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Technology Stocks : USWeb (USWB) -- Ignore unavailable to you. Want to Upgrade?

To: MarkC who wrote (836)	5/3/1999 10:19:00 AM
From: Rick	Read Replies (2) \| Respond to of 1188

I agree, but whatever economies exist are overshadowed by the more important elements of the business model. The value of internal knowledge is mitigated by these facts: 1) Since it is based on third party software or tools, it is not unique to USWB. 2) Since employees can take their knowledge to your competitors or become and independent competitor, it is not very stable to the organization. 3) Since the most talented and ambitious employees can demand a ransom for their skills, the company always ends up paying fair value or overpaying (in cash or options, either way shareholder value is diminished). This leaves little residual value for shareholders. Contrast this to a product oriented patent, which once developed by employees stays with the company and potentially delivers residual value for years. 4) Every consultancy would like to believe that it has found the magic formula to use repeatable processes, leverage knowledge, etc. But the sad (for shareholders) reality is that this is often an empty rallying cry. Any value captured by these efficiencies is usually shared with the customer, because it's such a difficult "product" to identify. Anyway, I am not arguing that you can't make any money. It's just that you have to work much harder for it than other business models. And once you start making good money it is not stable or predictible into the future. Rick.