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. 

Up & down - random thoughts

Can't say that did not suck. I was at the ballpark last night for Giants versus the Marlins when Buster Posey got pulverized by that other guy at home plate and is now going to be out for a at least a couple of months with a broken lower leg and a completely busted (no pun) ankle. Arguably the best player on the Giants, losing Posey for an extended period of time absolutely sucked all the positive energy out of the team and the Giants fan base. Today was overall depressing and a drag, not only because the news of Posey, but the Giants also lost today as well and got swept by the Marlins (guess the team was feeling the same).

It completely overshadowed what was an epic ninth inning comeback in last night's game when the Giants rallied for four (FOUR!) runs to tie the game. I mean the Giants have trouble scoring four runs a game, much less in one inning. It was a sight to behold, and the TRUE fans that were still left in the stadium got a visual treat. It is moment like that, that makes the game a beautiful one. Fans and players alike live for them. Too bad the moment will not not be soon remembered because of what happened only three innings later.

That being said, the team and the fan base must move on. The Giant's pitching staff is still tops in the majors, and have potential to blank an opponent on any given day. Sure losing Posey will mean not only his bat but also his catching abilities in handling the staff, but I think having Bochy as a former catcher means whoever does replace Posey on a permanent basis (Whiteside or somebody else) will be fine in adapting to handling the staff. If Belt plays to his potential, and Panda returns in two weeks continue his form, the offense for the most part will be fine as well. The team is infinitely better with Posey, but it is at the very least still a very competitive team without him. It is not even June yet, plenty of ball to be played.

So other than that, my first week of post under grad life have been great. Finally got past being sick the past couple of weeks was a welcome sign as I finally get to work out properly again. Though I definitely lost some of my strength because I lost a couple of reps on all my workouts. Anyways, treat your body well because being sick absolutely sucks (accept you sleep really well, only to wake up finding out that you are still sick). 

I have to say, my entrepreneurship graduation ceremony this past Friday was the best. Two years of hard work with the same people culminated in a celebration unlike any other. Of course these type of things are all for the parents, but I think for us the graduates we had a great time as well (free booze did not hurt one bit). My favorite part of the ceremony was when our names got called individually to get recognized and make a small speech. Very interesting to see what my classmates have to say during one of their best moments in their lives (I am surprised our professor had the fortitude to hold back the tears haha). Anyways thanks to the power of media, our class will always have pictures and videos of the ceremony to remember with.

Naturally I skipped the "big" ceremony that happened on the next day. My sympathies to those that sat in the sun for four hours only to see your graduate's name get called. I on the other hand slept in, ate pho for breakfast, and then had a nice stroll in Golden Gate Park and drank tea at the Japanese Tea Garden. Not a bad way to spend the day after grad I think (of course there were alcohol involved the night before). 

And the party continues this weekend! Actually all on Saturday. Got invited to a party to watch a soccer (what the rest of the world would call football) match, which just happens to be the biggest soccer match in Europe every year (the UEFA Champions league final). Unfortunately that soccer here is only big every four years when the World Cup rolls around (it is the only time I get to watch a soccer game on TV here in America. Thank you ESPN). I would be a bigger soccer fan if it actually shows up more on TV. Back when I was still in China soccer was about the only sport there is to watch because it was so big everywhere. Here in America I've grown to adore the game of Baseball and American Football, and have seldom watch a soccer game of any sort. Anyways, I am very excited for some soccer action. It is going to be Manchester United vs. Barcelona. Should be a good match at the very least. Who am I rooting for? Well I am rooting for a good exciting game haha. 

Honestly, this whole post undergrad world is still very strange to me. Until next time. 

This is where the fun begins

Presented here is my little speech made at the SFSU entrepreneurship class of 2011 graduation celebration on May 20th, 2011. Congrats again to all my classmates!

Thank you Professor. First of all I would like to thank everyone for coming this afternoon and honoring our class with your presence. These past two years have indeed been extremely tough and rewarding at the same time. And to be honest, I’ve always expected to make it to this day. Because for me, once I started this entrepreneurship program, I was absolutely determined to reach the finish line. My only problem was finding the motivation to start. But thankfully I got that shove out of the plane, and here I am!

Of course, a big thanks goes out to Professor Gaglio. To quote my classmate Lee, this class changed my life. I knew you were a person to be reckon with when I saw the 30 page syllabus that was handed out on the first day of the first class. Little did we know, that was the only piece of written instruction for the rest of the semester! Professor, your hands off approach made the learning that much deeper, because we were forced to make mistakes. That being said, the workload of teaching an entire concentration by yourself must have been tremendous, and I truly appreciate what you have done for us. Thank you for giving me a college education that was many, many times over what I paid for tuition.

