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Get Out, And Get Into Silicon Valley: SurveyMonkey, Google, GoPro, FlipBoard, & So Many More

By - May 22, 2015
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Brian and I on SurveyMonkey’s rooftop last year.

New York is in the can (what a great event!) and next up, for those of us in the US anyway, is NewCo Silicon Valley. I won’t be able to actually attend NewCo SV, as I’ll be on the road visiting NewCo Amsterdam and NewCo Istanbul. But If I could go to Silicon Valley, these are the companies I’d pick to attend:

Day 1 – Monday June 8th

 5:00 pm – VIP Kickoff At SurveyMonkey – This is a bittersweet choice, in that our kickoff speaker was to have been Dave Goldberg, who suddenly passed away while on vacation earlier this month. It’s a terrible loss for all of us in the Valley community, and of course we reached out to his family at SurveyMonkey and offered to cancel or move our kickoff so that the company could mourn. But in an expression of what makes Dave such a beloved person, the folks at SurveyMonkey insisted on keeping the kickoff event on their amazing rooftop deck. Dave was extremely proud of the LEED certified building he designed in the heart of Palo Alto, and this kickoff, hosted by my partner and NewCo Board Director Brian Monahan, will be a very special event indeed.

Day 2 – Tuesday June 9th

10:00 am – GoPro. Zander Lurie, a good friend of Dave’s, was to speak, but is now interim CEO at SurveyMonkey. No matter, whoever speaks, I’d want to hear the story of Go Pro, which is truly one of the most inspiring new kinds of companies in the Valley. If there were two (or more) of me, I’d also want to hit Survey Monkey and LinkedIn (almost full).

12:00 pm – Google. Google is doing two sessions this year at NewCo SV, and this one on the future of search and apps promises to be a deep dive on Google’s mobile plans. You must prequalify to attend this session, as it’s intended for developers (I’m not sure they’d let me come!). Other great sessions include Silicon Valley Innovation Center and Quixey.

2:00 pm – Tesla. C’mon, you have to go to a factory tour if you can! This is another qualified session – they are looking for senior level attendees and it looks to be sold out already. That can change if the company opens up more slots, or folks drop out, but if you can’t make Tesla, there are a lot of other great options: Institute for the Future, CourseTalk, and CareLinx would be in the running for me.

4:00 pm – HighFive. Slick and affordable video conferencing for the other 95%? Sign me up. I’d love to check this out – as much as I love Google Hangouts, truth is it’s not very reliable. But I can’t afford a high end solution. Enter High Five. Not into videoconferencing? Check out StartX, Intel, or Cask.

Day 3 – Weds. June 10th

10:00 am – HealthTap. I’m fascinated by the intersection of the NewCo economy and healthcare, and HealthTap plays squarely in the middle of it. Though I’ll admit it’s hard to miss Walmart, Polyvore, and BetterWorks, which would be my runners up.

12:00 pm – Matternet. An Internet in the sky for drone-based delivery? Yes please! And if not Matternet, then check out HealthLoop (I’m an investor so I’m very familiar with the company) or Flipboard.

2:00 pm – Mozilla. I’m in the tank for Mozilla’s open web philosophy, and Mozilla’s storied founder is speaking. But if you’re looking for something else, check out Singularity University or Cloudera. Both are Diamond Pass only at this point, but worth the upgrade price IMHO.

4:00 pm – Unshackled. Fascinating NewCo story here, focused on empowering entrepreneurs on work visas. If that’s not your thing, check out Scanadu or Acxiom (I’m on the Board).

6:00 pm – Meetup at Location TBD. Well, I know where the meetup is…but we can’t announce it quite yet. Trust me though, it’ll be a lot of fun!

If reading my picks whetted your appetite to spend a couple days getting out of your daily routine and into the most fascinating companies in the Valley, register here and get to picking your schedule! Many companies are already sold out, but there are plenty of open sessions left. I’m sorry to miss it this year, but I’ll be reporting from Istanbul and Amsterdam instead. Not a bad trade!

 

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Uber, The Rashomon.

By - April 26, 2015

Uber Women Promo

Our industry loves a rashomon, and in the past year or two, our collective subject of debate has been Uber. Perhaps the fastest growing company in history (its numbers aren’t public, but we’ll get to some estimates shortly), Uber has become a vector for some of the most wide-ranging arguments I’ve ever had regarding the tech industry’s impact on society at large.

It’s not that Google, Facebook, Apple, or Microsoft didn’t evoke great debate, but all those companies came of age in an era where tech was still relegated to a sideshow in the broader cultural conversation. Microsoft was taking over the computer industry in the 1990s, Google the Internet in the early 2000s, Facebook and Apple the mobile and social world in the late 2000s. But Uber? Uber is about a very real and entirely new approach to our economy, a stand in for the wealth divide festering in the US and beyond, an existential rorschach testing your values around the role of government, the social contract, and the kind of society we want to become.

When an Uber glides to its appointed pickup point, what do we see? Do we see an innovator hastening the inexorable shift to a new information-based economy? Or an arrogant bully using cheap capital, greed, and a dangerous, misogynist culture of convenience to consolidate a trillion dollar market?

Or do we see both?

Yes — that’s a cop out, but it’s also an honest answer. I know people who work at Uber, and I know some of Uber’s investors as well. They are in general a well intentioned group — and many of them have reservations about Uber’s unbridled success and its mixed reputation.

Uber’s success is breathtaking. Consider: Uber’s most recent round valued the company at over $41 billion — $15 billion more than Google’s initial public market cap of $26.4 billion. At a conference I attended last month, an Uber executive mentioned the company was clocking more than one million rides each and every day. If you (conservatively) estimate each ride at $10, that’d be gross revenue of $10mm a day, or $3.65 billion a year. Uber takes roughly a quarter of that revenue (20% is the widely reported number, but when I ask drivers, they tell me it’s 25–28%), or just under a billion dollars. And their costs are….well, assume about 2,000 employees (I’ve heard estimates of 1200 to 2500), for $250mm or so in labor costs. I’m pretty sure they’re not spending another $750mm on marketing and platform costs. So the company is most likely quite profitable already.

