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May 1, 2007

Unsolicited Advice for CNBC

I am merely an occasional commentator on CNBC, so the biz network can do with the following advice what it sees fit, but given that Dow Jones is in play GE/NBC should be bidding aggressively. A new Fox biz network with integrated WSJ/DJ/Marketwatch will be an instant major media presence.

Regardless of whether GE/NBC shows up, lots of speculation about who else might. This sort of thing will shake a lot of trees, with everyone from the NY Times, to the WashPost, to a host of PE guys all almost certainly giving it a serious think.

[Update] Barry Ritholtz, who rec'd Dow Jones on Bloomberg not long ago, has some equally strong views on the subject.

Some Context on WSJ, Dow Jones, and the Bancroft Family

Any WSJ/Dow Jones acquisition involves inevitable discussion of the Bancroft family, which has owned the company for more than a hundred years, meanwhile consistently spurning buyout offers. For more, read this lengthy Ken Auletta piece from the New Yorker back in late 2003:
The Journal, like two other great American newspapers, the New York Times and the Washington Post, is controlled by a family, and there is concern that the younger generation might want to sell the company. Unlike the Washington Post Company, which has diversified, and which expects to generate more revenue from its Kaplan unit, an educational-testing and teaching service, than from the Post, Dow Jones relies on the Journal for fifty-five per cent of its revenues and, in most years, seventy per cent of its profits. And Dow Jones, with revenues of about $1.5 billion, is just half the size of the New York Times Company. The Bancroft family has owned Dow Jones since the beginning of the twentieth century, and has steadfastly spurned overtures to sell, but its resistance may be softening. "Anything is possible--you never say never," said Leslie Hill, an American Airlines pilot and one of three Bancrofts who serve on the Dow Jones board, along with a family trustee, Roy Hammer. While the family has "a lot of pride" in its journalistic property, Hill says that family members sometimes disagree about financial issues. "I hear comments that they’re not happy with the company’s performance."
Read more here.

May 2, 2007

Google vs the Ad Market

A nifty factoid on the ad market, courtesy of WPP Group CEO Martin Sorrell in a recent speech:
  • Google has revenues of $11 billion, and a market capitalization of $150 billion
  • The top four advertising companies have combined revenues of $33-billion, and a market cap of $50 billion
[via Adage]

Online Ad Spending Still Too Inefficient

Here is a criticism I haven't heard leveled recently at online ad spending: It's too inefficient. The comment comes from DoubleClick CEO David Rosenblatt in today's WSJ:
Advertisers are interested in two things. One is increasing the efficiency of their media buys. It still costs too much to spend money online compared to offline. For example, every part of the process is still not as efficient. Everything from tracking measurement across thousands of Web sites, collecting all of those forms of data, billings, physically trafficking ad units out to publishers -- all of those sorts of things are still too manual...

The second thing advertisers are looking for is measuring the efficacy of their media. So I think we as an industry have done a good job of perfecting that measurement within specific channels, like search or within graphical, but not as much between them. If you have $100 to spend and you have a certain goal for your advertising, you should be neutral between spending that on graphical, on video, on search media -- let alone between the Internet and offline channels. But in order to make that decision you need tools to help you measure the relative efficacies, and those don't really exist yet.
Sounds like an opportunity to me.

Ferreting out Apple's Internal Forecast for iPod/iPhone Sales

A great example of using multiple information sources to ferret out Apple's internal projections for iPod/iPhone sales:
Digitimes via EE Times Asia reports that Apple is negotiating to buy 500 million Samsung NAND flash chips. These are 4 GBit chips, so that means that a 4 GByte iPod nano or iPhone would require eight of these; an 8 GByte iPhone would need 16. Averaging out those numbers says that Apple is looking for flash supplies for somewhere around 50 million iPods and iPhones over the next nine months.
[via Blackfriar]

Defrag Conference Registration is Open

Conference registration is now open for the Defrag conference. Eric Norlin has put a ton of work into this (and, full disclosure, I'm an advisor), so check it out.

The Pesky Millionaires Amongst Us

Being a millionaire is becoming so ... common. The damn people are seemingly everywhere, as a new report from TNS points out. The number of U.S. millionaire (excluding primary residence) households is up 5% to 9.3m, which means, given 92m U.S. households, that one in 1018 households meets the definition, or one every half urban block or so.

More here:



[Update] Barry has a useful related post here on the hedonism index.

Barry "Bling-less" Ritholtz

My friend Barry "Bling-less" Ritholtz has a cry from the heart appended to a recent post and directed to financial journalists, et al.:
NOTE TO MIDDLE-AGED WHITE PEOPLE, ESPECIALLY BANKERS, INDEXORS, PR FLACKS AND MEDIA STILL USING THE WORD "BLING":  Stop. Right now. For your own sakes. It does not make you look hip if you use hip-hop, urban, or black expressions -- most especially those that are circa 1998. Please stop it immediately. All it does is reveal you to be a clueless middle-aged white guy.

The term Bling long ago jumped the shark. And because I am a middle-aged white person, I was more than a year late in making that observation -- over two years ago. (See RIP Bling-bling for more details). 

Shopping Data for Good Rather than Evil

I hate shopping, but I love shopping data. I was reminded of that today in scanning a recent ResourceShelf post about services that combine shopping and price data to give insights into market trends. Here are some of the services mentioned, most of which have come up separately here before:
  • mPire.com. Shopping search plus historical pricing information.
  • Trulia. Heat maps and monthly reports on the real estate search market.
  • FareCast. Airline ticket shopping plus historical pricing info.
  • Wize. Taking user generated rated reviews from disparate web sources and combining them into a single score.
  • Oodle. Market data distilled from over 20 million classified listings.

