HBS Bitcoin Panel

The HBS Bitcoin Club kicked off its first organised event with the Bitcoin Panel at Cyberposium 2014. The panel represented a broad cross-section of players within the Bitcoin ecosystem resulting in a good debate that was described as "off the (block)chain". Panelists included Adam Draper (Boost VC), Jeremy Allaire (Circle) and Adam Ludwin (Chain). HBS Professor Andrei Hagiu, who authored the first HBS case on Bitcoin, moderated the discussion.

We started by asking where the bigger opportunities were in Bitcoin; infrastructure, merchants or consumers. The answer: all three. The general view was that Bitcoin is still very early in its development. Adam Draper commented "Bitcoin 2.0? We aren't even at Bitcoin 0.2". Moreover, parallel development of all parts of the Bitcoin ecosystem were important for mass adoption - which at this time, panelists concurred, is more important than picking the correct part of the value chain. It was noted, however, that infrastructure businesses currently have an attractive business model, given they can be profitable from day one. In contrast, consumer applications may hold much of the value longer term.

Adam Ludwin then talked about Bitcoin as the "most interdisciplinary field out there" encompassing finance, economics, technology, government and more. It was an explicit call for MBA's who may be attracted to this type of faculty. (Aside: All three companies are hiring). Not only is Bitcoin interdisciplinary, it is truly global. The discussion shifted to the potential global applications that Bitcoin promises such as remittances. Adam Draper said the "US is the worst place that Bitcoin could have taken off because 93% of our payments are already digital." The discussion centered around how Bitcoin, or more accurately the distributed, open ledger known as the blockchain could modernise the "piping" of our financial system. Ludwin explained "If you invented money today, you would invent Bitcoin." Jeremy Allaire articulated the real power of Bitcoin as a protocol akin to HTTP for the internet. He envisioned blockchain technology being deployed to replace not only the localised national ledgers, but also the payments system that currently connect them. Allaire's vision of the future: "The cost of moving value internationally will drop to 0". (We hope so too).

We discussed briefly some other applications that could be powered by blockchain technology including smart contracts and equity raising. In fact, panelists agreed that much of what "Wall St" and law firms currently do could be disrupted by Bitcoin in some form. Regulation was also discussed briefly, with Allaire saying he was "relatively positive" on the state and engagement of regulators. He also mentioned that he viewed his own bank as his "principal regulator" given their strict adherence to the current rules. In addition, the favourite comment about Bitcoin volatility was discussed and highlighted as a major impediment to adoption.

Overall, there was immense optimism about Bitcoin and its future potential (albeit at least 5 years away). It was clear many challenges still remain - the protocol itself, consumer adoption, regulation, volatility and many more not discussed. Panelists viewed these challenges  as fixable and just "opportunities to create companies" rather than existential threats to Bitcoin as we know it. They are all staking their careers on Bitcoin and left the audience a lingering question: Should we too?

-Rahil Gupta

Note:
The HBS Bitcoin Club is now an official club at HBS. We aim to be the center of everything Bitcoin at Harvard. Please get in touch with Daniel Vogel (dvogel@mba2015.hbs.edu), Hassen Abdu (habdu@mba2015.hbs.edu) or Rahil Gupta (ragupta@mba2015.hbs.edu) for further information.

Education Technology Panel

Panelists

• Marissa Lowman - LearnLaunch Institute
• Dan Winkler - Mimio
• Kin Lo - Kaymbu
• Kimberly Steadman - Edward Brooke Charter School

What tools are particular effective? Where are there rooms to grow?

