1. Keeping Up With Artificial Intelligence

    At one time I was the master of the technology universe. With the title of Managing Director of Technology Research and Chief Market Strategist, my knowledge level was impressive.

    For example I knew everything about the difference between dial up Internet speed and DSL. I understood the speed of DSL was dependent on the users proximity to amplifiers located at the central station. The puzzling question of the day was how important Bluetooth was going to be?

    No matter how much effort goes into keeping up with technology, it changes too fast. It is possible to spend full time and still not know all there is. Fortunately, I am not alone; this is a common lament pretty much everywhere.

    Whatup Intel?

    Case in point is semiconductor giant Intel. Recently a major Wall Street firm lowered its investment rating from average to underperform. That is as close as you can get to a sell recommendation. Intel has been a huge investment payday over the past 30 years so what is the reasoning behind the change.

    It all has to do with deep neural networking. As a key part of Artificial Intelligence, DNN requires the type of huge computing power that makes Donald Trumps version of huge look modest.

    Opinion has it that Intel rival Nvidia has the edge in emerging parallel workloads like deep neural networking. Wow, now that is a real tectonic shift in the tech universe.

    I must admit in all honesty I can’t tell the difference between a deep neural network and a shallow neural network but I plan to take the next rainy weekend and brush up on my reading.

    The Tensor Processing Unit: This Is Bigger Than Huge

    Deep within Google with the help of a retired UC Berkley professor an effort is far along to create a newer faster chip. By itself, this is hardly novel. Everybody in Silicon Valley has run with that idea in the past.

    The development team was motivated by a $6-$10 billion incentive. Based on Google’s conservative estimates of user ship of its machine learning technology using either Intel or Nvidia chips, Google would have to double the capacity of its data centers. The cost of that would truly be a bigger than huge investment.

    In the world of computer chips, everyone makes claims of higher speeds and lower power consumption so it is important to be skeptical when such claims are offered.

    Faster Than A Speeding Bullet

    Ok, so here are the claims: TPU runs 15-30 times faster than anything produced by Intel or Nvidia while being 30-80 times more efficient. That is just nasty fast. If true this could cause problems for both Intel and Nvidia.

    Instead of investing in servers, Google parent Alphabet may be tempted to build its own semiconductor foundries; not exactly a small cost item itself. The other, and more efficient approach would be the Qualcomm model and license the technology and let others spend the big bucks.

    Remember Google is not the only company chasing the gold in AI. Virtually every company will have their own development interest and the FAANG companies are only part of the list.

    Under the old standard Moore’s Law, chip speeds double every 18 months. That law sounds about as antiquated as the dial up modem when the prospects of a possible 30 fold increase in the not to distant future.

    No question that AI is here and huge. Who knows some day AI may even be able to find a way to reset a password without needing to be told the name of my 3rd grade school teacher . Now that is technology doing work for the good of mankind.

  2. What is Alibaba All About?

    Social Media forces like Google, Facebook, Instagram, Twitter and Snapchat are names we are all familiar with. For many, these services are part of our daily lives. In some of us it would be more accurate to call it our minute-by-minute lives.

    What about companies like Alibaba? Sure, it’s a familiar name but what exactly they do is not so clear.

    Alibaba got its start in San Francisco way back in 1999. A young, unknown Jack Ma founded a business-to-business portal to connect Chinese manufacturers with US buyers.

    The name Alibaba, as legend holds, was chosen because everyone recognized the word and immediately associated it in a positive way by responding, Open Sesame! It was a wise choice for its name recognition world over.

    The mystery of Alibaba may be due to their activities focusing so much on China and nearby parts of Asia. But it is just as likely that their many online platforms are not yet on your computers bookmark list. So lets have a look at this $250 billion mystery company. 

    Huge Presence in Online and Mobile

    Alibaba is a global online and mobile marketing colossus. They have all the bases covered: Business-to-Business, Business-to-Consumer and Consumer-to-Consumer.

    Visualize Alibaba as a combination of EBay, Amazon, Google, Expedia, and PayPal with a touch of Costco and Home Depot. That might get you close to what we are talking about.

    If you’re a citizen in the Republic of China, you know Taobao Marketplace for online shopping or Tmail that is the Asian version of EBay. And what would a vacation be without Alitrip?

    If you are in business anywhere in the world, Alibaba.com is where you are likely to check for wholesale prices on a huge variety made in China products including everything from electronic goods to apparel. AliExpress is the second most popular site in Russia for small Chinese businesses to sell their wares.

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  3. Top tech IPOs to watch for in 2017

    Last year was a dog for initial public offerings on U.S. soil. It was so bad it achieved the double whammy of having the fewest IPOs (105) since 2009 and for the lowest dollar volume ($18.8 billion) since 2003.

