libor

a picture that explains the libor scandal...the link below has the full size picture

http://www.accountingdegree.net/numbers/libor.php

Infographic by AccountingDegree.net

hacker hostels

http://www.nytimes.com/2012/07/06/technology/at-hacker-hostels-living-on-the-cheap-and-dreaming-of-digital-glory.html?_r=1&pagewanted=all

it seems that every twenty-something in northern california has a start up...

http://www.nytimes.com/slideshow/2012/07/02/technology/02hostel-ss.html

business speak

http://www.forbes.com/special-report/2012/annoying-business-jargons-12.html

nice collection of crap people say at work...

startups

http://online.wsj.com/article/SB10001424052702304371504577406142515388550.html?mod=WSJ_article_comments#articleTabs%3Darticle

a good article about what the real tech start up industry should be about...not semi-useful websites that produce nothing real like facebook, but companies that are looking to solve real problems in energy, manufacturing, transportation, etc...that is why google is a real "tech" company...some think they're just a search engine company, but they do real research in robotics, automation, and whatever else they're cooking up in google x...imagine how useful a self-driving car would be to a blind or elderly person...space x is another great example of a real tech start up (http://www.spacex.com/)...started by the guy who made pay pal...i bet nasa is super pleased with the results with dragon's successful mission since the budget for the space program got cut...i don't want to single out facebook too much, because they still do some interesting things with their data center design and their open compute project (http://opencompute.org/)...however, it is a necessary byproduct of the need to have a website for close to a billion people...i think it is a great idea for them publish their research and design of their data centers for everyone to study and build upon, which is completely the opposite of the super secret policy that just about all other tech companies adopt...if the US wants to remain a leader, then they have to go back to real science, engineering, and R&D and move away from finance related industries and internet start-ups that make nothing

facebook

interest interview about the impact of facebook's ipo for start ups that are doing real research and development versus simple social media sites

http://www.theatlantic.com/business/archive/2012/05/the-golden-age-of-silicon-valley-is-over-and-were-dancing-on-its-grave/257401/


The Golden Age of Silicon Valley Is Over, and We're Dancing on its Grave'
MAY 18 2012, 2:59 PM ET 116
To help make sense of the Facebook IPO, we caught up with Steve Blank, a professor at Berkeley and Stanford and serial entrepreneur from Silicon Valley. This conversation has been edited and condensed.

THOMPSON: What does the Facebook IPO mean for Silicon Valley?

BLANK: I think it's the beginning of the end of the valley as we know it. Silicon Valley historically would invest in science, and technology, and, you know, actual silicon. If you were a good VC you could make $100 million. Now there's a new pattern created by two big ideas. First, for the first time ever, you have computer devices, mobile and tablet especially, in the hands of billions of people. Second is that we are moving all the social needs that we used to do face-to-face, and we're doing them on a computer.

And this trend has just begun. If you think Facebook is the end, ask MySpace. Art, entertainment, everything you can imagine in life is moving to computers. Companies like Facebook for the first time can get total markets approaching the entire population.

THOMPSON: That all sounds pretty good for Facebook, actually.

BLANK: For Facebook, it's spectacular. But Silicon Valley is screwed as we know it.

If I have a choice of investing in a blockbuster cancer drug that will pay me nothing for ten years,  at best, whereas social media will go big in two years, what do you think I'm going to pick? If you're a VC firm, you're tossing out your life science division. All of that stuff is hard and the returns take forever. Look at social media. It's not hard, because of the two forces I just described, and the returns are quick.

THOMPSON: Half the tech and innovation world seems to think this is just evidence that we're in the middle of a dot-com remix. You disagree?

BLANK: In the last bubble, venture capitalists went into a frenzy if anything had an ear and eye. I don't think this a bubble. I think the valuations are a bit of a bubble, but social media is real.

THOMPSON: Is Facebook worth $100 billion?

BLANK: In the last bubble there were no customers. Facebook makes $4 per user. The users are customers. They produce real revenue. Nobody's debating whether Facebook can make money. They're debating how much more valuable Facebook's hundreds of millions of users can be, and how fast can they can grow that value. That's an execution problem.

THOMPSON: But you think Silicon Valley is screwed, whether Facebook lives up to that valuation or not. Why?

BLANK: I teach science and engineering. I see my students trying to commercialize really hard stuff. But the VCs are only going to be interested in chasing the billions on their smart phones. Thank God we have small business research grants from the federal government, otherwise the Chinese would just grab them.

THOMPSON: But there are some people doing interesting, daring things, like Vinod Khosla.

BLANK: He is. But think about this. The four most interesting projects in the last five years are Tesla, SpaceX, Google Driving, and Google Goggles. That is one individual, Elon Musk, and one company, Google, doing all four things that are truly Silicon Valley-class disruptive.

