Archive for September 2011

Like shooting fish in a barrel…

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More information emerged today about self-proclaimed “trader” and financial markets “expert” Alessio Rastani. The Independent reported that Rastani “hosts seminars for The Wealth Training Company”, which claims to offer “The UK’s Number 1 Stock Market Training Course”, and named his boss as Darren Winters. Sure enough, Rastani (and his now-infamous BBC interview) are featured on The Wealth Training Company’s website (and what a slick and professional-looking website it is, too!).

A spot of Google research revealed that The Wealth Training Company isn’t the first company Darren Winters has run that offers stock market training. He previously ran WIN Investing which, as it turns out, has had a few dissatisfied customers in its time and was censured by the Advertising Standards Authority for making unsubstantiated claims in its adverts. It also appears that, despite running a company that claims to be able to teach you how to make money from trading the stock market, Winters has some trouble keeping his own ventures afloat – he was director of a software company that went bankrupt, owing over £250,000 and WIN Investing itself came very close to collapsing in 2009.

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Written by jackgavigan

September 28, 2011 at 9:34 pm

What makes a trader?

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 Update: While I was busy tapping away at this blog post, the Telegraph published an article on their website in which they quote Rastani confessing that he’s “an attention seeker. That is the main reason I speak.”, before going on to reveal that “Trading is a like a hobby. It is not a business. I am a talker. I talk a lot. I love the whole idea of public speaking.”

Yesterday, the BBC News channel broadcast a live interview with a “trader” named Alessio Rastani, in which he made various provocative statements that have been widely reported and debated across both traditional and social media. The story came to my attention yesterday evening, so I watched the interview online.

He didn’t come across as the sort of person who works in the financial markets. In fact, to me, he came across as the sort of person you occasionally encounter in various fields who claim to be an “expert” or a “guru” but who are, in fact, self-promoting attention-seekers. You see a lot of these in the tech startup industry or the information (or “cyber”) security space. A good starting-point for determining whether someone is a genuine expert or a charlatan is to find out what he does, where he works, what his background is, that sort of thing. So, I decided to do a quick background check on Mr Rastani.

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Written by jackgavigan

September 27, 2011 at 7:28 pm

Can Groupon Pivot?

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Last week, I wrote about the fact that the single largest threat to Groupon’s survival is a loss of confidence on the part of its merchants, in Groupon’s ability to pay its debts. Just as Lehman Brothers was brought down when other banks stopped lending it money because they feared that Lehmans wouldn’t be able to repay, Groupon could be brought down were merchants to stop supplying Groupon with deals if they feared that Groupon wouldn’t be able to pay up in 60 days time.

Since then, Groupon’s IPO has been delayed and news has emerged that Groupon employees are suing the company (credit to Eamonn Carey for bringing that last piece of news to my attention). Meanwhile, Groupon’s competitors continue to gain ground and Google has expanded the “beta” version of its Google Offers service to five more cities.

The bad news is piling up and one has to ask oneself: “Is this the beginning of the end for Groupon?”

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Written by jackgavigan

September 11, 2011 at 11:47 pm

Posted in Bubble 2.0, Innovation

Will Groupon be able to pay me in 60 days time?

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Update: Commentary added on 7th September after news emerged that the Groupon IPO may be delayed.

The traditional path from startup to success used to be as follows: a company gets founded, it gets funded by VCs and then it either IPOs or gets sold to another company, allowing the founders, VCs and employees who have been granted share options, to cash out their shareholdings and reap their just rewards.

Over the past few years, however, things have begun to change. Companies like Facebook and Twitter are now eschewing IPOs in favour of staying private, in order to avoid the public disclosure requirements and regulations that a public company must comply with. The downside of this is that the time horizon for founders and employees to receive their pay-off stretches out into the dim and distant future. To solve this problem, it has become common practise for shareholders to cash out small portions of their shareholdings as part of investment rounds, thereby liquidating some of their wealth and enabling them to buy a house, a Ferrari or whatever else they fancy. However, when this occurs, it normally only accounts for a small fraction of the investment round, with the majority of the money raised going into the company, to fund its growth and expansion towards an eventual exit (or, if they opt to remain private, profitability).

Groupon have been doing things slightly differently.

Between its founding in 2007 and the Series E round in November 2009, Groupon raised $35.8m.

Then it stepped up a gear. Since the beginning of 2010, the company has raised over a billion dollars – $1,098.2m to be exact.

Here’s the interesting thing: of that $1,098.2m, $946.8m (more than 86%) has been distributed to the founders or earlier investors in the form of share buybacks.

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Written by jackgavigan

September 5, 2011 at 12:07 am

Posted in Bubble 2.0, Investing