Madison Avenue & 50th looking south 1941
This is an expanded answer to a Quora question that I posted on August 6, 2017
I wrote a blogpost about 1 1/2 year ago valuing MZ. At the end, I suggested a few use cases that would benefit from the low latency of their platform. With the passage of time, there is a lot of talk about how the IoT requires a new computing paradigm called edge computing. I now am thinking about how MZ’s publish-subscribe, many-to-many platform could be used as a “first alert” messaging platform at the edge. Servers would be called only in cases of a need for higher order compute functions and storage.
The obvious use case for MZ’s platform would be v2x middleware for the era of autonomous cars. Another use case would be a IoT to IoT “first alert” message of a computer virus akin to what Tanium has developed.
Also, moving 400 billion or so daily events connected with RTB ad exchanges to the edge by conducting individual ad impression auctions within a Docker located on the device.
Also, many-to-many AR games placed via Bluetooth at the edge without calls to the server.
MZ’s has contracted with Switch, an innovative data center provider based in Las Vegas, to house thousands of MZ -owned servers with FPGA’s optimized for its Erlang-written publish-subscribe platforms.
Switch has recently announced “The MOD 100…for a rapidly deployable, single user environment that can be extended to nearly any location around the globe. The MOD 100 data center can be customized to fit on premise, at the edge or in a dense urban environment on a parcel as small as 400 feet by 400 feet.”
MZ has recently entered the AdTech business with an omnichannel, demand-side stack featuring RTB for display ad impressions. We could see them leverage their relation with Switch and growing expertise in rapid-response, FPGA servers. One way would be to enter AdTech from the supply-side via an edge CDN featuring 1,000 of MOD 100’s full of video ads and connected to auctions via MZ’s publish-subscribe platform.
Below is a picture of Switch’s SUPERNAP 8 data center outside Las Vegas:
© Lawrence W. Abrams, 2017
Inquiries : Lawrence W. Abrams, firstname.lastname@example.org, (cell) 831-254-7325
Our Vision of the Modern Carpooling Business
The success of ride-hailing apps has given rise to the idea that app-enabled carpooling could be a scalable business. Plus, carpooling at scale could become a much needed poster-child of tech “public good” as it would be the first impactful solution to traffic congestion and automobile pollution in years.
The question is: Why would any company want to enter the carpooling business today? What kinds of driver and passenger incentives would be required to scale this business?
The unexpected early success of autonomous vehicle (AV) R&D has given rise to the idea that automobile ownership will be replaced within a decade by companies offering shared mobility-as-a-service (MaaS).
Given this, why would any company want to enter the driver-centric carpooling business with its limited life expectancy and profit potential?
There have been at least a dozen carpooling startups trying to grow the business since 2010, but none have gained traction and most have closed down. Perhaps their timing was premature as the urban ride-hailing companies like Uber had not yet matured enough to provided acculturation spillover benefits or been in a position to partner with a carpooling company in a tight “mesh-transit™” network. (see more on this later)
Today, the only commuter carpooling service with serious financing is Commute by Waze, a division of Alphabet (Google). But, Uber, Lyft, and Ford could enter this business easily by expanding their existing urban ride-sharing services to long-distance commuters.
uberPOOL and Lyft Line are urban shared-ride versions of their on-demand services. Ford’s new acquisition Chariot has recently rolled out an app-enabled, fixed-route vanpool service using Ford Transit vans and full time drivers. Lyft has just introduced a similar urban fixed route car jitney service called Lyft Shuttle.
Waze’s vision of of the modern carpooling business is in the spirit of altruistic carpooling among neighbors and coworkers. Everyone takes turns driving and chip in to cover out-of-pocket expenses if there is an imbalance.
Consistent with this vision, Waze has capped driver pay rates at the business mileage reimbursement rate of $.54 per-mile. It has set per-ride fares that, when aggregated, just cover driver pay. It also limits drivers to two-a-day rides, eliminating the possibility of full-time work.
Despite low pay, driver commitment is high because drivers have an altruistic “gift relationship” with passengers rather than a “transactional relationship.” (more on this later)
While Waze’s vision for modern carpooling is laudable, we will argue that scaling the business will require a business-like transactional approach, starting with driver pay rates on par with Uber.
We envision the modern carpooling business as a unit of horizontally integrated MaaS company that also offers ride-hailing and has third-party tie-ins with ecommerce delivery companies like Amazon and Walmart and rental car companies like Hertz and Avis.
