After seeming to drop in, then lipping-out like a 3-foot putt on a Saturday’s golf at Nassau, the Dow Jones Industrial Average powered through the 10,000 level March 19 like it wasn’t even there. What does the new record mean for electronic commerce?
For one thing, it means the trends that made billions of dollars for shareholders in eBay, Amazon, and Yahoo! are still in place. The so-called “fundamentals” of Internet stocks become less of a burden to investors when the nation’s biggest companies are selling for 30 times their earnings.
The new record also means you may be facing all sorts of distractions. Even Internet sites that are firmly in the control of a corporate parent, like ZDNet and barnesandnboble.com, are going public. This can impact everything you do. New hires are looking for stock options, while veteran hires search your hallways for investment bankers. While your creditors will give you credit, they’re less willing to wait for the cash you owe them.
The continued bull run leaves everyone around you wondering where theirs is, and that’s the most dangerous thing about it. The CEO needs to keep an eye on long-term goals while everyone around them is looking at the next week or the next quarter. What good is it to go public early, and flame out, when if you stay focused you can become Microsoft?
Remember that once a company goes public, it goes under a microscope and a failure to meet expectations can be fatal. If you’re not public yet, you can use your rivals’ distraction to your advantage. If you are public, remember to lower expectations so you’ll be able to beat them. If you’re beating expectations, try and avoid the temptation to light a cigar with $100 bills. Until you cash out, there’s always the chance it can all go up in smoke.
What do you think? Let’s talk about it.