a16z VC Marc Andreessen On Tech Valuations and More (podcast)

Marc Andreessen Answers the Tech Valuation Question | Bloomberg.com: "many investors don't grasp what's changed ..."

“We make our money on the ones that work and our reputations on the ones that don’t.”

Stock returns tend to be driven by a handful of big winners; for venture investors, it’s even more lopsided. Venture-capital funds typically have a 50 percent failure rate -- half of the investments lose money, with half of those being total losses. The third quartile breaks even, or returns two or three times their money over five to 10 years. The real action is in their top quartile, which can generate return on investments of anywhere from three- to 1,000-fold.

See also:

• Tech Valuations: Nothing Like the 1990s... | ritholtz.com

• 10 Federal Agencies You Might Not Have Heard of, But That Matter for Tech – Andreessen Horowitz | a16z.com

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TechReview: Trump Election Victory Aftershocks Hit Silicon Valley

Domain Mondo's weekly review of technology news:

Feature •  Trump Election Victory Aftershocks Hit Silicon Valley: Just a little over two weeks since Donald J. Trump's historical Presidential election victory, and the aftershocks are still coming in waves:

Post-Hillary Therapy

•  The five stages of loss are denial, anger, bargaining, depression, and acceptance.

Get Over It:  Stop blaming Russia, Facebook, Twitter, or "Fake News"

•  Russian Agents Are Not Behind Every Piece of Fake News You See: The Washington Post's Russian propaganda story has dubious sources, little evidence to back up the data, too general claims that describe how internet news spread in general.--Fortune.com. In other words, the Washington Post (owned by Amazon.com's Jeff Bezos) is publishing Fake News in its effort to combat Fake News.

•  Let’s get real. Facebook is not to blame for Trump. | Recode.net: "This comes down to two very important concepts that our society has been turning its back on, in the age of social media: Confirmation bias and epistemology."

•  However, Facebook and Twitter as platforms did affect the election's outcome: the winning candidate was not just willing, but eager to break with traditional models of campaigning. His team invested in new ways of using the digital tools and platforms that have come to dominate the media landscape. Anyone who wants to defeat him in the future will have to do the same.--WIRED.com.

•  The Secret Agenda of a Facebook Quiz | NYTimes.com: "While Hillary Clinton spent more than $140 million on television spots, old-media experts scoffed at Trump’s lack of old-media ad buys. Instead, his campaign pumped its money into digital, especially Facebook. One day in August, it flooded the social network with 100,000 ad variations, so-called A/B testing on a biblical scale."

•  The traditional campaign is dead: “It’s hard to overstate and hard to summarize Jared’s [Jared Kushner, Trump's son-in-law] role in the campaign,” says billionaire Peter Thiel, the only significant Silicon Valley figure to publicly back Trump ... “Jared understood the online world in a way the traditional media folks didn’t. He managed to assemble a presidential campaign on a shoestring using new technology and won. That’s a big deal,” says [Eric] Schmidt, the Google billionaire. “Remember all those articles about how they had no money, no people, organizational structure? Well, they won, and Jared ran it.”"--Forbes.com. 

Note:  FEC filings through mid-October, 2016, indicate Trump campaign total spending was only about half that of the Clinton campaign. Outresourced more than 2-to-1 in money raised, staffing, and spending, the Trump campaign nonetheless overcame the Clinton machine and establishment (MSM) media's incessant false narratives a/k/a 'fake news' (for more than a year) that Hillary was a shoo-in to be the next President, combined with a steady stream of MSM negative coverage on Trump from July-November, 2016. Clinton and the establishment MSM, and their pollsters, lost because they never saw nor understood the disruptive digital strategy of the Trump campaign that by-passed old media and traditional campaign methods, and instead, used social media to raise money and communicate directly with voters, reinforced by Reince Priebus's RNC ground game, all showcased by Trump's large and enthusiastic campaign rallies. Donald Trump, unlike desperate Hillary Clinton, never needed headliners like Jay Z & Beyoncé or Bruce Springsteen & Jon Bon Jovi, to draw a crowd.

Peter Thiel is Trump's Silicon Valley go-to guy on tech

•  Trump’s Transition Team Adds VC From Thiel’s Founders Fund | Bloomberg.com: "Trae Stephens will focus on defense plans for president elect - Peter Thiel worked with Stephens at his VC firm and Palantir."

