Now I face the possibility that my children, when they grow up, will find their jobs outsourced to the very country their grandfather left to pursue economic opportunity.
September 06, 2005
Technology Review published its annual list of top 35 technology innovators under 35 today and it gives me immense pride and pleasure to note that my fellow blogger, college classmate, and one of my closest friends Chari is on the list and in addition is one of the three people to be profiled. For those without access to TR, here is the complete article:
Narasimha Chari, 31
Setting the mesh networking standard
In the late 1990s, when Wi-Fi-equipped laptops were still a novelty, Narasimha Chari saw the possibility of creating large communications infrastructures using wireless mesh networks--which at the time were the exclusive province of the military. In 18 months of moonlighting while a physics grad student at Harvard University, he created elegant algorithms that tailored mesh networking for routine civilian communications.
Tropos Networks, the company Chari founded in 2000 with coinventor Devabhaktuni Srikrishna, helped launch commercial wireless mesh networking. With their straightforward installation--routers attach to lampposts--and attendant low cost, mesh networks have eased into plentiful use both outdoors (on campuses, in public safety networks, and at gatherings such as festivals) and in (in hospitals and factories). But Tropos is focusing on the rapidly growing market for networks that serve entire municipalities. That's the application of choice for one-third of the company's 200 customers.
Tropos's services, which are built around Chari's routing protocols, dominate the nascent mesh-networking industry. Telecommunications companies fear the proliferation of the technology, seeing it as a threat to their Internet access businesses. In fact, the telecommunications industry is lobbying for legislation granting them--not local governments--first dibs on municipal Wi-Fi installations. Meanwhile, Tropos is gaining customers at a rapid clip; 75 signed on in the first half of 2005.
Tropos's expansion is bringing Chari full circle. In 1992, after receiving the third-highest score out of 80,000 on the Indian Institutes of Technology entrance exam, Chari left India for Caltech. Later, while at Harvard, he had late-night talks with Caltech pal Srikrishna about providing anytime, anywhere communications in developing countries. Now, as Tropos ships its first systems to India, Chari is seeing his innovation connect back to his homeland.
Its an incredible achievement that is richly deserved and could not have happenned to a nicer guy.
I would be remiss if I did not mention one other thing - TR has a policy of recognizing only one person for an achievement. I disagree with this philosophy. Any scientist or technologist would tell you that innovation rarely happens at an individual level - it happens through active collaboration with other folks and upon building on things other people have already invented. In this context, Tropos Networks was a brainchild of both Chari and Sri. Sri was equally instrumental in the creation and commercialization of this world class technology and should get half the credit. Together these guys have built incredible technology and a world class company - Tropos Networks. I feel honored to know them both.
August 03, 2005
DNS - The achilles heel of the Internet
CNET has a good article on the vulnerability of the Internet to DNS "cache poisoning" attacks. Turns out that more than 10% of DNS servers could already be compromised and I think its very important that ISP's and enterprises fix this problem immediately.
Full disclosure: One of my portfolio companies, Nominum, offers a variety of DNS related products some of which help solve this problem.
Some excerpts from the article include:
In a scan of 2.5 million so-called Domain Name System machines, which act as the White Pages of the Internet, security researcher Dan Kaminsky found that about 230,000 are potentially vulnerable to a threat known as DNS cache poisoning . . .
. . . In a DNS cache poisoning attack, miscreants replace the numeric addresses of popular Web sites stored on the machine with the addresses of malicious sites. The scheme redirects people to the bogus sites, where they may be asked for sensitive information or have harmful software installed on their PC. The technique can also be used to redirect e-mail, experts said.
. . . The vulnerable servers run the popular Berkeley Internet Name Domain software in an insecure way and should be upgraded, Kaminsky said. The systems run BIND 4 or BIND 8 and are configured to use forwarders for DNS requests--something the distributor of the software specifically warns against.
BIND is distributed free by the Internet Software Consortium. In an alert on its Web site, the ISC says that there "is a current, wide-scale...DNS cache corruption attack." All name servers used as forwarders should be upgraded to BIND 9, the group said.
As I have mentioned before in this blog, BIND is neither secure nor is it going to scale to manage the needs of the Internet. I think its important that ISP's and enterprises either upgrade to BIND 9 or do something else to protect their DNS servers.
