Monthly Archives: October 2004

Determining the market cap of a person

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What is a person’s market cap?

Sounds crude, but really — what is the value of a person? Really … what I am asking is … what is the net-present value of a person??

The net present value of a 93-year-old who is worth a billion dollars is probably worth less then a billion (unless, of course, you are Anna Nicole Smith). Whereas the net present value of a smart 23-year-old computer science major in Silicon Valley is a lot higher then her $4000 in savings.

When looking at a person there are growth stocks that are highly volatile and mature stocks that pay dividends. Some people have lots of assets on the books but are stodgy and risk-averse and thus have a low P/E ratio. Other people might have a really high P/E but a really low E.

Henry Ford, before he started Ford Motor Company, was essentially a failure. He tried and failed at numerous businesses. But he still had a high P/E as he was persistent and a good risk.

Obama has a high P/E while Senator Byrd has an extremely low P/E. Some people, like Warren Buffet and Michael Dell and Arnold Schwarzenegger, have had an high P/E ratios all their life — and those are the people you want to invest in.

What makes a person a good investment?

Dare I say it is someone that is ethical? OK … I said it. Ethics matter. You want to invest in someone that isn’t going to sell you out and transfer the funds to the Bahamas.

So does consistency. Erratic behavior causes too much uncertainty. Generally you are looking for someone that stays in the same location for a while, keeps friends for a long time, and has some roots.

Does intelligence matter? Probably not. Joanna Gallanter, one of the top venture capitalists (and Managing Partner at Venture Strategy Partners) likes to say that “smart is like vanilla ice cream.” Meaning — everyone is smart … what else is new? She looks for persistent, driven, honest, hard-working, personable people. And those that have the “leadership gene.”

Something else you might want to look for … loyalty … can make a big difference …

more of this line of thought in the future ….

Books: The Metaphysical Club: A Story of Ideas in America

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Books: The Metaphysical Club: A Story of Ideas in America by Louis Menand

read this book. if you are like me and you lack historical perspective of the post-Civil War years (the late 1800’s), read this book. you’ll find a past generation talking about the “sixties” in much the same way we do.

this book was recommended to me by Heather Bergman.

Summation: read The Metaphysical Club

Outsourcing is Good for America

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I outsource everything. I outsource repairing my car to my mechanic. I outsource all my legal matters to my law firm. I outsource growing of my vegetables to the local farmer’s market.

Outsourcing is good – we can not and should not do everything ourselves. You don’t need to own a cow anymore if you want milk. The industrial revolution was built on increased specialization.

The recent controversy over outsourcing is massively protectionist and xenophobic. People like Lou Dobbs and John Kerry believe that outsourcing is good as long as it is done by people in America. But they believe it is bad if done by foreigners – especially by people who are yellow or brown. Their xenophobic and borderline racist reactions should have no place in a globalized economy.

When Nike outsources its manufacturing to a plant in Malaysia or Citibank outsources its customer service to a call center in India, the American consumer wins because we get cheaper goods and help create markets for our goods abroad. Remember, America has a gigantic trade surplus in services and in intellectual property. Unlike manufacturing, only people in nations with a growing economy can afford services or IP – so it is in the U.S.’s best interest to help out other economies through trade. Trade, not aid, is the best way to create a worldwide economic expansion.

There is also a myth that American programmers are losing their jobs to people overseas. Nonsense. No good American Java or C++ programmer has had their job outsourced. If you are a COBOL programmer and you haven’t updated your skills in over 30 years, you might be at risk. But you probably would be at risk anyway since the COBOL market is shrinking and the Java market is growing.

Summation: Outsourcing is good for America and also good for the countries that participate as our off-shoring partners.

Rob Reid on The Moral Argument for Free Trade

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Rob Reid posted a great article on the Lead21 Blog entitled The Moral Argument for Free Trade.