•  Secretive brain trust of Silicon Valley insiders who are helping Trump: "... a tight-knit group of conservative and libertarian-leaning entrepreneurs who have long felt ostracized in Silicon Valley for their political views ... Many are excited to finally have a voice in government ... “The chance to influence the government is a huge opportunity,” said Jack Abraham, a serial entrepreneur who is executive director of the Thiel Fellowship."--WashingtonPost.com

New President | New Reality 

•  Live elevator cam gives C-SPAN a lift | BostonHerald.com: C-SPAN’s live camera feed of the golden elevators at Trump Tower — showing a parade of media titans and potential White House appointees coming and going — has spawned hashtag #elevatorcam and a spike in viewers for the usually dry congressional channel.

•  #DrainTheSwamp: Obama techies in turmoil over sticking with Trump | POLITICO.com.

•  Future iPhone production in the U.S.: "Foxconn already has demonstrated a solution that could be applicable here in the U.S. - robots. Since September 2014, Foxconn has reportedly replaced 60,000 Chinese factory workers with robots."--SeekingAlpha.com

•  Backlash: Reddit.com CEO Huffman's decision to delete and alter comments on a pro-Trump thread amounts to censorship and threatens to destroy Reddit's credibility--NewStatesman.com

•  Welcome to Washington’s new normal | WashingtonPost.com: “People did elect change,” said Sam Nunberg, a former Trump adviser. “He is a novel character. We’ve never had a magnate — a successful entrepreneur and celebrity who understands the tabloids and media saturation, and who thrives off of it — elected. He’s going to be the most open president we’ve had in terms of engagement. He’s a people person.”


Other Tech News:

•  Google Pixel XL Long Term Review: "The most striking observation is how little I use Google Assistant ... Whilst Assistant impresses, it’s limited functionality puts you off from using it. Perhaps I’m just a pessimist, but when I want to perform an action, I assume Assistant won’t be able to do it. Which puts me off from asking. It’s the same with Amazon’s Alexa." --Forbes.com. See also Voice search creates vulnerability at heart of Google's business | Business Insider.com: "The problem with voice assistants is they don't have a screen on which to display ads. And analysts have noticed."

•  How Apple Lost China to Two Unknown Local Smartphone Makers | Bloomberg.com: "Oppo and Vivo offer subsidies to sales representatives ... top vendors in China thanks to rural expansion."

•  Google has lifted a controversial ban which wiped out the digital identities--Gmail accounts, access to photos, voicemails and files--of those consumers who used a tax loophole to profit from reselling their Pixel smartphones"--TechCrunch.com

•  Alibaba Cloud expands data centers as its steps up challenge to Amazon, Google, Microsoft: Dubai, Tokyo, Germany and Sydney, Australia. The number of Alibaba Cloud data centers outside of China will increase to eight. In each market, Alibaba Cloud formed joint ventures (JV) and partnerships. In Dubai, Alibaba has formed a JV with Meraas Holdings called YVOLV. In Germany, Alibaba partnered with Vodafone to open its first data center in Europe. In Japan, a JV with Softbank called SB Cloud Corporation was formed."--CNBC.com

•  Facebook will expand its presence in the U.K. by 50 percent in 2017, joining other U.S. technology firms [Google, Amazon, IBM, et al] in increasing investment in the U.K. despite any uncertainty due to "Brexit," the country's vote to leave the European Union. Facebook will hire 500 new staff members, adding to the 1,000 people it already employs in the U.K. Facebook will also open a new U.K. headquarters in London next year, as have other tech firms drawn by talent and the tech start-up scene.

•  Red Hat CEO Jim Whitehurst: "I’ve seen too many open source companies focus on “oh, isn’t this great technology, it can add a lot of value,” and maybe it can. But if you don’t have the unique business model that allows you to add value on top of the free functionality, in the end you’re going to fail. Just like every major airline has gone through bankruptcy."--Fortune.com

•  Xiaomi says shrinking smartphone sales won't hit the company | Reuters.com

•  U.S. Senate Commerce Subcommittee Announces First Artificial Intelligence Hearing: U.S. Sen. Ted Cruz (R-Texas), chairman of the Subcommittee on Space, Science, and Competitiveness, will convene a hearing on Wednesday, November 30, 2016, at 2:30 p.m. on “The Dawn of Artificial Intelligence.” The hearing will conduct a broad overview of the state of artificial intelligence, including policy implications and effects on commerce.

