Venture Capital and Augmented Reality

Yesterday, Marshall Kilpatrick asked, in readwriteweb.com, “Why aren’t VCs backing Augmented Reality?” He made some interesting observations and I would like to add to those here, with my own comments and thoughts.

First, let’s take a look at some of the typical responses I have encountered in my own efforts talking to venture capitalists. Keep in mind that I haven’t done a formal “roadshow”, and I have not engaged in a comprehensive “call everyone you can find” campaign either.

The augmented reality industry is in its infancy, and it is going to need the support, resources, and infrastructure of venture capital to grow into a mature, world-changing industry. I feel like most technology venture capitalists still haven’t heard about augmented reality (you would think that these guys would be watching industry news, twitter, and blogs like hawks looking for new opportunities, wouldn’t you?), or they have already formed an opinion based on stuff that is a year or more old, or that they simply don’t understand the tecnology and the potential of AR. Ok, no problem. We can fix that.

If you are a venture capitalist and are reading this

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Thinking outside of the box is not enough...

…you need to reinvent the box. Bigger, better, faster, stronger.

I talk a lot about massively multiplayer online games, virtual worlds, augmented reality, simulations, social networking, social media, and a variety of related topics, but a lot of what I have to say (or at least what I am thinking about) goes beyond that. This post, for example, is readily targeted at companies in those areas, but also at those working in technology and communications in general. Two years ago, I wrote about the lack of flying cars (we were promised!) and the seeming death of the American creative and innovative spirit.

As Alan Kay said: “The best way to predict the future is to invent it. Really smart people with reasonable funding can do just about anything that doesn’t violate too many of Newton’s Laws!”

The problem, as I see it, is that we have forgotten about inventing the future. If you take a look at the last year or two of venture funding announcements (particularly in the sectors I mentioned) there is a lot of “me too” ventures getting funding. It is almost as if we keep seeing the dealflow centered around what is hot or popular, which in turn floods the market with a lot of very similar products. How many social networks can you name? What about MMORPGs? Casual game companies? Which of them are really innovating or trying to push the envelop? How many of them are nearly identical in features and functionality? How many of them lack any discernable business model other than “get traffic, get acquired”?

Are the “really smart” people finding funding, or is it a matter of doing what someone else is already doing and just knowing the right people? I’m beginning to wonder. A lot of interesting ideas keep coming across my radar, but they all seem to have difficulty finding any funding at all. At the same time, the number of “what are they thinking” venture deals keep getting announced.

There are a lot of opportunities out there to change the world and make billions at the same time, but I feel like the visionaries and luminaries are hiding or have simply given up. Did the great dot com bubble burst hurt American innovation more than we realize?

I have had my fair share of ideas, most of which seemed to be too “ahead of their time”. It is incredibly frustrating to me to see an idea I couldn’t get funded 5 or 10 years ago (and in some cases, as recently as 3) suddenly find west coast funding and market excitement. Even worse when it seems that the new venture is doing things in a way that feels backwards to me. That’s the best way to describe it I guess…backwards. Why are they doing x THIS way, when it would be so much better and powerful THAT way? 

I’m not about to give up though. As Nikola Tesla said: “The present is theirs; the future, for which I have really worked, is mine.” That sounds pretty arrogant I guess, but it resonates with me. Other people in various industries are reigning supreme now, but they are failing to look ahead to the future, and invention is more like “the same thing the other guys are doing, but slightly different”. Throughout my whole career I have tried looking ahead, anticipating the flow of trends and technology, and generating ideas, concepts, and innovations to catalyze, evolve, and revolutionize. They can have the present, but the future is mine.

It can be yours too…but you have to think outside of the box (reinvent it!) and be creative. Don’t hyperfocus on your own area of expertise…talk to others in related fields. Look at the big picture and shuffle the puzzle pieces around. Sometimes we talk about ideas in fiction that have been unreachable for a long time and we act like they still are, but there is a lot of technology out there NOW that simply needs to be put together in a different way to make those dreams a reality.

