Apple’s Tim Cook makes blistering attack on the “data industrial complex”

Apple’s CEO Tim Cook has joined the chorus of voices warning that data itself is being weaponized again people and societies — arguing that the trade in digital data has exploded into a “data industrial complex”.

Cook did not namecheck the adtech elephants in the room: Google, Facebook and other background data brokers that profit from privacy-hostile business models. But his target was clear.

“Our own information — from the everyday to the deeply personal — is being weaponized against us with military efficiency,” warned Cook. “These scraps of data, each one harmless enough on its own, are carefully assembled, synthesized, traded and sold.

“Taken to the extreme this process creates an enduring digital profile and lets companies know you better than you may know yourself. Your profile is a bunch of algorithms that serve up increasingly extreme content, pounding our harmless preferences into harm.”

“We shouldn’t sugarcoat the consequences. This is surveillance,” he added.

Cook was giving the keynote speech at the 40th International Conference of Data Protection and Privacy Commissioners (ICDPPC), which is being held in Brussels this year, right inside the European Parliament’s Hemicycle.

“Artificial intelligence is one area I think a lot about,” he told an audience of international data protection experts and policy wonks, which also included the inventor of the World Wide Web itself, Sir Tim Berners-Lee, another keynote speaker at the event.

“At its core this technology promises to learn from people individually to benefit us all. But advancing AI by collecting huge personal profiles is laziness, not efficiency,” Cook continued.

“For artificial intelligence to be truly smart it must respect human values — including privacy. If we get this wrong, the dangers are profound. We can achieve both great artificial intelligence and great privacy standards. It is not only a possibility — it is a responsibility.”

That sense of responsibility is why Apple puts human values to be at the heart of its engineering, Cook said.

In the speech, which we previewed yesterday, he also laid out a positive vision for technology’s “potential for good” — when combined with “good policy and political will”.

“We should celebrate the transformative work of the European institutions tasked with the successful implementation of the GDPR. We also celebrate the new steps taken, not only here in Europe but around the world — in Singapore, Japan, Brazil, New Zealand. In many more nations regulators are asking tough questions — and crafting effective reform.

“It is time for the rest of the world, including my home country, to follow your lead.”

Cook said Apple is “in full support of a comprehensive, federal privacy law in the United States” — making the company’s clearest statement yet of support for robust domestic privacy laws, and earning himself a burst of applause from assembled delegates in the process.

Cook argued for a US privacy law to prioritize four things:

1. data minimization — “the right to have personal data minimized”, saying companies should “challenge themselves” to de-identify customer data or not collect it in the first place
2. transparency — “the right to knowledge”, saying users should “always know what data is being collected and what it is being collected for, saying it’s the only way to “empower users to decide what collection is legitimate and what isn’t”. “Anything less is a shame,” he added
3. the right to access — saying companies should recognize that “data belongs to users”, and it should be made easy for users to get a copy of, correct and delete their personal data
4. the right to security — saying “security is foundational to trust and all other privacy rights”

“We see vividly, painfully how technology can harm, rather than help,” he continued, arguing that platforms can “magnify our worst human tendencies… deepen divisions, incite violence and even undermine our shared sense or what is true or false”.

“This crisis is real. Those of us who believe in technology’s potential for good must not shrink from this moment”, he continued, saying the company hopes “to work with you as partners”, adding: “Our missions are closely aligned.”

He also made a sideswipe at tech industry efforts to defang privacy laws — saying that some companies will “endorse reform in public and then resist and undermine it behind closed doors”.

“They may say to you our companies can never achieve technology’s true potential if there were strengthened privacy regulations. But this notion isn’t just wrong it is destructive — technology’s potential is and always must be rooted in the faith people have in it. In the optimism and the creativity that stirs the hearts of individuals. In its promise and capacity to make the world a better place.”

“It’s time to face facts,” he added. “We will never achieve technology’s true potential without the full faith and confidence of the people who use it.”

