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Baptized into the world of business and travel at a young age I’ve subsequently lived in multiple countries, traveled to many more and built myself a small fortune investing in businesses and markets that I spend an extraordinary amount of time doing due diligence on. People sometimes ask me... More
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  • The Technology Entrepreneur 0 comments
    Feb 15, 2012 5:22 AM

    Technology will save us.

    OK, maybe that's a stretch… or maybe it isn't.

    I had the pleasure recently of meeting Jeff Bone. Jeff is a long-time technology entrepreneur and visionary. My friend who introduced us made the comment that "Jeff is always the smartest person in the room." I quickly found out how true that statement was!

    Jeff and I sat down for coffee while he was here in Chile. We talked about quite a few things, and I immediately thought, "I need to post some of this on the site…"

    Chris and I are working on an incubator project that we took a minority stake in recently, so I'm fast becoming more and more involved in the processes that go into start-up tech ventures. It's a world to its own. Jeff and I spoke about that project, as well as many others. I think you'll enjoy the conversations.

    ---

    Mark: Jeff, you're a serial entrepreneur like Chris and I. It's always fascinating to hear the back story on fellow crazies. How did you get the bug? Where'd you grow up? Were your parents business people?

    Jeff: My father was a USAF fighter pilot who was medically retired early; he spent the next three decades as a hospital administrator. After moving around a lot we moved to a tiny little town in the Texas panhandle and "settled down." He and my mother bought a flower shop there when I was in middle school, and he both helped her run that and ran the local clinic for several years. Pretty much everything that I know about business that's right, I learned from them or through doing it the wrong way myself.

    As for the entrepreneurial bug, I have a very direct answer to that. Two parts: I had a friend named Doug that sold cinnamon flavored toothpicks to kids in elementary school. It was against school rules; contraband. And he must've done pretty well at it because he always had cash during fireworks season, which was a big deal! (laughs)

    But more directly, I read this book called "The Computer Entrepreneurs" by Robert Levering, Michael Katz, and Milton Moskowitz. It was a collection of mini-bios of people like Steve Jobs, Nolan Bushnell, Gary Kildall. This was in 1985. It pretty much lit the fire; I was already into computers, had already been doing some programming to make money for a while, and it was an epiphany: "Let There Be Products!"

    Mark: Sorry to date you, but let's face it, you're a tech veteran. Way back in '93 you co-founded a company called Activerse, which developed some of the first mobile email and web browser apps. You were really at the forefront of a lot of what we take for granted today, weren't you?

    Jeff: (Laughs) That's sort of simultaneously an understatement and an overstatement. In terms of technology, I've always believed that technology had the potential to improve peoples' lives, and I've always been driven to build things that I thought needed to exist. And I've always had an active imagination and read a lot of speculative and future-oriented fiction, so that's always been an inspiration.

    But it's kind of been like swimming upstream. Stuff's easy to conceive; slightly harder to build. Convincing others it is do-able is sometimes hard even when you've already done it - I had Jean Louis Gassée tell me to my face that a product I'd already built was "impossible" - and adoption, well, it just sort of goes at its own rate. Actually there are mathematical models for technological innovation and adoption; had I learned of these a few years earlier things might have been… easier!

    That first company, the one that did mobile email and web browsing on handhelds way back when, was initially called Active Paper. We'd go out to pitch VCs and they'd say things like "hmm, this Internet thing, I don't know. AOL's going to own the whole thing, aren't they?" And nobody - and I mean nobody - thought we'd all be running around with cell phones, much less net-connected ones, even as recently as the mid 90s. Now it's becoming (become?) the primary modality of accessing the 'Net.

    Mark: Amazing the doubters huh? I imagine young developers today wonder how you guys did it. Things were so different. I remember walking around campus seeing the computer science guys carrying reams and reams of green and white striped paper with their programs on it. I thought to myself, "forget that!" What was it like developing back then?

    Jeff: Well, for handhelds specifically, the state of the art pretty much sucked. It was all one-off languages, nothing standardized, the hardware was crap, you had to debug tethered, and while you could write code in a "high level language" (always some ad hoc, custom, proprietary offshoot of C) you usually had to debug in assembler. And when you tried to explain what you were doing to people outside of a narrow slice of the tech industry, they'd look at you like you were speaking Esperanto!

