> I used to think that a similar strategy could be employed
> against any company whose valuation is based on proprietary
> technology which could be reengineered for substantially less
> money than the technology adds to the company's valuation:
> reengineer the technology in secret, short the stock, give
> the technology away. I'm quite skeptical of this idea now
> because I think you'd need to create a perfect substitute
> (bug-for-bug in software terms) and do lots of marketing to
> ensure your success, both of which require lots of capital.
I love this idea. I could imagine doing it in the software
field specifically, because the cost of engineering a piece
of software with certain functionality goes down with time
as tools and methods improve, the opportunity for adding
features grows, and it is often cheaper to re-engineer a
piece of software from scratch than to update it--yet many
companies persist in updating software for non-technical
reasons to their detriment. You also have the advantage of
not having to support a user base with old hardware, etc.
Here's how I'd do it: find one or more companies who have a
large market share for a specialized software application
that's horribly overpriced (AutoCAD comes to mind for some
reason:). Create a substitute using modern engineering
methods. Make it if not completely compatible at least
easy to migrate to from the older system (requiring minimal
data translation and retraining). Short the stock, and
start selling it for the minimum price necessary to sustain
advertising it. Short the stock some more, then start
giving it away completely. Invest the money in startup
user-support businesses that start springing up to support
the free software, then retire. Simple plan, no?
You might not even have to create the software from scratch.
Imagine, for example, just cleaning up something like GIMP
and porting it to Mac and Windows to undermine Photoshop.
-- Lee Daniel Crocker <lee@piclab.com> <http://www.piclab.com/lcrocker.html> "All inventions or works of authorship original to me, herein and past, are placed irrevocably in the public domain, and may be used or modified for any purpose, without permission, attribution, or notification."--LDC
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