The Brilliant Power of Humor in a Campaign

Two weeks to go in one of the most bitterly contested Presidential elections in U.S. history. Robo-calls and accusations abound. And yet, in the middle of a storm, a night for humor arrived last Thursday at the Alfred Smith Memorial Dinner in New York. These 20 minutes of humor and roasting tell us much about these men. That we can have good-natured ribbing in the middle of the biggest election of our lifetimes is one of the many reasons I love this country. Here are the videos…

An Excerpt from Obama’s Roasting of McCain:

“Recently, one of John’s top advisers told the “Daily News” that if we keep talking about the economy, McCain’s going to lose. So, tonight I’d like to talk about the economy.

Given all that’s happened these past few weeks on Wall Street, it feels like an odd time to be dressed up in white tie, but I must say I got a great deal, rented the whole outfit from the treasury department at a very good price.

Looking around tonight at all the gourmet food and champagne, it’s clear that no expenses were spared. It’s like an executive sale meeting at AIG.

But I don’t need to tell any of you that it’s been a scary time on the stock market, with people losing their investments, their entire fortunes. It’s gotten so bad Bloomberg now has to take the subway. And while the collapse of the housing market’s been tough on every single home owner, I think we all need to recognize that this crisis has been eight times harder on John McCain.

You know, we’ve been debating a lot these economic issues over the course of the campaign, but lately things have been getting a bit tougher. In the last few weeks, John’s been out on the campaign trail and asked the question, who is Barack Obama? I have to admit I was a little surprised by this question. The answer is right there on my Facebook page.

But, look, I don’t want to be coy about this. We’re a couple weeks from an important election.

Americans have a big choice to make, and if anybody feels like they don’t know me by now, let me try to give you some answers. Who is Barack Obama?

Contrary to the rumors you have heard, I was not born in a manger.

I was actually born on Krypton and sent here by my father Jorel to save the Planet Earth.”

An Excerpt from McCain’s Roasting of Obama:

“Events are moving fast in my campaign. And, yes, it’s true that this morning I dismissed my entire team of senior advisers. All of their positions will now be held by a man named “Joe the Plumber.”

Already — and already, my friends, my opponents have been subjecting Joe to their vicious attack machines. His veracity has been questioned by Barack Obama’s running mate Joe the six term senator.

He claims that this honest, hardworking small businessman could not possibly have enough income to face a tax increase under the Obama plan. What they don’t know — what they don’t know is “Joe the Plumber” recently signed a very lucrative contract with a wealthy couple to handle all the work on all seven of their houses.

This campaign needed the common touch of a working man. After all, it began so long ago with the heralded arrival of a man known to Oprah Winfrey as “The One.” Being a friend and colleague of Barack, I just called him that one.

And he — my friends, he doesn’t mind at all. In fact, he even has a pet name for me George Bush.”

Financial Markets: 3 Predictions

I may be wrong, BUT…

1. This is the End of the Financial Crisis–

This is the end, not the beginning, not the middle. AIG will likely get a $85B-$90B bridge loan from the Fed backed by company assets in exchange for a majority stake in the company. The Dow will continue its rise in the morning with the news of AIGs stabilization. Based on March market capitalization, AIG It is five times bigger than Lehman. AIG is the 13th largest company in the world according to the Fortune 500 versus 37 for Lehman. It is an insurance and annuities company mainly and not a broker. It affects Main St. Americans much more than Lehman did. It can’t, and won’t be liquidated.

2. Oil Is At a Bottom–

Oil is at its bottom. Remember $88.90 per barrel, the bottom today before it started rising at 2:30pm. It is the lowest we will see a barrel of oil sell for in the next fifteen years until sustainable energy technology (“ET” as Friedman calls it, “ST” as Sachs calls it) creates green power at a price/KWH that is lower than fossil fuels can and transportation fully converts to electric ( reducing global demand for oil significantly and possibly reducing the price under today’s price). Oil will trend upwards, more slowly, toward $150/barrel by the end of the decade.

3. The Dow and S&P Have Reached Their Bottom–

The DJIA has reached it’s bottom. Remember 10,742.70, the bottom today at market open. It’s the lowest you’ll see the DJIA go in your lifetime. The underlying profits and productivity of American businesses are simply too strong to justify the S&P 500 the same level it was at in December 1998, nearly ten years ago when the U.S. GDP was 58% lower than it is today (8.7T vs. 13.8T).

This graph shows the S&P 500 at the same place it was in December 1998. Today’s bottom was 1174.

I may be wrong here, BUT… I sure hope I’m not.

