Trend in the Growth of Technology Companies: Is Software Really Eating the World?

By Alison N. Dougherty, Tax Manager, Aronson LLC

In a Wall Street Journal article dated August 20, 2011, Marc Andreessen writes that “Software Is Eating the World”. (http://tinyurl.com/6ko4as3) According to Andreessen’s perspective, we are now in the midst of an era in which the growth of software companies represents a significant and increasing share of the economy. From the growth of Apple, Microsoft, Google and Amazon to Facebook, Twitter, Skype, Groupon, Living Social, Zynga and Foursquare, there is a dominant trend in software as the core capability of major businesses and industries. Many sectors and industries from telecommunications, financial services, entertainment, retail, natural resources, automobile, health care, education and national defense are becoming increasingly software driven. Andreessen believes that obsolete technologies are being eaten by software in what he refers to as a software revolution that continues to transform many industries.
So what does this mean for new companies? New companies are at a significant disadvantage in today’s economic and regulatory environment. The new generation of technology companies needs to be even stronger and more resilient to survive. If the new technology companies can prove their worth, they are going to be “highly valuable cornerstone companies in the global economy.” The best of the new companies will be positioned for significant growth if the economy eventually stabilizes. Andreessen predicts that the cornerstone companies which evolve will have the capacity to eat even larger markets. So it may appear that software is eating the world for the time being and at least for the near future.

Roth Conversion Recharacterization Deadline

By Mark Flanagan

Taxpayers have until 10/17/2011 to recharacterize (unwind) a “failed” Roth conversion, even if their initial return was filed by April 15th. An amended return can then be filed within the three year amended filing window, with the client getting a refund.

This may be very attractive for clients that converted their traditional IRA during 2010 only to have it lose significant value since the conversion. The extension to 10/17/2011 is little known and automatic, specifically for Roth conversion recharacterization purposes. Clients that converted and filed timely likely do not realize that recharacterizing is an option.

IN SUMMARY….Recharacterizations can be done up until 10/17/2011 and the amended return must be filed within three years.

No. 1 Reason Internet Startups Fail

By Jennifer Nolan

According to a recent report from Startup Genome, the number one reason internet startups fail is premature scaling. In fact, according to the report, startups that scale properly grow 20 times faster than startups that scale prematurely. The report maintains that startups that prematurely scale lose the battle early on by getting ahead of themselves. They can do this by prematurely scaling their team, their customer acquisition strategies or by over building the product. In addition, overinvesting in the early discovery stage can also be detrimental.
If you would like to obtain a copy of the Startup Genome report or if you are a startup and would like to test whether your company is scaling prematurely, you can obtain a copy of the report and sign up for the Startup Genome Compass at http://startupgenome.cc/. The Startup Genome Compass is a benchmarking tool for entrepreneurs where they are automatically classified by type and stage and compared to other startups in the same type and stage across more than 25 key performance indicators.