Dot-Bomb 2011, The Sequel

Recent IPOs and IPO filings are a scary indication that the financial markets did not really learn anything from last decade’s dot-com bust. 

First, let’s start with some facts: Groupon’s recent IPO filing shows that their 2010 Revenue was $713MM with a net loss of $217MM, not including the $203MM expenses due to acquisitions.  This was certainly a huge increase from 2009 when their revenue was only $30MM, and 2011 will probably blow 2010 out of the water; revenue through March 31, 2011 is already $645MM. 

Except for the losses, this definitely sound like a company poised for success. However, filing an IPO with a valuation of $20B is not only absurd, but is virtually criminal.  To borrow a quote from the article ‘Groupon's $20b valuation “irrational”,’ Sucharita Mulpuru, an analyst at Forrester Research, said, "It's just not a rational valuation.  It's not based on logic; it's based on whatever the highest bidder will pay for the company."

To compare this to a ‘real’ company: in February 2011, Sanofi  offered $20B for Genzyme, which is a company with revenue over $4B and a net income of over $400MM.  Real revenue; real profits.

I have no problem with the owners seeking $20B (they are geniuses if they get it), but I caution any investors who fall for the hype in these valuations and fuel the next crash ‘Dot-Bomb 2011, The Sequel’.

Volunteering: Giving to others is rewarding to yourself

Recently, I finally got back to volunteering, which I have not done on a regular basis for years.  I kept telling myself things like, “I don’t have time, so I will give money instead”, and “I will make up for it later in life when I have more free time.”   I am grateful that I stopped making excuses and started making volunteering reservations at the San Francisco Food Bank.  I only work a few hours a week, and I am one of many, so it can be tempting to think, “Does this really matter?”  To maintain focused, I try to imagine the families that are eating the food that we are preparing for delivery, and I encourage myself by thinking, if even one more family gets food because of my direct actions, then that is rewarding enough.

I love my job and I am grateful for work and for being able to afford my groceries, and it is extremely rewarding to put in my time and energy, not only to help others, but to also remind me how lucky I am.