Joining me for tomorrow’s 3rd show of WatchMojo Live is Tim Sykes.
Tim Sykes is an investor, author, entrepreneur and media personality who parlayed $12,415 Bar Mitzvah Gift money into a fully audited pre-tax sum of $1.65 million from 1999 to 2002 before founding his hedge fund, Cilantro Fund Management, LLC in 2003. Author of An American Hedge Fund, Sykes was born in Connecticut but attended school in Tulane, Louisiana and today lives in New York City. Since the beginning of 2008, Timothy has been the #1 trader/investor, out of 25,000+ on Covestor.com, a website that tracks and verifies all trades, by earning 365% as the overall US stock market dropped 40%. He has written for AOL and featured on ABC, CNN, CBS, CNBC, FOX News and far too many other places to name in this blurb. Catch him on WatchMojo Live on Wednesday November 11th 2009.
Let’s hope he brings the ladies tomorrow:
Check out his site here. Check out the show tomorrow, Wednesday, at 3pm EST on WatchMojo Live.
Omar Hamoui sold his company AdMob today for $750M. That’s nice, but the stories behind the story is even more impressive. Read more on WSJ in The wisdom of Omar Hamoui here.
Here is an interview Robert Scoble did with him a few years ago:
Most impressive? Sequoia added a picture of the guy on their home page. Wow.
Somehow*, I came across Paul Lee’s post on high valuations, he’s a founding member and Senior Vice President at the Peacock Equity Fund, a joint venture between NBC Universal and GE Capital:
A high valuation is problematic for a number of reasons. The first, and probably most important, is the impact on the company’s ability to attract quality talent. That’s not to say that you couldn’t (I’m sure the aforementioned microblogging site is seeing a flood of resumes). However, most people in the startup world join startups for the equity upside in a liquidity event or IPO (although the garage sale furniture and stale pizza at 1 a.m. is tremendously appealing). When a highly priced round is completed, guess what–the strike price of the options also go up. In effect, the hurdle for the options to be “in the money” has gone up and the value of the options has decreased. The motivation for the employees coming in after the financing has been materially altered.
Another difficulty in raising a highly priced round is the set of expectations from the new investors. Given the high valuations, the milestones that you’d have to hit to justify the valuation are usually aggressive. The difficulty in setting such aggressive milestones is that if you only complete 50%, you’ve basically built a bridge to nowhere. When you next need to raise capital, you may be faced with a down round, or in extreme circumstances, a complete recap or non-funding. Lawsuits and tensions around the board about fiduciary responsibilities are common. Not very fun stuff.
It sort of reminds me of a quote from a low-profile entrepreneur named Bill Gates who started a software company in Seattle back in the day. He quit to run a non-profit to help end poverty:
One challenge Microsoft did face, and that Netscape now faces, is coping with a high market valuation. Netscape has little income, but investors have valued its stock at more than $2 billion. When a company’s shares have a high value, expectations from investors, including employee-owners, are correspondingly high. Failure to meet those expectations can be damaging. If you’re giving share options to employees so that they can participate financially in the expected success of a company, a high valuation hurts. If the market’s already anticipated the great work those people are going to do, then their stock options won’t appreciate much in value, if at all. This can make the options worthless. Many times in the past I have felt that Microsoft stock was higher in value than it should be. Subsequently I was proven, in a sense, to be wrong. Controlling expectations—whether about deliveries, product features or stock value—is often wise in a technology business. It’s a lot better to under-promise and over-deliver.
Read more about that here.
[* A lie. You will see why and how I was on Fast Company in a few days when I post the Fast Company article that mentions WatchMojo.]
I keep telling myself not to post monthly updates of WatchMojo’s growth trajectory, and I mean it, but then every once in a while something else happens that blows me away. This is one of those months. I just announced how our offline reach has soared to over 15,000,000 consumers per month (think big screens in malls, gyms, coffee shops etc. broadcasting our content) which combined with our online reach of 5,000,000 uniques put our total reach at 20,000,000 consumers. That is very cool.
But today, I ran our October stats and I was floored, first, the graph, then some perspective, and finally some lessons:
Monthly Streams
All-time Streams
This is freaking insane. When we launched the site in 2006, I used to look at the stats and I would ask myself: do people actually watch videos? And if they do, do they watch anything other than cats falling off skateboards (well, and porn)?
Eventually, we found out that we had to take our videos to where people consumed them. We did 550,000 streams in all of 2006, then did 13,000,000 in 2007. Then 2008 saw a jump to 28,000,000 streams and in 2009 we will do 55,000,000 streams.
