The Twentieth Century was called “the American Century” as the United States became the country without a peer for economic and military strength, innovation, and trend setting. Unlike previous World Empires who got their power from might and conquest, America’s magic was sparked from the concept of freedom, liberty, and justice for all.
The power of the idea was that it didn’t matter who your parents were, what color your skin was, whether you were rich or poor, in America, what determined your future was you. Immigrants flocked to America’s shores seeking freedom and limitless opportunity.Apr 072014
As a young investment banker fresh out of B- school in the mid ‘90s, I hardly knew what to think when the IPOs of clients like Yahoo!, Infospace, Sportsline and many others rocketed upward on the first day of trading. These companies had very little revenue and certainly weren’t close to profitability when they went public.
Many experienced Wall St. people didn’t buy in, but the “ducks were quacking” and needed to be fed, as the saying goes. And feed them we did, never mind the occasional predictions of impending doom and light-hearted references to the tulip bulb mania of yester-year.
The bubble did finally pop, and all the smart people were vindicated. By 2002 the Internet was dead to Wall Street. While it took a few years to climb out of the hole, we soon were introduced to Google, Salesforce, YouTube, and, a little later, Facebook. (Disclosure: GSV owns shares of Google, Facebook.)Read MoreMar 312014
For some reason, the cynics and skeptics are always thought to be the “smart guys” while the optimists are thought to be wide-eyed, simple and naive.
Phrases that get thrown around to demonstrate wisdom and judgement include “trees don’t grow to the sky”, “you can never go broke taking a profit”, and “at these levels, the stock is dramatically overvalued”. The air pockets that have hit high flying stocks in the past such as the “nifty-fifty” in the early ’70s, Internet stocks in 2000 and financial stocks in 2007 remind us that just because the cynics can be annoying to us growth investors, it doesn’t mean they are always wrong.Read MoreMar 242014
A brand is nothing more than a promise. Accordingly, great brands are created by consistently delivering a product, service, or experience that confirms that promise. It’s reality. It’s the truth.
Apple has a great brand because it consistently delights its customers with beautifully designed, simple to use technology. Apple’s customers have a connection with the Company and they love to display the Apple icon on their Mac, iPhone and iPad. Moreover, they are generally bewildered when they see somebody they thought was normal who has a PC or Android device (and a Blackberry would require an intervention).
Starbucks has a tremendous brand because its customers know that when they walk into the store, they are going to get a consistently good beverage, with friendly service in a clean environment…anywhere in the World. Starbucks knows the power of its brand and guards it like the Crown Jewel which is one of the reasons you will never see a franchised Starbucks—too much brand risk. Starbucks CEO Howard Schultz once said that franchising was worse than a terminal disease.Read MoreMar 172014
We are in Dubai this week meeting with a number of sovereign wealth funds, global investors and participants in the Global Silicon Valley. What strikes us is the fascinating conversations on the convergence of global culture and trade.
Dubai was created by the foresight of Sheikh Maktoum bin Butti Al-Maktoum in 1833 and joined the nascent United Arab Emirates upon independence in 1971 as the country’s second emirate.
Founded on Dubai Creek, its strategic geographic location made the town an important trading hub and by the beginning of the 20th century, Dubai was already an important regional port.
Today, Dubai gets only 7% of its revenues from oil and natural gas. Understanding the limits of their natural resources and its central position connecting other larger wealthy regions, the leadership in Dubai actively turned the city into a marketplace for global trade, tourism and retail.Read MoreMar 112014
One of our greatest inherent desires is to communicate with other people. No matter how vastly superior the current system of communicating is compared to the old way, it’s human nature to want something better. Moreover, it’s human nature for a significant part of the population (usually the old guys) to mock new technology and question its usefulness.
Over 30,000 years ago, the communication innovation was painting in caves as that allowed the Hunting and Gathering society of the day to share stories and the news. Ultimately, about 15,000 years later, calendars were able to be etched in caves for a community to understand weather and the Seasons.
It took 20,000 years but the next breakthrough in communication was the invention of “petroglyphs” — writing on rocks. This allowed society to be more mobile and ultimately more Cosmopolitan in a Hunter and Gathering way.Read MoreMar 032014
“Compound interest is the eighth wonder of the world. He who understands it — earns it, he who doesn’t — pays it.”
In last week’s A 2 Apple, we made the case why stocks in general were attractive from a Supply-Demand and a Valuation standpoint. Simply put, there is a significant demand imbalance for equities and valuation metrics for stocks so that they are “cheap.”
While the macro fundamentals give us some confidence that we are in a good environment for equities, the formula we use to create outsized returns is to identify and invest in the companies that we believe can growth their revenues and earnings at the highest rate for the longest time.Read MoreFeb 252014
“Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.”
This week I had the honor to be one of three speakers for the CFA Society of San Francisco’s Annual Forecast Dinner. Having this opportunity was especially meaningful for me as the CFA Program was extremely influential in pursuing my career in the investment industry. (Download the entire presentation HERE)
While I share some of the Oracle of Omaha’s skepticism on the value of the aforementioned activity, it gave me the opportunity to dust off the crystal ball and focus more intently on the weather conditions for my beloved growth stocks.Read MoreFeb 122014
The Olympics has always been part athletic competition and part political competition and Sochi is no exception. Bringing to mind Hitler’s grand scheme of showing off Nazi supremacy through the 1936 Berlin Games, Putin has spent $50 billion—4X more than London’s 2012 Bonanza—to host this year’s Winter Olympics.
For anybody who thinks I’m exaggerating the ambition of the often topless President of Russia, consider Mr. Putin’s statement “At last Russia has returned to the World Arena” and Sberbank the state owned financial institution’s Olympic motto “Today Sochi, tomorrow the World”.Read MoreFeb 042014
Every once in a while, an idea comes along that changes everything.
For much of the Digital Age, computers and the Internet were entirely dependent on human beings, both for information and for direction. Nearly all of the data available on the Internet was created by people through the process of typing, pressing a button to take a photo or video, or scanning a digital code.Read MoreJan 272014
Renting is the new owning… especially for the younger demographic who is battling with high unemployment and student loan repayments. The 2008 financial crisis opened a wide path for some of the most disruptive and innovative businesses in the New Rent Economy.
Renting-as-a-service has been an old concept and has shaped large industries like car renting or apartment housing for years. Other rental services used in skiing or ice skating, or renting for weddings and parties have been around for some time too.Read MoreJan 142014
An annual post New Year tradition for me is to go to the Consumer Electronics Show in Las Vegas. Started in 1967 in New York City, the event moved West in 1978 and now attracts over 150,000 people, 3200 companies, and 2 million square feet of display space.
Historically, game changing technologies have been introduced at CES such as the VCR in 1970, the CD Player in 1981, High Definition TVs in 1998, and the Xbox in 2001. Like the Super Bowl, while the “game” might be interesting and an excuse to be there, it’s the “scene” that makes it a must to be at event.Read MoreJan 012014
When I first started driving, I remember being afraid to sneeze because my eyes would momentarily shut and I might run into something. Riding on the highway, my eyes were transfixed right over the hood which meant turns on the road weren’t as blasé as they should have been. Total concentration was required to get from point “A” to point “B”.
Now, of course, my multi-tasking carries into my car and I see how many things I can do on my way to my destination without getting in an accident or getting a ticket (to date, I have succeeded at objective #1, not so well at objective #2).
The fundamentals of driving serve as a good guide for successful growth investing, and in particular, as we look at the year ahead. For example, if you are always looking in the rear view mirror, you will never get anywhere and will likely hit something in front of you. If you never look in the rear view mirror, you will never see any potential danger approaching you.Read MoreDec 232013
It’s been coooold in California with temperatures approaching freezing and even possibility of snow in San Francisco for the first time since 1945. On the news, the Weather “man” has leapfrogged his usual place sandwiched between current events and sports and has been the top of the hour headline.
Since there couldn’t be many more boring jobs than doing the weather in California (“it’s going to be sunny tomorrow with the highs between 65-80″) it’s understandable that the weather people are trying to make a big deal out of the fact that it’s not perfect. The gigantic parkas with the hood over the ears, the picture of the palm tree with a leaf kind of blowing, the clock at the bank showing the temperature at 34 degrees all trying to look like Anderson Cooper not being swept away from Katrina is good local theater.Read MoreDec 162013
If you come to my office in Woodside—and I encourage you to do so—you will see six black and white photos of leaders who inspire me; John Wooden, Margaret Thatcher, Thomas Edison, Martin Luther King, Theodore Roosevelt and Nelson Mandela.
I have the constant reminder of exceptional people who had extraordinary accomplishments and are the real Impressionist—much more for me than Renoir, Monet or Manet. Moreover, the impact each of my “Wall Heroes” made was in the face of incredible adversity and circumstances…a good reminder for when I’m upset because a stock I like is down or we can’t get our Nest thermostats quite right.
Last week the World mourned the passing and celebrated the life of an amazing “game-changer” Nelson Mandela.
His story is well chronicled but no less remarkable. He spent 27 years in prison with most of it on Robben Island. His crime? His fervent belief that all men and women were created equal and should be treated as such. Link to Great Troublemaker.Read MoreDec 092013
When the Internet first emerged in the mid 1990s as an e-commerce platform, financial services was among the handful of industries that many felt would be among the first to be transformed by online access. The Internet investing mania started in mid-1995 when three Internet service providers (Netcom, PSInet, and UUnet) went public, followed by the Netscape IPO in August 1995.
