Vestigial:  when, through an evolutionary process a part of an organism or organization no longer serves a useful purpose, we refer to it as being vestigial.  For example, the appendix is a vestigial organ, except that like in many other cases where doctors have told us stuff that’s no longer true, the appendix does have a purpose.  (The appendix is kind of a reboot kit for the large intestine where it stores our own internal version of Activia Yoghurt and has the active bacteria set aside for emergencies like when the rest of our bowel flushes itself out because of infection.  But I digress.)

For roughly ten years, about twenty years ago, I was closely involved with the newspaper industry and in the spirit of full disclosure, as well, I continue to dutifully read the New York Times every day, in paper form, and dispose of it properly in the recycling bin. 

If we examine the newspaper industry business model twenty years ago, there were three major sources of revenue: classified advertising, other, typically retail advertising, and subscription fees.  Generally, it was true that the subscription revenue paid for the printing and distribution but not the editorial staff which was paid for by the remaining two sources of income. 

Over the last ten years, the Internet has decimated the newspaper model.  Craig’s List has taken over the classifieds, and Google has seriously undermined the other advertising revenue.  Both Internet models are cheaper and more easily measurable in their effectiveness.  This has left the newspaper industry with quite a problem and newspapers all over the US are closing. 

Now even twenty years ago it was obvious to me that there was redundancy in the business.  Not being a significant sports fan myself, I would marvel at how many photographers would cover a not-very-special Boston Celtics basketball game.  There was a Globe photographer, a Herald photographer, several wire services photographers and maybe even some independent stringers.  To my eye one could interchange any of their photos, or even photos from prior games and I wouldn’t know the difference.  It was clear back then that things were going to change, but not as much as they did and will.

It has become clear that younger people today don’t buy and read paper newspapers so there is a demographic shift that isn’t helping.  And, along with the loss of revenue, there is obviously a significant increase in media choices that are available.  The pressure is causing newspapers to be unable to sustain their editorial staffs at prior levels, and with good reason.  Do we really need local experts to cover national or international topics?  With the increase in communications speed and accuracy isn’t it more rational to pay the best writer (or a small group of writers) to cover a topic that they know in greater depth.

Now of course, I know the opposing argument about the need to keep a balanced and objective journalistic community, but there’s a limit to the number of opposing voices that are needed.

Just recently, online subscription sales of the New York Times for delivery over tablets and phones have been increasing and there may be light at the end of the tunnel.  While it may be true that the printing presses (and the people who run them and the people who deliver the papers) will become vestigial, it may also be true that the Times will survive, unlike many other newspapers.  There are just going to be fewer journalists in the coming years.

Over the last five years I’ve been teaching at Babson College and I am observing a similar trend and problem, yet we are earlier in the cycle.  Like newspapers, the business model for colleges is also somewhat complicated.  They get income from student tuitions, contributions from alum, government agencies and others, and some schools also participate in for-profit non-degree based education as well.   And, as in the case of newspapers, technology and a change of demographics are applying significant pressure for change to the educational community.

In the short term, one change that I have already seen is that there are more foreign students on campus.  One can rationalize this on the basis that these students value American education and are also willing to pay full load while the recession has made college unreachable for many Americans.  Unfortunately, it should be noted that foreign students are notorious for not becoming contributing alumni after graduation.  So, what you get today, you may lose tomorrow.

I, and many others, also believe that the tuition debt assumed by many students is unacceptable and must change.

We can also observe that there is substantial pressure from online educational services, some degree based, that are clearly cheaper in that they do not require the infrastructure of a campus.  While there have been stumbles and blunders along the way with regards to over selling programs, one cannot deny the inevitable trend.  Many top tier universities are offering online courses for free (currently without degree options) and some for fees and optional degrees.

Now it’s true that a college education has many values in addition to education.  I count a total of five.  First, it’s a safe, often first place from home, for kids with yet undeveloped frontal cortexes to hang out, drink beer and meet members of whatever sexual group they’re interested in.  For four years they get to slowly ripen while remaining out of jail and in relative comfort. 

Second, college is an opportunity to develop a lifelong network of friends.

Third, college is supposed to prepare a youngster for work and for a productive role in society. 

Fourth, it’s supposed to open a student’s eyes to the myriad of undiscovered opportunities and possibilities that lie before them. 

And finally, fifth, it can be a place to find adult mentorship and role models.

However, with the pressures evident from technology, it may be necessary to separate these different services and think about their delivery through different vehicles.

For the informational component of education, much like the newspaper industry, we are confronted with an interesting dilemma.  If, for example, I’m interested in studying physics, am I better off taking an online (and free I should add) class from Richard Feynman (one of the leading educators from Cal Tech) or should I choose Professor Max Von Noname at a local community college?  Does the speed, convenience and often lower cost of receiving the best outweigh the opposing value of “live” education from a likely mediocre alternative?

It would seem clear that some compromise is in order.  We don’t really need a thousand physics teachers any more than we needed all those photographers at the Celtic’s game.

To accomplish the network that many build in school it is already evident that online social networks including dating sites are already impacting this aspect.  It is possible that the creation of new virtual communities for those who are sharing a common educational experience is needed, along with newer tools, but it would appear that we are already on our way to seeing this change.

Even if we do away with the concept of the traditional four year college, we still need somehow to provide a safe haven for high school graduates, albeit maybe without the terraced lawns and comfy sofas.  It’s possible that returning to a model of mandatory community service including the alternative of military services is possible with the consideration that housing needs must be met.

But, I teach at Babson because I really enjoy the interaction with the students, or kids as I like to refer to them (whether they’re under graduate or graduate).  For me, it’s clearly not the money, as is true for all adjunct lecturers (not to be confused with full time professors who can be paid a whole bunch for doing very little and often don’t even like the students).  And, if online education becomes dominant, how would my role as mentor be delivered?

Of late, I have been really impressed with my ability to connect to entrepreneurs elsewhere on the planet through video skype and conduct teaching and mentoring sessions that I’m certain are as effective as one-on-one live meetings.  As well, I and several collaborators have started a business incubator called the IEC (http://iecpartners.com) where we intend to be able to continue to offer the mentorship without the trappings of the university.

So, newspapers and schools need to beware.  Business models are under extraordinary pressure from technology and both are likely to be unrecognizable in a few years.

I’m currently answering questions on AMA on Reddit! Come ask me about your business.

Here’s the link: http://redd.it/uys6x

There’s a lot of stuff in the news right now about the testing of Arizona’s 2010 law in the Supreme Court which allows state police to stop and detain undocumented people, like maybe you or me, out for a jog without our driver’s license, simply on the basis of “suspicion.” Several states have recently passed similar laws including Alabama which has been struggling with both embarrassing uses of the law, like several automotive executives being detained, and the loss of revenue by local farmers who didn’t have pickers when they needed them.

Over the past two years, right leaning, dare I say Republican state legislatures, have seized power and the opportunity to press these and other “social engineering” laws into action. However, the unintended impact is coming home to roost in many cases with the loss of local revenue, and needed workers for low skilled jobs. Recently one can observe a split in the Republican Party between pragmatic business interests that are looking to find compromises and “Tea Party Republicans” that want to purify our nation.

Beyond the troubling aspect of harkening back to the Nazi era of “your papers please” and questioning how this fits into the American concept of liberty, there is a more fundamental observation that one can make that renders this issue and the pending Supreme Court decision irrelevant.

