Coming to Terms with Unfairness

As someone who bought a house in 2005 and knew he was likely overpaying, I certainly need to take Roger Ehrenberg’s advice.

Many also need to come to terms with modifying mortgages for millions of homeowners on the edge. We can argue forever about how it’s not fair, the borrowers screwed up, etc., but we are way, way beyond the point where intellectual jousting will help us achieve a better outcome.

However, I am a firm believer that the more fair approach would be for the government, and the taxpayer, to be a participant in the upside associated with keeping the bailed out borrowers in their homes.  As Jeff Minch, a guest poster for Fred Wilson stated:

The government should get an “equity kicker” for their trouble.  If you participate in the plan and peg a new value on your home, then the government should get either a par payoff of a 25% equity kicker above the marked down price for the next ten years.

I don’t know if this option is technically possible, or was even explored, but I would have liked to have seen it included in the governments plan.

Bank Nationalization

There has been a lot of commentary over the past few weeks about the value of nationalizing major US banks like Bank of America and Citigroup.  Many feel that the current bailouts are propping up the shareholders at the taxpayer expense.  Given that bank shares keep going lower and lower, a commenter at Baseline Scenario raised an interesting question:

Nevertheless, if you are still feeling miffed that your tax dollars are inapppropriately [sic] propping up shareholder value, allow me to make a suggestion. Buy a hundred shares of Citigroup. Then you too can reap the largesse at tax payer expense. You don’t have to be rich. 100 shares of C cost about $420 presently [even lower now, given this was posted in late January]. I keep wondering, if the shareholders of banks are getting such a great deal at the expense of the tax payer, why isn’t everybody rushing to purchase shares of bank stock now?

(Emphasis mine)

The obvious answer makes the case against government intervention in the markets; shareholders are fleeing in part because of the fear of nationalization.

Witch Hunting

I think this is a great quote for the current political environment:

Assuming that we are indeed facing, in large part, a crisis of confidence, would this crisis be solved more quickly if we stopped nattering about the banking system and simply burned us some witches?

Competition and Schools

I’m sympathetic to the argument that introducing some form of competition to public schools could be beneficial. However, in practice, I don’t see it as the panacea that many do. The main issue for me is that businesses are able to make choices that aren’t open to schools. For example, if a business is unable to compete in a locale, it can choose not to and open an office somewhere else. Or, if a customer group is unprofitable, the business can target that segment for a price increase. These options are not open to public schools.

A Letter to the Editor in today’s Wall Street Journal also made a highly illustrative point:

As a public school teacher, I often muse that if my school ever operated as a business, I would be allowed to return inferior raw materials to their place of origin.

Warren Buffett, Product Manager

Berkshire Hathaway’s annual letter to shareholders has been called essential business reading. Buffett’s investment criteria could be read as great advice for product managers.

A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the low cost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies
whose moats proved illusory and were soon crossed.

Our criterion of “enduring” causes us to rule out companies in industries prone to rapid and continuous change. Though capitalism’s “creative destruction” is highly beneficial for society, it precludes investment certainty. A moat that must be continuously rebuilt will eventually be no moat at all.

[My emphasis]

Be careful with fireworks. Its good advice for both children and business managers.

Pingg Launches

My friends at Pingg launched their online invitation site last week. TechCrunch has a positive review:

Pingg’s invites are drop-dead gorgeous. A lot of care and attention has been put into the design of each one…

Evite is a strongly entrenched incumbent in this space but Pingg does a lot of things right and I hope they succeed.

Lawsuit Waiting to Happen

More from TechCrunch:

Monster Dare is a social network where you can wager money on daring your friends or the general public….When a dare is declared, members can donate to a money pot to entice anyone or a specific person to carry it out.

I hope these guys keep their liability insurance up-to-date because the only people getting rich from this are the lawyers.


TechCrunch today points to Mizpee:

Using MizPee is as simple as surfing to via a mobile device browser. Users simply enter their location and MizPee delivers a list of nearby toilets, how far away the toilet is, a rating and whether it requires payment.

Obviously, this will be a local advertising play. My question is, how effective can advertising delivery via this site be? Let’s say you’re so desperate to find a bathroom that you need to turn to an online tool versus asking the nearest human, are you really going to spend time perusing the ad links presented alongside the results of your request?

File this as away as evidence that things are getting a bit ridiculous on the new venture creation front.

PowerPoint: “Format Over Content”

PowerPoint turns twenty this week and this column in the WSJ [subscription] is spot on in so many ways.

When used incorrectly, PowerPoint can be the worst thing to happen to a business. I’ve seen complex analysis that fits neatly on a single sheet of Excel expanded to fill 12 PowerPoint slides but somehow still lose all of the critical detail.

One of the creators of PowerPoint states, accurately:

“a lot of people in business have given up writing the documents. They just write the presentations, which are summaries without the detail, without the backup. A lot of people don’t like the intellectual rigor of actually doing the work.”

The column also contains a joke that is far to close to home:

[T]he best way to paralyze an opposition army is to ship it PowerPoint and, thus, contaminate its decision making.

Jobs on Partnering

Steve Jobs and Bill Gates meet yesterday for a joint interview at the Wall Street Journal’s All Things Digital conference. The excerpts are fascinating to read [subscription required].

Given all the public bickering and bad blood it is interesting to read about the extent to which Apple and Microsoft cooperated in the early days, and still do.

When they were both asked what they wished they had learned earlier from the other, Jobs’ said:

You know, because Woz and I started the company based on doing the whole banana, we weren’t so good at partnering with people. And, you know, actually, the funny thing is, Microsoft’s one of the few companies we were able to partner with that actually worked for both companies. And we weren’t so good at that, where Bill and Microsoft were really good at it because they didn’t make the whole thing in the early days and they learned how to partner with people really well.

And I think if Apple could have had a little more of that in its DNA, it would have served it extremely well. And I don’t think Apple learned that until, you know, a few decades later.

Here you have the leader of one of the most notorious “do-it-all-ourselves” companies recognizing that partnering earlier could’ve helped.

Very interesting

[some excerpts are available without subscription but not the Jobs quote above.]