Monthly Archives: September 2008

Reading the Bailout Bill for You

I’m forcing myself to read the text of the bailout bill. I’m only at the beginning. But I already see that the Secretary of the Treasury has a lot of power. And who will that be after the election? That’s the first issue. But let’s get to the part where they help the homeowner.

The most important issue for me has always been WHY CAN’T WE JUST TALK TO THE MORTGAGE COMPANY OURSELVES? That’s the easiest way to solve this: I go to my mortgage company, which happens to be a unit of the failed Lehmann Brothers called Aurora Loan Services. I say to it, “I’m $100,000 under water in my house right now, and my mortgage will adjust soon. Why don’t we make a deal where you lower my interest rate to 3% so I can afford my payments, or tack the interest on to the end of my loan?” Then I call up Citibank FSB, my home equity line provider, and I say “I am $100,000 under water on my house right now and your line is worth nothing. Please lower my interest rate so I can continue to pay.” And we make a deal. I stay in the house, they continue to get some money, although not all the money they would have made, and everyone goes away moderately happy until things settle out and I either sell the house or die.

I actually got on the phone a week ago and asked that question of my mortgage company. You know what they said to me? We can’t help you because you are current. And why am I current? Because my ethics won’t let me put the keys in the mailbox and walk, and because I want to be on the board of my new bank and I have to have an unblemished credit record to be so. So the woman on the other end of the phone told me to wait until October when the bill passes and see what happens.

So here’s what I see in the bill:

It says vaguely that: “the Secretary shall implement a plan that seeks
to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages, considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 257 of the National Hous ing Act or other available programs to minimize foreclosures. In addition, the Secretary may use loan guarantees and credit enhancements to facilitate loan modifica tions to prevent avoidable foreclosures.”

But then it says: Secretary shall consent, where appropriate, and considering net present value to the tax payer, to reasonable requests for loss mitigation measures, including term extensions, rate reductions, principal write downs.

So we (the plain old folks) get the ability to do what I just tried to do without the government’s intervention. We get to make a deal to stay in our homes. And they have to implement this within 60 days of the passage of the act.

So don’t look it as a bailout bill for Wall Street. Look at this as what should have been done by the banks all along, and as punishment for Wall Street. I hope Wall Street will never be the same.

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What Debate? Devil’s Slide Bridge Opens


Looking Down the Bridge to the Tunnel
Originally uploaded by hardaway

After the meltdown last week, during which I experienced my own empathetic mini-meltdown (too much TV-watching and mail-opening can always produce that in me) I decided to escape to my house in Half Moon Bay for the weekend.

I’ve handpicked a few key events to attend here while I decompress when the mini-depression caused in me by the gigantic Depression in Phoenix and the nation. One of these is Milan Scoble’s birthday party, but another was the opening of the Devil’s Slide Tunnel Bridge yesterday. These events are connected in my mind by their association with the future, a place I love to envision.

The bridge starts in Pacifica, and connects to the as-yet-unfinished tunnel that connects Pacifica to Montara through some of the prettiest parts of the Pacific Open Space Trail and replaces Devil’s Sllide, a particularly dangerous part of the Pacific Coast Highway 1. The tunnel will open in 2010 (from CalTrans’ lips to God’s ears), but we were able to walk the road leadning into it yesterday.

The views from this road are awe-inspiring, and there was never a way to see them before. We won’t be walking this bridge again, either, because it’s going to become a major road. This photo was taken with the iPhone, so you can imagine how truly beautiful the views are.

If you love big toys, large construction projects, or raw nature, you would have loved this. Of course there were a lot of speeches associated with the opening, but I bailed on those after walking the bridge and having a bottle of water and a cookie.

Way more exciting than the debate, although my pregnant daughter, another bridge to the future, cooks an incredible pineapple chicken to watch it with. It’s great to be me:-)

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A Bailout Isn’t Enough

I want my chance to help do things correctly. All week long I’ve been
emotionally and intellectually struggling with the near collapse of
the global economy and the admonitions of both former Goldman Sachs
CEO and President Bush about how we had to give them $700b to bail out
the banking system. Immediately. No questions asked.

Why? The American public is correctly asking. Who is bailing out my
family?

So I want more than a bailout I want the American taxpayer to be a
limited partner in the vulture fund that buys up these worthless
assets and re-sells them. I want to be sold my unit with the same
type of careful prospectus I get when I go into any investment. I
want to be told of the risks, even the small print risks. I read those
when I invest, and if the investment goes South, I know I was
responsible. And if the fund makes money, I want a piece of the action
since I am putting up the risk capital.

