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9/11/2020

By Universe

I have strong, mixed feelings today.

I was a trader on 9/11, safe on midtown but still watching live on CNBC. It was scary as hell. 3000 people died, include acquaintances of mine.

The men who conducted the attacks were from Saudi Arabia, Egypt, Lebanon, and the United Arab Emirates. We went to war with Iraq, and later Afghanistan.

It’s estimated that on March 31, 2020 the deaths in NYC due to COVID-19 surpassed the NYC deaths of 9/11. And as a country we are at war… with ourselves.

I have such profound sadness at the loss of life from both. And such anger at the bungled leadership responses to both. I have pride that our country could come together so quickly and resolutely in the face of extremism in 2001. And shame that our country is dominated by extremism 19  years later.

Letting the Air out of the Bull Run Bus

By Startups, Universe

Coronavirus is everywhere. Well, if you listened to the news you’d think that it was everywhere: in every home, on every corner, in every convention center, and on every flight. In truth, it’s still spreading, slowly, but spreading indeed. At the time of writing this, it is not an epidemic in the country. But you think it was based on the reaction of the general populous. The reaction to COVID-19 is spreading like… like a virus, only worse: a virus that can transmit from one person to one million in a single tweet.

Conference Cancellations

The first chip to fall in what could be the economic downturn of 2020 was Mobile World Congress. Driven by fears of contagion, a couple of big organizations pulled out. And then the rest of the world pulled out. So the organizers canceled it.

Next up, the corporate conferences started cancelling. Facebook. Adobe. Google. Microsoft. IBM. More. And then Expo West Natural Foods had major players pull out, followed by the entire conference cancelling. Then HIMSS.

Corporations are restricting travel. Mayors are declaring pre-emptive emergencies. (Does that defeat the purpose of declaring a state of emergency?)

And the 400,000 people that go to SXSW are holding their breath as they watch the mayor of Austin, the Austin City Council and SXSW organizers dance around the word “cancel” like it was forbidden fire. No one wants to be the one to cancel the event that brings $350+MM into the city each year.

Update 3/6 – they stopped dancing and the city cancelled SXSW.

All of this has me thinking about the economic impact to the country and the world.

Corporate Actions

First let’s unpack the corporate actions. Restricting travel and cancelling your own conference (that is purely a cost center) is a very rational thing for a company to do—not because of the health and safety concerns but because of the fiscal responsibility. The coronavirus provides the perfect scapegoat for saving a significant sum of money. Cutting your developer / marketer / influencer conference and saving $1-10MM in hard event costs “out of an abundance of caution” is a perfect excuse. Same with cutting down all but essential travel. This is a once-a-decade opportunity for big businesses to scale back costs without hurting employee morale, and you damn well better believe they’re going to take it.

With or without a SXSW, F8, MWC, Dreamforce or whatever your conference of choice is, corporations scaling back travel wil have ripple effects throughout the country. Those ripples alone are probably not enough to let the air out of the tires on the Bull Run Bus. Couple that cutback with media-fueled fears of large groups of people, and add in a solid dose of big businesses getting more restrictive with spending—done out of caution in case of an economic downturn—and we’ve got the making for an economic downturn.

The industries that are most exposed right now are anything reliant on travel, groups, or personal interaction. And then closely followed by consumer products, and its sister industry: advertising. But more important is the understanding that all industries are subject to belt tightening, and thus the most at-risk startups are those not mindful of their cash.

Drilling Down

My friend Eric Marcouliier on his website, ObviousStartupAdvice.com says that the CEO has only 3 jobs: 1) sell the vision, 2) hire the best people, and 3) never run out of money. Right now, #3 is all that matters.

As the cases of the coronavirus spread and grow, the fear factor will only get worse. As I write this, my mom is going through chemo and has a compromised immune system. I worry about her, though I know she and my dad are taking precautions. I live 2000 miles away (CO to Pgh) but if I lived closer, I would be very careful about going over to see her. And I sure as heck wouldn’t go see her after coming home from SXSW (and yes I’m still going to SXSW) . And if I lived with her, I wouldn’t go to SXSW at all. I’m not worried about me getting coronavirus—if I get it, I’ll fight it off and recover because our bodies are built to fight viruses. She might not. How many people are having the same thoughts?

