual Goods.”  I wanted to try to understand this new, emerging economy.</p>\n<p>It all starts when a user sees an ad on Facebook:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 169px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/2a841e34dcaa3e2d64be5fd3f21f9d69/0b504/screen-shot-2009-09-28-at-1-40-41-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 129.58579881656803%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 09 28 at 1 40 41 pm\"\n        title=\"Screen shot 2009-09-28 at 1.40.41 PM\"\n        src=\"/static/2a841e34dcaa3e2d64be5fd3f21f9d69/0b504/screen-shot-2009-09-28-at-1-40-41-pm.png\"\n        srcset=\"/static/2a841e34dcaa3e2d64be5fd3f21f9d69/0b504/screen-shot-2009-09-28-at-1-40-41-pm.png 169w\"\n        sizes=\"(max-width: 169px) 100vw, 169px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-09-28 at 1.40.41 PM</figcaption>\n  </figure></p>\n<p>After clicking and installing the app, she gets a little farm where she can grow tomatoes and such.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 296px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/3a4d91411958138f8427089d9a731f35/ffc89/screen-shot-2009-09-28-at-1-43-08-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 96.95945945945947%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 09 28 at 1 43 08 pm\"\n        title=\"Screen shot 2009-09-28 at 1.43.08 PM\"\n        src=\"/static/3a4d91411958138f8427089d9a731f35/ffc89/screen-shot-2009-09-28-at-1-43-08-pm.png\"\n        srcset=\"/static/3a4d91411958138f8427089d9a731f35/924ad/screen-shot-2009-09-28-at-1-43-08-pm.png 170w,\n/static/3a4d91411958138f8427089d9a731f35/ffc89/screen-shot-2009-09-28-at-1-43-08-pm.png 296w\"\n        sizes=\"(max-width: 296px) 100vw, 296px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-09-28 at 1.43.08 PM</figcaption>\n  </figure></p>\n<p>Game seems pretty fun.  But she runs out of seeds, and wants more.  So she goes shopping for virtual goods.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a502a58a3427a5f4e7d49deb20482ceb/9fa2c/screen-shot-2009-09-28-at-1-39-17-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 48.92761394101877%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 09 28 at 1 39 17 pm\"\n        title=\"Screen shot 2009-09-28 at 1.39.17 PM\"\n        src=\"/static/a502a58a3427a5f4e7d49deb20482ceb/94a55/screen-shot-2009-09-28-at-1-39-17-pm.png\"\n        srcset=\"/static/a502a58a3427a5f4e7d49deb20482ceb/924ad/screen-shot-2009-09-28-at-1-39-17-pm.png 170w,\n/static/a502a58a3427a5f4e7d49deb20482ceb/f570f/screen-shot-2009-09-28-at-1-39-17-pm.png 341w,\n/static/a502a58a3427a5f4e7d49deb20482ceb/94a55/screen-shot-2009-09-28-at-1-39-17-pm.png 681w,\n/static/a502a58a3427a5f4e7d49deb20482ceb/9fa2c/screen-shot-2009-09-28-at-1-39-17-pm.png 746w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-09-28 at 1.39.17 PM</figcaption>\n  </figure></p>\n<p>Let’s say our protagonist is too young to have a credit card, so she decides instead to buy coins by signing up for a free offer.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 669px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 31.091180866965622%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 09 28 at 1 39 25 pm\"\n        title=\"Screen shot 2009-09-28 at 1.39.25 PM\"\n        src=\"/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png\"\n        srcset=\"/static/245282258c5c043e7ba048ded09b9434/924ad/screen-shot-2009-09-28-at-1-39-25-pm.png 170w,\n/static/245282258c5c043e7ba048ded09b9434/f570f/screen-shot-2009-09-28-at-1-39-25-pm.png 341w,\n/static/245282258c5c043e7ba048ded09b9434/95db4/screen-shot-2009-09-28-at-1-39-25-pm.png 669w\"\n        sizes=\"(max-width: 669px) 100vw, 669px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-09-28 at 1.39.25 PM</figcaption>\n  </figure></p>\n<p>She decides to download a toolbar.  Free greeting cards seem like fun.</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/d1578e6c0e0b64752f1e58a96ff56bdb/04907/screen-shot-2009-09-28-at-1-39-56-pm1.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 13.572343149807939%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAADCAIAAAAcOLh5AAAACXBIWXMAAAsTAAALEwEAmpwYAAAAuklEQVQI1xXHaw+BUBgA4P7/TzBfzFziUFOG5DJLFOVyvM6OU1gskXIZm9ls+PY8HCwsAIuQyXxmYmKHkYeXtuuAwxYOw4zi7Ro+7+Aau9GJRqdVfGa32P03XHEZPiVVRFEs5YtIruQ0NYlQhud5hAqCIKSzJb3feT1osDd9z/B3hu8Nf95t9OhocbJcbtQltVlrt1WlLhVzCUWpAsz0sa0NDMMcETK9X4Auuw7tEdxaM+0WQ3iYvJ70CzMnkOZRnj9ZAAAAAElFTkSuQmCC'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 09 28 at 1 39 56 pm1\"\n        title=\"Screen shot 2009-09-28 at 1.39.56 PM\"\n        src=\"/static/d1578e6c0e0b64752f1e58a96ff56bdb/94a55/screen-shot-2009-09-28-at-1-39-56-pm1.png\"\n        srcset=\"/static/d1578e6c0e0b64752f1e58a96ff56bdb/924ad/screen-shot-2009-09-28-at-1-39-56-pm1.png 170w,\n/static/d1578e6c0e0b64752f1e58a96ff56bdb/f570f/screen-shot-2009-09-28-at-1-39-56-pm1.png 341w,\n/static/d1578e6c0e0b64752f1e58a96ff56bdb/94a55/screen-shot-2009-09-28-at-1-39-56-pm1.png 681w,\n/static/d1578e6c0e0b64752f1e58a96ff56bdb/04907/screen-shot-2009-09-28-at-1-39-56-pm1.png 781w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-09-28 at 1.39.56 PM</figcaption>\n  </figure></p>\n<p>The download puts an Ask.com search toolbar in the user’s browser.  Ask.com makes money off search ads.  Ask probably paid $1 to $2 for the install.  Some portion of that goes to Zynga, and then back to Facebook when Zynga advertises.</p>\n<p>Farmville apparently does not advertise on Ask.com:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/a7aff6fe96497bd57856ee17060d2ede/3b243/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 39.55078125%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAICAIAAAB2/0i6AAAACXBIWXMAAAsSAAALEgHS3X78AAABB0lEQVQY042N23aCMBBF+f8PsX/St7bqQrxFMAIBDGZyTzApFF/b2tU958yal70myV4W+HikIIUduPFcWZDWOPd2YovXJm8NU0H7qH5LAh2luLxeGlp1lFChPChPwfXC93KQNggd5q1dcPf4LQmDO8pNVVtnwziO0zTFOJaNVybOdw930g3GxGH4nH6QtFStD+R4gboDqQVXggsRQpz+QVI18JHh5a7KS0JZ195a4GCt9d5ZY7TW3vunctO06Tbd7LboVGB8ngefH0UIYXyhtJdSPv9M4H1dZId6ualR0aOC7lF7pTcAEEIwxpRST+WyIqss3aL9apeiMsekvDHO2GxK/gD+kL8AII7FxRraFEMAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 09 28 at 2 03 02 pm 1024x405\"\n        title=\"Screen shot 2009-09-28 at 2.03.02 PM\"\n        src=\"/static/a7aff6fe96497bd57856ee17060d2ede/94a55/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png\"\n        srcset=\"/static/a7aff6fe96497bd57856ee17060d2ede/924ad/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 170w,\n/static/a7aff6fe96497bd57856ee17060d2ede/f570f/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 341w,\n/static/a7aff6fe96497bd57856ee17060d2ede/94a55/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 681w,\n/static/a7aff6fe96497bd57856ee17060d2ede/e8f76/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 1022w,\n/static/a7aff6fe96497bd57856ee17060d2ede/3b243/screen-shot-2009-09-28-at-2-03-02-pm-1024x405.png 1024w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-09-28 at 2.03.02 PM</figcaption>\n  </figure></p>\n<p>Thereby preventing the entire new internet economy from imploding in an endless cycle of circularity.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/28/what-if-online-business-model-innovation-is-slowing-down",
      "title": "What if online business model innovation is slowing down?",
      "description": "There is a widely held assumption that new business models will continue to emerge online – that statements like “how will Twitter ever make…",
      "url": "https://cdixon.org/2009/09/28/what-if-online-business-model-innovation-is-slowing-down",
      "published": "2009-09-28T00:00:00.000Z",
      "updated": "2009-09-28T00:00:00.000Z",
      "content": "<p>There is a widely held assumption that new business models will continue to emerge online – that statements like “how will Twitter ever make money?” will look as silly in 10 years as similar <a href=\"http://www.cdixon.org/?p=1179\">statements</a> made 10 years ago about Google look now.</p>\n<p>There is no question that, if they wanted to, Twitter could make tens of millions of dollars tomorrow, by, say, running ads or by licensing data feeds.   The big question is whether Twitter and other social media sites will figure out how to make Google-scale money and not just Facebook-scale money.  Google and Facebook get (ballpark) the same number of monthly visits to their sites.  Facebook made hundreds of millions of dollars last year and reportedly lost money.   Google made over $22B last year with huge profit margins.</p>\n<p>The optimistic view (which I tend to hold myself) says that where people spend time, money will follow.  If people are spending all their time on Facebook and Twitter, the Proctor and Gamble’s of the world will eventually find an effective way to shift the bulk of their ad spending online.   The tacit assumption in this view is that the next 15 years will see as much business model innovation as the last 15 years.</p>\n<p>On the other hand, what if we are mostly done creating big new business models for the web? History suggests that business model innovation is rapid right after the advent of a new medium and then slows down considerably.   If indeed it is slowing down, social media could end up like instant messaging – incredibly popular but basically lousy at monetizing.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent",
      "title": "Online advertising is all about purchasing intent",
      "description": "A while ago I dug up this quote from Business Week from 2000: But how will Google ever make money? There’s the rub. The company’s adamant…",
      "url": "https://cdixon.org/2009/09/27/online-advertising-is-all-about-purchasing-intent",
      "published": "2009-09-27T00:00:00.000Z",
      "updated": "2009-09-27T00:00:00.000Z",
      "content": "<p>A while ago I <a href=\"http://www.cdixon.org/?p=138\">dug up</a> this quote from <a href=\"http://www.businessweek.com/bwdaily/dnflash/dec2000/nf2000127_947.htm\">Business Week</a> from 2000:</p>\n<blockquote>\n<p>But how will Google ever make money? There’s the rub. The company’s adamant refusal to use banner or other graphical ads eliminates what is the most lucrative income stream for rival search engines. Although Google does have other revenue sources, such as licensing and text-based advertisements, the privately held company’s business remains limited compared with its competitors’.</p>\n</blockquote>\n<p>We now know what people were missing back then and why Google generates such massive revenues from advertising.  The lesson is that the RPMs* of online ads are directly proportional to the degree** to which the user has <strong>purchasing intent</strong>.  This is why when you search Google for “<a href=\"http://www.google.com/search?client=safari&rls=en&q=cameras&ie=UTF-8&oe=UTF-8\">cameras</a>” you’ll see ads everywhere (and those advertisers are paying high CPCs), but when you search for “<a href=\"http://www.google.com/search?client=safari&rls=en&q=abraham+lincoln's+birthday&ie=UTF-8&oe=UTF-8\">Abraham Lincoln’s birthday</a>” Google doesn’t even bother to show ads at all.</p>\n<p>This is also why Nextag will have revenues this year in the ballpark of Facebook’s revenues, even though Nextag gets a fraction of the visits:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 520px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/22405b9ee3c6bcdf78ac3c6217635666/249e6/screen-shot-2009-09-27-at-9-33-10-am.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 60.57692307692308%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"screen shot 2009 09 27 at 9 33 10 am\"\n        title=\"Screen shot 2009-09-27 at 9.33.10 AM\"\n        src=\"/static/22405b9ee3c6bcdf78ac3c6217635666/249e6/screen-shot-2009-09-27-at-9-33-10-am.png\"\n        srcset=\"/static/22405b9ee3c6bcdf78ac3c6217635666/924ad/screen-shot-2009-09-27-at-9-33-10-am.png 170w,\n/static/22405b9ee3c6bcdf78ac3c6217635666/f570f/screen-shot-2009-09-27-at-9-33-10-am.png 341w,\n/static/22405b9ee3c6bcdf78ac3c6217635666/249e6/screen-shot-2009-09-27-at-9-33-10-am.png 520w\"\n        sizes=\"(max-width: 520px) 100vw, 520px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">Screen shot 2009-09-27 at 9.33.10 AM</figcaption>\n  </figure></p>\n<p>When people talk about search being a great business model (for, say, Twitter), they should distinguish between search with puchasing intent, which is an incredible business model, and search without purchasing intent, which is a terrible one.</p>\n<p>This may change as brand advertising moves to the web.  But for now web advertising is dominated by “direct response” ads, and those are all about purchasing intent.</p>\n<p>* RPMs = revenue per thousand impressions – can we please agree to start saying RPMs instead of CPMs or eCPMs?  :)</p>\n<p>** degree being how close the user is to actually purchasing multiplied by the profit margin on what they are purchasing</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/26/yahoo-should-invest-in-products-not-advertising",
      "title": "Yahoo should invest in products, not advertising",
      "description": "For 10 years, Yahoo was my default home page.  Now I can barely stand using the site.  I still use it for Finance and Flickr, but that’s it…",
      "url": "https://cdixon.org/2009/09/26/yahoo-should-invest-in-products-not-advertising",
      "published": "2009-09-26T00:00:00.000Z",
      "updated": "2009-09-26T00:00:00.000Z",
      "content": "<p>For 10 years, Yahoo was my default home page.  Now I can barely stand using the site.  I still use it for Finance and Flickr, but that’s it. The <a href=\"http://m.www.yahoo.com/\">new</a> home page design has windows popping up everywhere and mind numbing celebrity gossip up top.</p>\n<p>Now we learn Yahoo is going to <a href=\"http://www.guardian.co.uk/business/2009/sep/22/yahoo-100m-campaign-challenge-google\">spend $100 million</a> on an advertising campaign.  The slogan is “It’s Y!ou” which sounds like one of those meaningless taglines invented by PR firms.  I’m quite sure no one will remember it and their money will be wasted (quick, name the tagline of any big tech company).</p>\n<p>By CEO Carol Bartz’s own <a href=\"http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/22/BUQP19QVSI.DTL&type=tech\">admission</a>, Yahoo is incredibly well known, especially outside of techie circles:</p>\n<blockquote>\n<p>When you get outside of New York City and Silicon Valley, everybody loves Yahoo…. We do great things for [users] and we’re excited about what we are.</p>\n</blockquote>\n<p>Yes, Yahoo has one of the best brands on the web. Which is precisely why they shouldn’t be spending $100M on branding.  That’s the last thing Yahoo needs.  What they need are new technologies, new revenue streams, and new products that people love.  If they can’t build those things themselves, then they should acquire them.  They’re coasting on inertia right now.  As we saw with AOL and countless other tech companies before them, that inertia will be lost if they fail to innovate.</p>\n<p>I think the Yahoo-Bing search deal is a great thing for startups as it potentially makes search competitive again.  But as a longtime Yahoo user it makes me kind of sad.  Between the branding campaign and the search deal, it feels like Yahoo has thrown in the towel.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/24/software-patents-should-be-abolished",
      "title": "Software patents should be abolished",
      "description": "The alleged societal benefit of patent law is that it creates a financial incentive to innovate.  The societal drawback is that it reduces…",
      "url": "https://cdixon.org/2009/09/24/software-patents-should-be-abolished",
      "published": "2009-09-24T00:00:00.000Z",
      "updated": "2009-09-24T00:00:00.000Z",
      "content": "<p>The alleged societal benefit of patent law is that it creates a financial incentive to innovate.  The societal drawback is that it reduces competition, reduces the spread of innovation, and creates deadweight legal costs.</p>\n<p>Perhaps patents are necessary in the pharmaceutical industry.  I know very little about that industry but it would seem that some sort of temporary grants of monopoly are necessary to compel companies to spend billions of dollars of upfront R&D.</p>\n<p>What I do know about is the software/internet/hardware industry. And I am absolutely sure that if we got rid of patents tomorrow innovation wouldn’t be reduced at all, and the only losers would be lawyers and patent trolls.</p>\n<p>Ask any experienced software/internet/hardware entrepreneur if she wouldn’t have started her company if patent law didn’t exist.  Ask any experienced venture investor if the non-existence of patent law would have changed their views on investments they made.  The answer will invariably be no (unless their company was a patent troll or something related).</p>\n<p>Yes, most venture-backed companies file patents (I have filed them myself), but this is because 1) patents can have some defensive value, 2) they can grease the wheels of an acquisition (mostly because big companies want a large patent portfolio for defensive purposes), and 3) occasionally failed startups will get funded by investors whose intention is to go around suing people (hence providing “downside value” for the initial investors).</p>\n<p>Articles like <a href=\"http://www.nytimes.com/2009/09/21/technology/21patent.html\">this</a> recent one in New York Times promote the urban myth that the main beneficiary of patents are lone inventors whose idea is stolen by the big guys.  I have no special knowledge of the situation referred to, but I find it hard to believe in 1995 the idea of tying GPS to mobile devices wasn’t obvious to anyone in the field.   Almost all software and technology patents that I’ve ever come across are similarly obvious to practitioners at that time.  In theory obviousness is grounds for disallowing patents, but in practice patent examiners grants tons of <a href=\"http://www.techdirt.com/articles/20090119/1449403453.shtml\">silly</a> patents.</p>\n<p>Take the <a href=\"http://money.cnn.com/2006/03/03/technology/rimm_ntp/\">case</a> of Blackberry and NTP.   NTP is a “patent holding company” – a patent troll – whose sole purpose is to sue people.  Now, I’ve been around long enough to know that the idea of mobile email is as old as email itself.  What RIM did was <em>they actually went and made it a reality</em>.  They figured out how to make a simple device that people loved, how to market it, and how to convince investors to give them money for what probably at the time seemed like an overwhelmingly difficult project.  The founders of RIM are the heroes of the story.   They didn’t need to sue anyone because they built a product and made money by actually selling a product people wanted.</p>\n<p>How did having patents help society here?  NTP never tried to build any products.  No one is claiming RIM took the idea from them.  The only beneficiaries here are a company that never built anything and a lot of lawyers.</p>\n<p>Software/internet/hardware patents have no benefit to society and should be abolished.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/19/climbing-the-wrong-hill",
      "title": "Climbing the wrong hill",
      "description": "I know a brilliant young kid who graduated from college a year ago and now works at a large investment bank. He has decided he hates Wall…",
      "url": "https://cdixon.org/2009/09/19/climbing-the-wrong-hill",
      "published": "2009-09-19T00:00:00.000Z",
