Money 20/20 recap: Jack Dorsey, blockchain, and the future of financial services

Also published on VentureBeat and LinkedIn

In the financial services industry, blockchain looms as a large but distant and somewhat mysterious presence. A few forward-thinking bankers take it seriously and are trying to figure out how to turn it to their own advantage. Everyone else has heard about it, knows little about it, and is taking a wait-and-see approach.

The one thing everyone seems to agree on: They don’t want to make the same mistake with blockchain that they did a decade ago with PayPal, which was ignore it completely, wait for it to go away, and then get surprised when it grows up and becomes a threat.

Instead of a single company, blockchain is a whole category of technologies – a movement embraced by thousands of people and hundreds of companies. The threat is actually much larger than that posed by PayPal (which, after all, is just another kind of bank now). It’s just that few in the financial services industry quite know what to do about it yet.

That’s the message I took from Money 20/20, a conference focused on financial technology taking place this week in Las Vegas. It was my first time at the event, which has grown to enormous proportions in the four years since it was founded: 11,000 attendees and more than 400 exhibitors filled up the Venetian and Sands conference facilities. At $3,000 per ticket, roughly, that’s a lot of revenue—even before sponsorships. No wonder that the founders were able to sell the event to i2i a year agofor a reported $100 million price tag.

Most of the event was not focused on blockchain. The transition to EMT (chip cards) and mobile apps are far more top of mind for most bankers. But there were plenty of sessions featuring blockchain companies and discussions of the technology and its future.

Blockchain, the technological concept behind Bitcoin, is real. In many ways, its approach to storing data in a transactional database that is distributed across many machines is reminiscent of the cloud approach to computing, as Square CEO Jack Dorsey noted in his keynote at Money 20/20: Both are “distributed, redundant, failsafe, and ubiquitous.”

People talk about “the blockchain” but unless they’re referring to Bitcoin’s blockchain, there is not one single blockchain. Instead, each cryptocurrency or smart contracts platform uses its own blockchain. A blockchain, simply put, is a public, distributed ledger of transactions. Because it’s public, transactions can’t be repudiated and people can’t spend the same value more than once: The public ledger records it and anyone can check it. Because it’s distributed (copies are maintained all over the internet), there’s no single point of control or failure.

And it’s quite secure—in principle. It’s worth pointing out, as several speakers at Money 20/20 did, that Bitcoin’s own blockchain has never been compromised in the eight or so years it has existed. Applications or exchanges that use Bitcoin have been compromised (and millions of dollars have been lost in the process), but the underlying blockchain has remained online, and intact, continuously. That might sound like a technicality to outsiders but it is significant.

In fact, Bitcoin itself appears to have matured somewhat. It is still a fairly volatile currency, so buy and hold it at your own risk. But as a medium for exchange it seems to be working quite well. Sonny Singh of BitPay, which powers a huge proportion of Bitcoin payments around the world, told me that Bitcoin accounts for roughly 99 percent of the blockchain transactions market, despite the rise of alternative currencies. And many of BitPay’s customers don’t even touch Bitcoin at all: they just use BitPay as a payment processor, like Visa: People pay in Bitcoin, BitPay clears the transaction and deposits dollars into the client’s account. Singh says BitPay’s volume of merchant transactions has tripled in the last year, to one transaction every 15 seconds.

So what does the future hold?

Bitcoin- and blockchain-based stock exchanges. For regulatory reasons, you can’t technically call them “exchanges,” but I don’t know what other word you would use for a place where you can buy and sell equities, like you can on T0. Overstock.com, an early Bitcoin adopter and the creator of T0, announced this week that it would start trading some of its stock on the T0 platform. (I wrote about Overstock’s plansyesterday.) The advantage: Trades can settle in 10 minutes, instead of 3 days, like on traditional equities markets.

Is that a threat to traditional stock exchanges? Absolutely. “We’re taking a burn it down and start over approach,” said Judd Bagley of Overstock.com

Big banks using blockchain for international payments. Visa announced a new product, called Visa B2B Connect, at the show. It’s powered by Chain, a maker of blockchain technologies. Details are fuzzy on how it works, but it is a custom blockchain network, operated by Visa, for corporate clients to conduct B2B transactions across borders.

It’s not just Visa: At least 2/3 of major financial institutions are working on blockchain-based products for deployment sometime in the next three years.

The potential here, of course, is cost savings. Most international bank transfers cost several percentage points of the total transaction value; if you use Western Union, be prepared to pay up to 8%. PayPal itself is about 3.5%. A blockchain-based transaction system could be much, much cheaper. (BitPay, for instance, charges just 1% for any transaction anywhere in the world.)

Companies are working on tying together different blockchains. Bitcoin isn’t the only blockchain out there. Ethereum has sprouted up as a significant alternative, although most people are looking at it as a tool for enabling smart contracts, not just currency transactions. And many other cryptocurrencies exist. How do you facilitate transfers of value between different blockchains? Right now you need to use an exchange, which is a clearinghouse using some intermediary currency or store of value. A better approach would be some kind of protocol that allows blockchains to talk directly to one another. Ripple has created one such protocol, the now-open-sourceInterledger Protocol. But others are certainly in the works. Whoever can decisively solve this ledger interconnection problem will have accomplished something comparable to the invention of TCP/IP–the foundation of the internet.