The first Internet-based financial services company to go public was E*Trade in late 1996, and the first Internet-based bank to go public was Netbank in 1997. E-LOAN and NextCard (online credit card originations) went public in 1999 as the Internet bubble was inflating at a rapid pace, and thus was born the eFinance category of Internet companies.
While Internet service providers, browsers and search engines were the first Internet companies to go public, the first category of Internet companies to be absorbed into their bricks-and-mortar counterpart comparable group was eFinance. While being an “Internet company” is no longer a particularly meaningful designation, there still are Wall St. research analysts who cover Internet-based businesses specifically.
But you won’t find an investment research analyst who covers eFinance companies separate and apart from other financial services companies because traditional financial services firms embraced the Internet so quickly after the advent of E*trade and other eFinance pioneers in the late 1990s.Read MoreNov 252013
This week, I’m spending time visiting London, Paris, Berlin and Barcelona with a large part of my trip going around with an Italian friend to meet startups, incubators and investors in those cities.
I met my Italian friend Mike D’Aliessi in Silicon Valley at a Startup Weekend EDU event and we became close friends and have kept in touch via Facebook, Skype, Twitter across an ocean and with 9-hour difference between us.
We are more connected today than ever before and people in the entrepreneurial ecosystem seem to all be kindred spirits. We all share the common interest and bond of creating a better future through building or investing in companies.Read MoreNov 192013
Size is to a growth company as an anchor is to a boat.
As readers of A 2 Apple have heard from me in the past, our weekly missive gets its name from our objective of providing perspective on the growth economy from Series A Round to the largest growth company in the World… Apple.
Apple is not only the largest growth company in the World with a market cap of $472 billion and a 44% 3-year revenue CAGR, but also the largest public company in the World with a $50 billion lead on Exxon Mobil.
Read MoreNov 132013
“Software eats the world.” That is the mantra that many tech entrepreneurs wear on their sleeves as they try to build disruptive products to shake up traditional industry processes.
Now these industry-eating entrepreneurs are turning their lens on venture capital, a business centered around human relationships, not procedural efficiency.
I attended a mini-conference around the topic this week. The conferenced featured groups like Crunchbase (over 150,000 companies in their database and over 5,000 companies using their API) and AngelList (over 87,000 companies in their database) who each presented their own vision for the future.
It is exciting to see a group of wide-eyed entrepreneurs building new products for an industry that has been an analog industry for many decades.Read MoreNov 052013
Every day we create 2.5 quintillion (10^18) bytes of data — so much that 90% of the world’s data today has been created in the last two years alone.
— New IBM Study
Global data traffic is expected to hit 7.7 zettabytes per year by 2017, while global cloud IP traffic will reach 5.3 zettabytes, growing at 35% annually. Currently, mobile data is skyrocketing. Last year, mobile data traffic was 8x the size of the entire Internet in 2000, and by 2016, it is expected to be more than 0.12 zettabytes, up from 0.015 zettabytes in 2012.
The magnitude of data we consume calls for rapid changes in its infrastructure. In the past 20 years, using services and storing data has moved from physical to digital, and the trend has been accelerating in the most recent years. Before, we used to read books, listen to CDs, store files on floppy disks, etc. Today, all these tasks have transformed to be part of a digital network, all driven by the Internet, and all connected in the Cloud…Read MoreOct 282013
Cut it out! Cut it out! Cut it out! What the hell’s the matter with you? Stupid! We’re all very different people. We’re not Watusi. We’re not Spartans. We’re Americans, with a capital ‘A’, huh? You know what that means? Do ya? That means that our forefathers were kicked out of every decent country in the world. We are the wretched refuse. We’re the underdog. We’re mutts! Here’s proof: his nose is cold! But there’s no animal that’s more faithful, that’s more loyal, more lovable than the mutt. Who saw “Old Yeller?” Who cried when Old Yeller got shot at the end?
— John Winger (played by Bill Murray) in Stripes, 1981
Americans are appalled… and embarrassed.
We should be. After 3.5 years and billions of dollars spent to get developed, we can’t get a website to work.
This isn’t about whether ObamaCare is a good thing or a bad thing… it’s the law of OUR Country. It’s about showing our citizens and other Nations of the World that we are competent. It’s about as a Country, when we say we are going to do something, we are going to do it right. (see Peggy Noonan article, Larry Kudlow article, and The Economist article)
America is the Country that put a person on the Moon first, invented the computer and the Internet and we can’t even get a website to work?Read MoreOct 212013
When the JOBS Act was signed a year ago, you could have counted me among the skeptics that it was going to make a material difference for the entrepreneurial ecosystem. This was despite my belief that something was better than nothing. Quiet filings, broader marketing of private securities, crowd-funding and allowing more investors in a private company before it was forced to go public seemed pretty incremental versus the major structural issues facing emerging growth companies (see The JOBS Act Isn’t All ‘Crowdfunding’).
Seeing the wave of momentum, I’m pleasantly surprised by what’s going on for the emerging growth ecosystem. Title I, “the IPO on ramp”, has corresponded with the best IPO Market we’ve experienced in more than a decade. Allowing a sub $1 billion revenue company to “quietly” file with the SEC and only requiring it to release full financials 21 days before marketing the IPO has proven to be a major improvement to the old process.
Title II went into effect September 23rd which loosens some of the requirements for marketing private offerings, provided the issuer has made reasonable effort to make sure those receiving the offer are accredited. We’ve been thrilled to see the response to the email we sent updating friends on the GSV X Fund.Read MoreOct 142013
As Washington burned, politicians fiddled.
Bringing the Country to the brink of insolvency was viewed casually by Wall Street….until it wasn’t. It’s kind of like watching a tired Circus Act and then all the sudden the tiger breaks out of the caged ring. Before too much havoc was created, the tiger was shot with a tranquilizer gun which solved the problem for the moment but it won’t matter unless somebody actually fixes the cage.
At the beginning of last week, I was in NYC at an event that is focused on an issue that I believe is even more consequential to our Country’s future than our credit rating or balancing our budget. “Education Nation” is a program NBC puts on to highlight ideas on how to more effectively educate our populace.
Celebrities (led by NBC’s reservoir of talent), politicians, education, business leaders got together to discuss how to make our education system better and not have a child’s future determined by the zip code where they live. Having the NBC megaphone and clout is awesome as is the potential of this type of gathering. I loved getting to mingle with stars who cared about education like CNBC’s Maria Bartiromo and Goldie Hawn, meeting Miss America (I told her “what a coincidence, I was “Mr. America”) and politicians like Jeb Bush and Michael Bloomberg.
While still great to get people passionate about positively impacting education in a room, Education Nation missed a huge opportunity in my view.Read MoreOct 072013
I spent Saturday morning walking around Addison Avenue and Waverley Street in Palo Alto. It’s a very quiet neighborhood. And considering the historical significance and impact that the residents have had on the world, the houses are nice but not extravagant.
Addison Ave. is recognized by many as the birthplace of Silicon Valley. Specifically, the Department of Interior has put a plaque outside of the old Packard house where Bill Hewlett and Dave Packard first collaborated on audio oscillators. Many other products later, Hewlett-Packard has cemented its place in Silicon Valley lore.
In its heydays, HP was as innovative and as dominant as any of the tech giants today. It was perhaps like the Apple of its day.
Speaking of Apple, within walking distance from the famed HP Garage, on Waverley St., is a nondescript house. The house stands at the corner of an intersection. There are no high walls or hedges, just short wooden planks to let ivies grow.
On this particular Saturday, people in groups came by the house and walked through the neighborhood. Some even put bitten apples on top of the small planks around the edge of the house.Read MoreSep 302013
Fifteen years ago, as a research analyst at Merrill Lynch digging for exciting growth companies, I visited the headquarters of NewSub Services in Stamford, Connecticut.
NewSub was the creation of Jay Walker and Michael Loeb and had as their big idea that banks had extra room in the envelopes of their credit card billing statements to insert an offer to subscribe to a variety of magazines without going over the weight limit for a first class stamp. Using this extra “remnant space” allowed NewSub to offer the banks “found money” for their cut on the magazine sales. Magazines got a more compelling marketing channel, benefiting from the bank’s “brand equity”, loyalty from bank customers by getting exclusive “deals” and about a $300 million revenue stream for NewSub’s role of inventing it and making it happen.
When I was visiting with Michael Loeb (son of the famous former editor of Fortune and Money Magazine Marshall Loeb), he was telling me how his Partner Jay had basically gone off the deep end on this new concept he had for allowing people to “name their own price” for hotel rooms, airline tickets, car rentals and vacation packages. Initially, NewSub had funded this new project but as it became more and more of a cash drain, Michael essentially told Jay “if he wanted to go crazy, he had to do it on his own dime.”Read MoreSep 232013
A global “language” for entrepreneurs
Lingua franca: a language systematically used to make communication possible between people not sharing a mother tongue (Wikipedia).
The term “lingua franca” was first recorded in English in the 1670s. Lingua francas have arisen throughout history for commercial, diplomatic and administrative reasons, and as a way for scientists and other scholars to exchange information across language and national borders.
