SEC Commissioner Paul Atkins' term is up this summer. With the SEC down to only three commissioners, it remains uncertain if he will depart the SEC or stay on until new commissioners come on board. Either way, he will leave a powerful legacy, albeit one shadowed by an undertone of disdain for the institution he was appointed to represent.
Atkins is the commissioner who has probably argued most forcefully (and often with considerable literary panache) that economic analysis should drive regulatory decisions. In repeatedly driving home this argument, and in not concealing his low opinion of the staff lawyers at the SEC who do not employ economic analysis, he will likely also be remembered as one of the most divisive commissioners in recent memory.
Atkins has famously remarked that the SEC is "of, by, and for lawyers." While a lawyer himself, he has lamented the failure of the SEC to hire more economists and MBAs and to hew sufficiently to statutory mandates to conduct economic and cost-benefit analysis of rule proposals. He has declared that "a lack of appreciation for economic principles has hampered the efforts of well-intentioned attorneys in many practice areas." Remarks about the PCAOB and accountants suggest he lumps them together with SEC lawyers as equivalently misguided.
In a speech delivered to the National Association for Business Economists in 2007, where Atkins faced a friendly audience, his remarks about the role of lawyers at the SEC were particularly pointed. In this speech, Atkins did little to harbor his view that the SEC, and other governmental bodies, would be entirely better off if they were essentially run by economists who could provide direction to inept lawyers, not merely in regulatory decision-making, but in enforcement decisions involving analysis of harm, settlement costs, and financial penalties.
What are we to make of this? If we look beyond Atkins' often impolitic bluntness about the institution he represents (but apparently does not love), he is probably correct that an economist's perspective can sometimes usefully frame analysis of specific regulatory and enforcement choices. If we set aside his clearly and consistently anti-regulatory bias, he is probably correct that the SEC continues to need to work from a principles-based, not prescriptive regulatory philosophy, and that it should continue to partner with the industries it regulates to the degree possible. If we set aside his instinct to minimize enforcement of any sort against corporations (as opposed to individuals), it is true that he raises good questions about the impact of large financial penalties on shareholders who have probably already suffered from plunging stock prices.
But if we don't look beyond these personal and ideological biases - Atkins loves markets and dislikes laws, hence "loves" economists and "dislikes" lawyers - we are left with someone who does not have the conceptual tools to manage the kind of financial and regulatory crisis we face today. In 2004, Atkins spoke out forcefully against hedge fund adviser registration, but has entirely missed the boat on matters regarding hedge fund valuation and more general issues about how we are to value complex financial instruments for which the markets themselves appear to have no solution. For these reasons, even as Atkins waves the bloody flag of overregulation, the hedge fund and pension fund industries are themselves calling out for help and will almost surely accept greater regulation if it assists them in managing market turbulence and uncertainty that threatens to overwhelm them.
Atkins believes the markets can restore the needed balance without undue regulatory involvement, even as its key players say otherwise. The problem is that - as even Treasury Secretary Paulson has emphasized - the markets have outpaced the regulators. There is now consensus that we need time for government bodies to deliberate on how best to frame market structures to avoid the breach in the dykes that has characterized the subprime lending debacle. If by "lawyers", we mean policymakers and regulators with deep domain knowledge of the industries involved in this crisis, and by "economists" we mean formal modelers and empirical testers beholden to their own, market-driven "prescriptive" solutions, I am not sure the present situation might not call for more lawyers!
Tuesday, April 29, 2008
Friday, April 25, 2008
Post 9/11 - Military, Food, and Energy Crises Spiral Together
Since September 11, 2001, President Bush has squandered - perhaps the better word is butchered - an opportunity to remake our world. In the immediate aftermath of that fateful day, the President held the peoples and nations in the palm of his hand. With bold and well-timed initiatives focused on global poverty and disease, as well as global security, his legacy could have been a testament to how the transforming power of Love might make meaningful the lives and deaths of all who perished that morning at the hands of Hate. Today, it is not an exaggeration to say that Hate rules the day. The world will bear the costs for decades, if not centuries, of the President's decision - as an Old Testament Destroyer, not a New Testament Healer - to make endless War in Iraq.
We do not need to look far to see the global impact of this war - in the mutually reinforcing spiraling curves of energy and food prices - a double helix of devastation that threatens to shred and mock the progress of the past decades in fighting hunger and disease, and bringing economic development to the populations of the world. For the moment, let us put aside the demand-driven impact on energy and food supply and shortages of economic growth in China and India. Let us focus, instead, on the direct energy costs of food production, and the indirect costs of energy on food production resulting from diversion of agricultural land to product corn for ethanol.
The war in Iraq has created enormous instability in energy markets. At the outset of the war in 2003, one Navy think tank study argued that the war would have little impact on energy prices. By 2006, a report from Nobel Prize prize-winning economist Joseph Stiglitz suggested that "the impact of Iraq on oil prices is a large proportion of the $45-a-barrel increase since the war began." Of course, the price of oil is now nearly $40-a-barrel higher than it was in 2006.
