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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

Silicon Valley is the New Wall Street

Once upon a time, Silicon Valley was a safe haven for socially subpar tech people. They lived in humble garages in the South Bay and built cool things for the sake of building cool things. The transistor. Apple I. Netscape.

Google HQ, 1998
Google HQ, 1998

The world loved the cool things they built. The geeky kids of Silicon Valley made money, lots of it.

Then the beautiful people showed up. MBAs and smashmouth capitalists. They wanted to build cool things too. Not for the sake of building, but to make money. They didn’t live in garages, because beautiful people don’t hide in garages. They live in high-visibility metropolises at the top of the peninsula.

More than 1,200 of Google’s 47,500 current employees formerly worked for one of the top 10 global investment banks, according to LinkedIn. The top banks also incubated at least 750 current Apple employees, 175 Facebook employees, and 260 Yahoo employees. Travis Kalanick, chief executive officer of the ferociously expanding Uber, has said that between 10 and 15 percent of his hires come from the financial services industry, with a full 5 percent coming from Goldman Sachs alone.

The new businesses don’t make users fall in love with their products. They churn out slick consumables that evoke the emotional connection of a quick handjob in a truck stop bathroom stall.

The Valley really is not so different from Wall Street. The core business model involves gambling with rich people’s money under the guise of wealth management. The startup founders, they’re just junior traders. They work 14-hour days and spend $2000 a month to carve out some sleeping space in a shared building.

Occupy Twitter
Occupy Twitter

And sooner or later, something will pop and the money will vaporize, because that’s what happens when everyone gets greedy. The Wall Street immigrants will return home, the San Francisco natives will get their rent-controlled apartments back, and it’ll only be a matter of time before the next hot spot emerges.

busillo

See Also:
Go West, Young Bank Bro –SanFrancisco

How to Get Lucky

The House that Jack Built... with MONEY
The House that Jack Built… with LUCK (and money)

Last month, Howard Marks of Oaktree Capital gave Jack Dorsey a good load of crap for claiming that there was no luck involved in his path to success.

Success is never accidental. No accidents, just planning; no luck, only strategy; no randomness, just perfect logic. –@jack

Marks points out that Dorsey would have been unlikely to found Twitter had he been born in Bangladesh. But clearly it was Jack’s awesome strategic planning skills that arranged for him to be born in the United States.

Aside from the circumstances of birth, there is an easy test to determine if success in an activity should be attributed to luck or skill: Ask if you can lose on purpose. If you can lose on purpose, then there is skill involved [1]. It would be hard to intentionally lose at a craps table (betting strategy notwithstanding).

Can a person intentionally fail at building a billion-dollar company? Of course. And that is because luck is a skill.

Given the role that luck plays in startup success, it should be considered the most formidable skill of all. Here’s how to improve on it [2]:

    1. Maximize Your Chance Opportunities. Be open to diverse people and experiences. Your lucky break isn’t going to find you in your cubicle.

    2. Listen to Your Intuition. It’s usually right, and shortens your deliberation time.

    3. Expect Good Fortune. Having positive expectations makes you attempt more things and persevere more. And if you act positively, the world reacts positively. That’s one of Newton’s laws.

    4. Turn Your Bad Luck Into Good. Because luck is a skill, any bad luck that arises is a result of something you did. Learn from it and move on. Time spent feeling bad is time spent being unlucky.

Just like Jack Dorsey, I had the incredible foresight to be born in the United States. That makes me luckier than 98% of the other humans on the planet. I managed to not come out mentally retarded or disfigured. Not excessively so, anyway. I think that puts me in the top 1%. This is a very good bet.

I am also clearly very stupid, so it is another testament to my luck that I haven’t ended up dead. I’ll list this alongside my credentials in the team’s executive summary.

What am I doing sitting at home writing code, anyway? I should go to Vegas and get lucky.

See Also:
success equation luck factor

1. Michael Mauboussin. The Success Equation: Untangling Skill and Luck in Business, Sports, and Investing. 2012.

2. Richard Wiseman. The Luck Factor. 2004.

Don’t Rush the Cash Flow

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

twitter-fail-whale.top

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

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