The truth about wall street and government fraud. Gunther Karger. 2005. ISBN 0964597934. This is one of those books you pick up and immediately think - the guy is slightly off. Lots of capitals, bold print and exclamation marks. Self published. Yet his credentials and govt/lg company/Wall Street experiences check out and his references are there when you check them. Is this the “one honest man?” Published in 2005 he predicts the Asset Backed Securities fraud. One scenario he lays out is very “scared straight”.

So OPEC is all Muslim countries except Venezuela (and he really loves America). Saudi Arabia is the biggest member of OPEC. In the late ’90s oil was $10-$20 dollars a barrel if OPEC could reduce production.

So if oil goes up in price , who benefits? Iraq invades Kuwait/American responds = $30 oil. Wait a minute if there is war in the Middle East oil goes up . So guess what happens?

9/11 - America responds =$50 oil. US invades Afghanistan =$70 oil. Saddam threatens to sell his oil in Euros not dollars. US invades Iraq = now $100 oil. Surprise , now Iran, Iraq and Saudi Arabia are all Shi’iite led. Saudis were the bulk of Bin Landins troops. Iran supports Hamas and Hezbolla with millions. None of these countries appear to embrace democracy.

China consumes 1/20th of the oil that the US does. So it’s not them driving up the price. So OPEC pulls an extra $150B more out of US after 9/11 and presently over $300 B US annually each yr out of the the US , for the same amount of oil since’90. This is over 2% of the US GNP. Remove it and the US GNP is almost at depression levels.

So if a new US Republican president is elected (McCain) who believes that wars can be won and keeps at it, what can happen to the price of oil? Who really benefits? What price is a compromise now? The Democrats are even further away. They do not even have a plan. You can buy the book from www.guntherkarger.com. He has a bunch of stuff, and is no dummy. I was surprised at how much sense he made , from Enron, Dan , Chapter 11 and so on.

and thats 30

Fooled by Randomness. Nassim Nicholas Taleb. 2004. ISBN 0812975219. Wow! a quant who is an entertaining writer. You may howl with laughter at one point, turn the page and then come face to face with your own sobering human foibles reading this book. You may never trust a broker/traders track record every again. Taleb just makes so much sense in light of his life experience. Most of us end up confusing pur luck for skill. Many of us have had to work for his “empty suits” (CEO/leaders who look good, are tall and can really use power point, yet they bring so little to the table). What if all the major “leaders” in our world are only recognized as successful because they have been in the right place at the right time? There are as many or more who are their equals or betters who made different choices. What if present day institutions are no wiser than those we ridicule from the 18th century? What proof do we have not to remain classical skeptics? As someone who loved probability and stats all my life this writer is a kindred spirit. I chuckled through his rationale as to why he does not read the paper nor use the media for news. The news reports the noise so that we miss the significant event. In recent months I have really worked to rise above the noise, and it has made quite a difference in my point of view. This is a must buy book.

Valuation = What Do You Want to Buy?

1. Team buy
2. Infrastructure buy
3. Market access buy
4. Movement attachment
5. Reduce your operating costs
6. Increase your potential

1 . Team buy
Pricing for a team these days ranges from $200 000 per member at the lowest level for $2M for rock star in recent deals we have seen. In our case we have attracted five rock stars from Asia and North America plus we are growing two almost-theres. So do the math.
2. Infrastructure Buy
For a web 1.0 company to design and build a new Web 2.0 site (with the correct look and feel ) might require an investment of six months of rock star planning ( $1500 per diem for 120 days ~ $180 000) with three months of rock star building (3 * $1500 * 60 days ~$270 000) and hardware costs (of approx $300K to find, build, test) for a net value ~ $650 000). Of course you still need the team to do this with.
Then you have unknown present data/content conversion costs to bring your members over to the new site.

This number has been validated recently by two different requests to us to build each client a single language Web 2.0 website. Cost was not an issue to them. Talent was.
3. Are you buying a Regional Market access?

Present individual, non integrated language specific small sites are being bought for a range from $10’s of millions through to $100 ‘s millions by all and sundry. If it is a large US site, valuations are ranging into the billions. Our site is the only unified platform based site n our segement. We already have 28 regional websites with domains in 17 languages in the can, ready to launch. Do the math.
4. Movement attachment
Attachment to the correct movement that has legs, emotion and the correct demographic is worth millions alone in free advertising and reduced lonfg term costs. Left to grow our site will only gain in value every day.
5.Reduction of operating costs
We know our operating costs are certainly 1/5 that of a “traditional” site. Perhaps even less. If you were a traditional mulit million dollar web 1.0 site, how would you reallocate 4/5 of your expenses next year? What would it be worth to you?
6. Increase your potential
There may be always a place for free and paid sites. Projection’s in dating expect that paid sites will grow about 4% 2007, while free site membership growth is in the double digits. Paid sites will no longer be a cash cow unless they move their infrastructure to a much lower cost model while ensuring a clear value definition to new members. If sign-up rates do not improve along with today’s 65% dissatisfaction survey results, then:

• churn will grow and
• revenues will fall.

