It's a lot harder to break into solving real, hard problems.
For instance, consider the market I know: neutron physics modeling of nuclear reactors. The existing solutions represent a ton of accumulated domain knowledge, but they're none of them very user-friendly or well-integrated into either the reload design process or the document creation process, nor were they designed with certain improvements in technology infrastructure (distributed computing, GPU computing) in mind.
Getting into this type of technology is hard, though - you need to pay for access to nuclear data files, and vast reserves of historical data are essential for validating your code's predictions, as well as reams of experimental thermal-hydraulic data for building empirical correlations. Information about modern neutron transport algorithms is scattered throughout academic journals, and unbiased comparisons, to say nothing of sample implementations, are so rare as to be nonexistent. Once you've done all of this work, then you need to produce all of the documentation required to convince the NRC that your algorithm is accurate enough for design calculations.
And after all of that, chances are the utilities will just buy the fuel vendors' codes because why deal with two companies, and the fuel vendors will keep using their in-house codes, because fuck you, that's why.
To compete in a market like that, you need connections, and you need experience, probably way more than 4 or 5 people's worth of either. A minimum viable product is probably a man-decade or so of labor.
It's especially difficult because investors aren't interested in funding long-term projects. I've put in that man-decade of labor (I've been working on my current project in various forms since 2001), but no one in the Valley's elite circles could care less. This is okay in that I own 100%, but it sure does make it difficult to get things done sometimes.
Barriers to entry include, but are not limited to:
1. Building a scalable accounting system that works for merchants and consumers
2. Keeping good enough records to get audited financial statements for as many years as it takes you to build (1)
3. Building mobile applications on 3 or more popular platforms with completely different SDKs
4. Applying for 43 state money transmitter licenses
5. Getting enough money to be able to afford (3) and (4)
6. Complying with the changing USA PATRIOT Act, Bank Secrecy Act, Federal Reserve Bank and U.S. Treasury / FinCEN directives on an ongoing basis while maintaining profitability
7. Convincing people and POS vendors to sign up and develop for a new system en masse...
8. ...without allowing malicious hackers to sign up en masse
9. Not moving so slowly that Apple, Google, PayPal, Visa, MasterCard, Discover, American Express, Intuit, AT&T, Verizon, Sprint or any other startup trying to break into mobile payments can copy you
10. Not moving so quickly that everything breaks, because it can't
Why isn't photo sharing a real problem? Why isn't it hard? I think it's easy to be dismissive of things like this, especially from a purely technical viewpoint.
I'd like to see the other pics people take at get-togethers or on camping trips, but the effort of uploading them to something like facebook doesn't seem worth the effort for many (most?) people (that i know, at least), and there's no way easy way to collate the pics taken by diff people.
I thought "hard" was meant in a purely technical sense.
But anyways - three smart guys in a garage can build a minimum viable photo sharing application using knowledge and technology obtained from the internet.
You can say "oh, it's hard to do photo sharing right, it's a hard problem", but the fact is there are technological problems out there that are hard to do at all, that are completely beyond the reach of three smart guys in a garage using only knowledge available on the internet.
If we're talking about the article, I don't think they were implying anything about technical difficulty (it doesn't even use the word 'hard'), but more about importance (the significance of the consequences).
edit: removed typo.
These aspirations are depressingly low. Where are all the entrpreneurs trying to compete with Google over self-driving cars? How about competing with SunRun’s solar energy systems to power homes across the country?
Just because you don't see them on TechCrunch doesn't mean they don't exist.
"By this point, your Paparazzi app looks up real users on Flickr, finds and lists their photos and lets you view them up close by zooming and panning. It also plots these photos on a map and lets you browser photos by location."
Okay, look. Worth 41 million? Sheesh, I dunno. But I think comparing Color to Instagram is probably a mistake.
Instagram is a photo application. Just like Flickr is a photo application. They're about Photography. They're shrines to images, where the image is paramount. These are apps where energy and attention is poured in, and photos come out.
I think Color might be a valid attempt to invert that idea. I think it's possible that Color is no more about photos than Twitter is about words.
Maybe photos are a real medium. This isn't a masturbatory attempt to tag and glorify false-attempts at art with a camera phone. The photos are visual information, and frankly I don't really think we've figured out how to deal with that elegantly. Youtube, Google Image Search, Flickr.. these are all really brute 'Search for something to look at' kinds of ideas.
I've been waiting to see someone think differently about visual information, and I'm hoping that Color is doing that.
Or whatever. Maybe they're a bullshit bubble-canary that's gonna spend the money making grunge-photo-filters and hooking iPads up to beer kegs. I dunno. Just hoping.
For what it's worth, Color (the company) does not see itself as just another photo sharing app.
When I was in their office, the executives kept making vague references to how they would be doing some heavy data crunching and creating recommendation algorithms. They really didn't elaborate, but it sounded like the photo-taking was very much just a Step 1. Almost like an excuse to get people to pull out their phones so that Color could collect a bunch of data beyond just the photo itself (the implicit social graph, location, time, audio, etc).
Maybe they were just saying this stuff so that I wouldn't put them in the same bucket as Instagram and the rest, but this is a really smart team, so I'm giving them the benefit of the doubt for now.
Also, I don't think Sequoia would have poured this much money into just another photo sharing app.
First, the domain of knowledge to create a photo sharing app is far different than the domain of knowledge required to compete with Google over self-driving cars or solar energy systems to power homes across the country. Both of those examples are clearly physical products which require teams with far different skills than creating a team to develop a piece of software.
