Bump Billboard in SF: Explained!

So every day on my way to SF i see the billboard promoting Bump. Their 80 million user number is quite compelling but the graph always confused me. I figured it was just standard 'clip art' and wondered why they'd show a choppy curve - ie if this is supposed to be a user graph (as it suggests) what are those dips - why were there periods of inactivity. It seemed like a poor graphic choice.

However founder/CEO David Lieb helpfully let me know via Jig that he believes in fact it's drawn from real Bump data.


via David: "it's actually real data in the graph. number of items shared via Bump per week I think."


So the question has been answered! And all I'm left wondering is why they used "number of items shared per week" instead of total users to depict their growth cleanly.

Crowdfunding Becomes Crowdbuying: Why Kickstarter Will Power the Maker Economy

You probably know Kickstarter as a crowdfunding tool built by a New York-based startup. Members can list creative projects in areas such as publishing, technology, film, and then gather funding from the masses, in amounts as small a dollar up to commitments of thousands. Last year the Kickstarter community pledged $150 million, which makes them a considerable tool to bring your idea to life. I've sponsored several myself, for example, one focused on photographic Mexican Lucha Libre wrestlers.

However to see Kickstarter as "just" a funding platform is actually too narrow. It's a system based on (a) being able to give money directly to a creator, not a corporation or middleman and (b) becoming part of the creator's community in the process. Tapping into the powerful collaborative action of "we're making this happen together," no way limits their ability to expand into content that's already been created, manufactured, or distributed. And as you consider the technology and economy changes occurring at a macro level - creators being able to go directly to consumers - Kickstarter has a chance to be something unique. Not just a payment system (today they just sit on top of Amazon Payments), but by tapping into data, emotion and community.

Four Reasons Kickstarter Will Power the Maker Economy

1) Crowdfunding Grows Because Corporations Cease Being a Primary Source of Capital for Creatives: We've entered an astounding period for creatives and entrepreneurial individuals. Never has it been easier to bring your writing, music, video, product, app to market. And the necessity to become an economic actor is driven partially by the decline of establishment - traditional employers of creatives are suffering (publishing, media, record labels). What does this mean? Few upfront dollars for creatives, especially if they are unproven or want to try something "risky."

Fortunately for many types of creation, the costs of production have decreased even faster. Predominantly due to technology advances (bandwidth, prosumer tools, shift from atoms to bits) and the creation of global marketplaces, it's never been easier to try and develop an audience or customer base. Whereas niche businesses were once dependent upon the density of cities or domestic mailorder, now you can find your community from across the world. Crowdfunding is simply asking these people to pay upfront. And when you're of a niche, your desires are usually undermet by traditional production, which means you are more likely to commit dollars in advance. Hence, the rise of crowdfunding.

2) Unbundling of Creators & Rise of the "Businesses of One:"

While disruptive to many, we're discovering that this unbundling has real financial benefits for makers who can cultivate a following. Consumers are more willing to pay when their money is going directly to a person. We hate paying corporations but we like paying creators. And of course when there's no middleman, the creator can yield higher profit even if they sell fewer or at a lower price. And when you pay a creator it's not a single one-off exchange of dollars for a good or service, it's a relationship. It's more like patronage - you are a supporter of a person's work and voting with your dollars.

Kickstarter has nailed the feeling that you are paying a person to work on a project of mutual passion, not just transacting. The story behind the item, the updates from the creators, the selection of what level you want to pay along with rewards -- these are all queues that you are sending your money to an actual human being who has worked hard on something.

I see no reason why this model can't evolve to be a front-end for selling what's already been created, not just raising money. It's the evolution of the tip jar, the subscription model, etc. I can read a post from a blogger I like and support her in a way that brings me closer. That makes me a supporter who starts interacting with her and other supporters. Not just a passive reader. I can buy a live concert recording from a band I like and it feels much more vibrant than just clicking a PayPal link. It's an emotional wrapper to what's otherwise a very mechanical interaction. And it forces creators to improve the way they interact with their purchasers.

Kickstarter can be the point of sale for the creative economy and increase sales conversion rates compared to simple checkout buttons.

3) True Social Commerce Means You Don't Have to Pay Me to Share: I don't need "$10 credit" promotions to share Kickstarter projects with my friends. "Three friends buy and yours is free" means nothing to me in the context of projects and creators care about. Kickstarter's language personifies the transaction - I'm "funding" a "project" and becoming a "backer" who will receive "updates" from the creator. Contrast this with pre-ordering a CD and becoming a customer who will receive emails from the store. Feels different, right? If above I argue that Kickstarter will increase conversions/donations, I believe they also will increase passalong, potentially with a system that shows how many "backers" you attracted. And in this case the compensation won't be an affiliate fee, but rather just access to, and thanks from, the project creator.