The Influence of Hank Greenberg on the Fed

As an aside, Hank Greenberg, a WWII hero and the former CEO of AIG for 37 years, has had quite a bit of influence on the Fed policy vis-a-vis AIG it seems. I heard him on Bloomberg radio today sounding like Mikheil Saakashvili on CNN five weeks ago when Russia was “invading” Tskhinvali. Greenberg wrote earlier today in the Financial Times:

“AIG is not an ordinary company. It has opened markets all over the world and, for more than three decades, stood at the vanguard of the liberalisation of the global trade in services. Its stock is owned directly or indirectly by millions of Americans. And it has contributed significantly to US gross domestic product directly and indirectly over the four decades of its existence. But all that is not why it should be saved. AIG has a trillion dollars in assets. It can (and always has) serviced its debt. With the right leadership, it will continue to do so. Action is needed now: AIG needs immediate help, because the threat to our financial system is real. For that reason, if private capital cannot rescue AIG, a temporary federal bridge loan – not a federal bail-out – is in order.”

The Greatest U.S. and Emerging Markets Equities Buying Opportunity of Our Lifetime

Update 10/20/08 - Looks like I was at least a month early on calling a bottom. I could have never predicted a drop to 8400. I just didn’t understand the de-leveraging process prior to watching it happen over the past month. I did love Buffett’s Op-ed from last Thursday. I’m more bullish now than ever about U.S. equities over the next 10 years. It truly is the best buying opportunity of our lifetimes for long-term investors.

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As Warren Buffett says, “Be fearful when others are greedy, and be greedy when others are fearful.”

It was a busy Sunday for Wall Street. It’s about to be a fearful Monday. This may create one of the best buying opportunities of our lifetimes.

After recently adding U.S. Trust and CountryWide into its fold, Bank of America has agreed to purchase Merrill Lynch tonight for $44B or $29 per share.

Lehman Brothers will likely declare bankruptcy on Monday morning due to it’s exposure to Credit Default Swaps and its inability to close the deal on a buy-out by Barclays. It will likely liquidate its assets in the coming weeks.

American International Group, the 18th largest company in the world, is seeking $40B in short-term liquidity from the Fed and will be announcing a restructuring on Monday morning which may including the sale of its aircraft leasing company.

In a move reminiscent of the private Long Term Capital Management bailout in 1998, ten major banks have agreed to create a $70B to $100B emergency fund to protect themselves from the results of the Lehman failure.

At a Bottom

I thought Bear Stearns was the end–then last week I thought Fannie and Freddie was the end. But now, this seems to be the official end of the financial crisis–the end to the credit market and subprime mortgage market crisis.

Tomorrow’s going to be painful day on Wall St. But for the smart Buffett-trained value-oriented buyer I’d suggest waiting about 30 minutes for the market clearing price to be establised and then buy. It may be the greatest U.S. Equities buying opportunity in our lifetime. Two years ago the Dow was at 11,500. One year ago the DOW was at 14,000. Tomorrow, the Dow may go under 11,000–for the last time in our lives. We’re at a bottom.

Buying Opportunities

Buy what? That’s a good question. I’ve never before written about equity opportunities or the positions I hold, but I’ll give it a shot. For full disclosure I currently own long shares of QQQQ, DUG, and SPY. I’m not making any recommendations to buy or sell, but instead recommending research and for you to make your own decisions.

Well, to play it safe, take a look at exchange traded index funds like SPY (S&P 500), DIA (Dow), or QQQQ (NASDAQ). They’ll track the markets and if the general markets go up in the future the value of your shares will go up.

For Higher Beta

For more risky bets look at a long financials ETF like Ultra Financials Pro (AMEX: UYG). But wait until the price resets after the first couple hours. It’s going to reset much lower when the market opens. It’s risky as AIG and WAMU remain at risk and the extent of the Lehman damage may not be immediately known, but it may provide significant upside in the next six months.

A Commodities Play

Or you could look at DIG (Ultralong Oil). Now that oil is under $100/barrel again it may be time to get back into energy for the long-term. I used a small amount of ‘theory testing funds’ in my TD Ameritrade account back in June and bought DUG (Ultrashort Oil) when oil was $130 per barrel and will hopefully sell it tomorrow with oil at $99. DUG’s near-inverse, DIG is down 48% in 90 days. It will hit a bottom as oil prices bottom out in the coming weeks.

Emerging Markets

Of course, you can always look at international opportunities. There is likely to be much more annual GDP in developing nations than in the U.S. over the next fifty years as these countries are starting from a lower base. Take a look at ADRE, an index of 50 emerging markets or BIK, which tracks the markets of Brazil, India, Russia, and China. If you want to look at China, you can take a look at individual equities like the Hong Kong Exchange or China Petroleum. Or you buy the Shanghai Composite, which is down 60% this year in a country with 8% annual GDP growth.

