Why Startup Companies Fail

This is an interesting article written by Carmen Nobel of Harvard Business School. He goes on to pointing out that even though companies can fail, it can have positive future results for its founders as along as those individuals tried in honesty. In addition, this article goes on to describe some key fundamental mistakes often made by founders of startups when developing their business models.

It’s a very important practice for us in our firm at Siskey Capital when we look at companies seeking funding that we explore management mindset thoroughly as we get to know them, and their really analyze their business model approach. We don’t particularly analyze those business models for flaws or compare them with other similar industries more so, we review those business models on management’s approach and realism on how they have paved their plan on achieving those goals.

A good read.

 

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The Economy Year Ahead (2015) Could Be Very Promising…But Without The Bubble!

When I look ahead to 2015, I notice there are several factors that are very promising for the US economy and the US equity markets. I have an old expression “shades of the past”…for me that would be 1999, which was a great year. Looking back, everybody knew the bubble was going to burst, this time around I don’t see a bubble. Here are my thoughts:

1. Interest Rates..Cause and Affect: While its almost a given that the Affect will be the Fed will finally increase rates in 2015, the cause will be the US Economy will have officially (and finally) recovered from the “great recession” of 2008-2010. Expect unemployment to drop to under 6%, GDP climb to over 3% and fed rates to go up 1 to 1.5%. Rates will still be historically low, so the trade off is one we can live with (and in some ways hope for)…a much stronger US economy.

2. Housing and Construction…the US economy’s  “supertanker” finally seems to have turned and should fire on all cylinders. Despite the rise in rates, housing and construction is finally back. Inflation should also pick up a little, which is also good for housing and construction. Demand for new homes will pick-up as household formation picks up. Let’s face it, the kids that have packed Mom & Dad’s house the past 7 years will need a place of their own. This should drive multifamily.

3. Financial Stability (somewhat)…unlike Europe where the banking crisis still haunts the balance sheets of the big banks, the US took its medicine and our banks are back in business. On a resent trip to Europe, I was amazed at how many bankers believe the Euro will go to parity with the US Dollar. I’m not sure if it will be this year, but who knows. This is driving investment into the US.

4. Energy Prices. A spark of the great recession in July 2008 with oil prices over $140 a barre, oil is now under $60 and may be at these levels all year. This will put tens of billions of dollars of dispensable income back into the pockets of the American consumer which should help our consumer driven economy. Better we spend money here than ship it over to the Middle East and Russia!

5. International Stability…at least it feels that way. Obviously, there are hot spots across the globe. Russia and the Ukraine, Isis, North Korea, etc. But when you read the headlines recently, the worst thing is the North Koreans hacking Sony pictures. (By the way, I watched the Interview the other night, and it was hilarious. And now I know why the North Korean leadership was so upset.)

The bottom line is I feel like 2015 reminds me of 1999, except I don’t see any bubbles. Lets face it, coming out of 1998, when The Globe.com was priced at $9 and opened North of $100, all you had to do was wait for the other shoe to drop. It was a hell of a nice run from January 1999 until the wheels came off in March 2000. I think we may see a similar set-up for 2015. I expect to see the DOW over 20,000 and the NASDAQ over its March 10th, 2000 peak of 5,142 this year.

Happy New Year To All,

Best,

Marty Sumichrast, Editor

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Martin Sumichrast |Milken Institute Global Conference, 2013

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Optimism and Electricity Despite the historic gridlock and continued failures in Washington DC, (aka. the Obama Administration and Congress), the overall sentiment at the 2013 MilkenConference held in Los Angeles last week was very upbeat. This tells me two things: … Continue reading

The Information Aggregator Investors Don’t Know (But Its Customers Love)

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Derycz Scientific (DYSC) is a California-based technology company that has quietly aggregated more scientific content than the largest libraries in the world. The Company has received numerous high profile awards for its products, and its CEO, Peter Derycz, is obsessed … Continue reading

Barrack Obama… Political Salesman or Statesman?

One of the greatest salesman that I have ever known likes to say, “if they want steak, don’t give them lobster.” Anyone who has ever sold anything knows the truth behind this saying. It doesn’t matter what you have to sell, if the buyer doesn’t want it, forget it, they aren’t buying.

Barrack Obama is selling. He’s selling hard. He’s making more speeches, more interviews than any President I can recall. He is articulate when he needs to be and folksy when it’s appropriate. He’s a rock star who is giving his fans and constituency what they want…more Barrack. Can you blame him? I don’t.

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The Ugly Duckling Turns Into A Swan – Wall Street Searches for New Revenue Streams

Why Reverse Mergers Make Sense & What to Look for Before You Leap In…

My First Prospectus – Back in 1992, a document was dropped on my desk. The front page said “Preliminary Prospectus”, “Kaliningrad Fund”. Under the name in big bold letters it read “AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK”. As I started to read, every page was worse than the next. 

I wondered what this Company did. It had no revenues, no business and only $10,000 in the bank. I found out that a family friend, the former Secretary of State, General Alexander M. Haig, had been asked to be the Chairman of the Board of this new venture which involved acquiring businesses in the former communist bloc.
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The Sumichrast Report is Reborn

Welcome to TheSumichrastReport.com. My name is Marty Sumichrast. A couple of months ago, I was talking to my friend in Southern California, Andre Peschong. Andre mentioned that he had started his blog site www.dealflowdiaries.com for one simple reason…he loved to write and got joy from doing it. After hearing that I said right then and there, ”That’s exactly what I’m going to do.” Because of that epiphany, I now have a vehicle for my voice.  As a result, I would like to dedicate the initial launch of this blog site to my friend Andre. I would also highly recommend his blog for those readers interested in private equity, venture capital and market commentary discussion.

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