America is at a crossroads. We sit here on the edge of a fiscal cliff fighting to determine if tax hikes or entitlement reform is going to lead the day. As we fight to raise our debt ceiling critical questions are not being answered and seem to be ignored time and time again. How did we get here? Why did we get here? And how do we avoid getting here again?
When we rescued two of the three American car companies we did so by removing huge debt and the liabilities of their underfunded pension liabilities. Did we address why they were all failing to begin with? Were VW, BMW, and Mercedes in Germany rescued? Did Japan step in to support Toyota, Honda, Nissan, Subaru or Mitsubishi. There are concrete reasons why two thirds of the American auto industry was failing. The truth is that America’s other smaller industries are just as affected but don’t have the glitter and prestige of the auto industry. Many have already disappeared.
Unfortunately, the hidden statistic that never reaches the lips of leaders in Washington is that the United States of America has had 38 years of consecutive trade deficits. Our current account deficit is 10 times worse than the worst country in Europe. The EU as a whole carries a $32 billion trade gap with the world which sounds large until you realize that the United States of America has a trade deficit of $600 billion annually. So the question needs to be asked, how is it that a continent stocked full of high cost socialist governments, scarce natural resources, expensive energy prices, speaking 23 languages, and with a 200 year history of intra-continental war, can out-produce and out-ship the United States of America. Aren’t we the most innovative entrepreneurial land on earth? Are we not the land of Facebook, Google, Microsoft, and Under Armour?
If you ask many of today’s leaders they will tell you that the new order of the day is an economy based on services, or they may tell you that manufacturing has left and will never come back. Some will say the cost of manufacturing in this country is just simply too high. Has anyone told LEGO’s, made in Portugal, or Playmobile, made in Germany that costs are too high? With 300 million people in this country why was it considered impossible to find a few hundred willing to work for reasonable wages so we could outfit our Olympic athletes in clothes made in the USA?
It is time for a reset. As a country we need to reflect upon the structure of how we operate and then begin to make the necessary structural changes – regardless of the blow-back from those seeking to benefit from the status quo. There are many things that need changing as America’s issues are not the result of just one or two burdening policies, but many small issues that together can seem overwhelming. The Chinese call this death by 1000 cuts and we can’t allow this paralysis to threaten the future of our country.
Complicated tax rebates, loans, grants, and special incentive programs while well intentioned, are actually a burden to business, especially small businesses that don’t have the resources to handle them. A business that is losing money cannot use a tax deduction when it is already losing money. What business in America needs are not specialized manufacturing technology centers and special start-up technology programs, what a thriving economy needs is simplification.
An entrepreneur to be successful must focus. They cannot be distracted with complicated tax codes, layers upon layers of insurance protections, human resource processes, burdensome licensing and environmental regulations, and complicated legal contracts. When an organization reduces operational processes it increases efficiencies which in turn creates the necessary focus on providing a better product or service.
Starting a business with core knowledge is not as difficult as some may think. However, growing a business to any substantial size is exponentially harder. Once a business grows to $40 million or 100 people it becomes subject to a bevy of interstate and intrastate rules and regulations that don’t affect smaller businesses. Most companies are completely unprepared both financially and operationally to handle the overwhelming onslaught of regulatory obligations that come when a company achieves these new milestones. It is my opinion that this is one reason you rarely see new small manufacturers opening production plants in the US. The labor regulations, the environment regulations, and necessary permits are just the beginning.
If none of these regulations stunt the growth of a new manufacturer, the product and worker liability burden will surely take a huge bite out of any potential profits. For in America, where companies are not reimbursed for successfully defending themselves in court, the cost of unwarranted litigation is a serious threat. With over 1.2 million licensed legal professionals in America, frivolous litigation is rampant.
We need to be able to stop pandering to the entrenched interests and start creating visibility to the obstacles of business then remove them one at a time. This is not as difficult as it sounds. What is difficult is finding those with the courage to get this done.
Jay Steinmetz, CEO of Barcoding Inc. is a Member of the Maryland Small Business Commission
The debate over what the FCC should do in regards to net neutrality is getting a lot of coverage these days. It’s no wonder, since where the policy lands will have immediate impact on profits and strategies in the media industry. But more generally, this is also a debate over our assumptions about and aspirations for what we want the Internet to be, and whose values are most important to respect. Is “open” more important than “speed” and “innovation”? And which type of innovation is most valuable given today’s economic and social context—one very different from the late 90’s boom time.
