Been thinking a lot about the cable industry of late. The media is carried away by the current re-transmission battle and is devoting a lot of real estate to that end. I want to touch on other inflection points that will hit the industry in the future. The only question is whether it will happen quickly or slowly. Lets look at residential services. Currently cable companies provide three types of service namely, wire-line, video, and data. The gambit is data. Unless 4G LTE adoption breaches desktops/laptops/tablets the cable companies will have a great opportunity to become a coherent service provider i.e. high speed data. At current pricing for 4G LTE (15 MB/$) versus cable (100 MB/$, assuming lower end) it will be a while before LTE competes with high speed data. Reliability/availability of data services is also a big win for the cable incumbents versus the telcos (think subways, remote areas etc). Verizon’s FiOS, the fiber alternative to the coax offers a price point of ~90 MB/$ (for roughly same speeds). Also, Verizon has decided to stop investing in FiOS and there will be no further build out. Google is still only experimenting with Fiber and is not mainstream yet. Ergo, cable companies will continue to be in the driver’s seat as far as high speed data is concerned.
I was at an event to hear Chet Kanojia (Aereo) speak a couple weeks back. An entrepreneur walked up to me and we started talking about the industry at large. We both agreed that the TV experience really sucks for the user. Google’s Chromecast is a great start in this regard. This brings me to the other inflection point. The TV is destined to become a ‘dumb pipe’.
Finally, with the democratization of content distribution via cable companies, over-the-top services like Aereo, Netflix, Hulu, Amazon Prime, content creators are gaining more options to reach the consumer. More avenues to recoup costs. This is in essence the crux of the battle. The distributor feels that the digital rights for content is now a commodity as it is available over multiple platforms and should therefore be cheaper. Or just added to the existing distribution deal as a kicker.
This democratization of content will lead to a portfolio theory of accessing content. Rather than depend on a bundler to provide services, customer will soon start to BYOS (Build Your Own Service). Imagine a household with a Netflix account, Amazon Prime, Aereo, and on demand live sports. At an annual price of $280 + bandwidth for sports it’s a win for the customer. Compare this to a conventional double play service’s annual price, $1000 (low end). What this means is that the cable companies will essentially offer on-demand live sports (maybe not?) as well as the key ingredient – access to the internet. It comes down to how much pain are they willing to stomach. Will they stay in the $720 range for sports & internet or will they hike rates? Time & some competition will tell.
There is an explosion in the number of devices that are connected to our smartphones via the internet. These devices have been around for ages and the internet as we know it has been around for a little over two decades. The smartphone (iOS/Android enabled) of today has been around for a little over five years. If Thomas Friedman were to update his list of levelers in The World is Flat the smartphone will feature. The world now buys more smartphones than computers. No surprise, because if you offer a product at half the price and the same if not more computing power consumers are bound to buy. This ecosystem is reinforced by the mobile only services like Foursquare, Path, Uber, Instagram and Whatsapp. Although there were concerns about the form factor early on, we seem to have adapted well.
So what are the devices I am talking about and what will the software architecture look like? Cars, Locks, Wind turbines, Solar panels, and Drones for starters. a16z announced today that they have invested about $10.7 million in a company Airware dubbed the OS of drones. One can start to imagine the kind of non-military applications for drones ex. farming, infra surveillance, preventing wildlife poaching, and even terrestrial mapping. The firm also has investments in Activate and Lockitron which help your car and lock (yes!) respectively connect to your smartphone. This is the beginning of the Internet of Everything (IoE)
What this means for the next generation of students/professionals is that, their skills have to evolve to interdisciplinary specializations. For example, a mechanical engineer must also know electronics, the intersection dubbed Mechatronics. I predict that we will be seeing such degrees go mainstream soon. And by the way, coding will become a mandatory course for undergrads soon enough.
If I had a drone powered by a customized OS, I would want it to do my grocery shopping. By ordering the list of items I want from my smartphone and paying with Bitcoins, I would automatically be taken to a screen which asks me to input the location of the store. The drone would collect the shopping bag and fly back to my house landing on the small drone-pad at my door. It would of course send me a text message after landing safely.
Last month (March ’13) marked the one year anniversary (give/take) of the MOOC providers in the edu-tech space (i.e. Coursera, Udacity, edX). Their single minded goal was/is to provide zero marginal cost education. I too believe technology can enable better education. What is interesting about this new trend to me is that online education is not trying to uproot the traditional model; rather it is an able supplement. And I think depending on an individual’s motivation, time availability, and financial appetite students will self-select into the traditional versus open model.
