That Was The week 2021, #15
Coinbase listed in New York and is now worth over $60 billion. The listing symbolizes the coming of age of Bitcoin and the Blockchain.
Let’s start at the end — Tweet of the Week. Dr. Alex Gouaillard, known to friends and business partners as Dr. Alex, was tragically killed last week due to a motor vehicle accident in Thailand. He had just been visiting the family of his daughter while dropping her at her School. Dr. Alex was the founder of Cosmo Software, the parent company of Millicast. At the Internet Engineering Task Force (IETF) and the World Wide Web Consortium (W3C), he was known as a thought leader in the evolution of WebRTC and, in particular, the ability to stream real-time video free of the latency that the old standards exhibit.
Only today, Google released Chrome 90 with a new video codec — AV1. It contains work done by Dr. Alex’s Cosmo Software colleague Sergio Garcia Murillo.
The team at Cosmo and Millicast is devastated, but at the same time, has a very strong commitment to using their ability to continue the work Dr. Alex led. And due to the company he kept, the team really does have the ability to do so. I wish them all the best and sincere condolences to his family.
This week Coinbase completed its journey to becoming a public company. Using the mechanism much loved by Benchmark Capital’s Bill Gurley, it did a direct listing. That means it did not raise money from the IPO, but it did list its shares, using the COIN ticker symbol. It was assumed to list at $250 a share, rose to $429 before settling to $328 on its first full day of trading.
A public listing is simply a milestone towards an end game. Valued at $60 billion, Coinbase is already a very large company. But with Bitcoin valued at over $1 trillion and with 56 million customers using its exchange trading platform, Coinbase is only at the start of its journey.
This week I curated the best pieces from people intimately associated with the Coinbase story from the beginning. In 9 short years, together, they have created a significant company that is championing a new way of thinking about money and value. Applause is in order, at least for a few seconds. Act two is coming up.
Also in the news this week, artificial intelligence. NVidia is rapidly becoming the company to watch if you want to understand what comes next in AI. We cover the company’s announcements as well as the Microsoft acquisition of Nuance — the voice AI company. Expect automated everything in the next 10–20 years.
And finally, the startup of the week is little Google. Larry and Sergey, the founders, reached a net worth of over $100 billion. They are in a very small company, and most of the others came out of the technology revolution.
I say this not to fetishize money but to acknowledge value creation. There is a lot more to come.
Today, Coinbase has gone public. We are proud to say that Coinbase is a Y Combinator company and a member of the Summer 2012 batch.
Co-founder and CEO Brian Armstrong applied to Y Combinator on March 29, 2012 and began the batch a few months later. According to the Coinbase YC application, the company was initially named “Bitbank” and had not been launched; however, Brian mentions in his application that he built one of the first Android apps for bitcoin as a side project.
The most interesting professional accomplishment that Brian mentions in his YC application is that he helped build the fraud prevention systems at Airbnb (which at the time was a relatively small and fast-growing Y Combinator company). In retrospect, this work experience around international payments, growth, and security was excellent context for Brian as the CEO of Coinbase.
Brian is a founder who believed in something early and was willing to act on that belief to build a company before most people thought it was a good idea. The Coinbase YC application also states “Right now there are about 100,000 bitcoin users despite the relatively immature tools, which is a good indicator of interest.” ?
When I joined the Coinbase board in 2017 as its first independent director, crypto in many ways was still the wild west. Back then the perception of crypto was that it was largely used by bad actors, and in fact my own introduction to the space came through my work as a federal prosecutor investigating financial crimes. But here was a visionary company with a management team led by CEO and co-founder Brian Armstrong that clearly was trying to do things the right way. They wanted to grow a new financial system based on crypto but they also were committed to following the rules.
Since the earliest days of the company, Brian and the Coinbase team had a clear vision of something entirely new: increasing economic freedom in the world. A new financial system that is trusted, fair, and easy to use. I was excited to get involved as they made this idea real, and my work on the Coinbase board also led to me getting to know and then join Andreessen Horowitz, where I now co-lead our investments in what we think are the world’s most promising crypto projects, Coinbase of course front and center among them.
All told, the a16z family of funds invested in Coinbase eight different times from 2013 to 2020, including in every primary financing since our initial investment. As we all saw the company grow, we continued to be excited about investing in it, because Coinbase represented the best of very different worlds: a company that brought Silicon Valley sensibilities to product and design, yet also took regulation and compliance seriously. And, of course, we were excited because of Brian and his co-founder Fred Ehrsam, two world-class technologists who saw the massive potential of this space so much sooner than others.
