firms, we don’t have to raise capital and we don’t have internal timelines on when to liquidate investments. In today’s environment, this provides stability and focus, which should mean good things for us as investors and for our portfolio companies.
X: What are your specific areas of investment focus, and themes, and how do they help advance the innovation process for Intel more broadly?
JS: There are some exciting trends in consumer technologies. One of the themes I’m working on is the Connected Consumer. With the walls coming down between mobile and the Web, we’re seeing lots of connected experiences, not just apps on cellphones but also connected toys, connected cars, connected TVs, and so on. Netbooks are also helping facilitate (and benefiting from) this trend. Another trend, which we’re watching closely but frankly we’re uncertain how it will translate into investment themes, is the change in user behavior regarding video consumption. The world is rapidly shifting toward on demand, consumers can’t seem to get enough of YouTube and Hulu, and the collision course between Internet values and TV values is not far away. We’re fairly confident the video incumbents will not let creative destruction run its course in the same manner it has in the music industry. But the video world has to compete and the basis of competition isn’t how much you can overpay for the NFL. The last trend I’m excited about is Open Education. I think we’ll see some of the changes we’ve seen in other industries, such as collaboration and new entrants, percolating into the educational sector over time.
In terms of innovation at Intel, this is a long-established value of the company and it is deeply ingrained into the culture. Much of Intel’s innovation happens upstream from us at Intel Capital. It occurs in the Labs (like the one in Seattle) and is spawned from brilliant engineers and product managers. Intel Capital, which is largely externally focused, helps influence and prioritize the commercialization of this innovation, but we’re not silicon jocks.
X: Within your areas of expertise, what surprising or undercover trends are you seeing in the Northwest? And how are local opportunities influencing the global market?
JS: The market has changed quite a bit since I was an entrepreneur. When I first raised money, Tom Alberg (founding Partner of Madrona Venture Group and early backer of Amazon) was willing to back me and my co-founder, as first time entrepreneurs, on the basis of a PowerPoint. For the most part, this just doesn’t happen anymore. And with the decline of money flowing into venture funds, the bar will probably get higher. On the flip side, I’ve been pleasantly surprised to see continued capital efficiency and angels filling the capital gap. I see lots of companies, who with a modest amount of capital, can create a fantastic business. It may not be venture scale but these can be great investments. I would guess that the angel capital market would migrate toward being less of a feeder for the venture market and more of a “cradle to grave” investment partner.
As it pertains to Northwest companies, I think one of the best kept secrets is Seattle’s influence on the games market. Besides Xbox, which is globally renowned, we have a number of companies (e.g. Valve), playing important roles in the hardcore / console market and nearly all of the leaders in the casual games market are based in Seattle. Lastly, as a trend which hasn’t happened but I hope it would, is that I’m surprised there hasn’t been more innovation around e-commerce locally. Given the depth of talent at Amazon, MSN, and big retailers like Nordstrom, Nike, and Starbucks, I would hope we could see a new company or two break out onto the national e-commerce scene. I think there are some exciting trends in specialty e-commerce.
