Miles To Go.

You should be arrested for using a flip phone in 2012

The National Transportation Safety Board (NTSB) came out with a shocker this week; urging a Cellphone Ban for Drivers. I support the NTSB’s cellphone ban for the following reason: anyone still using that word probably still calls a “car” a “horseless carriage”.

Beside the story in the New York times, there was a stock photo of a freaking Razor flip phone. It made me laugh.

As per usual, a Government Agency trying to protect its public actually just misses the point, in this case by a couple of generations. Here’s why

1. The moniker “Cellphone” was actually based on analog cellular technology, where signals were splits into cells when a tower was overloaded or a signal was passed from one tower to another. With Voice requests. So last century. But the whole history is here.
2. The rest of the world began with digital installations and so calls their devices mobile phones, or mobiles (said Mo-Biles). Early last decade.
3. The “SmartPhone” ushered in the proliferation of data (texting, Social Media, Mobile Web, etc.). It was smart, and it drove the phone feature to the background. Mid Decade.
4. The new name is still being fumbled with, just as Horseless carriage was eventually replaced with the automobile. As noted five  years ago by digital sooth-sayer Phil Leigh in an Inside Digital Media video  podcast, the device is more accurately labeled a “teleputer”.  George Gilder originated  the concept about twenty years ago when he envisioned a hand-held unit  providing convenient wireless access to a global computer network. It was  kind-of the evolutionary destination implied by a popular computer industry  slogan at the time, to wit, “the network is the computer.”

More significantly, (following P from Phil Leigh) iPhone users are progressively learning that computer applications are becoming  the unit’s raison d’etre.  In short, the phone’s digital capabilities such as photography, geo-location, audio & video playback, and  especially Internet access, are the defining characteristics. Applications like  Skype and FaceTime portend an era when cellular telephony per se, becomes irrelevant  to iPhone owners. Long way of getting to the point that, it’s not a phone anymore. And people use voice as a diminishing percentage of their device time.

And Deborah Hersman, chairwoman of the N.T.S.B., an independent federal agency responsible for promoting traffic safety and investigating accidents, said the concern was heightened by increasingly powerful phones that people can use to e-mail, watch movies and play games. “Every year, new devices are being released,” she said. “People are tempted to update their Facebook page, they are tempted to tweet, as if sitting at a desk. But they are driving a car.”

Nine states now ban the use of hand-held phones, and 35 states ban texting by drivers, according to the Governors Highway Safety Association, which represents state traffic agencies. Many mobile phone companies dropped their opposition over the last decade to any restrictions on the use of phones in cars, and have in recent years joined calls to ban texting while driving. In a statement, CTIA, the cellular telephone industry trade group, said it deferred to states about whether to enforce such bans.  Which underscores the point that carriers care less and less about voice: it’s about the data stupid. Most of the money will be made off of the advertisements served to these devices- a subject that is near and dear to my heart.

A complete ban on phone use by drivers would have enormous impact on many car makers that are offering integrated hands-free, voice-activated systems that allow drivers to talk and do other tasks, like calling up their phone directory.  The Alliance for Automobile Manufacturers, a trade group for the industry, said in a statement that it was reviewing the N.T.S.B. recommendations. But it also defended the integrated systems, saying they allow drivers to keep their hands on the wheel and eyes on the road while they remain connected.

No way we are going to get people to put away their devices, at dinner or on the road. Best we can hope for is to educate them on the dangers (socail or physical) to what feature is to be used when. “What we do know is that digital technology has created a connected culture in the United States and it’s forever changed our society:  consumers always expect to have access to technology; so managing technology is the solution,” the alliance said in a statement.

That, and updating the lingo so people know what the hell you are talking about…

Mobile Global: Click 2 see cool pic

I work hard to get lucky.

1. The Carriers used to think they were content curators. Seriously, there was no other way to get distribution than to program in bizarre carrier languages (BREW, etc) and pay them through the nose to be “on deck”. Hey, they got the idea from the old AOL days. But these people did not realize the comic effect of managing content on a 2″x2″ screen. Plenty of money was wasted getting on those decks, and getting the content optimized. At one point, I counted an easy $500MM of venture money was poured down that rabbit hole.
2. Eyeballs began to shift. First it was getting email and text on phones. Then a few games and stock quotes. But the iPhone and its 250,000 apps out the gate brought all manner of information and entertainment to the mobile screen. The PC reached a plateau.
3. People were no more willing to pay for apps than they were to pay for the “old fashioned” internet. It should be free, man continued as the digital credo. And except for very few exceptions (iTunes being one), the entire mobile revolution has been driven to date with ads.
4. Tablets followed shortly, and guess what: they’re mobile too. Meaning all the ad serving technology, all the geo-location and device data was much more like a mobile phone than a PC.