I recently attended the Babson Latin Entrepreneurship Forum and learned some really interesting stuff, much of it from a presentation by Carlos Guzman, CEO of ProMexico. I hope that he will forgive me for using some of his charts.

NAFTA was enacted back in 1994. At the time, there was fear that this would lead to an exodus of American jobs into Mexico and in fact, in many cases this was true. But it was also true that more American jobs were being outsourced to China at the same time. Now we have the opportunity to look back and see what happened.

As of 2010 NAFTA accounted for almost one trillion dollars of trade between the US, Canada and Mexico, doubling since 1993. Mexico is the US’s third largest trading partner, after Canada and China, adding up to around half a trillion dollars per year.

The true effect of NAFTA wasn’t so much the export of US jobs but rather it caused the export of European and Asian jobs into Mexico in a much bigger way. Mexico’s economy is booming, currently number 11 in GDP, larger than South Korea. Goldman Sachs forecasts that Mexico will grow to be the fifth largest economy by 2050.

This isn’t apparent when you read the newspapers regarding the latest in drug related killing, but quietly and efficiently over the past 10 years, Mexico has been transformed from a sleepy economy that exported for the most part oil and food to one that is moving soon to become one of the world’s largest economies. It’s already the third largest trading partner of the US, just behind Canada and China.

It’s remarkable to observe as shown above, that Mexican exports have climbed to $350B and are comprised of less than 10% oil and food products and 90% from the manufacturing sector of electronics and automobiles of virtually every brand. NAFTA has attracted every major auto manufacturer from Asia and Europe to Mexico where labor prices are reasonably low, there is an enormous pool of available workers, there are lower shipping costs into the US and Canadian markets, and there is free trade into the US and Canada.

To make this better for Mexico, the age distribution in the country is shifting a baby boom bulge that is maturing into a growing workforce adding roughly 17 million workers by 2030 while reducing the size of the age group that is most commonly associated with crime (according to US statistics).

Therefore the entire concept of building a $6B wall between the US and Mexico was ill conceived in the first place. The real goal should have always been (and was attempted with NAFTA) the growth and stabilization of the Mexican economy. If Mexico was as prosperous and safe as Canada, for example, nobody would want to leave. In fact, the Pew Hispanic Center suggests that immigration from Mexico has “began to slow five years ago and may have reversed in the past two years.” The $6B would have been better invested in the direct goal of helping to socialize the youth of Mexico along with continuing their economic growth.

Now even Mexicans will readily admit that the drug problem and its resulting crime problem is serious and they are trying hard to attack it, literally, with federal forces, in much the same way that J. Edgar attacked the organized crime waves in the US back in the 1920s that were rooted in prohibition.

However, similar to the US, the real problem with drugs for Mexico is on the demand side (as was true for American consumption of alcohol) and not on the supply side. Note that Mexico was not historically a source of drugs but rather was on the delivery route from suppliers in South America, and Mexico got snared in the mess, building both crime syndicates and users. The real route to solving the drug crime problem is a combination of what Mexico is trying to do in enforcement, along with the reduction in demand through the decriminalization of at least marijuana in the US. Marijuana that is imported from Mexico represents 60% of the total drug trade or around $100B.

So, in the end, it doesn’t really matter whether our uber-conservative leaning Supreme Court upholds the recent trend in anti immigrant state legislation. Nor does it really matter whether we finish the wall, and keep it maintained. It is likely to become a tourist attraction soon and we would be smart to think about naming it. My favorite would be the “Great Wall of North America” or “The Imagino Line.” Best of all, we are starting to find that our neighbor to the south is finding prosperity and safety which will improve our lives along with theirs.

I have two questions that I would like to pose to the entrepreneurs out there and I’m interested in your responses.

Question 1 -

Assume that you have a product idea and you have found a perfect customer. Your customer is a large company with a strong balance sheet.

You make your pitch and the customer says: “I love it. Let’s get started.” But, you don’t have the needed cash to get started. So you ask the customer if they will advance you the cash. It’s a small amount in comparison to their cash on hand. They say: “We’re not a VC firm. Go find the money somewhere else.”

The question is: What should you do? Should you look elsewhere for the money or move on and find another opportunity?

Question 2 -

You have a product idea and you approach a large company that can be a customer. They have a strong balance sheet. They love the product, but you determine that what you’re selling will not be of any interest to any other customer, or in other words, this product does not lead to a scalable business. Yet, the customer is ready to give you and order and you will make a profit on the first transaction.

The question is: What should you do? Take the business or move on to some other opportunity?

Please leave your analysis in the comments section and I’ll give my opinion after getting a few of yours.

I had the pleasure last weekend of spending my time with a generous and warm family from Brazil. They invited me to their beach home and everything, including the weather, was marvelous. My hosts were Mark and his wife, Roberta Lund. Mark has lectured at Babson and has participated in some of the student excursions into Brazil.

Mark is a talented musician, sales educator, and surfer, but this particular weekend, I learned about his fascination and in depth study of myth, religion, and more specifically the Mayan calendar which, to some, predicts the end of the earth as we know it in 2012. Mark has lectured extensively on the subjects.

I am an atheist and a disbeliever when it comes to aliens, gods, myths and, not related, most of the business plans that I read. So I wanted to hear Mark’s story. I always love a good story. I will summarize it, certainly getting it wrong.

Virtually all religious holy days (shortened now to holidays) are related somehow to celestial observations and their synchronized events. We celebrate the longest and shortest days, the transitions in seasons, etc. Thus, all are in synchrony with the zodiacs. As Mark tells it, the Mayans were sophisticated enough with their observations of the movement of the stars to record not just the annual patterns but the patterns that occur over longer periods, thousands of years by including the effects associated with the axial tilt of earth in their calculations. The tilt undergoes a nutation, a slight irregular motion with a period of 18.6 years, and the orientation of the axis precesses around the sun each 25,800 years.

The Mayans either ran out of rock for calendars after 2012, or they assumed there was no need because we would all be dead. More likely to me, they figured that it would all repeat and there was no need to waste more rock. They probably had rock recyclers back then too.

I don’t believe that the world is likely to end in 2012, but I do believe that the planet is beset by cycles of catastrophes and the very nature of time, or a clock or a calendar points out one’s expectations for a catastrophe in the same way that we expect the spring after winter. A possible strike by a meteor, a possible reversal or collapse of the earth’s magnetic field, solar flares of immense proportions, are all lurking in our future. And, all of these catastrophes are cyclic in nature; meaning that they are inevitable. The end of days is likely upon us, or is it?

The first problem is that humans don’t really get probabilities. We have a hard time understanding the concept that the likelihood of a giant asteroid or meteor strike can be represented by a normal or Gaussian distribution centered on an average rate. It has been calculated that extinction events can be expected at an average rate of anywhere from one to twenty per 100 million years, depending upon your definition of extinction. The last major one was 65 million years ago. Well, once every five to fifty million years still seems like pretty good odds, but is it? In any case we’re overdue.

Major extinction events are part of our planets history and I’m certain that the forces that cause them are eventually going to occur. Yet, I’m not worried. Partially, because their likelihood is so low, that it’s not likely my problem, but more likely the problem of future generations, but more importantly, because there is now, unlike any time before us, a new chance for survival that none of our progenitors had.

