8 Ways AI Will Profoundly Change City Life by 2030



How will AI shape the average North American city by 2030? A panel of experts assembled as part of a century-long study into the impact of AI thinks its effects will be profound.

The One Hundred Year Study on Artificial Intelligence is the brainchild of Eric Horvitz, a computer scientist, former president of the Association for the Advancement of Artificial Intelligence, and managing director of Microsoft Research’s main Redmond lab.

Every five years a panel of experts will assess the current state of AI and its future directions. The first panel, comprised of experts in AI, law, political science, policy, and economics, was launched last fall and decided to frame their report around the impact AI will have on the average American city. Here’s how they think it will affect eight key domains of city life in the next fifteen years.



1. Transportation

The speed of the transition to AI-guided transport may catch the public by surprise. Self-driving vehicles will be widely adopted by 2020, and it won’t just be cars — driverless delivery trucks, autonomous delivery drones, and personal robots will also be commonplace.

Uber-style “cars as a service” are likely to replace car ownership, which may displace public transport or see it transition towards similar on-demand approaches. Commutes will become a time to relax or work productively, encouraging people to live further from home, which could combine with reduced need for parking to drastically change the face of modern cities.

Mountains of data from increasing numbers of sensors will allow administrators to model individuals’ movements, preferences, and goals, which could have major impact on the design city infrastructure.

Humans won’t be out of the loop, though. Algorithms that allow machines to learn from human input and coordinate with them will be crucial to ensuring autonomous transport operates smoothly. Getting this right will be key as this will be the public’s first experience with physically embodied AI systems and will strongly influence public perception.


2. Home and Service Robots

Robots that do things like deliver packages and clean offices will become much more common in the next 15 years. Mobile chipmakers are already squeezing the power of last century’s supercomputers into systems-on-a-chip, drastically boosting robots’ on-board computing capacity.

Cloud-connected robots will be able to share data to accelerate learning. Low-cost 3D sensors like Microsoft’s Kinect will speed the development of perceptual technology, while advances in speech comprehension will enhance robots’ interactions with humans. Robot arms in research labs today are likely to evolve into consumer devices around 2025.

But the cost and complexity of reliable hardware and the difficulty of implementing perceptual algorithms in the real world mean general-purpose robots are still some way off. Robots are likely to remain constrained to narrow commercial applications for the foreseeable future.




3. Healthcare

AI’s impact on healthcare in the next 15 years will depend more on regulation than technology. The most transformative possibilities of AI in healthcare require access to data, but the FDA has failed to find solutions to the difficult problem of balancing privacy and access to data. Implementation of electronic health records has also been poor.

If these hurdles can be cleared, AI could automate the legwork of diagnostics by mining patient records and the scientific literature. This kind of digital assistant could allow doctors to focus on the human dimensions of care while using their intuition and experience to guide the process.

At the population level, data from patient records, wearables, mobile apps, and personal genome sequencing will make personalized medicine a reality. While fully automated radiology is unlikely, access to huge datasets of medical imaging will enable training of machine learning algorithms that can “triage” or check scans, reducing the workload of doctors.

Intelligent walkers, wheelchairs, and exoskeletons will help keep the elderly active while smart home technology will be able to support and monitor them to keep them independent. Robots may begin to enter hospitals carrying out simple tasks like delivering goods to the right room or doing sutures once the needle is correctly placed, but these tasks will only be semi-automated and will require collaboration between humans and robots.




4. Education

The line between the classroom and individual learning will be blurred by 2030. Massive open online courses (MOOCs) will interact with intelligent tutors and other AI technologies to allow personalized education at scale. Computer-based learning won’t replace the classroom, but online tools will help students learn at their own pace using techniques that work for them.

AI-enabled education systems will learn individuals’ preferences, but by aggregating this data they’ll also accelerate education research and the development of new tools. Online teaching will increasingly widen educational access, making learning lifelong, enabling people to retrain, and increasing access to top-quality education in developing countries.

Sophisticated virtual reality will allow students to immerse themselves in historical and fictional worlds or explore environments and scientific objects difficult to engage with in the real world. Digital reading devices will become much smarter too, linking to supplementary information and translating between languages.


5. Low-Resource Communities

In contrast to the dystopian visions of sci-fi, by 2030 AI will help improve life for the poorest members of society. Predictive analytics will let government agencies better allocate limited resources by helping them forecast environmental hazards or building code violations. AI planning could help distribute excess food from restaurants to food banks and shelters before it spoils.

Investment in these areas is under-funded though, so how quickly these capabilities will appear is uncertain. There are fears valueless machine learning could inadvertently discriminate by correlating things with race or gender, or surrogate factors like zip codes. But AI programs are easier to hold accountable than humans, so they’re more likely to help weed out discrimination.


6. Public Safety and Security

By 2030 cities are likely to rely heavily on AI technologies to detect and predict crime. Automatic processing of CCTV and drone footage will make it possible to rapidly spot anomalous behavior. This will not only allow law enforcement to react quickly but also forecast when and where crimes will be committed. Fears that bias and error could lead to people being unduly targeted are justified, but well-thought-out systems could actually counteract human bias and highlight police malpractice.

Techniques like speech and gait analysis could help interrogators and security guards detect suspicious behavior. Contrary to concerns about overly pervasive law enforcement, AI is likely to make policing more targeted and therefore less overbearing.




7. Employment and Workplace

The effects of AI will be felt most profoundly in the workplace. By 2030 AI will be encroaching on skilled professionals like lawyers, financial advisers, and radiologists. As it becomes capable of taking on more roles, organizations will be able to scale rapidly with relatively small workforces.

AI is more likely to replace tasks rather than jobs in the near term, and it will also create new jobs and markets, even if it’s hard to imagine what those will be right now. While it may reduce incomes and job prospects, increasing automation will also lower the cost of goods and services, effectively making everyone richer.

