Blockchain, Tech and Business

Blockchain needs its Netscape

The next step for the massification of blockchain is something that allows anyone to interact with it easily. Netscape Navigator was that something for the PC internet. The iPhone was that something for the mobile internet. There is enough money in the system for it to be developed, although it is unclear if it will take months or years. When it happens it should be easily visible and trigger another crypto run.

Cryptocurrencies have fallen precipitously this year. Still, the Blockchain soldiers on. Enterprise application of Blockchain is spreading. Analyst coverage is expanding. Technology investment and development is growing. Cryptocurrency trading is vibrant. Applications are being created

There is no way for a normal human to interact with the Blockchain beyond speculation

However, there is a large gap in the ecosystem. There is no way for a normal human to interact with the Blockchain beyond speculation. It is challenging even for geeky humans. I am pretty sophisticated and have tried chrome extensions and other options. The passphrases, the clunkiness, the financial risk, the lack of support… it is still too much.

This situation is not new. The internet in 1994 or mobile data in 2007 was exactly the same. Difficult even for geeks, although the potential was obviously there. The internet was solved by HTML(1989), Netscape Navigator (December 1994) and Google (1998). The combination of the three turned “the internet” into “the world wide web”. Mobile data was solved by the iPhone (2007) and the Appstore (2008). It turned “mobile data” into “the smartphone”. The world wide web and the smartphone triggered momentous transformations

When this interface is created we can expect massive adoption and the rise of at scale public Blockchain applications

Blockchain needs an interface that makes it accessible beyond hardcore technologists. When this interface is created we can expect massive adoption and the rise of at scale public Blockchain applications. It can also trigger another cryptocurrency run for the winning chains.

How will the interface work and look? Difficult to say. What is clear based on history is that it needs to be appealing for an early majority audience. It needs to be accessible enough to make a non-techy technology enthusiast interact with the blockchain easily. It also needs to have services available to make the interaction worthwhile.

5-10 billions should be enough to achieve the breakthrough

There have been 5-10 billions of capital poured into Blockchain already. Probably close to 2 billion from VC and more than ~30 billion from ICOs according to (~100 million pre-2017, 6.5 billion in 2017, 21 billion in 2018). The ICO totals are probably very overstated given the 90% drop in crypto values, but we can still place it at somewhere from 3 to 6 billion. This doesn’t even consider enterprise investment which is growing.

That amount of capital should be enough to catalyse the breakthrough the industry needs. It might take months or years, but when it happens it should quickly become obvious to everyone. So watch out and prepare for the ride when the rocket ship takes off again. I am very curious to meet the next Marc Benioff or Steve Jobs (hopefully a woman this time).

Tech and Business, Telco

Predictions 2019

Following the great Fred Wilson from USV, I have tried to put together my 2019 predictions. They cover both the macro and the telco specific. I have tried to be specific so the predictions can be wrong. I am an optimist by nature, but my predictions have a negative tone. I think it will get worse before we wake up and put our act together. My predictions are biased towards tech. Other topics like climate change or biotech are very important but I don’t know enough to predict

Macro predictions

1. Populism continues its run and causes a serious event

3-4 countries will join the swelling populist ranks, electing a populist president or prime minister. Almost all major countries will have at least one populist party or candidate. People are stressed, afraid and distrustful of politicians, and will become more so in 2019. Populism is the natural (if often misguided) human response to stress and uncertainty.

We will have a serious at-scale event triggered by populism in one of the top 10 developed countries. By an event, I mean something that challenges our notion of the liberal cosmopolitan safe world we live in (in the developed world). We have had “virtual” events (e.g. Trump election, Brexit), small events (e.g. two children dying in American custody in immigration, CFO Huawei detention and Canadian detainees as retaliation) and at-scale events in the fringe (e.g. Venezuela collapse, Sirian war and the Russian invasion of Ukraine).