I have spoken in my class about the observation by many scientists like Moore and Kurzweil that the rate of technological innovation is not linear but exponential because it appears that the development of future technologies is dependent upon the prior innovations. Thus, if we look at the rate of innovation during the four to five hundred years called the industrial revolution, we see that the rate has sped up, for example, from a time lag of 25 years between the invention of the telephone and wireless which occurred around the turn of the 20th century to our current environment where it seems major new inventions are available monthly.

Thus, we are in a race. One where the next extinction event gets more and more likely every year, but our technical ability to protect ourselves is also growing, albeit at an exponential rate. For example, it’s already true that NASA is tracking large objects in the sky, in anticipation of having to one-day “adjust” the orbit of a meteor or asteroid that appears to be on a collision course with our planet, a shield that the dinosaurs didn’t have.

This isn’t just about extinction however; it’s also about many if not all of the major global problems that beset us. Let’s consider global warming. Regardless of whether you believe that it’s induced this time by humans or not, let us for a moment assume that regardless of its source, it will be dramatic in its cost to society. The rising of sea levels and the changing of weather patterns will likely have a dramatic cost impact.

The question I raise is: is it really necessary for us to attempt to battle this problem now, or are we better off waiting until technology offers us a better solution? I must first define the term: “better.” To me, better simply means, less cost to society.

What we know is that there are two intersecting curves.

First, there’s the curve associated with the accumulated cost to society if we do nothing. Second, there’s the curve of the accumulated cost of mitigation.

For example, we know that it’s possible to remove or scrub carbon from the atmosphere and return it to a state where it can be used as a fuel once again. It has been demonstrated many times with many different technologies. But in all cases, the limiting factor is the amount of energy required to accomplish it. If however, sometime in the future, energy was cheap, fundamentally free, as might occur, for example, if we could harness lightening, or the rotation of the earth’s core, then the concept of building massive atmospheric scrubbers is not so farfetched. And, one might even suggest that using gasoline, namely the chemical storage of energy as opposed to batteries, was a pretty efficient system. Specifically, we would make the gasoline at the giant atmospheric scrubbers, ship it to the already existing gas stations, burn it in our cars and return the CO2 to the atmosphere where it is carried for free essentially back to the scrubbers. We stop digging for oil, coal, etc. and simply use air-gasoline as the storage system for environmentally friendly energy generation that is centralized.

So this leads to the essential question of: how long should we wait to start dealing with the problem?

I have no idea. But I would suggest that it’s possible for engineers and scientists to construct the curves that I speak of and to make a rational decision as to when it’s necessary to start, and what technology is likely to be used. Of course, we don’t seem to have a great track record when it comes to forecasting the future so maybe we will be left to just guessing.

I would guess that it’s not time yet to panic. Solar collectors are getting more efficient every year. Alternative energy sources are appearing frequently. I would suggest that we take a deep breath and wait. I think that there’s time and it will be cheaper in the future to fix. So: Fix it later.

It seems like a tall order, solving the world economic problems, and, given that so many have tried unsuccessfully, I thought that it wouldn’t hurt for me to take a crack at it. I’ve actually gotten a few phone calls from people who asked me: “Bob, you work at Babson, a business school, right? How do you think we should solve this problem?”

First, my degree is in engineering and most of what I’ve learned through starting and running several businesses has been in the field of psychology, not business. But, maybe they’re the same.

My first observation is that the stock market and the economy both have the deceiving attribute that they are described with numbers which would lead one to believe erroneously that they have something to do with mathematics, statistics, and formulas. My own impression is that nothing could be further from the truth. Both are really driven by mass psychology much more than by number theory. So the roots to the solutions may lie not in interest rates but rather in the hearts and minds of people.

It seems fairly obvious that if more of the population was employed, then productivity would be higher, and with more productivity, each additional dollar earned would cycle through the economy several times (I believe that I read that each dollar cycles an average seven times) and the GDP, and tax revenues would also climb wiping out the national debt and making everybody happy. It all starts with jobs.

An increase in jobs and productivity would also drive the real estate market as people looked to improve their living conditions with their new found salaries.

But the problem is that employers are reluctant to speculate on growth and add resources without clear evidence that their customers are ready to buy and so goes the vicious cycle. If “you” don’t invest, then I’m not going to either. And if neither of us invest in hiring, and building, the jobs and the spending associated with those newly employed people just doesn’t materialize.

So what happens is that downturns in the economy can be precipitous as many shed jobs quickly in response to fear, but the growth back occurs gradually as confidence builds in their ability to sell what they’re going to make.

I see this in very much the same way traffic at a stop light works. All of the cars come to a full stop and there are two ways that they can move as a group when the light turns green. In the first way, the common way, the first car moves, then second sees the first move, and begins to move. The third sees the second, and so on. The cars propagate through the light, but slowly, and some, at the end of the line don’t make it.

It would be much more efficient, and many more would go through, if everyone applied gas to their car simultaneously, upon seeing the light turn green, with confidence that the car in front of them was also accelerating at the same pace.

So, we’re stuck at the light waiting for the consumer or business before us, our customer, to flinch first.

There are four approaches to solving this problem.

First, do nothing and eventually, maybe in 10 or 20 years, the economy will slowly grow back. Each year, the consumers buy a bit more, the manufacturers build a bit more and we all get moving. Keep in mind that 60 to 70 percent of our economy is driven by consumer spending.

Second, stimulate the economy by having the government buy a whole bunch of stuff, like roads, airports, and infrastructure. After all, we need that stuff, the stuff we have is getting old, and we’ll all enjoy the better roads, schools, trains and airports, so why not. Remember that every dollar that the government spends is a tax dollar, but it does cycle through the economy and generates more tax revenues through the growth of employment.

The TARP funds were an attempt at this and it would appear in comparison to the UK, where last I looked there were riots, the concept was successfully responsible for growth. But, the problem lies not with the concept, but rather in the fact that we are a bitterly divided country on political grounds and if one side says blue, then the other side feels compelled to say red. And with our government divided, it leaves us at a standstill. One would have hoped that there was a possibility that our elected leaders could form rational decisions, but having met a few of them, the concept of rational and elected official seems somewhat oxymoronic.

Third, we could start, or participate in, a war. That would give us all something to focus on that we could unite in, namely the mobilization of our resources for the protection of our country. Everybody gets to work, the government borrows the money from the citizens (through bonds) to pay for the labor and tax revenues go up, and productivity is maximized. Note that this isn’t all that different from the second choice only that the elected officials agree to borrow the money to boost productivity in this case because they’re doing something good overall for the country.

There are only two problems with this. First, you have to kill a whole bunch of people in a war, and that’s fairly unpleasant. And second, the productivity is directed at the creation of assets that are of no real use to the society. Unlike the second case, you don’t have a new airport, you just have more bombs.

In both the second and third cases, there is another problem, the accumulation of additional debt by the government. I’d like to discuss this in two ways.

First, governments, unlike businesses don’t seem to publish their complete balance sheet. They do disclose their current and long term debt but they don’t seem to disclose their assets in the same way. As in the case of Greece and other struggling companies, the sale of assets can be used to pay off debts. The US has enormous assets including the Post Office, roads, bridges, parks, mineral rights, waterways, as well as several operating “businesses.” Back during the Vietnam War Lyndon Johnson sold off Fannie Mae and Freddie Mac to private investors as a way to finance the war. It was a good idea to reduce the debt, a bad use of the money.

