Goldman Sachs: No bubble trouble


In a briefing to its wealthy clients, Goldman continues to be sunny on equities.

With the Nasdaq Composite Index surpassing its former March 2000 peak and closing the week with a year-to-date total return of 7.9%, bubble concerns are dominating the headlines once again. After all, both the Nasdaq and the S&P 500 Index closed at new all-time highs on Friday. Not surprisingly, concern about a significant downdraft has increased among investors. These concerns have been exacerbated by the expectation of disappointing first quarter earnings, which have been revised down steadily since last fall partly as a result of falling oil prices. In line with these worries, year-to-date flows into US equity mutual funds have been negative, as shown in Exhibit 1.

We have been on the lookout for bubble valuations since 2013. In our 2014 Outlook, Within Sight of the Summit, we dedicated a notable portion of our introduction to explaining why we did not think US equities were in bubble territory. With the market making further gains since, we are even more vigilant in our search for bubbles today.

Yet, we still believe that US equities broadly, and the technology sector more specifically, are not in bubble trouble yet.

We will first clarify what we mean by “bubble territory.” We will then explain why we do not share the view that US equities are in bubble territory—notwithstanding the impact of a stronger dollar, slower first quarter US economic growth, and pending Federal Reserve interest rate hikes later this year.

We will conclude with our key investment takeaway which is to maintain one’s full strategic asset allocation to US equities.

The presentation can be viewed, Still No Bubble Trouble.pdf (377 KB).


“Why, dear God, haven’t you started marketing yet?”

Great post by Gaurav Jain at Founder Collective on marketing. It backs-up my zero-budget marketing post with some striking examples.

  • Mint is the classic case study in this area and got people excited about banking software by pioneering the use of infographics and content marketing with nearly no budget.
  • SparkFun/AdaFruit/iFixit built marketing into their product. All three are part of the “maker movement” and created high-quality tutorials featuring the components they sold which were passed around eagerly by hackers.
  • Wayfair is now a massive player in e-commerce, but built its business through smart Search engine marketing, buying up over a hundred domains with exact matches for popular searches.
  • HubSpot became a billion dollar company by blogging and producing content that complemented their core marketing software.
  • GoldieBlox created a web video that went viral and founder Debbie Sterling hustled to the point where she earned a Super Bowl spot, worth $4 million dollars, for free.
  • Tinder co-founder Whitney Wolfe evangelized the dating app by going door to door at fraternities and sororities, tripling the user base in the process.
  • ProductHunt is the new gold standard in early-stage, budget marketing. Before there was even much of a product, founder Ryan Hoover managed to whip up an energy around the concept like a latter-day PT Barnum.
  • Plated, one of our portfolio companies, appeared on Shark Tank, sending tens of thousands of viewers to their site.

More here.


RSA conference

I’ll be at the RSA conference this week as a board member of Malwarebytes. If you’re going, feel free to drop by the Malwarebytes booth (#344) and say hello.

markets venture capital

Of course we’re in a bubble. Duh.


Of course we’re in a tech bubble. But at what part? The early part? The late part?

What concerns me is that the biggest argument I hear for the “it’s not 2000” is this one:

Back then, those were not even real companies — today we’re investing in real companies.

WTF? Tulips were real in 1637. Houses were real in 2007. The companies being invested in the wild bull market of the 1920s were real (as were the companies in the Japanese bubble economy in the 80s).

It’s a completely illogical statement.

Every bubble needs a narrative. It needs a story. This “today these are real companies” is part of the story, the narrative.

Money money money
The Fed has been printing money at a mad rate for years. We haven’t seen serious consumer inflation because the money hasn’t crept into the general marketplace (increased money supply equates to inflation, but money supply is created through debt, and there’s not a lot of the right type of lending). Instead, the money finds its way into the public equity and debt markets, which reflects in a) lowered bond rates and b) higher equity premiums. Both low bond rates and high equity premiums are the fuel for private investments through a number of factors (wealth created by the public market looks to reinvest, private money wants to buy an option on a impending IPO by buying late stage, low bond rates creates an aggressive private equity market, etc., etc.).

