jstanderfer's comments

No one doubts that Amazon's customers love them and that Amazon is growing revenue at an incredible rate.

The question is when and if will this revenue growth translate into increasing margins? Revenue growth without profit has very little value (see Groupon) and the nature of their current businesses make it difficult to establish a competitive position where you can increase margins by charging a premium versus your competitors.

For reference - Wal-Mart has operating margins of 6x those of Amazon, has 8x as much revenue as Amazon yet is only valued at 2x that of Amazon. It would take Amazon almost 8 years of nearly 30% growth in revenue and profit margin to match Wal-Mart, a company which trades at a PE in the low teens.

Zynga is structured such that Mark Pincus has a majority of the voting shares (50.15% to be exact). This means he cannot be fired nor can any takeover occur without his consent.

HN is focusing far too much on the employee stock options. Once any company gets into a "dire financial situation", the options are already completely worthless.

The worse alternative would have been to not restructure and just shut down the company leaving everyone without stock options, jobs and probably without severance either.

LPs commit money to new funds before the first investment is ever made. What type of information does the seller (VC) have that the buyer (LP) does not?

Read "The Hedge Fund Mirage" by Simon Lack

My interpretation is that OP is not arguing that BigCo's aren't currently making money.

Instead he's saying that the amount of resources being pumped into the ecosystem (financing, incubators, startups) is significantly larger than what is required.

That the market as a whole won't grow fast enough to satisfy the needs of all the investment capital being deployed.

The last question of the FAQ is this:

>Can I export my Space’s to Wordpress, Tumblr, Blogger, or >another service?

>Over the coming weeks we’ll provide you with specific >instructions for exporting your content to other services.

I don't think there is any doubt they'll be shutting down Spaces soon.

There is a flaw in this argument.

First they say that 56% of companies started in 2004 were still in business in 2010. Then they reference the VC rule of thumb that 4 of 5 companies will flounder and dismiss VC companies as being "riskier". But then for their argument on making "real money" as an entrepreneur they reference the same VC companies that they already dismissed as being riskier and having a failure rate far higher than the 44% the article led off with.

Having lived in Silicon Valley, Seattle and Austin, my estimation is that the amount of money required for a family to live the same lifestyle (owning similar level home, access to good schools, reasonable commute, etc.) in Austin as in Silicon Valley / SF is at least 2x. I'd estimate the differential to be significantly less for someone single or DINK.

To simplify - Spotify can never be profitable because they do not create or own the product they are selling. Also, the product they are selling is not a commodity so they cannot source alternate suppliers.

Why is this a surprise?

Reminds me of when I first got a modem and was able to connect to local BBSes and discovered shareware. Huge selection of things that sounded cool but only ended up running once or twice.

This isn't completely accurate is Be Inc. did successfully IPO in 1999 and won a lawsuit against Microsoft.

Agree. What's even stranger is how differently we treat different types of deaths. Anything terrorist related is something that needs to be prevented from happening again, regardless of the costs. Yet as many people die each and every month in auto accidents as died on 9/11 yet we all accept that as the cost of freedom the automobile offers us.

Can't we wait for reviews of the actual shipping product before making sweeping conclusions about its pros and cons?

This article confuses volatility with liquidity.

Restrictions on who can buy/sell and how often increase volatility at the expense of liquidity because it shrinks the potential pool of buyers and sellers. Real volatility is not waking up one morning to see that your publicly traded stock that you can sell at a moments notice is down 10%, it's waking up to see that no one wants to buy your illiquid assets at any price.

When you've sold yourself as a growth story, the reasons for the decline don't matter to Wall Street. Sell side analysts build complex earnings projections models based on estimated compounding growth rates. Even a slight reduction in the growth rate has a large impact on projected earnings a few years out and a negative growth rate blows up the entire model.

If they were already public, this would likely cause a huge drop in the stock price. Similar to what happened to Netflix when they guided down on number of subscribers.

How long until we read about a company that's storing significant amounts of data gleaned from the API's of Facebook/LinkedIn/etc. being hacked?

I don't take it personally at all. The meme is common among people familiar with the internal workings of consumer web business models. My concern is that its not well understood outside that group. I also think it's an interesting way to view the rollout of Facebook's new features and public reaction to them.

This is a great example of the inherent conflict of interest when your users are not your customers, in fact they're your product.

http://johnstanderfer.com/2011/09/26/facebooks-most-importan...