Category Archives: Insights

The Inevitable Evolution of Online Sharing — Live Video Conversations

It’s been an incredibly exciting few weeks as the world comes to hear more about the latest category of social sharing — live mobile video. (Disclosure: we have been bullish on this space since our investment last year in YouNow.) Given that we have had the pleasure of observing this phenomenon for a bit, I thought I would share a few thoughts.

It’s Not Broadcasting, it’s a conversation

Many people are calling these live video feeds “broadcasts” which presume they are one-to-many and are one-way. The internet has taught us that all media must be participatory now. We all have an expectation that we are not just observers, but that our voices as viewers must be part of the content itself. From likes to comments, the web is built on the “post-respond” engagement model. For any of these apps to be successful, they must engender engagement. And to be engaging, the viewer must be a participant in some way. In YouNow “broadcasts”, the chatting audience is as much a part of the content as the “broadcaster”. This is what leads to successful long-term engagement.

utility vs. platform

Meerkat launched as a livestreaming utility built atop the Twitter network. Like Bit.ly and Twitpic before it, Meerkat itself is not a platform. One does not browse Meerkat to find content, one waits for announcements in the Twitter stream. If they are useful, utilities for social networks very quickly get absorbed into the platform as a core function, leaving no room for third parties. We saw that with link shortening and image hosting, and now we are seeing it with Periscope.

However, much like YouNow, Periscope is more of a network. It uses your existing Twitter graph to build your Periscope graph, but ultimately users will prune and grow their Periscope graph to look very differently than their Twitter follow graph. The Periscope app includes some (limited) forms of content browsing. I expect, given what happened to Meerkat, and with the very talented Josh Ellman as a board member, they will quickly move in the platform direction. Platforms are much more valuable and more sustainable than utilities.

native media format

All successful social networks have a native content form to them in which users become expert. There is a form to a great Facebook post (baby and party pics), a great Tweet (witty observation and link to interesting news), a great Instagram pic (beach and sky pics with awesome filters), a Vine vid (successful loop), etc. So too with live video streams. We can see it on YouNow, as users become expert at creating engaging performances and successfully interact with (and involve) their audiences. I expect we will see the same with Periscope streams (just not yet. Give it time.)

I really think the promise of these products is in creating more conversations between creator and consumer, rather than being millions of new cameras for livecasting the world. It’s tempting to think of this in terms of crowd-sourced news-gathering, which is a compelling use case, for sure. But the web has taught us that social media must be interactive to be successful. Sure, it will be supercool to watch Mario Batalli cook in his kitchen. But that’s the TV model. Unless he personally interacts with his audience (and is really good at it), I don’t think it is web native enough to work. So I suspect the winning formats for all of these products are the ones which are most participatory.

Source: http://www.pakman.com

Dataminr and the Science of Real-Time Information Discovery

Today Dataminr announced a $130m round of financing from a group of leading financial institutions and prominent financial thought leaders including John Mack, Vikram Pandit, Tom Glocer and Noam Gottesman.  

A number of friends have asked me about the company and what I find most interesting about it. This seemed like a good opportunity to highlight a few thoughts. 

What I find most interesting about Dataminr is that in addition to building a business, it is pioneering a new science. The science is real-time information discovery, and it involves sifting through the ever-growing tidal wave of real-time public data to identify and determine the significance of breaking events by their nascent digital signatures, as they happen. Sometimes these events are well-wrapped, for example by someone witnessing an event and tweeting about it, with others providing corroboration. Sometimes they aren’t, with algorithms figuring out what is happening by seeing thousands of facets of something larger. The company has a deep strategic partnership with Twitter that makes this kind of discovery possible. 

This new science is, without a doubt, very cool. It enables one to discover news before its news and market-moving information before markets move. It provides a kind of X-ray vision of what is going on in the world in real-time with a filter for what is significant, and to whom. All on the basis of publicly available data.

In a period of five months, Dataminr has become the real-time wire service used almost universally by major news organizations, beating out the next best service by over an hour and discovering troves of unknown unknowns that would never have otherwise come to light. It has become adopted by the lion’s share of leading financial institutions to have access to the frontier of breaking information in real time.  

What’s also interesting is how Dataminr will change the world. In my view most industries that rely on real-time information — an ever-increasing number — will be influenced by it, and some will be transformed by it.  The wave of change began in the fields of finance, news and public safety, and I think will move quickly to risk management, security and PR. And undoubtedly to other verticals in ways that are difficult to predict. I am particularly excited about what the company and its technology can do to help save lives in the fields of public safety and humanitarian assistance.  

Dataminr is in the early days of a long journey, but it is already impacting the world in significant ways, and it’s exciting to be a part of.

Source: http://www.nickbeim.com

Are Venture Capitalists Biased Against Female Entrepreneurs?

In her article Taking a Hammer to the Silicon Ceiling, Amanda Bennett hits on a real problem in the venture industry where spoken and unspoken biases have a significant impact: it is harder for women to raise money than it is for men. However hopeful one’s outlook, this is an uncomfortable and inescapable truth that the industry should acknowledge.

What’s the reason for it? I’ve been in the venture business for 14 years, and rarely, but sometimes, I’ve seen it come from unabashed bias about women’s ability to do as good a job as men. Generally this relates to the subject of women already having or potentially having children. I’ve heard people remark: “Wouldn’t that be a big distraction for the company, and how could they possibly be as productive as men in those circumstances?” This particular kind of bias is rarely expressed in a public manner but certainly affects the thinking of some. The good news is that as younger generations of investors assume more prominent roles in the industry, I think it will substantially diminish.

