Mr. Tuzmans experience with Goldman Sach - Term Paper Example

Using your knowledge of small business management critically to evaluate the difficulties of Gov.Works.com experience while it grew also mention other strategic issues that helped them grow and what led to their failure. During the late nineties the dot com. mania possessed the imagination of the world. The potential seemed limitless. Money was chasing after the future, which hadn't arrived but was sure it would-maybe the day after tomorrow one could suppose in retrospect. But it never did. The same tedious fundamentals applied since the days of Jesus-one and one, has to make two. (Except today, in the U.S. monetary system, it apparently doesn't. They just print money, and it's the confidence of the people makes it so. With, Mr. Isaza Tuzman and Mr. Herman, the founders of Gov. Works.com- ingenious as they were, they couldn't return profit on capital to investors, and so the AX fell-and fell hard. Not only did ax fall on Mr.Tuzman and Mr. Herman's company but with many .com companies whose similar aspirations are now just vacant ideas. Along with these vacant ideas, a multitude of U.S. office buildings became vacant. Some, even at this writing, are still vacant. Mr. Tuzman's experience with Goldman Sach, the major investor firm in the U.S., indeed was expedient on Isaza Tuzman resume in grabbing the 60 million from investors. One can easily see money flowing behind such a resume, in such an explosive field, with such great expectations. The late nineties were exciting, especially when one heard news like- young restaurateur goes into computer business, establishes Earthlink, sells part of his interest for $43,000,000. Of course, one of his financiers went to jail for swindling 200 million. But that a different story and had nothing to do with this young genius. Capital stumbling over itself, the government printing money without regard for true value, greed up-trending, the mafia selling 57 billion in illegal drugs in the U.S., 300 million world wide(U.S. DEA, internet.). Ethics, totally disregarded in government and lobbyist in Washington are king with cash. And today Madonna says she's going to sing her songs hanging from a Cross Where money rules action and truth becomes sophistry-to be used for any all purpose to gain wealth. (Now you'll get no down- pump on wealth from this writer. But it's way to over rated. There are greater pleasures besides money and sex. The Dot Com era offered great expectation and nobody wanted to be left out. Mr. Tuzman now says, "Say it truthfully, say it completely and say it first.") (Start-up Journal, P. 1, Wall Street Journal 2006) "We're growing too fast and losing focus." Those statements tell us money alone-in fact money alone tells us success and accomplishment will not come unless the CREATOR has decided it is so, and are willing to persevere until the dream is SO. Capital and knowledge are imperative to succeeding in business.( I preach not here-I tell it from being at the bottom and the top.) The truth is, it's not the end that matters, it is how you do it in between that counts. That you do it right,-in the end, that is the only result which matters. (Enron, 2006.) Small coin games will not give you no happiness at the final rest. Oh, but the glare of capital that overshadows all creation. It's something to behold.. This may be above you understanding, but there is no such thing as failure, only just not enough follow through. I'd be delinquent to tell you otherwise. Mr. Tuzmand is now apparently doing some kind of amends project-has a firm, the Recognition Group, which invests and advises distressed companies. It is admirable when he states that he advises future business relationships of his past failures. (Loftus P. 1) That indeed, is admirable in a world bent on suicide bombings and invading countries. Both have said, Mr. Tuzmand and Herman, they've learned their lesson. Life appears to be on the mend. He goes onto further say, (Loftus P.1) "I'm trying to internalize the lessons I've learned and avoid similar mistakes in the future. I'm as hungry as anyone out there because I'm trying to restore my reputation." This statement tells us the tiger is alive as ever. The question is, will he be temperate when the chips are on the table again. Will he take the ethical ground first, before taking chips off the table. We'll see- we'll see with you too. How you'll play your life It appears with 60 million in hand, Mr. Tuzmand and Herman had to do something-something to earn interest that was expected. That money could be called fools gold because it has no immediate use. You spend, because you have to spend not because it's something to do with it. Tazumund goes onto say, (Loftus Page 1-2) "I've lost some very powerful people a lot of money. I thought I was smarter than I was, and I made some stupid decisions. My reputation is colored as a result and you should know that if you're going to do business with me." (Wikipedia Encyclopedia, Dot-Com bubble P.1) "Refers