Trends

I like to look at Google Trends from time to time to see what it can tell me about things. I realize that search keyword activity is only one data point in a complex system and that with the move to mobile, it is less important than it was in the web only era. And people search for things when they want them. Once they have them, the search volume goes down. But I still think Google Trends can reveal some interesting things.

Here are some queries I ran today:

Facebook and Google are battling it out for video supremacy, but this query really doesn’t tell us very much about where that battle is going and how it will end. It is interesting to note that YouTube has been a mature but stable business for a long time now.

Twitter and the smartphone seem to have risen with a similar curve and are now in decline, with Twitter falling a bit faster than smartphones.

We see a similar shaped curve with Facebook, but the order of magnitude is quite different which is why I did not combine it with the previous chart.

December 2013 sure seems like the high water mark for the mobile social sector.

But not all boats go out with the receding tide.

Here is Snapchat and Instagram, with Twitter thrown in for scale comparison

It will be interesting to see when Instagram and Snapchat start flattening off. My gut tells me Instagram may already be there but we just don’t see it in the data yet.

Moving on from the past to the future, here are some of the sectors that entrepreneurs and VCs are betting on as the next big thing:

If you take out the VR term and look at the other three, you see something that looks like the NCAA football rankings over the course of a season. Each team/term has had a moment at the top but it remains unclear who is going to prevail.

If we look at one of the most interesting coming battles in tech, the voice interface race, the data is less clear.

I think we haven’t really gotten going on this one. But it is an important one as Chris Dixon explained in a really good blog post last week.

My semi regular Google Trends session today confirms what I’ve known for a while and have written here before. We are largely moving on from mobile and social in terms of big megatrends, video is being played out now, and its not yet clear what is going to emerge as the next big thing. Google is betting on AI and I tend to agree with them on that. Voice interfaces may be a good proxy for that trend.

Video Of The Week: The Nitty Gritty Podcast

Bond Street, a startup company that makes small business loans, has started a podcast to tell stories about small business entrepreneurs and the companies they create and run. They call it the Nitty Gritty Podcast.

The first episode features an entrepreneur who is also a friend of ours, Gabe Stulman.

Gabe is a restaurant operator in the west village of Manhattan, where we live. We started our relationship with Gabe as regulars at his first restaurant and we have gone on to be investors in all of his current restaurants, as well as good friends with him.

Here is Gabe’s story. It’s a good one.

Funding Friday: Three Noteworthy Projects

It’s funding friday again. Here are three projects I thought you all should know about.

Black Medicine Iced Coffee – This is an equity raise on CircleUp for a new iced coffee brand. Not only does the product look great but you can get a $1.3mm pre-money valuation for a product that did over $300k in sales last year and is growing rapidly.

Black Medicine

To learn more about this equity crowdfunding opportunity, visit the Black Medicine CircleUp page.

 

Blue Sky Lab – This is a charitable crowdfunding project on Crowdrise. Xibei Li is running a marathon at the North Pole to raise money for a non-profit that works on reducing urban pollution in China.

Blue Sky Lab

To learn more about this fundraise, visit the Blue Sky Lab Crowdrise page.

 

In Search Of Truth – This is a Kickstarter project in which the creator, an artist named Hank Willis Thomas, proposes to take his “Truth Booth” to all 50 states in the US.

Truth Booth

To learn more about this project, visit the In Search Of Truth Kickstarter page.

The “Losing Jobs To China” Discussion

I am bothered by the ongoing discussion about how the US has allowed China (and other lower cost countries) take our manufacturing jobs. That is true, of course. But it does not address the larger context which is that manufacturing is becoming more and more automated and many of these jobs will not exist at all anywhere in a few more decades.

We are now well into a transition from an industrial economy to an information economy. It seems to me that part of that transition was the move of industrial jobs to lower and lower cost regions in an ongoing march to reduce costs. But that march may end with massive automation and very little labor in the manufacturing process. That means that these low cost regions that “stole our jobs” will also lose these jobs eventually.

The US and a number of other countries around the world are building new information based economies. That is the long term winning strategy.

So while we can critique our leaders (business and political) for giving up on the manufacturing sector a bit too early, I think the US has largely played this game correctly and will be much better off than the parts of the world that have taken the low cost manufacturing jobs from us.

But we don’t hear any of our political leaders explaining this. I wish they would.

The New Boss

I got an email from a friend who is starting a CEO job. He said to me “I’d love any thoughts or advice you have as a new CEO joining a company.”

I have reached out to a number of CEOs I know who have taken over companies recently and am compiling a list of suggestions.

But given the number of great CEOs in the AVC community, I would be remiss if I didn’t pose this question to all of you as well.

What are the one or two pieces of advice you would give a friend who is taking over as CEO of a new company?

