Musings of an Entrepreneur

                                                 

There is no denying Apple has had an incredible run.

Steve Jobs’ return and the Mac’s resurgence

After a number of strategic and execution mistakes, the company almost went bankrupt in 1996. It was greatly helped in 1997 when Steve Jobs returned as CEO and announced that Microsoft invested $150 million and made a five-year commitment to develop Office for the Mac. Steve Jobs slashed Apple’s 15 product lines to just 4 categories: desktop and notebook Macs for consumers and professionals. Jobs halted the Macintosh licensing program. In 1998, he hired Tim Cook as COO. Cook had worked at Compaq and IBM and was tasked to “clean up the atrocious state of Apple’s manufacturing, distribution and supply apparatus”. He hired Taiwanese contract assemblers to manufacture Mac products. He revamped Apple’s distribution system from smaller outlets to national chains and also launched a website to offer direct sales for the first time. Apple’s inventory fell from months to a few days! In 1998, the company posted a $309 million profit, reversing the 1997 $1 billion loss allowing Steve Jobs to increase R&D spending.

Under Tim Cook operations are now smoothly oiled. According to Fortune Magazine “Apple routinely pulls off the miraculous: unveiling revolutionary products that have been kept completely secret until they appear in stores all over the world. The iPhone, the iPod, any number of iMacs and MacBooks – the consistently seamless orchestration of Apple’s product introduction and delivery is nothing short of remarkable. … In 2006 Apple transitioned its entire computer line to running on processors made by Intel. … Cook’s team … made sure there was nary a blip in sales.”

The transition to Intel CPUs allowed Apple to build chips that were faster and less power hungry, essential now that notebooks account for the vast majority of Mac sales. This also allowed Macs to run Windows applications if the user so chose, thus offsetting one of the longstanding disadvantage to choosing a Mac – the relative lack of Macintosh software.

The move into direct retail distribution also proved revolutionary. The first Apple retail store opened in McLean, Virginia in 2001. The Apple retail experience gave many consumers their first exposure to the Macintosh product line. By 2009, Apple estimated that half of all retail Mac sales were to “new to Mac” customers. The retail division with more than 280 stores in 10 countries grew to account 16% of Apple’s total revenue. The company also entered into a partnership with Best Buy, the world’s largest electronics retailer.

Moving Beyond the Macintosh

While it was essential for Apple to fix its Mac business, it’s the new product lines that really put Apple on its explosive growth path. Apple introduced the iPod in 2001. With its sleek design, simple user interface and large storage, it put other MP3 players to shame. Apple had the foresight of allowing the iPod to work with both Macs and Windows machines. The distance only grew wider when Apple introduced the iTunes Music Store starting in April 2003 which was the first legal site that allowed music downloads on a pay-per-song basis. With its large catalogue and ease of use, it allowed Apple to capture the MP3 market. By 2010, Apple was estimated to have around 70% of the US MP3 player market.

In 2007, Apple introduced the iPhone. While the product was revolutionary in many ways, it was not a huge success. Apple actually only sold 6 million of the first iPhone because it was sold for $499 without a subsidy and AT&T gave a revenue share back to Apple. In 2008, when Apple released the second iPhone which ran on the faster 3G network, it smartly revamped its pricing model. AT&T provided a subsidy in exchange for dropping the revenue share agreement. Consumers could now buy an iPhone for $199. With the 3G model, iPhone revenues exploded to $13 billion by the end of 2009. When the 3GS went on sale in June 2009, the subsidized 8Gb iPhone price dropped to $99.

The recent very successful launch of the iPad further extends Apple beyond its Mac roots and diversifies its revenue base.

Near Term Winner

Apple is currently on top of the world. It has the highest market cap of any tech company, recently surpassing Microsoft’s and dwarfing Google’s. It also seems perfectly positioned for the future given its strength in smartphones.

Apple is now essentially a mobile company. As of the last quarter, Mac sales accounted for $4.4 billion of revenues (with 31% growth year to year), iPod sales for $1.5 billion (4% growth), iPhone sales for $5.3 billion (74% growth) and iPad sales $2.1 billion out of a total of $15.7 billion. Apple is arguably in the perfect business. US smartphone penetration just crossed the 20% mark and global smartphone penetration is around 10%. Undoubtedly at some point in the next 5 years the majority of phones will be smartphones and eventually almost all phones will be. Market growth alone should buoy Apple.

