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Month: March 2020

There Must Be Something That’s Recession Proof Right Now?

COVID-19 has disrupted businesses of all types across the world. I have already written about the turmoil that markets are in. I’ve also mentioned that our business was largely affected too. In fact, our business was affected before most other businesses when COVID-19 was only limited to China. All this while I’ve been thinking what could be the right thing to do during this tough time.

I thought about software businesses, which may also be struggling, but far less than other kind of businesses. In fact there are some software businesses that are doing better than they have ever done before; Zoom for example. As S&P500 index goes down as much as 30%, the stock price for Zoom is up by 30% as more and more people resort to work from home.

You may have also read that Amazon is hiring as many as 100,000 people to fulfill the customer demand. So Amazon doesn’t seem to be doing too bad either as people resort to online shopping to follow social distancing.

The more you read about the bad news on Twitter, Facebook or wherever you get your news from, the more opportunities are presented to you. In fact, when the world was functioning on full-throttle, it was tough to find opportunities because every industry was so competitive. Now, opportunities present themselves to you.

For example, you may have read that in many parts of the world, everything has been closed except for pharmacies, groceries and food deliveries. This is an obvious proof that if you could deliver medicines, essentials or food, you might be doing better than others. But what’s more obvious is that if there was a delivery version available of everything else that’s on a complete shutdown, that could be an even better opportunity.

If people are locked in their houses, they might need more than food or medicines. They certainly need video conferencing (zoom) to continue to work from home. They need Netflix, obviously. They probably also need to workout, right? Probably other things to keep themselves entertained or busy.

Because people need to still workout, we’ve launched our “workout from home” brand in the last couple of days. We’ve seen initial demand for it, and plan to scale it in the coming weeks. There’s a big e-commerce opportunity right now and I encourage that you seize it.

Moreover, Shopify is giving away 90 days free trial instead of the regular 14-days to help small businesses stay afloat. So what are you waiting for? This could be the time to kick-start your e-commerce journey.

Currency? Store of Value? Uncorrelated? What is Crypto?

During the market meltdown that started about 10 days ago, crypto-assets crashed the most. With Bitcoin going as low as $3500 from the high of $8000 in a single day posting the largest value drop since inception, everyone wondered what is Bitcoin?

People didn’t expect this drop to happen. Here’s Brian, CEO of Coinbase, tweet about this

People wondered if Bitcoin isn’t currency (volatile), or store of value (posting massive losses in value), and it’s also not uncorrelated with stock markets or other assets, then what is it?

Personally, it made me wonder that too. If it can’t even act as an hedge against the other markets, what is it? This drop affected my confidence in this asset-class. However, only a week later, my confidence picked up, at least by a bit.

During the first 3-4 days of the meltdown, I started to see that gold is losing value too. What is often seen as the safe haven during financial turmoil, was losing value too. The oil markets crashed as well, although that likely happened for a different reason, but it did. There was pretty much nothing that didn’t lose value.

What I concluded in the end is that during a financial crisis like that, people sell everything to move to cash. It doesn’t matter what asset class. It doesn’t matter what safe haven. All assets are sold so people can sit on cash and take their time to understand what’s happening before figuring out what to do next.

In the next week, I saw crypto-assets and Bitcoin rebound by a lot. It is trading above $6500 at the time of this writing. It is still below where it dropped from, but has recovered by a lot. Meanwhile, the stock market hasn’t recovered at all. The S&P 500 index for example is still down by 30%. What I’ve concluded from that is while all assets are correlated at the time of turmoil, only 10 days later, I can see crypto-assets moving in a different direction. I feel that in the coming weeks and months this uncorrelation will be very well established.

And that would be the first real world test that this asset-class would pass.

Identifying The Optimal Manual Bid For Your Ads

I like to scale my Facebook ad campaigns with manual bids. One of the the tough decisions is to identify what is the optimal bid with regards to the best combination of number of sales and profit per sale. In short, getting the best return on ad spend (ROAS).

One manual way that I’ve used in the past is to start my ads by placing a bid that would result in 1.00 ROAS. For example, if the cost of goods sold is $10 and I’m selling the goods for $30, I’d start by placing a manual bid of $20. What this translates into is that I’m willing to break-even to initiate the learning phase for the ad-set.

Then I reduce this bid by 10% everyday until my ROAS keeps getting better and stop when the spend starts going down. This has helped me identify the right manual bid in the past. But there’s one drawback and that is the auctions change everyday and I only run the top down bid-identifying strategy once. So my manual bid may not be the most optimal manual bid everyday in the future.

