Fear of Past Dot Com Crash: Venture Capitalists Only Interested in Consumer-Targeted Companies like Facebook or Groupon

Fear of Past Dot Com Crash: Venture Capitalists Only Interested in Consumer-Targeted Companies like Facebook or Groupon

 

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via online.wsj.com

The dot com crash has had a big impact on how venture capitalists invest in the current market. To understand why, it is important to know a little history about the impact of the Internet and why these investors are leery.

The Internet became commercially popular in the mid-1990s.  By 1995, there was an estimated 18 million users on the net.  This led to the creation of online businesses which led to speculation about how big these companies could grow.  The problem came with how much these companies were actually worth vs. how much they were perceived to be worth. 

What causes a bubble and eventual crash?  When people get excited about a company stock, it can drive the price up but if it inflates to an unrealistic point where investors get wise to the fact that the company can’t be worth as much as they hoped, people bail, sell the stocks, the price drops, and the company crashes. 

The pain of those dot com crashes are still felt today.  Venture capitalists now may be more hesitant to invest.  Tom Abate with SFGate.com said that venture capitalists in 2000 made about 8000 investments valued at $100.5 million.  “In 1999 and 2000, Wall Street invested in 534 venture-backed initial public offerings.” Those, who cashed in early, made a lot of money.  As large amounts of money were being put into the market and speculation was growing, the bubble was forming.  NASDAQ hit its peak on March 10, 2000 at 513252, only to lose 78% of its value by October, 2002 when it dropped to 11411.

In 2001-2002 while a lot of companies were over-valued and going bankrupt, people found their stock purchases were not such a great investment.  So now when Facebook and Twitter are considering going IPO it has some potential investors concerned.  This is especially true in the case of Twitter that has yet to publically show their business plan. 

What has the effect been on venture capitalists investing?  An article in Investopedia stated, “In the year 1999, there were 457 IPOs, most of which were internet and technology related. Of those 457 IPOs, 117 doubled in price on the first day of trading. In 2001 the number of IPOs dwindled to 76, and none of them doubled on the first day of trading.” SFGate.com reported, “In 2008 and 2009, a total of just 18 venture-backed companies went public.”

Investments have picked up for the consumer-oriented companies like Facebook and Groupon.  However there has been a venture squeeze for companies with business products.  Wall Street Journal reported, “In the first three months of this year, venture-capital investment in consumer tech companies nearly tripled to $874 million from $310 million a year earlier. Meanwhile, investments in tech firms with business products rose at a slower rate to $2.3 billion from $1.9 billion a year earlier.  The shift away from business-oriented technology start-ups has been gathering steam over the past few years. Venture investment into such companies was $11.9 billion in 2010, down 35% from $18.4 billion in 2006, according to VentureSource. The overall number of financing rounds these companies received also dropped 18% to 1,261 during that time.”

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Coexisting with Four Generations in the Modern Workplace

The modern workplace has seen growth in the 16 to 24-year olds and over 55 year olds.  With people living and working longer, this growth has led to four generations of workers trying to coexist. This may present challenges to management.  According to The East Valley Tribune, “It’s not merely age that differentiates these workers, said AARP officials, but rather how they approach accomplishing different assignments and tasks, as well as how much “work” defines their everyday lives.” 

These 4 generations include:

World War II Generation (aka depression babies) – Those born prior to 1945

Baby Boomers – Those born 1946 to 1964

Generation X – Those born 1965 to 1982

Generation Y (aka the Millennials) – Those born after 1982

According to the Tribune each of these groups has unique needs:

“World War II Generation – appreciate a logical approach to work, with clear job expectations that are fair and consistent. This group prefers face-to-face communication rather than phone or email. . .are reluctant to buck the system, uncomfortable with conflict and reticent when they disagree with their boss or fellow co-workers.

Baby Boomers – represent the largest segment of the American work force. There are roughly 77 million Boomers who are service-oriented, appreciate a team perspective, and are motivated workers . . . appreciate personal communication and the telephone, are not necessarily “budget-minded” and are uncomfortable with conflict. In addition, some may put “success ahead of result.” They also insist on phased retirement and health and wellness programs to foster a healthy lifestyle.

