CES update
This is the Best CES I’ve ever attended. I’m blown away by how rapidly technology is changing everything I’ve ever known about media, both mass media and my own content.
We are entering a world where anyone can produce audio and video programming and actually get it into the hands of consumers on any device.
This has been true for PCs for a few years now as content companies, authors, artists, and publishers can get their content online easily, and web users can find it. For 10 years I have carefully watched scores of online content companies, analyzed what they were developing and how they were marketing it. I used what I learned to help build MyFamily.com and Ancestry.com.
But today that same content will begin to be easily accessible on all kinds of mobile devices and most importantly, for the first time, on televisions in living rooms.
As a columnist for Connect Magazine, I’ve been able to attend hard-to-get-into keynotes from Paul Otellini, CEO of Intel and Terry Semel, CEO of Yahoo. Later today I will hear Larry Page, co-founder of Google.
Here are some of the big announcements:
1. Intel announced yesterday a new PC platform called Viiv (pronounced “vive”, like the Shampoo I used this morning). This tiny PC is built on Intel’s Core Duo processors will sit in your living room and connect to your large screen TV. And what will you watch? In the early decades of TV we watched whatever the 3 major networks played. More recently we’ve become accustomed to having dozens of channels delivered via cable or satellite. But Intel is teaming up with AOL Time Warner, Yahoo, and others to provide a totally different TV experience.
But in the new Viiv world any consumer will have remote control access not just to a few dozen channels but 14,000 TV episodes from 300 TV series for FREE, offered by AOL Time Warner via Viiv.
Consumers will also have access to at least 1,000 movies on demand and 1-2 million songs, under new subscription models. Morgan Freeman, famous actor and founder of ClickStar, announced yesterday a simultaneous in theater/in home world premiere of a new Hollywood film, later this year. Tom Hanks and Danny Devito, among others, were there to support Intel’s efforts to provide distribution to any film maker, putting creative control of future films in the hands of producers and directors. With the Viiv distribution channel, indies should thrive.
The last time TV changed for me was a few years ago when I got a DVR. This let me easily record any program and watch it at my convenience. TV time shifting is wonderful. My DVR is my favorite consumer electronics device of all time. (Second only to the 300 CD jukebox that I bought many years ago.) I’m not counting my Blackberry because that is for business.
But Intel’s announcement yesterday is a far more dramatic change than what Tivo has done. Intel will forever change television as we know it. Our living rooms will be powered by Viiv PCs that allow us to access millions of songs, thousands of movies, and all the TV programming of the past, on demand, plus any user generated content or other content off the internet, including photos, audio, and streaming video.
2. Yahoo today announced Yahoo Go and Yahoo Go TV. They invited all device manufacturers to partner with them (since they said they have no interest in doing hardware) . They showed how easy it will be to access your Yahoo mail, photos, music, and video on your cell phone and on your TV.
In fact, they demonstrated taking a picture on a Nokia camera phone, which automatically uploads to Yahoo Photos, and within minutes is viewable on your My Yahoo on your Intel Viiv powered TV.
The seamless syncing (or synching) of content on your three screens, your PC, TV and mobile phone, are really here for the first time.
My biggest complaint about my Blackberry is that I read 80-90% of my email on the Blackberry, but then I go online to Yahoo Mail and have to re-read the same email, and online it can’t tell if I’ve read the email message on the PDA or not. This makes my email life impossible. Some emails always drop through the cracks for me.
Phil Burns thinks the new MS CE based Treo would solve this problem. But Yahoo clearly is solving it too.
And my biggest complaint about digital cameras is remembering to get photos online so that I can save them and share them esaily with others. Cingular apparently tells Yahoo that billions of cell phone photos are trapped on phones where people never get them off.
But Yahoo fixes this. Then they also demoed how to use your phone to go online to Yahoo photos and pull down photos (whether taken by your phone or by your digital camera and uploaded previously) and look at them on your phone.
So perhaps our synchronizing problems across devices is really going to be solved. That is huge. But more importantly, the access to all the world’s mass and personal media on all of these same devices is even more important.
For years I attended Comdex and was impressed at how the technology industry enhanced human productivity. Phil Burns says the book “Natural Born Cyborgs” basically says we are all augmenting our human capabilities with technology. But a few years back Comdex started dying and all the computer hardware and software companies seemed to want to turn into consumer electronics companies.
HP two years ago hardly mentioned productivity. It was all about media.
Intel is now the future of television. The CEO ended his speech by saying that the “new normal” is a “rising baseline of fun” that is “brought to life by the human imagination.”
It seems like the main players in the computer industry are now all about entertainment.