However, since the launch of campaign budget optimization (CBO), there’s a simple solution to this problem. You can create multiple ad-sets with different manual bids and place them in a CBO. So if you’re selling that $10 product for $30, you can may be create 5 ad-sets in a CBO with a bid of $13, $14, $15, $16 and $17. The CBO will automatically choose the ad-set that’s likely to get the best results and each day a different ad-set with a different bidding may be getting the sales for you.

My Life Right Now

I don’t like doing these posts too much. I like to talk more about meaningful things that could potentially help others and less about myself. But I don’t feel like talking about meaningful stuff today. I want to talk about myself.

Pakistan

2 days ago, Pakistan reported more than 100 cases of COVID-19 in a single day. The government of Pakistan so far is claiming that 100% of the cases are imported ones, and there are no local transmissions. The problem with Pakistan is not the virus itself, but the healthcare system which is over-loaded and in a mess even without the virus. The second problem with Pakistan is that with lockdown more people will die of hunger and poverty than the virus will kill without the lockdown. Hence, Pakistan has adopted a mid-way strategy with regards to social distancing.

Mental Health

For the past few days I kept reading to learn more and more about the virus in order to be more aware of the virus to protect myself and others not only in health terms but also in the markets and to create the right investment strategy. The good thing about consuming all that information is that it kept me busy while I was distancing socially and I learnt a lot of things. The bad thing about consuming this much information on a pandemic is that it induced fear, anxiety and panic in my mind. Today, I’ve decided to pull back. The important stuff will reach me as it will reach everyone. The details, I’m not interested in anymore.

Work

My work is a mess. For the past 15 years, I’ve only known two ways to make money. I either sell ads to make money i-e publishing, blogs, ad-breaks etc

Or I buy ads to make money i-e e-commerce, influencer marketing etc.

Both are in a mess right now.

The CPMs are down as much as 75% depending on the industry you are in. So selling ads is 75% lesser profitable as before. This in theory means this could be a good time to buy ads. While that’s true that CPMs are lower for buying ads too, but that’s because the demand for buying things except for certain essentials is down too. In addition to demand, the supply chain is disrupted too as most things are manufactured in China which is not fully functional even now.

In summary, both e-commerce and publishing are largely affected.

As I was spending more time at home than usual, and do not have much work to do except for reading about the virus, it has been a bad combination for me. So I’m taking a step back.

Options

The options that I can personally think of to keep me engaged are Netflix, reading, courses etc. I don’t think binge-watching Netflix will be too helpful in restoring the right state of mind for me. So I’ve decided to enroll in certain online courses. Work has been absolutely essential for me always to keep me in the right state of mind. I think getting educated further about digital marketing is going to feel as an extension of work to me.

What are you guys going to do if you are in a similar position?

Are Stocks Manipulated?

I wasn’t old enough in 2008 to see, feel or understand what happened to the world, economically. It was only later that I learnt about the financial crisis and recession from the documentaries and movies.

When I started investing a few years ago, I invested in crypto before I invested in stocks. Once I tried to invest in stocks, I was turned off by how far behind the tech was. But I liked stocks for being the real thing. Representing real companies, with real earnings. More substance, and less speculation. Today, however, I’m confused between the two asset classes, and I thought to compare them a bit.

One of my first disappointments with stocks was that the trading hours were restricted to 9-5 / Mon-Fri as opposed to crypto-assets which are traded 24/7.

Another disappointment with stocks was the inability to own and store them the way I can own and store crypto. I had to leave the stocks with the broker account. I couldn’t move my stocks around between brokers and I couldn’t store my stocks in an hardware wallet. This is unthinkable in crypto. Only newbies leave their assets on an exchange or with a broker. Not your keys, not your money.

As for crypto, I hated the fact that markets were manipulated so much. USDT (Tether) faced allegations year after year that they are just printing USDT out of thin air and using them to manipulate crypto and specifically Bitcoin prices. That they don’t have the actual USD in their bank account in the same amounts as the USDT in circulation. Eventually, they were able to prove it time and again that they have the equivalent funds available with them.

