Technology Investor

Harry Newton's In Search of The Perfect Investment Technology Investor. Harry Newton Previous Columns
9:00 AM EDT, Thursday, October 1, 2009: He calls frenetically. "This is the investment of my dreams. Fantastic technology. Fantastic potential. They need $2.5 million." Two hours later, we reached several conclusions:

+ There are a zillion great technologies out there. I see three to four a week. Since computing got cheap, memory became throwaway and the Internet got ubiquitous, there's been a explosion of technology startups.

+ No matter how much due diligence you'll do, you'll never figure the black swan --- the one event that messes things up irretrievably.

+ Entrepreneurs don't listen. Once you've given them your money, you have no leverage over them. They'll do what they want with your money -- even though you have a better idea.

+ Losing $2.5 million is a lot more painful than the pleasure of, say, making $2.5 million (i.e. doubling your money). Moreover, after 2009's debacle, nobody can afford to lose $2.5 million.

The company is close to cracking "the big sale," but it's run out of money, again. That tells you something about how difficult selling new technology is. Buyers, like angel investors and VCs, have seen it all before. Buyers buy from IBM. It's safe, though they pay more. No one lost their IT job buying safe.

But, Harry, new technology drives the economy, provides jobs and makes investors zillions. And Harry, you made zillions with your technology business.

Absolutely true. But I've also lost money on virtually every technology business I've invested in since I sold the business I started and ran.

The difference, I've concluded, is twofold: I was there at the beginning. I and a partner ran it. We worked super hard. We listened to each other, but not to our investors (we had none). Times were different. Our business would not succeed today.

II love meeting technology entrepreneurs. I'd love to invest in, and be involved with their new company. The thrill of conquering the world is totally addictive. I suspect it will have to be with a company I form from scratch, or in partnership with a very special entrepreneur starting up. Will I find that very special fellow? Will I find that special relationship? I kiss many frogs. Kissing frogs is almost as much fun as playing tennis.

The bible said it. Ecclesiastes 3 writes:

To every thing there is a season, and a time to every purpose under the heaven:
+ a time to be born, and a time to die; a time to plant, and a time to pluck up that which is planted;
+ a time to kill, and a time to heal; a time to break down, and a time to build up;
+ a time to weep, and a time to laugh; a time to mourn, and a time to dance;
+ a time to cast away stones, and a time to gather stones together; a time to embrace, and a time to refrain from embracing;
+ a time to get, and a time to lose; a time to keep, and a time to cast away;
+ a time to rend, and a time to sew; a time to keep silence, and a time to speak;
+ 8 a time to love, and a time to hate; a time of war, and a time of peace.

What's AOL going to be worth once Time Warner spins it off? Yesterday, two Wall Street analysts -- JP Morgan's Imran Khan and Pali's Rich Greenfield -- figured that the new AOL's valuation would be around $4 billion, assuming no net debt.

That's less than the $5.7 billion valuation that Google and Time Warner assigned it earlier this year when Google sold back its AOL stake. And it makes the dot-com bubble-era valuations -- north of $161 billion -- look very silly.

This chart says it all. You can get rich with technology. You'd better get your timing right:

Latest economic news:

+ U.S. Consumer Spending Jumps by the Most Since 2001.
Oct 1 (Bloomberg) -- Spending by U.S. consumers climbed in August by the most since 2001, indicating the biggest part of the economy is starting to rebound from its worst slump in almost three decades.

The 1.3 percent increase in purchases was larger than forecast and followed a 0.3 percent gain in the prior month that was bigger than previously estimated, Commerce Department figures showed today in Washington. Incomes climbed 0.2 percent for a second month and inflation decelerated.

+ Recession Rising Like Phoenix With Area Delinquencies Surging
Oct. 1 (Bloomberg) -- Drive up to the Peaks Corporate Park in north Scottsdale, Arizona, and the only person you’ll encounter at the luxury office complex is a security guard.

The development was planned to offer executive suites with views of the McDowell mountains, neighbors such as General Electric Co. and a location just minutes away from Jack Nicklaus’s Desert Mountain golf courses. Plans to lure tenants haven’t materialized and today the complex in this city next to Phoenix is empty, the entrance blocked by a traffic barricade.

Delinquencies in the Phoenix area on loans backed by office, industrial, retail and apartment properties have risen more than five-fold since March, according to data compiled by Bloomberg. The Phoenix region has the second-worst U.S. delinquency rate, behind Detroit’s 10 percent. In Phoenix, the economic recovery looks a lot like a recession.

Favorite economic cartoon:

No respect.
"I don't get no respect. I told my landlord I want to live in a more expensive apartment.

"He raised my rent." -- Rodney Dangerfield

Kids on marriage:


A: You might have to guess, based on whether they seem to be yelling at the same kids. -- Derrick, age 8


A: Both don't want any more kids. -- -- Lori, age 8

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.