Chappelle in London

I've been really busy the last 4 weeks but I promise I'll take the time to do a worthy blog post before the new year. In the meantime, enjoy........I love satire. Something about being a witty a$$hole puts a smile on my face.



Like always, parental advisory explicit content.

"There is absolutely not bubble in technology."

LOL. Don't take my word for it. Listen with your own ears.

Moving at a glacial pace

We used to fool ourselves…We used to think our content was perfect just exactly as it was. We expected our business would remain blissfully unaffected even as the world of interactivity, constant connection and file sharing was exploding. And of course we were wrong. How were we wrong? By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find and as a result of course, consumers won.

- Edgar Bronfman, CEO, Warner Music Group

You have to respect the brutal honesty. Well done Ed!

In Pictures: Eight Ways To Make Money Online

Peter Thiel exclusive: Facebook, the classic growth vs. value story

Yeah f*cking right! $15B. Wtf! I've admitted in the past that I have a love/hate relationship with fb, but I might have to just throw in the towel and retire. I haven't been blogging long, but it seems like ages ago when I first blogged about the zuckster being idiotic for not selling @ $1B. Then, it was a $2B valuation and I thought......that's just being damn greedy. A couple months back microsoft rumors resurfaced and the valuation went up to $10B. I knew that could never happen especially given Ballmer's fad comments. Low and behold msft bit the bait and so did two hedge funds. $740M for less than 5 percent of the company. I guess fb will go public and everyone will be happy.

So coincidentally, I had the pleasure of attending the MIT Sloan Club of NY's Annual Hedge Fund Dinner. One of the guest speakers happened to be the Peter Thiel. Most of the conversations that night revolved around the current climate of valuations. Peter gave us his take on the 3 bubbles (housing, credit lending, emerging markets) that we are currently facing and he believed that globalization (or the expectation of globalization) may be the root cause behind every boom, bubble, or bust.

We all listened intently....trying to glean some type of "free" tidbit from the over achieving entrepreneur turned hedge fund guru. After his 30 minute talk, we had about 5 minutes of Q&A. The first 3 questions were basic questions that could be answered reading any macro textbook...............then came the final question from the wild gunslinger. My question to Peter:

"Peter, given the context of tonight's discussions, where do you see the recent facebook investment by microsoft and 2 hedge funds at a $15B valuation?" - whooknew

Before he could start to answer the question, Peter began with a diatribe of disclosures starting with he's on fb board, was an early investor, believes in the company's long term plan, blah blah blah blah.

He went on to say that Facebook is "the classic growth vs. value story." He contends the $15B was absolutely justifiable in the current climate. Now........I'm not mad at Peter. Why would he ever say anything different? It would be suicide (and stupid) for him to to question the valuation. He is on the board and has a lot riding on his own farabuttos.

The funny thing is........after listening to Peter recount the history of markets, mobs and mayhem (and I mean history), he had the nerve to look us in the face (a room full of pretty smart people) and say NO, we are not in a tech bubble. GTFOH. Here are his three reasons.

1. Prospect Theory. (I don't recall him using the term, but I've taken the liberty to interpret what he was trying to say.) Basically, people value gains and losses differently. He recalled some study that says we feel loss much more than gain......almost 3 to 1. Peter contends that the 2000 bubble is still fresh on the brain and people have not forgotten the pain. Since investors lost so much money with the last tech bubble, they would need to make 3 times the money they lost in order to get to a new irrational state. (These are not his exact words, but my understanding of his words.)

2. No tech ipos. During the late 1990's, the way to monetize a tech investment was through an IPO. There were a number of entrepreneurs who made their fortune after going public. Peter contends the absence of tech IPOs is an indicator that we are not in a speculative tech bubble.

3. HBS grads are not in tech. In the late 1990's HBS grads were going into startups. From 2005 to date, HBS grads have been flocking to private equity and hedge funds. Since HBS grads have not gone into startups yet, we are not in a tech bubble. (This was somewhat of a joke, but I believe the metaphor is plausible.)

After this third point........I sat patiently.......waiting, hoping, praying for some insight........ I would still be sitting at the Tribeca Grand Hotel right now if I continued to wait for some reasonable explanation.

IMHO, #1 is purely wishful thinking. I could counter his application of Prospect Theory with Sunk Cost Fallacy. We can't say that because people lost money in 2000 and haven't made 3x the amount lost, we are not in a bubble. Read #1 again. Seriously, this just sounds asinine. I could argue that given the current level of capital raises, people are placing more bets on tech companies now. Granted it takes less money to start a company, but startups are raising more money at higher valuations. Sounds like doubling down to me.

#2 just sounds good. I can't really agree or disagree. People have been waiting for the tech ipo window for awhile. Here's a current status check. Here is some research on IPOs (from April 2007). Wall Street fiascos and Sarbanes-Oxley have to be addressed as well. Why would you want to IPO when you could be acquired, get paid in cash, and not have to deal with all the extra reporting/disclosures. Let's not forget going across the pond.

# 3 is probably the most palpable. If you replace "HBS grads" with "seemingly informed herds," one could agree with Peter. By the time people realize something is good, it's time to get out. Next time we go to MIT to recruit, I'll stop by HBS and take a poll on where people are going after graduation. Hopefully it's still PE and hedge funds.

Honestly, the most disconcerting thing for me was not Peter's response. That's his story and he's sticking to it. I'm not mad at him. For me the problem is the 30 minutes prior to my question. He cautioned the audience to move out of investments that are levered and suggested not investing in popular, crowded ideas. I guess fb is an anomaly and social networking is not a popular, crowed space. I guess fb is profitable and not leveraging current growth with future cash flows. I'll just stop here and let the numbers speak for themselves.

So is fb worth $15B? It doesn't matter what I think. msft paid that much.........so it has to be worth $15B. The real question was...........are we in a bubble?

------------------ Extra

What was Peter's take on yoonew?

Why did it take you so long to build a futures market for tickets?
Why would you try to build a startup in nyc?

I'll respond in a future post.

Is Facebook worth $15B?

Here are the BBC's 15 reasons why Microsoft may think Fb is worth $15B.

Good try. I think JohnM hit the nail on the head! Thanks John for your honesty.

