The official "blog of bonanza" for Alfidi Capital. The CEO, Anthony J. Alfidi, publishes periodic commentary on anything and everything related to finance. This blog does NOT give personal financial advice or offer any capital market services. This blog DOES tell the truth about business.
The keynote speaker described the enormous backlog in the state's highway maintenance schedule. County governments have an even larger backlog for local road maintenance. I do not believe the state should play any role in funding or controlling local road development. It is uneconomical to commit state funds to streets in municipalities that are not economically viable. Vallejo, Stockton, and other places have overbuilt their suburbs. Overgrown towns will eventually unbuild what they cannot sustain, just like Detroit. Urban planning drives transit policy. Too much uncontrolled growth gets us roads and bridges to uninhabited areas.
The latest MTI survey of public attitudes toward transit funding reveals nuances that policymakers should recognize. The conventional wisdom that transportation taxes are unpopular breaks down as the public entertains options that commit funds to wise use. Variations on specific uses of revenues get progressively higher support if policymakers address pollution, modern tech, and safety.
The expert panel revealed much about policy planning iterations. Inflation-linked gas taxes may work but they are not a complete solution for fully funding road maintenance as gasoline use declines over the long term. Big Data from in-car solutions offers a trove of insights into how daily car habits impact road use. I think industry will easily share that data with regulators and drivers won't object. The California Transportation Commission has a voice in the process if citizens want to air their privacy concerns about shared data.
The rural California counties that are too poor to raise revenue and too sparsely populated for efficient mass transit have unique planning challenges. The obvious policy default is to orient their economies toward agriculture and encourage high residential density around a core that has exactly one rail link to the rest of the state. Our ancestors had the answers generations ago, when rural folk did not expect to have urban lifestyles.
Sales taxes typically support local transit funding, without user fees that assess those who more heavily use infrastructure. The panelists note that government planners are willing to explore assessments on ton-miles, vehicle weight, axle weight, and other metrics that require heavier vehicles to contribute more revenue for their extra burden on highway upkeep. If axle count is in play, then I say hybrid cars are also in play for special assessments because their drive trains are heavier than internal combustion engines.
I had way more fun than most laypeople at this Transportation Finance Summit. One participant even gave me some hints about supporting the Transportation Research Board (TRB) of the National Academy of Sciences. I have subscribed to the TRB's email feed for years. The board could benefit from finance types like me who contribute expertise on cost estimates and revenue options for a given policy mix. I might just pay them a visit the next time I'm in Washington, DC.
Wherever there is hope, there is also sarcasm. A place without hope is the realm of despair, but it can also make room for sarcasm.
Greece walked away from Europe's debt deal. The Tsipras administration threw down a gauntlet and threw the world's financial markets into turmoil. Athens has no money, no plan, and no hope. Many Greeks will have trouble paying everyday bills while their banks are closed for a week, or longer. The new drachma printing presses may already be plugged in somewhere and ready to run hot. Once they do, and the new drachma hyperinflates, Greeks will have a hard time paying the electric bill to light the Parthenon at night.
China's stock market is crashing. The PBOC thinks cutting interest rates will prop up stock prices. The language they use is even more blatant than what the Federal Reserve says to justify monetary stimulus. China's hard landing will be even harder than the one due for US markets. The Chinese stockbrokers who will soon be unemployed can all go live in one of those empty ghost cities springing up outside Beijing. There's plenty of room.
Puerto Rico cannot pay its debts. A whole bunch of US investors fell in love with the "triple tax free" narrative when their financial advisers sold them Puerto Rican bonds. Now they have the pleasure of opening their brokerage statements to see verbiage like "bond in default, payments in arrears" for the foreseeable future. Way to go, wealth management firms.
All this talk of financial trouble in Greece, China, and Puerto Rico makes me want to hunt for bargains. Here's a thought. I'll go to my nearest imported grocery store and load up on discounted pita bread, shrimp dumplings, and plantains. I even have a name for the meal I could make . . the Black Swan Feast. Get it? A bunch of financial black swans are coming home to roost. It calls for a culinary celebration, because I've been waiting for this opportunity to go short and then buy bargain assets all of my life.
