Finally we know what they do. Nothing at all;
Making it big by doing nothing
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 stock market now indulges a 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.''
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. 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.
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 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.''
Translated into English: We do nothing and we intend to continue to do nothing.
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.''
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 apparently makes it
potentially desirable to a private company that wants to avoid the hassle involved
in going public.
Such an approach to business would have been laughable just a few years ago.
Still, it is hard to say what distinguishes NetJ.com from most Internet companies.
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.
That is the beauty of NetJ.com. 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.''
Of course there are risks here. Some of them are stated pretty clearly in
NetJ.com's filings with the SEC. The telling passage is the one that describes,
incredibly, the danger of competition. You might think a company that does
nothing would have the field to itself. But no! Asthe 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. |
