Friday, September 5, 2008
Monday, September 1, 2008
It Gets Worse ...
Ok, the Kos kiddies went on the slander dis tip over the weekend accusing Sarah Palin of covering up her daughter's pregnancy by claiming that baby Trig was actually hers. Offered some pretty convincing circumstantial evidence. The conservative commentators went apeshit -- after all, disgusting slander-mongering is usually reserved to them (vis the Swiftboaters, or the Obama-is-a-Muslim meme).
Lo and behold, Palin then comes out and reveals that her 17 year old daughter is preggers, with a convenient time line that "proves" the Kos meme was a lie. Well, not so fast, says my wife. She thinks that we will see a fake miscarriage in the next couple of months ...
There are actually two legitimate issues here. First, McCain's judgment. Either he didn't do any vetting at all, or he did, and he went with her anyway. Either way, it's a total "fuck you" pick. Like I said in my Six Reasons post, he's not a leader, he's an antagonist. That's what the Palin pick is, pure and simple.
Sure, it's cynical and pure identity politics, but that's just par for the political course. Can't really fault him for doing what every pol does when given half a chance. What it really gives lie to is the "put the country first" bullshit he's been spewing all summer. He just revealed he's willing to fuck the country -- leaving it in the hands of the most unserious neophyte in American political history -- to further his own political advantage.
The second issue is more subtle, but, in my mind, equally meaningful. And, I hate to say it, but it's a class thing. That is, are the Palin's the kind of people we really want in the White House, at the core of our political tradition?
I mean, this family is really a half step removed from what they'd call white trash in my old neighborhood in south Florida. Knocked up 17 year old daughter. Creationist evangelicals. Mom got knocked up herself at 23 by her high school boyfriend. Shotgun marriage. Bounces around five schools in four years before graduating college in Idaho. Works as a part-time sportscaster, goes on the pageant circuit. Husband is a commercial fisherman, snowmobile enthusiast. Has a DUI. Sarah's sister, the locus of "Troopergate," has nine kids from multiple husbands. I mean, do we really want a political version of Brittany Spears' family in the Oval Office?
Most importantly, where is their aspiration to excellence? Are their dreams for their children so limited that they are happy their 17 year old is going to marry some high school hockey player who proudly refers to himself as a "fuckin' redneck." I mean, I'm all for class identity, but isn't part of our duty as parents to protect our children from this sort of result in their lives?
You can call the Obama's "elitist" if you want, but Barry overcame his poor, dysfunctional background to attend Columbia, Harvard Law School, win a US Senate seat and run for President. Michele Obama and her brother Craig rose from their working-class origins to both attend Princeton; she went to HLS as well and became a lawyer at a white shoe firm in Chicago. Craig excelled in the basketball world as a player and coach, worked for a decade at well-known investment banks, and is currently the popular head coach of the Pac 10 Oregon State men's team. These stories are the essence of the American dream -- work hard and rise up.
Most importantly, where is their aspiration to excellence? Are their dreams for their children so limited that they are happy their 17 year old is going to marry some high school hockey player who proudly refers to himself as a "fuckin' redneck." I mean, I'm all for class identity, but isn't part of our duty as parents to protect our children from this sort of result in their lives?
You can call the Obama's "elitist" if you want, but Barry overcame his poor, dysfunctional background to attend Columbia, Harvard Law School, win a US Senate seat and run for President. Michele Obama and her brother Craig rose from their working-class origins to both attend Princeton; she went to HLS as well and became a lawyer at a white shoe firm in Chicago. Craig excelled in the basketball world as a player and coach, worked for a decade at well-known investment banks, and is currently the popular head coach of the Pac 10 Oregon State men's team. These stories are the essence of the American dream -- work hard and rise up.
I know the Republicans think that a large part of the conservative constituency will see the Palin's as "keeping it real" -- with the hunting and snowmobiling, the hockey, the fucked up family issues, the older son skipping college to go to Iraq -- but I think we want for better in our political life than these people.