Let’s play this out on a larger scale. Corporations cut travel. Conferences are cancelled. General public cuts exposure to large groups of people. The country turns inward, online, and closes its doors. For every 1 person that gets sick, another 10,000 are paralyzed by fear. Schools are shutting down—preemptively or reactively. With children at home instead of at school many parents will be unable to go to work, which puts financial burdens on the lower and middle classes. Many of those people do not have the financial resources to withstand missing work. Household spending begins to dry up. The economic ripples begin turning into waves.

Travel industries and tourist locales are going to get hit hard this year. Retail is going to take it on the chin, again. Events–whether sports, concerts or conferences–will suffer. As these ripples out into the economy more people will become unemployed. Families will spend less, resulting in lower consumer spending, and that is a massive driver of our economy right now. When consumer spending falls, so falls the economy.

It doesn’t help that supply chains are getting disrupted right now—and I mean “disrupted” in the classic “breaking” sense not the startup “innovation” sense. With less stuff to buy and fewer bucks to buy it with, the secondary effects kick in: less advertising. Lower marketing budgets. Less dollars to go around in that industry. (Poor AdTech, can’t win in a bull market, going to get slaughtered in a bear market.)

Side bar: I can imagine an alternative scenario for adtech where everyone stays home and digital ads and digital video ads take off. This is with the added disclosure that I’m an investor in an awesome video ad tech startup, Brandzooka.

I digress.

Bull Run Bus

My belief is that the underlying business fundamentals of most businesses are strong. That is, the Bull Run Bus has been based on solid fundamentals and not the “eyeballs” of the late 90s. And as far as I know, there’s no financial manipulation happening by Wall Street as with the 2008 crash. Even better, the public market is not buying the “cult of the CEO” shit (WeWork, Uber) any more. My hope is that there is truly no funny business being done by bankers (whether of the fed or goldman variety) that has created unnecessary risk exposure beneath the surface.

The reason we’ve experienced an unprecedented bull run is because we continue to unlock human potential by replacing humans. When Edwin Hubble proved that other galaxies existed and the universe was unimaginably massive, he did so by sending the data of his observations to humans (mostly women) who computed the results using pencil, paper and slide rule. Human computers. (h/t to Answers with Joe) We now have all that computing power in our pockets, and more. That is unlocking human potential by replacing humans. That cycle is accelerating. For this reason, I’m a long term bull.

But even with solid fundamentals, as consumer spending dips, as consumer sentiment is driven by fear, and all these little ripples sync up turning into waves. Add in businesses curbing spending—starting with travel budgets being cut—and the economy will take a hit.

Advice for Startups

Startups, now is the time to take a hard look at your cash flows. The venture capital model is predicated on a company continually raising more capital at higher valuations in every subsequent round. The underlying message is: growth at all costs. That is certainly one strategy. Another strategy, and more fitting in down cycles, is to keep the lights on at all costs.

What will it take to stretch your runway between rounds from 12 months to 18 months? From 18 to 24? What do you do if your revenue is cut in half? What happens if you can’t raise at the next higher valuation? Who is prepared to take salary cuts? What projects need to be cut? How will you handle all of this as a leader? Now is the time to buckle down, figure this out, draft a plan, and be prepared to move quickly, nimbly.

It’s been fun, bull run. I’m a long-term bull, but I’m ready to ride the bear this year.

Turkey Hat

As Nassim Taleb said, “you can’t make a prediction without being a turkey somewhere.” We’ll see where I end up being a turkey…

Losers
Consumer goods
Physical retail
Travel
Events
Marketing and advertising

Winners
Remote work enablement
Ecommerce
Esports
Streaming services

Could go either way
Supply chain
Logistics
On-demand economy
Digital advertising

Originally written Tuesday March 3, 2020. Updated Friday March 6, 2020.

The Night Before S8E6

By Universe

Here’s my prediction. I thought I’d share with you my awesome theory. Don’t read this if you haven’t seen up to S8E5. And don’t read if you don’t want this theory rolling around in your head in advance of the show tomorrow (or today as it’s already late here). First, it’s worth saying that I’m really enjoying Season 8. Despite the hate on the internet—and granted, it’s the internet and so there’s always going to be hate—I think the writers, producers and directors have done a phenomenal job with this season.

