*michael parekh on IT*

ON TRYING TO BE PRICELESS

FREAK AND FUNK

Visa keeps making headway in making TV commercials with broad appeal, as this latest "Super-Freak" ad illustrates:

Not quite the "Priceless" campaign by MasterCard, but not bad.  My favorite Priceless ad still is this "Back to School" ad from a year ago, played to "We Want the Funk":

Still don't get tired of watching that one.  Did you notice the Visa ad ends with the word "Funky"? Priceless.

ON LIVE PRODUCTIONS GOING DIGITAL

THAT'S SLOW BIZ

One of the last bastions of entertainment may finally be dragging itself slowly but surely, from the real world of live performances on to our TVs and eventually onto the internet.  As Variety reports in it's own lingo:

"As legiters seek footholds for old-fashioned live entertainment in the world of new media, the Metropolitan Opera has struck a profitable balance between stage and screen -- and theater orgs have begun to take note.

"The Met: Live in HD," the successful series of live hi-def cinema transmissions of current Met offerings, continues to expand even as the company has been forced to downsize some of its programming ambitions in the current economy.

The growing momentum of the program -- with more than 1.5 million tickets sold so far this season -- has caught the eye of legit orgs looking for ways to boost their brands. Earlier this year, London's National Theater announced a similar series of live cinema broadcasts clearly modeled on the Met's pilot program."

The rub to date has not been anything to do with technology or potential receptivity by the market, but business model issues having to do with union contracts.  Variety goes on to explain:

"Performer and stagehand unions were initially wary of the "Live in HD" program as a potential exploitation of its members -- but they warmed up when a deal was worked out that has union members sharing in revenues once the broadcast's production costs are recouped.

"It's a model that works," Gelb says, adding that sales easily outpace the costs of production and distribution, which average around $1.3 million per transmission."

And as one might have theorized, the experiment is broadening the audience for live productions:

"Part of the benefit comes in bringing Met fare to new auds -- a goal shared by an array of Gelb's aud-building programs, including free dress rehearsals and live telecasts in Times Square on the season's opening night.

"We've seen it go from the core opera fans to a broadening demographic," says Dan Diamond, VP of Fathom, the National CineMedia branch that distribs the "Live in HD" series. "It creates a relevance to younger audiences because it's in a movie theater, and it's more affordable."

That rising profile, in turn, feeds into box office at the Opera House itself. Paid attendance, which came in at 76% before such initiatives began, rose to 88% last season."

Who knows, we may see this trend expand to live theater as well, be it Broadway or Off-Broadway.  One of these days the show may yet go on...line.  Perchance to Dream.

ON GRASS-ROOTS ADVERTISING

FROM THE HEART

With the exploding popularity of social networks and social tools to leverage them, the question arises...what if consumers produced their own ads for products or services they really cared about? What would these "user-generated" ads look like?

Certainly, this movement has already started a few years ago, with marketers in recent SuperBowls fielding ads conceived by users.

But what if it was even more grass-roots than that? Might it look something like this ad done by a fan of Trader Joe Supermarkets? With his Blackberry? Take a look:

Who knows, the song may even become a standalone hit, like some of the tunes from those Apple commercials.  And they'd give a whole different twist to Fan Pages on social networks like Facebook.

ON FINANCIAL McCARTHYISM (Part II)

COLLATERAL DAMAGE

This letter titled "Dear AIG, I Quit", written by a senior executive at the AIG Financial Products Group at the center of the current national Bonus controversy, should be a must-read for anyone with an opinion either way on this issue.  As he explains, Mr. Jake DeSantis did not have anything to do with the products that ultimately caused the downfall of AIG.  Here are some salient excerpts:

"It is with deep regret that I submit my notice of resignation from A.I.G. Financial Products. I hope you take the time to read this entire letter. Before describing the details of my decision, I want to offer some context:

I am proud of everything I have done for the commodity and equity divisions of A.I.G.-F.P. I was in no way involved in — or responsible for — the credit default swap transactions that have hamstrung A.I.G. Nor were more than a handful of the 400 current employees of A.I.G.-F.P.

