Power Pal

Just flipped through a quick slide-show on BusinessWeek titled " Recession Lessons " about companies that were founded during recessions and that have hence been quite successful.  Here's the list: GE - 1876 (1873 - 96 recesssion) - leveraged US financial system to grow Johnson & Johnson - 1887 (1873 - 96 recession) - same Allstate - 1931 (Great Depression) - pulled together smart team from collapsed banks, took advantage of financial upheaval Morgan Stanley - 1935 (Great Depression) - same Krispy Kreme - 1937 (Great Depression) - cheap comfort food when people needed both Hewlett-Packard - 1939 - cheap Burger King - 1954 (decade's first recession) - rode the expansion of the Interstate Highway System Hyatt - 1957 (decade's second recession) - rode the wave of mass standardized travel Trader Joes - 1958 - rode demand of discount dry-goods from "Russia scare" IHOP - 1958 - piggy-backed on trend of eating cheap lunch and dinner out of your house So...

I just read a good article in BusinessWeek titled " The Biofuel Bubble ".  The gist of the article is that biofuels start-ups (particularly those focused on ethanol) are going to fail or be absorbed by oil and gas majors.  Ethanol will be limited by the infrastructure that can absorb it (i.e. current automobiles can't take much more than 10% ethanol in the gasoline mix).  Firms, like LS9, that are more focused on diesel or gasoline-like fuels will be better off.  The article also discusses some of the limitations around feedstock.  The article highlights: Producing 30 billion gallons of fuel takes 300 million or more tons of plant material. That's more than the total weight of cars and light trucks sold in the U.S. over the past 10 years. Growing this much cellulose would take at least 30 million acres of land. "I think the biggest problem for everybody is how are we going to grow, gather, store, and treat the biomass," says Brent Erickson, lobbyist for the ...

I just read this posting in VentureBeat about the FCC's $7.2 billion investment in broadband infrastructure coming from the stimulus package.  The investment is focused on developing the rural and underserved areas of the US.  What I found most interesting was how far behind the US is in terms of broadband penetration around the world.  We are 20th!  Here's the excerpt: To understand the vital nature of these hearings, it’s important to first understand how widespread the lack of broadband access is in the U.S. It might come as a surprise, but the U.S. is at at No. 20 in the world for per- capita  broadband penetration. A study by  Point Topic says that only 26.4% of people in the country have regular broadband access. To give you some context,  another report issued by the  Brookings  Institute and MIT  determined that for every percent increase in per- capita  penetration, 300,000 more jobs are created. This is an opportunity that can’t go overlooked right now. Incidentally,...

From my last post about search funds , I took a closer look at some of the documents on the Stanford CES website .  Specifically, I read through a 2007 study on the state of search funds.  It covered the stages search funds go through and typical characteristics at each stage - profiles of principals, typical fund and acquisition sizes, range of returns for the funds, etc. Some highlights from the four stages of search funds are as follows: Raising the search fund (3 months):  Write a formal proposal and business plan for the fund.  Sections of the plan include - executive summary, overview of process, list of screening criteria, detailed timeline and milestones, explanation of financing sought, outline of exit alternatives, backgrounds of principals and allocation of future responsibilities in the target.  Raising a fund typically takes around 3 months. Identifying and making the acquisition (20 months): The three steps in identifying an acquisition are 1) generating deal flow, scre...

The WSJ put out a three part video series on the source and events of the financial crisis.  It's about 25 minutes in length.  Good follow-ups to my previous posts - The Weekend that Wall Street Died and The End of Wall Street and Misaligned Incentives . Chapter 1: What Happened Chapter 2: Why it Happened Chapter 3: What Happens Next

I saw this post titled "How to Spot Subprime VC" from Georges van Hoegaerden on PEHUB and thought it was interesting.  Here are the highlights: Seems more interested in how it is built rather than what the disruptive business proposition is. Seems more worried about cost of development than cost of greenfield customer acquisition. Talks about valuations before you’ve explained the value of becoming the market leader. Seems more occupied with categorizing the investment than understanding its unique business value. Talks about capital efficiency without probing market inefficiency. Doesn’t question market entry risk, but focuses on cost . Doesn’t ask about the runway to profitability, but the initial round to get in. Asks you which other investors you’ve spoken to. Asks you to talk with his associates first. Asks you more about your education than your work experience.

I've heard the term cloud computing thrown around a lot and never quite knew what it was.  I quickly Google'd it.  I may be simplifying things, but it basically sounds like software (or hardware)-as-a-service.  Amazon's Web Services ( AWS ) is likely the leader in this category.  It seems like a natural evolution in computing - just a further packaging and abstraction of computing power.  I think what's important about it, though, is that from a strategic perspective, IT will become less and less of a differentiator among companies.  In the long-run, if everyone can quickly integrate and bring applications from a salesforce.com or AWS online in their business quickly, IT in and of itself will become more commoditized as an input in the value chain.  Or maybe it will kick-off another round of IT innovation that could serve as a differentiator.