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<nettime> New York Observer: The New New Strategy


The New New Strategy: Do Nothing and Do It Well

by Michael Lewis

(BLOOMBERG NEWS)--The Internet boom has transformed the idea of the
company.  A company used to be a group of people who organized themselves
for fairly well-defined tasks. But these days the U.S. stock market
indulges a new, looser definition. A company is now a group of people who
raise capital to do whatever they want to do. 

The reason usually given for the new tendency of companies to morph
overnight is that they operate in a fast-changing environment. A company
should not be expected to predict what it is going to be doing in six
months because six months suddenly feels like a lifetime. 

That may be true. But it is also true that 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
slightly unknowable. It must remain forever in a state of pure

A Bloomberg user recently pointed out what must be one of the purest
examples of pure possibility, an Internet company called
Corporation. 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 5-for-1 stock split. 

The only hint that is in any way different from most Internet
companies is Bloomberg's description of it: currently has no
business operations. 

Assuming that the Bloomberg machine was mistaken, I went to the documents
filed by 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

This in itself is unremarkable. Many people do nothing and intend to
continue doing so. What distinguishes is the spirit in which it
does nothing, which is astonishingly similar to the spirit of many new
companies widely viewed as successful. began life as, 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. 

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 na´ve. The mere fact that is a public company, with a
share price that goes up and down every day, apparently makes it
potentially desirable to a private company that wants to avoid the hassle
and the wait involved in going public. offers itself as a kind of
bandwagon, albeit one without wheels. 

Such an approach to business would have been risible just a few years ago. 
Maybe it is even now. Still, it is hard to say what distinguishes
from most Internet companies. A lot of putatively successful Internet
companies raise capital first on the pretext of creating one kind of
business, only to deploy it in the creation of another. Netscape
Communications Corporation invented this approach, pretty much by
accident.  (Microsoft Corporation took away its original business.) Others
now do it more deliberately. The trick, as one prominent Internet chief
executive 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 By doing nothing, it has avoided ruling
out the possibility of not doing something else. As the company explains
in an S.E.C. filing, "The company does not intend to restrict its search
[for a partner] to any particular business or industry." Its list of
possible ventures includes, but is not limited to, "high tech, natural
resources, manufacturing, R&D, communications, transportation, insurance,
brokerage, finance and all medical related industries." Not even Inc. leaves itself open to so many different opportunities. 

Of course there are risks here. Some of them are stated pretty clearly in's filings with the S.E.C. The company has $127,631 in accumulated
losses--tiny by Internet standards. It has "extremely limited assets" and
"no source of revenue." 

But the most telling passage of the risk-disclosures section in's
confessional is the one that describes, incredibly, the danger of
competition. You might think a company that does nothing, and which is
looking to merge with a company that does something, would have the field
to itself. But no! As the 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. 

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