Go Give Your Kids Ulcers

There is a fascinating result in a newly published study in the Archives of Internal Medicine. The gist: Early exposure to Helicobacter pylori may reduce risks of asthma and allergy. While h. pylori is now known as the stomach bacterium that leads to many/most cases of peptic ulcers, this new result suggests that being exposed before the age of ten reduces the likelihood of childhood allergies and asthma, both of which are raging higher.

It is, of course, further fuel for the cleanliness hypothesis, which says that one of the primary causes of the current startling increase in allergies, asthma, and atopic dermatitis among children in developed countries is our cleanliness fetish. Our highly developed immune systems need something to do, and they find it -- even if it's ultimately harmful to the young host.
Results The presence of cagA+ H pylori strains was inversely related to ever having asthma (OR, 0.79; 95% confidence interval [CI], 0.63-0.99), and the inverse association of cagA positivity with childhood-onset (age ≤15 years) asthma was stronger (OR, 0.63; 95% CI, 0.43-0.93) than that with adult-onset asthma (OR, 0.97; 95% CI, 0.72-1.32). Colonization with H pylori, especially with a cagA+ strain, was inversely associated with currently (OR, 0.77; 95% CI, 0.62-0.96) or ever (OR, 0.77; 95% CI, 0.62-0.94) having a diagnosis of allergic rhinitis, especially for childhood onset (OR, 0.55; 95% CI, 0.37-0.82). Consistent inverse associations were found between H pylori colonization and the presence of allergy symptoms in the previous year and sensitization to pollens and molds.

Conclusion These observations support the hypothesis that childhood acquisition of H pylori is associated with reduced risks of asthma and allergy.
Will we one day see class-action suits directed by allergy sufferers at manufacturers of antiseptic soaps and the like? One wonders.

Rupert Murdoch, Marketing Genius

Jon Friedman on Fox/WSJ is typically interesting:
I think company chief Rupert Murdoch is a marketing genius.

With the news Tuesday of a dramatic, unsolicited bid to acquire Dow Jones & Co. for $60 a share, Murdoch has created a tremendous amount of excitement. Since brand awareness means everything these days in the media, News Corp.'s coming business channel just got a supersonic promotional push.
As a related aside, Valleywag demurs on the subscription side of the deal in an interesting but flawed way. True, subs limit the audience, but it hasn't hurt the WSJ's influence where it matters -- i.e., outside of the blogosphere -- as much as Vwag argues.

Dow Jones Price to Hit $100?

Bloomberg is carrying a story speculating -- based on brand marquee value, not finances -- that the Dow Jones purchase price could hit $100 in an auction.

Bancrofts Bent Over Dow Deal

The real news tonight in the Dow Jones board announcement it will "take no action" on the News Corp offer is that only 52% of the shares are against. Why? Because the Bancroft family control over 62% of the voting shares via their Class B ownership, with the clear implication being that a signicant percentage of the Bancroft shares are for the deal.

My take: This deal is going to get done, and it is going to get done upwards of $70.

Debating Peak Oil with Boone Pickens and Steve Forbes

Good video from recent Milken Conference of Steve Forbes and Boone Pickens debating peak oil.

May 3, 2007

MBAs Go Contrarian on Google

At the same as a number of engineering friends of mine are leaving Google -- most common complaint: too big and bureaucratic -- MBAs have declared it to be their employer of choice. Food for thought, n'est-ce pas?

Top Ten Limited Partner (LP) Lies

Now and then I'm fond of running top ten lists, including my list of top ten VC lies a little while back. Well, that latter post provoked another venture guy to send me, with a request of anonymity, the following entertaining list of the top ten lies of LPs, the institutions that fund venture firms. It's a bit "inside baseball", so feel free to ask for explanations, but I think it's great stuff.
10: We don't invest in first or second funds, see #1
9: We have committed this years allocation
8: We don't believe in this asset category unless we can get into Sequoia
7: My committee would never let me do a deal outside of the valley
6: Our diligence is very deep (bottomless unless you are about to close and any of my close LP friends are in)
5: Your past results don't fit into our quantitative model that is highly predictive of future success
4: We don't invest less than $100M per fund (and we expect early-stage returns)
3: We are independent thinkers
2: We would really like to be in the second close
1: See #10... we don't invest in first or second funds unless Harvard / MIT / Stanford are already in

Catching Up: VC Eating, Murdoch, and Cell Phones

A few quick things to get caught up and empty my link-box:

Biz Media Froth, Ken Fellata, and the Dow Jones Thing

Biz media is never more nutty and self-involved than when it gets to write about itself. Some of the overly fawning Murdoch coverage this week has put me in mind of the classic New Republic piece of a decade ago parodying just that sort of thing via a made-up writer named "Ken Fellata":
MY car phone rang. It was August 10, and I was on my way to Kennedy Airport to fly to Paris to go bungee jumping off the Eiffel Tower with Walt Disney Chairman Michael Eisner. He had told me earlier by phone that he had taken up bungee jumping after Disney's stunning takeover of Cap Cities/ABC in order to put to rest any lingering doubts about his masculinity. A proud but intensely private man, who recently battled back from quintuple-bypass heart surgery, he promised to tell me in Paris the real story of his celebrated feud with Barry Diller. Word on the street was that the two titans had nearly come to blows at the Allen & Co. mogul retreat in Aspen in July when their visions of the information age collided over Evian water next to the resort's vast, Olympic-sized CEO sumo wrestling ring. In the phone call I got when I was halfway to Kennedy, Eisner canceled the jumping trip. A deal was in the works. 'Jiffy Lube,' he told me. 'That's all I can say right now.'

