Big News! We are not alone.

So we’ve postponed the fiscal cliff and dodged a mis-translated Mayan prediction.  I guess these things over-shadowed the really big news.

The big news is this: there is probably an E.T. out there somewhere.  According to new data from the Kepler telescope, we can now estimate that, just in our Milky Way galaxy, there are 100 billion planets.  More than 10% of those are thought to be in the “goldilocks zone” which means the star is very sun-like and the planet is a very earth-like distance from the sun.  That leaves 10 bilion chances for carbon based, oxygen breathing, tool using life to exist.  With that many chances, the odds are good for intelligent life.  It’s also 10 billion chances that they may have evolved a Justin Beeber and created reality TV as an entertainment format.  OK, that might not make them intelligent, but they are still “life”.

And of course, the Milky Way is just one galaxy of an estimated 100 billion galaxies in the universe.  That means there are at least as many potentially life-bearing planets out there as there are dollars of US debt and YouTube views of Gangham style, combined.

This is big news.  It helps define our place in the universe.  We are just an incoming radio signal or semaphore from confirming a great mystery.  All those science fiction stories could be true.  If the odds are 1 million trillion to 1 that the Vulcan Mind Probe exists (that’s 1,000,000,000,000,000,000:1 just to give you a sense, and called a quintillion), then odds are that the universe contains 1,000 planets where Vulcans are probing minds all over the place.  Freaky.

 

Fiscal Cliff or Economic destimulus?

A recent survey of Americans showed that most believe the Fiscal Cliff will increase the US Debt.  It will not. In fact, it improves the debt by quite a bit.

 

 

 

The reason why folks are concerned is that it is Economic Destimulus.  With a fragile recovery underway, reducing government spending may help us slide into recession.

Just wanted to clarify that.

Next week I’ll talk about how Santa Claus has such great productivity numbers.

Fernando Escartin the best Tour de France rider ever?

Even if you follow cycling, you may have never heard of Fernando Escartin. But with the disqualification of Lance Armstrong’s 7 Tour de France titles, perhaps you should know him. During Lance’s 1999-2005 run of victories, Fernando Escartin remains the only rider to achieve the podium at the Tour de France who has not been implicated in a doping scandal.

Even when he didn’t reach the podium, finishing 7th in 2000 for example, he is the highest placed rider not to have been implicated in a doping scandal.

Fernando Escartin may be the best Tour de France rider of the last decade. Or he may be the only one that hasn’t been caught cheating yet.

The End of Nike Sweatshops.

Nike, once assaulted for the poor working conditions in their factories around the world, has found the solution.

The solution is not to improve those jobs.  The solution is the FlyKnit shoe. Here is why it’s interesting (from Wall Street Cheat sheet):

The Flyknit, a lightweight shoe made from synthetic yarn, is built using proprietary technology on a machine that automatically knits the complete upper part of the shoe in a single piece before attaching it to the tongue and the sole. That basically means that the average 37 pieces that need to be put together to make a standard Nike running shoe are cut down to just two. The software, which Nike plans to patent, is also capable of altering the look and strength of the shoe.

The company says the computer-controlled weaving technology will cut labor costs and production time drastically. It could even result in shoe manufacturing moving back to the United States.

96% of Nike’s current shoe production is done overseas including Indonesia, China, and Vietnam.

So, bully for the US, we may get some high tech manufacturing back.  My question, though, is whether all those overworked, underpaid Indonesians are going to wish they had their jobs back.  No one in the US would want one of those Nike hand assembly jobs, but in some geographies, the loss of high labor piece work jobs will be as devastating as the loss of steel jobs to Pittsburg.

Writer Wanted

I need a writer.  I have this book I’ve written.  Which means it needs a real writer to make it readable.  Send me your leads.  Here is the summary I worked on for my agent.  See what I mean?  I need a real writer:

SILICON VALLEY NATION (working title) articulates the core business ideas that have led to success in Silicon Valley and makes them applicable to other organizations.  Through examples and first person experiences, SILICON VALLEY NATION provides senior management and decision-makers with a new lens through which to view their challenges.   The book is organized around five Silicon Valley truisms that organizational leaders can adapt for their own uses.

SILICON VALLEY NATION describes Silicon Valley efforts, but it also reframes the successful efforts of large companies.  These firms (sometimes inadvertently) replicate the actions of start-ups, creating economic value beyond one geographic valley (that really is neither based on “silicon” nor a “valley”).

We need more economic value.  America is struggling to retain its economic leadership in the face of threats from China, India, even Brazil. SILICON VALLEY NATION is about fighting back.  In the face of other nations’ faster growth rates and promising futures, Americans are concerned, for the first time, that their children’s generation will have less rather than more.

America’s future destiny — a caricature of the wilting British Empire — is not a foregone conclusion.  We are the nation of the gold rush, the telephone, the mass-market automobile, and the computer chip.  We invented the internet.  We have brands from Apple to Zynga.

