Airbnb and NYC

There is a bill in front of the NYC City Council called Intro 981 that will impose reporting requirements on Airbnb and their hosts in NYC. There will be a public debate on that bill this coming week.

The backdrop here is the growing housing affordability crisis in NYC and the idea that Airbnb is a significant contributor to it.

While I am not an expert in the economics of housing, I have lived in NYC for the past thirty-five years (my entire adult life), and my wife and I are also landlords in several of the neighborhoods in Brooklyn where rents have been rising most quickly. I have a layman’s understanding of the issue and an on the ground feel for it.

It is my view that we have a fundamental supply and demand problem at work in the rapidly gentrifying outer boroughs of NYC (most acutely in Brooklyn,

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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?"

The Parent Child Relationship

It is fathers day today. And I thought I’d write a bit about something that is really bothering me.

I’ve come to terms with a lot of what is going on in the US federal government and our political system. I see it as a natural swinging of the pendulum. Many on the right think we went too far left under Obama. Many on the left think we have gone too far right under Trump. In time, Trump will be history and we will undo all of this nonsense he is putting in place. So is the way of politics and government and every time something happens in DC that bugs me, I think “this too shall pass.”

But, this policy of separating children from their parents at the border really bugs me. The NY Times has a good report up on their homepage right now about how we got

Continue reading "The Parent Child Relationship"

Taxation Of Carried Interest

The issue of how to tax carried interest, the profit sharing interests that VCs, Private Equity firms, and Hedge Funds receive as compensation for generating returns to their investors, is in the news again.

This time it is not a debate at the Federal level, but at the state level. There are carried interest taxation bills under discussion in California, Illinois, Maryland, New Jersey, New York, Rhode Island, and possibly other states that I am not aware of.

My view on this issue is simple and I’ve stated here publicly and regulary since mid 2007.

If you are being paid a fee for managing other people’s money and have no capital at risk on the carried interest, I don’t understand how it can be considered a capital gain.

It may be good economic policy to incentivize people to manage other people’s money and maybe there should

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Regulation and The Retail Investor

One of the things that came out of the lunch we did at the University Club the other day was the focus of the SEC. There are several agencies and independent organizations that regulate finance and the SEC is at the top of the pyramid.

I have spoken to both SEC and CFTC regulators on cryptocurrency. They seem to be working together and are not engaged in turf battles. Right now, they say that’s the case and you have to take them at their word. In past engagements, like the CFMA Re-authorization in 2000, it was a brutal bare knuckle battle between agencies and the industries they regulated.

Here are a couple generalizations.

When we think about markets the CFTC regulates, they are not targeted to retail investors. They exist for the risk management and risk transfer of professional investors and big time industrial organizations. That requires a different touch Continue reading "Regulation and The Retail Investor"

Entitlements Consume The Federal Budget, Not Defense

There is a misnomer out there about government budgets. They don’t work like a family budget. Politicians have used the family budget to try and illustrate how off the rails government budgets are. However, families can’t really sell bonds and tax the way governments can.

When you hear that someone “cut the budget”, most people assume that spending is going down. Usually with governments it means the rate of spending has gone down. It might have been budgeted to go up at a rate of 5% but now is only going up at 2%. The spending is still going up.

I remember seeing Mary Meeker’s slide deck on the future of the internet a few years ago. It’s always full of a lot of information that might help you build some correlations or opinions on things. One slide stood out to me. It was that entitlements consumed over 60% of

Continue reading "Entitlements Consume The Federal Budget, Not Defense"

Entitlements Consume The Federal Budget, Not Defense

There is a misnomer out there about government budgets. They don’t work like a family budget. Politicians have used the family budget to try and illustrate how off the rails government budgets are. However, families can’t really sell bonds and tax the way governments can.

When you hear that someone “cut the budget”, most people assume that spending is going down. Usually with governments it means the rate of spending has gone down. It might have been budgeted to go up at a rate of 5% but now is only going up at 2%. The spending is still going up.

I remember seeing Mary Meeker’s slide deck on the future of the internet a few years ago. It’s always full of a lot of information that might help you build some correlations or opinions on things. One slide stood out to me. It was that entitlements consumed over 60% of

Continue reading "Entitlements Consume The Federal Budget, Not Defense"

Trump, Irrationality and Game Theory

I have been openly critical of Trump as a president going back to before the election. While I want radical change I do not believe the price for this ought to be going backwards on foundational issues such as the rule of law, press freedom and science. Nonetheless it has been fascinating to observe how Trump’s potential or actual irrationality has opened the door for progress on some issues that were previously deemed intractable, such as North Korea.

