Getting unfounded from my paradigms, helps me become a real founder.

Often times the help that one most needs, is the help that one most resists. This is what Founders Institute has been for me thus far.

I began my startup journey straight of highschool after winning a city-wide business plan competition that paid me enough money to quit working at Starbucks and take a partnership in a small Intra-cultural marketing agency called Nexo Latino. At Nexo we had clients such as Continental, HP, and Lexus that needed help translating the cultural messages, not just language, of their advertising campaigns. I sacrificed a lot way back then, and to this day I do not regret a single minute of it.

My journey continued when I finished college and began working for SingleHop, an IaaS (Infrastructure as a service) provider in Chicago. At the ‘Hop I was fortunate enough to be  right in the middle of helping take the company from just another technology service company, to the 3rd fastest growing IT firm in the USA according to 2010’s INC 500 rankings. . That was growth of over 4000% in three years which means revenues, clients, and technological issues expanded by a factor of 2 every few months. A spectacular learning experience on how to put ideas into action, action into client happiness, and more and better clients into bottom-line growth.

Thus, by the time I began working on my new startup, Adblivion.com I thought I knew a lot, not everything, but at least a lot. And boy was I wrong. My presumption of what made sense in the real world, and what made sense in my theories and calculations could not be further away from the truth. Not because my calculations were wrong, or my theories unfounded, but because most of my plans are so broad and unspecific that when applied to any one specific vertical (basically a single product type and customer type) it would all fall apart. In simple terms, I have been planning to re-build Rome in a few months, had all the good looking city-maps done, parks planned, but I’m missing all the people. Yes a few may come at first, but I’ve planned for a few million on day 10. Not going to work.

My founder institute experience up until now has been one where I have had humility and common sense drilled into me. And as painful and frustrating as this process is, it is a necessary one. Without it, I am sure my chances of success would have diminished significantly. Yes, the institute has its issues. A lot of them. But for every nine issues that it has, it retains its most valuable one- forcing the inner founder inside all of us to rise to the occasion.

I’m glad im getting slaughtered. I feel sad for the other 25% of  companies that have thus far not been able to stand the heat. And I feel doubly sorry for the other 5% who’s businesses complexities do not seem to match the way the program works. I will miss working with you guys.

Goodbye, PC. Hello Personal Cloud. Thoughts on iCloud from an industry insider.

Apple’s recent announcement of their iCloud product fascinated me on two levels. First, it publicly showed why Apple is one of the most successful companies in recent history, it pivoted. After their failed attempts at the mobileme/idisk systems, they regrouped, re-envisioned, and seem to have produced an industry-beating product.

Second, if iCloud works as seamlessly as the rest of Apple’s product line-up does, they will have indeed laid to rest THE PC world and replaced it with a new PC world- the ‘Personal Cloud’ one.

As an industry insider I have witnessed how the entire IT industry has slowly inched and then jumped head first into the cloud fray. However, what the cloud meant to the average consumer, let alone understand it, was left to side for a long time on the basic reality that there is no common definition to what cloud is. And thats ok because there ARE dozens of technical paths that a company can take in order to offer cloud capabilities. But unless you are a serious geek, technical graphs and explanations is not what consumers are interested in.

Thus instead of focusing on what the cloud is, I pushed the communications of the IT firm I was involved with to focus on what the cloud does. I wanted to ensure that our customers would be far more fascinated and excited about the abilities of the cloud than simply what it was built on. Apparently not everyone seemed to agree with this tactic, as the first consumer-focused implementors of the cloud -Amazon, Netflix, Google, Pandora – failed to capitalize the cloud aura with their customers. They probably assumed it was too hard, too early, and too complex for the average consumer. And it is, if you focus on the technology alone. In my opinion Google should have branded Gmail as ‘powered by the cloud’ a long time ago and earned the badge of cloud pioneer in the minds of millions of consumers. Even Pandora, a perfectly simple ‘music everywhere’ cloud benefit could have taken the badge and brand power of being powered by the cloud.

