Finance Geek

It’s no secret the Sprint, the nation’s third-largest mobile service provider, opposes AT&T’s proposed $39 billion takeover of T-Mobile. Earlier this month Sprint’s CEO testified before Congress that the deal could do “irreparable harm” to consumers. Now, Sprint has formally registered its objections with the Federal Communications Commission, which is scrutinizing the deal along with the Justice Department.

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Apple has revealed the name of its upcoming online media service: iCloud. But don’t let the cute branding fool you. The company has tried this service before, and the iCloud re-branding signals a do-over on one of Apple’s greatest failures.

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Lockheed Martin and PBS this weekend joined Sony, Epsilon Data Management and Hyundai Capital among the growing list of companies hit by cyber attacks in recent months. The attack on PBS was done in retaliation for the network’s documentary on Wikileaks, The WSJ reports. The group who claimed responsibility, LulzSec, placed a fake article about [...]

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The current National Football League labor dispute is sometimes characterized as a battle between billionaire team owners and millionaire players. What’s often left out, however, is the role that the American taxpayer is playing in this dispute.
Through rich stadium subsidies and cartel powers granted to professional football by our representatives in Congress, we have helped to bankroll the gains in revenues that are now at issue in this clash. In particular, as Vanderbilt University economist John Vrooman argues in a chapter from a forthcoming book about the NFL (Economics of the…

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Apple has announced the details of the WWDC keynote that will take place before the Worldwide Developers Conference on June 6th, and has taken the unusual step of pre-announcing a new: the long-predicted ‘iCloud.’

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Reports of yet another new bailout for Greece sent stocks sharply higher early Monday, overshadowing more grim news on the housing front. In recent trading, the Dow was up nearly 1% while Germany’s DAX gained over 2% and other major European bourses rallied in tandem with the euro, which hit a 3-week high. Details remain [...]

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A hacker group unhappy with PBS Frontline’s hour-long documentary on WikiLeaks has hit back at the Public Broadcasting System by cracking its servers, posting thousands of stolen passwords, and adding a fake news story to a blog belonging to the august PBS Newshour.

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Revelations the Fed lent financial institutions like Goldman Sachs and Credit Suisse $80 billion via a “secret” lending program in 2008 suggest there’s still plenty we don’t know about the financial crisis. In Reckless Endangerment, co-authors Gretchen Morgenson and Josh Rosner painstakingly detail the events, policymakers and decisions which led to the financial crisis of [...]

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There are a couple of research reports out today which indicate the impact of a number of different variables on the likely success of a startup.  As with cooking in the kitchen, having the right ingredients doesn’t guarantee success, and equally a good cook can make a great meal out of almost anything, but high quality raw materials undeniably make success more likely both in the kitchen and in the world of startups.

However, in the kitchen it is generally well understood which are the ingredients where quality will make a difference, whereas in startups the relative importance of factors like the age of founders and the balance of the founding team have largely been matters of conjecture and ill-informed debate.  As an aside, in my opinion most business literature suffers from the difficulty of getting high quality data and is over-reliant on anecdote and case study, which is where the startup world has been.  Until now…

First up is a report called the Startup Genome which aims to ‘crack the code of innovation’.  The full report is worth a read, but here are a couple of highlights about the characteristics of successful startups:

• Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot. [I.e. teams are much better]
• Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or business-heavy founding teams. [We all new that a mix of technical and business founders is best, but maybe not this much better…]
• Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.
• Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or not at all. [Interesting to note that few successful entrepreneurs get it right first time and that too many pivots is a clear negative indicator]

And here are a some common mistakes:

• Founders overestimate the value of IP before product market fit by 255%.
• Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.
• Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.
• Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.

The message here is clear, assuming the data is right, some founders would do well to reign in their natural bullishness a little (remembering also that founders who learn are more successful).  As I’ve said many times before, the most common way that venture backed startups get into trouble is scaling before the market is ready for them.

And finally, to the second report, which comes in the form of a blog post on Techcrunch from Adeo Rossi, founder of TheFunded.com.  He is reporting on data from the Founder Institute which had a couple of interesting findings:

• Older age has shown in the data to correlate with more successful entrepreneurs up to the age of 40, after which it has limited or no impact. [I buy this overall, experience helps, but suspect that if the data was cut for truly revolutionary ideas and some of the more innovative market segments younger people might come out better.]
• Fluid intelligence is a largely genetic trait that measures one’s ability to quickly learn a rule set and apply the learned logic to solve problems. It can also be referred to as abstract thinking

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The following was published with author’s permission. As the U.S. economy seemingly limps out of the Great Recession most analysts now assume that the Federal Reserve will soon join the tide of other central banks and bring an end to the current era of unprecedented monetary expansion. Markets expect that Fed will begin withdrawing liquidity [...]

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Corruption: How is it that a GOP politico can get drummed out of the Senate for bathroom acts while Rep. Barney Frank merits not even a flicker of censure for economically disastrous cronyism? When will the double standard end?
Two years after politically motivated mortgage lending triggered the biggest collapse since the Great Depression, House Finance Committee Chairman Barney Frank, D-Mass., has been found to have helped one of his lovers, Herbie Moses, land a six-figure job at Fannie Mae, the agency at the center of the meltdown and one he had a responsibility to regulate.
Instead of…

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Earlier this spring, the new Consumer Financial Protection Bureau (CFPB) launched its official website and started actively soliciting public input for its policy initiatives.
Created as part of the landmark 2010 Dodd-Frank Act, CFPB is set to fully launch in July. So in just two months, the agency will be fully staffed with 1,000 workers and wield immense authority over a wide range of consumer financial products.
One of the CFPB’s chief challenges will be reforming the mortgage industry. Dodd-Frank grants the agency sole oversight over the two major federal mortgage laws — the Truth…

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It seems like week after week there is new evidence highlighting the decline of America’s middle class. The latest is a report by the Employment Policy Research Network which found that over the last thirty years, American workers have increased labor productivity by 78 percent, while wages for many have fallen or have remained stagnant. [...]

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After the amount of savings and assets one has, a credit score is probably the most important number when it comes to personal finance. Having a high score allows for more financial freedom and can save a borrower thousands of dollars on the terms of a loan. The score ranges from 300 on the low [...]

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Imagine it is the spring of 2008. You are one of the many long term investors at the annual meeting of Bernard L. Madoff Investment Securities LLC, one of the most prestigious firms in town. A dissident just presented a complex analysis implying that Bernie is paying off old investors with money brought in from new investors. He’s demanded a forensic audit and a vote of no confidence on the fund’s management. How do you vote?
Imagine it is the spring of 2011. A special election is being held in Upstate New York pitting the party of the status quo against the party that just admitted…

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