We decided to brand the videos heavily to WatchMojo.com, with opening and closing bumpers and lower-third watermark and all. I thought it was crazy, I pushed for it because I figured if people pirated the content (who would want to do that anyway, was my own counter-argument) then at least we would get some branding. But today this means our brand has been seen some 87,000,000 times online alone.
That’s the thing, that is only online. This month I finally decided to run the numbers and see how much presence we had offline. I fell off my chair. Our videos - branded WatchMojo again - are seen in 2,000 retail locations and reach 15,000,000 consumers each month. I will never forget when a would-be investor called me up an hour after we chatted and told me he saw us in a gas station in Los Angeles, or when a former host of ours saw us in a bagel shop in Chicago, or for that matter, when I heard that my former boss curses every time he lands on a site and sees our logo display before a video loads up.
I always laugh when Google scores heavy in InterBrand’s top brand survey because they never set out to build a brand but did so by focusing on the nuts and bolts.
I always thought WatchMojo could become a strong brand (the logo was always intended to stick out). I also thought the company could be big, very big; but the company’s popularity, reach, brand and position in the marketplace is starting to floor myself. And I am a very ambitious and driven individual. I want to make WatchMojo as successful financially as it has been operationally, and I know there’s lots of work to do on that front, but still…
We’ve had to overcome a lot:
- being a content company, which in the 2000s gets no respect from the media and investors alike,
- the 2006 lawsuit which was frivolous and we won, but almost killed us before we really took off,
- talking to VC groups and then seeing them turn around and fund our “competitors”, which wouldn’t be the end of the world, if it weren’t for…
- … seeing those very same companies scale back or shut down, only to leave a bad taste in the mouths of other would-be investors,
- there not being any ad format in online video that is popular, efficient and effective enough to move the needle, the way Google’s text ads did for search, despite the hundreds of millions that hapless VCs have made in the sector,
- being unfunded (forget being underfunded, I mean literally not funded - ever), so always having one foot in the grave and the other foot on the gas pedal,
- the 2008 recession which basically almost killed everything,
- the 2009 advertising market crumbling in H1.
Anyway, I’m not complaining. In fact, I am very grateful.
As we finish Year 3 of WatchMojo’s operations, we have never laid off a single person and technically now have 50% more staff than we did last year (don’t know why I use the word “technically” since we do, in fact, have 50% more staff than last year this time).
Not only am I not complaining, I am counting my lucky stars that we:
- have such a great team,
- have an amazing product,
- provide a valuable service to countless other media companies, both new and traditional,
- are now finally counting amongst our clients marketers such as McDonald’s, Coca Cola, Coors Molson, Malibu Rum and many, many others.
How, on earth, did this all happen?
Well, for one, determination and persistence. I’ve written on that before, here, here is the quote from former President Calvin Coolidge:
Nothing in the world can take the place of persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent.
Determination and persistence is just one part of it, you need a lot of luck and timing… and of course, vision, ambition, execution and focus.
I have no idea what the future holds… but I used to think we would get a lot of “street cred” if we jumped off the bridge like many others and raised a boatload of money. The boat never came, the money wasn’t there… and some how we are now totally dominating the industry.
I’ve referred to Sequoia’s “Good Times RIP” presentation and the famous death spiral slide:
I was very concerned about not becoming Company A - you know, the company that didn’t take immediate action and lay off people so that maybe, just maybe, when the dust settled, it could become like Company A, who had the “courage” to lay off everyone and reset its operations.
But, I also didn’t want to be Company B, who recklessly laid off people because it got scared.
Then it hit me, we were neither company A or B, we were a company that was largely off the radar, doing our own thing. We had written our own playbook and were in the process of writing our own history. We were, in fact, Company C:
I don’t quite know who is Company A and Company B in our world, and I don’t care, all I know is that we’re coming on strong. I have always said the beautiful thing about content is that it is not a zero-sum game, our wins won’t necessarily come at the expense of our competitors… but the more we compete in the marketplace, the more often we find ourselves winning.
Since being pushed out of MySpace, Chris DeWolfe has tried to raise money to roll-up social games and compete against Zynga:
DeWolfe is likely looking at very small gaming companies run by a handful of stellar developers but that lack the legal, business development, and dealmaking resources to make any kind of a dent in the current social-gaming market.
Social games are a red hot space, with Zynga allegedly generating $100-250M in annual revenues.
If this all sounds familiar, it’s because DeWolfe’s former boss Ross Levinsohn was also planning on raising money and rolling up assets when he left Fox Interactive Media. Levinsohn, of course, joined forces with former AOL boss Jon Miller and instead merged their venture capital operations with ComVentures to become Velocity. Today Miller has left for News Corp’s Digital Chief and Levinsohn has renamed Velocity Fuse. One thing he learned wasn’t obvious was the whole roll-up strategy.
