Schumpeterian creative destruction – the rise of Uber and the great taxicab collapse 

In 1942, economist Joseph Schumpeter described “creative destruction” as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly...

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In 1942, economist Joseph Schumpeter described “creative destruction” as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” There probably hasn’t been a better example of Schumpeterian creative destruction in the last decade or more than the recent ascendance of app-based ride-sharing services like Uber (and Lyft, Sidecar, Gett, Via, etc.) challenging traditional, legacy taxi cartels in cities like New York, San Francisco, Chicago and more than 160 other US cities. Market-based evidence of the gale of creative destruction in the transportation industry is displayed in the two charts above. The top chart above shows how the increasing popularity of ride-sharing apps like Uber has caused the price of New York City individual taxi medallions to collapse by at least 37%, from a peak of more than $1 million in August 2013 to only about $650,000 in recent months (based on advertised asking prices here, not actual sales).

Source: Schumpeterian creative destruction – the rise of Uber and the great taxicab collapse – AEI | Carpe Diem Blog » AEIdeas

In this article

The end of cancer – Vincent DeVita & Elizabeth DeVita-Raeburn – Aeon

Attacking multiple hallmarks at the same time requires that we do complex clinical trials of a new kind. We can randomly combine a variety of drugs to try...

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Attacking multiple hallmarks at the same time requires that we do complex clinical trials of a new kind. We can randomly combine a variety of drugs to try to attack multiple hallmarks simultaneously, but the analysis of such studies would be a statistical nightmare. The new studies need to be planned using the wiring diagram of the cancer cell in question as the blueprint. And they must be conducted in a radically different way from conventional studies.These studies hold extraordinary promise, but they are virtually impossible to achieve under the government’s current regulations. Normally, when we test a new treatment, we establish a protocol and hold that constant during the trial to isolate the effect of the treatment. But in these new multi-hallmark trials, we will need to monitor the effects and adjust the approach on the fly – during the trial – to fully use all the information at our disposal. Current regulations make it difficult to get that kind of study approved.

Source: The end of cancer – Vincent DeVita & Elizabeth DeVita-Raeburn – Aeon

In this article

The Model UN and Climate Change Crowd Meet in Paris

A bunch of politicians, who all believe (they are not scientists so don't know how to refute) they need to control CO2, gather in Paris for a Model...

760 0

It’s almost New Years, so time for a resolution. Yes, this is the year I will reduce my CO2 emissions.

A bunch of politicians, who all believe (they are not scientists so don’t know how to refute) they need to control CO2, gather in Paris for a Model UN like conference, to settle on a non-binding target that adversely effects all the economies of the world, but if you believe the science has no measurable impact on the climate.

This non-binding agreement has more than a few obvious flaws:

  1. A country could believe COP21 is meaningful, and waste time deluded that Paris agreement fixes the problem or moves us to the next plateau. But the politicians who agreed will, overtime, leave office, replaced with politicians perhaps uninterested in the agreement. Political will has a half-life no greater than one’s time in office.
  2. This agreement seeks to end the use of a cheaper energy solution. Net of externalities, fossil fuels perhaps are uneconomical, but externalities are by their definition outside of the economic decision making process. It is unclear that a non-binding, even a binding agreement, could over 40 years motivate a country to work counter to its near term economic interest.
  3. From a game theory standpoint, it makes sense to bluff. A country like China will gladly say it will comply, and then not. In their bluff, the willful believers implement constraints for a period giving China more advantage.
  4. If it is true that climate change is due to human effects the agreed to goals will not halt climate change (See Hansen).
  5. If climate change is real, it’s getting warmer, but not human driven, this plan directs resources to CO2 reduction when resources should be focused elsewhere, like building sea walls.
  6. If the climate is not getting warmer over the long term, this is a total waste of time.

I am sure the President and John Kerry will start ridiculing Congress for resisting the Paris agreement. While it is fun to criticize Congress, maybe we should start seeing Congress as a source of common sense, as messy as it is. If you can’t convince 50% of Congress maybe the plan is not so good.

