"The bar in consumer tech is being raised all the time"

Manish Patel’s passion for building began when he was a kid. Whether it was on his brother’s Commodore 128 or with a bucket of Legos, he loved to create experiences that stretched the imagination. Today, that same excitement drives his involvement in the start-up community, where Patel helps countless teams realise their potential as they evolve from an insight to an experience to a business. As partner at Highland Capital Partners, Patel invests in consumer internet, mobile and digital media companies that observe patterns in our everyday lives and use technology to help solve problems on a human scale. Prior to Highland, he held several leadership roles
in Google as it grew from a search engine to the dominant company that it is today. 

If you ask me which companies have infinite potential, I would say companies solving problems on the “human scale”. What do I mean by the human scale? These are problems that affect you and me on a daily basis. A good example is Google, which made it easy for people to look for information online. Facebook bridged another gap — the human need to connect with others. The same logic applies to many other hugely successful companies — Zynga and YouTube satiate the human need to be entertained. Likewise, Flipkart in India has given people the option of buying stuff online rather than going to a store, thereby simplifying their lives. Amazon ships my groceries home every month and there are many more firms making instant deliveries. Companies solving human-scale problems often end up being consumer-oriented companies because individuals outnumber businesses. 

And the list of consumer internet firms keeps growing longer, with new ones being built every day. This is because it’s a lot easier to build a company today than in the past. Information is abundantly available and people are so well-connected through social media that they instantly get to know about and help promote the next big thing. It’s pretty incredible when you think about companies such as Snapchat or Instagram — the number of users they are able to acquire with such small teams is amazing. 

At the same time, it’s tough to build a successful firm because so many others are attempting the same. The bar is being raised all the time. Either way, consumers win because there’s more competition, so more innovation will happen as companies race to survive. Without that competition, the industry gets stifled. You get large players that don’t have enough reason to innovate faster because they aren’t worried about losing their market share. 

I believe there are four areas in which really big innovations will happen: communication and connecting with people, information search, entertainment and e-commerce. Within all these areas, the focus now is mobile. In the communications field, Facebook was built off a desktop paradigm; its focus was never mobile. But now, messaging companies such as Snapchat, WhatsApp and ReachOut are on fire as they are available on mobile phones.

The opportunity is huge because so much communication is flowing through this channel now. Highland invested in a company called Fleksy, with which you don’t have to struggle to type on your smartphone touchscreen because it removes the need for a physical keyboard. The product works by predicting where your thumbs are relative to the position of other fingers, coupled with artificial intelligence tech that allows you to type a lot smarter. It is one of the most amazing technologies consumers can use. These types of products and services can really change how people interact in the world. 

As for information search, one of our portfolio firms, Aviate, is designing the next generation of tech for finding information on mobile phones. Google is an amazing company and Bing is a great search engine, but they started on the web first. Now, we spend most of our day on mobile devices and because of the form factor, design and context in which it is being used, the type of search we are doing is very different.

Another firm we invested in that is working on something extreme is called Leap Motion, which is changing how people interact with machines through gesture computing. Everybody in the world needs to interact with computers — that is inevitable. But that interface has to become much richer and more intuitive than it is today. While early implementations of Leap Motion are taking shape in the gaming industry, the technology has the potential to alter how people accomplish day-to-day tasks. For instance, imagine a doctor performing surgery. He can’t use a keyboard or touchscreen if he has scrubbed up or started the surgery. With Leap Motion, he can interact with machines with intuitive hand motions and gestures in the air. That is a powerful application.

The other category I am excited about is the internet of things, which is this idea that all devices will be connected to the internet, and become “smart” by learning from each other. It’s not so much about my refrigerator talking to my microwave, but about my entire home becoming smarter in how I engage with it. Nest is a great example — its thermostat is smart, which not only leads to energy saving but improves life as well. The internet of things can improve my life in subtle but important ways.

For example, if I forget to close my garage door, I should get a SMS telling me to shut it. What’s even more powerful is having a platform that allows developers to imagine and create various experiences that make our lives better — that’s what our most recent investment, SmartThings, will enable. For instance, perhaps the components of my household security system have been made by different manufacturers. With SmartThings, someone could wire them together in a way that makes sense for me. Clearly, the consumer internet space is only getting more and more exciting and if you have a great idea and exceptional team, you can stay relevant. 

Be warned, though: very few early-stage companies are able to run with the same idea until they become a company of consequence. Most pivot several times. That ability to react to the market and see where it’s going is important and critical for success. You need to be clear about the market, the space you will operate in and then focus on the product. And, of course, on the revenue model.