Come for the tool, stay for the network

A popular strategy for bootstrapping networks is what I like to call “come for the tool, stay for the network.”

The idea is to initially attract users with a single-player tool and then, over time, get them to participate in a network. The tool helps get to initial critical mass. The network creates the long term value for users, and defensibility for the company.

I’m going to give two historical examples and leave it to readers to think of present-day examples (there are many): 1) Delicious. The single-player tool was a cloud service for your bookmarks. The multiplayer network was a tagging system for discovering and sharing links. 2) Instagram. Instagram’s initial hook was the cool photo filters. At the time some other apps like Hipstamatic had filters but you had to pay for them. Instagram also made it easy to share your photos on other networks like Facebook and Twitter. But you could also share on Instagram’s network, which of course became the preferred way to use Instagram over time.

The “come for the tool, stay for the network” strategy isn’t the only way to build a network. Some networks never had single-player tools, including gigantic successes like Facebook and Twitter. But starting a network from scratch is very hard. Think of single-player tools as kindling.

Virtual reality: a new creative medium where the default state is belief

The holy grail of virtual reality, the one that’s always been out of reach until now, is presence.

In the VR community, “presence” is a term of art. It’s the idea that once VR reaches a certain quality level your brain is actually tricked — at the lowest, most primal level — into believing that what you see in front of you is reality. Studies show that even if you rationally believe you’re not truly standing at the edge of a steep cliff, and even if you try with all your might to jump, your legs will buckle. Your low-level lizard brain won’t let you do it.

With presence, your brain goes from feeling like you have a headset on to feeling like you’re immersed in a different world.

Computer enthusiasts and science fiction writers have dreamed about VR for decades. But earlier attempts to develop it, especially in the 1990s, were disappointing. It turns out the technology wasn’t ready yet. What’s happening now — because of Moore’s Law, and also the rapid improvement of processors, screens, and accelerometers, driven by the smartphone boom — is that VR is finally ready to go mainstream.

Once VR achieves presence, we start to believe.

We use the phrase “suspension of disbelief” about the experience of watching TV or movies. This implies that our default state watching TV and movies is disbelief. We start to believe only when we become sufficiently immersed.

With VR, the situation is reversed: we believe, by default, that what we see is real. As Chris Milk, an early VR pioneer, explains:

You read a book; your brain reads letters printed in ink on paper and transforms that into a world. You watch a movie; you’re seeing imagery inside of a rectangle while you’re sitting inside a room, and your brain translates that into a world. And you connect to this even though you know it’s not real, but because you’re in the habit of suspending disbelief.

With virtual reality, you’re essentially hacking the visual-audio system of your brain and feeding it a set of stimuli that’s close enough to the stimuli it expects that it sees it as truth. Instead of suspending your disbelief, you actually have to remind yourself not to believe.

This has implications for the kinds of software that will succeed in VR. The risk is not that it’s boring, but that it’s too intense. For example, a popular video game like Call of Duty ported to VR would be frightening and disorienting for most people.

What will likely succeed instead are relatively simple experiences. Some examples: go back in time and walk around ancient Rome; overcome your fear of heights by climbing skyscrapers; execute precision moves as you train to safely land planes; return to places you “3D photographed” on your last vacation; have a picnic on a sunny afternoon with a long-lost friend; build trust with virtual work colleagues in a way that today you can only do in person.

These experiences will be dreamt up by “experience makers” — the VR version of filmmakers. The next few decades of VR will be similar to the first few decades of film. Filmmakers had no idea what worked and what didn’t: how to write, how to shoot, how to edit, etc. After decades of experiments they established the grammar of film. We’re about to enter a similar period of exploration with VR.

There will be great games made in VR, and gaming will probably dominate the VR narrative for the next few years. But longer term, we won’t think of games as essential to the medium. The original TV shows were newscasts and game shows, but today we think of TV screens as content-agnostic input-output devices.

VR will be the ultimate input-output device. Some people call VR “the last medium” because any subsequent medium can be invented inside of VR, using software alone. Looking back, the movie and TV screens we use today will be seen as an intermediate step between the invention of electricity and the invention of VR. Kids will think it’s funny that their ancestors used to stare at glowing rectangles hoping to suspend disbelief.

(originally posted on a16z)

VC investment vs Gartner hype cycle

Here is total VC investment over time:

Screen Shot 2015-01-12 at 10.38.00 PM

And here’s the Gartner hype cycle:

Screen Shot 2015-01-12 at 10.38.22 PM

One reading of this is that the advent of the internet was the technology trigger, the dot-com crash was the trough of disillusionment, and 2004-present is the slope of enlightenment (with a mini-crash in 2008 due to the implosion on Wall Street). This reading would be consistent with Carlotta Perez’s theory that we are now in the multi-decade deployment phase.