What happens in Wall Street does not stay in Wall Street
So with this orgiastic money-love fest on Wall Street, you get a situation like this chart in the private company space:



That’s Series A valuations. Yeah.

As one VC told me a while back: “The exits are great. The entries are tough”.

Okay, there’s controversy.
There are plenty of statistics one can point to either way. PE ratios are way too high for comfort. The bubble proponents all have their theories — Bill Gurley and Michael Moritz (it’s these late stage companies — the unicorns), Mark Cuban (it’s the explosion of angels), Jeff Reeves (look at post-IPO performance) and Adam Lashinksy (the subjective reality, just look around) are all raising the alarm.

I was a professional investor between 1999–2002, working at a hedge fund and investing in private companies. I lived through that last tech bubble intimately. This one is different. There were complete douchebags with no business sense starting companies that were ridiculous. And there were idiots like me investing in them.

Subjective reality
However, I’m seeing the signs:  The age of unicorns (I mean, come on! This isn’t something to be alarmed about?) Billions raised in crowdfunding, with virtually no oversight. The explosion of angels. The explosion in the cost of living and doing business in the valley and the city. The incredible challenges hiring new people. And, oh, it’s starting to get really hard to get a hotel in San Jose (not as hard as in 2000, when I literally stayed in a bug-ridden “motel no-tell” as my only option).

It’s simple to observe that as more money chases fewer deals, deal quality goes to crap. Just because some dude with a lot of cool talk is launching a tech company does not mean he has a clue as to how to actually run the tech company (something many learned very painfully back in the last bubble).

I got a lot of flack years ago when I wrote a similar blog post about oil prices. I was right then, maybe I’m wrong now.

The San Francisco effect
Several years ago, the “center of power” in tech moved from the Valley to the City. This has resulted in some fairly astounding increases in rent and housing costs.

In addition, we see the center of creative power moving from Hollywood to San Francisco. Who sets the design trends now? Not Hollywood, but San Francisco.  Instagram, Twitter and Facebook can have more impact on a trend than the latest movie. Our design philosophy has even become bay-area centric. Look at sites like Canva: the designs are all SF. Ugly stock photos are now replaced by hip (and free) sites like Unsplash.  It’s like the world is awash in misty mornings and cloud afternoons looking over the San Francisco Bay.


This factor is squirreling the discussion, because people still keep talking about “the valley”. It’s not the valley anymore, it’s the city. 

Now, the good news
The tech economy goes through massive secular disruptions every 20–odd years. In corporate America, the age of the mainframe went to the age of the minicomputer in the 70s, which went to the age of the microcomputer in the 80s , which went to the age of LAN networked PCs, which went to the age of Windows NT-based systems, and to now, what I call the age of heterogeneity. This is an age where devices are dislocated from each other in many ways: people bring devices of whatever type into organizations; people are working on various devices throughout the day. Consumer trends have been similar. There’s a freedom and there’s a whole new world of technology around it.

This is a major disruption and great companies are being built minute-by-minute.

It’s not a disaster and I’m still optimistic. But it’s bound to end. The problem is one runs out of buyers. All bubbles end in a parabolic blow-off. Perhaps we are in the parabolic blow off. Perhaps not. It’s possible, as past history has shown, a correction will hit in the fall. Who knows.

Just watch for when people just go into a frenzy of buying, believing it’s not going to end.

Because that’s when it ends.


Executive meetings

My task on this blog has evolved to bringing you the nuts and bolts of actually running a tech company. Call it “stories from the field”. Sometimes I think what I write is just ludicrous (probably is) but in all the work I do with so many CEOs, I find the simple things of actually running a company are what they are looking for.

There are so many business advice books out there that talk about radical solutions for this new technology world, but there aren’t any simple places to get advice on actually getting the show on the road. Tony Hsieh can play around with Holacracy to his own destruction, but in the end, someone’s gotta make payroll, if you get my gist.

So this is your “nuts and bolts” blog. Welcome to it.