    Mark: Oh, I'm sure. Given that most people thought you were nuts, how did you guys raise the money? Was it VC's, friends and family, tech funds? An incubator?

    Jeff: Active Paper was funded purely through angels. Austin had a very vibrant angel community at the time, a lot of first-generation tech entrepreneurs; and Texas had quite a bit of oil money and some of those guys are very forward-looking. It was a great community to be doing a start-up in; I'd spent a few years post-university in the Bay Area and had moved back with the express intent of starting a software company.

    We had great "anchor" companies like Motorola, AMD, Apple, IBM, and a huge array of tiny-to-medium-sized software companies just getting going. And we had MCC, which meant we had Adm. Bob Inman, who is truly an amazing person and a mentor of sorts of mine at Active Paper.

    Mark: You explored in a few different directions with Activerse, including instant messaging and peer-to-peer. You eventually sold the company to CMGI, which blew up in the dot-bomb if I'm not mistaken..? What happened to Activerse?

    Jeff: That's about the extent of it. After we exited the handheld space with Active Paper by selling our entire product line, we had a great team, money, and no business plan. I'd messed around with some early social virtual reality stuff, really primitive, years before and thought that the 'Net as social space and communication medium was a huge opportunity. I'd been inspired by folks like William Gibson and the cyberpunks, Neal Stephenson, and so on. We found out that a former colleague and some friends had basically the same ideas and had started a company called Intraverse, so we joined forces and changed the name to "Activerse."

    The original idea was to build something very much like what you see today in Second Life, complete with the virtual economy and all. Stephenson's Metaverse, of course. That - the virtual economy aspect of things - always fascinated me, I thought it could be huge. The technology of the day - graphics, processors, broadband capacity and penetration, all that - wasn't really up to it. We ended up stripping out one feature - something that had been around since the days of time-sharing computers, just a list of "who's on right now" and a way to message them in realtime - and dressing it up a bit. Voila, instant messaging and buddy lists.

    Mark: Wow!

    Jeff: CMGI bought us and a bunch of other dot-coms and was talking about a roll-up to compete with AOL when the dot-bomb hit. I'd already departed the company. Our product was called "Ding!" and I think they must've sold the logo to Southwest Airlines, because it was visually almost identical! (laughs)

    Mark: So after that you formed Clickfeed, which was a microblogging, social bookmarking, a news aggregation and publication platform. This sounds an awful lot like the precursor to things like Twitter, Blogger, Delicious and WordPress. Is that an accurate assessment?

    Jeff: To be fair to Evan (Williams, co-founder of Pyra / Blogger) we were a contemporary of his. But we were way before Delicious and Twitter. We were doing something that was a kind of a fusion between what you see with those things, but it was probably most like Delicious. There was some automatic classification that most resembles something like Google News.

    We had the business model wrong, though. I was funding this out of pocket out of the Activerse proceeds and the model was free for consumers, for-pay for custom news feeds for folks wanting to put news online. The problem was that all of our customers were dot-coms and started to blow up just as I started to see a large part of my own asset allocation tank.

    Mark: It seems like you were just a couple decades early on all this stuff. The hardware just wasn't there yet, right? And hence the user base didn't exist. Was that the issue?

    Jeff: Really a combination of things, every time: tech, awareness of the opportunity among the money, awareness of the utility of the things we were doing among the folks that really needed them. Lots of bias, usually wrong, on the part of VCs, a kind of herd mentality. But yeah… always several years too soon! (laughs) Being right eventually isn't as good as getting paid now! (laughs) But we did okay, for the most part.

    Mark: Apple really transformed the industry with the iPhone didnt' it? The Newton was a flop, Palm never really got it… Why did the iPhone succeed?

    Jeff: Because it's perfect! (laughs) I really can't say. There were plenty of MP3 players out there before the iPod, too; the iPod's success has always baffled me. I knew Tony Fadell through the stuff we did at Active Paper; I guess he just got everything right enough.

