Nov 22, 2022
Create Your Investing Profile & Share It on Savvy Trader w/ Hamid Shojaee
BRT S03 EP58 (157) 11-20-2022
What We Learned This Week
- Savvy Trader allows you to share your portfolio
- Investing Track Record - see how people actually invest & their results
- Why Software is Such a Good Business Model, Build 1x, sell multiple X
- VCs want to see Traction in Startups
- Cost of Customer Acquisition (CAC) & Long term Value of a Custer (LTV) are critical in scaling a startup long term, how much does it cost to get a customer, and how long do you keep them
Guests: Hamid Shojaee AZ Tech Beat
Hamid talks all thing AZ tech, Startups and what the world of an Angel Investor really looks like. His 2 decades + of experience is laid out, from starting and running software companies, plus exited the industry to now an Angel Investor mentoring the next generation of Startups.
Hamid (Founder of Axosoft and Pure Chat) has always had a passion in helping Arizona's up-and-coming tech talent. Since 2010, Hamid has been involved with various AZ tech initiatives, including bringing tech founder and CEOs together, investing in startups and helping push the #YesPHX community forward.
Axosoft – software tools for software development
PureChat – live chat software for websites
Hamid is a 20 year + software veteran who’s built four different multi-million dollar SaaS products in the last twenty years. He recently sold two software companies, Axosoft and Pure Chat, and has been advising and investing in Arizona-based startups for nearly a decade. He recently announced he’ll be investing $10 million in promising Arizona tech startups. Hamid is also host of the AZ Tech Podcast, where he interviews Arizona’s most successful founders, investors and doers.
AZ Disruptors is founded by Hamid Shojaee (@hamids) and Lawdan Shojaee (@lawdan) as a vehicle to invest in for-profit companies that want to make the world a better place, with a geographical focus on Arizona’s tech ecosystem. Working with startups and investing (20 companies). The criteria listed on the website for a Startup to be considered for investment.
AZ CoWork was founded by Hamid and Lawdan Shojaee as a way to support and foster the next generation of fast-growing tech companies in Arizona. They designed the 12,000 square-foot space, which conveniently sits directly below Axosoft and PureChat, to cater specifically towards tech startups through hosting various local startup groups and events, providing mentorship opportunities, and cultivating a community of like-minded founders.
AZ Tech Beat is Arizona’s online news source for everything related to technology and science. We aim to highlight the efforts of the talented Arizonans trying to make a positive impact in the world. We also produce AZ Tech Podcast (https://aztechbeat.com/category/podcast/), a weekly show featuring conversations with some of Arizona’s most interesting founders, investors, scientists and other doers. Covers the AZ Startup community, the struggles and people involved. Find the podcast library here, watch the interviews on YouTube or listen on your favorite podcast app.
AZ Tech Beat is founded by Hamid Shojaee and financially supported by the Shojaee Foundation. Stories are written and reported by Adrienne St. Clair (@agestclair) and Abby Sharpe (@byabbysharpe).
What is Savvy Trader?
Create
Create a virtual portfolio of your stocks and crypto. Buy or sell your investments at any time to keep your portfolio up to date.
Share
Share your portfolio for free, or set a price, for your followers to get access to your portfolio and notified about your trades.
Notify
Notify your subscribers when you make a trade. Savvy Trader will send a text or email to everyone subscribed to your portfolio.
Savvy Trader is on a mission to make investment information more accessible.
Learning about stocks and crypto can be intimidating and overwhelming with incredibly high levels of noise and very little signal.
Savvy Trader helps solve this problem in two ways:
- Create and trade stocks and crypto in a safe virtual portfolio environment. The Savvy Trader virtual portfolios work a lot like a real brokerage account, except the trades are not real, allowing users to experiment and learn.
- Portfolio Creators can also share their virtual portfolios. A great way to learn about stocks and crypto is to see the virtual portfolios of others, see the actual performance of those portfolios as if they were real, and learn about the reasons behind the creators decisions for buying or selling each holding.
So go ahead, create a virtual portfolio and share it with the world.
Speaking of, I have a Savvy Trader virtual portfolio myself. Truth be told, I wanted to create Savvy Trader for myself as an easy way for me to consolidate my holdings in multiple accounts into a single virtual portfolio that represents my actual investments, and I wanted an easy way to share my portfolio details with friends and family. You can subscribe to my portfolio below - it's free!
Notes:
Seg 1
Hamid has a long history in tech, 20+ years and software. Sold his company in 2020.
Software is a great and unique business model. You can build the software utility one time and then sell it many times. Build 1x, sell it many x
The cost is with the software development team, and heavy costs upfront. There is very little traditional capEx long term, as you do not need to build multiple physical products.
It does not matter if you have one customer, 10,000 customers, or 1,000,000+ customers, all costs the same.
It is a high margin business with lower expenses, and now you can manage it and host it in the cloud.
The classic Marc Andreessen quote software will eat in the world
There is a high bar on user experience which is why you need the best software engineers and they cost a lot of money. With those engineers you can build a great product and scale to millions of users. You will always have the cost of the team on going with maintenance & upgrades needed to the software.
Software is a never done story, you’re always in development. With some small start ups the founder may be the developer and now you’re just talking the cost of their time and the opportunity cost.
Venture capitalist want to see traction in a start up, they want the graph to go up into the right. VC are looking for the ability to scale and have a product that can play in a big market.