Moreover, Apple still has two low hanging fruits to massively increase its iPhone revenues:

1. Expanding the number of carriers that carry the iPhone in countries it has released the iPhone.
2. Releasing the iPhone in more countries.

However, Apple and Steve Jobs seem to be repeating a number of strategic mistakes that seem destined to relegate it to a niche player.

Long Term Loser

In 1984, when Apple introduced the Mac in 1984, it was revolutionary. It was elegant, simple to use, had the first mass market mouse and graphical interface and became a huge success. Apple seemed destined for greatness. However, Steve Jobs’ vertical integration driven by his desire to only have beautiful machines and software limited both innovation and the availability of software. On the DOS, then Windows side, the constant competition between PC makers, processor makers, and software developers, while less elegant and functional at the beginning, given enough time led to a plethora of offerings and innovation that not only copied many of the Mac’s best features but extended them. The competition also drove prices much below Mac prices. The combination of faster PCs with more software at lower prices eventually completely marginalized the Macintosh.

Steve Jobs seems to be repeating the same mistake all over again. The elegant integration between the iPhone, iTunes and the App Store is definitely a current source of comparative advantage. It is easier to offer a better user experience at the beginning when you limit the form factor and completely control the hardware and software. The iPhone 4 is clearly the best smartphone on the market. The apps in the Apple App Store are clearly the best apps on the market.

However, Apple’s insistence on having a single form factor, on being a premium player at a premium price point (to carriers at least), and its arbitrary decisions with regards to what apps make it in the App Store will eventually make Apple a niche player. Even if Apple keeps innovating and has the best phone on the market, it won’t matter.

Android, with its relative openness, seems to be playing the role Windows played for the Mac. We are already seeing a plethora of Android phones which cover all segments of the market – from the very low end to the very high end. There are phones with keyboards or without, Amoled screens, huge screens, small screens… There is already seems to be an Android phone for every taste and the choice is only going to get larger. In only one year Android’s smartphone market share catapulted from 1.8% to 17.2% overtaking Apple’s iPhone which grew from 13% to 14.2% of the market. Moreover Android is now activating more phones in the all-important US market, despite the iPhone 4’s recent launch.

It’s unclear to what extent the number apps offered is relevant. Regardless of the answer, it won’t play in Apple’s favor. It could be that the top 30 apps are all that matter (e.g.; Maps, Facebook, Email and a few games), in which case the current better quality of Apple apps will eventually be matched by the apps on Android. Alternatively, and arguably worse for Apple, if it’s the diversity of apps that matters, the relative openness of Android will mean that there will eventually be many more apps for Android phones than for Apple given its desire to only have “pretty” and “elegant” apps. This will only get worse as Android’s market share will increasingly exceed Apple’s and many developers will first build for Android and the guarantee of appearing in the Android App Store versus taking a risk with Apple’s fickle App Store approval process. More developers are already developing for Android than the iPhone and the number of Android apps is rapidly approaching the number of iPhone apps.

Furthermore, with the iPhone Apple has taken vertical integration one step further. It acquired PA Semi for $278 million in April 2008 and Intrinsity in 2010 and now designs its own chips. Both the iPad and the iPhone 4 run on the A4 chip it designed. This means that in addition to competing with Google, all the handset manufacturers in the world and many app makers, it now has to compete with the likes of ARM! It’s extremely hard to be world class in so many product categories and arguably Apple has just made its job of having the best smartphone on the market that much harder. In a few years it might end up with underpowered phones relative to the Android phones very much like the Macs used to be underpowered (and overly power hungry) before Apple made the switch to Intel!

None of this will matter in the short run. Globally increasing smart phone sales and extending sales to new carriers will buoy growth for some time to come, especially since Apple still has a better phone and better apps. However, this growth will bely the fact that Apple is losing market share rapidly to Android. Fast forward 5 to 10 years and it’s not hard to imagine seeing Apple with a small (but probably very profitable) share of the smartphone market. It will be a niche player in the market it revolutionized and could have dominated. History seems bound to repeat itself!

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Paul Graham just wrote another fantastic article, this time covering what happened to Yahoo.

