Aug. 5, 2010 - Beijing:  Baidu 5th NASDAQ Listing Anniversary

Aug.  13- Sep. 3, 2010 – Tuscany, Italy

It has been three years since I left Wall Street, officially on June 30, 2007.  So far, it has been a highly enjoyable break for me,  but  I am starting my plans to get back to full action. As many of you know, the past three years were filled with enjoyable activities such as travel and spending time with my son, as well as various investment and other activities that were more serious. Here is a quick rundown of what kept me busy in the past three years:

• I joined the board of my son’s school, Wings Learning Center  in 2007, as the chair, which consumed a great deal of time, as it required some significant activities and direction.
• I invested in an Indian start-up, Investmentyogi.com and joined their board of directors.  Investmentyogi is addressing a growing upper middle class in India that wants to manage its money, but has few resources for investment or financial planning.
• I joined the advisory board of ChinaVenture, the leading venture and investment strategy consultancy in China. ChinaVenture provides research, consultancy, and advisory services to TMT companies in China and abroad.
• I joined the advisory board of icanbuy.com, an Irvine, CA-based start-up that is targeting the mortgage and home buying experience with an innovative new online approach and has created a new platform that attracted the National Association of Home Builders and the Building Industry Association.
• I joined the advisory board of 3plus1, a Silicon Valley-based company with patent pending technology that provides a hardware/software solution for a variety of applications, especially video download and viewing.
• I joined the advisory board of AARP International Network, which is a subsidiary of AARP focused on expanding international alliances and learning from global population trends.
• I continue to be on the advisory board of SEMPO, the Search Engine Marketing Professional Association. SEMPO is regrouping with a new leadership and has seen a tremendous expansion in international markets.
• I have also been investing actively in the public equities.  It has been, of course,  a harrowing experience in the past three years but I am happy to say that I fared much better than the market and have gained back all the loss in 2008. I am now solidly in positive territory compared to when the financial crisis begin, while S&P is some 20% below its Dec. 2007 level.
• I have invested in a new search application that will be launched soon. Very excited about the team and the concept here.  Stay tuned.

Recent Investments and Advisory Involvements

Investmentyogi.com

Icanbuy.com

3plus1 (3p1.com)

http://www.clenova.com/

New Multi-Media Search Application [Sept. 2010 Launch]

I believe that we are likely to see weak but sustained overall growth in global economy into 2011. Equities are not oversold, especially given the potential for 2H10 and 2011 downward estimate revision, but recent corrections, post May 6, have priced in a significant amount of growth slowdown.  As such, I expect some possible downward movement, but not another major correction.  I do expect key Internet names, as well as certain China sectors to outperform the market and produce absolute positive returns, driven in part by a shift in relative multiple expansion.  After the quick jolt of 1H10, we are now entering the more prolonged and slower phase of recovery and investors are likely to focus on companies that will benefit from the longer term trends, not just immediate pent up demand and inventory build up.

An Update – I have been remiss to post more, and the not-so-subtle comments from many of my friends in conjunction with my own guilty conscience have finally forced me to change. While I don’t promise to blog on a regular basis, I intend to write very short pieces on selective areas, more frequently. Below are a few thoughts that I have been having lately, but first let me tell you what I have been up to in the past year and my whereabouts in the next month or so:

What I Have Done Since June 2007. A lot more than I was planning and yet accomplished a lot less than I had hoped. Six areas have taken up the majority of my time:

1. Investing in startups – I have been looking at many business plans and selected three of them for investments:  one in U.S., one in India, and one in China,  two of which are about to close in the next month or so, and I’ll disclose them soon. These are seed level investments in the consumer Internet space.

2. Industry contacts and Advisory – A good part of my time is spent in meeting with entrepreneurs and investors, and in many cases, I have been unofficially (that is without pay!) advising some startups. I have also occasionally participated in conferences and have had some speaking engagements, both of which have helped keep me in the flow.

3. Board of Directors – Wings Learning Center, a school for children within Autism Spectrum Disorder . As the board president, my responsibilities have been a lot more than I expected, especially as our school is in need of much help and resources. (www.wingslearnigncenter.org). I am also on the advisory board of SEMPO and will join the boards of the two companies I’ll invest in, but so far I have not yet committed to any other board memberships. I may choose one or two beyond my core investments, but I don’t intend to add many more.

