During Chicago Toy And Game Week, Products Get Licensed

Last week, I had the pleasure of interviewing a remarkable toy inventor named Mary Couzin. In 2003, Couzin founded Chicago Toy and Game Week — affectionately known as ChiTAG — to bring toy inventors, toy companies, and toy lovers together. Now in its 16th year, the annual celebration of play and innovation has become the event for toy inventors of all ages and degrees of experience. Currently taking place right now, this event is unlike any other I’m aware of for inventors in the best way possible.

It’s beloved by the industry, for starters. Event sponsors include industry titans like Mattel, Hasbro, Spin Master, LEGO, and Goliath Games. And get this: Product acquisitionists from more than 90 companies, representing 26 countries, will be there. Wow. That’s a lot of decision-makers in one place. Every year, new inventors, professionals, and even young inventors license their toy and game ideas as a result. That makes ChiTAG a uniquely successful event for inventors.

Unlike typical trade shows — such as Toy Fair in New York City — the focus at ChiTAG is squarely on invention, not retail. There are several distinct components. This weekend, more 30,000 attendees (half of whom are children) will peruse and interact with toys and games exhibited at the fair. Retailers including Target also make a point of attending the fair, because they can observe how customers interact with the toys and games on display.

Before the fair gets underway, there’s a two-day conference for new inventors focused on education, including how to pitch. Professional toy inventors — who set their own meetings with companies looking for ideas — are provided with meeting space. Young inventors are encouraged to compete in a challenge by submitting videos of their invention ideas, and receive feedback and mentorship in return. And finally, there’s an awards gala. (This year, my former bosses David Small and Paul Rago from the startup Worlds of Wonder are being recognized for their decades of innovative toys with a Lifetime Achievement award.)

In the 1990s while she was in real estate, Couzin pursued her love of inventing as a side-hustle. After achieving some success, she began advising and representing other toy inventors.

“Coming together can only help the industry,” she explained in a phone interview. “We really make a point of this feeling like a community. People who don’t carry that out are not invited to return.” Industry leaders make themselves available because they view this as their time to give back, she added. Opportunities to network are a core part of the experience. “You could sit down to breakfast with the head of Hasbro,” she said.

I personally know of inventors who have licensed their ideas because of ChiTAG. When novice inventor Eduardo Matos had an idea for a new toy that he thought was a hit, he considered his options. Sharing his royalties with a toy broker didn’t appeal to him. What he heard about ChiTAG on LinkedIn sounded too good to be true. But after an executive convinced him it was the real deal, he took the risk and paid to participate in the conference for new inventors, included the opportunity to pitch.

It paid off. He received a lot of interest, and eventually secured a licensing deal with a leading toy company. His invention is scheduled to debut next fall.

“ChiTAG a must,” he said. “The information shared was hugely valuable. For example, I learned that when a company asks to option your product, the typical fee paid is $5,000 a month. When my invention was optioned later that same day, I knew to ask for that.”

His recommendations? Take as many notes as you can, attend the entire conference, make your prototypes look as professional as possible, and have a hit on your hands.

When you have an idea for a new product that you want to commercialize, determining how to spend your resources is incredibly important, because they’re always limited. This is true for startups that raise millions of dollars as well as independent inventors. What’s worth it? What’s not? When? These questions are especially relevant when considering industry events like trade shows, as costs quickly add up.

At the end of the day, being able to access the people in your industry who are decision-makers is remarkable. I wish more trade events provided access like this. (If you’re looking to license your product idea, I don’t recommend buying a booth and waiting for someone to walk up. Read more of what I believe inventors need to know about trade shows.)

Missed out this year? There’s a wealth of information on the ChiTAG website, including a regularly updated blog and white papers.

Mary Couzin’s Tips For Inventors

1. Do your research first. Does your product idea already exist? Use Google to find out. You could also visit a local retailer or toyshop. Ask, has this been done? Will it sell?

“It’s so easy to check. It’s not like the old days when you had to visit every show and store. Otherwise, you’re just spinning your wheels.”

2. Don’t give up too soon. “Persistence is the number one quality you must have to become successful at toy inventing,” Couzin said. “Believing in what you have will carry you for the most part.”

Remember, no one has all the answers all the time. So take the opinion of others with a grain of salt. Couzin says she abstains from passing judgment on any toy or game for this reason.

3. Tell your story in the media. She emphasized the importance of storytelling, and referenced the success of the startup GoldieBlox. “Their marketing was brilliant. Before the product was as good as it is today, it had sold the public.” (Interestingly, GoldieBlox describes itself as a disruptive media company on its website.)

Toys are part of the entertainment industry, she pointed out, which means they compete for attention with movies, music, books, and television. “We’re the only ones not telling our story!”

If you want to succeed in the toy industry, you absolutely must attend this show.

Apple supplier AMS cuts forecast, indicating poor iPhone demand

VIENNA (Reuters) – Austria’s AMS (AMS.S), which makes facial recognition technology, became the latest Apple supplier to cut its revenue forecast, adding to growing evidence that the latest iPhones are not selling well.

The logo of the multinational semiconductor manufacturer AMS (Austria Mikro Systeme) is seen during a annual news conference, in Zurich, Switzerland February 6, 2018. REUTERS/Moritz Hager

The Swiss-listed group cut its fourth-quarter revenue outlook by 15 percent and pushed back its medium-term targets, blaming “recent demand changes from a major customer”.