Today, a new lingua franca is connecting entrepreneurs and startups around the world. This lingua franca is both a language spoken by founders and investors in startup hubs around the world and, more importantly, a set of customs and a culture that people identify with.
Let me start with the story of my Labor Day weekend in Atlanta. I hadn’t been back to Atlanta since 2006, so it seemed like visiting a new city.
My first thought after getting off of the plane (on Thursday): “I miss Silicon Valley.”
Second thought: “I need to go see some startups tomorrow.”Read MoreSep 172013
Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.
— Bob Dylan
Bob Dylan grew up 200 miles North of my hometown Minneapolis in Hibbing, Minnesota (I know it’s hard to believe there is anything 200 miles North of Minneapolis!). Hibbing, also hometown of NBA great Kevin McHale, is located in the Mesabi Iron Range, just West of the shores of Lake Superior.
Iron ore, which is the raw material for steel, was as important to the manufacturing revolution as sugar is to cookies. Cars, skyscrapers, bridges, washing machines were all dependent on mining iron ore and shipping it to Pittsburgh, Detroit, Chicago, Buffalo, etc., to manufacture the future.Read MoreSep 092013
Green acres is the place for me.
Farm livin’ is the life for me.
Land spreadin’ out so far and wide.
Keep Manhattan, just give me that countryside.
New York is where I’d rather stay.
I get allergic smelling hay.
I just adore a penthouse view.
Dah-ling I love you but give me Park Avenue.
You are my wife.
Good bye, city life.
Green Acres we are there!
— Green Acres Theme Song
In the ’60s popular sitcom “Green Acres,” erudite Manhattan attorney Oliver Wendall Douglas (Eddie Albert) moves his uber urban wife Lisa Douglas (Eva Gabor) to a rural farm to remove themselves from the superficial trappings of City life. “Fresh Air” trumped “Times Square” with farm living becoming their new way of life.Read MoreAug 292013
I was inspired by a friend’s recent trip to Rwanda where she and other volunteers built bicycles for the local residents. Why go half way around the world to build bicycles?
It turns out that there is something special about bicycles. Some time ago, in a story relayed by Steve Jobs, Scientific American published a study that measured the energy efficiency of locomotion for different species. The condor came in first place. Human beings were somewhere a third of the way down the list, a rather poor showing for the “crown” of creation.
But someone at Scientific American had the curiosity to test the efficiency of a human traveling on a bicycle. A person on a bike blew away the competition, coming in first place.
What you realize from this story is that we humans are tool builders. We design and build technology that amplify and enhance everything that we do. If personal computers — desktops, laptops and even phones and tablets — were bicycles of the mind, then wearable computers — watches, glasses, clothing, and other wearable electronics — are surely to be much more for our mind and body.
I see two branches for the growth of wearable computing.Read MoreAug 202013
The world lost one of the all time greats with the passing of Jack Laporte last week.
Everyone in the investment community at least knew of Jack as he was the skipper of T. Rowe Price’s flagship New Horizon Fund for 22 years. He was Morningstar Portfolio Manager of the Year, mentor to T. Rowe Price’s up and comers, manager of the largest small cap fund in the World at around $6 billion…Jack was legendary.
As great of an investor as Jack was, he was an even finer person. Humble, classy, caring, thoughtful, generous and a genuinely nice guy are all adjectives that barely scratch the surface of what a wonderful man Jack was.
The first time I met Jack, he had just taken over the New Horizon Fund and I was a young research analyst at Dain Bosworth in Minneapolis. I, of course, knew the significance of meeting with the Portfolio Manager of the famous New Horizons Fund and I was a little anxious that I was going to get chewed up and spat out.Read MoreAug 122013
3D printing: “a process of making a three-dimensional solid object of virtually any shape from a digital model.”
In technology, timing is everything and inflection points matter.
I. The Dream
The first 3D printer was created in 1984 by Chuck Hull of 3D Systems Corp. (NYSE: DDD). In the same year, the Macintosh hit the market.
Looking back, it’s safe to say that the year 1984 was remarkably different from George Orwell’s depiction in his classic novel “Nineteen Eighty-Four”. Instead of a dystopian future with omnipresent government surveillance and control described by Orwell , the world saw the creation of two products that gave power back to the individual in the form of personal computing and 3D printing — the power for citizens to access and create digital information and to build physical products.
From there, the story of these two products diverged. While the Mac, Apple Computer and the entire personal computing industry surged to the forefront of society as the most important technology of the last few decades, the 3D printing industry grew quietly and much more tepidly in the background.Read MoreAug 052013
In the day we sweat it out on the streets of a runaway American Dream,
At night we ride through mansions of glory in suicide machines,
Sprung from cages out on Highway 9,
Chrome wheeled, fuel injected and steppin’ out over the line,
Baby this town rips the bones from your back,
It’s a death trap, it’s a suicide rap,
We gotta get out while we’re young,
`Cause tramps like us, baby we were born to run.
— Bruce Springsteen, “Born to Run”
My favorite way to start the day is to get up and run around the neighborhood with my male best friend Bruiser.
Bruiser is a therapist of sorts as he is always happy to see me, patiently listens to all of my woes and keeps things pretty light.
The only issue I have running with Bruiser is despite his size, he’s about 3 feet long and 1 foot tall, he thinks he’s gigantic and picks fights with just about anything in our way.Read MoreJul 292013
Dream (not reality) of attractive returns sustains the venture industry.
Most of us who are involved in the venture capital industry are familiar with the Dow Jones Venture Capital Index, which tracks the annual rate of return on venture capital investments. Ever wonder where the data behind the Index come from?
Turns out it’s a little firm called Sand Hill Econometrics that has compiled a database of venture investments and exits. Their database contains 6,700 venture exits, which Sand Hill claims is essentially the entire universe of relevant data points.
In a DealBook article published in May, Steven Davidoff uses some of the data to draw some interesting conclusions that will resonate with many entrepreneurs and investors concerning venture returns.
Since 2003, only 6% of venture exits have been via IPOs, which is significantly lower than in prior periods. An additional 1% of venture exits were accomplished through reverse mergers (surprising to me that the number is even that high). So just 7% of exits were accomplished via the public equity markets.Read MoreJul 232013
“Oppressive” was a frequently used word to describe the sweltering heat found East of the Rockies last week. What few clothes people were wearing was drenched in sweat if they dared to go outside… staying inside and often it was like you were working in freezing meat locker.
Airplanes were grounded or not allowed to land. There were warnings for children, pets and older people to not go outside. Even the beach wasn’t the relief it normally is as the hot sand scorched your feet and the humidity was unbearable.Read MoreJul 162013
Gamification (n): is the process of using game thinking and mechanics to engage audiences and solve problems.
People love to play games… 3 billion hours per week. Five million people play 45 hours or more of games per week. Forty five million people a month play the Candy Crush Saga, earning its maker King.com $633K per day.
Looking at how people spend their time, 43% of the time spent on smart phones is on games, versus 26% on social networking, and 10% on entertainment. News is at 2% as is Productivity.
Read MoreJul 022013
Two weeks ago, I wrote about the first leg of our European journey, chronicling our visit to London and Paris. Today, I’m using part of the fifteen-hour flight from Rome to San Francisco to give some observations on the second half of our trip where we visited Greece, Turkey and Italy.
When we arrived in Athens, I was struck by how much it reminded me of California—the incredible blue sky, the majestic mountains surrounding Athens and the Aegean Sea, the brown landscape from the relentless sun, Pistachio and Olive trees everywhere…and a bankrupt Government.
What we call “Greece” is actually the Hellas. While it has thousands of years of history, the modern Hellas state is less than a couple hundred years old.
Athens, today with a population of 4 million people, or 1/3rd of Greece’s population, is the cultural, intellectual and economic hub for the Country. Named after the Greek Goddess of Wisdom Athena with an owl as its symbol, Athenians pride themselves on their knowledge — perhaps analogous to Bostonians or San Franciscans.Read MoreJun 242013
This week, as the World was rocked by the prospects of QE4ever actually looking like it may have a final chapter, I was on the Greece and Turkey part of my European trip. While it’s frustrating to be ten time zones away as our portfolio was under siege, being removed from the mayhem is probably pretty healthy for having a clearer perspective. More on learnings from Athens and Istanbul next week.
Without question, if you want to have a window to the future — watch your kids. Every generation is different than the last, but what is a consistent truth is that their interest, behavior and attitude are what matters for tomorrow.
Societal shifts take place in ways that at the moment are unnoticeable but over time are striking. Remember the movie Tootsie with Dustin Hoffman? When I first saw Tootsie, I thought it was the funniest movie I ever saw. Watching it recently with my daughters it was painful — they thought it was humiliating that I had recommended it as a great movie.Read MoreJun 182013
Cities have sexes: London is a man, Paris a woman, and New York a well-adjusted transsexual.
― Angela Carter
My arm didn’t need to be twisted to book a few extra days in London and Paris in front of a long planned European vacation to celebrate my wife’s 50th birthday. Both are favorite cities of mine and given the distance from San Francisco, accomplishing more on ten hour flights is always a good objective.