Ethereum is still a work in progress. Ethereum founder Vitalik Buterin is clearly a genius. He’s also very young and sort of awkward. But despite the scope of his ambitions he’s fairly modest about how far Ethereum has come so far. In an onstage chat with author Don Tapscott, Buterin was sanguine about the controversial patch he made to Ethereum in order to reverse the weakness that allowed someone to hijack $50M of a decentralized $160M investment fund called the DAO. Critics viewed that as an assault on the immutability of the blockchain, thus compromising the trustworthiness of the Ethereum system. But for Buterin, “immutability is not absolute,” and needs to serve a social purpose. At present, the need to evolve Ethereum is a greater good than the need to preserve its blockchain unchanged, he said. Ethereum will eventually mature, he said, but “until then it should be viewed as an evolving ecosystem, not a fixed work of art.”

Governance is a grey area. Buterin seems to be coming around to the idea that some kind of governance—by groups of people working together—is necessary in any system. You can’t just create the perfect protocol and assume that it will take care of everything from that point on. Politics is necessary and unavoidable, he acknowledged. Like others in the blockchain space, he is coming up against the real world: One in which regulators may eventually catch up to what’s going on and impose real restrictions.

What’s more, it’s important to note that anonymity is not one of the essential properties of blockchain transactions. In fact, the immutability of transactions in blockchains works against anonymity, as the operator of the Silk Road, Ross Ulbricht, discovered to his regret a few years ago. The blockchain is a paper trail. That cuts in multiple directions, as Jamie Smith of The BitFury Group pointed out in one panel: “If you have an immutable record, authoritarian governments might find that very interesting, too.”

Still, while regulators around the world are generally far more enthusiastic about blockchain than they were about earlier cybercurrencies (like E-Gold), there will come a time when the world’s financial regulations start to impinge on the blockchain world. Operators of cross-border transaction platforms, for instance, will need to provide the same assurances as banks do that they’re not being used for drug deals, money laundering, etc. At least, they will have to do this if they want to remain operating within the law.

The opportunity is huge. “Every 20 years, something really cool comes along, and this is it,” said BitFury’s Smith. In the next few years, everyone on the planet will have some kind of mobile device. And there will be some kind of ubiquitous, planet-wide internet access. Combine those two things, she said, and why wouldn’t the world gravitate towards fast, convenient, low-transaction-cost payments?

As for Bitcoin itself, who knows? One panelist, Eric Martindale of Blockstream, predicted that Bitcoin would increase 10x in value, to more than $6,000, in the next 12 months. (The current value of Bitcoin is about USD $653.) I don’t know if he was joking, trying to hype up the value of his own holdings, or if he really believe that. It seems unlikely to grow that much. Bitcoin itself could in fact wind up getting bypassed by more flexible, more scalable blockchains. But the underlying technology seems sound, according to many who have looked deeply into it, and there seems little doubt that there will be more many more blockchain-based companies in the future, with or without Bitcoin in their business plans.

The biggest obstacle is usability. Bitcoin and blockchain have a long way to go before they’re easy enough to understand and use for the majority of bankers, let alone consumers. But with lots of people working on tying them into existing financial systems, that’s the direction that they seem to be headed.

Photo: Bobby Lee of BTCC wears a hat that says “Make Bitcoin Great Again.”

Money 20/20 recap: Jack Dorsey, blockchain, and the future of financial services

Overstock.com could begin first Bitcoin-based stock trades

I’m a stringer for VentureBeat this week at the #Money2020 conference, looking for good stories about blockchain. Here’s one about how Overstock.com is about to offer stock (in itself) via T0, its Bitcoin-based equities trading platform. (Just don’t call it an exchange, even though it is.) Official news announcement to come tomorrow.

Overstock.com could begin first Bitcoin-based stock trades

 Overstock.com has had it with the inefficiency of today’s equity markets, and it’s not going to take it anymore.

The company announced a new blockchain-based platform for trading equities(stocks and bonds) called T0 last year. Today, at the Money 20/20 conference in Las Vegas, Overstock.com’s communications director, Judd Bagley, detailed T0’s advantages over traditional equities trading systems and made statements that lead to the conclusion that a company — likely Overstock.com itself — would soon begin selling its stock on the T0 platform.

While other financial technology innovators might tread lightly for fear of offending the Wall Street types they eat lunch with every day, Bagley said Overstock is not going to hold back.

“We’re from Utah. We don’t care. We’re really taking a ‘burn it down and start over’ approach,” Bagley said.

After the panel, Bagley clarified that for regulatory reasons, T0 cannot be called a “stock exchange.” It is, he said, a platform for trading “widgets,” and the first use case will be equities (stocks and bonds).

Bagley did not actually say that stock trading would begin on T0. All he said onstage was that T0 would be in operation some time this year, and pointed to an upcoming Tuesday morning announcement by Overstock.com.

However, circumstantially, it seems quite likely that “being in operation” means trading stock, and that it would likely start with the stock of Overstock.com itself, which started accepting Bitcoin as a payment method a couple of years ago and has received SEC approval to sell stock for Bitcoin via T0.

