Michael Dell says Being A Public Company limits Ability to Transform a Business

Dell is a private company now and is going through a transformation.  USAToday has an article on a Michael Dell interview.

It's a challenge Dell relishes after feeling handcuffed by the expectations from the market for a public company undergoing a significant makeover. "The market encourages (public companies) to not make investments in new areas," he says, wincing at the notion. "It is short-term focused."

IDC chimes in.

A private Dell allows it to move at its own speed to transform to an end-to-end technology solutions company without quarterly pressures from Wall Street and comparisons to rivals HP, Lenovo and Microsoft, says IDC analyst Matthew Eastwood, who closely follows Dell.

More and more companies are realizing being private has advantages vs. being public.

For now, the ending appears happy. "What I saw at Dell's analysts' meeting (in May) was a relaxed, confident Michael Dell," Moorhead says. "He is no longer under the thumb of Wall Street. He can make moves at his pace."

How many companies like Twitter who have gone public wish the old days of being able to take risks were part of DNA?  Like the days before the IPO.

Honestly, a Startup is surprised at its failure because it couldn't crack the business model?

I read this GigaOm post on a startup shutting its doors.

Chris “moot” Poole pens an honest goodbye to his failed startup, DrawQuest

by Lauren Hockenson

2 HOURS AGO

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SUMMARY:

Chris Poole’s big post-4chan startup, DrawQuest, is shutting down, and his fair, graceful blog post should be required reading for all startup CEOs.

After four years and one big strategy shift, Christopher “moot” Poole’s big venture after 4Chan, DrawQuest, is shuttering its doors. Poole honestly detailed the experience in a blog post on the matter, which discusses the failure that came despite a relatively healthy community that the “draw a day” app created:

What was funny is the founder made this point.

“It may seem surprising that a seemingly successful product could fail, but it happens all the time,” Pool said. “Although we arguably found product/market fit, we couldn’t quite crack the business side of things.”

Here is a post on advice to startups that focuses on the business model with a nice explanation of the equation to solve.  If you don’t have a business model that works then you will no survive and your product is not successful in the eyes of the business owners.

The Essence of a Business Model

As outlined in the Business Models introduction, a simple way to focus on what matters in your business model is look at these two questions:

• Can you find a scalable way to acquire customers
• Can you then monetize those customers at a significantly higher level than your cost of acquisition

Thinking about things in such simple terms can be very helpful. I have also developed two “rules” around the business model, which are less hard and fast “rules, but more guidelines. These are outlined below:

Luckily I figured out the business model problem 5 years ago and have told my business partners that the #1 thing we will do is be innovative in developing business models.  We will do business different than others and then fit the technology.  

Is Dropbox a cause of Fedex's loss of customers wanting it next day?

WSJ has an article on FedEx needing to make changes to its fleets as customers want their deliveries slower and cheaper.

Things that absolutely positively have to be there overnight don't absolutely positively have to be there overnight anymore.

Nowhere was that more evident than when FedEx Corp. FDX +0.56% on Wednesday reported that its quarterly profit plunged 31% as its international customers and shippers flocked to slower, cheaper delivery options instead of its premium-priced express service.

Now the company whose name is synonymous with overnight delivery—and has built the world's largest air express fleet—must make even deeper changes that take it farther away from its roots. It has already tweaked capacity and deferred plane purchases. Now it will shrink its global network, possibly its air fleet and direct more business via third-party alternatives like ships, commercial airlines and third-party shippers.

Besides the shift in next day big packages, I wonder how much of the next day document delivery which I would guess is a much higher margin business than shipping iPhones around the world is impacted.

We have all suffered through 5MB document limits through e-mail delivery.  Using Gmail you would be able to send a big document, but the receiver couldn't receive it in their e-mail system.  With the growth of DropBox, Box, Google Drive, Micorsoft Skydrive you can now send GB documents to users in a text or e-mail for little cost and delivery in seconds.

In the WSJ article FedEx discloses the shift in delayed shipments from Asia.

Though you would think this "was a good problem to have," Dave Bronczek, CEO of FedEx Express, told analysts in an earnings call, the latest gain was driven by a 12% growth in deferred international export traffic, mainly led out of Asia and Europe. So while the company had "a lot of freight on our planes; our high load factors, quite frankly, were driven by the deferred traffic. So we had lower yields. We had more traffic, higher pounds—all in deferred traffic," Mr. Bronczek said. International export priority volume inched up only 2%.

