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Snap Inc by the Numbers

If you follow the tech industry at all, you will have heard that consumer app darling Snap Inc. (makers of the app Snapchat) has filed to go public. The ensuing Form S-1 that has recently been made available has left tech-finance nerds like yours truly drooling over the until-recently-super-secretive numbers behind their business.

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Oddly apt banner (Image Credit: Business Insider)

Much of the commentary in the press to date has been about how unprofitable the company is (having lost over $500M in 2016 alone). I have been unimpressed with that line of thinking — as what the bottom line is in a given year is hardly the right measure for assessing a young, high-growth company.

While full-time Wall Street analysts will pour over the figures and comparables in much greater detail than I can, I decided to take a quick peek at the numbers to gauge for myself how the business is doing as a growth investment, looking at:

  • What does the growth story look like for the business?
  • Do the unit economics allow for a path to profitability?

What does the growth story look like for the business?

As I noted before, consumer media businesses like Snap have two options available to grow: (1) increase the number of users / amount of time spent and/or (2) better monetize users over time

A quick peek at the DAU (Daily Active Users) counts of Snap reveal that path (1) is troubled for them. Using Facebook as a comparable (and using the midpoint of Facebook’s quarter-end DAU counts to line up with Snap’s average DAU over a quarter) reveals not only that Snap’s DAU numbers aren’t growing so much, their growth outside of North America (where they should have more room to grow) isn’t doing that great either (which is especially alarming as the S-1 admits Q4 is usually seasonally high for them).

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Last 3 Quarters of DAU growth, by region

A quick look at the data also reveals why Facebook prioritizes Android development and low-bandwidth-friendly experiences — international remains an area of rapid growth which is especially astonishing considering how over 1 billion Facebook users are from outside of North America. This contrasts with Snap which, in addition to needing a huge amount of bandwidth (as a photo and video intensive platform) also (as they admitted in their S-1) de-emphasizes Android development. Couple that with Snap’s core demographic (read: old people can’t figure out how to use the app), reveals a challenge to where quick short-term user growth can come from.

As a result, Snap’s growth in the near term will have to be driven more by path (2). Here, there is a lot more good news. Snap’s quarterly revenue per user more than doubled over the last 3 quarters to $1.029/DAU. While its a long way off from Facebook’s whopping $7.323/DAU (and over $25 if you’re just looking at North American users), it suggests that there is plenty of opportunity for Snap to increase monetization, especially overseas where its currently able to only monetize about 1/10 as effectively as they are in North America (compared to Facebook which is able to do so 1/5 to 1/6 of North America depending on the quarter).

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2016 and 2015 Q2-Q4 Quarterly Revenue per DAU, by region

Considering Snap has just started with its advertising business and has already convinced major advertisers to build custom content that isn’t readily reusable on other platforms and Snap’s low revenue per user compared even to Facebook’s overseas numbers, I think its a relatively safe bet that there is a lot of potential for the number to go up.

Do the unit economics allow for a path to profitability?

While most folks have been (rightfully) stunned by the (staggering) amount of money Snap lost in 2016, to me the more pertinent question (considering the over $1 billion Snap still has in its coffers to weather losses) is whether or not there is a path to sustainable unit economics. Or, put more simply, can Snap grow its way out of unprofitability?

Because neither Facebook nor Snap provide regional breakdowns of their cost structure, I’ve focused on global unit economics, summarized below:

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2016 and 2015 Q2-Q4 Quarterly Financials per DAU

What’s astonishing here is that neither Snap nor Facebook seem to be gaining much from scale. Not only are their costs of sales per user (cost of hosting infrastructure and advertising infrastructure) increasing each quarter, but the operating expenses per user (what they spend on R&D, sales & marketing, and overhead — so not directly tied to any particular user or dollar of revenue) don’t seem to be shrinking either. In fact, Facebook’s is over twice as large as Snap’s — suggesting that its not just a simple question of Snap growing a bit further to begin to experience returns to scale here.

What makes the Facebook economic machine go, though, is despite the increase in costs per user, their revenue per user grows even faster. The result is profit per user is growing quarter to quarter! In fact, on a per user basis, Q4 2016 operating profit exceeded Q2 2015 gross profit (revenue less cost of sales, so not counting operating expenses)! No wonder Facebook’s stock price has been on a tear!

While Snap has also been growing its revenue per user faster than its cost of sales (turning a gross profit per user in Q4 2016 for the first time), the overall trendlines aren’t great, as illustrated by the fact that its operating profit per user has gotten steadily worse over the last 3 quarters. The rapid growth in Snap’s costs per user and the fact that Facebook’s costs are larger and still growing suggests that there are no simple scale-based reasons that Snap will achieve profitability on a per user basis. As a result, the only path for Snap to achieve sustainability on unit economics will be to pursue huge growth in user monetization.

Tying it Together

The case for Snap as a good investment really boils down to how quickly and to what extent one believes that the company can increase their monetization per user. While the potential is certainly there (as is being realized as the rapid growth in revenue per user numbers show), what’s less clear is whether or not the company has the technology or the talent (none of the key executives named in the S-1 have a particular background building advertising infrastructure or ecosystems that Google, Facebook, and even Twitter did to dominate the online advertising businesses) to do it quickly enough to justify the rumored $25 billion valuation they are striving for (a whopping 38x sales multiple using 2016 Q4 revenue as a run-rate [which the S-1 admits is a seasonally high quarter]).

What is striking to me, though, is that Snap would even attempt an IPO at this stage. In my mind, Snap has a very real shot at being a great digital media company of the same importance as Google and Facebook and, while I can appreciate the hunger from Wall Street to invest in a high-growth consumer tech company, not having a great deal of visibility / certainty around unit economics and having only barely begun monetization (with your first quarter where revenue exceeds cost of sales is a holiday quarter) poses challenges for a management team that will need to manage public market expectations around forecasts and capitalization.

In any event, I’ll be looking forward to digging in more when Snap reveals future figures around monetization and advertising strategy — and, to be honest, Facebook’s numbers going forward now that I have a better appreciation for their impressive economic model.

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Dr. Machine Learning

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Not going to happen anytime soon, sadly: the Doctor from Star Trek: Voyager; Image Credit: TrekCore

Despite the hype, it’ll likely be quite some time before human physicians will be replaced with machines (sorry, Star Trek: Voyager fans).

While “smart” technology like IBM’s Watson and Alphabet’s AlphaGo can solve incredibly complex problems, they are probably not quite ready to handle the messiness of qualitative unstructured information from patients and caretakers (“it kind of hurts sometimes”) that sometimes lie (“I swear I’m still a virgin!”) or withhold information (“what does me smoking pot have to do with this?”) or have their own agendas and concerns (“I just need some painkillers and this will all go away”).

Instead, machine learning startups and entrepreneurs interested in medicine should focus on areas where they can augment the efforts of physicians rather than replace them.

One great example of this is in diagnostic interpretation. Today, doctors manually process countless X-rays, pathology slides, drug adherence records, and other feeds of data (EKGs, blood chemistries, etc) to find clues as to what ails their patients. What gets me excited is that these tasks are exactly the type of well-defined “pattern recognition” problems that are tractable for an AI / machine learning approach.

If done right, software can not only handle basic diagnostic tasks, but to dramatically improve accuracy and speed. This would let healthcare systems see more patients, make more money, improve the quality of care, and let medical professionals focus on managing other messier data and on treating patients.

