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Large businesses on
Net are designed to be unprofitable. If
principals in a startup Net business must earn US$100,000 to US$400,000 a year, that money must come from investors. Everyone from
CEO to
janitor must have large blocs of stock in a Net company. When that company goes public,
employee stock usually destroys
share price. Who takes
loss? Investors.
The investors expect a greater fool to absorb
insider selling and take
share price higher. In a few instances this happens. In most cases,
IPO buyers have proven to be
greater fool. The mistake has been repeated so often that many investors are wary of Dot Com stocks.
The problem isn't
glut of Dot Com IPOs entering
Market. Dot Com has become terminal because of permanent non-profitability and insider selling. The evolution of
Net won't rescue these failing Dot Com companies.
Few Dot Com technology companies can keep on
forefront of technology for very long. They will have a brief period of excellent revenues and then they will fade. Dot Com distributors, particularly niche distributors, can survive and prosper. The secret is to make more money than you spend.
Here are my five rules for making more money than you spend with a Dot Com Distribution Company. 1. Keep your overhead down. This means modest salaries. It means few perks. The company must have a strong controller. 2. If you must give away blocs of stock, require that they be pooled and vaulted along with your insider stock. 3. Incorporate in a tax haven. Operate from a country that doesn't tax foreign-source income. If you are a Canadian citizen, you operate tax free. If you are an American and keep your salary below US$70,000, you operate tax free. 4. Contract reliable overnight shipping services in
States, Canada and Western Europe. Keep regional inventories adequate to meet expected demand. 5. Target your buyers on
Net. In
San Francisco Bay Area, I assume all
Dot Com companies advertising on
radio are doing it to create demand for their IPOs. It can't be to sell their product.
I think Dot Com IPOs are dying. Dot Com technology companies will find it harder to attract IPO investors. Well-run Dot Com distribution companies will survive and prosper. However, Net investment interest is going into a period of major decline. The Lemmings are looking for a new cliff.
To contact
author: Visit
Beowulf Investments website: [http://home.earthlink.net/~beowulfinvestments/] Or, visit
Global Village Investment Club Website: [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]

He has been the Managing Director of Beowulf Investments [http://home.earthlink.net/~beowulfinvestments/] since 1981 and is the Executive Director of the Global Village Investment Club [http://home.earthlink.net/~beowulfinvestments/globalvillageinvestmentclubwelcome/]