WHY I LOVE HIGH BARRIERS AND PHYSICAL PRODUCT

No one said building a company was easy. It is probably one of the most challenging things you could ever do. Up there with a successful marriage and that kind of thing. But somewhere between VisiCalc and the founding of Facebook there seems to have proliferated this notion. This web software thing. This thing that blows up and everyone is using it and it’s the best thing since your reflection in the mirror. It is a notion fed by media and it is a notion fed by the industry itself. Has YCombinator or TechStars ever produced something I can hold in my hand? I would have to check.

The heart of the startup is the value it brings to market and to society at large. Tangible value that wasn’t there before. It is supposed to be the antithesis of the securities derivative. And then we have our most revered entrepreneurial products. And something gets blurry. Something manufactured in hyperspace, existent in that greyish cloud. Maybe our heads are in the cloud. Markets are not always rational nor do their limits roll endlessly over the hills. In any case, the skew remains immense. Of the roughly 6.4 billion of U.S. venture capital invested in Q4 of 2012, Software made up 1/3. Along with Biotech, the closest competitor, these two sectors account for over 50% of all venture capital invested. In contrast, the Consumer Product/ Service sector totals only 8%. Sectors like Computers/ Peripherals and Electronics/ Instrumentations make up roughly 1% each.  

Ultimately, the responsibility for long-term value creation will always rest with the entrepreneur. The U.S. still harbors the brightest technologists. And this place is an absolute catalyst for innovation. But is the software curve ultimately sustainable over hardware? You’re seeing compressive effects. There is ever more enterprise and less consumer code going through the later stage tech VCs. The barriers to entry are just too low. I’m not saying software isn’t awesome. But I think there must be equilibrium throughout the innovation ecosystem. I think there is this opportunity. It’s not just in the cloud. Foundations lay in the earth. You really have to give MassChallenge some credit. They accelerate everything from urban farms to mountain wheelchairs. And that’s the idea - and perhaps the necessity. China churns on in the night.       

Of course there are exceptions. If you told me in early 2010 that you will see the eminent rise of two more social goliaths, I would have hesitated. Yet Facebook feared Instagram and Pinterest has a user base the size of Twitter. Pinterest is lovely and perhaps it is better than your reflection. And maybe you are the next Pinterest. But probably not. That’s not to say you’re not the next big thing. That your company isn’t going to reinvent its niche or save the world. And I believe more than anything in the power of innovation by design. It will topple empires and resurrect anew. The capable usurper is always out there. But I also believe in revenue and long-term sustainability. I believe in something beyond the web. In something that uses the cloud as a backdrop. Or something that doesn’t use it at all. Something original and nothing easy. Scale the walls. Blend code with physicality. Make the new smart-thing. Build the next Nest. Something I can feel. Something I can fall in love with the intricacies of. Give me art, like the emperors did. And like the pharaohs before them.                

-WG

Come at last to this point

I look back on my passion

And I realize that I

Have been like a blind man 

Who is unafraid of the dark.

                     -Yosano Akiko