Category Archives: Uncategorized

Political Trade-offs

If we gathered the smartest financial and economic minds together and locked them in a room for a week I think we could solve the current economic conundrum…

But instead, our system of representative democracy forces compromise between brilliant ideals and half-baked social plans motivated by re-election cycles. Perhaps this is what the founders wanted – to keep the representatives tied to the local whims of the body politic.

However, in the context of social dislocation like that we are facing today, it seems that the benefit of coordination more than compensates for the potential abuses that might come from a republic led by disconnected philosopher-kings.

This trade-off: between efficacy and representation, is likely less stark in a society where the populous has the benefit of good education and therefore more wide-spread competence. But when a society allows its educational system to fail, when pop-culture and hollywood media replace civic awareness, and more info

when party politics make any debate center around hot-button social issues rather than content, the trade-offs become dangerous.

Our President has sided with Mr. Cheney in attempting to address this issue by seizing more power for the executive. I see this as a rational market reaction to the tensions of our representative form of government in the context of our current challenges. If he uses this power to tap into the brain trust he has accumulated, we should likely look the other way…

But on the other hand, our framers set a system in place that has brought us through generations of war, conflict and change, leaving us standing in a position of strength. So perhaps we should resist urges spouted by intellectuals like yours truly and instead address the educational inadequacies that strain our representative forms.

Either way, I think talking about these civic issues is important in these strained days.

Nature Rules Even The Economy

The Storm Is Back

You may have noticed that we are out of the eye of the storm.

As I mentioned in my last post on the economy (Rules of Nature), the current process of economic unwinding is going to be long and painful, and we are still in the early stages of the process.

The headline issues of the last few weeks – the “stimulus”, the “nationalization of the banks”, and Obama’s “housing plan” – do little to change this reality.

Primary Driver = The Housing Market

The primary driver of our current economic situation remains the housing market. I will not bore you too much data about  where we are, but this article indicative: Housing Prices in 20 U.S. Cities Fall a Record 18.5%.

Unfortunately, these declines are only the beginning.

We must remember that the record mortgage issuance of 2005-06 continued through 2007 and that this was at the end of a massive levering-process at the household level that had been going on for decades. In other words, there is a massive wave of people with underwater mortgages who will continue to default and be foreclosed upon unless something is done to facilitate rational pre-foreclosure restructurings.

Unfortunately, it appears this is not going to happen.

Change Is Not Coming

The primary reasons why proper reform is not happening are: 1) most people don’t understand how important this issue is, 2) most people who do understand the economics let half-baked moral arguments about “bailing out” homeowners get in the way while at the same time talking out of the other side of their mouth about how we need to keep the Banks and GM out of bankruptcy, and 3) when we finally do get a proposal that makes enough people happy to satisfy the lobbyists, it is watered down and ineffectual.

As a result, I am fairly certain that housing prices will continue their steep decline, that this decline will continue to spread to commercial real estate, that the balance sheets banks and other financial institutions (including the Fed) will be even more severely strained, that consumer spending will continue to fall, that consumer defaults will rise, that corporate bankruptcies will spike, and that these results will spur second-and-third order effects around the globe.

Call it a depression or a recession or whatever you want, but it is almost inevitable at this point. But this is nothing new. The writing has been on the wall about this for nearly two years.

Ineffectual Responses Don’t Help

There are so many bad ideas coming out of Washington right now, I am reluctant to even begin dissecting them in specific terms, but the TALF is a good example of governmental attempts to control nature and the markets.

The now $1T package is discussed in this article:
U.S. Tries a Trillion-Dollar Key for Locked Lending

That the credit system needs thawing is obvious, but providing below-market loans, funded by taxpayers, to encourage under-water risk takers to bet the bank in order to get these markets going to me is beyond the pale. And more than that, it just won’t work. It is too small and too late.

Real Hope

All of that being said: I remain optimistic about innovation and the long-term success of the American Economy.

There is a lot of exciting stuff going on in the world of social-networking, medical technology, biotechnology, clean tech and digital media. These and other areas will continue to drive the engine of innovation in this country and subsequently the world.

I am grateful to go to school with entrepreneurs who are taking the plunge to do something creative in spite of the dark reality in which we find ourselves.

But that is unsurprising.

A half-melted, rain-soaked, bloody-mouthed American Dream is still the best promise and hope that the world has ever seen. And years from now, that dream will continue to be worth fighting for.

In the meantime, keep your umbrella handy and be patient. This one will be around for awhile.

Why I Like Twitter

As Twitter grows in popularity, a number of my friends who have heard me talking about it have started asking me why I like Twitter so much. Although I enjoy chatting about the topic and am glad to do so anytime, I thought writing a post on it might be helpful.