Increased conversion rate + increased sharing

4) Yielding a Purchase Graph to Improve Discovery: Social graph, interest graph, location graph, graph paper, no wait, not that last one. These are all just fancy ways of saying "data on something and its relationship to other things." Kickstarter's purchase graph means they know what you have supported or bought in the past. And we know that "bought" beats "liked" in terms of true intent. With enough transaction volume Kickstarter should be able to cross-market effectively, which again leads to an ability to drive demand. You sell more when you sell via Kickstarter.

Why do you think eBay bought Hunch? Because Paypal data + Hunch = better product recommendations. Same with Amazon Payments + Amazon. Owning transaction platform providers gives you tremendous insight into individual purchases and preferences. And Kickstarter data is already public ("Backers") since the social recognition is part of the experience.

Plus unlike eBay and Amazon, Kickstarter has the chance to also be a content destination for its community. "Updates" and "Comments" already provide a basic discussion and marketing framework for an item's creator and their fans. While Amazon allows, for example, author's to talk about their product and interact with reviewers, it's just another small item on their overcrowded product page. It's not a loving and warm space owned by the creator. Kickstarter is.

Beyond the on-site experience, I could choose to share my purchase data by authing my Kickstarter account to other products. Personalization gets better because what I bought is a strong signal. People discovery gets better because the fact you and I both bought London Calling by the Clash is now known. And oh look, they already provide simple profile based summaries of what I care about:

Increased item conversion rate + increased sharing + increased discovery = the Kickstarter advantage for the creative economy.

If you believe in the unbundling of creatives from corporations. If you believe that consumers will seek out relationships with creators and vote with your wallets. And if you believe communities will form around creators, goods and content, well, then it's not a stretch to believe that Kickstarter will be one of the most important platforms for commerce, and a fundamental catalyst of the ideas economy.

License to Drive: Will Computerized Vehicles Speed Us Towards a Predictive Model for Driver Behavior?

California joining Nevada with frameworks for allowing driverless cars on the state's roads got me thinking about how this all evolves. My assumption is that driverless car safety increases as the density of driverless cars increase. That is to say, when we're 100% driverless cars there should rarely be any accidents because the cars can coordinate with one another to prevent such mishaps. However up until that point, the driverless car OS needs to reactively deal with human drivers in other cars which leaves a lot more room for the unknown.

The onboard computer needs to account for other cars it believes could cause an accident. The most basic part of this is reactive to an immediate threat -- a car cuts you off or breaks suddenly and your car needs to stop suddenly less it hit the other vehicle. The next wave of intelligence emerges from analyzing available realtime information from the car's proximity to anticipate potential threats. A speeding car coming up on the left could cause your car to push to the right hand side of its lane, giving a few extra inches to the passing auto. We probably do things like this unconsciously while driving and the computer needs this sort of AI too. But what if we could go beyond what a driver was doing right now and understand the history of how he drives generally or reacts in certain situations. Then the computer could create a predictive model of what was likely to happen given the specific drivers (well, vehicles) on the road around them at any time. A database of intention for cars instead of people.

Here's how it could work: the driverless cars basically pass data back and forth and into a centralized db. Imagine that a driverless car is at all times gathering information about the cars around itself. Additionally it's using OCR to identify cars by license plate and record information about those vehicles - speed, distance it keeps from other cars and so on. You can essentially build a compendium of driving habits by car using license plat as the unique identifier. For example, your driverless car "sees" that plate number CSR4408 just pulled 20 feet behind you. It does a lookup into the car database and find that this driver is very aggressive, which increases the chance of an accident. So your car moves one lane over and lets it pass rather than risk a tailgater. 

Would there be privacy implications here? Certainly you are allowed to observe other drivers and make judgments about their safety. Our car's software today is able to gather enough information about your historical speeds to already fill in some of this information. Of course some cars are driven by more than once person but unless you start doing facial recognition too, one would assume the fingerprint would match the car and not the driver. When a car is sold, the record would be cleared & restarted since there's a different driver (this wouldn't be a problem since car sales are recorded with the DMV as change of ownership). And I guess opting out means obscuring your license plate :)

[I should note that although I work for Google, I have no knowledge of our driverless car project outside of what has been discussed publicly and the speculation above is merely forward looking]

#UncensoredBook now free to all EFF supporters

Great news to share. In January Eric Ries and I curated an ebook called Uncensored to benefit the Electronic Frontier Foundation, a nonprofit organization which defends digital rights. The book features blog posts from notable technologists such as Fred Wilson, Brad Feld, danah boyd, Marc Andreessen and dozens of other big thinking folks. While you can continue to purchase the book by itself - and 100% of proceeds are donated to the EFF - I'm excited to let you know that we've worked to make the ebook one of the perks you can get for free when you become an EFF member! So go over to their site and join today.

We're honored that the EFF found our project valuable enough to embrace in this manner.

