What Didn't Happen

Last year, I ended 2014 with What Just Happened and started 2015 with What Is Going To Happen.

I’ll do the same tomorrow and friday, but today I’d like to talk about What Didn’t Happen, specifically which of my predictions in What Is Going To Happen did not come to be.

  1. I said that the big companies that were started in the second half of the last decade (Uber, Airbnb, Dropbox, etc) would start going public in 2015. That did not happen. Not one of them has even filed confidentially (to my knowledge). This is personally disappointing to me. I realize that every company should decide how and when and if they want to go public. But I believe the entire startup sector would benefit a lot from seeing where these big companies will trade as public companies. The VC backed companies that were started in the latter half of that last decade that did go public in 2015, like Square, Box, and Etsy (where I am on the board) trade at 2.5x to 5x revenues, a far cry from what companies get financed at in the late stage private markets. As long as the biggest venture backed companies stay private, this dichotomy in valuations may well persist and that’s unfortunate in my view.
  2. I said that we would see the big Chinese consumer electronics company Xiaomi come to the US. That also did not happen, although Xiaomi has expanded its business outside of China and I think they will enter the US at some point. I have a Xiaomi TV in my home office and it is a really good product.
  3. I predicted that asian messengers like WeChat and Line would make strong gains in the US messenger market. That most certainly did not happen. The only third party messengers (not texting apps) that seem to have taken off in the US are Facebook Messenger, WhatsApp and our portfolio company Kik. top social apps year end 2015Here’s a shot of the app store a couple days after the kids got new phones for Christmas.
  4. I said that the Republicans and Democrats would find common ground on challenging issues that impact the tech/startup sector like immigration and net neutrality. That most certainly did not happen and the two parties are as far apart as ever and now we are in an election year where nothing will get done.

So I got four out of eleven dead wrong.

Here’s what I got right:

  1. VR has hit headwinds. Oculus still has not shipped the Rift (which I predicted) and I think we will see less consumer adoption than many think when it does ship. I’m not long term bearish on VR but I think the early implementations will disappoint.
  2. The Apple Watch was a flop. This is the one I took the most heat on. So I feel a bit vindicated on this point. Interestingly another device you wear on your wrist, the Fitbit, was the real story in wearables in 2015. In full disclosure own a lot of Fitbit stock via my friends at Foundry.
  3. Enterprise and Security were hot in 2015. They will continue to be hot in 2016 and as far as this eye can see.
  4. There was a flight to safety in 2015 and big tech (Google, Apple, Facebook, Amazon) are the new blue chips. Amazon was up ~125% in 2015. Google (which I own a lot of) was up ~50% in 2015. Facebook was up ~30% in 2015.  Only Apple among the big four was down in 2015 and barely so. Oil on the other hand, was down something like 30% in 2015 and gold was down something like 15-20% in 2015.

Here’s what is less clear:

  1. Bitcoin had a big comeback in 2015. If you look at the price of Bitcoin as one measure, it was up almost 40% in 2015. However, we still have not see the “real decentralized applications” of Bitcoin and its blockchain emerge, as I predicted a year ago, so I’m not entirely sure what to make of this one. And to make matters worse, we now seem to be in a phase where investors believe you can have blockchain without Bitcoin, which to my mind is nonsense.
  2. Healthcare is, slowly, emerging as the next big sector to be disrupted by tech. The “trifecta” I predict will usher in an entirely new healthcare system (smartphone becomes the EMR, p2p medicine, and a market economy in healthcare) has not yet arrived in full force. But it will. It’s only a matter and question of when.

So, I feel like I hit .500 for the year. Not bad, but not particularly impressive either. But when you are investing, batting .500 is great because you can double down on your winners and stop out your losers. That’s why it is important to have a point of view, ideally one that is not shared by others, and to put money where your mouth is.

#economics#enterprise#entrepreneurship#hacking finance#hacking healthcare#health care#Politics#stocks#VC & Technology

Comments (Archived):

  1. awaldstein

    Pls do a post on the bitcoin/blockchain connection.Expert opinions are all over the place on this.

    1. Semil Shah

      Yes, a clarifying post here would be helpful.

      1. Tkr

        Bitcoin is to blockchain as Yugo is to car.

        1. Semil Shah

          Yes it’s a good discussion but still believe something more current and definitive on this specific topic would be helpful, especially coming from AVC.

    2. falicon

      The motivation to mine (and hence keep the system in distributed control and honest) is the money you earn for doing it (bitcoin).Bitcoin provides a reason for random people/parties to want (and afford) to run miners…which is what makes the whole ‘verification by the network’ part possible.you can also argue that putting a small bitcoin cost on transactions could keep players honest and help prevent abuse of the network as a whole (though at the moment most dont actually charge for transactions because they care more about adoption and can currently make it back on mining)without bitcoin you most likely lose the edges of the network and end up with just another form of central control

      1. awaldstein

        Get that and thanks.

        1. falicon

          Thank you! You inspired me to write the following post this morning ;-)Why Blockchain is no fun without Bitcoin -> http://falicon.com/post/136

      1. awaldstein

        Discussion closed then?

        1. William Mougayar

          I’m going to elaborate more on it in my book. It’s long topic.

  2. Humberto

    i wish other “public figures” would share your sense of accountability to your their own past predictions and promises.. way to go.the only debatable in my view is apple watch. it sold many, many million devices, being one of the top releases ever of a new apple product.

  3. LIAD

    i remember that post like yesterday.where the hell did the year go!

    1. Nick Grossman


  4. Jon Katzur

    Always impressive to see a review post – appreciate the candor!As a subset of your comment on enterprise, an interesting trend has been the vertical wedges against the mega-vendors (Oracle, SAP, IBM). This type of thing goes in cycles and the SaaS companies like Salesforce.com and now Zenefits have stepped up the competition. In the consumer world, the idea used to be build a vertical startup against some Craiglist need. I think we’ll continue to see more of the same against the mega-vendors as BYOD and consumerization lead users to be more comfortable working with the best tools possible, regardless of vendor.

  5. Tom Labus

    Uber may have reached the point of no return for going Public.

  6. Salt Shaker

    The public markets don’t punish, they issue a reality check. Some companies just don’t want to (or are afraid to) face reality, and perhaps that’s prescient.

    1. Tkr

      Why privately held companies awash in a sea of liquidity should bother going public to make things better for VC investors and startups looking for funding is beyond me, and doesn’t make any sense at all.

      1. Salt Shaker

        Employees seek the pay window too. The whole ecosystem is built on a perceived windfall, while in reality w/ ludicrous valuations it’s often a house of cards.

  7. Twain Twain

    I don’t believe in VR but I do believe in AR holographics.The problem with VR is the same as the problem with Google Glass: obstruction of natural vision and ambience which requires our brains to adjust and this is a barrier to mass market adoption.Most people who wear glasses for vision don’t like being able to feel the armature on their ears, the pressure indents on their nose bridges and the frames wrapping the lens. VR googles are even worse for those.Meanwhile, AR via IoT devices and more naturalistic interaction (voice activation) is a better bet.

    1. William Mougayar

      I’d like to learn more about AR and VR. Aren’t they related eventually?

        1. kenberger

          Greatly useful links to explain.As they say in Southeast Asia: “same same, only different”.

      1. Semil Shah

        I have invested in an IndustrialAR solution and would love to find more to learn about.

  8. William Mougayar

    Really well knotted together series of points, and it makes us think about these important issues. I’ll riff on your (loaded) Bitcoin comment …1a. Bitcoin, the currency made a come-back, but not Bitcoin itself. Bitcoin, the protocol is swirling in a sea of bickering and arguments over block sizes, poor governance and developers are bursting it at the seams. I’d like to see that mess get a little more organized in 2016, despite its grass roots beneficial process.1b. Writing large-scale decentralized apps on Bitcoin is not easy. It’s hard. I’m seeing it done by companies I’m very close to. Due to 1a, decentralized apps on Bitcoin are going to continue being hard. In fact, I’ll say that Ethereum is gaining ground in terms of programmability advantage and tools around writing decentralized apps. That’s not a bad thing because we will approach backward and forward compatibilities between Bitcoin and Ethereum in 2016.1c. Blockchain without Bitcoin makes sense, and there is lots of innovation happening there. But private blockchains within regulatory environments (such as banks) will live within the constraints of the regulations, so that’s like dialing-down on innovation, and we have to accept that for what it is. Banks can’t handle true innovation. They can just apply it within their limitations.That said, I’m bullish on Bitcoin proper, as a currency and as a most global and viable blockchain. But we must also make room for innovation in the blockchain department, because the greater playing field is “Cryptography-based software engineering”, and the reality is that it has burst outside of the capabilities of the Bitcoin ecosystem to absorb it on its own.It’s the blockchain that’s the innovation, not just Bitcoin. Bitcoin is one instrument/asset on it, and yes it’s the most successful one so far, and it has network effects and that will continue to be for a long time. Everything that happens around Bitcoin in the cryptocurrency space helps to support Bitcoin proper because it is the default reserve cryptocurrency. So, why stop at Bitcoin?