The carpooling unit would be credited for dropping off passengers at transit hubs for last-mile ride-shares. It would be credited for delivery of meals, groceries, etc. It would be credited by rental car companies when carless carpoolers come in for cheap rentals on the weekends.
While never profitable on its own, the carpooling unit would be building brand-awareness and customer loyalty. It would be an important contributor to positioning for the biggest business opportunity of a lifetime — the AV MaaS business.
The carpooling unit would be accumulating valuable MaaS logistics data. It would play an important role in the acculturation of commuters to the shared-ride lifestyle much like AirBnB and WeWork are doing for the shared-living and the shared-work lifestyle, respectively.
More MaaS synergies originate from carpooling than any other mobility service. And those synergies magnify when carpoolers go carless.
The fundamental strategy of an integrated MaaS company today should be to reduce carpool fares to the point that passengers will go carless and unleash a demand for related services. Good accounting practices dictate that the carpooling unit get credit for these spillover benefits.
We think that it will take a minimum of $4,000 in cost saving to motive a significant number of people to go carless. This implies that fares will have be reduced by an additional $1,583 a year to reachthat level of cost savings.
The way to recoup fare reductions would be to negotiate referral credits (dollar or accounting) with related units offering last-mile ride-sharing, delivery, and weekend car rentals.
Next, we present a brief look at the carpooling business from the vantage point of specific companies — Lyft, Uber, Ford, GM, Google, and even Amazon, Walmart, Hertz and Avis.
Besides spillover benefits to related companies, carpooling at scale will have a significant impact on traffic congestion and automobile emissions. These “public goods” justifies government support. We discuss the merits of a few ways government can help scale the carpooling business with minimal expenditures.
A Sense of Carpooling at Scale
By quantifying “carpooling at scale”, we will show why Waze’s altruistic vision of carpooling with driver pay set at $ .54 / mile is insufficient to scale the business.
For this exercise, we chose California Highway 101, a.k.a. “The Bayshore Freeway” between San Jose and San Francisco (SF).
There are number of reasons why Highway 101 would be good starting place to scale a carpooling business:
The question is how many carpool drivers would be needed to reduce the rush hour traffic along Highway 101 by, say 30%? How would that estimate compare with the number of Uber and Lyft drivers now working in SF?
Based on 2015 CalTrans data of vehicle traffic flow, we estimate that there are approximately 150,000 vehicles flowing both ways past a mid-peninsula point along Highway 101 (at Highway 92) during a typical weekday commute period of four hours (5-9 AM or 3-7 PM).
We derive the following table of driver requirements:
To get some sense of the magnitude of this requirement, we cite a 2016 report by the San Francisco Treasurer’s Office estimating a total of 45,000 Uber and Lyft drivers currently working in the City.
We conclude that it would take one-third the scale of Uber’s and Lyft’s combined operation in San Francisco for a carpool service to impact commute congestion along Highway 101, assuming an average of 3 passengers per carpool. And this is just one highway in the Bay Area.
Attracting 15,000 new drivers would be a huge undertaking. But, if the business could use existing Uber and Lyft drivers during peak commute hours and allow them to do multiple commute loops, the task becomes much more manageable.
Reverse Commuters as Early Adopters of Carpooling
Highway 101 is especially attractive as a place to start a carpooling business because of a strong city-to-suburb reverse commute.
The two other areas with strong reverse commutes are in Washington, D.C area with reverse commutes to government complexes in suburban Maryland and Virginia and along Santa Monica Freeway from downtown Los Angeles to coastal Santa Monica.
There are several reasons why highways with reverse commutes should help. It may be that these corridors should be the only places targeted, given the limited lifespan and profit potential of the business.
Reverse commuters are city dwellers who do not need a car for running errands, going out to eat or seeing a show at night. Parking is expensive. They already sense tremendous value and little added inconvenience by going carless. They are primed to be early adopters of a well-run carpooling service.
Corridors with strong reverse commutes also are attractive to the carpooling business because companies can offer drivers full time work via a combination of multiple carpooling loops mixed with periods of ride-hailing work.
Finding other metropolitan areas with strong reverse commuting would be a high priority research project for any carpooling company.
The Rationale for Market Rate Pay for Carpool Drivers
Carpool drivers have to be on-time twice a day, five days a week, 250 days a year. After all, failure could cost passengers their jobs. Work-going carpoolers are “on-the-clock”. Bar-hopping ride-hailers are not.
The management of a carpool business has to demand a greater level commitment out of its drivers than Uber and Lyft now demand of their drivers. As independent contractors, Uber and Lyft drivers have a great deal of latitude in choosing work hours and routes.