2. The economy, stock markets and trade wobble but make it through 2019

The economy and stock markets will end the year with a mild negative but will have swung quite a bit during the year. Going into significantly more negative territory but rallying back. Trade tensions and structural imbalances continue to be there but are not capable of causing a collapse. The trade situation between the US and China and more globally deteriorates slightly but doesn’t flare up radically

3. Big Techs start to receive the monetary penalties of popular distrust

The hate and fear towards the large tech firms from the US and China continue to increase across the world. It now moves from inquiries and protestations to real-world economic consequences. Most probably taxes, but also restrictions, fines and regulation. Popular distrust will also start to weigh on Big Tech employees.

4. Blockchain finds its Netscape Navigator, but cryptocurrencies are flat

Blockchain finds its application that makes it accessible to the public. Much like Netscape Navigator brought the internet to non-geeks, Blockchain requires a similar open democratizer. It will appear and start to gain traction in 2019. However, it will not be clear enough to create another crypto-craze in 2019 (wait until 2020 for that). What it will be I can’t imagine, but enough money and talent have flowed in for it to happen. The enterprise blockchain world will continue advancing slowly but surely.

5. AI and digitalization continue their march, Luddites strike

AI and digitalization will continue to take over parcels of the economy, silently but surely. We will see how new jobs that weren’t potentially automatable could be automated. At the same time, the real work of automation in businesses and organizations will continue pressuring middle-class incomes. We will see angry violent action against AI-enabled labor-saving devices, most probably against autonomous cars/Uber. Some visible organization will claim the Luddite name with pride.

Telco predictions

6. The heir to the smartphone won’t appear in 2019

We won’t see the next interface appear at scale yet. Mixed reality, voice-assistants and other candidates will continue to improve and amaze. However, no Steve Jobs will imagine the vehicle of their mass adoption yet, mainly because technology is still not ready. Smartphones will become more powerful and more commoditized. Folding devices will go the way of the 3D TV.

7. 5G be much ado about nothing in 2019

Without a device to really use its capabilities, 5G will be little more than 4G+. This won’t stop vendors, governments, pundits and telcos that have launched it from extolling its virtues. Adoption data and economic consequences will still not prove or disprove the investments of early adopters like Verizon, the Koreans or Telstra. 4.5/4.9G and fiber deployment will provide most of the real improvements in connectivity in 2019.

8. Regulators and governments will consider telcos as local tech champions

Populist and nationalist governments will realize that telcos are among the biggest tech companies in their countries, and the only ones really under some measure of control. Governments and regulators will start to support telcos as “national tech champions”. Allowing greater leeway in terms of consolidation and commercials, but at the same time requiring a stronger contribution to the national tech strategy. In this, they will follow what has already happened in the US with net neutrality and 5G.

9. AI, Digitization, virtualization and legacy switch-offs will accelerate.

Technology will continue to transform the way telcos operate, reducing costs and improving customer service. Real spend savings will combine with customer experience improvements to create an increasing space for differentiation for those that are able to execute. This will not come out of a single technology, but rather the implementation of hundreds of small transformations that will improve operations. Simplicity will be mandatory, so telcos will accelerate legacy switch-offs in terms of network (e.g. copper, 2G, 3G, transport) and IT stacks.

10. The sector will continue to do better in the stock markets

The opportunities and defensive qualities of the sector in a time of uncertainty will make the sector increasingly attractive. However, stock market and geographical volatility will also impact it during the year.

Tech and Business, Telco

Embedded Connectivity: The next wave of telco growth

Telcos have transformed their business once every decade since the 80s: fixed voice, mobile voice, fixed data, mobile data. Fixed and mobile data for homes, offices and individuals will continue to be required in ever greater quantity, but will be difficult to monetize further (see Connectivity Explosion). The next wave for the 2020s seems embedded connectivity for everything. Embedded connectivity holds substantial promise but requires a rethink of many traditional telco orthodoxies.

