Tools to win, at global scale: June 24, 2018 Snippets
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This week’s theme: democratizing technology for the benefit of everybody, where a rising tide can lift all boats.
In the early 20th century, an incredible transformation took place in cities in towns across America: households and workplaces became networked. Homes were plugged into the new electrical grid, and they lit up with light; homes were plugged into the new water and sewer systems, and they became clean and safe. Homes were plugged into the new road, streetcar and highway systems, and they became connected to one another. As Robert Gordon put it in his work The Rise and Fall of American Growth, the American home underwent a startling transformation from being dark and isolated to bright and networked.
The significance of this change was not that it introduced brand new conveniences and comforts. If you were a wealthy New Yorker in the late 19th century, you already had access to light, heat and transportation on command. For those with the privilege of proximity and wealth, these luxuries were already available, and enjoyed readily. What happened subsequently was that these tools — light, heat, power, mobility — became industrialized, democratized, and made abundantly available to the broad American population. Scale matters; networks matter; abundant access matters; not just for what one person is able to do, but for what anyone can now do.
Today, we are witnessing the inflection point of another such sweeping transformation, not based here in America but one that’s truly global in nature. The industrialization, maturation and democratization of the mobile internet means that individuals, small and large businesses, and anyone you can imagine are getting networked together. And the barriers to resources, tools and starting materials that you need to build a business that sits on top of that network are becoming increasingly irrelevant: anyone can log onto AWS or Alibaba, bypass the former obstacles to starting companies, and be up and running within hours. The most impressive businesses being started, both in quality and in quantity, are no longer confined to Silicon Valley; they’re global. What is happening? Social Capital partner Ashley Carroll, who has spearheaded our Capital-as-a-Service initiative at Social Capital over the last year, put it this way:
“I’ve spent my entire adult life and career in Silicon Valley, and the answer to me is clear. Even just a decade ago, when venture capital and technical talent was already plentiful, the friction that stood behind a good idea and a willing customer was too high. Today, the exponential growth in both scale and scope of public cloud providers has turned this reality on its head. The relentless pace of innovation and price competition among Amazon AWS, Alibaba Cloud, Microsoft Azure and Google Cloud means the barriers to entrepreneurship are now lower than ever. With the proliferation of affordable cloud infrastructure, initial costs have fallen close to zero. There was never a shortage of compelling ideas and driven entrepreneurs. There was just an uneven distribution of resources and capital. Now that the barriers to resources have fallen, it’s time for capital to follow suit.”
This observation did not come from nowhere: it’s been part of the central thesis behind Capital-as-a-Service, which we launched a year ago at Social Capital. Every willing and capable entrepreneur on the planet deserves access to the very best tools to win. And if they can’t come to Silicon Valley to get them, then it’s an imperative for us to help bring the tools to them: to be part of the network that empowers founders everywhere.
From experiment to product: Capital-as-a-Service one year later | Ashley Carroll, Social Capital
Ashley writes: “A little over a year ago, we started working on a new model for capital allocation designed to keep up with the pace that ideas all over the world were being converted into successful businesses, and to put the entrepreneur at the center. Our bet was simple: that as more and more founders around the world begin building their businesses on top of a small number of consistent public clouds, the operational data from running these businesses would become increasingly comprehensive and accessible. In this world, you could understand a company not based on broad intuition or low-fidelity graphs in a PowerPoint presentation, but rather based on real-time data about how successful that business was at turning prospects into engaged customers. …
A year ago we launched the alpha version of Capital-as-a-Service (“CaaS”) to do just this. Founders engage with us online and self-select into our queue for diligence and funding. Without so much as a plane ticket or a coffee chat, entrepreneurs submit their transaction data to our automated diligence engine and we can make funding decisions in a matter of hours. Overnight, through software, we were open for business on six continents (no submissions from Antartica… yet!), 24 hours a day, 365 days a year.”
Over this past year, with Capital-as-a-Service still in alpha experiment stage, we evaluated 5,000 companies from all across the globe, and were able to offer investments to 76 of the most promising ones. Our goal was to launch a genuine operating system for early stage investing, so that any entrepreneur can plug into the network (via their cloud platform of choice) and very easily gain access to resources, funding opportunities, and the ability to find ground truth within their own data. As business operations become increasingly structured and streamlined within these public clouds and global networks, funding decisions and resource allocation have no business being made via exclusive closed networks and expensive Sand Hill Road pilgrimages. They can happen transparently, confidently, and at much greater scale than we can accomplish today. This matters.
When power, light, and running water were expensive and scarce, only the rich and well-connected could enjoy them, and only they could exploit and leverage their benefits. These new technologies amplified the divide between rich and poor, and drove gilded age resentment that’s echoing in a familiar way today. But as those technologies became abundantly networked into every home and workplace, the tide turned in a significant way: the new, resulting prosperity had a completely different character. It was democratized, abundant, and lifted all boats rather than just a few of them. It represented the very best of technology, and the world prospered because of it.
Capital-as-a-Service is just one small part of the modern tidal wave of global connectivity for everyone, everywhere. But we’re excited and proud to be contributing something that helps give founders everywhere access to the best tools and resources that Silicon Valley can provide. As Capital-as-a-Service enters its second year, we’re gearing up to expand to much greater scale, in pursuit of our mission and in service of every entrepreneur out there.
