Category: Startups

Brands, Advertising, and Relevance

What is a brand? I think the answer to that simple question has changed in complex ways over the past decade. I think a brand is a proxy for a collection of attributes of their products and services. These attributes include quality, competitiveness, uniqueness, and any other property of the product that can be experienced or communicated to potential and current customers. In its simplest form, advertising is communications from the producer of products to potential and current consumers of that products as well as anyone else who may influence that purchase decision.

The nature and flow of such communications used to be largely asymmetric (brand to customer) and non real-time (days/weeks in print media).  As forms of media change in a fundamental way and becomes not only symmetric (Twitter) and real-time (push), but also pervasive/cheaper; the power of brands to hold its customers captive also undergoes a fundamental change. Artisans and guilds producing goods or providing services now have the ability to communicate attributes of their products as effectively as traditional brands. For the set of customers seeking information about attributes of potential products in order to make purchase decisions, communications from established brands will be on par with artisans and guilds.

In this context, two lessons emerge:

1. Online brands with a focus on leveling the information playing field will compete on product attributes… and win where deserving, and

2. The nature of communications becoming symmetric will bring profound change on advertising form and means of delivery.

Online-only brands not only seek to address the inefficiencies in the various manufacturing, logistics, fulfillment, and inventory practices, they also leverage new communication media to level the playing field versus their traditional competition.

Another observation is that screens we use to communicate (smartphones, tablets, connected consumer widgets) will drive advertising to change its form. Mobile advertising in particular needs to evolve beyond the traditional draw-attention (disruptive?) formats of banner ads and interstitial videos towards a straight up communications when/where the consumer wants information. As a trivial example, I may be much more likely to read and perhaps respond to a direct @reply from a relevant producer or a rich, contextual push on a smartphone vs. a banner ad sliding in on the screen.

Determining ‘relevance’ is the key to making such communication be effective and invited and not disruptive. This is where Prismatic and newer startups like Relcy can play a crucial role. They are not merely delivering news and information ‘relevant’ to me, they will one day be the pathways connecting new online brands to me and communicating to me what I don’t want to see as “ads”.

Why Enterprise Matters

At the beginning of this century in year 2000, the average enterprise worker was using technology at least on par with anything else available elsewhere. By 2010, consumer technology had surpassed enterprise technology and products in just about every conceivable way. Google empowered every consumer to access information faster, cheaper while Facebook delivered a worldwide platform capable of handling a Billion users with few tens of milliseconds of latency, composite apps, and capable of ingesting tens of terabytes of new data every day. iPhones, Android, and iPads brought mobility to media, web, and apps while Twitter was on its way to becoming the messagebus of the world. Consumers could store and sync across devices and locations with Dropbox or Box, or stream movies on demand direct to most screens with Netflix. It is clear that 2000-2010 was the decade of consumer computing.

Looking forward to the next ten years, there is increasing excitement about the Enterprise market in silicon valley. I think we have seen waves of innovation form and deliver change in enterprise: the first big wave was the introduction of computing, the second was the Internet, and the third is a combination of cloud, big-data, and mobility. 

There are some clear reasons for this enthusiasm:

First, for about a decade and a half, technology startups have tried to sell solutions that can be broadly classified as either faster, cheaper, or more efficient. Touting ‘lower TCO’ or ‘lower opex’, these products aimed to save money for their customers but never really enabled new products or revenue for their customers. Today, for the first time since the arrival of Internet as a business reality, startups are creating products for the enterprise that enable the enterprise to create new lines of business and new revenue in addition to being faster/cheaper. This is particularly true in Enterprise Infrastructure where consumer platforms have already demonstrated scale, ability, and innovation never seen in enterprise products. Today, there is no reason why the technology stack in use at Twitter or Facebook should not be leveraged for GE or Walmart or the next 5000 enterprise IT operations – not merely to save them money, rather to enable new lines of business and revenue so that they can compete against new online businesses.

