Dear Movie Stars: Stick To Your Knitting

For Celebrities Seeking Their Fortunes Working with Startup

1. Don’t.

2. If you are amazing at what you do (read: an A-Lister) then you will make far more money sticking to your day job. If you make $5 million per movie – trust me you are not guaranteed that kind of return in working with a startup. The reason I hate working on tech deals with celebs is that when things get hard (hint: startups always get hard) it is far easier for them to disappear and go make another: Movie, TV show, hit song, whatever than it is to figure out how to make the startup work.

3. You risk your personal brand for no reason. If the product you’re endorsing isn’t a home run (in a startup chances are it will be yesterday’s news faster than your sex-tape video) your personal brand will be associated with it and that could hurt your day job. Why risk it? Startups aren’t all that.

That’s Mark Suster in a very interesting/amusing post.

The Lost Archives- Too Big To Fail

I was with my wife buying baby stuff in Target yesterday. Needless to say I was actually screwing around with my blackberry and found some notes from an aborted review of *Too Big To Fail* the 2009 book by Andrew Ross Sorkin.

– dealmakers are all the same. “To a man with a hammer, every problem is a nail”. Paulson did deals to fix the problems. In the end, he had to force the deals! Every dealmaker’s dream, being able to force an agreement. The problem is that disagreement isn’t always easy to understand; which was it?
1. One/both parties misunderstands a good deal (false negative)
2. One thinks it’s awesome for both, but doesn’t understand the whole situation (false positive)
3. Everyone gets that it sucks.
TBTF is Paulson falling into and out of and into #2s.
– Klingian [edit: that’s not Klingon, that’s Arnold Kling, see here for example] power vs knowledge is overarching theme. These guys didn’t (couldn’t) have anything like the right answers. Knowledge is too dispersed.
– maybe the financial system got too complicated? Knowledge became too dispersed within organizations.
– there are limits to what an individual can comprehend. TBTF is a symptom of this.

-=-

One idea that sticks in my head is Sorkin’s interpretation of Dick Fuld’s failure to ‘save’ Lehman by selling it to someone. He characterized Fuld as a trader, which he was by profession, and suggests that traders are horrible deal-makers. They are ‘take it or leave it’ negotiators who’d rather walk away than find a way to yes. He, his firm and his reputation all came up one deal short.

Hank Paulson is different: he’s a corporate finance guy, an intermediary. Doing deals is what they do. He took himself, his government and taxpayers one deal too far.

Vampires, Tooth Fairies, Santa Claus, IT Projects

I don’t believe in IT projects. Well, mostly not, but I’ll get to that later. First, here’s Ars Technica on a failure of the Romney Campaign: its app, Orca:

The goal was to put a mobile application in the hands of 37,000 volunteers in swing states, who would station themselves at the polls and track the arrival of known Romney supporters. The information would be monitored by more than 800 volunteers back at Romney’s Boston Garden campaign headquarters via a Web-based management console, and it would be used to push out more calls throughout the day to pro-Romney voters who hadn’t yet shown up at the polls.

Here’s the failure part:

When the Romney campaign finally brought up Orca, the “killer whale” was not ready to perform. Some field volunteers couldn’t even report to their posts, because the campaign hadn’t told them they first needed to pick up poll watcher credentials from one of Romney’s local “victory centers.” Others couldn’t connect to the Orca site because they entered the URL for the site without the https:// prefix; instead of being redirected to the secure site, they were confronted with a blank page, Ekdahl said.

And for many of those who managed to get to their polling places and who called up the website on their phones, there was another, insurmountable hurdle—their passwords didn’t work and attempts to reset passwords through the site also failed. As for the voice-powered backup system, it failed too as many poll watchers received the wrong personal identification numbers needed to access the system. Joel Pollak of Briebart reported that hundreds of volunteers in Colorado and North Carolina couldn’t use either the Web-based or the voice-based Orca systems;  it wasn’t until 6:00 PM on Election Day that the team running Orca admitted they had issued the wrong PIN codes and passwords to everyone in those states, and they reset them. Even then, some volunteers still couldn’t login.

Someone fire the IT department for effing this up. Right? Yet, consider this:

IT projects are easy scapegoats for organizational failures.

Exactly.

IT projects, academia aside, are chasing a business objective. All business projects involve technology, it’s just that normally the technology is very familiar (paper, pencils, telephones).

Unfamiliar technology, on the other hand, can create problems…

Hey, learning on the fly is hard. New technology doesn’t evolve gradually to fit your business. It ‘tips’ into the mainstream after furious validation and iteration in some other sector of the economy then gets chucked at new industries by startups.

