A Nice Fire

Living in the city, I miss having a fireplace.  We never had one when I was growing up.  In our first house we bought, we had one.  When we built a house we had two and I wanted to figure out how to do more.  Something about humans and fire. Mesmerizing.

In our Geneva house, I would roast ducks occasionally over the fire. I imagine the copper tubing I put to hang the ducks over the fire is still there. You could smell the duck fat coming up the chimney.  It was heavenly.

Canadian air started to creep into our cabin this morning so I made a fire to take the chill off.

 

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Are Companies Responsible for Employees?

Senator Elizabeth Warren doesn’t think they are and she’s proposing a new bill to put in regulations that would make sure they are.  She wants to establish a new “federal corporate charter” for companies larger than $1B.

Clearly, she detests and abhors Milton Friedman.  I wish Friedman were alive to debate her. He would do so and relish the opportunity.  He would eviscerate her points one by one with logic, smiling all the way.

Here are her points:

In the four decades after World War II, shareholders on net contributed more than $250 billion to U.S. companies. But since 1985 they have extracted almost $7 trillion. That’s trillions of dollars in profits that might otherwise have been reinvested in the workers who helped produce them.

Before “shareholder value maximization” ideology took hold, wages and productivity grew at roughly the same rate. But since the early 1980s, real wages have Continue reading "Are Companies Responsible for Employees?"

It’s Not Just Paying Rent, It’s Forced Confiscation

Yesterday was chatting with a friend who lives in Lakeview.  It’s a neighborhood north of the Loop in Chicago.  Wrigley Field is in Lakeview.  They just got their new property tax bill.  

They bought the place four years ago.  The tax bill was $11,000, which isn’t cheap.  It’s a condominium.  It was just re-assessed and the new tax bill is $33,000.  

Table shows CPS’ property tax revenues from FY1991 through FY2019: https://t.co/UWKeWpLK02 pic.twitter.com/Q1cXrzxMUh— The Civic Federation (@CivicFederation) August 13, 2018

Uh, no one’s income went up by that and the rate of inflation was pretty tame during that time.  

My friend Mark Glennon at Wirepoints has been all over this for a while.  I think most Chicagoans are okay paying a bit more in tax than most people.  We live in a city.  Cities have more needs than rural areas.  The tax bite Continue reading "It’s Not Just Paying Rent, It’s Forced Confiscation"

Best Advice You Ever Got

The other day on Twitter, Gies College of Business Dean Jeff Brown asked “What is the best piece of advice you ever been given?” Here is his tweet.

I’m in the mood for some positivity on Twitter. So, what is the best advice you’ve ever been given?

Mine: “presume good intentions.”— Jeffrey Brown (@IlliniBizDean) August 12, 2018

I like that Dean Brown presumes good intentions.  I do that too when I first meet someone.  It makes life a lot nicer when you don’t walk around with a cynical or defeatist attitude all the time about other people.  That makes you surly. Presuming good intentions keeps you positive.

My best piece of advice came from my father and other coaches I interacted with throughout my life.   My father was a coach.  It’s three simple words.

“Never give up.”

It came at me in many many ways and Continue reading "Best Advice You Ever Got"

Routers and Modems

We have fiber internet at our place in Minnesota.  It’s super fast.  We use an Eero modem for wifi.  We have had some crashes recently and we think it’s the router.  They gave us a router when they set it up.  It’s not one we bought.

This is not my forte.  

What’s the best fiber router out there for the best price?  Hard to know from searches.  

The Revenue Problem

Seed stage investing is so hard.  Needle in a haystack hard.  I was thinking about what floats a person’s boat when it comes to the first round of investing.  In the Midwest, it’s all about revenue.  It might be the first question an entrepreneur gets.  

In the Bay Area, sometimes it’s not a question.

Who’s right?  Not an easy answer.  With what we invest in revenue is a proof point.  Usually an entrepreneur is solving a pain point.  People are willing to pay to solve it.  I was involved with one business and we asked the entrepreneur if they were getting price as an objection to making a sale.  The company wasn’t so the advice was to raise their price.  With other businesses it is not that simple.

I do think that when you get older, you tend to look at businesses a lot differently than when you were Continue reading "The Revenue Problem"

More Kitty Kitty

This whole mountain lion thing creeps me out a bit though it probably shouldn’t. I guess it’s because we have a new puppy who is having a great time bounding around up there. He doesn’t stray right now but you never know.

To tell you the truth, a bear could simply just show up at any time so it pays to be wary. Yes, I do have a weapon with me and my wife just ordered pepper spray.

Yesterday my wife made this video. This is not Ted Nugent Cat Scratch Fever. Those scratches are pretty deep into the tree. If you have ever tried to scratch a tree, you would understand that cat is pretty powerful and it’s claws are sharp. It’s at a place about 100 yards from our place. The lady that owns this cabin puts out a lot of corn everyday. That corn attracts ducks.