Second, software-as-a-service is now the dominant mode of delivery of most new applications for enterprise. While enterprise CIOs are changing over to this service-driven app consumption model, they are also facing a simultaneous change across all their resource layers – Computation, Storage , and Networking. Amazon and to some extent Google have proven you can leverage resources available anywhere (Cloud) across the Internet for your business operations whether you are a startup or the largest enterprise on the planet. This dual change presents most enterprises with perhaps the most complex challenge since the arrival of desktop computers for their workforce.  Solving this challenge will create large and long lasting opportunities for many startups and established vendors (IBM) alike. As if this challenge wasn’t enough, mobility is now a potential standard feature across all applications and requires deep changes to presentation, logic, and database layers. Startups targeting this particular field must remember that the “S” in SDN or SDDC must stand for “service”, not software.

And finally, the ability to manipulate, transform, and store unprecedented amounts of data (Big Data) for enterprise enables them to derive real-time intelligence and actionable information for their customers, partners, and suppliers. This Data-Intelligence segment alone has the potential to create a market as momentous as the Enterprise Software market that began with the founding of Systemanalyse und Programmentwicklung (“System Analysis and Program Development“) in 1972, Software Development Labs in 1977 and Gupta Software in 1984.

Taken together, these innovations promise to deliver productivity gains that will rival those delivered by the first two waves (computing, Internet) in the enterprise.  Such productivity boost, coupled with new business capabilities has the potential to increase revenue and boost profit margins for enterprise customers that can leverage these advances. This is the beginning of a great new enterprise market for startups.

It is time to build the future of enterprise – starting now.

 

Notes for Infrastructure Post

Notes for Infrastructure Investments blog post:

This is a list of points from my notebook over the past year collected over various meetings and conferences.

Mobility

  • Consumer mobile behaviour matters – leading indicator broadly for mobility
  • Think beyond current devices (3-5″ smartphones, 7-11″ tablets) – what devices/screens matter in 2015 ?
  • Pay attention to the rise of infrastructure apps (How mobility connects information silos)
  • Composite Apps matter more vs. individual apps (IFTTT + hardware + ambience awareness)
  • Role of data in mobile architectures (Virtual cell definitions, moving beyond ‘circuit’ connections to a single base station). Multiple radios (WiFi, 4G/LTE, …)
  • Offloading mobile traffic to data-centers vs. core-networks.
  • Mobile is not a “second screen”
  • Think “Interaction” when you think of mobile screens, not “presentation”

Cloud & Control

  • Management & Control frameworks for heterogenous hardware
  • Service-to-service information exchange with policy/compliance
  • Stupid simple ways to deliver app-aware performance (no QoS please), solve by sufficiency/availability of resources, not strict reservation.
  • Cloud-to-cloud resource signaling/advertisement/reservation
  • Software defined networking v1.0 was MPLS (remember Ipsilon), pay more attention to protocols vs. systems/boxes. Global knowledge neither required, nor assumed for optimal/practical TE.
  • Data-center to network boundary+Control matters.

Custom Hardware

  • Software defined hardware (is there any other kind?)
  • Processor controlled modules for specific workloads (across consumer/enterprise/ServiceProvider/DataCenters)
  • Software-defined Networking hardware required: backplanes, Top-of-rack switches, Data-center fabrics, DC-to-DC core networking vs. CO-to-CO (Flows/mobile-traffic/…)
  • IO bottlenecks need to be solved – scale (Users/apps) begets throughput problems.

Data Intelligence

  • New BI stack on Google/Amazon infrastructure vs. specialized warehouses
  • DI stack = presentation/visualization + Infrastructure-smarts (SW, HW) + Federated DI warehouses + DR/HA + flex-scalable db + Caching + …
  • Optimize cost per bit/byte of [store, manipulate, move, serve]
  • Infrastructure apps play a big role here, as does custom hardware (workload specific compute/store/network)
  • 2000-2010 was v0.1 (MapReduce), think Dremel, Cassovary, Spark & Shark,…

 

Infrastructure Opportunities for Startups

Over the past month I have focused on long term opportunities in Infrastructure Investment. The areas of interest to me outlined here are an invitation for founder-conversations for a venture adventure.