    1. awaldstein

      You think Fred is incorrect?”we now seem to be in a phase where investors believe you can have blockchain without Bitcoin, which to my mind is nonsense.”

      1. Twain Twain

        To me, Fred’s right.The Bitcoin is a proxy unit for trust. The Blockchain is the network of trust.The code of the Blockchain is based on the probability of … BITS.

      2. William Mougayar

        I didn’t cover the “investor” part. Here it is.There are private equity and corporate investors that are investing a lot in “blockchain without Bitcoin”. I personally think that part is beginning to get overdone a bit, but think of it as an investment fork. When the blockchain is living within regulatory environments, it will not blossom to its potential. So, these investors will get disappointed from an ROI perspective, but the corporate users who are implementing the blockchain will be happy.So, the nonsense part in my view is blockchain going into regulatory environments, but not blockchain going full steam on innovation elsewhere. That’s the distinction, and on that note I’m going to write a blog post on that!

        1. awaldstein

          You should run for public office my friend.

          1. JLM

            .I would vote for either of you. Of course, I would bribe both of you.JLMwww.themusingsofthebigredca…

      1. William Mougayar

        We used to say – The good thing about standards is … there are so many of them to choose from!

        1. Girish Mehta

          Hey, we used to make that joke about UNIX – HP UX, Solaris, IBM AIX, DEC Unix…:-)

          1. William Mougayar

            Yup. And before that about Open Systems and other IEEE standards. Now we’re dating ourselves.

      2. Vasudev Ram

        Or the 15th one attempts to become a meta-standard that unifies, say, half of the others. Then the other camp does likewise. So now there are 14 competing standards and two competing meta-standards.You can guess what comes next …Also, old programmer joke:A: I have a problem. I know, I’ll use regular expressions.B: Now you have two problems.

  9. Twain Twain

    On the Blockchain-Bitcoin apps problem, the Blockchain brigade haven’t made a compelling enough case for why developers would put their apps and data flow into Blockchain instead of AWS or Google Cloud.That and there aren’t enough Product people who can also code smart contracts to help the developers shape consumer apps that “cross the chasm” — not just apps developers geek over.

  10. kirklove

    I just bought an Apple Watch (granted for 1/2 price) from a buddy who didn’t want it any longer. I’m actually liking it way more than I thought I would. For a v1 it’s absolutely incredible. And based on sales I wouldn’t call it a flop, just not a homerun. Solid clean single to left and ready to steal second.

  11. Steve_Dodd

    Hey Fred, I think you actually did better than .500. You mentioned that WeChat did not make major inroads into the US but actually didn’t they (Tencent) put some serious money ($50 million) into your portfolio company KIK? The Chinese global growth strategy is very different that the US approach. We tend to move directly into markets and try to take them head on where as the Chinese tend to invest in more localized players (like they also did with Snapchat) to capitalize on and learn from more localized expertise. And, from what I can see from KIK’s market strategy, they are becoming very WeChatish……Did I miss something here?

  12. Tkr

    Fred – I say this as a big fan, but you are giving yourself too much credit.1. The Apple Watch wasn’t a flop. At all. Apple sold more smart watches in the first six months than every other smart watch vendor combined over the previous year. And activation reports indicate that holiday sales were great.http://www.forbes.com/sites…That doesn’t take away from Fitbit, but the watch is certainly not a flop.2. Bitcoin is dead, Fred. Really disingenuous to link the surge in blockchain, which provides no lift to Bitcoin as a currency or marketplace, with Bitcoin itself, which is looking more useless every day.

    1. fredwilson

      i addressed the flop comment in a reply near the top of this threadhow can you say Bitcoin is dead with a straight face? that is preposterous.

      1. pointsnfigures

        I think it’s way way way too early to declare Bitcoin dead. When I get really good and long it, then we can call it dead : )

      1. Kirsten Lambertsen

        Great explainer!

  13. Matt Kruza

    Big props for being so transparent on both sides of the issues. Good reminder for all public leaders, especiallly in tech. You obviously have a reputation at this point which doesn’t necessarily need more examples of your style of thinking / honesty / openness to raise your profile, but most in tech do need more exposure, and honest displays of success and failure are a good way to build a loyal following. And per your point on republicans and democrats wouldn’t it be great if THEY would give a list like you did of their successes and failures? Boy would that change things.

  14. kidmercury

    i’m not sure how it can be said there was a flight to safety in 2015 when the S&P 500 is at all time highs and VC investment dollars in 2015 is higher than it has been in 17 out of the last 20 years, or something like that. that facebook and amazon, two clear growth stocks with limited earnings and high valuation ratios, had triple digit growth only supports the notion that the flight was towards risk (enabled by low rates).

  15. aminTorres

    Remember to pose next year’s predictions in the form of questions.

  16. anthonybissell

    On the note of Fitbit, it’s been a strong competitor in the wearables market, but most of the fanfare we’re seeing right now is its success as a Christmas present. Its app saw a 21.6% increase in downloads in the month of December after being relatively flat for the past 6 months (most of the downloads were in the last week).You can see the trend in their iOS rank (attached).Note: I am the lead data scientist at http://apptopia.com

    1. Semil Shah

      But FitBit stock has been performing well for months, before Q4 began.

      1. anthonybissell

        Actually, if you look at the stock, it’s been relatively flat as well; back to roughly where it was a year ago (see attached). Granted, it had a large bump in Q3, but those gains have since tapered off.

    2. Matt Zagaja

      On The Talk Show John Gruber said that anecdotally Watch app developers also saw a boost in app downloads. Anything to back that up?

      1. anthonybissell

        That’s a great question Matt. My initial inclination is “not really”. I created a Watchlist (which allows you to track multiple apps simultaneously) on our site for several apps that are primarily Watch apps (remotes, watch faces, etc). and I really don’t see the serious ‘bump’ you’d expect to see around the 25th if people were downloading a lot more watch apps (with the exception of one app). Cumulatively, it could add up, but that’s not as trivial of an analysis given how tied together iPhone and Watch apps are.

  17. Richard Klancer

    I’m curious about “the big companies that were started in the second half of the last decade (Uber, Airbnb, Dropbox, etc) would start going public in 2015. That did not happen. Not one of them has even filed” vs “Fitbit … was the real story in wearables in 2015”.Well, Fitbit was started in 2007 and filed and went public in 2015!This isn’t to point out a contradiction but rather (as a Fitbit employee) to wonder why Fitbit often isn’t included in the same cool kids’ club as the above companies. Comments appreciated!

    1. Semil Shah

      It is probably because people envision Uber and Airbnb (not Dropbox) to be fully global $100M+ and growing networks, so they’re in their own category and are disruptive to many elements of current society and laws. Fitbit, I think, surprised people as the IPO timing was alongside Apple Watch, so many observers just assumed that would depress things, even though the opposite turned out to be true. My two cents, and a sincere congrats.

    2. fredwilson

      i was simply referencing the list from my post last year. no diss intended

  18. John Lowery

    Fred, great post! I agree that the ‘trifecta’ that you list will have a very strong impact on disrupting healthcare, but just not as much as biology itself. I still firmly believe that we are living in the century of biology, and that major advances in medicine are coming (relatively soon) that will truly disrupt the healthcare system in a very positive and meaningful way.

    1. fredwilson

      i think you are right. not being a biologist, that is just a gut instinct of mine

      1. Richard

        Not being a microbiologist, immunologist, or a geneticist would be a little more reflective of the breakthroughs over the next 25 years.

        1. pointsnfigures

          @disqus_255gpLSAjw:disqus is correct. I have seen some really way cool shit when it comes to biology that will blow your mind. Cell technology, gene technology and the things they can do in the labs today are amazing. Call it the unbundling of biology as they work on smaller and smaller things. I am amazed at some of the things I am reading when it comes to health and relationship to gut bacteria.