With a little knowledge as an angel/board member with digital yield optimizer operative (now Operative One) and some domain expertise from Cellufun, I went on to start mobile ad network/ad server Mojiva with co-founders Krish and Dan.  And I have since been founding angel in mobile powered projects like MyBailiwick (crowdsourcing too early!), TrustCloud (trust in the sharing economy getting hotter now) and WellAware (mobile health and wellness platform). I think my bets in mobile media have been pretty lucky, and i will continue to make them for all the basic reasons above (and many more that are regularly laid out by tech guru Mary Meeker).

I just never knew where the tipping point was.

I do now. High five.

Krish, Dan and Miles make the Mojiva napkin

News of Mojiva closing a $25M round just a few years after starting up brought a rush of high five from peers, rounds of drinks from friends, and more than a few calls from unknowns trying to sell me things I never knew I needed. The ride so far has been amazing, and not a day goes by that I am not grateful for the courage of my co-founders Krish and Dan, the expertise of our CEO Dave, and the dedication of rest of the team. And with all the skill in the room, I am still also respectful of how much luck and timing have to do with the entire equation.

When she heard of the news, one of my Board members from KFAC had a pretty simple question: what does it really  mean? I had the benefit of some time away to reflect on that while doing my annual cultural lap through southern France and came up with no less than the following.

Mobile is now, and will be, among the most profound effects on our society and civilization of our lifetime. Its impact will be right up there with space exploration (cancelled), HIV (still nasty), Middle East Peace (as if), The Internet (still going), Reality TV (why Snookie why!) and the Fall of the Berlin Wall (still down).

Phil Leigh sums it up artfully:

Today we interact with digital t media nearly as routinely we checked our wristwatches to read time-of-day fifteen years ago. While the conversion might seem radical to consumers from 1996, the advent of portable connected devices such as smartphones and tablet computers implies an even more fundamental change in the future. In short, all media shall become interactive – not just Internet media.

Significantly, app-enabled mobile devices are empowering traditional media to adapt to such a transformation because the portable units are evolving into cognitive prosthetics. Much as experienced amputees routinely use mechanical prosthetics as artificial limb extensions, habitual smartphone and tablet owners are starting to use the devices as convenient intelligence aids. They help users gain more information that would otherwise be unavailable, or difficult to obtain. For example smartphones can find price comparisons merely by scanning barcodes and other implanted signals off shelf merchandise labels. Specifically, a price-comparison app reads the barcode or embedded signal to (1) identify the merchandise and (2) display a website where up-to-date prices for the item from all merchants are complied.

According to www.chetansharma.com, smartphone sales in the United States crossed the 50% market share threshold for the first time in the first calendar quarter of 2011. That’s nearly double the 27% share of only two years ago. Google’s Eric Schmidt proclaims “the smartphone is the new PC”. Similarly, Yankee Group predicts that over 60 million tablet computers will be in use by 2015. Sharma concludes “…mobile will become the platform of everything. Anything that can be connected will be connected.” Among other functions, such devices will evolve into ubiquitous cognitive prosthetics, nearly always available to help us interact with media in all its forms.

I have blogged about my thoughts of how mobile (plus social and local to quote Mary Meeker) will affect a few places I have interest in: how we might visualize health, coupons, high school sports and even how the trust and reputations that we earn (both online and in the real world- an increasingly blurred distinction) will enable us to build an economy of sharing.

What excites me is the tremendous domain expertise and world view I am given by being involved in a company like Mojiva. It’s a box seat with a great view of everything that will play out on the field of mobile in the next few decades. And those things will have profound effect on how our world evolves.

Lucky, lucky me. Up ’til now at least.

~~

If you have mobile social local ideas that you think will solve big problems or make better our world, bring ‘em on!

Michael Arrington is blunt.

That ouchie brought to you by Michael Arrington at a recent Tech Crunch Disrupt Conference.

It’s not as bad as it seems.

I find myself initially defensive at this comment, made by the headline grabbing (headline making!) founder of TechCrunch. I fall on the other side of thirty. If you check out this graph, which represents 300 responses from startups financed by Ron Conway, repeat founders under the age of 30 get more $500M+ exits. 

So if this is true, are old(er) founders more cautious, prudent, and take earlier, cheaper exits for security? Possibly. Whereas a younger founder will let their company brew for a while, gaining value, or be more tolerant of the risk along the way.

Older founders have also likely seen the game played before, and know how to judge incremental success, while a younger buck is more likely to bet the farm. But what is most interesting to me is which of these personalities match best with todays “2 & 20″ VC dynamic, where small hits don’t clear their preference hurdles. If you need a moonshot to make a buck for your portfolio, by all means go find a kid.

