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March 2010

Avatar + SXSWi = Bill Gates’ House

(Spoiler alert: maximum cynicism for maximum entertainment value)

OK. Here we go. A post about three things I haven’t actually experienced: I haven’t seen Avatar. I haven’t been to South-By-Southwest Interactive (SXSWi). And I certainly haven’t been to Bill Gates’ house. But I sure have read a lot about them, so that makes me as much an expert on the subjects as knowing how to use Facebook and Twitter makes one qualified to call him or herself a social media guru. (Oh, SNAP! You dint!?)

Apparently — because I haven’t seen it — the movie Avatar is so moving and so portrays a Utopian world Pandora that the Journal of Psychology needs to have a new section called “Post-Avatar Depression.” There are people who upon seeing Avatar wish that they actually live in this 3-D generated world. The real world in which we live is simply too depressing, and James Cameron has managed (brilliantly, I imagine) to create a world that seems like some sort of functional alternative to the one we’ve got right here. The problem is that the one we’ve got right here needs a lot of work so let’s not get all LOST on each other looking for a time-traveling, world escapin’ submarine, K? Need you right here, K?

Still with me? Remember, Jane Goodall is an ape like I am an anthropologist. So, you know. Carry on…

Over the past week, ten of thousands of tech-minded cool people descended upon Austin, TX for the annual glorification of technology called South-By-Southwest Interactive (SXSWi). Don’t get me wrong: I wanted to be there. I will go there. But I couldn’t because my non-Avatar world created perhaps the busiest two weeks of my business life. While I was working on all this worky-work, I was following a never-ending cascade on Twitter of #SXSWi hashtags. Sounds like there was some pretty amazing technology going on down there in Texas. By next year, perhaps — oh, I don’t know — ONE or TWO of them will emerge as being sustainable, viable, mass market technology that you’ll still read about and use. Much of the other stuff — maybe even some of the coolest — will die a death caused by a little something called “capitalism.” Capitalism sucks too because when so much of that cool stuff can’t find a market or figure out how to make money, it kills it. With laser guns.

But not on Pandora. Everyone on Pandora uses all the apps. Apps don’t die on Pandora. Especially the hyper-local GPS apps.

And now, to my favorite place on Earth — Bill Gates’ house. I’ve actually never been there. Hell, I’m going to Seattle next week for the first time in a dozen years! But I’ve read about Bill Gates’ house, and it sounds amazing. Apparently when you walk into each room, the lighting changes to reflect your mood, your favorite music plays, and the temperature adjusts to your liking. I also imagine that the walls are all touchscreen and, oh, the WiFi’s pretty fast. I’m also pretty sure that everyone who’s ever been in Bill Gates’ house says that same thing: “Dude. Every house should be like this.”

There’s one thing that Bill Gates’ house is missing: peaceful people with blue skin bumping Droids with you sharing hyper-local apps. (I don’t think Bill allows iPhones in his Utopia.)

I’m being cynical. I get it. I love the future as much as the next guy or gal. Love. It. But unfortunately, my 100% Swedish genetics force me to live in this crappy little polluted world with a bunch of people — whoa, like 98% of ‘em — who have trouble sending text messages and live in stupid houses with light switches and a boom box. Plus, what really sucks, is I have to make money selling tech that has mass market appeal. That really sucks. Means that all that shiny stuff’s going to have to mature into something viable before I can sell it with a straight face. Bummer, dude.

I plan to see Avatar. I plan to go to SXSWi. When Bill invites me to his house, I’m so there. If after I experience these Utopian worlds I change my mind on anything I’ve written here, I’ll append this post. Until then, see you on Earth.

“Bathing My Cat” and other useful social media insights…

As our mothers used to say to us as kids, “If you don’t have anything nice to say, don’t say it at all!” Man o’ man, ain’t that the truth.

Recently I went on a bit of a Twitter hiatus or, shall I say, #twitterhiatus? It was a self-inflicted purgatory to see what it’d be like to block out the stream of noise that Twitter can be. Now, recognize that if Twitter (or Facebook or LinkedIn) has simply become a worthless noise machine, it’s really your own fault, not the tool’s. Why? Because YOU choose who you want to follow, not Twitter. Maybe if all this social media stuff isn’t doing it for you, perhaps you don’t have interesting friends. Strike that. You don’t have friends who share interesting Tweets or Facebook updates. You know that guy or gal who’s always got the best jokes or the most keen insights or fascinating factoid? Yeah, well why the hell am I getting updates like “Bathing my cat” from them?

Working with companies on their social media strategies can be equally challenging. As you can imagine, nearly every firm out there is feeling behind the curve when it comes to using social media. The problem with social media — as opposed to web design or other marketing campaigns — is that there’s no barrier to entry from a financial standpoint. Yup, that’s right. I’m saying that its “free-ness” is a problem. When stuff costs money to execute, companies spend time thinking about how the want to invest that money. They rightfully question what they want to achieve. They request and require ROI.