Agriculture is petroleum-dependent, in the use of petroleum-derived chemical fertilizers, the cost of oil for powering agricultural machinery, and the dependence of global food markets on transportation networks fueled by oil. In conjunction with widespread periods of drought in key agricultural regions of the world, rice and wheat production have dropped precipitously in Australia, Canada, the European Union and Turkey. Prices of these staples have soared, and nations, such as India, that previously exported their agricultural surplus, are reserving it for domestic consumption. Shortages have led to food riots in Bangladesh, Egypt, Senegal, Ethiopia, and Haiti.
President Bush's lost presidency can count no significant policy achievements. His grand bio-fuels initiative represented the President's one attempt to address dependence on foreign oil. However, massive corn-fed federal subsidies to support biofuel production - which more legitimately might be called a sublimating tactic designed to mute opposition to the war in Iraq - has done nothing to lessen our dependence on fossil fuels. Its failure as an energy policy aside, biofuel subsidies in the United States have distorted markets and diverted a vast amount of corn acreage away from food production, thereby contributing significantly to rising food prices.
The War in Iraq has become, by default, the President's energy policy and food policy. The War justifies and twists rationales for all other domestic and global policy initiatives of this Administration. One can calculate its engulfing, soul-destroying impact - not simply in the incalculable loss of life and wealth and happiness in Iraq and in the United States - but in the silence that befalls our leaders when the needs of the world require them to speak clearly and constructively about solutions to the transcendent issue of the day: the need for an energy policy that addresses global military and political insecurity, global warming, and global hunger.
We do not need to look far to see the global impact of this war - in the mutually reinforcing spiraling curves of energy and food prices - a double helix of devastation that threatens to shred and mock the progress of the past decades in fighting hunger and disease, and bringing economic development to the populations of the world. For the moment, let us put aside the demand-driven impact on energy and food supply and shortages of economic growth in China and India. Let us focus, instead, on the direct energy costs of food production, and the indirect costs of energy on food production resulting from diversion of agricultural land to product corn for ethanol.
The war in Iraq has created enormous instability in energy markets. At the outset of the war in 2003, one Navy think tank study argued that the war would have little impact on energy prices. By 2006, a report from Nobel Prize prize-winning economist Joseph Stiglitz suggested that "the impact of Iraq on oil prices is a large proportion of the $45-a-barrel increase since the war began." Of course, the price of oil is now nearly $40-a-barrel higher than it was in 2006.
Agriculture is petroleum-dependent, in the use of petroleum-derived chemical fertilizers, the cost of oil for powering agricultural machinery, and the dependence of global food markets on transportation networks fueled by oil. In conjunction with widespread periods of drought in key agricultural regions of the world, rice and wheat production have dropped precipitously in Australia, Canada, the European Union and Turkey. Prices of these staples have soared, and nations, such as India, that previously exported their agricultural surplus, are reserving it for domestic consumption. Shortages have led to food riots in Bangladesh, Egypt, Senegal, Ethiopia, and Haiti.
President Bush's lost presidency can count no significant policy achievements. His grand bio-fuels initiative represented the President's one attempt to address dependence on foreign oil. However, massive corn-fed federal subsidies to support biofuel production - which more legitimately might be called a sublimating tactic designed to mute opposition to the war in Iraq - has done nothing to lessen our dependence on fossil fuels. Its failure as an energy policy aside, biofuel subsidies in the United States have distorted markets and diverted a vast amount of corn acreage away from food production, thereby contributing significantly to rising food prices.
The War in Iraq has become, by default, the President's energy policy and food policy. The War justifies and twists rationales for all other domestic and global policy initiatives of this Administration. One can calculate its engulfing, soul-destroying impact - not simply in the incalculable loss of life and wealth and happiness in Iraq and in the United States - but in the silence that befalls our leaders when the needs of the world require them to speak clearly and constructively about solutions to the transcendent issue of the day: the need for an energy policy that addresses global military and political insecurity, global warming, and global hunger.
Thursday, April 17, 2008
KM Releases New Version of Securities Mosaic on Monday
In the past nine months, Knowledge Mosaic engineers have rewritten the entire code base of Securities Mosaic. You can reap the rewards of their prodigious efforts on Monday, when we release the newest version of Securities Mosaic. Change abounds.
Our goal was to dramatically improve the experience of our users by streamlining the website, enhancing text search, and adding new tools and capabilities to existing search pages. Here are the major changes you can expect to see when go to Securities Mosaic on Monday.
Our goal was to dramatically improve the experience of our users by streamlining the website, enhancing text search, and adding new tools and capabilities to existing search pages. Here are the major changes you can expect to see when go to Securities Mosaic on Monday.
- A new login page. Away with the sallow, grey box that has been with us for every login since 2001!