And my figures are conservative. Business Insider claims the company is on track to do $10 billion in gross revenue this year, and CEO Travis Kalanick last year claimed revenue is doubling every six months. In five years, Uber has expanded to 57 countries. So, yes, this company is astonishingly successful.

And yet…I’ve not met a single person in this industry who doesn’t express reservations about Uber. Certainly the company stepped in it terribly with the whole Lacy debacle, but the ambivalence goes deeper still. I’m sure pure Uber defenders exist, but the truth is, most of us are worried about the sheer expression of capitalistic force that the company represents. Privately, many are heartened by the regulatory counterforces that are stemming the company’s march through worldwide markets — Germany, Holland, India, Korea, Canada, Spain, France, New Zealand, and many other countries have banned Uber’s services either nationally, or through local city regulations.

Uber is the poster child for our global conversation about the role of work in our society, and about the kind of company we want to create, work at, and celebrate. And that conversation is deeply political and cultural in nature. On the one hand, the “1099 Economy” is providing hundreds of thousands of flexible, living wage jobs for those who might otherwise be marginalized or underpaid. On the other, it represents the systemic dismantling of our labor laws by rapacious, profit seeking monopolists.

If you want to hear an unalloyed economic takedown of Uber, head over to Robert Reich’s blog. And if you want to hear a reasoned defense of the company as an innovator, read what Suster has to say. But anyone who read Sarah Lacy’s passionate story has to wonder — if we didn’t have Uber now, wouldn’t the Valley just end up creating it? Certainly that’s Lacy’s conclusion — Uber is the collective creation of the Valley’s deep arrogance, its heartless celebration of high valuations and killer exits, and its male-dominated, aggressive philosophy of “breaking things fast” and “asking for forgiveness rather than permission.”

Put another way, Uber feels inevitable — a uniquely of-the-moment company, a mirror held up to the Valley’s aggregate psyche. And as we all look into that mirror, we are both fascinated and appalled.

All of this was at front of mind a month ago when an email from a site called FounderDating popped into my inbox. FounderDating is a LinkedIn-like service that connects entrepreneurs, and it sports a lively Quora-like Q&A forum. When interesting new threads emerge, the service notifies you. “Is Uber A Social Impact company?” was the question of the day, and it immediately sparked a strong debate, as you might expect. Lydia Eager, the thread’s originator, opened with this:

A lot of people love to hate uber because of their aggressive tactics, but the fact of the matter is that they are creating 20K new driver jobs/month and the median uberX driver income in NYC is $90K/year. Feels to me like they do way more good than harm and I’d consider them a social impact company. They are having a much bigger impact than say a non-profit trying to create jobs.

Do you have to have set out to have a major social mission to be considered a social impact company?

From there a diverse group of folks, myself included, chimed in with 50 or so thoughtful replies, touching on the importance of purpose- and mission-driven business, the role Uber plays in destroying living-wage jobs in the taxi and livery businesses, the actual economics of driving for Uber and similar businesses, the positive impact Uber has on carbon emissions, congestion, and drunk driving, the inevitable future where driverless cars and automation make workers irrelevant, the positive competitive response Uber has created in the taxi business (better customer service, competing apps, etc), stories of questionable competitive business practices, stories of rape and kidnapping (on both sides — taxies and Uber), debate over the meaning of “social impact” at its core, debate over the role of local and national regulation, debate over consolidation of power and money in markets and society, debate over libertarian political philosophy, and much, much more.

I hear these questions debated every time Uber comes up at a party, an industry event, or just between friends shooting the breeze. Back in 2013, when we were starting NewCo, we had the same debate when we were considering which companies to invite to our first full-fledged NewCo festival in San Francisco. We asked ourselves whether Uber was really a NewCo — an engine of positive change in our society. We couldn’t make up our mind and ended up kicking the can down the road. This year, we have to once again tackle the question. And I’m still not sure where we’ll land.

Like it or not, Uber is now our rashomon for understanding the impact technology is having on our culture. The company is showing signs of “growing up” — as all fast-growing tech companies do over time (you have to love Facebook shifting its motto from “Move fast and break things” to “Move fast …with stable infrastructure”). Uber’s stance to local regulators has shifted from a siege mentality to one of engagement (necessarily, I’m sure). Its CEO (and the offending exec) apologized, sort of, to Lacy, and has shifted its public voice to highlight its positive impact on the world — the first image on its site today is of a woman, with the headline “Her Turn to Earn — Creating 1,000,000 jobs for women by 2020.”

Is this all just calculated PR spin, or might it represent a real shift in the company’s culture? I think I know where Lacy stands on this one — she was personally targeted by a senior Uber executive, and she’s in no mood to give the company a second chance. But for most of the rest of us, the ambivalence — and the broader debate — continues. I personally believe that companies can change over time — Walmart, Unilever, and many others are now champions of sustainability — yet one could reasonably argue they played huge roles in creating the unsustainable world in which we currently live. But does that mean we shouldn’t celebrate and encourage their corporate change of heart?

If we dismiss these glimmerings of change as mere greenwashing, we are handing corporations an excuse to continue past practices. Instead, we should hold them accountable. For Uber — and all of us — that journey has just begun.

Integrations (and Metaservices) For The Win

By - April 04, 2015
GBoard

A GeckoBoard sample dashboard, integrating half a dozen separate data services.

What makes for a truly NewCo business? I’ve been giving this question a lot of thought the past six or so months, leading to posts like Maybe The Best Way To Change the World Is To Start a CompanyLiving Systems and The Information First Company, What Makes a NewCo, and posts on NewCos like MetroMile and Jack.

But lately I’ve noticed a strong theme running through a number of interesting and successful businesses: Integrations. From Acxiom and sovrn (where I am a board member) to Slack, Gecko and Zapier (where I am a happy customer), these companies are thriving because they have built a platform based on the integration of many different products and services. At NewCo, we call this “being platform’d” – an inelegant but apt descriptor.

