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When it comes to startups timing really is everything

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Arista's Andy Bechtolsheim at GigaOM RoadMap 2011A few months ago, I was chatting with Andy Bechtolsheim, who is perhaps one of the smartest people in Silicon Valley (as his Sun Microsystems co-founders such as Vinod Khosla would attest). The conversation, which started out very technical in nature, turned into a philosophical discussion, mostly about how much of a role intangibles and timing play in startups. Of course, Andy should know. As an angel investor in startups like Google and co-founder of companies like Sun and Arista Networks, Bechtolsheim has seen that timing is often the key difference between startup success and ignominy.

When it comes to startups, a lot is made of a startup and its founders, the market opportunities, its advisers and the team. Of course, there is chest thumping around investors and the dollars raised. Yes, those are important issues, but let’s not forget about the role of timing. I was reminded of Andy’s comments when I read Benoit Felten’s post about the demise of Onlive. While there are  a multitude of reasons, including architectural problems, it seems that the lack of ultra-broadband is one of the main reasons why a service like Onlive (a cloud gaming service) found no traction.

Benoit pointed out that in 2003, there were a lot interesting online video startups, but they couldn’t get traction because broadband lacked oomph. Of course, a few years later when network speeds were up, YouTube was born and took the world by storm. History might be repeating itself, Benoit argues. I couldn’t help but agree, and said as much in a conversation with Bloomberg TV’s Emily Chang. I believe that Onlive came five years too soon. Why?

Future is not the past 

For starters, our definition of desktop software and desktop applications is going to change. It is not hard to imagine that what desktop games are today might not exist in five years, or that they could be an entirely new class of products? After all, the technologies that are the building blocks of our technology experiences are going through a sea change.

In the near future, if one reads the chip industry’s tea leaves, a personal compute client like the iPad will have twice or perhaps even four times the power of a contemporary laptop. With all the growth coming from those portable clients, it makes perfect sense for companies like Qualcomm to plow all their resources into developing mobile processing units with immense power and graphics ability.

The emergence of cloud is changing the software and what we expect from it. Furthermore, the presence of sensors in our compute devices could start to influence our online experiences, including games themselves. Why shouldn’t the Need for Speed change locations or graphics based on geo-location?

The Gigabit future

But more importantly in five years we can hope to have much faster pipes — both wired and wireless. The 1 Gbps experiments currently being conducted by Google in Kansas City and the 1 Gbps municipal network in Chattanooga, Tennessee are well positioned for these high-bandwidth applications. Benoit puts it well when he writes:

The sad thing is that when the tipping point for good quality broadband is reached, it will seem obvious looking back that this was a meaningful service concept, one users would be willing to pay for if they have good enough broadband (and are at least casual gamers, obviously). Just like there were many YouTube lookalikes before YouTube who all died for lack of decent broadband. [Fiber Evolution]

It is not just YouTube. Skype, which celebrated its 9th birthday recently, won mostly because it came at the right time. People were buying broadband and needed applications. Skype fit the job description and benefitted from it. Not many people remember Kozmo, a much-loved Internet delivery service that was a spectacular bust. A decade later we have companies like Postmates working on a similar concept.

Thanks to the growth of social media and mobile devices, a company like Postmates is able to find customers faster. The company, which launched its Get it Now app in May 2012, has seen a steady monthly increase (of about 43 percent) in its usage, The New York Times reports, and is processing about $100,000 worth of deliveries every month. Bastian Lehmann, the Postmates chief executive officer and a co-founder, told the Times that “With the penetration of smartphones, the world has changed, as has the ability to purchase through a mobile device.”

In five years, Onlive sadly will be forgotten — an idea caught in a timetrap, reinforcing the notion that when it comes to startups, timing is everything.

16 Responses to “When it comes to startups timing really is everything”

  1. Ziggy Stace

    No matter how fast the ad industry can spend money on new outlets not being intrgrated into the POP ad displays in public buildings is the same as Amazon not capitalizing on the still popular “going shopping ” and putting pickup centers and a place where seeing a product online is not a closer.
    So much is going to cross a persons screen from now on keeping track of what you want from all those ads and offers is going to be a deal killer for ad sales online and on devices in hand.
    Seeing a huge LED sign with full motion video in hi def with surrond sound right in front of a stores where the product reside and whos sales offer is there to respond to is like saying we can do without radi and TV ads now.
    Google, Facbook and Twitter all suffer from not having a third leg to their ad programs…..POP in Public buildings. Stadiums, Shopping Malls, Cinemas and public areas where products are avalible is till the closer for now and many years to come. With texting and bar code features thos display ads grab attention and then close the deal by sending the shopper along with that offer they missed on their devices to the actual merch to buy….that being the only goal of advertising..sell sell and sell, or now money for all those neat ad formats to survive!!

