Monthly Archives: January 2009

Is it Useful to Compare Today to the Great Depression

A reporter asked me today to answer a few questions about the Great Depression. Here are the questions, and my answers:

Q.Are the current parallels being made between the current recession and the Great Depression applicable, accurate?
A. I wasn’t alive during the last Great Depression. I have a friend who was, though, and she says this one is not as bad.
But this is a useless and even dangerous comparison.

Q. Where are the comparisons wrong?
A. In the last Depression, we were not involved globally on the scale we are now.
In the last Depression, we still lived in an industrial economy, and now we’re in an information economy.
In the last Depression, we still had a tradition of people living with their multi-generational families; now we don’t have that tradition any longer, although I bet we are going to get it back:-)
And we didn’t have government protections in the last Depression. (FDIC, SIPC)

Q. Where are they right?
A. Financial greed brought on both meltdowns
Layoffs occurred in both Depressions
In both, people chose a permanent solution (suicide) for a temporary problem (losing money)
In both innocent people suffered for the sins of a few.

Here’s a more useful view: money comes and goes in most people’s lives, and it’s a matter of timing whether you lose yours with the masses, or in some unexpected twist of fate when everyone else is partying. It’s best to realize that we repeat these cycles because we seem never to learn from them. I went through the real estate recession in the 80’s, and when the market turned, everyone said “don’t worry. We won’t overdevelop this time. The banks won’t let us. They won’t fund us. ” Twenty years later, voila! We did, they did, and we suffer again. Everyone should be reading the teachings of Buddha. Attachment leads to suffering.

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Facebook Throws off iFart Creator: Am I Next?

The following thought process began as a comment on Scoble’s blog, where I got to thinking about the fact that I have 800 Facebook friends and actually have met them all either virtually or in person, or know of them through a friend and can tell you something about them. And since I’m not a college kid, many of my “real” friends haven’t gotten to FB yet, but are coming to it every day. Just yesterday I helped my neighbor across the street open an account, and I started off by telling her “go ahead and friend me, and I’ll friend you back.” This was just the neighborly thing to do for a woman I’ve known for about 35 years. But eventually I will get to the friend limit, and I may be accused, like Joel, of being a spammer.

There is a thin line between “getting the word out,” “networking,”
“online marketing,” and “spam.” One person’s online marketing may be another person’s spam, and that’s the problem with Facebook. But it’s the problem with every social networking site as we figure out how to re-live our lives in this new era of transparency. Some people on LinkedIn have 30,000 contacts, and LinkedIn finally decided to cap them where they are.

Even if you are careful to offer only useful information to people who have opted to be your “friend,” it’s easy to violate unwritten conventions. It’s worse if you follow back the people who follow you on Twitter, or friend people on Facebook. I like to meet new people online, so I am always having the problem of inadvertently friending a spammer whom I later have to block or delete. One day that spammer may be me, however unintentionally.

This new world is going to be tricky for journalists, who want to do a better job by making themselves available to sources, or who want a personal life in addition to their professional life. It is also going to be tricky for incubators like me, who communicate things their companies are doing for a variety of reasons. In my other role, advocate for social change, it’s also tricky. And It will certainly be tricky for PR people, and for internet marketers.

We are in an age of transition, and the rules are hard to know and even harder to follow. Although those of us who were early into social media keep advising people to listen before they jump in, so they can at least sense what the boundaries are, people on various platforms (Twitter, Facebook, MySpace, YouTube) are always violating conventions they didn’t know existed.

A while back, Social Media Club tried to do a “best practices” initiative, but I think the proliferation of platforms and the inability of the members to agree on what the best practices might be, defeated us. It is going to take a while for those practices to evolve, and in the mean time, I think Facebook should just answer its emails individually and quickly, take each one seriously, and act on a case-by-case basis. I refer you back to Robert’s idea of the jail for Facebook offenders, in which your account isn’t disabled, but everyone knows you have done SOMETHING wrong. It’s a pretty good solution for now.

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Give Me a Break

John Thain redecorated his office for $832k right before he handed the failed Merrill Lynch off to Bank of America and the taxpayers. That’s more than I paid for my house in California. That’s more than most people have in savings. That’s more than the Obamas are paying to re-do the White House.

Moreover, that’s unconscionable. Howard Lindzon can’t get a bank charter, and neither can I. We were both part of separate groups of investors trying to start new community banks last year. But the government has frozen the startup bank process in Arizona, one of the worst state economies in the nation. Both Howard and I work with entrepreneurs, not real estate people, and we’re not dumb. We know that now’s the best time to start a bank. But we can’t.