Most of those responsible have left the company and have conspicuously escaped the public outrage.

After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

I take this action after 11 years of dedicated, honorable service to A.I.G. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down."

Mr. DeSantis goes on to add:

"I have the utmost respect for the civic duty that you are now performing at A.I.G. You are as blameless for these credit default swap losses as I am. You answered your country’s call and you are taking a tremendous beating for it.

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut. "

It's one thing for an outsider like me to talk about how our politician and the media are encouraging what amounts to Financial McCarthyism around this issue, and quite another to read the opinion on all this from someone in the middle of all this, through no fault of their own.
What's particularly poignant is the way he goes on to describe his decision process regarding the compensation these he and his peers were due for hard work done in good faith:

"You’ve now asked the current employees of A.I.G.-F.P. to repay these earnings. As you can imagine, there has been a tremendous amount of serious thought and heated discussion about how we should respond to this breach of trust.

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised. None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored. They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

The only real motivation that anyone at A.I.G.-F.P. now has is fear.
Mr. Cuomo has threatened to “name and shame,” and his counterpart in Connecticut, Richard Blumenthal, has made similar threats — even though attorneys general are supposed to stand for due process, to conduct trials in courts and not the press."

He goes on to describe how he's donating what''ll be left of his bonus to people affected by the global downturn.
In yesterday's post, I described what was going on in the context of getting AIG employees to "return" their bonuses as "Reputational Waterboarding". 
It's clear from the comments by folks like Mr. DeSantis and others that are sure to follow, that we'll look back at this period in our history and feel the same national shame over how we're treating what's left of AIG and the financial industry at large (aka "Wall Street"), as we now do over our treatment of U.S. citizens of Japanese origin interned in camps during World War II, and the lives of thousands of Americans carelessly trampled during the McCarthy hysteria in the Fifties. 
This one hasn't been going that long and the collateral damage is not as bad as it could be. 

So it's not too late for us to all calm down a little bit, take a deep breath, and think some more about our misdirected rage. 

Oh, and let's not rush to cancel those AIG policies, unless of course we get a better deal.

Update:  Fred Wilson also had a post on this matter yesterday that's worth read, especially the comments from his readers on either side of this issue.

ON THE EFFICACY OF AFRICA AID

AID ADDICTION

One of the best things I've read in recent days is this piece by author and economist Dambisa Moyo in the Wall Street Journal this weekend, titled "Why Foreign Aid is hurting Africa".  Whether one agrees or disagrees with the premise of her piece (and her book, Dead Aid), she makes some arresting points:

"Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year.

Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower.

The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster."

She doesn't stop there:

"Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s, and more than 50% of the population -- over 350 million people -- live on less than a dollar a day, a figure that has nearly doubled in two decades.

Even after the very aggressive debt-relief campaigns in the 1990s, African countries still pay close to $20 billion in debt repayments per annum, a stark reminder that aid is not free. In order to keep the system going, debt is repaid at the expense of African education and health care. Well-meaning calls to cancel debt mean little when the cancellation is met with the fresh infusion of aid, and the vicious cycle starts up once again."

The whole piece is worth reading, again, regardless of whether one agrees with her views on this or not.  I just ordered her book, and look forward to adding it to my reading list.

ON SELF-DESTRUCTIVE RAGE

BOILING OVER

Today was a day of extreme bad behavior by our Congressional leaders, at least in the view of this humble citizen.  As the New York Times reports:

"The House overwhelmingly approved on Thursday a near total tax on bonuses paid this year to employees of the American International Group and other firms that have accepted large amounts of federal bailout funds, rattling Wall Street as lawmakers rushed to respond to populist anger."

