Meerkat

Why Meerkat and Periscope are the Biggest Breakout Hits of the Year

Periscope

Our phones are GoPros, thanks to Meerkat. —Semil Shah, overpaid blogger. March 15 2015.

When did the media turn into sales catalogs for shit made by rich people?

Meerkat was never cool. Even at its peak its highest ranking on the US iPhone download chart was 140. Periscope isn’t cool either. Even with Meerkat’s $12M Series A and Twitter’s marketing budget, these are apps that underperformed your average Croatian Flappy Bird clone [1].

Everyone is building their own brand, and the more you pander to the rich and powerful, the closer you might get. Maybe someday they’ll let you touch their hair.

As if being rich makes you smart or infallible. Remember how stupid Andreessen and Doerr and the Google guys looked with their idiotic Google Glass? The tech elite wanted it to be a hit so bad.

You look like tools.
You look like tools.

Secret will change communication. Yo is the future of your homescreen. Ello will kill Facebook.

Spouting nonsense is easy. Maybe a TechCrunch editor can do a story about how much of their content has been pitched. Or maybe they can disclose which VC funds their founder has invested in.

But they’re too busy tweeting and blogging about live-streaming selfies as the next big thing.

Great, our phones are now GoPros. Morgan Stanley analysts tried to GoPro themselves doing company research [2]. They learned that their lives are boring and they made a horrible career choice and they should just kill themselves.

And the live-selfie-streaming celebrities are boring too, because 99% of life is boring no matter how rich you are.

The tech reporters will keep trumpeting everything made by people with money — every venture-backed app is great until someone checks the download charts and finds out they’re shit. But it’s okay, you’ll get a free pass. Rich people always do.

Not your life
Not your life

References:
1. Meerkat is dying – and it’s taking U.S. tech journalism with it
2. Morgan Stanley Analysts Try GoPro, Discover Their Lives Are Boring –WSJ MoneyBeat

Liquidity Causes Bubbles

meerkat-app-tweet-live-video-twitter

A shitty app called Meerkat is raising money at a $50M valuation. Perhaps the only thing keeping it from being priced at a billion is the fact that the herd can’t come charging in. Restricted demand.

A market bubble needs a propagating mechanism, a process by which new investors are attracted into the market to keep the price momentum going (on the way up) and existing investors are induced to flee (on the way down). [1]

Liquidity also results in burst bubbles. As long as no one can sell anything, the price will never go down. In an illiquid market, Meerkat will sit on its last-traded price forever. I’m not sure if that’s a good thing, but in theory that means the bubble doesn’t pop.

Aswath Damodaran is a little late to the Hate-on-Mark-Cuban game, but he makes a very important point: Mark Cuban became a billionaire by creating a crappy internet company in the 90s. Broadcast.com was a negative-profit company that put local radio stations on the internet, and Yahoo bought it for $5.7B at the height of the dot-com bubble.

Mark Cuban thinks this tech bubble is worse than the last one only because he’s not profiting off the excesses this time.

If Cuban is serious about staying out of bubbles, he should look at the largest investment in his portfolio, which is in a market where prices have soared, good sense has been abandoned and there is very little liquidity. In a market where the Los Angeles Clippers are priced at $2 billion and the Atlanta Hawks could fetch a billion, the Dallas Mavericks should go for more, right?

This bubble is even better than the dot-com bubble.
This bubble is even better than the dot-com bubble.

References:
1. Illiquidity and Bubbles in Private Share Markets: Testing Mark Cuban’s thesis! –Aswath Damodaran

2. Caginalp, Gunduz and Porter, David and Smith, Vernon L., Overreaction, Momentum, Liquidity, and Price Bubbles in Laboratory and Field Asset Markets. Journal of Psychology and Financial Markets, No. 1, pp. 24-48, 2000. –SSRN