Which Startup To Pick?


I was fortunate enough to visit two great conferences here in sunny San Diego during the last week of September, DEMOfall and ASIS, and then Consumer Technology Ventures more recently.

In case some of you don’t know: DEMOfall (or “Demo”) and CTV are all about startups pitching their new products, mostly software, to VCs and the press, plus some related keynotes. ASIS is a physical security show (cameras, access control, gates, lights… and software and systems, which are what I was there to see). Demo is tiny, pretty much all in one auditorium, plus the lunch tent. CTV was in the fabulous San Jose Fairmont Hotel, and had the presentations split into different rooms, but was even smaller than Demo. ASIS is huge. It would be literally impossible to visit every booth, even if you had an entire week to spend there. My legs and back hurt after the first day. Every product at Demo and CTV was new, and the folks who created them were standing there having a beer with me. Every employee I spoke with was able to immediately answer my questions about the product, the company, the competition, and the market as they see it, or tap the shoulder of the person next to them to get the answer. Heck, some of them answered questions about my products. At most booths at ASIS, I had a hard time finding anyone who could answer fundamental questions such as “How does your product compare?”, or “What underlying technology does this use?”, or even identify an employee who could answer. Many of the companies did not even produce their own software products (white label products from the same source were sold by competitors – i.e. companies own no IP and compete against each other with exactly the same product).

Of course the difference between the conferences is to be expected, given that two are venture-orientated, but actually attending them in close proximity made contrast all the more interesting.

There is one other difference between the companies at Demo and CTV vs. the companies at ASIS: Almost every ASIS company has proven that it has something customers will pay money for. At Demo and CSV, most of the products and services are free to the consumer, with an advertising or up-sell/subscription revenue model – a future revenue model that is.

It was very interesting to see top tier VCs dance around directed questions from WSJ editors and reporters about how they will pick the next “MySpace” or “YouTube”.

Almost every product I saw at Demo and CTV was absolutely useful, well thought out and well implemented. But have a more fundamental question: Do people really want all of this new technology?

One of the things I’ve discovered is that the people I know are really a lot like everyone else. I figure if I can’t get my own family and friends to use these products or services, I’ll be hard pressed to convince a few million people I don’t know to use them.

So, to the horror of those around me, that’s exactly what I’ve set out to do (cram all this technology down my poor friends and family’s throats, that is).

Now, I of course need to be careful about which “friends” I pick as use cases. As a developer, I of course have plenty of geek friends; tech company founders, Black Hat speakers, … All of those folks will install anything, figure out how to use it instantly, without reading the instructions, give some feedback, and then go on the next thing. There are about 137,000 more where they came from at TechCrunch.

Luckily I know some “regular” people too. My daughter attends a school that has great parental participation, we belong to a dads/daughters camping group, I know a lot of sports car enthusiasts who attend show and track events together, I just bought a Jeep and plan to join the local 4×4 club outings (first outing last week!), my wife has lots of friends, and my heritage is Irish and Italian Catholic (so I have 100s of relatives, many who help smog up Daniel’s New England air each day). We just returned from Disneyland yesterday. A week ago we went to Vegas.

So in a nutshell, I have lots of opportunities to take photos and videos, communicate, collaborate, share, search, etc. while on the go.

Here are some of my recent experiences:

First and ten
I needed a way to share huge high definition video files with friends. True, video is more compelling than text, but the most compelling video on earth is a video of “you”. These are videos that I took of my friends running their cars on race tracks, surfing, etc. They wanted the videos. Real bad. ‘Nuf said. My “old way” of delivering the videos was to encode them in various formats for Windows and Mac, create ZIP files, and allow them to download the files from my Web site. I also used (and still use) variations of progressive download players (objects that cause the video to start playing automatically on a Web page). That works, but is clumsy and tedious.

Along came a new company; one who had exactly what I thought I needed. This company also has a lot of users. It was a peer-to-peer based application that allowed for efficient, e-mail like, exchange of huge files. I tried sending some of the HD zip files around using this tool. One of about 30 people installed it, and they said they had “trouble” with it. I have yet to identify possible failure scenario… all you do is click “install”, but my friends seem to have a way of breaking almost everything. Problem is, my friends – not the techies – are a lot like everyone else. These guys passed on the opportunity to watch the most compelling content possible (OK, maybe the second most compelling) simply because they were unwilling to install yet another application.

So like I said, that new company has a lot of users. 137,000. To be fair, the company really does have a faithful user base, beyond the TechCrunch crowd, but it’s mostly a techie user base (for example, one of the Skype founders is a faithful user).

Second and ten
We go on these dad/daughter camping trips about once a month. In fact, we are going tomorrow, and the guy who turned me on to PE Week Wire (which I have read faithfully every single day ever since) will be attending too.

