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Archive for August, 2009

Show Me the Deal

FRANK: The opportunities come as people start to really feel pain. There’s still shock, but I don’t think the actual pain has really set in. I think there will be good deals come this fall? It’s like a sneeze. It’s still getting there.

ANGLES: But isn’t this broad-based downturn so much different than the last one? Then, people were saying the Internet was over. Internet advertising was a fraud. No one’s saying that now.

FRANK: That was really a stock downturn. Everybody’s stocks were in the toilet and no one could get free money any more for your Pets.coms. It was just a stock play, all driven by The Greater Fool. That was then. In some respects, that is replaying now. People are not in a rush to spend, and I don’t think it’s going to snap back.  It’s harder for people to raise money.

Unless the Dow goes back to 14,000, which it won’t, people will start to realize, by this fall, that this stuff is not bouncing back. The economy is not going well, and we’re going to see some serious panic selling set in and it’s going to create huge opportunity.

ANGLES: So what should people do?

FRANK: The name of the game right now is to keep your cash close. So if you’ve got cash and a good opportunity comes along, you can go for it. Look for distressed situations. But for now, save. There will come a time to spend, based on the prices that I’m seeing.

ANGLES: Isn’t one reason that prices of domains are not aligned with the economy because, no matter how hard people try, there’s not a liquid aftermarket?

FRANK: Exactly. And that’s a blessing and a curse. You can go in and buy names way below true value because not everyone knows about it. On the other hand, there’s no liquidity and names go for too much.

ANGLES: Have you been buying many names?

FRANK: We’ve been buying names the whole way. We’re buying a lot less now then we used to. We saw Gocart.com come down the chute a while back and we were hemming and hawing, should we? We came up with a sensible number and it went for three times that, over $90,000.

ANGLES: Wow.

FRANK: Right. And it’s not just gocarts.com. It’s everywhere right now.

ANGLES: Fair enough, but isn’t it in your best interest to say domains are expensive now? Whereas a few of years ago, when VCs and big money guys were prowling in the space, it was in your advantage to talk about how much names are worth?

FRANK: That statement is true, but I never felt that good “talking my own book,” because firstly people see through that, and, secondly, I’d feel terrible if somebody reads something I write, acts on it and fails. Total bad karma.

The truth is that today, while plenty of people expect way too much, some names are valued fairly, and others are cheap. But collections of portfolios still sell at a fairly large discount to intrinsic value because there are very few people who can hold each name to the light and correctly assign a fair value to each, so the PPC value of the collection becomes it’s default value (it meets GAAP rules and seems sensible) but that massively undersells the break-up value of most portfolios.  The breakup value flows to the buyer for free.

ANGLES: But who’s buying giant portfolios these days?

FRANK: Nobody. A great deal of this is moot because there are no corporate or equity buyers today—when most of the publishing world and corporate-America and the equity and investment shops are trying to keep their head above water and survive the worst global downturn in 80 years.

ANGLES: But isn’t that shortsighted? Don’t we all now know and accept that more advertising is migrating to the Web and that prices and payouts are just that things are down because the economy is a mess?

FRANK: That’s true. And you have a dominant marketplace, Google, which performs exceedingly well and could pay out much more. The next nearest market place, Yahoo, cannot pay out as well. Google knows that, so it pays out a lot less than it could, and so that’s just the way it is.

What you need is a disruptive force – or a series of disruptive forces – to come along and create another ad market place and create some competition. You can’t have a marketplace where the entire domain world is parked on Yahoo and Google and the power rests with the publisher, but that’s what we have.

13. Isn’t part of the problem that, in so many cases, there’s really no way to value a name in so many cases? That it’s really not like real estate because so often comps don’t exist?

