0:00:05 The content here is for informational purposes only, should not be taken as legal business
0:00:10 tax or investment advice or be used to evaluate any investment or security and is not directed
0:00:14 at any investors or potential investors in any A16Z fund.
0:00:17 For more details, please see A16Z.com/disclosures.
0:00:21 Hi, and welcome to the A16Z podcast.
0:00:25 I’m Lauren Murrow, and today we’re talking about the delivery optimized grab-and-go future
0:00:26 of food.
0:00:31 The spike in online ordering and food delivery, a trend that’s particularly relevant now,
0:00:35 is evidence of how tech is fundamentally changing how and what we eat.
0:00:40 In this hallway-style conversation recorded on-site at the A16Z summit, we discuss what’s
0:00:45 driving this transformation, how tech can cut costs both to get food delivered and operate
0:00:50 a restaurant, the infusion of data into the restaurant industry, and what this all means
0:00:52 for the future of dining and cooking.
0:00:57 Joining me and general partner Andrew Chen are guests Ken Chong, CEO of Virtual Kitchen
0:01:02 Co., which is a network of delivery-only kitchens that partners with existing restaurants,
0:01:07 and Kevin Tan, CEO of SnackPass, a food ordering app currently on college campuses in which
0:01:10 customers can order ahead at restaurants and skip the line.
0:01:14 The first voice you’ll hear after mine is Ken of Virtual Kitchen Co., followed by Andrew,
0:01:16 and then Kevin of SnackPass.
0:01:21 We’ve seen a shift in the past five years or so from fine dining establishments to the
0:01:25 kind of fast casual to delivery-only and take-out-only.
0:01:27 What do you think is driving this trend?
0:01:31 Millennials in Gen Z is the generation that grew up with a smartphone, grew up with the
0:01:36 Internet, and with everything at the press of a button on the phone, whether it’s a
0:01:41 car with Uber rides or packages from Amazon, they’re growing up with this behavior and
0:01:45 this convenience and this habit, and I think we’re seeing that demand in food as well.
0:01:51 Yeah, I think if you live in a major city and you’re used to the conveniences of using
0:01:57 tech to enable everything in your life, you’ll almost end up with this baseline expectation
0:02:01 where everything ought to act this way, and over time, the question then becomes, is this
0:02:08 generation who grows up on this level of convenience and choice, once they are 21, 22, 23, they
0:02:13 move to the cities, are they going to give that up and revert back to maybe what their
0:02:17 parents did, or are they just going to expect that, “Yes, I do have a remote control for
0:02:22 food and it’s my phone,” and so for both cities and for college campuses as well, where there’s
0:02:27 so much density, there’s so much choice of different food options around you, that’s
0:02:32 the best possible setting to begin the food delivery trends enabling all of this to happen.
0:02:36 But as they say, the future is here but unevenly distributed, right?
0:02:40 So I think the next thing that will end up happening is a lot of this technology that
0:02:45 ends up working in these highly urban places can then ultimately go to places that are
0:02:50 suburban and rural the same way that a lot of technology ends up spreading.
0:02:54 Consumers love food delivery, they love the convenience of it, and at the volumes we see
0:02:58 and what we’re projecting going forward, it just requires a totally new infrastructure
0:03:03 layer to power that, so we’re building the delivery optimized kitchens of the future.
0:03:07 What Amazon did for retail, we’re hoping to do for local restaurants and on-demand food.
0:03:14 If you are a restaurant or a local food truck, you can sign on and deliver your food region-wide,
0:03:15 nationwide even.
0:03:19 Well, I think a lot of people underestimate the cost of owning an operating restaurant
0:03:24 today, and that’s whether that’s a Michelin star restaurant or a food truck, right?
0:03:28 Traditionally maybe dining restaurants are limited by how many people they can seat per
0:03:33 hour, and then there’s also spikes in which times are rush hours, so they really need to
0:03:37 maximize and squeeze every dollar out of it to cover all their fixed costs, but at least
0:03:41 for pickup and delivery, a lot of restaurants are using that as another revenue stream,
0:03:44 and you don’t have some of the limitations, you can have a kitchen in the back or in the
0:03:48 basement or a virtual kitchen, and so, yeah, it really helps restaurant owners survive
0:03:52 with all these other things that they have to worry about, like rent and labor increasing.
0:03:54 I think Kevin hit on a lot of really good points.
0:03:59 It’s no secret that owning an operating restaurant is really tough as a business, and what we
0:04:06 can do is decouple that upfront investment risk, the real estate build out lease and commitment
0:04:10 that a restaurant tour and a chef has right now before even opening the restaurant, we
0:04:15 can remove that and build it into a platform that allows restaurant tours to come in, experiment,
0:04:21 expand, and move with food trends, consumer trends really quickly with a lot less turnover
0:04:22 overhead.
0:04:27 Because of the digital nature of it, we can change the menus, the concepts in a much more
0:04:30 lightweight way, and not only that, when you look at the whole value chain of where all
0:04:36 the money is, the cost of delivering food, thus, in my mind, the biggest thing that needs
0:04:40 to be solved before this can unlock for people on a daily basis.
0:04:43 And research shows that that is the single biggest barrier that is preventing people
0:04:46 from ordering delivery as it’s cost, correct?