A sector in continuous revolution over half a century

Telco might be a 100-year old sector but Moore’s law has allowed a continuous transformation of the products it offers during the last four decades:

  • The 80s were the last decade fully devoted to fixed voice in the home and the business premises. It was also a decade of transformation, with voice lines being fully automated and digitalized, finally eliminating human operators in calls. I am old enough to have seen some of the last human operators routing calls in a small village of northern Spain when I was a young boy.
  • The 90s were the decade of mobile voice for the individual. First in the car and briefcase, moving gradually to pockets. While early analog systems launched in the 1980s (1979 was NTT in Japan, the earliest system), it was only the decade of the 1990s with 2G that really saw the explosion of mobile phones. Deploying mobile telephony at scale was a huge undertaking which required creating new companies, often owned by the former fixed monopolies but independent from them.
  • The 2000s saw the resurgence of fixed, through fixed data for internet connections. In the late 90s no one expected fixed and cable players to be able to capture much value from the internet revolution. Up to 2001 ISPs like America Online or mobile players with 3G seemed to be a much more attractive investment. However, the open internet based on a standard TCP/IP and HTML broke down walled gardens and was powered into broadband by ADSL and cable (DOCSIS). This gave back value to fixed operators who gradually transformed their business from voice to data, and over the next decade from copper to fiber
  • The 2010s saw the promise of mobile data finally materialize through the smartphone. The mobile data promise of 3G didn’t materialize, except in Japan where i-Mode created a walled mobile internet one decade ahead of the rest of the world. This lead to a crisis for mobile players in the 2000s, with voice penetration already saturating which was somewhat alleviated by SMS and blackberries. It was only in 2008 when Steve Jobs and his iPhone saved the industry and provided a way to leverage mobile data fully. The smartphone came to its own with the deployment of 4G and created a mobile internet which has quickly overtaken the fixed one in time spent. It is dominated by the two smartphone OS duopolists, Apple and Google, who have created a “semiwalled garden”

All these developments were always unexpected and full of uncertainty. Today they might look like sure things, but at the time they were uncertain strategic bets. Mobile telephony was a niche proposition. According to a mythical consulting study mobile phones had a ceiling of 3 million subscribers globally (they got it at least three orders of magnitude wrong). Fixed data came out of the internet, something that seemed reserved for tech geeks in the 1990s and only came to the fore in the internet boom. Even in the internet boom it was ISPs and browsers that where expected to capture most of the value, not telcos. Mobile data took a decade longer than expected in coming, and was created almost singlehandedly by an industry outsider with an iconic device that a decade later has created the first trillion dollar company.

The candidates for the next wave

There are many candidates for the “Next Big Thing” beyond the smartphone in terms of the next user interface: Augmented Reality, Virtual Reality, Artificial Intelligence, Blockchain… As covered in Connectivity Explosion all these technologies will indeed require exponentially more connectivity with significantly enhanced performance, which telco technology is perfectly ready to provide.

However, as we are already seeing over the last five years, regulation and the ultra competition it engenders will not allow to capture increasing revenues in the individual mobile connection or the home/office fixed connection. Users will get increasingly better performance that will cover the needs for these “Next Big Things” at similar prices. The telco sector will continue to provide its 99,5% price-performance discount as it has done decade after decade (only semiconductors and hardware have managed a similar feat). This will slightly shrink the weight of communications on household expenditure and business expenditure, as traditional connectivity revenues grow slower than GDP.

The next wave will take us beyond individual and home connections, to connect everything else in the world. This phase has been called “Internet of Things” or “Internet of Everything”, embedded connectivity seems more precise. It has to do with embedding connectivity in everything in the physical world, so intelligence and interactivity expands from digital to physical. This explosion has the potential to be as transformative and significant as fixed data or mobile data.

The 2020s and embedded connectivity

This new wave of embedded connectivity has already started haltingly with M2M and IoT. However, it is not growing at a pace at which it looks poised to transform the industry yet. It is like fixed data before the internet craze really got on, or mobile data before the iPhone. Something that looks like an attractive niche rather than a transformative wave of growth. Telco valuations are suffering from this, as the previous waves of growth have already saturated and the new one is not ready to take off.

Embedded connectivity also seems to require a rethinking of the model at several levels. First, connections will be numbered in the billions and trillions, so current ARPU levels are completely out of questions, we need to move from “connection scarcity” to “connection abundance”. Moreover, it is just too complex for the customer to pay a monthly fee for each object, so we can expect one-offs that are embedded in the initial purchase price or in a subscription related to other services. Finally, customers don’t want connectivity, they want intelligence, so connectivity will become a component in a larger value proposition sold by another business to a third party, an “Intel Inside” B2B2X model.