It is well known that even in relative simple games, such as repeated prisoner’s dilemma the set of sustainable equilibria grows significantly when there is some possibility of at least one of the actors being irrational (some of the time). In this regard, Trump is a stark contrast to his predecessors such as Obama, Clinton and the Bushes who cultivated an image of themselves as rational actors. For an opponent such as Continue reading "Trump, Irrationality and Game Theory"

Trump, Irrationality and Game Theory

I have been openly critical of Trump as a president going back to before the election. While I want radical change I do not believe the price for this ought to be going backwards on foundational issues such as the rule of law, press freedom and science. Nonetheless it has been fascinating to observe how Trump’s potential or actual irrationality has opened the door for progress on some issues that were previously deemed intractable, such as North Korea.

It is well known that even in relative simple games, such as repeated prisoner’s dilemma the set of sustainable equilibria grows significantly when there is some possibility of at least one of the actors being irrational (some of the time). In this regard, Trump is a stark contrast to his predecessors such as Obama, Clinton and the Bushes who cultivated an image of themselves as rational actors. For an opponent such as Continue reading "Trump, Irrationality and Game Theory"

Trump, Irrationality and Game Theory

I have been openly critical of Trump as a president going back to before the election. While I want radical change I do not believe the price for this ought to be going backwards on foundational issues such as the rule of law, press freedom and science. Nonetheless it has been fascinating to observe how Trump’s potential or actual irrationality has opened the door for progress on some issues that were previously deemed intractable, such as North Korea.

It is well known that even in relative simple games, such as repeated prisoner’s dilemma the set of sustainable equilibria grows significantly when there is some possibility of at least one of the actors being irrational (some of the time). In this regard, Trump is a stark contrast to his predecessors such as Obama, Clinton and the Bushes who cultivated an image of themselves as rational actors. For an opponent such as Continue reading "Trump, Irrationality and Game Theory"

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"

Is This The Way You Want It To Be?

When I was in California, I met a lot of people.  We spent a solid two weeks in Silicon Valley and two weeks in San Francisco.  Sometimes it was organized and sometimes it was just the randomness that happens.  In some cases, I was actively seeking out to find something that was unfamiliar or different from my Midwest bubble.

One of the people I met was Aaron Ginn.  He started the Lincoln Network.  We had lunch together.  Aaron is from Texas.  He moved to Silicon Valley because he is a technologist.  When he got there, he discovered that the attitudes of a large majority of Silicon Valley people can be stifling.

We are seeing that play out today.

Google, Facebook, and Twitter have been active at not only discriminating against conservatives in their communities but at discriminating against conservatives in their own organizations.  Lawsuits have been filed. Heck, Continue reading "Is This The Way You Want It To Be?"

Primary Day in Illinois

Don’t forget to vote.  Good elections in lots of races no matter if you are a Republican or Democrat.

If you are in the 10th district and are pulling a Republican ballot, vote for Dr. Sapan Shah.  He’s a healthcare entrepreneur and a doctor and a lawyer. Isn’t that the kind of guy you want figuring out healthcare issues and policy in Washington?  He also is pledging to term limit himself to two terms in the House because he believes strongly in citizen government instead of career politicians.

I met Sapan via Hyde Park Angels in Chicago.  He started a healthcare business.  While he was running that, he started to invest in other entrepreneurs.  He is exactly who we need in Washington.

Of course, in Chicago, vote early and often.  I woke up this morning and felt a breeze coming out of the cemeteries.

 

The Promise Of Parkland

This post is not about the tragedy that happened at Parkland or the gun safety debate that has been re-energized by it. Those are both worthy topics but I’m not opining on them today.

I do hope that this tragedy, among so many like it, will result in meaningful changes in our society in terms of how we protect our children in school and also how we allow responsible and healthy people to own and secure their weapons.

What I am going to opine on is how Parkland is re-shaping the debate about how social media and technology more broadly is impacting our culture, our collective conversations, and our politics.

In the beginning, the tech sector believed, and told everyone, that connecting the world via technology was going to be great, a technological utopia as it were.

That, of course, turned out not to be true and what we have

Continue reading "The Promise Of Parkland"

The Square and the Tower: Networks and Power, from the Freemasons to Facebook

I listened to Sam Harris talk to Niall Ferguson yesterday on Sam’s Waking Up podcast.

Niall is a historian, an author, a journalist, and an academic.

He has just published a new book on a topic that is near and dear to me, USV, and many of you; networks and hierarchies, and how these two forms of information flow and management have impacted society over the last five hundred years (or so).

The book is called The Square and the Tower: Networks and Power, from the Freemasons to Facebook.