But social media execution is practically free so companies have little reason not to simply execute. As a result, all of sudden you’ve got organizations publicly sharing information, tidbits, and snarky commentary without any strategic idea of what they’re trying to accomplish. I bet if it cost $20,000 to get up and running, you wouldn’t see these types of behaviors.

Social media’s magic isn’t in its execution of tools and outposts and pages. Social media, despite its “free” price-tag, is serious stuff with serious and potentially wonderful returns. Every company considering jumping into the realm of distributed content, market conversation, and real-time vetting — all fancy descriptors of social media — need to channel the voices of their mothers: “If you don’t have anything nice to say, don’t say it at all.” Organizations need to take considerable time to ask those basic and fundamental questions: What do we have to say? What do we want — and are prepared — to hear? What is our voice and perspective? How will we handle controversy and criticism? What are our returns? Why are we doing this?

I guarantee there are fruitful answers to all of these questions, but without asking them, you’re more likely to add to the noise rather than become a signal that people gravitate towards.

Woodstock for Capitalists | Andrew’s MinnesotaBusiness blog

Rich people have been getting creamed. From Wall Street bankers sipping their martinis in paper cups to Bernie Madoff in orange prison knickers, the past year and half has been a real bitch to be rich.

On the other hand, there’s one rich guy who’s my favorite — Warren Buffett. The Oracle of Omaha. Andy Rooney’s younger brother. (Alright, that was a stretch.) Last count, Mr. Buffett was the second richest guy in the world, right behind those guys who invented Twitter.

Warren Buffett might be the most boring investor in the world too. He buys insurance companies. He buys Dairy Queens. Get this — he buys railroads. Hey, Warren, would you like a side order of sock garters with that?

But through all of the “celebrity” bank collapses, Federal government bailouts, and perp walks, Warren Buffett has stuck to his conservative, boring investing ways, and we have so much to learn from the old man. Here are some snippets from his annual letter to his Berkshire shareholders. (He calls his annual meeting a “Woodstock for Capitalists”) The entire letter is a fascinating peek into his brain, with folksy prose (“Sing a country song in reverse, and you will quickly recover your car, house and wife”), and scathing critiques. It should be required reading for all MBA students. Hell, all sixth graders should read it.

On “chasing shiny objects” (my words):

Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries. Even the survivors tended to come away bleeding.

Just because Charlie and I can clearly see dramatic growth ahead for an industry does not mean we can judge what its profit margins and returns on capital will be as a host of competitors battle for supremacy. At Berkshire we will stick with businesses whose profit picture for decades to come seems reasonably predictable.”

On Wall Street:

“We make no attempt to woo Wall Street. Investors who buy and sell based upon media or analyst commentary are not for us. Instead we want partners who join us at Berkshire because they wish to make a long-term investment in a business they themselves understand and because it’s one that follows policies with which they concur.

On CEOs:

“In my view a board of directors of a huge financial institution is derelict if it does not insist that its CEO bear full responsibility for risk control. If he’s incapable of handling that job, he should look for other employment. And if he fails at it – with the government thereupon required to step in with funds or guarantees – the financial consequences for him and his board should be severe.

It has not been shareholders who have botched the operations of some of our country’s largest financial institutions. Yet they have borne the burden, with 90% or more of the value of their holdings wiped out in most cases of failure. Collectively, they have lost more than $500 billion in just the four largest financial fiascos of the last two years. To say these owners have been “bailed-out” is to make a mockery of the term.


The CEOs and directors of the failed companies, however, have largely gone unscathed. Their fortunes may have been diminished by the disasters they oversaw, but they still live in grand style. It is the behavior of these CEOs and directors that needs to be changed: If their institutions and the country are harmed by their recklessness, they should pay a heavy price – one not reimbursable by the companies they’ve damaged nor by insurance. CEOs and, in many cases, directors have long benefitted from oversized financial carrots; some meaningful sticks now need to be part of their employment picture as well.

On valuating a potential acquisition:

“When stock is the currency being contemplated in an acquisition and when directors are hearing from an advisor, it appears to me that there is only one way to get a rational and balanced discussion. Directors should hire a second advisor to make the case against the proposed acquisition, with its fee contingent on the deal not going through. Absent this drastic remedy, our recommendation in respect to the use of advisors remains: “Don’t ask the barber whether you need a haircut.”

His closing statement:

At 86 and 79, Charlie and I remain lucky beyond our dreams. We were born in America; had terrific parents who saw that we got good educations; have enjoyed wonderful families and great health; and came equipped with a “business” gene that allows us to prosper in a manner hugely disproportionate to that experienced by many people who contribute as much or more to our society’s well-being. Moreover, we have long had jobs that we love, in which we are helped in countless ways by talented and cheerful associates. Indeed, over the years, our work has become ever more fascinating; no wonder we tap-dance to work. If pushed, we would gladly pay substantial sums to have our jobs (but don’t tell the Comp Committee).

Nothing, however, is more fun for us than getting together with our shareholder-partners at Berkshire’s annual meeting. So join us on May 1st at the Qwest for our annual Woodstock for Capitalists. We’ll see you there.

February 26, 2010

Warren E. Buffett
Chairman of the Board

P.S. Come by rail.

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