My parents. Sorry everyone but I am going to do this in Chinese: <Chinese> Mom, dad, thanks for the support throughout the 23 years. I will not throw away all the hope you have place in me. I am up here today because you two. Thank you. </Chinese>

To my close friends that have made it here this afternoon, thanks for supporting me throughout the years. All the chats, debates, ball games, food runs, movie nights, trips, arguments, and other various hijinks we have reminded me that I do have a life outside of entrepreneurship.

Last but last least, my beloved classmates. We did it! We finally achieved the American dream of being a college graduate with a mountain of debt. It has been an honor to go through the entrepreneurship program with you guys. I have high respect for each and everyone of you because we all know that it takes a special person to make it here today. Thank you for the support, the laughs, the learning, and most importantly, the late nights at the library annex. Please keep in touch, because not only are we the strongest network we have, but I also have photography services to sell to all of you. 

I would like to end by saying this to my classmates: its time to jump out of the plane - there is no going back. Because this is where the fun begins.

Thank you.  

D minus eight - random thoughts

Only eight more days until my graduation ceremony. Eight more days until the first day of the rest of my life. Yesterday was the final day where I have something academically due for class. I am a free man - the burden of academia is finally over after 18 long years (oh hello there grad school, not yet please). So you can say I DONE, but I am hesitant to say I am DONE (no tweets, no nothing), because no it has not hit me that I am done yet (the fact that next week is the ACTUAL finals week and I still have work on campus probably contribute to it). Though I guess I am getting to a point where it is hitting me little by litte (I slept REALLY well last night, and waking up without academic obligations was damn nice). 

At least my body is telling me it is over. How nice of it to wait until my final projects were turned in to hit me with a throat infection (actually it started on Tuesday as I was knee deep in trying to complete my last projects - how wonderful). But man today it was the mother load - I slept really well, but woke up feeling more crappy than the previous day. Felt like my throat was on fire. But hey if there is a good time to get sick, now is the perfect time is it not? I guess two straight months of 11 hour work/school days and a full academic workload finally taken its toll on me (no she did not say goodbye). You know what, it is okay, because on the bright side if I was not as healthily living as I was, I would probably be getting more than a throat infection.

Major congratulations to myself and my 25 other classmates for finally finishing the grueling two years of the entrepreneurship program at SF State. The amount of apathy that was in class yesterday was absolutely hilarious. Everybody basically busted tail for the past four days to finish the final three major projects, so everybody was dead tired in class. Whatever the professor was (still!?) teaching during class just completely went over our heads. Can you blame us? We just turned in our last projects - we are DONE. Nothing we could have done yesterday would otherwise prevent us from graduating. Quite frankly I don't know how some of us stayed awake haha. Of course the professor could care less - as far as she is concern the learning never stops (and she would be right).

Anyways I was incredibility disappointed I did not get celebrate with the class for drinks after class ended due to the fact that I had work on campus. But hey I am going to be unemployed in a week so I need all the money I can get right now. Besides the grand celebration is only eight days away haha (cake and champagne!).

It may have been a tough week workload wise, but the Giants winning six in a row certainly help me pull through. I think it is about time the team go a on a run like this, and the fact it is doing it the Giant's way is just incredible (winning by one run, not scoring more than four runs a day, torture torture torture). Now that I am done with the burden of school, time to go to more live games! Not to mention I have yet to see a live game where the Giants have won so my goal is to un-jinx myself really soon (so when is Washington in town?). Anyways, wait until the Panda comes back form his injury (he was raking before he got injured) and the team will only continue to improve and stay atop the NL West as they should. Though I like how everybody is avoiding the Zito situation not that Vogelsong is pitching so well (Bochy practically brush Zito off by saying couple of days ago that he is still three to four weeks day and will need to build arm strength before he can return).

So I wonder what I should I do for finals week. Well I still have internship to go to. I am practically done with my product photography assignments, now I am taking over managing the company media, which is very exciting for me. Managing the blog, flickr, Facebook page, and twitter will give me experience into managing those of my own. Besides I am an introvert, so me making sales calls will hardly be effective (entrepreneurship Professor said hiring an introvert to sales is a royal waste of money and time). I think the web is that perfect wall and filer between myself and others so that I can be more natural (why do you think I blog? lol).

But for sure what I will be doing is purging my room of the clutter that have accumulated over the past couple of months (I know, impossible!). Probably going to junk anything and everything that has to do with college (accept for the stuff that has to do with entrepreneurship, because you know, kind of important). 

The thing I am looking forward to next week though, is watch all the TV shows I have yet to watch do to all the busy. It will be mini marathons after mini marathons. I've always love end of semester TV marathons - there is no TV experience like it.

Oh yeah - SLEEP!