0:04:47 That’s right.
0:04:48 That’s right.
0:04:52 And the industry is moving to an interesting place where the costs are a little bit obfuscated.
0:04:55 You have the delivery fee, you have the service fee, you have the tip, they’re all kind of
0:04:56 separate.
0:04:57 You also have the potentially markup on the food.
0:05:03 As a consumer, how many times have we been ordering food on one of these services, and
0:05:05 everything seems like it should be okay.
0:05:09 And then you look at the bill and somehow you end up with a $60, $70 order, and you’re
0:05:10 like, how did that happen?
0:05:11 Right?
0:05:12 It’s like, yeah, it happens one screen at a time.
0:05:17 So when you add that all together, what that means is it’s very, very hard for the current
0:05:22 conception of food delivery to be something that you can do every single day.
0:05:26 So I think we need a more fundamental solve to that before this can be widely available.
0:05:31 I know both of your companies are largely based on customer analytics and data.
0:05:33 How does that translate for your restaurant partners?
0:05:34 Yeah.
0:05:35 I can use the analogy.
0:05:38 Restaurant owners right now, when you have customers go to the store and order at the
0:05:42 cash register, it’s almost like anonymous web visits, and you don’t know who those users
0:05:43 are.
0:05:47 Like if you have a website and you’re just getting anonymous traffic, whereas on a digital
0:05:51 platform, they can retarget their loyal customers, they can incentivize new customers, and they
0:05:54 can incentivize loyal customers to bring new customers in.
0:05:58 So that is definitely a big part of the play is helping them have that additional customer
0:05:59 relationship layer.
0:06:00 What are you tracking?
0:06:06 So we actually work with the restaurant brands to figure out the best locations to put these
0:06:10 virtual kitchens, what people in those zip codes want, and then we work really close
0:06:15 with them as a very tight feedback loop in terms of ordering behaviors, time of day,
0:06:17 what’s selling, what isn’t.
0:06:21 We’re bringing what e-commerce businesses have had the luxury of in the last decade
0:06:26 in terms of analytics and tracking to that business as well, so a very data driven approach.
0:06:31 Can you give any examples of an instance in which having that data fundamentally changed
0:06:32 away?
0:06:33 An owner operated?
0:06:34 Yeah.
0:06:36 For some restaurants, they’ll have a lot of slow hours.
0:06:40 And so if they want to target customers during those slow hours, right now they can put a
0:06:45 sign on their store or on the sidewalk saying we have a happy hour, but I think with a digital
0:06:48 platform, they’re able to market that even better.
0:06:51 And we’ve recently worked with a really great restaurant partner to figure out what are the
0:06:57 optimal basket size ordering behaviors for delivery and how can they optimize and change
0:07:01 the menu to really, really take advantage of what people want, how they’re ordering
0:07:05 with their friends or with their families, or maybe a dessert with their meal.
0:07:10 I think what that means is as the very, very first e-commerce experiences on the internet
0:07:16 when Amazon were among the first to actually figure out how to use web analytics to present
0:07:20 you the right products and all of that, the restaurants that are able to think through
0:07:24 that and adopt the right tools will be able to hugely, hugely succeed.
0:07:27 And the ones that don’t, I think will remain the restaurant on the corner or maybe not
0:07:28 even exist at all.
0:07:32 So the food industry is obviously a hyper competitive place.
0:07:36 What is it about your companies that makes people want to partner rather than a restaurant
0:07:39 developing their own online mobile ordering app?
0:07:42 So we do partner with a lot of restaurants that have their own apps, but I think they
0:07:45 have trouble getting people to use their apps.
0:07:49 What we bring to them is a bigger customer base that they can tap into and grow their
0:07:51 brand and get incremental revenue.
0:07:53 And you’re growing pretty quickly now.
0:07:54 We’ve been around for two years.
0:08:00 We’re at 11 campuses and we plan on being at 100 campuses in the next 20 months.
0:08:05 And take that playbook that we started at Yale, brought it to Brown, brought it to Berkeley,
0:08:10 and maybe taken a page out of Tinder or Facebook’s campus to campus model.
0:08:14 And Ken, I know there’s a lot of competition in the virtual kitchen space.
0:08:18 A lot of restaurant tours we’ve talked to have considered building their own dark kitchens
0:08:22 and have considered all the options out there, but we’re really focused on building the best
0:08:24 platform for restaurant tours.
0:08:30 And we work really closely with them to help them scale and grow their delivery presence
0:08:31 in the most turnkey way.
0:08:36 What they care about is really how do they bring their food to as many people as possible?
0:08:38 And so that’s been really our focus.
0:08:42 And we make it as easy for the restaurant tour to go from their existing three locations
0:08:46 to four than it is to go from three to Bay Area wide.
0:08:47 I was just going to add that.
0:08:53 I think the proliferation of technology for many of these small restaurants presents huge
0:08:57 opportunities and also there will be also check out and changes in the industry as a
0:08:58 result.
0:09:02 First, I think you can see that if you’re a neighborhood Italian restaurant, if you do
0:09:07 really, really well, if you’re like a beloved local brand, what ends up happening is you
0:09:09 can serve a much, much larger audience, right?