So what is a good plan? There is really only one: Reduce the cost of clean below the cost of dirty. Legislation does not create innovation. Innovation delivers more than expected for less than expected. It’s a subject of a longer post, but in my opinion the only way to control CO2 emission is to internalize its cost benefit. Carbon trading, targets, agreements, etc do not internalize these costs because each can be changed through political will faster than the capital life cycle of energy infrastructure. Anyone who truly believes man is the major reasons for climate change should focus solely on reducing cost of clean energy.

A few thought questions:

  1. Can anyone identify a predicate worldwide non-binding agreement, that works against a countries economic interest, that achieved its desired long term goal?
  2. Since all these politicians are so hot on science, as if they got better than a C in any science course, can anyone name a game theory construct that would prove the context of this agreement achieves its goal?
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Join the Conversation (0)

President: Stop Giving into Terrorism Fear

Things that help ISIL grow: Substantial increase in indiscriminate UAV attacks Killing Qadaffi, freeing up Libyan weapons cache for ISIL. Where did all those MANPADs go? Very narrow...

641 0

Things that help ISIL grow:

  1. Substantial increase in indiscriminate UAV attacks
  2. Killing Qadaffi, freeing up Libyan weapons cache for ISIL. Where did all those MANPADs go?
  3. Very narrow rules of engagement, barring even bombing ISIL fuel trucks because a civilian might be driving it.
  4. Releasing $150B to ISIL enemy Iran
  5. Paris, Russian airplane, Lebanon like attacks that shows ISIL can attack others
  6. Capitulation of Iraq army when attacked by ISIL
  7. Specific anti Muslim movements in Europe, that make US anti Muslim trends look tame.
  8. Presence of US troops in theater
  9. Lack of economic opportunity for 20 year old males
  10. Promises of religious idealism, free house, electricity, food, healthcare etc – blasted out on twitter, Facebook, whatsapp, etc to unemployed disaffected youth – in mass and daily (90k tweets a day alone on twitter)
  11. A long held vision to reclaim the reach of the Ottoman empire, turning Europe to Islam, achieving trans continental Caliphate.
  12. Radicalized Mosques in western nations
  13. And now apparently reluctance of US to accept, without further background checks, 10k of the 10M refugees running away from ISIL.

While #13 may be on the list, I think data shows recruiting maximizes with Paris style attacks, not Ted Cruz campaign stops. Since 67% of Americans are against letting refugees in (a predictable ratio normal in all past mass migrations in US), if it is a good recruiting tool for ISIL perhaps a leader might work overtime to explain why these refugees are not a threat. Given 67% means more than the GOP, perhaps widen the message. A leader might work quickly with congress to say “Your concerns have been heard, we have taken some additional measures, and we all agree on a path forward”. Supporting the bill might actually diffuse the whole debate.

The elephant in the room is why only 10k out of 10M.

But, #9 likely is the biggest issue.  A demographic boom in the middle east of young males matched with world wide unemployment in that age group, lays the foundation for recruiting youth with a idealistic message.  Perhaps the greatest failure in the middle east strategy is a failure to reform regional ecosystems to promote entrepreneurship and growth.

Source: President Obama: Stop giving in to terrorism fear – POLITICO

In this article

By the People: Rebuilding Liberty Without Permission

The American way of life, built on individual liberty and limited government, is on life support. American freedom is being gutted. Whether we are trying to run a...

605 0

The American way of life, built on individual liberty and limited government, is on life support.

American freedom is being gutted. Whether we are trying to run a business, practice a vocation, raise our families, cooperate with our neighbors, or follow our religious beliefs, we run afoul of the government—not because we are doing anything wrong but because the government has decided it knows better. When we object, that government can and does tell us, “Try to fight this, and we’ll ruin you.”

In this provocative book, acclaimed social scientist and bestselling author Charles Murray shows us why we can no longer hope to roll back the power of the federal government through the normal political process. The Constitution is broken in ways that cannot be fixed even by a sympathetic Supreme Court. Our legal system is increasingly lawless, unmoored from traditional ideas of “the rule of law.” The legislative process has become systemically corrupt no matter which party is in control.

