SVForum Main Event: Hot/Not 2012

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...