Opening the conference before Cook took to the stage, Europe’s data protection supervisor Giovanni Buttarelli argued that digitization is driving a new generational shift in the respect for privacy — saying there is an urgent need for regulators and indeed societies to agree on and establish “a sustainable ethics for a digitised society”.

“The so-called ‘privacy paradox’ is not that people have conflicting desires to hide and to expose. The paradox is that we have not yet learned how to navigate the new possibilities and vulnerabilities opened up by rapid digitization,” Buttarelli argued.

“To cultivate a sustainable digital ethics, we need to look, objectively, at how those technologies have affected people in good ways and bad; We need a critical understanding of the ethics informing decisions by companies, governments and regulators whenever they develop and deploy new technologies.”

The EU’s data protection supervisor told an audience largely made up of data protection regulators and policy wonks that laws that merely set a minimum standard are not enough, including the EU’s freshly updated GDPR.

“We need to ask whether our moral compass been suspended in the drive for scale and innovation,” he said. “At this tipping point for our digital society, it is time to develop a clear and sustainable moral code.

“We do not have a[n ethical] consensus in Europe, and we certainly do not have one at a global level. But we urgently need one.”

“Not everything that is legally compliant and technically feasible is morally sustainable,” Buttarelli continued, pointing out that “privacy has too easily been reduced to a marketing slogan. But ethics cannot be reduced to a slogan.”

“For us as data protection authorities, I believe that ethics is among our most pressing strategic challenges,” he added. “We have to be able to understand technology, and to articulate a coherent ethical framework. Otherwise how can we perform our mission to safeguard human rights in the digital age?”

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TC Sessions AR/VR surveys an industry in transition

Industry vets and students alike crammed into UCLA’s historic Royce Hall last week for TC Sessions AR/VR, our one day event on the fast-moving (and hype-plagued) industry and the people in it. Disney, Snap, Oculus and more stopped by to chat and show off their latest; if you didn’t happen to be in LA that day, read on and find out what we learned — and follow the links to watch the interviews and panels yourself.

To kick off the day we had John Snoddy from Walt Disney Imagineering. As you can imagine this is a company deeply invested in “experiences.” But he warned that VR and AR storytelling isn’t ready for prime time: “I don’t feel like we’re there yet. We know it’s extraordinary, we know it’s really interesting, but it’s not yet speaking to us deeply the way it will.”

Next came Snap’s Eitan Pilipski. Snapchat wants to leave augmented reality creativity up to the creators rather than prescribing what they should build. AR headsets people want to wear in real life might take years to arrive, but nevertheless Snap confirmed that it’s prototyping new AI-powered face filters and VR experiences in the meantime.

I was on stage next with a collection of startups which, while very different from each other, collectively embody a willingness to pursue alternative display methods — holography and projection — as businesses. Ashley Crowder from VNTANA and Shawn Frayne from Looking Glass explained how they essentially built the technology they saw demand for: holographic display tech that makes 3D visualization simple and real. And Lightform’s Brett Jones talked about embracing and extending the real world and creating shared experiences rather than isolated ones.

Frayne’s holographic desktop display was there in the lobby, I should add, and very impressive it was. People were crowding three or four deep to try to understand how the giant block of acrylic could hold 3D characters and landscapes.

Maureen Fan from Baobob Studios touched on the importance of conserving cash for entertainment-focused virtual reality companies. Previewing her new film, Crow, Fan noted that new modes of storytelling need to be explored for the medium, such as the creative merging of gaming and cinematic experiences.

Up next was a large panel of investors: Niko Bonatsos (General Catalyst), Jacob Mullins (Shasta Ventures), Catherine Ulrich (FirstMark Capital), and Stephanie Zhan (Sequoia). The consensus of this lively discussion was that (as Fan noted earlier) this is a time for startups to go lean. Competition has been thinned out by companies burning VC cash and a bootstrapped, efficient company stands out from the crowd.

Oculus is getting serious about non-gaming experiences in virtual reality. In our chat with Oculus Executive Producer Yelena Rachitsky, we heard more details about how the company is looking to new hardware to deepen the interactions users can have in VR and that new hardware like the Oculus Quest will allow users to go far beyond the capabilities of 360-degree VR video.

