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General Commentary
July 10, 2016

All For One and One For All…

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Indices Week YTD

We hold these truths to be self evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights, the amongst them are life, liberty and the pursuit of happiness.

— Declaration of Independence

We don’t have a Black America. We don’t have a White America. We don’t have a Latino America. We have the United States of America.

— President Barack Obama

A house divided cannot stand.


With horror, pain and grief, most of America watched the events of last week and feared for the future of our Country. Many of us were angry at what appeared to be executions of black men in Louisiana and Minnesota, and then in retaliation, for the brutal murders of five white police officers in Dallas.

Many of us also hoped that having elected a black man as President — twice — and with the “minority” population being the majority of the population in four states already (California, Texas, New Mexico and Hawaii), we had entered a post-racial society. Today, fourteen states have more “minority” births than white births per year.

States With Majority “Minority” Toddler Populations
Percent White for Persons Under the Age of Five

Source: Brookings Institution (analysis of U.S. Census Bureau Population Estimates, Released in 2013)

Unfortunately, the violence of last week, combined with Ferguson, Freddie Gray, Eric Garner on Staten Island, the racially motivated assassination of two policeman in Brooklyn, and the Charleston church shooting show the naiveté of such hopes.

Racism is evil. Prejudice is evil. Hatred is evil. Injustice is evil. Disrespect for the men and women who put themselves in harm’s way to protect us and our freedom is evil. As a country, we can all be against evil and for love, empathy and equality.

Sports and rivalries are an interesting lens to gain some perspective on human nature and the ways people can come together around shared aspirations while ignoring their differences.

When I was in high school, I went to Minnetonka and our chief rival was Edina, which was disparagingly referred to as the “Cake Eaters”. Everyone in Minnetonka — the kids, the parents, the coaches — hated Edina and could go though a list of why they were despicable people. The funny thing was, I lived in Edina with my Dad. Even though I went to Minnetonka High School, many of my friends were from Edina… the evil “Cake Eaters”. And while I had heard all of the horrible things about how awful people from Edina were, I realized that my friends from both towns were remarkably similar. Plus, both had a mutual love for the Vikings and a hatred for the Green Bay Packers.

At the University of Minnesota, I was on the football team and half of my teammates (and friends) were black. Their backgrounds were very different than mine, growing up in places like South Chicago and Detroit, but we were all Golden Gophers. You realized that everybody bled red, and what mattered wasn’t your skin color, but the size of your heart. When a black teammate of mine experienced prejudice, it was like all of us were treated unfairly… and we were all enraged. All for One and One for All.

With the Olympics coming up in Rio, it is a great time for America to come together and root for our athletes as they compete against the rest of the World. It would be a great time for a modern-day Tommie Smith/John Carlos 1968 Mexico Olympics moment, putting a fist in the air to signal the ongoing fight for justice, dignity, and equality for all Americans.

Black lives matter. Officers’ lives matter. Military lives matter. ALL lives matter.

GSV 300 + The State of Play in the Global Growth Economy

A surprisingly strong jobs report last Friday was a catalyst for stocks to head skyward, despite increasing societal unrest. Gains on Friday capped an eight-day rebound of 6.5% that restored $1.4 trillion of market capitalization to U.S. shares, value that was erased in the aftermath of the U.K. vote to leave the European Union.

Job growth for June was 287,000, over 100,000 more than projections indicated. And while the unemployment rate rose to 4.9%, it was driven by “good news” for a change — more people are actually looking for work. At the same time, the 10-Year Note yield fell to an all-time low of 1.36%, reflecting both the slow growth environment and U.S. Treasuries being a relative safe haven in a scary World.

When it comes to tracking the state of play in the global growth economy, an old saying rings true: “If you can’t measure it, you can’t manage it.”

So in 2015, GSV launched the GSV 300 Index, which we believe is the best representation of what is truly going on with growth companies, their valuations, and performance. It is an index of 300 of the World’s fastest growing companies, selected systematically based on key fundamentals, including revenue and earnings growth, geography, valuation metrics, and market capitalization. Because the companies aren’t handpicked, the GSV 300 doesn’t look at all like the indexes that people typically use to analyze growth companies and growth investors.