          1. Richard

            Indeed upper far way off from making really good use of this data ((in practice )). I just visited several dentists with a listing of my mouth biome)). I just visited several dentists with a listing of my mouth biome. It was as if they were looking at Chinese

  19. JLM

    .I am interested in healthcare and have been studying it with the same diligence as I normally reserve for military history. It is so hopelessly fucked up as to be beyond help.The biggest problem is quite easy to fix — national competition amongst insurance companies (healthcare is not the same thing as health insurance, obviously).Obamacare has done such irreparable damage to the entire industry as to be worthy of wholesale repeal. It is incredible to see how wrong the Obama administration has been on everything. Nobody is ever that wrong but they managed to do it.I would support a single payer system as long as individuals could opt out and not be required to join and we had national competition amongst insurance companies with comprehensive tort reform.I never thought I would get to that position.JLMwww.themusingsofthebigredca…

    1. Tom Labus

      To those who can now see docs, it is signature legislation. The GOP would have to show a legit plan but will never happen

      1. Richard

        Primary care mds insurance reimbursement is less than $100 a visit. “Can See” is a little of a oversimplification.

        1. Matt Zagaja

          My Obamacare care silver plan had a $20 co-pay for PCP visits, and now my Harvard University HMO plan is the same, plus $0 for preventative. Everything else is fully covered by the insurance co on both plans. Lots of people also choose the high deductible plans, but that’s a choice individuals make.

          1. Richard

            Yep, the primary issues of purchasing insurance is deciding how much of the first 10k to self insure, knowing about provider networks, and deciding how much black swan risk you want to take on (access to top tier hospital and or procedures)

      2. JLM

        .Herein lies the problem — the inability to see the challenge as it truly exists. it is not really a Republican v Democrat problem though it certainly has been couched in those terms and there are enough bad marks for both sides.The insanity of passing a bit of legislation written by lobbyists and insurance companies, with no subcommittee/committee/floor debate, unread, and on a straight party line vote — stupidity and arrogance writ large. Results predictable and delivered.I provided health insurance (health, dental, vision, life, wellness) to my companies over a 33 year period. I never provided Republican insurance, just insurance.The problems with Obamacare are structural. And the solution is going to have to be structural. It may require dismantling to fix the big cracks in the foundation.The notion that more people are seeing doctors is nonsense. There were 35MM uninsured in the before and they went to emergency rooms. To clinics. To indigent care. Used Medicaid. I sat on the board of such an entity and payment or insurance was not a consideration.We now have a similar number but worse, every single insurance beneficiary has had a staggering increase in price, staggering/unrealistic deductibles, and miserly coverage jammed down their throats.Keep you plan? Your doctor? Bend the cost curve downward?Wholesale disruption with inferior results. Across the board.The big winners?The lobbyists, the insurance companies.The Republicans do need to get off their asses and get with it and propose a viable alternative. Passing Obama’s budget — a la Paul Ryan the bearded one — is not going to do it.This is one of the causes of the anger that Trump is tapping into. It is only starting now. Just wait a year.JLMwww.themusingsofthebigredca…

        1. LE

          Agree with it all.The big winners? The lobbyists, the insurance companies. You forgot lawyers and politicians as big winners.

          1. JLM

            .Fair play to you. My oversight.JLMwww.themusingsofthebigredca…

          2. Richard

            The government is a health insurance company.

          3. JLM

            .Houston, we have identified the problem — the gov’t is a fatter than usual Jabba the Hut who is unable to get out of its own way.Microagression to all Huts. Sorry.JLMwww.themusingsofthebigredca…

        2. LE

          to my companies over a 33 year periodThank god you got out when you did. I am remembering that back in the 80’s I paid $65 for the gold plan of healthcare for an individual and iirc $130 for a family. That was “all you can eat, go anywhere no preapproval” plan that Blue Cross offered.The other thing that people ignore is that current healthcare costs greatly disadvantage smaller type companies (and traditional non “runway” startups) because they are competing with larger companies (or vc/angel startups) that can afford to pay for healthcare as a benefit.

        3. Matt Zagaja

          If more healthcare isn’t being provided for the same price that leads to a few potential conclusions:1. Healthcare organizations and insurance companies are getting better at extracting profits from consumers. In an industry where your demand isn’t elastic it can be quite easy to extract large rents. Yeah they capped the profits the insurance industry can take, but not the hospitals.2. The cost of providing the same quality of care is rising. Maybe doctors now make larger salaries. Maybe you’re paying for an espresso machine in the waiting room. Maybe the cost of occupying the land the hospital is on has risen as a function of the real estate market.

          1. JLM

            .The inflationary pressure of healthcare is immutable. It is real and it is pointless to delve into the “why”.This, of course, was one of the justifications for Obamacare which, like all the others, has failed to materialize.If you are going to pretend to ride the wave of free market healthcare, then you have to unleash national competition.I have a relative who is undergoing a very simple operation. Will likely cost $50-100K but the procedure is simple.She was able to find a hospital in Oklahoma which has published its rate card — fixed price — and touts an $8K cost for the same procedure. On their schedule, mind you.Her insurance? NO, cannot do that. Have to stay within the network.That is the problem in a nutshell right there. We are required to be stupid.JLMwww.themusingsofthebigredca…

          2. Richard

            This is slightly an unfair criticism. As you know there are many insurance cos that permit you to go out of network, they are however more expensive.

          3. JLM

            .No sale. Not even close. It does not really matter what some other insurance company in N Dakota does when you live in Texas.I get theoretically great care from the VA tempered only by the reality of the situation.By no measure, can anyone say that the system has improved.It is hopelessly and horrifically broken and Obamacare was the instrument of its demise.Please, just a smidgen of reality?JLMwww.themusingsofthebigredca…

          4. Richard

            I don’t follow your criticism. I pay an extra $250 a month to have access to out of network providers and hospitals. Think about it, let’s say your an HMO and you negotiate your rates with a local community of provides and hospitals. You have 10-15 million policy holders. To expect an HMO to now have to deal with 10 to 15 million new hospitals and doctors and so on as each policy holder seeks out of network coverage would be unfair to the insurance co and participating doctors and hospitals who negotiated the rate package based on the population size of the HMO

          5. JLM

            .”Unfair to the insurance company,” said NOBODY EVER.The big winners in all of this are the insurance companies. How does any insurance company not have a deal with every doctor and clinic in town? It is their core business.The whole population of Texas is only 27MM (and about 3MM illegals but who’s counting).Hospitals and doctors all have an insurance company rate card just like Medicare imposes one on them. They’ve been dealing insurance companies for decades.My personal doctor, part of a clinic with several practitioners, just closed down and is selling their building. Their complaint — Medicare declining reimbursement and the paperwork of Obamacare. They actually love the insurance companies because they are about collecting money.Guys in their mid to late 60’s and 70’s. A huge loss to the community.JLMwww.themusingsofthebigredca…

          6. Richard

            I’m trying to follow your arguments, but just not able to. What point are you making? There is no argument from me that a single payer is the wrong direction. And no argument that HMOs are not appropriate for people who want choice. Anyone who thinks that we don’t need insurance companies to negotiate rates on our behalf however should take a look at the “innovative medicine” sector, where charges are $650-$1000 for a consult.

          7. LE

            A guy that I bought a condo off of was a retiring doctor who was closing his practice. He told me he had a job lined up at the VA. Next thing I knew his wife told me he was closing down immediately rather than in a few months. Why? He had dementia or alzheimers.I kind of suspected something when I went to the office to look at it. There were pictures of him when he was in the Navy. When I passed by the first picture he said “I’m was an officer in the Navy!”. Then another picture further down the hall he said “did I tell you that I was in the Navy!”. Then a bit later “you know I was in the Navy”. Yet he was practicing medicine and got a job lined up at the VA. Of course he never ended up working there his wife finally realized he was unfit.

          8. JLM

            .Hmm, I think he treated me once.JKThe VA is long on promise and short on delivery. It should be great and it is dangerous. Why the gov’t should not be in certain businesses.Give vets a debit card and close down the VA.JLMwww.themusingsofthebigredca…

          9. Richard

            Went to an orthopedist at UCLA for a second opinion, i received three bills one from the doctor (in network), one from the imaging company (who turned out to be out of network) and one from UCLA. Called UCLA, they now charge a facilities useage fee. The charge was more than the reasonable and customary fee of the provider. This is now a common practice hospitals.

          10. Matt Zagaja

            I think Rich is correct that many PPO plans are agnostic to where you get care for out of network, but if you have an in-network option the savings you might find by leaving the network are not realized by the patient because the total out of network cost to you has a higher cap than the in-network cap.

