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Domain: downside.com
Stories and comments across the archive that link to downside.com.
Comments · 118
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LibelAbout the only real risk is a libel suit. If you're in the US, libel claims almost always lose in court, absent out and out malice. (This is not true in the UK, incidentally.) A useful guide is the Associated Press Style Guide and Briefing on Media Law.
I get threats all the time, because I run Downside, which reports on failing dot-coms. Companies huff and puff, but don't actually do much.
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Open source is a win for hardware companiesThe open source business model will probably settle down in a year or so, with the hardware companies (HP, Dell, Compaq, IBM, maybe Intel) putting some money in. But pure software open-source companies are probably doomed - no revenue model.
I wonder who'll end up owning SourceForge. Or Slashdot.
Still, RHAT and LNUX may be around for a while. They both got so much cash out of their ridiculous IPOs they can coast for quite a while longer. Neither is on Downside's Deathwatch, even though the stock is in the tank.
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Of course etoys is going underSounds like their prediction of when they run out of money agrees with ours on Downside's Deathwatch. We run a Perl program to compute, from SEC 10-K and 10-Q filings, when dot-coms will run out of cash. It's really dumb; it just computes when the cash runs out. And it works embarassingly well.
It's worth pointing out that, while sometimes the company outlives its cash, the stockholders almost never do. There are a number of ways a cash-short company can stave off bankruptcy, but from a stockholder perspective, they all suck. More on this at Downside if you're interested.
Etoys stock is at 1/4 today, down from a high of 40. If you had invested $1000 in Etoys stock at the high, you would now have $6.25.
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Of course etoys is going underSounds like their prediction of when they run out of money agrees with ours on Downside's Deathwatch. We run a Perl program to compute, from SEC 10-K and 10-Q filings, when dot-coms will run out of cash. It's really dumb; it just computes when the cash runs out. And it works embarassingly well.
It's worth pointing out that, while sometimes the company outlives its cash, the stockholders almost never do. There are a number of ways a cash-short company can stave off bankruptcy, but from a stockholder perspective, they all suck. More on this at Downside if you're interested.
Etoys stock is at 1/4 today, down from a high of 40. If you had invested $1000 in Etoys stock at the high, you would now have $6.25.
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We just need to get rid of the non-techiesThe problem in Silicon Valley is that it's not dominated by techies, like it used to be. There are all those dot-commers who would be mall developers if that were the big thing. They think they're into high-tech because they know what Cisco part numbers to order and maybe can write CGI scripts in Perl. But they're not.
That crowd is doomed. Hundreds of dot-coms, mostly the ones based on stupid business ideas, are tanking. I track these at Downside. (Go ahead, click; I upgraded to "unlimited data transfer" hosting.) Once the IPO money runs out, they're dead.
Now that running a web site is a mature technology, selling stuff online doesn't need dot-commers; it's just a routine business function ancillary to the main business. Yes, there are pure E-businesses, like Ebay, but there are very few that actually make money. Too many are selling each other banner ads.
Once that crowd has gone under, or gone on to the Next Popular Thing, we can get back to designing really advanced stuff. But a big recession lies ahead. The whole dot-com sector is down by 1.7 trillion from its peak.
The Internet bubble is an artifact of a change in SEC Rule 144. Rule 144 used used to prohibit insiders from selling stock for two years after an IPO, which was long enough to keep people from getting rich off dud ideas. In the early 1990s, that was changed to six months. Hype alone can keep a stock up for that long. This is a major driver behind the Internet bubble, which burst on April 14, 2000.
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We just need to get rid of the non-techiesThe problem in Silicon Valley is that it's not dominated by techies, like it used to be. There are all those dot-commers who would be mall developers if that were the big thing. They think they're into high-tech because they know what Cisco part numbers to order and maybe can write CGI scripts in Perl. But they're not.
That crowd is doomed. Hundreds of dot-coms, mostly the ones based on stupid business ideas, are tanking. I track these at Downside. (Go ahead, click; I upgraded to "unlimited data transfer" hosting.) Once the IPO money runs out, they're dead.
Now that running a web site is a mature technology, selling stuff online doesn't need dot-commers; it's just a routine business function ancillary to the main business. Yes, there are pure E-businesses, like Ebay, but there are very few that actually make money. Too many are selling each other banner ads.
Once that crowd has gone under, or gone on to the Next Popular Thing, we can get back to designing really advanced stuff. But a big recession lies ahead. The whole dot-com sector is down by 1.7 trillion from its peak.