Don’t Forget The Last 8 Years, America

Today for the first time since April 14th 2008, John McCain has taken the lead in the average of the past week of National Polls in the U.S. Presidential Election according to RealClearPolitics.

This fact concerns me greatly due to the many domestic and foreign policy similarities John McCain has with the current U.S. President George Bush. John McCain is in the same political party as the President and voted with the President’s position 95% of the time in 2007.

During George Bush’s eight year administration we saw:

1. U.S. Debt Go Up: The U.S. National Debt increase from $5.7 trillion to $9.6 trillion (from 58% to 66% of the annual GDP).
2. U.S. Annual Deficit Go Up: A change in the U.S. annual federal deficit from a $125 billion surplus in 1999 and a $236 billion surplus in 2000 to a $412 billion deficit in 2004, a $318 billion deficit in 2005, a $248 billion deficit in 2006, and a $162 billion deficit in 2007.
3. Hurricane Katrina: 1,836 Americans die due to Hurricane Katrina, many of whom died to FEMA mismanagement before and after the storm under Mike Brown formerly the Judges and Stewards Commissioner for the International Arabian Horse Administration, from which he also was forced to resign.
4. A War on False Pretense: The invasion of Iraq based on incorrect intelligence that Iraq had weapons of mass destruction including yellowcake uranium that was known to be suspect at the time and sought out and used by Vice President Dick Cheney and Donald Rumsfeld to sell the war to the media, American people, and global community, which Colin Powell indicated later was “deliberately misleading.”
5. U.S. Deaths from War: 4,155 Americans die in combat in Iraq.
6. U.S. Wounded from War: Over 30,000 Americans wounded in combat in Iraq
7. Iraqi Deaths from War: At least 600,000 and as many as 1,200,000 excess deaths of Iraqi civilians since the July 2003 invasion (Source 1, Source 2, Source 3)
8. Revealing a CIA Agent’s Identity: The purposelful revealing of CIA Agent Valerie Plame’s indentity to the press by Dick Cheney’s Chief of Staff Scooter Libby, and the subsequent Presidential commuting of Libby’s prison sentence to a fine.
9. Suspension of Habeas Corpus: The unconstitutional suspension of the rights of Habeas Corpus including prisoners seeking relief from detention without trial.
10. Breaking of the Geneva Convention: The breaking of the laws of the the Geneva Convention, which was ratified as U.S. law, and the U.S. War Crimes Act of 1996 regarding torture in Iraqi prisons and the detainment of enemy combatants at Guantanamo.
11. Greenhouse Emissions Increase: The Kyoto Protocol, to which the U.S. is a signatory, never submitted for ratification, in part leading to higher carbon dioxide PPM to continue to increase, leading to faster increase in global temperatures, which is leading to sea levels rising and more frequent droughts and hurricanes
12. Osama Never Found: Osama Bin Laden never to be found, who is the founder and leader of Al Qaeda and the major architect of the September 11 attacks in New York, Washington, and Pennsylvania which caused the deaths of 2,974 people, 2,646 of whom were Americans.
13. Energy Prices Increasing: Gas prices increasing from a low of $1.04 in December 2002 to a high of $4.05 in June 2008 (from $1.45 at the beginning of the term in January 2001 to $3.66 as of September 1, 2008).
14. Rumsfeld’s Resignation: The hiring Secretary of Defense Donald Rumsfeld in the first Bush Administration, who responded to a question from a soldier about not having the right equipment and armor by saying, “You go to war with the army you have, not the army you want.”
15. Torture by U.S. Soldiers: The torture at Abu Ghraib prison, which included sodomy with a baton, urinating on a detainee’s leg, smearing feces on a detainee, forced masturbation, applying electric shocks to detainees, and jumping on a gunshot wounded leg.
16. The Decline of Veteran Care: The decline of Veteran Care at Walter Reed Army Medical Center.
17. Withdrawal of Miers Nomination: The nomination of Harriet Miers to the Supreme Court, who had never before been a judge and had very little experience with Constitutional Law at the time of nomination.
18. Resignation of Gonzalez: The appointment of Alberto Gonzalez as U.S. Attorney-General, forced to resign in 2007 after politically motivated firings of U.S. Attorneys, who in 2002 wrote an opinion that the Geneva Conventions prescriptions on torture did not apply to Taliban and Al Qaeda prisoners and in 2005 lobbied for the continuation of an illegal NSA wiretapping program targeting U.S. citizens without proper warrants.
19. U.S. Inflation Increase: The annual U.S. Inflation Rate go from 3.37% in January 2001 to 4.43% so far in 2008.
20. Unemployment Increase: The U.S. Unemployment Rate go from 4.2% in January 2001 to 6.1% today.

I’ll be posting more about my current views on the policies and the candidates leading up to the election.