More often, I’ve seen the challenges female entrepreneurs face in raising money result from a bias that is rooted in the primary way venture capitalists make decisions, which is through pattern recognition. In a private conversation, a successful west coast venture capitalist expressed the issue to a friend of mine in a backward-looking empirical fashion that was an attempt to be unbiased: “look at the numbers – most successful startups are started by men in their 20’s and 30’s; the number of successful startups founded by women is much smaller.” Yes, but most startups in any historical timeframe were started by men in their 20’s and 30’s. This doesn’t speak to the likelihood of women succeeding, particularly since a significantly larger number of women are starting companies today than in the past.

Social scientists call this logical flaw selecting on your dependent variable: determining that A is a principal cause of B by looking only at cases of B. Used as the primary lens for evaluating new investment opportunities in venture capital, it creates all sorts of intellectual distortions and inertia and is the principal reason most venture capitalists are late to promising new trends and only jump on board when there is a significant pattern of success. I think this is the cause of the biggest challenge that female entrepreneurs face in raising money. Most venture capitalists have not internalized the success of female entrepreneurs to a sufficient degree to have it influence their intuitive pattern recognition, partly due to what they perceive as a lack of a large enough n and partly no doubt due to the fact that they have not worked with female entrepreneurs directly. It was also the cause of challenges that entrepreneurs faced in raising money in a variety of pioneering new fields, from personal computers to the internet to digital animation. Success by entrepreneurs in these fields was not yet a large enough historical pattern to influence investors’ thinking.

I believe this is changing. When I look at the number of female entrepreneurs who have built successful companies over the past 20 years or are doing so today, a significant historical pattern is definitely emerging. This group is comprised of some very impressive people, all the more so since they’ve had to clear higher bars than their male counterparts. Some of their companies are already significant successes, and others are on their way. A very partial set of examples that come to mind include Judy Falkner (Epic Systems), Diane Greene (VMWare), Julia Hartz (EventBrite), Jilliene Helman (Realty Mogul), Elisabeth Holmes (Theranos), Sheila Marcelo (Care.com), Natalie Massenet (Net-a-Porter), Alexis Maybank and Alexandra Wilkis Wilson (Gilt Groupe), Miriam Naficy (Minted), Alison Pincus and Susan Feldman (One King’s Lane), Kim Popovits (Genomic Health), Victoria Ransom (Wildfire), Clara Shih (Hearsay Social), Adi Tatarko (Houzz) and Anne Wokcicki (23andMe). And many dozens of others. If one does not see a pattern there, I think it may be due to lack of awareness of the facts.

I personally believe that the magnitude of success of these entrepreneurs and their peers is precisely what will finally move the needle for the silent majority of venture capitalists stuck on historical pattern recognition, for they will represent a significant historical pattern that one would ignore only at one’s peril. It’s only when venture capitalists fear they will miss out on something big that their behavior will ultimately change. Remember all those venture capitalists who thought that it would be challenging to make money on the internet, or in social media or on mobile? Those debates have been definitively won and lost, and today everyone invests in these areas. I think that those harboring concerns about investing in female entrepreneurs, even if they won’t say so directly, will ultimately abandon those concerns in the face of significant and increasing data relating to their success.

There is another bias that Bennett mentions in her article, one that creates disadvantages for female entrepreneurs but advantages for female venture capitalists: that the venture capital industry as a whole, given that it is primarily comprised of men, is slow to recognize opportunities in female-dominated industries. The first people to see big new opportunities in female-dominated industries are generally women, and many male venture capitalists may never catch on. This can lead to a particularly significant adverse selection problem for venture firms in today’s internet world, where social media and ecommerce, to name two major fields, are both dominated by female users. I believe the large number of successful ecommerce and media startups focused primarily on female users — from Pinterest and Houzz to the Honest Company and Net-a-Porter — has now become an historical pattern of sufficient scale that it will help increase the numbers of women in the venture industry going forward (although the industry moves slowly), since they will likely be better able to spot these opportunities than their male counterparts. And this will certainly help female entrepreneurs.

For all the problems that the venture industry has with investing in female entrepreneurs, there are some investors who do care and who do support female entrepreneurs in a significant way. And often this works out particularly well for them given the biases mentioned above. In her article, Bennett asks “would a man have seen what Sheila Marcelo saw: the need for a way to connect caregivers with those who need child, elder and pet care?” Certainly much less clearly than Sheila did, but yes, there was one. I invested in Sheila the day the company was founded based on my belief in her and in her vision. I invested in Alexis Maybank and Alexandra Wilkis Wilson in the very early days of the Gilt Groupe for similar reasons. I am close to investing in my fifth female founder. I invested in these entrepreneurs primarily because they were extraordinary individuals with big ideas who understood their industries and customers extremely well, and sometimes this understanding related to the fact that they were women. I’m very glad I made these investments and look forward to investing in more female entrepreneurs in the future.

I believe that in the long term, markets do tend to be efficient, and the success of these and other female entrepreneurs will ultimately erase the regrettable biases that female entrepreneurs have to fight against today.

Full disclosure: Beyond investing in female entrepreneurs, I actually married one (in a field very different from my own). She has been the greatest source of insight and learning for me on this subject.  

Source: http://www.nickbeim.com

Why Are There So Few Black Investors?

