Here are my “Business Links” for the week. Make sure you scroll to the end for the two bonus references: 1) the “BC Innovation Council Newsletter Directory”, and 2) DBTA list of 100 companies that matter in data.
This Nuance I Learned From Social Entrepreneurs Is Worth Your Time
Summary: As a kid growing up in South India, when I saw fellow humans seeking alms at traffic lights, I always felt that an opportunity for steady income would extricate them out of poverty. In my naive mind, I had implicitly assumed that the opposite of poverty was income. I was wrong. When you ask veteran entrepreneur, Jacqueline Novogratz who leads Acumen, [a nonprofit that takes a businesslike approach to improving the lives of the poor,] she would share one, singular construct about the English language. The antonym for poverty is not income — it is dignity.
Why I turned down $500K, Pissed off my investors, and Shut down my startup
Summary: I just did what no startup founder is ever supposed to do. I gave up. My team and most of my investors are pissed, but I’m sure I did the right thing. At least I think I’m sure.
The business had what I considered to be an unfixable flaw. My investors and my team wanted us to take the funding and figure out how to fix the problem before the money ran out. I’ve started four companies in the past with a mixture of exits and bankruptcies, so I understand that this is what startups are supposed to do, but I just couldn’t do it this time.
Why Early Exits Are So Critical to an Angel Portfolio
Summary: Unlike VCs, who operate on fixed fund cycles and must distribute capital to limited partners (LPs) when it is returned to the VC, angels are essentially two-legged evergreen funds. As soon as they get money back, they can turn it right around and re-invest it. The faster that happens, the more they can recycle it in a given period of time and the more shots they have at increasing their returns. It also allows them to manage risk. If an angel gets a 3X on an original investment, they can take that original single investment and put it across three different investments which can allow them to hedge risks (three relatively safe follow-ons in other successful portfolio companies) or chase returns (three new aggressively risky moonshots) or anything in between.
Since angels don’t answer to LPs chasing specific levels of performance, don’t have massive funds to return, and are not obligated to return capital when it comes in, they can use the liquidity from the trailing edge of their portfolio to fund investments in the leading edge. Early exits are the grease that keeps that wheel turning!
Why Canada’s tech startups need to prepare for a funding slowdown
Summary: This tightening of the purse strings has been a long time coming, says Owen Matthews, a general partner at Wesley Clover. The 2008 recession ground fundraising to a near-halt, which in turn led to a surfeit of funds closing a couple of years later when markets picked up again. “There was a glut of money during that period, and investors have to put that money to work,” says Matthews. “[Investors] start competing with one another, which drives up the value of the deals that are closing.” Now that glut has largely moved through the system. Canada’s venture capital industry had a banner year in 2015. Canadian companies saw $2.3 billion invested (up 12% over the previous year) in 536 deals (an increase of 24%). Fundraising was up too, with 30 funds garnering $2 billion, up from $1.2 billion in 2014. In the U.S., however, the last quarter of 2015 saw a drop of almost US$6 billion in investment over the previous quarter, while the total number of deals fell 13%. The average deal size went down by nearly US$4 million.
Amazon Plans $3 Billion India Investment
Summary: While Amazon has struggled to gain ground in China amid stiff competition from Alibaba and JD.com, the company has fared better in India as it battles against local incumbents Flipkart and Snapdeal. The company’s latest spending commitment for India, which still has much lower online retail penetration rates than China, follows a $2B commitment in 2014. The funds will go not only towards retail investments, but also the creation of an Indian AWS region and a major software R&D center.
Due to local rules, Amazon doesn’t directly sell goods in India. However, it provides both an online marketplace and a fulfillment/delivery infrastructure for third-party sellers, and already has 21 fulfillment centers in the country, where transportation challenges can help make a superior logistics infrastructure a big differentiator. Morgan Stanley forecasts the Indian e-commerce market will grow to $119B in 2020 from just $16B in 2015 and $6.3B in 2014.
http://www.wsj.com/articles/amazon-plans-3-billion-india-investment-1465355857 (Note: article sits behind a paywall)
Twitter replaces another product chief
Summary: Jeff Seibert, Twitter’s fourth core product chief since early 2014, has been “reassigned” after just nine months on the job; engineering director Ed Ho will take over on an interim basis while Twitter looks for a “permanent” successor. The shakeup follows the recent departures of Twitter’s business development and media/commerce chiefs, as well as the execs responsible for Moments.
