I imported a review here from my business blog about the Innovation Summit that I attended earlier in the month. There was a lot of high tech innovation being talked about there, but the most innovative thing I saw there was a chocolate fondue fountain...
AO2004 brought together a mixed crowd of enthusiastic investors, skeptical investors, corporate execs, startup entrepreneurs, press, bloggers, lawyers, government officials, academics, and freelance innovators. As the "AlwaysOn" name implies, AO holds the premise that consumers and businesses are demanding "anywhere, anytime" access to the Internet for more convenience and productivity, and that these demands are driving the next boom in technology.
The conference focused on innovation that is disrupting such existing markets and creating new opportunities. The panelists discussed a wide range of topics, but the general theme was open source media and one of the most lively discussions was a panel on the commoditization of software.
While the panels were underway, there were also several CEOs of startups giving their "elevator pitches" in a separate room. These companies were selected by the editors of AlwaysOn and KPMG 1Start after surveying over 1,000 venture investors, investment bankers, top entrepreneurs and executives. To view profiles of these 100 companies, please visit our listing in Silicon Valley Connect.
Of the AO2003 class, only one has gone out of business, while 6 have gone public, 3 are in IPO registration, and 5 have been merged or acquired.
For the new AO2004 class, 62% are based in Silicon Valley, but very global with offices around the world, and many with teams of engineers in India or other countries. The breakdown by sector is:
* Business Software - 42
* Devices - 25
* Connectivity - 20
* Web Services - 7
* Media and Entertainment - 6
In the business software sector, most were security or application integration companies.
Special awards were given to the following companies:
Consumer Company of the Year: AuctionDrop
Headquarters: San Carlos, CA
AO/KPMG Analysis: AuctionDrop pioneered the retail eBay drop-off concept, and will slipstream its growth with eBay's growth. Operating much like a traditional consignment shop, they broker sales in exchange for a commission. Customers simply drop the items they want to sell at the UPS Store, and AuctionDrop takes care of everything else involved in marketing and selling the items, from taking professional photos to answering questions and making the shipment after sale. Selling on eBay could hardly be easier.
Consumer Company of the Year: Friendster
Headquarters: Silicon Valley, CA
AO/KPMG Analysis: Venture capitalists have pumped more than $200 million into so-called "social networking" companies, and the hands-down leader in terms of brand recognition and total members so far is Friendster. If the company monetizes the traffic its nine million-and-growing membership base is creating as we expect, we estimate that Friendster may be the social networking website most likely to follow in the successful footsteps of Yahoo and Google.
B2B Company of the Year: MySQL
AO/KPMG Analysis: MySQL is the world's most popular open source relational database company. Its inexpensive licensing makes it the most affordable full-featured relational database product. With more than four million active installations, including many prominent Fortune 100 companies, over the next few years MySQL is experiencing 100 percent growth and may give Oracle and IBM a run for their database dominance. After all, why pay a lot more than you have to?
New Company Innovator of the Year: Voltage
Headquarters: Palo Alto, CA
AO/KPMG Analysis: Voltage has created a revolutionary breakthrough in cryptography that advances the art beyond Public Key Infrastructure (PKI). Its Identity-Based Encryption (IBE) is a completely new approach to the problem of encryption, enabling data to be protected without the need for certificates and other costly infrastructure. Easier to use, less costly secure communication will drive the increased use of encryption throughout any organization.
Top Innovation of the Year: Yahoo
Headquarters: Sunnyvale, CA
AO/KPMG Analysis: Yahoo continues to successfully reinvent its business model and powerfully leverage its customer base. Everything Yahoo does is increasingly tied to e-commerce and advertising revenue. Yahoo's Search Technology has shifted the competitive landscape in search technology. Yahoo's Product Search has blended their search functionality with comparison shopping capabilities to create the largest comparison shopping destination on the Web. Yahoo's SmartView maps enhances consumers abilities to choose local points of interest and attractions. Yahoo Messenger has enhanced integration with the Y! network (Launch Music, Calendar, Games, Search, and Photos). In the post-bubble Google enthused era - Yahoo was also successful in making key acquisitions (Hot Jobs and Overture), consolidating market share, and successfully position itself for growth.
The Event Schedule can be found on AlwaysOn's site, along with video streams of most of the panels.
In 2004, AO became the one of the first media brands to combine participatory journalism (blogging) and a powerful social network - The AO Zaibatsu. This spirit was alive at the conference as every panel included a large screen to the right of the stage with a many-to-many backchannel for audience members to chat and post their comments and questions in real-time. This included wirelessly connected members attending the event as well as people from around the world who were watching live video streams of the conference via the AO Web site.
The comments were even more enlightening than the panelists at times, as you could get a sense of how the audience felt about the comments that were being made. Many of the panelists were from established companies such as IBM, Sun, Qualcomm, Motorola, Intel, and Verisign, and were defending their business models, while rebels in the audience challenged them. Many startups were also on stage discussing their emerging models.
On opening night, the special guest of honor was Michael Powell, the chairman of the FCC. His co-hosts were Steve Jurvetson of Draper Fisher Jurvetson and Lawrence Lessig of Stanford Law School. Prior to the event, Chairman Powell had set up his own blog on the AO network, which stirred up considerable dialog. Lessig, a well-known proponent of progressive DRM laws, had many tough questions, as did the audience. The hot topics included the converged living room, regulation of airwaves, and free speech vs. indecency restrictions. His posting on the event and blog are recommended reading on the AO site.
Panels on the following two days covered the future of software, the wireless wars, the battle for the E-Home, ubiquitous computing, democratization via the Internet, search tools, new business models in media, the commoditization of software, innovation in sports, China, the tech bubble, and bloggers vs. big media corporations.
