What Moves You?

Joseph Stalin

 

Three pursuits are said to fuel most human endeavors – those of power, fortune, and fame. The news, when it’s not reporting hurricanes, is mostly about individuals in politics, business, and entertainment. These three driving forces are worldly representations, albeit quite removed, of the pillars of conscious existence – love, truth, and beauty, which stem from the bedrock of peace. The young are prone to take shortcuts and to pursue instead their low-brow reflections – pleasures of sex, drugs, and rock-n-roll.

Metaphysics aside, the big three forces (power, fortune, and fame) are interconnected but not interchangeable. Actually, we strongly resent instances when as a group we imbue an individual with plenty of one and the bastard tries to convert it into the other two. When a politician is elected into a powerful office and then takes bribes or accepts inappropriate perks (converting power into fortune), she may be scalded or even jailed. This attitude could be more pronounced in the West, as older cultures are more accepting of sinecure and baksheesh. Translating power into fame intentionally is not sustainable in the long run. It may show-up rather innocuously, as retired politicians giving commencement addresses and publishing memoirs. But in its ultimate the result is a cult of personality, Stalin variety, and history frowns upon this.

Rabid fans may throw bras at a rock star, but relatively few enjoy the idea of gangster rapping youths becoming multimillionaires, an example of fame translated into a major fortune. Famous individuals pursuing positions of power in politics are inherently suspect, though people are often confused on this point. California tradition of gubernatorial election of bad actors goes back decades.

There is little rational logic to surrendering societal power to a good-looking demagogue with a coiffured wife in tow, rather than to a calculating businessman. But common folk consistently express deep fear that the moneyed and landed will conspire, Bilderberg-style, to control the political process and to make purely self-serving decisions, historical evidence to the contrary notwithstanding.

In the end, political careers of Ross Perot and Lee Iacocca fizzled out, and Michael Bloomberg may have topped out as the Mayor of New York City, despite rumors of his 2012 Presidential ambitions. By comparison, Nelson Rockefeller, a NY Mayor for 14 years during the 1960s, got as high as an unelected US Vice President (appointed by Gerald Ford) in 1974, when he was 66. But he was not on Ford’s losing presidential ticket in ‘76.

Donald Trump

Donald Trump

Donald Trump attempted to grab all three, first as a ruthless businessman famous for unbridled greed, then with a media career as a rude TV personality, and very recently trying his hand in dirty politics. Thankfully, his attempts were aborted and the man looks like a joke.


The Man Behind DST

Image representing Yuri Milner as depicted in ...

Image via CrunchBase

It has been seven months since we wrote about the Moscow Facebook connection. So, what actually happened before that, you may ask.

The famous Facebook investment deals were done by a fund named Digital Sky Technologies (DST), headed by one Yuri Milner, hailing from Russia and now residing in a $100 million home sitting on seven acres of Silicon Valley’s posh neighborhood of Los Altos Hills.

The man is no slouch, having studied theoretical Physics at the prestigious Moscow University and completing in the early 1990s an MBA at Wharton. After a little talked about stint at the World Bank he headed back to Russia, where the whole country was being ‘privatized.’ There he headed Menatep, an investment banking arm of an oil-and-gas empire controlled by  Mikhail Khodorkovsky.

A decade went by, Mikhail had been convicted of tax fraud and stripped of tens of billions of natural resources holdings by Putin’s regime, and had  been doing hard time in Russian labor camps since 2005. Meanwhile Yuri, who will turn 50 in November, moved on to become the major investor in Internet companies in Russia, with a particularly astute eye for Social Networking properties. His holdings were aggregated under the umbrella of Mail.ru, the largest email provider there. Mail.ru owns Russia’s number two social networking site Odnoklassniki (Classmates) and number three Moi Mir (My World). Also, it controls a third of Russia’s top social networking site, Vkontakte (In Contact). The famous Facebook seriously lags homegrown competitors in Russia, a distant fourth, with well under 10 million subscribers. Vkontakte and Odnoklassniki each have three to four times the audience.

Vkontakte

Vkontakte via Wikipedia

At the end of 2010 Yuri took Mail.ru public in London, at a valuation reaching $5 billion and raising well over a billion in cash in the process. A third of that valuation was based on bundling with the offering a fraction of the 10% stake  in Facebook that DST holds. This cash is perhaps twice what DST ponnied-up over last couple of years for their foreign investments, and after the deal they still own 75% of Mail.ru, plus two-thirds of their original Facebook shares. Purely brilliant.


