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The future of computing: distributed, deep learning, embedded intelligence.

I loved this post on the future of computing from Chris Dixon. Please read. ‘What’s Next in Computing?‘.

The future clearly appears to be built around hardware systems that are mostly composed of cell phone components + software + internet connectivity + data-enabled intelligence. The convergence of these forces is unbelievably powerful. We can already see the rise of embedded intelligence in hardware systems all around us – and this is set to grow exponentially.

What’s fueling this new age of computing, but not getting deserved attention in the public sphere, is GPU computing. NVIDIA clearly stands to be a big winner but others may catch up (including competition from FPGAs, ASICs etc).

GPU’s are powering the rapid growth of deep learning and AI. As others mentioned on twitter, VCs that pursue hard tech now hear about GPUs as often as we used to hear about AWS a few years ago. In fact, one could argue that deep learning could likely become the future of ALL computation. As Chris says in his blog post, to consider it merely a SV buzzword would be at your own peril.

Between on-device AI & in-the-cloud AI, all kinds of hardware systems are becoming intelligent. They can see, learn, find their own way. In fact, the use of GPU compute + Machine Learning/AI is now almost ubiquitous in modern hardware startups. A majority of recent Lux portfolio companies are also part of this revolution, and helping make it happen. From self-driving cars (stealth) & drones (CyphyWorks) to home automation (stealth), physical security systems (Evolv Technology), medical devices (3Scan and Auris) and AR/VR (Matterport, Survios and Altspace). In fact, new GPU based infrastructure (e.g. Nervana Systems) is literally helping the blind see (eg Clarifai and Aira collaboration) and physicians make smart decisions (CloudMedX).

As cost of sensors, connectivity and compute approach zero, the question is what kind of future can be envisioned a few years out? This is where Lux is spending time now. It is easy to fast forward and visualize a world where smart sensors were embedded in every dumb surface we see around us, image and voice sensors seamlessly analyzing spaces and activity for us, and our decisions always supported by tons of data. And such a future doesn’t have to be all Big Brother-y either. It can also be private, where AI would make us feel our 6th sense was actually real.

Reality is VCs did not see this coming at us as fast as it has. We are observing and learning. Entrepreneurs are predictably at the bleeding edge of all this,   noticing these advances, and rapidly imagining + building the future we will all live in. It is happening fast. It is awesome.

Dealing with competitors: Do not play to play. Play to win.

All startups have competition. No idea is so unique that nobody else can have the same idea. Or even if your idea was super-unique once, others will follow your lead and try to beat you at your own game. VHS beat Betamax in video format wars, and ipod wasn’t the first mobile digital music device. Almost all early adopters of the ipod likely already owned a mp3 player. Hey, even the crazy hard industry that SpaceX is in now appears to have some competition, if at least on the PR front.

So what to do about competition?

Let me take a particularly narrow, investor view, on it. Investors in your startup will get to learn about and will track your competitors. Other potential investors interested in your space will also learn about and track your competitors. And you won’t just have to compete with those other companies in the market, but you will also be asked frequently about them. How would you answer? Often I get some of the following unsatisfactory answers from founders and CEOs:

  1. Oh they suck. Their product is way crappier than us. They make toys while we are building high quality solutions.
  2. They are a cheap imitation of us and customers don’t want it. Or they are too expensive and we will always beat them on price.
  3. This validates our intuition about how exciting and large this market is. Only makes us look better.
  4. We have built years developing our technology. We have a 2 year lead, at least.
  5. We have patents and can sue them whenever we feel like it.

Above answers suggest either you are underestimating your competition, or you think the one asking you the question is relatively dumb.  Unfortunately I see startups frequently point to graphics comparing features offered by their own company vs their competition – and almost by God’s will – their company always appears to have more features than their competition. Funny how competition always looks bad when presented by a competitor.

I try to track competitors of my portfolio companies. I get news alerts about them and their announcements, keep tabs on who they are hiring, what customers they are serving, who is investing in them, and what story they are telling the world. And every now and then I email my own portfolio companies about competition and see how they respond. Their answers tell me more than the answerer thinks they do. Are my portfolio companies on top of the happenings in their space? Are they competing and losing deals, or not even getting to compete on those deals? Are they paranoid about competition and using that feeling to make their own teams better or brushing competition aside? Are they nimble on their feet and adjusting for short term strategies while maintaining the long vision for the space?