- A new home page. We have reordered the tabs on the home page and in the website navigation bar to reflect a more natural and intuitive organization of our content. We have removed the Enforcement tab and created a new tab for SRO regulation. We have consolidated the Compliance Centers into a new section called In Focus and created a new section called Paper Trail that links to a recent document of interest.
- A new navigation bar. We have added a new universal SEC Release search box - available on every page - that lets you search for both regulatory and enforcement releases by release number. We have replaced Watchlist access with a link to our new Document Cart. However, you can still access your Watchlist via the Quickfind dropdown.
- More flexible text search. You can now do Boolean searches without using brackets (<>) around your operator. For example: dog and cat, dog or cat, dog near cat. However, you can still use brackets if you have grown to love them! For proximity searches on the All SEC Filings and SM Item Extractor pages, you can use "near/5", "w/5" or "/5" to define the word proximity range.
- Batch it with Document Cart. The Document Cart allows you to select up to 25 documents from throughout Securities Mosaic and add them to your "cart". Batch print or email at any time. The Document Cart requires a personal account. We can create one for you upon request.
- Streamlined statutory and regulatory materials. Simple collapsible "tree" pages now encapsulate SEC laws and regulations and PCAOB rules and standards. And where there once were 16 FINRA and NYSE search pages, now you will find only one, allowing you to search across the full range of these SRO materials.
Wednesday, April 16, 2008
From Documents to Data: The New World of Risk Disclosure
Online research used to be about navigating massive, discursive document landscapes. At some level, this kind of research served merely to extend traditional analog methods for research and analysis of printed materials. However, documents are only containers. They are not themselves information.
More recently, sophisticated use of databases and the transition to XML has begun to liberate data within documents, creating new possibilities for how we imagine, encounter, manage, and manipulate information. At Knowledge Mosaic, our general business strategy has been to develop data parsing methods that allow us to build deep reservoirs of data mined from documents and then transport and deliver this data dynamically and in multiple formats to multiple platforms. All nearly in real-time.
In the past year, as part of this effort, Knowledge Mosaic has plunged into the dark and uncertain world of risk disclosure. Companies historically have been required to list risk factors associated with their business when they issue new securities. More recently (since early 2006), the SEC has mandated that public companies include risk factor disclosures in their 10-K annual report.
Now, many people assume that risk factor disclosures are like fresh, shiny paint on rotten wood - or perhaps old, crappy paint on fresh wood - but that in either case lawyers recycle and slap together risk disclosure language to dissemble, not to enlighten. And there may be some truth to that view.
But here's the deal. Risk is not generic. It varies by industry and it varies by business segment. Risk for software companies is not the same thing as risk for companies that manufacture chemicals or drill for oil or sell groceries or manage investments. Risk pre-Sarbanes-Oxley is not the same as risk post-Sarbanes-Oxley and it will be different yet again post-Bear Stearns. Directors and officers face different kinds of risk, as do engineers and salespeople.
Our SM Risk website currently contains 1,074,598 risk factor statements parsed from 57,213 filings filed since May 26, 2000. We have classified these risk factor statements using a taxonomy that includes more than 30 master categories (such as competition risk, environmental risk, experience risk, governance risk, and legal risk) and more than 1,000 minor categories (such as accounting charges, hazardous waste, patent infringement, product liability, and senior indebtedness).
What we have learned in developing this risk disclosure research platform is that it is definitely a terrific environment for instantly finding useful precedent language when preparing risk disclosure statements. However, SM Risk also reveals the nuance and texture in risk disclosure, with rich implications for how we understand the meaning of risk in different industries, business segments, regions, and time periods. One of our exciting opportunities in the coming months will be to start analyzing and mapping that nuance and texture.
But for now, here are two interesting illustrations of risk disclosure, one concerning experience and one involving earthquakes.
No Experience. It turns out many companies admit they have no experience in the activity for which they are trying to raise money. Just two days ago, Accential Pharmaceuticals Inc. - which is trying to raise nearly $9 million to commercialize BiovaxID, a non-Hodgkins lymphoma vaccine - conceded in a risk factor statement that "we have no experience manufacturing BiovaxID or any other immunotherapies for the number of patients and at a cost that would enable widespread commercial use."
Back in February, Refinery Science Corporation, a company with virtually no revenue, tried to raise $10 million, while conceding that "We are a development stage, independent petroleum processing technology company, with no experience in the market, and failure to successfully compensate for this inexperience may adversely impact our operations and financial position." Wouldn't this be useful information to have at your fingertips before investing?
Earthquake Faults. Many companies operate facilities that sit on or near earthquake faults. Of the 1,949 risk factor disclosures that mention earthquake risk, 920 (or 47 percent) are from companies headquartered in California. If you want to know which of these California companies faces risk to manufacturing facilities from an earthquake, a simple text query (earthquake manufacturing) returns 239 risk factors from 165 companies.
