Subliminal Messages on Alphabet’s Home Page

Google knows that sex sells.

Screen Shot 2015-08-12 at 9.55.41 PM

Sort of unrelated: I looked up the WHOIS for It looks like the domain was updated at 10:48 am PDT on August 10, which is probably when it was transferred to Alphabet. It previously belonged to MarkMonitor, who serves as a middleman for domain names (and sometimes squats on domains that might be desirable).

Screen Shot 2015-08-12 at 10.04.14 PM was created at 2:10 pm PDT the same day. That’s some quick work by Microsoft Anonymous Shell Company in New Zealand.

Google on published their blog post announcing Alphabet at 1:41 pm PDT.

Screen Shot 2015-08-12 at 10.14.14 PM

Public Tech Company Valuations are also Bullshit

Most tech companies don’t take stock options into account when calculating employee compensation expenses. Therefore the earnings numbers they publicize are bullshit.



Amazon (AMZN)’s P/E ratio, when calculated using Generally Accepted Accounting Principles (GAAP) is 1192.9. That’s twice as high as any other large-cap stock out there.

Notable exceptions in the tech world include Microsoft (MSFT), Intel (INTC), and Apple (AAPL), which report only GAAP earnings.

See Also:
How Much Do Silicon Valley Firms Really Earn? –Barrons (if you have trouble viewing the page, try grappling hook)

Can Retail Investors Gain Access to Growth Companies?

Last week marked the 10-year anniversary of Google’s IPO. A $GOOG investment on August 19, 2004 would have returned 13x over the decade. Not bad. But a seed-stage investment in Google would have returned 10,000x.

Non-accredited investors never had easy access to early-stage growth companies, but now it is hard for retail investors to even access late-stage growth.

Growing companies are staying private.

Private financing rounds that valued U.S. venture-backed companies at $1 billion or more were four times as common through the first half of this year as billion-dollar IPOs. This is the widest gap on record between venture rounds and IPOs for billion-dollar companies.


The JOBS Act was intended to improve access to the public capital markets for emerging growth companies, but at the same time, the significant increase in the maximum number of shareholders that a private company may have without registering as a public company has given private companies more flexibility in timing their IPOs. As a result, companies are waiting longer to IPO, and are more mature by the time they emerge.

Growth companies can still gain access to capital, but can retail investors gain access to growth companies? Yes.

Sand Hill Exchange

See Also:
1. Google’s IPO, 10 Years Later: Just 10 Stocks Beat It –wsj
2. For Billion-Dollar Companies, Venture Deals Outstrip Going Public –wsj
3. 2014 Wilmer-Hale IPO Report

Don’t Rush the Cash Flow

TWTR crashed 20% last week after Twitter’s earnings report indicated a slowdown of user growth.

The income statement, at first glance, would appear to be a winner – TWTR beat analysts’ revenue expectations by 12%, with reported earnings of 2 cents per share as opposed to the 2 cent loss that was expected.

Silly Twitter. You’re an internet stock, which means shareholders care about user growth, not cash flow. Every last cent should go towards making the fire burn hotter.

Remember, Facebook was founded in 2004 and did not become cash-flow positive until the end of 2009. Google was founded in 1998 and turned profitable in 2001, with the invention of Adwords. LinkedIn was founded in 2003 and probably didn’t become profitable until 2010.

Check out these gross margins:

Quarterly Gross Profit Margins, Dec 2013. Source:
Quarterly Gross Profit Margins, Dec 2013. Source:

Twitter, you have lower profit margins than Facebook, Google, or LinkedIn. If you are coming back with positive net income, you’re doing something wrong. Your cash flow is too strong. Get back out there and lose more money for your shareholders!

But only in the name of user growth, of course.

See Also:
Which Internet Stock is the Most Overvalued? –New Yorker