#16 JohnM

October 25th, 2007 at 9:32 am

Microsoft is LEASING Facebook for the next 4 years. Facebook is not worth $15B, Microsoft is leasing an advertising distribution system. The equity ownership is so small as to become almost immaterial.

Of course, Facebook will now attempt an IPO northwards of $15B, saying that Microsoft already set the valuation floor. Of course this assumes all the lawsuits regarding ownership are settled.

If the company does go public, what the myopic public should realize is that they are not buying the advertising deal, along with shares. Only Microsoft gets that. Don’t be fooled, Ballmer cut a better deal than the public will ever get. Microsoft is NOT valuing Facebook at $15B. No, no, no. Microsoft is valuing a potentially lucrative advertising distribution deal and a small percentage of Facebook at $240MM.

The public are sheep though, so I imagine Facebook will line-up the investment banking sheperds to take them out at $20B+. Baaaahhhhh.

Now why might hedge funds get involved? Because the bump-up in valuation will go from 15B to $20B on an IPO. Nice % increase for a holding period of likely only a few quarters.

But keep in mind, it’s the investing public (proxied through mutual fund managers, etc.) who will pay the price for all of this. Feels like 2000 all over again. Great move for Facebook, probably a smart move for Microsoft, and probably a smart move for the hedge funds. But remember, this is a game of musical chairs. And as usual it is often the naive public investor left standing.

Did you hear that? Musical chairs! John, holla at me.

Coming to a city near you!

Thanks for all of your support! I had a great time. Can't wait to do it again.

It's alive!

I'd like to be the first one to welcome everyone to the new yoonew!

We are officially the world's first futures exchange for event tickets.

Thank you all for making it possible. Who's ready for shots of Patron?

Francois ?
Frederic ?
John ?
Kaveh ?
Pratap ?
Sriram ?
Stan ?
Victor ?
Will ?

To the first of many celebrations! WGTCT!

It's coming

Full Circle.....

Are you ready? It's coming.





For the last year or so, I've been doing some research to get a better understanding of how the online ticket industry has evolved. I stumbled upon an old article describing Ticketmaster's entrance into the industry. They were a puny David with $1M in annual sales up against the colossal Ticketron, which did $100M in annual sales.

Ticketmaster, founded by two Arizona State University computer students in 1978, got its first big break in 1981, when it was a struggling $1 million-per-year upstart trying to take on $100-million-per-year giant Ticketron. Ticketmaster needed a major client to give it credibility, and to prove that the company could handle a large account and a complicated set of ticketing problems efficiently. They also wanted a client with a national profile. It settled on a major-league baseball franchise whose new owner was appalled to find that his team did not have computerized ticketing. At the beginning of each baseball season, tickets to every seat for every game were printed, stored somewhere in its stadium, then delivered to box offices and ticket outlets as game dates approached. The system was horribly inefficient, and wasteful as well, as most of the tickets printed up were never sold.

-Fred Moody Seattle Weekly 11/2/94

Wow! Talk about coming full circle. Back in the day, Ticketmaster found a way to make the process of buying tickets more efficient and more enjoyable to the customer. Fred goes on to point out three keys to Ticketmaster's success:

• 1-Ticketron stopped innovating

  It is also forgotten that Ticketmaster rose to dominance at the expense of an established, competing company -- Ticketron -- that operated a virtual monopoly in the early 1980s, and that was notorious both for insensitivity to customer complaints and for its refusal to innovate or create efficiency. Ticketron was so bad that many venues opted for noncomputerized ticketing rather than Ticketron's computerized service. Even Curtis says Ticketmaster succeeded because "they are good, smart businessmen. They were way better than everyone else -- Ticketron just wasn't as good."

• 2-Ticketmaster built a portfolio of exclusive venue contracts
  

  These exclusive contracts contain two interesting provisions -- one of which helps explain the variety and high levels of Ticketmaster service charges. Arenas or promoters who sign them are prohibited from allowing anyone else to sell their tickets; and Ticketmaster "rebates" or, in the words of its critics, "kicks back" some of the service charges to its contractors. Venues that have entered into such agreements with Ticketmaster are reported to have taken in as much as $500,000 per year from the ticketer as a result -- payment, essentially, for freezing competitors out of the market.

• 3-Ticketmaster established "promoter incentive programs"
  
  In addition to locking up those venues, Ticketmaster also signs contracts directly with promoters. So even a venue that refuses to contract with Ticketmaster finds it impossible to stage a non-Ticketmaster concert, as any viable promoter in a given market will also have an exclusive contract with Ticketmaster.

A better product, some nice barriers to entry, and the legal muscle to enforce the binding contracts helped shape the environment for a super monopoly. So much so, that it was almost impossible for artists to go on tour without using Ticketmaster. The exclusive contracts with suppliers and more efficient distribution channels (phones and thousands of kiosks) helped catapult Ticketmaster over Ticketron.

Because of Ticketmaster's avowed determination to enforce its contracts by suing promoters who cooperated with Pearl Jam, says Kelly Curtis, "We realized that we couldn't put together a safe, efficient tour without using existing venues. In order to do that, we would have to use non-Ticketmaster venues, which means open fields where we install fences, security, amenities... It was a logistics thing. It's possible to do a tour without Ticketmaster, but it's an incredible pain in the ass."

In the early 80's, 2 computer scientists from Arizona State (Albert Leffler?, Jerry Nelson?) built a better mouse trap. Their technology made it possible to service a larger number of consumers in a smaller period of time. Ticketmaster's ability to sell out a show in less than 10 minutes was revolutionary. In addition to speed of transactions, one often overlooked asset is the information Ticketmaster produced through the market.

While the convenience factor Ticketmaster affords cannot be overemphasized, neither can the value of the information it provides. One of the prime justifications for the company's high service charges is the fact that only one out of eight callers actually buys a ticket; the rest call for information, and pay nothing. The company is an information source for nearly every live event in the region. "Seventy to eighty percent of our calls," says Ticketmaster Northwest general manager Brian Kabatznick, "are for information only, and generate no revenue."

