What we're reading...
This Tech Crunch article by Anshu Sharma defines stack fallacy, the belief that it is trivial to build the layer above the current operating layer of a company (EG a database company thinking it can easily create apps).
As history has shown, Amazon is dominating the cloud IaaS market, even as the technology vendors that build ingredient, lower-layer technologies struggle to compete — VMware is nowhere close to winning against AWS, even though all of AWS runs on virtual machine technology, a core competency of VMware; Oracle has been unable to beat Salesforce in CRM SaaS, despite the fact that Oracle perceives Salesforce to be just a hosted database app. It even runs on their database!
Apple continues to successfully integrate vertically down — building chips, programming languages, etc., but again has found it very hard to go up the stack and build those simple apps — things like photo sharing apps and maps.
Bilal Zuberi gives some advice to tech companies raising money in 2016. One of those pieces of advice:
Be deliberate about your operating plans and strategies for 2016. Make sure you understand well what are key metrics that investors will be looking for in terms of traction, and what are most valuable value-inflecting milestones for your business. No, hype in tech-media is not a good metric. Don’t let your organization stretch too thin across to many offerings and features, and for heaven’s sakes don’t project revenue and earnings targets you cannot meet. Don’t surprise your Board half way through the year that your 12-month runway is actually just 7 months.
Danny Crichton of Charles River Ventures articles argues for a change in the big venture formula and a call to action to fight against the trend of staying private longer. Investors need more options for liquidity, and employees have a right to have insight into the company that is paying their bills.
The Atlantic reports on how farmers in Myanmar are utilizing Facebook. The in depth article was put together by design ethnographers, people who study how culture and technology interact.
Alex Danco at Social Capital outlines some factors that can be used to predict the next ‘mythic’ company in the developing world. The lenses he uses are path dependence, participation, and reach.
Alex Iskold outlines 7 ways to evaluate founding teams when making an investment.