San Francisco still keeps me entertained throughout this financial trouble. A couple of useful idiots brandished their support for anti-Israel boycotts at the Commonwealth Club tonight. One of them was a hot babe, and I thought it was a shame to waste such a lame brain on such a gorgeous body. Give me a hot nerdy babe any day who can think for herself. I'm certain they inhabit the Commonwealth Club.
Most of you know that I enjoy mentoring startups. I get my kicks out of it for the third year now that the Cleantech Open has kicked off its 2015 season with the National Academy sessions for the West Coast. I attended the show down at GSVlabs on the peninsula this month.
I used to hear a lot about traction at startup conferences. Luminaries have finally come around to defining traction as sales revenue. All of the third party validation proving a technology's function means little if no one wants buy its output.
Guy Kawasaki had a new acronym for us to master: MVVVP means Minimum Viable Valuable Validating Product. I prefer the original formulation of a minimum viable product (MVP) because it focuses solely on the tech's workability. The value and validation come not from the MVP tech but from the target market. Guy's other formulation of Milestone, Assumption, Tests, and Tasks (MATT) is useful for motivating a startup's daily accomplishments. I had to LOL at the mention of the "bozo explosion," where lame executives hire less capable people than themselves, which leads to an inevitable collapse. It takes a lot of courage to hire people better than yourself. I can't hire anyone like that because no one is better than me. That's why I work alone.
I did not know about the Biomimicry Institute's Global Design Challenge prior to the academy. I have known about biomimicry ever since Dr. Hunter Lovins presented the subject at the Commonwealth Club a decade ago. Cleantech people should look to nature for inspiration rather than reinvent the wheel.
Entrepreneurs must link Customer Development and the Business Model Canvas as a holistic effort. Using a capital-efficient framework is implied in those models and the Cleantech Open's experts made it official. CustDev will quickly and cheaply eliminate unworkable hypotheses. One speaker mentioned Rob Fitzpatrick's The Mom Test as the exemplar for explaining a business model simply. The irony is that these approaches require brutal honesty between customer and vendor. In my experience, most human beings abhor honesty. People have fired me from jobs, ejected me from social networks, and threatened me with physical violence for being brutally honest. It's easier said than done.
The Chasm Institute had plenty of tools for startups to work through as they "cross the chasm" from early adopters to mass adopters.A product's inherent complexity can be a barrier to mass adoption, so further product iterations should resist the temptation to over-engineer it with undesired features. I'll bet that startups who successfully leverage their partnership networks can cross that chasm. Startups tend to overuse the word "partner" without differentiating whether partners are in their supply chain, manufacturing value chain, or marketing channels. Marketing channels are the path across the chasm.
Entrepreneurs had plenty of time to work on their pitches at the Academy. Brand audits and SWOT analysis enable better storytelling. The "Weissman score" is not a plot device anymore and information scientists are beginning to use it seriously. We'll know the score has gone mainstream when content marketers start publishing test results from web properties. Data science doesn't connect emotionally with a mass audience.
Conventional wisdom on pitches now includes use of Marimekko charts and 2x2 metrics. Look those up online for examples. Marimekko charts illustrate market segments, showing how a market strategy can reach different segments as a startup achieves milestones and collects capital injections. The 2x2 matrix shows a product's differentiation within its sector. Those things are effective visual displays if entrepreneurs have robust marketing data. Making up stuff is not acceptable. Investors want to see how tech development milestones reduce risk.
Here's one of my new pet peeves about venture capitalists. Some VCs claim they don't understand business models that are heavily dependent on subsidies for financial viability. Pfffftttt, yeah right! Everyone in the Valley loves Tesla Motors even though subsidies and tax breaks rule its financial viability. The same goes for its twin, SolarCity. The whole cleantech sector would not be where it is today without massive government subsidies de-risking things so scaredy-cat VCs can jump in later.
