Mark Cuban: Most Angel, Crowd Fund Tech Investors Are Underwater

Mark Cuban
(Image: biography.com)

Mark Cuban posted today in his blogmaverick.com site about the storm clouds gathering around technology investing. If you were to ask the woman or man on the street, most would say tech investments are where the money is made. Alas, the faith in tech, both for its financial potential and its "inevitable" progress, often eludes calm, thoughtful analysis. In his post, Cuban noted there are approximately a quarter-million "angel" investors involved with tech firms. Some of them are mom-and-pop investors whose common denominator is a desire to get rich quick. Cuban foresees the opposite result: plenty of losers wondering how they were so gullible to tech's siren song. When the rush to the tech exits hits, the lack of liquidity in small-time tech investing opportunities will crush both small-time players and a number of private equity firms.

Cuban's broadside is a strong hint that the "hot" tech market is either at or just past its peak. It is unlikely that the drumbeaters with motivation to sell to suckers would raise an alarm. Cynical institutions will take the money and shrug, as the world witnessed during the first tech bubble.

The sudden decline of tech and other popular stocks, along with smart money's sayonara from that market, could potentially signal the start of a bleak psychological cycle for the country. The withdrawals from the heroin known as "get rich quick" are certain to be painful. The impact of a stock market "shock" on the upcoming presidential elections would be significant. This scenario, in which a cocktail of resentment and despair would shape political campaigns, is traditionally one where candidates tapping into discontent become the voters' darlings. Does that sound like a formula for a Clinton victory?

Dan Rather's Autobiography

Dan Rather
(photo from Wikipedia)

In the days when TV was watched on a TV set, Dan Rather worked for CBS News as a journalist. He did his work the old-fashioned way: Rather built a story on a solid foundation of facts, he checked his facts, he really interviewed people, he went to the site of an incident, he told the story in a way that nearly any viewer could grasp. He understood how to put together a television news segment. The Texas-born Rather's career began in radio, which influenced his succinct delivery and ability to ad-lib. He also grew up the hard way, in a wrong-side-of-the-tracks Houston neighborhood. He was as far away from big-time internships and Ivy League pedigree as one could get.

Throughout his career, as Rather plainly states in his newly released autobiography Rather Outspoken, he remained dedicated to the public's need for the "truth." That concept can be a slippery one to embrace, as "truth" can often rely upon individual interpretation. Indeed, the conundrum of "interpretation" is at the heart of the current crisis in American journalism. Rather fought the good fight for high journalistic standards. He continues to do so today, via Mark Cuban's HDNet. However, even Rather concedes that HDNet is a long way from Black Rock.

I'm on the road a bit these days. While I wait for a flight, I sometimes watch TV at an airport gate. The news, or what passes for it, is inevitably on a screen. Almost everything I see, regardless of network, is dreadful. The experience makes me long for the time when CBS News was a worthy standard bearer of excellence. Those days have vanished, partly due, as Rather bitterly points out in his autobiography, to Viacom (and CBS) owner Sumner Redstone's greed and insensitivity to public service.

At least the 80-year-old, still vigorous Rather is trying to pass the torch via HDNet. His journalistic neighborhood, however, is a tough one. Conservatives have rolled over and played dead for a lurid amalgamation of fact and propaganda, of which Fox News is their soiled standard bearer. Many liberals have, to their shame, embraced the exploitative information plantation known as the Huffington Post or to preaching-to-the-choir talking heads. Major newspapers are in obvious decline, though their "brands" retain journalistic pedigree largely linked to their glorious past. Where will the next Dan Rather come from?

"Lost" Steve Jobs Interview To Appear in Selected US Movie Theatres

Steve Jobs, circa 1997

Yesterday's LA Times reported that an allegedly "lost" video interview with the late Steve Jobs will be shown in nineteen movie theaters across the United States. The footage, shot during Jobs' curious interregnum between his Apple management tours, came from the 1996 miniseries Triumph of the Nerds: The Rise of Accidental Empires.  The Times story and a related siliconvalley.com article provide details; each piece is worth reading for their unique spins on the film's release.

The stories share a common element -- Mark Cuban and the Landmark Theatres chain which he owns. Cuban has skin in the tech game, the media game, and the entertainment game (via the NBA Dallas Mavericks and his interest in acquiring a major league baseball franchise).

Cuban's ownership stake, if any, in the movie, was not noted in either media story.