So I happily accepted an invitation to attend the eighth Founders Forum gathering in London last week. The focus on founders, entrepreneurs and innovation are definitely “my cup of tea” and having the opening event at the Windsor Castle also gave some panache to the event…at least for somebody from the New World (one of my British friends said that only Americans thought that being in a thousand year old dreary castle was cool).
But, besides my host, I had no idea who was going to be at the Forum as the attendees were held in confidence until you arrived. So it was with great delight when the first person I saw when I walked into Windsor was my neighbor and friend Dan Rosensweig — the outstanding CEO of Chegg. (Disclosure: GSV owns shares in Chegg.)Read MoreJun 112013
Bubble and the Beast
(with apologies to Celine Dion and Beauty and the Beast)
Tale as Old as Time
True as it Can Be
When the Bubble Ends
Investors are not Friends
Just a little change
Small to Say the Least
Everybody is Scared
Nobody is Prepared
Bubble and the Beast
Ever Just the Same
Ever a Surprise
Every as Before
Ever just as Sure
As the Sun Will Rise
Tale as Old as Time
Tune as Old as Song
Bittersweet and Strange
Finding Things Can Change
Learning You Were Wrong
Certain as the Sun
Rising in the East
Tale as Old as Time
Song as Old as Rhyme
Bubble and the Beast
It’s a predictable script.
The potential of a promising new technology gets EVERYBODY excited.Read MoreJun 042013
For growth stage companies the JOBS Act is nice, but not a game changer.
Here’s my Part 2 on the JOBS Act (Part 1 here). In this post I cover how the new law impacts the IPO market by giving companies more flexibility in their decision process around going public. As pointed out in one of my prior posts, the number of tech IPOs has decreased 87% in the last 5 years as compared to the pre-bubble 1994-1998 time period. That is not a good fact for the U.S. economy or the venture business, and the JOBS Act makes some changes to address some of the issues that have caused the dramatic decline.
For growth companies that no longer need startup capital and that are considering the best way to fund their further growth, the JOBS Act does offer some helpful changes in the law but nothing as potentially transformative as what crowdfunding represents for startup financing. Here’s the rundown…Read MoreMay 202013
I’m going to say one word to you. Just one word. Plastics.
— Mr. McGuire, in The Graduate
All the World’s a stage.
— William Shakespeare
In what is one of the happiest moments of my life, my daughter Maggie graduated from Ithaca College this weekend.
College graduation is an important moment for most families but it might seem a bit overstated for me to say this… After-all, people who are from the professional community have certain expectations for their children and a college degree is one of them.
Why this is such a big moment for Maggie and our family is that for much of the past twelve years, Maggie has been sick with Lyme Disease and wasn’t even able to finish high-school, having to drop out after her Sophomore year. While many of Maggie’s friends, in what would have been her Junior and Senior years, were focused on what colleges they were going to get in to, Maggie was in bed too weak to even walk around the block.Read MoreMay 142013
The radio is gone… That means — the car is gone! Oh God, not the car! Anything, but not the car!
— Terry Fields, in American Graffiti
It was just over 100 years ago when Henry Ford introduced the World to the Model T, the first car that was affordable to the masses. Detroit in 1913 was like Silicon Valley today — the place where people came to participate in the future, and automobiles were the disruptive technology of the day. There were over 240 independent car companies operating in Detroit in the heyday.
Ford’s first two automobile companies failed but his third started in 1903, proved a charm and was immediately profitable. By 1905, profits were $300K, which would be equivalent to $30 million today, amazing for a two year old Company.
The breakthrough, of course, came with the introduction of the Model T in 1908, and with it, the assembly line and mass production. Ford famously said “Any customer can have a car painted any color he wants…as long as it’s black.”Read MoreMay 072013
I think there is a world market for maybe five computers.
— IBM Chairman Thomas Watson, 1943
The Verdict is in: Nobody likes Glass
— Business Insider, May 4th, 2013
People have trouble imagining a World different than the one they come from and tend to dismiss transformational technology as a “toy” or a “fad”.
When Alexander Graham Bell invented the telephone, people thought it might be helpful for telegraph operators to speak with each other to clear up confusion on transmitted messages.
When automobiles were introduced in the late 1800s, there were “Red Flag Laws” passed in the United Kingdom and the United States that required a pedestrian to walk in front of the “horseless carriage” with a red flag to warn others it was coming. A toy for the rich, you were required to have three passengers in the car: the driver, the owner and the mechanic.Read MoreApr 302013
Ten days ago, we completed a fabulous education innovation summit where we brought together nearly 1,500 leaders in the learning ecosystem. Innovators, educators, social entrepreneurs, institutions, policy makers, and investors were all mixed together in a potent cocktail to focus on how to have scaled impact in this $4.5 trillion industry.
We had participants from disruptive edtech companies like Chegg, Coursera, Kno, 2U, Grockit and Knewton; keynotes from captains of industry such as Bill Campbell and Steve Case; investors like Bill Gurley and Roger Novak; politicians and policy people such as Jim Shelton, George Mitchell, Bob Kerrey and Beverly Perdue, and academic leaders such as Michael Crow, Benno Schmidt and Michael Feinberg. Five years ago, you couldn’t have gotten 1,500 people from these diverse backgrounds to discuss education innovation if you would have given away $1,000 to each participant, now we had to stop taking registrations three weeks before the event with a ticket price of $1,500. (Disclosure: GSV owns shares of Chegg, Kno, 2U, and Grockit.)
The Summit culminated with GSV, ASU and the Clayton Christensen Institute‘s inaugural ROE AWARDS (Return on Education) highlighting education companies that have had the greatest impact in showing positive learner outcomes while decreasing cost, increasing access and leveraging learning leaders. We had over 150 nominations and the finalists and winners were…Read MoreApr 222013
The Boston Marathon started in 1897 with 18 participants and has become the oldest annual marathon in the World, and the best known with over 20,000 participants and 500,000 spectators.
Held on Patriots’ Day, the race has become intertwined in the fabric of Boston and a part of Americana. Patriots’ Day starts with an 11am Boston Red Sox game and finishes with the celebration of the Boston Marathon.
Given its symbolism, it shouldn’t be a surprise that terrorist would view the Boston Marathon as a prime target to terrorize even though it’s the last thing people expect to happen. Accordingly, the Tsarnaev brothers’ heinous and cowardly bombing of innocent bystanders at the 107th Annual Boston Marathon on Monday sent shock waves in Boston and around the World.
While the evilness of the acts enrages us all, it was impressive to see how quickly the law enforcement officers were able to identify who was responsible, and thrilling to see the Tsarnaevs apprehended. Most inspiring was the bravery of the Boston people who when the bombs went off ran to the explosions to help the injured as opposed to running away. Moreover, the New England Patriots’ resilience and, really, defiance in the face of terror made us proud as Americans. When Neil Diamond, the Boston Red Sox fans and the New York Yankees saying together “Sweet Caroline” at Saturday’s game, “good times never seemed so good.”
Remarkable, when contrasted with 9/11, is how advanced our capabilities are to handle acts of terror AND how much innovation has happened in twelve years.Read MoreApr 172013
There are “old” pilots and there are “bold” pilots. But there are no “old bold” pilots.
My friend Dave Pottruck teaches a course at Wharton on “Bold Change” which is focused on the actions needed for a large organization to transform itself in the face of dynamic competition. Dave, the former CEO of Charles Schwab, speaks from what he’s done as Schwab, which under his leadership transformed itself from a traditional discount broker to an online powerhouse with $45 billion market cap in 2000.
Dave also had the painful experience of not moving his Company fast enough after the dot.com bubble burst, and after a 20-year career at Charles Schwab, he was fired in a 20 minute conversation by his mentor and Company namesake. Given Dave’s real life experience, it’s no surprise that his class was voted the most popular one at Wharton.
Last week, another friend of mine Ron Johnson was terminated after a tumultuous 17 month reign as CEO of JC Penney. It would probably be wise of me to be quiet and allow the piling on to continue until the media finds another story it wants to jump on.Read MoreApr 092013
Massive Open Online Courses, a.k.a. MOOCs, are leading a wave of change to radically democratize access to high-quality, college-level courses for people anywhere in the world who can connect to the Internet…generally for free.
In the Global Economy and Knowledge-based Economy — it’s about what you know, not where you go…knowledge, not necessarily college. MOOCs have the opportunity to dramatically increase access and create more opportunities for people to participate in the future.
The MOOCs concept originated in 2008 via the Open Educational Resources movement that had begun in 2001-2002 through MIT’s OpenCourseWare project but it really hit its strides in late 2011 and 2012.
The modern wave of MOOCs started through what might be considered a lucky accident. Stanford University, in the fall of 2011, launched three online courses, each with over 100,000 students enrolled, a breathtaking number when you consider that most university courses have a difficult time teaching a hundred students.Read MoreMar 262013
Cyprus is located in the Eastern Aegean area of the Mediterranean Sea just below Turkey and to the West of Syria. It’s the third largest island in the Mediterranean behind Sardinia and Sicily and ahead of Crete. Cyprus’ strategic location and historic neutrality has made it the crossroad between East, West and the Middle East.
In 1191 King Richard I of England conquered Cyprus almost by accident as part of the Third Crusade. Three of England’s boats were shipwrecked in a storm with the Island’s occupants taking the survivors as prisoners. When a fourth boat carrying King Richard’s sister and bride were denied their request to come ashore to get water, King Richard learned of the insult and had a “Popeye Moment” unleashing his military on the heretofore irrelevant Cypriots.