Good Eggs: How a 2007 brunch led to my investment in Karma Science

You ever meet someone and wonder if you could get away with kidnapping them, locking them in your basement and exploiting their incredible intelligence to your sole gain? Yeah, me neither. But IF I did think that way, Lee Linden would be shackled right now to my water heater. Since that would be, you know, illegal, I'm settling for being an angel investor in his newest company Karma, alongside folks like Kleiner Perkins, Sequoia, Obvious and others. Karma's app is one of the smartest "mobile social commerce" experiences I've seen and many many many journalists seem to agree. It's an example of my "anthropology + algorithm" thesis - that the best consumer technology uses science wrapped in art to delight users. In this case it's rethinking what gifting looks like in a way which creates tremendous emotional satisfaction for the giver and recipient. 

But as suggested above, it's not just the product I loved, it's the founders Lee and Ben Lewis. Ben used to work at Google and I tried to recruit him over to YouTube a few years back. He declined, letting me know he was actually leaving to join a friend in starting a new company. That friend was Lee Linden and the company was Tapjoy, which enjoyed a very successful exit in 2010. I'm thrilled to finally get to work with Ben, even if it's not in the capacity I originally expected.

Lee and I first met in 2007 at a Stanford brunch. He was a first year grad student and I was an alum returning for a mentorship brunch. If I remember correctly, Lee's mentor didn't show and we hit it off big time. Getting together for coffee or lunch every so often, I discovered that in addition to Lee's raw horsepower, he's incredibly modest. So this is a guy who began his post-undergrad career as a star product recruit at Microsoft, then came out to the Valley and within a few years got a graduate degree, launched a Y Combinator startup, built a hit iOS game, built an ad solution for that game, turned that ad solution into a company and sold that company. Oh and did I mention he also worked with Kleiner Perkins as well as some other early stage investing work? Yeah, he's fundable.

So when the opportunity appeared to help lend my support to their latest venture, it was with head and heart that I enthusiastically committed. Thank you Ben and Lee for saving me a seat on this bus. Full speed ahead!

"I'd Give It a Good Review but Then It Would Get Crowded:" How airbnb, vrbo, etc should evolve their user review incentives

We recently rented an amazing VRBO place here in the city for visiting family. Did I supply a favorable review?  And risk the place getting too popular? No way!

Unlike reviewing a restaurant or hotel where a handful of good reviews aren't going to impact overall availability (many good reviews might), supply constrained goods & services can often book up on much low volumes. This seems most common with short-term rentals -- I've had a few friends tell me they intend to keep private lists of great airbnb apartments to only share with friends. 

But since these services need reviews as a signal to help consumers, what are some product solutions to this "review reluctance"?

1. At the listing level, show me distribution graph of repeat renters

Flowery glowing reviews are nice to give specific context but often I want one piece of information: how many people who stayed there before would stay there again? Since these services know renter info they can actually report how many consumers returned to a location. They also know whether you came back to the same city and decided to stay somewhere else even though your previous rental was available. This can be turned into useful information without the renter's input since it's anonymous.

2. Let renters put specific customers on VIP list which providers early window for booking or auto-waitlist

Another approach is to deal with the concern of the reviewer - that their good reviews will make it more difficult to get into their favorite properties. Property owners could categorize certain customer accounts as VIPs and grant them earlier booking window, auto-waitlist for cancellations, etc. Basically any way for the renter (who wants good reviews from satisfied customers) to help unfreeze the review process.

3. The companies themselves can provide incentives for reviews

Since reviews = more bookings, it's actually in the service's interest to get users to review - both good and bad.  Accordingly they can provide system level benefits for giving reviews -- discounts, loyalty program, etc.

"Is this a billion dollar business?:" The tension between market sizing and innovation

Your time has arrived - pitching a new idea to BigCo executive team. Your day job on one of the BigCo's other products is fine, but this project, man, it's your dream. The demo is ready after an all-weekend programming jam. You've carefully prepared a resourcing ask and roadmap. You even came up with a snazzy product name and logo!

You lead people through the presentation while simultaneously reading the reaction of the room. Here's why it fits in well with current business strategy. Here's proof of adoption via a small internal dogfood. Did the VP Engineering just nod her head? Awesome! Wait, did the VP Marketing just put his index finger to his lips and write something on a Post-it? What does that mean? Overall though, you're feeling pretty good as you wrap up the demo and prepare to take questions.

The CEO leans back in her chair, looks straight at you and delivers a grim verdict, "I don't know, I just don't see this as a billion dollar business. And you know at our scale we need billion dollar businesses in order to grow."

Discussions of innovation challenges at large companies usually focus on people, politics and culture. Trouble retaining talent. Too many middle managers. A culture which starts to reward steady hands as opposed to risk taking. 

