Gordon Bowman

10% Happier Notes: Using Meditation to Tame the Voice in Your Head and Reduce Stress Without Losing Your Edge

Mon, 16 Feb 2015 16:27:41 -0800

10% Happier: How I Tamed the Voice in My Head, Reduced Stress Without Losing My Edge, and Found Self-Help That Actually Works

Rating: 9/10

Last Fall I started to look seriously into meditation for the first time. I came to it very begrudgingly. I’ve always been incredibly skeptical about meditation. I thought it was mostly for the vegan yogi types who quarantine themselves to silent retreats in Thailand for weeks on end.

And yet, you hear of the very successful and normal people who meditate like Ray Dalio, Jerry Seinfeld, Phil Jackson, David Lynch, etc. (okay maybe Lynch isn’t normal, but that’s also what makes him cool right?)

I also kept seeing study after study about the science and many health benefits of meditation: lower anxiety, reduced cortisol (the “stress hormone”), more energy, reduced insomnia, increased focus, improved memory, etc. So how could I not explore it further?

But the time and effort you have to put into meditation kept me at bay. (Hours of uncomforable sitting with nothing but my own terrible thoughts? Thanks but I’ll pass). The lazy me wanted someone to really investigate meditation from a skeptic’s point of view. That’s why I was really excited about Dan Harris’ book 10% Happier.

Dan Harris is a co-anchor of Nightline and the weekend edition of Good Morning America on ABC News. And he came to meditation with exactly the skeptical, investigative lens I was hoping for. In an interview with Sam Harris he describes how he “had a long-standing aversion to anything touchy-feely or New Agey” and further, how “meditation seemed like the quintessence of everything I was most wary of”.

But after a series of interviews with experts, retreats, and hours spent alone, Harris came to an entirely different view on meditation.

This is his personal story of trying to calm the non-stop stresses of everyday life while also avoiding the pitfall of cliché. And in my opinion, it’s a story every ambitious person can benefit from.

Here are my notes:

As one Buddhist author put it, the “craving to be otherwise, to be elsewhere” permeated my whole life.

In a nutshell, mindfulness is the ability to recognize what is happening in your mind right now— anger, jealousy, sadness, the pain of a stubbed toe, whatever— without getting carried away by it.
According to the Buddha, we have three habitual responses to everything we experience. We want it, reject it, or we zone out. Cookies: I want. Mosquitoes: I reject. The safety instructions the flight attendants read aloud on an airplane: I zone out. Mindfulness is a fourth option, a way to view the contents of our mind with nonjudgmental remove.

I spent so much time, as one Buddhist writer put it, “drifting unaware on a surge of habitual impulses.”

Mindfulness is an inborn trait, a birthright. It is, one could argue, what makes us human. Taxonomically, we are classified as Homo sapiens sapiens , “the man who thinks and knows he thinks.”

The Buddhists had a helpful analogy here. Picture the mind like a waterfall, they said: the water is the torrent of thoughts and emotions; mindfulness is the space behind the waterfall. Again, elegant theory — but, easier said than done.

On still wanting to be ambitious and thinks through problems:

I was still unshakably certain that looking at a problem from all angles and searching for the right move gave me an edge. And yet I was also still concerned that too much worrying was driving me nuts.

The idea of leaning into what bothered us struck me as radical, because our reflex is usually to flee, to go buy something, eat something, or get faded on polypharmacy. But, as the Buddhists say, “The only way out is through.” Another analogy: When a big wave is coming at you, the best way not to get pummeled is to dive right in.

She nailed the method for applying mindfulness in acute situations, albeit with a somewhat dopey acronym: RAIN. R: recognize A: allow I: investigate N: non-identification

The final step— “non- identification”— meant seeing that just because I was feeling angry or jealous or fearful, that did not render me a permanently angry or jealous person. These were just passing states of mind.

I’m remembering that time when my friend Kaiama stumped me by asking how anyone can be in the present moment when it’s always slipping away. It’s so obvious to me now: the slipping away is the whole point.

“Is this useful?” It’s a simple, elegant corrective to my “price of security” motto. It’s okay to worry, plot, and plan, he’s saying— but only until it’s not useful anymore.

When I got into a rut, it didn’t take long for me to jar myself out of it. I would use RAIN— watching how the feelings would show themselves in my body and then labeling them with some degree of nonjudgmental remove.

The answer is in non-attachment.

“It’s like, you write a book, you want it to be well received, you want it to be at the top of the bestsellers list, but you have limited control over what happens. You can hire a publicist, you can do every interview, you can be prepared, but you have very little control over the marketplace. So you put it out there without attachment, so it has its own life. Everything is like that.”

Striving is fine, as long as it’s tempered by the realization that, in an entropic universe, the final outcome is out of your control. If you don’t waste your energy on variables you cannot influence, you can focus much more effectively on those you can. When you are wisely ambitious, you do everything you can to succeed, but you are not attached to the outcome— so that if you fail, you will be maximally resilient, able to get up, dust yourself off, and get back in the fray. That, to use a loaded term, is enlightened self- interest.

It brought to mind a meeting we’d had at ABC a few months before the 2012 election. A small group of reporters, anchors, and executives were in a conference room, clustered around David Axelrod, who was conducting President Obama’s reelection campaign. At one point, Ben asked the preternaturally even- keeled Axelrod about the existential challenges of conducting a campaign in an environment where there were so many factors out of his control— from the European debt crisis to a potential al- Qaeda plot to Israel’s saber- rattling against Iran. Axelrod responded, “All we can do is everything we can do.”

This clunky phrase “nonattachment to results” was my long- sought Holy Grail, the middle path, the marriage of “the price of security” and “the wisdom of insecurity.”

The Way of the Worrier

1. Don’t Be a Jerk
2. (And/But …) When Necessary, Hide the Zen
3. Meditate
4. The Price of Security Is Insecurity — Until It’s Not Useful
5. Equanimity Is Not the Enemy of Creativity
6. Don’t Force It
7. Humility Prevents Humiliation
8. Go Easy with the Internal Cattle Prod
9. Nonattachment to Results
10. What Matters Most?

Mindfulness, happiness, and not being a jerk are skills I can hone the rest of my life— every day, every moment, until senility or death. And the payoff is less reactivity, less rumination, and— who knows?— maybe stream- entry. I have willingness and curiosity. I have confidence and trust. I guess another word I could use is … faith.

Also: Born to Run Reading Notes

Investing in Mobile: The Gaming Stocks

Mon, 11 Aug 2014 12:23:06 -0700

Last week I took a look at the performance of our Mobile Growth Portfolio two months in.

But I wanted to take some time to unpack the Mobile Growth Portfolio a bit more and break down each of the eight categories.

This post will look at one of the more fun categories: Mobile Gaming.

It shouldn’t surprise anyone now that mobile gaming is BIG bucks. A recent study from SuperData cites the mobile gaming market in the U.S. at $3.2 billion a year.

Gaming is the most lucrative category for app developers, taking the lion share of mobile app usage and revenues. According to gaming focused investment bank, Digi-Capital, games accounted for 72 percent of mobile app revenue in 2013.

However, gaming is also the most saturated app category. According to analytics firm Adjust, games account for the highest number of apps of any category by a long shot:

Meanwhile, there are big problems with retention and engagement. A similar report from Localytics points out that games have the lowest level of stickiness and engagement among any category. (Note: a problem we’re trying to help with at TapCommerce).

In short, you’ve got to do a lot of things right in order to make it as a gaming company. And you need to master many more to make it to the next stage of being a public gaming company.

So who are some of the biggest public gaming companies to invest in?

King Digital Entertainment plc

King ($KING) is the leading mobile game company in the U.S. in terms of number of players and time spent on games, according to mobile analytics firm Mobidia Technology.

King is an interesting company in that unlike many of their competitors, they don’t have a huge portfolio of games. Instead they focus on just a few titles. But these titles tend to be massive hits. (Supercell is another company that exemplifies this strategy but unfortunately we can’t invest in it because it’s still private.)

King’s numbers are beyond impressive (see: 5 Key Numbers From King’s IPO Filing). With a DAU/MAU ratio of almost 40%, King’s users clearly love — or are addicted — to their products.

(Note: be sure to check out Brooklyn Nine Nine’s homage to Candy Crush addiction: Kwazy Cupcakes.)

The main concern about King is their heavy reliance on Candy Crush. It still makes up the vast majority of their users and revenue so they need to diversify beyond it to prove future growth. They do have a promising new Candy Crush Soda title coming out but it looks like more of a complement than a true sequel.

