EIEIO...Lessons From 1984
EIEIO...Lessons From 1984
Entrepreneurship, Innovation, Education, Impact, and Opportunity
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"It's better to be a pirate than join the Navy." ā Steve Jobs
"A Camel is a horse designed by a committee."Ā - Anonymous
"When we have facts, we will use facts.Ā When we have opinions, we will use mine." āĀ Bill Campbell
Forty years ago, at Super Bowl XVIII, the Washington Redskins got smoked by the Los Angeles Raiders 38-9 in Tampa. Ticket prices at the game were $60 each, which was a $20 increase from the year before.
What turned out to be more notable, however, was a sixty-second ad that announced the introduction of the Macintosh Computer.Ā The "1984" ad was directed by Bladerunner director Sir Ridley Scott and created by the hot advertising boutique Chiat/Day.
1984 paints this very dystopian Orwellian future where Apple wanted the Mac to represent individual empowerment against an authoritarian Big Brother (IBM). The ad ends with a blonde female runner throwing a sledgehammer at a screen with Big Brother on it saying, "We shall prevail" as it shatters. A voiceover follows that says, "On January 24th, Apple Computer will introduce Macintosh.Ā And you will see why 1984 won't be like 1984.ā
Legendary announcer John Madden turned to his colleague Pat Summerall and said "Wow, what was that?!"
So did the rest of America. The ad was an instant sensation and in 1995 Ad Age named Appleās ā1984ā as "the best commercial ever made."
Given the 1984 ad's monstrous success, one could picture Apple's executives dancing on the boardroom table in anticipation of it getting aired to John Q. Public.
The truth is, when Appleās board members first saw the ad, they universally hated it. Director Mark Markkula wanted to fire Chiat/Day on the spot and Apple CEO John Sculley instructed Apple VP Bill Campbell (who became known as the Coach of Silicon Valley) to sell the three ad spots they had bought for the Super Bowl.Ā Ā Ā
Bill wasn't happy, nor was Steve Jobs who thought the ads were amazing, but neither had the authority to disobey clear instructions from the board to dump the ads. By the Friday before the Super Bowl, Bill had been able to sell off two of the spots but still hadn't gotten rid of the third, so Bill and his boss (SVP of Sales and Marketing Floyd Kvamme) thought the ad might run anyway.
Friday afternoon, Bill and Floyd got the call from the woman they were using to sell the spots and she excitedly told them that she had found a buyer. Bill turned to Floyd and said, "I didnāt hear thatā¦did you?"
At which point he hung up the phone and said, "F@#$ it, let's run it!"
If 1984 hadnāt been such an out-of-the-park home run, Bill would probably have had to go back to coaching football, but moments like that define leadership and make careers. The easy and safe decision would have been to follow orders but Bill knew that would have been the wrong thing to do.Ā
There's a reason why Trust Departments and Committees typically have mediocre returns. Risk isnāt looked at as true ārisk/rewardā as much as āwill this make me get fired or look foolish.ā
In the Age of AI, success will belong to those who think for themselves, using AI tools for insight while making innovative decisions that go beyond conventional wisdom.
Back to the Super Bowl.
The data analytics available to NFL teams can make a billion-dollar hedge fund look primitive. But in an NFL game, sides have the same quality access to that information.Ā For example, AI would have never had the "guts" to call the "Philly Special" on 4th & Goal in the 2018 Super Bowl, but that decision by Doug Pederson was the difference that won the Eagles the Lombardi Trophy.
Super Bowl LVIII brings back echoes of Super Bowl LIV in February of 2020, where the match-up was also Kansas City versus San Francisco (and Joe Biden was facing Donald Trump in the Presidential Election).Ā But this was before Patrick Mahomes had won his first Super Bowl, before the COVID-19 Pandemic, and before Taylor Swift and Travis Kelce.
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Other interesting Super Bowl LVIII tidbits:
The Super Bowl will be played for the first time in the City of Lost Wages, aka Las Vegas, and will bring over $1 billion of incremental revenue to town.Ā Ā
Taylor Swift's "Eras" Tour brought an incremental $77 for restaurants and $51 for bars, the Super Bowl will boost restaurant sales by an additional $97 per person and bars $79.
The average ticket price is $11K, so with 72,000 in attendance, that's nearly $800 million in ticket revenue.
