Entrepreneur Extraordinaire: Max Levchin of Slide, Paypal

slide logo taglineWhat is the definition of an Entrepreneur? To me, a true entrepreneur is a person who not only dares to dream, but it is someone who has the single minded courage and persistence, to chase the dream until it turns into reality. It is someone who is willing to try 10 times and fail, until they reach that breakthrough moment, when they finally create something of lasting value.

I have heard numerous talks or read many articles, where an entrepreneur’s story has been described from the lofty point of view of implied, instant success. Entrepreneur starts company, grows revenues to x million, has an IPO, and successfully sells the company a couple of years later. And then on to the next success.

Reality rarely matches this idealistic scenario. Very seldom do we find entrepreneurs who simply step on the start-up rocket ship, and blast into mega enterprise space, the first time around. Even less frequently do we find a successful entrepreneur who is willing to tell the real story behind the story, and talk about all the failures that led to the ultimate success.

I once heard Max Levchin, founder of Paypal, deliver a keynote at a conference, where he put a human face on climbing up the golden path of entrepreneurship, and the trials and tribulations on the way. He described his experience of starting a string of “garage” companies (9 in all) with little or no success. Then he spoke about one day, showing up at a business class with the intention of taking a nap in the back of the classroom (it was a hot day and the class room was air conditioned). Turned out that there was only one other person in the class. When the presenter, hedge fund manager Peter Thiel turned up, he found out, much to his chagrin, that he had an audience of only two, Max and another person. That “close” encounter led up to another meeting, and soon, between Max’s software expertise and entrepreneurial drive, and Peter Thiel’s business and finance acumen, Paypal was born.

After Paypal, Max Levchin went on to found his next start-up Slide, a photo sharing site. Today, with upwards of a 100 million viewers, the site, by any account, is a huge success.

Well, a winning streak of two successes, after a string of not-so-successful ventures - is that a fluke? Not really. If you stack up a few wrecks on the road of entrepreneurship, pretty soon you are able to climb high enough, where you can see further, and you know which direction to not go next time. Past experiences tend to successively focus our vision towards where the next success will very likely lie. Also a huge success like Paypal probably brought Max a whole lot of credibility and panache, which made the next success, Slide, all the more likely.

Ultimately, we do realize that Max Levchin got where he did, not just because he was smart enough to see and seize upon an opportunity, but also because he had the tenacity to keep trying until the “fluke” ultimately happened!

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Quantum Entanglement: Information faster than the speed of light?

quantum teleportation national geographicQuantum Entanglement is a phenomenon that is now moving from being mostly a gleam in a few scientist’s eyes, into the realm of reality, in a myriad of fields such as quantum computing. As time goes on, we will not only find more profound practical applications for this fascinating occurrence, we might even transform the way we exchange information in the future!

Quantum entanglement is the phenomenon where the state of two particles is related - such as a system containing a pair of photons where one has a spin-up, and the other spin-down. The interesting effect is that the two particles stay embraced in a perpetual tango, even when they moved far apart. When the spin of one particle is changed, the other instantaneously flips its spin so that the overall spin is conserved, and the universe is whole again.

In 2003, in one of those poetic and dramatic experiments, scientists tested entanglement across the Danube river in a Quantum Teleportation experiment, and showed that the particles can be separated by 600 meters and still stay entangled. Since then the phenomenon has been demonstrated in up to 100 kilometers of optic fiber.

So what does this mean? The most important implication is the almost “instantaneous” transfer of information over large distances.

wondersofphysicsAlthough the experiment seems to suggest that knowledge of the state of the particles is being exchanged instantaneously, the information cannot, however, be transmitted faster than the speed of light, upholding the theory of causality ie cause and effect, where the effect must always follow the cause, and not the other way around.

On a different, and somewhat amusing note, this morning it was reported that a company called Steorn has invented a “device” that supposedly “produces free, clean and constant energy - without recourse to external source”. Just what we need to solve the world’s power crisis!

Move over Perpetual motion machines - your new green competition is here!!

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Value of a junk patent and patent strategy of a company

Local.com was awarded the patent number 7,200.413 by the U.S. Patent Office. It covers “Enhanced Directory Assistance�?, which will deliver keyword specific ad referrals based on user input on the phone.

If you look the lone claim (which defines the coverage and scope of the patent), it requires nine specific steps, each of which can be executed or bypassed. A few months ago, this patent might have had some inherent value but after the Supreme Court’s recent decision on obviousness and what is “patent worthy�?, I strongly doubt it if this patent can survive a spirited challenge.

Also this patent only has one claim, which is extraordinarily uncommon for a non-design patent and generally happens only if the patent offices trashes everything that is initially claimed and throws you a bone.

Some people might refer to patents like these as “junk” patents; they are very narrow and they are vulnerable to various legal attacks; so as a protect able IP component, they have limited value.

However, these patents do serve another important purpose, which is to get noticed by the investors. As soon as the enhanced directory assistance patent was granted, Local.com instantly added about $30-$50M to its market cap.

If local.com were to be sued by another company that holds a geo-specific patent, local.com would have the option of cross-licensing it’s patent as a trade.

The point that I am driving at is that building a patent portfolio is not just for creating a defensible IP barrier, but also to attract investors, and to have IP assets available for cross-licensing and bartering.

Some patents might not have inherent value, but they might have tremendous perceived value which is as important!

Patent strategy for a company is different depending on its gestation level, the technology it focuses on, and several other factors. A start-up might benefit from higher number of patents and a stable company might benefit from having more quality patents.

The key to success is to maximize the real, inherent value of the patent and take full advantage of the its perceived value in the market place.

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Will it blend?

willitblend logoWhat do a golf ball, tiki torch, rake and crystal have in common? They have all been through the blender on WillItBlend.com!

The company, Blendtec, is less known for its heavy duty home and industrial blenders, as it is known for its hilarious videos, where the CEO Tom Dickson in a lab coat, tries to run anything and everything through a blender.

In a stroke of marketing genius, director George Wright (covered on WSJ), saw the potential in an initial spot which demonstrated the power of the blenders chewing through a 2×2. This has led to a publicity minefield, and the creation of a series of videos that capture the blenders doing their thing on a whole lot of common household items.

The site willitblend.com carries the videos in two categories, “Do not try this at home” and “Try this at home”. A shot of the flaming tiki torch (do not try, of course) shows the blender blades digesting the entire torch, stem and all!

While a lot of companies have “viral marketing” as part of their business plan, rarely does one actually accomplish it with as much ease and aplomb as Blendtec has managed to.

While the company has been around since 1975, the brand was reborn last November, when the company started its very successful online campaign. The initial videos proved to be a great hit on Youtube and Revver, and the story was picked up on Digg.

Today, the company is not just reaping the benefit of higher sales of its product, but companies are actually lining up to be featured in the Willitblend videos. For $5000 a piece, you can send your product to the Blendtec and team, and get the important question answered - “Will it blend?”.

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