The last part of the 2010s is proving a very tough period for telcos, as the new wave still needs to take off. As usual, financial markets can not see beyond what is already in the P&L and this has lead to extremely low valuations, similar to fixed assets before the ADSL boom. We can expect the cycle to reverse as embedded connectivity kicks into high gear during the 2020s, but it is difficult to forecast if we will have a specific event that triggers the change (like the iPhone or the internet boom) or if we will see a steady growth beyond all previous expectations (like with mobile voice in the 90s).

Tech and Business, Telco

Connectivity Explosion

After two decades of increasing use connectivity continues to explode for the home/office, for the individual, and now for inanimate objects. New technologies being deployed like AR/VR, AI, cloud, Blockchain and IoT only promise increased connectivity needs and requirements. 5G, Fiber, Edge Computing and softwarization present a clear path to fulfilling these exploding needs over the next decade. Prepare for a world in which everything is connected at ultra-high bandwidth, securily, automagically and with ultra low latency: it will have its advantages, but we will also have to fight Orwellian nightmares.

Connectivity continues to explode

It has been already almost two decades since the internet boom and bust. Quaint 48kbps and 56kbps modems that loaded the initial text versions of Yahoo! have been replaced by homes connected at hundreds of megabits per second (x10.000 from 1997) and smartphones routinely reaching tens of megabits (x1.000). Load times of minutes have given way to trying to reduce hundreds of milliseconds of a web page or app load. Progress has been staggering and cost has plummeted. The cost per Mbps for consumers is at least 99,98% lower in an internet connection comparing the late nineties with today.

We can expect this explosion to continue. All projections of connectivity use point towards continued exponential growth. Taking Cisco for the 2016-2021 period, it is projecting a tripling of internet data, at least a doubling of speeds, more than three connections per capita and close to two thirds of the world connected.

We can imagine this predictions being fulfilled just with streaming video and file sharing. However, customer needs will go even forward. New emerging technologies have increased needs and requirements for connectivity:

  • VR/AR represents an order of magnitude increase in content size compared with video, and it has interactivity making connectivity make or break. The amount of data that needs to be send bidirectionally for AR and VR will strain even today’s connections. And latency will need to be reduced below 100ms to avoid degraded user experience and motion sickness.
  • AI requires great quantities of data, including live video and audio feeds as well as huge datasets to be effective. Integrating AI seamlessly in customers lives also requires extremely low latency so the lag between command and response is not perceptible. Connectivity and data security becomes critical in a context in which we are continuously monitored and commands can control the real world.
  • Cloud is increasingly distributing computing and storage, requiring connectivity to tie it back together in a way in which the distributed nature of the system is invisible to both human and machines. Connectivity needs and requirements (i.e. latency, security) to make apparently simple tasks, like editing a document remotely, work seamlessly are still significantly greater than what we have today.
  • Blockchain’s key problem at this point is scalability, and scalability has to do with network performance. A blockchain is a distributed system and as such requires the network to make it work effectively. To run our most critical trust infrastructure on the blockchain would require extreme bandwidths together with low latency and first rate security.
  • Finally, IoT, the connection of all things to the internet, is itself a tremendous connectivity challenge. Not so much in terms of bandwidth, but in terms of latency, power consumption, architectures that allow millions of connected things, and the security to protect us from cybercriminals.

Overall, the connectivity explosion for the next decade will not only mean much greater speeds and capacities, but will also provide lower latency, lower power consumption, greater security, and greater scalability in number of connections.

Telco technology is ready for the challenge

Given this extreme wave of connectivity needs coming, is telco technology ready to cope with them? The answer is a clear yes. The industry has pulled together to create technologies and standards with significant runway in terms of performance and flexibility to meet the challenge.

Fiber will underpin all connectivity. While it hasn’t been widely appreciated yet, fiber deployments taking place across the world are equivalent to the paved roads that allowed our automobile-based economy. We are moving from copper, equivalent to earth roads, to fiber, equivalent to paved roads, and we are doing it quickly and efficiently. Some countries like Japan, Korea or Spain are almost finished in their transition. Fiber infrastructure has the potential to take us very far, with GPON technology already capable of several orders of magnitude of improvement of our average speeds with negligible latency and much lower power consumption and line faults.

