But who are these companies that are standing out?  And which of these companies would you invest in if you had a chance?

The companies that come to mind first are Facebook, Yelp, and Rackspace. This is just the tip of the iceberg. As more and more consumers search online for products and services, it is essential to look for companies that push the edge in innovative ideas in this rapidly growing, online marketplace.

Demand Media, a company that I discovered back in November, is an example of this.  As fresh, online content becomes the driver of search results on the web, this new company stands in line to take advantage of this opportunity. Kind of like a content “factory,”  as described in November’s Wired magazine.

And then what about online reviews? Forget about Yelp, even though it’s a darn good business model, and think about review software in general. A recent article, “Even Bad Reviews Boost Sales,” appeared in Fortune Small Business and highlights the growth of reviews on the web. An excerpt from the article,

“Online reviews have been spreading ever since Amazon.com (AMZN, Fortune 500) pioneered them in 1997. Consumers are becoming used to searching for reviews when they shop online. Internet shoppers rank reviews as the most desired feature of a Web site, according to a recent survey by Forrester Research.”

Forsee Results, one small example from the FSB article, provides customer satisfaction survey software to websites.

What other sectors of the tech industry will experience massive growth in 2010?  A recent article in TechCrunch called, “The Top Ten IPO Candidates For 2010” will certainly get you thinking about these growing sectors.

Are there any other companies, tech or otherwise, that you will be keeping your eye on in 2010? Please share.

Posted by Corey Curwick on December 24, 2009

 “The creation or distribution of products or services intended for a global or transregional market, but customized to suit local laws or culture.”

 In business school, the term glocalization was used as liberally in core business courses as it was in marketing courses.  But is this widely-used strategy as effective as it used to be? Vijay Govindarajan, Director of the Center for Global Leadership at the Tuck School of Business, says no. 

 On a recent Harvard Business School podcast, Vijay suggests that many multinational companies will have to ditch the strategy of glocalization and replace it with a new strategy that will be more effective in our current and future economy. This strategy he calls, “reverse innovation.”

 In a Harvard Business Review article titled, “How GE Is Disrupting Itself,” this new strategy is described as being the new game that multinationals have to play if they want to survive in the 21^st Century. 

 But what exactly is “reverse innovation?”  The HBR article summarized it best by saying,

“For decades, GE has sold modified Western products to emerging markets. Now, to preempt the emerging giants, it’s trying the reverse. With glocalization, companies develop great products at home and then distribute them worldwide, with some adaptations to local conditions.”

 For many multinationals, product innovation is centralized in the U.S., while products are then modified for local markets all over the world.  This strategy won’t be easy to replace but, if it is indeed becoming obsolete, multinationals need to begin to experiment with it.  For many multinational companies, the change in business models means that local “growth teams” will replace the centralized model of decision-making and resources.

 To read more on this trend of reverse innovation, also check out Business Week’s March feature, “Game Changing Ideas for Business.”

 What are your thoughts? I am particularly curious to see what my fellow Thunderbirds think about reverse innovation. Have you seen changes in your own multinational companies? Please share your observations if any.

 Also, to read what others said on this topic, check out a Harvard Business blog post on this topic at: http://blogs.harvardbusiness.org/hbr/hbr-now/2009/09/is-reverse-innovation-like-dis.html

 (See below a brief except from the Harvard Business School article discussed in this post).

 Thanks…..!

 Posted by Corey Curwick on October 31, 2009

Excerpt from HBR Article, “How GE Is Disrupting Itself:”

In May 2009, General Electric announced that over the next six years it would spend $3 billion to create at least 100 health-care innovations that would substantially lower costs, increase access, and improve quality. Two products it highlighted at the time—a $1,000 handheld electrocardiogram device and a portable, PC-based ultrasound machine that sells for as little as $15,000—are revolutionary, and not just because of their small size and low price. They’re also extraordinary because they originally were developed for markets in emerging economies (the ECG device for rural India and the ultrasound machine for rural China) and are now being sold in the United States, where they’re pioneering new uses for such machines.

