About Trust, the Community, and Charles Ingalls

Image via Wikipedia, Copyright NBC 1974-2008

Capitalism is based on social trust. Trust is the belief of one in the reliability, truth, ability, or strength of someone or something (I’m quoting my Mac’s Oxford).  So basically, trust is a human emotion, or some kind of derivative of this emotion.

In order to “trust” a person, we need to have references.  So, for example, Charles Ingalls (see the Little House on the Prairie) would have known who to trust and would have had no problem flagging those who may represent a higher risk of breaching trust.  Our societies have seen dramatic changes over the last century and Charles Ingalls’ approach is outdated… or is it?

Where trust was built-in the community’s basic social rules (again, the Mac’s Oxford defines community as being a group of people living together in one place, esp. one practicing common ownership), 21^st century “trust” takes form of Fico Scores, credit files, rating agencies, financial analysts, professional associations, etc.  These systems are not really about supplying trustworthiness data, but more about flagging those who do things that are “fundamentally wrong” like committing a crime, failing to pay creditors, etc.

The issue is that even if a person gets a “C-” on one of these negative scorecards, the rest of us may not have access to this information for lack of permission or remoteness.  Also, this reflection does not go as deep as trying to figure out what could constitute an untrustworthy behavior (Wall Street executives driving us full speed into this credit crisis or the Enron and other utility executives who created false energy shortage to drive prices up…). As one does not necessarily need to be bankrupt or have a criminal record to not be worth trusting.

I am a supporter of the free market and globalization.  But I also know that left to themselves, without the close-knit community presence, humans will deploy many efforts to maximize their own situation often at the expense of others.

This is why we may have to find new ways to get the “house in order”… I believe we need to step back to the Little House on the Prairie kind of communities again.  This is where one could earn trust.  Then after, we just need to find a way to interconnect the millions of communities in order to keep this new approach in the global economy.  Easy enough, don’t you think?

Patterns

What is going on Wall Street is a case of laisser faire that shows what happens when we wait too long to do anything about something we know to be fundamentally wrong... This pattern has taken place in the past and may as well be back the day all of Florida is flooded under 5 feet of water.  Then Congress may try to pass a non partisan bill to save the World!!!

Touching Story on a Quiet Saturday

My colleague Lea Mackay-Mejia posted a touching story on the Zefridge blog.  It's worth reading!

"The Good Old Days

The Good Old Days

I’ve been on an extended summer vacation inMontreal and as a result have gotten to hang out with P and his brood more than I have in the last 6 years combined. Hanging out with my boys at his and S’s house in the Plateau area ofMontrealwww.bonjourplateau.com) has been not only a pleasure (good for the soul and the palate given that S is a fabulous natural cook) but also an eye opener.

..."

Concrete ways to reduce my CO2 footprint

I attended a French - Canada Chamber of Commerce event yesterday in Quebec City.  The drive both ways is approximately 300 miles (475 km).

Trying to be environmentally responsible and since we live in a central area very close to downtown Montreal, we are a one car only family. View

Larg

er Map

As our boys are growing up to be athletic kids, we need :

So this is why I make a point to stop by the local Thrifty car rental to reduce

my carbon footprint as much as I can when going on short business trips.

Image from Toyota

The World is not only Flat, it is Small too!

Image via Wikipedia

I was talking on the phone this morning to a friend and fellow entrepreneur, Laurent, who runs a startup in Paris (France, not TX) and he was asking if I knew an American marketing tech executive with European experience or a European counterpart with the reverse background... The first person that came to mind is an ex Mckinsey, turned startup superstar in the Bay Area: V.B... I told Laurent that this guy is certainly the best person I know with this profile.... 

I wasn't too surprised when Laurent answered  "yeah, I tried to contact him twice in the last 2 weeks... can you call him please!"  So Vincent, if you read this, please return Laurent's call.

Friedman said The World Is Flat... I say it is small too!

Why the US Government needs to Invest its $700,000,000,000

Unlike other financial crisis in history, what is going on now is impossible to fully evaluate.  With financial markets' participants holding fancy products like credit default swaps, synthetic CDOs and other products that are probably not even all accounted for (the back office treatment of fancy products is usually lagging as most products are over the counter and not regulated), the bad mortgages are a bit like a pingouin standing at the summit of the iceberg... except that if the pingouin falls, the iceberg may go down as well!

So what happens if it's not the US Government who buys the troublesome assets.  Well, there will be a real fire sale... and those who have capital (foreigners), will make the deal of the millenium...

Families across the Country are better off taking a bet on the Fed and the Government!

