The Attention War

The attention war is in full force.

Netflix reported earnings tonight and a few things stood out to me:

1. Netflix called Fortnite (Tencent) a more formidable competitor than HBO.

2. The billions in cash they are spending

3. Their ability to raise prices.

Until Disney launched a real competing product, Netflix can and should remain all in on spending for content. They will continue to get a pass.

They can and will continue to raise prices and if they have to, create tiers.

The battle for attention in a 24 hour day is thermo nuclear.

As for Netflix raising prices…I.WILL.PAY.MUCH. MORE.

Back in 2016, Ben Thompson wrote that Apple should buy Netflix. IT made sense than and it might make more sense now.

Like the Co-CEO’s at Salesforce, Tim Cook and Reed Hastings would have plenty to do with Reed running Netflix and building out an Apple ‘Core’ premium service,

An Apple ‘Core’ premium service that included music, Netflix and Texture (magazines) would be an attention nirvana package.

Rally Rd

I rarely write about a company or product two posts in a row, but Rally Rd breaks the mold today. They are a special company with dynamic founders and a creative team.

Yesterday morning my partner Gary and I attended the Rally Rd board meeting in SOHO, NY.

The Board meeting went well and the team took us to their new store – at 250 Lafayette in SOHO – for a sneak peak of their new store (it opens to the public today at 1pm).

Rally Rd is an app where you can invest in million dollar works of automotive art (along with a bunch of other asset classes coming soon). ‘The Store’ is their showroom where they display the most interesting of these investments.

Long story short, co-founder and product and marketing lead Rob Petrozzo have done a spectacular job leading the launch of a fast growing app and now a physical store to drive the brand and growth.

Last night, Social Leverage held a small party for friends and partners at the new store. The rare Lamborghini Countach (Countach means wow!) in the pictures below will IPO today and should sell out very quickly at $127/share.

You will have to see the store for yourself to appreciate the vision of the brand and the team, but here are some pictures…

This is Rob:

The store will hold 20 people at a time:

Go Rally Go.

Rally Rd

Today, our portfolio company Rally Rd will be offering their most unique and pricey cars – a 1980 Lamborghini Countach Turbo – $127 per share, 1-of-2 ever made, first time its ever been available to the general public. Initial Offering: 1/17, 1pm ET.

The presale is here.

Try it out and own a piece of a great car.

Momentum Monday – The Waiting and S&P 2,600

As a reminder, Marketsmith (by Investor’s Business Daily) is now a sponsor of the weekly show. All the charts you have been seeing in the videos and will continue to see are from Marketsmith. They are offering my readers a three week trial for $19.95. Click this link if you would like to try it out.

I am in Toronto and Ivanhoff is in Bulgaria.

I went to my first leaf game in 20 years last night. A popcorn is $8 and a beer is $12. I never comment on food prices, but WTF!

Before I get into this weeks episode, the Techmeme team asked to do a short podcast with me on the state of the big tech stocks. It came out well so have a listen.

Onwards…

The markets continue to digest the big oversold rally. The resistance at S&P 2,600 is real!

Here is today’s episode which covers a lot of ground from biotech to enterprise stocks and our Momentum 50 list:

As an extra today, I thought people might also like the 2019 prediction video from Scott Galloway and his partner Maureen Mullen:

PS – This clip of Snoop Dog in the booth color commentating his first hockey game was a classic.

JOMO – The Joy of Missing Out and Sunday in Toronto

I had never heard the term JOMO (Joy of Missing Out) until yesterday, but I like it. Psychology Today calls it the ‘Emotionally Intelligent Antidote to FOMO‘. Have a read.

Ten years ago I would have dismissed JOMO immediately.

Today, I am all about a JOMO lifestyle, though I will always have to battle FOMO because it lurks in my competitive soul and the connected world.

I am in Toronto for a few days.

I spent the day with four generations of my family…my mom, my nieces Jordy, Sammy and Amanda and Jordy’s beautiful baby twins. I love being an uncle. It is one of the only things that has come natural to me. Here are the twins:

Toronto just keeps booming. I was driving my mom to get lunch and we passed by the house I grew up in and my mom told me it just sold for $5.8 million. When they bought the home over 40 years ago, she told me they paid $99,000…which brought on a brief bout of FOMO!

We have two portfolio companies in the city, Joist and Street Contxt. I caught up over a coffee with Blair Livingston, Street Contxt’s founder to talk about the business and his vision as he enters year 6 of building a company and business focused on ‘Intelligently Connecting The Capital Markets‘.

I took two Sunday pitches in Yorkville from founders with great backgrounds and ideas.

