June 14, 2014

Startup Memories

Over the course of my investing on behalf of others I've gained the knowledge that events that affect the broad markets are always going to be present, and getting excited over a crisis is subject to disappointment, unless one is armed with the experience, that upon being solved a crisis will immediately be replaced with another. But I have to admit that it gets harder to accomplish in a world where information travels at light speed at best and does so whether it's true or false at worst.

Current issues such as the growing tension in Iraq, the ongoing complexity of the political climate and their impact in the price of oil and stocks is reminiscent of the kind of economy slowing distractions that led up to the financial crises, albeit we're far from the $149 highs of that period. But when other events occur such as the occasional merger between behemoth tech firms and unknown startups the news is less read because I believe technology news is generally focused on how something works, not useful to a population that appears more interested in what something does. Which leads me into the point which is information carries much in the way of fodder that only seems to let the big stories out which make for more emotional impact and whose solution is less clear. But what about the information we don't see or hear? That's the information we should interested in.

In technology, a sector of the economy I pay much attention to, there are new startups coming every day. Venture capital companies (VC's) of the type that brought us Google (GOOG) and Yahoo (YHOO) with names such as Sequoia Capital and smaller, but amply funded ones such as Kickstarter, come to the market annually with a range of ideas, raising  money for well researched pre-funded companies at all levels. Much of that money is their own but with the decades old demand from institutional, corporate and state pension funds the amount of outside capital is nearly endless. Investors in these "private equity" vehicles find themselves holding what might be the names of tomorrowsuch as Uber, the transportation service company connecting people with rides via an app (lication) on their mobile phone. Less controversial is Spotify, a music streaming service competing with the likes of Amazon (AMZN) and Pandora (P), the upcoming IPO of GoPro, a maker of affordable high definition personal cameras or SpaceX, a space exploration company founded by Elon Musk, famous, for his other company Tesla, an originator of luxury electric cars. Even companies hailed as expensive failures such as Etoys and Webvan, an internet toy store and a web based grocery pickup and delivery service respectively, were followed by numerous online retailers of toys and the very visible trucks belonging to Fresh Direct and support the notion that some of the companies and products were just launched before their time. Remember the Newton?

I'm never at a loss for words to describe the ways that I avoid the distractions of daily life to maintaining objectivity when I invest. Most of them I simply look to swap with the distractions of potential new ideas for investment that with a sound network, the right tools and an open mind can be found over every crisis filled horizon. The best part is its fun and anyone can do it.