Wouldn't it to be good to begin benchmarking California companies with manufacturing facilities in similar industries that do not address this potential for disaster in their risk factor disclosures? For example, 57 of these risk factors are reported by 34 companies in the semiconductor industry (SIC 3674). Intel is not one of them. Why not? Indeed, Intel only mentions the word "earthquake" in two of its 1,516 filings - one a 1999 8-K referring to the major earthquake in Taiwan and one an S-4 from 1999 that does refer to risk to Intel's critical business operations from earthquakes in California. Doesn't this disclosure gap seem odd? Does it matter? In the event of a major earthquake that destroyed major parts of Intel's facilities, some investors (and their attorneys) might think it did.
We are not currently licensing SM Risk, except as a data feed. Later this year, when we release our new business law platform, we will incorporate SM Risk into this platform. For now, if you are interested in exploring this risk landscape in more fine-grained detail, you can use the SM Risk website free of charge. Please feel free to contact me for more information on signing up. My email address is pschwartz@knowledgemosaic.com.
More recently, sophisticated use of databases and the transition to XML has begun to liberate data within documents, creating new possibilities for how we imagine, encounter, manage, and manipulate information. At Knowledge Mosaic, our general business strategy has been to develop data parsing methods that allow us to build deep reservoirs of data mined from documents and then transport and deliver this data dynamically and in multiple formats to multiple platforms. All nearly in real-time.
In the past year, as part of this effort, Knowledge Mosaic has plunged into the dark and uncertain world of risk disclosure. Companies historically have been required to list risk factors associated with their business when they issue new securities. More recently (since early 2006), the SEC has mandated that public companies include risk factor disclosures in their 10-K annual report.
Now, many people assume that risk factor disclosures are like fresh, shiny paint on rotten wood - or perhaps old, crappy paint on fresh wood - but that in either case lawyers recycle and slap together risk disclosure language to dissemble, not to enlighten. And there may be some truth to that view.
But here's the deal. Risk is not generic. It varies by industry and it varies by business segment. Risk for software companies is not the same thing as risk for companies that manufacture chemicals or drill for oil or sell groceries or manage investments. Risk pre-Sarbanes-Oxley is not the same as risk post-Sarbanes-Oxley and it will be different yet again post-Bear Stearns. Directors and officers face different kinds of risk, as do engineers and salespeople.
Our SM Risk website currently contains 1,074,598 risk factor statements parsed from 57,213 filings filed since May 26, 2000. We have classified these risk factor statements using a taxonomy that includes more than 30 master categories (such as competition risk, environmental risk, experience risk, governance risk, and legal risk) and more than 1,000 minor categories (such as accounting charges, hazardous waste, patent infringement, product liability, and senior indebtedness).
What we have learned in developing this risk disclosure research platform is that it is definitely a terrific environment for instantly finding useful precedent language when preparing risk disclosure statements. However, SM Risk also reveals the nuance and texture in risk disclosure, with rich implications for how we understand the meaning of risk in different industries, business segments, regions, and time periods. One of our exciting opportunities in the coming months will be to start analyzing and mapping that nuance and texture.
But for now, here are two interesting illustrations of risk disclosure, one concerning experience and one involving earthquakes.
No Experience. It turns out many companies admit they have no experience in the activity for which they are trying to raise money. Just two days ago, Accential Pharmaceuticals Inc. - which is trying to raise nearly $9 million to commercialize BiovaxID, a non-Hodgkins lymphoma vaccine - conceded in a risk factor statement that "we have no experience manufacturing BiovaxID or any other immunotherapies for the number of patients and at a cost that would enable widespread commercial use."
Back in February, Refinery Science Corporation, a company with virtually no revenue, tried to raise $10 million, while conceding that "We are a development stage, independent petroleum processing technology company, with no experience in the market, and failure to successfully compensate for this inexperience may adversely impact our operations and financial position." Wouldn't this be useful information to have at your fingertips before investing?
Earthquake Faults. Many companies operate facilities that sit on or near earthquake faults. Of the 1,949 risk factor disclosures that mention earthquake risk, 920 (or 47 percent) are from companies headquartered in California. If you want to know which of these California companies faces risk to manufacturing facilities from an earthquake, a simple text query (earthquake
Wouldn't it to be good to begin benchmarking California companies with manufacturing facilities in similar industries that do not address this potential for disaster in their risk factor disclosures? For example, 57 of these risk factors are reported by 34 companies in the semiconductor industry (SIC 3674). Intel is not one of them. Why not? Indeed, Intel only mentions the word "earthquake" in two of its 1,516 filings - one a 1999 8-K referring to the major earthquake in Taiwan and one an S-4 from 1999 that does refer to risk to Intel's critical business operations from earthquakes in California. Doesn't this disclosure gap seem odd? Does it matter? In the event of a major earthquake that destroyed major parts of Intel's facilities, some investors (and their attorneys) might think it did.
We are not currently licensing SM Risk, except as a data feed. Later this year, when we release our new business law platform, we will incorporate SM Risk into this platform. For now, if you are interested in exploring this risk landscape in more fine-grained detail, you can use the SM Risk website free of charge. Please feel free to contact me for more information on signing up. My email address is pschwartz@knowledgemosaic.com.