But they are getting less naive every day.

Huana AKA Sugar loaf

I was in Deer Valley recently for a Pelion LP meeting and the topic turned to high- altitude climbing. Entrepreneurs that I work with know that I constantly use the experience as an analogly for building companies. (I have analogies for everything, some more crazy than others.  At least, that’s what I’m told).

The basic premise is that, as you get to higher  altitudes, your mind and body play tricks on you. Cognitive powers are altered. Moving carefully and deliberately is important, but so is having a guide to help you move quicker and avoid mis-steps. For a look into real-world mountain climbs, there’s a great book called Into Thin Air by Krakuer that covers it well. (and the rebuttal by Anatoly Bukareev is just as good). As for entrepreneurship, there are very few books about a company’s pending danger and death; most focus on reaching the top. I wrote a bit about that aspect in a prior post called Let ‘em Crash. I personally have been to what I define as” high altitude,” both in climbing and entrepreneurship. (Over 10,000 and over $100M+ in valuation, respectively.) Here’s a hairy story from one climb: entrepreneurs, see if you can pick out the analogie(s).

A trip to Peru brought me to the Machu Picchu lodge and my altitude adjustment was fully set, having begun the trip in Cusco at 11,000 feet. I had climbed Huana Picchu earlier that day, at dawn. I saw the most spectacular sunrise, as many Inca priests had before me (hint, these would be VC’s), and marveled at the symmetry of the Sun Gate and the other temples in the complex. I returned to the lodge for late breakfast. It was there we began talking about Cerro, the peak I had seen obscured by mist from Huana, with a giant flag fluttering at the top. I did some quick calculations and decided I could make it by sundown.

Cerro is the highest immediate peak above Macchu Pichu, but there’s nothing technical about it.  Like most of the Inca trail, .ost of the path is carved rock.  A little slippery at times, and occasionally requiring pull-ups, but mostly the climb is a mental one. I say this because the Urabumba River roars on three sides of the peak, and the drop is about 1,000m, sometimes straight.  After a few thousand feet, the mist socked me in. All there was in front of me were stones, laid by Incas many hundreds of years ago, and vines. And the sound of the river. It became my navigation.  As I heard it down and to my left, I knew I was on the west face; at it switched to my right, I knew I the path had traversed to the west. Half way up, I met two Japanese who were on descent. You alone?, they asked. Yup. Even that small exchange heartened me, not for the guidance, but for the fact someone else would know where I was on the mountain if things got bad. As it was, their estimate was a bit off.

 Ninety minutes later, I came through a skree field of snakestone (awesome green stuff that looks like malachite, but softer) and arrived at a gate of carved rock. It was the first clue I was entering a holy place. From there, I experienced my closest-to-divine moment. The path became flat, and the mist enveloped my feet, such that only my footfall revealed the path in front of me. I was on the spine of the peak, so the sun, or what was left of it, made the way brighter. I noticed orchids, which grow wild at that altitude. And hummingbirds which fluttered around like some  Natural History Museum display. Summit euphoria was taking over, as I heard the flag flapping in the wind in front of me. As I reached it I sat still for twenty minutes, precious time given the daylight. It was total peace. (Have you guessed? This is an exit!) 

When I turned to go, I notice the river roaring about me not on my left or right, but on three sides. With the dimming sun, the mist, the flowers and birds it was truly heaven. The euphoria lasts through the first fifteen minutes of descent, as I passed markings I had made in my mind during the ascent. I allowed myself to gain momentum, feeling free, and frankly as good as a teenager in springtime. Then I mis-stepped. In an instant, I was hurtling down one side of the face, when I instinctively grabbed on of the vines hanging from the face. It caught me, and I quickly recovered, with not a small amount of briars — and a pulse suddenly 2x. I kept rolling, and reached the main Inca village by dusk.

Llamas get around without Merrils

At dinner that night back in Macchu Pichu, one of our guides, Juan —- asked if I had walked or crawled on the spine of Cerro. I told him, and he was surprised. Most people crawl, he said. The spine is only 2m wide, and the drop to the river there is about 800m on the right side, and 1,200m (4,000 feet) on the left. Well, I walked the whole thing… maybe leaning a bit to the right to compensate for the difference…

But the most interesting thing about that climb was what it taught me about the entrepreneurial climb: the height of the ascent is an optional objective… but the return is mandatory!

» Monastario-Cusco
» Machu Pichu Lodge
 and ask for  Juan and Lourdes Sotomayor

Ranjit & Chad. We NEED these guys. (generalization)

One thing I hear month after month at the Next American Economy thinktank breakfast is, “Where are the Jobs Jobs Jobs? “Seems like a giant game of peekaboo.