But as it often happens in Silicon Valley, in spite of their failures Apple may end up having the very last laugh with the cloud through iCloud. Apart from the two or three pictures of their new datacenters, the iCloud presentation was thoroughly focused on what it does for the consumer. Without mentioning GB, RAM, ping-time, or bandwidth, Apple took a concept as ethereal as ‘the cloud’ and brought it down to the feet of consumers who will now expect everyone else in the tech industry to follow along with cloud-powered systems.

Something really crazy happened that day.

Something really crazy happened this day, and I had heard about it but had never seen it. Its amazing to think that it was so revolutionary that an entire concert hall of grown adults erupted in laughter, amazement, and un-stoppable clapping.

Today whenever I see Apple doing a presentation of a new iSomething… i’m always amazed at how utterly enthusiastic the audience is. Job’s says “oh and it comes with a microphone”… and people erupt in clapping and “woohoo”. It’s rather childish in my opinion to react like that. But, the way that people react in this video is by far something different, its not an apple fanboi kind of reaction, its a deep human WOW kind of reaction.

If you have ever wanted to see the original 1984 Apple Macintosh introduction, here it is! (http://www.youtube.com/watch?v=2B-XwPjn9YY)

Bourgeoisie Wireless Service- the only natural consequence of ATT buying T-mobile.

I travel a fair bit. And while sometimes I get to sit in first class when my frequent flyer number hits the jackpot, most of the time I end up waiting on the long line as a the few lucky first and business class passengers get to board first. I don’t mind, I don’t care to pay the exorbitant prices to sit first and up front all the time. The nice thing is that the plane that takes me and the first class customers takes off and lands at exactly the same time- a physical constraint not enjoyed by wireless customers– your “call” might just be put on standby very soon.

This extra and priority access is something that I am afraid will soon happen to wireless customers across america with ATT buying out T-mobile. If you take a network as poorly supplanted and overcrowded as ATT and combine it with a working one like T-mobile, you either destroy the new one, or make the new one your “first class” network. Sounds crazy, I know, but its true. ATT has even accepted that all Tmobile customers are going to have to upgrade their cell phones to work in the new ATT system down line.

So, for all the T-mobile customers out there. Enjoy your network while it lasts. The days where you can’t get a call through because ATT is selling priority service to those who can and want to pay an extra $15-30 bucks a month for “priority” wireless service, is not too far off. When there is no competition, this type of customer abuse is the only natural consequence. Oh wait, you can’t get calls through now…. wow. Your luck-0-meter just got alot lower.

Is there a solution? I think so. Its a bit crazy, but it might just be crazy enough to work- a mutually owned wireless company. Basically, just like Prudential and so many of the insurance giants out there, a mutually owned T-mobile would re-invest ALL of its profits into expanding its network and maintaining customer service as exceptional as they are today. Mutually owned organizations require very large numbers of members, and monthly and on-going payments- two key things that a 20+ million community like T-mobile already is.

Maybe, just maybe by the time this deal hits the justice department some T-mobile customers, like me, will take the lead and organize something as crazy, nutty, but realistic as a mutually owned wireless company. I think it can be done.

Solution 2: Google buys Sprint and brings the game back to content and not delivery… kills ATT ability to overcharge and makes them focus on making money by getting people to content… not just charging people for just hoping to get content.

Full disclosure: I am a loyal T-mobile customer. Have been for close to a decade when I left Sprint when I had my cell-phone bill subsidiezed by my parents. No service is no good, even if its free. Since then I have always loved T-mobile, good (not great) coverage, exceptional customer service, and no roaming charges- ever! Also, their world coverage is spectacular, have never been out of coverage no matter where on earth I am.

Why is the wealthier part of American cities in the north and west?

Of the vast majority of cities in the USA that I have been to, driven through, or heard of, the wealthier sector of the population can be found in the north and west side of the city- almost without fail.

My guess of why this phenomena repeats itself all over the country is simple. In general in this part of the world rivers tend to flow from north to south and since most cities began their life around the benefits of shipping goods in and out, it made sense to put factories in the southern part of the city while building homes in the northern part. This was beneficial because the north side enjoyed cleaner water and less smog. Now as time went by and the production of goods slowed down in the cities, it was cheaper to build a house in the southern part of the city than do so in the already residentially established north side of the city.

