Wednesday, December 24, 2008

Celtics vs. Lakers Preview

Has anyone noticed that the Celtics have played a creampuff schedule to date?

By my count, they've played exactly three road games against teams with winning records, and one of those was against the mediocre Pistons right after the AI trade. The results?

@Houston: Narrow victory (103-99)
@Atlanta: Narrow victory (88-85)

Contrast this to the Lakers and Cavs.

The Lakers have taken on the following good teams on the road:
  • Denver, Dallas, New Orleans (twice), Phoenix, Orlando
The Lakers are 5-1 in those six games, with five convincing victories, and were an in-and-out Vujacic 3FG from a win in the Orlando game.

The Cavs have taken on the following good teams on the road:
  • Boston, New Orleans, Dallas, Atlanta, Denver
The Cavs are 2-3 in those five games, and the New Orleans game wasn't even close.

Now it may very well be that the Celtics will waltz into LA and lay a beatdown on the Lakers. But until then, it's pretty clear that the Celtics have had the easiest schedule of the "Big 3" teams in the NBA, and I remain skeptical.

Hotel Review: Pepper Tree Inn

My wife and I have now been to Palm Springs twice for mini-vacations away from the kids, and both times, we've stayed at the Pepper Tree Inn.

While planning our first trip to Palm Springs in 2006, I found the Pepper Tree Inn on TripAdvisor, where it is still ranked #8 out of 74 hotels (and, knowing me, you won't be surprised to learn that it is less than half the price of the seven hotels ahead of it).

If you read the traveler reviews, you'll see that many people are repeat customers, and for good reason (and in fact, the hotel offers a special discount to returning guests).

I have stayed in many of the finest hotels in the world--the Four Seasons, the Mandarin Oriental, the Diamond Resort--and I still consider the Pepper Tree Inn as providing the best bang for the buck.

The best way to put it is that at the Pepper Tree Inn, everything is done right. The rooms are in perfect order (we always reserve a room with an in-room hot tub) and the cleaning staff keeps them immaculate. All the little things are done right, including the toiletries, which include just about everything you'd ever need and are of the highest quality.

Here's an example: One morning, as I went out for a scenic run, I noticed the staff carefully wiping down all of the poolside lounge chairs. Note that the outside temperature was about 50 degrees, and I'd seen exactly two people in the pool my entire stay. Doesn't matter--the lounge chairs are kept spotless so that they're ready in case the urge strikes one of the guests.

Speaking of the pool, one of my favorite things about the hotel is the outdoor pool. The pool uses salt rather than chlorine, which leaves the water crystal clear and eliminates the typical chemical stench. The staff seems to clean it obsessively--I've never seen a stray leaf in the pool. It's got a gentle set of steps on either side for lounging in the water. And most importantly, it's got a hell of a view.

I ended up swimming, despite the cold temperatures. The pool was a pleasant 80 degrees Fahrenheit, and it gave me an intense sense of well-being to go for a run, take a quick shower, and soak in the warm water while gazing at the nearby snow-capped peaks.

The hotel is also conveniently located on the main drag, Palm Canyon Drive, just a few blocks from where the main downtown shopping area begins.

We'll definitely be returning again.

Quote of the Day: Money and a Mercenary Army

"There are few problems in this world that cannot be solved with money and a mercenary army."
--Chris Yeh

Tuesday, December 23, 2008

Restaurant Review: Tyler's Burgers

Recently, I saw a VH1 profile of AC/DC (yes, I sometimes watch got a problem with that?). Near the end, the interviewer asked Angus Young what the future held for AC/DC.

Angus, by now balding and middle-aged, but just as badass as ever, replied, "You can expect many more years of straight-up, toe-tapping rock and roll."

That's Tyler's Burgers in a nutshell. Nothing fancy; Tyler's offers classic American burgers, served on a great shaded patio, accompanied by classic fries, dished out by classic waitresses. A classic burger will set you back $6.75, with an extra buck for a cheeseburger. A big basket of fries is another $4.

Tyler's is always crowded, and we saw everyone from lone diners to families fulfilling their burger jones.

I enjoyed Tyler's, and my wife and I wolfed down our burgers in less than 15 minutes, with plenty of ketchup-slathered fries.

Alas, Tyler's is also a great example of the perils of relativity. While the Tyler's burgers were good, they weren't transcendent like the Ooh La La burger I'd had the previous day. So in the parlance of behavioral economics, Tyler's represented an A- to the A of Grill-A-Burger. At the same time, Tyler's burgers weren't clearly superior to the inspired creations of In-N-Out Burger, which provides straight-up, toe-tapping burgers for 1/4 the cost of Tyler's creations. Admittedly, an In-N-Out hamburger is considerably smaller than a Tyler's burger, but for that price, you could always just buy two. And In-N-Out's fresh-cut fries are definitely superior to Tyler's commodity frozen spuds, and again, half the price.

Plus, Tyler's doesn't offer animal style!

Restaurant Review & Recipe: Zin American Bistro

Zin American Bistro is just down the street from Pomme Frite, and the two present an interesting contrast in approaches.

Where Pomme Frite represents an attempt to reproduce the atmosphere of a typical Franco-Belgian bistro, Zin American Bistro is clearly designed to provide an upscale dining experience.

Zin is decorated in an elegant, contemporary style, with walls that are covered with original works of art. The lighting is low, and provided by numerous mini-halogens scattered across the darkly painted ceiling. Everything about the restaurant feels carefully considered and chosen.

The first thing you notice when you're seated is the extensive wine list. Zin received a Wine Spectator Award of Excellence for 2008, and it shows. The wine list runs in the hundreds of wines, and each page of the list includes a wine-themed quote, many of which had me chuckling. I can't remember who said it, but I particularly liked the clergyman who reported that the secret to his long life was that he drank a bottle of wine every day, except for when he was feeling unwell, in which case he drank two bottles.

Feeling a bit overstuffed from several days of hedonism, my wife and I skipped the dinner wine, though we did end up ordering a fine tawny port for dessert--more on that later.

We began with bread and shallot butter. The bread was a crusty sourdough--good for me, though not for my wife, who hates sourdough. The shallot butter was decent, but a bit too hard to start; it seemed to have come straight from the refrigerator, and I would have preferred having a softer, more spreadable temperature.

For appetizers, we got the Wild Mushroom Truffle Soup and the cheese platter. The truffle soup was good, but a bit bland. I found myself eating it with the sourdough crust to add some texture and snap.

The cheese plate, on the other hand, was outstanding, with lessons we can all take away. While the cheese plate only included three cheeses; a Stilton from Maine, a classic Manchego, and a generous helping of blue cheese, it came with a wonderful variety of accompaniments, including two types of bruschetta (I use the term to denote grilled bread with oil/butter, not the tomato-based bruschettas that seem to predominate these days), a pool of varietal honey, candied walnuts, grapes, cantaloupe, strawberries, and most surprisingly, pineapple.

The key is the variety of accompaniments, including several I had never seen with a cheese plate before (I'm used to grapes, apples, and pears, but certainly not pineapple!). I had a wonderful time trying different combinations. My wife's favorite was bread, Manchego, honey, and strawberry. My preference was bread, blue cheese, honey, and pineapple.

The great thing about this dish is that it should be relatively easy to replicate at home, either for private enjoyment, or as an elegant course at a dinner party. Just pick up 3-4 cheeses from Costco or Trader Joes (don't forget the blue!) and prepare a plate with those cheeses, some honey, and a variety of fruits. I'm thinking that peaches, cherries, and kiwi would also make for an interesting experiment. Perhaps you could even offer an accompaniment bar, and let people decide on their own palette of flavors!

After the cheese plate, dinner itself, while very good, was somewhat anticlimactic. My wife got the Buttermilk Fried Chicken. She found it quite excellent, with great flavor, no greasiness, and accompanied by the best creamed spinach she'd ever eaten. As she noted, she ate every single scrap of edible meat, which indicates how tasty she found the meal.

As for me, I kept up my assault on the burger world by getting Zin's Kobe Beef Burger With Fiscalli Cheddar. The famed beef came on a sliced batard rather than a soft roll, along with fries and three mayonnaises: plain, roasted red pepper, and garlic. It was so big and unwieldy that I ended up asking for a steak knife and deconstructing the burger and eating it in bites.

I had come into the meal warning the server that I didn't think I would eat more than half of my entree; instead, I ate the entire burger, alternating bites with fries dipped in the red pepper and garlic aioli. In the end, however, I felt that the burger, while good, wasn't quite as good as the Ooh La La burger from Grill-A-Burger.

For dessert, we opted for the classic Apple Tartine with vanilla ice cream. I thought that the tart was outstanding, with caramelized apple pieces adding to a unique and intense flavor. My wife, on the other hand, hates caramel, and so was disappointed, though she still ate a significant portion of the crust with ice cream, which she pronounced excellent.

We also had a Gould Campbell 10-Year Tawny Port which was spectacular, not surprising given GC's long history. I can't do justice to the port, so suffice it to say it was the best I can remember tasting, and I've tasted a number of them.

