Category Archives: Capital

All the experts…

I was listening to a podcast the other day and basically heard Barry Ritholtz come to the conclusion during the interview with the Prof that Apple should buy Netflix.

What I find fascinating is how quickly armchair quarterbacks can make an off the cuff declaration that turns into a business meme.

Days after that podcast Barry writes this :: https://www.bloomberg.com/view/articles/2017-11-07/why-apple-should-buy-netflix

Of course people will read Bloomberg and quickly think this should happen but my take is that it shouldn’t happen and it won’t. For many reasons.

First reason is I don’t think Reed wants to be bought. People will counter that with everyone has a price but I generally think Reed has been bought before, has purposefully worked to build a big company he loves to run and has a vision for Netflix that doesn’t include an acquisition.

That point aside it would appear that folks like Barry and others who say Apple should buy Netflix don’t actually get OTT businesses at all. For a company to be successful in OTT they need three things – the ability to stream content, they need the content to stream and they need distribution or devices to consume the streams. Apple already has 2 out of the 3 and most companies have to pay for all 3. They have to build streaming, they have to buy content and they have to buy distribution – in other words they have to spend a shit ton of money on adverstising. This is why OTT businesses are a funding game these days. I always proffer the biggest winners here are Google, Facebook, OVPs and the content guys – not the OTT companies.

Since Apple has 2 out of the 3 then all Apple has to do is buy or make content. Those not in the know don’t realize that before Netflix was an aggregator of content and didn’t produce much of their own content but now Netflix is not only buying content but it is is making content. However making content is not magic and esentially means Netflix operates like any other studio which means it has all the issues like any other studio and with each passing day Netflix has to be a studio and be a aggregator which is not easy.

Plus it is very expensive.

Which means Apple can do exactly what they are now doing. Use their tech and their massive distrubtion – iTunes, iOS, MacOS, Apple TV and whateve else they are creating to highlight content that they will make much in the same way Netflix is doing. This means buying Netflix would be waste of capital. Apple could actually use their cash to outspend Netflix on similiarly great content – like what they have just announced here, http://variety.com/2017/tv/news/apple-jennifer-aniston-reese-witherspoon-morning-shows-amazing-stories-1202610068/

Keep in mind that almost all celebrities in the world use Apple phones. Which means that Apple has a direct relationship with the people that star in and produce content already. Not difficult at all for Apple to get exclusive content for their ecosystem.

John says much the same thing here :: https://daringfireball.net/linked/2017/11/08/apple-netflix-ritholtz

Also the latest Daily Update from Ben Thompson corrects his earlier mistake where he discusses that Apple should buy Netflix. https://stratechery.com

 

ICO’s to disrupt VC?

Good article here on this – not really answering it but just highlighting the stats :: http://tomtunguz.com/ico-trends/

For sure blockchain, crypto and ICO’s are here to stay. No doubt about it but for every trend there will be good and bad things to happen. No different than any other period of mass change. I myself am still trying to grok the longterm view of this since contrary to popular belief VC is a long game. Of course there are rollercoaster like moments of ups and downs marred with upheavels but generally the course of finding good companies to invest in and seeing them along their journey is what VC is.

And will continue to be.

An ICO will be a new tool in the arsenal a startup has to raise capital or to create a token system that is meaningful to the business. I think this comment at the end of the article is very telling:

First, startups raising these ICOs tend to be pre-revenue. Second, retail investors are buying substantial fractions of these offerings. Third, the volatility of these offerings is enormous.

If this trend continues and questions like regulation are answered, ICOs may be a novel and important mechanism for crytpocurrency based startups to raise capital.

The last sentence is a doozy – novel and important mechanism for cryptocurrency based startups to raise capital.

If I had a dollar for all the ICOs I have already seen that have nothing to do with cryptocurrency whatsover, I could proabably retire. If a company is doing an ICO with no meaningful use of the token other than to raise cash – I would run not walk to the nearest exit.

I have no crystal ball but the world is changing, blockchain + crypto will be a force for change but I wonder myself if there will be more good than bad around this. I bring you this clip from a well known techie:

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Again – I don’t have the answers but much to ponder on.