The Internet bubble is an artifact of a change in SEC Rule 144. Rule 144 used used to prohibit insiders from selling stock for two years after an IPO, which was long enough to keep people from getting rich off dud ideas. In the early 1990s, that was changed to six months. Hype alone can keep a stock up for that long. This is a major driver behind the Internet bubble, which burst on April 14, 2000.
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Public disclosure is betterIf you want an anonymous web site, there's the bottom-feeders: GeoCities, Tripod, etc. So if you have a real need for an anonymous web site, perhaps because you're involved in some political issue, that's available.
Businesses can't be anonymous, at least in the US. There has to be an address for service of process somewhere. (If it's fake, winning default judgements is really easy.) So it's not a business issue.
Spam is the only big problem, and only because it's still legal. We need to fix that. There are only a few hundred spammers, after all.
So people can get your address. What are they going to do, come and beat you up? The idiots who threaten via E-mail are unlikely to do much in person. A friend of mine puts on her web site "If you have something nasty, dirty, whatever, to say to us, don't share your gutlessness here--come say it to our faces. You know where to find us--San Francisco, California. Just ask around..." Few take her up on it.
All my domains carry my name and address. Maybe three times a year somebody says something nasty. Only one real threat in the last five years, and that was when I exposed an invention-broker scam. He's out of business and I'm still here. And I'm the guy who runs Downside, which predicts dot-com failures. So quit worrying.
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Financial infoI have something like this running now, but it's SGML-based, not XML-based. I read in SEC filings from EDGAR, and extract the financial statement info from the SGML. This is used to produce Downside's Deathwatch, a prediction system for failing dot-coms.
Currently I'm running the updates as a batch job, but I'm thinking of adding the ability to accept a ticker symbol on the web site and get back a death date prediction.
It's all written in PERL, including my SGML parser.
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Re:Use SpamCop, but understand how it works.Spamcop is a useful service, but the spam filtering option basically works by sending back a message to each new correspondent requiring them to click on a link before the mail is delivered. This filters out spam, but is a pain for new people who want to e-mail you. It's incompatible with most mailing lists, and annoying to people who "cc" you. If you need to receive e-mail from lots of people, Spamcop probably isn't the answer.
I use it on Downside because, as a site that makes negative comments on failing dot-coms, it attracts unwanted, and sometimes hostile, mail. One nice thing about running mail through Spamcop: if a threat makes it through the filters, you have a solid E-mail address for it.
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Re:People are studying the wrong thingPlaces like San Francisco maintained a particular cultural position and significance for _decades_, even in some cases centuries, and have been culturally obliterated in a matter of years.
San Francisco hasn't had a good "art scene" in several decades. It just thinks it has. The basic problem with SF art and music has been lack of criticism. In NY, they tell you if you suck. In SF, they don't. So there's a psuedo art scene with bad art. I used to go to art openings in SF, and the question I and my friends would argue was "Will this piece be around in five years?" Most of that stuff, especially the bigger pieces, ended in a dumpster.
Check out the permanent collection at SFMOMA. Essentially all the work by local artists sucks. Now visit MOMA or the Guggenheim in NYC. Any questions?
On the other hand, the wannabe artists were more fun than the current crop of wannabe online mall developers.
The end is coming. The cash is running out. See Downside's Deathwatch.
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I haven't heard from them yet.
As the proprietor of Downside, which reports on dot-coms in trouble, I wonder if I'll be hearing from these people. So far, no complaints.
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Software warranties may become realIt looks like the FTC is gearing up to propose federal preemption of UCITA. The FTC staff opposed UCITA, and generally favors an approach based on the Magnusson-Moss Warranty Act, which is pro-consumer. Federal law preempts state law, so if software comes under the main federal law on warrantees, state laws based on UCITA are overridden. Right now, software isn't considered "goods in commerce", which is a loophole in Federal law. The FTC is considering plugging that loophole.
This is a good thing. Warranties on software need to be more like warranties on, say, cars. Offering a full warranty, as defined by Magnusson-Moss, (free repair or replacement of defective parts; refund or replacement for goods if cannot be repaired in a reasonable time) is great for consumers, and not too hard on software manufacturers. Manufacturers can still disclaim consequential damages ("the software ate my file system"), but have to deal with complaints promptly and offer refunds. And the warranty period can be limited, as in "Full 3-year warranty". So you have to send out replacement disks and refunds now and then. Big deal. You also have to respond to complaints within specified time limits. Again, big deal.