Usually it doesn’t stick; that’s why startups are risky. But when startups don’t stick, the business still gets done (it just goes to someone else). It’s the tech that dies, useless.

Startup failures are failures to compete, not failures of technology, per se. The thing that irritates me about “IT projects” is the implicit dissociation of the technology from the business.

Most managers don’t understand the pitfalls of implementing new technology because most new technology doesn’t matter. In the real world we observe that incumbent firms are conservative, reacting “too late” to ideas already validated by the marketplace.

But we also know that business advantage is precious and risking your business on a new idea is insane.

Also remember something Peter Drucker taught: innovation is what matters and that is definitely not the same thing as what we think of as being technology. It’s about process. This can mean smartphone apps, sure, but can also mean weekly internal meetings. Linus Torvalds says: “Bad programmers worry about the code. Good programmers worry about data structures and their relationships.” The tool doesn’t matter, the process matters.

So let’s walk though what the Romney campaign’s process idea:

  1. You need a list of for-sure GOP voters. Easy, already do that.
  2. You need a bunch of people on-site to note which for-sures have voted. Easy, got volunteers everywhere.
  3. Now cross off those that voted and contact those that did not. Wow, interesting idea, we should have been doing that all along.

Ok, give cell phones and pencils to the volunteers and they can make the calls. Right?

Nope, we need to build something that has never been done before. And give it to… seniors? With no instructions? This is a project run by someone who does not know what they’re doing. Because, I’d suggest, it was not run by the person in charge.

To me, the leader of an organization has two qualities: first, he/she is the person that best understands the value that the organization creates. Said another way: the leader has the power to set the priorities of the organization because he/she understands what they should be.

There’s a tradeoff in undertaking a big new project: distraction exchanged for a new competitive edge. A sure cost for an uncertain benefit. The leader, who is best positioned to understand the upside of this trade, makes the call.

But here’s another quality of the leader: he/she is probably the most competent executive as well. And think about the root of the word ‘executive’: execute. An important project must be run by an outstanding operator who can never lose sight of the organization’s priorities in the million of little decisions that go into execution.

Big failures land on the CEO’s desk. If they’re big enough to matter, he was in charge. If he wasn’t, he’s an idiot.

If You Buy 1,000 Books

Buy 1,000 print books ($21,000) and get the following (Priceless!!!! That’s FOUR exclamation points!) — Limited to first 6 people:

– Awesome all-expenses-paid trip somewhere in the world. You’ve seen me do this inIndia, Africa, and elsewhere. I don’t half-ass trips. I don’t even three-quarter-ass trips. I full-ass my trips! This will be a life-changing, amazing, all-inclusive trip somewhere in the world. High probability: high-end trip through Tuscany, dates TBD with people who sign up.
– CLEAR card: lifetime membership (value: $12,530 [$179/year x 70 years = $12,530]).
– WellnessFX Performance assessment: Early access (will not be public until late Q1 2013) to an exclusive version (value: over $700). This package builds off of of Baseline diagnostics to give people a deep look into their cardiovascular, metabolic, nutritional and hormonal health & performance. Here’s what’s included: all lab & phlebotomy fees, data in your own private WFX dashboard, and 50+ biomarkers (total cholesterol, HDL, LDL, Triglycerides, etc).

Interested in this package? Great! But…DON’T buy it on Amazon. Since there are only 6 spots, fill out this page: https://4hb.wufoo.com/forms/z7x1k9/ First come, first served. This bad boy will be epic.

That’s Tim Ferriss. And that’s not the maximum prize. He’s probably the most impressive self-promoter there is.

Incompetent S&P’s Day of Reckoning?

Felix Salmon has an excellent piece on how S&P royally effed over some municipalities in Australia and now might actually have to pay for its incompetence.

Put it all together, and you get a very shocking view of S&P. Here’s the list:

  • S&P used the wrong model input for starting spread.
  • S&P used the wrong model input for volatilty.
  • S&P used the wrong model input for average spread.
  • S&P completely ignored ratings migration.

If S&P had just got any one of these things right, the CPDO would never have gotten that triple-A rating. If it had got them all right, the CPDO would almost certainly not even have been investment grade, let alone triple-A.
S&P was not doing its job, and as a result a bunch of Australian municipalities lost a great deal of money. Jagot has found S&P liable, as she should. Good for her.

I’ve written about rating agencies before: they run a government-granted oligopoly grading financial instruments.

The big news here is that the disclaimer that rating agencies use, “don’t blame us if it goes wrong!” has actually been thrown out.  Is this the beginning of the end?

