Gurley and Om
The first thing I do most morning is check #discover in Twitter. This morning I saw this in my feed:
In conversation w/VC Bill Gurley/Benchmark Capital [six short easy videos. he & I talk VC, startups & @uber gigaom.com/2012/12/11/bil… @bgurley
— Om Malik (@om) December 11, 2012
Bill Gurley and Om Malik are two people that I deeply respect. They are thoughtful and have been in the game for a long time. They know their stuff and they focus on what’s important.
There are six videos up on GigaOm, each about five or six minutes long, that captures a conversation they had recently. I encourage everyone to watch all of them, but this one is my favorite. It’s about nine minutes long even though the player says 17mins. Bill is such a great analyst and historian of our business. And he’s 100% correct as well.
I am going to put this quote on my office wall:
“You can’t make money with a consensus accurate prediction”
I just love that way of thinking.
Found @bgurley’s sharing of Open Table story interesting. First hand stories of tough times are very valuable. We should strive to get more of it out.
Great thoughts on Groupon, too. Bill is a smart guy.
+1 agreed. saw that yesterday
I see you found the way to embed a tweet. I wonder if you can do that in the comment thread….Hmm….In conversation w/VC Bill Gurley/Benchmark Capital [six short easy videos. he & I talk VC, startups & @uber gigaom.com/2012/12/11/bil… @bgurley— Om Malik (@om) December 11, 2012<script src=”//platform.twitter.com/widget…” charset=”utf-8″></script>
The player is 17 minutes long because there is a second segment at 12 minutes mark.
yeah, but that’s the same as the first segment on the giga om page i linked to
It’s a good quote but of course he goes on to say that you can make a lot money with a consensus accurate prediction if you’re quick enough.Great series of videos (although I kinda feel like a dinosaur now), but wow! that Ooyala player sucks.
yes it doesi wish they would just use youtube
Yup. Various video formats/players are getting annoying, especially those that don’t work well on Mobile. I had to switch to watch the original on GigaOm.Ditto on YouTubing as the standard.
Indeed, but that’s not ‘investment’ – that’s just being a mercenary. Big difference. Which is fine, if that’s what you want just be honest about it. That’s where the industry needs to change – don’t bullshit about being investors if really you are just a variant of Glengarry Glen Ross.
Excellent discovery. Bill Gurley is a VC legend. I used to read his blog all the time. (disclosure: he endorsed my book, Opening Digital Markets back in 1997)Lots of great quotes and take-aways from this interview.- Re: muscle memory. So true, that as long there’s enough of us that were around in 99-00, a bubble effects like the 2000’s will not happen again. Lesson: Stay away from deals/companies where no one was involved in ’99.In 2000, it was normal to hit $1m/quarter and go public and assume your problems went away.“Good judgment doesn’t come from experience. Good judgment comes from bad judgment.”RE: VC business”VC business is a hustle game. There’s always something to go after.””Lots of luck involved. Lots of near-misses. It could be very humbling. Failure is built into the system. You have to be an optimist. Pessimism has no place in VC. So many companies are close to death, and yet they rise-up. You have to be comfortable in sales. Strategy is only 5% of the business.””The break-out players break the rules you thought were unbreakable. We always think about which rules are we going to break next.”Group think doesn’t do well. (Speaks to Fred’s favorite quote)“Several late stage in the last 2 years isn’t doing well because of herd mentality.”“The VC business is: High barrier to exit, low barriers to entry.”E.g. Groupon- Too much capital helped them create an illusion of big, but they have $900 million of accumulated deficit. They spent 1.5 billion to get there.“Until you’ve earned back the cash that it took to create the business, you haven’t created any cash flow yet.”“Incumbents have a hard time flipping to the new model. This gives opportunities to new players to jump ahead of the incumbent.”3 key trends:1- Smartphone trend transition is massive, pushing computing so far out and standardized. It dramatically hanges what’s now possible. (lower costs)2- SaaS. We spent 40 years cramming technology into the enterprise,- now we’re spending the next 10 yanking it out.3- We have multiple Goliaths. 25 monoliths that matter. Good for M&A and for opportunities to integrate/partner.He’s enamored by local markets, e.g. GrubHub (online food ordering).Opportunities is in “painting the white spaces”, i.e. “putting technology where it wasn’t before.””Everything I write about is at least 6 months in the making where I’ve been using it and living it.”He’s not a cheer-leading “Hooray Hurrah VC”. He gels with entrepreneurs where he dives in to figure things out with them.
