Category: Innovation

Immigrants Building The Future

As we enter the era of a new generation of critical technologies, from AI and AR/VR to EVs and robotics, the technical and entrepreneurial horsepower of immigrants will be more important than ever for Silicon Valley.

Yesterday, I had the opportunity to attend Entrepreneur First‘s first-ever demo day in San Francisco. Folks in the US and India might not be too familiar with EF – they are one of Europe’s top incubator programs, with a particularly strong presence in London and programs now in Paris, New York, and Bangalore.

Reid Hoffman at the EF Demo Day in SF

EF’s model is interesting – they operate in the -1 to 0 stage, spotting deeply technical founders, mostly in their early-to-mid 20s with many straight out of college, and help them identify and incubate a startup idea that aligns with their core technical skillsets and achievements.

And they are definitely spotting some outlier talent. Within this cohort, I saw everything from a Math Olympiad gold medalist, a Material Science PhD from Cambridge, and a 3rd year PhD dropout in Brain-Computer Interfaces to a Formula 1 aerodynamics engineer, someone who built systems for the US Department of Defense and another who worked on JP Morgan’s first AI systems.

This is what made the demo day super interesting for me. With the advent of AI, Europe is gaining prominence in the global tech scene courtesy of excellent technical universities and research institutions that produce some of the most cutting-edge research talent. A majority of EF cohort companies are in deeptech/ applied sciences and therefore, this demo day in a way, gave a glimpse into the future that leading AI research can potentially bring to life.

My 1 line takeaway from seeing these 32 companies pitch – the future is brighter, and full of “tech magic”, than we can probably imagine right now. Get a load of some of the ideas that are already in early productization:

1/ World’s first AI training processor using photons (directly taking on Nvidia).

2/ Optimizing farming 24×7 with low-cost swarms of Roomba-like robots that live in fields and spray everything from fertilizers to pesticides.

3/ AI platform that does automatic product placement within creator videos (a YouTuber can place everything from a Nike shoe to a Fiji bottle within a video in a matter of minutes).

4/ AI-powered real-time language translation that freelancers in non-English speaking nations can use to work with clients across geos.

5/ Exponentially simplifying going from a 3D render to a detailed pre-manufacturing drawing & design for any production process.

6/ Non-invasive neural links that can help soldiers in a hot zone communicate with each other without talking (telepathy brought to life?).

The raw intellect of these founders, combined with the product progress they appeared to have made in a short period, makes me think that many of these ideas are not that far away from commercialization.

What EF is smartly doing is relocating this entire batch to Silicon Valley, where the founders will live full-time, building product and raising capital. Seeing the ambition level of ideas the cohort is taking on, they definitely need the risk appetite and vision-backing mindset of the Bay Area. Can’t think of any other ecosystem in the world where such technically complex and capital-intensive ideas can be backed by a combination of talent, risk capital, institutional knowledge, and diverse networks.

Which brings me to another thought – how talented immigrants continue to move to the Bay Area to build the future. Imagine such unique outlier talent from places like Europe and India choosing to uproot themselves from their home countries, moving to the Valley, and offering their unique skills & knowledge to companies here. This makes me super-long on the Bay Area and clearly shows that the Silicon Valley immigration flywheel is still as strong as ever.

This macro trend is what also makes me equally excited about India’s emergence as a key supplier of founder talent for the world. And not just to the US, but also to regions like SE Asia, the Middle East, and Australia. I believe the Indian diaspora will make a defining impact on the global knowledge economy over the next 20 years. Combine this with the rise of a new generation of critical technologies (AI, EVs, AR/ VR, robotics, semiconductors, etc.), and this transforms into a generational opportunity that energizes me as a venture investor in the US-India corridor.

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.

Time-Price: How Things Are Actually Getting Better

Social media, politicians and public discourse would lead us to believe that everything in the world is increasingly going South.

However, over the long term, the concept of ‘Time-Price’ shows how each of us is enjoying materially better goods and services, all earned at a fraction of the work prior generations had to put in.

