Tuesday, June 28, 2005
Repository of Unexpected Random Observations
- Some people are Darwin machines who sift through large amounts of observations to extract principles. I don't mention Darwin lightly. The methodology he used and developed is very powerful. One way to learn about it is to read his Voyage of the Beagle notes... and while you're there at Literature.org, there's also Aesop's Fables which people no longer take seriously.
- How much different are box office movie revenues from DVD sales? Wild Wild West box office US=$113million, Amazon DVD rank=6,113, South Park movie box office US=$52million, Amazon DVD rank=1,316. According to Trey Parker/Matt Stone, part of the difference is because they both opened the same weekend and kids too young to see South Park (after Columbine, they started asking for ID) bought tickets to WWW and snuck into South Park (don't feel bad, WWW production cost=$175million, SP production cost=$21million). Troy US box office=$133million, Amazon DVD rank=500, Team America US box office=$32million, Amazon DVD rank=28. Blockbuster movie Spider-Man 2 US box office=$374million, "frightening" right-wing-extremist Passion of the Christ US box office=$370million. Looking at charts, here's what a trend looks like. Here's what a blockbuster looks like, and here. And a cult movie.
- I can think of 5 causes of shoddy work: 1) priority trade-offs, 2) incompetence, 3) lack of incentives, 4) internal conflicts, and 5) hiding something.
- 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.
- Investing in the stock market is now more of a losing game rather than a winning game? That's an excellent way of viewing things, but I believe both approaches are needed: an investment needs to pass both tests. I've often used Buffett's Arcata Corp arbitrage as a great example of investing (from the 1988 shareholder letter, search for "arcata"). That example covers both independently.
- Why is it that nearly all pink-sheets companies beginning with the letter X are disasters? I have some ideas ("X" was a fad).
- Underpants Gnomes Theory of Business: It's amazing how many companies seem to view business the same way South Park's "underpants gnomes" do. Phase 1: Collect Underpants. Phase 2: ???. Phase 3: Profit. They seem to believe that doing some activity that seems like a businesslike activity in their minds will result somehow in profits. You ask yourself, "What value could this possible add to their customers?" and find the answer is "Nothing!"
- NOTE TO SELF: Read your own notes. After sifting through everything for a company, stop, come back later, and go through the notes again--cold. Did you remember to come back and read this note?
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.
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.
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.
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).
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.
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.