I definitely think that "Onset and the Spaceship" should either be a movie or the pilot title for a sci-fi series. However, it is also an apt description of our activities today. We got to visit a venture capital firm and see Apple's headquarters in Cupertino.
The onset at Onset
It's hard to believe that we're already on the ninth day of our trip. Time really flies by, and despite everything I'm learning, it really doesn't feel like I'm in a class. Then again, I did have to give a book report today, so I suppose that grounded it a little more. Still, today started, as most days do, with breakfast. The hotel we're staying at offers a free breakfast (much to our delight), so the morning was a little less hectic than Seattle was. Despite a small incident with some spilled tea (I'm told the chair will make a full recovery), the morning started off well as we piled into our 12-passenger van to head to Onset Ventures.
Once we got there (and managed to safely park the van, which was no easy feat), we met with Joel Mjolsness, a Luther College alum from the class of '74, and his friend at Onset, Shomit Ghose. They were kind enough to take a couple hours out of their days to talk to us about the venture capital perspective to starting a company, as well as some advice and financial forecasting.
Network, Network, Network
I think the topic that Joel and Shomit hammered most was the importance of networking. When starting a business, it matters what you know, but who you know is just as important. If you know the right people, or know people who know the right people, your abilities are vastly improved. Shomit told us that he won't even consider meeting with a perspective startup unless he knows the person behind it. I have to admit, that seems a little daunting to me. I have connections from my professors at Luther and the internship I had last summer, but are those enough? How do I extend my reach while I'm still in school? So much of networking seems to be having a mutual acquaintance introduce you to a person, but how do you get that first mutual acquaintance? As it usually does once the topic of professional networks arises, LinkedIn came up as a valuable tool, reminding me once more that I should probably do more with my page then letting it collect digital dust. One more thing for the to do list. The interesting fact that came up was that, at one point, Boston was vying with San Francisco to be the tech capital of the country. However, according to Shomit, the reason the Silicon Valley ultimately rose up on the West Coast was because of horizontal, rather than vertical, networking. In vertical networking, a person knows most people inside their organization (a vertical chain of command). In horizontal networking, a person spreads their network out across many different companies. Ultimately this leads to a better network overall, and more possibilities for connections. Shomit did tell us that reaching out to people isn't just acceptable, in many cases it's welcomed. It isn't an imposition to ask for wisdom. That's a good thing to remember as I try to build my professional network.
The Dotcom Bubble 2.0
Yes, the Dotcom Bubble has been patched and has come back to plague the markets once more. Possibly. For those who either don't remember, or (like me) were too young to know what the Dotcom Crash was, it was the result of over-speculation on companies during the big internet hype in the early 2000's. Companies with no real business plan or profitability were being evaluated at a much higher value than should be possible, and caused artificial inflation in the market, or a bubble. Eventually, that bubble popped, and internet companies lost most, if not all, of their value. This is a gross simplification of the the events, but you get the idea. Over-hyping, bubble, crash. Experts aren't in agreement (though, let's be honest, expert consensus on financial news never happens until after the news breaks, then everyone saw it coming), but Shomit believes that we're riding another internet bubble. Right now, there are 223 companies considered unicorns, a startup company that is valued at over $1 billion. According to Shomit, this number is growing, and shows no sign of leveling off as these startups go public. Often this is because their public valuation would be far lower than the valuation investors give them, and because of this investors don't want these companies to go into the public market. So what happens when/if the bubble pops? Shomit seemed positive about the outcome overall. Prices around Silicon Valley would likely go down, and the number of ridiculous startups will decrease. If there's one thing I'm sure of, it's that I'm really not sure what will happen. The internet has proven to be a strange place. If any industry managed to completely change the way we think of economics, I think it will be internet companies.
What is your product?
