Startcon 2016

We attended the Startcon tech conference this weekend in Sydney. It had a global presence with presenters such as Uber, Zillow, Bloomberg and Twilio.

The bad news is that we are in a startup bubble on average Venture capitalists paid 46x revenue for their investments a record high which has since come off. The good news is that startups are tackling bigger problems than ever. Interestingly each region in Asia has a different set of problems to solve.

Japan
Has one of the highest rates of suicide in the world. Its a major issue so a lot of start ups are working on mental wellness apps able to pre-empt and sense your emotions.

Australia
Australia as you might have guessed is focused on fin tech. The dominance of the big 4 banks and their profitability is attracting many startups. Apparently banks make $1,000 per person in Australia the second is Belgium at $400. We are also early adopters of technology with the 2nd highest iPhones per capita after Singapore. Given we are such early adopters there is no reason why fintech shouldn't be more successful in Australia.

Indonesia
Traffic in Indonesia is bad so start ups are focused on on-demand services.

There was also great advice on pitching creating your Wow moment. The inside joke on elevator pitches is that there are no elevators in Silicon Valley!


The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Trumptastic returns

Trump isn't the only surprise winner. The best performing stock since he was elected president is not a financial or healthcare stock but a commodity shipper.  Dryships (operates drybulk carriers iron ore, coal) is up over 16 times increasing from $4.56 to $73 in less than a week. Its an extraordinary return given concerns over Trump's trade policies. Though Dryships is still way down from its peak in 2007 of $171,000.

The chart above is measured over 4 days note there are only 1.1 million shares outstanding over 10 million shares traded the last two nights. Who would have thought Trump would be good for shipping then again it's been a crazy week.


Decisive has no position in Dryships. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Disruption in two charts

Traditional industries are being disrupted faster than ever. Google disrupted newspaper ads now Facebook is adding to their pain. Valuations of newspapers are cheap for a reason at the time of IPO both Google and Facebook looked expensive but valuations aren't as important when there is a paradigm shift of a better mouse trap.

Not only have Google and Facebook disrupted hundreds of newspapers they have also taken all the growth leaving advertisers with little digital choice. Digital Content Next have calculated that the two companies accounted for all the growth in US digital advertising in the first half of this year. The rest including Yahoo are shrinking. If you're worried about their dominance it might be an idea to go long their shares.

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Decisive has a long position in Facebook and Google. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Computer gaming a legitimate career?

Millennials follow computer games and their teams just as passionately as sports. Even Australian banks are getting on board with news that St George is sponsoring a local gaming league. The biggest event the League of Legends world championship was held this weekend at the Staples Arena Los Angeles. Esports as they are known is massive in Korea and it's reflected in their sponsorship the top team SK Telecom T1 defeated Samsung Galaxy for the championship. The debate about whether gaming is a sport can be settled they earn just as much. The wining team took home $2m. Interestingly over 50% of the $5million pool was contributed by fans the final number will continue to increase as fans can contribute till November 6th.

 Viewership is already ahead of hockey and is on track to overtake every American sport except NFL by 2020. It was the first worlds final to go to five games but for the rest of us it's hard to follow. The commentary is interesting with each gamer having their own call signs such as Blank and Wolf. Most millennials relate more to these gamers than to professional sports stars. 

It's a great business model change for gaming companies. Gaming in general is predicted to increase significantly (see chart below) so far they earn money from games but if you begin to add in ticket sales, sponsorships and licensing revenue its financially looking much more attractive than the traditional sports model.

These slides were sourced from http://www.wsj.com/articles/activates-michael-wolf-predicts-whats-next-for-tech-and-media-in-2017-1477436031?tesla=y

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Australian phone use is one of the lowest globally.

Charging your phone is a daily habit for all of us you have to do it everyday. In Australia we all seem obsessed with our phones but globally we are one of the most power efficient with 26.7 hours of phone power compared to the global average of 21.7 hours. Apps are the biggest drain on our phones. The biggest power hogs are games the least are messaging apps suggesting we are big on messaging, all fun but no games.

Baidu in conjunction with DU Global Battery Lab have ranked apps according to the drain on your battery life. The worst battery offenders tend to be games.

The best energy wise are 

You can find the entire report here 

Decisive has no position in any of the stocks mentioned. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

The Big Mac disrupted from above

I was astounded to read this week that just one in five millennials have eaten a Big Mac. You can see this trend below millennials are flocking to more expensive but better quality burgers the type that Shake Shack sells. McDonald's focus on speed (nearly 70% of sales in the US are drive through) makes it difficult to offer more natural, better tasting burgers.

Big Mac disrupted from above
Disruption usually occurs from cheaper products but in this case it seems McDonalds is being disrupted from above. Customers are focusing on quality rather than speed. McDonalds is fast while Shake Shack is slow long lines mean long order times but it is better quality. Shack's focus on 100% all natural angus beer (beef), no hormones and antibiotics, wine and even snacks for dogs makes it the brand for Millennials. McDonald's image is that of a soft drink and Big Mac.

Shake Shack the millennial brand
McDonald's strength is in breakfast. The introduction of all day breaky has been a success there is a reason why they have 36,500 stores globally. To put this in context Shake Shack has only 50 stores in the US and another 50 globally with plans for 450 restaurants domestically. Only a handful of Shack's restaurants offer breakfast. Shake Shack is a big brand in a small company. Disruption doesn't just occur in technology. McDonald's is the brand for baby boomers, Shake Shack is the relevant brand for millennials.

Decisive has no position in any of the stocks mentioned. The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Snapchat/Uber opening up the IPO market

The IPO market is coming back to life with news that Snapchat is planning an IPO next year at a rumoured $25 billion valuation. Snapchat generated $60 million in revenue in 2015 with expectations for as much as $1 billion in 2017 the majority from video ads. It's valuation would be twice that of Twitter and as a multiple of sales more expensive than Facebook at time of IPO. Since selling their loss making China business Uber is likely to follow. At this early stage with limited information all we can look at is revenue growth potential.

Price x Volume
Revenue growth is a function of price and volume. Snapchat likely has the ability to increase ad prices and increase user/ad volumes. Uber has volume growth but at its current commission rate it's hard to see this increasing. The attractiveness of the last big IPO Alibaba was that it could increase its pricing alongside increased customer growth. For example at the time of IPO Alibaba's mobile commission rate was 1.87% its now 2.8% of all products sold, to put this into context Ebay's is 8.4% so both price and volume could grow. One issue for Uber is their high take rate. A rate of 30% (see below) seems too high especially compared to other marketplaces. It would be unlikely that Uber could raise price though the majority of their rates are discounted and reimbursed to drivers so it's effective rate is lower. That leaves Uber relying mainly on user growth. Based on this I'm leaning towards Snapchat as an IPO. One thing we know for sure the IPO market is getting interesting.

https://www.bloomberg.com/gadfly/articles/2016-10-05/uber-s-outsize-commissions-leave-it-vulnerable-to-competition

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.