Of course if Oculus is around, its parent company can’t be far away. Facebook’s Ficus Kirkpatrick believes it must build exemplary ‘lighthouse’ AR experiences to guide independent developers towards use cases they could enhance. Beyond creative expression, AR is progressing slowly since no one wants to hold a phone in the air for too long. But that’s also why Facebook is already investing in efforts to build its own AR headset.

Matt Miesnieks, from 6d.ai, announced the opening of his company’s augmented reality development platform to the public and made a case of the creation of an open mapping platform and toolkit for opening augmented reality to collaborative experiences and the masses.

Augmented reality headsets like Magic Leap and Hololens tend to hog the spotlight, but phones are where most people will have their first taste. Parham Aarabi (Modiface), Kirin Sinha (Illumix) and Allison Wood (Camera IQ) agreed that mainstreaming the tech is about three to five years away, with a successful standalone device like a headset somewhere beyond that. They also agreed that while there are countless tech demos and novelties, there’s still no killer app for AR.

Derek Belch (STRIVR), Clorama Dorvilias (DebiasVR), and Morgan Mercer (Vantage Point) took on the potential of VR in commercial and industrial applications. They concluded that making consumer technology enterprise grade remains one of the most significant adoption to virtual reality applications in business. (Companies like StarVR are specifically targeting businesses, but it remains to be seen whether that play will succeed.)

With Facebook running the VR show, how are small VR startups making a dent in social? The CEOs of TheWaveVR, Mindshow and SVRF all say that part of the key is finding the best ways for users to interact and making experiences that bring people together in different ways.

After a break, we were treated to a live demo of the VR versus boxing game Creed: Rise to Glory, by developer Survios co-founders Alex Silkin and James Iliff. They then joined me for a discussion of the difficulties and possibilities of social and multiplayer VR, both in how they can create intimate experiences and how developers can inoculate against isolation or abuse in the player base.

Early stage investments are key to the success of any emerging industry and the VR space is seeing a slowdown in that area. Peter Rojas of Betaworks and Greg Castle from Anorak offered more details on their investment strategies and how they see success in the AR space coming along as the tech industry’s biggest companies continue to pump money into the technologies.

UCLA contributed a moderator with Anderson’s Jay Tucker, who talked with Mariana Acuna (Opaque Studios) and Guy Primus (Virtual Reality Company) about how storytelling in VR may be in very early days, but that this period of exploration and experimentation is something to be encouraged and experienced. Movies didn’t begin with Netflix and Marvel — they started with picture palaces and one-reel silent shorts. VR is following the same path.

And what would an AR/VR conference be without the creators of the most popular AR game ever created? Niantic already has some big plans as it expands its success beyond Pokémon GO. The company which is deep in development of Harry Potter: Wizards Unite is building out a developer platform based on their cutting edge AR technologies. In our chat, AR research head Ross Finman talks about privacy in the upcoming AR age and just how much of a challenger Apple is to them in the space.

That wrapped the show; you can see more images (perhaps of yourself) at our Flickr page. Thanks to our sponsors, our generous hosts at UCLA, the motivated and interesting speakers, and most of all the attendees. See you again soon!

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Los Angeles investors and entrepreneurs launch PledgeLA, a diversity and inclusion program

In an attempt to boost diversity and inclusion efforts and civic engagement between the growing technology industry in Los Angeles and the community that surrounds it, over 80 venture capitalists and entrepreneurs joined the city’s mayor, Eric Garcetti, and the non-profit Annenberg Foundation to announce PledgeLA.

The initiative is one way in which the Los Angeles technology community is attempting to ensure that it does not repeat the same mistakes made by Silicon Valley and San Francisco and alienate fellow citizens who could feel left out of the opportunities created by tech’s rise to prominence in the city.

Anti-Tech Protesters Are Telling Kevin Rose’s Neighbors That He’s A “Parasite”

“L.A.’s tech growth is no accident – it is a tribute to our region’s tradition of creativity, leadership in innovation, and wealth of talent. With PledgeLA, we will promote transparency in a growing sector and open the doors of opportunity to our diverse base of workers, no matter their race, gender, or background,” said Garcetti, in a statement.

