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This site is no longer maintained.
My current weblog.
Tuesday, October 08, 2002From an SJ Merc editorial on the latest Wall Street controversy, access to IPOs:
The notion that New Economy companies were more egalitarian or ethical than those of an earlier era has been shattered.
I briefly worked for company that "Rode the Netscape IPO wave" -- the COO's words, not mine. He was proud that the company had gone public at a vastly inflated valuation, and it wasn't particularly bothersome that 75% of that value had been erased less than a year later.
The "New Economy" was littered with similar companies. Those that didn't suffer from declining stock prices used their stock as currency, buying other companies at similarly inflated prices to get some revenue on the books and bump up their stock price some more.
I don't think there was anything ethical about that. I swore never again to work for a company without a history of revenue growth, actual profits, and low debt. You know, the types of companies that a rational person might want to invest in. Naturally, the company I landed at got snatched up by another over-valued, debt-ladden public company with ridiculously low revenue and no hope of ever turning a profit...
Some lessons:
- As a bubble grows, the value of ethical behavior steadily declines.
- When the bubble bursts, ethics will suddenly become very important.
- It is always bad to be the one left standing when the music stops.
Isn't it interesting that, just a few years ago, nobody really cared about executives walking away with millions while their companies suffered or collapsed?