I need to grab a copy of Sull and Eisenhardt's Simple Rules because they went like hotcakes among the Cleantech Open crowd. My simple rules at Alfidi Capital are to be honest, publish daily, and attract hot babes. The "two pizza rule" for product development teams is still popular. I would jump into more product development roles as long as I'm not paying for the pizza. Oh yeah, being cheap and scoring free food are some other simple rules I use.
It's good to see large corporations use a corporate development philosophy that includes reverse logistics and life cycle termination. One corporate development participant here described a whole slew of supply chain services they offer to help startups with product delivery. Wow, here's how partnering makes a difference on the back end.
The Band of Angels showed up to describe a convincing financial narrative. I am not convinced that there is publicly verifiable proof of a connection between contact frequency and closing sales. Venture Beat published an excellent article in 2014 about how some commonly quoted sales statistics are worthless. I worked at a major wealth management firm from 2005-06 where the best sales people closed all of their business with one contact. It was easy for them because their rich families gave them all of their money immediately. There are other ways to be convincing besides citing statistics invented out of whole cloth. Once again, emotional hooks and the early involvement of financial backers make a big difference. People from Band of Angels are generally pretty cool.
Someone mentioned CAGIX but did not describe how to use it. Another guru suggested bargaining for discounts from supply chain partners based on how they benefit from a startup's product. I think that would work if the startup has CustDev data to back up any claims. Since introductions from referrals are now the norm among venture capitalists, it makes little sense to even run through the traditional pitch fest circuit. The reality of VCs throwing money away passively is even more depressing than their reliance on inbred referral circles, but that's why many of them fail. I am not surprised that Silicon Valley's elite have become so insular. I expect the next tech sector crash to sweep away the ones that have added zero value.
Bill Reichert always excels when he teaches us how to "get to wow" when pitching. Venture capitalists are only human, as I described above, and they invest when they fall in love with a team. You can read his wisdom online so I don't need to repeat his thesis here. I do need to repeat his warning that entrepreneurs should not lie, because too many of them think lying is okay. I have personally met people in the startup community who excuse lying as an "everybody does it" thing. That's one reason why almost everybody fails at startups. Investor due diligence uncovers lies about founders' backgrounds. Customer due diligence uncovers product flaws that destroy reputations. I could go on but only a few honest people on the planet will ever grok what I say about integrity.
The closing keynote on how society is transitioning from coal to solar was a big winner. Scarcity makes some energy sources more expensive, but tech advances are making solar cheaper. Thermal coal prices are certainly crashing as utilities switch to cheap natural gas. I concur with the broad argument that the coal sector is in decline and deserves Wall Street's short interest. I do not know at this time whether non-coal substitutes for metallurgical coal are viable. The metal refining sector still needs coke for steel production. Clean coal technology also exists, and it may extend coal's viability if it reduces carbon impact or produces attractive byproducts (i.e., CO2 feedstock for algae-based biofuel). The lack of obvious non-coal substitutes for steel making mean coal companies with large metallurgical coal deposits may be bargain plays. Some part of the coal sector will still be viable for several decades regardless of the energy sector's trends favoring solar over coal. This is the heart of an Alfidi Capital thesis I shall develop in future research.
I normally get plenty of unsolicited attention at these types of business events. I was on my best behavior at the Cleantech Open 2015 academy. Mission accomplished.
I am really curious about a whole bunch of financial concepts. I get even more curious when one or more purveyors of proprietary strategies join up in a marketing maelstrom. Let's explore a recent confluence of several practitioners.
Go ahead and try to locate a source for someone named Dahl Downing and something called Cash-Flow Strategies. Google Search results gave me absolutely nothing. There is nothing morally or legally objectionable about squeezing every last cent of wealth enhancement into an IRA. I also do not object to flipping income-producing properties or participating in tax deed auctions provided the players involved know what they're doing. I just cannot understand doing these things without referencing a credentialed expert source or appropriate legal guidelines. It takes a lot more than having an "invested IQ" to pull these things off. It also takes more than a couple of slap-dash Web portals that warrant a Google warning about hackers.
