Esurance Wasted Money Last Night

I'm sure that by now you have undoubtedly seen the Esurance commercial that aired right after the game and decided to tweet something out with #EsuranceSave30 for your chance to win $1.5mm (and if you haven't yet, you're welcome.)

Let's just get a few things about the commercial out of the way:

1. Was he watching the game by himself though? Where's Pam? Where's their child? WHAT IS HAPPENINGGGG?
2. That table of money was pretty sweet
3. In 7.5 minutes you can save on car insurance by calling us***

*** But only if you press 1 on your keypad for "New Customers Willing To Pay Money". If you press 2 on your keypad for the "Any Other Reason" option, you might be re-routed across the world until you no longer want to file a claim and just give up.

But enough about the ad, lets talk about how the company (in my opinion) just threw money out the window...

They allegedly only paid $2.5mm for an ad spot that, had it ran 5 minutes beforehand would have been $4.0mm - do the math.

(carry the 1) $1.5mm - I just did the math for you.

Esurance: "We saved $1.5mm, and we're passing that along to you - aren't you excited!!!"

Me: "Yea, I'll for sure take the $1.5mm, except my issue is that it could have been MUCH more"

Let's dive into the details...

• Cost of a 30-second ad not during the superbowl is ~$350k (And I'm rounding up here - most expensive primetime CBS ad space is Big Bang Theory on Thursday nights at 8pm for $326,260)
• Nobody watched the commercials after the game ended - in fact, I'm pretty sure that most people turned off the game after the 3rd quarter
• The ad went viral quicker than gangnam style with over 1 billion impressions

What does it all mean, Basil?

Well, boys and girls, what it means is that Esurance could have saved themselves an extra $2mm+ by releasing this ad during ANY OTHER TIME (or even just an online ad) and accomplished (in my opinion) the same exact social engagement and publicity that they paid $2.5mm for.

Things they could have done with that extra $2mm+

• Given it away
• Not given it away

Either way, Fox is now $2.5mm richer, and I'm still hoping for my $1.5mm #EsuranceSave30.

Rich People Need Money Too

I was on the subway the other day (shout-out to the 1 train) and noticed that sandwiched in between the ad for an ambulance chasing lawyer and teeth whitening services was an ad for Borro (picture of a very pretty girl with diamonds). Obviously when I got home I googled it, and here's the rundown...

For those not familiar with Borro (and why would you be), it is essentially a pawn shop for rich people --- if you're rich and have Rolex's, Picasso's, 10 carat diamonds, etc., then you can get loans against these assets (for a fee of course.)

Now you might be saying to yourself "Max, you're an idiot, why would rich people need to pawn their items for cash? Isn't that a poor person activity? Rich people have like a gazillion dollars in the bank and definitely aren't going to pawn shops and pawning their Rolex's"

Ao contraire, mon frere -  ever heard of liquidity???

Let's say you're some hotshot real estate developer - you have $50mm worth of properties in NYC. You're pretty rich... However, you just poured the remaining $2mm in cash that you had in your bank account into a new development. Now, we all know that stuff comes up - unforeseen expenses are part of everyone's life.

Lets just assume that one of those unforeseen situations happens -  you have a few options now that you're strapped for cash...

1. You can sell some of your properties (who knows what the market is like, and you might be selling for a loss)
2. You can go borrow money from the bank (they will ask a lot of questions)
3. You can pawn some of your watches and paintings for cash with Borro (ding ding ding, we have a winner, Johnny)

To understand Borro, you need to first have a basic understanding of how a traditional pawn shop makes money - Step 1: forget everything that you think you learned from Chumlee on Pawn Stars. Step 2: keep reading.

The name of the game if you're a traditional pawn shop is to actually never have somebody default on their loan. Pawn shops are in the business of loaning you money against your toaster oven, and then 30 days later you come back with 10% more money than they lent you and they give you back said toaster oven. They would MUCH rather collect that interest all day every day instead of having you default on your loan and then dealing with reselling your toaster oven. 

Now that you're familiar with how it all works, let me say that I absolutely LOVE Borro's business model. Pure brilliance!

Borro has created an effective, but more importantly DISCREET, lending platform that caters to wealthy people. If I had to take a guess, I would venture out and tell you that their default rate on loans is well under 1%, if not 0.5%. This, as discussed earlier, is EXACTLY how they want to be making money. The beauty of Borro however, is that EVEN IF somebody defaulted on their loan, the Rolex that Borro now owns can easily be resold (as opposed to that toaster oven.)

Earlier this week, Borro issued a press release that they have reached a milestone of lending $100mm to date - what a phenomenal accomplishment. I anticipate that we will soon start seeing more consumer lenders focused on high net worth individuals, not just for the underbanked.

Ever Wanted To Know What Uber Drivers are Thinking?

Yes. I know. I'm late to board the Uber train. 

I started using Uber about 1 month ago - not because of the hype and $20 discount offers out there, but because I couldn't find a cab home from work one night. Ever since that day i've been absolutely fascinated by the product. 

