Marvin’s Best Weekly Reads September 13th, 2020

“Unless there is opposing wind, a kite cannot rise.” — Chinese saying

This is very much worth reading if you are a SaaS founder looking to scale your business. Lots of good frameworks for thinking thru growth.

The key misconception of B2B SaaS growth

This is absolutely fascinating. Love these profiles.

“The ASO is incredibly secretive about its finances. But over the years, researchers and French journalists have managed to piece together bits of data from public filings.

Sources The Hustle spoke with estimate the Tour’s revenue to be somewhere between $60m and $150m per year — about 50% of the ASO’s total annual income. Based on historical revenue data, the ASO has ~21% profit margin. So, a very rough estimate would be that the organization enjoys a $12m to $30m annual profit from the race.

“The Tour de France exists to make money,” says Jean-François Mignot, a demographer who has studied the economics of cycling. “It’s a commercial race, and it’s owned by people whose main goal is to make money off of it.”

But the organizer is only one moving part of the Tour de France: a second thriving economy has been built around the teams and riders who compete there.”

The economics of the Tour de France

I like this term. Micropolitan work from home towns. Lots of cool towns listed here.

https://www.bloomberg.com/amp/opinion/articles/2020-08-27/scenic-towns-enjoy-boom-as-work-from-home-becomes-pandemic-norm?__twitter_impression=true

Keep calm, make sure you go out and vote. (have a plan B & watch how things develop.)

“But I think she — like a lot of other white, Gen X native-born Americans who’ve known mostly domestic peace and stability — is being entirely too blasé about the approaching storm.

As an immigrant who escaped to America from apartheid-era South Africa, I feel that I’ve cultivated a sharper appreciation for political trouble. To me, the signs on the American horizon are flashing blood red.

Armed political skirmishes are erupting on the streets, and scholars are tracking a rise in violence and instability as the election draws near. Gun sales keep shattering records. Mercifully, I suppose, there’s a nationwide shortage of ammo. Then there is the pandemic, mass unemployment, natural disasters on every coast, intense racial and partisan polarization, and not a little bit of lockdown-induced collective stir craziness.”

https://www.nytimes.com/2020/09/03/opinion/im-doomsday-prepping-for-the-end-of-democracy.html

This shows how broken the housing market is in many big US Metropolitan areas. Also what a strange & sad story of real estate grifters.

“One reading of Brooks-Church and Gendville’s faltering empire is a tale of a couple who simply got in over their heads. From what Miller, the appraiser, can surmise, the math stopped working “well before COVID,” given the double whammy of falling retail sales and rising commercial rents. “They can’t keep it going without selling some of the assets,” he says. “They’re running into roadblocks of their own making.”

Another way to look at their downward spiral is as a parable of a housing market that is not primarily intended, or even incentivized, to actually house people. Brooklyn’s runaway success, it turns out, was built on an economic disparity so intense that it has created a microgeneration of gentrifiers like Brooks-Church and Gendville who are now being priced out themselves.”

https://www.thecut.com/2020/08/1214-dean-street-brooklyn-landlords.html

Go Optimism!

https://seths.blog/2020/09/optimism-as-a-choice/

This is an excellent framework for thinking about marketing. From the master.

https://rishad.substack.com/p/strategy-frames-light-and-time

“Unlike other middlemen like Instacart and Uber Eats, GoPuff acts more like a retailer, buying directly from giants like Anheuser-Busch, PepsiCo and Unilever. It generates revenue not so much from the nominal delivery fee, but from slapping a hefty markup on the stuff and, increasingly, selling better placement on its app.

Business has been booming since the pandemic hit. Sales reached an estimated $250 million in 2019, and orders are up 400% this year, but it is not profitable and admits it’s still not making money on a fourth of its centers.”

It is not a new idea — and not necessarily a good one. Essentially the same model (with the exact same financial backer: SoftBank) was tried out in the first dot-com bubble.