Turns out, this is just one of a number of more broadly impacting policy issues that are about to come under the microscope of public debate and government action (or, inaction…which itself is also a choice), as the Internet and the “online” economy of digital goods and services re-integrates with the “offline” or “real” economy.
One of those issues will be about data—big and small—and the property rights assigned to it. There is no need to repeat the hype about how big data is changing everything. Everything from the mundane (cost effective 1 hour delivery!) to the profound (our understanding of climate change impacts!) will look to use data—about individuals, groups, places and things—to find patterns that suggest ways to improve services or deepen our understanding of how our world really works. And as with most technological revolutions, the ability to use data most effectively will lead to changes in who has the potential to hold power within an industry.
But because most of the applications for big data so far have resided in either niche areas or beyond the public’s view, we have not yet seen what happens when the promise of ‘better with data’ rubs up against real human lives and emotions on a large scale. As data-enabled business models grow in their reach and have more economic impact, more questions loom and will have to be addressed by the consuming public, regulating agencies, or the courts. For example: is your refrigerator or car or any other high end consumer good a natural monopoly when it comes to the data it collects? Who should have access to your consumption patterns—just the company that made the product? To what extent is targeted pricing—which some would label as simple a highly efficient market clearing mechanism—discriminatory? When is it okay to essentially make public information about someones’ private life through commercial behavior(e.g. Target and its infamous promotion of pregnancy products)?
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Matt Ranen: GROWING PAINS FOR THE INTERNET ECONOMY
Here’s what you never hear anyone say at a Biglaw firm – followed by a discussion of why you never hear anyone say it.
Here we go…
Let’s work on this together. It’ll be more fun.
People write me all the time, complaining I’m too down on Biglaw. Nothing new there, but one guy, recently, expanded on the topic, adding that he works at a firm where everyone, so far as he knows, is happy – enjoying a rewarding career in a supportive, non-exploitative environment.
Perhaps you can see this coming: It turns out this guy owns the firm – and specializes in oral arguments before federal appellate courts. Prior to becoming managing partner, he attended top Ivy League schools.
By way of a reply, I opined: “Your experience might be considered atypical.”
In reality, his experience should be considered ridiculously atypical. Redonkulouslyatypical. Yet this presumably brilliant legal mind couldn’t manage to grasp that reality from where he was standing – at the top of the heap.
This man claims, without irony, that every lawyer at his firm is happy. But, that little voice in the back of your head begins to counter, before you’re even aware of having the thought: it’s your firm.
They work for you. Of course they act happy, just as the maid cleaning your hotel room – the one without a green card, with a family to feed, smiles and acts delighted to see you when you pop in to grab your extra iPad mini and she’s on her knees scrubbing the shower.
Presumably, someone else, some possibly unhappy little person at this guy’s law firm, is doing the work he would rather not think about – the work that has to be done. Maybe it’s a junior he’s never met. And I’d bet good money that other guy’s doing it all by himself, probably late at night or on a weekend.
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Will Meyerhofer: What You Never Hear
When most US investors do not like the way a company is heading, they vote with their feet and sell their shares. But a new generation of activist investors is challenging that tradition by opting to amass shares and demand board representation and strategic change instead.
Hertz, the car rental group, became the latest US company to come under such pressure. It is now said to be considering selling or spinning off its equipment hire business after stakebuilding by investors including Dan Loeb and Carl Icahn.
While activists have been around for decades, the scale appears unprecedented
. Such hedge funds were managing $90bn as of last year’s fourth quarter, almost triple the total five years ago, according to Hedge Fund Research.
“But if you never try, you’ll never know”—Fix You, Coldplay
Ten years ago, before I was a husband and father, I learned that giving flexible work hours to your best people is a great way to keep them. I was running Yahoo Music, and my senior business development leader, Karin, was doing a terrific job but needed some time at home after the birth of her first child. She asked me if she could work four days a week and get paid 80 percent of her full-time salary. Because she was a star performer, I agreed, though we hadn’t allowed people to work part-time before. Karin did a great job, and we never really noticed that she was out on Fridays. When her second child was born, she wanted to travel less. We switched her into a product development job, still at 80 percent time. She not only flourished but was eventually able to take on a general manager role at Yahoo in another group because she had experience in both business and product development. Karin has continued to progress in her career as a successful leader, and managed to keep her 80 percent schedule until her kids were in school full time.