Takes Two

Concepts in Eric Berne's Transactional Analysis

Image via Wikipedia

In a couple, do people grow to look the same over time? Or are they actually taking on two different roles and then look the part?

A couple sits in the car next to me, one with some air of lightness, a smile quick to light-up the face, a sense of ease.  The other is withdrawn, perhaps even somber or fully intent and searching for every chance to make the world a serious place.

Does it just seem that way, that between two people, at a given time, one is much more relaxed and jovial than the other?  Yet it can be seen so often, this pronounced difference in two mates, so distinct and undeniable. But a theory readily finds its own evidence; proof is easy when based on arbitrary and inherently subjective judgments.

Eric Berne

Eric Berne

It’s at least plausible, from a simple and quite likely simplistic principle, that opposites attract, and that once attracted start moving to opposite sides of many psychological dimensions. Transactional Analysis, as popularized by Eric Berne’s Games People Play, formally describes the Parent – Child dynamic, and also Prosecutor – Victim one.

Have you seen this in the world around you, in your friends and neighbors? Let me know.


Stupid People Pets

Pet Dog

Pet Dog via Wikipedia

Dogs are angels with paws.
– bumper sticker

What’s up with this pet thing? Ladies dressing up their small dogs or hugging and kissing the cat, in short exhibiting behaviors that are appropriate toward small children and husbands, is this charming or pathetic?

Historic process of domesticating animals served two main purposes. Cattle and poultry were a portable source of fat and protein that was busy fattening itself in time for a family feast, and delivering milk or eggs meanwhile. And there were service animals, beasts of burden and dogs kept for a hunt or to guard the settlement.

In case you thought that the word ‘pet’ refers to gentle stroking or caressing, that’s rather modern usage. It actually derives from petty, meaning small, from Old French petit. In 16th century the word referred to young children and eventually to small animals.

Sure, people anthropomorphize everything and create totems. We find solace and comfort in our pets, a substitute for human companionship and an object of responsibility and affection that can be owned. Often a pet and its owner seem to look alike and you wonder who picked who. A family would have several dogs – his and hers?

Pet Rabbit

Pet Rabbit

I had a number of pets over the years, a parakeet and fish, a turtle that ran away and a rabbit that would not, three cats and a dog. But my favorite was an owl that I rescued, fed for a months, and set free. It was a thing of beauty, amazing eyes and a beak of a bird of prey. Come to think of it, it was no pet but a wild creature that I kept for a time.

Some people mourn death of a pet as much as that of a family member. Still, this name of a pets cremation outfit bothered me – Friends Forever.


Who can I trust online?

FarmVille

FarmVille via CrunchBase

I guess not the estimable and very trusting MR. MOSES ODIAKA of NIGERIA, who needs a little help with moving $18 million and must be so excited that HE OFTEN WRITES IN ALL CAPS. Nor his compatriot, Dr. Akeem Biobaku Ph.D C.R.P, who can also use some banking assistance and kindly writes, “As a token of our appreciation to you, we shall make available to you at less than market price as much as 500,000 barrels of Automotive Gas Oil for spot lift.” But I digress, this is decade old news.

We tend to trust our friends and neighbors and like to ask them for a good car mechanic or for a super moist brownie recipe. But online these same people forward us emails with chain letters or with dozens of pictures of cutest kittens and biggest sunsets and oldest jokes. They expose us to Facebook survey scams and worst of all – invitations to FarmVille.

But, let’s say you actually want to find something online. Have you noticed lately that the Internet is kinda big? I’m not alone in not fully trusting sites of the manufacturers of “new and improved” products, who are predictably focused on selling stuff. A link in some online Yellow Pages does not impress me either. Perhaps multitudes of fellow online users can steer me in the right direction?

In 2003 a company named Delicious (formerly del.icio.us) was started with the idea that many good and social people would semi-randomly label (bookmark) web links with free-form tags, for others to find and follow. Think a democratic election with every candidate a write-in. Flickr did something similar for photos.

