Benjamin Kuo’s Blog

I’ve been pondering lately the reason for a rise in new startups, the wall-to-wall networking and events that are happening, and the overall increase in attention to Southern California’s high tech industry, and think I am seeing (part) of the reason for the surge in activity: a new generation hitting the market, joining local companies, and starting to network and connect with the local community.

I was discussing this with someone who was heavily involved with the last crazy networking/startup period here in the Dot Com era, and we were talking about how people who were around in the 90’s go-go years were all in their 20’s then, didn’t know lots of people, were eager to network, and there was a whole new community of companies being formed. Then, post dot-com bust, there was a significant lull for a number of years in terms of networking and events (with not a few organizations disappearing and cutting back). He told me why things didn’t start up immediately after the economy improved: “we already did our networking, and knew everyone.” Those folks were now more likely than not starting to settle down, probably had families, and knew everyone in town, and had established their network–so really had no reason for starting the networking scene up again.

Now, we’re seeing a new surge, an overwhelming number of both private and public networking events, which seems to be driven by a new influx of a younger generation into the market. I’ve found that these are people who weren’t around during the dot com bust (they were in high school or college), are more comfortable with Facebook than LinkedIn, are more likely than not connected into social sites like Twitter, and are now working at the many, newly funded local startups in the area. They — being young and ambitious — don’t know lots of people, are (usually) very mobile, single, and can handle the hectic social calendar, and are very interested–both professionally and socially–in networking with others, attending events, and connecting into the local startup economy.

One attorney I was talking to lately told me that he’s seeing a new generation of young venture capitalists, young startup founders, young executives and workers, and others who are moving into this market; it’s a new generation looking to establish themselves and create a community around the technology industry.

I’m showing my technical background here, but I was recently browsing through my ever growing backlog of “friend updates” from Facebook, LinkedIn, Twitter, etc. and started thinking about the poor signal to noise ratio in social communications.

The signal to noise ratio–in electrical engineering–is a measure of how much useful signal you are actually getting from a communications channel, versus the background noise in the signal. For those poor souls who grew up in the world of analog, the noise is the snow on a bad TV set, and the buzzing you hear on a remote radio station. In the world of social communications, signal is the useful information you get from that information, and noise is the extra, useless stuff you just really don’t need to be filtering through.

Facebook, Twitter, and other social sites are great, but they’ve got a critical problem, which is the amount of noise is almost staggering; without some kind of filter, it’s very, very difficult to pull out the most critical information you need to know from the constant data stream. In figuring out signal-to-noise, engineers use the amount of power in the actual signal divided by the amount of power in the noise to determine how much useful signal you have. You could almost determine a numeric ratio by using the number of messages and updates in the feeds which are are non-useful information to actual informative information.

In a social sense, signal to me might be:

• Insightful pointers to interesting news or commentary
• Information about upcoming events or happenings
• Breaking news
• People joining or leaving a company
• Questions to the community, or trading of useful information
• Anything actionable - that you can act on in some way

Noise, on the other hand, would be:

• Details on lunch/dinner/breakfast or some other random detail of daily life
• System messages about who you have added as a friend (LinkedIn is particularly bad about this: once you get past a few hundred contacts this becomes an un-usable flood).
• Random stream-of-consciousness posts
• Auto-generated, GPS-powered “I’m here” information
• Micro traffic updates (everyone in LA on Twitter seems to be stuck somewhere in the city in traffic)
• Updates on all the contacts I have who have changed their profile picture
• etc.

In order to make these services more useful, there needs to be more signal than noise — and tools to filter out those signals from the massive data stream they’ve created. Those tools need to be built into the services (there’s plenty of random hacks for doing some kind of text-based filtering for Facebook feeds, twitter updates, etc.), and they need to be automatic, easy to use, and tunable. Social communications has lots of promise, but without some help improving the signal quality, it’s very easy to get completely inundated by the noise.

The Pasadena Angels have just launched their weekly blog, Ask The Angels Blog, where their members will be giving advice on fundraising, starting up your company, and other relevant topics for startups. We have just re-posted a great article in our Insights and Opinions section from Pasadena Angels member Steve Reich on Your First Sales Hire (original here):

Every startup faces the question of who to hire for their first sales position. Do you look for that fantastic VP of sales who is not only a great closer, but also a master strategist? Do you hire that friend of the founder who is young but promising? How do you decide?