As to why cities tend to have the west side as the wealthier side, today I learned that it seems to be due to the way winds in the USA blow, mostly from west to east. This means that if you built your house on the east side you would be stuck with industrial smog more often. But building on the west side allows you to get away from that pollution.

If anyone has other thoughts on why cities have developed this way, feel free to comment. I’m not 100% sure im accurate, but I think its a good guess.

The Senate Heathcare bill passed. But what does it say?

The healthcare debate has been raging for months here in America. Unfortunately, though, the debate is centered on extremely polarized assumption on what exactly the healthcare bill will do. While some of this is generated through ecstatic comments from both sides of the issue, the sad reality is that getting clear-cut and honest facts on what the healthcare bill will include is extremely hard. The entire debate, if truly given shape, sense, and a impartial public face, I am convinced would boil down to a large number of obvious rules and regulations that almost anyone with a heartbeat can approve of. If one of this countries vital rights is the right to life, and the government is charged with protecting it, it seems beyond logical that the government should be closely involved in ensuring that people can afford and get access to life-care.

If you are wondering WHERE to find the supposedly landmark Senate health bill that was approved today, go here: http://help.senate.gov/BAI09M01_xml.pdf

I was saddened and amad that finding the bill was a massive task all on it’s own. How sad that something so pivotal and public seems to be done so privately. I have gone through about 180 pages and so far it makes sense. however, with over 2000 pages it’s sure to have a ton of useless pet projects.

A few high points from what I have been able to garner include:

  • Health Insurance companies (HIC) must impose NO lifetime limits on any coverage they offer. Duh- this seems beyond obvious. Coverage limits are as close as we can get to putting a price on life.
  • HIC’s cannot deny people healthcare based on pre-existing conditions.
  • Emphasis on HIC funding continuous health initiatives so healthcare is about staying healthy, not just fixing you up when your sick. Some of this new focus would include things such as weight loss, smoking cessation, diabetes care, exercise… common sense things that many health plans do not cover.
  • The immediate creation (once signed by president) of a high-risk insurance pool that would cover individuals who currently are denied healthcare based on pre-existing conditions.
  • The establishment of standards on how to provide accurate, succinct, and common language information to consumers. It even emphasizes how long a coverage information packet can be and how small the small print can get. This part also affects hospitals, in that each one must clearly present the cost of all their services. This is great, if passed we will be able to get information on not just which are the best hospitals in America, but which hospitals offer the best value. If anything, this will foster awesome competition based on clear information.
  • Steep penalties for misrepresentation of coverage information, or failing to provide information in the correct way, this one will cost $1,000 per enrollee, per incident.
  • While there will be federal guidelines to follow, the bill provides States with great amplitude both through regulation and funding, on ensuring that HIC in their districts are overseen locally.
  • Age in which a “child” is covered by a parent insurance is increased to 26. This makes alot of sense since most insurance policies today stop covering “children” over the age of 18, unless they are enrolled full time in college. But what if the family does not have enough money for college? Currently, the system drops young adults when they are most vulnerable economically.
  • Create the American Health Exchange System. This provision is a unique system that would open up competition of health plans to small business and even perhaps individuals. If HIC want to sell insurance policies to small businesses they would have to go through a Health Exchange System that would enforce standardized ways to easily disseminate and asses the value provided by any insurance policy.

What does the “Bailout” do, how, and why.

After much focus on how neither Obama or McCain explained the economic situation on Friday’s debate I was pleasantly surprised when during a campaign stop yesterday Obama effectively conveyed at its most basic sense what the bailout is meant to do. He mentioned that if you see your neighbors house catch on fire you should do something about it, even though you know that your neighbor has always been irresponsible, and you knew that he never stopped smoking in bed. As much as you might believe that your neighbor should suffer the consequences of their house burning down, their house might just make your own house catch on fire too! So if the “what” is your question thats your answer, weak but an answer.