• Marissa: We've funded ~250 startups in Boston area and have seen a lot of growth in really niche area, for example, classroom management or grading papers. For example, one startup, Gradeable, allows students get feedback faster within a day rather than weeks. Most successful companies have teacher support, if they haven’t piloted in a classroom, they don’t know the challenges. 
• Dan: Hardware is a way to get points across, most effective solution in special needs classroom, interactive hardware system like interactive whiteboards. In one particular pilot, kids were laser focused on the hardware product. Hardware only works when given to teachers with the right training and uses it the right way with the right support. 
• Kin: Kaymbu focuses in preschool. The most effective technologies, hardware or software, are those that help teachers do what they do better. Teachers are pretty good at what they do. Don’t transform, focus on enabling teachers that do things better, faster, easier. In EdTech, nondisruptive is a good thing. Technologies that integrate very easily, rather than revolutionize the dynamics of the classroom, are the most effective.
• Kimberly: EdTech is taking up a lot of airspace in education, and are misguided. It's taking a lot of talent and a lot of funding, where people are trying to make money off of schools. I don’t believe that. I don’t think anything will make a big change in education. Education is the business of developing human capital, and human capital is developed in person. For teachers, they need to believe in their own vision and authority and lead their kids to there. They need to interact with parents and kids as much as necessary to get there. There's no screen or app to help you do that that will actually be transformative. Deep rich education that make school betters needs to develop the teachers. The technology that we use are for general audience, not specific for schools (e.g. Google Docs). One exception: Coding websites that help teachers to teach that to kids in K-12. Most other things are actually distracters of time and talent and resources. 
• Dan: The situation to avoid is one where the Technology Coordinator of the district say, here’s your technology, use it. That’s a failed way of using technology. Alternatively, here’s a budget for each school, and the teachers go out to find the technology, and they pitch them to the school board to buy for the school.
• Kin: While I agree with Kimberly, there are tools that can make teachers more effective and communicate better.

On the next big change in EdTech

• Marisa: There will be more ability for teachers to experiment with new tools as wifi access increase in the classroom. Focus on experiential learning/group learning rather than having teachers standing in the front. 
• Dan: Biggest opportunity and challenges is the Keep It Simple rule. Make it frictionless, part of people’s lives. The more interesting is way for kids who are ahead or behind can continue their learning or catch up at their own pace.
• Kin: Most excited about are bringing more people into the fold. Family and advocates, technology can play a role.
• Kimberly: Technology can’t replace the human relationships. Our K-8 schools, almost all of our children live in poverty, almost all will be first generation in their family to go to college. We need to be teaching kids to interact, don’t put a screen between them. They need to interact with each other, learn from each other. I visited a high school who implemented technology fully. Their feedback: This is great because I am not as held back by the other kids. Self-centered, self-driven things, doesn’t recognition the social skill of learning from others. Most of our technologies are coming from a collaborative process. Making sure we only have one laptop with every 2-4 kids. We don’t want one device per child. The most promising: Massive portions of the world don’t have access to this technology yet.

Q&A

• Most exciting EdTech startup?
• Marissa - Tiggly, physical product focused on early learning; it's a toy that you use with iPad. It combine shapes and numbers with iPad games in a blended learning model. There's a lot of startups that are combining the physical and the digital.
• What would you need to see to believe a truly disruptive technology in education? 
• I would need to show actual data in a large school. That there are actually student outcome, that actually proves it. 
• With the growth of online learning platforms, will alternative education complete overtake classroom learning?
• The math lectures on Khan Academy are are actually a lot closer to lecture/problem set process. So students never have to differentiate between the situations when learning the concepts. They ask you to master this concept, and then they test you on it. We ask kids to tackle a problem they've never seen, and figure out which math concepts they need to solve the problem. That’s not what you can do with the current online offerings.
• Are needs different in poor and affluent community’s school?
• If you feel like you have a product that’s going to benefit students, you want to make it available. The selling process in K-12 is so nebulous and it’s a really hard decision on how to allocate resources. More of the affluent schools are open to ideas. The affluent district wants more data. Selling to MA is different from CA (where per capita education expenditure is much lower low). 
• Emerging markets like Africa and India, there’s a major paucity of good teachers are rural/low-income schools. What kind of technology do you think will help bridge this cap?
• EdX — universities that provide their courses for free, open sourcing their education. I don’t think they will ever replace working around people. If you’re not working with people when you’re going to school, you’re not gonna have the social skills for your job. 
• Are Interactive Whiteboards really not beneficial?
• Kimberly: Don’t see any reason we need. It's better if students write their own solutions to problems and work together as a group. In that case, the board just a distractor. Best math class: Went through 2 of 3 problems. He was not teaching them and they learned from each other. Similar to the working world, any bosses that are great took the time to talk to you a lot, and invested in you a lot.

Summary

• Marissa — As you’re thinking about EdTech startups, really talk to the potential users of your product, and what their challenges ares, test the product with all those users. If you just make assumptions based on your former assumptions, they can be faulty assumptions.
• Dan — User tests, figure out what problem actually exist in the classroom? As far as advice of building technology in general, focus on watching them, then you can improve that problem. Improve that process. Sometimes, it's just one UI/UX change. 
• Kin — It is a very noisy space, because there's lots of stuff out there. Interesting to note is the gap between the user and the purchase decision maker in EdTech. The products that are pushed down from the city level are the most appeal to VCs because you can sell a lot of it.