As an investor, I’m very excited about the new businesses that can be built here and put together the following “wish list” of what companies setting out to apply machine learning to healthcare should strive for:

  • Excellent training data and data pipeline: Having access to large, well-annotated datasets today and the infrastructure and processes in place to build and annotate larger datasets tomorrow is probably the main defining . While its tempting for startups to cut corners here, that would be short-sighted as the long-term success of any machine learning company ultimately depends on this being a core competency.
  • Low (ideally zero) clinical tradeoffs: Medical professionals tend to be very skeptical of new technologies. While its possible to have great product-market fit with a technology being much better on just one dimension, in practice, to get over the innate skepticism of the field, the best companies will be able to show great data that makes few clinical compromises (if any). For a diagnostic company, that means having better sensitivty and selectivity at the same stage in disease progression (ideally prospectively and not just retrospectively).
  • Not a pure black box: AI-based approaches too often work like a black box: you have no idea why it gave a certain answer. While this is perfectly acceptable when it comes to recommending a book to buy or a video to watch, it is less so in medicine where expensive, potentially life-altering decisions are being made. The best companies will figure out how to make aspects of their algorithms more transparent to practitioners, calling out, for example, the critical features or data points that led the algorithm to make its call. This will let physicians build confidence in their ability to weigh the algorithm against other messier factors and diagnostic explanations.
  • Solve a burning need for the market as it is today: Companies don’t earn the right to change or disrupt anything until they’ve established a foothold into an existing market. This can be extremely frustrating, especially in medicine given how conservative the field is and the drive in many entrepreneurs to shake up a healthcare system that has many flaws. But, the practical reality is that all the participants in the system (payers, physicians, administrators, etc) are too busy with their own issues (i.e. patient care, finding a way to get everything paid for) to just embrace a new technology, no matter how awesome it is. To succeed, machine diagnostic technologies should start, not by upending everything with a radical solution, but by solving a clear pain point (that hopefully has a lot of big dollar signs attached to it!) for a clear customer in mind.

Its reasons like this that I eagerly follow the development of companies with initiatives in applying machine learning to healthcare like Google’s DeepMind, Zebra Medical, and many more.

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Why VR Could be as Big as the Smartphone Revolution

Technology in the 1990s and early 2000s marched to the beat of an Intel-and-Microsoft-led drum.

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via IT Portal

Intel would release new chips at a regular cadence: each cheaper, faster, and more energy efficient than the last. This would let Microsoft push out new, more performance-hungry software, which would, in turn, get customers to want Intel’s next, more awesome chip. Couple that virtuous cycle with the fact that millions of households were buying their first PCs and getting onto the Internet for the first time – and great opportunities were created to build businesses and products across software and hardware.

But, over time, that cycle broke down. By the mid-2000s, Intel’s technological progress bumped into the limits of what physics would allow with regards to chip performance and cost. Complacency from its enviable market share coupled with software bloat from its Windows and Office franchises had a similar effect on Microsoft. The result was that the Intel and Microsoft drum stopped beating as they became unable to give the mass market a compelling reason to upgrade to each subsequent generation of devices.

The result was a hollowing out of the hardware and semiconductor industries tied to the PC market that was only masked by the innovation stemming from the rise of the Internet and the dawn of a new technology cycle in the late 2000s in the form of Apple’s iPhone and its Android competitors: the smartphone.

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via Mashable

A new, but eerily familiar cycle began: like clockwork, Qualcomm, Samsung, and Apple (playing the part of Intel) would devise new, more awesome chips which would feed the creation of new performance-hungry software from Google and Apple (playing the part of Microsoft) which led to demand for the next generation of hardware. Just as with the PC cycle, new and lucrative software, hardware, and service businesses flourished.

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But, just as with the PC cycle, the smartphone cycle is starting to show signs of maturity. Apple’s recent slower than expected growth has already been blamed on smartphone market saturation. Users are beginning to see each new generation of smartphone as marginal improvements. There are also eery parallels between the growing complaints over Apple software quality from even Apple fans and the position Microsoft was in near the end of the PC cycle.

While its too early to call the end for Apple and Google, history suggests that we will eventually enter a similar phase with smartphones that the PC industry experienced. This begs the question: what’s next? Many of the traditional answers to this question – connected cars, the “Internet of Things”, Wearables, Digital TVs – have not yet proven themselves to be truly mass market, nor have they shown the virtuous technology upgrade cycle that characterized the PC and smartphone industries.

This brings us to Virtual Reality. With VR, we have a new technology paradigm that can (potentially) appeal to the mass market (new types of games, new ways of doing work, new ways of experiencing the world, etc.). It also has a high bar for hardware performance that will benefit dramatically from advances in technology, not dissimilar from what we saw with the PC and smartphone.

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via Forbes

The ultimate proof will be whether or not a compelling ecosystem of VR software and services emerges to make this technology more of a mainstream “must-have” (something that, admittedly, the high price of the first generation Facebook/Oculus, HTC/Valve, and Microsoft products may hinder).

As a tech enthusiast, its easy to get excited. Not only is VR just frickin’ cool (it is!), its probably the first thing since the smartphone with the mass appeal and virtuous upgrade cycle that can bring about the huge flourishing of products and companies that makes tech so dynamic to be involved with.

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What Happens After the Tech Bubble Pops

In recent years, it’s been the opposite of controversial to say that the tech industry is in a bubble. The terrible recent stock market performance of once high-flying startups across virtually every industry (see table below) and the turmoil in the stock market stemming from low oil prices and concerns about the economies of countries like China and Brazil have raised fears that the bubble is beginning to pop.

Company Ticker Industry Stock Price Change Since IPO (Feb 5)
GoPro NASDAQ:GPRO Consumer Hardware -72%
FitBit NYSE:FIT Wearable -47%
Hortonworks NASDAQ:HDP Big Data -68%
Teladoc NYSE:TDOC Telemedicine -50%
Evolent Health NYSE:EVH Healthcare -46%
Square NYSE:SQ Payment & POS -34%
Box NYSE:BOX Cloud Storage -42%
Etsy NASDAQ:ETSY eCommerce -77%
Lending Club NYSE:LC Lending Platform -72%

While history will judge when this bubble “officially” bursts, the purpose of this post is to try to make some predictions about what will happen during/after this “correction” and pull together some advice for people in / wanting to get into the tech industry. Starting with the immediate consequences, one can reasonably expect that:

  • Exit pipeline will dry up: When startup valuations are higher than what the company could reasonably get in the stock market, management teams (who need to keep their investors and employees happy) become less willing to go public. And, if public markets are less excited about startups, the price acquirers need to pay to convince a management team to sell goes down. The result is fewer exits and less cash back to investors and employees for the exits that do happen.
  • VCs become less willing to invest: VCs invest in startups on the promise that future IPOs and acquisitions will make them even more money. When the exit pipeline dries up, VCs get cold feet because the ability to get a nice exit seems to fade away. The result is that VCs become a lot more price-sensitive when it comes to investing in later stage companies (where the dried up exit pipeline hurts the most).
  • Later stage companies start cutting costs: Companies in an environment where they can’t sell themselves or easily raise money have no choice but to cut costs. Since the vast majority of later-stage startups run at a loss to increase growth, they will find themselves in the uncomfortable position of slowing down hiring and potentially laying employees off, cutting back on perks, and focusing a lot more on getting their financials in order.

The result of all of this will be interesting for folks used to a tech industry (and a Bay Area) flush with cash and boundlessly optimistic:

  1. Job hopping should slow: “Easy money” to help companies figure out what works or to get an “acquihire” as a soft landing will be harder to get in a challenged financing and exit environment. The result is that the rapid job hopping endemic in the tech industry should slow as potential founders find it harder to raise money for their ideas and as it becomes harder for new startups to get the capital they need to pay top dollar.
  2. Strong companies are here to stay: While there is broad agreement that there are too many startups with higher valuations than reasonable, what’s also become clear is there are a number of mature tech companies that are doing exceptionally well (i.e. Facebook, Amazon, Netflix, and Google) and a number of “hotshots” which have demonstrated enough growth and strong enough unit economics and market position to survive a challenged environment (i.e. Uber, Airbnb). This will let them continue to hire and invest in ways that weaker peers will be unable to match.
  3. Tech “luxury money” will slow but not disappear: Anyone who lives in the Bay Area has a story of the ridiculousness of “tech money” (sky-high rents, gourmet toast, “its like Uber but for X”, etc). This has been fueled by cash from the startup world as well as free flowing VC money subsidizing many of these new services . However, in a world where companies need to cut costs, where exits are harder to come by, and where VCs are less willing to subsidize random on-demand services, a lot of this will diminish. That some of these services are fundamentally better than what came before (i.e. Uber) and that stronger companies will continue to pay top dollar for top talent will prevent all of this from collapsing (and lets not forget San Francisco’s irrational housing supply policies). As a result, people expecting a reversal of gentrification and the excesses of tech wealth will likely be disappointed, but its reasonable to expect a dramatic rationalization of the price and quantity of many “luxuries” that Bay Area inhabitants have become accustomed to soon.