Great CEOs, and those who have dealt successfully with competitive situations before, take their competition seriously. Instead of brushing competition off, they plan and devise defensive and offensive strategies to deal with the competitive landscape. They are paranoid about the assets they own (including their teams and their customers), and while they talk politely and nicely about competitors, one can easily read they are preparing to, and expect to, squash competition to smithereens. They show a little bit of ‘either you are with us or against us’ mindset.

Here are some thoughts on how to think about competition (at least from an investor’s point of view):

  • Understand your competition and how its evolving. Get to know them well, their strategy and their tactics. Understand their strengths and weaknesses. What can you learn from them?
  • Never underestimate competition. Never speak badly about them, publicly or internally. That never helps. Its OK to point out positive differences but only you can look bad if something you say about the competition turns out to not be entirely true. Don’t lose your credibility.
  • What are your defensive strategies? How would you protect if they tried to poach from your team? What if they are reaching out to your customers already? Have you raised the right amount of capital to be fueled up for the fight to come? Patents, branding etc are also a part of your defensive strategy.
  • What are your offensive strategies? Should you try to poach key talent away? Or pitch to their customers? You might hear all the ‘nice’ talk about not worrying about competitors and focusing on your own business – but you have to decide for yourself if you are playing to play or playing to win. Never do anything illegal or unethical – but fight hard.
  • Copycats usually don’t have a roadmap or vision for the space. Have you given enough thought to it yourself? Have you communicated this to your team, your investors and your customers? Are people on your team able to track how you are doing against the vision so their confidence builds in your leadership, and how you are nimble on your feet as the landscape around you starts changing. A nice analogy I heard recently is that a Startup’s struggle is not just a game of Chess. It is also a game of Tetris. And you get to play the cards you are dealt with. (who, I just butchered three different games in one sentence!)
  • Understand what your customers want and deliver that to them, at the price they will afford. In the face of emergent competition in your category, it is foolish to try to spread your resources thin, add tons of features, and try/or to win on the ‘portfolio’ approach. That makes it easier for your competition to strike at your heart. Focus your efforts, build reinforcements around your core business, and plan careful guerrilla warfare to enter new areas.
  • There are some tried and true strategies that have worked in the past to help startups against competition. Use them as applicable in your case:
    • Raise significant capital to suck the air out of competition. For example, did you notice what large fundraises by MagicLeap, Uber etc did to the competition?
    • Partner with a giant – get a Google, Amazon, Microsoft, Tesla in your corner. Stable, reference-able, customers matter.
    • Sometimes a strategic acquisition of a potential competitor can be a great tactic. See a great team assembling to attack your space, or a great product? Acqui-hire them. Join forces and assemble the best team to play on your side. Large companies have the ‘Not Invented Here’ syndrome. Don’t have the NIH. Maybe some players on your team are not so good and need to be upgraded. Maybe some aspects of your product are weak. Maybe the market has moved since you started your journey and you need to find a way to respond faster than the time an internal development effort would take.
    • Google or Amazon entering your space is not validation of your idea. Stop saying that because you know even you don’t believe that. It likely means you should expect choppy waters ahead. Your defense lies in exploiting a small company’s ability to be quick, agile, nimble, responsive to customer needs, and to be passionate. Utilize your strengths.
    • Don’t let others, not even the journalists and industry analysts, define who you are. Be in front of the story about yourself and your company. Create your own voice and make space for yourself. Guard that space fiercely.

In startup land competition is a fact of life. Entrepreneurs are built to see opportunities and find wedges to drive trucks through. I don’t want to say startup founders and CEOs should only think about competition all the time*, or be defined by their competition, but I want to encourage honesty and aggressiveness in winning against competition. Do not play to play. Play to win.

*I encourage startup founders to read this essay by Andy Rachleff: When It Comes to Market Leadership, Be the Gorilla.

Fundraising blues in 2016?