Overstock.com’s beef with current equities trading processes came about a few years ago, when the company was on the receiving end of some stock market manipulation. Investigating the problem, it found that the trouble came in part because of the complexity of settling trades. This is a complex process that involves many intermediaries and is aimed at ensuring that the transaction is legitimate. However, the complexity introduces vulnerabilities — and also means that trades aren’t fully settled for three days. (After the Trade is Made describes the process in detail, although Bagley said the book is unreadably dense.)

“It shouldn’t take three days in this day and age,” agreed panelist Emmanuel Aidoo, who heads up cryptocurrency and blockchain strategy at Credit Suisse.

By contrast, blockchain-based equities transactions can complete in 10 minutes.

Yolanda Goettsch, a VP and associate general counsel at NASDAQ, begged to differ. “Our markets are very liquid, very efficient,” she told the panel, pointing to the extreme speed of the exchange’s electronic trading system. However, she did seem to acknowledge the three-day span required for full settlement, when it’s necessary to validate that the parties to a transaction have the funds, have the rights to the stock, and are meeting regulatory requirements.

In other respects, all of the panelists agreed on one thing: Banks and exchanges can, and should, take blockchain technology very, very seriously.

“Everybody’s in active trials,” said Jacob Farber, general counsel for R3, referring to financial services companies testing blockchain technologies. “There’s an assumption now that it will be deployed. The question is how and when.”

R3 is a consortium of 75 financial institutions and is building an open-source platform for distributed ledgers, called Corda.

NASDAQ, for its part, is testing a blockchain-based proxy voting system in Estonia, a country noted for its openness to fintech and digital identity technologies.

The panel reflects a broader trend. There’s robust interest in blockchain in the financial services industry, according to a recent study by IBM, which found that15 percent of top global banks plan blockchain products in 2017. Sixty-five percent are planning blockchain products within three years, IBM’s study found. And 80 percent of exchanges are testing blockchain, Goettsch noted.

Updated 10/24/2016 to clarify details about T0 launch.

Overstock.com could begin first Bitcoin-based stock trades

AppDynamics CEO: Don’t call my $2B company a unicorn (podcast)

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This week’s guest is David Wadhwani, the (relatively) new CEO of AppDynamics. My interview with him is in this week’s podcast.

David Wadhwani

Above: David Wadhwani

Image Credit: AppDynamics

Wadhwani joined AppDynamics as its CEO and president in late 2015, after a storied career at Adobe. AppDynamics, which provides application monitoring services for developers and enterprises, recently raised $150 million in a round that reportedly valued the company at close to $2 billion. Note: Wadhwani wouldn’t confirm the valuation and didn’t want to talk about it too much, which is not surprising, given how much downward pressure unicorn valuations have come under lately. Still, he gets some points for foresight and prudence: I recorded the conversation with him in December, well before this month’s valuation and stock market downdraft.

I talked with Wadhwani about the investment climate, application performance monitoring in general, DevOps, and about how he helped Adobe manage its transition from packaged software to cloud services.

Plus, Jordan Novet and I tell you what to think about:

  • the possible bursting of the “unicorn” bubble in 2016
  • Apple abandoning its iAd platform
  • Google’s AMP platform for faster mobile pages, and
  • Jordan Novet’s home-built Oculus Rift-compatible PC.

You can listen to this episode in the embedded player below:


Or, click here to get the MP3 of this episode of What to Think.

You can also listen to this episode of What to Think on SoundCloud.

And please subscribe to What to Think in iTunes, where you’ll get every episode delivered to the device of your choice as soon as it’s released!

AppDynamics CEO: Don’t call my $2B company a unicorn (podcast)

Dylan’s Desk: At CES, the ridiculous never goes out of style

Segway robot at CES 2016

A lot of us sort of expected CES 2016 to reveal a new, more practical side to the consumer electronics industry.

Guess again. Despite a looming global economic slowdown, the devaluation of tech-company unicorns, and the fact that everybody already has as many smartphones, tablets, and wrist gadgets as they need, CES continued to show us the same cavalcade of craziness and excess that it always has. Smartphone-connected kegel exercisers? A Wi-Fi-enabled Febreze scent dispenser? Modular TV screens? Yeah, baby.

Some of it was even kind of cool.

Facebook’s Oculus division finally announced the price and shipping date for its VR headset, the Oculus Rift. Despite being almost twice as expensive as expected, at $600, eager consumers snapped up all the available preorders almost instantly. Oculus founder Palmer Luckey went onto Reddit to humbly beg forgiveness for understating the price last year, when he led everyone to believe that it would be about $350. Even at $600, it’s still worth it, Luckey said: “I will use whatever credibility I have left to assure you that you are getting a pretty crazy deal.” The Oculus is what most observers regard as the most promising VR headset, and with Facebook’s reach and marketing muscle behind it, we’re sure to hear a lot more about this in the coming year.

Segway announced a combination hoverboard/personal robot, and somehow managed to not get laughed out of Las Vegas. It’s a smallish, self-balancing two-wheeled contraption that rolls around on its own, with a cute little face and optional arms, so it can take photos, carry your stuff, or maybe even act as a tiny personal teleconference robot. When you’re ready to head home, you literally squeeze the robot’s face between your legs and off you scoot.