Read More

This One Thing in The Last Jedi Really Ruined It For Me

By Universe

I just saw Solo. I want a sequel.  But what I really want is rant about The Last Jedi right now.

There’s a saying I heard somewhere about that the only thing Star Wars fans hate more than Star Wars’ critics is Star Wars itself. Might be true for me as I reflect on The Last Jedi.

The more distance I get from The Last Jedi the more I am pissed off about the resolution of the Finn/Rose/Poe conspiracy. To be fair to the movie, I really enjoyed the Rey/Kylo/Luke story arc. But the more distance I get from The Last Jedi, the more this one thing really grinds my gears.

Let’s summarize:

  • Poe asks for information from his commanding officer
  • She deems it unwise to share with him, given his reckless behavior
  • Pissed off by the slight, he proves his recklessness by defying orders in two huge ways:
  1. He sends two people, a mechanic and an ex-Stormtrooper, on a crazy one-in-a-million-shot mission
  2. He mutinies and captures his commanding officers

Let’s pause here

The one-in-a-million mission was a failure. That’s fine. It’s actually pretty good and it’s nice to have some realism (for lack of a better word) play out, as opposed to a non-stop barrage of one-in-a-million things panning out all in the same movie.

I don’t have a problem with the mission itself. Even the entire casino planet being a pointless diversion except to maybe play out a freedom-from-oppression allegory and introduce us to the new character, DJ. That’s fine. Whatever.

And the plans fail. That’s great. Better yet, they get betrayed by the morally-absent new character, DJ. That was fantastic. In your heart of hearts, you were secretly excited for a “new Han.”  A scruffy, stuttering, hacking genius was there to tease us and to make us think we had a new Solo who was going to join up and save the rebels, flying out of the sun to blast the baddie at the last minute. Admit it, you thought it, you hoped it. I did.  But no, the tables turned on him and he turned on his new friends. That was a great twist.

Not only does DJ turn on the two misfits he brought on the ship, but he turns on the entire rebellion by helping The First Order track the loadlifter ships that were fleeing in secret. The First Order otherwise would have never noticed. That’s Crait salt in the blaster wound right there.

Fast forward a bit

  • Leia wakes up from her near-death and blaster-stuns Poe
  • The rebels begin their evacuation on the loadlifter ships
  • Holdo stays behind
  • First Order starts shooting down the evacuation ships
  • Holdo sacrifices herself to shred the mega-class Star Destroyer (fucking amazing BTW)
  • Finn, Rose & BB8 escape to join the rest of the rebels on Crait

It’s at this point that I’m starting to become the True Star Wars Fan. My transformation is nearly complete.

Poe, along with Finn & Rose are put right back into the rebel troops. And Poe still holds his position as an officer.

In what universe would a mutiny leader be left in a commanding role? Shouldn’t he have been spaced? (I’m crossing universes with that jargon, but you know what I mean.)

Not only did Poe lead a mutiny, but his actions along with those of Finn, Rose and BB8 led directly to the deaths of hundreds of the (already severely diminished) rebel fleet. The escape to Crait would have gone of perfectly smoothly, without the First Order ever noticing if Poe had just followed orders of a commander who was wiser and less self-absorbed. There would have never been a Battle of Crait, and there would be hundreds more alive, ready to continue the rebellion another day.

I’m not saying this because I think there shouldn’t have been a Battle of Crait. Quite the opposite.  The battle was awesome. Nor am I saying the plot line was bad. It wasn’t; it was fantastic. Everything coming together in the rebel’s last stand.

Missed opportunity

I’m saying this because there was an opportunity to enrich the plot by holding Poe, Finn, Rose, and even BB8 accountable for mutiny, treason, and the deaths of a hundred or more fellow rebels. Instead, they’re back in the ranks like nothing ever happened.

The character arc of “Poe learns his lesson” and decides at the last minute to call off the frontal assault against the battering cannon is pathetic. He mutinied! He was responsible for hundreds of deaths! That doesn’t phase him or anyone else, at all. Anywhere.