With that being said, I’ll now get to the incredibly pedestrian subject, just for CEOs: Running internal meetings.

Yup: You got it. This is probably one of the most pedestrian posts you’ll ever find on management. But probably one of your more useful ones.

First off, I’m not going to delve into the cute ideas of having all of your meetings standing up, or fun things like that. Experiment all you like. Like I said, this is going to be very pedestrian.

The role of a leader
As I’ve said before, I describe a leader as someone who establishes and communicates clear goals, gets the right people in place, gets everyone working toward these goals and focuses on what’s important.

And that takes meetings.

A couple of pointers on how to run your exec meetings.

Weekly senior staff
This is the staple of most business: the weekly senior staff meeting. However, it’s generally done incorrectly.

Usually, what happens is:

  • The CEO does all the talking (often lecturing) while others sit, mute.


  • The meeting turns into a long, extended, boring, endless “consensus building” or “discussion” session.

Both of these scenarios suck as senior staff meetings go. And when they both happen together at the same time, ugh. I’ve been there all too many times.

So, here’s how to run it:

  • Keep it short. An hour at the most.
  • Understand that the purpose is to get the team together, review the business, make decisions on the state of the business and move on. The primary goal is coordination of existing plans and goals.
  • Always do it Monday morning. Never on a Friday. (J. Paul Getty learned this years ago. He would hold his senior staff meetings on a Friday and by Monday, everyone would forget what they were supposed to do.) 
  • Only key executives should attend, perhaps five or six executives. Don’t turn it into a love fest with all the middle management team as well.
  • The CEO starts off the meeting with a brief statement, to get things going. Perhaps a quick summary of the business.  However, it’s not the CEO’s meeting: it’s a coordination meeting to get the team working together.
  • Each executive presents their KPIs for their department and discusses the state of their area. (Don’t have KPIs in place? You can’t manage what you can’t measure…)
  • Don’t spend all of your time preparing stuff for the meeting. That’s the job of each executive. And let them speak for themselves.
  • Decisions are made based on the data presented. Follow-up meetings and actions items are decided upon.
  • The meeting ends.

And that’s your basic senior staff meeting.

Employee staff meetings
This is largely a cultural issue, but I am often discover CEOs that don’t hold regular all-staff meetings with the employees. Perhaps they just send email missives out to all staff. But there’s nothing better than getting the team together on a regular basis to review what’s happening with the business.

Employees hate — hate — not knowing what’s going on. And hell, they’re doing all the work, why shouldn’t they know? Worse, if you don’t tell them what’s going on, they’ll make stuff up about what’s happening. That’s the definition of a rumor mill. Nature abhors a vacuum…

When the meetings are held is a question of your size. Smaller companies do well with weekly meetings. When you get above 50 employees, go to monthly. When you get to above 500 employees, think about quarterly.  If you’re public, time it after the quarterly numbers are out. And so on.

Generally, the format I’ve found successful is:

  • The purpose is to get staff briefed on the state of the business.
  • The CEO presents. Not other staff, unless it’s for some special update on a specific area.
  • The meeting is short –  perhaps 30–45 minutes or so.
  • Don’t be an bore and lecture the employees (or worse, rail at them). This is not about you — you’re just giving them an update! That’s it.
  • The meeting is recorded for replay to remote offices (or live streamed).
  • Put everyone in a big room and bring cookies. Or lunch. Or whatever fits your culture. It should be fun.

Generally, I prepare slides in advance that show:

  • HR. Start with new staff hires. Have them stand up, or just show a picture of the new staff member. If you’re too large for that, just highlight the key new hires (director and above, for example). Play it by ear. 
  • Depending on your size, it’s a really nice idea to announce employee anniversary dates (one year, two year, etc.).
  • Then, any other HR updates, such as new health insurance plan, etc.
  • Then do a quick set of slides on each major department (Sales, Marketing, Technical Support, Dev/QA, Finance/Ops). You don’t make the slides. The managers of each of those departments make the slides in advance and send them to you to put together. The slides give a brief status report and, if they like, any key employee shout-outs.