So, what to do if you’re in / trying to get in to / wanting to invest in the tech industry?

  • Understand the business before you get in: Its a shame that market sentiment drives fundraising and exits, because good financial performance is generally a pretty good indicator of the long-term prospects of a business. In an environment where its harder to exit and raise cash, its absolutely critical to make sure there is a solid business footing so the company can keep going or raise money / exit on good terms.
  • Be concerned about companies which have a lot of startup exposure: Even if a company has solid financial performance, if much of that comes from selling to startups (especially services around accounting, recruiting, or sales), then they’re dependent on VCs opening up their own wallets to make money.
  • Have a much higher bar for large, later-stage companies: The companies that will feel the most “pain” the earliest will be those with with high valuations and high costs. Raising money at unicorn valuations can make a sexy press release but it doesn’t amount to anything if you can’t exit or raise money at an even higher valuation.
  • Rationalize exposure to “luxury”: Don’t expect that “Uber but for X” service that you love to stick around (at least not at current prices)…
  • Early stage companies can still be attractive: Companies that are several years from an exit & raising large amounts of cash will be insulated in the near-term from the pain in the later stage, especially if they are committed to staying frugal and building a disruptive business. Since they are already relatively low in valuation and since investors know they are discounting off a valuation in the future (potentially after any current market softness), the downward pressures on valuation are potentially lighter as well.
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Tesla in Energy Market

One of the most fascinating things about the technology industry is how the lines between markets and competitors can shift all of a sudden. One day, Nokia is mainly thinking about competing with phone makers like RIM and Motorola on getting influence with carriers and upselling text messaging services / ring tones and, the next, they need to deal with players like Apple and Google, fostering a strong app ecosystem, creating intuitive user experiences, and building a brand that resonates with users.

One interesting case that has emerged in the past couple of days is the electric car company Tesla entering the Home and Industrial energy market. In much the same way that software let Apple and Google build operating systems that could double up as phones, the manufacturing prowess and battery technology which let Tesla take on the electric car market also gives them the ability to offer energy storage solutions for the utility market.

When I was a VC looking at energy storage opportunities, there was a fair amount of discussion in the industry about the future potential for electric cars connected to the grid to themselves to operate as energy storage / load balancing. I never expected this to amount to much for at least a decade — when the penetration of electric vehicles would be high enough to make sense for utilities to invest in this capability. Never would I have imagined the path to anything even remotely like this would be through an electric car company directly making and offering electric batteries to supply the market. While history will judge whether or not Tesla is successful at this (a lot of unanswered questions around the durability of their Li-ion batteries for utility purposes and how they will be serviced / maintained), you can’t fault Tesla for lack of boldness!

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The Most Underrated Life Skill

I read a great blog post this morning which captures what I think is the most important life skill for today’s knowledge workers:

The barriers to becoming a software engineer are real. People born in technical families, or who were introduced to programming at an early age have this easy confidence that lets them tackle new things, to keep learning — and, in our eyes, they just keep getting further and further ahead. Last year, I saw this gap and gave up. But all we really need is the opportunity to see that it’s not hopeless. It’s not about what we already know, it’s about how we learn. It’s about the tenacity of sitting in front of a computer and googling until you find the right answer. It’s about staring at every line of code until you understand what’s going on, or googling until you do. It’s about googling how-to, examples, errors, until it all begins to make sense.

Everything else will follow.

Practically speaking, nobody can possibly learn or know everything they need to succeed at life. Even the greatest college/graduate education is incapable of teaching you what you need to know two or three years out, let alone the practical ins and outs of the specific situation you may face. As a result, what drives success for knowledge workers today is a mix of three things:

  • the tenacity to tackle the many problems that you will face
  • the persistence and skill to figure out the answer — which oftentimes means knowing how to Google well (or Bing or Baidu, if that’s your cup of tea)
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A Week with the Moto 360

Its hard for a device to get noticed in a world where new phones and tablets and smartwatches seem to come out every day. But one device unveiled back in March did for me: Motorola’s new smartwatch, the Moto 360 (see Motorola marketing video below).

So, being a true Fandroid, I bought a Moto 360 (clarification: my wonderful wife woke up at an unseemly hour and bought one for each of us) and have been using it for about a week — my take?

While there’s a lot of room for improvement, I like it.

  • This is by far the best looking smartwatch out there. Given how important appearance is for a watch, this is by far the most important positive that can be said of the Moto 360 — it just looks good. I was a little worried that the marketing materials wouldn’t accurately represent reality, but that fear turned out to be unfounded. The device not only looks nice up close, especially since its round design just looks so much better than pretty much every other smartwatch’s blocky rectangular designs, it also feels good: stainless steel body, a solid-feeling glass surface, and a very nice-feeling leather strap.
  • The battery life is nothing to brag about but will last you a full day. The key here is that the watch display can be used in two modes: (1) where the display is always on (and, from what I’ve read, will get something like 12 hours of battery life which won’t last you a whole day) and (2) where the display only turns on when you’ve triggered it which, in my experience, will get you something more like 20 hours of battery life — enough to get through a typical day. Obviously, I use (2) and what makes this possible is that turning on the screen is quite easy: you can do it by tapping on the touch-sensitive screen, by pushing the side button, or (although this only works 80% of the time) by moving your arm to be in a position where you can look at it. Now, I’d love a watch that could last at least months with the screen on before needing a charge but since I’m already charging my phone every night and since the wireless charging dock makes it easy to charge the device, this is an annoyance but hardly a dealbreaker.
  • The out-of-the-box experience needs some work. While the packaging is beautiful and fits well with how nice the watch itself looks, the Moto 360 unfortunately ships needing to be charged up to 80% before it can be used. Unfortunately this is not clear anywhere on the packaging or in the Android Wear smartphone app that you’re supposed to use to pair with the device or on the watch display so let me be explicit: if you buy the Moto 360, charge the device up before you download the Android Wear app or try to use it. Otherwise, nothing will happen — something which very much freaked out yours truly when I thought I had gotten a defective unit. Also, while I haven’t heard about this from anyone else, the Moto Connect app that Motorola wanted me to install also failed to provision an account for me correctly, leaving me unable to customize the finer details on the watchface designs that come with the watch. Not the end of the world, but definitely a set of problems a company like Motorola shouldn’t be facing.
  • I’m not sure the pedometer or heart rate sensor are super-accurate, but they’ve pretty much killed any need/desire on my part for a fitness wearable. The fitness functionality on the watch isn’t anything to write home about (its a simple step counter and heart rate sensor with basic history and heart-rate goal tracking). I’m also not entirely convinced that the heart rate sensor or the pedometer are particularly accurate (although its not like the competition is that great either), but their availability on a device I’m always going to be wearing because of its other functionality may pose a serious risk to fitness wearable companies which only do step tracking or heart rate detection.
  • Voice recognition is still not quite where it needs to be for me to make heavier use of the voice commands functionality.
  • The software doesn’t do a ton but that’s the way it should be. When I first started using Android Wear, I was a little bummed that it didn’t seem to have a ton of functionality: I couldn’t play games on it or browse maps or edit photos (or send my heartbeat or a random doodle to a random person…). But, after a day or two of wearing the device to social gatherings, I came to realize you really don’t want to do everything on your watch. Complicated tasks should be done on your phone or tablet or PC. They not only have larger screens but they are used in social contexts where that type of activity makes sense. Spending your time trying to do something on your smartwatch looks far more awkward (and probably looks far more rude) than doing the same thing on your phone or other device. Instead, I’ve come to rely on the Moto 360 as a way of supplementing my phone by letting me know (by vibrating and quickly lighting up the screen) about incoming notifications (like from an email or text or Facebook message), new alerts from Google Now (like access to the local weather or finding out about sudden traffic on the road to/from work), and by letting me deal with notifications the way I would if they were on my phone (like the ability to play and pause music or a podcast, or the ability to reply using voice commands to an email or text). This helps me be more present in social settings as I feel much less anxiety around needing to constantly check my phone for new updates (something I’ve been suffering from ever since my Crackberry days)
  • Android Wear’s approach makes it easy to claim support for many apps (simply by supporting notifications), but there needs to be more interesting apps and watchfaces for the platform to truly get mainstream appeal

