Five Visionaries on What’s Coming Next in Technology

Every year for the past 13, the business and technology forum Churchill Club of Silicon Valley has held a very popular annual dinner where about five tech forecasters and finance people offer up their predictions on what’s coming next in technology in the next three years. On the panel tonight at the venerable Santa Clara Marriott are Curt Carlson, president and CEO of Menlo Park research lab SRI InternationalAneesh Chopra, first chief technology officer of the United States; venture capitalist and speed talker Steve Jurvetson, managing director at Draper Fisher JurvetsonAjay Royan, managing director of Clarium Capital, Peter Thiel‘s company (Thiel was supposed to be here); and futurist Paul Saffo, managing director of foresight (an appropriate title) at Discern Analytics. Emcee is Tony Perkins of AlwaysOn. I’m liveblogging the highlights.

If I remember previous events, this one is a little different in that Carlson, not each individual panelist, is presenting the trends. Each of the panelists raises a paddle with green on one side, to show they agree that the predicted trend will happen, red on the other to show they don’t. Yeah, it’s kinda hokey, but it’s fun. The audience votes with handheld devices as well as little red and green cards.

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The Future of the Connected Living Room: Not Far Away

One of the hottest products in the tech business these days are devices intended to bring the Web onto your television. Whether it’s Google TV, Roku, Boxee, Sezmi, Tivo, or any of many other devices, they’re all aimed at taking the Web into the last place it hasn’t yet caught on: your living room.

Today I’m at the Streaming Media West conference in Los Angeles, where content creators, tech companies, and TV people are trying to figure out what’s next in this TV-Web maelstrom–as evidenced by countless panels looking at every angle of this issue that is top of mind everywhere from Silicon Valley to Hollywood and Madison Avenue.

The first panel is Internet-Enabled TVs and the Future of the Connected Living Room. On the panel: Evan Young, director of product marketing at Tivo; Andrew Kippen, VP of marketing at Boxee; Olivier Manuel, director of content for TV maker Samsung; and Dale Pistilli, VP of marketing for disk drive maker Western Digital. The moderator is Dave Habiger, CEO of Sonic Solutions.

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Mike Moritz and Steve Streit at TechCrunch Disrupt

Michael Moritz, perhaps the key partner at Sequoia Capital, is “the most powerful venture capitalist in Silicon Valley,” says TechCrunch editor Mike Arrington. Moritz is onstage with Steve Streit, founder and CEO of financial services company Green Dot, a Sequoia-backed company that went public in July at a $2 billion valuation. They’ll be talking about “The Road Less Traveled.”

Streit’s talking about how Green Dot, which issues reloadable prepaid debit cards, got started. What’s more interesting than the particulars is how this company went public completely under the Silicon Valley radar. Probably has a lot to do with being in financial services and aiming to be a bank holding company, which requires adherence to a lot of regulations–and not shooting your mouth off like so many startups do in ways that we love so much. Plus, it takes a long time to make it work in that business–seven years in Green Dot’s case.

Arrington tries to get Streit to describe how Moritz works, but that’s not really working beyond platitudes. Arrington asks Moritz if he’s better at discovering new talent  or making whatever opportunity is there a success? Moritz implies the former, despite Sequoia’s (not always deserved) reputation for replacing founders at the drop of a hat. In fact, Moritz says they look for entrepreneurs who look like they will be able to take the company all the way.

Now Streit opens up a little bit and says: Mike feels investments like Santana feels the guitar. He feels the investment in many ways more than the entrepreneur. He has said, “Steve, you don’t know what you’ve got here, back up a little bit” to realize it.

OK, well that’s it, and wish we’d heard more.

LIVE from TechCrunch Disrupt: Peter Thiel

Peter Thiel may be best known for being an early investor in Facebook, though his investments look like a Who’s Who of hot (and once-hot) companies in latter-day Internet startups: Yelp, LinkedIn, Powerset, Friendster, Slide, and many more. The president of the hedge fund Clarium Capital, Thiel is speaking in a fireside chat with my onetime colleague Sarah Lacy at TechCrunch Disrupt this morning in San Francisco.

Q: Is Silicon Valley still the center of innovation? Thiel: Silicon Valley is still the center for a lot of technology innovation. But incredible stagnation in U.S. economy. One of the questions being asked about Silicon Valley is how are we actually doing things to make the country and the world better? Lately there’s not that much to move the dial, outside the Internet. We need to be spending a lot more time on breakthrough vs. incremental things (paraphrasing).

Q: A lot of people say it’s not up to VCs here to do basic science–an obstacle to cleantech development. Thiel: Says that’s true. (But) you want to be focused on some of the harder-tech companies.

