Amazon’s Dynamic Perspective: Gaming’s history will repeat itself

Yesterday, Amazon made its long-anticipated announcement that it will formally be entering the smartphone phone market, with what it’s calling the Fire Phone. As expected from Amazon, the product promises (and will likely deliver) a lot. At a starting price of $199 for a 32GB phone with a one-year AT&T contract, the device provides (a) an image, voice, and text recognition-based service for buying products its users encounter in the world; (b) a full-year of the company’s incredible Amazon Prime service (read: free music, movies, TV shows, books, and two-day shipping on physical products); (c) it’s innovative “Mayday” video chat-based customer support service; (d) free cloud storage for every photo taken with the phone; and more…

But one of the most talked about features of the new device is what Amazon is calling Dynamic Perspective — or what some are calling the “3D” user experience supported by the phone (demo here & foreshadowed by a patentfrom Bezos himself in 2008). Sample applications of the technology include new views of stadium seats in a ticket purchase experience on StubHub and zooming into real estate photos on Zillow by simply moving the phone closer to your face. Dynamic Perspective is enabled by the phone’s four front-facing cameras which detect where a user’s head is at any given time, updating 60 times per second. They’ve even included infrared lights in each camera to ensure that the technology works in the dark. There are many technologists who will do a better job of explaining the mechanics of the Dynamic Perspective, but I’d like to focus on what I believe to be it’s motivations and implications. I believe they are huge. And it starts with gaming.

If you think about the past 10 years across the technology landscape, there have been at least 3 major digital platform transitions that have occurred:social (Facebook), mobile (Apple & now Google), tablet (Apple, Amazon, & now Google). And on each platform, there has been one category that has led the charge in mass market consumer adoption: gaming — accounting for the plurality of platform revenue. When new platforms emerge, they start as pretty boring places to ‘hang out’ until application developers are able to sync their teeth into the potential of the new form factor or user experience. On Facebook, other than sharing articles, status updates, and photos, when Facebook released it’s Platform in 2007, there was not much to do. But within a short few months, with the birth of companies like Zynga, Playdom, and Playfish, people were hooked. They made games that you were meant to play with your friends, something you could not really do with the same ease before Facebook. When Apple opened up its App Store in 2008, similarly there was not much interesting going on. Remember fart & beer apps? As expected, the legacy gaming companies were slow to develop much of substance. Then came Rovio, makers of Angry Birds. The game took advantage of the snackable nature of mobile entertainment. It leveraged simple hand gestures like drag-and-release to power it’s slingshot. When Apple launched the iPad in 2009, it was met with a tremendous amount of skepticism. And while it was used early as a media consumption device (largely books & video), again, with the rise of mid-core strategy games likeClash of Clans (by Supercell) which required deeper engagement & broader screen real estate than a mobile phone could offer, gaming drove big time business for the platform. [At General Catalyst, we believe that we’re still in the middle of the tablet platform transition, recently backing the team fromSuper Evil Megacorp, to reimagine what core gaming can look like on the medium]

When a game takes off on a platform, it is unique content that users cannot find anywhere else. For example, Supercell only launched on Android a few months before it sold 51% of the company for $1.5B. Because consumers could not get the games elsewhere, they were compelled to purchase an iOS device. In Zynga’s case, they helped drive users away from competing social networks, who lacked such rich entertainment experiences. Amazon has tried to differentiate its phone from a media perspective by giving away music, books, movies, and TV shows with it’s free year of Amazon Prime. But consumers can already get (or in most cases already have) relatively cheap access to to that content. What consumers cannot find elsewhere, however, is what game developers might dream up with Amazon’s Dynamics Perspective SDK. Some people have talked about gaming experiences like first person shooters or sports games (massive gaming categories on other platforms). And these are only the beginning. If Amazon is able to properly evangelize the capabilities of their new Dynamic Perspective technology platform to the gamging community, they may create yet another massive product category within the Amazon product portfolio, the smartphone. My bet is that they will.

What Exactly is IBM's "Smarter Planet"?

