min-myinnersoul

A terrible decision for the company and its founder. A great decision for everybody else. Welcome to the crazy world of private equity. Facebook needs an IPO like a hole in the head. It doesn't need the money. The only possible use it has for it is to pay off some tax liabilities being triggered by doing an IPO. Most of the money is going to be invested in US government bonds - impeccable logic of raising expensive equity and investing in bonds that yield nothing. The business itself is a cash spewing machine - it doesn't need more cash. On the contrary it doesn't know what to do with th cash already being generated. Actually the risk when too much cash is sloshing around is that the Board will go and make a stupid headline grabbing acquisition. Mark Zuckerberg doesn't want to do an IPO either. He doesn't need the "valuation" to prove to everybody that he is rich. He's going to lose every autonomy he had in running the business - now he has to pander t...

Is Facebook really worth $50 bn ?? Yes, billion that is, not million. Or are we seeing the second incarnation of the mindless hype that we saw at the dawn of the century which made the word dot com a household name ? Judge for yourself. What happened yesterday was that Facebook raised the first tranche of $500m funding from Goldman Sachs and a Russian investor. Goldman Sachs is putting $375m of its own money . Extrapolation is always a dangerous thing, but if you take the licence of using the same valuation per share to determine the value of Facebook as a whole, it somewhere close to $50 bn. Facebook is not a listed company; so we should be careful. But still such a stratospheric valuation ?? Facebook's revenues are reputed to be some $ 2 bn. This all seems to be old style internet ads - very few media companies have succeeded in that space. Google is different - its advertising model is such that a fair proportion of the searches actually lead to a commercial transaction. Clicks...

This is the title of a very interesting article written by Prof Prabhudev Konana of the University of Texas at Austin. Click here to read his article. He compares two massive streams of innovations in the last two decades – the internet and the financial sector. The Internet has revolutionalised our way of life, created jobs and wealth for a lot of people and , in general, has created unprecedented social good. Financial innovation has created lots of wealth and done good, but it has done bad as well. Prof Konana wonders whether the rewards for financial innovation have been disproportionate and whether our systems for rewarding innovation are appropriate. Thought provoking article ( the Professor has written it for the average reader and not a scholar – so its refreshingly devoid of 25 letter words that business professors often inflict on us, mortals). It nicely captures one of the dilemmas I have been musing on – is the reward system for the financial sector “right” ? On the one ...

What should be the “internet policy” in companies ? Not so easy a question to answer. Companies have one of the following approaches - Complete ban (would be very unusual these days) - No internet on your desktop, but internet kiosks available - Internet access for limited hours at the desktop - Wide internet access, but personal stuff like e mail, blogging, youtube blocked) - Complete free for all What is “right” to do ? Only one thing would be universally agreed – no porn. After that everything is fuzzy. Arguments against a very open access are many. Firstly it costs hell of a lot. If you have 10000 employees in your office, the cost of providing internet access to everybody will be a fortune. Why should companies foot the bill for you doing your personal stuff in the office. At least some employees will goof off having fun online rather than doing what they are supposed to be doing. More serious is that companies face big law suits and possibly massive liabilities if some employee d...

Carol Bartz, the CEO of Yahoo, said a few days ago , that it was “not our job to fix the Chinese government". She was responding to a question from somebody from Amnesty International who asked a question at the company’s AGM about filtering of internet information in China. She’s dead right. It is not the job of companies to advance political or social causes. That’s the job of governments, the United Nations, religious institutions like the Church, etc. Not companies. She could have put it better though. Her choice of words was not exactly great. Companies come under increasing pressure from all sorts of organizations who want to promote their agenda and find companies as soft targets. They use pressure tactics and publicity to force companies to further their agenda. These range from very worthy causes to cranky, and to , frankly, batty causes. But the worthiness of the cause must not cloud the issue. It is the not the business of companies to further political, social or reli...

There’s a battle going on between China and Google. Google can’t win and China can only lose. Just for the record, its China who started this battle . The stakes were upped yesterday night, when the Net Nanny blocked Google. Yes b-l-o-c-k-e-d Google. Google everything – Search, Gmail, the works ! I’m gob smacked. What are they thinking ? For some weeks China has been demanding that Google block searches from throwing up pornographic content. That’s the official stated demand. But we all know what this means. We know what they want to block. In China, Google is not the dominant search engine. In fact their market share is some 20% or so. The dominant search engine by far is Baidu . This demand for blocking has not been made of Baidu and searches on Google and Baidu throw up virtually the same results. Google is in a bind. How can they react. If they give in, this is against all that they stand for. If they don't, they get blocked and out of one of the most important markets in the...