Coinbase shares began trading Wednesday in what’s expected to be a watershed moment for Bitcoin and cryptocurrencies.
The company set a reference price of $250 a share for its direct listing on the Nasdaq. Speculation that it could open at a much higher price, given the massive interest, proved correct: It began trading at $381 a share and rapidly leapt to $429 valuing Coinbase at more than $100 billion, before retreating to $328.28 by the end of trading.
Coinbase Chief Operating Officer Emilie Choi spoke to Protocol Wednesday morning while waiting for the trading to begin, after a somewhat restless night before the big day.
“I’m always scared that my alarm is not gonna go off for some reason,” she said. “I feel like I’m still in high school. As it happened, of course, I woke up naturally because I was so excited.”
This interview has been edited for clarity and brevity.
This has been described as the Netscape moment for crypto, a turning point for Bitcoin and other digital currencies. How do you see it?
We’re going public for an internal and an external reason. We’re going public internally because we feel like we have the pieces in place to be able to go public, whether that’s the financial foundation, the management team, the employee base that will help us take this to the next level.
And then externally, there are two reasons. One is we want to be able to have a public mark on our stock price because it helps us do more and more M&A. That’s the whole reason I came to Coinbase in the first place. We’re going to be using acquisitions as a way to accelerate all the different things that we wanted to do.
The second thing is, we believe that this is the moment to shine a light on crypto in the world. If our public listing is a small part of that, we’re honored to be able to do that.
Why is M&A critical, and what should we expect from Coinbase going forward now that you’re a publicly-traded company?
Coinbase’s public stock market debut today crystallizes enormous gains enjoyed by the crypto firm’s earliest investors, most notably Union Square Ventures and Andreessen Horowitz. But for Andreessen, the win is even sweeter, given its decision two years ago to double down on its stake even as USV was selling.
USV led Coinbase’s Series A round, becoming one of the biggest shareholders. But after Bitcoin’s price plunged in 2018 and 2019, USV sold about a quarter of its stake, leaving it with its current position of around 5% of the outstanding shares (including options), worth $5.3 billion at the opening trade of $381 Wednesday.
Andreessen, in contrast, was a slightly later investor. It led the company’s Series B round in 2013 and then participated in the next round two years later. But in 2018–19, when USV and other venture firms were trimming their positions, Andreessen was a buyer. It ended up as the second biggest shareholder after CEO and co-founder Brian Armstrong, with a roughly 11% stake worth $11.2 billion.
The world is moving forward at an accelerated pace. Historically, it’s taken multiple decades for companies to be worth $1 trillion. For bitcoin, it took just 12 short years to reach such a milestone.
To help put things into perspective, here’s a look at how long it took America’s biggest tech companies to reach the $1 trillion market cap.
AssetTime To Reach $1 TrillionCurrent Market CapMicrosoft44 years$1.9 trillionApple42 years$2.2 trillionAmazon24 years$1.7 trillionGoogle21 years$1.5 trillionBitcoin12 years$1.1 trillion
Market caps as of April 12, 2021
Extreme Bullish Sentiment
Bitcoin has been subject to widespread commotion in markets.
At the start of 2021, the cryptocurrency had a more modest market cap of $500 billion, but has gained more than another $500 billion since. An onslaught of headlines has contributed to extremely bullish investor sentiment, including:
The post Bitcoin is the Fastest Asset to Reach a $1 Trillion Market Cap appeared first on Visual Capitalist.
AI on the Rise
Kicking off another busy Spring GPU Technology Conference for NVIDIA, this morning the graphics and accelerator designer is announcing that they are going to once again design their own Arm-based CPU/SoC. Dubbed Grace — after Grace Hopper, the computer programming pioneer and US Navy rear admiral — the CPU is NVIDIA’s latest stab at more fully vertically integrating their hardware stack by being able to offer a high-performance CPU alongside their regular GPU wares. According to NVIDIA, the chip is being designed specifically for large-scale neural network workloads, and is expected to become available in NVIDIA products in 2023.
With two years to go until the chip is ready, NVIDIA is playing things relatively coy at this time. The company is offering only limited details for the chip — it will be based on a future iteration of Arm’s Neoverse cores, for example — as today’s announcement is a bit more focused on NVIDIA’s future workflow model than it is speeds and feeds. If nothing else, the company is making it clear early on that, at least for now, Grace is an internal product for NVIDIA, to be offered as part of their larger server offerings. The company isn’t directly gunning for the Intel Xeon or AMD EPYC server market, but instead they are building their own chip to complement their GPU offerings, creating a specialized chip that can directly connect to their GPUs and help handle enormous, trillion parameter AI models.
