The Times They Are A Changing

Kevin Spacey has an interview in the Wall Street Journal today.  It’s a great read.  I like Kevin Spacey as an actor.  He is great in House of Cards of course-and I cannot wait for that to start again.  My wife and I are hooked.  But, Spacey made a speech about the future of television, movies and media last year that generated a lot of buzz.  It’s always interesting to me what people on the inside think about their business.

Spacey says some more in the interview,

Did you ever expect that your keynote speech last year at the Edinburgh International Television Festival—in which you said that appointment television was over—would go so viral?

There are a lot of things I said in that speech that I had been thinking for a long time, and that people have been saying for a really long time. The fact that [business] models are changing, companies that have made gazillions of dollars providing portholes for content, that if they were going to compete were going to end up making original content. One of the reasons it went viral is because nobody in my position had said it in such a public way before.

I wanted to stand up there and speak for the creative. I talked about how mad the pilot season was, how inefficient it was economically. Everybody knows it is madness and nobody seems to want to change it.

When [Fox Chairman Kevin Reilly recently said the network was abandoning pilot season]—do you feel that “House of Cards” is responsible?

Christ. I am not in a battle with anybody. All I am saying is that it doesn’t surprise me that these shifts are happening and that ultimately the business will catch up with the audience. People know what they want and how they want it. They want to stay in command. And networks are either going to catch up or they’re going to go somewhere that provides [audiences] with what they want. I think it’s an incredibly exciting time for creative people. Because of the Internet and because people are self-producing, there’s no barrier to entry anymore.

Yesterday, I looked at some raw data on venture capital.  Where are deals being done?  What kind of money is going into them?  What sectors are hot?  What’s not? Why?

In 2012 and in 2013, roughly $34 billion went into venture deals in the United States.  The top cities were the usual ones, Silicon Valley, Boston, Austin, Seattle, New York and Los Angeles.  Because the media industry is rapidly being disrupted, I predict that LA will start to attract a lot more VC capital.  The stakes are so high, and the innovation so fast and varied that LA will have grow.  There is also a lot of local money in LA, and when it finds some success in the VC market, it will attract more dollars.

Chicago and Washington DC were about the same when it came to deal flow and dollars invested in VC money.  (Insert joke about politics here).  There are some positive trends for those two cities however.  When sectors are looked at, money is starting to accelerate into B2B sectors.  Both cities have a nice B2B community to innovate off of.

One sector that is seeing a rapid investment drop is healthcare and devices.  That has hurt the North Carolina VC industry harder than it hurt Boston.  It’s also subject to some longer term trends.  Obamacare has a medical device tax buried in it-and it has caused money to pull back from taking risk in healthcare while everything gets sorted out.  The FDA is a horrible bureaucratic organization to deal with, and they have made it hard to innovate.

Another interesting piece of data was the state of Wisconsin.  Wisconsin has passed a tax credit for seed stage investing, and has tried to jump start its VC community in a variety of ways.  But, the data shows current efforts are failing.

The Badger State saw a startling 52.7% drop in VC deal-making from 2012 to 2013 (74 rounds to 35). Wisconsin had been making strong gains since the financial crisis to attract capital to invest in local startups, particularly in the Madison and Milwaukee areas. This translated into a 119% jump in the number of VC investments in the state from 2010 to 2011 and another 25% increase from 2011 to 2012.

There were just 35 closed VC financings in 2013, which was still the third-highest total on record. However, capital invested in Wisconsin companies last year dropped to $72.8 million from $124.8 million in 2012. In 2011, the state attracted $159.6 million in VC investment across 59 deals.

That’s not moving the needle in the right direction.  There is a lot of potential to build a great community in Wisconsin.  However, the biggest strength in Madison is probably the healthcare sector, and with that risk capital on the sideline right now, it hurts them more than other areas.  Anecdotally, I know some great healthcare companies that have really promising products that are having trouble raising money.  The data confirms what I am seeing on the ground.

With all the changes in healthcare, the aging of the population, and trends in mobile computing, I think now is a good time to invest if you find the right entrepreneur and company.  I also think that financial services are going to be rapidly changing.  Both sectors will change as fast as the media sector-but because they are more under the radar, people won’t notice it as much.  Benedict Evans has a nice post up today on how you might make a purchase or go to a restaurant in the future.

Ten years from now, the way we structure and go about daily routines in our life are going to be very different.

Thanks for the link Instapundit

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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