What I’m seeing today happen to stocks makes me think that stocks are perhaps manipulated even more than the crypto-assets. For example, how the Fed is cutting interests to put market on steroids. The fact that Fed has injected trillions of dollars created out of thin air to solve what they term as “liquidity crisis”. But the most mind boggling is how these dollars are created, let’s hear that out from the ex-Chairman of Federal Reserve

I want to finish this off with circuit-breakers. What are these circuit breakers? Whenever markets dip more than 7% in a single day, trading is halted for 15 minutes. When markets dip 13%, trading is halted for another 15 minutes and at a 20% dip, trading is halted for the rest of the day.

This is unthinkable in crypto where we’re used to seeing 70% dips in a single day but no circuit-breakers are introduced to manipulate the prices. The amount of effort Fed puts in in keeping the stock prices afloat is nothing short of manipulation as these practices are unthinkable in crypto trading which we see as the free markets.

Domestic E-Commerce Expected to Post Growth in 2020 Despite COVID-19

E-commerce was one the first affected industries when the COVID-19 hit China. There was a supply-side crisis and many e-commerce stores were unable to source the goods to sell.

Our dropshipping stores came to a stand-still. All other businesses, e-commerce or offline, that relied on China for sourcing or production of goods are in the same boat as us.

But the e-commerce stores that rely on sourcing and shipping products locally or domestically are set to post growth and higher profits. As more and more countries are advising social-distancing, many people around the world are staying at home. This trend will continue to increase in the coming weeks. During the social distancing period, many people are relying on e-commerce services for grocery and other essentials.

Proof of this can be seen by having a look at e-commerce platforms in China tailored to serve the local customers. Carrefour in China has reported 600% growth in sales in Q1 while JD, one of the largest e-commerce services in the world, has reported 200% increase in sales during the first quarter.

2020 is not only going to be a good year for those associated with domestic e-commerce, especially grocery, but such businesses could continue to see more demand beyond the 2020 as well. The current pandemic situation has shown a unique use-case for e-commerce platforms and has proven the need of such businesses in times like these.

The World Is Working From Home & Distributed Companies Are The Future

If you have read my thoughts before, you may have known that I’m a big supporter of distributed companies and remote work mentality. My favorite part of the remote work is the ability to have a higher quality of life for a much lower cost.

Many tech entrepreneurs and investors feel that remote is not the way to go. That the physical presence within the Silicon Valley is a very important pre-requisite to success. They back this with statistics that over 70% unicorns are born in the bay area, and that less than 10% are born in NYC or LA. With only 3% or so coming out of India or China and 5% from rest of the world.

Their case is strong as far as the statistics are concerned. I’m the numbers guy so there’s no basis for me to refute what they are saying. Despite that, I believe remote work is the way to go. Silicon Valley could be the present, but remote is the future. The statistics that are thrown around only reflect what is happening today, and not what could be happening in the future.

As with the COVID-19 emergency, many tech companies have decided to go remote. The list is a bit too long but here are the ones I’m aware of; Amazon, Facebook, Google, Linkedin, FourSquare, Twitter, Uber, Lyft, Zillow, Bitly, Digital Currency Group, IBM, MongoDB, Airbnb, Grammarly, PostMates, SalesForce, ShutterStock, KickStarter, Silicon Valley Bank, WeWork, Yelp etc. I think when all of this is over, some of these companies, and many other companies will have a part of their work force hired to work remotely.

Remote work is to HR what CloudFlare is to the internet. Remote employees ensure higher uptime, load balancing, no single point of failure. Remote employment means you can hire better talent for cheaper costs. Forget cheaper costs, remote employment ensures you can hire better talent from the talent pool that was previously unavailable to you, even if you want to pay identical salaries as you pay in the SV. For the employees, it’s the ability to get a serious bang for the buck by being in a high quality low cost area.

After the COVID19 is over, the world will retrospect. The world will question the ability of the US to handle health crisis. The world will question if China should be the sole manufacturer of the global goods. The world will question the open borders of the EU and the lack of systems in place to protect against a pandemic. And a small part of the world will also question how can we leverage remote work to build more durable companies.

This Simple Trick Resulted In 800% Higher Traffic From Facebook

We have worked with many influencers for some of our content websites. The best part of running this operation between ’11 and ’16, in addition to generating revenue, was gaining extraordinary insights and knowledge.

It was a collaboration with over 200 marketers each running individual experiments in identifying the best of the best ways to leverage Facebook’s newsfeed. During the few years that we ran these websites, we collectively identified many ways to increase newsfeed visibility, but here’s my favorite one because this was the easiest to execute and had the highest reward.