I’m not, as a taxpayer, going to invest in anything else that I can’t
influence. After all, I don’t do that as an entrepreneur or an angel.

I have invested in a bank that is forming right now to replace all the
banks in Phoenix that are failing because they got on the greed track
rather than on the community track. The bank I am investing in is a
true “community” bank which will raise capital in smaller units, with
great responsibility to the community that puts up the money. It will
be more like the lending communities on social networks than the Wall
Street investment banks.

And it will be regulated. Oh, boy will it be regulated. Our bank,
fortunately, will operate in an environment where the pendulum will
have swung the other way. We will not be in real estate loans, like
every other bank in Phoenix. We will fund true operating businesses.

And it will have a community mission, not just a monetary mission.

Want to hear the irony of all this? We are behind in getting it off
the ground because we need the regulatory approvals and the regulators
don’t have time to see us. Guess why! Because they are too busy
working out the bad stuff from the old banks.

In a Recession, or whatever we are in that nobody will be honest
about, the only way to get yourself out is through innovation. Do I
hear that from Bush, from Paulson, from McCain, or even from Obama?
Only as a cliche, not as a plan.

So I guess that has to come from me and you, the American people.
After all, if we don’t innovate, we don’t survive. We can’t just print money.

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Alcoa Receives Green Enterprise Award: ESS Celebrates

While ESS, a company in which I’m a shareholder, is congratulating Alcoa for receiving Oracle’s Empower the Green Enterprise award during a ceremony today at Oracle OpenWorld in San Francisco. But I’m congratulating ESS.

Oracle Board Chairman Jeff Henley and CIO Mark Sunday presented the award to Alcoa, which was recognized for adopting green business practices – including effective use of advanced information technologies – in order to protect the environment, reduce costs and risks and enhance operational efficiency. Alcoa was one of 15 organizations selected to receive the award. The big news here for me is that Alcoa won the award because ESS made it possible, which is a big win for ESS–part of a week of big wins I can’t talk about yet.

Oracle chose Alcoa for the award based on its successful implementation of ESS enterprise software – installed on Oracle 10 – as its unified platform for EH&S sustainability management throughout the company’s global operations.

This is a case of technology making something possible (I refuse to use the over-used word “enabling”) that was not possible before in the enterprise: almost real-time tracking and reporting of Alcoa’s emissions so Alcoa can manage them.

The Oracle ESS combo lets Alcoa simplify ISO 14001 compliance so the company can continue to be certified;
improve its data analysis capabilities to improve decision making and reduce emissions; and analyze emissions data daily rather than annually.

Nice to see ESS CEO Robert Johnson get those wins!

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LiveBlogging Charlene Li in #Phoenix

Charlene Li, author of Groundswell, has a new presentation. I’m so happy to see her here.
She begins with the world-famous Comcast technician asleep on his customer’s couch and how that comes up on Google.

Technologies are enablers but social media is about relationships. “You’re not even listening.” She shows a great video of a man and a girl in a restaurant. He’s an old time marketer. She’s an uninterested consumer. It’s a commercial for Microsoft Interactive Solutions.

How do you create a social strategy to enable relationships

Companies often have relationships with their customers that are
Transactional
Occasional
Impersonal
Short-term

They want passion, constant, intimate and loyal relationships.
How to get there?

Know your audience
Know your goal
Make an action plan
Then use the tools, tactics, and techniques

The audience:
Bottom of the ladder=not active
Then watchers (YouTube watchers, blog readers)
Sharers(join social networks, share photos and tag content)
Commenters (create content, review products, comment on blogs
Producers (create content on a regular basis) Once you cross that line, it’s a labor of love
Collaborators (curate and moderate content, edit wikis, lead discussions)

Learn by listening: do a Google search about you or your company
Respond quickly-use Google Blog Search or Technorati

Charlene
quickly gives the examples: Southwest maintenance mechanic who blogs, Novartis communities,
Oracle’s experiment with taking feedback from customers on their home page, and, of course, @comcastcares.
She talks about Ben & Jerry’s free cone day on Facebook, and Skittles’ involvement in social media.

Skittles is on Twitter.

Markets are now about engagement, conversation, and relationships. Those relationships often involve helping. Quickbooks gives business advice on its site. The community helps. You can use the groundswell to take on some of the responsibility

Now she’s on to @LionelatDell, and how he handles Dell’s laptop issues.View this photo

She talks about Dell’s comments and how they handled it. And all @lionelatdell said was, “We know our laptops are exploding and we are looking into it.” But everyone as thrilled that Dell even participated in the conversation.

