The Syndicate Blogcast: Startups | Startup Investing | Tech News | Angel Investors | VC | Venture Capital | Private Equity | Crowdfunding | Fundraising

Apple and Google are two of the strongest, most profitable tech giants today. But both are in for a kick in the ass, here is why. Disruption is the name of the game. Great businesses die from one of two main reasons: failure to innovate or a powerful disruption. From my vantage point, both Apple and Google are firmly in those categories. An Apple a day and amazing profits. Steve Jobs must be rolling over in his grave. From one of the great innovators of all time to one of business’s most logistically efficient conmen, Tim Cook is driving Apple into the ground and grabbing dollars by the fistful. Everyone understands the pros and cons of short vs long term thinking/gratification. And Apple for one is focused on the short term. Cook’s greatest innovations have been dongles and adapters and connectors and crap designed to milk fanboys for all they are worth. Apple isn’t focused on usability or innovation anymore, they are focused on annoying, high margin accessories that have driven profits and market caps through the roof in recent years. Removing ports, removing headphone jacks, removing all simple functionality to force an additional purchase, all in the name of profit and aesthetics is downright troublesome. And Apple’s flops on new product lines and innovation are awfully embarrassing — the Macbook Pro slider, the Watch, the car, the marginally better iPhone at ever increasing prices… Apple is building fluff features for the sake of showmanship and sales… that is usually a formula for disaster. The question is how long will Apple fans feel okay being dragged through the dirt and robbed blind by Apple. It isn’t what have you done for me, it is what have you done for me lately… is Apple’s brand of old enough to carry to quick buck appearance of greatness and brand? Rome falls at the pinnacle of it’s opulence and Apple’s $5B spaceship headquarters is arguably the best product since the iPhone. Mhm. Bold prediction: Apple has peaked and short term greed has offset long term growth mindset. This is a company that HAS to buy someone to save their own ass and remain relevant. Logical Acquisitions: Netflix, Spotify, AR acqui-hire (and definitely not Tesla) Logical Expansions: Focus on podcasts and advertising to unseat radio and drive ad dollars through iTunes. Podcasting and curated streaming content creates obvious synergies with iPhone and value-add upsells to existing customer base. Hailmary Shot: Augmented reality could save Apple, if they are smart enough to execute well. Apple is a hardware/software company with raving fans and design aesthetic. If Apple can outperform competitors and create a new category defining product, AR is almost certainly it. Augmented reality will disrupt touch and screen based interfaces. Apple needs to lead from the front, rather than following to keep up and keep the brand relevant. “Ok Google, I don’t want to hear another ad” Voice is a paradigm shift, especially for Google. And it is ironic. Google is the leader in voice and NLP, clearly outperforming competitors like Alexa, Cortana and Siri (a joke) in the fields of voice. But that begs a bigger question: what happens to search results and paid ads without the screen interface? Will Google just read ads all day like Billy Mays?