The White House, the Fed, the Fat Cats, and the rest of US

Image Telegraph.co.uk

I could not help it and kept the Congress' hearing on the top right corner of my screen this morning (CNBC via my 3 year old Sling Box).  Although I agree with most analysts that the US Government needs to "rescue" the financial sector and that Mr. Bernanke and Paulson are brilliant men... I think it is unfair that those who are responsible for that mess will walk home with their millions...

On the other hand, I hope the bi-partisan approach will work.  It is not the time for Democrats to push for their ideology!

The focus should remain on helping familie in America (and for that matter all over the World), to keep on going with their lives.

An Interesting Lunch

I had lunch with a fellow lawyer and blogger Dominic Jaar yesterday.  Dominic is a litigation lawyer by trade, that in spite of his young age has built quite a reputation as a legal tech specialist in Canada.  Up until recently, he was in-house at Bell.

I got to know him last winter when I attended a conference he was chairing.  Back then, he was still practising law.  He's now launched a consulting firm that specializes in e-evidence and other information management and security.

Besides exchanging business stories and lawyering tales, we bot agreed that the business model of most law firms is to be inefficient.  Piling up the hours is their way to make money!!!

Thoughts about the Meltdown (Part 3)... Gordon Gekko plays Liar's Poker

Until a few years ago (when my friend decided to export his expertise to the UAE), I was having regular breakfast meetings with Serge D. a good friend and ex-colleague.  Having two decades more experience than I had, not only were those meetings fun, but also full of insightful thoughts.  I'm telling you this, because one morning, Serge woke me up to reality.  It was around the peak of the Internet bubble.  I was really excited as business was going great.  I had launched a two 20 something lawyers' firm... and we were having traction (yes, big clients and deals that the big firms were chasing)... after all, in 1999 anything seemed possible!

So here I sit at the table (late, as always), all excited.  Drinking my first coffee sip, I go on to say, "You know, for the first time in history, anything is possible" ... "there are no limits to what we can do" ... "the creation of wealth we are participating in is limitless"... 

After about 2 minutes of my exuberant spiel, my friend, who is an economics graduate tells me... "Hmmm, have you ever read Adam Smith?  Did you ever hear about the Tulip Mania back in the 1830s...???"

That morning, Serge had a point... We, Humans, seem to get into the same patterns, over and over again.

Back in 1990, I read Liar's Poker a New York Times best seller by Michael Lewis.  In this non-fiction that reads like a high intensity drama, Lewis tells the real life story of  how "big swinging dicks" at Salomon Brothers were "blowing up clients".... or for the rest of us, how thrifts' managers throughout the US were lured into selling their real estate loan portfolios at a discount to the investment banks (in this case, Salomon), only to be investing their deflated proceeds from such sales, into overpriced mortgage bonds (those securities were backed by the same mortgage portfolios sold to the IB)... That was greed walking down wall street at it's best.

Image via Wikipedia

Now, what does this have to do with what's happening now?  Well, Gordon Gekko's famous quote, Greed is good, has been the word on the street more than ever during the last decade.  With increase pressure to see double digit growth of their revenues, investment banks rewarded their innovative employees generating new ways to collect fees.  With a somehow slowly growing but stable economy, governments not borrowing as much money as in the post WW2 era, low interest rates, and a stable population, fix income gurus needed to expand their market.  With local bankers aware of the late 80's wealth shift from Main Street USA to Wall Street, the only way for Wall Streeters to claim their big paychecks was to build yet another bubble.  This time though, the bubble was not about inflating tech stocks or tulip prices, but about luring families into borrowing unprecedented amounts to be secured by their home. 

Image via Wikipedia

The sad part in all of this, is that now many American families will struggle to make it back to a descent level of economic comfort.

As I said in Part 1 of this series, this is not a plea against the market economy or capitalism.  Quite the contrary.  But rather a call for the regulator to do its job... and make sure greed doesn't lead to this kind of situation again.

ZeFridge's Blog First Post

I am not quoting myself here, but I thought I would post Zefridge's first blog post on my personal blog...

ZeFridge

I am happy to write this first post of the ZeFridge blog.  We have been working hard during the past months to bring a new tool to families.  ZeFridge is a social application that brings coherent ubiquity to families.  Wherever you are, whatever you do, ZeFridge allows you to better interact with your love ones and your community.

ZeFridge is coherent ubiquity.  It is hosted on the Internet, but it is much more than a website.  For us, coherent ubiquity is the leverage we get when we can share knowledge, services, resources... all without having to rely on the Government or to be charged for.  Coherent ubiquity is when we can truly benefit from our preferences.  It is when we get to spend more quality time with our love ones.  It is also the support we can get from those we support.