Q: What’s the most far-out investment you’ve done? Space-X, Elon Musk’s rocket company. The economics are not terrible–people generally pay in advance for launches. It’s just the kind of thing that’s not in people’s mental framework to look at. We should go back to the 1950s and 1960s and look at the classic science fiction things that were supposed to happen–biotech, AI, …

Q: Back in 2006, you said we’re not in another Internet bubble? Were we, or are we now given even higher valuations? Thiel: I don’t think that we are at a crazy valuation point. I suspect Facebook is still among the most undervalued company in the Internet, even at $30 billion. If you had a choice between Google and Facebook, you should be long Facebook.

Q: Would you fund Facebook today? Thiel: We would not be categorically against it. But I think the angel/early VC thing feels very crowded. You have to be very careful. It’s not as contrarian as it was three or four years ago.

Q: Are we at the point with Internet companies like where auto industry was in 1950s? Thiel: More like 1940s. But it’s a lot harder to make incremental progress. So we’re more focused on breakthrough technology areas.

Q: Has Google joined the Microsoft category of companies that are not fundamentally innovators anymore? Thiel: Maybe not quite yet, but possibly. Apple still very innovative. By definition what is technology, what is disruptive, changes.

Q: What about Facebook–still innovative? Thiel: Yes–if Zuckerberg stays in charge.

Q: Is Zuckerberg an evil genius like the movie indicates? Thiel: I would beg to disagree. Hollywood is this nasty zero-sum game where everyone is trying to stomp on each other. I.e., not like Silicon Valley. If this movie encourages people to go create companies in Silicon Valley, that will be a good impact.

Q: What kind of investing do you like among all you do (venture, angel, hedge fund)? Thiel: I like them all. We haven’t invested in any cleantech companies. The challenge is to create something that’s cheaper than oil. To the extent it’s more expensive, it’s not going to work.

Apparently Thiel has an announcement: We’re offering 20 kids under 20 money to create something great. One of the big problems with the (higher) education system is just that it costs so much more. It’s a lot harder to take big risks. You can apply for the two-year program individually or with up to four partners, and get up to $100,000 to start companies.

LIVE from TechCrunch Disrupt: Fireside Chat with Reid Hoffman and David Sze

Now we’re on to the fireside chat with Reid Hoffman, cofounder of LinkedIn prolific angel investor, and VC David Sze. They’re both partners at Greylock Partners. TechCrunch editors Mike Arrington and Erick Schonfeld are moderating.

Hoffman: Today, we’re announcing Greylock Discovery Fund, a $20 million seed fund to operate very quickly to invest in startups with only a single partner OK.

Facebook, Zynga, Twitter, Pandora, LinkedIn–these companies are some of the most successful startups in the Valley, and most had many naysayers.

Q: What disruptive spaces are underinvested in? Hoffman: Mobile e-commerce. Consumerification of the enterprise.

Q: Are Silicon Valley startups really tackling hard problems? Hoffman: Yes. But is it important to be doing stuff in the hard sciences? It would be great.

Q: What happened to Cuil (which appears to have hit the skids)? Sze: Not close enough to say. Cuil is not done, it’s in the process of a lot of things.

Q: Is it a good thing that things sometimes go wrong? Sze: Yes, it shows you’re taking risks.

Q: Digg seems to be at an inflection point–what’s next? Sze: The last launch didn’t go well, but they’ve made some changes. All the successful companies hit these points. The key is the ability to power through them.

Q: What were LinkedIn’s inflection points? Hoffman: Every year, you actually hit something, no matter how well you’re doing.

Q: Can LinkedIn really overcome Facebook’s more universal appeal? Hoffman: All our numbers are better every month and every quarter. It’s a different consumer value proposition. Sze: Stuff happens in email (but that doesn’t mean LinkedIn isn’t of value in a professional setting). We want some separate between different things. (I agree–very different kinds of services. Some overlap, but I’m doubtful I’ll go full bore on Facebook for all professional things. But the question is how big LinkedIn can be. Less sure of that.)

LIVE from TechCrunch Disrupt: Super Angels Vs. Super VCs

The upcoming panel at the TechCrunch Disrupt conference in San Francisco this week suddenly became the flashpoint for the show last week when TechCrunch editor Mike Arrington wrote a blog post on how he crashed a dinner of angel investors and accused them of collusion. A maelstrom of charges, leaked emails, and countercharges ensued. Now some of the principals in this controversy are onstage together with Arrington: Dave McClure of 500 Startups, Ron Conway of SV Angel, Chris Sacca of Lowercase Capital, Chris Dixon of Founder Collective, Roelof Botha of Sequoia Capital, and Mark Suster of GRP. Oh, and Yossi Vardi has crashed the panel. Here we go:

Arrington asks: Anything else you guys want to add on Angelgate? McClure: No. Sacca: Not really. We have to thank Ron for starting this industry. It seems worth getting past. This whole thing is a total waste of time. Conway: nothing more to say. OK, I guess enough of that.

Arrington: How are super angels different from VCs? McClure: Bigger funds can’t invest a small enough amount to do startups.