Today, some of the world’s most respected and successful figures are those in the tech industry. They include entrepreneurs who have developed innovative products and launched industry-changing companies. An important segment of people who provide capital and (hopefully) assistance to these entrepreneurs are venture capitalists. While the technology sector continues to thrive, it suffers from a lack of diversity, which limits innovation.

African-Americans are Under-Represented in the Good Ol’ Boys Club

The Venture Capital industry in the US (and thus, in turn, Silicon Valley) is made up of nearly all white males. In fact, the National Venture Capital Association (NVCA), the trade group for the industry, has recently acknowledged the lack of diversity in the industry and has recently formed a task force to help tackle the problem. However, even the task force lacks diversity, with 7 of its 11 members being white males and none of the remaining four members being a person of color. Furthermore, a number of tech companies have released their diversity stats, revealing that roughly 2% of the employees at Google, Facebook, Pinterest, LinkedIn and Yahoo are black.

In my quest to determine the true diversity statistics within the Venture Capital industry, I conducted a study of over 200 firms composed of roughly 2,000 investors investigating the current number of black investors working in Venture Capital in the United States. I included only full-time investment team members, so I did not include EIR’s, Venture Partners, accelerators, or incubators. The results demonstrated that the diversity stats are eerily similar, if not worse, than that of the aforementioned tech companies, comprising 1.5%. You can find the data that I have pulled together here — Venture Capital Diversity Stats.

To dive a bit deeper, many of the more visible funds and, by extension, visible investors tend to be those at venture funds with a fund size of $100M+. The stats look even bleaker here with less than 1% of investors being African-American, and only one of which is a woman. Since we love discussing unicorns in the tech world, it is clear that female African-American venture investors are the “real” unicorns. In light of this data, I’m hopeful that there are additional African-Americans in the venture community that were not captured in my study, however, this wish may be inconsequential, as it is clear that there are nonetheless far too few.

A Technology Bias May be the Culprit

With venture capital often functioning as an “old-boys” club (where financiers mostly give to people who are within their network — friends, colleagues, college alumni, etc.), most African-American entrepreneurs lack connections to investors who have access to funds. Other issues that have led to the lack of black entrepreneurs and overall lack of diversity in the tech industry include, but are not limited to, few African-Americans who are studying STEM education and a lack of publicly visible role models for young African-Americans. Despite these obstacles, there is still plenty we can all do to ensure that tech careers are seen as a viable career path. While one would hope that the lack of black venture capitalists would not have any correlation with the presence of black entrepreneurs in Silicon Valley, this is not the case. Instead, there appears to be quite the correlation to the lack of African-Americans in the tech industry today as there is among venture investors.

Finding Ways to Diversify

Despite the bleak statistics, there are, fortunately, a number of individuals and organizations who are trying to improve diversity in Silicon Valley (and across the United States). Code2040 is an organization that I am involved in that connects undergraduate computer science majors with internships at Silicon Valley-based startups, with the goal of increasing minority representation within the tech community.

Other important initiatives to support the career growth of African-Americans who have been able to successfully enter the tech community include developing or growing a black or minority investment community and expanding the network of people whom existing venture capitalists recognize, know and fund. This community could help create more entrepreneurs, resulting in more successful black-led companies who can then go on to fund and help other African-Americans start their own businesses. My close friend Charles Hudson and I have started one such community called Stealth Mode, which hosts quarterly events to bring together African-Americans within the tech community. Please reach out to me if you would like to join our community or learn how you can help the organization grow.

The lack of diversity is clearly a significant issue in Silicon Valley that needs to be addressed, and one that I care very deeply about as one of the few black faces within the industry. I would love to hear other people’s thoughts on the matter and discover more ways to improve the status quo of the venture capital and tech communities.

Source: http://ker.by

Everyone Can Live the Luxe Life

As someone who owns a car and lives in a city, I routinely find it hard to find a parking spot and spend unnecessary time circling blocks in search of a coveted spot.  And when I do find a spot, I often end up getting a ticket or paying exorbitant garage rates.  Our latest investment in Luxe (http://luxevalet.com/) solves this problem!  Luxe is changing the parking experience for consumers in cities, and a major reason for their early success is due to vertical integration.  In fact, Luxe isn’t really a valet service at all, but rather a full-stack parking solution.

How does it work?

The product provides consumers with on-demand parking via their valets and partner parking garages.  In addition to parking your vehicle, Luxe also offers premium add-ons such as a car wash and fueling up your vehicle for additional fees. The service itself is intuitive and easy. Users simply download the app and request where they would like to drop their car off. A valet then meets them at the designated spot, wearing an easy to identify bright blue uniform.  The valet then takes over, addresses you by name, and verifies their identity as a Luxe employee. You can track your car as it goes from the drop off point to its parking spot.

In addition to providing a great service to consumers, Luxe saves consumers money.  With parking rates in congested downtown areas pushing $50 per day, Luxe’s maximum fee is only $15. Not only do they meet you anywhere in their service area for pick-up, but you can also schedule your car drop-off the same way. So, have the valet meet you at work in the morning, and then meet you off-site when you are done entertaining clients or are finished with a dinner meeting. Luxe takes convenience to the next level and does so in a cost-effective manner while saving consumers their most precious asset – their time.

While many people in Silicon Valley believe that car ownership and car usage is going down, it is actually increasing in North America as well as the rest of the world.  In fact, automobile sales are on the rise, 2.5 percent globally, and if this trend continues, the need for parking will become more critical. Circling the block in the morning could leave you late for an important meeting, while paying for a monthly parking spot can be very expensive for those who need ready access to downtown areas. As a full-stack parking solution, Luxe takes the guess work and anxiety out of parking.