Read it at: www.paulgraham.com/yahoo.html

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We can start by asking why Microsoft should be in search. Microsoft has two extremely successful businesses with Windows and Office that generate $13.1 billion and $12.4 billion in operating income in 2008. Granted search advertising is an attractive market. It is predicted to grow from $20 billion in 2007 to $40 billion in 2012. It’s also extremely profitable once you obtain scale and cover your fixed costs with 60-70% gross margins. However, market attractiveness is not enough: pharmaceuticals are also an attractive business with high margins and no one is suggesting Microsoft goes into pharmaceuticals.

In one word Microsoft’s problem is Google. The spread of broadband, Wi-Fi and mobile data network presages an always on connected future where applications can run in the cloud as effectively as they do today on your local desktop. In this world desktop operating systems and desktop applications become irrelevant. The company best positioned to take advantage of that future is Google. Google’s scale gives it an inherent cost advantage in providing services in the cloud. For instance, Google is rumored to have 15 data centers to Microsoft’s 4. Moreover, while Google may not be interested in Office like applications per se, it can offensively offer them for free to disrupt Microsoft’s core business without undermining its own given that it relies on advertising rather than software sales.

Looking at it from this perspective, Microsoft’s logic for being in search is clear: it is a strategic defensive move to protect its core Windows and Office franchises. Given this logic, Microsoft has to be in search. This leads to the fundamental question: can Microsoft succeed in search? Bing has around a 10% market share in the US and an irrelevant market share in the rest of the world. Even with Yahoo’s 18% of US search share, it will be a distant number 2 in search in the US and irrelevant in the rest of the world. Moreover, there is evidence that a fair amount of Bing searches are “passive searches” brought about by partnerships. These are much less valuable than active searches where the user intentionally goes to a search engine to search for something. Add to that the fact that Microsoft has 50% less search engineers than Google and a quarter of the data centers and it’s hard to see how they can succeed. Worse, even if Bing was a slightly better search engine than Google (as it is for some categories of searches), analysis of consumer behavior suggests it would not be enough for consumers to switch. People cannot tell the difference between the speed of two PCs if one is 25% faster than the other. The speed increase has to be above 50% for consumers to start to be able to tell the difference. Similar consumer behavior seems to affect search. As a result Bing would have to be significantly better than Google for a large number of users to switch which is unlikely to happen given the speed at which Microsoft and Google are copying each other’s new features in search.

Let’s ask the question a few different ways. Can Google sustain its leadership in search? It is not difficult to argue that search as we know it today is extremely primitive. We can easily envision a world where things like natural language search crossed with social and behavioral information will revolutionize the way we search. Unfortunately for Microsoft and wannabe competitors, Google is best positioned to dominate the “Search 2.0” market. The reason is simple: fixed costs. The amount of existing and new information on the web is incredibly large and growing exponentially. Google’s index for instance is rumored to have grown from 1 billion pages to 40 billion pages between 2000 and 2008. A company which developed a better algorithm would still have to crawl all the information on the web to apply its algorithm in order to offer relevant results. Doing so requires billions of dollars to build the type of data centers that Google and Microsoft have built. High fixed costs create huge barriers to entry. As a result, I don’t see anyone displacing Google in search in the next 10 years.

Given all this, what should Microsoft do in search? Historically the company has dealt very effectively with competitors which threatened its franchise by entering their business and giving away the product for free. When Netscape released its browser, Netscape Navigator, in December 1994, Navigator was priced below $50, with evaluation copies downloadable for free, while matching software for servers was priced above $1,000. Marc Andreeson, Netscape’s chief technologist, had a vision that the browser could grow to become a PC user’s primary interface to all of his or computing needs. The browser, he opined, would “reduce Windows to a set of poorly debugged device drivers.” By May 1995, Netscape held a 70% share of the browser market.

Recognizing the threat, Bill Gates sent his top team a nine-page memo title “The Internet Tidal Wave.” Promising to “embrace and extend” the Internet, Microsoft released its own browser Internet Explorer (IE) 1.0 in My 1995. With the August 1996 release of IE 3.0, Microsoft then largely matched the then-current version of Navigator. IE and its matching server software were offered for free and IE came bundled with Windows on new PCs. Versions of IE were also made available for Apple and Unix operating systems. Microsoft also struck deals with Internet service providers (ISPs) to use IE to provide Internet to consumers. To convince America Online, the largest ISP, to promote IE, Microsoft agreed to place AOL’s icon on the Windows desktop, even though AOL competed with Microsoft’s own ISP offering.

