Category: Apprentice VC

All the experts…

~ michael_msft ~ Leave a comment

I was listening to a podcast the other day and basically heard Barry Ritholtz come to the conclusion during the interview with the Prof that Apple should buy Netflix.

What I find fascinating is how quickly armchair quarterbacks can make an off the cuff declaration that turns into a business meme.

Days after that podcast Barry writes this :: https://www.bloomberg.com/view/articles/2017-11-07/why-apple-should-buy-netflix

Of course people will read Bloomberg and quickly think this should happen but my take is that it shouldn’t happen and it won’t. For many reasons.

First reason is I don’t think Reed wants to be bought. People will counter that with everyone has a price but I generally think Reed has been bought before, has purposefully worked to build a big company he loves to run and has a vision for Netflix that doesn’t include an acquisition.

That point aside it would appear that folks like Barry and others who say Apple should buy Netflix don’t actually get OTT businesses at all. For a company to be successful in OTT they need three things – the ability to stream content, they need the content to stream and they need distribution or devices to consume the streams. Apple already has 2 out of the 3 and most companies have to pay for all 3. They have to build streaming, they have to buy content and they have to buy distribution – in other words they have to spend a shit ton of money on adverstising. This is why OTT businesses are a funding game these days. I always proffer the biggest winners here are Google, Facebook, OVPs and the content guys – not the OTT companies.

Since Apple has 2 out of the 3 then all Apple has to do is buy or make content. Those not in the know don’t realize that before Netflix was an aggregator of content and didn’t produce much of their own content but now Netflix is not only buying content but it is is making content. However making content is not magic and esentially means Netflix operates like any other studio which means it has all the issues like any other studio and with each passing day Netflix has to be a studio and be a aggregator which is not easy.

Plus it is very expensive.

Which means Apple can do exactly what they are now doing. Use their tech and their massive distrubtion – iTunes, iOS, MacOS, Apple TV and whateve else they are creating to highlight content that they will make much in the same way Netflix is doing. This means buying Netflix would be waste of capital. Apple could actually use their cash to outspend Netflix on similiarly great content – like what they have just announced here, http://variety.com/2017/tv/news/apple-jennifer-aniston-reese-witherspoon-morning-shows-amazing-stories-1202610068/

Keep in mind that almost all celebrities in the world use Apple phones. Which means that Apple has a direct relationship with the people that star in and produce content already. Not difficult at all for Apple to get exclusive content for their ecosystem.

John says much the same thing here :: https://daringfireball.net/linked/2017/11/08/apple-netflix-ritholtz

Also the latest Daily Update from Ben Thompson corrects his earlier mistake where he discusses that Apple should buy Netflix. https://stratechery.com

 

ICO’s to disrupt VC?

~ michael_msft ~ Leave a comment

Good article here on this – not really answering it but just highlighting the stats :: http://tomtunguz.com/ico-trends/

For sure blockchain, crypto and ICO’s are here to stay. No doubt about it but for every trend there will be good and bad things to happen. No different than any other period of mass change. I myself am still trying to grok the longterm view of this since contrary to popular belief VC is a long game. Of course there are rollercoaster like moments of ups and downs marred with upheavels but generally the course of finding good companies to invest in and seeing them along their journey is what VC is.

And will continue to be.

An ICO will be a new tool in the arsenal a startup has to raise capital or to create a token system that is meaningful to the business. I think this comment at the end of the article is very telling:

First, startups raising these ICOs tend to be pre-revenue. Second, retail investors are buying substantial fractions of these offerings. Third, the volatility of these offerings is enormous.

If this trend continues and questions like regulation are answered, ICOs may be a novel and important mechanism for crytpocurrency based startups to raise capital.

The last sentence is a doozy – novel and important mechanism for cryptocurrency based startups to raise capital.

If I had a dollar for all the ICOs I have already seen that have nothing to do with cryptocurrency whatsover, I could proabably retire. If a company is doing an ICO with no meaningful use of the token other than to raise cash – I would run not walk to the nearest exit.

I have no crystal ball but the world is changing, blockchain + crypto will be a force for change but I wonder myself if there will be more good than bad around this. I bring you this clip from a well known techie:

tweet

Again – I don’t have the answers but much to ponder on.