Driver commitment isn’t an issue in Waze’s altruistic vision of the carpooling business because a driver is driving for neighbors and co-workers. The desire for continued respect is the prime motivator. Waze’s choice of limiting driver pay to the $.54 / mile is consistent with this vision.
But, we believe that carpooling at scale has to involve a vast majority of drivers working for strangers, not neighbors and co-workers. It is a transactional business where driver commitment is secured by market rates of pay and the threat of being fired.
Recognizing that performance is affected significantly by the type of relationship a driver has with his passengers is similar to what Richard Titmuss discovered in blood-giving as chronicled in The Gift Relationship, a social science classic.
Basically, Titmuss found that the quality of blood was much better when it was give freely by altruistic donors than when it was given in exchange for pay.
As a result, we firmly believe that a carpooling business has to pay drivers equal to what an Uber driver gets per-mile.
An Estimate of Driver Pay
Below is an estimate of an Uber fare and related driver pay rate on a per-mile basis for a 25 mile uberX ride from Redwood City to San Francisco taking 50 minutes during rush hour. We use 80/20 as an estimate of Uber’s current driver/company distribution ratio.
We believe that a transactional carpool business has to match Uber all around in terms of gross fare rate of $1.55 / mile and driver pay at $1.18 / mile, which is set at 80% of gross fare less booking fees.
The idea of uniform fare rates and driver share across all mobility services is consistent with our vision of an horizontally integrated MaaS company and a “mesh-transit™” system that seamlessly integrates carpooling with last-mile ride-sharing.
An Estimate of Passenger Cost-Saving Over Solo Commuting
We next estimate a passenger fare assuming Uber’s fare of $1.55 / mile shared by 3 passengers. We also derive the cost savings for switching from a solo commute to carpooling.
Even with 3 passengers who share the fare, carpooling yields only a $2,417 cost saving over solo commuting. Even if passengers did commit to carpooling, we do not believe that this cost-saving would be enough incentive to “cut the cord” of car ownership and go carless.
Motivating Carpoolers to Go Carless
We were not surprised to see a lack of passenger incentive to choose carpooling over solo commuting assuming market rate pay for drivers.
Our initial thought was that government-mandated congestion pricing would be the only way the carpooling business could scale. Congestion pricing would force the cost of solo commuting even higher than the already high cost of carpooling.
We now envision carpooling as a unit of horizontally integrated mobility company. The business scales via reduced fares. These reductions are recouped by referral programs that offer credits and rewards coupons redeemable by passengers for using ride-hailing, delivery, and rental car services of related units.
In economic terms, the business scales via its “own elasticity of demand” through reduced fare prices rather than via its “cross-elasticity of demand” through raising the price of substitutes via congestion pricing.
The fundamental strategy of an integrated MaaS company today should be to reduce carpool fares to the point that passengers will go carless and unleash a demand for related services.
We think that it will take a minimum of $4,000 in cost saving to motivate a significant number of people to go carless. This implies that fares will have be reduced by an additional $1,583 a year to reach that level of cost savings.
The way to execute this strategy would be to build app payment algorithms that posts dollar credits and rewards coupons to passenger accounts that are redeemable at related companies.
The dollar value of these credits and coupons are set at the discretion of the related companies. Separately, the carpooling company negotiates payments with related companies for setting all of this up. Payments would accrue as these credits and coupons are redeemed.
In the case of tie-ins with third-party delivery and car rental companies, the carpooling company receives cash. If the carpooling business and the ride-hailing business are owned jointly, say in the case of Uber or Lyft, the carpooling unit earns accounting credits offset by debits to an intercompany clearing account.
Below is an illustration of a series of credits earned from referral programs that would recoup a $1,583 per passenger fare reduction. The distribution of the credits among the related companies is based mostly on a qualitative ordering of “spillover benefits” generated by carpoolers.
We believe that a ride-hailing partner would get the most benefit by far. The expected benefit values to delivery and rental cars companies are about equal, but far behind.
Surge Pricing Would Kill the Carpooling Business
The ride-hailing business is “on-demand” with no set commitments made by drivers or passengers. Peak-load pricing, or surge pricing, is used to balance out supply and demand.
Commuter carpooling is not “on demand”. Passengers rely on the service to get to and from work. They risk firing if late. The business depends critically on gaining customer confidence through reliability and predictability. This can be achieved by paying drivers market rates and require them to meet precise pick-up times. Surge pricing would kill the carpooling business.
