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Category: Silicon Valley

The Winds of Change

The Winds of Change

In case you missed it, The five biggest tech stocks lost nearly $100 billion in value on Friday. It was decidedly not a good day for FANG (Facebood, Amazon/Apple, Netflix, Google) stocks, now called FAAGM, although we prefer AGFAAM (Alphabet/Google, Facebook, Amazon, Apple, Microsoft) – rolls better off the tongue (NOTE: Netflix was left out of the original FANG in the Goldman Sachs report released on Friday, “since its impact on the S&P 500 is still too small). As CNBC noted, “Facebook, Apple, Amazon.com, Alphabet, Microsoft all fell more than 3 percent Friday as investors rotated out of the stocks. The group has been the market’s leaders and is behind about 40 percent of its performance this year… While they may be loved, today’s tech darlings aren’t without potential flaws…During the bubble, the five largest tech names were trading at almost 60 times two-year forward earnings, with the cheapest stock trading at 36 times. Now FAAMG trades at 23 times forward two-year earnings with only one, Amazon, over 30 times.”

Walter Mossberg refers to them as the “Gang of Five.”

What was not said, and attention must be paid: the stock market, especially tech stocks, have been overheated/overvalued for quite some time, and we all do well know that what goes up, must come down. At some point. And as soon as the valuation of a sector – especially tech – at least somewhat begins to right itself, it isn’t long before the word ‘bubble’ is top of mind once again. Read More...

How to Defy the Laws of Time and Physics – And (Sometimes) Common Sense

How to Defy the Laws of Time and Physics – And (Sometimes) Common Sense

We were recently asked to give a brief history of the early days of tech in New York. Given the speed of tech, it’s not all that easy to condense even a relatively short cycle into a brief presentation, especially considering internet time: a lot happened quickly, and all at once.

It did, however, strike us that many of the ideas that have made for successful – and not so successful – Silicon Valley companies today were first developed in New York in those early days. We had social networks – Six Degrees, theglobe.com, iVillage – two of which were acquired, while the third (theglobe.com) not only went public, but posted the largest first day gain of any IPO in history up to that date – then crashed spectacularly when the dot com bubble burst.  What also struck us was the on-demand economy. We did have that back then, too, so nothing new and again, what man cannot remember he is doomed to repeat.

In the days of Web 1.0, there was a company called kozmo.com, an on-demand delivery service that promised free one-hour delivery of “videos, games, dvds, music, magazines, books, food, et al, and they would even deliver a pack of chewing gum at 2 am, if there was a call for it – literally. They raised money and lots of it: $250 million, according to Wikipedia, and they burned through lots of it as well: According to documents filed with the Securities and Exchange Commission, in 1999 the company had revenue of $3.5 million, with a resulting net loss of $26.3 million. They, too, spectacularly dot bombed. Read More...

SiliCon Men

SiliCon Men

Now, that’s a book we’d like to see written and we do want credit for the title.

Dan Lyons put Silicon Valley’s bro culture back on the radar, and speaking of bro culture, Alicia Syrett (Pantegrion Capital) once referenced an article where two identical resumes were submitted to a hiring manager, one under a male name, the other under a female name. The hiring manager opted to meet with the male. Reason: he had stronger, more relevant experience.

What to speak of the fact that Men With 2 Years of Work Experience Earn More Than Women With 6. Read More...

Crimes, Misdemeanors – and Business As Usual

Crimes, Misdemeanors – and Business As Usual

Move fast and break things. Do more faster. These are the mantras that the tech industry, particular those in Silicon Valley, cut their teeth on. Competition is fierce and timing (first to market) – and perception (category killer: think Google and Facebook) – is everything. So is it a wonder that Uber has drawn so much scrutiny and criticism for its practices lately? On all fronts, it seems.

“Has Uber Gone Too Far this Time? Is Uber involved in a Smear Campaign,?” asks Michael Spencer on LinkedIn, referring not only to former Uber employee Susan Fowler’s blog on the sexual harassment she encountered at the company, which was not unique to her but instead, fairly widespread in Uber’s frat boy culture, according to Caroline Fairchild on LinkedIn.