I recently came across a compelling economic concept called ‘Time-Price’ in the Lux Capital LP Letter Q2 2023. In this era of social media, any negative news, information, or argument makes instant headlines. This is not unusual, given any unpleasant development typically represents a clear and present concern for readers (see: loss aversion), something that they are currently going through in their lived experience. It could be inflation, air quality, street crime, traffic snarls, depression, rising taxes, quality of education, cost of healthcare, etc. On top of this, a combination of politicians and social media algorithms ensures that these negative sentiments go viral.

While emphasizing negative stories in the short term, mainstream narratives totally ignore the steady improvement that the entire planet has experienced across almost all livelihood factors over the long term. Everyone living today has inarguably, a better quality of life compared to their grandparents. But, can this improvement be represented in a quantitative way?

Introduction to Time-Price

This is where Josh Wolfe of Lux Capital advocates using Time-Price as a metric. Here’s how Lux defines it (reproducing from their letter):

Source: Lux Capital LP Letter Q2 2023

Rather than representing access to any goods or service just in terms of economic price (nominal or real), Time-Price calls for calculating the number of hours of work needed to afford something. It gets over the limitations of classical pricing that reflects only the concept of money (or currency). By smartly incorporating the concept of productivity, Time-Price expands the perspective on affordability beyond just dollar terms, and into the effort that is required to be able to access any goods or service.

The main thought behind this metric is human ingenuity that creates technology-driven innovation which, in turn, drives productivity improvements that, to quote Lux, “allows all of us to consume more for less and free up more time to generate even more new ideas”.

Lux presents some fascinating data on significant falls in Time-Price of multiple categories:

Source: Lux Capital LP Letter Q2 2023

Applicability to Venture Investing

I find Time-Price particularly appealing as a venture investor in tech and innovation, as it helps to elegantly capture the actual delta any technology creates for users in real life. After reading the Lux Letter, I immediately started applying this framework to various startup ideas that went on to become large companies:

  • Apple – A few decades back, one had to be part of a top university to access powerful computers. Apple brought this computing power first into everyone’s homes, and then into their pockets.
  • Uber – Growing up, a chauffeur-driven car was a luxury that only the top percentile could afford. Uber created micro access to it for as low as $10.
  • Airbnb – Traditionally, hotels in marquee downtowns like New York, London, or Sydney were expensive and thus, were accessed largely by business travelers with expense accounts. Airbnb opened up residential supply in the same locations, making staying downtown affordable for even student travelers.
  • Hubspot (or any SaaS) – For decades, only large companies could afford expensive workflow software. The rise of SaaS has now enabled anyone with the Internet and a credit card to access ERPs, CRMs, and pretty much any software.
  • Udemy, Udacity (or any edutech) – cutting-edge curriculums and the best teachers were housed in marquee institutions. Edutech platforms brought them out of these walls, broke them into bytes, and delivered them affordably to any learner anywhere.

Time-Price can also be helpful as a framework while assessing new investment opportunities. While most early-stage startups don’t have enough traction to validate whether their offering is already bringing down Time-Price viably, investors can at least evaluate whether the founder is imagining an end-future (the Mission) that predicts significantly bringing down Time-Price in a particular domain.

Running another set of Time-Price thought experiments, this time on some of my portfolio companies that are still relatively early in their maturity curves:

  • Varda Space – making in-space manufacturing commercially viable and accessible.
  • Yulu – affordable urban mobility solutions that reduce traffic congestion and air pollution.
  • LetsVenture – organizing private markets investing to make it more accessible.
  • Playto – bringing quality and affordable STEM learning to kids in high-cost developed countries.
  • Lore – enabling groups to pool resources to be able to buy previously unaffordable, large-ticket assets.

A few caveats…

There are 2 characteristics any good tech investor needs to exhibit – (1) optimism for the future and (2) a non-zero-sum view of the world that believes in technology innovation expanding the pie for everyone to share. Time-Price encapsulates both these features rather nicely, proving to us quantitatively that humans collaborating on new ideas can help infinitely compound prosperity for the planet. That’s why as Lux says, despite an ever-growing world population and per-capita consumption across countries, we haven’t yet run out of food. Or fuel. Or metals.

