Tag Archives: investment

Uber For…

google-search-uber

There’s an Uber for pet-sitters (Rover). There’s an Uber for dog walkers (Wag). There’s an Uber for private jets (JetMe). There are several Ubers for alcohol (Minibar, Saucey, Drizly, Thirstie). In fact, enter the keywords “Uber for…” into Google and the search engine will return “Uber for kids, Uber for icecream, Uber for news, Uber for seniors, Uber for trucks, Uber for haircuts, Uber for iPads (?), Uber for food, Uber for undertakers (??)…” and thousands of other results.

The list of Uber-like copycats, startups and ideas is seemingly endless — a sign, without doubt, that we have indeed reached peak-Uber. Perhaps VCs in the valley should move on to some more meaningful investments, before the Uber bubble bursts.

From Wired:

“Uber for X” has been the headline of more than four hundred news articles. Thousands of would-be entrepreneurs used the phrase to describe their companies in their pitch decks. On one site alone—AngelList, where startups can court angel investors and employees—526 companies included “Uber for” in their listings. As a judge for various emerging technology startup competitions, I saw “Uber for” so many times that at some point, I developed perceptual blindness.

Nearly all the organizations I advised at that time wanted to know about the “Uber for” of their respective industries. A university wanted to develop an “Uber for tutoring”; a government agency was hoping to solve an impending transit issue with an “Uber for parking.” I knew that “Uber for” had reached critical mass when one large media organization, in need of a sustainable profit center, pitched me their “Uber for news strategy.”

“We’re going to be the Uber for news,” the news exec told me. Confused, I asked what, exactly, he meant by that.

“Three years from now, we’ll have an on-demand news platform for Millennials. They tap a button on their phones and they get the news delivered right to them, wherever they are,” the editor said enthusiastically. “This is the future of news!”

“Is it an app?” I asked, trying to understand.

“Maybe. The point is that you get the news right away, when you want it, wherever you are,” the exec said.

“So you mean an app,” I pressed. “Yes!” he said. “But more like Uber.”

The mass “Uber for X” excitement is a good example of what happens when we don’t stop to investigate a trend, asking difficult questions and challenging our cherished beliefs. We need to first understand what, exactly, Uber is and what led to entrepreneurs coining that catchphrase.

Read the entire story here.

Image courtesy of Google Search.

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Litigation Financing

Have some loose change under your mattress? If so, and the loose change comes in the millions of dollars, you may want to consider investing it. But, not in a paltry savings account or the stock market. You should consider investing it in litigation. Yes, there are funds, run by money managers and lawyers, that do nothing but sue for financial gain. And, if that so-called “litigation fund” happens to be suing for a cause that you believe in, then you’ll reap a two-fold reward: you’ll collect a handsome investment return, and you’ll get the pleasure of ruining your legal adversary in the process.

Here’s just one example. Burford Capital, a British litigation investment company, has recorded an almost 400 percent growth in profits over the last five years. The firm reported recent profits of $77 million and declared a staggering 70 percent net return on its investments.

So, perhaps you should ditch the notion of becoming the next Warren Buffet; trash the thought of investing in companies that innovate, create and build, and pour your retirement funds in companies that sue and litigate. Furthermore, if you seek a really stellar return on your hard-earned cash, then you should consider investing in litigation funds that sue media companies over the first amendment — that’s where the action and the money is today, and that’s where the next part of this ethically questionable story leads.

From Wired:

The revelation that Silicon Valley billionaire Peter Thiel bankrolled Hulk Hogan’s sex tape lawsuit against Gawker sent shockwaves through the media industry. Commentators had barely recovered from the $140 million in damages awarded to Hogan. Now they were grappling with a bigger question: Is this kind of financial arrangement even legal? Could it happen to them?

The short answer to both is yes—picking up the tab on someone else’s lawsuit is now perfectly legal (it wasn’t always), and people who do it aren’t required to reveal that they’re doing it or why. The practice is reviled by the business community, and yet Thiel, a staunch pro-business libertarian, has shown billionaires everywhere that it’s possible to not only sue a media company indirectly for revenge but to make money doing it. Now that the message is out, there’s nothing to stop other billionaires from following his lead.

“This [case] could really change the landscape, because everyone who has gripes about what the media has done is going to start thinking about dollars and cents and running to their lawyers,” says Thomas Julin, a partner at Miami-based law firm Hunton and Williams who focuses on First Amendment litigation.

