Sector news and commentary « discourse and notes

We tear things down and then we build them up again. Like hackers who started out deconstructing the telephone and its network grid – in order to build calculating machines that eventually became personal computers – much of the hacking taking place today is informational. Where this will lead remains to be seen. And anyway, the win is not predicated upon novelty, strictly speaking. (Calculating machines and computers predated the phone hackers.) The win is the creativity and flow, which opens up possibilities.Â As discussed here in a recent post, in possibilities lies option value, the more volatile the terrain the better.

Three platforms illustrate the point. All three are gaining momentum and in so doing redefining their fields, and all three are hacking information in very different ways. Groupon (and the industry it now symbolizes) has torn down the barrier between merchant and consumer, a barrier set by traditional advertising, and has brought the two in direct contact. SecondMarket (and the financial domain this platform represents) has torn down regulatory and capital barriers that stood between private companies and liquidity. Both Groupon and SecondMarket are predicated on the access of two opposing sides to one another, and in both cases this is based on information flow that leads to a transaction.

The third exemplary platform, StockTwits, is not directly transactional, but opens up information as a pure play, as it were, and the net effect is not different. Where sophisticated analysis – in theory at least – used to be the purview of premium research sold by sell-side analysts to the buy-side, StockTwits has found a way to democratize and expedite this information flow, adding a layer of efficiency to an otherwise tough market to penetrate. Arguably, not only the quantity but the quality of analysis improves when thousands of judges conspire to keep the author honest. And the end-result here, too, is transactional, even if not directly.

With these observations about trends in disintermediation as backdrop, and continuing the parallel between early hackers and new, we remember that the phase after tear-down is the build-up. The phone mechanism was decomposed in order to be reconstructed in a different way. So, also, when information is fragmented and democratized through an analogous decomposition (or disintermediation), the evolutionary stage to follow is curation. The pieces on the table need to be assembled according to rules of structure, and information that is scattered about, or is otherwise overwhelming in its numbers, must be funneled, contextualized, targeted.

The same three platforms, and the fields they respectively represent, now also serve this latter function. Having taken advertising – and its assemblage of networks and exchanges – out of the middle, Groupon (and its ilk) are now focused on quality and targeting of their new content. Having established a new paradigm for buyers and sellers to meet outside of the traditional exchanges, SecondMarket is building a new exchange where the two sides can effectively find one another. Similarly, StockTwits, through a series of filters and recommendation tools, segments and directs commentary from the most interesting sources to the most interested users.

Broadly speaking, there is nothing new under the sun. Broadly speaking, the original curation technology was the very telephone switch with which the hackers tinkered. And here we are now, decades later, tearing down old filters to build new ones. Broadly speaking, however, there is still a difference between Morse code and the Internet, and innovation that happens in little steps, with little perfections and improvements, before too long reaches a point where evolution is seen as revolution with hindsight. The hacking that is happening in information and disintermediation, the themes in transactional efficiency described herein, and the three enterprising symbols at the forefront of these movements, will merit revisiting at some point in the future. The work these three have undertaken is much bigger than we may now realize.

It’s hard to be insightful when everything is obvious. You stare into a bright flashing sign with big bold letters, and what can you say? Look, letters. You say that if you’re simple. If you’re more sophisticated you will, of course, read the sign and pronounce its statement. The true orators may even exercise different pronunciations or vary the accents. Soon enough, arguments will ensue, no doubt, because even the biggest and flashiest sign lends itself to interpretation. With hindsight, maybe the simple – look, letters – was the more sophisticated reaction after all, even if leaving much to the imagination. In bemused silence, even the biggest and flashiest sign is defeated.