Four years ago I wrote  File Under: Metaservices, The Rise Of, in which I posed a problem:

…heavy users of the web depend on scores – sometimes hundreds – of services, all of which work wonderfully for their particular purpose (eBay for auctions, Google for search, OpenTable for restaurant reservations, etc). But these services simply don’t communicate with each other, nor collaborate in a fashion that creates a robust or evolving ecosystem.

The rise of the app economy exacerbates the problem – most apps live in their own closed world, sharing data sparingly, if at all.

In 2015, the problem is coming to a head, and there are huge, proven opportunities for companies willing to do the hard work of managing complex data and services integrations. In fact, I’d go so far as to claim that in the NewCo economy, an unfair advantage will accrue to those businesses that excel at delivering seamless, effective integrations of complex services.

It’s already starting to happen. Why, for example, has Slack taken off so quickly, when there were already a raft of seemingly successful collaboration tools (Yammer, Basecamp, HipChat, etc)? As a user of Slack, my answer is simple: Slack has a super elegant approach to integrations. It “just works” with Google Docs, YouTube, Trello, MailChimp,  and about 100 other services. It creates an intelligent “metaservice” for effective group collaboration outside of its core use case. It’s not easy to make these integrations seem effortless to the consumer, but Slack got it right.

Another example can be found in what’s known as the programmatic or adtech industry. For the past four years I’ve been very close to this industry, steering FM into the purchase of an at scale programmatic advertising business (Lijit, now called sovrn), and serving on the board of Acxiom, a public data and marketing services company. With sovrn, we’ve noticed that the hardest, but most rewarding work comes in integrating new partners onto our platform. We’ve got nearly 100 integrations now, with several more coming online each quarter. These are not easy to pull off, each takes from three to six months to get done. It’s messy and hand-crafted, and it involves human to human negotiations all along the way. But once done, adtech integrations open a flood of data back and forth between partners, and when that happens, money gets made.

Adtech and data businesses that have acquired a lot of integrations, like Acxiom, AppNexus, OpenX, and sovrn, are valuable precisely because those integrations take a lot of time. If a large, well heeled tech business wanted to enter the adtech industry, they’d have to buy their way in. Doing 40-50 integrations from scratch would take years. It’s one of the reasons Facebook bought LiveRail, Twitter bought MoPub, and Apple bought Quattro.

Another class of integrators can be found in companies like Zapier, which is playing directly in the mobile app data market (and as such, is a direct response to the problem I posited back in 2011). Zapier gives developers the ability to tie together all their siloed apps, and to manipulate that data on one creative canvas. Another example is GeckoBoard, which at present is mainly a dashboard for disparate and discrete information sources, but even that limited functionality delivers a “holy shit!” set of insights.

Once I started noticing these integration-driven businesses, I saw them everywhere. Sure, Facebook and Google (and all the platforms) have been integrators forever, but they fail to solve more specific and/or bespoke problems inherent to individual use cases. Across online marketing, for example, tools like AppBoy, ZenDesk, and MailChimp lead with their metaservice-based integrative approach.  So do hundreds more, in dozens of categories, far too many to mention here.

But I’d like to call the ball right now: Metaservices is here to stay, and the best and fastest integrators will win.

If you want to get inside great companies around the globe, come to a NewCo festival. Next up is New York, then Austin and Silicon Valley.

A Few Questions For Publishers Contemplating Facebook As A Platform

By - March 23, 2015

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Well, it’s happening. According to no less authoritative source than The New York Times, The New York Times is preparing to plant a taproot right inside the highly walled garden that is Facebook.

As Times’ executives contemplate moving The Grey Lady squarely under the rather constrictive confines of Facebook’s terms of service, they may be comforting themselves with a few palliative pretty-much-truths:

  1. We may be putting our content on Facebook’s platform, but we’ll still have our presence on the open web, apps, and in print. We’re really just accessing a massive audience natively, in a way they want to consume our content. In our other products, we’ll still be in control (well, not so much with iOS but…).
  2. Really, Facebook is just another channel — like when Borders and Barnes & Noble consolidated the newsstand business. Facebook’s just a big newsstand where we have to have our product.
  3. We’re going to be among the initial few to do this, which gives us first mover’s advantage, and probably the best economics anyone will ever get given how strongly Facebook is wooing us.
  4. If it doesn’t work , we can always call it a grand experiment and move along, sort of like we did with AOL back in the day. Or Apple back when the Newsstand was a thing.

All kinda true, and compelling enough to “test,” which is how the article carefully positions the Times’ intentions. But as testing beings, here are a few questions any publisher should ask before dipping a taproot into Facebook’s carefully cultivated soils:

  • Do you have full and unfettered access to reader data? Will Facebook have access to your customer data?

A publisher lives and dies by its ability to maintain a strong connection to its readership. That means understanding how people use your product, so you can make it better. It means knowing who your customers are, so you can call them by name, make them offers, ask them questions, converse with them using sophisticated tools. Will Facebook offer the kind of tools the open web does?

  • Do you have full and unfettered control over your advertising relationships and data? Will Facebook have access to that data?

If Facebook is selling your advertising, or telling you how to sell your advertising, or dictating what your advertising has to look like, or has access to data about your customer data *and* your advertising, they have your jewels in their hands. I hope those are very soft hands.

  • Do you have certainty over the levers of circulation marketing, including the price of reader acquisition and engagement? 

Facebook’s record here ain’t exactly encouraging. Everyone knows that if you want to build audience on Facebook, you have to pay Facebook. Publishers have gotten pretty sophisticated at understanding customer acquisition costs, ROI, and the like. Will Facebook offer a consistent ecosystem here, or will the sands shift as the company ropes in your competitors, leverages “proprietary algorithms” to decide who sees what, then ultimately decides to get into your business in some way? If you want to read up on such a market, just ask Yelp how it feels about Google.

  • Do you have control over your core product, so you can craft your reader’s experience as an expression of your brand? 