  2. The availability of high speed internet is also probably one of the reasons why “the cloud” is such a popular concept now. Previously you wanted to run your software locally, on site, because it would be faster to access. There’s no way you’d run accounting, word processing or file storage over the internet. Now we can stream music (from iTunes Match), collaborate on docs in Google Apps and have software delivered as a service.

    “The cloud” is the same kind of web hosting that’s always been available, it’s just packaged differently for businesses and provided as the layer powering services to consumers.

  3. Neil Young

    Can you believe David Perry got away with selling Gaikai to Sony for a whopping $400 million? Its hilarious.

    The truth is that the problem with these services is not with BANDWIDTH.

    The problem is that it takes a whole PC to run a game like Call of Duty and thus Gaikai and Onlive would need millions of servers to really offer these games to the masses.

    Gaikai sold a demo to Sony…. a Fantasy…

    Its nice that they can claim to be a future technology.

    Maybe Facebook should do the same. Pretending they will make money in the future but not yet today.

    Its bullcrap.

    Truth is that Sony will be out of business before Gaikai type technology ever happens?

    Do we really need less local CPUs? No. Our Phones now have strong CPUs.

    Cloud gaming should be defined as Multi-Player gaming. Not that a company sends the entire screen to your device 20 times a second. That is just stupid.

    If Gaikai really had something they wouldnt have sold out. They had just raised $50 million.

    Truth is they had nothing.

    And Sony is so stupid for buying them.

  4. On a similar note, does it hold good to say “let the fires keep burning” by keeping the burn rate really low i.e do not kill the idea if overall concept or fundamentals sound fine. Sometimes it takes time for some ideas to gain acceptance which again can be due to various reasons – market readiness, current technology limitations etc.

  5. Dave Smiddy

    One of the guys who founded Kozmo carried the mission forth and has a NYC only delivery service for all kinds of stuff (think Pharmacy, Grocery, food). It’s been active for almost a decade.

  6. Brian Jaquet

    I think there’s a point to technology being ahead of its time and I’ve always felt the key is to be in the middle of the wave rather than too early and unable to catch it or too late and get crushed by it:).

    In OnLive’s case I can’t help but think broadband speeds weren’t the biggest problem. Sure, hard core gamers were going to complain about some lag or latency because that’s what they will notice, but the gaming industry is all about the big, big titles and exclusivity!

    I feel like that still holds true. Broadband is an important factor, but the OnLive service ran well, even on 4G tablets.

    Did YouTube blow up because of content or because there were tools and technology that made it incredibly easy to upload video? I don’t definitively know the answer to that one. I just think content is the killer app! Netflix proved the back catalog had value with its service, and now it hopes exclusive, original content is its HBOGO answer.

      • Ayinde Alakoye

        A couple of young guys started a service back in 2003 to bring every radio station on the planet to your cell phone…. We partnered with Clear Channel and had some meaningful interest from carriers like Verizon, but we predated the iPod’s ubiquity and the Dawn of the App. Great article. A theme we know all too well, but one that we’ve used to drive us forward with a new company that seems to have the right timing…

  7. Timing / being lucky definitely very essential for startup success as countless examples attest to. Quite obvious; isn’t it ?

    Apart from focusing on customer validation ( Steve Blank’s book is highly useful here), is there anyway, we can check if timing is right for once’s startup/idea ? Readers, any thoughts ?

  8. narenrulz

    As markets evolved to introduce the “missing variable” which wasn’t available in 1998(internet availability for masses in case of komzo),it gave birth to instacart,postmates etc..I wonder why people who ran komzo haven’t started these fresh batch of startups!

      • Chris Galasso

        It still remains a problem of demand / density / avg order / low revenue per delivery vs high cost of operating vehicles (or using ICs who don’t understand same). Postmates / Shutl / grocery delivery “maybe” viable top 10 US markets. Come back in another half generation or so.