Garry's Channel: Why now? The key to million dollar startup ideas

I mean, I did OCR in the nineteen seventies. Optical character recognition. Yeah. So we were able to do that in the seventies and I waited till the eighties to address speech recognition since that requires more computation. So you were thinking through timing when you're developing those things Yeah. Has its time come?

Today, we're talking about why now because that is the key question. And given tech curves, you can predict when things become viable the way Kurzweil did when he pioneered optical character recognition and speech recognition. Today, the frontiers probably revolve around things like large AI language models, computer vision, blockchains.

But they might actually still be some of the oldest ones out there like mobile phone adoption or number of transistors on a chip. These are all powerful technologies that are driving new things that human beings are now capable of doing. And when you start a startup or you're trying to evaluate a startup, it's one of the best things to evaluate. And let's take a concrete example.

Almost anyone can look at a smartphone today and say, wow, that really changed the world. But what you might not know is that for many many years, even a decade before the successful iPhone debut,.

there were attempts like this one. It was a telephone. It was essentially going to be a smartphone with a lot of intelligence. When we were talking about reinventing telephony,.

we meant it. We're trying to make something that people love. We need it to be like your watch, your glasses, your wallet. We decided to make everything.

That meant we were custom building every piece. It's it's insane. And how small will it finally be, do you think? Someday,.

Dick Tracy Rischwach.

This was the beginning of what became, I think, the most important company to come out of Silicon Valley that nobody's ever heard of. That was a clip from a great movie called General Magic,.

named after, of course, the company that tried to make a smartphone at the moment that the tech was not ready yet. And here's what that looked like. In 1994, this device cost $1,400. It had only one megabyte of RAM, a 4,800 baud modem, which is about 480 bytes per second, and they had a monthly data fee of $400 per month. Thirteen years later, Apple and Steve Jobs delivered the iPhone one.

Well, what we're gonna do is get rid of all these buttons and just make a giant screen. A giant screen.

The iPhone one costs $499. It had 16 gigabytes of storage and 2. 5 g cell network, which was about 300 kilobytes per second. So about 16,000 x the storage, 600 times faster network, and it cost one third the price. In tech, orders of magnitude improvement is not just possible, it's actually the key to breakthrough.

The most powerful things you could work on come on the back of not a 50% or two x improvement, but on 16,000 x better, 600 x. Look for the 10 x. Look for the hundred x. That's why tech is the most powerful thing, because it is the driver for those 10 x, 100 x, and 1,000 x improvements that change things and leave them changed forever. Why now?

Sometimes the answer is it literally can only be done now. That was true for the iPhone and that was a perfect storm. Now technology is huge. But the next why now, once technology is broadly available, is actually the human mass behavior change that happens. You know, the smartphone was an amazing business that was hard won by Apple and Google in the end. But that's often just the beginning.

These technological innovations stack. Here is a graph of smartphone adoption as a percentage of population. And so you can see that the smartphone went from something that was very fringe, not a lot of people had it, to suddenly everyone had it. And right around 2012 was when Instacart happened. That's the grocery delivery startup that I funded when I was at Y Combinator.

The founder sent me a six pack of beer and I said, what the heck is this? I downloaded it and I saw the future literally right before my eyes in my iPhone. It's a huge part of Initialize's first fund and it's returned the whole fund several times off of that one investment. But to know why now for Instacart, you actually have to understand the history that happened right before it.

You have to look at Webvan, which was a huge failure that raised over $396,000,000 from Sequoia, Benchmark, and yes, even SoftBank. This was 1997, so literally twenty five years ago. The company ended up losing over $800,000,000 and shutting down in June 2001, which really marked one of the last gasps of web one point o. When Instacart came around eleven years later, people were wondering.

why now, and it turned out to be one of the most powerful why nows I've ever seen up close. What has changed today and and why this is the first time in history where a company like Instacart is actually possible is because smartphone penetration. There hasn't been a time where smartphones are are so prevalent that everyone has them.

And and as a result of that, we're able to to utilize the the people who have them to pick and deliver the groceries. So when you want to order groceries, we connect you with someone who can pick those groceries and deliver them to your door. So this is the same reason why Uber and Lyft exist today when they couldn't have existed ten years ago.

So, you know, we we think, you know, in our opinion, it's actually price selection.

and convenience. All three of those are important. It's not just one thing. And with Instacart, think that customers can get all three of those. Today, Instacart has been churning out profit and it's a household name. Their software eating all of grocery and they wrote a why now that was also the driving force for Uber, Lyft, and DoorDash, all multi billion dollar startups today.

Funny story, my partner Kim I Cutler actually wrote the first article in 02/2012 on TechCrunch about Lyft's pivot into the first citizen driver service. This was even before Uber did UberX. Before that, Lyft was called Zimride, and they were a ride sharing app that let people do long haul rides better than posting on Craigslist.

Zimride becoming Lyft was the pivot of a century, and all because it was behavior that drove a giant why now. Suddenly, big mobile workforces were not just possible, they became huge billion dollar industries. Now, I'm a technologist and we may love technology, but I have to admit, there's a very powerful type of behavior change that is a third kind of why now.

And it might be a bit foreign to you and me, but it's still a key driver of why certain startups can happen at certain times. I can't think of a more extreme example of this than actually Uber. Here's Bradley Tusk, famously one of the people behind getting Uber approved in many cities, including Washington DC, the primary American power center of them all. We started in 02/2012.

in DC, actually. So we launched in DC, was going well, and then, you know, taxi did taxi's typical thing. They got a member of the city council to put in a bill basically that would outlaw Uber. And at the time, you know, we didn't know if this would work or not, but we sent an email from Travis to all of our customers saying, look. If you like this thing, you wanna keep using it.

