- What do you do when someone steals your idea?
First off, yes, it does happen.
It's so hard to get a good idea that sometimes
it's easier for people to just look
at what's already working, and then rip it off.
- Middle Out is based on a completely new
and probabilistic model.
I'm sorry, is this too in the weeds?
- Not at all.
Take us into the weeds.
- How does that even work?
I mean, you can't compress something
that's already compressed entropy, right?
- Wow, I don't really get too many of those questions
in meetings like these, but it's actually easier
if I show you.
May I?
- Absolutely.
- They're brain raping us, right?
- They definitely are.
- Those guys are never going to fund us.
We need to leave now.
- What are you talking about?
This is going great.
- Of course they're interested,
because they want to steal it.
This is a classic brain rape.
- Okay, so that's a really extreme example,
and that's really not what you should expect
from coming to Silicon Valley,
but it does happen, and there's a real reason why.
Good ideas that will actually work are very, very rare,
and they come about for just a few reasons.
One, technological, two, regulatory,
or three, some sort of macroeconomic force that's happening.
(upbeat drumming)
First is technological change.
Just imagine what it took to create the first iPhone.
It took battery tech, it took display tech,
it took miniaturization, it took software
that could actually be efficient enough
to use far less memory.
It was almost a perfect storm that needed
to come together to make the iPhone.
A more recent example that we're seeing in our portfolio
right now is the cashierless checkout process
of Standard Cognition.
They're able to do what Amazon Go did,
but with no shelf sensors, and that's a really
powerful thing, because if you can do it just with cameras,
you can bring down the cost of deploying
cashierless checkout by 10 to 100 times,
and that's powerful.
And when these things finally come together,
they actually unlock entirely new platforms.
Before Instagram could happen, you needed the iPhone.
And that's the crazy thing about technology.
These platforms are continually stacking,
and so what wasn't possible before,
suddenly becomes possible by the startups,
the products and services that happen before it.
Another really common way something becomes not possible
and suddenly possible, is actually regulation.
One thing that's happening before our very eyes right now
is the adoption of telemedicine.
It actually took the FDA to put out a letter
saying you can have a doctor in the loop
driven by software, through your smartphone
or through your web browser.
It's okay to do this now.
When regulation hits, suddenly there's a wave of activity,
because here's a thing that you couldn't do
that suddenly you now can do.
(upbeat drumming)
Finally, macroeconomic forces are sort of pushing people
around in our modern society all of the time.
One good example of this is remote work.
It's housing, right here in San Francisco,
causing the cost of living to go up so much
that it becomes nearly impossible to keep
and retain software engineers.
These are forces that are way bigger
than any individual one of us, or any given company,
but they're so big that they enable entirely new markets.
And this is why answering the why now question
is so fundamental for anyone who wants
to start something new.
(upbeat drumming)
If startups that can actually work
are limited by these very specific things,
then of course you're going to have people
who fast follow, who might actually just figure out
that idea independently of you,
so as a result, the idea is only a multiplier on execution.
The ideas are out there, everyone can sort of pursue them,
and the thing that will actually distinguish you
from all of the other people who are trying to do it,
at the end of the day, will be your execution.
What's your product like?
Is it actually what people need?
And do people choose you over all possible alternatives?
And that's the one inescapable fact.
A lot of people when confronted with the scary idea
of having a lot of competition,
or people wholesale stealing their idea,
they freeze.
They get scared, they stop sharing that idea,
and the reality is, that's almost the exact opposite
of what you need to do.
When you have a lot of competition,
often you have to lean even more heavily into that.
You actually have to be so deeply associated
with that problem space, and being the best solution
for that problem, that you win.
That actually becomes a way you crowd out your competition.
If you clam up, you're doing exactly the opposite
of what you need to do to beat your competition.
It's easily one of the most counterintuitive facts
when it comes to how to bring ideas to life in startup land.
The reality of any great idea
is a great idea on its own will not be enough.
In order to actually take advantage of it,
you're going to have to jam it down their throats.
It's going to be a lot of manual work
and it's just pure execution.
But the upside is, if you execute faster,
you go to market faster, you're innovating
and running out ahead of everyone else,
then even the people who are trying to copy you
can only copy the version of you
from six or nine months ago.
That's what it takes.
You can beat the copycats, but you got to outrun them.
The number one thing that has made us successful by far
is obsessive compulsive focus on the customer
as opposed to obsession over the competitor.
And I talk so often to other CEOs, founders and entrepreneurs
and I can tell even though they are talking about customers, they're really focusing on competitors.