In this episode of Startups For The Rest Of Us, Rob and Mike make their predictions for 2019. They also look back at their 2018 predictions and rate how they did.
Items mentioned in this episode:
Welcome to Startups For The Rest Of Us, the podcast that helps developers, designers, and entrepreneurs be awesome at building, launching, and growing software products, whether you’ve built your first product or you’re just thinking about it. I’m Mike.
Rob: And I’m Rob.
Mike: And we’re here to share our experiences to help you avoid the same mistakes we’ve made. What’s going on this week, Rob?
Rob: I’m kind of stoked that my first book Start Small, Stay Small is now out live on Audible, only eight short years after I originally recorded it and have been selling the audiobooks. What happened is back when I published the book and I recorded an audio version within a few months of releasing it, Audible wouldn’t let individuals post audiobooks. I couldn’t, there was no user ability, and I emailed then and said, “Hey, I self-published a book, it’s popular, it’s getting traction and such, and I have a podcast. There’s a lot of people who want to hear the audio version but how do I get this in there?” “Yeah, we don’t really offer that. You have to go through a publisher.”
I just never did and I’ve been selling basically the audio version from the website startupbook.net is where kind of Start Small, Stay Small lives but within a few years, I think they did release the ability to do that and then it was just wasn’t a priority when I’m building and growing companies and running conferences. It’s kind of the last thing on the list. I’ve had the last several months off, as you know, and I had the audio files. They had to be re-engineered and remastered. It’s still the same reading but it had to be re-rendered at a certain resolution or whatever and luckily, I still had the original source files from 2010 because the MP3s I had been selling are not at the bitrate that they need for Audible these days.
I literally pulled them off of DVD-ROMs from our old editor for whoever is editing this in 2010. I pulled WAV files or something off of DVDs and put then in Dropbox, which is just amazing, because back then it would have been on DVDs because there was nowhere else to store them. That was my long-term storage for these things. Our editor, Josh, for this podcast, he did a nice edit job on them and it’s now live.
We’ll link it up in the show notes. It’s for posterity. I just actually just purchased it and I’m downloading it because I haven’t listened to the audio book in forever because it’s not easily accessible. When it’s not in my Audible app, I just don’t really listen to audiobooks. Do you? If someone sent you an audio book of 12 MP3 files, you can’t to exit, it’s not easy to open it in an app. It’s a little bit clunky.
Mike: Yeah I probably would not. I think I used to throw things like that in iTunes and I’d be able to listen there but unless it was quick to grab, probably not. I actually didn’t think about taking my book and put it out on Audible. It’s one of those things that’s been such a low priority for me to even look at. Now that you mentioned the bit rate, I went back and I’ve looked and I was like, “Yeah, I’m pretty sure that what I’ve got is not enough.”
Rob: Yeah, The nice part is we do have Josh as a resource. As long as you have the pre-MP3 or whatever, if it’s M4As or I guess it’s AIFFs or the lossless and WAVs, then you could send those to him and he can re-render them in a way that Audible will accept.
Mike: Yeah, I’m not sure if I do.
Rob: But it’s still a project. It’s still a project and you have to get cover art. It wasn’t 20 minutes of my time. It was a few hours of my time and at that point, is it worth doing is a question that should probably be on your mind.
Mike: Yeah and that’s part of why I haven’t done it is because just hasn’t been worth my time to do that.
Rob: That makes sense and one of the things I’m thinking about, if you go to startupbook.net, I sell bundles and I sell an EPUB version plus a paperback version plus an audio version and you can buy in different combos. In 2010 that made a lot of sense and it’s literally fulfillment through PayPal, I built the fulfillment thing because there was no Gumroad. It was barely Kindle Books at that point. I built a bunch of stuff myself and as I’m looking at it, I still get sales of this book.
I’m thinking to myself, I don’t even know that I want that anymore. I kind of just want to link out. If you want the audio, go to Audible. If you want the electronic or the paperback, go to Amazon and everything is handled. Obviously, I make a little bit less money per copy because they take their commission but it just eliminates that thing that I had to maintain.
Mike: Yeah. And that means just simplifying things on your end from just because a process that makes things easier. It becomes the distribution channel for you and then you only have to deal with that versus all the other things that you’ve kind of hacked together over the years. I have the same thing with my book. Everything’s done through Gumroad and I just haven’t changed it because it be a pain-in-the-neck change.
