entrepreneurship

There’s a story on TechCrunch today on how Microsoft’s market value exceeded Google’s market value. I don’t know if this is news, but I suppose it’s interesting to check in from time to time on how the public markets perceive the two tech giants.

What caught my eye were two comments from those claiming to be from two prestigious venture capital firms: Accel Partners and Silver Lake Partners.

Here’s an angry one from Han Lee, Accel Partners:

Dear writer, do you really not know the difference between market cap and enterprise value? Pathetic.

From Jeff Schnabel, Operating Executive at Silver Lake Partners:

Total enterprise value is a more accurate measure of a company’s value (market cap is only a piece of the puzzle – the value of the company’s publicly traded equity).

If you look at TEV, Google is still worth more than Microsoft ($306.4B vs. $290.4B)

What is Enterprise Value and how’s it different to Market Value you may ask? Finance people love to confuse lay people to make themselves look smarter, so let’s peel away the jargon.

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I love this essay from Paul Graham of Y Combinator. It’s chock full of truths, as Paul’s essays typically are, and I encourage you read the whole thing. Here’s one of my favorite passages:

It’s not surprising that after being trained for their whole lives to play such games, young founders’ first impulse on starting a startup is to try to figure out the tricks for winning at this new game. Since fundraising appears to be the measure of success for startups (another classic noob mistake), they always want to know what the tricks are for convincing investors. We tell them the best way to convince investors is to make a startup that’s actually doing well, meaning growing fast, and then simply tell investors so. Then they want to know what the tricks are for growing fast. And we have to tell them the best way to do that is simply to make something people want.

So many of the conversations YC partners have with young founders begin with the founder asking “How do we…” and the partner replying “Just…”

Why do the founders always make things so complicated? The reason, I realized, is that they’re looking for the trick.

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I was reading on Mashable how most are happy with their iPhone 6 Plus, a few are undecided, and a few returned it for the 6 — usually after only a day of use. That’s interesting because many who are happy with the 6 Plus needed a week or two to get used to it. Once they did, they loved it. That too was my experience with the OnePlus One.

The biggest reason for not liking the 6 Plus is that it wasn’t ideal for one handed use. Which I find fascinating, because the reason for that is not hardware — i.e. size per se — but software.

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The conventional wisdom is not to invest in videogames because of its hit-driven nature. Only a handful make money and it’s difficult to predict which will. A company that produced a successful game may never produce another. Like a music band that’s a one hit wonder.

Videogame companies typically make a bad investment, because you want to invest in a repeatable business model. Not luck.

The traditional console games industry has combated that with franchises. Gamers who love a game will remember the brand and are more likely to buy the sequel. Grand Theft Auto, Halo, Madden, etc. are all examples of this.

Unfortunately, this strategy does not appear to work for mobile, casual games. Casual games, by definition, have simple gameplay. Is it possible for a sequel to feel fresh and new, yet still have the same simple gameplay?

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Microsoft is acquiring Minecraft maker Mojang for $2.5 billion. I’ve got mixed feelings about the transaction.

The strategic benefits are questionable and financially, Minecraft is worth maybe $1.8 billion — a valuation which assumes a sequel is as commercially successful as the original, and which assumes the intellectual property rights founder Markus Persson took out of Mojang is part of the transaction.

A $1.8 billion valuation leaves $700 million that new revenue streams like additional merchandising, a successful movie, etc. are unlikely to cover.

The best possible explanation might be that Microsoft is using its foreign cash reserves to pay for the acquisition — money that would be difficult for Microsoft to use domestically for tax reasons.

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Google is a smart company and Sundar Pichai is a smart man.

When Android One was first announced at Google I/O, I didn’t fully understand what the program did. New details have emerged in a BBC article, and I have to say, it’s genius.

I’ve consulted for an Indonesian company before interested in launching its own tablet. It was not an easy process. They had to meet many potential vendors in China, test an endless list of components and spend a lot of time haggling over price. Even then, prototypes were often disappointing from a price-to-performance ratio point of view. It was a huge management challenge, especially for a company whose strength is marketing and distribution.

The Android One program makes all that easy.

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As I researched the Search Filter Host problems plaguing my Surface Pro 3 — which results in hot temperatures and low battery life — I am reminded that functionality isn’t the same thing as usability.

The search index is a good idea. Windows builds an index of your files as unobtrusively it can, so when you search for something, results instantly appear. It’s a wonderful thing when it works. This is an example of high functionality; all modern operating systems should have it.

However, Microsoft’s implementation comes at a sacrifice to usability. While you can specify which locations and file types to include in the index, Windows will try to index everything within those specifications. Good, right? Nope.

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