The MOOC proponents couldn’t have timed it better,. This uptrend in edu-tech is creating opportunities for secondary/tertiary markets to germinate. Proliferation in the number of universities that are signing-up, subjects being offered, and the demographics of students is creating a need for credentialing and aggregating these various models of learning. Add to this the problems that beset the local job market (supply/demand) and you have the perfect springboard to start a firm that helps remove the noise and eke out the signals from user engagement data.
This sets the stage to build companies that can piggy-back off the MOOC effect and start tackling these challenges. Services that help create a edu-folder of all my accomplishments (traditional and non-traditional), connect me to employers who are looking for customized skill-sets, and/or solve the issue of credentialing will be poised for big growth. The network effects will generate data on user learning patterns, age based interests, stage of career, ability to rate/grade peers, participatory skills etc.
Edu-tech is disruptive and a firm I’d invest in that is accelerating change is “Degreed” . The service will score and validate your lifelong education from both accredited and non-accredited sources. Although every person is unique, the current system tends to measure potential based on standardized test scores which may not call out our strengths/interests. As employers start looking for specialized skills in employees and for ways to measure these, Degreed will be in pole position. Learning has been/will be a continuous process and Degreed has a solution to reflect this.
I imagine a future where students/professionals list a FICO type edu-score calculated by Degreed on their LinkedIn profiles (the new resume). These scores would be holistic and recruiters will be better able to gauge a candidate’s competitiveness and vice-versa. Profile matching will be an add-on feature and would aid in forming well balanced official teams. Advertising can be fine tuned to match the target better. Traditional universities could use the service to recruit professors with specific expertise for short-term courses. Start-ups could find mentors with specific backgrounds. The possibilities in this space are exciting and we are just beginning to scratch the surface.
I think blogging is a great way to engage an audience and get quality feedback on your thinking. Recently, a lot of prominent bloggers I follow are stressing on the importance of making this a habit. The trade-off of course is between content and frequency. Today, I want to talk about a couple of interesting engagements that I am involved in.
In my spare time I am helping two ICT enabled social ventures with pitch decks, funding proposals, business model vetting, negotiations, and strategic partnerships. Also, I am working on an interesting piece of research for a venture capital alliance around the next wave of tech that will create jobs of the future. New Ventures (WRI incubated) is roping me in to make the business case for innovative water companies to set shop in south-east Asia. Finally, I am part of a global team which is trying to disrupt the BOP essential services market via business model innovation.
This piece is not intended to talk about the various projects but rather to talk about the tech thread that weaves these together. That thread is Skype. Over the last three months Skype has helped me traverse the length and breadth of the globe. My partners are all across from Colorado, New York, Sweden, Finland, Kenya, and India. Geography is not a constraint anymore. Skype is enabling global virtual teams to work on exciting problems to make the world a better place.
Over the next few days, I will be delving into each of these projects in more detail. For a couple of these projects I will soon be looking for people to onboard. I also plan to do a highlight section where I will write about an exciting new startup that I meet at any of the various events I frequent in the city or virtually. Watch this space!
Kenya has been drawing my attention for the last couple of months. The country is a breeding ground for social entrepreneurs both indigenous and from outside. All this is part of a plan to create a middle class economy by the year 2030.
I believe the country is in good shape to achieve this goal. My personal experience with these leaders has been in a field of passion – clean energy. Very soon it will extend to include primary education. There are other passionate folks who are tackling challenges in health, agriculture, water, and tech.
Some facts to chew on in the Kenyan context:
The country is pushing renewable energy adoption not for PR but for the tangible benefits the tech offers and also because of on-the-ground realities of the grid. There are more folks off-grid and this means distributed systems have an advantage. 3rd party firms like KMR Infra are unlocking this opportunity as I type this piece. The government is also working in lock step by providing incentives like the FiT (Feed-in-Tariff). Solar and biomass have been vetted for maximum impact.
Open data is helping and empowering citizens to ensure transparency in services administered by the government. Small groups of students who are tech savvy are creating tools to aid this process. For example, M-Maji and MajiVoice (Maji means Water) are two services which help citizens track the nearest water dispensing location as well as lodge complaints if the services provided are sub-par.
The other piece of tech that is driving this change is the mobile phone. Safaricom via its M-Pesa service has basically created a branch-less bank for Kenyans. Users conduct instant peer-to-peer money transfers, using phone numbers as identifiers. Cash enters and leaves the system through M-Pesa agents or traditional ATMs. More than 70% of Kenyan adults use the service. And to think this is before the smartphone has even entered the country!
