With a share price that is, incredibly, at its lowest point since 1955, GM is worth around $6B, while Toyota is worth around $150B. The DOW is the same as in January 2000.

Many of the product press releases I’m emailed claim a ‘green’ angle which is often false. Today’s is for a July 4th Room and Board special, focusing on American made goods:

“As the 4th of July approaches, we thought it’d be a good time to remind you that more than 85 percent of Room & Board furniture is sourced and manufactured right here in the United States. Room & Board is thinking American-made for America’s birthday!”

“This means a smaller environmental impact as these pieces are shipped entirely within the boundaries of the U.S. Room & Board is committed to sustainability and this means high-quality construction, timeless design and the commitment to American-made as it stimulates local economies and helps to keep our suppliers in business and doing what they do best.”

This does make sense from a local perspective, but it is false to claim it to be ecologically sound. Aside from the fact that an American worker has a much higher carbon footprint that almost any other, and US manufacturing growth (rather than services growth) therefore usually has a negative global impact, there is a bigger problem. Transferring goods by land across the US has a higher energy cost than transferring by sea from Europe. If you live in New York, transportation costs mean it is more ‘green’ to by French wine than Californian. This is counterintuitive and uncomfortable, but its the truth.

Being green is fashionable these days, and unlike in the past, its profitable, so it isn’t merely an act of charity. But if you claim something is green that isn’t, you are benefiting as a result of the environment suffering.

The leftwing Huffington Post is now the world’s most authoritative blog, according to Technorati.

In the election runup, although publicly known, I wonder how many people realize that the Huffington Post is named after a power obsessed, failed Democrat who was actually a former Republican extremist .

The ‘Huffpo’ has a proprietor who once campaigned as a Republican to the religious right for the dismantlement of welfare because “big government cheats people out of the spiritual rewards of giving to the needy”; who made her fortune from a divorce settlement after marrying a man she knew was gay; who was a follower and financial supporter of a strange religious cult and who paid less than a thousand dollars in tax in a year she campaigned as a Democrat against ‘fat cat’ tax avoiders, while living in an ostentatiously kitsch 6,000 sq. ft. LA mansion.

(I have just finished updating her Wikipedia entry, should you want details)

Arianna Huffington’s political vacillation is statistically unlikely. To paraphrase Wilde, given that it has tended to be in her personal interest - it looks like carelessness.

It is ironic and sad that in an election year, the Left’s most prominent outlet in the Blogosphere is a site run by someone who represents exactly the same cynicism as the media outlet it rails against - Fox News.

The Guardian today has a good article on why Origins.net’s latest genealogical database is a particular gem, putting online a particularly rich set of English wills from 1470 to 1856. The wills show just what people left to each other, hundreds of years ago, including a Mrs Adowne who was fulfilled when her dying tenant, Robert Sherlocke, granted her “all the soil and dung that I have”.

Article here.

The wills can be accessed by subscription, here.

Beans Beans, who found this leaked corporate video, where a group of dorky Cool-Aid sloshed employees sing along, gospel style, to ‘O’ Happy Day’, puts it well:

“Ernst & Young teambuiding video - holy shit I nearly pissed myself”

Corporate accountants singing Soul; once more with feeling.

I’ve just watched it 5 times in a row and cannot stop, each time there’s one more priceless gem to notice.

Effing hilarious.

The real buuble.

Four words: Hedge Fund Private Equity.

I hear these too much. I don’t really understand hedge funds and private equity, but more frighteningly I get the impression that some of the people involved don’t either.

My one theory about the rise of Private Equity, is that its a natural reaction against the increase in communication due to things like the Internet, and the reduced arbitrage or spread that it creates as more people have access to information, more quickly.

One way of countering this and the recenty tightened financial regulation in the US is to deal in private companies and investment, where the information is more opaque.

James Simons, hedge fund manager, earned $1.7 billion last year…. (kottke.org)

The greening of The Valley, why sustainable companies matter.

Evan williams and Biz Stone have taken back Odeo from its backers to form part of a company focused on innovation through multiple products, rather than exit. It’s like a tech. startup version of the recent trend for private equity takeovers of public companies. But it could point to a better model for Internet startups - the model of normal companies like corner stores. Here’s why.

[update: The sustainable model is not new, it is the way that almost all companies outside of the bubble-prone technology world work, however, sometimes the bleeding obvious is worth pointing out. Venture backing should be for the exception - for the exceptionally rapidly growing.]

The Exit Model

Every venture funded tech company is predicated on the idea of ‘exit’, the point where the company is sold to a bigger one or has an IPO, so that the investors see a return and move on.

This time round, in the 2.0 boom, there are almost no IPOs, and the exceptions, like Vonage, have been a disaster.

That leaves the second option, selling the company to a bigger one. Unlike during the dotcom boom, the big galaxies, Google, Yahoo, Ebay etc. are properly formed, and surely ready to suck in more stars.

This expectation has been fueled by three large success-story acquisitions, Myspace, Skype and YouTube.

However, only one of these companies is in the Valley, and 1 does not make a trend.

In addition, these are all-or-nothing plays. In a parallel universe, all three companies could have folded, leaving them in the same position as their numerous competitors. Their success was not planned and was very high risk. They are species that survived in a particular evolutionary niche that opened up, they were not ‘intelligently designed’.

If there is no trend for large acquisitions, this still leaves the smaller ones. Business week recently ran a headline about ‘Yahoo’s spending spree’, a spending spree of such wild abandon that it includes a single sub $10M acquisition in a year.

Many so-called acquisitions are glorified signing bonuses. They are the result of a finite employment pool where the galaxies have to compete with each other for stars, where the stars are the people not the product.