2016 began with a string of bad news related to the economy. From China economy to Twitter stock – it has certainly sent ripples through the early stage investment ecosystem that there me the opposite of easing happening in the venture world. People are gently referring to it as: the bubble is popping, or reality may be setting in, or this is the new normal etc. Never mind the positives associated with low cost of oil or that the Fed thinks economy is doing well enough that they should start increasing interest rates.

Putting aside the mumbo-jumbo you might hear about macroeconomics, fact is that many entrepreneurs are concerned, and asking for advice on the fundraising environment for early stage companies (companies raising Series A or Series B) and trying to devise strategies for when and how to raise their next round of financing.

Here is generally what I am telling them:

  • Great companies are getting funded at all stages. Entrepreneurs don’t stop building great companies and investors don’t stop investing. There are several significant funds that have re-fueled in the last year, and some others who are in the middle of a raise now. The point of raising capital is to deploy it. And when/where others are not looking is often where great opportunities are found. That’s what Lux does and we are among the funds that have a fresh pool of capital to invest across early stage rounds in breakthrough tech.
  • A lot of noise will be made by those smelling blood regarding companies that are already sitting on ridiculously high valuations. While some of the woes around later stage growth equity rounds are real, some are being fed by competition just to hit back below the belt. Companies likely to get most bad press will be those who actively sought attention when they were raising funds at ever-increasing valuations.
  • Investors are certainly more cautious right now at the beginning of the year given the string of bad financial news, but there is really no way of knowing (as yet) what all this means for the long term. Most early stage investors know as much about economics as your average college physics professor – so VC partnerships across the country are in a little bit of wait and watch mode. They are doing portfolio analyses, trying to understand what reserves they may need for existing portfolio companies, and what their own fundraising prospects might look like for the next few years. In the meantime, they will continue to pile $$ on companies that are being chased by other well-known investors (nobody looks idiotic competing aggressively with top tier funds), and will likely move cautiously on companies where they will need to build internal conviction from first principles.
  • If you are not a company with momentum, or don’t really need to raise, my guess is raising money in Jan-Feb 2016 might be a bit more of a distraction for you than worth it. Perhaps let the market sort itself out a bit and then go out to raise when people are less likely to be checking twitter stock ticker at the end of every day. Take this time to plan, figure out who you would talk to in what order, tighten your metrics, and pressure test your pitch with your existing investors/advisors.
  • Be deliberate about your operating plans and strategies for 2016. Make sure you understand well what are key metrics that investors will be looking for in terms of traction, and what are most valuable value-inflecting milestones for your business. No, hype in tech-media is not a good metric :) Don’t let your organization stretch too thin across to many offerings and features, and for heaven’s sakes don’t project revenue and earnings targets you cannot meet. Don’t surprise your Board half way through the year that your 12-month runway is actually just 7 months.
  • Plan fundraising process to take at least 3-4 months, and in fact more likely 6 months (from first conversations to close). This is radically different than the last few years when some people were wiring money without even signing the paperwork. Suddenly VCs have discovered that they should pay more attention to the advice lawyers are giving on nitty gritty details of protective provisions etc.
  • If you get inbound interest, don’t toil away the opportunity. Don’t be ‘cute’ with financings or try to optimize on all kinds of things at once. This is an example of where keeping conversations open with other investors helps (i.e. even when you are not fundraising) – you can quickly spin other potential investors up and run a quick process should you choose to.
  • Last but not the least, it is not just the VCs and CEOs who are concerned about the fundraising environment. I would think many employees in startups are likely also paying attention to this, and making judgements about their own situations. CEOs should be transparent to their teams, build confidence in their teams, and boost their morale. A strong, impressive, executing team is the first and most important reason why VCs invest in a company.

Happy fundraising!

Prepare for 2016: take scenario analyses, operating plans, and budgets seriously.

One of the most important things Boards do in the beginning of the year is to approve the operating plans and associated budgets put together by founders and company CEOs. This is a short post to say: “take that exercise seriously, even more so than you may have done in the past”.

2016 has gotten off to a somewhat rocky start. I just got off the phone with a journalist who wanted to talk about the stock market declines (esp in China) Fed interest rate hikes, sinking oil prices, refugee crisis in Europe affecting its economy, threat of terrorism in Middle East and elsewhere, and the impact of all of the above on tech startups. Oh boy, there was a lot of negative in that last sentence.