Where I Am Coming From

For the sake of sharing where I am coming from, I am registered as an Independent and am a businessperson and entrepreneur from North Carolina. My father was an Episcopalian priest and my mother was a social worker. I am a fiscal conservative who believes in efficient government and cares about equality of opportunity and helping others. Please feel free to comment. Facts and discussion of policy and issues is very welcomed.

How to Be a Public Company CEO

I’m out here at the Pacific Crest Technology Leadership Forum in Vail, Colorado this week. The 600 attendees here are a mix of public institutional investors, hedge fund managers, investment bankers, public company analysts, venture capitalists, public company CEOs and CFOs, and private company CEOs and CFOs.

The investors are here to meet the management of the public and soon-to-be public companies and to build relationships with the people that feed them data about these companies–the analysts. The analysts are here so they can publish research on these companies to sell to the investors. The investment bankers are here to build relationships with the management of companies they hope to sell, advise on acquisitions for, take public, or do follow-on offerings for. The CEOs and CFOs are here so they can raise money from the investors and get covered by the analysts. It’s a fascinating dynamic.

I’m learning how to be public company CEO. Here are some of the things I’ve learned.

The Process of Going Public

The general process of taking your company public in the United States is:

1. Build your company to at least $40M in annual sales (the sort-of-hard ‘takes 7 years’ part).
2. Reach breakeven or profitability and have solid positive EBITDA in sight.
3. Invite investment bankers to pitch you in what’s called a ‘bake-off’
4. Buy labels and write on them the price of your cakes and cookies
5. Select two of the following ‘bulge-bracket’ investment bankers to ‘bookrun’ your initial offering of shares: Goldman Sachs, Morgan Stanley, Credit Suisse, Deutsche Bank, Merrill Lynch, Lehman Brothers, UBS, Citigroup, and JP Morgan
6. Select two to three ’boutique’ investment bankers to ‘co-lead’ your initial offering of shares such as Pacific Crest, Jeffries, Piper Jaffray, William Blair, Cowan, Needham (there are dozens and dozens)
7. These four or five banks form your ‘underwriting syndicate’ (the people who help you ‘make a market’ for the percentage of your company that you are selling to the public by taking initial orders from institutional investors).
8. Meet with your bankers to write your ‘Form S-1‘ which is a couple hundred page document detailing every part of your business, every product, every management team member, every metric, every material agreement, every options plan, every differentiation, every risk etc.
9. Determine which exchange you wish to list on. The NYSE has higher revenue requirements than the NASDAQ. The NASDAQ is weighted toward technology companies. NYSE ARCA and NYSE Euronext are also options for smaller offerings, as is the AMEX. The London Stock Exchange (AIM) is also sometimes an option, though it requires different filing steps and doesn’t presently provide the branding imprimatur or liquidity that a New York exchange does.
10. Presuming you are going public on an American exchange, file your S-1 with the Securities and Exchange Commission.
11. Publicly announce your registration and your intent to go public.
12. Respond back to the comments and questions that the SEC provides until they tell you you are good to go.
13. Determine with your bankers which metrics and the definition of each metric you will report to ‘the Street’ (the institutional investors that will buy/sell your shares and analysts which will cover your company once it’s public). You will have to report all financials (bookings, revenue, GM, COGS, Cap Ex, R&D, Sales & Marketing, General & Admin, OpEx, Net Profit, EBITDA, assets, liabilities, ARs, APs) and numbers such as customers, growth rate, ARPU, retention/churn, LTV, and CAC.
14. Work with your bankers to craft your story and prepare your slidedeck for the roadshow, emphasizing your strengths, metrics, and opportunity.
15. If the market timing is good then prepare for your roadshow. The market is rather bad right now (August 2008) for IPOs. There have been no venture-backed IPOs to date in 2008, although there will likely be a few in Q4 and many in 2009.
16. Determine your initial price per share target and how much money you wish to raise, and the percentage of the company you wish to sell to the public market.
17. Hold an ‘IPO roadshow’ in which you and your CFO visit the major U.S. cities to present to the institutional investors and mutual fund managers who may wish to purchase your shares.
18. At this point your ‘bookrunners’ will take orders for shares and help build interest among firms that they know have demand for businesses like yours.
19. Based on demand (# of orders) you and your investment bankers make a final determination on price per share, amount of shares to sell, and who to sell shares to (ideally stable investors that won’t trade out of your stock right away) the night before or the morning of the listing.
20. Ring the bell the morning of your offering and celebrate. Watch the wire of funds go into your corporate bank account. Now the work begins to properly manage expectations, overperform, and gain trust with your investors.

The Advantages to Being Public

The advantages to going public are generally greater access to capital to help grow the business, liquidity for pre-IPO shareholders (though not for at least 6 months after the offering), an ability to command a higher revenue multiple than most private companies can, and a greater level of trust and respect among larger customers or vendors.