0:09:13 Obviously through food delivery, you end up being able to serve pretty much everyone
0:09:17 in the city versus the people that were maybe in walking distance before would have thought
0:09:18 to drive over to you.
0:09:22 And so on one hand, it really grows the addressable market for any restaurant.
0:09:25 There’s a regionalization to what a restaurant actually can face.
0:09:31 And then on the flip side, it also means that restaurants competition can come from everybody
0:09:32 within the city as well.
0:09:37 When you combine that with the complexities around having every restaurant needing social
0:09:42 media accounts and you got to manage all your Yelp reviews, you have to think about what
0:09:46 is the whole technology stack for how you’re going to do checkout and all this other stuff.
0:09:50 These restaurants that maybe previously didn’t actually need a ton of technology in order
0:09:55 to succeed, all of a sudden need to master this very, very different stack of tools and
0:09:57 applications to be there.
0:10:00 Let’s say your grand vision comes to fruition.
0:10:02 What do you see as the future of restaurants?
0:10:05 Is this the end of the restaurant experience as we know it in some ways?
0:10:10 But it’s also the beginning of basically having every meal become a restaurant experience.
0:10:11 How so?
0:10:15 I think with delivery and with pickup, you can basically turn food into a press of a
0:10:16 button for every meal.
0:10:20 If you’re walking on your way to class or you have a 30-minute lunch break and you don’t
0:10:24 want to wait in line or you want to get pasta for dinner, but you don’t want to sit down
0:10:27 in the restaurant and take an hour to do that.
0:10:30 And I think that’s just going to become a bigger part of people’s eating habits.
0:10:35 I think that in the not too distant future, people will be eating the majority of their
0:10:40 meals either through delivery or pickup, the level of convenience and the ability to give
0:10:45 people back their time and really open up the accessibility to different types of foods,
0:10:48 healthy dietary options is really powerful.
0:10:49 And I think that trend is going to continue.
0:10:50 Yeah.
0:10:55 And I think the other angle we’re approaching is anytime someone’s buying something by themselves,
0:10:58 like single player, we’re going to make that multiplayer.
0:11:01 So right now when you buy something, it’s largely a solo experience.
0:11:05 But on snack pass, every time you buy something, you get to share something with a friend,
0:11:09 whether it’s a discount or a future credit that makes sense for everybody involved.
0:11:14 You, your friend and also the merchant in organic referral.
0:11:18 And because it’s categorically rational, but also extremely fun and has an emotion attached
0:11:22 to it, I think that’s just going to become a really powerful e-commerce trend.
0:11:26 You bring up an interesting point, which is the role of social and all of this.
0:11:30 Can you talk about the growing role of social and where you see that in the food space?
0:11:34 I do think there’s a misconception when we talk about this delivery only model that people
0:11:37 are kind of holing up in their apartments or homes.
0:11:41 And in fact, you’re both telling me it’s about expanding access and making it more social
0:11:43 to eat out or to eat at home.
0:11:44 Yeah, absolutely.
0:11:48 Someone posted a meme on the Yale memes page that was, we don’t say I love you.
0:11:51 We send each other gifts on snack pass.
0:11:55 And the social mechanics we’ve created on the app, give people a way to connect that
0:11:58 isn’t like a text or snap.
0:11:59 Actually food is super social.
0:12:03 And so we found a way to weave that together, social and commerce.
0:12:04 So people are flirting through food.
0:12:05 Yeah.
0:12:11 And your boyfriend or girlfriend, a smoothie, if they’re sick, you can even see who’s sending
0:12:12 gifts to each other.
0:12:16 You can see who’s hooking up with other people by who their gifts are being sent to.
0:12:20 So yeah, it’s like this other social network that you wouldn’t really expect.
0:12:24 And it’s definitely not going to replace a visual feed like Instagram or Facebook, but
0:12:27 it’s augmentation of your social life at college.
0:12:29 It’s kind of like a Venmo of food.
0:12:30 Yeah.
0:12:31 I guess you can say that.
0:12:34 What’s the role of social when it comes to virtual kitchens?
0:12:39 I think hitting at the parallels with retail and how that has gone in the last decade from
0:12:41 brick and mortar to more digital.
0:12:47 You see the opportunity for brands to really experiment and build their presence in a digital
0:12:48 first manner.
0:12:53 We’ve seen a lot of direct to consumer products rise in popularity over Instagram and social
0:12:58 media and really reach and connect with their customers in a very direct way.
0:13:01 You can see the same with restaurant brands and food.
0:13:04 Food trucks have been doing this because they don’t have that permanent brick and mortar
0:13:08 presence, but with virtual kitchens, you’ll see that go even a step further.
0:13:11 So if you don’t have a physical kitchen, are these brands spending more on marketing
0:13:12 than?
0:13:13 Potentially.
0:13:17 It depends on how you view Instagram and Facebook and Twitter.
0:13:23 It’s I think really just a new channel for the brand to create its presence and to reach
0:13:25 their customers in a more direct way.
0:13:30 So when we talk about the future of food, it’s impossible not to talk about robotics, everything
0:13:34 from robot chefs to robot delivery.
0:13:38 What role do you think robots will play in the next five years or so?