If the stars are the product, then, just like real galaxies, the Internet galaxies, are really good star factories. In fact the dirty little secret is that they are sometimes better positioned for product development than the startups. A single bowel movement from Google and out pops Google Calendar, wiping out the hopes of a multitude of Internet Calendaring startups like Trumba, in an instant.

Back to Yahoo’s one acquisition. Again, 1 does not make a trend.

If you can’t IPO or sell then what alternative is there?

The Sustainable Model

The alternative is to question the whole notion of exit and to build a real company.

When I was an architect, you didn’t set up a practice on your own to ‘exit’, you setup to build a company that made a profit and made products that made the environment a better place along the way - a sustainable enterprise. The whole idea of ‘exit’ in the context of building an architecture firm, or a legal or medical practice is preposterous.

The reason why tech. companies have fallen into the mindset of raise money and exit, ‘live fast and sell young’ is that they traditionally needed large amounts of capital, both to bootstrap and later to fuel growth. They needed to gain ‘market share’ dictated by quantitative things like price rather than intangibles such as good design . But that has changed.

What we are seeing now is the second phase of the Internet, what some people call web 2.0. In this phase the infrastructure and ‘platforms’ are in place, the freeways and toll bridges and shopping malls are there but there is an opportunity to build retail outlets that go in the malls. Some of these outlets may be JCPenney, and others may be Prada. The ‘exit’ model favors Penney over Prada.

The recent trend has been to keep the model of ‘exit’, but to raise less money. Wherever you turn now, there are flocks of ‘Angels’, from VCs that are downgrading to people with a few bucks extra after refinancing their real estate gain. But this is all still predicated on the idea of ‘exit’ - which just isn’t there.

The correct model for web 2.0 should be sustainable growth, its the Obvious Corp.

When you describe the Obvious Corp - as Evan Williams has, it sounds a bit like an incubator - you work on multiple projects and some may even get spun off, who knows. But this is not an incubator - incubators do not work for the founders, they work for the owners. Founders like to feel ownership of their ideas, and as much of their equity as they can keep.

Most importantly, incubators are still based upon the premiss of exiting. Apple Computer and Gawker Media produce multiple products but they are certainly not incubators, they are both sustainable - i.e. profit making companies that are based upon innovation rather than exit.

As the technology market matures, value added qualitative aspects such as good design will become more important, allowing mini versions of Apple to thrive - companies based upon product design and innovation rather than spreadsheets and MBAs.

I have started Venture backed companies, worked at an incubator and started non-venture backed companies. I have had more fun, produced more and made more money from the latter.

What is wrong with your exit model may be the model of exit itself, and a sustainable [i.e. normal] company like the Obvious Corp. may be the answer that is - obvious.

evhead: The Birth of Obvious Corp.

Average house price in the US, Aug 2006:
$230,000

Average house price in the UK, Aug 2006: $376,600

Average gas price per gallon in the US, Aug 2006: $3.04

Average gas price per gallon in the UK, Aug 2006: $6.46

There will almost certainly be a recession in the US soon, caused primarily by inflated gas and house prices. One will continue to go up and the other will crash - a problem for people who own houses and drive cars, i.e. are long in real estate and short on gas.

But these prices are actually very, very cheap compared to places like the UK, which didn’t go into recession with much larger costs and similar wages. The principal difference being the rate of consumption.

average home sales prices in all regions of the united states

Old farts like myself, who were tinkering with the Internet in the early 90s will remember that there was a sudden surge in interest in the Internet a year or so before the web.

The tendency is to think that the Web was the prime reason for the increased adoption of the Internet, but in fact it is more likely that the Web was actually the result of an evolutionary niche being opened up by the spread of the Internet.

Once the Web was born, of course, it did help fuel the growth of the Internet, but like almost any other ‘ecosystem’ from the autocatalytic reactions in a single cell organism, to the money flow in an industrial economy, it was based upon a circular feedback loop, making it difficult to separate the chicken from the egg.

The are two other very important examples of cause and effect which were not what they seemed: oil and coal.

It would seem plausible to assume that the industrial revolution created engines which needed coal, which was eventually replaced by the more transportable oil.

In fact the demand for coal was stimulated by a decline in the available wood during the mini ice age in the 17th and 18th centuries. Steam engines, often running on wood fires, were developed to pump water out of coal mines. Later, a positive feedback loop would mean that more coal could mean more steam engines.

Similarly, the demand for oil was created by a demand for lamp oil to light the factories of the industrial revolution, long before it was used to transport the workers and the goods they produced, creating a bigger marketplace and demand.

The lesson from this, is perhaps that:

1. looking for cause and effect in a strictly linear fashion is nonsense.

2. business plans that are looking to change the world by attracting a significant slice of an existing market or ‘ecosystem’ would be better off focusing on how to step up between small to large marketplaces.

If you like this is similar to the vogueish marketing books of the last dotcom boom, like Crossing the Chasm or Inside the Tornado. The difference being that there is not one tornado but a series of ever increasing ones, with fractal like self similarity. The inverse pattern of turbulent air flow.

Perhaps the skill (or luck) of the entrepreneur is to find the seemingly trivial niche (like selling crude oil instead of Sperm Whale fat for lighting) that could interconnect all the way to the top.

The people that did this in the last boom were not Napster or Webvan, but people like Blogger or Ebay. And before you say, oh but Blogger never became a huge company, consider this:

The founders made more than the founders of some billion dollar companies, and they got to change the world at the same time.

Even if Webvan had succeeded, it was kind of boring and complicated and difficult to setup in your garage.

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