One of the most depressing things our country does is supply aid rather then free trade. Instead of blanket aid (which ends up going to a few kleptocrats), we should encourage enterprise.

Abe Lincoln once said:
“The worst thing you can do for those you love is the things they could do and should do for themselves.”

Job: Executive Director of the Center for Entrepreneurship & Technology

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My friend Jon Burgstone (who is teaching entrepreneurship at UC Berkeley) is hiring for the following position. this is truly a unique opportunity:

The UC Berkeley College of Engineering is initiating a search for the first Executive Director of the Center for Entrepreneurship & Technology – can you please help spread the word? Resumes will be reviewed starting Oct 19th and compensation is competitive with other Bay Area senior academic positions. Thanks for your continued support — information on the CET and the Position Description:

Center for Entrepreneurship & Technology

The College of Engineering is currently creating a new program in entrepreneurship, the Center for Entrepreneurship and Technology (CET). The CET is a top-tier academic center designed to promote entrepreneurial education and to foster new venture creation. The CET envisions building an academic program serving engineering and science students, and generating new start-up ventures derived from discoveries made in UC Berkeley laboratories. Academic programs will initially target undergraduate students at the College of Engineering, but will be available to all members of the UC Berkeley community.

CET activities will include coursework development, network building, student-faculty-entrepreneur mentorship, distinguished lecture series, business plan contest preparation and competition, and new venture creation. Academic instruction will rely heavily on case-based learning and classroom discussions. Students will pursue multiple projects in identifying and developing commercially attractive technology-oriented ventures.

The academic program of the CET will initially offer an undergraduate certificate program. The program will be administered through the College of Engineering’s Meakin Interdisciplinary Studies Center. Details on this new program can be found at http://www.ieor.berkeley.edu/~cec/.

Position Description
Posting Title: Executive Director, Center for Entrepreneurship and Technology (Title Code: MSP 0245)

Department: College of Engineering, Interdisciplinary Studies (Code: EDINS)

Salary: Commensurate with experience and qualifications within the Management and Senior Professional Program (MSP)

First Review Date: October 19, 2004. This requisition will remain open until filled.

Overview:

The Center for Entrepreneurship and Technology (CET) will primarily serve engineering and science students and faculty with interdisciplinary educational coursework, outreach services, and relevant research in entrepreneurial processes. The initial focus of this program is undergraduate students although it is anticipated that research and graduate education (linked, for example, to the Management of Technology program) will be developed.

Responsibilities:

Responsibilities of the Executive Director include program development and management of all aspects of the center’s operations, including budget matters. The director must also provide intellectual leadership in curriculum development and judgment in defining outreach services. The Executive Director will develop and maintain liaison with the advisory board for the center and coordinate fund raising for center programs in consultation with the College of Engineering.

The center is being established in the College of Engineering and the Executive Director is expected to play an important role in this process. As such, the Executive Director will be required to lead, or assist, in the process of securing approval for courses of study as part of the program (through the appropriate faculty committees of the university.) The Executive Director will be required to develop plans for securing financial resources to support the program and its activities within 1-2 years of its formal establishment. The Executive Director will be responsible for coordination with the Haas Business School and the Management of Technology Program on development of any cooperative entrepreneurship activities at the undergraduate or graduate level.

Qualifications:
An ideal candidate requires the following interdisciplinary characteristics:
1) a Ph.D. in an engineering or science discipline and/or an MBA from a leading business school;
2) experience with the launch process of a new technology based new ventures;
3) executive experience with ability to assimilate development, financial, intellectual property, and market issues in technology firms;
4) experience with teaching and program building within a leading academic institution;
5) communicate effectively (both written and oral); and
6) be capable of working with a dynamic and diverse set of faculty, staff, and students in a university environment.

Other:
Successful completion of a criminal background check is required.

How to Apply
Applicants should apply through the UC Berkeley online system at http://jobs.berkeley.edu (job #1903), to be formally considered for the position.