The GSV 300 Global Growth Index
The Definitive Barometer for the Global Growth Company Ecosystem

Source: GSV Asset Management
Comparing Key Metrics: GSV 300 vs. Peers
Tracking the GSV 300 P/E, Growth Rate, P/E/G, and P/S vs. Key Global Indices

Source: GSV Asset Management
Country Breakdown: GSV 300 vs. Peers

Source: GSV Asset Management

Performance in Context
Tracking the Performance the GSV 300 vs. Key Global Indices and Funds

Source: GSV Asset Management

The most relevant index for Institutional Investors to date has been the S&P 500, which is a good proxy for broad Market dynamics. But with a 5% long term growth rate, it hardly reflects conditions or performance for fast growing companies.

The fact that the S&P 500 is solely a market cap weighted index is problematic in that a $100 Billion Market Cap Company has 100x the impact on the Index as a $1 Billion Market Cap Company… not realistic in that a portfolio manager who viewed two portfolio companies as being equally attractive would have 100x more of that company in their portfolio.

The most well-known index, the Dow Jones Industrial Average (DJIA), is created with an even more bizarre rationale in that it is weighted by share price. So in other words, if one stock was $30 per share and another was $300 per share, the $300 stock would have 10X the influence on the DJIA as the $30 stock.

The GSV 300 Index is constructed using a three-step process, which is summarized below: Screening, Ranking + Scoring, and Index Weightage. For a full description of the GSV 300 construction methodology, please click HERE.

GSV 300 Methodology Summary

GSV 300 Snapshot

As of the end of the second quarter in 2016, the average market capitalization of GSV 300 constituent companies was $4.9 billion, with a median of $1.5 billion. The 10 largest companies account for 25% of the index. By comparison, the top five companies in the NASDAQ — Apple, Microsoft, Amazon, Facebook, and Alphabet (Google) — account for over 37% of the index alone.

GSV 300 Snapshot

Looking at the GSV 300 by geography, 35% of the index weightage comes from U.S. companies. China is the second-largest geography at 18%, followed by India at 14%, and South Korea at 9%. By contrast, 95% of the S&P 500 and 86% of NASDAQ are represented by U.S. companies.

GSV 300 Breakdown by Country
Countries of GSV 300 Constituent Companies as a Percentage of Index Weightage

Source: GSViQ

S&P 500 Breakdown by Country
Countries of S&P 500 Constituent Companies as a Percentage of Index Weightage

Source: GSViQ

NASDAQ Breakdown by Country

Countries of NASDAQ Constituent Companies as a Percentage of Index Weightage

Source: GSViQ

Performance & Valuation

While the overall index was down by 2.3% for the quarter, a look at the geographic breakout indicates that the movement was largely driven by Chinese companies, which fell nearly 7%. India, by contrast, was up 6%, and the U.S. advanced 3.5%. All other geographies were flat.

GSV 300 Performance by Country
Q2 2016 Performance of the GSV 300 by Country of Constituent Companies

Source: Yahoo Finance, GSViQ

Segmented by GSV investment theme, the most significant movement in the index was among “Education Technology” companies, which rose over 14% in the quarter. Companies in the “Sustainability” category fell 9%.

GSV 300 Performance by GSV Investment Theme
Q1 2016 Performance of the GSV 300 by Industry of Constituent Companies

Source: Yahoo Finance, GSViQ

To date, the GSV 300 is down 15.6%, reflecting brutal first half of the year for many growth stocks, combined with turbulent public market dynamics in China. One might naturally expect us to be upset that GSV 300 had such brutal performance, but actually, we are pleased that we have created a scorecard that reflects what is actually going on in the World of growth stocks.

The T. Rowe Price New Horizons Fund, for example, has pursued a strategy of investing in small, high-growth companies since 1961. While it is actively managed, Peter Lynch observed in Beating the Street that the fund is, “as close as you’ll get to a barometer of what is happening to emerging growth stocks.”