Most of the next seven hundred years resulted in British Administrative Control of Cyprus with the introduction of the Norman Feudal System. From 1925 to 1960 it was a British Colony.
Today, Cyprus is divided in two with its Northern half under Turkish control. It’s called “The Turkish Republic of Northern Cyprus” by Turkey and called “Occupied Cyprus” by everyone else.Read MoreMar 192013
If the Earth was a single state, Istanbul would be its capital.
— Napoléon Bonaparte
It’s one of the most dynamic places on Earth, right at the intersection of Europe, Asia and Africa, it connects the Western with the Arabic world, and it’s an up-and-coming power place.
Istanbul, which spreads across seven hills (like San Francisco) and lies on the Bosphorus strait, will be one of the most interesting places for growth and innovation in the years to come. With 14 million people, it ranks #21 among the World’s metropolis — but #2 if accounting for density, and it is the fastest growing large city in Europe, with a 3.5% annual population growth. Istanbul is also one of the six applicants for the 2020 Summer Olympics — which will be decided this summer.
This week, I spent a few days in this vibrant place and met with local entrepreneurs, investors, startups, and some of Turkey’s emerging companies. The last time I was there was more than 10 years ago, and the city has definitely transformed from being just a cultural and historic capital to a dynamic and booming global city.Read MoreMar 112013
Earlier this week I was in Austin for the initial stages of SXSW (a.k.a. South by Southwest).
Austin is a great city with abundant Sun, the Colorado River running through downtown, the state Capital, and the campus for the University of Texas (usually) Mighty Longhorns.
While the State of Texas is the “reddest of red states,” Austin prides itself on being counter culture and has as its motto “Keep Austin Weird.” A definitely weird and a bit creepy fact about Austin is it has the largest bat population of any urban city in the United States.
SXSW began as a music festival in 1987 where 172 bands showed up and played to 700 people listening, dancing, eating and drinking. Now SXSW has become an annual destination on the innovation tour. Added to the music festival’s menu over the years are film, interactive media, the environment and education (I was Co-chairman of this years SXSW Education Launch).Read MoreMar 052013
It’s ten years ago this month when the “Shock and Awe” military campaign began in Baghdad. 2003 was also the year when the Space Shuttle Columbia disintegrated when entering the atmosphere over Texas and the iPod began to kill MP3s. It’s been 11 years since the Salt Lake City Olympics and Enron CFO Andrew Fastow was convicted of 78 felony counts of fraud and WorldCom filed for bankruptcy.
Do these events seem like they happened just yesterday? My point is: while 2003 wasn’t that long ago, the world has changed in almost incomprehensible ways. Sure, Blackberry had just entered the market with its “smartphone”, but in hindsight it was basically a bad phone and even worse way to get your emails. Nobody could imagine one device that could act as a phone, computer, camera, TV, gaming “console”, wallet, newspaper, book, etc.
In 2007, Apple’s iPhone changed the way we live by putting our life in our pocket. In 2004, Facebook first connected everyone at Harvard, then the Ivy Leagues, then U.S. college students, then all students around the World, and then expanded to capture 1.1 billion people. In 2005, YouTube became THE platform allowing everyone to be a video “producer”, allowing a song about Seoul’s Gangnam district to attract 1.4 billion views in less than a year.Read MoreFeb 252013
‘Cause when you are a celebrity, it’s adios reality.
You can act like a fool, people think you’re cool.
Just cause you are on TV…
People love the movies and they worship their stars. Over $10 billion was spent at movie theaters in the U.S. last year and an estimated 1 billion people will watch the 85th Oscars tonight.
Will Lincoln win Best Picture? Or will it be the sentimental favorite Argo? Maybe Silver Linings? (My movie crazy daughter Maggie is rooting hard for that one but I think her interest in Bradley Cooper may have colored her judgement).
The convergence between real life and fiction is blurring the World in confusing ways. Oscar host Seth MacFarlane’s character “Stewie” who seeks World domination could be mistaken for North Korea’s evil leader Kim Jong-un.Read MoreFeb 112013
“Stay hungry. Stay foolish.”
People love startups.
I wouldn’t just say that casually. I mean that people in startup ecosystems – founders, investors, mentors and evangelists – love startups in this deep and passionate way. Startups are the physical overflows of the optimism and enthusiasm of their founders. They embody the attitude that a small group of people can change the World for the better.
For founders, startups are the ultimate empowerment – you are the master of your destiny. And for the community, country and the World, we stand to benefit from the innovations that these entrepreneurs bring to our lives.
But the journey is really hard. The path from startup to success, from idea to IPO, from (Series) A to Apple is more challenging than most founders can imagine at the onset of their voyages. (Disclosure: GSV is a shareholder of Apple.)
Today, Silicon Valley’s startup ecosystem is booming and startup fever is spreading around the country and the world. Starting a company is now easier than ever before because of the foundations that have been built. Isaac Newton, the father of modern physics and calculus, once said, “If I have seen further it is from standing on the shoulders of giants.” And in the startup world, there have been many Giants who have created the technological, financial and cultural bedrocks to enable the next generation of Pioneers and Mavericks.Read MoreJan 282013
Since 1990, global population growth has been ~29%. During the same period, average energy use per person has increased by 10%. So net-net, energy consumption has actually gone up 42%… What’s worrying is that the rise of the Internet and our computer-driven lifestyle are also kicking in globally and will add aggressively to the trend in the next decades.
The need for better, faster, and cheaper energy, and the associated problems and opportunities in cleantech is what we are focused on… and wrote about in our last issue on January 13th. In Growing Sustainable, Part Two, we are looking at Wind, Storage, Alternative Power, Pollution, Light and Lifestyle.
Wind energy accounted for 6% of US’s total energy in 2012, with 13.2GW installed — 5.5GW in December alone. Globally, wind accounts for even less but it is projected to go to 15-20% by 2030. Similar to solar, wind is an abundant resource and it’s ~100% clean. On the flip side, it’s not easy to install, wind farms have large footprints and need to be built away from rural areas. What’s critical for wind in order to gain broader adoption is a better cost structure and simpler installation methods.
But we are beginning to see ground braking technologies that are potentially very disruptive. Kleiner Perkins-backed FloDesign Wind, which is a spinoff of aerospace company FloDesign, is impressive and promising… Its turbines are quite different compared to traditional ones, as they are much smaller, lighter, more efficient and easier to transport and install. And they can be placed much closer to rural areas. Its jet engine-like turbine has two sets of blades — the first one is fixed and redirects the wind onto a second set of blades that are moving. The wind spins the rotor and as it comes out on the other side, it meets with slower moving wind from the outside and creates a rapid mixing vortex… The end result is 3-4x more efficient output compared to traditional wind turbines. See the visual description — it’s impressive.Read MoreJan 142013
The end of the human race will be that it will eventually die of civilization.
— Ralph Waldo Emerson
I remember like yesterday coming to LA in 2003 and being somewhat shocked about the extremely aggressive use of energy in this country. It struck me that UCLA’s sports fields were fully lit late at night when no one had stepped on them for hours. Or going to Las Vegas the first time and thinking that “Sin City” was probably using as much energy as my home country Bulgaria… (I checked, and it’s not quite the same, but still worth the thought).
I’m not trying to say aggressive consumerism is bad, and I do understand the principles of capitalism and economics well. But it does make me think that we are running into a growing problem. A powerful country like the U.S. also pays a price for its growth, and energy and sustainability are on the very top of that list.Read MoreJan 072013
If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience.
— George Bernard Shaw
I like the dreams of the future better than the history of the past.
— Thomas Jefferson
It would be convenient if to pick tomorrow’s winners you just had to look at past results. Unfortunately, that plan doesn’t work because the world is constantly changing.
If you were to look at the leading industries in 1925, you would have found that 23 of the 100 largest capitalization companies in the US market were in the railroad industry. Ten were automobile companies, and four were in metals and mining. Zero of the 100 largest companies were in information technology, healthcare, or financial services.
Fast forward the clock to 2013. Only two companies were in automobiles or railroads, one in metals & mining and zero in railroad amongst the largest 100 companies. Conversely, 25 information technology companies were amongst the 100 largest, 20 financial services companies, and 17 healthcare companies.Read MoreJan 022013
While the networks tried to create drama around the looming “Fiscal Cliff,” including political analyst giving a play by play on the negotiations and a countdown clock, politicians seemed mostly anxious that they were going to miss the event that REALLY mattered…Sunday’s 8:30PM kickoff between the hometown Redskins and America’s TEAM, the Dallas Cowboys.
Taxes going up for everyone and a likely recession causing massive unemployment is trivial compared to whether RG III could run and pass the Redskins into the playoffs. To give context to how big this matchup was, thirty second TV spots for Sunday Night Football were going for over $550K versus $340K for American Idol’s new season.
With Washington’s 28-18 Victory, Owner Dan Snyder has gone from being less popular than Richard Nixon to replacing Ben Franklin on the C note, and Mike Shanahan is the Nation’s Capital Commander-in-Chief. RG III is going straight to have DC’s fourth memorial along with Washington, Jefferson and Lincoln.
