Friday, April 27, 2007

No Idea's Original

A couple of months ago I was talking to my (PE/now VC) friend about where the next big plays in the technology/web 2.0 would be. Somewhere it came up that using high technology to do low-tech things. It also came up that both of us were trying to improve our vocabularies, and the way he had been going about it is keeping track of words he had not known or was interested in adding to his lexicon through an excel spreadsheet. I suggested that someone make online flash cards or a system similar to flash cards that could be used to study anything. Well, Quizlet did it.

This is a great idea; think of students in classes studying vocabulary or terms, think of actors remembering prompts, think of anything and everything that can be written on a card can now be saved and viewed by anyone.

Although this is the second(1st was the Sony Reader: basically an iPod for eBooks) time in the last year where a good idea of mine has been released by someone else, it makes me happy to see that is is successful (confirming the good idea) and making our experience on this rock a little more enjoyable. One thing it proves once again is that no idea is original.

As Nas would say:
"No ideas original, theres nothin new under the sun
Its never what you do, but how its done
What you base your happiness around material, women, and large paper
That means you inferior, not major"

Look to leverage long the eBook and Quizlet. Unfortunately Nas' hold ranking remains unchanged.

Tuesday, April 24, 2007

Market Makers

A new company, made it's debut on today. "Trendio takes the high pressured, fast paste(paced) world of the stock market and turns it into a game. Instead of actual stocks, key words are used as the trading item. The amount of times that name or word is mentioned in the news the next day determines how well those stocks are doing." But unlike a real market, these participants are unable to generate any material gains.

Although it isn't exactly the same, it reminded me of two other recent(ish) start-up that were exchanges themselves in weather and professional athletes, respectively.

"Basically the way they make money is Weatherbill's algorithm will usually be better than you at guessing the variance of cooling/heating degree days, so they can price their contracts with a premium. The small risk of error they have calculated and already sold to masticulating hedge fund analysts in NYC. Their premium is going to eat into your profits no matter what -- it's decided by the insurer, not the market. This is why people use insurance for low-probability, high-impact events and futures for high-probability, low-impact events (like weather); you just keep getting screwed by overhead otherwise. "(DL)

The third example of this created market, and more similar because of the not REAL money being traded in it, is Protrade sets the athletes prices and people (investors) trade these athletes based upon the fantasy points they think they will achieve during the season. Price move up/down based upon trading pressure. Then the season ends with earnings day. Unfortunately these earnings are in FAKE dollars. Because of all the online gambling laws, Americans are unable to recklessly throw their money away online, yet can do so with other markets (NYSE, Nasdaq, AMEX...Shanghai Stock Exchange) and find forms of gambling without much effort.

I am definitely a fan of these types of start-ups. In "Trading Is Taking to the High Seas: Freight-Rate Swapping Lets Investors Wager On Costs of Shipping" By Ann Davis on January 4, 2007; Page C1 of the Wall Street Journal, we see that investors are always looking for new alternatives to invest or gamble on, in this case it is tracking the timing of shipments and buying contracts on the amount of time they will take to be delivered.

As an investors you might be in a tough position because the arbitrage opportunities might become eaten up by the high premiums on the contracts. But my good friend DL suggested "However, if you think like an entrepreneur you realize that you can do this with basically any security, repackaging it using Ajax to seem like a new offer. You could do this with options, with swaps, even with **** like treasuries. "Buy ***** School community bonds!! Customize your issue based on your kid's AP score! We will only take a 10% premium for making you feel cool." Schmucks will line up for X number of months, and you are guaranteed money."

I would look to leverage long these market makers, especially if they get the ability to allow investors to use REAL money.

Thursday, April 19, 2007

Project San Dimas

eBay seems to finally be rethinking their user experience with the announcement of a new Apollo application currently called "Project San Dimas." The new application is meant to make buying and selling items on eBay more efficient, competing with third party “Power User” auction service. "No word on whether it was named after the patron saint of reformed thieves (fraud detection?) or referencing the quiet suburb that served as the backdrop to “Bill and Ted’s Excellent Adventure”."(Ajax Blog)

San Dimas features a user interface created by Effective UIand uses eBay’s API’s to make creating, and managing auctions easier and faster. Because it’s written in Apollo, the program can improve performance by cutting down on repetitive requests for data, caching it locally instead. The application will also feature real-time auction monitoring and allow sellers to add in pictures directly uploaded from webcams and cameras.

