The Secret to Hiring Great People

Disclaimer: This is meant to be a humorous,but serious post.  This absolutely cracked me up, but I guess it has a lot of truth to it if you want to run a successful .com startup.

• Max Levchin – “All of this is about self-selecting for people just like you. He thinks like me, he’s just as geeky, and he doesn’t get laid very often. Great hire! We’ll get along perfectly.”
• The interviewee cannot enjoy “playing hoops”.  Everyone that Levchin knew in college that played hoops was an idiot.
• They need to be good at ping-pong.  This shows they have a competitive fire!
• “The difference between Google and PayPal was that Google wanted to hire Ph.D.s, and PayPal wanted to hire the people who got into Ph.D. programs and dropped out,”

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Sources:
http://money.cnn.com/2007/11/13/magazines/fortune/paypal_mafia.fortune/index.htm

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Should We Nationalize Banks? Sorry, already happened…

The big debate right now is whether or not we should “nationalize” banks…but, in my opinion it has already happened.  A quick look at bailout numbers over the past 7 or 8 months courtesy of New York Times running tally:

These numbers do not even include the $500B+ in note guarantees to keep US banks solvent. There truly is a lot of money on the line and without it, our banking system would have collapsed already. The fact that the government had to step in and invest money in non-performing assets to to keep them solvent pretty much defines “nationalization” to me. I am not making a judgment on whether this is the right or wrong decision, because I am not an economist, but I do believe we should label things as they are.

Instead of calling what has been done up to this point in time “nationalization”, it is called something different by the US Government (credit Barry Ritholtz):

…why don’t we call it by a more accurate, precise, and less scary name: FDIC mandated, pre-packaged Chapter 11, government funded reorganization.

That is an accurate description of what occurred with Washington Mutual (WAMU) now part of JPM Chase, and Wachovia, now part of Wells Fargo. The Feds step in, seamlessly transfer control of the assets to a new owner, while simultaneously wiping out the debt, the shareholders, and giving a huge haircut to the bondholders.

Let’s look at each of these in turn:

• FDIC mandated: What does that mean? Well, by law, the FDIC is required to handle the liquidation or reorgs of insolvent banking institutions. We have prevented that normal process thru the application of trillions of dollars in bailout monies;

• pre-packaged The entire process is mapped out in advance so as to make it fast and seamless. WAMU depositors did not notice a single change over the weekend their FDIC mandated, pre-packaged Chapter 11 workout, government funded reorganizatio occured. The only observable difference was that WAMU customers were no longer charged an ATM fee when they went to Chase ATMs, as it was now the same company;

• Chapter 11 The full bankruptcy protection applies — meaning employees still get paid, secured creditors do not suffer, and debtor in possession financing (DiP) is available to the bank;

• government funded The source of the DiP funding;

• reorganization Just what it sounds like — new board of directors, management transitions out to a new team, recaptalized, bad debt taken off of the books, toxic assets spun out.

What emerges is a clean bank, no debt, well capitalized, and free of deadly toxic assets. You can see why so many people would find this state of affairs utterly objectionable.

In all seriousness, I understand the objection by shareholders — already down 90% — who would be wiped out by this. I fail to see the merit in the save-the-banks-at-any-cost arguments so many are proferring and preferring.

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Sources:
http://projects.nytimes.com/creditcrisis/recipients/table
http://www.ritholtz.com/blog/2009/02/nationalization-the-new-n-word/

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The World's Worst Investment

Well, the US Government has not been know to be the best fiscal operator and they have proven the same in the world of investing by claiming the world’s worst investment last year, which is about to get worse (possibly).  Barry Ritholtz summarized the losses and status of the investment to date, check it out below:

Losers double down.

That’s the classic trading rule which the USA is about to violate in an enormous way. According to trading maven Dennis Gartman, one should “never, ever, ever, under any circumstance, add to a losing position.”

And yet that is what we are about to do.

To review: Former Treasury Secretary Hank Paulson made a terrible investment on behalf of the taxpayers by purchasing a 7.8% stake in Citigroup (C) for an initial $25 billion dollars. He further put the US on the hook by guaranteeing against 90% of future losses on $301 billion in assets. Subsequently, we (the taxpayers) injected another $20 billion dollars.

At the time, Citigroup had a market cap of about ~$50 billion dollars. Today, its worth ~$13 billion.

So for about 100% of the market value of Citi, plus insurance guarantees worth of as much as 500% of its value (~$275 billion), we got less than 1/10 of a company that in total was worth 1/5 of our investment.

Pretty good deal, eh?

That $45 billion dollar stake now has a market value of just over a billion.

And, its about to get even worse.

Rather than do what is the FDIC-mandated-by-law thing, we will instead convert the nearly worthless common into preferred shares. The taxpayers stake will rise to near 40% of Citigroup.

NYT:

“Under the terms of the deal, the Treasury Department has agreed to convert up to $25 billion of its preferred stock investment in Citigroup into common stock. It will convert its stake to the extent that Citigroup can persuade private investors, including several big foreign government investment funds, to do so alongside the government, two people close to the deal said.”

What does this do for us? Well, the higher investment stake creates an enormous incentive for John Q. Public to continue to pour money into Citi, regardless of valuation. The inept banking giant then has access to infinite amount of capital, courtesy of you, the 1040 filers.

Its just another example of why these insolvent banks should be nationalized, or for you squeemish free marketers, FDIC mandated, pre-packaged Chapter 11, government funded reorganization.

If Obama continues to listen to the god-awful advice of Larry Summers and Tim Geithner, he will doom his presidency, and finsh marginally ahead of George W. Bush on the list of worst presidents.

This is not change we an believe in . . .

