SVForum Main Event: Hot/Not 2012
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My name is Jeff Crowe, and I'm a partner with Northwestern Venture Partners
Hi, my name is Bipul Sinha I work at Lightspeed Venture Partners
My name is Todd Kimmel, I'm with Mayfield Fund
My name is Ari Levy, I'm a technology reporter with Bloomberg News
We invest in IT, healthcare, and consumer here and in India, China and Israel
Lightspeed is a global venture fund, we manage two-billion dollars plus in capital
We invest in India, China, Israel in addition to the US
I focus primarily on the Clean Tech space, but my partners
send me anything that's not traditionally IT or consumer
I cover mostly technology, I've sort of gone back and forth
between finance and technology over the last six years
and for the last two years been very focused on venture capitalist startups
and innovation
Tonight we're here to talk a little bit about what we think,
what they think, are upcoming trends
both in the upward and in the downward direction
and we basically decided as a group that they should just run away with things
So, we're going to just take it from the top
and open it up to the four of them to duke it out
over what they each think will be HOT or NOT
in 2012
As far as what is hot
What will be Hot and what will be Not...
Hot is a very, very loaded term
I think the whole enterprise software infrastructure
is up for a mass of innovation
There are a number of industries...
finances, healthcare, education to name a few
Uh, I think Clean Tech will NOT be HOT
(laughter)
in 2012
From my perspective I think there are
two big trends that I am particularly excited about
There are all these interesting opportunities
in something which you'd say "Well, I thought people had played that out"
"five or ten years ago" and you're finding that the theme is so big
and the wave is so big that there is just many derivatives on top of that
Google-type annalytics, and what people have learned in the social spheres
the ongoing shift to online advertising from TV and print
Why is it so difficult for me to store my health records...
In a way that is just really easy to access?
This whole IT stack disruption
Why is it so much easier to book the perfect flight
than it is to find the right mutual fund?
Things like curated commerce, social commerce, subscription commerce
theres a whole series of things there
These people that have been working at Google and working at Facebook
the way that they've learned that consumers like to use their products
and the sort of big data things that they've learned
those can all be tremendously useful in verticles that have been
very slow to adapt to technology
How is social driving commerce?
Or how is subscriptions kind of the latest thing?
You know? You've seen subscription commerce in all kinds of
sectors of the economy
I think the next wave
is that 'How do you leverage how people are connected?'
for the whole internet not just the website
to build the next level of services. Not just for the consumer
but as well as for the enterprise
Major things that we try to invest behind
is just the ongoing shift to e-commerce
What I do think is going to be hot
is an area that, you know, Jeff touched on
the financial services area
I think if you look at what happened
during the downturn, I think the fundamental trust
You know? That kind of bond that was there between
financial institutions, you know, up and down the chain
from banks to brokerage firms
I mean you name it, has really been broken
and I think there is an opportunity for both
product innovation and service level innovation
and bringing more transparency, and reducing the fees
around most of those types of products
and we've been spending some time at Mayfield looking at that
What's not hot, are businesses
who have a single platform dependency
They will crush you without them even knowing
that they've crushed you
unless you really have something that's disruptive
There's a chance for the entrepreneur
and the investor, to make a lot more money
because they're not facing over-funded competitors
Say you have fifty-million dollars
which is interesting. But it's not like,
"Holy shit!" interesting
(laughter)
eh.... sorry
We don't like to invest in companies, that, uh,
where their entire business can have the rug
pulled out from under them one other party
So how are you even conceiving of 'hot'
Right? Is it something that, what sort of time horizons
are you thinking of, for what you're thinking of as 'hot'?
We really don't focus on 'hot'... at all.
It's less about what's 'hot' or 'not'
It's about what has the potential to be disruptive
against the target, right?5
The fact that something's 'hot' or 'not hot' is really irrelevant to us
What 'hot' is really, is an understanding of
some of the fundamental trends that we're seeing
and extrapolating them to see if these market terms
will intersect with the, with the demand that the customers will generate.
If you are doing your job...
you've hit upon an idea, and you're starting a company
before it's 'hot'
And if we're doing our job
we're finding you before it's 'hot'
If you've got a hundred thousand users to start
and they're like, throwing money at you
because they can't wait to get more of your services
that's really... 'hot'
So, that is your job.
And that is our job.
Is to figure these things out before its obvious
to everyone else and broadly anointed as 'hot'
What are you seeing
in sort of data analytics and, you know, ways that
information is being harvested, used, re-purposed, sold
and what that means for other people
What I'm seeing now is more of
delivering in a managed service offering way
Right? So, and just putting an economic story around it
Social means Facebook, plus Twitter, plus Google+
Plus LinkedIn. Plus, plus, plus, plus, plus
Where you are seeing Big Data is going to be impactful
is around the oil and gas part of the energy space
particularly with natural gas and what we're seeing with fracking
Modern e-commerce is all about customer acquistion
and visibility and doing the big purchase.
The first generation internet was all about directories,
And the second generation internet was about people adding information
to their data tree and creating a search engine
that can bring everything together
So if you think about the social media,
social media is a two-dimensional plane
that people are points on and are connected through graphs
Now can you build the third dimension
and aggregate people around a theme
That will be the next generation of opportunities
How are you, and where are you
finding the people and the ideas?
I mean, where is it that you're going for the top talent?
And where are you finding these new things?
There isn't, I think, any one formula,
for finding individuals who turn out to be very talented
at kind of looking ahead
The business of creation, of value creation
is really about having a very unique perspective
We have to look everywhere to find these people
We have to look at people who have spun out of large companies
People that have spun out of small companies,
because they know the domains.
We look at universities, we get all kinds of recommendations
from uh, from our network
We look for people that have that unique perspective
and if you find people with that unique perspective
and we see some signals that this unique perspective can be translated
and that these guys can translate that into a business
then we go ahead and fund them.
How do you... even know where to start?
I mean, for the people out here who are going to be looking
for their co-founders and people to join them and their networks
are here, how do they access that?
We cast a wide net and we try to reach a lot of, different,
you know, constituencies, to find opportunities
and that comes from, you know, corporations and strategics that we know
all the way down to lawyers and accountants
and people that we trust within the venture community,
and other entrepreneurs we know
The ability for entrepreneurs to find places where investors are
and to access capital is greater than its ever been
There's always typically a few spheres of excellence
where you can go and uh, try to understand what the key
motivators are for technology to be successful or what's held an area back
and whatnot, and just get some resident experts
that can help you be informed about the situation...