FRANK: Yes but real-world comps exist. Take any name—and I’m pulling this out of the air—“Hair Styles” (actually, my wife just suggested it). There may be ZERO comparables for hair and hairstyle related names, but we know that a cut costs $15 at Supercuts and $600 at the Christophe Salon in Beverly Hills, then I know that products range from $15 to $100s, I know that a monthly rent or an ad in a national magazine can cost thousands or tens of thousands, so with that sort of back-of-the-envelop-thinking, and without much effort, I can set a floor of ten or twenty thousand dollars for the name.

That’s a price I’d consider paying, that would make it worthwhile to part with the cash and carry the name.

Then you have external factors such as competitors and other hair companies who may be willing to buy the name and relatively quickly you can see how something with no obvious comparables can still have a high market value.

There are always traffic that the name gets but we rarely actually price these into the value of the name. Traffic is just the bonus for owning the name.

What About the Uninsured?

One of the major goals of health care reform is to cover the vast numbers of uninsured. But how vast, really, is that pool of people? Who are they? And how important is it to cover all or most of them?

Critics play down the seriousness of the problem by pointing out that the ranks of the uninsured include many people who have chosen to forgo coverage or are only temporarily uninsured: workers who could afford to pay but decline their employers’ coverage.

No matter how you slice the numbers, there are tens of millions of people without insurance, often for extended periods, and there is good evidence that lack of insurance is harmful to their health.

Do We Want Health Care or Not?

So, my friends, what were we thinking? Did we really think that extending health care coverage to all Americans would be easy? Did we really believe that those who reap g’zillions of bucks from our ‘health’ (read: ‘sick’) care system were going to give it all up without a fight?

Of course those who benefit from the status quo are attacking the Public Option. Of course they are falsely claiming that Medicare reimbursement for end-of-life discussions are “death panels”. Of course they are disrupting town hall forums – some even carrying firearms. It’s not an element of reform they oppose; it’s reform itself.

The special interests and protectors of the status quo acted worse when America was on the brink of passing Civil Rights and Voting Rights legislation. They spread lies and fear when America was contemplating women’s suffrage too.

Maybe it’s us, and not opponents of reform, who have failed to grasp the magnitude of this moment. We are on the verge of bringing about health care reform 60 years in waiting. Yes, we’re going to have to fight for it. I worry that a little rough stuff has discouraged some progressives.

As Frederick Douglass famously said, “Power concedes nothing without a demand. It never did and never will.” It’s easy to figure out who the “Power” is. The 10 largest health insurers took in $13 billion in 2007 with CEOs earning an average $12 million a year, according to Health Care for America Now.

This Time We Can’t Leave the Middle Class Behind

Yes, we want to see a GDP recovery take hold as soon as possible, and once we start seeing robust, consistent job growth we’ll know we’re solidly on track.

But even then, we won’t be done: not until the prosperity we’re generating reaches everyone who’s contributing to it, not until all the bakers get their fair slice of the pie — not just the owners of the bakery or the investors in the bakery, but the men and women who are actually doing the work.

Modern Day Government Subsisdized Loansharks

Where is the help for the hard working men and women that helped to build and maintain this great country of ours?

US banks stand to collect a record $38.5bn in fees for customer overdrafts this year, with the bulk of the revenue coming from the most financially stretched consumers amid the deepest recession since the 1930s, according to research. The fees are nearly double those reported in 2000.

The finding is likely to increase public hostility towards the financial sector, which has been under political pressure to ease the burden on consumers by increasing credit availability and lending more fairly after being bailed out by taxpayers.

The median bank overdraft fee has this year rose from $25 to $26, according to Moebs, the first time it has gone up in a recession for more than 40 years.

“Banks are returning to a fee-driven model and overdraft fees are the mother lode,” said Mike Moebs, the company’s founder.

Overdraft fees accounted for more than three-quarters of service fees charged on customer deposits, he said.

The most cash-strapped customers are the hardest hit by such fees, with 90 per cent of overdraft revenues coming from 10 per cent of the 130m checking accounts in the US. Regular use of overdrafts is most common among consumers with low credit scores, Moebs discovered.

How much is Joe American, used to being middle class,  expected to suffer?

