Moving Ideas
Thomas-Watson
May 072013

Project Runway

I think there is a world market for maybe five computers.
— IBM Chairman Thomas Watson, 1943

The Verdict is in: Nobody likes Glass
Business Insider, May 4th, 2013

People have trouble imagining a World different than the one they come from and tend to dismiss transformational technology as a “toy” or a “fad”.

When Alexander Graham Bell invented the telephone, people thought it might be helpful for telegraph operators to speak with each other to clear up confusion on transmitted messages.

When automobiles were introduced in the late 1800s, there were “Red Flag Laws” passed in the United Kingdom and the United States that required a pedestrian to walk in front of the “horseless carriage” with a red flag to warn others it was coming.  A toy for the rich, you were required to have three passengers in the car: the driver, the owner and the mechanic.

When the founder and CEO of IBM Thomas Watson made his famous quote about the market potential for computers — he was right — at the time there were maybe five governments who could afford the invention and could possibly use it.

Moore’s Law making computing cheaper and more powerful has resulted in the iPhone in your pocket having more computing power than what NASA had to land Neil Armstrong on the Moon in 1969.

The Internet opened to the masses by Mosaic twenty years ago had been scoffed at by the wise elders in business as a fad of gargantuan proportions. Accordingly, when the Dot-com bubble burst, the chorus of “I told you so” could have made you deaf if people weren’t so busy starting new businesses and migrating everything to the NET.

In March of 2000 when the Internet Bubble began to burst, there were less than 500 million people on the Internet globally — today there are 2.5 billion. Moreover, products and businesses such as iTunes, Facebook, YouTube, iPhone, iPad, App Store, Android, Spotify, Dropbox, Pinterest, Coursera and Twitter were all started after the Internet was supposedly over. (Disclosure: GSV owns shares in Apple, Google, Facebook, Spotify, Dropbox, Twitter.)

We are now at the dawn of the new era of Wearable Technology that some such as ourselves believe could transform how we live, work and play. Ubiquitous Computing has been predicted for years but the Megatrends of the Internet, Big Data, Mobile Computing and the Cloud have all converged to bring this concept to life.

An early window to the Wearable Technology wave are the activity monitor devices such as Fitbit, Nike’s Fuelband and Jawbone‘s UP.

Nike’s FuelBand is a $150 device that you wear on your wrist which measures your steps, calories and fuel. Users download data to either their smartphone or Nike’s website and it allows them to monitor their activity against their goals.

Jawbone’s UP is an even more ambitious monitoring device which you wear on your wrist like jewelry and it measures your activity, the food and calories you are taking in and even your sleep. Jawbone had a false start with an earlier UP version that had to be recalled but now seems to have it rocking and rolling. Jawbone won’t release sales data but it does say there are over 1 billion steps taken a day with UP and 610K hours of sleep measured, so our simple estimate is there are about 100K devices sold.

Last week, Jawbone announced that it bought BodyMedia for over $100 million which helps take Jawbone one more step into the wellness arena, going from just measuring to prescribing as well.

The Wearable Technology that has everybody talking is Google Glass, which is scheduled to launch later this year for a rumored $1200 — $1500 (How to use Google Glass). Effectively, this takes the computer in your pocket to your line of vision, integrating connectivity and information. (Disclosure: GSV owns Google shares.)

The way Glass works is you tap the side of your glasses’ frame to wake it up. In your field of vision, you start with a standard hologram of the time like you see in some cars with the speedometer. If you want to take a picture of what you are seeing, you say “take picture” and voilà, Glass snaps a digital picture.

You can record what you are seeing live without holding anything. You can share what you are seeing live with friends.

You can get directions right in front of you, again like how it works with some automobile GPS systems in the windshield telling you where to go. You can ask a question like how long is the Brooklyn Bridge and Glass will tell you.

In what is a game changer for travelers to foreign countries, Glass also acts as a personal translator allowing you to speak in English and having Glass convert it into Mandarin if you were in China.

Critics chirp about how the battery life is “only” five hours (remember when cell phones came out?), that there are “bugs” (revolutionary technology with bugs — impossible!) and that Glass is ugly and makes people look like they are from Star Trek (agree but it will only get cooler — what about the blue tooth devices that make people look like they have a tumor coming out of their head?) Glass causes headaches — not sure all this technology swirling around your brain is healthy but mobile phones were said to have same side effects. See Business Insider’s The Verdict Is In: Nobody Likes Google Glass.