But there’s good news beyond the Beltway. Technology is siphoning power from sclerotic government agencies and putting it in the hands of individuals and communities. The rediversification of American culture is making local freedom attractive to liberals as well as conservatives. People across the political spectrum are increasingly alienated from a regulatory state that nakedly serves its own interests rather than those of ordinary Americans.

The even better news is that federal government has a fatal weakness: It can get away with its thousands of laws and regulations only if the overwhelming majority of Americans voluntarily comply with them. Murray describes how civil disobedience backstopped by legal defense funds can make large portions of the 180,000-page Federal Code of Regulations unenforceable, through a targeted program that identifies regulations that arbitrarily and capriciously tell us what to do. Americans have it within their power to make the federal government an insurable hazard like hurricanes and floods, leaving us once again free to live our lives as we see fit.

By the People’s hopeful message is that rebuilding our traditional freedoms does not require electing a right-thinking Congress or president, nor does it require five right-thinking justices on the Supreme Court. It can be done by we the people, using America’s unique civil society to put government back in its proper box.

Source: By the People: Rebuilding Liberty Without Permission: Charles Murray: 9780385346511: Amazon.com: Books

In this article

Eisenhower’s Timeless Virtues

In office, he was disparaged on both the left and the right. Conservative pundit William F. Buckley said Ike was “undaunted by principle, unchained by any coherent ideas...

469 0

In office, he was disparaged on both the left and the right. Conservative pundit William F. Buckley said Ike was “undaunted by principle, unchained by any coherent ideas as to the nature of man and society.” To Democrats, he was the antithesis of Adlai Stevenson, whom they regarded as “the voice of a reasonable, civilized, elevated America,” in the words of liberal historian Arthur Schlesinger.

Source: Eisenhower’s Timeless Virtues – Reason.com

In this article

Washington Sets the Stage for Another Financial Crisis

….The crash of 2008 was caused by government policies and regulatory failure, including easy money policies that flooded the markets with debt. Within a decade, these policies led...

438 0

….The crash of 2008 was caused by government policies and regulatory failure, including easy money policies that flooded the markets with debt. Within a decade, these policies led to preposterous mortgage loans being issued, and massive over-leverage of government, companies, and households…..

Source: Washington Sets the Stage for Another Financial Crisis

In this article

How Modern Sweden Profits from the Success of Its Free-Market History

Bernie Sanders’s entry into the presidential race has sparked a nationwide conversation about socialism and its potential to remedy the real and perceived pathologies suffered by Americans. Source:...

454 0

Bernie Sanders’s entry into the presidential race has sparked a nationwide conversation about socialism and its potential to remedy the real and perceived pathologies suffered by Americans.

Source: How Modern Sweden Profits from the Success of Its Free-Market History | Mises Daily

In this article

Should a Cal State Fullerton math professor be forced to have his students use $180 textbook, written by his boss? 

A Cal State Fullerton math professor was reprimanded by the university after he used less expensive – and in his view, better – textbooks instead of a $180...

511 0

A Cal State Fullerton math professor was reprimanded by the university after he used less expensive – and in his view, better – textbooks instead of a $180 text written and mandated by his department

Source: Should a Cal State Fullerton math professor be forced to have his students use $180 textbook, written by his boss? – The Orange County Register

In this article

The Model UN and Climate Change Crowd Meet in Paris

A bunch of politicians, who all believe (they are not scientists so don't know how to refute) they need to control CO2, gather in Paris for a Model...

760 0

It’s almost New Years, so time for a resolution. Yes, this is the year I will reduce my CO2 emissions.

A bunch of politicians, who all believe (they are not scientists so don’t know how to refute) they need to control CO2, gather in Paris for a Model UN like conference, to settle on a non-binding target that adversely effects all the economies of the world, but if you believe the science has no measurable impact on the climate.