The panelists for "Wireless War: What Technologies Will Win?" argued various business models, always supporting their own of course, but all agreed there is a big worldwide demand for cutting cords and improving wireless anytime/anywhere capabilities. WiMax and Wi-Fi were talked about as helping the democratization of wireless, while many debated if spectrum should be free or not. A surprising statistic thrown out was that the ringtone market has already reached $3 billion. Mobile VoIP was a hot topic, and one of the most talked about startups was Skype, a developer of P2P telephony solutions. One of the questions from the audience was about software defined radio (SDR), but the panelists seemed to dodge it, as I assume it is a bit too disruptive to their current business models.
In "The Battle for the E-Home", panelists talked about the convergence of media in the home. Their bottom line argument was that everything has to be very simple to use. One out of 5 HDTV sets get returned because the buyers can't figure out how to set them up. At the same time, there are now fewer truck rolls for cable Internet installations as more and more consumers are expected to set them up on their own, saving the cable companies time and money. That means consumers don't have to talk a whole day off from work anymore to accommodate the cable guys, but also means it has to very simple for them to set-up and integrate, so even Grandma can do it.
The keynote from Padmasree Warrior, CTO of Motorola, was a lot of marketing 101 basics. She argued that in her industry, the important points to remember are content consumption, content access, heterogeneity, context sensitivity, command and control, and the balance of security and fair use. She said mobile devices need to be safer, simpler, smarter, and synchronized. As more and more people find themselves seamlessly mobile between their work and personal lives, this is becoming even more important. If devices can be smart and context-aware, they can make the mobile lifestyle easier.
"The Revolution Will Not Be Televised!" was a fascinating discussion between the AO host, Tony Perkins, and author of book by same name, Joe Trippi. Trippi is the Founder of Change For America, and was Howard Dean's campaign manager. He spoke enthusiastically about how unprecedented it was for somebody like Howard Dean to get such widespread support via the Internet, both in terms of campaign contributions and community support. He believes the Internet can be a great tool of democratization by leveling the playing field and giving lots of people a voice, while increasing the speed at which ideas can travel.
The panel on search technologies, "Finder's Keepers", was entertaining, thanks to audience participation. Otherwise, they may have been stuck talking about their own business models as the end-all solutions. Ask Jeeves, AOL, Yahoo!, and Forrester were all represented, but no new disruptive innovators were present. They mostly talked about the wonders of their algorithmic and indexed search, but other emerging models for finding and receiving personalized information and news were also discussed. RSS feeds, spam, paid listings, and "paid inclusion" crept into the conversation. It was pointed out that search and information retrieval are not one and the same and it is important to know what mode your customers are in when they use your applications. Social networks and finding people has become a hot new topic, and some audience members were pressing the issue that RSS, FOAF (friend-of-a-friend), and context can combine to build a relevant trusted network, so that people can find people and find information from other people as well (not just from documents and Web pages). The audience asked about Semantic Web, but the comments were not very in-depth. One coined it the "executable Internet", making the Web a more interactive experience. They touched on visualization too, pointing out that there should be innovative new ways developed to view information and navigate it, and that adding another dimension to the linear page can open up whole new realms of possibilities.
The most though-provoking panel was "The Commoditization of Software". Jonathan Schwartz, President and COO of Sun Microsystems hosted the panel. They debated and confused the definitions of standardization, open source, and commoditization. They are all closely connected, but uniquely different. Schwartz argued that bandwidth is a commodity and should be, like electricity, but software is not. Standards like 3-prong outlets help spawn market growth and "the rising tide", and Sun sponsors many standards such as Java, but argues that software is IP and should not be commoditized. Schwartz argues his points in depth, using the analogy of railroads, in his blog titled "Commodities, Railroads and How Sun Monetizes Java".
The panelists further argued whether commoditization of software can spawn market growth and more importantly, innovation. Marc Canter jumped up from the audience and introduced Doc Searl's and Esther Dyson's concept of do-it-yourself-IT (DIY-IT), suggesting the software industry should evolve the way Home Depot did, leveling the playing field, while leading to competition in areas of design and construction, (or in software - system integration and "putting the pieces of the puzzle together".) For another alternate point of view, I highly recommend reading Ross Mayfield's thoughts on the subject. His bottom line point: "...if an industry embraces physical or financial commoditization early by pooling risks, volume and innovation grows."
Another noteworthy panel was titled "Blogger vs. 'Big' Media Competition". Panelists included many revolutionaries from the blogging world but no reps like Rupert Murdoch from the Big Media world, but the audience seemed OK with that. Most agreed blogging is taking the world by storm and is leveling the playing field for journalists and plain old common folk with a connection and a voice. David Sifry of Technorati.com showed his graph illustrating the recent growth in blogs to over 3 million. Dan Gillmor argued that blogs create great checks and balances that keep the established journalists like himself honest. The diversity of viewpoints is healthy. All in all, all were optimistic that blogs are just the tip of a bigger iceberg that will help transform the way people communicate with each other and influence political and economic change.
It is clear that consumers and businesses are demanding "anywhere, anytime" access to the Internet, but not everybody is delivering it yet. Emerging forms of communication and open source standards are spawning new innovation, but there are still many roadblocks to overcome. How we get there is still a big subject of debate, but some are not waiting around for answers. Startups on the AO100 list are already out there taking their chances on the next big disruption. The rest of us out defending our current business models might want to pay close attention to them and remember, things don't stay the same for long in this valley...
AO 100 Winners
To view profiles of the winners of the AO 100, please visit our listing in Silicon Valley Connect.