AMS, which specializes in sensors, did not name Apple as the customer, but analysts estimate that the U.S. giant accounts for 40 percent of the Austrian group’s sales.

Apple (AAPL.O) shocked investors two weeks ago with a lower than expected sales forecast for the Christmas quarter, prompting suppliers including U.S. firm Lumentum (LITE.O), British chipmaker IQE (IQE.L) and screen maker Japan Display (6740.T) to issue warnings that pointed to weakness in new iPhone sales.

Like Lumentum, AMS supplies Apple with software components needed for its FaceID technology.

Anglo-German chip designer Dialog Semiconductor (DLGS.DE), which struck a $600 million deal with the U.S. tech giant last month bucked the negative trend when it said late on Wednesday it does not see a drop in demand from Apple.

Dialog justified this by pointing out that it supplies many more products than the latest iPhones.

For the past year, investors had largely been willing to overlook stagnating unit sales of the iPhone because average selling prices kept rising. But Apple now faces fierce competition from mid-priced phones from makers such as Xiaomi Corp (1810.HK).

The California-based firm started selling its latest phone generation, the iPhone XS and XS Max in September and the XR model last month.

The new AMS guidance suggested between 11 and 18 million fewer iPhones would be produced in the fourth quarter than an initially estimated 77-82 million, Credit Suisse analysts said in a note to customers.

“This is largely in-line to read from recent Lumentum warning,” they said, adding the Lumentum guidance would have implied an impact of 15-20 million iPhones.

VOLATILE SHARES

AMS shares gained as much as 6.4 percent to 29.65 Swiss francs after a steep drop in early trade.

They have lost nearly 30 percent since Apple’s latest earnings release and are down 70 percent since the beginning of the year and some investors see a buying opportunity, said traders.

AMS expects revenue to come in between $480 million and $520 million in the three months to Dec. 31, compared with the $570-$610 million it forecast last month.

The adjusted operating margin for the quarter is expected to reach the low to mid-teen percentage range after previous guidance for the margin to rise to 16-20 percent.

AMS also abandoned its 2019 revenue target of more than $2.7 billion, saying it now expects annual double-digit revenue growth for the coming years.

It still aims for a 30 percent adjusted operating margin but no longer gives a specific time frame. It had already postponed the target to 2020 from 2019 in July, at the time due to order delays from a major customer.

“These guys have no visibility any more,” said Mark Taylor, senior sales trader at Mirabaud Securities’ Global Thematic Group.

AMS, which has invested heavily in research and development and in production expansion, is now seeking to address underutilized facilities, increasing competition and its reliance on Apple.

Although a number of analysts have cut their recommendations recently, many target price recommendations are still above 40 Swiss francs. “I wouldn’t be surprised to see (the stock) rally,” said Taylor.

additional reporting by Helen Reid in London; Editing by David Goodman and Keith Weir

Here's How Leaders Get in Their Own Way Every Single Day

Leaders setting goals or New Year’s resolutions tend to focus on what they need to start doing: tracking more data, investing in better software, establishing a new annual review process.

While implementing new tracking or setting clearer review standards likely would make an impact, it’s what leaders are already doing that’s often the biggest barrier to their success.

Customer feedback, employee pushback, or failed marketing campaigns sometimes send signals about what you should stop doing. A lot of what you do, however, feels like forward motion but really keeps you in place. Your ideas about running your company or changing your industry are sometimes misguided, but that feedback’s a lot harder to gather.

How do you know, for example, if your goal-setting methods are effective? What tells you whether your risk-taking philosophy works? You’d need to make it through several quarters before you could tell whether your outlook was paying off. But there are three ways I’m sure you are hurting yourself and don’t even know it.

Adopting One Outlook Is Dangerous

We tend to absorb the thoughts we’re surrounded by. It’s not a weakness. It’s human nature. A 1969 study by French psychologists found that people who discuss ideas with others develop stronger attitudes than they’d held on their own. Their viewpoints intensified as they found more people with their perspectives, and human psychology hasn’t changed much in the intervening five decades.

The psychologists concluded that group consensus leads people to “adopt more extreme positions.” That phenomenon isn’t isolated to political discussions like the ones the researchers started. Our thoughts and behaviors are reinforced by what we come in contact with.

Don’t get trapped in an echo chamber where you’re only exposed to outlooks that affirm your own. It’s hard to see that something isn’t working. Worse, it’s difficult to come up with new ideas with only one perspective in mind.

3 Things You Can Stop Doing Today

Ditching a long-standing mindset is hard work, and that’s especially true if a leader’s viewpoints have been reinforced by policies or processes. But in my experience, there are three things leaders can stop doing today to make a new start:

  1. Stop hustling. “Hustle” has become a buzzword, shorthand that someone’s an endlessly hard worker. But hustling prevents thinking. If you’re always hustling — and trying to get your culture oriented around hustling — you’re leaving no space for creative ideas. Hustling is meant for execution, but creativity takes space.

    My best ideas don’t come during the hustle. Most come when you are not thinking about the issue like when you are on a run or in the shower. When I get away from the computer screen, my mind begins to think about problems differently. When I write speeches, I need space to think about stories and their key points.

    You can’t force the creative process; doing something unrelated sparks fresh approaches.