July 31, 2005
What do Golf, Startups, and Slots have in common?
They all conform to one of the fundamental rules of human behavior conditioning - provide random and variable rewards to reinforce repeated behavior.
Ivan Pavlov in a series of seminal experiments in the 1900's established all of this and now the gambling industry uses the same principles to "hook" and "keep" people. As Alan Krigman wrote in this post:
Nearly everybody knows of the experiments by Ivan Pavlov in the early 1900s. Pavlov started by ringing a bell and presenting food simultaneously. When he stopped offering the food, the dogs still salivated at the sound of the bell. Later, to keep the dogs responding to the bell, he reinforced the behavior by accompanying it with food at random, but frequently enough that the stimulus was not futile too often. B F Skinner extended this work during the 1930s using conditioning to train animals such as pigeons and rats to perform various tasks. Tom Creed, a psychology professor at the College of St Benedict at St John's University, says that slot machines utilize similar conditioning processes to produce player behavior characteristics desired by the casinos.
Like slots, Golf and Startups provide the same conditioning response (though the only good news is that unlike slots in which the odds are conditionally designed for you to lose, Golf and startups provide opportunities for truly skilled players to hit the jackpot). How often is it that you play golf and go through 16 holes of hell but remember that one great shot in hole 17 in which you drive within 6 feet of the hole and one putt it for a birdie - in my case very often - and it is that one shot that makes you want to come out and play golf again.
In Silicon Valley, startups have some of the same conditioning allure of the slots. Slots are designed to be "loud" and "blaring" when there is a huge payout so that all the other players around the slot realize that someone has won and thus get reinforced that they could also win. This motivates the other slot players to play more often. The same thing happens with startups - think Google. In Slots, the machines are designed to have many "close" outcomes to trick players into thinking that they almost hit the jackpot. The same thing happens in startups (not by design but just by their nature) when the startup is close to being acquired or when they get a major deal. Slots make periodic payouts that condition players to keep playing. Startups get acquired or go public in quick enough time frames that they resemble "payouts" to the employees and thus motivate them to start or join another startup.
Now please don't mistake this post to mean that startups are a "con" like slots. Far from it. Startups offer a truly unique opportunity for people to pursue their vision to create fantastic products/services, delight customers and make everyone wealthy. Unlike slots which are destructive for everyone (except the casinos of course), Startups actually benefit society. I draw the parallel only to show why startups are addictive to some folks. They share the same conditioning response with slots and golf. Hopefully my wife now understands why I still play that god forsaken game of golf.
July 25, 2005
Mark Cuban Wisdom
No. This is not an oxymoron. I had the pleasure of listening to Mark at the Always-On conference last week and found this pearl of wisdom. Mark asked this rhetorical question:
"What is the #1 job of a General Manager of a NBA team?"
He answered the following:
"You might think it is to win the NBA championship or assemble a great group of players or get the best value for the budget but you will be wrong on all counts. The #1 job of a General Manager is to keep his job because there are only 30 jobs like this and he/she gets paid millions of dollars to work 6 months a year"
This is so true. There are lots of jobs especially high paying jobs in which the incentives of the folks working those jobs are not aligned with their employers. Mutual fund managers come to mind (their goal is to maximize assets not returns), Studio execs (whose job is to keep their job) and some would even argue VC's (keep raising funds independent of the ability to invest it wisely)
July 18, 2005
Does Valuation matter?
You probably are thinking - Duh! of course it does.
Sure valuation matters but is it the end all and be all of all venture transactions or is it just one piece of the puzzle? By valuation I am not just referring to the price but also to terms. I was at a conference recently where a bunch of early stage venture guys were talking about how valuations have creeped up and how they were no longer seeing single digit pre-money deals. That got me thinking - why are folks so caught up with valuation?
I do mostly early stage deals (Seed/Series A) so this reasoning is confined to the early stage (middle and late stage deals are a different cup of tea.) My thesis is that if you are doing early stage deals the MOST important thing for you is to BACK a big winner. Basically your goal is to shoot for a Amazon/Google/eBay/Juniper/Verisign and you want to do everything to maximize your chances of getting into one of those deals.