Friday, August 29, 2008
Sarah Palin
Like just about everybody, I don't know much about her. But what I do know is that the first Democratic response to her selection was absolutely stupid:
"Today, John McCain put the former mayor of a town of 9,000 with zero foreign policy experience a heartbeat away from the presidency."
If they thought this one through, they'd realize that McCain just handed them a major gift on a silver platter.
How on earth can he now criticize Obama's lack of experience, when he is tacitly suggesting that Palin is qualified to be president with even less experience? Oh, they'll say that she has "executive" experience -- but this is just bullshit. I mean, no offense to Alaska, but how does being governor for all of 2 years of a state with a population smaller than Memphis, Tennessee and an economy smaller than Sudan's trump Obama's resume as a US Senator and Illinois legislator? I think McCain just fumbled his strongest argument against Obama.
Something else seems a bit strange in Palin's resume. She gave birth to a son with Down's Syndrome just 4 months ago after hiding the pregnancy from the public for most of the baby's term. A little weird that she would be willing to head out on the campaign trail with a 4 month old handicapped kid in the house. Odd.
Thursday, August 28, 2008
Six Reasons Why You Shouldn't Vote For McCain
6. He's a pugilist, not a leader. He has thrived as a "maverick" by challenging from outside the centers of power. He pokes powerful and cynical politicians in the eye. He's an insurgent. But, like Castro or Robert Mugabe, insurgents can get kind of deranged when they win. I don't think he knows how to lead. I think he knows how to resist. It's the legacy of his captivity, perhaps.
5. He's a Cold War relic. Look at his recent saber-rattling rhetoric on Georgia. He called it "the first probably serious crisis internationally since the end of the Cold War." Er, 9/11 wasn't serious? The rise of modern China wasn't serious? His old-school fear of Soviet Russia is going to get us committed to extending the NATO umbrella to all these idiotic places that are really not in our strategic purview. Like Georgia. I mean, I comprehend the strategic rationale for the expenditure of blood and treasure in Iraq way before I get the rationale for the Caucasus. We've got bigger problems than Russia's mischief along its southern border -- how about a nuclear Pakistan becoming a nearly failed state, a beehive of lunatic Islam and reactionary tribalism? This man's world view was formed at the height of US-Soviet tensions. I don't believe his instincts are relevant or helpful to solving modern global problems.
4. He is kind of dumb and doesn't appear to have a strong commitment to excellence. Finished 894th out of the 899 students in his class at the U.S. Naval Academy -- which, while a fine school, is probably top 100 academically rather than top 10 (a recent survey put it at #79). His application to the War College was rejected, and he only managed to gain acceptance through the intercession of his family (see reason #3, below). He stumbled like a bumpkin into the savings and loan scandals. He surrounds himself with mediocre people. And he's horrible when speaking impromptu -- vis the "how many houses?" gaffe. He starts every sentence with "My friends ..." and ends every sentence with his mouth contorted in a rictus of yellowed dentures. It's creepy.
3. He is dishonest about his personal history. This guy is Johnny Nepotism -- his daddy and granddaddy were Navy admirals, who made sure he followed in the family trade. The reason his captivity in Vietnam got all the attention and infusion of symbolic meaning that it did was because his father orchestrated it, brought the press into the story. There were many heroic POWs in Vietnam but somehow McCain became the poster boy for defiant resistance. He came back, fucked over his first wife, caroused around like a frat boy, found a rich, vapid second wife, and -- shocker! -- had her beer distributor father bankroll his political career. He's the opposite of self-made.
2. He's out of touch with America. Oh, he's in touch with those flag-wavers at the VFW, and all the pathetic conservatives who have been looking for a replacement father-figure after Ronald Reagan died. But the real America, the one with massive debt problems, an energy crisis, an innovation economy based on the internet, bad public education and health care -- he doesn't know fuck all about that America. I don't know about you, but I don't live in the flag waving VFW America. And I suspect you don't either.
