An Interesting Gilder Article from Boston.com....FYI...
<<Sage of the Berkshires
Technology 'futurist' George Gilder a one-man market force
By Aaron Zitner, Globe Staff, 3/20/2000
red Kocher was at his desk one Monday morning last July when a glance at his computer showed that something strange was afoot. Shares of NorthEast Optic Network Inc. of Westborough, where Kocher runs investor relations, were climbing to unprecedented heights. As he watched in puzzled amazement, the stock soared higher and higher, nearly doubling in less than two hours.
'We hadn't announced a thing,' Kocher said. 'There was no news. Everything was the way it had been when we turned off the lights Friday night. I said, `What in the world is going on?'
It wasn't until Kocher checked with stock analysts that he had an answer. NorthEast Optic was riding one of the most powerful forces in today's market: the Gilder Effect.
Software giant Novell Inc. saw the power of the Gilder Effect in December, when its market value rose $2 billion in a single day. Last month it was tiny Xcelera.com Inc., whose shares climbed 47 percent in one day. Terayon Communications Systems got two boosts, 28 percent one day in June and 48 percent last month.
To find the force propelling these stocks, look beyond the money managers of Boston, past the high-tech headquarters of Route 128 and Interstate 495, and stop at the tiny Berkshires town of Tyringham. On a recent day there, George Gilder, a somewhat disheveled man with unruly graying hair, was looking out from his farmhouse and fretting about a decidedly low-tech problem: His mother's cows had broken from their pen, and one was heading toward the house.
'It's coming to our yard,' Gilder complained. 'It's going to redecorate the lawn in due course!'
The bustle of Silicon Valley could not have seemed farther away. But from Tyringham (population 350), Gilder has built top credentials as a 'futurist' and technology analyst: A profile on the cover of Wired magazine. His own annual technology conference, which draws industry stars. Status as cofounder of Forbes ASAP, an influential tech magazine. And now, a cult-like following for the Gilder Technology Report, his monthly analysis of trends in the computer and networking sectors.
Gilder has written the newsletter since 1996, but in recent months it has grown to 50,000 subscribers who pay $295 a year for the reports. And he has gained the clout to move stocks.
It is an unlikely role for a man who spent three decades as a kind of roving intellectual, more motivated by ideas than money.
Famously absentminded - friends say he has turned up at events with a sock or two missing - Gilder has been a speechwriter for Richard Nixon, Nelson Rockefeller, Bob Dole, and Ronald Reagan. His books on gender in the early 1970s, in which he argued that society depends on firm, traditional sex roles, prompted the National Organization for Women to dub him 'Male Chauvinist Pig of the Year' in 1973. His 1981 book 'Wealth and Poverty' became the bible of the supply-side movement.
Now, at age 60, Gilder is so respected as a technology analyst that Bell Labs once called a meeting to try to convince him that his favorite fiber-optic products were going nowhere. Microsoft Corp.'s Bill Gates summoned Gilder to his office and dressed him down for writing that the Internet would swamp the giant software company. Later, Bell Labs adopted the technology Gilder favored, and Gates embraced the Internet.
'He's absolutely ahead of his time,' said Stephen Garofalo, who credits a 1992 Gilder article, on the coming era of fiber optics, with persuading Garofalo to found MetroMedia Fiber Network Inc. The New York builder of data networks now has a market value of more than $20 billion.
'I haven't read anyone who's been so consistently on the money,' Garofalo said.
The Gilder Technology Report is packed with details about the physics of light and the properties of semiconductors. Gilder celebrates the breakthroughs that allow a disk drive's reading mechanism to fly 75 billionths of a meter above the disk. In a single second, he predicts, one fiber-optic cable will soon be able to carry the same traffic that crossed the Internet in an entire month three years ago.
Gilder starts with the physics, then reasons his way into a passionate argument about what technologies will succeed or fail. But many of his subscribers apparently skip the science and troll for the names of companies Gilder favors. The minute the newsletter goes online, highlighted companies often see their share prices soar. In November, investors even bid up a company, Microtest Inc., that Gilder had mentioned in passing and was not recommending in any way.
And yet Gilder portrays himself as a kind of accidental stock guru. He says he is only telling readers which technologies he finds the most elegant, not which stocks are about to take off.
'I don't study the prices of these companies,' he said. 'I don't write about them because they're low or not write about a great technology because it's overvalued.'
But the Gilder Technology Report, like other stock letters, presents a model portfolio of favored stocks. It also highlights Gilder's impressive skill as a stock picker. He has backed wireless company Qualcomm Inc. for years, for example, and last year it was the best performer among the Standard & Poor's 500. Other longtime picks include some of today's top stars, such as JDS Uniphase Corp., a maker of fiber-optic components, and Global Crossing Ltd., which lays fiber-optic lines beneath the ocean.
Moreover, the report, produced in tandem with Forbes magazine, is advertised as a tool for making a stock market killing. 'Incredible profits ahead,' says one advertising flyer. 'Get rich on the coming technology revolution.'
'It is morally ambiguous,' Gilder acknowledged. 'I don't particularly defend it, the way these things are sold.' Handed a brochure touting the newsletter, he scans it uncomfortably. 'I let them do that,' he said of the Forbes organization. 'It's based on what I write. But they take my stuff and a copywriter writes it in this language.'
Gilder himself says he has done well in the stock market. He owns seven or so stocks from his newsletter's 32-company model portfolio, including about $500,000 worth of Qualcomm. But he says he does not buy or sell in tandem with his writing, and that a San Francisco money manager makes most of his stock decisions.
Even some Gilder fans question his role as a stock guide.
'He's excellent in his niche,' said George Colony, chief executive of Forrester Research, the Cambridge research firm, who credits Gilder with being among the first to understand the Internet phenomenon. 'But this [stock-picking] sounds like it's outside his niche.'