Netscape tried to survive by quickening its pace of innovation, by opening its source code so that others could improve its products, and by diversifying into new products. However, Netscape’s development costs rose rapidly, its browser share plunged, and webmasters increasingly optimized their websites from IE, not Navigator. By late 2002, Microsoft’s browser market share surpassed 95%.

Could Microsoft use a similar strategy with Google? At first glance, the answer would seem to be no. Google is offered for free so there is no way to undercut their price. However, Google is more vulnerable that appears at first glance: almost all of their revenues come from search advertising on Google’s own websites where it bears no traffic acquisition costs. Moreover, the vast majority of the revenues comes from less than 5% of the searches which are concentrated in the following categories: travel, product, real estate, vehicles, jobs, services, finance and legal. Long tail searches actually have very little economic value: what ad do you want to put next to “GDP of Zimbabwe”?

In other words Microsoft can disrupt Google by attacking its profit engine in the short tail of searches. This would prevent Google from spending billions of dollars on various new initiatives which often are aimed at Microsoft’s core business. Granted most of Google’s new initiatives fail, but the sheer number of initiatives combined with Google’s rapid iterative product strategy are clearly giving Microsoft cause for concern. To achieve this objective, Microsoft should do the following:

1. Attack the short tail of searches where all of the value lies:

• Deploy most of your engineers to work on the aforementioned short tail.
• Offer 85-100% of the revenues to sites that use Bing’s equivalent of Adsense (we now know that Google gives 51% for AFS and 68% for AFC).
• Keep trying new initiatives like Cashback (which was aimed at product searches) to lure users to use Bing for those short tail searches (though discontinue them if they fail, as Cashback did).
• Spend a few billion buying vertical search sites (Kayak, Trulia, Indeed, etc.) and deploying them globally to attract an ever greater share of those short tail searches.

2. Get scale in order to cover your fixed costs. The Yahoo deal is a step in the right direction, but it’s a pity that it has taken so long to be implemented. It should already be live! Continue doing such deals but please don’t acquire AOL or Ask. The integration would just distract you. Just power search for them.

3. Leverage your operating system leadership and installed base by putting a big search box in Windows 7 on the desktop. You can offer local searches, but the default should be Internet only searches using Bing (at least when there is connectivity). At the very least put a Bing search Box in the taskbar.

4. Use the market’s distrust of Google and their monopoly position in many markets to your advantage:

• Present yourself as the friendly, open and responsive alternative to Google to publishers. Be fully transparent on revenue shares, etc. Giving 85-100% of the advertising revenues back to them will also help that cause :)
• Give away Windows Phone 7 to mobile operators and handset manufacturers and tightly integrate mobile search into it. Many operators fear Google as much as they fear Apple and are open to partnerships. Given how irrelevant the revenues from Windows Phone are going to be just give it away but make sure you get Bing to be the default search engine.

5. Keep your research lab working on long term disruptive technologies in search such as natural search. Maybe you could use all the data on people’s hard drives to improve search results. Being the dominant OS you have the easiest access to that information. It’s likely any innovation would be rapidly copied by Google, but you never know, besides you have to stay product competitive.

Good luck! The world’s web publishers need a strong alternative to Google and you are our last remaining hope in search! You owe it to yourself and to us to succeed. We’re all rooting for you!

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I am skeptical about all the hype around Twitter. I like Twitter and find that it’s an effective way of letting my followers know what I am up to, but it’s not much more than that. It’s not a great real time search engine. The information is too “spammy” and confusing.

The hype around Twitter reminds me about the hype around SecondLife a few years ago. SecondLife has turned into a great business, but it has not revolutionized the Internet or social networking. I suspect Twitter will become a successful business as well, if only by putting Adsense around its search results.

However, I have a hard time seeing it become more than that. It’s just not as useful as a site like Facebook. I had a similar criticism of SecondLife. Contrarily to a game like World of Warcraft, SecondLife has no objective which makes it harder to retain user engagement.

Comparing Facebook and Twitter, over 50% of Facebook’s 200 million active users login every day. 60% of Twitter users stop using it after a month. I personally find Facebook much more relevant to my personal life – I like seeing pictures, relationship status changes, etc.

They might confound me, but my bet is that will become a successful interesting site, but not much more than that.

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wingsuit base jumping from Ali on Vimeo.