Good recap William!
I remember reading eBoys in 2001 and wanting to be like him when I grow up… if I ever grow up 🙂
.Well played. Excellent recap. Thx.
I really liked the way he put “All the money that has gone to the top quarter ” … elevating the top 25 with too much cash… and there was/is only too little they can actually do … herd and herd and more herds.
Never seen him speak before and I must admit to not being too familiar with his pedigree. I have only had time to watch this one vide clip – very impressive. Great to see such candour/intelligence in this industry. Gives one hope.Looking forward to watching the other videos later and learning more about Bill and his thoughts.
Here’s the full 1993 letter from Howard Marks that Bill Gurley quotes from on the issue of consensus predictions http://www.oaktreecapital.c…
Such a great way of approaching investing
Looks great. Thanks for that!
“”You can’t make money with a consensus accurate prediction”” Isn’t that the stock market?
Everyone wants a rock-solid-safe high-return.Safety in numbers. So many sheep, at all levels.
that’s not what I meant – I meant stock price is set through consensus prediction
Pay attention to what @carl_rahn:disqus is communicating. Sheep are majority and love to be herded.
it’s great to see we’re getting closer to more and more people acknowledging bubble 2.0. this is the closest i’ve seen to a VC or tech blogger that had been on the upside who truly acknowledges it. IMO a few more need to get popped, then we may have selling exhaustion. exhaustion may have already occurred on the public side, although i think an acquisition of some of the ones that have truly collapsed — namely grpn and znga — would serve as nice confirmation of that.i’m a little skeptical that we’ll get bubble 3.0, and i’m hoping we’re finally ready for the end of the IPO hustle, whereby the chase of the IPO drives the whole market. so long as the IPO hustle remains the dominant driver, VCs will be paid to spend money, and entrepreneurs will enjoy cashing out at absurdly high valuations. it doesn’t matter how obvious it is that it’s a bubble, there are enough people to profit from it they will happily delude themselves into thinking it’s different this time.part of me is expecting the collapse of bubble 2.0 to bring about a significant divergence in valuation trends between public companies and private ones, with more capital flowing towards the public side.
Here’s what he said to address the points you raised above:1- Groupon/Zynga were the result of herd mentality and spending too much to create something that’s artificial. He implied they were aberrations, and they won’t bring the system down.2- He didn’t say it that way, but basically he implied that – as long as there are people that were involved in 99/00, they have the muscle memory needed to NOT repeat the same bubble mistakes. There are enough checks and balances in the system today such that this won’t happen. And when those people aren’t there anymore, I hope they will have written enough about the lessons learned such that the future generation doesn’t repeat them.
it depends on how we define “bringing the system down.” all the social media stocks are down significantly except linkedin, and some private market stuff whose valuations are a bit more opaque (although they are delaying their IPOs, which is a sign). facebook is the mothership of bubble 2.0, and i believe its collapse is important and relevant to the entire ecosystem.i don’t entirely believe him on the muscle memory part. there are investors who were around for bubble 1.0, invested in groupon, and said it wasn’t a bubble. what difference does it make? after all, they made lots of money any way. those who have the memory are the ones who got burned badly, but many folks who got in early enough didn’t get burned so badly.
Good point/s – the muscle memory analogy is most relevant when equated to a painful golf-swing in this context. A bad deal/swing burns and is etched into one’s soul, let alone one’s metaphorical muscles. If things go swimmingly they become intuitive and are repeated – even when good and bad.Namely, bad for someone else doesn’t matter a damn in today’s self-serving culture, as long as it is ‘good’ for me – even if wrong/absurd.How prescient was the old British comedy, with the late/great Peter Sellers, “I’m Alright Jack”. That doesn’t make sense but it kind of does, if you think about it…
It’s more discipline. You have to possess the discipline to walk away and not look back when you miss deals that wind up doing well. Same with trading. Knew a lot of traders that didn’t have the discipline and they are broke. In Jan 2000, I was on Bloomberg and said the NASDAQ was going to trade 1500 and they tossed me off the air.
