USV's original investment thesis was heavily influenced by economist Carlota Perez whose research detailed the life cycle of new technologies as they enter and penetrate society. Perez found that fundamental new technologies -- the kinds that radically re-shape the economy and society -- tend to follow a common pattern, which she breaks into two phases: installation and deployment. The installation phase is characterized by wild exuberance and exponential growth, as a new technology breaks onto the scene and the early leaders take hold. The deployment phase, which typically occurs after some sort of blow-up (in the market or in law/regulation/society), sees the technology penetrate all corners of society, slowly but surely re-shaping norms, laws, customs, regulations, etc. Looking at the last ~40 years of computing and the internet (26 years now since the birth of the WWW), we can see this cycle play out, perhaps with the dot-com bomb of 2000 marking the inflection point:
Looking at the shapes of the curves during these two respective phases, you'll notice that the farther we get into the deployment phase, the more the rate of growth flattens out, as the technology is better understood and therefore de-risked. Perhaps the specific dates shown here are right, or perhaps not -- you could argue that the "deployment phase" really didn't take hold until mobile was firmly in place (2008 ish), but the point is really just that: at this point, the overall operating model of web+mobile is understood, and the world is well along in adopting it and applying it to all things. Another way of saying that is that now, in the deployment phase of the web+mobile era, the incumbent industries from the previous era (the industrial era) are all facing intense competition and are under threat of being re-shaped in the web+mobile model:
At the same time, however, we're seeing the other end of the cycle begin to play out: we now have "new incumbents" representing the web+ mobile model. This is Google, Amazon, Twitter, Facebook (from the first big wave of desktop applications), and now Uber, Airbnb, Instagram etc (from the second wave of mobile applications). Now that these new incumbents have staked out their territory, we're in the middle of the traditional cycle of technology power wars as big platforms duke it out, and new insurgents try to poke holes in their grip:
I'm not prepared to say that today's "new insurgents" (essentially blockchain companies and others that are challenging incumbents on data control practices) necessarily represent the next great surge, but there is undoubtedly a serious amount of activity that's focused on disrupting the "traditional" web+mobile model, as opposed to further deploying it farther into society/industry. So to summarize, the two big forces we're focused on at the moment are the deployment of the web+mobile model, reshaping the communications architecture of every industry, and the disruption of the web and mobile model, challenging the new incumbents based on their data architecture:
Two weeks ago at USV's annual CEO Summit, Muneeb Ali from OneName explained the blockchain in a way I hadn't heard before, and which I thought was really helpful: the blockchain is time.
That's a somewhat abstract way of saying it, so more concretely we could say that:
The blockchain is database of verified public timestamps.
Every bitcoin transaction is kept in a public ledger, and that ledger is verified and maintained by all of the computers participating in the Bitcoin network. This "chain" of transactions is known as the blockchain, and each transaction is essentially a public timestamp that can contain data.
The key aspects of the blockchain's timestamps are: decentralized (no one entity controls the database of timestamps, and everyone in the network confirms that timestamp has happened -- this is "mining"), immutable (once a timestamp has been verified and recorded, you can't un-do it), public (all of the timestamps are publicly visible, though some aspects of the data are encrypted), and programmable (you can write code against the blockchain -- for example, triggering some sort of action based on the details of a "smart contract" embedded in a timestamp).
Importantly, each of those timestamps contains a packet of data which can hold lots of things: details about a financial transaction, details about a contract between two or more parties, a hashed version of almost any document, etc.