Turns out super-fast delivery of low-cost groceries is a very tough way to make a buck. GoPuff says it is different because of its $2 delivery fee (Kozmo was free) and $10 minimum (Kozmo had none). It also benefits from focusing on physical clusters of customers, which pre-Covid largely meant college kids on campuses.”

https://www.forbes.com/sites/laurendebter/2020/08/31/gopuff-1-billion-venture-capital-online-convenience-store/#59a8445c28f0

This is a brilliant analogy. Coffee and Consultants. Worth a read.

“At the risk of over-simplifying this, for both coffee and consulting you could say:

First wave is the Silent Generation with a cronyist ethos and no taste.

Second wave is Boomers with a flashy charisma ethos, some taste, and a lot of stagecraft.

Third wave is Gen X with a retreating/self-effacing nerd ethos and skeptical but deeply held tastes. It’s obviously the best wave.

Fourth wave is Millennials with an ironic/kayfabe ethos and cynically performative tastes.

This shouldn’t be too surprising. Both coffee and consulting are products for minds. Psychoactive products that link to producer and consumer personalities. You should expect to see echoes of generational personalities. Both are also mid-career markets. Your coffee tastes settle down around when you settle down into an adult career.”

https://artofgig.substack.com/p/fourth-wave-consulting

“Both journalists and venture capitalists struggle with mainly the same end decision; is the story worth publishing and is the story worth investing in. Approaching the issue from the notions of news judgement and investment decision, the two professions have striking resemblances when it comes to both upstream and downstream processes. Journalists rely on newsflow while venture capitalists depend on dealflow. The quality of it is key.”

https://medium.com/@jdromberg/why-the-molested-journalist-to-venture-capitalist-path-actually-makes-sense-adecb54b8d78

Love these kinds of unknown giant businesses. Great for Croatia and the region too. Profitable too!

“Infobip is one of those big companies that no one has heard of but everyone has used. If you’ve ever received a message from your bank, or from Facebook or Uber, you’ve used Infobip. The Croatian company provides the messaging platform for some 750 banks, and works with some 650 mobile operators around the world.

Silvio Kutic, founder and chief executive, estimates that some 5bn people, or ⅔ of the world’s population have used the Infobip service, which is still run from Kutic’s tiny home town of Vodnjan, on Croatia’s Istrian coast.”

https://sifted.eu/articles/infobip-unicorn-ipo/

“Like money, status is about scarcity. It is an abstract but absolute representation of what you have. It is zero-sum, and backed by something tangible. Status is a flex.

Also like money, status is about reputation. It’s about trust, generosity, and about what you’ve given away, not what you have. It can be originated into existence, or destroyed. It isn’t like a gold coin here; it’s more like an IOU. It’s an adaptation to abundance, not to scarcity.

Status is both of those things. It’s a unit of what you have, and it’s also a unit of what you’re owed.”

https://danco.substack.com/p/scarcity-status-versus-abundance

A great rags to riches story. The original Tyler Perry.

“The 51-year-old entertainer owns the entirety of his creative output, including more than 1,200 episodes of television, 22 feature films and at least two dozen stage plays, as well as a 330-acre studio lot at the edge of Atlanta’s southern limits. He used that control to leverage a deal with ViacomCBS that pays him $150 million a year for new content and gives him an equity stake in BET+, the streaming service it debuted last September.

Forbes estimates Perry has earned more than $1.4 billion in pretax income since 2005, which he used to buy homes in Atlanta, New York, Los Angeles and Jackson Hole, Wyoming, as well as two planes. Quite a lifestyle for a once-homeless playwright raised in poverty in New Orleans. Today, Forbes estimates his net worth at $1 billion, with a clear path to future membership in The Forbes 400.”

“I love when people say you come from ‘humble beginnings,’ ” he says. “[It] means you were poor as hell.” It also makes success sweeter. “Ownership,” he adds, “changes everything.”

https://www.forbes.com/sites/maddieberg/2020/09/01/from-poor-as-hell-to-billionaire-how-tyler-perry-changed-show-business-forever/#3ad7851534b5

One of the most prescient books (and favorite ones too), “The Sovereign Individual”, this world is starting to come to fruition 2 decades later.