Fast forward to 2001 and Stubhub steps on the scene. Doesn't Stubhub's story sound strikingly similar? In the later 90's Ticketmaster's fees were getting a bit too annoying. Marquee events would sellout too fast (I guess there is a such thing as too much efficiency) leaving customers highly upset. Additionally, customers not only wanted to buy tickets, but also SELL their tickets. Ticketmaster had fumbled the ball. How did Stubhub scoop and score?

• 1-Built a better platform for sellers
• Stubhub attracted sellers which in turn attracted more buyers. An introductory systems dynamics course will help you see the positive reinforcing feedback loop.
  
  
• 2-Established "secondary market" contracts
• Once Stubhub got a foot in the door, it would be easier to become the primary ticket supplier of a venue, artist, or team. (Stubhub recently inked the MLB deal.)
  
  
• 3-Developed ticket broker relationships
• Stubhub aggregated inventory from the fragmented ticket broker community across the United States. "Fans" could [buy/sell] tickets [from/to] other "fans" or ticket brokers.

By getting supply from venues as well as "regular fans" Stubhub was able to build great brand awareness at the end customer level (they "owned" the customer) as well as offer a wider variety of tickets at competitive, market driven prices.

2 Stanford MBA students (Eric Baker, Jeff Fluhr) established a $310M company in 6 years. Their technology was not rocket science, but as enterprising economists, the founders built a more relevant, efficient way to both buy and sell tickets.

Here's the kicker. Fred Moody actually predicted the fate of Ticketmaster in 1994. Almost 13 years before eBay bought Stubhub. At that time Ticketmaster had unimaginable power. Here's Fred's warning:

Ticketmaster, like IBM before it, is more likely to falter or decline because of changing market conditions than because of federal intervention. Knowledgeable sources claim that the availability and ease of use of current computing technology has so lowered the barriers of entry into the ticketing market that competitors inevitably will find a way to break Ticketmaster's stranglehold. And if Pearl Jam pulls off its concert tour next year, a template of sorts will be in place for other acts to follow. The history of monopoly in this country, after all, is more a history of disgruntled competitors and customers finding an alternative to the services of a monopolist than it is a history of the government regulating monopolies out of existence.

Ultimately, the question of whether a monopoly can survive its own abuses of power boils down to how much consumers will tolerate. Companies that are morally monopolistic -- even if not monopolists in the tangled and technical legal sense of the word -- grow so cynical in the process of accumulating and keeping market power that they lose touch with reality, become incapable of decent public relations, and overstep some boundary in the consumer's mind. Monopoly, in this sense, is like pornography -- consumers can't define it, but they know it when they see it. And ultimately they turn away from the monopolist in disgust.

It's now 2007 and according to Moore's law, things are coming full circle once again.

2 (I guess two is the magic number) engineers from Princeton who graduated from Sloan (me, Gos) have combined technology and creativity with the most efficient market clearing mechanism known to man, not an online store, not a message board, not an auction...............................but a continuous, electronic exchange. I wonder what Fred would say about trading tickets and ticket derivatives. Innovative? Efficient? Fun? Transparent?


It's about to get really interesting. WGTCT

MIT Career Fair 2007

To be the best and beat the best; you have to compete head to head.
It was great going back to campus. (Life was so much easier then.)
















Booth #294
Thanks everyone who stopped by our booth!


Here's the Who's Who list of the career fair:

Microsoft

eBay

Susquehanna

Oracle

Adobe

Google

Yahoo: (sorry....i couldn't find their booth.)

South of Philly

I guess there are some places worse than the South.
(Parental advisory recommended. Graphic torture in Logan County, West Virginia.)


What's the first word that comes to mind when you see this picture?
(Please place your comment below.)

Happy Birthday Kyle

Good luck today. We're all watching.

GO BOISE!

The video that made it all possible

You asked for it. Here you go.

This is why I live in the Northeast

First, I would like to thank everyone for reading my blog. The readership is growing every month and I welcome all feedback as well as comments (I hide from no one.) Now I usually don't post on political issues, but the recent events have left me no choice.

As crazy as the story of the Jena 6 sounds, many still have no idea. To be honest, I only heard about the story sometime last month. (I know, I know....I should be ashamed of myself.) But seriously, why is there no US media coverage of the case? Not CNN, ABC, NBC....I won't even mention Fox. Why do I have to read articles from publications overseas discussing racism in the US? Before you hear me go off, watch this quick video.



See, this is why I can't live in the South. I was born, raised, and schooled in NJ, but my mom's side of the family is from Mississippi. Every summer my brothers and I would go visit my family in MS. Every summer I would get scolded by my cousins, aunts, uncles, and family friends. Why might you ask? Because I didn't know my role.

They were absolutely right. I didn't know my role (and still don't.) I don't care where you are from or who you are or how much money you make, there are some things that I will not tolerate. #1, please do not try to speak to me in a condescending manner. That's only going to bring out the beast. #2, my name is Gerry, not boy, not kid, not (I won't even type it.)

So, you can imagine what happens when you mix a literate, intelligent, slick talking, young man from NJ with some of that down south nonsense you've just witnessed in the video. It's not a good look. Needless to say, I'm banned from Mississippi or anywhere south of Philly for that matter.

Now this brings me to Jena, Louisiana, population 2,971. What the f*ck is going on down there? Can someone please help me answer these questions:

• Why would some child have to ask if they could sit under a tree on school grounds? At a public school! (I don't know if this is true, but if it is, I'd have to pack my bags and leave Jena, LA asap.)

• If a grown man pulls a shotgun out on you and you "wrestle" the gun away from him, how could you be charged with theft of a firearm? (I don't know if this is true, but if this happened to me, I'd have to pack my bags and leave Jena, LA asap.)

• Since when did hanging nooses with school colors become a popular, juvenile prank? (I don't know if this is true, but if it is, I'd take it as a warning, pack my bags and leave Jena, LA asap.)

• I've heard of out-of-school suspension for fighting, but when did getting into a school yard fight become a crime punishable by 22 years in prison. (I don't know if this is true, but if it is, I'd pack my bags and leave Jena, LA asap.)

Without getting into all of the he said, she said politics, I still find this case quite troubling. With all of this controversy, why is there minimal media coverage on the Jena 6? No one wants to touch this case except the obvious Rev. and Rev. All I want are the facts. Just the facts.