All in all, I think the Moto 360 is hands down, the best smartwatch available right now (I’ll reserve my judgement when I get a chance to play with the Apple Watch). Its a great indicator of what Google’s Android Wear platform can achieve when done well and I’ve found its meaningfully changed how I’ve used my phone and eliminated my use of other fitness tracking devices. That being said, there’s definitely a lot of room for improvement: on battery life (especially in a world where the Pebble smartwatch can achieve nearly a week of battery life between charges), on voice recognition accuracy, on out-of-the-box setup experience, and on getting more apps and watchfaces on board. So, if you’re an early adopter type who’s comfortable with some of these rough edges and with waiting to see what apps/watchfaces come out and who is interested in some of the software value I described, this would be a great purchase. If not, you may want to wait for the hardware and software to improve another iteration or two before diving in.

I think the industry still needs a good answer to the average person around “why should I buy a smartwatch?” But, in any event, I’ll be very curious to see how this space evolves as more smartwatches come to market and especially how they change people’s relationships with their other devices.

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How Often Does a $3 Billion Valuation Come Along?

Snapchat-reportedly-said-no-to-3-billion-in-cash-from-Facebook

I blogged recently about why companies like Facebook are willing to pay large amounts for barely-in-revenue-if-at-all companies like Snapchat – but that’s a question about the buyer. The question dozens of entrepreneurs and venture investors are asking themselves is: should Snapchat have taken Facebook’s rumored bid?

While the right answer to that is a combination of personal (what does the team want to do) and business (what do we see as the likely path forward for the company), one question we can answer objectively is how often does such an exit happen?

As part of an exercise to try to better understand when and where big venture-backed opportunities lie, I pulled together data from Dow Jone’s Venturesource service and cross-matched it with companies from S&P’s Capital IQ to try to identify the home runs that venture capitalists pat themselves on the back for since 2002 (the end of the 2000’s dot-com bubble and burst).

My dataset showed 23 venture-backed outcomes that exceeded $3 billion in valuation (factoring in a 180-day lockup period that accompanies most IPOs where investors and key employees cannot sell stock, except for companies listed which haven’t had that 180-days of history then which I added the most recent market cap). Five of these (Yandex, Hibu, Biosensor Applications, Carmat SAS, and CTC Media) are not U.S. companies and an additional three (MetroPCS, Antero Resources, and First Republic Bank) are what I would call “unconventional” (i.e., an organization which does VC investments was involved in a pre-exit financing but they don’t fit the usual profile). So, more practically, since 2002, only 15 U.S.-based venture-backed companies have achieved exits in excess of $3 billion.

Company Valuation ($M) Exit Date Type Sector

Google

$53B

Aug 2004

IPO

Search

Facebook

$48B

May 2012

IPO

Social

Twitter

$22B

Nov 2013

IPO

Social

Workday

$9.8B

Oct 2012

IPO

Business Software

LinkedIn

$7.2B

May 2011

IPO

Social

Groupon

$6.9B

Nov 2011

IPO

Coupon

Veeva

$4.8B

Oct 2013

IPO

Business Software

FireEye

$4.5B

Sep 2013

IPO

Security

Tableau

$3.9B

May 2013

IPO

Business Software

Palo Alto Networks

$3.7B

Jul 2012

IPO

Security

Service Now

$3.7B

Jun 2012

IPO

Business Software

Zynga

$3.7B

Dec 2011

IPO

Gaming

Hyperion

$3.3B

Mar 2007

M&A

Business Software

Doubleclick

$3.1B

Mar 2008

M&A

Adtech

Splunk

$3.1B

Apr 2012

IPO

Business Software

Of those 15, only two are acquisitions — Hyperion Solutions (a business intelligence software company bought by Oracle) and DoubleClick (a leading ad exchange bought by Google) – the remainder are IPOs, and only 5 or 6 (depending on if you count LinkedIn) are direct-to-consumer in the same way that Snapchat is.

In short, Snapchat supposedly walked away from an outcome which is extremely rare and so the Snapchat founders/board, if they’re being “rational”, are clearly focused on building a standalone, IPO-able company of the size of a Google/Facebook/Twitter/Groupon/Zynga.

They have had remarkable traction to date and it will be interesting to see if they look back on this as a big mistake or the beginning of when the rest of the world understood just how big of a company they could become.

(Image source – PhoneArena.com)

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DBX Keynote

My college roommate Eric sent me a link to Drew Houston’s keynote presentation from the inaugural Dropbox developer conference (DBX). While I’m a little sad I didn’t get to attend (*ahem* friends who work at Dropbox who didn’t invite me), I was very pleased to find that some of the major themes of the keynote were very much aligned with some of the things I’ve blogged about recently: mainly, putting together a web file system and creating better synchronized application experiences. While I still have questions about the details on the feasibility of the merge-less syncing back-end they were promising, I hope app developers everywhere pay attention: while DBX might not have gotten as much attention as Google I/O or WWDC, what Dropbox announced is equally important in terms of building the types of services that users will want.

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Staying in Sync

While I don’t expect everyone to be as device-crazy as I am, one of the obvious consequences of convergence (the idea that more gadgets will become more computer-like — think smartphones, tablets, etc.) is that more people will have more devices. This creates new problems for users who, especially if they are from the US, were previously used to accessing their services/information mainly from a single device. After all, a well-built service or source of information should optimize experience around the user, not which device.

This proliferation is one reason I think internet services like Evernote and Gmail took off: for someone working with multiple devices, its much easier to make sure every device has access to the same data and functionality when the data and functionality aren’t on the devices themselves but hosted somewhere “in the cloud.” (Thank you, Dilbert)

188737.strip

The same logic applies to syncing services like Dropbox and applications like Netflix and smart syncing software like Chrome: they make it easy to ignore which device you’re using and just focus on the functionality and data that you want access to (in the case of Dropbox, its files; in the case of Netflix, its your viewing history and your place in a given video; and in the case of Chrome, its browser history and preferences).

Its gotten to the point where there are enough app developers and technologists working on this type of syncing that I get disappointed when a service or application fails to intelligently think about syncing as a way to delight the user. For instance, I get regularly irritated by the Twitter app for not tracking which interactions (@replies, favorites, re-tweets) I have previously seen. As I routinely move from one device (a smartphone) to another (a PC) to yet another (a tablet), with each device, I need to recheck which tweets and interactions I have seen and which I haven’t. While this is hardly the end of the world, it is only obvious because apps like Google’s new Hangouts app and Amazon’s Kindle app pass information on what you’ve seen and to where between devices, making it a coherent service completely unchained to the specific device you’re using – you can start a chat/book on one device and transition to another device without a hitch. I especially am a fan of Hangouts’ extra step: if you see an incoming message on one device, it will remove the notification from all the other connected devices (and will even minimize the open windows in other Chrome browsers).

This sort of abstraction is a common theme in the technology industry – where new companies and technologies emerge to simplify new sources of complexity. Its something I believe is becoming key functionality as the underlying problem (people with lots of devices and lots of services) grows. My advice to developers and entrepreneurs out there: don’t assume your users are married to any particular device and help them stay in sync. They will reward you for doing so.

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A Month with the Chromebook Pixel

Last month, I had the pleasure of attending Google I/O – Google’s annual developer conference and product geekfest. To put it simply, it was probably the nerdiest conference I’ve been to (and yours truly has been to some really nerdy conferences) with Google Glass users everywhere and flying, internet-controlled, camera-connected dirigible floating above the conference floor among the attractions.

