Hi Dig,
I was thinking about that as I was writing. It kinda depressed me. They really do seem to have a single visionary model, which is a romantic one, but also a hugely expensive one. Build it and they will come. In a decade or two.
But there's one major difference between WXP and Wave's TC model. The TC model actually showed signs of progress, slow though they were. And TC was the thing described by Wave as its focus.
Whereas WXP just remained this wallflower, unable to convince the content industry to provide raw material, unable to convince viewers to adopt the service. And unlike Wave, which was able to generate its own capital, WXP was dependent on sucking money out of Wave. When it came time to sell it, Wave's valuation met market reality. They'd spent $50m on a boondoggle.
If they had hived it off, in 2002-3 say, then I would have no complaints. It would have died sooner, perhaps, but it would have had its own natural life. My complaint is really about the parasitism, and the complacency and the indulgence of an idea beyond its sell-by date. Wave is a public company focussed on the TC market. It does not say in the annual letter - this company is a VC house and training facility for the Sprague family.
As regards scrambls - I agree. But I fear it has the look of another WXP which has a roadmap which may, or may not, intersect with TC sometime in the next decade. I hope the company stays focused on the TC opportunity and works this type of visionary opportunity only once it has the operating cash flow to do so.
We are staring at a budget shortfall whose only resolution is dilution. And they are choosing to launch a service with a somewhat related purpose and an entirely unproven market at this moment.
The whiff of indiscipline and family preference taints the company and causes investors to flee. Those left holding the stock (ie not the board or management so much) bear more than the burden of Wave's doughnut hole. They now have to fund a second venture again.
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