Jeff Bezos is the Terminator… and he is killing competition and ecommerce faster than Arnold can say “I’ll be back” Hope you are hooked. Let’s go for a ride. My background is ecommerce. Before starting The Syndicate and investing in early stage disruptors, I cut my teeth in ecommerce, specifically Amazon. I had learned a fair deal about sales and copywriting and after seeing other successful ecommerce entrepreneurs decided to try it myself – this was at the start of 2015. Fast forward a year, and from an $8k investment I scaled our brand (primarily via Amazon) to a successful 7 figure exit. I’d built a top 3 Amazon podcast and somehow solidified myself as an expert on the subject. And here is what I learned… Amazon are assholes. They do not care about anyone except themselves and customers. And they routinely screw sellers – think million dollar businesses shutdown overnight, for no reason, with no warning. And it gets better. Amazon also rips off their sellers. Between failing to refund fees and directly copying and cutting out successful products and brands, I have seen everything when it comes to Amazon. They are the 800lb gorilla that couldn’t care less. And every day Amazon gets more and more integrated in everyday life. From 2 day shipping to same day delivery, from in home Alexa to acquiring Whole Foods, Amazon is aggressively eating EVERYTHING. It will not stop, it will only get worse. Voice is a paradigm shift. Customers don’t want options, they want answers. This disrupts Google and crowns Amazon king. Think about it. “Hey Alexa, I need toilet paper, peanut butter, 2lbs of chicken and a new tablecloth” Do you think for a second Amazon won’t just ship their Amazon Basics products? Marketplaces die when the creator becomes the competitor. As an Amazon seller, I saw firsthand Amazon’s preference for their own products over all else. And they can afford to sell for less. Your margins are their opportunities. Combining this with the one and done nature of voice means commodities and CPG game is over. Brands do not realize it but the writings on the wall. Customers trust and are trained to use Amazon. Once Amazon decides your products for you, competition is dead. This is incredibly dangerous. Have you seen Wall-E? Amazon is that corporation. Amazon owns the world, we just don’t realize it yet. The Whole Foods acquisition amplifies this. Amazon now owns a self-sustaining network of grocery supply and demand (we talk about this in the recent interview with Ben Gilbert of Acquired). There is no longer the problems of overcommitting and products going bad. Amazon’s acquisition gives them hundreds of locations across the US, a raving customer base and the ability to slowly roll out all grocery to Amazon.com customers. They don’t need to worry about spoiled milk – a Whole Foods customer will grab it if an Amazon.com one doesn’t. Networks are almost impossible to setup and even harder to disrupt. Outside of Alibaba in China, Amazon has arguably the strongest consumer network in the world. And every move they make crushes the competition. They acquired Whole Foods and the market caps of the top supermarkets dropped $13B, the full purchase price. Supermarkets in effect financed the acquisition and killed themselves. And it is happening again in pharma. Amazon announces a pharmacy line and all the top retailers get trashed in the markets. Amazon is a monopoly and will soon be the largest and profitable monopoly in history. When one company controls commerce, who controls that company? Just look at the bids for Amazon’s 2nd HQ. Cities will do ANYTHING…

The blockchain build up is eerily reminiscent of the Dotcom era – inexperienced founders with only an idea raising absurd amounts of money to build a product and take it to market. We all remember how that turned out. Things went up, things blew up, and later things went up again. This time is no different. Except that it is… Today ICOs are accelerating at unmaintainable pace, funded by cryptowhales with billions in Bitcoin and nowhere else to diversify. And the pace is accelerating while the stakes get bigger and bigger. Tezos, the largest ICO to date has had their fair share of problems. And the truth is non-profits are not designed to be businesses and the majority of the ICO market is preying on dumb money. That is not to say all founders launching ICOs only want a free lunch, but that is basically what it boils down to. Blockchain is a fundamentally disruptive technology, but not all businesses and use cases make sense to tokenize. Ideas with little to no merit and little more than a white paper and “well thought” plan are raising 10s and sometimes 100s of millions of dollars. This is dangerous. What happens when investors realize there is little to no value in these tokens? You cannot create hundreds of categories of “valuable” assets in such a short span of time without having some intrinsic value and not expect problems. And the conversations I have with founders are almost always “how can our company do an ICO?” rather than, “does our company have inherent, tokenizable value?” Because until further notice, crypto currencies CANNOT legally be equity/securities. Even though they should be and are the likely evolution of the outdated stock, this is not the case today. So what happens when you combine a ton of money, overly ambitious ideas, hasty business plans, generally weak founding teams, gullible investors and the idea of a free market trading said tokens… The fact is, ICOs are the most hyped area of tech today. Inevitably the markets will correct, investors will start to sell and the tokens and companies behind them will crash. Billions of value will be destroyed, feelings will be hurt, securities commissions will step in and investors will likely sue founders. But none of that matters. What matters is what happens next. That is the ultimate question. That is the reason our syndicate won’t look at ICOs. These are the gold miners, these are the guys and gals who die trying to make a quick buck. But if history has taught us anything, disruptive technology ultimately wins and recovers, and those selling the Picks and Shovels profit immensely (hence why I invested Matt Galligan’s company The Picks & Shovels Co., a startup building the tools and software to help investors manage crypto assets). Which brings us to the end of the article, and the question. In the Wild West, who wins? How do you position your startup or your portfolio to survive the boom and inevitable bust of ICO economy? Some startups graduated the Dotcom era to own the internet. Who are the titans of tomorrow and how can planning to pop put them in a position to dominate? Chaos creates opportunities and as this game plays out and matures, we will start to see some true value. Thoughts? And if you liked this, subscribe to The Syndicate blogcast series on iTunes or via Stitcher now. on itunes – for ” on itunes” via stitcher” — Originally posted on Medium The blockchain build up is eerily reminiscent of the Dotcom era ...