Tuesday, April 15, 2008
Valuation is the Heart of the Matter
Business and financial regulation in the United States builds upon two worthy traditions - self-regulation and self-disclosure. By design, these traditions preempt and represent lightweight alternatives to more heavy-handed and prescriptive direct regulation by government agencies. When the SEC deputizes private organizations such as the NYSE to police its members, it is adhering to the time-honored tradition of deputizing private citizens to maintain public order. When the SEC requires electronic disclosure, it respects the dependence upon, and responsiveness of, financial markets to the flow of information - to the idea that, indeed, markets are little more than the flow of information.
However, when industries themselves call for more self-regulation and more self-disclosure, it is always an act of desperation, not merely because they want to avoid direct government oversight, but because they are acknowledging that they can no longer survive without some measure of public accountability and public trust. They are acknowledging that the open markets to which they pay fealty now threaten to consume them.
In that spirit of desperation, today we are privileged to experience the much-anticipated release to the President's Working Group on Financial Markets of two private sector reports on hedge fund best practices - one from the hedge fund industry and one from institutional hedge fund investors (primarily pension funds, endowments, and foundations). These reports represent responses to the meltdown in the financial services industry that has led to the evaporation of more than $245 billion in asset write-downs and credit losses since the beginning of 2007, and to market instability that the hedge fund industry no longer trusts it can manage.
What strikes me in reading these reports, and observing the conversation about the recent financial crisis from a distance, is the centrality of the problem of valuation. Both reports combine reference to valuation with other key aspects of hedge fund management and investment - disclosure, risk management, taxation, accounting, liquidity, trading, and compliance. But there is a palpable sense that the other practices and conditions are secondary - that all would be well if we only knew how to value structured securities and derivatives.
The bottom line is that we don't. The credit rating agencies don't. The banks don't. The hedge funds don't. Institutional investors don't. And in the absence of robust valuation data, methods, and models, there is no floor to the risk that financial institutions face when they toy with structured securities and derivatives.
Both reports carve out special sections for the discussion of valuation challenges. The institutional hedge fund investors' report - which starts by affirming that "valuation is ultimately at the core of any investment" - is more discursive on this subject than the hedge fund industry report. This may be indicative of general differences in stylistic approaches to the subject matter. Or it may suggest an entirely different perspective on the depth of the issue, with anxiety about valuation reflecting investor concerns more than the concerns of asset managers.
While both reports focus on the need for better valuation methods, valuation policies, valuation committees, and valuation governance, neither really grapples with the core reality - which is that huge dollar volumes of assets simply cannot be valued. There is insufficient liquidity and inadequate data, and in their absence, values depend upon someone simply assigning a value that has no relation to anything except the interest in making a market out of vapor. Until the hedge fund industry, and government regulators and policymakers, acknowledge this deep emptiness at the heart of the financial industry, all the reports in the world will amount to nothing more than a rearrangement of the deck chairs on the Titanic.
However, when industries themselves call for more self-regulation and more self-disclosure, it is always an act of desperation, not merely because they want to avoid direct government oversight, but because they are acknowledging that they can no longer survive without some measure of public accountability and public trust. They are acknowledging that the open markets to which they pay fealty now threaten to consume them.
In that spirit of desperation, today we are privileged to experience the much-anticipated release to the President's Working Group on Financial Markets of two private sector reports on hedge fund best practices - one from the hedge fund industry and one from institutional hedge fund investors (primarily pension funds, endowments, and foundations). These reports represent responses to the meltdown in the financial services industry that has led to the evaporation of more than $245 billion in asset write-downs and credit losses since the beginning of 2007, and to market instability that the hedge fund industry no longer trusts it can manage.
What strikes me in reading these reports, and observing the conversation about the recent financial crisis from a distance, is the centrality of the problem of valuation. Both reports combine reference to valuation with other key aspects of hedge fund management and investment - disclosure, risk management, taxation, accounting, liquidity, trading, and compliance. But there is a palpable sense that the other practices and conditions are secondary - that all would be well if we only knew how to value structured securities and derivatives.
The bottom line is that we don't. The credit rating agencies don't. The banks don't. The hedge funds don't. Institutional investors don't. And in the absence of robust valuation data, methods, and models, there is no floor to the risk that financial institutions face when they toy with structured securities and derivatives.
Both reports carve out special sections for the discussion of valuation challenges. The institutional hedge fund investors' report - which starts by affirming that "valuation is ultimately at the core of any investment" - is more discursive on this subject than the hedge fund industry report. This may be indicative of general differences in stylistic approaches to the subject matter. Or it may suggest an entirely different perspective on the depth of the issue, with anxiety about valuation reflecting investor concerns more than the concerns of asset managers.