We identified that Facebook distributes new domains on it’s platform with a much higher weight than domains with history. As the new domains receive some feedback in the next few days, their distribution is also limited. But there was no easy way to launch a new website everyday, with all sorts of advertising approved, and unique content in place. So as a quick fix, we resorted to using new domains but only as redirectors. This wasn’t a great solution to this problem, and obviously came with some caveats. So we looked further and eventually identified the perfect recipe to leverage this.

On running another experiment, we identified that sub-domains are also considered as fresh domains with no history as far as the Facebook’s algorithm is concerned. At the same time, subdomains do no require fresh approvals from the ad networks and exchanges. We also do not have to use redirectors, and Facebook referral headers stay intact.

Using this simple trick, we were able to boost our traffic by up-to 800% and were able to provide an environment that the influencers preferred due to extra-ordinary results and revenue-share.

The COVID-19 Challenge For the Governments

The main strategy that all countries seem to have inherited from China is “flatten the curve”. Delay the virus as much as possible so the healthcare system is not overburdened and the vaccination is developed.

China has enough health-care facilities to accommodate 1% of their population concurrently. But even that would only work had the disease spread evenly through-out the country. Any bigger number suggests that fatality rate will be higher as lesser people are able to receive healthcare.

This number varies for different countries and so the fatality rate is going to differ largely between different countries and regions based on the age of affectees, number of cases, and concurrent healthcare facilities available.

Flattening the curve requires that the governments need to control transmission which means that people should spend more time by their own and avoid meeting other people and especially large gatherings. This affects economic activity.

The real challenge for the governments is that they don’t want to bring the economic activity to standstill. In theory, governments could get done with this as quickly as possible. Let it happen to everyone, let the people die, so they restore order and work as quickly as possible. But this involves loss of human lives. The other option is to lockdown everything, quarter after quarter, and let the economies enter a recession that’s going to take a really long time to recover from.

The governments are trying to find the optimal number in order to flatten the curve just enough to sustain the concurrent healthcare and affect economic activity as little as possible. It is why we’re seeing certain world leaders treating this particular disease as “common flu”.

Getting A Massive Payout For the Simple Skills

The problem with the traditional mentality is that we feel that in order to make a big buck, we need to know rocket science. Many people believe that their compensation is directly proportional to how much more qualified they are about a certain skill.

This could be true in certain cases especially in competitive or saturated lines of work and most specifically for those seeking fixed compensation in the form of salaries. However, it doesn’t always have to be the case.

The money is in the application of skills and not in the skills itself. If you know javascript and can write 20 lines of codes in JS for your employer or your client, of course your compensation will be minimal. But if you use 20 lines of JS in a specific use-case yourself, your compensation could be 10s of thousands of dollars. Let me give you a few examples below.

If you’re a graphic designer and your main gig is to create thumbnails for YouTube or Facebook videos, may be you can charge $10-$30 for something like this. But if you have the ability to create thumbnails that will have a very high click-through rate on YouTube, then your skill is worth a lot more. You could use your small skill for a massive payout. May be you could even hire or partner with someone who makes videos, while you only focus on those high click-through rate thumbnails and eventually get rewarded long-term by YouTube algorithm.

I have also used small skills for massive payouts by applying them in areas where the reward could be very high. And here’s an example of what I did in 2011.

This was a black hat technique. Most people do not talk about black hat techniques publicly but since I was very young, on an exploration, learning the true power of internet, and also learning my true self, I do not mind talking about it today. It helped me learn a lot and unlocked the true potential of my mind. I discourage black hat as a long-term business model but sharing this is important because I want everyone to know what you can do with very little knowledge if you look in the right places.

I was still in university pursuing a bachelors degree in Computer Science. I had learnt some programming there. Nothing extraordinary, nothing that I could use to score a high paying job. Just good enough on a student scale. I had learnt some HTML, CSS, PHP, MySQL etc but not a lot. A couple of assignments, one or two projects. But I found an area where these skills could be applied.

After seeking help from someone who explained me of this technique, I set up a landing page. A simple page with nothing but a video embed and some ads. I used some CSS to place facebook Like button behind the video embed’s play button. Every time a user would play the video, he would also share it on his Facebook without knowing. This way couple of his Facebook friends would also end up on the landing page and would play the video themselves creating a viral loop. In couple of hours, I had over 20,000 users online on the landing page and of course I made a lot of money.

The only skill I used was some CSS which I barely knew enough to be able to sell something for $5 on Fiverr.