The Home Stretch

The last day of the year, and I'm about to enter the home stretch.

Winter classes start January 2. I'll be done with those in three weeks.

After that, 4.5 credits and I will be done.

I've filed my application for graduation.

Excited!

Seriously

I had a chat with a fellow Sternie before my morning class yesterday. One of the things we touched on was the non-Sternies out class.

It's a small class, fewer than a dozen people. I call it the Breakfast Club because we meet Saturday mornings. What's different about it is that a fair proportion are from other schools within NYU. There is representation from the Law school, Wagoner (public policy) and Steinhardt (social work, I think).

What is so funny is that they are all so serious. I don't mean to say Sternies aren't serious - we are all very competitive MBA students, after all - but these guys sound like they're auditioning for Meet the Press. The way they phrase their questions, it's like they want to show off their own knowledge. They ask about issues that are far out of scope for the class. Example: it's an econ class, and the lawyer quotes chapter and section from antitrust law. He's my partner on our class project.

Funny, he and I had a conversation. He realized that unlike his law papers, this one was not going to be 50% footnotes.

Funny for me, since my original ambition was law school. Funny for him because now he can concentrate his analytical eye on his LLM classwork.

Business News Views & Blues

As I finish up my degree this year - target graduation date, May 2011 - it's hard not to look around and wonder just where I'll find the most opportunity.

It's increasingly clear that there will be a lot of opportunity in health care. That is an industry I am keenly interested in, and I look forward to the class I start next week on the economics of health care. In one of our pre-reading assignments, PriceWaterhouse Coopers predicts that declining overall costs will mask myriad changes: a number of drugs are going generic in the next 3-5 years, employers are switching to higher co-pay plans with co-insurance, and health care firms are investing considerably in IT in order to comply with new government regulations. What was once a relatively staid industry is going to experience some significant structural changes.

The digital economy looks to be continue its dynamism. As Android devices achieve feature parity with Apple's iOS devices, we're going to see an explosion of developers developing for multiple platforms. In my opinion, there will be two levels here: one focusing on the front end user experience - the app on the phone; there is also the back end infrastructure, the piece that the front end ties into, which need not be specific to a device or platform.

We Take the Field

Well, after two years of hard work, I am finally taking the field. Interview season is upon us, and I am applying for jobs within my current company and outside it.

I won't say with whom, but I will say I am drawn more towards executive and consulting functions. I want to analyze problems, develop a solution, and implement. That is what I do now, within the more narrow confines of my technical specialty.

I ought to say that in the past few months, I have built a software distribution method, blocked applications that put the company at risk, and pushed business units to adopt corporate standards. This is on top of business-as-usual work like testing new equipment and serving as an engineering resolution for technicians.

Applying for jobs has been a job in itself: going to workshops, corporate presentations, submitting my resume, setting up informational interviews - it's a lot. There is no doubt i my mind that I have worked harder in the past year than I have since I was in college - where I also worked an almost full-time job.

So wish me luck. I think this will all pay off one way or another. I certainly hope it does.

Interim

The big news this week has been China surpassing Japan as the world's second-largest economy. That's pretty amazing. It's by a hair, and it seems like it might be a fluke that won't last long, but it is certainly a reminder that one day it will happen with more certainty, and that China will eventually be the world's largest economy.

I have some more personal MBA-related news. First, I finished my Emerging Markets class and did better than I expected. I was able to follow that up by having lunch with another SSB alum who advises in Mongolia and China, and we had a very interesting discussion.

I'm also in the final stages of LRP, Stern's recruitment program for part time students. I've had mock interviews, been mocked, revised my resume, prepared for questions, and soon, I am told, we will be making contact with actual employers. With less than 9 months left before graduation, it all seems to be coming together. There's plenty of hard work remaining, but I have to say I felt a sense of accomplishment completing this process.

I've had a couple of weeks off. I'm taking a short vacation, and when I come back I start up summer intensive course that will last ll of ten days. I already have a pound or so of reading to complete. Who needs a beach novel when they're getting an MBA?

Sweatshops

In tonight's Emerging Markets class we had a lively discussion about sweatshops. Good ? Bad ? There is no Indifferent.

When asked, a few students agreed it is a corporation's role to provide a safe and equitable workplace. Most disagreed.

Questions: Where is the government? Can't the workers organize, or leave?