          11. LE

            Her insurance? NO, cannot do that. Have to stay within the network.I had to get PT for a pulled plantar fascia. So I went to my wife’s hospital where I can get unlimited PT for free. I didn’t like it there so I decided to go out of network (and a place that was a bit closer to the office.) [1] They charge $110 out of pocket but $85 to the insurance company. I hadn’t met the deductible so I figured I would just pay up front. Can’t do that. They have to bill the insurance company ($85 per visit) and then when they don’t pay (because it’s out of network) they will bill me the $85. So if you have no insurance they won’t let you pay the $85 rate. Amazing the amount of paperwork that will fly when I am willing to just pay them now.[1] My wife of course thought I was nuts because it’s free at any place in her health system. To me all I cared about was getting what I wanted. I explained that you don’t go to a restaurant that you don’t like, or stay at a hotel you don’t like because it’s free or cheap so why should this be any different? Of course people do this just not me.

          12. Richard

            Regrettably PT space is a mess. I’ve had therapists bill my insurance $300+ for a single visit and get paid for virtually all of it.

        4. rick gregory

          Single payer. Eliminate the insurers and the dollars they take as profit which don’t go to the primary purpose of a healthcare system.Every other developed country does this and they have, as a group, the same level of care at about half the cost. Ignoring that because “socialism!!!” is idiotic. Any intelligent entity learns from others who do things really well.

          1. JLM

            .No sale. Sorry.We need competition just like all the other things that the gov’t is NOT involved in — the stuff that works.I would have no problem with a single payer system but only if there was national competition, tort reform, an opt out ability, and private insurance.You are simply wrong when you suggest that other socialized medicine countries are as good as the US. Who’s going to the Czech Republic to get a heart operation?Not me.JLMwww.themusingsofthebigredca…

          2. rick gregory

            Ah, prejudice. On balance, the other OECD countries have the same basic health outcomes as the US. They pay about half as much.We need competition because government? Really? Then why is our system twice as expensive per capita as any other developed country? Competition should have made us more efficient, right? But let’s not let facts get in the way of intellectual small-mindedness.The issue is that a healthcare system is about delivering care. The billions taken out of the system to feed private company profits are only acceptable if the system as a whole delivers a) much better care even though it costs more or b) the same level of care at a lower cost. Since the US system fails on both criteria… No.

          3. JLM

            .OK, so I think you made my point, didn’t you? It isn’t prejudice, it’s MY freakin’ heart.We had a bit of competition BEFORE Obamacare. I used to be running a company with a pool of about 500 and our heathcare insurance was quite good. Low cost, great network, low deductible, co-pay for everything. Great pharmaceuticals plan.Company paid.Along comes Obamacare and our plan became a Cadillac plan — for which we would be fined and the costs no longer tax deductible. I moved out as CEO in that time frame.As to outcomes, I will have to respectfully disagree. At the top, the American system delivers the best healthcare and diagnostic equipment in the world. Nobody else even close. Saudi princes can tell you that, no?In the middle and at the bottom, there are quite different drivers. You can great healthcare in Dallas but not so great healthcare in Kermit, that’s a geographical reality.Obamacare has mandated the creation of state exchanges which are duplicative of all the administrative overhead and which allow insurance companies to pick which markets to dominate. They also stifle competition.Obamacare anointed the insurance companies as winners.Do we disagree somewhere?JLMwww.themusingsofthebigredca…

          4. Lawrence Brass

            How about Sweden or the UK?In the line of what you wrote earlier, this is what you get when you let private interest dominate over public interest.

          5. JLM

            .I had British partners for years when I was a developer. Got an earful of healthcare rationing complaints.Their system is just like our VA.There is a system for the poor folk that grinds along and everyone else just pays for superior healthcare out of their own pockets.I wouldn’t mind that system in the US if it came to only that and you could opt out of the public system.Sweden is in a meltdown on a number of social service fronts.I would argue the dilemma is exactly the opposite of what you say. The government offered us up on a platter — ridiculously making us participate in a flawed plan under pain of the IRS boogeyman coming to get us with no real test of reasonableness when it came to pricing — to the private interests who were their unindicted co-conspirators.They wrote the damn legislation — the unread, misunderstood, straight party line legislation.If we had a nationwide competitive landscape, the American entrepreneurial spirit and a little old fashioned competition would give the curve a bit of downward pressure.I actually saw a bit of that years ago when the Heart Hospital of Austin opened in competition v Seton Hospital’s cardiac care clinic. It was healthy. Very healthy.This is a business problem moreso than a regulatory problem if we are smart about it. Smart being the operative word.JLMwww.themusingsofthebigredca…

          6. Richard

            One insurer vs 10 insurers vs 100 insurers will barely budge the needle.

      3. pointsnfigures

        Vouchers. Vouchers and Health Savings Accounts work. Right now my med premiums are through the roof-with a $10,000 deductible per person. Basically it’s a tax.

        1. Tom Labus

          But to do something positive is almost impossible

          1. pointsnfigures

            Not if there is intestinal fortitude and the courage to abandon the current crappy scheme.

        2. JLM

          .Actually, it is a fine.JLMwww.themusingsofthebigredca…

    2. Richard

      There are other other models for insurance not in the public press, see https://www.libertyhealthsh… which offers nationwide hospitalization for about 200 month.That said, access to affordable insurance is not the same as access to affordable health or healthcare.

  20. Brandon Burns

    “That’s why it is important to have a point of view, ideally one that is not shared by others, and to put money where your mouth is.”Words to live by. And also a good segue into an update for my AVC buddies on my whereabouts.I’ve frequently shared a POV here that is in conflict with the startup consensus. However, while both my parents and two of my grandparents made a living by starting their own companies, and I’m a UX designer by trade (via the agency world), my personal blend of tech and entrepreneurism doesn’t really jive with the so-called one place where those two things are supposed to live together — the startup community.Raising money has been a challenge for me, but there are also good reasons for that. Or so I thought. So I set out on a plan B: take a job at a good tech company, become a member of the in crowd, and then go from there.And that’s when everything that’s wrong with startup land reared it’s ugly head.I got my start in UX at R/GA, the world’s undisputed best digital agency. I opened the Beijing office of BBDO, the worlds most awarded global agency (i.e. they’re digital + tv + PR + the whole shebang). I have a chest full of my industry’s top awards for creativity, in addition to having garnered business results with tools I’ve built — tripled conversion on family plans for Verizon, launched Google Fi (for which invites, unexpectedly, sold out almost instantaneously), etc. To say that I’m a seasoned, effective product leader is an understatement.Nevertheless, the road to applying those skills to do the same job — building tech shit that matters — in the tech/startup world was almost comically arduous. There are many, many stories to tell here, but the kicker came via one particular series-D level A16Z company that was on the hunt for a design director. I had never in my life interviewed at a place where *several* of the people I interviewed with told me that I shouldn’t want the job. The CEO has no tech or design experience, yet leads product, poorly, leading to a palpable defeatist attitude permeating throughout the design and engineering teams — that is, except for his pet people, who seem to be quite happy, yet were openly shat on by most everyone I interviewed with as incapable and having bad attitudes. However, the product is profitable and respected, due to a first mover advantage in a big profitable market with few players, and has given them a moat that has bought them time to iron out their internal growing pains.But how does a company fix such growing pains? How did they get in the rut in the first place? Well, by their own doing of course. You only know what you know, and it’s hard to save yourself from what you don’t know.But you could bring in an outsider who knows better, right?No. Because the startup world is either too arrogant or too foolish to realize that the answers to a lot of its problems lies in hiring talent from other more mature industries who’ve already dealt with the same B.S. and know how to navigate it; from hiring, to staffing, to project management, to whatever. The startup could easily help itself by being less insular, yet it’s too drunk on its own kool-aid to do so.And that’s just the tip of the diversity iceberg. *cough, cough*Along the way, I took an interview with an ad agency by the name of Wieden+Kennedy. I was actively avoiding answering calls like these, but W+K is by far the most respected privately owned agency in the world. From creating the Nike brand in the 80s (which they still manage), to the Old Spice guy today, they’re legendary and so I took the call. Despite being known as a TV commercial agency, they’re building a new product development group, and are full of excitement about it, don’t really know what it’s going to become or how to get there, but they know they need to hire good people with a diversity of backgrounds and experience in order to figure it out.They’re also in Portland, where there are quite a few startups — Simple (banking) and Treehouse (education) are probably my favorites — but the community couldn’t be any more anti-startup. People don’t talk about Silicon Alley buzz, and no one ever validates anything by what an investor had to say — Portland is a maker’s town, where people are judged by what they’ve made, how well it worked, and whether or not it had a tangible impact. They also go home at 5p, don’t work weekends, spend lots of time outside, and are generally healthy and smiley.So, I’ve moved to Portland to join Wieden+Kennedy as Experience Design Lead. It’s been about 6 weeks, and it’s already abundantly clear that it was the right choice for me. There are a lot of reasons for that, but they can be summed up by one thing: I’m surrounded by people who see the world similarly (but not exactly) the way I do.Starting my own business is currently on the back burner, but leading teams in the starting of new products — from concept to research to build to launch to management of it’s growth — is now my everyday job at W+K.At some point, likely sooner than later, I’ll launch something else of my own. And when I do, and when I’ll need to assemble a team, and look for funds, I’ll be in a community that I feel is a better fit for me and, while it’s not guaranteed, will hopefully lead to more successes. Worst case, I’ll at least be in a better head space.The startup world doesn’t have a monopoly on startups, technology, financing, or anything else. Anyone can start a company anywhere, everything these days is tech, and you’re only going to raise money from people who feel a personal connection to you anyway. All the rest is just hot air.”That’s why it is important to have a point of view, ideally one that is not shared by others, and to put money where your mouth is.”I’ve shared these thoughts about the startup community right here on this blog many times. Now I’m putting my money where my mouth is by physically removing myself from the NYC startup bubble to kick it at W+K Portland.But I’m not removing myself from AVC. I’ve learned a lot here, and will continue to do so. And having removed myself from the bubble, AVC will be an important aspect to how I stay informed, and I’m grateful that it, and all of you who make up this community, are here. There are slivers of the startup world that I love, and AVC is one of them.