I bought it for our Kindles today and will get into it asap. But just hearing Niall talk about the ideas in the book tells me that this is going to be an important read for many of us.

We may think that the power of information networks to shape society is a new thing (Facebook, fake news, Trump, etc, etc)

Continue reading "The Square and the Tower: Networks and Power, from the Freemasons to Facebook"

Some Fake News In Illinois

There is a pretty heated governors race in Illinois.  The Democratic primary is heating up and so is the Republican primary.  Illinois is in really, really, really desperate shape fiscally.  My state resembles Puerto Rico.  As I have said previously, raising taxes isn’t the answer only bankruptcy is.  Mark Glennon at Wirepoints does a great job covering all of it.

I was alerted to some fake news that might get traction in Illinois.  I decided to write about it.

I was alerted to it by a friend who moved from Illinois to Florida to escape the super high property taxes and other taxes in Illinois.  He asked me if I had seen it and I hadn’t.  I read through the site and didn’t think it was true.  However, the way it is presented with actual legal documents makes is smack with some authority.  To someone who is uninformed, it might Continue reading "Some Fake News In Illinois"

When Confirmation Bias Shapes Your Knowledge

How many people think Tulipmania was one of the first recorded behavioral economics financial disasters? Here is a quote from the crowd sourced Wikipedia page on the event.

Tulip mania (Dutch: tulpenmanie) was a period in the Dutch Golden Age during which contract prices for some bulbs of the recently introduced and fashionable tulip reached extraordinarily high levels and then dramatically collapsed in February 1637.[2] It is generally considered the first recorded speculative bubble;[3] although some researchers have noted that the Kipper und Wipper (literally Tipper and See-saw) episode in 1619–1622, a Europe-wide chain of debasement of the metal content of coins to fund warfare featured mania-like similarities to a bubble.[4] In many ways, the tulip mania was more of a hitherto unknown socio-economic phenomenon than a significant economic crisis. And historically, it had no critical influence on the prosperity of the Dutch Republic, the world’s leading economic Continue reading "When Confirmation Bias Shapes Your Knowledge"

“What Unites Us” —Important Lessons from @danrather at the #UpfrontSummit

“The institution of a free press in America is in a state of crisis greater than I have ever seen in my lifetime, and perhaps in any moment in this nation’s history.” — Dan Rather

I sat down to interview Dan Rather at the 2018 Upfront Summit about his outlook for our country one year into the Trump presidency. The interview was conducted around the thesis of Dan’s newest book, “What Unites Us,” which is a must read. You can watch the interview here or in the embed below. It’s truly an inspirational listen and there are some insightful lessons about democracy itself.

If you don’t know, Dan Rather was a new journalist for CBS News for 44 years including 24 years as the anchor of CBS Evening News. He was a pioneer in reporting the civil rights struggle, Vietnam, Watergate, Iran-Contra, The Gulf War and so many more historical moments in our history.

“What Unites Us” is a concise reflection of what it means to be an American and the common set of values we hold even in a world in which we feel so divided. You can order it here.

As the title implies, Rather seeks to find the strands that unite us rather than divide us but a lot of our interview and a lot of what Dan talks about publicly is about how much is at stake with the direction of the Trump administration. I’d encourage you to watch it — it is just 25 minutes — because Dan Rather is still so eloquent with his words and thoughtful in his outlook.

Dan told me that his goal in continuing to publish (you should follow him on Facebook if you don’t already) and his goal with the book is that he realizes that he is now in the latter years of his life (Dan is a very cogent and capable 86 years old) and he wants to find a way to collaborate with young entrepreneurs today to get out the messages in the world about the things we have in common and the importance of liberal democracies and tolerance.

“I understand that my time to shape and help this world is passing … I hope now to inspire others to love this country, to pledge to work hard to make it a healthier and more just place to live. I believe strongly that the core tenets I love most about this nation can be a foundation for commonality and strength once more.” — Dan Rather in “What Unites Us”

His media organization is called “New and Guts” and if you think you can help Dan spread messages that unite us please reach out to me and I’ll connect you with his organization.

In the interview, I asked Dan about his statement, “the institution of a free press in America is in a state of crisis greater than I have ever seen in my lifetime, and perhaps in any moment in this nation’s history.”

Rather worries, as do I, about the destruction of norms in our country because we can disagree about policies or even about the leaders we want but when you attack the fundamental role that the media plays in our society then you undermine the potential existence of a liberal democracy itself. The pillars of democracy require the acceptance of and trust in our media and our first amendment rights to free speech.

I give you some of Dan’s quotes talking about the current state of the Trump’s hostility towards the press.