A good qualifier I use is “Is this a 10 year market?” – putting this simple question at the beginning of a discussion and gently raising it during founder pitches for their vision has served to separate chaff from meaningful kernels.

Another good filter is ‘enterprise‘ as the end-customer. Even if a startup is selling to intermediaries like service providers, at some point, most infrastructure “solutions” are consumed by, and hence defined-by enterprise customers.

Following this criteria, I find the following four areas highly interesting:

  • Mobility
  • Cloud & Control
  • Custom Hardware
  • Data Intelligence

Mobility

We’re now definitively entering the era of smartphones, tablets, and other screens enabling mobility for just about every experience. Historically treated via ‘gateways’ or addressed by merely reformatting pixels for the mobile screen, mobility is an aspect that is as much about context as it is about the specific features/information selected for display/interaction on a mobile screen.

In a world of touch interfaces, ‘swipe’ gestures, and easy eye-tracking for display control, the nature of information presentation and interaction changes in a fundamental way. Database, partitioning, load-balancing, caching, front-end serving choices, etc are all up for optimization once you factor in mobility. Unless addressed at every layer of the solution, mobility will break more applications than it enhances and deserves to be treated as a fundamental factor in engineering infrastructure for any service/application.

Thinking further, advances in mobile frameworks like Musubi (Mobisocial Group, Stanford) permit serverless app development by leveraging the smarts in any smartphone while honoring user privacy for all personal/social data. Efforts like these have the potential to reinvent mobility for the next decade.

Cloud & Control

I believe the ‘control’ layer for enterprise, data-center, and service provider infrastructure (private, public, hybrid) is up for grabs for the first time in infrastructure history. None of the large technology vendors: Cisco, EMC/Vmware, Citrix, HP, IBM,… have a defensible position or a compelling solution here. More than merely an OS (open) or resource-aware hypervisor, this layer needs to address policy and compliance as much as it needs to deliver service supervision, quality at the right cost and performance across sub-clouds.

As enterprises begin to consume a rapidly increasing set of software services hosted elsewhere, these services will be required to exchange information between themselves. This exchange of information also needs to occur with compliance and following customer policies. At some point, a TIBCO of cloud(s) also needs to exist. The control layer I envision needs to interact with all the constituent parts of a cloud based, cloud-delivered set of services. Nicira and other’s vision of SDNs are early pointers to the kind of protocol work yet to be done to support service-aware traffic engineering goals over data center and core networks.

In physical infrastructure, at some point, a simple and stupid-fast optical layer in the service of flexible IP networks will eventually happen without jurassic interface definitions like OTN. Physical layer innovations that lead to simplicity will scale – and win.

In the end, the cloud is less about technology – it is about providing the right business solution. Yes, innovative (and open) technology is required but in the end, technology is the easiest part of the stack.

Custom Hardware (Workload optimized Computing)

The most meaningful advances in computing, networking, and storage have come from consumer focused webscale companies in the past decade: Yahoo, Google, Amazon, Facebook, Twitter. Most of these innovations will have applications directly in the enterprise world over the next ten years.

Innovations like the low latency, throughput optimized hi1.4xlarge instance announced by AWS and benchmarked by Netflix in July 2012 are now available on demand without spending a dime on custom engineering, maintenance, or revisions. The software (application) layer needs to do precisely nothing to leverage this hardware innovation – it just runs (faster)!

This is the eventual promise of cloud – ideally it should know no bounds and permit a variety of specialized hardware to be utilized without requiring a change in *any* software. We are approaching the end of commodity hardware machines and entering the era of custom (re)configurable hardware subservient to software.