    But don’t lose hope investors; President Trump is here to Make IPOs Great Again. If all bodes well this year could easily surpass 2015’s total of $30 billion with some big tech companies preparing to go public.

    With that in mind, here’s a look at some of the most anticipated IPOs for 2017.

    Snapchat

    The wildly popular messaging app’s parent – Snap Inc – is poised to be the first big fish to hit the market, reportedly offering 200 million shares at between $14 and $16 per share. That would give it a valuation between $19.5 billion and $22.3 billion, easily making it the largest IPO since Alibaba in 2014 ($25 billion).

    While Wall Street is generally high on Snapchat and its 160 million daily users, doubters flag the social network’s unprofitability and decelerating user growth. The company reportedly earned more than $400 million in 2016, but costs were upwards of $500 million. It’s attempting to find new revenue streams by rebranding itself as a “camera company” and making virtual reality glasses a la Google, but faces some stiff competition.

    Some analysts, such as Eric Schiffer of private equity firm Patriarch Organization, are decidedly down, telling Vanity Fair: “Snapchat will be the greatest investment loser of the 21st century.”

    When Facebook (FB) went public in May 2012 it had annual revenues of $1 billion and listed at $42. Still the social media giant’s stock price tumbled over the ensuing months to $18, before rebounding and incrementally rising to more than $130 today.

    Ultimately, says The Economist, how well Snapchat fares as a public company will “serve as a litmus test of whether it is possible to prosper in the shadow of digital behemoths like Facebook and Google.”

    Uber

    The ride-hailing darling whose name is now used as a verb among its key millennial base, as in to “Uber over,” will likely wait until after the Snapchat IPO to gauge investor appetite for its own public offering. Despite raising more than $11 billion as a private company, giving it a monstrous valuation close to $70 billion, Uber hemorrhages money. It was on track to lose more than $3 billion in 2016, forcing it to ditch its China operation. The market is also wary of looming legal battles over whether Uber’s drivers are employees or independent contractors and its plans to eventually convert to self-driving cars.

    Uber has historically revealed little in regards to its financials, which it would be forced to do with a public offering. It could likely keep raising money privately for the foreseeable future, but may bow to early-stage investors who will be agitating to see a return.

    Palantir

    The data-mining company was founded way back in 2004 and, like Uber, will have some very anxious investors looking to cash out. Palantir, valued at $20 billion, boasts a number of high-profile security clients, including the U.S. military. Chief executive Alex Karp has already met with President Trump and has indicated the company will turn a profit this year, putting it in a position to go public.

    Spotify

    As a condition of its $1-billion funding round last year, the music-streaming site agreed to go public this year or pay greater interest on its debt. With about 100 million subscribers – 40 percent of which are paying – Spotify has been valued at more than $8 billion. However, recent reports indicate the company may hold off its IPO until 2018 in order to improve its margins.

    That may be wise, as competitor Pandora (P) went public in 2011 at $16 a share, but the music service now trades around $13.

    Dropbox

    The cloud storage startup is reportedly mulling an IPO this year. Last year saw several competitors go public, most notably Coupa Software (COUP). Dropbox, which has more than 400 million users and boasts Spotify and News Corp as clients, has far better brand recognition and lower customer acquisition costs. Founded a decade ago, Dropbox was valued at $10 billion after its last funding round in 2014. That’s far greater than competitor Carbonite Inc (CARB), which went public in 2011 at $10 a share and is now trading at double that price.

    Pinterest

    The craft-oriented social network has a similar valuation to Dropbox and looks primed for an IPO after poaching former Twitter finance exec Todd Morgenfeld to be its chief financial officer. Another thing it has going for it is a fast-growing user base, jumping from 100 million to 150 million users from 2015 to 2016. Revenues also tripled during that same span, rising to $300 million from $100 million in 2015. CEO Ben Silbermann, however, says there are no imminent IPO plans.

    Slack

    The messaging app is growing even faster than Pinterest, quadrupling its daily active users from 1 million to 4 million in an 18-month period between mid-2015 and the end of 2016. But erstwhile investors will need to be patient after chief executive Stewart Butterfield threw some shade on an IPO, suggesting it will be “a while” until it happens.

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  4. The Energy Option: Filler Up With DC

    Las Vegas, Kansas City, Raleigh, Denver and Miami.  Slowly, EV sightings are taking place most everywhere.

    There is one other thing that EV’s all have in common.  They need to be recharged.  Even the most durable model, the Chevy Volt can only run 420 miles without some recharging.  For most of the 10 top selling EV’s, 100 miles on a charge is about the average.