      "updated": "2009-09-19T00:00:00.000Z",
      "content": "<p>I know a brilliant young kid who graduated from college a year ago and now works at a large investment bank. He has decided he hates Wall Street and wants to work at a tech startup (good!). He recently gave notice to his bosses, who responded by putting on a dog and pony show to convince him to stay. If he stays at the bank, the bosses tell him, he’ll get a raise and greater responsibility. Joining the technology industry, he’d be starting from scratch. He is now thinking that he’ll stay, despite his convincing declaration that he has no long term ambitions in finance.</p>\n<p>Over the years, I’ve run into many prospective employees in similar situations. When I ask them a very obvious question: “What do you want to be doing in 10 years?” The answer is invariably “working at or founding a tech startup” – yet most of them decide to remain on their present path and not join a startup. Then, a few years later, they finally quit their job, but only after having spent years in an industry they didn’t enjoy, and that didn’t really advance them toward their long term ambitions.</p>\n<p>How can smart, ambitious people stay working in an area where they have no long term ambitions? I think a good analogy for the mistake they are making can be found in computer science.</p>\n<p>A classic problem in computer science is <a href=\"http://en.wikipedia.org/wiki/Hill_climbing\">hill climbing</a>. Imagine you are dropped at a random spot on a hilly terrain, where you can only see a few feet in each direction (assume it’s foggy or something). The goal is to get to the highest hill.</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 394px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/19ece91728a130202a689551af6f0376/0306f/local_maximum1.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 43.65482233502538%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAJCAIAAAC9o5sfAAAACXBIWXMAAAsTAAALEwEAmpwYAAABBElEQVQoz4WR22qDUBBF/f9f8knQRIUI8QIqMVFivGuEPETx0i44YErbtOdhkHNm7b1nlD7+PNM03W63siyXZfn5Kr3D1nWlghVFQa3rerv8BxZNz+czjuP7/d40TZIkwzCIp01CekdyCJxlWdu2XdfleX69Xn+PLQAmpAkmCALP83CrqgqSzJinabrf7xVFORwOl8tlnmdpizGOI91Y0UclMELAkPD4843ibreDxOblTKtlWdzSASzcWBUqbIt6Pp8hCYXhK/bj8SCGLMu+74shqUQIw9BxnOPxaJqmpmm2bfd9/20pkmEYeJ5OJ7SjKELCdV3kdF2HUVWVOZET//nrqjmfrMf46CHWkBsAAAAASUVORK5CYII='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"local maximum1\"\n        title=\"local maximum1\"\n        src=\"/static/19ece91728a130202a689551af6f0376/0306f/local_maximum1.png\"\n        srcset=\"/static/19ece91728a130202a689551af6f0376/924ad/local_maximum1.png 170w,\n/static/19ece91728a130202a689551af6f0376/f570f/local_maximum1.png 341w,\n/static/19ece91728a130202a689551af6f0376/0306f/local_maximum1.png 394w\"\n        sizes=\"(max-width: 394px) 100vw, 394px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span></p>\n<p>Consider the simplest algorithm. At any given moment, take a step in the direction that takes you higher. The risk with this method is if you happen to start near the lower hill, you’ll end up at the top of that lower hill, not the top of the tallest hill.</p>\n<p>A more sophisticated version of this algorithm adds some randomness into your walk. You start out with lots of randomness and reduce the amount of randomness over time.  This gives you a better chance of meandering near the bigger hill before you start your focused, non-random climb.</p>\n<p>Another and generally better algorithm has you repeatedly drop yourself in random parts of the terrain, do simple hill climbing, and then after many such attempts step back and decide which of the hills were highest.</p>\n<p>Going back to the job candidate, he has the benefit of having a less foggy view of his terrain.   He knows (or at least believes) he wants to end up at the top of a different hill than he is presently climbing.  He can see that higher hill from where he stands.</p>\n<p>But the lure of the current hill is strong. There is a natural human tendency to make the next step an upward one. He ends up falling for a common trap <a href=\"http://books.google.com/books?id=znbkHaC8QeMC&lpg=PA256&ots=a_8QX_rduF&dq=thaler%20apple%20today&pg=PA256#v=onepage&q=thaler%20apple%20today&f=false\">highlighted</a> by behavioral economists: people tend to systematically overvalue near term over long term rewards.  This effect seems to be even stronger in more ambitious people. Their ambition seems to make it hard for them to forgo the nearby upward step.</p>\n<p>People early in their career should learn from computer science: meander some in your walk (especially early on), randomly drop yourself into new parts of the terrain, and when you find the highest hill, don’t waste any more time on the current hill no matter how much better the next step up might appear.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/17/thanks",
      "title": "Thanks…",
      "description": "I got my first computer (TRS-80 Model 1) in 1980 at the age of 8.   I got my second computer – an Atari 800 – two years later.   I was…",
      "url": "https://cdixon.org/2009/09/17/thanks",
      "published": "2009-09-17T00:00:00.000Z",
      "updated": "2009-09-17T00:00:00.000Z",
      "content": "<p>I got my first computer (<a href=\"http://en.wikipedia.org/wiki/TRS-80#History\">TRS-80 Model 1</a>) in 1980 at the age of 8.   I got my second computer – <a href=\"http://en.wikipedia.org/wiki/Atari_8-bit_family#The_early_machines:_400_and_800\">an Atari 800</a> – two years later.   I was living in Springfield, Ohio.  Very few people were interested in computers in that area then.   The only people that seemed to be were engineers at the nearby Air Force base, Wright Patterson.  Every month, I used to get my parents to drive me over to meet the engineers there for Atari “user group” meetings.</p>\n<p>Like most computer enthusiasts back then, I wanted to program video games.  This of course was pre-internet and before the PC boom, so information on computer programming was scarce.   At the user group meetings we would trade information as basic as what memory locations performed what functions, or new techniques people had developed (vsync interrupt, page 6 techniques – old school readers will know what I mean).  After a while I was increasingly frustrated by the lack of technical information so I decided to write a letter to Atari asking them for manuals.  I got a hand written letter back from <a href=\"http://en.wikipedia.org/wiki/Alan_Kay\">Alan Kay</a>, who was already quite famous at the time and was working at Atari, along with a giant box full of manuals and technical documentation.  I’ve never met the man but I give him a lot of credit for my lifelong interest in computers.</p>\n<p>I was reminded of this yesterday when I had the pleasure to meet with Om Malik.  Om took time to meet with me years ago when I was struggling to get SiteAdvisor off the ground.  No other popular bloggers would meet with me, but Om spent over an hour listening to me talk and giving me advice.  I was introduced to Om by Ron Conway who invested in my company despite the fact that the industry experts he introduced me to as part of diligence hated my idea.</p>\n<p>People never forget who helps them when they are struggling.  It’s a cliche, perhaps, but true – and a good thing to always keep in mind.  Thanks Alan, Om, and Ron.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps",
      "title": "The inevitable showdown between Twitter and Twitter apps",
      "description": "People usually think of business competition as occurring between substitutes – products that serve similar functions for the user.   Famous…",
      "url": "https://cdixon.org/2009/09/14/the-inevitable-showdown-between-twitter-and-twitter-apps",
      "published": "2009-09-14T00:00:00.000Z",
      "updated": "2009-09-14T00:00:00.000Z",
      "content": "<p>People usually think of business competition as occurring between <a href=\"http://en.wikipedia.org/wiki/Substitute_good\">substitutes</a> <em>–</em> products that serve similar functions for the user.   Famous substitutes include Coke and Pepsi, and Macs and PCs.</p>\n<p>In fact, especially in the technology sector, some of the most brutal competition has occurred between <a href=\"http://en.wikipedia.org/wiki/Complementary_good\">complements</a><em>.</em> Products are complements when they are more valuable because of the existence of one another – e.g. hotdogs and hotdog buns, PCs and operating systems.</p>\n<p>There is inherent tension between complements.  If a customer is willing to pay $2 for a hotdog plus bun, the hotdog maker wants buns to be cheaper so he can capture more of the $2, or lower the price of the bundle and thereby increase demand.  (For a great primer on competition between complements, I highly recommend <a href=\"http://www.joelonsoftware.com/articles/StrategyLetterV.html\">this</a> Joel Spolsky post.  I’ve also been writing about complements, <a href=\"http://www.cdixon.org/?p=334\">here</a> and <a href=\"http://www.cdixon.org/?p=694\">here</a>).</p>\n<p>Microsoft is famous for destroying companies that offer complementary products, either by bundling complementary apps with Windows (Windows Media Player, MSN Messenger, IE) or aggressively competing head-to-head against the most popular ones (Adobe, Intuit).  The surviving 3rd party apps are usually ones that are too small for Microsoft to care about.  The best (selfish) economic situation for a platform like Windows is lots of tiny complements that have little pricing power but that make the platform itself more valuable.</p>\n<p>One of Google’s main complements is the web browser and desktop operating systems, which is why they built and open sourced the Chrome browser and OS.  Google’s other big complement is broadband access – hence their excursions into public Wifi and cellular spectrum.</p>\n<p>So what does all of this have to do with Twitter?  At some point, significant (non-VC) money will enter the Twitter ecosystem.  I have no idea whether this is will be by charging consumers, charging businesses users, search advertising, sponsored tweets, licensing the twitter data feed, data from URL shorteners, or something else. But history suggests that where there is so much user engagement, dollars follow.</p>\n<p>For the sake of argument, let’s suppose Twitter’s eventual dominant business model is putting ads by search results.   Who gets the revenue when a user is searching on a 3rd party Twitter client?   Even if Twitter gets a portion of revenue from ads on 3rd party apps, there will always be an incentive for them to create their own client app, or to “<a href=\"http://en.wikipedia.org/wiki/Commoditization#Business_and_economics\">commodotize</a>” the client app by, say, promoting an open source version.</p>\n<p>I’m not saying this will happen in the immediate future.  First, Twitter and a lot of app makers* have raised a lot of money, so aren’t under (much) pressure yet to generate revenues.  Secondly, some of the lucky Twitter apps will get acquired by Twitter.  I think this is what many of their investors are hoping for.  But those that aren’t so lucky will eventually find their biggest competitor to be Twitter itself, not the substitute product they see themselves as competing against today.</p>\n<p>* when I say Twitter apps, I mean any product, website, or service that eventually makes money and depends on Twitter’s API.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/13/entrepreneurs-need-to-learn-some-law",
      "title": "Entrepreneurs need to learn some law",
      "description": "I recently wrote a post where I said entrepreneurs need to understand term sheets on their own, without the assistance of lawyers.  I got…",
      "url": "https://cdixon.org/2009/09/13/entrepreneurs-need-to-learn-some-law",
      "published": "2009-09-13T00:00:00.000Z",
      "updated": "2009-09-13T00:00:00.000Z",
      "content": "<p>I recently wrote a <a href=\"http://www.cdixon.org/?p=655\">post</a> where I said entrepreneurs need to understand term sheets on their own, without the assistance of lawyers.  I got quite a bit of criticism for this, e.g.</p>\n<blockquote>\n<p>@<a href=\"http://twitter.com/rafer\">rafer</a> Never ever sign a term sheet without your atty’s review. sry but thats <strong>crazy</strong> talk <strong><a href=\"http://twitter.com/cdixon\">@cdixon</a></strong> <a href=\"http://bit.ly/UOgiC\">http://bit.ly/UOgiC</a> myreblog <a href=\"http://bit.ly/cJ9d0\">http://bit.ly/cJ9d0</a></p>\n</blockquote>\n<p>I’ll agree that entrepreneurs, especially first timers, should have lawyers review everything they sign.  But I stand behind my main point:  you can’t outsource the understanding of key financing and other legal documents to lawyers.</p>\n<p>Here’s just one of many examples of why.   A company I know was recently confronted with the following trade off.  Get a higher valuation with full ratchet anti-dilution or a lower valuation with weighted average anti-dilution.   The only way to assess this trade off is to understand what these terms mean and try to compute the expected value of the two offers.   In this particular case what matters is the likelihood of a future down round.  This is a business judgment, not a legal one, and the people best able to make it are business people.</p>\n<p>You also need to consider your personal utility function.  For example, as a founder, I don’t care very much about anti-dilution provisions because I figure in the cases where it matters I will already have been fired and my equity crammed down.</p>\n<p>My point is you can’t leave these judgements to lawyers.   They don’t have the expertise to make these expected value calculations nor do they understand how various scenarios affect the founders personally.</p>\n<p>Another common mistake entrepreneurs make is let their lawyers argue over terms that don’t matter.  This puts deals at risk and costs money.  You need to understand what they are arguing over to decide when it matters and when it doesn’t.</p>\n<p>You learn about these legal issues from experience, by talking to lawyers, by talking to experienced advisors, and by reading blogs and books (every entrepreneur should read <a href=\"http://www.amazon.com/Entrepreneurs-Guide-Business-Law/dp/0324204930/ref=sr_1_1?ie=UTF8&s=books&qid=1252842726&sr=8-1\">The Entrepreneur’s Guide to Business Law</a>).</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/12/google-and-newspapers-the-false-choice-of-opting-out",
      "title": "Google and newspapers:  the false choice of opting out",
      "description": "First let me say I love Google.  I think Google created one of the greatest inventions of the past century and continues to give back much…",
      "url": "https://cdixon.org/2009/09/12/google-and-newspapers-the-false-choice-of-opting-out",
      "published": "2009-09-12T00:00:00.000Z",
      "updated": "2009-09-12T00:00:00.000Z",
      "content": "<p>First let me say I love Google.  I think Google created one of the greatest inventions of the past century and continues to give back much more value to the world than they “capture” in revenue.</p>\n<p>Secondly, I think Google itself has almost nothing to do with the decline of newspapers.  That is due to, among other things, 1) the newspapers losing their classified business to Craigslist and others, 2) the internet making geography irrelevant and hence causing newspaper competition go from 1 or 2 papers per market to thousands.</p>\n<p>That said, I am bothered by the <a href=\"http://www.techdirt.com/articles/20090421/0228024589.shtml\">arguments</a> I hear in internet circles of the form:</p>\n<p>Premise 1:  X can stop working with Y at anytime.  (NYTimes could opt out of Google search results / Google news at any time)</p>\n<p>Premise 2:  X would lose out if it did that (NYTimes would lose traffic and revenue if they opted out of Google).</p>\n<p>Conclusion:   Hence Y is helping X.  (Google is helping the NYTimes and the NYTimes should stop whining.)</p>\n<p>The conclusion doesn’t follow from the premises.  The NYTimes might in fact be better off in a world without Google.  More specifically, they would be better off if the search engine market were genuinely competitive.</p>\n<p>The power dynamics between Google and the newspapers has the same dynamics of any buyer-supplier market.</p>\n<p>Newspapers, like all websites, are suppliers of content to Google.  In most markets, with genuinely competitive buyers and suppliers, the revenues are shared between buyers and suppliers in proportion to their relative bargaining power.  Their bargaining power depends on how fragmented each side of the market is – how many genuine alternatives each company has.</p>\n<p>Normally there is some reasonable level of interdependence between buyers and suppliers, hence the revenue split is positive and non-negligible. Pepsi and Coke are always jostling with their bottlers about the percentage split but in the end each side usually makes a profit.</p>\n<p>And in situations where the relative bargaining power is severely imbalanced, there are normally business mechanisms for correcting the imbalance.   For example, before Staples was founded, office supply stores were mostly mom-and-pop shops that were tiny relative to their suppliers, and hence had very little bargaining power.  The central business concept behind creating Staples was to “roll up” these shops and thereby increase their bargaining power with their suppliers.  In doing so, they were able lower their costs and increase their margins even while lowering their prices.   One of the primary reasons companies merge is to increase bargaining power with respect to buyers and suppliers.</p>\n<p>As a “buyer” of web content, Google has incredible dominance, so much so that the price they pay for that content is zero.  If the NYTimes decided to opt out of Google tomorrow, Google users would barely notice.  (Perhaps the only content site that would matter and hence in theory could bargain with Google would be Wikipedia – but even Wikipedia only accounts for ~2% of Google click throughs).  On the flip side, the NYTimes would see a massive decrease in traffic and hence ad revenues.  Google has so much power they can split 0% of the revenue for organic traffic (and of course charge for paid links).</p>\n<p>Now imagine a world where search engines are truly competitive.  I know it’s hard – but imagine there are say 20 search engines, each with 5% market share.  And suppose they differ primarily according to which content sites they index.  (I am not saying I’d prefer this world – I’d actually hate it – but please bear with me for the sake of argument).   On the content side, suppose there are only a couple of newspapers left – maybe the NYTimes, WSJ, USA Today, and the Financial Times (which, btw, will probably be the case in a few years).  In this situation the newspapers would have enough leverage to get the search engines to pay them for inclusion in their organic listings.  I know that in my own case if two search engines were nearly identical except one included my favorite newspaper and the other didn’t, I’d use the one that did.  I suspect a lot of other people would make the same decision.</p>\n<p>There is nothing inherently un-monetizable about newspaper content.  Like all goods and services, if newspaper content has value to people and is scarce (it’s not scarce today but as more newspapers go out of business will become increasingly so), they can eventually generate sustainable revenue (albeit probably operating at a much smaller scale).  The revenue can come either through consumers paying directly or buyers like Google sharing revenues, or some combination thereof.</p>\n<p>For the moment, and for the foreseeable future, newspapers (and all content sites) just happen to be in a dreadful bargaining position with respect to Google.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/10/non-linearity-of-technology-adoption",