In the meantime, bankers like John Thain are rearranging the rugs on the Titanic. (I purposely mixed that metaphor.) His rug cost 3x the price of my car. And he knew things were bad when he bought that rug. He just thought the rules didn’t apply to him.

When welfare reform was passed, many people spoke out about the sense of entitlement of the welfare mother, and how it was essential to get her back in the workforce taking care of herself rather than depending on the government. Well, I believe these bankers have a bigger sense of entitlement than any crack-addicted welfare recipient on the planet.

They are not asking for food, clothing, and shelter. They are asking for Oriental rugs, antique furniture, and limousines. Their excuse is that they “create wealth.” Yeah. Out of thin air. And now they have created havoc.

Can’t we have a class action lawsuit brought by Obama on behalf of the American citizens, demanding our share of the ill-gotten gains? I’d take the $.03 each taxpayer would get after the lawyers got their share, just to have my sense of moral outrage assuaged.

I rarely get angry, but the story of how these guys spend money they have created FOR THEMSELVES out of our investments has left me livid this morning, and not my usual yogini self.

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Best Practices for Layoffs

What follows is a post I wrote during the dot-com meltdown. I think it’s as appropriate today as it was then, so I’m reprinting it since I couldn’t find it in the archives of my own blog. It was cached from the Noend Press, and I suspect it’s from before my blog, when I was only sending a weekly post out by email.

Unless you’ve been in a deep coma, you know that companies are beginning the inevitable rounds of layoffs that are “de rigeur” when you miss the whisper number or when your early stage company discovers it’s running out of cash. The way companies conduct these layoffs ranges from locking people out of their computers without notice to pre-announcing layoffs and allowing people to leave of their own accord. Because both my daughters live in the Bay area and call me daily to update me on layoffs, because I work with early stage companies, but mostly because I have laid people off before, I’ve come up with a set of “best practices,” which I feel are sorely needed, for laying people off.

1.) Remember you are dealing with human beings. You are not bringing a litter of unwanted kittens to the pound. Human beings have feelings. And most of them are trying to do their best, no matter how you, as a manager, view their performance. Their jobs are a large part of their lives, and layoffs are frightening.

a) Employees’ reactions to layoffs are all over the map. Although some may go postal, most will just go get drunk. Layoffs are not like firings, and a security guard is not necessary. Running around changing all the passwords in advance is cruel and rude.

b) Employees at early stage companies are risk tolerant. They know on some level that layoffs might occur, and they’ve made a choice to come on board anyway. This means that as a manager, you owe them a great deal of respect.

2.) Versata had an international conference call last week, and split the staff into two groups: one for the departing employees; one for the remaining employees. This is a good plan if everyone is not in one place, but in a small company it’s a better idea not to do this. It accentuates the “survivor’s guilt” for the people who stay, and deepens the shame for those who are laid off as they look at each other. Better to counsel the laid off employees out individually, with one-on-ones by the designated manager.

3.) Samantha (daughter #1) told me that one Bay area company laid off its entire marketing staff. This is unbelievably short-sighted, as the best way to finance a company during a down cycle is through customers. Building customer relationships, asking customers to pay in advance, and keeping existing customers are time-honored ways to reduce the impact of recessions. If you are brave enough to continue marketing (albeit with a limited budget), you will gain market share and presence as all the wimps cut their marketing staffs.

4.) Give employees time to plan. Pre-announce layoffs, as Fortune 500 companies regularly do. Don’t just call a meeting with no agenda, and when everyone shows up, lay them off and turn off their computers.

When I laid off most of my staff in 1990 during the real estate recession, I sat them down at a regular staff meeting, and said “guys, I can’t support this overhead anymore. There aren’t any clients out there. I’m going to have to downsize. Help me do it.” I offered to help them get other jobs, I gave them severance, I gave them advice, and I counseled them out slowly over a two-week period. Several of them are still my friends, because I explained carefully that it wasn’t them, and included them in my agony. I took a few people with me to a new office, and I spent hours explaining things to them, as well. It wasn’t fun, but at least they knew we were all in it together, and it was not a personal reflection on them — more like a personal failure of mine.

5.) Remember that the people who stay will feel worse for a long time than the people who leave. The people who leave immediately get wrapped up in a new job search, and get sympathy from friends and colleagues. They get to spread rumors about the company that make them feel better, too. The people who stay have to look at the empty desk of the girl they were sleeping with, the guy they did Happy Hour with, and all the others who were with the company when it was a success. New Economy companies, especially, tend to treat employees like family. When they lay off, it’s like disinheriting a child. The remaining employees are very scared that they’ve stayed with a failure.