She Continue reading "More Kitty Kitty"

Caps and Supports Make Markets Gum Up

This is dumb.  New York just capped the amount of licenses that Uber and Lyft can have.  It will cause the rates that NYC people pay for Uber and Lyft to go higher and it will help the cab companies compete.

Here is what a price ceiling does to a market:

The demand for licenses will outstrip the supply.  There will be dead weight loss in the market and fewer drivers and passengers will get served.  This is an example of regulation that shouldn’t be.  Regulation like this encourages bad behavior, not curb it.

Now, crony capitalists will find ways to favor their best politician and get a leg up on licenses.  Bootleg cab companies will startup and work under ground.

It doesn’t surprise me that some drivers wanted the regulations.  Of course, if you already have a license you want to limit competition so you can drive your Continue reading "Caps and Supports Make Markets Gum Up"

Health Tech Conference in Chicago

Chicago’s startup community has made a lot of progress in medical startups over the last few years.  There has been a good emphasis and my friend Jordan has a dedicated fund for medical seed stage startups.  I am not a med tech investor, but I am very supportive of the community.  We talk a lot about changing lives with different startups and I think medical startups offer you the most tangible evidence of that.

There are a lot of resources for med tech in Chicago and the surrounding area.  Labs, wet labs, bench space. Chicago Innovation Mentors does a great job mentoring and fostering small companies.  The University of Illinois in Champaign just started its first ever, and the US first ever, medical school dedicated to engineering.  There is a cutting edge Jump Simulation lab in Peoria, and another in Champaign.  We have a couple of top med schools and Continue reading "Health Tech Conference in Chicago"

The Crypto Pump and Dump

Does it surprise anyone that there are traders doing “pump and dump” in crypto?  It happens in stocks and other heavily regulated asset classes from time to time.

Since it’s happening in crypto, it doesn’t mean trading should end in crypto.  It just means that it needs to come out of the dark and be more transparent with regulation that forces transparency.  One of the things that will hurt the crypto industry is disenfranchising retail investors.

My lawyer friend Pat Daugherty of Foley and Lardner used to be an SEC regulator.  He is part of a group that leads a lunch and learn Fin Tech group at the University Club of Chicago.  In that group we don’t pick stocks, but we talk about issues in Industrial Fin Tech or Big Finance.   One of the things Pat has driven home over and over again is that the SEC cares deeply Continue reading "The Crypto Pump and Dump"

A Big Taste of The Wild


Not the cougar we saw, this is a stock photo

In the summer, I spend some time in northern Minnesota.  Grand Marais is the closest town. It was rated the “coolest small town in America.”   I have been coming up here since about 1974.  My grandfather was in the US Forest Service, and he built a cabin on a lake.  We bought and rehabbed the cabin next door.

17 ft away from the lake

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One of the great things about our place is we have some of the fastest internet service in the country.  We have fiber right to our door.  That means I can do a lot of my job up here except meet with people in person.  If people want to meet and they come up here I will buy them a Continue reading "A Big Taste of The Wild"

Compete Compete Compete

You have to want to compete if you are going to be a startup entrepreneur. If you don’t like competition, don’t even think about doing it.  Go work for someone else.

Competition is underrated today.  Kids are raised to think they are all “special” and everyone gets a trophy.  Each human has an attribute that is indeed special but you have to spend a lot of time figuring out what it is.  Every kid on the soccer field isn’t special and as a matter of fact it’s rare to have even one special kid in an entire league.

Brian Urlacher played for the Chicago Bears.  I saw him play a bunch.  I couldn’t believe how fast he was.  A friend of mine played middle linebacker for the Bears.  His name was Tom Hicks and he started in the mid-70’s. After Butkus and before Singletary.  He wore #54 too!

I was Continue reading "Compete Compete Compete"

A Regulatory Sandbox

Yesterday Trump Treasury Secretary Steve Mnuchin put out some new policy.  The Trump administration is embracing Fin Tech startups.  This is good for the fin tech world and good for American citizens.  I am sure Trump haters will find a way to twist it into something nefarious.

From the Wall Street Journal article I linked above:

The Treasury Department in a report recommended that regulators adopt changes it said would better support such financial companies. It recommended a “sandbox” giving regulatory relief to startups; encouraged the federal consumer regulator to rescind its payday-lending rule; pushed for a fresh look at rules governing fintech investments by banks; and endorsed an effort by nonbank lenders like LendingClub Corp. to ease the resale of loans.

The regulator of federally chartered banks also said it would start accepting applications from fintech firms “effective immediately,” opening the door for those firms to receive charters that Continue reading "A Regulatory Sandbox"

Our Investment in Holberg Financial

We met Joe Holberg through Rob Topping.  Rob is another Chicago investor.  I never asked Rob how he met Joe but my guess is it was through the Michigan network since they are both alums.