      "title": "Non-linearity of technology adoption",
      "description": "When I was in business school I remember a class where a partner from a big consulting firm was talking about how they had done extensive…",
      "url": "https://cdixon.org/2009/09/10/non-linearity-of-technology-adoption",
      "published": "2009-09-10T00:00:00.000Z",
      "updated": "2009-09-10T00:00:00.000Z",
      "content": "<p>When I was in business school I remember a class where a partner from a big consulting firm was talking about how they had done extensive research and concluded that broadband would never gain significant traction in the US without government subsidies.  His primary evidence was a survey of consumers they had done asking them if they were willing to pay for broadband access at various price points.</p>\n<p>Of course the flaw in this reasoning is that, at the time, there weren’t many websites or apps that made good use of broadband.   This was 2002 – before YouTube, Skype, Ajax-enabled web apps and so on.  In the language of economics, broadband and broadband apps are complementary goods – the existence of one makes the other more valuable.  Broadband didn’t have complements yet so it wasn’t that valuable.</p>\n<p>Complement effects are one of the main reasons that technology adoption is non-linear. There are other reasons, including network effects, viral product features, and plain old faddishness.</p>\n<p>Twitter has network effects – it is more valuable to me when more people use it.  By opening up the API they also gained complement effects – there are tons of interesting Twitter-related products that make it more useful.  Facebook also has network effects and with its app program and Facebook Connect gets complement effects.</p>\n<p>You can understand a large portion of technology business strategy by understanding strategies around complements.  One major point:  companies generally try to reduce the price of their products complements (Joel Spolsky has an excellent discussion of the topic <a href=\"http://www.joelonsoftware.com/articles/StrategyLetterV.html\">here</a>).   If you think of the consumer as having a willingness to pay a fixed N for product A plus complementary product B, then each side is fighting for a bigger piece of the pie. This is why, for example, cable companies and content companies are constantly battling.  It is also why Google wants open source operating systems to win, and for broadband to be cheap and ubiquitous.</p>\n<p>Clay Christensen has a really interesting theory about how technology “value chains” evolve over time.  Basically they typically start out with a single company creating the whole thing, or most of it.  (Think of mobile phones or the PC).  This is because early products require tight integration to squeeze out maximum performance and usability.  Over time, standard “APIs” start to develop between layers, and the whole product gains performance/usability to spare.   Thus the chain begins to stratify and adjacent sections start fighting to commoditize one another.   In the early days it’s not at all obvious which segments of the chain will win.  That is why, for example, IBM let Microsoft own DOS.  They bet on the hardware.   One of Christensen’s interesting observations is, in the steady state, you usually end up with alternating commoditized and non-commoditized segments of the chain.</p>\n<p>Microsoft Windows & Office was the big non-commoditized winner of the PC. Dell did very well precisely because they saw early on that hardware was becoming commodotized.  In a commoditized market you can still make money but your strategy should be based on lowering costs.</p>\n<p>Be wary of analysts and consultants who draw lines to extrapolate technology trends.  You are much better off thinking about complements, network effects, and studying how technology markets have evolved in the past.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/08/getting-a-job-in-venture-capital",
      "title": "Getting a job in venture capital",
      "description": "Getting a job in venture capital is extremely hard.  There are a lot of really smart, well qualified, eager people who want to work in VC…",
      "url": "https://cdixon.org/2009/09/08/getting-a-job-in-venture-capital",
      "published": "2009-09-08T00:00:00.000Z",
      "updated": "2009-09-08T00:00:00.000Z",
      "content": "<p>Getting a job in venture capital is extremely hard.  There are a lot of really smart, well qualified, eager people who want to work in VC, and very few jobs.  And it’s likely to only get harder as the <a href=\"http://abovethecrowd.com/2009/08/24/what-is-really-happening-to-the-venture-capital-industry/\">industry contracts</a>.</p>\n<p>If you look at the backgrounds of partners in VC firms, they generally either came in as a partner after being a successful entrepreneur or worked their way up in VC.  There are books written on how to become a successful entrepreneur, so here I’ll just focus on the other common path – career VCs.</p>\n<p>First, you should understand how VC firms are structured.  Every firm is different, some have no junior people, some have just a few, and some have a lot.</p>\n<p>The key distinction between junior and senior people is whether they can write checks – meaning they can independently lead a deal.  If you can’t write checks, you have to get a check writer to sponsor an investment you like.  Check writers get almost all the credit and blame for an investment.</p>\n<p>The hierarchy within VC firms is basically as follows:  (There has been a wave of title inflation in VC lately, so I’ll put the inflated titles in parentheses).</p>\n<p>Partners – Owners of the firm.  Get the most of the management and carry fees.  Can write checks.</p>\n<p>Principals – Usually get small piece of carry.  Can write checks.  (Inflated title:  Partner;  in which case it’s hard to tell the “real” partners from the principals).</p>\n<p>Associates – Usually post-MBA or 4-6 years work experience.   Usually get little to no carry and can’t write checks.  (Inflated title:  Sr. Associates or Vice President).</p>\n<p>Analyst – Usually right out of college.   They do research or cold call companies.   No carry and obviously can’t write checks.   (Inflated title:  they just don’t list a title or say something vague like “investment professional”).</p>\n<p>As you can see with the title inflation this is all pretty confusing.  It’s meant to be.  VCs want entrepreneurs to take their junior people seriously.  (Which, by the way, entrepreneurs always should:  even though they can’t directly write checks, they can be extremely influential)</p>\n<p>You can break down working your way up in VC into 3 challenges:</p>\n<ol>\n<li>Getting a job in the first place.  The two most common places to break into VC as a junior person are after undergrad or business school.  VCs are heavily biased toward certain top schools.  On the MBA side, the industry is dominated by Harvard and Stanford.  Undergrad, the VCs I know only recruit from Wharton, Harvard, Stanford and maybe a few other elite schools.  (Please don’t accuse me of elitism-I’m just reporting on elitism, not promoting it). Even if you go to one of these fancy schools it’s still not easy to get a job.  You need to network like crazy.  I did a whole bunch of volunteer research projects for VCs when I was in business school.  I came up with lists of investment ideas so when I got a few minutes with a VC, I could show them I was obsessed with this stuff.  Other things that help you:  computer science or other relevant technology background.  Single best thing is to have started a company (even if it didn’t succeed).</li>\n<li>Going from non-check writer to check writer.  This might even be harder than breaking into VC.   There is kind of a Catch-22 here:  you can only gain credibility by having led deals, yet you can’t lead deals until you’ve gotten credibility.  Some partners are nice and let high level junior people “virtually” lead deals, join boards etc so they can get credit.  My advice here is to try to get your hands on a checkbook, even if it means leaving a top tier VC and going to a second tier one. Too many junior people hang around top tier firms waiting to get promoted.</li>\n<li>Once you get your hands on a checkbook, then you just need to find the next Google/Facebook and invest before anyone else figures it out. ! ;)</li>\n</ol>\n<p>If you really want to break into VC and aren’t just now graduating from a top school, my top suggestion would be to go start a company.  If you don’t have the stomach for that, the next best thing is to work in a VC-backed portfolio company, hopefully in a role where you get some VC exposure.</p>\n<p>And, finally, if you just want to work in finance, try to get a job at a hedge fund or a big bank.   Breaking into VC so hard that it’s only worth it if you really love startups.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/07/is-now-a-good-time-to-start-a-company",
      "title": "Is now a good time to start a company?",
      "description": "Back in 2006, my co-founder at Hunch, Caterina Fake, wrote a blog post called “It’s a bad time to start a company.”  There were no doubt…",
      "url": "https://cdixon.org/2009/09/07/is-now-a-good-time-to-start-a-company",
      "published": "2009-09-07T00:00:00.000Z",
      "updated": "2009-09-07T00:00:00.000Z",
      "content": "<p>Back in 2006, my co-founder at <a href=\"http://www.hunch.com/\">Hunch</a>, Caterina Fake, wrote a blog post called <a href=\"http://www.caterina.net/archive/000965.html\">“It’s a bad time to start a company</a>.”  There were no doubt some great consumer internet companies started then (note she was only talking about consumer internet – which is what I’m also talking about), but on average I’m guessing she was probably right.</p>\n<p>Now I’m sure Caterina would agree with me that if you want to start a company, you should just go do it immediately, as she herself has done repeatedly, so no one is trying to discourage entrepreneurs.   But the reality is the fate of your company is partially dependent on things you can’t control, including what is happening in the tech market as a whole, which tends to be extremely cyclical.</p>\n<p>One way to look at this is from the venture capital side.  VC returns are extremely cyclical.  For example, 1996 funds (or “vintages” as VCs say) returned an <a href=\"http://www.hbstech.org/article.html?aid=135\">average of 95%</a> while 1999 funds returned an average of -3%.  I don’t think this decade had such extreme swings but most people agree 2002-2005 were great times to invest in consumer internet and afterwards probably not as great.</p>\n<p>Venture returns are a function of two things:  great opportunities and low valuations.  Low valuations are obviously not good for entrepreneurs from a dilution perspective but they do indicate that investors are fearful, which means we are probably at the down part of the business cycle, which has historically been a great time to start a company.</p>\n<p>People are fearful now, and people with a shallow understanding of technology are <a href=\"http://online.wsj.com/article/SB124784696163158721.html\">declaring</a> the internet over.  I’ve been saying for years that the best time to start a company and invest in startups will be when people start declaring Google (and online advertising in general) a “mature” business, which seems to be happening now.  It feels a little like 2003 when people mocked “dot coms” as profitless sock puppets.   In retrospect, 2003 was a great time to start a company.</p>\n<p>On the other hand, there were massive amounts of money invested in consumer internet startups over the last few years.  You know when hedge funds and mutual funds start investing in early stage startups, as they were in 2007-8, we’ve reached the peak of the cycle.  It takes a long time for that kind of money to work itself out of the system, so at least for another year or two you are still going to see some crazy money being spent on marketing, salaries etc, making it harder for us mortals to compete.</p>\n<p>All that said, I wouldn’t try to over think timing.  It’s pretty much impossible to predict what will happen in the near term.  You should instead focus on solving a big problem and let the chips fall where they may.  Be cautious about falling into starting something around the latest fad, e.g. online video, facebook apps, twitter apps.  I love the audaciousness behind <a href=\"http://www.businessinsider.com/2009/1/andy-grove-on-web-20-and-the-valley-slackers\">this</a> Andy Grove interview:</p>\n<blockquote>\n<p>What really infuriates him is the concept of the “exit strategy.” That’s when leaders of startup companies make plans to sell out to the highest bidder rather than trying to build important companies over a long period. “Intel never had an exit strategy,” he tells me. “These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can’t build an empire out of this kind of concoction. You don’t even try.”</p>\n<blockquote>\n<p>What really infuriates him is the concept of the “exit strategy.” That’s when leaders of startup companies make plans to sell out to the highest bidder rather than trying to build important companies over a long period. “Intel never had an exit strategy,” he tells me. “These days, people cobble something together. No capital. No technology. They measure eyeballs and sell advertising. Then they get rid of it. You can’t build an empire out of this kind of concoction. You don’t even try.”</p>\n</blockquote>\n</blockquote>\n<p>Benjamin Graham famously said that the stock market is a voting machine in the short run and weighing machine in the long run.  The same is true of startups.  Make something weighty – try to build an empire – and you’ll be far less vulnerable to the ups and downs of the market.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/06/the-only-college-major-that-matters",
      "title": "The only college major that matters",
      "description": "If you want to work in venture capital focusing on internet/software companies, or start one of those companies, or work as an employee in…",
      "url": "https://cdixon.org/2009/09/06/the-only-college-major-that-matters",
      "published": "2009-09-06T00:00:00.000Z",
      "updated": "2009-09-06T00:00:00.000Z",
      "content": "<p>If you want to work in venture capital focusing on internet/software companies, or start one of those companies, or work as an employee in any role at one of those companies, <strong>there is only one undergraduate major you should consider:  computer science.*</strong></p>\n<p>I’m not saying you need a computer science degree, but I am saying it’s incredibly helpful to know computer science.  Lots of great computer scientists are self taught. But almost all of them started coding in their teens.  If you are a coder already and want to spend your college years majoring in something else for the heck of it, great.  I spent my whole childhood coding, and worked during college as a programmer, so decided to major in Philosophy because I thought it was interesting.</p>\n<p>Why is it so much better to learn computer science in college (or before)?  Because after college it’s very hard to find the time and discipline to teach yourself coding.  On the other hand, it’s pretty easy to pick up business skills, economics and all sorts of other skills on the job or in grad school.</p>\n<p>Why is a computer science degree so important to VC and startups?  I would estimate in about half the conversations I have at my own startup, with tech founders, and with venture capitalists, there is a moment in the conversation when we start getting technical.  Sometimes someone will even ask “Are you technical?” before starting down a topic.  The non-technical people in the room just sit there like we are speaking Greek.</p>\n<p>It’s a shame that student enrollment in computer science is <a href=\"http://www.cra.org/wp/index.php?p=126\">in decline</a>.  The thinking apparently is that computer programming is increasingly moving overseas.  What these students fail to realize is you don’t need to be a professional coder all your life to find computer science an incredibly valuable major.</p>\n<p>* There is a whole separate world of VC and startups in energy and healthcare.  In those areas I’d recommend analogous technical undergraduate majors.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/05/which-vc-firm-should-i-pitch",
      "title": "Which VC firm should I pitch?",
      "description": "A friend asked me the other day “Which VC firms should I pitch?” and I started to respond to him, but then realized that most of my…",
      "url": "https://cdixon.org/2009/09/05/which-vc-firm-should-i-pitch",
      "published": "2009-09-05T00:00:00.000Z",
      "updated": "2009-09-05T00:00:00.000Z",
