Aside from Coronavirus/ COVID-19 effecting the largest drop in the Dow Jones since 2008, my post here has little to do with Tech and/or Finance….

It is great when Life imitates Art. This Guardian article shows the renewed interest in the 2011 Soderbergh film Contagion, starring Gwyneth Paltrow as Patient Zero of a global pandemic.  Given the public’s heightened anxiety which has been amplified by the mainstream media, people are looking to this film as an illustrative “How to Get Prepared” guide.   In real life and on a recent trip to France, Gwyneth goes Full-On facemask channeling her Contagion film experience.  Awesome.

My wife just returned from Germany and she was asked by her co-workers to self-quarantine (what about the Family??!!).

We are all subject to the same anxieties.  I did not google whether netflix has contagion (below) prior to searching netflix (it does not).  Happily it is on AMZN Prime Video!

Startup hits are always viewed as phenomenons but what factors are the ACTUALLY the most important to success? There was a study attempted a few years ago to list [6] key factors below , across a broad longitudinal study of X companies, and to rank them in terms of predictive success:

• Founding team quality
• Novelty/ ingenuity of idea
• Market Opportunity
• Market timing
• Capital Raised
• C-level Management effectiveness

What do you think the results showed?

It turns out that Market Timing is #1 as most important.  There were 16 businesses with AirBnB’s business model before it came along.  However 2 years post-financial crisis, many Americans were looking for ways to generate income and that facilitated the rapid growth of the Homesharing marketplace (and sharing economy).  Founding team quality was #2 and the others were a wash.  The market timing allowed AirBnB to generate outsize returns on their good execution.

Whether is be Technology or Life, it helps to know the Game that one intends to play.

Jet.com created massive value through the idea that a successful serial E-commerce entrepreneur could build an online wholesale club.  Using ample cheap capital in the private markets, the Marketing was broad and ambitious including a ‘ridiculous’ marketing video of a massive warehouse being built from the ground-up in NJ.  Using credit cards on the back-end to order from other competitors and cobbling together fulfillment, it didnt seem to matter if the business model and execution were ideal.  They created enough marketing and brand awareness (NY Subway ads and TV spend notwithstanding) to effect an acquisition by Wal-Mart and become their E-commerce presence for a massive $3.3B 18-months into their business.  Timing certainly helped but their plan was marketing all along for an acquisition.  Bravo.

The SoftBank Vision Fund has invested in PortCos similarly leveraged large war chests for a land-grab to grow as quickly as possible and their Valuations were rewarded.  Now that it may be drying up, with some unproven models  – one hopes that they will figure out a Plan B.

“Let’s wait and see.  We need time to evaluate the Tech landscape.  Best of luck on the fundraising and please keep us posted on how else we can be helpful.”

I’m not sure if Yoda has heard this before.  Here are the headwinds that the WSJ article highlights:

1.  Key LPs including Mubadala and PIF are getting cold feed
2. There are key executive departures at the Vision Fund
3. Softbank is ponying up most of the $48B they will likely close Fund II at (less than half of Target) and looking for creative ways to raise cash (leveraging alibaba stock with asset-backed loan against their ARM semis holdings…hmm)

May the Force be with you.