Now the application is pretty remarkable in itself, but the real significance of this release is that it highlights an increasingly competitive marketplace, which previously had one major player; Adobe. Now Adobe Flash and Microsoft Silverlight are in a broader battle over how Internet services and software will be built in the future. Both want to be the key supplier of cutting-edge software that handles functions like video and animation on the Web.

Just like any competitor trying to save face (by thinking the best defense is a good offense), Adobe made an announcement about moving into Microsoft's Windows Media Player Space with their own Adobe Media Player. Unlike the "Freddy Vs. Jason" or "Alien Vs. Predator" films where "No matter who wins, earth loses" attitude, this Adobe vs. Microsoft competition can only make our media experience more enjoyable.

Because it is so unpredictable who will win with both sets of products (if I had to guess, Adobe Flash and Windows Media player are the winners in their respective groups) I would Leverage Long both of these products and make up the loss from the premiums on the gains from the winner.

Un-American : Howard Stern and Sanjaya

It is no surprise that Howard Stern fully supports Sanjaya. They are brothers. Just look at their long brown hair. Look at their top teeth only smile. Look at their big protruding noses and tell me they aren't related. They have both gotten famous by doing something poorly: Sanjaya with singing and Stern as a radio host.

As much as I dislike American Idol, it is an opportunity and pissing contest for Americans to assert that they are winners. With people like Howard Stern and his following Voting for the Worst, outsiders are able to see the American Dream be undermined by no talent clowns.

The problem with this is that it still creates the stir and buzz that these shows need. Slander or praise is still free advertising. People are actually texting in to vote more now because there is now more competition to keep the best or sabotage to vote for the worst. Look to Leverage Long the American Dream and never think about Howard Stern or Sanjaya again.

Monday, April 16, 2007

fotowoosh - bringing pictures to me motion sickness

These two seemingly boring 2-D pictures of a train and a building can be transformed into moving 3-D pictures of the same objects. This program will turn any image (preferably an outdoor image) into a 3D model. Freewebs just raised $11 million in August 2006 and draws around 18 million visitors per month.

Microsoft is working on something related to this in their Live Labs group called Photosynth. The product will construct a 3D model based on lots of photos of the same thing or general area from different angles. Unfortunately for Microsoft, Freewebs fotowoosh is able to deliver with just one picture. Look for Freewebs to be gobbled up in the near future by a video sharing/mashup site, a social network, or GOOG/MSFT/YHOO. Definitely look to Leverage Long.

Thursday, April 12, 2007

Disruptors...What's Next?

Everyone loves disruptive technologies...well, except for the disrupted. A disruptive technology is a technological innovation, product, or service that eventually overturns the existing dominant technology or product in the market. Think Steamships and Sailing ships. Think automobiles and horses. Think muskets and crossbows. Think iPods and compact discs.

But are there any true disruptors? "Clayton M. Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is strategy that creates the disruptive impact." My favorite disruptive technology/innovation is one that does away with all of the inefficiencies in a certain market.

Like Chris Anderson's "The Long Tail," in the music market, music stores(Tower Records or a Wherehouse) had gross inefficiencies in offering the amount of music because of cost of storage space. Online retailers had much larger warehouses and were able to make their way down this tail capture a sizeable piece of these inefficiencies. Companies like Apple, with iTunes, and Rhapsody were able to take this to the next level and become perfectly efficient and in doing so created niche markets for specialized music tastes. These disruptions changed the music industry as a whole. Getting every listener the ability to get to the music he wants to listen to.

Another example of this, which was brought to my attention from my Grandfather, is when the Investment Banks began to lower trading commissions for their securities. Although no special technology was involved, the ability for investors to execute trades at 1/8 of the previous price completely changed (increased) the opportunities available. Day trading became much more common and profitable.

Some recent examples of great new disruptors who I think are doing it right take an example right out of eBays playbook. free real estate platform with good valuations
- Help home buyers and owners with finding value, buyers and sellers. (New version real estate brokerage) (peer-to-peer lending)
- Helps find good rates to lend and borrow money.
(New version of a bank) (The On Demand Global Workforce)
- The marketplace for remote work.
(New version of a staffing company)

I look to Leverage Long Odesk, Zillow, and Zopa. Look for these three and maybe a few more to really shake things up. Out with the old guard.

