The trouble with CSS

By Paul Kedrosky · May 6, 2003 · ·

Geek note: Great, savvy comments from Tim Bray on the pluses and minuses of dealing with Cascading Style Sheets (CSS). Like democracy, they’re better than the alternatives, but that’s not necessarily saying much.


Two key points that he makes:



  • CSS is harder to maintain than either content or computer programs. Personally, I find them nightmarish, and it’s so-so easy for a CSS document to descend into meaninglessness.
  • When you make a change and the resulting CSS doc blows up your page, there is really no straightforward way to debug the causal chain. Had that happen the other day for this site and finally had to regress back to a known working copy, despite making only minor changes.

Filed Under: Technology

Venture capital continues the slide

By Paul Kedrosky · May 6, 2003 · ·

Venture capital is rapidly becoming a derelict industry. News this week that a partner in a major Boston fund recently moved out to play “house” in South Carolina. And more news today that the first quarter of the year followed recent trends: the amount of money has declined every quarter since early 2000.


Other facts:



  • There has been one public-offering for a venture-backed company since January of 2003, down from 262 in the same period during 2000
  • There were 623 venture deals in Q1, the smallest number since 1996
  • Workshops on obtaining goverment grants are now a growth business

Filed Under: Venture capital

SARS update

By Paul Kedrosky · May 5, 2003 · ·

Eerie how the peak of media SARS frenzy matched the moment when the outbreak went into serious decline. The Time/Newsweek contrarian indicator strikes again!


More seriously, as I have been saying for some time now, the latest data shows that SARS is under control in all regions, with virtually no new cases outside of China. Even the exception, China, is having some success controlling the outbreak.


On an investment front, SARS shorts who didn’t cover some time back, as I suggested two weeks or so ago, are taking it in the teeth. And SARS longs who are playing with various micro-cap biotechs are hanging by their teeth instead.


Finally, as a general note on biotech, this morning’s developments were interesting. There was a classic tragedy of the anti-commons, as patents were filed by Hong Kong, Canada, and U.S. agencies on aspects of the virus and related genes. All would seemingly have preferred not to file, but all also worried that someone else would and they would be forced to pay a ticket-taker for access to the SARS market — assuming it becomes a persistent or seasonal syndrome.

Filed Under: SARS

Those smarty-pants at Mensa

By Paul Kedrosky · May 5, 2003 · ·

Somewhat off-topic, but those smarty-pants at Mensa have always irritated me more than a little. It took, however, a comment on Peter Hall’s site to really get me thinking about just how kooky they are.


Peter points to this Mensa page and says that with all the high IQs in their supposed target audience, is it really necessary that Mensa tell would-be applicants that 1 in 50 is the same as 2%?


Fair comment, and I would add to that something else further up the page:


Many people are surprised to learn they have an above average IQ.
Yes, given that half the population is by definition above average, I would guess …. oh, about half the population is “surprised”.

Filed Under: Society

Revving up the technology IPO engine

By Paul Kedrosky · May 5, 2003 · ·

Much is being made of two tech IPOs coming out this week. Yes, the arrival of Diginet and iPayment (oh, that’s so 1990s sounding!) will end a two-month lull in the offering market. While the underwriters are saying that the road show is going well (what else would you expect them to say), Diginet and iPayment are both losing money.


What happens if both or either do well? Near-term, I count 18 U.S. IPOs in the backlog, and they’d happily come to market, looking to raise about $3.6 billion.


But the sumo wrestler in the closet is, of course, Google. The parade of stories about that company’s potential offering is growing, and the company is participating in some of the stories. And as I pointed out on the weekend, ex-analyst Lise Buyer has joined the company in a position that I would call help-tridy-us-up-to-go-public.


What would a Google offering look like? Well, with something like $500-mm in sales this year, and cashflow positive since December of 2000, it would be the first tech offering in some time to attract broad and deep institutional interest.

Filed Under: IPO

Is truth in accounting an oxymoron?

By Paul Kedrosky · May 5, 2003 · ·

Tim Bray repeats the usual criticisms of GAAP (generally accepted accounting principles). While he’s right, of course — GAAP is overly subjective — that shouldn’t be news to anyone. After all, its inherent subjectivity is right there in the acronym if you choose to look. The principles are generally accepted, not universally accepted, not laws of nature.


