Author: Mike Lewis

Yahoo! is on it’s way back

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I had pretty much written Yahoo off.  I thought they were dead.  They hadn’t done anything new and interesting for over 5 years.  Their webpages looked like crap.  They were just treading water.  That all changed lately.  Specifically in the past 6 months, they’ve done some things that really make me think they’ll be a player in the future.

First, let’s talk about Flickr.  I’ve always used it as my default photo service where i store all my photos online.  It used to be the best (in 2003-2006) and then it got abandoned.  I still kept putting my photos there because i was locked in, but i knew it was dead.  They added one small feature a year. I had seen that playbook at AOL.  It means it’s only a matter of time before it’s time to leave.  Then something magical happened.  They pushed out a new iPhone app for it that was actually decent.  Then they updated it to make it really slick.  Then they announced 1 terabyte of free storage.  Then they announced automatic iPhone uploads of photos.  Whoa.  All of the sudden, it was one of the best photo apps on my phone.  All in about a 6 month period.

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Second, they released a new News Digest app that is basically The Week magazine but a daily app.  It aggregates 8 to 10 recent news stories and sends them to you twice a day.  Once you’ve read the morning stories, you have to wait for the evening delivery. It’s beautifully made and is really easy to consume.  It’s not the main way I get mainstream news.

Finally, they launched a new Tech site that claims to be different than current tech sites.  The premise being that all tech sites today are focused on the top tier tech enthusiasts and people who care a lot about Silicon Valley.  Yahoo Tech will be focused on the other 90%. People who want to know what the best TV is, not which Palo Alto exec just changed jobs.  I think that’s a great idea.

So, it’s good to have another player back out there.  Someone is building new things and innovating.  I’m excited.  It seems that Yahoo! is indeed earning the exclamation point on their name.

 

Tesla and Continuous Deployment

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I’m thinking about getting a new car. Mostly because i never drive my car, it frequently needs maintenance, and it just sits in my garage depreciating. So, i’d like to have a less expensive, more reliable car depreciating. 

Of course, the car i want is the Tesla.  It has everything a guy could want.  But it’s too expensive and the Tesla SUV (the Tesla X) isn’t available yet.  So, back to the drawing board.  I’ll keep you posted as to what i get around to. 

In the meantime, i thought i’d write a little about why I think Tesla is so great.  One key characteristic is how they release their cars. Most car manufacturers do a waterfall-style release schedule, meaning they do one step of the manufacturing process after another in a linear way:

  1. First, design the car and call it a model name (usually after a year)
  2. Second, produce the car in a factory
  3. Finally, release the car to the public
  4. Then, start the process over again with a different model. 

Most software companies (Kapost included) do it a different way, called “continuous deployment” where you release your product and then continuously update it every day, week and month.  This way you can take customer feedback and immediately make change and improvements for all customers. 

Telsa is doing this too. Their Model S sedan downloads firmware updates on a regular basis.  These software changes go much further than simply changing user interface elements in the dashboard (which is a monster 11 inch touch screen).  Instead, Tesla will modify major elements of the car from the suspension to its acceleration and handling characteristics.  When they found out that people were lowering the height of the car too much on highways resulting in fires from drivers running into debris, they made a quick firmware update not allowing the car to be lowered as much.  

What’s even cooler about doing this continuous release cycle is that Tesla has broken automobiles traditional release schedule.  Rather than waiting a year to roll out a new Model S, they have been continuously improving the product every quarter on the assembly line.  There are no model years to differentiate a Model S in 2012 from one in 2014.  

That’s just one of the reasons they’ll disrupting the industry.  I love it. 

 

YouTube is Huge and Sketchy

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I wrote a few weeks ago a post about just how massive the site is.  I listened to a good interview with Jason Calcanis recently where he shared his experiences working with them as a potential partner.  

The short of it is that YouTube has not been at all interested in accommodating any partners because of their size and scale.  One thing that i found interesting in this talk was just how powerful the future of YouTube is. Some interesting points:

  1. Cash. They have an amazing amount of cash at $50 billion  (Forbes)
  2. Nobody’s in charge. Google is great at this in general.  It is very hard to identify who is setting the direction and strategy for each group and the company as a whole.  Because of this, they can’t be critiqued for lack of execution or for being evil. 
  3. Avoiding Anti-Trust. They can’t buy any large players due to the fear that the government would block it for anti-competition reasons.  
  4. They are copying competitor’s strategies.  These competitors are getting lots of video channels around a niche and selling ads around it.  YouTube is now doing just that and will probably do more. 

