Fearful Friday: When Will This Bull Market End?

We are going to do a variation on Fun Friday today. We are going to discuss the near future of the public stock markets, particularly the NASDAQ, where so many of the tech stocks trade.

Here’s a chart of the NASDAQ over the past six years.

NADAQ chart

What you see is a big run upwards since the last downturn (and the election of Obama). He’s been great for the stock markets. If you had bought the NASDAQ on his inauguration on Jan 20th, 2009, you’d have tripled your money in six years. A 3x in 6 years is a 20% compound annual return. Whatever you might think of the President, he surely has been great for wall street.

But I am not really interested in the rear view mirror. What I am curious about is when this bull market will end.

I’ve posited on this blog that rising interest rates will eventually suck the wind out of our sails and bring stocks and valuations back to earth. But we could get a break before that happens. Ebola could start spreading in the US, ISIS could take all of Iraq and Syria, Putin could take the Ukraine and then start thinking about the Baltics. Or something else could happen.

We could do this via the comments section, and I am sure we will discuss this there, but I’ve created a poll so that we can easily see where the sentiment of the AVC readership is on this issue. So please vote away and add any color you’d like in the comments.


Paul Graham Dropping Serious Wisdom

Every so often Paul Graham will email me something and say “can you read this before I post it?”. He did that last week. It was a talk he was going to deliver in Sam Altman‘s startup class. It was great. I told him I wouldn’t change a thing. I am not sure if he changed it before he delivered it, but what I do know is he posted it yesterday. And here it is.

I just went back to my emails with him and pulled these quotes out for all of you. These are some nuggets that I particularly liked.

On Investors – “our function is to tell founders things they will ignore”

On Selecting Investors, Co-Founders, Etc – “If you’re thinking about getting involved with someone– as a cofounder, an employee, an investor, or an acquirer– and you have misgivings about them, trust your gut. If someone seems slippery, or bogus, or a jerk, don’t ignore it.”

On Knowing About Business Before Doing A Startup – “The way to succeed in a startup is not to be an expert on startups, but to be an expert on your users.”

On Success – “Y Combinator has now funded several companies that can be called big successes, and in every single case the founders say the same thing. It never gets any easier. The nature of the problems change. You’re worrying about construction delays at your London office instead of the broken air conditioner in your studio apartment. But the total volume of worry never decreases; if anything it increases.”

On Finding The Next Big Thing – “If you think of technology as something that’s spreading like a sort of fractal stain, almost every point on the edge represents an interesting problem.”

Those are the quotes I called out in my emails back to Paul. They all resonate hugely with me. But the whole post is great. Give it a read.

How We Got To Now

For the past two years, NYC’s loss has been the Bay Area’s gain. No I’m not talking about hot startups, VC, or anything like that. I’m talking about Steven Johnson‘s two year departure for the beauty of Marin County over the grimy streets of NYC. But this summer Steven and his family came back to NYC, reminding me that the world is just and fair if you wait long enough.

I liked Steven the minute I met him. He has a wonderful smile and a gracious being, he is whip smart, and he writes beautifully and simply. He tells stories that educate. I have read pretty much everything he’s written and whenever something new comes out, it is an instant buy.

Yesterday was “pub day” for his most recent book, How We Got To Now. It’s the story of six technological revolutions that set up the world for what it is now. Those would be glass, cold, clean, sound, light, and time. The book has a companion TV series on PBS of the same name. The first of the six episodes airs on Oct 15th at 9pm

And to make things even better, I got to spend part of “pub day” with Steven yesterday. We did an event at WNYC’s Greene Space (a great venue in west soho) yesterday morning.

I believe the event was recorded and will be online at some point. If and when that happens, it will be a video of the week post.

We talked about a bunch of things, but the most interesting thing is how all of these innovations are related to each other. Steven told a story about the printing press and how when books started making their rounds, people realized that they needed reading glasses, which spurred a spike in demand for lens makers, which in turn led to microscopes and telescopes, which led to all sorts of biological and astronomical discoveries. That’s the kind of connections Steven makes in his stories. I love them.

I have the book and I am going to watch the series. If you love history, technology, and great story telling, I strongly encourage you to do both of these things as well.

Satisficing

We had one of our many (non-stop) email conversations among the USV crew last week about a situation in our portfolio where nobody could agree on something. I lamented that “VCs are such optimizers.” It takes one to know one you see.

Nick Grossman replied that he prefers satisficing to optimizing. I had never heard that term. So Nick sent me to Wikipedia which says:

Satisficing is a decision-making strategy or cognitive heuristic that entails searching through the available alternatives until an acceptability threshold is met.[1] This is contrasted with optimal decision making, an approach that specifically attempts to find the best alternative available. The term satisficing, a portmanteau of satisfy and suffice,[2] was introduced by Herbert A. Simon in 1956,[3] although the concept “was first posited in Administrative Behavior, published in 1947.

I love the concept of satificing instead of optimizing. It is something I have been trying to adopt (changing behavior is hard) for close to twenty years now with a good measure of success. But I never had a word for it. I do now. Thanks Nick!

Switching Things Up

The thing I most want to avoid is to come back from a long break and get right back into my habits and routines. There are exceptions, of course. I can’t wait to get back to my bike rides and my yoga practice. But in other areas, I want to switch things up.