I have a background piece on this which answers in detail most of the usual objections to software warranties. It was written regarding the Microsoft antitrust case, but the background info is still valid. Knowledgeable comments would be appreciated. Thanks.
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The real problem: banner revenue is downThe problem for "content sites" is that the value of banner ads is declining, because everybody sends them and nobody reads them. Businesses that depend on users clicking on banner ads aren't getting enough revenue to stay alive. That's what's happening.
Combined with this is the fact that both the stock market and the venture capitalists have lost patience with money-losing dot-coms. I just ran an automated screen on a list of dot-com stocks, scanning for money-losers without enough cash to last another year. (This will go up on Downside.com in a few days.) Essentially all the money-losers have seen their stock go way down. It wasn't like that last year. From an investment perspective, the "dot-com/grab market share and don't worry about profitability" thing is over. Only the ones that have a business model that makes money will survive.
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Cash flow analysisI have a cash-flow analysis I run on all Internet startups, and I'll soon be putting it on my Downside.com. Right now, here's a typical raw analysis:
Ticker CAIS CIK=01078404
Parsing EDGAR index page: http://www.sec.gov/cgi-bin/srch-edgar?0001078404
Parsing EDGAR filing: http://www.sec.gov/Archives/edgar/data/1078404/000 0928385-00-001580.txt
Analysis for CAIS INTERNET INC filed 20000515
Start date: JAN-01-2000
End date: MAR-31-2000
Period: 90 days.
Multiplier: 1000
Liquid assets: 26952000
Income: -83497000
Days to live since report: 29
Analysis for CAIS INTERNET INC:
Based on data from SEC schedule EX-27 for the period JAN-01-2000 to MAR-31-2000, the predicted bankrupcy date is Apr 29, 2000 which is -18 days awayOr, in other words, what are they using for money?
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Of course it's a bubbleI've been saying that for some time. See my Downside.com. Of course there's a bubble. In fact, it's already burst; we're seeing a long, slow decline in most of last year's hot Internet stocks. We may or may not see a big crash where prices drop in a single day or week, but we are seeing a slow decline, a few percent per week.
Schiller's "hey, let's have active markets in everything, so you can speculate in house price trends online, and that will fix the problem" is totally bogus. (But then, I'm only reading Katz's review, which may be wrong.)
Meanwhile, I'm working on a new tool for Downside which does some simple cash-flow analysis for money-losing companies. Here's some early output:
Analysis for AMAZON COM INC:
Based on data from SEC schedule EX-27.1 for the period JAN-01-1999 to DEC-31-1999,
the predicted bankrupcy date is Dec 22, 2000 which is 228 days away.That's when they run out of cash.
Something drastic has to happen to a company in that situation. The options are dilution, taking on debt, bankruptcy, major cutbacks, or acquisition on unfavorable terms, all of which clobber current shareholders. It's not pretty. There is an endgame to the Internet mania, and it's not too far away.
As I keep telling people, "Losing money on every sale and making it up on volume is a joke, not a business plan."
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It's about time.I've been expecting this crash for a long time. I've activated my financial bad-news site, Downside.com, which I've had on standby waiting for this. There's an army of analysts cranking out good news, much of it paid hype, but bad news is hard to find. (Only about 1% of analyst recommendations are "sell".) Watch for future commentary.
This is not the end of the world, but it's the end of those "lose money on every sale and make it up on volume" Internet companies. As the Red Herring pointed out, there are around 200 Internet companies that have to outperform Microsoft to justify their stock values. No way could that happen.
As for LNUX, its decline is only vaguely related to the overall market. Look at the chart.. It's been in a screaming dive since the IPO, down over 90% now. Regardless of market conditions or VA Linux press releases, the dive remains steady. It's a very pretty chart. I pointed this out a month ago, when LNUX dropped through 100. Now it's at 29. Enough said.
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A stronger logo program
We need a powerful organization with a strong image that can enforce its privacy rules.
And here it is.
Make Space Ghost a part of your marketing program. -
Re:Is this 1929 all over again?A non-conspiracy, non-Marxist web site on the 1929 crash eludes me at present.
There are a few:- 1929.com Interesting, but needs more material.
- WPA Writer's Project A Library of Congress collection. Good photos.
- Songs of the Great Depression Brother, can you spare a dime?
- Downside.com See the guy jump out the window, just like 1929. A service of Animats