Given the level of commitment by drivers, it would be reasonable to ask customers also to make weekly or monthly commitments in return for a set fare rate.
Why Would A Company Enter the Carpooling Business Today?
The success of ride-hailing apps like Uber and Lyft plus the unexpected early pace of autonomous vehicle (AV) research and development has given rise to the idea that shared mobility-as-a-service (MaaS) may be here sooner than later.
Most agree that so-called Level 4 AVs — no steering wheel or accelerator, but location-constrained — might start appearing by 2021. But, there is widespread disagreement as to when the ultimate Level 5 AVs (hereafter just AVs) will appear.
Also, there is widespread disagreement as the length of time it will take to scale AV production. For example, there are a number of optimistic predictions that mobility-as-a-service (MaaS) using AVs will start appearing around 2020 or 2021.
On the other hand, The Alliance of Automobile Manufactures, a trade group that represents Ford, General Motors, Fiat-Chrysler, BMW and more, has estimated that AVs won’t be available for sale before 2025 and it might take another three decades until 2055 when AVs represent a majority of vehicles in use.
Our view splits the difference between these two extremes. Namely, we start with the view that AVs first appear in a decade, say around 2027, with another three year to congestion-ending scale by 2030.
Given the driver-centric carpooling business has a short life expectancy and limited profit-potential, why would a company want to enter the carpool business in 2017?
Traditional Automobile Companies
We think that the fundamental reason for entering the carpooling business today is to establish a consumer-facing MaaS brand ahead of the biggest business opportunity of a lifetime — the AV MaaS business.
The only companies that NEED to enter this business are traditional automobile companies. Executives in the automobile industry knows that MaaS and AV are existential threats as they could end their 110+ year history as consumer-facing brand. Auto companies fear becoming the “Intel Inside” of the MaaS business.
We expect that both GM and Ford will seize this opportunity with the goal of scaling the carpooling business over the next decade. They are also in the unique position of subsidizing this business by using their own vehicles.
To have any success at scaling they business, they will have to partner either with Uber or Lyft to share drivers and mesh their branded carpooling with last-mile ride-sharing services offered by Uber or Lyft.
Ford has entered the ride-sharing business by acquiring Chariot. Chariot is a modern day urban jitney service using 15 seater Ford Transit vans and full time drivers. It has plans to expand to eight cities in 2017.
The picture below illustrates what we mean by using carpooling to establish a consumer-face MaaS brand. Ford is much further along than GM in establishing a MaaS brand. It has brought all of its AV and MaaS efforts under one division located in Silicon Valley called “Ford Smart Mobility.” Ford also has promoted the head of this division Jim Hackett to CEO of the whole company, a huge indicator of Ford’s priorities.
GM has just begun to roll out a niche MaaS service called Maven, an hourly car-rental service. GM is way ahead of Ford in partnering with a ride-hailing company as it has a 9% stake in Lyft.
We expect GM to enter the commute carpooling business shortly with its own consumer-facing brand and partner with Lyft. But, Lyft and GM are “frenemies”. Both want be a consumer-facing MaaS brand. Lyft might consent to a carpooling service branded as “GM Mobility powered by Lyft”. The only question is whether Lyft will enter the business with its own brand similar to Lyft Line or Lyft Shuttle.
Uber and Lyft have established MaaS brands at great cost over the last 7 years. Their existential threat is from the AV supply side not from the branding side. Uber and Lyft might enter the carpool business, but they don’t need to. On the other hand, Ford and GM need to partner with Lyft or Uber as a source of shared-drivers and to mesh a carpooling service with last-mile ride-sharing service.
Alphabet (Google) has chosen to enter the carpooling business via its Waze Division’s Carpool service. As we have mentioned earlier, Waze’s altruistic vision for the carpooling business doesn’t scale.
Google is probably in a better position for the coming era of AV MaaS than any other company on the planet. It’s Waymo division has a 5 year lead on AV R&D. With their Waze and Google Maps real time traffic monitoring apps, Google has established a brand awareness with commuters that is second to none.
But, Google is on the verge of applying the same muddled strategy to the carpooling business as it did with Android and the smartphone business.
Without an existential crisis to focus its thinking, it seems that Google is about to compete with itself once again. Namely, Goggle sold their own Nexus brand of smartphones. At the same time, they licensed Android to countless Asian manufacturers who turned around and competed with Nexus.