Since I don't have the facts and I can only get second hand facts from across the Atlantic Ocean, my only real advice to the people of Jena, LA is to follow that North Star.

One last Boise post for the week

For those who missed the Fiesta Bowl, here's the best catchup in less than 10 minutes.

Out of the Blue

How could you not love Boise? When Vince and I put together Kyle's highlight film, all we knew at the time was that Boise was in the Top 25. We knew Kyle could play anywhere, but it was late in the recruiting season and most schools had already made their offers. With little options and time ticking away, I made a highlight tape over Thanksgiving break and fedex'd 25 copies to the top 25 programs in the country. Boise was the first to respond and the rest was history. Little did I know, our little video would have such a profound effect on the Boise community.

For those of you who watched the Fiesta Bowl on TV, all I can say was the live game was the most exciting game I've ever witnessed. Not only was the whole family there, but our seats were in the corner of the endzone where all of the magic took place. We couldn't have asked for a better view.

Now I'll be the first to admit. After the interception I thought it was over. I recall an Oklahoma fan who had never said a word during the entire game, came over to our seats after the pick and say, "Win or lose, this was a hell of a game." I sat there thinking to myself, if you don't get your sorry, chicken-$hit ass out of my face I'm going to throw you down the stairs. A real sportsman would not have waited until his team was on the verge of winning to start gloating. Anyway, instead of leaving the stadium, my girlfriend reminded us the game was not over and we just needed faith. And after all was said and done, she was absolutely right (as usual).

How could you not love Boise? Boise State is much more than a football team. Much more than Blue Turf. Much more than a some university in the middle of Idaho. Boise is all about faith.

Faith; if you're a great prospect and no one has found you yet, Boise State will. Faith; if you're an underdog and nobody believes you can do it, Boise State will show you how. At some point in life, we all need a little faith in whatever we do in order to make things happen. Like I said, Boise State is much more than a football team.

I'm so proud of the school. So proud of the team. So proud of the coaches. So proud that I had a small role in history.

Now.....I'm not in the movie, nor am I receiving any royalties.....but I would like to invite all of my readers to check out Out of the Blue. You can't see it in the theaters unless you live in Boise. Everyone else, we'll have to get the DVD. Why am I recommending this movie without ever seeing it? Because I feel like I lived it. I've followed the school ever since the day we sent the highlight tape and I want to share my experience with everyone I know.

I know it will be difficult, if not impossible to top last season. But if I had to think of one team that could find a way to make it happen, it would be Boise State.

B-O-I-S-E!! S-T-A-T-E!!

I get money!

Thanks to my new little toy (thanks gos), I am now making my foray into cinema. Watch out Guy.

Please let the video load before playing.

The Left Hand Man on the Right

Maybe it's me, but when did it become against the law to tap your foot while sitting on the toilet? I mean, how do we know that Larry wasn't listening to Kanye's new album on his Ipod? And how do you get arrested for putting your left hand under the stall while reaching for toilet paper? What's criminal about that?

This whole case is ridiculous. Here are some things I want to know.

#1, why is the Minneapolis-St. Paul International Airport such a hotbed for "lewd" behavior? What ever happened to simply getting a hotel room?

#2, why is the Senator using a public bathroom in the first place? You would think he would have some Frequent Flyer card and could use a bathroom in a one of those plush airline club rooms.

#3, what kind of police officer are you, if your job is to solicit men in an airport bathroom in Minnesota all day. Talk about hating your job.

#4, I'm going to assume that senators must have some minimal level of intelligence. Having said that, why would Larry start the conversation saying, "You solicited me?" What ever happened to "I plead the fifth" or "It wasn't me."

#5, Since when did presidential candidate Arizona Sen. John McCain and Minnesota Sen. Norm Coleman become the bastion of morality? (John, deflection won't work. Maybe Newt was right.)

At any rate, listen to this fool and make your own conclusion.

Boise St. 65 - Weber St. 7

"First of all, this was a joke. I was surprised with the way we played. It's not all [the players'] fault. It goes to the coaching staff, too. That was as bad a football game I've been a part of. When you don't come to play, that's what happens." - Weber State coach Ron McBride

Blowout from beginning to end. Granted Weber St. is a I-AA team, Boise still executed very well. Much better than I thought. QB, check; RB, check; DLine check; WRs, check; Secondary, no need to ask.

The streak is still alive.

Kyle, good work on that return. Not sure if you could have stayed inside or bounced out, but I was jumping up and down in the office!


Yeah, this hit was real too. Not sure about the final count, but it was pretty high. That slam on the sideline was the truth. It should be on youtube (update: here you go)!

Stay up.

Go Boise!

Good luck Kyle #1!

The Power of Facebook (I can't believe I'm saying this)

I'll be the first to admit, I'm a self-proclaimed Mark Zuckerberg hater. I'm not sure how we've gotten to where we are today, but Facebook is all over the place. The more I try to run from it, the more difficult it becomes to avoid the revolution. I think I came to this realization sometime last week. While connecting with an old classmate, I saw that he joined a group called "Don't Name Princeton's Mascot."


Prior to logging in Facebook, I had no idea that this "contest" existed. Some genius at the university thought it would be a good idea to name the Princeton mascot. How idiotic (for a plethora of reasons)! I immediately joined the group and proceeded to invite every single Princeton friend. 20 minutes later I had 20 friends join me. The wall posts on the group page confirmed that my outrage was not alone. As of right now, there are 500+ members. Now I can't say that we've won the battle, but the link to the asinine contest has been removed from the varsity sports homepage.

Is our group that powerful? Is Facebook the next Google? Did Mark just punk Shirley? I won't go so far as to say yes, but something happened. Something potentially powerful.

Mark...c'mon bro. Make me like you. Just admit it. You didn't plan this revolution. You got a lot of help. I would respect you a lot more if you just admit that luck has a lot to do with Facebook's success.

If my dad ever...

When it rains, it pours. I've refrained from posting on the Mike Vick situation because there really isn't too much to say. I'm sure never in his wildest dreams would Vick ever believe his career would come to an abrupt end because of his dog fighting. I can't even begin to imagine what is going on in Mike's head right now. I mean seriously.....it was all good just a week ago.

