Over the past 24 months, a deplorable activity in the money management business came to light.  It got the name “pay to play” but was just another form of bribery.  The common description of pay to play is “the practice of making campaign contributions and related payments to elected officials in order to influence the awarding of lucrative contracts for the management of public pension plan assets and similar government investment accounts.”  Yup – sounds like bribery to me.

However, for some reason, the definition of this expanded to include any campaign contributions to any state or local officials, regardless of the size.  So, if I contribute $1,000 to the campaign of the Colorado state treasurer, I violate this SEC rule and become someone who is “paying to play.” Now, as someone who gets multiple calls and emails most days to contribute to campaigns as an election approaches, I can assure you that it has never occurred to me to support the campaign for a state treasurer. However, I do know that a candidate for state treasurer has called me asking for campaign contributions. And I’ve politely declined.

After studying the implications of this ruling, I’ve decided it prohibits me and my spouse (Amy) from making any campaign contributions to state or local races anywhere in the country.  The NVCA has also studied the new SEC rule and has come to the same conclusion:

“This ruling is consistent with guidance the NVCA has been providing members.  It is now even more important to have a firm-wide policy against political contributions to these officials / candidates. This restriction does NOT include political contributions to candidates running for federal office (U.S. House of Representatives, U.S. Senate, U.S. President) nor does it include contributions to the NVCA PAC, which only gives to federal candidates.”

We’ve instituted this rule at Foundry Group, although it’s upsetting and offensive to me because I think it fundamentally violates my First Amendment rights. To err on the side of caution, we’ve determined that spouses cannot make state or local political contributions either.  This infuriates Amy, as it should.

It’s even more upsetting when you consider that there is no cap on political contributions that corporations can make.  The Supreme Court ruled on this in January stating that the government has no business regulating political speech.  So, on one hand we have corporations who can give any amount to any candidate running for office while on the other hand my wife can’t contribute $1,000 to someone running for governor of Colorado.

Now, don’t misunderstand me – I think pay to play is grotesque.  And Amy and I are huge advocates of campaign finance reform.  However, the core problem of pay to play is bribery, not the active support of state and local candidates for office by individual citizens.  They are totally different things and should be able to be easily and cleanly differentiated, without the government regulating my political speech.

I just got the following breaking news alert from The New York Times.

“U.S. Economy Adds 290,000 Jobs in April; Jobless Rate Rises to 9.9%”

Let’s parse this.  The first clause says “U.S. Economy Adds 290,000 Jobs in April.”  This means to me that a bunch of people found new jobs in April.  A bunch.  Yay!  Good economy.

The second clause says “Jobless Rate Rises to 9.9%.”  This means to me that the number of people in the U.S. that don’t have jobs went up in April.”  A quick search showed that the March “jobless rate” (actually the unemployment rate) was 9.7%.  That’s a big relative jump, especially given that it was 9.7% for the first three months of 2010 according to the Bureau of Labor Statistics Economic News Release titled Employment Situation Summary that came out a few minutes ago.  Boo!  Bad economy.

How could this be?  The simple explanation is mid-way through the WSJ article titled U.S. Added 290,000 Jobs in April which appeared about six minutes after the NYT article:

“The two numbers are calculated by the Bureau of Labor Statistics in different ways. The payroll figure is taken from a survey of employers, while the jobless rate is calculated using a household survey.”

I just read through the BLS report and looked at a few of the tables.  Yes, there’s a ton of data here.  However, it breaks all kinds of rules about how to present data to reach a conclusion.  Our friends at the BLS need to hire Edward Tufte to get some help with their data presentation skills.

There are now two stories based on two completely calculations munged together into one sound bite.  The explanation will likely turn into “more people are looking for jobs now.”  But why is the denominator shifting around?  Weren’t those people already jobless (unemployed), even though they weren’t looking for jobs?  Oh – wait, if we include the people not looking for jobs in the historical unemployment calculation, the unemployment rate goes up, maybe by a lot.  Eek – wouldn’t that be more scary.

It’s a simple game the government is playing with the numbers.  Occasionally I’ll run into a company that does this – usually around revenue vs. gross margin dynamics, or bookings vs. revenue, or GAAP accounting vs. actual cash flows (where what really matters is cash flows.)  Picking the better number vs. dealing with reality is disingenuous at best; presenting them in conflicting ways that obscure the message is bullshit.

Oh – and 20 minutes later the newest NYT Breaking News Alert is now “Four-Month Rise Strengthens U.S. Job Outlook.” 

My dad sent me an incredible thirty minute interview of Ayn Rand by Mike Wallace in 1959 which I just watched on my iPhone during a treadmill run.  I’m a fan of Atlas Shrugged and The Fountainhead and, while I’m intrigued by a lot of Ayn Rand’s philosophy and writing, I don’t consider myself an Objectivist. 