While both reports focus on the need for better valuation methods, valuation policies, valuation committees, and valuation governance, neither really grapples with the core reality - which is that huge dollar volumes of assets simply cannot be valued. There is insufficient liquidity and inadequate data, and in their absence, values depend upon someone simply assigning a value that has no relation to anything except the interest in making a market out of vapor. Until the hedge fund industry, and government regulators and policymakers, acknowledge this deep emptiness at the heart of the financial industry, all the reports in the world will amount to nothing more than a rearrangement of the deck chairs on the Titanic.
Monday, April 14, 2008
The Plan
In a small business that has grand aspirations, the two most important qualities for growth are mindfulness and structure. Mindfulness makes for attunement - creation of harmony - with the two most vital partners of any business - customers and employees. Structure creates a detailed template for operational effectiveness. It amounts to a plan for success to which all relevant parties can commit.
Structure and scheduling go hand-in-hand. I'd like to help make my Wired Mosaic blog be a success by introducing a predictable weekly schedule, with each day devoted to a particular topic or theme. Here is what I am envisioning.
Monday - General News and Observations (on anything compelling)
Tuesday - Regulation (stories worthy of comment from the SEC and from elsewhere in the world for business law and regulation)
Wednesday - Disclosure (tales and trends mined from corporate disclosure filings)
Thursday - Knowledge Mosaic (stories about triumphs and challenges of running an online business)
Friday - KM Book Club (weekly review and comment about a book of interest to myself and to readers)
I may reserve time to post separately on a more ad hoc basis (for example, when we have a new product announcement or other event or news report worthy of instantaneous reporting), but as busy as I am, I imagine this schedule will be more than sufficient to keep me tied frantically to my post on the blogging assembly line. Imagine Charlie Chaplin in Modern Times or Lucille Ball in I Love Lucy. Only more crazed.
Structure and scheduling go hand-in-hand. I'd like to help make my Wired Mosaic blog be a success by introducing a predictable weekly schedule, with each day devoted to a particular topic or theme. Here is what I am envisioning.
Monday - General News and Observations (on anything compelling)
Tuesday - Regulation (stories worthy of comment from the SEC and from elsewhere in the world for business law and regulation)
Wednesday - Disclosure (tales and trends mined from corporate disclosure filings)
Thursday - Knowledge Mosaic (stories about triumphs and challenges of running an online business)
Friday - KM Book Club (weekly review and comment about a book of interest to myself and to readers)
I may reserve time to post separately on a more ad hoc basis (for example, when we have a new product announcement or other event or news report worthy of instantaneous reporting), but as busy as I am, I imagine this schedule will be more than sufficient to keep me tied frantically to my post on the blogging assembly line. Imagine Charlie Chaplin in Modern Times or Lucille Ball in I Love Lucy. Only more crazed.
Thursday, April 10, 2008
You Blog, You Die
The recent NY Times article about obsessive blogging and the health risks to those who struggle in their post-modern sweatshop - to churn out the posts, to harvest the clicks, to gain their measure of fame - resonated with many bloggers, but left me underwhelmed.
Beyond the obvious point - if you don't take care of your body and nurture your spirit, as well, you place yourself at risk - I am not sure how anyone can say that blogging is dangerous. It may not pay very well, but this is the result of the advertising model that underpins the new media business models of companies like Gawker Media that employ bloggers.
In another post, I'd love to extemporize on advertising business models - with their spurious "no pain/all gain" premise. For now, the main point I'd like to make is that blogging is, at the end of the day, about some combination of good writing, good storytelling, and good reporting. My favorite bloggers on the KM Blogwatch invest significant amounts of research, thought, and time in their posts, and deserve to be honored for the quality of the writing that results. Whether this requires an unhealthy lifestyle is another question, that may shade into a conversation about creativity and art.
But the NY Times article is really focusing on the kind of mania that compels technology bloggers to post obsessively and stress themselves to the breaking point because milliseconds in posting times can drive audience and revenue. It is almost a zero-sum game of the sort David Mamet depicts in Glengarry Glen Ross, where Alec Baldwin tells the Jack Lemmon, Al Pacino, and Kevin Spacey that first prize in their sales contest is a Cadillac Eldorado, second prize is steak knives, and third prize is "you're fired."
The NY Times article is also about compulsion and addiction. But I don't see how it is really about blogging itself. Blogging is a powerful and creative new medium of expression with different subcultures, some of which intersect the business world and require a cash nexus, but many of which don't. Blog as business. Blog as art or as craft. The two endeavors may overlap, but remain, nonetheless, two very different activities.
Beyond the obvious point - if you don't take care of your body and nurture your spirit, as well, you place yourself at risk - I am not sure how anyone can say that blogging is dangerous. It may not pay very well, but this is the result of the advertising model that underpins the new media business models of companies like Gawker Media that employ bloggers.
In another post, I'd love to extemporize on advertising business models - with their spurious "no pain/all gain" premise. For now, the main point I'd like to make is that blogging is, at the end of the day, about some combination of good writing, good storytelling, and good reporting. My favorite bloggers on the KM Blogwatch invest significant amounts of research, thought, and time in their posts, and deserve to be honored for the quality of the writing that results. Whether this requires an unhealthy lifestyle is another question, that may shade into a conversation about creativity and art.