Just a couple of months ago I posted a joke on the Facebook wall of a friend/classmate, Chris (son of Gerald Poindexter), saying that his dad was going to ruin the Falcons season with these trumped up charges. I warned him to tell his pops to chill before the entire city of Atlanta comes to Surry County and beats his a$$. Little did I know, his dad, Surry County Commonwealth's Attorney, was not going to be Vick's achilles' heel. Who would have thought that Vick's own father would rat him out?

I guess I could understand why Vick's Co-d's would cop pleas and leave their "friend" out to dry, but his FATHER. If my dad ever......................................I would have to do more damage than Randy Couture did to Gonzaga's nose.

I know father-son relationships can be hard. I'm thankful everyday for the relationship I have with my father. Sure he constantly reminds me of danger and opportunity or tells the same jokes or at times can be overbearing, but what father who is proud of his three sons wouldn't be supportive? It's because of him that I work so hard at what I do (and why I'm so aggressive/overbearing/dedicated). Failure is not an option......especially when we only have a limited number of opportunities in life.

I still can't understand this. What would drive a father to go on national tv and sell out his son? His own flesh and blood. Basically, Michael Boddie put the last nail in the coffin. At least Abraham could say God told him to do it. I'm thoroughly disgusted!

I'm sure I've done some things in my 29 years that my dad didn't like. I'm sure there are some things that he down right hated. But in the end, we talked about it and worked things out. I think that's what makes a relationship stronger. I can't think of a single thing I could ever do that would give my father the impetus to arrange from my sodomization in a Federal penitentiary.

It's things like this that make me wish Father's Day was once a month, not once a year. I don't think we take the time to really thank the dads that not only shield their children from prison, but actually act as role models. I'm glad I have my role model. I'm glad my father has been in my corner every day for 29 years straight.

Thanks Dad for having my back.

My House of Stairs

Why all the tattoos?

A lot of people ask me that question and the answer varies every time. I got my first tattoo in high school right before graduation. It wasn't about rebellion, it was more about permanent self expression. Since that time, I've gotten a tattoo at every major juncture in my life. Each one represents something particular to me and is a biography/historical timeline of sorts.

Why that latest tattoo? As many of you know, we've been working really hard for the last 4 years getting yOOnew off the ground. When we started, we had no idea how difficult it would be to create an electronic exchange. Imagine building the NASDAQ or Euronext.liffe from scratch. After several prototypes, several years, several iterations, several long days and even longer nights, we are now getting ready to come out of stealth mode.

Having said that, my latest tattoo, M.C. Eschers's House of Stairs, was my most ambitious undertaking.

I always say that each successive tattoo has to be "better" and more complex than the former. Boy did I underestimate the complexity of Escher's work.

I arrived at The G-Spot Tattoos around 11:15am. (Don't be fooled by the outdated website. The shop founder, George Moore, is probably the most talented tattoo artist on the east coast.) For those who know how anal I am, it takes a lot to convince me to put something permanent on my body. On top of that, I would never want to bastardize the work of Dali or Escher. George is the only person that I would ever trust with the task. No disrespect to Chris, Arni, and the rest of the Miami Ink crew or Kat for that matter, but George is on another level.

Anyway, G started at about 12:45pm and finished around 5pm. When I say finish, I mean just with the OUTLINE.



After all the shading was said and done, it was about midnight!


Now...I think I have a pretty high pain tolerance, but this was a bit ridiculous. The last hour was the absolute worst. However, when it was all said and done....George had created a masterpiece. (I'll post the final product when things have completely healed).

What's the point of this post? These last four years of my life have been like the 11 hours I spent sitting in the cold, dark room bleeding profusely. I had a great idea of what I wanted when we started......the adrenaline was pumping and I was juiced. After the first year or 2 hours, things were a breeze. I felt good and my heart was filled with fervor. Then things changed. The soreness kicked in and it became uncomfortable. The lack of comfort then transformed to pain, then annoyance and then all I could do was just pray for it to be over.

What is most frustrating? You start with a clear vision and begin to see the beautiful picture come to life before your very eyes. As things develop you start to realize this is going to be a long, hard, and painful process. After awhile, things don't seem to look right and the only thing you can think about is.......when will the madness stop?

Why all the masochism you ask? Because when the wounds heal and the bugs have been worked out.....the end product is so gratifying. It's the final masterpiece that keeps you enthralled, keeps you focused, and keeps you prepared to do it all over again...........

WGTCT

Age and the entrepreneur

There's been a lot of debate about the optimal or ideal age to start/run a startup. From Marc Andreessen to Fred Wilson to other celebrity tech bloggers.....everyone has an opinion. I don't have anything major to contribute on the topic other than my gut leads me towards the younger end of the spectrum (and my brain is swayed by pretty charts).

During my bschool days when I jumped on the bandwagon and tried my hat at "strategy" consulting, I remember interviewing with some partners from BCG. I recall them stressing the high level of involvement that new hires (fresh college grads or MBA grads) have on important engagements. 2 points stuck with me.

• First, they contended that younger people with little "domain" expertise tend to develop expertise from a completely different perspective. When tasked with solving difficult problems, they are not clouded (consciously or subconsciously) with preconceived notions of how things work or should work. They may also use seemingly irrelevant experiences to answer a question.
  
• The second point was that if you look at geniuses and their greatest accomplishments or contributions to society, "greatness" tends to take place at an early age (Einstein, Mozart, etc.).

While we may accept these observations as truth, many have asked for quantifiable data. While reading Marc's post tonight, I remembered an overhead projection slide from a class on tech entrepreneurship. I would like to direct everyone to Professor Edward Roberts at MIT Sloan. In his book "Entrepreneurs in High Technology: Lessons from MIT and Beyond" (especially Chapter 3) Roberts addresses "The Makings of an Entrepreneur."

The data is compelling.