Joe grew up in western Michigan.  He paid his way through school and went on to work for Teach for America and Google.  One day, he woke up with an idea, a cell phone and a computer and started Holberg Financial.  Ironically, my father spent his teen years in western Michigan.  I still have some family there in Three Rivers.

Holberg Financial is a financial health and wellness platform that helps employees reduce financial stress. 85% of Americans are financially stressed and 62% have less than $1,000 in savings. HF is 100% free to employees and 100% unbiased since they don’t sell data, products, or financial services. They just get people the unbiased info Continue reading "Our Investment in Holberg Financial"

These Maxims Are Always True

Barry Ritholtz published this interview with Warren Buffett.  It was Buffet’s first ever television interview.  The interview was in 1985.  Berkshire Hathaway started in 1962.

The video is well worth watching. Some gems:

“When you buy a company if you are worried about the stock market opening tomorrow then you aren’t investing. You shouldn’t worry if the stock market isn’t going to open for the next five years”-this is long focus, not short term focus. Fama would tell you the same thing about investing for retirement.

“Stock prices don’t tell you about how the business is run”-True. They tell you the sentiment of the market given all the public information available.

“I don’t have to play every game”-Buffett focuses on what he knows.

I think what’s interesting about Berkshire, is the first investment he made failed.

In 1962, Warren Buffett began buying stock in Berkshire Hathaway after noticing a pattern Continue reading "These Maxims Are Always True"

The Decentralized Exchange

The crypto world sometimes takes things to extremes and pushes the envelope. I think this is okay. After all, when you take a serious study of economics you always look at extreme cases and what happens at the margin. How much does it cost to make one more? How much revenue can I generate by selling one more?

I am appreciative of the framing and view that people advocating for decentralized exchanges are taking. There is a lot of power concentrated inside an exchange. It’s more than just the data. On the SEC side, there is listing requirements. There are transparency requirements. There are plenty of other rules and regulations that turn over power to centralized exchanges. On the CFTC side, it’s about clearing. Because exchanges own their own clearinghouses, they have an incentive to innovate and respond to customers. But, at the same time they have a lot of Continue reading "The Decentralized Exchange"

Your School

Fred Wilson wrote a post today about where you went to school and the VC biz. He’d like to see some things change and he’d like it sooner rather than later. I don’t disagree but I also know that inertia, network effects and networks are hard to change.

Fred’s post came out of Richard Kerby’s post on Medium. My friend Rick Zullo is partners with Richard and was tweeting about it yesterday. They have a VC firm in NYC. Jason Rowley of TechCrunch wrote a series of posts about where VCs went to school and what they studied.

Unfortunately, it does matter.

It’s reflected in the cost of tuition and the difficulty in getting in. There is only one Stanford. There is only one Harvard. I think it will change but change will be slow. There are factors outside of network that bear on the reasons why.

In my own Continue reading "Your School"

Just Do One

Sometimes it’s overwhelming to a startup when they have several different projects they can do. All of them are staring them in the face. All of them seem meaningful. All of them seem like they will bring something back to the company.

Yet, they sit there on the shelf.

Often, it’s hard to decide what to do. Where do I start? What if I start this one and then the other one would have been the better choice?

Best to just start doing one. Do the one that you rank which has the highest return. The other ones will always be there.

Focus never killed a startup

We Lost Internet

When we rehabbed our place up here in Grand Marias, MN, we put electricity and internet into it.  By a freak, our lake has fiber internet and it’s super fast.  We got up here on Friday and the internet was gone.

Fortunately, we have cell service that works.  Only one provider works here on our lake, Verizon.  We have tried other ones and they don’t.  I am writing this with a cup of coffee next to the lake on an iPad tablet.

Turns out, there was a power surge and it fried our router.  I made the switch to Eero routers last year.  I use one up here and I use them in my apartment in Chicago.  Sam Rosen of Deskpass turned me on to them.  They are great, easy to set up and a lot more trouble free than the Apple ones I was using. By the way, I Continue reading "We Lost Internet"

Facebook Crash Didn’t Crash Everything

Facebook crashed last week.  The numbers are astounding.  But, the company is still in business and it’s not laying off anyone.  They are resilient.   The drop hurt the $QQQ, and it certainly affected companies like Twitter $TWTR.  Twitter is trying to get rid of fake robot accounts too.  But, a lot of the tech stocks were unaffected.

I think those are good developments.  I don’t think when those companies were started the founders envisioned people doing any nefarious stuff or being fake on their platforms.  For most of us, it’s hard to even imagine setting up a fake profile and attacking people or causes with it.

By the way, even though the Russians and foreign entities created fake profiles, it didn’t affect the outcome of the election.  Social media is powerful, but not that powerful.  At some point, it does come down to candidates.  Hillary wasn’t a very good Continue reading "Facebook Crash Didn’t Crash Everything"