Now here is the rub if you are shooting for one of these "verb" companies you are playing a high beta game which means that you are either going big or going home and in both cases valuation does not matter. Because if the company becomes big, it would not matter if you did the deal at $5 pre or $15 pre e.g. Amazon was done at $27 pre, Google was done at $60 Million pre, Netscape was done at $21 Million pre, and eBay was at $27 Million pre, etc. And if the company bombs then again valuation does not matter because you ain't gonna get much back.
July 17, 2005
My money is on America
Suketu Mehta wrote an Op-Ed piece on the NY Times on July 12th 2005 titled "Passage to India." Suketu is a wonderful writer who recently wrote a book called "Maximum City: Bombay Lost and Found" which I really liked and recommend for those trying to get a sense of India independent of the cliches of poverty, outsourcing, and the caste system.
I was however disappointed with this piece because I did not understand what it had to say and I definitely disagree with some of its conclusions. Here are some excerpts from the piece:
Okay folks let us do some Math - the US economy is $15 Trillion growing at 2-3% a year which means the US economy is adding $300-$450 Billion a year. The Indian IT industry in its wildest goals would be happy to be a $100 billion industry in 2010. Even if the Indian IT industry attains its goals it would still be less than 1/3rd of the growth of the American economy every year. Its hyperbole to think that this is going to deprive your kids of a job.
But I am here because the country of my ancestors didn't understand the changing world; it couldn't change its technology and its philosophy and its notions of social mobility fast enough to fight off the European colonists, who won not so much with the might of advanced weaponry as with the clear logical philosophy of the Enlightenment. Their systems of thinking conquered our own. So, since independence, Indians have had to learn; we have had to slog for long hours in the classroom while the children of other countries went out to play.
Ah, Suketu you might want to get out of your upper middle class Indian perspective and smell the roses a bit my friend. Most Indians *barely* go to school and even when they do, they do it in schools with no text books or competent teachers. Yes the Cathedral school types might be studying but most Indian schoolkids are just happy to get a "free lunch" in school.
When I moved to Queens, in New York City, at the age of 14, I found myself, for the first time in my life, considered good at math. In Bombay, math was my worst subject, and I regularly found my place near the bottom of the class rankings in that rigorous subject. But in my American school, so low were their standards that I was - to my parents' disbelief - near the top of the class. It was the same in English and, unexpectedly, in American history, for my school in Bombay included a detailed study of the American Revolution. My American school curriculum had, of course, almost nothing on the subcontinent's freedom struggle. I was mercilessly bullied during the 1979-80 hostage crisis, because my classmates couldn't tell the difference between Iran and India. If I were now to move with my family to India, my children - who go to one of the best private schools in New York - would have to take remedial math and science courses to get into a good school in Bombay.
Why do I hear such reasoning so often from Indian immigrants? Let us see - you were part of a group of fortunate well educated, upper class Indians who managed to migrate from India to Queens. There you ended up going to a public school and found yourself to be more competent than the students there. What is the surprise ? How would a student who actually went to a "public school" in India compare to one in Queens or what if Suketu had attended Philips Exeter instead of a public high school. Also I am not sure where Suketu's kids go to school but the other day I was looking at one of my partner's kids homework (she goes to a private school in Cambridge) and I found her Math homework hard - granted I am not that smart but still I am a product of the "fabled Indian school system"
The rich countries can't have it both ways. They can't provide huge subsidies for their agricultural conglomerates and complain when Indians who can't make a living on their farms then go to the cities and study computers and take away their jobs. Why are Indians willing to write code for a tenth of what Americans make for the same work? It's not by choice; it's because they're still struggling to stand on their feet after 200 years of colonial rule.
Whoa, hold on a sec. Now I am totally lost. Are you for a second suggesting that because of agricultural subsidies in the west, rural farmers in India are leaving their fields to write code. That's absurd. Indians are willing to write code for 1/10th the price because that is a lot of money in India and its worthwhile for them to do so economically. They are not making any grand statement on colonial rule - they are just trying to make a buck like everyone else.
But we have a resource of incalculable worth right here to help us compete: the immigrants who've been given a new life in America. There are many more Indians in the United States than there are Americans in India. Indian-Americans will help America understand India, trade with it to our mutual benefit. Just as Arab-Americans can help us fight Al Qaeda, Indian-Americans can help us deal with the emerging economic superpower that is India. This is the return of the gift of citizenship.