Full Stack Integration Builds Trust

As a consumer, you don’t want to worry about dealing with multiple vendors for a finished product, and the demand for end-of-line services is on the rise. For example, consider major tech players like Apple. Their vertical integration model of controlling the finished product has made them a top player in the consumer electronics industry. By maintaining quality standards, they have created trust among consumers that other businesses struggle to emulate. This same model applies across other industries, and Luxe hopes to prove it in the parking industry. By taking control of the pick-up and drop-off of cars, they take control of the entire parking equation and offer a full-stack solution.

By leasing under-utilized parking spaces, Luxe ties in the vertical with contracted spaces through alternative parking lots. Working with parking authorities to find and utilize spaces that would otherwise remain empty, Luxe manages to negotiate contracted rates that allow them to turn a profit. This is an example of vertical integration that creates added value for both parts of the service provider equation – the parking company earns more on empty spaces, while Luxe uses their contracted rates to determine cost levels and turn a profit based on predictable expenses.

Just The Beginning

Luxe is currently live in San Francisco, Los Angeles and today the company announced that the next three cities will be Chicago, Boston, and Seattle with more cities to come as they look to continue to rapidly scale the business.  The company has also announced the release of their Android app, feel free to download it here.  Luxe is just getting started on their journey and if you are excited about solving the parking problem and solving problems with tremendous amounts of data, shoot me an email (kerby@venrock.com). The team is looking to make hires across the board.  Feel free to use my invite code: RICHARD26 to take your first ride for free.  Now you have no excuse to not give Luxe a try!  

If you would like to read the company’s announcement, which has an awesome infographic of their growth you can see it on the Luxe Blog.

Source: http://ker.by

How to End Your Parking Nightmares Once and For All

Luxe-Logo

I love cities, but a settled family and the location of our offices relegate me to life in the suburbs at present. I drive up to San Francisco several days most weeks and though I love the energy, creativity, food, culture and walkability, I truly hate parking. My parking frustrations start with the high cost, expand to the inconvenience of finding a lot and a spot (usually at the point I am already running late due to traffic), and culminate in the unpredictable risk that all nearby lots might actually be full due to a Giant’s game, a convention in town, or just the fact that it’s 8:58am on a weekday and the San Francisco economy is booming.

As a technology venture investor and former product manager I am further frustrated that parking need not be the daily battle it is in most dense cities. There are in fact enough parking spots in most cities most of the time. Reports suggest that US cities average between four and eight parking spaces per vehicle and in some cities parking lots cover more than one-third of the metropolitan footprint. The issue is the information gap of knowing where to find an available spot at a specific time, at a price you are willing to pay, as close as possible to your destination. This sort of linear optimization along three dimensions (location, time and price) would be simple for software to solve if only we had the right real-time data. Unfortunately we don’t.

I am well aware of and have indeed tried many of the parking apps that list garages and their prices, and some that even attempt to indicate (or predict) availability, and yet others that enable you to pay with your smartphone. The problem is that even in their flagship cities no app yet has particularly good coverage of all parking options and the real-time availability data is woefully inaccurate. Even if the perfect app did exist, it is hardly ideal for me to be fumbling with my smartphone at the most chaotic and stressful last mile of my drive–and the app still may dump me many long blocks away from my actual destination. A “full stack” solution is necessary.

I first heard about Luxe while chitchatting with a friend who frequently drives from Palo Alto to various meetings around San Francisco. She emphatically heralded Luxe as an app that has made her life better. I tried the service the very next day and saw exactly what she meant. The experience starts by entering your destination on the home screen of the app. Then start driving. No need to indicate your arrival time as Luxe can track your inbound progress and predict your arrival time based on distance, speed and real-time traffic. As you near your destination the app pops a picture of your specific valet with their name and a brief blurb about their personal interests, setting the tone for a very warm and human experience. The app zooms in a map to show the exact location of your valet, who is actually quite easy to spot on the sidewalk in their bright blue track jacket. You jump out, they jump in, and you are walking to your destination feeling like we live in an age of magic. Luxe will even fill your tank or get your car washed for a small service fee. When you need your car back just confirm your pickup location and click the “return my car” button in the app and watch the icon of your valet retrieving your car and then driving your car towards you. I find Luxe especially awesome when I have a series of meetings in the city such that my last appointment is far away from my first appointment–Luxe brings my car to me so I don’t have to trek my way back across town to where my day started. And the best part is that the cost of parking via Luxe is almost always 25% to 50% less than what I would pay at the nearby commercial garages. Luxe can price attractively due to the volume discounts they get from garages and the fact that their valets can run or kickscooter further from the busiest parts of town than you or I care to when we are rushing to our appointment.

To be fair, this is a very hard business to build due to bursty demand and the unpredictability of traffic, road construction, weather and other variables. Maintaining rapid response times at peak rush hours is a challenge. Algorithms which predict demand, routing and dispatch optimization, personalized CRM, and high standards in hiring, training, and live customer service are key’s to Luxe’s current and future success. Attention to detail and a customer centric culture are essential. While this is not an easy business to manage, I believe it is one of those rare business where generating demand will be far easier than fulfillment. Do not let the name confuse you, Luxe is not a service meant solely for the pampered ultra-wealthy who only fly private and gets massages in their home twice a week. Luxe is an extremely cost effective solution to everything that sucks about parking in busy cities and the service will only get better over time as they grow and expand their coverage universe.