Since small companies are expected to grow at a faster rate than large companies, they usually sell at a higher P/E than larger companies. Logic might suggest, therefore, that the P/E of the New Horizons Fund would be higher than that of the S&P 500 at all times.

This isn’t always the case, and at times when it isn’t, the New Horizons Fund can be a smoke signal for an undervalued or overheated growth economy. Over the last 50 years, for example, the New Horizons P/E has risen to double that of the S&P 500 only four times.

GSV 300 Q1 Valuation Metrics
GSV 300 Valuation Metrics vs. Key Indices (As of June 30, 2016)

Source: Capital IQ, GSViQ

Currently, the GSV 300 has a P/E (forward) of 25.2x, or 1.4x greater than the S&P 500. Our thesis is that at over 2x, it’s a warning signal for growth stocks, and at under 1.2x, it’s a buying opportunity. We’ll monitor this trend, as well as the relationships of other key valuation metrics, to determine patterns over time.

GSV 300 P/E VS. S&P 500
GSV 300 P/E as a Multiple of the S&P 500, through Q2 2016

Source: GSViQ, Capital IQ
GSV 300 P/E/G VS. S&P 500
GSV 300 P/E/G as a Multiple of the S&P 500, through Q2 2016

Source: GSViQ, Capital IQ
GSV 300 P/s VS. S&P 500
GSV 300 P/S as a Multiple of the S&P 500, through Q2 2016

Source: GSViQ, Capital IQ


Through the end of Q2, there were 33 IPOs — 11 VC-backed — generating an average of $132 million in proceeds. One company priced above range, 24 priced in range, and eight priced below. The average one-day pop was was 16%.

Q2 2016 IPO Snapshot

Source: GSViQ

Two notable technology IPOs priced at the end of the quarter. Acacia Communications, a fiber optics company specializing in long-haul deployments and networks connecting data centers, listed on May 12th. Backed by Summit Partners and Matrix Partners, Acacia recorded a first-day pop of 35%. It currently trades at a P/E (forward) of 17.9x with a $1.4 billion market value.

Twilio completed a highly anticipated IPO on June 22nd, notching a 92% first-day pop. Backed by a syndicate of leading VCs and institutional investors, including Bessemer Venture Partners, Founders Fund, Union Square Ventures, Redpoint, DFJ, Fidelity, and T. Rowe Price, Twilio raised $234 million in private capital and last recorded at private valuation at $1 billion. Today it is valued by public markets at $2 billion with a P/S (forward) of 15.6x.

Subsequent to the end of the second quarter, there have been nine additional IPOs, bringing the 2016 total to 42. The average one-day pop has dropped to 12%.


by Luben Pampoulov

A Shared Experience

While most tech industries experienced a pullback over the last year, and in some cases quite significant, one area has continued to outperform and to rapidly rise in value.

The Sharing Economy has seen no impact from the 2015 tech bubble, or from the contracting private company valuations, or from the economic slowdown in China. A recent Pew Research Center survey showed that 72% of Americans have already used an on-demand sharing service, and we expect that number to continue to rise. In China, more than 500 million people are already participating in the local Sharing Economy, and projections are that by 2020, China will have 10% of its GDP originating from that industry.

Airbnb, the global leader in home sharing and the disruptor of the hotel industry, has had over 80 million guests to date, with 2 million listings in 34,000 cities across the World. Chinese travelers using Airbnb abroad are now over 2 million and growing at 500% per year. To show the power and dynamics of its model, Airbnb released data on NYC hosts last week. The report shows that hosts in NYC made $5,474 on average over the last 12 months. In high-end areas like Midtown Manhattan, hosts made $8,286 on average, while hosts in Queens made $4,100 on average.

This data is impressive, as it indicates that hosts rent out their homes around 50 nights per year, assuming the average listing price is $120 per night (with 12% going to Airbnb). As of June 1st, NYC had 41,373 Airbnb listings, indicating that gross revenue from the Big Apple could be ~$250 million annually. With an estimated $10 billion in gross revenue, this implies that NYC makes up 2.5% of Airbnb’s business. (GSV estimates).