While Baseball is America’s Pastime, Football is its Present. Apple and Google are AMAZING companies but the NFL might be the World’s greatest business. The 32 NFL Franchises are worth approximately $40 billion. (Disclosure: GSV owns shares of Apple and Google.)Read MoreDec 172012
It’s almost a wrap on 2012 and while some are counting the days to the “Fiscal Cliff” or to “Bowl Games,” we’re getting excited about Christmas and what might be under the tree.
While we’d love to give all of our loyal readers a new iPad Mini, we can’t because they are perpetually sold out. We then thought giving everybody a premium gift subscription to Spotify would be cool, but then our research showed us that basically everybody has become a member of Spotify in the past couple of years.
For those that don’t already have Dropbox, certainly giving an invitation to open an account would be appreciated as the service works like magic. We then came to our senses and realized that Dropbox basically creates dependency and we don’t need to be accused of creating addicts (although we love businesses that are additive without causing cancer). Disclosure: GSV owns (long) Apple, Spotify and Dropbox.
Alas, as much as we’d love to be original, the process of elimination forces us to go back to tradition. Accordingly, our gift to A 2 Apple readers is our annual “Stock Stocking Stuffers” and also a few “shorts” to provide some “coal” for the naughty ones.Read MoreDec 142012
Apple CEO Tim Cook did his first major TV interview last week with NBC’s Brian Williams.
The gist of Mr. Williams questioning was that Apple is a dynasty and all dynasties come to an end, often when the magnetic leader goes. ”Nobody remembers who replaced Thomas Edison.” So why is Apple any different?
Given AAPL shares are off 24% since September and 9% last week alone, it would seem that’s a fair concern. Not to mention ferocious competition from the likes of Samsung and Google, and even concern about manufacturing in China.
In his first at bat on the big league media stage, Mr. Cook hit it out of the park. He came across as focused, humble, intense, thoughtful and likable. His comment, when challenged on why Apple would succeed where others before had failed, was “Don’t bet against us, Brian. Don’t bet against us.”Read MoreDec 042012
In the “you can’t make this stuff up” category, last week Edward Archbold of Deerfield, Florida choked to death after “winning” a cockroach eating contest.
The “prize” the late Mr. Archbold was coveting was a python valued at $850. Showing he wasn’t completely out of his mind, Archbold called 911 himself when he realized eating dozens of roaches was in retrospect not such a good idea and giving him an upset stomach.
Given that I know of at least one private equity firm that has a prohibition of investing in any Company headquartered in Florida, some might say that type of craziness can happen in a Banana Republic like Gator Country but not in civilized society.
The Sunshine State doesn’t have a monopoly on fools, and in fact, it is pretty minor league compared to the Politicians on the Potomac. I personally was hoping that with the election behind us, we could forget about Washington for a while and focus on the Real America.Read MoreNov 202012
Ingredients: Nonstick cooking spray or vegetable oil, 60 grams (1/2 cup) cake flour, 30 grams (1/4 cup) all-purpose flour, 1 teaspoon baking powder, 1/4 teaspoon salt, 2 tablespoons milk, 4 tablespoons unsalted butter, 1/2 teaspoon vanilla extract, 5 large eggs at room temperature separated, 12 tablespoons sugar, 1/4 teaspoon cream of tartar, 6 tablespoons unsalted butter at room temperature, 165 grams (1 1/2 cups) confectioners’ sugar, 3/4 cup Marshmallow Fluff, 2 tablespoons heavy cream.
For those of us who grew up with Twinkies and Ho Ho’s as a staple in our diet, it came as both shocking and sad to hear the news that Hostess, the purveyor of the aforementioned super foods, was shutting its doors.Read MoreNov 132012
Throughout much of history, one’s future was determined by who you were born to and where you were born.
Princes became Kings. Farmers’ sons became farmers. 99% of the people lived and died within 10 miles of where they were born.
Social status was predetermined by your family, your sex or your skin color. Nobles remained nobles. Women enjoyed elevated stature if they had a large family. Being black or brown meant limited options for opportunity.
Access to education changed the model of predetermined destiny as one’s education now is the primary determinant to one’s future. The correlation between income and education is direct as is unfortunately, unemployment. The “Woman Power” wave has corresponded with the surge of women in college and graduate programs. It’s no accident that our first African-American President got his undergraduate degree from Columbia and his law degree from Harvard.Read MoreNov 052012
The Weather Channel exists because people are fascinated by watching things out of their control, and especially natural disasters. Storms, floods, hurricanes, earthquakes, fires, tsunamis, tornadoes… all with potentially horrific consequences, draw people’s attention like honey to a bear.
The media realizes this and rush to opportunities where they can wear the storm gear and appear to be in harms way. Politicians having no upside in presenting a balanced approach, appropriately error on the side of the worst case scenarios and warn loudly and often about the potential disaster on its way.
Accordingly, when hearing about the impending “Frankenstorm,” my reaction was it was going to be a great way to “sell tickets to the show” but unlikely to be a history changing event. Seeing the windswept anchors reporting Monday morning from Point Pleasant, New Jersey, and Battery Park in Manhattan, I said to myself “come on.”
Truth be told, I was mildly annoyed the Market was closed as there were some trades I wanted to make, and also, I was supposed to be in NYC midweek for some “important” meetings and I was getting concerned my flights might be a mess and I would be inconvenienced.Read MoreOct 312012
“I turn on my computer. I wait patiently as it connects. I go online. My breath catches my chest until I hear three little worlds, ‘you’ve got mail.’”
— You’ve Got Mail, Warner Brothers, 1998
Remember when email was cool? Almost sexy? It was so clean. So quick. So efficient. It almost seemed like magic.
Your email address replaced your phone number as your most important coordinates and like “snail mail” before it, voicemail became a relic for the dinosaurs.
The fact that a popular RomCom could have as the foundation for its plot the virtual couples email connection as plausible speaks volumes of our not so distant past.Read MoreOct 222012
“In 2011 we created more data than since the beginning of mankind to the end of 2010. Competing in business will take more than being good at collecting and processing Big Data.”
— Andreas Weigend, Director, Stanford Social Data Labs & former Chief Scientist at Amazon
Global data traffic is expected to hit 1.3 zettabytes per year by 2016, growing annually at 29%. Currently, mobile data is skyrocketing. Last year, mobile data traffic was 8x the size of the entire Internet in 2000, and by 2016, it is expected to be more than 0.12 zettabytes, up from 0.015 zettabytes in 2012. (For reference, 1.3 zettabytes equals to 20.3 billion iPhone 5s.)
The magnitude of data we consume calls for rapid changes in its infrastructure. In the past 20 years, using services and storing data has moved from physical to digital, and the trend has been accelerating more so in most recent years. Before, we used to read books, listen to CDs, store files on floppy disks, etc. Today, all these tasks have transformed to be part of a digital network, all driven by the Internet, and all connected in the Cloud…the term Cloud Computing arrives from the use of a cloud-shaped symbol as an abstraction for the complex infrastructure of the system diagram.Read MoreOct 152012
At the invitation of King Abdullah’s commission on Innovation and Entrepreneurism, last week I was in Riyadh speaking at a conference on the aforementioned subject.
Saudi Arabia is a fascinating place of approximately 28.1 million people located between the Red Sea and Persian Gulf. The Country of Saudi Arabia was formed in 1932 and oil was discovered in 1938 — and now has one fifth of the World’s proven oil reserves
Saudi has a young population with the median age at 25 years old and nearly 30% of the population being below 14. Oil is 45% of GDP but some analyst have predicted that Saudi will be a net importer of oil in 20 years.Read MoreOct 092012
“There are ‘Old’ Pilots and there are ‘Bold’ Pilots, but there are no ‘Old Bold’ Pilots.”
It was a particularly spectacular weekend to be in the Bay Area with a cornucopia of events and activities to enjoy.
It was “Fleet Week” with the amazing Blue Angels zipping around San Francisco to the delight of all (accept the travelers trying to land at SFO who were subject to endless holding patterns).
If watching Top Gun pilots wasn’t thrilling enough, people on the Bay could also view America’s Cup races.Read MoreOct 022012
Since the bottom on March 9, 2009, NASDAQ is up 146%. Year-to-date, NASDAQ is up 19.6% and the S&P 500 has advanced 14.6%.
While our optimistic nature would like to convince ourself that this is a predictor of great things to come, our rational side realizes that this is more a function of: 1) a snap back from the 2008 cliff, 2) the near zero interest rate environment being no competition for capital, and 3) the Feds flooding money into the system.Read MoreSep 252012
“All the forces in the world are not so powerful as an idea whose time has come.”
— Victor Hugo
Part of what has made Silicon Valley a magnet for entrepreneurial talent and innovation is the embracing of bold new ideas and marrying those with risk capital. Unlike any other place on the Planet, Silicon Valley has this unique ecosystem where abundant resources are focused on people who are driven to reinvent the World.
On much of the East Coast and Midwest, when somebody has a new idea, the chorus has a hundred reasons why it won’t work; “If it was such a good idea, why hasn’t anybody done it?,” “talk to me after it’s proven without a shadow of a doubt that it works,” or “the existing industry giant will squash this before it’s out of the box.” In Palo Alto, a new idea is greeted with a flurry of angels who want to write a check.
