Class V

Sense and Sensibility

Been watching the HBO miniseries John Adams on DVD this week,  which is a great biopic for those who are interested in the founding years of the American republic.  One thing (of many) of which I was unaware was the extent to which Adams' thinking was influenced by his appreciation for the powers of strong, central government, even monarchy.  The series paints a less than flattering picture of the first Cabinet, with Jefferson and Hamilton constantly at odds with each other.  The words of Hamilton, in discussing how to establish the financial infrastructure of a new country, were particularly resonant given the recent events of the worldwide financial system (see Hamilton's First Report on the Public Credit).

As much as American independence marked a political separation from Britain, there is no doubt that our culture - and all institutions which support it, including government - have been greatly influenced by our former enemy.  And during this current global economic crisis, the United Kingdom has stepped up to demonstrate its wisdom and hopefully, once again, influence the direction of the US government.

I am specifically writing about Wednesday's announcement from the Treasury of the United Kingdom.  Instead of focusing primarily on removing toxic assets from the balance sheets of financial institutions - which had been the favored approach of American lawmakers and government officials - the UK is primarily addressing the issue of liquidity.  Purchasing preferred shares of banks for cash.  Sound familiar?  This was the approach Warren Buffett chose in late September, when he injected $5B into Goldman Sachs and in return, received an ownership interest in the form of preferred shares.  There is no doubt that owning a piece of a bank can only prove profitable in the long run if the bank's balance sheets are cleaned up.  But the fundamental issue in this current global economic crisis is one of liquidity.

Finally, our own government and in particular, Henry Paulson, seems to be acting upon this reality.  Friday's press announcement indicates that Paulson has at last broken free of his bias to protect his former banking colleagues from government ownership.  Paulson indicated he will use some of the $700B authorized under the "Emergency Economic Stabilization Act" to purchase with cash, equity interests in financial institutions.  Which, as this New York Times editorial piece suggests, is clearly a better use of my (and all US taxpayers') money than scooping up a bunch of Collateralized Debt Obligations ("CDO's") that were recently proven to be worth only nine cents on the dollar.

Technorati Tags: bailout, John Adams, Alexander Hamilton, Henry Paulson, CDO

Vote Yes on Proposition R!

Just completed my mail in ballot.  Besides voting for one President and Vice President, and one representative to the US House ... there were something like 10 state propositions and 20+ city propositions as well.  Whew.

I couldn't help but to laugh out loud at this city proposition, to rename one of our city's facilities after our nation's 43rd President.

Technorati Tag: Proposition R

Follow Ups

1.  I was right about the traffic* spike related to this (rather uninteresting) blog post.  Have no idea why some of these message board members are so interested in my (rather uninteresting) musings, but boredom can explain a lot, I guess.  (I personally do not subscribe to the jealousy theories, because I find it beyond comprehension that someone could be jealous of a person he or she does not even know, outside of a message board.) 

*By traffic, I am referring to overall blog and post visits, and not the number of comments.  I am grateful to all who take the time to post thoughtful, constructive comments and so my thinly veiled criticisms are in no way directed at those who posted comments.

2.  The Democratic primary is great for political junkies like me.  While I was disappointed that my candidate did not win my state, Obama earned a significant number of delegates regardless (and he did carry my county).  Furthermore, this particular fundraising development from his opponent's campaign yesterday inspired me to contribute even more money last night to Obama.  What this development also tells me is that those who support Clinton do so with only a minimum of personal commitment or passion.  Even with her acceptance of PAC funds and the so called "institutional party backing" she enjoys, Obama is earning more financial support.   And earning is the right term.  He is not just getting his supporters to turn out to the polls, but to open their wallets as well.  In these uncertain economic times, that's saying something.

I find it amusing (and predictable) that Clinton now wants to debate Obama every week.  Does anyone want to see that many debates between just two candidates?  I know it's the cheapest form of television exposure she can get, but still ...

Technorati Tags: boredom, Obama

Casting My Vote

I sent in my state's mail-in ballot the day after I received it, which was perhaps a week or two ago.  I am officially registered "non party", though my personal leanings tend to be quite Libertarian.  As "non party" here in California, I had the choice this year to participate in either the Democratic or Independent primary election.  I chose the Democratic one this year, and have voted for Barack Obama.