    Mark: Ok, so you founded, ran and sold a few pretty successful technology ventures, all at a pretty young age. Not satisfied with that I guess, you kind of took a 180 degree turn and went from mobile apps and internet technologies to developing super-complex financial trading models. You actually designed and built the Forex trading models for a large proprietary trading firm.

    How does one go from building email apps to building systems that handle billions of dollars of financial transactions?

    Jeff: Well, to be fair, I was much more of a generalist than that. I wouldn't consider myself a "quant" by a long stretch. I did everything at the company that was involved in building up the currency trading business, from establishing and managing the business and banking relationships to writing (some, small) parts of the trading system, to actually building models from time to time. But for most of the time I was there it was whatever, whenever, just make it happen. For that they needed somebody who could be both a technologist and an entrepreneur.

    But my primary qualification for that job seems to have been that I made an attempt at some automated trading, back between Activerse and Clickfeed, and nearly lost my shirt! That made me keenly aware that it was a scalability problem on several dimensions. But scalability is usually a simple matter of engineering and economics! (laughs)

    What really attracted me to it, though, was the science. We were doing some very interesting things in the machine learning space, and that has always been a strong passion of mine.

    Mark: That's an uber competitive space Jeff, the pressure must have been immense. Without breaching any confidentiality agreements or otherwise, can you give us an insiders view of the high-frequency trading game? It just seems surreal for most of us.

    Jeff: Well, there's definitely some stress involved. But things happen so quickly that all the pre-trade risk management is automated. And you'd better get that right. At a more macro level there's risk management that involves human discretion, and that's the stressful part. And at an even more macro level, for me, it was fairly trying, seeing the world currency and bond markets in operation, watching them in realtime, for several years… it made me keenly aware of risk.

    Mark: OK, so that's behind you now. When we met in Chile we talked about some other things you're getting involved in, including land banking. What made you decide to start buying up land?

    Jeff: Simple - Barton Biggs book, "Wealth, War and Wisdom."

    Mark: I'm ashamed to say I haven't read that one! I guess I should, because you and I see eye-to-eye on a lot, I'm sure I'd enjoy it.

    Jeff: It's a fantastic book, you should read it this weekend.

    Mark: It's on my to-do list!

    Switching gears again… Your involved with something called the Lifeboat Foundation. When I read the mission statement it's like something out of a science fiction movie. I'm just going to let you tell us what it's all about.

    Jeff: I can't claim any personal credit for Lifeboat; it's been around a while. I'm a relative newcomer, just an advisor and contributor.

    Its basic mission is to try to address existential risk scenarios for humanity. In building the advisory boards Eric Klein and company have put together one of the most amazing and diverse brain trusts, real intellectual horsepower, that's ever been assembled. Some of the risk scenarios may seem rather extreme and unlikely, but even extraordinary risks are worth some attention when it's the survival of the species in the balance.

    Mark: So what do you think the biggest single threat to mankind's survival is right now?

    Jeff: Mankind! (laughs)

    Mark: Should have saw that one coming. (laughs)

    Enough said. Look, frankly I want to front run you Jeff; It seems you are always one step ahead. When you look at technology today, what excites you?

    Jeff: Everything excites me. It's a problem! (laughs)

    Biotech, personalized medicine - particularly the $1000 genome, which we're going to see very, very soon - soft path technologies, decentralization, automation, distributed fabrication, ever-increasing machine intelligence, cheap and private access to orbit… we're seeing a massive convergence of very powerful (and potentially dangerous) technologies that are game changers literally, I think, unlike anything we've seen before.

    Mark: So where are you placing your bets nowadays?

    Jeff: Anywhere I find a team of 10 or fewer really smart people working on something cool that can *truly* change the world - in some crappy office space. With a lot of passion! And no money… (smiles)

    ---

    Mark again… Jeff is truly an amazing person and a gifted entrepreneur. I'm beyond excited that he has decided to spend a little time chatting with us about technology, entrepreneurism and his vision for the future.

    We'll talk more with Jeff. In the next couple discussions he'll give us a rundown on why he likes incubators as a tool for investing into technology ventures, and he'll give us his take on the future of the mobile app space.

    It should be very interesting!

    - Mark

    "Any sufficiently advanced technology is indistinguishable from magic." - Arthur C. Clarke

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