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XWatch: Why Are Tech Markets Booming While the Economy Reels?
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Why is the stock market up if the economy is getting crushed? With so many people out of work, how is it that the market is soaring, by some estimates, to its highest point ever?
Spencer Rascoff, executive chairman at dot.LA, spoke with senior tech-focused executives at investment firm Evercore to discuss what's behind the trends. John Scuorzo, Evercore's senior managing director joined Zaheed Kajani, senior managing director at Evercore to break down Wall Street's perspective on what's happening in the current tech capital markets.
The two say there are several factors contributing to Wall Street's optimism. First, the enormous stimulus coming from governments.
"I think that the biggest and probably the most important driver of this is just the massive stimulus that all the central banks globally have put into the economy," Kajani said. "There is somewhere where this money has to go. If you've got more money chasing fewer assets, that drives price up."
Copy of dot.LA Strategy Session: Wall Street's Perspective
Also contributing, the two said, are several other factors, including low interest rates, international investment, and optimism for what cutbacks and introduction of new technology will mean for many companies' future profits.
"People generally have an allocation towards equities and bonds," said Kajani. "And because the rates are so low, your bonds just don't give you the same return. And that's driven even more capital into the equity markets."
That's been true overseas as well, where investors are looking for safe places to put their money, and the U.S. market appears like a good bet.
"If you have capital in Europe, or in Asia, which other market do you feel is the most stable in the safest market?" Kajani said, "And so, many people who follow the market closely often see the futures up every morning when you wake up. A lot of that money is coming from overseas capital that's entering the U.S. market."
Companies who have made cuts and had to incorporate new technology into their workflow as part after the lockdowns, may also be finding themselves becoming more productive as a result, even with a (temporary or permanent) reduction in staff.
"I think a lot of companies have realized they're being as productive with fewer people and using technology," Kajani said. "I think that actually may increase profits."
All that together, along with optimism that a vaccine will eventually solve many of the problems the world is currently facing, is helping to create the frenzy that the world is seeing on Wall Street, the two said.
Scourzo said that Evercore's projections point in that direction as well.
"Our data suggests that we exited the recession in May, and we're back to an expansionary period, though the cut was deep," he said. "We think we think we're moving in the right direction with the economy only, we estimate, 35% reopened,"
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About the Speakers
John Scuorzo , Senior Managing Director of Evercore
John Scuorzo is a senior managing director and the Head of Technology Equity Capital Markets at Evercore, with responsibility for the origination and execution of equity and equity-linked transactions for the firm's global technology clients.
Mr. Scuorzo has been a trusted advisor to technology companies for nearly 20 years, most recently as managing director with Citigroup, where he ran its technology equity capital markets business.
Mr. Scuorzo has been at the forefront of the evolution of capital formation for most of his career and is recognized as one of the most experienced and innovative capital markets professionals in the Technology sector. Mr. Scuorzo has advised hundreds of leading companies across the globe, including Alibaba, Broadcom, CoStar, Despegar, Dynatrace, Facebook, Fastly, Globant, GoDaddy, GoPro, Grubhub, Guidewire, Microsoft, Ping Identity, Paypal, Palo Alto Networks, Pinterest, Presidio, Sailpoint, Slack, The Trade Desk, Uber, Upwork, Roku, Vmware, Wayfair and Zillow.
Mr. Scuorzo graduated from Georgetown University with a B.S. in business administration with a major in finance.
Zaheed Kajani, Senior Managing Director of Evercore
Zaheed Kajani is a senior managing director in the firm's technology corporate advisory business and leads the global internet and digital media practice. Zaheed was most recently a managing director and global head of internet and digital media at Citi. With almost two decades of experience, Zaheed has advised on over a 100 transactions in the sector. He has worked with companies raising private capital, public capital through IPOs, follow-ons and converts, as well as M&A.
Zaheed has an M.B.A. from UCLA's Anderson School of Management, a J.D. from UC Berkeley's School of Law and a B.A. in political science from U.C. Berkeley.
Spencer Rascoff, Executive Chairman of dot.LA
Spencer Rascoff, Executive Chairman of dot.LA
Spencer Rascoff is an entrepreneur and company leader who co-founded Zillow, Hotwire and dot.LA, and who served as Zillow's CEO for a decade. He is currently executive chairman of dot.LA and a board member at TripAdvisor. In the fall of 2019 Spencer was a visiting executive professor at Harvard Business School where he co-taught the "Managing Tech Ventures" course. In 2015, Spencer co-wrote and published his first book, the New York Times' best seller "Zillow Talk: Rewriting the Rules of Real Estate." Spencer is the host of "Office Hours," a monthly podcast on dot.LA featuring candid conversations between prominent executives on leadership, diversity and inclusion, and startups.
- Founders and Investors Do Not Share Wall Street's Optimism - dot.LA ›
- Tech Markets Boom While Economy Reels - dot.LA ›
Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.
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Activision Buys Game Studio Proletariat To Expand ‘World of Warcraft’ Staff
Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Activision Blizzard intends to acquire Proletariat, a Boston-based game studio that developed the wizard-themed battle royale game “Spellbreak.”
VentureBeat first reported that the Santa Monica-based publisher was exploring a purchase, noting its ongoing mission to expand the staff working on Blizzard’s hit massively multiplayer online game “World of Warcraft,” which launched in 2004.
