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The Roundup July 7

Bag of IOU's
As goes California . . .

Maybe Arnold should take a cue from Sarah and vamoose.

Court-appointed lawyers, cancer patients and alcoholics in treatment programmes have become the latest victims of California’s financial crisis, as the state grapples with a budget deficit that has ballooned to $26bn.

The state has been forced to issue IOUs after starting its fiscal year with a huge deficit and no budget in place. . . .

The IOUs are transferable, which means they can be bought and sold. SecondMarket, a New York-based firm that trades illiquid assets such as bankruptcy claims, private company stock and so-called toxic assets, has been gearing up to trade the IOUs if there is demand. . . .

The secondary market in the IOUs is expected to grow sharply after July 10, when most of the banks in the programme will stop accepting them. “Until the banks stop accepting them, there probably won’t be a lot of traffic in them,” said Mr Dresslar.

(“Cancer patients to receive California IOUs,” Financial Times, July 7) California has an initiative and referendum system. I suggest that its citizens — particularly the goofballs playing at tea parties — put a referendum on the ballot that effectively stops all paychecks and staff paychecks to elected officials, such as the governor (who, it turns out, takes no pay anyway) and the legislators if a budget does not get passed on time. You see, in the MBA world, this is called “the agency problem.” Managers don’t care about a business’ profitability so long as they make money, but the owners do. If you give managers bonuses even when the business performs badly, you’re exacerbating the agency problem. So you structure compensation so that they have something to lose — hence rewarding them in stock and options. Well, we haven’t yet figured out how to solve the agency problem in government, most recently illustrated by Sarah Palin’s nonperformance over the past six months and her irresponsible resignation (it’s not like elections cost nothing). So maybe we ought to make sure that elected officials in California (and Pennsylvania and Illinois) have something to lose if they don’t perform.


Google wins. Gmail holds the world record for the longest software beta test since the bad old software days of the Roman Empire.

But Gmail was different. Released on April 1, 2004, it was still in beta five years and tens of millions of users later. . . .

That changed on Tuesday, when Gmail finally shed the beta label, signaling that Google considered the product to be fully baked. Google is also removing the beta label from Calendar, Docs and Talk, three other applications that are part of a package of online software called Google Apps. . . .

“Obviously we haven’t had a consistent set of policies or definitions around beta,” Matthew Glotzbach, a director of product management at Google, said in an interview. Mr. Glotzbach said that different teams at Google had different criteria for what beta meant, and that Google felt a need to standardize those. “It was time to address the issue and bring the products out of beta,” he said.

(“After Five Years, Gmail Finally Sheds the ‘Beta’ ,” New York Times, July 7) After years of shadiness and slipperiness, the word “beta” no longer has any real meaning. On the one side, you have companies releasing pretty complete and bug-free software as beta versions and hanging out in beta land for a bit too long. Kind of like hanging around college for a few months after you’ve graduated. On the other side, you have idiots like Mozilla rushing to make their release date and releasing, as a complete, final version of their software, a bug-addled, jerry-rigged mess like Firefox 3.5 that would barely pass muster as an alpha. So as users become accustomed to finely-tuned, well-crafted “beta” versions of software and equally accustomed to crash and burn disasters coming out of venerable shops like Mozilla and Microsoft as “final” versions of software, the word “beta” might as well be replaced with, say, “beebelbroxdagolian” for all the meaning that’s left in the word. And so “beta” joins the hallowed ranks of meaning-free product terms like “organic” or “natural.”


A Facebook phenomenon. Shame he had to die.

The King of Pop is more popular than the leader of the free world, at least on Facebook.

During Tuesday’s memorial service for fallen music icon Michael Jackson, when numerous news, music and entertainment events streamed the event live, Facebook users were averaging 6,000 status updates per minute. That’s roughly 2,000 more updates per minute than occurred during the inauguration ceremony for President Obama last January.

(“King of Pop Rules Facebook,” Adweek, July 7) I pay no attention to trivia or gossip. The outpouring of interest, emotion, and affection for Michael Jackson is — I hate to sound mercenary here — a window of opportunity for entrepreneurs that will soon be closing. The simply incredible showing on Facebook should be a wake-up call for entrepreneurs dragging their feet. For a few days, maybe a few months, the uncertain status of Jackson’s estate means that no-one really “owns” Michael Jackson right now. Once the estate is firmly settled, expect the family (or whoever ends up “owning” Michael Jackson) to clamp down like a vise on anything and everything Michael. He, and everything he did, will become intellectual property and, like Elvis, no-one can come to this party without a ticket. Think hard. If you, as an entrepreneur, have something valuable for the rest of us, don’t think, do. Your opportunity is passing every day.


So Apple and AT&T nearly got away with it . . .

Cellphone customers have long complained about exclusive deals between handset makers and wireless carriers — many, for instance, won’t buy the iPhone because it runs only on the AT&T network — and federal authorities now are being prodded to take action.

Concerns have mounted that the power that major carriers have amassed is stifling consumer choice and, perhaps, improperly propping up prices. . . .

Kohl cited “lock-step price increases” over the last two years for text messages — a doubling to 20 cents apiece — by the four leading wireless carriers. Executives from the two largest, Verizon Communications Inc. and AT&T Inc., denied any coordinated actions during a hearing Kohl held on the topic last month. But he was not convinced. . . .

Four other senators, including John Kerry (D-Mass.), who chairs a subcommittee on communications and technology, wrote to the FCC last month urging a review of special handset deals, such as the one Apple Inc. has with AT&T to use the carrier’s network exclusively for the iPhone. Smaller wireless companies have complained about the practice as well.

(“Antitrust review of wireless carriers is urged,” Los Angeles Times, July 6) Stifling consumer choice and “perhaps” propping up prices? Perhaps? Ever get a good look at some of the sock-popping fees AT&T iPhone users are getting smacked with? And when you’re done Senator, want to take a peek at broadband carriers for a second or two?


Microsoft plays Santa to thousands of software entrepreneurs.

In a move lauded by third-party software developers, Microsoft said Monday it will apply its Community Promise to the ECMA-334 documentation of the C# programming language and the ECMA-335 standard for .NET Common Language Infrastructure. . . .

Many software developers use a software-development platform called Mono to create programs that can be used on various computer operating systems, such as Microsoft Windows, Apple OS X or Linux. Among other abilities, Mono translates software written in the C# programming language into a code the operating system can read.

For example, Mono supports many iPhone apps, written in C# but then able to run on the iPhone OS.

The problem is – legally, at least – much of the technology used inside Mono is covered by Microsoft patents. . . .

That made third-party programmers and open-source proponents antsy and led some operating-system developers to reconsider offering Mono.

But on Monday, Microsoft said it would put the technology in question – ECMA-334 and -335 – under its Community Promise, a legally binding edict that protects certain hardware and software developers from getting sued by Microsoft.

(“Microsoft won’t sue over open-source software platform,” Seattle Post-Intelligencer, July 7) We’ve been watching a gradual change of strategy creeping in at Microsoft (what I wouldn’t give to be a fly on the wall at some of these meetings). Remember, Microsoft was originally founded to make money off of programming languages. It was only by sheer dumb luck that they got into the operating system business and, from there, the software business. While the public face of Microsoft is Windows, the real Microsoft has still been buzzing about in the programming language business. As a result, they have been as hostile as Huns to all things open-source. But open-source is creating a flurry of innovation and entrepreneurial activity, so Microsoft seems not just to be thawing, but willing to embrace the future. Why is this news on our Shoestring Venture blog? Because this news opens up a million opportunities to clever entrepreneurs — from Web apps to smart phones.

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