First of all, happy Mother's Day! All love wished to all mothers. It's been a strange week in tech. To summarize: the media world that relies mostly on advertising revenue is heading hard toward the abyss, Twitter has a velvet hammer, venture capital funding of startups is changing and Google is unexpectedly rewarded.
Google has been surpassed in terms of success with AI by OpenAI and its licensee and shareholder Microsoft, but Alphabet CEO Sundar Pichai thought he could mask this by mouthing the word AI dozens of times during the Google IO event received with little enthusiasm. It led to this hilarious video.
Deconstruction in the media world
In the traditional media, Charles' coronation took center stage, put into perspective by the popular Australian YouTube comedian Ozzyman who, during his commentary, referred to "Chuck and the misso in the king mobile.
In the Internet world, the former queen of online advertising suddenly surfaced after a three-year absence: Marissa Mayer, former boss of Google Search and ex-CEO of Yahoo, was given plenty of space to promote her new startup Sunshine. Sunshine has the same claim as its (how is it possible?) even more boringly named competitor Contacts+: improving your address book and contact management. Both companies praise their smart contacts but Mayer is smart enough to tout her Sunshine Smart Contacts with ... AI. Coming up: "Sunshine Smart Contacts uses AI and other sophisticated technology. Just in case we thought they made the app with quill, bottle mail and wax crayons.
It is no coincidence that Mayer chose to skip advertising as a revenue source at Sunshine, even though it made up the majority of her revenue during her time at Google and Yahoo. It became clear once again last week that over-reliance on advertising revenue is the death knell for any media company not named Google or Meta when the impending bankruptcy of former media crown prince Vice came out.
The hipster shack where you couldn't get a job as an intern without a facial tattoo and coke addiction is for sale for $400 million while it was once valued at nearly $6 billion. Still, it's nice to read how someone who worked there for nearly a decade looks back fondly on his time at Vice.
David Pakman explained simply to the outstanding podcaster Lex Fridman why the McDonald's of the news media, Fox News, relies much less on advertising revenue: each cable company pays a per-connection fee for retransmission of the sewer channel.
That's the dream for Twitter from Elon Musk, who had high hopes for revenue potential from user revenue but got stuck in the blue checkmark fiasco. Given the mediocre revenue results from online advertising and Twitter in particular, it was surprising that he found Twitter's new CEO in the advertising world. 'Elon & and the problem for the velvet hammer' sounds like a Suske & Wiske title, but 'the velvet hammer' is Linda Yaccarino's nickname. One can already bet how many days it will take for the velvet hammer to give way under Musk's hard knocks.
Musk is trying to follow the example of Facebook, where for years the golden rule was that Zuck built the product and Sheryl Sandberg provided the revenue. Those who worked at Facebook ended up being on either team. That worked fine until last year, when results were disappointing and Meta shares completely collapsed. Sandberg had switched to the SB just before that.
Dutch VCs happily continued to invest in 2022
NFX partner James Currier briefly summarized for Techcrunch what three forms of defensible elements successful startups have in common:
- Network effects: your product becomes more valuable the more people use it.
- Embedding: Integrate your services so deeply that customers "can't rip them out."
- Data loops: Collect, process and act on real-time data.
Assuming Currier is right, it would be interesting to see which Dutch startups meet these criteria. According to De Nederlandse Vereniging van Participatiemaatschappijen (NVP), last year around 1 billion euros was invested in 411 Dutch startups. Only in 2021 was this amount higher, at 1.8 billion Euros. But that was an exceptional year in which Mollie, MessageBird and Bunq, among others, raised hundreds of million. The upward trend of recent years, especially in the number of investments, continued in 2022. From what I hear in the corridors, investments by Dutch VCs are falling sharply this year, but no research is available to show that.
It would be fascinating to study whether all the incubators of recent years in the Netherlands have led to more successful startups. The Techleap support platform is too short-lived and has too vague goals to be measurable, but I hear a lot of positive things about it from tech entrepreneurs. I was thinking about the role of incubators when it was announced that the Dutch company Instruqt raised as much as $15 million in its first round of investment after operating on its own for 5 years. Instruqt did not emerge from an incubator and this entire round was done by Blossom, a foreign vc. Kudos and Godspeed to Instruqt!
The largest IPOs of the past 10 years all below first-day price
Meanwhile, the market is so bad that the biggest IPOs of the last 10 years have all underperformed after their first trading strike. Top investor Elad Gil says things are about to get much worse. Perhaps that's why it's not a miracle, but a natural progression, that a ChatGPT-based fictional investment fund is out performing Britain's most popular mutual funds. Perhaps investing is not a people business?
To create the fund, ChatGPT was asked to put together a portfolio of stocks that followed a set of investment principles drawn from leading funds. Despite two warnings that it "cannot give specific investment advice," this was quickly circumvented by saying this was just a theoretical exercise. ChatGPT ended up picking 38 stocks, with the top performers in the fund so far being Meta, up nearly 30%, Microsoft, up 20%, and Intel, up nearly 18%. But as I wrote last month, Meta stock is scoring relatively so high this year because it experienced a historic price drop last year.
One sector that VCs do warm to is "climate prediction tech. It's not that KNMI will be the next unicorn, because it's about companies that develop technology that can make better climate predictions.
Unfortunately, the very technology that the world needs most, carbon capture, is proving extraordinarily complex and therefore will not attract sufficient investors quickly enough. This is sad because it is clear that governments will fail to take meaningful action that will limit global warming in time. Carbon capture technology removes CO2 from the atmosphere.
Notable links:
- Nearly a quarter million Apple - Goldman Sachs savings accounts opened in the first week, at this rate Apple will be America's largest savings bank within a year.
- Rats in an experiment moved VR objects only with their minds.
- The highly informative newsletter from McKinsey's boardroom consultants is now online and available for free.
Spotlight 9: The winner of the week is ... Google?
I never pretend to understand anything about investing and look at tech prices like the Eredivisie: the level remains mediocre, but sometimes there are outliers among them and you still faithfully follow your own clubbie. This week, for example, Apple did not seem to exist, as the stock moved 0.048%. Not so. Google is under great pressure on every revenue source, especially the search engine may be totally outflanked by ChatGPT within a year, just as Google itself once overthrew Altavista and Excite. And ... Alphabet shares are rewarded with an 11.7% rise. It's as strange as Feyenoord becoming champions. Just kidding, congratulations 010! Very well deserved.
Happy Mother's Day!