For the longest time I have been affected by a certain discomfort I've felt in my job. As a human I am regularly subject to all the discomforts and neuroses that plague mankind but I have one certain area that has distracted me for some time.
By way of background, my day job involves searching for and investing in certain types of "technology" companies. According to The New Oxford American Dictionary, technology is:
"the application of science for practical purposes."
By deduction, this would mean I invest in companies that transform science into products and services that have some practical and economic purpose. My problem with this deduction is; however, that I rarely (in fact never) perceive that our portfolio companies are in the business of converting science to its practical applications. In fact, when I step back and ponder "technology" companies in general [ in which I would consider an investment] , the word "science" nor mental images of "science" ever come to mind. Absolutely never.
When I think about "technology investing" I feel this unshakeable sense of being surrounded by urgency and "speed". When we talk of "technology" there is a subconscious assertion of things moving quickly. Isn't "technology" itself generally promising more time (or less time as the case may be) to its users and isn't this much of the basis from which new technology is sold or bought into?
When I think of technology companies I think of the need for several large things to happen quickly.
- Large Thing Number 1: Since technology itself has implicitly a brief half-life, its developers need to organize themselves quickly in order to provide plausible commercial life to a new technology. So Large Thing Number 1 is the act and effectiveness of organizing a group of people whom you are paying to do a thing.
- Large Thing Number 2: Since new technology generally displaces an old way of doing things, developers/marketers of new technology need to convince a meaningful number of consumers to CHANGE HUMAN BEHAVIOR. So Large Thing Number 2 is trying to convince a group of people to change its behavior and pay you to do so.
Try and recall the time that you needed to organize a group of people to do something, anything - say form and stay in a line. It wasn't that easy was it? You had to explain to the group that they needed to get in line, why they needed to get in line, and why they needed to do it exactly at that moment. Lots of explaining. Now layer on top of that memory the notion that you had to get people to pay you in order to be in that line. The value of what is on the other end of that line just came under serious scrutiny and the degree of difficulty just went up about 10x. This is pretty much how mob violence is triggered. Welcome to technology investing.
What accomplished venture investors are good at doing is this: Identifying and scoring pools of people capable of Large Thing Number 1 with a minimum degree of waste, and having a good sense if the positive results from Large Thing Number 1 are suited to cause Large Thing Number 2. Said another way they must be skilled in making assessments about pools of people more than anything else which would render them, in a way, more research sociologists than technologists per se.
Now...did I just produce the perfect working definition of "technology investing"? No. But I feel I am getting closer to a working definition of its essence. Technology is simply a medium around which certain role players may chose to organize. Many venture funds have fallen for the slight of hand caused by the shiny technology bauble (myself included) and too often think of ourselves as technology-centric Zen masters when in fact we are playing inside of a larger equation whose primary variables are group dynamics. It really makes me wonder what type of educational background is required to prosper in this business. One thing is for sure....one needs to have extremely good hearing.