Here are a few of the meaningful ways I have integrated Twitter into my life.

1) As a way to interact with and meet a diverse group of people.

I am able to do this on a scale that is impossible with other services – this comes from Twitter’s one-to-many structure (i.e. each one of my “Tweets” is seen by all of my followers). This also creates the ability to have semi-public “conversations” that others can “listen” in on or participate in.
In addition, by reaching out to new people on Twitter (primarily friends of friends) and through the new “followers” I get each day, I have access to an entirely new and diverse source of social connections.

2) As a way to get the News.

It turns out that if something is interesting, people like to talk about it with their friends. Thus, I share and receive all kinds of news through Twitter in a way like never before. The service has virtually replaced my other news services for everything but financial news (for which I primarily turn to mobile Bloomberg and blogs). In addition, Twitter usually has most news stories hours or days ahead of traditional news outlets, which keeps me ahead of the curve in terms of being in touch with the world outside of the HBS-HLS bubble.

3) As a way to keep in touch.

My mother is probably reading this blogpost and so are a number of my friends. In fact, many of you probably stumbled upon this post through Twitter. Thus, you know that I regularly post what I’m up to – ranging from relatively trivial stuff to the places I am traveling. Many of my friends on Twitter do the same, and as a result we are able to keep up to date on what is going on in each of our lives. That I can better stay in touch with my family and friends while maintaining a busy schedule is a great benefit of the service.

4) As a means of self-expression.

One of the things I have enjoyed most about blogging over these last couple of years is that it gives me the ability to express what is on my mind and share it with others. Twitter does the same but on a more real-time basis. As a result, I find myself opening up to an “audience” of friends about the way that I see the world. Of course opening up your life to a new level of transparency is daunting, but I think putting myself out there has brought more than enough good – in conversations, new friends, and insights – to make up for any discomfort that it might create.

If you are new to Twitter.

I suggest giving it a go for a month or so. Like most communities, you reap what you sow, so try to participate in whatever way feels right. There is no one “right” way to use the service. Hopefully my thoughts on it are helpful, and please let me know if you ever want to chat about it more extensively.

China, Capitalism, and Character

(I wrote this a few weeks back in the cab on the way to the airport leaving Shanghai…)

I am wrapping up what has been a phenomenal trip to Shanghai and Beijing. I finally made the trip I have been wanting to make for a decade, and I’m so glad that I did.

A Nation of Capitalists

The reflections an observations of these past days are far too many for a post or likely my words at all, but one observation that struck me was just how capitalist China seems.

It seems to be a country of scrappy, hard-working dreamers. Everyone I met in their twenties had plans for bigger and better things – new careers, new cities, new adventures.

It also showed up in day-to-day life from the taxis to the stores to the mega-nightclubs. Everyone was reaching for that edge – like a game of poker with no cards and all bluff – posture was everything.

But rather than being put-off or intimidated my the melee, I dove into it and started smiling. My poker face was no match, but it was fun to play along.

Did I get “ripped off” a few times in the process? Sure. I definitely spent few extra dollars over the last two weeks because I pushed the envelope and took chances. But it was well worth it.

Tension Between Ethics And Profit

Seeing people push that line of ethics beyond the breaking point in the pure pursuit of profit is something I have seen in worlds from high finance on Wall Street, to the competitiveness of Harvard classrooms, and now on the streets of China.

It is the same fundamental strain: What are you made of when the chips are down? Are you willing to sacrifice your character for a few dollars or points or yuan? Or do you believe integrity is worth it?

We have seen the results of a collective group of decisions to put the game ahead of integrity, and we will be picking up the pieces for the next few years if not longer. Yet when a market-mentality replaces morality and values in people’s decision-making processes we should expect nothing less. This is a symptom of a broader social problem.

Striving For Integrity

I would be lying if I said I have never crossed the line. Sure I have…we all have. But I have sincerely tried – especially in the last six months or so – to put my integrity, character and transparency high on my priority list.

Maybe that makes me a sucker in some sense – but consciously choosing to take the high road when you see the alternative in front of you seems different than being duped into naivete.

In other words, I have seen the demons and know that dark path exists, but I’ll keep trying to resist it and instead keep trying to walk with my head held high and with honor. I know that it will come in fits and starts, but I am grateful to have many of you out there walking along with me.

In the mean time, I think I may have paid too much for some souvenirs…

Meeting Twitter Friends IRL

Social Networking in My Life

I have recently had the rewarding experience of meeting a few people IRL (in-real-life) that I had only previously “known” through Twitter and the Interwebs.