Arrington: Do you take money off the table when entrepreneurs do (pre-IPO)? McClure: Yes, but only if the founders cash out some. Botha: No. McClure: Of course he doesn’t, because they’re going for the big score when there’s an IPO. Conway: The rank and file engineer has a right to get liquidity at the same time as the investors and the founder. McClure: True.  Suster: Founders should be able to take “feed the family” money off the table. But if and only if you’ve achieved something in the business. McClure: VCs will get squeezed out of deals if they don’t offer founder liquidity.

Arrington: Valuations are going up. What are you doing to counter that? (Laughter throughout the room, as it’s obvious this is a backdoor into Angelgate.) McClure: We’d have to have dinner on that. (More laughs.) Dixon: None of the last 15 investments we’ve done has been larger than $5 million pre.

Arrington: Why should the entrepreneur care? McClure: Because more startups need to be ready for small exits. You have a higher probability of a $50 million to $100 million exits. If you get too high a valuation or too high a round, you have to go for the fences, and that may not be appropriate (paraphrasing).

Arrington: Is it really best to think small, to go for a $25 million company? Conway: We invest, and two years later the entrepreneur decides if they want to sell or keep going for something more. A great entrepreneur does not talk about the liquidity event when he’s talking to us. Sacca: People get rich on $20 million exits. That’s real money. No one in the audience would sneeze at $4 million (apiece for, say, five founders). (Amen.)

Arrington: There’s a cult of personality developing in the angel community that isn’t good. We need $1 billion-$2 billion-$10 billion IPOs and exits. Sacca: They may not be magazine cover stories. But $20 million-exit companies are not “dipshit companies,” as Arrington called them.

And it’s over, with people on the panel more angry with each other than when they started.

LIVE from TechCrunch Disrupt: John Doerr, Mark Pincus, Bing Gordon

TechCrunch Disrupt, the tech blog’s annual conference in San Francisco, is underway. I’ll liveblog the highlights of this first panel of luminaries, which is looking at Building Internet Treasures. FYI, John Doerr is a partner at Kleiner Perkins, as is Bing Gordon (former longtime creative guy at Electronic Arts), and Mark Pincus is CEO of social game giant Zynga.

Actually, Doerr is soliciting audience questions for everyone, and then they presumably will address them. They’re all over the place–where do you look for new ideas, what about micropayments, the wisdom of developing on a closed platform (in other words, Facebook), is advertising the revenue model for the Internet, what’s the future of companies like Groupon, what matters most for the future of the Internet, what is the future of social games, is the intelligent Web real or a myth, is there a future for Flash vs. HTML5, Internet disruption in health care.

Pincus starts out. 33 million people as of yesterday played a Zynga game. 1200 full-time people. Won’t disclose revenues.

Pincus says the best companies are creating products and services that we now can’t imagine living without–Amazon, Google, etc. That’s what an Internet “treasure” is. He says Zynga measures its users’ “net promotion score,” which has to do with how much they spread the word of their game experiences to others, if I understand correctly.

Doerr says he’s getting a different sense of games culture today–more analytical than creative. “We’re data junkies. We measure everything,” he says, and Zynga has invested in big data warehouses–more than a petabyte of data a day. “We’re adding a thousand servers a week.” Yikes.

But, he adds, design and creativity still really matters.

Doerr: What is disruptive about social games? Gordon: Four big disruptions from the Internet: Social, analytics, APIable Internet (app economy) and new payment methods. What’s disruptive about social games is that they combine all four in one. Pincus: In summer 2007, I was here for the Facebook apps platform launch (so was I). Games and fun were not a big macro on the Internet yet. The disruptive thing for me was not apps and platforms, but that they took down the barriers to entry to playing games–you could now design games that three clicks in, you know how to play them.

Doerr: Is the social Web going to create other great possibilities beyond games? Pincus: We are going through the biggest change in Internet consumer behavior since using the browser. Somebody will become the travel icon on my phone–and be that throughout the Web as a result. Health is waiting for someone to turn it into a consumer product that’s useful.

Turns out John Doerr’s daughter Mary, in high school when meeting Pincus along with her dad and Gordon to assess whether Kleiner would invest in Zynga, sealed the deal by saying, “He’s cool.”

Pincus: Wanted to keep control of the company to avoid “death by a thousand compromises.”

Doerr: Zynga has the notion that every employee is a CEO. That can’t be right, can it? Pincus: We sure try. People have to define what they’re the CEO of, and how they’re going to kill it (that goal).

Doerr: Is it the app economy? Pincus: Every consumer behavior on the Web is going to become an app and a new kind of industry. Consumers are going to expect the way they interact with a service is an app.

Will there be a revenue stream besides advertising? Pincus: I’m a big believer in the user-pay economy. Just as offline, ads will eventually be a small part of the overall Internet economy. Advertising [online] is only a $50 billion industry–smaller than the auto industry.

Pincus: We’re still far far away from being an Internet treasure. People can still imagine life without playing our games. Gordon: I don’t know, I was harvesting wheat at 6:15 this morning. Pincus: We have to make the daily grind have more meaning. It’s a big challenge.

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