Then there’s the Google patent infringement lawsuit, which is alleging that Uber is using stolen technology which it acquired through its purchase of Otto, to advance its own autonomous-car development (A Stray Email Caused Google’s Waymo to Sue Uber and Otto Over Stolen Tech). Read More...

The Things We Think and Do Not Say

The Things We Think and Do Not Say

This past week, not unlike Jerry Maguire, Mark Zuckerberg issued a mission statement, with some 5700 words on the goals of Facebook. To refresh your memory, there has been some speculation of late as to whether or not the Facebook founder is preparing a presidential run, presumably in 2024, but now it seems, he has decided that, instead, he wants to rule the world. According to Mashable, with his manifesto, Mark Zuckerberg just said he wants Facebook to save the world. Same difference.

Facebook has certainly been under the microscope lately. Between the so-called fake news (we say ‘so-called,’ as while Macedonian teenagers might have posted misinformation, news sources that don’t necessarily follow lock-step with the world view of the Silicon Valley/global elite were also conveniently lumped into this category and even the ethics of Facebook’s chosen outside fact-checkers are called into question) and streaming suicides, murders and gang rapes, Facebook has become a veritable online Roman Coliseum.

As Zuckerberg discusses the evolution of peoples from tribes to cities to nations, he’s no doubt considering that that’s the progression of Facebook as well, which is in parallel to the global community that Silicon Valley would like to see, with national boundaries as a leftover of a bygone or disappearing era, and isn’t Facebook, after all, a global community without boundaries? The social network does not suffer under the inconvenience of national barriers. Read More...

The New Pathway to Exits

The New Pathway to Exits

Silicon Valley is fond of exits – isn’t a meaningful exit the dream and endgame of every investor and entrepreneur in tech? You have to admire – or shake your head in total disbelief at – Silicon Valley, when it comes to what they’ve managed to accomplish: namely, disrupt a number of industries, as well as the basic principles of economics and business, to get to those astronomical exits, whether or not they were real, or just so much smoke and mirrors.

When Twitter launched in 2006 and started picking up steam after its debut at SXSW the following year, they had no revenue model, but the company’s investors assured us that there would be a revenue model by 2009. Then came the IPO in 2013 and, as The Wall Street Journal noted, “The San Francisco-based company raised as much as $2.1 billion and ended the day with a market capitalization of about $25 billion. That made the six-year-old company bigger than more than half of the firms in the S&P 500 and larger than well-known brands such as Kellogg Co. and Whole Foods Market Inc.”

That was then and this is now, and the company is now worth well under its IPO price and as Bloomberg News notes on the eve of three-year-old Snap going public, Snap’s IPO to Be Haunted by Twitter and GoPro. As MarketWatch warns, Snap’s cost of revenue has exceeded sales for two years, and could grow more. Which is Silicon Valley newspeak for the company is losing money, in case you’ve never read George Orwell’s 1984 and evidently, we don’t know what the hell they’re teaching out there. As for Twitter’s revenue model (what to speak of the fact that the company is hemorrhaging users), we’re still waiting. Read More...

The Founder’s Guide to the 2017 Investing Landscape

The Founder’s Guide to the 2017 Investing Landscape

Esther Dyson hit it spot on when she said that there are too many entrepreneurs out there, and way too many who don’t know the fundamentals of how to work and/or build businesses properly. Many young entrepreneurs have never worked for a company, or may have worked briefly for a startup that may or may not have gotten traction/funding, and that’s not the same as working for a company that is not dependent on funding – nor are you likely to learn the fundamentals of building a true, sustainable business that way.

We talk to investors all the time and count some as being among our closest friends/longest-standing acquaintances, and they tell us things – provided that they’re shared anonymously – that they would not ordinarily share with entrepreneurs. We’re going to share some of that information with you here and, for the record, with the prior consent of those investors, and a special thanks to Veronica Guzman of WAM Ventures, who did give us permission to mention her name, for her comments and insights.