“bringing the system down” is my own wording, paraphrasing what he’s implying as the advent of another tech bubble burst.I think there will always be some aberration, bad decisions and companies that go public too early, but the point is that that’s not enough to create a grid-lock effect in investment and bring pessimism all over.I’m with him that we’re a lot wiser today- as an ecosystem. Today’s system has better checks and balances, and a built-in resilience from disasters.
most of them are way too dependant on advertising in an industry that itself is in the middle of being disrupted (advertising that is). long term viability means that the main business model has to change….
I’m not sure about zynga – game companies historically have been venture backed, and do enter into the public markets.
I was surprised as well that he lumped Zynga with Groupon, but I was just transcribing what he said.
Absolutely.Apropos nothing at all herein, this struck me as a rather odd posting/timing from The Onion…http://www.theonion.com/art…Maybe questioning the establishment is about to get mainstream? Or maybe I am just an optimist, after all…
wow, i’m impressed the onion would run that! satire is a great place for the truth to come out. thanks for sharing!
Cheers! I am very intrigued – it isn’t The Onion’s style/tone at all as in being meant as dark comedy/satire. Sounds full of angst and sick of the lies.Very interesting. Hopefully the Max Keiser/Keiser Report culture is becoming more the norm.
You mean you didn’t tip them or write it yourself 😉 ?
Today’s KR is an absolute classic…http://www.youtube.com/watc…
Where was the satire?
satire = use of humor to ridicule, expose stupidity, weakness
Hey, kid, except for the use of Saint Claus as spokesperson, I thought it was a pretty straight-up report.I’m just a little concerned that Santa Claus might be in jail before Christmas. Unlike the folks at HSBC.
the US wont deliver any justice, but hopefully santa can put some coal in the stockings of HSBC and their partners.
His voice was the defining one for 1.0 and I loved his song quotes.
Bill Gurley is an amazing investor and person. One of his most amazing talk was with Max Levchin, arguably one of best talk I have ever witnessed in person. This quote about non-consensus accurate prediction come from Howard Marks, the Chairman of Oaktree. Howard Marks served as the Chairman of the Investment committee of U Penn Endowment with one of Bill’s former colleague Andy Rachleff. Howard Marks famously noted in a 1991 memo to his investors. “There are two conditions for making money in stock markets: being right and being non-consensus,.” You can read the full memo on Trusted Insight’s blog. http://www.thetrustedinsight.com
Thought we might have gotten a review of the 1212concert.- It was amazing the comments coming from our 14 and 16 yr old daughters – re: who are these guys…I saw this funny tweet last night – when the WHO came on – something about – if you are 20 yrs older or less…whats the name of the band that just came on that just played the Theme song to the CBS – CSI show….. I asked Lizzie and she smiled & agreed w/ quote.#WeAreGettingOld
It was ridiculous. The Gotham Gal called it Jingle Ball For Grandparents I couldn’t watch it
I felt exactly the same.
My parents used to love watching Guy Lombardo on New Year’s Eve, and we never understood it. It seemed like it was from a different century. But the time between his peak stardom and playing at the Waldorf Astoria was much shorter (about half as long) than from My Generation to now. Who could have guessed we’d be paying so much today to watch geriatrics run around on stage as if they were still 20 year old sex symbols.
Until Roger Daltry becomes a judge on Idol or the Voice 🙂
My niece (13) has been playing guitar for years and didn’t know who Eric Clapton was! I’m going to have to speak to her instructor.
Everyone gets older, and some manage to grow as artists as they do. Paul McCartney isn’t one of them.There was that moment (at Live Aid?) in the ’80s when Bono literally grabbed the microphone from spotlight hog Paul – it seemed a tad presumptuous then, but now it’s clear Bono had the right idea. Why won’t Paul just go away already? Move to France, like that former member of the Stones did, and live in opulent obscurity.
you know he needs to go away when he starts composing ballets.
Love Giga Om but freakin’ HATE HATE HATE their commenting system. Have no idea why they refuse to change it.
I’ve requested it a bunch of times.Sure there is a back story here.
Om is a partner at True and they are very close to WordPress
There’s the answer. Thanks!
Both of you are clear thinkers.
“You can’t make money with a consensus accurate prediction.” — yes. yes. yes. thank you for sharing that. Made my day!
The Series G Groupthink on Groupon. Wow.I looked it up and those investors included:Andreessen Horowitz, Battery Ventures, Greylock Partners, Kleiner Perkins Caufield & Byers, Mail.ru Group, Maverick Capital, Silver Lake, and Technology Crossover VenturesWow again.
