Was idly looking up the evolutionary history of the stock markets and came upon this wonderful story on an Investopedia article http://www.investopedia.com/articles/07/stock-exchange-history.asp and was surprised at how this story sounded a little too close to call :) .. ok let me elaborate by picking sections in the article and bringing out contemporary parallels
So apparently in the early 1600's East India companies from all over Europe (yes, every European country had its own EI company ..Dutch, French, Brits ..even the Greeks i guess, before they decided it was too much hard work and figured they ll just retire) wanted to basically "trade" with us. But then the voyage was a crazy 2-3 month journey (return / one way, not sure) and there were risks of pirate attacks, bad navigation (i am not surprised ..have you seen the crooked maps they had back then ? it was a drinking game of who could draw the weirdest contour without putting his pen/pencil down) and just general boredom i guess. So here's what they did : form a limited liability company and ensured that people could take part in the journey , albeit financially, and finally be able to share profits when (IF) the ship returned with silk, spices et al. The company was then dissolved and a new one was formed for another journey. The investors would also invest in multiple ships at the same time just to ensure sunken ships don't take them down.
Modern Day Parallels :
Ships -> Startups
Pirates -> Price sensitive customers , 0 brand loyalty
Bad Navigation -> Rahul Yadav (dont want to be too specific here :P)
Investors -> VC's
Returns -> maybe silk and some spices , at best
what happened next was brilliant ..the investors figured there were other people who would buy their "share" for a higher price and some companies just put in some initial capital, trumped up the voyage and sold all their "shares" before the ship even set sail ! Obviously when there's free money on the table, there were folks that sold shares on their ventures which included and not limited to reclaiming sun shine from vegetables
I don't need to go any further with the article or this blog ..right ?
So apparently in the early 1600's East India companies from all over Europe (yes, every European country had its own EI company ..Dutch, French, Brits ..even the Greeks i guess, before they decided it was too much hard work and figured they ll just retire) wanted to basically "trade" with us. But then the voyage was a crazy 2-3 month journey (return / one way, not sure) and there were risks of pirate attacks, bad navigation (i am not surprised ..have you seen the crooked maps they had back then ? it was a drinking game of who could draw the weirdest contour without putting his pen/pencil down) and just general boredom i guess. So here's what they did : form a limited liability company and ensured that people could take part in the journey , albeit financially, and finally be able to share profits when (IF) the ship returned with silk, spices et al. The company was then dissolved and a new one was formed for another journey. The investors would also invest in multiple ships at the same time just to ensure sunken ships don't take them down.
Modern Day Parallels :
Ships -> Startups
Pirates -> Price sensitive customers , 0 brand loyalty
Bad Navigation -> Rahul Yadav (dont want to be too specific here :P)
Investors -> VC's
Returns -> maybe silk and some spices , at best
what happened next was brilliant ..the investors figured there were other people who would buy their "share" for a higher price and some companies just put in some initial capital, trumped up the voyage and sold all their "shares" before the ship even set sail ! Obviously when there's free money on the table, there were folks that sold shares on their ventures which included and not limited to reclaiming sun shine from vegetables
I don't need to go any further with the article or this blog ..right ?
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