So what is it worth to a Web 1.0 subscription model to ensure survival? Is this not a bet the company time? Live? Die? We think our model holds the future. Our model is simple, watch where subscription sites grow a market and then be a fast follower. There is always a market for a free product.

So what valuation would you put on this model? In our case we do not need to sell, since the model is a money machine today. However having more money could just help us make life more interesting for the competition.

Next: Responses to questions and comments on this series

Revolutionary Wealth. How it will be created and how it will change our lives. Alvin and Heidi Toffler. 2006. ISBN0375401741. Well for a generation that cut its teeth on Future Shock and The Third Wave there are few surprises in Tofflers’ approach to the issues. They re-emphasize the impact of Wave Three (the Third Knowledge revolution) with more reference to the growth of Prosumser ( open source, You Tube, home schooling, NGOs) arising as much from the failure of second wave institutions (”industrial society” creations like manufacturing factories, schools and their attached stakeholders). The analysis if Europe and the EU is quite different. They believe that the EU is using too centralized a control and growth strategy that makes Europe less competitive and further into the Second (industrial ) Wave each passing year as the Third (knowledge) Wave continues to roll out. He points out the real fears that we should be aware of with China as it follows a dual wave strategy. India and the other Asian countries receive quite a review as well. Their analysis of the deep fundamentals of Time, space and knowledge is worthwhile as the impacts can be seen further along multiple directions. Simple to follow and readable as they use shorter chapters, but as a 447pp tome, this is good for long flights and/or your summer reading selection. They end up optimistic despite the pitfalls but a bit short on suggestions as to what are the business opportunities coming forward. Read more and see him

My Life as A Quant. Reflections on physics and Finance. Emmanuel Derman.
2004. 04713944203.
“Eman” moved from being a practicing physicist (Ph.D.) to being a
financial wizard on Wall Street. If you have ever wondered
how the really serious big money managers reassign their investment
risk, then you will learn lots from this book.
In a very distant past I fancied myself a mathematician, but this book
really pushed my envelope for understanding.
Not the easiest read, as the style is quite choppy.

Book reviews for the business side of the technology industry.

The First Venture Capitalist. Udayan Gupta. 2004. ISBN 1896209939.
The life of Georges Doriot. Leadership, Capital, and Business
organization.
“The General” was an unique individual who set an unbelievable standard
as he created the
US, Cdn and European VC markets that we know today. He refused to have
a biography
created while he was alive, so this is a collection of articles and
memories that were amassed after his
death. He drove the Harvard business school curriculum the early days,
organized the US Quartermasters Corp
for WWII and started key VC organizations. He harks from a much more
altruistic era. If you can find it
it is an enlightening read.

Book reviews for the business side of the technology industry.

The Only Sustainable Edge. John Hagel III and John Seeley Brown. 2005.
ISBN 1591397200. An academic look at the impact of globalization, that
challenges what we could say is conventional thinking. The ways to meet
the ongoing competitive pressures all business face is laid out here.
But the tome is not for the faint of heart. It seems to take forever to
digest. They believe that it is paramount to strategically address
talent development, specialization, connectivity (loosely coupled) and
coordination ( process chains and enablers) The number of authors who
are giving us roadmaps to international success is getting quite large.
The gist is that open borders and open competition is good for everyone.
They also point out that in early days the American manufacturers
freely ignored copyright on British inventions, just like the Chinese
have been doing for awhile.

Book reviews for the business side of the technology industry.

Start late, Finish Rich.

Start late, Finish Rich. Canadian Edition. David Bach. 2005. ISBN 0385661312. Part of a seven book FinishRich series. Written for Canadian audiences. I’ve seen these books around so much, I had to pick one up and read it. Plus I like the way the titles always ended. This one is more practical than the Rich Dad series. Easy to read, this author has never really been poor. If you have not read one of these., pick one up at the library and have a read. Its especially good to explain these things to the young folks around and those who are numerically” challenged”, he keeps things simple. The book is fun and not a waste of time. I think he would be a good speaker, it’s nothing new, Mike

Grenby preached us this stuff many years ago. Good line,you can not invest money that you have spent.