Happy Holidays: My Holiday Reading

Posted on

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

Posted on

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

Posted on

“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

Posted on

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

Posted on

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.

———

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

 

 

YouTube and Walmart

Posted on

I recently read a post about advertising on online video.  It’s a good post but probably too detailed for most people.  One thing in the post that stuck out is how big Walmart is and also how big YouTube is.  It got me thinking.  Pretty interesting stuff about two behemoths of our time.  Here are some details: 

Walmart is ginormous: 

  • 8% of every dollar spent in America is spent at Walmart  
  • They have more than 4,000 locations and sell more than $34 billion / month.
  • If Walmart were a country it would be the 19th largest in the world.

YouTube is also huge:

  • 1 billion monthly uniques hit the site
  • 40% of the online population uses YouTube every month
  • 6 billion hours of watched video a month. That’s enough for every human on earth to watch 150 videos a year. 
  • 63% of all videos watched in the US are on YouTube

 

The point of the article is that if you’re in the online video business, it’s foolish to try to do anything without thinking about YouTube. Similarly, it’d be foolish for a retailer to not want to sell their product through Walmart. 

 

 

SNL and Wes Anderson’s Parody Trailer

Posted on

Saturday Night Live is definitely hit or miss.  Sometimes they can crush a skit but then the follow that up with 4 skits that aren’t even remotely funny.  That said, i watch every week and generally find myself laughing at least at a few of the skits. 

A recent skit that Diane and I both loved was this Wes Anderson horror movie trailer: 

What’s even better is the guy who created the short blogged the whole thing and talked about how hard it was to mimic Wes’s style – and how hard it is to film a horror movie trailer in the middle of NYC.   Its’ a great read if you love Wes Anderson films.  Makes you appreciate how hard his crazy style is. 

Well done SNL. This is why I’m a regular viewer. 

 

Trying to Reach the Sun

Posted on

Starting a business is hard.  There’s always the fear of failing and when things fail, the idea that it was all your fault and you could have done things better. It’s a shitty feeling.  That’s what struck me about this poem below was it celebrates the accomplishment before the failure.  I often think about the skiing mantra, “if you’re not falling, you’re not trying hard enough.” 

So, to all of you who are trying to reach the sun like Icarus, bless you, and keep on flying…

Failing and Flying

Everyone forgets that Icarus also flew.
It’s the same when love comes to an end,
or the marriage fails and people say
they knew it was a mistake, that everybody
said it would never work. That she was
old enough to know better. But anything
worth doing is worth doing badly.
Like being there by that summer ocean
on the other side of the island while
love was fading out of her, the stars
burning so extravagantly those nights that
anyone could tell you they would never last.
Every morning she was asleep in my bed
like a visitation, the gentleness in her
like antelope standing in the dawn mist.
Each afternoon I watched her coming back
through the hot stony field after swimming,
the sea light behind her and the huge sky
on the other side of that. Listened to her
while we ate lunch. How can they say
the marriage failed? Like the people who
came back from Provence (when it was Provence)
and said it was pretty but the food was greasy.
I believe Icarus was not failing as he fell,
but just coming to the end of his triumph.

Who Would You Invest In? Salesforce vs. LinkedIn

Posted on

I like playing this game.  It’s a game where you have to force yourself to choose to invest between two (arguably) overpriced companies.  I’m been doing it once a year between Foursquare and Quora.  Go ahead and make your vote there.

I read today in a good article about LinkedIn’s business that the two companies LinkedIn and Salesforce.com have the roughly the same market cap at $30 billion (Linkedin lately has cruised past it even more to $32).  So here’s the game: If you had to put 80% of your entire life savings into stock of one of these companies, which do you choose?  A breakdown:

LinkedIn:

  • Current market cap: $32 billion
  • 2013 Q2 revenue: $364 million
  • Net income last quarter: $3.7 million
  • Growth rate: 12% last quarter & 60% over the last 12 months

Salesforce

  • Current market cap: $30 billion
  • 2013 Q3 revenue: $957 million
  • Net Income in Q3: $76 million
  • Growth rate: 7% last quarter & 31% over the last 12 months

I think from these comparisons, you can see that SF is twice the size, but growing at half the rate. If both companies keep growing at the same rate, LinkedIn will be bigger in 5.5 years and almost double the size of Salesforce in 9 years. The market really rewards growth and doesn’t seem to care about profits from newish companies.

Personally, i’m putting my money into Salesforce, but it’s interesting to see how much the market loves LinkedIn.  In my daily work life, i use both. We have all our sales information in Salesforce and can’t operate without it.  All of tools plug into it (Eloqua, Totango, Desk.com, etc.).  At the same time we’re hiring and not a day goes by where i’m not looking at someone at LinkedIn or trying to contact them through that platform.  It’s proven to be invaluable when hiring.  I can see it breaking into new businesses and growing fast.

That said, i can’t see Salesforce being replaced any time soon – and the pricing is much better.  We pay less than $1000 a year for LinkedIn (for the ability to message people) but well over $30k a year for Salesforce.

Who would you bet on?

[poll id=”4″]

 

 

Apple Maps vs. Google Maps: A Rant

Posted on

I recently heard someone talk about what a bad move it was for Apple to release their own Maps app on the iPhone.  I’ve heard this maybe half a dozen times lately and I couldn’t disagree more.  We should all be happy this happened.  Here’s why…

About a year ago when there was no Apple Maps, the situation was this:

  • The default map app on the phone was Google maps
  • Apple had repeatedly been negotiating with Google to have them provide turn-by-turn directions and voice navigation in their app on the iPhone.  Google had turned them down time and time again so they could promote Android phones and claim some level of superiority.
  • Apple had no alternative but to accept that Google was sandbagging their iPhone app

Fast forward to today.  Apple releases Maps which has turn-by-turn directions that are way better than the old Google app.  Google was rendered to be an optional app on phone and because of this fact they stepped up their development efforts and made the Google maps app way better than their previous app.

Today iPhone users have two great options for maps and both options are way better than they had a year ago.  If Apple hadn’t done anything, we’d probably still be stuck with a second-tier version of Google maps.

So, Apple’s probably pretty happy with their decision.  The iPhone mapping capability is at the very least comparable to Android, something they couldn’t claim a year ago.

Ok, i can now go back to work.  Thanks for letting me rant.

May 2015 Update: 

Looking at this latest report you can see that 84% of cell phone users get turn-by-turn navigation while driving.  Looks like Apple made a good call to really shake up the platform to get that functionality in there.

Screen Shot 2015-05-27 at 9.44.41 AM

 

 

← Newer posts

Older posts →