Why the Author's $100 Billion Prediction is Credible

Posted by Lee Lorenzen on

In other blog postings on this site, the author has recently been predicting that Kik Interactive Inc. is the next $100 billion company.
 
Before dismissing this prediction as hyperbole from a KIN fanboy or the pipe dream of a Kik founder, please read the following bit of history to understand the author's track record with regard to spotting super-saturated environments and the seed crystals that have the power to efficiently crystallize consensus, coordinate collaborations and change the world.
 
As shown in the cartoon below, most people have no expertise in spotting the "crazy ones" who waste their time "sitting around inventing" and little appreciation for the initial versions of their creations.  For these reasons, they are surprised when subsequent versions with true paradigm-shifting power are released into the world and cause what had been tiny ripples of change to swell into wealth-creation tsunamis that can exceed $100 billion.  
 
 
Why the Author's $100 Billion Prediction for Kik Interactive is Credible:
 
Lee Lorenzen is a serial entrepreneur who sold his first software company while still in college and then went on to work at Xerox and Digital Research on some of the first graphical user interfaces for the personal computer. For over 30 years, Lee has founded and/or funded 25+ startups with multiple liquidity events including:
 
  1. Sales Tracking System -- sold to Haggar in 1980
  2. Ventura Publisher -- sold to Xerox in 1990
  3. Fractal Design Painter -- sold in IPO in 1992
  4. Mac2Win -- sold to SHOP.com in 1997
  5. PGSoft -- sold to Novell in 2001
  6. Adonomics -- sold to Adknowledge in 2008
  7. SHOP.COM -- sold to Market America in 2010
  8. WorldShop/ShopO -- seed funded by UPS in 2014
Lee is known for founding companies based on his predictions about the ability of new technologies and/or business models to change the world. One example of this is evidenced by his invention in 1997 of the multi-vendor, virtual inventory, one-cart shopping system (US 7,197,475). This invention enables 3rd party marketplace experiences like the one that now powers over 50% of Amazon's GMV and was the reason why Bill Gates (Forbes #1) was a seed round investor in SHOP.COM in 1997 and Jeff Bezos (Forbes #2) invested 837,520 shares of Amazon stock (currently valued at $817 million) for 10% of SHOP.COM in 2001.
 
 
Prior to his work at SHOP.COM, Lee created the Lone Star graphical user interface on a PC platform while at Xerox in 1982 (as seen in this video: https://www.youtube.com/watch?v=EMBGRZftS30). This proof-of-concept pre-dated Apple's Macintosh and Microsoft's Windows by more than 2 years. When Xerox chose not to develop the Lone Star user interface into a product, Lee joined Digital Research (DRI) in 1983 and went on to create the GEM OS and GEM Desktop in 1984 which proved to the world the viability of Xerox's pioneering user interface work on the IBM PC platform.
 
 
Interestingly, Steve Jobs was so worried about Xerox's user interface being deployed on a PC platform that he personally threatened Bill Gates regarding Windows being too "Mac-like." Bill then suggested Steve first threaten to sue DRI because Lorenzen's GEM Desktop was closer to Mac than Windows was. Steve did so and DRI's inability to fight Apple's lawyers led to Lorenzen leaving DRI to start a desktop publishing company called Ventura Software. Both Apple and Microsoft subsequently went on to build graphical user interface businesses on the PC and Mac platforms that each exceeded $100 billion in market value.
 
At Ventura Software, Lorenzen was the software architect and primary developer of the bulk of Ventura Publisher on the GEM and Windows platforms creating such major desktop publishing innovations as advanced style sheets, fast H&J, multi-frame text flowing, database publishing hooks and editable tables. This period from 1986 to 1990 was during the early days of the desktop publishing industry (i.e., another industry that Lee helped pioneer) which grew to over $100 billion in market value and included companies such as Adobe, Aldus, Apple, Microsoft, FrameMaker, Xerox, Seybold and Quark. Lorenzen was recognized along with selected leaders of these companies as Desktop Publishing Pioneers by the Computer History Museum in 2017.
 
During its entire history, Ventura Software had only 5 employees and Bill Gates was so impressed by Lee's "lean and mean software company" that he sent the following letter to make that point and to request Lee's support of Microsoft in the future -- which is why Lee approached Bill when he wanted a seed round investor for SHOP.COM.
 

 
More recently, Lorenzen accurately predicted that Facebook would be worth $100 billion at their IPO.  This prediction was made in writing and on video in 2007 and came true five years later just a few days after Facebook's IPO in 2012.  Here is the written snippet from Scott Austin's WSJ article on May 18, 2012:
 
 
As you can see in this video of Lorenzen's $100 billion prediction at the Graphing Social Patterns conference, Lorenzen had to defend his views while being called "drunk" and "delusional" and "on crack" and a "security threat" by fellow panelists that included Michael Arrington, Jason Calacanis, and Robert Scoble:  http://www.youtube.com/watch?v=wJG9uxlmryI 
 
 
So far, only Robert Scoble has revised his views when he wrote the following in his blog, "Back on October 11, 2007, I wrote that Lee Lorenzen was nuts. [...] I told Zuckerberg to sell at a $15 billion valuation. [...] But, Zuckerberg and Lorenzen had real vision and I didn’t."
 