And several old brands embraced decidedly retro products, in hopes of eking out a few more moments of relevance, perhaps. The most ambitious: Kodak (which went bankrupt a few years back) has re-emerged, teamed up with famed industrial designer Yves Behar, and is planning a revival of the Super 8 camera that launched a thousand film careers. The new Super 8 will shoot movies on film, just like the old one, but will also have some unspecified digital capabilities. We don’t know much, except that it will take film cartridges ($50-$70 each) and will also have a USB port and a slot for an SD card. You may chuckle, you may lust for it, but either way, one thing is certain: Kodak lined up a truly impressive array of Hollywood directors for its press release, with quotes from Steven Spielberg, Quentin Tarantino, J.J. Abrams, and a host of others.

This is all in striking contrast to the realities of the marketplace. As VentureBeat learned earlier this week in a conversation with Accenture, the consumer technology market is in a serious global slowdown. Consumers have reached a saturation point — first noticed a year or two ago when tablet sales started tapering off — and are less likely to buy the latest shiny new thing until it’s demonstrably useful and necessary. (Hello, Apple Watch.) Many gadget categories, like smartphones, have matured to the point where the differences between market leaders are marginal at best, based largely on design and brand.

And, as Accenture noted, consumers are worried about security and privacy. Electronics makers have forged blithely forward into a world where your every step is logged and stored in the cloud, and where even your wall sockets and light bulbs have Internet connections. Yet at the same time, over the past year we’ve seen one horrible security breach after another — 76 million customer records here, 40 million there, 240 million there. No wonder buyers are leery: They’re not idiots.

So in the coming year, will you buy an Oculus headset, a Segway robot, a weird digital/film camera from a failed brand, or a fitness tracker with a color screen? Probably not. You’ll hold out for something more useful — and if you’re smart, you’ll wait until you hear more about how these companies are going to protect the increasingly personal data they have on you. Maybe these things will be useful enough, or cheap enough, to buy in 2017.

In the meantime, enjoy the show.

 

 

originally published on VentureBeat

Dylan’s Desk: At CES, the ridiculous never goes out of style

How GitHub is building a platform and supporting open source (podcast)

Kakul Srivastava, VP of product management at GitHub.

In this week’s episode, we talk with Kakul Srivastava, the VP of product management for GitHub.

We caught up with her recently to talk about how GitHub has evolved into a platform (and what it means to be a platform), how the company figures out which new features and products to build, and the role of open source software in stimulating innovation.

Plus, we tell you what to think about:

You can listen to this episode in the embedded player below:


Or, click here to get the MP3 of this episode of What to Think.

You can also listen to this episode of What to Think on SoundCloud.

And please subscribe to What to Think in iTunes, where you’ll get every episode delivered to the device of your choice as soon as it’s released!

 

originally published on VentureBeat

How GitHub is building a platform and supporting open source (podcast)

How Castlight is using data to transform health care (podcast)

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1424305_798766343473447_743051478_nWe’re investigating the nature of these Innovation Engines in a series of What To Think podcasts, sponsored by Pivotal Tracker, and columns by VentureBeat editor at large Dylan Tweney. Tune in here to learn the secrets behind the tech world’s most successful platforms.


In this week’s episode, we talk with Jonathan Rende, the new chief research officer for Castlight Health.

Rende oversees his company’s new products and brings perspective from a long career in enterprise IT. In this podcast, VentureBeat reporter Mark Sullivan and I talk with him about how Castlight’s data-gathering and analytics tools are helping its clients (companies) offer their employees more insight into the health care options available to them. That, in turn, can help bring more transparency to the market for health care — a market that has been pretty much the opposite of transparent for decades.


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Plus, we tell you what to think about:

You can listen to this episode in the embedded player below:


Or, click here to get the MP3 of this episode of What to Think.

You can also listen to What to Think on SoundCloud.

And please subscribe to What to Think in iTunes, where you’ll get every episode delivered to the device of your choice as soon as it’s released!


The What to Think Innovation Engine podcast is brought to you by Pivotal Tracker, the Agile tool that’s been organizing software teams since 2006. Tracker’s simple drag-and-drop interface and structured workflow have allowed developers, product managers, and designers alike to build and manage better software, one story at a time. Is your team ready to get on track? Go to http://ift.tt/vJlT3G to sign up for your 30-day free trial and start delivering better software now.

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originally published on VentureBeat » Dylan Tweney http://ift.tt/1RcxcjZ

How Castlight is using data to transform health care (podcast)

Tech billionaires tackle politics the way Batman fights crime

Lego Batman 3: Beyond Gotham

For more than a decade, people who follow Washington politics have wondered when the tech industry was going to start taking politics seriously.

This week, the tech industry made two big moves that show that tech — or at least its most successful billionaire founders — is beginning to understand how much political power it commands.

Characteristically, these tech billionaires are not taking the traditional approach of hiring lobbyists, making donations to Congressional campaigns, and funding Super PACs. They are putting vast sums of capital to work in order to work with governments, or if necessary around them, to solve the global problems they consider most pressing.