These structural shifts in the economy will require political rather than purely economic responses to ensure these riches are shared. In the short run, this may include resources being pumped into education and re-training, but longer term may require a far more comprehensive social safety net or radical approaches like a guaranteed basic income.


8. Entertainment

Entertainment in 2030 will be interactive, personalized, and immeasurably more engaging than today. Breakthroughs in sensors and hardware will see virtual reality, haptics and companion robots increasingly enter the home. Users will be able to interact with entertainment systems conversationally, and they will show emotion, empathy, and the ability to adapt to environmental cues like the time of day.

Social networks already allow personalized entertainment channels, but the reams of data being collected on usage patterns and preferences will allow media providers to personalize entertainment to unprecedented levels. There are concerns this could endow media conglomerates with unprecedented control over people’s online experiences and the ideas to which they are exposed.

But advances in AI will also make creating your own entertainment far easier and more engaging, whether by helping to compose music or choreograph dances using an avatar. Democratizing the production of high-quality entertainment makes it nearly impossible to predict how highly fluid human tastes for entertainment will develop. [SingularityHub]

October 24, 2016 / by / in , , , , , , , , ,
This Amazing Robotic Glove Lets You Touch the Virtual World


“Seeing is believing.”

While there may be some truth in the old adage, it forgets a crucial component of how we interact with the world: touch.

Touch makes things real. Imagine reaching out to grab your coffee mug, and instead of feeling the smooth ceramic surface pressing against your fingertips, you get…nothing. It’s jarring.

Virtual reality has a touch problem.

The release of Oculus Rift and Gear VR to consumers earlier this year clearly shows us graphics and sound are no longer the bottleneck in an immersive experience. The issue — a big one — is how to interact with the world we’re seeing on screen, with all the dexterity our fingers allow in the real world.

According to Dexta Robotics, a US-registered startup operating in China, the solution is an exoskeleton for your hands: a sleek, gorgeous mechanical glove that captures the full range of hand motions and provides real-time tactile feedback to let you touch and feel the digital world.

“It’s the difference between gazing at the moon and setting foot on it for the first time,” said Aler Gu, CEO of Dexta Robotics, in a press release. The glove, Dexmo, “is a leap forward that will inspire worlds of new content and new experiences,” he said.


Dexta Robotics is far from the only company offering a solution to the VR interaction problem.

The half-moon shaped Oculus Touch, for example, curls the hand naturally in a grasping motion around the trackable accessory. Vibrations provide tactile feedback, and users can grasp virtual objects by pressing buttons on the controller.

While easy to use, the Touch isn’t exactly an ideal extension of our hands — the feedback doesn’t match up with what we normally expect, and button pressing is a sad substitution for the myriad of ways our fingers can reach out and explore.

“Vibration alone isn’t enough to fool the brain,” Gu told MIT Technology Review. “The moment you detect anomalies in how objects feel, your sense of immersion is broken.”

Another approach is to track the user’s eye or finger movements and use those inputs to directly control the digital space. It makes intuitive sense: after all, we’re always looking at or touching something, and VR headsets are already optimally placed in front of our eyes.

Companies like Eyefluence, Leap Motion and Gest are all betting on this approach.

Despite initial excitement, without tactile feedback this method falls solidly into the uncanny valley of motion control — sure, the interaction looks strikingly real to your eyes, but your body definitively knows you’re grasping at nothing but air.

exoskeleton-glove-touch-virtual-world-32Dexmo is inherently different.

Shaped like a pterodactyl claw, the wearable tracks the full range of hand motions — up to an impressive eleven degrees of freedom — as you reach, touch, grasp and feel objects in the virtual world. The glove wirelessly sends the data to a VR avatar, prompting the avatar to mimic your movements.

Say you’re reaching for a digital rubber ducky. As soon as the avatar’s fingertips touch the toy, Dexmo’s software computes the direction and amplitude of the force applied to each individual fingertip. This information is passed on to the five custom-built force-feedback units embedded in the glove, which then dynamically apply a counterforce to the user’s hand. This way, you can feel the virtual object “push back” against your fingers, just like a real one would in our physical world.

Dexmo’s variable force feedback system allows each motor to simulate the force coming from different points on the virtual object, thus translating more subtle physical properties. This way, the motors may lightly press against your fingertips when you pick up a soft slice of cake or offer heavy resistance to your palm when you grab a brick. With Dexmo, you can feel the squishiness of a rubber ducky, the solidity of a big rock, or the jagged edges of a table leg, all inside the virtual world.

And the forces are strong with this one: the glove’s powerful resistance prevents your fingers from passing through an object like a phantom, adding to the quality of immersion.

Dexmo also boosts user-friendly specs to round out the experience.

The exoskeleton weighs around 170 grams, just a tad more than an iPhone 6 Plus, but with the weight distributed across each hand. It runs on battery power, and a full charge is estimated to support over four hours of game play. It uses NRF for wireless communication, averaging between 25 and 50ms of overall latency.

“Wifi and Bluetooth [were] too slow for our applications,” explains Gu.

Since conception, Dexmo has already gone through over 20 iterations, and initial user testing with prototypes has been overwhelmingly positive.

“We conducted many studies where test subjects performed tasks using Vive controller or Dexmo. Tasks such as turning a knob, grasping an odd-shaped object, playing piano, pressing buttons, and throwing a ball. As expected, no contest! Users preferred Dexmo, and reportedly enjoyed a much higher level of immersion,” says Gu.

exoskeleton-glove-touch-virtual-world-1-1The utility of Dexmo goes far beyond the gamer crowd.

