High Tech Talk

Bloomberg Press: Market Chalk Talk

Corrections or additions?

These articles were prepared for the July 18, 2001 edition of U.S.

1 Newspaper. All rights reserved.

Venture $s for Telecoms

Teltier Technologies — represented on the New Jersey

Technology Council panel on July 19 (see story above) — has the

distinction of being the second company to get seed money from the

venture capital fund that is sponsored by the NJTC. Jim Gunton

is the fund’s general manager.

How does Gunton justify investments in telecommunications when that

industry is doing so poorly on Wall Street? "Over the longer

term,"

he says, "we think it is an attractive area and are taking

advantage

of the depressed valuation to get a good price."

Teltier Technologies, located in Summit, was founded by a team that

had been in charge of Lucent’s investment in the wireless space and

decided to take the entrepreneurial jump. "They decided that,

if there is no security in the corporate environment, they would

pursue

the entrepreneurial realm," says Gunton. Teltier makes middleware

that enables third party application software developers to create

applications (908-598-4782, www.teltier.com). Founded in the

first quarter of 2001, Teltier has about a dozen employees and is

hiring. It received about $500,000 from the fund in the second

quarter.

What sets NJTC Venture Capital Fund apart from many of the other funds

based in New Jersey is its focus on early stage companies in the

state,

says Gunton (E-mail: venturefund@njtc.org or call 856-787-9700). Early

stage falls between seed stage and the majority of current venture

capital investment. The seed stage company has probably gone through

one or two rounds of angel financing or is a spinoff that was

privately

financed by a larger firm, and a venture capital fund’s seed stage

investment might range from $300,000 to $3 million.

The NJTC fund ends up owning 5 to 40 percent of the companies it

invests

in. "We have done exactly what we were hoping to do," says

Gunton. "On fund raising, we have been oversubscribed." He

has $35 million, $28 million from individuals — from angels and

such institutions as Kemper Ventures, Commerce Bank, Silicon Valley

Bank, and Progress Bank — and the rest from the New Jersey

Economic

Development Authority. The NJEDA matches every $3 that Gunton raises

with $1 from its own funds — income from its own investments and

monies raised through bond issue.

"On the investing side, we made three investments in the first

half and expect several more by the end of the year," says Gunton.

He expects the third deal to close this month.

Gunton’s first $500,000 investment went to Somerset-based Netilla

Systems (732-764-8858), which provides virtual private networking.

"It allows you, when you are away from the office, to work over

the web and access your computer files as if you were in the office.

It is less expensive, more secure, and more user friendly than current

solutions, which until now have been dialup solutions," says

Gunton.

Companies that get seed financing from the NJTC fund can piggyback

on the prestige this money gives them. Netilla Systems, for instance,

has obtained a bank line from PNC and is applying to the NJEDA for

another $500,000 under its direct seed financing program.

Currently only about 10 percent of the venture capital raised in New

Jersey actually goes into enterprises located here, says Gunton.

"My

aim is to get 100 percent of the fund invested in New Jersey

companies,"

he says. "We’re looking for companies to invest in with the

potential

for rapid growth with sustainable competitive advantage and

opportunity

for a premium exit. The appeal of early stage venture capital is that

you are looking for the home runs."

Gunton is understandably optimistic that the rewards for NJTC Venture

Fund investors will be high, and earlier this year he guesstimated

that they would get a return of 30-40 percent. Says Gunton: "I’m

still optimistic."

— Barbara Fox

Top Of Page
High Tech Talk

In college, they used to call them bull sessions. In

the days when most women stayed at home, they were called

kaffeeklatches.

In the business world, they are called "round tables," chances

to meet colleagues in your field to discuss common problems. The New

Jersey Technology Council calls them Tech Talks.

"I suggested the Tech Talk idea to NJTC last fall," says

Rick

Weiss, founder of Princeton Multimedia Technologies on Witherspoon

Street. "Some of the small companies were trying to resolve some

technology issues, and I thought we could have a forum to help each

other through our personal experiences."

"We did get criticism that our programs were so carefully

structured

that there was no time for getting to know each other and listen to

each other’s issues," says Maxine Ballen, NJTC’s president.

Panels usually last two hours, but by the time panelists have had

their say, only 20 to 30 minutes remains for questions and discussion.

"There is always a need to provide information from experts,"

says Ballen. "But we also now have woven in more interactive,

less structured programs." NJTC will hold a Tech Talk at the

Princeton

University School of Engineering on Tuesday, July 24, at 6 p.m.

Victor

Boyajian, of Sills Cummis Capital Markets Group, joins Weiss for

the session. It is open only to NJTC members and is free by

reservation,

but member walk-ins will pay $20.

Weiss (E-mail: rick_weiss@compuserve.com) was an electrical

engineering and math major at Carnegie Mellon, Class of 1980, and

has a master’s from Princeton in electrical engineering and computer

science. He worked at Bell Labs, ADR (now Princeton Softech), Digital

Equipment Corporation, and (the now defunct) Health Information

Technologies

at Canal Pointe before founding Princeton Multimedia Technologies

in 1993.