In most of Europe, new ideas are viewed with even greater skepticism which has resulted in virtually non-existent venture capital community and an IPO Market that makes the U.S. look robust. In fact, there have been more IPOs that have come out of Silicon Valley in the past thirty years than there has been in Europe since the time of Charlemagne.Read MoreSep 182012
“What would I do? I’d shut it down and give the money back to the shareholders.”
— Michael Dell, on October 6, 1997, when asked what he would do with Apple if he were Steve Jobs
As Apple continues to make new all-time highs, up another 2% last week and 71% for the year, Dell’s quote looks destined to surpass “dumb quotes by smart guys” Hall of Famers Ken Olsen, founder of Digital Equipment, who said, “there is no reason for any individual to have a computer in his home” and Tom Watson, founder of IBM, who proclaimed, “I think there is a World market for maybe five computers.”
When Dell made his remark in 1997, the Company with his name on it had a market value of around $29 billion versus Apple’s market cap of $3 billion. One way to look at it, at the time, is that it would take nearly 10 “Apples” to equal 1 “Dell.”
On Friday, Apple’s market value touched $650 billion and Dell‘s market cap is now $19 billion. Using stock as a currency, it would take more than 34 “Dells” to BUY 1 “Apple.”Read MoreSep 102012
On March 21, 2006, Jack Dorsey sent the first “Tweet“ and forever changed global communication…and the World.
Who would have thought that a 140 character text message could help topple governments, routinely beat major news organizations to breaking stories and be the backbone for major trading systems?
Far from the snarky cynics who view Twitter as the way you find out what people are eating for breakfast, it’s become THE global realtime information network. (Disclosure: GSV Capital owns Twitter stock). Celebrities, athletes and politicians use it as an unfiltered, direct to consumer channel…consumers use it as their hyper-personalized news, information and knowledge channel.Read MoreAug 272012
“ So when you drive
And the years go flying by
I hope you smile
If I ever cross your mind
It was the pleasure of my life
And I cherished every time
And my whole world
It begins and ends with you
On that Highway 80 ride…”
— Zac Brown Band (slightly modified)
Last week, I got to drive cross country with my oldest daughter Maggie for her senior year at Ithaca College. Basically, you get on Interstate 80 at the Bay Bridge and drive 3,000 miles until just before it dumps you into Manhattan from the George Washington Bridge.
I’ve done this once before but it’s always hard to comprehend how vast the United States is. For those of us who’ve become accustomed to fly Coast-to-Coast, it feels like New York City and San Francisco are practically neighbors — all that separates them is a quick snooze, lunch and going over emails thru the magic of WiFi.Read MoreAug 202012
The Olympics have always been part sport, part social, part political and part spectacle. Adolf Hitler infamously used the 1936 Berlin Olympics to show the World the superiority of the Arian Nation only to be slightly thwarted by Jesse Owens track triumphs.
The 1972 Munich Olympics were tragically used by the Palestine Liberation Army as a way to shock the World into understanding its plight. The 1980 Moscow Summer Games were a political pawn as President Carter boycotted participating in protest to the Soviet Union’s war with Afghanistan. The 1980 Winter Olympics in Lake Placid and “the Miracle Team” gave America hope it could win again.
The 2008 Beijing Games were meticulously scripted to promote host China’s arrival as the emerging leader on the Global Stage. While the USA won the most medals, China won the most golds and successfully made its case that it was planning on being the lead actor for the future.Read MoreAug 152012
I spent the weekend in Santa Barbara celebrating my youngest daughter’s 20th birthday and her return to playing soccer after a year of rehab from a knee injury.
Santa Barbara is one of the most spectacular places on earth — incredible beaches, mountains surrounding the harbor, hip classy town and Southern California weather.
I love to run along the ocean in the morning and to take it all in. What’s funny is how different a place can look depending on which way you are heading and what you are looking for.
Heading one way down the beach, you see a collage of surfers, yachts, real beach volleyballers and the Santa Ynez mountains. In a word, “Heaven.”
Reversing course but on the same track, I now see the bums littering the beach, the left over garbage being devoured by the scavenger birds, and the people who should know not to expose too much of their body as it’s gross and covered with tattoos everywhere. In a word, “Hell.”Read MoreAug 062012
“Education is the most powerful weapon which you can use to change the World.”
— Nelson Mandela
On Friday, The New York Daily News reported that the planet’s most famous rising kindergartner, Suri Cruise, is going to attend AVENUES — The World School this Fall. AVENUES, the most recent creation from media and education entrepreneur Chris Whittle, opens its doors in NYC in September with over 700 students paying a $40,000 tuition. (Disclosure: GSV Capital is an investor in AVENUES.)
AVENUES has a spectacular facility on “the High Line” in Chelsea, a world class faculty with the former President of Yale, the Former Head of Philips Exeter, the Former Head of Hotchkiss, and most impressively to New York residents, the former Head of the pre-school program at the 92nd Street Y on staff, and an international orientated curriculum.
AVENUES is building a global network of top tier private schools and will be opening sites in Beijing, London, Sao Paulo and Mexico City in the next several years.Read MoreJul 312012
“Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.”
— Charles Mackay, Popular Delusions and the Madness of Crowds, 1841
It seems just like months ago when Facebook was thought to be the Second Coming and investors were fighting over themselves for whatever shares they could get their hands on at any price.
Or maybe it was just months ago. Amazing how fast the tide can change…
Now, the Company puts out its first quarterly earnings report since its May 18th IPO which were exactly what had been forecast but the headlines are all negative… “only” 955 million monthly active users (there are “only” 7 billion people on the planet!), Revenue growth was “only” up 32% year over year and 12% from the 1st quarter (which was actually slightly better than what had been projected), the 67% growth of monthly mobile users was fine but where was the monetization? Payments were up 61% but that was slower than the 90% in the first quarter, yada, yada, yada.Read MoreJul 232012
Oh, I get by with a little help from my friends
Mm, I get high with a little help from my friends
Mm, gonna try with a little help from my friends
— The Beatles
While the tone was probably deaf to the already skeptical capitalist crowd, the words are pretty non-controversial. Describing oneself as “self-made” is both delusional and arrogant. As tough as one’s background might have been, and as hard as one may have worked, if you made it to this Country, you’ve benefitted from a lot of things including a free market, democracy, the most robust capital markets in the World and rule of law.
Many of us have also been beneficiaries of mentors who have helped “show us the ropes” and been role models. One of my mentors, Coach Holtz, used to say, “you were who you were by the people you spent time with and books you read.”Read MoreJul 162012
Silicon Valley is no longer just a physical place but a mindset that has gone viral. Entrepreneurism and innovation are flourishing from Austin to Boston; from Chicago to Sao Paolo; to Mumbai, Shanghai and even Dubai. This is what we call the Global Silicon Valley.
Language, which used to be a barrier to entry, is disappearing as the World/Internet is going English. In the next five years, China will have more English speaking people than America. What we also see — the three emerging languages the next generation will need to know are English, Mandarin and Coding (Codecademy)…some would argue Twitterish too.Read MoreJul 022012
Sony bought EMI Music Publishing on Friday for $2.2 billion creating the #1 music label with 31% global market share.
The Big Four Tech Companies — Apple, Google, Amazon and Facebook — all have music madness and social music leader Spotify is rumored to have raised $220 million at a $4 billion valuation. (Disclosure: our GSV X Fund is long Apple, Google, Amazon and Facebook; GSV Capital owns Facebook shares.)Read MoreJun 282012
“All the forces in the World can’t stop an idea whose time has come.” — Victor Hugo
In what could only be categorized as conspicuous timing, GM Marketing Chief announced to The Wall Street Journal a few days before Facebook‘s IPO that it was pulling $10 million of ads because they didn’t work. Sure, Facebook was good for creating awareness around GM cars and for creating “fans” but that didn’t sell cars. (Disclosure: GSV Capital and GSV X Fund own 351,000 shares of Facebook.) Since GM’s revolutionary cars, like the expensive and non-practical Chevy Volt, weren’t selling themselves, somebody needed to be able to get consumers to BUY and Facebook wasn’t doing the trick.
Far from being alone in its cool embrace of social media, consumer product leader and marketing powerhouse Proctor & Gamble only allocates approximately 10% of its marketing spend on digital advertising. It’s ironic that former P&G CEO Ed Artzt was talking how interactive media was going to be everything in advertising 20 years ago. Unilever and L’Oreal` spend about the same as P&G in relative percentages. Apparently social doesn’t sell soap.Read MoreJun 182012
With New Democracy leader Antonis Samaras winning the Greek election Sunday, a bullet was dodged for now and tragedy was averted.
The obsession by global leaders and financial markets about a Country with a GDP the size of the State of Washington is a bit funny but it is what it is.
Scott Walker’s victory in Wisconsin was a more significant win in my view but I would put both elections in the bucket of moving in the right direction.
Could the aforementioned elections be the catalyst we need to get the Market out of the funk it’s been in over the past couple months?