Consider first the announcement by Facebook’s Mark Zuckerberg and his wife Dr. Priscilla Chan that they will be donating 99 percent of their Facebook stock to help promote equality and increase human potential around the world. That amounts to about 45 billion dollars, making the newly formed Chan Zuckerberg Initiative as large as the Gates Foundation in eventual capitalization. (It also leaves a healthy $450 million in Facebook stock in the Zuckerberg-Chan’s family pockets, not to mention almost $2 billion in other assets that they already own, so don’t worry too much about young Max being cheated out of a rich inheritance.)

Notably, the new Chan Zuckerberg Initiative is a limited liability corporation, not a nonprofit. Analysts have pointed out that this means it’s not subject to the usual rules of transparency that govern most nonprofits. It’s freer to spend (or not spend) its capital as it sees fit. It can back political candidates and make political contributions. And, for that matter, it’s free to turn a profit, I suppose. All of those differences mean that the CZI will have a good deal more flexibility in pursuing its aims than most philanthropies.

But the Zuckerberg philanthropy news is only the second big move by billionaires this week. At the beginning of the week, a consortium of billionaires, led by Bill Gates, pre-empted the Paris climate talks by announcing a $2 billion pledge to stimulate innovation in clean energy. Joining Gates were Virgin founder Richard Branson, Alibaba founder Jack Ma, and HP CEO Meg Whitman. It was a joint announcement, in which 20 governments also pledged to increase their investments in clean energy. But I couldn’t help but notice that the initiative seemed to have been led by Gates, who, as with his philanthropic work on fighting malaria and educating the world’s children, seems eager to “route around” the kind of slow, bureaucratic processes that characterize government work.

Taken together, these two events point to a reinvention of not just philanthropy, but of what it means for billionaires to “give back.” Today’s billionaires are not content to wait until their seventies and then disburse their billions to charities like museums, libraries, and hospitals. They’re not patient with slow change. As with the businesses they built, they want to disrupt things and stimulate rapid, transformative change — and they’re deploying their philanthropic money accordingly.

In short, like Bruce Wayne, they’ve grown frustrated with the official ways of fixing problems of pressing public interest and have invented their own, maverick solutions.

Is this a good thing or a bad thing? I won’t venture to say, yet. I applaud Zuckerberg and Chan for making such a massive commitment so early in their lives. I welcome the help of Gates and his fellow billionaires in trying to address the most massive planetary change since the dawn of humanity.

There is, I suppose, the possibility that these are cynical power plays and attempts to grow the market for their products, an accusation that has been leveled, fairly I think, at Facebook’s Internet.org initiative. There is also the possibility that philanthropy and politics desperately need to be reinvented, and these guys are doing it.

The proof will be in the execution, and in what kind of difference these organizations actually make in the coming years.

Originally published on VentureBeat

Tech billionaires tackle politics the way Batman fights crime

The iPad Pro might point to the future, but that future’s not here yet

Apple's new iPad Pro is a gas giant, the company's photos suggest.


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The iPad Pro is one of the most hotly anticipated products to come out of Apple in quite awhile. The 12.9-inch work-oriented tablet went on sale this week, and the first crop of reviews came out yesterday.

Unfortunately for Apple fans, some of those reviews don’t look so hot. Reviewers who normally rave about Apple products, like John Gruber and Walt Mossberg, are damning it with faint praise, while pointing out its substantial flaws: the substandard keyboard, the interface inconsistencies, the awkwardness of such a large device, and the lack of apps designed for such a large screen.

Both of those reviews are a bit weird. Gruber, while admitting that the iPad Pro is not for him or for many other people, still somehow believes that it is the future of computing.


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Mossberg, while saying that the iPad Pro is not for him because it won’t substitute for a laptop, goes on to say that it can’t really be compared to its most obvious competition (and inspiration), the Microsoft Surface Pro 4, because the Microsoft product really is meant to serve as a laptop.

Wait, what?

It’s almost as if these guys expected Apple to work some kind of magic to keep them from having to make a decision: Do I want a tablet or a laptop?

The problem is, that decision is not going to go away that easily. Microsoft has been throwing its considerable R&D and design resources at the problem for the past three years, starting with its Surface and Surface Pro tablets and more recently with its Surface Book.

I’ve been using the Surface Pro 3 for the past four months and, while I’m impressed by many aspects of it, I am far from a Microsoft fan. I’m constantly running into shortcomings or little glitches of the type that Gruber describes. But where the iPad Pro seems like a tablet that’s being uncomfortably forced to do double-duty as a laptop computer, the Surface Pro feels like a full-blown computer that’s being forced to do double-duty as a tablet. Its screen is gorgeous, its stylus (which comes included in the base price, unlike the iPad Pro) works as intuitively and responsively as anything I’ve seen, and it runs the full range of highly capable Windows software, making it a real workhorse. But the Surface still drives me up the wall nearly every day, with buttons for maximizing or closing windows that are too small to hit with my finger, screen-splitting gestures that work unpredictably, settings that are complex and hidden, and built-in apps that seem half-baked, buggy, or ill-conceived.

Other reviewers differ with Gruber and Mossberg. Federico Vittici at Macstories gushes over the iPad Pro, saying that he’ll never use a Mac as his primary computer ever again. Wired‘s David Pierce loves the hardware, and even though he dings it a bit for not fulfilling everything we need our laptops and desktops to do, he still believes that the iPad Pro — and iOS — represent the future of computing.