These observations, beyond some limited truths they offer, are also about analysis, equity value, and options. We are presented with a profile of a business operation, say, a prospectus for a public offering, and we sift through its contents diligently, underlining, taking notes, cross-referencing, calculating – aha, here is a clue to the truth, we think to ourselves – and we adjust our models accordingly. We have discovered an element, or a string of elements, that leads to a conclusion about the state of the business that is profiled. We hold on to that conclusion, and we compare it to the conclusions that others have reached, who have poured through the same fine-print. We argue among ourselves or we congratulate each other on seeing the same statement in what now seems like a big flashing sign. From this, we derive what we think is an estimate of fair value. But we’re wrong.

Because the very next day the world changes, as the world does every single day almost like clockwork. We discover that the analysis which kept us up all night was of an asset that no longer exists – very precisely speaking – having been framed in a different context under different circumstances in a different world. In the original analysis, with hindsight, we failed to consider option value. This is the value of future possibilities, and – more correctly – those possibilities we can’t forecast. The more entrenched the underlying business is in this world that changes, and the more unpredictable the possibilities of this changing world, the greater the present value of such unknowns. More financially speaking, option value increases with increased volatility.

This discourse, like much other discourse in markets and the media these days, leads us to Groupon. There is something about the analysis that pervades in the blogosphere and other circles that leaves one unsatisfied. It has become fashionable to look for, and often find, the inconsistencies and “red flags” in filings related to the company’s forthcoming IPO, and it has gotten to the point where such analysis is like reading a big flashing sign with colorful bright letters. We all know, alright already, that some key metrics are dubious and some trends are concerning. But we also know that Groupon is a dominant force in a segment that is not going away, and yet is by any standard of relativity a mere babe. Two years ago, the sector was hardly a speck on the digital media map. Two years from now, who can predict what daily deals will become?

Increasingly as I read new analysis about some fine-print in the S-1 that calls into question missing details – or found details that were previously overlooked – and increasingly as we hear about positive investor reaction to the company’s roadshow (as if in defiance of the fine-print detectives), increasingly I see the wisdom of investors and markets. Look, they are saying, letters.

Sometimes, to keep a cool head, I think about Oprah. More particularly, I think about her giveaways. But really what I think about is the crowd’s reaction, which has been well documented over the years. I never get tired of watching the replay. Like I said, it helps me to keep a cool head, to keep things in perspective. When, for instance, a new application is launched, or a new funding round is announced in support of it, I will think of Oprah’s giveaways. This serves as a sanity check, as it were, a frame of reference. If the scenario fits, I take under advisement. Which isn’t to say that the product might not be destined for greatness – it well might, it probably will for all I know, for all anyone knows – but success is not always measured in months and traffic spikes. With hindsight, many forgotten things were celebrated.

With hindsight, to be fair, it was perhaps more legitimate once, or at least more excusable, to bounce around with our hands covering our faces, on account of a new way to quantify the bristles of a toothbrush, or some other such example of success. There was a time when everything in the ecosystem of the popular web was new, when the popular web and technical innovation were more or less synonymous, and when possibilities seemed endless. If a dot-com bubble grew in the late-90s, this was understandable back then. Fast-forward past web 2.0 and its delivery of social networking and mobile apps and geolocation tools and big data, which things now exist and are no longer a futuristic glimmer, and I think many would agree with me that perspectives need also, accordingly, evolve. This isn’t a statement about valuation as much as about execution, almost running parallel to Moore’s Law.

When the rate of acceleration diminishes, as it inevitably does at some point, value sustained by optionality and volatility gets displaced by actuality and operations. Option value is easy, justifying the same (or more) through a successful enterprise is hard. (Perhaps it is this transition that lies behindÂ mixed venture capital dataÂ - in aggregate dollars invested as well as numbers of deals closed – varying with sectors and geographies as these vary in their evolutionary stage. Perhaps it is the same transition that has contributed to a broader market that seems stuck in a trading range, weekly turmoil caused by all manner of flows and affairs notwithstanding.) What these and related phenomena describe is an environment in which pencils have to be sharpened, visions have to be more focused, and execution more diligent. Oprah’s children, in short, have to grow up.

