Monday, March 18, 2013

Social Risk and Private Reward

Both optimism and pessimism are two different forms of delusion and in business, the game is to treat Triumph and Disaster with the same level of caution.

We all know funding is critical for innovation and the survival of SMEs, A lot of the funds spent for upstream research can be channeled back to the business through downstream commercialization.
One form of funding that should not be ignored is the government:
Google’s algorithm was funded by the National Science Foundation, Iphone smart technologies were also funded by the U.S government; GPS, touchscreen display and Siri. Apple also benefited from early stage finance from the U.S. government's Small Business Investment Company program.
Venture capitalist only got involved long after the proof of concept had been established, in other words the government took more risk to spark innovation in a strategic area.
Once the business is running, the stock market can be an excellent source of funds for expansion, growth and wealth. The same way Apple became the most valuable company for a couple of years

An efficient market prices things accurately. The more informed buyers and sellers who behave in a logical fashion, the more efficient a market becomes.
The stock market is somewhat efficient, meaning it prices stocks at rational levels over the long term. But on any given day, the stock market is driven by alternating cycles of fear and greed which distort prices away from their fair value. Day traders are simply gamblers who are one trade from disaster and the market is more efficient with investors.
A smart way to innovate and grow your business is to spread the upstream investment risk for a triumphant downstream reward which should benefit all stakeholders