One of the quotes I most love is John Galt’s statement “I swear by my life and my love of it that I will never live for the sake of another man, nor ask another man to live for the sake of mine.”  A while ago my mom made a painting out of this quote (it currently hangs in my partner Jason Mendelson’s house.)

Regardless of my philosophical perspective, I thought this interview was fascinating.  While it’s 50 years old, the format and content is timeless.  I think Ayn Rand was brilliant in her articulation of her philosophy and her perspective and did an excellent job of engaging with Wallace without running him over.

As we exit 2009, I encourage you to watch this, if only to have it stimulate your thinking.  I expect some of you will love this and some will hate it, but I challenge anyone to say that “it didn’t cause me to think or react.”

Two things really tweaked me in the past 24 hours.

1. The FTC rules to regulate product endorsements in blogs
2. The US Antitrust Inquiry of IBM

The FTC thing is just fucking stupid.  Jeff Jarvis does a better takedown of it than I could ever do on his post FTC Regulates Our Speech.  I’m not a journalist, nor do I pretend to be.  I’m involved in some way in virtually everything I write about on this blog.  While I don’t directly make money when you buy a product or service from one of the private companies I have an investment in, I have the potential of eventually making money if the company is more valuable.  I do get a share of the ad revenue that appears alongside the articles and I get affiliate fees from some services like Amazon whenever I write about a book or movie, link to Amazon, and remember to include my affiliate link.  These are all well known practices among bloggers that adding “disclosure to” in every post is tedious, pointless, and irrelevant.

Is this what the FTC should be spending it’s time on?  I completely agree with Jarvis – this is about “free speech” – presumably I should be able to write about whatever I want on this blog (it is “my blog” after all) and you can decide to ignore me if you want.  Oh – and no one pays me to write this blog so how does it become an FTC issue?  I’ve seen some comments that this is aimed at payola – only impacting bloggers that get paid to write about products and services.  But the language seems to include direct payments and indirect payments.  Call me perplexed and confused.  I wish there was a product called “perplexed and confused” that I could sell.

The The US Antitrust Inquiry of IBM is even weirder.  As I read the NY Times article, it looks like a bunch of companies whining that IBM won’t license their mainframe software to them.  This stems from a complaint filed by the Computer and Communication Industry Association whose members include Google, Microsoft, Oracle, Yahoo, Fujitsu, and a bunch of others. IBM is conspicuously absent from the membership list – I guess they made a mistake not joining since it looks like the argument being made could easily apply – in my experience – to business practices of Google, Microsoft, and Oracle.   Two important quotes from the NY Times article.

“I.B.M.’s opposition to licensing its technology to outsiders is not enough to build a successful government antitrust case, said Andrew I. Gavil, a law professor at Howard University. More likely,

and

In the ruling in the private case last week, Judge Lewis A. Kaplan of Federal District Court in Manhattan found that I.B.M. had invested heavily in its modern mainframe technology and its decision not to license it “does not constitute anticompetitive conduct.”

The only logical conclusion to this one is Gavil’s speculation that “the Justice Department is investigating to see if I.B.M. is engaged in other tactics that might be anticompetitive.”  But based on what actual evidence?

I’m really proud of my Congressman Jared Polis.  Jared was one of the first people I met when I moved to Colorado in 1995 (we met in early 1996) and have been good friends ever since.  Jared has a great article about his first few weeks in Congress up on the CNN website titled Commentary: Congress is like going back to college.  There’s also a fun video.

Jared – you look very serious in that suit and tie.

Today’s Washington Post article titled Staff Finds White House in the Technological Dark Ages was no big surprise.  However, while I was taking a shower (in a hotel in the Houston suburbs of all places) it occurred to me that this presents an incredible marketing opportunity for Apple.

If I were king of Apple (or say, a board member with deep White House ties), I’d be on the phone with “the appropriate person” with the offer of “a Mac on every desk in the White House along with an iPhone for every White House staffer.”  I’m sure there is some law that prevents Apple from giving this away from free so I’d offer it “at cost” just to Mac-enable the White House.

You can’t buy better PR than “Apple computerizes the Obama Administration, displacing ancient PCs running Windows XP.”  Plus, the leader of the free world then would carry around an iPhone and a MacBook.

In addition, I see an executive order coming that completely changes the stupid, archaic, and limiting rules about archiving communications within the White House.  This is a regular excuse that is used to explain why it’s “hard” to use things like Blackberries if you are president.  Baloney – there are plenty of straightforward approaches that solve for whatever you want to do.  It’s not like someone archived all of Rumsfeld’s Snowflakes (or maybe someone did – if so – egads.)

