{"id":24751,"date":"2014-02-21T09:20:57","date_gmt":"2014-02-21T14:20:57","guid":{"rendered":"http:\/\/www.technologyinvestor.com\/?p=24751"},"modified":"2014-02-21T09:23:28","modified_gmt":"2014-02-21T14:23:28","slug":"check-your-rationality-before-you-enter","status":"publish","type":"post","link":"https:\/\/www.technologyinvestor.com\/?p=24751","title":{"rendered":"Check your rationality before you enter"},"content":{"rendered":"

“It makes no sense,” insisted my lunch companion yesterday, a successful investment banker.<\/p>\n

Of course, the Facebook buy of WhatsApp for $19 billion makes no sense — in conventional investment valuing.<\/p>\n

He raised three points:<\/p>\n

+ The competition.<\/strong> WhatsApp has no proprietary technology. There are zillions of competitors and there will be more.<\/p>\n

+ The “useability.”<\/strong> He saw no value in WhatsApp since he used a BlackBerry and they had their own messaging app which was “far superior,” but, sadly, worked only for BlackBerry devices. (Dumb BlackBerry.)<\/p>\n

+ It doesn’t make any money.<\/strong> And apparently never will. (Maybe.)<\/p>\n

\u00a0I explained you had to check these ridiculous ideas at the door, and look at one metric of valuation –– growth.<\/strong><\/p>\n

No company has grown as fast as WhatsApp. Certainly not Facebook.<\/p>\n

No company has this incredible metric: Every day WhatsApp users upload 600 million photos, for example, and send 100 million video messages every day.<\/div>\n
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If you do insist on figuring some value, the best way to see that Facebook paid $42 for each of WhatsApp’s 450 million users. That’s actually cheap. I defy anyone to buy 450 million customers\u00a0 for an average of $42. Not possible.<\/div>\n
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The irony of all this is that WhatsApp didn’t spend a single nickel on marketing. It was all word of mouth. What they call viral marketing. Amazing stuff. But shows what can be done with an amazing product. (Are you listening, kids?)<\/div>\n
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One thing that’s most appealing to me about WhatsApp is the fact that it doesn’t store messages. It delivers them, then deletes them from its servers. There is a huge marketing opportunity in selling communications apps which the NSA and others can’t poke around into. There’s a name for this new area — something like impermanence communications.<\/div>\n
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The Wall Street Journal tried to figure the value:<\/div>\n
\"TwittervsWhatsapp\"<\/a><\/div>\n
Yesterday I wrote about nosebleed Internet stocks, and showed some charts on Priceline, Softbank, YY,\u00a0 and Facebook. But there’s also Google, Open Table, and TripAdvisor.<\/div>\n
The key is see your portfolio of Internet and technology stocks (like 3D printing and Tesla) the way VCs see theirs. Do your best at picking them. But ultimately, some will succeed and some will fail. The successes will far outweigh the failures. Do it. Change your thinking NOW.<\/div>\n
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If you missed yesterday’s column detailing “Harry’s New Internet Investment Game Plan,” please read it here.<\/strong><\/a><\/div>\n
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Harry’s latest travel tips:<\/strong><\/span><\/div>\n
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1. Never use Expedia, Orbitz, Kayak to book your flight. Those guys are great for checking who flies where and when — but they rarely offer the lowest prices. And worse, when your flight is messed up, the airline will tell you to go pound sand, “You bought your ticket from XYZ, not us. Go talk to them about re-routing.” In short, the best prices and the best tickets are from the airline directly. I learned this last night when I booked flights from PSP to SFO for a mid-March conference. It was much cheaper directly on Alaska Airlines than on Expedia.<\/div>\n
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2. Ticket prices vary dramatically from one day to another, from time to another. It’s good to be flexible and not buy too close to departure since planes these days are full and the airlines hike the prices the closer it gets to departure.<\/div>\n
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3. You’re at the airport. Your flight is delayed. You have no information. The weather, the airline’s incompetence and your own gut tells this will be a long rolling delay. Go find another flight ASAP. Don’t stick around, feeling more and more yuchy.<\/div>\n
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How to remember your life.<\/strong><\/span> I tried Evernote. Too complicated for my tiny brain. I tried a million other organizers. The best solution for me is a single text file that contains passwords, account numbers, phone numbers, notes on vendors, repair case numbers, product keys, airline frequent flyer numbers, product serial numbers, etc. My file is endless bits and pieces of text. To access it I use very simple software called The Semware Editor. But you could use Notepad or (God forbid) even Word.<\/div>\n

How marketing got ratcheted up with great photography.<\/strong> Every great new business is making great use of great photography. Whether you’re running a hotel, a tennis club or peddling workout clothes for women, you need great photography to show off your wares. This image is from the latest Sweaty Betty catalog. They’re selling the top and the leggings the dancer is wearing. I love this picture because the pose is exquisite and I love great dancers.<\/span>
\n<\/strong><\/span><\/p>\n

\"SweatyBetty\"<\/a><\/p>\n

Here’s another picture of the same lady. I think I’m in love, again.<\/p>\n

\"SweatyBetty2\"<\/a><\/p>\n

Sweaty Betty’s web site is here.<\/strong><\/a> If their stuff is as good as their models and their photographs, they’ll kill LuluLemon, though it’s doing a great job of shooting itself in the foot:<\/p>\n

\"LuluLemon\"<\/a><\/p>\n

I’m hooked on this garbage. <\/strong>Get it from Amazon. Click here.<\/span><\/a><\/strong><\/span><\/span><\/p>\n

\"KellogsFruitySnacks\"<\/a><\/p>\n

What is Resurrection?<\/strong><\/span><\/p>\n

\"ThePriest\"<\/a><\/p>\n

The priest asked the children if they knew what the Resurrection was.<\/p>\n

A boy raised his hand.<\/p>\n

\"TheBoy\"<\/a><\/p>\n

The priest called on him and the boy said, “I know that if you have a resurrection that lasts more than four hours you are supposed to call your doctor.”<\/p>\n

It took ten minutes for the congregation to settle down enough for the service to continue.<\/p>\n

\"HarryNewton\"<\/a>
\nHarry Newton who apologizes if you had trouble getting onto this site in recent days. We came under a heavy spamming attack, putting pressure on our servers and network. The bad guys seemed to have moved on. It should be OK, for now. However, it’s easier to receive this column by email every morning — just sign up to the box on the top left. Sadly, you won’t get the ads and I won’t get the Google Adsense revenue. But I’m forming the next WhatsApp. I now care about billions, not hundreds. Anyone got an idea for the next WhatsApp? Ask your kids\u00a0 NOW. I got access to the money we’ll need. Every investor wants in on something Internet, anything Internet. Talk to your kids this weekend.<\/p>\n