Of course, Tim Cook loves it, saying he no longer needs to travel with a MacBook. But he would say that — he’s Apple’s chief executive, and he does nothing but tout his own company’s goods all day long.

And VentureBeat’s Mark Sullivan was duly impressed with the iPad Pro’s size when he first laid hands on it in September.

There’s little doubt that the iPad Pro is a triumph of engineering, with a fantastic, high-resolution screen (2,732 x 2,048 pixels), remarkably light weight (1.6 pounds), and incredible performance, especially given that it’s running an ARM processor, not the more traditional desktop and laptop-style Intel x86 CPU. It also boasts fantastic battery life: 10 to 12 hours’ worth of serious usage, in these reviewers’ tests, which puts my Microsoft Surface Pro 3, with its 4 hours of sustained usage, to shame.

But the iPad Pro is expensive. The model every reviewer tested, with 128GB of storage and cellular data connectivity, sells for $1,079, and with the $99 Pencil and $169 keyboard, you’re looking at  $1,347 to replicate the experience enjoyed by Gruber, Mossberg, and the others. Yes, you can get an iPad Pro for as little as $799, but that will have only 32GB of storage and will lack cellular, a keyboard, and a stylus.

Who’s really going to shell out $1,000 to $1,350 to purchase a big tablet with a halfway decent keyboard and a really nice stylus, even if it does have a great screen and awesome battery life? I imagine there will be quite a few customers here in tech-loving (and cash-rich) Silicon Valley. But it seems like a hard sell for anyone else.

In short, the iPad Pro might represent the future of computing. But Microsoft saw that future almost three years before Apple did. And to both companies’ chagrin, that future isn’t here yet — which means it is still up for grabs.

IPad Pro, Surface Pro, Surface Book: Pick your compromise.

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originally published on VentureBeat » Dylan Tweney http://ift.tt/1QkHX3n

The iPad Pro might point to the future, but that future’s not here yet

VC Tomasz Tunguz explains his approach to SaaS investing (podcast)

 

In this week’s episode, we talk with Tomasz Tunguz, a partner at Redpoint Ventures and a noted expert on SaaS company metrics.

Tunguz explains how a law firm internship in South America when he was 17 launched him into tech, building a small software company and then winding up at Google before landing at Redpoint seven years ago.

One of the things that has garnered him a lot of attention is the blog he writes. He posts nearly every day and includes a lot of data-driven analysis, providing useful and concrete insights that entrepreneurs can really use. One of the things that got him started with that? Becoming a father and getting up early every morning to give his son a bottle. The site gets 100,000 views per month on the website, and he also says he has 10,000 email subscribers and 10,000 RSS subscribers.

In our interview, Tunguz explains where he gets his data for his posts — and goes on to talk about what he looks for in startups and why he wound up focusing on SaaS. (Hint: 65 percent of VC dollars go to enterprise companies, and consumer startups only get 15 percent — even though the latter get much more press.)


Also in this episode, Ruth Reader and I tell you what to think about:

You can listen to the podcast in the player above.

Or, click here to get the MP3 of this episode of What to Think.

You can also listen to What to Think on SoundCloud.

And please subscribe to What to Think in iTunes, where you’ll get every episode delivered to the device of your choice as soon as it’s released!

originally published on VentureBeat » Dylan Tweney http://ift.tt/1Qkpxzy

VC Tomasz Tunguz explains his approach to SaaS investing (podcast)

Using data to improve diversity — and business performance

Studies show that diversity improves performance of human teams. Not sure about beach huts, though.

Too often diversity discussions in business are framed as a zero-sum game: affirmative action versus meritocracy, minority versus majority, them versus us.

There are some hopeful signs that the tech industry is starting to realize that this is not the case. Google, Facebook, Twitter, Apple, and Amazon — among others — have all made a point of releasing their diversity numbers, at least insofar as diversity means “gender and ethnicity,” and have done so for two years in a row now, so we can see how little things are improving. At least they recognize it’s a problem.

More significantly, these companies are releasing this data without apology, and with a frank recognition that diversity is a goal worth striving for. It makes companies smarter, it makes them more sensitive to the needs of a diverse customer base, and it’s the right thing to do.

But, as anyone who writes about the topic will discover in the comments on social media about their work, there’s still a sizable contingent of people who believe that companies need to lower their standards in order to increase the diversity of their work forces.

Not so, says Joelle Emerson, the founder of a relatively new agency called Paradigm that applies data-driven social-science techniques to the challenge of helping companies increase their diversity and manage more diverse workforces more effectively. Clients include Slack, Airbnb, Pinterest, and Udacity.

In fact, Emerson said, numerous studies show that diverse teams are more innovative and better at solving problems than teams where everyone shares the same background, race, or gender.

I spoke with Emerson at a discussion on diversity earlier this week at Draper University. Incidentally, Draper was a great venue for this chat. Every time I’ve visited Draper University I’ve been impressed by the diversity of the students (they are truly a global, multiethnic, mixed-gender group) as well as their infectious enthusiasm, curiosity, and seriousness of purpose. They ask great questions, too, and they are unfailingly welcoming and polite, which is something you don’t always encounter in Silicon Valley. Say what you will about Draper’s goofy “hero” iconography, they are doing something right in this department.

So if diverse teams produce better results, why not just focus on results, and let the diverse teams shine through their own merits?