Rob: So, how about you? What’s up with you this week?
Mike: Well, I’ve been planning out some of my Blue Tech marketing efforts that I want to start in January and been looking at things like putting together a set of webinars. I’ve been expanding the number of emails that are into some of my various email campaigns. Just that those are a little bit longer and they lead directly back to Blue Tech a little bit better. Putting in some automations there and just kind of thinking of more about how the different pieces connect to one another and how I can help move people through the sales funnel a little bit better than I have in past.
Rob: That sounds like a good project to be starting after the new year and to be thinking about it and planning it now so you can hit the ground running right after the holidays. I was thinking it is January 5th is the date in my head and that’s probably a Sunday this year. But between January 5th and January 7th is where we would resume big pushes of marketing.
Mike: Yeah. I’m really just planning out what needs to get done because nothing is really going to happen between now and the end of the month. There’s stuff that needs to get done and preparation would take longer even if I wanted to try and launch it. Next week just doesn’t matter so I’m planning the things out, going to do the work between now and the end of the year. Once the calendar flips over, release are pushing on some of those things. By that point, I should be ready to go live with them.
Rob: Sounds good. What are we talking about this week?
Mike: Well, we are going to go into our predictions for 2019 this week. But before we do that, we’re going to go back to episode 370, talk about our 2018 predictions, and see how well we did.
Rob: Dive into your first one. We’ll do a 1-5 scale on these.
Mike: Sure. The first one, I had said there was going to be an economic downturn and I said that things looked pretty good last year about that time, that there’s a lot of uncertainty. It felt to me there were some economic problems that were starting to build up and there weren’t any easy solutions. I kind of pointed to the health care. I don’t want to call crisis but health care problems for small businesses in the US are pretty bad. It’s just awful trying to figure out how to deal with that.
Also looking at the idea that there might be a rise in unemployment, I didn’t think that the housing market was going to go down very much but it felt like was going to relatively flat and I also thought that the stock market was going to level off but not go down. Most of those I would say, it’s hard to judge somebody because it’s not like there’s a standard or number that you can point you for most of them with the exception of the stock market.
Rob: I would say unemployment is well. Unemployment has not risen. Unemployment is at historic low. That one, I think that piece I don’t think you’ve got. I think stock market, it’s leveled off and gone down.
Mike: Well, if you look at from January 2nd to today, it is down by 300 points. It’s pretty close. I mean, that’s real close and in terms of unemployment, I think the actual number has gone down but I also think the number of people looking, who are actively looking, or has stopped has gone up. That’s hard to measure.
Rob: Yeah, I know. I agree but the other two I don’t know. Small service businesses will go out of business. I don’t know that that’s really happening yet. You’re kind of talking about a recession at that point and we’re not in a recession. Housing market won’t go down very much. It will relatively flat.
Mike: I think I was wrong on this one. I think it’s gone up a little.
Rob: Yeah, I think so. I would say such. I mean, real estate’s local but there can certainly be national things. What score do you give yourself on this? It’s not a one but it’s not a five, either.
Mike: Yeah. I’d say three on this one because of those four things that I listed, the stock market will level off but not go down. I would say within 500 points either direction is still leveling off because they could swing by 500 points in a day. I would give that a five but in terms of the housing market won’t go down very much, I thought that it was going to go down and it did not. I would say that’s a one.
I think if you would average all these things together and going to the other one like small service business going out of business due to their taxes and healthcare, I don’t think that happened. The unemployment rise, I would say, according to the numbers, that says no as well, but I think if you were to dig deeper, then there’s a lot of people who stopped looking for work. I’d give that maybe a four and the other one a one. Average is probably around three, something like that, maybe a little bit less but pretty close.
Rob: My first prediction for 2018 was that 2018 will be the year of non-institutional startup funding: angels, crowdfunding, and ICOs. If I were to rephrase this, I would not say non-institutional. I would say non-traditional or it will be the year of alternative startup funding. In hindsight now looking back, it’s like I have this inkling of something.
When new ICOs were happening, the opposite cooled off at this point but I do know that they’re still in play. I think crowdfunding has been so-so and I’ve seen a few like Hacker Noon is crowdfunding. But really the Tiny Seed model that I’m thinking about where it’s a way to get money that doesn’t look like traditional institutional venture capital, where it feels more like an angel investment but it is technically institutional money. It’s these alternative funding sources for people who would normally bootstrap frankly. There’s a whole revenue-based debt financing, like Lighter Capital, Bigfoot Capital. There’s a few others in that space and then there’s more than […], the Tiny Seed thing, that area that I see percolating and starting to happen.