“The basic thesis of the book is that technology, particularly the internet, will lead to unbundling & modularizing of government.

Put simply: We’ll transition from being a “citizen” of government to a “customer” of government, where governments compete to earn our business.”

https://eriktorenberg.substack.com/p/the-sovereign-individual-investment

“Zoom is the Napster of the event industry, the ease with which you can put on good-enough virtual events with a global audience, almost for free, much to the undercutting of the underlying economics of the physical events world. All types of business event — conferences, trade shows, conventions — are in danger of their revenues streams of tickets, sponsorships, memberships, and other types of fees being eroded as the world gets used to digital formats and alternatives emerge to physical networking, matchmaking and other tasks we get out of these events.

Billions of dollars have been sucked out of the industry this year as it is completely shut, and virtual is making up only a tiny fraction of that.”

https://skift.com/2020/08/26/the-event-industry-is-being-confronted-by-its-napster-moment/

“We agree with much of the investing world. It’s hard to build conviction in most things, and these tech platforms offer an oasis of certainty. But buying their shares sounds expensive, and it’s a hard way to differentiate.”

“Rather than own FB shares, we’d rather own Instagram accounts. Rather than owning Amazon stock, we’d rather own a bunch of third-party selling merchants. And rather than owning Google stock, we’d rather own YouTube libraries.

Why? Because all the tailwinds that make those stocks interesting to own are, in part, shared by the commercial actors on their platforms. And yet capital markets largely haven’t flowed into those spaces yet.”

https://medium.com/@alibhamed/platform-economies-65d6714ca768

I like this new version of Wartime vs. Peacetime leadership. That analogy was not always the most appropriate for business. Routine Check vs. Emergency Room CEO.

“The “wartime” analogy gives people in power an excuse for poor behavior which is separate from making tough decisions quickly. You don’t need to look past the White House and other world governments to see how behavior and decision making can be conflated. Furthermore, many tech CEOs have not fought for our country. They have fought many many other battles and wars, but not the type that involves the military.

Also, the military has traditionally been exclusively for men (Mulan!), so I wanted to remedy that. [b] Finally, war implies a zero sum result (a winner and loser), but in times like a pandemic, the end result is not necessarily zero sum. In fact if one loses, we all lose.”

https://foundermusings.substack.com/p/war-and-peace

“Since 2017, the San Francisco–based company has invested in more than 15 startups. It tends to take early-stage stakes of about 10% in startups that are led by its former employees or represent a facet of the financial technology sector, say investors who have worked with Stripe on deals.

Leveraging its success as a private company and the reputation of its founders Patrick and John Collison, Stripe has won deals, sometimes by outbidding traditional VC firms. That’s helped it emerge as a growing force in corporate venture capital, just as Google and Salesforce did in years past.

“There’s a halo effect around Stripe” because of its valuation and engineering reputation, said Ross Rich, who spent four years at the company before he co-founded Accord, which makes collaborative software for sales representatives. Stripe led its seed financing earlier this year after a competitive fundraising process.”

https://www.theinformation.com/articles/venture-capitalists-newest-threat-stripe

“The lesson here for startups is that the imperative is to achieve a drumbeat of regular and repeated product-market fits, because PMF isn’t a single note you hit and then move on. It’s an ever-evolving rhythm of problems and desires and whims that you have to constantly play to, like great jazz.”

https://www.forbes.com/sites/stevevassallo/2020/08/31/silicon-valley-truisms-that-arent-true/amp/?__twitter_impression=true

This really spoke to me and I think it is timely for all of us right now.

“We’ve all been thrown off our track, to varying degrees. Some, more cruelly than others. It’s easy to assume we can just find the track again on the other side of this, if there is another side. But in listening to Boyd over and over in August, I have a slightly different view. I think most of us will need to work really hard to rediscover the track.