It is not clear what Google’s ultimate goal is. Does it want to become a consumer-facing MaaS brand with Waze taking the point? Or does it want to become an “Intel Inside” AV OEM to automobile brands like Chrysler-Fiat and a host of European and Japanese auto companies?
Uber has begun to capitalize on the synergies between its ride-hailing business and the delivery of food, groceries, and other goods. These synergies would be even greater in the carpooling business.
Look for Amazon and Walmart to seek tie-ins with carpooling companies. This could include partial financing of transit hubs where ride-hailing, carpooling, and e-commerce delivery services meet and re-distribute people and goods. Commuter favorites like Starbucks and McDonalds might also want to lease space there.
Car Rental Companies
The stock prices of Hertz and Avis shot up by double digit percentages recently when Apple and Waymo announced that they had contracted with these two car rental companies to maintain their fleet of prototype AVs.
Suddenly, there was a recognition by investors that car rental companies might not be wiped out when the era of AV MaaS arrives.
We can see another reason why Hertz and Avis might want develop an association with a carpooling company. Carless carpoolers have a need to rent a traditional car for weekends and vacations where getting a car “on-demand” just isn’t good enough.
It is a natural fit for rental car companies as most of their cars are used for business purposes and sit idle on weekends. Indeed, they currently offer such steep discounts for weekend rental that we have observed their offices jammed on Friday afternoon with carless families jumping at the chance to get a cheap rental for the weekend.
The Rationale for Public Support
If the carpooling business could scale, it would provide significant “public goods” via reduced traffic congestion and reduced automobile pollution.
This would justify public support via congestion pricing, increasing the minimum requirement to use the HOV lane, and building transfer hubs where carpools and last-mile ride-shares could redistribute passengers.
The unexpected early success of AV R&D has given rise to the idea that automobile ownership will be replaced by MaaS within a decade. This realization will actually make congestion and pollution worse in the meantime.
The reason why is that AV forecasts are starting to be used to persuade government authorities rightfully so to kill off plans for expensive, long lasting infrastructure projects like new highway lanes, light rail extensions, and bus terminals. The only positive environmental benefit of AV hype would be if it was used to kill off plans for new city-center parking structures.
Our initial thought was that government-mandated congestion pricing would be the only way the carpooling business could scale. Congestion pricing would force the cost of solo commuting ever higher than the high cost of carpooling.
Now, we see congestion pricing as a first option primarily in Asia and Europe. At one time, the technology necessary to implement congestion pricing was crude. But now, real-time pricing is possible via “connected cars” and real-time cloud-based pricing platforms using an architecture similar to MZ’s (formerly Machine Zone) RTplatform™.
In the United States, we now view congestion pricing as a “doomsday” solution to be deployed a decade from now in the event that AVs show little promise in solving the congestion problem.
And, given that there are about 263 Million passengers vehicles registered in the United States, with about 17 million vehicles sold a year, it might take another ten years, or until 2037, until AV carpooling has scaled enough to end congestion.
In the meantime, scaling the carpooling business is one of the best options we have for reducing traffic congestion and automobile pollution before the era of AVs. And, support for carpooling won’t cost the government trillions of tax dollars. It may just take a boost in the HOV lane minimum from 2+ to 3+, which the State of California is considering for Highway 101 . If a carpooling company could show some success on its own in reducing congestion along 101, this could accelerate the State’s own plans to improve management of HOV lanes.
© Lawrence W. Abrams, 2017
If the tagline for AngelList has become “The LinkedIn for Startups”, will the tagline for Product Hunt become “The Launch Pad for AcquiHires”?
To me, the acquisition of Product Hunt is another signal of the narrowing of business models for standalone apps. Product Hunt was never in the running to scale enough to attract advertisers. The referral fees from Amazon for purchases of makers’ products launched on Product Hunt never really took off.
I suggested that the Product Hunt team morph to become paid, virtual, consultants to Fortune 500 companies looking for world class UX. http://glomoinvesting.com/an-alternative-business-model-for-product-hunt/
I said that they should become the McKinsey of the “Software Eats World” World, starting with becoming the premier consultant for Slack implementations.
Instead, they are headed down the path of becoming part of Angel List’s talent pool for hire. A more curated, nuanced LinkedIn. IMHO, this is a sad day.
The growth in the numbers of technology startups valued over $1 Billion, so-called unicorns, has abruptly stopped and even reversed.
In the last several months, a number of unicorns have seen their valuations marked down by mutual funds. This has been accompanied by a number of titillating articles about frivolous spending — Dropbox’s Chrome Panda sculpture — and debauchery — Zenefits’ sex in the stairwells — claimed to be endemic to high flying unicorns.