Wednesday, April 11, 2007

When it comes to TVs, Bigger is Always Better

For all of you out there looking to get a TV, you probably should use or They do a good job reviewing most everything out there so at least you'll be making a more informed choice on big decisions. What one of these sites should really do is keep reviewing products, but similar to, code in AJAX so you don't actually have to go from page to page. I also think the sliders that Kayak offers are fantastic.

I ended up getting a JVC HD 52 Inch Rear- Projector. Now for all of you anti-rear projectoristas out there claiming the LCD or the Plasma is the only way to go, you are very wrong. If I want to spend more then I spend to get a great image on a small screen, I would buy an iPod Nano or an LCD/Plasma. I like that there is some good reviews on it too; "Relatively inexpensive; excellent black-level performance; still the best picture quality in a proper environment with proper setup."

LCDs and Plasmas a great, but not great enough for me to be willing to pay the prices for them. LCDs are "
Relatively expensive; home-theater image quality generally not as good as on plasma models; relatively narrow viewing angle." Plasmas are also "Relatively expensive; slight potential for burn-in; generally lower native resolution than similarly sized LCDs."

Look to Leverage Long big TVs and never buy a small TV*. If unfortunate enough to find yourself in the possession of a small TV, it still may be used as a paperweight, mirror or chair.

*Small TVs are considered smaller than 50 Inches.

Tuesday, April 10, 2007

So you want to Start a Hedge Fund...

With all the press hedge funds have been getting recently, it isn't a surprise that 1,518 hedge funds launched in 2006 with about the same amount failing.

Hmmmm...let me guess why so many people want to be a Hedge Fund Manager? Maybe it is because the amazing returns that can be attained skyrocketing winning manager into the categories of the super-rich. "A $1 billion fund posting a zero percent return can still spread around $20 million to its employees. The best managers do a lot better than breaking even, mind you, and as a result, a handful of hedge-fund kingpins take home more than $500 million in annual compensation."

Unfortunately, because of these new entrants, average annual performance has been declining over the past fifteen years. That isn't going to stop investors from putting their money into new and old funds, funds of funds, and now the fund of fund of funds.

If you want to start your own fund, and you should want to, you can use a turn key site and pay around $60-80,ooo to set up. They also will help you when deciding how to find investors. You can also do a little more work and save some money by doing this whole process yourself. You need to set up a back office, a relationship with a prime broker, a good accountant and have a trading account. It also helps to have a good track record for the system you will be using to show investors what they are getting into.

Definitely Leverage Long Hedge Funds and being a Hedge Fund Manager. Except for Ken Griffin. If not careful, he too will go down like like Icarus.

Monday, April 9, 2007

20ltd Upgraded to Leverage Long

20ltd is a terribly slick eCommerce site that takes a page out of Woot sells one item per day and closes shop when all items it has in stock are sold. 20ltd goes way, way up market and only sells products where you can be sure that almost nobody else has what you have.

"On 20ltd, you can buy a 40,000 British pound limited edition Hellcat Combat motorcycle produced exclusively by Confederate, or a Longchamp crocodile skin handbag for 10,000 pounds or a silver Alessi tea and coffee set for 20,000 pounds.

Apparently, one London Hedge fund manager has bought every item on 20ltd since in launched last week."

This is comparable to the idea of a Black Card,
Bugatti Veyron or a Black Bugatti Veyron paid for with your Black Amex Card. Look for 20ltd to be Leveraged Long by me because of there ability to stick with quality rather than volume*.

*- unfortunately this doens't work in every case: home run records, rap music, drinking contests, and the relationships with the Men on the Water Polo team.

"Amazon" - not "Amazing to Swim"

What some people will do to set a world record... A 52-year old Slovenian named Martin Strel has set and broken his long-distance swimming world record again. Although a 9 week, 3,272 mile swim is quite an accomplishment, was it worth it?

When I was younger and climbed trees around my Grandmother's neighborhood, I enjoyed it because it was difficult, dangerous, and wouldn't take too long. More recently, I had planned on attempting the Seven Summits. It would have taken 6 months, tons of energy, was difficult and dangerous. Now in the case for Martin Strel, he swam DOWN the river. Even though that is a long river, which is basically the same as taking a moving walkway across the United State or an escalator up Everest.

Because of this, Martin Strel and all other Guinness Book of World Record Holders (unless individually mentioned) will NOT be Leveraged Long.