World Domination 

~ michael_msft ~ Leave a comment

This past week was busy with switch, slush, venturecon, VC-PE summit and then walkabout. I hit or spoke or cheered them all on. I love đź’• being in Singapore and it was awesome to witness everyone from around the world coming out to support the city/state that continues to punch well above the weight class that everyone thinks it might be in.

I won’t lie – I am Singapore fanboy. 

When I read stories like this about America, startup slump, I am thankful to be in Asia and specifically at the center of SEA. Pro startup with a government mindful of the challenges ahead but super supportive of tech and the role it will play in future societies.

I worry about America but remain hopeful.

Overall I continue to be concerned about the role of the huge tech companies in our lives and their impact on startups and capitalism.

I can’t wait to read The Four.

And on this subject his weekly newsletter is very timely :: https://www.l2inc.com/daily-insights/no-mercy-no-malice/the-worm-has-turned

The biggest opportunity for the Four

The Four could pull off one of the greatest moments in business, addressing a huge social issue while disrupting an enormous, wildly profitable sector that hasn’t innovated in decades. One or more of the Four should launch a tuition-free university that blends offline and online learning, and charges firms to recruit. Student debt and corporate profits are at an all-time high, meaning we need to flip the model — charge firms, not students, for education.

Apple is also well suited to do this as its brand has roots in education. I estimate the economic value of credentialing is, if taken as a market, likely the largest industry in business with 80%+ gross margins. There would be several ways to create $100B+ in shareholder value and catalyze desperately needed competition. We (universities) have stuck out our chins and deserve fists of stone. Feeding like insecure vampires on the scarcity of our product (dopamine surges through our brains at faculty meetings as we revel in how impossible it is for kids to get into our programs), and praying on the hopes and dreams of families. Education used to be the upward lubricant and a social good. It’s now just one of those things.

Other than each other, there is only one thing between the Four and $1T in market value: the perception of poor citizenship. The small-ball strategies of tax avoidance, obfuscation, and the idolatry of youth and the dollar, may turn big tech into smaller tech.

Thoughts to ponder for sure.

I hope one of the companies steps up and challenges the perception of the role they could play and make America proud.

DRM is a pain but needed

~ michael_msft ~ 1 Comment

Coming from the OTT world I can lament the use of DRM like everyone else but I can also tell you that without out – people will steal every bit of video they can. What else can one do about it then to try and protect it. Without DRM built into browsers the video companies with either push a plugin at you or use some other non-stamdard methods which just makes life harder on everyone.

I am with Gruber on this one – EFF is being kind of silly :: https://daringfireball.net/linked/2017/09/18/eff-w3c-drm

The Splice Newsroom

~ michael_msft ~ Leave a comment

Signed up for this newsletter today.

I used to work with Alan at Yahoo! and from time to time we have some coffee and discuss tech, people and news. Mostly though we will talk about news and where we consume it these days – or listen to it since we both like podcats. 

I used to subscribe to the FT weekend but found I wasn’t always reading it and figured I should read more books. Most of my news then is from online sources and podcasts but lately I have been actually listening to less news and getting the majority of my updates from Inside.com – I like the email format with links. I also read Pro Rata and Term Sheet everyday.

From time to time I will use the Washington Post and New York Times app but not enough that I am compelled to pay for them.

What Alan and I talk about most though is there isn’t anything super amazing coming out of Asia that I look to as my news source. Hopefully with projects like this we will see some change and find truly quality newsrooms that provide content the way most of us consume it.

Alan recently got some $ from FB and is beginning to build things out, you can read all about here :: https://www.thesplicenewsroom.com/about-us/.

Subscribe to the newsletter and support this much needed look at media across Asia.

The Four – the book is out!

~ michael_msft ~ 4 Comments

I picked up my copy at the bookstore in Singapore but you can also order it on Amazon.

So far really enjoying it – total page turner.

—————-

So far my favorite book of the year has been :: https://seedvc.blog/2017/06/27/shoe-dog-best-business-book-of-the-year/. Just couldn’t put it down till I finished it.

After hearing this latest podcast :: https://www.recode.net/2017/9/14/16303784/transcript-author-nyu-professor-scott-galloway-recode-decode-four-book-google-amazon-facebook-Apple.

I am anticipating that Galloway’s new book is going to be amaze balls and on obvious best seller.