This troubles me. The idea that the average american spends 247 minutes per day watching TV and only 50 minutes online really bothers me.
The availability of all the world’s entertainment content 24/7 on any device in our homes or in our hands leads me to believe that future generations all over the world will spend more and more of their time seeking entertainment. As if that is what life is all about.
Every year 150 m people get a mobile phone for the first time every year, 100 million get PCs. Most of the world have TVs. As these devices become Yahoo Go enabled and as Intel Viiv (with its 100 OEMs and a price point as low as $900) replaces traditional TVs, the whole world will have access to millions of hours of programming.
What does this mean for words? What will be the future of books? How well will words fare in a world that is filled with entertaining audio and video everywhere?
What does this mean for the future of health? In the US we’re setting obesity records and getting diabetes and Alzheimers in record numbers. Will future generations be couch potatoes
What does it mean for family life? More and more youth these days have multiple portable devices and wear earphones constantly. When they also have access to millions of hours of audio and video programming wherever they are, how will that change their attitudes towards their parents, siblings, and others?
I’m far from being a Luddite. But I am increasingly concerned about how the new focus on technology and entertainment will affect the world in the coming decades.
Bill Joy thinks the world will end in grey goo, with nano or biotech gone bad.
My concern is that no one will notice because they’ll be so engrossed in listening to some of the 10,000 songs on their iPod or watching all the episodes of “Welcome Back, Kotter.”
Neal Postman worried about the death of public discourse in the age of television. His book “Amusing Ourselves to Death” offers a very thoughtful warning. He suggested that those of us in the modern world could not sit through the Lincoln Douglass debates (which were several hours long) because all we can handle is small sound bytes.
What happens to logic, reason, conversation, and the human experience when media consumption fills almost every waking hour of every day. (I think many people are averaging 8-12 hours a day already.)
I’m not wringing my hands in despair; I’m just wondering myself as I contemplate the sweeping changes that I am seeing here at CES and trying to foresee where the world is heading.
I’ve blogged previously about Peter Drucker stating that the decreasing in population is the developed world is the biggest issue facing western civilization.
I wonder if we continue to be more and more entertainment by mass media which will now be portable–what will that do to family life? What will that do to hard work and sacrifice?
Will a larger number of us be contented to drink beer and watch satellite television for 7 hours a day in trailer parks, caring little for anything else?
I saw that lifestyle first hand while serving as a missionary in North Carolina 20 years ago. I couldn’t comprehend it. I visited hundreds of homes and wondered why anyone would choose to live like that.
But I think a new modern version of that will be simply escaping from the traditional work of education, hard work, sacrifice and responsibility into a constantly connected mobile world filled with entertaining media. In other words, we won’t need the beer and trailer, but we’ll achieve just about as much in our lives as those who do. It will just be a more portable and more social version of it.
I already know that most high school students know almost nothing about history. Jay Leno has proven that over and over again with his hilarious man-on-the-street interviews.
But the more content entices millions of youth to escape into the attractive world of modern portable entertainment, where millions of hours of content are luring them, what will happen to education? How many teens will read and study and ponder the Federalist Papers, to understand the cost of freedom, and why we should limit government?
I think a deadly 1-2 punch happens when youth stop reading books and start living an Always On lifestyle — where they all know the lyrics to every popular rap song, but no one can quote even a few lines from the Gettysburg address.
Google Print has the potential to change this. The Open Content Alliance too.
But the question is, how will we get any youth to care, when they have their cell phone and their video-enabled iPod, and their Viiv TV and high-def and a large plasma screen, and access to millions of songs and ten thousand movies?
Will the world end in Grey Goo or will we all amuse ourselves to death watching music videos by the Goo Goo Dolls on our Viiv TV?
Staying in Business
We entrepreneurs sometimes feel victorious after we have raised capital from family, friends, angels or VCs.
But the pressure and the hard work are just beginning. You have to stretch those dollars until you get to cash flow positive, and it is always difficult to do so. The worst case scenario is to run out of cash before you have built the product or successfully sold it to real customers. Or you are just starting to get customers, but you can’t afford to spend more money on sales and marketing to attract more.
You have to plan smartly and watch expenses carefully and have contingency plans to avoid burning through your capital.
The biggest mistake we usually make is to hire too many full time employees and get a burn rate that is too high. Our optimistic projections assure us that we will be okay, but it usually takes longer than we project to generate enough revenue to support our entire staff.
Some possible solutions for this are: 1) hire contractors and only when they are needed to do a specific project, and 2) outsource development work to low-cost outsourcing companies, 3) try to hire a commissioned based sales team and add headcount only as they are needed to support actual customers.