0:13:42 We’ve seen some interesting things on the kitchen automation side in terms of robotics,
0:13:47 but I think that is a little bit nascent sidewalk robots and autonomous vehicles, obviously
0:13:48 coming later.
0:13:53 I think we’ll really reduce the cost of fulfillment, the actual delivery piece, which then makes
0:13:55 it even more accessible to more people.
0:14:00 The funny thing about robotics that I’ve seen and let’s use autonomous vehicles as a good
0:14:04 linchpin, I know there was so much excitement about the field just a couple of years ago.
0:14:08 You’d ask people that were just reading the news and you’d say, hey, how long before we
0:14:11 have self-driving cars on the road?
0:14:14 And if you talk to some people, they would tell you five years.
0:14:15 Some people would say six years.
0:14:20 And what I noticed at least was when I started to talk to people that were closer and closer
0:14:24 to the problem, working on self-driving, the number of years that it would take before
0:14:28 it was widely available would increase to the point where the people directly working
0:14:31 on it would be like, I don’t know, it might be a long time.
0:14:36 And so going back to the question on how automation and kitchens will come together, I think first,
0:14:41 as Ken mentioned, there’s a lot around what’s going to happen with delivery.
0:14:45 There’s a number of really interesting companies out there like Starship and Kiwi that are
0:14:50 thinking about that and are thinking about it in a way that hybridizes human teleoperations
0:14:54 in addition to having completely software-based navigation.
0:14:58 And then the other big question that I think is super interesting is in the kitchens themselves,
0:15:03 do you get to a point where you have robots making the burgers and making the pizza and
0:15:04 all that stuff?
0:15:07 Or is this something that humans have to be involved?
0:15:11 And what I’ve seen on the research and the companies that we’ve encountered is that,
0:15:16 yes, that will eventually happen, but each food type is actually very different than
0:15:17 the next one.
0:15:22 Like it is an entire company to just solve automation plus smoothies.
0:15:26 And it’s another whole startup that needs a lot of money to go figure out burgers and
0:15:30 a whole other company that needs to be successful to figure out noodles.
0:15:35 When you look at that in comparison to still being able to have human labor, I think there’s
0:15:40 still quite a gap before we’re going to be able to fully realize that robotics vision.
0:15:43 Andrew, you look at food, gaming, social.
0:15:47 When you look at the food landscape, do you have some vision for the future of food?
0:15:53 So much ink has been spilled about the driverless car, but I think more realistic even is the
0:15:55 idea of the kitchenless home.
0:15:59 And it’s really the notion that if this becomes so convenient and you can have amazing food
0:16:05 that exactly fits your dietary needs for your whole family and it’s at the right price and
0:16:10 it’s in the right packaging, the everyday need for people to actually have a kitchen
0:16:13 in order to do this chore might go away.
0:16:17 And so if you think about that as a general idea and then you say, okay, what actually
0:16:23 needs to happen in the entire flow of the customer experience in order to enable that,
0:16:27 what you end up seeing is a lot of room for really interesting, great companies.
0:16:31 Is this the end of cooking in that everyone is getting everything delivered all the time?
0:16:37 I think what’s going to happen with this combination of delivery and dark kitchens is that one day
0:16:41 somebody who’s gluten free is going to open up the app and they’re going to have dozens
0:16:45 upon dozens of amazing, high quality food available to them.
0:16:50 I’m sure that once all of these platforms like Virtual Kitchen and SnackPass have fully
0:16:57 proliferated, the kinds of chains that we’ll see will not just be burgers and pizza.
0:17:01 Very recently, in fact, over 60% of food delivery was just pizza, just because that was the
0:17:04 thing that would keep you could deliver.
0:17:05 Dominoes.
0:17:08 Dominoes as a stock has performed just as well as the top tech companies.
0:17:13 And so when you start to unlock everything, I think that it will be a golden age for food
0:17:14 entrepreneurs.
0:17:19 The other angle is for those that have dietary restrictions, it can be a huge thing as well
0:17:25 because if you’re gluten free, if you’re keto, if you can’t eat nuts or whatever, it’s not
0:17:28 like you have dozens of choices.
0:17:32 There’s a lot of really, really interesting things that will happen through these platform
0:17:33 shifts.
0:17:37 So is this the end of the traditional restaurant experience as we know it?
0:17:41 The big thing for me is really thinking about the bifurcation of how people are going to
0:17:42 think about food.
0:17:46 There’s the everyday sort of utilitarian view of food.
0:17:51 This is the quick bite that you want for lunch or for dinner on a day where you maybe have
0:17:52 a lot of work to do.
0:17:57 And then there’s also the kind of experiential evenings that you might want out with your
0:18:01 significant other, which is where the presentation of the food matters, the story behind the food
0:18:02 matters.
0:18:08 And so first, how do you up level food overall in all its different capacities and bring
0:18:13 the sort of super high quality ingredients designed by a chef who really cares about
0:18:19 the food to consumers in all forms, and even delivery, even fast casual pickup type experience.
0:18:21 I think that bifurcation is going to be really real.
0:18:25 We’ve seen it in the retail space with showrooms versus ordering online.
0:18:29 And I think it’ll actually be a great world for both sides.
