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Tuesday, June 28, 2005

Repository of Unexpected Random Observations

This post is a placeholder for observations that are unexpected. If you don't write these things down, you forget them.

Comments:
I'm not sure I understand shoddy work cause #4, what do you mean by "internal conflicts?"
 
Wow, someone is actually reading this stuff! An organization needs to function as a single entity from an outsider's perspective. A single deliverable may require contributions from multiple people in different parts of the organization with different notions of what is being delivered. People within different parts of an organization can see each other as competing and sabatage the other's efforts. A lot of stuff falls into this category based on my observations.

My guess is that BakBone Software's problems are mostly 1 and 2: not putting enough emphasis on the accounting of the business as well as one or more people apparently being way over their head. I think we've all found ourselves in situations where we are essentially incompetent at what we're trying to do and the mess generally looks like BakBone's financial re-re-statements.
 
Okay, I think I get what you mean. I'll admit to only skimming the sections on the software companies. The bank stuff is interesting, but I'm suprised at how high valuations are so far. It's a huge change from a couple of years ago when it seemed like every small bank traded at book value.
 
"It's a huge change from a couple of years ago when it seemed like every small bank traded at book value."

Yeah, it was a dead-end, at least for now. It certainly says good things about the economy when even tiny backwater banks are all trading at a reasonably fully value. Now is the time to bs starting up a new company.
 
"In 5 separate situations that I've personally been involved in, I've seen a new startup operation cherry-pick the people they wanted from a previous operation. Looking back, it's probably the best method of getting good people I've seen. There are very few surprises."

This is so true. The cases where I've seen this done, the startup founders cherry-picked so many people that the former company had to shut down. The new startup than proceeded to buy up all the old company's assets on the cheap. So it's really a double bonus. Evil, but it works. It just goes to show how relationships are often the most valuable asset that a company has.

Great blog you have here, DeliLama.
 
Hello Deli:

I lurk at the Motley Fool boards, where I just found out about your blog.

Keep it up.
 
anonymous,

Well, here it is. The purpose of the blog is really for my own benefit, but I believe it's important for other people to be able to read it (to keep it independent, if that makes sense).
 
Great blog, deli.

This blog was kind of my "a-ha!" moment in realizing that sustained high returns come from investing in the tiny companies you are looking at that are too small for the big money to chase.

The irony is that 90% of the chatter, even from educated posters, on boards like the Fool BRK board ignores this fact. (And I think that board has one of the best signal/noise ratios out there.) It's all what's WEB buying, and is this or that large cap a buy now? BUD? WMT? please. That's not how Warren did it when he was running a mere 10 or 20 mill.

And again, as usual, the master told us with his "if I was running <100 mil I'd make %50 per year." but most everyone misses what that really means.

Anyway, you're the man, keep it up.

j
 
Jaloti,

Abolutely! And I'm always afraid that everyone will figure it out, so I don't make a lot of noise about it on TMF. I figure I'll make it easy enough to find for someone who's looking, but I don't want to bring the masses in.

I had that "a-ha" moment earlier in the year, right around when I started the blog. Once you realize it, you wonder why you didn't grasp the perspective earlier. I had already given up on big cap stocks and I had been investing in microcaps for years, but it wasn't until this year that I really waded into the obscure stuff on the pink sheets and OTC BB. The "a-ha" involved not only pink sheet stocks, but also blogging in a focused way about it (and some of the other stuff I'm doing that I don't make public).

The 22 Immutable Laws of Marketing has a good section on finding a new area to pioneer rather than being part of the crowd.
 
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