Before I discoverd Uber, living in NYC there were 2 types of "cabs" that I used to take

1. Yellow Cabs - Ah, good ol' yellow cabs. Clean, great drivers, great quality cars, no hassle.... Just kidding, yellow cabs are the absolute worst. Vomit-soaked cars that have a perpetual check-engine light on, coupled with a driver that may or may not be yelling at you in another language while he's on his bluetooth the whole time.
2. Gypsy Cabs - Black cars that ride around and prey on people in hard-to-get-a-cab areas by charging $75 for a 10 block drive. They are like sharks who smell blood in the water - some of the prices that they quote are mind-boggling, but such are the rules of an efficient economy.

Enter Uber - nice, clean cars with drivers that engage with you when you want, and let you sit in peace if you prefer. Fares are fair (see what I did there?), and there is no need to ever exchange money with the driver.

Being the Curious George that I am, I would say that I talked to 4 out of every 5 Uber drivers that I've had. Some of what they had to say was expected, but some of it really surprised me.

What they love about Uber...

• The freedom to be their own boss - they aren't required to be anywhere at any given time. They can work whenever they want, for however long they want.
• The ability to make some pretty descent money (caveat is that you need to know what you're doing and where to go at what times.)
• Surge pricing - duhhh.
• A more sophisticated clientele (their words, not mine), although take one look at me and I get what they are saying.

What they hate about Uber...

• They absolutely hate the rating system. Look, lets call a spade a spade here - Uber's rating system is flawed. You know it and I know it that some people are going to give the driver a rating of 4 stars (out of 5), which in a normal society isn't a "bad" rating at all. However, when Uber has a minimum rating requirement of 4.5 stars, those 4's might as well be 1's.
• Uber has slowly started to squeeze more out of their drivers - initially it was about 20% of the fare, now it has risen to about 30%.
• Uber has not yet capped the number of drivers that are on their platform - every day there is an increase in Uber drivers, which translates to more competition for the current Uber drivers.
• They are concerned that there will be similar Uber-like competitors introduced into the market (i.e. Lyft.)

At the end of the day, Uber is a way for me to get from point A to point B in a safe and economically efficient way - they have 100% succeeded at doing this - big time kudos! 

Box (Allegedly) Files for IPO

So the big news from all the media outlets is that Box has (allegedly) filed for an IPO - I use the term allegedly because under the JOBS act any company with less than $1Bn in annual revenues can file secretly and the only people that know are 1) the Company 2) the SEC and 3) the Underwriters who will be taking them public --- given all the press this has gotten, I'm going to go ahead and assume that it is indeed true (although Box spokespeople have declined to comment). 

Like most people, I first heard about Box when their CFO, Dylan Smith, was featured on Season 3 of Millionaire Matchmaker. For those that need a refresher, Patti was really questioning whether Dylan was ready for love - he ends up taking a girl on a ferris wheel - he goes in for a peck (not of the french variety) - Patti yells at him for not being a macho man. Fast forward several years and he's getting ready to (allegedly) take Box public. 

The good news is that this company will become yet another "poster boy" for a Silicon Valley success story...

• ~10 Rounds of funding (the latest valuing the company at just around $2 Billion) with VERY smart money backing them
• Great market penetration (especially institutionally) and scaled very quickly - the platform boasts over 20 million users...very impressive
• IPO as an exit

Boom. That's the way you drew up the play, right?

Of course with the good must come some bad...

• Mark Cuban, a.k.a Marky Mark, a.k.a. Cubes, missed out on a HUGE return - long story short, he gave Box $350k seed funding and then got repayed when they did their next round of funding because he didn't believe in their vision - it's OK Mark, you'll get the next one (and by next one I mean my Billion dollar idea coming to the shark tank very soon)
• Box needs to learn to compete with the Investment Banking-friendly datarooms (RR Donnelly, Intralinks, Merrill) - the Ibanks have a TON of business to give away - especially as M&A picks up - but i've yet to notice Box improve on this product offering (I have been pitched multiple times, but their pricing model and features aren't competitive yet)

Regardless, it's a great business model and i'm excited to read the S-1 if/when it comes out.

P.S. Anybody know if Dylan ended up finding true love? 

Post 1 - Here Goes Nothing

Well the moment everybody has been waiting for - blog post numero 1. 

First of all, let me just start off by saying that if I can get more than 2 people reading this then I'll consider it a success. While I know that this will undoubtedly replace tech crunch and term sheet at some point, I'm a very reasonable and patient person - I need at least 2 months for that to happen.

Having said that, as we embark on this journey together lets establish some rules - nay - guidelines (but more just suggestions) that we should all try to follow.

1. Lets get a dialogue going. Feel free to respond to my posts. Tell me your thoughts. Tell me when I fudge up. Now I get that there are going to be times when you say "Max, how could you write about [insert topic here] you insensitive jackass" - to which I would probably say "get over yourself". But still, lets get that dialogue going.
2. We win as a team we lose as a team. I'm not really sure how this applies, but I feel like all the big hitters are saying it, so lets just roll with it.
3. Its going to be real. And by real I mean I'm not going to hold back. One minute I could be posting about a hot new startup and BAM, next post is a picture of a golden retriever puppy cuddling with a baby giraffe. I'm moving very quickly today Toby, keep up. (If you get that reference then you're coming along nicely)

Twitter: @MaximSpiegel | Email: MaximSpiegel@gmail.com