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I had the pleasure of being invited to a New Media dinner at Strauss Zelnick’s apartment in New York. It was a fantastic opportunity to reconnect with old Internet friends and to meet a slew of interesting characters. Jason Hirschhorn formerly from Sling Media was easily the funniest person in the room and made quite an impression with his stories, humor and impertinent yet astute commentary.

After the dinner, we all partook in a discussion on the future of media moderated by David Remnick from the New Yorker. The discussion ranged far and wide from Fred Wilson’s “There is no truth, I only want to read what the masses are thinking” to a few journalists from the New York Times and the Wall Street Journal vehemently defending the value of investigative journalism. Jason reminded us of the fantastic Epic video that emerged a few years ago where Google caused the demise of the New York Times which at the end became a newsletter for the elite.

There is no denying that the newspapers are under threat as they have never been before. They are facing increasing competition on the distribution side from the Internet while classified advertising and print advertising revenues are going away. Newspapers represent 3% of media consumption and 17% of advertising revenues while the Internet represents 20% of media consumption and 5% of advertising revenues. It’s not hard to imagine those shares of advertising revenues inversing.

Given the threat to the very existence of newspapers, many voices emerged defending the public value of the big brand newspapers, especially the New York Times, the Washington Post and the Wall Street Journal. While their best days may be behind them economically speaking, I am actually not worried about the survival of these newspapers. Their business model significantly worsened, but it does not mean they will go away. Airlines provide a nationally critical service. The industry as a whole has not been profitable over its entire history, yet they manage to survive. The same will be true of newspapers, even if it takes a few billionaires subsidizing them during the transition period.

There definitely seems to be a market for well written and researched papers and magazines. The Economist is currently increasing its readership and the Wall Street Journal is doing relatively well. One could even argue that the demise of local papers will strengthen the large brands.

It’s hard to tell where the media world will end up 25 years in the future. As someone pointed out, 10 years ago AOL had half the Internet and Infoseek, Alta Vista, Lycos and Geocities were the talk of the town.

There is no doubt the transition will be painful, but I am convinced there is a market for well researched reporting and I can’t wait to see how it all pans out!

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Over the past few years, my angel investing strategy has been to be very selectively aggressive. I would invest relatively large amounts of capital in very few companies and typically sit on the board as well. I believed that my ability to identify unique companies and help them out would lead to outsized returns. Over the past few months, I have fundamentally revised this strategy.

I have had the pleasure of interacting with a large number of angels with numerous investment strategies. Without fail, the companies that succeeded for them were never those they might have expected to succeed the most at the time of investment. Their success as investors most often came down to luck and did not seem correlated with the intensity of the due diligence they had conducted or a priori quality of the management teams they had backed.

Given the hit driven nature of the angel investing business, it’s important for angels to have at least one hit in their portfolio to cover the losses from the duds. Angels who, on average, had invested in less than eight companies lost money on their investments, while those who invested in more than eight companies on average made money on their investment.

By May 2008, I had invested in 6 companies and sat on the board of 4 of them. Since then, given how busy I am with OLX, I have scaled back my existing board involvement dramatically, divided my average investment size by a factor of five and I am now invested in 15 companies. I have not joined the board of any of the new portfolio companies and don’t intend to for future investments either.

I invest mostly in early stage startups at the seed level as I think it’s the least efficient and most fragmented stage of the investing process. Series A rounds and beyond are well covered by venture capital and private equity firms and are much more competitive. I focus on direct to consumer businesses both because I understand the space better and the due diligence is significantly easier to do (why active entrepreneurs mostly invest in consumer internet companies). I also often invest in companies off the beaten path (outside of Silicon Valley and often outside of the US) reflecting a small comparative advantage in international sourcing because of my background.

In the past few months, I added another constraint. Given the likely dearth of venture capital investments in 2009 (why VCs invest less in downturns), I am currently only investing in companies with very low capital requirements that are likely to reach profitability on the seed funding. I also insist on very low valuations (often much lower than $1 million pre-money) to compensate for the likely increase in default rate caused by the lack of funding and potential acquirers.

