Company ideas can come from many sources. How did a stolen laptop transform into your idea for Cloudastructure?
I was CEO/founder of Televoke. We had raised money from Softbank and WI Harper, had loft space South of Market in San Francisco, and did all the security stuff you’d expect. The staff had badges, we had an alarm system, front desk security—you name it. One day, around noon, someone walked into the office, picked up a laptop off of a desk, and walked out. When the laptop’s owner came back from lunch, we asked the building owners to see the footage, but they didn’t have any video at all. It turns out, someone had unplugged the surveillance system to plug in a vacuum cleaner.
This was before everything went to the cloud, but even with the technology we had at the time, I was shocked to learn that a security system wasn’t monitored and could be completely foiled by a vacuum (I now call this the “vacuum effect”).
This problem really struck me and I knew it was something that needed to be fixed.
When did you start working on Cloudastructure?
I started looking at video surveillance in the cloud in 2003. It was challenging—network cameras were new and the broadband wasn’t quite there to get all the video offsite. More importantly, the buyer wasn’t comfortable putting security data on someone else’s servers.
Around 2015, the conversation completely changed. All of a sudden, server rooms started disappearing. File servers became Dropbox or Box accounts. Exchange servers for emails moved to Gmail or Office 365. What used to be on a CRM server became Salesforce. Everything started going to the cloud. Everything, that is, except for access control and video surveillance. In most companies today, there are still two physical servers in every building. It’s the last part of the industry to go to the cloud, and our goal is to get it there.
That’s over a decade—did you have any reservations when you decided to go back and work on your company vision from 2003?
It’s funny—we kept our old website live, and when things started moving to the cloud all of a sudden the phones started ringing. This especially hit when the news about the Target data breach came out; that’s when things really transformed for us. At the time, Target had a Windows server in front of an HVAC system, so all you needed to do was access the HVAC system and you were in. When that breach happened, it created a big moment for us, and that’s when I decided to jump into the business with both feet.
How did your experience, especially the UBER acquisition, help prepare you to launch Cloudastructure?
The last company I started, Televoke, had the benefit of the dot-com boom. Our tagline was “connecting people to things”. It was Internet of Things (IoT), but before the term “IoT” really existed. I remember walking up and down Sand Hill Road until my feet hurt pitching to every VC I could. Every conversation went the same—VC’s wanted eyeballs and clicks. I could show that this concept will make money, but they didn’t care if it wouldn’t generate a billion “eyeballs” next week.
Then, Softbank decided to back us. They were the first real VC in the door.
Everyone says VCs are sharks, but when they are yours, they are your sharks. That’s true as long as your interests are aligned.
And then the dot-com crash happened. At the time, we were the only Series-A company around with a revenue model, which helped keep us going. This was an important lesson: have something to sell that people want to pay for. It sounds obvious, but sometimes founders miss this when they are seeking venture money.
Another lesson I learned was to not count your chickens before they hatch. We were actually offered to get bought by Ford. It was an 8-figure deal. We took the offer, signed the term sheet, but they almost immediately switched the acquiring party to a joint venture they had with Qualcomm (called Wingcast, their answer to OnStar), and then, when the economy crashed, their CFO killed everything that wasn’t profitable. Ford killed their own JV to save money. So, even though we didn’t get bought, we still outlived our very well funded Ford/Qualcomm would-be acquirer.
After this fell through, the VCs brought in the proverbial grey-haired CEO. I then helped arrange a merger and, sometime after the merger, I stepped out of the company. The merged entity renamed itself deCarta, and started hosting maps. Back then, over 90% of their revenue was from Google. Then Google developed its own maps and finally UBER came in and bought the company. We were their first acquisition. After all the history, though, I was fairly washed out—even though it was a pretty sizable deal, I was basically able to get a new arcade machine out of it (which my kid and his friends love). I do have a small amount of UBER stock too, which is still under the 180 day lockup after the IPO.
What were the 2 most surprising trends you’ve had to learn about while launching your business?
Crowdfunding. It came out of left field for us—we didn’t see it coming. We are a little late to the game and I beat myself up for not jumping in earlier. For instance, Bill Li (CEO of Knightscope) raised 8-figures in crowdfunding. Bill and I were both portfolio company CEOs at Softbank. He saw this trend early and he has done really well with it.
Anyone who works in tech startups has to be on the bleeding edge. That’s what we do. We do irrational things that are too early for the incumbents (or wise people with the money) to take risks on.
I wish I jumped in to crowdfunding sooner—that’s why I’m excited about our current campaign on Republic.
Technology trends. When I worked at the Kinetics Foundation, I was a direct report to Andy Grove (one of the founders and former CEO of Intel). His former boss, Gordon Moore (co-founder of Intel) coined Moore's Law, the idea that every 18 months the processing speed doubles. When we first explored the idea for Cloudastructure in 2003, the market just wasn’t ready and the technology wasn’t there. In this sense, Moore's Law worked in our advantage, as technology—just like processing power and broadband—is always getting better.