Another concern for King is they are still a recent IPO. The market needs more time to judge them.

The biggest pro is that King is one of the cheapest mobile gaming stocks out there fundamentals-wise.

Titles: Candy Crush Saga, Bubble Witch Saga, Farm Heroes Saga, Pet Rescue Saga

Fundamentals: Price/Sales - 2.67, Price/Book - 9.54, Enterprise Value/EBITDA - 6.65

Technicals: Limited data here since it’s a new IPO, but looks like short term support is around $16

Electronic Arts

Electronic Arts ($EA) is of course the premier legacy PC and console game developer. Makers of EA Sports (Madden, NHL, FIFA, etc.), Need for Speed, The Sims, Battlefield, etc. There’s no telling how many people will forever have the voiceover “EA Sports… It’s in the game.” seared into their memories.

But EA is starting to invest big in mobile. GamesBeat recently had a great interview with the EVP of EA Mobile on how they are doubling down on mobile games. They have a great portfolio of IP for mobile. Everything from The Simpsons to The Sims to Bejeweled.

EA just reported a great Q2 earnings, with profit up 51%. While most of their revenues still comes from console sales like Titanfall and FIFA 2014, a growing percentage is coming from mobile. They announced an impressive 140 million monthly active players on mobile in Q1. And revenue from mobile rose 18% to $120 million during the period. Up 39% from last year.

“We continue to view mobile as a business with tremendous opportunity as the market is experiencing significant global growth in smartphones and tablets,” Blake Jorgensen, CFO said.

I’d expect EA to keep improving mobile with successive titles and additional IP. I’d also look for them to make some serious mobile acquisitions in the next year. Let’s hope they take advantage of this current ZIRP (zero interest rate policy) and cheap borrowing environment to pick up some strong mobile studios.

Titles: Bejewled Blitz, The Sims, Plants vs. Zombies, Real Racing, The Simpsons: Tapped Out, etc.

Fundamentals: Price/Sales - 2.71, Price/Book - 3.84, Enterprise Value/EBITDA - 23.72

Technicals: After popping on earnings in May, it’s been consolidating in this $34-38 range

Activision Blizzard

The other big legacy PC and console game developer is Activision Blizzard ($ATVI).

Activision has been developing hits for years, ever since their first billion dollar game franchise, Tony Hawk. They now have the most valuable franchises of any gaming company in the world (e.g. Call of Duty, World of Warcraft, Diablo, etc.)

They have however been a bit slow on the uptick for mobile. They tend to focus on making high production value games that people play for hours at a time. That doesn’t translate quite so well to mobile. Yet.

Their first foray into mobile sure made a big splash though. Originally a desktop game, Hearthstone — a Warcraft inspired card game — blew up the charts when it launched in April, quickly hitting No. 1 on free iPad apps.

It has been sliding down the charts lately but they have some interesting plans for expansion packs and a forthcoming iPhone version that will be sure to do well.

Activision reported this week with good recent earnings, with Q2 results above consensus. They also have a strong 2H lineup and release momentum, with new IP Destiny (Sept.), sequels to Skylanders (Oct) and Call of Duty (Nov), and a World of Warcraft expansion. (Dec).

I think we’ll see Activision be a lot more aggressive on mobile in the next few years as our devices get even better and stronger (and for iPhones, bigger), allowing for more immersive gaming experiences.

And much like EA, I think we should expect Activision to get acquisitive about mobile this year too.

Titles: Hearthstone

Fundamentals: Price/Sales - 3.75, Price/Book - 2.24, Enterprise Value/EBITDA - 13.90

Technicals: Solid uptrend since breaking out of $16-18 channel at the beginning of the year

Glu Mobile

Glu Mobile ($GLUU) is a mobile games publisher mostly known for its high quality action/adventure games.

They are routinely pushing the limit on the type of gameplay that can be done on mobile devices, often resulting in features by Apple and Google. People often compare their games like Deer Hunter and Contract Killer to console level quality.

But they’ve recently been focusing on widening their reach with more casual games. Their latest casual title Kim Kardashian: Hollywood launched recently has been a big hit, getting to the top 5 free. If the title gets staying power, expect them to continue this Hollywood franchise with other big celebs.

Investors would welcome the news for Glu to expand beyond just the action/adventure niche (which has higher value users, but fewer of them).

Glu has been on a run recently, seemingly due to the Kardashian game success. However down roughly 25% since announcing Q2 earnings on July 30th. They beat estimates and raised Q3 guidance, but it looks like investors were hoping for more.

That said, it’s still relatively cheap at a market cap of $450mm and a Price/Sales of just over 3. This is one of the reasons that I gave it the most weight of any of the gaming stocks.

Glu is also highly shorted, with 17.8% of float short. As growth investors, we like to see this because it means the stock can move quickly on good news as short sellers cover their positions. It does mean more volatility in the meantime though.

Another pro is that Glu could make for a good acquisition target. Given their traditionally action niche, I wouldn’t be surprised if Activision makes a move here. Could be a good fit.

Titles: Deer Hunter franchise, Contract Killer franchise, Gun Bros, Kim Kardashian Hollywood, Blood and Glory, etc.

Fundamentals: Price/Sales - 3.20, Price/Book - 4.50, Enterprise Value/EBITDA - (-53.55)

Technicals: Needs some time to consolidate after this big run. I’d look to be a buyer with some consolidation around $4.80, and especially if it closes the previous gap around the $4.00 support

Zynga

I’ve written a lot about Zynga ($ZNGA) in the past. It’s a name that’s synonymous with mobile gaming.

With their big portfolio of games, Zynga seems seems to have found the formula to deliver hits on a routine basis. They have huge network effects with the “With Friends” and “Ville” franchises from which they can drive installs for their newer games and get titles into the top 10 with relative ease.

The main concern with Zynga is that they overextended themselves, growing too far too fast.

They have had to undergo multiple rounds of layoffs and re-orgs recently.

However, many are still optimistic about Zynga’s prospects. They needed to make some bold moves to turn things around and the new CEO Don Mattrick did just that.

From my perspective, the strategy they’re going after is in the right place. Just a matter of execution now.

Titles: Zynga Poker, Ville franchise (FarmVille, CityVille, CastleVille), With Friends franchise (Words, Scrabble, Hanging), Slots franchise, Draw Something, Stampede Run, etc.

Fundamentals: Price/Sales - 3.32, Price/Book - 1.30, Enterprise Value/EBITDA - 55.28

Technicals: Zynga has been in a clear, long term downtrend. It’s now hovering around the ~$2.80 support from last summer. Could be a good time to hop on for the brave long term believers. Next support is around $2.20

Note: One big caveat here is that this portfolio is focused on the U.S. To get a more complete exposure to mobile gaming, you would want to add international companies like DeNA, GREE, Konami, Sega, etc.

It also doesn’t include some of the larger, very successful mobile gaming companies that are still private such as Supercell, Machine Zone, Kabam, etc. It would be great to see how the public markets valued them too.

But as you can see, there’s a lot of opportunity in the mobile gaming stocks today. It’s certainly a trend that’s here to stay. While it is one of the more risky categories we’ll look at (because it’s still hits focused and investors can be finicky), there’s clearly a lot of money to be made if you can navigate them well.

The Mobile Growth Portfolio: Two Months In

Sat, 02 Aug 2014 13:02:00 -0700

In a previous post on How To Invest In Mobile, we looked at three ways to invest in the mobile growth trend, with the most accessible option for most people being to invest in public stocks.

In the post, I took a shot at putting together a (very rudimentary) Mobile Growth Portfolio of potential stocks to invest in. It’s been two months since inception (5/30), so thought I’d quickly take a look at performance.

Two months in, the Mobile Growth Portfolio has outperformed the major market indexes at +5.5% vs. +0.4% from the S&P 500.

Since the portfolio is mostly a collection of high growth stocks, we should expect it to lead on the way up during risk-on market rallies as well as on the way down during risk-off corrections. And so far this seems to be the case.

The end of the quarter is often marked by performance chasing. If you look at the above chart, it’s clear that performance chasing was in effect during the month of June. This year may be a bit more pronounced than most as it’s been a frustrating, choppy market where many fund managers have struggled to perform.

So after getting kicked in the teeth for most of the year, the growth stocks were able to find some traction as performance chasing kept an underlying bid in them.