How We Got To Now

I really enjoyed Steven Johnson’s How We Got To Now. I read a lot of history and science books, but this book stood out because 1) the anecdotes were entertaining and relevant, and 2) it got the process of innovation right.

I’ll just pick one story here that I liked. Frederic Tudor was a Boston entrepreneur in the early 1800s who had the clever idea to ship ice from New England to the Caribbean:

The history of global trade had clearly demonstrated that vast fortunes could be made by transporting a commodity that was ubiquitous in one environment to a place where it was scarce. To the young Tudor, ice seemed to fit the equation perfectly: nearly worthless in Boston, ice would be priceless in Havana.

Not only was the ice almost free, but so was the shipping:

His New England base gave him one crucial advantage, beyond the ice itself. Unlike the U.S. South, with its sugar plantations and cotton fields, the northeastern states were largely devoid of natural resources that could be sold elsewhere. This meant that ships tended to leave Boston harbor empty, heading off for the West Indies to fill their hulls with valuable cargo before returning to the wealthy markets of the eastern seaboard. Paying a crew to sail a ship with no cargo was effectively burning money. Any cargo was better than nothing, which meant that Tudor could negotiate cheaper rates for himself by loading his ice onto what would have otherwise been an empty ship, and thereby avoiding the need to buy and maintain his own vessels.

He invested his life savings and years building his startup. Everyone thought he was crazy. The local paper wrote a snarky article about him: “No joke. A vessel has cleared at the Custom House for Martinique with a cargo of ice. We hope this will not prove a slippery speculation.” He even spent two years in prison when he went into debt (this was before one of the greatest legal inventions of all time- limited liability). He finally got his ice delivered but failed to predict one thing:

Despite a number of weather-related delays, the ice survived the journey in remarkably good shape. The problem proved to be one that Tudor had never contemplated. The residents of Martinique had no interest in his exotic frozen bounty. They simply had no idea what to do with it.

We take it for granted in the modern world that an ordinary day will involve exposure to a wide range of temperatures. We enjoy piping hot coffee in the morning and ice cream for dessert at the end of the day. Those of us who live in climates with hot summers expect to bounce back and forth between air-conditioned offices and brutal humidity where winter rules, we bundle up and venture out into the frigid streets, and turn up the thermostat when we return home. But the overwhelming majority of humans living in equatorial climes in 1800 would have literally never once experienced anything cold. The idea of frozen water would have been as fanciful to the residents of Martinique as an iPhone.

There is a saying that entrepreneurs should create “painkillers not vitamins”. This is bad advice. Painkillers are not very interesting businesses. Lots of people create painkillers, and they either work or they don’t, and nothing more is generated as a result. The really interesting companies create vitamins. You don’t know you want ice until you figure out what to do with it. Once you do, you discover all sorts of things you couldn’t imagine before, which in turn create new opportunities for invention and entrepreneurship.

The stories in the book ultimately argue for public policies that support networked innovation:

[T]here are social and political implications to these kinds of stories. We know that one key driver of progress and standards of living is technological innovation. If we think that innovation comes from a lone genius inventing a new technology from scratch, that model naturally steers us toward certain policy decisions, like stronger patent protection. But if we think that innovation comes out of collaborative networks, then we want to support different policies and organizational forms.

People who understand how innovation really works tend to support open standards, lenient immigration policies, well-funded university research, employee stock options, and significant restrictions of patents.

Flow

Mihaly Csikszentmihalyi in 1996 on the concept of Flow:

[Flow] is being completely involved in an activity for its own sake. The ego falls away. Time flies. Every action, movement, and thought follows inevitably from the previous one, like playing jazz. Your whole being is involved, and you’re using your skills to the utmost.

Goals transform a random walk into a chase. You need clear goals that fit into a hierarchy, with little goals that build toward more meaningful, higher-level goals. Here you are, tracking the footprints of some animal you haven’t seen. That’s exhilarating. Then there’s the question of feedback. Most Web sites don’t very much care what you do. It would be much better if they said: “You’ve made some interesting choices” or “You’re developing a knowledge of Picasso.” There’s also the ability to challenge. Competition is an easy way to get into flow.

Realize that change and downtime are important. I found that if a painter relates to objects only through vision, his work is much less original than a painter who walks up to the object, smells it, throws it in the air, and manipulates it. The variety of sensory inputs allows you to create a visual image that has all kinds of dimensions bubbling up inside it. We are still a multimedia organism. If we want to push the envelope of complexity further, we have to use all of our devices for accessing information – not all of which are rational.

“Go With the Flow,” Wired Magazine