And all these guys (whether in the incarnation of their current firm or not, except perhaps Yuri Milner, who I am not sure of) were around in 1999 so not sure I buy the muscle memory point.
Point is you can still make mistakes, but it’s harder to take the whole system down with you. How many more like that followed? None. If it was 2000, they would call it a trend and have 40 more IPO’s like it.
True.Tangentially related, but I was at a holiday party last night, and was talking to a friend who is a CEO of a NYC startup, about the MVP/lean philosophy and failing fast on one hand and maintaining your vision/persisting through difficult feedback on the other hand.There is right in both philosophies, and it is an art and ultimately instinct in balancing them in your own particular situation.I am thinking about this as I see the Gold-Plated GroupThink around a very late-stage Series G Groupon underscoring how even the very smart professional got things so wrong. Important to keep in mind to temper your emotions and subsequent decisions when you are getting both positive and negative feedback.
the whole system did come down, it was just a smaller bubble. and, grpn, znga, yelp, livingsocial, and others did follow facebook. what’s happening in the secondary market remains to be seen.bubble 1.0 was epic, it was almost as big as the housing bubble. there’s not as much distributed wealth to steal from so the bubbles are increasingly difficult to engineer and most likely will be smaller.
The abstract Groupthink bubble that Gurley describes that is so interesting and mystifying is that there was a collective view by the smart money — whose supposed expertise is to fund early stage startups — that there was an arbitrage opportunity between late stage private (right before IPO) and IPO. Seems so out of their supposed expertise where they made their names.He describes that those funds were enabled/encouraged to make those bets because so much of the investor money was directed to the top quintile funds.
the arbitrage opportunity gurley speaks of could also be called a speculative opportunity, because it is not an investment made in growth and productivity, but rather in the opportunity to quickly flip. in other words, the kind of behavior characteristic of every bubble — i.e. condo flippers in florida during housing bubble, day traders during bubble 1.0, etc. but nobody cares, they all made their money, thanks to those who bought the IPO and the investors in the later rounds who bought at too high of a price in the secondary market.
yes, it was totally speculation. it was all about flipping, especially if you had missed out on seeing the good idea in a seed or Series A stage.
Bubble one was in the NASDAQ. It was public. Bubble 2 was mostly private money. While $GRPN, $YELP, $ZNGA, $FB all popped-many others were privately held and had no effect. In Bubble 1.0, individuals leveraged assets to buy levered equity assets. Those sorts of things are a lot more damaging that losing preferred equity on valuation in non-public companies.
agreed on the public/private discrepancy between bubble 1.0 and bubble 2.0. but that bubble 2.0 is private what does that ultimately mean? i suspect it will mean they end up getting acquired at an inexpensive price. or they do down rounds with dilution galore until they can work the kinks out and get to profitability. i think it’s still going to be a lot of pain for those who got in too late, or for those who got in early but did not liquidate in time.
talking about bubbles in past tense is one thing, predicting bubbles is another thing & more importantly making or loosing money predicting is another thing. As they say in insider trading, it is always happening the game is always not to get caught, bubbles are happening all the time, just have to be the one to inflate or deflate the bubble and not be the air being moved around.
Andreessen has made an explicit point to deny his muscle memory for 2001. He equated it to having a bomb explode in your face, and said he didn’t want to walk around and invest in fear for the rest of his life.
I like Andreessen’s point that one source of ideas for the current market is all the ideas that failed in Web 1.0He said recently (including this week in NY I think) that his default thesis is that every Web 1.0 idea that failed was just too early and not a bad idea.
Actually here is a link:http://qz.com/36368“One of my working theories right now is basically every single idea from the dotcom era was correct.”
i agree. i also agree that all the ideas from bubble 2.0 that gained traction — i.e. daily deals, micromessaging, photo sharing — are also correct. but if you don’t finance it properly and present it in the context of a viable business model, then you fail. and that’s what bubbles do, they take good ideas, mess up the financing, and distort everything in the process.
So right. Everything does not have to be a $100 billion, $10 billion, or even a billion dollar idea to be more than wildly successful!
