The Wall Street Journal published a biographical article (free till May 10th) on George Gilder, one of the chief exhalers that inflated the optical bubble of 1999.
I mentioned Gilder last week in my first post on Wintegra (WNTG). He has consistently spoken positively of a network processor company called EZ-Chip and the holding company LanOptics Ltd. (LNOP). His support for the company has been unwavering for years as he continues to predict an NPU revenue ramp for EZ-Chip 6 months into the future. I hope this isn’t because EZ-Chip is a leading sponsor of his annual Telecosm shindig. How about some introspection into why things aren’t working out as he projected?
I’ve been cautious of Gilder because I think he took technology like WDM and purposely dumbed it down to enrapture investors who lacked the technical discipline to really understand what they were buying. Occasionally I get comments that what I write is “too technical” or “Not targeted at a wide audience”. I take them as compliments as that’s exactly what my goal is – to operate at a higher technical level than most. While my audience may be smaller I think it’s a better source of feedback, which is why I write this blog.
Barry Ritholz at the Big Picture summarizes the WSJ article and adds his opinions:
The key tell that his newsletter was a house of cards was that even Gilder himself would note that “He doesn’t do price.” When you consider how utterly absurd that is for an investment newsletter, you can understand how totally out of hand things can get.
This is a simple but important observation. Buying technology equities for technology’s sake without attaching a valuation is a formula for investment disaster (as well proven 6 years ago). His posts on EZ-Chip (that I’ve seen) lack any financial justification, like how big he thinks their TAM is (not what some market research wonk thinks) or what he thinks the company is worth.
I think his service and brand would be significantly enhanced by adding financial rigor, perhaps by adding a partner to his company.