Every CEO is starting off 2016 thinking at least a little about the macro environment. Is this the year that the proverbial tech bubble bursts? Will these multi-billion dollar private tech companies be able to go public? Will early stage investors pull back, and will valuations across the Board get crammed down? Will new hires look for higher compensation, or will employees flee to safer grounds of large tech companies? It doesn’t take much for investors and potential hires to be spooked in choppy waters, but great CEOs anticipate and manage this as a key risk.

The best way to plan for uncertainties is to stay lean, nimble and be more prepared with scenario analysis/planning. The fun and glorious days of the last few years has meant that some CEOs  (and Boards) did not consider planning to be a useful spend of their time. Boards accepted generic high level plans with some rough numbers around it to call a budget. Don’t be that CEO in 2016. Prepare for the upside and for the downside scenarios and rigorously test your assumptions with your Board and your investors. I am encouraging CEOs I closely work with to think through their operating plans carefully. What are the internal and external dependencies that we should keep a close eye on, and scale spending up or down accordingly? Lets assess team capabilities and upgrade right away wherever necessary. Lets be more resourceful and cut any extra fat on the expenses aggressively. Find non-dilutive sources of financing, look for earlier revenue opportunities, and let’s keep a close eye on gross/net margins. All obvious things but takes discipline to get them done right.

Frankly, I am excited about 2016. Yes, there will be uncertainty, but great companies will find it easier to cut through the noise and emerge as winners. They will be able to stay lean, recruit better, and fundraise effectively. They will also be more customer-focused, and generally aligned on core business metrics that truly create long term enterprise value (vs hype). Be that company!

Quick thoughts on some tech sectors. 2015/2016.

December is a month of holiday parties and reconnecting with friends. When you live inside the tech bubble, it also feels like a time for everyone to dish out their opinion on random topics in tech. I do the same. Hey, what else am I supposed to talk about at a cocktail event when I neither drink nor follow sports very closely?

Below are some quick thoughts on various tech sectors that I am sure I must have shared with unsuspecting holiday party-goers this year :)

HAPPY 2016 everyone!