Women in Kenya are creating their own geek culture, so to speak. A ladies only IT club calls itself Akirachix, inspired from Akira a Japanese movie which means energy and intelligence. Of which these women have plenty. Kenya has laid hundreds of miles of fiber optic cable. Google and IBM set up shop here. The city even has plans for a $7 billion technology hub just outside the capital, Nairobi. With the infra in place all you need is for these clubs like Akirachix to bring in more and more girls; importantly, catch them young. One such inspired club member started a service M-Farm to help farmers with market info and weather updates.
The Kenyan motto is called Harambee which means “Let’s all pull together”, and by my observation, they sure are. This is the germination of a brilliant ecosystem that tackles very fundamental challenges in an economy namely, energy, health, finance, agriculture/water, and education. The common denominator being tech, both hard and soft. So Harambee!
Never been much of a Star Trek fan. But that could change soon. I have Netflix to thank for that. All the versions of the series are on Netflix. Of late I have come across a lot of entrepreneurs/companies/organizations that are on a mission to covert the sci-fi portrayed in the series to reality.
Yes, right from the medical tricorder to the universal translator to the laser weaponry and perhaps in the future ‘beaming up’ too. So my suggestion to those looking for the next big thing in tech is to tune in to the activities of USS Enterprise.
How would you feel if you were able to make drones run small errands for you? Imagine you went to visit a friend in another state and forgot something important at his place. Do you get him to FedEx it or what? What if he could use a drone net and send it to you cheaply.
Although the development is still in an infant stage, when live, an Internet of drones if scaled up could disrupt our lives. All you would need is a drone pad at your home which will be issued a unique ID and of course the Internet. Using an app on your smartphone you could key in the ID of your friend and ship small stuff within a geographic radius. You might even be able to track it real time with GPS!
Wow I can’t wait to see all this unfold! By the way blogging from the fourth gen iPad is pretty cool.
Elon Musk is a smart man. The former PayPal partner has his hands full with three startups today. These are Solar City, SpaceX, and Tesla Motors. He has tasted considerable success on all three. But, the focus of this post will be on Solar City and Tesla. We’ll go to space some other time.
Solar City and Tesla Motors are both public now. Briefly, Solar City is in the downstream solar business (installing & financing solar panels) and Tesla Motors is in the electric vehicle business. There has been a lot of talk about the long-term viability of both these firms. Tesla has been questioned about its product variety (it’s really a single product firm) and how such diversification (Model S) would hurt its ability to manage suppliers and keep costs to a minimum. Solar City has been criticized for its high costs of customer acquisition and its dependence on the Investment Tax Credit that will expire December 2016.
I am not going to delve into any of this here. My focus is at a more macro level. Recently, Tesla announced the launch of solar powered charging stations in the east coast. A half an hour charge at one of these would get you from Boston to DC. Who is in charge of these charging stations? Solar City. Musk is creating an ecosystem for his portfolio. A self-reinforcing portfolio if you will.
The Tesla batteries are helping store the solar power generated by Solar City panels on Walmart rooftops. The Tesla cars are being recharged at Solar City stations. This is amazing to witness. News broke earlier today that Avis is acquiring Zipcar for $500 mn in cash. I can see Musk planning a foray into the car share space in the future. He will be extremely well positioned to do so. A major assumption of course is penetration of the EVs.
The other bet that seems to have gone the South African’s way is the battery part. Better Place helmed until recently by Shai Agassi took a bet on swapping out batteries after they juice out. Musk went the charging stations at regular intervals way. Agassi was recently ousted and the firm is now helmed by Better Place Australia CEO Evan Thornly. The Ofers of Israel (shipping tycoons) have a significant investment and one of them Idan Ofer is playing an operating role in the firm.
It’ll be interesting to see if battery standardization becomes a reality in the EV industry. My bet is that it will not. I say so simply because of different power and mileage requirements that users might demand. And size determines all as far as batteries are concerned, in the current schema at least. Imagine the ICE being the same across all cars today?
That said, it would not be difficult for Better Place to setup its own recharging infra (technologically). Though, the issue of capital outlays required for the same might not go too well with the venture investors who have been patient for about 6 years now.
On a tech tangent, I want to talk about toothbrush tech. There were record 138 patents filed in 2012 on novel toothbrush tech designs! The filers spanned the gamut from behemoths like Colgate (smart brushes that adjust according to surface; gums versus teeth) to solo folks who are designing the bristle tilt to be a permanent downward 45 degree (which is recommended). The most interesting one for me was the disposable pellet dispensing brush. The paste is stored as dried pellets which when under running water generate the semisolid paste.
Happy New Year everyone!