    1. fredwilson

      congratulations! finding a great fit in your work life is so important.and this is a fully blown blog post delivered as a comment

      1. Brandon Burns

        Ha, yeah, halfway through I almost stopped because it was too long, but I felt I owed AVC an update.That said, I will likely expand on the story of my interview process with the startup I mentioned above and publish it on Medium as a piece on diversity. Tech’s diversity problem is less about race and gender, and more about insularity and an unwillingness to look outside the box — and I have a slew of first-hand anecdotes via the dysfunction of this one company to show it.

        1. LE

          Medium? Brand it under your own name on your own site. (Then if you want ok copy it to Medium).

          1. Brandon Burns

            You always make me remember the right things, @domainregistry:disqus

          2. LE

            brandonburns.com is for sale for $895Nothing how many of you there are:https://www.linkedin.com/pu…and the fact that you might get them to take a haircut of 10 to 20% you may want to consider buying that (since you missed getting it when you could for $15).

          3. Brandon Burns

            I can’t believe I missed it for $15. Sigh.You’re right, though. I need to get it.

        2. Vasudev Ram

          >Tech’s diversity problem is less about race and gender, and more about insularity and an unwillingness to look outside the boxI was about to write ALMOST EXACTLY THE SAME THING (as your words I’ve quoted above) – but in reply to your first comment – the long one at the top, which Fred called a full blown blog post – except that I would modify your comment to say:Tech’s diversity problem is more about INSULARITY (and an unwillingness to look outside the box) which is likely also at least partially the cause of the attitude towards race and gender (though the latter can also be a standalone issue of its own).Having a background in both enterprise companies and startups, and seen a lot of what you describe, and the stupidity of it, and the extremely poor results of such attitudes, I can say that these issues are not limited to startups (including the insularity etc.), but are present across the spectrum of companies. It”s a human and a (insular) community thing, not a sectoral thing.

          1. Brandon Burns

            I hear you. I also think a lot of the diversity issue is due to not knowing how to hire. Not knowing what skills are really needed for a job, not articulating them well internally, not communicating them well to candidates, not knowing what you’re looking for in an interview, or how to evaluate people in general… which all leads to making decisions on gut, or relying on examples of what you’ve seen work before (which doesn’t help when you have problems you’ve never navigated before), and ultimately hiring who you trust most, which when you don’t know any better, ends up being someone just like you. And thus the circle of insularity — and, thus, the roadblock to inclusion — continues.There’s my full thesis.

          2. Vasudev Ram

            All good points, including, specifically:>not articulating>not communicating them well>making decisions on gut (but I’d add, “only”)>relying on examples of what you’ve seen work before>ends up being someone just like you. And thus the circle of insularityInsightful thesis, overall.

          3. Brandon Burns

            Thanks. I’ve been sitting with it for a while.

          4. Twain Twain

            The roots of the diversity problem is also to do with companies not having the right tools to measure human biases. It’s ironic that startup sector goes on and on about the importance of measuring everything so we can track ROI and improve results, yet even Google only started measuring bias relatively recently:* https://m.youtube.com/watch…Imagine if this process was repeated with African American and white European instead of male and female.Without exception, all of us are subjected to and affected by biases.Being able to measure those biases would make problems easier to fix — in much the same way that measuring user churn rates enable us to quantify and qualify problems and put in steps to reduce churn.High churn rates of talented people is what companies need to risk manage.So … the key is in measuring those human biases in systematic ways — just like any other KPI.

          5. Brandon Burns

            Yep.And I think there is a way to solve this using technology. But I also don’t think anyone will put much effort towards measuring these things without some sort of clear ROI. The key is slipping it into a (enterprise) product that can bring clear ROI in a way that’s tied to this kind of data.

          6. Twain Twain

            Believe me, I think about measuring perception biases so much I “put my money where my mouth is” and coded the system to do it.It’s worth reading how YCombinator recruits engineers and how they also know the recruitment process is broken:* https://data.triplebyte.com

          7. Brandon Burns

            I just shared that with my team at W+K. Thanks!

          8. Twain Twain

            Triplebyte’s conclusion into who YC startups recruit was this: “YC Startups disagree strikingly about who’s a good engineer. Each company brings a complex mix of domain requirements, biases, and recruiter preferences. Some of these factors make a lot of sense, others less so. But all of them are frustrating for candidates, who have no way to tell what companies want. They waste everyone’s time.I’m excited about mapping this. Since we started matching candidates based on company preferences (as well as candidate preferences), we’ve seen a significant increase in interview pass rates. And we only just completed the interviews analyzed in the post. I’m excited to see what this data does. Our planned next step is to not only interview founders and recruiters at these companies, but also have the engineers who do the bulk of the actual interviewing provide the same data.”See? There’s a lot of missing data that hasn’t previously been collected and mapped — even by the leading-edge startups incubated by YC.

          9. Brandon Burns

            You work at Triplebyte?

          10. Twain Twain

            No. I know Triplebyte’s CEO a bit.

          11. Matt Zagaja

            Hiring processes and preferences are a strange black box in relation to most companies from Fortune 500 to start-ups. When I was job hunting last year I learned the most valuable two things to ask a connection I networked with was to explain the thinking behind the job description (is this a minimum v. is it aspirational, what other things are they looking for, etc.) and then obviously if it might be a good fit to put in my resume as a referral (not sure how much this counts at smaller cos but in big orgs they usually give the referring employee a bonus if you’re hired and having someone refer you in gets you at least looked at).

          12. Donna Brewington White

            Wow, Brandon. This is my battle as a recruiter. I see these hiring trends — a new one is hiring people with management consulting experience for operational roles — and a whole population of great potential candidates gets left out because the environments they come from are unfamiliar to my client who only knows the tech world. People with operational experience that may not be as sexy but could get the job done well. My early experience was as a job analyst so I learned the anatomy and architecture of jobs, but this knowledge doesn’t come in very handy when a CEO wants the latest design in a job candidate.And then the whole diversity thing. It’s a very old problem. But the lessons don’t get learned so it keeps following the next generation of business leaders.

        3. Donna Brewington White

          Thanks, Brandon. Really appreciate the update. And the thoughts you’ve shared in the comments in this thread. I really do think that you should do some posts on Medium around these topics/thoughts. Relevant and timely. And there will likely be upcoming developments in the tech community that will create more cause for reflection.

    2. falicon

      At the end of it all, the secret is in finding what makes you the most happy…I think it’s always been clear that great design, UI/UX, and building quality products is what motivates you and is where your true happy place exists…so excited for you.Also on a personal note – thrilled to hear that, no matter what, you’ll stick around here and continue to bring doses of “reality checks” to the debates!