Can you find the Lionel in your organization and empower them to do the right thing? Because they will know what to do if they are already engaged in social media. Dell has been unsuccessful in Second Life, for example. And so has WalMart. But they’ve kept comoing at it. The only thing they’ve done successfully in social media is their sustainability blog.

Getting started:
Listen first
Set your goal – what do you want to do with the relationship? Learn, support, get ideas,
Start small and repare for things not to work.

Measuring Social Media
Use your goals to determine your metrics
Use same metrics as you use for your other marketing goals
Learn to measure the lifetime value of your customer

What can you measure?
#of Customer feedback – impact of faster customer insight
#of comments – brand loyalty
#of referrals – faster higher sales
# of issues addressed – customer satisfaction
# of implemented ideas – Faster develop,emt

Net promoter score: how likely are you to recommend this to someone you know?
This is a higher order metric
Here’s another:
Lifetime value of a customer
(Cost of acquisition, cost of retention, lifetime revenue, referral value)

It’s not necessarily about how many sales are generated, although Dell can trace $500,000 of incremental sales in six months just from its Twitter activity.

Who needs to buy into the plan, who will own the community, what’s the right level of engagement?

You will be out of control in a social media relationship. Just like in a real relationship. Control is an illusion. Social media pulls this right into your face. It’s exciting, engaging, and makes you feel slightly queasy. Get out the Maalox.

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Time for the 21st Century Financial Institution

I woke up this morning to Jim Cramer calmly speaking about the death of his industry, followed by a clip of him freaking out a year ago on his show. In the interim, he’s been medicated I guess. Or as he says, “no point in ranting now. It’s over.” In the clip, he said “my people are losing their livelihoods.” He is now being hailed as prescient.

Of course all the brokerages are going out of business. Didn’t you know they would when the Internet and online trading started? It just took longer than I thought.

Jim Cramer said this morning “Our industry is going out of business.” Right. Slowly and agonizingly over ten years. I remember when I originally thought Merrill Lynch would go out of business. And the part of the business that used to be theirs, the retail brokerage, really got lost a long time ago. When online trading first began, I knew it would only be a matter of time before the standalone brokerages began to have trouble. And just at that time, if I remember correctly, the Glass-Steagall Act, which forbade banks to have brokerages, expired.

So everyone became an equities trader: banks, brokerages, you and me.

Truthfully, the financial industry needs an overhaul. It is overly complicated, secretive, and concentrated in a few hands. In this day of transparency on the Internet, when sites like Covestor exist, these old time Lehmanns and Merrills shouldn’t exist.

Yes, the mortgage-backed securities bubble was the proximate cause, but the securitization of mortgages happened because the securities guys were looking for a way to make fees, and securitizing mortgages was a new way. That’s relatively new, too.

But I was just listening to Om interview Bill Hambrecht, and Om refers to it as a slow motion car wreck. That’s more like it. Hambrecht points out that the retail part of the brokerage business (the part that commoditized) funded a lot of the research investment banks did, so they got involved with these securities absent adequate research (translation: “blindly, without knowing what they were buying”)

Hambrecht says Silicon Valley hasn’t been affected because most IP companies don’t take on debt and don’t need banks as much. But there will be fewer investment bankers to take companies public unless they are very big. This creates a market niche for someone who will do smaller deals.

As usual, it’s an opportunity for somebody in a meltdown like this. But it’s not the old players, because the rules have changed. I wonder if I can get a Twitter account for my new (proposed) bank. The more transparency the better.

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The Coen Brothers on the Upcoming Election

I just came out of the Coen Brothers new movie “Burn After Reading.” Disclaimer: I’m a fan. It got bad reviews, but I thought it was a hilarious illustration of how partially-educated, insanely self-confident people perceive issues and events. When people have a superficial understanding of the way things work, they make incredibly bad judgment calls. Very similar to “No Country for Old Men,” their last movie, in its themes, if not its mood.

I went into the movie having just commented on Robert Scoble’s post about politics. Scoble exhorted the Democrats to get back to being aspirational and talking about issues.

I have been trying to talk about the issues” on NewsGangLive all summer, or at least trying to, in the hopes of educating our microcommunity on the importance of having a smart person who can choose good advisors and make nuanced decisions as our next President, but Steve Gillmor keeps telling me people don’t vote on the issues and that it’s about character and values and context. And I dare say he is right. So we continue to point out how McCain lies, and how the media gives him a pass, and how we all should be angry.