Changing Structure of Venture Capital

Changing Structure of Venture Capital

For our panel, “The Changing Structure of Venture” we’ll be looking at trends and observations on the venture ecosystem quite broadly (LP trends, funding trends, etc). Gaurav will be helping moderate the panel and we'll be piecing together some insights and perspective on the venture industry.

Moderator:

• Gaurav Jain (Founder Collective)

Speakers:

• Andy Macey (Common Angels)
• Neil Chedda (Romulus)
• Kyle Lui (DCM)

Some Notable Quotes and Perspectives:

• On VC Firm Partner Composition: 
• "We've seen dynamics change of those entering the industry -- the venture partner composition is finally beginning to come around to non-anglo-middle-aged-men to reflect the diversity and perspective of a great new generation of entrepreneurs" - Andy

• On getting into VC:
• "Right out of b-school, potentially the best thing for the firm and yourself is to go start a company. Join something if you don't want to start that thing yourself." - Kyle
• "Some MBA's dont know the difference between confidence and arrogance" - Andy

• On a career in VC:
• "VC is not a great career, but it is an incredible obsession. Truth is, is that most people don't make it." - Neil
• "Some people see it as a career that is less risky, but the reality is that you only get to cut so many checks, and you're only as good as your last deal." - Neil
• "When it comes time to cut a check, it becomes valuable to know you've been there before, and what they are going through" - Neil
• "The greatest joy of venture is watching a company grow from something small to a big company." - Andy
• "It's not just a one time decision, often the company isn't going anywhere and they are out of capital." - Kyle

• On deal selection: 
• "I'm constantly asking: Why you? Why Now?" - Neil 
• "No soccer team needs 11 strikers [MBAs], there is so much value in diversity" - Andy

HBS Founders Panel

• Moderator: Howard Bornstein (BCV)
• Panelists: Joris Poort (Rescale), Brent Grinna (Evertrue), Phil Kim (Bundle, Capital One), Louis Beryl (Earnest)

Panelists by the Numbers

• 100% of panelists started a company directly out of HBS
• 75% of panelists started a company while at HBS
• 50% of panelists raised their first capital pre-revenue
• 75% of panelists raised non-institutional capital for the first round
• 100% of panelists have cofounders now; 50% had that cofounder at the time of idea generation

Fundraising by the Numbers

How much time did you spend raising your first round? How many conversations did you have? How much did you raise?

• Louis: Spent a few months, 50-60 pitches in ~2013
• Joris: Spent 2 weeks (via Y Combinator) Raised $3M in the first round, >100 pitches
• The more you commit your time to fundraising 100%, you can condense your time spent fundraising and reduce the amount of time you're not making progress on the business via distraction
• Brent: Spent 18 months, $1.3M in a seed in 2010-2011
• Phil: Spent 2 years raising money from strategic partners in 2009

The decision to start

• Louis: We spend more time trying to talk ourselves out of ideas than into it - when I woke up in the morning and realized that was all I wanted to do was work on my idea, that's when I knew it was time to officially transition.
• Phil: I've always been an entrepreneur in that I loved building things, especially technology. I came to HBS to "reset" after I realized that I wasn't doing what I wanted to be doing as a consultant.
• Brent: Didn't spend time on entrepreneurship while at HBS, and "accidentally" founded my company. Didn't realize it was a good plan until a judge at a business plan competition offered to invest.
• Joris: If you can be rejected by 100+ investors and you still think it's obvious that the company needs to get built, it's a good sign.

Customer development plans

• Brent: We frequently get focused on our ideas and it's usually linked to the problem space you've experienced. I wish in hindsight we'd spent more time trying to understand our problem, interviewing more customers in the space.
• Joris: Being your own customer is great in that you can understand your problem best and really dig into it. The best example is how Optimizely started -- selling the product to a customer and validating the market before even building it.
• Louis: I tried to solve the problem for myself when we were smaller; now that we're bigger, we're able to spend more time on the customer development side. You've got to be testing a hypothesis that's actually relevant. You have to really make sure you're not just running tests to validate your own opinions or what you believe to be true.
• Phil: I've made so many mistakes where we haven't exercised enough judgment. There are lots of ways to do customer development, but building something exclusively for yourself will only work if you want yourself to be the only customer. You have to exercise great judgement continually while trusting your own gut and that of the people you've hired.