      "content": "<p>A friend asked me the other day “Which VC firms should I pitch?” and I started to respond to him, but then realized that most of my knowledge of VC firms is already available online in the <a href=\"http://www.hunch.com/which-vc-firm-should-i-pitch/\">Which VC firm should I pitch?</a> Hunch decision topic. That is the idea behind <a href=\"http://www.hunch.com\">Hunch</a>: to crowdsource the creation of decision trees, so that a group of knowledgeable people can get together and create a “virtual expert” that can be accessed by anyone.</p>\n<p>Here is the VC chooser topic in embedded widget form (anything you create on Hunch can be embedded anywhere):</p>\n<p><a href=\"http://www.hunch.com/which-vc-firm-should-i-pitch/\">Which VC firm should I pitch?</a> – make thousands more decisions on <a href=\"http://www.hunch.com/\">Hunch.com</a></p>\n<p>Like everything on Hunch, this topic is completely user generated (“topic” is our word for what some people would call a “decision tree”). Users have full control over the questions it asks, the results (in this case VC firms), the descriptions, and a lot of more advanced functionality for “sculpting” the decision tree. If you go to the VC topic’s <a href=\"http://www.hunch.com/which-vc-firm-should-i-pitch/about/\">About page</a> you can see that so far 7 people have contributed 86 firms and 5 questions to this topic (other topics have a much wider range of contributers, <a href=\"http://www.hunch.com/tv-shows/about/\">this one</a> for example). The VC topic has been played (used by non contributors) 506 times, many of those users coming in via Google organic results for phrases related to pitching VC firms.</p>\n<p>In addition, the results are all “trained” to be associated with responses to questions – meaning users have taught Hunch what to “believe” about each of the firms. For example, in red is what Hunch believes about Union Square Ventures:</p>\n<p><span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/5d1d4b19fd44f32e54ad8915ce6ffa47/cac76/picture-23.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 78.63984674329501%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"picture 23\"\n        title=\"picture 23\"\n        src=\"/static/5d1d4b19fd44f32e54ad8915ce6ffa47/94a55/picture-23.png\"\n        srcset=\"/static/5d1d4b19fd44f32e54ad8915ce6ffa47/924ad/picture-23.png 170w,\n/static/5d1d4b19fd44f32e54ad8915ce6ffa47/f570f/picture-23.png 341w,\n/static/5d1d4b19fd44f32e54ad8915ce6ffa47/94a55/picture-23.png 681w,\n/static/5d1d4b19fd44f32e54ad8915ce6ffa47/e8f76/picture-23.png 1022w,\n/static/5d1d4b19fd44f32e54ad8915ce6ffa47/cac76/picture-23.png 1044w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span><br>\nUsers who find mistakes can just click and fix them, similar to how you fix things on Wikipedia.</p>\n<p>So if you see anything missing or that you’d like to change, feel free to do so. I was one main people who worked on this particular topic so it is biased toward my tastes (e.g. Hunch’s own VCs – <a href=\"http://www.hunch.com/which-vc-firm-should-i-pitch/bessemer-venture-partners/999484/\">Bessemer</a> and <a href=\"http://www.hunch.com/which-vc-firm-should-i-pitch/general-catalyst-partners/999084/\">General Catalyst</a> – rank extremely high).</p>\n<p>If you don’t like Hunch’s Q&A process you can jump directly to the <a href=\"http://www.hunch.com/which-vc-firm-should-i-pitch/all/\">See All page</a>, and then using the filters on the left to drill down.</p>\n<p>If you are not logged into Hunch, the VC firms you see will be ranked by their popularity amongst all Hunch users. Hunch personalizes the rankings specifically for you if you <a href=\"http://www.hunch.com/people/create-account/\">create an account</a> and answer what we call “Teach Hunch About You” questions. For example, when I am logged in and go to the Hunch page for <a href=\"http://www.hunch.com/which-vc-firm-should-i-pitch/bessemer-venture-partners/999484/\">Bessemer</a> I see this on the right sidebar:<br>\n<span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 282px;\"\n    >\n      <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 32.97872340425532%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAABQAAAAHCAIAAACHqfpvAAAACXBIWXMAAAsTAAALEwEAmpwYAAABJElEQVQY021Q7U7CMBTdi5uob+CbGGVEtwEmEvxhAAXm8I8KrOvaDZn7btd23m2RROPJzc3paU/bc7U8z+u6llJyzhnnwEEpikK2UEoxxoDU/0G7NUzDGgyGA8s0DcN6Xq7G9+M7yxxPHubTGezc9PtxksJRuOivGUTBCmhAJGdKcNW+WVUV9LIsgajfAF200CzHHb3i4dobrpHloMkbTbL88LmPogj7BCIkaZpmGbQkTgBZkyrvgminvRnUmT4/1+cnV9OLkUP2h+3mfbfdLGw7oBRj7GHfQwi5iBDfJzQIAsaa6WjXRPXa0om6xPIxrpP4y3mxd9uPp+WKUuJhDEYf4zCgYAzD0EUIPtKYs0oeK61kIZoJd4HFD45LKVqxEt3wvgG2F4NpY5B+rwAAAABJRU5ErkJggg=='); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"picture 22\"\n        title=\"picture 22\"\n        src=\"/static/160c30937dffca50e483c0e9eed18e48/2a195/picture-22.png\"\n        srcset=\"/static/160c30937dffca50e483c0e9eed18e48/924ad/picture-22.png 170w,\n/static/160c30937dffca50e483c0e9eed18e48/2a195/picture-22.png 282w\"\n        sizes=\"(max-width: 282px) 100vw, 282px\"\n        loading=\"lazy\"\n      />\n    </span><br>\nMeaning that Hunch has learned to statistically correlate the questions I’ve answered about myself with liking Bessemer. At this point Hunch has statistically significant data (over 40M user feedbacks total) in most of our ~5000 topics so it usually works really well.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products",
      "title": "Dividing free and paid features in “freemium” products",
      "description": "One of the most difficult decisions to make when developing a “freemium” product is how to divide the product between free and paid features…",
      "url": "https://cdixon.org/2009/09/04/dividing-free-and-paid-features-in-freemium-products",
      "published": "2009-09-04T00:00:00.000Z",
      "updated": "2009-09-04T00:00:00.000Z",
      "content": "<p>One of the most difficult decisions to make when developing a “<a href=\"http://en.wikipedia.org/wiki/Freemium\">freemium</a>” product is how to divide the product between free and paid features.</p>\n<p>Assume you’ve come up with the “ultimate” product – the complete set of product features including both free and paid versions. Given this, many people think they need to make the following trade off:</p>\n<ol>\n<li>more features in free version –> more users</li>\n<li>fewer features in free version –> higher conversion rate from free to paid</li>\n</ol>\n<p>So for example, if your consumer storage software gives away tons of free storage, the assumption is you will get more users but a lower conversion rate, as compared to a competitive product that gives away less free storage.</p>\n<p>Actually this not the whole story, because tilting toward #2 – more features in the paid version – opens up new marketing channels that can actually get you more users. If you have a compelling paid product that isn’t undermined by a nearly as compelling free product, you can potentially profitably market through affiliate networks, SEM, display ads, bizdev partnerships and so forth. Lots of websites that reach large user bases are only interested in promoting paid products. For example, from my experience, OEMs (PC makers like Dell & HP) are only interested in offering security software that they can charge for in order to generate additional revenue.</p>\n<p>In terms of the user experience, it is often very difficult to draw the line. In the old shareware days, software would nag you with popups or expire after a certain number of days. I don’t like either of these approaches. Nagging is obviously just annoying. And expiration schemes end up tossing out users who are potential future customers. Why not keep them around and preserve future opportunities to offer them something they find useful enough to buy?</p>\n<p>The ideal division allows the free product to be an independently useful, non-annoying, non-expiring standalone product, while still leaving room for the paid version to offer sufficient additional value that some acceptable percentage of your users will upgrade.</p>\n<p>Some products are fortunate enough to have a natural division point. For example, in security software, “remedial” products like anti-virus and anti-spyware often give away a free scan, and charge for clean up if your PC is infected.  What’s nice about this division is that the free product has non-annoying, genuine standalone value, and if you actually do have an infection the upgrade is extremely compelling. (The bad news is that this division encouraged companies to hype the risks of innocuous things like browser cookies).</p>\n<p>Preventive security products are trickier to divide than remedial security products. Preventive security products include firewalls like ZoneAlarm and my prior startup, <a href=\"http://www.siteadvisor.com/\">SiteAdvisor</a> (and now SiteAdvisor competitors like <a href=\"http://safeweb.norton.com/\">Norton’s SafeWeb</a> and <a href=\"http://www.trendsecure.com/portal2.1/en-US/free_security_tools/trendprotect.php\">Trend Micro’s TrendProtect</a>). The problem with preventative security products is that the only features you can remove end up opening up a vulnerability, which just feels like a huge disservice to the user.</p>\n<p>Skype figured out a nice division point: free for Skype-to-Skype calls, pay for calls to regular phones. It’s not clear how sustainable this is as the cost of long distance drops to zero and the distinction between software phones and “regular” phones goes away.</p>\n<p>Online storage products usually divide things by the <a href=\"http://www.getdropbox.com/pricing\">amount of storage</a>. The nice thing about this is 1) you can test a bunch of different prices/storage levels, 2) you get to have a free version plus multiple tiers of paid, which means your pricing can more granularly track customers’ willingness-to-pay. The goal of all revenue maximizing pricing structures is to minimize what economists call “<a href=\"http://en.wikipedia.org/wiki/Economic_surplus#Consumer_surplus\">consumer surplus</a>.” Since you can’t gaze into the mind of the user to see what she is willing to pay, and attempts at explicit price discrimination are usually met with outrage, you have to look for proxies for willingness-to-pay. With stock quotes, professionals can’t wait 15 minutes. With books, avid readers don’t want to wait for the paperback version. With databases, wealthier companies have more servers. And with online storage, professionals and hardcore consumers are generally more likely to need more storage space.</p>\n<p>The New York Times’ TimesSelect was one of the more interesting attempts at the freemium model. It was free to read the regular news but you had to pay for the op-eds. Personally I usually read one or two of their op-eds every day, but part of the attraction is that I know my friends do and someone will say “Did you read the Krugman piece today?” and then we might chat about it. So in a way op-ed’s have network effects. Putting them behind a paywall doesn’t just reduce their readership, it reduces their influence – the very influence that compels people to read them in the first place.</p>\n<p>A final thought:  when in doubt, err on the side of putting more features on the paid side of the divide.   It’s easy to add features to the free side;  however, removing features from the free side is a recipe for trouble.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/04/incubators",
      "title": "Incubators",
      "description": "It seems like every successful entrepreneur I know at one point or another kicks around the idea of creating an incubator. The appeal is the…",
      "url": "https://cdixon.org/2009/09/04/incubators",
      "published": "2009-09-04T00:00:00.000Z",
      "updated": "2009-09-04T00:00:00.000Z",
      "content": "<p>It seems like every successful entrepreneur I know at one point or another kicks around the idea of creating an incubator. The appeal is the idea that you can do not just one startup but many, and just focus on the “fun stuff” in each one (idea generation, product features, strategy, etc).</p>\n<p>History has shown that incubators are really hard to pull off. In fact, the results from incubators in the 90s were apparently bad enough that the word itself carries a bad connotation in VC/startup circles.</p>\n<p>Here’s why incubators are so hard to make work. Every successful startup requires a great entrepreneur focused solely on that company’s success. You can’t just take a great idea and have a great entrepreneur work on it for a while and then pass it off to a mediocre entrepreneur. It just won’t work. Maybe you can do that after the product is launched and gaining traction. But this is hardly an incubator. It’s more just like an early-stage entrepreneur transitioning to an advisory role – a pretty common practice a few years into a venture.</p>\n<p>And maybe you can find exclusively great entrepreneurs to take over the companies, but then what you are doing is much more like active advising/investing, or “hatching” companies, as some VC’s now call it, presumably to avoid the dreaded I-word.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/03/new-york-city-needs-a-tech-startup-blog",
      "title": "New York City needs a tech startup blog",
      "description": "At first it seemed like Silicon Alley Insider would be this, but they seem to have moved away from covering NYC startups. The New York Times…",
      "url": "https://cdixon.org/2009/09/03/new-york-city-needs-a-tech-startup-blog",
      "published": "2009-09-03T00:00:00.000Z",
      "updated": "2009-09-03T00:00:00.000Z",
      "content": "<p>At first it seemed like <a href=\"http://www.businessinsider.com/alleyinsider\">Silicon Alley Insider</a> would be this, but they seem to have moved away from covering NYC startups.</p>\n<p>The New York Times covers national tech, as does the WSJ. The majority of their tech articles are about CA companies.</p>\n<p>I think for the NYC tech startup ecosystem to really become as vibrant as CA’s, we need a <a href=\"http://www.techcrunch.com/\">TechCrunch</a> equivalent. I hope someone starts one.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/02/dont-shop-your-term-sheet",
      "title": "Don’t shop your term sheet",
      "description": "There are all sorts of protocols in the VC world. Most of them make sense upon further examination, but if you’re a first time entrepreneur…",
      "url": "https://cdixon.org/2009/09/02/dont-shop-your-term-sheet",
      "published": "2009-09-02T00:00:00.000Z",
      "updated": "2009-09-02T00:00:00.000Z",
      "content": "<p>There are all sorts of protocols in the VC world. Most of them make sense upon further examination, but if you’re a first time entrepreneur, they aren’t obvious, and it’s very easy to mess them up. Here’s one of them.</p>\n<p>From VC’s perspective, one of the most annoying things an entrepreneur can do is “shop” a term sheet.  That means after they’ve offered you a term sheet in writing you take it to other investors to try to get a better deal. Most VCs I know won’t even send anything in writing until you have verbally agreed on all essential terms precisely to avoid this possibility.</p>\n<p>Why are investors so sensitive to this?  First of all, no investor wants to think they are “just money” – the idea that you want to get an explicit auction going suggests that.</p>\n<p>More importantly, what often happens is that once a VC has offered you a term sheet – especially if that VC is well respected – other VCs suddenly become interested.  It is pretty much guaranteed that if Sequoia offered you $4M pre, there are many other investors who, simply because of Sequoia’s offer, would offer you a higher price.  So if Sequoia allowed their term sheets to be shopped they’d never get deals done.</p>\n<p>Some entrepreneurs think they are being savvy by shopping a term sheet but I would strongly caution against it.  The VC/startup community is extremely small and this will usually come back to bite you.</p>\n<p>Note that I am <strong>not</strong> saying an entrepreneur shouldn’t get a competitive process going and try to get the best deal with the highest quality investors.  You just need to do it in the right way.  Discuss things verbally and only accept a term sheet when you have agreed on all significant terms.  At that point, assuming the term sheet agrees with what you said, you should sign it and return it within a day or two.  (Don’t say you need to wait for you lawyer to review it – if you want to be an startup CEO you need to learn how to review and evaluate term sheets.  Have your lawyer teach you about term sheets before you receive them.).</p>\n<p>Also, don’t shop a verbal offer.  You can’t go to, say, Greylock and tell them Accel offered you 4 pre.  First of all they might collude.  Secondly it’s very likely to get back to Accel (they all know each other) and you might lose both deals.  What you can say is “I’m planning to wrap things up by X day and I have a lot of interest” and see what Greylock does.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/02/question-from-a-reader",
      "title": "Question from a reader",
      "description": "I’ve gotten some emails recently from readers of this blog with questions about early stage startups.  I’m sorry if I haven’t responded to…",
      "url": "https://cdixon.org/2009/09/02/question-from-a-reader",
      "published": "2009-09-02T00:00:00.000Z",
      "updated": "2009-09-02T00:00:00.000Z",
      "content": "<p>I’ve gotten some emails recently from readers of this blog with questions about early stage startups.  I’m sorry if I haven’t responded to all of them yet.  I’m happy to try to answer questions but would generally prefer to do them on the blog so they can be shared/discussed.</p>\n<p>Here’s one I got recently:</p>\n<blockquote>\n<p>So you’re joining a startup as one of the first, or the first, non-founding members.  At the moment, the company generates little or even no revenue, but they do have a working first version of their product and a few early users.  To this point the company has been surviving on a modest amount of “friends and family” capital, which has largely been used to support the founders as they built the company and their product.  The founders, however, are convinced that a significant investment is imminent and you will be receiving a reasonable salary in short order.  They are equally certain that their product and their plan is ready to take off.</p>\n<p>Determining a fair equity grant at this time is tricky enough; there seem to be far fewer established norms and guidelines for determining compensation in a pre-investment startup than there are following such a milestone.  To further complicate this situation, fast forward 6, 9, even 12 months into the future.  That “imminent” investment has not yet materialized and you have yet to receive any salary (though perhaps the founders have continued to subsidize themselves from the earlier friends and family investment).  The original product has been slow to build traction.  The product has undergone significant upgrades, and one or more new products have been developed, all with your input and assistance.</p>\n<p>At this time, both sides decide to sit down and more formally address the issue of your equity grant, but by now the boundaries of your role have become even more blurred than when you first joined the startup.  To be sure, you are not one of the founders, but it seems the founders were not as far along as they believed when they brought you in.  Of course both sides are still likely to overvalue their contributions, so what guidelines and norms can you and the founders possibly look to in order to reach a fair and reasonable agreement on your equity grant?</p>\n</blockquote>\n<p>Honestly, I’m not sure my top worry would be my equity grant at this point.  If I understand correctly, you’ve been working for a year with no written equity grant, no salary, for a company that has gotten little traction, and for founders who were way overly optimistic about their chances of raising money…? (perhaps even misleadingly so?)  I guess if you really love the vision or have no other options then you stay, but otherwise I’d recommend looking for a new job.  At an absolute minimum you should be given an option grant in writing ASAP, and I think that given your sacrifice and the uncertainty of raising any money beyond friends and family that grant should be significant.  If your skills are as important to the company’s as the founders, I’d say it should be at or around founder level.</p>\n<p>I worked for a startup once where my equity grant wasn’t in writing.  Needless to say, when the company was sold, I got nothing.  <strong>Always, always get your equity grant in writing.</strong> Quality entrepreneurs will simply give you your grant in writing without you even needing to ask.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/09/01/information-is-the-other-currency-of-venture-capital",
      "title": "Information is the (other) currency of venture capital",
      "description": "Many seasoned entrepreneurs have had the following experience.  A VC eagerly wants to meet with you.  You have what seems like a very good…",
      "url": "https://cdixon.org/2009/09/01/information-is-the-other-currency-of-venture-capital",
      "published": "2009-09-01T00:00:00.000Z",
      "updated": "2009-09-01T00:00:00.000Z",