Unlike stories of fallen unicorns, this article is about a company that “officially” is still on all unicorn lists. It is about the mobile game company Kabam, elevated to unicorn status by its last funding round in August 2014 of $120 Million by the Chinese platform company Alibaba.
Kabam had early success at developing games based on movie IP licensed from major studios like Disney’s Marvel studio, Warner Bros., and Lionsgate.
Beginning in 2014, Kabam started timing new releases to coincide with the releases of mega-hit movie sequels like Fast and Furious and the Hunger Games. The results have been a disastrous string of five failures and one success.
What caused this unicorn to stumble?
There is an inspiring YouTube video of a Keynote address given by Kabam co-founder Holly Liu at a Women 2.0 Conference in 2014.
She talks about key moments in the early history of Kabam when the founders decided to “Go Big” in her words. By this, she meant building products based on a vision of where a market was going rather where the market was at. Today, we use a hockey metaphor of “skating to where the puck is going” not “skating to where it is”
Specifically, for the Kabam founders it was deciding in 2007 to port their games to Facebook via its newly created API in a year when the dominant access to games was through the PC browser.
Then again, at the height of game company success on Facebook in 2010, Kabam founders were anticipating Facebook’s closure of its game API and made the visionary decision to develop only for the mobile phone.
Silicon Valley VCs have a bias toward supporting founders opinions over professional managers when startups periodically face existential choices.
This is because founders have vision (“skate to where the puck is going”) and want to build long-lasting companies. They have a Facebook “move fast and break things” mindset that is risky, but can result in outsized payouts in the end.
Whereas professional managers prefer risk-averse choices (“skate to where the puck is” ) that look to be the fastest path to cashing out via a buyout or an IPO.
Kabam stopped making visionary choices in 2013. What had happened was the emergence of a “talk the talk” culture championed by hired professional managers that favored strategies geared toward short-term revenue goals followed by an IPO.
In 2013, Kabam’s revenue grew 100% that year, fueled in part by the explosion of mobile phone purchases. Kabam had 3 hit games with greater than $100 Million in annualized revenue.
CEO Kevin Chou talked to the press about timetables for an IPO. He even announced publicly early April of 2014 that revenue was forecasted to grow 80+% or more and be in the range of $550 — $650 Million.
The safe bet to achieving these short term goals was to release as many games with $100 M in annualized revenue as possible. And that is what Kabam did, with disastrous results.
Visionary game founders in 2013 would have seen that only a company with multiple chart-topping $1 Billion games could ever have a chance at an IPO.
They would have known that another mobile game company Machine Zone (now MZ) was doing the visionary thing by building a ultra-low latency many-to-many game platform based on Erlang and investing in dedicated servers with field programmable gate arrays.
Visionary founders at Kabam would have stopped doing more of the same, and would have started building a new platform. They would have shut off all talk of IPO, stopped giving the press explicit financial numbers and revenue forecasts, and told investors that revenue would plummet in 2014.
In our opinion, the source of Kabam short-sighted culture was non-engineering managers brought in run Kabam’s operations. COO Kent Wakeford, a lawyer and former AOL executive, has been the face of Kabam to the press in matters of deals. To his credit, he consistently deflected any questions dealing with IPO specifics.
The real source of Kabam’s culture of “talk the talk” was former SVP of Corporate Communications Steve Swasey. The idea for making annual explicit financial disclosures can directly be traced Swasey.
The height of Kabam’s arrogance occurred in December 2013 when Kabam announced that it bought the naming rights for the Cal-Berkeley’s football field for $18 Million paid over 15 years. This idea had to be initiated by Steve Swasey. But, to be fair, this symbol of arriveste had to be approved by Kabam’s Board of Directors and founders.
One can understand the desire of Kabam’s co-founders — all three UC-Berkeley grads — to give back to their alma mater. But, founders should wait years after their IPO to give cash for University buildings. For example, buildings on the the Bay Area campus of Stanford and Berkeley include no less than Gates, Allen, Moore, Varian, Hewlett, Packard, and Wozniak.
In our opinion, we do not think Kabam can recover. It is running out of cash. The IPO window is permanently closed to mobile game companies after the Zynga and King Digital IPO debacles. Kabam’s only hope for more funds is Alibaba, its prime investor to date.
The naming of the football field at UC-Berkeley in December 2013 looks to be Kabam’s symbolic “Kiss of Death.”