I can’t really stress this one too much. I mean, what if a year in, you want to ask some of your Facebook readers to pay you, in exchange for less advertising (or none)? Do you have to ask permission? Wait, you agreed to not do that? Well why would any reader pay you on the open web if they can get it for free on Facebook? And what if you want to do something like Snowfall? Or what if you come up with a really neat widget that pulls in processed content from, say, Twitter and SnapChat? Will Facebook let you? They kinda sorta don’t like those companies, last I checked. My guess is they won’t like others down the road too.

  • Do you have any proof that publishers using another company’s proprietary platform have ever created a lasting and sustainable business? 

I guess I should have put this one first. There have been good exits for some publishers from platforms — a few of the MCNs on YouTube come to mind — but those were native video publishers who will all admit that they could never reach profitability on YouTube’ economics.

I can’t really think of any publisher who thrived on someone else’s platform, for the reasons I laid out above. Sure, a lot of apps have done well, but in the main they were either hit businesses (gaming) or free services that kept their customer and revenue models well away from Apple or Google’s grasp (everybody else ever).

Perhaps Facebook has addressed all these points with the Times and others — but the article certainly didn’t find evidence of that. And all of you other publishers should know how the playing field tilts before joining the game.

Which brings us to BuzzFeed, which has taken a delightfully inverse approach to platform economics — that is to say, it embraces the distribution of its content independent of its home base. Of course, it can do so because its core revenue model is native advertising content, which is distributed in the same fashion as original editorial content. This model suits BuzzFeed very, very well. I’m not sure it scales for many others.

So far, Facebook has not clipped BuzzFeed’s native advertising wings. Could it? Just ask Zynga.

Then again, and to be fair, I’m not privy to the conversations between the Times and Facebook. Regardless, were I a publisher, I’d sure like to know the answers to those questions above. If anyone gets some, do let us know?

(cross posted to Medium).

With Meridian, Sovrn Levels the Playing Field For Publishers

By - March 08, 2015

meridian-logo-invA long, strange, and ultimately rewarding trip, that’s what many involved in the past ten years at Federated Media, Lijit, and now sovrn Holdings might say. One year ago, give or take, we sold FM’s assets to LIN Media, and created sovrn Holdings, a programmatic data business focused on one mission: to foster an ecosystem where independent and influential publishers can thrive.

Sovrn has had an extraordinary year. It’s led the way in the fight against fraud, and has one of the cleanest networks in the industry. It’s a profitable, fast-growing business, and it’s more than quadrupled its network CPM – an amazing feat that is a testament to both eliminating fraud, as well as focusing on data science – understanding the reams of data the network throws off each day, and putting it to work for its 20,000+ publishers. And it’s that focus on data science that has led to sovrn’s latest crowning achievement: The launch of meridian, sovrn’s completely rethought publisher platform.

Meridian is a cooperative data-driven platform. So what does that mean? Publishers integrate with meridian – mainly because of its advertising platform – and when they do, they share their collective audience, advertising, and other data.  Because sovrn has massive scale, we can share back information to publishers that no other platform offers – and we can do it for free.

So that’s what we’re doing. Meridian is a rich insights platform, featuring information about audience segments that was previously the domain of ad buyers alone. I’m excited about this for many reasons, but the main one comes down to this: For too long smaller publishers operated in the dark: They didn’t know who was buying their inventory, for how much, or how they stacked up against similar inventory across the Internet. Meridian is changing that. Over the coming months, sovrn will build more and more information sharing into the platform, all with the same goal: To level the playing field so that buyer and seller are on equal footing.

I’m super proud to be Chair of sovrn Holdings, and proud of CEO Walter Knapp and his entire team today. Congratulations, sovrn, on a major milestone, and here’s to many many more!

A few screen shots of meridian follow.

The main dashboard:

meridian-screenies-of

The comparative stats:

Category Comparison meridian

And the audience tab:

Audience Tab meridian

 

 

Metromile: A FitBit for Your Car

By - January 26, 2015
MetroMile staff

The Metromile staff in front of their SF HQ (Preston is in the red shirt in the back right).

Ever since writing Living Systems and The Information First Company last Fall, I’ve been citing Earnest, the financial services startup, as a poster child for what I mean by an “information-first” company. But earlier this month I met with another perfect exemplar: Metromile, a company that is already upending industrial-age assumptions about what “insurance” should be.**

I’m fascinated by the idea of “potential information” – flows of information that are locked away and unused. Potential information flows live in the imagination of every NewCo – once tapped, they create all manner of new potential value. Metromile is a stellar example of a company that has found a vector into a treasure trove of potential information – the automobile – and is busy turning that information into a new kind of customer experience, one that has the potential to completely retool the utility and value of the insurance business.

But I get ahead of myself. Let’s back up, and start at the beginning. Metromile began as the brainchild of David Friedberg, co-founder and CEO of yet another information-first insurance breakout, Climate Corp. Climate opened up reams of new information flows for the farming industry, and along the way was acquired by agribusiness giant Monsanto for more than $1 billion. Friedberg realized that the lessons of Climate were applicable to consumer insurance, and Metromile was born.

I met with Metromile CEO Dan Preston in his crowded and humming San Francisco headquarters (pictured above). I had heard about Metromile, but my knowledge was limited to their headline: car insurance you pay for by the mile. But I figured the company was up to more than just a cheaper insurance product. On that hunch my chat with Preston did not disappoint.

Metromile does have a deceptively simple premise: those who drive a lot tend to have more accidents, those who drive less, fewer. Simple, no? But it turns out, the way insurance products currently work spreads the risk of those high mileage drivers across the entire pool of the insured. Put another way, if you drive less than 10,000 miles a year, most likely your insurance premiums are higher than they need to be. That’s because insurance companies average out the costs across their entire base of customers, forcing the less risky drivers to cover the costs of those who drive more.

Metronome

The Metronome – Metromile’s vector into a goldmine of potential information flows.