What is likely to dramatically accelerate development of Glass and the Wearable Technology movement is the “Glass Collective”, recently announced with Google Ventures, Andreessen Horowitz and Kleiner Perkins to fund apps in the ecosystem.

Where does this all go and what does it look like?  We don’t know for sure but what we do know is that this has the potential to be very, very big.

GSV’s Li Jiang is a big fan of Glass

 

Stocks continued to march higher last week led by technology with the NASDAQ up 3.0%, the S&P 500 advancing 2.0%, and the Dow moving up 1.8%. Despite governments around the World trying to inflate assets, the deflationary trends pushed the 10-year note to 1.74%.

A decent jobs report with 165K new jobs in April was part of the catalyst for good action in stocks as were good quarterly reports by companies like Facebook (revenue up 38%), LinkedIn (revenue up 72%), and Yelp (revenue up 68% — and stock jumped 27%). To see more on Internet trends, go to GSV’s Socially Mobile. (Disclosure: GSV owns shares in Facebook, LinkedIn and Yelp.)

Apple’s $17 billion bond offering essentially taking free money to double its dividend and accelerate its $100 billion stock buyback was well received. AAPL stock, which is down 15% YTD, is up 11% since April 23. (Disclosure: GSV owns Apple shares.)

As evidence that technology stocks want to move up, so-so reports by tech companies like Microsoft and Advanced Micro have resulted in major moves in their stocks.   Adding some fuel to the fire are the over $50 billion of cash inflows into equity mutual funds in the past quarter.

We continue to be bullish on growth stocks as many remain undervalued with strong fundamentals. Bonds are no competition and now with some positive inflows, we could see some big moves continue like we’ve recently experienced. And Google should continue to be a core holding.

To see a great commencement speech, watch Twitter CEO Dick Costolo at the University of Michigan yesterday.

Bubblin…
From Luben

Online course leader Coursera continues its fast expansion efforts and announced it is starting to offer training programs for teachers. Coursera has partnered with 12 top professional development programs and schools to open up training courses to teachers worldwide. Initially, the list of courses includes content development, common core curriculum, teaching through tinkering, character education, and implementing flipped and blended learning strategies.

It’s impressive how powerful Coursera has become, with more than 3 million students on its platform in less than two years. It is likely that this is just the very beginning of a much larger trend that will shape higher education for the long-term. Many of the major universities are paying close attention and are considering to partner with leading MOOCs… and Coursera being on the forefront.

Considering how Coursera opens access to best-in-class courses to people around the world, I expect it will change the higher ed landscape. What I think will happen is we will start to see people with a portfolio of courses from different universities competing for jobs against those with traditional university degrees. And this will be more so the case in graduate level.

Coursera fits square in the middle of the three uber-trends we see in the $4.5 trillion education market: KaizenEDU (continuous learning), Return on Education (ROE), and Knowledge as a Currency (KNAAC). Increasingly, it’s going to be about what you know, not where you go — it’s knowledge, not college. ROE is about creating stronger outcomes but at the same time lowering cost and increasing access.

A company that’s been under the radar and is now bubbling up is Curious — a marketplace that helps students and teachers connect on a wide variety of subjects ranging from dance classes, to basics of stir frying, to how to refurbish wood cabinets, to how to snowboard,… to anything possible. I had to check it out myself and took a 10 minute video class on Basics of Human Genetic Disorders (I chose this randomly). The experience was interesting as I ended up learning a few new things as well as refreshing things I learned in Biology in high-school (which I had obviously forgotten). What’s nice about the service is that it’s mostly quick and efficient. It lets you browse the content, you watch a video, and you take short quizzes while watching.

Additionally, it gives the ability for people to teach skills they know. If you are good at XYZ, then you can apply to be a teacher for that specific subject and Curious provides you with the platform to create, design, share and promote your content. If your content is popular, the rating for the lesson increases and generates more revenue.

In that respect, Curious uses its own virtual currency — Curious coins — which allows learners to purchase premium lessons. The company gets a 30% cut from proceeds of delivered lessons, and it offers $20 credit for free for new sign-ups.

Last week, the company raised a $7.5 million investments from Redpoint Ventures, Bill Campbell, Jesse Rogers and its CEO Justin Kitch.

The online video learning space is heating up with multiple companies bubblin up lately, including Lynda.com, Udemy, Khan Academy, Skillshare, and CreativeLive to name a few. It’s certainly a very interesting space and we are watching some of those companies very closely.

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