What is your superpower?
Being early. I was providing IoT in 1998, only then we were calling it “connecting people to things.” In 2003, I first tried to move video through broadband before the cloud (and before there was enough broadband to move it). I love thinking about the future and seeing what’s coming, even before we are ready for it.
How do you cope with people not being ready for these early ideas?
Being early can definitely be worse than being late. You can be late and be a fast follower. You know the saying, “pioneers take the arrows, settlers take the land.” Being a fast follower is a very valid strategy. If you are early—and repeatedly early like me—you have to learn to stick it out until the market catches up to you. As a founder, you can’t do a six month dabble and leave. If all of the wind is blowing in your direction you have to ride it out.
What’s your kryptonite?
Knowing when to quit. It’s a double-edged sword for a founder. It’s a lot easier to get the day job, but the day job is the siren song of the entrepreneur.
What does a typical day look like for you?
I don’t think any days are typical! Lately, I’m mostly working from home. The team is spread out with most people working from home. I have my 11 year old son with me half of the time, so on those days there’s lots of dropping off and picking him up from middle school. The typical day will involve a solid schedule of meetings, calls, and a lot of email.
Lately, I’ve been spending more time at night with my son playing the video game Fortnite. It’s been a lot of fun. I have to confess, I’m no pro gamer but …I do have double digit wins. If they ever do a masters age group division, I’m pretty sure I’ll be ready to take the gold. At the very least, right now it makes me the coolest dad in the neighborhood. That’s been a lot of fun.
I also swim with the Stanford Masters Swim Team a few days a week. I went to Berkeley, but no one at Stanford has managed to drown me yet :) I also lift weights with my fiance almost daily too, it’s good alone time for us (no kids) and keeps us healthy. She’s a software developer who has started her own company in the past and gotten VC money too. It’s really great that she understands and therefore tolerates my crazy life.
Do you have any unusual routines or habits?
I always have animals around. We used to have an office cat named Buddy. Now, we have Buster. We also have 3 dogs, 2 hamsters, and a family of raccoons that visit us every night. I also live on the water, so we see a lot of rays and geese (who just had babies).
What apps or products are you really into lately?
I just started playing with the Samsung Galaxy Watch. I worked on the Google Watch for a bit while I was at Google X in 2015, and pioneered using wearables in Parkinson’s trials when I was working with Andy Grove, and I just love wearables. We haven’t seen their full potential yet.
What’s something you wish you knew more about?
I have a bit of a curiosity problem: if I want to know more about something, I make that topic my hobby for a while. For example, I used to keep bees until the HOA made me get rid of them (they swarmed one season, that’s how they reproduce, and made my neighbors uncomfortable).
Another example: I built the Mystery Machine from Scooby Doo. I still have it. The idea crossed my mind in my 20s. I saw someone driving one and I thought it was so cool, but I knew it was something I couldn’t afford at the time.
Around 3-4 years ago, I was driving my fancy-pants M6 convertible on 101 and the Mystery Machine popped back into my head, only this time I realized I could trade in my current car and have way more than I needed for the van. I found the perfect base van in Omaha on Craigslist. So my fiance and I got one way tickets to Nebraska, took an Uber to McDonald’s an hour from the airport and counted out 25 $100 bills to the dude who rolled up in a beat up van with faded paint and tinted windows. He gave us what looked like a Nebraska title (I had no way to tell) and we drove off with our roller bags. I’m sure to everyone there it looked like a drug deal.
We drove straight to California on I-80 for the test drive. Once home, I rewired the entire system (this is where my background in physics and engineering helped!), and built the perfect Mystery Machine. It had nothing to do with my job, but I got completely obsessed. It’s my daily driver, so I actually drive it to VC meetings, etc. (it helps me stand out a bit). You can even rent it out if you want at scoobymobile.com; I put it on Turo.
If you could give yourself one piece of advice 5 years ago, what would it be?
Mine Bitcoin! I mess around with new stuff all the time, so when PGP (Pretty Good Privacy) first came out, my old roommate and I would play with it and send messages to each other. I usually dive in to new ideas like this, but somehow I didn’t do that with Bitcoin. I didn’t get into crypto until 2015 and I wish I started much earlier. Since then I’ve done ASIC mining for BTC and GPU mining for ETH, I run a half dozen graphics cards in a single rig, but it’s all too late to make me rich. The irony is that cryptocurrency is almost the one time I wasn’t early on something.
Any advice you’d give aspiring founders?
Jump in and get started. You can spend a lot of time sitting around thinking about the idea, what you need, what the perfect website would look like, and who your team would be. Just get some stripped down version of that which you can sell and find someone to buy it. Ultimately, the version in your head is not perfect because you do not have any consumer insight or feedback. Take the time to talk to actual or potential customers. It isn’t worth trying out something until you know you can get someone to pay for it, that’s the ultimate judge. Find the shortest path to revenue and go. No battle plan survives the first engagement, so get your first engagement as fast as you can.