This was in stark contrast to the original Yahoo Directory, which is organized in nice categories, gobs and gobs of them. For example, venerable Hasbro Super Soaker is placed under Recreation > Toys > Toy Guns > Water Guns. Good people at Yahoo decided and manually put it there. Supersmart people call having all these categories a taxonomy. It sounds like a ‘taxi’ or a ‘tax’ for a reason: the Greek root refers to organizing and by inference to measuring. The Delicious way of having bunches of tags was dubbed, perhaps in jest, folksonomy. This approach can have its uses.  For example, Delicious helped me find this video of using the water gun as a flame thrower. (Kids, don’t try this at home.)

Back in 2005, around the time when Yahoo bought Delicious and Flickr, Clay Shirky published an influential article Ontology is Overrated: Categories, Links, and Tags. Clay, a writer and an artist by education, was actually debating against taxonomy, a hierarchical classification system, such as the one started by Carl Linnaeus for biological species, rather than ontology – philosophy of categories of existence. So, six years later, which approach won out, hierarchical Yahoo Directory or free-for-all Delicious tags?

Yahoo Directory had been relegated to Internet history. Delicious barely enjoys half-a-million unique visitors per month, a tiny fraction of the overall Internet population, which instead flocks to multi-zillionaire Google, with its ‘secret algorithmic search sauce.’ And overall over four times more searches use Google than wayward Yahoo.

Delicious

del.icio.us once was

Oh, and Yahoo thought of closing and now sold off Delicious to YouTube founders. And it has been vehemently and rather unconvincingly denying that it will shut down Flickr eventually. So, regarding finding stuff online, as the saying goes, “If you want something done right – do it yourself.”


Cookie P&L

Girl Scout Cookies

Girl Scout Cookies via Flickr

Readers who know what ‘D’ stands for in EBITDA may choose to skip this post.  

Before I dive further into matters of corporate finance in future posts, let me explain a couple of terms.  Say, your Girl Scout troop is selling cookies* for $4 a box and you buy them at the baker for $2. You are doubling your money and MBA types call it a ‘mark-up’ of 100%.  I know that percent has to do with much dreaded fractions, but they do show-up when you are dividing numbers.

So, you push the girls in the troop hard, cajole your friends and family and colleagues, and sell 200 boxes. $800 that you collected is your troop’s ‘revenue’ or ‘sales.’ $400 that the baker got is ‘cost of goods sold.’ $400 that the troop kept is your ‘gross profit.’ Being half of the total, it’s called ‘gross profit margin’ of 50%.

Extra credit: Explain how 50% margin is 100% mark-up.

Your troop paid for a field trip and bought some awards for top sellers, to the tune of $320 in ‘expenses,’ which left you with $80 in the kitty.  Forgetting for the moment that it’s a non-profit, $80 is your troop’s (net) ‘profit,’ officially called ‘earnings.’

Extra credit: Your troop only wanted to make enough money to cover $320 in expenses or ‘break even.’
How many boxes did they have to sell?

Accountants like things in neat columns, since they add and subtract numbers all day long. They draw lines across to make totals easier to see. Everybody wants to know how much money they made and get to keep (after taxes). That’s the number on the bottom, (below) the ‘bottom line.’ If you spend more than you take in you suffer a ‘loss.’

Some say that humans developed counting and writing to maintain business records, as they learned to observe Sun and the stars to help predict growing seasons. It was a gradual process to nail down ideas of negative numbers or a zero and to agree on symbols to record them on a page. A few centuries ago bookkeepers in Europe started putting down figures showing a loss in red ink instead of everyday black. Companies that make money are ‘in the black’ rather than ‘running red ink.’

    Cookie Profit and Lost (P&L) Statement

  • Sales                    $800
  • Cost of goods   $400
  • ————————–
  • Gross profit      $400
  • Expenses           $320
  • ————————–
  • Earnings               $80

Companies total-up their results for shareholders four times a year and publish a ‘quarterly earnings release.’ Now you can read through one.

*Actual Girl Scout Cookies economics and politics are a bit more complicated, as most things in life are upon closer inspection.  People study accounting and finance for a decade to become competent CPAs or tax attorneys.

IBM PC

Original IBM PC

- For nerds and technology history buffs: It was putting numbers in columns in a program called a ‘spreadsheet’ that made the original IBM PC, which cost well over $1000, commercially useful. This gave a deciding push to the entire personal computer industry. Microsoft Excel (originally Multiplan) was not the first spreadsheet program around. VisiCalc appeared on Apple II in 1979 and on PC in 1981. Hugely popular Lotus 1-2-3 was introduced in 1983 and it was only in 1988 that a Windows version of Excel started overtaking it.


