Welcome to another edition of Business Twitter, where we collect the best tweets to come out of Silicon Valley so you don’t have to. This article is part of a newsletter — if you want a weekly Business Twitter roundup sent to your inbox every Friday, subscribe here.
This week: Andrew Chen breaks down how Silicon Valley and Hollywood finally began working together, a VC from the Hustle Fund explains his startup valuation framework, Anthony Pompliano talks about the value of investing in used cars, and Twitter irks just about everyone by unveiling its new font, Chirp.
1. LA gets closer to SF
Andreessen Horowitz VC Andrew Chen says it’s time to acknowledge the intersection of technology and entertainment as Silicon Valley and Hollywood become more intertwined.
“From LA, you see celebs angel investing, and promoting tech,” Chen wrote in a Twitter thread. “And SF startups are actively courting creators, both mainstream and digital native, as the anchors in their new social products.”
Chen noted that this is a fairly recent phenomenon. “For a long time, the SF world found the LA ecosystem to be byzantine, full of gatekeepers and copyright owners. The most common interaction was music labels and movie studios suing early startups — Napster, YouTube, BitTorrent — not collaboration.”
Now, though, Chen sees the two sectors as inseparable. He added that there’s still the issue of culture clash to deal with, and that celebrity investors ask for extra perks most VCs don’t get.
Chen concluded: “While LA x SF is trending up — more cross-pollination, more people spending time in both, more collaboration — it's still early. But more is happening and it will unlock new approaches to engage consumers that could never [have] happened before.”
2. Startup valuation frameworks
As startups receive more venture capital than ever, pushing valuations ever higher, some firms are reevaluating what goes into those valuations in the first place. Will Bricker, a VC at Hustle Fund, wrote a thread on his own valuation framework.
Bricker wrote that VCs evaluate pre-seed startups in three ways: “Market, Opportunity value, and Probability of Success.”
In a previous thread we covered, Bricker discusses the market — in short, it’s a great market for founders, he writes, because “There's lots of capital and competition for good deals.”
Bricker doesn’t go in depth about the third factor, but elaborates on the second: Opportunity value. “You need to make sure that the volume of widgets you are selling and the revenue you earn from each widget is sufficient to provide venture-scale returns. What are venture scale returns? It depends on who you ask, but it's somewhere around $100m.”
“While that seems like a lot, you don't need to make it all tomorrow, and you don't need to make it all the same way,” Bricker continues. “You can sell to new people, new & different widgets, etc.”
3. The value of used cars
Investor Anthony Pompliano recently noticed an unusual phenomenon: Used car prices are rising faster than the S&P 500.
Used car prices have risen 42% in the past year, while the S&P is up only 33%. Pomp tweeted the statistic, adding, “It was a better investment to buy and flip a used car than invest in the stock market. Crazy.”
While investing tends to be more complex than this, used car prices really have been soaring. According to data from used car marketplace CarMax, some carmakers have seen prices soar as high as 50% year-to-date. Some models are so expensive, in fact, that they may cost more than their brand new counterparts. A study from iSeeCars shows that used models like the Kia Telluride and the Toyota Tacoma cost thousands more than new models.
4. Twitter’s new font, Chirp
You may have noticed something was a little off about Twitter this week — if something didn’t look quite right, it was probably because the site changed its font. Introduced in January and made standard this week, the font (which is called Chirp), irked just about every user.
Many complained that this change was entirely unnecessary, and that more functional improvements could be made instead, like adding an “edit” button.
One user replied to Twitter’s announcement, writing, “Nobody asked for a font change. Things we have been asking for: remove the damn auto scroll whenever your feed updates, an edit button, better tools to remove fake news.”
Some users were more upset about the updated follow button, like VICE editor Brian Merchant, who wrote, “The font change is whatever, but changing the Follow button from filled in if you follow to filled in if you don't, the precise opposite of the design expectation you taught users for years and years, is the kind of pointlessly confusing nonsense we've come to expect here. Bravo.”