It may take years, in fact. It will require a significant amount of scenario planning, letting go of beliefs once strongly-held and/or accepted as immutable truths, a survivalists’ adaptability, and the willingness to be nimble and accept new environmental signals that may force us to make decisions we couldn’t have dreamed of just a few months ago.

That’s why I find Boyd’s metaphor so powerful. This year will force me to be even more alert, move alive, more aware of the signals around me. By paying close attention, there’s a possibility to find the track again. It won’t just reappear, like someone flipping the switch back. Rather, I believe it is a new track, and it has to be forged from scratch.”

https://semilshah.com/2020/09/06/finding-the-track/

This is an excellent framework and idea for startup founders working on alignment of their team.

https://davidcummings.org/2020/08/29/startup-state-of-the-union-slide-deck

“The general population does not have internal motivation. They are more interested in being entertained and “chilling” with other people who won’t go anywhere. Therefore, they always want the short cut and they want it sold in an exciting manner.

If you attempt to sell with logic and without emotion, the losses you incur will force you to quickly realize the above. Short cuts and hype are significantly better sales tools compared to logical things such as more effort = more rewards. Make everything appear to be more entertaining vs. educational, hence why movies are more popular than books. So on and so forth.

If it sounds long/difficult like anything meaningful in life, you’ve done a terrible job with your pitch.”

https://wallstreetplayboys.com/ignore-what-people-say-focus-on-what-they-do-specific-examples/

“And so with no good answers from authorities who should offer them, we have entered a golden age for anecdata about the state of the U.S. economy that I think is teetering on the edge of full-out denialism about the recession, the recovery, and how lawmakers and other officials ought to proceed with what happens next. And we’ve reached this moment believing what we see instead of what a sum of the economy’s parts tell us. We are in this position not because of economic data but in spite of it.

Because what the data really tell us is we shouldn’t believe our lying eyes. We shouldn’t trust that it looks like things are reopening with vigor, that the world appears to be. getting back to “normal,” that this crisis seems to have turned out to be temporary.

The economy is operating so far below capacity that we can’t help but make excuses for how “normal” things around us might seem.”

https://mylesudland.substack.com/p/can-we-trust-our-lying-eyes

“Hu is part of a rising class of creators in China who are racing to get in on live-stream shopping, an emerging form of retail that has grown into an industry worth an estimated $66 billion. Although the trend has been part of Chinese internet culture for years, analysts say the coronavirus pandemic has made it mainstream.

Even the Chinese government has voiced its support, calling the industry the “new engine” of e-commerce growth and encouraging live-streaming as a solution to unemployment, which has risen sharply in China due to the pandemic.

Live-stream shopping is a blend of entertainment and e-commerce. Viewers buy goods online from people who show off their latest finds — from lipsticks to laundry detergent — in real-time videos. Many liken the concept to TV shopping channel QVC, but the Chinese model is distinctly more modern, mobile and interactive. Hosts can give their fans discount coupons and flash deals in real time, while viewers can click to send their favorite stars virtual “gifts.”

https://www.cnn.com/2020/09/06/business/china-livestream-shopping-spc-intl-hnk/index.html?utm_term=link&utm_medium=social&utm_content=2020-09-08T03%3A01%3A12&utm_source=fbbusiness&fbclid=IwAR0M60OM4vM7IrueOezgqiA_R-NA0x8B5ZW5LYhBffIqdLcq8v2fQHLrg2E

I think this is a really smart move altho Tai Lopez has a mixed reputation.

“Tai Lopez — whose Web site hawks wisdom for Web entrepreneurs on “traffic mastery” and “Instagram hacks” — has launched a new company, Retail Ecommerce Ventures, that’s shelling out tens of millions of dollars for a growing assortment of down-and-out retail brands. And he’s been keen to broadcast REV’s deals to his more than 10 million social-media followers.