Each of those examples has the answer that will keep us preeminent.  It’s no longer manufacturing power, military power, or pop-culture power.  It’s Renewal Power.

Organizational leaders need SILICON VALLEY NATION — lessons and stories from and for organizations of all sizes.  Copy, rip, or steal these, organized in 5 areas:

Own it – People perform better when they own rather than rent, when they are principals rather than agents.  Feeling a lack of control is the number one complaint of middle managers.  Silicon Valley uses methods beyond stock options, like linked incentives, variable pay, and the end to tacit tenure.  So can you.

Do less – Silicon Valley does more with less.  Most organizations do less with more.  Contracting for services, super-disaggregation, and graduated risk allow Silicon Valley to manage their business relations better than BP manages outsourced oil drilling.  Well, that’s a low bar to get over.

Shrink span – The more we have on our plates, the less we pay attention to the details.  Silicon Valley uses smaller “span of control” and allows for a lower “care threshold”.  Achieve a smaller Span per Attention ratio and get better decisions than can be achieved by the Hewlett Packard board or a Congressman deciding on the Federal budget.  Tiers of Span and multiple outside boards are ways to achieve this.

Starve – Silicon Valley organizations, like small mammals, have to work harder to get resources needed for sustenance.  A chance of starvation clarifies what needs to be done now.  Silicon Valley is built around VCs and start-ups as a risk market for capital, not a monolithic, nearly communistic, centralized planning process.  Competitive capital, with multiple sources and the right to starve, eliminates budget inertia.

Risk it – If failure is punished with death, there will be no risk, no innovation, and little responsibility.  In Silicon Valley, a failed CEO is MORE likely to get funded by a venture capitalist than a first time CEO.  That’s because it’s the lessons learned, not the failures, that are considered.  Risk tolerance and risk taking is required to build the next generation of American organization.

SILICON VALLEY NATION is not an academic text.  It is not a how-to or twelve step program for recovering re-engineering-aholics.  It is an encouragement for the reader to view their situation through a specific lens of Venture Capital and entrepreneurship and improve upon it, bolstered with story-telling and experiences of those who have gone before.

Blended Profit’s GameChanger series

Self promotion mode on:

I did an interview on Blended Profit on Impact Investing.  You can find it here.

My goal is always to be pithy and quotable, so you don’t need to listen to all 20 minutes to either laugh or yell at me.  Highly opinionated and a little grouchy about Impact Investing.

Some quotes that they pulled out in their PR, just for flavor:

“I am the Gordon Gekko in the room. Equity in a failed business is charity.”

“Most of the VC’s in silicon valley have investments in their portfolio that have impact. But they would never show up to an impact conference.”

“We need private sector compliant financial products. Impact investing of the future can’t have a Sally Struthers story behind every transaction.”

“The top two assumptions in the impact investing space:  1) We’re poised for growth and 2) We all need to decide whether its OK to make money or not.

Self promotion mode off:

Lance Armstrong cheated. He’s not the first

Lance Armstrong, one of my heroes, has decided not to fight charges of doping leveled by the United States Anti Doping Agency (USADA).  Bummer.

Here is the bigger bummer.  There have been 15 winners of the Tour de France since 1996 that are no longer active (Cadel Evans and Bradley Wiggins, winners the last two years, are still racing.)  Of these 15 winners, how many have been convicted of doping, admitted to doping, or have accepted the doping allegations against them?   Take a guess, I’ll wait.

Of 15 previous winners, 14 have cheated at some point in their career. Only one did not–or did not get caught.  Double bummer.

Sport is meant to take us away from the vagaries and confusions of life.  The rules are simple, the good guys and bad guys are chosen by your rooting interest, and the winners win.  It’s simpler than work rules — it’s confusing figuring out who won that confrontation in the conference room.  Now, sorting out the winners is harder than trying to understand the needs of my wife.  Did Barry Bonds set the home run record or not?

In some Tour de France years, seven of the top ten finishers have subsequently tested positive for doping.   It’d hard to figure out how to retroactively give the yellow jersey.  If you thought you finished twentieth, you may find out you won ten years later.

Finally, the lies that go around cheating are extreme.  Floyd Landis raised legal defense funds from fans he had duped.  Tyler Hamilton claimed that cells in his bloodstream that proved to be from another human were from his “reabsorbed fetal twin”.

I didn’t feel sorry for Jason Gatlin, the 100m runner that lost his gold medal after testing positive for drugs.  In his “Up Close and Personal” exposé during this year’s Olympics, when he said “it was hard to maintain my focus during those four years.   Definitely.” I didn’t feel sorry for him like some cancer victim.  This wasn’t a story of overcoming adversity. It’s a story of cheating.

So I don’t feel sorry for Lance, my hero.  Nope.  I feel sorry for me.

USA Loses the Olympic Medal Tally.

We Americans love to compare ourselves to other countries — and win.  So we count medals at the Olympics and gloat over our tally.  Note we don’t count how our children’s education compares to the world. (Let’s just say we rank behind South Korea, Canada, Estonia, and most of Slovenia.)