Background homework on the stars of Flipping Vegas is just as entertaining as one could imagine. Perhaps a computer algorithm or a paid gaggle of trolls have published a large number of negative comments all over the Web. Anything is possible. It is also possible that a lot of consumers with real complaints just need to vent their opinions. Contracting out a presentation to pitch an abundance of education probably won't help matters.
There are better ways to spend time than chasing wild rabbits into dark holes. I elected not to waste one of my weekend mornings listening to slick seminars on real estate. I did not need to find out whether cash flow or futures were also on the agenda once I saw a whole bunch of shabbily dressed people milling about a hotel lobby waiting to register. I really am better off on my own, thank you very much.
Some cultures are just made for good business. Countries with Anglo-Saxon common law and Protestant work ethics have high per capita GDP, like the good old USA. Japan and South Korea manage to do well economically. The rest of the world makes me wonder about the connection between culture and ROI. Richard Lewis' When Cultures Collide explores the relationship between culture and business in some depth. I'll just throw my own thoughts about the subject onto the Interwebs.
High-functioning cultures should generate reliably higher GDPs and project ROIs than more primitive cultures. It's an a priori conclusion supported with deep dives into global indexes for corruption, economic freedom, and other measures of well-being. Countries in Scandinavia, the Pacific Rim, and North America tend to cluster at the top of most global rankings.
Culture has implications for common currencies and economic unions. The tightest unions (like the EU and euro) are only viable with very closely linked cultures. Looser unions (like the managed trade areas the US is trying to forge with Europe and Asia) work if they only involve business elites whose common outlook will facilitate large projects. Transnational elites have more in common with each other than they do with common citizens in their own countries.
The EU and euro became nonviable when the common market grew so large that too many ordinary citizens from incompatible cultures were required to interact. I have long believed that a "Holy Roman Euro" of former Franks, Gauls, and Germanic tribes is the only viable future for Europe's common currency after the periphery explodes. The former Hapsburg countries are better off having their own common market. Poland and the Baltics need to go their own way.
The Alfidi Capital thesis offers the US as the most viable geostrategic link for loose common markets that would otherwise include incompatible cultures. The US's long coasts with natural ports are the geographic links to European and Asian traders who would otherwise transit unfriendly waters (yes, China, this means you and your lack of commitment to freedom of navigation). American business elites include many upwardly mobile Asian and Latin American immigrants with cosmopolitan outlooks. We figured out the winning formula for linking culture and economic success right here at home.
The markets are on edge about Greece's fate, and my sarcasm is far edgier. Investors can pull all the money they like from bond funds, because my sarcasm will always be there to fill the hole.
Greece throws some new proposals at Europe. Only the dumbest journalists and analysts believe anything Athens says these days. The Greek leadership goes through the motions and Europe's leaders act like they've earned another few billion euros. Neither party believes in the process but they're both too terrified of what may happen in the markets if they don't keep up pretenses. Anything Greece does to fulfill its austerity commitment will force a snap election that brings real radicals into power, and then the world watches an instant default.
Caterpillar plans another round of layoffs. I'm glad I don't own that stock. Bad times in the mining sector will hurt more than heavy equipment. A whole bunch of truck stops and flophouses in Idaho, Montana, and Nevada will go under at some point. Guess how much more the heavy equipment sector will hurt once the next housing market downturn comes along.
Amazon has incentives for vanity press authors. Wow, now there's a reason to accelerate my pipe dream of self-publishing my financial tomes through Amazon's Kindle. Content marketers are increasingly measuring user engagement in smaller increments. Every instance counts. It pays to change the metric from broad downloads to something like a la carte pricing.
I have to blast out a sarcastic missive at one loser who claims to operate in the tech sector. I won't embarrass him by name. This dude wouldn't listen to me a few years ago when I told him what he needed to do to make a minimum viable product (MVP). He also demanded that I pretty much write his business plan for him and do a whole bunch of things he was too lazy to do himself. I recently noticed that this guy is back in startup mode, running through the same accelerator program he's done before. He has never succeeded in commercializing any of his claimed inventions. Dude, sometimes you just need to know when to quit, so quit already. I'm so glad he's not cramping my style anymore.