As part of the diversity and inclusion effort, the signatories to PledgeLA have agreed to track civic participation and diversity data each year and to make that data publicly available.

The metrics that signatories will track include community engagement statistics like participation in mentorship programs, volunteering, board service, offering internships, using local banks, giving preference to vendors owned by women or minorities, dedicating a portion of annual spending to local impact initiatives, and investing in local Los Angeles startups.

Demographics at funds and startups will also be under the microscope, since signatories have agreed to report on their composition by race, gender, age, sexual orientation, disability status, immigration status, veteran status, educational attainment, socioeconomic origin, tenure at a firm. PledgeLA participants will also need a code of conduct around diversity and inclusion and are required to privilege diversity in corporate hiring practices.

Over the past five years, Los Angeles has emerged as one of the top five destinations in the U.S. for technology investment and corporate development. It’s one of the fastest growing tech hubs in the country with the 100 largest tech companies in L.A. and Orange County reporting a 24 percent increase in employment from the previous year, according to data provided by the Annenberg Foundation.

Southern California needs to find its hub for it to develop its own tech ecosystem

The local non-profit was instrumental in setting up the PledgeLA initiative, which grew out of discussions that the institute fostered among the Los Angeles venture community.

Nonetheless, diverse talent remains vastly underrepresented in the workforce of the local tech sector. The landmark
PledgeLA initiative grew out of a series of problem-solving sessions within the Los Angeles venture capital community.

“This commitment from L.A.’s venture capitalists and Mayor Garcetti means that change is happening, and this change is good, as long as we can work to make Los Angeles a more diverse, inclusive and community-focused city that benefits everyone,” said Annenberg Foundation Chairman, President and chief executive Wallis Annenberg, in a statement.

For Los Angeles investors like Upfront Ventures partner, Kobie Fuller, diverse hiring practices are just good business sense.

“Investing in a diverse array of founders, looking for talent in all corners of the city, and bringing different voices to the table when making decisions on investments is just smart business,” Fuller said in a statement. “We know companies with a diverse workforce are more successful, which, in turn, increases community engagement and provides opportunities for the community-at-large. PledgeLA will put Los Angeles on the right trajectory.”

Nearly every large investment firm and Los Angeles based company agreed to sign on to the pledge with at least three notable exceptions. Neither Snap, SpaceX, nor Tesla appear on the list of companies willing to participate in the diversity pledge.

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Why so many tech companies are creating shows

Editor’s note: Jay Acunzo is the author of the new book Break the Wheel, which explores how the world’s best creators break from conventional thinking to think for themselves. He’s a former digital media strategist at Google, head of content at HubSpot, and VP of brand at the seed VC, NextView.

The deep tones of synth music begins to play. A crackling sound emerges, as if from static electricity, followed by a single strum from an electric guitar that shatters the silence. A man’s voice booms.

“I really didn’t get fascinated with design until I learned what it was and what it could actually do.”

These are the opening moments of InVision’s “Design Disruptors,” a now-famous film within the design community. This hour-long video features some of the biggest and brightest names in software design today, hailing from companies like Google, Lyft, Netflix, Dropbox, and more. The film launched in the summer of 2016, and although it was never aired online (the company debuted the film in 1,500 offline screenings worldwide), “Design Disruptors” helped InVision generate more than 70,000 leads and double its user base in a single year, according to sources within the firm.

While this may seem like an outlier project, it’s become part of a larger marketing trend we’re seeing proliferate around the tech world today: marketers creating films and shows. Why?

“Optimistically, I’d hope it’s because marketers are realizing that impressions and pageviews are BS metrics, and it’s a lot more valuable to get a smaller group of consumers hooked on a show that they’ll watch for a really long time,” said Joe Lazauskas, executive editor and head of content strategy at the marketing tech firm Contently. A journalist by background, Lazauskas now consults clients like Microsoft, IBM, and Autodesk for Contently, and while he clings to his optimism, he knows there’s a downside to any trend. “Pessimistically, I’d say that it’s because marketers still fall in love with big vanity projects without much thought to the return on investment.”