    Employees are generally starved for data. So give each department the opportunity to give that data. For marketing, show the ads being run, or a picture of the new website being designed. For Sales, show where the numbers are and the top sales reps. For Tech Support, highlight the KPIs and acknowledge any employees (tech support rep of the month, etc.)

  • Assuming I’m holding a monthly meeting:  each quarter, I’d suggest getting each department’s top three “big picture” goals. Example: Dev’s goal is to a) release product x, b) get defects below x and c) do a service release on product z.

    Then three months later, do a recap as to how they did on their goals. Obviously, you time it based on your size. You can do annual goals, as well.

  • I then do a big picture presentation as to how the company is doing against its key goals. At the start of the year, I’ll tell the company what the goals are (revenue, EBITDA, market share, whatever). And then I’ll tell them how we’re doing against the goal.

    Don’t hide key information. Just tell the truth, but tell it intelligently. The employees are not slaves, or “the great unwashed”, but your team members, and deserve respect. There are obvious confidentiality issues, but CEOs who are paranoid of letting employees know what’s going on are invariably arrogant and insecure (my direct experience). The opposite, CEOs who believe in things like “servant leadership” (where they propitiate to employees), should also be treated with a fair degree of scorn. The CEO is the captain of the ship.  Keep that analogy in mind. What do good captains do? 

    Never, ever, ever rail at the employees or a specific employee.That is what true assholes do. If the numbers are bad, tell the employees but don’t scare them. Don’t harp on them to “get working harder”. Keep it cool and professional. If it’s bad news, tell them what’s being done to fix the problem. I’ve run big all-staff meetings during good times and bad. Just project confidence and tell them the truth. The all-staff meeting is not an opportunity for you to vent your personal frustrations with the company.

    I do believe in an open style of management. I do believe that employees should know what’s going on in the company. It’s worked for me, and I would recommend it.

  • When in doubt and you don’t know what to do, just follow the old trick:  Tell them “where we were, where we are, where we’re going.” 
  • You can leave time for employees to ask questions but be very careful of not letting this meeting move into a bitch session, or some kind of communistic “everyone gets a vote”. This is how to destroy a good company meeting. Politely and respectfully take bigger points off-line for further discussion.

The fastest way to destroy morale is to run a bad all-staff meeting. But not having all-staff meetings is actually worse.

Now, in between, your time is filled with meetings, all in the an effort to forward your goals. How you run those meetings is your business. I will say, however, that team-building comes from actually doing things together.  

Meetings are not bad. Badly run meetings are bad.

Other major tools in the CEO’s management toolkit are quarterly senior management meetings (QBRs — Quarterly Business Reviews), as well as annual planning meetings, annual budget planning and running a good sales kick-off. This fits into a broader context, and I will write about those types of meetings in the future. I also recommend implementing team-based budgeting.

But this is enough for now!


Your experience matters


Many believe that we are all the sum of our experiences, and while I don’t subscribe to that philosophy, it’s certainly true that experience plays a major part in how we approach things. This can be good, and it can be bad.

And that statement leads me to the topic of discussion here: the role of experience, especially in today’s very young tech culture, is surprisingly underrated.  What I see instead is inexperienced managers wasting a tremendous amount of time on tasks that should be straightforward, simply because they’ve never tackled them before.

The mark of a good manager is simplicity in action. Straightforward and decisive. That trait, however, is learned over time. It takes experience. Just as a pro athlete “makes it look easy” after having had quite a lot of practice, a good manager “makes it look easy” through a lot of experience. This doesn’t negate the great capabilities of a junior manager: it simply highlights the fact that junior managers often need quite a bit mentoring, which I don’t see much of going on at all, especially in technology. And “executive coaches” do not fill that gap. I’ve found they sometimes can matters worse.

At one point many years ago, it occurred to me that every decision I was making had, in the background, sometimes hundreds of little lessons that I had learned.  While this seems like an obvious statement, it struck me that my decision-making process was the result of many mistakes and successes.  I had learned from them.  I would look at something and simply decide, based on my experience. I could look at a product feature and simply say “that won’t work”.  I could look at a marketing campaign and suggest a change that would make a difference. I was sometimes suprised that this was deemed by some (perhaps with fragile egos), as some sort of condemnation of their work.  It wasn’t.  It was because I had, in the past, done what they were doing and had failed.

