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President Obama blasting bankers' bonuses

How could one disagree with the opinion expressed by President Obama regarding the bonuses some Wall Street bankers have decided to pay themselves? We’re really witnessing recklessness of untold and unprecedented proportions. Those bankers’ behaviro testifies to the fact that there is a complete disconnect between modern finance and the field reality of what we call the "real" economy. But of course when things are getting tough for their girlfriends, wives and mistresses who need to change lifestyle (see the DABA Girls blog to get a feel for the utter disconnect of this crowd from real life), these guys feel the pressure to do something, no? Sadly enough a limited number of people damage the reputation of an entire profession. Most of my contacts in the world of finance are just very fine persons, working hard and decently to fulfill their mission and serve real companies with real customers and real services and real employees and real profits and real problems. They’re part of economic life, whereas the people President Obama is targeting are causing economic death and loss of confidence. If we are serious about solving the current crisis, both they and the pervert system they’ve created must be taken out of the system.

Read on for an analysis take and a video embedded.

Roubini confirms deep crisis: how will you shield your business?

Nouriel Roubini’s (RGE – Wikipedia –  Page at NYU Stern) interview on Bloomberg is something you ought to listen carefully (podcast at the end of this post) if you’re a business founder, a manager or an asset owner. It’s not exactly the sort of content that will boost your morale, but I don’t believe the Coué method is the right way to go because it’s much more than a mere crisis of confidence. On the other hand neither denial, nor pessimism are going to take us anywhere.

Rather a pragmatic take on the situation is an essential first step if you’re serious about adapting and being in a position to fully benefit from an eventually recovering economy. This is only one of the reasons why it’s worth getting down to some of the implications of this analysis for business. Today helping business people deal with anxiety and make sense of this chaos is part of my work in different industries, from commodities to tech-innovative sectors, in different areas of Europe. So what does a pragmatic analysis of the situation mean for business? Read on and listen to the podcast.

Going to Twestival

Twestival seems like a terrific idea to make a brilliant case about how social media (Twitter in this case), new technologies and the international connected community of geeks, tech enthusiasts, creators, media types, marketers, home mums, retired pros...etc can actually make an impact. The event takes place on February 12th in over 100 cities around the world and the proceeds will go to Charity Water, whose mission I find outstanding. If you want to join, here's where to register if you can make a donation of 5, 10, 25  or 50 Euros. Looking forward to meeting the fun online crowd on February 12th in Brussels!

Click fraud on the rise: a threat to measurability of ads?

Interesting and worrying figures from a recent study on click fraud showing deterioration of the situation on the front of click fraud. I wonder whether fraud can be curtailed and if not whether it can derail the project of genuinely measurable advertising and marketing communications...

Social media gaining more traction than expected

A very interesting conclusion of recent study by Pew shows that social media is on track for faster adoption than previously believed. And this means that the media landscape is on the brink of yet another radical change in the way owners of content relate to their audience and communities. Exciting stuff.

clipped from www.poynter.org

"The share of adult Internet users who have a profile on an online social network site has more than quadrupled in the past four years -- from eight percent in 2005 to 35 percent now."

"It appears that American adults are moving into social networks more quickly than top 100 news organizations."

McLellan cited recent Bivings Group research, which found that only one in 10 major news organization sites offer social networking features

It's not the site, it's the links, the connections and the network.

I think McLellan is on to a couple of interesting ideas here. First, that mindset and culture -- not resources and technology -- are the key barriers to news organizations benefiting from social media.

the willingness to continuously experiment is the most likely path to success in media. This includes not just trying out new technologies, but learning how to value engagement other than page views on your site.

one of the more rewarding ways news orgs can connect more fully with their audiences

Quote of the day - source: Cisco's CTO

Padmasree Warrior, Cisco’s CTO, tweeted this very beautiful sentence quoting a poster she saw:

“Rosa sat so Martin could walk, Martin walked so Obama could run, Obama ran so our children can fly”

 

Beta Group evening in Brussels

This evening I attended the meeting of Beta Group in Brussels. The event took place in one of the classrooms of the University of Brussels, home of my business school… It felt like a big return to the past since it’s been at least 14 years since I last visited that part of the world and in fact it hasn’t changed on bit… There were five presentations of startups that I found refreshing, not particularly because of the quality of the demos (sometimes too technical, low energy and not that assertive), but because I saw people creating fun stuff and prusuing visions and dreams of their own. Here’s a couple of companies I think are before good market opportunities:

1. Oxynade, because aggregating the information about events in a way that is clever, usable and relevant irrespective of the user’s device is a growing need, especially if they decide to make the whole thing transactionnal and allow tickets to be purchased and sold over their platform.
2. Plot Point Prod, because there is a big opportunity in product placement in videos online and VOD, especially during a period of economic downturn when consumers are likelier to stay at home and therefore need to be reached through channels they will use for entertainment. To make their case they very cleverly opened their “Stratagémistes” channel on YouTube and I think the entire audience enjoyed watching their stuff.
3. Proxyclick aka Click ‘n Lunch, because it simply makes sense for a lunch ordering platform to act as an intermediairy to allow caterers to deliver food to people at work and beyond. Their idea to offer a “virtual canteen” is interesting even though the operational challenges must be quite daunting.

During the event I heard someone ask the presenters of the last presenting startup (Seetiz) about Seetiz’s scalability. An interesting question, even though growth is not an objective per se. I think companies are better off making sure they’re great, solid, disciplined, high-quality and fun places to work before they attempt to grow. Growth is a by-product, a consequence of something fundamental: the enthusiastic urge to profitably serve customers in a consistent manner such that they become eager to stick with a company as a supplier. So, the list of this post is not meant to identify potential “high-growth” companies, but merely to say why these three stand out in my opinion.

Definitely refreshing to be spending some time with people who innovate by pursuing their own quests in the wonderful and often mesmerizing world of business.

Widenoise just released by WideTag

Even the longest journey starts with the first step… As WideTag releases WideNoise I feel this is the best way to describe the event because WideTag’s stated destination is to be a leading player when the Internet of Things becomes reality.

As WideTag’s CTO often says, there is a still a hell of a lot of stuff missing from the real world for the Internet of Things to happen, but one ought to start with what we’ve got, include new stuff that is coming up and build whatever is missing.

WideNoise, designed by a beautiful team released yesterday as an iPhone application that allows you to socially share data about the noise level at a specific location, is very much the result of this very pragmatic approach: use an existing networked device that has at least one sensor embedded to offer a first application of a “spime”. What’s a spime? It’s a device capable of recording and transmitting location coordinates as well as information about its immediate surrounding, e.g. temperature, carbon dioxide concentration… Now, spimes are likely to play a prominent role in the Internet of Things. Although it’s quite geeky as a concept (if you’re interested read this), there are three reasons why it’s noteworthy:

1. spimes will be (already are) all over the place in a matter of a few years using technologies (RFID, GSM, GPRS, GPS, GoogleMaps…) that only need assembling
2. with the environmental crisis we need to measure our “physical” world in order to make smarter (micro-)decisions from whether to use a car to how to manage the powergrid dynamically
3. the flow of data that will be captured will in part BELONG TO YOU so you don’t want it taken from you without your consent or in a way that is so proprietary you can’t control it, which is one of the reasons why WideTag seeks to make things open, something it started doing with OpenSpime, an initiative aimed at offering open protocols and technologies to the world for building and operating the spimes of the future

In fact, Widenoise is also a bridge between the “pure vision” of the Internet of Things (where objects are supposed to exchange information and form self-configuring networks for relaying the data) and today’s reality of applied technology becoming increasingly “social” and hybrid in that it mixes hardware, software and people to create value for participants. So has WideTag managed to make noise social as a very nice post of this morning claims?

Congratulations Nimbuzz!

Almost a year and a half ago on I covered Nimbuzz on this blog because I felt they had a pretty cool and promising proposition. Since, their team has been able to progress even more and get to the point of receiving the prestigious Red Herring Global 100 award.
As always, I am thrilled to see entrepreneurial ventures find their way and reach new heights, so congrats to the team of Nimbuzz for beautifully pursuing an entrepreneurial quest that creates value.

