Monday, October 31, 2005

VC money out of fashion for internet start-ups

Today's WSJ has an interesting article (Many Internet Start-Ups Are Telling Venture Capitalists: `We Don't Need You') about entrepreneurs who refuse VC money to build their businesses.

With costs of creating an internet venture falling down (cheaper storage, open source, outsourcing software development to India...), there is no need for huge amount of capital to create a business: only $200,000 were needed to have Flickr up and running and the company was then acquired for $25m by Yahoo!

This marks the emergence of a new type of start-ups: low up-front without VC money and built with the idea of generating a quick exit, usually by being acquired by a big player. It does not mean that the VCs are going to disapear since there are still start-up companies who need money for long run expansion but it's probably going to be more difficult for VCs to invest in pure internet players, thereby creating an interesting shift of power.

Which city is the most expensive in Europe?

No surprises here: London of course. The FT reports that a basket of 250 branded goods in the UK capital is 5.3% higher than in the Eurozone average. So not only it is difficult to be on budget because you are a student, you need to do this in the most expensive city in Europe... I should have go to Warsaw instead where prices are 22% cheaper than in the Eurozone.

The article also mentions price convergence in the Eurozone, at least for branded goods, which is (one of) the benefits of the common currency. Of course, it does not help us very much here in the UK!

Saturday, October 22, 2005

New mega-deals in European PE?

The NYT reports that cash-loaded private equity funds are pursuing even larger targets. The paper reports very early talks between Centrica, the British natural gas supplier (market cap: $15bn) and Compagnie de Saint-Gobain (market cap: $19bn), the French construction materials company. If the deal for the French firm gets more traction, it will be interesting to monitor the reaction of the French government.

Meanwhile, large pharmaceutical companies are increasingly dissatisfied of their (mandatory) participation to the reduction of the French social security deficit. The French government has recently announced that he will deduct $1bn from the pharmaceutical companies operating in France. The size of the cheque is large but CEOs of those firms are actually more worried by the political incertitude in France and in the words of the CEO of the French subsidiary of a US group: "Au siège, aux Etats-Unis, la direction générale place la France au même rang que l'Afrique." ("At the US HQ, the general management now compares France to Africa [in terms of political incertitude]"). The results of all this: a significant decline in FDI in that industry with R&D centers (thus jobs, government taxes...) relocating to Ireland, Germany or elsewhere. Way to go!

Thursday, October 20, 2005

Ethics at Business School

Ethics is not intensely taught at Business Schools. The FT discuss the "Beyond Grey Pinstripes" ranking report by the World Resources Institute and the Aspen Institute. The ranking methodology evaluate how Business Schools prepare their graduate "on the social, ethical and environmental stewardship of business".

Number 1 is Stanford followed by ESADE (Spain). The London Business School did not make it to the top 30 which is not surprising given that Ethics is a one-time class taught at the beginning of the first year and the content of the class is not really compelling.

Of course, no student will choose its school based on the Ethic ranking but that may count to employers and more importantly, it's critical that future managers have those issues in mind. Forgetting about them could lead to tragic consequences: think Enron or Worldcom and more recently the hedge fund manager at Bayou Management who killed himself after commiting fraud.

Wednesday, October 12, 2005

Instant Messaging alliance

One of the consequences of eBay acquiring Skype is that announcement made today by Yahoo! and Microsoft: the two instant messaging software operated by the two companies are going to be made inter-operable, meaning that a user of Yahoo Messenger will be able to "see" a MSN Messenger user and chat with him.

The two companies are feeling the pressure from Google Talk and Skype which led to that alliance as reported in this article. That's a good move, at least for the customers and actually, they should use a common interface so that users do not have to download and install 3 or even 4 different programs.

Tuesday, October 11, 2005

EU MBA are getting traction in the US

Today's WSJ ("M.B.A. Track: European Schools Draw More Interest Among Americans") has an article about EU business schools. Worth reading, even if London Business School is the only top EU school not mentioned in the article :(

According to the article, prospective US students are attracted by Europe for the opportunity of learning a new language and developping cultural sensitivity. However, the lack of recognition among US employers is worrying some candidates. The London Business School largest group is actually Americans (for the full-time MBA)

Sunday, October 02, 2005

Back to school

The first term of the second year officially starts tomorrow... Not that it will be very busy since I only took 2 electives plus Spanish classes but the Milkround (recruiting) season is also starting the same week. Banks, consulting firms and some industry-type companies are coming to campus which is nice but it means you need to wear a suit and try to "network" with the various people and I don't feel ready for this. It would have been great to have 1 week to settle in before the rush...

I am also quite busy with my work as an independent consultant. My client is a telecom company who needs to develop its business so it's quite an interesting job. I'm not actually working directly for the client but for a very small consulting firm who needs some support on that project but since it seems to go on well, they might have other projects for me.

And a final word to recommend an excellent book I'm currently reading: "The End of Poverty: Economic Possibilities for Our Time" by Jeffrey Sachs. You just need a basic understanding of economics to follow Jeffrey's reasoning and he gives some quite powerful ideas on how to meet the UN Millenium Goal of reducing extreme poverty by half its 2000 level by 2015.