  2. Stop the complexity. Companies try to tackle too many strategies and find themselves making things too complicated. It’s hard for bosses to explain to employees what’s needed, and it’s even harder for customers to understand. Simplifying strategies doesn’t dilute their effectiveness — it helps them stick.

    Changing my sales flow to a two-step process impacted new clients enrolled. Over the years, I’d listened to experts’ different strategies. I found that first having a short qualification call was a rapport builder. Only in the second step do I dive into defining the problem and offering a solution. It’s simple, and I vow not to break this process after seeing how much easier it’s been to enroll new clients.

  3. Stop following others. Fast-growing companies don’t follow others. Imitation results in blander results for the copy, who can’t duplicate the excitement of the original. It’s good to remember that no matter how dominant a brand is, there’s always room for a competitor doing something different. MySpace was once the No. 1 site in the U.S., outpacing even Google, but that didn’t stop it from losing out to Facebook.

Rather than overwhelm yourself with all the things you should start doing, consider what you should quit. While some leaders have a hard time admitting they’re wrong, that can hurt their chances of success. And failing is a lot more painful than quitting.

Tencent profit beats estimates as investment gains offset gaming weakness

HONG KONG (Reuters) – Tencent Holdings (0700.HK) said on Wednesday its third-quarter net profit rose 30 percent, beating estimates, as investment gains offset a weak performance in the Chinese company’s core gaming business.

FILE PHOTO: Tencent Holdings Chairman and CEO Pony Ma (C) visits the Tencent booth following the opening ceremony of the fifth World Internet Conference (WIC) in Wuzhen, Zhejiang province, China November 7, 2018. REUTERS/Stringer/File Photo

Net profit at China’s biggest gaming and social media group in the July-September quarter rose to 23.3 billion yuan, compared with an average estimate of 19.32 billion yuan, according to 15 analysts polled by to I/B/E/S data from Refinitiv.

Revenue rose 24 percent to 80.6 billion yuan ($11.59 billion), the slowest quarterly growth in more than three years, in-line with estimates.

China, the world’s biggest gaming market, has been imposing tougher rules on the industry, including a halt to new game approvals since March and calls to tackle young people’s gaming addictions.

This contributed to Tencent reporting its first quarterly profit fall in more than a decade in its April-June quarter. The company also cut its gaming marketing budget.

Tencent shares, which more than doubled in 2017, have dropped by about a third so far this year, wiping about $165 billion in value from the group’s market value.

In the third quarter, Tencent benefited mainly from a more-than-doubling in net gains from its investment activities, including the initial public offering of online food delivery to ticketing services company Meituan Dianping.

Douglas Morton, Head of Research, Asia at Northern Trust Capital Markets, said the result beat was a positive surprise even if not counting the investment income.

“What the real surprise is or the real comfort for the market will be that the mobile gaming data which beat expectations,” he said.

Tencent said smartphone games revenues grew 7 percent year-on-year and 11 percent quarter-on-quarter to 19.5 billion yuan, mainly due to contributions from new games. Despite the new approval freeze, Tencent already had 15 approvals and released 10 titles in the quarter, it said in the filing.

PC games revenue dropped 15 percent year-on-year due to continued user migration to mobile games and high base in the same quarter a year ago.

Advertising revenue, which accounts for 20 percent of the company’s total revenue, rose 47 percent, supported by a 61 percent jump in social and other advertising.

Tencent said its cloud services revenues more than doubled year-on-year in the quarter while the number of paying cloud customers grew at a triple-digit percentage rate year-on-year. Cloud revenues for the first three quarters of the year exceeded 6 billion yuan, it said.

Monthly active user number of WeChat, the most popular social network in China, rose incrementally to 1.08 billion.

($1 = 6.9536 Chinese yuan)

Reporting by Sijia Jiang; Editing by Muralikumar Anantharaman and Jane Merriman

Here Are the Details on the Big American Airlines Checked Baggage Fee Settlement. Passengers Have 14 Days to See If They Qualify

Of all the little things that add up when you’re traveling, it’s checked baggage fees that often annoy airline passengers the most.

For a while there it seemed like the federal government was going to step in and put restrictions on them, in fact–alas, when President Trump signed the new aviation law earlier this year, that provision wasn’t included.

But at least some passengers will be getting some relief anyway, after American Airlines just settled a class action lawsuit, providing as much up to $200 or more to aggrieved passengers.

The lawsuit, filed in federal court in Massachusetts, claimed that American Airlines  charged passengers for checked bags that should have been free during a five year period.

It’s confined to five categories of travelers, but over a long enough time period that the number of people affected seems like it could be significant.

So if you flew on American Airlines between July 2013 and June 2018, and you fit into one of the following five specific categories, you’ll want to take a minute to register.  You’ll have to act quickly however, because the deadline to register for payment is November 26. 

The five categories are:

  • American Airlines passengers who flew First Class or Business Class on domestic flights during the five year period
  • American Airlines passengers who flew Business Class on international flights
  • American Airlines passengers who had AAdvantage elite status or its equivalent, or were traveling with another passenger who had that status
  • American Airlines passengers who flew while an active member of the U.S. military, whether on orders or for personal travel
  • American Airlines passengers who flew while a dependent of an active member of the U.S. military on orders.