We are all getting tired of being raped by the so called suffering financial institutions in this country and the Fed.

Yet they somehow find the funds to pay out billions in exorbitant  bonuses, while denying credit to the businesses that can help get America and the GDP moving more positive.

Maybe it’s time for the average consumer to pay cash or put it away, like the old days on layaway.

I’m thinking that we all have responsibility in this crisis, but many of us are also getting tired of being plugged in the ass dry.  Cash is king for now and if you can’t afford to pay cash maybe it’s more of a want than a need. To be truthful I’m looking forward to a simper, kinder, and more loving America.

Ironically it seems like those who are most affected by the economy,  are also the same families and individuals who are best coping with our current economic crisis.

If this is capitalism, then I suppose I’m guilty of being a socialist.

I believe in the fair and equitable distribution of wealth.  The hypocrisy in this nation never ceases to amaze me.  We claim to be a God Fearing and loving Nation, yet we turn a blind eye to those who can’t take care of themselves.  Unless they are in the womb, then after they are born they are on their own.

The real travesty of justice, is that this country has more than enough resources to take care of everyone.  The elite 1% could still have their 24K gold plated fixtures on their G550′s and mega yachts.  They just need to pay more taxes.

Is anyone else tired of seeing  the rich housewives of  New York, New Jersey, and California  paying more for a purse then it would cost a family of four to pay for health care in the U.S?

Not too mention the state of CA is going broke.  They are issuing IOU’s to pay bills.  Does anyone besides me see a problem with that.  Why should we continue to subsidize the rich when they are more than capable of paying their fair share of taxes?

We are spending hundreds of billions if not trillions fighting wars in Afghanistan and Iraq.  Mostly for the protection of an antiquated fuel source called oil and the cheap economy it supports.

Don’t kid yourself, we are not spending billions in Iraq and Afghanistan to save humanity and the democratic/capitalistic way of life, or in a futile attempt to eradicate opium.  It’s all about fossil fuels and the upcoming energy wars.

The Afghans have been living in turmoil for 30 years or more.  Most of them are illiterate which makes the dissemination of information difficult if not very improbable.

Afghanistan brought down the U.S.S.R. with our help in the 80′s.  They may very well do the same to to the United States of America,  maybe this time with Russia and China’s help.   Unless cooler and more intelligent heads prevail, I fear we are heading down that very road.

The U.S.S.R didn’t get it, until it was too late.  Hopefully we can and history doesn’t repeat itself again.  It’s about time that we got over ourselves and realized just because we have the most nukes doesn’t give us the right to be the worlds bully and police force.  Maybe someday we can really give peace a try.

The Afghanistan war will cost us much more than the Vietnam War, both in human and monetary cost.  Do we even have proof that they are enemies?  Or are they for the most part poor illiterate uneducated farmers trying to provide for their families.

These are people that have known nothing but war for over 30 years, are we really that arrogant to think we can win this war?  Let’s face the truth, most American have no idea of the true horrors of war.  It’s become something we put on a balance sheet.

If we learn nothing from the past,  I Pray that we can learn quite quickly that we will never win in Afghanistan.  Look what it did to the Russians and the empires before them.  Afghanistan brought down the Soviet Union and it will do the same to us if we don’t learn from past mistakes.   The U.S simply cannot afford to be the world’s policeman at this time.

Bottom line most middle class Americans are living on borrowed time.  Once the credit is exhausted shit will really begin to hit the fan.

How much more are the working men and women of this great country supposed to endure?  All the while the fat cats of Wall St. grow richer at the taxpayers expense.

Why do we think that as Americans we have the right to tell the rest of the world how to live and run their governments, when we can barely run our own country?

Maybe it’s time for us to get our own country into better fiscal shape, before we take on the world.

The Romans thought they had a good plan too,  until they realized it was too late.

Let’s hope that the United States of America doesn’t have to make the same mistakes by spreading our military strength too thin, until we realize it is economically and politically unsustainable.