So what’s causing this trend, anyway?

Ultimately, Lazauskas concludes that the rise in branded shows is a combination of both his optimistic and pessimistic views. On the one hand, films and series are indeed strategic for some companies, enabling them to reap certain rewards that disparate pieces of content can’t provide. On the other hand, plenty of companies continue to glom onto the trend because, well, “it’s a thing.” Those in the former group, however, have identified a fundamental shift currently affecting how companies go to market. Most of us talk about the industry’s reaction to that shift: things like content marketing, influencer marketing, and similar experience-based approaches. The shift itself, though, is far more revealing. You see, the marketing mandate has changed. The goal is no longer to acquire attention. The goal is to hold it.

It used to be sufficient for marketers to describe the value of their products in a few disconnected interruptions. Marketers would leap out in front of the content a consumer actually wanted to consume in order to grab just a few seconds of their attention and deliver the right message, with the right promotion, at the right time. Of course, we all know what happened to that old marketing playbook: (insert mushroom cloud GIF). Along came the internet. Buyers of both B2C and B2B products now face seemingly infinite choice, from content to competing products, all accessible on multiple screens, whenever and wherever they want it. Additionally, technologies whose sole purpose is to block advertising signal a larger trend: As consumers, we don’t want to be interrupted. We control what we consume because we have all the choice, and we only choose experiences that create value in our lives, like content–not advertisements, which are messages that merely describe value. (I’m painting with broad strokes, but we’re all part of the technorati after all.)

If you’re a marketer today, and you’re stuck in acquisition mode, it’s like digging a hole in dry sand. Nothing you do sticks. The very best in our world are winning on customer experience, not brute-forcing their way into customers’ lives. We need to embrace the new marketing mandate: The job isn’t to acquire attention. The job is to hold it.

“If you’re willing to make the investment in some serialized, engaging content, rather than a bunch of disconnected pieces, you can start thinking in terms of hours spent with your company as opposed to ideas like impressions,” said Dan Mills, creative director at video software company Wistia. This fall, the company announced a new documentary series called “One, Ten, One Hundred,” a partnership with video agency Sandwich, which boasts clients like Facebook, Slack, Uber, and Square. The series explores the effects of constraints on creativity when creating videos.

Said Wistia’s cofounder and CEO, Chris Savage, “What’s interesting about a more substantial project like this is that instead of just moving on to the next piece of content to push out the door, we have the time and space to really invest in exploring all of the different angles and nuances of this complex topic.” First, the company asked Sandwich to create three videos to promote the same Wistia product (a Chrome extension called Soapbox): One ad for $1,000, one for $10,000, and one for $100,000 (hence the name “One, Ten, One Hundred”). Those videos launched in mid-September. In October, Wistia will release a four-part documentary series going behind-the-scenes of the entire process to examine exactly how changes in budget alter the quality of the videos. They believe that budget is a major reason why more marketing teams don’t prioritize video (and thus, buy Wistia). More specifically, they believe this is a perception problem and that teams don’t really need more money to create better videos in most cases. But it’s a messy subject.

“A blog post or a two minute video just wasn’t going to cut it,” Savage said. “We wanted to create something that was deeper and lasting. The most valuable thing that we learned through this process, and what we explore in “One, Ten, One Hundred,” is the complex relationship between money and creativity.”

InVision’s CEO and cofounder, Clark Valberg, seems to agree that holding significant audience attention means focusing on depth, not breadth. Like Wistia, InVision used its documentary, “Design Disruptors,” as well as its newer film with IBM called “The Loop,” to illuminate a large problem facing designers in their work and to rally the community around their brand to solve it. For Wistia, their customers struggle with budget. At InVision, they realized that product designers wanted a better sense of identity as a profession, as well as a seat at the proverbial table.