The top performers in the portfolio have been Glu Mobile ($GLUU), Twitter ($TWTR), King Digital Entertainment ($KING), and Expedia ($EXPE).

The two poorest performers have been Zynga ($ZNGA) and Millenial Media ($MM).

At the one month mark, Priceline ($PCLN) was the worst performer but was able to turn it around in July. It looks like it could have been a temporary blip because of the large cash outlay from the OpenTable acquisition. I had some quick thoughts on that acquisition here.

The rally has extended not just to small and mid-cap stocks but to many of the mega-cap growth stocks too: Facebook ($FB), Apple ($AAPL), etc. It takes a lot to move these big names so it’s clear the institutions are heavily involved in this rally.

But there are some signs of warning too. The small cap stocks in the Russell 2000 have been hit particularly hard. And even the S&P 500 is getting close to its 20 week moving average.

As we get off to a start in Q3, we’re now entering the slowest, lowest volume month of the year in August. Volatility also historically picks up during the summer months. Especially with the news of Argentina defaulting this week, I’d expect more choppiness and little upside in the major indices over the next two months.

It will be interesting to see how the market reacts to our Mobile Growth Portfolio stocks during these months and into Q3-Q4. I’ll check in every so often with updates.

TapCommerce Joins The Flock

Mon, 30 Jun 2014 17:16:03 -0700

Excited to share that TapCommerce is joining the Twitter family!

So proud to be a part of this incredible team and journey. A big thank you again to Brian, Samir, Andrew, and Tim for inviting me along.

And the most exciting part is that we’re just getting started. Here’s more from our founder and CEO Brian Long:

Today, we are thrilled to announce that TapCommerce has agreed to be acquired by Twitter. Learn more on Twitter’s blog.

When Samir, Andrew, and I started TapCommerce, we had one goal in mind: advance mobile advertising forward to allow for relevant and real-time communication between brands and consumers. Our team built our app retargeting technology from the ground-up exclusively for mobile, and our demand-side platform now processes over 15 billion targeted ad impression bids each day, across 50,000 apps worldwide.
Our focus on creating engaging brand experiences for mobile consumers aligns perfectly with Twitter’s product and core values, making TapCommerce a natural fit in Twitter’s expanding mobile advertising stack.
In addition to numerous other exchanges and networks, the TapCommerce platform is already deeply integrated with MoPub, Twitter’s mobile-focused RTB ad exchange. We look forward to growing our role as an integral part of the Twitter Publisher Network.
For our existing customers, your TapCommerce experience will not change. Being a part of the Twitter team will allow us to dedicate more resources to developing our product and expanding our services, so that you can continue to deliver even more value from your campaigns.
Thank you to all of the TapCommerce team, and our investors—Bain Capital Ventures, Eniac Ventures, Metamorphic Ventures, Nextview Ventures, and RRE Ventures.
We’re excited to #JoinTheFlock, and to continue to push mobile advertising forward!

Quick Thoughts on Priceline's Acquisition of OpenTable ... And What's Going to Happen to Yelp and GrubHub

Fri, 20 Jun 2014 10:21:34 -0700

When Priceline announced it was buying OpenTable for $2.6B last week, a lot of smart people chimed in with thoughts.

It’s a fascinating deal, so I wanted to share some quick thoughts too. My initial reaction was that it was a smart acquisition by Priceline, especially in light of the recent dip in tech momentum names.

International

My main thinking here is international. OpenTable has a huge presence here in the U.S., but has struggled to grow abroad. In a conference call after the announcement, Priceline’s CEO Darren Huston mentioned the success of Kayak (acquired for $2.1B in 2013) and how they can use that same roadmap for OpenTable’s international expansion.

Differentiation

OpenTable should also help provide Priceline with some much-needed differentiation. It seems like it’s a race to the bottom price with a lot of these OTA’s. The way they try to differentiate is by building customer loyalty. With OpenTable, Priceline can offer more bundled packages and reward programs to users. For example, imagine a package where booking your flight, hotel, and rental car together on Priceline could also get you a free or discounted meal at top restaurants.

Mobile Payments

I also think there’s a lot to be bullish about for OpenTable’s new mobile payment product. I haven’t used it yet personally but a few friends have and they’ve been impressed. All you have to do is add your credit card to the OpenTable app before your meal and you can pay your check right there in the app. This product still has a lot to prove out, it’s still in pilot at just a handful of restaurants in San Francisco, but I think with Priceline’s cash behind them OpenTable could roll this out in a big way.

Yelp and GrubHub Suitors

Regardless of whether or not it was a good buy for Priceline, another interesting side effect was how other stocks reacted. The main ones to note were Yelp and GrubHub, which both took off (14% and 7% respectively) after the announcement.

Leigh – who’s been putting out some great material on the Estimize blog lately – took note and surmised about them both as potential acquisition targets. Here he is with some great points per usual:

“The average predicted takeover price on Mergerize is $7.81B, and the news of the OpenTable deal just increased Yelp’s market capitalization by over $750M to $5.34B. If Yelp were to be acquired today for the same 47% premium that Priceline paid for OpenTable, the sale price would be around $7.85B. Maybe there is some wisdom in the crowd for M&A after all.”

Leigh is predicting Yahoo! as the main acquirer for Yelp here, however I think another one of the likely candidates here could be Expedia.

Priceline has been known for their big acquisitions, which include OpenTable, Kayak, Agoda, and Booking.com (considered by many to be one of the best acquisitions of all time). With all those properties combined they are the leader in online travel by a huge margin.

But Expedia Group (which includes Hotels.com, Trivago, Hotwire and Venere) is the second largest travel company and has been making some moves recently. For example, their strategic deal with Travelocity will give them access to another ~10.6mm uniques.

With the Priceline and Expedia arms race heating up, I could see Expedia going after a big acquisition like Yelp to even the odds a bit.

YelpHub

Another option I think would be interesting here is a GrubHub acquisition by Yelp. Okay, so maybe it’s a far cry since Yelp doesn’t really have the cash, but hear me out. Combined, Yelp-GrubHub (YelpHub anyone?) would make up the biggest restaurant and food delivery service by a huge margin.

The synergies (buzzword!) there would be numerous. Yelp – which has a massive salesforce and relationships with many more restaurants than GrubHub – would immediately be able to offer food delivery as part of their platform. GrubHub could also source Yelp reviews directly into their listings vs. using their own.

And as Leigh points out, then Yelp would just need to double down on reservations via their SeatMe acquisition and undercut OpenTable on pricing to gain market share.

I also think YelpHub would be a good move in light of all the recent food delivery startups taking aim and coming on strong like Munchery, Sprig, SpoonRocket, Zesty, etc.

As Jeff Weiner noted, it will be interesting to see if Priceline can do for OpenTable what it did for Booking.com. Will also be interesting to see who else comes a-knockin’ for Yelp and GrubHub.

How To Invest In Mobile: The $30 Billion Dollar Question

Fri, 13 Jun 2014 13:18:59 -0700

There is a $30B+ opportunity in mobile ads. And that’s in the U.S. alone.

As we’ve seen from the charts, time spent on mobile is clearly on the rise. Mobile is a huge platform shift still in the early stages of high growth. And more growth is coming as we quickly head towards 5B smartphones on the planet.

So how does one invest in the mobile advertising trend?

There are a few options.

Angel Invest in Startups

The best leverage you can have is likely through startups and private companies. We’ve all heard the stories of angel investors who made 100x+ on their investments. Or as my friend Howard calls it, searching for the Unicorn’s Unicorn.

You could invest in startups yourself but this is risky, hard, and capital intensive (although fortunately getting easier and cheaper). It’s risky because most startups fail. It’s hard because the time commitment is enormous. And it’s capital intensive because to do it right you should really diversify your portfolio (10-15 companies).

Startups also often have minimum angel investments of $10-25k. That means you’re looking at a lower bound of $100k. And because of the risk, you really shouldn’t be putting more than 10% of your investible assets into an angel portfolio.

I often refer others to Andy Rachleff’s great post on angel investing. It covers why angels usually don’t make money and advice for people who are going to do it anyway.

Join a Startup

The other option to invest through private companies is to join a startup. I often get asked for advice by people looking at mobile startups on where they should work. I think I usually disappoint them by recommending that they not to go work for a startup at all. The fact is, most people just aren’t ready. I tell them to go for midsized companies with momentum instead, not startups.

Why not a startup? Well again, most startups fail. Their risk/reward ratios just aren’t good. Good investors know the concept of risk/reward: You want the highest return for the least amount of risk. Why not apply the same sort of thinking when it comes to your career?

