Sean Kaye’s Posterous

Sean Kaye’s Posterous

Sean Kaye  //  A simple guy with a variety of interests. I like technology, it's what I do for work and it also is my hobby. I have developed an interest recently in the "machinations" of running web startups. I'm also interested in just about all sports but particularly hockey and the Toronto Maple Leafs. I also like talking and writing about politics and current affairs.

Jul 20 / 8:39pm

End the Cap

This deal between the Devils and Ilya Kovalchuk is just flat out wrong.  Back in the early 1990’s Lou Lamoriello was screaming for salary controls on the players because he had a rubbish arena, a terrible local market and a cheap owner.  Fast forward to the labour negotiations during the devastating player’s strike and Lou is one of the Govenors leading the negotiation for the Board.  His fingerprints are ALL OVER the CBA.  Now he goes and signs a deal that is entirely designed to circumvent the average salary measures and forces players with legitimate salaries to have higher amounts in escrow.  Disgusting.

I am a supporter of a salary cap system that ensures the players get 55% - 60% of the revenue the league generates on the gate, TV, merchandise and sponsorships.  If the team owner has taken the risk and built the arena too or has managed to get parking rights or concession rights, then I don’t think the players deserve any of that because frankly, the owner is taking risk outside hockey.  I think the escrow is unfair – the league should set the salary cap and if the revenues don’t meet expectations then move teams to regions where they will be successful or run the businesses better.  I think the players are paying for the fact that Bettman wants teams in stupid locations who are then giving away tickets, whereas if they moved those teams to real hockey markets, you’d get 15,000 fans per game paying real money.  

What I’m not in favour of is a system that “protects” the owners from being crazy, caps the players’ income, makes them subsidise bad franchise decisions and then still allows the clubs to make ridiculous deals like the Kovalchuk contract to dodge the cap.  I’d rather the players make as much as they can, have failing franchises all over the place and clubs like Toronto and the Rangers be able to spend whatever the hell they want.  That’s the most fair way.

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Jul 20 / 12:15am

Egg Before Chicken

I just read http://news.cnet.com/8301-11386_3-20010563-76.html which is an article quoting some scientists as having conclusively proven that Chickens came before Eggs.  I think we should all celebrate this discovery by burning every single book that talks about evolution because they are clearly wrong.  

The theory posits that a protein used to create the egg COMES from the chicken so therefore, without the chicken, the egg could not exist.  Ok... So the modern chicken appeared magically on the Earth (as if designed by God) and started laying eggs, which begat further chickens.  This scientific discovery is going to do wonders for creationists everywhere.

Here are my thoughts for what they’re worth and I don’t have a Supercomputer called HECToR at my beck and call, I just have common sense.  Let’s go back in time to a day when a genetic predecessor to the modern chicken existed.  Follow me here, this gets into evolution concepts which might be hard to grasp.  One of two things happened: one, the chicken’s predecessor laid an egg, containing a mutant that when hatched would become a modern day chicken; or two, the chicken’s predecessor gave some kind of crazy live birth to the mutant (the modern day chicken) and it would forgo this live form of breeding and start laying eggs as part of its mutation.  I suppose there could be a third case and that’s God made chickens in one of the seven days, but I’m trying to stick to science here.

Now, I wasn’t there and I don’t think I know anyone who was, but my first theory sounds much more likely, which if true, supports the theory of slow progress evolution AND also says that the egg came first.  Conversely, if the second theory is true, it throws out all of our current knowledge about the evolution of birds (even Chickens) coming from dinosaurs (which laid eggs).

I suppose the biggest question remaining about the chicken is why it crossed the road?

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Jun 6 / 9:51pm

Scoble's Mistake

In a post today on his blog, Robert Scoble (http://scobleizer.com/2010/06/06/why-mark-zuckerberg-should-have-a-carol-bartz-moment/) basically makes sweet love to Mark Zuckerberg and Facebook.  We get a wonderful list of accomplishments from Zuck, how many jobs he’s created, how much wealth he’s generate (on paper) and how he’s even created a beautiful ecosystem of wealth in the form of companies like Zynga.  

We’re then treated to shots at Jason Calacanis and others for having the audacity to challenge the benevolent leader of the Facebook empire.  What have his detractors accomplished in their careers?  Nothing compared to The Zuckerberg.  We’re all but peons basking in the warm glow of Facebook, thanks to Mark Zuckerberg.