His five-person firm has developed a number of applications for

dietary

analysis, including a software program that calculates and manages

metabolic diet studies to eliminate paperwork. His company’s story

(U.S. 1, January 3) is a textbook case of how a technology startup

can leverage government help.

At the time he was suggesting a forum or roundtable, Weiss needed

information about the different web application techniques, "so

we could lower our risk by hearing what others were doing in the same

space." Though Weiss has made his own web application decision,

he will prod those who attend the July 24 meeting to think about the

future of web application technology. He will ask where other

companies

are focusing their long-term technology attentions and what are they

using in the meantime.

What difficulties are they having in supporting their

program?

How are they hiring individuals who know this program?

How are they training people?

Among the available web applications now are Java Server pages,

Cold Fusion, and the updated version of Microsoft’s Active Server

Pages. "I think we are in a market where there is no clear

leader,"

says Weiss.

— Barbara Fox

Top Of Page
Bloomberg Press: Market Chalk Talk

The market doesn’t wait around for you to catch up.

It is a moving target, and when situations change, you must know

instinctively

what your next move is going to be." So says Tom Dorsey,

president of Dorsey, Wright & Associates, an investment advisory firm

based in Richmond, Virginia, and author of Tom Dorsey’s Trading Tips,

a new book from Bloomberg Press on Business Park Drive in Montgomery.

After daring new technology stock market darlings dipped, and even

solid former stars like Lucent took shocking tumbles, investor

confidence

— and interest, too — dropped out of sight. Maybe investing

in the market was just for pros all along. Not so, says Dorsey. The

dust jacket on his new book draws timid investors back in with a

sports

image — a chalk board liberally sprinkled with the X’s and O’s

and arrows so familiar to fans of football telecasts, especially any

where the ebullient John Madden is in the booth.

Dorsey calls up that old fighting football spirit early on when he

quotes famed coach Vince Lombardi saying, "Discipline is a part

of the will. A disciplined person is one who follows the will of the

one who gives the orders. You teach discipline by doing it over and

over, by repetition and rote, especially in a game like football where

you have very little time to decide what you are going to do. So what

you do is react almost instinctively, naturally. You have done it

so many times, over and over and over again."

Here are excerpts from Dorsey’s lively bookTerada.

Practice, Practice, and Then Practice Some More.

Many comparisons can be made between the stock market and sports.

Most parents want their child to be involved in some type of sport,

from baseball to basketball to football to swimming to dance. It is

because sports teach us valuable lessons that we carry throughout

life. Participation in sports teaches us about commitment, hard work,

the value of teamwork, wanting to excel, the thrill of victory,

learning

to accept defeat, sportsmanship in victory and defeat, and the

importance

of practice.

Very few people are born with the natural instinct to hit a baseball

or throw a football. Some may be born with a body built for being

a defensive lineman, for example, but the actual skills have to be

learned. To be learned well, those skills must be practiced over and

over again.

When it comes to making a decision in the market, it’s very much like

a football game. As the quarterback, the ball’s been snapped, it’s

in your hands, and now you have to try to make forward progress. You

have a split second to decide whether you’re going to throw the ball,

hand it off, or carry it yourself. So what you do is react almost

instinctively, as Vince Lombardi says. You have been to practice so

many times that when you step back and take a look at the defense

as it is coming at you, you instinctively know what the defense is

and you react.

The only way you are going to know how to instinctively implement

your game plan is by practice. Practice looking at different chart

patterns and analyzing what happens afterwards. If you look at the

bearish catapults, you will develop an understanding that this pattern

usually leads to lower prices. Look at enough bullish triangle

patterns

and it becomes instinct that stocks usually see a nice trading pop

after the breakout. Look at enough sectors above 70 percent and you’ll

learn that it is an extremely risky time to be buying, as stocks

almost

always can be bought later at better prices.

Make flash cards of the patterns; take 15 minutes each day and study

a stock’s historical chart; devote a weekend to looking at sector

bullish percent charts; and do practice case studies, so that when

the time comes to make a decision, you’re ready.

Did you get the outcome that you had anticipated. Does that mean you

were wrong? No. Not every trade is always going to work out exactly

as you have planned. You will have times when a stock will go against

you for any number of unforeseen reasons. That is life on Wall Street.

But investors falsely believe that if a trade doesn’t work out, you

made a bad decision. That’s wrong. Therefore, it is imperative to

educate yourself. Be sure you understand the game plan and know why

you are making certain decisions. If you know you used the tools

correctly,

you will be able to accept the outcome, good or bad.

To illustrate how the "decision" should be looked upon as

separate from the "outcome," let’s look at the following

scenario:

Take a coin with both heads and tails. If the coin is tossed and heads

comes up, you will be paid $1.25. If the coin is tossed and tails

comes up, you will be paid $1.00. Shouldn’t you always bet on heads?

Fifty percent of the time heads will come up and you will be a winner,

and 50 percent of the time tails will come up and you will be a loser,

but over time you will make more money because you are paid more for

the heads.

So the point is, if your investment research tools tell you to make

a certain decision based on the information you have at the time,

make that decision. Over time, since these tools are designed to

increase

your odds of success, you will be a winner.


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