  • Drones – Big players emerging and tough to be a new entrant as an OEM. Regulatory world has engaged commercial/consumer drone companies and I expect clarity in 2016. Industry specific drones are becoming the norm, esp for commercial uses, and tough to be a component vendor in the industry with significant price pressure.
  • Autonomous cars – Billions of dollars already invested and unless you think you can raise at least hundreds of millions quickly, hard to see how a new entrant competes. These cars are here, parking for us, keeping lanes for us, soon taking turns for us, and before you know it, completely taking over. Int’g to think what companies might get created to occupy our time while we don’t drive.
  • Home automation – There was hype a few years ago, then the valley of disillusionment, and now we are likely see a recovery over the next 24 months as practically every new device that rolls out starts to include a chip for communication. We won’t consider it a big deal when we are able to turn our lights on using our phone, or answer the door without having to walk to it.
  • Wearable devices – wow on that FitBit IPO. I still don’t fully get it. Do people actually use their fitbits? I think the interface to connected health sucks – both for consumers and for the information to be utilized in some meaningful way. We need to get more out of devices we wear, they need to make me smarter, healthier, more informed about what is beneficial or not for my health. Some such devices are being developed, but hard to know if they crack the code.
  • Virtual reality – I believe 2016 will be a big year for VR. Major platforms are set to finally release their devices to the world along with serious games and other apps that engage. While gaming will be big, its traditionally been a difficult sector for VCs. I expect increased focus on social VR, AR, and commercial/industrial uses of the platform.
  • Computational imaging – 2015 was a big year for computational imaging. We have cameras that keep us connected to our homes, provide security alerts, allow us to shoot in 360 degrees, create streamable VR content, focus in post-processing, track faces/detect emotions, and auto-tag our photos/videos. As we see some of the depth sensing cameras embedded in mobile phones, the utility of such algorithmic/deep learning tools will spread across many apps.
  • 3D Printing – The first phase is over, hype does not win any more. Time to build real technologies that are truly breakthrough and/or disrupt traditional manufacturing, and to enable average consumer to benefit from this industry more than they can with tchotchkes.
  • Physical security – This is one industry that I believe does not get enough love from the tech sector – partly because it means dealing with governments, bureaucratic institutions, and big risks/liabilities. However 2015 should have made clear that we need technologies to fight terrorism, technologies that go above and beyond the realm of cyber. From bomb detection to tracking known suspects/potential terrorists on their movements. We need to utilize tools like computer vision, human-in-the-loop AI, deep learning, and crowdsourced security processes while maintaining privacy of individuals and refraining from any kind of racial profiling. Few companies doing very meaningful work in this space.
  • HCIT – Tremendous opportunity to reduce costs, improve outcomes, and save lives, especially post ACA (Affordable Care Act). However, investors remain focused on identifying companies that can break through the ~$10M revenue ceiling and truly show scale. Healthcare customers are tired of hearing AI/deep learning buzzwords from companies that cannot truly deliver on the promise. Create value from day one, get access to data on the basis of that, and then derive learnings to create forward looking value for customers.
  • Space/Satellites – Tech industry has done what incumbents could not even imagine. Startups are now operating the largest constellations of satellites in space, we are tracking poverty, human resettlement, refugee crisis, and oil tankers from space, and we have been able to return our rockets back to the landing spot successfully. What a year for the space. While we will continue to see int’g hardware opportunities in the sector, I think the real action is in proprietary data and analytics which are starting to prove their worth in several sectors.
  • Robotics – Generally robots tend to fall into two categories: either they are toys, or they do real work. We saw some successes of the first kind, but not enough of the second. So we keep looking while technologies mature and get more integrated into other devices. A machine with hands is probably not going to be the breakout success the industry is looking for.
  • Machine learning/Deep learning/AI – Is this a field of its own? I think it has gone past that and is now embedded into so many different sectors, from image tagging, medical x-rays/CT scans, and autonomous driving to big data analytics, financial, and healthcare data analytics. Beware of the hype though. Many of the interesting applications still use traditional computer vision and machine learning, and/or keeping a human in the loop to get tasks done accurately.
  • Medtech – There is such amazing progress being made in this field, from medical robotics to medical devices and diagnostics etc. Cloud connectivity, big data infrastructure, and AI is making the force be strong with this one.
  • Consumer apps – I don’t invest much in those sectors. But when it comes to e-commerce and services I am personally a huge fan of Uber, Doordash and Instacart. They have truly changed how I get stuff done. I really like subscription services (with easy cancellation policies) and would love such services for Uber, AirBnB, grocery delivery and home repair services etc.
  • Computational sound – unfulfilled promise in 2015. I expected more from this space. Some int’g product launches in-ear buds, active sound adjustments/canceling etc, but I wouldn’t call any of it truly disruptive. I had expected we would see more experiments around the Apple Watch but that didn’t happen. Apparently people use their noses to go hands-free.
  • AppleWatch – Somewhat a disappointment in 2015.
  • Unicorns – Everybody wants a few in their portfolio, nobody wants to use the word publicly (except journalists), and God bless those who founded them. I want to see a few unicorn IPOs in 2016 so we can finally be done with this word and its silly derivatives.
  • Twitter – This remains my favorite medium to connect with smart folks. I learn considerable much from it. I wish the product evolved more, and incorporated more ways to tackle interesting content…but as long as I am not forced to deal with the weird Moments tab, I continue to be a big fan. Of course this medium is only as important as the people on it, and as such my thank you to all those who engage frequently on it, from @pmarca and @semil to @hunterwalk, @stevesilberman, @mattocko, @smc90, @StartupLJackson, @DanielleMorrill, @SultanAlQassemi, and @historyinpics.

What else have I been talking quite a bit about on FB and Twitter?

  • Syria refugee crisis
  • ISIS and international terrorism
  • Gun control
  • Republican presidential candidates
  • Police violence in America
  • Middle East politics
  • My wife Lama, and kids Ayla/Zaid
  • Awesome people at Lux Capital

Don’t reward bad behavior in early stage startups!