I have seen scary Powerpoint slides from David Autor (MIT) and Dane Stangler (Kaufman Foundation) about not only the dearth of new jobs, but the dearth of the new businesses that create most of them. (“Dearth” is a double credit word in Scrabble). I touched on this same issue in a previous post Stuck in the Middle with You.

Nobel Laureate Michael Spence and Sandile Hlatshwayo note that the American economy has seen the lower and middle components of the value-added chain moving to the rapidly growing markets abroad and warn that soon, higher-paying jobs may follow low-paying jobs in leaving the United States.

The actions of the free market have made goods less expensive for Americans, but the free flow of labor and capital has also diminished the employment opportunities available in the United States and will, the authors warn, continue to do so at all levels of society. While Spence and Hlatshwayo acknowledge that there’s no simple policy fix to improve the trade-off between inexpensive goods and diminished domestic job opportunities, they argue that given the political policymakers must tackle this enormous question of inequality and economic distribution.

I’ve got a suggestion. Rather than lament our long slide into global parity, let’s do something that will arrest the dive: issue more H1B Visas.

Years ago, super angel Brad Feld was a guest on my show, MoneyHunt, and between filming takes, we talked about how America’s new job creation engine would be pinched by access to tech talent. Wow, was he right (many of Brad’s words follow). As is typical in Washington, the issue bounced around for a decade until Senators Kerry (D-MA), Lugar (R-IN) and Udall (D-CO) unveiled the Startup Visa Act of 2011. This is an updated version of the Startup Visa bill from last year that is aimed at making it much easier for foreign entrepreneurs who want to start a company in the US to get a visa. Today, this process is incredibly difficult and has been stifling the creation of new companies and the corresponding job creation that these companies provide.

VCs... deserve some respect!

As the summer intern wave hits New York, I get my share of inquiries from very smart kids wanting to become VC’s.

And now I know, as Rodney Dangerfield once said, why tigers sometimes eat their young!

It’s that tough a world. Yes, I’ll be the first to tip my hat to some great VC successes (not much ink is wasted on the failures), and it makes a wonderful pickup line for Wedding Crashers.  But being a VC today- or tomorrow- is way harder than it looks. First-time funds, no matter how much they raise, are basically start-ups under intense pressure to provide a preferred return to their investors before they get paid anything special. They have to be incredible consensus-builders within their firm  to get anything approved. And the deals that everyone wants come with incredible competition from everyone else looking at the same thing.  This is not a profession to wander into with stars in your eyes. If you do, expect your Share of Crashes.

According to a recent Cambridge Associates Study, short-term returns in 2010 were fine (based on data from nearly 1,300 funds raised between 1981 and 2010, U.S. venture capital rose from 6.4% at the end of Q2 2010 to 8.2% by the end of Q3 2010,). But venture is a long-term asset class. The median net return to VC fund investors has not been positive for any vintage year since 1998. Cambridge reports that 10-year returns fell from a miserable -4.2% to a downright horrid -4.64% over the relevant period. Five-year returns fell from 4.3% to 4.25%. Think about that for a moment: despite the past decade’s many hits (Google, YouTube, etc.), the typical VC fund has lost money for its limited partners. Even the top-quartile benchmarks over the past decade aren’t very impressive, with the best figure coming in at 5.59% for 2001 vintage funds.

I was a VC for a brief moment in time and it was fun, profitable — and nothing I would ever attempt to repeat.  From 1997 to 2000, Capital Express, having failed to raise any big money like our competitors in the dot.com chase, had a measly $4M to invest. But we picked right (including an IPO that reached a $4 Billion valuation for a moment) and we exited with great timing, returning 100x. It was the top of the bubble. My partners were fantastic, our timing was fortuitous, but I know the difference between luck and skill, and believe me, as good as we thought we were, we were luckier than we will ever know.

Do not try this at home! Your results may vary depending on many circumstances. The mortality rate of VC’s and their funds is stunning.  Thats why I now leave that work to smarter people, and wish them all the best. And I do that often because I see them practically everyday: in the past five years,Vaux’s companies like Cellufun, Operative, Mojiva and more have raised nearly $50M in capital from VCs.  I  sit on panels with them, across board tables from them, and see them constantly in subsequent fund raises for growing companies. They’re incredibly smart, ask great questions, usually have relevant and helpful operating experience, and work really hard. Yet, their fate lies with the luck and timing of a random world.

Is that a profession I would encourage a little cub to venture into? I respect VC’s, I just don’t encourage more of them.

And if they absolutely insist, I wish them all the luck.