5G is built on fiber and softwarization. 5G is the latest industry buzzword and it represents the next standard for mobile communications. This standard is already built with fiber and softwarization in mind. Beyond gigabit speeds we can expect 5G to deliver millisecond latency, much greater flexibility in network architecture, and another level of security through network slicing. While speed and latency in 5G will be evolutionary with 4G, 4,5G and 4,9G, its architectural flexibility and the security provided by network slicing provide a paradigm jump similar to fiber.

Edge computing will optimize latency, bandwidth and data security. Increasing bandwidth, reducing latency and improving security and privacy in the last mile access with fiber and 5G won’t be enough for many applications. The datacenter needs to be closer to the customer, both for performance and data security. Fiber, softwarization and improved datacenter technology is making it possible to deploy “mini-datacenters” in telecom infrastructure or even at the customer’s home or office to make this real.

Softwarization will make the network liquid. Finally, the telco network is being digitized, with specialized hardware losing importance to edge computing and network software. Once the network is softwarized it becomes much more flexible, as happens in all transition from atoms to bits. This is the silent transformation that makes all the other technologies so powerful.

In summary, technology is ready. The only risk some countries might face is making the deployments economically unfeasible through regulation. A natural monopoly like telecommunications needs and benefits from regulation. However, some regulators, especially in the EU, have shortsightedly prioritized short term consumer price reduction (making the 99,98% cost per Mbps reduction a 99,985% reduction) vs. industrial policy for innovation and creation of the infrastructure for the long term economic growth and leadership. The EU hasn’t created any of the Big Techs, has almost managed to destroy its technological lead in mobile with Nokia overthrown in handsets, and the equipment providers are under siege from China and Korea’s much more long term focused industrial policy.

How will the next wave of connectivity change your life and your business?

Picture a world in which connectivity is so ubiquitous, powerful and secure that it can basically transfer all information (including live 360 video) instantly. Private secure connections can be created and decommissioned in milliseconds, completely through software. Processing and storage capacity in the edge allows to perform most computation and storage really close to where the information is being generated, without having to surrender ownership of the data.

A physical store might have even greater data granularity than ecommerce, understanding and analyzing continuous video feeds without compromising user privacy. A doctor might be able to experience a patient fully even if she is hundreds of kilometers away and call on a specialist for support if needed, without sensitive health data being in danger. A teacher might be able to take students into an immersive trip into whatever is being studied, with students attending physically or virtually and having real-time personalization adequate to their level of understanding. This is only some of what we can imagine now, but as the internet and the smartphone revolutions showed our current imagination is a poor guide to what could happen.

Of course, there are also dystopian scenarios already being deployed and many others that can be imagined. China’s social credit system with complete monitoring and censorship of citizen’s actions in the digital and physical world will only be further empowered through the new wave of connectivity. This kind of 1984-like monitoring is in conflict with western values like privacy and freedom. And we shouldn’t only fear state actors, the last months have put companies like Facebook or Google on the spotlight for similar reasons.

So prepare to take advantage of the instant ubiquitous connectivity, but also prepare to fight against whatever intrusions it starts to allow on our hard won rights. As Bill Gates famously said: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

Tech and Business

A New TMT Hypersector

During the first internet boom, 20 years ago, there was ample talk about the convergence of Telco, Media and Technology (TMT). Now, the last months have completed this convergence, creating an scenario that would have been difficult to imagine back then.

First, eight new technology giants have emerged, threatening to take over the world. They started in Digital Advertising (Google, Facebook, Tencent, Baidu), Digital Commerce(Amazon and Alibaba), or managed to transform their way from traditional PC software and hardware (Microsoft and Apple). Now those eight companies have grown into unstoppable behemoths that dominate the top 10 most valuable company list and are worth over 3 Trillion dollars. They have expanded to take over adjacent industries like media and IT infrastructure, they took control of the smartphone age, they buy up companies that threaten their dominance and they are betting hard on AI as the new paradigm to continue their dominance.