NBA Information Arbitrage

"By having this non-public information, I was in a unique position to predict the outcome of NBA games. Some of my picks included games I had been assigned to referee." - Tim Donaghy

Really Tim? You were able to "predict" the outcome of NBA games because you had non-public information? No $hit! How else can anyone make money in any "market"? Either you're lucky or you have more relative information than other market participants. This "edge" may help your predictions, but nothing is more powerful then simply blowing your whistle when a play is not in your favor. Tim you didn't just have inside information, you CREATED information (allegedly........sometimes I have to cma).

I've always contended that sports markets are more efficient than the equity markets. There is a lot more transparency. You don't have to worry about funny accounting or corporate scandal. Every major media outlet publishes sports scores, odds, and injuries daily. Most people are more informed with regards to sports than stocks. If you don't believe me, try this simple experiment. Ask someone.....where is GOOG trading, then ask.....who is leading the National League. More people would say the Mets than $487.18.

I'm not so much concerned with Tim's inside information. As a somewhat believer in APT, eventually this information gap will be arbed away.....usually quicker than one can realize any gains.

As repulsive as it is, I could potentially grow to forgive Tim for using his edge. However, having a ref purposefully affect the outcome of a game is the ultimate disgrace. Players gambling on/against themselves is horrible. But a REF! A REF? A supposed, independent, neutral arbiter. I'm disgusted!

And to think......none of this would have come to fruition if the Feds were not investigating the Gambino crime family in Brooklyn. They stumbled upon Tim and contacted the NBA. All for what?

Let's look at the numbers:

• Gamblers at first agreed to pay Donaghy $2,000 for each correct game pick and later boosted the payment to $5,000
• Investigators believed Donaghy made at least $30,000 from December to April
• Donaghy was free on an unsecured $250,000 bond
• He also faces a maximum prison sentence of 25 years, $500,000 in fines and might have to pay a still undetermined amount of restitution to the NBA

Some reports claim that Tim was providing "tips" since 2003. How much money is that? If one team plays ~80 games a season and Tim refs every game, we could estimate 5 seasons or 400 possible games. Let's say that he has some "edge" on 1/2 the games and is correct 90% of the time (i know that's impossible, but we are making an assumption about his edge). This would mean that Tim could supplement his $200k+ annual salary with $900,000* over 5 years. That brings his total annual compensation to $380,000 a year. What a f*cking idiot!**


* 400 games * 1/2 edge * 90% accuracy * $5,000 per game = ~$900,000.00
** $380k - (25 years * annual prison salary) - (costs associated with running from the mob) = ~ $0.00

Who knew the electric violin could sound like this?

I was passing through Grand Central Station today and heard one of most amazing instruments....the electric violin. The music was so moving that I had to take off my headphones......and I was listening to the new Common album.

After standing in the hot subway station for over 20 minutes listening to Lorenzo LaRoc, I decided to take some video on my treo and post a quick blog. You can download a the full single on Lorenzo's myspace page.

I recommend buying the album (I bought my CD at the station). I usually don't stop to listen to street performers, but this was an extraordinary case. Apparently Lorenzo has been playing the subways for over 15 years. He's a well trained, well accomplished musician, composer, and arranger. He doesn't "work" the subways full-time, but knows other musicians who make over $200k a year doing what the love. (And I thought they were poor bums wasting their time in the subways. Damn I was wrong!)

Don't just take my word for it! Watch the video (Sorry for the poor sound quality.....it's Palm's fault.)

Lorenzos' Bio:

Lorenzo La Roc is a native New York electric violinist, composer, and arranger. He began playing the violin at the age of eight, and though he was classically trained, he now plays a diverse gamut of styles, including jazz, rock and Latin music. He studied at the Julliard School of Music under the tutelage of Mary Jane Metcalf, the Guitar Study Center in New York City and at the Creative Music Studios in Woodstock.

Very soon after graduating college, he was hired as a solo electric violinist to perform with Warner Brothers recording artist, Sheila E. It was then that he embraced Latin jazz.

After several years working with Sheila E., Lorenzo formed his own group of New York City musicians called Masterpiece. Masterpiece is now comprised of cutting edge musicians who have worked with many grammy-award winning artists such as Dizzy Gillespie, Ray Charles, and Whitney Houston.

Lorenzo uses his signature trademark, a custom made five-string plexiglass electric violin. The intensity and passion with which Lorenzo plays his instrument expresses not only his musical versatility, but also his deep love and commitment for what he does. He hopes to bring the electric violin to a popular audience and to touch the hearts of listeners worldwide.

And I thought the X-Games was boring

I'd be the first to admit that I didn't really like skateboarding. I though it was for geeks who couldn't play a real sport......I take it ALL back. I watched my first X Games this past week and have a new found respect for these modern day Evil Knievels. On my JetBlue flight from Vegas (yes, I'm up), I had nothing better to do than watch 5 straight hours of skateboarders, bikers, and other crazy, young guys/girls defying gravity and performing some of the most amazing tricks I've ever seen. I never knew this sport (I'm officially recognizing it as a sport) required ridiculous skills, tremendous body control, strength, creativity, grace, and most importantly reckless abandon that one would have difficulty finding from the toughest in the NFL..........I mean they hang low. Very low.

Here's a sample:

Adam Jones bustin a Shaolin flip! (I'm even learning the lingo!)


Todd Potter rocks his kamikaze flip - Kiss of Death Backflip!


Kyle Loza's Gold medal trick.


These guys make it look so easy. Makes me want to go out there and pick up a skateboard and start flippin.....SIKE!!

Now let's talk about Jake Brown and his fall from grace. If you don't know who/what I'm talking about, just scroll down below. Before you do that, here is a video of Jake Brown performing some sick tricks. Please watch this video before you go any further. It will give you a good idea how skilled Jake is.

VIEWER DISCRETION ADVISED. If you haven't seen this on ESPN and refuse to live in the 21st century and watch TV, please prepare yourself.

I was fooled into thinking this stuff was fun and games. This fall reminded me never to ride a skateboard. I saw this clip on the plane without my headphones on.....good thing I didn't hear the SMACK! Take a deep breath.


Let's take a look from another angle (homemade film).


One more time for good measure (on the jumbotron).


Jake, I wish you a speedy recovery. Thanks for introducing me to the sport.

First you take my home, then you take my phone!