Well, obviously Tiny Seed is just getting started now. Really 2018 was the year it announced but it’s not really going to be in full swing until 2019. That’s not completely accurate. I certainly would not give myself a five on this. I will say that I’ll probably give myself a three. It’s either a three or a four and I tend to want to be a harsh critic of my own stuff. I will say that it’s about a three but I actually think this is worth the beginning of a wave above all these non-traditional options.
That is why I am devoting the next several years of my life to basically starting a company and then fund an accelerator in this space because I think it’s going to be big. This prediction is I think it’s correct. I just think it’s perhaps a tiny bit too early.
Mike: I think you cheat on these things sometimes.
Rob: Why? Tell me.
Mike: Look, because you make a prediction and then you’re like, “Oh, if this isn’t going to come true, I’m going to do it and that will make it true.”
Rob: That’s how entrepreneurs cheat, huh? That’s so funny.
Mike: I mean, I surely call you out of that.
Rob: Yeah, Mike, appreciate that. I think if we have the power to do that, then we probably should. If we have the power to change something that we think should exist, that’s funny. I haven’t thought of it that way but it’s a good point.
Mike: Let me know how that works out for you in Vegas this year.
Rob: Yeah, totally. How about you? What’s your second prediction.
Mike: My second one was that we would not see a US-based legislation around in-app purchases and classification of loot crates as gambling. I don’t know that we ever actually saw that.
Rob: I think it died down.
Mike: Yeah. There was a lot of talk about it initially, and then after that, it just kind of went away because the game makers decided, “Oh, we’re going to change how these things are done,” and it just kind of silently died.
Rob: Yup. My second prediction was that artificial intelligence and machine learning would continue to be marketed as the next big thing but would not deliver again in 2018. Specifically, I think I was talking about how every marketing SaaS app says, especially the venture phone that wants, “Oh, we’re going to be AI for email or AI for you landing pages or machine learning for your data sets to do blah-blah-blah.”
Everybody’s marketing and really most people don’t have the data sets that are big enough to actually use machine learning. A lot of the machine learning winds up just saying, “Oh, it’s noise anyway.” It’s really hard to do this right and my prediction was kind of people would continue to over-promise, use it as a buzzword to raise funding and make promises that would kind of come true maybe a little bit but that it was not going to be of this thing of like, “Holy crap. Someone really finally made this happen.”
My personal opinion was this is a five. I definitely continue to see AI and ML in both startup pitches and on marketing websites, and I have yet to see something that has been a ground-breaking shift in specifically a MarTech app or really any kind of SaaS app that I’m looking at.
Mike: My third prediction was that Uber is not going to regain the ground that they’ve lost and that was kind of based on a lot of the scandals that were plaguing the company. I did a little bit of research on this and one article I found pointed to the second quarter of this year where they lost almost $900 million and then there was another article I found where they were just kind of graphing the Uber-versus-Lyft market share. Lyft is continuing to go up and Uber is continuing to go down.
I don’t know how much of that I would attribute to the fact that now there’s a second entrant, but at the same time if Lyft is eating into Uber’s market share, then it’s because they’re growing and they’re growing faster than Uber is. I have a hard time on figuring out whether or not that means that Uber is not regaining the lost ground.
Rob: I think that you are correct on this. I think this is a five based on market share. That’s what I would’ve thought when you said regain the ground they’ve lost, where losing money is nothing new for them. They’ve lost hundreds of millions, if not a billion dollars every quarter, I think, for years, which is why they had to risk so, so much money.
To the part, I’m not concerned but you wrote this prediction around the time where there was the big kerfuffle where Travis the CEO got kicked out, and there was the big article written about or several articles written about the toxic culture and the bro culture, and then he became kind of the poster child of “what’s wrong with Silicon Valley companies.” It’s not in quotes because its not real but it’s just the thing that happened at the end of 2017 was that a lot of this stuff started coming out.
I have not seen a graph of market share but if you saw a graph where Lyft is going up and they’re going down, I think very much that, that was partially caused by—not entirely caused by—that whole kerfuffle that went down. I always now look for Lyfts first and I used to always look looked for Ubers first. When this all happened, I switched. I know a ton of people who deleted their Uber app altogether. A lot of people don’t want to support a company that acting that way toward its own employees.