One of the things that Google tried to emphasize to I/O attendees was the growing idea of Chrome, Google’s web browser, as a key platform for developers to embrace. Part of that message, of course, came from the talks and sessions where Google promoted Chrome’s widespread adoption (if you count mobile deployments, Google claims 750 million users worldwide) and proudly touted Chrome’s support of both sophisticated open technologies like HTML5, WebRTC, and WebGL, as well as proprietary-to-Chrome technologies like Native Client and their new Packaged Apps capability.

Equally (or perhaps more) effective was the conference’s giveaway of its Chromebook Pixel (not to mention some pretty interesting artistic displays showing off the device and its capabilities, see below).

My generally positive take on the Pixel’s predecessor Samsung’s Series 5 Chromebook is one of the more popular posts on this blog and so I thought I would share my take on Google’s latest and greatest. In a nutshell, I will say that the Chromebook Pixel is light years ahead of its predecessors and is an amazing device which hints at the potential of well-built Chrome OS hardware, albeit one which is probably not worth the $1200+ price tag:

    • Good, not good enough, performance: While the Series 5 routinely stumbled and hiccuped, the dual-core Ivy Bridge processor in the Pixel, while not the fastest chip around, was up to the task of almost any large web workload I threw at it – multiple tabs with Netflix and complex webapps like Tweetdeck and Gmail and Feedly running. Even Evernote, which I had not been able to get working on the older Chromebook, worked without any problems on the Pixel.
    • Amazing display: In the same way that other remarkably high resolution displays make you want to view more content (Nexus 10, Retina Display Macbook Pros), the Pixel has actually managed to steal web browsing and video watching time from my tablets, something I didn’t expect would happen.
    • Touch: I used to be a big skeptic of the importance of touchscreen displays on laptop form factors – no more. As cheesy as it sounds, the type of relationship you have with content is different when you can use touch gestures to zoom in/out and scroll up/down versus using arrow keys or a mouse. I can’t say that I primarily use the touchscreen in navigation, but it’s a nice touch (pun intended).
    • Much better industrial design: I don’t claim to be an ID expert, but the attention to detail on the machine is decidedly impressive for a company that many in the tech industry for years felt just didn’t care about design quality. The touchpad beats most of what the PC industry has put out in feel and responsiveness (although that’s a low bar to beat) and, taking a page from Apple’s playbook, supports multi-finger gestures. The device body is smooth aluminum with only a groove on the body for cool-looking LED lights to come out as a signal that the device is on and an interesting piano hinge for the display which someone engineered to function not only as a hinge but as a heat sink and Wi-Fi antenna. Simply put: it doesn’t feel or look cheap.

Couple that with the advantages I described to all Chrome OS systems (rapid boot, easy multi-user support, frequent and automatic updates, syncing tabs/histories/passwords with all your other Chrome browsers), and I think you have a fairly compelling device.

That said, three major problems are worth calling attention towards:

    • This is still just a browser: granted, most of what we do today is in or can easily be replaced by web-based applications of some form or the other, but, this won’t be playing Starcraft or running Excel or operating a server or doing software build work.
    • Underwhelming Battery life: for an operating system that is effectively a browser, I am surprised that my typical battery life is somewhere in the 3-4 hour range, and significantly lower if I’m using Netflix or YouTube. I can’t tell if this is simply an issue where Google included too small of a battery to save costs, if this is the energy from the extra processing power and backlight needed to run such a high-resolution screen, or if this is a operating system/firmware bug where the video codecs aren’t being used properly, but this is something that will likely need real improvement.
    • Extremely high price: while this is a fantastic device, its usage limitations (to basically being a big browser) and storage and memory and battery life limitations don’t make this a $1200+ machine. Interestingly, I do feel that if they included a dual-boot to Linux option, the screen and industrial design could very well justify a higher price (compare with Linux laptop vendor System76’s new Galago UltraPro)

So, the verdict? I am extremely happy I got this device for free from Google. It’s something I use regularly because it is a delight to use and really does put forward Chrome in a fantastic light for developers (which is really the purpose of the giveaway at Google I/O). This device is also probably more than enough for what the average computer user needs (who is mainly interested in checking email, reading articles, watching videos, and playing webgames) and has unique advantages for enterprise/educational settings. But, the fact that Chrome OS still can’t do everything that I need it to do and has limitations in battery life and storage and memory make it difficult to justify the high price for a regular consumer purchase.

Any other Chromebook Pixel users out there care to share their perspectives?

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Brainteasers are a Complete Waste of Time

In hiring that is.

At least that’s what Google’s Head of People Operations (the Google-y term for HR) Laszlo Bock said in a recent interview with the New York Times. While most of the article is about the fascinating data-driven approach Bock’s group has taken to try to improve how they hire and retain the best employees, his point on the lack of success with using Fermi problems (brainteasers that physicist Enrico Fermi was apparently known for enjoying) that Microsoft and Google were famous for asking in job interviews caught my eye:

On the hiring side, we found that brainteasers are a complete waste of time. How many golf balls can you fit into an airplane? How many gas stations in Manhattan? A complete waste of time. They don’t predict anything. They serve primarily to make the interviewer feel smart.

[emphasis mine]

I personally loathe brainteasers and have walked away from companies who have dared to use those questions on me (I’ve been asked the golf ball question by two interviewers at one company). While they supposedly push the interviewee to demonstrate intellectual horsepower, the complete irrelevance to the important functions of the job, the lack of information this type of question shines on the character or ethic or work experiences of the job candidate, and the fact that many of these are easily looked up online make answers to these questions pretty useless in determining job fit.

So, if you’re an interviewer – do your interviewees and your company a favor: skip the Fermi problems and focus, instead, on ways to probe relevant knowledge and a candidate’s cultural fit in a rigorous, repeatable process.

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Android Bluetooth (Smart) Blues

Readers of this blog will know that I’m a devout Fandroid, and the past few years of watching Android rise in market share across all segments and geographies and watching the platform go from curiosity for nerds and less-well-off individuals to must-support platform has been very gratifying to see.

Yet despite all that, there is one prominent area in which I find iOS so much better in that even I – a proud Fandroid venture capitalist – have been forced to encourage startups I meet with and work with to develop iOS-first: support for Bluetooth Smart.

LogoBluetoothSmart

In a nutshell, Bluetooth Smart (previously known as Bluetooth Low Energy) is a new kind of wireless technology which lets electronics connect wirelessly to phones, tablets, and computers. As its previous name suggests, the focus is on very low power usage which will let new devices like smart watches and fitness devices and low power sensors go longer without needing to dock or swap batteries – something that I – as a tech geek — am very interested in seeing get built and I – as a venture capitalist — am excited to help fund.

While Bluetooth Smart has made it much easier for new companies to build new connected hardware to the market, the technology needs device endpoints to support it. And therein lies the problem. Apple added support for Bluetooth Smart in the iPhone 4S and 5 – meaning that two generations of iOS products support this new technology. Google, however, has yet to add any such support to the Android operating system – leaving Bluetooth Smart support on the Android side to be shoddy and highly fragmented despite many Android devices possessing the hardware necessary to support it.

To be fair, part of this is probably due to the differences in how Apple and Google approached Bluetooth. While Android has fantastic support for Bluetooth 4.0 (what is called “Bluetooth Classic”) and has done a great job of making that open and easy to access for hardware makers, Apple made it much more difficult for hardware makers to do novel things with Bluetooth 4.0 (requiring an expensive and time-consuming MFi license – two things which will trip up any startup). Possibly in response to complaints about that, Apple had the vision to make their Bluetooth Smart implementation much more startup-friendly and, given the advantages of using Bluetooth Smart over Bluetooth Classic, many startups have opted to go in that direction.

The result is that for many new connected hardware startups I meet, the only sensible course of action for them is to build for iOS first, or else face the crippling need to either support Android devices one at a time (due to the immaturity and fragmentation in Bluetooth Smart support) or get an MFi license and work with technology that is not as well suited for low power applications. Consequently, I am forced to watch my chosen ecosystem become a second-class citizen for a very exciting new class of startups and products.