There’s a great chance to add some distention to the ranks, for the rebel alliance to have internal divisions to overcome. There’s an opportunity to turn from black/white characters and add some layers of complexity. Is BB8 a fun party droid, or a mutiny conspirator partially responsible for hundreds of deaths. Is Finn a reformed Stormtrooper, or mutiny conspirator partially responsible for hundreds of deaths. They are both. And that would make them better characters.

Instead, it’s brushed under the rug, and we all escape in the Falcon singing kumbaya without acknowledging that major mistakes were made, that a mutiny—no matter how well-intentioned—led directly to the deaths of hundreds of fellow rebels.
None of that got addressed. At least for now. Maybe it will get addressed in the next film. Maybe.

Until then, my transformation to True Star Wars Fan is complete.

St. Patrick’s Day and Prejudice in America

By Universe

Ah, Saint Paddy’s day. In my wilder days, I will admit to throwing some great parties to celebrate. I vaguely recall nearly missing a Black 47 concert due too many car bombs (the drink, not the act of violence) the night before. I was living in New York City, the home of the St. Patrick’s Day parade, and I’m Irish, after all. I had to represent my heritage with some pride! What I didn’t realize until later, was the history of the Irish in America, and the blatant racism my great grandparents faced. Or even that the St. Patrick’s Day parade was originally a show of solidarity by a repressed people.

As the waves of Irish immigrants landed on America’s shores from the Great Potato Famine, they were looked upon as a drunk, ignorant, and violent people, and ranked lower on the social scale than freed slaves. At a time when an entire race was being subjugated and oppressed through the horrors of slavery, the Irish were thought to be nearly as low.

This idea that the Irish were more than a lower class, that they were a separate race, has deep roots in England, and continued for decades in America. An Irish-Italian union was even considered an interracial marriage up until the mid-20th century.

NINA

No Irish Need Apply (NINA) signs were so common that there was popular Irish folk song of the same name. They were so prevalent, that recently even an eighth-grader could find detailed accounts of NINA postings, and published a research paper documenting their widespread use throughout America for decades.

The American Civil War was raging while the Irish were still fleeing their homeland, and they were recruited heavily into the Union ranks, mostly because they couldn’t get jobs elsewhere. In the army, they were often treated as cannon fodder.

The history of the anti-Irish sentiment stems from Medieval England, and is largely due to religious differences. The Irish held fast to their Roman Catholic beliefs while England turned towards Protestantism. This carried over into America, manifesting in everything from extreme prejudice to acts of violence such as burning down convents.

Modern Ties

The ties of the Irish plight to modern America are uncanny.

Can you imagine an entire country of immigrants being discriminated against so blatantly? Of course you can.

Can you imagine discriminating against people just based on religion? Of course you can.

The story of immigration in America is filled with stories like the Irish. Just ask African-Americans. Or Chinese. Or Polish. Or Indians. Or Mexicans. Or Muslims. Or any non-settler people who emigrated to the US.

Personal Ties

My wife is half Mexican, and so our son is one quarter Mexican, half Irish, and one quarter “American mutt.” I suppose that makes him 100% American Mutt. But some people don’t see their fellow Americans that way — they see differences instead of similarities.

What will his future be like? Will he be discriminated against because of his Irish heritage? I doubt that, as we’ve moved past that prejudice. Will he be discriminated against because of his Mexican heritage? Maybe. I certainly hope that as a country we can move on from that prejudice, as well as all others.

My incredible Grandmother, who turns 97 next month, used to say to me all the time, “we Irish need to stick together.” She was referring to the lingering bias she saw growing up, and a desire to unite Irish descendants under a common banner. When a group of people are being actively discriminated against, it makes sense to stick together based on those bonds. The original St. Patrick’s Day Parade in NYC was an example of this: a show of solidarity, showcasing the Irish presence in New York as a positive thing, not a negative.

Now that we no longer have to fight blatant prejudice and NINA posters, we Irish should stick together to welcome other ethnic groups, religions, and races. We should never promote prejudice, but instead reflect on what it felt like for our forefathers, and banish hatred from future generations. We should open our hearts to people who are different, so that we can “stick together” as one amazing, eclectic, and colorful mass of Americans.