6.) Over-communicate. Plan carefully in advance to have the correct communications tools and messages prepared: a press release, an investor relations piece, bullet points for the CEO. Release everything simultaneously, because five minutes after the layoffs, the press will know. So will the competition. So will the investors.

a) There are certain people who think they should know about your company. They feel like stakeholders, and should be treated like stakeholders. These people get antsy when they read about your layoffs in the newspapers. These people include your customers, vendors, suppliers, bankers. Make sure they are informed simultaneously with the press, employees, and investors.

7.) Over-plan. Inexperienced managers always think things should be done immediately. But a long-term strategic plan, complete with estimates of the feasibility of the new structure should precede layoffs. For example: how many customers will leave? How will that affect the revenue projections? How many key employees will bail after they see the layoffs?

8.) Don’t panic. This is a cycle. Perhaps you haven’t seen one before, but you’ll have plenty of time to learn about them, as they occur every 7-10 years, like the Bible says. Seven lean years. Whatever. If you’re healthy, you’ve nothing to fear.

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Across the World with my Tech Toybox

I just came back from India, a 40-hour flight when you consider all the layovers between planes (Phoenix to L.A., then five hours in LAX between L.A. and London, and six hours in Heathrow between London and Delhi). On the way home it was somewhat worse, except that I stayed overnight in both London and San Francisco, which was much better. That’s what happens when you opt for the cheapest fares.

However. I actually loved the long travel times this trip. Why? Because I traveled with my tech “toy box”: a MacBook Air, the iPod 3G, and the Kindle. A box full of customized content, they rendered me independent of Virgin Atlantic, which was showing about twenty different crummy movies in three different languages and playing the least-known music in every category for which there was a channel.

Yes, Virgin Atlantic has in-flight Internet, but not in the cargo area.

So here’s how I did it. I’d start by reading feeds on Google Reader, or by posting to my blog. When the Air ran out of battery, or perhaps by some strange chance I caught up on the feeds, I’d switch toys.

Usually, the next toy I’d take out would be the Kindle, on which I read both The Age of American Unreason, by Susan Jacoby, Revolutionary Road by Richard Yates, and part of Malcolm Gladwell’s Outliers. I never was able to run the battery down on the Kindle, although I never charged it at all while in India. (It’s not that easy to charge devices, since in any given room with three electrical outlets, only one is usually truly working, and I needed that one to charge my iPod and my Air.) Revolutionary Road was so good that I actually was fighting to finish it before the flight landed, and unbelievably wanted a ten-hour flight to be a few minutes longer☺

If the cabin crew turned out the lights, or I wanted to meditate or seek sleep, I could listen to anything I had with me on the iPod, which lasts the entire flight from Delhi to San Francisco on one battery if it’s in Airplane mode. This time I used listening to the Audible.com version of The White Tiger, a superb novel about life in India. I also listened to this book at night when I had jet lag and woke up at 3 AM.

And then don’t forget the podcasts I downloaded to the iPod. I kept up with ScobleizerTV, Rachel Maddow, TWiT, Bill Moyers, Obama’s weekly address, and Fresh Air. Oh, by the way, I’ve got those fabulous Bose Q2 noise-cancelling headphones to listen with. (Buppy started to eat them one night, but I caught him before he had done anything but detach one earpiece from the headset. They aren’t pretty, but they still work.)

Last, but certainly not least, was the music. I have about 500 songs on the iPod as well, and I sure didn’t get through very many of them on the flights with all the other stuff I could watch and listen to.

I can remember earlier flights, toyless, that seemed endless, and other long flights on which I had to carry three books with their attendant extra weight and bulk. The other joy of my tech toy box is that I took this ten-day jaunt to India with no baggage to check – just a laptop bag for my toys and a carry on bag for my clothes.

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Self Examination

There’s nothing like a trip to India to bring out the best and the worst in yourself. As usual, on this latest trip I wasn’t insulated in a country-neutral five-star hotel (except for one fact-finding lunch before visiting the Taj Mahal) or the business compound of an American company in Bangalore.

No, I stayed at an Ayurveda Clinic in a suburb of Delhi, next door to a school where 1000 children came to learn every day in their unisex uniforms of gray slacks and maroon blazers, identical from kindergarten to high school.