Metromile is the only insurance product on the market that charges by the mile on a retroactive basis – it tracks your miles driven, then calculates your monthly premium in arrears. To do so, it needs access to your vehicle’s diagnostic port – the same access point used by mechanics when they service modern cars (every car since 1996 has such a port).  When you sign up, Metromile sends you a “Metronome” – the same kind of device made famous by Progressive Insurance’s Snapshot, which uses them for data-driven discount products.

If you drive less than 10,000 miles a year, and live in a city environment, chances are you’ll save a lot of money using Metromile. But saving money is just the start of the company’s ambitions. After all, once the Metronome is installed, Metromile begins to collect data about your car and your driving habits. And any good information-first entrepreneur knows that the true value of an enterprise lies in mapping potential information flows. And that little Metronome is a hidden goldmine of such data.

Preston and his team doesn’t see Metromile as just an insurance company. Instead, Metromile is “your friend and ally in owning a car.” An ally with sophisticated data science and a friendly app that delivers much more than monthly savings. From the company’s website:

We aim to make the urban experience of having a car as simple as it can be, by taking our deep understanding of data and transforming it into information and services that make having a car less expensive, more convenient, and simply smarter….With the Metronome in place, the free Metromile app functions as your personal driving dashboard. Use it to track and optimize your gas usage and trips, monitor the health of your car, and locate your car if it’s missing. You can even use it to get automated street sweeping alerts.

And there’s the difference between Metromile and the rest of the insurance business – Metromile sees itself as a services company in the business of helping drivers make more informed choices about their cars. It starts with insurance, but it quickly becomes the voice of your car. Metromile’s app opens a window into the previously opaque world of automotive data and helps you understand all manner of things about your car – if it’s close to breaking down, for example, or if you’re using it in ways that might cause unwanted expenses down the road. When you think about it, Metromile is a fitbit for your car. And that’s pretty darn cool. One to watch, to be sure.

**Because I believe so much in the company, I am considering a small investment in MetroMile. Anytime I write about a company where I am or might be an investor, I will make a practice of noting it – so far, this hasn’t happened yet. As I point out on my disclosures page, I am a fairly active angel investor. 

Apple and Google: Middle School Mean Girls Having At It

By - January 20, 2015

THE-DRAMA-YEARS(image) I’m the father of three children, and two of them are girls. And while my first was a boy, and therefore “broke me in” with extraordinary acts of Running Headlong Into Fence Posts and Drinking Beer Stolen From Dad’s Fridge Yet Forgetting To Hide The Bottles, nothing, NOTHING, prepared me for Girls Behaving Badly To Each Other Whilst In Middle School.

Those of you with girls aged 11-14 know of what I speak: Middle school girls are just flat out BADASSES when it comes to unrepentant cruelty – and they are almost as good at forgetting, often within a day (or an hour) the rationale or cause of their petty behaviors. On one of my daughter’s wall is a note from a middle school friend. It says – and while I may paraphrase, I’m not making this up – “Hey Girl, I’m so glad we’re best friends, because I really hated you before but now we’re best friends right?!” And my daughter *pinned this* to her wall – her ACTUAL wall, in her bedroom!

Anyway, every so often girls in middle school end up squaring off – and the result is an embarrassment of small-minded but astonishingly machiavellian acts of cruelty. Little lies are let loose like sparks on a pile of hay, and soon a fire of social shunning rips through the school. Invitations are made, then retracted vigorously, and in public. Insults are veiled as compliments, and a girl’s emerging character strengths – a penchant for science perhaps, or a love of kittens for God’s sake – are expertly turned against her.

But this post isn’t really about middle school girls. Because we all know middle school girls – with love, patience, and copious wine (for the parents) – eventually grow up and out of such behavior.

Apple and Google? Not so much. And as an avid consumer of both these company’s products, I’m tired of it.

It’s the little things that pile up, the unnecessary lies and petty inconveniences. Like the fact that you need to install a javascript or browser extension to make Gmail the default mail application on your Mac. Because, you know, everyone knows how to do that. Or that you need a third party app (and a degree from General Assembly) to make music and movies purchased on Google Play work in iTunes, or vice versa. Or that Apple won’t let Google index apps in the iTunes store, because, you know, that Google mission of making the world’s information useful and accessible sounds suspicious, right?

Or – and yes, this is the one that pushed me to write this post – that you have to follow an utterly convoluted five-step process just to make group texting work between iPhones and Android users – only to learn it doesn’t really work every time, and in fact, if you’re expecting an important text from someone with an iPhone, well, you better just man up and buy a f*cking iPhone too, loser.

I’m not even scratching the surface of the bullpucky these two companies are putting us through to create “user lock-in” and discourage consumer choice. I mean, we gave up on the easy stuff, like, oh I don’t know, a universal power cord that can charge any phone. Because, you know, why have standards when you can take forty bucks from some poor loser every time he misplaces his charger? Or, if you wanted to change your default browser to Chrome, you had to root around in Safari to do so (Google has since gotten around this)? And don’t get me started on Apple Contacts and Calendar…and getting them into Google’s universe. Yeah, it’s supposed to work. And no, it really doesn’t, not so much, and not so well. I’m six months and thousands of dollars into trying to make that work. Um, Google – tell me please why there’s no Google Calendar app for iPhone? Is it because…you know, Apple’s not cool anymore? Gah.

I bet I’ve missed tons of examples, but given the state of diplomacy in the Apple and Google worlds, I’m not expecting a solution anytime soon. The two companies clearly don’t want to play nice – Apple’s DNA is to lock you into their pristine, walled garden user experience, and Google certainly isn’t eager to encourage Android users to interact with iOS. Apple has kicked Google out of the default position for mapping in iOS, and many expect search to be next. The walls are getting higher, and the middle school girl behavior is likely to get worse.

To Apple and Google, I say simply this: For the sake of folks who love both of your product lines: Grow up. Please!

