Winston Churchill's Secrets And Lessons In Leadership

The internet is full of memes of how to be a leader.  Leadership is the new Eckankar, management philosophy, buzzword, transient movement, vehicle for consulting success, etc.  Stephen Covey started it, and people are milking it to this day.  I just got the entire lesson in leadership by looking at one photo.

I saw this candid picture of Winston Churchill emerging from bathing in the sea, and instantly I learned the secret and lessons of being a great leader. It can be summed up in one sentence:

"You don't need a big dick to be a great leader, you just have to be one!"

Malaysia Airlines Flight 370 ~ My Analysis

(click on graphic for larger image)

Update:  I made this prediction four days before any authority did.

Here is my two cent analysis of the Malaysia Airlines Flight 370 mystery.  Point A on the graphic is where the transponders stopped working at cruise altitude.  Point B is where the military radar last saw Flight 370, still at cruising altitude in the Straits of Mallaca, near the tiny island of Pulau Perak.

There are two possibilities at point A.  The first is that the plane suffered severe mechanical malfunction that took out the transponders and the pilot turned the plane around.  The second possibility, is that the plane was hijacked either by the pilot with mental issues, or by terrorist act.  The transponders would be turned off either ordered by the terrorists or by the mad pilot.  I saw a Pentagon analyst say that if this was a terrorist attack, this could be dry run or a feasibility study to see if this would work in the United States.

The heading is way off course.  There are two possibilities again.  Either the pilot believed that he was headed back to Kuala Lumpur and was mistaken, or the course is deliberate.  It doesn't much matter until point B is reached.

If the pilot is flying a damaged plane, and he believes that he is on the course back to Kuala Lumpur, he will hold his course to point C until he sees the lights of the city.  Unfortunately he get to North Sumatra and there is no city.  He keeps flying until the plane falls out of the sky between points C and E.  If the pilot was not under coercion and sane, then he would realize that by point E that he had flown long enough to reach Kuala Lumpur and missed it.  Again in the same state, he should have realized that he was not over the Malay Peninsula and might have turned south to point D, when reaching point D should have realized that he missed Kuala Lumpur.  With the damaged plane, sane pilot scenario, the wreckage should be found in the orange circle, or at maximum in the pink circle or if there was a course change, in the yellow circle around C,D, and E.

The terrorist or mad pilot scenario is scarier.  If there was a terrorist or if the pilot went mad, there was enough fuel in the plane to take the flight out into the deep Indian Ocean to point F and past so that the plane would never be found or not found for a long time.  If the plane ditched around land, the water is relatively shallow compared to surrounding ocean. This same scenario would hold true if the plane de-pressurized killing all aboard and then continue to fly on auto-pilot like the case that killed golfer Payne Stewart.

So there you have it.  If there is a reasonable explanation, I would look in the Indonesian waters off North Sumatra for the wreckage.  If the loss of the plane defies rationality, if it is found, it will be somewhere off in the Indian Ocean.

Time will tell.

Wherefores and Whys of Facebook Stock - Where it will end

(click for larger image -- Facebook stock chart this morning)

I'm taking off my geek hat and putting on my technical trader software guy hat and my entrepreneur hat, and will look at my favorite bête noire, Facebook. As I have so fearlessly predicted in these pages (HERE and HERE and others), Facebook stock is going to tank, and tank badly. Where will it end up? I am not afraid to make fearless predictions, and they usually end up near the mark. So I predict that Facebook stock will sink initially to the $14-16 dollar range. It will momentarily find some support there and then find its true valuation in $7-9 range. Remember you read it here first on August 2, 2012 when the stock price is pennies over $20.

So why will it tank may you ask, when Wall Street jokers like Arvind Bhatia say that it is worth the $38 dollar opening price? Either these buffoons were paid by the underwriters to say this, or they are hugely mistaken about what constitutes real value in business, and were enamored with the business play.

Facebook stated that because they have 900 million followers, that this is a huge unmonetized potential. I maintain that they cannot monetize this user base, because people do not go to Facebook to buy things. They go there to be social. It is like a hooker trying to sell her services in church. The French have a wonderful word: inaccrochable. It means "You can't hang it!". It's like trying to put up a Playboy centerfold in a kindergarten class. You can't hang it. Here's another example. If every time you met your neighbor on the street, he tries to sell you Amway, would you still be glad to see him on the street? Nope, in these instances, we just want to be social and not commercial. Facebook and Wall Street do not understand this.

But let's look at the pure business side of this. Zynga, the social networks games folks have tanked and lost 75 percent of its value. Groupon is limping like a ship pierced by torpedo in the hull losing 70 percent of its skin. Pandora Media's ship has plummeted to the depths of Davy Jones' Locker. What gives? It's the business side, stupid. What is the value proposition of these companies. Zynga sells you a $4 virtual cow. How big is that market and how long until you saturate the IQ-challenged market? The Pandora value proposition has disappeared because people don't want streaming -- they want to own the music for their iPods -- thanks to Steve Jobs. Groupon can't provide deep discounts in an economic downturn, because merchants need to milk every dollar from every person that comes through the door.

And Facebook? Let's face it. They are a Php driven website for desktop computers. They have missed the mobile market. They are brogrammers. They are not smart like the Google programmers who can spooge code down to the bare metal. They have missed their core value proposition -- that people want to connect in a lazy fashion with each other, and really don't want to shop while doing so.

So, I predict that unless Zuckerberg has the testicular fortitude to say that he was wrong and turn the Facebook ship 180 degrees, then they will continue their slide into oblivion.

What will the Facebook replacement look like, and how will it make money? Stay tuned.

Facebook's True Valuation, Stock Price and Capitalization

In yesterday's blog entry, I outlined why Facebook will never overtake Google. Most of the valuation of the company at $38 per share is based on unrealized, unmonetized potential. I argued yesterday, that the user base is near its limit of monetization, and gave reasons why.

So lets assume that one of the biggest fans of Facebook, Arvind Bhatia is right about Facebook's search capability. (I don't buy it, but let's go with it for the sake of argument). Bhatia says that Facebook's search capability is better than Google's and Facebook will monetize it. Nobody is better at monetizing searches than Google. They are the gold standard. They do it with less data on the searcher than Facebook, and they outperform Facebook by orders of magnitude in the revenue department.

Google currently trades at 19 times revenues. Facebook at $38 is 100 times revenues. If we say that Facebook is at least as good as Google, then it would be fair to assume that they also would trade at 19 times their revenue. That would make a fair share value of Facebook at $7.22 at share. That would make a market capitalization of $3.04 billion dollars instead of $16 billion.

Just for fun, let us double the fair market valuation to $14 per share because they have close to a billion in followers (although even Facebook admits that a fair percentage are fake accounts). That still is a long way off from $38 and $16 billion.

Facebook has a lot of potential to realize. I suspect that the Morgan Stanley and the hedge funds that bought Facebook did a lot yesterday to support the price at $38 a share in the last hour of trading. And the hedge funds are not going to permit the borrowing of shares to short the Facebook stock, so it may be kept up artificially for a while.

My own risk radar says that this valuation is way too high, and that Facebook will not fulfill its potential. There has to be a correction, like there was for Zynga that lost 13 per cent of its value on the same day that Facebook had its IPO. Ten percent of Facebook's revenue comes from Zynga and its Facebook games, so another red flag goes up.

The thing that really gets me, is that if a geek like me can see the obvious, why can't Wall Street and the pundits see the obvious? Are the financial markets so out of tune with reality, that players like Morgan Stanley and Goldman Sachs can tell us to believe what they say and not believe what our eyes and rational senses tell us?