If you read the complaint in the case, which was filed in U.S. district court in Massachusetts (link opens in .pdf), it seems this all came to light after passengers claimed on Twitter and forums like flyertalk.com that American had charged them for checking bags that should have been free.

In an emailed statement, an American Airlines spokesperson told me that American doesn’t admit that it did anything wrong here, but it’s settling the case anyway. As you might imagine that’s a common result, where companies decide that fighting would just take too much time and money.

The settlement was reported on Twitter by by a Harvard Business School associate professor named Ben Edelman, and by The Points Guy. In theory, if you’re on the list of passengers getting compensation, you should receive an email telling you about the settlement.

But of course, that’s not exactly foolproof. So there’s a website you can go to and take a few minutes to register.  

The payouts are supposed to range from between $18.75 and $200 plus interest for each improperly charged bag, so the high end could be significant–certainly worth most people’s time to spend a few minutes filling out a form.

Here’s the full American Airlines statement on the lawsuit:

“American denies the allegations in the lawsuit, and the Court has not made any determination regarding the merits of the lawsuit. Nonetheless, we believed a settlement was the best outcome for the company and its customers. Accordingly, as part of the settlement agreement, American will refund baggage charges to certain customers participating in the settlement.”
 

Rest In Peace, Stan Lee. (Here's the Big Break He Told Inc. About in 2009)

The comics world mourned the death Monday of Stan Lee, the man who dreamed up some of the most iconic characters and superheroes of the last 60 years–including Spider-Man, Hulk, the Avengers, the X-Men, the Fantastic Four, Black Panther, and Daredevil. 

Lee was also a reluctant entrepreneur. His creations became the center of an empire that Disney bought for more than $4 billion. But he told Inc. in 2009 that never loved the business side of his business. 

As he remembered, if you had to point to one big break in his life, it was the advice his wife gave him in the early 1960s when he was about to quit the comics business. His boss was his cousin’s husband, Martin Goodman, and Lee was annoyed that he was being pushed relentlessly to copy the competition, and wanted to go out on his own.

I said to my wife, “I don’t think I’m getting anywhere. I think I’d like to quit.” She gave me the best piece of advice in the world.

She said, “Why not write one book the way you’d like to, instead of the way Martin wants you to? Get it out of your system. The worst thing that will happen is he’ll fire you — but you want to quit anyway.”

So in 1961 we did The Fantastic Four. I tried to make the characters different in the sense that they had real emotions and problems. And it caught on. After that, Martin asked me to come up with some other superheroes. That’s when I did the X-Men and The Hulk. And we stopped being a company that imitated.

Lee’s wife died in 2017. They’d been married for 69 years. He leaves a daughter, and a legacy that people won’t soon forget.

Here’s what else I’m reading today:

Do not hire this 1 person

Seth Godin has a new book out. Like most of what he writes, there are some very interesting takeaways. If you take just one point away as an entrepreneur however, here’s his best advice about the one person no startup should ever hire: a chief marketing officer.

Instead, “go to a shelter and get a German shepherd,” he suggests in an interview with Inc.’s Leigh Buchanan, and train it to bite you every time you think about hiring a CMO. 

That’s because Godin thinks most startups fail because of product problems, or customer service problems that need to be addressed. And the person who is in charge of overseeing product and customer service–and yes, marketing and everything else–is called the CEO. Or maybe the founder. The entrepreneur. In other words, you.

It’s the hardest, best job you’ll ever have, and it’s the one you’ve signed on for. Relish it.

Netflix has some truly eye-opening new technology

Oh, there’s nothing dystopian about this at all: Netflix just unveiled a feature it calls EyeNav, in which its iPhone app tracks your eye movements so you can select shows by simply staring at them, and press stop by sticking out your tongue. Once you get past the inherent creepiness, the entertainment giant says it’s excited about how this could make its app more accessible.
–Bill Murphy Jr., Inc.

The war at 7-Eleven

There’s a war going on inside 7-Eleven, at least according to some franchisees who say the company is tipping off Immigrations and Customs Enforcement (ICE), and resulting in raids on stores owned by it least cooperative store owners.
–Laureen Etter and Michael Smith, Bloomberg

A Black Friday prediction

A new study says Americans plan to spend $520 each on average during Black Friday, with over half of U.S. residents making at least one in-person purchase. It’s not exactly a double blind scientific study–online coupon site Slickdeals surveyed 2,000 people. But it’s good news, so we’ll take it.
SWNS

What on earth was Hasbro thinking?

The game of Monopoly is 83 years old. Hasbro owns the copyright now, and for almost 25 years, they’ve licensed lots of different versions, from Auburn University-themed edition to an X-Men Collector’s Edition. The latest edition to make the rounds, just in time for the holidays: Millennial Monopoly, in which players don’t buy real estate (it’s too expensive), and collect experiences rather than cash.

The rules say the player with the most student loan debt rolls first, and the rules recommend playing in your parents’ basement. Millennials are not amused, which leads to the question: who did they think would buy this?
–Gina Loukareas, Boing-Boing

How Amazon's Marketplace Supercharged Its Private Label Growth

In 2009, Amazon launched its first private label brand AmazonBasic. Today, Amazon has 100+ private label brands that offer over 4,600 products. That explosive growth has been supported by rich data that Amazon mines from its marketplace. The modern monopoly’s control over search results on its website, mobile app, and Alexa voice queries further exacerbates the problem by giving its own brands premium listing space (or in the case of some voice searches, the only listing).