We call the process used to develop the two machines and take them global reverse innovation, because it’s the opposite of the glocalization approach that many industrial-goods manufacturers based in rich countries have employed for decades. With glocalization, companies develop great products at home and then distribute them worldwide, with some adaptations to local conditions. It allows multinationals to make the optimal trade-off between the global scale so crucial to minimizing costs and the local customization required to maximize market share. Glocalization worked fine in an era when rich countries accounted for the vast majority of the market and other countries didn’t offer much opportunity. But those days are over—thanks to the rapid development of populous countries like China and India and the slowing growth of wealthy nations.

GE badly needs innovations like the low-cost ECG and ultrasound machines, not only to expand beyond high-end segments in places like China and India but also to preempt local companies in those countries—the emerging giants—from creating similar products and then using them to disrupt GE in rich countries. To put it bluntly: If GE’s businesses are to survive and prosper in the next decade, they must become as adept at reverse innovation as they are at glocalization. Success in developing countries is a prerequisite for continued vitality in developed ones.

The problem is that there are deep conflicts between glocalization and reverse innovation. And the company can’t simply replace the first with the second, because glocalization will continue to dominate strategy for the foreseeable future. The two models need to do more than coexist; they need to cooperate. This is a heck of a lot easier said than done since the centralized, product-focused structures and practices that have made multinationals so successful at glocalization actually get in the way of reverse innovation, which requires a decentralized, local-market focus.

Almost all the people and resources dedicated to reverse innovation efforts must be based and managed in the local market. These local growth teams need to have P&L responsibility; the power to decide which products to develop for their markets and how to make, sell, and service them; and the right to draw from the company’s global resources. Once products have proven themselves in emerging markets, they must be taken global, which may involve pioneering radically new applications, establishing lower price points, and even using the innovations to cannibalize higher-margin products in rich countries. All of those approaches are antithetical to the glocalization model. This article aims to share what GE has learned in trying to overcome that conflict.

Why Reverse Innovation Is So Important

Glocalization is so dominant today because it has delivered. Largely because of glocalization, GE’s revenues outside the United States soared from $4.8 billion, or 19% of total revenues, in 1980, to $97 billion, or more than half of the total, in 2008.

The model came to prominence when opportunities in today’s emerging markets were pretty limited—when their economies had yet to take off and their middle or low-end customer segments didn’t exist. Therefore, it made sense for multinational manufacturers to simply offer them modifications of products for developed countries. Initially, GE, like other multinationals, was satisfied with the 15% to 20% growth rates its businesses enjoyed in developing countries, thanks to glocalization.

Then in September 2001 one of the coauthors of this piece, Jeff Immelt, who had just become GE’s CEO, set a goal: to greatly accelerate organic growth at the company and become less dependent on acquisitions. This made people question many things that had been taken for granted, including the glocalization strategy, which limited the company to skimming the top of emerging markets. A rigorous analysis of GE’s health-care, power-generation, and power-distribution businesses showed that if they took full advantage of opportunities that glocalization had ignored in heavily populated places like China and India, they could grow two to three times faster there. But to do that, they’d have to develop innovative new products that met the specific needs and budgets of customers in those markets. That realization, in turn, led GE executives to question two core tenets of glocalization……….(Copyright © 2009 Harvard Business School Publishing Corporation. All rights reserved).

According to a recent article in Inc. magazine, “A Buyer’s Market,” the median sale price for a private company fell by nearly 30 percent last year.  This is no surprise, with dwindling revenues across the board from the recession, and the rapid implications of a completely New Economy.

This represents a tremendous opportunity for those who are looking to buy a business or acquire a competitor.  Cash rich companies, who have found themselves in dying or just slowing industries, are snatching up their competitors at deep discounts.

The scarcity of credit is also pushing down prices. Businesses that no longer have access to easy credit, are dumping their businesses for pennies on the dollar.  This then forces other sellers to lower their prices. In this way, buying a business is a bit like buying a house.  Recent comparable sales can have tremendous influence on the sales price of comparable assets.