VC is looking for the type of market to 10x their invested money, get an ROI to make it worth their time. VC makes many bets because most of them fail, and they need their few successes to be large.
VC looking for that start up that can become a unicorn, as guy Kawasaki said it is unique and valuable.
Question does the market or the product come first?
Hamid built Savvy Trader to solve a problem. He had looked for a solution and could not find it.
Seg 2
Savvy Trader - what is your performance? Track your portfolio online
Internet of investing w s Wild West, No idea what peoples track record is
Get ideas or virtual portfolio to learn, can use portfolio to teach people with case study
Skin in the game - where people put $
Follow investors online, know if full of crap or not, not cherry picking winners, and post with survivor bias. Hamid portfolio is down in 2022 and you can see it
Long time investor in the Buffett mode
Investment style - buy cos you know and understand
Good valuation, market cap not ridiculous
What is the revenue? Any profit? Strong financials vs market cap
Investing is 10% identifying cos to buy and 90% wait, as can’t impact outcome
Could be years before know if investing choice was right
Pandemic valuations during 2020 were way too high.
Case study of looking at investment potential.
Apple is a $2 trillion company so there is diminished potential to have a 10x return as it would then need to become a $20 trillion company. When a company is so large it is hard to move the needle.
The entire stock market valuation is $46 trillion. Netflix is $128 billion company so 10 X is Plausible through user growth, ad revenue, and raising rates.
Micro cap stocks are smaller companies with higher risk but the potential to 10x. You want to look for stocks with the potential of growth, that not have not achieve success yet.
Seg 3
Hamid owns Tesla, Netflix, FB, Uber
How to think about diversification, Hamid makes 2 to 3 bigger bats in the past when is risk tolerance was higher, now it is lower so he makes 4 to 5 bets. If you have too much diversification, your returns will be subdued.
Facebook stock as a case study, over the short term the market over reacts and is very emotional. the.com boom and bust of 2000 or the 2008 housing market crash, or current 2022 and people are sour on tech stocks.
Netflix stock was $600 in late 2021 and drop two as low as 170 in the summer of 2022. Financially Netflix lost 1 million users or a half a percent of their 200 million user base. Contrast that the stock lost 70% of its value. It has rebounded back up to 310.
Market over reacts on the highs and lows stocks are over bought of times and then oversold.
Facebook was at 380 in late 2021, and now is at 100 in the fall of 2022. Seems like Facebook is at a discount? Did the market overreact or did Mark Zuckerberg become an idiot overnight? Same people bought Facebook at $300 plus and then sold it at 150.
Stock analyst give buy ratings to stocks when they’re at their high and sell ratings when they’re at that low. Analyst seem to follow momentum.
Some selling in the market creates more selling. This has to do with momentum and fund managers who have to dump losers, boat with high speed traders selling.
Seg 4
Tesla stock has seen a bomb in the last few years. Turns out the retail investor was right for a stock analyst who would recommend Tesla to be sold.
Tesla has 70% of the EV market. SpaceX is building reusable rockets, a feet that even NASA could not do. Obviously Musk knows something.
Facebook has 2 billion users daily and is still making billions and add revenue. When you’re investing in the start up world anymore diversification versus public markets has 80% of startups fail. You need the one or two that succeed to vastly make up for the money invested in all start ups.
Hamid advises founders on a limited basis. Common piece of advice is that they’re going to need a long runway, and it will be difficult to raise money in the current environment. He believes there will be less start ups being created with huge money behind them in 2023.
More start ups will fail in 2023. Cost of money / debt is higher. On the positive side there may be less competition for start ups. hamid personally saw some unreal valuations over the last year.
One example is he was offered to invest in a company that claim their own valuation was at $1 billion when they only had $17 million in sales. Early stage start ups are not expected to have a valuation, sales or profitability. Later on though your valuation goes hand-in-hand with revenue. Expected valuations are 3x to 7x of revenues.
FTX downfall was through exuberance. At one point they were rumored to be buying more Robin Hood as well as other crypto companies. Their exchange always seemed a little shady, like a black box with no info on financials, no one knew what was behind the veil.
It’s a common red flag if a company is churning through cash too quickly.
Uber was the company at one point that had serious churn in the beginning, but now seems to be a better investment. They are profitable and seem to be sustainable. Uber customers will stay just like Netflix they’re likely not to cancel. The cost of the customer acquisition plus the lifetime value of the customer is very solid.
Uber valuation is 62 billion with limited profitability right now. Oddly enough it’s a lower market cap than it was five years ago when I wasn’t profitable at all.
value investors get frustrated with tech valuations being so wide-eyed.
Uber will continue to grow, as now it has three revenue sources. It makes money from the rides, the eats, and the freight division. The eats plus freight division is a little over half their income and actually more income for us the rides.
Per Elon Mosk Robo taxis will be available in the next five years which will make rideshare is bigger. This may not happen in five years but likely in the future.
Uber CEO Dara K ran Expedia prior to Uber so obviously you know something about running a big company. Uber followed the same story as Google did 20 years ago when they needed to hire an adult in the room, professional manager. This mirrors when Google hired Eric Schmidt.
Tech Topic: https://brt-show.libsyn.com/category/Tech-Startup-VC-Cybersecurity-Energy-Science
‘Best Of’ Topic: https://brt-show.libsyn.com/category/Best+of+BRT
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