Gen Shift

My son is in California enjoying the summer: spending time in the Sierras, visiting friends, just goofing off. He barrows a phone every night and calls me to complain that his cell phone is broken. This is ruining his summer.

My son is a high school senior. He and his friends don’t just use computers and cell phones, they depend on them like they do their arms. To them their laptops and cell phones are not better typewriters, faster mail, and more extensive “ten keys”: they are communication, entertainment and social connection. They are extensions of themselves. With them they manage their various personas, chat with friends, hone their skills and show off their capabilities. These devices allow them to express themselves in ways otherwise impossible.

A few minutes in the twitter-verse, on Facebook or in World of Warcraft demonstrate this new social order. We are just beginning to see the profound shift taking place. Don Tapscott, calls this group who are now just entering the workforce the Net Gen. Clay Shirky documents the power of their dynamic social groupings. You should also check out Kevin Kelly who muses convincingly that the Internet in the coming years will by completely different than what we have today.

Attending tech events lately, it is clear I am one of the old guys. But I am an old guy that grew up with technology. I had an HP calculator in 1969. Unlike my friends at college who paid to have papers typed for them, I had an Apple II. I bought a Mac the first day it was available and founded DMUG (Davis Macintosh Users Group).

I know I am old because at my first corporate job in 1986, I was given an office, a Dictaphone and secretarial support. I was expected not to waste my time typing myself. Everywhere I work, I notice that people younger than me use PCs and people older tend to not. I was on the cusp of a generational shift that has helped fuel the greatest increase in productivity ever experienced. But it will pale in comparison to the next one.

We are only just beginning to see is how this generation is going to change the work place. They will get things done in ways the will make today’s meetings, emails, reports and annual budgeting cycles look like Dictaphones and typing pools. Adopting these new work styles, adapting our work environments and putting this new generation to work will be the competitive advantage for the foreseeable future.

Seed what exactly?

There is much talk about a new generation of Tech companies with a totally different business model. The claim is that with Facebook, Google widgets, Salesforce AppExchange and other platforms, you can start a company for just a few thousand dollars.

Reputable funds are jumping in the fray. Like Accel with it’s Facebook fund. And Bay Partners with its AppFactory. These guys are smart enough to do their homework. I assume they see enough of a play in quick exits and early positions to make it worth their opportunity cost.

These platforms are a quick way to deliver relatively narrow functionality to an identifiable target market; at best a cheap way to validate a value proposition. But this does not a company make. And, with over 1600 Facebook apps, it is already a questionable way to get distribution.

Names have changed and the delivery dynamics are different, but this is hardly new. Seeding engineering projects that have low cost distribution dates back to the Homebrew Computer Club. CNet’s Download.com is still riddled with the stuff.

VCs who caught religion around Web 2.0 and SaaS models early, like Niel Sadarangany at Bay, and Byron Deeter at Bessemer are quick to point out that the real capital requirements don't come from development or even operations, but rather marketing and customer acquisition. And they are larger than ever. Worse the recurring revenue model builds slower than a traditional enterprise sales model and leads to a longer burn.

Acquisitions of cool technology is all well and good. I just hope that in all the widget and platform hype we don’t delude ourselves into thinking that the fundamentals of building a company have changed.