Mike: Yeah, definitely. The reason I was a little confused about the graph was just because it’s a trend line that basically shows that and it doesn’t really change. Uber’s market shares continue to go down and Lyft’s is continuing to go up, but it’s showing that back as early as 2016. Is that directly caused by that? I don’t think that it is. I think that it’s just that Lyft is doing better in general than Uber is and it’s kind of eating them alive at this point.
I do think of those other things that we’ve just talked about kind of play into that. I don’t think that I see them recovering from this anytime in the near future and I don’t think that it’s just because of the PR things or the things are going on internally. I think that it’s just they don’t have a good sense of how to basically break ground against Lyft.
Rob: Right. You’re saying it’s like Lyft kind of is doing a better job of executing or whenever. I don’t disagree with that, that it’s just a competition that Lyft has hit their stride and that Uber had enough stumbles that they’re getting ground made up on them. I still think Uber is an amazingly wildly successful company, it’s still worth a ton of money, and I do think they’ll be fine.
Both of them have filed for IPOs. Both Uber and Lyft should have an IPO in the next, I don’t even know, two, three, found months. There’s going to be massive liquidity and there’s going to be deck of millionaires and millionaires coming out of both of those. It’s interesting to think long term. Will there be a two of them? Will they ever consolidate? I don’t know. I mean, they’re both still pretty healthy. Even as hard as Uber got hit, it’s still, I think, quite a successful company. Obviously it’s losing money and there’s this argument to be made. Could it withstand a recession or whatever? But I just think they just pulled back growth. They are actually making profit.
My next prediction for 2018 was that there will be an enormous crash in Bitcoin’s valuation but the long-term I’m still bullish. What do you think? You think I called this one right?
Mike: I think you hacked somebody’s servers and made this crash happen, because you’re an entrepreneur, right dude? You make things happen.
Rob: I did not do that and I give myself a six on this one. It was just an inclination, just the volatility of this whole space. Sometimes I say these things because yes, I own many different cryptocurrencies. I was saying this to my head of there going to be a crash so that I’m prepared for when it happens. It’s kind of the worst case scenario but I definitely thought that there would be some volatility. Got lucky on this one.
Mike: Yeah, especially when you saw that coming and in the middle of that run up, too, like you have to be very aware of the fact that it is run up and how much longer is this going to last before it pulls back and how hard is it going to pull back. Yeah, you were definitely right on this. I give you a six on it, too.
Rob: Yeah, I mean Bitcoin went from $1200 to $18,000 in 18 months or something? Maybe is it even 12 months? It’s insane. Yes, at the time there was irrational exuberance of people where like, “It’s going to $100,000. It’s going to $200,000,” and I was just kind of like, “I don’t think this has the staying power in the short term,” but again, I set out long term. I’m still bullish and I have another prediction this year about it.
My fourth prediction for 2018 was that cryptocurrencies will be regulated by several large governments and this has happened. I think it’s been quite a bit of a regulation in different countries around the world and I think what’s interesting is the longer cryptocurrencies are around, there’s less of a question of, “Oh, it’s this new thing. Is it going to stick around?” It’s more like, “Yes, it’s going to stick around. How do we classify it? How do we regulate it? How do we measure it? How do we tax it?”
Maybe the crash helped it. It’s like become this thing that’s just there that’s just hanging around. I think it’s going to become more and more of a ubiquitous part of kind of what we’re doing to it today.
Mike: You want to kick us off for 2019? What’s your first 2019 prediction? You said you’ve got something for this year.
Rob: Indeed. My first 2019 is a crypto prediction. I think there will continue to be ups and downs in 2019, just continued volatility across all the cryptocurrencies but there will be no major boom in 2019. There will not be a run up like we saw last year. But I am still bullish long-term, I want to be clear. I still own cryptocurrencies but I don’t think we’re going to get the 200%, 300%, 500% bump up that we saw on 2018. I think it will either be just a gradual thing over the course of the year or it will just bump along up and down and I thinking in the future year, we’ll once again see a run-up like we saw.
Mike: Do you think it’s kind of done being highly volatile because even just in the past several weeks, it’s lost half its value. That’s a lot or at least the reports specifically talking about Bitcoin because obviously each cryptocurrency is different but most of them tend to track on Bitcoin’s progress.
