Investing in Internet Stocks

An ill-timed, if interesting, series of interviews conducted at the height of the internet frenzy.

internet stocks book cover

With a title like Investing in Internet Stocks you might argue that the timing of Leo Gough’s book is a little unfortunate. Had it come out in March, with the world in full internet frenzy, it would have flown out the window (to use a favourite bond market term). As it is, well … hmm.

This is a shame. I like Gough’s books. Their critics might justly suggest they’re a bit fast-foody. They’re simply a collection of Q&As. However, Gough targets clever people and asks intelligent questions. To his credit, in this book he asks some pretty cynical, to-the-point questions about internet companies.

The unfortunate thing is that most of these interviews were done while the bubble was rapidly inflating. And that world seems as different from today as the Elizabethan world of Francis Drake. Maybe I exaggerate a little for effect, but you get the point.

Still, this book is worth dipping into for some insights.

US based Internet venture capitalist, Fred Wilson is asked about the cultural gaps between the US and Asia and says: “Certain things, such as the act of managing an investment, are problematic. Asians are very concerned about the need to be respected and so you can’t say to somebody, ‘You’re pissing me off!’ Why can’t I say that, when that’s what I’m feeling? But no, you can’t say that. So how are we ever going to communicate? How can I tell them that I am pissed off at them.

“In Latin America it’s not like that. They’re a little different, but not as different as Asians. You can say, ‘Look I’m pissed off at you.’ And they say, ‘Okay, so you’re pissed off at me. I’m pissed off at you.’”

All the interviews are pithy, and quick to read. It's ideal for a flight.

One of the best interview is with Jim Mellon, who recently set up iRegent, with $2.5 billion under management, and who takes a pretty negative view about Europe’s future. But not Asia’s. He notes: “My own view is that, today, Asia accounts for something like 20% of technology investment in the world; within five years it will be 50%.”

But he adds some views on why we have an internet bubble: “The baby boom generation wants to try and make a quick buck for its retirement. They’re fearful of not having enough to live on after the age of 55. Fifty-five year olds have a desperate desire to make money quickly. It’s a game of musical chairs. The process goes a lot further in both directions than anyone can imagine, so when the bear market comes, and for all I know it may already have started, it’s going to go down much much further than anyone can believe.”

The interview with Ilyas Khan of Techpacific is also very entertaining, especially when he queries Gough's old econonomy interest in price/earnings ratios (PEs).

Speaking of which, the book publishing industry is very old economy. It doesn’t move at the speed the internet. The fact that this book has been so mistimed is a testament to that fact.

Rating 3/5

Reviewed by Steven Irvine

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