Another option is to work with your full time staff on a milestone based plan. As revenue and profitability milestones are achieved, provide them with pay increases or increased equity. But on the other hand, if the milestones aren’t achieved, planned-for cost reductions (decreased salary or decreased hours) may automatically go into force.
One of my friends has a brilliant way to keep his costs down and to give his employees upside. Dan Oaks from DVO.com allows his employees to buy into his profit-sharing plan on a monthly basis. They risk some of their regular salary to buy the right to share the profits if the company meets or exceeds its goals. He has seem incredible results from the team doing everything possible to share in the bounty by making sure the revenue goals are hit each month. If the company doesn’t hit its numbers, its payroll actually goes down. This idea works great if you have fairly consistent revenue and want to grow it faster, with full support from your team.
An incredibly important idea is to phase in employees as they are needed in the correct order. A recent article from Silicon Valley discussed that many software companies scale up a full-fledged sales team (with the burn rate that entails) before they have proven the best way to generate sales. Start small, see what works, and then scale up quickly when adding sales headcount adds to profits. Early on, sometimes sales headcount can be a cost center. That is a formula for disaster.
Another fall back option if the runway doesn’t seem long enough is to do outside development projects — for example, get a contract project and use your staff half time working on someone else’s project.
That is not ideal, but it’s better than running out of runway.
Spending a lot of capital on office space, equipment, and other overhead costs can be disastrous. But there seems to be pressure on companies who have raised money to look more professional, to move into expensive office space, and put on the appearance of success.
Avoid this pitfall. Stay as lean as you possibly can. Rent cheap space or work from home virtually. Use online project management software to manage your team. Do guerilla marketing. Use email and LinkedIn to people you know to reach potential customers and partners. Put in the hours and hours of hard work turning over stones to find revenue.
I’m increasingly anxious about the burn rate for the various Provo Labs startup companies. I’m blogging today as much to remind myself of what I believe in as I am to make sure the entire Provo Labs family understands the our philosophy of using seed capital as a runway to positive cash flow, and that our own funds are limited.
All of us need to be thinking day-in and day-out about where our revenue is going to be coming from. We are in the middle of determining the amount of capital available to our various portfolio companies. It has to be enough to get us to cash flow positive or to a larger funding round (if growth capital really is required to have a big success.)
All employees and contractors need to be sales people for our companies, helping us find revenue from real customers.
And if revenue doesn’t come readily, then we must be prepared to find creative ways to reduce costs and build a longer runway so each startup can survive first and thrive later.
We want each startup to live to see another day. Because when a startup really does hit the J curve, everyone wins. And that is a rush.
Angel Investors Acting Like VCs
A Business Week article (thanks John and Steve!) discusses that angel investors are banding together more often and investing larger amounts in less risky deals. The author mentions that more than 200 organized angel groups exist in the U.S. served by the Angel Capital Association.
I like seeing the growth from the organized angel groups.
FundingUniverse.com (one of our portfolio companies) helps by providing free online software (the DealFlow Suite) to help angel groups find quality business plans and growing companies that they want to learn more about.
But I still think that the vast majority of angel investments are made by individuals who are not part of organized angel investor groups. I think the largest investments are made by superangels who don’t join groups and I think the majority of deals come from angels who aren’t trying to be like VCs–they are helping entrepreneurs that they know and like to try to get something off the ground. They invest anywhere from a few thousand dollars to hundreds of times that amount.
I know quite a few superangels. I wish more of them would join angel investor groups because sometimes angel groups can’t raise enough money to get good deals funded. Superangels could easily solve that problem.
Meanwhile, FundingUniverse.com now has more than 700 angel investors (20 state sites have at least 10) registered on its network of states sites. They collectively have more than $500 million in "available capital." As more and more state sites attract angels, the company will be able to hold speed pitching events and larger regional events in more locations.
Goals for 2006
I’ve been thinking a lot about goal setting recently. As a Christian, I have always liked that Ezra Taft Benson (Secretary of Agriculture under Eisenhower and later, President of the Mormon Church) explained that all of us should follow the example of Jesus Christ in making progress in four areas of life.
The single biblical verse that describes Jesus’ life from age 12 to 30 says: “And Jesus increased in wisdom and stature and in favor with God and man.” (Luke 2:52)
Ezra Taft Benson explained that every person ought to set goals and make personal progress mentally (wisdom), physically (stature), spiritually (favor with God) and socially (favor with man). It is easy to be happy when you are making measurable progress in these four important categories.
So I’ve been contemplating what I want to achieve in 2006 in these four areas.
