Thursday, July 31, 2014

Hacking Wall Street: The Strategy PE Firms Haven't Yet Grokked

The barbarians out looking to rape and pillage on Wall Street seem blinded by spreadsheets created by Harvard MBAs who don't truly appreciate what technology can do to completely change the playing field. Take today's WSJ print story (yesterday's online one: read it here). The relevant paragraphs:
Private-equity firms have all but stopped buying public companies, retreating from a cornerstone of their business as rising stock prices push acquisition targets out of reach.
Public companies taken private accounted for 3.5% of the $89 billion of U.S. leveraged buyouts in the first half of this year, the lowest share on record, according to data tracker S&P Capital IQ LCD. In the first half of 2008, at the apex of a buyout boom, these types of deals represented about 68% of all buyouts by dollar volume.
Instead, private-equity firms are buying companies from one another, a shift driven in part by the relative simplicity of completing an acquisition of a private company compared with a publicly traded one. Transactions between private-equity firms have made up 60% of U.S. leveraged buyout volume through June, according to S&P. That is a higher percentage than the ratio for any full year tracked by the firm, whose data date to 2002.
Net-net, leveraged buyouts (or LBOs) keep getting financed the old fashioned way: A bunch of bean counters say, "I can run this better than you can and bleed off profit to service the debt."

A much better LBO approach would be to find large companies with a bloated sales force and pay for the LBO by firing two-thirds of the sales team and using technology to supercharge the rest to exceed the previous numbers. So what is the technology, grasshopper?

Hint: You can find almost anything you want within 50 miles of Silicon Valley.


Thursday, July 24, 2014

Data Exhaust: Time For The U.S. Power Grid To Go Down?

Let's see, now. Russian "separatists" down a passenger airline with Russia-supplied a surface-to-air missile. Palestinians are parading civilian casualties after the psychotic impunity of having used those civilians as human shields in their rocket attacks on Israel. Coyotes are making thousands of dollars a head to smuggle children across our border with Mexico. That makes at least three proponents of the argument that America needs something else on which to concentrate. Hey, how about a few teams of…wink, wink…"separatist jihadist Remember-the-Alamo patriots" with high-powered rifles taking out critical power substations throughout the United States? Take us offline as effectively as an EMP attack. Toss in a few wildfires near populated areas.

Good grief! I hope somebody is thinking a few chess moves ahead besides Vladimir Putin. Those critical power components are well known. Certainly a few governors are deploying their National Guard assets to protect the power grid. Right?

Tuesday, July 1, 2014

Russians and Chinese are Infecting an App Near You

The next-best way to hack the world, if you can't hit the supply chain and nail every customer of Microsoft or Adobe with those vendors' software update programs, is to set up "watering hole" infections of far less astute application providers, like:

  1. Your local Chinese restaurant (or any take-out food supplier) who has their own swell application.
  2. Your favorite TV station's weather application.
  3. Your bicycling or other exercise-logging application.
Yes sir, Big Dog. How many times a day do you see automatic software updates on your iPhone, Android, or even from desktop software suppliers. Heck, look at the permissions you grant to the average Android application, and you'll see why today's New York Times story about those pesky Russians deploying Stuxnet-like viri (see the story here) is really REALLY relevant to your lives. Just update your favorite small business application (hey, you get free meal points, just like your airline frequent flyer program), and before you know it Boris and Natasha (or Wen and Hu, see my parody of the Abbott and Costello routine here) will be draining your bank account.

So the next time you consider downloading an online application from the Foo King Chinese restaurant, remember Hu might be infecting all your computers. It's not a question of "if" but a question of…Wen. 

[Note: Check out the above-referenced Abbott and Costello parody if you wonder about that last paragraph.]