Actually, Emerson told me, at least one study has shown that the more meritocratic people try to be, the less meritocratic their hiring and promotion decisions actually are. In other words, people are more likely to give big raises to men and small raises to women if they’re told to base their decisions exclusively on meritocratic principles. It’s a phenomenon known as the paradox of meritocracy.

You can see that dynamic at work in Silicon Valley, where investors pride themselves on their “pattern matching” and “data driven” decision making, but still somehow overwhelmingly prefer to invest in founders that look like them. When VCs are 91.8 percent male and 77.5 percent white, that’s a problem.

So if companies want to be truly meritocratic, they need to take steps to make more objective hiring and promotion decisions. That should result in better business performance — and more diversity at the same time, since it will eliminate built-in biases.

One such technique is the blind audition, which I’ve written about before. In symphony orchestras where people audition for jobs from behind concealing screens, hiring managers are forced to pay attention to the only thing that really matters: how well the person plays their instrument. Similarly, blind auditions in a tech company can help managers focus on the work a person can actually do, such as writing or coding, rather than on their look or their self-presentation.

I’ve used blind auditions, with reasonably good results, in hiring journalists. I will say this, however: If you’re forced to focus only on the work, it does make the hiring process more laborious, because you actually have to read every work sample very carefully. But there’s no doubt that leads to fairer decisions.

Emerson herself has a handful of recommendations in a smart article on raising the bar in hiring. Her basic thesis: If you fix your hiring process, you’ll wind up with employees who are both more diverse and more talented. She recommends doing that by democratizing the job application process (for instance, by eliminating the advantages that certain groups have thanks to training on how to interview); focusing on job-related skills; and retuning your “culture fit” questions around aspects of culture that really matter, such as “would I enjoy working with this person?” rather than “would I hang out with this person after work hours?”

This being Silicon Valley, there are a number of startups aimed at helping tech companies with their diversity efforts (in addition to Emerson’s Paradigm). Gapjumpers helps companies conduct blind auditions for more objective recruiting. Textio uses AI and natural language analysis to improve the text of job listings, removing words that might discourage women or other diverse applicants. And Jopwell helps connect black, Latino, and Native American job candidates with companies that want to hire them.

The bottom line: Diversity is — and should be — good for business. Smart companies will embrace this approach and make themselves not only more inclusive, but higher functioning.

For more on these issues, follow VentureBeat’s collections of stories on diversity, gender, and race. And please let me know how your company is — or isn’t — tackling diversity in tech.


 

Originally published on VentureBeat

Using data to improve diversity — and business performance

I, for one, welcome our new surveillance robot overlords

A Knightscope K5 robot patrols an empty parking lot.


Knightscope founder and CEO William Santana Li is not modest in his ambitions.

He estimates that crime — of all kinds — has an annual global economic impact of a trillion dollars. That’s $1 trillion lost every year due to theft, vandalism, robbery, violence, and more.

He wants to cut that in half. And to do that, he’s building a fleet of surveillance robots.

The Knightscope K5 is a tall (about 5.5 feet), dome-headed, wheeled robot loaded with cameras and sensors. It rolls around at a slow speed, just a few miles per hour, and as it goes it emits a sort of drone-like humming sound. The sound is deliberate, so the robot doesn’t surprise people by rolling up silently behind them, but it also gives it a somewhat eerie presence — a sensation that’s probably appropriate, given that it’s watching your every move with a sensor suite that includes light detection and ranging (LIDAR) devices; high-definition, low-light video cameras; a camera designed to read and recognize the digits on license plates; directional microphones; proximity sensors; an inertial measurement unit; and a GPS unit.

The K5 looks a bit like a cross between R2-D2 and a Dalek, and that’s right where Knightscope wants it. The design challenge, Santana Li told me, is to make something that commands respect but isn’t frightening; that’s serious-looking but approachable. So, for instance, even though the technology might allow it, Knightscope is not going to make black-painted robots that zoom around at 20 miles per hour, because that would terrify people. Like police officers and security guards, the K5 aims to be a constant, calm, reassuring presence.

Knightscope seems to be succeeding in that. I find the robots eerie, but I’m also a born cynic. Most people apparently find them charming, and many people take selfies or family photos with the robots.

Now, Santana Li’s approach might strike some people as a little overly optimistic. Indeed, he had a difficult time convincing any Silicon Valley venture capitalists to back him. “Hardware is too hard,” is the refrain that many investors will tell you: It’s simply too expensive and too difficult to build a sustainable hardware business, particularly in a world where fast, professional, and cost-effective Chinese manufacturing is so dominant.

Santana Li has little patience with that. In a recent onstage interview I had with him at GSV Labs’ Pioneer Summit, he expressed exasperation at the crop of tech entrepreneurs who are tackling social media sharing and apps instead of challenging hardware innovations.

“It’s un-American for an entrepreneur to take the path of least resistance!” Santana Li yelled.

Undeterred by the lack of venture backing, Santana Li raised a total of $7 million from a State Farm-backed incubator, Flextronics, and NTT DoCoMo. The company said it has just four customers so far, but claims to have over 100 on its waiting list.