Rob: I think it will continue to be volatile and it’s just the nature of it for now while it’s this unknown entity. This is asset class that people aren’t exactly sure what to do with it. I think there’s still going to be people manipulating it, which causes some of the volatility. I think there’s still going to be people speculating it, which causes volatility. That’s my gut feeling.
Mike: Yeah. I look at Bitcoin and the cryptocurrencies. They are one of those things where I wish there was more regulation around it but I also understand why there’s not going to be any time in the very near future. Obviously, governments are making an effort to do that kind of stuff but until there’s federal backing and an insurance on it, there’s going to be a lot of stuff that happens. The exchange gets cracked open and they’d lose all the Bitcoins, everything. That stuff’s going to happen. There’s not much you can do to prevent it. That’s going to help cause that volatility.
Rob: How about you? What’s your first prediction for the year?
Mike: This was a little bit of a tag on the last year and I think that there’s going to start to emerge a global downturn that’s going to be in full swing and it’s going to be obvious. I think before, we were seeing signs of it. I’d say last year’s prediction was probably half-right-half-wrong and I think that’s going to continue, not me being half-right-half-wrong but the downturn, so to speak.
I think we’re going to start seeing more signs of it. I’m hoping I’m wrong but I see these little things happening here and there and it just makes me wonder because it kind of goes back to 10 years ago or so. I don’t think we’re going to hit a global economic recession that causes some massive crisis like we did last time back in 2008 but I do think that it’s going to be noticeable.
Rob: I think either you or I make that prediction every year and has for three or four years. I hope you’re wrong but I’m thinking that you’re probably going to be accurate on that one.
Mike: Is that like predicting it’s going to rain eventually—
Rob: Eventually. It’s kind of. I think that’s kind of what we’re doing here.
Rob: My second prediction is, in 2019—this is a bold one—will be the year of augmented reality. Really deep down, I question if it will but I wanted to make one at least one prediction that I was super unsure about. It’s kind of a big proclamation. I kind of want AR or VR to catch on. I want it to be cool and accessible and I want to do stuff with it, but every time I tried VR, it’s like, “Meh. It’s not there yet.”
I think that AR is probably a more viable thing because you’re not sitting there with a big old mask on your face, you can’t see anything else in the room, whereas AR, there just so many real applications of it that I think can take hold. Whether 2019 will actually be the year of it or whether it will take longer is another thing but my prediction is it going to be this year, Mike, in the next 13 months.
Mike: Now, when you say there’s a whole mess of applications that it could be used for, are you thinking more consumer or you thinking more like industrial- and factory-type things? It seems to me like that would be the place where I would start and then eventually would move over into mainstream consumer because I don’t see anything out there where augmented reality is really something that people would buy into just yet. I definitely see the industrial applications of it but not like practical things that people would use on a regular basis.
Rob: Yeah. I like the way you’re thinking. I mean, that’s what I’m thinking about as well. When I say practical applications, I do mean kind of B2B stuff which means people will pay money for it. If you’re on a factory floor, you can you look over and whatever, see the instructions, how to do things, or you can see the inventory levels. If you’re surgeon, when you look down at a patient and there’s an overlay of what should be there and where you should cut or whatever. It’s incredible for pilots, for all kinds of applications where this could work.
Now I also think that even on our phones, you can imagine having Yelp augment reality around. You hold your phone up, kind of like have you ever done the ones where the apps where you can look at the stars?
Mike: Yeah. I’ve seen—
Rob: You hold them up and that’s essentially augmented reality. Those are cool and those are fun but what are the consumer applications of this? Could you hold your phone up as cars are coming through? You hold your Uber app or your Lyft app up and it will just have a big sign over your Uber? Especially when you’re at a crowded airport, it’s often hard to find things out. They’re trying to do it right now with these lights that sit on the dashboard but what if you’re able to hold that up and just see? That’s maybe a clunky example of it.
I think once we get some contact lenses or some better version of like a Google Glass type thing, that would be even better because then you don’t have to hold your phone up and it’s just kind of projected into your eyes so that you can see things that are augmented, which is not going to happen in 2019. But those are the kinds of, I think, consumer applications that could do it but I think you’re probably right. I think B2B may be the place that makes it work and makes it more affordable.