I Don’t Read Books

Kurt Vonnegut

Kurt Vonnegut

Don’t write them either, not at the moment. Who has the time?

I skim books, as audio recordings, in five-minute increments, on the way to the store. So, my apologies for an occasional book review. Lately I listen to lots of books on technology entrepreneurship.  At one point I was reading lots of Science Fiction. So it goes.

So, I listened to a recording of Who Moved My Cheese? The book is 96 pages, 94 pages too many.  You can pretty much get it from the title. If not, let me summarize it for you. Life circumstances change, including sources of nourishment.  If you do not adapt to change by looking for ‘cheese’ in new places you will go hungry. Business people do manage to make a leap from ‘cheese’ to ‘revenue.’ They think of this as a profound metaphor for having to adjust to shifts in the marketplace.

Business Cheese

Business Cheese

Do not look at me with a strange expression. That’s the whole book. I will not comment about the cheesy title. That’s not a very satisfying stab – they present such an easy target. One redeeming quality of the book is that two of the characters are mice.  We have a predilection for cute small furry creatures.  Entertainment empires were built around that.  I salute the author who found a product this easy to consume. The dude made his own cheese.


Fellows in Time

Machine of the Year

Machine of the Year

Mark Zuckerberg of Facebook was inducted into perhaps the most exclusive club in the world, thanks to Time Magazine. This group includes present day political biggies Obama and Putin, both Bushes and Clinton. But also the list has the Pope and the Queen, FDR and JFK, Hitler and Stalin, Churchill and Gandhi. 

It’s an interesting historic arc, from the aviation pioneer Charles ‘Lucky’ Lindberg, who in 1927 was the first, and at 25 still the youngest person selected by Time, to the awkward billionaire Zuckerberg, picked in 2010 at 26 years of age. What does that say about what we value and who we admire?

Another arc leading to Facebook started in 1982, when Time picked The Computer for the annual distinction, followed by Andy Grove of Intel in 1997 and Jeff Bezos of Amazon in 1999. Apple marketing magician Steve Jobs did not make The List, though he was on the cover of Time a bunch of times, first in 1982 and most recently in April 2010. Microsoft’s chief nerd Bill Gates only squeezed in through his charitable work, in 2005, together with wife Melinda and singer Bono.

Mohandas Karamchand Gandhi

Mohandas Karamchand Gandhi

Zuck made it.  We have still have ways to go.


Don’t Read Marx

Karl Heinrich Marx

Karl Heinrich Marx

It’s easier to have polarized opinions derived from pop-culture cliches about writers one hasn’t actually read. Niccolo Machiavelli was a philosopher and fought for the republic in Florence, for which he was jailed and tortured by the Medici. His Prince, first published in 1532, five years after his death, gives clear political advice and is not cynical or ‘machiavellian.’ De Sade denounces in Justine many ‘sadistic’ abuses that befall the heroine and he sounds apologetic for his proclivities. Freud is not all about sex and excrement.

I am rather attached to my biased opinions and to the ignorant comfort of negative labels that permits the simplicity of hate. I will not read Mein Kampf or Das Kapital, lest there is in them any material making sense or even appealing. I will not give people I despise an opportunity to say things that I cannot argue with or just ignore.

Niccolo Machiavelli

Niccolo Machiavelli


What’s In Your Ear?

Bluetooth Headset

Bluetooth Headset

Middle-aged guy walking down the street, his eyes are remote and downcast and he is mumbling to himself. I appraise the distance between us – Is this nutcase dangerous? But his clothes are decent, if unseasonably warm, hair had been combed at some point today. Is he talking on the phone?

He passes me and I see a shiny blinky gadget around his ear. Is it at all surprising that a hearing aid, a symbol of old age and infirmity, is made so tiny as to fit inside the ear canal, its beige plastic blending with the skin tones? Meanwhile, the Bluetooth* headset is black with silver accents and a blue light, a modern toy of the well-connected**.

King Harald

King Harald

* Bluetooth radio technology was named by its inventor Ericsson of Sweden after Harald “Bluetooth” Gormsson, 10th century King, who united and christened Denmark and Norway. Don’t know what happened to his teeth.

**For my nerd friends concerned with radio wave power levels – Bluetooth operational transmit power is 1-2mW, which is perhaps 2-3% of cell phone’s typical output.  But few people are walking around for hours on end with a cell phone strapped to their head.


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