I suspect this is going to be a great comment thread.

Generally Accepted Accounting Standards (GAAP)

I understand and appreciate the need for rigorous accounting standards and I appreciate that our financial system and our capital markets in the US enforce the use of generally accepted accounting standards (GAAP) for the reporting of company financial information. Without standards rigorously applied, investors would not be able to understand what is going on in the companies. That would be awful.

But when I read Gretchen Morgenson’s recent article in the New York Times accusing companies of “spinning losses into profits” my eyes rolled.

The truth is the the accountants who run the accounting standards have forced companies into reporting their financials in a certain way that neither the companies nor the sophisticated investors who own many of these companies’ shares believe accurately represents the financial condition of the reporting companies.  Gretchen quotes this stat in her piece:

According to a recent study in The Analyst’s Accounting Observer, 90 percent of companies in the Standard & Poor’s 500-stock index reported non-GAAP results last year, up from 72 percent in 2009.

That sure feels like the market speaking. When 90% of your customers order the scrambled eggs differently than you normally serve them that tells you something.

My pet issue is stock based compensation. When a company issues options to an employee, accounting standards require that the option be valued (usually by a formula called Black Scholes) and expensed over the vesting period. That sounds reasonable. But the truth is that that option may end up being worth nothing. Or it may end up being worth 10x the value that it was expensed at. By taking out the stock based comp expenses and reporting an “adjusted EBITDA” number that does not include it, companies are giving investors an idea of what the earnings power of the company is without this theoretical expense. And that stock based compensation expense is a non-cash expense meaning that even though it theoretically costs the company something, it is not paid in cash but in dilution of the total number of shares outstanding.

This is not a cut and dried issue. Different investors will approach it differently depending on whether they care about cash flow, long term dilution, or something else. But the accountants who control the accounting standards board require a certain way of presenting these numbers and that is that.

So investors and the reporting companies offer other ways of looking at these accounting issues. That is not bad. That is not spinning. That is transparency and it is good.

Help Teach A High School Computer Science Class

I have written about TEALS here many times. TEALS is a program where software engineers volunteer and support high school teachers who have limited or no computer science background so that their schools can offer computer science, and eventually continue the program without volunteer support. In its third year in NYC, TEALS supports 20 teachers in 19 high schools in Manhattan, Brooklyn, The Bronx and Queens. Last year, 7 NYC TEALS teachers reached “hand off,” a milestone indicating they can continue teaching independently or with diminished support. To learn more about TEALS, visit their website.

If you are interested in doing this next year (Sep 16-Jun 17), you can attend an info session. The next one is in Brooklyn on Wednesday, May 11th:

Brooklyn, NY:
May 11th, 2016 6:30 – 8:30pm
Williamsburg Preparatory High School
257 North 6th Street (Brooklyn)
REGISTER HERE

Many AVC readers have done this over the last three years. And I’ve heard from many of them that it is a very rewarding way to give back and help build a more diverse pipeline of software engineering talent here in NYC. I hope you will consider doing it this year.

An AI First World

Sundar Pichai said this last week on Alphabet’s earnings call:

In the long run, I think we will evolve in computing from a mobile-first to an AI-first world

That statement got a lot of pickup and attention and deservedly so.

It explains how the CEO of one of the most important tech companies thinks about where tech is heading and where his company is heading.

What does an AI first world look like?

It was easier to think about a mobile first world. That’s a smartphone centric computing environment. That is very much where we are right now.

Does an AI first world suggest we will move beyond carrying around devices? Does it suggest that computing moves into the ether and is just there when we need it “on demand”? Does it suggest that voice will emerge as the primary user interface?

I do believe AI is the most important next big thing and have been saying that here and publicly for the past few years.

I am running into AI technology more and more in my daily life. It feels like this AI first world is arriving. That’s big.

Fun Friday: What To Do With Your DNA Information

I got my 23andme DNA report back this week. I shared it with my family (parents, siblings, wife, children) and participated in the “DNA Relatives” program that shows me likely relatives who have done 23andme. I found the information that came back to me from this sharing to be really interesting and potentially quite valuable.

I had lunch yesterday with a friend who I am not going to name to respect his privacy who spent many years trying to find his mother and finally tracked her down using public DNA records. It was an incredibly moving story and I am still thinking about it today. Stories like his make me feel that we ought to be more public with our DNA so that matches like his can be made. The DNA match he made was not to his mother. It was to his aunt, who then got him to his mother.

Obviously there are reasons not to be public with your DNA. The one most commonly mentioned is potential impacts on life insurance.

I started a Twitter poll to see how my Twitter followers feel about this issue. Feel free to participate in it and let’s talk about this issue today in the comments.