As a prospective employee it’s important to think about whether the startup is de-risked yet. Chris Dixon has a classic post on this. In it, he says that the worst time to join a startup (financially speaking) is right after the first VC or Series A round. That’s when the company has some momentum but hasn’t proved it can reach real revenues or product-market fit.

But there are ways to de-risk it. Do your research. Talk to the company. Talk to their clients. Is it a team you really admire and believe in? Does the company have true product-market fit? Does it have real revenues?

If yes to all of the above, then I say go for it. This is what I’ve done twice now. (Oh and by the way we’re hiring.)

Let’s not forget you also get to create lasting relationships and really learn the industry you are interested in. If you’re only doing startups for the money then you’re probably doing it for the wrong reasons.

Public Market Stocks

A third way to invest in the mobile growth trend is to invest in public companies and stocks.

Active investing isn’t easy. It takes a lot of time and effort to be a successful active investor. (see: The Skills It Takes To Be A Great Active Investor)

But I do think it’s easier than most make it out to be. First and foremost, you have to love it as a hobby and have a passion for it.

Second, you have to understand the catalyst and the WHY behind your investments. That is one takeaway I got from the great book Hedge Fund Market Wizards: If you don’t understand why you are in a trade, you won’t understand when it is the right time to sell. Which means you will only sell when you get scared.

The WHY behind what we’ve been talking about here is mobile growth trend, the rise of mobile attention, and the $30B opportunity for ad spends to catch up.

So what are some of the good public companies out there that are capitalizing on this trend?

I’ve taken a shot at putting together a portfolio of stocks on Motif Investing, which is a site that lets you find and invest in certain motifs. It’s just an experiment for now but I’ve been impressed with it so far.

Here is my Mobile Growth Portfolio:

And here’s the description for it:

“This motif was built to capture alpha from the mobile growth explosion. There will be 5B smartphones on the planet by 2020. Mobile advertising is up 47% Y/Y, mobile commerce revenues are up 60% Y/Y. This motif invests in the platforms, publishers, ad tech, commerce, travel, etc. that are driving the mobile growth trend.”

Along with a pretty cool Excel spreadsheet for the holdings.

I’ve separated out the portfolio into eight categories of public companies driving the mobile growth trend: the platforms, the publishers, the pipes, mobile advertising and ad tech, mobile commerce, mobile travel, mobile gaming, and early stage private co’s.

I created the portfolio a few weeks ago and at a quick glance it’s up about 3.4% vs. 0.7% from the S&P.

The weighting is pretty subjective at this point. I went for less exposure to the highly volatile and hits based gaming companies and more exposure to the advertising companies and platforms. I also tried to get less exposure to the more volatile small caps.

Would love to hear any top level thoughts or feedback on it.

Now, a big caveat here is that now might not be the very best time to invest. The stock market just this week hit record highs. Keep in mind 4 out of 5 stocks move in the general direction of the market. As the market goes, so do most stocks.

Generally you don’t want to buy high and sell low. So two ways to think about this then. One is to control your risk beforehand. You can set up stop losses (orders to sell once a stock reaches a certain point) so you don’t lose more than you’re comfortable with.

The other is to take a truly long term perspective. As Warren Buffett says, “Time is the enemy of the poor business and the friend of the great business.”

I like to do a bit of a combination. Long term view while still cutting losses around 20% or so. Just in case any one particular business really craters.

In the next few weeks I’ll try to do a deep dive into each of the categories and the stocks within each. Stay tuned.

5 Charts That Show Mobile Advertising Is Set To Soar

Wed, 04 Jun 2014 12:15:45 -0700

Note: This is an excerpt and a couple of highlights from my first guest post on the TapCommerce blog. Would love to hear your reactions…

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Last week, Mary Meeker’s annual Internet Trends Presentation was released. At TapCommerce, we focus exclusively on mobile app re-engagement, so naturally we paid close attention to the overarching trends shaping the mobile advertising space that were covered in the report.

The report by KPCB is fully loaded at 164 slides— so below is a quick recap of our 5 favorite charts related to the state of mobile advertising:

1. Attention vs. ad dollars shows ~$30B+ opportunity for mobile

What jumps out most here is the discrepancy between mobile advertising spend and the amount of time that consumers are spending with mobile devices. In the US alone, there is a $30B+ opportunity for mobile advertising spend to grow, just to keep pace with the massive amount of time spent on mobile. Tweet this

Mobile is the only media category here where spend increased from the prior year—advertising investments in all other media either decreased or stayed about the same.

Consumers are now spending more time with mobile than with print and radio combined, and nearly as much time with mobile as they do with the web. Tweet this

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And skipping ahead to my favorite of the 5 charts…

5. Mobile ad spends still have a long way to go

Last but certainly not least, here’s a great one on mobile advertising as it relates to total Internet advertising. Internet advertising grew a strong 16% year-over-year globally, according to Meeker. However, mobile advertising on its own is up a staggering 47% year-over-year. Tweet this

And yet, mobile still only accounts for just 11% of total global Internet advertising. As you can see from the first chart covered earlier in this post, advertising will continue to shift toward where consumers are spending their time… and today, that’s on mobile.

***

Head on over for the full list and summary:

5 Charts That Show How Mobile Advertising is Set to Soar

Twitter Follows Facebook into the Lucrative Mobile App Install Game

Fri, 18 Apr 2014 15:35:48 -0700

A few weeks ago I tweeted out a beta version of Twitter’s new mobile app install ad unit that I came across.

Well yesterday Twitter officially announced their app install ads with a new mobile app promotion suite.

Twitter says advertisers will now be able to use one interface (ads.twitter.com) to buy ads targeted at both Twitter’s 241 million monthly active users and more than 1 billion mobile devices served by the MoPub advertising exchange.

It’s a move that isn’t exactly surprising. When Twitter bought MoPub in October, they hinted that expanding MoPub’s app install ads was part of the plan. As I wrote then, MoPub brings a ton of value to Twitter and I think was a big reason why the IPO did so well (although the stock has since been hit hard along with a lot of other tech momentum names).

Granted, Twitter is coming in a bit late to this game. Facebook launched its mobile app install product in late 2012. At the time I thought these install ads would have some potential. But I had no idea how massive they would become for Facebook.

It’s hard to say exactly how lucrative they are (I’ve heard various rumors) since Facebook doesn’t break down their mobile revenue by product. But they did hit a major milestone last quarter when they crossed the halfway point and now earn 53% of ad revenue from mobile, or $1.37 billion out of its $2.59 billion.

Here’s how Mark Zuckerberg put it in January:

“We’re finding that people also really want to buy a lot of app install ads, and that’s grown incredibly quickly and is one of the best parts of the ad work that we did over the last year.”

I can attest to this as well. Anecdotally, a few marketers I’ve talked to have told me Facebook continues to outperform and now accounts for a good 40-60% of their entire user acquisition and CPI budget. If you are an indie app developer with a bit of a marketing budget (say under $100k), my advice: go straight to Facebook and maybe soon, Twitter. It just doesn’t make sense to spend anywhere else.

This week’s news makes it obvious why Twitter spent $350 million in stock for MoPub last year. The difference in scale of Twitter standalone vs. Twitter + MoPub is substantial. Once you add in MoPub, advertisers now get access to over 1 billion potential devices – which is on the same scale as Facebook can offer.

And as I mentioned before, it’s probably a no-brainer for Twitter to also follow Facebook into what I think is the next big trend in advertising: mobile app re-engagement ads.

It’s still very early but in a few years I think we’ll look back on the MoPub acquisition as one of the better acquisitions in mobile. Should be fun to chart Twitter’s rise in mobile the same way we’ve done with Facebook.

Also: Facebook’s Rise In Mobile (In Charts)

5 Key Numbers From King's IPO Filing

Wed, 19 Feb 2014 13:07:00 -0800

Yesterday King.com filed their long awaited IPO.

King, the maker of Candy Crush Saga and the rest of the Saga franchise, is one of the biggest players in the freemium games business. Since Candy Crush is consistently #1 in the top grossing mobile games, many in the gaming space have wondered about the numbers behind their business.