The Disadvantages of Being Public

The disadvantages of being a publicly traded company include the 3 months of time you as CEO will have to be fully focused on going public and the 6 months your CFO will have to be fully focused on the process of going public–causing you to lose some focus on operations, having to report many of your key metrics and strategies to the public–including your competitors, having to ‘manage to the Street’ or in other words manage your results and report every quarter which sometimes causes short-term thinking, an inability to be fully flexible, the legal reporting requirements of Sarbanes-Oxley that cost around $2 million per year in compliance costs, and a requirement to be profitable or within clear visibility of profitability that sometimes can limit ability to pursue growth.

Some Tips for the Public Company CEO To Be

Here’s a few tips I’ve picked up here at the conference on being a public company CEO.

1. Manage Expectations Well: Become very good at managing expectations. As a public company CEO your job is to consistently hit or outperform your revenues and earnings per share (EPS) guidance every quarter. It takes time to develop trust with institutional investors. And if you go out saying one thing and end up not hitting that plan and doing another, it will cause turnover among your shareholder base, which will cause your share price to go down (bad). To become very good at managing expectations, make sure you have a solid financial model in place that can very accurately model future revenues, bookings, gross margins, and earnings projections. Don’t go out indicating you’ll have 10% net profits and then decide that you’re going to have 3% net profits so you can grow faster.
2. Build Relationships Before You Need Them: Just as with raising venture capital, build the relationships before you need them. Start going to the analyst and investment banker conferences at least 18 months prior to your offering and build relationships with both the ibankers and public investors. Make sure they know who you are and like you and the company story many months prior to the roadshow.
3. Pick Sticky Investors: When you are going out, you’ll decide which institutional investors get to purchase your stock and which do not. Ask in your contract with your investment bank that you significant input if not have final say as CEO. Get to know in advance which firms are long-term investors and which are not. You can use a service like the ‘Business Intelligence’ offering from Thompson Reuters to determine which institutions are looking at your deck and materials. Pick the firms that are going to hold your stock and not have high share turnover. Be wary of hedge funds who have high portfolio turnover.

Hope you enjoyed the post! I’ve still got a lot to learn so please let me know in the comments what I’ve mis-stated or altogether missed. Man I love this stuff.

The Opportunity of Our Lifetimes

Our generation–those born in the 70s, 80s, and 90s–has a great opportunity ahead of ourselves. We have the ability for the first time in human history to eliminate extreme poverty within our lifetimes and ensure shared access to prosperity regardless of color, geography, or nationality. This possibility is worthy of a boisterous cheer.

By 2050, we’re projected to have 9.5B humans on this planet, however. Our planet will not allow a world of 9.5 billion humans living in the manner the average citizen of the Western world lives today, yet alone the 6.6 billion we have today.

Here inlies the great connection between sustainability and poverty. Unless we as a global society invest to develop the needed technologies to allow for humans to become sustainable in food, energy, and water production we will end up having less resources than are necessary for 9.5 billion people to live in a world without extreme poverty–let alone a world in which there is true shared prosperity, mutual security, and equality of opportunity. This is the greatest challenge of our lifetime as entrepreneurs, social entrepreneurs, scientists, technologists, and public servants. We must have sustainability to end poverty.

As a friend of mine from high school recent wrote me, “We must work toward the creation of a world where the standard of living, human rights, basic freedoms, and sustainability are all compatible.”

The two billion people that Goldman Sachs projects will be added to the global middle class by 2030 may never make it if sufficient food, energy, and water resources don’t exist. Dominic Wilson and Raluca Dragusanu, showed in a Goldman Sachs Economic Research paper published on July 8 called “The Expanding Middle: The Exploding World Middle Class and Falling Global Inequality” that close to 70 million people a year are entering the global middle class. They define this range as those with per capital income $6,000 and $30,000, purchasing power parity adjusted. They foresee shifts such as:

1. Changing spending patterns.
2. Increased pressure and competition for resources
3. Greater threat of environmental degradation
4. Rising environmental consciousness
5. Political and social changes

Through one lens, we could have resource wars, strife, famine, and terrible droughts, melting ice caps, biodiversity extinctions, and rising sea levels.

Through the other lens, we could have a world of growing prosperity, security through commerce, and gained respect among cultures and religion, a world of ubiquitous broadband, a world of communications technology that will enable humans to gain a common language and understanding, a world in which dictators can no longer use scare propaganda to wedge the false division of us vs. them, a world in which there is access to education, healthcare, nutrition, and opportunity for all, a world in which entrepreneurship thrives and technology drives improves food production, water access, and non-carbon based energies, a world in which our identity as human is so much more important than what divides us.