App Stores Must Go

By - January 11, 2015

appstores2014 was the year the industry woke up to the power of mobile app installs, and the advertising platforms that drive them. Facebook’s impressive mobile revenue numbers – 66% of its Q3 2014 revenue and growing  – are a proxy for the mobile economy at large, and while the company doesn’t divulge what percentage of that revenue is app install advertising, estimates range from a third to a half – which means that Facebook made anywhere from $700 million to more than a billion dollars in one quarter on app install advertising. That’s potentially $4 billion+ a year of app installs, just on Facebook. Yow. That kind of growth is reminiscent of search revenues a decade ago.

But as I’ve written before, app installs are only the beginning of an ongoing marketing relationship that an app publisher must have with its consumer. It’s one thing to get your app installed, but quite another to get people to keep opening it, using it, and ultimately, doing things that create revenue for you. The next step after app install revenue is “app re-engagement,” and the battle to win this emerging category is already underway, with all the major platforms (Twitter, Yahoo, Google, Facebook) rolling out products, and a slew of startups vying for share (and M&A glory, I’d wager).

Over time, app install revenue is bound to wane, and app re-engagement revenue will wax, to the point where the latter is inevitably larger than the former. Neither will disappear entirely, of course, but as the mobile model matures, it’s likely they will take new form. But the following three steps will remain constant – they were true before apps (when we called Internet services “websites”), and they were true before the Internet itself:

  1. Get people to notice your product or service, and engage with it for the first time. 
  2. Get people to come back, and keep sampling your product or service. 
  3. Get people to regularly give you their money for your product or service.

We’ve now got a reliable model for #1: It’s the combination of the app store platform and app install advertising. #2 is coming along as well, as I mentioned above.

But what of #3? It’s one thing to get someone to give you a few bucks for your app, but how can you keep them giving you money (or doing things that make you money, like ordering on GrubHub)? If app makers are spending an unhealthy percentage of their capital on advertising, innovation in product will suffer, and we won’t get apps that people are willing to continually pay for. It strikes me, after any number of conversations I’ve had around the state of mobile, that mobile markets in the US will slowly but surely evolve toward the norms currently in place in Asia, where advertising is a minority of mobile revenues, and in-app commerce of all kinds is the standard. After all, that’s how it is for business in general – advertising is a small but significant percentage of overall revenues.

But for this to occur, our process of app discovery and engagement has to rationalize – it’s simply too expensive to build a loyal audience in mobile, and the top 1-2% of apps can afford to price the rest of the market out. This is the great failure – or cynical intention – of Apple and Google’s hobbled app store strategy. There simply should not be one app store per platform – they’re what Steve Jobs would call “orifices” – monopolistic constructs created to consolidate control. App stores stifle innovation – they are damage, and the Internet will eventually route around them. 2015 should be the year that becomes evident.

My other recent musings on mobile can be found here.  

Predictions 2015: Uber, Google, Apple, Beacons, Health, Nest, China, Adtech…

By - January 04, 2015

1-nostradamus2015. My eleventh year of making predictions. Seems everyone’s gotten onto this particular bus, and I’m now late to the party – I never get around to writing till the weekend – when I have open hours in front of me, and plenty of time to contemplate That Which May Come.

There are several keys to getting predictions right. First, you need to pay attention to long term secular trends – big changes that have been in the works for a while. Second, you need to call the timing – will those trends break into the mainstream this coming year? Last year, for example, I predicted that 2014 would be the year that the Internet would “adopt the planet as its cause.” I think I was right on the secular trend, but utterly wrong on the timing.

Third, you need to pay attention to patterns that have yet to emerge, but have a high probability of breaking out in the near term. A good example of this is my declaring that Twitter would become a major media platform three years ago.

So what might happen in 2015? The year to come feels clearer to me than 2014, which I labeled “A Difficult Year To See.” Plenty of interesting technology, Internet, and media trends seem poised to break out in 2015. Here’s my cut at them.

1. Uber will begin to consolidate its namesake position in the ” The Uber-ization of everything” trend. When we think of Uber, we think of black cars, of getting around from one place to another. But Uber has the brand permission to expand its brand to mean more than transportation. If you think of Uber as a company that takes a previously expensive, complicated, and inefficient process and leverages the Internet, mobile devices, the 1099 economy, and logistics to create a 10X better offering, there’s no reason the company won’t identify and pick off one or more similar markets in 2015. Uber is already making moves in delivery, a natural adjacency, but I imagine the company may either buy or build its way into markets that feel – at least initially – a bit further afield.

2. Related, Uber will be the center of a worldwide conversation about the impact of tech and business culture on the world. Put another way, Uber will replace Google, Facebook, and Apple as the centerpiece of a debate around the change wrought by the powerful tincture of technology and capitalism. This has already begun, of course, but 2015 will be when it comes to a dramatic head. I’m not quite sure how, but it’ll be obvious when it happens.

3. Google will face existential competition from Facebook due to Facebook’s Atlas offering, to the point where Google will find a way to connect its search and personal data to its Doubleclick asset. This will require changes to long-held pillars of its Privacy Policy – and thanks to legal complications from its search near-monoply, these changes will be tortured and painful. But in the faec of Facebook’s superior personalization capabilities, Google will have no choice. Google has long owned web advertising through its consolidation of a universal adtech stack. It’s the default platform for both publishers and advertisers, the 900-pound gorilla of ad serving, measurement, and delivery. But Facebook is attacking Google head on here with a rebuilt Atlas product that allows advertisers to target users of its ubiquitous service across the web. It will take time for Atlas to grow into meaningful market share, but advertisers love high quality personalization, and that’s what Facebook offers. Google’s in a difficult position here  – its privacy position was crafted for a world where there was no meaningful competition in web advertising. Now there is. The phrase to watch is this one: “We will not combine DoubleClick cookie information with personally identifiable information unless we have your opt-in consent.”