As this occurs, as it undoubtedly will, I look for consumption themes – some of which already mentioned – to parallel themes of maturation. Free stuff, for starters, will be increasingly replaced by stuff that must be bought, because adults have bills to pay after they exit Oprah’s amphitheater. The changeover from advertising-driven product to transaction-based solutions has been discussed in this space many times before, most recently here, and the evolution of media towards a transactional direction is indicative of the pattern. Part of this changeover, maybe the most important part, is that which relates to the payments themselves. In regard to mechanics, the development of digital wallets and associated digital alternatives – by Google, by Apple, by Facebook, by Square, by eBay, by AmericanExpress – this may not be a driver of the trend as much as an effect. And beyond the mechanics, there is the actual funding…

Traditionally this has been the purview of banks and finance companies. Traditionally, however, media was the purview of newspapers. Looking forward, one has to wonder if the same technology titans that have supplied the web with innovation, the same companies that are piling up vast pools of cash – which are many of the companies developing digital wallet alternatives, as cited – will in an environment of diminished technical acceleration, diminished option value, and an increased maturation of perspective, become new banks, just as they had previously been known as new media. Once upon a time, there was no GE Capital. Soon enough, there might be a Google Finance, an Apple Credit, or Amazon Bank, N.A.

When limousine services start to compete on the basis of mobile apps, when retailers strike alliances with broadcast media companies to facilitate commerce, when finance companies invest in social ad exchanges, the industry of media has evolved beyond its traditional mix of content, ads and subscriptions. It has become an integral component of every-day commercial activity, and it is all-inclusive. When payment systems, mobile procurement solutions, promotional platforms, and other related technologies conspire to bring merchants and consumers directly together, and when this becomes a growing focus-area for media companies as varied as Google, The New York Times, and Amazon, the industry of media has created a new and important sub-sector.

Even if the emergence of Groupon and Living Social and Gilt Groupe from nothing to IPO-level critical mass in two years’ time was insufficient to warrant the recognition of this sub-sector by name, maybe the listed participations alert us to the need for it. Everything that exists has a name, and nothing that cannot be named exists. Because this new sector exists as a distinct form, it deserves to be properly addressed. Social commerce has been tried, but this is a limited aspect of a much broader field. Similarly, daily deals, flash sales, group buying, and the like, are discrete segments within a much broader industry. This sector contains more than promotional springboards for retailers, and it is more than the sharing of shopping interests by friends. It is a type of media – which connects many to many – that is not about ad placement or a brand name on a page, but rather about the consummation of transactions.

The components of a transaction are almost as numerous as the aspects of media. When the two forms combine – transactions and media – the possibilities are many, if not endless. Transactional Media is an ecosystem that contains all of the ingredients described and that brings together merchants, consumers, and all their connectors. Transactional Media is a segment as deserving of its designation as any other popular media domain – for instance, Social Media – with which transactions increasingly overlap.

At CoRise we have developed two presentations to describe in greater depth our views of issues raised herein. Our Digital Media Landscape is an illustrative slide-deck of the four main circles of media that we see – social, information, entertainment and transactional – and the confluence, migrations and transitions happening within and between these shapes. Our Transactional Media Survey & Outlook focuses in on Transactional Media more closely, and through a series of essays contemplates strategic and financial themes emerging – and that we believe warrant our attention. We invite you to take a look, and to take in these perspectives in the context of a Transactional Media stock index that in the last three years has stubbornly and consistently distanced itself from its peer group in media, technology, and related fields. We suspect there is a reason.