Media has finally, and painfully, converged with Telco and Technology. Print media was decimated and has mostly moved to digital, with even the largest properties struggling to hold their relevance. Pay TV is progressively integrating into telco (Liberty into Vodafone, Direct TV into ATT) or content (Sky in Fox). New content majors have emerged, Netflix already more valuable than any other media company and Disney completing its transition to a full range media giant. Traditional majors are being bought up by telco (Universal by Comcast, Warner by AT&T), tech players (Columbia by Sony), with Fox up for grabs between Comcast and Disney, and Viacom embroiled in a corporate dispute about its future.

IT infrastructure and hardware is being taken over by cloud, which has been taken over by Amazon, Microsoft, Google and Alibaba. This is putting great pressure on traditional blue chips like IBM or HP, which could be quietly moving to irrelevance. Only the technology giants seem to have the scale, skill and daring to conquer this new world. The cloud dominance of only a few companies could eventually have knock-on effects on other industries like hardware or chips.

Business Software is in full transformation with the traditional players (SAP and Oracle) having been able to buy their way into the new world world of Software as a Service. The price they have paid is to dilute their shareholders by buying innovation, in a similar way to pharma companies, and to admit three new players into their oligopoly. Salesforce, Microsoft and Adobe, have improved their position and now have joined SAP and Oracle as key providers to many large and small companies. Beyond the new Big 5, there has been an amazing explosion of innovation with tens of thousands of SaaS companies creating new software, which is only comparable to biotech innovation in the pharma sector.

Telco keeps its place in the world as the gateway to the new connected world. A couple of years ago, connectivity seemed under fire, with Google Fiber or Facebook Aquila apparently focused on eliminating telcos from the equation. However, the Big Techs realized that telco was about perspiration and territoriality, while they are about inspiration and global scale. In consequence, they have abandoned their connectivity projects and moved to work with the telcos (e.g. Facebook with TIP and Google with RCS).

Device manufacturers lost their position and a new set regained it again. The pre-smartphone ecosystem was almost completely wiped out, with Apple and Samsung becoming the only profitable games in town. Only recently, did the Chinese players (Huawei, Xiaomi, 1plus1,…) manage to recreate a competitive ecosystem on the Android part of the equation.

Internet services have been captured mostly by the Big Techs, either directly or through acquisitions, and some independent unicorns. Messaging and communication with Whatsapp and Skype. Social networks with Facebook, Linkedin and the new wave (e.g. Instagram, Snapchat). Only some specific verticals like transport (e.g. Uber, Lyft) or lodging (e.g. AirBnB) have been large and independent enough to create their own ecosystems

The new TMT Hypersector is very different from what could have been expected 20 years ago in the eve of the dotcom boom and crash, or even 10 years ago at the start of the smartphone revolution. We can only guess how the next ten years will evolve for each of the subdomains and for the dominance and balance of power among players.

integrated reality, Tech and Business

Facebook’s F8: VR First

Facebook’s developer conference F8 gives great information on what the company is proud about and what are its priorities. This year two highlights stand out: its commitment to creating an iPhone moment in VR and its deep acknowledgement and willingness to tackle its social responsibility after Cambridge Analytica. While the mea culpa and resource shift to safety and privacy has been much talked about, the VR First mantra in Facebook is still underappreciated.

VR’s potential iPhone moment

Time has given the unveiling of the iPhone mythical status. Mobile internet had been severely hyped with the launch of 3G in the early 2000s, but usage had never lived up to expectations. Mobile browsing was only happening in Japan through iMode, while even the most advanced “smartphone” models from Nokia were driving very limited use. Steve Jobs managed to take mobile data across the usage chasm with the iPhone, creating a new dominant interface for the Internet over the last ten years and more than three quarters of a trillion in value for Apple shareholders (from less than $100 billion in 2018 to close to $900 billion).

VR is in a similar place to mobile data pre-iPhone. It has been severely hyped, many players have been putting out headsets but nothing is catching on. VR and AR are still stuck in the wrong side of the innovation chasm, with only techies and geeks using it. Many in the tech industry have acknowledged the new VR/AR winter and downplayed their ambitions. However, Facebook continues to push on all cylinders.

