Sunday, July 27, 2014

Silicon

Larry Ellison on stage.
Larry Ellison on stage. (Photo credit: Wikipedia)
The number one destination for tech startups on the planet today is San Francisco. No, it is not Silicon Valley which continues to be home to the top tech companies in the world like Google, Apple and Facebook. Why did the center of gravity shift? Because the engineers wanted the city lifestyle. Most engineers who work for companies like Google in Silicon Valley tend to live in San Francisco.

Guess which city really has the city lifestyle? New York.

Boston used to be number two after Silicon Valley. Not any more. New York City has wrested that number two spot. Although Boston continues to be strong. Austin and Seattle are also strong spots.

But the Silicon Valley ecosystem is to be envied. One generation of successful entrepreneurs invest their money and wisdom into the next generation of entrepreneurs. That cycle goes on. You have to have several generations of successful companies to end up with the ecosystem that Silicon Valley has.

London and Berlin are also coming along. Bangalore in India has a decently rich density of developers. Chile has experimented with replicating the Silicon Valley thing. Israel has a vibrant tech ecosystem.

Geography matters less and less. India’s answer to Amazon - Flipkart - just raised a billion dollars. They are not in the Valley, or even in the US.

In New York City the primary tech action is in the Flatiron District. There is also a pocket in Dumbo. But Long Island City also has potential, I think. When Cornell establishes its tech campus on Roosevelt Island (New York City’s own “Stanford”) LIC will be a major attraction. Rent is substantially cheaper just because you crossed the river.

Culture is supreme. Silicon Valley’s strongest point might be that failure is celebrated there. Risk taking is probably the top quality in an entrepreneur. Failing is an essential part of the process. If you did not fail, that means you did not try, you did not take the plunge.

The big venture capitalists in the Valley raise their big money in New York City because this is where the pension funds and the like are.

FourSquare, one of the most celebrated tech startup stories to come out of NYC, has an office in San Francisco because they can’t afford not to hire some of the talented developers there who don’t want to live anywhere else. On the other hand, by now Google has a major presence in New York City. They just so happen to own the largest building in the city. It is because Google makes its money from ads. And guess where Madison Avenue is! But it is beyond that. Google has a major engineering presence in the city, as does Facebook, as does Twitter.

Silicon Valley is an attitude, it is a culture. It is about moonshots, as Larry Page might put it.

I routinely go to numerous tech events in the city. If someone makes the mistake of showing up in a suit, he immediately gets labeled a “suit.” I think there is something to be said of casual clothing, but you can not capture the essence of Silicon Valley in jeans or in a hoodie. Larry Ellison, probably the most colorful character to emerge in the Valley, has been wearing suits forever, that is his way of giving the finger to those who wear the casual stuff like they were uniform. You wear what you are comfortable wearing. That could be jeans and a turtleneck, the Steve Jobs way, or a suit as worn by his best friend Larry Ellison.

Software is eating the world, Marc Andreessen, the father of the Netscape browser that launched the web era, famously said in a Wall Street Journal article. There is so much still left to do that I expect the feast to go on for decades and longer. That is my way of saying one Silicon Valley is not enough, if it ever was. My answer to the famous question if Silicon Valley can be replicated is, yes it can be replicated. New York City is as good a place as any to build a tech startup.

Angel investing is a major aspect of a successful tech ecosystem. You seek some basic funding from friends and family. You need a basic prototype to be able to take a stab from the professional angel investors. And then there is crowdfunding. I see that as a majorly positive trend.

I think doing well as an entrepreneur in the New York City environment is a necessary precondition to being able to contribute to Nepal’s economic revolution. Brain drain is a pre-Internet, pre-globalization term. Today the work is so much more interlinked that you can be many places and contribute many places. There are global solutions to many local problems in Nepal.

Sunday, July 20, 2014

The Pinterest Story

English: Red Pinterest logo
English: Red Pinterest logo (Photo credit: Wikipedia)
Pinterest came out of nowhere to overtake Twitter at a record speed. It became the fastest growing website in history. And to think it was founded by a non techie, that it was rejected by pretty much every venture capitalist in Silicon Valley, that it had a slow start, that its earliest users were in Iowa (Iowa?), that it is what it is today.

Silbermann got a job in Washington DC as a consultant. He was basically putting together spreadsheets. His girlfriend tired of his talking about wanting to do a tech startup. Finally she said, either we move to Silicon Valley, and you do it, or you stop talking about it. I will support you, she said. So they moved. Not only she gave the big nudge, but also the big idea. The image centered website was her idea. The pinboard was her idea.

But it was no easy take off. Silbermann claimed he had the WiFi password to pretty much every cafe in the Valley. He had approached every known VC around there. It was tough. Today Pinterest feels so obvious. It has the feeling of having hit the bull’s eye.

Early on the company was using an apartment because it could not afford office space. At one point Silbermann tried to sell off the company at what would today be considered a weirdly low price. But he failed to sell.

After launch, he reached out to every friend he had in the Valley hoping they would become avid users, but noone seemed to “get it.” He had to make do with his early users in Iowa. For nine months the user base was really, really low. He personally wrote to his first 5,000 users.

But those using the site were really, really engaged. That deep engagement was a good sign. Also, although the user base early on was small, it seemed to double every month. That is why there was a spike after nine months.

After Pinterest had already established itself as a successful company, Silbermann said if he were to now apply to work at the company, he probably would not be hired. That was a modest thing to say. But maybe not. Maybe he had a point. Hire people smarter than you is a mantra many successful tech entrepreneurs seem to follow.

Pinterest by now is the stuff of legend. Its success is a reward to out of the box thinking. But you also have to note, Silbermann did not invent the pinboard. He simply took it to the web. All old industries similarly are waiting virtualization. Looked at that way, it feels like recycling, rather than a bolt of genius. But the success is there for all to see.

I am a Third World Guy. A million dollars is a lot of money to me, but a billion is more. Pinterest hit billions in valuation right before my eyes. For that matter, I met the two FourSquare founders before they had raised any money. FourSquare has also approached a billion dollars in valuation. It feels to me like it happened right before my eyes. I met another early stage team a few years ago that sold for $29 million last year. It feels like it happened fast.

The web is the wild, wild west today. Software will keep eating the world, to echo the Netscape founder. There are enormous inefficiencies everywhere you look around. There is so much work to do.

Pinterest also made a major blind spot spotting in that the site was an early success among women. There was something about the image focus, and pinboarding that a lot of women seemed to have found really appealing.

I have to admit, I have still not learned to use Pinterest. I mean, I have had an account for a while. But it is more like a flag holder. I have still not figured out how to make Pinterest part of my daily life, like Twitter is. I guess it takes some practice. Maybe there are blog posts out there I need to read on how to make the best use of Pinterest.

Some women have called Pinterest their Google. It is how they find stuff on the web. Pinterest has been sending more traffic to a ton of websites than Facebook. It is a search engine to a lot of people, apparently. That is as good as it gets on the web.

Did you google it? Did you pin it? Both those questions are grammatically correct.