The cool part of this is that YouTube could have bought Netflix or something similar.  Thus, they are just going to buy lots and lots of content and put it out for free.  My prediction is that You’ll see NFL and other sports content available there along with full tv shows – and it’ll be SWEET for all of us.  

Things I’ll Remember About 2013

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2013 was an interesting year.  Here are a few of the things I’ll remember about it:

Diane and I bought our first house.  After 3 years in Denver, we moved up to Boulder and bought a nice little house in North Boulder.  It’s the perfect size and location.  It’s close both to downtown (where we work) and the mountains so our commute is nothing and we can walk to the hiking trails.  It’s a huge game changer.

My stint as a single parent.  I’ll never forget the 10 weeks I spent taking care of Hunter.  The baths, the feedings, the walks, the coordinating with the nanny – I got to really understand what it’s like to be responsible.  I really think it’s made me a much better parent now having that experience.  It also made Diane really happy which makes me happy.  I love it when she  shines – there’s nothing better. 

I lost 20 pounds.  During that time with Hunter, i got into a running routine and ate a bunch less for dinner, and as a result i dropped some serious weight. Although i put some back on over the holidays, it was game changing for me.  I feel a lot better both physically and mentally.  I’m still keeping to the 4x a week routine and should be able to keep the weight down to 170-175 (I was at 193)

This past year was a pivotal year for Kapost.  We really grew the business and we hired some incredible folks.  We went from 13 people to 42 and from under 400k in revenue to 1.8MM. 

The Boulder flood was an incredible experience.  Seeing that much rain and what i can do to a town is frightening.  It destroyed our basement but nowhere near what it did to others.  Seeing a rush of water crush down your front door is a nightmare.   Here’s a video of a friend’s apartment building where they all had to be rescued from the second floor. 

Becoming an uncle. I’m so happy for Liz and Mike.  Knowing all the crap they went through to try to have a kid, then to finally get pregnant, then to have such a beautiful girl come into the world – I’m so happy both for them and for me.  It’s really fun having that girl around and i can’t wait for Hunter and Reagan to become friends. 

Those are the things that pop out in my mind in 2013.  Here’s to a great 2014!

 

Happy Holidays: My Holiday Reading

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I did a lot of couch reading this holiday and as a result found some good stuff on the interwebs and thought I’d share…

1. The Paul Rudd & Conan video

Paul Rudd has been going on Conan O’Brien’s show for 20 years.  Each year he brings a clip to promote a new film. Apparently, every time he brings the same video clip every time. Here’s a video showing all of them. This is pretty hysterical. 

2. Bill Gates’s Good News of 2013

Here’s a post from Bill Gates about the good things that happened this year. Gates is out there solving real problems and he has such a unique perspective of how things are improving on a global level. This is worth reading.  For instance, he lets us know:

Half as many children died in 2012 as in 1990. That’s the biggest decline ever recorded. And hardly anyone knows about it! 

3. Billy Joel at MSG

Billy (now age 64) hasn’t released a record since 1993 and hasn’t toured since he wrapped up his last gig in 2010, but he’s still changing the music business. He recently signed a deal with Madison Square Garden to play a concert there every month. A good article in businessweek.

4. Maria Bello’s Modern Family

I’ve always loved Maria Bello as an actress.  She has an interesting personal life too. She’s penned a good essay in the NYTimes about her children and romantic situation.  It’s good and worth a read.

   

5. NYTimes and New Yorker vs. Buzzfeed and Gawker

The online advertising world is changing.  Sites like Gawker and Buzzfeed are grabbing lots of traffic and some good ad dollars.  This article looks at how publications that try to be more exclusive (and thus have less traffic) are trying to compete.  Hint: it’s not going to work out well for them. 

6. Be Nice to Cats

We have two cats and love them (most of the time) and I loved this video of a mean old woman getting karma right in the face.