Indeed those attributes might be found at some large companies and are corrosive to innovation, but there's another drag on innovation which is equally insidious: the law of large numbers which causes managers to try and size market opportunities prematurely. This tendency comes from a reasonable place, namely an opportunity cost issue: if you are going to dedicate resources to a new project area you'll want to know that it's likely to "move the needle" in terms of overall company success, otherwise you can always get a higher nearterm ROI from putting those same resources on an existing business.

But market sizing forces you to understand the world as it exists today as opposed to how it might look tomorrow. And forecasts into the future are exercises in assumptions contingent upon any number of compounding hypotheses. I'm not suggesting market sizing is a useless gambit, just that it's actually more important to be directionally correct than truly accurate. Come away from the work understanding what you believe to be true about the future and just get within an order of magnitude.

My proposed cure to premature asking "is this a billion dollar business" is improved incubation and project lifecycle management within large companies. Don't prematurely try to size a market - start building a product and see if it works. Then you figure out what market you're actually in.

1) Overall Resource Allocation framework
Just as Google traditionally allocated a percentage of their resources to core, extension and "totally new" areas, larger companies focused on innovation need to protect a percentage of resources to push into new business lines. This is different than R&D (or at least I think of it differently. I guess there could be way to have both 'core R&D' and 'new venture R&D'). It's about realizing that while the next dollar, heck the next billion dollars, may come from businesses you're already in, that the incremental billion dollars will not. And the current business unit leads who are being judged on today's opportunities will almost always put new resources on growing current business - it's the bird in the hand. Accordingly, it's really a CEO/upper management job to manage this overall distribution.

2) Progress Review framework
Ok, so once senior leadership blesses the overall allocation, you need a way to solve for which ideas get resources. There are a number of approaches - top down, bottom up. Acquihires vs internal developments - but as this isn't a Harvard Business Review article, let's hold off too detailed a discussion. Google's "20% time" approach is one well-documented example, but has never been the only way the company makes expansive bets.

It's helpful here to understand that projects have distinct stages and that your company should come up with a taxonomy which works for your own culture and business. It can be as simple as a single classification which says "these are new projects until they're not" (ie they become formally funded). Or you can segment more granular into something like "early stage," "product dogfood," etc. Main goal is to allow CEO/senior leaders to have an air traffic controller map of incubating projects and understand their stage of development.

One note though - really important here to avoid too much management supervision - provide quick help or escalation paths but not executive hovering. There will be many people who want to be "helpful" but the whole idea here is to let small teams working quickly to prove out new ideas. Don't overcrowd them. Set up milestone check-ins and then largely leave them alone. Use a champion or sponsor model but too many VPs turn into design sessions, business reviews, powerpoint decks, etc. The mantra here should be "demo or die" not "discuss to death."

*Bonus* Reality Check: Don't pretend these early stage internal projects are "start-ups"
Calling internally funded projects "startups" is the equivalent of pretending dry humping is sex (yes, I just went there). Don't try to replicate market forces by creating strange valuation mechanisms. Don't ban them from the company cafeteria in hopes of inspiring a "ramen profitable" mindset. Not only is it unnecessary complexity within the company, it also won't hold water externally. Very tough to get the press and potential partners to see these projects as separate entities - and for good reason, they're not. Similarly, BigCo cannot take the brand or legal risks of an entity they fully own. Increasingly in cases where the new venture needs to be separated in order to execute, I think we'll see examples of parent BigCo investing in the entity as a financial equity owner rather than keeping in-house. [I obviously think the relationship between Google & Google Ventures is a strong example of how to do this - with examples like Craig Walker's funding by GV]

Concluding, large companies often get themselves into trouble by trying to assess the market potential of new projects prematurely. Instead ensure a percentage of company resources are working on projects that may have great potential, and be rigorous about funding or killing decisions, rather than over-analyzing before anything has been built.

Patents: When is it okay to aggressively enforce?

This post is instigated by, but not in support of, the recent news that Yahoo is approaching Facebook about licensing patents they believe the social network has been infringing. The other disclaimer is that I personally believe the patent system, especially software patents, is in need of major overhaul and have been on the defendant's side of "patent troll" suits (which waste time and money even in victory). Listen to "When Patents Attack" from NPR if you want more info.

That said, two questions given the reality of today's legal system and tech innovation:

a) I still hear venture investors asking startups about IP - not just to make sure their potential investments are in the clear, but also to see what new technology the company has patented for purposes of protection and value creation. If we as technologists are dismayed by patent warfare, are we not complicit in these actions by continuing to play the game of "oh, these are for defensive purposes only."

b) Given a very competitive and fast-changing innovation environment, is there ever a time when it's right to use patents in an aggressive fashion against competitors (either as a licensing revenue stream or to block their entry into markets). I assume lots and lots of licensing dollars change hands every year in a perfectly hospitable fashion.