Politics – What I care about

June 29, 2009

If you are a political junkie or policy wonk, there is no shortage of issues to follow.  There are only a few I care about: healthcare, taxes/spending and climate change are at the top of my list.

I wrote about my thoughts on healthcare a while ago, here are some comments on the other two issues.

Taxes/spending – most solutions to the problem of how to raise more revenue to pay for all the spending going on right now involve taxing the most affluent.  Nothing wrong with that theory to a point but the problem is where to draw the line on who is “affluent” and how much you can reasonably raise from that group.  According to the Tax Foundation, in 2005, the top 5% of US taxpayers (those with income above $145,000) paid 60% of personal income taxes and the bottom 50% paid only 3% of personal income taxes.   How much more can the top 5% pay and how do you incent those at the bottom to vote for those who might hold down spending?

I recently read this take on what happens if you keep raising the state income tax rate on top earners.  And while it is certainly easier for the affluent to move among US states than it is to avoid US taxes by moving abroad, one wonders about the impact.  There is certainly no shortage of data that demonstrates cutting tax rates stimulates the economy.

Climate Change – One of the frustrations I have with issues like this is that no one seems to be willing to discuss trade-offs in spending.  A think tank based in Denmark called the Copenhagen Consensus that brings together economists and specialists and uses sound economic science to suggest priorities in how governments and philanthropies should spend scarce resources, prioritized 30 solutions to 10 challenges.  Spending on climate change mitigation ranked 29th and 30th on the list.  And just at the time when Congress is getting ready to pass a huge climate change bill that will raise the cost of energy for Americans and US businesses, the “consensus” on the “fact” of climate change seems to be collapsing.  Ouch.


Starting a Movement

June 26, 2009

"You know, if one person, just one person does it they may think he’s really sick and they won’t take him. And if two people, two people do it, in harmony, they may think they’re both faggots and they won’t take either of them. And three people do it, three, can you imagine, three people walking in singing a bar of Alice’s Restaurant and walking out. They may think it’s an organization. And can you, can you imagine fifty people a day, I said fifty people a day walking in singing a bar of Alice’s Restaurant and walking out. And friends they may think it’s a movement…" – Arlo Guthrie

I spend a lot of time in rental cars. For a while now, I’ve been thinking, wouldn’t it be great if, no matter where you were or what company you were renting from, you could get in the car and know what type of station you’d get when you pressed any preset? I think so too.

So I’m starting a movement.  Join me here to get started!


Must work for dopes…

June 26, 2009

I saw a bumper sticker today that said “If you can’t see my mirrors, I can’t see you.”  This is pretty ridiculous.  Of course the point is to tell cars in the rear to be careful around big trucks but anyone with half a brain would know that what’s true is: if you can’t see my mirrors, I can’t see your eyes but there is a pretty good chance I can see at least some of your car.

Men are from Mars

June 24, 2009

About the only thing I remember from reading this book way back when is explained by this “Man Rule” sent to me recently by my friend David.

1. Come to us with a problem only if you want help solving it. That’s what we do. Sympathy is what your girlfriends are for.

It’s true.  Solving problems is what men do.

I like to solve startup problems and this is a recent example: The founder of one of my clients wanted to take on a co-founder.  The company was bootstrapping so there was no money to pay salary but #2 was willing to take equity instead of cash.

#1 correctly noted that if the co-founder had been involved from day one, they probably would split ownership 50/50.  But the company had made quite a bit of progress before #2 was ready to join, how to determine a fair split?

My solution: deconstruct.

Start with an estimate of the value of the business, call it $2 million.  Divide that by the number of shares, we’ll say 2 million to keep the math simple, $1.00 per share.

Next, determine the elements of compensation: salary that would have been paid, over the number of months until capital is raised and the company can start paying, plus a number of shares that would have been offered as incentive compensation if #2 had joined as a paid employee.

So if #2 would have been paid $100,000 per year and we expect him to work without pay for six months, we’ll give him 50,000 shares of stock that vest over six months.  In addition, someone at his level wound normally receive options for 2% of the company, we’d grant him one for 40,000 shares vesting over three years.

This may not be where the numbers end up but by deconstructing, we’ve established a framework for a constructive conversation that is based on more than just “I think you’re/I’m worth x%.”

Startups and Healthcare

June 23, 2009

For a newly minted startup, healthcare coverage for employees is quite a ways down the list of priorities.  But the long-term success of our economy depends on both entrepreneurs and restraining the runaway train that is the cost of providing healthcare to those who live in the US so I think it’s fair game here.

There are several proposals floating around in Congress, mostly from the majority.  Some have interesting ideas, some are downright scary.

Over the last few weeks, I’ve read some interesting perspectives on aspects of the issue and I thought I would share links here with some of my own thoughts.

Perhaps my biggest concern about this issue is the haste with which it is being pushed through.  In the Wall Street Journal, Daniel Henninger explains how there are many similarities to the initial passage of Medicaid back in 1965 and how that program has ballooned into something that accounts for 20% of state budgets.

Stephen Burd, CEO of Safeway Inc., has implemented coverage with features that seem to be getting some traction on the hill but it remains to be seen if those in charge will adopt any of his great ideas.  Safeway reduces insurance premiums for those that avoid unhealthy activities, an incentive-based plan that any entrepreneur would love.

And Oregon Senator Ron Wyden, a democrat, is proposing a plan that sensibly eliminates tax subsidies.

Fixing the healthcare mess, along with fixing Social Security, is one of the biggest issues Congress will face in any of our lifetimes.  Let’s hope they don’t blow it.


June 5, 2009

I guess that’s the title of the first blog post for many blogs.  And an appropriate one it is.

I’ve been meaning to do this for quite some time but have recently been spurred to take the leap by my son Jim who started his blog last week.  It is excellent and can be found at nerdventures.blogspot.com.

I guess I should start by explaining the title of this blog.  I work in the world of early-stage technology companies.  The earliest of early stage where it is often an idea and little more.  And I love it.  For me, the energy, passion and “change-the-world” mentality of entrepreneurs and startup companies is, well, addicting.  I have been in this world for more than 25 years and had my share of ups and downs.  I’ve learned a great deal and now enjoy sharing as much as I can.

And what is it that I do?  I help start companies.  My background is in finance and operations so that is the emphasis.  But in startups, you wear a lot of hats and learn much about all the disciplines so my involvement tends to be pretty broad.

I think that’s enough for now.  Readers will learn more about what I do from the observations I share here than any long description so we’ll see where this leads.