4. The Apple Watch will be seen as a success. I know, I know, I’m wandering into a morass here, as many others have already predicted that the watch will or will not work in 2015. But the use case, to me, is simply too strong to ignore, and I believe Apple will be first to prove it. I think Fred’s post was misunderstood, he didn’t say Apple’s watch won’t succeed, he just said it won’t be an iPod, iPhone, or iPad. And he’s right – no way will Apple sell as many units as those hits. We’re talking fashion here, and not everyone wants an Apple on their wrist. But I think we’re all ready to stop pulling out our phone every time we get a new text, email, or social media update. And for a significant number of folks, the Apple Watch will be how we change that behavior.

5. And Apple Pay will not. Apple Pay is slick, and it works, according to those I’ve talked with (I don’t use an iPhone, so I am certainly at a disadvantage here). But I’m basing this prediction on my sense of market need – does the market need a new way to pay? I’m not certain the current system – credit cards, cash – is so inefficient that it will motivate consumers to switch en masse this year, and for Apple Pay to be a success, I think that has to happen. I’m not saying the service won’t show good uptake and growth, it most likely will. But until there’s an orthogonal reason to use it that gives us all a much stronger value proposition, I don’t think Apple Pay will take over the world. In five years, I’d say the reverse will be true, but by then, we’ll have universal expenditure tracking and integration with a larger ecosystem of financial management tools, an ecosystem that is still underdeveloped and fractured at the moment.

6. But Beacons will re-emerge and take root. Remember iBeacons? They created quite a fuss when launched some 18 months ago, but since then, no one’s really paid them much nevermind. That will change in 2015 as ambient intelligence starts to be part of the fabric of everyday life. By year’s end, beacons will be a red hot market, and a platform for many a startup funding round.

7. Google’s Nest will build or buy a scaled home automation service business. Nest is a home automation business, but it’s also invested in rolling trucks to help its consumers install its growing suite of gadgets. Why stop there? The modern home is now a complicated mess of mismatched technology – there’s spotty wifi that works in one room but not another, dumb phone systems that don’t integrate with anything, and AV systems that break down more than they work. Shouldn’t someone 10X the home technology platform? Yes! And Nest is the brand with permission to do just that. It won’t hurt that by becoming the best home system integrator in the world, Nest will sell a shit-ton of its own devices.

8. A breakout healthcare startup will emerge in the consumer consciousness. Hard to say which one, as there are a ton of them, but the time is ripe for a startup to breakout that changes how we view our relationship to health data and services. One such startup will become the darling of the press and the exemplar of how healthcare services “should work.”

9. A breakout mobile startup will force us to rethink the mobile user interface. The time feels right for a new approach to mobile interfaces, and tons of startups are busy rethinking the space (see my posts on the subject here). I’m not predicting that the “chiclet-ized” approach to apps and OSes will break down in 2015, that’d be too much change to happen in one year. But as with healthcare above, a startup will break out that opens the industry’s eyes to new ways of interacting with our mobile devices. It’s about time.

10. At least one hotly-anticipated IPO will fizzle, leading many to declare that the “tech correction” has begun. Will it be Box, Dropbox, or Square? Spotify, Pinterest, or even Uber? I don’t know, but with so many deeply funded startups in the IPO zone, and our current tech boom entering its fifth year, the cycle is poised to pendulate. And yes, I just used “pendulate” for the first time in my writing life.

11. China will falter. This may be controversial, but again, using my keys of “secular trends, timing, and emerging trends,” it strikes me that China is due for a correction of its own. The US tech markets have a complicated and fractious relationship with China, and now that Alibaba is public and reportedly acquisitive, all manner of issues will be forced to the front burner. The Valley is anticipating a flood of Chinese tech competition and lucre in 2015, and I can’t imagine this comes without policy ramifications. Used to be, China regularly spied on US corporations, and we shrugged it off. No more. China is widely understood to have a brittle, centrally controlled, and deeply corrupt power structure. I expect this mix of illegal behavior (the spying and corruption) and easy money will cause powerful companies in the US to lobby Washington for relief, and I expect Washington will be willing to take action. One to watch, to be sure.

12. Adtech comes back. Adtech, a sector that took a beating this past year, will once again be seen as a strong, investable market. The sector has matured, and is no longer dominated by one-note business models dependent on a culture of fraud. This trend has already begun to play out with acquisitions in 2014 – LiveRamp, Datalogix, Blue Kai come to mind. With major players like Oracle, Salesforce, Facebook, Adobe, SAP, IBM and Google battling it out over marketing automation, it’ll be a very good year to be a differentiated adtech startup.

Well, there’s a dozen predictions for you, and I feel like I could do another twelve. But I think I’ll leave it there, and leave it to the fates to see how I did in one year’s time. Happy New Year everyone, and here’s to a great 2015!

 

Related:

Predictions 2014

2014: How I Did

Predictions 2013

2013: How I Did

Predictions 2012

2012: How I Did

 

My Predictions for 2014: How’d I Do?

By - December 31, 2014

2014Each year around this time I look back at the predictions I made 12 months ago, and I score myself with some combination of objectivity and defensiveness. And each year I do pretty well, batting somewhere between .500 and .750, depending on how you keep score.

This past year was different. First off, my predictions were unusually sparse. I started the year in a funk – I was depressed by our industry’s collective ignorance of climate change, and it showed in my writing. I called 2014 “A Difficult Year to See,” because my vision had been clouded by a deep anxiety over why tech hasn’t tackled what seemed to me to be the world’s most pressing problem.

One year later I find myself in a more patient stance. But given the goal of this post is to review how I did, and not how I feel today, let’s get to the score card.

1. 2014 is the year climate change goes from a political debate to a global force for unification and immediate action. It will be seen as the year the Internet adopted the planet as its cause.

Well, maybe not. I think I wrote from a place of “I wish this was the case” as opposed to “I think this actually will happen.” What I can say is this: Climate change is now a front burner issue for all thinking people on this planet, and that’s certainly a shift for the better. California, cradle of the tech industry, is in the middle of a severe, inescapable drought, one that weighs heavily on everyone working here. Sure, California has had cycles of drought in the past, but this one is different – in just three years, we’ve eclipsed draught data from as far back as 1,200 years, and as persistent as seven years in duration. Data like this starts to change how people think about their impact on the world.