Lopez’s business partner is Alex Mehr, a 40-year-old, ex-NASA scientist who co-founded Zoosk, a dating site that sold for $298 million last year. Together, they’re buying the intellectual property of some of the highest-profile victims of the carnage that has engulfed the retail industry.

In addition to Dressbarn in November, Pier 1 in July and Modell’s in August, the duo’s Miami-based firm acquired Linens ’N Things and the Franklin Mint in June from Sequential Brands Group for an undisclosed price. Another three are in the pipeline, Lopez says, declining to identify them.

Their big bet: That these retail names have the potential to become cash cows online, even if the thousands of stores they used to operate are getting shuttered.”

https://nypost.com/2020/09/02/this-company-is-buys-brands-like-modells-and-gives-them-new-life-online/

Josh Kopelman knows. In this day and age, it’s the brand of the firm and the brand of the individual investor.

“When First Round was first getting started, there were so few seed funds that it was like walking into a Footlocker and seeing just three sneakers on the shelf. A founder could try on all three and kind of see which fit, then pick. But today, when you walk into that shoe store and you see 1,000 shoes on the shelf, it’s really hard to know where to go first.

And we believe that the brands that have proven their ability to create winners before really matter. Just like Nike is defined by the entrepreneurs who have benefited from its product, I think brand actually matters more now than ever before.”

https://techcrunch.com/2020/09/10/vc-josh-kopelman-isnt-so-sure-about-spacs-but-he-thinks-so-called-rolling-funds-could-prove-powerful/

Yup! The absolutist policies make no sense as well as the lack of rational guidance from anyone in government right now in the USA. Basically down to the individual now to manage this.

“When we talk about outdoor risk of transmission versus indoor, we’re talking about like 20 times difference with indoor risk being 20 times higher. So it’s just a huge prevention opportunity.

And, as you said, we are not going to stop interacting as human beings. So let’s find ways to keep our contacts at a minimum and keep them outdoors. If we work with that framework, I think there’s a lot we can do. That is more sustainable than the approach we’re currently taking, which is fragmented and unproductive.”

https://www.vox.com/2020/9/10/21430547/covid-19-julia-marcus-the-ezra-klein-show-outside-inside-risk

A successful bet gone bad. And now America & the world is paying for it.

“Although Thiel has been moving away from Trump for years now, his write-down on a presidential investment during an election year is due in part to the administration’s disastrous response to the coronavirus. As the economy tanked and millions got sick, Thiel became furious, as first reported by the Daily Beast. Two people close to Thiel have confirmed that the pandemic was a breaking point for the technocrat, who once hoped electing a political outsider would disrupt bureaucracy and bring about radical change and innovation in government.”

https://www.buzzfeednews.com/article/rosiegray/peter-thiel-donald-trump-white-nationalist-support

When Revolutionary meets Revolution. This is awesome. Anthony “Pomp” Pompliano

“We are living through a time of great transition. These trends will lead to the creation of a new type of investor — the solo-capitalist.

These trends include:

  • A transition away from institutions
  • Increased need for individual identity
  • Decreased friction for audience building
  • Greater focus on a decentralized investor base
  • Increasing desire for removal of communication middlemen
  • A rise in solo-capitalist tools & platforms

My goal is to be at the tip of the spear of this transition to the era of solo-capitalists.”

https://pomp.substack.com/p/im-launching-a-new-fund

“The teenage economy of cool is a savage yet intricately structured marketplace where humans have to work out how to survive in an open tribal landscape. There’s a reason so much YA fiction is dystopic and horrifying like The Hunger Games or The Maze Runner.

Why is it that cool is so often associated with teenagers?

I suspect it’s because teens live at a very particular juncture in life. They’re old enough to be conscious of the dynamics of cool and social status, their tastes are developed enough to have a more refined quality filter on things like music and fashion and other consumer products, but they’re not so old that their tastes have ossified or that they’ve become captive to years of conditioning from the advanced marketing apparatus of capitalism or the sophisticated social conformity pressures of adult society.

So we ascribe a more intuitive valence to their judgements of what is cool, what is not.”