1. He is simply too old. Think about it for a moment, he'll be 72 when he's sworn in. I recognize that the aged have much to contribute to American society. But have you had any recent contact with a 72 year old man? No offense, but if you were looking for a CEO for a troubled company that was facing a tough economy and increased foreign competition, you would not be recruiting a man in his 70's. I've heard this boomer propaganda for decades about 50 being the new 40, and 60 being the new 50. But 70 is the old 70. The brain slows down. The thought processes get cemented in place. The energy levels drop. Against the backdrop and demands of a 21st century presidency -- in an era of 24 hour news cycles and globalization -- I will say it categorically right now: McCain is too old to be president.
5. He's a Cold War relic. Look at his recent saber-rattling rhetoric on Georgia. He called it "the first probably serious crisis internationally since the end of the Cold War." Er, 9/11 wasn't serious? The rise of modern China wasn't serious? His old-school fear of Soviet Russia is going to get us committed to extending the NATO umbrella to all these idiotic places that are really not in our strategic purview. Like Georgia. I mean, I comprehend the strategic rationale for the expenditure of blood and treasure in Iraq way before I get the rationale for the Caucasus. We've got bigger problems than Russia's mischief along its southern border -- how about a nuclear Pakistan becoming a nearly failed state, a beehive of lunatic Islam and reactionary tribalism? This man's world view was formed at the height of US-Soviet tensions. I don't believe his instincts are relevant or helpful to solving modern global problems.
4. He is kind of dumb and doesn't appear to have a strong commitment to excellence. Finished 894th out of the 899 students in his class at the U.S. Naval Academy -- which, while a fine school, is probably top 100 academically rather than top 10 (a recent survey put it at #79). His application to the War College was rejected, and he only managed to gain acceptance through the intercession of his family (see reason #3, below). He stumbled like a bumpkin into the savings and loan scandals. He surrounds himself with mediocre people. And he's horrible when speaking impromptu -- vis the "how many houses?" gaffe. He starts every sentence with "My friends ..." and ends every sentence with his mouth contorted in a rictus of yellowed dentures. It's creepy.
3. He is dishonest about his personal history. This guy is Johnny Nepotism -- his daddy and granddaddy were Navy admirals, who made sure he followed in the family trade. The reason his captivity in Vietnam got all the attention and infusion of symbolic meaning that it did was because his father orchestrated it, brought the press into the story. There were many heroic POWs in Vietnam but somehow McCain became the poster boy for defiant resistance. He came back, fucked over his first wife, caroused around like a frat boy, found a rich, vapid second wife, and -- shocker! -- had her beer distributor father bankroll his political career. He's the opposite of self-made.
2. He's out of touch with America. Oh, he's in touch with those flag-wavers at the VFW, and all the pathetic conservatives who have been looking for a replacement father-figure after Ronald Reagan died. But the real America, the one with massive debt problems, an energy crisis, an innovation economy based on the internet, bad public education and health care -- he doesn't know fuck all about that America. I don't know about you, but I don't live in the flag waving VFW America. And I suspect you don't either.
1. He is simply too old. Think about it for a moment, he'll be 72 when he's sworn in. I recognize that the aged have much to contribute to American society. But have you had any recent contact with a 72 year old man? No offense, but if you were looking for a CEO for a troubled company that was facing a tough economy and increased foreign competition, you would not be recruiting a man in his 70's. I've heard this boomer propaganda for decades about 50 being the new 40, and 60 being the new 50. But 70 is the old 70. The brain slows down. The thought processes get cemented in place. The energy levels drop. Against the backdrop and demands of a 21st century presidency -- in an era of 24 hour news cycles and globalization -- I will say it categorically right now: McCain is too old to be president.
Saturday, August 23, 2008
Fulham FC
Ok, I'm a Fulham supporter. I know, it's slightly pathetic. But like many FFC supporters, I have a story.