to approximately four years of time (1997-2001) in which stock markets and Western nations had their value increase rapidly and most significantly in the technology new internet sector. A combination of rapidly increasing stock prices, individual speculation in stocks, and widely available venture capital created an exuberant environment in which many new businesses dismissed standard business models of increasing market share at the expense of the bottom line. The period was marked by failure (and in many cases, eventual spectacular failure) of a group of new Internet based companies commonly referred to as dot coms.The bursting of the dot-com bubble marked the beginning of a relatively mild yet rather lengthy recession in Western nations." (The bubble builds, Witepedia Encyclopedia P.1) The times expressed, again, great expection. Shares of these .com's were excellerating and venture capitalists put caution aside. Greed overtook comon sense.And investors who otherwise would play it close to the vest decided to get in while the getting was good. Low interest rates helped fuel the engine. Most of the young enterprenours had the dreams and technical now how but in reality lacked the Administrative ability to bring it off. However, they were successful in selling their ideas, stacking a bunch of money in their bank account, with nothing really to do with it.But spend on expansion for customers who weren't there yet. Something like a dame gets all dressed up for the ball and the hall lights hadn't been turned on yet. So she had to wait in the dark-girls can have big problems in the dark. So it is with money-you just can't leave it alone. You have to do something with it. (Free Spending, Wikipedia Encyclopedia P.1) The theory was, spend large quantities of money accumulating large customer base. Huge sums of money were spent this way, but the returns were slow in coming, too slow for the venture capitalist to wait. "Get large or get lost," (Free Spending Encl P.1) became almost policy at the .com's. Initial stock offering were scooped up the public even though there were no profits. It was all tomorrow, but what must be realized is what happens tomorrow only arrives what you did today. If one doesn't create today there will be nothing to have tomorrow. So, the reader should perceive, money is only an ingredient. Gradients cannot be skipped.When taking gradient steps, one should keep one's eye on the goal while moving up the gradient. Banks always have plenty of money. Sell 1 and 2, and 1 and 2. Look what's in the account by the end of the week, and plan next week from there. Always keeping an eye on your dream and know there is distance and distance are arrives at by gradients. (The Aftermath, P.1) The clash between Time Warner and AOL was apparently the beginning of the end. The Dot com's paled in face of the "Old Economy" (Wikipedia Encyclopedia P. Aftermath P.1 ) "The revolutionary optimism of the boom faded, and analysts once again recognized the relevance of traditional business thinking." Summary: The Dot Coms ran out of money. Convential wisdom prevailed,-but that in no way should diminuize the extroadinary step forward. However, the only companies surviving that era are those who kept their feet on the ground, their dreams alive, and common sense spouting from their lips. Work Cited Page Startup Journal, Wall Street Journal, page 1, Peter Loftus New York 2006 Wikipedia Encyclopedia P. 1 "The Dot-com bubble refers to approximately four years of time (1997-2001)" Wikipedia Encyclopedia, Dot-Com bubble P.1 Wikipedia Encyclopedia Aftermath P.1 Mr. Isaza Tuzman and Mr. Herman are trying to put behind them any pain caused by "Startup.com." But, when possible, they have also used it to their advantage. Mr. Isaza Tuzman, who worked in investment banking at Goldman Sachs Group Inc. before Govworks, has written a book on entrepreneurship that will be published by Harvard Business School Publishing in January 2003. And the film has helped get free media publicity for Recognition Group. But both men now say they have learned their lessons, and they are using them in their latest venture. Mr. Isaza Tuzman, 30, now heads Recognition Group, a New York firm that invests in and advises distressed companies. Mr. Herman, 31, is an affiliate partner with the firm, although he recently took a leave of absence to assist his father's business in New Hampshire. The friends have reconciled since their falling out over Govworks. Recognition Group seeks controlling stakes in distressed companies with less than $150 million in annual revenue. The firm works on behalf of other private-equity firms and workout groups within banks. Since late 2000, Recognition Group has advised about 25 companies and purchased controlling stakes in three firms. It has sold two of those companies for solid returns, Mr. Isaza Tuzman said. After all, the messy demise of Govworks.com, an online government-services provider, was chronicled in the 2001 documentary "Startup.com." The film showed a company