“We went out and talked to our best customers,” he said. “They had a lot more to tell us than just what they were doing with our products. There was a movement [in the field of product design], and they all felt it. They all understood their role within the company and their company’s role in the formation of this new market called digital product design. It was evolving here and now, and they had a lot to say about it.”

Wistia and InVision are not alone in creating shows and trying to spark movements in doing so. Other companies creating video series include Fuze, which will partner with CBS to create a new series about tech later this year, and LinkedIn’s sales and marketing solutions team, which debuted “B2B Dinner for Five” late last year. In audio, dozens of brands are breaking from the conventional wisdom of what a podcast has to sound like (namely, Q&A with experts) to create documentary series instead. These include Zendesk’s “Repeat Customer“ (created with the agency Pacific Content), Adobe’s upcoming “Wireframe” (Gimlet Media’s branded content studio Gimlet Creative), and “Exceptions,” a series exploring why high-growth SaaS companies are betting so heavily on brand marketing (which, full disclosure, I host and produce for my client Drift).

These companies all seek benefits from their shows that the usual marketing campaign or “piece” of content doesn’t offer. By holding attention for hours on end, shows develop a level of intimacy and trust similar to a one-on-one meeting that scales far better. Shows provide endless amounts of marketing efficiencies, too, allowing marketing teams to mine each episode for excerpts, lessons learned, and new ideas, all of which can fuel company blogs, newsletters, and social media profiles. At some point soon, I expect to see a brand-sponsored book with material pulled exclusively from their company’s show, there’s that much source material bottled up in episodes. Lastly, shows create customers through both word-of-mouth and thriving subscriber lists. After all, it’s far more powerful to say to a visitor, “Get the next episode,” than, “Subscribe for alerts” or “more of our content.”

According to the Edelman Trust Barometer, an annual report measuring consumer trust in big institutions like government and business, trust in companies continues to fall. To get any individual, let alone an entire audience, to spend 10, 30, or even 60 minutes with your company each week is more powerful than ever. But that’s the benefit these companies seek.

What would cause this trend to stick?

It’s hard to ignore Lazauskas’s pessimism about brands adopting this approach. After all, most companies barely know how to market a single blog post well, let alone build and promote an entire series. For example, in many B2B niches, competing shows feel like copycat programs. They’re all effectively “Talking Topics With Experts!” (If everyone claims to have the smartest show in a niche, does anyone?) Additionally, many shows lapse after a season or two, even after a public victory lap over their first few episodes. Slack’s “Work in Progress” hasn’t aired an episode since October 2017, despite being widely loved and even syndicated to satellite radio. But while Lazauskas hints at the potential negatives, Wistia’s Savage sees it differently. His company is investing heavily in serialized content, but he believes marketers need to shift how they track results to justify doing so.

“It starts with qualitative results: Are people talking about it, are they engaging and spending time with the content? Over a longer period of time, we expect to see that content like [“One, Ten, One Hundred”] brought in totally new and different audience that helps expand our customer base.” If most marketing focuses on reach with a broad group of people, then shows are all about resonance with the right people.

Additionally, as Clark Valberg of InVision told me, it has to be a “portfolio approach.” Brands shouldn’t aim to be purely Netflix any more than they should act exclusively like Don Draper in “Mad Men.” Some things are directly measurable, some things are not. Some marketing looks like a piece of content, some like a series. Finding the right mix for your business is what matters most.

Shows have long been a vehicle for holding attention, and marketers are finally catching up to what media companies realized long ago. Call it the Curse of Conventional Wisdom. As tech companies invent the future, marketers at those very same companies need to constantly question older norms and even the most tried-and-true best practice in order to keep up. After all, we may be at the start of something positive for companies and consumers alike—that is, if you’re optimistic.

“We definitely think this is the beginning of a trend,” said Savage. “It’s clear that companies are making investments in engaging their audiences with things like podcasts. We see video series content and storytelling as the next logical step for companies to connect at a deeper level.”