I’m hoping that at Google I/O this year (something I thankfully snagged a ticket for :-)), in addition to exciting announcements of new devices and services and software, Google will make time to announce support for Bluetooth Smart in the Android operating system and help this Fandroid VC not have to tell the startups he meets to build iOS-first.

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2012 in Blog

I may have not blogged as much as I wanted to in the last quarter of the year, but that won’t stop me from carrying out my annual tradition of sending off the previous year in blog!

Happy New Year everybody! Here’s to a great 2013 and thank you from the bottom of my heart for reading (and continuing to read) my little corner on the internet!

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Where do the devices fit?

About a month ago, I got Google’s new Nexus 7 tablet, and have been quite happy with the purchase (not that surprising given my self-proclaimed “Fandroid” status). Android’s Jelly Bean update works remarkably well and the Nexus 7 is wonderfully light and fast.

However, with the purchase of the Nexus 7, this brought the total number of “smart internet connected devices I own and use” to a total of 6:

  • Samsung Galaxy Nexus Verizon edition (4.65” Android phone)
  • a Nexus 7 (7” Android tablet)
  • a Motorola Xoom (10” Android tablet)
  • Chromebook (12” ChromeOS notebook)
  • Thinkpad T4o0 for personal use and a Thinkpad T410 for work (both 14” Windows 7 laptops)

nexus-devicesBeyond demonstrating my unreasonable willingness to spend money on newfangled gadgets (especially when Google puts its brand on them), owning these devices has been an interesting natural experiment to see just what use cases each device category is best suited for. After all, independent of the operating system you choose, there’s quite a bit of overlap between a 10” tablet and the Chromebook/laptop, between the 7” tablet and the 10” tablet, and between the 7” tablet and the 4.65” phone. Would one device supplant the others? Would they coexist? Would some coexist and others fall by the wayside?

Well, after about a month of adding a 5th device to the mix, I can say:

  • I wound up using all the devices, albeit for different things. This was actually quite a surprise to me. Before I bought the Nexus 7, I figured that I would end up either completely replacing the Xoom or find that I couldn’t do without the larger screen. But, I found the opposite happening – that the Nexus 7 took over for some things and the Xoom for others. What things?
    • Smartphone: The smartphone has really become my GPS and on-the-go music listening, photo taking, and quick reading device. Its small size means it fits in my pocket and goes everywhere I go, but its small screen size means I tend to prefer using other devices if they’re around. Because it’s everywhere I go, it’s the most logical device to turn to for picture-taking (despite the Galaxy Nexus’s lackluster camera), GPS-related functionality (checking in, finding directions, etc) and when I want/need to quickly read something (like work email) or listen to music/podcast in the car.
    • 7” tablet: I’ve really taken to the Nexus 7 form factor – and it’s become my go-to-device for reading and YouTube watching. The device is extremely light and small enough to fit in one hand, making it perfect for reading in bed or in a chair (unlike its heavier 10” and laptop-form-factor cousins). The screen is also large enough that watching short-form videos on it makes sense. It is, however, too big to be as mobile as a smartphone (and lacks cellular connectivity, making it useless if there is no WiFi network nearby).
    • 10” tablet: Because of the screen size and its heft, my 10” Motorola Xoom has really become my go-to-device for movie watching, game playing, and bringing to meetings. While the smaller 7” form factor is fine for short-form videos like the ones you’d see on YouTube, it is much too small to get the visual impact you want while watching a movie or playing a game. The larger screen size also gives you more room to play with while taking notes in a meeting, something the smaller screen size only makes possible if you like squinting at small font. It is, however, at least to this blogger, too big and too heavy, to make a great casual reading device, especially when lying in bed 🙂
    • 12” Chromebook: What does a Chromebook have that its smaller tablet cousins don’t? Three things: a keyboard, a mouse, and a full PC flavor of Chrome. The result is that in situations where I want to use Flash-based websites (i.e. the free version of Hulu, Amazon Videos, many restaurant/artist websites, etc) or play Flash-based games (i.e. most Facebook games) or access sophisticated web apps which aren’t touch-driven (i.e. WordPress, posting to Tumblr) or which don’t have full functioned apps attached (i.e. Google Drive/Docs), I turn to the Chromebook.
    • 14” Laptop: So where does my 14” laptop fit (and how could I possibly have enough room in my digital life that I’m actively researching options for my next Thinkpad machine)? Simple: it’s for everything else. I track my finances in Excel, make my corporate presentations in PowerPoint, do my taxes in Turbo Tax, compose blog posts on Windows Live Writer, program/develop on text editors and IDEs, write long emails, edit photos and movies… these are all things which are currently impossible or inconveniently hard to do on devices which don’t have the same screen size, keyboard/mouse caliber, operating system, and processing hardware as modern PCs. And, while the use of new devices has exploded as their cost and performance get better, the simple truth is power users will have a reason to have a “real PC” for at least several more years.
  • Applications/services which sync across devices are a godsend. While I’ve posted before about the power of web-based applications, you really learn to appreciate the fact that web applications & services store their information to a central repository in the cloud when you are trying to access the same work on multiple devices. That, combined with Google Chrome not only working on every device I have, but also actively syncing passwords and browser history between devices and showing the open browser tabs I have on other systems, makes owning and using multiple devices a heckuva lot easier.

How do you use the different devices you own? Has any of that usage segmentation surprised you?

(Image credit – GetAndroidStuff.com)

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A Few Months with the Chromebook

(Hello visitors, if you’re interested in this post, you may be interested to know that I have posted my impressions of the newer Chromebook Pixel here)

Last year, I had the chance to attend the New Game conference sponsored by Google to talk about the use of HTML5 in games. The conference itself was fascinating as it brought up many of the themes I’ve mentioned before on this blog about the rise of HTML5 as a tool to build compelling software, but one of the highlights was that Google gave every attendee a free Samsung Series 5 Chromebook to test out and use for development purposes.

chromebooks-portability

I’ve blogged a few times before about Chromebooks and how they represent the next logical step in Google’s belief in the web as the core platform for software delivery (seeing how they’re machines that are built almost entirely around the browser), and I jumped at the chance to test it out.

I initially tested out the Chromebook shortly after getting it for a week or two. To be completely honest, I was underwhelmed. While there were many cool things about the operating system (it always being up to date, the built in Google Talk experience, and the ability to use Google Docs as a scratchpad for starters), the machine just felt very slow (likely in part because of the low-end Intel Atom processor inside). The device never seemed to sync properly with my Google account, the lack of a desktop made this feel more like a browser with a keyboard than an operating system, and poor support for offline functionality and handling of peripherals made it feel very constraining. I meant to write up a review on the blog but I never got around to it and it faded from memory, collecting dust in storage…

Flash forward to May when Google unveiled a pretty bold re-vamp of the Chrome OS operating system that lies behind the Chromebook: Aura. Aura replaced what was formerly a within-one-browser-window experience with something which looks and feels a lot more like a traditional operating system with a taskbar, multiple windows (and hence true multi-tasking), a desktop background, a “system tray/control panel” to readily access system-wide settings (i.e. battery life, which WiFi network I’m connected to, screen brightness, etc), and an application launcher. My previous problems with syncing with my Google account are gone (and its support for tab syncing – where I can continue browsing a webpage I was reading on another device – make using this very natural). The experience also just feels faster – both the act of browsing as well as thinsg like how quickly the touchpad responds to commands. Chromebooks now also handle more file types natively (whether downloaded or from removable media), and, with the recently announced offline Google Drive integration, Chromebooks have gotten a lot more useful and have taken another step to achieve the “web file system” vision I blogged about before.

Much to my surprise, I’ve even found myself turning to my Chromebook regularly as a casual consumption device. It being instant-on, browser-centric, and ready support for multiple user accounts makes it a perfect device to watch TV epsiodes or movies from Google Play, Netflix, or Amazon Videos or to share interesting articles to my Tumblr (something that my touch-centric Galaxy Nexus and Motorola Xoom do less well at).