      1. Brandon Burns

        Yep, and yep!Though being on the west coast makes it kinda hard to get into the convo here, since it’s usually 6am my time, or earlier, when it’s getting started. That said, I’ll try my best!

        1. Donna Brewington White

          It’s earlier. More like 4:00 a.m. our time. Works great when you pull an all-nighter. Doing far fewer of these nowadays.But no worries Fred will (I think) be doing his winter in Southern California soon and will post at a more reasonable hour for some of us.Welcome to the West Coast.

    3. awaldstein

      Mazel tov–doing stuff that makes you happy is all that matters.

      1. Brandon Burns

        It’s funny how simple a statement that is, yet one that’s so difficult to internalize and actualize.

        1. awaldstein

          I’ve spent a lot of time thinking about this this year and am acting on it as well.It will take me in very different direction than you own but the end game is to do what you are great at and be happy doing it.Have a great holiday!

          1. Brandon Burns

            Thanks, and you, too!

        2. LE

          Money is necessary. And it’s an important part of the equation for most people. More now than it ever was. Even in Portlandia.My guess is JLM would not be as happy with his perfect son in law married to perfect daughter if he when he met him he didn’t have a job and career and was simply pursuing happiness.Advice to pursue happiness is great if you have a trust fund or for some other reason you are financially independent (spouse with good job.)

          1. Brandon Burns

            I’m not financially independent, so the job definitely helps.And being at a company that’s excited to have someone on staff who’s entrepreneurial and doing his own shit, plus the 9ish to 5ish nature of the Pacific Northwest culture that allows for time for yourself, helps more.

          2. JLM

            .I know JLM.JLM is a friend of mine.I can assure you that if “future son in law” was actually “son in loll” there would have been no wedding. This is the real world down here.Two cannot live as cheaply as one. My Perfect Daughter is not supporting anybody but herself.JLM http://www.themusingsofthebigredca...

          1. LE

            That was great. In that Carrie is playing the role of the lipstick lesbian.

    4. kirklove

      Congrats Brandon! W+K is badassssss. All the best.

      1. Brandon Burns


    5. Elia Freedman

      Welcome to Portland, Brendan! We need more smart, creative people like you here. So glad W+K got you here. If you are ever interested in meeting a local, please drop me a line: eliainsider.com

      1. Brandon Burns

        Nice! Let’s definitely grab coffee mid-January. You can get my contact info from http://www.brandonburns.co

        1. LE

          You need the .com (and the email should be [email protected] (get rid of the .co ) not at gmail. Google apps is $5 per month well worth it for the portability.

    6. Kirsten Lambertsen

      Congrats! Portland is indeed a great place for creatives, from what I’ve seen. I follow a bunch of comics industry artists and writers (on Twttr) and a lot of them are in Portland.Have fun!

      1. awaldstein

        I know all of the natural winemakers in the area.Excellent group of people. Excellent wine.

        1. Brandon Burns

          Oregon wine > California wine, hands down.

          1. awaldstein

            I won’t go there.Climate, grape varieties aside, the west coast is one large community of small, mostly first generation winemakers who are just doing things differently and redefining the role of the natural wine maker in a unique way.Almost no one can afford land so there is a nomadic community sleuthing out and sharing plots, doing some whacky things along the way.Great great quality and interesting wine being made all up and down the coast.I do love the Portland community though and please do say hello to the Bow & Arrow people who are doing just kick ass approachable wine in downtown Portland.

          2. Brandon Burns

            I will for sure check them out.FYI, my favorite part about the Oregon wine scene is the quality-to-price ratio. I find that they produce many more quality options at a lower price point than I see coming out of CA.

          3. awaldstein

            You will love Bow & Arrow then.Great people. Approachable and affordable wine.

        2. leigh


          1. awaldstein

            The natural wine community on the west coast–the winemakers that is–are so fascinating a group.Now i have my next post.

      2. Brandon Burns

        My co-lead at W+K is a developer, a Portland-native who came from the comic industry. It’s incredible to work with people who have the same skill sets, but different perspectives due to different experiences. And it’s even better to be in a culture that knows that and actively seeks it out.Building a company, if you do it right, and it gets big enough, is in many ways building a culture. W+K has done that in spades, and Portland provided the environment that led to its success. Definitely looking forward!

    7. Twain Twain

      Talent flows to wherever it FEELS valued and heard and has the freedom to learn and do better work.Finding the people culture that’s right for us is one of the hardest problems to solve.Congrats on solving that hardest problem and all the best for your new adventures in Portland.

      1. Brandon Burns


    8. JLM

      .BB, life is a journey — a freakin’ marathon — not a destination. You are on the journey. Never stop developing — in two contexts.People at AVC don’t know that I watched you lead and you have the right mojo. I don’t bullshit people very often.Rip it.JLMwww.themusingsofthebigredca…

      1. Brandon Burns

        You’ve been a great mentor, and a secret perk of AVC. All your counsel has been both integral and appreciated.

        1. JLM

          .Kind, appreciated words but for me — I’m very high on the mentee. He’s a killer.Happy New Year.JLMwww.themusingsofthebigredca…

      2. BillMcNeely

        It’s siege not a raid

        1. JLM

          .Of course, I do love a good raid.JLMwww.themusingsofthebigredca…

    9. Drew Meyers

      Welcome to the west coast! (I’m in seattle)

      1. Brandon Burns


    10. Salt Shaker

      W+K has always been ahead of the curve, and somehow the agency has always maintained its small, creative culture, in spite of its enormous growth. The gap between digital and traditional agencies has begun to narrow, as the latter needed to enhance its core competencies to compete in today’s digital world, particularly if they wanted to “follow the money trail.” That said, traditional agencies know best how to manage and position brands, and enhancing W+K’s digital capabilities, particularly for an independent agency, makes a lot of sense.My friends who live in Portland love it! What’s not to like? It’s pretty chill, is relatively affordable, great outdoors rec, good food, The Gorge, great wine (Willamette is a stone’s throw away, as is Syncline Vineyards–one of my fav’s–right across the OR/WA border), etc.Anecdotally, I think there are more tats and piercings per capita in Portland than anywhere else. Maybe there’s some body art in your future :)Sounds like a great opportunity. Best of luck!

      1. Brandon Burns

        Yep, W+K has clearly figured something out about building a successful company that stays small in size, big on profits, and maintains a culture in the founder’s image. Lot’s to learn.I may or may not get another tat, but I’ll definitely take advantage of the gorge, wine, food, etc.

    11. leigh

      I completely wish you only the best of luck but (here comes my but) … everything is what you make it. Whether that is W+K, creating your own thing, or working for a start up. Sometimes, it isn’t just ideas that matter. As someone who has been in denial that I own an Ad Agency (Having working at big agencies, had my own failed start up, consulted, back to smaller independent agencies etc.), I’ve come to understand it’s the people that matter almost more than anything else. Speaking of which, if you are working with Oonie, she is good people so get ready to hold on and have some fun (and tell her Leigh says hi).

    12. Dale Allyn

      Well done, Brandon. Thanks for posting this update.

  21. Val Tsanev

    .500 is not bad at all, although it proves the fact that no one has a crystal ball. It is amazing how only a small number of factors we can control in our lives. Personally I have no predictions for 2016, the only thing I feel confident about is that once those big private companies, the multi billion ones go public, and they will have to at some point, will be a bloodbath. Shareholders/founders of those companies who are currently billionaires on paper will become millionaires, valuations will be reduced by on average 25%-30% because Wall Street does not care only about market share and growth rates but for the entire income statement, balance sheet and cash flow statement, including EBITDA margins and Net Income margins and for most of these companies they are big time in the red, which will impact valuations.

  22. Matt Zagaja

    Not sure about healthcare, but I think government is the next big sector to be disrupted by tech.

  23. pointsnfigures

    I remember when I traded. I used to say if I hit .300 I’d be in the trader hall of fame. In VC, if I hit .300, I will do really well. Hitting .500 on actual predictions isn’t easy. If you do better than 50%, either you are making predictions that everyone else sees-or you aren’t taking enough risk with your soothsaying.

  24. Marcosardi

    The Apple Watch was a flop? I’d be curious to learn on which numbers this is based on, and what would a success look like. Going from zero to an estimated (in my book) $8 billions in revenue in under a year is not a flop. We might have different numbers though, and I might learn something here.