0:18:34 We’ll see great restaurant experiences for Dine-In, and then we’ll have great convenience,
0:18:36 great selection, and great price points for delivery.
0:18:37 Great.
0:18:39 Well, thank you so much for joining us on the 16T Podcast.

0:00:04 The content here is for informational purposes only, should not be taken as legal business
0:00:10 tax or investment advice or be used to evaluate any investment or security and is not directed at
0:00:17 any investors or potential investors in any A16Z fund. For more details, please see a16z.com/disclosures.
0:00:22 Hi, and welcome to the A16Z podcast. I’m Lauren Murrow, and today we’re talking about the rise
0:00:27 of remote work and virtual networking, especially among knowledge workers amid the spread of the
0:00:32 coronavirus. For this quick pulse check, I’m joined, all remotely, of course, by General
0:00:36 Partners Connie Chan and David Yulovitch to talk about the platform’s powering this homebound
0:00:42 workforce, creative new use cases for videoconferencing and streaming from education to therapy,
0:00:47 and whether remote work and online events is the new normal. The conversation begins with Connie,
0:00:52 describing how, for many of these videoconferencing tools, the line between professional and social
0:00:58 use is already blurring. People are trying to use existing and new tools for a variety of things.
0:01:03 I mean, even teenagers who want to interact are using Zoom to hang out with each other.
0:01:08 So I think the use case is very wildly. If you are having a one-on-one conversation and both
0:01:14 people are using Apple products, FaceTime is fantastic. If you are doing a small group setting
0:01:20 where it’s the same repeat users, Zoom might be more relevant. If you are hosting a large event
0:01:24 where a lot of the audience members are trying to look for networking opportunities,
0:01:28 we’re on the world has a solution for that. One platform you mentioned, Zoom,
0:01:33 has really risen through the ranks. It’s the third most popular app in the app store at the
0:01:39 moment. Why do you think Zoom has been so emergent? I think one of the reasons Zoom has sort of broken
0:01:45 out is that they have observed all the friction that all videoconferencing platforms have had in
0:01:49 the past, where it’s hard to get an account. It’s hard to set up. It’s hard to invite people to
0:01:54 people who have less patience these days for products that have too much friction to onboarding.
0:01:58 You know, there’s always sort of the joke of conference calls of like, “Hey, who just joined
0:02:03 the line?” or like, “Who are you?” or “Hey, did you get the right link?” Zoom has fixed almost all of
0:02:08 those usability issues. And I’d say there’s also little moments of user delight, right? I think
0:02:13 virtual backgrounds have been one of the ways that people are breaking the ice or making
0:02:18 conversations more friendly when they’re on Zoom. For those listening, it’s a way that you can
0:02:24 completely obfuscate your background and make it look as if you’re in a green room and put any photo
0:02:29 in the back. And I think people underestimate the amount of technology that’s behind the scenes.
0:02:34 They’re running a global network. They’re carrying hundreds of thousands of minutes of calls at any
0:02:38 given time. They’ve built an infrastructure that’s scaling to a dramatic degree. And that’s really
0:02:44 hard to do. And they’ve spent a lot of time over the last few years as they’ve grown up as a company
0:02:49 to build a reliable, high quality, high fidelity system. That’s why they’ve broken out.
0:02:54 To your point, David, this is new ground as millions of people are flooding these online
0:03:00 platforms. We’ve already seen some outages with tools like Microsoft Team last week. Several
0:03:05 gaming platforms have had outages over the past week or so, including Nintendo Switch and Xbox
0:03:10 and Discord. So there is some trepidation among people that all of us working and learning from
0:03:15 home is straining that underlying infrastructure of the internet. And that’s something that could
0:03:20 particularly impact home networks. What are the limitations of some of these collaboration tools?
0:03:25 Well, first, we all owe a debt of gratitude to the network operators that are running the global
0:03:29 infrastructure. They’re adding capacity that are making sure that the quote unquote the pipes are
0:03:33 not getting too full. That is not an easy job. And these are the people that are working and
0:03:37 they’re probably working from home right now. But they’re working tirelessly. And as somebody
0:03:41 who comes from an infrastructure operations background, I always think it’s good to give a
0:03:44 shout out to those people that are generally thankless until there’s a problem. Right. I think a lot
0:03:49 of people don’t recognize their actual people who are keeping their net running. Totally. And adding
0:03:55 capacity and rerouting things and reprioritizing traffic. We’re all the beneficiaries of that
0:03:59 for all of us who network from home. Broadly, what you end up seeing though is companies that
0:04:04 invest in infrastructure, the ones that know how to scale and have planned for sort of elastic
0:04:08 capacity. And when you’re seeing these platforms, like how teams had an outage and things like that,
0:04:13 these are platforms that have been sort of cut and paste put together over the years from different
0:04:18 products from legacy products. And when you’re building on top of legacy infrastructure or legacy
0:04:23 technology stack, legacy video codex, it’s very hard to then be able to scale up and deliver the
0:04:28 kind of experience people are expecting. So you are seeing new technologies like run the world
0:04:33 and a company called tandem as well. That’s a way to do real time water cooler like conversations
0:04:36 when you’re not doing a scheduled meeting. And companies like zoom that are really taking
0:04:43 advantage of this opportunity. So it’s one thing to have these tools that help us work in small
0:04:50 teams. It’s another thing when these events get at a much larger scale. Many, many conferences,
0:04:55 festivals, sporting events have been canceled in response to the pandemic. What are some of the
0:05:00 promising alternatives you’re seeing to physical events? I think virtual conferences is this brave
0:05:05 new world that we’re all going to start exploring and realize that there’s actually a lot of benefits.