This non-binding agreement has more than a few obvious flaws:

  1. A country could believe COP21 is meaningful, and waste time deluded that Paris agreement fixes the problem or moves us to the next plateau. But the politicians who agreed will, overtime, leave office, replaced with politicians perhaps uninterested in the agreement. Political will has a half-life no greater than one’s time in office.
  2. This agreement seeks to end the use of a cheaper energy solution. Net of externalities, fossil fuels perhaps are uneconomical, but externalities are by their definition outside of the economic decision making process. It is unclear that a non-binding, even a binding agreement, could over 40 years motivate a country to work counter to its near term economic interest.
  3. From a game theory standpoint, it makes sense to bluff. A country like China will gladly say it will comply, and then not. In their bluff, the willful believers implement constraints for a period giving China more advantage.
  4. If it is true that climate change is due to human effects the agreed to goals will not halt climate change (See Hansen).
  5. If climate change is real, it’s getting warmer, but not human driven, this plan directs resources to CO2 reduction when resources should be focused elsewhere, like building sea walls.
  6. If the climate is not getting warmer over the long term, this is a total waste of time.

I am sure the President and John Kerry will start ridiculing Congress for resisting the Paris agreement. While it is fun to criticize Congress, maybe we should start seeing Congress as a source of common sense, as messy as it is. If you can’t convince 50% of Congress maybe the plan is not so good.

So what is a good plan? There is really only one: Reduce the cost of clean below the cost of dirty. Legislation does not create innovation. Innovation delivers more than expected for less than expected. It’s a subject of a longer post, but in my opinion the only way to control CO2 emission is to internalize its cost benefit. Carbon trading, targets, agreements, etc do not internalize these costs because each can be changed through political will faster than the capital life cycle of energy infrastructure. Anyone who truly believes man is the major reasons for climate change should focus solely on reducing cost of clean energy.

A few thought questions:

  1. Can anyone identify a predicate worldwide non-binding agreement, that works against a countries economic interest, that achieved its desired long term goal?
  2. Since all these politicians are so hot on science, as if they got better than a C in any science course, can anyone name a game theory construct that would prove the context of this agreement achieves its goal?
In this article

Join the Conversation (0)

President: Stop Giving into Terrorism Fear

Things that help ISIL grow: Substantial increase in indiscriminate UAV attacks Killing Qadaffi, freeing up Libyan weapons cache for ISIL. Where did all those MANPADs go? Very narrow...

641 0

Things that help ISIL grow:

  1. Substantial increase in indiscriminate UAV attacks
  2. Killing Qadaffi, freeing up Libyan weapons cache for ISIL. Where did all those MANPADs go?
  3. Very narrow rules of engagement, barring even bombing ISIL fuel trucks because a civilian might be driving it.
  4. Releasing $150B to ISIL enemy Iran
  5. Paris, Russian airplane, Lebanon like attacks that shows ISIL can attack others
  6. Capitulation of Iraq army when attacked by ISIL
  7. Specific anti Muslim movements in Europe, that make US anti Muslim trends look tame.
  8. Presence of US troops in theater
  9. Lack of economic opportunity for 20 year old males
  10. Promises of religious idealism, free house, electricity, food, healthcare etc – blasted out on twitter, Facebook, whatsapp, etc to unemployed disaffected youth – in mass and daily (90k tweets a day alone on twitter)
  11. A long held vision to reclaim the reach of the Ottoman empire, turning Europe to Islam, achieving trans continental Caliphate.
  12. Radicalized Mosques in western nations
  13. And now apparently reluctance of US to accept, without further background checks, 10k of the 10M refugees running away from ISIL.

While #13 may be on the list, I think data shows recruiting maximizes with Paris style attacks, not Ted Cruz campaign stops. Since 67% of Americans are against letting refugees in (a predictable ratio normal in all past mass migrations in US), if it is a good recruiting tool for ISIL perhaps a leader might work overtime to explain why these refugees are not a threat. Given 67% means more than the GOP, perhaps widen the message. A leader might work quickly with congress to say “Your concerns have been heard, we have taken some additional measures, and we all agree on a path forward”. Supporting the bill might actually diffuse the whole debate.

The elephant in the room is why only 10k out of 10M.

But, #9 likely is the biggest issue.  A demographic boom in the middle east of young males matched with world wide unemployment in that age group, lays the foundation for recruiting youth with a idealistic message.  Perhaps the greatest failure in the middle east strategy is a failure to reform regional ecosystems to promote entrepreneurship and growth.

