Emergic: Rajesh Jain's Blog

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Rules For Tech Investors

December 4th, 2006 · No Comments

Rich Karlgaard writes about George Gilder’s ten rules. Among them:

1. . No one knows less about the fast-growth tech business than the CFO. Early-stage tech is about the future. CFOs deal with past numbers. In effect, CFOs are trying to steer companies by looking in the rearview mirror. Moreover, CFOs tend to focus on internal problems, and early-stage tech companies should not try to solve problems. They instead should pursue opportunities. Solving problems sounds good, but it is a loser. You end up feeding your failures, starving your strengths and achieving costly mediocrity.

2. The elasticity of Moore’s Law. In the tech world, Moore’s Law ordains that prices routinely drop 50% every 18 months for a given rate of performance. In older businesses, price collapses would be bad. But in the tech world, users multiply when prices drop. You get positive elasticity.

3. Metcalfe’s Law. The value of a network rises by the square of the number of compatibly connected users. Obviously not literally true, yet a rough and useful guide.

Tags: Management

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