This experience caused me to think back to how social-networking has changed the way I meet people.

Upon reflection, I realized that I have been “social networking” on the Internet for a really long time. When I was in high-school (in the mid-nineties!), I spent time in the “metaphysics” chat-room on AOL because I had briefly been exposed to Philosophy, and for some reason my football buddies weren’t that interested in chatting about it.

As time has progressed and my life has included time spent living in Texas, on both Coasts, in the Midwest, in England and now in Boston, I have accumulated a group of people that I can connect with on most topics…

Twitter is Different

But now thanks to Twitter, I have the ability to meet new people around the world and interact with them on a variety of topics, primarily around technology, but I also to get to “know” them in a way that wasn’t possible back in the AOL days.

Watching people’s Twitter-streams flow by is almost like listening to a series of radio-stations featuring the contents and interests of a couple hundred interesting people all around the world. By briefly tuning into these streams, I get a glimpse into their thoughts, experiences, and passions, and I start to develop a picture of who they are.

Especially for those who are more active participants, I feel a sense of ambient intimacy with them as we react to the various different shared and unique experiences we talk about on Twitter.

Why Meeting IRL Can Be Awkward

Whenever we take this stream of communications and collapse it into a traditional social setting, I must admit that it is a little unsettling at first.

I think part of the reason is that because of Twitter we have put the cart before the horse.

Ordinarily, when you first “meet” someone, you make judgments about them based on a brief introduction…maybe you judge them by how they look, what clothes they are wearing, how clever they are, etc.

You get to know them gradually over time, and maybe after a month or so you can figure out what kind of music they like, what their temperament is like on a Sunday afternoon, and how they feel about relationships.

But thanks to the Interwebs and Twitter, I have been “meeting” people that I already “know” on a more extensive level than some of my acquaintances from work and school.

Twitter Is Making Me More Open-minded

Probably the coolest thing about this experience is that my IRL interactions have become more open-minded as a result.

People I might have previously excluded from my interactions based on some immature judgmental part of my nature, I now embrace.

As a result, I think my horizons have been broadened, and hopefully that means I will have more extensive, exciting and interesting relationships. Creating the possibility of meeting people from different walks of life and backgrounds has a ton of upside.

Living A Public Life Is Hard

Even though Twitter creates the upside of meeting new people, it is not always easy being so public and open with your interactions. The whole experience of living a public and open life on Twitter and on this blog has changed my life in many ways.

From potential employers to potential friends, people now have much more fodder with which to form their initial judgments about me and my personality.

Hopefully, with more nuanced data we can come to more nuanced conclusions. I think we should, and I am optimistic that we will.

In the meantime, I am looking forward to meeting more of you Tweeps IRL sometime soon.

Rules of Nature

The Eye of The Storm

Have you ever been in a hurricane? I have, and one of the strangest things about it is the phenomenon that happens right in the middle of the worst of the storm – the eye.

You can walk outside and literally see the stars and the branches lying askew all around you…the air feels eerie and a sense of anticipation for what is left to come fills the air.

I can’t help but think we are witnessing a similar occurrence in the markets over the last couple of weeks.

Every now and again, I will glance at the screen and see the Dow up a few hundred points, followed by an irrational headline like: “Market Rises on Hope for Shorter Recession” or some such nonsense.

But, we all know that we are only partially through the natural consequences of what we have witnessed already.

Rules of Nature

For those of you who have been reading Paranoid Bull for awhile, you probably are tired of the “shoe-to-drop” metaphor, or before that the “trainwreck in slow motion” ones, so I’ll go for another one.

We are witnessing something like the end of an Ice Age. There has been a fundamental shift in the temperature of the environment which was previously calm and unrealistically muted to risk. The molecules and atoms moved more slowly at the lower temperatures, and the over-confidence of false-statisticians suggested that this temporary cold-chill was indicative of the indefinite future.

However, as we see in the weather, one of the few things that can be certain about the future is that it will look different than the present. Also like the weather, most systems in the world move through a wide variety of states: cold, medium, hot…slow, fast, zooming.

Right now our system has gone from cold to hot, from an appearance of risk mitigation to a reality of correlated, levered and volatile risks.

As the temperature rises and glaciers melt, this has an impact throughout the ecosystem: entire landscapes are transformed as water rushes with such velocity that it crushes anything in its wake.

And once the melt has begun, there is no going back.

The People Factor

The problem with our financial system is that unlike the natural order of a post-glacial natural ecosystem, our world is inhabited by human beings who are smart enough to have some semblance of an understanding of the world, but not smart enough to recognize their own limitations.

