UPDATED 17:33 EDT / FEBRUARY 14 2018

EMERGING TECH

Startup entrepreneurs get history lesson, and tips, from Fitbit, Tesla and Reddit

If indeed the past is prologue, then technology startups got both a major history lesson and a curriculum for the future this week at the Startup Grind 2018 conference in Redwood City, California.

Perhaps it was the unconventional setting — a restored movie theater originally built in 1929 — or maybe it was the appearance of several major industry figures who could actually remember when “autonomous” meant placing a phone call without needing operator assistance. Whatever the reason, the annual Silicon Valley gathering of startup entrepreneurs, corporate executives, investors and journalists offered an interesting contrast between recollections of what the landscape looked like at least 15 years ago and what it may become as the tech world strides boldly toward 2020.

Take the story of Tesla Inc.’s early days. Back in 2003, when the company got its modest start in a nondescript Silicon Valley office, cleantech wasn’t part of the common vocabulary and the notion of a self-driving car was pure fantasy. “I could tell you in 2003 that self-driving cars were not possible,” recalled Marc Tarpenning, who co-founded Tesla with Martin Eberhard. “It was not on our radar screen at all.”

What the company was focused on was the building of affordable, mass-market electric cars. The first model required a lot of power and the company set up early testing of lithium-ion batteries in the parking lot at its San Carlos, California facility. One day, there was a commotion and Tesla executives dashed outside.

“A piece of the battery pack had launched itself and was burning on the roof,” Tarpenning said. “That was a wakeup call on how much energy we had at our fingertips.”

Electric cars versus spaceships

Tesla encountered an especially rocky period in its first five years, cycling through CEOs and narrowly escaping bankruptcy. Elon Musk led the company’s initial round of funding in 2004, but did not take ultimate control of Tesla until the end of 2008. However, Tarpenning recalled that persuading Musk to become an investor 14 years ago was actually not as difficult as some might have imagined.

“I remember thinking that this was not going to be a problem, because he was building spaceships,” Tarpenning said.

Asked for a prediction on when autonomous cars will become a commonly used driving technology, at least on U.S. roads, Tarpenning offered a time frame of five to six years. “It might be quicker than people think,” said Tarpenning, who forecast that initial deployments will be in confined areas of 100 city blocks. “I think they’re going to get released as fleets in very constrained places.”

Wooden box launched Fitbit

Another executive who spoke at Startup Grind on Tuesday was James Park, co-founder and chief executive of Fitbit Inc. The company got its start in 2007 and Park had little more than a circuit board in a wooden box to show as he made the rounds seeking investment for the fledgling wearable fitness tracker.

“There was no infrastructure for hardware startups 11 years ago,” said Park, who pointed out that Kickstarter didn’t exist. He had to create a system for pre-orders and even that tested the patience of prospective customers. It took Fitbit almost a full year to begin delivering its first product after people had signed up.

Park set up a blog that kept customers up-to-date on the first Fitbit’s progress. “We tried to keep people entertained and distracted,” Park said.

Fitbit announced this week that it had acquired Twine Health, a cloud-based health management platform. The move was part of the company’s strategy to position itself as a key player in the wellness arena.

“There should be a point where you wouldn’t want to leave your house without a Fitbit because of the negative impact on your health,” Park said.

Reddit millionaires at age 22

One of the more unusual startup stories was recounted at the conference by Steve Huffman, co-founder of Reddit Inc., the social news and discussion website. Huffman and his University of Virginia roommate, Alexis Ohanian, had no particular plan or exit strategy for Reddit when they launched it in 2005. Yet the company was bought by Conde Nast Publications barely a year afterward, making both men instant millionaires at the age of 22.

“We didn’t know really what we were doing,” Huffman said. “We didn’t have a vision or mission for the company. We were just building what was fun for us.”

Reddit was part of the inaugural class of companies funded through Y Combinator, a tech startup accelerator which went on to spawn major firms such as Dropbox and Airbnb. But Reddit’s uneven curation and occasionally questionable content gave pause to Y Combinator’s early backers.

“We faced a lot of criticism from everybody,” Huffman recalled. “This is the best that Y Combinator could do?”

The site has been on a roller coaster since the acquisition. Users attempted to shut it down at one point and there was a revolving door of CEOs who tried to bring order to chaos. Huffman and Ohanian both left Conde Nast after only a few years, but Huffman has returned to lead Reddit again.

Slingbox survived reporter’s scrutiny

Sometimes even journalists can determine the course of tech history. For over 20 years, Walt Mossberg was the principal technology columnist for the Wall Street Journal. His reviews of the latest tech gadgets could literally make or break the future direction of a startup’s product.

In an appearance at the conference on Tuesday, Mossberg recalled when a young entrepreneur named Blake Krikorian pitched him on a new device that encoded local TV for transmission over the internet. The two men met at a Starbucks in Washington, D.C., where Mossberg was based, and the Journal’s tech columnist got his first view of the Slingbox. Fortunately for Krikorian, the signal worked and both men watched a TV program livestreamed from India.

“If it hadn’t worked, I would have said, ‘Don’t buy this,’” Mossberg told the audience.

Mossberg, who left the Journal to co-found Recode, warned the gathering that the path for startup companies today has become more difficult because of the rise of five major firms, including Google and Amazon, which dominate the tech landscape.

“Yes, it is harder,” Mossberg said. “I don’t think we’ve ever had a concentration of power in a few companies like we have today. They snap up startups and patents and ideas.”

The lessons offered by founders of major companies such as Fitbit, Tesla and Reddit during Startup Grind this week provided a cautionary tale for a roomful of hopeful entrepreneurs. The tech business is tough and failure is an ever-present option. But at their core, many founders are also dreamers, preferring to see the pot of gold at the end of the rainbow rather than the storm.

“If all of our users were dogs, the world would be a better place,” Huffman mused. “They’re always optimistic.”

Photo: Marc Albertson/SiliconANGLE

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