Note: Our second podcast episode went live yesterday. We talked to Michael Gibson, General Partner of 1517 Fund, an early-stage venture capital firm. Previously, he ran the Thiel Fellowship where he oversaw the selection of the world’s youngest and brightest minds.
Listen as he shares his thoughts on finding the lost Elons, what the alpha-gamma quality is, why he’s thinking of the Counter-Enlightenment now, and the importance of inspiring future generations.
Onto the piece…
Many foundational technologies see their constituent parts made years, if not centuries, before they come to fruition. Let’s take a glance at some of the core inventions of the iPhone, even before they actually became commoditized.
Fiber optics has its roots in the 19th century when engineer William Wheeler built a system of ‘light-pipes’ to connect light from one lamp to other areas around his home.
The integrated circuit was originated in 1952 when Geoffrey Dummer, a British radar scientist, presented the idea to American officials.
Capacitive touch screens were invented by radar scientist E.A. Johnson, who published this work in 1968.
All of this goes to show that technologies that may appear to be toys can rapidly become crafted into a foundational technological bedrock, much like cable, that people can use to develop even more abstracted applications. It would have been unthinkable, from its constituent parts, to predict the iPhone; yet, that same story is occurring once again with the rise of video conferencing tools and the AR revolution.
Laying Cable
“As the economy boomed after the Second World War, America hungered for entertainment. Some 78 companies were selling nearly 200 different models by 1948, and nearly 600,000 TV sets flew off appliance store shelves. Each day, an estimated 1,000 new sets were being installed.
Applications for broadcast licenses hit the Federal Communications Commission (FCC), which became so overwhelmed with technical and policy issues to create a national broadcast system, it simply stopped granting new licenses altogether.”
Video has become omnipresent in our lives: it’s as foundational of a utility as electricity. Indeed, the word ‘television’ comes from the greek root ‘tele’ meaning ‘far-off’ and the latin ‘videre’ meaning ‘to see,’ but also referring to “something seen in the imagination.” As the average American watches TV for six hours a day, that seems to perfectly describe our society – we live in a fictionalized, recorded world faraway from domestic concerns.
We consume content made, produced, and released in countries we haven’t traveled to. Still, as I wrote in Video is Eating Software, video is eating the world, but the question of who controls our video infrastructure remains – will they block new entrants who seek to build on top of their platforms?
If we can learn anything from the broadband wars of the last century, possession is nine-tenths of the law. One of the last great monopolies, cable companies have operated by swooping into hitherto fresh land, inserting antenna towers, and then pulling broadcast signals from nearby TV stations.
Why did entrepreneurs see cable as the new frontier? The demand for TV was like nothing the world had ever seen before – after World War 2, Americans were hungry for cheap entertainment, so much so that the FCC froze broadcast licenses for four years. Meanwhile, TV was here to stay – the total number of TVs increased to 15 million domestically in that four year period alone. The cable industry underpinned all of this growth and owned the original information highway.
Video conferencing applications are the second-coming of cable because they allow for stable around-the-clock access to video while enabling another level of abstraction on their surface. If our access to electricity was uncertain, our lives wouldn’t be the same – we expect a 24/7 access to this utility. The domestic appliance revolution in the 1930s (dishwashers, laundry machines) that became a staple of any American home was a consequence of abundant energy supply. Economies that don’t possess this, like Nigeria, this are left in the dust; as it were, GDP and energy consumption are highly correlated indicators.
For example, Snap’s popularity has surged during the crisis as more people spend their time chatting with friends. Certainly, the company’s vision extends far beyond instant messaging: they’ve even integrated their Snap filters with the video conferencing tool, so people can add some variety to their daily calls. This is marketing genius; the company’s brand is now synonymous with video augmentation (something that Apple tried to do with their emojis, but which never took off in the same way).
She’s lucky it was only a potato…
The Dawn of AR
If video conferencing, and therefore remote work, only become more popular, will this shift necessarily be beneficial for augmented reality (AR)? Because such transitions take years, are we ready to see AR become pervasive?