Mike: You answer my question throughout even though I didn’t directly ask it because what I was really interested in was how do you see it working and what it sounded me like you’re saying is it’s not wearable but it’s kind of on all time. You’re carrying your device around and then you can use it in certain situations when you recommend a situation to augment the data that you receive and it would show you, “Hey, this is what you should be exactly looking at.” It’s a difference between something like Google Glass that you wear all the time versus you pull out your phone and then see the additional stuff.
Rob: Right. That would be the idea. I don’t think that you’re going to wear this stuff all the time. Most people aren’t going to do that unless you’re on factory floor and you might need to, then you do put on safety goggles and maybe it projects under your eye. If you’re surgeon or dentist, they often wear the glasses anyway that have a magnifying something or other, have augmentation there. It just makes a lot of sense and they don’t wear those all the time but they wear when they’re doing surgery o when they’re doing a procedure. Same thing perhaps for pilots. I don’t know if it would be and they already have heads up displays in certain aircrafts but that’s where it just makes more sense and you don’t have to do extreme behavior changes for people to do start adopting this.
Mike: Yeah and you don’t have to worry about the social context or social problems that are associated with that stuff. When I think about some of this stuff, it kind of reminds me of a project that I worked on at Wegmans back in I think it’s 2000-2001 where they had this voice recognition unit and I had to program things to integrate into the wireless system for the warehouse.
I got to a spot and there’s all these people wandering around the warehouse with these power lift jacks. They had to grab things at a warehouse so they could put on the trucks and they would just talk to this thing and it would tell them what it is that they needed. Fast forward 15 years and now tablets exist and you can do that kind of stuff now in a visual format that whereas before it was just text only, speech-to-text recognition.
My second prediction for 2019 is that esports leagues will get a dedicated TV channel and having done the research on this after the fact, I realize now that there is already one in existence.
Rob: I was going to say I think this exists that’s not Twitch.
Mike: Yeah, I didn’t realize it. That’s the thing is that it was not going to be Twitch. Obviously, there’s streaming systems out there, obviously. People stream out on YouTube. My kids watch that stuff constantly. Whenever they get a chance, they want to watch other people playing video games. I had this discussion with my half brother. His comments on it was, “You will watch a football game or a baseball game. How is watching somebody play video games any different than that? You’re not involved, you’re not directly playing, you’re just being entertained by the fact that somebody else is playing.”
It’s a good point to make and I think that it especially applies to people who grow up around this technology and are able to watch other people play those types of things versus back when I was a kid, you either went to a ball game some place or you watch it on TV. Now, there’s other things that people are finding interesting like esports leagues and video games. They want to watch that stuff as well and they have their own personal heroes and people that they follow.
Rob: Right and I feel the same way as you do about it. It makes no sense to me which truly proves that we are old and that people should get off our lawn but my kids, at least my oldest is really likes it. Something that I realized is it’s not just that he is watching someone else play video games. It’s that this someone else is way better than most people, who’s way better than him at it, and has witty banter, is saying funny things so they’re entertained along the way.
It’s not just like when we used to go to an arcade and when your buddy was playing Donkey Kong, you are bored because (a) your buddy wasn’t saying witty things and (b) your buddy wasn’t that good at it. He wasn’t any better than you are at it but if you put those two things, if you would sat and watch someone live on a stand-up arcade machine who is making these hilarious quips, doing well on level 50 when you can only make it to level 5, that actually is intriguing when I started thinking about what’s actually going on there.
I’m personally not a fan of esports in terms of I don’t watch any of them but I think I’ve seen the appeal and how it could appeal to folks who are into it.
Mike: Yup. I’m going to cross this one off just because it’s not applicable but I came up with that and I was just like, “Oh, I think that this could be a thing.” Oh well.
Rob: Yeah. That makes sense. Cool. My third prediction is that Facebook will face antitrust issues and due to that, whether it’s negative press, they are not having a great couple months right now. I think it’s going to get worse for them and I think that it’s going to open up a possibility of there being a new social network that comes about in 2019. I don’t mean the next Facebook but much you would say Instagram is a social network or you’d say these messenger apps like WhatsApp and Snapchat that are called social network.
These aren’t things that just replicate or replace Facebook, but they are new forms of it and a new takes on social networking and I think that door will open even wider based on perhaps, I don’t know if I’m going so far as to say that the declining used to Facebook, but that at least I’m imagining growth is going to slow down pretty precipitously for them.
Mike: Wouldn’t the growth slow down just do a market saturation as well?