When I became CEO of SurveyMonkey four years ago, I used this lesson in flexibility to help attract outstanding senior executives. Today, 40 percent of our senior executives are women with children, an unusually high number in the technology industry. I was able to hire Selina, our senior vice president of product and engineering, by having this elastic approach to hiring great people. At the time, Selina was four months pregnant with her first child. She had many opportunities to start or run her own company (she founded Evite when she was at Stanford), but I was able to persuade her that she could have both a huge impact and more flexibility by joining us than she would have by doing her own start up.
Minna, whom I hired early on to run SurveyMonkey’s international business, had taken a year off after her second child was born and was hesitant to commit to full-time work. I convinced her that she could work four days a week, like Karin, and I was confident that 80 percent of Minna was more than 100 percent of most people we could have hired. Brad, our head of user experience, was very interested in joining us, but he and his wife were expecting their first child and were concerned about his hours, wondering if it made sense for him to jump to a smaller company. Selina and I took Brad and his wife out to dinner and convinced both of them that it could work better—that if he joined our team, Brad would be able to be around more for his family by working a day a week from home.
Too often we focus on titles, compensation and perks to attract great people. I have learned that giving talented men and women flexibility and trusting them to excel has been key to hiring and retaining a great team.
The author is the Founder and CEO of Survey Monkey. Read his full bio here.
I have been thinking about regeneration. While it is common knowledge, it still amazes me, that salamanders can regenerate body parts, including their tails, upper and lower jaws, eyes and hearts. Yet mammals including humans can’t. Salamanders are the highest order of animals capable of regeneration. Do mammals know something that salamanders don’t? Cosmetic surgery, implants, and promising regenerative medicine research aside we humans are stuck with the body parts we are dealt for now.
I wonder if our inability to regenerate at the biological scale also impedes our ability to regenerate at a social system scale. It seems obvious that our important social systems including education, health care, and energy need serious regeneration. These systems have evolved over a long period of time, were built to support an industrial era that is long gone, and have built up incredible mechanisms to resist and prevent needed change. It is not technology that is getting in the way of social system change. It is humans and the organizations we live in that are both stubbornly resistant to change. Why are humans so incapable of regeneration at both biological and social scales?
Maybe understanding the biology of regeneration can provide insight. Salamanders can regenerate injured body parts because evolution has enabled them to immediately unleash stem-like cells to a wound site when damage is detected. When salamanders are wounded skin, bone, muscle, and blood vessels at the site revert to their undifferentiated state. In essence they go back to an embryonic state and start all over again making regeneration possible. Humans took a different evolutionary path.
Turns out the human evolutionary pathway traded off regeneration in favor of tumor suppression. In order to decrease the risk of cancer and increase longevity our mammalian ancestors selected against regeneration. The theory is rapid cell division required for regeneration looks to our bodies a lot like the unchecked growth of cancer. Because our longevity makes us vulnerable to accumulated DNA mutations we’ve evolved a kind of molecular brake to keep tumors at bay. I can’t speak for humankind but it seems like the right trade-off to me. Unlike salamanders, when mammals lose a limb the body’s reaction is to release cells to the site that become scar tissue. Current stem cell research is promising and offers the future potential for a work-around to enable regeneration without turning off the molecular brake that prevents tumor formation and progression. Tissue generation and regenerative medicine are both exciting fields to watch.