  25. Eric Seufert

    The Apple Watch (and the current generation of smartwatches) seem like a hardware form factor that borrows usability and use cases from the mobile phone form factor, missing out on the fundamental strengths and capabilities of a watch-sized computer. Most apps I’ve seen for the Apple Watch are either complements to iPhone apps or completely misdirected in terms of UI and purpose. I’m not sure if the Apple Watch will ultimately take off, and if it does, what kinds of apps will catalyze that, but the current state of the Apple Watch App Store certainly isn’t facilitating that. The Apple Watch feels a lot like the Segway in that respect.

  26. abolish

    Seems premature to call the Apple Watch a flop given there are no reliable sales figures.I hope you will post an update when they are actually public. Kudos for checking yourself though.

  27. ian van every

    if the marginal cost of (digital) elements of healthcare can approach zero then mighty things could happen, changing how we deliver care and how we consume care beyond our wildest imagination. if the blockchain could deliver the underlying mechanism for our smartphones to access the verified chain of our healthcare record then, boy.

  28. howardlindzon

    Wade Biggs would have killed for .500

    1. howardlindzon

      I mean Boggs

  29. Pete Griffiths

    “…we now seem to be in a phase where investors believe you can have blockchain without Bitcoin, which to my mind is nonsense.”I think this is overstating the case:http://www.nasdaq.com/artic

  30. leigh

    Retail is the next big digital wave that will hit. Still miles behind where it should be. Oh and email *might* get smarter but I’ve been waiting for that like I’ve been waiting for Canadian housing prices to decline.

  31. Mordy Kaplinsky

    A few notes on your predictions:VR: The VR market will take a bit of time to develop as the tech matures and as use cases develop that widen the market. I wholly agree with the weakness in both the current headsets capabilities, as well as the applications that they’re being used for. That said I can totally see the headsets improving and products being developed to make it a mainstream product long-term, so I’m bullish long-term.iWatch: Phones and their expected uses fit into the one-size-fits-all approach, while wearables do not. To date the customer’s required use case is the driving reason for their choice in wearable, but if/when a watch comes out with interchangeable sensors and capabilities ala Google’s Project Ara and new sensors are developed that drastically improve the on-body capabilities, I can see this market exploding.Healthcare: Health is an obvious area that cries out for innovation, but the heavy regulatory environment at multiple government levels and the lobbying dollars makes this a very hard market to crack even for the most experienced entrepreneurs, thus scaring away people looking to fix this beyond NGO’s and investment dollars. When there is a breakout product that showcases the potential for health, the dam will breach in the government’s obstacles as well the available funding. However any investor and entrepreneur looking to get into health had better have access to a deep bench of domain specific expertise.

  32. WA

    If you want to use a baseball analogy you can’t say not impressive….250 = no longer on the roster.300 = hall of fame.500 = Pretty impressive results Happy New Year all.

  33. Dale Allyn

    Excellent post, Fred, and it’s fueled a great discussion, as is so often the case.I especially share your views on the “Unicorn Syndrome” and its associated woes.(Oops! Guess I stayed up past midnight on the Eve. Reading got the better of me. 😉

  34. george

    Love your year end summary! Although, I was a bit surprised to read one call out, that the Apple Watch is a flop. My pov, I wouldn’t classify this new product launch a flop when it’s estimated to ship between 15-20 million units and record 7-8 billion in new revenue over the first year. It’s early days but Apple has shown repeatedly, they understand how important product leadership positions their path in overtaking the market (Fitbit 1.5 Billion in sales).

  35. Donna Brewington White

    We used to have a weather forecaster in SoCal named Fritz and there were billboards that said “Fritz said it would be like this.”I had a few “Fred said it would be like this” moments in 2015.Didn’t you also predict SaaS taking a more prominent role? I certainly saw this in the increased number of searches for SaaS sales roles that came my way.

  36. Michael B. Aronson

    The Repubs and Demos did agree on one thing that is great for tech and startups, they made the QSBS exemption PERMANENT, so NO capital gains taxes on much of angel and VC investment (if you hold for five years). definately a forerunner of bifurcated cap gains rates based upon holding periods which seems to have a lot of support

  37. cliveb

    VR is innovating where Moore’s law is at. Smartphones, head sets and the change over to low power multi-core computing. VR looks like the new game console to me + PoRN!

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  39. kidmercury

    agreed. if one views the wearable market as growing trend, the watch has sold a few million units and apple has clearly put a major stake in the ground that positions the company 2nd behind fitbit and well-positioned to continue iterating.

  40. fredwilson

    The percentage of people who bought those first iphones and iPads that still used them six months later is like 10x the same percentage of watch buyers. That’s a flop!!!!!

  41. LE

    First the entire idea of this exercise is a fun game but near meaningless. [1] Sure by a 1 year time frame it’s not the winner that people were expecting it to be. Perhaps (in defense of it) it’s more of a long game than a “Top 40 hit”. We are only on the 1st iteration. Took some time until most people got iphones as well. Wasn’t a blockbuster with the first iteration.Anyway back to “meaningless”. Why?1 year is an arbitrary timeframe. Why 1 year? Why not 5 years or 3 years or whatever? What granularity do you want? 1 month why not that!What about Tesla? Is that a flop? They aren’t making money and relative to cars sold (by other brands) it’s a small amount and they loose money on every single car.Self driving cars? What’s the prediction on that? Everyone thinks that’s a given so what is the time frame for that.Amazon? How many years did that take until it began to cut off the air supply of traditional online (and now bricks and mortar retailers)?[1] The type of things that newspapers do to build circulation (like they did “Dear Abby” or “Best of Philly”).

  42. andyswan

    We predicted 9-14 million: http://blog.likefolio.com/p…Analysts were predicting 30-40 million at the time… that’s a VERY big difference.We were right on. It was a flop by Apple/analyst standards.The real winner was social-data becoming a proven metric in investing. Now we’re taking that to the next level in 2016— “If you’re not using social data in your research and analysis, you are failing your clients”

  43. kidmercury

    damn, better than i thought. maybe not a home run by some calculations, but at least an extra base hit.

  44. falicon

    Perhaps it’s a Fosbury Flop ( https://en.wikipedia.org/wi… )…so at least it got over a high bar to start 😉

  45. Semil Shah

    Probably takes 3 generations to get the product right, as it did with iPhone. Folks @ Apple know v1 wasn’t up to snuff but I can’t seem them abandoning the line, yet they have to learn from how market expectations for their releases have changed since 2007.

  46. Salt Shaker

    Wristly’s customer survey data says the Apple Watch has a satisfaction rating of 96%, which obv is a very strong metric but IMO a bit misleading. When they calculated their top 2 box rating they used unusual scaling (“very satisfied/delighted”) as a top box measure and “somewhat satisfied” as their second top box rating. Most market researchers would view and segment “extremely satisfied” and “very satisfied” as a top 2 top box rating. There is no “extremely satisfied” metric in Wristly’s survey design, which again is fairly standard protocol. https://techpinions.com/apphttp://recode.net/2015/07/2

  47. Matt Zagaja

    I’m seeing more Fitbit than Apple Watch out there but am still going to double down on Apple Watch succeeding. I think Apple is replicating their iPhone strategy and occupying the high end of the wearable market where the profit margins live while letting the competition eat each other up at the lower end. I still love and wear mine daily. No regrets on the purchase but I am also excited for v2 which will hopefully be faster.

  48. LE

    Wha? Are you saying that people are either returning their watches or they are buying the watches and not wearing them? What doth thow base this conclusion on?Killer apps for me (and I was not an early adopter fanboy by the way):1) Talk to mom while moving about or cleaning office [1]2) Flick wrist to see texts (or phone calls)while driving or when phone is in pocket. Reply to text right from the wrist by voice3) Set alarms (super helpful)4) When indisposed no longer need the phone in the indisposal room.(Then again I drive an ICE so what do I know..)[1] This is great and justifies the cost in itself.

  49. Brandon G. Donnelly

    it’s funny how uptake works.without looking at any numbers, you can get an intuitive sense of what is spreading and what is not. you just have to look around to see what people are using and what they’re talking about. symptom of living in a dense city, i guess.nobody seems to be talking about the apple watch anymore. of course, that doesn’t mean they won’t get it right by the 2nd or 3rd gen.in my own case, i was really stoked to buy one. i even went to the store ready to deploy my wallet. but after playing around with it for awhile, i couldn’t see how i would get any value out of it.

  50. Lawrence Brass

    I have not used a wrist watch for almost 17 years, since my first compact mobile phone, so I was not too excited to wear something on my wrist again. However, I got one for ‘development purposes’ and forced myself to use it to get a feeling of the experience. After 6 weeks, I can tell you that the experience has been awesome, pleasant and liberating. It is also nicely built as everything Apple. I think it has a lot of unrealized potential, more of a slow adoption curve than a flop to me.We do not have Steve Jobs to explain us why we need an Apple Watch.