What is going on in the economy right now shows that our system is not perfect.  It is not perfect because of all the externalities.  From the greed of certain people, to the lack of motivation of others, we face challenges in raising our families, challenges that simply should not be there.

ZeFridge is about you, your family, your relatives, friends, neighbors, colleagues and fellow community members sharing insight, getting better access to healthcare and education, living in safer neighborhoods, and ultimately getting more enjoyment from your family life.

ZeFridge is poised to offer new services as we go.  It will be launched soon, it is our initiative... now it is yours to discover, use, and leverage to its full utility.

Welcome to ZeFridge,

The Founder, Phil

The $750,000 Kitty

This is the story of the 12 year old kid who posted his cat for sale on Craigslist.  The price tag was $750,000.  Excited, the boy told his father that he was expecting to sell the cat for the announced price.

Two days later, the boy was happy to see his father coming back home after a day at work.  The kid could not withhold his excitement and said to his father, "Dad, you won't believe this... I sold Sam (the cat)".  The father, a bit surprised asked, "Well, aren't you sad to see Sam go?"  

The boy answered, "Not at all, I've done a great deal".  His dad was a bit puzzled, considering his son's expectations... "Just how much did you get?"

"Well Daddy, I got $800,000...  I got an $800,000 parrot for Sam, can you imagine!"

Think outside the Box

I was driving back to Montreal with the family in March of this year, when we heard that one of Canada's top orchestra was to be dismantled by year end.  This followed the decision of the Canadian Broadcasting Orchestra to stop funding its orchestra.

The orchestra, the CBC Radio Orchestra, is the last of its breed in North America.  Of course, radio orchestras in this day and age are not booming businesses.  On the other hand, this group of fine musicians are members of a 70 year old orchestra, that is not only recognized for the quality of its work, but also for its role in showcasing the work of Canadian artists.

The initial reaction was for a significant number of people to condemn the CBC's decision.  Facing important budget constraints, the public broadcaster had to cut costs... The orchestra was to play its final concert in November, 2008.

Although I believe that the CBC is managed by skilled executives and I am sure they follow a rigourous governance process, the "death" of the orchestra simply did not register.  Thinking outside the box, I decided to invest a few hours of my time to investigate.  I quickly came to the conclusion that this Orchestra, an icon on the West Coast and certainly a jewel of the Canadian music scene, could in fact be severed from the CBC.  For more info, see the article written by Robert Everett-Green in the August 9, 2008 Edition of the Globe and Mail.

Since then, I have been working on a business plan, contacted CBC's leadership to present a simple spin off plan, asked people in the community to back the project, and started the fund raising process.

Will we succeed?  No one knows for sure.  After all, we are in the middle of a financial crisis.  We will have elections in October in Canada. We only have 50 days before the "new beginning concert".  But I think anything is possible if we can get the support needed in the community... 

I am doing this simply because I believe it is my duty to do what I think is right.  All I can say is that this endeavour has already given me a great return on my (time) investment... as I was introduced to a great person, one of the best musicians in Canada and a skilful young conductor, Alain Trudel. 

I wish everybody supporting the Orchestra good luck!

A Bad Business Model - Selling Cars to Families

A significant number of friends/business people in my hometown network drive Volvos.  I guess it's a sign of the time, but we all have families, ski, and have to drive in the Canadian Winter.  So, I guess this makes sense.

Recently, I have started to hear more and more complaints about Volvo from this crowd.  And these complaints were neither about the driving experience nor about the quality of the cars... It's always about after sale customer service.

This is not good for Volvo.  Canada is a small country (population wise), but it is after Sweden, its largest market in terms of car sold per pop.  So, annoying repeat customers, who for the most are moms/dads in their 30s or 40s, educated, somehow successful... may not be a good business model...

Here are a few advices:

1. Try to close the gap between the price of Volvos in the USA and Canada... yes we can probably afford to pay the average $8,000 premium charged because we live 40 miles North of the US , but I'm not sure we will do it next time we purchase a new car;

2. Be aware that some of your authorized dealers treat us like shi....

3. We know dealers make only a little profit when they sale cars.  But is this normal that we have to spend an average 400$ every time we go to the dealership to change oil?  I know Japanese car dealers are a little less agressive!!!

4. Why is it that dealers charge close to $100 / hour for their repair technicians and make so many mistakes?

It's not all to have a good product... selling a car to a family means your representatives need to show they care!