Most EM nations, and frontier markets, don't care. They are either too corrupt or too eager for the money that sweatshops bring in to really care. Workers often cannot organize, or can be swiftly replaced if they do. The labor market is such that everyone wants to work for the sweatshop. There is a lot of competition for these jobs we Americans show such disdain for.

There was some conflation of issues. Most of us agreed that the low wages are not the issue - the work and pay is not much worse than other options. When it comes to how workers are treated, however - beaten, or crazy hours, or what have you - there was considerable debate.

No one thinks workers should be treated badly, but more than half accepted that as "the way things are".

It was pointed out that fair labor practices might raise the prices of goods. That's one thing if you're discussing, say, a line of premium sneakers. What about low-cost clothes available at Wal-Mart or K-Mart or similar outlets? What happens to a poor American family that suddenly has to feed and clothe three or four children, and the costs for food and clothing have gone up 25 - 50 percent?

Moreover, our professor claims that in his undergraduate class, students from Asia tend to see sweatshops as a good thing. They are progress. It's apparently only us Westerners, first-worlders, who have a problem with sweatshops.

Casing

Normally I try to keep this blog very high-level and professional. I'm relaxing that aspiration for this post. I have to write about casing.

Casing, as any business student knows, is the art of pretending to consult on a business problem presented by a moderator. The moderator has one or more pages of case details, the bare threads of detail that define the problem: profitability, market entry, o what have you. The moderator then presents information, and through a loosely defined protocol, the person being cased sets up a framework, puts information into buckets, and then dives deep to try and solve the problem.

It's a bit like playing Dungeons and Dragons:

Dungeon Master: You are standing in the entry hall of a giant abandoned castle. On the far end of a hall is a might chest spilling over with treasure. However, there is also a giant dragon, guarding the treasure. The dragon wants to know if he should expand his internal medical billing practice into an external business offering.

Player: I'd like to take a few moments to structure my thoughts.

And so it goes. The moderator parcels out information, and the player - that is, the person being cased - takes that information and tries to find a solution to the problem. Sometimes, identifying the problem is part of the problem itself.

Thing is, this is usually just two girls (or guys, or one of each) in a room. Often as not, the moderator is trying to make sense of the case. There are cases where information is mislabeled ("reveal this for part II" that is clearly required for part I). There are cases where the arithmetic literally does not add up. There are cases with fully 1.5 pages of background information that are absolutely irrelevant to the case at hand.

The result, very often, is the blind leading the blind.

That said, I think that's actually apt training. Business school, like professional postgraduate schools (JD, MD) trains you to work through a problem; there is always a solution, even if it is a solution you do not like. However, real life is messy. Clients don't always have their information together, or even know what they're looking for. Consultants may start of with one framework only to realize it is really, completely and truly, irrelevant, and further clouds their ability to see what they actually need to see.

So, as frustrating as it is, casing is valuable. It is real life. It's uncertainty, debate, communication. As frustrating as it is (and hey, we MBAs like to always be right), it's valuable to see where we can go wrong.

Correction: Martin J. Siegel

I inadvertently referred to my Emerging Markets professor by the wrong name in an earlier post, since corrected. The course is taught by Martin J. Siegel, not the more notorious Martin A. Siegel, both formerly of Long Term Capital Management.

Project Management 101

Today I sat in on a meeting where, from what I could tell, eighteen months of effort was being devalued because of a badly managed project.

Basically, there was never any proper intake of requirements.

This is a project I've seen in my peripheral vision; it doesn't really impact me directly, though it takes inputs from some of the processes I manage.

What happened was basically this: a manager wanted a uniform interface between two computer systems that used similar but different technologies. The goal was to provide our customers with a single point of access that they could be trained on, and to provide an access control layer that allowed them to see and modify some information, but not other types of information. This is about as detailed as I can get without getting too technical.

An engineer was hired to build this system. This took about a year. Rumor has it that he built something similar elsewhere, and just had to apply his earlier craftsmanship to the details of our particular environment.

The problem is that the manager simply hired him and said, essentially, "build an interface for these two systems". There was no consultation with the final customers - the people who would use the system. There was no consultation with the people providing inputs into these systems - people such as myself who create objects that are referenced by the system. It would be as if you started selling cars without assessing whether the market preferred right-hand or left-hand steering wheels, automatic or manual transmission, or even the color of the car.

