2016 A (crazy) year in review.

Bye-bye 2016. Hello 2017. Time to look back and reflect upon what the heck happened over the past 12 months. I am sure you are reading (or may be even writing) a few “2016 in review”…hopefully none like this one, for I’d like to offer a somewhat unique perspective on the year that was, not mincing my words while doing so.

Twitter and Facebook became weapons of mass disinformation (aka propaganda).

First let us start with the Wikipedia definition of propaganda: Propaganda is "information, especially of a biased or misleading nature, used to promote a political cause or point of view".[1] Propaganda is often associated with the psychological mechanisms of influencing and altering the attitude of a population toward a specific cause, position or political agenda in an effort to form a consensus to a standard set of belief patterns.

If you are as old (or rather “aged” like a good wine or a good cheese) as I am, you know that propaganda, in decades past, required the control of the means of dissemination of said “information” (think newspapers (as in “paper”), radio and television. Until something called “social media” appeared on the Internet. Social media: like you can tell the entire world how unhappy you are, that you have just ordered a pizza, or that your life is so interesting that you spend your time reading Kim Kardashian tweets. BTW, KK has 49M (as in Millions) followers…this single fact alone will tell you tons about the current state of our society.

But we were one master propagandist away from seeing those “social media” become tools of propaganda. And guess what, no need to overthrow a democratically elected government, buy press outlets or control radio and TV stations (Rupert you are so “passé”). Here comes Trump “I will tweet lies as much as I want”. Given that the “mainstream media” (including cable) are not “news” outlets anymore but primarily advertising agencies who use “news” (mostly of the fake or distorted kind) to justify their existence, Trump was like winning the lottery for them. Who cared what he said (mostly outrageous lies), who cared what he tweeted (same), he drove audience ratings up...the more tweets, the more coverage, the more audience, the more sponsors, etc etc..

Facebook, then became an amazing relay for opinions and…fake news. The problem with a medium like Facebook is that any “news” is “equal” to any other. There are no filters. NONE. So you can very conveniently broadcast the most inept, false or distorted “information” and get away with it, while brain washing entire swats of the population. As a matter of fact, said swats are actually brain washing themselves and each other on a near 24/7 cycle these days. 1984 to the power of 10.

Now, you would think that Twitter and Facebook, both traded on the NASDAQ (as in, you have millions of shareholders) would have been extremely worried about the fact that their platforms was being used as propaganda tools. Nope. “Hey, it’s a free country…people can post whatever they want”. Indeed, including agents in Macedonia, working for a foreign power (Russia), posting outrageously faked news (“Podesta is involved in a child porn ring”) to influence the election of the President of the US in favor of one of the candidates (a certain Donald Trump who, to this day, in spite of overwhelming evidence, denies the intervention of said foreign power on his behalf). Are you serious?

Twitter, Facebook and others: you are now an integral part of the political disinformation process. And you make money of it. That may require a bit of introspection, don’t you think?

P.S. Now the Trump team is promoting the idea of “Twitter as a direct line of communication between the POTUS-elect and the “people””…sounds good except that without any kind of feedback loop, this “communication” is simply pushing more fake facts (what a concept!) to people who are simply willing to be fed with stuff that makes them feel good. This is precisely the definition of propaganda.

The Theranos debacle and what it really means.

Whether you are investors, executives, members of the Board of Directors, employees, commercial partners, the press, there is ONE question you should ALWAYS ask when confronted with a story “too good to be true” about a cold-fusion like product: DOES IT ACTUALLY WORK?

In the case of Theranos, very few actually bothered to ask the question, let alone get the real answer before it was too late. Rather, almost $700M (just to put this for you in perspective: $700M is 70% of $1B…does it register now) was invested into a company that made rather “bold” claims about its products capabilities (involving human beings’ health…like you and I or your mother or your child). As it turned out, said “capabilities” were simply hyped. As a matter of fact, “hyped” is to be generous about the actual truth of Theranos’ capabilities. More to the point: non-existent, pipe dream, or simply stated, bullshit. Yep, Theranos is one giant, $700M bullshit story.

It sounded so so so good though. The founder (a woman, wow…how hot is that), dropped from college (now we are getting somewhere) to completely disrupt (yeeeeeeeeeeeessssssssssss!) the medical testing industry (a juicy multi-billion $ market). I do not know how much Ms. Holmes understand about human biology and physiology but she sure does know how to promote herself. And that she did, appearing on more shows that you should be able to appear on when you claim to be busy changing the way we test for life threatening diseases. All that in the context of “unicorns”, “cool young entrepreneurs who kick the old folks in the balls”, and “finally we have a woman Steve-Jobs”, she could not do any wrong…except she did not do much right either with respect to delivering on her out-of-this-world promises…

The most amazing thing to me is that it took…10 (as in TEN) years for the bubble to burst (between the 1st round of financing and the total collapse). How in the world can you escape scrutiny in the medical world for 10 years (mind you Enron almost did it in the energy industry for the same amount of time).