The company envisions trainee surgeons using the glove to learn complex surgical procedures in VR while receiving realistic feedback. The system could also be developed for military clients or bomb disposal experts, giving trainees the opportunity to feel and tinker with the intricate mechanical parts in their hands in a safe setting. It would also cut down on cost by reducing the need for procuring actual parts for training or otherwise.

Dexmo could even be used to control physical robots or robotic arms and allow the user to gain a better sense of presence of the robot’s movement in space.

According to Gu, the company is working with VR firms to develop and deliver the “best immersive experience possible.” Currently, the glove works in any 3D simulated environment and is compatible with the majority of VR headsets, including Oculus Rift, HTC Vive and Hololens, to name a few. The company is also planning to release a devkit for developers.

Dexta has not yet set a release date or price for the futuristic controller, although Gu believes that it’ll be something that “eventually everybody should be able to afford.”

Haptics interaction in VR is only just beginning to take off.

Whether we’ll finally be able to get a satisfying grip in VR with Dexmo remains to be seen. The glove likely represents the first generation of VR controllers that bring real-world tactile sensations into the digital universe.

The end goal is to reach across the digital divide, says Gu.

After all, “there’s no better feeling than feeling.”

October 24, 2016 / by / in , , , , , , , , ,
Bootstrapping 101: 4 Things to Remember as You Grow Your Startup

getty_471021507_115201 CREDIT: Getty Images


Instead of raising a round, bootstrapping may just be the answer for accumulating funds for your startup.



“Do I really need funding?” Many entrepreneurs — both young and experienced — ask themselves this question when starting any business. Though many push to secure funding from angel investors, venture capitalists or partners, funding yourself (bootstrapping) is more often than not the best solution. This is especially true today: It may take additional time to save funds and get running, but this provides more time to produce and polish your business agenda.

Self-funding may lengthen the time to grow organically, but the advantages are numerous, from both a financial and growth perspective. Here are four things to consider as you’re bootstrapping:

Don’t Waste Time Pursuing Funding

Chasing down VCs and angel investors takes much energy and effort, and this energy and effort is often better focused on the business itself. I’ve observed many friends in the funding chase; I’ve also been part of the rat race in raising millions for my various startups.

However, too often days turn to months; months turn to years, and suddenly the scope of the business is lost, along with that initial enthusiasm of starting a new company. Though I personally invest in other businesses, I raised $0 in outside funding in the process of building a digital marketing and affiliate network, which eventually I sold to eBay in 2009.

I’ve also completely bootstrapped my newest business without using outside capital. Both ran operations based on small personal loans, and eventually produced positive cash flow and strong profit.

Focus on Revenue

Bootstrapping forces you to focus on revenue: something many startups fail to do when they have major backing from investors. For a startup to survive and actually pay employees and marketing initiatives, revenue must be present.

This isn’t always the case when funding is secured, as many startups lose sight of actually generating revenue. The earlier revenue exists, the faster a company can turn a profit. Through the latest growth spurt at my company, we ran purely on positive cash flow.

This put additional pressure on us, but as a byproduct, it forced me and my team leaders to focus on existing customers and marketing initiatives to garner new customers. By focusing on building revenue, the customer becomes the true beneficiary.

Connect to the Roots of the Business

Just as bootstrapping forces a focus on revenue, it also sheds light on the roots of the business, such as the product/services, customers and the internal team. Without investors tracking your every movement, you have more time to focus on what truly matters for success. We were forced to constantly revisit our digital marketing product suite, something that wouldn’t have garnered as much attention if we had funding.

If the big budget is not there, you are forced to polish your current offerings. This, in turn, benefits your customers, who should always be No. 1. When you don’t have to worry about pleasing investors, you open additional bandwidth, allowing you to work closer with your internal team.

Constantly reminding team members that the company is self-funded can help produce a sense of overwhelming achievement as the business garners traction. This helps smooth the flow of ideas and promotes work productivity. It also opens up more respect for you as a leader and what you are achieving.

Answer to Only Yourself

When bootstrapping, you only have to answer to yourself. Investors are always looking to maximize their return on investment, and some go as far as demanding weekly business reports. This can cause unneeded amounts of stress and, again, take the focus off the business.

Bootstrapping allows you to prioritize the core principles of your business, whether that’s a marketing push through social media, reducing costs or analyzing the true fitness of operations.

When people ask me about good investments, I always say the best one a person can make is investing in themselves. If you’re passionate and driven for success, bootstrapping a business is the ultimate way to do this.

Startups without funding can achieve smoother transitions to growth, which not only increases business morale, but also the bottom line: the true sign of a successful business. [Inc]

October 24, 2016 / by / in , , , , , , , , ,
Can DNA Hard Drives Solve Our Looming Data Storage Crisis?



The idea of storing digital data in DNA seems like science fiction. At first glance, it might not seem obvious that a molecule can store data. The term “data storage” conjures up images of physical artifacts like CDs and data centers, not a microscopic molecule like DNA. But there are a number of reasons why DNA is an exciting option for information storage.


The status quo

We’re in the midst of a data explosion. We create vast amounts of information via our estimated 17 billion internet-connected devices: smartphones, cars, health trackers, and all other devices. As we continue to add sensors and network connectivity to physical devices we will produce more and more data. Similarly, as we bring online the 4.2 billion people who are currently offline, we will produce more and more data.

Oftentimes we also want to store data for longer-term purposes. These timeframes might exceed the capabilities of current storage technology. For example, we might want to store family photos and videos such that our descendants 100 years from now might be able to view and interact with them. We might want to pass down cultural relics, family recipes, or technical know-how to future generations.

Our current data storage methods are struggling to keep pace with our demand for storage capabilities. A data storage crisis would be incredibly stifling for human development. So, we need new robust and sustainable solutions for both short-term and long-term data storage.

