Newton's In Search Of The Perfect Investment. Technology Investor.
8:30 AM Thursday, April 28, 2005: The
perfect investment. Your own business. There are two pluses. First, you make your
own stupid mistakes. Second, you get double rewards. You get the
profits the first time -- when you make them. You get the profits a second
time -- when you come to sell the company or take it public. Sale prices are typically
a multiple of what you earned (and paid yourself) for the last several years.
If you have a growing business, your multiple can be 12, or more if your business
is growing strongly.
It's all so bleeding obvious. Most people don't see it. They think it's too difficult,
too risky, too competitive. What they don't understand is that companies never
fail because their competitors kill them. They fail because they shoot themselves
in the foot. Items.
+ Apple's new
OS is out tomorrow. Microsoft's won't be out for 18 months, at least.
+ Skyline Windows web site has a form asking if you want someone to call you?
But it neglects to ask for your phone number.
+ Immediatech offers a demo on its web site, then fails to deliver. When I emailed
the founder, he said, "Sorry," but failed to send the demo.
It's really hard
to piss off a customer, but the biggest and best do it every day.
secrets to long life:
1. Don't smoke.
2. Don't carry too much weight.
3. Do eat five servings of fruits and vegetables a day.
This from a university
study quoted by MarketWatch. To which I'd add:
1. Fasten your seatbelt.
2. Don't lift heavy stuff or do stupid things with your back.
3. Get a job you genuinely enjoy.
5. Save for your old age.
Desperation in old age is not pretty: A
Harvard Business School classmate of mine visited me yesterday. He's penniless
and jobless. He lost all his money in the tech bubble by violating three basic
1. The 15% Stop Loss Rule. He put and left his money in WorldCom, etc.
2. The Diversification Rule. He put most of his money into a risky startup.
3. The Management Rule. He didn't manage the startup. An idiot did and lost
all his money.
continue to look ugly. Don't ape my desperate
classmate. Get rid of junk stocks you own -- if you still own any.
but sad: Last night DaimlerChrysler said its net income fell 30%
in the first quarter, as profits at its most important division -- Mercedes
Car Group -- evaporated amid falling sales, quality problems and a huge restructuring
of its tiny-car unit, Smart. I own a Mercedes wagon, my second. As I took delivery
of it, I marveled at an array of really stupid design features -- cup holders
that break, a passenger seat that insists on crunching the passenger when the
back seat is down, a clock that's impossible to adjust, a tiny glove compartment
that resists closing, no method of installing a GPS after the fact, etc. I turned
to our salesman (the top one at the Manhattan Mercedes dealership) and asked,
"Does the management of this company listen?" His reply: "No."
He continued, "Nor have they ever asked us for our feedback on what our
customers want. I've only been here 20 years."
Microsoft compares to Google. Go to
sandbox.msn.com. Go to www.Google.com/options.
The contrast is amazing.
things in life are certain:
The madam opened the brothel door to see a rather dignified, well-dressed
good looking man in his late 40s or early 50s. "May I help you?" she
asked. "I want to see Natalie," the man replied.
is one of our most expensive ladies. Perhaps you would prefer someone else,"
said the madam.
"No. I must
see Natalie," was the man's reply. Just then, Natalie appeared and announced
to the man that she charged $1,000 a visit. Without hesitation, the man pulled
out ten one hundred dollar bills, gave them to Natalie, and they went upstairs.
After an hour, the man calmly left.
The next night,
the same man appeared again, demanding to see Natalie. Natalie explained that
no one had ever come back two nights in a row- too expensive - and there were
no discounts. The price was still $1,000. Again the man pulled out the money,
gave it to Natalie and they went upstairs.
After an hour,
he left. The following night the man was there again. Everyone was astounded
that he had come for the third consecutive night, but he paid Natalie and they
After their session,
Natalie questioned the man. "No one has ever used me three nights in a
row. Where are you from?" she asked.
The man replied, "South Carolina."
she said. "I have family in South Carolina."
the man said. "Your father died. I came to bring you your inheritance which
is $3,000 after your father's estate taxes."
The moral of the
story is that three things in life are certain:
2. Taxes, and
3. Being screwed by a lawyer.
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 .
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