I think there are parallels at a social system scale. Social systems have also evolved selecting for traits that maximize longevity. Our current education, health care, and energy systems are well intentioned and pedaling very hard to deliver value. The truth is these systems are no longer positioned to deliver value the way we want and need them to. We all know there is a better way. The 21st century screams for system regeneration and yet the best we seem to be able to do is tweak current models and to leverage technology in a sustaining way to coax more life out of systems that are not sustainable. The evolutionary pathway for our current social systems seems to have traded off regeneration in favor of innovation suppression. I know it seems extreme to equate innovation to a cancerous cell in an organization or social system. But hey, I have seen and worked in many organizations and systems, in both the public and private sectors, which have built up incredible defenses to insulate and protect themselves from innovation and change. Tell me you haven’t experienced the same thing? Our social systems have evolved antibodies to attack and wear down innovators. Organization and system leaders fear metastasis of disruptive technologies and seeds of change. They have established an armamentarium of tools to resist and block regeneration.
We don’t need more tweaks. We need system regeneration. Just like tissue engineering and stem cell research is opening up the possibility of regeneration at a biological scale we need to leverage social media and purposeful networks of innovators to enable regeneration at a social system scale. We must design, prototype, and test new systems solutions in the real world to determine what works and can scale. Student, patients, and citizens are waiting. Let’s unleash the newt within.
Last month I had the pleasure of reconnecting with many classmates at the same reunion that Jonathan Miller enjoyed. I went to a panel discussion about health care reform. As a physician who is interested in health policy, I was eager to hear what the panelists had to say. My former classmates were now health services researchers, physicians, and health policy experts. Other audience members were now health insurance executives, policy makers, and health care users with diverse political affiliations. It didn’t take long before I felt as if I had mistakenly walked into a foreign language film without English subtitles. While Canadians may spell and pronounce words differently, understanding American English is usually not a hardship. The language used in public discourse on the Affordable Care Act, however, simply does not resonate with Canadians.
While I have lived in the US, I have never practiced medicine there, nor have I ever been a consistent user of US health care services (unless you count sporadic interactions with the University Health Service in college– but let’s not). I have spent over 20 years as a health care provider and a lifetime as a health care user in Canada. I am not a comparative expert on US vs. Canadian health care models. I have simply experienced the Canadian system both as a physician and a patient/ advocate.
There are three key components of the Canadian universal health care system that are integral to its success and might illustrate the true differences between citizens of both countries (aside from the Canadian propensity to be polite and apologetic). The first is the way in which Canadians view their right to health care. It is an expectation but not one that is felt to necessarily be an immediate one. Canadians are very patient people (unless they are watching an NHL playoff game on TV and the cable goes out). I think it is similar to garbage collection. I pay taxes to the city of Toronto and in return I get my garbage collected on a regular basis. While I might want the garbage collectors to come every day, instead I have to wait patiently to have it removed according to the schedule.
What if there is a chemical spill or a major hazard that would require removal of toxic waste urgently? There is a way to initiate an emergency system to get that garbage removed. Access to health care is seen in much the same way.
Another component of Canadian Medicare that supports its success is the belief of most Canadians that every citizen has the right to access the system. While there may be geographic variations with respect to the services that are offered, those differences are not unique to this country. It is similar to public primary and secondary education. This belief is part of the fabric of the country.
The last characteristic of Canadian Medicare might sound odd. I actually believe that we have less government and third-party intervention in the doctor-patient relationship in Canada when compared to the US. While government involvement in instituting Obamacare has met with resistance from insurance companies and individuals on many levels because of the fear of losing free choice, the recent Supreme Court Hobby Lobby decision suggests that there is a long road ahead. As a physician, I see patients and bill the province’s Ministry of Health, who then pays me for the services that I have provided. Neither the patient nor the physician has to get approval from a third party for the care that is needed. The role of health insurance companies is for extended benefits only, such as dental and psychological services, medical device costs, medication costs, and use of private hospital rooms. While there are government controls on overall costs and resource allocation, there are certainly no government or third parties interfering with moral decision-making for the patient.
Canada has usually been a little behind the times when compared to the US. In a reference to the ‘80s fashions worn by Robin Sparkles in 1994 in an episode of How I Met Your Mother, Cobie Smulders’ character says, “The ‘80s didn’t come to Canada ‘til like ’93.” While that may be the case for access to stores like Target (which finally opened in Canada in 2013), access to health care in Canada is the exception. While uninsured rates for those without health insurance are followed closely south of the border, and are thankfully dropping, they are negligible in Canada and have been for 50 years.