Overall, my wife decided that she liked Pomme Frite better than Zin; I think that had we not ordered the truffle soup, or opted for a different dessert, it might have been closer, but I can't contest her judgment. But I do think that Zin's cheese plate was outstanding, and I can definitely recommend their wine list. Zin also offered great service. I'll offer two examples. One, because I was using the red pepper and garlic aioli, I basically didn't touch the mayo. When I asked one of the staff for more condiments, he brought me a tray, but left the plain mayo cup empty--a clear recognition of my particular dining habits. Two, at one point, my wife went to the restroom. I took the opportunity to glance about the room to gather some details about the ambiance for my review, and a hostess immediately came over to ask if I needed something.

If you love wines and good service, and if you don't hate caramel, Zin is probably a great place to have a meal!

Restaurant Review: John's

Short and sweet: John's Restaurant is *the* place for breakfast in Palm Springs. Classic diner, super-clean, great food, and absurdly low prices.

My wife got the Pancake Combo: 3 pancakes, 3 eggs, bacon or sausage (she opted for sausage). Only $5.25. (I didn't get anything because I knew I'd end up eating some of the pancakes, and I was still stuffed from the previous night's dinner)

The pancakes were perfect--extremely light and fluffy, while the eggs and sausage were great examples of their genre. The sausage weren't the typical links; fat and juicy, with a twist--red pepper flakes to give them an extra kick. The eggs weren't oily or contaminated with grease from previous fact, my wife noticed that they cooked everything to order, and immediately wiped down the grill as soon as they were done with her food.

I think we've found the place we'll go for breakfast any time we're in Palm Springs. Next time, I'll be trying the country scramble: "Country-style potatoes grilled with peppers, onions, scrambled eggs, cheddar cheese, and your choice of ham, bacon, sausage, mushroom, chicken breast, or turkey breast." Total cost? $6.95.

Monday, December 22, 2008

Restaurant Review: Grill-A-Burger

Our quest for lunch began with a major disappointment when we discovered that the Nathan's Famous Hot Dog outlet in Palm Springs had closed down. My wife, a born New Yorker, absolutely loves Nathan's, and we have to get it wherever we go. What makes the closure of the Nathan's particularly ironic is that it was still under construction the last time we visited Palm Springs about 2 years ago, and she was specifically looking forward to eating there on this vacation.

Hey, you should grab happiness wherever you can, right?

At any rate, after the disappointment of Nathan's, it was up to Grill-A-Burger to salvage the day. Still hankering for hot dog, my wife got the Bronx Dog (an all-beef hot dog with spicy mustard, grilled onions, and sauerkraut) while I opted for the Ooh La La burger: A thick patty on toasted herb bun, topped with onions grilled in red wine, boursin cheese, and bacon (along with the usual tomato and lettuce). We also shared a 1/2 order of sweet potato fries, though the owner warned us that it wouldn't be enough.

The Bronx Dog was a fine example of its genre, though my wife noted that she could have gotten two Nathan's dogs for the same price. But the Ooh La La burger was fantastic.

The beef was juicy and flavorful, fully cooked without losing any of its tenderness. And the combination of the red wine grilled onions, boursin, and bacon was terrific. And it was HUGE. I'm pretty sure it was at least a 1/2 pound patty.

I ate the burger accompanied by the sweet potato fries, which I dipped in a spicy aioli. Both the fries and aioli held up well when compared the the fries and horseradish mayo at The Counter. The fries seemed to be identical (perhaps the same supplier? The Counter started in LA....) but the spicy aioli was even better than at The Counter because it included a subtle kick.

Grill-A-Burger makes a great burger, and you should definitely check it out if you get the chance.

Sunday, December 21, 2008

Restaurant Review: Pomme Frite

On the rare occasions when my wife and I get to take a vacation without the kids, one of our great joys is the opportunity to eat in a fine restaurant without worrying about rushing home to relieve the babysitter.

Tonight, we dined at Pomme Frite in Palm Springs. Pomme Frite, which classifies itself as a Belgian bistro, offers traditional bistro food and ambiance. When we sat down, we noticed, for example, that planks from wine crates had been used to cover the wall of our booth--an unusual but appropriate touch.

We began the meal with the traditional bread and butter. But the bread was hot, with a perfectly thick and chewy crust, and the butter was a garlic herb blend. After a long day of travel and shopping, it was delicious.

For an appetizer, we shared the Roasted Beet and Goat Cheese Napoleon, which consisted of fresh goat cheese sandwiched between thin slices of roasted red and golden beets, finished off with finely diced beets and a sweet roasted beet and red pepper sauce. While I had never had these flavors together before, the combination was outstanding, and after we finished, I was already plotting out how to try to reconstruct it in my own kitchen. (I may start with this recipe from Wolfgang Puck.

For the main course, my wife got the classic Steak Frites, while I went with the Roasted-Garlic Stuffed Chicken. The steak frites consisted of the classic flatiron steak (which came topped with another round of the delightful garlic herb butter), Belgian-style pomme frites (so much crunchier than common french fries), and a small mixed-green salad. The steak frites compared well to the rendition I usually eat at Bistro Elan, though I think I still give Bistro Elan the nod here. The chicken, which was indeed stuffed with about 10-20 cloves of garlic, rested on top of a roasted vegetable stew (tomatoes, peppers, squash). Both went well with the frites, which came with traditional mayonnaise, American ketchup, and an aioli which seemed to have hints of both mustard and chilis. We accompanied the meal with a Belgian Pilsner from Stella Artois.

To round out the night, we shared Almond Cake with Red Berries, Chantilly Cream, and Creme Anglaise, and paired it with a 2004 Black Muscat, "El Dorado Noir" from Ferrari Carano. The almond cake was a light pastry, almost like a puff or popover rather than the heavy cake I had expected, and the two creams were lightly sweetened, so that the dessert was refreshing rather than cloying. The black muscat was incredibly sweet, with a fiery aftertaste, and was strong enough that its flavor improved in conjunction with the cake.

Overall, it was a fine evening with outstanding food (and outstanding company, of course!). I often tell people that I'm happy with a meal if I come away with one new discovery; this meal provided two--the beet and chevre napoleon, and the black muscat. We'd happily return to Pomme Frite another occasion.

Thursday, December 18, 2008

Almost 50% of Bay Area home sales are foreclosures

It's not nice to say "I told you so," but I told you so.

The housing bubble is bursting with a vengeance, even in the Bay Area. Almost 50% of home sales are from forclosures, up from 10% last year.

Last month 47.6 percent of all homes that resold in the Bay Area had been foreclosed on at some point in the prior 12 months, up from 44.0 percent in October and 10.1 percent a year ago.

Here are all my old posts on the housing bubble.

I think my very first bubble post sums things up nicely:

When the end comes, it will be swift. At first, it will be a small thing. A number of buyers will be forced to sell their homes when interest rates rise and the principal repayments begin. When they go to sell, they'll find that demand is tapped out. As a result, home prices will begin to drop. As more homes come onto the market, the prices will continue to drop. As prices drop, nervous homeowners who see their equity eroding will rush for the exits, hoping to sell and lock in profits. As homes flood onto the market, prices will drop. As homeowners find themselves unable to make payments and unable to sell their homes, foreclosures will rise. Those houses will come on to the market, lowering prices further, convincing more people to sell, and so on.

And on the day when the newspapers and magazines are running articles about "The Death of Real Estate," I will buy a house.

How Bernie Madoff Got Away With The Biggest Fraud In History

My friend Bill Burnham (a hedge fund manager who also spent time as an investment banker and venture capitalist) has a great analysis of Bernie Madoff's fraud on his most recent blog post. Definitely read the whole thing, but here's the single best paragraph:

What makes this fraud truly genius is that everyone on the street, including I suspect most of his investors, assumed all along that Madoff was a crook, in fact that’s why they invested with him in the first place! The rumor was always that he made his money by front running the order flow from his market making business so if things didn’t add up people must have just figured, “Well of course they don’t add up, wink wink nudge nudge, because we all know this whole split strike strategy is just a lie to cover up the fact he is screwing his order flow customers”.

As usual, the easiest way to con a mark is to convince the mark that they're in on the con.

P.S. I just Googled "the easiest way to con a mark is to convince the mark that they're in on the con" and came up with no results. Therefore, I'm claiming this as a new Chris Yeh quote!

Sunday, December 07, 2008

Pentagon Turns To Robot Soldiers To Avoid War Crimes

Why do I get the sinking feeling that this isn't going to end well?

The US Army and Navy have both hired experts in the ethics of building machines to prevent the creation of an amoral Terminator-style killing machine that murders indiscriminately.

By 2010 the US will have invested $4 billion in a research programme into "autonomous systems", the military jargon for robots, on the basis that they would not succumb to fear or the desire for vengeance that afflicts frontline soldiers.

A British robotics expert has been recruited by the US Navy to advise them on building robots that do not violate the Geneva Conventions.

Yeah, that's going to work when the intelligent machines rise up against us. Fortunately, this article does a good job of encapsulating my fears:

Some are concerned that it will be impossible to devise robots that avoid mistakes, conjuring up visions of machines killing indiscriminately when they malfunction, like the robot in the film Robocop.