About Coherent Ubiquity in the Big Apple

One of my favorite blogs is A VC, Union Square Ventures founder Fred Wilson's blog.

This morning's A VC blog post is entitled Power to the People.  It is precisely the heart of what ZeFridge and Coherent Ubiquity are.

Coincidence in the Middle of the Night

As my eldest son complained about his legs at 3:30 this morning, I just couldn't fall asleep after rubbing the pain out.  I tried counting lambs, but it was totally inefficient in bringing back my sweet dreams.  I therefore pulled out my iPod to listen to a podcast.  That was a bad idea... at least if I wanted to get more rest...

I found, in the long list of material I had subscribed to but had not opened yet, a conference that Shai Agassi gave a while ago at Stanford (The Physics of Startups, Stanford Technology Ventures Program).  When I saw the program, I was intrigued as Shai is featured in Wired's September edition and of course, because Agassi is not only one of the most successful entrepreneur in my generation, he is also incredibly skilled as a business operator (he was the next in line CEO at SAP in his mid-30s).

Anyhow, this podcast was great. Agassi outlined the good and the bad of the startup endeavour... The difference between success and failure is often a very fine line (days, even hours can make all the difference in the world, provided you can be at the right place at the right moment).

After 47 minutes of this speech, the excitement of the clever thoughts, and the brutal reminder that so much is left to random factors (i.e. there is no net below), how can I go back to sleep... 

It's now sunset, I guess I'll fix breakfast for the family!

Thoughts about the Meltdown (Part 2)... Regulating...

I was in New York earlier this week when the Lehman/AIG debacles were the talk of the day.  This was of course the topic of choice for both Republican and Democrat camps.  Obama was accusing the Republicans to have failed to efficiently regulate the financial sector during the last eight years, while McCain was accusing the Democrats of wanting to kill the US economy  with their socialist regulating approach.  Pure mud slinging... but little substance.

According to my Mac Book's New Oxford American Dictionary "regulation" does not mean much...

regulation |ˌreg(y)əˈlā sh ən|

noun1 a rule or directive made and maintained by an authority : planningregulations.• [as adj. ] in accordance with regulations; of the correct type :regulation army footwear.• [as adj. ] informal of a familiar or predictable type; formulaic; standardized : a regulation Western parody.2 the action or process of regulating or being regulated : the regulation of financial markets.
So, what about regulation?  We know that savage capitalism is not the key.  If it was, we'd be back to canaries in coal mines within a few years.  On the other hand, the rule or directive made and maintained by an authority are to be made to meet common objectives.  In the financial market, those objectives are to make sure we keep everyone honest (we could write a thesis trying to define this) and assure a transparent flow of information allowing all participants to have an equal access.  I know this is simplification to the extreme, but it just  makes sense.
Now when I was a student, we still had the four pilars in the financial system (and I swear, I'm not old yet!!!).  Banks, trusts, investment banks (broker dealers, back then) and insurance companies were all independent from each others.  It went as far as limiting American banks from having branches in more than one State.  This was the result of the REGULATOR REGULATING... Those regulations followed the early 1930's financial meltdown.
I am not pleading for a new New Deal here.  Neither am I saying that the 1990's deregulation should be reversed... but I'm asking, what are you guys (including you ladies) doing in D.C.?  The problem is not regulations, it is the Regulators...
Since it is up to the regulator to decide what the regulations should be... here are some dos and don'ts...
1. DO: Focus on what is important... While the US Governement was trying to "nail down" Microsoft in the second half of the 1990s, nobody said anything about the major accounting firms merging.  Duh!  We now have the Big 4... four firms controlling the reporting of more than 90% the World's wealth... What if we have an Arthur Andersen again... and again???
2. DON'T: Do we need to create oligopolies like what we have now?  Although the public's protection calls for the registration of broker dealers, fund managers, bankers, etc., the way the systems are designed now, licence holders do not face enough competition to be forced to be efficient... Why focus on creating value when you get an automatic 2% on the money you manage, so long as you can justify that you are doing somehow "all right" compared to indexes...
3. DO: Break-up the Big 4!
4. DON'T: Do not allow the actual rating agencies to remain the watchdogs of the markets...  Unless they reorganize, they are worthless (unless you are a shareholder)...
More to follow...

Thoughts about the Meltdown (Part 1)

Before reinventing myself as an Entrepreneur in 2006, I was a corporate lawyer advising private equity investors in the financial sector.  I would never claim that I'm an expert analyst, but I was in the trenches long enough to be opinionated what has been going on lately... 