If you want to believe the cover story related to siliconvalley.com about the "lost" film, be my guest. The article states that a VHS copy of the filmed material, left in a garage for over a decade, was the basis for the soon-to-be-released film. I'm not buying it. VHS tapes stored in uncontrolled environments for prolonged periods of time tend to deteriorate. Garages, even in Silicon Valley, have temperature control issues. The Times' version cites a different origin of the material.

What's most interesting, of course, is that Jobs is not around to threaten or initiate litigation to stop the viewing. It's safe to say that Jobs' "passion" for control -- and his fangs -- would have quickly emerged.

A December to Remember?

The blog's title, borrowed from an automobile's company's annual year-end advertising campaign, made us wonder what would be so memorable about December 2010. Well, there's already enough to fill one's holiday stocking with episodes and incidents worth remembering. The following examples offer some ideas:

1. New Jersey's conservative, Republican governor Chris Christie has discovered YouTube is a very effective propaganda tool. This tactic became evident during a recent town hall meeting, in which a questioner was "escorted" to the stage by a state trooper. Then, in a physically bullying manner, the governor responded to the inquiry without allowing any sort of reply. A trooper removed the questioner and that was that: a perfect YouTube moment available for Governor Christie's fans. The Star-Ledger of New Jersey included the episode in its print coverage (no YouTube, sorry) of the town hall meeting.

2. In fairness, it should be noted Christie did confront a sacred cow of prosperous, typically Republican suburban communities at the town hall meeting. One of his questioners asserted his municipality's right to pay its school superintendent above the $175K cap the Christie Administration has decreed suitable for the position. The municipality used a line of reasoning which must have sounded familiar to its many highly compensated, Wall Street inhabitants: the proposed superintendent's salary was "competitive" with the local school system's perceived peers.

Senior management compensation committees and consultants have used the "peer" ploy to boost key personnel pay schemes for some time. The rationale is usually accepted without complaint, and the top dogs make a killing via compliant corporate boards. The superintendents and local boards of education know this game, and have shamelessly played it. Prosperous suburban communities have rarely hesitated to use financial incentives to land the candidates they want. As long as the school system stayed "highly rated," and the connection between a school system's quality and housing prices remained ironclad, the money would be found. While Governor Christie's politics and public personality are repellent, he's on the mark on this issue.

3. China v. Google -- The WikiLeaks material in The New York Times included some profoundly disturbing information regarding the Chinese government's relentless grip on its domestic information dissemination, its mistrust of Google as a tool of the American government (read the Le Monde summary of this episode for some of the juice), and the sinister efforts of elements within China to conduct cyberwarfare against United States interests. Keep in mind China holds trillions of dollars of United States government debt.

4. Google Settles "Street View"/Privacy Lawsuit for One Dollar -- A couple sued Google for its unwelcome photographing of their Pittsburgh area home. According to a story based on original reporting in the Pittsburgh Post-Gazette, Google employees drove 1,000 feet onto private property in order to get the photo of the couple's house. Google fought the lawsuit, only to eventually give in and pay a symbolic one dollar settlement fee. However, the couple had to pay their own legal fees. How many people have pockets deep enough, and time substantial enough, to fight Google? The FCC, meanwhile, is looking into allegations that Google's Street View campaign collected passwords and other personal information from unguarded WiFi locations. That information is quite significant in location-based marketing; the commercial leveraging of it by the aggregate information's possessor has the potential for a staggering financial bonanza.

5. Wild and crazy Mark Cuban made a fascinating post on Vator.tv called "The End of Location-Based Apps?" His thesis involves the increasing use of face-recognition software to identify prospects and customers in a specific location. He also makes a chilling assertion: "few people exclude their basic name and picture information from public search, so FB [Facebook] could be the first to provide a database of names and faces to the commercial world of facial recognition."

6. Zero Hedge posted a CNBC segment in which former Reagan Administration budget director David Stockman tells some very unpleasant truths about the American economy. Stockman notes how offshoring strongly and negatively impacted job creation in this country. (Liberals should take note this happened during the Clinton years as well as the Bush 43 nightmare. The corruption runs deep, my friends.) Stockman pointed out the inconvenient fact that most "new" jobs that have appeared during the Great Recession (Stockman's phrase) are mostly part-time jobs. He noted that government jobs will decline, as municipal and state governments are broke. And implicit in his observations is the time line for "recovery" is very, very long.

A December to remember? More likely, you'll want to take a rain check on this month. As Humphrey Bogart said in Casablanca, "I drink to forget."