Proletariat’s team of roughly 100 people will be merged into Activision’s “World of Warcraft” team to work on its upcoming expansion game. Though there’s no release date as yet for the title, “World of Warcraft: Dragonflight” is expected to debut before the end of this year.
Activision did not immediately return a request for comment. Financial terms of the deal were not available.
This Proletariat deal is Activision's latest push to consolidate its family tree by folding its subsidiary companies in under the Blizzard banner. More than 15 years after it bought out New York-based game developer Vicarious Visions, Activision merged the business into its own last year, ensuring that the studio wouldn’t work on anything but Blizzard titles.
The deal could also have implications for workers at Activision who have looked to unionize. One subsidiary of Activision, Wisconsin-based Raven Software, cast a majority vote to establish its Game Workers Alliance—backed by the nationwide Communications Workers of America union—in May.
Until recently, Activision has remained largely anti-union in the face of its employees organizing—but it could soon not have much of a say in the matter once it finalizes its $69 billion sale to Microsoft, which said publicly it would maintain a “neutral approach” and wouldn’t stand in the way if more employees at Activision expressed interest in unionizing after the deal closes.
Each individual studio under the Activision umbrella would need to have a majority vote in favor of unionizing to join the GWA. Now, Proletariat’s workforce—which, somewhat ironically given its name, isn’t unionized—is another that could make such a decision leading up to the Microsoft deal’s expected closing in 2023.
Samson Amore is a reporter for dot.LA. He previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to samsonamore@dot.la and find him on Twitter at @Samsonamore. Pronouns: he/him
Snap Officially Launching ‘Snapchat Plus’ Subscription Tier
Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Snap is officially launching Snapchat Plus, a paid subscription plan on Santa Monica-based social media company’s flagship app.
Snap is now the latest media company to tack a “plus” to the end of its name—announcing Wednesday that the new service will provide users with “exclusive, experimental and pre-release features” for the price of $3.99 a month. The first features available to paying subscribers include the ability to customize the style of app’s icon, pin a “BFF” to the top of their chat history and see which users have rewatched a story, according to The Verge.
The new product arrives after Snap confirmed reports earlier this month that it was testing Snapchat Plus—though the version that it has rolled out does not incorporate the rumored feature that would allow subscribers to view a friend’s whereabouts over the previous 24 hours.
Snapchat Plus will initially be available to users in the U.S., Canada, U.K., France, Germany, Australia, New Zealand, Saudi Arabia and the United Arab Emirates. While certain features will remain exclusive to Plus users, others will eventually be released across Snapchat’s entire user base, Snap senior vice president of product Jacob Andreou told The Verge. (Disclosure: Snap is an investor in dot.LA.)
The subscription tier introduces a new potential revenue stream for Snap, which experienced a “challenging” first quarter marked by disruptions to its core digital advertising market. However, Andreou told The Verge that the product is not expected to be a “material new revenue source” for the company. He also disputed that Snap was responding to its recent economic headwinds, noting that Snap had been exploring a paid offering since 2016.
Despite charging users, Snapchat Plus does not include the option to turn off ads. “Ads are going to be at the core of our business model for the long term,” Andreou said.
Snap is not the first popular social media platform to venture into subscriptions: Both Twitter and Tumblr rolled out paid tiers last year, albeit with mixedresults.Kristin Snyder is an editorial intern for dot.la. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.
Bling Capital’s Kyle Lui On How Small Funds Can Better Support Young Founders
On this episode of the LA Venture podcast, Bling Capital’s Kyle Lui talks about why he moved earlier stage in his investing and how investors can best support founders.
Lui joined his friend—and first angel investor—Ben Ling as a general partner at Bling Capital, which focuses on pre-seed and seed-stage funding rounds. The desire to work in earlier funding stages alongside someone he knew well drew him away from his role as a partner at multi-billion-dollar venture firm DCM, where he was part of the team that invested in Musical.ly, now known as TikTok.
Bling primarily focuses on entrepreneurs looking to raise around $1 million to $3 million who are often early in their careers as founders. Lui said Bling evaluates companies on characteristics that go beyond whether they like the founder or feel that the market looks good. Instead, he said they take a hard look at the available company data, and quickly respond.
“And we send it back to them and say, ‘Okay, this is what's working, what's not working’,” Lui said. “And then create the playbook for them on how to find product market fit and get to like, ‘These are the milestones you actually need to hit’.”
When considering companies, Lui said Bling looks at the founder, the market, the company’s current traction and differentiation while asking the founder the questions they would expect to get at Series A and Series B funding rounds.
“One thing that I really admire about what [Ling’s] built with Bling is the consistency and the processes and playbooks— everything from the way that we evaluate deals to the way that we work with our portfolio companies,” Lui said. “Everything is kind of around playbooks and operationalizing things and also iterating to do those processes better.”
As part of its work to support founders, Bling maintains an extensive product council, which connects tech executives with the founders in Bling’s portfolio. Bling also has created numerous self-serve resources for founders so they can easily tap into the fund’s network and shared knowledge.
“We have a bunch of playbooks that we introduce to companies around how to hire efficiently, how to negotiate with counterparties, how to think about the founding team, business development…We just have these different things that we start to train our entrepreneurs on,” Lui said.
dot.LA Editorial Intern Kristin Snyder contributed to this post.
Click the link above to hear the full episode, and subscribe to LA Venture on Apple Podcasts, Stitcher, Spotify or wherever you get your podcasts.