Reinventing the private label game

To be clear, Amazon is a late comer to the private label game. For decades large retailers such as Walmart, BJ’s, and CVS have placed private labels on their shelves at a cheaper price than other brands.

In the decades before the rise of online marketplaces, retailers stocked their shelves by making deals with big manufacturers like Proctor & Gamble or Nestlé. Those big consumer good conglomerates wielded the power to shove out smaller brands, demand premium shelf space, and trade for other perks as part of their deals with big retailers like Walmart. Consequently, Walmart could, and did, use the data it gathered in its stores to build its own private label brands.

On its face, Amazon’s approach looks no different – that is, it gathers data on products sold of the website and builds out a private label strategy with that data. However, Amazon’s platform business and market share gives it advantages that brick-and-mortar retailers could only ever dream of.

Predatory pricing in Amazon’s private label brands

The proliferation of Amazon’s private label brands has consumer good sellers squirming. Because Amazon prioritizes growth over profits, the tech giant has been able to move quickly across many product categories from electronics to fashion to home and kitchen, pet products, cosmetics, health and beyond. Like the private label brands of traditional retailers, Amazon’s products often sell for cheaper than other brands on its own market, and often (though not always) at a loss.

As Lina M. Khan wrote in the Yale Law Review in an article discussing antitrust issues with Amazon, “The economics of platform markets create incentives for a company to pursue growth over profits, a strategy that investors have rewarded. Under these conditions, predatory pricing becomes highly rational.”

Amazon’s multi-channel revenue, including the revenue it makes from third-party sellers on its marketplaces, subsidizes its private label experimentation and dominance. But Amazon’s platform has done more than provide financial cover for Amazon’s private label brands, it has also provided the right data.

Data richness and search results

Amazon’s marketplace catalog dwarfs even the largest traditional retailers, such as Walmart’s catalog (especially pre-marketplace). Amazon democratized access to the consumer for sellers. Soon small brands and living room product startups could open shop on a marketplace that commanded over half of online sales.

That boon cut both ways. Amazon gained access to all the data for itself, and the quality of the data is much richer and more granular than any data collected by traditional retailers at their stores.

The combination of granular data and the democratization of access has quickly benefited Amazon in a matter of years. Consider Anker, a smaller brand of portable battery packs, speakers, and other electronic goods. Before 2017 they were sold almost exclusively on Amazon’s marketplace. Compare and contrast Anker’s portable bluetooth speaker with Amazon. Anker’s is $40 and Amazon’s is $20.

Both even come in black, blue, and red! Notice Amazon is out of stock of its blue speaker. Most of its private label brands carry a limited stock of each item to test their performance.

In addition to hyper specific data mining, Amazon also accounts for 49% of online product searches, while another 36% of product searches start on Google and point to Amazon first (according to research firm Survata). Amazon can, and does, list its items before competitors. In the case of voice shopping via Alexa using generic product terms such as ‘batteries’, the smart speaker chooses an Amazon brand for the consumer (a practice that, among others, is inviting antitrust scrutiny).

How manufacturers and resellers should respond

Given Amazon’s monopolistic advantage, what can product sellers do? In the short term, pulling your product from Amazon simply isn’t practical. Amazon accounts for over half of all online sales. They have the consumer goods retail market by the wallet.

Rather than just hoping that antitrust regulation is successfully brought against Amazon, product vendors should build or acquire a marketplace of their own. Listing stock on competing marketplaces is a good idea, but it isn’t enough. The publishing industry tried that approach with books, and it found little success. By building or buying a competing marketplace, product companies can scale niche, specialized marketplaces that can serve as a competitive moat against Amazon.

Bitcoin: The Calm Before The Storm

Source: CCN.com

Bitcoin: The Calm Before The Storm

Bitcoin (BTC-USD) has been remarkably stable in recent months. In fact, for over two months now Bitcoin has traded in an incredibly narrow range of around $6,000 – $6,800. There doesn’t appear to be much news worthy of moving prices right now. So, Bitcoin remains extremely calm, for now.

Bitcoin 1-Year Chart

Source: BitcoinCharts.com

Nevertheless, despite the tame atmosphere surrounding Bitcoin for the time being, this is predominantly likely just the calm before the storm, a storm that is likely to lift Bitcoin prices substantially higher over the next several years.

This is not the first-time Bitcoin has seen calm waters. We’ve seen similar periods of modest volatility, and humble price swings. Primarily, similar low volatility phenomenon have occurred in the very late stages of Bitcoin bear markets (the opposite of vertical moves and wild price swings we see at the height of Bitcoin bull markets). Everyone seemingly loses interest, volume dries up, news flow quiets down, and then, when you least expect it, the next Bitcoin bull market begins.

I expect the current “quiet period” to lead to a new Bitcoin bull market soon. So, what will be the catalyst to light a match beneath Bitcoin prices? There are several developments that should begin to improve sentiment, and start to move prices substantially higher going forward.

Bitcoin at $250,000 in 4 years?

Billionaire investor Tim Draper recently reiterated his $250,000 Bitcoin price target by 2022. Draper believes that many of us will be using cryptocurrencies to buy coffee and other everyday things 5 years from now instead of implementing fiats everywhere. Naturally, Draper is not alone in his bullish analysis on Bitcoin. Fundstrat’s Tom Lee, and many other prominent Wall St and non-Wall St figures believe Bitcoin will be worth much more in the future.