And just in case, I'm making sure my children learn Hindi.
Yes Suketu, I agree that we "Indian American" immigrants can help America. We help America and Americans understand India better and help them to take advantage of the economic opportunities India offers. India's emergence as an economic power is not zero sum but rather its a huge positive for the world especially America. We as Americans benefit as India grows economically as we can then sell India our goods and services (movies, technology, drugs, etc.) and also create economic value by leveraging the tremendous talent India has.
I am also glad that your kids are learning Hindi. I am trying to teach my kids Tamil - not because I think this is going to be of economic benefit to them but rather I would like them to stay in touch with their cultural heritage and be able to enjoy their visits to India more. Isn't it ironic that while you are teaching your kids Hindi, there are 300 Million Chinese and 200 Million Indians who are desperately trying to learn English for economic benefit. Are they wrong?
India, China and (name your favorite developing country) are all great places and its in all our interests for them to grow and be economically successful. However lets not get too carried away. America has 230 years of building a capitalistic society based on property rights and personal freedom that is not easily replicated overnight. America has an unique ability to absorb people, customs and social mores from all over the world and mix it into the American melting point. This is our biggest strength and until this stops happening I am not worried. There is no other place in the world where a 16 year old with no money and no family can come to a country and build a career, where an Austrian body builder can marry into blue blood society and became governor, and where immigrants can get a chance to build a life. That is why my money is in America and why I will make sure that my kids can speak and write English better than I (not too hard). And Suketu I suggest you also do the same.
July 04, 2005
Sorry for the hiatus folks but have had a few life events to celebrate and appreciate.
Not to mention, the good ol 4th of July.
This independence day has got to be even more symbolic for we have hundreds of thousands of our brave young men and women out in Iraq fighting for Iraq's as well as our freedom. To those of you out there and to all your families and friends over here, THANK YOU!! Your commitment, hardwork, and patriotism is what allows America to be the place it is. Be safe and come home soon.
June 05, 2005
Google Stock Split
Normally I take very little interest in commenting on Google since it seems the whole blogosphere is rife with Google coverage. However this post by John Battelle got my interest (btw John's coverage on the search space is top class and always worth a read)
Will Google split its stock? Given its love of Buffet, probably not, says Bloomberg News. So does that mean smaller investors will be priced out of owning it? Yes and no. Yes, they probably can't own it if if keeps going up - Buffet's stock is at 84K or so - but they can always buy a fund that owns it. In other words, if Google does not split, it'll end up being owned mostly by institutions.
Prices such as Google's make it more difficult for individual, or retail, investors to buy and sell stock, according to David Ikenberry, a finance professor at the University of Illinois in Champaign.
``It's clear that higher sales price equates with higher institutional ownership,'' Ikenberry said in an interview. ``At a certain level, the retail market gets priced out.''
I realize that John is quoting a bloomberg story in which the reporter is in turn quoting a finance professor (David Ikenberry) and my limited dealing with the media has convinced me that words spoken to a reporter don't necessarily turn out the right way in print.
That being said this statement by the professor makes no sense. The stock price has no rational bearing on its attractiveness or not (its market cap has but not the stock price). If you are a retail investor and you wanted to invest $1500 in Google you still can whether the stock price is $10 or $300. In one case you get 150 shares and in the other 5 but the reality is that you own the same amount of the company. The only time this stops being true is when the stock price goes so high that it expands beyond the reach of most retail investors (Berkshire at $80,000 comes to mind) but even with Berkshire, you have a Class B stock at $2800.
June 02, 2005
The Desi Trifecta in the Spelling Bee
The 78th Annual spelling Bee competition finished today and the top 3 finishers were:
A desi trifecta. Its fair to say that South Asians usually don't set the field on fire with their athletic exploits but they definitely seem to know how to do well in Spelling Bee. Amar Shah of ESPN has a great article on the Indian American phenomenon in Spelling Bee. Some of the stats are impressive:
Although representing less than 1 percent of the U.S. population, Indian-Americans made up around 15 percent of last year's participants. This year's spelling bee continued the trend, as 31 competitors of Indian origin (according to rediff.com, an Indian news portal) vied for the coveted title of the nation's best speller. Seven of the 17 contestants from Texas were Indian-American, and Puerto Rico's lone representative was none other than Arun.