Every so often, there comes a free event packed with aspiring entrepreneurs, experienced investors, and free refreshments. It's the kind of event I just can't miss. Today's playbill included Silicon Valley Entrepreneurs convening "Funded! Global Edition" for the benefit of folks who love the tech sector. I arrived at the Bespoke co-working space tonight just in time to score free sodas as the event kicked off.
The unicorn hunt never ends. The unicorn I prefer to hunt is some kind of gorgeous, classy, genius-type nerd babe who would totally dig me. Venture investors prefer to hunt unicorns in hot growth sectors, which of course fizzle out after every market bubble. The Uber story started with heavy data analysis of spot transportation demand in several markets. That's the case for proving how a large business will scale up.
Timing is everything. I now wonder why health care IT innovation is so hot for startups to disrupt. I don't think Obamacare is the best explanation because it doesn't control costs very well. The spillover from cloud adoption may be the main driver pushing IT into health care.
The bubble in tech startup valuations is so obvious. Any VC warning startup founders not to obsess over valuations is of course doing the right thing. Warnings from Sand Hill Road are going to sound hypocritical after a while, given the recent rash of late-stage capital injections into unicorns just to pump their valuations.
One VC shared a memorable quote: "A startup's DNA must be global on day one." It doesn't matter whether DNA is global if the execution doesn't start with a national test market. App developers in Asia test in South Korea because its demographic homogeneity and universal mobile penetration reveal whether an app can go viral.
Product/founder fit is another buzz term for the common sense principle of building something for a market the founder understands. Sticking to one's knitting used to be a no-brainer for founders who seriously knew their terrain. The buzz status of this new term shows how far so many founders now stray from their original expertise. I am amazed that VCs are apparently funding, or at least noticing, so many startups whose founders develop something they do not truly understand that this mantra now becomes necessary.
One of the featured VC's big success stories was a startup that depended on a low-probability event where every major market leader stumbled. That's just what happened and the startup was ready to jump. Only a founder who is sufficiently arrogant and delusional could pull that off. Yes, that happened too. When all is said and done, the founders who create brand new gigantic piles of wealth have some unique brain chemistry that makes them see impossible things through to completion.
Early hires must have compatible visions, joined to the startup's vision. The biochemically unique founder or co-founders will ensure that this happens. Hires also have complementary skills and can fill gaps in domain expertise. No one mentioned that someone has to make the coffee but I'm sure that's a valuable skill set early in a startup's life. Once they scale up to Facebook's size, they can hire administrative assistants to keep the coffee pots full.
Venture capitalists prefer to invest in teams that worked together in the past, or so conventional wisdom goes down in the Valley. I'm sure it's easier to raise money in the short term when VCs see familiar faces sitting around the table. Execution may be different after that first capital raise if some of the old team members do not have the same vision alignment as they did with their past projects.
I did not hear any of the invited expert panelists mention whether founders should draw Venn diagrams of their team's skills. I heard that insight at Box's developer conference this year and it was a winner. I also did not hear anyone tonight mention CustDev or other common tools. People who are serious about building huge tech companies have lots of informal continuing education to complete.
Investors can extract odd perquisites from their startups. Since when do investors prefer caps on convertible notes? I really need confirmation from open sources. Maybe it depends on how much asymmetric power an investor has over a startup that hasn't broken into some hot list.
Any founder who can't see the tech bubble right now is naive, or more likely disingenuous. I heard more than one founder tonight belittle the possibility of a bubble while experienced venture investors recognized it as the elephant in the room. The VCs hanging around sounded sanguine compared to some founders.
I cannot confirm whether founders use decision trees to make key decisions after raising capital. It would definitely help in choosing between spending on new hires or a new marketing campaign. My MBA training once led me to believe that decision science is common in enterprises. I am no longer so naive. Many startups are obviously just winging it when they commit investor capital to something untested. It is unclear to me whether anyone does any disciplined thinking without specific direction from a mentor (i.e., Sheryl Sandberg at Facebook keeping the young ones in line). It is much more clear to me that undisciplined startups risk failure when they neglect to map out their options.