This morning’s funding news for Row 44 - a Westlake Village manufacturer of equipment for providing Wi-Fi in airplanes — is a reminder of what I’ve long regarded as one of Southern California’s biggest strengths: its diversity of people, industries, and companies. While many people might think of Southern California on mostly consumer internet and entertainment terms, the technology roots here run much, much deeper. Name almost any industry — hardware, software, Internet advertising, publishing, biomedical devices, pharmaceuticals, clean energy, advanced materials, semiconductors, communications, scientific equipment, storage, computer games and so on–and I can give you a list of a significant number of companies here who are major players in those industries.

It’s what you would call — if you were a biologist — biodiversity, namely, a wide range of types of species and variations (or in this case, companies) in the ecosystem (here, the economy). It’s a strength, because as folks in the tech industry know, there is a constant shift in the fortunes of not just companies but entire industries. It’s one of the great things about being in an area which isn’t completely dominated by technology. There are enough other industries here to constantly spawn out new companies — very often, technology companies — to fill some need for those other industries.

That diversity makes for sustainable growth, so that when you have a shift in either economic or funding patterns, activity doesn’t just dry up. A classic industry which sees boom/bust cycles is semiconductors, where you’ll have a number of years with an immense amount of investment, usually followed by some crash and years of recovery. It’s the same with any industry; however, if you’ve got (like we have) more than just Web 2.0 companies, and a diverse base, you’ll (hopefully) be able to see the economy swing from one industry to another in terms of growth.

Stacey Higginbotham at GigaOm has an interesting commentary on the New York Times recent news item on the loss of women in science and technology.

Having worked with many excellent female engineers and software developers — as an employee, manager, coworker, and colleague — in my time working in the technology industry, I believe the New York Times is correct in pointing out a problem with a “pervasive macho culture” in many — but not all - technology companies. Unfortunately, you often see this repeated in the online blog world, where there has been a dramatic degradation of standards in terms of treatment of women. There’s been (at least to me) a noticeable shift in many technology blogs (which tend to be dominated by single males in Silicon Valley) which sometimes feels more like the boy’s locker room than the professional environment you’d expect in the technology workplace.

I’ve found — both through engineering school (the top Electrical Engineers in my graduating class were all female), in the workplace (I have hired as many top notch female software engineers as male, perhaps more–and worked for many brilliant women), and in industry groups (there are many very good technologists in the standards groups) — female engineers and scientists are as good as, and often have to be better than their male peers. The issue here isn’t competence or ability, it’s one of culture.

In some part, it feels like the more hostile environment is partially linked to the merging of professional and personal life, and a less professional work culture. The inherent mixing of personal pursuits and professional pursuits tends to encourage a much more relaxed atmosphere in male/female relations; which in many cases is more negative than positive. It also feel to me like there’s more issues with this in the online world than in the hard core technology rank and file–which has tended to be more of a meritocracy.

So what to do? In the blogging and online publishing world, at least, here’s what I think ought to be happening:

• Readers of blogs — that is, you and I — should complain, in comments and personally to people who insist on covering women in a degrading way.
• People should reward their attention, time, links, and referrals to bloggers who encourage, not discourage, women in technology.
• There needs to be a refocusing of priorities on substance, rather than style. In particular, I’m personally tired of “you should watch this video blog because the hostess is hot.” Really folks…
• Finally, we (men and women) should make an effort to point out the successful women in engineering and technology.

Message to new SoCal entrepreneurs: get over your Silicon Valley envy.

I’ve run into quite a few entrepreneurs lately who have what I like to call Silicon Valley Envy. It’s the–somewhat defeating–attitude that everything in Silicon Valley is better, that in order to validate your startup you need to have approval from the “in” folks in Silicon Valley. This is usually manifested to me by startups who gush that they had so-and-so Silicon Valley media mogul or so-and-so angel investor or VC talk about  their company.

One thing Southern California has been very good at, is going our own way. That means, we’ve create our own startups — kept our companies here even though Silicon Valley venture investors may have pressured companies to move to Palo Alto — developed companies which made business sense or which serve a market need — rather than just followed the latest “trendy” startup idea. This independent spirit set the stage for the last round of successful companies here in Southern California. The big successes here in SoCal — the Overtures, Pricegrabbers, MySpaces, Jamdats, LowermyBills, etc. in the world — didn’t have competitors and weren’t following the lead of the hot Silicon Valley startup of the day/hour.

