And you know something really strange… the best part of the book is actually the Introduction…

Did a nice mindmap (using a software that costs me a hundred bucks!).. but could not resist the temptation….

http://www.techcrunch.com/2009/04/19/reid-hoffman-my-rule-of-three-for-investing/

Got some really interesting insights from my good friend who started StreetSine.

——————-From StreetSine———————

Bro,
I understand what he is saying and agree to it if you’re building the next facebook or flickr. Macham like whatever Google does, it must scale WORLDWIDE.

But building something for niche areas and niche customer segment is a different ballgame altogether. Especially in the Asia Pac region. The geo-political situation, data representation, culture and needs are completely different in each country. There is no economies of scale for your web app. You need to customize it to serve a relatively small population. SG is a small place, and so is Malaysia, or Thailand or HK or even Australia, etc…

When the potential audience is small, the focus will be fundamentally different.

——————-From Me———————

Hmmm… so you are saying… that the business model right from the start one… is only relevant for Singapore Start Ups?

While for the states… community and users are all that matter?

BTW, facebook is still bleeding and is in need of funding… despite over 400 mil revenue.

——————-From StreetSine———————

Business models are far more important in SG (or more accurately, if you’re starting up something niche either in geographical or services sense).

2 things don’t change. One is a company closes down due to negative cashflow or being out of capital. Second is, assuming that the the business finds a sustainable business model, it is often different from the original one that is envisage.

If you put the 2 things together, funding takes a very critical role. Its a fact that the business will have to lose money on a constant basis until the business model is found. So the qn is, how long do you’ve before you will be forced to abandon it?

How long depends on (a) the development cost and burn rate and (b) the confidence of the investor to continue putting money. Now, if you compare SG and Worldwide, the development cost per potential customer is significantly higher due to lack of economies of scale. To put things worse, the confidence of the investor is also lower (or investors are more impatient) due to the smaller potential.

(Note that investor can be anyone, including ourselves)

Bottomline is, niche has far less time to play with compared to facebook. So if you assume business model change takes the path of A (initial conception) -> B -> C -> D -> E (right one), then you had better start with C or D in SG because you don’t have the luxury of waiting for the right model before you’re forced to close down. (Note: business model experimentation and changes take as much time whether you’re creating facebook or SG services)

Therefore, IMHO, getting the business model approximately right (rather than precisely wrong) is far more important in niches where there is no economies of scale.

That’s my thesis

Normal Functioning Market Economy

Market Economy in Recession

Communism

Innovation

Obama’s Clean Energy Initiative

WAR

‘In normal times, malls hope to open with at least 90 per cent tenancy,’ said Ms Sherene Sng, head of retail at Knight Frank.

Orchard Central – Stats

Last October, the mall announced it was 60 per cent leased, at prices between $20 psf and $70 psf. Far East Organization’s deputy director of retail management, Ms Susan Leng, had said in December she would ‘be pretty happy if we can achieve an occupancy rate of about 80 per cent to 85 per cent…in this economic situation’.

Forfeiting of Rental Deposits

‘There have also been a few cases of tenants forfeiting their rental deposits, which typically amount to three months’ rent.’

Hmmm..  now I wonder… for my office leasing agreement, if I run away half way, does that means.. just forfeiting my one month security deposit?

The first comment that came out of the article (which I could no longer retrieve because the online Straitstimes actually do now show any news article past 7 days)… exclaim that the loses have not even taken account of the further decline of share price caused by share dilution.

Well, I totally disagreed with that comment.  I felt that the result would have been contrary.  I thought that this was really a good piece of news for Citigroup.  The fact that I am blogging about this is… I have been proven wrong by the markets.

Hmmm… makes me reminiscent about the song… "I started a joke… but I didn’t see … that the joke was on me…"

So why did I think otherwise?

It had to be a piece of good news for Citigroup.  Citigroup owes our government US 6.88 billion and instead of needing to pay it back, they got GIC to convert it at double the market price at $3.25.  If its on a negotiation table, it would have been a double whammy to GIC because:

• In general, institutional investors are given preferential deals because of their large amounts of investments.
• Rights offering (so far as I know) are always at a lower price then the current share price to induce shareholders’ take up. 

So, by all accounts, it is only right that it should be lower than the current market price.  But instead… the final price agreed upon was not lower… not even equal … but double the current price.  In fact, the deal sucks so much that:

The US government’s move was conditional on Citigroup getting other major preferred shareholders to do the same. The bank also agreed to reconstitute its board. CEO Vikram Pandit will stay on.

Hmmm… and so if Citigroup has struck such a favourable deal for itself, shouldn’t the share price just go up?

It went down.  All the way down.

Why? Well based on Google Finance, you can see there are possible 5 reasons: F G H I and J (dun we just love Google?)

The dollar rose to the highest in almost three years against the currencies of six major U.S. trading partners as the deepening recession and the third government bailout of Citigroup Inc. stoked demand for safety

Citigroup plunged 39 percent after the Treasury agreed to convert as much as $25 billion of preferred shares into common stock in a third rescue attempt

Well.. apparently, the bailout did not go well with the markets.  This makes it so complicated.  So not all bailouts are good for the markets.  Still remembered the first time they announced the 800 billion bailout… share prices practically sky-rocketed.  But this time.. what happened?  If its a bailout, should it not be good news for the company itself?

Confused

PRICES of resale HDB flats in Punggol have fallen in recent weeks to the point where they are now around the same level as new ones launched just two months ago.

March 5, 2009

‘There are many restaurant segments priced above us. In this downturn, we are seeing customers trading down from pricier restaurants to our outlets,’ he said. – Excerpt from Straitstimes Online

Well this is the second time I have read something like this.  Something like that happened for the property market too, when people started to take profits on the more costly condos in the CBD and opted to buy sub-urban condos… so I believe at one point of time, condo prices in CBD tank while the sub-urbans one actually increased (as people always need a place to stay….)

Hmmm.. .maybe if this economy persists… HDB will start appreciating… while the sub-urban ones will tank (they are already tanking… just now sure if HDB are appreciating…)

Click here to see the real article in action!

Looking at this graph, I kind of recall what I read in investment books.  Generally, sudden large appreciation in share price for a company in a particular industry is a sign of weakness.  This is because for weakly managed companies, a slight increase in profitability of the business can have incredulous results on their year-on-year % profit increment, compared to those of a well-managed company. 

Hmmm… so beware of extraordinarily high year on year growth!  We should pay more attention to the company’s profit margin which acts as a reliable buffer in lean times!