0:05:10 In addition to being able to access it from anywhere from your phone or your laptop and not
0:05:17 needing to pay for travel for hotels for airfare and so forth, there’s also just a lot more engagement
0:05:23 that can happen in an online context that quite frankly is easier in many ways than the offline
0:05:28 in real life version. So think about when you go to a conference and that awkward moment during
0:05:34 cocktail hour and you’re not sure who to approach, you’re not sure how to break into that conversation
0:05:39 or even who you should be meeting with, right? Well, in an online context, now people can be
0:05:44 chatting with other folks but have full context of who they are, why they’re there, who they’re
0:05:50 looking to meet and so forth and platforms can do better matching. So you are making sure every
0:05:55 minute is a good use of time. Look, you always look for silver linings in moment of crisis or
0:06:01 dramatic change and as an introvert, I think this is our golden moment. There’s a lot of people
0:06:05 that don’t get an opportunity to speak up, that don’t have an opportunity to participate
0:06:09 or that the conversation gets steered into a certain direction just because there’s a lot of
0:06:13 voices in a room. There’s somebody who is both often on panels and somebody who’s listening
0:06:19 to people that are on panels. I think panels are like the lowest fidelity form of communication.
0:06:23 I love the idea that in an online conference, you can maybe suggest questions, do a lot more
0:06:28 Q&A, you can help prepare the panel much better and people can better socialize and surface
0:06:31 questions. You don’t just have a moderator trying to decide what’s interesting. There’s
0:06:36 so many opportunities in an online format through all those different communication mediums
0:06:41 to just cultivate and curate a much better experience. The way that you connect with someone
0:06:47 can be through video, it can be through audio, it can be through text and by allowing the various
0:06:52 options, you also attract different types of personalities that otherwise would have been
0:06:56 too intimidated to go to a conference. What’s interesting is when you see a lot of these
0:07:01 conferences switch into an online format, not only do more people join because quite frankly,
0:07:07 the bar to attend is much lower, but more people participate because they’re not so afraid to
0:07:13 chat in an online chat room. The courage required to do that is a lot lower than it is to go speak
0:07:18 to someone in real life. I’m not to mention that it can be recorded and chronicled so that somebody
0:07:22 who maybe can’t make it in real time can go catch up later. There’s an auto chronicling
0:07:27 and auto documenting and archiving capability that is inherent that most conferences just
0:07:31 opt out of because of the cost or complexity. I think that’s really powerful because it means
0:07:36 that especially when you pair it with where we are with automatic transcription, a voice,
0:07:40 it allows people to really consume the information in whatever format works best for them. It makes
0:07:44 it much more accessible to people, whatever prevents them from engaging, not just as an
0:07:49 introvert, but as somebody who also likes to participate sometimes a little bit more voyeuristically
0:07:54 than sort of dive into a full two-day conference session. It’s perfect for people like me and I
0:07:59 think there’s a lot of people out there that feel the same way. So as the coronavirus has spread,
0:08:05 we’ve seen people get creative with ways to keep connected. What other apps are you seeing on the
0:08:10 rise? Are you seeing any particularly creative use cases? Education, I think, is a very big one.
0:08:15 Parents not only need to figure out how to entertain and how to occupy the children,
0:08:19 but they want to make sure that it’s still a good use of time and educational, right?
0:08:25 The V1, of course, is you watch a streaming video of your teacher and you’re basically
0:08:32 watching this person on a screen versus seeing them in real life. But I think the V2 of education
0:08:37 is going to incorporate a lot more different types of media such that the actual course content
0:08:43 could possibly be even better or more engaging. So imagine, for example, an online coding class
0:08:48 that is teaching children how to program, but it’s not just showing you the teacher’s face and
0:08:53 having the teacher talk you through your workbook or through your program, but actually recreating
0:08:59 something that’s half video game, half problem set, and having a teacher talk you through it.
0:09:04 So as you go into these different types of verticals of curriculum, I think the V2 of online
0:09:11 education is going to go beyond just video streaming and be really a mixture of video streaming
0:09:19 plus animation, AR, or really just interactive ways to learn. So I think there will be a lot of
0:09:24 new experiments that happen in distance learning. There are startups out there like OutSchool that
0:09:30 allow all kinds of parents to find teachers who are teaching a variety of courses. And I think
0:09:35 existing teacher-student relationships are going to use things like Zoom or other new platforms
0:09:42 that focus on online education. Now that my own child is at home, I’m seeing that firsthand.
0:09:48 I see my own daughter taking art classes through Zoom, having her piano class through FaceTime.
