KUHN CAPITAL Sunday, February 25, 2018
Dispatches from the front

Pushing Speed

Speed Saves
We have been hearing for some time that Internet company valuations will soon collapse. Lately, however, we’ve been surprised to hear that from some of our Internet clients themselves. For them, it’s one more compelling reason to go faster. Not that they need another reason: it’s been understood for quite a while that the primary ingredient of a dotcom’s market cap is its velocity, its ability to grow and do deals fast and, ultimately of course, profitably.

But now the younger Internet players and investors alike are increasingly afraid of arriving after the party’s over. This goads them to another higher level of commitment and performance. To wit: one of our dotcom clients called us recently to announce with some pride that this year they had decided not to observe Christmas. Their fear is well-founded: if the bubble bursts in the next six months, only the VCs and investment bankers will profit from these entreprenuers’ labors.

But in fact, we believe that contained within their fear may be the antidote to Internet market value collapse — more speed. That is, as long as this increased speed doesn’t make for reckless driving. And it need not. We can still wring more speed out of our accumulating experiences in creating and assembling Internet business models.

Packaged Parts
We’re sliding down that learning curve now, losing altitude, gaining speed. The speed doesn’t come from moving or thinking faster. Instead, we’re seeing more and more vendors selling business model parts or solutions to the dotcoms themselves, and these parts are becoming cheaper and more standardized. These vendors are in the business of selling speed to dotcoms.

So we expect and hope that, when the time comes, the market can discriminate between those who are driving recklessly and crashing, and those who have the technologies and reflexes to execute expert maneuvers.

The coming market will make roadkill out of dotcoms who stop to manufacture a solution that they could otherwise acquire immediately, and it will reward the players who buy and sell packaged Internet model parts in a single-minded drive toward profitability.

Ryan Kuhn

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