Venrock led the Series A for Luxe because we believe in the team, the concept, and the market opportunity. Finally we can enjoy our cities, parking included.


Source: http://vcwaves.wordpress.com

Does your physician have to prescribe antibiotics for every sore throat?

This article was first published in Fortune.  It is co-authored by Ezekiel J. Emanuel and Bob Kocher. 

With the right medical malpractice reforms, physicians can reinforce high quality care and provide cover for those who don’t want to prescribe antibiotics for every sore throat.

There is a lot of jockeying ahead of the Supreme Court’s decision on the Affordable Care Act. Beyond posturing and heated rhetoric, there is a health care issue the two parties can work together on rather than blame each other: medical malpractice.

It is clear there is support for reform. Republicans have long argued for reform. President Obama has been a consistent advocate for it. In 2006, he co-authored an article in the New England Journal of Medicine with Hilary Clinton and introduced legislation on the matter, and he launched several demonstration projects for reform. And doctors desperately want it and remain befuddled and upset about why malpractice reform never made it into the Affordable Care Act. So there is ground for optimism.

And we desperately need reform. By every metric, the malpractice system is dysfunctional. For many physicians in high-risk specialties, such as cardiac and neuro-surgery, no matter what they do there is essentially a 100% chance they will be sued at some point during their career. Even so-called low-risk specialties, such as family medicine and dermatology, the chances of being sued are over 70%. While over the past 7 years, the actual number of malpractice claims paid, the amounts paid out, and premiums have held steady or declined, doctors still feel traumatized by the malpractice threat.

The malpractice system also doesn’t work for patients. Many patients who are actually harmed never get compensated. Or if they do, the claim resolution essentially takes forever and damage awards are haphazard and uncorrelated to actual harm. Finally, the malpractice system does not seem to encourage better care — or at least does not disincentivize poor quality care.

But let’s also be clear, despite physicians’ fervent beliefs, the data indicate medical malpractice reform is no panacea. The best studies that examine the effects on practices and medical costs of reform at the state level suggest the savings from reform alone are likely to be very modest, even minimal. Overall, according to the Congressional Budget Office’s summary of the data, under the best scenario, malpractice reform alone might reduce total health care costs by approximately 0.5%, or $15 billion.

Nevertheless, there are good reasons to enact malpractice reform. One is physicians’ psychology. Removing this albatross will make them open to hearing about other more impactful changes like the need to scale back no- or low-value interventions. Second, if done properly, malpractice reform could reinforce higher quality care. It can encourage transparency that makes it easier to identify systematic problems in care delivery. It can also encourage adherence to quality guidelines. In this sense, malpractice reform not only removes an obstacle but reinforces the efforts to improve care delivery.

Of course, like many other issues where there appears to be common ground, such as corporate taxes, there are myriad ways to ensure nothing happens. Each party could dig in its heels about its favorite approach to reform and fail to compromise.

Some Republicans have favored caps on damages, shortening statute of limitations, and eliminating joint-and several liability so that each defendant’s financial responsibility is limited to the degree they are at fault. These reforms seem to reduce the number and pay-out of suits. But they neither compensate patients who have been harmed by negligence nor incentivize good medical practices. And 30 states have adopted some version of these reforms without any noticeable improvement in quality or reduction in defensive medicine and health care expenditures.

In the past, President Obama has stated that he opposes such caps as unfairly targeting those who have been hurt. Instead, he has supported a “disclosure, apology and compensation” approach in which providers disclose mistakes, apologize, and offer standardized compensation. Pioneers in this approach, such as the University of Michigan and Stanford, have reported substantial reductions in numbers of malpractice suits and premiums.

Another potential common ground policy is called “safe harbors.” The idea is that physicians would have a presumption of innocence—a safe harbor— if they adopted electronic health records with decision supports and adhered to established professional society guidelines for the care of the patient. They could deviate from the guidelines if they could show why they did not apply in a particular patient’s case. This innocence could be rebutted if they were shown not to have actually followed the guidelines in the care of the patient or mis-classified the patient using the wrong treatment approach. The safe harbors idea reinforces high quality care and provides cover for physicians who don’t want to order MRI’s for every headache or back pain and prescribe antibiotics for every sore throat.

There are other potential reforms that could serve as common ground between Republicans and Democrats. For instance, Oregon recently adopted a state mediation initiative and others recommend specialized health courts. We prefer safe harbors.

Better yet, Congress could find compromise without even choosing the preferred policy. As a matter of law, malpractice is controlled by states. The federal government can’t actually rewrite malpractice laws. Thus, the best compromise might be for the federal government to provide an incentive for states to implement something from a menu of reforms.

No matter how it’s done, reforming our broken medical malpractice system would mark an important step in “fixing” the ACA. More importantly, it would be a victory for bipartisanship and demonstrate that the federal government can actually help solve problems.


Source: http://bobkocher.org

A Few Lessons I’ve Learned

A young entrepreneur asked me a great question the other day, “What are some things you learned later in your career that you wish you knew earlier in your career?” I didn’t have a great answer at the time, but of course it got me thinking. There are a few key lessons I have focused on these past five years or so that weren’t part of my thinking early in my career. I’m not sure I would have cared for these thoughts back then, but I thought I’d share them.

Be comfortable being uncomfortable.