I switched back to Viacom Chairman Sumner Redstone, who had been holding on the other line. The billionaire Redstone, a proud but intensely humble man who parlayed a small collection of newspaper kiosks into the country's biggest privately owned multiplex theater chain, didn't like to be kept waiting. 'Was that Eisner you were talking to?' he asked me. The two shared a long-standing animosity ever since Redstone's deputy, Frank Biondi, jostled former Eisner protege Jeffrey Katzenberg at a Texas-style barbecue at David Geffen's estate in the Hamptons in honor of Edgar Bronfman Jr.'s stunning multi-billion dollar acquisition of MCA. 'There was no way around it,' an admirer of both men told me. 'Jeffrey and Frank may be humble, but they are intensely proud men.' I recounted to Redstone the substance of my converstation with Eisner. Redstone felt sick. He had been working in secret for months on a multi-billion dollar deal to merge his entertainment colossus with Midas Muffler. But Redstone knew that Jiffy Lube was twice the prize Midas ever was, featuring a $19.95 tune-up and oil change that had transformed the industry. Eisner was moving to steal his thunder once again.

I pulled over to the side of the Grand Central Parkway, stunned by what I had learned. The Eisner bombshell, I realized, meant that the media industry's merger mania had reached a new level--an all-out fight over the crown jewels of the auto parts and service industry. Swayed by pride and a stew of other emotions, the new masters of the media universe have decided that powerful hidden synergy lies in the intersection of the so-called information superhighway and the highway highway. But ...

May 4, 2007

MicroHoo, and Non-Peeing Sections in the Internet Pool

As much as I believe that Microsoft needs to do something major, and as much as I have predicted that it would put Yahoo in play in 2007, the idea of Microsoft trying to buy Yahoo, while in a sense inevitable, is still desperately difficult. The two companies' cultures are different, as people keep yammering, but you could say that about Microsoft and pretty much any other company -- Microsoft is an anomaly in an industry of anomalies -- and so culture is not the real issue.

The real issue has to do with size and experience. Bringing off multi-line acquisitions of this size -- call it $50-billion and 11,000 employees, against Microsoft's $293-billion mkt cap and 71,000 employees -- is always tough, and Microsoft, while a relatively profligate small acquirer, doesn't have material large dealing experience to point to. It can do the deal, in other words, but the subsequent carnage may be something to behold -- which Google might actually end up applauding.

[Update] Some people are saying that Microsoft needs to spin out its "Internet" business and combine that with Yahoo. Newsflash folks: This is 2007, every technology/software business is an Internet business. If you want to make the argument that MSFT needs to carve out media and advertising then make it, but don't conflate media/ad with Internet and pretend the latter still remains a distinct category, because it doesn't.

Pretending there are are Internet and non-Internet aspects to a tech company like Microsoft is like pretending you can have peeing and non-peeing sections in a swimming pool. It doesn't work.

Reuters in Play, and Data Uber Alles

There is something in the media/advertising water. Having had DoubleClick and RightMedia dealt for, and Dow Jones kinda put in play, and Microsoft noshing with Yahoo on a deal, word is now that Reuters has been approached by a group, which one paper alleges is Thomson Financial.

While this will come as no real surprise -- Reuters had been bandied as a target for some time -- it is still testimony to a rapidly changing business media landscape. While some insiders wrongheadedly think that people are newly finding the real value in the reporting side of the sector, the truth is entirely different.

Data, to quote my friend Tim, is the Intel inside. More than 90% of Reuters revenues come from trading and data, not reporting, and Dow Jones is not dissimilar. The real story here is the rise to supremacy of data, not a sudden whack-on-the-head discovery of the primacy of business & financial reporting.

[Update] Phil Pearlman has been drinking the biz media water, and he thinks GE should get in the game and buy the NYT, integrate it into NBCU, and then spin out the whole lot and call it a day. Ballsy, true, interesting, and unlikely.

[Update^2] Just to drive the point home that acquirer interest has diddly to do with the reporting side of media, check the just-released WashPost results:  First-quarter profit were off 16%, largely because of crummy ad performance in the newspaper, magazine and television broadcasting
divisions -- in other words, in all of its traditional business.

Updated: The Age/Entrepreneurship Myth

I pretty much entirely disagree with Fred Wilson's implication earlier this week that age is an obstacle to entrepreneurship. It may be an obstacle to a particular kind of entrepreneurship -- venture-backed companies where you give up equity to parental figures with money -- but implying anything broader than that is silly and counter to the facts.

Find a related take at my friend Neil's blog here. And I see that Fred has backed away from the clear sense of his original post in a subsequent one.

[Update]  I'm taking some deserved heat for having a strong stand here with no data. Sorry, it's a TV habit.

To bring some data into the mix, the truth is that entrepreneurs do skew somewhat younger than the general working population. But that's misleading, as it causes you to over-emphasize an unrepresentative statistic. The age skewness in entrepreneurship is much less important than the raw number of entrepreneurs in every age group.

You begin to see some of the preceding in a useful, if a little screwy, figure from the 2006 Global Entrepreneurship Monitor report:




While there are undeniably demographic differences between entrepreneurs and the general working population -- ignore the GEM's loopy high- and low-potential differentiation -- there are huge entrepreneur numbers in every age group. There is no mid-life crisis for entrepreneurs.