I’m still working through what these new things will be. I have some ideas about the flow of my work week that I want to change.

But the first change I am going to make is to swap my Nexus5 for an iPhone6. I’ll use the iPhone6 until at least the new Nexus6 comes out sometime this fall.

I have an iPhone that I use to try out iOS only apps. But I have not used an iPhone as my every day phone since 2008. I’ve been carrying an Android as my primary phone for at six years.

I figure it’s time to change that, at least for a bit. So I’m going to walk into the T-Mobile store near my office today and buy an iPhone6. I am not really looking forward to learning a new OS and setting the phone up. But no pain, no gain.

I will let you all know how it goes.

It’s A Wrap

The six week break I took from work is ending. The trip through Europe is over. We landed back in the US on friday night and drove up to our kids’ college yesterday for homecoming/parents weekend. It was great to see our kids (two of them) and we’ll see our oldest this afternoon. I’ve missed them terribly and I’ve missed NYC, our dog Ollie, and our bed, shower, kitchen, local coffee shop, etc, etc, etc.

Many people have asked me what the highlight of the trip was. I always give the same answer – spending every waking (and sleeping) hour with Joanne for an entire month. It’s been a long time since we did that. I think the last time was the summer after we graduated from college thirty one years ago. We are the same people who made that trip around the country, just a bit older, wiser, wealthier, and with three wonderful young adults to show for it. It’s good to know that, even if you already knew it.

The trip through Europe was fantastic. We started in Rome and finished in Paris and stopped in a bunch of places along the way. This Foursquare map/list shows the itinerary:

fall trip map

The list has 131 places on it. We visited many more than that, but I only listed the places in Foursquare that I want to remember and let others know about. I wrote a tip on every single one of them.

As you can see our major stops were Lake Como, Cote D’Azur, Provence, Barcelona, San Sebastian, Bordeaux, and Paris. Of those, I would say Provence and San Sebastian were probably my favorites. I also loved the Piedmont wine region in Italy (Alba) and the city of Bordeaux and the wine region surrounding it. The best food was in Provence and in the tapas bars in Barcelona and San Sebastian.

The most beautiful place we found ourselves in was on a boat in the middle of Lake Como and staring out into the mediterranean sea from the tip of Cap Ferrat. We mangled three languages along the way and found that english is spoken almost everywhere, particularly if you are nice about it. If you want to learn more about the trip and the places we stayed along the way, the past thirty days of blog posts on GothamGal.com will deliver all of that to you.

I turned off my out of office responder yesterday. It gave me great trepidation to do that. If you ever want to give me a gift, the thing I would most appreciate is a filter from incoming email. I was able to manage all of my email in less than 15-20 minutes a day on this entire trip. I just archived everything that came in that wasn’t from someone that I knew I needed to respond to. The out of office responder sets up that expectation and so I feel absolutely fine doing that. Now that the responder if off, I am back to drinking from a firehose and I am terrified of how that is going to feel.

I’ve never taken an extended vacation or sabbatical from my work before. So all of this is new territory for me. I believe you should take the time away from work to get some distance from it, read, learn, relax. I did all of that and feel like I got what I was looking for from the time off. But it won’t be until I’m back at work that the new perspectives will totally reveal themselves to me. I’m looking forward to that too. Then I will know for sure what this time off taught me and I am eager to find that out.

And, as always, when I figure something out, I will share it with all of you here at AVC.

Video Of The Week: Fred Ehrsam’s Bitcoin Presentation

Someone posted this video in the comments a week or two ago. I watched it and liked it a lot. Fred Ehrsam, the co-founder of our portfolio company Coinbase, does a good job explaining what Bitcoin is and why it is important in ten minutes, no small feat.

In other Bitcoin news, the results of the AVC poll on Bitcoin ownership are in. 40% of AVC readers own Bitcoin, 60% do not.

bitcoin poll results

I purposely did not tweet out this pool as I only wanted regular readers of AVC to participate. I think if I had tweeted out a link with the headline “Do You Own Bitcoin?”, that would have skewed the results as Bitcoin fans would have poured in to vote.

The Bitcoin Hype Cycle

Most people are familiar with the Gartner Hype Cycle. It is a great framework for looking at the development of important technological innovations:

Hype-cycle

It is interesting to look at the price chart of Bitcoin in this context:

btc prices since jan 2012

It sure feels like we’ve been through the technology trigger phase, the inflated expectations phase, and are now well into the trough of disillusionment phase.

What’s more interesting is the question of what will lead us onto the slope of enlightenment? I am thinking that we will start to see native applications of Bitcoin. These would be things that simply could not exist without this technology. Donating money to charity with Bitcoin is awesome, and I do it regularly, but it is not a native application of Bitcoin.

I plan to write more about these native applications because I think they are the key to getting to the next phase in the Bitcoin adoption cycle.

Photoblogging: Tour Eiffel

As my extended vacation comes to an end, the question of how I was going to blog during it also comes to an end. For the most part it was the same as usual. There were a few reblogs on the days I didn’t want to blog. And some vacation oriented posts. The photoblogging experiment was largely a failure but I am going to give it one more shot before the vacation is over.

I saw this painting today at the Paris Museum Of Modern Art. It was painted by Robert Delaunay in 1926. It is called Tour Eiffel. I really like it and thought I would share it with all of you. I hope you like it as much as I do.

tour eiffel