We need your help. And in the course of a week, fifty thousand people organically, you know, reached out to the city council and said, I want this thing. And not only did we kill the bad bill, we passed our bill unanimously,.

including voted before it by the sponsor of the bad bill who then voted for us. Regulation is a crazy double edged sword. It can limit and destroy your business just as much as it can support it and make it possible. Working with the government is like any other enterprise partner, only way more fraught. They're the elephant, and they can either raise you up or crush you.

Your job as a founder is to find the former and avoid the latter. When I was at Y Combinator, I remember meeting Parker Conrad when he was working on of his first startups, Zenefits. And the thing that really jumped out at me in his y c application was actually one of the big reasons I wanted to fund him.

He had pointed out that Obamacare was about to roll out and that meant that millions of small businesses and medium sized businesses would be mandated to offer health insurance. That turned out to be a megatrend need that drove huge adoption of not just Zenefits, but Gusto, and yes, even Parker Conrad's new Decacorn startup, Rippling.

When the government comes and says x needs to happen, there's a wave of business activity that is gonna rush towards that thing. And if you can spot that before it happens, it'll be you who figures that out first. Now if you ask what's the why now right now when it comes to regulation, I'd say the biggest enduring one facing us today is climate change.

Here's initialized investor and partner, Kimai Cutler, who wrote that first Lyft article on TechCrunch back in the day.

This is what she sees in this space. In my lifetime, I've never seen a moment like this where the political consensus around climate change is hasn't has never been more urgent or more obvious or more inescapable.

than right now. It doesn't take much to realize climate change is happening all around us, whether it's wildfires, record temperatures, or storms, the likes of which we've never seen. And there's change afoot now in DC and the halls of power. And so that those climate disasters,.

those effectively man made climate disasters, you know, created the political will for for the inflation reduction act, which is the first of its kind, the largest climate package The United States has ever done, has ever seen before, and that's going to lead to lots of different incentives around decarbonizing our entire economy and the way that Americans live.

And that's a huge opportunity for entrepreneurs to latch onto right now. One of the hottest startups in Silicon Valley today is the one Kim led a series a in called Pano,.

which is fighting wildfires,.

one of the worst disasters plaguing the American West, and it's something computer vision is here to solve. We had a policy of last hundred years of of suppression where we didn't allow any fires and fires had to be put out, you know, by, you know, the early morning every day.

And so we've accumulated this huge fuel load over the last hundred years that in combination with higher aridity because of climate change is setting off these mega fires. And so we're gonna have to head towards this world where we're actually having more managed low intensity fires versus uncontrollable, unpredictable mega fires.

And to do that, you're going to have to have, like, a lot of tech, frankly, to do it. That that that's gonna have to be, you know, situational awareness from you have smart cameras that can identify smoke plumes and triangulate where fires are and how fast they're spreading across the train, we're gonna have to do that going forward.

And UPiano, which is a deal that that we did the series a for, is part of that. They're a network of, you computer vision enabled cameras monitoring huge amounts of terrain across multiple content continents, Australia and here, helping first responders, utilities, and private landowners figure out how to, you know, identify and manage wildfire.

on land. Pano is gonna be a huge business that solves a giant societal problem. Kimai Cutler is an amazing investor when it comes to this third kind of finding startups with a strong why now. Because governments are one of the largest forces in our lives, like it or not.

And where that works to a founder's favor is that unlike big tech that's totally opaque, unlike private corporations, governments are generally built to be open systems with governance and policies that when done right are transparent to everyone, including you. Regulation is the largest, hairiest, and most difficult to handle why now for any startup, but it's the one you should always be aware of.

You might not be interested in the government, but the government is interested in you. Technology, behavior change, and government regulation, Those are my three why nows I want you to keep in your mind as you evaluate any startup idea. Those aren't the only three, but those are the ones that I have seen up close.

And we funded dozens of billion dollar startups that have made it based on those three. Wired writer Paul Ford says, watch for the curious and interesting intersections between very large things. Look for the points of contact or points of conflict. Pick two enormous forces and wonder how they connect. And where those intersect is the one big question, why now?

That's why we're here and that's why I'm so glad you found my videos. That's why I hope we can get there together. I want you, yes, you, to be the creator of a better future for all of us. Technology continues to change our world. And if you can build that technology, you can be the lever on that fulcrum that moves everything. This is the mission. You can get the skills.

You can build your people networks. You can learn how to do this and you're on the right path. If you ask the right questions, product market fit will find you. Alan Kay says, the best way to predict the future is to invent it. What future will you invent? Let's go get So that's it for this week.

I've actually made almost a hundred videos that help you on your journey to be a founder, builder, or manager. We live in a fallen world that won't get better without your elbow grease. If this is your first time watching, please click like, subscribe, and hit the bell icon to make sure you see every video we make for you.

If you want bite sized snippets of the best parts of those many hours of videos I've made over the years, or if you wanna hear more from brilliant investors and founders like my friend, Kim Mai Cutler, click over to the initialized channel link down in the description and hit subscribe. You'll learn a lot more about the future both on this channel and that channel too.

As always, thank you for watching. I'm gonna be watching the comments to answer any questions you might have about starting a company, and I'll see you next week.