7. Pregnant Virgins

Here’s an Interesting study here of 8000 women about how they got pregnant.  Almost 1% of them said they got pregnant with no men involved (and no in vitro or other reproductive technology).  Here’s to immaculate conception.

Happy Holidays everyone.  (note: if you want to regularly get my links, follow me as @MikePLewis on twitter)

Let’s Talk about Bitcoin

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There are a lot of talking and articles about what the price of bitcoin is these days.  These drive me nuts.  They are missing the point completely.  Here’s why…

First, i like bitcoin because it’s a technology. If you ask anyone who knows about technology, they love bitcoin (see here).  It is because bitcoin is first and foremost a protocol.  It has the potential to be the transaction and financial protocol for the entire internet.  This doesn’t exist now.  There hasn’t been a layer of internet infrastructure that was global, distributed, and not owned by any one person or company for payments.  This is a technology-based architecture that looks like TCP/IP or HTTP. It can be fundamental to the internet.   This is why investors and entrepreneurs are gaga about it.  It can be used (and will be used) to create applications on top of and we’ll see payments and money flow on the internet in the same way we see content, images and everything else flows on the internet.  It will not be controlled by any one company like PayPal or Visa and money will be unlocked. 

What’s also really interested about the protocol is that there is a ledger (called blockchain) that is global, distributed, peer-to-peer that exists on every bitcoin wallet so that every bitcoin transaction clears publicly.  

Second, I like bitcoin because it can be a currency.  I want to pay for stuff using bitcoins and i’m way less likely to do this if the price is $300 one day and $1200 the next.  I need it to be stable. I don’t want to “invest” in bitcoin, i want to use it.  I don’t invest in US dollars, i use them.  I want to do the same with bitcoins as i believe that this is the future of it.  So, please stop treating it like a commodity (like gold). 

I’m still getting used to it and i’m excited to see what applications are built to use it.  I’ll be out there testing them

Nelson Mandela: A Great Man

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“He’s actually the rare revolutionary who actually sees the revolution through” – Nader

I was sad to hear about Nelson Mandella’s death today.  He was an amazing person.  Some history about him….

Born into a traditional Aftrican tribe, he was sent to boarding school. In his spare time, he studied to become a lawyer so that he could protect blacks. Work as a lawyer strengthened his feelings against apartheid (which segregated and discriminated against blacks in South Africa).

He joined the African National Congress (ANC), which, at the time, was polite to the government. Soon Nelson Mandela had persuaded the ANC to use boycotts and strikes against the government instead of being polite. He was arrested for civil disobedience, and was not allowed to attend gatherings.

After a massacre, Nelson went underground and created the MK – a military portion of the ANC. He launched a sabotage campaign. On his return from Algeria he was arrested for going between countries without a passport, and was tried for sabotage and attempting to overthrow the government. He spent the next 28 years in prison.

While Nelson was in prison he was offered freedom if he would stop his violent actions. He refused this offer.

In July of 1991, Nelson Mandela was appointed President of the ANC. Nelson decided to join the government and other parties to negotiate South Africa’s future. Finally everyone came to agree on a majority rule constitution. This constitution states that racial discrimination it is against the law.

In 1993, Nelson Mandela shared the Nobel Peace Prize with F.W. de Klerk for dismantling apartheid, and in 1994 he became the first democratically elected South African president.

He was quite a guy and truly shows how one man can make a difference in this world.  Well done Mandela.

 

Siri and the Digital Natives

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I wrote a post a few years ago about cognitive surplus and how we’re all doing more and more stuff on the web.  One of the stories in that post was: 

I was having dinner with a group of friends about a month ago, and one of them was talking about sitting with his four-year-old daughter watching a DVD. And in the middle of the movie, apropos nothing, she jumps up off the couch and runs around behind the screen. That seems like a cute moment. Maybe she’s going back there to see if Dora is really back there or whatever. But that wasn’t what she was doing. She started rooting around in the cables. And her dad said, “What you doing?” And she stuck her head out from behind the screen and said, “Looking for the mouse.”