Data Intelligence (DI)

Moving beyond the first generation of large scale data processing tools (GFS, MapReduce, Hadoop, Pig, Hive,…) we’re now entering phase-2 of wringing intelligent insights from Big Data interactively, and in near real time.

BigQuery (Dremel) at Google, Cassovary at Twitter are examples of easy to use (for programmers) services that scale with ease from tens to thousands of servers and return instantaneous results across diverse data sets. The old/conventional paradigm of batch-processing required Business Analysts, the eventual users of these tools, to work with programmers/IT or learn frameworks like SQL, SAS, R,.. in order to run, modify, and redefine queries of interest. While it won’t turn mere mortal Business Analysts in to data scientists, it meaningfully reduces the ‘process’ friction and conventional-IT cooperation required in order to get the desired intelligence out of data.  Suitable only for developers today given their data models and querying languages, the interactive nature of these tools will make it attractive for startups to build data visualization, manipulation, analytics, and reporting tools on top of these magnificent data processing frameworks. The resultant Agility in business processes directly and positively enables business model innovation.

Thank you for reading this far. Some working notes for this post are here.

On Staying Relevant

Over the years I have put away thousands (approx 12,000) of business cards from people I met since I impulsively moved here in 1996. Among the many engineers, marketeers, investors, and press, only a few have stood out. Not for the CxO or MD or GP designations noted on the cards, but for the quality of the individuals that has held over time.

A few days ago in a conversation with a few founders, the discussion turned to AngelList and Naval and how it was changing the landscape of innovation, financing, and startups. To the amusement of others, I recounted the very first time I met Naval.Naval Ravikant & Elad Gil business cards

The top business card you see here is from a meeting with Naval and Milo, both of @home, in 1998 (I think) at KPCB. We had just been funded by Kleiner and MDV and this was one of the meeting our VCs arranged with a portfolio company of theirs. Milo did most of the talking I remember – about their grand plans for taking over the world through high bandwidth cable broadband. A few years later, Naval was in a meeting again with us – this time as a co-founder of Genoa making and selling semiconductor optical amplifiers. His business card had changed but he was passionate about how that device would change the network despite our concerns about Gain/Noise-figure vs. optical fiber amplifiers. Then a few years later, I heard of him again – this time in a Sand Hill boardroom regarding epinions and the legal wrangling.

In 2011-2012, I joined AngelList and yes, Naval is still relevant – perhaps with more impact than ever. As I meet founders enamored with the latest valley exit still fresh in their mind, I encourage them to ask themselves a simple question – Are you relevant in ten years? How do you plan to stay relevant to yourself and to the community around you? If you haven’t thought about that yet, please consider asking yourselves the question.

The other business card in the scan belongs to Elad Gil. I first met him in 2000 when he was a graduate student who had organized (w/ Pavel) the MIT $50K competition and I was honored to be the opening keynote there. Later that night, he spoke of his research, and his interests in multiple areas including devices and networks. The year after, I met him again – this time along with Gokul Rajaram – as representatives of Onetta – a smarter optical amplifier for networks.  And then in 2004, at Google cafeteria where he talked of Google Mobile and how mobility is the eventual frontier for information. Now, after founding Mixer Labs and a few years at Twitter, he is planning on reinventing himself again while continuously giving back to silicon valley.

Yes, a lot of people in the valley and elsewhere have stayed relevant, learnt constantly but very few have also given constantly – Naval and Elad have openly and continuously shared their learning with others around them and made everyone else a little smarter.  Their impact on our valley is not just measured in dollars or exits, it is compounded through their contributions to amplifying the potential of others.

This is my definition of ‘relevance’. It is not just something you do when you’re successful, it is who you are – for others – constantly. I guarantee that whatever technology or market you happen to be working on will change multiple times in your career.  If you learn and help others learn, you will change too – for the better and you will still be relevant in 10, 15, 20 years – to yourself and to those around you.