A panel at SynBioBeta SF 2016 with representatives from Intel, Gen9 and Semiconductor Research Corporation discussed the current state of DNA data storage. One major takeaway from the discussion is the fact that the long-term data storage market is the fastest growing segment of the data storage market. Moreover, all panelists seemed to agree that demand for DNA data storage will be driven primarily by the need for a better solution that transcends the limits of silicon-based storage systems.


Why would we store digital data in DNA?

DNA is nature’s information medium. In fact, we call DNA the “blueprint of life” precisely because it contains the recipes that guide cells in making proteins. These proteins enable all aspects of life, from digestion to movement and from growth to fighting diseases.

So, DNA already encodes information — “biological recipes,” if you will. Thus, the idea with DNA data storage is to repurpose that information storage capacity so that we can store our digital data — our selfies, movies, and documents — in DNA. To do this, it is necessary to first translate digital info into biological info.

The major reasons for using DNA are:

1. Eternal relevance: As long as there is DNA-based life on Earth, DNA will be relevant. Conventional methods of data storage will always be superseded by new technology, so if we use conventional data storage, we will always need to transfer data to the new, better systems.

2. Stability: DNA seems able to withstand some degree of environmental stresses. In 2013, scientists read the DNA derived from a 700,000-year-old horse fossil. This suggests that a DNA-based storage system will last longer than hard disks and tapes.

3. High storage capacity: The storage potential for DNA vastly exceeds that of all other media. Some experts estimate that all the world’s data could be stored in one kilogram of DNA — an incredible proposition.


Where are we today?

Earlier this year researchers at Microsoft and the University of Washington broke the record for storing digital data in DNA. They managed to store and retrieve 200 megabytes of information (including high-definition video, multiple books and articles as well as a database) using DNA provided by Twist Bioscience.

Storing 200 MB represents a huge leap from the previous record of 0.74 MB achieved in 2013. This is great progress, and it highlights the fact that more interest is being devoted to this endeavor. However, the current cost of DNA data storage is not attractive.

Storing digital data in DNA involves both reading and writing DNA. While the price of reading DNA (DNA sequencing) has fallen sharply, the price of writing DNA (DNA synthesis) currently remains prohibitively high for data storage. New companies like Gen 9 and Twist Bioscience have emerged with new methods that allow for cheaper, faster DNA synthesis.

However, greater cost reductions are needed in this regard in order to accelerate DNA data storage.


What needs to be done?

To make DNA data storage a commercial reality, we need to:

  • Develop new and better ways of translating digital information into biological information; ways that enable fast, accurate and cost-efficient retrieval of information.
  • Invent and advance new chemistries to enable cheap DNA synthesis.
  • Incorporate more automation in production workflows to achieve cost reductions.

Open questions

Because this field is very young, there are several open questions that have yet to be answered:

1. How do we design for security? Today, very little will stop a skilled, dedicated, and patient hacker from accessing and stealing confidential information. If we are going to design a new data storage system, it should be more secure than the current paradigm. We need to think seriously about designing for security from the outset.

2. What will the user interface look like? The user interface of a new technology often influences whether or not that technology will be adopted en masse. How we will interact with DNA data storage technology remains unanswered. In the future, will we all have DNA sequencers, DNA synthesizers, and algorithms that translate digital data into biological data in our phones, our homes, or our local community biohacker spaces? Or will these capacities be restricted to companies? In either scenario, how easily we can interact with DNA data storage technology might affect how quickly we adopt this technology.

3. How will the world receive this? Today, there are pressing debates about consumer privacy and biotechnology. In the wake of the Snowden revelations, many are paranoid our data is accessible without our permission. In addition, many are generally apathetic towards biotechnology. Perhaps there is an opportunity to create a world in which consumers can store some of their own data via DNA instead of using centralized data centers.

While some will welcome the transition from magnetic storage to DNA data storage, it is likely that others will be uneasy with this, citing their distrust of biotechnology as a reason. Considering many are unaware of the processes that currently store their information, should future consumers even be told that their information is stored in synthetic DNA? Or will consumers be indifferent about the storage medium?

People’s answers to these questions are likely to vary with their location in the world.

4. What kind of information do we want to store using DNA? Archival data that we would want to access less frequently, like messages we may want to pass to future generations of humans, or more frequently-accessed data like our selfies and Netflix movies?

The DNA-for-data-storage scene is quite nascent. Earlier this year, Helixworks announced a DNA data storage system that can be bought off Amazon. Their system can store up to 512 kB, which according to Helixworks is enough to “store a small photograph, a poem, a love-letter, a eulogy or a bitcoin wallet.” A number of groups have recently formed to attempt new solutions: Edinburgh’s 2016 Undergraduate iGEM team as well as Catalog, a new entrant in IndieBio’s fourth cohort of biotech startups in San Francisco.

As these groups continue to develop their technologies, we will start to get a clearer picture of their implementation strategies. Until then, it is too early to make predictions with certainty. [SingularityHub]

October 24, 2016 / by / in , , , , , , , , , ,
There’s Nothing Small About Small Businesses in the U.S. (Infographic)

20161018150356-gettyimages-508065449 Image credit: Hero Images | Getty Images



Since 2000, small businesses have been on the rise. But the space still has some catching up to do. 


Today, there are nearly 28.4 million small businesses in the U.S.

Accompanying this increasing number is their impact on the U.S. economy. In fact, small businesses account for nearly half of private-sector employment in the U.S. The small-business sector in America occupies 30 to 50 percent of all commercial space in the U.S. and accounts for more than half of U.S. sales.

Unfortunately, the small-business sector still has some catching up to do. Nearly two-thirds of small-business owners are men with average receipts of $570,000. The remaining female small-business owners have an average of $130,000 in receipts. Half of small-business owners are between the ages of 50 to 88.

