“Man-made disaster”…”works as Congress Designed It”

This Washington Post article was written “upside-down” – the most important points in news articles are supposed to be first. I’ve rearranged it as follows:

Under EPA rules, manufacturers are responsible for funding and conducting the safety tests the agency uses to evaluate products.

Frustrated scientists say that allowed chemical companies to cherry-pick the data available to regulators.

The problem, farmers and weed scientists say, is that dicamba has drifted from the fields where it was sprayed, damaging millions of acres of unprotected soybeans and other crops in what some are calling a man-made disaster…. That harms nearby trees, such as the dogwood outside Blytheville, as well as nonresistant soybeans, fruits and vegetables, and plants used as habitats by bees and other pollinators.

And although pesticide-makers often supply new products to university researchers to conduct field tests in varied environments, Monsanto acknowledged it did not allow that testing on its commercialized dicamba because it did not want to delay registration, and scientists said BASF limited it.

Regulators did not have access to much of this data. Although Monsanto and BASF submitted hundreds of studies to the EPA, only a handful of reports considered volatility in a real-world field setting, as opposed to a greenhouse or a lab, according to regulatory filings.

But during a July 29 call with EPA officials, a dozen state weed scientists expressed unanimous concern that dicamba is more volatile than manufacturers have indicated, according to several scientists on the call. Field tests by researchers at the Universities of Missouri, Tennessee and Arkansas have since found that the new dicamba herbicides can volatilize and float to other fields as long as 72 hours after application.

The new dicamba formulations were supposed to attack those resistant weeds without floating to other fields.

The problem, farmers and weed scientists say, is that dicamba has drifted from the fields where it was sprayed, damaging millions of acres of unprotected soybeans and other crops in what some are calling a man-made disaster. Critics say that the herbicide was approved by federal officials without enough data, particularly on the critical question of whether it could drift off target.

Government officials and manufacturers Monsanto and BASF deny the charge, saying the system worked as Congress designed it.

 

 

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Persist, Pivot, or Swap: Startup Strategy

A classic problem for entrepreneurs: Persist, Pivot, or Swap.

There are arguments for each.

1) Persist: startups are never easy, so a slow start is to be expected.
e.g., It took 2 years from Google’s initial development in 1996 to receive its first investment of $100,000 in 1998. For most entrepreneurs, two years without an investor seems like a very long time, indeed!

Advantages: overcoming barriers to entry takes time and is to be expected. In the long run, high barriers to entry are a good thing!
Disadvantages: risk of running out of capital before the business becomes viable (either through profitability or ability to raise additional capital). Risk of pursuing a non-viable business model either because lack of market or lack of competitive product/service.

2) Pivot: use knowledge and experience to find a better niche that can support growth/profitability.
e.g., Starbucks operated for its first 13 years selling coffee beans and equipment, not brewed coffee. Only once it pivoted to the coffee shop model in 1984, it began its rapid expansion.

Advantages: after gaining startup experience, founders can pivot business version 2.0 to target market conditions or specific niches. Various methodologies such as “fast failing” or the OODA Loop all describe the concept of learning from experience and reacting accordingly.
Disadvantages: Switching strategies too rapidly may confuse cofounders/employees. All business take time to develop, so pivoting before devoting sufficient efforts to a concept will only lead to perpetual failure.
3) Swap: a new, exciting opportunity comes along, completely unrelated to the first. With limited time / capital, is it better to abandon the first, and work on building something new.
e.g., Before founding Slack, a startup that reached a valuation of $1.2 billion, Stewart Butterfield was working on a computer game called Glitch. The game was a flop, but while developing the game, they built the communication technology that they realized was a marketable product. They gave up on the game, and swapped to the messaging product.

Advantages: leveraging experience from one industry into another is a classic way of creating innovative and disruptive businesses. Some markets are highly competitive, while others seem frozen in the past.
Disadvantages: “the grass is always greener” applies particularly to areas where one has less familiarity. There is high risk of either being unable to overcome the new challenges in the new business, or even being unaware of critical factors necessary to succeed.