Source: CreditCards.com

Tom Lee even predicted that Bitcoin would be at $25K by the end of this year. Well, that does not appear very likely now, nevertheless, Bitcoin could be worth much more several years from now. The problem with Bitcoin price targets is that they are extremely difficult to pin down, but due to the fundamental factors surrounding Bitcoin the overall trajectory should remain higher long-term.

Jamie Dimon Does Not Care Much for Bitcoin

On the flipside of the bull argument many Wall St insiders like JPMorgan’s (JPM) CEO Jamie Dimon, and even revered investor Warren Buffet have become avid skeptics of Bitcoin. In fact, in a recent interview Mr. Dimon shared just how much he does not care for Bitcoin.

I never changed what I said, I just regret having said it. I didn’t want to be the spokesman against Bitcoin. I don’t really give a sh*t, that’s the point. Blockchainis real, it’s technology, but Bitcoin is not the same as a fiat currency.

Great insight from Jamie right there, which may accurately represent the viewpoint of many longtime banking and Wall St insiders. So, why should Mr. Dimon care about Bitcoin, or like it or dislike it at all?

Source: imgflip.com

Well, Mr. Dimon is the head of one of the wealthiest and most powerful banking institutions in the world. Incidentally, JPMorgan, like every other major bank in the U.S. owns part of the Federal Reserve through stock. Additionally, member banks like JPMorgan get to assign 6 of the 9 board members at every regional Federal Reserve Bank.

Some readers may think the Federal Reserve is part of the U.S. government but it is not. It is sanctioned by the U.S. Congress through the Federal Reserve Act, but is ultimately a private enterprise owned by member banks like JPMorgan, Citi (C), Bank of America (BAC) and others. Therefore, it is logical to presume that the same entities who own majority stakes in major U.S. banking institutions by default own and through the appointment of most directors control the Federal Reserve.

It seems convenient that a private organization like the Fed has a monopoly on dollar creation. The organization creates all the dollars “it sees fit”, then lends out these dollars to member banks like JPMorgan at a very low rate, the member banks then create all the credit they want through fractional reserve banking (typically at a rate of 10-1, credit – reserve), and then lend it to the population, small businesses, etc. at a substantially higher interest rate.

This is the system that we live in, the fiat reality. Who do you think a system such as this favors and benefits, the people making the rules, or the general public?

So, of course Jamie Dimon does not care much for Bitcoin. In fact, he should probably fear and despise it, because Bitcoin and cryptocurrencies in general represent a real alternative and thus a true threat to the current status quo fiat finical order.

The Bitcoin/blockchain system essentially assumes control over currency from big banks like JPMorgan, and returns the power over currency into the hands of the population, essentially leveling the financial field for all participants in the market. This takes the potential for predatory manipulation, devaluation, inflation, and other unpleasant factors essentially out of the financial equation.

Don’t Mind the 2,000 Plus Cryptocurrencies

Critics often point to the fact that there are now over 2,000 cryptocurrencies in circulation. Some skeptics claim that the continuous creation of new digital assets delegitimizes the entire space, and will ultimately render most or all cryptocurrencies close to worthless.

However, the cryptocurrency complex has maintained a relatively stable market cap of roughly $200 billion for months now, despite the creation of new coins. This implies that new coins coming online may enjoy very limited success going forward, and the prominent coins of today will likely turn out to be the widely-used coins of tomorrow.

Source: ViceNews.com

As the segment matures barriers to entry will become higher as there are a number of dominant cryptocurrencies that are likely to retain their leading market positions indefinitely. Aside from specifically designed coins to handle certain functions like Ripple (XRP-USD) Ethereum (ETH-USD) and others, prominent transactional coins like Bitcoin Cash (BCH-USD), Litecoin (LTC-USD), and others will very likely retain extremely high portions of the transactional market.

This suggests that while these coins will increase in value substantially over time, newer coins coming online with similar functions will likely remain largely irrelevant due to the recognition and widespread use of current digital assets, and higher barriers to entry going forward.

Still Waiting on a True Bitcoin ETF

The SEC continues to stall on a Bitcoin ETF. In September, the ruling on 9 Bitcoin ETFs got postponed, but a decision is expected in the near future. The introduction of Bitcoin ETFs will likely open floodgates into the Bitcoin market, and will propel Bitcoin into the main stream as far as conventional investible assets are concerned. This will very likely help ignite the next bull phase in the bitcoin era.

Right now, investors have very limited access to Bitcoin. They can either buy Bitcoin directly through a cryptocurrency exchange, they can trade Bitcoin futures contracts, or they can buy the Grayscale Bitcoin Investment Trust (OTCQX:GBTC), none of which are ideal options for the vast majority of retail and institutional investors. Much easier access will be granted via multiple mainstream Bitcoin ETFs.

Furthermore, even if the SEC postpones its decision again or does not approve an ETF at this time, the path is already set for Bitcoin to be accepted into the investment world on a mass scale. Bitcoin futures already exist and trade freely on the biggest exchanges in the U.S. Furthermore, Bitcoin has been officially classified as a commodity, is receiving increased regulation, and the next logical step is to introduce ETFs. Also, there are many prominent companies now pushing for Bitcoin backed ETFs to be approved.

