And there they stood armed, shielded, clad from head-to-toe in gleaming Non-GAAP armor. The once gilded heroes of the “The Valley” known as Unicorns, determined to stand their ground, steadfast in their resolve, to prove to any remaining, willing devotees still wanting to believe in their magical powers known as IPO’s. That with their “it’s different this time” shielding and double-counting weaponry, that they could, indeed, not only stand up to these dark forces and times. But rather, rise above and vanquish any doubters or evil forces gathering against the “New Religion.”
Then, the blockchain army, led by the general known as Bitcoin, drew his gleaming blade, forged of bits, derived from the secret mines of the ether, ordered a charge. Then, backed by their more powerful ICO siege engines, pummeled any remaining faith of the once mighty “eye balls for ads” high priests into oblivion. Confirming to any-and-all that dared doubt whose offerings was superior. The cleaved heads, severed valuations and self-declared fortunes laid strewn across the ledgers as testament to the might of this now superior empire. Yet the lagging question always remains…
For how long, this time?
Magical thinking deserves fairytale inspired descriptions, which is why I penned the above tongue-in-cheek. However, that shouldn’t deter you from the seriousness of the underlying point. i.e., Magical thinking times are precisely where we are.
Years ago I first heard about the idea of “magical thinking” when I was introduced to the writings and work of James Howard Kunstler. Although he’s well-known (I’m generalizing here) for his caution on “big oil” related topics and the dismal affects regarding suburbia and modern architecture. His book “Too Much Magic” is a title and theme that just keeps popping front-of-mind every time I both read any financial/business news, or watch the “markets.” It truly is the best descriptor of our times.
There’s now so much magical thinking, along with actual practice, I believe Merlin views his crystal-ball in envy.
Trying to argue any form of common sense, or rational thinking is now viewed as if one is trying to work a spell on the other. All while speaking in some long-lost arcane dialect. And if you try using math which consist of 2+2=4 voodoo? The conversation is all but rejected in total, with the subsequent need-to-look-at-my-phone-now styled conversation stopper. After all, maybe the Kardashians’ are about to launch an ICO. Don’t want to miss that opportunity, right?
Not that long ago I asked the following about IPO’s. To wit:
“Have you noticed the near financial/business media blackout when it comes to anything like IPO’s and their spawning stable-mates known as “Unicorns?”
Remember when debuting an IPO was met with such media fanfare it allowed for the viewing public to fawn, or feel really insignificant (more like loser) for not being one of the “beautiful people” paraded across magazine covers, screens, or conference stages?
So alluring was the “next IPO celebrity” made out to be it probably made Hollywood’s PR machine envious.”
I’ll ask again: When was the last time you heard about an IPO, Unicorn, Series A,B,C -LMNOP funding round for adding 10’s of $Billions to an already deemed decacorn, or any “unicorn” for that matter? ___________ (Insert crickets here) And yes, “decacorn” is an actual term used in “The Valley,” because “uni” is so passé. e.g., Think Uber™ or AirBnB™. Don’t want to mix the single digit $Billions with the double digits’ now, do we?
How about Bitcoin™?
I know, it was a trick question. However, can the parents of the seven-year-old, still chanting “blockchain” in the back, please bring their child to order, for the sake of the group, so we can proceed? (TIA!)
Do you know what “blockchain” technology truly is and what it means? Maybe a better question: Do you care?
Is there an even better question? Maybe. How about: Does anyone really care?
Hint: call me crazy, but I’ll go with, nope, nope, and nope. But maybe the best question of all would go something like this…
“I’ll go with ‘Cryptocollectables’ for $300 Alex.” Question: “Name this equivalent of Beanie Baby® mania in blockchain form?” Answer: “What are Cryptokitties®” “Correct!”
And you thought unicorns were the ultimate mythical, magical mascots of delirium to ever enter the world of finance and business. My, how old and dumb you must now feel. What are you, like over 35? I bet you still have a landline in your house, don’t you? Geezer.
First it was the Federal Reserve and its casting of spells for economic prosperity via quantitative easing. Then, it was Silicon Valley borne Unicorns that were changing the way business (they claimed) should be done. Then it was the “markets” with their proprietary central bank affixed bullseye which allowed for IPO’s and cash-to-burn so large and bright, it made a Burning Man® festival pale in comparison.
But that was then – and this is now.
IPO? Fuggetaboutit! ICO’s (initial coin offerings) are where it’s all happening now. Oh yeah, and don’t “Bogart” the hopium, please. There’s plenty to go-round for everyone. After all, just mint your own if the current batch doesn’t suit your investing taste buds.
Again: Why deal with the endless chasing of ones tail, needing to replenish the ever-quickening, self-draining coffers with endless funding rounds, only to wait then add the possibility of being publicly humiliated (see Snapchat™ for for clues) when it all goes awry? That’s now soooo last year.
Now – you can just fire-up your own bank of computers (or anyone else’s you can hijack) and mint not only your own “coins.” But you can skip the whole going public thing, because the “markets” have already announced and cemented your “winning” ways via setting up virtual vehicles for active trading to go long/short these entities. All before they even go “public” as was once thought, or even vaguely understood!