Insularity is not the only cause, but is a shared characteristic. When trouble happens, insularity is not far from the scene. When we suspect that trouble is ahead, we often find such hints mixed up with insular qualities. Insularity, with its root in island, is a state of comfortable isolation that is only sometimes geographic. It is as likely thematic, or temporal, or social… cliques being one common form, although such groups not necessarily consisting of teenagers. We are sometimes insular in time, thinking for example that an era exists in isolation. This makes us a clique of modernity. Or we may be insular in our views of finance, economics, technology, industry, or any other aspect of practical reality, such insularity keeping us from framing narrow subjects in a broader context. Trouble sometimes happens very far from its first root, so long into its future we don’t even recognize the source looking back, and we can’t imagine the effect looking forward, stuck as we are, insularly, in our present moment.

In the pedestrian language of markets, insularity is referred to as a herd, leading to bubbles and corresponding pops. In such cases the outliers of opinion are often referred to as contrarian, and even if this is strictly speaking correct it is a trait that merely runs contra to insularity. Otherwise, though almost always with hindsight, after these rebels have been proven right in some fashion, they are called visionary. This is also true, in a manner of speaking, although their vision is nothing more than an ability to see – no, rather, a willingness to look – panoramically beyond the island. It isn’t as easy as it seems, putting it that way, to be either contrarian or visionary, else we would all qualify. This would make us a herd of contrarian visionaries – only resetting the borders of the island, that’s all.

These reflections about islands, literally and figuratively, were brought to mind in part by Michael Lewis’s book, Boomerang, and more profoundly by news about the death of Steve Jobs. The book begins with the story of a small island nation becoming a massive hedge fund almost overnight, based on availability of credit, confluence of short-term economic conditions, and a narrow interpretation of finance theory by several MBAs. It is a cautionary tale that extends beyond the confines of a small island nation, and it stands in contrast to that of Apple’s true visionary, whose premature end has moved so many of us. That Apple – under Jobs’s watch – has become one of the world’s most valuable companies, even as nations and big banks fall apart, has been an effect (not a cause) of our admiration, and our current sense of loss.

The legacy of Steve Jobs, much more than any individual product or technical direction – neither of which, alone, would have left an impression deep enough to warrant the massive-scale distress upon his departure – lies in the approach. Throughout the man’s career, this combined art with science, technology with esthetics, practical solution with a global context, near-term drive with longer-term direction. As events around us unfold, we recognize it now as an approach that ran visibly counter. The Mac, the iPhone, the iPad, and a host of other products that Steve Jobs has left behind, are most valuable as a reminder of the capacity of the human mind when insular constraints are removed. Surrounded as we are otherwise by the effects of short-sightedness and insularity, it would be easy to forget.

In his biography of the Rothschild banking dynasty, the economic historian Niall Ferguson depicts an organization that was founded on several core principles: internal unity, external relevancy, and long-term commitment. The particulars and circumstances in the late-18th and early-19th centuries, when the Rothschild firm was built, were obviously different from our own, but history can teach us important lessons if it isn’t read too literally. Two hundred years ago the firm’s clients were governments and politicians, and this clientele benefited from patience and a view to the long term. Two hundred years ago relevancy to this base was optimized by one’s ability to reach across many jurisdictions and markets. Unity, in the Rothschild context – a firm that branched out to all major capitals to serve multiple factions – was made possible by strong family bonds and manifested itself in consistency. Without this, the other two factors would have been rendered meaningless.

That was then, and even though we pride ourselves today on being innovative and almost scientific in our approach to strategy, the success drivers of the Rothschild firm were essentially the same as those to which we give more modern names. Family unity is now called teamwork, partnership, and a strong company culture. External relevancy is now less a matter of geographic tentacles, but the concept of diversifying beyond a solitary core remains as critical. Long-term orientation is now not only the development of asset value, not only potential sacrifice today for more lasting reward down the road, but as importantly an ability to adapt and maneuver with changing circumstance over an extended period.

These qualities and strategic elements point to a seemingly contradictory blend: specialization on one hand, and diversification on the other. Specialization is essential for a deep commitment to one’s customer base, but it must be a commitment that anticipates change – a defining characteristic of the era – and wide variance of customer needs. While specialization allows one to recognize these, diversification makes it possible to assist in multiple ways, as fitting the circumstance. Long-term relevancy is not easy to achieve, but it is essential to success in any segment.