Some more factoids:
  • The average age of Inc Hot 100 members is 41, but there is huge spread
  • U.K. data shows that while the average of entrepreneurs there is 36, there is little age difference between that group the rest of the working population. Matter of fact, 23% of entrepreneurs there are between 45 and 54

A New Yahoo Acquisition Rumor

Ooooh, I knew I shouldn't have told David Ascher about my Yahoo plans. Damn.

Microsoft/Yahoo, the Immelt Indicator, and a Quiz

One semi-rational two-fold way to look at today's rumor du jour -- Microsoft buying Yahoo, or not ... maybe -- is a) that people want Microsoft to do something to get out of its perceived funk; and b) that everything is in play.

I accept the former point, and Microsoft should do something. watching it not do something is like watching one of those old movie serials and wanting the person to get off the damn train tracks already. Jump! Jump ! Jump!!

The trouble is, it's just that the most sensible Microsoft somethings mostly involve the unglamorous business of spinning out parts, cutting spending, paying higher dividends, and generally ceasing to pretend that Microsoft can break the laws of corporate physics and re-energize growth.

On the second point, that's true too. And the only way you'll know that merry madness is coming to an end is when people start speaking noisily ill of Jeff Immelt and whispering about a consortium of PE firms working quietly on a bid to take the company private -- all $300-plus billion of it -- and break it up. [obDisclosure: I appear regularly on the GE-owned CNBC.]

Last fun point. Which company's stock, Microsoft or Google, has outperformed as of close of markets today (5/4/2007) over the following two periods? The answer can be found by dragging your mouse over the area to the right of the respective question.
  • Year-to-date? Microsoft (2.33% vs. Google's 2.31%).
  • Trailing twelve months? Microsoft (30.4% vs Google's 19.4%)

Wolfman Jack Talking Microsoft/Yahoo, Reuters/Thomson, etc.

Some guy who sounded like Wolfman Jack was on CNBC late today nattering about the Microsoft/Yahoo non-deal, plus the News/DJ bid, not to mention Thomson/Reuters. Was hard to focus on the content given the gravelly voice.

Who lets people who sound like that on TV?

May 5, 2007

Hidden Data Sets, and Nigerian Email Meta-Scams

There are two thought-provoking pieces in the current New Scientist.

The first is on data hidden in rocks, the idea being that delicately balanced rocks in quake-prone areas are an untapped data set of the maximum strength of quakes in the area. After all, if you know how much force it would take for the rock to tip and fall down a hill, you have a rough upper limit on the largest quake in the era in recent geologic history. It is a great example of tacit data, a theme that I'm aggressively pursuing in financial markets investments.

The second piece is considerably more flip, but still interesting. Turns out that Nigerian scammers have come up with a clever idea: They're apologizing via email for all the financial scams, and asking for bank information to send a payment for  the inconvenience. You have to be in awe.

Feedback has just received a letter from one Bello Ahmed of "EFCC
Prohibits Office" telling us, "The Nigeria Government has set side for
your compensation for all your past efforts and attempts to assist this
duped character." Just tell Ahmed all the information you used in
sending money to the scammers, and the Nigerian government will give
you $150,000.

In case past losses have left you wary, Ahmed thoughtfully provides a link to the commission's website, www.efccnigeria.org, which oddly fails to mention the compensation programme and uses rather better English than Ahmed's letter.

May 6, 2007

Sneak Peek at Weekend Reading

Here is a sneak peek at some links from my weekly Weekend Reading at TheStreet/RealMoney:
  • High current correlations in the hedge fund industry may not be as ominous as back in 1999 (NY Fed)
  • Google is locating new data centers in the U.S.'s tornado alley (Byte & Switch)
  • Summarizing the argument that the U.S. economy has decoupled from the rest of the world (NY Times)
  • Why Rupert Murdoch is the best owner for Dow Jones (NY Times)
  • Recency bias and the magazine cover indicator for stocks (Economist)
  • There are 16 Wall Street billionaires on Forbes list of best paid, but only 4 CEOs (Forbes)
  • AI, neural nets, and the second (or maybe fifteenth) coming of the market quants (Bloomberg)
  • Warren Buffett thinks he has the investing strength of four men -- wants four CIOs (Reuters)
  • Forbes somewhat self-refuting list of the best brokerage analysts (Forbes)
  • Tidal power entrepreneurs include hedge fund manager Paul Tudor Jones (Bloomberg)
  • David "Prudent Bear" Tice is stubbornly calling for 50% market declines within 3-6 months (TheStreet)

Surviving a Meeting With Microsoft's billg (circa 1993)

Good stuff on surviving a meeting with a bully, albeit a very specific and well-known one: Microsoft's Bill Gates.

So you’re in there presenting your product plan to billg, steveb, and mikemap.  Billg typically has his eyes closed and he’s rocking back and forth.  He could be asleep; he could be thinking about something else; he could be listening intently to everything you’re saying.  The trouble is all are possible and you don’t know which.  Obviously, you have to present as if he were listening intently even though you know he isn’t looking at the PowerPoint slides you spent so much time on.

At some point in your presentation billg will say "that’s the dumbest fucking idea I’ve heard since I've been at Microsoft."  He looks like he means it.  However, since you knew he was going to say this, you can't really let it faze you.  Moreover, you can't afford to look fazed; remember: he's a bully.