Business plan? Real product? Real customers? Real anything? F-that! That’s the only thing that needs to be real.
And if you think I’m being hyperbolic? Here are just two points (you can read more here) that should state all one needs to know about what is currently transpiring. Actually, these two points alone should scare the pants off anyone blindly mortgaging their house, credit cards, 401K, kids tuition payments and more, to get-in-while-the-gettin-is-good type of investing prowess. To wit:
Lack Of Restrictions: ICOs are unregulated and able to avoid the routine scrutiny of venture capitalists or lending institutions. As of this writing (September 2017), there is no official regulatory body for the industry to comply with.
Flexibility Of Compensation: In return for the capital investment, ICO purveyors are not required to give specific compensation or ownership rights to the investor. Percentages of the new cryptocurrency, cloud storage or other services may be used in place of traditional IPO stock models.
As I type this Bitcoin and its subsequent aspiring offspring (e.g., Etherum™ et al.) are currently worth hundreds, upon hundreds of $BILLIONS of dollars in cold-hard cash equivalent. By the time this article goes to post? They could be worth $Trillions! By year-end I wouldn’t be surprised if James Altucher starts taking bids for how to by Mars, paid with Bitcoin riches. Yes, as crazy as that sounds, remember – we’re talking magic here. So anything is possible. (To be clear, I have nothing against Mr. Altucher. It’s only because he’s now seen, by many, as the face of an ever-growing “bitcoin” retirement guru cadre. Nothing more.)
You have to feel bad for the once mighty unicorn of days gone by. After the Federal Reserve stopped their own money printing ex nihilo operations, the reporting of strength, stamina, and business models of these once unassailable, magical, mythical business creations appeared beyond reproach. Then, overnight, the only press that seem to be able to garner is bad. And I mean just that, all bad.
Uber™ and its stable mate AirBnB are once again “Back in the news.” The issue? Uber’s stems from (yes, another!) possible coffer bleeding legal quagmire with accusations of illegal corporate espionage. And AirBnB? Europe seems to be taking a liking much as they did with Uber. i.e, As in enforcing laws, codes, and more. And when it comes to some of that “more?” Well, let’s just say, no matter where you may be staying: Remember to smile, because you could be on hidden camera.
Here’s another set of questions I believe no one is asking so, as usual, I’ll ask them.
First: What does one think the reaction at a SoftBank™ roundtable meeting would be if someone brings up the suggestion when it comes to making their next “investment? Here’s just one hypothetical, but I know if I were at that “table,” here’s what I would argue, tomorrow. To wit:
“What if instead of investing $Billions into an entity (e.g., Uber or other) where we have to use more computing power and PR just to
spincalculate how we can state a few $Billion to now be worth $10’s of Billions, with the added possibility, we may never get to an IPO to begin with, where that stated valuation and more will be redeemed.
Flanked with the ever-increasing actuality of more and more potential legal liability, or lawsuit quagmires. Reducing the odds of ever making that possibility increasingly more unlikely. And instead: All we may need to do is just state: ‘We’re getting into the Crypto-business with both feet tomorrow. And, are prepared to allocate significant resources to this endeavor immediately?
An ICO could mint us $10’s of Billions near immediately. Just look at some of the latest entrants – most, if not all, currently lack or even have our size of potential seed capital. So why are we needing to look further into anything with an IPO in the future – when ICO’s are here, now, and in such a frenzy buyers are willing to pay just about anything – just to get in?”
That’s what I’d be waiting to say, as soon as the meeting started. And if there wasn’t one already slated? I’d make sure I booked the conference room myself with the CEO, Board, and whomever else I could get to attend. Asking it first thing when the office opened.
I’ll bet anyone dollars-to-doughnuts if I’m already thinking it – someone else already is, also. And any remaining unicorns, decacorns, or cash-burn junkies should assume the same. Because once one can create everything in-house, ex nihilo, unregulated, and in an all-out mania of which has now eclipsed the Tulip mania of the 1600’s, making it the largest ever?
It won’t be unicorn tears running down the gutters of the magical kingdom known as “The Valley.” It’ll be worse, much worse. The only thing worse might be this, if something like the following happens in conjunction.
When would/will Amazon™ declare (or Wall Street demand) it’s separating itself into two separate entities? i.e., Amazon the on-line retailer – and AWS™ – the crypto-computing powerhouse? After all, Overstock™ CEO is already exploring pretty much the same idea.
Could or would AWS do to Bitcoin what Amazon did to retailing? Think about that as one tries to recalculate their latest “coin” balance.
Just remember when playing in the “markets” – any and all losses are to be made payable via cold-hard cash if your “investment” prowess suddenly runs out of “bits.” That’s not mythical folklore, but rather, that’s a possible, if not probable reality. Yet, just like all good fairy-tales…
We still have to wait for the final ending, as the story continues to unfold around us. Or said differently:
“To be continued…”
© 2017 Mark St.Cyr