While we were running Entrustet we became famous for calculating how many Facebook users would die in a given year. Morbid, I know. Jesse and I originally calculated this stat in March 2010 on the eve of our launch at South By Southwest using user data provided by Facebook and death rates by the Centers for Disease Control. Since then, our estimate has been published in just about every media outlet imagineable. Since we were acquired by SecureSafe, we continue to receive media requests, including one from a large media outlet who asked if I could update the numbers.
In January 2011, we estimated that 408k US Facebook users would pass away in 2011 and 1.78m worldwide. Since then, Facebook has added ~300m new users for a grand total of 901m active users. After running the numbers, it’s quite clear the problem is getting bigger and accelerating quickly. As Facebook adds more users and its current user base greys, 580,000 US based Facebook users will pass away in 2012 and 2.89m will die worldwide.
It’s a growing number and a growing problem that both Facebook and its users will have to deal with now and increasingly in the future. One way to deal with it is via SecureSafe, a service where you can make a list of your digital assets and decide what happens to them when you pass away. It’ll be interesting to see how these numbers keep accelerating as Facebook continues to grow and adds its users continue to get older.
Last night I attended ASECH’s Cumbre de Emprendendores (entrepreneur summit), which brought together entrepreneurs, Chile’s President and Minister of Economy to talk about the challenges and goals of economic growth via entrepreneurship. Founded about 8 months ago, ASECH is a privately funded association founded by entrepreneurs, for entrepreneurs. Their goals are to bring the Chilean entrepreneurial community together and give entrepreneurs a voice in government by lobbying for more entrepreneur friendly laws.
So far it’s been an huge success. Over 1000 entrepreneurs from 9 of Chile’s 15 regions have joined ASECH. They hosted meetups and workshops, but most importantly they’ve been shining the spotlight on the challenges faced by entrepreneurs and pushing the government to help fix them. People say that in the US entrepreneurs don’t have a lobby. We don’t. In Chile, we now do.
Why it’s important
I believe that the world is going through the biggest change since the industrial revolution and that the country that figures out how to create the right landscape and culture that fosters entrepreneurship will be best positioned for the future. Entrepreneurs aren’t asking for handouts, they want a more level playing field against incumbents. Governments around the world should be clamoring for entrepreneurs and job creators.
What’s happening in Chile is unprecedented. Between private initiatives and public policy, Chile is on the way to getting it right. Say what you want about President Piñera, but he gets entrepreneurship. He understands why its important and continues to support it both with words but more importantly with action, unlike many politicians who only pay lip service to entrepreneurship. If you contrast Chile with Argentina, the US or many countries in Europe, you’ll see the differences. You’d never see Argentina’s President at a gathering of entrepreneurs. In the US, President Obama mostly pays lip service to entrepreneurship, same as Europe.
President Piñera
Chile is uniquely positioned to take advantage of the big changes happening in the world economy. It has a stable government that is serious about changing laws to make starting a business easier: opening a bank account, receiving payments from large companies in 30 days or less and making the playing field more level. In Chile, the government is engaged, the private sector is growing. Chile also has a strong, educated, up and coming private sector made up of entrepreneurs who are eager to make sure these changes happen. They want to build businesses to make Chile a more equal place.
There are two ways to make a society more equal and more prosperous. Government can redistribute by giving away money and taking from others or businesses can redistribute wealth by creating more of it. It happens via entrepreneurship. The first country that gets this right, will have a huge competitive advantage in our new economy. Between government policy and a strong entrepreneurial sector, Chile is on the right path. It needs to keep it up.
These types of changes don’t happen by accident or in a vacuum. They are part of an ecosystem, powered by people. Congratulations to Nico Shea, Cristian Lopez from ASECH (and previously Startup Chile) for having the vision and execution to make it happen. Keep it up guys. There’s still a long way to go. And for anyone else interested in being a part of it, get involved. There are tons of opportunities. Take the leap and be a part of Chile’s entrepreneurial ecosystem.
Check out this video produced by ASECH about the struggles new businesses have to just get a bank account. For my english speakers, an entrepreneur walks into a bank and asks for a bank account for his future business. The executive just laughs him out of her office.
I’ve been living in Chile off and on since November 2010 when I arrived as part of the pilot round of Startup Chile.
When I got here as part of the pilot round in 2010, I didn’t know anything about Chile. I had the time of my life and ended up selling my business a few months after returning to the US. This is the book that I wished I had when I arrived.