Despite questions about the legality of the retroactive 90 percent levy, Democrats and some Republicans said the tax on bonuses for traders, executives and bankers earning more than $250,000 was the quickest way to show angry Americans that Congress intended to recoup the extra dollars. Even backers of the measure noted it was an extraordinary step.

The House vote sent some employees into a panic about the prospect of, in effect, having to give up money they might already have spent. And it had regulators fearing it could undermine the Treasury’s efforts to stabilize the financial system if banks tried to flee the bailout program or if other firms refused to participate in coming rescue operations to protect their bonuses, some executives said. "

In their anger to punish AIG, the House action, if echoed by the Senate and passed into law by our President, would affect hundreds of thousands of Americans across the country in an extraordinarily negative manner.  As the article continues to explain:

"The legislation would apply to bonuses paid to executives at companies holding at least $5 billion in bailout money and would essentially wipe out the phenomenal paydays that have been a tradition on Wall Street, at least until the firms reduce the amount they owe taxpayers to less than $5 billion.

According to a tally by The New York Times of bailout recipients, employees at 11 institutions — including Goldman Sachs, Bank of America, Citigroup, Wells Fargo and JPMorgan Chase — would face restrictions immediately.

The current version of the Senate bill would apply to an even wider array of companies. It would tax bonuses at companies that received as little as $100 million in federal bailout assistance, though at a lower rate. "

Worse still, is that in it's quest for vindictive revenge, Congress could utterly undermine the very rescue effort of the national economy it's committed trillions of taxpayer dollars to already:

"Several banks are considering refusing to participate in government financial rescue programs if the bill passes, according to a person briefed on the banks’ plans. Hedge fund and private equity firms may also be hesitant to work in partnership with the government to purchase bad assets from banks — a central component of the Treasury Department’s coming financial recovery plan — if they think the government might later add restrictions on their pay."

Yet another awful reality that's emerging about all this is that ours leaders, including the President, may not have all the facts in their quest for retribution. 
As the Washington Post points out in an article that's a must-read, the real culprits of the AIG mess are long gone.  The people that are being nationally targeted and torn apart, not to mention physically threatened in some cases, are the folks that our government asked to stay on to undo the mess for the ultimate benefit of the tax-payer.

We all need to take a deep breath on this AIG and "Bonusgate" issue.  In our anger and need to lash out at somebody, we may be giving our leaders and the media the opportunity to take us to places that we may very well regret going to in the very near future.

* Image source.

ON EXPENSIVE OUTRAGE (part II)

FOCUSED RETRIBUTION

The furor over the AIG bonuses discussed yesterday continues today, seemingly stronger than ever.  Most of the discussions in the media, print, TV and online, continue to fan the populist outrage. 

Occasionally one can find a piece here and there that takes a breath to look at the broader implications inherent here, as this Washington Post article tries to do:

"The bonus scandal has inflamed lawmakers in both parties and could have broad repercussions, and lawmakers warned that it could serve as the death knell for further aid to the ailing sector. Obama's budget calls for allocating another $750 billion to bail out troubled firms, and his administration had hoped to quietly "wind down" operations at AIG without an excess of intervention from Congress, but both of those ambitions could be in doubt after the explosion of attention drawn by the bonuses."

In the meantime, the politicians continue to out-do each other in what they'd like to do to address the situation.  Most popular today seemed to laser-guided taxation, as the piece goes on to explain:

"Action on the legislation could begin as early as today in the Senate. A proposal from Senate Finance Committee Chairman  Max Baucus (D-Mont.) and the panel's ranking Republican,  Charles E. Grassley (R-Iowa), would levy an excise tax on both AIG and the executives who received the payments, adding up to more than 90 percent of the total of the bonuses. That tax would also apply to future bonuses awarded, either by AIG or by other firms receiving federal aid.