0:09:53 I know that there’s an artist in San Francisco, Wendy McNaughton, and she’s now been doing these
0:09:58 free drawing classes for kids using Instagram Live. And I think yesterday she did a class and
0:10:03 there were almost a thousand kids that were in this class doing drawing. It’s great for the
0:10:08 parents who need to be working. It lets their kid pay attention to somebody who’s giving instruction
0:10:11 and lets the parent maybe do some work while they’re at home with the kids.
0:10:16 This online format still is very, very effective. Teachers are still able to see what the kids are
0:10:22 doing, give real-time feedback. Another use case I’ve noticed is online tools that facilitate
0:10:27 virtual therapy sessions as well. Right. Yeah, I think there’s a lot of really interesting
0:10:31 use cases. You know, I wouldn’t say I’m a yoga practitioner, but I have many friends who are,
0:10:36 and I probably should be. But one of the things that they lament is that classes spill up.
0:10:40 But now these classes have moved to Zoom and you can do it from home on your yoga mat.
0:10:45 Now the classes never fill up by definition. And so that’s really a transformative shift.
0:10:51 One other interesting trend I’ve seen is third-party video conferencing add-ons.
0:10:57 So apps like Crisp, Crisp with a K, which cancels out background noise like typing or wrappers.
0:11:02 There’s Muzzle, which silences pop-up notifications during screen sharing.
0:11:07 I think I could use both of them. One thing that’s sort of amusing is, you know, I used to work at
0:11:12 Cisco, which has a large collaboration business in Edge WebEx. And so maybe I’m more used to the
0:11:16 always-on video conference call, the constant videoing. But I think for a lot of people,
0:11:20 it’s a new experience and they’re learning all kinds of things. You need to be cognizant of when
0:11:24 your camera’s on. Even if you think your camera’s off, it’s probably on. You need to be much more
0:11:28 aware of whether you’re on mute, whether you’re connected. And there’s a certain sort of video
0:11:33 conferencing hygiene that comes along with that. I’m a big believer in believing the video camera
0:11:37 on. I think it keeps you more engaged and paying attention. Isn’t that one of the features of
0:11:43 Tandem in that it shows which apps you’re on as you’re collaborating with coworkers? Totally.
0:11:47 And they do this in a very privacy-aware way. You can disable it. They show you what application
0:11:52 you’re using and what your coworkers are using. And so what’s cool is I can see, oh, hey, if Connie’s
0:11:57 in a Google Doc, if I have permission to that Google Doc, I can actually see which file it is.
0:12:01 And let’s say I want to collaborate with her. I can just click on it and immediately jump into
0:12:04 that Google Doc. And because Google Doc’s multiplayer by default, we don’t have to
0:12:08 screen share. We don’t have to even have our video on. We’re just collaborating and talking.
0:12:12 It’s sort of like having somebody at the desk next to you and be looking at the same file.
0:12:17 Then if you’re busy, you can jump into a focus mode either permanently or for a period of time. And
0:12:22 so they’re really focused on the usability to create this virtual office environment that’s both
0:12:26 not distracting, but also creates a level of closeness and intimacy with your
0:12:31 coworkers so you can still feel that connection and say, hey, how’s your day going? Or what are you
0:12:36 up to? Or what are you eating for lunch? Right. We’re experimenting using these platforms to even
0:12:41 just hang out with each other, right? Like to David’s point, making sure people don’t feel lonely
0:12:46 during this time of self-quarantine is really important. And so there are teams in our firm,
0:12:50 my own team included, where once or twice a week, we will have an hour set aside where we’re all
0:12:55 online, we’re not allowed to talk about work, and we’re eating lunch together. And that’s funny,
0:13:01 because years ago, I talked about how in China, live streaming for eating was a thing. And everyone
0:13:07 used to make fun of me for that. But we are now doing it here, right? We’re using video platforms
0:13:11 to eat lunch with each other, to hang out with each other. Well, in my team, we’ve been eating
0:13:16 lunch together virtually more than we were when we were actually physically in the office.
0:13:24 It’s actually upping our sociability. So in addition to these online collaboration,
0:13:29 video conferencing tools, some other categories of companies that are seeing somewhat of a bump as
0:13:35 we become increasingly homebound, some of them are obvious, like streaming services, delivery
0:13:40 services, like Instacart. But are there other examples of categories of companies that you’re
0:13:48 seeing more use cases of? Gaming and entertainment is a very big one. Roblox, I can only imagine
0:13:53 how many kids are now wanting to play all the time, because Roblox is not just a one-way game
0:13:56 where you’re playing against a computer, you’re playing with other kids, you’re playing with
0:14:02 your friends. And so for a lot of children, this is their way of maintaining those relationships.
0:14:05 And David, you can speak to that, right? You just installed a Xbox?
0:14:10 I did. I never thought of myself as a gamer. I realized I’m going to be home alone.
0:14:14 I’m up in the mountains. So I bought an Xbox one. I played it a little bit.
0:14:18 I think I still am more of a programmer than a gamer, but I certainly have become a gamer
0:14:24 as a result of this. And whether that endures, I would say work from home, time will tell.
0:14:26 David, have you noticed larger macro trends?
0:14:31 Yeah, there are certainly companies that facilitate more collaboration in terms of
0:14:37 coordination. So whether it’s task management, whether it’s OKR, there’s a whole set of tools
0:14:40 that I think are going to see a lot more usage in the workplace.