The drying up of the credit markets has also forced both buyers and sellers to get super creative in how they structure the deal.  Buyers are more commonly using “earn-outs,” to structure an acquisition.  In this scenario, the seller of the business stays “in the game” with the business for a set period of time, and thus takes a percentage of the agreed upon sales price from future revenues.  I think an earn-out is a smart move, particularly with the rapid pace of economic changes we are experiencing.  A business that made a profit for the last ten years, may not make a profit in the next two, if its business model or industry are now obsolete.  With an “earn-out,” the new business owner passes on some of this systematic risk to the former business owner.

Any comments about the plummeting prices in this asset class? Or, is anyone currently looking to acquire a competitor?

If you are curious about business valuations, I recommend taking a look at the article referenced in this blog post.

Please leave any additional thoughts & ideas!

Posted by Corey Curwick on August 30, 2009

The smartest real estate investors not only made their money during this sharp upturn in the cycle from 1997 to 2006, but are also making money during the downturn.  This small minority of investors sold off their holdings at super inflated values right before the crash in 2007.  They are now rebuilding their real estate portfolios with deeply discounted or distressed assets; and making money when they purchase!

I met with a potential client today who mentioned, with an intriguing twinkle in his eye, that he has lived through multiple real estate cycles.  With 40 years of investing in real estate, he laughed when I asked him to share his thoughts on the cycle we’re in.  I was grateful to hear the confidence in his voice when he said that we would see the end of the downturn by this time next year or shortly thereafter.

I’m personally looking forward to the next upturn in the real estate cycle, but I’m actually more excited about the next downturn. Like so many other novice real estate investors, I wasn’t experienced enough to be poised for the opportunities that are being presented in the current downturn.

Any other thoughts or ideas on real estate cycles anyone out there would like to share?  Because my own knowledge of previous cycles is so limited, I would enjoy a dialogue on this topic.  Please share.

Posted by Corey Curwick on July 19, 2009

A home in Memphis, Tennessee that appraised 3 years ago for $145,000 is being sold for $48,000.  A home in Salt Lake City, Utah that someone purchased 2 years ago for $1.4 million is selling today for $750,000.  An apartment complex in Chicago, Illinois that appraised for $4.4 million 4 years ago is being sold for $2.1 million.  The list goes on, and on, and on, and on….

Why wouldn’t you be chasing these deals? It’s like instant equity and any dummy can see the value in these properties. Right?

Because I see so many of these types of deals every day, I’ve started to wonder about the perceived value of these properties. Are these values ‘real,’ or, are these just  ‘assumed values?’

In the book, Irrational Exuberance by Robert Shiller, something made me test this ‘value assumption’ further.  This ‘something’ is related to the average yearly increase in home prices in the United States between the year 1900 and the year 2000.  In that 100 years, the average increase was approximately 3.4% per year.

Interestingly enough, according to the Case-Shiller 10-City Index, from 1997 to 2006, home prices increased by an average of over 19% per year.  The most obvious reasons for this break-neck growth seem to be both the mania for ‘real estate riches’ and loose credit.  But there is surely so much more to it.  On a macro-economic level, the fundamentals were altogether absent and the Federal Reserve’s power has far exceeded any dreaded dictator or unruly tyrant in the world’s history.

Was this break-neck increase in home prices from 1997 to 2006 a result of rampant inflation, investor speculation, bad lending practices by U.S. banks, or a combination of the three? I think a more important question is the next one. As the stimulus/bailout pumps more U.S. Dollars into the market to counteract our downward spiral, will home values be artificially propped up as hyperinflation sets in?

With these questions on the table, how valuable are these supposed “undervalued”  real estate investments in the long-term compared with an investment in a commodity like gold or food?

Posted by Corey Curwick on May 22, 2009

• Builder Bail-Out Scams: In this scam, individuals seeking funds for distressed or halfway completed projects will approach investor groups for funding. Unbeknownst to the investor, no additional work is actually performed on the property and the investors and/or lenders are left with incomplete or completely uninhabitable structures. Yuck.

Some other mortgage/lending scams that are popular include,

• Foreclosure Prevention Scheme—In this scam, desperate homeowners who are about to lose their homes are approached by individuals who claim they can prevent the house from going into foreclosure.  These scams take many forms so its difficult to describe just one example. Does anyone have a story to share about one of these particular scams?