"Similar proposals taking shape in the House would target as much as 100 percent of the bonus money..."
"House Speaker Nancy Pelosi (D-Calif.) said the House will consider its own AIG tax bill, along with measures authorizing Attorney General Eric H. Holder Jr. to recover excessive compensation payments made by companies that received federal financial assistance and to block further bonuses at such companies. Pelosi predicted "tough questioning" today when AIG chairman and chief executive Edward M. Liddy appears before Frank's committee.

Democratic lawmakers raced to put their proposals on the table.  Reps. Steve Israel (N.Y.) and  Tim Ryan (Ohio) introduced the Bailout Bonus Tax Bracket Act to create a 100 percent tax on bonuses over $100,000 that are distributed to employees of financial firms receiving federal bailout money.  Rep. John D. Dingell (D-Mich.) offered a version that would tax such bonuses at a 95 percent rate."

Amazingly, there were some politicians who expressed some broader reservations on this move to micro-targeted taxation:

"Some Democrats expressed concerns about the tax approach. House  Majority Leader Steny H. Hoyer (D-Md.) told reporters that he worried about running afoul of the Constitution's equal-protection clause, which forbids laws that treat certain groups differently.

House Ways and Means Committee Chairman  Charles B. Rangel (N.Y.) also raised doubts about the tax idea. "It's difficult for me to think of the code as a political weapon," Rangel told a handful of reporters outside his office. "Is this an indictment or a bill?""

Kudos to both these legislators for raising some questions to a raging mob.

These seemingly small steps take us down a slippery slope that can have far greater negative consequences that are utterly unintended.  Surely the last few years should have taught us that lesson well by now.

ON EXPENSIVE OUTRAGE

POUND FOOLISH

Over the last 24 hours it seems like every politician and media outlet has tried to outdo all their peers in mustering up as much populist rage against AIG as possible. 

This includes some of the leaders you'd expect to be more reserved like Fed chairman Ben Bernanke, who went out of his way to express his "anger" at AIG on an unprecendented interview on 60 Minutes, and our President.  As the Wall Street Journal reported:

"President Barack Obama said Monday that he would "pursue every single legal avenue to block" $165 million in bonuses to American International Group Inc. employees who were in part responsible for the insurance giant's near collapse."

It didn't matter which party a politician represented.  For example, Republican Senator Charles Grassley of Iowa went even so far as to suggest that AIG executives consider committing suicide as honorable executives in Japan would do in a heart-beat.

It was hard to find someone in politics or the media to take a different stance on the matter.  But there were some.  Case in point was Andrew Ross Sorkin of the New York Times, who takes a look at the whole situation in a broader perspective:

"A staggering $165 million — for employees of a company that nearly took down the financial system. And heck, we, the taxpayers, own nearly 80 percent of A.I.G.

It doesn’t seem fair.

So here is a sobering thought: Maybe we have to swallow hard and pay up, partly for our own good. I can hear the howls already, so let me explain.

Everyone from President Obama down seems outraged by this. The president suggested on Monday that we just tear up those bonus contracts. He told the Treasury secretary, Timothy F. Geithner, to use every legal means to recoup taxpayers’ money. Hard to argue there.

“This isn’t just a matter of dollars and cents,” he said. “It’s about our fundamental values.”

On that last issue, lawyers, Wall Street types and compensation consultants agree with the president. But from their point of view, the “fundamental value” in question here is the sanctity of contracts.

That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.

As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts."

Our leaders are already trying to do everything in their power (or so they think), to restore investor confidence after the bankruptcy of Lehman last year.  Just imagine what they'll have to do to restore confidence in the sanctity of contracts in business.

But for now, it sure feels good to be part of a lynch mob. 

You'd think we would learn a lesson on the slippery slope when we let our politicians and media lead us by our worst emotions after 9/11.  And unfortunately in this instance, you'd be wrong.

ON A NEW USES FOR LASERS

WHY NOT?

Forget swatting flies with a cannon, or sharks with "frickin' lasers".  Some rocket scientists, are apparently working on a fusion of those two ideas.  The Wall Street Journal reports:

"A quarter-century ago, American rocket scientists proposed the "Star Wars" defense system to knock Soviet missiles from the skies with laser beams. Some of the same scientists are now aiming their lasers at another airborne threat: the mosquito.

