Today I sit in these sessions about the global financial markets and the emerging global technology markets. Big news from America: YouTube bought for $1.6billion. No real management. Brand new market. No substantial revenues. Google trying paying a premium to beat Microsoft, once again. Entertainment value. Lots of flash but are they buying a real company?
- Sony doesn’t like doing business in America. The former chairman of Sony, Isei-san
says, "Americans difficult to do business with. Difficult to trust."
- CEO, Founder of FON, a wiki router device that demoe'd at DEMO and here, says, Americans are difficult, very quick to call their lawyers. Americans lie about the preciousness of their suburban neighborhoods and villages. They seek privacy and fences. Luckily, free-wiki cuts through those fences!!!
- Paul Deninger, exec at Jefferies Broadview says, this year's 2 largest IPOs (non-tech) were in Russia and China, on their respective exchanges. Not the US. He also said one
of the best things that happened this year were that Mr's Sarbanes and Oxley announced their retirement. Sarbox is one of the leading reasons why young companies are not finding exits, and why innovation has slowed down in the US. The other issue is that the small-medium size IPO needs to be restructured. The boutique investment banks don’t really exist anymore and the big firms, i.e., Goldman don’t care about those little IPOs now. They want big deals. Tech IPOs are only less than 1% of an investment banks revenue now!
- Eric Benhamou of 3Com, now a VC admitted his inability to hire a successor there, and
that he didn’t build an effective sales team while at 3com, which is why Cisco beat them at every turn. Their new strategy? Become a Chinese company. Formerly a Silicon Valley company, they now only have 500 employees there and 5000 in China and are buying a major Chinese company to gain a sales force. The future he says, is not America. It’s the Chinese.
Here's a prediction on the financial markets. Frank Quattrone rebuilds a boutique investment house to take all our favorite tech IPOs out and restructures the process so it’s appealing to them. He has something to prove. And the tech firms that align themselves with him will gain from his "star" factor. Just a guess. He has a year to figure it out and the timing will be perfect.
Are we in a bubble? For Web 2.0 -- not really. It’s still reasonable and manageable. But for those companies working with the private equity firms, yes. There is a private equity bubble. The LBOs are becoming unreal. These guys have $500billion under management and take a 2% management fee every year, for what? The last time there was a private equity bubble it burst after the RJR Nabisco deal, and more poignantly after the Prime Computer deal.
I feel sad for American entrepreneurs. I am embarrassed for how we treat foreign entrepreneurs. I am more embarrassed for ourselves. We are an entertainment culture. The HP saga became a "saga" because we said it was so, and it was amplified in the press. It got more column inches than the atomic bomb that was detonated yesterday in North Korea. We REALLY need to get a clue. We are so caught up in ourselves and our own self-created policies and self-created platforms for individual promotion. Have we forgotten about the entrepreneurial spirit? About the beauty and simplicity of innovation and the ability to create commerce? I have to say, being here, we definitely no longer have the "most favored nation status". We, as American companies, and business people and humans, have a lot to do to restore our image as a worthy enterprise, as a country that should be admired and revered.