To learn more about American small-business owners, check out Bryant Surety Bonds’ infographic below.




October 24, 2016 / by / in , , , , , , , , ,
5 Rules for Hiring Engineers



Great engineers are not a dime a dozen, and you can expect to dedicate plenty of time and resources into finding the right match for your company. In fact, one firm estimates that it takes upwards of 80 hours of recruiting time just to land one quality engineer for their business.

As the success of your business likely depends on these positions to execute critical ideas, here are five rules for interviewing and hiring top engineers.


1) Test for competencies vs. IQ

Few engineers make it into a top school if they don’t have the intelligence and talent for the work. Unfortunately, these aren’t necessarily indicators of success in the workplace.

In fact, one seven-year study on interviewing engineers confirms that the best predictors of on-the-job productivity for engineers lie in a set of nine core competencies.

These can be screened through behavior-based interviewing and include leadership, taking initiative, self-management, perspective, networking, teamwork, organizational savvy, followership, and show-and-tell.


2) Diversity in thought is overrated

Sometimes involving your current top engineers in the hiring process creates a winning formula. This was the overriding experience at PayPal, and with the extraordinary teams that Max Levchin, co-founder and CTO, was able to assemble.

In their process, hiring decisions had to be unanimous, and they had a unique philosophy on teamwork. While collaboration in small teams was considered important, Levchin wanted engineers with similar backgrounds and training to minimize disputes about minutiae and product vision.

While Levchin saw diversity in thought as valuable at later stages in a company’s life, speed and cohesiveness are much more important for startups.


3) Look outside the box for talent

Finding a quality engineer may involve much more than just placing an online ad for the position. In many areas, there is a shortage of engineers and one of your top sources of new leads may come from referrals.

Referrals could be external from platforms like LinkedIn or GitHub, or they may be internal from your existing employees.  Set up an easy to use system that makes talent referrals both simple and rewarding.


4) Cultivate a reputation for exclusivity

Whether you are a startup or an established firm, you’re likely competing with a host of other companies just like your own for top engineering talent.

The best engineers want to be challenged and feel as if they are battling for a place within a top company. One way to achieve this is by making your interviews and engineering positions as exclusive as possible.

Make it known that it is incredibly difficult to get hired by your company, with only the best coders being offered spots on a unique team. If engineers view you as a challenge, you’ll have more who are vying for positions in your company.


5) Talent and knowledge have their place

While we discussed the importance of competencies and behavior-based interviewing, it’s still pretty important that your engineers demonstrate that they can get the job done.

For example, when an engineer interviews at Google, they may have a unique and fun interview experience but, in the end, there will be a set of three coding questions that must be answered within 45 minutes.

Hiring the best engineers requires a time and resource commitment because landing top talent is more than just gaining a competitive advantage. In the end, the quality of your team will determine the ultimate success and survival of your company. [Alltopstartups]

October 24, 2016 / by / in , , , , , , , , ,
What is the Right Amount of Money to Raise at a Startup?
Recently I’ve been debating with a number of young startup companies that are raising money in the next few months, “what is the right amout of capital to raise at a startup?”

It’s a tricky question with no clear answer. There are trade offs. And it obviously depends on the kind of business you’re building. Let me assume for this discussion it’s a garden variety 2010 IT or Internet business (as opposed to something requiring capital equipment or a life sciences project). Any answer will be subjective and any real answer will just be explaining the tradeoffs to you.

On the upper end I’ve spoken openly on many occasions that I think that raising too much money too quickly can be destructive. It’s like adding rocket fuel to space ship before you’re sure that it’s pointing in the right direction for take off (or even if all of the people on board are qualified to take this into outer space). It places undue pressure early in the company’s history to “do big things” when sometimes what is warranted is more prudence. It also takes options off the table if you eventually find out that this isn’t a VC backable business. I’ve spoken about this in a post entitled, “Do you even need VC?” to which the answer for most people is “no.” If you’re interested in that topic the link also has a short video I did on the topic for Fox Business News.

But the lower end also has risks. I’ve seen too many entrepreneurs try to do things on the cheap. I know the standard line, “I want to do a small round now and raise a larger round later when we get A,B,C deal done and I can raise at a higher valuation.” If it works you’re a hero. But there are also problems / risks:

– the funding environment might change dramatically — there may never be a next round (see: March 2000, September 11, 2001 and September 2008)

– you may hit unexpected bumps in the road yourself making the next round tough

– there may be major competitive changes in the market that makes your next funding round hard (e.g. Google suddenly makes your product category free)

– you might do a great job in a great market but a competitor raises $3 million when you raised $500,000 and suddenly you have to compete with them

I’ve even heard people repeat this bullsh*t Silicon Valley mantra about “failing fast” which is horse puckey. The line goes like this, “well at least you know early that your business isn’t going to work and you didn’t have to waste 2 years and $1 million trying to bang your head against a wall.” That is so self centered it winds me up. Tell that to the person who wrote you the $50,000 of their hard earned money and entrusted you to try your best. Fail fast? How does your brother-in-law feel about that?

And how do you think the next person who’s thinking about writing you a check going to feel about that sort of cavalier attitude with their money? Fail fast = quit and give up easy = spaghetti against the wall = no clear strategy going into your business = no ability / willingness to try and pivot as market conditions change = easy way out = today’s management mantra that will be laughed at in 10 years. Who started this meme? I say define a strategy, test it up front and pivot if you’re not getting the traction you had expected. Fail fast on your own dime.

Whoops. Off topic. But seriously, if you take somebody’s hard earned money treat it and them with the respect they deserve.

So, let’s say you’ve raised $200,000 in friends and family money and you’re thinking about raising a round of $1 million and investors offer you $2 million. Should you take it? Let’s assume that the $2 million buys 25% of your company, which is the norm in an equity financing.