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After all the dire warnings given by various VCs, here is a more positive list of recommendations sent from one of my friendly VCs:

1. Don’t panic! Economic cycles are part of life. Best companies are built in the worst of times. If you panic, your employees will panic.
2. Conserve cash. Delay spending on non-critical things that do not result in revenue generation. Renegotiate vendor contracts, rental contracts, etc.
3. Improve productivity. Get more out of your team.
4. Differentiate between high and low performers. Reward the high performers. Counsel out low performers.
5. Optimize the organization. Hire critical talent as they may be available at a reasonable cost. Transition or re-deploy non critical resources.
6. Continue selling and marketing your product or service. Being in front of customers and vendors builds confidence that you are a long term player.
7. Focus on growth with an eye on profitability. Since the cost of capital is high today, be cautious on how much capital you raise to invest for growth. Avoid over-investing in the business in the hope for exponential growth in the future.
8. Communicate with your team internally. It Make sure your team understands that you are building a lasting and successful enterprise and that some of the cost cutting measures including layoffs are necessary for the health of the company. Anxiety levels can be high in tough times.
9. Act swiftly. Try to deliver any bad or tough news at one shot to the company. Continious bad news can affect morale and instil fear.
10. Have fun! Make sure your team is having fun. A happy environment builds loyalty and performance for the long term.

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Last March I explained why startups should raise as much money as possible to prepare for the upcoming crisis (Why the startup market is like the real estate market). Now that the crisis has hit, we can examine what it means for entrepreneurs.

1. Aspiring Entrepreneurs:

There is no better time to start a company!!

The opportunity cost has decreased as many high paying jobs have disappeared and employment opportunities in general have lessened. If you have a job, companies will have less room to give generous bonuses and/or raises.

It’s going to be harder for entrepreneurs to raise money, but competitive pressures decrease dramatically in downturns giving you more chances to establish yourself as the leader in your field and more time to do so. When I created Aucland, a copy of eBay for southern Europe in 1998, we faced dozens of VC backed competitors in every major country. We wasted millions of dollars in advertising to establish ourselves as the leader.

When I launched Zingy in September 2001, we essentially had no competition. The online advertising market had completely dried up allowing us to buy billions of advertising impressions for $10,000! The lack of competition proved critical to our success given that it took two years for the company to start establishing itself in the marketplace.

If you have been thinking of creating a company, now is the time to make the plunge!

2. Poorly Capitalized Startups:

My definition of a poorly capitalized startup is a startup with less than 1 year’s worth of cash on hand. A company may have $100 million in the bank, but if it’s burning $20 million per month, it’s poorly capitalized. If this is the predicament you find yourself in, I will reiterate the recommendations that most VCs have been giving to their portfolio companies during the past week: cut your burn as much as possible as fast as possible:

• Stop marketing unless it has a proven positive return on investment
• Lay off anyone non essential
• Focus development on the most important features
• Consider salary cuts for the top management and anyone highly paid
• See what payments you can defer

Only profitability will put you in control of your destiny!

If you have not seen it, check out the Sequoia “RIP: Good Times” presentation.

3. Well Capitalized Startups:

If you have more 3 years worth of cash on hand, you are well capitalized. Given the current environment, you may very well need it and I would advise you to heed many of the recommendations I mention for poorly capitalized startup in terms of keeping lowering your burn and aiming for profitability. However, I would recommend being selectively aggressive.

It’s when everyone else is cowering and sitting by the sidelines that the best opportunities arise. For Internet startups, they usually come in the form of inexpensive acquisitions and marketing. That time has not yet come.

In terms of potential acquisitions, many entrepreneurs have not adjusted to the new reality and many startups have not run out of cash yet. This opportunity will come in 2009 and/or 2010. In terms of marketing, the time has not yet come either. Many media buys are committed to ahead of time and will probably run until December. In 2009, the opportunity may appear to buy a lot of traffic cheaply. You will notice it when if your average cost per click decreases significantly in your Google AdWords campaigns.

In the meantime, cut costs and be patient knowing that your time will come!

Conclusion:

The economic environment has been radically altered fundamentally changing conditions for startups. Valuations will decrease. M&A activity and IPOs will decrease. The average life cycle of a startup from inception to exit will be much longer – over 5 years. In this environment, only the truly committed should venture. Your mettle will be tested and you will need all your grit, tenacity and passion, but if you stand the test of time and take advantage of the opportunities the crisis offers you, you will be richly rewarded!

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It annoys me to no end that even as banks have massively diluted their shareholders to raise capital, they are still paying dividends. In the current environment they should focus all their efforts on capital preservation. They should completely eliminate their dividend. Besides, given the number of new shares they have issued, cutting the dividend per share by a certain percentage, does not decrease the cash outflow by that percentage.

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