While we are at it, did anyone notice that Apple reported record revenues and profits in the quarter ending 12/27/08?  Yeah, I guess you did but it’s worth repeating the numbers since all we’ve been hearing is bailouts and losses.  These are quarterly numbers.  Revenue: $10.17 billion.  Net Income: $1.61 billion.  These numbers are lower than reality because of the bullshit GAAP rules that force accounting for the iPhone to be reported ratably over the life of the iPhone contract.  If you actually accounted for this in a way that made sense, Revenue would be $11.8 billion and Net Income would be $2.3 billion.  As every good MBA knows, the key rule is to “follow the cash” which increased by $3.6 billion in the quarter.  It’s worth saying again – $3.6 billion.  Wowza.  Well done Apple.

I’ve been an unabashed Obama supporter for a while.  I’m glad he’s going to be our next president and am optimistic about his leadership.  I’ve been enjoying listening to some of the punditry ricocheting around about his coming administration now that I don’t have to listen (or – in my case – try to ignore) the endless analysis about the campaign.  A few requests on my part have come to mind as I start to synthesize what I’m hearing.  Of course, I’m not so arrogant to believe that President-elect Obama – or for that matter – anyone in the administration – will care about my specific requests, but since this is my blog afterall I thought I’d toss my thoughts out into the wild.

1. Appoint Some High Profile Republicans to Your Cabinet.  I believe we need to eliminate the extreme partisan divide that exists in the US today.  The best way to start to do that is from the top – if President Obama makes it clear that he has no interest in perpetuating the "partisan politics as usual" dynamic, we actually have a chance to start to change it.  The biggest, loudest way to send this message would be to get the absolute smartest and most capable people in the cabinet, regardless of their party affiliation.

2. Veto The First Pork Laden Bill.  I continue to be baffled by the dynamics around Pork in Congress.  I want my politicians to become vegetarians and reject Pork.  TARP is such a disgusting example of this – as far as I can tell, the only major difference between the TARP bill that failed the House and the one that came back from the Senate and passed was the addition of a bunch of Pork.  Disgusting.  When the first bill hits Obama’s desk that has one key issue in it that is covered with Pork, he should Veto it.  He should then get on TV and explain the bill in clear English to the American population.  He should describe the single issue in the bill, and then list the Pork – state by state, Congressman by Congressman.  He should then insist that Congress revisit the bill, take all the Pork out, and send it back to him for approval. 

3. Continue Being Confident But Not Certain: Amy and I had a great brunch in Chicago over the weekend with a bunch of folks from Wellesley.  The guest of honor was Madeleine Albright (Wellesley ’59) who was the US Secretary of State from 1997 to 2001.  Secretary Albright was amazing and it was so humbling to get to spend some time with her.  When asked what advice she’d give Obama, she said two things.  First – "listen".  Second – "be confident, but not certain."  She described Bush as a president who has been too "certain" – he’s "certain that he is correct on all issues and then never listens."  In contrast, she wants a president who is "confident" yet willing to listen, learn, and adjust his point of view based on the data presented.  That resonated with me – being confident but willing to listen is a key tenant of a great leader in my book.

Now – go download Zynga’s Live Poker on your iPhone and play a hand or two.  If you made it through this blog post, you deserve a break.

I didn’t come up with this idea – Om Malik did.  But he’s absolutely right – Obama needs to look outside the beltway for many key positions, including FCC Chair.  Tom Evslin is an absolute star in my book and as Om states:

"Tom Evslin, who is a retired telecom executive, is the kind of person I would expect to be in the FCC. He knows the machinations of the big companies and at the same time is an Internet liberal who can keep broadband providers and their anti-consumer tricks under check."

While Tom graciously responded in his post The Importance of the FCC that "[he's] flattered although neither a likely choice (that’s an understatement) nor a candidate" help me and Om start a real drumbeat.  Obama was elected on a platform of change – let’s bring some completely fresh leadership and thinking into the mix.

Fred Wilson has the best post I’ve read so far from the 700 of so feeds I follow on how he feels about the election.  It’s titled Barack Hussein Obama, President of the United States.  Fred – like me – decided a while ago to believe in Barack Obama and I’m sure he’s as happy as I am to see him elected president of the United States.

Fred states clearly the six things he thinks we’ll get from an Obama administration. 

1. A world class management team
2. Honesty
3. A steady hand
4. Diplomacy
5. Fairness
6. Leadership

I won’t repeat the details of each here – go read Fred’s post.  But – I’ll add one thing.  If you are an entrepreneur, an executive in a company, or in any leadership position at any level, these same six principles apply to you.  As Fred so clearly stated, "Like everyone else, I am dying for a leader we can believe in and get in line behind and follow."  Reflect on that statement as you go about your day.

Where is James Carville when you need him? 

Finally, Obama is taking a line from Clinton’s playbook.