Not carrying a record of the assets on our national books leads us to misunderstand our debt. If, for example, we assumed 10 trillion dollars of additional debt for the purpose of building a national solar energy generation facility and distribution system that completely eliminated our need for imported energy, that investment would be paid for in 10 years. But, getting our government to make those long term investments is virtually impossible if we don’t actually understand or record the asset and the impact that it has on our collective spending. Keep in mind that our government could sell us the electricity and the income would retire the debt. We do leave this to business in the US, which isn’t a bad idea, but in some cases, it’s just too large a problem.

So, one way to deal with all this debt is to sell off some of our collective assets. When selling assets, one typically considers whether the interest that you’re paying on the debt is greater or less than the income that the asset would otherwise provide. Or, as an example, one could either sell mineral rights to a tract of land, or choose to lease or license the mineral rights for an annual fee. While interest rates are low, it’s likely that the fees that can be generated from these assets is actually the better deal. This implies that the entire concept of getting energized about the national debt is silly since at any time we want, we could sell assets to cover the debt, but with the interest rates so low, it makes more sense to hold on to the asset and collect the revenue that they offer. If interest rates climb, then the sale of assets becomes more compelling.

Finally, here’s the fourth method for raising productivity. To use the car analogy, we all need to step on the accelerator simultaneously. But, nobody wants to take the risk. This is exactly where the collective force and wisdom of government can help. If the government would effectively “guarantee” the investment in increased productivity, then it would all just likely work out OK. This means that the government, instead of paying unemployment insurance and letting someone sit and watch Jeopardy should guarantee the wages of new hires if, and only if, revenue and profits don’t grow in accordance with the additional investment.

Companies are shielded from the additional risk, unemployment goes down, productivity goes up and the tax base along with it. The risk to this plan is that positions are created in companies that have no impact on their actual productivity. For example, the CEO gets two additional “assistants” to shine his shoes and bring coffee as opposed to adding two more workers on the assembly line. Thus, companies need to be able to demonstrate the growth of their productivity, which is measured through revenue or an increase in their assets through the additional hiring. Of course, there are ways to cook the books and defeat the intent of the program, but that goes without saying with any government program and the critical question is whether the end justifies the means.

Introduction

I began my career in electrical engineering in 1969 when I graduated from NYU’s school of engineering and science. At that time, the best that the school could afford were a collection of vacuum tube laboratory systems, DC motors and a single large IBM mainframe computer. Students could practice programming through the creation of punch card decks with one programming instruction per card and therefore, a program was typically represented by a stack of cards often several feet high. It’s fun to recall that special features were added so that if you accidentally dropped your program on the floor, and shuffled the cards, you could reorder the deck though the use of a sorting machine that was the size of several washing machines.

Clearly, technology has come a long way. In one of his recent books called “The Singularity” Ray Kurzweil, the popular futurist and entrepreneur speculates about the ever increasing speed with which technology seems to move. His point is that technology feeds upon itself, the latest computer is used to design the next computer, and so on, making the rate of change exponential as opposed to a linear progression of advancement. We are taught how the progressive doubling of some quantity can quickly build into an enormous number through the simple example of attempting to repeatedly fold a piece of paper, doubling its thickness with each fold. After a mere 17 folds (if one could do it) the paper would be taller than the average house, and after 50 folds would reach to the sun!

For the duration of my career, I have been involved in the digital imaging industry and the effect of this exponential growth can be illustrated over the last forty years by observing how this one field of technology has evolved.

In the early 1970s, digital imaging computers were referred to as signal processors or digital signal processors, and eventually shortened to the DSP. The only applications that one could find back then were related to the military because of the prohibitive cost of these computers. One of the first projects that I worked on was an “over the horizon” radar system that would watch for enemy intercontinental ballistic missiles (ICBMs). The radar data would be processed by a room full, over 300 cubic feet, of computer hardware that would create images that could be viewed and evaluated by an operator. This multi-computer system would accomplish something in the order of around 6 million arithmetic multiplies per second.

In 1965, Gordon E. Moore, cofounder of Intel, predicted quite accurately that digital electronic circuits would double their density approximately every two years. So it was fairly soon into the 1970s that these same mathematical algorithms used for radar image processing were finding their way into the first commercial market application, medical imaging, specifically in the form of CAT scanners. The specific mathematical equations that were being used to process radar images were similar to those needed to reconstruct x-ray images as done within a CAT scanner but the price of this equipment and its size were dropping rapidly as predicted by Moore. Early CAT scanners could be purchased for 1 to 2 million dollars.

In the 1980s it became affordable to bring the same mathematical processes to yet a new market, graphic arts imaging, in the form of computers that would help an artist or designer lay out a magazine or newspaper page on a computer screen in place of the manual techniques which would require a razor blade and film. These systems had again dropped in price again, breaking into a new application.

It is interesting to note that the basic science of image processing was not really changing that much. For example, Johannes Kepler, a German astronomer and mathematician had defined the equations that would be used in a CAT scanner back in the early 1600s. What was changing was that with each progressive cycle of redesign of the basic hardware, its speed, size and cost were all rapidly improving and frequently surging through market opportunities that became practical when cost performance objectives could be achieved.

From graphic arts imaging, basic digital imaging techniques were next found in consumer imaging, most famously in the form of digital cameras that today can be found in virtually every cell phone of which there are billions already in use.

From a room full of computer equipment costing millions of dollars, today the digital camera portion of a cell phone can cost in the range of tens of dollars, and yet exceed the performance of their early forbearers by a factor of 30 times in speed. A common cell phone might perform mathematical multiplies at a rate of 1 GHz or 1 billion per second. This is an improvement of cost and performance of roughly 1000 times overall in 40 years.

From a generational perspective, we might consider the DSP as having gone through four generations from military, to medical, to graphic arts, and finally consumer applications. And now we stand that the edge of the fifth generation which I call surrogacy.

Surrogacy

The concept of the imaging surrogacy market is that cameras in combination with small fast computers are capable of watching and making autonomous decisions based upon what is being seen. Those decisions can be communicated to other systems, or can, for example, in a simple case, activate a machine. As in prior markets, the application of imaging to the surrogacy market is not a question of “if it will occur” but rather, more simply, “when it will occur,” and current technological advancements have brought us to that moment now.

It was estimated by the automotive industry that over the next 10 years, one would find tens if not hundreds of digital cameras in every automobile. But most would not be used in the way that one might expect. It’s true that you would find low cost digital cameras used in place or as an adjunct to mirrors to assist the driver in seeing otherwise hidden vantage points. Back-up cameras are common in many vehicles. But this is a provincial use of digital imaging and the real volume of applications are represented by imaging surrogacy systems.

It has been common to think of low cost imaging as simply a way to bring images to a human operator at a remote location. For example, a security camera in a store delivers its images to a console in the security office where a guard can scan and watch for thieves.

However, the concept of surrogacy implies that the camera along with its DSP not only watches and potentially records what is seen, but more importantly it can make fundamental decisions, autonomously, without the need for human intervention.

So, for example, the pressure switch that might be located in the passenger seat that would disable a passenger airbag from being deployed when a child is sitting there would be replaced by an inexpensive digital camera and DSP that would “see” the passenger, measure his/her size and position and make an airbag deployment decision based upon the processed result.