Most of the great things in life are hard. The circumstances that lead to great accomplishment are often uncomfortable — strange and new, out of your comfort zone, and filled with challenges. Getting your mind programmed to be comfortable in the midst of challenge, conflict and uncertainty brings you great benefit. You won’t shy away from the conflict or uncomfortable conversations often required to influence outcomes. Your mind becomes in control of your body. In physical challenges, your mind usually quits before your body does because it is opting to avoid discomfort. It tells you your body is failing before it actually is. Take control of this and get comfort around the fact that many situations in life are not comfortable, but you can still handle it. Hang in there. Be in control.

Develop an expert point of view earlier than the consensus.

By the time everyone agrees on something, it has already happened. You can’t innovate ahead of the curve unless you see a future that most others don’t yet see. You also have to be right about it, but not every time. You can change your view about the future when you see evidence that it won’t happen the way you thought it would. For me, I first try to become expert on something by going super-deep on the topic, learning everything I can about it, talking to many people about it, and using the technology or product in question as much as I can. Once I do, I usually find that many of the people talking about it aren’t truly experts. In fact, I believe many of the loudest voices are often the most wrong.

I remember in 1996, John Markoff, then the most senior and well-respected technology writer at The New York Times, called Microsoft’s Active Desktop, “the most fundamental change to personal computers since the machines were invented in the 1970’s.” To me, this sounded like not just silly hyperbole, but a fundamental misreading of where things were going on the internet. Given his vaulted position at The Times, many people believed Markoff and accepted his view that Microsoft would dominate the next phase of the internet. As we all now know, Active Desktop was an inconsequential product and a failure, and more than fifteen years later, Microsoft is still struggling to be consequential on the internet.

I work to develop my own point of view about where things are going. I work to validate that by looking for data or evidence. Then, if I feel passionately about it, I try to bet on this outcome. And in many cases, my point of view is different than most others. This gives me confidence that I might be on to something (or just be totally wrong). Consensus scares the heck out of me. Really loud voices tend not to be right. My job, as both an entrepreneur and a venture investor, is to beat the consensus long before it happens, but to be right that it will.

Be fact-based in your observations and beware of confirmation bias.

We live in a world filled with data, so use it to make observations. Don’t live life purely on your gut. I gain confidence in my point of view by seeking out research or data that supports my hypotheses. But I force myself to be open about the data I find, knowing that we have a psychological tendency to seek out data which confirms our preconceptions. In short, be honest with yourself about what you observe and challenge your point of view.

Figure out what you are good at and depend on it.

Are you great at reading people, generally right about their capabilities? Are you an astute observer of markets and trends, usually right about who will win or what will happen? Are you a product savant whose obsessiveness with simplicity produces outstanding experiences? Are you a natural leader, able to convince a room full of people to follow you into an uncertain future? Are you an outstanding sales person, able to convince people to part with their money? Or, are you a total introvert who wants to avoid interaction with people but can architect a massively scaleable web application? Maybe you are a mixture of these things? Knowing what you are good at and building your undertakings around that is a quicker path to success. Yes, you can improve in all areas of weakness, but certainly engineer the game to play to your strengths.

Be self-aware, know your short-comings, and find mentors.

We all suck at plenty of things. The only way to get better and to level-up is to first recognize our own limitations and to work with experts to teach us. Self-aware people recognize their short-comings, are not afraid to talk about them, and seek out experts to teach them how to improve. Asking for help is not an admission of weakness. It’s the path to improvement.

Big companies are slow, do not innovate and are unwilling to self-cannibalize.

When I was younger I thought this might be true but now I have seen it happen over and over and over again. Sure, there are exceptions, but in general, startups can move very quickly and innovate on the home turf of large incumbents. As organizations get bigger, executive pay structures often do not encourage companies to cannibalize their existing business even when they see a new technology coming that may impact them. And power is more fleeting these days then in decades past. Do not be daunted by the presence of large incumbents when you can capitalize on a technology shift and catch giants flat-footed. There are too many examples of this common cycle of disruption working time and again.

 

Source: http://www.pakman.com

Will There Really Be an Uber for Everything?

 

The Next Uber

This post originally appeared on TechCrunch here.

Though the press has turned on them as of late, seizing on every allegation and misstep, I love using Uber. From the very first time (September 28, 2010 to be exact) I saw the little town car icon crawling across the map coming towards my little green dot I knew taxi cabs, airport car services, and parking lot attendants in downtown SF were going to see a whole lot less of me.   Tens of millions of riders around the globe love this service so much it has become its own verb. And at a $40 billion valuation, it is no wonder that it has become cliché to describe other on demand mobile services (ODMS) as the “Uber for X”. Any offline service that can be reserved, or delivered to you physically, or transmitted to you virtually through your smartphone seems to have a startup or several trying to become the Uber for that particular vertical. A few of these will turn into very large and successful global internet brands, grabbing major market share and even greater market capitalization from the offline rivals they out innovate. Most, however, will succeed on a much more limited scale, making only a small dent in their industry and servicing limited geographic markets.