Generation X – are independent and creative souls who are adaptable, technology-literate and like to buck the system. They don’t need a boss constantly looking over their shoulder as they enjoy being turned loose to meet deadlines. . .this group enjoys communicating by voicemail and email and is looking for development opportunities and to add certifications to their resumes for upward mobility.

Generation Y – brings to the workplace optimism, a can-do spirit and the ability to multitask, but they are often inexperienced and require supervision and structure. This group, which prefers instant messaging, blogs, text messages and email, has difficulty communicating in the workplace and likes to be spoken with one-on-one.”

For more information understanding personalities in the workplace click here. 
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Inspired by One Tweet: Quakebook’s Creation is Helping Japan Raise Money

An expatriate in Japan, Our Man in Abiko, sent out a call with a single Tweet to social media contributors that eventually led to the creation of an e-book called Quakebook.  “The idea was to share the stories and experiences of people actually on the ground during the earthquake,” claims Quakebook.org. “In just four weeks, the 2:46 Quakebook project has turned an idea first voiced in a single tweet, into a rich collection of essays, artwork and photographs submitted by individuals around the world, including people who endured the disaster and journalists who covered it.”

Quakebook is available on Amazon for $9.99.  Amazon stated the intentions of the editor who created the book, “is to record the moment, and in doing so raise money for the Japanese Red Cross Society to help the thousands of homeless, hungry and cold survivors of the earthquake and tsunami. ONE HUNDRED PERCENT of the price you pay (net of VAT, sales and other taxes) goes to the Japanese Red Cross Society to aid the victims of the March 11 earthquake and tsunami. ”

The book has the title 2:46 Quakebook because it begins by showing the effects at 2 minutes and 46 seconds after the quake hit.  There are over 30,000 words of accounts and over 200 people who have chipped in for this project.  This whole project was completely volunteer-oriented and the e-book became available in only one month after the disaster.  Quakebookorg stated, “The contributions in 2:46 Aftershocks have come from a wide variety of sources, and include photographs, personal accounts, drawings; each telling their own tale.”

Click here to read some excerpts from 2:46 Quakebook:  Aftershocks Stories from the Japan Earthquake. To follow on Twitter, check out #Quakebook.

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  • From Twitter to ‘Quakebook’ (cnn.com)

How to Teach Online Classes

I’m testing doing some radio podcasts.  This initial show has issues with the music in the first few seconds but it is just a test . . . Anyone interested in learning how to teach online courses may want to listen to this for helpful information though. Click on the picture to hear the podcast or click here.

http://www.blogtalkradio.com/btrplayer.swf

Listen to internet radio with DianeHamilton on Blog Talk Radio
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Famous Entrepreneurs Who Hit it Big With Humble Beginnings

 

via google.com

The movie The Social Network showcased Mark Zuckerberg’s ability to create an enormous business from seemingly nothing.  Not all entrepreneurs have been accepted to Harvard like Mark Zuckerberg or Bill Gates to hit it big. However, having the intelligence to get there doesn’t hurt.

I grew up next door to a very smart man who worked his way through a state college and started a little company with $5000.  That man was Leonard (Sam) Shoen who created U-Haul by asking gas station owners to let him rent trucks from their lots.  Amerco is now the parent of U-Haul and is a far cry from the corner gas station beginnings.

There are plenty of Leonard Shoen and Sam Walton stories out there.  Accountingdegree.com recently published a list of 10 big businesses that got started in a garage including: 

  1. Apple
  2. Google
  3. Mattel
  4. HP
  5. Amazon
  6. Disney
  7. Microsoft
  8. MagLite
  9. Yankee Candle Company
  10. Harley Davidson

For more detail regarding how each of these companies got started, you can click on each individual company or read the article by clicking here.

To see Steve Jobs’ Commencement Speech at Stanford explaining how he started Apple watch the following video:

[youtube http://www.youtube.com/watch?v=UF8uR6Z6KLc]
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