In automotive applications, it is anticipated that cameras will be used to observe and make decisions on:
• Operator fatigue by watching the head and eyes of the operator,
• Lane drifting by watching the dashed or solid lines,
• Distance to an obstruction by watching (often in stereo) objects in front and behind the car
• Dimming the headlamps by watching for an approaching vehicle
• Deploying the airbag (as described)
• Obtaining the speed limit by reading signs
• Observing danger by reading signs
• Steering by observing the road
• Measuring the speed by observing the road
• Watching for rain and dirt

As well, insurance companies are deploying automotive cameras that record the last few minutes or seconds before an accident which can be used to assign blame or improve designs.

Today Volvo is testing a car which contains cameras that automatically avoid collisions and accidents by seeing and processing the objects and more importantly pedestrians in the path of the car.

As a completely different example that is already in common use, fully autonomous systems can already be found in Las Vegas gambling casinos watching for the faces of known card counters (or cheats from the perspective of the casinos) so that they can be escorted from the property.

As the cost of these systems continues to drop, it is only more likely that they permeate our environment as sensors that are used to make basic decisions like: should the lights and heat (or A/C) be on based upon whether there is any person in the room, or should the brakes be applied based upon whether there is an obstruction in the path of a car.

One can also envision imaging systems that are hybrid in nature and include human operators for whom the responsibility of decisions is aided by the processor through either the reduction of information to only relevant images, or through the enhancement or highlighting of suspected regions of interest. A common example today is the highlighting of mammography images to aid a radiologist in finding micro-calcifications, an early sign of cancer. Other examples include:
• Security cameras that detect motion automatically and pass video clips of interest to an operator.
• Security cameras that can discriminate between a dog that has been intentionally left on the property from an intruder who should not be there.

One must consider the application of surrogacy cameras from the perspective of: “if I could put a tireless human at this position and ask them to watch for a simple (or in some cases, not so simple) event at virtually no cost and with no environmental or size limitations, would I choose to do so?” Such cameras can be mounted on the wings of airplanes looking for “out of the ordinary” changes, or on cruise ships looking for an intoxicated passenger who accidentally falls overboard. These cameras have the advantages of never becoming tired, or bored. They can see in a variety of spectra, for example IR or UV, and can watch and observe endlessly.

Soon, cameras along with their autonomous computers will be less than a few dollars each which will cause an explosion of these types of applications.

Finding Surrogacy Solutions

Finding surrogacy applications begins with forgetting commonly held beliefs about the use of cameras in industrial or consumer environments.

The key is to identify events, which if observed, have a direct cost or profit impact on one’s business. Often, a safety or theft issue can drive the need for continuous observation, processing and a resulting decision that in some cases, calls for the attention of a human and in other cases makes a decision relating to the operation of the system.

Keep in mind that these cameras can be tiny, especially if used in higher quantities or for applications where high value is obtained. In these cases, one can integrate the camera and processor into a single tiny package, often no larger than a pencil eraser head. Systems that are this small are often easier to hide or protect environmentally. Today, there are complete wireless cameras that can be swallowed in order to inspect the patient’s GI tract.

Camera systems can be completely encased in plastic thereby eliminating many environmental considerations. Camera systems can provide mono or stereo vision and, like humans, can therefore make accurate distance assessments based upon a stereo pair. Camera systems can observe changes over time periods that are too slow or fast for human observation.

For me, it’s fun to ponder some future applications. Here are some of my favorites. All of these are possible within the context of currently available hardware and software.
• A lapel camera and earphone that reminds me of the name of an approaching customer at a trade show. Imagine this used in retail environments to remind the sales agent of the identity and history of a shopper that enters the store.
• A door camera that unlocks my door when I or my family approach.
• A light switch and thermostat camera that saves money when no one is in the room.
• Cameras used in retail environments that watch for theft by observing that objects are moved past the register without properly being scanned. Or taken by a customer without being paid for.
• Cameras on complicated machines like airplanes and boats that call attention to malfunctions so as to create a faster appreciation for the situational emergency.
• Cameras at train stations that stop trains if tracks are obstructed by a fallen passenger.
• Cameras that watch for fires or leaks or floods.
• Cameras that protect hands and fingers from machinery.
• Cameras that scan skin for cancerous lesions.

It’s endless.

During the Jurassic period, some 150 to 200 million years ago, large dinosaurs ruled the land, and like all other life forms on this planet, they share a common cell structure that includes a genome which contains the entirety of each organism’s hereditary information. This tiny data storage bank therefore defines the organization of biomass into complex organisms and frequently into social structures involving multiple organisms. Sometimes it even defines symbiotic relationships between dissimilar creatures.

In each case, through the process known as evolution, the size, shape and function of each organism and their social structure adapts, albeit slowly, to environmental pressures. Stephen Hawking, the renowned physicist, remarks in his essay on “Life in the Universe – 1996” that evolution accumulates data at a rate of about 1 bit per year, consistent with the current estimate of a dinosaur’s DNA as being several billion bits long and early life, consisting of simple cells, as being about 3.8 billion years old. It is the very stability of patterns in the environment, for example, the sun rising each day in the east that gives organisms their ability to adapt. Over millions of years, plants evolved the ability to point to the sun for more energy.

The process of extinction can be seen as occurring when an organism is unable to adapt to a rapidly changing environment which includes the pressures from competitive organisms. For example, it is believed that the rapid disappearance of large dinosaurs (and their currently believed evolution to birds) was driven by a cataclysm, likely a meteor strike, which in a short matter of time radically changed their environment. Many species simply did not have the time to evolve into new forms that could survive. Their evolutionary traits that gave them dominance up until that time were no longer an advantage. For dinosaurs, it’s likely that meteor strike and the “nuclear winter” that followed vastly reduced the available plant material and the subsequent collapse of the entire dinosaur community started with the herbivores, and then eventually, ended with the starvation of the T-Rex who fed upon them.

Humans also adapt to our environment for survival. But, unlike our neighboring creatures, as Hawking observes, through language we can pass hereditary information to our offspring far more efficiently. He estimates that we add some 100 billion bits of information each year just through the books we write. And while, most of this information doesn’t actually change our individual cell organization, it does change the organizational social structures that we create including governments, businesses and religions. Our social structures are defined through language in many ways, including: laws, management structures, religious tomes, and even marketing programs that influence and control the behavior of individual members of the group. And we observe that between groups there is both symbiosis and competition.

But, keep in mind that the “goal” is the same, namely that the stored data is used to promote the evolutionary success of the organism, whether it’s the individual organism that we’re referring to, or the organization of many individuals into a group. We have seen in recorded human history the emergence and demise of organizational structures, like fiefdoms and feudal estates that have become extinct and today are replaced by governments and corporations.

Wal-Mart, which is only 60 years old, is currently the largest public corporation in the world, measuring in at $258 Billion in revenue while some150 million years ago, the world’s largest dinosaur, the Bruhathkayosaurus, weighed in at around 220 tons. The mega-corporation is relatively recent in human history. Can it go the way of the Bruhathkayosaurus?