      "content": "<p>Many seasoned entrepreneurs have had the following experience.  A VC eagerly wants to meet with you.  You have what seems like a very good meeting, and yet the VC’s excitement level drops noticeably in follow up conversations. Then he says <a href=\"http://bryc3.com/post/172703130/i-ganked-this-slide-from-joe-beninatos\">“No” in VC language</a>.  What just happened?</p>\n<p>The answer is that besides cold hard cash the other currency in venture capital is information.  A VC will meet with pretty much anyone they deem “serious” in order to gather more information, which they can then use to discover interesting investments, do better diligence on potential investments, impress entrepreneurs and other VCs with their knowledge, gossip with other VCs about recent deals and trends, and give seemingly informed advice to their portfolio companies.</p>\n<p>I’m not saying VCs are trying to take your trade secrets and give them to competitors.  The vast majority of VCs would never do this.  Instead, they are after much more general, innocuous information, like the rough valuations of recent financings, what companies and markets are “hot,” what products are getting popular, what marketing tactics are proving successful, and so on.</p>\n<p>Imagine you were a professional sports bettor but none of the existing information sources – Internet, TV, etc – existed.   The only way you could get information was by talking to people who actually saw the sporting events live. This is kind of what it’s like to work in venture and why VCs are so desperate for information.  There is very little publicly written about what’s really going behind this scenes. Occasionally juicy tidbits will come out on blogs like <a href=\"http://www.techcrunch.com\">TechCrunch</a>, and some moderately useful stuff appears daily in <a href=\"http://www.pehub.com\">peHUB</a> and other VC newswires – but crucially missing are the valuations, cap tables, competitive offers, companies’ performance, and pretty much everything else people really want to know.</p>\n<p>In the way they cross-polinate information, VCs play a role with startups similar to what consulting firms like McKinsey play in the Fortune 1000 world.  They spread best practices around from one firm to another, in the end, on average, making everyone more efficient and informed, while also reducing informational advantages</p>\n<p>My advice to entrepreneurs is not to run and hide.  Instead, you need to learn to play the game.  Meet with as many VCs as you can.  They are great sources of high level information.  Such and such assets are cheap right now.   Startups are having success with a such and such marketing channel.  A certain venture firm is eager to deals in your space.  Staying in the information flow is one of the main reasons many serial entrepreneurs angel invest on the side.</p>\n<p>Just go to these meetings with the proper expectations – the VC’s eagerness probably has more to do with gathering information than investing in your company.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/31/new-york-city-is-poised-for-a-tech-revival",
      "title": "New York City is poised for a tech revival",
      "description": "One thing that was puzzling about the “web 2.0 boom” from 2003-2008 was how irrelevant the East Coast, and particular New York City, was…",
      "url": "https://cdixon.org/2009/08/31/new-york-city-is-poised-for-a-tech-revival",
      "published": "2009-08-31T00:00:00.000Z",
      "updated": "2009-08-31T00:00:00.000Z",
      "content": "<p>One thing that was puzzling about the “web 2.0 boom” from 2003-2008 was how irrelevant the East Coast, and particular New York City, was compared to the first dot-com boom.  There were a few big hits – Right Media comes to mind – and a big near miss – Facebook – which started in Boston but moved to the West Coast.</p>\n<p>I was mostly checked out of the internet scene in the 90s (in perpetual grad school), but from everything I’ve read and heard, New York City and the East Coast in general was much more competitive with the West Coast.  One interesting supporting data point: Matrix Partners in Boston had the best return of any VC fund in the 90s (<a href=\"http://www.matrixpartners.com/site/press_detail/63/\">an astounding 516% IRR</a>).</p>\n<p>I think it’s fairly easy to explain what happened to Boston in the 2000′s.   In the 90′s much of the action was around infrastructure and enterprise software – and Boston (led by MIT) tends to be very infrastructure and enterprise oriented.   I am told Boston is still relevant in biotech and cleantech, and perhaps infrastructure and enterprise IT will have a resurgence, although even those areas seem to now be dominated by the West Coast.</p>\n<p>But the question that has puzzled me is:  why did New York City lag behind the West Coast this decade so much more than last decade?  Especially since the internet in the 2000′s has been more than ever about consumers, media, and advertising – traditional New York City strengths?</p>\n<p>I think the only explanation is that the finance bubble of 2003-2008 was a giant talent suck on the East Coast.  The people I knew graduating out of top engineering or business programs on the East Cast were all trying to work at hedge funds or big banks or else felt like fish out of water and moved west.   Money was flowing so freely in the finance world that there was no way the risk/reward trade off of startups could compete.  Eventually it just became downright idiosyncratic to be a startup person on the East Coast.  The Larry and Sergey of the East Coast were probably inventing high frequency trading algorithms at Goldman Sachs.</p>\n<p>But this is why New York City now seems poised for a technology startup boom. The finance bubble has burst and the industry will hopefully return to its historical norm, about half its bubble size.  The traditional advertising and media businesses are in disarray.  The people who work in them will no doubt find new applications for their talents.</p>\n<p>There is also a nice ecosystem developing in New York City.  Union Square Ventures is one of the best VC’s in the country, with early stage investments in companies like Twitter and Etsy (that were followed on by top West Coast VCs at significant markups).   Bessemer is an old firm that has a managed to stay relevant with investments in Yelp, Skype, and LinkedIn among others.  There is also a new wave of scrappy Boston firms spending a lot of time in New York City – specifically Spark, General Catalyst, Flybridge, and Bain Ventures.  First Round Capital out of Philadelphia is extremely active in early stage investing in New York.  There are a bunch of veteran entrepreneurs actively investing in and mentoring seed stage startups.  Google has a big office here and many people seem to be leaving to go start companies.</p>\n<p>But most importantly, the engine of the startup economy, young engineers, will be returning to doing something besides shuffling money around.  As Obama said:</p>\n<blockquote>\n<p>…Wall Street will remain a big, important part of our economy, just as it was in the ’70s and the ’80s. It just won’t be half of our economy. And that means that more talent, more resources will be going to other sectors of the economy. And I actually think that’s healthy. We don’t want every single college grad with mathematical aptitude to become a derivatives trader. We want some of them to go into engineering, and we want some of them to be going into computer design…</p>\n</blockquote>\n<blockquote>\n<p>That’s why I don’t just want to see more college graduates; I also want to specifically see more math and science graduates, I specifically want to see more folks in engineering. I think part of the postbubble economy that I’m describing is one in which we are restoring a balance between making things and providing services…</p>\n</blockquote>\n<p>New York City has many of the same strengths as Silicon Valley – merit-driven capitalism, the embrace of newcomers and particularly immigrants, and a consistent willingness to reinvent itself.   Silicon Valley will always be the mecca of technology, but now that people here are getting back to, as Obama says, <em>making things</em>, New York City has a shot at becoming relevant again in the tech world.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean",
      "title": "VC’s care about the upside case, not the mean",
      "description": "The biggest mistake entrepreneurs make when pitching VCs is to argue that their startup is likely to succeed.  Instead, they should argue…",
      "url": "https://cdixon.org/2009/08/31/vcs-care-about-the-upside-case-not-the-mean",
      "published": "2009-08-31T00:00:00.000Z",
      "updated": "2009-08-31T00:00:00.000Z",
      "content": "<p>The biggest mistake entrepreneurs make when pitching VCs is to argue that their startup is likely to succeed.  Instead, they should argue that there is a small probability their startup could be a billion dollar or greater exit.  There is a big difference between these arguments – the mean of the return distributions might be the same but what VCs care about is right side tail of the distribution.</p>\n<p>Investor sentiment, the old saying goes, is a horse race between fear and greed.  The fear and greed in venture capital is all about investing in or missing out on the next Google.  No VC stays up at night worrying about missing the next startup that’s flipped to Google.  The way you get VCs interested is to convince them there’s a small but non-negligible chance you’ll create a billion dollar (valuation) business.</p>\n<p>I’ve learned this lesson first hand on both sides of the table.  One example:  A good friend of mine was starting a company a few years ago.  I was excited about the idea and tried to help him raise venture money.  After the entrepreneur pitched some VC friends of mine, I was surprised when the they came back to me to say they are passing because “it seems like a smallish, ‘lifestyle’ business.”</p>\n<p>The entrepreneur had made a very good pitch for why his product was valuable, why he could create a profitable business, that he was very smart and well prepared, and so on.   What he needed but failed to do was leave the VC with the nagging thought that this could be the “the next big thing.” Part of this was because of the entrepreneur’s natural modesty.  Some people don’t have the chutzpah to aggressively assert that their idea is the next big thing, even when, deep down, they truly believe it.  In everyday life, this kind of modesty is a virtue. When pitching VC’s, it is the single worst thing you can do.  (If deep down, you don’t believe your idea will be the next big thing – don’t raise VC money.  Once you raise VC you are committed to going for the billion dollar exit whether you like it or not.)</p>\n<p>I don’t know if this obsession with the upside outlier case is a good strategy from the VC’s perspective or not.  Granular VC return data is hard to come by.  I tend to think it is a good strategy – one Google or Facebook (and a lot of other billion dollar exits that aren’t nearly as famous) can make up for a ton of misfires.  And the anecdotal return numbers I’ve heard from VCs suggests it works.   But I don’t really know.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/30/to-make-smarter-systems-its-all-about-the-data",
      "title": "To make smarter systems, it’s all about the data",
      "description": "As this article by Alex Wright in the New York Times last week reminded me, when the mainstream press talks about artificial intelligence…",
      "url": "https://cdixon.org/2009/08/30/to-make-smarter-systems-its-all-about-the-data",
      "published": "2009-08-30T00:00:00.000Z",
      "updated": "2009-08-30T00:00:00.000Z",
      "content": "<p>As <a href=\"http://www.nytimes.com/2009/08/24/technology/internet/24emotion.html?_r=1&ref=start-ups\">this</a> article by Alex Wright in the New York Times last week reminded me, when the mainstream press talks about artificial intelligence – machine learning, natural language processing, sentiment analysis, and so on – they talk as if it’s all about algorithmic breakthroughs.  The implication is it’s primarily a matter of developing new equations or techniques in order to build systems that are significantly smarter than the status quo.</p>\n<p>What I think this view misses (but I suspect the companies covered in the article understand) is that <strong>significant AI breakthroughs come from identifying or creating new sources of data, not inventing new algorithms.</strong></p>\n<p>Google’s <a href=\"http://infolab.stanford.edu/~backrub/google.html\">PageRank</a> was probably the greatest AI-related invention ever brought to market by a startup.  It was one of very few cases where a new system was really an order of magnitude smarter than existing ones.  The Google founders are <a href=\"http://citeseerx.ist.psu.edu/stats/articles\">widely recognized</a> for their algorithmic work.  Their most important insight, however, in my opinion, was to identify a previously untapped and incredibly valuable data source – links – and then build a (brilliant) algorithm to optimally harness that new data source.</p>\n<p>Modern AI algorithms are very powerful, but the reality is there are thousands of programmers/researchers who can implement them with about the same level of success.  The Netflix Challenge demonstrated that a massive, world-wide effort only improves on an in-house algorithm by approximately 10%. <a href=\"http://www.cs.unb.ca/profs/hzhang/publications/FLAIRS04ZhangH.pdf\">Studies</a> have shown that <a href=\"http://en.wikipedia.org/wiki/Naive_Bayes_classifier\">naive bayes</a> is as good or better than fancy algorithms in a surprising number of real world cases.  It’s relatively easy to build systems that are right <a href=\"http://www.cdixon.org/?p=342\">80% of the time</a>, but very hard to go beyond that.</p>\n<p>Algorithms are, as they say in business school, “commoditized.”  The order of magnitude breakthroughs (and companies with real competitive advantages) are going to come from those who identify or create new data sources.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/29/thales-the-milesian",
      "title": "Thales the Milesian",
      "description": "Like a lot of things we think are obvious today, financial options were first invented by a philosopher: There is the anecdote of Thales the…",
      "url": "https://cdixon.org/2009/08/29/thales-the-milesian",
      "published": "2009-08-29T00:00:00.000Z",
      "updated": "2009-08-29T00:00:00.000Z",
      "content": "<p>Like a lot of things we think are obvious today, financial options were first invented by a philosopher:</p>\n<blockquote>\n<p>There is the anecdote of Thales the Milesian and his financial device, which involves a principle of universal application, but is attributed to him on account of his reputation for wisdom. He was reproached for his poverty, which was supposed to show that philosophy was of no use. According to the story, he knew by his skill in the stars while it was yet winter that there would be a great harvest of olives in the coming year; so, having a little money, he gave deposits for the use of all the olive-presses in Chios and Miletus, which he hired at a low price because no one bid against him. When the harvest-time came, and many were wanted all at once and of a sudden, he let them out at any rate which he pleased, and made a quantity of money. Thus he showed the world that philosophers can easily be rich if they like, but that their ambition is of another sort.</p>\n</blockquote>\n<p>- Aristotle, <em><a href=\"http://classics.mit.edu/Aristotle/politics.mb.txt\">Politics</a></em>, Book 1, Part XI</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/28/function-my_exit_payout",
      "title": "function my_exit_payout(…)",
      "description": "/* aggregateoptionsstrike_price = your options strike price per share * number of shares you own company sale price is 1) if private…",
      "url": "https://cdixon.org/2009/08/28/function-my_exit_payout",
      "published": "2009-08-28T00:00:00.000Z",
      "updated": "2009-08-28T00:00:00.000Z",
      "content": "<p>/* aggregate<em>options</em>strike_price = your options strike price per share * number of shares you own<br>\ncompany sale price is 1) if private transaction: amount paid by acquirer plus any funds in startup returned to investors,  2) if IPO = market capitalization.<br>\nnote: if you assume all financings were 1x preferred, investor preferences == total amount of money the company has raised<br>\nto do:  add condition for participating preferred, graph various scenarios</p>\n<p>*/</p>\n<p>function my<em>exit</em>payout(  company<em>sale</em>price, your<em>percent</em>ownership, your<em>aggregate</em>options<em>strike</em>price, investor<em>preferences, investors</em>ownership_percent)<br>\n{</p>\n<p>if (investors<em>ownership</em>percent * company<em>sale</em>price < investor<em>preferences) investor</em>converts=FALSE;<br>\nelse investor_converts=TRUE;</p>\n<p>if (investor<em>converts) return your</em>percent<em>ownership * company</em>sale<em>price – your</em>aggregate<em>options</em>strike<em>price;<br>\nelse {<br>\ncommon</em>stock<em>proceeds = company</em>sale<em>price – investors</em>preferences.<br>\nyour<em>percent</em>common = your<em>percent</em>ownership / ( 1 – investor<em>ownership</em>percent );<br>\nreturn common<em>stock</em>proceeds * your<em>percent</em>common – your<em>aggregate</em>options<em>strike</em>price;<br>\n}</p>\n<p>}</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/27/pitching-the-vc-partnership",
      "title": "Pitching the VC partnership",
      "description": "The last step to raising venture capital is normally a 1 hour pitch to the whole partnership during their weekly monday meeting.  This is…",
      "url": "https://cdixon.org/2009/08/27/pitching-the-vc-partnership",
      "published": "2009-08-27T00:00:00.000Z",
      "updated": "2009-08-27T00:00:00.000Z",