But it takes time. Last year I hoped that “…the lessons of disruptors like Google, Twitter, and Amazon, as well as newer entrants like airbnb, Uber, and Dropbox, can be applied to solving larger problems than where to sleep, how to get a cab, or where and how our data are accessed. We need the best minds of our society focused on larger problems – but first, we need to collectively believe that problem is as large as it most likely is.”

Such a shift requires more than one year to happen. I’d judge myself harshly here – what I predicted simply did not happen. However, I do believe that 2014 was the beginning of it happening, and I reserve the right to come back to this post a few years from now, and claim that I called the beginning of a multi-year, secular shift toward “the Internet adopting the planet as its cause.” At least, I certainly hope I can.

Score: .000

2. Automakers adopt a “bring your own” approach to mobile integration.

Automobiles are in the “mobile experience” market, and until recently, it looked like they were going to try to keep their customers from bringing Apple, Google, and other tech brands directly into the driving environment. I noted that the auto industry changes painfully slowly, but 2014 would be the year things shifted to one where consumers began integrating their own smartphone environments directly into their driving experience. And while there is still a long way to go, it seems I was right.

Just this month, for example, Ford announced it was dropping its seven year partnership with Microsoft for a Blackberry’s ONX operating system. Seems like small news, till you look under the covers and see what it really means: using QNX allows Ford’s customers to easily integrate their iPhones or Android devices with their cars. Apple and Google seem to be taking a dual-pronged approach to the automobile – work with the industry to allow simple integrations between the phone and the car (contact lists, phone calls, some apps), while at the same time announcing far more ambitious plans to become the entire operating system for those cars in the future (for Apple, it’s CarPlay, for Google, it’s Android Auto).

Overall, I think I got this one largely right.

Score: .750

3. By year’s end, Twitter will be roundly criticized for doing basically what it did at the beginning of the year.

Twitter went public in November of 2013, and in my predictions two months later, I wrote: “The world loves a second act, and will demand one of Twitter now that the company is public…its moves in 2014 will likely be incremental. This is because the company has plenty of dry powder in the products and services it already has in its arsenal – it’ll roll out a full fledged exchange, a la FBX, it’ll roll out new versions of its core ad products (with a particular emphasis on video), it’ll create more media-like “events” across the service, it’ll continue its embrace of television and popular culture…in other words, it will consolidate the strengths it already has. And 12 months from now, everyone will be tweeting about how Twitter has run out of ideas. Sound familiar, Facebook?”

For the most part, this is pretty much what has happened. For Twitter, 2014 has been a year of piling on, in particular for Twitter CEO Dick Costolo, who was given a vote of no confidence in the Wall St. Journal this November.  And what has Costolo failed to do? Apparently, the same thing everyone else has failed to do over the past seven or so years: Define exactly what Twitter is supposed to be, even as the service kept growing and delighting the world. But let’s get real: in the four years Costolo has been CEO, Twitter has gone from zero to more than a billion in revenue – a feat that puts the company in the rarified air of Google, Facebook, Uber, and precious few others.

It strikes me that Costolo’s biggest error in judgement was to let Twitter go public in an environment where the stock was vastly over-valued. His stock debuted at $26, closed above $40,  and was pushed past $70 before it was retreated to its current price of $36 or so. Unfortunately, the market’s expectations of Twitter far outpaced the company’s true value, which was extraordinary to begin with. And so, one year later, Twitter is “roundly criticized for doing basically what it did at the beginning of this year” – struggle to define just what Twitter actually is, but at the same time, produce an invaluable service that has managed to grow revenues at a blistering pace. My own view boils down to this: Ignore Wall Street, and focus on Twitter’s plans in mobile services. More on that in my predictions post.

Score: 1000

4. Twitter and Apple will have their first big fight, most likely over an acquisition.

Well, I have no idea whether this one was true. It certainly didn’t break out into the mainstream news if it did happen. I mentioned that entertainment would most likely be where the two companies diverged, as I view that to be an area both want to play (most notably music and video). Apple certainly made its play there with Beats, but there’s not been any word of a “fraying relationship” between Twitter and Apple that I’m aware of. As far as I know, I whiffed on this one.

Score: .000

5. Google will see its search related revenues slow, but will start to extract more revenues from its Android base.

Yep. Search revenues have been slowing for years, but 2014 was the year everyone woke up to it. As the NYT reported this October: “The thing that worries investors, though, is that the company’s golden goose — its search engine — is showing signs of age.” Put another way, search revenues are not growing as quickly as they once were – Q3 grew 17% y/y, compared to Q2, which grew 25% on the same measure. But the piece also noted a strong uptick in Google’s Android-based Play store revenues – up 50% year on year. Combine that with Google’s focus on consolidating its control of the Android ecosystem, and I think I got this one pretty much right.

Score: 1000

6. Google Glass will win – but only because Google licenses the tech, and a third party will end up making the version everyone wants.

Whoa. What was I thinking? I was right in some details – in the post I suggested the price will go down by half, and sure, you can get used Glass for half price or better on eBay – but I whiffed again here. Not much happened with Google Glass this year, and no third party ended up making the version everyone else wanted. And I’m not sure anyone ever will.

Score: .000

7. Facebook will buy something really big. 

Um….yup. Twice. I suggested it might be Dropbox or Evernote, but Facebook went for WhatsApp and Oculus, among many others. I suggested that Facebook needed to admit it had “become a service folks use, but don’t live on anymore,” and that the company would continue to buy its way to its core user base, as it had with Instagram. I was right, but I picked the wrong horses.

Score: .750.

So looking at all my predictions, how did I average? Well, on seven attempts, I whiffed three times, nailed it twice, and hit .750 on two more. An average of .570, if you use “hits” as your base, but a less impressive .314 if you just add up the numbers and divide by 7.  I’ll let you decide which it was, and meantime, look forward to doing better next year. My Predictions 2015 post is coming, but most likely will wait till this weekend. Happy new year, everyone!