Rob: I’m going to get a five on this, Mike, just because. You just gave away my secret. No. It might. I haven’t honestly look at that. I mean, to be honest the prediction is not that growth is going to slow down. My prediction is that Facebook’s going to continue to face antitrust issues or start facing antitrust issues if they’re not already and that, that will make way for the rise of another social network to come. Frankly, maybe Facebook buys them, too. It’s not I have a question. They bought Instagram and it was a good call for them to do that. I think there’s a two-part prediction basically.
Mike: Got it. I just wanted to clarify that last piece. I’ll call this my second prediction here. I think that there’s going to be something “bad” that happens involving Tesla, SpaceX, or Elon Musk, possibly at least two out of the three. Looking at it, I don’t know how to define something bad. I don’t think anything is going to specifically happened to Elon Musk like he gets in a car crash and dies—but that’s certainly obviously a possibility—but I think it’s going to be more likely that he starts making some bad decisions.
I mean he’s already had to step down from his CEO position at Tesla because of some of things that he said on Twitter that influenced the stock price. The SEC came after him and basically he had to pay these massive fines, step down for three years, and I feel something along those lines is going to progress and maybe he has to step away, maybe they push him away from Tesla because maybe he can’t keep his mouth shut or something along those lines. I don’t know what but I just kind of have a feeling about that based on what I’ve seen in his behavior. Seems very erratic.
Rob: Is this a prediction or it kind of a continuation of what’s already going on? Like you said, something bad has already happened. He’s been, basically, asked by the SEC to leave. He had to settle with them because they were going to sue him—I don’t know if that’s the right word—they were going to do really bad things.
Mike: They fined him, I think it was $20 million and they made him step down as CEO for a period of three years.
Rob: Yeah, for three years. That’s something bad has already happened to him. You’re just saying something else bad—
Mike: I’m saying something else, which is going to be in addition to the stuff that has already happened. Maybe he does something else and the board says, “Look, you’re out,” or SpaceX gets some contract and instead of putting something into space, that thing blows up on the way up or it’s trying to land it and the thing just gets destroyed. It’s not going to be one of their tests. It’s going to be something actually important. I think something like that is just going to bite them. I don’t know what.
Rob: Oh, Mike, this is such a morose prediction, man. Geeze. I hope—
Mike: I don’t want it to happen.
Rob: You’re like the shorts, the people who bet against the stock market. They’re right sometimes but nobody likes the shorts because they’re negative. They’re basically against the marks. You’re kind of betting against these companies. I’m not saying that no one should like you. I was just pointing out that there is a similarity. That was a weird thing to go down.
One of the predictions I’m most proud of actually, Mike, one that I remember is, I don’t remember if it was 2017 or 2016 but I predicted that, I was contemplating that Twitter would have major issues, that they would see their growth decline because they were growing super fast and they were just one of the many social networks.
Obviously, Twitter has continued to have a slide. I’m actually proud of that one. I picked the year, stumbled upon the right year that they did start to decline. My prediction for this year 2019 is that Twitter gets acquired by someone. I don’t even have a guess as to who. There are public companies. They have to be obviously—
Mike: They got acquired by Tiny Seed. I’m calling bull…
Rob: There it is. Nice. Making stuff come true, am I right?
Rob: That’s good.
Mike: Yup. I mean it’s certainly possible. I don’t know. Isn’t Jack Dorsey the founder, right?
Rob: He’s one of the – I mean, Ev Williams was the founder, yeah.
Mike: Yes, one of the co-founders. He’s the CEO right now and he’s also the CEO of Square, isn’t he?
Mike: Got it.
Rob: Which is got to be interesting. It’s got to be a challenge.
Mike: Right. I don’t know. It seems like he’s got, I don’t want to a stranglehold on it but it seems like he’s trying really hard to manage all the problems that are coming up inside of Twitter, with people harassment, and things like. I don’t feel like he’s doing a particularly great job but at the same time not tracking every single thing that they’re doing and how they’re handling stuff. I definitely see situations where it’s just handled really, really poorly and everyone seems to think that except him, but I don’t know. It’s an interesting prediction.
Rob: Yeah. That’s been a criticism of Twitter for the past year or two, is that they’re just not doing enough to send the harassment. They don’t have verified accounts anymore or they have them but you can’t get verified anymore and they say, “Hey, we’re going to come out with a new verified process.” That was ages ago and there’s no new process. What are they doing in there that they can’t get the stuff done has been a criticism.