If you are wondering how the bailout works I will reserve all judgement (as best as I can) until the end, and explain. The 110 page bill (yes I’ve read it and its that long) currently going through Washington does several things:

  1. Give the Treasury the authority and cash to purchase the toxic bonds I mentioned in the last post.
  2. Focus on bailing out pension funds and government entities like cities and counties that heavily depend on these bonds working.
  3. Create a board that reviews how the bailout money is managed.
  4. A) The top executive pay of whichever company asks for assistance will be scrutinized to limit excessive risk-taking, ie: focus their pay on long-term growth and not quick and risky short-term reward. B) No golden parachute allowed, if the executive did a bad job and was fired or left the company he cant get a fat goodbye-to-you check.
  5. Temporarily increase the government protection on checking accounts from $100,00 per account to $250,000.
  6. Provide home-owners who are having trouble paying the mortgages more time and even lower interest rates.

So Why does the bailout help?

Buying toxic bonds would probably stop the dropping price of the bonds. Think of a bond as a pill which is made up of many ingredients, which are the loans. Worst case scenarios dictate that about 35-40% of the loans that make up many of these large bonds are bad, meaning they should be worth only 65-60% of what they were sold for. But since banks sold them off and others bought them up as high quality bonds, the current uncertainty of how much they are really worth has made them drop up to 80% or more of their value. So if the government starts buying them for how much they are worth long-term, their prices would become more stable. Banks would have a sense of how much they lost, and how much they still have left over to continue providing all of us with credit.

My thoughts This extreme bill is anything but pleasant to swallow, and with a price tag of 700 billion its easy to see why its easy to hate. Apart from seemingly helping wall-street out and having government budge into how markets work, my main dislikes are that it doesn’t seem to have strong punitive focus over the individuals who authorized much of this crisis to be created, and in some ways encourages the risk-taking to happen all over again.

At the same time the idea that Wall-street is literally getting “bailed” out of a jail of their own making is not entirely true. Up to this day many of the executives at the top of this crisis have lost massive amounts of money, many of them are running out to sell their art collections (Lehman Bros. CEO) and some have lost about 98% of their company stock value (think Bear Stearns, Wachovia, Washington Mutual etc…). In fact unless they have stock investments on the moon, almost all of the wall-street crowd have lost at least 50% or more of their company stock- not painless at all.

While letting all the chips fall would certainly decrease the possibility of such wild risk-taking in the future, we are human and as soon as this group of people were too old or tired of working a new crop of risk-takers will certainly arise. Keep in mind that this kind of economic crisis is not new, 1987 and 1997 had similar crises threatening the world, yes they ended through bailouts too. The world is not about to end, we all need food, clothes, cars and books, and as long as we need those things someone will make them, and without a severe and long crisis make them at a price at which you and I can purchase them.

Being against the bailout is being for alot of good things, but its also loosing sight of the fact that all of our “financial” houses are in the same city. Not doing nothing will hurt far far far more than doing something because in practical terms, your credit card limits will get lower, interest on a car or a house will get higher, companies regardless of size wont be able to get credit, and jobs will be eliminated. Its a simple as that.

On the economy- what they should have said.

The recent economic upheaval has left a large portion of Americans looking for direction and guidance. The news have been spelling trouble, big trouble, week after week. While some people understand what is happening and why, the majority of the population does not. Thus I was especially excited to see how the candidates addressed the current crisis and what ideas they would put forth to help ease it. It seemed obvious that whichever candidate provided the most effective conversation and perhaps solutions to the crisis could easily sweep the debate, if not the entire election. The logic being that if the ship is sinking whoever has the best idea on whats wrong and how to fix it would garner the vast majority of the support.

Neither candidate even adequately addressed the problem. Like two campers scared of a snake they both prodded it with a stick and then ran away. They both spoke in code and with no new ideas on how to fix things as they are now. Most important though, neither candidate showed an ounce of leadership by explaining to probably the largest audience they have ever had in their lives what the heck is all the fuss about!! Good leadership is not just knowing what to do about a situation, but using the knowledge and resources at your discretion and helping those who depend on you understand what you understand. How can your leadership be trusted when those you lead are in the dark about what can be seen from the drivers seat?