The hindsight bubble fallacy? It may be naïve and simply to easy to just refer to theses events as “bubbles”? Aren’t they more accurately just a bad call on “projected future earnings”, which based on the best available evidence at the time made sense? And if they made sense on investment day, is this really a bubble? What make all these events so easy to refer to as a bubble is the “speed of the price decline”. New facts, do not a bubble make.
bubbles are easily forecasted while they are occurring — in fact that a bubble will occur somewhere is also easily forecasted. i called bubble 2.0 a while back and have not wavered; i am not saying this to pat myself on the back or say i am a great analyst, but rather just the opposite: it is so simple anyone can do it, provided they are psychologically willing to accept the facts and their implications.there are three components to every bubble:1. expansion of the supply of money and credit — the biggest and most important factor2. fraud3. entrance of amateur speculators and frequency of tradingall three of these factors were in place more than a year ago. groupon and zynga have had accounting issues and lawsuits (not saying they are guilty, but that the fraud alarm was rung). money supply has expanded since the bailouts and set the stage for a bubble somewhere (and more bubbles still to come). celebrities started investing in startups and angels started flipping well over a year ago.VCs get paid to spend money, so the more money that gets injected into their ecosystem, the more they get paid. there are strong psychological incentives to deny the bubble and believe it is real.
That is nonsense. I can name five I funded that were outright ridiculous
Your humility is luminous, and illuminating.
which 5?I hope Andreesen is going to fund Kozmo II. I miss not even having to walk outside to get my Gatorade 🙂
In all seriousness, it is amazing how much money and effort is going into making same day delivery networks ubiquitous. last week, I wrote a short post on that with some interesting links…http://takingpitches.com/20…
amazon and walmart are my two favorites here. amazon especially since i am an amzn fanboy. i don’t think google has the customer service skills needed in its DNA.
i am an amzn and in particular, jeff bezos fanboy too
that exists already
i loved kozmo and urbanfetch. i was in college in new york at the time and i thought it was the greatest thing ever. in fact it really inspired me to get more into the internet scene.
I was a user of Kozmo in both NY and DC and was similarly entranced. I still want an Orange Kozmo bike messenger bag!
we were an investor in kozmo…i miss that one too 🙂
me too. on both counts
Refreshing honesty, that!!
Not me. I wear those scars proudly and they deeply inform my investing style.
Yeah. I question that idea. History is always an important data point in investing. The question is always…how much weight do you give it? Zero seems extreme.
I notice that everyone is saying the word, “ideas”. Everytime I have lost money I have invested in an idea. Much better to invest in people executing those ideas. Jockeys not horses.
If you have to pick between the two, I’d completely agree.
Invest in a market not an idea – Bradley Joyce Socialiyzer Tech Wildcatters Spring 2012
Of course, there are a lot of companies that seem ridiculous at first that have gone from ridiculous to disruptive to mainstream adoption. I’d even venture that investing in ideas that are exclusively ridiculous has some value, especially in a portfolio that is otherwise very stable and/or in sectors that have consistent returns.Did Twitter ever seem ridiculous to you? Tumblr?
I think one of the biggest lessons that I learned on this blog (surprisingly) was how you missed out (if you want to call it that – so let’s call it that for now) on airbnb. How you said that younger people at USV liked it but you didn’t. Part of that is muscle memory. It simply didn’t make sense that people would want to let a stranger in to use their place. To many issues and potential pitfalls. (Actually I think this was a PG writeup..)The question that I have is did the younger people attempt to overcome your muscle memory by selling you on why airbnb made sense or did they just say “we think it’s a good idea”. They must have made some positive statements. I’m wonder though that if they were able to more clearly make their points (sell you) if they would have overcome your objections (which I share btw.)Many times I fight against people trying to convince me to do things that go against my grain. But I try at least (fantasy maybe?) to give them their day in court to prove what they are saying. I always had to fight (with my parents and others) for what I wanted so I guess it’s second nature for me to try and overcome certain obstacles. (That assumes the younger people are motivated to even try of course.)
I look at the one graph I see all the time about Airbnb, and see one huge red flag (Techcrunch yesterday). It is the cumulative total of the nights booked since the inception. Everybody says look at the hockey stick!!Can you imagine if I said my revenues were the total of all past periods, plus the forward periods (booked versus actual)?That being said,I totally agree. I think what numbnut would book a room with a stranger or stay with one? I underestimate how many people have rooms that need money and how many people that need rooms can’t spend much money, because that is not me.However, when I hear that it will take over the world I think it is just the opposite.That and when I also see you can postulate the behavior of a few (those that read TechCrunch) to the many. Why wouldn’t I want a random person to pick me up and drive me?
