Archive for August, 2010
Tuesday, August 10th, 2010
In the latest edition of his e-newsletter Early Indications, Smeal’s John Jordan offers a review of Apple’s iPad, calling it “a milestone that redefines how people and technology interrelate.” In the excerpt below, Jordan offers his opinion on the tablet’s e-reader capabilities (and limitations):
The iPad rapidly changed some of my long-standing habits. Reading, however, is not one of them. I have yet to get on board the e-reader bandwagon, and have left several texts I should read for work untouched: I literally forget they’re loaded and waiting for me. In part this is because I read scholarly books idiosyncratically, never starting at page 1 and proceeding to 347. Rather, I’ll start by looking at the plates if the book has them, checking out the pictures bound somewhere randomly in the middle. From there I might look through the endnotes, or the jacket blurbs. I’ll often skip chapter 1, at least initially, preferring instead to start with what often turns out to be the first body chapter with real evidence and real argument rather than introductory matter which some people find very hard to write. The point is that e-readers do not support non-fiction reading as well as they do a good mystery, where there’s only one way through the story. Pagination also presents a real issue when you need to footnote a source.
To stay with the question of reading, what was widely called “the Jesus tablet” in the publishing industry can not yet serve as a replacement for a physical magazine—particularly at the prices being suggested: $4.99 a week of Time or Sports Illustrated is not going to fly, I don’t believe. Merely exporting static, dated dead-tree content to a new medium (which happens to be dynamic, real-time, and capable of multimedia) follows a familiar trap. The Wright brothers did not succeed by mimicking a bird. Printed books did not find a market mass-producing hand-lettered scrolls. Television quickly stopped presenting radio shows with visible people. Businesses are continuing to learn that the Web is not “television except different.”
You can read his complete review here.
Friday, August 6th, 2010
Pitching legend Nolan Ryan and attorney Chuck Greenberg bought the Texas Rangers this week in bankruptcy court. Smeal’s Andrew Bergstein, associate director of the Center for Sports Business & Research, highlights Greenberg’s ties to Penn State:
Penn State just got a Major League Baseball team. Well, not exactly. When the complex deal was finalized after midnight recently, a group headed by Pittsburgh attorney Chuck Greenberg and Major League Baseball legend Nolan Ryan emerged to win the auction and take over the Texas Rangers.
Chuck Greenberg has many Penn State ties. His other interests include the on-campus State College Spikes, a Pittsburgh Pirates single-A minor league baseball affiliate. His sports management firm, Greenberg Sports Group, is located here and manages Medlar Field at Lubrano Park. Chuck’s son recently graduated from, and played baseball for, Penn State. Chuck is also a member of the advisory board for the Center for Sports Business & Research, and has spoken to students as part of a sports industry leadership series. He has been very helpful connecting the center to sports industry partners.
Maybe every member of the Nittany Nation should go out a buy a Rangers hat to add to their collections.
Monday, August 2nd, 2010
Smeal’s Anthony Warren, director of the Farrell Center for Corporate Innovation and Entrepreneurship, weighs in on the micro-lending trend and what it means for venture capitalists:
In the business section of The New York Times on July 28, reporter Kristina Shevory describes how so-called “micro-lending” is being taken up by small businesses in the United States that are starved for cash in the current uncertain economy. Micro-lending originated in India. Small amounts of money are loaned from special banks such as Grameen, under terms that are much less onerous than those at established commercial banks. The loans are given based more on trust than on financial analysis. And a little money can be made to go a long way by frugal entrepreneurs once given the chance to develop their dreams.
The article however did not mention another underlying driver of micro-finance. The Internet has made it much less costly to build a company. No longer is it necessary, in many cases, to build expensive sales forces, hire experts full time, or spend fortunes on broad advertising campaigns. The Internet allows small companies to “bootstrap” their growth without spending a lot of hard-earned dollars. They are what is now being termed “highly capital efficient.” Having websites designed in Croatia, using Twitter and Facebook as free and “viral” marketing channels, buying highly targeted advertising from Google one hit at a time, and getting access to specialists only when needed from anywhere in the world for an hour’s advice have become the norm rather than the exception.
Alongside the emergence of micro-lending banks, we see new micro-equity funds such as DreamIt Ventures in Philadelphia and YCombinator in the Bay Area. These provide small amounts of cash, enough to pay one or two founding entrepreneurs minimum wage for three months while accessing a network of volunteer experts who guide the foundlings through the difficult early stages of a new venture. At the end of this incubation, the new companies are ready for bigger things that may not demand large amounts of investment.
These new sources of micro-cash are a threat to the conventional early stage venture capital sector which is still in a multi-year downtown, unable to return any profits to their own investors. The VC model has been based on raising large amounts of capital and investing several millions dollars in each portfolio company often leaving little ownership and motivation for the founders. Managing large funds provides high management fees to the venture capitalists of course, but if companies become far more capital efficient there is much less need to take the expensive VC funds at all. Micro-lending and micro-equity are moving in to provide the early stage funding and thereby reducing the need for vast amounts of venture capital.