Institutions Likely to Move In Soon

One very atypical factor about the Bitcoin phenomenon is the extremely limited role traditional investment houses and Wall St in general has played in it. Aside from shorting Bitcoin from the highs, it appears that institutional investors have made very little money in Bitcoin, thus far. This is precisely why the next wave of capital capable of taking Bitcoin substantially higher will likely come from big institutional investors. This could include the creation of Bitcoin backed ETF’s and other asset classes, infrastructure projects, development and funding of supporting companies, direct investment, and so on.

Opportunities in the digital asset space for investment companies are essentially limitless, and this is precisely why Goldman Sachs (GS), and others are starting to venture into the crypto space. I expect that when the next Bitcoin bull market arrives, Wall St will not be sitting it out this time. There is simply too much money to be made, and the space has reached scale capable of attracting many billions in institutional dollars. So, expect prices to go especially high next time around due to excess speculation from the guys on Wall St.

Improving Functionality

Another factor that is likely to propel prices higher is the continuously improving functionality of digital assets. Whether it’s the Lightning Network, transactional coins like Dash (DASH-USD), ZCash (ZEC-USD) and others, big multinational corporations starting to accept Bitcoin, or other developments, it appears that the trend is leading to one outcome, much wider use of digital assets in the future.

The Lightning Network is optimizing Bitcoin’s functionality, alt coins provide safer, or more anonymous modes of conducting commerce, and more and more companies are openly beginning to accept Bitcoin seemingly every day. Moreover, Bitcoin returns the control over money back to the people where it ultimately belongs. I agree with Mr. Draper, 5 years from now we are likely to be using Bitcoin and alt coins much more readily than most people expect, and because of this Bitcoin’s price is likely to be much higher in 2022.

The Bottom Line: The Calm Before The Storm

Bitcoin’s price is extremely calm right now, but we have seen such calm periods before. Most notably, Bitcoin’s price action flattened out in 2012 before a bull run, in 2013, prior to an ascend, and throughout periods in 2015, and 2016, prior to the most recent bull market. One thing that all these calm periods have in common is that they occurred after substantial declines had taken place, and they all preceded significant rallies. I don’t expect this time to be any different.

Bitcoin: Long-Term Logarithmic Chart

Moreover, there are plenty of potential catalysts capable of sparking an explosive rally in Bitcoin as well as in other digital assets. The approval of Bitcoin backed ETFs, increased institutional participation, improved functionality, as well as other bullish elements will likely play an instrumental role in driving the next Bitcoin wave significantly higher. Prices in this wave should go substantially higher from current levels, and could eclipse the prior top of roughly $20K by several factors. So, essentially I am looking for Bitcoin to be at around $50,000 – $100,000 in 3 – 5 years.

Risks Do Exist

Detrimental Government Regulation

In my view, the number one long-term threat Bitcoin faces is detrimental government regulation or an all out Bitcoin ban. If major Bitcoin friendly governments like the U.S., E.U., Japan, South Korea, and others follow the footsteps of China and essentially make Bitcoin use and trading illegal, it could have catastrophic consequences for Bitcoin’s price. Demand would likely plummet and when demand for a commodity decreases so does its price, drastically at times. This seems unlikely due to the progressive steps taken in the U.S., E.U. and other areas concerning Bitcoin, but the threat does exist, especially if Bitcoin ever starts to seriously challenge the current fiat financial status quo.

Continued Functionality Issues

Another risk factor is the concern that Bitcoin may never become a widely used transactional currency due to its issues with speed and scale. Yes, the Lightning Network promises to solve many of the issues associated with speed, cost, and scale, but there is no guarantee that the LN will become widely adopted, even over time.

Therefore, there is the risk that newer and more efficient digital currencies like LiteCoin, Bitcoin Cash and others will make Bitcoin somewhat obsolete as an actual medium of exchange for the masses.

Continued Security Breaches and Fraudulent Activity

Continued security breaches in the Bitcoin world concerning exchanges and individual wallets is a constant concern. If significant breaches continue, investors and users may start to lose confidence in the system and demand could decrease as a result.

Likewise for fraud cases. In an industry that is relatively loosely regulated, substantial fraudulent activity is a persistent risk. Just like with security breaches, when people get ripped off, it reflects poorly on the entire industry and demand along with prices can suffer.

One Million and One Cryptocurrencies

Another concern is the seemingly endless supply of new cryptocurrencies. There are now over 2,000 different cryptocurrencies listed on CoinMarketcap.com. The risk is that the market may become oversaturated with digital assets which could lead to a crash, or to a devaluation of many digital assets, including Bitcoin.

Loss of Interest Amongst the Masses

There is always the simple risk of loss of interest amongst the masses. There is a chance that Bitcoin will forever remain a niche phenomenon, a novelty, as JPMorgan’s Jamie Dimon puts it. In this case, Bitcoin may not experience substantial demand, and the price would very likely cascade much lower over time.

Bitcoin is Not for Everyone

The bottom line is that Bitcoin is not for everyone. I view it as an investment for people with a relatively high risk tolerance, and even then, maybe only 5-10% of a portfolio’s holdings should be allocated to digital assets.