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Sources:
http://www.ritholtz.com/blog/2009/02/worlds-worst-investment-to-get-worse/

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Book Review of Commerce Through Community

A friend of mine, Clayton Pykiet, sent me a book called Commerce Through Community.  It is a short book (140 pages) and is very to the point.  In it, the authors outline business trends they see coming and how to build a successful business model.

I found chapters 3, 4 and 11 to be of most interest, as they did a great job of explaining the following three things that I found of most interest in the book:

.

Building a Community (or Customer Loyalty) Can Be Attempted Several Ways:

• Low prices: only lasts so long before someone undercuts you
• Best Selection: The internet provides a larger selection than any single store ever could
• Advertising: Advertising can attract a customer to view your business, but won’t necessarily create loyaly
• Habit: Making it easy and convienint for a customer to do business with you, a low enough competing price can still steal a customer
• Money: When you can turn someone into a business owner or affiliate marketer, they get a feeling of loyatly and ownership

Business Distribution Model Evolution:

• The old school model of distrbution extending from manufacturer through a chain of middle men to the consumer is now an obselete model
• The internet has created much more efficient means of distribution
• Coupling this with Direct Relationship Marketing is very powerful

Most Important Ingredients to Forming a Successful Business Culture:

• Vision, Mission, Purpose
• Strategic Strategy Council
• Recognition
• Qualified Mentorship
• Effective Meetings
• Friendly Competition

Complementary Business Model Concept:

• Almost every great business has complementary busiensses that benefit from the primary business
• It is a great idea to build these related businesses to not only assist the primary, but to diversify you income stream
• Example: Car Dealership – Primary – New Car Sales, Secondary – Used Car Sales, Service, Parts

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What is an Economic Stimulus Payment?

Q. What is an Economic Stimulus Payment?
A. It is money that the federal government will send to taxpayers.

Q. Where will the government get this money?
A. From taxpayers.

Q. So the government is giving me back my own money?
A. No, they are borrowing it from China. Your children are expected to repay the Chinese.

Q. What is the purpose of this payment?
A. The plan is that you will use the money to purchase a high-definition TV set, thus stimulating the economy.

Q. But isn’t that stimulating the economy of China ?
A. Shut up.

Below is some helpful advice on how to best help the US economy by spending your stimulus check wisely:

If you spend that money at Wal-Mart, all the money will go to China.
If you spend it on gasoline it will go to Hugo Chavez, the Arabs and Al Queda
If you purchase a computer it will go to Taiwan.
If you purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala (unless you buy organic).
If you buy a car it will go to Japan and Korea.
If you purchase prescription drugs it will go to India
If you purchase heroin it will go to the Taliban in Afghanistan
If you give it to a charitable cause, it will go to Nigeria.

And none of it will help the American economy. We need to keep that money here in America. You can keep the money in America by spending it at yard sales, going to a baseball game, or spend it on prostitutes, beer (domestic only), or tattoos, since those are the only businesses still in the US.

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Verizon Fail Video

Great stuff.  This is a classic case of failing at math!

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Sources:
http://www.failblog.org

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List of Similar Blogs

I have started compiling a list of similar blogs about how to save money, or general frugality.  I wonder now if we should have used “money saving” or “money saving tips” or “how to save money” instead of frugality.  Just something to consider.

http://www.thesimpledollar.com  

http://notmadeofmoney.com/blog/

http://frugalblognetwork.com/ – this one is interesting as it is a compilation of articles from many blogs.  Kind of like a hotwire for frugality blogs.  Might be worth looking into joining.

http://tightfistedmiser.com 

http://almostfrugal.com/ http://frugalzeitgeist.blogspot.com/ http://frugalbabe.com 

http://sharonhr.blogspot.com/ http://www.savemoneyblog.net/     http://www.savingadvice.com

http://www.moneysavingmom.com/    http://www.mymoneyblog.com/   http://aroundthesunblog.com/

http://www.savemoney.com/   http://live-frugal.blogspot.com/  http://live-frugal.blogspot.com/    http://live-frugal.blogspot.com/   http://frugaldad.com/  http://live-frugal.blogspot.com/ 

http://www.creditpanda.com/blog/2007/top-50-frugality-bloggers/   This is a list of 50 frugality blogs

That should be about a total of about 60 blogs to start with.

 

 

 

 

]

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Google Gmail adds a task list…finally!

I came across this post this morning and remembered you asking me if Google Calendar had a task list.  Apparently Google has integrated the task list into Gmail and it is easily accessible via the iPhone.  The article below explains how to enable it in gMail and how to access it via an iPhone/iPod Touch.

Google’s Gmail is one of the company’s most popular services, and the service has been enhanced with an add-on feature, a Task list, which is now ready and waiting for iPhone users.

However, to use this new feature you must first log into Gmail and enable Tasks. Once you log into your Gmail account, locate Settings, and then go to the Labs tab and enable Tasks. That’s it and you’re ready to use this feature on your iPhone. Gaining access to the task list is easy: just launch Safari, surf to http://www.gmail.com/tasks, and you will see the new iPhone compatible mobile web interface for tasks in Gmail.

Just like any other task manager, you can add new tasks, check off your completed tasks and delete tasks. You can also add notes to any task. You can also manage multiple tasks lists, and separate tasks onto one list for work tasks and one list for personal tasks. Task lists are immediately synced with the Tasks list in Gmail whenever you make changes.

Unfortunately, there is currently no offline access to Task list(s), so you must have an active cellular data or Wi-Fi connection to use Tasks. Tasks also does not allow you to prioritize your tasks as this can only be done in the desktop computer version of Gmail’s website.

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Sources:
http://reviews.cnet.com/8301-19512_7-10155864-233.html?part=rss&tag=feed&subj=iPhoneAtlas

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