A more artistic view of my Delicious cloud of tags and LinkedIn profile

An interesting correlation

These past few days I came across an article published by CNET News listing the seemingly unending announcements of layoffs of these past months. One of the questions that occurred to me was whether there is a correlation between the importance of a company's layoffs and its stock's price-to-earnings ratio (P/E). I chose to use the P/E ratio before the beginning of the crisis, because that's when future expectations of growth where factored into the price of a stock and hence the layoffs reflect the fact that these very expectations were disproved.

My take is that our economies have been running into trouble since the second half of 2007 and hence I used the P/E of 2007 for a subset of tech companies of the CNET list. The companies included in the data set are: Adobe, Alcatel-Lucent, AMD, AT&T, Autodesk, BMC Software, Borland Software, Cymer, Dell, Electronic Arts, EMC, Ericsson, Lenovo, Level 3 Communications, Lexmark, Logitech, Microsoft, Midway Games, Motorola, Netflix, Oracle, Plantronics, RealNetworks, Seagate, SGI, Sony, Sun Microsystems, Unisys, Viacom, WebMD, Western Digital, Yahoo

I got the P/E ratios from Prof. Damodaran's web page that I got from Prof. Farber's page of resources at Solvay Business School, my Alma Mater. So I'm once again grateful to professors & academia for sharing knowledge, the only way for knowledge to grow.

While this is by no means enough to draw conclusions and the analysis is only very rough relying on many opinions, the indication is that the higher a company's P/E is in good times, the likelier it is to lay-off personnel when the economy sours . To illustrate this result, I used IBM's Many Eyes visualization resources, which I find prety cool, so thanks Big Blue for making great tools available freely to those who seek, for those who are on their quest, sometimes a business quest :) Here's the link to the chart. I'm also including a screenshot of ManyEyes below because the link doesn't always work properly:

I also used data visualisation software Tableau to verify the correlation: quite a powerful product. Below is the analysis of the model produced by Tableau:

 

And the Tableau visualization is below:

So what was Madoff investing in?

The name Madoff is now indelibly associated to the largest financial scam of history. Nevertheless, it's interesting to see what types of investments had Madoff's favors and that's what a columnist of the FT did. Fairly interesting piece although I'm not certain you should immediately try to replicate Madoff's approach because this stuff smells like insider trading. Yet another indication of the degree of corruption that plagued parts of the financial system that is collapsing before our eyes and inflicting damage on many people who neither benefited, not supported it.

clipped from www.ft.com

It looks like Mr Madoff (or whoever chose the stocks in his fund) liked to get involved in various special arbitrage situations. Some of these still exist and make for interesting stock picks.

Mr Madoff played a lot of special-purpose acquisition company arbitrage: SPACs trading below cash.

Hicks has $540m in cash and a market capitalisation of $480m. Trading below cash makes this a very safe play.

Anheuser-Busch, which has since been acquired. When Mr Madoff bought the stock he had a potential 40 per cent annualised return implicit in it because of the arbitrage going on with Anheuser-Busch being acquired by InBev. The deal closed in November so Mr Madoff made his money.

Mr Madoff also liked “closed end fund arbitrage”: buying closed end funds trading at significant discounts to their net asset value

Finally, Mr Madoff was a big believer in financial media. One of his new positions in the third quarter of 2008 was a little stock called thestreet.com, founded by CNBC’s Jim Cramer.

Back to economic reality with Joseph Stiglitz

As we're trying to salvage more of the financial system than we really should, especially with taxpayers' money, it's worth getting back to understandable economics and to a financial system that is the tool, the slave, not the master of the "real" economy. By the way, isn't the term "real economy" ironically pointing to the fact that the rest of it wasn't that real? The way the economy is being financed needs to be completely reviewed and the responsibility lies with each one of us. This is not about "bad guys" in the financial world who got rich at the expense of the rest of us: almost everybody was happy getting credit beyond reasonable levels, almost everybody voted for the system through their patterns of consumption and investment. We've been living in a world where the poorer economies were in essence financing the richer ones which indulged in levels of consumption that were disproportionate relative to their actual creation of value, especially long term value. Time to listen a bit more to experts like Joseph Stiglitz, who was recently interviewed on French TV. As usual an uncompromising analysis of the situation (voice-over in French covers his voice at times):

Le monde des livres du 16 janvier 2009
Video
Envoyé par LCIWAT sur wat.tv