Gadgetory

hey everyone welcome to reporters roundtable the first reporters roundtable of 2012 and we're doing that live from CES here on the convention floor the giant cnet mega booth hey listen this is a show about gadgets about big companies sony samsung LG toshiba showing off all their giant gash to the refrigerators their Roomba competitors all that stuff but there's a whole other side to the technology economy which is what we normally would I normally cover back at cnet which is entrepreneurs and startups and then little companies that are emerging that want to someday be the big companies in the central hall here so what we're talking about on this edition of reporters roundtable with two great guests is how the small fry the small up and cummers companies that are actually big now how the small guys get here get in with the big guys to do it and my two guests to discuss is really interesting topic of the technology ecosystem and how small becomes big our first on my far left Paul Sloan in the decade at CNN and co-worker Paul thanks for coming in of course pleasure yes and Josh Stein managing partner at draper fisher jurvetson one of the coolest VCS on Sand Hill Road Josh thanks are coming in thank you for having me alright so let's get started here what first of all is there where are the startups here I mean are they in the big hall or they elsewhere I mean where do you see the cool new technologies so this year at CES for the first time they've sort of created this startup alley that they've called the Eureka park over at the Venetian and there's some cool stuff there it's a little weird to have it separate from the whole the whole hall and I've met a lot of great startups that are not there and particularly said they didn't want to be there the other again there are there's some great ones over there too met a lot of startup companies that come here for the events that are not CES the nighttime events the parties and so clearly there's a big presence for here from trying to meet folks like yourself and you know trying to meet retailers and distributors it's just they're little they're they're actually a little spread around so Josh one of these he comes to CES where do you hang out well you know I think we obviously coming to the floor and meet with big companies you know I always tell people we back startups but the big companies are the ecosystem that which our startups are operating so if you want to talk to the guys at you know HP or Microsoft or didn't tell it's a great place to meet them they're all here you get to see the products it you know and then of course there's as you mentioned there's a lot of the events at night and fun social things that come along with CES so are there a lot of small emerging companies here yeah you know I think less and the booths I mean certainly not in the central hall right now I'm you know you'll see the occasional one typically the ones that are selling through a retail channel like you know the attached like the GoPro attached cameras things like that smaller companies aren't trying make a really big impression on the retail channel you know more traditional Silicon Valley startups I don't think tend to have the big boost but they do tend to be here while the folks are here and you're here I mean we got news indicates that you're taking our not the only venture capitalist who in there who's here and and what what's kind of your mode of operation are you are you going from booth to booth looking for things that nobody has seen are you taking meetings are you looking at in the Panasonic booth to look for opportunities for your portfolio companies how does it work yeah little all that I mean it's it's a really efficient place to set up meetings with people because people are here and you just block it out and then with the bigger companies what I like to do is usually will will have them give us a tour of their booth so they'll they'll walk us around and show us all the new products that are coming out did I get it I mean when you go to a sharp booth or something and they're they're doing deals with Best Buy and Target Costco and you come along and say I'm a sandhill the Bay Area entrepreneur representative do they know what to do with you you know it varies yeah I it varies i mean you know we're we're going over to the microsoft booth later today and they know the folks over there really well and last year you can do that by the way ie exactly the longer and have apple of course you know is the big story they're not here in and yeah Microsoft's last year that'll be it'll be interesting but ya know they you know they tend to show us around it's it's it's a useful thing I mean I think you know a lot of our companies want to do partnerships with bigger companies so having those connections is really valuable well what have you seen from from the big companies small company merge that you think is interesting you know you mentioned the camera I've seen a lot of companies making gadgets for the iphone and making cameras yeah one of them a robot company called bro motive and they just this week closed a big financing round from tony hsieh former Zappos founder and stanford university and dammit and they've raised some big money there make there's a lot of people making creative things gadgets that find ways to work with your smart phones and over at that hall at the Venetian they all said they were guys from the apple retail stores they're looking