Somewhere buried in those next day deliveries are probably documents which don't weigh that much and push the revenue up.

2 - 5 GB isn't enough.  I have 27 GB with Skydrive and pushing up 1 GB of photos is something I don't even think about.  

FedEx could have created a DropBox type of product, but there is no way they could charge the kind of money they make for a next day delivery.  FedEx tried a fax service in 1984 that didn't work.

A new facsimile delivery service, known as ZapMail, made its debut in 1984. It guaranteed delivery of five pages or less in less than two hours for $35. That year, the firm made its first acquisition, package courier Gelco Express. Other acquisitions soon followed, including businesses in Europe and the Middle East. International expansion continued in 1985 when Federal Express established a European headquarters in Brussels, Belgium. Sales grew to $2 billion.

The company's ZapMail service proved unprofitable. As a result, Federal Express discontinued it in 1986.

Read more: Fedex Corp - Early History - Express, Federal, Firm, and Delivery http://ecommerce.hostip.info/pages/443/Fedex-Corp-EARLY-HISTORY.html#ixzz2Ox0CO1zw

The Elite go Private, Public companies are not so hot

There is all kinds of news on Facebook's IPO.  Some have learned to be cautious of an IPO.

What some people don't get is the elite, the smart ones have figured out that being a private company is better than being public.

The Economist has an article on this topic.  Here is an excerpt that will get you thinking.

Companies are like jets; the elite go private

Mr Zuckerberg will be joining a troubled club. The burden of regulation has grown heavier for public companies since the collapse of Enron in 2001. Corporate chiefs complain that the combination of fussy regulators and demanding money managers makes it impossible to focus on long-term growth. Shareholders are also angry. Their interests seldom seem to be properly aligned at public companies with those of the managers, who often waste squillions on empire-building and sumptuous perks. Shareholders are typically too dispersed to monitor the men on the spot. Attempts to solve the problem by giving managers shares have largely failed.

At the same time, alternative corporate forms are flourishing. Once “going public” was every CEO’s dream; now it is perfectly respectable to “go private”, like Burger King, Boots and countless other famous names. State-run enterprises have recovered from the wreck of communism and now include the world’s biggest mobile-phone company (China Mobile), its most successful port operator (Dubai World), its fastest-growing big airline (Emirates) and its 13 biggest oil companies.

ABRY Partners and Berkshire Partners acquire Telx from GI Partners

Last week a friend asked who was acquiring Telx.  I told him I didn't know but, I found the tweet on Telx being acquired and posted the question.

Who is acquiring Telx?

WEDNESDAY, AUGUST 3, 2011 AT 8:44AM

Found this Tweet.

Well, here is the press release with the answer.

The Telx Group Acquired by ABRY Partners and Berkshire Partners

GI Partners Sells Leading Colocation and Interconnection Company to Two Boston-Based Investment Firms

August 8, 2011 9:30 AM EDT

MENLO PARK, CA and BOSTON, MA -- (MARKET WIRE) -- 08/08/11 -- GI Partners ("GI"), a leading mid-market private investment firm, announced today the sale of its portfolio company, The Telx Group, Inc. ("Telx"), one of the fastest growing providers of global interconnection and colocation facilities, to ABRY Partners and Berkshire Partners LLC, two Boston-based investment firms. Terms of the transaction were not disclosed.

Telx facilities serve over 900 customers with approximately 34,000 interconnections, and customers can connect with hundreds of communication service providers, enterprises and cloud providers in Telx facilities. The company was acquired by GI Partners in 2006 and, under the investment firm's nearly five-year stewardship, Telx achieved considerable organic growth in its existing markets and also dramatically improved its competitive position as a result of key add-on acquisitions. The company has since developed a national footprint of 15 locations starting from two facilities at the time of acquisition. GI Partners also significantly expanded the management team with the appointment of industry veteran Eric Shepcaro as CEO, in addition to several other senior positions. As a result of these and other initiatives, Telx achieved dramatic sales and EBITDA gains, including topline growth of over 40% throughout the hold period despite the recession, landing on the Inc. 5000 list two consecutive years in a row and earning a nod from Red Herring as a Top 100 North American Company.