0:14:45 It’s things like Asana, where people are using more shared task managers across teams,
0:14:49 instead of just doing their daily huddle, they’re moving some of these team huddles online.
0:14:54 And a company called Workboard aligns goals across teams in a very transparent way.
0:14:57 And they are seeing a lot more interest in people saying, hey, how do I communicate?
0:15:01 What’s important to people? And let them know how we’re doing against our goals.
0:15:05 And so I think there will be a whole trend of applications that create more organizational
0:15:10 transparency so that people understand what they’re working on, why they’re working on it,
0:15:14 and how they’re doing against their goals. And one of the other use cases now that’s really
0:15:19 interesting is telehealth and telemedicine, which is a video conference call with either a nurse
0:15:23 practitioner, a nurse or a doctor. It’s much more efficient. It’s much safer for all the
0:15:28 practitioners and the emergency medical professionals. And I think as a consequence of
0:15:32 all this, the telehealth would become a norm instead of just something that was maybe a little
0:15:36 overpromised and underdelivered. Now I think it’ll become totally mainstream.
0:15:40 Yeah. And I think the common themes you’re seeing here are that when you switch things to this online
0:15:46 digital communication format, not only are they cheaper, they save more time, but they also can,
0:15:51 in many cases, up the quality of care or teaching that you would otherwise receive.
0:15:56 All right. So in the teaching context, when you have one teacher teaching thousands,
0:16:01 you can afford to get one of the most amazing teachers there to create that course.
0:16:07 And same thing, when it’s in medicine, if there are not enough doctors in that particular city,
0:16:13 you now can access doctors from all over the world and unlocking a big supply of service
0:16:18 providers, whether it’s teachers, doctors, therapists and so forth. What it does is it not
0:16:23 only ups the quality of what you can typically access, but it does that simultaneously with
0:16:28 lowering the costs. I want to talk about the longer term impact of this. This is likely not
0:16:34 short-lived. Even before the coronavirus began to spread, our workforce was already becoming
0:16:39 more distributed. So as more and more people are likely to go remote in the coming months
0:16:46 for work, for school, how do you see this pandemic shaping the workforce in the future?
0:16:48 Do you think that remote work will become the new normal?
0:16:54 One thing I would say is certain is that the myth that there are so many jobs that quote-unquote are
0:16:58 not possibly done remote clearly is shattered because people that are doing jobs that when
0:17:02 they were hired into it, they were told that it was not possible to successfully do the job
0:17:07 remote and proven that that’s not true. There’s just a tremendous number of jobs that people can
0:17:14 do remote. It’s an unfortunate but an interesting test case in that, as you noted, most people
0:17:20 probably aren’t that comfortable video conferencing into work. But with this scenario, many are being
0:17:27 forced to, once people realize that these tools are available and that they’re someone intuitive
0:17:31 and easy to use, I wonder if this is the beginning of a more permanent shift.
0:17:34 I think a lot of people like going to an office. They like the separation of
0:17:38 home life and work life. And so there’s a lot of people that will be very happy to go back to the
0:17:42 office. But there’s certainly going to be an enduring trend. I would have to imagine where
0:17:46 people want to live, where they want to live, and then work at the companies they want to work at,
0:17:50 even if those two things are not co-located. And certainly this is showing that that’s very
0:17:53 possible for the vast majority of professional use cases.
0:18:00 Right. It’s still too early to call whether or not consumers prefer working at home or in a physical
0:18:04 office right next to their colleagues. I think distributed teams, especially teams that have
0:18:09 global workforces, are going to realize maybe they don’t have to do all of their hiring in a
0:18:14 very small radius around their office. You know, all three of us are in three separate cities and
0:18:20 three separate rooms all recording this podcast digitally using digital podcasting software
0:18:24 that’s delivered as a service. And so, you know, I think people will find that there’s a tool for
0:18:30 almost every use case that they have. And, you know, I think if I had asked you six months ago,
0:18:34 “Hey, we can start recording podcasts all remote and distributed,” you all would have said, “No,
0:18:38 that’s not going to be good. It’s not going to work out okay.” But of course it’s working out fine.
0:18:44 The other thing I would mention is we don’t know how long this particular phase is going to last.
0:18:48 And as a lot of entrepreneurs are seeing these opportunities, they’re seeing also these gaps
0:18:52 in existing products, I think there’s going to just be more innovation in this space.
0:18:57 Just think about the possibilities when you add things like AR. You know, you can have a fashion
0:19:02 show where things are coming to life or you can look at an item and save it for later, right?
0:19:08 There’s all kinds of things that you can do once you overlay a digital screen in front of a real
0:19:12 life event. So inevitably, I think that means you’re going to get better products serving this
0:19:16 particular use case, too. You know, if you think about video streaming as a new browser,
0:19:20 what are all the extensions you’re going to need? What are all the different destination websites
0:19:24 that are going to have to be built? And I think it’s an open question for some of these verticals,
0:19:29 whether or not it’s a horizontal platform that wins or whether it’s a vertical platform that wins.
0:19:32 Great. Well, thank you so much for joining us on the A16Z podcast.
0:19:33 Thank you.