Choosing cofounders

• Louis: The first sales process was less about selling customers than it was about recruiting employees. The relationship that you have with those employees (specifically your cofounder) is important; you'll see them more than your loved ones.
• Phil: I think of my cofounder like my brother; there are things that drive us crazy about each other, but we're really complimentary.
• Brent: I was looking constantly for a CTO; I was going to every developer meetup in Boston, but it finally worked. Statistically, that is not what most people would recommend you do. But if you don't have the long-term relationship with a cofounder, it's still doable.
• Joris: Trust and alignment of values is really important, as is a passion for the product itself. I ended up hiring my brother as my cofounder.

Biggest challenges

• Phil: About 2 years into Bundle, I realized that we weren't on the right path. We did more research and evaluated another path, and when we presented it to the board, they didn't agree with the path.
• Brent: My low point was probably when I was meeting with an investor who looked me in the eye and told me "This isn't fundable."
• Joris: I had about an 8-month low point where I couldn't raise money, and had to live on ramen and watch my classmates take high-paying jobs. The true lowest point was when I had to fire an employee, someone who was a classmate at HBS. We often simplify at HBS the complexity that's required in personnel decisions. It's the hardest thing you'll do.
• Louis: The psychology of founding a business is intense in terms of the ups and downs. One of the strongest qualities that an entrepreneur needs to have is perseverance. You have to be ready for a lot of "No"s relative to the "Yes"s.

High points of being a Founder/CEO

• Louis: I love sitting in product development meetings when you realize that you're going to birth a product that people want
• Joris: Seeing customers use your product in ways that you couldn't necessarily have imagined is a great feeling.

Fundraising: The benefits of outside money

• Louis: VCs were useful outside just sources of capital.
• Joris: VCs are the most expensive source of capital that you can get, so alternatives are always desirable if you simplify it down to the cost of money. There are specific VCs who can be helpful, though. The most useful resource for me was other founders who were a little bit beyond where I was.
• Brent: We spent the first few years with angel funding and bootstrapping, and bringing on BCV has been very helpful.
• Phil: In finding the right partners in my next venture, I would bring on the best people with capital. Even if you have all the capital in the world, you may not have the resources, connections, etc. that you need.

Highlights from Sam Altman Presentation: On MBAs, YC, and the Startup Ecosystem

Great Presentation / Q&A from Sam Altman from YC

Highlights of the discussion: 

On MBAs

Many MBAs struggle to succeed in launching startups because they are not passionate about the idea.  Instead, they do it because startups are the cool thing to do.  Successful founders have to be passionate about the idea, because success is driven by building a product that small number of people deeply love and then expanding from there. So, if you are thinking about starting a startup because it's fashionable - don't, you will fail.  

When MBAs apply to YC and indicate that they are only willing to work on the idea full-time if YC accepts them, then that's a pretty good indication that the passion is not there.The MBAs YC funded that have been the most successful either dropped out of business school because they were so passionate about the idea, or they worked in a specific industry for a few years after business school and really understood it in depth. 

For many MBAs, however, the best time to join a startup is when it hits the upward sloping part of a hyper growth curve.  When a company needs to build out its organization and scale, then MBAs can have a huge impact in Biz Dev, Finance, Marketing, etc.  And working at a fast growing startup is one of the most valuable things you can do. 

On YC

YC gives many companies a little money, and then gives them a lot of advice about what to do.  In particular, YC advice tends to focus on product and growth, though over time they've also developed expertise in building a team and raising money.  More than anything though, YC provides access to other YC companies, which Sam considers the strongest network in Silicon Valley.

When looking at YC applications, the most important thing is for founders to clearly indicate how they and their company are special in a few easy to understand, impactful sentences.   YC has found that people who can't communicate their ideas effectively are bad at running startups, and YC will choose not to accept companies because the presentation wasn't succinct and powerful.

YC will even take chances and fund ideas that seem seem "out there" at the time, as long as the founders can communicate the problem/vision in a compelling manner.  When Airbnb's founders indicated that people's homes are the largest untapped asset in the world, it was a powerful statement.  YC thought the idea was crazy at the time, but the opportunity was expressed in such a compelling manner that it was worth a shot.

On the Startup Ecosystem

Many people ask whether we are in a bubble.  Maybe, but  the difference between the 2000 bubble and now is that today's companies have real revenue.   Areas where Sam (and presumably YC) are particularly excited about include  Energy, Biotech, Healthcare, AI, Internet communities.