Driven to distraction
One day many years ago, Gilder drove to Philadelphia to watch a track meet, then flew home to Boston. Back at his house, he noticed his car was no longer on the street. So he called police to report it stolen.
'Then I started to think a little more deeply about it,' he recalled. The car was still where he parked it in Philadelphia.
Friends talk affectionately about his absentmindedness - the suit he lost, the string of shoes and socks he has left in hotel rooms across the country. To them, it is the flip side of his intensity.
'He thinks about one thing and pushes the others out of his head,' said Bruce Chapman, a longtime friend.
It is a trait that has not always served him well.
Gilder comes from a prominent Yankee family. One great grandfather ran the Boston & Albany Railroad, and another was Louis Comfort Tiffany, famous for his stained-glass lamps. But Gilder did not grow up wealthy. His father was killed in World War II when Gilder was 3, and the family lived modestly off its dairy farm. A friend of his father, David Rockefeller, stepped in to pay the tab for his education at Exeter and Harvard.
But at Harvard, he failed courses.
'I could not focus on more than one subject at a time,' a fidgety Gilder said over lunch recently, playing with an empty Nestea bottle that often shot from his hands and across the table. 'I was kicked out of Harvard, and I don't mean suspended.'
Even when Harvard readmitted him, the problem remained. Once, Henry Kissinger assigned a 30-page paper on arms control. Gilder turned in a long argument on how arms races can be a helpful mechanism for pushing scientific advances. But it was 120 pages, and Kissinger gave him a C.
A moderate Republican in the Rockefeller tradition, Gilder became a freelance writer and editor for political magazines. Then in 1971, he unexpectedly broke into the mass media. President Nixon had vetoed a day-care bill, and Gilder defended the action in an arcane journal published by the Ripon Society, a Republican group. He argued that federally subsidized day care merely takes tax money from stay-at-home mothers and gives it to working mothers, who he said tend to be wealthier.
The piece immediately became a rallying point for the budding women's movement, and even Republican women protested. Gilder was ousted from the Ripon Society. But the controversy put him on television, debating Betty Friedan and Germaine Greer.
It was the start of a career as a kind of public intellectual and provocateur.
'I decided this was obviously a hotter subject than liberal Republicanism,' Gilder said.
Gilder went on to write more about gender and sexuality, saying that homosexuality and workplace equality led to a variety of social ills. He also wrote books on race and welfare.
To write 'Wealth and Poverty,' he says he read 100 books on economics. Then, in the early 1980s, Gilder became enthralled by the US semiconductor industry. He devoted himself to studying its characters and its science. When he noticed that every chip engineer had a book by Carver Mead on his desk, Gilder moved to the Caltech campus for several months to study with the famed chip expert.
'Carver is the one who taught me how to analyze technology,' Gilder said. 'He said, `Look at the physics first, not the markets. Listen to what the technology is telling you.'
Gilder began writing more about technology, eventually persuading Forbes to create a tech supplement called ASAP. It became an influential publication, and Gilder eventually used it as a platform to found, along with Forbes, his annual technology conferences.
Today, Gilder spends about half his time on the road, giving speeches and grilling engineers and enterpreneurs about their companies. His wife, Nini, works from home as an architectural historian. Together they have home-schooled each of their four children for at least one year, with Gilder's mother teaching ancient Greek, Gilder handling science, and Nini teaching other subjects. His 14-year-old daughter, who is his youngest child, is being home-schooled this year.
Twenty people work for Gilder Technology Group Inc., housed in an old mill building in the village of Housatonic. In tandem with Forbes magazine, they run the invitation-only technology conference and publish three newsletters: the technology report, a report on trends in the power utilities industry, and a report on companies leading the new economy.
The new frontier
What does Gilder see next?
He laid out his ideas recently at the Optical Fiber Communication Conference, a once-obscure event that drew 18,000 earlier this month to a Baltimore convention center. Gilder was its keynote speaker.
The computer age is dead, he believes. Bill Gates, Steve Jobs of Apple, Andy Grove of Intel - they are the Mount Rushmore of the industry, towering figures relegated to lifeless stone. Instead of the computer and the chip, the future belongs to technologies that speed the movement of data. They include lasers that slice light into thousands of data-carrying wavelengths, fiber-optic strands to carry the light, and newfangled wireless systems.
Gilder is a bandwidth evangelist. Today we are tethered to 56K modems and frustrated by what he calls the 'World Wide Wait,' but Gilder says we will soon be awash in bandwidth.
What this will feel like remains a bit obscure, but Gilder thinks a wave of small computerized gizmos is on the horizon.
'They'll be as portable as your watch, as personal as your wallet,' he told the engineers in Baltimore. 'They'll recognize speech, navigate streets. They'll perform transactions, collect your news and your mail, and they'll read it to you if you want. They'll perform a wide array of functions that are hard to anticipate today.
'They just may not do Windows,' he added, in a swipe at Microsoft, which he believes is ill-prepared for this future.
The audience roared its approval, and afterward Gilder was crowded by people seeking his autograph. But as with many of his readers, they weren't there to thank Gilder the analyst. They wanted to meet Gilder the stock guru and ask questions.
'Should I keep Global Crossing?' (Sure. The company may soon be acquired.)
'How will high oil prices affect broadband?' (They make communications technology look more attractive.)
Anthony Soslow was in the crowd trailing Gilder from the convention hall, listening to his every word. 'I've certainly gotten something out of my $295,' said Soslow, a Pennsylvania money manager, referring to the newsletter subscription price. 'Hundreds of thousands of dollars more.' He rushed back to listen to Gilder. 'I can't talk,' he said. 'This is pretty valuable for me.'
This story ran on page C1 of the Boston Globe on 3/20/2000.
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