"Absolutely!" Shiller exclaimed. "Housing traditionally is not viewed as a great investment. It takes maintenance, it depreciates, it goes out of style. All of those are problems. And there's technical progress in housing. So, new ones are better."
This is a great article, something I think about every time I consider buying a house again. In the past I've been lucky (even selling my last one at a bad time for personal reasons), but if you think about it, it isn't a good investment. That's not a good reason to buy a home.
So maybe in the future I'll rent and only buy if things are perfect? Maybe. It isn't so easy to avoid the idea that rent is wasted money.
A U.S. judge yesterday threw aside a much-anticipated trial between Apple and Google-owned Motorola Mobility over smartphone patents. The decision and a blog comment by the same judge could prove to be a watershed moment for a U.S. patent system that has spiraled out of control.
The headline is provocative, but the meat of the article is much more grounded in reality. I don't think it is social media, per se. That may have run its course, mobile is clearly what's on the rise. While there will be a lot of absorbing the last trend into the first (just as social media on its rise had a lot of "Social Media for X"), what creates value and opportunities in mobile ultimately is still being decided, while social media is a much more known quantity at this stage.
Mr. Blank's primary point, that all the VC money chasing after quickie returns from tech startups, is very important and relevant no matter what the current tech startup fad is. Most tech startups have absurdly low barriers to entry and a lottery ticket appeal for a small chance at huge returns. While investors are rolling the dice on these startups instead of investing in arguably more important, more expensive to get rolling industries, the model is not working.
I think opening up angel investing to a larger pool is a potential solution to this problem. The obvious candidates for funding from a lot of smaller investments are the companies that don't need tons of capital - which right now are tech startups. If angel investors are willing to roll the dice (which they have been, taking away the early investment opportunities and changing the VC investment landscape) it eats into the VC fund's competitive advantage in those industries.
Maybe, just maybe, they will have to go back to investing in industries which need funding for actual research and to overcome the large barriers to entry.
Another possibility is that those VC firms that establish top reputations could use their negotiation leverage to get longer time horizons for their funds.
Every few weeks there’s a press report of an acquisition of some startup or another along with a rumored acquisition price that’s quite low, sometimes less than the amount of venture capital invested in the company. Those deals usually, but not always, have equity grants to key founders and employees that are often a multiple of the acquision price. Example – a recent deal had a rumored acquisition price of around $2 million plus stock grants to a few key employees of $15 million.
They drove a dump truck full of money up to my house! I'm not made of stone! - Krusty the Clown
I'm fascinated by the idea of acqui-hires for a few reasons. Professionally, if things change in the way that Mr. Arrington suggests, I may need to change the way that we model some exits in VCHub.com to include those stipulations, plus handle the option grants he talks about as part of the input of the exits. That would be wacky.
There's also the question about whether we'll ever become a target of acquisition, acqui-hire or more mundane, and what that would look like.
What this article got me thinking about, though, was the ways in which these kinds of acquisitions are changing the startup ecosystem. I was at a startup event where, after hearing a speaker talk about acqui-hires and how important building a top notch team is (even if you fail at what you're doing, you might be able to sell for the talent) one of the pitching companies switched tactics to talk about how awesome their team is, and how you should invest in them for their acqui-hire potential.
It fell flat at the event, and I think when someone is blatantly steering a company in that direction from the beginning it will fall flat as well. Just like interacting with a coworker who is obsessed with their career rather than the work they're doing, I would have a hard time believing that after they got to my company they'll stick around and do great work. Maybe they'll just try to flip another company as soon as they can, or maybe they'll focus on climbing the corporate ladder rather than producing great results.
In the end I think it comes down to people that are trying to game the system, whether it be corporate ladder climbers, scammers, entrepreneurs building a company for VC funding or a home run exit in an area they don't care about, or those who make decisions purely based on how it will help their resume... those people are just not fun and rewarding to interact with.
A great article that talks about the importance of logistics in running a business, particularly one that is producing actual physical objects.
I've often thought that if I had grown up in a time that didn't have computers I would have gotten into logistics. My favorite video game series of all time is The Settlers from BlueByte (at least through #4 in the series), which at its best was all about supply chain management and logistics. I often pine for another game that does it as well.
When people think about outsourcing stuff like software development they need to be aware of these dynamics. What's the turnaround time to get a change made? What's the feedback loop look like? I think one of the reasons for the success of Pair Programming is the immediacy of the feedback loop on the technical side, it is like having an ongoing code review with near 0 latency.
The Lean Startup movement, Minimum Viable Product, and similar concepts try to reduce the latency on product/market feedback for the same reason.
So the key question: What areas in your business do you need minimum latency, and are you structuring things to make that happen?