For the last few years we have lived in an extra-ordinary time for venture capital. Early stage companies have been getting support from venture capital at unprecedented levels, and we have seen all kinds of headlines marking bubbles in seed, early stage and late stage investments. For a lack of better words, money has flown like wine into startups.

Availability of capital to sustain innovation and entrepreneurship is a good thing. However, the investing euphoria of the last few years also led to some careless, and possibly irresponsible, behavior among investors and entrepreneurs. Since entrepreneurs had an upper hand in investment negotiations, investors often caved in to terms that weren’t just bad for their interests, but also not beneficial to the entrepreneurs and startups as well in the long run. In my opinion it wasn’t just that ‘bad behavior’ was sometimes tolerated, whats worse is that it was often rewarded.

Some examples of such ‘bad behavior’ could include:

  • investments in uncapped convertibles notes (some companies raised tens of millions that way before any priced financing took place)
  • investing in founders who sometimes wouldn’t even commit to full-time work, or agree to any period of vesting
  • lack of formal governance structures, Boards of Directors, or general accountability
  • no formal controls on compensation, expenses etc leading to startups taking on hefty liabilities (like real estate leases)
  • companies not hiring strong management teams, not investing in HR, patents etc, and not creating defensible moats around their companies
  • placing growth ahead of everything else, accepting negative gross margins for extended periods of time
  • ignoring financial controls and not understanding financial metrics (one company founder/CEO believed he had >100% gross margins)
  • not doing strategic thinking, and not sharing company strategy with entire team. Not creating KPIs, dashboards or such
  • not pitching with decks or any semblance of formal business plans/business models
  • ….

It is to be expected that not at all CEOs, especially first-time entrepreneurs, may know how above issues can negatively affect a company in the long run. In my opinion it is investors’ job to diligence such matters, and once invested to guide/advise/mentor entrepreneurs in instituting best practices in their companies.

But many investors didn’t do so over the last few years. They were too busy chasing the next shiny item, and didn’t want to burden themselves with the tough/hard work of helping entrepreneurs actually build their companies carefully. Worse still, even when they noticed signs of bad behavior, some investors rewarded entrepreneurs by throwing even more money at them. What is an entrepreneur to make of the situation the way they run their companies is rewarded by their investors? It reinforces their behavior, and any bad behavior eventually becomes ingrained in the company’s culture.

Unfortunately things don’t always go so well. Some times the macro-environment shifts, and some times a particular company’s circumstances change. For example when competition kicks into high gear, when hiring becomes tough, operational flaws lead to significant cash burn, feature creep and geographic creep becomes expensive burdens to carry forward, cap table gets too complicated, when funding dries up or a down round happens, when employees start leaving, and months of runway left suddenly starts to become the most important metric…that’s when how a company is organized truly matters in whether they are able to manage themselves in crisis or not.

My rant above is not to chastise anyone. But it is definitely to encourage investors to play a more active role in helping their portfolio CEOs, especially first-time entrepreneurs and CEOs, build cultures and corporate structures of excellence. Help CEOs identify mistakes they may be making early on, and help find solutions. Institute good governance, advise CEOs to set up formal Boards, focus on HR processes, don’t encourage foolishly priced rounds, promote transparency and trust, and proactively share best practices/KPIs/dashboard templates from other companies in your portfolio. Finally, cultivate a trusted partnership, provide mentorship and coaching to your founders, and enable a supportive network of peers in your portfolio. Entrepreneurs deserve to get this from their investors.

Related post: Friends Don’t Let Friends Have a Lazy VC/CEO Relationship

Thoughts on physical security – in the aftermath of Paris attacks

1/ As an investor in Evolv Technology, a company that aims to protect physical spaces against threats, I am reading articles on Paris attacks carefully. There is a lot to digest. How coordinated these attacks were, how sudden, how they targeted the youth, and how some attack sites were able to contain the damage a lot more than some others.

2/ It is an unfortunate reality that we are increasingly living in a world threatened by those who seek to hurt innocent people en masse. This is our generation’s struggle and we must overcome, and beat this evil.

3/ Public spaces globally are at risk. Especially spaces that weren’t considered as such. For eg sports events: Boston marathon, Paris Stadium etc. These are soft targets, usually less secure. And they attract lots of people, crowds that are harder to screen, harder to control, and harder to evacuate in case of an emergency.

