Michael Lewis, the author of
`"Liar's Poker'' and ``The New
New Thing,'' is a columnist
for Bloomberg News. His opinions
don't represent the judgment
of Bloomberg News.
New
York, Jan. 25 (Bloomberg) -- An interesting aspect of
the Internet boom is the way
it has transformed the idea of the
company. A company used to
be a group of people who organized
themselves for fairly well-defined
tasks. The U.S. stock market
now indulges a new, looser
definition. A company is now a group
of people who raise capital
to do whatever they want to do.
The
biggest and most respectable new companies, such as
Amazon.com, routinely surprise
investors with some new activity
they intend to spend money
learning how to do. If you asked an
investor in any of several
hundred Internet companies what,
exactly, his company would
be doing or claim to be doing six
months from today, he would
say, if he were feeling honest, ``I
have no idea.''
The
reason usually given for the new tendency of companies
to morph overnight is that
they operate in a fast-changing
environment. A company should
not be expected to predict what it
is going to be doing in six
months because six months suddenly
feels like a lifetime. Who
can predict what the world is going to
look like in six months?
This
may be true. But it is also true that once an Internet
company is considered established,
or committed to a line of
attack, it loses its allure.
It leaves itself open to the sort of
hard analysis Internet companies
strive to avoid. To be desirable
an Internet company must be
ever so slightly unknowable. It must
remain forever in a state of
pure possibility.
A Bloomberg
user recently pointed out what must be one of
the purest examples of pure
possibility, an Internet company
called NetJ.com Corp (NASDAQ
name: NetJe). NetJ.com is
smaller than most of its Internet
cousins. It has a market capitalization
of a mere $22.9 million. Still,
its stock price has soared --
up seven-fold to$3.50 -- since
the middle of last year. Six months
ago it offered a five-for-one
stock split.
No Plans'
The
only hint that NetJ.com is in any way different from the
general run of Internet companies
is Bloomberg's description of
it: NetJ.com currently has
no business operations.
This
raises an obvious question: how can a business worth
$22 million have no business
operations? Assuming that the
Bloomberg machine must be mistaken
I went to the documents filed
by NetJ.com with the Securities
and Exchange Commission. There I
found the following confession:
``The
company is not currently engaged in any substantial
business activity and has no
plans to engage in any such activity
in the foreseeable future.''
That
sentence is a nice example of businessspeak gussying up
a simple fact. Translated into
English: We do nothing and we
intend to continue to do nothing.
This
in itself is unremarkable. Many people do nothing and
intend to continue doing so.
What distinguishes NetJ.com is the
spirit in which it does nothing,
which is astonishingly similar
to the spirit of many new companies
widely viewed as successful.
NetJ.com
began life as NetBanx.com, which hoped to collect
bad debts for doctors. That
didn't work out. So the company gave
up, and went into another line
of work: searching to acquire or
merge with another company
that actually does something. For this
it claims to be well-suited:
``Management generally, and Mr.
Stifford (the founder) in particular,
has substantial experience
and expertise with analyzing
prospective business endeavors.''
Keeping New
You
might wonder why a company that actually does something
would care to merge with one
that does nothing, even if it has a
gift for doing nothing. You
are naive. The mere fact that
NetJ.com is a public company,
with a share price that goes up and
down every day, apparently
makes it potentially desirable to a
private company that wants
to avoid the hassle and the wait
involved in going public. NetJ.com
offers itself as a kind of
bandwagon, albeit one without
wheels.
Such
an approach to business would have been risible just a
few years ago. Maybe it is
even now. Still, it is hard to say
what distinguishes NetJ.com
from most Internet companies.
Certainly not its business
model -- the investment bankers' term
for the widespread practice
among Internet companies of making it
up as they go along.
A lot
of putatively successful Internet companies raise
capital first on the pretext
of creating one kind of business,
only to deploy it in the creation
of another. Netscape invented
this approach, pretty much
by accident. (Microsoft took away its
original business.) Others
now do it more deliberately. The
trick, as one prominent Internet
CEO told me, is to keep yourself
new. You have to present the
stock market with a face-lift every
three months.
Competition
That
is the beauty of NetJ.com. By doing nothing it has
avoided ruling out the possibility
of not doing something else.
As the company explains in
an SEC filing, ``The company does not
intend to restrict its search
(for a partner) to any particular
business or industry.'' Its
list of possible ventures includes,
but is not limited to, ``high
tech, natural resources,
manufacturing, r&d, communications,
transportation, insurance,
brokerage, finance, and all
medical related industries.'' Not
even Amazon.com leaves itself
open to so many different
opportunities.
Of
course there are risks here. Some of them are stated
pretty clearly in NetJ.com's
filings with the SEC. The company
has $127,631 in accumulated
losses -- tiny by Internet standards.
It has ``extremely limited
assets'' and ``no source of revenue.''
In fact, it has so little money
on hand that if it wanted to do
anything, such as file to sell
more shares in itself, it would
need to ask its management
consultants to advance the money.
But
that is not the telling passage of the risk-disclosures
section in NetJ.com's confessional.
The telling passage is the
one that describes, incredibly,
the danger of competition. You
might think a company that
does nothing, and which is looking to
merge with a company that does
something, would have the field to
itself. But no! As the filing
explains, ``Management believes
that there are literally thousands
of `blank check' companies,
many of which have substantially
greater financial and management
resources.''
Indeed, there are.
--Michael Lewis through the New York newsroom (212) 318-2300