CoRise is a merchant banking firm in the classic sense, structured for current realities. We aim to be relevant into the long term with a unified approach. Our three core services – investment banking, industry research, and strategic equity – augment, enhance and leverage each other to the combined benefit of clients, investors and entrepreneurs. We can be advisors or principals as the situation dictates, we are experienced and versed in all capital markets and corporate finance product, and we are long-term focused on the themes that impact our clientele. As our very name suggests, unity and partnership are the essence of our culture. Our tagline describes the firm completely: Merchant banking for the age of invention.

A strategic philosopher once advised his students to follow in the path of history’s greatest. Thus, even if failing to live up to such loftiness they would fall short of a very high target. Like all professionals, we are eager to find instruction in the strategies of our most successful predecessors (and there have been many after the Rothschilds). The greatest among these, it seems, excelled at something besides strategy: Execution and a job well done. We will be very attentive to this aspect of the trade in the months and many years ahead.

When we think of innovation we think of the creation of something new, and we are programed in this way to think of invention. We think of the lightbulb and the wheel, for instance, or in more contemporary parlance the microchip. And often enough these sorts of revolutionary breakthroughs are exactly what innovation is, and when these breakthroughs occur often enough – as has been the case for several decades – we think of innovation and invention interchangeably. But this is wrong, because innovation comes in different varieties, and at its core the concept is not about the creation of a new object but the discovery of a new path. Christopher Columbus was an innovator as much as Thomas Edison, although only one of them was an inventor.

At its core, innovation of any variety is about progress, which is about movement, transition, migration, and bridges that connect disparate points. Coming on the heels of a prolonged period of invention, in the more or less true sense, an era is bound to follow in which these novelties are allowed to mature – to ferment, as it were, to find their way – and during such time the innovation that occurs is of an evolutionary sort, migratory in nature and characterized by positioning and repositioning of points, as described. Disparate technologies combine, or at least find ways to communicate; disparate services morph, or at least come towards each other with recognition; and market leaders overlap in scope as their respective market boundaries blur.

We have seen innovation in the past months that symbolizes these themes. If we think of Google, Facebook, Amazon and Apple as the symbolic leader board of their respective disparities – information, social media, commerce and entertainment delivery – these entities have innovated lately as much to set themselves apart as in order to converge. With Google+ a road was taken by its inventor that leads to Facebook. With Facebook Credits a path has been paved by its developer towards Amazon, which is moving towards Apple with the Kindle it created, and towards Google with the Silk platform on new Kindle devices. Examples of such migrations are multiple, and these were selected only to illustrate the point with highly visible symbols.

The list of examples is extensive – in some cases reflecting an offensive and in others a defensive stance, action and reaction â€“ and it is not limited to only media and its technologies, but includes finance, retail, and many other segments. This should prompt us to revisit the subject of innovation in a new context perhaps, one of convergence and its patterns, and maybe even go so far as to judge the quality of new inventions accordingly. Value, in such an environment, is as likely to emerge from the bridges and transitions as from any revolutionary starting points. On a relative scale, the former even gains ground when the latter tends to diminish.

It can be an amusing exercise sometimes to second-guess causes, effects and other matters of relativity in the economy. For instance, is this now being pulled down by consumer deleveraging or are consumers deleveraging because of a soft economy? Further, if leverage at all levels should never have risen to where it rose in the first place, is the economy technically soft or just where it belongs? When we refer to a Depression or a Great Recessions we imply something about economic unhealth, disruption, and abnormality; but what if the abnormal state, the disease, the disruption are not in the down-cycle but rather the period and circumstances preceding it? I suppose we refer to those periods and such corresponding elements as bubbles, but we tend not to be particularly fussed about these when they occur. We treat bubbles with a tone of academic detachment, we debate their existence, we sometimes joke or make up silly names, and after they pop we look for economic cures to the ailment.