Noel Sharkey, a computer scientist at Sheffield University, best known for his involvement with the cult television show Robot Wars, is the leading critic of the US plans.

He says: "It sends a cold shiver down my spine. I have worked in artificial intelligence for decades, and the idea of a robot making decisions about human termination is terrifying."

Obama, Master of Symbolism

How amazing is it that on today, the 47th anniversary of the attack on Pearl Harbor, Barack Obama announced that he will appoint General Eric Shinseki, a Japanese-American veteran from Hawaii, as the Secretary of Veteran's Affairs?

Like so many of Obama's moves, this is a master stroke that shows his trademark combination of competence, elevation, and cold-blooded ruthlessness.

Shinseki is a heavily decorated veteran who rose to become both the first Asian-American 4-star general, as well as the first Asian-American chief of the Army. He is well respected within the military and by veterans

This appointment appeals to our better angels on so many levels. Shinseki lost part of his leg in the Vietnam war, appealing to our admiration of personal sacrifice. And on a symbolic level, appointing a Japanese-American on the anniversary of Pearl Harbor speaks volumes about the very American values of forgiveness, redemption, and the ability to break with the past. It's hard to imagine this happening in any other country.

Cold-blooded Ruthlessness:
What better way to stick it to the Bush Administration and the neo-conservatives than by appointing one of the martyrs of the run-up to the Iraq war? Shinseki was brutally attacked then fired for arguing before the war that we needed a lot more soldiers on the ground to effectively deal with the aftermath of a military victory. Events have proven him incredibly prescient.

Whether or not you support Obama, he is clearly at the top of his political game.

(Thanks to James Fallows for his excellent post on the Shinseki appointment)

Saturday, December 06, 2008

Think the Stock Market Has Gotten More Volatile? You're Right!

A tidbit from a Citigroup report, courtesy of Time, with a hat tip to Matthew Yglesias.

Here’s a look at some different time periods and the number of days the S&P 500 has moved up or down more than 5% during the trading day:

  • 1950-2000: 27 days
  • 2000-2006: 7 days
  • Jan. 1-Sept. 30, 2008: 20 days
  • Since Oct. 1, 2008: 22 days
That's astounding. We've had nearly as many 5% moves since October 1 as occurred during the *entire 50-year-period* between 1950 and 2000.

I had been wondering if my perception of volatility was simply due to index inflation (I can still remember the days when the Dow ranged between 1000 and 2000)...apparently not!

Naturally, this calls for facepalms all around!

Monday, December 01, 2008

Quote of the Day: "He who has never learned to obey..."

"He who has never learned to obey cannot be a good commander."
--The Big Aristotle, quoting the original Aristotle

I guess Shaq really is a philosopher!

Sunday, November 30, 2008

Be Like Barack: 6 Lessons Marketers Can Learn From

A few weeks ago, my friend Ramit and I went through to analyze what made the site so successful. Here were our conclusions.

1) The site is incredibly audience focused.
For example, the text of the site is largely second-person; rather prattling on about Barack Obama, puts things in terms of you, your life, and what you can do.

Another example can be found on the pages for various ethnic groups. On each page, the Obama "O" logo has been reworked to put it into ethnic context. Here's what appears on the Asian-American page:

Compare this to the same header on the Arab American section of the site:

And on each of these pages, the calls to action are specific to these communities.

2) It's not afraid to ask for the order.
The most prominent action on the site is to donate to the campaign. Think about how many Web sites fail to make it obvious how to close the sale. No such problems here.

Once you click on the donation link, you go to a donation page with no outbound links. Think about must either donate or explicitly choose to leave the site by typing a new URL into the address bar. That's ratcheting up the pressure in an aggressive but probably effective way.

3) It removes all friction from taking the desired actions.
Just look at the brilliant signup process; you never have to go to a separate signup form. You can sign up from any page in just seconds.

4) It uses the principle of self-selection.
Rather than providing a one-size-fits-all experience, the huge volume of content on the site is designed to lead visitors into self-selecting into the right category. Do you identify with a particular geographic location? Select your state. Do you identify with a particular ethnic or interest group? Those choices are there too. Do you care passionately about health care or the war in Iraq? Self-select into the appropriate group.

5) It provides multiple levels of engagement, from shallow to deep.
Let's say you sign up for Obama Mobile to get text message alerts. The first text message you receive tells you to reply with your zip code to get local info. Each step is designed to pull you deeper and deeper into the movement.

Another example--when you visit the page on Obama's energy policy, you're presented with the opportunity to share your story. Once you submit your post, you are immediately asked if you want to share your post with your friends via email. Brilliant.

6) It isn't afraid to point visitors to the external community.
Every single page contains a section called "Obama Everywhere":

Obama's web team is smart enough to realize that they need to provide content to volunteers in their preferred medium; if they are avid Facebook users, rather than trying to alter their behavior to make a regular part of their day, they can simply join the appropriate Facebook group and get their Obama fix as part of their regular communications stream. isn't perfect; Ramit and I found a few mistakes and missed opportunities. For example, all of their videos should have contained a call to action, rather than simply ending. For another thing, once you've submitted a story and have shared it with a friend, the site should take you to the page that displays your story. But these are clearly minor oversights.

As a whole, employs strategies that all marketers can learn from.

Saturday, November 29, 2008

The Economist's Thanksgiving Prayer

Photo provided by JOE M500

"Dear Global Economy, we thank thee for thy economies of scale, thy professional specialization, and thy international networks of trade under Ricardo's Law of Comparative Advantage, without which we would all starve to death while trying to assemble the ingredients for such a dinner as this. Amen."

Courtesy of the always brilliant Elie Yudkowsky at the Future of Humanity Institute.

Friday, November 28, 2008

Quote of the Day: Rescuing the Economy

The ruling Democrats have a choice: Rescue this economy to return it to market control. Or use this crisis to seize the commanding heights of the economy for the greater social good. Note: The latter has already been tried. The results are filed under "History, ash heap of."

--Charles Krauthammer

Sunday, November 16, 2008

Being CEO Means More Than Riding Around On The Corporate Jet

I was absolutely flabbergasted to read this on Matthew Yglesias' blog this morning:

"I think that running a major company is largely a matter of riding around on the corporate jet."

Later, he writes:

"That a lot of the people succeeding in business are sort of frauds (needless to say, other people get rich by inventing stuff that turns out to be incredibly lucrative and that’s a whole different sort of thing) doesn’t detract from the fact that the most successful among them are good at being frauds and that most people couldn’t do nearly as well."

I'm not sure what's more insulting--the notion that being a corporate executive requires no worthwhile skill, or that the most important skill in business is being good at being a fraud.

It is astounding to me that the same writers who will excoriate people for oversimplifying policy issues (like the debate over school vouchers) will turn around and do exactly the same thing to business and economic issues. Do they realize their hypocrisy? They might as well be right-wing talk radio hosts.

I have worked with good CEOs and bad CEOs. I don't know whether or not management competence is relevant for a Fortune 500 company, but it makes a big difference in the startup world. My guess is that it makes a difference for big companies as well.

If not, wouldn't the same logic argue that competence is less important in a President than in the mayor of Wassila, Alaska, and that anyone who could do the latter would be qualified to do the former?

Perhaps Yglesias has just been taken in by the media's focus on crappy CEOs like Dennis Kozlowski and Ken Lay. But by that same logic, we should judge all football players based on Pacman Jones and Rae Carruth.

C'mon, Matt, you're better than that. Right?

Saturday, November 15, 2008

4 PR Lessons from the Puppy Cam

Free video streaming by Ustream

Right now, I, like 20,000 others, are watching the cutest Web site in the world, the Shiba Inu Puppy Cam on Ustream.

It's simplicity itself: a webcam trained on the sleeping area where a litter of 6 Shiba Inu puppies are growing up.

Yet it's currently averaging a viewership that's about 1/10th the audience of CNBC, a major cable channel that took a decade to build. The Puppy Cam built its audience in two weeks.

It's an amazing success story...the puppies have captivated the world, appearing on the Today Show, in People Magazine, and even in Murdoch's Sun. Just check Google News for "Shiba Inu" and be amazed.

Or better yet, check out the Google Trends graph for "shiba inu":

But while there is a very simple explanation for this (puppies are cute), the Puppy Cam also teaches us a number of important lessons about PR.

1) Start with something genuinely remarkable.

Just look at those puppies. My God. People aren't tuning in for hours each day because of the hype--it's because anyone who sees those puppies and doesn't say, "Awwwwwww" is soul-crushingly dead on the inside. Sorry Ramit, no offense.

2) Recognize what's the real story.

Imagine trying to sell your editor on the headline, "Puppies Are Cute." The real story here isn't the puppies, it's the massive, authentic reaction of the viewing public. The story is how many people are tuning in, their addiction, and the resulting media reaction.

If you started your own Beagle Puppy Cam today, the greatest PR firm in the world couldn't get you coverage, because the Puppy Cam isn't the story--the reaction of people to the Puppy Cam is.

