Here Is A Terrible But Irreconcilable Idea

Yesterday the news broke that Alderman Pawar wants basic income in the city of Chicago.  This is a horribly misplaced idea.  Interestingly, on the same day, former President Obama made a speech endorsing the idea of a basic income for everyone.

Let’s disregard the fact this is a socialist policy reminiscent of failed nations across the world.  Let’s also ignore that the US has many large government transfer payment programs that assist the less fortunate.  The cost is 65% of the federal budget, and growing.

Instead, let’s think about the core of the issue.  What’s the problem that is being solved?

Fear, for sure.  We are heading into a lot of unknown territory when it comes to innovation and jobs.  How are people going to earn a living in the future if our future is full of robots?  The answer is hard to digest.  We don’t exactly know.  However, Continue reading "Here Is A Terrible But Irreconcilable Idea"

A Metaphor For An Investor

Went to Jimmy Buffett at Wrigley last night.  He played the first ever concert at Wrigley back in 2005 and it was pretty good. It was a great concert if you were a long time fan. He played this song and I thought it was a metaphor for any investor that takes risk.

Deep in puppy housebreaking so no real time to blog this morning!

The Startup Grind at mHub

Last evening, I was invited to participate as a judge for Startup Grind.  The event was held at mHub. If you don’t know about either of them you should.  mHub is a cool spot.  A lot of people think these events are hype and don’t add to the community.  I disagree.  I don’t think they are the be all and end alls, but they give people a chance to come and get to know each other in person.

They also give startup entrepreneurs a chance to pitch to a room full of people.  It’s sort of like open mike night at a comedy club.  That three minutes in front of people might be the first time an entrepreneur has done this and that’s good for them.  If you are an entrepreneur and you get the opportunity to pitch, take it.  You will learn.

I respect people that try, even if Continue reading "The Startup Grind at mHub"

A Slight Pivot

Startups talk about pivots. Sometimes they are radical but most of the time you can think about a pivot like a person going on a long trip.  You run into unexpected construction on a road and you take a detour.

Venture funds sometimes do the same thing.  Andreesen-Horowitz recently announced a brand new fund dedicated only to cryptocurrency.  Other funds raise “opportunity funds” as their situations change.  People forget that VC funds are often as entrepreneurial as the companies they invest in.

Our fund started out as a B2B Fin Tech fund.  It still is.  We don’t invest in anything that is consumer facing. Our wheelhouse is Big Finance.  When we started out, we hypothesized that our deal flow would come from places like Chicago and New York City.  So far, we have invested in two Chicago based companies and one New York based company.

However, we have seen a Continue reading "A Slight Pivot"

Cut It Out; Chicago Can’t Win Without Champaign, Champaign Can’t Win Without Chicago

The other day, Governor Rauner made the statement that once a company gets to a point where it needs to scale, it cannot do it in Champaign, IL.  He’s mostly right.  While Champaign has gotten significantly better since I went to school there, it’s not high on the places to move for most talented tech people with choices.

I bleed orange and blue but recognize the reality.

Rauner is the incumbent Republican governor and losing in the current polling by a wide margin.  But, who knows about polls anymore?  I am not sure pollsters have their pulse on anything except the fees they charge Continue reading "Cut It Out; Chicago Can’t Win Without Champaign, Champaign Can’t Win Without Chicago"

Faux Networks

In my daily routine, I get the opportunity to chat with college students.  They are both undergrads and graduate students.  Usually, they are business school students but sometimes they are engineering students and sometimes they are just liberal arts students.  I enjoy meeting them.  I get to learn about things as much as they do so really, it is a two way street.

I always ask them how their school’s network is.

When I went on college tours with my children, every single college that we toured said they had a great network that would help your kids.  It might be possible but I doubt it.  Some networks are better than others.  In the Midwest, Notre Dame has a tremendous network.  So does Michigan.  They hew to the “blood is thicker than water” ethos.  No questions asked.

The Ivy League schools have legendary networks.  The service academies are called “ring Continue reading "Faux Networks"

Did The Supreme Court Just Save Brick and Mortar Retail?

Yesterday in a momentous 5-4 decision, the Supreme Court of the United States overturned a precedent and made new law.  It will have reverberations around the country.  It could help Megalytics, a startup our fund is invested.

The precedent they overturned was known as the “Quill” case.  Ironically, it involved a good friend of mine Steve Miller.  Steve started and runs Origin VC here in Chicago.  His family had started Quill and states wanted them to collect local and state sales taxes from customers when they sold in areas where they didn’t have a physical presence.  At the time it was really arduous to collect those sorts of taxes and would have increased the costs to the company making it extremely difficult even to execute the business.  Quill’s case paved the way for internet ecommerce.

Back then, the nascent internet technology hadn’t taken hold.  Most over the border commerce Continue reading "Did The Supreme Court Just Save Brick and Mortar Retail?"

