Tidbits in the News: ICO Push Back, Nvidia and Uber, IPO Fever

Last week, and the week prior to that, was rather hectic for me, for one reason or another. Needless to say, the world’s been chugging along since then. While relations between North and South Korea continue to blossom like May flowers, Donald Trump’s personal relations seem to have hit April showers. All the while, the threats of a trade war between the two global economic powerhouses, US and China, is becoming more reality than fiction with each passing day.

And yet, that’s not what I’m focused on here. I’m focused on the things that don’t seem to matter much.

So let’s get back to it.

ICO Push Back

MailChimp is well known in marketing circles as an effective tool for email campaigns. It’s responsible for most of the emails you receive, from newsletters to promotional emails. It offers analytic data pertaining to many aspects of these email campaigns, all in an effort to improve response rates, and success of the enterprise. This is all to say that it’s a very valuable tool for marketers worldwide.

It would be unfortunate, then, if this company were to prevent your business from using its services. Except, that’s exactly what MailChimp has done. Rather, it’s banned an entire industry.

Well, not entirely.

In a recent tweet concerning the matter, MailChimp clarified what their “ban” on ICOs and crypto related content:

Cryptocurrency-related information isn’t necessarily prohibited. It can be sent as long as the sender isn’t involved in the production, sale, exchange, storage, or marketing of cryptocurrencies.

So, if you’re an individual who’s interested in crypto, who has no vested, conflicting interest pertaining to crypto, and are only interested in sending out the info for information’s sake, then you’re more than welcome, according to the tweet. If any of the descriptors are applicable to you, then, tough luck, I’m afraid.

This is just the latest in a push back against crypto, especially since the SEC is actively seeking to rein in the previously unregulated industry. Companies like MailChimp, which are more messengers than culprits, are looking to distance themselves from crypto until things become more stable, at least, in a regulatory sense.

There’s hope that increased regulatory oversight in the industry will help weed out scam artists and weak, unstable crypto projects. There’s hope, especially from entrepreneurs in the field, that it will help clear the field so that projects that are promising and on solid foundations can get the spotlight they deserve. Whether the spotlight will come to those same entrepreneurs remains to be seen, especially since every entrepreneur drinks their own Kool-Aid, but they do have a point.

The current state of crypto leaves a lot to be desired. There’s little going for them, especially in driving interest for the asset, and the underlying blockchain technology. The marketing behind them have been, largely, superficial, especially if the concept behind the application was on weak footing. The sightings of crypto ads featuring bikini girls aren’t superlatives — they’re the norm in the current status quo.

For companies like MailChimp, this is a problem. Not only is the messaging (using sex to sell something no one quite understands) problematic for these companies, if the project goes under, and people actually incur losses, the harm to their brands may be irreparable. This is the travesty MailChimp, along with Facebook and Twitter, are looking to avoid. They don’t want to have an image problem on their hands.

It’ll be interesting to see how marketing platforms react to strengthening regulation on crypto. I, personally, see this whole fiasco as a temporary measure to prevent calamitous brand damage from scams and financially disastrous projects. Once regulations pick up, the rules may become lax, yet again. It’ll be difficult for the platform to keep a hard line stance on crypto, especially once it becomes legitimized in the eyes of the public, with the help of the SEC.

Nvidia and Uber

The latest Uber incident seemingly changed the game overnight when it comes to autonomous vehicles. One day, we were all talking about the onslaught that would be in a few years, and the next day, we’re all talking about just how dangerous these vehicles are to pedestrian safety.

And Nvidia is having none of it.

Nvidia CEO Jensen Huang stated in a Q&A session during Nvidia’s GPU Tech Conference in San Jose that “Uber does not use Nvidia’s Drive technology.” He went on to emphasize this point by reiterating that “Uber develops their own sensing and drive technology.” This comes after a member of the press pointed out that Uber uses Nvidia GPUs to process data in their self driving cars.