But the NY Times article is really focusing on the kind of mania that compels technology bloggers to post obsessively and stress themselves to the breaking point because milliseconds in posting times can drive audience and revenue. It is almost a zero-sum game of the sort David Mamet depicts in Glengarry Glen Ross, where Alec Baldwin tells the Jack Lemmon, Al Pacino, and Kevin Spacey that first prize in their sales contest is a Cadillac Eldorado, second prize is steak knives, and third prize is "you're fired."
The NY Times article is also about compulsion and addiction. But I don't see how it is really about blogging itself. Blogging is a powerful and creative new medium of expression with different subcultures, some of which intersect the business world and require a cash nexus, but many of which don't. Blog as business. Blog as art or as craft. The two endeavors may overlap, but remain, nonetheless, two very different activities.
Wednesday, April 9, 2008
Ready? Set? Go!
I've been thinking and talking about doing this for months. Writing a "real" CEO blog. Not that I'm a "CEO". I'm officially a "President", and my company is tiny - with only 20 employees - so truly, it is a bit embarrassing to even say I am writing a "President blog".
But one has to start somewhere. And an entertaining, thoughtful "leadership" blog from a small-potatoes business beats the stuffing out of the marketing drivel that emanates from so many large corporation blogs.
What would it mean to write a real CEO blog, as opposed to a fake CEO blog? Well, for starters, it needs some background music for inspiration. A little Springsteen, perhaps. And so I am delighted to have just discovered that when I close the door to my office and turn up my music, no one else can hear me.
A good CEO blog also needs a bit of literary flair. Some honesty. Humor. A taste for the story. The instinct to peer beyond corners and see things happening before anyone else.
There is a reason people love reading Pmarca (Mark Andreesen) and Blogmaverick (Mark Cuban), and there is a reason that Sun CEO Jonathan Schwartz's blog leaves people a little bit cold (or bored). Pmarca and Blogmaverick - each in different ways - engage the world at the level of ideas and opinions.
The two Marks could not be more different in their styles - Andreesen is simply a massive brain jonesed on caffeine. Nothing escapes his interest and his voice is polymathically perverse. Always a fun, engaging, enlightening read (his latest post is about the history of newspapers).
Where Andreesen is the sunny lad you might want your daughter to marry, Cuban is his dark, brooding twin - a businessman's Marky Mark. More self-absorbed, opinionated, angrier, more the pot-stirrer (his latest post is about his feud with Bill O'Reilly), Cuban is the shadowed, slightly dangerous angel about whom your daughter would fantasize.
By contrast, the problem with Jonathan Schwartz and his sunless Sun blog is that it casts zero light and zero shadow. He posts fairly irregularly - always about Sun technology and Sun customers and Sun finances - and despite the fact that he sports a ponytail (perhaps twinning himself with me, the lesser Schwartz, who is both bald and grey), there is nothing remotely hip or edgy or interesting about any of these posts, which because of their irregular timing, also come across as being somewhat random.
Frankly, although I have no idea what the traffic figures are for any of these blogs, my hunch is that Pmarca and Blogmaverick relentlessly pound Jonathan's Blog when it comes to readers and visits. Honesty and humor will always trump PR
Anyway, I do want Knowledge Mosaic to have a voice, and I do see the Wired Mosaic blog as a way to offer this voice. There is no doubt that an authentic, powerful, vivid voice for a business can give it identity and presence, and thereby yield a significant marketing and sales benefit. There is no reason to apologize for pursuing these goals, of course.
That said, I truly believe the best service I can offer Knowledge Mosaic, even from a marketing standpoint, is to speak from my heart about the events and ideas that excite me - not just as they pertain to Knowledge Mosaic, or even to the world of legal, regulatory, and compliance matters - but as they pertain to and resonate with the most significant trends and groundswells of our time.
So here is my commitment as a "CEO blogger". To post regularly, fearlessly, fairly, and on topics that will resonate. I know myself. I will never be a blogger like Broc Romanek, who knows the ins and outs of SEC regulation and compliance as well as he knows the guitar solo from Stairway to Heaven. Nor will I ever forge the lovely, arcing synthesis of literature and liability that characterizes the posts of everyone's favorite D&O attorney, Kevin LaCroix. But I can commit to writing honestly and openly about a broad range of topics that include, but are not limited to, the work we are doing at Knowledge Mosaic; the challenges and satisfactions of operating a small business such as ours; the trends and developments in the world of business law, regulation, and compliance; and the implications and meaning of technology transformations. Along with those topics, I also expect to interweave conversations about - among other things - history, politics, sports, culture, brain science, cosmology, religion, consciousness, and good as it stands in relation to evil.
All the things, in short, that are calculated to inspire the ire of Bill O'Reilly.