As the most famous company dabbling in the space, Snap has seen extraordinary growth in its users who harness its AR features. In only two years, creators have 10x’d, 100 k to 1 million, the amount of AR-powered lenses available on Snapchat. And according to TechCrunch, over 3/4 of Snap’s users interact with these lenses daily – that’s incredible retention for a product unavailable elsewhere.
“From 2000 to 2017, out-of-home entertainment spending dropped 3 percent, according to U.S. Department of Labor consumer spending data, while spending on audiovisual equipment and services rose 6 percent and spending on cellular phone equipment and services shot up 534 percent.”
Historically, AR’s timing hasn’t worked out, much as we witnessed with the ill-fated demise of the Snap Spectacles. Yet, one reason the glasses failed is because they didn’t have an ecosystem – what else could you do besides record video? This time is truly different simply because the company has integrated with Amazon and Shazam for a full suite of visual and audio search. The future, that already exists in China, is one where consumers cycle through Zara’s clothing selection, Sephora’s makeup, or a pair of Nike sneakers without ever leaving the comfort of their homes. Moreover, malls have increasingly become a hotbed for social behavior and niche photo opportunities, fewer consumers believe they can get the best deal from a retail vendor and even fewer desire to spend on entertainment outside their abodes.
This isn’t relegated to consumers, even the US government, always late to the party, understands the monumental changes taking place. The USAA used Snap’s AR framework to design an interactive Poppy Wall for Veterans day, which was cancelled due to covid fears. “The coronavirus pandemic forced virtually all Memorial Day ceremonies to re-envision plans, including USAA’s Poppy Wall of Honor on the National Mall in Washington, D.C.” as Chris Talley, USAA’s chief communications officer explained. “The coronavirus pandemic forced virtually all Memorial Day ceremonies to re-envision plans, including USAA’s Poppy Wall of Honor on the National Mall in Washington, D.C.”
In hindsight, the Snap Spectacles were years before their time; however, it appears that sooner or later we will need some seamless way to mesh our physical world overlain with the virtual. Snap’s next step is in allowing developers to connect their own neural-net models into their environment – filters will be the cornerstone on the next App Store: additions that transform how we view the world in real-time.
Symbiotic or Parasitic?
For the prudent investor, it’s important to understand which layer will possess the lion’s share of the value. This is the keystone of the lawsuits against Apple’s App Store, which takes a 30% cut of all paid revenue on its apps (Android’s Play Store takes a cut as well). Acting as the middleman helps to police quality and aggregates all the demand to Apple, not to any specific developer.
Another way to think about video’s pervasiveness is that it, like a river channel, increases the bandwidth of information that can be sent to another person. Rivers were one reason that America achieved its second industrial revolution – we could send goods from the Midwest anywhere in the country thanks to our natural geography – they generated capital by increasing the amount and value of goods that could be transported.
Therefore, if we believe that people are gradually adjusting to more data-rich mediums, then it’s clear why Snap has taken off; consumers want to do and say more with less work. This is a characteristic of video and not photo-sharing. As Michael Gibson has stated, bits can move atoms and indeed, Instagram has had marked impacts on the way our cities and institutions have changed. What happens when they want to become more Snap-worthy?
This seems to be their strategy by allowing developers to embed the camera in their own products. When Snapchat rebranded to Snap, a camera company, I was bemused at their tagline of “[believing] that reinventing the camera represents our greatest opportunity to improve the way people live and communicate.” How could they do that with puppy filters? But truth be told, companies have to first test demand and then iterate progressively towards their overarching vision – literally allowing people to view the world from a different lens.
Thanks for listening & reading. Conservative Curious will soon restart our exclusive, monthly dinner series hosted by the most interesting minds in San Francisco. As a Dreams of Electric Sheep subscriber, you’ll receive early-access. If this is interesting to you, please send me a message and I’ll add you to our list.
– Anirudh