We live in interesting times. As observed by Ray Kurzweil in his book “The Singularity,” technology feeds upon itself and is therefore increasing its rate of change to levels that are unimaginable. There was a 25 year gap between the invention of the telephone in 1876 and Marconi’s discovery of wireless communication in 1899. A shoe manufacturer back in the early 1900s would have had more than fifty years to adapt its business model to the use of the telephone before being threatened with extinction. But look around you today. New technological inventions are appearing daily. Many, like social networking, are still not understood in their potential for changing business models. It is not a huge leap of science fiction to believe that eventually, for example, the Internet will be integrated effectively into every business model, whether it’s a Wal-Mart or a local garage. Yet, we have trouble however anticipating whether we’re thinking about adaptation times of tens of years or just a few. But there is no doubt that whatever it is, it’s getting shorter.

Observing evolutionary changes and extinctions has never been possible for humans. Our lifetimes are simply too short. But that is changing. The rapid changes in our environment that are driven by technology are occurring within time scales that are going to modify organizational models and force the extinction of structures that are unable to adapt. It’s likely that many large institutions are simply, like the dinosaur, unable to change quickly enough to survive.

It’s quite possible that the industrial revolution of 300 or so years, along with contemporary concepts of governance which are roughly the same age and even religious institutions that are measured in thousands of years are all teetering on the edge of their own existence simply because in an age of the democratization of information and universality of communication, their structures are no longer optimum or even relevant. We may be nearing the end of the era of the mega-corporation and its extinction may occur right before our eyes.

With great pride, I was one of three graduate school teachers who were nominated for the Thomas Kennedy award for best professor.  I thought that it would be helpful for those students who missed the speech and might have wanted to hear it if I posted it here.  I should mention that I gave it without referring to my notes so some of the written parts were skipped and some new ad libs were added.  With great affection for my students:

Welcome

Thank you for giving me this opportunity.  I would like to use my time here today to offer you a sort of Whitman Sampler of advice, a Forest Gump box of chocolates, so to speak.  I have for you, eight small observations and conclusions that could be taken as profound advice, or as a statement on the absurdity of life, or simply that, as most of you already know,  I’m nuts.

1.     On winning an election

The last election that I won was in 1959.  I was running for class president of my fifth grade class.  Yikes, that’s a long time ago.  My mother, who was otherwise known as the Carl Rove of the Bronx elementary school political system, was my campaign manager and her plan to get me elected was to give candy to each and every member of my class.  Well things haven’t changed that much for political campaigns today except the candy has gotten more expensive.  And as I said, it worked and I won that election. 

My mother died twenty four years ago but I was wondering whether she had anything to do with this election.  Did any of you get candy before you voted?

While thinking about my mother’s dedication to her eleven year old child it might be a good time to also think about how we tend to fall from our ideals of integrity that are clearly reinforced during our education.  I have observed two ways that we typically begin our descent. Here’s my warning.

First, it’s often a small transgression that starts us.  We’re a bit short on our cash flow, we borrow a little for a few days from the federal withholdings, the days pass, nobody notices, the crises passes.  We survive.  What has happened though is that we have chipped away at our moral compass.  We now feel a bit empowered to break the rules.  We wake up a year or two or ten later as Tiger Woods or Bernie Madoff;  so talented, yet so fallen.

Entrepreneurship offers you unusual freedom from the prying eyes of others.  That freedom means that your responsibility to form your own boundaries is amplified.  Make sure that you create for yourself a clear definition of the behavior that you believe will build a legacy that you aspire to and then never ever waiver from it.  I remember when my youngest daughter was a teenager and returned from a kid’s party with her shirt on inside out.  It was clear that something had happened.  After some interrogation by both her mother and me (using various CIA techniques) she admitted that all of the kids had thought it would be cool if they all went streaking outside (basically running in their underwear between the bushes).  Of course, the boys had to wait inside while the girls ran, and the girls would wait inside while the boys did it.  My advice to her (and this was 12 years ago) was to live her life as if it was constantly in the public eye.  How would she feel if her streaking picture was on the front of the local town newspaper?  Well, it’s interesting what has happened since then.  We have youtube, facebook, twitter.  Our lives are constantly on public display.  It further emphasizes the importance of my advice.

The second way that I see transgressions begin is through the acceptance of behavior by others that is less than ideal and yet willingness to associate with that person in the hope of achieving some benefit.  It might start with a casual conversation that indicates a less than ethical attitude by a potential business partner, but rather than pull away, the potential benefits of the relationship seem too appealing.

Just to be clear, you are talking to the devil.  You can’t out con a conman.  You must pick your friends carefully and in the same way, pick your business associates carefully.  If you observe any lack of principle on the part of a potential business partner, customer, or vendor, I strongly advise you to walk away.  Life is too short.  There are plenty of good folks out there to do business with.  Don’t worry about getting even.  Simply get away.

2.     On Space and Time

Now you’re not going to believe this stuff.  I did some research on Wikipedia.   Did you know that it takes the earth 365 days, or equivalently, one year to travel around the sun.  What a coincidence?  But think about this, if the earth were located where Venus is, not only would we all be venutians (and our sight challenged citizens would be referred to as Venutian Blinds) but if, for example, you’re currently 27 years old, instead you would be 44 years old and your parents would be that much more pissed that you still don’t have a job. 

Or, think about this.. Did you ever notice that a foot of length, 12 inches, is about the size of a person’s foot?  What a coincidence?  So listen: If we humans were all the size of Rhesus monkeys, which are about a third of our current size, with tiny little feet, the Boston Marathon would probably take around 8 hours to run and a dollar bill would be a foot and a half long.  That’s crazy.

Our lives are divided neatly into earth years.  And each year we make a measurement of our progress.  For example, we celebrate our birth date (which, by the way, would come more frequently on Venus – another benefit of Venutian living – more gifts).   And when we’re little, once per year we get our report card.  (As many of you might expect, “plays well with others” was not my strong suit in elementary school.) 

Then, as we get older, the report cards become a more formal document: our “official transcripts,” all part of our ever growing “Permanent Record.”  And again, we continue to measure our progress. 

In business school we learn to divide years into Quarters, much more precise.  And, after you graduate, your official measurement will be your 1040 (that’s your IRS form just in case you’ve never filed taxes).  What did you make this year?  Are you still making progress?

It’s all so arbitrary.  Time, distance, success, progress.  Who made this stuff up? 

As official entrepreneurs, you are hereby free to make up your own rules, your own measurements and your own definitions of success.  My advice: Don’t simply buy into the systems defined by others.  Select your own path, live in your own dream.  Most importantly create your own concept of success and then achieve it.

And while I’m talking about success, let me add:  If you haven’t figured it out yet, you’re going to fail many times on the way to finding your own version of success.  Please, clean up your messes.  Take responsibility for your errors.  Your parents were right, clean up your room, but more importantly, learn to apologize for your transgressions and own your errors.

3.     On Movies and Technology

I, and I’m sure many of you as well, love watching movies.  I’ve heard it said that the most creative of any era are drawn to the latest technologies for self expression.   Brahms and Beethoven in the 1700s were being drawn by the creation of new orchestral instruments.  Rod Serling in the 1950s was being drawn to television, The Beetles drawn to electric guitars and today James Cameron, the creative energy behind the movie Avatar is drawn to film. 