I understand the point here, but I disagree with it completely. Let people build what they're passionate about. Fund passionate people. If there's a market for the product it will be successful. If not, the investors made a poor decision. The money went into the ecosystem, it didn't disappear, it wasn't wasted.
We hear a ton about the venture firms that fund internet and software businesses because of what we read and pay attention to. Because we don't hear about all the bio-med and energy companies on TechCrunch or HN doesn't mean that they're not out there building the exact same products and getting funded by VC firms specializing in that space. They are getting attention, you're just not looking in the right places to see it.
All I've been reading lately are opinion pieces on what people should and shouldn't be doing with their lives, their businesses and their talents. If you're so passionate that you need to tell everyone what to do, quit complaining about about what should be happening and go make it happen.
Edit - Plus the author is currently head business development at Alphonso Labs, which develops iPhone, iPad and Android applications. What sense does that make? Quit making apps and do something else, but I'm going to keep working for a company that makes apps?
I never said to quit making apps and do something else. There are many, many apps that solve big problems. I love apps and work at a company that makes apps for mobile devices. I just don't happen to find photo sharing to be a big problem requiring $41M to solve at the moment.
It's been clear from the first article about Color that the investment was not about a photo sharing application, but about the underlying technology. The recent information that they are applying for six patents supports this.
You're drawing conclusions outside of my argument. Please re-read what I wrote.
She said I just don't happen to find photo sharing to be a big problem requiring $41M to solve at the moment. And my comment regarding the patents was based on the $41M investment being in their technology, not a photo sharing app.
I made no other comment on the validity of the patents. I believe the investors based their investment on the underlying technology used to create the app and not the app itself. They valued the technology and the team that created it worthy of a $41M investment.
If its a big space with lots of potential people will try to fill it. Remember, people build the future, it doesn't just "happen." All these services and large funding rounds are just proving that photosharing is a big unsolved space (just like group buying, LBS, social networks, search engines, online retailers, computer manufacturers, operating systems...). Relax and let the market do its thing. Or jump into the market. But please don't complain about the way innovation works.
Companies like those do get funded, but they are usually run by industry veterans that cut their chops on consumer internet companies the like. ie. Tesla Motors. I do not think it makes sense for internet entrepreneurs to go after markets with such heavy capital restrictions, it's not reasonable, it's much more reasonable to start small and slowly mature/graduate up to the more complicated and advanced problems/companies.
If there was a better ROI for young entrepreneurs, they would do it. There is nothing that scales like the internet/software that can be built with such a low cost. Michael Lewis said this best in his book, the last 20 years have been the largest legal value creation in the history of mankind in Silicon Valley (measured by normalized job creation, revenue, new businesses, etc.)
I don't disagree with you in that entrepreneurs choose software because it's cheaper.
My question was: what's inherently derivative about software startups? Why is everyone making photo-sharing software and not software to solve other (unaddressed) problems?
Most of the software-based 'hard problem' niches that are accessible to programmers without specialized domain knowledge outside software were filled by startups in the 70s and 80s that are now the establishment. Nobody is going to fund another word processor, operating system, or DBMS.
Web startups are attractive because they have low capital requirements, don't need much domain knowledge, and are more closely tied to changes in culture than technology, so there are always a few open niches.
What unaddressed problems do you think they should be solving? All in all, the consumer web is a pretty over-served market. I don't see a problem with there being ~5 serious competitors in a big, fresh problem area.
1. According to that line of thought, every problem has been solved already. Are we really at that point? There are hundreds of problems that are more relevant than "how do I share images of my location with people in my same location".
2. ^What real problem does a company like Color solve? Is there one?
3. Maybe the problem is that startups are targeting consumers? B2B has a way of culling the herd: if you don't solve a problem, no one buys your product.
She's not saying that the idea is wrong in and of itself, but that we should all be focusing on ideas that go beyond sharing photos - solving hard problems.
I agree with the sentiment. If we only worry about the social, society gets tied up in trivialities. It extends the echo chamber for the same old things.
On the other hand, this is simply what the media is obsessing over. It's easy to understand convenience apps, but not new technology for which the implications on large scale are still pretty unknown.
It's all still happening: Better and smaller chips, commercial spaceflight, more efficient solar energy, interesting developments in DNA sequencing. Real high tech. Just look past the attention whores.
I think it's more interesting to enable people to share other people's photos. I can certainly take more creative commons photos that other people took than I can take myself. See
While I don't disagree, I did notice that the author works for a company that develops a mobile news reader app. Not exactly breaking new ground there either.
For instance, consider the market I know: neutron physics modeling of nuclear reactors. The existing solutions represent a ton of accumulated domain knowledge, but they're none of them very user-friendly or well-integrated into either the reload design process or the document creation process, nor were they designed with certain improvements in technology infrastructure (distributed computing, GPU computing) in mind.
Getting into this type of technology is hard, though - you need to pay for access to nuclear data files, and vast reserves of historical data are essential for validating your code's predictions, as well as reams of experimental thermal-hydraulic data for building empirical correlations. Information about modern neutron transport algorithms is scattered throughout academic journals, and unbiased comparisons, to say nothing of sample implementations, are so rare as to be nonexistent. Once you've done all of this work, then you need to produce all of the documentation required to convince the NRC that your algorithm is accurate enough for design calculations.
And after all of that, chances are the utilities will just buy the fuel vendors' codes because why deal with two companies, and the fuel vendors will keep using their in-house codes, because fuck you, that's why.
To compete in a market like that, you need connections, and you need experience, probably way more than 4 or 5 people's worth of either. A minimum viable product is probably a man-decade or so of labor.