In 2004, the Canadian Broadcasting Corporation (CBC) launched a TV series called The Greatest Canadian. It was a reality show/documentary, of sorts, that encouraged viewers across the nation to nominate the greatest Canadian. The winner was not Mike Myers, Wayne Gretzky, Alexander Graham Bell, William Shatner or Jim Carrey. It was Tommy Douglas, the politician who is rightfully considered the father of universal health care in Canada. This year, the federal government ran an on-line survey asking Canadians which of the country’s accomplishments “make you most proud to be a Canadian?” The answer, not surprisingly, was Medicare. So this Canada Day (yes, July 1 is a real holiday here with beer and fireworks and everything), I will pick up a bottle of Molson Canadian and toast Mr.Douglas.
It’s time for me to come clean. In today’s social media crazed world it will come out sooner or later anyway. I have one high school varsity letter and it’s for bowling. Yes, you heard right, bowling. And it wasn’t ten-pin, but candlepin bowling. Anyone who grew up in New England, with parents like mine who looked for ways to get the kids out of their hair on rainy Saturdays, knows exactly what I’m talking about. Candlepin bowling rocks.
For those of you who aren’t from New England, candlepin bowling is a unique version of the sport invented in 1880 in Worcester, Massachusetts by a local bowling alley owner, Justin White. Candlepin bowling is clearly evidence of New England as a regional innovation hot-spot. For the most part candlepin never caught on outside of New England and the Canadian Maritime provinces. In the region candlepin bowling enjoyed a cult following including its own local television shows. I remember Candlepins for Cash, which was a Saturday morning staple and may well have been the first reality television show.
The first noticeable difference from the more popular ten-pin variety of bowling is the small size of the balls. Don’t look for holes for your fingers because there aren’t any. The ball is 4 ½ ” in diameter weighing only 1.13 kg. It fits in the palm of your hand and can literally be thrown rather than rolled down the alley at the pins. I have seen many errant candlepin balls launched across lanes. Personal injury insurance is a must. Back in the day I owned a set of balls (spare me the cajones jokes) and yes of course the required bowling ball bag. The balls were a pearly white with wonderful lime green marble swirls throughout. Come to think of it I wonder where they went. Most likely my wife sold them at a garage sale when I wasn’t paying attention.
Another difference in candlepin bowling is the size of the skinny pins (15 ¾ ” by 3″) which are harder to knock down so you get three tries in every frame versus the two attempts you get in ten-pin. My favorite difference in candlepin bowling is that the deadwood between shots isn’t cleared. In other words pins that are knocked down are left as they lie to either impede or aid the subsequent shot in each frame. You haven’t lived until clearing a 7-10 split which would be all but impossible without the help of well-placed deadwood. I love this aspect of the sport and in this way candlepin bowling is like the innovation process and life. There is always deadwood to deal with. It is how you deal with and leverage the deadwood in your life that defines you.
Innovation is a better way to deliver value. It isn’t an innovation until value is delivered to an end-user in the real world. Innovators must figure out how to deal with deadwood. This ability often marks the difference between an innovator and a non-innovator. It isn’t the lack of ideas or technology that gets in the way it is stubborn humans and institutions that slow down or block experimenting with and scaling a better way. Most give up when deadwood is either blocking the way forward or it seems insurmountable and not worth the personal effort or risk. Innovators don’t give up and are never deterred. They incessantly find ways to go around or through deadwood. The most creative innovators find ways to leverage deadwood. They actually put it to use in exploring new and better ways to deliver value and solve problems. Innovators co-opt or repurpose people and capabilities to enable the innovation process. What looks like deadwood to most is just part of the solution for an innovator.
This is the secret of how innovators confidently attempt 7-10 splits when no one believes a proposed innovation is even possible. Innovators see ways to recombine capabilities in order to tackle the seemingly impossible. They are relentless in trying new permutations until some new combination works. Innovators have learned to leverage deadwood to find new ways to create, deliver, and capture value. This innovation junkie is proud of his bowling varsity letter. Bring on the deadwood.
When business leaders talk about the ‘race for talent,’ you naturally want to know more about where the contestants in that race are going to come from, and exactly how they are training for the race. The answer, at least in the US, has for a very long time belonged to the higher education sector.
