As we all witness the impact Covid-19 is having on the global economy, I have been reflecting on my experiences in the tech industry during nearly two decades in Silicon Valley.  Covid-19 is accelerating digital transformation from the work and schooling from home experience, to the boom of e-commerce, to changed retail, restaurant and travel industries focused on safety, plus touching in some way, almost every industry.   In my career,  I’ve seen fundamental consumer behavior change occur organically and recognize aspects of the change that Covid-19 is inorganically.  A career of memorable consumer internet and mobile business journeys; a few learnings from those industry changes and my specific industry shift examples that I’ve experienced follow.

  1. When looking to disrupt markets, start with unconstrained thinking
  2. Think Outside/In-  It’s a consumer centric world
  3. Content is King; Distribution is the Emperor  
  4. Know where the Value Chain Money is
  5. When looking to disrupt markets, start with unconstrained thinking

In 2005, I joined Yahoo! as a finance manager, responsible for supporting Yahoo’s global communication products-  Yahoo! Mail, Yahoo! Messenger, Yahoo! Photos amongst others, creating way north of $1B in value a year for Yahoo!.    In those years, Yahoo! Mail was the clear leader with 100 million monthly active users.  Gmail was in beta stage and was the upstart trying to compete with the heavyweight Yahoo! when it came to Mail.   Google then made a brilliant move.  It marketed the availability of unlimited storage when it came to Mail.   In practicality, it was around 2GB which was in fact significantly more than the 100 MB limit Yahoo had, but the perception of unlimited storage changed the game for all.    Yahoo! ultimately changed their limit to 2 GB as well but a fundamental, permanent shift in the consumer’s mind occurred.   Users that were previously deleting 8 out of 10 emails on Yahoo!, now suddenly expected to delete only 2 out of 10 or in some cases zero.   For Google, which only was starting to grow users and was nowhere near the 100 million users Yahoo had, the capex investment was manageable and could be planned.  For Yahoo, it felt like seemingly overnight, the amount of storage required increased 4x.    It was not a fun experience for me when just a few months after the AOP concluded, I had to go to Yahoo’s CFO and ask for in the tens and tens of millions more in capex $ immediately, more than the whole years’ worth of capex $ we just got approved.   In this experience, I saw first hand a permanent shift in consumer behavior by a company that had the foresight, strategy, and bravado to take on and defeat the leaders.

Google went into this market without constraints in their thinking.  Their strategies weren’t based on incremental changes to existing storage size norms; they thought unconstrainted; married it with resource allocation they could support with their might and transformed the market.

  1. Think Outside/In- it’s a Consumer Centric World

A few years after my Yahoo! Experience, I joined Glu Mobile to lead their Global FP&A team.   Glu created, licensed, and ported video games exclusively for mobile phones.  They were a pure play mobile game company at a time when most questioned the viability of mobile as a sustainable platform for games.   Would users even be able to discover such games on the portals of global carriers and would they be willing to pay up to $9.99 a game for games that didn’t have the sophistication or game play of console games?  Would the top brands that owned games like Call of Duty and Zuma and super hero and action figure brands license their titles to an exclusive mobile game company?     Against this backdrop and doubt, Glu went public, debuting on the Nasdaq in March 2007 and in fact securing licenses prior to its IPO from Activision for Call of Duty and Hasbro for Transformers and the Dark Knight games.    The IPO succeeded, raising near $100M to go lead the future of gaming on mobile devices.    But later in 2007, Apple released the first iPhone and the future of mobile games was turned upside down overnight.   The Iphone featured a touch screen, large screen size, and accelerometer which detected motion all supported by the iOS App Store that pushed price points down to $2.99 or even free and listed apps by a strict performance rating algorithm.   Opposite characteristics of the feature phone that Glu built its now publicly listed business on; highlighted by games sold for $9.99, securing premium slots on carriers games portal based on sales relationships, and a model that required porting of the title to the thousands of skus (combination of carrier and handset (i.e. Nokia/Sprint; Nokia/Verizon, Motorola RAZR/Sprint, etc.), a tedious process which led the likes of Activision to license console titles like Call of Duty to Glu for exclusive mobile rights.    The iPhone, and soon its Android counterparts, quickly captured the imagination of mobile game players, who now had an expectation of rich, console like game play using the features of the iPhone at a near zero price point.  In the short term; Glu’s business took a major hit; declining revenues and a stumbling stock price.  Glu though persevered and financially recovered in subsequent years; shifting to the freemium model with in app purchases and released some of the most successful mobile games in the market and remains one of the world’s most popular mobile game publishers. 

Partly bad timing, Glu’s initial stumbles also had an element of an inside focus; continuing to optimize its porting relationships and portal first page placement with OEM and carriers to maintain its discoverability edge.  But simultaneously, Apple was enabling the consumer experience to change; an experience that featured a larger, touch screen, ability to tilt the screen to accelerate a gaming vehicle for example, and reduced price points of games.   Glu’s internal focus helped make it late to shift resources to create the new consumer centric superior experience in its games; a shift to offer these superior consumer experiences that consumers clearly desired.