The future is coming…but only if you invent it, and do it now. Otherwise, we will waste another decade or two toying around with old ideas and old technology. Is it really any wonder that we haven’t returned to the moon or landed on mars yet? That we are still reliant on fossil fuels? It doesn’t have to be this way. Everything can, and will, change…but we need innovators, inventors, dreamers, visionaries, and of course venture capitalists that yearn to change the world instead of playing “keep up with the Jonses”.

Don’t accept mediocrity.

Back from San Francisco

I’m back from the conference at San Francisco! It was totally worth the time and resources to go out there. We made a lot of solid connections to the west coast venture capital crowd, as well as some other companies that are worth talking to in the future for strategic relationships.

While the overall conference was awesome, I must confess that a few things surprised or disappointed me. For starters, there weren’t very many presenters that were exciting and only a handful qualified as “interesting”. I’ve said before that I think that, as a country, we have lost our taste for innovation. More than a few of the presenters felt like the same types of companies getting funding during the dot com boom. By that I mean I said “huh?” more than a few times…weak business models, “innovative” concepts that were half-baked, and “new” ideas that were simply a rehash or a “me too” version of something else. At the end of each day there was a panel of venture capitalists that talked about what they had seen during the day and what they thought. More than a few of these guys said they saw some interesting things, but not much that was exciting or felt like a home run. Sure, many of the presenters had companies or ideas that can and probably will be profitable, but nothing mind-blowing.

We did get

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Dow Jones Consumer Technology Innovations Conference

I’m flying to San Francisco on Monday to attend the Technology Innovations conference. Naturally, I will be networking like crazy and getting the word out about what we are doing at Neogence. Our funding deal with the Pakistani venture fund seems to have gone up in smoke with all of the problems and instability other there, so we have been scrambling around trying to reorganize and find alternative funding sources.

So we have been in the early stages of reaching out to several venture funds, making new connections, getting several introductions, and so forth. This is not an easy process by any means, and quite a bit more difficult because we are “on the wrong coast”. I know some others think that this “east cost/west coast” thing is a bunch of nonsense, but I have definitely encountered it on multiple occasions, and not just with this venture. I might blog more about this later.

We have a killer team in place (with experience on most of the leading MMORPGs, as well as virtual worlds and simulations), great content, perfect market positioning, several amazing partnerships and strategic alliances, and some incredible technology that no one else has. We have figured out how to break away from the closed loop, linear, and static grind-fest that most games are. Our worlds are living…they will evolve, adapt, and grow based on user actions (or inaction). It is pretty damn sweet.

So I think it is just a matter of time before we are back on track and the funding gets sorted out. In the meantime, we continue to do what we can with a small core team and I will spend some of my time working on several other projects that are quite interesting on their own, and actually dovetail into what we are doing. Expect to see more strategic partnerships and relationships emerging for us over the next six months.  If all goes as planned, we should be launching a tech demo (and probably a light demo of the first game world) by mid-late summer.

I need to figure out what I’m going to do for business cards at this conference. I was going to get some printed at Kinkos this afternoon but they refused to print on the card stock I provided. Really stupid. I got mad and walked out. Why the hell won’t they print on user provided stock? They totally lost money. 

"If this is such a good idea...

Why aren’t the big companies doing it?”

This is, perhaps, one of the most frustrating questions that I have been asked by investors, venture capital funds, and colleagues/mentors kind enough to take some time to look at my business plans over the last decade and a half.

The mentality behind this question assumes that big companies are naturally successful, smart, and have both the will and the resources to continually push for bigger, better, faster. If the “big boys” aren’t doing something, than it probably isn’t worth doing…because of course, you have to assume that they already thought about your idea and have discarded it as unworthy.

Ok, this sounds like it makes sense, but it is a very weak assumption. Big companies are

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