      "content": "<p>The last step to raising venture capital is normally a 1 hour pitch to the whole partnership during their weekly monday meeting.  This is often described to entrepreneurs as a formality, but at least in my experience, for early stage deals, I would say there is probably a 25% chance of you getting a term sheet afterwards and a 75% chance of you getting rejected (although it will <a href=\"http://bryc3.com/post/172703130/i-ganked-this-slide-from-joe-beninatos\">rarely</a> come in the form of an actual “no”) .</p>\n<p>The reason the odds of you getting dinged are that high are:</p>\n<ol>\n<li>In most VC firms all it takes is one partner to say “This is really stupid – I hate it” to kill a deal.</li>\n<li>Although by the time you pitch, the lead partner has probably told the other partners about you and probably sent around a memo, the non-lead partners probably didn’t pay attention, and only really do when you are presenting.</li>\n</ol>\n<p>Good VCs have a much lower post-partnership ding ratio, because they work hard to socialize a deal and really get their partners to focus on it before asking the entrepreneur to present.   For example, I used to work for <a href=\"http://www.bvp.com/Team/robert-stavis.aspx\">Rob Stavis</a> at Bessemer and he had a much lower post-meeting ding rate.  This was because he spent a lot of time talking to his partners beforehand (“socializing the deal”), and if they had good objections he got them early on.  (Ps. Hopefully the VC will work extra hard to pre-sell the deal if they ask the entrepreneur to drop everything and fly across the country.)</p>\n<p>The very worst thing that can happen in a partnership meeting is what I call the “partner ambush.”  Basically this is when the partner who brought you in (the “lead” partner), who you’ve met with for many hours and fully understands your company and is excited about investing in it, realizes midway through the meeting things are going badly and decides to try to save face by turning on the entrepreneur.</p>\n<p>I had this happen to me when I was raising money for my last startup, SiteAdvisor.   Basically what happened is me and my co-founder <a href=\"http://www.tompinckney.com/\">Tom Pinckney</a> walked into this big, well known VC firm at 4pm to a room of very tired looking guys (yes, they are all male) who had been hearing back-to-back pitches all day (side note:  always try to present in the morning).  No one introduced themselves or said hello, which was a bit unnerving.   The first questions were clearly hostile to the very idea of a consumer security startups (for a bunch of bad reasons, most VCs vastly prefer enterprise to consumer security – especially on the east coast and back in 2005).   One of them literally laughed at the idea of marketing via search engines (this is the east coast – believe it or not many VCs our here still don’t know what (white hat) SEO is and how important it can be).   Then the partner who brought me in said “Well, Chris, why not make SiteAdvisor into an enterprise product” basically turning on me and the whole concept of the company.  Things went downward from there.  To add insult and injury, the lead partner never even bothered to call me to ding me afterwards – in fact I haven’t heard from him to this day.</p>\n<p>In retrospect, that would have actually have been a very good investment for the VC if they had actually given our pitch a fair hearing.  Which gets me to my final point:  I think VCs are making a mistake by putting so much emphasis on the partnership pitch.  There is some positive correlation between presenting to a room full of (sometimes hostile) VCs and building a successful startup, but not a very high one.</p>\n<p>Besides missing good investments, the emphasis on the partner pitch leads VCs to invest in bad companies.  An investor friend of mine was recently talking about a failed startup he invested in:</p>\n<blockquote>\n<p>Toward the end of the company, when things were going very badly, I went in and spent a day sitting with the entrepreneur and watching him work.  At that point I realized his one skill in life was pitching investors.  He had no idea how to manage people, build a product, get stuff done, etc.</p>\n</blockquote>\n<p>The current early-stage VC process is optimized to favor people who are good at pitching partnerships, not necessarily people good at creating successful startups.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/27/the-one-number-you-should-know-about-your-equity-grant",
      "title": "The one number you should know about your equity grant",
      "description": "The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever…",
      "url": "https://cdixon.org/2009/08/27/the-one-number-you-should-know-about-your-equity-grant",
      "published": "2009-08-27T00:00:00.000Z",
      "updated": "2009-08-27T00:00:00.000Z",
      "content": "<p>The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever – it doesn’t matter – just the % matters).</p>\n<p>Number of shares:  meaningless.</p>\n<p>Price of shares:  meaningless.</p>\n<p>Percent of the outstanding option pool:  meaningless.</p>\n<p>Your equity in relation to other employees:  meaningless.</p>\n<p>Strike price of options: meaningless.</p>\n<p>The only thing that matters in terms of your equity when you join a startup is what percent of the company they are giving you.  If management tells you the number of shares and not the total shares outstanding so you can’t compute the percent you own – <strong>don’t join the company!</strong> They are dishonest and are tricking you and will trick you again many times.</p>\n<p>I find it really depressing how often employees, especially engineers who are so smart about other mathematical issues, don’t get this.  I felt forced to post this after talking to a friend today who told me about how a prominent NYC startup has been telling hires the number of shares they are granted but won’t tell them the percent those shares represented (“it is company policy”), or the number you need to compute the percent – the total outstanding shares.  It’s really amazing people are getting away with this simple and incredibly cynical trick.</p>\n<p>I’ve seen many companies “split the stock” 10-1 so that instead of, say, 10M shares there are 100M shares outstanding so the absolute number of shares granted sounds really big to naive hires who don’t understand that all that matters is the percent they own.</p>\n<p>I think every engineering school in the country should have a week-long course on the basics of the capitalization of startups.  There are other things that matter too, but far less (like the number of preferences outstanding).   I’ll try to write about these other things in later posts.</p>\n<p>Engineers – here’s how equity is paid out in a normal company sale/IPO (assuming a “good” outcome – in the downside cases it’s more complicated as investors have preferences which act like a max() function).  You get the percent you own multiplied times the price the company was sold for (or the market cap after IPO).  That is why percent ownership is the only equity number that matters.  Don’t work for someone who tells you otherwise or won’t tell you what percent you own.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems",
      "title": "Six strategies for overcoming “chicken and egg” problems",
      "description": "Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks…",
      "url": "https://cdixon.org/2009/08/25/six-strategies-for-overcoming-chicken-and-egg-problems",
      "published": "2009-08-25T00:00:00.000Z",
      "updated": "2009-08-25T00:00:00.000Z",
      "content": "<p>Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks.</p>\n<p>“Complementary network effects” refer to situations where a product gets more valuable as more people use the product’s <strong>complement(s).</strong> Two products are complementary when they are more (or only) useful together – for example, a video game and video game console, or an OS and an application for that OS.  Microsoft Windows gets more valuable the more apps are made for it, which in turn makes Windows more popular, which in turn leads to more apps, and so on.  Microsoft Windows is not more valuable simply because there are more copies of Microsoft Windows in the world, but because there are more complements to Windows in the world.</p>\n<p>Network effects can be your friend or your enemy depending on whether your product has reached critical mass.  Getting to critical mass in complementary network effect markets is sometimes called overcoming the “chicken and egg problem.”  Back in graduate school (2003), my friend Jeff Rhodes and I wrote a paper titled “Six Strategies for Overcoming the ‘Chicken and Egg’ Problem in Complement-Based Network Effects Markets.”  This is a frequent challenge when launching technology products, yet at least at the time we had seen very few people try to systematically document strategies for overcoming it.  Some of our examples are a bit dated now, but if you are interested in this topic you might like the <a href=\"http://cdixon.org/mnb-paper.html\">full paper</a>.</p>\n<p>Here is a high level summary of the 6 strategies we describe with a few updated examples.  I’d love to hear from any readers who have more strategies and/or example products.</p>\n<p><strong>1. Signal long-term commitment to platform success and competitive pricing</strong>.   When Microsoft launched the original Xbox,  they made a big deal of publicly committing to spending $500M promoting the platform, thereby signalling that they were fully committed for the long haul and giving comfort to 3rd party game developers.   Another way to give comfort that your platform isn’t going away is to open source it – this way third parties know that even if the company stops supporting the product, independent developers can continue to do so (e.g. Google Android and Chrome).  Open sourcing also gives comfort that the company isn’t going to raise prices once they’ve reached critical mass.</p>\n<p><strong>2. Use backwards and sideways compatibility to benefit from existing complements.</strong> Microsoft of course has used backward compatibility very successfully for decades with DOS and then Windows, as have many game console makers.  In our paper we argue that the successful early bill pay (“bill presentment”) companies provided backward compatibility by sending snail mail checks to merchants who had yet to sign on to their electronic platform.</p>\n<p>Virtual machines and Bootcamp gave Apple’s hardware some sideways compatibility with Windows.  Sun’s invention of Java could be seen as an attempt to introduce sideways compatibility between its shrinking server market and its competitors (Windows, Linux) by introducing a new, cross-platform programming layer.</p>\n<p><strong>3. Exploit irregular network topologies.</strong> In the last 90s, most people assumed that dating websites was a “winner take all market” and Match.com had won it, until a swath of niche competitors arose (e.g. Jdate) that succeeded because certain groups of people tend to date others from that same group.  Real-life networks are often very different from the idealized, uniformly distributed networks pictured in economics textbooks.  Facebook exploited the fact that social connections are highly clustered at colleges as a “beachhead” to challenge much bigger incumbents (Friendster).  By finding clusters in the network smaller companies can reach critical mass within those sub-clusters and then expand beyond.</p>\n<p><strong>4. Influence the firms that produce vital complements.  Sony and Philips, the companies that oversaw the successful launch of the compact disc technology in the early 1980′s, followed the CD launch with the introduction of the digital audiotape (DAT) in 1987. The DAT offered CD sound quality and, in a significant improvement over CD technology, it also offered the ability to record music.  Despite these improvements, the DAT never gained significant consumer adoption and ended as an embarrassing failure for Sony and Philips.  DAT failed because Sony and Philips failed to reassure record companies who were concerned that the recording capabilities of DAT would lead to widespread piracy.  Sony finally reached an anti-piracy agreement with record companies in 1992, but by that time consumer expectations for the DAT platform were dampened sufficiently to doom the platform.</strong></p>\n<p>On the other hand, when Sony and Philips launched the CD, they succeeded because they did a significantly better job influencing complement producers. Most importantly, they addressed the record companies’ primary concern by making CDs piracy resistant (or so it seemed at the time). In addition, Philips was able to influence Polygram, a major record label, to release music in the CD format because Philips owned a 50 percent stake in Polygram. Finally, Sony and Philips provided the record companies with access to their manufacturing technology and plant in order to ensure an adequate supply of complementary products. As a result, nearly 650 music titles were available in CD format when the first CD players were released and the CD format went on to become the most popular music format.</p>\n<p><strong>5. Provide standalone value for the base product.  Philips introduced the videodisc player (VDP) in 1979 as a competitor to the VCR. VDPs had slightly better picture quality than VCRs and had potentially lower hardware and software costs, owing to a simpler manufacturing process. However, the VCR had a 3-4 year head start on the VDP and had already developed an installed base of over one million units.</strong></p>\n<p>Providing a stand-alone use is the strategy that VCR producers used to achieve a successful launch and avoid fighting the difficult chicken and egg startup problem. Unlike the VDP, the VCR offered the ability to time-shift television programming. In fact, when the VCR was launched this was the only application available because the market for pre-recorded videocassettes had not yet developed. The standalone value for the VCR “time-shifting television programming” was sufficiently strong to get over a million people to purchase the product in the first 3-4 years after its launch. This installed user base of the VCR as a base product was sufficient to entice entrepreneurs to develop a market for pre-recorded videocassettes as complementary products in the late 1970′s. The complement-based network effect that resulted improved the value of the base product, increased sales velocity for the base and complementary products, and ensured that the VCR would be a common feature in most American homes.</p>\n<p>A good modern example of this would be del.icio.us, which had stand alone value by storing your bookmarks in the cloud, and also had network effects with its social features.</p>\n<p><strong>6. Integrate vertically into critical complements when supply is not certain.  To overcome the chicken and egg problem, companies must find a way to ensure an adequate supply, variety, and quality of complementary goods. By vertically integrating into the complement product as well as the base product, a company can attempt to ensure an adequate supply of both goods.  Nintendo is the leading developer of games for its consoles, and Microsoft and Sony fund many of their most popular games.</strong></p>\n<p>Vertical integration is risky – as witnessed by the Apple computer in the late 80s and early 90s. By remaining tightly integrated, Apple precluded market competition from providing the necessary variety of price-competitive complements and base products.</p>\n<p>**</p>\n<p>Many of the above strategies (especially 3 & 5) apply to regular (non-complementary) network effect products.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/23/dividing-equity-between-founders",
      "title": "Dividing equity between founders",
      "description": "A friend asked me recently if I knew of any good guidelines for dividing up equity between founders, and specifically what to do in the case…",
      "url": "https://cdixon.org/2009/08/23/dividing-equity-between-founders",
      "published": "2009-08-23T00:00:00.000Z",
      "updated": "2009-08-23T00:00:00.000Z",
      "content": "<p>A friend asked me recently if I knew of any good guidelines for dividing up equity between founders, and specifically what to do in the case when a co-founder provides seed capital.</p>\n<p>The truth is I don’t know of any great guidelines – this is seems to me a very case-by-case decison.</p>\n<p>Obviously the main consideration should be the relative importance of each founder to the future prospects of the venture.  And, as in any negotiation, the alternatives each person has will also factor in.</p>\n<p>Probably way too many founders divide things evenly just to avoid a difficult conversation.  Most likely, this will lead to a difficult conversation down the road (or worse).</p>\n<p>(As an aside – you should also figure out titles early on.  When founders say “we are co-CEOs” or “we don’t have titles” that more often than not means there is a big fight looming.  Startups are little dictatorships for good reason.)</p>\n<p>One thing I’ve also noticed is people tend to overvalue past contributions (coming up with the idea, spending time developing it, building a prototype, etc) and undervalue future contributions.  Remember that an equity grant is typically for the next 4 years of work (hence 4 years of vesting).  Imagine yourself 2 years from now after working day and night, and ask yourself in that situation if the split still seems fair.</p>\n<p>Another consideration is if one founder has had greater career success and will therefore significantly improve the odds of getting financed at an attractive valuation.  One way to figure out how much this is worth is to estimate how much having that founder increases your valuation at the next financing and then, say, split the difference.  So if having her means you can raise $2M by giving away 30% of your company instead of 40% of your company, let that founder have an extra 5%.</p>\n<p>If one founder had the idea for the company, it is sometimes reasonable to give that person additional equity.  If that idea involves a bona fide technology breakthrough, they could be entitled to considerably more equity, say 10-20% (or you may have to give some of that to a university or other IP owner). But if the idea is more abstract and doesn’t have real IP behind it (“User generated X” “A marketplace for Y”) that should only earn a few extra points of equity, if any.</p>\n<p>If one founder is providing seed capital, assuming there are no other investors involved, the best way to do this is a simple interest bearing (say 5% annual rate), non-convertible loan to the company. I did this once and just had my partner write an IOU on a single sheet of paper, without using lawyers.  When you raise further money the best thing is to have that loan convert into equity at the same terms as the rest of the investors (it looks a somewhat bad to investors to take their fresh capital and pay it right out to a founder – unless the founder is in dire financial straights).</p>\n<p>The reason you want to avoid granting equity for a founder’s seed capital is 1) it would cost a lot more in legal fees and 2) you would have to come up with a valuation without a 3rd party, arms length offer.</p>\n<p>If there are multiple seed investors, including non-founders, things get more complicated and you might have to resort to a convertible note or full blown equity round.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret",
      "title": "Why you shouldn’t keep your startup idea secret",
      "description": "A frequent question entrepreneurs have when they are just starting their company is:  how secretive should I be about my idea?  My answer…",
      "url": "https://cdixon.org/2009/08/22/why-you-shouldnt-keep-your-startup-idea-secret",
      "published": "2009-08-22T00:00:00.000Z",
      "updated": "2009-08-22T00:00:00.000Z",