In the early '80s I spent a summer living with my friend Hamish McAlpine (now the head of Tartan Films and a great supporter of transgressive, psychotronic cinema) and his entourage in London. At the time, Hamish lived pretty far down the King's Road near the Fulham-Broadway tube station, a good walk past the World's End pub -- in fact, quite a bit closer to Fulham town than to Sloan Square. A couple of years later, Hamish had relocated to tonier digs on the Cheyne Walk, next door to Mick Jagger, and I had the fond memory of my summer, drinking in Fulham pubs.
In the early '80s, Chelsea FC were not even in the Premiership -- they were a decent Division 2 team. Fulham, a middle-of-the-table Division 3 team, were about to make their first magic run, achieving promotion to Division 2 in the '81-82 season, then the next year missing out on promotion to the Premiership by just one point (and finishing 14 positions above Chelsea in the table!).
In those pre-internet and pre-Fox Soccer Channel days, you couldn't be much of a supporter of a lower division European club from the USA. But I was always happy to see Fulham doing well, and sorry, later in the the '80s and early '90s, when they headed for relegation to Division 4. I lost track of them, and was only vaguely aware of their acquisition by Mohamed Al-Fayed (the owner of Harrod's) in '97 and their subsequent promotion to the Premiership in '00-'01.
What brought me back was the combination of greater TV access to matches through Setanta and Fox, access to Premiership news on the internet, and Fulham manager Chris Coleman's infatuation with American players after the acquisition of McBride and Bocanegra in early '04 (at one point, Fulham had five on the roster: McBride, Boca, Dempsey, Eddie Johnson, and Keller). After a couple of over-achieving seasons under Coleman, during which Fulham consistently finished in the middle of the Premiership table, they began to falter. Last season, it looked like they were going down for sure.
Then came the "Great Escape." Under new manager Roy Hodgson, Fulham were 7 points in the drop zone with 4 matches to play. Miraculously, they won their last three in a row, twice on the road (where they had been woeful all season), including the astonishing comeback from 2 goals down at Man City, scoring 3 times in the last 20 minutes.
The Premiership season opened last weekend, and hapless Fulham looked inept once again in a 2-1 away loss to recently-promoted Hull City, throwing away an early lead. It looked like another year of frustration and relegation battles. But this week, hosting Arsenal, it was a different Fulham team on the field. With tough tackling and good possession play (at least most of the time) Fulham held off Arsenal's late surge to win 1-0.
The Fulham optimist looks at the upcoming fixtures, sees some winnable matches: they have West Ham, West Brom, Sunderland, Pompey and Wigan all before they run into the better sides in late November and through the winter. With a little luck and some draws on the road, they could get to 20 points by the mid-point, halfway to the magic number that will insure they remain in the top flight for another season. It's precisely that irrational belief that we'll catch a break and stay up that seems to characterize the Cottager supporters -- and it was certainly given a jolt to the good with today's result against Arsenal. COYW!
In the early '80s I spent a summer living with my friend Hamish McAlpine (now the head of Tartan Films and a great supporter of transgressive, psychotronic cinema) and his entourage in London. At the time, Hamish lived pretty far down the King's Road near the Fulham-Broadway tube station, a good walk past the World's End pub -- in fact, quite a bit closer to Fulham town than to Sloan Square. A couple of years later, Hamish had relocated to tonier digs on the Cheyne Walk, next door to Mick Jagger, and I had the fond memory of my summer, drinking in Fulham pubs.
In the early '80s, Chelsea FC were not even in the Premiership -- they were a decent Division 2 team. Fulham, a middle-of-the-table Division 3 team, were about to make their first magic run, achieving promotion to Division 2 in the '81-82 season, then the next year missing out on promotion to the Premiership by just one point (and finishing 14 positions above Chelsea in the table!).
In those pre-internet and pre-Fox Soccer Channel days, you couldn't be much of a supporter of a lower division European club from the USA. But I was always happy to see Fulham doing well, and sorry, later in the the '80s and early '90s, when they headed for relegation to Division 4. I lost track of them, and was only vaguely aware of their acquisition by Mohamed Al-Fayed (the owner of Harrod's) in '97 and their subsequent promotion to the Premiership in '00-'01.