Here are five numbers that jumped out to me:

324mm Monthly Active Users (MAUs) and an average of 128mm Daily Active Users (DAUs)

This is pretty astounding. It’s interesting to look back at my analysis of the Zynga IPO filing and compare the numbers. When Zynga filed, they had 236mm MAUs and 62mm DAUs. The big difference here is really the DAU count; King has over double the DAUs Zynga had when it filed. For a more recent comparison, you can also look to Supercell (maker of Clash of Clans and Hay Day) which has 29.4mm DAUs across titles – if we can believe the hacker’s recent numbers.

A DAU/MAU ratio of almost 40%

Crazy. It’s unheard of for most businesses to have this high of a ratio. King’s users are super sticky. That or just plain ole addicted.

(h/t to @shaig for first pointing this out)

12mm Average Monthly Unique Payers

That’s payers, not players. People actually spending money in the games. This represents approximately 4% of their monthly unique users. So overall, a relatively small amount of people are subsidizing King’s games for the rest of us.

Candy Crush makes up 75% of their users and 78% of their revenue

As the late PSH would say as Brandt in The Big Lebowski: “This is our concern, dude.”

I wouldn’t quite call King a one-hit wonder, but this is obviously a big concern for them. They need to expand past Candy Crush into other titles. And quickly. They seem to be doing well so far with Pet Rescue Saga (15mm DAUs) and Farm Heroes Saga (8mm DAUs) but I’d like to see more. And they need to figure out how to expand beyond the Saga franchise if they want to continue growing.

The reality is this is a hits based business so for them to last long term as a public company they will need to diversify away from Candy Crush.

They have raised only $9 million of primary capital to date

And they made $1.9 billion in revenue last year. With 665 employees, that’s $2.9 million in revenue per employee. Positive cash flow for the past nine years.

Simply put, a home run for everyone involved.

–

It will be really interesting to see how the King’s life as a public company plays out. And how it fares against Zynga, Glu Mobile, Kabam’s rumored IPO, and the rest of the public gaming companies.

There are definitely some risk factors here, which King has been very clear of in their filing. But overall, these numbers show just how well they’ve done and how far ahead they are from everyone else.

Also: Zynga’s IPO Filing: Analyzing the S-1

In Charts: Facebook's Rise In Mobile

Thu, 30 Jan 2014 10:16:18 -0800

Over the past year, we’ve looked at Facebook’s rise in mobile multiple times: how it’s happening faster than most expected, how it’s due in large part to the app install market, and most recently how they are doubling down with mobile app re-engagement ads.

Well they reported earnings yesterday and once again impressed the Street with strong mobile growth. The stock is up ~16% to $62 at the time of this writing. For the first time, mobile now accounts for over half (53%) of Facebook’s total ad revenue. And my guess is it could get up to 70% by year end.

Here are some charts highlighting their mobile rise:

Mobile MAUs increased to 945 million, up 8.1% from the third quarter.

Mobile DAUs even more impressive, now at 556 million, up 8% from the third quarter.

And lastly, their overall revenue came in at $2.59B, up 63% from a year ago.

For the time being at least, it seems investors have realized that the whole “Facebook losing teens” thing isn’t really a big deal given their overall mobile story.

TapCommerce & The Evolution of Mobile Advertising

Thu, 09 Jan 2014 09:55:14 -0800

As I mentioned in my last post, I’m moving on from the incredible ride that was Pandora to my next adventure. I’ve enjoyed mobile advertising so much that I’ve decided to dive deeper by joining TapCommerce as Director of Sales leading up their San Francisco team.

Here’s the why and backstory:

About May or June last year, I got a note from a client asking if we did any “mobile re-engagement campaigns” on Pandora. Instead of paying us to drive an app install, they wanted to retarget their users (who already have the app installed) via a deep link and pay us to bring them back to their app. At the time, we didn’t have the capability and we moved on.

But after talking to more clients, it made me realize: engagement is a huge problem.

The average person has over 30 apps on their phone. Most of the people I know have way more.

The problem if you’re a marketer is the more apps a user has the harder it is to re-engage that user.

Marketers can (and should) use push notifications to re-engage users. But unfortunately due to a lot of developers abusing the privilege early on and spamming, more and more users are opting out of push.

Email is another good tool for re-engagement but much ink has been spilt on the problems of email overload.

So engagement has continued to drop.

Flurry now says that after installing an app less than 25% of users still use the app 3 months later. And that number is dropping.

Meanwhile Apple said on Tuesday that App Store customers spent more than $10B in 2013. There are now more than 1 million apps on both the App Store and Google Play. With the app market growing more competitive, the cost to acquire those users keeps going up.

Still, many app developers are starting to get massive reach, with 900+ of them having over 1 million monthly active users. And 30+ of them with a whopping 20mm MAUs.

Because of this combination, we’re starting to see a big shift in mobile advertising spend: from new user acquisition to re-engagement.

As the market continues to mature and evolve, the largest advertising categories of the desktop Web (e-commerce, travel, financial, telecom, etc.) will follow suit and focus primarily on mobile re-engagement. In fact, the smart ones already are.

The evolution hasn’t gone unnoticed. Facebook announced they were getting into re-engagement ads (related by me: Facebook Jumps Into The Mobile App Deep Linking Game). And I’m sure Twitter will take their Cards deep linking feature to mobile soon. Both of which further validate and bring more scale to the re-engagement market.

With much more demand from advertisers and more supply coming on board every day from programmatic, RTB, Facebook, Twitter, etc., there will be lots of opportunities for startups to capitalize.

Enter TapCommerce.

After getting to know the founders and hearing the vision for the company laid out by CEO Brian Long, it became clear that this would be a perfect fit.

TapCommerce sits in a truly unique space within the industry. They saw the writing on the wall before everyone else and made big investments building out the product. They achieved product-market fit early on with some of the top grossing mobile companies and now have a significant first mover advantage because of it.

The team has lots of experience building products and scaling. More importantly, they have hired the right engineers with the talent and knowledge to keep executing.

The company also had the foresight to put teams in place to help with basically everything a client could ever need. Customer service isn’t just a punchline in the pitch deck, it truly guides every decision in the company.

When I was at their headquarters in New York last week getting ramped up I looked over the team and felt humbled to be a part of it. It’s going to be an exciting ride.

As for my writing… I wouldn’t expect much to change. I’ll still be writing here and elsewhere as time permits. Hopefully a bit more, maybe even occasionally on the TapCommerce blog.

Now after 6 weeks of travel I’m glad to get back to San Francisco (and normal people weather) and really get started.

Update: We’re hiring. If you know anyone good (mainly sales, account managers, and engineers) looking in SF or NYC, please ping me.

Moving On To My Next Adventure

Mon, 02 Dec 2013 09:30:00 -0800

I joined at Pandora as #85 nearly 5 years ago. After an amazing ride, it’s time for me to move on to a new adventure.

Today will be my last day… and what a ride it’s been. When I started, Pandora’s future as the leader in personalized radio was far from guaranteed. In fact, it’s existence was still very much still in jeopardy. In 2009, the royalty structure for Pandora and other webcasters caused it to shell out nearly 70% of its revenue to record labels, which obviously made it very hard to run a profitable business.

Pandora’s own founder Tim Westergren said the situation was approaching a “pull-the-plug kind of decision.” And Mike Arrington wrote that Pandora may need to be our sacrificial lamb — “sacrificed before artists and labels to realize just how absurd their position is.” Needless to say I asked a lot of questions in the interviews but was still a little more than nervous that I’d be out of a job soon.

Luckily a few months later a royalty agreement was struck, Pandora raised another $35mm in VC funding, and the rest as they say, is history.

It has been a truly incredible experience to watch how far we’ve come and how fast we’ve grown since then.

Here are a few examples that come to mind.

— I joined Pandora 3 months after we launched audio ads. I found in an old notebook that our entire company audio goal for the 2nd quarter in 2009 was $650k (which I’m pretty sure we didn’t hit). This past quarter we did $144mm in advertising revenues. While the financial results don’t break out audio vs. display, you can bet audio revenues made up a huge chunk of this.

— Mobile advertising revenues in 2009 were laughable. The advertising industry just didn’t adopt it as fast as users were. Our CEO at the time Joe Kennedy called it the runaway train problem. The usage and costs paid from royalties on mobile was far outpacing our actual revenues. So we got really serious about mobile monetization and doubled down as a company. This past quarter we passed the $100mm milestone on mobile advertising revenues for the first time.

— I wish I remembered our exact unique visitor and share of radio listening numbers from back then (update from the comments: it was 10mm monthly uniques as of May of ‘09) : so I could show you some graphs. But you can imagine that now at 71mm monthly uniques and 8.06% of total U.S. radio listening, those are hockey stick graphs that would be the envy of any startup.