Roll-ups sound great in theory and every time I mention rolling up video assets (the industry I operate in via WatchMojo) investors get hot and heavy, but the truth is, just because sometimes creative/technical types lack the “legal, business development, and dealmaking resources to make a dent in their market” doesn’t mean roll-ups make sense from a strategic, operational, financial or tactical perspective.
You have to be able to manage a lot of personalities and egos, above all, and then once that is done (if that can be done), then you have to make the numbers add up.
Then again, don’t be surprised if Levinsohn invests in DeWolfe’s venture, who knows.
DeWolfe still has a better valuation landscape today than the one facing Levinsohn when he left FIM, but either way, DeWolfe should avoid suffering from hubris and biting off something that is easier to chew if he plans to catch lightning in a bottle twice.
It’s been a rockin’ rollin’ few weeks. We keep setting records and judging from the preliminary mid-month report, we are on pace for our second best month ever and to be perfectly honest, our best month ever if we just push the envelope a bit.
Seeing so many deeply funded, high profile companies go bust, it’s very simple, to win in business, it doesn’t matter what your name is, what school you went, which big-name company you used to work at, who funded your company and for that matter what you did last year; you have to worry about the proverbial “six inches in front of your face” and finish your tackles, make the necessary block and reach for that extra inch, but don’t take it from me:
On the heels of WatchMojo.com crossing the symbolic 75,000,000 all-time streams mark, here are more even stronger growth numbers.
1) What summer effect?
Summer 2008 to Summer 2009: 233% Annual Growth.
A reader asked me about the 200% growth number, so here it is: in fact, we grew 233% if you look at the summer months of June/July/August 2008 to the similar period in 2009:
We’re on pace to cross 50,000,000 streams in 2009. That’s using a simple cross-multiplication formula, if you look at our growth we might do over 55,000,000, even. What will our 2010 figures look like? When 2009 started, I told myself “we should do 100,000,000 throughout 2010″, but if you ask me the same question today, I would say that is a no-brainer.
2) YouTube is the Marketmaker.
YouTube is really starting to own the video content market, in our case, they now account for 49.5% of our total streams. A year ago, they were at 30%.
3) September 2009 was our second best month ever.
What I love about our monthly video stream growth chart is that we keep setting new records, then we come back stronger to break the previous record not within too long.
When we hit 4.2M streams in March 2008, I thought we might never break that, but then in January 2009 I was running December 2008’s stats and realized: “oh, lookie here, we set a new record”. That new record took a whole 9 months to set. These days we set new records fairly quickly, and I do think this can be attributed to Metcalfe’s law.
4) 100 Million Streams by our Four Year Anniversary on January 23 2010 is Possible
As we enter October, we’re on the footsteps of 80,000,000 all-time views, which at our recent volume and growth rates - along with our countless new distribution deals - would suggest that hitting 100,000,000 all-time views by our fourth year anniversary is not impossible.
When I hired our technical advisor from Big Media, I showed him our growth rates and he forecasted that we might hit our 100,000,000th stream by Christmas. At that time, we had just crossed 50,000,000 streams. I told him he was crazy. But with hindsight, I guess this proves one man’s crazy is another man’s common sense.
We had a long conversation last week with Barbara Corcoran, whose real estate empire rose to the top of the NY residential world. She sold her company recently to focus on her media interests, but for all intents and purposes, she remains queen of NY’s real estate market. In this part, we talk about the real estate. Read Part 1 here, Part 2 here, and Part 3 here.
WatchMojo: Well, let’s get to it, what is your read on the real estate situation right now?
Barbara Corcoran: Well, right now I think we are definitely in the midst of a market turnaround. So, and hold on just one second, there are some good numbers that I’ve got this morning, and maybe because I always like to have an opinion than try to find the stats at support. For example, if you look at all the communities across America, they are usually always watched very carefully every month a hundred and sixty major markets.
For the first time in this quarter a hundred and twenty-seven of them went up in price; that is amazing to me.
I don’t think people realize that, you know because people are so much expecting more bad news that they are not on the game as to what good news are out there. And, some of the markets have gone up tremendously.
Markets that I think most people have written off as being in the dumps like San Francisco open area. I don’t think people realize that those house prices and condo prices are really shooting up all across the state. So, the main thing is a hundred and twenty-seven markets, and hundred and sixty markets are up for the first time in sales price. And, the bottom-line in this really, and I know a quarter doesn’t make a lifetime. But, it’s first time we saw prices go up in most of the major markets across the US, and somehow people have the moods for bad news I think.