These questions all came after the project was more or less constructed.

The result is that for the past six months, all of the stakeholders have submitted numerous requests for changes, some coasmetic, some minor, a few very major. Because no requirements were even formally defined, there is no way to properly end the project. Stakeholders can keep submitting feature requests, "tweaks" until the engineer finally leaves or stops responding.

It's not a bad system, and it does fulfill a need. However, this project is a clear example of what happens all to often in the business world: resources are dumped into a "great idea" with no assessment of the value of the idea or how it will be implemented.

Emerging Markets

Last night I had the first session of my Emerging Markets class. Taught by Martin J. Siegel, formerly of LTCM, it promises to be a very real and interesting class.

Martin's an old salt, from the rag trade to being a forex arbitrageur to investing in emerging markets. This class is shaping up to be a series of war stories punctuated with real advice. It's interesting - he's interesting.

I also have to say that this continues my experience that upper-level courses are taught with more nerve and personality.

On the Road - with Google and Microsoft

Slate's The Big Money has an interesting article covering Apple and the automotive industry. Their verdict? Not a good idea. What I found interesting was the broader background of consumer technology with Big Three stalwarts GM and Ford.

Some of the Google products caught my eye. I am not clear on whether or not they are real, but put them together with some of Google's other privacy law skirmishes and I can put forward some interesting legal scenarios.

What if Google/OnStar reported back positioning of cars it was installed on to a central site that provided data for traffic management? Imaging a service that tracks the location of all Google/OnStar vehicles and extrapolates traffic conditions, then provides recommended alternate routes? Can drivers opt out?

What about a third-party service that pays both GM and Ford for this kind of information, then resells a service available to multiple platforms for drivers to use. Imagine installing a app on your 'smartcar' that gathers real time traffic data from a database generated by Sync and Android devices, maybe some free government public data as well?

What about telemetry? Black box technology that transmits your speed, mileage, road conditions, fuel consumption, and whatever else. how's that for privacy? What if the government started issuing tickets because your Android phone reported that you were doing 80 in a 65 for ten minutes?

Europe

I'm still digesting my recent two-week course in Germany, which mostly covered doing business in the European Union (EU).

The first couple of days focused on the structure and regulatory environment of the EU. The EU started as an international coal and steel agreement in the 1950s and later developed into a trade and tariff zone before becoming the modern EU.

The EU tends to have a heavier regulatory hand that the US, in particular with respect to competition. Their goal is to keep the playing field open; market dominance is permitted, but watched very, very carefully.

Europe tends to finance from banks more than markets. There is also a tendency in governance to focus on the success of the enterprise, as opposed to the primacy of enhancing shareholder value. I found this very interesting, after having the latter repeated in every other class at school. The notion that the employees, bank, and partners have a guiding stake in the enterprise is somewhat refreshing.

We discussed Eastern Europe; I was part of a team that presented a high-level plan for bringing a pet products retailer in through Slovenia (developed economy, on the Euro, burgeoning middle class). Having lived in Europe during the Cold War, I found this portion most interesting: the East is still different from the West, culturally and economically. It's a huge potential market, but it's not "business as usual" in any sense.

Relationships

So here is the position I've found myself in recently. I'm going to keep it as vague as possible wrt to details. This comes on the tail of discussions about agent duties in my law class.

One of the things I do is manage an enterprise support relationship with one of our vendors. We pay them a big sum of money, and in return we get access to a variety of support resources, including some guys who come in and help us out for a limited number of days. The latter are contracted by the vendor to provide support.

A couple of months ago, I had a couple of projects going. I talked to the vendor about one, and to the contractor about the other. Ultimately, we later learned that the second impacted the first. Unfortunately, neither party brought it up, and after completing the second project, we found that in order for the first to be completed, we would have to redo the second. This was all completed using days on that contract.

So, I'm asking for my days back. I've gone back through emails, stamped my feet, and said, basically, give me back my days, or I'll find someone else and next year, we won't use their services. But now the vendor is going back to the contractor and pressing them to cough up the days. I shouldn't care, but I do, because the contractor is who I work with regularly, and I also think that the communication and management is the vendor's responsibility.

So, now there's this tension as I go about my business. I don't doubt my position, but I need the help to get this all sorted before I can go any further.

