P/V by Geoffrey Moore:
Hot off the GGlist press:
Gang,
Luu has raised some great issues in a recent post and I wanted to dash off a quick answer (in the midst of the new book launch). The market is not doing gorilla game investing. It is doing a kind of venture investing based
on the inexorable force of the Internet reengineering the economy. Arguably all the B2B investment enthusiasm has been early market, and this week's corrections have been about hitting the chasm, as pragmatist investors call for a "showing of the money." This will create GREAT buying opportunities, I think, but again, more in the godzilla than gorilla game areas.
P/V is not an analytical tool the way P/S and P/E are (there is no numerical V). Instead, it is a teasing reference of how out of line P/S or P/E has gotten. But investors do factor in V into their valuations for sure,because if you
are not with the Internet, it is all too likely you will get caught crosswise in it, and lose the franchise. Basically,
V is all about how market dynamics are shaping CAP, just as E is pretty much all about how management execution is shaping GAP, and S is the combination of the two affecting both GAP plus CAP.
Geoff
Geoffrey Moore
Chairman, The Chasm Group
(650) 312-1946
Venture Partner, Mohr Davidow Ventures
(650) 854-7236 |