4. Travel – This is the best part of course (and the costliest one too) – Trips to Europe, Mexico, Brazil, Canada, Yosemite, and other places, with my fifteen year old son have been extremely satisfying. You see some of the photos on this site – more are at my public albums in Picasa.

5. Investing in public equities, with a focus on TMT space in the U.S. and China.  So far, I have been lucky enough to stay above the trends and show some small profit for the year.

6. Flying and Spanish lessons – Both have been humbling as they have taken much longer than I thought – hoping to get my private pilot license soon, but I am far from being muy buen in speaking Spanish.

My Top Five Global Trends – the pillars of my investment thesis

1. Middle Class is the King. Global economic liberalization is producing a growing middle class in many countries, with the power, and the desire, to spend

2. Intelligent Consumer are reshaping the purchase patterns – consumers know what they want to buy, know how to research it, and know how to compare items, rate them and seek advice. Most businesses have failed to understand let alone embrace this and are clinging to the old ways of advertising and “monetizing”, up-selling, and cross selling consumers.

3. Internet-based Networks are far more powerful than we can see now. This power should be measured not just in terms of revenue generation, but the value and the service they provide to the consumers. The new way to look at business model should be based on maximizing the consumer value, which as we have seen with search, leads to high revenue potential.

4. All consumer Trend are Global, but they act Locally. From search to texting to e-commerce and blogging, consumers are adopting the same trends, but at different times and with different flavors, producing local winners.

5. Make it Simple. The common-sense, easy to understand, and straight forward ( no fine lines, no hidden agenda, no free razors to sell the blades) is the model for today’s consumers. Most businesses still operate in yesterday’s paradigm and are doomed to die unless they transform.

First, we must accept the fact that Microsoft has failed massively in creating a value proposition for Internet consumers, and hence has failed to gain any share of heart, regardless of how many unique visitors it has. The simple fact remains that Microsoft has very close to zero brand loyalty, or even recognition, with consumers, as an Internet property. To be sure, Hotmail and a few other MSN properties have some followers, but that’s about it. The reason for this is that Microsoft and MSN, despite the efforts of it’s able and skilled leaders and managers, failed to create a value proposition for the consumes. Yahoo, on the other hand, sadly saw the value proposition that it did have for the user erode away, as consumer behavior changed and Yahoo failed to do so. As such, it baffles me why the combination of Yahoo and Microsoft will make a better value proposition for the consumers.

Many pundits have analyzed the cost savings impact of this merger and the value to the advertisers by reaching a higher aggregate base of users. For the consumer, however, there is no reason to cheer. Yahoo, above all, needs a self-examination of what it is doing wrong and why the time spent on its properties have gone down over the last year. A close examination should reveal surprising simple things that Yahoo can do: make the sites follow my three rules: simplicity, common sense, and accuracy. Simplicity means easy navigation, clean interface, and easy selection – features that Yahoo , (and certainly most Microsoft properties) still noticeably lack, even in their most recent products such as the new Yahoo Mail. Common sense is my term for designing the site based on the way average users will naturally navigate and click, not designing them for ads or pageview or for maximum options, but for the most common way to use the web site. Finally, accuracy refers to having reliable, fast, and accurate information on the site, all the time, creating a sense of trust, the way that Google has earned it. Speed is an important part of this which, for lack of a better word, I have lumped into accuracy.

Surprisingly, the content or topic is not that critical an issue. Yes, social networking and of course “communitinament” is hot with users but many areas of Yahoo are in fact communitianment site – they are just not a properly functioning ones and hence fail to gain major acceptance. Yahoo mail and Yahoo messenger, as well as Yahoo news, finance and Yahoo music are potential gold mines but I highly doubt that Microsoft can help them reach their potential.

Combining Yahoo with Microsoft is most likely to compromise the principles of Simplicity, Common Sense, and Accuracy , even further rather than enhance them. Let me explain why. Microsoft can bring in three important assets to Yahoo: money, technical expertise, and freedom from shareholder pressure. I did not include network effect or cross selling as I think they have been vastly over-sold. But even those three assets are not sufficient to solve Yahoo’s problems, let alone help Microsoft gain a major footprint on the web, without a change of culture. As such, my unsolicited recommendation to Jerry and the Yahoo board is: don’t sell to Microsoft, or to anyone else for that matter. Try to fix the problem by infusing a new life and a new culture, into the valuable entity that you have built.