In addition, they are driven by passions and irrationalities that cause them to build cities on piles of snow…because if it hasn’t melted yet, it won’t.

These quirks of humanity also cause us to run with the crowd, and as the chaos of the system has emerged over the last couple of months, the emotional side of human behavior – especially that of fear – has set in.

People don’t know what to do, what to expect, which direction to run, and they surely don’t know what the landscape will look like once the ice has finally completely thawed.

As a result, we are caught in a state of fits and starts, with each pundit and pseudo-intellect looking over his or her shoulder at the next quasi-intelligent one wondering what the other one is thinking.

Keep Running

In this game of chicken, however, the one who stops running first will likely be caught in the flood.

I wish there was better news, and given the stars in the sky, one can almost believe that we are through the storm.

However, don’t forget that the patterns of nature are much more powerful than any we could hypothesize…and I haven’t heard of a one-sided hurricane or a partially melted glacier yet.

But Play

But don’t run in fear. Run because it is exhilarating, and enjoy the scenery and lightness in your step as you go.

A friend of mine recently highlighted the importance of ‘play’ in life…and I think even in moments like these, while we are reacting to a change in the landscape, we can find these rose-colored lenses in all that we do.

I for one am going to try, as I stop to catch my breath before the next leg of the marathon.

In The Air

Flying Is Inspiring
For whatever reason when I find myself on a plane far above nowhere, I feel like the creative impulses become more uninhibited.

It might simply be the fact that sitting in one place for so long allows the kind of self-reflection necessary for creativity, but I think instead it has something to do with the unfettered reality of being in the air – literally off the ground.

Going through the process of trying to figure out my first post-grad-school career move in the midst of the biggest market downturn in a generation has been a very intense process to date.

Even though failure is a necessary part of life and an even more understandable part of such trying times, having desired outcomes eliminated by others is never fun.

That this happens both in our personal relationships and in our careers is not a surprise – both are simply the interface of our hopes and expressions of commitment and the outside world.

Challenges Show True Colors
An interesting phenomena in the current environment is that peoples’ true character is being shown, for better or for worse.

Arguably an opportunistically minded employer should see today as a great time to find talent – even those with the most options are having this opportunity set constrained by the reality of a market downturn.

However, instead, many of these previously-shrewd types are hunkering for cover like the rest of the masses.

This might mark capitulation, but instead I think it highlights the danger of a human-driven economy: it is driven by psychology as much as any “reality of the matter”.

What I mean is that today even the even-keeled in the crowd have become part of the collective pessimism that is currently gripping our markets and economy.

That it has become the status quo is reflected in the experiences of my fellow graduates of Harvard Business and Law Schools, who arguably have a unique snapshot into the corporate psychology across our economy as we are welcomed into organizations for interviews, meetings and other gatherings.

The mood across these organizations is one of fear-of-failure at worst to wait-and-see for most.

Entrepreneurs Remain Optimistic
Thankfully, this is not a uniform experience, and unsurprisingly it is the entrepreneur-set that retains the most optimism. I have spoken to a number of venture capitalists as well as aspiring and current entrepreneurs over the last several months, and the outlook for this group remains upbeat.

Sure there is a sense of “cash-preservation” typified by the now infamous “Sequoia book” on the economy; however, this group also recognizes that there are likely an infinite number of problems waiting to be solved and a lot of really smart and creative people out there solving them.

This sense of innovation and optimism is what our nation thrives on, and it is what will ultimately inspire and drive the rest of the crowd out of the shadows and back into the eye-squinting light.

Social media, communications technologies, renewable energy, biotechnology, music, film…all of these areas continue to feature brilliant minds doing wicked-cool stuff.

Innovation Needed: Personal Finance
One area where innovation has only moderately occurred is in the area of personal financial management. Sites like Mint.com help people to manage their personal finances, but as too-many people are experiencing the current state of financial advisors is inadequate.

I think there is room for someone to create a service to help moderate-income people manage their personal finances and retirement accounts. With the out-flux of talent from the failed financial-services industry, a would-be entrepreneur has a legion of people to help with execution.

The cool thing about our country is that someone will solve this problem. And they will be another entrepreneur in a series of creative folks who have helped built our country and its ever-persistent economy. (Update: I met a guy from MIT last night who is working on a very similar idea…beautiful thing).

Landing
The plane is banking left and my batteries are low…until next time, be careful of the continuing-to-fall shoes and try to keep an eye on the sun.

Giving Thanks

America is a beautiful nation that gives you the freedom to sit on your chair, hold the device in your hand, and listen to your yuppie-like and defiantly-critical music.

But lately it has become far too popular to throw stones, and to point to others for blame.