to suck it up but you're trying to get in the stores that's their goal is to get the apple store they're making things stop it stop it well you're doing is you're encouraging even more Apple smart iphone case manufacturers but no cases and I told you I tweeted the other day we're in an iphone case bubble there's just too many cases it's crazy josho a little word of warning to people after who have an idea for a genius case please don't don't do it thank you if I get it you can take something way to charge the iphone without a cord right a bucket you drop the phone in and it just charges can I want to know if you've actually made any deals here or if you've ever made deals here is that mean yeah you know we've done a lot of partnerships here in terms of actually making investments at CES don't I know I haven't although I had a near miss of the company that's now fairly well-known the company that makes the jawbone headset scum called a lift I remember meeting them here five six years ago when they were just a tiny company you know products weren't anywhere was still courted product instead of a bluetooth thing and it still haunts me that we didn't manage to find her way to making that investment because it you know it's obviously a big company now so that alone keeps you coming back I'm sure yeah I mean it's you know it's the one that got away when it got away the ante all has the wire is right hey I want to ask you what particular what specifically you're looking for but before we do that we come back when I talk about what a VC looks for at CES we're going to take a quick break right now and get into that in detail when we come back stay tuned right we are back on reporters roundtable Paul Sloan from cnet have you seen any deals get done here I haven't seen any deals get done though I've seen some approaches or offers there's a one company i saw that makes it's a company called modular robotics and they make these things called cubelets it grew out of the project out of them a guy's PhD thesis actually had a Carnegie Mellon and they're these toys through these robots sensor that have sensors and they react and they think and you build these blocks and play with them and honestly I felt bad for all the booths within you know a hundred yards if not hundreds but whatever all the boots around them because people were just like crowding around this one booth playing with these things and those guys have sort of been in stealth mode whenever that gets pressed they get all this traffic and people want to buy him and they haven't had the manufacturing there in from Boulder and I was there the other day talking to them and came back to chat and say hello and he said some guy came by and just offered him 10 million dollar investment on the spot which they turned down because they don't need it but there's smart money's there's don't money going after it so when you can see a booth Josh that is flocked like that does what does that mean to you does that mean that it makes good TV or it might make a good investment does it does it indicate anything to you yeah I mean you know sometimes it just means they have great booth babes there but yeah you know oh yeah not in this case they went over to the car show that's a different story go ahead no you look for the bus you look after the heat you know one of the things we always have to parse out other things something that's popular is a great place to start it's also got to be a great business one of the challenges for us with CES is there's a lot of hardware businesses generally hardware businesses haven't been a good match for venting Apple just takes too much money to scale not marred legs are too hang on a second yeah it takes too much money you guys are sitting on piles of cash I mean here's the problem as I see I'm in for for venture not necessarily angel doesn't provencher today you can start an internet company two guys in a garage with no hardware practically nothing and upfront services yeah and it's hard to figure out how to use 20 million dollars in some cases I'm not sure I'd agree with that I think okay it's you know what's changed with you know things like Amazon Web Services meaning that you know to buy a bunch of hardware and things things like that is you can get product market fit very early so you can know if you have something where the dogs rating the dog hood scaling a company really building a company that still takes a lot of money I mean you know Facebook would be a great example right look at the amount of money that Facebook is raised and consumed on its path to greatness it's still less you still to hire a lot of people the infrastructure costs you know scale pretty significantly as you get up there and not having to rush into monetization is important you know there you want to figure out what is the application what is the product really do before you're forced into doing things like you know running a bunch of banner ads but it hasn't be also gotten cheaper to invest in hardware companies I mean cover the park components for hardware getting cheaper production isn't that much I mean I it's a company called Dropcam that's here that makes that raised almost six million dollars recently they make this home surveillance camera there this other prices are going down and down down know that that's definitely true I mean we you know you like just as you can rent servers from amazon now you know typically you're going to do your