Matt Wallach: A dozen lessons learned

A dozen lessons learned from Matt Wallach's journey from the Whiteboard to IPO:

1. When you agree with someone who is very different from you, you have a higher chance of being right
2. The vision trumps the polish
3. Your values are how you achieve your vision
4. Do the right thing is before your vision and values... Get your moral compass right, would your mother approve of what you are doing?
5. Focus on customer success not customer satisfaction
6. Stay focused, don't get distracted by shiny opportunities
7. Don't overspend... Be smart and efficient with your spending. Senior people come to build orgs and spend money, don't hire them until you need to
8. Pricing: it is the difference between survival and failure... Important from the beginning
9. Hire A players, they won't fight with each other, they will attract other A players
10. Don't spend all your time at business school looking for a job, you are here looking for a career not a job
11. Don't be a competitive jerk but don't be a slacker either... People will remember both
12. Spend real quality time with your classmates

If you are not having fun at business school... You are blowing it

Big Data: From Hype to Value

Do you think ‘big data’ is over-hyped? Are you tired of hearing about its potential and want to know how it affects the bottom-line? Will Hayes (CEO, Lucidworks), Phil Kim (Cap One), Michael Morrison (CEO, Datawatch), Adam Towvim (CEO, Trust Layers) share their perspectives on how companies are deriving value from big data today, moderated by Andrew Burton (CEO, Logentries).

As the panel traversed topics ranging from hiring practices in big data to data governance and protection, there was one major reoccurring theme: big data is not the same as the big answer. As Adam Towvin eloquently put it, “sometimes it’s not about finding the needle, it’s about building the right the right haystack.”

Much of the reason that big data as a field feels like hype is because of the ways it’s being described as a way to find answers and solutions for a huge range of previously unsolved challenges – and those answers have not been forthcoming since “data science” became an industry buzzword.

But as our panellists today have outlined, that’s partially because of the way big data is being misinterpreted and partially because of limitations in data usage and lack of expertise in the field.

Will Hayes kicked things off reminding us, "don't get infatuated with technology, get infatuated with results,” a sentiment echoed by the rest of the panel. Phil Kim agreed that big data is in stage where people don’t understand what it is and how it can be used – and although there are great tools for extracting value from data, people aren’t always sure on how to use them.

The biggest benefit of big data at the moment, said Towvin, is that data helps companies innovate faster and improve business in ways it was impossible to do before.

Andrew Burton turned the panel to the question of how “offensive or defensive” data should be in bringing data science practices to other parts of the business.

While the group agreed that an offensive approach was important for educating others about the value and limitations of big data, as well as formulating questions and helping customer-facing teams build better products, there was some discussion of the tension that other departments (particularly legal) might feel when large pools of data across the company are thrown together and leveraged in this way.

When it came to data governance and protection, the panel acknowledged the importance of protecting data but Towvin in particular felt the aggressive ways in which data was encrypted and hidden away undermined those data true potential. While protection was important, there is a sense we are selling customer short by using that data to make better decisions in areas ranging from health to consumer products to personal finances. Kim highlighted Capital One’s practice of putting risk management and marketing teams in the same room so that they can jointly solve problems of how to protect and use data effectively at the same time.

The audience was curious about how to prevent people from confusing correlation and causation – a challenge the panellists admitted is almost impossible to solve. Their solution? Hire the right people, experts with deep insights to help them avoid these biases.

Of course this naturally led to a discussion of how to build the right team and make the right hires for the field. Kim explained the challenges he faced explaining to hiring departments what a data scientist actually was, but all of the panellists agreed that the most important trait for a data scientist was a deep intellectual curiosity, as well as scientific yet creative mind that can absorb the quantitative challenges of big data while still looking for interesting patterns.

Fortunately for the students in the room, Michael Morrison spoke to the need of these big data companies and teams to hire “the next generation.” He pointed out that many of these companies need to do as much to market themselves to talent as candidates need to do to market themselves to companies. Morrison highlighted an example from Datawatch – they opened an office in Boston as they knew it was a more appealing location for the type of people they wanted to attract.

Looking forward, the panel spoke passionately about the benefits that real time analysis of streaming data will provide to the industry.

Thank you to Will, Phil, Michael, Adam and Andrew for a great overview of this fascinating and fast-moving field.