We have come to a turning point in history. This is both the challenge of our lifetime, and the great opportunity of our lifetime. How can we enable the great economic and creative potential for all humans while ensuring we leave a world of environmental stability to our grandchildren?

Will we invest in the creation of a new Apollo Plan for Energy? We will create the Global Bill of Rights that provides access to education, healthcare, and nutrition? Or will we fall into a once great society as the benefit of inexpensive petroleum leaves? Will Malthus finally get his way?

Is growing economic prosperity possible in a world of declining resources and increased commodity prices? Does our lifetime end up being marked in history as the time of resource wars, increased poverty, and environmental damage? Or does it end up being marked by global collaboration, shared prosperity, and sustainability. We have a choice.

This is the greatest opportunity of our lifetime, and our greatest challenge.

Sustainable Capitalism and The Role of Aid vs. Trade in Prosperity Creation

I picked up a glossy investment prospectus from a firm called Legatum Group at up at the Fortune Brainstorm Tech conference today. A statement inside caught my eye. It stated:

“While aid can play an important role in alleviating immediate needs, its impact is naturally limited since it is neither sustainable nor scalable.” Seperately, it states, “Quite distinct from the limited scope of charitable initiatives, businesses are both self-sustaining and scalable. Legatum directs its attention towards promoting entrepreneurship and business for all its social benefits within developing communities.”

I wanted to to take a chance to think more about the nuance of the right type of aid vs. the right type of trade and investment.

I feel presently that the answer to reducing poverty and increasing access to opportunity and prospectity in developing nations is three fold. The answer is A) for-profit private capital investment into sustainable companies that are socially responsible (or at least not socially irresponsible) AND B) direct “aid with standards” to community-based non-profit organizations run by local social entrepreneurs that are efficiently serving the needs of their communities AND C) efficiently run transparent government that creates and protects a system of law and property rights.

The question that should be asked cannot be as black and white of aid vs. trade. It’s not aid OR trade. It’s accountable aid AND sustainable trade AND efficient goverment. It’s a public/private/community partnership that does not succeed without participation from each sector. The questions that we as a society should be asking is how to make direct aid measurable and accountable AND how to make trade and investment sustainable AND how to make government efficient and transparent.

These methods of human and capital investment are on the spectrum of socially responsible venture philanthropy that builds human capital, infrastructure, and standards of living through education, medicine, nutrition, and technology that enables us to do more with less resources. At the end of the day–all private sector and public sector investment should come back to efficiently serving the needs and desires of the local population in a sustainable manner.

What the answer to prosperity creation seems not to be is the traditional bi-lateral government to government aid (read: loans that local populations will have to pay back to buy our stuff from our companies) nor traditional private capital investment in companies that are not socially responsible and end up hurting local environments. This of course is the very common and very key “aid vs. trade” question that so many like Sachs, Easterly, Collier, Stiglitz, Pralahad, and Gates have debated.

So what is the import of this debate and why is a tech CEO talking about it? The great war of ideas of the 19th and 20th Century between pure communism (total state control of the economic sector) and pure capitalism (total market control of of the economic sector) is giving way to an “end of history” state that could be simply called “Sustainable Capitalism.”

Sustainable Capitalism could be defined as a state in which competitive market economies that are based on environmental sustainability, democracy, transparency, communication technology, an educated populace, and a government with a limited but very important role in setting the rule of law, thrive while efficient social entrepreneurs with services that produce a public good are invested in with capital with measured returns and public servants integrate the same communication and ERP systems of the best-run companies in the world.

In this new Zakarian model of economic system, companies that destroy the environment, provide a negative net benefit through off-balance sheet externalities, or exploit their populations are video blogged and written about and pressured through market forces to reform or wither. This is perhaps somewhat idealist today–but it is the path I believe we are on. The fact that all companies must be sustainable soon enough for the system to scale and prosperity to be possible for all humans is clear. This trend will accelerate as we enter into the coming age of ubiquitous broadband and improved technology of the citizen blogger and as resources become less available. Governments, non-profits, and businesses will have a much higher level of accountability. This assumes of course people have incentives to work toward shared prosperity that can continue beyond the short-term, and I think that is a fair assumption and a vision shared by the global connected youth of today that I know.

What’s the common denominator for human invesment in either the public or private sector? Return on invested capital, as long as the definition of return is broadened to include social returns and the definition of cost is broadened to include environmental degradation. This is the Net Domestic Product (NDP) approach versus the Gross Domestic Product (GDP) approach.

So am I criticizing the Legatum brochure statement? No, not really–I just hope they share the belief–and I am sure they do–that prosperity in the developing world and continued sustainable improvement can only be possible if we find methods to enable entrepreneurs, social entrepreneurs, and public service entrepreneurs to transparently, efficiently, and sustainably make investments that maximize individual utility, return on investment, and the public good.