However, this narrative around a perennially bright future needs some caveats:

1/ Peace – Historically, while 2 world wars did little to slow down technology progress (and might have even expedited it), the highest-caliber individuals that drive innovation for the rest of us (scientists, engineers, entrepreneurs) strive for security and stability. Amidst various pockets of geo-political tension (US-China, China-Taiwan, India-China, India-Pakistan, Iran-Saudi Arabia, etc.), it’s important to recognize the Time-Price dividends of prolonged peace.

2/ Science – Ensuring a steady stream of useful innovation requires encouraging fundamental scientific research. In addition to attracting the best talent and equipping them with capital and other resources, this also requires inculcating a broader scientific temperament within society that then keeps the spirit of problem-solving alive within communities, particularly among youngsters.

This is where the US and Europe have a massive headstart over emerging economies like India. Countries that generate the best original scientific research will continue to drink from that fountain of innovation for generations, maintaining their lead over others. BRICS countries need to have a 100-year roadmap to catch up with the West on this aspect.

3/ Entrepreneurship – Translating breakthroughs in pure sciences into products and services that can make their way into the lives of regular citizens requires an entrepreneur to take the risk of commercializing innovation. Bringing down Time-Price requires both science and entrepreneurship to work hand in hand. Else, the system becomes sub-optimal.

For instance, Europe is strong in science but lacks an entrepreneurial environment. While India has natural entrepreneurship in its DNA, it lacks the scientific research prowess needed to move up the value chain. Both these regions are, therefore, trailing the US which offers a unique combination of science and entrepreneurship.

Closing thoughts

While all of us get bombarded with various types of negative news daily, most of which is sadly also true, Time-Price provides us a tool to take a step back and look at human progress over generations. Fortunately, it’s all trending in the right direction, demonstrating how humanity continues to collaborate on new ideas that eventually end up making each of our lives better. Entrepreneurship is the core channel for delivering this positive transformation and this is what keeps me excited and motivated as a venture investor.

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.

Cooking with the Bay Area secret sauce

I often get the question from founders – “what makes the Bay Area successful? And how can I replicate its model in my teams?”.

Outlier success is usually driven by a set of interconnected factors. But there is one element behind the Valley’s success that is less talked about. Sharing that secret sauce here for your own cooking!

During this India trip, a bright young founder asked me an interesting question – “why does the Bay Area keep doing better at thinking big & innovating? And how can I get my engineering team in India to start doing the same?”. These questions got me to reflect on my own experience of operating in Silicon Valley & what makes it different from other geos.

Any region that becomes an industry hub (erstwhile Detroit in auto, New York & London in finance, the Bay Area in tech) is usually the result of a complex web of factors. These go top-down, starting with the country’s history, values & socio-economic structure at the macro level, to local factors like weather, presence of feeder universities & a critical mass of companies that drive network effects.

However, based on my experience, there is one important element in these complex webs that’s less talked about – the presence of “Relatable” role models. While social, economic & cultural factors set up an amenable environment, seeing people you know or can relate to, pushing boundaries & a few getting outstanding rewards for it, is what drives daily action from talented folks.

Doing anything new or unconventional requires 2 things:

  • Inspiration – stories that create a desire to chase something better than the status quo.
  • Action – internal motivation to translate inspiration to daily action.

Each of these is driven by a different set of role models. Inspiration is driven by what I call as “Prominent” role models while Action is driven by “Relatable” role models.

Prominent role models

These are the handful of most visible, externally successful and recognized leaders of their fields. I have been inspired by many of these in my own life.

Even before startups were a thing in India, I remember discovering Steve Jobs’ famous 2005 Stanford Commencement Address while I was working as an investment banker at Citigroup (& hating it). Looking back, this was my initiation into this world that now deeply lives within me. Jobs inspired me to start looking beyond spreadsheets & discover unsolved problems in the world.