Mental
I have a large reading list of great books and want to devote significant time daily to reading. I read in the Love-is-the-Killer-App way, taking notes every time I come across a big idea. I am also planning to finish reading the Book of Mormon in Russian. I graduated from BYU in Russian 15 years ago, and haven’t kept up the language skills like I want to.
I also want to do more writing. My Connect column always challenges me. I need to write more thoughtful articles for my blog. And I want to prepare to do a national column on entrepreneurship. I also want to make progress on writing my first book. Since I will be internet marketing at BYU again this coming fall I intend to be better prepared with more curriculum material for my students.
Physical.
I hope to run another half-marathon on my next birthday; but I also hope to do my longest 1-hour run so far. Last year I did 6.83 miles in an hour. (I know that is slow, but it was my personal best.)
I also want to eat a more healthy diet. I’ve studied the diets of Thomas Edison and Buckminster Fuller (very contradictory by the way), and I’ve also recently skimmed the book “Fast Food Nation” which is a real wake up call. I’ve spoken with several vegetarian friends. I watch the statistics about obesity and the predictions about diabetes and Alzheimers for our aging population. I think a healthy diet and regular exercise are the best ways to combat these epidemics, and yet most people don’t seem to adopt them. I did well last year but want to do even better this year.
Spiritual/Social. My goals in these areas are private. But I will say that I admire Mahatma Gandhi, who said in his Autobiography, “”What I have been striving and pining to achieve these thirty years is to see God face to face.” I admire those who believe that God is our Father and that all men and women are brothers and sisters. I appreciate those who live their lives trying to keep the two great commandments: love God with all your heart, and love your neighbor like yourself. Those two commandments really cover the Spiritual and Social areas well.
Okay, so now for my blog readers, here are the more important goals, the ones that deal with Provo Labs and our various internet businesses.
Here are the main things I hope that we accomplish in 2006.
1. We will acquire and/or build a dozen revenue-generating web sites that will offset the costs of all of our Provo Labs staff. This is our top priority. If we use our fund to pay for headcount, then having ten employees will use up a good deal of our fund. But by building or buying high traffic sites and generating revenue (affiliate or AdSense) from them, we figure that we should be able to support at least a dozen employees without dipping at all into our fund. If we can pull this off, then our success is virtually guaranteed, because our core team will be able to build startup companies with subsidized labor costs, giving each company a chance to get to positive revenue on very little capital.
2. Provo Labs companies will become the #2 player in the genealogy/family space, the #2 player in the history space, and the #2 player in the audio books space. MyFamily.com, The History Channel, and Audible.com are great companies delivering excellent content to millions of customers. But it is hard to think of any brand in the number two position, because all the other players are extremely far behind. We hope to become players in these very interesting categories by delivering unique services to new platforms and integrating text, audio, and video in unique ways. My love of knowledge motivates me to stay involved in genealogy, history, and all kinds of content.
3. Blastyx will become one of the hottest online marketing agencies in the country as it starts using insider audio and video-casting and blogging as online marketing tools. Every Provo Labs startup will be launched with the help of Blastyx.
4. FundingUniverse.com will become a household name among entrepreneurs as its speedpitching events for investors and its regional events start to attract hundreds of serious investors and well-prepared entrepreneurs. Every Provo Labs company that needs outside funding will utilize the growing network of angel investors and venture capital sources in the FundingUniverse.com network.
5. We’ll get back into the political arena with a relaunch of iCount.com. Our mobile commerce technology company (to be announced) will roll out its first product and start attracting a lot of attention. Our SEO technology company will reach profitable after signing up several larger enterprise clients. And I hope we launch an online education company that holds online classes in dozens of subjects like MyFamily.com does in genealogy.
So that might be way too much to bite off for the new year, especially since some of these goals are simply ideas at this point. But if we aim for the sun and hit the moon, we’ll be pretty happy and we’ll end the year 2006 in the words of Cervantes with an oar in every boat and a finger in every pie.
Most importantly of all, I hope Provo Labs helps create a culture of innovation, networking and knowledge sharing in Utah. We need to bring the good parts of the Silicon Valley culture here. We need to think big, and do what it takes to bring world changing ideas to fruition. There are hundreds of great companies that can be formed here and that can succeed here. We have the technical talent, the language skills and the internet marketing skills. But we need more ways for people to meet, share ideas, collaborate, and form partnerships that are win/win.
I am optimistic that this will be the best year ever. As an entrepreneur I have to believe this, or I should go get a real job. As Robert Browning said, “The best is yet to be.” I believe this is true. I believe this will be the best year of my life so far. Here’s to hoping …
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