CES 2017 Thoughts

I’ve traveled to CES and its predecessor Comdex for more than 20 years. Each year I conveniently forget the hype, undelivered products, and inevitable post-trip flu from the previous year hoping to interact with products that fuel the imagination and can actually be bought within a year or two. Sadly, those products are becoming fewer and far between.
Why? Part of the reason is that those breakthrough products might be in Las Vegas, but they increasingly are not on the show floor. Microsoft, HP, Nvidia, Dell, and Oculus might bring the next great product, but you have to be invited to an exclusive press event or private meeting room to see it. The same holds true for some startups, as it is easier and less expensive to control who sees their upcoming products via a private room than a large public floor space. It might be at CES, you just don’t get to touch it.
A bigger reason, in my opinion, is that we’ve entered an age of incrementalism. CES 2017 was littered with products whose feature set was exactly the same as the wares in ten or twenty other booths. A side effect of simplified hardware development is me-too products. Any signal of market opportunity, no matter how stale or small, brings countless products to chase after the opportunity. Nearly everything at CES 2017 was tagged a “smart” something, but was it smart for so many vendors to create the same products?!
Incrementalism is good for some and challenging for others. As a VC, incremental products and many companies pursuing the same, narrow segments means CES has fewer opportunities than I’d hope to see. Fewer each year, even though the number of startups in attendance is increasing. CES is the hunt for the needle in a haystack; the startup with a great team, differentiated product, VC scale (>$100M/year) future revenue potential, and hopefully a blue rather than red ocean surrounding it.
But do not be disheartened by this VC’s perspective of CES. I am not. While a VC, I’m an entrepreneur by experience and at heart. CES in recent years confirms my hope and excitement for the hardware revolution. Inside this incrementalism, inside this sea of startups whose ARR might only be <$15M, are an increasing array of sustainable, small(er) businesses led by enthusiastic founders gaining experience and customers by the day. CES, and especially Eureka Park, has evolved to highlight nimble startups catering to smaller, focused audiences and the online, specialty, and mass retailers who sell to those customers. To survive in an age of incrementalism and quickly imitated industrial designs, a hardware startup must innovate through software, information, and community. Those that succeed create new, local jobs and trail blaze a path for this generation of global hardware entrepreneurs. Many will fail, but hopefully they will learn from those experiences and try again.
While CES is dominated by big companies and huge hype machines, the real star of the show are smaller companies who might never get “big enough” to warrant VC investment. And that isn’t just ok, it’s great.
So why attend CES? Attend to see ground zero of the hardware revolution. The passion, commitment, and energy pouring out of Eureka Park and the Venetian hotel rooms is palatable. It’s the only place where you can meet so many founders and engineers in such a short time span. I love having deep conversations with people who actually make product. I spent more than 30 minutes on a couch in a small hotel room listening to the legendary Andrew Jones explain in painstaking detail how he designed ELAC’s new speakers. Almost an hour talking with the person guiding HDR (High Dynamic Range) about future broadcasting standards, firing technical questions as fast as I could think of them. CES is about people, and only at CES are so many hardware builders, entrepreneurs, and leaders in one place at one time. CES is about being with our extended hardware family.
From a personal, geek perspective, I saw a few things that I remember well after the show ended:
  • Sony’s booth was great. I grew up admiring Sony and it was exciting to see innovative ideas and products in their booth again. It felt like Sony finally zagged while Samsung and LG continued zigging in a yearly battle to out increment each other.
  • Xiaomi’s booth floored me for one reason: prices. Every product in the booth had a price on the description card and that price was far below what other vendors would sell similar products for. In a show filled with glitter and gloss, the only booth with pricing, sometimes unbelievably low pricing, was a breath of fresh air or a well-placed shot across the bow.
  • Sony’s Ultra Short Throw 4K Laser projector was amazing. Product of the show for me. I think laser projection will change the TV market significantly in the next 4-8 years. Forget thin; think anywhere and huge (image size).
  • Ultrahaptics was the developer technology I kept imagining how to take advantage of. Imagine feeling feedback to your movement, intentions, and actions without touching an object (mouse, trackpad, desk, ATM, car dashboard, etc.) The actual haptic feedback felt weird because it felt new, something unfamiliar but powerful. Too bad the development kit was $2000 and seemingly targeted at large corporations.
  • There were a myriad of new audio standards to create more immersive game, music, and movie experiences. There were too many to be viable, but like any other change, a few will survive the winnowing to drive innovation. As an audiophile, it was heartening, though it makes my personal home theatre decisions a bit cloudy.
  • I can’t wait to get a TPCast Wireless Vive kit. Wireless whole room VR! Even if it is not perfect, freeing me from the tangle of cables my Vive entombs me in would be a huge upgrade and a needed step in the evolution of VR.
As a footnote, I do think I might have found a needle in that haystack. Hope springs eternal!