My own framework for trying to determine which markets and which companies will be truly transformational is basic in concept. Start with a service where the greatest percentage of customers are most painfully unhappy with the existing providers. Fortunately for entrepreneurs and investors (but unfortunate for our daily lives as consumers), many service sectors suffer major challenges around availability, quality, transparency, and pricing. Not all problems are equally painful, however. Most people don’t consider the logistics around getting a massage or attending a yoga class nearly the same level of pain and frustration as home renovation or trying to sell their old car privately. There is also the question of how often one needs such a service, with frequently used services having the advantage of being more likely to become sticky habits versus one-off trials that may be forgotten over time. We are much more motivated to find solutions for frequently encountered pain than occasional pain. Next, ask yourself how can an on demand mobile service leverage smartphone technology, network effects, economies of scale, rich data, crowdsourcing, and the other tools found in a tech entrepreneur’s arsenal to build a service that truly delights customers and “bends the curve” in terms of customer experience. This is obviously the really hard part. Great service is hard to consistently deliver in general, but there are those services that are innately more challenging, such as home or auto repair, where the nature of the service is to diagnose and fix idiosyncratic physical problems that catch consumers by surprise leading to an initial state of frustration and financial worry. While aspirational to think that an ODMS can fix even the most broken service sector, often the symptoms of pain in the hardest industries may need to be treated progressively over time. Thus, it is the total distance travelled between the typical incumbent service level and the redefined ODMS service level, rather than the start or end point on an absolute scale, which creates the opportunity to create a truly great business.

How can on demand mobile services create delight versus their offline incumbents?

Immediacy and Reliability—the main point of most ODMS is to use the smartphone to be your remote control for life so that when you push the button for your ODMS stuff needs to happen, as fast and consistently as possible. Uber leverages local network effects between drivers and riders, and invests heavily in data science and AI simulations to insure that rider wait times are as short as possible and drivers are as busy as possible so they can earn the most money. Without short wait times Uber would not be nearly the magical experience we all love. Another example of instant fulfillment is Doctor on Demand*, a service providing immediate smartphone video visits with a board-certified physician so that you don’t have to wait for days or weeks to get an appointment to see your doctor or head to an after-hours clinic or emergency room for routine medical needs. Clearly you wouldn’t use Doctor on Demand if you have severe chest pain or are bleeding profusely, but there are a huge variety of use cases for which you don’t need to be in the same room as your doctor and the convenience of an immediate appointment, at one third the cost (on average) compared to an in-office visit, is so compelling that employers are offering DoD as a benefit to their employees.

For the majority of services that can’t be delivered virtually like Doctor on Demand, the act of rolling out city by city is expensive and time consuming, often requiring an investment in “boots on the ground” to recruit and train workers, market to new users, and assure quality in new cities. If you are truly bending the curve with a revolutionary service breakthrough you can attain a superior growth rate which attracts the capital to enable a nationwide and even global expansion strategy like in the case of Uber or Airbnb. For many ODMS that are only incrementally improving upon the traditional service model, geographic expansion will likely have to come more slowly and may ultimately max out at the major US cities or even just a region or two. This is not necessarily a bad thing as many enduring businesses can be built as the most technologically advanced player in a region. Personally we still enjoy PurpleTie’s drycleaning home delivery services, which started as a 1999 VC backed effort to go big with an online nationwide dry cleaning service but failed and got acquired by bootstrapped CleanSleeves (who apparently liked the PurpleTie name better.) Fifteen years later PurpleTie.com operates only in the Bay Area between San Mateo and San Jose and seems to have a healthy business. Perhaps the new generation of ODMS startups providing dry cleaning and laundry deliver services will go substantially further than did CleanSleeves, and if so it will be because they figured out how to create more customer delight than just mobile app order placement and efficient delivery. My wife is quite eager to give Wash.io a try, but whether or not she would stay loyal to them versus the next cheaper version will depend on how well they turn a relatively commoditized service category into a truly differentiated experience.

Quality—Service businesses are so hard to build because they rely on people to deliver service and interact with customers as much or more than they rely on computer code. Managing people, especially a workforce of independent contractors rather than full time employees, is a lot more variable than executing software routines and so recruiting, selecting, training, and managing workers is a core element of any ODMS. Background checks, license verification, detailed applications and face to face interviews are all part of the selection process. Most services rely on their customers to rate service providers and tend to ruthlessly cull those drivers/doctors/plumbers/etc that fall below a rating threshold, often a fairly high bar. Doctor on Demand checks the lighting, sound, and appearance of every doctor before every virtual shift. Some services even provide a satisfaction guarantee on the completed job, such as Red Beacon’s* $500 offer. Service quality can often be a matter of individual taste. For example, in the home cleaning category services like Homejoy may delight 9 out of 10 customers but it will be an endless uphill battle to please the pickiest consumers when it comes to something as subjective as a clean home.   Quality is not just the absence of problems, but also those unexpected touches which delight. Good Eggs, for example, would unexpectedly throw in a free gourmet treat or two when we first started the service. The freebies stopped once they hooked us as repeat customers but the amazing quality, friendly service, and personal touches like handwritten notes have made us loyal. There are simply no shortcuts when it comes to delivering consistently great services levels and ultimately quality can make or break a business regardless of whether they have the best looking mobile app.

Price—Tech enabled services are often far more efficient than traditional businesses at acquiring customers and aggregating demand through digital channels, viral marketing, and highly visible brands. This often enables cutting out layers of middlemen in the value chain. Additionally ODMS can rely on large regional facilities on cheaper real estate for physical goods processing versus sub-scale storefronts and expensive Main Street locations of their offline peers. Passing a good portion of these savings on to consumers is perhaps the smartest way to generate trial, grow quickly and hook customers on your service. BloomThat is a flower and gift delivery service that does a wonderful job of curating their selection and providing same day delivery, but their pricing advantage vs 1-800-FLOWERS is so significant that they have dramatically grown the frequency of gift giving among their customers far beyond the traditional Mother’s Day and Valentines Day holiday spikes. Some of the smartest pricing plans still include premium and ultra-premium levels, such as Uber Black or Uber Lux, for the truly price insensitive segment, but the mass market almost always appreciates a good value, especially when being asked to try a brand new service through a new medium. In the long run, however, one hopes that there is enough technology leverage, economy of scale, and disintermediation in your ODMS to be the good margin, low cost provider in your industry, not just the company most willing to subsidize losses indefinitely.

