Colin Charles Agenda

I’ve been following Lyft going public, and its clearly nuts. For an analysis of the S1, do read some Fred Wilson: The IPO Price and the S1.

My belief is that people are excited by tech IPOs, rather than the prospects of Lyft. When is it expected to be profitable? Do not use the Amazon argument, one is an Everything Store (a great read by Brad Stone), and the other is a provider of transport in limited markets.

Personal journey with Lyft: had not installed it in March 2015, still not in May 2016, tried it (i.e. downloaded it) July 2016 and deleted it a week later! There was at some stage a partnership where you could order a Lyft from within the Grab app, but that never worked (July 2016, March 2017).

What helped Lyft grow might have been the #DeleteUber campaign of 2017, though I still continued to use Uber. It was quite prevalent in San Francisco. Uber rates going up 10% in San Francisco still failed to push me to become a Lyft user.

However, a16z was betting on the “millennial mindset” when they poured money into Lyft, read their thesis/blog post. As I said in 2015:

“The bet on Lyft has always been that ridesharing wins” read the investment thesis. A real bet on “millenial mindset”

Did it pan out well? Sure, millennials on the Robinhood app traded it a lot upon IPO. San Francisco folk (maybe with some virtue signalling?) traded it 3x more than those in New York City. Fascinating piece in Axios: How millennial investors reacted to Lyft’s IPO. Maybe millennials treat Lyft (and tech IPOs?) like cryptoasset investing?

Anyway, FT has covered it best: But today, it seems Mr Market has woken up to realise Lyft is trading at 10x sales with negative 44.3 per cent ebitda margins and is operating in a market with no proof of profits. in Lyft is nuts, and it’s crashing.

The future will be very exciting, I expect more consolidation in this space (don’t all long tentacles go back to SoftBank?). If you have access to The Information, they’ve got an exclusive on Lyft’s Biggest IPO Winners. Just one highlight:

Sean Aggarwal, Lyft’s first outside investor, who put in $30,000 in 2007 and has a stake now worth $100 million. The biggest venture capital winner may be Floodgate Ventures, a seed investor which has seen a nearly 10,000% return on its roughly $1 million investment. Then there is Mayfield Fund, which invested a total of nearly $15 million in the first four venture rounds, giving it a stake likely to be worth about $600 million at the IPO.

“In the end we couldn’t find a tech team we could trust and that could produce what we asked of them.”

How these words ring so true. This is from a Medium post by John Biggs, now working at The Block.

It is amazing to see what happened, as they hired two tech teams:

“Our first tech team worked mightily on product that worked but was not scalable. Our second tech team was self-interested and the tech did not work.”

They raised $150k, had 10 employees, two development teams, and over 8,000 beta users, but were unable to deliver functioning technology.

I have no idea if these were outsourced teams, or hired teams (I’ll go with outsourced), but this is a real problem facing many companies, not just those involved in the cryptocurrency space. Sometimes it also has to do with the irrational exuberance of the leadership team, directing the tech teams. This is where experience makes sense and pays off…

It makes me think a lot about the offering of the fractional CTO (basically a fractional CxO in general). There is a lot to do. A lot of patterns to recognise. A lot of project management. And a lot of understanding on what can and should be delivered in an appropriate timeframe. Something a really technical co-founder or lead will get right, but something the average founder will miss.

There are so many e-wallets in Malaysia now, it sure feels like I’ve got e-wallet fatigue and I don’t even spend much time in KL or use most of these wallets. I am more a fan of the AMEX, followed by Visa or MasterCard. Eventually e-wallets are going to have to implement merchant fees that seem closer to these credit card networks (your rewards have to be paid somehow…).

I have tried GrabPay before in Singapore where I loaded SGD$20 into my wallet from my credit card. I never did get to spend it. This balance sticks around for when I am next in Singapore. You have a separate e-wallet for Malaysia. I tried to set this up a few days ago, and they require a photo of your passport or IC to verify your ID (unlike Singapore). I seem to have failed this verification (it looks like an actual human does it, but when you fail it, they don’t tell you why; not that it matters, it seems you can still use it just fine). Also, Grab is now holding photos of the front of Malaysian’s Identity Cards… let’s hope they never have a data breach.

Today as I was trying to get a ride, a pop-up (potentially the first useful ad I’ve seen in the adware that is Grab…) said I could get RM5 off 2 Grab rides if I use GrabPay credits. So I promptly topped up my GrabPay wallet with RM20 (which came from my credit card), and then paid for a ride with GrabPay credits.

I see absolutely no difference with paying via a credit card. I believe you can use your debit card to pay for your Grab rides as well. There is an argument that cards are unpopular in South East Asia as evidenced by this Twitter thread, but if you have a bank account in Malaysia, you get a debit card by default that you can use for Grab. Maybe the play is that people will use it for peer-to-peer payments, like when you need to pay a friend for splitting the bill (like Venmo? Maybe I have a generation gap)?