Chinese tech rising:
China is winning the global tech race | Michael Moritz, Financial Times
China’s Xiaomi scales down IPO | Julie Steinberg & Liza Lin, WSJ
Teaching robots and prosthetics to feel pain:
Pain is weird. Making bionic arms feel pain is weirder. | Matt Simon, Wired
What starts in the gaming world spreads to real life:
With Twitch, Amazon tightens grip on live streams of video games | John Hermann, NYT
The rise of the video game gambler | Alan Burdick, The New Yorker
The rise and rise (and rise) of Fortnite | Matt Brian, Engadget
Disguise artists:
The camouflage artist: two world wars, two loves and one great deception | Mary Horlock
Adobe is building tools to make it easier to spot photoshopped images | James Vincent, The Verge
What’s old is new:
A brief history of soy milk, the future food of yesterday | Nadia Berenstein, Serious Eats
Other reading from around the Internet:
Bias detectives: the researchers striving to make algorithms fair | Rachel Courtland, Nature
Death by revenue plan | Steve Blank
Chekov’s gun and the principle of sufficient reason | Venkatesh Rao
The spread of innovation: why emerging economies can do more than just copy | Tanay Jaipuria
The rise of algorithmic VC | Dominik Vacikar
How Desus and Mero conquered late night | Jazmine Hughes, NYT Magazine
In this week’s news and notes from the Social Capital family, in keeping with our theme of “democratizing access to powerful tools that used to be only available to few, and making them abundantly available to all”, we want to highlight that it’s not just people and businesses that need these tools. Governments need them too. We just wrapped up a Snippets series outlining our new commitment to partner with city governments around the country and the world, our partnership with 100 Resilient Cities to help work with them, and finally our investment in UrbanFootprint, which for many cities will be the key set of software tools and resources that makes such partnerships and insight possible.
At Social Capital, through our Venture Team, with Capital as a Service and our automated diligence tools, and any other way that we interact with entrepreneurs at Social Capital, we care very deeply about being able to take entrepreneurs’ own semi-structured and hard-to-use data, structuring and parsing it for them, and then giving it back to them in a way that they can actually use. UrbanFootprint does the same thing for cities: it’s no surprise that our two organizations share a very similar philosophy around data and how to empower our customers. It can take two forms: a high-touch, very active role where the two groups work closely together to identify and solve complex municipal problems, and also a self-serve, highly automated and user-friendly tool that gives any urban planner, developer, or city employee access to powerful tools that used to be
This week, UrbanFootprint shows us a powerful and step-by-step example of how this kind of data science and access to tools can help cities find what levers they can pull, and in what order, to best effect the changes they want to see in their communities. Set in the City of Saint Louis, Missouri, the great city on the Mississippi that has gone through both flush and very difficult times over the last century, city planners are now facing the task of how to manage a surge of young professionals moving back into the downtown core, in a way that revitalizes the city while avoiding the inequality and reinforced neighborhood divides that often accompanies gentrification. The key variable to look at in this case is transit accessibility.
Examining transit accessibility by the numbers in St. Louis | Kuan Butts, UrbanFootprint
One challenge facing planners is assessing the housing stock that they have available for grants, programs, and other planned revitalization. In Saint Louis, there are still a large number of vacant houses and residential lots that are owned by city and whose redevelopment needs to be organized and prioritized by city planners.
Redeveloping vacant residential lots its a good way to revitalize neighbourhoods, but if done poorly can be a huge waste of money for little gain. What cities need to be able to do is incorporate housing and land availability data with other crucial variables that go into attracting new residents of all economic levels, where one of the most important variables is access to employment. Mapping employment zones together with vacant parcels is nice to look at, but not inherently helpful on its own. The reason why, as you might guess, is that the two don’t overlap very much.
The key third variable we need to consider is access to transport, whether it’s quick driving or ideally public transit routes. That doesn’t just mean access to new, shiny light rail transit lines that have popped up in St. Louis over the last few years; it also applies (in a much more meaningful sense) to the cities bus routes. Bus routes remain the workhorse transportation vehicles for large numbers of people, especially on the lower end of the economic spectrum, and unlike with higher density transit routes like LRTs or subways, can be hard to quantify and assess unless you have on-the-ground local knowledge and access to highly granular data on transit usage. UrbanFootprint’s data sets and software tools, combined with local planning experts who actually work and live in these communities, can together identify a comprehensive understanding of where vacant houses and parcels are specifically located in areas that have very good employment access: in the photo below, the areas highlighted in blue indicate parcels that should be prioritized.
City planning is a kind of problem for which there aren’t “Silver Bullet” easy answers to solving complex societal challenges. With better data, better tools, and better understanding, Social Capital and Urban Footprint may not be able to provide answers directly. But we can give those who do know the answers the tools to uncover them, harness them, and put them into practice. Data-driven urban planning best practices shouldn’t be something where only a few fortunate cities, governments and firms have access; it’s a kind of technology that needs to be democratized, and we’re looking forward to helping to make that happen along with UrbanFootprint, 100RC, and our partners in city governments around the world.
Have a great week,
Alex & the team from Social Capital
