2013 Tech IPOs - Healthy and Power Law Distribution

The tech IPO pipeline has been healthy through Q3 2013. 15 companies are now actively trading on US public markets at a collective market capitalization of over $20B at the time of writing. A number of notable venture-backed companies like Chegg, Violin Memory and RingCentral have not priced yet. This is plenty of public-market liquidity to keep the traditional technology venture and growth capital industry thriving. There is much talk of 'disruption' to the VC industry, but this discussion almost always only means changes in the seed-stage deal-sourcing environment. The back-end IPO market is healthy and consistent.

The most notable feature is the excess returns that accrue to the winners even within the select group of companies that IPO. Similar to 2012 when Facebook's market capitalization dwarfed the rest of the 2012 IPO companies, Twitter's estimated IPO value of around $15B compares favorably to the $20B of combined market cap of all tech IPOs through the first 3 quarters of this year.

 

Probability Vs Possibility

People who know me well know about my fierce and longstanding intellectual allegiance to Nassim Taleb of Fooled By Randomness and Anti-Fragile fame. I claim indie-fan cred for jumping on the bandwagon after reading the original Malcolm Gladwell article about his anti-fragile hedge fund, Empirica - before Black Swan was published.

Most people, lay, journalists, experts, economists still have a hard time with the difference between what's probable and what's possible.

Today, I noticed a small example from daily life, that almost anyone should be able to understand:

I was doing work on my laptop at a coffee shop this morning and had to use the bathroom. I thoughtfully waited until the bathroom was empty, then left my laptop on the table, got up, and made sure to return quickly. The time I was away wasn't more than 30 seconds. In this situation, I am quite confident that it is very unlikely - improbable - that someone steals my laptop, so I don't feel like it's a big risk.

However, this in no way makes it less possible for someone to steal my laptop while I am gone. Those 30 seconds could coincide with a thief coming into the shop just as easily as any other 30 seconds in the day. A thief who sat near me and waited and watched for me to get up with the express intent of stealing my laptop could easily take it. The possibility of theft is not reduced, even though I feel good about the low probability of theft occurring.

MSFTs New Office Suite

Microsoft’s new office suite:

Knowledge work has changed; it has become more oriented around communication, and less focused on document production.

Spreadsheets have become automated dashboards

Word documents have become living texts published on the web.

Powerpoint presentations have given way to live and recorded video talks.

The new office suite is made up of collaboration tools, not just new versions of solo-worker focused productivity apps. These types of apps are on the decline. The next 'word-processor' will probably look a lot more like Quip than like Word. Microsoft is refreshing its brand and cash cow boldly and correctly.

Ray Ozzie was ahead of the curve by bringing Groove into Microsoft and focusing on collaboration. Groove was just a little bit too wonky too early, and Ray did not have time for Microsoft style internal executive competition.

One aspect of the consumerization of enterprise technology has been the ability of workers to cherry-pick a set of the best products for their needs. This trend has created best of breed brand names with network effect businesses. These important companies rightly command premium valuations.  

Microsoft has not shied away from placing large, accurate bets on acquisitions at non-consensus price levels. This strategy is going to pay off in a positive way for Microsoft’s continued leadership in its core markets.

Microsoft knows that, going forward, enterprise buyers will not settle for inferior copies of excellent and widely used category-winner software like Skype andYammer.

In the productivity market, Microsoft is executing on the investment thesis that only a few winning technology companies really matter, and those are worth a significant premium to their also-ran competition. The antilog M&A strategy is buying runners-up and market failures with good technology and teams and banking on pushing those products out through the acquirer's bigger channel. With app switching costs low, and network effects available to category winner collaboration apps, there is no reason to expect that losing collaboration products will suddenly outcompete winners due to a change in ownership.

This is the one strategy that a large, cash-generating incumbent can employ to avoid business disruption by new innovative startups: Buy the category-winning product and brands.

Pebble Watchface Tutorial - Arabic Numbers

I just created my first Pebble Watchface. I have had my Pebble since February, but it has taken me a little bit of time to think of a good idea for a Pebble Watchface that only required swapping image assets from an example Watchface. The idea: Big Arabic - Arabic-script numbers substituted for Western-script numbers in the Big Time example Watchface. The whole project took me 30 minutes, and I love my new, custom Watchface. Big Arabic looks like this:

First, I created a new project called 'Big Arabic' in CloudPebble, the dead-simple hosted Pebble App IDE. When I created the new project I chose to use the 'Big Time' template available in CloudPebble:

Second, I looked through the files and file structure pre-populated from my template. This is a really simple Watchface. All of the numbers for the Big Time template are individual PNGs that take up a quarter of the Pebble screen (72x84px.)

Next, I found a large image on the web containing Arabic-script numbers 0-9. I wanted to find the absolute simplest way to cut this image up into individual 1/4-Pebble number images, and found this easy tutorial on Preview in OSX: http://mac.tutsplus.com/tutorials/app-training/preview-os-xs-secret-weapon-image-editor/ 

I used Preview to generate 10 72x84 Arabic number images, then I went back to my CloudPebble project and replaced all of the number image resources with my new Arabic-script images. After this I went out on the web and found an icon-sized image of Arabic script, resized it to be the same size as the example menu icon in my CloudPebble project using Preview and replaced the example image with the new icon.

Last, I opened big_time.c in CloudPebble for the first time and made two changes to the code. First, I changed the display name within PBL_APP_INFO from "Big Time" to "Big Arabic". Second, because the original Big Time Watchface is white numbers on black background, and my Arabic number images are black numbers on white background, I changed  window_set_background_color from GColorBlack to GColorWhite

After saving my changes in CloudPebble, I clicked over to the Compilation tab and ran a build. When the build completed, I got a short URL linking to my new Watchface, Big Arabic that i opened on my phone and loaded on to my Pebble.

Super-easy, fast and with barely any coding, I have a cool new custom Watchface. You can get it here yourself: http://builds.cloudpebble.net/4/2/42cc68d25c4c4a3bbe2ab3053dd05b1c/watchface.pbw

Next up, something more involved - I cannot wait for access to the accelerometer in the SDK.