However from a metrics standpoint, my desire to save RM5 off two rides (a total of RM10), has made me an active user of GrabPay. I loaded up a balance of RM20. Will I be able to bring that balance to zero or does Grab earn interest on my money (like they do for my Singaporean balance)? Will future promotions only apply to GrabPay payments that aren’t via credit card, but via this e-wallet service?

Yes, we Malaysians, and Singaporeans and probably most South East Asians love a good deal. One of the reasons that Grab probably won before Uber exited the South East Asian market was GrabRewards. If you could expense your Grab rides, participate in the loyalty program, and naturally keep the rebates, why would you ever use Uber?

Measure what matters. Anyway, back to e-wallets. The banks will wake up. The VC money will run out. Economics will eventually meet reality.

Last week, I read in the WSJ an article about Beyoncé and Jay-Z and their new album, “Everything is Love”. If you have a subscription, feel free to read: Beyoncé and Jay-Z Go Pay-to-Play With New Album.

Naturally, that tempted me to listen to the album with my Apple Music subscription. I was not moved (keeping in mind, Jay-Z’s Empire State of Mind is one of my favourite tunes).

So Taylor Swift has done before too. One of the reasons why I have subscribed to Apple Music was to listen to her music when she pulled out of Spotify. While this has changed, I have never bothered to change my streaming music service of choice.

It occured to me that these folk only do this to get in the news. It is free advertising, via “earned media”. I generally don’t read music reviews in the papers that I subscribe to, but if it makes the main pages, it is quite hard to skip over.

I think we can all agree that globalisation has won, and we live in a flat world.

However when it comes to consuming media, we still live in a world of regional restrictions. Rights are not issued globally, and rights owners see this as milking every last penny by ensuring that regional restrictions apply. This is not just true for the movie world, but also the music world, and generally the book world. Apparently the entertainment industry is one of the last holdouts in realising that we live in a truly globalised world.

Yesterday I read an interview in the FT with Kate Tempest, a writer/rapper whom I’ve not heard of. I immediately hopped onto iTunes, searched Apple Music and started playing her tunes from her album Let Them Eat Chaos – Kate Tempest. This was a success and I’d discovered a new artist.

A few months back I was in a bar (the recently shuttered La Conserverie) in Paris, speaking to a Japanese friend, and I was telling her that I did know some J-Pop; growing up it wasn’t too far fetched you would listen to some songs that made the mainstream English radio stations. One example was Utada Hikaru’s First Love. The French friend who was there said he’d love to hear it, so I fired up iTunes on my phone, and tried in vain to find the song, and realised its not in the catalogue (don’t worry, YouTube saved the day). This was a failure, and I didn’t get to reminisce properly.

Just last week, I fired up Netflix (now blocking all VPN traffic, an almost impossible thought two years ago, with VPN providers giving up the fight nowadays) and started streaming The Mirror Has Two Faces. I stopped around the half way mark and switched countries only to realise that now I’ll have to wait to be in the same geographical location again to continue watching the movie! I’d mark this as a failure because it hurts the user experience; it isn’t Netflix’s fault, it is the entertainment industry.

I still listen to an old song that I like, that resides on my drive and not in the cloud — Puff Daddy featuring Jimmy Page – Come With Me from the Godzilla soundtrack. It’s not on Apple Music, but it is available with Amazon Prime Music, that comes for free with an Amazon Prime subscription! I’d mark this as a failure since I’d expect my music collection to be available in one place, not scattered across various services.

We’re living in an increasingly globalised world. We have friends from all over the world. We’re travelling more frequently. This is all supposed to be a good thing – exposure to the world. Why hasn’t the entertainment industry caught up yet? Would they prefer everyone just focused on content piracy? Region restrictions do not work in a globalised world.

I just read, Buy SAP again? 60% of customers say no, says Nucleus Research. SAP isn’t pleased but made clear that they don’t participate in this particular report (presumably they do for Gartner/Forrester/IDC).

Besides the opportunity for others playing in the space SAP plays in, I am reminded by how a humble research firm (Iceberg Research) brought Noble Group down – Singapore Noble Group Rejects Iceberg Research’s Claims, Nobbled, How Richard Elman’s Noble Empire Crumbled (when this was written, its share price dropped 75% since the research report). This wasn’t the case for SAP (Noble lost 9.5% the day the report came out), and may not be (who knows).

As an aside, it regularly shocks me that people don’t realise that when it comes to analyst firms, the whole game is “pay to play”. You pay a sum of money, you get to speak to their analysts, the analysts get to query your customers, and boom, a report is produced. Firms tend to be clients of analyst companies.