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Author: cgerrish

Unemployed philosopher

Hambrecht Previews the Next 18 Months

Om Malik interviewed my old boss Bill Hambrecht about the state of the economy and the future of the IPO in Silicon Valley. Watch the whole thing. Hambrecht has worked on transparency in the pricing of securities for many years. His ideas about using a modified dutch auction to price initial public offerings are still revolutionary.

Hambrecht’s explanation of the subprime mortgage crisis is one of the clearest I’ve heard. Mortgage backed securities are traded in a dealer-to-dealer market without transparent and continuous pricing. Stocks are priced through a continuous auction on the stock exchanges. When a company has to voluntarily mark down the value of these mortgage-backed securities, they hesitate. When they’re finally forced to mark an asset down, there’s a big jump down in value. That change in value wrecks the balance sheet. Interestingly, it’s not a business or revenue issue– it’s a price/value of assets problem. Hambrecht’s solution has always been to allow the market to discover the appropriate price and make the process transparent.

Hambrecht thinks the consolidation of the bulge bracket investment banks means that big iBanks will only be doing big deals. Their cost structures will dictate a move toward the mega deal. The ground is being prepared for a new crop of boutique investment banks to bring the new crop of small companies public. My favorite quote in the interview? “It’s like 1968 all over again.”

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Tree Planting and the Politics of the Soil

Japanese Maple

I recently planted a new Japanese maple tree in my back garden. The new one replaced an old one that had died a suspicious death. Over the last few seasons its growth had slowed to a crawl. It had always put on a fine display of maple leaves that turned bright orange-red in the Autumn. When they fell to the ground, the leaves scattered across the green grass making beautiful patterns.

This Spring the maple tree barely sprouted leaves; clearly something wasn’t right. We love to grow different and unique tree in our garden, we have the full equipment to take care of them, even have a good electric pole trimmer reviews, but this tree is a disaster for us because we don’t know what kills it. We consulted with our gardener and we took some measures to try and bring the tree back to health. In the end, the battle was lost. A preliminary post-mortem concluded that a gopher had eaten the roots of the tree and therefore it was unable to take in water and nourishment from the soil.

A month or so passed and the Japanese maple turned into a stark and brittle wooden sculpture. Slowly, bit by bit, the life was drained from it. My wife and I drove down to Half Moon Bay to a large nursery to pick out a replacement tree to be planted to celebrate my birthday. After a few stops, and auditioning a number of trees, we found a perfectly formed Japanese Maple — an Emperor I variety.

When we planted the new tree, the mystery of the previous tree’s death was revealed. The gopher was exonerated by a more thorough investigation. The large Italian cyprus tree nearby, a tree planted in the 1920s, had strangled the maple. It was murder. The cyprus sends out shallow roots in a fine dense mesh. The roots of the large tree surrounded, enclosed, and cut off the water supply of the smaller maple. The Japanese maple has woody roots that are meant to grow deep. They never had a chance.

This war of the root systems had been going on underground all along, invisible to us. We suddenly discovered that our garden is also a kind of battlefield. We were about to plant a new tree and place it in harm’s way. We realized that we couldn’t do what we’d done before. If we simply went ahead and planted the tree, it would meet the same fate as its predecessor. It was the end of the era of naive tree planting.

Our gardner came up with a solution. The new Japanese maple came in a large 10 gallon plastic container. The plan was to cut the bottom from the container and plant the tree along with the container. The container’s plastic sides would serve as a barrier which would protect the new roots from the Cyprus root’s smothering embrace. This new arrangement gave the maple’s roots the chance to grow deep into the open soil below.

As we plant new trees, and start new ventures, sometimes we aren’t attuned to the political currents flowing just below the surface. Our naive first attempt at tree planting assumed we were entering a neutral and nurturing space. Who could take exception to the addition of a beautiful tree to our garden? We won’t know for some time whether the strong move by the federal government of our garden will have effectively given the new maple tree the chance to grow and prosper. But so far, so good.

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Remembrance and Forgetting

Prometheus bound

This morning MSNBC aired a minimally edited replay of their broadcast from the morning of September 11, 2001. I remember watching those images on that morning. I remember worrying about my colleagues who would be arriving at our New York office in the World Trade Center. I’d visited them a few months before, spending all day in the building– from early morning to early evening.

At the time, on that morning seven years ago, I viewed the images with disbelief, as in a dream. Now as I view them again, the emotions are still strong, but I see them with clear eyes. On the day of the actual event, I didn’t think we lived in a world where such a thing could happen; today I know such a thing has happened.

Prometheus, in eternal punishment, is chained to a rock, where his liver is eaten daily by a vulture, only to be regenerated, due to his immortality, by night.

But my topic is not the possibility of terrorist acts, but rather the replaying of memories and something Nietzsche called ressentiment, or the spirit of revenge. When we act out of the spirit of revenge, filled with the pain of the moment, we act out of weakness. In our digital age, if everything is recorded, can we ever forget the past? Will we be like Prometheus bound to a rock, our wounds forever raw? Will all human motivation be reduced to acting from the spirit of revenge, as no perceived slight or hurt ever fades from memory? The digital doesn’t fade, it’s on or off. The challenge to overcome the spirit of revenge grows larger as memory is displaced into our digital systems and networks. The digital is immortal and can be replayed endlessly at the click of a mouse.

I think perhaps we forget the meaning and power of forgetting. Manu Bazzano in his book “Buddha is Dead” discusses the modes of forgetting:

“There is forgetting and forgetting. We subconsciously remove from our memory unpleasant experiences, and we tend to ‘forget’ by sheer inertia. On a super-conscious level, however, we keep our consciousness fresh and vibrant by actively ‘forgetting.’ The noble person knows how to forget, not solely out of compassion (‘forgive and forget’), but also because there can be no happiness, no cheerfulness, no hope, no pride, no present without forgetfulness. Life would drag on, forever unresolved, a life that ‘cannot have done with anything,’ a life of ressentiment, a sick life.”

In our digital age, with perfect replays, can we learn to digest and properly metabolize events and turn them into experience? When we act and create from experience, we’ve listened, reflected and responded. We’ve created something new to fill the present moment. To truly embrace change, we must not look back in anger, but walk purposefully into the future.

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A Vendor Squeaks at an Unconference

Tom Waits sums it up nicely “What the large print giveth, the small print taketh away.” Vendors like to say things like “we’re users too.” But when they speak as vendors first and users second, they aren’t engaging in the real conversation. No matter how cool the rhythm track and the doubled sax, the words tell the story.

Waits does a formidable impression, and remember, no salesmen will visit your home.

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