Maybe dating or watch party for Facebook, Group video for Instagram and Whatsapp, or instant translation for Messenger might have been more flashy announcements. However, VR/AR is the area in which Facebook’s commitment and investment is clearer across the board. Its Oculus Go $200 headset could be a game-changer. Its Rooms, TV and Venues are also creating new social use cases for VR that could go viral. Beyond that, Facebook is working to overcome one by one all of the problems VR still has. Overall it seems Facebook is fully committed to VR and it will doggedly pursue creating the “iPhone” of VR through Oculus and seeding the “VR Appstore” with content through its other properties.

It still has not been made explicit, but Facebook has a “VR-first” smell to it which is different from the other Big Techs, which are all following a Cloud/AI first strategy. Its other two long term strategic priorities, AI and Connectivity, seem to be important enabling elements, while VR/AR is the one that will “bring people closer together”. Facebook has unique capabilities that could make it successful: technical capability, consumer sensibility, user experience focus and a depth of VR/AR capabilities in its Oculus unit which is unrivaled by the other Big Techs.

Facebook had a near-death experience with mobile which has led it to try to define its own destiny in the next interface transition. Mobile seems to be reaching maturity, and smartphones are increasingly banal in their differentiation focusing on increasing megapixels and number of cameras. VR/AR could be a transformative interface that leads to a new wave of deeper person-machine integration. If Facebook manages to pull off its VR iPhone moment we could see it skyrocket from the smallest of the Big Techs to a dominant force. We can expect Zuckerberg to do it in his own terms, Jobs was the paranoid perfectionist that wanted to surprise the world in a big event, Zuckerberg seems more the relentless engineer who gets there in sprints by “moving fast and breaking things”. So Facebook “VR iPhone moment” might look more like a continuous improvement curve, rather than a big announcement. However, if the VR interface vision is realized the change and opportunities created will be at least equivalent to that of the momentous iPhone presentation.

SaaS, Tech and Business

10 expensive lessons from the startup world

In my experience as an investor, entrepreneur and startup advisor I have learned a number of lessons. They are fully aligned with the advice you get from startup and VC gurus, but at least for me, it takes a bit of pain in my wallet and my pride for the lessons to really sink in. I hope I can make it slightly cheaper and less painful for others, or even to prevent them from making at least one or two mistakes.


Startups are a wonderfully invigorating experience. I have been a full-time operator in two, have advised extensively five, have invested in over 10, and have seen countless examples. I find startups incredibly inspiring as a professional experience and startup people a lot of fun and learning to be around. You get to do almost everything in each function, you are creating something from scratch so you can move fast, without bureaucracy. You are inventing so you need to creatively design an experience for a customer. It is really a great package that is a lot of fun.

At the same time startups usually imply a significant short-term opportunity cost as most of the equivalent compensation is equity. And they can be very stressful, there is never enough time to do everything, and you experience a very quick succession of highs and lows. With the highs being very high, but the lows being really low.

In the last years, I have read a lot of stuff about startups. When I did my first one in the internet boom there was almost nothing, not even the term or the glamour. Now, you have great textbooks on how to do things and what pitfalls to avoid. Still, making a startup work is really difficult as a lot of moving parts have to fit and work out.

I have distilled the top 10 mistakes I have made myself or seen made. Nothing new but even if it helps just one person avoid a mistake well worth the time writing. They are mostly relevant to B2B tech plays, especially SaaS, which is what I am familiar with, but they probably translate to other domains too.