What’s Real?

In all the excitement about fake news these days I see that most people are in two different tribes.  They see the same information and process it differently.  Sometimes it’s because of their own confirmation bias and sometimes it’s because of the way it is served up.  I am going to give you an example of that as it relates to my own city and state.

I am concerned because we cannot have a brain drain out of Chicago if we want to have an entrepreneurial community.  We need to be attracting people like a magnet.

Chicago has always had a natural draw for Midwesterners.  I think it can be a draw for people from all across the globe.  I am typing this outside on a beautiful summer day.  I am on a balcony looking at a fantastic skyline with a city abuzz.  I am blocks from a lake.

It Continue reading "What’s Real?"

How Term Sheets Build Community

One of the things that is tricky with entrepreneurship is the term sheet.  A ton has been written about term sheets and all the terms that go into them.  What I want to explore is why it is beneficial for a seed stage VC to make sure they offer term sheets that are good for everyone.  When they do it that way, successful companies will go on to seed the ecosystem.

I don’t know if you have read the book Venture Deals, but you should if you are an entrepreneur or an early stage VC.  They cover term sheets extensively in the book.  We encourage every entrepreneur that we speak with the read it if they haven’t read it.

Seed deals should not cost a lot of money when it comes to legal.  I am disappointed that more rounds are not priced at seed.  Two of the largest reasons Continue reading "How Term Sheets Build Community"

The Day The Music Died

As the baby boomers, and the generation ahead of the baby boomers dies off, their music dies off with them. Music back then was a product of a different time.  Top down distribution.  Hitmakers.  There was zero opportunity for a person like Chance the Rapper to do what he did. I don’t know what music will look like in the future. There is so much noise in it now that it’s pretty hard to do what Chance did.

You wonder, will the sounds of the old time musicians and crooners like Frank Sinatra become simply passe and never heard again?  Certainly, classical music is that way.  Certainly, the swing music of the 30’s-40’s is gone.  Certainly, jazz is not what it was.  I wonder as the old blues legends die off if the blues will be the same way.

Yesterday, an old Chicago blues legend Eddy Clearwater passed away.  He Continue reading "The Day The Music Died"

Crypto and Free Markets

Yesterday the government released the unemployment numbers.  Unemployment is going down.  Our economy is on an upswing.  I think a lot of the things Trump is doing is moving the economy forward in the short term.  I think there are some things he is doing that could hurt us in the long term.

I am a very strong believer in free markets.  I bathed in them daily for 25 years on a trading floor.  I have witnessed, and felt to my core how they work.  I don’t think the rest of America is with me on their faith or their knowledge of free markets.  The reaction to the financial crisis and the way we think and talk about them now tells me there is a lot of catching up that has to be done.

I came across this letter from Brian Wesbury to Arthur Brooks.  Brian Wesbury is an economist Continue reading "Crypto and Free Markets"

The Rehab

Thought I’d change up the blog today and talk about what was going on in my life.

We are rehabbing a place in Chicago.  Slowly but surely.  It’s our fourth rehab.  It’s our third in an older home.  We rehabbed before with kids in mind, but now we are not worried about that since they are gone.  My wife is really good at it by now.

We put in A/C over the last couple of weeks.  When we bought the apartment it had a window a/c unit.  It’s an old building (over 100 years old) and we put in Mini-Splits by Mitsubishi.  They work great and are quiet.  I highly recommend them over space-pak in older units.  I also couldn’t imagine living in Chicago without air conditioning.

We have a/c. Second step of rehab

A post shared by Jeff Carter (@pointsnfigures) on

Last year Continue reading "The Rehab"

Can’t Put My Finger On The Problem

Part of living in a city is just co-operating with one another.  Another part is that you know when a mass of people live together, there are going to be some problems.  There will be some violence.  You have to be able to tolerate a certain amount of it.

I grew up a suburban kid.  We didn’t go into the city much.  If I needed to find a game of basketball, I could go to plenty of suburbs. They weren’t all lily white.  I could roll into Maywood at 10th and Washington and I’d be the only white kid there.

But it was safe.

Occasionally, we’d have arguments. Kids playing competitively on a playground will do that.  But, no one was in danger of a knife being pulled on them or a gun being pulled on them.  No one was in danger of a stray bullet whizzing across the playground. Continue reading "Can’t Put My Finger On The Problem"

What’s The Upside And Downside?

Coinbase is opening up a Chicago office.  Smart move by them.  Chicago is the best place in the entire world to find human capital talent for Fin Tech.  It’s not happenstance that Max Levchin grew up here, went to the University of Illinois and created PayPal.

If you are operating a B2B Fin Tech company and trying to do it outside of Chicago, you are operating with one hand tied behind your back.