So, without more frustrated ranting this is what I believe either candidate could and should have said to explain whats happening… they might not have the perfect antidote, but at least let people know that either one of them DOES understand what is happening.

“Guys I don’t have to remind you that we are in an economic crisis, you know it, you see it, you feel it. When houses in your neighborhood are being taken by the bank, people are loosing their jobs, and you have a hard time paying for gas you know something is wrong. Allow me to briefly explain what is going on how it affects us all. This great country’s economy is interconnected by credit, it’s in your wallet, it’s what you use to buy your car and your house. Credit is money that we borrow to use now and pay it back later plus a fee. For most of us, using this credit makes a lot of sense, its better to get a school loan and start studying now than earning less for a long time until you’ve saved up enough. The same argument goes for buying a house particularly when you know its value may increase.

Now, companies use credit in similar ways- they get money now to hire more people and produce new products and services that will create value for stockholders, and more jobs for the economy. What is wrong with today’s situation is that many companies at the center of our financial system figured out a way to sell credit to companies and individuals who honestly couldn’t pay back the debt. The (Obama: lack of regulation) (Mcain: greed) drove these companies to make bad loans because they could quickly sell the stream of payments from a large pool of loans, and then go back to selling even more shaky loans, assuming that they had nothing to loose once these bad loans were out of their hands. Who bought the loans?  Institutions like pension funds, companies, and other banks, looking to invest their money into something that would pay them interest for a long time- at this point these loan packages usually were called bonds. But, again, as we now all know these bonds were made up of many loans from entities that couldn’t afford to pay for them. And so if you as the greedy bank, or the entitiy who bought the bonds, wanted to sell these bonds you had to do so for 1/3 of their price or less- that is if you can even sell it. Nobody wants these bonds hence why they’re called toxic. And yet the banks who created them had become so accustomed to selling these pools of loans that they actually planned to pay for day to day activities through the sale of new loan packages. And since they can’t sell them or can only sell them at huge losses, the credit that these institutions need to keep functioning is evaporating and the money that many institutions depended on by investing in the loans is not there.
And so the credit that you and I need for groceries, or student, car, and home loans is also withered. Effectively the economy could easily come to a complete standstill. Credit is like the water of an economy and if it can’t flow the economy dries up. Credit is made up of the money that all of us put into our checking accounts and investments and nobody wants to loose that money, and if lending it out has the risk of loosing it, we and our banks simply dont. We all take part in the credit system, we all need it, and without it the economy has a very hard time functioning.”

Market Volatility is here to stay.

The awesome level of volatility that investors have experienced this year in the US stock market has caught many people by surprise, including myself. Is this volatility due to severe investor skepticism, bad economic fundamentals, poor economic management, or something else? I would venture to answer that it is due to all of the above, but even more important, volatility is a signal to investors around the world that the world is changing. Commerce, innovation, and societal change is happening faster and in more uncertain ways than humanity regardless of pedigree is used to. Take cell-phones for example, 15 years ago one could scarcely find a cell-phone in Africa and even in the USA these devices were relegated to the very wealthy and large corporations. But today there are very few households in Africa who do not have a cell-phone. A friend of mine doing translation work in the middle of Indonesia was awed by how no matter how deep into the jungle he went he could still get great cell-phone coverage. A culture whose language is barely known by the rest of the world can feasibly and relatively economically call across the world! While a single example cannot seal the case on why there is so much volatility it does shed light on how the world is changing. A millionaires toy 15 years ago is now used by close to 3 billion people. The ability to communicate ideas and plans across the country and across the world is now available to almost everyone on the planet. And if ideas are the driving engine of innovation, and innovation the fuel of growing economies the powerful effects of connecting people are obvious… 3 billion new idea sources, decision makers, and continuously more discerning consumers.

While the west has seen tremendous change in the past 300 years, their commanding heights of the economy have never been contested like this, their ability to perceive the next step, or even to dictate the next step is eroding. With hundreds of millions of new factors in the world stage its impossible not to have volatility. Volatility is the new normal. The “New Economy” is not just based on continuous growth through normal circumstances, but continuous growth because of unusual ones. Welcome to the new world, the new economy, the new normal.