Payments—Rolling out of your UberX curbside without having to fumble through your wallet for cash nor waiting for your credit card to be run through a mobile POS is simply addictive. Getting food delivered by services like DoorDash or Seamless without the awkward eye to eye tipping procedure with the pizza guy is very easy to get used to.   Customers simply expect that effortless payment is part of the magic in a service that has been newly redefined as on demand and mobile. The nice part is that this also solves many business model problems around your workers handling cash or credit card numbers, deadbeat customers, and leakage from your workers attempting to cut you out of a side deal they offered your customer after you so nicely made the match between them.   The downside for the ODMS is that for low priced transactions the interchange fees on these credit card payments can be a significant hit to your margin, and on the other end of the spectrum certain high ticket services that require onsite estimates like home renovation may not easily lend themselves to being in the payment flow. Over time, however, we will see the vast majority of ODMS handle payments in the background as part of the consumer experience.

So, will there be an Uber for every service industry? There will be some for sure, but not many in terms of a global, dominant, hugely valuable iconic brands.   Some industries are just not important and/or frequent enough to our daily lives, or unpleasant enough as they exist today, whereas other industries face service challenges so fundamentally hard to solve that it will be a long while before we see an ODMS truly solve them. Just like with the B2B Marketplace craze of the late 1990s we will see massive experimentation across an enormous swath of the consumer services sector. We will also see traditional offline service businesses forced to up their game and become more technologically sophisticated. So while there may only be a handful or so of Uber-sized winners, there will be many smaller ODMS who find some degree of success, and the biggest winners of all will be consumers themselves.

*Current or past Venrock investment.


Source: http://vcwaves.wordpress.com

Brian Williams and Abundance vs. Scarcity in Media

The physical world’s native economic basis is scarcity. Value is determined by demand for each item produced. If I make only five gold Ferraris and thousands of people are just dying to have one, the value of those will increase.

In the digital world, we live in a world of abundance. We can make infinite perfect copies of anything produced without significant marginal cost. We can satisfy pretty much all the demand for digital goods, so it’s hard to drive value by limiting quantity.

The same shift is occurring in media. In the legacy media world of newspapers and TV shows, tons of scarcity exists: editors can only fit eight stories on the front page of a newspaper, cable companies only have capacity for a few hundred channels, and TV networks can only offer 24 hours of programming a day. In media governed by scarcity, editors and programmers must make hard decisions about who and what to talk about and hope their audience cares for their choices. In the archaic world of television news, the choice of an “anchor” really mattered. After all, each of the three terrestrial broadcast networks could only have one, and this anchor was going to appear on TV each night for 30 minutes or so. The investment in anointing a single personality around which your network’s entire credibility was built was significant, and made sense.

Consider now the digital media companies of the present day. The most valuable ones are platforms, not programmers. Facebook, Twitter, Pinterest and YouTube, for example, are platforms for expression through the sharing of content produced by, or curated by, their users. All of these are built natively for abundance. They have infinite inventory, can support an infinite number of creators and users, and make no decisions about which content or which personalities are “right” for their audience. The audience decides entirely whom to friend or follow, what to “like”, and what to ignore in their feeds. (Algorithms can help make this process easier.) In this model, platforms are not reliant on a few editors or a few personalities to represent their brand. And they are immune to the inevitable rise and fall of the popularity of people and topics. In fact, they welcome it.

Excitingly, early adopters of these platforms are motivated to figure out the essence of what makes them work. They produce and refine lots of content on them and watch audience engagement until they master the platform. There are now millions of creators who are great at YouTube and Vine, Instagram and Twitter. More of these platforms will emerge, and more creators will blossom. Abundance.

Traditional media, by their selection of what to cover and feature, confer an artificial sense of importance to anything or anyone appearing in their pages or on their programs. I heard an NPR story the other day featuring someone whom the reporter profiled as “a great tweeter.” According to whom? And why this person? It was classic scarcity media — anointing to speak for many. There are millions of great tweeters in the world and featuring one as an example of what Twitter is like is kinda silly. This person’s true relevance on Twitter is indicated by the engagement metrics around their tweets, a topic not discussed in the story.

So how does this relate to Brian Williams? Well, the reason we know about him is because NBC chose, in a scarcity-based media world, to build their entire news brand around him. And now he has significantly tarnished this brand. This will have a real economic affect on NBC as a result. Brands built in the age of scarcity take significant risks when they use celebrities (or any one individual) to act as a proxy for their products. Endorsements bestowed upon athletes carry the same risks — unnecessary in a digital world of abundance. On digital platforms, brands are built by the stories brands tell and the content they share. They rise and fall based on their ability to engage us and capture our attention in the streams. We care about them when they do, and often ignore them when they hire a celebrity spokesperson to speak on their behalf.

The age of abundance in media requires a more democratic approach to programming. In this world, platforms take little risk in the inevitable imperfections of humans. They cherish it. Because when it happens, they are the places where we all go to talk about it.

Source: http://www.pakman.com