•  ICYMI: Exploring Augmented Reality - Hearings - U.S. Senate Committee On Commerce, Science, & Transportation: November 16, 2016 - Exploring Augmented Reality
U.S. Sen. John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation, convened a hearing on Wednesday, November 16, 2016, at 3:00 p.m. entitled “Exploring Augmented Reality.” The hearing examined the emergence, benefits, and implications of augmented reality technologies. Unlike virtual reality that creates a wholly simulated reality, augmented reality attempts to superimpose images and visual data on the physical world in an intuitive way.  Witnesses:
•    Mr. Brian Blau, Research Vice President, Gartner
•    Mr. John Hanke, Chief Executive Officer, Niantic, Inc. (developer of Pokémon GO)
•    Mr. Brian Mullins, Co-Founder & Chief Executive Officer, DAQRI
•    Mr. Stanley Pierre-Louis, General Counsel, Entertainment Software Association
•    Mr. Ryan Calo, Assistant Professor of Law, University of Washington"
Replay video at link above.

•   Nobody has real friends anymore | NYPost.com:  Brendesha Tynes — an expert on social media and adolescent development online and an associate professor of educational psychology at the USC Rossier School of Education — told The Post: “People who aren’t on social find other ways to communicate.”

•  Fooled Again? Black Friday’s Inside Secret: Same Deals Every Year | WSJ.com: "Circulars from retailers like Target, Best Buy and Wal-Mart repeat products, prices from holidays past." See also: Black Friday’s Slow Death Drags On as Shoppers Migrate Online | Bloomberg.com.

-- John Poole, Editor, Domain Mondo 

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New gTLDs Registry Minds+Machines Reports Loss, Hopes for Profit 2016

Above: 1-year stock chart on MMX, note Sep 26, 2014 price of 12.00 pence=US$0.19 (source: google.com)

In a release today, new gTLDs registry operator Minds + Machines Group Limited (domain name: mindsandmachines.com), which trades on the London Stock Exchange under the symbol MMX  (LON: MMX), reported a H1 2015 loss of (US$3,695,000) for the 6 month period ending June 30, 2015, compared with a profit of $USD4.9 million for the same period in 2014, primarily due to lower profit from participating in new gTLD (generic top-level domain) auctions. Shares closed today at 8.62 pence which equals USD $0.13. Stockholders have lost money as MMX shares declined over the past year--e.g., see in chart above 12.00 pence (US$0.19) high in Sept 2014.

Among other highlights reported:

• Headcount has been reduced from 58 to 44 even as the sales and marketing teams grew from 2 to 12;
• Board committed to achieving its stated goal of crossing over into profitability in 2016;
• 217,200 domains were under management, representing 3.43% of new gTLD market;
• Cash reserves at period end up 2% at $46.9 million from 31 December 2014 reflecting private auctions taking place in period;
• Company authorised to purchase up to £15 million of shares in the open market during the next 12 months;
• A copy of the unaudited interim accounts is available at www.mindsandmachines.com. 

According to the company, Minds + Machines operates three distinct business lines: the registry, through which it is a major owner of generic top-level domains ("gTLDs"); the registry service provider, whose technology powers the top-level domains of MMX and its clients; the registrar, which provides an additional distribution channel through which the Company can target specific vertical markets.


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Smart Money, Dumb Money, New gTLDs, Worthless Domain Names

In Wall Street parlance there's the "smart money" and the "dumb money." Dumb money falls for all the investing fads, sells at the wrong time, or is forced to liquidate at a loss. Adding insult to injury, the dumb money usually pays ridiculous fees to boot. Smart money doesn't do any of that.

How does this play out in domain name investing?

Dumb money: Follows the domaining blogs that tout every new gTLD launch, buying into the new gTLDs that come on the market, often at premium prices, with no long-term plan for development or sale.

Smart money: Follows domain name sales reports and trends (including broader trends in technology and the world), reads and does his/her own research and due diligence, selectively accruing a portfolio of domain names [e.g., short .COM domain names] that can be developed into profitable businesses or held for resale, for a profit, to another end-user.

Here's an excerpt from what a reputable, experienced domain name broker recently wrote: "... new gtlds are like the "raw land" of the domain industry: while there are properties that can appreciate in value in a very short time... the vast majority of them will remain worthless. Why is that? Well this is simply because there are not enough end users looking to brand under under a new gtld, and there are even less looking to pay a significant premium for it... " (emphasis added)


Caveat Emptor!


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