Realistically, there are a set of apps which I’ve found to work much better on Windows/Linux (mainly coding, using Microsoft Excel, and composing blog posts) and which prevent me from using a Chromebook for 100% of my computing needs. But, while important, these only take up a minority of my time on a computer — what actually stops me from using the Chromebook much more actively as a primary machine in my job and day-to-day are two far more pressing items:

  1. Evernote does not work. I am a very active user of Evernote for note-taking and note organization, and its unfailing ability to crash whatever tab is open to it on a Chromebook is a pretty major roadblock for me.
  2. Some web apps don’t play nice because they don’t recognize Chrome OS properly. The key culprit here for me is Microsoft Outlook. A conspiracy theorist might think this was some ploy by Microsoft to get people using Chrome OS to switch to Windows or by Google to get Outlook users to switch to Google Apps – but at the end of the day, Microsoft’s very nice, new Outlook Web App, which works beautifully on Chrome on my Windows 7 machine, treats the Chromebook as if it were a barely functioning computer running Internet Explorer 6 – leaving me with a crippled web experience for what is my corporate email lifeline. If Google made it possible to spoof the browser identification or found a way to convince Microsoft to give Chrome OS flying colors when it comes to serving up web apps, that would make me a MUCH happier camper.

These issues aside, there is no doubt in my mind that Chrome OS/Chromebooks are a concept worthy of consideration for people who are thinking about buying a new computer for themselves or their loved ones: if you spend most of your time on the computer on the web and don’t need to code or create/consume massive files, these machines are perfect (they boot fast, they update themselves, and they are built with the web in mind). I think this sort of model also will probably work quite well in quite a few enterprise/educational settings, given how easy they are to support and to share between multiple users. This feels to me like an increasingly real validation of my hypothesis of the web as software platform and, while there’s quite a few remaining rough spots, I was very impressed by the new Aura revision and look forward to more refreshes coming out from the Chrome team and more time with my Chromebook :-).

(Image credit – Chromebook – Google)

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My Takeaways from GTC 2012

If you’ve ever taken a quick look at the Bench Press blog that I post to, you’ll notice quite a few posts that talk about the promise of using graphics chips (GPUs) like the kind NVIDIA and AMD make for gamers for scientific research and high-performance computing. Well, last Wednesday, I had a chance to enter the Mecca of GPU computing: the GPU Technology Conference.

tmp_image_1337198959501

If it sounds super geeky, it’s because it is :-). But, in all seriousness, it was a great opportunity to see what researchers and interesting companies were doing with the huge amount of computational power that is embedded inside GPUs as well as see some of NVIDIA’s latest and greatest technology demo’s.

So, without further ado, here are some of my reactions after attending:

    • NVIDIA really should just rename this conference the “NVIDIA Technology Conference”. NVIDIA CEO Jen-Hsun Huang gave the keynote, the conference itself is organized and sponsored by NVIDIA employees, NVIDIA has a strong lead in the ecosystem in terms of applying the GPU to things other than graphics, and most of the non-computing demos were NVIDIA technologies leveraged elsewhere. I understand that they want to brand this as a broader ecosystem play, but let’s be real: this is like Intel calling their “Intel Developer Forum” the “CPU Technology Forum” – lets call it what it is, ok? 🙂
    • Lots of cool uses for the technology, but we definitely haven’t reached the point where the technology is truly “mainstream.” On the one hand, I was blown away by the abundance of researchers and companies showcasing interesting applications for GPU technology. The poster area was full of interesting uses of the GPU in life science, social sciences, mathematical theory/computer science, financial analysis, geological science, astrophysics, etc. The exhibit hall was full of companies pitching hardware design and software consulting services and organizations showing off sophisticated calculations and visualizations that they weren’t able to do before. These are great wins for NVIDIA – they have found an additional driver of demand for their products beyond high-end gaming. But, this makeup of attendees should be alarming to NVIDIA – this means that the applications for the technology so far are fundamentally niche-y, not mainstream. This isn’t to say they aren’t valuable (clearly many financial firms are willing to pay almost anything for a little bit more quantitative power to do better trades), but the real explosive potential, in my mind, is the promise of having “supercomputers inside every graphics chip” – that’s a deep democratization of computing power that is not realized if the main users are only at the highest end of financial services and research, and I think NVIDIA needs to help the ecosystem find ways to get there if they want to turn their leadership position in alternative uses of the GPU into a meaningful and differentiated business driver.
    • NVIDIA made a big, risky bet on enabling virtualization technology. In his keynote, NVIDIA CEO Jen-Hsun Huang announced with great fanfare (as is usually his style) that he has made virtualization – this has made it possible to allow multiple users to share the same graphics card over the internet. Why is this potentially a big risk? Because, it means if you want to have good graphics performance, you no longer have to buy an expensive graphics card for your computer – you can simply plug into a graphics card that’s hosted somewhere else on the internet whether it be for gaming (using a service like GaiKai or OnLive) or for virtual desktops (where all of the hard work is done by a server and you’re just seeing the screen image much like you would watch a video on Netflix or YouTube) or in plugging into remote rendering services (if you work in digital movie editing). So why do it? I think NVIDIA likely sees a large opportunity in selling graphics chips which have , to date, been mostly a PC-thing, into servers that are now being built and teed up to do online gaming, online rendering, and virtual desktops. I think this is also motivated by the fact that the most mainstream and novel uses of GPU technology has been about putting GPU power onto “the cloud” (hosted somewhere on the internet). GaiKai wants to use this for gaming, Elemental wants to use this to help deliver videos to internet video viewers, rendering farms want to use this so that movie studios don’t need to buy high-end workstations for all their editing/special effects guys.
    • NVIDIA wants to be more than graphics-only. At the conference, three things jumped out at me as not being quite congruent with the rest of the conference. The first was that there were quite a few booths showing off people using Android tablets powered by NVIDIA’s Tegra chips to play high-end games. Second,  NVIDIA proudly showed off one of those new Tesla cars with their graphical touchscreen driven user interface inside (also powered by NVIDIA’s Tegra chips).
      2012-05-16 19.04.39Third, this was kind of hidden away in a random booth, but a company called SECO that builds development boards showed off a nifty board combining NVIDIA’s Tegra chips with its high-end graphics cards to build something they called the CARMA Kit – a low power high performance computing beast.2012-05-16 19.16.09
      While NVIDIA has talked before about its plans with “Project Denver” to build a chip that can displace Intel’s hold on computer CPUs – this shows they’re trying to turn that from vision into reality – instead of just being the graphics card inside a game console, they’re making tablets which can play games, they’re making the processor that runs the operating system for a car, and they’re finding ways to take their less powerful Tegra processor and pair it up with a little GPU-supercomputer action.

If its not apparent, I had a blast and look forward to seeing more from the ecosystem!

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Happy Mother’s Day

This year, my brother and I cheated. We did Mother’s Day one day earlier. What did we do?

    • The whole family got together at UC Berkeley
    • We had lunch at a nice Persian place, on me of course
    • We met my brother’s lovely girlfriend Andrea
    • My brother and I then gave her the present we had bought (split 50-50) for her: a shiny new tablet!

But of course, my brother outdid me completely on his present by happening to graduate and get his master’s degree from Berkeley thus officially becoming more educated than me :). Here we are with our dear mom:

Hope everyone else had a great Mother’s Day – and if you haven’t already, CALL YOUR MOM! 🙂

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Trip to Taiwan

In late March, I had a chance to take a one week trip with my parents to Taiwan. I’ve posted some of the pictures I took on Google+ (I’ll get around to properly captioning them at some point), but the trip was very meaningful for me as it was my first trip back to “the motherland” in over twenty years.