[Fractals via Slashdot]

Friedman on Fox's CNBC-Killing Plans

Jon Friedman's latest column is more than a little breathless and intermittently fan-boy-ish about Rupert Murdoch's "stunning" bid for Dow Jones, but it also contains some penetrating comments directed at my sometime hang-out at CNBC. Agree or disagree, this is required media reading and will almost certainly be forwarded 'round and 'round the business-media business tomorrow.
Rupert Murdoch's stunning $5 billion takeover bid for Dow Jones is the key to News Corp.'s strategy to topple CNBC in the potentially lucrative arena of business-news television.

Did I say "topple?" Excuse me. I meant "crush." (Obliterate is probably a tad strong but you get my drift.)

By making this unsolicited offer, News Corp.chief Murdoch proved -- again -- why he has a reputation as a global media master. Regardless of how observers view him and his media holdings in the U.S. or elsewhere, he understands the ever-changing media landscape better than anyone else. He adjusts to change. He thinks global. He thinks digital. Always, he thinks big.

Trading on Unusual Option Volume

Many/most readers will have noticed that the way insider trading has been detected on the proposed Dow Jones/News deal is via unusual option activity. In the case of Dow Jones, there was some big buying pre-announcement of $45-ish calls that were then trading below $1. Post-announcement, they soared to $12, making buckets of money for some smart (ahem) people.

Without getting any deeper into the regulatory side of things, one of the things I like to keep an eye is unusual option volume, whether on the call or put side. A good resource for doing that sort of thing is Schaeffers, which has the appropriately named "Unusually High Option Volume" page. It looks the ratio of the prior days option volume to the average volume over the prior month. While Schaeffers doesn't do it, you can obviously filter this data for known info, such as earnings releases, etc., which will drive option spikes -- or better yet, include those companies, but compare the spikes to what we saw around previous earnings releases. (The latter is closer to what I do via a little program I run at IGreed HQ.)

The current unusual-activity leader? Andrew Corporation, which last week saw traded call options at 19 times its usual level. Mind you, that may be explained by the company's earnings release last week, so you'd have to look back and see if there was similar option activity last time it released earnings.

May 7, 2007

Meetings, Meetings

Traveling and in many meetings today, so postings will be very slow.

GFinance Updates

Two useful updates on Google Finance today:
  • You can pull up historical stock prices on all stocks.
  • You can add events on portfolio stocks  (and other financial events) to your Google Calendar.
Both are great features, and while the former merely adds something Yahoo Finance has long had, the latter is new and useful.

May 8, 2007

HP's Guidance Error, and Why Email Needs to be Smarter

Nice to see that people other than me now and then screw up cc-lists on emails. In the latest example, HP apparently cc-ed someone external that it shouldn't have on an internal email, thus forcing it to send revised sales/earnings guidance everywhere.
The decision to issue updated guidance follows the inadvertent disclosure of financial information relating to HP's recently completed second fiscal quarter through an internal email sent Monday evening to a single outside party. The company determined that the most prudent course of action under these unusual circumstances was to publicly release updated revenue and earnings guidance for that quarter prior to the market's open Tuesday.
More broadly, shouldn't this be a feature of smarter email software? I  have a Greasemonkey hack that bugs me if it looks like I meant to include an attachment and forgot it, but shouldn't email programs be smarter andask me if, say, the preponderance of people are inside my company, but a small number of outsiders have slipped in?

I'm sure there are other ways of making email smarter. Ideas?

Catching Up: Why a .338 Hitter is Better than a .833 Hitter, etc.

I'm emptying out my linkbox with a few things other people may find worth reading:
  • Fascinating stuff on why a .338 hitter in baseball is better than a .833 hitter. And, more importantly, why a .334 batting average is the best predictor of actual average. (ASA)
  • D.E. Shaw refuses to stay in the hedge fund box, and is now doing everything from computational chemistry to solar power (NYT/DE Shaw)
  • Wikipedia has a good entry on the whole "Does 0.999... = 1?"
    issue. This, for reasons too obscure to mention, took up a bunch of my
    time in a semi-debate with someone yesterday. (Wikipedia)
  • Nick Wilson is Twitter-ing a live birth (Twitter)
  • Fascinating data on Twitter vs Blogger growth (Kotke)

The Trouble with Fungible Startups

There is a piece in today's WSJ on some of the unintended consequences of startups that can all-too-readily change markets on a dime. The piece uses Peter Rip as an example, but the gist is that active VCs can wake up one morning to find themselves with overlapping portfolio companies, and tricky conflicts of interest.
When venture capitalist Peter Rip put money into two young Internet companies, he thought he was buying into two entirely different businesses. Riya Inc. was a digital-photo-sharing site while Vast.com Inc. was an online classified-ad site that made money by generating leads for online advertisers.

The next year, in 2006, Riya changed course, and now Mr. Rip wonders if he has a conflict of interest on his hands. Late last year, Riya launched a comparison-shopping Web site that makes money by producing sales leads for online retailers.

"I thought I had invested in two totally different start-ups," says Mr. Rip, a general partner at Crosslink Capital in San Francisco. "But all of a sudden, I'm sitting on the boards of two companies that are both doing lead generation."

Richard Russell Turns Bullish: Is the End Nigh?

One sure sign of a market top is when even uber-bears capitulate. So, with Richard Russell turning highly bullish about a world boom after refusing to buy into the market advance since 2002, is the end nigh?

I think not, but I know what my friend Herb will say.