Many founders – especially first-timers – believe that pitching to investors is a panacea. Note to self: we do attend many accelerator demo days and one investor recently told us that he was writing checks to companies he had met through the accelerator, which is why he goes to demo days: to suss out good companies. Mind you, he was writing those checks to companies he had met through the accelerator three years prior, and not that day. He had been keeping a watchful eye on them, and now that they were ready (meaning, had traction/customers/sales), he was all in. A company that has nominal revenues and has only been in business a few months is asking for major disappointments, if getting funded is their goal at that point, another investor recently noted. “Advisors are telling them to pitch angels this way,” Veronica noted. Read More...

The Innovator’s New Dilemma

The Innovator’s New Dilemma

It has been 10 years since the iPhone first appeared, and when it did, people frankly didn’t know what to make of it. . According to Quartz, “When Steve Jobs stood on the stage 10 years ago today at the MacWorld Expo in San Francisco’s Moscone Center, he started out by saying he was launching three new devices: “An iPod, a phone, and an internet communicator.” In fact, of course, they were a single device—the iPhone, which would lift Apple’s fortunes to unprecedented heights.” Of course, it was so novel, to many it was also the Blind Men and the Elephant.

Then there’s the new innovator’s dilemma, wherein one can innovate just so much, before one is in danger of running out of ideas, in which case, it’s a long-standing tradition in Silicon Valley to simply steal from a competitor, as in the case of Instagram Stories (Instagram’s shameless Snapchat knockoff is doing marvelously well) “Instagram Stories closely mimics Snapchat—users can broadcast short videos to their followers, which disappear 24 hours after getting sent out,” says Quartz. “Upon its launch, Instagram CEO Kevin Systrom said he felt no shame about playing the role of copycat. In an interview with TechCrunch at the time of its launch, he admitted that Snapchat “deserve[s] all the credit” for the concept, adding that copying ideas remains somewhat of a tradition in Silicon Valley. “Gmail was not the first email client. Google Maps was certainly not the first map. The iPhone was definitely not the first phone. The question is what do you do with that format?” Systrom said.”

The iPhone may not have been the first mobile phone, not was Facebook the first (essentially) phone book, but it was not a copycat. If there was one thing that Steve Jobs could do brilliantly, it was to think outside of the dispenser. With larger companies swooping in and literally stealing ideas from smaller players, is it game over? Even the iPhone is losing market share, as we’ve mentioned previously. Read More...

The Emperor’s New, New Clothes

The Emperor’s New, New Clothes

The establishment of any new Industrial Age always brings with it the loss of jobs, or a shifting of them, at the very least, and technology is no exception. But the tech sector did come up with an ingenious solution for certain people who found themselves somewhat disenfranchised or in need of some quick cash: the sharing economy, which gave us the Taskrabbits, Airbnbs and Ubers of the world. Task-related solutions are one thing, but when it comes to a platform like an Airbnb, which enables one to rent out one’s abode for short term stays and a bit of dosh and which has blossomed into quite a cottage industry (pun unavoidable), it can become somewhat of a more thorny issue, and it’s not only due to regulations in certain cities around the world (Airbnb’s plan to compromise with cities as regulatory challenges pile up).

Tech has always had a bit of an ‘us versus them’ brashness to it, and again, Airbnb is the perfect example, disrupting the hospitality industry – and rental market – in ways that the founders, who started by renting out an air mattress and hence the name, had not foreseen. But given technology’s (and its investors’) insatiable appetite for more, more, more, at this stage in the game, as technology and platforms outgrow the startup phase and become seven- and eight-figure businesses, buyer – or renter – beware: it’s only ever really a matter of time before our so-called fellow conspirators become ‘them.’

According to Quartz, Airbnb is no longer the nice guy of the sharing economy. “For almost a decade, Airbnb has stuck carefully by that message, while maturing from a scrappy startup into the world’s fourth-most valuable private tech company. On paper, Airbnb is worth $30 billion, as much as Marriott International, the world’s largest hotel chain. At the same time, the company brands itself to hosts, guests, and investors as a champion of the middle class.” Read More...