Penn State Entrepreneurs Network

You’ve probably heard by now, haven’t you? Of course you have, the iPad, the new device consumers expected to solve every one of their problems, isn’t going to solve most of those problems. Thus, it will fail, right? Why else would such tech savvy websites (sarcasm to full!) such as FoxNews and CNN already be talking about how no one will buy one except Apple fanboys and the Tech elite? It will fail, they say, because it lacks a camera, won’t do Flash (the number one cause of web browser crashes, but more on that later), doesn’t have USB ports, and blah blah blah.

In their minds, and in the minds of many typical consumers out there, this product has already failed. “I won’t buy one, ” they say,  “I’ll wait until it has …,  ” or “I’ll never use iTunes” and on and on and on. It must be pretty depressing to look at the world and at science and technology with such a close-minded view. Instead of trying to understand why one of the most successful companies in technology has spent close to 10 years developing THIS product, and realizing that they may have a need that they never even considered, these consumers think about why they won’t need it. Yet truly revolutionary products in any category always catch people off guard, and sometimes elicit this sort of reaction. Case in point: If I asked you 10 years ago if you would pay $200-$400 for a machine that holds music in your pocket (lots of music), most people would have pointed to their CD Walkman and asked “why, I already have this.” Yet, over 200 million iPod’s later, no one would answer that question in the same way. The same goes for the iPhone. Most people would have told you that they would not pay an extra $30 a month to get Internet on a phone when they already paid to get it at home. Yet, millions of them do that today, and love it.

Henry Ford understood that people don’t usually know what they want, and expressed it in his famous quote ”If I’d asked my customers what they wanted, they’d have said a faster horse.” We must admit to ourselves that visionary figures in history are not like us. They don’t think in the everyday, they aren’t tied down by the mundane, as most of us are. They are free to let their minds wander, and in so doing, bring us the future, today. We must not judge the future by the limits of the present; instead we must ask ourselves “how can I leverage this innovation to make my life better in ways that I have yet to imagine?”

So, what’s the iPad all about? What’s it for, and why do we all need one? Well for starters, we may not all need one, and that’s fine. But guess who does NEED one? Your mom, your dad, your grandparents, your son, daughter, nieces and nephews. Those who don’t understand computers and those who are just beginning to use them. The iPad isn’t just about the hardware, the features, the aesthetics or even the over 140,000 applications that are already available for it, courtesy of the iPhone and the App Store; it’s about what’s not there, and about how you interact with it. It’s how you are no longer tied down by the technology; the technology has finally become what it should have been in the first place an extension of YOU.

Do you understand hierarchical file structure, or drivers, or plug-ins? Do your parents, your grandparents, etc? Why should they, this is simply how the computer thinks-it’s not how PEOPLE think. When you open a program in the IPad, the documents associated with that program are presented to you so you can chose. No more looking through folders to find files! There are no drivers to worry about, everything that it can do it does with it’s built in technology and with periodic updates from Apple, installed seamlessly over iTunes.

Everything you do with the iPad, you do with your hands. Why should we be limited by a tool created by man (the mouse), when we can use a tool that has served the human race for millennia? If you’ve never seen it, you should look up the video of a 2-year-old using an iPhone-it really shows just how dead on this technology really is. You want to select something, point your finger at it and press. How easy and intuitive is that? While this may not be as magical as Apple claims, it is clearly intuitive.

Most of us who use programs such as MS Office or frequent websites such as Youtube, Facebook, CNN.com etc. don’t realize that there is a whole section of the population who don’t understand how to use a computer. And there is a whole new generation of people that are being forced into using technology in ways thought up over 35 years ago, when the limitations of technology dictated the interface. We are no longer limited by the technology, so why are we still being limited by the interface? This question, in my opinion, is at the core of the creation of the iPad (and also the iPhone). Those people who complain about the lack of camera or Flash or USB, etc. perceive this new device through a very old lens of perception- or as Aldous Huxley once put it, “man has closed himself up, till he sees all things through narrow chinks in his cavern.” In order to understand the iPad, we must break free from our current perceptions of what technology can do for us, and embrace a new lens, a lens of what can be done, not what can’t.

The iPad is not going to replace your computer or your smartphone (it doesn’t pretend to either), what it will do is allow you to experience CONTENT in a whole new way. Whether its curling up on the couch watching your favorite show, or reading a book you just bought and downloaded, or looking at family pictures or surfing the web, the iPad will become an integral part of your daily routine. It will not live on a desk, or in your pocket, it will live on the kitchen counter, the living room table, etc. It will become just another appliance in the home-a content appliance for the whole family, a linker of human and information, it will liberate content (whether its from the web, magazines, a book, movies, TV shows, etc) from the traditional computer setup. You will interact with your content using your hands; you will hold the vessel of your content in your hands, just like you already do when you read a book, a magazine, etc. This personal interaction with your content is not possible in a laptop, or a netbook, or even a smartphone. That is why there is a need for the iPad, a need many people don’t even know they have, yet have been trying to satisfy with existing technologies.