What brought me back was the combination of greater TV access to matches through Setanta and Fox, access to Premiership news on the internet, and Fulham manager Chris Coleman's infatuation with American players after the acquisition of McBride and Bocanegra in early '04 (at one point, Fulham had five on the roster: McBride, Boca, Dempsey, Eddie Johnson, and Keller). After a couple of over-achieving seasons under Coleman, during which Fulham consistently finished in the middle of the Premiership table, they began to falter. Last season, it looked like they were going down for sure.
Then came the "Great Escape." Under new manager Roy Hodgson, Fulham were 7 points in the drop zone with 4 matches to play. Miraculously, they won their last three in a row, twice on the road (where they had been woeful all season), including the astonishing comeback from 2 goals down at Man City, scoring 3 times in the last 20 minutes.
The Premiership season opened last weekend, and hapless Fulham looked inept once again in a 2-1 away loss to recently-promoted Hull City, throwing away an early lead. It looked like another year of frustration and relegation battles. But this week, hosting Arsenal, it was a different Fulham team on the field. With tough tackling and good possession play (at least most of the time) Fulham held off Arsenal's late surge to win 1-0.
The Fulham optimist looks at the upcoming fixtures, sees some winnable matches: they have West Ham, West Brom, Sunderland, Pompey and Wigan all before they run into the better sides in late November and through the winter. With a little luck and some draws on the road, they could get to 20 points by the mid-point, halfway to the magic number that will insure they remain in the top flight for another season. It's precisely that irrational belief that we'll catch a break and stay up that seems to characterize the Cottager supporters -- and it was certainly given a jolt to the good with today's result against Arsenal. COYW!
Saturday, July 12, 2008
Obama & Clinton As Executives
Stuck without a book on a recent long flight, I ended up reading a bunch of current magazines. Among the articles I read were a number of post-mortems on the Democratic primaries.
Two stories in particular really struck me. The first was the companion piece to Jann Wenner's interview with Obama in Rolling Stone, "Obama's Brain Trust" by Tim Dickinson. The second was Gail Sheehy's look at the Clinton campaign in the most recent Vanity Fair.
A lot has been made about Obama's readiness to govern versus Hillary's experience. But after reading these two articles, which leader seems like the superior executive? Obama comes off as trusting, in control of his team and his message, willing to delegate, willing to try new things, flexible in the face of changing circumstances. Hillary seems manipulative, unable to control her staff, a poor judge of character in hiring (vis Mark Penn), possessing no fiscal discipline, and willing to vary her message based on polling.
I realize that the victors write the history, and we might be seeing a different side of this had, god forbid, Hillary won. However, I recently talked to someone who had lobbied Hillary's senate office on some health care legislation. She said that Hillary's senate office was just as disorganized and arrogant as these articles portray her campaign.
The Dems spent years in the thrall of one of the biggest dumb-asses in American politics, Bob Schrum. This guy had a tin ear for the American Zeitgeist. Total loser. But candidates came back to him again and again because he had experience (Mark Penn, who ran Hillary's campaign, seems cut from the same loser cloth). Experience is not a panacea. It's got to be the right kind of experience.
The Obama folks, on the other hand, are not exactly outsiders -- the prevalence of the Daschle team was news to me -- but they are innovators. On this evidence, you'd have to conclude that Obama would be far more likely to be ready on day one than Hillary. She would have made a terrible chief executive. I'll take his execution over her experience, any day of the week.
Two stories in particular really struck me. The first was the companion piece to Jann Wenner's interview with Obama in Rolling Stone, "Obama's Brain Trust" by Tim Dickinson. The second was Gail Sheehy's look at the Clinton campaign in the most recent Vanity Fair.
A lot has been made about Obama's readiness to govern versus Hillary's experience. But after reading these two articles, which leader seems like the superior executive? Obama comes off as trusting, in control of his team and his message, willing to delegate, willing to try new things, flexible in the face of changing circumstances. Hillary seems manipulative, unable to control her staff, a poor judge of character in hiring (vis Mark Penn), possessing no fiscal discipline, and willing to vary her message based on polling.
