Last week was a BIG week for technology, the web and markets. Whenever this happens, there is a lot of confusion.
Tying all three together is our government. The policy is to keep rates LOW. Love it or hate it…it’s policy – so that is the backdrop. Prices are very distorted today and if you want to invest in the market – value or momentum – you need to know the macro and big picture. Interest rates and bonds drive markets. LinkedIn, Facebook, Zynga are monetizing the macro backdrop after building great businesses. This is NOT their fault. It’s part of the new distorted business cycle that has more needles in it than season one of the Wire ( I [email protected]#^king LOVE The Wire).
As Andy Kessler wrote in his latest and always great Wall Street Journal piece :
So what are these companies worth? I like to use a 10 times rule. If a company is worth $10 billion, can they someday, any day, make $1 billion in profits in one year? If so, maybe it’s worth holding on to. Can LinkedIn make $900 million after tax in the next 10 years? Can Facebook make $7 billion? Google made $8.5 billion last year, seven years after its IPO. So it’s possible. But then again, there is a saying here in Silicon Valley that Google is the exception to almost every rule.
Just don’t forget that zero interest rates are not real—they are a construct of the Fed, not the market, and they are dangerously distorting the crucial capital-allocation process. Now capital will inevitably be over-allocated to growth companies, good and bad. Enjoy the ride, but buckle up.
Taking the market and prices and bubble talk out of the mix for the rest of this post, I was on the road for the last 8 days and I noticed the following:
I did not use Facebook. Once. Just a data point.
The only software products I need or use is Google
I really need to finally learn Evernote or find and utilize a great to do list app that works seamlessly across all my mobile and desktop life….SUGGESTONS PLEASE !!!
I did not use Skype once.
Tweetdeck bought Twitter and so I am happy and have more Twitter shares (wondering how to hedge with $sina ). Twitter for iPad is a fantastic product.
Cabs everywhere suck ass. No investment in equipment, technology and deodorent have made taking cabs almost too hard to work with. It will just get disrupted by mobile and software and good service and a few will deservedly do well.
Amtrack is ghastly and I lost/left behind my expensive glasses (my favorite Bono ones). The train has so much possibility for greatness.
Apple was integral on this road trip. I dropped and broke my iPhone – can’t understand lack of NERF technology in Apple products – The good people of Apple just gave me a new back glass piece. I Dropped my iPad and it hit each of ten stairs in super slow motion at my favorite tea place in soho. Pople just went silent and it wrecked even their nights to see it. Shiva ends on Tuesday. I used the Soho Apple Store as my home office in New York. I left my Verizon MiFi by mistake in Coronado, rendering my Mac Air to the bag. I was basically trapped to an Ipad and iPhone which I ham and egged surprisingly well.
I was asked about the bubble by 50 journalists to which I replied….’what freaking bubble. Banks are in a bubble and Gold may be in a bubble, but that is it.’ Only Sarah Lacy agrees with me and that’s fine.
I treated myself to a little contemporary and cool street art for Stocktwits hq and it felt great to support some artists. Artists with talent have never had more potential for success. Artists with no talent will reap the most benefits from technology. oh well.
I went to Chinatown just to pitch Stocktwits to street vendors who don’t speak english and wondered why I was not buying sunglasses and fake Cartier watches. No data point here, just ALWAYS be practicing your pitch.
LinkedIn is crucial to me and Ben when we are scouting out leads and backgrounds. I think Linked IN could do so much around utlitly pricing but am happily patient. 99 percent of people think it’s a joke so I am hoping for a crash to $50 and don’t expect to ever see one.
Tech Crunch Disrupt – Awesome conference. I learned Arrington prefers Lunesta to my Ambien and that the start up world is freaking vibrant as it relates to bad ass mobile projects. I got to sit on a panel with @sacca @bijan and @tonysphere which was fun but once again panels are a waste of time to get great insights. It was great for me, not for everyone else so we need to just stop this panel stuff and find a smarter experience for entrepreneurs and investors to meet at events in person.
It’s ok to be skeptical of the froth and pricing but the government has your back for now. Risk on.