Google Developers Launchpad has some special goodies just for startups deploying apps. I should try it myself once I figure out how to launch my own app. I have other things ahead of that project in line, so don't hold your breath waiting for me. I'll let the world know if Google ever takes my idea seriously.
I really wonder whether so-called international investing even applies to the new venture landscape. I think non-US venture investors have less risk tolerance than we find on Sand Hill Road. I cannot imagine any US-based VC fund that can launch a startup anywhere other than the US without having a country-specific team of in-house experts just for that one startup. Bench strength matters because every country has its own regulatory hurdles to navigate no matter what comes out of the WTO or WIPO.
The conference wasn't all work for me. I got some pizza and a couple of libations courtesy of the sponsors. Check out the above photo for proof that I enjoy these events. I had asked a random attendee to photograph me on the speaker platform, but of course she messed it up and got nothing. I had to do it myself because I wanted it done right. The massage therapy lady out front was really going to town on another female volunteer. It would have been really hot if they had taken all of their clothes off for the massage. Man oh man, I would definitely photograph that hot action. I tend to get some hot action myself at these tech conferences when women come right up to me for flirting, and tonight was no exception. I keep it Platonic because I don't know where these women have been.
San Francisco tech action is a nonstop churn of events, booze, flirting, and expensive deals. I can't be everywhere but I totally nail the hottest conferences. The hottest chicks at these conferences obviously want to totally nail me too. Bring it on babes, and I'll see you at the next Silicon Valley Entrepreneurs event.
One of my entrepreneur contacts recently asked me if I knew anything about Class F stock and Class FF stock. I had no clue what those things meant, so I did some digging. Google Search reveals several legal sources explaining how startup founders use these classes of securities.
Class F common stock is a special class giving founders more powerful voting rights, often some multiple of ordinary shareholders' rights. Class FF stock is a series that allows founders to convert their shares into other equity tranches as they raise further rounds of funding. I have read that the founders of well-known tech companies owned these types of shares while they raised capital at various stages. Founders' shares allow the early team to retain an extraordinary amount of control even after outside investors buy a majority of their company's common shares.
The hottest startups have the luxury of dictating terms for capital raising. Venture investors eager to raise the valuation multiple of the next sure thing may be willing to ignore the disadvantages they will face dealing with founders owning these special share series. Late-stage investors may not care about founders retaining control this way if they can jump on the gravy train of a pending IPO at the eleventh hour.
I am not a securities attorney. There is no way that anything I mentioned here could ever constitute legal advice. I mention these things because founders will eventually encounter investors who may wish to discuss these stock classes as part of a term sheet. Startup founders should consult their attorney before deciding whether issuing these types of shares makes sense.
I played the role of catalyst tonight in a meeting with two San Francisco leaders who can really leverage each others' organizations. That's more than I can say for the sorry parade of Wall Street executives and central bankers who keep blasting garbage into the world economy. I am here to catalyze some sarcasm.
American CEOs aren't so bullish on the US economy's growth prospects after all. More top honchos are waking up to the looming peak of record high corporate earnings. That's still a tiny fraction of the collective C-suite. The other chiefs are out playing golf, drinking, or nailing their secretaries. Expect another survey revealing CEOs' opinions of themselves to be at record highs, with big bonuses to follow.
Extortionist cyberattacks are way up. Adobe will face serious brand damage if it can't secure its Flash tech. Good cyberdefense sleuths can trace the attacks back to Fu Manchu's terracotta army. The folks on the other side of the Great Wall are plotting their next intrusion as we speak. Lock your Google Wallet into your chastity belt.
San Francisco real estate is so pricey that even the slums should be getting rich. I passed some boarded-up storefront in the Tendernob tonight. It would probably rent for some gawd-awful sum to a VC-backed startup if the absentee landlord had the sense to convert it. The dumbest startup ideas are still getting funded and they're blowing through cash like there's no tomorrow.