I’ve been a content marketer for a decade now, which makes me a grizzled vet in a relatively new career path. (In marketing, “grizzled vet” is code for “jaded as hell.”) But for once, I’m bullish on a trend. It’s not because the hype won’t fade. It will. But, refreshingly, this is an approach to marketing that can’t be gamed. When the goal is to hold attention, not merely acquire it, there’s no faking it. You have to earn that level of attention. Trust, influence, and hours of someone’s time aren’t things you can purchase or hack. Eventually, this wave will go out, and all who will be left will be companies like InVision and Wistia who truly dug into the ground, with real foundations of creativity and customer-focus. Those merely riding the wave will be washed away. When it comes to holding long periods of our attention, the hucksters and system-gamers have no power. Because fool me once, shame on you. Fool me twice—can’t get fooled again.

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Building a great startup requires more than genius and a great invention

Shahin Farshchi Contributor

Shahin Farshchi is a partner at Lux Capital.

More posts by this contributor

• Investing in frontier technology is (and isn’t) cleantech all over again
• The dos and don’ts of crafting frontier-tech companies

Many entrepreneurs assume that an invention carries intrinsic value, but that assumption is a fallacy.

Here, the examples of the 19th and 20th century inventors Thomas Edison and Nikola Tesla are instructive. Even as aspiring entrepreneurs and inventors lionize Edison for his myriad inventions and business acumen, they conveniently fail to recognize Tesla, despite having far greater contributions to how we generate, move and harness power. Edison is the exception, with the legendary penniless Tesla as the norm.

Universities are the epicenter of pure innovation research. But the reality is that academic research is supported by tax dollars. The zero-sum game of attracting government funding is mastered by selling two concepts: Technical merit, and broader impact toward benefiting society as a whole. These concepts are usually at odds with building a company, which succeeds only by generating and maintaining competitive advantage through barriers to entry.

In rare cases, the transition from intellectual merit to barrier to entry is successful. In most cases, the technology, though cool, doesn’t give a fledgling company the competitive advantage it needs to exist among incumbents and inevitable copycats. Academics, having emphasized technical merit and broader impact to attract support for their research, often fail to solve for competitive advantage, thereby creating great technology in search of a business application.

Of course there are exceptions: Time and time again, whether it’s driven by hype or perceived existential threat, big incumbents will be quick to buy companies purely for technology. Cruise/GM (autonomous cars), DeepMind/Google (AI) and Nervana/Intel (AI chips). But as we move from 0-1 to 1-N in a given field, success is determined by winning talent over winning technology. Technology becomes less interesting; the onus is on the startup to build a real business.

If a startup chooses to take venture capital, it not only needs to build a real business, but one that will be valued in the billions. The question becomes how a startup can create a durable, attractive business, with a transient, short-lived technological advantage.

Most investors understand this stark reality. Unfortunately, while dabbling in technologies which appeared like magic to them during the cleantech boom, many investors were lured back into the innovation fallacy, believing that pure technological advancement would equal value creation. Many of them re-learned this lesson the hard way. As frontier technologies are attracting broader attention, I believe many are falling back into the innovation trap.

Investing in frontier technology is (and isn’t) cleantech all over again

So what should aspiring frontier inventors solve for as they seek to invest capital to translate pure discovery to building billion-dollar companies? How can the technology be cast into an unfair advantage that will yield big margins and growth that underpin billion-dollar businesses?

Talent productivity: In this age of automation, human talent is scarce, and there is incredible value attributed to retaining and maximizing human creativity. Leading companies seek to gain an advantage by attracting the very best talent. If your technology can help you make more scarce talent more productive, or help your customers become more productive, then you are creating an unfair advantage internally, while establishing yourself as the de facto product for your customers.

Great companies such as Tesla and Google have built tools for their own scarce talent, and build products their customers, in their own ways, can’t do without. Microsoft mastered this with its Office products in the 1990s through innovation and acquisition, Autodesk with its creativity tools, and Amazon with its AWS Suite. Supercharging talent yields one of the most valuable sources of competitive advantage: switchover cost.  When teams are empowered with tools they love, they will loathe the notion of migrating to shiny new objects, and stick to what helps them achieve their maximum potential.