While its easy to look at this year's results as a coincidental outcome for Indian-Americans, I actually look at the results and remain in awe of America. For the people shouting from the rooftops on how America is declining, how China and India are gaining on us, how our best days are over, blah, blah, blah . . . all I have to say is that can you think of one other country in the world where this could happen. Where a group of kids born to immigrant parents come to a new land and have enough opportunities (and also drive and hard work) to learn a new language and be the top 3 finishers in the national spelling contest. Nada, nyet, not one. This is what makes America tick. Our ability to welcome and absorb people of all hues into our melting pot. Until that phenomenon stops, my money will always be on America.
Update 1: The NYtimes also has a post on the phenomenon of Indian-Americans and the spelling bee . . . my only quibble on the article is that it makes it out like Indian-Americans follow the spelling bee like a cult. The reality is that this community values academics very highly (and in the same token devalues athletics and worships bollywood) so coverage of any academic achievement is strong. The ethnic media just the last few weeks covered the National Geographic Bee (where an Indian-American kid came in second) as well as the Intel Science Talent winners.
May 04, 2005
Detecting nukes in transit: What can the newly-established DNDO do?
Just finished writing a paper with Sri and Tom Tisch - it's titled 'Nuclear Detection: Portals, fixed detectors, and NEST teams won't work on a national scale, so what's next?'. We analyze the *use* of nuclear detectors to help prevent terrorist nuclear attacks, and we conclude that fixed detector approaches (such as those currently being implemented) are unlikely to be that effective. Here's the executive summary of the paper:
Recognizing the need for detecting terrorist attempts to transport or use fissile nuclear materials, President Bush’s FY 2006 budget request includes $246 million to form a Domestic Nuclear Detection Office (DNDO) within the Department of Homeland Security (DHS).  “The DNDO will provide a single accountable organization with dedicated responsibilities to develop the global nuclear detection architecture, and acquire, and support the deployment of the domestic detection system…”  How can DNDO planners deliver a global nuclear detection architecture that works?
Nuclear detection systems, as architected and deployed today, leave loopholes in the transportation network that terrorists can easily exploit by making use of light road vehicles to private jets to oil tankers . Progress can be made if we face up to three fundamental facts:
1. Terrorists will most likely try to use highly enriched uranium (HEU), not plutonium: assembly of a HEU bomb does not involve technically complex detonation as with a plutonium bomb.
2. Terrorists can circumvent a network of fixed detectors: fixed detectors not only lack sufficient proximity and exposure to the vehicle in transit but also do not screen many types of vehicles.
3. R&D breakthroughs cannot change the physics of detection: passive detection of HEU will always be limited by its natural rate of radioactivity, and the attenuation of radioactivity is very sharp with distance . The gamma rays and neutrons useful for detecting shielded HEU permit detection only at short distances (2-4 feet or less) and require that there is sufficient time to count a sufficient number of particles (several minutes to hours).
Recommendation: Due to fundamental physical limits, the current trend toward a fixed detector infrastructure is a dead-end. The only way shielded HEU can be effectively detected is if commercially-available detector technology, rather than being kept at fixed locations, are directly integrated into vehicles themselves. Detectors would travel with vehicles and have enough time to record radioactivity before reporting their readings to a network of check-points (in the same way E-Z pass collects highway tolls).
Our paper, 'Nuclear Detection: Portals, fixed detectors, and NEST teams won't work on a national scale, so what's next?' explores tradeoffs in detecting HEU in transit, and analyzes its technical, operational, and economic feasibility.
 “R&D in the Department of Homeland Security”, AAAS, http://www.aaas.org/spp/rd/06pch12.htm
 “Fact Sheet: Domestic Nuclear Detection Office,” http://www.dhs.gov/dhspublic/display?content=4474
 Medalia, J., 2005, “Nuclear Terrorism: A Brief Review of Threats and Responses,” CRS Report for Congress, The Library of Congress http://fpc.state.gov/documents/organization/43399.pdf
 attenuation of radioactivity with distance is subject to an inverse-square law in free-space and is exponential with shielding