First you take my home, then you take my phone!

We've all heard the noise about the subprime housing debacle. Everyone is to blame........the deadbeat customers, the suspect lenders and even the hedge funds that trade this risky debt. Well, it doesn't just stop with homes. Risky lending has finally hit the cellular industry. Amp'd Mobile is done!

What can you say? When you target customers that NO OTHER CARRIER would touch with a 10 foot pole, you're asking for trouble. When young, fickle customers with little or no credit make up the majority of your user base, you're asking for trouble. When you allow people to pay as they go, you add to the volatility and unpredictableness of your revenues.........say it with me...........YOU'RE ASKING FOR TROUBLE!

You raise $360M in VC funding, but you can't pay your Verizon bill ($41M)? How do you rack up $370,000 a day in charges? And that's just with Verizon! Who is watching the finances?

To add insult to injury, you still advertise the phone service and sell the equipment in Best Buy and Circuit City! Down right despicable!

Now here is the ultimate slap in the face. Your current paying customers are greeted with the following explanation:



Is this a sign of things to come? I'm not the only one concerned for all the other MVNOs (Mobile Virtual Network Operators). On paper, it seems like a great idea.

You don't need to pay billions to create the infrastructure.
You don't need to hassle with subscriptions or customer service.
You can charge ridiculous premiums to customers who have no other options.
It's prepaid, so you earn interest on the float.

Here's the rub. If you own a MVNO, you are in the risk management business! If I was a partner at a PE firm, I'd buy Amp'd for 5 cents on the dollar. I'd hire some guys from Capital One or Wall Street and apply the appropriate risk management systems. Then, I'd ride the wave back up (during the next bubble).

$8M dollars....before the 68, in front of the money!

How to raise money from a VC?

Before I comment on this video, I'd like to provide the appropriate contextual background. I read a lot of blogs. When I say a lot, I mean several blogs from a wide spectrum of bloggers. Entrepreneurs, VCs, marketing gurus, scientists, economists, sports fans, gossipers, etc........Like I said, I read a lot of blogs. However, I am still looking for a compelling reason to accept VC money.

Shpigler's video is quite amusing. I don't speak Hebrew, but the subtitles (good work 5min) are quite helpful. Throw in the mannerisms of a cocky angel, the cigar waving, the glass of scotch and you have all the makings of a great comedy. However, the most compelling part of the video is the content.

Many may dismiss the "content" as typical, amateurish, angel rhetoric. I beg to differ. It's really quite simple. If you're managing a venture fund in which 9 out of 10 of your investments fail, how do you maintain abnormal returns? How do you satisfy your LPs? The 1 shining star must makeup for the 9 dogs. If you're a dog, you don't care. But, if you are the star.....there is an inherent conflict of interest. You are essentially responsible for making up for the dogs.

Riddle me this:

If one could raise the same amount of money at the same valuation and the same deal terms from the following options, how would one evaluate the choices?

A. the best VC in the world with the best track record and connections out the wazoo

B. an angel investor who is a successful, serial entrepreneur

C. a strategic partner who has been in the industry for 50 years

D. the venture arm of a multi billion dollar public corporation

Any takers?

Pimpin' all over the world.....even Mexico

Listening to hip hop, one may hear several references to the legendary character, Iceberg Slim. Robert Beck's legendary "career" reached its height in the '70s as Iceberg "pioneered" the Pimp Game. When the pimping was done and Iceberg "squared up", Robert went on to sell over 6 millions copies of his books depicting his life and ascension in the Pimp Game.


Now, let's talk about the real Pimp. Iceberg Slim's Pimp Game pales in comparison to that of Carlos Slim. Carlos' pimp stick is so strong, he recently pimp smacked Bill Gates right off the pedestal as the world's richest man.

Following a surge in America Movil's shares over the second quarter, Slim's fortune has mushroomed to an estimated $67.8B (£33.6B) - equivalent to 8% of Mexico's gross domestic product - compared with $59.2B for the Microsoft mogul, putting him in the lead by a decisive $8.6B.

Now, I've always contended that behind every extraordinary fortune, there is a extraordinary crime. Whether we're talking about cotton, railroads, alcohol, diamonds, or corporate productivity software......it doesn't matter. White collar or blue collar crime ......it doesn't matter. To make multi-millions, you need a lot of luck. To make billions, you need more than luck. You need a controlled capitalistic playing field, a.k.a. a perfect monopoly.


What does Carlos Slim own?

• Five insurance companies (valued at $1.5 billion)
• Mexican retail chain (pretax annual profit, $500 million), a mining company, an auto parts manufacturing company, a bank, a tobacco company, oh, and another mining company. All told, Slim's companies account for almost one-half of the value of the Mexican stock exchange
• 4 out of every 5 cell lines and 9 out of every 10 land lines are owned and operated by him
• a budget airline, Volaris
  
• a cigarette company, Cigatam
  
• a music retailer, MixUp
  
• an internet service provider, Prodigy
• piece of Comp USA
• piece of Saks Fifth Avenue
• America Movil group
• Telmex
• Telcel

"If you're a Mexican citizen, Carlos Slim is Microsoft, Apple, Coke, Pepsi and GM all rolled into one. In spite of all of Slim's charitable contributions, Mexico's working class just doesn't trust him."

What's the secret of his success? Carlos started at age 26 with $400,000 and all the ambition in the world. With his family's business relationships and government connections, Carlos was able to buy companies....early.....often and at rock bottom prices. We all know what happens when the privatization process is not so transparent. These deals alone would assist anyone with amassing tremendous wealth in a short period of time. When coupled with remittances, even Bill Gates has to throw in the towel!

I'm not a macro economist, nor do I profess to know the Slim's life story. However, getting income from tax-free US dollars, does add to the leverage. And leverage can give anyone an advantage. Like I said.....you need more than luck to make billions.

Will Carlos be as philanthropic as Gates or Buffett? I have no ideas. I just know that Carlos was quoted saying:

"Wealth is like an orchard. You have to share the fruit, not the trees."

For all you conspiracy theorists, here's a YouTube video on Mr. Slim (sorry, it's one of the few videos in English.)