I’ve always felt, personally, that bucking the trend, finding a different angle on the market, having somewhat of a renegade attitude has been one of the most valuable traits that an entrepreneur can have. About the last thing you want to see in an entrepreneur that is being unoriginal and just trying to “follow the crowd.” Following what “Silicon Valley” thinks isn’t going to get your startup — or Southern California — ahead.

I was chatting with a well regarded venture capitalists here in the area last week, and he was telling me how he looks for companies which aren’t trying to follow Silicon Valley’s “group think” — companies which are different, and which won’t have to compete in the intense pressure zone that is Silicon Valley’s “hot next thing.”

It’s one thing to take the lessons and successes of companies in Silicon Valley, and use that to your advantage to create the next big Southern California sucess — it’s another thing to latch onto the idea that you can’t consider yourself “made” until you get that pat on the head from the Silicon Valley “in” crowd. My advice to you: get over it, and start focusing on if you’re creating a sustainable, worthwhile business and less about becoming a Silicon Valley darling.

On of the more perennial questions I am asked by people is “how do I get into venture capital?”. There are plenty of venture capitalists offering up their words of advice, but here’s mine: sell your company for $1.4 billion dollars.

Jeffrey Stiefler, former Chairman and CEO of Calabasas-based Digital Insight, just joined a Bay Area venture firm, Emergence Capital Partners, and is just one of the many post-big-sale CEOs who have moved to the venture capital industry. Stiefler sold Digital Insight in February of 2007 for $1.4 billion. The firm was already public (having made its backers money in an IPO already), but the pattern is consistent with a long tradition of finding those deal makers who know how to build — and sell — their firms as venture partners.

I get countless numbers of people — from all parts of the high tech industry — who ask me how to get a gig as a venture capitalist. There’s lot of MBAs, quite a few business development folks, a few product managers, and countless VPs who’ve approached me over the years. Unfortunately — unless you’re lucky — it’s actually quite tough to find a position at a venture firm. Most VC firms are fairly static, not likely to hire very often, and there’s not a lot of latent demand for new talent.

However, successfully selling your company seems to be a more sure route to a venture role; some folks who have done this include Leo Spiegel over at Mission Ventures (he was chairman/CEO of Sandpiper Networks); Bill Woodward at Anthem Ventures (founder of Paracomp, which merged with MacroMind and went IPO); and Dave Gross and Rusty Reed of Great Pacific Capital (founded Fastclick, made enough to just start their own VC fund) — just a few of the folks that come to mind.

This is an occasional post to thank Clearstone Venture Partners, the venture firm which makes this blog page possible.  Clearstone — with offices in Santa Monica, Menlo Park, and Mumbai — it a top tier venture capital firm with a significant focus on Southern California. Some of the firm’s most notable investments: Overture Services (acquired by Yahoo); PayPal (IPO/acquisition); PeopleSupport (IPO); United Online (IPO); and many others. Please tell them you appreciate their support of socalTECH!

Comscore is reporting today that online video views grew to 11.5 billion views during the month of March, up 13 percent from February, and a 64 percent year to year gain. Most of those views — not a surprise — come from Google, and its popular YouTube video sharing site. 38% of the video market is represented by Google. The next most popular site for videos was Fox Interactive Media (namely, MySpace) which had 4.2 percent of the views for March.

Aside from the continuing domination of Google, I find it interesting that more and more of the ISPs and bandwidth providers I speak to out at conferences and events tell me that video now represents a huge majority of the traffic they deal with on a regular basis. Video has overtaken HTTP (web) protocol traffic as what they watch, tune their networks for, and gauge in order to plan and manage their networks.

The telecom folks I talk to tell me that this growth in video traffic has helped to fill what had been very empty (and expensive) pipes, which had been overbuilt during the dot com boom.  Although it looks like there’s still lots of un-used capacity out there in the world (I haven’t seen anybody building new capacity nowadays — mostly just buying up unused telecomassets), it should be interesting to see if the increase in content and use of video online will help spur another surge in the telecommunications and equipment provider market, as we finally grow past the latent capacity available today.

I’ve gotten a lot of response from my interview earlier this week with Richard Wolpert, about his new venture fund — which is backed by William Morris, Accel Partners, Venrock, and AT&T. It turns out, Richard also has his own blog — albeit mostly personal observations rather than info for entrepreneurs and others — althought a good one is his look at the difference between Hollywood and Silicon Valley: Valet Parking.