Students at the Jiva School listen to Rishi tell them not to eat junk food and to eat mindfully

Students at the Jiva School listen to Rishi tell them not to eat junk food and to eat mindfully

Indian parents are desperate to get a good education for their children. Public schools (our equivalent of private schools) are intensely competitive, and in the best Delhi schools if you don’t have a college education yourself, no matter how successful you are, your child may be rejected. India needs about 200,000 additional schools to get every child and education. Something like 40% of the population is under 20. (I’m hoping that Steven Rudolph, director of education at Jiva Institute, will correct me here if I’m off on the number. It’s big, anyway.)

At the clinic, where i lived in a room usually reserved for either people traveling from afar for Ayurvedic treatments or students of this ancient wisdom of mind-body-soul balance, the hot water and electricity both sputter fretfully and showers require exquisite timing and enough agility to balance shampoo,shower wand and body over a bucket to catch waste water before the electricity goes off or the hot water runs out. The day I arrived I was treated to a wake-up cold shower before my first meeting.

However, after the first day, which can be jarring, none of this matters. Not the layer of dust on the trees in Delhi, nor the Indian toilets with their scarce toilet paper and faucets with buckets for washing your privates, nor the litter in the streets, the poor living in tents by the side of the road, or the miscommunications of people who can speak English but don’t necessarily understand it.

The only thing that ultimately matters to me after the shock of the first day is the brilliance of the ancient Vedic wisdom and culture, coupled with the spirit of entrepreneurship of the people. Like no other country I’ve visited, the beauty of India’s spiritual tradition casts a warm glow over everyday life and draws me in.

I went there to help Jiva Institute expand its reach through online marketing. The principals in the company are mission-driven; they want to spread the wisdom of the Vedas to modern life. To do that, they have to fight the allopathic medical establishment, the misconception that the Vedas are attached to a religion, and the deafness of modern society to a balanced life. But after three massages, a week of detoxifying fresh, unprocessed food, and a whole lot of love, I came away feeling they have done more for me than I did for them.

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The Vedas and the Modern World

It’s time to do something about health care that does not depend on the government. The world seems to have come to a halt waiting for Obama to be inaugurated and solve all the world’s problems. In the mean time, I have gone off to India to visit the Jiva Institute, with whom I’ve been working for the past ten years. Jiva is an oddity; a business built on ancient Vedic truths, whose mission is to translate the wisdom of the Vedas to modern life.

Jiva’s been in business for fourteen years, running a school, a cultural center for the preservation of Vedic language and philosophy, and six Ayurvedic (complementary medicine) clinics– one “product” for each of the the body-mind-soul trilogy of the vedas. Its founding directors have spent a great deal of time in the United States (the Director of Education is from New Jersey, the Director of Culture graduated from IIT and worked in the United States for five years, and the Director of Ayurvedic Medicine travels the world lecturing and teaching). These men are hardly out of touch with the modern western world.

But their vision is to build a business according to the tripartite wisdom of the Vedas: balance between mind, body, and soul, and to impart that wisdom to the rest of the world. Those of us in the West already know that we are out of balance. We’ve beaten up our bodies with lack of sleep and improper eating and exercise, we’re pushed our souls off into a corner, and we’ve given the mind a pre-eminent position in structuring our lives.

But the mind has led us into a deep hole right. Now’s a good time to re-examine some of our perspectives. We can’t think that Obama is going to restore universal access to health care. American health care will continue to be the unsatisfactory, expensive, and broken system it is now for the forseeable future, and one way to deal with it is to circumvent it as best we can by staying healthy. For a long time now we have been aware that prevention is cheaper and easier than cure, but it’s very difficult to make Americans take the knowledge they have in their minds about prevention and apply it to their bodies.

I’m going to make a bold suggestion here: that we draw upon this ancient tradition to make some small changes in our daily lives that will make us healthier. Jivananda, based on the jewels of ancient Indian tradition and philosophies, is a simple lifestyle regimen for busy people. In Sanskrit, Jiva means ‘soul’ and Ananda means ‘bliss’. Therefore, Jivananda signifies the ‘bliss of the soul.’

Yes, this sounds very touchy-feely. But it’s the same thing we’ve always been told: diet, exercise, and a balanced life. If we spent more time remaining healthy, the health of our insurance system would become less important to us. For years we have been trying to inculcate prevention into the lives of Americans who eat themselves into diabetes, cancer, and heart disease. Now, without access to health care, perhaps we will take a moment to listen and stop making ourselves sick until we can repair our health care system.

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