Source: President Obama: Stop giving in to terrorism fear – POLITICO

In this article

By the People: Rebuilding Liberty Without Permission

The American way of life, built on individual liberty and limited government, is on life support. American freedom is being gutted. Whether we are trying to run a...

605 0

The American way of life, built on individual liberty and limited government, is on life support.

American freedom is being gutted. Whether we are trying to run a business, practice a vocation, raise our families, cooperate with our neighbors, or follow our religious beliefs, we run afoul of the government—not because we are doing anything wrong but because the government has decided it knows better. When we object, that government can and does tell us, “Try to fight this, and we’ll ruin you.”

In this provocative book, acclaimed social scientist and bestselling author Charles Murray shows us why we can no longer hope to roll back the power of the federal government through the normal political process. The Constitution is broken in ways that cannot be fixed even by a sympathetic Supreme Court. Our legal system is increasingly lawless, unmoored from traditional ideas of “the rule of law.” The legislative process has become systemically corrupt no matter which party is in control.

But there’s good news beyond the Beltway. Technology is siphoning power from sclerotic government agencies and putting it in the hands of individuals and communities. The rediversification of American culture is making local freedom attractive to liberals as well as conservatives. People across the political spectrum are increasingly alienated from a regulatory state that nakedly serves its own interests rather than those of ordinary Americans.

The even better news is that federal government has a fatal weakness: It can get away with its thousands of laws and regulations only if the overwhelming majority of Americans voluntarily comply with them. Murray describes how civil disobedience backstopped by legal defense funds can make large portions of the 180,000-page Federal Code of Regulations unenforceable, through a targeted program that identifies regulations that arbitrarily and capriciously tell us what to do. Americans have it within their power to make the federal government an insurable hazard like hurricanes and floods, leaving us once again free to live our lives as we see fit.

By the People’s hopeful message is that rebuilding our traditional freedoms does not require electing a right-thinking Congress or president, nor does it require five right-thinking justices on the Supreme Court. It can be done by we the people, using America’s unique civil society to put government back in its proper box.

Source: By the People: Rebuilding Liberty Without Permission: Charles Murray: 9780385346511: Amazon.com: Books

In this article

The Value of the American Entrepreneur

There is ample evidence that the share of total wealth in America held by the wealthiest Americans continues to grow – one reason for this is access.  When...

527 0

There is ample evidence that the share of total wealth in America held by the wealthiest Americans continues to grow – one reason for this is access.  When someone has net worth in excess of $100 million, the investment opportunities afforded to them include easy access to early stage venture deals, the nation’s top venture capital firms, and high-performing hedge funds.  Those with nine-digit net worth or greater are not limited to the usual slate of mutual funds, bonds, ETFs, and other products available to average investors.  Wealth buys access.

Investment in American entrepreneurs is the single most effective wealth producer the world has ever known.  American entrepreneurs solve the world’s big problems and generate tremendous profits doing so.  Want affordable health care?  Pick an entrepreneur.  Want to improve education?  Pick an entrepreneur.  Want to create jobs?  Pick an entrepreneur.  The resilience of our global economy comes from customers eager for better answers, entrepreneurs bold enough to think differently, and investors willing to fund new ventures.  Entrepreneurs make America great.  Investing in entrepreneurs makes the wealthiest Americans even wealthier.  iSelect broadens access to investment opportunities that previously were only open to the super rich.

This week it was announced that Chinese private equity firm CSC Group invested $400 million in AngelList.  CSC Group’s investment represents the largest ever reserve of funds earmarked for early stage startups.  In fact, the Wall Street Journal posits it may even represent the largest-ever investment by a Chinese private equity firm in a U.S. fund.  CSC Group wanted to invest more, but AngelList’s focus did not offer enough capacity for a larger deal.

Smart investors like CSC Group know if they invest in just one venture they will lose – but investing in a diversified portfolio of 20, 30, or more ventures achieves annual compounded returns greater than 20%.  Research and fund performance represented by the Kauffman Foundation, Cambridge Associates, and 500 Startups all reach the same conclusion.