Santana Li is also impatient with the arguments that privacy advocates bring up. You don’t like having a robot rolling around your neighborhood, recording video 24-7? Well, think how you’d feel if you were a victim of crime, Santana Li said. Now what’s more inconvenient?

I don’t find that argument fully persuasive, but the analogy he draws with beat cops and security guards is a good one: Sometimes the mere presence of authority is enough to deter crime, and — given the recent push to put body cameras on police officers — it’s maybe not such a big step to having a fully autonomous camera-equipped robot rolling around.

Besides, for the most part, Knightscope is punting on the privacy and data storage issues: It will let its customers sort those questions out.

The pricing model is what’s perhaps most intriguing. Knightscope plans to rent its robots out for $6.50 an hour — far lower than the $20 per hour most security guards make. With that, you’d get 24-7 coverage, a web-based console, and a slew of features that can supplement, not replace, whatever security force you already have. Customers could include businesses (for monitoring a mall or a parking lot, for instance), neighborhoods, or maybe someday even police forces.

And if Santana Li’s ambitions pan out, it could turn into a very big business. According to the National Institutes of Health, the U.S. spends $179 billion a year on police protection, legal proceedings, and corrections. At $6.50 per hour, supplemental security monitoring might look like a very economical alternative to policing and security guards — and with billions already being spent, Knightscope has the potential to carve off quite a big slice of revenue.

Just as long as it can keep from freaking people out too much.

Originally published on VentureBeat

I, for one, welcome our new surveillance robot overlords

Netflix reveals the future of enterprise tech: Here’s why

This is the legacy: Data centers that most people don't need to think about any more.

I was sitting in a conference on enterprise infrastructure this week when I realized that the generational shift long promised by cloud advocates is finally, irreversibly underway.

That shift is away from “legacy” data centers built on x86 servers, VMware-managed hypervisors, SQL databases from Oracle, and storage hardware provided by EMC. Replacing all that are web-scale (or at least wannabe web-scale) technologies based on containers, commodity hardware, NoSQL databases of various kinds, and flash storage. The new infrastructure is cheaper, easier to scale up to large volumes of data and computation, and more flexible and agile.

But who really cares about that architecture, except the billion-dollar infrastructure companies that are about to take a giant hit in their valuations? And by that I mean Dell, HP, IBM, Cisco, Oracle, and, yes, EMC (which Dell is in the process of trying to buy). These companies might not quite be the walking dead, as Wired called them this week, but they are certainly headed for a world of hurt, which is why Dell is trying to buy EMC: It needs to shore up its legacy business.

Who cares about them, except their shareholders? Because it’s now possible to build a billion-dollar company without ever setting foot in a data center. You don’t have to care whether the datacenter is using HP and Dell hardware or some cheap commodity CPUs built to spec by the cheapest possible manufacturer. All you need are virtual servers you can spin up on a moment’s notice, the ability to deploy containerized apps into that environment, and support for the unstructured databases you need to handle the massive influx of bits you’re about to start collecting and will need to analyze.

Netflix shows what that looks like, and why — for now — Amazon owns such a big piece of that future.

Neil Hunt, the chief product officer and vice president of engineering for Netflix, was speaking at the Engineering Summit on Infrastructure, which had been organized by Engineering Capital, a small, enterprise-focused VC fund. Hunt talked about Netflix’s longstanding use of Amazon Web Services, the market and technology leader in cloud services. But it’s not just Netflix, Hunt said: Everyone is moving toward AWS.

“AWS is now the basic layer of compute services,” said Hunt.

Netflix is not just heavily reliant on AWS — it’s about to become completely dependent. Hunt plans to power down his company’s last data center this year, at which point Netflix will be running almost entirely on outsourced cloud infrastructures, mostly operated by Amazon. (It’ll still run its own content delivery network — CDN.)

Note that this timeline is new. Netflix originally said it would shut down its last datacenter in 2014, and then again this past summer, but the future sometimes comes a little slower than expected. That’s one aspect of enterprise infrastructure that will probably never change.

Still, Hunt would be happy to be less dependent on a single vendor: “That’s a somewhat uncomfortable place: To be dependent on a partner who is also competing with you,” Hunt said, referring to the fact that Amazon also sells a streaming video service.

But up to now, Hunt hasn’t found a single provider that matches Amazon in terms of its capabilities and scope.

“AWS is years ahead of Azure and a year or two ahead of Google in terms of the features and levels of abstraction they offer,” Hunt said.

“It’s getting closer, but Amazon keeps raising the bar in terms of AWS features.”

Gleb Budman, the CEO of Backblaze, which also recently began providing storage services that compete with AWS, asked Hunt if he’d consider using other cloud providers, even piecemeal. For the most part, Hunt said, the answer was no. Apart from a few tests here and there (Netflix is backing up data to Google, for instance), the company is almost entirely based on AWS.

So is the battle for the next generation over? Hardly. AWS has an enormous head start, but there is still no standardization of cloud services — something that Hunt believes will be necessary.

Hunt looks forward to a day when there is more standardization among computing components — and, by extension, more competition for AWS.

“Let’s get it right. Let’s make a standard toolkit that software engineers use when building software, just like hardware engineers use when building a bridge,” Hunt said.

“Then we’ll see an incredible increase in productivity.”

originally published on VentureBeat

Netflix reveals the future of enterprise tech: Here’s why