The weather in San Francisco was nice enough today that plenty of hot babes decided to wear revealing clothing. Women around here have a high level of physical fitness. That's something I really like about this town. Keep those short sundresses coming, ladies. I'll be around all summer.
I spent some time poring over Mary Meeker's recently released KPCB Internet Trends 2015 report. The data reveals surprising growth potential in countries with low per capita GDP but strong smartphone penetration. Smartphones are not yet a mature, low growth market like desktops but that threshold draws closer by the day. Telecom and computer companies are thus wise to pursue the next big things in smartwatches and IoT. There may be other big surprises ahead. Here come my own guesses.
Drones probably belong in the IoT category. Their affordability and loiter persistence enable operators to maintain daily coverage of some area with a very small fleet. Farmers and miners may need no more than one drone for regular aerial surveys. Anyone with persistent security needs for high-value properties will need no more than two or three for 24/7 coverage. The strongest profits for drones won't be in manufacturing, because a drone's per-unit cost will drop rapidly with adoption just as the cost of PCs dropped in the 1980s. The big bucks will be in cloud storage and data analytics for the millions of hours of video with embedded data that drones will generate.
The KPCB report is largely silent on wearables, another emerging IoT category that many people pretend to understand. Measuring smartwatch usages in instances is only one way to capture their value. Users will ultimately expect their smartwatches to do things their smartphone cannot do on its own. A watch face's form factor limits its display capability to no more than six items: a main icon (i.e., the equivalent of the time function), four very small icons (calendar date, etc.), and the background color representing something else. I remain convinced that successful smartwatch apps will have little to do with games, email, messages, or notifications. The winners will have a lot to do with biofeedback because the smartwatch, unlike the smartphone, is worn touching human skin all day. Real-time health data is an untapped market.
Every analyst chasing perpetual growth from in-app shopping and advertising always forgets the economic cycle. Even the most publicized analysts have trouble learning from experience. Advertising is the first expense businesses typically cut in a recession because it loses its power to drive sales. Campaigns pushing inventory clearances and discounts will continue to work well for high-margin businesses but will only compound the problems for low-margin businesses. The good news for the ad sector is that the less effective channels like desktop ads will see cuts first. If mobile ads are truly more effective at driving frictionless conversions, they will be cut last. I am not aware of any ad channel that escapes cuts completely in a recession.
I will never forget the bullish talk that preceded the first dot-com bust in 2000. Forrester Research led the lemming parade, investment bank equity analysts followed, and retail brokerages brought up the rear as they swept their sucker clients into Internet-themed mutual funds. The impending bust in Web 2.0 companies will be just as much fun to watch from the sidelines. Clearing out the debris will leave capacity for the next round of IoT plays to run.
Ellen Pao is still pursuing her former employer through the courts. I feel for anyone who suffers unjustly at the hands of an employer's asymmetrical power. I've been there myself. I think the easier route for successful VC women is to start their own investment firms and leave the good old boys' clubs far behind. I'm all about women making big bucks on their own, especially if they spend it on dinner and drinks with yours truly.
The hotel business thinks it has a bright future. I think they're wearing rose-colored glasses. Disposable income drives leisure travel spending. Corporate earnings drive business travel spending. Both of those drivers will be imperiled in the next recession. Straight-line growth projections only work in an economic expansion's first couple of years. A lot of franchised downscale hotel operators and Chinese investors are going to get their rear ends handed to them.
US oil frackers are at some kind of crossroads. Saudi Arabia is not turning off its pumping spree and many more highly leveraged US drillers are due to implode. I think any fracking company is crazy to pump more or buy out a competitor unless it has a year's worth of cash, very little debt, and a plan to shut down high-cost wells. I am of course giving frackers too much credit for foresight. A lot of inexperienced fly-by-night operators will become very familiar with bankruptcy court, and probably divorce court.
I don't plan to write a book for submission to the next California Book Awards. If I did, it would be about the stupid investors who went whole hog into hotels and fracking. The sequel would be about hot finance babes who should partner with me on early-stage ventures, plus other exciting ventures of an intimate nature. I am sure these literary works would sell like hotcakes because I am clearly the greatest writer in human history.