Most years in which I have voted, my reasons have been negative, e.g., "Anyone but Kerry."  It has been both strange and refreshing to vote for a candidate for positive reasons, e.g., "I am inspired by Obama."  I am voting for him because of his intellect, charisma, and integrity; it is my opinion that his rival in this primary election only possesses one of those qualities.  In the eyes of some, Obama may not have enough years of public service under his belt to sit in the Oval Office ... but in today's age of politics I don't necessarily see that as a liability.  In my opinion, he is more open to changing the status quo, because he has not had enough time to become a cynical insider.

Will his candidacy ultimately overcome the institutional forces within his own party, who will use their considerable power and influence to resist the kind of change Obama represents?  Perhaps.  But this is the first candidate in a long time who I not only am voting for, for positive reasons ... but for whom I am actively campaigning, whether by advocacy as represented by this blog entry or with my checkbook.  I respect those who vote differently, especially those who vote differently for well articulated reasons ... if only because they are actually voting.  I can't wait to see what the participation numbers are like on "Super Duper Tuesday" ... if you are a US citizen, please vote, or if you've already missed your registration deadline, please register to vote for the General Election!

Technorati Tags: Obama, Super Tuesday, election

Goals for Leaders

Joe Torre turned down the Yankees' contract offer today.  Analysts suggest the reason that the Torre Era is ending is because Torre balked at the fact that the new, 2008 - 2009 contract would contain several performance based compensation clauses that his previous, 2005 - 2007 contract did not.

From the Sports Illustrated article:

Torre made $7.5 million this year, the final season of a $19.2 million, three-year contract. His new deal would have included substantial bonuses for each round of the playoffs the team reached.

"We felt we needed to go to a performance-based mode," Levine said. "We thought it was very fair. It clearly was at the top of the market, but we respect Joe's decision."

--

Just 10 days ago, the Yankees were bounced out of the first round of the playoffs for the third straight year.

It is important to include that last sentence, because the issue for the Yankees these last few years has not been their regular season performance or inability to get to the postseason, but to close the deal, as it were.

Athletes often have all kinds of performance incentives written into their contracts, in part because sports provides a context in which goal attainment can easily be measured, in such a way that all interested parties agree.  One either hits 40 home runs or completes 12 sacks ... or not.

So why not coaches?

I've been following the Torre contract saga not only because I am a passionate Red Sox fan but because this issue of performance-based compensation is one we often struggle with, as venture capitalists.  Success in business can be measured nearly as objectively as success in sports, e.g., 12 paying customers with current year revenues greater than $10M each, so I am all for it. 

Seems straightforward enough, so where are the struggles?

• Metrics.  I've seen offer letters often refer to attainment of goals mutually agreed upon by the supervisor and the employee but rarely have I seen a time limit placed on when such a discussion needs to occur.  In my opinion, this should be within 60 days of the employees' starting date.  Enough time for the employee to understand the business and what is feasible, not so long that the employee is working towards goals that the supervisor does not agree are in the best interest of the company.  Bonuses that do not tie to specific metrics - and I would say I have seen this to be the case in a surprising number of offer letters or employment agreements - make zero sense to me.  And like any other set of metrics, the more specific, the better.
• Compensation components, specifically cash versus equity.  Some of my industry colleagues feel that bonuses should not be paid out in cash until a startup is cash flow positive.  While I personally find this perspective to be extreme, I do agree that until a startup is cash flow positive, a greater percentage of the bonus should be paid out in equity than what I currently see in most of the companies with which I have worked (often, there is no equity component to the bonus compensation).

Coaches and athletes on the same team should be financially motivated in similar ways.  Although I am personally a big fan of Joe Torre the gentleman (for I am as much a baseball fan as I am a Red Sox fan), my humble opinion is that he was wrong to decline the Yankees' offer because of the performance-based nature of it. 

Now, on the other hand, if the real reason he declined it is because he is sick of being constantly hung out to dry by the rest of the Yankee leadership organization ... that I could not only understand, but completely agree with.