I observe that films and especially science fiction films can often serve as the first half of a sort of déjà vu experience in the future.  For example, the Truman Show anticipated reality TV and YouTube.  Eternal Sunshine of the Spotless Mind, also with Jim Carrey, anticipates the ability to do selective memory adjustment (something that the government is working on as a way to reduce PTSD (post traumatic stress disorders suffered by war veterans).  Jurassic Park anticipates the genetic recreation of long extinct species (in fact they just found intact genetic material inside the marrow of long petrified dinosaur bones and think now that this might be possible) and Avatar anticipates the ability as predicted by Ray Kurzweil, in his book “The Singularity” that we will someday be able transport our identities from our bodies into other vessels and achieve immortality. 

If you lived in the early 1900s when Jules Verne wrote From the Earth to the Moon, you would need to have waited until 1969 to see science fiction turn into reality.  But today, technology is evolving much more rapidly.  Technologically driven changes to our societies are occurring in ever shorter and shorter time spans.  Societies, and more importantly, you no longer have the luxury to slowly adapt to technological advancements.  You must embrace the changes and learn to live in a rapidly adapting world.

My advice: watch and learn from others.  I am always surprised at how much I find in every book that I read and every movie that I watch that helps me with the anticipation of business trends and technological advancements.  Remain curious and use every opportunity to learn someone else’s business model and ideas.  It is through those discoveries that you will form your own new entrepreneurial ideas.  And finally, stay involved in technology.  It is more important to small company development than you can possibly imagine.

4.     On Business Planning

A few weeks ago nice young student, an undergraduate business student, from BU came to talk to me in my office (as you know, I have the largest office in Babson, Pandini’s – with its own private bathrooms, men’s and women’s (that you’re all, of course, welcome to use).  He had found me on the Internet (how random is that? – but more about that in a few minutes). 

He wanted to interview an “entrepreneur” and apparently I was the only one that he could find.  Imagine – he had to travel 15 miles from BU to find an entrepreneur – that’s 45 Venetian miles.

He came with a carefully constructed set of questions, almost 50, neatly typed on a single sheet of paper.  Undergraduates are much better prepared than graduate students.  He thought a lot about those questions.  He started: “So, Mr. full time lecturer adjunct Caspe, he said, (addressing me with my proper title) I see that you started 5 businesses and I was wondering how much preparation and planning went into your first business?  For example, how long did it take to create the business plan?”  As many of you know, I said: “planning?  None…  business plan, none… in fact, I’ve never written a business plan – it’s not that I never used a business plan.  Once my businesses were up and running and I was managing lots of people, and we were spending lots of money, of course I had my employees write business plans for me.   But write one on my own?  Nope, not a one.  In fact, I told him, once I had raised some money from a VC who said after he gave me the check, “you know, Bob, it would be really nice if I had a business plan for the file.  Could you write one?”  to which I replied:  Nope.. don’t have the time, how about it if you write it yourself.

At that point, I saw this bright young BU business student kind of deflate and scanned his list of questions. Unfortunately, all of them were based upon the presumption that I followed the traditional path to starting a business – invent a product, write a plan, build a prototype, make the website, raise money…, He paused.  And he tore up the list of questions. 

My advice: Business plans are kind of like his neatly typed questions, often irrelevant after the first answer.  Don’t put too much time into planning.  Put it into doing.

5.     On regrets

One of my young interviewer’s questions was whether I have any regrets about decisions that I’ve made, or would choose to have done things differently if given the chance.  My response was that the actions that I do regret the most were those where I have failed to show proper patience, appreciation and kindness to others.  A trait that I have attempted to control with the help of my wife who is considerably more civil than I am.  But in business, I have no regrets, nor do I believe that it was really all that much in control.

In the spirit of ending my accumulation of regrets, therefore, let me say now that I am terribly proud and appreciative that the graduate student body has elected to offer me this recognition and approval.  I truly value your opinions and I can think of nothing that I value more than what you have given me.

And to those of you to whom I’ve been a bit too rough, or unkind, I have two comments:  First, I am truly sorry and second get over it.  If you think I was hard on you, wait until you do some cold calls.  Please allow me to join you in the celebration of your accomplishments with no hard feelings.  And please do understand that for me, it’s all about your success, not mine.  It’s your turn, not mine.

In some way, I think that the biggest regret that my generation has is that we didn’t leave you a better world.  But, the good news is that it’s your turn.  My advice: Pick one way to make it a better planet.  (other than moving it to where Venus is) and do it.  You have both the power and the responsibility to make this a better place.  By the way, you’re what I picked, my way to make a better world is now through you.

6.     On randomness

As many of you know, I have integrated a book called “The Drunkard’s Walk” into my course and I spend a lot of time talking about how, as John Lennon said: Life is what happens to you while you’re busy making plans.”  I have been watching each of you as you perform your own drunkard’s walk, some more drunk than others.  Much of your destiny is defined by events that you will not be able to control.  As I’ve shared with you, that doesn’t mean that you just sit back and wait for it to happen to you but rather, that you must have a plan for survival that gives you a chance to enjoy the serendipitous things that are going to occur and avoid your demise at those that are less fortuitous.  And, that the most important advice that I can offer to someone starting out in business is to focus on survival.  Your cash flow.  That’s it.  Don’t spend more than you make and you’ll never go out of business.  It’s not real complicated. 

Also related to randomness is the topic that I frequently have brought up in class regarding our tendency to retrospectively and selectively analyze businesses (often through the case study method) in ways that tends to lead to improper assumptions.  We often, for example, study only the winners and not the losers. 

My advice: don’t be too impressed with the advice that you’re given.  (including this advice)  Make your own decisions based upon your own instincts and have the confidence that you can accomplish anything.  And that leads to my next topic.

7.     On Fear

Again, as many of you know, I’ve spent a fair amount of time talking about fear in my class.  Sioma mentioned to me that the image of that chicken that I use in my class presentation has been burned into his memory.  In fact, he’s lost his taste for chicken at this point. 

But the right word isn’t fear, it’s really phobia.  Fear is our natural response to a real threat, a form of self preservation. 

Have you ever seen those guys that jump off of mountains wearing those odd suits with wings under their arms?  They should be afraid.  Yet, oddly enough they don’t appear to be controlled by fear.  The last guy I saw on TV, his partner who was going to do the 60 minutes interview with him, had actually died just before the interview– probably flew into a mountain.  But this guy, he still wasn’t afraid.

But just as clearly as you can imagine the rational fear that you might feel if you stood on the edge of that cliff wearing a spandex suit with wings, there’s another image I want you to imagine, of two pre-teen girls standing at the edge of a swimming pool, holding hands, and afraid to jump in.  The water is chlorinated – there isn’t a live bacterium within miles.  It’s only 6 feet deep and there are lots of adults standing within easy grasp.  They can swim and the water is 80 degrees.  And yet, they’re afraid.  And they hold hands as if to say – if we jump together that’s better.  At least then, if I die, so will you and our parents can at least mourn together. 

That’s not fear, that’s a phobia – an irrational fear that’s not based upon a real understanding of the potential outcomes, but rather they’re just afraid.

I see fear as driving most of the decisions around me.  Conquering that fear is part of entrepreneurship.  You must develop an understanding that in fact you are risking nothing.  A year of low income, the sense of failure.  Who’s watching?  Who are you afraid of disappointing?  Our parents make us nuts.  Get over it.

 Lately, I have been studying small businesses that were started by former Babson graduates and after interviewing 10 businesses, I’ve found a simple common thread: their difficulty in forming successful partnerships.   Next year I’d like to edit the video interviews that I’ve done into an hour long story about partnerships. 