I am vaguely reminded of the business school adage by way of ancient Chinese wisdom: the battle is won or lost before it is fought. This has to do with preparation and strategy, at least in the business school context, but it also relates to causality in the sense of issues raised in the previous paragraph. In that same spirit, I sometimes wonder if the causality begins and ends with leverage, with bubbles, or if these too have been an effect rather than a cause, a manifestation of a deeper fundamental driver. Conventional wisdom has dealt with this very issue often enough, and the conclusion is usually along the lines of short-term orientation in the market, short-term oriented compensation structures for those who impact the market’s directions, and at the consumer level the multitude of fads that come and go and the variety of programs that tend to blur the line between necessary and discretionary spending. But this either doesn’t delve deeply enough into the subject or more likely fails to connect the dots, as it were, for a more complete picture.

To complete the picture, or at least to add depth to it, there is another quality that must be considered, which has something to do with efficiency, competency, and the counterpart to these things, apathy. To illustrate, let’s look at a selection of corporate news stories from the past week: One major international bank is suffering a multi-billion dollar loss as a result of poor executive supervision, one major technology company is replacing its CEO and reversing his strategy after less than one year on a job for which he was not actually interviewed by the board, one major Internet company is firing off conflicting emails to its employees about the future of the company as it currently steers without a clear path, one major entertainment and information hub has become its own scandalous story, and one of the highest-profile IPO candidates is having to restate its gimmicky filing now for the third time while its executive ranks unsettle. To underscore the point with contrast, we concurrently lament the departure of modern industry’s most successful executive, who led the development of the world’s most valuable company with vision as well as attention to detail.

The examples cited bring home, I think, all of the issues raised: short-term and long-term orientation, efficiency and apathy, bubbles and fundamentals, causes and effects, battles won and lost. When we consider the state of the economy – worldwide – we should not dismiss such issues as irrelevant simply because less quantifiable than aggregate leverage and money supply. Economies are based on enterprise, and the principal lesson all good entrepreneurs can recite by rote is that success and failure is all about execution. It’s time for this lesson to be applied with utmost seriousness and urgency across all segments, private as well as public, because when circumstances change as drastically as these have in the last few years even the most mature entities contain elements of the startup.

There have been two news items to consider, one major and the other, in its own way, too. The two are disconnected at the surface, but underneath it they relate. One: The Fed announced its more or less expected Twist. Two: Bloomberg is reporting that the alleged IPO plans by the second largest deal platform, Living Social, are being reconsidered. In particular, the IPO would be replaced with a private round that may also include debt capital.

The Fed’s Twist underwhelmed the market, which has proceeded without hesitation to crater. According to some estimates that had hinted at market expectationÂ of roughly $300-$350 billion of Fed action, the actual sum of $400 billion should not have beenÂ disappointing. The slight upside “surprise” is even consistent with this Fed regime’s passion for seeking to move markets and its attentiveness to the trading desk. The goal was less than successful this time, and the reason was probably along these lines: On one hand, the FOMC statement contained an economic outlook paragraph more bleakly worded than the last time around, and on the other hand the magnitude of Twist was only slightly above expectation. I mean, what’s $50 billion more when $1 trillion and change has already been spent or committed between QE2 and this current round? In short, the Fed that markets have grown to appreciate for the enthusiasm of its easings should have wanted to do much more – both in order to surprise and in order to offset weakening economic prospects. The fact that this little sum is all the Fed has come up with implies that it’s all it could do, and all it will do for a while.Â The market’s reaction indicates that this message has been understood.

And then, there was another market reaction that warrants mentioning. The long end of the yield curve – the stated target of Twist – tanked. Now, part of that stands to reason, because, as stated, the aim of Twist is to drive long term rates down. But with most of $400 billion already priced in, the magnitude of the yield shift seems to have been more than a mere adjustment for the extra $50 billion. In combination with a negative stock market reaction, it was more like a rotation out of risk and into relative safety. It was, in other words, a movement up the rungs in the seniority and liquidation preference of the global capital structure. (Please see this prior article here for a more detailed interpretation of corporate finance fundamentals as applied to global market flows.)

