Finance

When Cash Isn't King

In times of economic uncertainty, it’s wise to “store nuts”, as an entrepreneur friend of mine says. There’s no question that U.S. companies are doing just that, with nearly two trillion dollars in earnings sitting on the sidelines. But be careful. Commenting on the competing interests of management and shareholders, legendary value investor Benjamin Graham once said, “The more dubious ...

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Do Tax Breaks for R&D Lead to Innovation?

Innovation is a complex process and I’m always skeptical about simple solutions to encourage companies to be more innovative. Recently I have written about some evidence against the widely-held assumption that creating industry clusters will make firms in these clusters more innovative. It turns out the the relationship between industry clusters and innovation depends a lot more on the type ...

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7 Reasons Why Capital Markets Need to Innovate

In the last month the SEC has said that it will consider changes to certain capital markets regulations, including: Raising the 500 shareholder threshold that triggers a public disclosure of financial results (and usually results in a public stock offering); Adjusting the ban on general solicitations that prohibit or restrict publicizing share offerings; and Allowing some form of crowdsourcing to ...

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Will Groupon Become Irrelevant?

Groupon is hoping for a $20 billion valuation in its coming IPO. Yes, the company is growing fast, but as I wrote last month that its business model is suspect. And now, in addition to Amazon-backed Living Social, a host of niche competitors are nibbling at Groupon’s heels. More significantly, both Google and Facebook are getting into the online couponing ...

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Creative Acquisitions

M&A Without Buying the Company by Mike Myatt Most people tend to look at acquisitions from a rather myopic and traditional M&A perspective: making a strategic or synergistic purchase of an operating entity on an accretive basis. However restricting your view of acquisitions to operating companies is like playing a football game with only one play in your playbook. The ...

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Borrowing isn't a Strategy

You may have read about the troubles Borders Group is having paying its bills. With Amazon pressing hard on one side and Barnes & Noble the other, Borders is facing the threat of buyout, bankruptcy, or even extinction if it can’t find a way to fix its balance sheet and shore up its revenue. Things don’t look too bright for ...

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Building the Innovation Business Case

One of the toughest aspects within Innovation is making the Business Case. Much of the information is imperfect, the returns are often fuzzy and unclear in the early stages and the doubters line up ready to block and deter new ideas from entering the commercialization process. Justifying new innovation to others can often be really hard. How can you reduce ...

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Walmart Disease

Summary: Many large, and leading, companies have not created much shareholder value the last decade A surprising number of very large companies have gone bankrupt (GM) or failed (Circuit City) Wal-Mart is a company that has generated no shareholder value The Wal-Mart disease is focusing on executing the business’s long-standing success formula better, faster and cheaper — even though it’s ...

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Why Innovation Matters Now

As the economic downturn settles in for its second year and promises to hang around like a slacker twenty-something on the couch, there is a growing divide between the innovation haves and have nots. Firms that were relatively innovative before the economic slowdown have for the most part sustained a high level of innovation investment. That’s not uniformly true, however. ...

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The Business Plan Fallacy

As I’m reviewing business plans from college grads I’m mentoring (as an alumnae mentor at Brown Univ ) and from Glengary , the VC firm I’m a partner in, this whole business plan process is getting to me. So much of what I see in biz plans is, pardon the phrase, BS. We all know none of us believe any ...

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