I cannot understate the importance of this single line from Jensen. Not even a bit. Nvidia is trying to distance itself from both Uber, as a company, and this incident, as a technologies provider. Let me explain.

First, why would Nvidia look to distance itself from Uber as a company? Well, there’s the whole Kalanick fiasco, not to mention the sexual harassment scandal, along with the growing public sentiment against the company as a result. Anyone can see that Uber is not a great brand to associate with presently. That’s not to say the company is worthless now. Quite the contrary. The company brand is still, very much, the de facto term for ride sharing service in the US and Canada, with its closest competitor, Lyft, in a rather distant second place. But, that’s not to say there doesn’t exist anti-Uber sentiment. What’s more, members of the anti-Uber movement are more vocal, more organized than any member of a pro-Uber movement. To Nvidia, siding with Uber would not be a good bet to make, especially since they have a consumer facing brand themselves.

So why would Jensen make these comments now? There’s two aspects to this I see. First, the incident highlighted the limitations of autonomous driving technology, specifically Uber’s self driving tech. Uber uses Nvidia GPUs, which would naturally pull into question the role of Nvidia’s products in the incident. This was to quash any doubt that Nvidia hardware was at fault. Second, Nvidia may have seen this as an opportune moment to distance themselves from Uber, by pointing out that the relationship between the two companies is merely a client-vendor one, as opposed to a strategic partner as it may have seemed. This is to draw a line to define the boundaries between the two.

It should be interesting to see just how this pans out for Nvidia, especially since Google’s looking to make a play for AI processing solutions with its Tensor processing units, and Intel looking to do the same. Distancing themselves from Uber is a good defensive move, but it does nothing, ultimately, to go on the offensive against the new threats from Google and Intel.

IPO Fever

IPOs in the US are in vogue, right now. The best quarter in 3 years, in fact. But that’s in terms of volume. In terms of the cash, the devil’s in the details. The long version is that companies that have gone public are seeing their stock prices fall below their IPO, with few exceptions. This can mean a variety of things, but, the simplest explanation is that investors aren’t interested in the companies that are offering themselves up on the public markets. Whether it be profitability issues, or control issues, these companies aren’t seeing their stock prices go up. The short version: companies are under performing post-IPO.

This is a problem that I’ve seen in many other companies, like Blue Apron, but I’m not here to evaluate the causes of dwindling stock prices for those companies. I’m not claiming that the startups going public are not ready for public scrutiny, nor am I stating that their profitability and business models need more tuning. There are other problems that contribute to a company’s stock price than profitability.

I am pointing out, however, that this isn’t limited to tech companies, or non tech companies, or companies from New York, or companies with PE funding. It’s an overarching theme, and it’s rather troubling. What’s more troubling is that despite this, this year is slated to be a hot year for IPOs, with Spotify being next to put itself up for public scrutiny.

My question, then, is, why are companies doing this? Why are they knowingly going public, when they know (with almost 100% certainty) that their price per share will take a hit? Who is this good for?

First, who is this good for? It’s good for founders, early employees, and early investors. It’s great for people who bought in at a valuation well below the IPO price. For them, they have a pretty penny to make. For everyone else, there’s little to gain, and much to lose. For late investors, it means they might not get their money back. For late employees with stock options, it means that their stock options may be worthless. For IPO investors, it may mean buying into a company that’s doomed to fail.

And yet, companies continue to IPO, and investors continue to buy IPO shares.

My hunch is that this might be a market bubble in the making. Or, at least, an overheating of the markets. Investors seem to be too confident and comfortable investing in startups, albeit with long histories as private companies before their IPOs. Moreover, based on the publications that I’ve read, I get the general vibe that many companies are looking at this confidence in the markets as a blessing to raise capital. It may be that these companies are in need of large cash injections, and an IPO is the most efficient way of accomplishing this goal.

Bear in mind that this is just me speculating, for the most part. The data only gave me a picture — I did the interpretation. But I still do feel that this isn’t a normal business cycle. I do feel this may be the start of something bigger. Or maybe I’m just longing for a good thriller story.

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