manufacturing through a contract partner there's still a lot of money gets tied up in inventory right ironically the faster the company grows the worse that problem gets right so if you have a really popular product heading into the holiday seasons you know you might have to spend 100 200 million dollars just on parts to get the product built out there hopefully you're going to sell it through but you know that's that's a pretty don't out you don't have time to build the processes to forecast budget get the deals for Mitt quantity yeah you know one of the things I've always loved about software and and you know particularly now it's software has become sasses if you make a mistake if there's a bug you can fix it right then I mean you know back in the old days when i was at netobjects a software company if we shipped the code into a retail channel in a box and a CD and we made a mess it was really expensive to put her hatch out there I mean there wasn't you know now if your Salesforce you just you know hit a button and boom and you can crash everybody's computer old one yeah talk let's talk about though as I said before the back what are you looking for you come here with representing Silicon Valley yep and your own firm of course well what do you look for in terms of opportunities for from entrepreneurs add a big show like this you know I think one of the things I always liked with looking at the big companies but it's just getting a sense of what's coming down the pipe what's possible and also where are the big guys focusing both because you can make money by supporting them are also you know frankly the areas that they're not focusing on or sort of a white spaces in between you know I think this year for me mobile is the really big story I think you know I'm a fan of the phrase post-pc mm-hmm I think you know saying mobile is almost becoming redundant everything is mobile you know looking at the hardware I don't think we would ever invest in a handset manufacturer or in a company that actually made the hardware from oval but understanding the physical capabilities of the devices is critical as we see entrepreneurs coming in you know pitching us on the new services because every platform shift creates opportunities application you talk about white spaces that's really interesting so it's one thing so if you see all the TV vendors out there doing Smart TVs obviously there's an opportunity in apps for Smart TVs or but what are the white spaces that you see maybe the big guys are leaving out where there's an opportunity for an entrepreneur come in and put a wedge in well I'll give you a classic one so a company that I work with that is on a tear right now is company called box so box is a SAS company they make a very powerful solution for collaborating around content particularly in the enterprise yeah so they're filling in a really interesting white space in what I would say that where Microsoft has sort of left a gap in between SharePoint which is an established product which they largely sell through their channel which they have a like most big companies it's hard for them to radically reinvent it without a lot of disruption for them and one of the things that was interesting for me today was talking to their SkyDrive team which is their new box Dropbox like product they've been working on that for you they've been working out for years I Lee came out actually it looks okay but it's you know it's there really aiming it at the consumer so my eyes i sat down with the product manager I walk through things like okay how do the how do the access permissions work for sharing well it's all it's all individually file-based that's not going to work for an enterprise right you've got to be able to do kind of large-scale macro things at the folder level or at the group level if you have a thousand employees and you fire somebody how do you make sure you d provision is access to all the content you're not gonna be able to do that in SkyDrive you know that's useful for me to know they're leaving this open space and box has gone right dinner so Paul you were looking at all companies over at Eureka park and elsewhere around the edge of the show the edges of the show by the way a big conference like this or 30 100 exhibitors here it's the perimeter the cheap boost that's where all the action is cheap seats are the best Paul what did you see here that you think it is a white space or an opportunity for for startups you know that's a good question most of it is around mobile there are some people out here who are you know making apps which doesn't seem quite like a consumer electronic show but it is they're serving the gadget so to speak and I suppose that's sort of what you're talking about some interesting plays attempts at new things with augmented reality that seems to be a big one there's a few of meant a reality company that here was a real interesting one I saw called Blippar that seems to be this from the UK and trying to make a presence in the US I don't know whether this stuff will get beyond just marketing or whether it will have some meaningful curtain now there was a company just to go off on that AR augmented reality's is it interesting I mean I did a demo from one of those events of this giant helmet it's an Android it's an android computer in a helmet with that blocks your vision with lenses looking at so you can overlay the real world on the AR or vice versa anyway see we're not going to invest