Which brings us to the other news story previously mentioned: Living Social is said to be abandoning its IPO (which would have been straight common stock) in favor of a private round (which, if typical, would be structured as preferred equity) that also features a debt tranche (presumably senior). The climb up the risk ladder to rungs of increased seniority is rippling beyond the point of symbolism. In light of current economic events, one should expect to see such ripples continue.

To understand a complex system it is sometimes useful to isolate its characteristics in a simplified example and let the imagination wonder from there. Recognizing that enterprise, economies, and markets are highly complex and intertwined systems, let’s investigate two simplified extremes – at polar ends of a continuum – and proceed to draw conclusions.

Let’s assume that there are two types of enterprise: the pure startup and the perfectly mature. The pure startup is made up of pure possibility and nothing actual, and the perfectly mature enterprise is completely actual and has no potential outside of that. At one extreme, thus, all value is option value, and at the other the business value is the value of the underlying asset (in its most fundamental state). The pure startup represents the most speculative form of equity and will be funded with the most flexible form of capital, and the mature asset will be funded with debt because it is completely predictable and has no upside at all.

Beyond this, the two isolated ends of the described enterprise continuum also differ in operational and strategic ways. There is, for example, a difference in management style required – as has been touched upon in a previous article here – with vision and leadership ranking high for the startup, where nimbleness, competitive positioning, and direction in a volatile scenario are all critical to growth. For the mature business, pure operating management and maintenance of the status quo are the necessary executive objectives. The respective management teams will accordingly require different types of boards, different forms of advice, and different offerings from its assorted service providers: On one hand a highly strategic, forward looking, aggressive and anticipatory approach; and on the other a conservative method based on historical observation, predetermined formulas, and careful asset conservation. To state this slightly differently, the difference is between entry and exit.

Now, while there are countless real examples of the two extreme scenarios, the vast majority of enterprise is likely to fall at one point or another in between. At such points there will be greater or lesser emphasis – combinations and permutations – of the characteristics described above. Depending on where an enterprise exists along the trajectory from entry to exit, as it were, it will have to be analyzed, managed, funded, and serviced accordingly. Sometimes there is a challenge in doing so effectively, because analysts, managers, funding sources and service providers are commonly only prepped and ready in one thing. This is especially true in an era of high specialization, and sometimes this disconnect is exacerbated by revolutionary changes that take place within whole sectors or, even more notably, as whole new sectors are born. To take the subject to an even higher plateau, the described nuances may even be manifest at the macro-economic level.

Regardless of one’s perspective in such matters – whether it is analytic, strategic, operational, financial, (political), or service oriented – it would be, I believe, a correct approach – maybe even the most correct – to first and foremost isolate the subject of one’s perspective and try to find its place along the evolutionary continuum. As hopefully demonstrated herein, not all such places are to be handled identically and not all such places demand cookie-cutter solutions. From a very high level looking down, one could even argue that our global economy, our technology, and our capital markets, are at a general point that is closer to the startup extreme – and all this signifies – than the other. The greatest mistake anyone can make – assuming one has an interest in the subject – is to fail to recognize this reality. Consequences and repercussions are multiple.

discourse and notes

Category Archives: Sector news and commentary

Information dis-intermediaries are new hackers

The missing point of Groupon analysis

From free to freemium to paid to payments to banks: trends in tech maturation (and stuff)

Representing Transactional Media

Surviving insularity and the legacy of Steve Jobs

Merchant banking for the age of invention

Transition as a new form of invention

Inefficiency at the root of an ailing economy

The Fed, the reconsidered IPO, and the climb up the capital ladder

Adaptation of perspective along the evolutionary path