  1. Content is King; Distribution is the Emperor

My Vuclip journey started in 2014 when I joined as CFO of a Silicon Valley mobile video streaming company exclusively serving emerging markets such as India, Indonesia, Africa, and the Middle East.    A company that built its business with deep technology, earning patents for content delivery transcoding; in essence a technology that reduced buffering of streaming video.   With an environment characterized by constrained networks and feature phones (4G and smart phones were yet to hit scale in these regions); the opportunity arose to serve and monetize consumers on mobile carriers’ portals by running short form video stores on their portal.   This turned out to be an effective business; leading to 100% revenue growth in consecutive years and an acquisition by PCCW, who owns the largest telecom and media properties in Hong Kong.   But it was clear that it was just a matter of time that smart phones would hit the mainstream consumer in markets like India; with affordable Chinese manufacturer smart phones soon building a large installed base.   In 2016-2018, Vuclip launched direct to consumer, B2C OTT platforms (brand: Viu) in India, Malaysia, Indonesia, Middle East, South Africa and other emerging markets driven by available low cost smart phones, less constrained networks and increasingly affordable data plans.   Consumers could now easily watch a movie or television episode on their mobile broadband enabled device through Viu’s freemium platform direct to consumer or through mobile operator distribution efforts.  Instead of licensing content only, Viu was now also making its own original content series with more modern themes targeted to younger viewers who would not see such themes on free to air and pay broadcast channels.  Suddenly, Bollywood actors were re-arranging their schedules to meet me at the Mumbai airport hoping I’d sign a check for their new original, production concept for OTT.    The evolution of Vuclip from a deep technology company to a tech media company happened in a blink of an eye, driven by the pervasive adoption of smart phones in all markets and the fundamental shift of content consumption from broadcast linear television to internet enabled OTT platforms around the world, competing with giants such as Netflix, Amazon Prime, Disney and Singtel.

In the content space, the phrase Content is King is pervasive.   Often viewed as a hit based business, an arms race to initially license the best content and then secure the best creators for original content production occurred in market after market.   But in emerging markets, distribution through mobile operators were needed to get initial reach and build an installed base so that you would be attractive to the best directors and hit makers—we would say Distribution is the Emperor, or as Derek Thompson said in his book, The Hit Makers, Distribution is the Kingdom.   A classic case of AND rather than EITHER/OR;  need to have a strong content proposition and a strong trade/distribution proposition to have a chance to compete with the money and clout of the Netflix and Amazon of the world. 

  1. Know where the money is

The early 2000’s were a fabulous time for Silicon Valley —the boom days.  Investment dollars free flowing, valuations sky rocketing, startups galore.   For me, my Boom days were not tied to a startup, but to a mega tech company that had the market presence and funds to go after its perceived piece of the growing pie.   I joined Intel as a financial analyst and worked for Intel Online Services (IOS) — a new web hosting division of Intel.  Intel built and maintained world class semi-conductor fabrication plants (fabs), why couldn’t it build and run world class premium data center hosting services using similar expertise.   IOS had an approved business plan requiring $1B USD in revenue to breakeven and within a year had built full scale data centers in the US, Japan, Korea, and Europe and hired more than 1,000 employees in a matter of months.    My primary responsibility was to build a data center cost model assuming 70% capacity utilization and to support price point recommendations using such cost metrics.   It was an exhilarating time, growing at breakneck speed, every day evaluating the economics of new tools and technologies to add to our data center technology stack.    Now, most know how the boom turned out, it soon became the bust.  Almost all of those startups that Intel envisioned hosting  went under or downsized, and thus the capacity utilization I modeled at 70% never exceeded 15% before abandoning the business.   While this initiative may seem like a failure for Intel, it turns out that its vision was early for the market and alternative ways to monetize this vision were soon to follow.    Today’s ubiquitous concept of Cloud Computing was clearly something Intel envisioned in that business model.   In the early 2000’s, Intel felt they would be hosting various growing technology stack companies in their data centers which didn’t happen then, but today we see it across the board with a host of cloud based applications from e-commerce, to finance, to retail, to entertainment which companies like Amazon, Google, and Microsoft generate significant revenues from today.   

The money ultimately wasn’t in the startup customer base that at the time were experiencing mind blowing valuations; it was in the compute, and the storage, and the analytics these internet businesses envisioned using.  Those compute, storage, and analytic use cases all continued; but with mature tech companies, mature non-tech companies that became digital (after all software was eating the world), and the disciplined startups that made it through the days to become the tech giants of today.   

Long after the experience is over; it has been the collective journey, succeed or fail, that I most fondly recall.  The beauty of entrepreneurial tech experiences is the opportunity to make fundamental, burgeoning differences in the lives of your customers.   I’ve been fortunate to participate in fundamental consumer behavior changing journeys in the past and look forward to new ones that are emerging today.