    When you buy or lease an EV the standard package offers the 110 Volt home plug in recharger.  This method takes about 16 hours to bring on a 100% dose of juice.  It takes less than 2 hours to drive 100 miles so this creates a real bummer, slowing the appeal of EV’s

    A second choice is a $400-$600 option that brings 240 Volts of jolt into your garage. That reduces the waiting time to 4 hours.  That’s a big improvement but you have to get an electrician involved and that complicates things.

    Elon Musk came up with one very good answer. He created recharging stations and located them near places like shopping malls.  By converting AC power to DC, Tesla vehicles can be brought to 80% capacity in less time than it takes for a mannie-peddie (guys think a quick trip to Best Buy).  We are talking only about 30 minutes.  That’s great but what if you don’t own a Tesla?

    There is another solution that has been quietly evolving over time. Enter ChargePoint, high speed recharges for the EV masses.  The company is private having been founded nearly 10 years ago.  Unless you drive one of the non-Tesla vehicles, and live in San Francisco, LA or San Diego chances are you never heard of the company.

    Here is what they claim: the largest collection of EV recharging stations in the US with over 33,250 in 13 states.  All stations are fast AC to DC units that can get you back on the road within 30 minutes.  Unlike Tesla, ChargePoint stations are capable of juicing up any type of EV.

    The list of ChargePoint partners supports the notion that this company has a chance at success.  They include Schneider Electric, Leviton, BMW, Fuji Electric and Nissan.

    The product line extends into single and multifamily residential markets where the company claims it has a 110 Volt juice box that is 6 times faster than the average home charger.  If true, this would bring the recharge time down to less than 4 hours and without the need for an electrician.

    There are other companies in this business but it appears most are in segments like electricity conversion hardware and the like.  We looked but could not find any with the size depth and number of stations that ChargePoint claims.

    From the start we mentioned the company was privately owned so unless you know someone that owns a piece and who is willing to part with a piece, we can only stand back and watch.  Eventually, this is a natural for a public offering and when that day happens, be ready.  This is a business where the cash will flow as freely as the electricity.

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  5. SnapChat, Just What The World Desperately Needs

    The latest social media phenom, SnapChat went public on March 1st instantly creating a $24 billion entity, on paper at least.  Actually, instantly overstates the truth, SnapChat has been around since cofounders Evan Spiegel and Bobby Murphy met at a frat party in 2010.  So the fact is creating a $24 billion didn’t happen over night. In technology measured time, it took a nano century.

    With social media mainstream apps like Facebook, Twitter, Instagram, you post a photo of yourself with all your friends appearing to be enjoying life fully, you add a cute comment and zap off it goes to your BBF and everybody else.  Once you post it you own it, for better or worse.  If caught on spring break puking your guts out in Daytona Beach . . . . . well, you get the idea.

    But none of these potentially embarrassing moments ever happen with SnapChat. That is because, at your convenience, the pics and the chitchat all disappear within a brief period.  SnapChat is not a one trick pony.  You can also create cute animated features with your photos.  So for example, if you are on spring break drunked up, making an ass of yourself and suddenly decide you want to look even more foolish, you can do that with SnapChat.  You take a selfie and add the ears of a rabbit and the nose of a donkey.  Now that is value added.

    Why does the world another photo sharing, chitchat app?  SnapChat was never aimed at my generation, although if Anthony Weiner had used SnapChat, who knows, today maybe he would be the President of The United States. Strange things this like this have happened.

    Though we may not appreciate its mass appeal, SnapChat has more than it share of devotees.  The IPO totaled roundly 200 million shares and reportedly was over subscribed by a factor of 10 times. This usually means that the stock will trade higher in the after market.  Oh yes, there is one thing.  None of the stock can influence the future of the company; it is all non-voting.  Eat your heart out Mark Elliot Zuckerberg.

    No company anywhere gets a $24 billion valuation until it has passed the sniff test by dozens of social media and tech investors including crowd funders, angel investors, venture capitalists and even a few ordinary bankers. So who are we to judge differently?

    According to our readings, SnapChat claims an audience of 158 million daily users translating into 2.5 billion daily chats. That is chump change compared to Facebook’s billions.

    Where on earth do people have the time after the hours spent on Facebook, Twitter, Instagram, not to mention Amazon, Ebay, messages, email etc.  Did I forget to mention the thing about the US economy being at full employment? People are working these days.  Where is there time for more social media?

    Like so many other platforms, SnapChat is dependent on advertising revenues to fan the flames of success.  The game is all about leveraging the size of the audience.  The more users and the more daily chats the better advertising rates that follow.

    It takes time and lots of capital to reach the top of the Social Media world.  For all it success, Twitter is struggling.  Less than 5% of all startup companies are successful (however success is defined).