in that but you are wise but there's another company here I can't remember the name view something other that they have a one on a monocle on a glasses frame now that projects an image so you can get the heads up display which isn't necessarily augmented reality but it could be is that of interest to you just at a curiosity yeah you know when it's tration that is absolutely i don't think lots of people are gonna be wearing monocles anytime soon but i think the what we often see is they could come back yes i was going to say you know i'm gonna go on the loose take your particular surprise chuckles are not going to be in next year but you know what we often see is the first person who has an idea doesn't get it quite right but it's still the ideas right right and so what's going to happen is in a year or two people are gonna make to us on it and somebody's going to find the way to make it work in a way that really works for people you know you and I met back in nineteen ninety nine I was building mobile shopping apps right back on lap phone you were you were dead on right yeah teenager I was talking with one of my comforter I said hey we were you know we were early wrong as opposed to just wrong wrong right yeah which is some consolation but but you see that a lot where you know the idea has merit and just we filed out in the back of her head hey guys let's talk about one of the alternate way that was there you know in this bubble of entrepreneurship but in the early bubble the first bubble which I covered in 98 99 it was venture capitalist which was a fair amount of money now in this bubble we're seeing a lot of angel fund their angel investors those are smaller amounts of money yeah and then there's this new model which is emerging that one sees some really interesting products come out of there including swivel which you covered which is kickstarter which is the crowd funded startup quick starter quick kickstarter indiegogo and other models like that what do you think of those Paul and Josh I find it interesting that you're just using bubble as an accepted its state that we're in it's the way the world works there's a boom in a crash and a boom in a crash wait I don't know but that's a whole other shell at me there's bubble bubble let's yes I don't know that but um look at you know all these gadgets I've seen that I've mentioned coming from the phones these uh one company that made the lens you clip on 4 may turn your foot your phone camera into wide-angle and go two months all those things started on Kickstarter you know they can't get money from you guys you look at it and say we don't want to invest in hardware they generally can't get Melanie from angels they say we don't want to invest in hardware so they go to Kickstarter they throw it up there just just like the modular robots I was talking about that that raised a lot of money this week you know they raised I think it was 150 $20,000 on Kickstarter those people paid essentially for their prototype their so-called Minimum Viable Product they took that and you know six months later raised a ton of money yeah so you know I think that's really a really amazing thing Josh how does that fit into your ecosystem I think it's great so you know again I think the most important thing is knowing do you have something that want to buy right and the sooner you can get to there the better and i think you know we're seeing more and more companies that are coming in and they already have customers they already have users and they haven't raised any venture capital you know 10 years ago you'd raise five ten million dollars for a software company make sure you you had product market fit now you can you that for five or ten thousand dollars I mean one of the problems in the first bubble was I did it was that people people invested in things before they knew if there was any traction yeah absolutely i mean by just threw money at it would be hope and now it's like that's one thing you want to see you want to see traction you want to see customers better yet paying customers and you want you know and you can prove that pretty quickly now when your burns low you're so nimble when you're 3 you know I I tantra knows all this time don't be in such a rush to you know expand and get big it's like you're so you don't really sound in blue arm you have 34 people you can pivot strategy on a dime once the burn rate starts ticking up your burning you know half a million dollars a month you 50 employees it's actually really hard to turn the ship at that point if you if you realize you're pointing the wrong direction so if you can get the more data you can get saying we're pointed the right director before you hit the gas the better so what other opportunities we talked about mobile obviously is a big app economy there there's an accessory economy what other opportunities you see here that yeah i mean i think the you know the the twin sister to mobile is cloud right and services that go with the cloud and i think that you know one is enabling the other i think you know going speaking about hardware i would say you know we never say never in terms of a category but hardware that's attached to a service is very interesting right because then i just look at the hardware as maybe it's a cost of acquisition or it's just a one-time thing but that recurring nature if you're attached to a high-margin recurring service then i'm very interested I think the mobile industry yeah I