Happiness - 10 things I think

Last week was quite terrible for the stock market, as the gains I've earned in my investment portfolio this year almost completely withered away. Of course, it shouldn't matter at all because investments are not meant to be touched in the short term, and more likely than not the stock market will steadily keep growing over many years. It's simply too much fun to keep an eye on the daily fluctuations, especially when the market is up. 

I was stunned to learn from my parents that they really never kept a budget. They simply spent their income on the necessities and saved what was leftover. They've got zero inclination on how much they are spending on a monthly basis. How they ended up saving so much money over the years is baffling to me.

In contrast, I keep rigorous records of my spending and I make sure I save before I spend each month. This method ensures that I don't go around and blow my entire paycheck - because I totally would. I truly admire my parent's tenacity and a sort of innate ability to not overspend each month, without so much as a piece of paper and a calculator. Our generation is spoiled rotten with myriad of tools for us to be fiscally responsible and yet so few of us actually do it. 

10 THINGS I THINK

1. I'm surprised no one has yet did a parody of that Chris Brown song "Loyal". An intrepid female Youtube personality should do a rebuttal version that centers around the line "These bros ain't loyal." 

2. Oakland A's GM Billy Beane is a genius. Crazy, but a genius. It's still shocking to me how he could trade one of his marquee (all) stars on his championship-favorite team simply to improve the already stellar pitching staff. Why hasn't the likes of the Yankees or Dodgers lured him away from the East Bay is befuddling. 

3. I didn't get the hype with "Sharknado 2". My twitter feed was entirely useless during its airing. I had no idea it was so culturally crucial to the people i follow. And for the record, the people I follow aren't exactly of the unintelligent mass. 

4. I'd punch you in the face too if my ex-wife is Miranda Kerr and you slept with her while she and I were still married. Good on you, Orlando Bloom. You don't fuck with Legolas and get away with it. 

5. The bursted water main that flooded much of UCLA wouldn't be so bad if it weren't for the fact California is in the worse drought of our lifetimes. Terrible timing, Moore's law. 

6. What an absolutely horrendous injury Paul George suffered. I couldn't stomach watching the video; the still photographs were terrifying enough. All the best wishes to his quick and full recovery. 

7. The first car at a stoplight has an almost fiduciary responsibility to be alert and go at the first turn of green. Being lethargic here can cost quite a few cars to have to wait for the next light. That's simply not awesome. 

8. 49ers' brand spanking new Levi's Stadium reportedly has got the same traffic and congestion issues that was the hallmark of the old Candlestick. And I thought the entire point of the new facility (other than being able to sell more tickets at a higher price) was to alleviate the usual nightmare involved with actually getting to the stadium. 

9. The problem with having a full can of Altoids is that you absolutely cannot stop eating them. They are indeed the Pringles of the breath-mint world. 

10. Whoever is in charge over at LAY'S potato chips need to stop putting out those fan-suggested specialty flavors. Potato chips should never taste like a cappuccino; ever. 

Second tech bubble

Mark Andreessen, one of the founders of the modern web browser, said during last week's All Things D conference that there is no second coming of the tech bubble. Part of the reason he said is because everybody think there is a bubble. How convenient that his own venture capital firm is staying away from all startups that involves the internet, social networking, location, web 2.0, etc!

I am sorry Mark, but just because everybody says there is a tech bubble does not automatically mean there isn't one. Heck back in the early 2000s when the first tech bubble was in its maturity, many a people were screaming out loud that there was a bubble then (Either that or self righteous people want to toot their own horns by saying "yeah, I saw that coming, I warned them"). The first time it happened nobody listened, and now people ought not make the same mistake twice. Because in my opinion there is another tech bubble brewing, and clearly many people that are joining in my assertions.

The first tech bubble was about converting ordinary services to the online sphere (Pets.com anyone?), and this current tech bubble is all about social networking. Social networking is absolutely the next big thing, and on that I agree. It has already change they way how people interact and share with each other (and to complete strangers). Suddenly, the world gotten much smaller with social networking (hello my cousins in China!). It is indeed a paradigm shift, and thinkers and dreamers are hard at work tying to monetize it.

Except nobody knows how to monetize it yet. If it was not for various forms of ad services (looking at you Google), nobody would be making any kind of money right now in social networking (Facebook selling our information, yeah!). Because what is the one thing that most social networking services have in common? It is FREE to the end user. How on earth are you going to make money if the sole product you offer is being sold to your customers at the price of free? In traditional sense of a business, this would never work, and the only reason it has "worked" so far is the revenues from selling ad space. 

And it is not like these social networking can just change their mind one day and start charging their customers. Because first of all nobody would then use the product (would you use Facebook if you have to pay a monthly fee?), and secondly pricing your products low (in this case free) and then going high is usually not the correct business strategy (you price high, and adjust down if necessary). 

So if these companies and never going to make a dime off their end users (in the strictest sense), how else are they going to make money besides selling ad revenue? Well I can't tell you the answer, because I don't know the answer. If I did I would be rich. it is going to take a long time before the magic code to monetize social networking will reveal itself. 

But can't these companies just earn money off of selling ads? (Or selling our information eh Facebook?). Well clearly they cannot, because by all accounts, most of these social networking companies are not profitable (yet?). So naturally these companies need to raise capital from other sources, such as angels, venture capitalists, investors, and the public. Sounds bit like the first tech bubble doesn't it? Simply giving money to companies that have no clear way of making any real profit. 

Just a few weeks ago LinkedIN filed for an IPO, at an valuation of the company at $4.3 billion dollars. This is 17 times the company's 2010 revenue, and I think it is insane for a company that has only recently in 2010 turned a profit (and lied to the public saying that they have been profitable since 2007). For comparison, Apple is currently trading at something around 16 times the company's previous fiscal year revenue. But the difference here is that Apple is immensely profitable with industry leading profit margins, and they also have 50 billion dollars in straight cash reserves. There is no way LinkenIN should have a stock value to revenue ratio amongst the likes of Apple.

But of course the investors bought it up, LinkedIN's IPO was deemed successful. Outside of IPOs, venture capitalists are dumping money hand over fist at any internet startup that deals with some form of social networking, which leads to the proliferation of it on the internet these days. Not a day went by the last few years without some new cool can't miss social platform springing out of the ground. If this once again sounds all too much like the first tech bubble, it does. Capitalists and investors do not want to miss out on the next big thing (that being social network, and there is no dispute), so they invest in anything that will attract a large user base. 

It is a maxim of any good business - you must have a large target market that will use your product. Any successful social networking today has that. I think investors are just dumping money into these companies, hoping that one day they will find a way to properly monetize it. It appears that the only way to do that is currently through an IPO (original LinkedIN founders and investors got a fat pay day). But guess who suffers when this second tech bubble burst and the value of these companies go for a nose dive? The public's. 

The bubble is real, it is happening right now, and with the chorus of people screaming that it is, one would think the tech investment circle would be more wise.