I had dinner with a best pal Adam Ochshorn and Matt Golden (my friend and best Venture Capitalist in Toronto), which was so much fun.

Hotels Tonight offered up this great deal at Anndore Hotel which turns out to be a great refurbished Comfort Inn. Worth trying if you come to Toronto. The restaurant downstairs is called Constantine and it is a world class Mediterranean food experience.

A great Sunday.

Open Source Software – An Undeniable Megatrend

A lot of the companies we invest in at Social Leverage rely on open source software.

A lot of these same companies contribute their code to the open source libraries for others to use.

I follow public market companies like Elastic and MongoDB that are open source companies. IBM just paid $32 billion for Redhat (3 times sales). I owned Mulesoft early in the year which was acquired by Salesforce for $6 billion.

This trend towards open source software companies is covered really well by Mike Volpi in this TechCrunch piece . Mike is a co-founder of Index Ventures and before that Chief Strategy Officer at Cisco.

I had to read it a few times myself and plan to come back to it and other pieces by Mike has written over the years. It is amazing how certain people just see the future by looking at code.

Have a great Sunday.

PS – CB Insights has a lot of FREE and easy to follow, high level research on technology trends

Moments of Truth and What The Playbook Says Happens Next…

We all face moments of truth.

As I get older and as little more comfortable with life, my moments of truth are mostly about helping others get past and through their own moments of truth.

When I am in Phoenix, each of my road bike rides has a few miles where I just can’t avoid traffic. I have to be extra focused. I don’t dread them or get excited…I just know they are extra risky.

Like people, companies and markets themselves face moments of truth.

The markets right now are facing one of these moments. Take a look at this chart of the S&P:

The sellers overwhelmed the buyers as December started. That set in motion a waterfall selloff (codenamed ‘glitch’ by Fat Nixon).

We have now gotten the ‘oversold’ rally that the textbooks say you get after a panic.

The markets are at a moment of truth. They will roll over in this area or start to eat through this technical resistance at the points of the breakdown.

It’s not just fundamentals and math…it’s human behavior.

Technically, the odds are we roll over before we make another attack at these levels. Fundamentally, nobody really knows.

Charlie has a great post walking through probabilities based on all the data we have at moments like these.

Time will tell all.

You have to love the game.

Me and Lupe Fiasco…Also Bezos and WeChat and Vaping

I had a fantastic two days seeing great founders and friends at CES in Las Vegas.

Last night Mike Katz (founder of mParticle) invited me to dinner and sat me with Lupe Fiasco. I had no idea who Lupe Fiasco was (my son Max does and gave me some cool points when I sent a pic), which is probably why he was willing to sit with me in the first place.

Turns out Lupe has a great sense of humor and by the end of the night I let him take a picture with me. Now I am digging into his Wikipedia page and music.

Onwards

The jokes are flying regarding the Jeff Bezos’ divorce. This chart was very creative:

I could not help myself and tweeted this:

There are rumors also about Amazon going much bigger into gaming. That totally makes sense because of the market size of gaming (huge), their Twitch property and of course Prime.

This NY Times piece on Wechat is fantastic (I am long Tencent).

Finally this piece on Juul is a really great read.

Is The Seed Stage Market Being Neglected?

Fred Wilson shared some research that shed some light on some changes in the private markets. The gist:

2018 saw the venture capital business moving to larger and larger deals. There were roughly 200 deals around the globe in 2018 where $100mm or more was raised.

And yet the number of total transactions declined slightly from 2017.

This trend is much more obvious if you look at the six years from 2013 to 2018. Total deal activity has increased less than 10% while total capital investment has almost tripled.

These trends are unsustainable. It is certainly attractive to de-risk by moving upstream to invest in more mature companies, larger rounds, etc. But if we don’t reseed our fields there won’t be as many of those mature companies in the future.

At the moment, it is not fashionable to do what we do at Social Leverage, but like Fred says, I am certain that it will continue to be profitable.

What If We Bottomed?

Last month in the heat of the crash/decline I shared a chart in a post titled ‘What Could Go Right‘.

The markets bottomed 10 days later and we have had a great rally.

Ryan pointed out something rare technically:

The last time the McClellan Oscillator went from -80 (super oversold) to +80 (super overbought) within two weeks?

March 2009.

It just happened yesterday.

I remember exactly where I was March 2009 (buying stocks on the beach). We were coming to the end of a brutal bear market and it was the beginning of a great run for stocks.

In yesterday’s ‘Momentum Monday’ a lot of software names were at or near all-time highs.

Today some new names popped up on my list in biotech and consumer tech.

The December ‘glitch’ in stocks is becoming the January ‘itch’ for stocks.

Fine with me.