Saturday, November 19, 2016

Stanford CSP. Business 152. Innovation Timing. Session 1, Quiz 2.

On November 14, 2016, the New York Times wrote a story about a Spark Capital, a 11-year old technology venture firm.

The article opened with a description of one of Spark's recent deals:
Betting on an automated driving start-up in 2015 may not have been the most intuitive gamble at a time when Google and Uber had already declared that self-driving vehicles were among their top research priorities. 
But in the fall of 2015, Spark Capital was one of a few established venture capital firms to wade into the industry, helping lead a $12.5 million investment in Cruise Automation, a start-up based in San Francisco whose software helps cars pilot themselves. One of Spark’s partners became the only outside board member of the firm. 
It was a bet that paid off quickly: Within six months, Cruise sold itself to General Motors for about $1 billion.

1. In your opinion, why the timing of the deal turned out to be so good? Was it pure luck? If you were the analyst who "discovered" Cruise Automation back in 2015, how would you justify the $12.5M investment to your VC partners?
2. (optional) Consider the generic innovation diffusion S-curve, as described in Everett Rogers' "Diffusion of Innovations." What stage of the curve the self-driving car technology is now? Why?

tags: course, stanford, innovation, s-curve

Thursday, November 17, 2016

From junk food to junk news

Remarkably, surrounded by an abundance of choices people chose what feels good, not what is good. With junk food, it's a combination of fat, sugar and salt that fools taste buds into craving for more. With junk news, it's the confirmation bias that fools brains into craving for more news that conform to their world view.

According to Buzzfeed, during the 2016 election cycle fake news outperformed real news.

Due the difference in feedback mechanisms, the situation with junk news is worse than with junk food. That is, after having a junk food diet for an extended period of time, people can at least use scales to discover that their weight has gone up. By contrast, after having a junk news brain diet, people can only get stronger in their opinions because their social network keeps rewarding them for consuming and sharing the junk.

Can we solve the problem without resorting to censorship? One way to look at it would be to consider the situation from a point of view widely adopted in another domain - money and finance. That is, today's fake money is easily detected and discarded, so that the society doesn't fall into the trap of the Gresham's Law. Similarly, fake news can be detected by a variety of technologies, including a BitCoin-like approach that verifies authenticity of the news and news sources. Fake news, like fake coins should be taken out of circulation. Otherwise, our brains get stupid by consuming junk news, just like our bodies can get fat, by consuming junk food.

Lunch Talk: Counterintuitive approach to building startups (Stanford University)

This is Lecture 3 from a Stanford University course "How to start a startup". The speaker is Paul Graham; his transcript is here:

tags: startup, stanford, entrepreneurship, innovation, lunchtalk,

Wednesday, November 16, 2016

Stanford CSP. Business 152. Innovation Timing. Session 1, Quiz 1.


Timing is critical for innovation success. Sometimes, companies introduce new products and services when it’s too late. For example, neither Google+ nor Microsoft smartphone succeeded, despite their respective companies putting major resources behind them, both in money and development efforts.

On the other extreme, some innovations fail because they seem to appear too early. Social networks Friendster and Livejournal started gaining traction in the early 2000s, but never got to the scale of Facebook. Similarly, WebTV started in 1995, with the intent to provide users with a broad range of content over the Internet. In almost two decades that followed, the company burned through hundreds of millions of dollars, went through a major acquisition, but failed in the very same marketplace where NetFlix and other video streaming services managed to succeed a few years later.

Finally, certain products and services had perfect timing. For example, Gmail and Youtube spread like a California wildfire. The Apple iPhone succeeded where Apple Newton failed.

In preparation for the course, please answer the following questions:

1. List 2-3 novel products or services in each of the timing categories:
a) too late;
b) too early;
c) just perfect.

2. (Optional). Pick one example from the list and explain your reasoning with regard to innovation timing. Mention at least 3 factors that played a role in the success or failure of the innovation.