In my experience, engineers and scientists always have a hard time with the idea that accounting statements allow management to have some discretion about when the recognize revenues and earnings. As Tim does here, they usually turn to cash flow statements, suggesting those are closer to the truth. While they are one type of truth — what is happening with cash — they too distort the investments a company makes and when it can expect to earn a return on those investments.


So, cash flow statements are fine, but they are not strictly better than accounting earnings statements. It is a fiction to pretend otherwise. Scan both, and don’t get hung up on some misguided search for truth in accounting.

Filed Under: Accounting

Frontline discovers Wall Street (again)

By Paul Kedrosky · May 3, 2003 · ·

May 8th will see a no-doubt downbeat report by Frontline on the brokerage industry, Worldcom, and Wall Street’s latest escapades. I’m not sure what more there is left to say on this subject, and snippets in Frontline’s press prelease promoting the program don’t give me oodles of hope.


Case in point, the following snippet:



“Is Wall Street fixed? Ha! Not by a long shot,” investor George Mickelis says. Mickelis, the owner of a family restaurant in Houston, lost $300,000 that he invested in telecom stocks for his children’s college education. “I have no faith and no confidence–not in the companies, not in the brokerage firms…. What have they done to restore my faith and confidence as an individual investor? Zero. Zip.”


While that may sound sad and piquant to some, it is entirely indefensible and unsympathetic. This fellow put a meaningful component of money into telecommunications’ stocks in saving for his childrens’ education? And then he expects sympathy?


That is an outrageous and entirely silly claim. Anyone who puts money into a) equities, and b) more specifically, technology equities saving for a known, near-term deadline needs psychiatric help, not legal redress for lost principal.

Filed Under: Brokers

Venture data is lossy

By Paul Kedrosky · May 1, 2003 · ·

After much tussling with venture funds and (mostly) the media, CalPERS finally released performance data for its venture capital investments. Here is that data in a more useful form:



















































Year Funds Average St dev
1993 5 19% 3.6%
1994 18 13% 6.0%
1995 14 17% 8.8%
1996 17 6% 5.2%
1997 13 11% 7.1%
1998 21 -3% 3.8%
1999 12 -8% 5.4%
2000 29 -15% 9.8%


Basically, you can see how returns deteriorate rapidly once you get past 1997. While it is a reasonable excuse to say that funds in their early years typically show poor returns, 1998 funds are now five years old and should be showing better than break-even numbers.


One other point: the standard deviation of returns is remarkably high. For vintage 2000 funds, the table shows that a 95% confidence interval (assuming return normality) would range from almost -35% to +5% — a very large range.


Here is the same data for CalPERS’ venture investments:




























































Year

Funds

Average

St dev


1993

1

28.6%

2.0%


1994

5

11.2%

2.2%


1995

4

23.4%

6.9%


1996

10

10.9%

4.2%


1997

3

25.3%

3.2%


1998

12

-3.9%

2.8%


1999

4

-29.7%

4.4%


2000

14

-22.8%

8.2%


2001

20

-29.8%

11.9%


2002

3

-27.6%

3.1%

Filed Under: Venture capital

Alan speaks

By Paul Kedrosky · April 30, 2003 · ·

Typically waffling comments from Fed Chairman Greenspan today. As the headline says, he is “optimistic, but on guard”. No, I have no idea what that means either, but I do know that worrying about pessimism, which he says he is doing, is the sort of magnificently circular construction of which only a central banker or an economist is capable.

Filed Under: Economists, Greenspan

Research shrinkage

By Paul Kedrosky · April 29, 2003 · ·

Good piece in the Boston Globe this morning rightly pointing out that equity research is becoming more and more of a commodity. Despite all the settlement noise, the industry is past a cusp: fund managers are relying less and less on external equity research, especially of the brokerage-based sort. While that trend has been in place for more than a decade — it was happening when I was an analyst — there is, for obvious reasons, a big push now to complete the shift.

Filed Under: Analysts
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