The effort toward sustainable capitalism and efficient government requires an improved ability to communicate, collaborate, and measure results. There’s a digital generation of entrepreneurs and social entrepreneurs that gets this who will be the global leaders sooner than you might imagine.

Barack Obama 2008 Chapel Hill Fundraiser

On Thursday May 1 from 7:30pm to 10:30pm, we will be hosting a Barack Obama for President 2008 Chapel Hill Fundraiser at our house in Chapel Hill. All are welcome. Please feel free forward this invite to your friends and colleagues who may be interested. Additional details can be found at the event page on Facebook Additional Information We will have heavy hors d’oeuvres, an open bar, and band entertainment. Representatives and a surrogate (TBA) from the Obama campaign will be attendance. Attire is formal. The event will be in the Meadowmont subdivision at: 102 Millingport Court Chapel Hill, NC Directions DIRECTIONS FROM DOWNTOWN CHAPEL HILL From HW54 (aka Raleigh Road) coming down the hill from Chapel Hill, take a left on a Meadowmont Lane, go to end of road (1.5 miles) then take left onto Park Bluff N. then first cul de sac on right into Millingport Court. House is #102. FROM DURHAM/RALEIGH Take I-40 to exit 273 toward Chapel Hill. Take right at Meadowmont Lane. Go to end of road (1.5 miles) then take left onto Park Bluff N. then first cul de sac on right into Millingport Court. House is #102. PARKING Plenty of parking is available along Park Bluff Road Ten Reasons I Support Barack 1. An Enlightened Foreign Policy: An End to the Us Vs. Them Mentality 2. A Commitment to a Balanced Budget 3. An Understanding of the Importance of Education 4. An Awareness of the Importance of Entrepreneurship 5. A Commitment to Work Toward Reducing Domestic and Global Poverty 6. A Commitment to Ensuring Sustainable Energy 7. A Varied Life Perspective 8. A Commitment to Reducing Climate Change 9. An Understanding That All People In All Countries Are Equal 10. An Ability to Bring Us Together

Who Are YOUR Role Models?

Who Are Your Role Models?

I’ve given some thought to the people I follow, read about, and try to learn from. While we all have faults, secrets, and imperfections, there are a good two dozen people that I consider today to be my role models in a few different fields.

The question I want to know is who are YOUR role models? Who should I consider starting to follow and learn more about that isn’t on this list? Would you leave the names of your role models in the comments?

Here’s to all the solemn souls who have cared for humanity that have come before and all those blessed brothers and sisters who come after. Here are my current role models.

SOCIAL ENTREPRENEUR/ACTIVIST ROLE MODELS
Mahatma Gandhi (The non-violent revolutionary)
Mother Theresa (The lady who cared for the sick and poor)
Martin Luther King, Jr. (The Man with a Dream)
Susan B. Anthony (Civil rights and suffrage leader)
Paul Farmer (Doctor for the Poor, Mountains Beyond Mountains)
Mohammed Yunus (Banker to the Poor)
Dennis Whittle (Founder of Global Giving)
Bill Drayton (Founder of Ashoka)
Matt Flannery (Founder of Kiva)
Jessica Jackley Flannery (Founder of Kiva)
Dan West (Founder of Heifer International)
Bernard Kouchner (Co-Founder of Doctors Without Borders)
Kerry Kennedy (Human rights activist)
Laura Arrillaga (Venture philanthropist)

BUSINESS ROLE MODELS
Bill Gates (the innovator and hard-line businessman)
Jeffrey Skoll (the eBay founder and social entrepreneur innovator)
Warren Buffet (the smartest fundamentalist around)
Marc Benioff (the SaaS phenomenom-maker)
Marc Andreessen (keeps hitting home runs)
Steve Jobs (he comeback kid)
Larry Page (the technologist and business innovator)
Sergey Brin (the dynamic duo part deux)
Richard Branson (loses his virginity every day)
Thomas Edison (succeeded by failing 3,635 times)
Steve Jurvetson (the VC gadget-lover)
Andrew Carnegie (the library funder)
J.P. Morgan (the financial system saver)
John D. Rockefeller (the competitor)
John D. MacArthur (the PBS funder)
Sam Walton (the great retailer, scaler, and SIFE founder)
Henry Ford (his ability to scale, not him per say)
Larry Ellison (his ability to sell, not him per se)
Tom Perkins (his ability to put together venture deals, not him per se)
Jimmy Wales (the maker of ubiquitous information)

