Monday, July 20, 2009

A Critique of Pointless Blogging

This blog is, I realize, a glass house in some respects1, but I'm going to ignore the old admonition in this post and throw a couple of polished stones from my blog's proverbial front porch. Today's target is the Oracle of NY, one of the blogs written by Joshua Persky, the subject of a recent post ("Infinite Corridor") and a man who was kind enough to correspond with me last week. After our correspondence, I checked out Persky's last few blog posts. I have critical comments about two of them, one of which I already noted on Persky's site, but I'll reproduce it here.

The first of the two posts I'll mention is this one, "President Obama on the American Graduation Initiative", which consists simply of three paragraphs excerpted from a recent speech by the President, without any context or commentary by Persky. This was the comment I left on Persky's site:

What is the "American Graduation Initiative"? You haven't explained what it is here, it's not mentioned in the three paragraphs you excerpted, and you didn't provide a link to the full text of Obama's speech. You also haven't provided your opinion of the American Graduation Initiative (whatever it is) here. What was the point of this post?

I hate to be critical, but through your moxie and hard work, you've gotten a lot of national attention, and I don't think posts like this one are anyway to retain that attention. This one seems like you just wanted to post something for the sake of posting something.

The second post is this one, "Valuation Services and Consulting", and here's the text of it:

Steps for producing a valuation for a bank loan to a private company:

  1. Gather and review financial and legal documentation.

  2. Note key loan parameters such as: interest rate, maturity date, type of loan (bullet or amortizing), first or second lien, financial covenants, up-front and other fees, pre-payment penalty.

  3. Note key financial performance parameters: EBITDA, income, margins, cash flow, balance sheet (historic, current and projected).

  4. Analyze key financial ratios: leverage, interest coverage, loan to value.

  5. Perform DCF analysis.

  6. Compare company to similar publicly traded companies.

  7. Compare loan to publicly traded similar debt instruments.

  8. If the company is distressed, determine the value of its assets.

  9. If the company is in bankruptcy, determine the probability and timing of recoveries.

For competitively priced hedge fund portfolio valuations, business development corporation and private equity valuation services and consulting, please contact:

Joshua Persky
tel: 917 650 8700

Here's my thought on that post: Wouldn't any potential customer of Persky's valuation services already know about these steps? If so, how does enumerating this list in a blog post demonstrate one's talent for valuation? A better tack might be to offer as an example a case study where you can demonstrate your mastery of some tricky aspect of valuation. Persky could use a historical case where he has access to all the necessary data, or he could speculate a little and attempt a valuation (or comment on the reported valuation) of a well-known, privately held company. A way to get some attention as a valuation expert while demonstrating that you are familiar with current technology might be to attempt a valuation for a business such as Twitter.

Another thought: is it best to lead with price by offering "competitively priced" valuations? First, it's probably implicit that your valuations will be "competitively priced", given your current situation and the state of the labor market, and second, is price the most important factor to a hedge fund or other firm seeking a valuation? If it is, they can probably find an even cheaper valuation by outsourcing the job to India, but my guess is that they have more pressing concerns than price, such as, for example, accuracy, and protection from liability. This sounds like a difficult market to compete in as a sole proprietor. I wish I had some positive suggestion to offer here, but I always try to picture myself on the other side of the deal: if you were running a hedge fund and you were concerned about litigation from your investors, wouldn't you feel more comfortable having your valuations done by an established accounting firm?

Perhaps Persky would be better off taking his talents in a different direction. Presumably, if he is talented in valuing private businesses, he'd have some talent for investing in them as well. There are always business owners looking to sell their privately-owned businesses, and affluent individuals and companies looking to buy them. Persky might, for example, offer service where he'd help affluent individuals diversify their assets by buying privately-held firms. He might also scout out businesses currently for sale, do his own valuations on them, and then offer to help sell those businesses. Last year I approached a business broker about a situation and he was happy to offer me remuneration contingent on finding a buyer for his client. I imagine most business brokers would be amenable to this.

1Namely (for starters), in its lack of focus, its name, its use of a generic blogger template. I plan to address some of this in the near future.


Paul Price said...

All your comments seem valid.

He could improve his offerings by using your constructive criticism.

JK said...

Have you decided on a specific subject to focus on in the future? If so, what is it? I kind of like the mixed bag here. When I think of this site becoming specialized around any particular subject you write about, I think, does the world really need another ____ blog?
No offense...I'm just saying I like the present generalist nature of The Hackensack.

DaveinHackensack said...

Thanks, Paul.


Thanks for the kind words about the current mixed bag content here. What I'm leaning toward doing in the future is moving the blog to a website that will have a more professional look, and will include links to the websites of a couple of businesses I'm developing, as well as information about some business services I'll be offering (assistance with business plans, introductions to institutional investors, etc.).

My general goal is to have the blog work for me in a business sense, while still being something you'd want to read. By "work for me" in a business sense, I don't mean generating Google Ad revenues. As I've mentioned here before, there's no money in that for modestly-followed blogs, and it's not worth ~$7 per month to clutter and uglify a blog, IMO. What I mean is creating some synergy between my modest readership and my business ventures, or at the very least, not working against my business interests.

To that end, I will try harder to refrain from blogging about politics. Why piss off 50% of my potential customers? Politics often intersects closely with business and investing, so this will be a little tricky. But I'll try to avoid any gratuitously political posts. I'm still trying to figure this out.

Re the look of the site, I hadn't paid much attention to aesthetics and branding before I started developing my own sites. I think the verb "branding" is over-used and often used in bullshit contexts (e.g., I don't get how an individual job seeker can "brand" himself), but the more I've thought about design and consulted with designers, the more aware I have become of shitty site designs. It really doesn't cost that much to get some professional design work, and I think it can be worth the investment.

To use a crappy example related to Persky, check out the site of his career coach, Pamela Bowland.

JK said...

Interesting plans. I'm intrigued, and will definately stay tuned for these developments. Best of luck.