      "content": "<p>A frequent question entrepreneurs have when they are just starting their company is:  how secretive should I be about my idea?  My answer:  you should talk about it to almost anyone who will listen.  This includes investors, entrepreneurs, people who work in similar areas, friends, people on the street, the bartender, etc.</p>\n<p>There are lots of benefits to talking to people.  You’ll get suggestions for improvements.  You’ll discover flaws and hopefully correct them.   You’ll learn a lot more about the sector/industry.  You’ll learn about competitive products that exist or are being built.  You’ll gauge people’s excitement level for the product and for various features.  You’ll refine your sales and investor pitch.  You might even discover your idea is a bad idea and save yourself years of hitting your head against the wall.</p>\n<p>In terms of the risk of someone stealing your idea, there are at best a handful of people in the world who might actually drop everything and copy your idea.</p>\n<p>First of all, most people will probably think your idea is stupid.  This does not mean your idea is stupid.  In fact, if everyone loves your idea, I might be worried that it’s not forward thinking enough.</p>\n<p>People at large related companies almost always think they have already built or are in the process of building all the good ideas – so your idea is either something they are already building (which is a good thing to discover early) or else they will dismiss it as a bad idea.  (I have a personal diligence rule that when speaking to people at large companies, the facts that they tell you are very useful but their opinions about startup ideas no more valuable than any other smart person’s opinions).</p>\n<p>In terms of speaking to other entrepreneurs, the vast majority are already working on something and are highly unlikely to drop everything and copy you.  Even if they are in the idea generation phase, high integrity entrepreneurs wouldn’t copy your idea anyways.</p>\n<p>VC’s will either not like your idea, or else like it and possibly want to fund you.  They vastly prefer funding an existing team than taking an idea and building a team.  The one risk is if they have entrepreneurs they are working with in a similar area (see next paragraph).  Most VCs have enough integrity to disclose this and let you decide how much detail to go into.</p>\n<p>The handful of people in the world who might copy your idea are entrepreneurs just starting up with a very similar idea.  You can probably just explicitly avoid these people, although by talking to lots of people your ideas will likely seep through to them.</p>\n<p>Even if your idea gets in the wrong hands, they will probably just get the high level “elevator pitch” which isn’t worth much anyways. Hopefully by that time you’ve developed the idea much further and in much greater detail – by talking to as many people as possible.</p>\n<p>A note about NDAs:  1) almost no experienced entrepreneurs/VCs will sign them (in fact, you asking them too is widely considered a sign of inexperience), 2) It’s not clear they have any real value – are you really going to spend years suing someone who signed an NDA?  I’ve personally never heard of it happening.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem",
      "title": "Machine learning is really good at partially solving just about any problem",
      "description": "There’s a saying in artificial intelligence circles that techniques like machine learning (and NLP) can very quickly get you, say, 80% of…",
      "url": "https://cdixon.org/2009/08/20/machine-learning-is-really-good-at-partially-solving-just-about-any-problem",
      "published": "2009-08-20T00:00:00.000Z",
      "updated": "2009-08-20T00:00:00.000Z",
      "content": "<p>There’s a saying in artificial intelligence circles that techniques like <a href=\"http://en.wikipedia.org/wiki/Machine_learning\">machine learning</a> (and <a href=\"http://en.wikipedia.org/wiki/Natural_language_processing\">NLP</a>) can very quickly get you, say, 80% of the way to solving just about any (real world) problem, but going beyond 80% is extremely hard, maybe even impossible.  The Netflix Challenge is a case in point: hundreds of the best researchers in the world worked on the problem for 2 years and the (apparent) winning team got a 10% improvement over Netflix’s in-house algorithm.  This is consistent with my own experience, having spent many years and dollars on machine learning projects.</p>\n<p>This doesn’t mean machine learning isn’t useful – it just means you need to apply it to contexts that are fault tolerant:  for example, online ad targeting, ranking search results, recommendations, and spam filtering.  Areas where people aren’t so fault tolerant and machine learning usually disappoints include machine translation, speech recognition, and image recognition.</p>\n<p>That’s not to say you can’t use machine learning to attack these non-fault tolorant problems, but just that you need to realize the limits of automation and build mechanisms to compensate for those limits.  One great thing about most machine learning algorithms is you can infer confidence levels and then, say, ship low confidence results to a manual process.</p>\n<p>A corollary of all of the above is that it is very rare for startup companies to ever have a competitive advantage because of their machine learning algorithms.  If a worldwide concerted effort can only improve Netflix’s algorithm by 10%, how likely are 4 people in an R+D department in a startup going to have a significant breakthrough.  Modern ML algorithms are the product of thousands of academics and billions of dollars of R+D and are generally only improved upon at the margins by individual companies.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/17/options-on-early-stage-companies",
      "title": "Options on early stage companies",
      "description": "I believe that what I’m about to say is accepted by venture capitalists as fact, even trivially obvious fact, yet very few entrepreneurs I…",
      "url": "https://cdixon.org/2009/08/17/options-on-early-stage-companies",
      "published": "2009-08-17T00:00:00.000Z",
      "updated": "2009-08-17T00:00:00.000Z",
      "content": "<p>I believe that what I’m about to say is accepted by venture capitalists as fact, even trivially obvious fact, yet very few entrepreneurs I meet seem to understand it.</p>\n<p>An option on a share of stock of an early stage company is (for all practical purposes) equal in value to a share in that early stage company.  Not less, as most entrepreneurs seem to believe (and god forbid you think “the VCs have the option to put in more money” is economically advantageous to you).</p>\n<p>Here’s why.  Black and Scholes (and Merton) won a Nobel prize for inventing the Black-Scholes model, which was the first model that somewhat accurately modeled options pricing.  Using this model, and making a few reasonable assumptions (the option is “near the money,” the maturity is sufficiently far away), the key driver of an option’s value is <a href=\"http://en.wikipedia.org/wiki/Volatility_(finance)\">volatility</a> (in fact, if you listen to option traders talk, they actually talk about prices in “vols”).   In public markets, options are usually priced at some fraction of the share price.  This is because public stocks under normal circumstances have volatilities around, say, 20% (at least they used to 10 years ago when I was programming options pricing algorithms).</p>\n<p>The volatility of the value of a seed stage startup is incredibly high.  I don’t know if any data exists for what volatility estimate would be good to use, but for an informal analysis suppose the average volatility of a seed stage startup is 300%.  Then try putting 300% into the volatility field of a Black-Scholes <a href=\"http://www.erieri.com/scripts23/blackscholes/blackscholes.exe/Calculate\">calculator</a>:</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 658px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/9656efda61973b989764fe608c4a7a35/6164f/picture-20.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 54.40729483282675%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"picture 20\"\n        title=\"picture-20\"\n        src=\"/static/9656efda61973b989764fe608c4a7a35/6164f/picture-20.png\"\n        srcset=\"/static/9656efda61973b989764fe608c4a7a35/924ad/picture-20.png 170w,\n/static/9656efda61973b989764fe608c4a7a35/f570f/picture-20.png 341w,\n/static/9656efda61973b989764fe608c4a7a35/6164f/picture-20.png 658w\"\n        sizes=\"(max-width: 658px) 100vw, 658px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">picture-20</figcaption>\n  </figure></p>\n<p>So if your share price is $1, an option (European Call is a fancy word for options similar to what are given out in startups) is worth $0.9993 dollars.</p>\n<p>This is good news for start up employees, directors, and advisors who are awarded stock options.  Their options are economically as valuable as stock but have better tax treatment.</p>\n<p>Here’s the bad news.  At least since I’ve been observing early stage deals (since 2003), <strong>so-called financial innovation in venture capital has been all about creating new kinds of options for investors, each one more obfuscatory than the last.</strong></p>\n<p>- The first way they create options is by simply doing nothing – telling the entrepreneur “great idea, come back in a few months when you’ve made more progress.”  The logic is: why would you invest now when you could invest in, say, 3 months with more information? (as VCs say, why not “flip another card over”).  This is obviously perfectly within their rights and logical, but ultimately, in my opinion, penny wise and pound foolish.   While the VCs might be successful with this strategy on a specific deal, in the long run they are hurting themselves reputationally and also probably by letting some good deals slip away.</p>\n<p>- Next there is tranching – this is pretty literally an option.  Even if the pre-negotiated future valuations are higher, the option has basically the same value as a share at the current price.  Try the Black-Scholes calculator but changing the strike price to 10 (simulating the idea that the seed round is $1M pre and future valuation is $10m pre):</p>\n<p><figure class=\"gatsby-resp-image-figure\" style=\"\">\n    <span\n      class=\"gatsby-resp-image-wrapper\"\n      style=\"position: relative; display: block; margin-left: auto; margin-right: auto;  max-width: 681px;\"\n    >\n      <a\n    class=\"gatsby-resp-image-link\"\n    href=\"/static/4877b070acefce900b537e88250ee0d4/ad9ce/picture-211.png\"\n    style=\"display: block\"\n    target=\"_blank\"\n    rel=\"noopener\"\n  >\n    <span\n    class=\"gatsby-resp-image-background-image\"\n    style=\"padding-bottom: 51.5625%; position: relative; bottom: 0; left: 0; background-image: url('data:image/png;base64,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'); background-size: cover; display: block;\"\n  ></span>\n  <img\n        class=\"gatsby-resp-image-image\"\n        alt=\"picture 211\"\n        title=\"picture-211\"\n        src=\"/static/4877b070acefce900b537e88250ee0d4/94a55/picture-211.png\"\n        srcset=\"/static/4877b070acefce900b537e88250ee0d4/924ad/picture-211.png 170w,\n/static/4877b070acefce900b537e88250ee0d4/f570f/picture-211.png 341w,\n/static/4877b070acefce900b537e88250ee0d4/94a55/picture-211.png 681w,\n/static/4877b070acefce900b537e88250ee0d4/ad9ce/picture-211.png 704w\"\n        sizes=\"(max-width: 681px) 100vw, 681px\"\n        loading=\"lazy\"\n      />\n  </a>\n    </span>\n    <figcaption class=\"gatsby-resp-image-figcaption\">picture-211</figcaption>\n  </figure></p>\n<p>The point is with the super high volatility of startups, you can structure the option in almost any way and it’s still like giving someone shares.  (I discuss the problems with tranching in more detail <a href=\"http://www.cdixon.org/?p=261\">here</a>.)</p>\n<p>- Next there was “warrant coverage.”  This is perfectly legitimate in many cases (e.g. as a “kicker” in a venture debt round, as part of an important strategic partnership), as long as the entrepreneur understands 1 warrant basically equals 1 share.  One mistake entrepreneurs often make is to focus so intently on nominal valuation that they don’t realize their “effective valuation” with warrants is much lower.  For example, if the valuation is $10M pre and you give 100% warrant coverage, the valuation is really $5M pre.</p>\n<p>- Over the past few years with big VCs starting “seed programs” we’ve seen the emergence of situations where there is no contractual option but the signaling value of the VC’s potential non-participation gives them option-like value.  I discuss why I dislike these deals <a href=\"http://www.cdixon.org/?p=256\">here</a>.  (This might be one point on which <a href=\"http://www.avc.com/\">Fred</a> and I disagree…?).</p>\n<p>- Super pro rata rights.  This is a new term that’s popped up lately.  Pro-rata rights are options, but seem like reasonable ones.  If as an investor I bought 5% of your company, pro rata rights give me the right to invest 5% in the next round.  They are arguably a reasonable reward for taking a risk early on.  <strong>Super</strong> pro rata rights mean if I buy 5% of your company now I have the right to invest, say, 50% of the next round.  This is a really expensive deal for the entrepreneur.  If an investors puts in $250K for 5% of your company now with super pro rata rights on 50% of the next round, I’d just for simplicity assume you sold ~20% (assuming the next round sells 30% and the VC does half of that) of your company for $250K.  (The actual analysis of the value of super rata rights seems tricky – maybe some finance PhD will figure out how to price them at some point).</p>\n<p>Good VCs don’t mess around with this stuff.  They realize that real value is created when you invest in great people and innovate around technology, not finance.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/16/ideal-first-round-funding-terms",
      "title": "Ideal first round funding terms",
      "description": "My last 2 posts were about things to avoid, so I thought it might be helpful to follow up with something more positive.  Having been part of…",
      "url": "https://cdixon.org/2009/08/16/ideal-first-round-funding-terms",
      "published": "2009-08-16T00:00:00.000Z",
      "updated": "2009-08-16T00:00:00.000Z",
      "content": "<p>My last 2 posts were about things to avoid, so I thought it might be helpful to follow up with something more positive.  Having been part of or observed about 50 early stage deals, I have come to believe there is a clearly dominant set of deal terms.   Here they are:</p>\n<p>- Investors get either common stock or 1x non-participating preferred stock.  Anything more than that (participating preferred, multiple liquidation preferences) divide incentives of investors and the entrepreneurs.  Also, this sort of crud tends to get amplified in follow on rounds.</p>\n<p>- Pro rata rights for investors.   Not super pro rata rights (explaining why this new trendy term is a bad idea requires a separate blog post).  This means basically that investors have the right to put more money in follow on rounds.  This should include <strong>all</strong> investors – including small angels when they are investing alongside big VCs.  There are two reasons this term is important 1) it seems fair that investors have the option to reinvest in good companies – they took a risk at the early stage after all 2) in certain situations it lets investors “protect” their investments from possible valuation manipulation (this has never happened to me but more experienced investors tell me horror stories about stuff that went on in the last downturn – 2001-2004).</p>\n<p>- Founder vesting w/ acceleration on change of control.  I talk about this in detail <a href=\"http://www.cdixon.org/?p=164\">here</a>.   If your lawyer tries to talk you out of founder vesting (as some seem to be doing lately), I suggest you get a new lawyer.</p>\n<p>- This stuff is all so standard that there is no reason you should pay more than $10K for the financing (including both sides).  I personally use <a href=\"http://www.gunder.com/\">Gunderson</a> and think they are great.   Whoever you choose, I strongly recommend you go with a “standard” startup lawfirm (Gunderson, Wilson Sonsini, Fenwick etc).   I tried going with a non-standard one once and the results were disastrous.  Also, when you go with a standard firm and get their standard docs it can expedite later rounds as VCs are familiar with them.</p>\n<p>- A board consisting of 1 investor, 1 management and 1 mutually agreed upon independent director.  (Or 2 VCs, 2 mgmt and 1 indy).  As an entrepreneur, the way I think of this is if both my investors and an independent director who I approved want to fire me, I must be doing a pretty crappy job and deserve it.</p>\n<p>- Founder salaries – these should be “subsistence” level and no more.  If the founders are wealthy, the number should be zero.  If they aren’t, it should be whatever lets them not worry about money but not save any.  This is very, very important.  Peter Thiel said it best <a href=\"http://www.techcrunch.com/2008/09/08/peter-thiel-best-predictor-of-startup-success-is-low-ceo-pay/\">here</a>.  (I would actually go further and say this should be true of all employees at all non-profitable startups – but that is a longer topic).</p>\n<p>- If small angels are investing alongside big VCs, they should get all the same economic rights as the VCs but no control rights.  Economics rights means share price, any warrants if there are any (hopefully there aren’t), and pro-rata rights.  Control rights means things like the right to block later financings, selling the company etc.  I once had to track down a tiny investor in the mountains of Italy to get a signature.  It’s a real pain and unnecessary.</p>\n<p>- Option pool – normally 10-20%.  This comes out of the pre-money so founders should be aware that the number is very important in terms of their dilution.  Ideally the % should be based on a hiring plan and not just a deal point.   (Side note to entrepreneurs – whenever you want to debate something with a VC, frame it in operational terms since it’s hard for them to argue with that).</p>\n<p>- All the other stuff (registration rights, dividends etc) should be standard NVCA terms.</p>\n<p>- Valuation & amount- My preference is to keep all terms as above and only negotiate over 2 things – valuation and amount raised.  The amount raised should be enough to hit whatever milestones you think will get the company further financing, plus some fudge factor of, say, 50% because things always take longer and cost more than you think.  The valuation is obviously a matter of market conditions, how competitive the deal is etc.   One thing I would say is if you expect to raise more money (and you should expect to), make sure your post-money valuation is one that you will be able to “beat” in your next round.  There is nothing more dilutive and morale crushing than a down round.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments",
      "title": "The problem with tranched VC investments",
      "description": "In venture capital, tranching refers to investments where portions of the money are released over time when certain pre-negotiated…",
      "url": "https://cdixon.org/2009/08/15/the-problem-with-tranched-vc-investments",
      "published": "2009-08-15T00:00:00.000Z",
      "updated": "2009-08-15T00:00:00.000Z",