If you've watched TV or walked through an airport over the course of the past 5 years, your probably seen advertisements for what IBM calls a "Smarter Planet." But perhaps because we do not really think about IBM as a consumer business these days, it's not exactly clear what exactly that Smarter Planet is. Thanks to Terry Jones and my Partner, Joel Cutler, I had the opportunity to attend a special IBM event, where they have sneak peak at what is to come. And perhaps it will come as no surprise to you, it begins with Watson (their Jeopardy winning super computer).

Watson is a technology platform for what IBM calls "cognitive computing." Put simply, it allows developers to build applications that use Watson's brain to solve problems, much like they use Amazon's cloud for core infrastructural needs like storage. Since demonstrating the technology's trivia acumen in late 2011, IBM has been working with number of pilot partners to demonstrate what the world can do with augmented intelligence. And at the launch event, the company showcased prototypes of such products. Probably the most viscerally powerful of such was in the medical arena, where IBM has partnered with Memorial Sloan-Kettering to build systems that aid in the both the detection of cancer and the prescription of which specific treatment is appropriate for the individual case in question.  In a more recreational use case, Watson will create cooking recipies for users with only the suggestion of a single base ingredient, style of cuisine, or dietary restrictions.

Launching new divisions is not something IBM does lightly. Similar transitions at the company occurred 50-60 years ago with the creation of a division for mainframe technology; in the 1980s around the personal computer; and in the 1990s around "Global Services" - the IBM's consultative practice for Fortune 500 corporations and governments. IBM is in an elite class of technology companies (including Apple, Google, Amazon, and Cisco) for whom $1B in incremental revenue hardly gets their executive team out of bed. They need $10b opportunities (revealing just how hard it is to continue to drive growth).

Fortunately for New York City, in the Watson Group, IBM sees this potential. For the past couple years, a large black glass construction project has been underway in the Astor Place corridor in downtown Manhattan. For anyone familiar with the area, the building is a total visual force, commanding attention and respect. Until yesterday, that building was largely anonymous, without any clear markings of propriety. Today, it is Watson.

In addition to housing their new team in their new downtown fortress, IBM is going to commit $1B of its own capital the developing the Watson Group over the next few years. 1,000 of its 3,000 person IBM Research team will be allocated to developing the technology. And the company will be earmarking $100m in capital for equity investments in start-ups their fledgling Watson developer ecosystem. IBM will also be sponsoring some kind of start-up accelerator in their new space for Watson-based companies.

Fundamentally game-changing innovation is so hard to do as a large company, I'm not sure how successful Watson will be. I do, however, respect the boldness of the vision and welcome the contributions to continue to build the technology ecosystem. It is exactly this sort of fundamental systems research and enterprise software development that we need.

Parting Ways with Winners

For any Chicago basketball fan, today is a sad day. After 10 years as the Bulls' starting small forward, Luol Deng, was traded to the Cleveland Cavaliers in exchange for the expiring contract of Andrew Bynum, and a package of Draft picks.

For those who do not know me, I grew up in Chicago in the womb of the Michael Jordan era winning 6 Championships through my teenage years. Basketball was a religion in my family, and old Chicago Stadium and the United Center were like Church or Synagogue. I remember where I was for many of the teams big wins over that time frame.

Since then, the road has been rocky for my team to say the least - from star athletes getting into career-ending motorcycle accidents to hyped high school prospects failing to reach their potentials to two years of fluke injuries to our MVP. Over that time horizon, however, there has been one steady source of leadership, energy, defense, scoring, and grit. And that has been our all-star, Luol Deng. "Lu" (as he is called by his devotees) was the kind of guy you never want to see in another team's jersey. Over his career, he was not only consistently a 18 point and 7 rebound guy, he was a tenacious defensive player. Whenever the Bulls would have to face a Kobe, Lebron, or Durant, Lu would be our show-stopper. And he played with incredible heart - averaging more than 40 minutes per game on the court (always close to, if not leading the league). He outlived multiple coaches, and helped lead the team to the Conference Finals. Had Derrick Rose been healthy, the current team would have been a Championship contender. People talk about getting "A's for effort" but Lu deserved an A+.

So, if Lu was such a winner, why trade the guy? Today the Chicago Bulls made a management decision that we see all the time in the venture business with many of our best companies. In short, the needs of the organization are bigger than any one individual - no matter how talented. With Derrick Rose out again and Lu moving into a contract year (where he should receive close to top dollar), the Bulls understood that they have to think about building the foundation for a successful organization for the next 10 years. While management has stood by their franchise player in Derrick Rose, they know that premium young talent will be key to the organization's longterm championship potential.