The thicket of industry regulations (and practices) that depend on these ratings is deep. If change is to happen, it would start in some jurisdiction that’s willing to roll the dice. Australia’s regulator, APRA, is a fairly progressive institution so perhaps we’ll see a competing model emerge.

Technology Giveth And Taketh Away

Independent Insurance agents are again on the rise. See below for a quote.

The story goes that technology forced consolidations in the 90s. Brokers needed scale and capital for SYSTEMS and batteries of tech priests to keep server rooms humming.

Today Automation is shaving all that infrastructure down to a rump. For many, an iPad takes care of 95% of what they need to do at work. The rest are either analysts, for whom a golden age of data has dawned, or middle-skilled system jockeys. The latter always glancing over their shoulders at aforementioned, all-consuming Automation.

Schumpeter, the job eating furnace: “Chomp, Chomp, Chomp, Chomp, Chomp, Chomp”

Key findings of the study, which is is sponsored by Future One, a collaboration of the Independent Insurance Agents & Brokers of America (the Big “I”) and independent agency companies, include:

  • The number of independent agencies has grown. After declining from 44,000 in 1996 to 37,500 in 2006, the number of independent agencies has grown to 38,500 in the past two years.
  • Business conditions for independent agencies improved between the 2010 and 2012 studies. In 2012, 60 percent reported increased revenue, compared to 42 percent in the 2010 study.
  •  Systems and data security are now the most important technology challenges facing agencies.
  • Agencies are beginning to use the Internet more to obtain new customers. About 25 percent use Facebook to keep in touch with prospects, and 20 percent use LinkedIn.

Hat tip

Summer Students and RIM

In my everlasting journey through Founders at Work, I came across this quote about RIM:

One of the things I realized was that to get strong co-op students, you had to start early because, by the second year, you’ve lost them already to some other company. So we started hiring first- and second-year students, knowing that they were not really going to be full-time employees for 3 to 4 years after that. It was a 3- to 4-year investment we started making with students early on because I knew their value. We treated them like full-time employees. We’re the largest co-op employer in Canada.

Building teams this way is an very long term strategy. What does the company’s recent troubles mean for these students?

Incidentally this is exactly our strategy for hiring green shoots. Few years till you graduate? Awesome. We aren’t always in the market for full time employees so we don’t want to set these kids’ expectations. More importantly, we need to hire strong when we do dip into the market.

Job interviews are incredibly ineffective; you don’t know what someone’s made of until you’ve put them through their paces. And if you caught someone early that you like they might still be available (or perhaps easily poachable) when you come calling.

Unfortunately this year we literally ran out of space in our office so had to suspend the program. It will begin again.

When Molehills Are Mountains

So Obama won. With 50% of the popular vote. Keep that in mind as you read this (from a super moderate Dem):

The issue, as it turns out, is that the polls weren’t skewed at all. They just had a lot of self-identified Democrats in their sample because a lot of people were self-identifying as Democrats. The underlying issue is that party ID is an “attidunal” variable (comparable to wanting to vote for Mitt Romney) rather than a demographic variable (comparable to being a white man). What seems to have happened is that the Republican Party brand has been in the toilet, so a lot of people who you’d demographically expect to vote Republican aren’t identifying as Republican.

I was watching CNN last night and happened to see the moment where the panel o’ pundits realized that Obama was going to win. The republican guy had a real pity party for a minute, stated that his party’s “brand was broken” and went on and on about it. No doubt the red-faced Mic-thumpers will all agree this morning.

Hey, 48% of the country voted for Mitt* and they do control the house of representatives. What conclusions is anyone supposed to draw. How much signal is there in this noise?

Wait, political analysis? WTF am I doing…

*Not that I’ve been paying too close attention, but can we call him a weak candidate, Debate#1 aside? I kinda thought so, but then I also thought that of “W”. And Kerry and Gore and McCain… I wasn’t impressed by Obama v2012 either.

Hm, maybe it’s just a hard job.

GOP For Deficits, Dems For War (etc)

Here’s Yglesias:

Yet insofar as I have to guess, I think short-term growth will be faster under Romney than Obama for three reasons. First, in the post-1980 era you get bigger budget deficits with Republicans in the White House than with Democrats, and that’s a good thing in the short-term. Second, the Federal Reserve seems to be biased and delivers looser monetary policy with Republicans in the White House. Third, Republicans are much more likely to promote short-term economic growth at the expense of environmental concerns.

A favorite observation of mine (my favorite, not my observation) is how presidents need to play against type to maintain credibility with the median voter.

In politics, actions speak softer than words.