I wish I weren’t so well-informed on the issues and could just take a pot shot at Sarah Palin, but like Robert, I too keep asking Obama to aspire to something: in my case, it’s rebuilding our national infrastructure, and I mean more than broadband, while encouraging alternative energy development.

Those are things he can actually DO things about. Health care costs are beyond him, except at the margins; the players are too entrenched. His best bet would be to create jobs that would allow people to AFFORD health insurance, however we decide to tweak the patient-payer-provider system. He can’t do too much about education, either, because most control is local. And on foreign policy, we have put ourselves so much on the defense during the last eight years that the next President will be responding, rather than leading.

The next President, and I hope it is Obama, has to pick one national BHAG that the President can actually have some impact on.

Because of our (fantastic) system of checks and balances, many things are beyond the next occupant of the Oval Office, no matter which party wins. So the only thing to do is build consensus between Congress and the Presidency again — which has been destroyed by Bush.

I’m an Independent, but I wouldn’t vote for McCain if they threatened me with death. Especially now that he has chosen Palin. I’m no dope. McCain can flip flop and shift to fit the political winds, but he is an old man with recurring melanoma, which is a very potentially deadly form of cancer, and I am terrified of the ignorance represented by Sarah Palin.

And here’s a potentially unpopular position, because it is ironic. I want someone who “earmarks” every dollar of the budget to attack the infrastructure and energy problems of America. There’s nothing wrong with earmarks if they actually do some good. We’re tangled in semantics, rather than actions.

Forgive the rant. The Coen Brothers are convinced that the public can’t understand these complex issues. Scoble is bummer. But I’m my usual Pollyanna self: we can fix this, if only we empower the right person to do it.

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Recycling Gets a New Look

Today is the first day of the rest of our lives. Americans on both sides of the political fence should know that the bailout of Fannie and Freddie means things will never be the same. Never mind the markets, which will gyrate up first (ah, problem solved) and then come back to reality (what are our Treasury bonds going to be worth). I’m talking real life. Beyond this euphoric week, when once again the markets will be high on financial cocaine. And then have to deal with coming down, which will probably include the merger of our automakers and the loss of more jobs.

Americans, you cannot have any more. There isn’t any more left. You spent it all. Americans especially Baby Boomers, have never been savers. Maybe it is the influence of their Depression-era parents, against whom they wanted to rebel. Boomers thought it was not worth while to save when you could invest and make more money.

A generation of financial planners underscored that philosophy, telling us that the stock market has always performed better than savings, and that the equity in our houses was a form of savings. And then, of course, things got even worse in the last ten years, what with the ability to day trade online and refinance the equity OUT of houses. Disintermediated, we have our own power to speculate.

So now, although we argue against socialized medicine, we hsve condoned socialized finance. The government has literally taken over the free markets.

This is horrible, but also laughable. The Republicans, notorious fiscal conservatives engineered the government takeover. And why not? For the last eight years they have been looking away from the problem. There are no other solutions.

But they are not the only ones to blame, because most of these problems were a long time in developing. And we can waste a lot of time laying blame rather than moving to solve the problem

Mort Zuckerman, conservative owner of The New York Daily News, put it best this morning on Mornig Joe. when he said the American people were going to have to accept a forced form of savings: increased taxes to pay for this bailout and all the others. He also said that neither candidate can afford to tell the truth about the situation we are in now, although he believes the American people know something is wrong.

So here’s my advice to you: vote for the first guy who tells you it will be necessary to raise taxes for a while.
You can’t get around it, so you might as well go for the guy who gives it to you straight. That will probably be Obama.

Younger people, watch what we did and do the opposite. We destroyed your planet and borrowed you into eternal debt. Do you know what “change” really means? Taxes. You will pay them, but if I were you, I’d also start to squirrel money away in a sock. Reduce, re-use, reycle. It will save the planet and probably your finances as well.

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The World According to Sarah Palin

Sarah Palin spoke last night at the Republican Convention, and at the end of the speech I had an argument with a group of people with whom I have everything in common politically. Why? Because I don’t think on Newsgang Live Last night, there was enough respect for the sheer power of words, even words that are twisted. Last night, the Republicans wrested possession of “Change we can believe in” from Obama.