ECONOMIST ROLE MODELS
Jeffrey Sachs (End of Poverty, Common Wealth)
Hernando De Soto (The Mystery of Capital)
George Soros (Open Society)
Milton Friedman (Capitalism and Freedom)
John Maynard Keynes (The General Theory)

JOURNALIST/AUTHOR ROLE MODELS
Tom Friedman (Lexus and The Olive Tree)
John Perkins (Confessions of An Economic Hitman)
Robert Kiyosaki (Rich Dad Poor Dad)
Napoleon Hill (Think and Grow Rich)
Jim Collins (Good to Great)

POLITICAL ROLE MODELS
Abraham Lincoln (The Uniter)
Benjamin Franklin
(The Inventor)
John F. Kennedy (The Dreamer)
Benazir Bhutto (The Fighter)
John McCain (The Fighter)
Barack Obama (The Changer & Inspirer)
Al Gore (The Authentic)
Bill Clinton (The World Changer)
Jimmy Carter (The Carer)

Hillary Rodham Clinton (The Courageous)
Mario Cuomo (The Speaker)

…And anyone who worked or is currently working to increase human prosperity, ensure an economically prosperous and sustainable world, and reduce human suffering, poverty, disease, warfare, and genocide.

Who do I need to know about??? Who’s doing amazing things??? Leave a comment…

Building Bridges Across the Atlantic

What’s up, what’s up. It’s Sunday at 3:34am but I feel like I’m still on EST. I’m over in Berlin this weekend doing some analysis of the usage of email marketing in German small businesses and attending a pretty cool conference put together by the a group called the British Council.

They’re calling it Transatlantic Network 2020. They’re basically bringing together 100 people from N. America and Europe for each of the next 12 years until 2020 to build relationships among future world leaders from the NATO countries between 23 and 36 years old. 2008 is the first year of the program.

The attendees are off the heazy. The 15 or so U.S./Canandian participants got together tonight at 6 in the hotel bar and then we headed off for dinner at a biergarten and had the traditional bratwurst, sauerkraut, and potatoes.

I met some mad smart people tonight–including social activist Jeff Johnson from BET, Washington Post “How the World Sees America” blogger Amar Bakshi, NASA public affairs specialist Stephanie Schierholz, Bethan Jenkins, a 26 year old Welsh Parliament member, and David Kirby from America’s Future Foundation and KSG at Harvard where’d I’d love to be at in a few years.

It’s wonderful to have a dinner in which we can get wide-ranging perspectives on topics like ice cap melting, microfinance, U.S. space program research, asteroid path projections, bilateral aid inefficiency, fuel cell physics, U.S. rural poverty, nationalism vs. internationalism, global health, genocide, the role of colonialism and Nation-State border creation in global poverty, Barack Obama’s triangulation of internationalism, government efficiency, and social liberalism, and the degenerative devolution of hip hop since Dr. Dre’s Chronic album in 1992.

I can’t wait until the outlook and ideas of the participants from Germany, Greece, Ireland, Italy, France, Scotland, Portugal, Poland, Spain, Romania, The Netherlands, N. Ireland, England, and Turkey are added tomorrow.

The other cool thing that keeps happening is that I keep running into iContact customers wherever I go. I ran into three our four while speaking at Metro State College in Denver on Thursday and here at the conference David Kirby from America’s Future Foundation uses iContact to send newsletters to the supporters of his non-profit. Word is spreading.

We just got back from a dance club called Tresor in a former communist-era power plant in East Berlin that seemed to just be getting started at 3am when we left. Man it’s harder to dance to techno than hip-hop, especially with the unvarying/long beats of underground Berlin trance.

Tomorrow afternoon we’ll be meeting the European participants and doing a guided walking tour of the city. The main conference runs from Mon-Wed.

If you are interested in being considered for the Dublin Transatlantic 2020 Conference in September check out their site and contact Jacqui Allan.

From their site:

ABOUT THE PROGRAM
Transatlantic Network 2020 (TN2020) seeks to create sustainable, multilateral networks that span the Atlantic by engaging future leaders from North America, the UK, and the rest of Europe to collaboratively address global issues. Building on the history and shared values of the transatlantic relationship, the program aims to foster long-term relationships among future leaders and to incite grassroots action on important global issues. It is designed to run until 2020.

WHY FOCUS ON THE TRANSATLANTIC RELATIONSHIP?

North America and Europe share a common set of interests – in the advancement of fundamental rights and liberties, education, science and technology. Reports indicate that North America and Europe need to strengthen the transatlantic relationship and work together more closely to best tackle global issues like climate change, immigration, and security. TN2020 will foster collaboration between the next generation of North American and European leader

HOW WILL THE PROGRAM WORK?

TN2020 will feature initiatives that give a voice to the next generation of leaders on both sides of the Atlantic, encouraging them to work together to explore common solutions to current and future global issues.

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