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Why does everything suck?

Exploring the tech marketplace from 10,000 feet

So Tell Me Again Why You Don’t Pay A Dividend?Yesterday

In one respect the stock market has often baffled me. I understand what stock ownership in a private company means. And I even understand what stock ownership in a publicly traded low growth dividend earning stock means.

What I don’t understand is why a reasonably mature public stock that generates no dividend is worth anything to anybody. Ok that’s not quite true. I understand why a company might be strategic to another company and so, in that context, to have substantial value even if not producing revenue, or even profit. But owning a stock in the hope that someone else will see it as strategic ain't no way to manage a portfolio.

In the tech market, most companies are considered “growth” stocks, and so do not pay a dividend. As the most insane and absurd example, Microsoft only felt it appropriate to start paying a dividend in 2003. In the case of a no-dividend company, what you are doing when you buy their stock is absolutely nothing more than gambling that some other guy is going to think, in the future, that the given stock has more value than you believe it does today, probably based on some nebulous metrics. But if your intent is to hold that stock for a long period of time, how are you getting a return on investment if there is no dividend? As I see it, investing in publicly traded mature stocks that don’t offer a dividend is the most pure (and ridiculous) form of gambling.

As I see it, the stock market ought to work a lo

The Veruca Salt EconomyOctober 9

I want it now daddy!

That is what drives us. It is what drives every financial meltdown. It is the gorging on stuff that is trivially accessible, while foregoing that which, regardless of value, presents too much challenge. It is the seeking of the low hanging, but tasteless, while eschewing the slightly beyond easy reach but ever so much more delicious. At some point the market always figures out if you have a basketful of flavorless fruit. The apples look like apples, but taste like cardboard. And no matter how easy they were to pick, no one wants cardboard apples.

But the easy way out is, unfortunately, vastly more appealing than the more circuitous route. And so it is with the crisis of confidence in the banking system, and the much less discussed crisis of ideas in the tech economy. Why put several years of design and re-thinking and engineering into something when you can graduate with your freshly minted MBA, partner with some PHP hack, and join the Web 2.0 generation. After all its what all the cool kids are doing.

The market should have punished this trend long ago. And it did briefly after the Web 1.0 bubble burst. But then we got stupid and we forgot how ridiculous we thought the quest for revenue-less eyeballs seemed in the last tech melt down.

So what is worrying me is that there is lots of talk in the tech community about impending danger, but as I see it the focus is all wrong. Yes, in these times it is always prudent

Inside Out vs. Outside InOctober 8

I like to read code on paper. Some people only read code on the screen. I have at times wondered what drives each coding style. The reason I like to code on paper is because it helps me see the big picture. I get to take in all of the code. And it allows me to change venues when looking at code. For example I can print out a big piece of code and go sit in the park or lay on my bed, or sit in the kitchen, or whatever.

I find that being able to flip between pages and mark things and take notes on paper is invaluable for seeing the big picture, or what I would call “outside in” coding. I tend to code outside in, and I think screen only coders write “inside out”. When you write code inside out it means you start writing small functions and you just keep putting them together until you have something useful. Looking at the big picture is less important because you are always focused on one little section at a time and your project grows this way.

Inside out coding is great because you always have something working. The downside is that it doesn’t necessarily help you get to a radically different place. It is harder to chart a course this way. Similarly, writing code outside in has the downside of not necessarily having the benefit of rapid iterative development, and not necessarily seeing all of the opportunities and patterns that may arise from deep in the structure of the code.

I have come to believe that both styles of development are

The Tech Market: A Failure of Ideas, Not ExecutionOctober 6

I have been having an online discussion with my friend Andrew Badera, who wrote the initial “idea = 1% execution = 99%” posting on the NextNY mailing list that I blogged about last week. His position is that execution is worth far more than ideas. We have been going back and forth in the comments of that article, and in the process I realized something I think is significant enough to elevate to a blog post.

The sorry state of tech entrepreneurship is not a failure of execution, but a failure of ideas. In the last four or five years, the Web 2.0 market has seemed explosively successful. But I would say that from an economic perspective it has been a failure. Because at the end of the day, a market cannot be judged by how much VC has been raised, but by how much actual revenue the companies are making either independently or after acquisition, as parts of larger companies.

The truth is that as it relates to generating revenue, Web 2.0 has been a bust. This is intuitively obvious, but unfortunately I don’t have any hard statistics to back it up. But the clearest indicator is that startups are not being acquired. If the best of the best were accretive to earnings for the acquirer they would be. The idea that the raft of social media companies with no revenue model was going to somehow “figure revenue out later” after building up large

What Is An Idea Worth?October 3

I am a member of the NextNY mailing list which is a group of New York folks that talk about tech business and entrepreneurship. A recent conversation and actually a persistent theme in that group is that in a startup, an idea is worth 1% and execution is worth 99% or some other highly disproportionate ratio.

I take issue with the concept.

Here’s the problem with the formulation. It belies a misunderstanding of what an actionable “idea” really is. A good idea is almost never some light bulb moment that occurs where you realize some insight that no one else has seen. In truth there are few of those. Very, very few people are that smart or that lucky. Great actionable ideas are really a collection of much smaller ideas, weaved together in such a way as to create something useful unique and compelling. There are few actionable “aha” moments.

In other words, to me, coming up with great actionable ideas requires lots of perspiration, iteration, and ideation. However, once you have an actionable idea that has been achieved through this process it is worth *way* more than 1%. I would say getting to this point is worth easily 50% and perhaps well more than 50% of the value of your enterprise. Actionable and truly compelling business ideas are incredibly valuable. And most people that say otherwise probably don’t have them. For example if you open up a shoe store on Amazon, there is likely no “idea” there