For me, my experience with partnerships has been great.  For most of my business career I’ve had 3 partners and we completely trusted each other and shared everything.  We never felt a need to own more of the company that the next guy and have voting control, we never regretted their making money as a result of our own efforts.  We remained partners until we sold the companies and remain friends today.  But, many of the partnerships that I observed that were formed by students aren’t so fortunate.  Many ended quickly, some with bitter remorse.  Some with legal battles.  Now I understand the advantage of having a partner, someone to commiserate with, someone to share the joy with, someone to debate the choices with but I also observe that many of the partnerships here at Babson are born out of fear as opposed to common goals and aspirations.  It’s like those two preteen girls:  “I’ll jump if you do.”

Learn to break through your fear and make decisions without regard to it.  And, if you choose to join as partners, make sure that your goals and aspirations align.  And, I should add, that I’m not a fan of “co-presidents.”  Pick someone to be in charge – even if they never make a decision in any way other than to either find a consensus or delegate the decision to someone else.

I should note that now that you’re graduating you’re running out of excuses.  It’s time to start your journey.

8.     On Jealousy

I always get confused on the difference between jealousy and envy.  So you figure out which I really mean.

Over the last one or two years I have met many of you, become friends with some of you, mentored some of you.  I’ve listened to your business ideas, and more often than not, replied “That’s a STUPID idea” but then, as you know, I’ve attempted to work with you to find a way to make it work and encouraged you to talk to customers and see what they say.

I have mixed emotions at this moment.  I will be saying goodbye to all of you.  Maybe not a permanent goodbye, but clearly not “I’ll see you tomorrow.”  And, I will truly miss you.  I will miss our discussions of your nutty ideas.  I will miss hearing when you find success and we share a high five (a bit lower for Yuka).  I will miss hearing about your life decisions, your families, your plans.

When my dog Mickey was still alive (he was a cockapoo) my wife and I would often go out to dinner and Mickey would come to the window by the door and get up on the bench and watch us walk to the garage.  I could see his little head above the windowsill and his beady little eyes.  And, I could read his mind:  “Me, you forgot me, Me, wait.. I’ll be good, I won’t pee on the floor, I promise, can I go?”  But we knew.  He would pee on the floor and he couldn’t go. 

Well, here I am.  And all of you are about to embark upon your journeys, your adventures.  I’m jealous.  (or envious – again, you figure it out).  Can I go?  Wait?  Me.  I won’t pee on the floor.  But, unlike Mickey, I know.  I can’t go.  It’s your turn.  You must leave. 

The only thing that I can ask, in the spirit of Mickey (he died a few years ago), is “please – if you’re going to leave me.  If you’re going to force me to go through this trauma.. then please, please… Don’t eat at MacDonald’s.  Don’t sit in a cubicle for the rest of your life.  Find your passion.  Follow your dream.  Don’t be afraid.  Don’t live by the measurements of others.  Create your own sense of purpose and achieve it.

And, don’t forget.  I can’t sit on that bench by the window too long.  I’ve got to be let out.  So please let me know what you’re doing.  Stay in touch.  Share your battle stories with me.  I do want to hear.  And, most of all, enjoy the trip and bon voyage.

Thank you.

But wait.  There’s more.  Tomorrow, you will be getting your formal certificate from Babson (that is all except for 3 of you, and you know who you are), but today,  I’d like for to take the Bobson oath.  Please rise, raise either hand or foot and repeat after me:

I, state your name, being of sound mind,
do solemnly swear that
I shall conduct my life with integrity
I shall keep away from creeps
I shall clean up any mess that I make
I shall create my own crooked path in life
And I will not write it down first
I will remain curious, but most importantly
unafraid ..buck buck buck
and I will buy a boat left parenthesis motor close parenthesis
and invite Bob for a ride
So help me bob – (say that with more pleading)
SO, HELP ME BOB..
AMEN

You may be seated, thank you.

Like many others who noticed the latest Supreme Court decision concerning the ability of corporations to fund political campaigns I wonder if this was good for our country?

Some time ago, I read a book called: Why Socrates Died? written by Robin Waterfield, a British historian.

If I correctly understood what I read, Socrates was disappointed in the political process of the day, namely DEMOCRACY. He had grown tired of living in a society where the uninformed rabble made the decisions. Back at that time, a group called the Sophists were formed. They had figured out that when decisions are being made by unintelligent mobs, it was possible through strong oratory skills that had nothing to do with the fundamental truth to carry the vote through oration (or what I will refer to as “advertising”). As such, they would sell their influence and training to be influential to anyone who could afford it. And, as a result, trials and political decisions were being carried by oration, or more precisely by money.

Socrates was accused of corrupting the youth of his day. And, while some thought that he was put to death because of his sexual preferences, it was, as the author points out, his political views that were more dangerous to the ruling powers. But, what in fact did he stand for? If his goal was to support the revolution by the oligarchs, who were better educated and richer, wouldn’t it in fact have had the same outcome, specifically that political power would be concentrated in the hands of a few. He did believe that there were underlying truths that should drive decisions, and that it should not be simply the capricious whim of the rabble, but I suspect that he believed that a “ruling class” that was benevolent and well educated would be better suited to enforcing the “truth” as opposed to counting on the analysis by a drunken mob.

Well, when I thought about it, what was funny to me was that both processes ended up in the same place: the power to influence decisions was in the hands of the rich and well educated. Whether you did it through sophism or through revolution didn’t really matter (except revolutions often kill people). The key then, and now, is the integrity of the leadership and its respect for “the truth.”

So here we are 2500 years later. The adults, just like back then, are complaining about the music of the kids and the way that they wear their hair. And, the political process is decided by money. The only difference is that we’ve changed the name of the influential group from “the sophists” to “the advertising agencies.” And, nobody died in the revolution.

So where does this leave us?

My conclusions are: Socrates was basically right, sophism or advertising can be used to manipulate democracy with money. The key is how to make sure that the ruling class (the elected few) have the best intentions to serving the common good as possible. It’s not counting on the voting process. We’ve seen that this just doesn’t work. Karl Rove and the sophists were identical.

I don’t know the answer, but I suspect that if over 2500 years it hasn’t evolved, possibly it doesn’t exist. (There, I got evolution into the argument). It is apparent that large corporations whose only goals are to increase profits have demonstrated frequently that they will sacrifice people to their goals and use advertising in apolitical ways to accomplish those goals. The best example being the tobacco industry. So it’s clear that putting advertising power into the hands of corporations for political decisions is not aligned with the common good. But, I see no real difference between putting the power into the cold hands of corporations versus the cold hands of some billionaire who made his (or her) money appearing nude on television. Neither meets the intended goal.

I suspect that the most satisfying answer will be to create a “test” for leadership. A demonstration of their ability (or tendency) to act towards the common good in ways that are fair and just along with a basic level of education and brains that suggests that they are capable of performing the task of serving in the role of leadership. Gosh, we even have a test for people who work in a hair salon. Why not the Senate? Then, there’s no advertising allowed. None at all. The test scores and resumes are distributed over the Internet. We read, and we vote. Oh one last thing. The only ones who can vote have also passed a test.

Again, what’s interesting to me is that while advertising is more effective than sophism it is only in its reach through media. This is in fact no real difference since in the time of Athens the population was small enough to fit into one city, today it covers the country. The effect is identical – 51% of the vote.