For more of his writing, check his latest weekly email :: https://www.l2inc.com/daily-insights/no-mercy-no-malice/from-russia-with-likes

Enjoy the weekend!

Structured Financing

~ michael_msft ~ Leave a comment

Over a quick bite today I continued to read the latest edition of Venture Deals, it has been enlightening to read it post working in VC for over a year now. I have been able to validate some of the principles first hand while gleaning a thing or two to help me in stuff I am currently dealing with.

I wrote, https://seedvc.blog/2017/09/07/take-a-discount/, the other day and was thinking more about the book in light of how some founders may not understand how various rounds of venture financing works.

A couple of things to note is that usually once you raise money – you will probably be raising until exit or profitability. So an angel round will turn into a seed round, which will lead to an A and most likely a B. Maybe somewhere in that mix you might exit or generate enough cash to no longer need to raise money. It could also be that venture financing makes way for debt financing instead. 

The point being that as you look at your very first fundraise, one must have a view to how the follow on rounds will work and the milestones you will achieve during the rounds. Usually this will map to burn rates and the hopeful product or revenue targets that match rounds and the end of cash cycles.

Being careful about valuations during this process is important but also realizing that more than one round will happen helps to put it all in context.

Long story short if you are a founder or thinkjng abor becoming one? Read the book before you start your fundraising journey since it will probably help you more than my ramblings.

Enjoy the weekend!

Level 5

~ michael_msft ~ Leave a comment

I often wonder if my kids will need to drive cars. When I was 15 or so my dad bought me a wrecked VW bug and our many months long father/son project was to get it on the road in time for my needing to use it to get to work. Oh the memories.

Guessing my kids won’t need anything like this.

Love this Monday Note article – also listen to the Kara podcast.

Fascinating stuff.

https://mondaynote.com/autonomous-cars-the-level-5-fallacy-247ae9614e14

Take a discount.

~ michael_msft ~ 1 Comment

This is such a great read. I am tempted to take item 1-3 and send it to every startup prior to our first meet up.

https://www.linkedin.com/pulse/raising-venture-capital-take-discount-your-valuation-marc-lore

It is always hard to explain this stuff as a VC without a founder assuming that it is just our ploy to buy more of the company for less money but it is not – it is us doing the best we can to ensure that we are helping to build the foundations of a great company.

Best to read the whole article but let me drop the three main points here.This one is so true and I have seen it first hand. A top tier VC will do the math, model the stages and model the exits. They will use these numbers to create their valuation but also take into account the stage and any other important signals. A founder, most likely not using any models, will decide they think the company is worth more and then go find another VC to give them that valuation. Usually the other VC is not top tier and is using valuation as tool to win the deal. Founder will think they have won but honestly they didn’t.

If you still aren’t convinced, here are three more reasons to take a discount on your valuation:

First, you get better investors. I’ve seen too many cases where second-tier investors outbid the top-tier. But a lower valuation ensures the very best investors want in.

Which VC do you think will do the hard yards down the road? The one that does the hard yards going into a deal or the one that just throws out the number you want to hear?

Second, a lower valuation helps protect you from a down round. Even great businesses face unexpected challenges like market downturns; I raised money during the 2001 and 2008 market corrections, and it was rough. Valuations got slammed, and the end result for many was a down round that seriously hurt their companies’ stature and ability to raise more money.

If you raising to perfection on the high-side any sort of issue might cause your next round to be a down or flat round. Less revenue, miss some metrics, tight funding environment or politcal/environmental issues can all create an event that might cause a flat or down round. If you raise with the discount or some “wiggle room” you can weather the storm much easier.

The third and probably least understood reason is that a lower valuation allows you more headroom for an exit. I’ve seen many entrepreneurs raise money at valuations that are higher than any buyer would be willing to pay. The result is that they get themselves boxed in, and when they see an opportunity to exit they can’t get a deal investors will agree to because their last round was done at too high of a price.

This is the one that trips of founders the most, it is also the one that SEA founders should think on the hardest. Most exits in our region will be from acquisitions and if you are not exiting close to going public then most likely you exiting somewhere between your seed and B round – if so then price is going to be a huge factor. On top of these regions being more expensive to get a deal done in, the acquirers may not have funny money and will be somewhat price sensitive. You may get an offer only to find out that your valuation means the exit isn’t going to be very meaningful.

Best to make sure you really grok how to fundraise.

Reminder to read Venture Deals and then superset it all with these three nuggets of gold.