Law

Well that was kind of a surprise. My law professor encouraged me to retake the LSAT up to two more times, with some prep, to get my score up. He said I could probably get in to a top 20 school. I'd love to but man, the opportunity cost, on top of an MBA.

In any case, the last two weeks of the semester is NOT the time to think about more school.

Round Two

The spring semester is drawing to a close, and I welcome it. While I have really enjoyed my classes this term, the combination of work, school, volunteer work and improving weather have steadily derailed my resolve. I need a break.

In some ways, I get that break either sooner or later. Classes end the first week of May, and in the third week of May I will be studying abroad in a program in Koblenz, Germany. It is a two week program that ultimately counts as a single course credit. Having lived in Germany as an adolescent, in the days before the Euro and the unification of Germany, I am truly looking forward to this opportunity to see firsthand how Europe has changed, and learn about Eurozone approaches to regulation, marketing, and monetary policy. Especially now, monetary policy.

I have greatly enjoyed my law class, though it has only clarified how deep the law goes, and how little we MBAs will understand it compared to a lawyer. Contracts, torts, Intellectual Property, and a bevy of legal terms (promissory estoppel and respondeat superior vie for my favorite) have been thrown at us for almost ten weeks now. Is it seeping in? Yes. Will it seep out? Yes, until of course it matters.

I have also enjoyed my strategy class, in particular the turn it took this week. After a semester of studying frameworks and case studies, this week we talked about how to engage non-market forces, such as the government and "activists". We studied the case of Shell's disposal of an oil terminal in the early nineties, and came up with a few alternate strategies that might have ended better for Shell and for the environment.

This summer, after a few weeks off after returning to the US, I'll be studying emerging markets. I notice a lot of references to the Long Term Capital Management crisis, and it turns out the prof worked for LTCM at the time of that event. Suggested reading includes FA Hayek, who is already on my long-term reading list. Maybe I'll catch up on the plane.

Too Big to Fail

Here is what I have learned from listening to the audiobook edition of Andrew Ross Sorkin's, "Too Big to Fail", along with continuing coverage of the financial apocalypse:

The use of "Fuck", "Asshole", and "Bullshit" are endemic to the profession.

Dick Fuld is alternately associated with one of the above three terms, and is, ultimately, a tragic figure.

People complain about the crisis for all the wrong reasons: Regulation, Hubris, Government Bailouts, Collusion.

I tend to favor regulation. At the very least, I tend to favor regulators doing their jobs. But as is becoming abundantly clear, no one was outright breaking any laws.

Lehman's own auditors signed off on the use of repurchasing agreements, whereby the firm basically sold obligations for cash on hand just before quarterly earnings report, knowing they would buy them back. This made their balance sheet look much stronger than it actually was.

Even mark-to-market accounting, which came out of the Enroll and Worldcom debacles, played a part. Mark-to-market basically means you have to value your assets at what you could get for them if you sold them right now, not further down the road. With housing, in particular, it means that if housing prices collapse you can't say, "yeah, but ten years from now the market will bounce".

Listening to the games of telephone between the government, the banks, and other banks, it's remarkable that everyone was doing their job. Maybe they were doing it badly (i.e. Fuld) but still - there wasn't any outright illegal behavior. There was no real malfeasance. Hubris, yes, incompetence, arguably, but the system was working the way it was set up to work.

Some Thoughts on eBook Readers

Lately I've been doing some research on eBook readers: The Kindle, the Nook, the Sony varieties. I'm not going to write about them here, because many others have already written comparisons of the readers themselves.

What I'm more concerned with, as an aspiring Strategy MBA, is finding the missing bits of logic in discussions of eBook readers. There has been a great deal of press lately on the supposed victor of some publishers in demanding variable pricing from Amazon for Kindle editions of their books, and much of the industry leverage is attributed to Apple's pending entry with the iPad, and their 'iBook Store', or whatever they are calling it.

So much of the digital media debate is focusing on pricing digital equivalents of old product bundles, no one discusses how these devices might result in a different bundling altogether. The "book" or single, or album, or TV season, is still the baseline. Selling a familiar product digitally is just the tip of the iceberg.

With eBook readers, what the vendors really want to do is define a platform. They want to define the new Windows for eBooks, or the high-def DVD format. Sony's had a dog and a horse: where they failed with Betamax, they succeeded with Blu-Ray.