A culture of second guessing and waffling can be very toxic. Companies are built on decisions.

Like many executives, I’ve made a lot of mistakes. But that’s the point — I’ve made those mistakes and I don’t intend to repeat them.  Others you work with may not have had the benefit of learning.

And because of that experience factor, I find that a lot of people don’t focus on the core, most important things in the business.  They get sidetracked.

So the message here is to make mistakes.  Make lots of them. Learn fast. And then really use that knowledge. And respect those that have been there, and done it, and learned.


The non-conspiracy of Hillary’s “fake followers”

Anyone on Twitter knows fake followers are a dime a dozen. In fact, virtually every major name on Twitter has fake names. It’s a plague on Twitter.

Hence, this article by the Daily Mail sensationalizing Hillary’s fake followers is a bit silly, showing a brand of sloppy journalism that is no surprise for this rag.

The article breathlessly states:

According to two popular online measuring tools, no more than 44 per cent of her Twitter fan base consists of real people who are active in using the social media platform.

And at least 15 per cent – more than 544,000 – are completely fake.

So what.

From an article on Yahoo Small Business that is, ahem, actually well-researched, here are some other public figures and the numbers of their fake followers:

Ten public figures with fake followers

1. Dick Costello, @dickc, CEO of Twitter

Follower Breakdown:
Fake: 32%
Inactive: 35%
Good: 33%
Klout Score: 82

2. Jack Dorsey, @jack, CEO & Founder of Square, Co-Founder of Twitter

Follower Breakdown:
Fake: 25%
Inactive: 39%
Good: 36%
Klout: 85

3. Evan Williams, @ev, Co-Founder of Twitter

Follower Breakdown:
Fake: 25%
Inactive: 42%
Good: 33%
Klout: 83

4. Kevin Rose, @kevinrose, General Partner at Google Ventures, Founder of Digg

Follower Breakdown:
Fake: 28%
Inactive: 35%
Good: 36%
Klout: 85

It’s doubtful that Hillary is buying fake followers (although it’s possible). What’s more likely, however, is that her staff has not been vigilant about scrubbing non-existent followers.

Let’s remember that Bill Gates, who could give a rat’s ass about fake or non-fake followers, has 50% fake followers.

(Let it be known that I am not a fan of Hillary Clinton. But I am a fan of accurate reporting.)


The simplest possible way to archive and search PST files

I have a massive collection of PST files dating back 15 years (yes, I’m a packrat). It’s incredibly handy to refer to something stored away, even years ago.

I would also like the freedom to access these PST files without having to use Outlook.

However, getting at this data is a pain. I load all my PST files into Outlook, and then Outlook goes through its endless indexing process…and then I have a huge bucket of PST files in my Outlook inbox.

So, I needed an archiving and search tool. There are plenty of solutions if you search around, but they cost money.  

So, as a notorious packratting penny-pincher, I figured out the following utterly simple solution:

  • Create a throwaway Gmail account (or use your own, whatever works for you).  
  • Configure the account as an IMAP client in Outlook.
  • Copy the contents of your PST files into any Gmail folder you like. You can even copy subfolders. Just throw ’em in.
  • Presto: Use your throwaway gmail account as your Outlook PST file archive, taking advantage of blisteringly fast Google search technology. 

Have fun.

business advice

M&A done right

Many words have been spent over the years on bad M&A deals. I’ve been involved in a few of them… ugh.

The Linda/LinkedIn one strikes me as one that’s not bad at all. In fact, it’s really smart.

But what I liked even more about it was the work that both CEOs put into the acquisition to really explain it in clear terms. LinkedIn CEO Jeff Weiner’s video presentation makes the point clearly as to why this is such a sensible acquisition.

Yes, it was expensive.