      "content": "<p>In venture capital, tranching refers to investments where portions of the money are released over time when certain pre-negotiated milestones are hit.  Usually it will all be part of one Series of investment, so a company might raise, say, $5M in the Series A but actually only receive, say, half up front and half when they’ve hit certain milestones.  Sometimes something similar to tranching is simulated, for example when a VC makes a seed investment and pre-negotiates the Series A valuation, along with milestones necessary to trigger it.</p>\n<p>In theory, tranching gives the VC’s a way to mitigate risk and the entrepreneur the comfort of not having to do a roadshow for the next round of financing.  In practice, I’ve found tranching to be a really bad idea.</p>\n<p>First of all, the entrepreneur should realize that the milestones written in the document are merely guidelines and ultimately the VC has complete control over whether to fund the follow on tranches.  Imagine a scenario where the entrepreneur hits the milestones but for whatever reason the VC gets cold feet and doesn’t want to fund the follow on tranche.  What is the entrepreneur going to do – sue the VC?  First of all they have vastly deeper pockets than you, so at best you will get tied up in court for a long time while your startup goes down the tubes.  Not to mention that it would effectively blacklist you in the VC community.  So just realize that contracts are the right to sue and nothing more.  The only money you can depend on is the money sitting in your bank account.</p>\n<p>Here are some other reasons both entrepreneurs and investors should dislike tranching:</p>\n<ol>\n<li>Makes hiring more difficult: Hiring is super critical at an early stage.  A very reasonable question prospective employees often (and should) ask  is “How many months of cash do you have in the bank?”  How do you respond if the money is tranched?  In my first startup, our full round gave us 18 months of cash but the first trance only a few months.  Should I have said what I had in the bank- just a few months – and scare the prospective hire?  Or should I have tried to explain “Oh, we have 18 months, but there is this thing called tranching, blah blah blah, and I’m sure the VCs will pony up.”  Not very reassuring either way.</li>\n<li>Distracts the entrepreneur:  The entrepreneur is forced to spend time making sure she gets the follow-on tranches.  In many cases, she even has to go present to the VC partnership multiple times (each time requiring lots of prep time).  Also, savvy entrepreneurs will prepare multiple options in case the VC decides not to fund, so will spend time talking to other potential investors to keep them warm.  So basically tranching adds 10-20% overhead for the founders that could otherwise be spent on the product, marketing etc.</li>\n<li>Milestones change anyways:  At the early stage you often realize that what milestones you originally thought were important actually were the wrong milestones.   So you either have to renegotiate the milestones or the entrepreneur ends up targeting the wrong things just to get the money.</li>\n<li>Hurts VC-entrepreneur relations.  Specifically, it encourages the entrepreneur to “manage” the investors.    One of the great things about properly financed early stage startups is that everyone involved has the same incentives – to help the company succeed.  In good companies, the investors and entrepreneurs really do work as a team and share information completely and honestly.  When the deal is tranched, the entrepreneurs has a strong incentive to control the information that goes to the investors and make things appear rosy.  The VC in turn usually recognizes this and feels manipulated.  I’ve been on both sides of this and have felt its insidious effect.</li>\n</ol>\n<p>There are better ways for investors to mitigate risk – e.g. lower the valuation, smaller round size.  But don’t tranche.</p>",
      "image": null,
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      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes",
      "title": "Why seed investors don’t like convertible notes",
      "description": "A popular option in seed round financing is a convertible note instead of setting a valuation in an equity financing.  A convertible note is…",
      "url": "https://cdixon.org/2009/08/12/why-seed-investors-dont-like-convertible-notes",
      "published": "2009-08-12T00:00:00.000Z",
      "updated": "2009-08-12T00:00:00.000Z",
      "content": "<p>A popular option in seed round financing is a convertible note instead of setting a valuation in an equity financing.  A convertible note is basically a loan where the investors convert the debt into equity in the next round of financing at a step up.  A common step up is 20%, which means for every dollar the investors lend, they get $1.20 worth of shares in the subsequent round.</p>\n<p>The appeal of convertible notes is 1) it defers the negotiation about valuation to the next round 2) it is often much cheaper in terms of legal fees (~$5k versus $20-40K).</p>\n<p>Here’s why a lot of seed investors don’t like convertible notes:</p>\n<ol>\n<li>Most importantly, they split the entrepreneur’s and investors’ incentives – for the subsequent round, the entrepreneur benefits from a higher valuation, the investor from a low one.   Most investors work hard despite this to help the company, but nevertheless the note creates friction between people who should be working in tandem.</li>\n<li>On more than a few occasions VCs in subsequent rounds have said “I don’t want to give the seed investors a 20% step up.”  Sure, the step up is in a contract, but the investor in the subsequent round can always make their investment contingent upon modifying that contract.  In the end, it ends up pitting seed investors who wants their step up versus entrepreneur who wants to get the financing done, and the seed investor is forced to choose between getting the step up they deserve and being “the bad guy” who spoils the financing.</li>\n</ol>\n<p>One increasingly popular compromise is to do a “convertible with a cap.”  What this mean is that you set a cap of $N million dollars valuation and a step up of M%, and on the subsequent round the seed investor gets the better of the two.  If the cap is low enough, this mostly rectifies #1 above since the investor has the economic incentive to increase the valuation above the cap.  It doesn’t rectify #2, however, but does have the benefit of being significantly cheaper in terms of legal fees than a proper equity financing.   There is nothing worse than spending 5%-10% of your seed round on lawyers.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/05/15/the-myth-of-the-eureka-moment",
      "title": "The myth of the Eureka moment",
      "description": "I’ve been involved in the development of a number startups over the years, including three I co-founded.   I have also observed the idea…",
      "url": "https://cdixon.org/2009/05/15/the-myth-of-the-eureka-moment",
      "published": "2009-05-15T00:00:00.000Z",
      "updated": "2009-05-15T00:00:00.000Z",
      "content": "<p>I’ve been involved in the development of a number startups over the years, including three I co-founded.   I have also observed the idea development process from the outside many times.  In the 10 years or so I’ve been involved with startups, I have never seen a “Eureka” moment where someone suddenly comes up with a great idea.  Instead, I have always found idea development to be a wrenching and often meandering process that is guided mostly by instinct.</p>\n<p>I think the first step to developing an idea is picking a general “space” that you think has interesting things going on (picking the right space and the right co-founders are in my view the only really important things you do at the beginning of a startup).  Maybe you have experience in the space or maybe you just sense something interesting is going on there.</p>\n<p>Here’s my experience developing the idea for <a href=\"http://www.siteadvisor.com\">SiteAdvisor</a>.  At the time, I had never worked in computer security but had always found it interesting.  When I worked at <a href=\"http://www.bvp.com\">Bessemer</a>, I spent as much time as I could talking to <a href=\"http://whohastimeforthis.blogspot.com/\">David Cowan</a> and other security experts.  One thing that was apparent was that, on average, every few years a new type of security threat would come along and usually with each wave of threats some interesting startups were built (e.g. viruses->mcafee & symantec, spam->brightmail & postini, spyware->webroot).  So in 2003 when phishing began to emerge, a friend and I created an anti-phishing toolbar.  It wasn’t a particularly special piece of software – there were a couple of other anti-phishing toolbars around at the time that had similar functionality.  We just figured something interesting was going on so let’s throw our hat in the ring and maybe something good will emerge.</p>\n<p>Think back to 2003, before Firefox.  It was a pretty bad time on the web.  Venturing off the major websites, you’d get bombarded with popups and spyware and ActiveX warnings.  It occurred to us:   if we are warning users about phishing sites, why don’t we warn them about sites that do other bad things?  In other words, we realized that phishing was just a special case of a more general problem – the web needed a reputation system for websites.  Two years later, by the time we actually released SiteAdvisor, phishing was just an afterthought (in fact the first version of SiteAdvisor didn’t even include anti-phishing since we were focused on “Safe Search” and phishing sites don’t show up in search results for various technical reasons).</p>\n<p>Today <a href=\"http://www.siteadvisor.com\">every</a> <a href=\"http://safeweb.norton.com/\">major</a> <a href=\"http://www.trendsecure.com/portal/en-US/tools/security_tools/trendprotect\">security</a> company has a “safe search product.”  It seems kind of obvious now.  But in retrospect, I don’t see how we would ever have developed the idea without having already “thrown our hat in the ring.”  Even if we had thought of the idea, we probably would have dismissed it as too obvious.  When you aren’t actively engaged in an space you can’t see the gaps.</p>\n<p>I think a lot of people who are interested in starting companies think they shouldn’t do it until they have a Eureka moment.  I’d say that instead they should focus on finding an area that “feels interesting” and then get ready to bob and weave.</p>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think",
      "title": "Joining a startup is far less risky than most people think",
      "description": "Joining a startup is far less risky than most people seem to think.  In fact, I don’t know if anyone has ever studied this systematically…",
      "url": "https://cdixon.org/2009/05/11/joining-a-startup-is-far-less-risky-than-most-people-think",
      "published": "2009-05-11T00:00:00.000Z",
      "updated": "2009-05-11T00:00:00.000Z",
      "content": "<p>Joining a startup is far less risky than most people seem to think.  In fact, I don’t know if anyone has ever studied this systematically, but I would bet that people who join startups have greater job security than people who join large companies, and certainly have better risk-adjusted returns.</p>\n<p>Here’s why:</p>\n<p>- <strong>Big companies aren’t as stable as you think:</strong>  I graduated business school 6 years ago.  Very few people in my class created or joined startups, instead opting for “safe” companies like… Bear Stearns, Lehman Brothers, Ford, hedge funds that no longer exist, etc.  Meanwhile, everyone I know who went the startup route has had job security and been successful – in some cases spectacularly so.</p>\n<p>- <strong>Big companies aren’t loyal to employees:</strong>  When there are cuts at big companies, they tend to just use a hacksaw and not consider how loyal you’ve been or how hard you worked.  The people who survive are often the ones who happen to be in certain favored divisions or are good at playing politics.</p>\n<p>On the flip side:</p>\n<p>- <strong>Startups that have financing pay pretty well:</strong>  If the startup you found or join is VC backed, you usually make market or near-market wages (in addition to the potential upside you get with equity).   Even if things go south you will probably have broken even financially and learned valuable skills.</p>\n<p>- <strong>Startups tend to be much more loyal to employees</strong>:  For example, in the recent downturn I know of a number of startups where management took pay cuts (in some cases took their pay to zero) before laying anyone off.  Experienced startup managers know how devastating layoffs can be to morale and to their own reputation and tend to avoid them at all costs.  Moreover, even when there are layoffs they tend to be based on merit and loyalty.</p>\n<p>**- When you join a startup, you are also joining a network –  **You aren’t just joining a company – you are joining a network of employees and investors who – regardless of the fate of the startup you join – will inevitably go on to do interesting and successful ventures.  If you impress them, they will bring you along.  I know of many cases where startups failed but employees went on to flourish at the founders’ next startup or another company their VCs invested in.</p>\n<p>In short, just because startups tend to fail more than big companies doesn’t mean joining a startup is riskier than joining a big company.</p>",
      "image": null,
      "media": [],
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    },
    {
      "id": "https://cdixon.org/2009/04/21/founder-vesting",
      "title": "Founder vesting",
      "description": "The most important term in a startup term sheet that no one seems to think carefully about is founder vesting.   There are two key points…",
      "url": "https://cdixon.org/2009/04/21/founder-vesting",
      "published": "2009-04-21T00:00:00.000Z",
      "updated": "2009-04-21T00:00:00.000Z",
      "content": "<p>The most important term in a startup term sheet that no one seems to think carefully about is <em>founder vesting</em>.   There are two key points about vesting:</p>\n<ol>\n<li>All startup employees – including founders! – should vest over 4 years from their start date (with a one year “cliff”).  When I used to work in VC I can’t tell you how many companies I saw where some random former founder who was long gone from the company and was only there for some short period of time owned some big chunk of the company.  Not only is this just plain unfair, it also means there is a lot less room for giving equity to employees and for raising new capital.  Even if you are founding a company with your best friend – actually, <strong>especially</strong> if you are founding a company with your best friend – everyone should have vesting.   If you have a lawyer who tells you otherwise, get a new lawyer.</li>\n<li>Founders should always have acceleration on change of control!  In particular, you should have full acceleration on “double trigger” (company is acquired and you are fired).  In addition you should have partial acceleration on “single trigger” (company is acquired and you remain at company).  I prefer a structure where you accelerate such that you have N months remaining (N=12 is a good number).  This gives the acquirer comfort that the key people will be around for a reasonable period of time but also lets the founders get the equity they deserve without spending years and years at the acquirer.  Consider the scenario where your company gets acquired 1 year after founding and you have 3 years of vesting remaining.   Suppose further that you just aren’t a big company type and leave after 1 year.  In that case you would forgo half your equity.  It’s always surprising to me how much time founders spending focusing on valuation that might change their ownership by a few points when vesting acceleration (albeit under certain circumstances – but I have seen this happen) can have a far larger impact on their ultimate equity ownership.</li>\n</ol>",
      "image": null,
      "media": [],
      "authors": [],
      "categories": []
    },
    {
      "id": "https://cdixon.org/2009/04/18/naming-your-startup",
      "title": "Naming your startup",
      "description": "The Name Inspector has a good post today regarding 6 naming myths to ignore. I think it’s generally right on.   Naming is so important and…",
      "url": "https://cdixon.org/2009/04/18/naming-your-startup",
      "published": "2009-04-18T00:00:00.000Z",
      "updated": "2009-04-18T00:00:00.000Z",
      "content": "<p>The Name Inspector has a good post today regarding <a href=\"http://www.thenameinspector.com/six-naming-myths-to-ignore/\">6 naming myths to ignore.</a> I think it’s generally right on.   Naming is so important and so incredibly hard, especially for consumer internet companies that not only have to find a good name but also get the URL.   I am convinced that a big part of Twitter’s success, for example, is it has such a great name.  Simple word, easy to spell, great imagery, and also evocative of what the product does without being overly literal.</p>\n<p>I have been involved in naming a number of startups, including my two most recent companies:  Hunch and SiteAdvisor.  Each time it was a long and painful process.  Here are some things I’ve learned along the way.</p>\n<ol>\n<li>Probably the most important thing is that the name be easy to spell after someone hears it pronounced.  I was involved in one startup before where every time you said the name the person says “what?” and then you have to spell it.  Trust me, it becomes really tedious and also adds friction to word-of-mouth buzz.</li>\n<li>You should have different naming goals for different products.  For example, SiteAdvisor was a security product.  You really can’t make security “cool” so we didn’t even try to bother to do that with the name.  Instead we went for a name that helped explain in a very literal way what the product did.  Before we came up with the name SiteAdvisor, I probably had 100 meetings where people said “I don’t understand what you are building – is it an anti-phishing toolbar, a spyware blocker or what?”.   This included meetings with VC’s who focus on security and other experts.  I knew the name SiteAdvisor was a winner when my father in law wrote the name on a high school blackboard and asked the kids what they thought the company did and one kid said “They advise you about websites” (and then he said ” … or construction sites” :) ).   Also we liked the name because we imagined in the future doing more than just security – for example warning about adult content.  (Alas, we never got that far).</li>\n<li>I tend to disagree with The Name Inspector about name length.  Shorter is definitely better.  In particular the number of syllables is important.  SiteAdvisor, while good at describing the product, is really clunky to pronounce.   I also tend to really dislike Latin-y portmanteau names like “Integra” “Omnitrust” etc.  Sounds like a pharmaceutical product.</li>\n<li>A few things I’ve learned about methodology.  I think it’s very rare to have an epiphany where you come up with a great name.  First of all, even if you do, the domain is probably taken and too expensive.  For systematically brainstorming, I really like the <a href=\"http://www.rhymezone.com/r/rhyme.cgi?Word=intuition&typeofrhyme=rel&org1=syl&org2=l\">Related Words function on RhymeZone</a>.  I try to make lists of words that are sort of related to the product and then look at all the related words, look at all those words’ related words, etc, making lists of words and word fragments that sounds good.  Then I have a systematic process for checking domains to see if they are buyable.  If you are super lucky (and picked a multiword domain name) you might get it retail, but at this point almost all .com names (yes, I think you still need to own the .com) are owned by someone and the question becomes whether they will sell it at a reasonable price.  The best case is usually that it’s owned by a professional domainer and it’s not very monetizable via Adsense (domainers make a lot of money from Adsense on sites like candy.com so you’d need to offer them a tons of money to sell it).</li>\n</ol>\n<p>Naming is tough!</p>",
      "image": null,
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    }
  ]
}