Perhaps. Unfortunately, nobody rings a bell to let investors know stocks are ready to go up again.Read MoreJun 122012
First time you feel it, it might make you sad
Next time you feel it it might make you mad
But you’ll be glad baby when you’ve found
That’s the power makes the world go’round
And it don’t take money, don’t take fame
Don’t need no credit card to ride this train
It’s strong and it’s sudden it canbe cruel sometimes
But it might just save your life
…That’s the Power of [Growth]…
— Huey Lewis & the News
Reading Barron’s Midyear Roundtable with Market gurus was both confusing and depressing.
There is no shortage of things to be worried about…Greece, China, Spain, the U.S. Deﬁcit, the November Elections, etc. etc. etc., and seemingly nowhere to hide.Read MoreJun 052012
Jessup (Jack Nicholson): You want answers?
Kaffee (Tom Cruise): I think I’m entitled to them.
Jessup: You want answers?
Kaffee: I want the truth!
Jessup: You can’t handle the truth!
(from A Few Good Men)
Spain reported nearly a 10% decline in revenue in April and has a 25% unemployment rate. Greece has looming elections on June 17th, which will determine the fate of its future participation in the European Union. In the United Kingdom, manufacturing plunged and India experienced the slowest growth in five years. Brazil’s growth has stalled and China is tapped out.
Back home in the U.S.A., the Economy has experienced the most tepid recovery since World War II with last week’s paltry job creation of 69,000 for May and first quarter GDP of 1.9%. This marks the third Spring slowdown in a row with rumors of QE III running rampant.
No surprise then, stocks plunged, gold soared, oil dropped and Treasury Bonds climbed to new heights as fear consumed the Market. When investors are more concerned with the return of their money than the return on their money, it’s pretty difficult for growth stocks to perform well. Accordingly, NASDAQ is off 12% since it started its correction on March 26th, and Facebook is off nearly 30% from its IPO price just two weeks ago.Read MoreMay 222012
It was a day to remember.
I arrived at Facebook’s offices Friday in Menlo Park around 6.15 AM to do an interview for CNBC. On a normal day, the parking lot would be basically empty before 10 AM but not Friday…the biggest tech IPO ever brought people from far and wide to watch the spectacle. (Disclosure: GSV Capital owns 350,000 shares of Facebook at an average price of $29.92)
Helicopters were hovering, camera crews were sprawled throughout the campus, and the paparazzi lurked everywhere. The anticipation of what was going to happen to Facebook stock when it began trading became an office pool event…would it price at $40 and trade to $60? $75? $100?
Alas, the most anticipated IPO ever, came out of the gates a dud, pricing at $38 ($104 billion market value), trading to as high as $45 but closing at $38.23—just 0.6% above the offering price. When it was over, 581 million Facebook shares had traded spinning the entire 441 million share offering 1.3x in its first day with the largest likely new shareholder being Morgan Stanley…the lead underwriter.Read MoreMay 152012
We’ll always have Paris.
— Rick (Humphrey Bogart) in Casablanca
Or so we thought… Choosing insanity over austerity, the French people elected François Hollande as its second Socialist President in modern history last Sunday.
Someone forgot to tell the French people that despite the conceptual appeal of reducing the hours you work, increasing your vacation time and lowering your retirement age, somebody actually has to pay for it as the Government doesn’t actually “make” money (although I’m sure they will create it). As one of my German friends told me, Switzerland is a lovely place to be for six months and one day, and the likely talent and corresponding tax drain from France is destined to be staggering.
With Greece taking a hard left in its elections last week and Spain taking over one of its largest banks, the “Social” theme is going viral in Europe. What investors don’t “Like” about this movement starts with philosophy and ends with uncertainty.Read MoreMay 082012
Insanity is doing the same thing over and over again but expecting different results.
- Albert Einstein
Stocks of most flavors had the worst week of 2012 spooked by anemic job data. The headlines which incumbents wanted us to see were that unemployment fell from 8.2% to 8.1%.
Scratching just a little bit below the surface, the picture becomes much more disturbing and inconvenient for the commencement of Campaign Season. Job growth was a paltry 115,000 for April…45,000 short of what was the forecast.
This was the good news. The bad news was that civilian employment shrank 342,000 in one month and the labor participation rate fell to 63.6%, the lowest level since the 1981 recession (when far fewer woman worked already). If we had the same labor participation rate we had in June 2009, the unemployment rate would actually be approximately 11%.Read MoreApr 302012
Bears continued to be baffled as negative data keeps outweighing positive news (at least in their minds) but stocks want to, obliviously, move higher.
The United Kingdom has fallen back into a “double dip” recession? Oh well.
Housing starts in the U.S. fell 7% in March. No big deal.
GDP growth for the first quarter was a paltry 2.3%. Maybe that will keep Bernanke active keeping rates down.
Nearly one in four adults is unemployed in Spain. Well at least they are great in soccer, tennis, and bicycling.
Individual investors are very negative with only 27.6% counting themselves as “BULLS” and over 80% saying we are still in a recession. Not surprisingly, they pulled $8.6 billion of cash out of equity mutual funds in the first quarter.Read MoreApr 182012
We hosted the Third Annual ASU Education Innovation Summit in Scottsdale this week with sold out attendance of 800 people, 100 leading innovative companies, and notable keynotes from luminaries such as Michael Milken, Governor Jeb Bush, Chris Whittle, Michael Crow, and Reed Hastings.
It’s an important time to hold the Summit. All’s not well on the home front. Unemployment is 8.2% and when you count the “underemployed,” it’s over 17%. For minorities, it’s much worse.
Of the students that enter 9th grade in America, 30% don’t finish. In large, urban school districts it typically is over 50%. In fact, 2000 of the 15,000 High Schools in America account for over 50% of the dropouts…effectively “dropout factories.”
The likelihood that a high school dropout is unemployed is 2X the normal population. It’s 8X more likely they will be in prison.
The correlation between levels of education completed and compensation is direct…as is the level of unemployment.Read MoreApr 042012
What we have been told by the wise market sages is that “over time, stocks outperform bonds.” Looking at the data since 1926, that is unambiguously correct. Over the past 85 years, U.S. Equities have a real return over inflation of 24,673% and U.S. Bonds have a real return of 651%.
This makes some sense for anybody with a vague familiarity of risk and return—the “riskier” the asset category, the greater the return that would be required to reach investors’ equilibrium. Broadening the asset classes to venture capital, private equity, small cap stocks, and real estate, and the historical returns correspond with risk measured mostly by volatility.
Contrary to the above history lesson, looking at a more modern analysis of asset category returns and we see that it reveals how U.S. Bonds have smoked U.S. Stocks in the past 30 years, 10 years, 5 years, and 1 year.Read MoreMar 262012
I was lucky to have stumbled upon Starbucks in its early days. It was the fourth meeting I had on a rainy Thursday in Seattle and I almost blew it off to go straight to airport and fly home.
The concept of a national chain of coffee bars sounded ridiculous to me and I didn’t even know what a Latte was. I figured I’d make it quick just so I could say that I had at least stopped to see what all the buzz was about.
Upon walking into Starbucks’ offices, you could tell something special was going on. The energy in the air was electric. After I met then 36-year-old CEO Howard Schultz, I became a believer and a MEGA Starbucks BULL.Read MoreMar 182012
The Dogs seemed to like the Dog Food with Apple fanatics—a.k.a., everybody—lined up for the latest iPad. While critics seemed to be mixed on how big a hit the “New iPad” would be, customers were unambiguous.
Responding in kind, Apple’s shares surged 7% for the week and are up 45% YTD. Since the ﬁrst iPad was introduced in January 2010, Apple shares have appreciated 182%. Since the iPhone was announced in January 2007, Apple is up 519%. And from when the iPod came on the scene in October 2001, AAPL shares have appreciated 6,356%.
Reﬂecting how insanely cheap AAPL shares are and how strong the numbers have been, Apple still only sells at roughly 12.1x earnings forecast. Given that’s below the forward P/E multiple for the S&P 500, we think Apple shares are still remarkably inexpensive. Add the $100 billion or so in cash the Company has in a checking account and we are hard pressed to think of a better stock to own.Read MoreMar 112012
This weekend, “Selection Sunday” will be the start of the NCAA Basketball Tourney where ordinary citizens lose their senses and go crazy rooting for whichever teams they’ve selected in their $10 dollar ofﬁce pool. Coined “March Madness” in 1939 by an Illinois writer, it was broadcaster Brent Musburger who made in popular during the 1982 tournament.
While the sour pusses point to the estimated $200 million of lost productivity from employees during the Tournament from watching the games instead of working, spending time bantering online, missing work due to hangovers and depression, most human capitalist think the Tournament is positive for Companies as it boost morale and improves camaraderie.
For sure, people are engaged. In Las Vegas, about $100 million is wagered annually on the Tournament, but this is nothing compared to an estimated $3 billion illegally tossed into ofﬁce pools and the $10 billion bet.Read MoreMar 042012
With more anticipation and frenzy than the Royal Wedding, Facebook will be entering the public markets around the time of Major League Baseball’s Opening Day.
The excitement around the Facebook IPO is justiﬁed by staggering impact this eight-year-old Company has had on society, politics, economics, and just about everything else. Nearly one out of seven people on the planet is on Facebook. If the 845 million monthly active users represented a country, it would be the third largest just behind India.
For some perspective, consider these facts:Read More
- Facebook accounts for 1 out of 5 page views on the Internet
- It generated approximately 60% gross margin and $1 billion of net proﬁts
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