  1. Tech is king. A tech startup has tech in the name for a reason. It depends heavily on digital technology and as such tech talent is the key competitive advantage it has. Forget about the glitzy business plan, the domain expert, and the ex-consultant. Tech founders and tech talent are priority number one. Tech talent will determine your speed to iterate and your value for a potential exit. Tech giants like Facebook mainly buy and look for engineers, the rest is overhead.
  2. Pain-killer. Of course, many startups with outstanding tech founders fail. For the most part, this is because they build things no one wants or just “vitamins” that will make life better but are not absolutely necessary. Startups need to offer pain-killers for a big bleeding wound that someone has. Alternatively, they need to pander to one of the seven deadly sins as Linked In founder has famously said. If people don’t scream for your product you probably are onto a “nice-to-have”. That is going to take too long to sell to survive, even with people telling you that they should be using it.
  3. CEO Sales leadership. The CEO is, among many other things, the salesperson-in-chief and evangelist of the company. A CEO that doesn’t go out to sell will have trouble finding traction. This is especially difficult for technical founders that sometimes are not used to sell and communicate. Of course, selling only means in-person selling for some products, but the CEO will always need to be close to the customers to listen to what they really need. A CEO that isn’t always selling their product (in their own unique way) is a big red flag.
  4. Customer personas and budget. This is very much B2B, you need to know whom you are selling to and the budget line item you want to be part of. It might take time to discover, but it is inescapable. Only people with budgets buy products, and people have job titles and worries that come with them. Even if you are selling to a small business owner that determines budget autonomously you will have to fit in some of her mental categories.
  5. Long-term commitment and passion. The stories you hear about startups in newspapers are about quick fame and riches. The stories you hear from entrepreneurs are about 7 to 10 years of hard work and overcoming disappointment. Your only chance to slog through those hard years with a steadily increasing opportunity cost is if you are really passionate about your goal. So take this as an at minimum 5-year (realistically 7+) decision and make sure you are so passionate about the topic that you will be happy even saying “at least we tried” at the end.
  6. Founder alignment and culture creation. Being co-founders is like a marriage, but seeing each other all the time and having grown-up kids that you have to motivate to work for much less than they could be making someplace else. You need to be totally aligned from the start and keep that alignment over time. Don’t paper over disagreements rather tackle them head on, get your prenuptial agreement (aka shareholders agreement), and make sure you agree on which culture you want to build.
  7. Anti-goldilocks talent. Talent in startups is tough. You have infinite work so you would want the best talent, however, you always have insufficient money so you always want the cheapest talent. As the CEO of Blackline said in the last SaaStr you have to choose two of cheap, talented and not crazy, and you can’t afford anything but cheap and talented. The consistent advice I have heard is to go towards three extreme profiles: (1) a few absolute stars that have done it before, as they will drive incredible impact and leverage on others even if they are expensive, (2) many cheap, enthusiastic and hopefully talented very young talent that hasn’t much experience but wants to learn, and (3) talented people who are quirky enough that they find it difficult to work in large corporations. Avoid someone that is reasonably cheap, talented and sane, you want to go to the extremes, goldilocks talent is better for corporates.
  8. Funding. You need money for everything. Even if the amount is much less than ten years ago you won’t able to build the product, sell to customers or deliver them the promise without money. If you are short on money you will spend all your time worrying about it and solving the problems it causes. Of course, funding doesn’t mean VC funding. You can have customers fund your startup and bootstrap it successfully even if it takes a bit longer. Just avoid being unrealistic about being able to do stuff without money, or hoping that a round of funding will materialize from thin air. Money is your gas and you will get nowhere with your tank empty.
  9. Data and analytics. Product, Technology and Sales have been the traditional pillars of startup success. Now Data is claiming its place in the table. Analytics will allow you to create much better product much faster and to sell a lot more much more profitably. Who is your analytics founder? You need one, so get it from the start.
  10. Family sport. On a more personal level, you can’t get into this alone. Your family and your friends have to be your support group. You won’t be able to talk or think about anything else, you will work 24×7 (even if you can do it from home), you will only be making money at the end of the rainbow, you will have at least a couple of horrible downs per month, odds are against you. Have you told your loved ones what they are getting into? Have they bought the ticket? You’ll need your loved ones to get you through the bad times and support you in your probable failure so make sure they have your back.

This doesn’t intend to discourage anyone. The list of obstacles is long, but the fun and professional and personal growth for trying is amazing, even if you don’t get the pot of gold. Just be aware of what it requires to have a chance and what sacrifices you will have to make. Newspapers, LinkedIn, Twitter and business books only talk about the exceptionally good cases because that is what people like to see. You will experience the full distribution of potential outcomes and need to be ok with them, even if the end you manage to get to the pot of gold through hard work, talent and luck.