Source: Airbnb


The other big Sharing Economy segment is in Ride Sharing, with a number of innovative businesses fighting to gain market share. Most notably, Uber and Lyft are competing in the U.S., while Uber is fighting against a number of local leaders elsewhere in the World; In China, Didi is the leader with over 11 million rides per day against Uber’s fraction of that. In Southeast Asia, Grab and Go-jek are local competitors to Uber, and in India, Ola is the one to beat. (Disclosure: GSV owns shares in Lyft).

Lyft has had a highly impressive performance over the past year, continuously outperforming expectations and also introducing smart new initiatives. Also, Lyft’s brand and advertising have been very strong, with cool local ads and fun commercials helping it gain increased market share at home. (Check out what happens when Shaquille O’Neil drives Lyft in Atlanta).

Last week, Lyft announced its new high-end service, Lyft Premier, which will compete head to head against Uber Black. Premier will initially be available in LA, SF and NYC, and will cost $2.66/mile compared to Lyft’s $1.16/mile regular service. Drivers need to have a luxury car like an Audi A6, BMW, Mercedes, or an Escalade in order to be eligible for Premier.

Source: Lyft

One of the key drivers for Lyft’s rising success has been its attitude and relationship to its drivers. From multiple sources and personal experiences, I see that in 4 out of 5 cases, drivers prefer driving for Lyft rather than for Uber because they are treated much better.

A major focus area of all ride-sharing leaders is in autonomous driving. While early, Lyft, Uber and Didi have all made strategic partnerships and investments in that area. It’s starting to be obvious that autonomous driving will be the future in transportation. It will lower the cost and improve the efficiency significantly. But it will also reshuffle jobs, ultimately causing drivers to have to find new jobs.


In a somewhat similar application, self-driving robots are now starting to do deliveries. A London-based startup called Starship Technologies is now launching a broad trial phase in three European cities — London, Dusseldorf and Bern. Starship has partnered with Just Eat, Metro Group and to deliver purchases directly to your home. The self-driving robot is equipped with 9 cameras helping it navigate accurately, and has a built-in alarm system to prevent incidents.

Starship Technologies was founded by Skype co-founders Ahti Heinla and Janus Friis, and has been tested in 12 select cities for the past nine months.

Pioneer Notes

by Li Jiang

GSVlab’s Trailblazer Series 

How Shattered Dreams Led to Success

By Sunyoung Kye & Bryce Morisako

trail·blaz·er: a person who blazes a trail for others to follow through unsettled territory

GSVlabs is dedicated to accelerating global innovation. With over 150 startups in the EdTech, Sustainability, Mobile, Big Data, and Entertainment verticals, we work with a diverse range of amazing entrepreneurs.

Above all else, we believe the “one-size-fits-all” mold is not what shapes entrepreneurs. We believe each person has his or her own path to entrepreneurship. Their own trail to blaze.

This week, we sat down with Greg Moore, founder and CEO of Fit3D, to hear how he went from a star athlete to a star entrepreneur.

Greg Moore at his desk at GSVlabs

Sports to Entrepreneurship

Take one look at Greg, and you wouldn’t guess that a wrestling-induced heart condition in high school shattered his dreams of becoming a professional wrestler after receiving 13 scholarships.

In order to become one of California’s best wrestlers, Greg put himself through his own intensive training program.

“I was up at 5 am every single morning. I would train from 5–7 and then go to school from 7 am to 3 pm. After school I would go to practice for a couple of hours, go back home, eat dinner, and then do my homework. After I finished my homework I would go back to the gym from about 8 to midnight. So in total I trained for about 8–9 hours a day.”

This work ethic separated Greg from the rest of his peers. Unfortunately, his heart condition meant he would never sport even a collegiate singlet.

But he has no regrets. The lessons that he learned as an athlete have shaped him into the entrepreneur that he is today.

For one, he learned that things very seldom go the way that you expect and that the only thing that you can do is control your input.

“You cannot control the outcome. Sh*t goes wrong. Sh*t goes bad real fast, real quick. If you continuously come in with the ‘I work my butt off and we’ll see what happens’ mentality then it at least allows you to keep on going and keep on driving.”

Second, he learned that it is okay to fail and make mistakes.