” I underestimate how many people have rooms that need money and how many people that need rooms can’t spend much money, because that is not me.”My inlaws (who since I married a younger women are in their early 60’s) went through 14 days of a power outage in North Jersey and stayed in their own powerless house. Didn’t go to a hotel. They travel to Europe on trips and while they are definitely not rich they have enough money to get a hotel room and not suffer. (To me anyway..)So some of the behavior (as you have noted) is due to lack of money and some is not. Take Fred who noted on this blog that he stayed with friends on the UWS. Even though given his financial circumstances he could have easily booked a hotel suite in advance. Maybe that comes from growing up in an Army family and having to be able to move frequently. I wasn’t raised that way so the idea of staying with others is distonic. I want the maid service and I don’t want to have to wake up and be all nice if I don’t feel that way on a particular day. And I don’t want to owe anyone any favors either. And have the least stress possible.In between moving I had to stay in a hotel for 6 weeks (costs plenty) and I didn’t even try for a second to stay with anyone else. And it was the right decision. (Just to show I’m not spouting off about something.)That said people are different. I call my kids “camp dogs” because they are schlepped everywhere (by my ex wife) and crash all over the place no problem. I could never do that.My brother in law (who is 28) airbnb’s his place in NYC (I told him about airbnb he had never heard of it in the circle he goes in (music). He thinks it’s great and took an immediate liking to it.That said I think one thing you have to recognize about this generation in order to understand why they aren’t as possessive (with their personal belongings). It’s been “easy come easy go”. You remember how hard you worked for your first car?How much effort you put into the house you restored?Why wouldn’t you be protective of those things?You earned them. You weren’t given them. That to me is a large part of this thinking. Back in the day if you broke the toy you had (or a friend did) you were out of luck until the next birthday. Daddy (at least my father) didn’t console you and buy you a new toy. He told you to be more careful.
Staying with friends for free /= paying for a room with strangers.Not equal is not a strong enough sign.As for the last part of your postWhen you are young you haven’t seen the evil of the world.
No Benchmark or USV on that list
For the most part, this time around everyone else was trying to buy in late to what you guys seeded early, and in the case of Groupon, buying in late to the wrong things in order to be seen as down with social
“Series G Groupthink on Groupon”Would be interesting though to calculate the other times they followed groupthink and things turned out correctly.Not to mention the fact that just the other day Paul Graham was singing the praise of Mark Andreessen (as were others) with the everything turns to gold thinking.
that is a brilliant quote. Which howard marks would he be referring to 😉 not the english one right!
these videos should be required viewing at techstars, ycombinator and every startup nursery in the world
+1 “startup nurseries” lol
Yup. That is wisdom being dropped
I am having trouble viewing these videos from chrome and ie8.. By trouble I mean I can’t find a source to view. The bolded text at the bottom doesn’t direct me. Can anyone help? thanks
Have you tried going straight to the GigaOm source URL?http://gigaom.com/2012/12/1…
I used to read Gurley’s ‘Above the Crowd’ essays when he was at Deutsche Morgan Grenfell as an analyst, and remember thinking how cool it was that each essay started with a rock (or hip hop) lyric. Ben Horowitz seems to channel that atop his posts…My wish for that GigaOM video segment was that he spent as much time talking about ‘prescience’ (his word for Yuri Milner’s FB positions) as he did tearing down Groupon and the groupthink around it. No question his perspective and reminders about ‘muscle memory’ are important — I just hope he continues to speak about great decision-making more than he criticizes poor decision-making.Great share, and I love the lead-up in the ‘how I found this’ opener — it’s remarkable how often the discovery of great bits lack ‘discovery attribution,’ thank you.
“I just hope he continues to speak about great decision-making more than he criticizes poor decision-making.”You can learn from both obviously. The problem is it’s all in hindsight.