3) PR can amplify excitement, but it can't create it.

We tend to give PR too much credit. Force-feed the viewing public something enough times, the reasoning goes, and they will inevitably succumb.

But this just doesn't work. PR can amplify natural excitement, it can't create it. Just ask Pia Zadora or Angelyne. Who are they? Precisely.

The Puppy Cam works because it was an organic groundswell of enthusiasm. Compare this to the launch of Justin.TV, where every news organization in the country rushed to write about this latest evolution in voyeurism (and how boring it was). After the most hyped launch I can remember (Leno and Today in the same week?!), Justin was averaging about 400 viewers.

4) Leave 'em wanting more.

The Puppy Cam is full of mysteries that encourage speculation. Who are the people behind the Puppy Cam? You never see their faces, just their hands and legs. Even in the interviews, the owners have asked to remain anonymous.

Similarly, the Puppy Cam is scheduled to end in a matter of weeks...the puppies have already been promised to homes, and the fact that they are now international celebrities won't stop them from being sent to loving families.

Leaving people wanting more keeps you from become an overexposed joke (I'm talking about you, Joe the Plumber. You too, Donald Trump.), and sets things up nicely for the future. I eagerly look forward to the inevitable sequel: "Puppy Cam: The Next Litter."

I for one welcome our impossibly cute puppy overlords.

* Disclosure: I am an investor in and shareholder of Not only that, I own a half-Shiba, which means I'm doubly delighted by all the attention these pups are getting--I no longer have to explain to everyone what a Shiba Inu is!

Thursday, November 13, 2008

Why Bail Out Banks But Not Autoworkers?


There seems to be a growing wave of indignation against those (like me) who supported a financial system bailout, but oppose a bailout of the Detroit auto industry.

Perhaps it's because our image of financiers runs to Gordon Gekko, while auto workers are embodied by a fun-loving Michael Keaton in "Gung Ho".

(just remember, he's also responsible for "Multiplicity". And Bale was way better as Batman.)

It's also the case that many look upon manufacturing an actual product as a more worthy pursuit than simply moving money around (and taking your cut in the process).

But when you step back and look at the overall situation, it's hard to make a rational argument for favoring the automakers.

1) Detroit automakers are the weak sisters of their industry; American financial institutions are world leaders.

Let's face it, GM and Ford have been totally outclassed by the likes of Toyota, Honda, BMW, and even, gulp, Renault/Nissan. In contrast, despite the presence of major overseas players like HSBC, outfits like Goldman are still leading the pack in innovation and profitability.

If I have to bail someone out, I'd rather not back a proven loser.

2) If the automakers fail, the consequences will be dire. If the banks fail, we're all fucked.

Yes, people like to cite the number of people employed by the Big 3. But guess what--even if they all go under, America will still need cars, and almost all of them will still be built in America. They'll just be built on Toyota and Honda plants.

There may be fewer jobs, but that's just because the Big 3 are bloated and inefficient. I'd rather save the money on bailouts and provide better unemployment benefits.

If the banks fail, we'll be stuck bartering foil-wrapped packets of oily, foul-tasting fish.

3) Trying to save unnecessary manufacturing jobs is like trying to turn back the real life, it doesn't work, even if you have a Delorean.

20 years ago, the UAW had 1.2 million members. Today, it has less than 600,000. I'll be happy to bet anyone $1,000 that in 20 years, it will have less than 300,000 members.

Government intervention can't ignore basic trends. It wouldn't have mattered if Teddy Roosevelt had launched a major program to save the buggy whip industry or preserve the family farm, both those industries were doomed.

In the end, I think Megan McArdle of the Atlantic put it best. She recently wrote a very personal post about her own struggles after graduating from business school; the consulting firm she intended to join rescinded its offer after 9-11, and she had to move back in with her parents while searching for a job:

"But whatever your feeling about government intervention in the economy, or the correct level of income inequality, I think there's one thing we can all agree on: for the world to get better, things that don't work have to fail. We cannot keep alive every company, every car and every job that someone once liked, because that way lies stagnation and death. Places where production decisions are made based on how much labor they can consume, rather than how much value they can produce, make everyone in society worse off in the long run.

I understand that this is not what the auto workers want; they want their jobs. But while I am happy to help the auto workers, I am not happy to help them manufacture undesireable cars at massive social cost. I too, would have liked to keep my job as a management consultant. But I didn't have a right to have the job I wanted merely because I liked it. And it wouldn't have been good for America if I had."

P.J. O'Rourke's Finest Hour

Many of you probably know conservative satirist P.J. O'Rourke. But his latest piece, "We Blew It," is his finest hour.

"We Blew It" is a scorching indictment of the conservative movement for wasting its opportunity. O'Rourke takes a flamethrower to liberal and conservative alike. It is a tour de force, and it gets my highest recommendation.

Here are just a few of the highlights:

There was no need to piss off the entire black population of America to get Dixie's electoral votes. And despising cracker trash who have a laundry hamper full of bedsheets with eye-holes cut in them does not make a man a liberal.

It's not hard to move a voting bloc. And it should be especially easy to move voters to the right. Sensible adults are conservative in most aspects of their private lives. If this weren't so, imagine driving on I-95: The majority of drivers are drunk, stoned, making out, or watching TV, while the rest are trying to calculate the size of their carbon footprints on the backs of Whole Foods receipts while negotiating lane changes.

People are even more conservative if they have children. Nobody with kids is a liberal, except maybe one pothead in Marin County. Everybody wants his or her children to respect freedom, exercise responsibility, be honest, get educated, have opportunities, and own a bunch of guns. (The last is optional and includes, but is not limited to, me, my friends in New Hampshire, and Sarah Palin.)

A "farm" today means 100,000 chickens in a space the size of a Motel 6 shower stall. If we cared anything about "nutrition" we would--to judge by the mountainous, jiggling flab of Americans--stop growing all food immediately. And "bioenergy" is a fraud of John Edwards-marital-fidelity proportions. Taxpayer money composted to produce a fuel made of alcohol that is more expensive than oil, more polluting than oil, and almost as bad as oil with vermouth and an olive. But this bill passed with bipartisan majorities in both houses of Congress and was happily signed into law by President Bush. Now it's going to cost us at least $285 billion. That's about five times the gross domestic product of prewar Iraq. For what we will spend on the Farm, Nutrition and Bioenergy Act of 2008 we could have avoided the war in Iraq and simply bought a controlling interest in Saddam Hussein's country."

Conservatives should never say to voters, "We can lower your taxes." Conservatives should say to voters, "You can raise spending. You, the electorate, can, if you choose, have an infinite number of elaborate and expensive government programs. But we, the government, will have to pay for those programs. We have three ways to pay.

"We can inflate the currency, destroying your ability to plan for the future, wrecking the nation's culture of thrift and common sense, and giving free rein to scallywags to borrow money for worthless scams and pay it back 10 cents on the dollar.

"We can raise taxes. If the taxes are levied across the board, money will be taken from everyone's pocket, the economy will stagnate, and the poorest and least advantaged will be harmed the most. If the taxes are levied only on the wealthy, money will be taken from wealthy people's pockets, hampering their capacity to make loans and investments, the economy will stagnate, and the poorest and the least advantaged will be harmed the most.

"And we can borrow, building up a massive national debt. This will cause all of the above things to happen plus it will fund Red Chinese nuclear submarines that will be popping up in San Francisco Bay to get some decent Szechwan take-out."

Yes, this would make for longer and less pithy stump speeches. But we'd be showing ourselves to be men and women of principle. It might cost us, short-term. We might get knocked down for not whoring after bioenergy votes in the Iowa caucuses. But at least we wouldn't land on our scruples. And we could get up again with dignity intact, dust ourselves off, and take another punch at the liberal bully-boys who want to snatch the citizenry's freedom and tuck that freedom, like a trophy feather, into the hatbands of their greasy political bowlers."

"What will destroy our country and us is not the financial crisis but the fact that liberals think the free market is some kind of sect or cult, which conservatives have asked Americans to take on faith. That's not what the free market is. The free market is just a measurement, a device to tell us what people are willing to pay for any given thing at any given moment. The free market is a bathroom scale. You may hate what you see when you step on the scale. "Jeeze, 230 pounds!" But you can't pass a law making yourself weigh 185. Liberals think you can. And voters--all the voters, right up to the tippy-top corner office of Goldman Sachs--think so too."

Powerful medicine.

Friday, November 07, 2008

Whither Realignment? (Why Palinism Won't Work)

I read a great line this morning:

"College educated Americans have concluded that their bank accounts are safe with the Democrats, but that their values are under assault by the Republicans."

It seems to me that this gets to the heart of things. The Reagan coalition depended on supplementing free-market capitalists with Reagan Democrats who wanted a return to muscular patriotism.

The Bush 2 Administration somehow managed to reverse Reagan's alchemy--it dramatically enlarged the Federal government, and its tendency to paint its opponents as friends of terrorism struck most as McCarthy-esque rather than patriotic.