The Global Economic Boom

Further to my earlier Richard Russell global economic boom post, some great data in a new Bloomberg piece on the changing reliance of U.S. public companies on overseas sales.
Companies in the Standard & Poor's 500 Index get 49 percent of their sales from outside the U.S., up from 30 percent in 2001, according to S&P, whose index includes the biggest corporations

Non-U.S. sales accounted for 48.6 percent of total revenue for S&P 500 companies last year, based on estimates compiled by S&P, the New York-based unit of McGraw-Hill Cos. That's the highest since comparable figures became available in 1999, said Howard Silverblatt, S&P's New York-based senior index analyst.
Much more here.

James Altucher on Addiction and One-Click Online Fortunes

Great column by my friend James Altucher in yesterday's FT on one-click entrepreneurial fortunes online. The best part is how it starts, with James 'fessing up to his addiction problem, and how it kept him from make millions with Lycos:
In 1992, I’m afraid, I was an addict. It got to the point where I was losing my friends and family, and it was harming my job performance. My only friends were my fellow addicts.

Specifically, all day long, every day, I would play chess online: one-minute games where my opponent and I would take one minute each to make all our moves. Whoever ran out of time first (or was checkmated first) would lose. My opponents were from Norway, Israel, South America, even Russia. I would walk to work with my girlfriend at the time and I would tell her “today I won’t play chess at all”. Then I would get to work and tell myself “well, one game won’t hurt” and I’d log on to what is now www.chessclub.com and play a game or two.

... Finally, a friend of mine helped wean me off the online chess server. He showed me a piece of software called Mosaic, which could download and format images and text off the internet. Also audio, but only if you wanted to wait two hours for a download. The worldwide web was just starting and there were maybe a few hundred websites at the time.

During this period, I would take the occasional bathroom break from my chess games and I’d see another guy wandering the halls around midnight or so. He told me he was working on something that could read text and catalogue it and he was testing it out by retrieving pages from the few websites there were. He was hoping for government funding so he could work on his little hobby during the day.

“Yeah, right,” I thought to myself as I locked my office door behind me for another session of one-minute chess. “Good luck with that.”

He went back to his computer, which was named lycos.cs.cmu.edu and eventually became the computer for the search engine he created, Lycos. It helped his net worth top 9 figures by 1997.

Biotech Patenting Increasingly Dominated by Universities

Some interesting data in a new biotech report from Marks and Clerk in the U.K. Among other things, academic patent filing outpaced biotech industry filing by 51% between 2002 and 2006, and it is now to the point that only one of the top five patent assignees in the world is a corporate:


Grammar Question: Stocks Up vs. Stacks Up

Normally when comparing things you would say "stacks up", as in "I wonder how the Hyundai Azera stacks up against its fellow land yacht competitors." Ignoring uses in financial markets, I keep running into prose containing "stocks up" when i expect "stacks up" (including in today's WSJ), and it is wrong and it bugs me. Am I just being fussy?

Note to Self: No M&A Tips to Mom & Dad

I'll give you five guesses how the following almost certainly happened, and the first four are wrong. The fifth, of course, likely has to do with a fine young investment banking associate who mentioned in passing the cool Dow Jones/News deal he was working on to his parents back home, not necessarily thinking they'd put $15-million into the trade.
The Securities and Exchange Commission Tuesday accused two Hong Kong residents of using inside information to buy $15 million of Dow Jones & Co. stock ahead of an announcement that News Corp. was seeking to buy the company.

The lawsuit in U.S. District Court in Manhattan named as defendants Kan King Wong and Charlotte Ka On Wong Leung, a married couple living in Hong Kong.

According to the lawsuit, Mr. Wong and his wife, Charlotte, bought 415,000 shares of Dow Jones stock in the two weeks prior to the announcement last week that News Corp. had offered to buy Dow Jones.

After the public announcement, the value of Dow Jones stock rose 58%, causing the couple's Merrill Lynch & Co. account to grow to $23 million, a net gain of $8.18 million. The lawsuit did not explain how the couple would have obtained inside information on the pending offer.

Wealth Booms and Waiting Times for Ferraris

Nice factoid on the current wealth boomlet using Ferrari delivery times as the measure:
  • Historical wait: 1 year
  • Current wait: 3 years
[via WSJ]

IP Quote du Jour

Here is the IP entrepreneurship quote du jour, via Lee Hood at ISB:
"... for a lot of states it is far more important [for universities] to have a really good football team than it is to have a really good IP team."

Do We Really Need Patent Reform?

There is lots of talk of patent reform, so news today that Amazon & IBM have settled their many suits is timely. Anti-reform sorts will use this to argue that the market and property rights allows patent owners to sort things out themselves, no politicos required; reform-minded people will point to the high costs Amazon & IBM incurred (and, of course, passed on) getting to today's point.
Amazon.com Inc. and International Business Machines Corp. Tuesday said they have settled all patent lawsuits between the companies, ending a years-long dispute over whether patents on methods of doing business should be applied over the Internet.

Under the settlement, Amazon will pay IBM an undisclosed sum. The companies also reached a long-term patent cross-licensing deal.

Intel Capital's CEO Summit

I'm at Intel Capital's CEO Summit in Carlsbad tomorrow and Thursday. The gist: The company annually brings together execs of its myriad portfolio companies, plus Intel's division GMs. This year the venue is the La Costa Resort, 25-minutes up the road from me in Carlsbad, California. Participants also include Ram Shriram, and oodles of others. Should be good.