THOMPSON: Does this represent a large-scale failure among venture capitalists in the Valley?

BLANK: It's not like anybody is doing evil or bad. It's like what Willie Sutton said: Social media is just "where the money is."

THOMPSON: What's the fix?

BLANK: I don't know what the fix is. Thank God for federal government grants, and the NIH, and Musk, and Google.

THOMPSON: So is American innovation simply doomed, or is it more complicated than that?

BLANK: The headline for me here is that Facebook's success has the unintended consequence of leading to the demise of Silicon Valley as a place where investors take big risks on advanced science and tech that helps the world. The golden age of Silicon valley is over and we're dancing on its grave. On the other hand, Facebook is a great company. I feel bittersweet.

business majors

http://www.nytimes.com/2011/04/17/education/edlife/edl-17business-t.html?pagewanted=all

article about lazy business major students and how the major allows students to get a degree without really doing anything...not much of a surprise here...these are the people who will go into business and step on the backs of people with real knowledge who do real work

finance

good article about engineering/science grads going into finance


http://techcrunch.com/2011/03/26/friends-don%E2%80%99t-let-friends-get-into-finance/

After having been a tech executive for many years, I needed to take a break, and I wanted to give back to society. Duke University engineering dean Kristina Johnson gave me a great spiel about how the school’s Masters of Engineering Management program churns out great engineers, and how engineers solve the world’s problems. She said that I could make a big impact by teaching engineering students about the real world and encouraging them to become entrepreneurs. I felt so excited that I joined the university without even asking for a proper salary. That was in 2005.

I was shocked—and upset—when the majority of my students became investment bankers or management consultants after they graduated.  Hardly any became engineers. Why would they, when they had huge student loans, and Goldman Sachs was offering them twice as much as engineering companies did?

So when the investment banks tanked in 2008, I cheered because engineering had become sexy again for engineering grads (read my BusinessWeek column).

But thanks to the hundred-billion-dollar taxpayer bailouts, investment banks recovered and went back to their old, greedy ways.  And they began offering even more money to engineering grads (and themselves).

Kauffman Foundation’s Paul Kedrosky and Dane Stangler have just published a report that analyses the damage this has done to our economy.

They note that the finance sector today produces a greater percentage of GDP than at any time in history. In the mid-nineteenth century, its contribution was between 1 percent and 2.5 percent of GDP. It peaked at around six percent of GDP at the beginning of the Great Depression, and then fell sharply. Since 1945 it has been steadily increasing, to 8.4 percent over the last two years.

Historians will tell you that empires collapse when they become too dependent on finance, but I’m not so pessimistic. I do, though, share the concern that Kedrosky and Stangler expressed in their paper:

Fewer people are being added to industry employment, but they are coming from new and narrower places. The financial services industry used to consider it a point of pride to hire hungry and eager young high school and college graduates, planning to train them on the job in sales, trading, research, and investment banking. While that practice continues, even if in smaller numbers, the difference now is that most of the industry’s profits come from the creation, sales, and trading of complex products, like the collateralized debt obligations (CDOs) that played a central role in the recent financial crisis. These new products require significant financial engineering, often entailing the recruitment of master’s- and doctoral-level new graduates of science, engineering, math, and physics programs. Their talents have made them well-suited to the design of these complex instruments, in return for which they often make starting salaries five times or more what their salaries would have been had they stayed in their own fields and pursued employment with more tangible societal benefits.

An analysis of MIT’s graduate-employment data shows that the financial sector increased its hiring from 18 percent of its graduates in 2003 to 25 percent in 2006. So not only are the investment banks siphoning off hundreds of billions of dollars from our economy with financial gimmicks like CDOs; they are using our best engineering graduates to help them do it. This is the talent that our country has invested so much resource in producing.

When most sectors of the economy grow, new companies are created. The authors found, however, that the finance sector is not driving firm formation; it is cannibalizing entrepreneurship in the U.S. economy by offering wage and skill premiums to individuals who might otherwise have started companies. It is also causing far greater volatility among publicly traded firms and a reduction in the quality of businesses started.

The report concludes that a shrinking finance sector will likely lead to a higher entrepreneurship rate and the creation of companies with greater social value, and still provide the financial intermediation services that are most important to young companies. So that’s what we need in order to save this empire: to tame this beast.

Paul Kedrosky says that the virus that infects scientists and engineers and causes them to go to Wall Street rather than create something of societal value is “economic Ebola”. He wants to be an “economic virus hunter”. Let’s all help him. Let’s save the world by keeping our engineers out of finance. We need them to, instead, develop new types of medical devices, renewable energy sources,and  ways for sustaining the environment and purifying water, and to start companies that help America keep its innovative edge.