How to decide?

In my startup career, I have persisted for years, pivoted multiple times, and swapped a couple of times. Here is the approach I have taken:

a) I generally persist at a startup concept until I develop a viable product/service that has the possibility of generating revenue. Quitting earlier means the venture never had the possibility to succeed.

b) I like trying new things, so I try to either pivot the business or make a spinoff product/service each year. The disadvantage of this, is it takes energy away from improving the core business and after a number of years there is a lot to keep track of. The corollary of pivoting is the need to prune out the old, less successful businesses if not immediately, then over time.

c) I’ve swapped ventures after I’ve put in enough time (sometimes years), there is a viable business model in my mind, but the business is getting no traction in the market. When something new and better comes along, I jump at it.

 

 

What Is Uber’s P/E Ratio if it’s valued at $41 billion?

Uber raised $1.2 billion that valued the company at $41 billion. Some people are skeptical that Uber could have the same market cap as Time Warner Cable or ADP. Projecting future P/E may give some idea of the scale and scope of Uber.

The entire Taxi & Limo industry in the United States is well shy of $15 billion. If Uber has 50% market share and 20% commissions, its revenues would be $1.5 billion. Net profit margins for a mature internet company (such as Ebay) are 18% – or $270 million. That’s a 152x P/E ratio.

Factoring in the rest of the world (based on GDP) brings the P/E ratio to 33x.

In sum:  33x forward P/E ratio for the startup assuming 50% control of the industry throughout the entire world. The S&P 500 is cheaper.

So, perhaps Uber has grander visions – ride share / carpooling, car share, ambulance service logistics, military applications…. there must be a larger market it plans to tap into, or its latest investors got caught up in the hype.

Uber Ballooning P/E Ratios

Storytelling for Children and Executives

The Wall Street Journal tells how the CEO of Procter and Gamble is more interested in the storyteller than in the powerpoint slides. Therefore presentations should have powerful stories.

Mr. Atkinson suggests organizing your story into three acts and starting by establishing context. You want to let your audience know who the main characters are, what the background of the story is, and what you’d like to accomplish by telling it, he says. You might open, for example, by describing a department that’s consistently failed to meet sales goals.

Move on to how your main character—you or the company—fights to resolve the conflicts that create tension in the story, Mr. Atkinson says. Success may require the main character to make additional capital investments or take on new training. Provide real-world examples and detail that can anchor the narrative, he advises.

The ending should inspire a call to action, since you are allowing the audience to draw their own conclusions about your story versus just telling them what to do. Don’t be afraid to use your own failures in support of your main points, says Mr. Smith.

Whatever you do, don’t preface your story with an apology or ask permission to tell it. Be confident that your story has enough relevance to be told and just launch into it, says Mr. Smith. Confidence and authority, he says, help to sell the idea to your audience.

The idea here is not new. Humans are more receptive to stories than to data. The powerful message that was omitted, however, was that while people are more receptive to anecdotes than boring powerpoint presentations, good decisions are made based on information. A story backed up by data combines the power of human psychology with the power of knowledge.

India, an Underappreciated Superpower?

With a population of 1.2 billion, it’s hard to imagine that India is being overlooked as a global power. However, many people don’t realize that India’s population is projected to exceed China’s by 2030; nor do they realize that McKinsey estimated India’s middle class is 300 million, and expected to double by 2030. Furthermore, India’s industry & economy is already greater than most nations, apart from the EU, US and China. (As calculated by CIA World Fact Book GDP Purchasing Power Parity.) The business landscape in India has been difficult to track, but there are now detailed reports to research India’s industries in the low-tech manufacturing and services sectors.

