April 25, 2016
Lazy people make the market for technology. At least, that's one philosophy of ffVC founder and managing director John Frankel. I sat down with Frankel at SXSWi, last month, to speak about what makes a successful tech entrepreneur and how he looks for opportunities to invest.
Lazy People Make the Market for Technology
According to Frankel, people are lazy. And lazy people make a market for technology that simplifies their lives by taking the non-obvious and making it obvious. An open mind requires that we stop, think for a moment, and see the opportunity that often lies right in front of us.
Frankel uses an analogy to describe how entrepreneurs find problems and their solutions:
“Do you know what a Norman Door is?,” Frankel asked me rhetorically. “A Norman door is a poorly designed door. It’s unclear how to open it. Whether it slides to the left or right – or it requires a push or a pull.”
Most people lazily follow what the last person did. If the last user pushes the door left, then the subsequent user will do the same. That “laziness” leads to opportunities to open a door a different way.
How Entrepreneurs Can Discover New Opportunities
To find as many opportunities as possible, Frankel often brainstorms unusual use cases to apply new technology. He starts with an example in unmanned aircraft technology – a field where ffVC has led investments in TopFlight and Skycatch.
There are a few interesting use cases we haven’t all thought about, and some are humorous”
“Suppose you’ve gone surfing – like I do [laughs] – and you’re swimming with sharks. You don’t know where the sharks are- but wouldn’t you like to know? Your drone could tell you exactly where there are and how close you are to them.”
That’s useful information you could receive on your watch, glasses or other wearable device. Even if the chance of a shark attack is remote you’d still want to know how close the nearest shark is to you.
Frankel sees opportunities in other spaces – 3D-printing for example – but has yet to be convinced by entrepreneurs that they have found the right way to open the Norman Door. “In most cases we don’t want to be too early, but we can be early and still be all right,” says Frankel.
On ffVC's Early Investment in Crowdfunding
For one, ffVC invested in Indiegogo years before “crowdfunding” entered our common business vernacular. It was a foreign concept for entrepreneurs to be able to raise funds from a website. Now, crowdfunding has become commonplace – with a proliferation of crowdfunding sites for every niche.
The Norman Door that Indiegogo wanted to open was project funding. “The funding process used to be far more opaque,” says Frankel. Pushing that Norman Door left or right to get funding from friends and family or more formally from capital markets was commonplace. Indiegogo pushed that same door forward – directly to investors from all over the globe through its crowdfunding platform.
Investing in Security
Frankel shared that ffVC is about to announce two new investments in the security space. Security is already huge, but it’s going to get bigger. Computing power continues to increase exponentially. At the same time, we’re storing more and more personal information using cloud technology or where minimal encryption exists. By definition, if there is a key to a lock, then there is a way to get in. And, so far, all of our locks have keys. And the key smiths are getting very good at making working keys very quickly.
How Corruption in Society Leads to Opportunities
Both culture and society, says Frankel, can stall the discovery of finding new ways to do things but only to a point. According to Frankel, a “corrupt society” is what allowed for the most disruptive technology and businesses – like Airbnb, Uber and Lyft – to prosper.
“Everyone pushed the Norman Door the same way,” says Frankel. “They were accustomed to hailing cabs.”
Some level of corruption led to a dissatisfied consumer and increasingly bottled up demand for the introduction of new tech. Those dissatisfied consumers created the opportunity for new technology to take root and let these sharing-economy upstarts grow.
Now that Airbnb, Uber and Lyft have grown as a market response to corruption in “old” industries (i.e., the taxi and hotel industries), the old-line industries want to regulate them out of business. “If you can’t compete in technology, [then] you compete in politics,” says Frankel. And both “sides” are well-armed. Frankel explains that there is a possibility for a market around enforcing all of the existing – and coming – regulation that is intended to control the markets that Airbnb, Uber and Lyft serve. We don’t necessarily know what will happen. But entrepreneurs in that space have yet to find the right way to fight the war.
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