I realize that the victors write the history, and we might be seeing a different side of this had, god forbid, Hillary won. However, I recently talked to someone who had lobbied Hillary's senate office on some health care legislation. She said that Hillary's senate office was just as disorganized and arrogant as these articles portray her campaign.
The Dems spent years in the thrall of one of the biggest dumb-asses in American politics, Bob Schrum. This guy had a tin ear for the American Zeitgeist. Total loser. But candidates came back to him again and again because he had experience (Mark Penn, who ran Hillary's campaign, seems cut from the same loser cloth). Experience is not a panacea. It's got to be the right kind of experience.
The Obama folks, on the other hand, are not exactly outsiders -- the prevalence of the Daschle team was news to me -- but they are innovators. On this evidence, you'd have to conclude that Obama would be far more likely to be ready on day one than Hillary. She would have made a terrible chief executive. I'll take his execution over her experience, any day of the week.
Wednesday, July 9, 2008
Why no IPO?
My partner, Bill Gurley, wrote an interesting post in his Above the Crowd blog, responding to Matt Richtel's piece about the dearth of venture-backed IPO's in the quarter. To summarize, Matt's contention is that the IPO drought was caused by lack of demand (e.g., Wall Street doesn't like what Sand Hill Road is selling); Bill's contention is that the drought was caused by lack of supply (e.g., CEO's don't want to be public). Bill is right.
Why don't CEO's want to be public? The usual explanations relate to the perceived public and governmental hostility towards public companies and their CEO's. Sarbanes-Oxley. Reg FD. FAS 123. Shareholder derivative litigation. I was a public company CEO under this legal regime, and I can attest to the fact that it well and truly sucks. Sarbox compliance costs a fortune (particularly for a smaller company) and creates a climate of fear in the management ranks. Reg FD turns the CEO into a stump-speech politician and raises the spectre of litigation every time you open your mouth (although, the incarceration of career criminals like Bill Lerach and his cohorts will reduce this a bit). FAS 123 has created a culture of financial obfuscation, in which most companies keep two sets of books, reducing the very transparency the rules sought to foster.
But I think there is a simpler reason why nobody wants to go public: greed. Historically, the IPO was the rocket sled to huge wealth creation for the CEO. This was further reinforced during the bubble. This is, however, no longer the case -- selling your company for cash is far more expedient, unless you are fortunate enough to be the CEO of Google.
My experience is a case in point. I was able to sell around 7% of my JAMDAT stock into the IPO (and this, even grudgingly, as the investment bankers were worried that too much "secondary selling" would look bad to investors). I was advised to sell no more than 15-20% of my holdings annually through a 10b5 programmed selling plan -- I sold a couple of thousand shares, weekly, at whatever price the stock opened at Tuesday morning. And some brain dead short would post a comment on the Yahoo message boards every time a Form 4 hit the internet, saying, "Lasky is selling, the company must be tanking!"
After 18 months, I had put away a decent amount of money in human terms, but not that much at all in modern CEO terms (I recognize that the waterline for CEO comp has risen dramatically over the last 40 years, and that is certainly part of the problem; but in the era of outrageous income inequality in which we live, you measure success against your peers, not your father's peers). Then, suddenly, EA bought JAMDAT for cash, and I got a check for 6X the money I had dribbled into my bank account over the previous year and a half, in one day. The discounted present value of the stream of programmed sales I had teed up for the next 5 years made this cash sale even more valuable to me -- depending on the discount rate and the risk of my programmed sales occurring at or above the $27 per share price EA paid, you could argue it was worth almost twice as much to me to get the money all at once, up front.
Going public is risky. You have intense quarterly pressure to make revenue and earnings numbers. The market is brutally efficient at pricing your stock, and brutally efficient at sending it into free fall when they think something may be wrong. Everything you do is scrutinized and criticized. The SEC is just waiting for you to slip up -- you are essentially presumed guilty until proven innocent. The legal and regulatory regime is a bitch to navigate. And, on top of it all, everyone in the process begrudges the founder/CEO who takes money off the table -- it's perceived as a sign of weakness. The Street wants you to buy more of the stock in which you often have 100% of your net worth tied up.