Last week it was President Bush and The War, this week it is Wall Street and The Greed.

The maniacal thing about all of this is that you are happy…for the most part.

You have the stuff you want, a full stomach, a warm bed, a choice of profession.

By any historical standard you are one of the luckiest people ever born on this earth…and yet you defiantly pip-squeak complaints and critiques at every chance.

For this I blame your comfort. A human being needs a certain amount of controversy and challenge in her life. If life is good, where else can we find it but in creating an uproar in the world around us?

Now surely the world is not perfect, and surely mistakes have been made in Washington and on Wall Street that have negative repercussions for many – not you specifically – but many…they could-have-should-have done better! So you say.

I say stop whining.

This week we will stop to *celebrate* with our friends and families at full tables across the country. We will laugh and eat and enjoy moments of the pinnacle of human-living with full stomachs and warm feet.

In the afterglow as you watch the Cowboys on the TV through the one eye-still-open, take a moment to notice.

And say thanks to our country, our leaders, our parents, and our friends.

Happy Thanksgiving my friends. I am grateful for you and this Great Country on this Beautiful Day.

On The Internet

Content Over Context

I am writing this message on a machine in a place and at a time, and that has little relevance.

What matters is that you are reading this message, and what would matter even more would be if this message somehow made you think something interesting or new.

We share and connect using this thing we call the ‘Internet’, but really it seems like just another iteration of the kinds of communication and sharing that has been going on since some Cave-dude first scrawled a writing on a wall.

We articulate our perspectives on the world and toss them out there in hopes that maybe the scratches and squiggles will create a bridge between my mind and yours.

One of the most powerful things about the Internet is that it allows us to take the act of message creation and sharing to a scale like never before. The cost of creation is close to zero, as is the cost of sharing and consumption…

And our distribution methods are getting better and more seamless. These words could theoretically reach a billion people within a matter of hours if the message resonated strongly enough for each of you to share it with someone else.

Sharing Is Human

Why do we share? Why did that caveman draw?

I think it has something to do with a human need to know that we aren’t alone here on earth, and also because we are naturally drawn to understand the world around us.

No matter how many times we connect with someone new, no matter how far along we scratch at the surface of the infinitely impossible problem of trying to understand our world, we will keep striving to make new connections and to explore the world around us.

This act of connecting and learning is one of the central pieces of what it means to be human. It allows us to create a common understanding and resonance with other people out there taking taking this same exciting journey.

‘Internet’ = ‘Equality’

One of the things I have been most excited about lately is taking the concept of sharing and connecting to the next level: our current social networking concepts are old-school, and most simply replicate our existing off-line relationships.

The democratizing power of this medium of sharing and expression is that the ‘Identity’ of the author is less relevant than the resonance of the message. While you are in the flow of reading the message, I could be a 47 year old writing in Calcutta as much as I could be a 29 year old writing in Cambridge.

Ultimately, I think sharing content in ways above and beyond our traditional social structures is what makes this next iteration of ‘social networking’ on the ‘Internet’ so exciting.

What is pretty rad is that this is simply an expression of the *Dream* of Dr. King, and it is something that the market is creating for us.

The Internet lets us hack-the-system to connect and share in ways that are revolutionary, and the fact that our natural tendency is to ignore creed and ethnicity makes me deeply hopeful about the innate nature of humankind – deep down we are more interested in the content of the minds and their ability to relate to us than we are about any of the other ‘filters’ on which people fixate.

By having a more accelerated and efficient filtering process between the various different in-person connections that we share, each of these moments can be more potent, rich, and more fulfilling.

As we continue to optimize these connections, our lives are are becoming more creative and ultimately more productive in ways that are fundamentally altering what it means to be human…and that is a pretty sweet thing.

Just what the next level of connecting and sharing will look like remains to be seen. In the mean time, thanks for taking a moment to ride along with me.

Walking The Walk

That one can accomplish entrepreneurial pursuits appears before us on an almost daily basis, but it is always cool when those materializations happen close to home.

This morning, my eye was caught by a TechCrunch article about an innovative company, EyeView, that just so happens to have been launched by a buddy of mine from HBS. (Here’s the article: EyeView Raises Seed Round For Flash Tutorials That Convert).

I first saw the presentation for EyeView last year at the HBS business plan competition, and it was clear from the second their video started that these guys knew what they were doing.

After getting to know the founder better, I can tell you that he has the drive and the passion to make this thing a success. It is a fun thing to watch, and I have no doubt that success will continue.

Check out the below video, highlighting their product which is helpful in navigating users through the sometimes-confusing introduction to a web-based product or service.