As of this writing, Ms Holmes is still CEO and Chairman. Seriously! One will wonder how the Board of Directors has not kicked her out. More to the point, one will wonder how Ms. Holmes, after selling that much snake oil, has not resigned. Well, in the world of fake news, manufactured business legends are the norm. If you want to be entertained or get sick, just visit Ms. Holmes twitter page…”Make health care great again!” could be her motto.

We have not heard much from all those involved in pumping that story into the stratosphere of complete bullshitdom, including the press…could it be part of their 2017 resolution: “If something sounds too good to be true, I will check the facts rather than publish garbage because it makes me look good and I don’t want to sound like a grumpy cat”.

The Note 7 melt down (literally).

Say that you are a giant company. No take that back! Say that you are a humongous conglomerate involved in just about anything that can be sold on earth. Say that you are willing to spend just about any amount of money to build a commanding position in any market you target. Soon enough you are locked into a world battle with another humongous company for the market dominance of a major consumer “appliance”, one that has far reaching implications for your business.

The competition introduces their next generation product. Six months later, you introduced yours with just as much hype, trying to convince the world that the inept convenience features you are now releasing are better than the inept convenience features your competitor introduced 6 months ago.

And then you release a product with great fanfare…and it explodes. Literally speaking. It explodes when your customers tries to charge it. Yep, having reached the pinnacle of arrogance, you include stuff in your product that nobody but a small fraction of the entire galaxy (:-) will ever use…but you forget to make sure that your product passes the most basic safety tests (because you use a component that has known safety risks, risks that are well documented).

As more and more of your products explodes in the hands of your customers, you try some kind of “rescue” operation. And instead of repairing the damage done, it simply makes it worse. To the point where:

1. The FAA issues a directive banning your product from being anywhere near, let alone in, an airplane.
2. You need to recall ALL the products you have built and shipped.
3. You admit you have no idea what the heck is going on.
4. You issue a return kit that includes an explosion-proof box.
5. You take a “humongous” write off on your earnings.

Battery. Hey, battery! Did you check the battery? Don’t need the wiz bang stuff that I will never use. I just want to be sure the phone won’t explode in my home or my car…is that too much to ask?

VR is very much that: virtual!

Do you remember the forecast, issued at the end of 2015, about shipment of VR products for the year 2016. Millions, billions and gazillions. Ok now we are at the end of this most definitely breakthrough “the milky way is going to be VR all the way” year…and? Hype…could it be that the potential for these products had been hyped?

Indeed.

For one thing the companies working on VR a – understand that they have something called “VR sickness” to deal with, b – that said sickness is a major issue limiting the use of said VR products, in most cases for most people, to 15-20 minutes before your throw up and c – in spite of all the promises, said issue has NOT been “fixed” (you simply cannot re-engineer the human body in 18 months’ time).

Sure, games. Hey, gaming, perfect application. Surgery? Humm…not quite I am afraid. In other words, VR, outside of very few applications and users of these applications who are ready to put up with a lot (including repetitive vomiting) to enhance their experience, is not going anywhere fast (except in the hype lane) until such time most people (as in 90%+) can use these products for extended periods of time (more than 15 minutes) without the need to go to the bathroom in a hurry.

Oh and by the way, no, I don’t want to have “virtual reality meeting”, thank you very much. The world is sufficiently screwed up by technology as it is that I don’t need to see it through VR goggles.

The quiet tech bubble burst and the death of the unicorns.

Something happened at the end of 2015 and continued on into 2016: losing huge amounts of cash for the sake of being called a “unicorn” went out favor (and style). Some who follow the evolution of high-tech company valuations (sometime they are called “high-tech” for simply delivering pizzas but humor me for a minute here), trace back the “oh shit, what are we doing?” moment of reckoning to the double stock-crush-whammy that took place on February 4th when both Linkedin and Tableau Software both lost ? of their value on the stock market (Tableau has yet to recover while Linkedin decided to join the “evil empire” after some form of recovery).