830DD97C-8BDE-4594-BBB8-48741A40EEC9Being able to see relatives I hadn’t seen in many years (some, like my grandparents, who probably don’t have much time left in this world), hear their stories about me as a baby, see sights that I have only the faintest memory of (now from a completely different vantage point), be able to actually visit the graves of my relatives/ancestors and participate in traditional ancestor worship rituals, and visit places that I had only seen in photos was very moving. And, while it was a tiring trip (I think I got way less sleep during this “vacation” than I would have in a normal week), its one that I enjoyed greatly (see picture left :-)).

Word of advice to those who want to visit Taiwan: March is a great time – warm and humid, but not excessively so :-).

As for why you should visit Taiwan sometime? Here’s a quick bullet list:

    • Huge swaths of the island are virtually untouched by people – this is one of the few places where you can have a pure tropical environment
    • Delicious (and cheap) fruit and gorgeous butterflies (consequence of the tropical thing)
    • Excellent (and cheap) food  — especially in the night street markets
    • Very easy to get around – they borrowed Japan’s penchant for labeling everything and also Japan’s pretty effective and ubiquitous public transit
    • The National Palace Museum houses some of the finest Chinese art you’ll ever see
    • There are some very gorgeous locations to see: Taroko National Park, Alishan Mountain, temples galore, etc

So go: support the tourism industry of the place I came from :-).

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Reaction After a Week and a Half with the Galaxy Nexus

Just before SXSW, I bought myself the latest Android phone (and the first to run Google’s new Android Ice Cream Sandwich): the Samsung Galaxy Nexus. So, after using it for a week and a half, here are some of my reactions, but to make a long story short: this phone is amazing

    • The screen is gorgeous – I had always heard that Samsung’s Super AMOLED screens delivered particularly vivid colors — beats the LCD that I had on my old DROID2 without any question.
    • I will stop making fun of big screens – my previous phone, Motorola’s DROID 2, had a 3.7” screen (more or less the same as the iPhone 4). The Galaxy Nexus? A massive 4.65”! I’ll have to admit: it took a little while getting used to it — and don’t get me wrong, there are still moments when I curse my small hands 🙂 — but the difference in terms of extra screen space, ease of typing, etc is amazing. At SXSW, there was a moment when I had to use my colleague’s iPhone to enter information into a form (because his email client wasn’t working so he couldn’t send me the link). What had once been normal to me felt like the most cramped little device possible. I now begin to understand why my girlfriend wants the Samsung Galaxy Note’s massive 5.3” screen
    • LTE is blazing. I follow wireless news so I had always logically understood the numbers behind Verizon’s LTE – it was one reason I was always irked that AT&T and T-Mobile called their HSPA+ and other non-LTE/WiMax technologies “4G”. But, having never used an LTE device, I didn’t really understand the speed until I had used the LTE on my Galaxy Nexus. The speed is incredible. Its as fast, if not faster than WiFi  (depending on connection strength) – how do I know this? I could point you to a speedtest screencap, but a use case is more illustrative: when the DSL died out in my house, it was my Galaxy Nexus to the rescue as we waited on AT&T (ironic considering I’m on the Verizon network!) to swing by and fix the connection.
    • LTE is blazing part 2: There are two downsides to LTE which are worth mentioning.
        • The first is that it burns up your battery extremely quickly and has a tendency to make your phone extremely hot. On both my DROID 2 and iPhone, it would take prolonged usage of the 3G network before that type of “burn” would kick in.
        • The second is that for whatever reason (I can’t tell if its the modem/RF in my phone or if its the Verizon network or if Verizon is just trying to throttle me 🙁 or some combination), my connection stability has not been great. I get kicked off the LTE network randomly, whereas 3G-only mode (CDMA) has given me much better network stability
    • While I miss the physical keyboard of the DROID2, the combination of the larger screen, faster phone, and combination of Swiftkey and intuitive in-text-field spell-checker makes it work. The larger screen means its easier to hit the right keys at the right time. The faster phone means no more weird latency between keypresses and actual registering of those presses. SwiftKey provides remarkably good autocorrect which is also predictive of next words, and the new in-text-field spell-checker means the words that I misspelled or have obvious grammatical errors on get underlined in the textfield directly, letting me choose between a number of alternatives for the best correction.
    • One thing that took a while for me to get used to was the weird positioning of the notification light. Whereas before, the notification light was, as with the Motorola Xoom, in the upper-right corner of the device – the notification light for the Galaxy Nexus is at the bottom of the phone – which is a little strange in my opinion…
    • Significantly improved performance. That significant UI slickness gap I mentioned in my last post comparing the iPhone 4 to the DROID 2? Basically gone. I don’t know if its the new operating system, the new chip, or some combination – but I no longer have iOS envy when it comes to performance.
    • But, the Galaxy Nexus doesn’t have the greatest camera. While the software interface for the camera has been revamped (and significantly improved in my opinion) and the zero-shutter picture taking is a nice touch, 5MP and the color performance of the camera just aren’t much to write home about. Thankfully, I’m such a terrible photographer, I don’t think it really matters what camera I have 🙂 so this is kind of a wash for me.
    • Ice Cream Sandwich keeps much of what I love about Android (refer to this prior post) and adds to it. I’ve had Ice Cream Sandwich on my Motorola Xoom (Android tablet) for some time as well – but it felt more incremental over the Android 3.0 Honeycomb operating system that it replaced than the dramatic change over Android 2.3 Gingerbread operating system that was on my DROID2 and on most Android phones today.
        • Better notifications: two major changes from the previous version of Android – the first is that individual notifications can be dismissed with a cool swipe gesture which just works wonderfully. The second is that the settings tool can now be easily accessed from the pulldown notification menu.
        • Resizable and dynamic widgets: With the exception of the occasional buggy implementation of the email widget (which, for whatever reason, stops reflecting the status of my corporate inbox), being able to scroll through my email and calendar or play music without going into the apps themselves or to rapidly turn on/off different wireless features without going into the settings or to create shortcuts to turn-by-turn navigation to specific addresses is amazing.
        • New turn-by-turn navigation has a much more natural sounding voice.
        • The New Chrome for Android browser, while lacking in Flash and the ability to enforce a desktop user-agent (to get the desktop version of a webpage), is not only extremely slick, it brings quick Google sign-in capabilities (saving me a ton of keystrokes when it comes to Google apps or other services which require Google login), instant synchronization with all Chrome browsers across all devices, and a number of awesome gestures to manage tabs. To be fair, I think Safari on iOS still shows a performance advantage in terms of avoiding artifacts (especially while scrolling while the page is loading), but the much improved tab management and the synchronization make it a far better browser, in my opinion, than anything else out there.
        • New multitasking makes it easy to see all the apps that are open, a quick screenshot (so you know what’s going on in those apps), and the simple swipe-to-close gesture that the new notifications menu has.
        • The new contacts app (now called People) and calendar app are significantly improved. Being able to pinch-zoom in the calendar app to shift the viewing frame is very cool and extremely helpful when switching between weekends/days where I have few and long meetings versus weekdays where I have many and short meetings.
    • Battery life is still something that needs to improve. Full context: at SXSW, everybody was charging their phones by the late afternoon: it didn’t matter if you were using Android, iOS, or Windows – everybody was charging up on spare power outlets or on the FedEx guys walking around with phone-charging jackets (no joke!) that you could plug into. But, with that said, there’s no doubt in my mind that the iPhone still wins hands down in a battery life race. I don’t know if this is primarily because of the larger screen & LTE connection on the Galaxy Nexus or if there are some runaway background processes/fundamental operating system limitations that are happening, but if I were Google or some of the Android phone makers, I would focus on tackling probably the last real but still very important advantage that the iPhone has.

Net-net, I think this device is pretty awesome. Sure, the battery life is not where I want it to be, and the camera, weird positioning of the notification light, and lack of physical keyboard are things I take fault at. But, the combination of having Ice Cream Sandwich, great screen, and LTE connectivity make me agree with the Verge’s review of the product: “The Galaxy Nexus is the best Android phone ever made… it could be the best smartphone ever produced … Since day one, I’ve been waiting for an Android device that lived up to the promise of such a powerful OS. I think I can stop waiting now.”

(Image credit – Galaxy Nexus – Android.com)

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