For tomorrow’s trip, all 14 or so dads will pack up the land yachts, gather the girls, and fight through busy San Diego traffic up to the mountains. The tradition for this particular yearly venue is to meet in a small town for beers, shots, and arcade games before the campout starts. As with every year, we have not decided where we will meet. We could of course fight our way through spotty cell phone coverage and randomly call each other to narrow down the choice of pubs, but I view this as an opportunity for technology.

Enter a free cell phone application (actually two) that allow a sort of “delayed group Push-to-Talk” (PTT) feature. Of course Nextel has long offered group PTT, and I noticed Cingular has it now for $9.99, but actual group PTT is not functional for this sort of use. First, cell coverage is spotty. There is coverage, but in the mountains it fades in and out. Second, real time PTT doesn’t work well for groups when there is background noise. Envision this – Suburban traveling at 60MPH on the freeway, music playing, girls screaming… and one dad group-casts “OK, we are meeting at the first saloon on the left”. Someone else replies “what? You haven’t even left? You going to make it tonight?”. Another says “we are meeting at that pub on the right?”.

These delayed PTT features allow one to many messaging, so that one sender can deliver a message to the group, members of the group can listen to the message (can send text, photos, and video too), turn down the radio, ask the girls to be quiet for a minute, and play it back again and again if needed until they can understand it. Furthermore the message gets delivered later if the phone has faded out of coverage when the original is sent, and any recipient can reply to the whole group. It works across all cell carriers.

Problem is, the group has to sign up for this service before it can be used effectively. One of them, a scientist and CEO, called me with all sorts of questions about the “terms” that you must agree to (pretty much the same ones that are on any Web site). I know of 137,000 people that don’t even read those “terms” agreements any more. Another replied with a question about why it needed his AOL password. I said “what?”. Turns out he used the feature that sucks all of your contacts into the site. It of course needs to access AOL to get those. I didn’t even consider allowing the application to pull in my contact list. I just cut-n-pasted the few I intended to send to.

Out of the 14 dads, and after quite a bit of prodding, I have convinced 4 to sign up.

Third and ten
Of course also at the dad/daughter camping trips, and race track events, lots of participants show up with cameras. Wouldn’t it be cool if there were an easy way to create a sort of shared photo album, were participants could send in photos for all to view as a collection?

Well, that’s exactly what one service offered (past tense), and another one recently added. The ability to create an e-mail address, say [email protected]. Of course the problem with plain e-mail is that most Internet service providers (ISPs) have an attachment size limit. 20 photos taken with your new 5MP camera from Costco just are not going to go through.

Both of these companies offer a piece of client software that looks like an e-mail program, but does compression and background transfer of the photos (and videos too).

So of course I’ve been trying to get my friends to use this sort of tool for about a year. The problem is that to use it requires that senders install software on their PC or Mac. Now there are other photo-video sharing services that don’t require a software install (or “client’ in geek-speak), but those offer even greater challenges with slow and interruptible uploads, etc.

After all of this time, and lots of prodding, only three of probably fifty non-geek friends have actually installed one of these photo sharing applications. Many of my friends have taken lower quality still photos and e-mailed them around, but most just leave the photos on their computers.

Field goal or punt?
So I’ve identified a few failed launches within my own circles. What about YouTube? I contend that one is a success, except for the “user generated content” part.

I asked almost everyone I know two simple questions: “Have you watched the video ‘Evolution of Dance’ on YouTube”, and “Have you uploaded a video to YouTube”. Until last night I was at 100% “yes” and “no”… and this after a mix of 30 or so geek and non-geek queries. My test-buster was a tech CEO of a video photo sharing company. He hasn’t seen Evolution of Dance, but has however watched other videos on YouTube, and had uploaded a video just to learn the experience.

But the point is – all this buzz about “user generated content” – who are the generators? Do you know anyone who has uploaded a video to YouTube? The answer I get: “why in the world would I want to do that”? My friend’s teenagers all have MySpace and/or Facebook accounts, but even they don’t upload videos to YouTube. I surmise that a select few are contributing the bulk of the uploads, hoping to be the next Lonely Girl (and it turns out she wasn’t so lonely). What happens when all the wannabe film production stars realize there is no one waiting to discover them, the skate punks tire of getting 10 video views and no comments in exchange for 4 weeks in a cast, and all the copyrighted content gets yanked? Are we left with infomercials and movie previews?

For all this “consumer” technology, exactly who are the consumers anyway? Are there really enough of them to build a business around? An industry? Ones who will either pay or click on ads?

Also, each investor can pick at most one in each category. Is there enough stickiness to keep consumers loyal? (i.e. Success of a particular consumer technology only helps if your company can maintain a large, active, user base).

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