Marketing and distribution efficiency: Companies are worth the markets they serve. They are valued for their audience and reach. Even if their products in of themselves don’t unlock the entire value of the market they serve, they will be valued for their potential to, at some point in the future, be able to sell to the customers that have been tee’d up with their brands. AOL leveraged cheap CD-ROMs and the postal system to get families online, and on email.

Dollar Shave Club leveraged social media and an otherwise abandoned demographic to lock down a sales channel that was ultimately valued at a billion dollars. The inventions in these examples were in how efficiently these companies built and accessed markets, which ultimately made them incredibly valuable.

Network effects: Its power has ultimately led to its abuse in startup fundraising pitches. LinkedIn, Facebook, Twitter and Instagram generate their network effects through internet and Mobile. Most marketplace companies need to undergo the arduous, expensive process of attracting vendors and customers. Uber identified macro trends (e.g. urban living) and leveraged technology (GPS in cheap smartphones) to yield massive growth in building up supply (drivers) and demand (riders).

Our portfolio company Zoox will benefit from every car benefiting from edge cases every vehicle encounters: akin to the driving population immediately learning from special situations any individual driver encounters. Startups should think about how their inventions can enable network effects where none existed, so that they are able to achieve massive scale and barriers by the time competitors inevitably get access to the same technology.

Offering an end-to-end solution: There isn’t intrinsic value in a piece of technology; it’s offering a complete solution that delivers on an unmet need deep-pocketed customers are begging for. Does your invention, when coupled to a few other products, yield a solution that’s worth far more than the sum of its parts? For example, are you selling a chip, along with design environments, sample neural network frameworks and data sets, that will empower your customers to deliver magical products? Or, in contrast, does it make more sense to offer standard chips, licensing software or tag data?

If the answer is to offer components of the solution, then prepare to enter a commodity, margin-eroding, race-to-the-bottom business. The former, “vertical” approach is characteristic of more nascent technologies, such as operating robots-taxis, quantum computing and launching small payloads into space. As the technology matures and becomes more modular, vendors can sell standard components into standard supply chains, but face the pressure of commoditization.

A simple example is personal computers, where Intel and Microsoft attracted outsized margins while other vendors of disk drives, motherboards, printers and memory faced crushing downward pricing pressure. As technology matures, the earlier vertical players must differentiate with their brands, reach to customers and differentiated product, while leveraging what’s likely going to be an endless number of vendors providing technology into their supply chains.

A magical new technology does not go far beyond the resumes of the founding team.

What gets me excited is how the team will leverage the innovation, and attract more amazing people to establish a dominant position in a market that doesn’t yet exist. Is this team and technology the kernel of a virtuous cycle that will punch above its weight to attract more money, more talent and be recognized for more than it’s product?

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Smule raises $20M, with plans to expand India operations

App maker turned music social network Smule has raised another $20 million. The latest round follows a $54 million raise in May of last year, led by Tencent, intent on helping the company expand Asia operations. This time out, funding is arriving via Times Bridge, the VC wing of India media conglomerate The Times Group.

The “strategic investment” comes as Smule pushes to expand its footprint in India, currently the second largest of the app maker’s international markets. Engaging there requires building a platform for an utterly massive and multi-lingual market.

“Building the Smule brand in India is a long term process, but a critical facet of realizing our vision to connect the world through music,” CEO and co-founder Jeffrey Smith told TechCrunch. “We are therefore thrilled to expand our reach in India through this significant partnership with Times Bridge.”

The round marks the first full social media partnership for Times Bridge, which finds the organization leveraging connections with local artists and helping to provide targeted marketing for Smule.

“Times Bridge’s mission is to bring the world’s best ideas to India and share India’s best insights with the world,” Times Bridge CEO Rishi Jaitly says in a statement. “Smule is a deeply original, bold idea with a mission of changing the way the world experiences music. Our investment will advance Smule’s music mission across the Indian subcontinent and unlock the creativity of many millions along the way. We are delighted to be working with a partner who approaches India with the empathy, conviction and optimism that the Indian market warrants.”

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