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Think Big. Move Fast.

The Nutanix team (ex-Googlers, VMWare, and Asterdata alums) have been quietly working to create the world’s first high-performance appliance that enables IT to deploy a complete data center environment (compute, storage, network) from a single 2U appliance.

The platform also scales to much larger configurations with zero downtime or admin changes and users can run a broard array of mixed workloads from mail/print/file servers to databases to back-office applications without having to make upfront decisions about where or how to allocate their scare hardware resources.

For the first time an IT administrator in a small or mid-sized company or a branch office can plug in his or her virtual data center and be up/running in a matter of minutes.

Some of the most disruptive elements of Nutanix’s technology which enable the customer to avoid expensive SAN and NAS investments typically required for true data center computing are aptly described on company’s blog – http://www.nutanix.com/blog/.

Take a look. We believe this represents the beginning of the next generation in data center computing.

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The social Internet is fundamentally a game changer. Unlike the web-link driven Internet, the social Internet connects people directly to one another and the resulting social graph essentially provides for a brand new, highly scalable distribution mechanism. The early adopters of the Facebook platform such as Zynga leveraged the platform’s social distribution to reach scale relatively quickly. However as the platform is restricting notifications to the users, a number of newer applications are finding it hard to get user traction and sustain engagement. In the competitive world of Facebook and other social platform applications, applications have to be fundamentally social to survive and get user attention. My acid test for an application leveraging social graph – “is the application useless in the absence of the social graph”. A “No” answer indicates a mere social layering on top which is not sufficient.

The Hierarchy of Social Interactions

A social application’s user interaction model should be around discovery and handholding users from “lookers” to “doers”. The discovery is essentially bringing together emotional, impulsive, curiosity, and other inherent psychological needs, and delighting users every time they engage with the application. The discovery aspect of a social application is what brings users back into the application and sustains engagement levels.

The hierarchy of interactions from lookers to doers is core to the discovery mechanism. A well designed social application must provide value to users who are just lookers and make no input. Such users make the majority of an application audience. The next up in the hierarchy is “one click” interactions. With this mechanism a user can vote up or down on any object created by other users. This kind of low-touch interactions help users get over the hurdle by reducing the cognitive dissonance arising out of “what to write or comment”. The next step up is “responding” to a question or comment from other users. This, again, is low hurdle activity since users have the needed context to respond with. Users who ask or comment in the first place are still next level up in the interaction hierarchy because they are dealing with low to no context resulting in higher level of cognitive dissonance. At the top of the hierarchy are users who upload or generate content. The effort needed to generate/upload content and the social approval anxiety make this step the hardest for the users. A successful social application essentially handholds users up the social interaction hierarchy and creates stickiness and high level of user engagement. As a general rule of thumb, the distribution of users in different position on the hierarchy are 80% lookers, 10% clickers, 5% responders, 3% askers and 2% creators.

A social application by its very definition involves social approval, recognition, and emotional fulfillment, and application developers should focus on reducing social approval anxiety and cognitive dissonance by creating an easier path for users to convert from lookers into doers.

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The first decade of the new century witnessed a fundamental change in the nature of the technology entrepreneurship. The dramatic reduction in the cost of starting a technology business combined with readily available risk capital has created a near perfect market for anyone with an idea and some risk tolerance to become an entrepreneur. This democratization of entrepreneurship has profound implications not only for the venture capital industry but also for the economic growth and prosperity.

The maturity of the Internet as a platform and the growth of open source projects have given rise to infrastructure-as-a-service providers that allow companies to almost completely eliminate the upfront capital expenditure and pay based on usage of the infrastructure. The entrepreneurs are leveraging the outsourced infrastructure along with Internet based low cost distribution to test and refine business models. The so called “Super Angels” who are a new class of risk capital providers have emerged to support such early stage Internet business model experimentation. In most cases the outcomes of such experiments are determined with less than $1M in invested capital. The successful models then go ahead and raise substantial venture capital to scale the business. What is the most interesting is, unlike the previous generation of technology entrepreneurs who were building infrastructure components of the so called technology stack, this new generation of entrepreneurs don’t need deep domain experience to start web based businesses as vast majority of the new companies are business model innovations with some technology pieces layered in. Further fueling this phenomenon is plenty of early exit opportunities for these companies even if the business model turns out to be not very scalable.

The democratization of entrepreneurship is net positive for the Silicon Valley ecosystem. The reduced barrier to entry and cost of failure have encouraged hordes of new college grads and corporate professionals to start companies. The traditional venture capital market is more efficient than ever because only somewhat proven ideas get further funding to scale the business. The venture firm brand name is not the most significant determinant of deal access especially in early stages due to serendipity factor in the identification of teams and business models. The market is much more of a level playing field for all.

Some people argue that easy access to capital and plenty of early technology/talent exit opportunities would create a culture of “fast flippers” where entrepreneurs would avoid long and hard slog of building large, standalone businesses that made Silicon Valley. Surely, there are well funded startups that look more like lifestyle businesses with no real potential to scale. However, we are early in this cycle and I believe market forces would eventually bring equilibrium.

I am more excited than ever about the pace of innovation and the resulting economic growth and prosperity. The unleashing of communication revolution combined with ubiquitous computing is creating level playing fields for consumer and entrepreneurs alike around the globe. We are indeed living through an age of acceleration where erstwhile temporal distances are getting squeezed. I will write more about it in the future.

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There’s been some great discussions recently about the Lightspeed Summer Program (http://news.ycombinator.com/item?id=2380567) and at several of the sessions over the weekend at the Stanford E-Boot Camp (http://bases.stanford.edu/e-bootcamp/ so I thought I’d do a quick post to help …

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As an entrepreneur, your time is a very valuable asset. It takes as much time and effort to build a business whether you’re attacking a small market or a big one. But the rewards for success in a big market …

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The Economist has published a couple of interesting articles about how to deal with bad PR recently.

The first suggests that it is better to ignore bad PR than to fight it:

…rebuttals are unwise, argue Derek Rucker and

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A couple of weeks ago Webtrends analyzed 11,529 Facebook ad campaigns representing 4.5bn impressions to see what conclusions they could draw. It’s worth reading their short white paper on Facebook Advertising Performance Benchmarks and Analysis. Some highlights include:

  • Click

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Bloomberg Businessweek has an interesting article on the infidelity economy this week, noting that registrations for AshleyMadison, the online dating site aimed at married people, spike the day after Valentine’s Day. But nowhere near as much as they spike …

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We continue to be very enthusiastic about the tremendous amount of opportunity in the Enterprise Infrastructure sector for 2011. In the past few years, we’ve seen significant innovation in technologies such as virtualization, flash memory and distributed databases and applications. …

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Last year, Amazon invested $175M into Living Social, one of our portfolio companies. Today we’re seeing the first step of operational integration from that investment. Living Social is running a nationwide deal – $10 for a $20 Amazon gift

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