On the Hunt for the Next Big Thing

12/22/2011 6:30 am EST

Focus: ALTERNATIVE INVESTMENTS

Josh Wolfe

Editor, Forbes/Wolfe Emerging Tech Report

Technology is moving so fast it’s hard for outside observers to get a grasp of what end all the moving parts are working toward, so it’s always valuable to sit down and talk to someone who knows where we’re headed, writes Josh Wolfe of the Forbes/Wolfe Emerging Tech Report.

Brad Feld has been an early stage investor and entrepreneur for more than 20 years. Prior to co-founding Foundry Group, he co-founded Mobius Venture Capital and, prior to that, founded Intensity Ventures, a company that helped launch and operate software companies. He is also a co-founder of TechStars.

Brad currently serves on the board of directors of Big-Door Media, Cheezburger Networks, Fitbit, Gnip, MakerBot Industries, Oblong, Orbotix, Standing Cloud, and Zynga for Foundry Group. Previously, Brad served as chief technology officer of Ameri-Data Technologies. AmeriData acquired Feld Technologies, a firm he founded in 1987 that specialized in custom software applications.

Brad has invested in and/or sat on the boards of Abuzz (acquired by NYT), Anyday.com (acquired by PALM), Critical Path (CPTH), Cyanea (acquired by IBM), Dante Group (acquired by WEBM), DataPower (acquired by IBM), FeedBurner (acquired by GOOG), Feld Group (acquired by EDS), Gist (acquired by RIMM), Harmonix (acquired by VIA), NetGenesis (IPO), ServiceMagic (acquired by IACI), and ServiceMetrics (acquired by EXDS).

Can you give us a quick overview of Foundry Group and what you do?

We are an early-stage software and Internet investor. We are focused on a set of horizontal themes—there are four partners and we all work on everything together.

We invest around the US—usually $5 million to $15 million over the life of a company. We’ve got 40 investments made out of two funds—a $225 million fund we raised in 2007 and a $225 million fund we raised in 2010.

What first got you interested in 3D printing?

One of our themes is “human-computer interaction.” We strongly believe that the relationship between computers and humans in 20 years will be radically different than the relationship today.

3D printing fits in this theme—in the same way that the Apple II changed the relationship between man and machine (to make it “personal”) and the HP LaserJet made it possible for everyone to have a high-resolution printer on their desktop, we think in a decade everyone will have a 3D printer on their desktop.

What was the feeling you got the first time you actually printed an object?
Awesome. It’s the ultimate in making something when you design a simple 3D object using a lightweight CAD program and 15 minutes later hold the object you’ve designed in your hand.

How do you fit 3D printing into the broader maker movement, and what excited you enough to make an investment in this space?
3D printing is a core component of the maker movement. Being able to print whatever you need to make whatever you need—well—it just fits together.

What impressed you about the MakerBot team?
Amazing founders who are obsessed with 3D printing. The Thing-O-Matic is a remarkable product—we bought one before we invested, and my partner Jason Mendelson, myself, and Ross Carlson (our IT guy) put it together over about 20 hours.

There was a lot of “wow—this is amazing” during the assembly process—even more when we started printing stuff. Given what the MakerBot team has achieved with a very modest investment, we realized these guys, and the company, are special.

Where do you see the company in 5 years? In 20 years?
I think the MakerBot products will be the standard for desktop 3D printing within five years, and as ubiquitous as HP laser printers became within 20 years.

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When new technology areas start gaining traction, how do you think about distinguishing real future merits from current consumer fads?
We pay no attention to consumer fads. We are focused on the entrepreneur and their long-term obsession about building something amazing.

Let’s shift attention to Fitbit—what does Fitbit do, and how did this company first come to your attention?
Fitbit is by far the most interesting human instrumentation device I’ve encountered.

I believe that in a decade, humans will be fully instrumented—there will be no need to count calories, measure blood sugar levels to decide how much insulin to take, or measure your blood pressure on a regular basis. This will be done “automatically,” and the data will be part of a human/machine feedback loop to help deliver the right amount of insulin, deliver low blood pressure medication, or tell you what you can eat and when you should be eating it.

A year before we invested (about two years ago), I became obsessed with the notion of human instrumentation and bought every product I could get my hands on (I now have several boxes of crap that I don’t use anymore.) Fitbit continually rose to the top of the list for the products I was using.

What was the skeptical feedback you got when thinking about investing in the business?
Something we hear regularly—“consumer electronics are hard.”

Our response to this is “whatever.” We’re glad it’s hard—that means less people will try to create them and fewer VCs will fund them.

Some might argue the increasing prevalence of technology in our lives is not a good or natural trend. How do you react to this? Does any part of your vision of the future scare you?
Resistance is futile—the machines have already taken over. They are just waiting patiently for us as we enter all of human knowledge into them and connect them to everything.

I’m an optimist—I think the machines will be our friends, and we can have a nice symbiotic co-existence.

You’ve said that “the way humans interact with computers 20 years from now will make the way we interact with them today look silly”—can you paint us a picture of some of your visions of the future?
I’ll give two examples. First, the idea that people will walk down the street typing on a piece of glass with their thumbs is absurd. The next time a plane that you are on lands, look around. 25% to 50% of the people will power up their smartphones and spend the next few minutes scanning their e-mail. What a silly way to communicate.

Next, observe carefully your next video conference. It’s awesome that we can see the pimples on people’s faces because of HD video over IP, but it’s crazy that we can’t actually interact with the data we are describing or showing to each other. Oh—and wires—there are way too many wires in my life.

Hardware companies face very different challenges than software companies. What lessons do you have for companies pursuing non-software innovations?
All of the hardware-related companies that we invest in have magic software at the core. We love hardware products that are wrapped around software that evolves regularly. Use the hardware to make the user experience magical, but make sure the software is doing all the real work.

Several of your investments seemed to have spawned from personal passions—love at first sight with the Makerbot, remote control robotic toys, exercising with Fitbit, etc.—how important is passion in the venture capital business?
For us, it’s everything. We only invest in companies with products and people that we are excited about.

What other non-consensus technology themes are you watching that would surprise people?
We believe there is a huge opportunity in machine to machine communication (our Glue and Adhesive themes). We also believe that there will be a continuous opportunity investing in new (and old) protocols (our Protocol theme).

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