  51. Richard

    Comparing Apple Watch to an Apple phone is comparing apples and oranges. Comparing the Apple Watch to Fitbit on usage on the other hand has meaning. Any data?

  52. Marcosardi

    Can you point us to actual data?

  53. Drew Meyers

    Agreed. Everyone I know who has gotten an apple watch says it’s not that useful. Sure, it may be “cool”… but cool doesn’t result in a lasting product that delivers no value. Future iterations could change that though, if it ends up making the phone useless..

  54. SubstrateUndertow

    That seem like a weak and convenient metric.The Apple Watch is a much more ambitious market stretch than any of Apple’s previous products. The ecosystem of enabling sensors and actuators that will give it consumer wings have not yet arrived as many of the them represent very difficult challenges(health sensors) as does the interface and battery challenges of the core product itself.The watch challenge by its very nature requires some serious lead time for support devices and developer imagination to get their integrational bearings.The iPhone and iPad were simple miniaturizations of well establish demand curves. The watch is miniaturization + a galaxy of hardware sensor/actuator satellites that will take time to grow into their new social dependencies.It seems clear that Apple is willing to suffer the premature cat calls of “the FLOP is falling – the FLOP is falling” while taking advantage of a strategic early start on the evolutionary product-timeframes required here.The watch represents a vastly more organic ecosystem challenge. Apple’s DNA speaks to its patience and faith in the rules of organics”things that grow together work together”the watch’s organic social/technical integrative growth-curve interdependencies will simply require more organic setup time than the previous challenges of simply shrinking the computer’s looking glass.

  55. abolish

    Where did you get that 10X figure? I call bull. Even if the iPhone first gen long term satisfaction rate was 99%, the maximum possible, you’re claiming the Apple Watch’s is under 10%? That 90% are sitting in drawers after six months?Baloney. Can’t be true.

  56. JLM

    .One of those things that has to be viewed through Apple’s unique lens.13MM is a lot of anything except for Apple?I think the jury is still out on wearables and Apple watches, in particular.JLMwww.themusingsofthebigredca…

  57. Semil Shah

    The flip side is Apple should be more sensitive to releasing these products ahead of hype curve given how well iPhones perform. People are bound to be let down.

  58. LE

    13MM is a lot of anything except for Apple?Otoh that was “by Apple”. The Apple brand alone shifts the baseline. You get more with a product and the Apple name than just a product alone.(I own a watch and think it’s great has a few killer app features for me but no it’s not an iphone..)

  59. LE

    You are saying they should manage expectations better. Deliver more than they promise all of that. For normal companies that is true. But for Apple it’s different.The truth is that Apple not hyping it would also be an acknowledgement that they don’t think it has potential. Then what would happen? This would be similar to Trump building something or doing something and not bragging about it. Plus they needed all of the hype to get the ecosystem goosed and people to start thinking about it. Part of Apple watch (say with payments) is a chicken and egg thing. [1]Apple (like Trump) operates by different rules than George Bush or General Motors.[1] Similar to real estate developers do this with projects in shit areas where they use the type to get name brands (say restaurants) on board in order to make the project a reality. It’s part of the process.

  60. SubstrateUndertow

    I seem very likely that Apple has that level of introspection covered and that Apple judged the best marketing/product-evolution tradeoff was an early launch so as to catalyze the required ecosystem evolution dynamic.

  61. LE

    Simmer down. Even if he thinks this he should also be hedging it.

  62. Elia Freedman

    I’d be surprised if Apple saw Watch sales as a flop.

  63. Richard

    I saw many predictions in the low teens. A projection without an algorithm and a time stamp is just smoke and mirrors.

  64. LE

    So my first question prior to looking at your data as a resource would be to want to see each and every prediction of a similar type compiled by an independent party. But that’s me. Touting this type of thing is a great way to get people to like likefolio. [1]By the way on your home page, in addition to “institutions” you need “investors” and maybe even some other financial buzz words (hedge funds or whatever is in vogue now).I also like the way you don’t show pricing on the institution page so you can soak them according to the size of their wallet.Oh wait you are missing the ability and not marketing totally package information to investors who would just want custom reports for their purposes and don’t want to program or anything like that. Just want facts and figures and a summary to read. Something you can do and charge for from the stream of data you say that you have.[1] And I say that genuinely good for you talking this up it’s what I would do as well.

  65. andyswan

    Who cares— investors did.

  66. andyswan

    It didn’t with the ipad. They sold that right into their customer base at a clip multiples higher than the watch.

  67. SubstrateUndertow

    Will the long market lead times required here, in the end, become a major product moat for Apple ???

  68. Richard

    Most iPad 1’s were not exactly a daily go to terminal

  69. Semil Shah

    But iPad was a more derivative product of iPhone, so in my book — new form factor, but mostly sorted out by time of production.

  70. rick gregory

    The iPad was the fastest selling tech hardware product ever. Hardly a reasonable bar (“Sorry rookie, but Michael Jordan was better by this time…”)

  71. Semil Shah

    That’s a good argument. I buy that. Maybe then, not make prices so high?

  72. LE

    No because the idea is to constrain demand at the start. The product is in no way ready to sell mass quantities even if it could sell more. [1][1] A similar situation with a new 2017 car I am going to buy. At the start (it’s not a new model but a mid cycle revision of an existing model) they offer limited quantities. First to gauge the market, 2nd to make more profit (at the dealer that is to reward them) and third to work out the kinks and prevent PR disaster. [2][2] Like the transmission that failed the last time I did this that they had to fly in by Fedex from Germany to fix 2 weeks after I took delivery. So I was the canary in the coal mine. Of course I still love the brand which is why you don’t want normal buyers having the same types of problems. You want the fanboys.

  73. Lawrence Brass

    4) indeed, save it from unwanted immersions.

  74. Richard

    Amazon vs retail continues to me the biggest missed forecast of all times.

  75. andyswan

    Our range was less than 50% of the average analyst projection. That’s a massive difference…anything in range is a total home run.As for defining “flop”, I’m doing so in the way our clients would view it. They are investors or analysts of AAPL– to them, it was a flop, which is why they were so happy with our data.

  76. andyswan

    Verified data is available to all potential clients. Custom reports is coming in 2016. Agree on all points.

  77. andyswan

    That’s fair

  78. rick gregory

    investors and analysts have been doomsaying Apple for years. What’s new there?

  79. SubstrateUndertow

    Let them place their bets !Who really thinks the the world of monitoring and controlling all your stuff and messaging is not going to end up conveniencing itself on our wrists ?It is simple a timeframe debate !

  80. andyswan

    That’s fair… but at the time it is EXACTLY the analogy that analysts were using to make projections to their clients. That is what we took on with our data, and proved incorrect.

  81. andyswan

    Actually if you read, it’s the opposite. Analysts and investors expected FAR MORE Apple Watches to be sold in the first year than were actually sold. We were predicting against the analyst/investor optimism.

  82. pointsnfigures

    http://j.mp/1NRuhJV When did they introduce the watch? Here is link to a YTD stock chart on $AAPL. Looks like investors cared, and continue to pound it.

  83. rick gregory

    Not debating that, but the street has been saying Apple is doomed pretty much ever since Jobs came back. It’s tiresome. AS to the Watch, I’d actually use the consensus prediction as an illustration that yet again, the street doesn’t understand Apple. Look at the growth curve for the iPhone… bit had a fairly slow start in the first year and we know how that ended.Now, I doubt VERY much the Watch will do the same thing, but I also think that wearables will be a significant market in 5+ years and the easiest entry there is a wrist band of some kind but that might not be the best way to do wearables in the long run.To the degree that computing has been a story about increasingly personal devices (corporate mainframe > departmental mini > desktop personal > laptop personal > phone) then it feels like the next step is for computing devices to disperse around the person… wearables (some of which might be only for ID purposes, think ring), car, devices around the house.

  84. rick gregory

    Yep. I think the analysts, again, failed to understand both the market in general and Apple’s place in particular. It’s poor analysis to say “OK, this new product in an emerging category will do as well as the fastest selling tech product in history.” On the face of it, that doesn’t hold up.I guess I push back against the flop label for two reasons. One, that first year sales in a new area like this aren’t necessarily indicative of success or failure and two, that Fred hopefully doesn’t consider every investment that’s not a home run 12 months post-financing a flop.