“Even with President Nixon, he never said such things as, ‘the press is the enemy of the people.’
This is not normal. This is unprecedented.
(His goal is) destroying one of the institutions that is responsible for checks-and-balances on his power.
This is the mark of an autocratic regime.”

Rather talks about the administrations efforts to confuse nationalism with patriotism and Trump’s willingness or desire to descend into extreme extreme economic, racial and religious nationalism.

There is an effort on behalf of his party to make it seem normal, that “every President has these reactions to the press or institutions — and maybe Trump just takes it a little bit further.”

“This isn’t normal. This is a very big deal.”

Dan and I talked about a book we both loved but also feared, “In the Garden of Beasts” that profiled the rise of Nazi’s in Germany in their earliest rise to power. It is a riveting and prescient book that is based on actual letters from the US Ambassador to Germany and his daughter in the run up to Hitler seizing power.

The book chronicles how initially many German leaders and business people thought Hitler was a joke and would eventually be cast aside but they were waiting for somebody else to do it. Hitler undermined the press and the courts and importantly placed his loyalists in the intelligence services and undermined military and judicial leadership. It was only after Hitler had his allies in critical roles of government and media that he took a more aggressive, militaristic stance under the guise of “national security.” Hitler created false crises and by then there was no independent press to challenge him and no business leader willing to risk his life to stand up against the strengthened intelligence services.

Dan made it clear that we weren’t anywhere near Adolf Hitler and the rise of Nazism but that this is a direction America could go if we as a country don’t take seriously the importance of checks-and-balances on our government.

Other topics we discussed?

  • How the government can use patriotism to descend into nationalism and then the more destructive forces of nativism and ultimately tribalism that have beset the most oppressive regimes in history. We discussed how we need to be mindful of the slow decline in values that lead to this.
  • The right to vote, “One of the key values that Americans fundamentally agree on is the right to vote but from time-to-time in our nations history we have limited the right to vote too severely. It has been a constant struggle for us to live up to our ideal that: One person, one vote.” Dan spoke of some of the recent efforts to restrict voting — particularly for people of color or Latinos.
  • The topic of “inclusion.” What Dan told me was that “inclusion” isn’t about diversity per se as the end goal but the term literally signifies including somebody into work, life or any initiative that changes your perspective. In Dan Rather’s book he talks about Ruth Bader Ginsberg who was appointed the the Supreme Court in 1993. Of the 106 judges who preceded her 105 of them were men (Sandra Day O’Connor was the first woman). Now 33% of Supreme Court Justices are women (vs. 8% of VC partnerships, for example). Dan talks about a landmark case in 2009 that involved whether it was legal to strip search a 13-year-old girl. In the oral arguments of the case many of the justices expressed skepticism that the girl’s rights had been violated. From the book …
“They had never been a thirteen-year-old girl,” Justice Ginsburg explained to the USA Today. “It’s a very sensitive age for a girl. I didn’t think that my colleagues, some of them, quite understood.”

Justice Ginsburg apparently set out to make sure they understood and in a result that surprised many court watchers, the judges, despite initial skepticism, ruled 8–1 in favor of the girl. Have a woman in the group of decision makers gave the group insights they may not have had on their own. Inclusion begets understanding, which in turn begets more comprehensive decisions.

We also spoke at length about the media industry. We spoke about the consolidation of media platforms “90% of media distribution is controlled by just 6 international business entities.” In this light we spoke about “the Fairness Doctrine” which was eliminated by FCC under the Reagan administration. It is an important precedent for which many are unaware. It originally required media companies to present both sides of public policy arguments under the belief that with concentrated media distribution it was important that a populace stay informed and was upheld 8–0 by the Supreme Court in 1969. However, when Reagan’s FCC abolished it the Supreme Court ruled 5–4 in the FCC’s favor citing “expanding sources of communication had made the Fairness Doctrine’s limits unnecessary.”

The eradication of the Fairness Doctrine led to the rise of right-wing talk radio personalities like Rush Limbaugh and Fox News’ current Trump propagandists like Sean Hannity, Tucker Carlson, Jeanine Pirro and others. It is clear that there is a two-way misinformation vector between Trump and Fox News that serves both entities’ goals. This deserves more public scrutiny. Fox has many legitimate and respectable news reporters but the difference between “news” and “propaganda shows” isn’t clearly delineated for audiences.

I don’t think I could do the entire Dan Rather interview justice so I hope you’ll consider watching it. I think you’ll find Dan as insightful about our country and the messages of both “unity” but also “responsibility” to own the protection of democracy still required.


“What Unites Us” —Important Lessons from @danrather at the #UpfrontSummit was originally published in Both Sides of the Table on Medium, where people are continuing the conversation by highlighting and responding to this story.