A month ago on Techcrunch, Michael Arrington wrote about “Twitter’s Revenue Dilemma”: “Your valuation can actually go down once you turn on revenue.”.
“Turning on revenue” frames it as a binary thing. You’re either making money or you’re not. It completely disregards the most important variable in finance: Time.
With the tiniest trickle of revenue you can extend your runway infinitely. That means you never have to raise another cent and you even have money to fund your growth. Let’s take an …

Read on »

In any company if you save $1 it goes straight to your bottom line. Meaning it’s as if you just earned another $1. The company that my wife and I have been running for about 2 years now serves over 30 Million page requests per day. We’ve invested a lot of time in getting more performance out of our hardware but about 6 months ago we started hitting pesky issues like limits on the speed of light and electrons.
So we’ve …

Read on »

Economists love the concept of opportunity cost because it gives you a the real long-term value of an investment or purchase in relative terms – which is really the only way to calculate value. On Wednesday the DOW hit 10,000 again. The US financial press did their part to ring the bell while the banking community celebrated the boost in perceived value and the increased likelihood that the public would buy their wares.
Fox News, like clockwork, has given former asshole …

Read on »

There’s a spectacular interview on ft.com today with my favorite FT journalist John Authers with Bruce Greenwald who teaches Ben Graham’s value investing course at Columbia.
Bruce talks about behavioural finance and the irrationality of investors, the often ignored mathematical realities of the market, the brutality and danger of short selling (all short sales are treated as short term capital gains), the power and value of franchise and much more!
I love his constant reminder of what value actually means: First look …

Read on »