Bitcoin is still a relatively new phenomenon and no one truly knows exactly how it is going to play out over the long term. The truth is that 10 years from now one Bitcoin could be worth $1 million, or it could be worthless, and given the number of uncertainties, neither outcome should really shock people.

Thank you for taking the time to read my article. If you enjoyed reading my work please hit the “Like” button, and if you’d like to be notified about my future ideas, hit that “Follow” link.

Disclaimer: This article expresses solely my opinions, is produced for informational purposes only, and is not a recommendation to buy or sell any securities. Investing comes with substantial risk to loss of principal. Please conduct your own research, consult a professional, and consider your investment decisions very carefully before putting any capital at risk.

Disclosure: I am/we are long BTC-USD, BCH-USD, LTC-USD, XRP-USD, DASH-USD, ZEC-USD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

At Netflix, There's a Big Fight Between Two Groups of Crazies. It's Something Every Company Can Learn From

Absurdly Driven looks at the world of business with a skeptical eye and a firmly rooted tongue in cheek. 

In the red corner, a group of self-regarding know-it-alls who believe the sun shines out of their every orifice because their abilities are manifest and manifold. 

In the blue corner, a group of self-regarding know-it-alls who believe the sun shines out of their every orifice and they have the numbers to prove it. In real time.

It’s between movie types who think they know a hit when they see one and data types who think they know a hit when they see one obeying their algorithmic predictions.

Entertainingly, the movie types are based in Hollywood, California while the data types slum it in Los Gatos, California a place that is to excitement what the paper towel is to culinary excellence.

The Journal describes how the nerds believe they know precisely which images from movies can generate clicks.

They claim that advertising is truly unnecessary. Instead, they think their algorithm can find the right viewers for a particular show.

Meanwhile, the Hollywood types prefer to lean on their alleged creativity and star-power. Oh, and marketing budgets.

I confess that when Netflix’s supposedly legendary algorithm recommends a show to me, it’s almost always a complete nonsense.

Indeed, it’s so painfully awful that I spend far too much time trawling the app to find something I might actually like.

It’s as if the machine truly has no clue about any Netflix show I’ve ever watched.

Occasionally, it seems to be so confused — or perhaps exasperated — that it’ll even recommend shows I’ve already seen.

I contacted Netflix to ask whether it was enjoying the tension between the numbers and the artists. I’ll update, should human or algorithm reply.

This apparent standoff between nerds and talent is one that’s surely being repeated across so many businesses.

The nerds appear to behave as if the algorithm is everything. They insist that the numbers tell the whole story. They seem to ignore that the algorithm was built by humans and is infused with a multitude of flaws.

On the other side are people who believe they know the business and have an instinct for its quirks and vicissitudes, none of which can be described by computer-generated numbers.

I recently read a fascinating book called Astroball: The New Way To Win It All. In it, Ben Reiter describes how the Houston Astros committed themselves emotionally to data nerds running their show.

I couldn’t help getting the impression, however, that at least some of their major decisions were made by not being a Slave to the Rithm.

The signing of star pitcher Justin Verlander, for example.

It seems that now some of the Hollywood types at Netflix are following that thought process, finding ways to outmaneuver the sure-thinging crazies that are nerds.

The ultimate problem for Netflix is that there’s now so much stuff in the world that it’s hard to find anything one might like.

Even when one finds it, how stimulating can it be when so much now seems to be created accordingly to a certain formula? 

I do, though, suffer from a helpful countenance. I have one idea that I believe would be a huge hit for the company.

A reality show that follows the artists and the nerds as they prepare to battle each other for supremacy at Netflix.

Now that’s something I’d really want to watch.

Cyber Saturday—Coinbase Loves Hackers, Facebook Election Win, White House Video Fake Out

You’re outta here! Facebook said it removed 115 accounts suspected of engaging in “coordinated inauthentic behavior” from its flagship site as well as Instagram in the lead-up to the midterm elections in the U.S. Nathaniel Gleicher, Facebook’s cybersecurity policy leader, said the company had been tipped off about the allegedly bogus accounts by law enforcement last weekend. Meanwhile, trolls have been struggling to spread their misinformation on Twitter, NBC News reports.

Doctor, doctor, give me the news. The White House appeared to share a doctored video as justification for its ban of CNN reporter Jim Acosta. The video in question, which sped up Acosta’s arm movement to make it appear as though he were karate chopping a White House intern, was first shared online by a known conspiracy theorist.

Iran so far away. Banks are on high alert for attacks by Iranian hackers in the wake of the U.S.’s reinstatement of economic sanctions on Iran. The middle eastern nation “might lash out,” as one top cybersecurity executive put it to CNN, which got a glimpse of a major bank’s cybersecurity defense center.

Cylance of the lambs. BlackBerry is reportedly in talks to gobble up cybersecurity firm Cylance for as much as $1.5 billion, Business Insider reported. The business news site’s sources said the deal could happen as soon as next week—although it could just as easily fall apart.

Fun in the sun. U.S. Cyber Command, a hacking-focused division of the military, began releasing unclassified malware samples to the public as part of a cybersecurity information sharing initiative on Friday. The command posted two code samples to the Google-owned malware research repository VirusTotal, including one sample that it said originated from the suspected Russian espionage group nicknamed “fancy bear,” which was best known for digitally infiltrating the Democratic National Committee in 2016.

Naynay on those n00bes.”

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