We’re executing well in a growing market (again, still only 8% of total U.S. radio listening) with an amazing vision (that I still strongly believe in).

Things are going very well.

So why leave a good thing?

In short, growth and impact.

My #1 priority is to learn. I’ve grown a ton in the past five years. My time at Pandora has taught me so much. How to sell and communicate. Listening to your users. Adapting to a changing industry landscape. Asking the right questions. How to keep a product simple but featured. How to scale and grow a team. The importance of hiring the best people while keeping the culture.

But as the company has grown (now over 1,100 employees), my role has become much more specialized and so the ability to learn and grow has gone down.

As we’ve gotten bigger, the overall impact that I personally have has gone down as well. Which is important to me.

So I’m ready for my next challenge. I’m heading to a startup where everything that I do matters exponentially more. I’ve written a lot about startups here so that might not be the biggest surprise.

Despite these feelings, the decision was not an easy one. I had a lot of difficulty saying the words “I’m leaving” to my friend and boss. It’s still a bit weird to think about, but I know it’s the right move.

I feel so grateful to have been a part of the Pandora journey over the past few years. I want to thank everyone, across the country, who I’ve had the pleasure to work with during my time here. I also want to thank my friends, family, and those in the entrepreneurial community (you know who you are) for all the support and love.

More details to come on my next adventure and why I chose it, but for now I’m taking the month of December off to reboot and recharge. I’m off to Hong Kong and Thailand tomorrow, so please let me know if you have any recommendations!

Update: TapCommerce & The Evolution of Mobile Advertising

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If you’ve gone through something similar recently, I’d love to hear from you at gabowman at gmail.

You can also follow my journey on Twitter (@gordonbowman) or subscribe to my email list.

Image credit: The only picture of Pandora’s old office I could find, courtesy of Inc.com

Why Facebook Losing Teens Isn't A Big Deal

Sat, 02 Nov 2013 10:59:11 -0700

There was a lot of noise this week about Facebook’s Q3 earnings release.

First they had a beat on EPS by a wide margin. Then they also announced that mobile advertising revenue is now 49% of overall advertising revenue.

Which is great news for investors. As we talked about when looking at the Twitter MoPub deal, a major trend publishers have been dealing with is the rapid consumer shift toward mobile. When Facebook first went public, the biggest question that investors asked was whether or not it would be able to make money in mobile. And here Facebook is answering that question with a resounding yes, saying, “Hey guys, we’re doing this thing. We’re slow and surely monetizing mobile as effectively as we are desktop.“

And sure enough, investors welcomed it. The stock shot up 15% in after hours.

But then low and behold, the CFO David Ebersman started talking about teens. He admitted that Facebook has recently seen a drop in usage among teens. And boom, the stock comes back to earth and has been dropping since.

Let’s look at what Ebersman said a bit closer though:

“We did see a decrease in daily users specifically among younger teens,” but “usage of Facebook among US teens overall was stable from Q2 to Q3.”

So, he explicitly said young teens. But that teens overall have been stable. I’m assuming this means they are seeing a drop only in 13-15 age bracket.

Which if that’s correct, is not really a big deal. Why? Because young teens don’t actually make that much money for publishers. Those of us in the advertising world know that 13-15 teens are the absolute least valuable demographic for advertisers. Ads targeted to 13-15 teens perform the worst of any age group: lowest click through rates, lowest conversion rates, and lowest CPMs.

Now, to be clear, I see how Facebook losing young teens is an issue if those teens grow up into another network and never make the move over.

However, that’s not what Facebook is saying. And I don’t foresee it happening, at least not any time soon. Teens usage overall is still stable for them, which means those young teens eventually do come over to Facebook as they get older. By the time these teens are in high school and making friends in other high schools, the network effects kick in and are just too powerful to avoid. Especially now that many of the other new apps they want to join require Facebook login.

So again, unless I’m missing something, this shouldn’t be that big of a deal. Nothing about the overall story has changed. And Facebook will continue to crush earnings and add lots to their market cap on the back of their mobile app install ads, deep linking and retargeting ads, and Instagram ads.

Notes and Highlights from Stocktoberfest 2013

Thu, 24 Oct 2013 08:02:00 -0700

It was a great few days last week on Coronado for Stocktoberfest 2013.

Howard Lindzon sure knows how to put on an event. He brought in some of the smartest people from tech and the markets all under one roof. Be sure to check out his wrap up post with the best quotes and superlatives.

I learned a ton about new trends, startups, and investing in general. And so did everyone else. Just check out the #stocktoberfest hastag on Twitter.

Last year I got a lot of positive feedback from people who enjoyed my Notes from Stocktoberfest post so I decided to do the same thing this year.

Note these are mostly related to the presentations about trends and investing. There were tons of great startup pitches too. And apologies in advance to all the great presentations that I didn’t get to.

Howard Lindzon

Big Data is great but I prefer “small data”

Small data = price, volume, and social leverage (the people web, sentiment, etc.)

Successful people build a routine - journaling, writing ideas down, etc.

Thinking about 3-5 years out – surfers are constantly paddling and positioning so that’s what we’re doing, positioning for the next big wave

Bill Geiser

Metawatch

Fashology - Why wearable tech needs fashion

wearables are a “mega trend” - credit suisse says $30-50B market in 3-5 years

watches are a $60B industry

FOSL - over $3B market cap, will do $1mm in KORS sales next year

3 conclusions:

1. Branding and design as important as technology
2. the playing field is level
3. multiple winners across multiple sectors

Chris Kimble

Chart art and the power of pattern

Macro… 3 things to watch: consumers, corporations, and the gov’t (how are each doing)

Consumers & Corporations - both doing great, lowest debt in years

Bullish or Bearish is a state of mind, not a strategy

sir john templeton book recommendation: extraordinary popular delusions and the madness of crowds

300 years from now, what won’t change: fear and greed dominate human behavior

4 bull market stages - born on pessimism, grow on skepticism, mature on optimism, die on euphoria

Fed’s giant experiment - one of the biggest in mankind. No one knows how it will end, but it will lead to the greatest opportunities

10/10/10 rule - 10% size position in favorable pattern, look to sell around a 10% gain, can we do that 10 times a year (equals a 10% return on the year)

10 year treasury, interest rates doubled in the last 14 months. Best way to play it is TMF, 3x long bond fund

Emotive points: 1973 Nixon, 1987 crash, 2001 9/11, 2008 housing crash

What are technicians? Really just treasure hunters using fear and greed maps

Panel - What are the markets whispering for 2014?

Mike Bellafiore - Big money is afraid to be left behind. Institutions and hedge funds will have to jump into big growth names in order to catch up to the S&P performance. DDD, P, WLT, FB

Cole Wilcox - Long on Microsoft. Everyone focused on death of PCs and no mobile, sees MSFT the leader of enterprise, cloud computing.

Greg Harmon - Long Japan, Germany, S&P (potentially up to 1900 over next year and a half), BAC, C, F. Short TLT.

Lydia Finkley - Long emerging markets, especially Africa. *South Africa, Ghana, Uganda, Senegal, *Nigeria. Incubators and startup scenes blowing up.

Chris Perruna - Not short at all, just holding long positions for now. Watch breadth and new highs/new lows differential to get bearish. Long INVN, SPLK, V, DNKN, KORS.

Andy Swan

Likefolio

11% of Gen Z think the stock market is good for investing. But the do care about brands

Likefolio built a product to company database

Brian Lund

bclund

Dittotrade

Enabling traders to run their business and let people follow in on the exact same trades

JC Parets

allstarcharts

Top down method:

* analyze all assets across the globe (stocks, bonds, currencies)

* narrow focus to select concepts (e.g. us stocks trending higher, etc.)

* focus on the specific trades (e.g. long gold)

* risk analysis and stress test

* portfolio allocation

Need to look globally and across asset classes to stay low correlation from the S&P 500

High correlation from Berkshire to S&P

Momentum, have to look at it using RSI and bearish/bullish divergences

Use common sense when judging sentiment (e.g. mainstream news cover stories on europe right at the bottom)

Seasonality - eection year cycles - we’re entering the worst year of the cycle

Bring it all together when you can: seasonality, sentiment, price, momentum. That’s when you put on the MONSTER trade

Present market - breadth is getting worse. With every new S&P high, less stocks are participating

Long Nikkei, AAPL, TLT

Ivan Hoff

ST50

Market is forward looking so equity selection is weighted to forward earnings

Lessons learned:

* trends continue a lot longer than anyone expects

* price targets are just noise
* market is forward looking, many stocks double and triple before reporting profitable earnings
* need to be willing to ride a 20% pullback if you want to have a 100% winner
* best time to buy is when indexes are 10% down

ST50 is momentum stocks so it’s a leading indicator for the market averages.