Some people will stubbornly argue that the missing features will cripple the iPAD; I would argue that the device will make those features irrelevant or obsolete. Take Flash for example, a wonderful technology that has revolutionized the way we watch videos and play games online, but also the number one cause of browser crashes (Don’t believe me? Install a Flash blocking app, like click2flash, and see how much more robust your browser becomes). With the increased implementation of HTML 5, the video issues will become moot, and why would you ever play a Flash game when you can play a full game on your iPad? More and more websites will HAVE to update their menus without Flash in order to cater to the millions of users without it. The lack of camera or USB port may seem to limit the device now (I would have preferred 2 cameras on the iPad myself), but the simple truth is that it won’t matter when I can simply access my laptop over WiFi or use its built in camera for the couple of times a year that I video chat (I bet most people won’t even miss the camera, or lack of USB). For those people that NEED a camera or Flash or USB on a tablet-like device, well, the iPad is not for you. And that’s fine; there are other devices out there that may be better suited for you. That doesn’t mean that the iPad won’t revolutionize the way ordinary people interact with technology, finally being freed up from understanding and fixing the technology to enjoy the content.

The potential for this freedom has existed for some time, why is the iPad any different that any other touchscreen device? As we all know, Apple did not invent touch screens (nor did they invent smartphones or mp3 players) but what they did with the iPAD is bring together enough (just enough) technology to allow us to better interact with the device without having “feature overload.” This is the same reason why the iPhone and iPods are so successful. Those people clambering for more features don’t understand that anyone can cobble features together but it takes true genius and a tremendous amount of restraint to NOT put everything you can into a device-why? Because at the end of the day, it’s not about the device, or what IT can do, it’s about the user and what THEY wish to do. Technology should not dictate what we can or cannot do; it should be a tool to do what we WANT to do in such a seamless manner that we forget it’s there. And that ladies and gentlemen is exactly what the iPad is.

Some of my most interesting interactions here at Penn State have been between venture capitalists and entrepreneurs. I know what you’re likely thinking: don’t the two run in similar circles? More often than not, my experience regarding that question is no.

Although I’m aware that there are countless angel investors and VCs who’ve earned their stripes as entrepreneurs, many of the venture capitalists I’ve met personally have often emerged directly from the world of business. This dichotomy creates an interesting dynamic, and often prevents aspiring entrepreneurs from getting past the initial idea pitch.

In majority of my business classes, professors will sporadically offer tidbits of career advice, including the importance of doing your homework prior to an interview. Penn State students (and I imagine most business students at universities across the country) are wisely taught the importance of looking at a companies’ 10k, as well as grasping an innate sense of the companies’ market, prior to any interaction with the company.

Corporate interviewers have obvious differentiators that they key into to find suitable candidates. This is a logical progression of the need to whittle down a list of 100 candidates to a more manageable number. What perplexes me, however, is how little this (seemingly) intuitive process carries over to the world of venture capital.

This thought emerged as a result of reading a post by Mike Levinson of DreamIt Ventures, titled “Getting Seed Capital.” DreamIt is a “start-up accelerator” with a great track record. As such, they receive countless applications for entry, many of them credible and innovative ideas, no doubt. According to Mike, however, it’s the attention to detail and prior research that make a company stand out to him, moreso than any tech-genius drawing on a napkin.

The last paragraph of his post sums it up entirely:

I had three entrepreneurs reach out to me in December or January (before our applications were open) and explain their idea. In each case it was one non technology guy with a web services idea. I told each of them to user PowerPoint, Photoshop or anyone of a number of online tools (Balsamiq for instance) to create a mockup or if possible a working demo. I also told each of them find a developer or technology team.   Now, just a few days before we make our final selections, lets look at what happened. One of them created a great prototype and built a team consisting of two new technology guys.   I already liked his background and his idea and among other things it showed me his ability to listen and displayed his tenacity and drive.    The other two?  Neither have made any progress in finding even one technology person to add to their team and neither have fully answered some of the business questions I initially posed. And neither of them will be in DreamIt this year.

You start a company and you’re thinking big.  No, you’re thinking huge.  The only way to make your dream a success is to invest in it.  But be careful that you don’t put the cart before the horse.  Mike McDerment wrote a good blog that outlined Five Milestones that a business should reach before looking for venture capital money.  We at PSEN agree with the bulk of Mike’s message.

The last thing a business owner should do is give up a huge chunk of ownership.  Boot-strapping, while more overused than Web 2.0, has fundamental value to it.  The more you borrow from friends, family, and Angel investors, the greater percentage of your company is kept for you – the greater your return is directly tied to your efforts…and the risk assumed.

Don’t get me wrong, VC’s play a very important role in the lifecycle of a young company.  They bring guidance and expertise, connections and know-how.  Think of Kleiner-Perkins.  They have an incredible network.  They have networks within their network.  And when KP’s interest is aligned with yours (i.e. investment), possibilities that were not there before are unlocked.

My point is only that VC’s are very good at negotiating.  Very good.  And as a business owner, you need have your act together before approaching any firm.  Good luck!