Nevertheless, I wouldn't give back the seven quarters that I got to sit in that chair. It was exhilarating. I commanded the bully pulpit for my fledgling industry. I made many deserving employees and investors tons of money. I had a powerful currency, which I put to work. It was awesome.
But if we, as venture capitalists, want to create incentives for our CEO's to take their companies public, we have to solve the greed problem. We can't have the trade sale be so vastly more attractive than the IPO. Part of this is about reducing personal risk and regulatory pain, but it's also about structuring compensation to help foster the IPO as a result.
Why don't CEO's want to be public? The usual explanations relate to the perceived public and governmental hostility towards public companies and their CEO's. Sarbanes-Oxley. Reg FD. FAS 123. Shareholder derivative litigation. I was a public company CEO under this legal regime, and I can attest to the fact that it well and truly sucks. Sarbox compliance costs a fortune (particularly for a smaller company) and creates a climate of fear in the management ranks. Reg FD turns the CEO into a stump-speech politician and raises the spectre of litigation every time you open your mouth (although, the incarceration of career criminals like Bill Lerach and his cohorts will reduce this a bit). FAS 123 has created a culture of financial obfuscation, in which most companies keep two sets of books, reducing the very transparency the rules sought to foster.
But I think there is a simpler reason why nobody wants to go public: greed. Historically, the IPO was the rocket sled to huge wealth creation for the CEO. This was further reinforced during the bubble. This is, however, no longer the case -- selling your company for cash is far more expedient, unless you are fortunate enough to be the CEO of Google.
My experience is a case in point. I was able to sell around 7% of my JAMDAT stock into the IPO (and this, even grudgingly, as the investment bankers were worried that too much "secondary selling" would look bad to investors). I was advised to sell no more than 15-20% of my holdings annually through a 10b5 programmed selling plan -- I sold a couple of thousand shares, weekly, at whatever price the stock opened at Tuesday morning. And some brain dead short would post a comment on the Yahoo message boards every time a Form 4 hit the internet, saying, "Lasky is selling, the company must be tanking!"
After 18 months, I had put away a decent amount of money in human terms, but not that much at all in modern CEO terms (I recognize that the waterline for CEO comp has risen dramatically over the last 40 years, and that is certainly part of the problem; but in the era of outrageous income inequality in which we live, you measure success against your peers, not your father's peers). Then, suddenly, EA bought JAMDAT for cash, and I got a check for 6X the money I had dribbled into my bank account over the previous year and a half, in one day. The discounted present value of the stream of programmed sales I had teed up for the next 5 years made this cash sale even more valuable to me -- depending on the discount rate and the risk of my programmed sales occurring at or above the $27 per share price EA paid, you could argue it was worth almost twice as much to me to get the money all at once, up front.
Going public is risky. You have intense quarterly pressure to make revenue and earnings numbers. The market is brutally efficient at pricing your stock, and brutally efficient at sending it into free fall when they think something may be wrong. Everything you do is scrutinized and criticized. The SEC is just waiting for you to slip up -- you are essentially presumed guilty until proven innocent. The legal and regulatory regime is a bitch to navigate. And, on top of it all, everyone in the process begrudges the founder/CEO who takes money off the table -- it's perceived as a sign of weakness. The Street wants you to buy more of the stock in which you often have 100% of your net worth tied up.
Nevertheless, I wouldn't give back the seven quarters that I got to sit in that chair. It was exhilarating. I commanded the bully pulpit for my fledgling industry. I made many deserving employees and investors tons of money. I had a powerful currency, which I put to work. It was awesome.
But if we, as venture capitalists, want to create incentives for our CEO's to take their companies public, we have to solve the greed problem. We can't have the trade sale be so vastly more attractive than the IPO. Part of this is about reducing personal risk and regulatory pain, but it's also about structuring compensation to help foster the IPO as a result.
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