I also understand that in undertaking a project of this sort, that I am representing my company and so will do everything in my power to honor that role and responsibility.
In the coming months, we will be revamping the KM Blogwatch to allow comments on all of our posts. In the meantime, I want to invite anyone with feedback on my posts to write me directly at pschwartz@knowledgemosaic.com. I will be sure to publish any and all thoughtful replies to my posts, and those of others in our KM Blogwatch blogging community. You also can go to the full Wired Mosaic blog at any time (and there find a photo that confirms that I am not the hirsute member of the Schwartz tribe). On that site, you can of course publish comments. If things go well, we may migrate it to the Knowledge Mosaic website at some point in the future.
But one has to start somewhere. And an entertaining, thoughtful "leadership" blog from a small-potatoes business beats the stuffing out of the marketing drivel that emanates from so many large corporation blogs.
What would it mean to write a real CEO blog, as opposed to a fake CEO blog? Well, for starters, it needs some background music for inspiration. A little Springsteen, perhaps. And so I am delighted to have just discovered that when I close the door to my office and turn up my music, no one else can hear me.
A good CEO blog also needs a bit of literary flair. Some honesty. Humor. A taste for the story. The instinct to peer beyond corners and see things happening before anyone else.
There is a reason people love reading Pmarca (Mark Andreesen) and Blogmaverick (Mark Cuban), and there is a reason that Sun CEO Jonathan Schwartz's blog leaves people a little bit cold (or bored). Pmarca and Blogmaverick - each in different ways - engage the world at the level of ideas and opinions.
The two Marks could not be more different in their styles - Andreesen is simply a massive brain jonesed on caffeine. Nothing escapes his interest and his voice is polymathically perverse. Always a fun, engaging, enlightening read (his latest post is about the history of newspapers).
Where Andreesen is the sunny lad you might want your daughter to marry, Cuban is his dark, brooding twin - a businessman's Marky Mark. More self-absorbed, opinionated, angrier, more the pot-stirrer (his latest post is about his feud with Bill O'Reilly), Cuban is the shadowed, slightly dangerous angel about whom your daughter would fantasize.
By contrast, the problem with Jonathan Schwartz and his sunless Sun blog is that it casts zero light and zero shadow. He posts fairly irregularly - always about Sun technology and Sun customers and Sun finances - and despite the fact that he sports a ponytail (perhaps twinning himself with me, the lesser Schwartz, who is both bald and grey), there is nothing remotely hip or edgy or interesting about any of these posts, which because of their irregular timing, also come across as being somewhat random.
Frankly, although I have no idea what the traffic figures are for any of these blogs, my hunch is that Pmarca and Blogmaverick relentlessly pound Jonathan's Blog when it comes to readers and visits. Honesty and humor will always trump PR
Anyway, I do want Knowledge Mosaic to have a voice, and I do see the Wired Mosaic blog as a way to offer this voice. There is no doubt that an authentic, powerful, vivid voice for a business can give it identity and presence, and thereby yield a significant marketing and sales benefit. There is no reason to apologize for pursuing these goals, of course.
That said, I truly believe the best service I can offer Knowledge Mosaic, even from a marketing standpoint, is to speak from my heart about the events and ideas that excite me - not just as they pertain to Knowledge Mosaic, or even to the world of legal, regulatory, and compliance matters - but as they pertain to and resonate with the most significant trends and groundswells of our time.
So here is my commitment as a "CEO blogger". To post regularly, fearlessly, fairly, and on topics that will resonate. I know myself. I will never be a blogger like Broc Romanek, who knows the ins and outs of SEC regulation and compliance as well as he knows the guitar solo from Stairway to Heaven. Nor will I ever forge the lovely, arcing synthesis of literature and liability that characterizes the posts of everyone's favorite D&O attorney, Kevin LaCroix. But I can commit to writing honestly and openly about a broad range of topics that include, but are not limited to, the work we are doing at Knowledge Mosaic; the challenges and satisfactions of operating a small business such as ours; the trends and developments in the world of business law, regulation, and compliance; and the implications and meaning of technology transformations. Along with those topics, I also expect to interweave conversations about - among other things - history, politics, sports, culture, brain science, cosmology, religion, consciousness, and good as it stands in relation to evil.
All the things, in short, that are calculated to inspire the ire of Bill O'Reilly.
I also understand that in undertaking a project of this sort, that I am representing my company and so will do everything in my power to honor that role and responsibility.
In the coming months, we will be revamping the KM Blogwatch to allow comments on all of our posts. In the meantime, I want to invite anyone with feedback on my posts to write me directly at pschwartz@knowledgemosaic.com. I will be sure to publish any and all thoughtful replies to my posts, and those of others in our KM Blogwatch blogging community. You also can go to the full Wired Mosaic blog at any time (and there find a photo that confirms that I am not the hirsute member of the Schwartz tribe). On that site, you can of course publish comments. If things go well, we may migrate it to the Knowledge Mosaic website at some point in the future.
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