A 30-second ad sells for $7 million with an estimated 100 ads during the game, that's $700 million.
There will be an estimated $16 billion in bets placed on the game.
Over 100 million people will watch the game in the United States and it will be televised in 130 countries.
During the game, $100 million in chicken wings, $1 billion in soft drinks, and $1.5 billion in beer will be sold.Ā Ā Ā
The point spread is San Francisco -2 and the over/under is 47.5.
Market Performance
Rebounding from a plunge on Fed Day, the Market moved higher again last week.Ā The Dow and S&P both advanced 1.4%, and NASDAQ was up 1.1%.
There were many positive signs to give investors encouragement including a huge employment report with 353K new jobs created in January, with unemployment at 3.7%. The University of Michigan Consumer Sentiment Index reached 79 which is a 2.5-year high. Global growth was also projected to be 3.1% for 2024, which is a slight uptick from what was forecast last Fall.
All of this good news, meant the Fed could keep its position of leaving rates where they are for the near term. The priority is to see inflation at 2% with the current reading of 2.9%.
Mark Zuckerberg's midweek was rough as he testified to Congress about Child Safety online along with the CEOs of TikTok, SNAP and Discord. In an example of offline bullying, Zuck reluctantly apologized to the victimsā families.Ā The rest of the week went way better for him as META reported revenue growth of 25%, its first dividend, and Zuck's net worth increasing by $28 billion.
Other Mega tech stocks reported good results including Microsoft which achieved 18% revenue growth and Alphabet which posted 13% revenue growth. For those paying attention, for both it was the fourth quarter in a row of acceleration of sales growth.
Our thesis has been that we would start to see a broadening of participation in Market performance which would also correspond with a wakening up of the IPO Market. Ā Last week, the first large IPO of the year went public with Amer Sports (parent of Wilson tennis and Arc'teryx) raising $1.3 billion...not a strong encouragement for others to follow, shares were priced below the range.Ā Ā Ā
We continue to be positive on the outlook for high-quality, emerging growth companies and believe an opening of the IPO Market will bring some much-needed, fresh oxygen for investors.Ā We remain BULLISH.
Maggie Moeās GSV Weekly Rap
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Need to KnowĀ
READ:Ā Sustainable investing: enduring good | Baillie GiffordĀ
LISTEN: Unlocking Innovation in Pharma | Alex TelfordĀ
WATCH: Biotechnology, Gene Editing, and Longevity | Fireside chat with David Friedberg Ā Ā
READ: The Tremendous Yet Troubled State of Gaming in 2024 | Matthew BallĀ Ā Ā
LISTEN: Assessing the Big Cap Between Large and Small-cap Stocks | Capital Ideas Investing Podcast Ā Ā Ā
GSVās Four Iās of Investor SentimentĀ
GSV tracks four primary indicators of investor sentiment: inflows and outflows of mutual funds and ETFs, IPO activity, interest rates, and inflation. Hereās how these four signals performed last week:
#1: Inflows and Outflows for Mutual Funds & ETFs
Source: X
#2: IPO Market
#3: Interest Rates
Source: Kalshi
#4: Inflation
Source: IMF
Chart of the WeekĀ
Chuckles of the WeekĀ
EIEIOā¦Fast Facts
Entrepreneurship: 47% ā percent of new business owners that were women in 2022, up from 29% in 2019 (CNBC)Ā
Innovation: 350M ā Roblox Monthly Active Users, more than the Nintendo Switch, Xbox, and PlayStation platforms combined (Matthew Ball)
Education: 43% ā percent of DC high school freshmen who have missed at least 21 days of school (John Arnold)
Impact: 86% ā percent of US inventors that believe companies frequently overstate or exaggerateā their ESG progress when disclosing results (Governance Intelligence)
Opportunity: 55% ā percent of Ivy League graduates believe that the U.S. "provides too much individual freedom" compared with just 16% of ordinary U.S. voters (Committee to Unleash Prosperity)
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Connecting the Dots & EIEIOā¦
Old MacDonald had a farm, EIEIO. New MacDonald has a Startupā¦.EIEIO: Entrepreneurship, Innovation, Education, Impact and Opportunity. Accordingly, we focus on these key areas of the future.
One of the core goals of GSV is to connect the dots around EIEIO and provide perspective on where things are going and why. If you like this, please forward to your friends. Onward!
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