Here’s the education rankings, for example:

But back to the Olympics.  We win!  We win!  USA!  USA!  We won 104 medals, crushing China and their paltry 88 medals.

But then again, maybe we didn’t win.  We won 104 medals because we are the most successful world economy, with the best standard of living.  And if you ever read Guns, Germs, and Steel, you realize that high standards of living allow for leisure and specialization.  For example, the leisure and specialization of spending your entire life (and an incredible amount of hard work) to become the best athlete you can.

So the real question is, how do we compete on GDP per medal.  That’s an indicator of how well we’re spending the leisure and good life that we’ve built in the US.

The answer:  We suck.

We’re 66th in GDP per medal out of 81 medal winning countries.  But don’t worry, China is only 54th.  Russia is 35th.  The top spot belongs to that Olympic powerhouse:  Grenada.  They have just $820m in GDP for their one medal.  For comparison, the US is at $150 billion per medal.

Jamaica, Mongolia, Georgia, and Kenya round out the top 5.  Is it possible they are less lazy than we are?  I doubt it.  It’s perhaps that Olympic glory is one of a narrow set of possible means of attaining glory.  Their best athletes don’t go to the  NFL, NBA, MLB , or even the very tempting league of Wall Street.

More data on GDP per medal here.

70% of all stocks traded are held for 11 seconds and other BS

I admit I’m an NPR listener, and recently I heard something astonishing.  70% of all stocks traded are held for an average of just 20 seconds.  Really?

In the title of this blog I quote Peter Cohan at AOL Daily Finance, with an 11 second average.  Sure the numbers are different, but whether it’s 11 seconds or 20 seconds, this is astonishing.  The NPR  story and Peter Cohan were describing the high frequency computer trading programs (HFT for short) that are increasingly used by some traders.

But I doubt this number is correct.  The first reason is the word “average”.  The average of all held stocks would include stocks that are held for 10 years.  We can’t calculate those holds until they sell. Maybe we want the “median” anyway, on the assumption that the distribution is not a normal distribution.  But whatever, statistics are boring.

The other reason I have doubts about these quotes is that the answer is unknowable.  The data is not reported or tracked by the exchanges.  In the stories I’ve found online, there is no backup data.

But I did find this off-the-cuff comment quoted in in the New York Times:

These are short-term bets. Very short. The founder of Tradebot, in Kansas City, Mo., told students in 2008 that his firm typically held stocks for 11 seconds. Tradebot, one of the biggest high-frequency traders around, had not had a losing day in four years, he said

Look familiar?  11 seconds.  As a fellow professor I can tell you:  don’t rely on off-the-cuff comments of classroom guest speakers.

Oh wait, another quote in the Financial Times:

I know of one HFT firm operated out of the west coast of the US that boasts its average holding period for US equities is 11 seconds

Whaddya know.  11 seconds.  ”Boasting” 11 seconds, actually, not “confirming” or even “announcing”.

In this day of seemingly infinite fact checking at our fingertips, of WikiLeaks, and of every comment/gaffe living forever on YouTube, I had hopes that Interesting-But-Fabricated data could be easily identified and ignored.  The equivalent of noisy chaffe in our signal of wheat.

I was wrong.  We’re as gullible as ever.  And so, apparently, is NPR.

If only we had an education system that would help us out.  Instead, according to Gallup polling one in five Americans:

• Believe President Obama is a Muslim.
• Believe the Sun revolves around the Earth.
• Don’t know that the US gained it’s independence from the country of England.

The business model decision – advertisers as customers

As a follow-up to my post about VC becoming like the movie business, there is one big business model decision that most companies need to make.  It’s a decision that even non-profits need to make.

The decision is:  do we want to get paid by our customers or by someone else?

Product companies and service companies get paid by their customers, typically.  Apple Computer and McKinsey and Co. provide a thing for people and those people buy it from them.  Seems simple, doesn’t it?  Well, not for others.

Facebook makes money from folks that want to advertise to their users.  TV stations, too.  And non-profit organizations — their users typically don’t pay for their services, instead the services get paid for by third parties.  It makes it hard to really know whether your users want your product.  In fact, I’ve had to say “users” instead of “customers” here, because the revenue comes from different folks than the users, so it’s hard to label any one group as “customers”.

This is a fundamental decision.  There is tension in the “free to customers with advertising”.  Your customers don’t really like those ads, and the advertisers don’t really care about your free product offering.  Tension, tension, tension.  That’s why Facebook gets in trouble for privacy issues, and Google gets in trouble for manipulating their search results to please advertisers.

So if you have a business supported by advertising, the more options you provide for customers, the more they will feel like customers rather than merely eyeballs.  Let them pay fees to remove advertising.  Let them select which ads to receive.  Be creative.

I’m tired of neon Nike shoes and Oakley sunglasses on every American Olympic athlete.  I’d pay to see athletes that aren’t being used for advertising, but I’m not given that option.