    So is SnapChat beating the odds?  Here are a couple of measures that naysayers like to point to.  SnapChats cost of acquiring new users is higher than Facebook and Twitter at a similar time of their development.  The critics also point out that these costs are rising at a time when the trend should be in the opposite direction.

    Last year the company lost $515 million on revenues of $404 million.  This all took place while VC’s and other private equity investors were financing the company.

    We remain cynical about the value of one more photo sharing social media platform. However, one thing really impresses. For greedy money hungry vultures like VC’s to willingly accept over $400 million in losses in one year and possibly close to $1 billion over time, makes a loud positive statement even from vultures accustom to making and loosing big bucks.

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  6. A LITTLE STORY ABOUT BITCOIN

    In a digital world such as ours, currency is almost becoming obsolete. With so many smartphones and debit- and credit-card readers being used for point-of-sale transactions these days, the paper and metal currency and coins that we have used for more than two centuries have now become quaint.

    In a digital world, money has moved from cotton paper to a series of zeroes and ones. It would make sense that in this new world, a new currency for online and digital transactions would be formed for these specific purposes. But there are a lot of questions about this new currency, called Bitcoin – namely, what is it really, and how prevalent can it be in an economic universe in the tens of trillions of dollars when there is less than $20 billion worth currently in circulation? (Two billion is 0.2 percent of 1 trillion. Just so you get a picture of the small universe we’re talking about here.)

    What is Bitcoin, Anyway?

    How to define Bitcoin is pretty dependent on who you ask. According to the “official” Bitcoin website, Bitcoin is actually a “consensus,” decentralized, peer-to-peer payment system that uses digital money. Bitcoins are used in this system for transactions much like cash would be used in brick-and-mortar stores. There is one government agency that considers Bitcoin a commodity (we’ll look at that in a minute), and there are others in the financial world that see it as a currency. Commodities and currencies have different regulations for their use, so the distinction is important.

    The Bitcoin Market

    As Bitcoin soars to a new high in value (nearing $1,200 per coin), the market for bitcoins is pretty expansive for it being a small universe. At last count, there were more than 100,000 merchants that accept Bitcoin as a valid form of payment for online and web-based transactions. The currency and the payment system have been growing slowly since its inception in 2008 and it currently has a universe worth about $18 billion. At the current valuation, that means there are about 15 million bitcoins currently in “circulation” – a sort of misnomer, as bitcoins are not circulated in the public monetary system but just within the Bitcoin system.

    Bitcoins in some ways are a lot like foreign currencies compared to the U.S. dollar. The U.S. dollar is generally stable in value inside its national borders, and it compares to other currencies in exchange according to the market supply and demand of the various currencies in each country. With that, bitcoins will fluctuate in value, which means if you were to buy something with a bitcoin, it doesn’t have a stable rate of exchange like a $100 bill does. It is almost like selling the bitcoin for cash according to the value of the bitcoin at the time of the transaction.

    Currency or Commodity?

    That is a very good question, because it’s not as obvious one way or the other. On the one hand, bitcoins are used to pay for goods and services online and in an exclusively digital environment. In that sense it is a currency. On the other hand, Bitcoin is a decentralized payment network that does not have a central bank or central processing, so it’s like using a commodity like gold bars in a sort of barter system, where one trades bitcoins for a good or service that another possesses.

    And because bitcoins do not have a face value on them like regular currency, it can be thought of as a commodity because the value of a bitcoin fluctuates wildly according to market forces within the Bitcoin network. While a bitcoin may be worth nearly $1,200 today and was worth about $1,100 in 2013, in between the value plummeted as low as $200.

    An Investor’s Take

    While an institutional investor like Goldman Sachs is on the record as investing in Bitcoin, it doesn’t mean that you, as an individual investor, should do it. The bitcoin market is very small in relation to the overall economic universe, and because it is small, the value of bitcoins will be perhaps the most volatile of any currency or commodity on the markets. And if you want to think of it as a commodity, that means you will want to invest and hold the bitcoins, which means you would be reluctant to engage in the Bitcoin system and network.

    And with only 15 million bitcoins in “existence,” holding a few of them can cause the value of the bitcoins to ebb and flow according to how many others hold it like you would, or how many will use and spend them freely in the network.

    Bitcoins are treated like a currency, but are looked upon as a commodity in need of regulation according to the Commodity Futures Trading Commission (CFTC), which wants to provide regulatory oversight of the Bitcoin network. Bitcoin is an interesting concept, but getting involved in such a small universe as an investor would involve an awful lot of risk – perhaps too much for all but the most daring individuals who may have some money to gamble, when the casino or the horse track aren’t interesting.

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