“And it’s going to get lawyers thinking, ‘Maybe I should be more willing to represent other individuals against the media.’”

Regardless of how you feel about Gawker, Hogan, or Thiel, this financial arrangement sets a dangerous precedent for anyone running a business—especially a media business. Litigation finance is a booming industry, and Thiel’s success likely makes the entire media industry vulnerable to professional litigation financiers willing to fund other vendettas.

“Litigation financing is really dangerous,” says Bryan Quigley from the Institute for Legal Reform, the civil justice arm of the US. Chamber of Commerce, an advocate for American businesses. “There’s no doubt it’s going to create more litigation in general.”

Read the entire story here.

 

 

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Art and Money

Google-search-Damien-Hirst-Dots

The process through which an artist finds fortune and fame is a complex one, though to many of us — even those who have spent some time within the art world — it seems rather random and obscure. Raw talent alone will only carry an artist up the first rungs of the ladder of success. To gain the upper reaches requires and modicum of luck and lots of communication, connections, sales and marketing.

Unfortunately, for those artists who seek only to create and show their works (and perhaps even sell a few), the world of art is very much a business. It is driven by money, personality (of the artist or her proxies) and market power of a select few galleries, curators, critics, collectors, investors, and brokers. So, just like any other capitalist adventure the art market can be manoeuvered  and manipulated. As a result, a few artists become global superstars, while still living, their art taking on a financial life of its own; the remaining 99.999 percent — well, they’ll have to hold on to their day-jobs.

From WSJ:

Next month, British artist Damien Hirst—a former superstar whose prices plummeted during the recession—could pull off an unthinkable feat: By opening a free museum, called the Newport Street Gallery, in south London to display his private collection of other artists’ works, Mr. Hirst could salvage his own career.

Just as the new museum opens, an independent but powerful set of dealers, collectors and art advisers are quietly betting that a surge of interest in Mr. Hirst’s new endeavor could spill over into higher sales for his art. Some, like New York dealer Jose Mugrabi, are stockpiling Hirsts in hopes of reselling them for later profits, believing a fresh generation of art collectors will walk away wanting to buy their own Hirsts. Mr. Mugrabi, who helped mount successful comeback campaigns in the past for Andy Warhol, Jean-Michel Basquiat and Richard Prince, said he owns 120 pieces by Mr. Hirst, including $33 million of art he bought directly from the artist’s studio three months ago.

Other dealers, such as Pilar Ordovas, are organizing gallery shows that place Mr. Hirst’s work alongside still-popular artists, angling for a beneficial comparison.

New York art adviser Kim Heirston, whose clients include Naples collector Massimo Lauro, said she has been scouring for Hirsts at fairs and auctions alike. “I’m telling anybody who will listen to buy him because Damien Hirst is here to stay,” Ms. Heirston said.

If successful, their efforts could offer a real-time glimpse into the market-timing moves of the art-world elite, where the tastes of a few can still sway the opinions of the masses. Few marketplaces are as changeable as contemporary art. This is a realm where price levels for an artist can be catapulted in a matter of minutes by a handful of collectors in an auction. Those same champions can then turn around the following season and dump their stakes in the same artist, dismissing him as a sellout. Like fashion, the roster of coveted artists is continually being reshuffled in subtle ways.

Most artists with lengthy careers have seasons of ebb and flow, and collectors who sync their buying and selling can profit accordingly, experts say. Before the recession, Mr. Hirst, age 50, was an art-world darling, the leader of London’s 1990s generation of so-called Young British Artists who explored ideas about life and death in provocative, outsize ways. He is best known for covering canvases in dead butterflies and polka dots whose rainbow hues he color-coded to match chemical compounds found in drugs.

During the market’s last peak, collectors paid as much as $19 million at auction for his artworks, and he staffed multiple studios throughout the U.K. with as many as 100 studio assistants to help produce his works. Mr. Hirst is reportedly worth an estimated $350 million, thanks to his art sales but also his skill as a businessman, amassing an empire of real estate holdings in the U.K. and elsewhere. He also co-founded a publishing company called Other Criteria in 2005 that publishes art books, artist-designed clothing and prints of his works, as well as other emerging artists.

But his star fell sharply after he committed an art-world taboo by bypassing conventional sales channels—selling works slowly through galleries—and auctioned off nearly $200 million of his work directly at Sotheby’s in 2008. While the sale was successful and proved his popularity, it became his undoing. He irked his galleries and some longtime collectors, who felt he had flooded his own marketplace for a singular payout. These days, it’s “much riskier” to trade a Hirst at auction than it was a decade ago, according to Michael Moses, co-founder of an auction tracking firm called Beautiful Asset Advisors. Collectors who bought and resold his works since 2005 have mainly suffered losses, Mr. Moses added.

Read the entire story here.

Image: A collection of some of Damien Hirst’s “dot” works. Courtesy of Google Search.

 

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The Pivot and the Money

Once upon a time the word “pivot” usually referred to an object’s point of rotation. Then, corporate America got its sticky hands all over it. The word even found its way in to Microsoft Excel — as in Pivot Table. But, the best euphemistic example comes from one of my favorite places for invention and euphemism — Silicon Valley. In this region of the world pivot has come to mean a complete change in business direction.

Now, let’s imagine you’re part of start-up company. At the outset, your company has a singularly great, world-changing idea. You believe it’s the best idea, since, well, the last greatest world-changing idea. It’s unique. You are totally committed. You secure funding from some big name VCs anxious to capitalize and make the next $100 billion. You and your team work countless hours on realizing your big idea — it’s your dream, your passion. Then, suddenly you realize that your idea is utterly worthless — the product looks good but nobody, absolutely nobody, will consider it, let alone buy it; in fact, a hundred other companies before you had the same great, unique idea and all failed.

What are you and your company to do? Well, you pivot.

The entrepreneurial side of me would cheer an opportunistic company for “pivoting”, abandoning that original, great idea, and seeking another. Better than packing one’s bags and enrolling in corporate serfdom, right? But, there’s another part of me that thinks this is an ethical sell-out: it’s disingenuous to the financial backers, and it shows lack of integrity. That said, the example is of course set in Silicon Valley.

From Medium:

It was about a month after graduating from Techstars that my co-founder, Lianne, and I had our “oh shit” moment.

This is a special moment for founders; it’s not when you find a fixable bug in your app, when you realize you have been poorly optimizing your conversion funnel, or when you get a “no” from an investor. An “oh shit” moment is when you realize there is something fundamentally wrong with your business.

In our case, we realized that the product that we wanted to create was irreconcilable with a viable business model. So who were we going to tell? Techstars, who just accepted us into their highly prestigious accelerator on the basis that we could make it work? Our investors, who we just closed a round with?

It turns out, our Techstars family, our friends, and the angels (literally) who invested in us became our greatest allies, supporters, and advocates as we navigated the treacherous, terrifying, uncertain, and ultimately wildly liberating waters of a pivot. So let’s start at the beginning…

In February of 2014, Lianne and I were completing our undergrad CS degrees at the University of Colorado. As we were reflecting on the past four years of school, we realized that the most valuable experiences that we had happened outside the classroom in the incredible communities that we became involved in. Being techies, we wanted to build a product which helped other students make these “serendipitous” connections around their campus?—?to make the most of their time in college as well. We wanted to help our friends explore their world around them.
We called it Varsity. The app was basically a replacement for the unreadable kiosks full of posters found on college campuses. Students could submit events and activities happening around their campus that others could discover and indicate they were attending. We also built in a personalization mechanism, which proactively suggested things to do around you based upon your interests.
A few months later, the MVP of the Varsity and a well-practiced pitch won us the New Venture Challenge at CU, which came with a $13k award and garnered the attention of Techstars Boulder.
The next couple of months were a whirlwind of change; Lianne and I graduated, we transitioned to our first full-time job (working for ourselves), and I spent a month in Israel with my sister before she left for college in Florida. We spent a good amount of our time networking our way around Techstars?—?feeling a little like the high school kids at a college party?—?but loving it at the same time. We met some incredible people (Sue Heilbronner, Brad Berenthal, Zach Nies, and Howard Diamond, to name a few) who taught us so much about our nascent business in a very short time.
We took as many meetings as we could with whomever would talk with us, and we funneled all of our learnings into our Techstars application. Through some combination of luck, sweat, and my uncanny ability to say the right things when standing in front of a large group of people, we were accepted into Techstars.
Techstars was incredibly challenging for us. The 3-month program was also equally rewarding. Lianne and I learned more about ourselves, our company, and our relationship with each other than we had in 4 years of undergraduate education together. About half-way through the program we rebranded Varsity to Native and started exploring ways to monitize the platform. The product had come along way?—?we had done some incredible engineering and design work that we were happy with.
Unfortunately, the problem with Varsity was absolutely zero alignment between the product that we wanted to build and the way that would bring it to market. One option was to spend the next 3 years grinding through the 8-month sales-cycles of universities across the country, which felt challenging (in the wrong ways) and bureaucratic. Alternatively, we could monetize the student attention we garnered, which we feared would cause discordance between the content students wanted to see and the content that advertisers wanted to show them.
Soon after graduating from Techstars, someone showed us Simon Sinek’s famous TED talk about how great leaders inspire action. Sinek describes how famous brands like Apple engage their customers starting with their “why” for doing business, which takes precedence over “how” they do business, and even over “what” their business does. At Native, we knew our “why” was something about helping people discover the world around them, and we now knew that the “how” and “what” of our current business wouldn’t get us there.
So, we decided to pivot.
Around this time I grabbed coffee with my friend Fletcher Richman. I explained to him the situation and asked for his advice. He offered the perspective that startups are designed to solve problems in the most efficient way possible. Basically, startups should be created to fill voids in the market that weren’t being solved by an existing company. The main issue was we had no problem to solve.
Shit.
250k in funding, but nothing to fund? Do we give up, give the money back, and go get real jobs? Lianne and I weren’t done yet, so we went in search of problems worth solving.