WatchMojo: Bad news is good for a headline, yes. This article will be called Barbara Corcoran killed New York’s Real Estate market. Just kidding. So, what is your read on the recession and the economy overall?
Barbara Corcoran: Well, I think we have a lot of problems. We have fewer jobs; we have people mistrusting the economy in every ritual way. We have tons of foreclosures which is a terrible black file that hangs over the real estate market. And, Ash, frankly hangs over every market, because people don’t spend when they think they have supposed value you know. We have assured financing for all kinds of things, new businesses, homes; we have banks under appraising. So, people who have the cash to buy it find the appraisals were coming in too low, because it would be compared to less quarter spaces. And so, you have so much bad news that people are in a negative mood, but I think it’s slightly better than it was three months ago; don’t ask me why, but it seems my own circle of friends and business people seem a little bit happier. And, what else is going on in the economy, I don’t know. The only news I ever read is real estate frankly.WatchMojo: I’m a Web entrepreneur… so I must ask, how has the internet affected real estate?
Barbara Corcoran: Oh, it’s been a Christmas gift to the real estate market from the get go.
I am speaking about the internet overall. It took the keys out of the hand of the broker and handed them to the buyer and the seller. Now, a seller can appraise their on your home; they don’t need to go at real estate broker. The buyer could drive by fifteen houses; see if they like them from the outside without ever needing to ask the real estate broker if she would have an appointment on Sunday at two, you know.
So, what it has done is it’s set lose the statistics and the information within the marketplace and the inventory to anyone who wants it in easy fashion with just a click or two. What it’s done for the real estate broker that kicked and screamed in the beginning, because they didn’t realize how good this was, it’s realized them from the terrible labor of showing ten houses.
If people don’t like them onside of the outside it saves them endless phone calls of people saying how big or small is the room. Now, they look at the photos and dimensions online, and it’s made the negotiation process faster, and it’s dramatically increased the number of transactions a typical broker can do in America now, and almost double them, and I would say eight years or nine years.
So, the average sales from selling twice as material things I used to with the help of the internet. So frankly, there is absolutely, it’s been the Christmas gift to the real estate industry, and it keeps on giving you know.
WatchMojo: Do you think that real estate remains like the best long-term investment to make?
Barbara Corcoran: Yeah, I believe long-term, the question is how long-term is long-term.
You know prices have gone down almost exactly a third in three years, okay? So, most people would say my God, why would you ever want to invest in real estate, but I’ve lived through too many identical markets to this even if you’d say we’ve never seen it like this. No, it’s a different twist on the old thing, but it’s still the old thing you know. And, markets are very slow to unwind, but they recover in a flash. When they start to spin, they spin quickly and people will forget about this. You don’t think so, but people will forget about this the minute they have to bid against another buyer. People have short memories and besides just people have to live somewhere.
WatchMojo: Yeah, that’s true. You’ve heard of the greater fool theory that on the way down there might not necessarily be somebody there to buy an asset, but on the way up there will be someone who will be willing to bid higher.
Barbara Corcoran: Absolutely. And, people look comfortable with real estate, again the moment they have to buy in a crowd which happens quicker than people remember.
WatchMojo: Who do you blame - I know nobody likes to say blame and blame is a strong word, but we want a really negative headline (laughs). So who do you blame or what do you blame for the real estate mess?
Barbara Corcoran: You know what, I don’t blame anybody.
Everybody is responsible for their own actions.
And so, the bank has made mortgage money so available, so inexpensive, and so to some degrees deceptive. You know they were the lending industry, because the big lie that was told, and I don’t even think it was intended as a lie, was always you can “always refinance” and “what knowing envisioned is a house value going, falling below the mortgage amount. And so, the number one thing that people were counting on when they signed up for, so one, so I guess not to blame, but I guess one factor is certainly the over-promising mortgage market, okay that you could “always refinancing. The other thing is places were going up so dramatically in every market that you have to be a fool to sit on the sidelines if there was anyway you could buy and get it on the game. So, anyone who wasn’t buying, so like there were nobody, that they were left behind.
Anybody and anybody who could work an angle to buy a house is buying a house. So, you had inordinate amount of demand, so you can say hey, blame the buyer. I’d say don’t blame the buyer, anybody sitting in that position then is just like a fool if they didn’t buy. And of course, they promised you can always refinance.
You know just tease a rate 2% owner set for three years, oh three years from now, you don’t like it popping up you know, your monthly payment doubling; you could always refinance. Well, and then people lost jobs, they couldn’t refinance either on that sense you know.
WatchMojo: Tomorrow, we talk about NYC, and the hit - if any - it has taken since the econopocalypse.
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