Using an Operating System Lens to See the Future of Wealth Creation
 
One of the keys to having real vision is to have the right lens through which to look at events. In Lorenzen's case, he uses an Operating System model in which each wave of wealth creation follows a predictable pattern:
 
1.  An new type of app is created on an old style operating system in which the app must not only provide its core functionality but must also carry along all the extra functionality that will one day be in the operating system. As an example, think of the first games on PCs in which they had to provide their own controller hardware, graphics cards, user interface elements, etc. because the character-oriented DOS could only provide the basic function of loading the app into memory. In this first phase of the OS Lens, new app-level services can only be created by the few experts who know how to write these hybrid apps that shoehorn new OS functionality into apps that can still run on top of old OS platforms.
 
2. The next phase is when a new Operating System arrives with a large portion of what the new type of app needs to function now built into the core of the OS. As an example, think of the advent of Windows after DOS when graphics apps like games and personal productivity apps like Word, Excel, Powerpoint can now be built on top of the Windows OS layer. In this second phase of the OS Lens, lots of the new types of apps can be built by mere mortals because the apps can easily tap into the core functionality provided by the OS.
 
3. The next phase is when a single "killer app" is built on the new OS that is so useful that it will cause users to purchase the app, the OS and the hardware. As an example, think of the arrival of Visicalc on the Apple II OS or Aldus Pagemaker on the Desktop Publishing OS of Postscript on the Mac/Laserwriter/Linotronic OS. In this third phase of the OS Lens, we have $100 billion wealth creation opportunities for the Killer App, the company that controls the OS and the company that controls the hardware.
 
4. The next phase is when a host of other follow-on "killer apps" and "niche apps" radiate out through the eco-system of users and hardware that has been made ubiquitous by the first "killer app." Examples of this would be the Windows Office Suite of apps, the thousands of apps in the iPhone's app store and the thousands of apps on Facebook's platform. In the fourth phase, there are lots of opportunities for entrepreneurs who create popular apps to make $1 to $20 million because the number of users with an easy way to buy the new types of apps grows exponentially with the overall utility of the OS.
 
5. The next phase is when the OS platform stops evolving and the app eco-system is so fleshed out that the best developers are forced to think of something they can build on the OS that isn't based solely on the core OS functionality that anyone can use. An example  of this is how Facebook used a combination of social connections and trusted users based on verified ".edu" e-mails to build a browser-based app that was about people connections instead of document connections. In this fifth phase, we revert back to the first phase and continue the cycle again.
 
 
Spotting a Super-saturated Solution and Designing the Right Seed Crystal
 
The most recent example of this OS Lens approach being used by Lorenzen is in his prediction of something he calls the Influence Operating System (Influence OS) and the "Killer App" for it which he believes will be the ShopO Circles cross-border e-commerce app.  The Phase 1 version of an Influence OS and App occurred during the Arab Spring in what Lorenzen called the Rock Candy Revolution when a Facebook Page was used to crystallize consensus, coordinate collaborations and change the world. The following TEDx Monterey talk by Lorenzen tells this story:
 

 
Like Wael Ghonim's one-off example of an Influence App built on top of a single Facebook page that rallied millions of Egyptians to take their country back in just 18  days, Lorenzen wants to build a multi-use, Influence OS on top of Facebook's Social Graph that numerous app developers can use to efficiently influence a large number of people for good purposes.  The category he chose for his "killer app" was cross-border e-commerce and the OS structure he envisions is one that leverages the logistics connections of UPS, the trust connections of Western Union and the friend connections of Facebook. To make such an Influence OS useful on a global scalethe ShopO Circles app will require millions of individuals to join this new eco-system in which ShopO Circle Leaders influence their friends, families, neighbors, co-workers, etc. in exchange for various forms of rewards that are provided by merchants, NGOs and others.
 
Stay tuned to see how this turns out...
 
Conclusion
 
In case you haven't been counting, that makes 5 new software industries and/or companies with market values over $100 billion for which Lee Lorenzen has either been a pioneer, an early predictor of massive value or a provider of enabling technologies or business models.  With that track record in mind, and for all the reasons stated earlier, you can count on his prediction that Kik Interactive will be the next $100 billion company.
 
That being said, if you intend to make financial investments based on any of the opinions expressed hear, please remember:
 
Lorenzen's First Law of Investing: "Invest only what you can afford to lose completely and if such a loss occurs, still remain friends with Lee."
 
(c) 2017 Altura Ventures Inc.

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