One way I've described this is similar to the way people used to use postmarked envelopes to verify that something had happened at a certain time. For example, signing a will and putting it in an envelope, and mailing it to yourself -- the post office's postmark on the envelope, which has the date of the stamp, proves that whatever was put in the envelope was done so before the date of the stamp. IIRC, more than once, a mystery on
I gave this talk at the EEC conference in Bilbao Spain this week:
https://www.youtube.com/watch?v=95n0-AspSCk
USV's original investment thesis was heavily influenced by economist Carlota Perez whose research detailed the life cycle of new technologies as they enter and penetrate society. Perez found that fundamental new technologies -- the kinds that radically re-shape the economy and society -- tend to follow a common pattern, which she breaks into two phases: installation and deployment. The installation phase is characterized by wild exuberance and exponential growth, as a new technology breaks onto the scene and the early leaders take hold. The deployment phase, which typically occurs after some sort of blow-up (in the market or in law/regulation/society), sees the technology penetrate all corners of society, slowly but surely re-shaping norms, laws, customs, regulations, etc. Looking at the last ~40 years of computing and the internet (26 years now since the birth of the WWW), we can see this cycle play out, perhaps with the dot-com bomb of 2000 marking the inflection point:
Looking at the shapes of the curves during these two respective phases, you'll notice that the farther we get into the deployment phase, the more the rate of growth flattens out, as the technology is better understood and therefore de-risked. Perhaps the specific dates shown here are right, or perhaps not -- you could argue that the "deployment phase" really didn't take hold until mobile was firmly in place (2008 ish), but the point is really just that: at this point, the overall operating model of web+mobile is understood, and the world is well along in adopting it and applying it to all things. Another way of saying that is that now, in the deployment phase of the web+mobile era, the incumbent industries from the previous era (the industrial era) are all facing intense competition and are under threat of being re-shaped in the web+mobile model:
At the same time, however, we're seeing the other end of the cycle begin to play out: we now have "new incumbents" representing the web+ mobile model. This is Google, Amazon, Twitter, Facebook (from the first big wave of desktop applications), and now Uber, Airbnb, Instagram etc (from the second wave of mobile applications). Now that these new incumbents have staked out their territory, we're in the middle of the traditional cycle of technology power wars as big platforms duke it out, and new insurgents try to poke holes in their grip:
I'm not prepared to say that today's "new insurgents" (essentially blockchain companies and others that are challenging incumbents on data control practices) necessarily represent the next great surge, but there is undoubtedly a serious amount of activity that's focused on disrupting the "traditional" web+mobile model, as opposed to further deploying it farther into society/industry. So to summarize, the two big forces we're focused on at the moment are the deployment of the web+mobile model, reshaping the communications architecture of every industry, and the disruption of the web and mobile model, challenging the new incumbents based on their data architecture:
Two weeks ago at USV's annual CEO Summit, Muneeb Ali from OneName explained the blockchain in a way I hadn't heard before, and which I thought was really helpful: the blockchain is time.
That's a somewhat abstract way of saying it, so more concretely we could say that:
The blockchain is database of verified public timestamps.
Every bitcoin transaction is kept in a public ledger, and that ledger is verified and maintained by all of the computers participating in the Bitcoin network. This "chain" of transactions is known as the blockchain, and each transaction is essentially a public timestamp that can contain data.
The key aspects of the blockchain's timestamps are: decentralized (no one entity controls the database of timestamps, and everyone in the network confirms that timestamp has happened -- this is "mining"), immutable (once a timestamp has been verified and recorded, you can't un-do it), public (all of the timestamps are publicly visible, though some aspects of the data are encrypted), and programmable (you can write code against the blockchain -- for example, triggering some sort of action based on the details of a "smart contract" embedded in a timestamp).
Importantly, each of those timestamps contains a packet of data which can hold lots of things: details about a financial transaction, details about a contract between two or more parties, a hashed version of almost any document, etc.
One way I've described this is similar to the way people used to use postmarked envelopes to verify that something had happened at a certain time. For example, signing a will and putting it in an envelope, and mailing it to yourself -- the post office's postmark on the envelope, which has the date of the stamp, proves that whatever was put in the envelope was done so before the date of the stamp. IIRC, more than once, a mystery on
I gave this talk at the EEC conference in Bilbao Spain this week:
https://www.youtube.com/watch?v=95n0-AspSCk
The blockchain is essentially a digital, public, programmable version of that. Which we've never had before.
Previously, every app kept its own notion of time. So if I post something on Facebook, Facebook saves that post and timestamps it. We have to trust them to get that right, and not to change it ever in the future. This is fine for cat photos, but less fine for a financial transaction, or a deed to a house.
Here's that same idea in diagram form:
So in some sense, the Blockchain is a public database -- it has the effect of moving data that was previously kept within the walls of one or more apps out into a shared public database. But to get a little more specific, it's really a public database of timestamps -- a new ability for anyone to state, publicly and immutably, that a certain thing happened at a certain time.
Maybe that is obvious to folks who have been working in this space for a while, but I found it to be a really helpful way of thinking about things -- and of explaining it to people who are new to the idea. Thanks Muneeb!
The blockchain is essentially a digital, public, programmable version of that. Which we've never had before.
Previously, every app kept its own notion of time. So if I post something on Facebook, Facebook saves that post and timestamps it. We have to trust them to get that right, and not to change it ever in the future. This is fine for cat photos, but less fine for a financial transaction, or a deed to a house.
Here's that same idea in diagram form:
So in some sense, the Blockchain is a public database -- it has the effect of moving data that was previously kept within the walls of one or more apps out into a shared public database. But to get a little more specific, it's really a public database of timestamps -- a new ability for anyone to state, publicly and immutably, that a certain thing happened at a certain time.
Maybe that is obvious to folks who have been working in this space for a while, but I found it to be a really helpful way of thinking about things -- and of explaining it to people who are new to the idea. Thanks Muneeb!
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