But it’s a pretty smart move.

business advice Leadership Uncategorized

The biggest mistake you can make about employees

I’ve done a fair amount of turnaround work. It’s not my favorite work, but it is interesting and challenging.

Now, one thing that’s very easy to do when you go into a bad area is to blame the people. I hear about “bad” employees constantly. And yes, there is often astonishing incompetence that has to get fixed fast. In fact, usually the most important and critical change in a crisis situation is in rapidly evaluating and replacing certain members of management.

But when we look at a broader scene, there’s one observation I wanted to share with you:

  • Good people in a bad system become “bad” people.
  • Bad people in a good system become plainly obvious as bad people.

It seems like such an self-evident statement, but I have routinely worked with executives who categorize, without a lot of understanding, a group of employees as low-quality. Now, a good manager has a fine-tuned sense of what a good employee is and those opinions are useful. But all too often, I’ve seen managers immediately make assessments on employees, based purely on their own opinion.

So when I enter a turnaround scene, one of the first things I look at is the system (or scene, whatever you want to call it), and then look at the people.

I have worked in areas where the organization structure and management was toxic. And, of course, the employees similar looked “toxic”. They get painted with the broad brush. But here’s a truth: the majority of employees are all too happy to work well. What I have found is that only a minority are actually bad/lazy/stupid/incompetent/evil/etc.

I recall at one company we had terrible problems with product releases. The “reason why” that I started hearing were general statements such as “the developers are unwilling to work”, “they are lazy”, and so on. I didn’t buy it. A simple and radical change in the development organization system suddenly highlighted the very, very small minority who were actually bad actors. And the good developers were miraculously wildly productive. They were all good people stuck in a bad system. When you implement a good system, the bad actors become clearly obvious.

If you consider that a majority of your employees are idiots, well, careful — don’t throw stones in a very fragile glass house.

Let’s remember, however, that even good employees in a good system need to be motivated, given clear direction and kept productive. That is the art and science of building great teams and strong organizational structures.

So, I’m not advocating being a pollyanna. But the broader picture is worth remembering: Good system, good people. Bad system, bad people.

Marketing Uncategorized

Myths about lead quality

Hubspot has a very good overview of various myths when it comes to lead quality.

Some of my favorites, which I have seen first hand:

Myth 1: Any lead is a Good Lead

Fact: You might think, “Look at all these leads we are pulling in! We need to get our sales team to follow up with these leads ASAP and close some deals!” Well, you could do that, but you will find that most of those leads are not ready to buy—in the time they became a lead to the time it took your sales team to reach out to them they haven’t experienced enough touch points with your audience.

Unfortunately, about 61% of B2B marketers still send all leads they receive directly to sales while only 27% of those leads will actually be qualified for a sales call. Remember, you should not pursue every lead you receive. You need to establish a system that better identifies a “hot” lead from someone who is just poking around.

Myth 3: Lead Nurturing Is Not Essential to Produce High Quality Leads

Fact: Lead nurturing is perhaps one of the best ways to produce high quality leads. Not everyone who visits your site and fills out a consultation form is going to be qualified. This is where lead nurturing comes in. In fact, 79% of marketing leads never convert into sales due to a lack of lead nurturing. Companies that establish a system for nurturing their leads on average produce a 20% increase in sales opportunities versus non-nurtured leads.

Myth 8: I Only Need to Actively Pursue Leads That Have Requested Sales Contact

Fact: It’s true that leads that have indicated a readiness for sales need to be actively pursued. However, you should also actively pursue those leads that have been identified as marketing qualified.

In some cases, you might experience what we at Kuno Creative call, a High Velocity Marketing Qualified Lead. This lead is someone that has shown a high level of engagement in a relatively short period of time but has not necessarily completed a bottom funnel conversion. These leads should be actively pursued through nurturing and perhaps even passed to your sales team for a quick qualification call.

More here.


A genuinely useful new mobile app from Microsoft

Office-Lens-2-v2-1024x587I routinely simply take pictures of things with my phone to catalog them — receipts, whiteboard discussions, etc.

Office Lens promises to do just that, with the power of OCR. Very useful. Link here.