 

Ethics in the Era of the Consultant

Howard Gardner, the Hobbs Professor of Cognition and Education at the Harvard Graduate School of Education, tells us that the time has come to reinvent ethics to fit our “modern” society. His conclusion: “If we can draw on wise people across the age spectrum, and enable virtual as well as face-to-face discussion,  we are most likely to arrive at an ethical landscape adequate for our time.” In short, the consultant model: a team of a few analysts, a manager, and a senior partner via both face-to-face meetings and conference calls can tell us how to lead our lives in optimal fashion. Thank you, Howard, for that insight. Do you prefer skype or polycom?

Income Inequality in NYC Extremely Depressing

New York Times reports the gap between rich and poor in NYC is widening further. Median income for the bottom fifth was $8,844. Median income for the top fifth was at a staggering $223,285.

What can be done? Sam Roberts of the New York Times interviewed Jilly Stephens, executive director of City Harvest, which helps get emergency food to hungry New Yorkers. jilly Stephens is in a unique position, because she runs a charity for the poorest in NYC, while she takes a salary for herself that places her in the richest fifth, earning $294,528 in total compensation in 2010. Her take on the problem? “The statistics demonstrate quite clearly that our most vulnerable neighbors are far from a recovery.”

Yes, she should know.

Hackers target CPAs: “Termination of your CPA license”

1) Creates an emotional/stressful situation that reduces carefulness (e.g., checking where the links are directing)

2) Establishes legitimacy: using existing organizations and quoting organization internal processes

3) Has a call to action: next steps require a response (via infected link)

Quite sophisticated, unfortunately. Here’s the full message:

SUBJECT: Termination of your CPA license.
FROM : Alicia Houston <support@bbb.org>

You’re receiving this email as a Certified Public Accountant and a member of AICPA.
Having trouble reading this email? View it in your browser.

Revocation of Accountant status due to income tax fraud accusations

Valued accountant officer,

We have been notified of your recent involvement in tax return fraudulent activity  on behalf of one of your clients. According to AICPA Bylaw Subsection 730 your Certified Public Accountant license can be terminated in case of the fact of presenting of a false or fraudulent income tax return on the member’s or a client’s behalf.

Please find the complaint below below and respond to it within 21 days. The failure to provide the clarifications within this period will result in cancellation of your CPA license.

Complaint.doc [attachment]

The American Institute of Certified Public Accountants.

Email: service@aicpa.org
Tel. 888.777.7077
Fax. 800.362.5066

Are we ALL the 1 percent?

Despite confusion of the Occupy Wall Street protests, they have a point. For those who would like some facts, here they are:

According to the CIA World Fact Book rank of income inequality, the U.S. is slightly better than in Bulgaria, but we’re worse than Iran, China, and Russia.  As a democracy, that should be embarrassing.

Here’s how income is actually distributed nowadays:

If you’re one of the peons in light blue, don’t feel bad, because you’re STILL at the tops from a global perspective. According to the Global Rich List, a salary of just $35,000 will place you squarely in the Top 5%. Starting to feel like a greedy ne’er-do-well? You can give a donation to help someone truly in need.

$35,000 Income Puts you in the TOP 4.62%

How to Partner with a Large Corporation

Congratulations! Your startup is in the final negotiations with a large corporation for a joint venture. Except now they’re asking you to foot the (marketing) bill. It’s becoming less and less clear what they’re bringing to the table. But you’ve been pinning your hopes on this partnership, so it must be a good thing, right?

Here are some considerations.

Joint Marketing:

1. Have company leverage existing resources/capacity (e.g., marketing people, graphic design) to reduce outside vendor costs
2. Design the ramp-up period  (i.e., pilot) with testing/analytics to improve campaign efficiency.

Competition:

1. The danger of working with a Goliath is that they often have the ability to squash you. Make sure your service maintains a competitive advantage so they won’t want to drop you in favor of another partner (or in-house solution)
2. There are plenty of examples of large corporations considering partnerships, getting lots of inside information, and then deciding to do it themselves without the partner. Prevent this by focusing on the benefits / final outcome, rather than on the details of execution