From Dotcom Startups to Cloud Startups

It’s hard to find inspiration to write sometimes until you realize it is staring right at you. In my current life I work with startups, which is very interesting and exciting work. I was at Microsoft flying all over the United States during the Dotcom era, which was very exhilarating and probably provided me with some of the best experiences and adventures I ever had during my career at Microsoft. Moving to today’s era of startups, the startups I have spoken with over the past year are truly amazing and inspiring. The breadth of technologies and problems they are trying to solve can be overwhelming as we cross industries from healthcare, financial services, renewable energy, retail, manufacturing, human resources, resource management etc…The technologies are all over the map using AI, ML, Blockchain, Quantum, IoT, Analytics, Genomics Data, etc..Some of the solutions are nearer term using AI and others are much farther out, such as Quantum Computing.  Having been around for a while now it brings me back to my first go around with startups which was during the  dotcom era in the mid to late nineties, a different time with different issues and different opportunities.  

Innovation is a great thing as it fosters new opportunities and different ways of thinking about how society works and can be pushed forward.  How we approach those problems and the solution to those problems gets turned on it head.  We escape the mundane methods of what was to the kinetic energy of what will be.  When the internet came of age in the mid nineties it threw a lot of industries into disarray,   Though it was invented many years before (not by Al Gore) it quickly became part of the mainstream dialog during this time period.  As is usual with new technology it was over-hyped and oversold.  We were still early on and though the internet was not new, the infrastructure to support it needed to be built out.  The old tech adage of, “We overestimate what we can  do in 2 years and underestimate what we can do in ten years” was in full effect. During that time I met with a lot of startups and visited a lot of data centers, they were a startups showcase piece.  Companies had racks of pizza box servers, raised floors, fiber everywhere, cooling systems, backup generators, tight security policies etc… Every company I spoke with wanted a investment from Microsoft, as though we were no longer cool, we did have piles of cash and what startup  does not need cash?  The ideas were good the execution often was not so good.  Early on there were a lot of dial up ISP’s, every company wanting to be the next AOL.  AOL was far away the leader in accessing the internet in those days. It seemed in our local papers we received a lot of CD’s inviting us to join.  In hindsight rather ludicrous but made for a nice CD collection. Some companies focused on “crawling” the internet with search engines. Some were pretty good but what was the business model? One company figured it out and if you want to learn more I suggest you “google” it

Dotcom was party central, it seemed every time I went to an event, passes were handed out to some “private” event. You gave a bunch of young kids a bunch of money, what better way to recruit clients and investors then by hosting a large party. I do not believe a lot of business was done, but in hindsight we sure had fun. It all unraveled rather quickly as most startups were built on a deck of cards that quickly came back to earth.  I was in Silicon Valley at a bar with a startup that I had been working with.  The place was rather empty except for one table where a celebration was underway.  The person I was with said, “Those type of celebrations used to mean they just got funding, now it means it is their last day in business”.   The startup I was with was called Allexgrix and  they soon went out of business.  The individual is now a VP at Google.  He is doing fine. In hindsight all the startups left behind was a lot of really expensive furniture.  

There were a few winners.  Mark Cuban, now owner of the Dallas Mavericks had a company called whose inspiration was that he wanted to be able to listen to Indiana Hoosier basketball game over the web.  It would grow to 330 employees and during the height of the dotcom boom was sold to Yahoo! for $5.7 billion.  Cuban is considered some type of tech genius, but in my opinion streaming radio broadcasts is not “genius”.  What was genious is perhaps one of the hardest things to do in technology – timing.  He sold when the hockey stick curve was going straight up and was not at the crest before it came straight down.  Later he would say Googles acquisition of YouTube would be a failure as they would spend years in litigation.  Back to earth, back to reality.  He was dead wrong.  Had been visionary with audio streaming they could have been Netflix, but that comes back to timing and having a vision for the future. You cannot fault Mark Cuban, he is doing fine.