4/ Security at public venues, such as stadiums, concert venues and public events, is getting beefed up…but there is still a long way to go before we can actually feel much safer than we do today. We have to improve everything, from physical screening to the security team’s reaction if a nefarious activity is detected.

5/ None of us want to go through everyday life as constantly being surveilled or searched. But such tech potentially saved hundreds of lives in Paris (at the Stadium). Technology will never be perfect, and it is a constant battle against those wishing to bring harm. But that is, if anything, a reason to do more, faster.

6/ A suicide bomber was stopped at the door of the stadium when he went through the security screening, and was patted down. A belt was detected and while exactly what happened at that point is not yet clear, he was certainly prevented form entering the stadium and causing greater harm. Once the bomb detonated, how the stadium security apparatus reacted is also admirable. Instead of letting chaotic evacuation happen, they were able to be more organized and methodic, and performed a controlled evacuation. Kudos to the staff there for saving many lives.

7/ There will be lots of analysis of what happened in Paris. What tech worked, what didn’t, and where systems failed. And what info or preparation have saved more lives. Unfortunately the reality is that the security will never be leak-tight, but would certainly make it more difficult for terrorists to infiltrate and carry out their plans.

8/ New tools and technologies in the physical security space are being developed and tested. Lots of private companies are also working on the same – making them detectors smaller, faster, cheaper, less invasive to everyday life, and more networked with the broader security systems. Security screening technologies of various sorts are not the answer alone. Obviously the scourge of terrorism has to be dealt with in the broader context, at the root cause level. But the security industry needs to step up its game and double down its efforts.

9/ Technology is our friend in this war on terror. We need it to work better, and for the state of the art technology tools to be shared broadly, worldwide. Terrorists are attacking soft targets everywhere, from Paris and Beirut to Karachi, Baghdad and Kabul.

10/ Unfortunately global sharing of best practices is not routine. Esp for soft target locations (vs for example, airports). There is just not an easy system to get plugged into, get security briefs, trainings and support. Its ad-hoc, largely organized around large multi-national companies, and expensive. For example, should every decent sized facility have a security director, access to at least video based surveillance tools with the latest analytics, and an emergency response plan, an active shooter plan?

11/ Should we screen for both metal and non-metal threats at all facilities, i.e. institute Airport like screening processes? Should we routinely practice face recognition on know terrorist accomplices or potential threats? Even in Paris attacks at least some of the attackers were known to be terrorist sympathizers. What should be our plan of action to track their movement and activities?

12/ There are lots of questions, but a few great answers. At least as yet. However, I k=have first hand knowledge that the security industry is hard at work analyzing, learning…and deploying the tools they have access to. I am rooting for them, and investing in the hope they succeed.

Metal 3D printing re-imagined: DesktopMetal

Team = Check
Technology = Check
Market = Check

That’s why Lux Capital chose to invest in DesktopMetal’s Series A alongside NEA, KPCB, and other smart investors.

DesktopMetal plans to revolutionize metal 3D printing. Current state of the art is…cumbersome. State of the art metal 3D printers are expensive, bulky, need complex setup including heavy use of inert gases, and are relatively slow. We know because we have studied this space well, and have invested in the broad 3D printing space multiple times now (e.g. Shapeways and Sols). Shapeways in fact uses the best of the best technology for their metal printed products and even they would argue much better is needed. The space needs to be ‘disrupted’ with a complete re-imagination of how metal 3D printing might work for broad usage. DesktopMetal team aims to bring a revolutionary new printer technology to the market for both prototyping and production use. I am sure Ric will share a lot more in months/years to come.

I have known Ric Fulop for many years now. We are both MIT alums. We were both entrepreneurs in Boston at the same time. We love geeking out over technology. We have taught the same classes before at MIT. We helped start a company from scratch (GridCo), and we have invested together in the past. He is the crazy guy who gave me my first ride in a Tesla Roadster (likely among the first owners of a Tesla in the Boston area). I have an incredible amount of respect for him as a most curious, creative, and resourceful entrepreneur. Ric, Yet-Ming Chiang, Chris Shuh and other members of the team are also well known to the entire Lux team. So when Ric called to tell us what he was doing, it didn’t take us long to agree to become his partners.