Technorati Tags: Joe Torre, performance based compensation

Few Words

Words cannot even begin to do justice to my time so far in East Africa, so I will keep it brief here from this Internet kiosk at the TED Global conference in Arusha.  12 hours in Nairobi, which were stimulating yet a touch disappointing.  The days since in Tanzania have been inspiring, breathtaking, potentially life changing.  Spent time engaging directly with the community through DATA and its founder, Bono.  The term hero should be reserved for the kind of people I met during these visits, offering their love to the most unfortunate among all of us connected on this planet.  May be off the grid for a while, as Kilimanjaro is 7-13 June and I've decided to attempt to take a proper vacation (really, I mean it this time) for two days afterwards in Zanzibar.

Technorati Tags: TED Global 2007, Africa, debt relief, Tanzania

Greetings from TED 2007

I know it's been a while since my last post ... trust me when I write that there are many things going on in my life at the moment which have created a To Do list whose item number is beyond count.  Will have more details about all that shortly.

In the meantime, I am in Monterey, California for TED 2007.  For those that may not recall, I was supposed to attend my first TED a year ago, when other events obviously prevented me from making it.  I was floored by the generous response that Chris Anderson and the TED team made at that time, and was overjoyed to be able to meet Chris in person last night at the Welcome Party and thank him directly. 

Summing up my first full day of TED is done as follows:

Coolest.

Conference.

Ever.

Personal highlights on Day One were:

• Carolyn Porco, who opened TED 2007 with astonishing images such as this one from the ongoing Cassini Mission.
• Singer, songwriter and guitarist (and to label him as just those three seems completely unfair given the range he demonstrated live) Raul Midon.
• The visual presentation of economic and standard of living (e.g., health, environment) data by Hans Rosling, some of which can be seen here.  As for the sword swallowing ...
• The Flight Patterns work of Aaron Koblin, on display as we took our seats in the Main Hall.

One criticism is the largesse and general excess of the TED Gift Bags.  And bag is not the right term here, as the schwag came in a large shopping bag and a suitcase.We are fortunate for all of the companies that want us to try their products and services, and Tom Rielly has clearly put in a great deal of effort to foster all of these relationships.  That being said, I wonder how many of these suitcases are going to end up in landfills, along with at least some of the content inside.  In the spirit of constructive feedback, my two cents would be to line up the gifts as a buffet, and allow TEDsters to move down a line, filling bags with the items that each is interested in.  Ideally, most TEDsters would bring their own bag for this exercise ... but for those that do not, bags would be provided of course.  And my faith in the goodness of human nature compels me to believe that each TEDster would know to take only one of each item ... but controls could easily be put in place if greed became an issue.  For those that are curious as to what could possible fill a suitcase, please check out the picture on my Flickr stream here, where additional pictures from the conference are posted.

As I told some colleagues and friends yesterday, TED 2007 is proving to be one of those experiences that inspires me to feel blessed and fortunate.  Fortunate to be invited, fortunate to be able to participate.  Mind expanding and life changing.

Technorati Tags: TED, TED2007, conferences, schwag

A Coaching Legend's "Exit Interview"

Some close friends already know this, but I was this [picture pinching one's thumb and index finger together] close to enrolling in a Ph.D. program in organizational behavior, upon my MBA graduation several years ago.  The research I was most interested in conducting was the application of sport coaching principles to corporate leadership. 

And the individual I had most clearly in my mind, when formulating all of my initial hypotheses, was Bill Parcells.  Not that I consider him the greatest sport coach of all time ... I don't even consider him the greatest football or NFL coach of all time.  But he struck me as a clear data point that there is no one perfect leader for all situations ... but rather, specific types of leaders for specific types of situations, e.g., turnaround artists.

In any case, Parcells claims to be retiring finally from coaching. Whether this retirement sticks, who knows?  On his way out, he did not do a final regular media interview.  However, he did participate in a lengthy radio interview with a New York station yesterday, and I thought it worth posting the link here.  For those interested in leadership or coaching, there are too many nuggets in the interview for me to attempt to quote only a few here.

