Incubation always has played a big role in determining the direction of a product. Incubation is really the same as early stage experimentation. It is where we play with concepts, ideas, features and products before subjecting them to any real market pressures.

Historically I have always incubated.

— EasyNet, in 1994, came about after 2 years of playing with AOL, Compuserve and Demon Internet in the UK. If it wasn’t for the experimentation and play there would have been no EasyNet.

–RealNames came about after a year of playing with mapping French MiniTel addresses to URLs and building browser plug-ins to enable the Minitel addresses to be resolved to URLs. About $500,000 was invested into the idea before launching it and getting the first deal with AltaVista in 1998.

–TechCrunch was initially Mike [Arrington] ‘s way of gathering and filtering data about the emerging Web 2.0 landscape in 2004-5. It became a business much later.

–Edgeio was incubated for almost 2 years before it did a seed round and launched in 2005-6.

But incubation alone doesn’t cut it. What you incubate, the theme that guides the focus for incubation is crucial. If that theme makes no sense then the resulting ideas will find no scalable audience.

Themes are not fixed. They change as conditions demand.

–In 1983 the emergence of networking and multi-user, client-server databases was the theme (what became cScape was born in that period).

–In 1994 the theme was the emergent internet replacing AOL and Compuserve (EasyNet, CYBERIA and Ivan Pope and Antony Van Couvering’s NetNames came out of that period).

–In 1997 the focus was on internet search and navigation (RealNames was created during that period).

–In 2004 the theme was distributed content and aggregation, and tools to manage those (edgeio was formed in that period, as was Mike Arrington’s TechCrunch to monitor and assess those developments).

Today our theme is the combination of

–the emergence of smart phones, and a distributed social graph that results from that. The world of desktop and laptop delivered software and services in about to go through major change as mobile devices dominate user engagement with data and with each other.

–ubiquitous bandwidth.

–the transformation of the internet into a real-time platform that is capable of broadcasting a users evolving experiences and interests.

These developments, taken together, have huge implications for everything – commerce, payments, content publishing, distribution, discovery and also for relationships between people.

These trends will challenge the winners from the last era.

Will Google still be the king of search as our focus on real-time information changes our view of what constitutes “good search results”?

Will CNN still be the place to go whenever something major happens in the world?

Will people’s passion for their hobbies move from buying Magazines to something else?

Will Yelp be the place to find places, or will that be something new?

Will Facebook and the desktop still be relevant to social networking as mobile and “distributed social” mechanisms develop?

The new becomes old quickly in times like these, and up to 1.5 billion people can now vote with their fingers, almost instantly.

We incubate through several stages.

–Stage 1 is “Intuition”. This is before we commit to an idea but believe there is an opportunity we can articulate. We have several projects at this stage.

–Stage 2: “Idea”. This is the stage when we have moved from intuition to build and put a team around an idea.

–Stage 3: “Finished Prototype” and Funding. These ideas have matured to be capable of external funding.