In world class technology companies, similar staff crossroads happen as well. World-class engineers do not always make for world-class managers. Sales teams accustomed to selling $10k SaaS licenses over the phone are not always the people that will close your multimillion dollar enterprise deal.  They accountant that you hire to do your books, is not likely to scale to be your CFO.

These transitions are often tough for both companies and individuals. You may work with one another to try to find new roles and responsibilities. But often times, even key early leaders must move on. There are now countless stories of epic public departures for such individuals from even companies they've founded.

My own wish at companies and sports teams alike is that we do what the Chicago Bulls have done and do the best to make the right human capital decisons for the present and future needs of the company (as hard and sometimes emotional as those decisons are). But my hope is also that we do so honorably. We should celebrate past contributions, and recognize that we would not be where we are today without them.

When I am fortunate enough to take one of my own kids to see the Bulls run in Chicago some day, I hope that when we look up, we see a #9 hanging from the rafters.

Thank you, Lu. And good luck.

Hypothesis: The Best VCs are Happily Married

Venture capital is what many call 'a people business.' Investments decisions revolve around a number of factors, from market size & forces to unit economics to technology. But particularly in the early stages of company development, people are the primary determinant of success or failure.

When making go vs. no-go decisons, investors always have imperfect information. You never know whether the girl or guy you are sitting across the table from truly has the hunger or the skill to change the world in a big way. You don't know how they treat others, or how they behave when their back is against the wall. How fast a learner are they? Can they command the respect of people who are smarter than they are? You may be able to answer some of your questions, but never all. And no founder is perfect. At the end of the day, you have to just make a call.

The best investors in the world thrive in these circumstances. Some call it pattern recognition. Some call it gut. Nailing one home run investment can be chalked up to luck. But the jedis of the venture world are master evaluators of people.

It is for this reason that I've developed the hypothesis that the best VCs are also happily married, in their personal lives.  In evaluating a possible mate, you similarly have imperfect information.  You don't know what parts of your significant other's character are malleable or rigid. You don't know how they will react to loss or failure. You don't know if they will be different in the presence of wealth or fame. You don't know whether or not they will really be a good parent, or how they will look and feel when they are old.  We are all approximations of who we will once be, and in choosing a mate, we make our best guess.

I've had the opportunity of working with several world class venture investors in the past, and have generally found that they turn out to be truly happy in their marriages. Curious to know if you've found the same.

The Great Purge

I am not a very spiritual person, but somehow I do believe in new beginnings.  And as recently explored by Maria Konnikova in a recent New Yorker article on Resolutions, the New Year for me brings new possibilities.  One of my goals for 2014 is to tame my inbox (another is to write more).  It has just gotten out of control.  Some of this will come through more disciplined communication, some through delegation, and some through finding creative ways to cut out clutter.

This morning, I used a clever product called Unroll.me to do an audit of all of the email lists that I have signed up for over the course of the past 10-15 years.  The product has been around for some time, but it really appears to have matured.  After a few minutes of scanning my inbox, the service revealed that I was signed up for 498 lists (some of whom are list-serves and can get quite cattery).  Note: This number does not even include the countless email lists that I have unsubscribed from manually.

Beyond the disgust resulting from how much unecessary clutter I get hounded with every day, the exercise demonstrated to me how much I value a few email newsletters.  Whether their content is editorially created by a community (Quora), assembled factually by a community (Crunchbase), functionally in nature (FollowUpThen), or written and curated by a single individual (Benedict Evans's Newsletter), email lists can still bring recipients a ton of joy and meaning.  I'm very excited to have unsubcribed from the crap, but am super grateful for the thoughtful product execution and effort from those who've really tried.

Couple trends:

• News curation still has value in a Twitter world
• For thought leaders who I do not want to miss, email is a great way to remind me of fresh content
• It is definitely possible to build real functional value (beyond content) into email
• It's amazing how many sub-email newsletters I've managed to get signed-up for from a single brand or source, increasing the rate at which they badger me.

I'd love to know what email lists or newsletters you subscribe to and truly enjoy, and if there are any underlying trends that you identify on the positive or negative.