– obviously the starting point is to ask yourself how much money you’ll need until the next milestone. It’s best if you can raise at minimum 12 months’ cash and even better 18 months’ cash. 24 months for most tech startups is usually too much money.

– add a buffer. Your revenue will take longer to ramp then you think. There will be some unforeseen expenditures.

– that is the correct amount to raise. It should pop out of your business plan

– and don’t ask for an extra $3 million to do M&A. No good investor wants that. They can fund a deal if necessary and valid at the time you present an acquisition target to them

So let’s assume that in the above scenario $1 million gets you 15 months and $2 million gets you 2 years. What to do?

This is actually something I’ve debated a lot recently. I was at breakfast with my friend Dave Young (from DLA Piper) this morning and we debated the topic. He had the best response I’ve ever heard. He said,

“When someone’s passing the hors d’oeuvres tray you always take two”

Brilliant. I think that if you’re offered fair terms that aren’t destructively dilutive, preserve options for an exit, don’t put undue pressure on your company to do things too quickly you TAKE THE MONEY. I know you think you’re going to do a bigger round later at a higher price but the problem is that if someone offers you $2 million now it’s guaranteed. That same extra $1 million might prove very difficult to get one year from now if something fundamentally changes in the market, your company isn’t getting traction as quickly as expected or your competition makes a lot of noise in the market. Or even your investors start having their own liquidity problems!

So I came up with the corollary,

“When someone’s passing you the hors d’oeuvres tray always take two. But don’t take the whole tray.”

The whole tray is obviously unhealthy. Look, these things are judgment calls and there are no mathematical answers. Just remember that for many companies success or failure often ends up being a binary outcome. Businesses usually fail for the exact same reason — they run out of money. Don’t let that be you. If the appetizers are in front of you, take two. [Mark Suster]

October 24, 2016 / by / in , , , , ,
Why The ‘Fail Fast’ Mantra Needs to Fail, Fast



I wrote a post about how much capital your startup should raise. In that post I was talking about how it is a bad strategy to be underfunded. In general when capital is available take it (provided it’s on the right conditions and from the best people from whom you can raise). It’s also bad to raise too much, too early. If you’re interested in that topic I cover it in the article linked previously.

I made a diversion in the article that I shouldn’t have taken. I talked about the Silicon Valley memo that has been circulated for the past couple of years that says you should “fail fast.” What I said was:

“I’ve even heard people repeat this bullsh*t Silicon Valley mantra about “failing fast” which is horse puckey. The line goes like this, “well at least you know early that your business isn’t going to work and you didn’t have to waste 2 years and $1 million trying to bang your head against a wall.” That is so self centered it winds me up. Tell that to the person who wrote you the $50,000 of their hard earned money and entrusted you to try your best. Fail fast? How does your brother-in-law feel about that?

And how do you think the next person who’s thinking about writing you a check going to feel about that sort of cavalier attitude with their money? Fail fast = quit and give up easy = spaghetti against the wall = no clear strategy going into your business = no ability / willingness to try and pivot as market conditions change = easy way out = today’s management mantra that will be laughed at in 10 years. Who started this meme? I say define a strategy, test it up front and pivot if you’re not getting the traction you had expected. Fail fast on your own dime.”

Obviously when a meme like “fail fast” forms and conventional wisdom builds in support of it you’re likely to get attacked for saying, “the emperor has no clothes.” But I just said it. Naked. I shouldn’t have covered it in the last post because I should have stayed focused on the topic of how much money to raise. Here’s an example of one comment I received,

“So you think it’s better to plan and build for years without testing it on the market and then make a big splash release and hope for the best?”

Nice logic, hey? If I say “fail fast” isn’t the right strategy then it must be a long, slow release process, right? I’m not attacking anybody’s religious beliefs. I’m trying to enter the debate with what I found to be a very destructive guiding principle that young people have started to believe. The following highlights what I do believe and why fail fast is wrong:

What is the right way to build a startup?

  • Define a market problem that you believe you can solve
  • Research this market by doing market sizing, looking at existing products, talking to customers and deciding how you will make money
  • Validate that you can make money before starting. This means looking at what your buyer pays for similar products now, what the history of other people who have tried to monetize in this way have experienced, what your costs to acquire customers will be and what you believe you can make over the customers’ lifetimes. These are all assumptions — nothing more. I believe passionately that if you don’t do a financial model you shouldn’t spend any time or money building a product. You want to talk about the ultimate “fail fast” — how about if you fail before you’ve spent any money building product because you validate there isn’t a big enough market or you can’t make money?
  • If you believe there is a market then build a prototype product that you can show customers, investors and potential employees.
  • From there build the MVP (minimum viable product). I believe in launching with a small set of features and learning from the market before you spend too much money building out a feature rich product or before you put serious capital to work.
  • If you validate that there’s a market then go for it! If you don’t believe that your product is resonating then pivot and find one!

Why fail fast is wrong, irresponsible, unethical and heartless:

  • I’ve read all of the fail fast, fail cheap articles. I’ve heard the insufferable speeches at conferences. I understand that many people argue that “fail fast” just means launch products and learn from customers. Fine. Then let’s call this “launch and learn” as well as “adjust and pivot” when adoption doesn’t happen.
  • The problem is that when you brand something that will be interpreted differently by people who weren’t part of the zeitgeist when the memo went out about what “fail fast” meant then we educate the next generation of entrepreneurs to do things the wrong way
  • How do I know this? Because I have met so many young entrepreneurs who tell me, “we don’t need business plans anymore, they’re a waste! We’re going to put our product out there and fail fast!” [note: business plan to me does not equal long Microsoft Word document. It means a financial model that sets a strategy for how you’ll make money and spend money] or they tell me, “we’ll launch a bunch of products and see what works.” That is the old “throw spaghetti against the wall and see what sticks” approach. It’s intellectually lazy and I doubt many great companies are born this way.
  • Worse still I’ve actually heard the following from somebody that is reputable and whom I actually like, who has raised $1 million, “we don’t want to raise $3 million to get to the next round. Either this thing has legs and will grow fast and we’ll raise at a very large price or we’re going to ‘fail fast’ .” Me, “What? Really? What about the money you raised? Aren’t you worried about that?” Him, “Well, what do you want us to do, stick around for 3 years trying to build something that we know isn’t working?” I can’t make this stuff up. People think that way these days. It’s wrong. It’s immoral. It’s irresponsible. That’s hard earned money you’ve raised, not house money at a casino that you get to put on lucky number 16 and see if it comes up.
  • As Reece Pacheco appropriately said in his comment to yesterday’s post, “Know who else you shouldn’t fail fast with? Paying customers. My business has a bunch of them, and a lot more users who really depend on our service. They’re relying on us. Failing fast may be an out for our bootstrapped lives, but it’s not an option.” Think about that. People gave you money to use your service. And they’ve invested their time and trust in you. Failing fast is to disrespect the very customers who placed their trust in you. It reminds me of the line, “blowing up your customers” and the disrespect bond traders had in the 1980’s for their clients in the book Liar’s Poker (One of the greatest business reads ever. If you haven’t read it you should. See the link for a list of quotes from the book including the now ubiquitous, “Big Swinging Dicks”)
  • We have taught a generation of young entrepreneurs that “failing fast” is ok. It’s quick and easy. It’s a way out so that you can focus on your next big business idea. Why waste your time on this one? Don’t get me wrong — failure is OK in my book. I’d rather you try something that doesn’t work and learn from it then to never have tried before. I personally think that second-time entrepreneurs are better because, as I’ve written, “good judgment comes from experience, but experience comes from bad judgment.”
  • But my message to young folks — if you take somebody’s money you have a responsibility. I raised too much money at my first company and regretted it. Long after the Dot Con 1.0 party was over and I knew that I personally wasn’t going to make as much as I thought I would — I stuck around. I felt a moral obligation to spend this money that I had raised responsibly. The market changed totally so my assumptions were all off. Goldman Sachs had told me we would IPO in a year. That wasn’t going to happen. But I signed up for making the company work and sometimes that commitment trumps your current economic incentives. Not forever — but for a period of time. Taking money = obligation and commitment to try your best to make a return.

How should you deal with a business that isn’t working? I’m not talking about when your product isn’t working, but your company. When you know that you don’t have a future.

  • Get your cost base as low as you can as quickly as you can
  • Communicate early to investors that you don’t think the business can be successful. Make sure you say you haven’t given up and that you’ll stay to help find a way to find the best possible outcome for the company. But that you don’t want to raise any more hard earned money if you’re convinced that new money won’t have a good return
  • Consider whether there are any buyers for the company. If not, are there buyers of the intellectual property?
  • In the worst case scenario is there a “face saving” exit for $1 somewhere? This will save everybody from the time, expense and risks of a bankruptcy
  • Remember that legally the order of payments (I’m not a lawyer, double check with a bankruptcy lawyer) is employees, creditors, equity holders
  • Better that you handle things until the bitter end and preserve your most valuable asset — your reputation
  • There is nothing wrong with saying respectfully to investors, “if I can find a buyer for this asset would you be willing for me to take a very small piece of the purchase price so that I can incentivize my team to stay together through this difficult period?
  • If the company needs a very small amount of money to get through this shut down period you should ask your investors for it. Make sure to tell them that it is for a shut down and/or attempt to recover value for the assets. Tell them you’ll only ask once. Only ask once.
  • Make sure your employees know what is going on. You have an ethical responsibility not to surprise them. MAKE SURE that you pay all of their expense reports that are outstanding. In the dark days of shut downs I’ve seen many junior members get burned. This is wrong.

So can somebody with better branding skills than I please come up with the new term that we can all use for what we all know we want to see — customer development, MVP, rapid iteration, pivot and learn.

OK, now you can attack me …

[Mark Suster]

October 24, 2016 / by / in , , ,
(When) Do Startups Need Lawyers?



I recently did an “Ask Me Anything” event here in Hong Kong with startups and portfolio companies at the invitation of Cocoon Ignite Ventures. We asked those attending to provide questions in advance. There was a strong theme in the responses. Here are some samples. Do startups need lawyers? Why do startups need lawyers? How can startups afford lawyers?


Do Startups Need Lawyers?

Sometimes. And I am not sitting on the fence. Let me explain.

Engaging a lawyer is a choice. There are few occasions when a company absolutely must engage a lawyer…and those probably involve a crime! Any other occasion is a choice made by the startup.

Startups do need legal support. But startups don’t necessarily need to engage lawyers for all the legal support they need. There are alternatives – self-help, hiring a lawyer to join the founder team, engaging alternative legal service providers, doing nothing. Startups need to understand the available choices, and make a risk and value based judgement. What is the best choice for the business at that stage? Can private practice lawyers service all the legal needs a startup has? Absolutely. Does a startup have an unlimited legal budget? Absolutely not. So where is the compromise?


When Do Startups Need Lawyers?

Startups need lawyers when lawyers provide the best, value-driven solution for specific problems the startup is facing. This will change from one startup to another. Here are some variables:

Company formation: In most cases, you don’t need a lawyer to set up a company, and it will be overkill to use one. One exception might be where founders and investors come together right at the start, and equity rights need to be sorted there and then. Another could be where advice is needed on the corporate structure or the place of incorporation. Even here, the advice can be separated from the execution of the task. A lawyer can advise on the corporate structure, and another (cheaper) service provider can set up the company.