• Elderly and Immigrant Identity Fraud—This is an old, played out scam yet its growing in popularity, particularly in “reverse mortgages.” This type of scam has to do with stealing an individual’s identity. Elderly and non English-speaking individuals get their identities stolen by scam artists who then use them to “straw buy”‘ a property.

Any other stories anyone would like to share about lending fraud?  Please share as these stories help us all.

Posted by Corey Curwick on March 20, 2009

Some of the facts in the post I found to be a little hard to swallow but unfortunately completely believable.  One sad fact is that, yes, down payment assistance programs have been pretty much abolished.  What about investors that are qualified from a track record standpoint but just can’t swing a 15-25% down payment?  Money does indeed talk in the U.S. credit market.  How will commercial real estate investors survive the ‘New World of Lending?’

Another fact for buyers that I found interesting was that there are 71% fewer mortgages available than a year ago. Also not a surprise. But the question is:

What is the future for the mortgage companies? How will they survive the ‘New World of Lending?’

Any further thoughts on the future of the lending environment in either the U.S. or Internationally? Please share your insights.

In the wake of the Fed’s $600 billion plan to reduce mortgage rates, there is now talk that the Treasury is developing another plan to get rates even lower.  Last week’s mortgage rate decrease was met with an almost 40% increase in mortgage applications of homebuyers.

Rumor is that the Treasury’s new plan could reduce the mortgage rates to 4.5%, although this rate could be limited to only purchases not loan refinances.

Although this is a last ditch attempt to revive the falling prices in the housing market, will the lower interest rates solve the credit crunch problem?  Potential buyers still can’t find loan products that they can qualify for OR they simply cannot afford the down payment.  And what about all of the people who are losing homes and assets because they don’t meet the stiff qualifications to refinance at a lower rate?

Quoted from CNNMoney.com in an article by Tami Luhby:

Kenneth Rosen, Chair of the Fisher Center for Real Estate at University of California, Berkeley says, “The problem is not interest rates, it’s the availability of credit.”

So even with the good news of falling mortgage rates, because the availability of credit is so limited, private money is becoming even more important than ever.

Posted by Blake Reese on December 7, 2008

For the price of $18,500.00 you get:

1.     Clear Title to a Midwest Property Home

2.     Management Contract with Nationwide Property Manager who will put a buyer in the home, do all the contracts, etc.

3.     Sale Guarantee.  If the property cannot be re-sold, we will exchange it for you.

4.     Min 20% CASH on CASH return paid monthly (direct deposit into your account).

5.     50% ROI in a 12-18 month period when the note is sold and you are cashed out.

We can give investors a vehicle to get a 20-30% per year cash on cash return and a total 40-60% ROI at the exit!  …or they keep the contract as a 30-year annuity.  …through Real Estate, that works in Today’s Market:

1.     Fully Owned (no mortgage to pay).

2.     Fully Managed

3.     NO BANK involvement (no loans to get, no need to leverage).

4.     No Appraisals. 

5.     No Credit Checks.

Please Call or Email for details. This is the real deal.

Posted by Dean Morgan of Project Liberty 

cecgroup@verizon.net

CAFTA has had a slow start for sure, as is anything in Central America that requires implementation. CAFTA is an import/export solution in regard to tariffs but is even better for foreign investors into these countries. Why? The investment provisions of CAFTA, like other trade deals such as the 1994 North American Free Trade Agreement, require Central American governments to comply with a long list of investor protections and grant private foreign investors the right to sue governments for damages if these obligations are violated.

But the author of this article has no concept of how things work in these countries, particularly in regard to his comments about the inability of these governments to tax businesses. Because of the out of control corruption amongst the government officials of these countries, taxing businesses would hurt the economy, not necessarily help it. Why? Because the government officials will just pocket these tax revenues NOT use them for the good of the economy. Business owners in these countries know this all too well.

What will come of CAFTA? Is it good for the U.S.? What about the Central American countries? Any comments?

Source  http://www.ft.com/cms/s/0/aa507bc0-8460-11dd-adc7-0000779fd18c.html