ABL

~ michael_msft ~ Leave a comment

Always be learning has been a constant thread in my life. I think anyone who goes into tech probably accepts that without moving forward one will be left behind. And yes – the pace appears to be accelerating.

I wrote this one some time back :: https://seedvc.blog/2017/07/30/always-be-apprenticing/

I still feel there are other ways to learn – one way is to apprentice. I am sure there are many others.

Someone at worked shared this read the other day :: https://medium.com/the-mission/why-being-great-is-so-much-harder-than-people-realize-c91616b18bc9

Wow. Eye opening to say the least.

This is telling:

The explosion of knowledge and the corresponding decay make one thing clear: we need to put a bigger priority on constant learning — as big an emphasis as we put on getting our optimal daily dose of nutrients, exercise, and sleep.

The whole article is a good read and will remind you to think about how to learn and to make time for learning. For me reading works but I find podcasts are pretty awesome too but I keep trying to figure out how I can learn a new craft or skill more regularly.

Brain exercise of sorts.

Have a nice weekend!

Breakfast with Gary V

~ michael_msft ~ 1 Comment

gary_meHad a pretty awesome morning. I have read one of his books and for sure follow his LinkedIn posts. Hard to escape Gary V.

I knew he was coming to town and fortunately got invited to a private breakfast at PropertyGuru. A few of the local luminaries, myself and the PG founders were in attendance.

No agenda. Just a frank discussion about Asia, politics, startup life and Gary’s plan for the future. One thing that is pretty amazing about Gary is what he has created in VaynerMedia over the last few years but also his candidness about his plans. Apart from wanting to own a football team – he has plans to buy up distressed brands and rebuild them. I bet it will happen.

During our breakfast, or basically his every move, Gary has a videographer filming all the time. He says he plans to leave the videos to his family for eventual usage. Amazing if you think about it.

I learned a lot in 60 mins. I had a ton of questions rolling around in my head all day.

Thankfully the week is only half over. I have ideas.

BTW – VaynerMedia is coming to Singapore!

Update: https://www.mumbrella.asia/2017/10/gary-vaynerchuks-agency-vaynermedia-to-expand-into-asia-with-office-in-singapore

Interesting times.

~ michael_msft ~ Leave a comment

I just finished up reading The Four,  and I thoroughly enjoyed it. It is a quick read but I learned a lot and has me thinking anew about some things. The career advice is something I wish I had gotten in my 20’s. The way he lays out how to approach early jobs and the tradeoffs to take is solid advice. Looking back I could have played the field much better but I am super thankful I have landed where I am.

Exciting times at Jungle – that’s for sure :: https://www.dealstreetasia.com/stories/tencents-grace-xia-joins-singapore-vc-jungle-ventures-84746/

I am somewhat new to VC and still finding my way but grokking it fast and loving every second of it. It’s a new challenge everyday but at the same time I can easily see honing my craft for years to come and still finding it all exciting.

However the world of VC is changing and the old models or ways of doing things will and are changing. It is not just about capital anymore and on top of that the ICO market will alter the landscape even further. I will admit that the ICO model is still something I am trying to wrap my head around since the scam to not scam ratio is still pretty out of whack but this may change. However I envision alot of pain and lawsuits yet to come.

This post from Fred is a master class in reason though and not only reflects on a how he has put together his firm but also suggets how his firm is thinking about the future. I am going to read this over a few times – so much in there to take notes on.

http://avc.com/2017/10/our-model/

For anyone not realizing it – VC is the long game:

It is also important that all of our partners participate in this model. It takes seven or eight years before we can expect a new partner to contribute and Albert, who joined us in 2008, has produced the last two high impact exits with Twilio and MongoDB. John, who joined us in 2010, has already contributed one in Lending Club. I have no doubt that Andy, who joined us in 2012, and Rebecca, who joined us this week, will produce their share of high impact exits. Andy already has several in the pipeline.

I also love his view of the model:

So this is our model. Keep the fund sizes small. Make investments early so we can buy meaningful ownership for not a lot of money. Keep investing round after round to maintain and/or grow our ownership. And have enough high impact portfolio companies that we can get two or three of them per fund.

One take-away from Fred and that was echoed in The Four is:

But the market has changed a lot with large incumbents taking up more and more white space in the internet sector as we have known it.

This also scares me. I think about the dominance of the big guys and how this is affecting VC, tech and the world at large.

Not sure what to do about it.