At Lux we love entrepreneurs like Ric who take on challenging technical problems – and where the reward maybe off the charts in case of success. They are dreamers and crazy enough to believe they can succeed. We are proud to join Ric and the team in this journey to help, support, and cheer. Go team!

Missed the hype part of the cycle?…don’t miss the execution phase!

Surely many of us have seen the famous Gartner Hype Cycle. It is reproduced every year by the IT research and advisory firm Gartner, Inc. We typically see the following version of it shared around which lists emerging technologies along the curve to illustrate what is hot and what is not.

While it is interesting to see if autonomous vehicles are more ‘hyped’ vs NFC technologies or 3D printing, it is important to note that all emerging technologies travel across the curve over a period of time, and above is just a snapshot in time. Every space gets hyped in the beginning, then disappoints (or gets old), and then re-emerges as real products emerge in the markets with customer adoption.

For any particular new emerging technology space, the cycle looks as follows:

Every new technology space (think connected devices, autonomous cars, drones, VR etc) sees a huge uptick in consumer interest when it is first introduced in an easy-to-understand and palatable way, driving hype among consumers (and investors). When the media/press/investor light shines on any new technology space, a few companies tend to really stand out and benefit disproportionately. They get seen as ‘potential leaders’ in the space, visionaries, capable of breaking through the clutter, and emerging as clear category winners. Why they get anointed vs others is complicated. Its likely a combination of being early in the space, having defensible technology, strong teams, great salesmanship by its founders, etc.

These companies that ‘hit the hype cycle’ just right benefit in several ways. With the press and media attention comes a reduction in their cost of capital. They are able to raise more capital at lower prices, are able to hire the best people with that money (as they appear likely to win this new exciting category), are able to do more experiments and get more shots at the goal without as much worry about costs of failure, and are able to attract early partners who are eager to participate in the spotlight.

Unfortunately, many other companies also involved in the same emerging space don’t get to participate in the ‘hype’ part of the cycle. They feel left out of the buzz surround a new space early on. They may not have the media-savvy CEOs and spokespeople, the well-placed investors and partners, or just may be in a geography that is not on the ‘radar’ of those buzzing about the new space. They don’t get the same press, the write-ups, the glorification of their teams and their technology developments, and the low-cost capital that usually follows to allow them to move fast, hire well, and make some mistakes along the way. They (and their investors) wonder how did they end up missing the ‘hype’ cycle? Regardless, the important question is: Are they doomed to fail vs competition?

I don’t think so.

Inevitably the ‘hype’ part of the cycle dies down a bit…The sexy stories start to get old and people start looking for what’s real vs what’s just good story-telling. And then the trough of disillusionment starts to set in which is when companies need to hunker down, start building real products, real solutions, and find real paying customers. This is the execution part of the cycle. And failing here is much more devastating for any company wishing to succeed in a new/emerging space. But if you win here, you win.

Companies that benefit from the ‘hype’ lavished on them benefit from the resources they are able to gather for survival during the tough part of the cycle, but that only goes so far. Let’s not forget some of the baggage they also carry into this phase. These companies sometimes end up raising more money than they need, often at higher-than-sustainable valuations. They have elevated burn-rates as money often tends to burn holes in CEOs’ pockets, and sometimes they get trapped by those hyping them setting unrealistic expectations of them. All of the above can be burdensome for a company when the real challenge becomes making technology work, getting customers to find your solutions worthwhile, and retaining talent as other emerging technologies enter the ‘hype’ part of the cycle. And believe me, any unfortunate ‘down round’ is terrible for morale across the company.

My point is not to say companies that are seen as category winners early on are doomed to fail. Of course they benefit and strong leadership can capitalize on that early success to truly leave their competition behind in the dust…but other companies who struggle to get their voice heard early on still have a second chance - an opportunity to succeed on the basis of focusing on customers, keeping a heads-down attitude towards distractions, and setting internal and external expectations that real victory is only reached by winning customers, revenues and profits. This is the real part of building a business, the real hard part. And you can win at this. Don’t miss the execution phase!

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