SunTrust’s Bob Peck is worried about the management upheaval and brain drain, particularly since it comes as weak user growth and engagement trends persists. He also suggests it’s “inevitable” Twitter will go on the block if those trends don’t change, and argues Facebook, Apple, and Google are the most likely suitors.
http://seekingalpha.com/news/3187650-twitter-replaces-another-product-chief-suntrust-reacts (Note: article sits behind a paywall)
Apple revamps App Store policies to drive subscriptions
Summary: Apple plans to take just a 15% cut of App Store subscription revenue following the first year of a subscription, down from a current 30%. It also plans to expand subscription support to all app categories, and to provide numerous pricing options and tiers. Meanwhile, Recode reports Google will lower its subscription cut to 15% from the start of a subscription.
Also: Apple has confirmed (as previously indicated by Bloomberg) it will begin showing app ads against App Store search results. Google already shows app ads within both Google Play and Google Search results, and Facebook has created a massive business out of ads that (relying on Facebook’s user and app-install data) urge users to either download or resume using an app.
The upshot: Both Apple and Google realize the struggles of small and mid-sized developers to get noticed and generate meaningful revenue are a major problem for their respective mobile ecosystems. By making subscriptions more appealing, they’re trying to provide an alternative to in-app purchases, which often see limited traction outside of games, and paid downloads, which are often a tough sell and can be hard to derive recurring revenue from after an initial purchase (typically less than $5) is made. Productivity apps could be a major beneficiary of Apple’s policy changes.
http://seekingalpha.com/news/3173262-apple-reportedly-weighs-app-store-search-ads-compete-facebook-google (Note: article sits behind a paywall)
http://seekingalpha.com/news/3187908-apple-lowering-subscription-cut-15-percent-year-debuting-app-store-ads (Note: article sits behind a paywall)
PwC’s Entertainment & Media Outlook Forecasts U.S. Industry Spending to Reach $720 Billion by 2020
Summary: PwC estimates U.S. online ad revenue totaled $59.6B in 2015, and TV ad revenue $69.9B. It sees the former figure rising to $75.3B in 2017, and the latter only to $70.4B. Considering the impact of cord-cutting on TV subscriptions/ratings, it’s not far-fetched to imagine TV ad revenue growth turning negative… and the dollars leaving TV often finding their way to online video.
PwC also estimates mobile ads accounted for 34.7% of online ad revenue in 2015, and will make up 49.4% in 2020. The 2020 estimate could be conservative, given mobile already makes up well over half the traffic seen by many big online content providers.
http://seekingalpha.com/pr/16513857-pwcs-entertainment-and-media-outlook-forecasts-u-s-industry-spending-reach-720-billion-2020 (Note: article sits behind a paywall)
Introducing 360 Photos on Facebook
Summary: Having added support for VR-friendly 360° videos last year, Facebook is now adding support for 360° photos. As with videos, users can pan around a 360° photo by clicking/tapping and dragging. When it comes to personal content sharing (recently under pressure), photos are still very much Facebook’s lifeblood: The company reported seeing 350M daily photo uploads in 2013, easily surpassing any rival platform.
Separately, Facebook is now allowing users to upload videos within comments and replies. Facebook has seen tremendous video view growth, thanks to the popularity of its autoplay videos… but so has Snapchat.
What Facebook Leaders Do in June with Their Teams That You Probably Don’t but Should
Summary: Most goals are set once at the beginning of the year. My experience with these annual goals at work is that they are subject to the same psychology as New Year’s resolutions. Only 8% of us will achieve our New Year’s resolutions. By the end of January, 35% have given up. By June, over half give up. Over half. Why? Because it is too hard to maintain without the push of New Year’s Eve. New Year’s is a strong psychological push to create a new you. It is the mark of time to reflect on where are you and where you want to be.
Why not leverage this same psychology to your advantage at work? Why not create rituals which force you and your team to reflect on where you are and where you want to be, more than once a year? Like Facebook does.
Leaders at Facebook split the year in half. There are 2 halves to the year. And as such they set goals for only 6 months.
Bonus Reference: “BC Innovation Council Newsletter Directory”
We’ve compiled the top free email newsletters for (and mostly from) the BC technology and entrepreneur community.