I don’t care that much in all honesty. I’m not a captain. I’m on Twitter all the time. I’m on now and again but it’s not something that’s part of my daily or even weekly regiment but I think that they are going to be ripe for an acquisition. I don’t know if their acquire will be able to turn this stuff around or not but that’s probably what the intent will be.
Mike: Yeah. I’m trying to think of who would even acquire them and I don’t know who that would be.
Rob: Facebook, Microsoft. No, I don’t know. I’m just kidding.
Mike: My last prediction is that Amazon is going to overtake Apple in terms of net worth.
Rob: Market cap?
Mike: Market cap, yes. I know it’s sort of close but I think that they are going to not only overtake them but in a solid and definitive way. I think they’re both somewhere in the $800 million range or something like that and I think Amazon is going to surpass them. They may even be the first to hit $1 trillion or did Apple hit that at one point then drop?
Rob: Apple hit it. Yup, they already hit it.
Mike: But anyway, I think Amazon is going to be solidly in front of Apple and the only way I see that not happening is it if they take AWS and spin it out as its own subcompany and it’s independently operated, which is also a possibility, I think.
Rob: Yeah, I do, too. I think that’s an interesting prediction especially given you’re talking about this global downturn, which would imply that stocks will continue to slide and they’re both, in theory, going to go down. You’re predicting that Apple is going to go down more than Amazon, if you tie those two predictions together.
Mike: Yeah, I guess so. I don’t know. It’s hard to say whether or not both of those would actually go down. I do think that Apple is probably headed for a downturn. I think that they’ve saturated the market so much at this point with their phones and that recently they started increasing the prices and they said that they’re not going to continue releasing sales numbers for units. I think that’s what it was.
Essentially, what they’re doing is they’re kind of hiding what their actual sales are in terms of what the revenue. They’re going to provide revenue but they won’t provide actual unit sales. You won’t be able to tell independently whether or not they sold more or less based on those numbers long because everything’s kind of aggregated. They just make it harder to tell whether they sold more from one year to the next.
Rob: Yeah, and who knows? I mean, Amazon has done that with their Kindle and Apple’s doen that with different device categories that they just keep in in other devices like Apple TV. That’s one point they were not releasing any numbers for that. I think when something gets successful, they break it out. Not uncommon for them to do that but it definitely is interesting.
I feel this is a good prediction, actually. I just think unless Apple comes out with a breakthrough something in the next year or two, they are just incremental improvements on good technology—I like their hardware—but there’s been nothing groundbreaking that’s really capture the market, whereas Amazon continues to innovate and continues to just kind of have cool stuff.
I mean, you think about AWS, multi-billion dollar business, Amazon Alexa they’re way ahead of everyone else in terms of the smart home stuff. They’re just pushing things forward and I have become a fan of Amazon’s products. Even that Kindle Paperwhite, first one was super clunky and then they just get better and better. Amazon is certaining doing a good job executing. I think you’re going to be right on this one I guess is what I’m saying.
Mike: Yeah. Well you’re point on Apple just making incremental improvements, I still have an iPhone 6s+ I think—I see there 6+ or 6s+ I forget which—it’s several years old and I have no compelling reason to upgrade, like none whatsoever. My wife got one just because her old one was an iPhone 5. There were certain things that just would not run. She kind of needed to upgrade.
It kind of made sense, but I don’t see Apple coming out with anything. The watch was nice but it’s not a game changer for them in terms of revenue and with AWS, that’s the biggest cloud platform on the planet and only Microsoft is behind them with Azure. But that’s still a $40-$50 billion a year industry for them.
Rob: Yup, and there’s Google app engine as well. That would be the other one.
Mike: Yup, that’s number three. I’ve looked at an article here that says Amazon’s revenue, it says $44 billion for AWS, $19 billion for Azure and then $17 billion for Google. Yup. Crazy, crazy numbers.
Rob: Crazy. Well, sir, we should probably wrap this up.
Mike: Sounds good.
Rob: We will see how we do about 12 months from now. If you have a question for us, call our voicemail number at 888-801-9690 or email us at email@example.com. Our theme music is an excerpt from We’re Outta Control by MoOt. It’s used under creative commons. Subscribe to us on iTunes by searching for startups and visit startupsfortherestofus.com for a full transcript of each episode. Thanks for listening, we’ll see you next time.