“When you get to higher level sports, you are going to mess up. You can either destroy yourself and be your worst critic or you can be like ‘I messed up, let’s get back out there and do it again.’ Approaching entrepreneurship with the second mentality allows you to learn from your mistakes, make adjustments, and change the way that you react when a similar challenge arises.”

Unconventional Learning

After high school, Greg enrolled at the University of California, Santa Barbara — the only college that he applied to where he wasn’t offered a scholarship. Until that point in his life everything had been so structured. So when he got into UC Santa Barbara and Isla Vista, he let loose.

Greg Moore surfing in Costa Rica
“This is probably not what people want to hear but I literally went crazy. It took me 7 years to graduate. I barely went to class. All I could care about was surfing, snowboarding, skiing, and playing club baseball. It was the first time in my life where I gave myself options and I really enjoyed it.”

What happened to the intelligent, motivated, and driven kid from the beginning of this series? Greg’s parents and UC Santa Barbara’s Dean of Engineering were all wondering the same thing. Before he entered his sixth year of undergraduate classes, they sat Greg down to tell him he needed a 4.0 GPA in the next four quarters to graduate. This proved to be the wake-up call he desperately needed.

“I thought to myself, “I wasn’t going to be here for that many years and not get my degree.”

Sure enough, he pumped out 4.0 after 4.0 after 4.0 after 4.0, and graduated. He was even accepted into his school’s PhD program because his professors were so impressed with how he did in their classes.

“College was this unbelievable valley for me. I had a tremendous amount of fun packed into an extended amount of time. Looking back on my time there, I needed it. I needed to get myself back on the path. I would have burnt out if I kept up at the rate that I was going at.”

After Graduation and Sportvision

A year after graduating and working as a research assistant at UC Santa Barbara, Greg stumbled across a Sportvision ad on Craigslist. After weeks of unsuccessful job searching, Greg decided to send the VP of Human Resources a note and scheduled an interview with her.

During his interview, Greg noticed something odd about the Sportvision office:

“A lot of the engineers had books on their desk like Baseball for Dummies and Football for Dummies. These were some of the Bay Area’s smartest statisticians, electrical engineers, and computer scientists but they had no practical experience with this kind of stuff. Although I didn’t perform well in the interview, I had something that was very unique to me — I had played baseball, I knew it, and had intimate knowledge of it.”

Despite his unconventional educational journey, the VP of Human Resources saw something in him. Long story short, he got the job, moved to the Bay Area, and started working for Sportvision on the team that created PITCHf/x, the pitch tracking technology that Fox, TBS, K-Zone, and other major broadcasting networks display on TV. Greg developed the pitch technology and successfully installed it into all of the Major League ballparks.

In just four years at Sportvision, Greg increased the baseball unit’s annual revenues by $7 million and was promoted to manage the entire baseball engineering branch. He wanted to scale and transform the business, but eventually ran into a barrier that he could not overcome.

Greg and the General Manager at Sportvision had shifted the pitch-tracking services to a data-collecting and data service entity that focused on analytics, coaching reports, and other services, but the MLB owned all the data. The only way they could grow would be to go down market to collegiate and amateur teams, and the executive staff did not want to go in that direction.

“I sort of saw this coming and didn’t want to be apart of the downswing, so I left the company and started looking for other opportunities”

Fit3D and Its Inception

Greg began his new job search at some of the more traditional Silicon Valley companies: Google, Nvidia, LinkedIn, etc. But his next venture did not start in Silicon Valley; instead it was inspired by his parents back home.

“I saw my mom go through a weight loss plan. I would go home every couple of months and see the progress that she was making. It was absolutely incredible. Despite the fact that she was building a healthier, leaner body, the scale failed to show her progress in a way that was easily understandable. Discouraged by the lack of “progress” that she was making, she stopped eating healthy and going to the gym.”

And that’s when he asked himself this question:

“How could somebody not be satisfied after losing that much weight, putting in that amount of effort, and changing their entire lifestyle?”