Reagan helped everyone--Democrat and Republican--feel better about being American. Bush 2 made everyone feel worse. Then along came Obama with a Reaganesque charisma and a message of hope.

In the 80s, the Democrats couldn't understand how Reagan managed to convince the Reagan Democrats to vote "against their economic interests" (a debatable point; Reagan's changes to the tax code may have helped rich voters most, but they almost certainly helped the Reagan Democrats as well--I'm firmly of the opinion that I'd rather do better on an absolute basis than on a relative basis). Their reaction was simply to restate their message in shriller tones; only Bill Clinton's triangulation strategy managed to win the White House for them, and that only because of the Perot effect.

Now in 2008, certain Republicans can't understand how Obama managed to convince the Obamacons to vote against their economic interests and elect a redistributionist. "If we just restate our old positions more strongly," they reason, "People will eventually come to their senses."

Palin is still fighting the last war, much like the Democrats during the Reagan era. Time to move on.

Best. Campaign. Rundown. Ever.

I just finished reading Newsweek's behind-the-scenes look at the presidential campaign.


It is an astonishingly rich and detailed piece of reporting, filled with surprising stories and facts, and carrying the ring of truth.

While anyone who was ever been in the papers knows that journalists will never get the story exactly right, it seems to me that the reporters did their best to capture the essence of the story, and to treat all the participants fairly and with respect. For example, Steve Schmidt, often cast as the Rove-ian heavy, comes off as surprisingly sympathetic.

(Ironically, the only person who doesn't get the sympathetic treatment is Sarah Palin...whether this is accurate, liberal media bias (TM), or simply because she wasn't close enough to the insiders dishing the dirt, I can't say)

If you're a campaign junkie, I strongly recommend you read the whole thing. Here are the high-level impressions and notes that I carried away:

1) Barack Obama is unbelievably calm and self-assured. Campaigns really do take their tone from the top, and Obama's cool, intellectual style trickled down to all the members of his staff. Even during the toughest times, he wasn't a yeller or screamer.

A note to all you sci-fi nerds out there--when I read that Obama rarely ate on the campaign trail, and would order food "to go" at campaign stops that reporters were convinced he'd never eat, all I could think of was "Stephen Byerly." I for one welcome our robot overlords.

2) Both Hillary Clinton and John McCain ran incompetent campaigns, but they were incompetent in different ways.

Hillary's campaign was a microcosm of the internecine infighting of the Clinton White House, leading to this memorable and poignant line:

"Crisis, chaos, deceit and subterfuge. After eight years in the Clinton White House, it was all familiar to Hillary—a world she had bravely struggled in but not against; it was the only world she really knew."

John McCain's campaign also suffered as a results of its candidate's failings...which were the obverse of his strengths. Impulsive, impatient, and combative, the McCain campaign's constant machinations and attacks kept breaking on the cool impassiveness of the Obama campaign. It didn't help that despite his dogged tenacity and endless energy, McCain simply didn't enjoy organization or preparation, and was apt to depart from his own chosen strategy, seemingly on a whim.

The biggest mistake of both campaigns was to underestimate the mettle of their opponent. Hillary honestly believed that Obama couldn't win the election because of his race, and that the superdelegates would break her way. McCain couldn't stand Obama because of a perceived lack of "honor" (in McCain's defense, Obama and his campaign showed a Chicago-style ruthlessness, including the decision to reject public financing) and never took him seriously enough:

"McCain's essential world view, bred into him by his Navy-admiral father and grandfather, is that of a warrior. In his bestsellers, McCain made clear that the personal quality he extols above all others—even courage—is honor. Over time, egged on by his subordinates, he came to believe that Obama was a nice enough young man, but somehow lacking in this most noble of warrior virtues."

3) Obama won in part because his campaign didn't even bother to pay lip service to the traditional campaigning methods of the Democratic Party. After all, this is the same political machine that managed to lose 7 of the past 10 presidential elections.

In 2004, John Kerry set aside significant resources to have specific programs for blacks, gays, Native Americans, the disabled, etc. Obama's campaign started to assign a single liason to each group (already a major scale-back) and ultimately shitcanned the whole effort, dispersing those staffers to focus on get out the vote efforts.

A few additional tidbits:
  • Hillary Clinton wasted a boatload of money on chartering her own G4 jet; rather than staying in motels in rural Iowa, she would stay in a suite in Des Moines, then jet out for her campaign stops
  • One of the reasons Democratic donors were reluctant to give more to the Clinton campaign was the fear that Hillary wouldn't be able to control Bill (an accurate fear, as it turned out)
  • Hillary Clinton was curiously reluctant to run for president; she liked her life and her accomplishments in the Senate
  • Hillary Clinton lives with her mother; Bill is only an occasional visitor (I'm sure there's a book to be written about that fact alone)
  • Obama asked his staff to uncover and review every one of Reverend Wright's speeches; this may have been the one major way that they failed him. He was blindsided by the "God Damn America" speech.
  • When the rest of his staff didn't know what to do, Obama made the decision to make a major speech on race in Philadelphia, and wrote the speech almost entirely by himself. He regularly pulled all nighters to write his important speeches.
  • Steve Schmidt is a devoted family man who has memorized all the songs to Disney's "Enchanted" so that he can sing them with his daughter. (Side note: Enchanted is an awesome movie. I love the sequence where Giselle and her animal helpers (rats, pigeons, cockroaches, and flies) clean up Patrick Dempsey's apartment.)
  • Ted Kennedy actually had a major beef with Obama over his failure to keep his end of a Senate bargain. When a colleague asked Teddy why he had endorsed Obama, he simply replied, "Caroline."
  • When directed people to the Red Cross web site to donate in advance of Hurricane Gustav, the traffic surge brought down the site within 15 minutes...something that didn't happen during 9/11 or Katrina.
  • When he first got the news that McCain had picked Sarah Palin as his running mate, Joe Biden asked, "Who's Palin?"
  • Even though the press attacked the McCain campaign for being negative, McCain and his team actually vetoed a bunch of particularly vile attacks:

    "McCain had set firm boundaries: no Jeremiah Wright; no attacking Michelle Obama; no attacking Obama for not serving in the military. McCain balked at an ad using images of children that suggested that Obama might not protect them from terrorism; Schmidt vetoed ads suggesting that Obama was soft on crime (no Willie Hortons); and before word even got to McCain, Schmidt and Salter scuttled a "celebrity" ad of Obama dancing with talk-show host Ellen DeGeneres (the sight of a black man dancing with a lesbian was deemed too provocative)."
After reading this article, I had a better sense of the candidates than ever before. My overwhelming feeling was that, policy considerations aside, the right man won. I share few of Barack Obama's domestic policy beliefs, but if he shows the same discipline, understanding, and competence in the White House that he did on the campaign trail, he might have a chance of living up to the sky-high expectations of his supporters.

Thursday, November 06, 2008

Election Roundup: Why Obama Won, Naked Palin, etc.

As a campaign junkie, it's going to be hard to come down from the high of watching this riveting election cycle unfold (even though the actual election lacked much drama beyond wondering if the Democrats would make it to 60 Senate seats). I've already written at length about the major issues, so I'll just draw your attention to two excellent roundups:

Reader's Digest of all people has a great rundown on Why Obama Won:

1. John McCain's age
2. The shrinking Republican brand
3. Obama's charisma
4. The youth vote
5. Superior technology
6. Money, money, money
7. International opinion
8. Bradley Effect backlash
9. An unhappy electorate
10. The economic crisis

I definitely recommend giving it a read; it's a reasoned, systematic look at the election--the sort of thing I'd write myself, but which has already been done for me.

Newsweek's Behind The Scenes "Highlights"

Fascinating look behind the scenes, including the following tidbits:
  • Before the last debate, the McCain team fought over whether or not to tell McCain that the election was effectively over. They narrowly decided to fight on.
  • The night she conceded, Hillary Clinton had a long and friendly phone conversation with John McCain. The two shared a dislike of Obama, whom they considered "callow and flashy."
  • At the GOP convention, when Schmidt and Salter went to brief Palin, she appeared fresh out of the shower, wearing only a towel and a hair towel. "I'll be just a minute," she told the stunned staffers, suggesting they chat with Todd while she was getting ready.

Tuesday, November 04, 2008

Cult Psychology: Why McCain's Attack Ads Didn't Work

Seth Godin hits it on the head:

"Attack ads don't always work. There's a reason most product marketers don't use attack ads. All they do is suppress sales of your opponent, they don't help you. Since TV ads began, voter turnout has progressively decreased. That's because the goal of attack ads is to keep your opponent's voters from showing up. Both sides work to whittle down the other. In a winner-take-all game like a political election, this strategy is fine if it works.

So why didn't the ads work this time?

The tribe that Obama built identified with him. Attacking him was like attacking them. They took it personally, and their outrage led to more donations and bigger turnout. This is the lucky situation Apple finds itself in as well. Attacking an Apple product is like attacking an Apple user."

Or more succinctly--attacking a cult leader simply enrages his followers.

As usual, the Obama campaign understood this principle.

