Victor's Musings

Cashing in on Subprime - D Magazine

Wed, 09 Nov 2011 16:22:47 -0600

I just stumbled upon this old article about Kyle Bass and his strategy of short-selling during the financial crisis of 2008. The story of Hayman Capital and its expertise in distressed real estate demonstrates that not everyone lost out on the 2008 crisis.

Here is one of the most ridiculous quotes in this article:

Then he ran the local office of Legg Mason, where he paid close attention to the housing industry and indulged his obsession with risk-taking after hours. In 2002, he raced a $200,000 RUF Porsche RTurbo from Manhattan to Los Angeles in a road rally called the Gumball 3000. Ignoring posted speed limits everywhere and using a helicopter spotter at one point, he won the event’s “Hottest Wheels” award for hitting 208 mph on a stretch of Nevada highway.

Risk-taking indeed.

Washington Post

Mon, 01 Aug 2011 14:02:52 -0500

Washington Post:

Interesting article about entrepreneurship.

The Weekend Interview With Kevin Ryan: Did Someone Say Tech Bubble? - Wall Street Journal

Wed, 06 Jul 2011 00:28:19 -0500

The Weekend Interview With Kevin Ryan: Did Someone Say Tech Bubble? - Wall Street Journal:

Definitely an interesting take on the issue of whether we are facing a new tech bubble or not.

For Mr. Ryan, the test is: As a group, are today’s Internet companies going to eventually be worth 10% of their current valuation? “There’s no way,” he answers. “There’s no way that LinkedIn at $7 billion today is worth $700 million. They own a position. Our recruiters don’t have any product they think is as good as LinkedIn.” Fair point, but is it really worth that much? “That feels like a big number to me. But three, four, billion, five billion? Definitely. And it may grow into that. So we’re just debating plus or minus 40%. That’s not a bubble.”

How the Cut in Debit Card Swipe Fees Will Affect You

Wed, 06 Jul 2011 00:22:30 -0500

How the Cut in Debit Card Swipe Fees Will Affect You

My top studying song. Eminem - Not Afraid (by EminemVEVO)

Thu, 09 Jun 2011 07:44:47 -0500

My top studying song.

Eminem - Not Afraid (by EminemVEVO)

Groupon Going Public

Mon, 06 Jun 2011 15:51:00 -0500

Groupon has been in the news a lot recently, with most of the attention focused on its unique business model and its plans for a public stock offering. I recently wrote about Eric Lefkofsky’s visit to Northwestern to speak about technology-enabled innovation and it is very interesting to see how the two perspectives of the company are clashing.

The newest issue of business is Groupon’s plan to go public. With an initial public offering (IPO), Groupon expects to raise another $3 billion and achieve an overall valuation of $30 billion. Just months ago, the company turned down Google’s offer of $6 billion. According to Lefkofsky, Groupon’s valuation would have grown too quickly in the time that it would have taken to make and carry out the deal. At a valuation of $30 billion, Groupon will have a bigger initial launch value than Google when it went public years back. Let’s hope that this isn’t yet another sign of an impending tech/internet bubble.

Especially interesting about Groupon is its less-than-spectacular financials. Because of the nature of Groupon’s business model and strategy, it spends a large chunk of its revenue flow on marketing. The company seeks to create a customer base as large as possible, simultaneously expanding its market and ability to provide more deals to more individuals. With this, they hope to change the world of commerce and at the same time, turn out a large profit for its shareholders and employees alike. Lefkofsky argued that Groupon was Google’s largest customer, with its method of maximizing its consumer base.

With this marketing budget, however, Groupon has actually been losing money for the past few years. According to Bloomberg, the company has recorded over $540 million in operating losses since 2008.

In order to hedge against these gloomy statistics, Groupon is using an alternative financial measurement to woo potential investors. Called the adjusted consolidated segment operating income, or adjusted CSOI for short, the figure excludes marketing and acquisition-related costs. Under this alternative figure, the company is seen as profitable, raking in $60 million last year and $80 million in Q1 of 2011 alone. Groupon argues that its marketing costs will decrease as it saturates the market and establishes solid footing for its consumer base.

Underwriting this titanic effort of an offering is Morgan Stanley, which was also responsible for LinkedIn’s highly successful public debut. It has been tough for the bank indeed:

Internet startups are notoriously difficult to price. There are few direct competitors to base an IPO valuation on, and the private-market valuations that do exist for social media companies — a new phenomenon — are based on just a handful of trades made by a small group of investors, which makes it hard to say whether they represent true demand in public markets.

It will definitely be exciting to see how Groupon fares once the legal issues get sorted out and the company finally goes public. One last aspect that has been featured in the news prominently as of late is the fates of Lefkofsky and his crew. The two co-founders, Lefkofsky and Brad Keywell, have cashed out some of their shares in order to fund their joint venture, Lightbank. This new venture capital firm focuses on providing human capital to fledgling start-ups in order to help them grow and prosper. The two entrepreneurs are some of the most knowledgeable in the field and should be able to make some great success stories for newcomers into the technology industry. Lefkofsky himself has already become one of Chicago’s big success stories, set to become the richest person in Chicago when Groupon goes public with his estimated $6 billion in shares.

