Monthly Archives: February 2009

watching movies without watching them

I pretty much never watch a movie on the plane … meaning I never put the headphones on and listen to it … but one cannot help to occasionally see the movie overhead. And if you fly the same airline a lot, you can start to piece together the movie without actually seeing it.

Last fall I think I was on a total of 5-6 flights that had the movie Speed Racer on it. without ever watching the movie, I pretty much know the plot. It is funny how unnecessary sound is.

vesting should be 7 years, not 4 years

Almost every technology start-up (including Rapleaf) gives stock options the same way … they often use the same docs that were developed many years ago at Wilson Sonsini. They vest over four years (usually monthly but sometimes quarterly) and have a one year cliff.

My question: why four years? Why not 5 or 6 or 7 or 9?

Nowadays, the average time from Series A round to exit is over eight years. So how does the 4 year vesting reflect the company? It seems like a better strategy would be to give your employees more options and have them vest over a long period of time (like seven years). That way they are incented to stay longer. Of course, many start-ups remedy this by giving their star performers additional stock grants along the way … but for some people in the company, most notably the executives, the additional grants are not even close to the initial grant.

I think the reason that most companies offer four-year vesting is that most companies offer four-year vesting. They want to stay competitive in the market for talent so they do not experiment or deviate fro the norm. that is certainly the reason why Rapleaf did not deviate from tradition.

But some tech companies, especially those outside of Silicon Valley, have successfully experimented with vesting timelines. I believe Microsoft had a seven year vesting until recently. That seems like a timeline more in line with the good of the company in mind. (Of course, I’m not personally looking to be a pioneer in this area so we are gonna stick with 4 years until enough companies make the move to show the rest of us the way).

who will benefit from this economy?

Repairmen will benefit.   So will tailors.  So will show cobblers.  

Last year when my ipod broke I just donated it to Goodwill and immediately bought a new one.   Now maybe I would try to repair it. 

And my guess is that there are a lot fewer repairpeople than there used to be … So I bet their fees will go up.  They will have more business and their effective hourly wage will also increase … So they will be raking in the dough compared to their take-home pay in 2007.   in fact, if your high school kid is looking for job security, you might want to tell her/him to skip social studies and concentrate on shop.  

Jay Benach’s Law of Three Hundred Thousand

I recently met an intriguing philosopher named Jay Benach who, when not starting Internet companies, roams the streets of New York City. 

In the course of a conversation over a few ginger ales, Jay enlightened me about the Law of Three Hundred Thousand.

When Jay was a kid, he was a comic book collector.  While he could not always predict which comic books would massively rise in value, he could usually predict when a comic was going to be worthless.  He figured out that there were about 300,000 people that read American comic books.  Whenever a comic printed more than 300,000 copies of an issue, Jay knew that the value of that issue would be close to zero since there are only so many comic book readers and every additional comic is just going to speculators (or to the readers buying two and three copies).

So sometimes a new comic book series would start and the publisher would print a boat-load of copies of the first issue, the issues would be bought up quickly, prices would initially rise … but they would inevitably crater.  A classic bubble and pop phenomenon. 

Every market has its own law of three hundred thousand – where the exact number of “readers” changes but the idea remains the same.   Oversupply feeds speculation and leads to massive downturns later on.

In some ways, the housing market followed the law of three hundred thousand.   Too many of the same type of houses were built in an area that not enough people wanted to live in (or afford).  

But the law of three hundred thousand is most apparent in the collectibles market.   When people start buying something (whether it is Beanie Babies, wine, art, etc.) purely because they think it will go up in price and not because they enjoy consuming it, then expect a big bubble and big burst.   Essentially, for a collectible to have sustained value, people need to “buy and hold” it rather than have a trading mentality toward it.

NPR pledge gifts getting worse

Was listening
to the local SF NPR station this morning as my alarm clock was waking me up.    In these
recessionary times, does it seem like the pledge gifts are getting worse?


In the old days
they would throw in a toaster or a pedometer or even a cheap GPS.  


Now you’re
lucky to get a podcast as a gift?


next?   You give them stuff???   I suggest the Tom Sawyer approach:


“for your
$30 contribution, we’ll let you babysit our kids”


“for your $12/month
support, you can fix our 1982 Chevy that keeps breaking down”


“for sustaining
us for $100, we’ll let you shine Greg Sherwood’s shoes”