CSC Group’s landmark investment was no surprise to iSelect.  That perhaps the largest ever Chinese private equity deal is focused on a broad portfolio of early stage startups further validates the value-creating potential of American entrepreneurship and the portfolio theory that iSelect advocates.  For iSelect, the CSC Group investment makes a lot of sense: entrepreneurs energize the world economy and the smartest investors want in at the earliest stages, capturing value before a company goes public.  Investing early allows investors to double down later once the winners in their portfolio emerge.

Modern portfolio theory teaches us that, by investing in more than one stock, an investor can reap the benefits of diversification – chief among them, a reduction in the riskiness of the portfolio.  The same applies to early stage investing: when funding 20 early stage ventures, investors have a 99% chance of at least recouping their investment.  At 50 investments, the chances of at least doubling their investment soar to 97%.  And at 500, investors have a 96% chance of at least tripling their money.

While AngelList is a great storefront for syndicating startup investment, Kauffman Foundation data clearly shows that success also requires extensive diligence and industry expertise.  Further, the assets underpinning the venture must still be fundamentally valuable and the company’s progress monitored diligently.

Silicon Valley cultivates software, IT, media and entertainment ventures – and AngelList does a great job of finding and funding these companies.  But what about everything else?  How can investors tap into the rest of America’s unique innovation engine?  After all, not every big company is built in Silicon Valley.

We estimate there is a shortfall of almost $8 billion per year in venture investment in the U.S.  It’s not that these ventures are too risky; Kauffman Foundation, et al. show how to minimize this risk through diversification.  The shortfall exists because it’s too hard for private individuals, wealth managers, and institutional investors to find, vet, and manage these investments.

Tools are need to bring accredited and institutional investment to early stage ventures in Chicago, Cleveland, Denver, Houston, Indianapolis, St. Louis… and many more places.  Why?  Because that’s where new ventures in other industries exist.  Investors should focus on ventures that cure cancer, fight fibrosis, improve agriculture, reduce costs of energy efficiency, streamline telecommunications, increase enterprise security, wrangle with logistics, and create new retail solutions.  In all cases investors should focus on firms that are customer focused and led by seasoned entrepreneurs.  Want to invest in next generation agriculture companies, it better be in St. Louis.  Want to find the smartest energy entrepreneurs?  It’s a good idea to look in Houston.  In short, investors should focus on need-to-have, not nice-to-have, opportunities.  They should invest alongside regional venture capitalists led by successful entrepreneurs and always with proven expertise.  Investors should diversify investment across companies and industries, because that’s the way to achieve higher risk-adjusted returns.  They should invest outside Silicon Valley because these locations offer cheaper operating costs, proximity to customers, excellent talent, rational valuations, and strong exit opportunities.  Just ask First Round Capital, who found their portfolio companies based outside technology hubs performed better than their coastal peers.

We live in an age with unprecedentedly new and novel ways to access deals.  CSC Group’s investment in AngelList is further proof for these alternative routes to funding.  China knows its future depends on American innovation.  US Innovation is not limited to Silicon Valley.  Investing in American entrepreneurs provides great returns, and changes the world for the better.

In this article

Should a Cal State Fullerton math professor be forced to have his students use $180 textbook, written by his boss? 

A Cal State Fullerton math professor was reprimanded by the university after he used less expensive – and in his view, better – textbooks instead of a $180...

511 0

A Cal State Fullerton math professor was reprimanded by the university after he used less expensive – and in his view, better – textbooks instead of a $180 text written and mandated by his department

Source: Should a Cal State Fullerton math professor be forced to have his students use $180 textbook, written by his boss? – The Orange County Register

In this article

Eisenhower’s Timeless Virtues

In office, he was disparaged on both the left and the right. Conservative pundit William F. Buckley said Ike was “undaunted by principle, unchained by any coherent ideas...

469 0

In office, he was disparaged on both the left and the right. Conservative pundit William F. Buckley said Ike was “undaunted by principle, unchained by any coherent ideas as to the nature of man and society.” To Democrats, he was the antithesis of Adlai Stevenson, whom they regarded as “the voice of a reasonable, civilized, elevated America,” in the words of liberal historian Arthur Schlesinger.

