Lemmings
The one group most responsible for the bubble and its subsequent messy explosion is not, as you may have heard, the executives at Worldcom (although they certainly can be assigned some of the blame). It was a group of shadowy figures known as VCs. VCs are typically very wealthy individuals (and getting more wealthy every day - more on that later) who control the purse strings of huge funds put together by people who don't want to have to deal directly with those strange engineering types who are always coming up with the good ideas. Every VC truly believes that they are the smartest person in the world at investing money, and every one believes that they independently come up with the best places to put other people's hard-earned cash. This is much like, I imagine, every lemming in the herd thoroughly believing that they have made a conscious decision to run over the cliff independently of any other lemming that may happen to be running in the same direction.
Disclaimer:We here at Telecommedy are fully aware that lemmings don't really run off of cliffs and that it was all a hoax set up by some malicious documentary directors, probably employed by Disney. Or something like that. We have trouble caring, and are not in the least interested in learning more on the subject, so please refrain from the long scathing emails and solicitations to join PETA.
In the late 90s, the VC lemmings decided en masse that Telecomm was the place to put money. Telecomm was being touted by analysts on Wall Street. (Actually, the analysts were typically inside the buildings around Wall Street. The only people who regularly "tout" on Wall Street are generally living in abandoned buildings and carboard boxes and are ignored by even the slowest of the lemmings.) Suddenly anyone who could make PowerPoint slides was getting investment dollars. New VC funds sprung up all over, but the most insidious by far originated on an otherwise unremarkable road in the middle of nowhere, California known as "Sand Hill Road". These funds poured money into companies like Tequila into college sutudents.
Feeding Frenzy
Before long, the big telephone companies got caught up in the frenzy. They started talking to - and believing - the lemmings. Some key employees even left the telephone companies to join the lemmings (no conflict of interest there - it's all in your head, and you wouldn't understand the subtleties even if we explained it to you with two by fours to the head). The stock options started flying like seal blubber in a feeding frenzy. Telephone companies started forming their own groups of lemmings to get in on the frenzy. Some just skipped any appearance of propriety and let the executives invest directly into companies whose equipment they were evaluating. (Don't make me get out the 2x4 again. It's perfectly legal and explainably ethical after a few martinis and a soulectomy.)
Before long, there were more lemmings than food. The law of supply and demand started driving up the costs of investing and, consequently, the perceived value of the companies looking for money. True story: at a major Geeknik show, my company had a lemming come by our booth and actually break down in tears when he heard that we had already closed our last round of funding and were not accepting new investors. Real tears! And this was for a company with a very shaky business plan and a lemming who knew little to nothing at all about us. If your humble scribe been thinking fast enough, we would have whipped out a PowerPoint slide or two and started our own company right then while his defences were down. Something like "feedmykidsandbuymeaporche.com". Our reseach makes us relatively certain that it would have been wildly successful.
Lemmings are Smarter then You Are
As the downturn started and the bubble began to burst, the lemmings predictably changed course. Within a matter of months, they went from blindly pursuing anything telecomm related to blindly divesting of anything that smelled like telecomm. Sure, there were a lot of just awful companies that were killed off (Did you invest in SilkRoad? Do you admit it in public? If you've never heard of SilkRoad, just count you blessings, kiss your children/pets/computer, and keep reading in the serenity that comes from ignorance.), but in their blindness, the lemmings killed off some good companies as well. A lot of quite interesting innovations are gone forever as a result, and the telecomm industry is the worst for it. What's important for this discussion, however, is that the lemmings still believe that they are smarter and better at this whole investing game than you, the lowly ordinary human, could ever hope to be.
We here at Telecommedy have had the good fortune to actually sit in on a few VC meetings where they explain to companies why the plug is being pulled. This was "good fortune" as it provided many hilarious comments and time consuming stories that can be repeated in bars to obtain free beverages. One of our personal favorites was a meeting where the head lemming explained to the CEO of one of his subservient companies why the lemmings were leaving the telecomm buisiness. His quote was, "You may know your business, but we're the smart ones here when it comes to investing money." This from a lemming who had lost millions of his investor's dollars on telecomm companies that crashed and burned spectacularly. However, since he had made money on a few early investments (nearly all lemmings made money in the early days just by spreading cash around and waiting for desperate large companies to buy out interesting small ones), he believed that his success was a product of his own intellect. But it's the follow-on quote that had us snickering in our sneakers "You can try another VC firm. We're all pretty independent and they may have a different idea." Sure they would.
So, to paraphrase, all of the lemmings running headlong in the same direction means that each of them has made an individual and rational choice that this is the best direction to run. And the looming cliff up ahead definiely wasn't there when they started and must have been caused by some less intelligent non-lemmings who just don't understand the lemming way of thinking. Really, the comedy in telecomm just writes itself sometimes.
Cream skimming
So, you might ask, now that the bubble has burst, surely the lemmings have learned their lessons. Well, not exactly. Most of them hit the bottom of the cliff, bounced off of the crushed bodies of the smaller lemmings, and kept running. This time in perhaps a different direction (watch out biotechnology - they're headed your direction), but still in a happy little group of independent-thinking furry bodies.
And the best part of all of this is that the lemmings are still paid wildly out of step with the humans whom they have left behind. Most lemmings are paid a percentage of the total velue of their investment fund, whether or not their decisions are working out in the end. For example, a lemming fund of 1 billion dollars might pay each partner lemming over 10 million dollars a year. But they deserve it, don't they? After all, they are so much smarter than you are and they have made such rational decisions, haven't they.