enriched by $60 million in venture backing growing too fast and losing focus. A low point came when Mr. Isaza Tuzman fired Mr. Herman, his childhood friend and Govworks co-founder. But both men now say they have learned their lessons, and they are using them in their latest venture. Mr. Isaza Tuzman, 30, now heads Recognition Group, a New York firm that invests in and advises distressed companies. Mr. Herman, 31, is an affiliate partner with the firm, although he recently took a leave of absence to assist his father's business in New Hampshire. The friends have reconciled since their falling out over Govworks. Recognition Group seeks controlling stakes in distressed companies with less than $150 million in annual revenue. The firm works on behalf of other private-equity firms and workout groups within banks. Since late 2000, Recognition Group has advised about 25 companies and purchased controlling stakes in three firms. It has sold two of those companies for solid returns, Mr. Isaza Tuzman said. Fame from "Startup.com" has been a mixed blessing. When Mr. Isaza Tuzman meets with prospective clients or investment targets, they often recognize him from the film. He first tells them what he calls the bad news: " Then the good news: One of the biggest lessons he has learned is that the various parties involved in a start-up must communicate with each other. "Say it truthfully, say it completely and say it first," Mr. Isaza Tuzman said. Investors should be willing to tell entrepreneurs when they intend to take "critical and brutal action" with a troubled start-up, for example. Entrepreneurs must be willing to hear dissenting voices, whether it is from a venture backer or from elsewhere in the company, he said. Founders must also be willing to step aside to let more-experienced managers run the company. Another lesson is to address problems before it is too late. A common mistake for entrepreneurs is to deny when their companies are in trouble, Mr. Isaza Tuzman said. Mr. Herman adds other mistakes: trying to grow too fast and not being focused enough. Founded in 1999, Govworks grew to more than 200 employees within a year. But the Internet bubble popped, drying up funding. Govworks wasn't generating enough cash to keep going. It filed for bankruptcy-court protection in late 2000 and its assets were purchased by First Data Corp. and American Management Systems Inc. One ironic lesson is that private-equity investors aren't such bad guys after all. In "Startup.com," Mr. Herman expresses disdain for Highland Capital Partners, a Lexington, Mass., firm that considered investing in Govworks. Mr. Herman believed the firm was trying to take advantage of Govworks by seeking too much control. The two sides ultimately failed to agree on terms. But now, as an investor in distressed companies, Mr. Herman is more sympathetic. "I have a totally different perspective on that today," he said. "If we had had Highland . . . we probably would have been much more successful. They had more of an interest in building a great company. They had more knowledge to contribute." Mr. Isaza Tuzman and Mr. Herman are trying to put behind them any pain caused by "Startup.com." But, when possible, they have also used it to their advantage. Mr. Isaza Tuzman, who worked in investment banking at Goldman Sachs Group Inc. before Govworks, has written a book on entrepreneurship that will be published by Harvard Business School Publishing in January 2003. And the film has helped get free media publicity for Recognition Group. One of Recognition Group's investments was KPE, a media-services provider. The firm's investment arm acquired KPE in late 2001 and sold it to Mobilocity Inc., a New York provider of mobile computing services, in February. Recognition Group also purchased PureCarbon, a Sunnyvale, Calif., application service provider, earlier this year, then sold it to Workstream Inc., an Ottawa professional-services firm, in June. The blended returns from those two deals were about eight times the initial investment, Mr. Isaza Tuzman says. He declined to provide further details, or to identify the third investment. Recognition Group will try to shift its focus away from advisory services and move further into private equity, Mr. Isaza Tuzman says. He is also trying to move away from a pledge fund model, in which the firm must consult with investors before doing a deal, to a blind pool where investors have less input. "This for me is a 10- to 15-year plan," he said. "I'm patient. I'm trying to marry what I did at Goldman Sachs and what I tried to do at Govworks, and work with small companies in trying to clean out difficult situations." Email your comments to sjeditor@dowjones.com. Home E-mail to a Friend Print-Friendly Format Respond to This Article Top of Page Subscribe to The Wall Street Journal Online or take a tour Sign Up Today for Free MarketWatch Membership Copyright 2006 Dow Jones & Company, Inc. All Rights Reserved By using this site, you agree to our Terms of Use and Privacy Policy. RSS . Read More