Dan Nathan

Risk Reversal

Why investors should use options in their program

3 main reasons

* yield
* leverage
* risk management

wrong way to use for speculation because the option premiums are too expensive

right way to add yield:

long stock and sell puts. e.g. long 100 shares of FB at $50.65, sell puts of the Nov 60 calls

right way to leverage:

long stock, buy 1 out of money call, sell 2 out of money calls. e.g. long 100 shares of FB at $50.65, buy Nov 60/65 1x2 call spread for even money (buy 1 Nov 60 call, sell 2 Nov 65 calls)

right way to risk manage:

long stock, buy collar for even money. e.g. long 100 shares of FB at $50.65, buy Nov 47/55 collar for even money (sell 1 Nov 55 call, buy 1 Nov 55 put)

Andy Kessler

Investing in the fog

Look for waterfalls in the fog. Look for the trail markets.

“it takes a lot to sit and do nothing”

when looking at trends, don’t have to be exactly right just have to be in the right zip code

buy when nobody knows about it, when no one knows the story

if you haven’t lost $10mm in a day you haven’t live j/k

invested in elantec, the company behind lasers for CD/DVD Rom burners – bought at $3-4, sold at $160-200

started with an $11mm fund, did well and raised $80mm, then grew it to $1B

turned down Saudis/Bahrains investing for $1B (signs of the top of a market)

“nobody rings a bell at the top or the bottom of the market”

so winded down LPs because they were investing too much $$

what’s in the fog now - industries related to cheap smartphones, Wifi, digitized health, 3D printing,

Mike Bellafiore

SMB Capital

Traders need to:

* avoid the non news edge
* Stick to a methodology
* Always think and ask, “what’s the big money going to do here?”
* Journal and archive your A+ trades, mirror those setups for the future

Kristen Bentz and Joseph Brusuelas

Decline of the US middle class consumer

Roughly 24mm unemployed and underemployed

Biggest area of jobs growth is in Low Wage sectors (temp workers, retail, leisure, health care)

US men over 20 are exiting the workforce at an alarming rate

US households are deleveraging, biggest area is in student loans and auto.

Housing price recovery is not supporting spending (mainly because you can’t cash out refinance anymore)

Apparel/retail stores are getting crushed as consumers slow down

Where to go for retail – dollar stores

Easiest trade for this economy - long dollar stores, long upper income earner stocks, short everything in between

“Layaway nation” - wal mart, disney, etc. are all offering layaway programs

The 1% feels great though - invest in luxury good stocks that benefit from the 1%

Ideas: long Apple (as a luxury brand), Burberry, 3D printers, USD

Day 2

David Cohen

Techstars

“Fuck investing in the fog, just write checks fast… bitch.” - classic Howie

Couple areas of interest - human computer interaction, how we interact and pull information (oblong), infrastructure (sendgrid, twilio), marketplaces where there is still a lot of inefficiency (uber, airbnb)

Long GOOG, FB, NKE, AAPL

No interest in getting an angel list syndicate, not capital constrained at the moment

Greg Harmon

Dragonfly Capital

Combining technical analysis w/ options to control risk and enhance leverage

Why to TA? identify trends, look for opportunity, lower risk

Trend identification

* index analysis
* inter-market influences
* sector analysis for relative strength

Build a mosaic by layering in many different types of TA

Options overlay

initiates spreads often to get a 3-1 risk/reward trade

stop loss is based on the stock’s price (not option price)

Herb Greenberg

“Fintech trends”

Big game changer was when SEC’s website went live. Democratized filings went out to everyone at the same time, institutions weren’t getting priority access.

Will always be cases of fraud, credible news rooms are needed to suss those out

ISRG - bull analyst $515 target, bear analyst $275 target.. but both can be right in this market

Bill Gurtin

Gurtin Fixed Income

“Finding value in the muni market”

Over the last year - FED is the largest owner of gov’t bonds. which pushes long term interest rates to unsustainable low levels.

Bernake has just been “inflating our way out of deflation”

Yellen slighly more dovish than Bernake

When QE3 stops, you’ll get back to fundamentals.

Outlook - fast and furious moves once Fed tapers so just have to be ready

Munis act as a derivative to treasuries, when treasuries move, munis move faster

Munis are primarily owned by retail investors, i.e. regular folks, not institutions. institutions can’t own tax free holdings

Interest rates go down, muni prices go up.

Worst state munis by far is Illinois. No competition. Chicago a mess too

California is in great shape relative to other states, $1.3T economy

Amanda Steinberg

Dailyworth

Truth about women and investing

Solving the problem of women earning and retiring on less than men

But women fast catching up to men to be the primary breadwinner

Educating women on asset allocation, where there money is going, etc.

Michael Parekh

Flikstak

The Box - book about shipping and globalization

$35 smartphone trend, who’s the best to play it? Bullish on GOOG, changed since Larry Page came in, google platform is platform agnostic, Android should benefit the most.

AMZN - kindle books don’t scale internationally

All in all, another great event and weekend. Thanks to all who attended and hope to see you in Coronado next year!

Why MoPub Should Boost The Twitter IPO

Mon, 21 Oct 2013 09:30:00 -0700

Twitter spent a reported $350 million last month to buy the mobile advertising company and real-time bidding (RTB) exchange MoPub.

The best post I came across on the deal was from Antonio Garcia – the founder of AdGrok, which he sold to Twitter, and the creator of Facebook’s RTB ad exchange (FBX) – where he described why Twitter buying MoPub is such a big deal:

“The MoPub acquisition allows Twitter to fundamentally change how mobile ads are purchased and places them at the forefront of how mobile, Web, and social ads interact. This makes Twitter the most interesting company in advertising right now.”

Garcia goes on to detail how Twitter could use their “Interest Graph” (i.e. who you’ve followed, what you’ve tweeted, etc.) and overlay it to power mobile RTB inventory, which is sure to increase Mopub’s mobile monetization. Importantly, this would be welcomed by the entire industry because in theory it should help BOTH advertisers and publishers. It would result in higher quality ad impressions for advertisers which they would bid higher for, which in turn would yield higher CPMs and better mobile monetization for publishers.

And sure enough, this week the news came out from sources of The Financial Times (behind a paywall) that:

“Twitter is planning to mine data on its messaging platform to help sell advertising on other mobile apps or websites…it plans to use data about who users follow and what they tweet about to target ads beyond its own Promoted Tweets, according to people familiar with the plans.”

In other words, exactly what Garcia described. It makes a ton of sense. Advertisers are clamoring for high quality data and targeting so they can reach their audiences more effectively on mobile. And Twitter has some of the best data around.

Timing-wise, the deal couldn’t have been better timed either. Twitter is looking to go public on the NYSE next month at a rumored $10-15B valuation. Their revenues have been growing exponentially over the past couple of years, reaching $270mm last year. But investors are nervous as their losses continue to widen, at $64.6mm last quarter in their recent filing.

So this deal should be welcomed by investors as great new source of revenue. Again, revenue that will be generated outside of Twitter’s own site and apps which will help it reach large scale. It should also help the user experience because they won’t have to over clutter the their apps with ads.

As Kevin Weil of Twitter, when announcing the deal noted:

“The two major trends in the ad world right now are the rapid consumer shift toward mobile usage, and the industry shift to programmatic buying.”

The addition of MoPub shows Twitter really understands advertisers. And it puts them smack in the middle of both of those trends.

My hunch is that investors will take note too.

Facebook Jumps Into The Mobile App Deep Linking Game

Sat, 05 Oct 2013 10:00:00 -0700

Facebook made an announcement this week that I think went fairly unnoticed amidst all the Twitter IPO hoopla.

For a while now Facebook has had the ability to drive installs via their mobile app ads. We’ve discussed before how these app install ads are a huge contributor to their rise in mobile and how that rise is now happening faster than everyone expected.

Well this week Facebook announced that for the first time they are going beyond just driving installs and will also focus on driving engagement and conversions. They will be using “mobile app deep linking” to do this.