Source: Eisenhower’s Timeless Virtues – Reason.com

In this article

How Modern Sweden Profits from the Success of Its Free-Market History

Bernie Sanders’s entry into the presidential race has sparked a nationwide conversation about socialism and its potential to remedy the real and perceived pathologies suffered by Americans. Source:...

454 0

Bernie Sanders’s entry into the presidential race has sparked a nationwide conversation about socialism and its potential to remedy the real and perceived pathologies suffered by Americans.

Source: How Modern Sweden Profits from the Success of Its Free-Market History | Mises Daily

In this article

Washington Sets the Stage for Another Financial Crisis

….The crash of 2008 was caused by government policies and regulatory failure, including easy money policies that flooded the markets with debt. Within a decade, these policies led...

438 0

….The crash of 2008 was caused by government policies and regulatory failure, including easy money policies that flooded the markets with debt. Within a decade, these policies led to preposterous mortgage loans being issued, and massive over-leverage of government, companies, and households…..

Source: Washington Sets the Stage for Another Financial Crisis

In this article

What Does Every Startup Need?

In chapter two of Mark Twain’s The Adventures of Tom Sawyer, Tom is directed by his Aunt Polly to paint her white picket fence. It’s a Saturday morning...

424 0

In chapter two of Mark Twain’s The Adventures of Tom Sawyer, Tom is directed by his Aunt Polly to paint her white picket fence. It’s a Saturday morning and the last thing Tom wants to do is work while his friends are out on “delicious expeditions.” Being the enterprising young man that he is, Tom sets out to convince his friends to do the painting for him. Tom feigns complete engagement with his painting while his friends pass by and, sure enough, Tom’s interest in painting the fence proves contagious. Each of his friends wants to try his hand at the “awful particular” task, and they all end up trading valuable “worldly wealth” in exchange for time painting the fence. Tom reaps, among many other items, “a kitten with only one eye, a brass door-knob, a dog-collar – but no dog – the handle of a knife, four pieces of orange-peel, and a dilapidated old window sash.” All very prized possessions for a boy in Hannibal, Missouri circa 1876.

Ostensibly, Mark Twain’s story is for kids, but it also contains some valuable and transferable lessons for old folks, as well. Tom learns that to persuade someone to purchase something, he needs to make it as valuable and as desirable as possible. He says to his friends,

“What do you call work? . . . Does a boy get a chance to whitewash a fence every day?”

Tom Sawyer offered a keen insight on entrepreneurship.  What does every startup need?  Money? Technology?  No, those are good, but not sufficient.  Every company needs customers! The best entrepreneurs win customers by making a product so valuable that people start lining up to buy it. When we were growing Gridlogix in the early 2000s, being in the midwest made it difficult to raise money. So we didn’t. Instead we focused on winning large purchase orders first.  That pressure forces the company to focus on what really matters to the market.  If you can’t get the order, does anything else really matter?

While some startups have sell-able products like software, others in biotech might signal customer interest with grants or contract research.  An entrepreneur just needs to find a real customer or entity that cares enough to offer a bit of “worldly wealth.”

Instead of raising capital to find customers, entrepreneurs find customers to raise capital.

Is the entrepreneur alone in this endeavor?  No.  As part of a “Pay it Forward” culture, we each have a role.  Big companies are creating venture groups to find innovation.  However, they should first learn to be good customers, letting in the new innovations already knocking at your door.  Are your company bureaucrats saying no to entrepreneurs knocking on your front door?  Would you want to sell to your company?

If you believe, as we do, that entrepreneurs make America great, help an entrepreneur paint their fence, buy their product.

In this article

New Study Blames Community Reinvestment Act For Mortgage Defaults

While the administration maintains the CRA played no role in the housing crisis, a major new study finds the law in fact “led to riskier lending by banks.”...

401 0

While the administration maintains the CRA played no role in the housing crisis, a major new study finds the law in fact “led to riskier lending by banks.”

Source: New Study Blames Community Reinvestment Act For Mortgage Defaults – Investors.com

In this article