After some research, Greg realized that there was a problem with the assessment tools and technologies that we use to show ourselves success. Companies spit out numbers that most people do not understand — there is no connection or relationship in the weight loss process. Instead, users are motivated by visuals as a means to measure progress. Greg understood this and found a solution in 3D body scanning.

Greg on a Fit3D ProScanner

Although the 3D body-scanning marketplace is incredibly active, companies compete based on how long it takes their machine to scan, a useless proposition that creates very little value for its users. Additionally, these machines are incredibly expensive and generally not accessible outside of a very small target demographic.

Determined to disrupt the market, Greg crafted his idea and got to work.

“So I was like, alright, I think I got the skill set. I know I’m going to have to stay up till 6 in the morning working on this stuff. Let’s try and build a system that will allow us to democratize body scanning in a way that all people, like my mom, can go to the gym and scan.”
“Oh and by the way, there is also another problem out there in retail. When you go to a store and buy clothing, you have absolutely no idea if it is going to fit your body. You need measurements — what will this machine capture? Measurements. It was the perfect intersection of these two markets. So I got to work and built it”

He took a bearing out of a Ford F-150, built a turntable out of plywood, installed a crank, and began testing it on his wife. Having built the hardware component, he then developed the code that would enable him to capture the images and stitch them all together. Despite the fact that he had built a functional prototype, he realized that he was not going to be able to do it all by himself — prompting him to reach out to his co-founders Tyler Carter, who now serves as the CTO, and Tim Driedger, who now serves as the VP of Manufacturing.

Greg with his Fit3D team

The three got to work out of their respective garages and created the second prototype. With a functional prototype at hand, Greg set out to receive funding and scheduled over 50 meetings with Silicon Valley VC’s and Angel Investors. Unfortunately, they all thought his idea was stupid and that the service could be packaged into an app.

So Greg failed and learned two very important entrepreneurial lessons:

1. “Companies don’t become successful overnight. Most people think of Facebook and have this idea that all you have to do is go out and raise money. Most people do not realize that it took them a really long time. So it’s not easy. It really takes that drive and dedication to make your dreams become a reality.”
2. “There is a lot of crap in the entrepreneurship world — so you have to be super objective about what you are building. It’s funny because I look back and had we been able to raise money from the start, I think that we would’ve folded because we were doing things based on our assumptions instead of doing things on market demand. We were building the machine out for ourselves, not for our customers.”

With that in mind, Greg gathered data to back up his assumption and found voids in the marketplace. People wanted easier-to-understand assessments of themselves.

“More and more people are beginning to use the scanner for physical therapy and rehabilitation. In the past, you had to use a tape measurer to get accurate readings whereas now you can take a 30 second scan to get more accurate measures.”

Using this information, Greg went back to the VC’s and Angel Investors, and secured funding.

Fit3D allows its users to view their data and visually track their fitness progress in ways that are intuitive and easy to understand.

Since the company’s inception, Fit3D’s body scanners have been introduced to a variety of new fields. And while this presents opportunities for growth and expansion, it also poses some of the biggest challenges that Greg and his team face today.

“Think of all the different applications and things that affect the surface of your body. It is tempting to explore these other markets but we know that we need to remain laser focused. At the end of the day, we are making a measurement device. There are a lot of different uses for that, some of which we did not anticipate.”

Fit3D has experienced great success after creating its product, raising funding, and focusing on a core market demographic. The company has sold over 325 ProScanners, captured over 80,000 body scans, and established global partnerships with gyms, retailers, and health & wellness centers in over 20 countries.

Now, many universities are using Fit3D’s ProScanner to research health risk outcomes and causes of morbidity associated with 3D body shape, gender and age, how controlled activity and nutrition affect body shape changes, and how 3D scans affect the subconscious notion of personal attractiveness as opposed to weight and facial features.

All in all, 2015 was a breakout year for Fit3D, which truly helped establish 3D body scanning in the health and wellness industry. Fit3D will look to build on its success, improve its product and services, and release new technologies that will enrich the user experience for its customers.

For interview inquiries and feedback, please send an email to

Market Update

Week ending July 10, 2016

World Indices

U.S. Indices Snapshot

Valuation P/E Est. P/E/G Price/Sales