12 April 2008 by Grizz.

The economy is just a symptom of the general malaise in the U.S.

Since markets are to a great extent driven by emotion, the war, the political mess in Washington, and the coming election are the reasons our economic engine has slowed…we’re all, in the words of the Oracle, “waiting for something.”

As with the Internet bubble, Americans went out and took risks, this time on housing. The American can-do spirit means we’ll fall for just about any reason to get excited and start taking risks. The collapse of the housing market and the sub-prime loan mess has given us all pause…now it seems we’re just waiting for a reason to start taking risks again.

The Iraq war, a conflict that has now out-lasted any other conflict in our short history, has droned on and on with no end in sight. While wars usually create an economic spark, that can only last so long. The inability for Congress to get much done (but plenty of time to focus on baseball and steroids) shows just how dysfunctional our political leadership is right now.

So here we are, waiting around, keeping our money safely tucked in our mattresses, hoping for change in the Fall.

Rothschild is quoted as saying “buy when there’s blood on the streets,” but I believe only those willing to take enormous risks will follow such advice. Families with kids, a mortgage, car loans, and college expenses can’t afford such ultra-risky behavior. It’s up to the rest of us to crank up the economic engine.

I’ve been talking about a “green” bubble for a couple of years now. More on that next.

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12 April 2008 by Grizz.

Read the WSJ story on American Apparel and its CEO Dov Charney in today’s edition. Go ahead and substitute “idiot” for “eccentric” whenever you read Mr. Charney’s name. American Apparel is a mess, and a now public mess (through a reverse merger) because Mr. Charney won’t follow standard business practices…you know know, like GAAP…oh, and he sleeps with members of his staff (four sexual harassment lawsuits) and continues to open new stores even though same store sales are down, and to top it all off, the company has had to restate earnings several times.

This is a classic case of the product genius getting in the way of making his own vision a success. What Mr. Charney needs is adult supervision. He seems to have his shareholders over a barrel by threatening to leave whenever any approach to bringing normalcy to his firm is introduced.

At some point his shareholders, then his customers, are going to give up.

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8 April 2008 by Grizz.

It’s been a while since my last post. I really need to put action into words and update this site more often. Since my last post, I’ve (among other things) been to Japan, reviewed a dozen (much much too long) business plans, and participated as a judge in a university business plan competition.

It’s not surprising, but the plans submitted by students for a school (albeit MBA level) competition are no worse, and in many cases much better, than the “professional” plans we review each week.

It’s a waste of time and an insult to the reader to ignore major aspects of how you intend to grow your business—such as a real revenue generation plan, and every investor’s favorite, the dreaded Use of Funds.

Saying you’ll use our capital to “grow your business” isn’t enough. A detailed cash flow analysis, month by month for the first two years, and quarter by quarter for the following three years, is the very least you can do. You are asking potential investors to trust you with their money…

As I’ve said over and over, you don’t have to have majority shares to control your company: the person with a plan, that runs the company TO THAT PLAN controls the company.

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