But there’s a significant disconnect here. Come June (graduation season) and then again come September (tuition check writing season), you can pick up any major newspaper and get even odds on finding an article or editorial that asks if a college education is worth the time and cost. If the race for talent were quite so intense, would anyone wonder about the value of college?
Today it’s absolutely fair to wonder. College education is one of the largest expenditures and investments that most people make in the course of their lives, with the possible exception of their primary real estate. These days, of course, a decent college education can cost a lot more than a decent apartment in most cities. And don’t forget the four (or more) years of opportunity cost, when the student is being a student and not something else that could earn him or her a salary.
And yet for a long time, at least in the United States, ‘is college worth it’ wasn’t even a question, or at least not a question you would pose in polite conversation. The economics of higher education seemed definitive: the more schooling you had, the more the labor market valued you and the more money you made over the course of your life (the only exception to that rule being non-professional PhD degrees). For most of the post-World War II period (and it’s still true today) a college degree was one of the best guarantees against unemployment during labor market downturns. And all of this, without even mentioning the inherent value of learning and socialization that happens during those four ‘wonderful’ years. Even electrical engineering students take a philosophy or art history course now and again, and human beings are indeed much more than simply labor market inputs. College was supposed to make them better at both.
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Matt Ranen: LABOR MARKETS, HIGHER EDUCATION, AND THE RACE FOR TALENT
As millions of Americans celebrate our nation’s birthday with parades, grill-outs and firecrackers, I will be stuck in a cavernous, over-air-conditioned, non-descript warehouse, leaning over cushioned tables with several hundred other exhausted, bleary-eyed (mostly) men.
And having the time of my life.
Yes, in a few hours, we will begin Day 2 of the World Series of Poker’s “Little One for One Drop” tournament, and I’m still in the hunt. (Read more about the tournament and the incredible charity it supports in my Daily Beast report from last year’s event.)
Precisely, with over 14,000 chips, I’m in 529th place out of the 887 remaining players who have so far survived 10 hours through a field of more than 4400 poker-star wannabes. (Is it fitting that I built my political career around the creation of a 529 pre-paid tuition plan in Kentucky? Naahhhh.)
I am really lucky to be here, and that’s not just some Gehrig-like humility. A little over an hour into the event, I made the stupidest, most regrettable move that I have ever attempted in my three years of World Series events. I was dealt an Ace-10, and the flop revealed a 10, 8 and 6. The betting got intense, and a talky, charismatic Californian at the other end of the table with a larger stack than mine ultimately made a very large bet. I impulsively went all-in, having the top pair on the board (10s) and the biggest kicker (an Ace).
However, with all of the betting, I should have realized that I did not have the best hand. In retrospect, it was very possible that the Californian had flopped trips (three of a kind). Indeed, when he called me and turned over his cards, he held an 8-6, therefore having two pairs.
I was in serious danger of leaving the tournament VERY early. I thought I had 6 “outs” — there were 3 Aces and 3 tens left in the deck that could possibly save me. When the turn (fourth card) revealed a 4. I had one chance left. Finally, came the river. Praying in vain for an Ace or a 10, instead another 4 appeared. I got up thinking my tournament ended with a stupid mistake.
Then, the player to my right quickly informed me that I had just won. I was now the holder of two pair — tens and fours, and my two pair was larger than the Californians. I had doubled up through my stupid luck.
The poker miracle served also as a wake-up call. I became a lot more focused on my conservative/aggressive game (playing only the top hands and playing them with boldness) and played perhaps my best poker ever. I was up to over 20,000 chips, and was poised to jump to 26,000 until I got rivered in an all-in against a short stack. (He had only two cards that could save him from elimination, and one of them showed up.) Still, while the loss took me down to 14,000, I’m still very much in the game, starting today in a slightly below average stack position.
So, now it’s time for your help. Yesterday, I wore my lucky outfit — my Cincinnati Reds Joe Morgan jersey and No Labels ball cap. I’m wondering if I should wear it again (with different undergarments, of course!) — or if I should switch up to my Anthony Davis UK jersey or my Jeremy Lin Harvard jersey. Please provide your counsel in the comments below.
Meanwhile, if you need to get away from Fourth of July festivities, you can follow the action here at the WSOP Web site, starting at 4PM EDT/1 PM PDT.