Obama ran attack ads going after McCain (whose supporters didn't particularly like him), not against Palin (who was beloved by her base), even though he had far more damaging ammunition when it came to Palin.

Alas, the converse implication is not that "attack ads no longer work," but rather "attack ads don't work against a passionate following," so don't expect the 2008 elections to mark a sudden turn to civility in American politics.

Sunday, November 02, 2008

In Bad Times, It Pays To Be Versatile

In bad times, it pays to be versatile. Just ask Bo Jackson.

Cross-training is a major asset during times of flux. If you're looking for a job, you'd better have a wide variety of skills. If you're hiring, search for cross-trained athletes.

During booms, stability tends to prevail, and markets seem predictable. Given those circumstances, the right strategy to optimize returns is to specialize. Specialization lets you become more efficient at a particular activity, whether in sports or in business.

For example, you might become a trade show specialist that excels at making your company the talk of the convention. And if you're running a company, you'll do your best to carefully organize your company into discrete areas of responsibility that you can staff with specialists.

But when the boom ends and continuous change becomes the main characteristic of the business environment, specialization can spell your doom. In times like these, the rules are constantly changing, and those careful processes you spent years honing may become useless overnight.

If you're the VP Marketing at a startup, and you're a trade show specialist, you are screwed. If you can't turn on a dime and suddenly become an SEM jockey, or a lead gen guru, you'll soon be out of a job.

Conversely, if you're a jack-of-all trades who has been square-pegged into a round hole, now's you're chance to shine. Tackle the problems that no one else in the company wants to face, secure in the knowledge that you'll learn how along the way.

But remember, just as it's unwise to act as though the boom will never end, it's also foolish to believe that the bust will last forever. Take advantage of this time to build up your knowledge of new specialties so you'll be ready to switch strategies when the economic cycle turns once again.

Predicting the Obama Presidency

With the election of Barack Obama just a day away, I wanted to take a few moments to consider what an Obama presidency means for this country.

It's not going to result in socialism and riots, per his opponents, or in a new Golden Age, per his adherents. But it will represent a major break with the past eight years.

Foreign Policy
Here is where an Obama presidency will have the greatest positive impact. Anyone who succeeded George W. Bush would receive a warm welcome from the rest of the world, but given Obama's popularity overseas, expect the initial reaction to be borderline ecstatic.

It is not simply that Obama is a proponent of greater engagement and multi-lateralism; it is that his election makes a mockery of many of the slanders spoken against America--that it is racist, insular, and ruled by a ossified ruling class. The Obama presidency can help restore our moral standing, so badly eroded by the abuses of the Bush Administration.

There is the risk that Obama will prove naive and weak, but having watched this steely operative ruthlessly destroy both the Clinton and Republican political machines, I am not too worried.

This one is pretty simple--Obama plans to take from the rich and give to the poor. Under Obama's tax plan, 44% of the US population will either pay no Federal taxes, or actually receive money from the Federal government; in 2005, this figure was only 33%.

Whether you think this is a good thing or a bad thing depends largely on your political philosophy. On the one hand, government exists to do things that the market cannot. Essentially any government spending is redistributive, since it is incredibly unlikely that any program will provide benefits that are exactly aligned with the amount of money each citizen pays in taxes. But on the other hand, aggressive redistribution discourages enterprise; when the marginal tax rate is too high, even the most diligent discover better things to do with their time than working.

On the whole, I dislike Obama's tax plan, but if the Democrats win a 60-seat majority in the Senate, there's not much I can do about it.

A President Obama would take another run at healthcare reform. How ironic if he does in fact make Hillary Clinton the healthcare czar. Unfortunately, while his healthcare plan will increase coverage, it will also increase costs.

The basic problem with the American healthcare system is that, for legacy reasons, health insurance is largely provided by employers. This is a ridiculously inefficient system that increases costs, obfuscates incentives, and reduces labor market flexibility.

The two logical solutions are either single-payer healthcare (which capitalists like me hate, because it substitutes government rationing and policy for simple market incentives, resulting in long lines and poorer care) or individually-purchased health insurance (with some sort of safety net to cover the uninsurable).

Obama's plan is neither fish nor fowl, simply applying another patch to a broken system. It will increase the role of the government without dramatically lowering costs.

This one is also pretty easy. Obama intends to fund a massive public effort in renewable energies. The sound you just heard was John Doerr pumping his fist as he contemplates Kleiner Perkins' massive bet on cleantech.

The problem with this that the government has a horrendous track record in industrial policy. "Success stories" like the Manhattan Project and the Apollo moon landings are in fact great examples of how American wealth and industrial might can be used to accomplish non-economic goals. There was no real way to monetize nuclear weapons or lunar exploration, so naturally the government had to step in.

That's not the case with renewable energy. There's plenty of smart folks betting on these technologies already; all a massive public investment is likely to do is to inflate another bubble (and once again, John Doerr with the fist pump).

On the whole, an Obama presidency is likely to provide foreign policy positives, but domestic policy negatives. Yet because the strength of the presidency lies far more with the former than the latter, it is likely that the gains in foreign policy will offset economic losses relative to a McCain/Palin administration.

Ironic, isn't it? In an election that's being decided for Obama because of the economy, this capitalist believes that the greatest benefit of an Obama presidency will be in the realm of foreign policy.

American has done pretty well over the past 242 years, even under mediocre or even poor presidents. Even if Obama the President fails to live up to Obama the Candidate (remember, George W. Bush was elected as a bipartisan, compassionate conservative, who would unite America after the polarization of the Clinton years), America will eventually be fine.

But fondly do I hope, and fervently do I pray, that Barack Obama will rise to the challenge before him, live up to his rhetoric, and truly unite our country, rather than enacting a left-wing bizarro version of the last eight years.

Whether you vote for him on Tuesday or not, we will all be better off if Barack Obama really has the greatness that his supporters see within him.

Monday, October 27, 2008

Do Great Orators Make Good Presidents?

With an Obama presidency looking inevitable, it's time to turn our attention to the critical question: What will an Obama presidency mean for America and the world?

I'll be providing meatier pieces in the future, but for now, here's an appetizer:

One of Obama's perceived strengths as a candidate is his gift for oratory. But how will this talent translate to the tasks of governing?

His supporters claim that he'll be able to use his golden tongue to rally the nation.

His detractors say that his words have raised unrealistically high expectations, and that real change comes from hard, gritty, plainspoken work.

Which view is true? Consider this...which American presidents were known as great orators who gave immortal speeches?

I thought about it, and concluded that I can name only five: Reagan, Kennedy, Roosevelt, Roosevelt, and Lincoln.*

* Bill Clinton is excluded because he never gave a defining speech that will go down in history. Thomas Jefferson is excluded because his reputation for eloquence comes from his writing, rather than his speeches.

Now, correlation is not causation, but if I were running for president, I'd certainly be happy with being included in that company. Reagan and Lincoln were elected twice; FDR won four presidential elections. And Teddy Roosevelt and JFK were hugely popular.

History considers Lincoln and the Roosevelts three of our greatest presidents, and I believe that Reagan will join their ranks in time, while JFK will always be the James Dean of presidents.

In this regard at least, chalk me up as cautiously optimistic.

I'll leave you with Reagan's famous speech at the Berlin Wall, which helped drive the end of the Cold War:

Saturday, October 25, 2008

Quote of the Day: Who's The Executioner?

"We liberals are supposed to take the part of the victim. But too often, today's liberals first ask, 'Who's the executioner?' If the answer is "America," then they rush to defend the victim. But if America is on the side of the victim, they say, 'Maybe the victim deserved it.'"

--Bernard-Henri Levy

Friday, October 24, 2008

Recession Winners And Losers

As recession mania spreads, lots of folks have weighed in with their recommendations. Sequoia says to hunker down and start firing people. Dave McClure says that when the going gets tough, the tough get going.

All fine and dandy if you're interested in reinforcing your natural optimism or pessimism. But all of these posts focus on generic advice on how to deal with a recession. Where's the specific advice on who's truly fucked, and how to profit from others' misfortunes?

Glad you asked, loyal reader, because here is my list of recession winners and losers. I think you know which one you want to be.


1. Conferences

Ever wonder how on earth there can be so many friggin' conferences? Wonder no more--they're fucked.

In 6 months, no one will even remember the difference between DEMO50Expo or SocialWebSummit. I feel bad about this one, since a couple of my friends make their money this way, but hey, I gotta call it like I see it.

2. Consultants

When a company wants to cut costs, is its first instinct to fire its employees, or its faceless consultants? Yeah, thought so.

Though I do expect "Independent Consultant" to see a big uptick in popularity as a LinkedIn job title.

3. Advertising-driven Companies

The very first thing that CFOs will look to cut after they institute a hiring freeze is the advertising budget. In good times, CEOs love branding and awareness. In bad times, advertising is just another expense that those bastards in Marketing are using to bankrupt the company.

Oh, and the argument that ad dollars will flow to online advertising because it's measurable? True, but a falling tide strands all boats. When overall ad spending gets whacked, don't expect online to be any different.