.From the first moment I heard about Groupon, I thought it was a head fake. I just don’t get that many Brazilian bikini waxes myself and the business deal is a killer for the sponsor. I recall thinking it would cannibalize customers and had no barriers to competion — moat.My assertions are really not relevant as to whether the founders made a buck or not — that is purely finance. But I don’t see a great sustainable business here. Today I get about 25 such daily deals and I find myself taking advantage of those from my current list of vendors almost exclusively.I was looking at the Best Buy buyout by the original founder. A bit of aribtrage and the chance to make $2-3/share on the transaction. Not a bad return on what is essentially a $15 stock.But what I wonder about is how does a company which has reported declining same store sales in 9 of the last 10 quarters overcome the current challenge/flaw — folks go to Best Buy to look at the products, to get some information and a bit of instruction and then buy them on Amazon.Sometimes being outside the room with your head up beats being inside the room with your head down..
lol i love the brazilian bikini wax joke although to be honest groupon does have a lot of stuff, especially their groupon goods line in which they sell physical products. i did some of my holiday shopping through that. as a bargain hunter/cheapskate i love it, although i’m not so sure how great it is for businesses. at least i’ve observed some of the deals have been getting less favorable for me as a customer which is probably better for the sustainability of the whole thing.
.No question there is a bit of good in the effort, a marketplace if nothing else.BTW, I don’t mean to be crass but I did get you a lovely Christmas gift and I spent $100, just saying.Don’t want you to be embarassed when I have nothing under the old Yule tree, sport.Merry Christmas to you. I cannot tell you how much I have enjoyed your wisdom and crackerjack thinking in 2012.All the best.JLM.
Re: Best Buy and branding strategies …http://www.fastcompany.com/…
“how does a company which has reported declining same store sales in 9 of the last 10 quarters overcome the current challenge/flaw”You can’t .. Near impossible. what they were was simply an efficient means to satisfy the demand that was out there for a product that can now be purchased elsewhere (and for that matter is being supplanted by other impluse purchases (apple) and economic problems as well.Have you ever been sailing when there is now wind?Or surfing with no waves?You have to find a place with wind/waves. But there is no reason to believe they will be able to do this. Even if they were to receive showrooming fees that wouldn’t support their business (and how would they sell those warranties that are a profit center).They are a company with retail locations. They are not a diverse business (like a GE or IBM or even HP) that actually has a chance of reinventing themselves. Or even a car manufacturer. By contrast being an auto company (even Chrysler) seems much more possible to fix.
I always liked Buffet’s advice to Zig when everyone else was Zagging. Seems to have worked out well for him.
.Gotta love Buffett. If you live long enough, you will be on both sides of every issue. You will both zig and zag.I love his annual letters but mostly I love his explanations when he screws something up. They are so unvarnished..
I don’t know Om but I have met Bill Gurley a few times and I’ve always thought he was among the smartest thinkers in the industry, period.
I would love for #discover to be my default page on twitter. I always get value whenever I go to that tab, but as soon as I visit twitter and I see my feed, I can never bring myself to go to that page. If twitter is pushing people to the #discover page, then they must be violating the equivalent of the paco-underhill rules of retail store design for the web.Bill Gurley is amazing. I was blown away with how great this talk was; really really high quality insight.
Great stuff Fred! “The buy-side cares about product differentiation,sustainable competitive advantage, and they are dong something that can’t be copied” This is worthy of a blog post? P.S. howard marks memos http://oaktreecapital.com/M…
Super interesting video. Loved it. To just apply that “groupthink” issue to one point @fredwilson:disqus has raised a couple of times now: the #discover tab is useful to ppl like Fred who cannot keep up with the content streamed at them, because of his enormous and well deserved popularity. This also applies to a lot of other VCs. This is why they love it. For the rest of us, it is wasted screen estate. Empathy towards segments of society/the market that differ from you and your peers massively pays off.
The funny part is the first time I discovered Fred’s blog several years ago, he immediately reminded me of the Gurley-man (though I suspect Fred is much shorter ;-)), kinda like his Noo Yawk twin (ok, I’ll stop short of comparing Fred to Danny DeVito). Thoughtful guys are very rare in this industry, rah-rah macho types are much more prevalent; and I definitely know who I would want to be on my side in a startup.
“You can’t make money with a consensus accurate prediction”.- mobile….and ONE (moi) looks for the consensus inaccurate prediction, recognizes it as being inaccurate before anyone else does, and then works out if there’s a way to make money off of it further down the road. Soros?
FYI, the video has an old-school tape casette like bonus track. Keep playing beyond the 9 minutes and after 2 minutes of black and silence, it resumes again around 12 minutes.
Apologies to the younger generation who have no idea what I’m talking about.
another question Fred, what do you check in # discover every morning , what are best keywords you prefer to filter out noise