IP creation: A startup must deal with IP. Whether a startup needs to engage a lawyer depends on two key questions. Is IP at the core of the business? Is that IP unique to the business? If the answer is yes to both, then engage a lawyer. If the answer is yes to one, then think very seriously about engaging a lawyer. Otherwise, it may not be necessary so long as the startup chooses one of the other alternatives for legal support.

Staff: This comes down to a value judgement. An employment agreement is hard to change, once agreed. But it’s not a difficult document. So is there value in having a good standard employment agreement? Yes. Is that the value a lawyer will charge? Debate. Here’s one situation where advice is useful. Most startups sensibly start with contractors, and not employees. Less admin and more flexibility. The agreement for a contractor is very different to an agreement with an employee. Getting it wrong will cause the startup problems later.

Founders: Do founders need lawyers to regulate how they operate among themselves? Not always, but sometimes. If one of the founders has the majority of the shares, then he has the control. The other founders might benefit from legal advice. It may not make too much difference … except to clarify and alleviate where the power lies. If the founders hold shares equally, then it comes down to trust. Can this wait for a first financing round? What if one of the founders leaves/stops contributing/dies/is a troublemaker before then? Can the founders, as a group of mature human beings, agree how to deal with these (and other) situations without something in black and white? If there is a moment’s hesitation on that, the founders should at least have a discussion with a lawyer, and then make a risk-based value judgement.

Regulation: What if the startup is a fintech startup disrupting business lines that are presently regulated? Then, run to lawyers, embrace them and pay them well.

Angel/seed funding: This is the first time when there is no doubt that startups need lawyers. Investors have a different agenda. Investment documents are technical. Lawyers understand them. Lawyers see a lot of them.


October 24, 2016 / by / in , , , , , , , , ,
10 Success lessons from Mukesh Ambani – “Wealthiest Man in India” for entrepreneurs



Thousands of stories are told about how children inherit wealth from their parents, but not many are told where the children take their parents dream and turn it into one of the largest and most profitable companies in the world. When one looks at the path that has been trodden by Mukesh Ambani, the challenges become as visible as the feats. And, they co-exist in equal measures too.

Located in South Mumbai, his skyscraper home Antilia has been rated as the world’s costliest residential property by prestigious Forbes Magazine. He held the position of the richest Indian for 6 years.

If you ask Mukesh Dhirubhai Ambani to share his secret of success, he may say really few words. Because the man is among those who are ‘doers’, and not a ‘talkers’. He will not spend time pepping people up, or saying big things about his success formula since he believes everything that happens to you is a direct outcome of the ‘understanding’ you have about your business environment.


Here are the 10 success lessons from Mukesh Ambani -“Wealthiest Man in India” for the entrepreneurs,

1. Let your work speak for itself

The quote by Israelmore Ayivor is apt for Mukesh Ambani. The 59 year old likes to be keep a low profile in the social circle, or so it seems to be with the media at least! He isn’t keen on social dos and neither is he voicing opinions on important economic issues at events such as the World Economic Forum. But still, he is one of the most talked about personalities in the country.

Ambani’s focus has always been his business and this entrepreneur is credited for the creation of the world’s largest petroleum refinery at Jamnagar in Gujarat besides other successful ventures.

2. Have a dream

Mukesh believes having a dream and working towards it is the most essential thing for any business to identify its niche space. Words may sound hollow when one speaks of a ‘dream’ but, really how can a business take shape without a concept and a dream that would show the road ahead?

3. Trust all, but depend on none

Ambani in an interview had said that he did not want “people carrying their wisdom in notebooks as if it some kind of secretive operations”. While he has a trusted team of a few people, who have played a pivotal role in the growth of his empire , Ambani has always emphasized on the importance of being involved in one’s own business.

When it comes to work, Mukesh Ambani knows nothing can match the aspects of perseverance and self-learning. Trust is something, but being prepared for all kinds of emergencies is what keeps the company going – he knows it well.

4. Risks give greatest lessons

Ambani once said that the person who doesn’t take risks will not have major growth in their life. And yes, he proved it from the start of his career. But his risks are calculative, like adventure-seeker and not like a gambler. He knows his goals and will chase them to their logical end.

5. Trust your gut instincts

There have been several controversies concerning Mukesh ‘a rich man without a heart’ owing to his splurging of money on building his house Antilia and investing in IPL cricket team. However, Mukesh does what he deems right and mostly, it so turns out that it is the ‘right’ thing to do.

6. Be hungry, be impatient

Success eludes those who rest in the middle of a run. You gotta recharge your batteries, agreed. But, don’t time it right in the middle of a competition that’s hotting up. Markets wait for none, so be on your toes. Resting time is when the market slips into slumber.

7. Don’t panic, stay strong

Mukesh Ambani joined his father’s business at a very young age. And while he was still in the process of learning the nuances of the business, he lost his uncle and his father’s business partner Rasikbhai in 1986, followed by Dhirubhai Ambani’s stroke within five months of his uncle’s death. Ambani then had take his father’s place and steered the company forward at a time when India was still a land of Licence Raj.

8. Credibility carries high premium

Whether your team needs you, or your competition – be there on both occasions to give your fullest. Understand, innovate and prepare for the future. He believes that credibility is something that needs to be safe-guarded beyond cash inflow and outflow.

9. Keep your eyes wide open

Mukesh Ambani keeps his eyes wide open when it comes to hunting for new ventures. It always pays well to understand your surroundings. You may have created a niche product. But if there is a better product in the market that’s going to outdo yours, you better pull up your socks and sit down to improve your skills.

10. Build a team

Be there for your team. Trust the professionals. Learn, learn and learn. It’s never too late for that. When you build teams that are trustworthy, every moment you spend with them contributes directly to revenue of the company.


October 24, 2016 / by / in , , , , ,
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