In a lab in this Seattle suburb, researchers in long white coats recently stood watching a small glass box of bugs. Every few seconds, a contraption 100 feet away shot a beam that hit the buzzing mosquitoes, one by one, with a spot of red light.

The insects survived this particular test, which used a non-lethal laser. But if these researchers have their way, the Cold War missile-defense strategy will be reborn as a WMD: Weapon of Mosquito Destruction..."

"...The scientists' actual target is malaria, which is caused by a parasite transmitted when certain mosquitoes bite people. Ended in the U.S. decades ago, malaria remains a major global public-health threat, killing about 1 million people annually..."

"...The mosquito laser is the brainchild of Lowell Wood, an astrophysicist who worked with Edward Teller, father of the hydrogen bomb and architect of the original plan to use lasers to shield America from the rain of Soviet nuclear arms."

The piece goes on to explain how all this came about, along with other creative efforts to come up with a solution against mosquitoes. 
But none of them hits the inner Dr. Evil as a frickin' laser for mosquitoes.

On the other end of the spectrum for innovative use for lasers, how's this from Thomas Friedman:

"What if a laser-powered fusion energy power plant that would have all the reliability of coal, without the carbon dioxide, all the cleanliness of wind and solar, without having to worry about the sun not shining or the wind not blowing, and all the scale of nuclear, without all the waste, was indeed just 10 years away or less? That would be a holy cow game-changer.

Are we there?

That is the tantalizing question I was left with after visiting the recently completed National Ignition Facility, or N.I.F., at the Lawrence Livermore National Laboratory, 50 miles east of San Francisco.
The government-funded N.I.F. consists of 192 giant lasers — which can deliver 50 times more energy than any previous fusion laser system. They’re all housed in a 10-story building the size of three football fields — the rather dull cover to a vast internal steel forest of laser beams that must be what the engine room of Star Trek’s U.S.S. Enterprise space ship looked like."

Mosquitoes or fusion energy power...didn't know lasers had this much versatility.

* Image source.

ON MEDIA CHUTZPAH

ALL ABOARD

Following up on yesterday's post, it's not just Congress that's on the populist bandwagon against "excessive" life-styles by corporations "on the public dole".  The media has totally jumped on the band-wagon, and in some cases is leading it, as the New York Times reports:

"The tabloid media, of course, have always peered into the excesses of the rich and famous with a mix of puritan disapproval and voyeurism. But these outlets and other news organizations are now recording troubling uses of taxpayer money at country clubs, private airports and glamorous retreats and, in so doing, explicitly tapping into a fierce populist anger at corporate America, and even pressuring Congress to hold companies accountable."

That'd be just fine if it was just limited to the tabloids.  But as the pieces goes on to explain, it goes way beyond that pretty quickly:

"Tabloids aren’t the only ones wagging their fingers. In recent months, network news divisions have relied more heavily on watchdog segments that, producers believe, resonate with viewers who are angry about their own economic status.

Sharyl Attkisson, an investigative correspondent who contributes weekly “Follow the Money” segments for the “CBS Evening News,” said visual proof of what could be excessive spending “taps into a lot of outrage” that Americans feel about the economy.

Tracking the private jets, lavish junkets and other trappings of what the ABC correspondent Brian Ross calls “corporate royalty” are now full-time jobs for reporters at the network news divisions. Next week NBC News will show a three-part investigative series in prime time titled “Inside the Financial Fiasco” and reported by Chris Hansen, the “Dateline NBC” correspondent who hosted the network’s “To Catch a Predator” franchise for years."

Hope the media remembers to give equal time to the executives and moguls who sign their pay-checks even though they're not on the "public dole"...yet*.  Oh, and ruminate some day about the long-term consequences of their actions, on the social fabric of the nation.

* Image source.