Technorati Tags: Bill Parcells, coaching, leadership, Dallas Cowboys

Brilliant: Charles Monroe King

Happy New Year to all!  While no one is truly happier to see 2006 go away than I, this post is not exactly going to be a merry one.  This morning, I was so struck by the following article, that I've decided I have to draw attention to it.

First of all, yesterday marked the 3,000th death of a military serviceman or servicewoman in Iraq since March 2003.

Perhaps not coincidentally, the New York Times is running an article today about First Sgt. Charles Monroe King.  The piece is written by his fiancée, Dana Canedy, and discusses a 200 page journal First Sgt. King wrote for his newborn son, Jordan, in case he did not make it back from Iraq.

Dear son, Charles wrote on the last page of the journal, I hope this book is somewhat helpful to you. Please forgive me for the poor handwriting and grammar. I tried to finish this book before I was deployed to Iraq. It has to be something special to you. I’ve been writing it in the states, Kuwait and Iraq.

The journal will have to speak for Charles now. He was killed Oct. 14 when an improvised explosive device detonated near his armored vehicle in Baghdad. Charles, 48, had been assigned to the Army’s First Battalion, 67th Armored Regiment, Fourth Infantry Division, based in Fort Hood, Tex. He was a month from completing his tour of duty.

Every passage Canedy chose to reveal in her article, absolutely broke my heart.

On paper, Charles revealed himself in a way he rarely did in person. He thought hard about what to say to a son who would have no memory of him. Even if Jordan will never hear the cadence of his father’s voice, he will know the wisdom of his words.

Never be ashamed to cry. No man is too good to get on his knee and humble himself to God. Follow your heart and look for the strength of a woman.

Charles tried to anticipate questions in the years to come. Favorite team? I am a diehard Cleveland Browns fan. Favorite meal? Chicken, fried or baked, candied yams, collard greens and cornbread. Childhood chores? Shoveling snow and cutting grass. First kiss? Eighth grade.

Though clearly the best gift First Sgt. King could have given his son would have been his day to day presence, I hope one day Jordan appreciates the effort, foresight and selflessness that his father's journal to him represents.

Back to being truly happy to ring in a new year, I understand all too well just how short a life can be, how suddenly someone's presence can be taken away from those who love him or her.  This story of First Sgt. King and his journal to Jordan is yet another poignant reminder that nothing can be taken for granted.  One of many gifts I have received as a result of my interesting journey during 2006 is a deeply held appreciation for life and for loved ones.

My New Year's wish for everyone is that they can develop that kind of enthusiasm and verve without necessarily having to suffer loss.  Again, Happy New Year to all!

Technorati Tags: Charles Monroe King, Iraq war, fatherhood

Silence is Deafening

As of 3:30 PM CT August 5, no word from Lance Armstrong on the results of Floyd Landis' B sample, which were made known overnight.

From Rafael Palmeiro to Justin Gatlin, it is clear that cheating has become synonymous with elite athletics.  As a passionate fan of sport from both a participant and fan perspective, I am disappointed even as I am not surprised. 

It is likely impossible to stem the tide of massive commercial pressures such as product endorsements and appearance fees that are, in my opinion, at the root cause of this phenomenon.   Decades ago, when most US consumers had no idea what the Tour de France was, no less who won it ... performance enhancement consisted of coffee and cigarettes.

I know this perspective is naive - and perhaps reflective of my useless Philosophy degree - but as the stakes are seemingly raised, why do our definitions of right and wrong become cloudier?  Do ethics mean anything at all, if they are observed only when materially convenient? 

One of the reasons I love athletics is that there are so many life lessons to be drawn from not so much the result as from the journey to arrive there.  Easily achieved results are just not as rewarding as hard earned ones.  My worst water polo season, from a statistics perspective, was clearly my senior year in prep school.   But in many ways it was, by far, the most rewarding time in my entire career, through college and beyond.  No need to get into the details of why here, but my point being that it is not so much that the end may or may not justify the means ... but that the means in and of itself is inherently more interesting and valuable in any case.

Technorati Tags: Lance Armstrong, Floyd Landis, cheating, sports