My favorite new blog of the year is ex-Business Insider blogger Dan Frommer's SplatF. I think the following things make SplatF great:
- Reader-friendly tempo with 1-2 strong, original blog posts per day
- Charts and graphs to visualize data
- Voice and a smart point-of-view
- Great overall feel to the site made up by its design, text and visuals
Take a look at some of the recent posts:
November 3, 2011
Priced to perfection
With both Netflix and OpenTable stock prices down around 75 % since the beginning of the year, one could expect both companies to be doing badly. When both are actually doing quite ok operationally (even if the Qwikster detour wasn't Netflix's best moment).
The main reason behind the companies' lower stock prices is that both stocks were priced to perfection with magical valuations of around 100 times earnings. And when the companies didn't turn out to be perfect, the magical valuations vanished.
When shares are priced to perfection, the margin of error becomes really thin. Results not meeting expectations? Valuations can go down 20-30 % in no-time. In addition, public market investors are not getting the same downside protection as late-stage private market investors get. Rather the opposite as free floats are small and insiders control the companies with supervoting shares.
It's worth remembering that Microsoft went public in 1985 with revenues of $172.5 million and 34 % pre-tax profit margins and ended up with a valuation shy of 800 million dollars on its first day of trading.
The main reason behind the companies' lower stock prices is that both stocks were priced to perfection with magical valuations of around 100 times earnings. And when the companies didn't turn out to be perfect, the magical valuations vanished.
When shares are priced to perfection, the margin of error becomes really thin. Results not meeting expectations? Valuations can go down 20-30 % in no-time. In addition, public market investors are not getting the same downside protection as late-stage private market investors get. Rather the opposite as free floats are small and insiders control the companies with supervoting shares.
It's worth remembering that Microsoft went public in 1985 with revenues of $172.5 million and 34 % pre-tax profit margins and ended up with a valuation shy of 800 million dollars on its first day of trading.
November 1, 2011
Having been CEO might be good for a VC, but is not a requirement
Steve Blank makes the case that partners in venture capital firms should have been CEOs for at least a year before becoming partners. In general it seems like good advice for a partnership, but I'm not convinced. Planning to be CEO for only a year, with close backup from the partnership, seems like a bit of a built to flip approach. Given how the history of a startup plays out, a year is not a long time (except if you're YouTube). And it's worth noting that neither John Doerr nor Mike Moritz were CEOs before becoming two of the arguably most successful venture capitalists of the last 25 years.
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