In one of the most bizarre, Orwellian syntactical flip flops of my lifetime, the Democrats have become elitists, the Republicans the party of the people, and Meg Whitman and Carly Fiorina are speaking at the Republican Convention on the same night as Sandra, whoops that’s Sarah, Palin, a complete outsider. Words no longer mean what they did.

We, the people who believe in the need for economic and political “change” (and you know I’m a change junkie who thinks everything that can be changed should be changed), often don’t recognize change coming when we see it, because we have a pre-conceived notion of what change should encompass in terms of actions.

How can anyone know who or what to support, when language is used the way it has been used in this election, with Barack Obama tilting to the right as John McCain becomes the Maverick bringing change? It’s like Alice in Wonderland – or better yet, Through the Looking Glass. The Obamas, although black and “liberal,” are the Brady Bunch, while the conservatives have the DUI and the pregnant teen-ager.

What does this all demonstrate? That no ideology is pure, no set of principles too sacrosanct to compromise to the realities of life. The Republican platform said no gay marriage, but Dick Cheney’s lesbian daughter has a civil union with her partner, and the Vice President hasn’t rejected her.

In human situations, people are both better and worse than political ideologies. Worse: John Edwards and abstinence only programs. Better: the Palin family’s support of their pregnant daughter, and the Clintons’ support of each other.

Everyone knows what has to be done in America: reduce dependence on foreign oil, spend less, educate more and better, provide health care affordably, recycle more and consume less, get out of Iraq and keep the nation safe for democracy. That’s change from both sides. Unfortunately or fortunately, these changes come with other things also lumped into the same word. For Republicans, change may also include appointing Supreme Court Justices who will overturn Roe v. Wade.

For the past twenty years, we have heard Roe v. Wade as defending “a woman’s right to choose.” Last night that term was co-opted by the Republicans, celebrating a woman’s right to choose to keep a child with Down’s syndrome. New meaning for a fmiliar term. An that’s what the Republicans are doing to ALL the words we have come to find familiar and comforting and symbolic of the American’s ship’s ability to navigate itself through the stormy waters of history. Very four years, we get to say “throw the bastards out.”

We are now arguing the rearrangement of the deck chairs on the sinking Titanic of America. I read all day long – political commentary, economics and financial newsletters, technology blogs, health care blogs. In every article, mainstream or basement blogger, on both sides of every issue, one belief stands out: as a nation, we’re in trouble. On the decline. In debt. Off the moral high ground.

How do we get back there? Certainly not by arguing over Sarah Palin’s grandchild, abstinence, gay marriage, or any of the minor issues we used to have the luxury to debate. And yet, if both sides claim “change,” with different ideas of what that means, we’re in the tower of Babel.

Only by deciding that as a nation, we have to put our oars into the water together (which means electing people who can work together rather than divide us further) to find ways to solve the big problems first, leaving the little ones to be solved in our own family rooms.

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To Grow Your Business, Ask Questions First

Tomorrow I leave the Bay Area with its plethora of innovators, resources, early adopters and smart people and travel back to reality.My thoughts are drifting back to the entrepreneurs I deal with in Arizona, who are trying to survive, thrive and grow in a difficult environment.

The environment is partly a reflection of outside events, partly a mental state, and partly a true shortage of capital.

The angels have gone away, slapped down by the real estate crisis and their own illiquid assets. The banks are burdened by their bad loans. And most companies I coach are either not ready for VC money or will never be in a space that interests a VC.

So the entrepreneurs are stuck, aren’t they? If they want to grow, or even to stay in business, they have to get serious about marketing. Now’s the time to ask yourself whether you have a product or service
the market even WANTS, and then how to reach that idea universe of
customers. Because you aren’t going to do it without customers.

Props to Aaron Bare from Career Tours, one of our Fasttrac volunteer resources, who sent me the correct list of questions to ask yourself if you are a small business looking to get into or grow a market.

1.What is your value proposition?

2. What is your target market?

3. What sales channels can you tap into?

4. Do you have an online marketing plan? (SEO + SEM)

5. How do you enable PR, word of mouth and guerrilla marketing?

6. How can I use partnership opportunities to help both my company and the partner?

7. Is there a joint venture opportunity somewhere?

8. What is my plan for growth?

These are the right questions. We will spend the next ten weeks helping companies ask them.

Why won’t we just skip right to helping them answer the questions? Because you can’t answer them until you ask them, and many companies don’t devote the time to learning what to ask themselves before looking for answers. That’s why companies ask marketing providers for “a brochure” a “web site,” “a blog,” without knowing what they are going to do with these tools.

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