About 3 weeks ago, I left a warm Canadian sun to fly south to San Jose's chilly weather, and attend the Semantic Technology conference. Or, let's be fair, 1.5 days out of the five the event lasted. The rest, mostly, I followed through Twitter, which by all accounts tends to be a little like watching the Olympics on TV, as opposed to being in the stadium: you don't get the pop corn and hot dog breeze, but in the end you know more about the games than people who were there (and not on Twitter too... it gets quickly confusing.)
Of course, the big objective at "Sem Tech" is networking. Thanks to the nice folks of Semantic Universe (thank you Eric and Steve), I managed to make it, last minute, onto the exclusive list of VC Connect, a cocktail reception which gathered both fundraising CEOs and investors (of whom more attended than I thought there would be. I guess the free hors d'oeuvres did the trick). I stroke most great conversations there (apologies to those I met outside of VC Connect!)
So, my impressions of the event. I know those are late but I'm not competing with news organizations, just with analysts, so that's ok!
Overall, it was sort of "hot and cold": there were lots of very positive signs and, by all admissions, there is still a lot to do before Web 3.0 and the Semantic Web truly happen.
Key mental notes I made to myself:
- Fully endorsed: all the godfathers are now at the table. This event marked the first participation of Google, confirming the company's mood reversal after the tough words Eric Schmidt had for the field a while back. Anyway, what matters is that the 800-pound gorilla now sits next to Yahoo's SearchMonkey and King Kong Microsoft, putting their seal of approval on the effort, and all the credibility that comes with it.
- Market traction (which some call hype): attendance was up by 16%, which, in these macro-economic conditions, is no small feat. Lots more companies are asking what they should do to get ready for web 3.0 and the semantic web, and visiting the conference to understand. I don't know whether they got the answers they hoped for, but they were there and that's one first step!
- Real products in B2B: there were some real, commercialized semantic products, especially in the B2B space, such as those of Cambridge Semantics, and products in that space are starting to use Linked Data and integrate information into the Semantic Web.
- B2C disappointment : on the consumer side, of course there was Wolfram Alpha, which is certainly interesting but ultimately not earth-shattering. But at the exception of search engines, I
found that little was new in B2C. SIRI was presented as a "game-changer", but
with all due respect to Tom Gruber, I believe it is way too early for
"Virtual Personal Assistants" to take off. Technology is not ready to support such a value proposition, all the hype
will only help create expectations that can't be fulfilled, and because
of this it is likely to fall flat in the market.
I saw nothing that took advantage of Linked Data (URIs) and the stack (RDF etc), beside those few apps we already know about, i.e. Zemanta, Glue... Even then support is limited (yet to come for Glue, I believe). Clearly the consumer space is still quite a bit in R&D mode (yawn...), and what I came across felt somewhat unfocused and confusing too. Hopefully more will happen on that side in the coming months, with the technologies maturing.
Sem Tech also showed me there were still challenges, at 4 levels:
- Incomplete technology : linked data now seems mature enough to create commercial apps, but as I described in previous posts there is a huge risk of GIGO (garbage in garbage out), as text analysis is lagging behind. Also, the general focus on aggregation is diverting resources from creating smarter application from a user standpoint. Nothing I saw at SemTech made me feel much better about those issues, although I believe there are efforts taking place in text analysis that may yield good results going forward.
- Usability deficit: way too many apps are still trying too hard to have machines do all the work. A majority of CTOs have a hard time internalizing that machines are still stupid. They are. AI won’t be here for another few decades. In the meantime, companies should focus on higher usability.
I was delighted to see this theme emerge strongly at SemTech, when the search engine panel advocated turning the search experience into a "conversation" with the user. By that they meant asking the user for clarification when there is ambiguity, for instance, or too many answers to be practical. Beside improving the user's experience, dialoguing with her and collecting the results intelligently would really enable the creation of rich semantic engines over time.
- Underinvestment in market understanding and marketing : this is worth its own post... Stay tune, I'll publish it in two days. Let's just say this is a huge issue in the space, and while I witnessed a certain progress at Sem Tech this year, we are faaaar from the levels required to make this R&D haven a business.
- Forget VCs, unless...: I was also hoping to see significant growth in the number of VCs and strategic investors at Sem Tech this year, and yet there seemed to be very few of them around. I could count maybe a dozen on the participant list, and met only about five of them. Interestingly, all said they would not invest in anything “semantic web”, but in solutions to problems, and they kept repeating that they saw the main problem with companies at Sem Tech as being a lack of focus on a consumer or company problem (see, I'm not the only one!)
I am not exactly sure what to think of that, though, coming from VCs. On the one hand, I obviously agree with them about the prevalent lack of a market-centric approach in the semantic web space. Yet, on the other, there is a number of companies with great semantic technologies just waiting to be properly positioned and packaged by a clever business team. What do VCs do if not helping with that?
After all, if you ask them, VCs don't invest in "Web 2.0" either. Yet in the meantime, they are still funding the next social network...
As was pointed out to me by a Gold sponsor of Sem Tech, even the best of VCs, such as my friends (before this post, that is!) at Intel Capital, end up sending confused signals to entrepreneurs: case in point, while professing on the Sem Tech podium to be only investing rationally in companies benefiting Intel, Intel Capital put money in companies with very fuzzy problem-solving potential and a very, very diffuse contribution to Intel sales. Such as Bragster, that I can't call anything else than a stupid social network, very unlikely to return any money to its investors. If Bragster is helping sell chips, what isn't?!
So, when VCs don't follow their own advice, how do you blame entrepreneurs for not doing it either?
But there is "hope".
Since VCs pretty much invented irrational exuberance and benefit from it (believe it or not, I am fond of the VC model - I just wish there was a little more self-discipline in the field), we could very well see a rally on the Semantic Web and Web 3.0 this year or the next, that would of course temporarily put aside question marks around "market problems" etc... VCs need focal points like that, and since cleantech investing seems to be taking a breather, the web 3.0 is the next best candidate.
Having said that, I am not encouraging any company to forget about tackling a real market need that they can get paid for. In any case, the best path for many of the start-ups at semantic technology companies is not to bet on a VC rally on Web 3.0 and rather to assume there is little investment money in the field. In other words, forget fundraising, and focus on revenue and profitability from day 1. If you do that properly, VCs may soon come knocking at your door (assuming they recover from their financial crisis wounds), and you will be ready for any rally.
Such minor considerations apart, it looks like things are moving in the right direction, although still a little too slowly on the business side. At Sem Tech, I was a bit let down by the limited range of new, innovative solutions solving a widespread or even a narrow problem, but I think that the stars are slowly aligning and we may see an acceleration wave. Especially if rapid improvements are made in technologies to structure unstructured data, if an increased focus is placed on revenue model, usability, and market awareness, and if you follow all the advice in this post and refer it to 10 other people...
During the live Semantic Web Gang podcast we recorded at Sem Tech, which will be available here when it is published, I said that business people should come in droves to Sem Tech next year and take things over from tech folks. While this was deliberately provocative, I think there is a huge imbalance in the field at the moment and it incumbs upon CTOs and other tech CEOs to rebalance their efforts, open the gates and welcome more business types in. Opening up the semantic web is, in my mind, the key to success. Rendez-vous next year to see how well start-ups have fared.
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