During the time from Dotcom to Cloud we saw business models mature and expand. Amazon was the first to realize that they could be much more than a eCommerce provider when Bezos announced their intention to sell their excess compute capacity. It seemed to take a while for the rest of the industry to realize what was happening with the creation of Amazon Web Services (AWS). Not sure we can call this the birth of the cloud, but it enable the industry to start thinking in a new direction. The first inkling of AWS was announced in 2002, Microsoft Azure would not be announced until 2008. There have been a slew of other vendors to announce their cloud dreams IBM, Google (GCP), AT&T, Rackspace, AT&T etc…Some more successful than others. At this point it is a 3 horse race – AWS, Azure and GCP. When we talk about new tech like AI/ML, Big Data and Analytics, IoT, etc..the foundation of these new services is Cloud Computing.

What we are seeing now with the cloud startups is a much stronger focus on solving problems. The infrastructure age is over and now we are tackling real-world problem. The technology at the forefront of many startups is AI. I find it amazing that artificial intelligence is now mainstream, it is being used to tackle specific problems, some as simple as scheduling a doctor’s appointment. Another area is the Internet of Things (IoT). This could be as simple as your thermostat, think Googles NeST. Any device can be turned into a IoT Device, HVAC’s, Drones, Cars, Household Appliances, etc..In addition we can capture data which leads to Big Data and Analytics, thanks to the internet we have moved beyond gigabytes and talk in terms of terabytes and exabytes. Companies now not only collecting data but do analytics to enable them to make decisions and act upon them. There are some far out ideas, like Quantum computing which will revolutionize a great many things but for all the hype we are still probably a decade away (this comes from Quantum PhD’s I have spoken with). It is fascinating in the Quantum realm that computing will not be based on binary but based on qubits. There are a number of new technologies I have not mentioned, but this gives us a start.

The field of Artificial Intelligence came into existence in 1956 at Dartmouth College, there were several researchers there, some from IBM but they came up with this groundbreaking statement  “every aspect of learning or any other feature of intelligence can be so precisely described that a machine can be made to simulate it”. This small conference is what started us on the path today. If you want a good overview of the history of AI I would watch this video with Google Chairman, Eric Schmidt. It is easy to get confused with the AI of film and the AI of reality. The AI in film is what is really know as Artificial General Intelligence. The freaky science of creating something much smarter than a human being (we may well get there but we still have a ways to go). The AI being created today focuses on specific problems. Could a law firm collect enough legal data and write an algorithm to provide an attorney with answers so a law firm no longer need to pay a paralegal? Could a shipping company (DHL?) get enough location data so an algorithm could provide a fleet of long haul trucks information to deliver their shipments in the most timely manor at the least cost? A modern fleet management system. Could they use prescription data to know in advance when my patients will need a refill or come in for a follow up appointment? These examples all require human intervention but what if I take that away? The three scenarios are all being tackled today by multiple startups and that is just a small sampling.

The problems that startups are tackling today and the problems they will bring, raise the same questions that have been raised every time we have a big global economic shift – Agrarian to Industrial to Information. Will workers be displaced? How do we protect them etc..In the past these shifts lead to new jobs and new opportunities. In all these shifts one thing that seems to always be ignored is time. We can transition quickly but those that are displaced cannot just go out and apply for a new job with a skill set they do not have. Many years ago as the information age dawned upon as and the spotted owl controversy raged in Washington state the thought was these loggers needed a new job opp… entry. Put the chain saw down and start typing on a keyboard. If human nature was so simple. Happiness is a part if life, change can excite us but it can also place us into despair.

When I look at our startup community today the incredible pace of change is truly amazing. Healthcare which has become an amazing tragedy in the United States could be changed though AI to serve all rather than the wealthy few. The IoT solutions can lead to more efficient machinery, whether it be an HVAC, Oil Drill, airplane, etc..the ability to capture, analyze and take action on data – reducing waste while improving results. The “renewable energy” sector is in force validating the job growth opportunities in this space. To reuse an overused term, digital transformation is sweeping across all sectors. Every industry will become a tech industry. Many of those changes being driven by a vibrant startup community. As is often the case, “big things start small”. The next decade will provide us with a whirlwind of change that will impact us for the remainder of the 21st century, for those who “time” it correctly they will retire very soon. Will it make life better? There will be those that succeed and prosper and there will be those that suffer. Mankind always strives for utopia and yet we always come up short. However it is that entrepreneurship of startups that will continue to drive towards that imagined future.

Good night and Good Luck!

Hans Henrik Hoffmann, November 3rd, 2020

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