“This more agile understanding of the digital economy helps explain why Gen Z is so much more prone to Internet entrepreneurship. Instagram, YouTube, and TikTok are incredible tools for broadcast — and for building a business around that broadcast content. When it comes to messaging friends and expressing themselves, they’ll go to Snapchat, iMessage, Discord, and Instagram DMs.”

https://alexdanco.com/2020/09/12/the-kids-are-alright-an-interview-with-eugene-wei-and-julie-young-gift-culture-part-4/

I hate this show but it is impressive how they leveraged the crap out of it as a business platform. We can all learn something from them regardless.

“The show allowed the family to establish themselves not just as celebrities but as characters with storylines that the media and fans hungrily devoured. They were able to then leverage this attention into billion-dollar businesses, the success of which was driven by the public’s sense of connection to them, of knowing them. The show was their secret weapon — a tool for promotion and personification, providing personal narratives and depth that influencers and even Hollywood A-listers could never achieve.”

“It could be argued that the Kardashians no longer need KUWTK. After all, they have already leveraged stratospheric fame and wealth into lucrative businesses. Kim’s and Kylie’s cosmetics companies are currently valued at $1 billion and $900 million, respectively; Khloé’s clothing brand had one of the most successful launches in history; even Kourtney — the least enthralled by life in the public eye — recently launched a lifestyle website.”

How The Kardashians Spent Years Destroying The Show At The Center Of Their Empire

Impressive group of investors, founders with grit & awesome product. Valuation seems really out of whack to me. WTF do I know?

“Roam Research, which has raised $9 million at a valuation of $200 million, or about 25 times higher than the median valuation for seed rounds.

Roam is tapping more than a dozen individuals and firms for the round, including Stripe co-founders Patrick and John Collison, True Ventures and Lux Capital.

“Other investors participating in Roam’s seed funding include Coinbase’s former Chief Technology Officer Balaji Srinivasan, Uber investor Tim Ferriss, Accomplice VC partners Sarah Downey & Jeff Fagnan, & individual investors Nikhil Basu-Trivedi, Josh Buckley, Brianne Kimmel & Harry Stebbings.

Excitement about this new crop of note-taking apps echoes the fanfare that rose around Evernote in its early years — & then largely evaporated.

It reached a valuation of more than $1 billion, boosted by a who’s who of Silicon Valley investors. Users topped 200 million. But its outlook dimmed as people turned to other free, cloud-based services, & Evernote went through rounds of layoffs. An expected initial public offering failed to materialize.”

https://www.theinformation.com/articles/a-200-million-seed-valuation-for-roam-shows-investor-frenzy-for-note-taking-apps

2020 has been tough on all of us.

“Surge capacity is a collection of adaptive systems — mental and physical — that humans draw on for short-term survival in acutely stressful situations, such as natural disasters. Pandemics are different — the disaster itself stretches out indefinitely.

“The pandemic has demonstrated both what we can do with surge capacity and the limits of surge capacity,” says Masten. When it’s depleted, it has to be renewed. But what happens when you struggle to renew it because the emergency phase has now become chronic?”

“I think we maybe underestimate how severe the adversity is and that people may be experiencing a normal reaction to a pretty severe and ongoing, unfolding, cascading disaster,” Masten says. “It’s important to recognize that it’s normal in a situation of great uncertainty and chronic stress to get exhausted and to feel ups and downs, to feel like you’re depleted or experience periods of burnout.”

“It’s harder for high achievers,” she says. “The more accustomed you are to solving problems, to getting things done, to having a routine, the harder it will be on you because none of that is possible right now. You get feelings of hopelessness and helplessness, and those aren’t good.”

https://elemental.medium.com/your-surge-capacity-is-depleted-it-s-why-you-feel-awful-de285d542f4c

Written by

Ever curious: Tsundoku, Reader, Aspiring Shokunin, World traveller, Investor & Tech/Media exec interested in almost everything! www.marvinliao.com

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