Here’s something four-year-olds know: A screen that ships without a mouse ships broken. Here’s something four-year-olds know: Media that’s targeted at you but doesn’t include you may not be worth sitting still for. Those are things that make me believe that this is a one-way change. Because four year olds, the people who are soaking most deeply in the current environment, who won’t have to go through the trauma that I have to go through of trying to unlearn a childhood spent watching Gilligan’s Island, they just assume that media includes consuming, producing and sharing.

This was 5 years ago.  Since then we’ve had some new technology advancements – such as Siri and voice search.  I’m seeing the impacts of this on my 1-year old (Hunter) every day.  

Both my wife and i have iPhones and we  regularly use Siri to compose text messages as we frequently have our son in our arms and no hands free.  As a result, he thinks this is just the way you interact with phones.  Check these videos out: 

 

These kids are definitely going to have a different experience with technology than the rest of us.  It’ll be fascinating to see.  

Growth vs. Profitability and Kapost

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One of the more interesting learnings I’ve learned at Kapost is what makes SaaS business models work. Related to that I often get the question asked to me, “How is Kapost doing? Is it profitable yet?” implying that if it isn’t, things are bad and if it is, then things are good.  This post is an attempt to address that question.

When talking about a company’s performance, I’ve noticed that you have to talk about both its growth and profitability, and discussing just one in the absence of the other is dumb.

I recently did a post comparing Salesforce and Linkedin.  You’ll notice in there that neither company is profitable yet both are worth over $30 billion dollars.  LinkedIn makes a $1 billion a year in revenue, whereas Salesforce does $1 billion a quarter ($4 billion a year).  Why are they worth the same?  Because LinkedIn is growing at 60% a year whereas Salesforce is growing at 30%.

To investors, companies are worth what their cash flow is going to be in the future – not what it is now.  That’s all they care about.  If they think the cash flow will be huge, the company will command a huge valuation.

Let’s take Amazon.com as an example.  They have had no profits for years, yet it’s currently worth $166 billion.  One analyst even jokes about it, writing:

With every Amazon quarterly earnings call, my Twitter feed lights up with jokes about how Amazon continues to grow its revenue and make no profits and how trusting investors continue to rewards the company for it. The apotheosis of that line of thoughts is a quote from Slate’s Matthew Yglesias earlier this year: “Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers.”

The point here is that you need to understand why any company is not profitable. In the case of Amazon, it is making huge investments in warehouses to grow its retailing business and huge investments in data centers to grow its AWS business. It could stop making those investments and start generating profits. But doing so will sacrifice growth in the market they current work in.  Amazon’s doing $70 billion in revenue this year and did $34 billion in 2010.  Here’s Amazon’s revenue since 1996:

That’s doubling in 3 years.  That’s pretty amazing.  I’m sure it’d be worse if they were focusing on profitability.

What does this mean for Kapost?  Kapost has established itself as the market leader in content marketing software and hit profitability early in 2013.  However, we desired to grow and grow quickly.  Thus, we raised a round of funding and are using the those funds to accelerate our growth.

Why can’t we grow organically with our profits?  

The way SaaS businesses work is that they face significant losses in the early years because they have to invest upfront to acquire customers, but they recover the profits from that investment over a long period of time (the life of the customer).  What’s somewhat strange for people to understand about SaaS businesses is that the faster the business decides to grow, the worse the initial losses become.

For example, imagine a world we you spend $6,000 to acquire a customer, and then charge them $500 per month.  For one customer, you’ll get the money back after a year, but you need $6k up front first to get them.  And, if you want to grow faster and get even more customers, you have to spend even more money.  The graph below shows that the more you spend, the better the rate of growth is.

This is why Kapost did another round of funding.  Going forward, as long as we’re accelerating the rate of revenue growth, we’ll always be needing more money and more money that we’ll need to fund that growth.  That is, unless we don’t want our rate of growth to increase.

Now, of couse, profits are critical to the health of a business.  The key is to be able to be profitable if we want to be and to be profitable at some point in the future, at least hypothetically. So, when you hear that a company is losing money, don’t read that as a necessarily bad thing. It could be a very good thing. It all depends on why.

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Notes: Here are some good posts on this topic that helped me out:

  1. David Skok is awesome.  I stole his graph and a lot of his thoughts.
  2. Wikivest
  3. From Eugene Wei’s blog
  4. From Fred Wilson’s blog