I’ve now lived in Chile for over a year and will share everything I’ve learned. You’ll get the inside scoop about how to best take advantage of the program, and your time in Chile. The book is divided into four sections: Startup Chile 101, Living in Chile, Doing Business in Chile and Traveling in South America.
Startup Chile 101 talks about the program’s history, the reimbursement process and how to get the most out of the program. The second part covers Chilean culture, where to live, safety and a city guide detailing where to go out, have a beer or have a nice meal. Part three talks about the Chilean entrepreneurial culture, doing business in Chile and hiring talent. Finally, the last section has travelouges of places I’ve gone in South America where you might enjoy taking a trip for a long weekend.
The book costs $10 and I can guarantee it’s worth it. If you have any questions, comments or feedback, please shoot me an email, otherwise enjoy the book!
Buy the PDF on Gumroad
Note: This book is not authorized by Startup Chile or anyone in the program. All opinions, recommendations and advice are my own. Please don’t confuse this books with anything official.
Many are calling Facebook’s IPO a bust because it didn’t pop on the first day. Others are decrying the fact that Facebook “took all the profits for themselves” at the expense of individual investors. Facebook’s stock may or may not be overvalued (I think it is, by a lot), but calling it a bust and complaining that retail investors aren’t making the profits they are “entitled to” is ridiculous and misses the larger point. For example, in a Forbes article titled 7 Reasons Why the Facebook IPO was a Bust, Rich Karlgaard writes:
Facebook left nothing for the common investor. The insider pig pile of PE firms and celebrity Silicon Valley angels took it all. This is a rather new, post-Sarbanes-Oxley fact and it should make Americans very, very angry. When Microsoft when public in 1986, its market value was $780 million. Microsoft’s market value would rise more than 700 times in the next 13 years.Bill Gates made millionaires of thousands of ordinary public investors. When Google went public in 2004 at a $23 billion valuation, it left less on the table for you and me. Still, if you had invested in Google then and held your stock, you would be sitting atop a 9x return. Zuckerberg and his Facebook friends took it all.
That Facebook and its investors acted in its self interest shouldn’t be surprising and it shouldn’t make people mad. They have no responsibility to the average Joe clamoring for a quick buck by purchasing Facebook stock. Zuckerberg and his team are thinking “The average investor hasn’t done anything, they didn’t take any risks like our previous investors, they just want to piggyback onto our gains. They’re greedy.”
Facebook sold its private stock at the highest valuation they could, which brought Facebook and its previous investors the most cash possible. It was as if they were selling their company to the public, not opening it as a great investment opportunity. They viewed the new shareholders as suckers, not partners.
With the advent of private equity in the 80s and its explosive growth into the 2000s, the pension funds and institutional investors have gotten more creative and powerful. They invest earlier and in huge amounts, into the multi-billions. The only people who can’t get early exposure are the regular joes who “play the market.” Its now a casino and the game is rigged. Facebook, the banks and the press sold the story using the old narrative, instead of the new role of public capital markets.
Facebook’s IPO shows this new role. In a private equity driven, post Sarbannes Oxley world, the returns are getting shifted to those who took the initial risk, not retail investors. These initial investors are playing a game of musical chairs and retail investors are the last stop, the last idiots to buy into the game. It’s rigged so that the retail investors don’t have a seat if (when) the music stops. And it’s purposely designed that way.
What Facebook, its investors and the banks did isn’t new. It’s just the latest example. Groupon did the same thing, but worse. Months before they went public they took a series G round valued just shy of $1b. The founders and investors took $810m off the table and put it in their pockets. The new investors not only allowed this, they did so enthusiastically because they knew that Groupon would go public at a higher price and the “stupid” general public would be left holding the bag when the price inevitably fell. Groupon is now down 54% from it’s IPO price.
Retail investors should not be mad at Facebook for acting in its self interest and raising as much money as possible. Retail investors should be pissed at the banks who hyped Facebook as the next great investment opportunity and the press who bought into the hype and the outdated narrative. They should be pissed at additional government regulation that makes it hard for companies to go public earlier and leaves more gains for private equity. Anyone who bothered to look at Facebook and Groupon’s previous private rounds and private sales on Secondmarket would have been able to see this coming.
It’s the new normal. Tech companies don’t use the stock market as an efficient way to raise capital like it was intended. It’s a way to cash out previous rounds and leave potential losses with the general public. It’s one giant casino with the public as suckers. This farce will only stop when retail investors realize that tech IPOs are a loser for most of the general public or refuse to play in the casino…er stock market.