When I entered venture capital, I discovered Fred Wilson of USV & reading his blog inspired me to start writing articles & become an early adopter of Twitter in 2011 when most Indian VCs didn’t even have Twitter accounts. Many years later, as I was driving global expansion for Alibaba, observing Jack Ma’s leadership & learning about his backstory inspired me to startup on my own.

Steve Jobs, Fred Wilson & Jack Ma are Prominent role models that inspire you to the very core, creating those moments of decision-making that change your direction. However, a long & arduous journey only begins in these moments, and walking the path requires years of daily action. This is where the ongoing presence of Relatable role models is super-important.

Relatable role models (the secret sauce!)

Completing the loop I started in the beginning; I believe one of the core strengths of the Bay Area that makes it an ongoing innovation engine is the vast presence of Relatable role models doing non-incremental things.

These are people you either know directly or know of in your extended network. These are people just like you, sometimes at the same stage of the journey as you, maybe a few steps ahead in a journey similar to yours, or perhaps already rewarded for walking the path.

These are ex-colleagues, batch-mates, friends-of-friends & social media acquaintances. To you, they are reachable, approachable, understandable. They aren’t necessarily outlier successes. It’s just that they are either walking the same part of the hike as you or have already walked this segment & reached the next check point.

When I first moved to the Bay Area & was looking to meet people in the ecosystem, I still remember one of my close friends introducing me to his “Mamaji” (mom’s brother) who had sold 2 companies & was living in Saratoga. One of the first intros I got was to this kid in his mid 20s who had just sold a company to LinkedIn & was on to his next startup already.

As I started working in the Valley, I saw colleagues building side-products on weekends & senior leaders joining startups with significant pay cuts. I saw peers investing into startups with salaried money & heard stories of friends-of-peers who were the first angel checks into now-prominent startups.

Humans learn the best by observing others in their surroundings. The core value prop of top universities is not classroom learning, but a high-quality peer group you end up learning with on campus for 4 years. Paul Graham realized this & therefore, created YC as a community-driven venture model where founders build largely on the back of peer learning & support. I can confirm this as a parent too, when I see my kids largely learning by osmosis from their friends & indirectly observing behaviors of grown-ups.

Living in the Bay Area exposes one to a continuous stream of relatable, real-life stories of risk-taking, of taking big bets & importantly, of creating all types of success, big or small, by taking these bets. In most cases, you can even get direct access to the protagonists of these stories, who are more than happy to pay-it-forward by sharing their learning & actively helping out. They do this because they too, are on the way to their next base camp & are looking up to their own Relatable role models for it. And so, the cycle continues!

Coming back to Part 2 of the question I got from the founder – how can one drive a non-incremental culture in your own teams?

As a leader, consciously surrounding your team with Relatable role models is a strong step towards this. It could be by encouraging team members executing differently to share their approach or bringing in folks from other companies for sessions & fireside chats. It could be doing knowledge sharing sessions at an offsite, or discussing a case study of a similar product or company that is nailing something you are struggling with. It could be recognizing taking on large problems & bold approaches via hackathons & ideathons. Or it could be setting up days where talented younger folks shadow leaders, sitting in important meetings & observing how they execute.

I tried to leverage this concept in my own startup a few years back wherein I convinced one of my batch-mates who was the ex-CTO of a large Internet company to come onboard as a CTO-in-residence. Him spending a few hours every month with the team & joining townhalls to share his perspective on technology transformed the learning trajectory & energy levels of our young engineering team. Even today, everyone fondly remembers that experience as a game changer for them personally.

So that’s it, I gave you the Bay Area’s secret sauce. Each of you is a Relatable role model for someone out there, so go ahead & pay-it-forward by sharing your stories, supporting other builders & connecting people to each other. If this becomes the dominant culture in your ecosystem, whatever that might be, success will follow!

Subscribe

to my weekly newsletter where in addition to my long-form posts, I will also share a weekly recap of all my social posts & writings, what I loved to read & watch that week + other useful insights & analysis exclusively for my subscribers.