The other insight we got from Shomit is that he doesn't believe there is any value in selling products anymore. The only value comes from the data those products generate. According to him, every successful company today is a data-driven company. They analyze trends, search for connections, and find data signals. Data signals are points of data that have a strong correlation. For instance, one online bank uses several data points to consider your loan request, one of which is the capitalization you use on the form. Are you typing in all caps or using no caps? Denied. Data is how you can predict your customer's needs before they even know them. In the moment, looking out a beautiful view, it felt like we were sitting in the expository scenes of a science fiction film. One of those that seems to be a utopian world, but you still feel a little uneasy at how perfect everything is, then you suddenly realise the twist and it becomes a dystopia. Data is for sale. Nothing we do on the internet is private, and when we carry the internet around in our pockets, much of what we do is tracked. And to those thinking, "that can't be true, I monitor all my privacy settings and make sure my things are hidden," that may be true, but you still leave data points that companies can track. Google was sued in late 2017 over allegedly illegally collecting data through a loophole in iPhone security. Even outside of loopholes and security breaches, much of your data is available to companies. How much time you use certain apps, what time of day you use them, what the weather is like when you use them. All these things can be, and likely are being, tracked. Perhaps my visions of a dystopian future where corporations can see and know all is just a paranoid delusion brought on by an over-consumption of science fiction media. Even if it is, I'm still not comfortable with the proliferation of data collection. I know that it seems contradictory (you write a blog about your life and post it free and open to the internet, then whine about your data being tracked), but I'm human, I'm allowed to be contradictory.
A book report in the Alpine
Thoughts of dystopia aside, the meeting at Onset was incredibly interesting, as it was great to get the viewpoint of a venture capitalist. But we couldn't stay and ask questions forever, and so it was time we headed off to lunch. On recommendation from Joel and Shomit, we went to the Alpine Inn, a burger bar not too far from Onset. It's a small, hole-in-the-wall type place, but had a great outdoor seating area and inexpensive, yet still tasty food. I got the Alpine Burger, with cheese, bacon, caramelised onion, and lettuce, and fries. It was pretty good food, and we were all pretty hungry. Once we all ate, I ran back to the van to get my notes and my book. As part of the class, everyone has to present on an entrepreneurial book that we choose. My book was Reality Check: the Irreverent Guide to Outsmarting, Outmanaging, and Outmarketing Your Competition, by Guy Kawasaki. The book is a collection of Guy's blog posts that he's made over the years, and as such contains some useful tips across the entire gamut of topic an entrepreneur would need to know. From getting an idea and raising money, to being the boss and giving keynote addresses, there's tips for everything. The book was published in 2008, so some of the examples are a little out-of-date (for example, Guy references Myspace as a leading internet space), but the advice remains pertinent. Several chapters of the book were especially relevant to me, such as "The Lies of Engineers," some of which I am guilty of ("this time we got it right," comes to mind). Another chapter that seems particularly relevant to this course is "Ten or So Things to Learn This School Year." Among the list are things that I wish there was a class in, like "how to make small talk," or "how to leave a voice mail." While these may seem like trivial things (and, honestly, they kind of are), they do help you out in the real world. If you want the knowledge of reading the book without reading the book, here are my top four points from Reality Check:
- Patents aren't defensible - This may seem weird, but Guy brings it up at least twice in each section of his book, so apparently it's a common mistake. You will run out of resources to fight patent lawsuits before the big companies do.
- Cultivate evangelists/be passionate - These two go hand in hand. Be passionate about your product; you will end up making a better one because of it. And cultivate people who love your product and will proselytize it to the world. That's the best marketing you can get.
- Undersell and over-deliver - project low, and beat those projections.
- The karmic scoreboard - Guy talks about his belief that somewhere there's a tally that keeps track of the good you do. Keep that scoreboard high, and leave the world a little better than you found it.
To boldy go where no group as gone before
After I finished my presentation, we had nothing else scheduled for the day, so we drove out to Apple's new headquarters in Cupertino. The aptly-named spaceship campus was an interesting sight, and though we couldn't actually tour the facility, the Apple Store right next to it had an augmented reality display that let us take a better look around the area.
The display was pretty darn cool. It let you take the roof off of the buildings to see the floor plan inside, let you change the time of day, and even had alternate viewing options to see the solar power plan and how the facility recycled wind for heating and cooling.
While I was tempted to, I resisted the urge to buy one of the $40 Apple t-shirts that they were selling in the store, though a few other group members did buy them. There is an interesting cult effect that Apple creates, and that feeling is especially strong in their stores. Surrounded by iPads, iPhones, iMacs, and Macbooks, you feel a need to buy in. I'd be interested to read about the psychological effect happening here.
After our brief tour around the store, we all piled back into the bus and headed back to our hotel. I think everyone is still exhausted from traveling yesterday, because most of us went to immediately take naps! As for me, I spent the evening relaxing, and enjoyed leftovers from my lunch yesterday at Jason's Cafe for dinner. Still, all-in-all, it was an eventful day. Tomorrow we're off to Google! This may be the most excited I've been for a visit yet. Hopefully it will live up to expectations.
Except taken with permission from Devin's blog.