We've all heard the noise about the subprime housing debacle. Everyone is to blame........the deadbeat customers, the suspect lenders and even the hedge funds that trade this risky debt. Well, it doesn't just stop with homes. Risky lending has finally hit the cellular industry. Amp'd Mobile is done!

What can you say? When you target customers that NO OTHER CARRIER would touch with a 10 foot pole, you're asking for trouble. When young, fickle customers with little or no credit make up the majority of your user base, you're asking for trouble. When you allow people to pay as they go, you add to the volatility and unpredictableness of your revenues.........say it with me...........YOU'RE ASKING FOR TROUBLE!

You raise $360M in VC funding, but you can't pay your Verizon bill ($41M)? How do you rack up $370,000 a day in charges? And that's just with Verizon! Who is watching the finances?

To add insult to injury, you still advertise the phone service and sell the equipment in Best Buy and Circuit City! Down right despicable!

Now here is the ultimate slap in the face. Your current paying customers are greeted with the following explanation:



Is this a sign of things to come? I'm not the only one concerned for all the other MVNOs (Mobile Virtual Network Operators). On paper, it seems like a great idea.

You don't need to pay billions to create the infrastructure.
You don't need to hassle with subscriptions or customer service.
You can charge ridiculous premiums to customers who have no other options.
It's prepaid, so you earn interest on the float.

Here's the rub. If you own a MVNO, you are in the risk management business! If I was a partner at a PE firm, I'd buy Amp'd for 5 cents on the dollar. I'd hire some guys from Capital One or Wall Street and apply the appropriate risk management systems. Then, I'd ride the wave back up (during the next bubble).

$8M dollars....before the 68, in front of the money!

How to raise money from a VC?

Before I comment on this video, I'd like to provide the appropriate contextual background. I read a lot of blogs. When I say a lot, I mean several blogs from a wide spectrum of bloggers. Entrepreneurs, VCs, marketing gurus, scientists, economists, sports fans, gossipers, etc........Like I said, I read a lot of blogs. However, I am still looking for a compelling reason to accept VC money.

Shpigler's video is quite amusing. I don't speak Hebrew, but the subtitles (good work 5min) are quite helpful. Throw in the mannerisms of a cocky angel, the cigar waving, the glass of scotch and you have all the makings of a great comedy. However, the most compelling part of the video is the content.

Many may dismiss the "content" as typical, amateurish, angel rhetoric. I beg to differ. It's really quite simple. If you're managing a venture fund in which 9 out of 10 of your investments fail, how do you maintain abnormal returns? How do you satisfy your LPs? The 1 shining star must makeup for the 9 dogs. If you're a dog, you don't care. But, if you are the star.....there is an inherent conflict of interest. You are essentially responsible for making up for the dogs.

Riddle me this:

If one could raise the same amount of money at the same valuation and the same deal terms from the following options, how would one evaluate the choices?

A. the best VC in the world with the best track record and connections out the wazoo

B. an angel investor who is a successful, serial entrepreneur

C. a strategic partner who has been in the industry for 50 years

D. the venture arm of a multi billion dollar public corporation

Any takers?

Pimpin' all over the world.....even Mexico

Listening to hip hop, one may hear several references to the legendary character, Iceberg Slim. Robert Beck's legendary "career" reached its height in the '70s as Iceberg "pioneered" the Pimp Game. When the pimping was done and Iceberg "squared up", Robert went on to sell over 6 millions copies of his books depicting his life and ascension in the Pimp Game.


Now, let's talk about the real Pimp. Iceberg Slim's Pimp Game pales in comparison to that of Carlos Slim. Carlos' pimp stick is so strong, he recently pimp smacked Bill Gates right off the pedestal as the world's richest man.

Following a surge in America Movil's shares over the second quarter, Slim's fortune has mushroomed to an estimated $67.8B (£33.6B) - equivalent to 8% of Mexico's gross domestic product - compared with $59.2B for the Microsoft mogul, putting him in the lead by a decisive $8.6B.

Now, I've always contended that behind every extraordinary fortune, there is a extraordinary crime. Whether we're talking about cotton, railroads, alcohol, diamonds, or corporate productivity software......it doesn't matter. White collar or blue collar crime ......it doesn't matter. To make multi-millions, you need a lot of luck. To make billions, you need more than luck. You need a controlled capitalistic playing field, a.k.a. a perfect monopoly.


What does Carlos Slim own?

• Five insurance companies (valued at $1.5 billion)
• Mexican retail chain (pretax annual profit, $500 million), a mining company, an auto parts manufacturing company, a bank, a tobacco company, oh, and another mining company. All told, Slim's companies account for almost one-half of the value of the Mexican stock exchange
• 4 out of every 5 cell lines and 9 out of every 10 land lines are owned and operated by him
• a budget airline, Volaris
  
• a cigarette company, Cigatam
  
• a music retailer, MixUp
  
• an internet service provider, Prodigy
• piece of Comp USA
• piece of Saks Fifth Avenue
• America Movil group
• Telmex
• Telcel

"If you're a Mexican citizen, Carlos Slim is Microsoft, Apple, Coke, Pepsi and GM all rolled into one. In spite of all of Slim's charitable contributions, Mexico's working class just doesn't trust him."

What's the secret of his success? Carlos started at age 26 with $400,000 and all the ambition in the world. With his family's business relationships and government connections, Carlos was able to buy companies....early.....often and at rock bottom prices. We all know what happens when the privatization process is not so transparent. These deals alone would assist anyone with amassing tremendous wealth in a short period of time. When coupled with remittances, even Bill Gates has to throw in the towel!

I'm not a macro economist, nor do I profess to know the Slim's life story. However, getting income from tax-free US dollars, does add to the leverage. And leverage can give anyone an advantage. Like I said.....you need more than luck to make billions.

Will Carlos be as philanthropic as Gates or Buffett? I have no ideas. I just know that Carlos was quoted saying:

"Wealth is like an orchard. You have to share the fruit, not the trees."

For all you conspiracy theorists, here's a YouTube video on Mr. Slim (sorry, it's one of the few videos in English.)

Blackstone, the real Aphrodisiac

It has been common folklore that oysters are a great aphrodisiac. Well, I've found something 95,000 times more potent ($38B/$400k) . The Black Stone!