It will only be a matter of time before the world sees how Groupon can transform commerce.

cordisre: Follow me….. (by skubmic)

Mon, 06 Jun 2011 15:16:34 -0500

cordisre:

Follow me….. (by skubmic)

moneyisnotimportant: “A goal is not always meant to be reached,...

Sat, 04 Jun 2011 03:09:20 -0500

moneyisnotimportant:

“A goal is not always meant to be reached, it often serves simply as something to aim at.”

-Bruce Lee

5 Reasons Why E-Books Aren’t There Yet - Wired

Sat, 04 Jun 2011 02:05:00 -0500

In one of my previous posts, I discussed the upcoming changes to the textbook and e-book industries. Now here is an interesting article discussing why e-books still have a long way to go.

His main five reasons are as follows:

1) An unfinished e-book isn’t a constant reminder to finish reading it.

2) You can’t keep your books all in one place.

3) Notes in the margins help you think.

4) E-books are positioned as disposable, but aren’t priced that way.

5) E-books can’t be used for interior design.

It definitely seems that e-books aren’t going to phase out books any time soon, but it will be interesting to see how much of an impact the technology has on the bookstore and publishing industries. I know that I’ll be hopping on the bandwagon soon with an iPad.

Photo

Sat, 04 Jun 2011 01:13:09 -0500

Regulations Hinder Development of Driverless Cars - New York Times

Thu, 02 Jun 2011 01:27:56 -0500

Regulations Hinder Development of Driverless Cars - New York Times:

Technologies like these are going to change our future as we know it. I hope government is smart enough to allow development continue, unhindered by bulky, unnecessary regulation.

Funny or Die: Groupon’s Fate Hinges on Words - New York Times

Wed, 01 Jun 2011 03:07:17 -0500

Funny or Die: Groupon’s Fate Hinges on Words - New York Times:

Interesting take on the importance of editors and writers for Groupon’s business strategy and its success as a fast-growing commercial enterprise.

"There is more “Monopoly” money than real money printed in the U.S. every year."

Wed, 01 Jun 2011 01:24:26 -0500

“There is more “Monopoly” money than real money printed in the U.S. every year.”

- 10 Things You Probably Don’t Know About Money - CNBC

How the Chinese Government Created the Asset Bubble - Room for Debate - New York Times

Wed, 01 Jun 2011 01:19:00 -0500

How the Chinese Government Created the Asset Bubble - Room for Debate - New York Times:

In this discussion panel featured at the New York Times, a group of economists and professors alike discuss issues that surround China’s building housing bubble. Though this issue wouldn’t generally interest me too much, I was surprised by one article.

Victor Shih, an associate professor of political science at Northwestern, wrote a piece depicting the increasing risks of the real estate investment model being used by the wealthiest groups within the People’s Republic. I took a Chinese Politics class with Professor Shih last year and found his lectures very insightful. I’m glad to see that Northwestern is being represented well in a variety of fields, often as diverse as Chinese economics and politics.

Rapture Ready: The Science of Self Delusion | Mother Jones

Wed, 01 Jun 2011 00:56:00 -0500

Rapture Ready: The Science of Self Delusion | Mother Jones:

A very interesting article about reasoning and persuasion.

kateoplis: Cameron Davidson

Wed, 01 Jun 2011 00:36:55 -0500

kateoplis:

Cameron Davidson

10 Essential Books for Thought-Provoking Summer Reading

Wed, 01 Jun 2011 00:34:00 -0500

10 Essential Books for Thought-Provoking Summer Reading:

theatlantic:

Everything from cutting-edge scientific ideas to a new philosophy of learning to art that honors living in the moment

Have at it.

Why Can't PCs Work More Like iPhones? - NYTimes.com

Tue, 31 May 2011 13:05:00 -0500

Why Can't PCs Work More Like iPhones? - NYTimes.com:

As Brian Chen of Wired predicted after Apple unveiled the iPad last month, “With the iPad and the horde of tablets that will follow it, we can expect computing to become much easier than what we’re accustomed to today.”

The Risks of Quantification - William Byers - The Conversation - Harvard Business Review

Fri, 27 May 2011 19:03:00 -0500

The Risks of Quantification - William Byers - The Conversation - Harvard Business Review:

What we misunderstand is that introducing mathematics and quantification into any situation subtly changes that situation and this needs to be taken into account. We are attached to our analytic and computational tools and have become blind to their limitations.

College? There's an App for That: How USC Built a 21st Century Classroom - Derek Thompson - Business - The Atlantic

Fri, 27 May 2011 12:56:11 -0500

College? There's an App for That: How USC Built a 21st Century Classroom - Derek Thompson - Business - The Atlantic:

This article discusses the University of Southern California’s development of its Masters of Arts in Teaching program electronically. The selling point? Everything is online, eliminating the need to be on campus so that one can learn from home. I’m not sure how much I would trust a teacher that comes out of this program, but it seems like it works pretty well.