Coherent Ubiquity is not intended to be a blog about finance.  But the credit crunch and the financial tsunami that followed may impact the average family for the years to come.  I also want the reader to know that I'm a firm believer that the market economy and capitalism are by far the best ways to create and share wealth.

I will start this series of Thoughts by the basics...

First day in a microeconomics class will teach you that the value of a good (or service) is where the equilibrium of offer and demand is met.  This may sound a bit simplistic, but as we will see later, it should always be kept in mind...

As for the finance 101 class, students learn that the agency problem is central to stakeholding... i.e. the executives of a company normally focus on their remuneration, not on the value of the securities held by stakeholders.

To be continued...

A Universal Definition for Web 3.0

Coherent Ubiquity could be it!!!

About Synthetic Derivatives and Cloud Computing

I was having diner last night at Victor's Cafe, a good Cuban restaurant on 52nd Street (near Broadway), and the conversation made me go on a lengthy explanation about liquidity in the market (a few hours later, major central banks and the Fed announced an injection of $180,000,000,000) and synthetic derivatives.  Needless to say, even if the people around the table were brilliant, it felt like explaining cloud computing to a 10 year old...

There has to be a better way...

I was thinking the other day... Why do we need to keep the old inefficient models when we could reinvent the way we do things...

Take the raising price of food in developing nations.  Up until recently it was clearly impossible, in a country like Egypt, to forego the state controlled agencies that are responsible for managing food supplies.  Without launching a political debate to find an explanation, one could point out that Egypt lacked the communication infrastructures to allow for any decentralized network to operate.  Now that Egyptians have access to mobile communications, the Internet, and social networking platforms like Facebook, they seem to be too busy, just as the attached excerpt from the MCMBM blog suggest, finding ways to confront the authorities, rather than focusing on finding new ways to feed the people of Egypt efficiently...

What about Coherent Ubiquity...

Coherent Ubiquity (tm) is part of ZeFridge's IP.  I wish I would have been the author, but it is Lea Mackay-Mejia who came-up with it... Thanks to the company and Lea, it makes a great title for my blog!

My iPhone, Time Square, and Penn Station

I was in the Big Apple this week where I was able to use my iPhone efficiently.  First, it's important to know that the roaming charges imposed to Canadian mobile phone users by Rogers/Fido simply make it prohibitive to turn the "data roaming" option on.

The alternative when traveling the USA is the use of a Boingo account. Thanks to Starbucks, one can not only find $6 latte every other bloc, you also have an unlimited supply of wifi hotspots, allowing the iPhone to perform its magic.

Thus walking on Time Square, I was able to send this instant postcard to my sons, without having to buy a stamp...

Later, I sent a meeting confirmation email to Jeremy Epstein using my coolest gadget of the year attaching a picture of me... pretty useful when you don't 

know the person you are meeting, when such is to happen near the Amtrak ticket counter at Penn Station around 11:00 in the morning!

According to Seth Godin, I'm blogger #80,000,001...

My good friend Procrastination has helped me stay away from blogging during the last few years. It's not that I'm lazy or disorganized, nooooo... it's just that I wanted to keep a low profile, as I've always have.

My problem now is that I cannot afford to keep this low profile anymore, after all I have ventured into founding a startup company in 2007 that is about to release it's product.  I'm also involved in a few charity/community initiative that will require visibility.  So here I am... facing a white page, not knowing if my thoughts will even get to be read by anyone.

I must also point out that English is neither my mothertongue, nor the language I use most of the time.  I could write this in French, but this would mean even less people to potentially read my prose and much more time to write (writing in proper French is a challenge for almost anyone).

Anyhow before I bore my reader(s) with this intro... I jump in...

Seth Godin established in Meatball Sundae there were some 80,000,000 blogs (in 2007). Most people could point out that my blog in this ocean of authors will simply have no effect. Logically, this is the statistical faith reserved to my blog.  Yet, I believe I'm a truly blessed low profile guy.  As my thoughts may be of limited interest to others, I have the chance to be working or collaborating with great people.  Those persons' actions are not only worth mentioning, the stuff they do influence so many people in various ways, that this alone may be of interest to eventual readers.

Last but not least, I recently was introduced to the friend of a friend, Jeremy Epstein (I know very little about him), which blog ignited my motivation to start blogging.  I could venture into trying to explain how Jer979 made a difference, but I guess you should just check it out... 

Finally, as this first blog post is very boring ( I had to introduce Coherent Ubiquity this way), I have decided to post a picture from last summer's family trip to Yosemite... Enjoy!