Blackstone recently floated 12.3% of its management partnership shares that resulted in the sixth richest initial public offering in US history. Initially priced @ $31.00, BX shares closed up $4.06 or 13.1 per cent to $35.06. (If you're even thinking about investing in BX or the like, I advise you to read Marc's blog here.) That's a $38B market cap OVERNIGHT!

Now if this stone doesn't get you rock hard, I don't know what will! Having Caribbean roots, I've heard all the rumors about the Black Stone. Rub on a little Black Stone on your head and BAM! ..........................you're the energizer bunny!!! No need for the little blue pills.

Scientists attribute the stone's prolonged stimulation to the bufotenine, bufadienolides resibufogenin, bufalin and.........a bunch of other "stuff" found in the potent stone.

I think the scientists have gotten it all wrong. You don't have to rub your head with any black stones to get excited. All you need to do rub elbows with some Blackstones. Here is one Blackstone I'd like to meet: Stephen Schwarzman.

His Stats:

• 2006 Net worth - $3.5B (73rd richest American in '06)
• 2006 Salary - $398M
• Initial $400k investment (1/2 his own money) now worth ~$38B (That's a 95,000 bagger!)
• Could collect ~$677M from the IPO proceeds alone
• After IPO, still owns 24% of Blackstone (valued at ~$7.7B)
• Owns a $30M Manhattan co-op at 740 Park
• Personal chef often spends $3,000 for a weekend of food for him and the wife, including stone crabs that cost $400, or $40 per claw.
• Birthday party and guestlist that Diddy could only dream of (maybe next time P.D.)
  
  
  (Get all the Stats on "The Golden Ass" from Daniel Gross at Slate.)
  

As you can tell, I'm aroused. Matter of fact, I'm going to have to cut this post short and get back to work. Any more research on the Black Stone and I'm liable to burst a vein. Ahhhhhhhhhhhhhhhh!!!!!!!!!! (WGCT!)

If anyone has any suggestions for battling my Priapism, please send some remedies or gift me some BX shares for my future children's trusts.

Requiem for a Pistol (to shoot MSFT in the helmet)

"Why did Live have to f*ck with my Halo?"

Is it any wonder why MSFT is losing the gaming battle? Why would you alienate your lead users? The people who test your product before the general public gets upset with bugs. The people who push your technology to the limit and help you build a better product? The people who spread the gospel to the world (FREE of CHARGE)?

I can understand employing the regimented approach with their bread and butter corporate community....you know....word, excel, power point, and all the other tools "required" for corporate productivity. But an XBOX? How the hell can Microsoft beat Sony with superb business decisions like this?


Joe Gamer: "You are RUINING THE LITTLE RESPECT YOU HAVE LEFT!"

Rule number 1: The gaming market is not the corporate productivity software market. Don't fight the gamer!

Like most diehard gamers I was one of the first guys on the original Xbox band wagon. I opened the box and played the only game that came with my console, Halo. At that exact moment, I was a true Xbox believer. I never bought another game for the first 2 years and played Halo until my eyes were bloodshot red. It was a problem...(or so my therapist said). If you've never played the original Halo, you've not a gamer..matter of fact....you've never played a video game.

Halo completely revolutionized the gaming market!
(Microsoft even bought Bungie because of this one game's success!)

The game was so enthralling.....we had to play more often, we had to play better people, we had to play online. However, MSFT did not support playing online. So what did we do.....we modded our xbox with chameleon chips and connected our boxes manually. This was before Gamespy or any other peer to peer gaming site. No slick user interface, not maps, not chat, you had to connect your xbox to your pc and use a linux boot-up disc to find other IPs that wanted to join your game. To "chat" you had to use another PC to find gamers/hosts on ICQ before you booted up the game. (Shout out to the Motley's, J and X! First on the block to make it happen.)

Now that I think about it, it was quite archaic, but it worked. We were playing Hang 'em High with people from all over the world. Even with the lag and hosting advantage (early Halo players know what I'm talking about) it was a revolutionary experience. I was playing a game at home...on a console...connected to the internet...talking $hit to some guys in Canada!

The community that evolved was ridiculous. Clans were forming, challenges were made, and LAN parties were popping up all over. People were doing ridiculous things in the games....things the game designers never even knew were possible. It was a great time for Xbox's penetration into the PlayStation market share. People were not buying Xbox for Xbox, we all wanted to play Halo!

All of the early Xbox innovations came from gamers taking the Xbox to the limit. Adding a hard drive, adding software to manage files, creating a multi media player, making it wireless.....all this stuff was out before MSFT even thought about building it. How could that be? You can't fight the gamer! Instead of fighting, MSFT should embrace innovation and let people build the product/games they want.

So what does MSFT do. They "steal" all of the innovation from "hackers" and incorporate it into the new and improved Xbox 360. The 360 launch was combined with the release of Halo 2. Boy was I was ready! I had my eBay auction ready (no time to stand in line) and paid ~$750 to be the first to play Halo 2. What a disappointment!

Not only did they kill the game with the bs maps and weapons (no more pistol shots); they completely bastardized the Live experience by commercializing some functionality and removing others. On top of that, MSFT was telling me that I had to PAY to play with other people. GTFOH! I just paid 2x retail for the game and console, I pay $150/month for high-speed internet and MSFT wants me to pay for Live! That's like AOL trying to get me to pay for a inferior browser. Ha!

I have not played my Xbox 360 since.

Why all this background info? It's simple. MSFT had the best thing going for them. Huge penetration into Sony's market, great staple game in Halo, avid die-hard gamers, and a great user generated road map for success. By abandoning the early adopters, MSFT managed to destroy most of the value that was was created......in record time.

Don't take my word for it. Ask any "former" Halo player what they think of MSFT and Xbox Live now?

Microsoft may have dropped the ball in gaming.....good thing they are dominating Google and others on the search front, the ad front, the web application front, the recruiting front, the video front, the social networking front, the it's cool to be a geek front, the wall street growth story front.........help! I'm running out of fronts....Ha!

Just watch this video and Halo-Union will rap to you why Xbox Live is dead. (Lyrics!)