Two nearby universities churn out all kinds of fin tech talent.  Chicago Booth is respected across the world for it’s graduates who get MBAs concentrated in finance.  There is also the legendary economics department at the University of Chicago.  The University of Illinois Gies College of Business has more CFOs of the Fortune 500 companies than any other school.

The largest exchange in the world is in Chicago, CME.  The largest options market in the world is Continue reading "What’s The Upside And Downside?"

Ycharts +TD Ameritrade

The news came out last week but it is worth highlighting. Ycharts integrates with TDAmeritrade now on their Veo One platform.  Ycharts is a B2B Fin Tech company I invested in back in 2009.  Their target market is RIA’s, wealth managers, hedge funds and other firms like that in the investor universe.

Ycharts is like a Swiss army knife for investors.

I have used it successfully to pick strike prices for options trades.  It is the best research terminal on the web.  It’s not for moment to moment trading. It’s an example of the quiet things going on behind the wall that you might not notice because it’s not on your phone.  But, they add a lot of value.

 

Learn At Lunch: Cryptocurrency

On June 1, I will be co-hosting a learn a lunch with a bunch of colleagues at the University Club in Chicago.  We are starting a new group in the club.  The group is going to be dedicated toward educating people on issues in financial services and technology.  It’s not a stock pickers club.  Lunches like this are not expensive. Typically it is just $20-$30 bucks.

Chicago has a wealth of talent when it comes to finance.  Just in my little group of co-hosts, we have one of the top SEC attorneys in the country, a hedge fund manager, an accountant that has 40 years of experience and a top fin tech attorney when it comes to payments and exchanges.

A number of years ago, James Koutoulas and I did an impromptu lunch on exchange clearing and the MF Global situation.  It was well attended and it was liked.

Our Continue reading "Learn At Lunch: Cryptocurrency"

Headed to Wall Street

Today I am flying to New York City.  If you are attending Howard Lindzon‘s Stocktoberfest East, hopefully I will see you there.  I am looking forward to it.

As a person who is not of Wall Street I have always looked at it differently than a lot of people.  I grew up in the pits of Chicago.  We traded our own dough and didn’t use OPM.  We had a lot more in common with Roman gladiators than the suits in NY.  The markets were different, cleaner in my opinion, with less conflicts.  I never understood the whole market maker system.  We prohibited order fillers from even trading, much less taking the opposite side and “adding liquidity” to the market when they felt the need.

At the same time, NYC is one big gigantic capital market.  Only a couple of other cities on earth might rival it, London and Continue reading "Headed to Wall Street"

Standards Are Not Bad-But They Do Cost Money

Was reading how a16z and USV met with the SEC and CFTC over regulation of cryptocurrency.  This is not nefarious.  It’s good to have this sort of dialogue.  One of the interesting parts of the piece I linked to is this:

The group wanted formal assurance from regulators that their products would be exempt from SEC oversight, arguing the tokens aren’t investments but products that can be exclusively used to access services or networks provided by startup companies, people familiar with the meeting said.

That would allow startups to sell tokens broadly to investors without having to provide regulated disclosures such as financial statements and elaborate descriptions of their business. The group said it wouldn’t object to the SEC intervening if a token issuer committed fraud, the people said.

SEC officials have privately expressed skepticism about granting such a broad exemption, the people said. The SEC is more likely to Continue reading "Standards Are Not Bad-But They Do Cost Money"

What Does Chicago Got?

The past few weekends, I have been out to dinner with friends my age.  They are all contemplating rearranging their lives.  Kids are gone and the responsibilities of work are changing.  Many of the people I hang with that are my age are still driving hard.  They aren’t contemplating retiring.  The thing that is driving their decision making is the total fiscal distress the Chicago Machine has put the state of Illinois and city of Chicago in.

Many of my friends are either moving away, or redoing their lives so they are not Illinois residents.  Ask any local wealth manager and they will quietly tell you that people are leaving and many are taking their businesses with them.  It’s especially acute with independent knowledge workers who have capital.  In big law and accounting firms, partners will fly in rather than domicile here.  The evidence is in real estate prices and Continue reading "What Does Chicago Got?"

Do We Need Artists?

Last night I was at Charles Adler’s first Demo Day for the workspace he created called Lost Arts here in Chicago.  It’s a pretty cool space and idea.  If you don’t know Charles, he was one of the founders of Kickstarter.

Ironically last night he spoke a bit about Kickstarter. But, he didn’t speak about Kickstarter.  Instead he talked about what led up to the group coming together and founding Kickstarter. There was both mental and experiential preparation.  In some cases, 10 years of it.  Finally, the primordial soup came together and an idea turned into a company which turned into a sort of community.

I listened to the pitches.  They were all different but the similarity that ran through them is they were using some sort of “art” to solve a problem.  In some cases, it’s something that had bubbled up inside the entrepreneurs for years prior to them Continue reading "Do We Need Artists?"