Paypal mafia member and former Square COO Keith Rabois recently said on Twitter that you “can’t win payments with money”. Indeed, money is a must-have but certainly not enough to build a competitive advantage in the payment industry. Mobile payment company LYDIA recently announced a €3.6 million Series A equity round with a pretty basic yet strong take on mobile payment: user-first (and by user they include both B2B and B2C users) and value created for all stakeholders. LYDIA CEO Cyril Chiche accepted to answer our questions regarding the future of his company and how it positions itself in the industry.
Bill Gurley gave an interview a few weeks ago in the WSJ where he sounded alarm on the very high cash burn rates of big startups these days. It triggered an immense debate as he was immediately echoed by Fred Wilson, this “Winter is coming” post from Techcrunch post along with deeper commentary from Mark Suster or Danielle Morill.
The trade-offs between profitability and growth is one of the most fundamental and (generally) misunderstood business topic in the startup ecosystem. Here I’ll explain why there is no “right” amount of burn for a company, and I’ll try to give you some frameworks you can use for thinking about this problem.
Artips co-founders Coline and Jean met at a startup weekend in Paris in fall 2012. They spent 54 hours designing and actually launching their product: a “daily dose of art”, as they pitch it, as it consists of three emails a week with witty anecdotes about arts. Here’s an example featuring Michelangelo’s Last Judgement (sorry non-French readers). I’m a subscriber and beta reader since the very beginning and I’ve honestly opened and read 98% of what they’ve sent to my inbox so far (subscribe here). Being that loyal made me curious about what was so great in Artips, so I recently met with Jean to discuss their product philosophy. In short: dead simple and dead smart.
“Gains from the growth accrue to the private investor, not the public investor”. In a recent interview, venture capitalist Marc Andreessen explained how startup-generated growth was picked up mainly by private investors, as IPOs happen a lot later than before. He mentions the example of Microsoft going public at under $1 billion valuation, whereas Facebook went out at $80 billion.
So if you’re into stock markets, the opportunity to profit from growth is reduced. You have to “be there” pre-IPO. This is not easy, and it is not reserved to those with money. Here’s the list of all ways to profit from startup hyper-growth.
Last Thursday was the first day of trading of GoPro. The company’s success (almost a billion dollars in revenue in 2013, up 87%) is another proof of the macro trend of self-documentation, which started with blogs and now selfies. Its category-defining products have almost turned the brand into a name: you don’t buy a camcorder, you buy a GoPro. Yet, in its S-1 filings, the company positions itself as “an exciting new media company”, and not a hardware company.
Two recent consumer tech acquisitions caught my attention because of a couple of similarities in their stories : French restaurant reservation service LaFourchette being acquired by TripAdvisor and the most discussed Apple/Beats upcoming deal. This may seem counterintuitive because of the differences in terms of sector, business model and scale of the two companies but their product stories sound a bit alike.
Venture capital firms invest money in companies and industries that would hardly exist without them. When they back entrepreneurs, they give them the possibility to create jobs by growing teams. When they massively invest in new technological trends such as 3D printing, they enable the creation of a whole new industry. But are their impacts on the job market always positive for an economy ? Don’t they foster talent dispersion hence weakening existing companies ?
Like everyone else, I read a few weeks ago the Berkshire Hathaway Annual Report from Warren Buffet. In a passage that struck me, he tells the story of two farms he bought in 1986 and 1993. He made the purchase because he estimated what the properties would produce, deduced its intrinsic value then compared it to its price.
Here is what he says about those investments:
“Focus on the future productivity of the asset you are considering. If you don’t feel comfortable making a rough estimate of the asset’s future earnings, just forget it and move on.”
Warren Buffet is famous for not investing in Tech. And it’s no surprise given the investment philosophy above: you just can’t make any useful forecasts beyond 5 years in Tech. There’s just too much uncertainty about the future.
For the past fifteen years, the news industry has been struggling. Newspapers are dying, unable to jump on the digital train. Some are getting taken over by tech moguls for pennies. New media outlets emerge, grab tons of traffic from incumbents, which sometimes consider pure players with some disdain.
In the middle of it stands the New York Times Company, one of the major global brands in the news industry. The recent years of the company have raised interest among media analysts as the company made major moves to stay on top. The 2013 annual report is the opportunity for Board Observers to have a look at what really happened in terms of economics and product offering.
We’re fans of email as a medium to deliver content. We are not subscribers to dozens of newsletters but the ones we receive we read religiously and get value from. Today we are launching our very own Board Observers newsletter which will feature our articles along with new and old reads. Once a week, you will get the recap of recent posts on Board Observers and a selection of articles we’ve been reading, from recent and old times. Now and then, we will also talk about books and other forms of content we find interesting.