Oh, and did I mention there is golf at the great La Costa course on Friday? Okay, and there's golf at La Costa on Friday, so, given my hook, drivers on I-5 should beware if there is a Santa Ana blowing.

Television and the Cuban Switch

Echoing Arnie Berman at Cowen, Om asks a variant of a question today for which Mark Cuban got pilloried a month or so ago:
“In the past, consumers replaced their PC’s every 3 years and their televisions roughly every decade. Is this trend poised to reverse? Hint: Yes.”
I have taken to calling this hypothesis the "Cuban Switch", echoing Nicholas Negroponte's famous view about a flip-over from wired to wireless networks. In this variant, of course, the switch is from computers to TVs.

Anyone buy the Cuban Switch? I am surprisingly, at least to non-TV-watching me, sympathetic to the idea. Then again, looking at my own behavior, I have replaced two TVs in the last two years, while not replacing my main home desktop computer. But I'm not planning on replacing either TV again any time soon.

Lijit is Over There to the Right

Folks may notice that over to the right I now have search service Lijit running on this site. Try it and see what you think. I got many (many^100) complaints about my prior blog search, so this has to be an improvement.

Thanks to Brad for poking me about it, and to Stan at Lijit for setting it up.

Playing the Activist Investor Home Game

Bess at DealBreaker has a typically entertaining post up on the "activist investor" home game. Identify the activist investor speaker and you'll win a ... well, copy of some Jack Welch book, but still.

Mobile Quote.com Updates

Some useful updates to the mobile version of Quote.com:
  • Watchlists of up to 10 trading symbols each
  • A chart-interval feature for economic analysis
  • A currency calculator for the U.S. dollar, Canadian dollar, euro, British pound, Swiss franc, Australian dollar and Japanese yen, and also includes the Mexican peso, Russian ruble, Hong Kong dollar and Singapore dollar.

Large Fortune Magazine Cover Images Online?

Anyone have a good location for large images of Fortune magazine covers online? I can only find smallish ones on the Fortune site.

Specifically, I want a larger version of the image at right. It's a keeper, even if only for ironic reasons.

May 9, 2007

The Next UI Breakthroughs: Command Lines and Physicality

In the current issue of ACM Interactions Don Norman says the next two major interface changes in technology are command lines and physicality. In the former case he's talking about interacting with search engines via  command lines;  in the latter case he's predicting more Wii-like interfaces where we manipulate technology via turning and moving sensor-ified devices.

Intel CEO Summit: The Breakout Buzz-ometer

Lots of buzz and hubbub here at the Intel CEO Summit in Carlsbad, California. We have oodles of companies doing quick pitches, the usual list of keynotes, and, I should mention, unseasonably warmhot weather.

While I can't write anything overly specific about the quick-pitch company breakouts -- although (and I never thought I would say this about anything) they're erring on the side of being too short -- I will give you my handy-dandy Breakout Buzz-ometer, a measure of sectoral interest based on a) the number of people in a sectoral breakout room ("Density"), and b) the likelihood of people staying in each room ("Fixity"). Higher numbers are better in both, and they are ranked from 1 to 5.

Here you go:


Sector
Density
Fixity
Enterprise computing 2
3
Design, Health, etc.
3
2
Mobility
4
4
Digital home & consumer
5
5
Communications & security
3
4

Adding some color, consumer Internet was packed, with people literally falling out the door. I had to run out to answer a call at one point, and I wished I had a machete to break through the press. Mobility was in a large room and had a good crowd, but also had a lot of topic shoppers. Enterprise software felt a little over-peaceful, and the miscellaneous room was mostly full of fellow topic shoppers.

Intel CEO Summit: Twitter-ing Intel Press Briefing

Just for fun, I am Twitter-ing Intel's press briefing live (1:35pm PST) here.

CNBC Tonight

I'm on CNBC tonight around 4:20 tonight with my friend Herb Greenberg. We're talking insider trading, Richard Russell's bullish turn, and Toyota's sales.

Financial Geeking with Greasemonkey

I must be mad. I'm in the process of writing two -- count 'em, two -- Greasemonkey scripts. Both are in finance, so I'll share them at some point here.

May 10, 2007

Intel CEO Summit: Why-Max? Because

Couple of quick tidbits on WiMAX from the Intel Capital CEO Summit.
  1. Intel says that, with the exception of North Korea, its WiMAX wireless technology is now rolled out across all the axis of evil countries. Make of that what you will.
  2. I asked Intel Capital CEO Arvind Sodhani yesterday if he were not at Intel Capital if he would be investing so aggressively in early-stage WiMAX companies. His (quick) answer: No -- which tells you something about the pressure of being a corporate venture guy. Sometimes you have to do stuff for the team.

Honey, I Shrunk the Equity Supply

Catching up with a few factoids on the incredible shrinking equity supply on major markets.
  • The supply of stocks shrank by $604-billion in 2006, a record
  • In first four months of 2007 it fell by another $300-billion, which is 1.4% or 4.3% annualized
  • More than $1-trillion of equity supply disappeared via buyouts and M&A in 2005/06
More here, here, and here.

Orbitz IPO Filing: Fun with Recombinations

Online travel company Orbitz has filed for an IPO. It's useful reading, but these are absurdly complex financials with difficult historical comparables. I think the company did $752m in revenues in the year ended December 31 2006, losing $144m in the process, but that is really a standalone figure given the number of acquisition and asset swaps involved in creating The Company Currently Known As Orbitz.

