Category: Capital

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.

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.

Bessemer

~ michael_msft ~ Leave a comment

I am enjoying this new Q & A part of Term Sheet.

http://fortune.com/2017/09/27/bessemer-byron-deeter-elon-musk/

Some interesting sections…

Crypto:

What are your thoughts on the future of cryptocurrency and the blockchain as it relates to venture capital?

I struggle with two diametrically opposed positions on this. On the one hand, I absolutely love the innovation that the blockchain is bringing and see a lot of need for financial industry innovation and removing friction from that ecosystem. On the other hand, I believe that Bitcoin and Ethereum are wildly overvalued relative to any notion of what is value. I do fear and suspect that a lot of the short-term price escalation is driven by speculation and/or improper uses for things like money laundering.

Cloud:

What’s going on in the cloud space right now that you think Term Sheet readers should know about?

The massive replatforming of software continues, and cloud is that next evolution. We are doubling down in every way on the space now and absolutely believe that the trend is ripping through the software ecosystem.

It’s created a number of related trends where cloud is the enabler for enterprise mobile, and this notion that mobile workers can get access to great software products is now taking hold. We went from clunky heavy software, to a browser interface with cloud, to your phone with mobile. The next iteration will actually have the interface disappear, and you will interact with software much more naturally. The pace of innovation is accelerating, and each of these cycles is compressing.

Anti-Portfolio:

You often point to a section on your website entirely dedicated to your biggest misses called, The Anti-Portfolio. Why does Bessemer showcase winning investments the firm decided to pass on?

We’ve had people call and notify us that our website’s been hacked: “Oh my God, someone put up an anti-portfolio on your page. You guys should know so you can take it down.” It’s hilarious, and I tell them, “Guys, just step back. You can’t take yourselves this seriously. Can you not enjoy a little bit of humor?”

We need to be able to make fun of ourselves. As good as we can be in this business, we still wake up every day and read articles of great companies that we missed or didn’t quite understand, and they materialized. We hope every entrepreneur we meet with ends up on one of two pages on our website — either the portfolio or the anti-portfolio. And we’re sincerely happy for their success either way. It’s not a zero-sum game. The spirit of the anti-portfolio is to acknowledge that even the best investors screw up all the time.

This is something we tracking internally over at SeedPlus.