Sramana Mitra: What you’re describing is not contrary to the point they’re making. The point they’re making is that we’ve gone through a 30-year extensive innovation phase. The company that really disrupted Nokia is Apple. To some extent, the Samsung world followed. Sitting in 2016 and looking ahead, it seems like there is a bit more of too many superstars dominating and playing monopolistic roles in their individual areas.
Facebook doesn’t really have a competitor right now. Google doesn’t really have a competitor in search. These are dominant industries. On the cellphone side, there’s competition. The business software faces a lot more competition. There’s Salesforce, Microsoft, SAP. They’re all still acquiring companies and staying relevant.
There’s a lot of startup activity that has built up companies to some scale. There are solid $50 million to $200 million companies. That side has better dynamics, but the media industry I talked about is completely finished at some level because of Facebook’s domination. How does that scenario change?
David Blumberg: I hear you and I agree to a large extent. It concerns me. We tend to invest much more in the B2B in the industrial, algorithmic, and the AI-driven businesses. We find it easier to sell to businesses. Our firm has a very successful CIO Council. It includes Chief Marketing Officers and Chief Security Officers.
We get these folks in a room four times a year and they tell us what they’re looking for. We show them new things that they’ve never seen. They’re excited to see startups. The good news for entrepreneurs is that large companies are now wanting your help. They are soliciting innovation and they know they can’t do it themselves. They need to buy from you. They need to partner with you or they acquire your company. They could also invest in you.
Let’s take a different industry because I agree with you to a large extent on media. Let’s take Advertising. The millennial generation doesn’t trust advertising much at all. Advertising has to change very significantly. We have a very interesting company called Yotpo, which is flipping advertising on its head because it uses customer reviews that are validated by social media profiles to show that these are real customers that bought this product.
They don’t trust religion. They don’t trust government. They don’t trust businesses. But they trust their friend. If you see a friend telling you about a new tennis racket they bought and telling you that they got great service, you have much more incentive to go out and try it. I think some of it is going to flip around, maybe, to the benefit of Facebook. Maybe there is some new entrant.
Let’s go to a different field. Let’s go to the area of food. This is more approachable. Many entrepreneurs are not going to be in high tech. When you and I were children, there was Coke, Pepsi, and milk. If you go to the average service station for gasoline, you walk in and there’re 500 kinds of drinks to choose from. All these were started by entrepreneurs. Very rarely were these new brands started by Pepsi and Coke. Pepsi and Coke buy these brands. It’s because the consumer is getting tired of the monopoly offering. Like that, consumers are going to get tired of Facebook.