Read the entire story here.

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A New Mobile App or Genomic Understanding?

Eyjafjallajökull

Silicon Valley has been a tremendous incubator for some of most our recent inventions: the first integrated transistor chip, which led to Intel; the first true personal computer, which led to Apple. Yet, this esteemed venture capital (VC) community now seems to need a self-medication of innovation. Aren’t we all getting a little jaded from yet another “new, great mobile app” — worth in the tens of billions (but having no revenue model) — courtesy of a bright and young group of 20-somethings?

It is indeed gratifying to see innovators, young and old, rewarded for their creativity and perseverance. Yet, we should be encouraging more of our pioneers to look beyond the next cool smartphone invention. Perhaps our technological and industrial luminaries and their retinues of futurists could do us all a favor if they channeled more of their speculative funds at longer-term and more significant endeavors: cost-effective desalination; cheaper medications; understanding and curing our insidious diseases; antibiotic replacements; more effective recycling; cleaner power; cheaper and stronger infrastructure; more effective education. These are all difficult problems. But therein lies the reward.

Clearly some pioneering businesses are investing in these areas. But isn’t it time we insisted that the majority of our private and public intellectual capital (and financial) should be invested in truly meaningful ways. Here’s an example from Iceland — with their national human genome project.

From ars technica:

An Icelandic genetics firm has sequenced the genomes of 2,636 of its countrymen and women, finding genetic markers for a variety of diseases, as well as a new timeline for the paternal ancestor of all humans.

Iceland is, in many ways, perfectly suited to being a genetic case study. It has a small population with limited genetic diversity, a result of the population descending from a small number of settlers—between 8 and 20 thousand, who arrived just 1100 years ago. It also has an unusually well-documented genealogical history, with information sometimes stretching all the way back to the initial settlement of the country. Combined with excellent medical records, it’s a veritable treasure trove for genetic researchers.

The researchers at genetics firm deCODE compared the complete genomes of participants with historical and medical records, publishing their findings in a series of four papers in Nature Genetics last Wednesday. The wealth of data allowed them to track down genetic mutations that are related to a number of diseases, some of them rare. Although few diseases are caused by a single genetic mutation, a combination of mutations can increase the risk for certain diseases. Having access to a large genetic sample with corresponding medical data can help to pinpoint certain risk-increasing mutations.

Among their headline findings was the identification of the gene ABCA7 as a risk factor for Alzheimer’s disease. Although previous research had established that a gene in this region was involved in Alzheimer’s, this result delivers a new level of precision. The researchers replicated their results in further groups in Europe and the United States.

Also identified was a genetic mutation that causes early-onset atrial fibrillation, a heart condition causing an irregular and often very fast heart rate. It’s the most common cardiac arrhythmia condition, and it’s considered early-onset if it’s diagnosed before the age of 60. The researchers found eight Icelanders diagnosed with the condition, all carrying a mutation in the same gene, MYL4.

The studies also turned up a gene with an unusual pattern of inheritance. It causes increased levels of thyroid stimulation when it’s passed down from the mother, but decreased levels when inherited from the father.