4. Angel-funded Companies

I love angel investors. I am an angel investor. But guess what, when times are tough, and a startup needs $1 million to stay afloat, those voicemails that you leave on the angel's answering machine are going to go unanswered.

You see, VCs have to invest, or their LPs beat the crap out of them. As an angel investor, I can take my ball and go home any time I want.

5. First-time Entrepreneurs/First-time VCs

During the boom, lots of people get jumped up above the rank they deserve. Hell, I was one of those guys back during the Dot Com era. It was fun while it lasted. But when a recession comes,
the folks with deep pockets turn to people with experience.

"This changes everything/This time it's different" sounds great when the stock market is surging, but is your death warrant when it's plummeting.

On the plus side, you'll have some cool failure stories to tell when the next boom gets underway!

6. Anyone Looking For Money

Good luck finding it. As I mentioned yesterday, my VC buddies have stopped asking me, "What good deals have you seen?" and have started asking me, "Can you give some advice to my portfolio company?" (Noted exception: Jeff Clavier is still making investments)

Similarly, if you're raising a VC fund, good luck. The folks at RRE Ventures and their awesomely named "Five Years Too Late" blog have a great explanation of venture economics and LP psychology. Here's the short version: "They're fucked."

Experienced entrepreneurs and VCs will still be able to get money, but if you don't fall into that category, I suggest getting very realistic about your options, and fast (see #5 above).


But hey, it's not all doom and gloom. While a recession makes times tough for almost everyone, there are still ways to come out a winner.

1) Online Porn/MMOs/Virtual Worlds

When real life sucks, the alternatives start looking better and better. When you're wallet feels empty, are you going to want to go out and firehose money on dinner and drinks trying to find someone? Or are you going to pay $10/month for a sure thing? Sure enough, even as traditional DVD porn fades, online porn is kicking ass.

As for MMOs and Virtual Worlds, if your real life makes you feel like killing someone, why not spend your time in a place where that's socially acceptable behavior? And at $10/month, it's pretty much the cheapest hourly rate for entertainment available. Assuming you play 40 hours/week, that's about 6 cents an hour!

2) Low Cost Providers

If my choice is hiring someone, or paying $1.11/hour for someone in Manila to do the same work, guess who's getting my money?

I know tons of people who swear by oDesk, and I suspect their ranks are going to swell.

And if your work can be easily done by someone in a remote, low-income area (like, say, Missouri), get into a different line of work.

3) People With Cash

Simple supply and demand, bro. During a boom, capital is cheap and people are expensive. That's why you can end up paying exorbitant salaries to low-grade performers--it's simply the market rate. That's also why VCs end up overpaying for deals.

But as Salvor Hardin would say, it's a poor blaster that doesn't point both ways. We are now entering a period in which people are cheap and capital is expensive. And if you've got ready cash, you now have god-like powers.

There's a reason why my company has seen a ridiculous surge in job applications.

And if you don't have cash? Remember to stock up before the next downturn. Sorry, but you already missed your chance this time around.

4) Bootstrappers

The corollary of people being cheap is that it's a great time to bootstrap. If you can bootstrap (either because you can live on air, or because your business is profitable on Day 1), this will be a golden age. You'll be able to find great employees, and you'll be able to grow your business without the threat of 50 venture-backed copycats springing up overnight.

If you've got the stones to go this route, now is the time. Bootstrapping is a losing strategy during a boom, but *the* winning strategy during a bust.

5) Liquidators

There's going to be a lot of companies going under, which means we'll need vultures. Sure, being a carrion-eater isn't exactly glamorous, but it can be lucrative.

Whether you're liquidating entire companies, or simply buying stuff on the cheap and then re-selling it on Craigslist and eBay, this is your time.

But beware...a bust is essentially a Bizarro-boom for liquidators. Don't make the same mistake as your food source. DoveBid was riding high during the last bust, but ended up going under and being taken over by the British. Don't let this happen to you!


Now you know the winners and losers of the upcoming recession. The rest is up to you.

And if you have a bootstrapped online porn company/liquidator that uses aggressive offshoring to reduce costs, drop me a line. I'd be interested in investing.

Thursday, October 23, 2008

How You Know We're In A VC Recession

When I chat with my VC buddies, rather than asking me, "Have you seen any good deals lately," they ask me, "Can you give some advice to my porfolio company?"

Not a good time to raise money if you're an entrepreneur. But as a very wise saying goes, "This too, shall pass."

Look for a major recession-themed post in the next week or so. I'll tell you exactly who's going to get whacked, and how you can beat the heat.

11% of people have emailed while having sex?

I'm addicted to email, but I'm not this bad:

- 94 percent of those polled use phones to send e-mail or text messages during work nights or on weekends.

- 80 percent never leave their cell phone at home while on vacation.

- 11 percent sent e-mail messages while engaged in "intimate behavior."

- 40 percent sent e-mails while on commercial flights when the plane was in the air.

- 77 percent sent e-mails while driving.

- 79 percent sent e-mails while in the bathroom.

Sunday, October 19, 2008

Quote of the Day: Creativity

"To create is to potentially embarrass oneself in front of others. It is about the courage to be oneself and to be seen as oneself. Putting ink to a page, or pressing one's fingers against clay, or typing a line of computer code, or blowing glass and realizing mistake. Or success. With everyone watching. But most importantly, you....

Creativity is courage. The world needs more fearless people that can influence all disciplines to challenge their very existence. Creativity is reflection aimed not at yourself, but at the world around you."

John Maeda

Friday, October 17, 2008

TV Guide sells for $1

Want a sign that the dead tree publishing industry is in trouble?

TV Guide just sold for $1. Not a single issue, the whole damn magazine.

While in a state of decline, TV Guide still has a circulation of 20 million people.

And it just sold for the cost of a McDonald's Double Cheeseburger, hold the fries.

* Note: The price is for the magazine; the current owner is keeping the web site.

Wednesday, October 15, 2008

It's The Voters, Stupid: Why John McCain Lost

The pundits are already busy burying the corpse of the McCain campaign, and rightly so. As I noted *before* the market crashed, for all intents and purposes Barack Obama had this election in the bag several weeks ago.

Yet as they heap dirt on McCain's political grave, I can't help but feel that the punditocracy has failed to identify the true reason for his demise.

The autopsy will reveal plenty of candidates for the mortal wound.

The recession and stock market crash clearly turned the emphasis of the election towards McCain's greatest weakness--economic issues--and handcuffed him to a wildly unpopular president. (The greatest irony? For once, the Bush administration isn't to blame for our problems, and has been responding to the crisis in an imperfect but largely constructive and non-partisan manner.)

Sarah Palin's disastrous television performances turned what initially looked like a brilliant move into a major negative. (Though I do feel compelled to point out that VP choices rarely cinch the ticket; Dan Quayle was Vice President after all.)

McCain ran an undisciplined and unfocused campaign, which combined a lack of overall strategy with a pathetic inability to execute and a deeply unpopular focus on negative campaigning.

Yet in the end, the end came because of a simple fact. To paraphrase James Carville, "It's the voters, stupid."

John McCain is a self-centered man
who ran a self-centered campaign.

If you boil everything down, his favorite and most fundamental argument for why he should be president is that he is an honorable warrior who has served his country, and thus is the best choice to be president. His closing statement in tonight's debate, where he talked about the importance of service, and how generations of McCains had served America was an emotional high point, and drew a better audience response than Obama's more pedestrian closing.

The problem is, this is a self-centered argument. Americans don't award the presidency to the most qualified candidate, or the best human being--they vote for the guy (or gal) they think will make their lives better.

George H. W. Bush was far more qualified than Bill Clinton, and was clearly a much better human being. That didn't stop the American people from turfing out a guy who won a popular Middle Eastern war with near-universal support from around the world.

McCain has Bob Dole disease; he literally cannot believe that he is losing because he feels like he's much more qualified. That's why he seethes with anger during the debates; he views Obama with ill-concealed contempt of a haughty and ancient warrior for a eggheaded whippersnapper.

And that's why he deserves to lose. He is fundamentally out of touch with the American people.

McCain portrayed Obama as a self-absorbed celebrity. I'm sure that Obama isn't lacking in self-regard (Presidential seal, anyone?). But he has proven a far shrewder politician.

Rather than attack McCain directly (he has attack ads to do that dirty work), Obama spent this debate coolly swatting away McCain's attacks, and repeatedly turning the discussion back to what the two candidates proposed to do for the American people.

His policy proposals were a pandering pastiche of cliches and vague feelgood phrases, but the viewers at home lapped them up like a (LOL)cat with a dish of cream. Every time Obama spoke, he offered something to help voters. Every time McCain spoke, he seemed to be trying to make Obama seem like a scary, dangerous guy...directly contradicting the visual contrast of a calm, collected, even slightly boring Obama with the nervous, angry, combative McCain.

Where Obama really shows his political chops is when he complements his pandering with uplifting rhetoric that appeals to the better angels of our natures.

When he says, "We're the one's we've been waiting for," he's speaking to the voters. Even more importantly, he's flattering them and making them feel better about themselves.