CNBC Two-Fer Tonight: Google and Adult Entertainment

I was on CNBC's OTM tonight for two spots. First was about Google's annual meeting, and whether the company needs another leg to drive growth. I argued no, said the other leg was there -- it's taking share, improving monetization, benefiting from a media shift, and adding page views with apps -- and that The Google looks good at these prices. At some point I may have said GOOG's going to $1,000 within two years.

The second segment was on adult entertainment and the outlook for Blu-Ray. Will adult entertainment tip the scales in the current format wars? I argued that it likely won't, that things have changed since the VHS/Beta wars, and the real differences between the two formats are too small, and the price differences too large. Happy to hear other views though.

May 11, 2007

Mobile Gaming at the Indie 500

I won't pretend to know much about car racing (and most of what I do know about oval racing of any kind comes from Hunter Thompson's "The Kentucky Derby is Decadent and Depraved"), but I couldn't be happier about an Indie 500 customer win by my friends Jim and Andrew at Vancouver-based Exponentia, where I'm a former board member and long-time advisor.

The gist: They have announced a great win at the upcoming Indie  500 where they will deploy their mobile gaming technology to allow the zillions of people on-site to answer trivia questions and make predictions live. A snippet follows, and more here:
There will be more than one winner in this year's Indianapolis 500: Race fans will be challenged to compete against each other and test their racing knowledge in a first-ever live contest utilizing mobile technology and the world's largest one-day sporting event.

Indy 500 PlayAction, being launched in partnership with WIBC 1070 AM and 97.1 HANK FM, the broadcast home of IMS in Indianapolis, allows fans at home or in attendance to answer trivia questions and make predictions with their cell phones during this year's Pole Day, Miller Lite Carb Day and Race Day.

As readers will know, I'm a big fan of this kind of thing -- live interaction with ongoing events via mobiles -- so this is great stuff.

A Digression on Spiders and Things

A brief personal digression. Was sitting here moments ago and the five-year-old came in to chat for a second before leaving for school. The following dialog resulted:
Him: Daddy, I love you a lot.
Me: Oh, that's great. Thanks for telling me.
Him: I love you 100-times more than spiders. I wanted you to know.
Me: Oh ... thanks, I think.
Good to know where I rank in the insect/human pantheon.

Summer Investing & Entrepreneurship Reading List

My friend James at TheStreet has a good summer reading list of entrepreneurship and investing books:

Vint Cerf Talking Google Directions

A recent video of Vint Cerf here in San Diego talking Google directions. I was stage left and three rows back for the first half.

On Golf, Lob Shots, and Trading

Some typically entertaining comments over at Daily Speculations, this time on the relationship between lob shots and trading:
The primary reason the lob shot is much more difficult to master is margin of error. The ball must be struck with almost absolute precision in order to put the proper backspin on it, not to mention the small target location. The margin of error with the bump and run shot is quite large compared with the lob shot. Therefore, it has a higher degree of forgiveness and is often mastered by many. But when one is in trouble, the bump and run is of no use.

So, for a week straight I hit 300 lob shots a day. I would spend a couple of hours a day striking that ball over and over, from every part of the practice green. I would pick the most difficult locations and lies that the practice green had to offer. I became so comfortable with this that I took fifteen strokes off my handicap because I became so adept at the lob shot. I would often use it even if it weren't necessary, much to the chagrin of the bump and runners.

May 14, 2007

Tesla, Chrysler amd the Rebirth of Autos

I'm sure I won't be the only to be intrigued by the juxtaposition of Daimler paying Cerberus almost a billion dollars to take Chrysler off its hands today; and last Friday's announcement that Tesla Motors had raised another $45-million. The comparison could hardly be more stark.

Some cynics will say that no-one ever learns, and that the auto industry, like airlines and race horses, remains a plaything for the bored and monied. Optimist that I am, I prefer to think about how a new auto industry is already emerging, in fits and starts, from the ashes of the old one.

More here and here.

Bookclub on Bubbles

I'm participating in an online bookclub this week over at TPM on Dan Gross's Pop!: Why Bubbles Are Great For The Economy. Fellow natterers include Andy Kessler, Barry Ritholtz, Dan Altman and others. As I understand it, the first posts should be up shortly.

Geekdad-ing on the Making of Planet Earth

I have a short post over at Geekdad about my older son and I's current infatuation with the Planet Earth series on Discovery Channel HD. In particular, the last episode on the making of Planet Earth is absolutely fascinating.

Catching Up: Polysilicon, Emerging Technologies, IPOs and China

Couple things worth reading to help empty the link box:
  • Video of MIT symposium on emerging technlogies (MIT)
  • The polysilicon shortage is causing non-solar semi firms to do multi-year buys, which will not end well (Marketwatch)
  • Huge influx of Chinese capital could drive global stock boom (Marketwatch/Hulbert)
  • Reuters blog from its current industry summit ongoing on technology & media (Reuters)
  • Is GSTrUE a Liquidnet for IPOs? This may be the most important post you will read this week (Roger)

The End of the Paid Video Download Market

There is a new report out from Forrester trumpeting the end of the paid video download market. Cynics like me might say that there would have to have been a market first before we could herald the end of it, but nevertheless it's good stuff. Here is the nut:
Like a flightless bird, the paid video download market in its current evolutionary state will go the way of the dodo, despite the fast growth and the millions being spent today. Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services. What’s left of the paid download market will then evolve into IP-delivered video on demand that has more in common with traditional pay-per-view than online download business models today.
There is some interesting data in this report, and I'll try to get back to it later when I have a moment.