think that's exactly right i mean in all the subscription economy it also doesn't have the problem you described before if you get the hardware pretty much right you know you can keep updating the firmware yeah totally exactly but I and I just think that you know that recurring connection I had a great talk with you know one of the some of the folks over at Samsung you know this is a real shift for those guys this idea that the relationship with the customer goes beyond the sale right you know I was sort of tearing them a new one for how they've handled android on there what's you know it's it's they've gotten better at it but you know the new version of Android come out and it wasn't it wasn't always the case that you could upgrade your device I mean that's just oh don't start with me I had sitting right where you are I had people from Samsung yeah we were looking at the the Galaxy Nexus which I have the note which is the next guys up and then the one after that is 5.5 or so I don't know whatever of and they were all running different versions of Android it's crazy side note here but whatever I think they had a legend on that now I think they big guys have fun I didn't pass up Tuesday but there's a little cloud confusion too right yeah i mean everyone is offering their own cloud service and sort of has this apple type end up wanting to own the whole chain you know and it's just like I think the consumers are going to get totally confused about which service to use and why you know that brings up a really interesting point what is the for the entrepreneur somebody trying to break into the c/e economy what is the impact of Apple at a place like this that is important for them to be aware of gosh I mean I think you know Apple really is driving mobile in my mind I think android obviously is driving a lot of the mass penetration but from an innovation standpoint I think apples driving a ton of it I think you've got to be aware of what Apple's doing they control their ecosystem very tightly which is why it works so well for the end users but you know we've seen them pivot and you know it can it can change models pretty quickly um you know I I think you have to try and maneuver around those guys but if you can work within Apple I mean I'll take a mobile gaming for example we have a mobile gaming company that has grown faster than almost any other company I've seen this is a company that generated millions and millions of dollars in net income in its first year which is not typical in the software roller and startup plan you know if you can these mobile games you can build them quickly Apple's got all the monetization built in there and it's just amazing the company's you can build mmm I mean can you imagine what this whole show would look like if Apple hadn't done what it's done in the last few years yeah I mean all the ultrabooks would be plastic and look like right all the macbook ripoffs which right now around this beats you all half the phones would have keyboards on all those cases wouldn't be here right because there wouldn't be with the almond if anything yeah and that's in a lot of these companies just wouldn't exist yeah so listen finally a recommendation if you're going to come to the show if you're an entrepreneur you've got a three or four ten person company you've got a product trying to get traction how do you best use CES Paul you want to go first from the from our perspective the journalism perspective and then from the funding the venture prescriptive look most a lot of the companies that come here wait right they don't even have much new to sit to bring but they didn't bring one little thing new because they know there's an army of us out here is ready to coverage cover it so it's a total marketing you know boom for them they should just have their messaging clear and straight and try to make it exciting and try to show where they fit in I mean I I walked by half these boots and I look at them and I don't even know what they do I mean that's just like basic 101 just you know yeah but you know the good ones do the good ones get attention and the good ones make good relationships here yeah Josh and to take advantage of the fact that you and your compatriots are here I'd say the big thing is plan ahead you know the biggest mistake I see people Mike is just kind of coming to the show and winging it I've you know planned my whole schedule ahead of time but a lotta but i also have a lot of open holes for people that email me and say hey can we get together so i would say you know figure out who you wanted me plan ahead set up meetings and the other thing is you can you know host events I think one of the best ways if you want to get a bunch of dc's or corporate partners set up a dinner you know and invite people yeah the parties are where it happens that's where the holidays happens is a human that you greatly what did I hear once that the medium of greatest bandwidth is the dinner table in and its end afterwards and yeah and the drinks and we're going to leave with that Paul Sloan is exec yet at cnet Josh Stein is a partner over at draper fisher jurvetson that is it for reporters roundtable for this show will be back next week at back in San Francisco stay tuned for buzz out loud at eleven o'clock pacific if you're watching this live and then we've got to show every hour on the hour here from CES live until they kick us out so come back we'll see you back in San Francisco thanks everyone