Genetic research in mice often involves “knocking out” or switching off a particular gene to explore the effects. However, mouse genetics aren’t a perfect approximation of human genetics. Obviously, doing this in humans presents all sorts of ethical problems, but a population such as Iceland provides the perfect natural laboratory to explore how knockouts affect human health.

The data showed that eight percent of people in Iceland have the equivalent of a knockout, one gene that isn’t working. This provides an opportunity to look at the data in a different way: rather than only looking for people with a particular diagnosis and finding out what they have in common genetically, the researchers can look for people who have genetic knockouts, and then examine their medical records to see how their missing genes affect their health. It’s then possible to start piecing together the story of how certain genes affect physiology.

Finally, the researchers used the data to explore human history, using Y chromosome data from 753 Icelandic males. Based on knowledge about mutation rates, Y chromosomes can be used to trace the male lineage of human groups, establishing dates of events like migrations. This technique has also been used to work out when the common ancestor of all humans was alive. The maternal ancestor, known as “Mitochondrial Eve,” is thought to have lived 170,000 to 180,000 years ago, while the paternal ancestor had previously been estimated to have lived around 338,000 years ago.

The Icelandic data allowed the researchers to calculate what they suggest is a more accurate mutation rate, placing the father of all humans at around 239,000 years ago. This is the estimate with the greatest likelihood, but the full range falls between 174,000 and 321,000 years ago. This estimate places the paternal ancestor closer in time to the maternal ancestor.

Read the entire story here.

Image: Gígjökull, an outlet glacier extending from Eyjafjallajökull, Iceland. Courtesy of Andreas Tille / Wikipedia.

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The Richest Person in the Solar System

Forget Warren Buffet, Bill Gates and Carlos Slim or the Russian oligarchs and the emirs of the Persian Gulf. These guys are merely multi-billionaires. Their fortunes — combined — account for less than half of 1 percent of the net worth of Dennis Hope, the world’s first trillionaire. In fact, you could describe Dennis as the solar system’s first trillionaire, with an estimated wealth of $100 trillion.

So, why have you never heard of Dennis Hope, trillionaire? Where does he invest his money? And, how did he amass this jaw-dropping uber-fortune? The answer to the first question is that he lives a relatively ordinary and quiet life in Nevada. The answer to the second question is: property. The answer to the third, and most fascinating question: well, he owns most of the Moon. He also owns the majority of the planets Mars, Venus and Mercury, and 90 or so other celestial plots. You too could become an interplanetary property investor for the starting and very modest sum of $19.99. Please write your check to… Dennis Hope.

The New York Times has a recent story and documentary on Mr.Hope, here.

From Discover:

Dennis Hope, self-proclaimed Head Cheese of the Lunar Embassy, will promise you the moon. Or at least a piece of it. Since 1980, Hope has raked in over $9 million selling acres of lunar real estate for $19.99 a pop. So far, 4.25 million people have purchased a piece of the moon, including celebrities like Barbara Walters, George Lucas, Ronald Reagan, and even the first President Bush. Hope says he exploited a loophole in the 1967 United Nations Outer Space Treaty, which prohibits nations from owning the moon.

Because the law says nothing about individual holders, he says, his claim—which he sent to the United Nations—has some clout. “It was unowned land,” he says. “For private property claims, 197 countries at one time or another had a basis by which private citizens could make claims on land and not make payment. There are no standardized rules.”

Hope is right that the rules are somewhat murky—both Japan and the United States have plans for moon colonies—and lunar property ownership might be a powder keg waiting to spark. But Ram Jakhu, law professor at the Institute of Air and Space Law at McGill University in Montreal, says that Hope’s claims aren’t likely to hold much weight. Nor, for that matter, would any nation’s. “I don’t see a loophole,” Jakhu says. “The moon is a common property of the international community, so individuals and states cannot own it. That’s very clear in the U.N. treaty. Individuals’ rights cannot prevail over the rights and obligations of a state.”

Jakhu, a director of the International Institute for Space Law, believes that entrepreneurs like Hope have misread the treaty and that the 1967 legislation came about to block property claims in outer space. Historically, “the ownership of private property has been a major cause of war,” he says. “No one owns the moon. No one can own any property in outer space.”

Hope refuses to be discouraged. And he’s focusing on expansion. “I own about 95 different planetary bodies,” he says. “The total amount of property I currently own is about 7 trillion acres. The value of that property is about $100 trillion. And that doesn’t even include mineral rights.”

Read the entire article after the jump.

Video courtesy of the New York Times.

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