Here’s how Facebook explains it:

The benefits for both app developers and users are clear. Instead of sending someone to a mobile web page where they are not logged in (or worse, directing them to the App Store to download the app when they already have it), you can send them deep into a mobile app where they are already logged in with their payment credentials and immediately ready to do a transaction. It’s a much better experience for the user and should result in a lot more transactions and better monetization for the app developer.

To be sure, mobile app deep linking has been around for a while. Twitter led the charge among big publishers to enable deep linking about 6 months ago for Twitter Cards.

But the entry of Facebook is a huge deal. It really validates the market to have one of the biggest players in mobile (if not the biggest) embrace deep links. Twitter’s mobile reach via their S-1 in the U.S. is at 49mm. For comparison, Facebook’s mobile reach is roughly 4x the size at 198mm. So they immediately bring massive scale to the mobile deep link and retargeting market. (For the curious, Pandora’s mobile reach is around 56mm)

We’re still in the early stages here. Every large app developer client I talk to regardless of vertical is starting to ask about deep links and reengagement campaigns. It’s really where the entire mobile advertising market is going to.

Here are a few quick examples that come to mind:

In-App Purchases - A game developer like Zynga Poker could reengage and reward their most active players in the last 6 months with a discounted chips special
Shop Now - A mobile retailer like Poshmark launches a nationwide purse sale for 24 hours
Travel Specials – A travel app like Hotel Tonight wants to promote a new hotel only to their power users in NYC

There are countless more examples. I predict that any sophisticated app developer with a lot of reach (say over 500k installs) will be running huge budgets to mobile deep link and reengagement campaigns within the next 6 months. Pretty soon everyone is going to go from talking about CPI (cost per install) to CPE (cost per engagement). We’re really just seeing the tip of the iceberg here.

It should be exciting to see how it all plays out.

“Let music flow from the artists who create it to the...

Wed, 18 Sep 2013 12:11:54 -0700

“Let music flow from the artists who create it to the audiences who love it.” #LetThereBeMusic

Facebook's Rise In Mobile Is Happening Faster Than Expected

Thu, 29 Aug 2013 12:44:00 -0700

Om on Facebook’s growth in mobile:

Facebook will nearly triple its share of global mobile advertising in 2013 compared to 2012, according to research firm eMarketer. They forecast that Facebook will have about 15.8 percent of the total global ad market, ahead of Pandora, Twitter and others. Google, however, is still the big kahuna with 53.17 percent of the overall market, up from 2012. The overall mobile ad market is forecast at $16.65 billion — up 89 percent from 2012.

We’ve talked before about the reasons behind Facebook’s rise in mobile. Namely, it’s their huge reach, incredible targeting, and a new focus on app install ads.

But I’m still shocked at how quickly it has happened. Well, turns out their rise in mobile is happening faster than expected.

eMarketer has been so impressed with Facebook’s growth that it now expects their share of mobile ad revenues to reach 15.8% this year, up from just 5.35% in 2012.

eMarketer is also revising their forecast of Facebook’s ad revenues (total, not just mobile) to $6.36B in 2013, up from their previous forecast of $5.89B.

Investors are welcoming it too. Facebook’s stock is up 77% in the last three months and recently passed the critical $100B market cap milestone. Now the question is how much can they keep pushing on mobile? My hunch is still a lot more since they still have a ton of room to expand internationally.

And as we pointed out when talking about the Millennial and Jumptap acquisition, the good news for startups is the overall mobile advertising pie is growing by leaps and bounds too. So there is more than enough for us all to grab a piece.

Also: Millenial and Jumptap

Millennial And Jumptap

Wed, 14 Aug 2013 15:59:44 -0700

Millennial Media, the independent leader in mobile advertising and data, today announced that it has signed a definitive agreement to acquire privately-held, Boston-based Jumptap in a predominantly stock transaction. Under the terms of the agreement, based on Millennial Media’s closing share price on August 9, 2013, Jumptap shareholders will receive approximately 24.6 million shares of Millennial Media, corresponding to approximately 22.5% pro forma ownership post transaction.

While this a highly dilutive acquisition at 22.5% (and the market is punishing them for it; down 18% today), I think it’s one that Millennial needed to make. Millennial has done well on the brand side of the business but (to date) has not cracked the performance advertising side. Jumptap gives them that edge. They have partnered with some 20 different third party data providers which gives them a leg up on RTB and programmatic buying. Overall, they complement each other very nicely.

But let’s not kid ourselves either. This deal is really about scale.

According to IDC, among ad networks Millennial ranks #2 and Jumptap #4 in terms of revenue where Google (AdMob) and Apple (iAds) were #1 and #3.

The Jumptap deal gives Millennial a reported combined 28.7% of the market share to top out Google/AdMob:

But that’s just among the mobile ad networks, who are steadily losing market share to publishers like Facebook, Pandora and Twitter. Facebook has led the way here with their meteoric rise in mobile. As publishers get more scale and targeting capabilities, advertisers are less inclined to go through networks. Who wants to pay a 30% cut when you can go direct?

So in my opinion, this Millennial/Jumptap deal is about fending off mobile publishers just as much as it is the other ad networks. The increased scale alone will get them a lot more looks from advertisers.

The good news here is the pie is big enough for a lot of players. The mobile advertising market is expected to grow to $11.4B this year according to Gartner as mobile ad spends catch up to % of time spent. Big enough to be bullish on Millennial if they can execute this transition well.

Ashton Kutcher on how he prepared for his role as Steve Jobs

Wed, 07 Aug 2013 09:30:07 -0700

Ashton Kutcher on how he prepared for his role as Steve Jobs :

People who know me well know that I’m an unabashed movie buff. While I have a greater respect for the writing and storytelling behind a film, actors never cease to amaze me.

One of my favorite things to put on in downtime is Inside the Actors Studio. I love hearing about how actors approach their roles. I find it so fascinating. It’s often about so much more than what just meets the viewer’s eyes. The best actors learn their character to the core. They embody the character completely: language, walk, physicality, quirks, behaviors, worldviews, ideals, emotions, etc. And then, importantly, they make it authentic.

A great example of this (and tying it back to tech) is Ashton Kutcher in his latest quora thread on how he prepared for his role as Steve Jobs. I liked it so much I thought I’d share it in its entirety here:

I spent about 3 months preparing the character.

I started by consuming content about Steve Jobs. The script was a fantastic resource but after reading it I was left with as many questions as answers as to why he was the way he was and why he made some of the decisions he made. I started by watching documentaries and interviews Silicon Valley Historical Association about him and collecting youtube content Inspired By Jobs: Technology and Soundcloud files on jobs.

This was to try to understand some of the broad themes of his persona. What I was looking for was patterns on consistent behavior and ideals. I heard him repeat his story about a computer being a tool for the mind and that we should all be bold enough to create the world we live in. I also picked up on his value for diverse education through experience. I then started to dissect the nuances of his behavior, the walk, the fact that he has an almost imperceptible lisp, his accent that was a combination of northern California and Wisconsin, the way he paused before answer, and nodded in understanding, the way he bowed in namaste when receiving praise, and stared with contempt when in conflict. I noticed how he used his hands to talk and how he counted with his fingers (pinky finger first), how he used the word “aaaaand” and “noooow” to think about what he was going to say next. But I quickly found that, while learning “how a person is” ultimately is the key, you have to learn “why a person is”.

Once armed with this external impression I wanted to get a better feel of why he saw the world the way he did. I wanted to know why he liked what he liked and pursued what he pursued. So I started to consume what he consumed.

Books he read: Autobiography of a Yogi : Paramahansa Yogananda,Mucusless Diet Healing System: Arnold Ehret, Be Here Now: Ram Dass.

Researching the artists he admired: Bauhaus, Folon, Ansel Adams

Eating the food he ate: Grapes, Carrot Juice, Popcorn

Studying the Entrepreneurs he admired: Edison, Edwin Land

Then I met with the people that he knew and worked with to unravel some of the subtle quirks and conflicted decision making that I couldn’t rationalize. Alan Kay, Avi Tevanian, Jeffery Katzenberg, Mike Hawley, and many others were phenomenal resources.

I then worked with my acting coach Greta Seacat to relate his emotionality and behavior to my own. She helped me make it personal and authentic.

But in the end one of the greatest tells of the man were his creations. They were elegant, intelligent, thoughtful, precise, artistic, bold, visionary, complicated, efficient, fun, entertaining, powerful, imperfect, and beautiful on the inside and out…. Just like Steve.

Check out Ashton in full Jobs action here.