Thoughts about the so-called SEA e-commerce war

~ michael_msft ~ Leave a comment

I have been an avid user of Redmart since they opened. Written about them a few times :: https://seedvc.blog/?s=redmart. I tend to walk to the market with my kids, visit the wet markets or visit the Thai market at Golden Mile but sometimes it is just easier to order some stuff online and have it show up. Magic.

I also use both Uber and Grab since depending on the time of the day and where I am going – sometimes one is cheaper then the other. I still say Uber has superior after sales support and so far that remains true. My biggest complaint was their stupid number masking system but they finally fixed that with the new in-app messaging. Now if they would support using taxi stand numbers I would say there is no difference between the two apart from the customer service. What I mean by that is when I have a problem with Uber they generally respond immediately and just fix the issue. Grab can take hours or days to respond and then it takes many, many emails to fix the issue. I have some issues that were simply never fixed, especially if resolving the issue requires giving me a refund.

Now let’s get to the bigger field of play. Alibaba via acquisitions is battling it out with Amazon in e-commerce. I love a good fight since consumers generally win anyway but one of the weapons the Alibaba team is weilding is the LiveUp loyalty program. As a redmart customer I signed up and honestly forgot to cancel the trial so I got stuck with their one year bill.

Realizing I didn’t want the service I started hunting around to cancel it:

From this: https://www.liveup.sg/faq

Q: Is membership renewal automatic?

A: Yes. However, you may choose to end your membership during the free trial if you do not wish to be subject to automatic renewal. Your payment will be processed by either Redmart.com or Lazada.sg depending on the pathway that you registered for LiveUp.

So basically only way to keep this from renewing is end your membership.

So then there is this:

Q: How can I cancel my subscription?

A: We are sorry to see you go, but if you insist, you may click on the following links to cancel membership your LiveUp membership. However, any and all unused LiveUp membership credits, Netflix and Uber benefits will be forfeited upon cancellation of LiveUp membership.

If you registered via Lazada: https://www.lazada.sg/customer/account/membership/

If you registered via RedMart: https://redmart.com/liveup/account

Just to be clear, this is not an error of my blog, those links are not clickable. You have to cut and paste them which to me is the first sign of a horrid user experience. Why make this hard to get to?

Anyway, I cut and paste to cancel since I figured I might forget to cancel.

However I forgot to grok this:

Q: If I cancel my LiveUp subscription, what happens to my rebates and partner benefits?

A: Your subscription will still be active for the full subscription period. Hence, you are still able to enjoy the all the benefits that LiveUp offers until the end of the current subscription period. Do note that unused rebates expire when your membership expires.

Honestly I don’t get what the purpose of a loyalty program is without the benefits but I digress. Once I knew I had to pay I figured I would look into availing of the benefits. The redmart one happens automatically and you get credits on orders so nothing to do there but won’t help me much if I don’t use redmart anymore.

The other benefit I wanted to use was Uber. I started to try and make that work. First I tried emailing LiveUp and nothing happened. Then I tried using Uber support and they kept telling me to login and activate it.

Told me to go here for the record: https://redmart.com/liveup/account.

I would go there and would find no link to Uber. Finally I called redmart cause after 2 days of sending an email they had yet to return my email. Let me just call out that basically LiveUp support is only by the kindness of the partners, no one seems to actually work at LiveUp from what I can tell.

On the phone, redmart was able to figure out that if you cancel, remember this is the only way to keep from getting billed, that the links to activate the other benefits are gone. Got that? As a user the only way to keep from getting rebilled is to cancel but when you cancel the links to benefit activations are gone.

How is that for loyalty program?

I re-apply to the program and the links show up. I activate Uber and it seems to finally work. A few days after that one of my Uber ride receipts says in yellow at the top to be sure to activate my LiveUp benefits. What? Thought I already did.

Now when I go back to the account page it shows me the activation link again – same as it did before I activated it. The link won’t work this time though. They suggest a workaround to use a special promo code in my Uber app but when I try it I get a promo full subscribed message.

Wow. Winning.

Emails to Uber confirm I am in the program, but have yet to see a ride counter for my 10th ride with 10$ off yet. If it comes cool but if it does not I think I have wasted too much time trying to fix it.

I have always said and will repeat it here, this battle will be won by superior customer service. If LiveUp is an example of this then we already have a leading indicator as to who is winning this battle.