At its GTC 2021, Nvidia this morning announced the general availability of its Jarvis framework, which provides developers with pretrained AI models and software tools to create interactive conversational experiences. Nvidia says that Jarvis models, which first became available in May 2020 in preview, offer automatic speech recognition, as well as language understanding, real-time language translations, and text-to-speech capabilities for conversational agents.
Microsoft’s decision to spend $19.7 billion to purchase Nuance Communications took a number of industry analysts by surprise.
The second-largest in Microsoft’s history, the price tag amounts to 13 times Nuance’s yearly revenue. In justifying the amount, Satya Nadella touted Nuance as a “pioneer” in the field of conversational AI for health care and highlighted the impact its tech would have on establishing Microsoft as a leading vendor in the sector.
But the rationale seems to lie beyond trying to own just one industry. Instead, Nuance could fill a critical void that would help Microsoft compete more fiercely against rivals like AWS.
A statement by the regulator’s acting director, John Coates, addresses the frenzy over blank-check company deals.
Electric vehicle and greentech companies have proven to be the sweethearts of the SPAC universe thus far when it comes to merger targets, but the question remains: where could they look next?
The notorious co-working giant is the beneficiary of the ongoing remote work revolution
Real estate is an awesome gig.
For starters, the supply of fertile land (urban centers) is finite, but the source of demand keeps growing (more people/capital moving to cities). On top of that, we’ve granted real estate development such favorable tax treatment that it is nearly immune from taxation. Even Donald Trump, arguably the worst business person in U.S. history, made money in real estate development, despite the serial failure of the underlying business. As one tax law expert put it, the real estate industry “thinks of the tax code as a basket of goodies to feast on rather than a financial obligation of doing business.” Imagine buying stock and being able to depreciate it as it increased in value.
Amazon Tone Deaf?
To our shareowners:
If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.
Remember that stock prices are not about the past. They are a prediction of future cash flows discounted back to the present. The stock market anticipates. I’m going to switch gears for a moment and talk about the past. How much value did we create for shareowners in 2020? This is a relatively easy question to answer
because accounting systems are set up to answer it. Our net income in 2020 was $21.3 billion. If, instead of being a publicly traded company with thousands of owners, Amazon were a sole proprietorship with a single owner, that’s how much the owner would have earned in 2020.
How about employees? This is also a reasonably easy value creation question to answer because we can look at compensation expense. What is an expense for a company is income for employees. In 2020, employees earned $80 billion, plus another $11 billion to include benefits and various payroll taxes, for a total of $91 billion.
You might not think Amazon founder Jeff Bezos would feel the need to prove the value he’s created in the e-commerce giant, given its market capitalization of $1.7 trillion. But you’d be wrong. Stung perhaps by the constant criticism of Amazon’s working conditions and allegedly rapacious attitudes toward merchants on its service, Jeff Bezos used his annual shareholder letter today to point out just how much value Amazon has created — for customers, workers, outside merchants and shareholders.
And the way he does the math, customers as a group have earned the most “value” from Amazon, based on time saved not driving to the store, followed by employees, with shareholders being at the bottom of the list. Perhaps Bezos should go into comedy. Instead of calculating value by looking at the increase in Amazon’s market cap last year — $679 billion — Bezos uses the company’s net income of $21 billion. That hides the fact that shareholders got the most value out of Amazon last year, far more than any other group. But it doesn’t otherwise make much sense.
Startup of the Week
Surge in share price of parent company Alphabet moved pair on to eight-man list
The Google founders, Larry Page and Sergey Brin, have joined the $100bn club of super-rich people with 12-digit fortunes after a surge in the share price of the tech firm’s parent company, Alphabet.
Page and Brin, who co-founded Google in 1996, joined a group of six others with paper fortunes of more than $100bn (£73bn), according to the Bloomberg billionaires index.
Tweet of the Week
It is with a heavy heart that we must give you the news that our friend, colleague and leader Dr. Alex passed away on Thursday, April 8th 2021. We can confirm through his family and the authorities that he was involved in a motor vehicle accident in Thailand that took his life.
All of us at CoSMo and Millicast are in shock. And for anyone who knew him, whether for weeks, months or years, he was a brilliant human being and as memorable a personality as you will meet in life. He will forever have a place in our hearts.
Dr. Alex was among the largest contributors and advocates for WebRTC technology. And although we are still mourning his loss, we will honour his memory by working to fulfill his unique vision for the future of WebRTC.
We are in touch with his family in Singapore and France and we are supporting them as best as we can during this difficult time.
Dr. Alex loved Twitter, and we have posted @rtc_cosmo where you are welcome to share your memories of him: