Only 50 Million

November 20, 2006

I’ve been concerned for some time that real estate is in a bigger bubble cycle than web 2.0 internet.

So to wake up this morning and see that Sam Zell has sold out to Blackstone Group, in the largest single real estate transaction in history.  As in, 36 BILLION dollars worth.  The underlying point is that it’s not just any REIT, it’s Sam Zell, the master of acquisition and disposition timing. 

Fortunately, I think someone just offered him an absurd amount of money.  Another fortunate coincidence is that my current gig is looking for property accountants, acquisition analysts, and property managers, so send me a note if you’re an Equity Office employee looking for a new job.

But at the end of the day, you’ve got people drinking the Silicon Valley kool-aid with the following statements: 

Within a year or two, companies with fewer than 100 employees will have no need to buy anything from Redmond other than perhaps Windows XP Home; within five years, the same will go for firms with under 1,000 employees.

 There are 50 reasons why SMB companies will be the last to adopt online applications instead of good ol’ Microsoft Office.  Granted, Google will create a bit of marketing pressure that will result in a cheaper price for Office, but that will only do more for Microsoft market pentration.

And then these doozies:

…and no $50+ million opportunities remain for startups other than in “Social Networking,” …

…and have a maximum upside of $50 million.

Although some may be happy with $50 million paydays after a seed and A round, if you want a shot at making some real money, best to stay out of Google’s way.

When you can start a company for $600 (and $10 million worth the VC connections) and a lot of people are tired of being the fighter pilot doing the crop dusting, I’m pretty sure $50 million would get you off the couch.  If you start working now, you might even be able to get 2 of these only 50 million companies off the ground. 

So take the opposite approach, get in Google’s way, you’ll have to settle for $50 million.  If you’re thinking “only 50 million,” shut up and buy someone a turkey.

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