That being said, the “we are not going to take those losses again” started in the last quarter of 2015 when it became obvious that you simply cannot spend your way into profitability if you do not have a profitable business model to begin with. Add to that a bunch of not so clean “unicorns” death or near death and you had a major wake-up call in the VC industry.

https://fortune.com/silicon-valley-startups-fraud-venture-capital/

Sure, people still use the “D” word (ie: disruptive). Some companies still get big rounds of financing (even if everybody know they can’t make money until the cows come home) but by and large, there was a sobering effect on an entire ecosystems: a – yes paying customers do matter, b – and being profitable makes a world of sense since c – we cannot spend OPM (Other People Money) forever while enjoying a “cool startup” lifestyle that benefits the founders, the employees and very few others in the process. And by the way, maybe we should mind something called “intellectual property” since a business model that just about anybody can replicate is not such a hot property after all, especially If you try to implement said business model in a corrupt faraway country you know nothing about (Hello Uber…how is your Mandarin accent these days?).

True, you still have the odd “unicorn” who would have you believe that there are such things are unicorns. SnapChat has filed for an IPO. Expected closing March. I don’t know about you all, but I have no idea why anybody would invest good money into a “company” (I guess) who has spent gazillions of $$ allowing people to send pictures to each other, some disappearing, other with “filters”, or both and now has come up with some kind of low-cost version of Google glasses. I understand that, as I said earlier, there are 45M people who follow Kim Kardashian on Twitter…In a world where that kind of statistics exist, there may be a place for a SnapChat IPO…or maybe you want to check the “performance” of the Twitter stock since it got listed…

Meanwhile. VC financing got tighter, fewer deals were made, and less capital was invested. Probably a good thing except for the perfectly OK companies who should have been funded except for the fact that they don’t deliver pizza to your door with drones, pizza that you ordered via your VR helmet (while your wife was trying to TALK to you)!

https://www.startupgrind.com/blog/why-you-should-be-building-a-business-not-a-unicorn-startup/

IPOs..of sort.

Speaking of IPOs, Uber is not going public any time soon. What a surprise! When you can afford to lose $2.8B in a single year and still claim the title of “most valuable private company”, why would you care to expose yourself to the scrutiny and discipline of public markets (especially when said markets have not been kind to your kind (“hello Twitter!”).

We had a few IPOs and they went the way tech IPOs go because that process has nothing to do with what the company does but with how those IPOs are handled by investment bankers.

https://www.dhirubhai.net/pulse/retail-investor-never-ever-buy-tech-stock-during-its-ipo-collard

By the way, do you know how hard it is to manage ONE publicly traded company? Darn hard. Seriously stressing. And you do not get to make a lot of unforced errors. Now imagine that you decide to manage TWO such publicly traded companies AT THE SAME TIME. Yep! With the blessing of both Board of Directors…how does that sound? That is what Jack Dorsey decided to do (and continues to do): be the CEO of Twitter and be the CEO of Square, every day, at the same time. I have no idea how the Directors of each companies let that happen…but they did. Just imagine if any of the employees of any of these two companies went to their boss and said: “Tell you what, I am going to continue my gig with you guys and getting a full pay check, but, I am also going to have this other full time job “on the side” and also being paid full pay. But don’t worry, it’s all cool. I can handle it”. How do you rate the chances of this conversation ending with a pink slip (or actually two)! Please, please can we respect the shareholders now and then?

MicroSoft buys Linkedin….hang on to your hat!

In June, MicroSoft announced it was acquiring Linkedin for $26B and change. If you accept that there are 450M users on LI, that’s about $57 per account. But let us think about that for a second. What is Linkedin if not a giant rolodex that we, the users, build and update every single day, for the benefit of the platform?

We, the users, provide most of the content for said platform. We ARE the platform. The content is an amazingly rich amount of data about who we are, what we have done in the past, what we do on a daily basis, who we are interacting with, who we are talking to, the topics we are discussing or are of interest to us, the connections we want to establish, the people and organizations that we solicit and that solicit us. In other words, our ENTIRE business life.

Even if you apply a discount on the total number of users, and benchmark the acquisition with the number of monthly users (about 100M), you get a price tag of $260 per active account for 100M accounts.

I'd call that a bargain The best I ever had (the Who: Next album, song: Bargain)

 Onto 2017

In closing I need to tell you a story. Sometime this past summer, some dude showed up on the tennis court I was playing on. He was staring at his cell phone like if he was looking for “something”. I had zero idea what was going on until my partner told me “Pokemon Go”…He had to explain to me the rather obsessive habit of those searching for Pikachus….even in the middle of the tennis court where we played on that day. I told this fellow to either go find what he was looking for some other place or wait for us to be finished…It’s a crazy world out there!

 So we are now in the year 2017…care to make predictions?

About Philippe. I have had a very fun life so far, and I am not done yetJ. I am helping high-tech businesses get off the ground and turning around faltering businesses. I am the father of a wonderful 23 years old daughter. I am also a passionate dressage rider.