Silicon Valley – Adjusting to the Internet’s Long Tail?

Over the past year or so there’s been an unusual amount of public navel gazing on the investor side of Silicon Valley (and by proxy most of the North American venture capital space). Venture capital companies have an image of being slow, demanding, and cumbersome; solely focused on big wins with huge valuations. So called “super” angels have emerged to fill a void in the VC deal space, and new hybrid models like that of YCombinator have emerged.

As Max Levchin observes, angels have an interest in lower valued exits. He concludes that the positioning of super angels as VC alternatives has resulted in a “lack of visible significant innovation”. While Levchin’s observations are correct, I’m not certain that it’s the angel’s fault.

Instead, I think we’re reaching the “long tail” of the Internet, and we need to look for innovation elsewhere. The big hits in the Internet space have all had to do with providing analogues of existing human behaviours, and the number of untapped behaviours is diminishing. A preponderance of incremental innovations with corresponding low exits is only to be expected.

We have been so focused on Internet related innovation for the past decade and a half (and software for the decade previous) that for a lot of investors seem to have forgotten that there are alternatives.

It’s not that there’s a shortage of demand for innovation. There are many areas that need great minds and risk capital. Unfortunately those aren’t the opportunities that can be exploited by a bright kid with six months programming experience. They’re big, capital intensive, long term projects that need teams of highly skilled people to address them. Some of these problems are critically important. They need to be solved if we’re going to preserve our current lifestyle, if not ensure our survival.

If the investment community wants to innovate, it’s going to have to stop looking for the ultimate solution to determining how to rank “influence” on Twitter, and instead look for better transportation solutions, better solar power generation, methods to scrub carbon dioxide out of the atmosphere, local power generation and distribution, and solutions for other truly important problems.

While North America becomes increasingly concerned about it’s own relatively trivial problems like how to make an even cooler handheld device, our ability to innovate our very concept of innovation is collapsing in on itself like a dying star. Meanwhile, Asia is fast becoming the true leader in innovation and unless we pull out of this “make it big on the Internet” vortex, it won’t be long before we’re buying critical technology from abroad.

Let’s not blame the angel investors. Levchin says “we should aim higher.” He’s right. The question is whether or not we know which way is up.

Long Weekends and the Home Based Business

These days things are really busy over here. Aside from neglecting this blog (partially Twitter’s fault), it’s a good busy. Too much work in a recession is a nice problem to have. I’ve been working early mornings and late nights to find quiet times when I can concentrate and keep up with the load.

So now it’s a four day long weekend. My spouse has the time off, my stepson is in town, and it’s going to be really hard to get stuff done. For a split second I resented the weekend as interference with work, and that’s when one of my alarm bells went off.

Let me back up for a moment. I’ve always been a little ahead of the curve. I started my first home based business shortly after university, in 1981. Back then it was radical, now it’s an established practice. There are many advantages to running a business from home, like my ten second commute to work. But there are disadvantages too, and one of them is that same ten second commute. Over the years I’ve learned to identify destructive thought patterns and to change course before doing much damage. “I wish everyone else was at work” is high on that list.

Over the past three decades, I’ve had times when I was so involved with my work that my friends forgot I existed. I did a lot of exciting work, but for the most part the results of my efforts have long since disappeared. Meanwhile most of my friends are still around. More poignantly, some of them are no longer around. The hard lesson is that the time I spent on work is time I didn’t spend with them, and now there’s no way to address the imbalance.

So if you find yourself resenting the long weekend, take a step back and get a new perspective. Most of us are working hard to bring benefits to our immediate families. Don’t focus on that to the point where you deprive them of what they want and need most… your full attention.