The point isn't how much an eBook costs; it's what an eBook is, and that is defined by the platform. If Amazon wins, and their format is the standard, then they win the long game - they can license their format to other manufacturers. If ePub readers - the Nook and Sony products - win, then that format defines what people develop for.

Since the iPad uses the ePub format, I'm going to guess there is a lot more leverage for that open standard than for the Kindle, unless (and I am uncertain) the Kindle can use that format.

Where consumers win is where the format leads to new kinds of books. The current bundling of test prep books with DVDs will seem like 18th-century hornbooks compared to what an open format with interactive elements, tied to a national or global data network, can do.

The News Market

Something I've been meaning to comment on for a while is the news market. Fox News gets a lot of criticism for catering to a specific population; MSNBC is criticized for catering to the opposite population. I've often wondered why that is; each side accuses the other of being propagandists, but they are, in the end, businesses. They have to make money.

I think that deregulation, as is the case with many industries, led to this kind of very specific, niche identification within the news industry. When news programs were no longer required to give 'equal time', they were free to program however they wanted, and thus discover their markets.

To be clear, news events are fairly non-partisan. Events occur, and the story must be told. However, how a story is told, and what questions are asked, can vary in tone. Some people prefer stories with one tone or another, or with political views that support their own.

Wo what happens when the news media becomes a market? How does one compete? Timeliness? Done. Quality of coverage? Subjective, but no matter what, something your competitors can do. Find an audience? What do they like to be told? What kinds of stories get the most coverage?

And so, news outlets begin catering to their audiences, telling them the same news stories, but in very different ways.

One might argue that this is how things should work - the marketplace of ideas. However, from a public service perspective, this is a dismal failure. Audiences self-select into their markets and do not pay attention to opposing views. Some people prefer chunky peanut butter over creamy peanut butter, and it's hard to get them to even bother trying what they don't like. The same holds true in a news market.

Of course the most sensible people realize this and sample from multiple outlets. However, most people are not so sensible.

The Road Ahead

I acknowledge that I am copying the title of Bill Gates' book from about ten years ago. I'm halfway through my degree, and considering my own road ahead. Since it's the start of a new calendar year, I'm going to make some wild guesses about the future of two firms I work with quite a bit, Apple and Microsoft.

Both are hardware companies. Microsoft may not manufacture computers, but they do make the Xbox and Zune, as well as a handful of peripherals. Both companies make operating systems, and both companies make application software.

Apple is run like a startup. Steve Jobs is entrepreneurial; after he was ousted from Apple in the 80s, he went on to start NeXT and run Pixar. Microsoft is turning into a growth company; they have their hands in many pies, and have a stable of goods and services that, for the forseeable future, provide steady revenue and growth.

Apple has a reputation as a warm and fuzzy company, while Microsoft has a reputation as an 'evil' company, based largely on their business practices in the 90s. Apple is not your friend; I say this having interacted with the company over many years in my career. They do not share information, they provide limited options to the enterprise space (and education, as well, educators just don't realize that). The company has had its share of failures, and they take their time to acknowledge and resolve them. This doesn't make them worse than Microsoft, or any other company, for that matter.It just means that they are a large corporation, and the notion that they are somehow nicer or cooler or better than other firms is laughable. They are very good at what they do; that is as far as it goes.

Microsoft has made some missteps. They had a huge manufacturing error with the Xbox, resulting in a $1BN charge to pay for defective units. That alone should knock out any profit they might have obtained from the Xbox, yet it is worthwhile to them to stay in the game console space - a space Apple has avoided. Their ties to Netflix, Facebook, LastFM, and licensed products sold via Xbox Live represent a multi-threaded approach to generating revenue from services. The Xbox is the razor; Xbox Live and various games are the blades. I would argue that the Xbox and Xbox Live are Microsoft's iPod and iTunes Store.

So where are these two firms headed in the near future? Everyone is certain Apple will be coming out with a tablet or netbook soon. Apple is known as a media company, and with the iTunes Store, they are establishing a strong presence as an e-tailer. Microsoft seems to be repairing its image and trying to stay warm and fuzzy in the consumer space; this is a departure from their previous attempts to become integrated with new services, ala operating systems for cable boxes. I'm not sure this is the best bet, unless they really have got all of the market they are going to get in their original markets, or are willing to cede it to other operating systems.