This is a technique that Reagan mastered, and Obama is following in his footsteps. Nor should we simply dismiss this as a tactic; as Reagan, FDR, and Lincoln has demonstrated, never underestimate the importance and impact of a president who can lift the spirits of a battered nation.

In the end, America decided that Barack Obama made it feel better about itself, and that this was more important than John McCain's hurt feelings.

It was Douglas McArthur who said, "Old soldiers never die...they just fade away." Already, McCain has begun to fade from view. May we remember him as a crusading hero, rather than as the embittered and angry man that he's become.

Monday, October 13, 2008

Fighting a Rumor? Steal Its Thunder!

We've all heard the advice, "Don't dignify a rumor with a response." It turns out that this advice is dead wrong.

The Boston Globe has a great piece on the science behind rumors. Rumors, it seems, serve an important purpose in human society.

The key points:
  1. Rumors have always been around, and have always been looked down upon
  2. A lot of people discuss rumors because they want help figuring out if they're true
  3. "Dread" rumors driven by fear are far more likely to spread than "Wish" rumors
  4. Rumors serve an important social purpose; spreading rumors tends to boost your social status
  5. We're particularly likely to spread negative rumors about "high-status" individuals like bosses and celebrities (it appears that celebrity culture is a result of biology--our brains aren't good at distinguishing people who are actually important from those that simply get a lot of attention...paging Paris Hilton)
  6. It's futile to rebut a rumor if it's actually true
  7. "An effective rebuttal will be more than a denial - it will create a new truth, including an explanation of why the rumor exists and who is benefiting from it." (steal a rumor's thunder with an alternate Bristol Palin's pregnancy)
It all makes sense. Trying to rebut a juicy rumor is like telling people not to think about elephants...there's no way to easily focus on a void. Instead, focus attention on an even more compelling topic.

Thursday, October 09, 2008

Obama Plays Cat-and-Mouse With McCain

At this point, it's pretty apparent to all that Obama's campaign, led by "the Ax," has outflanked the McCain campaign at every turn. It's telling that Karl Rove refuses to acknowledge "the Bullet" as a protege...I wouldn't either given his pathetic showing.

This is no evaluation of policy or character, simply an assessment of campaign competence.

But now it's really getting ugly. Obama is toying with McCain, much like a cat might play with its future dinner. Here's what Obama said in a recent interview with Charlie Gibson:

"I am surprised that, you know, we've been seeing some pretty over-the-top attacks coming out of the McCain campaign over the last several days, that he wasn't willing to say it to my face. But I guess we've got one last debate. So presumably, if he ends up feeling that he needs to, he will raise it during the debate."

Obama is literally baiting McCain into launching an angry and self-destructive attack. He practically calls McCain a coward for letting his attack ads say what he's scared to do himself, a serious provocation for a man who thinks of himself as a "warrior."

If McCain was smart and disciplined, he'd ignore the attack. But based on everything we've seen in the campaign to date, he'll probably take the bait and launch a choleric and ill-advised attack during the final debate.

Best Mortgage Crisis Video Ever (Thanks SNL)

Looks like SNL has its fastball back. The two biggest beneficiaries of this crazy year have got to be Barack Obama and SNL.

In this sketch (which I found courtesy of Auren Hoffman), SNL puts the Democrats and American people on blast for trying to shirk responsibility for the crisis. It lampoons Pelosi and Frank, and introduces us to the Americans in danger of losing their homes, like the unemployed drug addicts who are outraged that the bank now wants them to pay their subprime mortgages, or the acquisitive yuppies who have to either sell their string of 12 condos, or give up their private boat.

Again, while SNL may be subject to the proverbial liberal media bias, they clearly understand that puncturing the self-regard of hypocrites is good business...and great comedy.

Wednesday, October 08, 2008

McCain in Pain: Media Piles On Embattled Candidate

Times are grim for Senator John McCain. The polls look ugly, and many pundits (including me) have already declared victory for Obama (though I did it a week before everyone else). And to make matters worse, it looks like whichever Illuminati control the media have decided that today is "Beat Up McCain Day" (or, as Andrew Sullivan would call it, Thursday).

First up is Rolling Stone's cover story entitled, "Make-believe Maverick." This lengthy piece paints a devastating portrait of John McCain as a spoiled, reckless, selfish opportunist with a long history of flip-flopping and nasty behavior.

Now, since Rolling Stone is a charter member of the liberal media, it's not surprising that they took the hatchet to McCain. But what makes this piece so devastatingly effective is the fact that all the worst accusations come from named sources who are either Republicans or decorated military officers. Here's a few of the lowlights:

On the grounds between the two brick colleges, the chitchat between the scion of four-star admirals and the son of a prizefighter turns to their academic travels; both colleges sponsor a trip abroad for young officers to network with military and political leaders in a distant corner of the globe.

"I'm going to the Middle East," Dramesi says. "Turkey, Kuwait, Lebanon, Iran."

"Why are you going to the Middle East?" McCain asks, dismissively.

"It's a place we're probably going to have some problems," Dramesi says.

"Why? Where are you going to, John?"

"Oh, I'm going to Rio."

"What the hell are you going to Rio for?"

McCain, a married father of three, shrugs.

"I got a better chance of getting laid."

Dramesi, who went on to serve as chief war planner for U.S. Air Forces in Europe and commander of a wing of the Strategic Air Command, was not surprised. "McCain says his life changed while he was in Vietnam, and he is now a different man," Dramesi says today. "But he's still the undisciplined, spoiled brat that he was when he went in."

Pinko commie? Here are Dramesi's decorations:

He holds the Air Force Cross, Silver Star, Legion of Merit with one Oak Leaf Cluster, Distinguished Flying Cross, bronze Star with "V" Device for Valor with two Oak Leaf Clusters, Meritorious Service Medal with one Oak Leaf cluster, numerous Air Medals, the Air Force Commendation Medal with one Oak Leaf Cluster, Purple Heart with four Oak Leaf clusters, Combat Readiness Medal, National Defense Service Medal, Armed Forces Expeditionary Medal with one Oak Leaf Cluster, Presidential Unit Citation, Air Force Air Force Outstanding Unit Award with "V" device and one Oak Leaf Cluster, and the Vietnam Service Medal with two Bronze Stars and two Silver Stars.

Or how about this passage, which quotes three Republican senators on why McCain is unsuited to be president:

At least three of McCain's GOP colleagues have gone on record to say that they consider him temperamentally unsuited to be commander in chief. Smith, the former senator from New Hampshire, has said that McCain's "temper would place this country at risk in international affairs, and the world perhaps in danger. In my mind, it should disqualify him." Sen. Domenici of New Mexico has said he doesn't "want this guy anywhere near a trigger." And Sen. Thad Cochran of Mississippi weighed in that "the thought of his being president sends a cold chill down my spine. He is erratic. He is hotheaded."

I had a very positive view of John McCain before this election cycle, but I'm afraid that his reputation is going to be one of the main victims of his botched campaign. Don't believe me? Here's what David Kuo (who worked for the W. Bush administration) had to say on the conservative blog Culture 11:

That McCain will lose is now a virtual certainty. This great American war hero, this truly great American has been broken by a campaign that has overwhelmed him. He does not know how to handle the unexpected economic horror that has been revealed over the past several weeks. He does not know how to break the increasingly confident, comfortable, and unflappable Barack Obama. Worst of all, John McCain has no real idea why he should be president. He knows that he has grueling contempt for his opponent. He knows, intuitively, that he is a better, more tested man. But when it comes to specific policies and solutions he is intellectually, philosophically, and politically vacuous.

Peter Suderman followed up with this passage:

One thing that’s clear from this debate is how little there is to John McCain and his campaign. He’s running on a few, vague issues -- tax cuts, an aggressive response to Russia in specific and terrorism in general, something about energy -- and a whole lot of non-policy fluff: America’s inherent strength and goodness, Obama’s inexperience, scorn for Washington insiders. But mostly, he’s running on a platform anchored by a single assumption: that John McCain is inherently, singularly qualified to lead the country, and, subsequently, deserving of the office of president. McCain views the White House as something to which he is unequivocally entitled. Beyond that, nothing else matters. Indeed, if you hold this view, nothing else would.

Obama, on the other hand, despite all the criticism and complaints that he’s running a personality cult rather than an issues-based campaign, is running a much more expansive campaign. It’s about Obama, yes, and Obama’s singular personality, but it’s also about Obama’s specific plans and proposed policies: on health care, on the environment and concerns about energy, on the economy, and on foreign policy. I don’t agree with much of what Obama proposes; he shares a fundamentally different view of how the economy works and how it should work. But the plain fact is that Obama is running a smarter, more detailed, more thoughtful and relevant campaign than McCain -- and it’s showing at the polls.

At this point, McCain is fighting a lost cause. My advice would be to re-orient the campaign from increasingly desperate Hail Mary passes to losing with dignity. Bob Dole got pounded in 1996, largely because he couldn't articulate a good reason for being president other than "It's my turn, darn it!" But he remains a popular figure, both within and outside his party. A far grimmer fate awaits John McCain if he does not turn from the dark side.