Just to clarify. We here at Telecommedy are not bitter. We are jealous. If you would like to invest in the Telecommedy Venture Fund, please send personal checks and money orders to telecommedy.blogspot.com. Nothing less than $10,000 please, we have standards.
Disclaimer:We here at Telecommedy are fully aware that lemmings don't really run off of cliffs and that it was all a hoax set up by some malicious documentary directors, probably employed by Disney. Or something like that. We have trouble caring, and are not in the least interested in learning more on the subject, so please refrain from the long scathing emails and solicitations to join PETA.
In the late 90s, the VC lemmings decided en masse that Telecomm was the place to put money. Telecomm was being touted by analysts on Wall Street. (Actually, the analysts were typically inside the buildings around Wall Street. The only people who regularly "tout" on Wall Street are generally living in abandoned buildings and carboard boxes and are ignored by even the slowest of the lemmings.) Suddenly anyone who could make PowerPoint slides was getting investment dollars. New VC funds sprung up all over, but the most insidious by far originated on an otherwise unremarkable road in the middle of nowhere, California known as "Sand Hill Road". These funds poured money into companies like Tequila into college sutudents.
Feeding Frenzy
Before long, the big telephone companies got caught up in the frenzy. They started talking to - and believing - the lemmings. Some key employees even left the telephone companies to join the lemmings (no conflict of interest there - it's all in your head, and you wouldn't understand the subtleties even if we explained it to you with two by fours to the head). The stock options started flying like seal blubber in a feeding frenzy. Telephone companies started forming their own groups of lemmings to get in on the frenzy. Some just skipped any appearance of propriety and let the executives invest directly into companies whose equipment they were evaluating. (Don't make me get out the 2x4 again. It's perfectly legal and explainably ethical after a few martinis and a soulectomy.)
Before long, there were more lemmings than food. The law of supply and demand started driving up the costs of investing and, consequently, the perceived value of the companies looking for money. True story: at a major Geeknik show, my company had a lemming come by our booth and actually break down in tears when he heard that we had already closed our last round of funding and were not accepting new investors. Real tears! And this was for a company with a very shaky business plan and a lemming who knew little to nothing at all about us. If your humble scribe been thinking fast enough, we would have whipped out a PowerPoint slide or two and started our own company right then while his defences were down. Something like "feedmykidsandbuymeaporche.com". Our reseach makes us relatively certain that it would have been wildly successful.
Lemmings are Smarter then You Are
As the downturn started and the bubble began to burst, the lemmings predictably changed course. Within a matter of months, they went from blindly pursuing anything telecomm related to blindly divesting of anything that smelled like telecomm. Sure, there were a lot of just awful companies that were killed off (Did you invest in SilkRoad? Do you admit it in public? If you've never heard of SilkRoad, just count you blessings, kiss your children/pets/computer, and keep reading in the serenity that comes from ignorance.), but in their blindness, the lemmings killed off some good companies as well. A lot of quite interesting innovations are gone forever as a result, and the telecomm industry is the worst for it. What's important for this discussion, however, is that the lemmings still believe that they are smarter and better at this whole investing game than you, the lowly ordinary human, could ever hope to be.
We here at Telecommedy have had the good fortune to actually sit in on a few VC meetings where they explain to companies why the plug is being pulled. This was "good fortune" as it provided many hilarious comments and time consuming stories that can be repeated in bars to obtain free beverages. One of our personal favorites was a meeting where the head lemming explained to the CEO of one of his subservient companies why the lemmings were leaving the telecomm buisiness. His quote was, "You may know your business, but we're the smart ones here when it comes to investing money." This from a lemming who had lost millions of his investor's dollars on telecomm companies that crashed and burned spectacularly. However, since he had made money on a few early investments (nearly all lemmings made money in the early days just by spreading cash around and waiting for desperate large companies to buy out interesting small ones), he believed that his success was a product of his own intellect. But it's the follow-on quote that had us snickering in our sneakers "You can try another VC firm. We're all pretty independent and they may have a different idea." Sure they would.
So, to paraphrase, all of the lemmings running headlong in the same direction means that each of them has made an individual and rational choice that this is the best direction to run. And the looming cliff up ahead definiely wasn't there when they started and must have been caused by some less intelligent non-lemmings who just don't understand the lemming way of thinking. Really, the comedy in telecomm just writes itself sometimes.
Cream skimming
So, you might ask, now that the bubble has burst, surely the lemmings have learned their lessons. Well, not exactly. Most of them hit the bottom of the cliff, bounced off of the crushed bodies of the smaller lemmings, and kept running. This time in perhaps a different direction (watch out biotechnology - they're headed your direction), but still in a happy little group of independent-thinking furry bodies.
And the best part of all of this is that the lemmings are still paid wildly out of step with the humans whom they have left behind. Most lemmings are paid a percentage of the total velue of their investment fund, whether or not their decisions are working out in the end. For example, a lemming fund of 1 billion dollars might pay each partner lemming over 10 million dollars a year. But they deserve it, don't they? After all, they are so much smarter than you are and they have made such rational decisions, haven't they.
Just to clarify. We here at Telecommedy are not bitter. We are jealous. If you would like to invest in the Telecommedy Venture Fund, please send personal checks and money orders to telecommedy.blogspot.com. Nothing less than $10,000 please, we have standards.
posted by Scott | 9:47 AM
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