Poor guy, he didn’t ask for that, he’s just trying to build what he thinks is cool stuff – I admire that.  I’m sure he didn’t commission Scoble to build a shrine.  Then Scoble tells him to hand over the reins (presumably to Sheryl Sandberg, more on her in a minute) and go be a geek.

In Jason’s last email, he outlined a whole series of thing that Zuckerberg could do to try and regain some public trust in him and his company.  That approach would inevitably help him grow as as a CEO and eventually it would be better for the company.  He has the “founder’s passion” which nobody else can have.  That’s why we’re captivated by the Bill Gates’ and Steve Jobs’ of the world – they BELIEVE in what they are doing and have grown into the role.

I also think Zuckerberg has come under a fair bit of criticism that is unwarranted, but not for the reasons Scoble is suggesting.  Sandberg is the COO and right on the Facebook website it says that she is responsible for Communications, Marketing and Public Policy.  So this entire privacy policy debacle is under her purview!  Working directly for Sandberg is Elliot Schrage, VP of Communications, Marketing and Public Policy.  These people are the two “supervising adults” and it falls directly under their job descriptions to handle privacy and they’ve botched it.  Not only that, part of Sandberg’s role is to protect Zuckerberg and the kid has gone under the bus for this privacy mess.  She now walks out the other side with people talking about making her the CEO?!?  Madness, get a clue.

I find Scoble a fascinating character, but sometimes he becomes a parody of himself – instead of a character, he’s a caricature.  His undying admiration for what Zuckerberg has achieved already at such a young age becomes ridiculous.  I also think his shot at Calacanis and Mahalo was pretty lame – Scoble is a guy who is a “Social Media Star” but for some reason needs to hide under the wing of big companies like Rackspace and Microsoft.  It is entirely disingenuous to commend Mark Zuckerberg for his creations, then mock Jason for his while you yourself create nothing of your own.

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Jun 6 / 7:09pm

Governing By Stats

One of the things that is killing the Labour Party right now both federally and at the state level in NSW is their reliance on statistics to “prove” how well they are doing.  Most people know the old axiom made famous by Mark Twain, “Lies, Damn Lies and Statistics”.  I’ve just had a very personal experience with that weakness.

I’ve been following Premier Keneally on Twitter for some time now to get a feel for what she’s up to.  I’ve come to the conclusion that she more or less uses it as an electronic press release technology and was getting ready to stop following her the next time I cleaned up my Twitter lists.  I’ve also used Twitter to try and get her attention on a very important personal issue.  My son’s local public school is stupidly overcrowded.  This is largely due to the fact that in the past two years Kindergarten enrollment has gone through the roof – Costello’s “breeding” programme from a few years ago seems to have worked.  We also live in a fairly affluent area in Cammeray along the lower north shore of Sydney which is a desirable place to live and more people are coming here.

Unfortunately the state government has not kept up with the growth in the area in terms of public services, particular schools.  Neutral Bay public school is full, Cammeray is bursting at the seams and the old Naremburn school can’t be fixed up to accommodate children anymore.  To our stunned amazement, a huge block of flats adjacent to the school came up for auction – all fifteen flats.  A number of the parents tried contacting the state education minister, Verity Firth, but that went unanswered.  Joe Hockey the Federal Member for the area personally responded to a number of parents in writing making suggestions.  

I took a different route and tweeted the Premier directly.  Needless to say the Premier didn’t respond at all, despite a few attempts.  Today the Premier announced on Twitter that we the people of NSW were being gifted by the state government with a boost in “CSI type technology” and more spending on police.  I couldn’t help myself and responded with:

“@KKeneally Way to go - TV Show determining our budget spend, but you're government couldn't afford land for Cammeray Public School  #fail“

I figured that would go to the keep like everything else, but how wrong was I!  I got the following response from the Premier within minutes:

“@skaye since 2001 23,000 cold links in NSW, leading to 7000 charges, 4600 convictions, offences from stealing to murder.”

No mention of the Cammeray Public school issue, but some meaningless statistics about Cold Cases and conviction rates.  I’m sure somewhere in Hollywood a television producer has gotten his wings.  Again, I responded to the Premier, thinking that I’ve now engaged her:

“@KKeneally Awesome! And Cammeray Public School has nearly 800 kids in a school built for 300, but you couldn't afford to fix that!”

“@KKeneally Premier, Law and Order is easy to run on, lots of stats.  Doing what's IMPORTANT for communities is hard and not so high profile.”

This is the kind of thing that makes me dislike politicians so much.  You’ve got a local public school which over the past year have asked for a turning light to be installed at an intersection and an extension to a bus route to pick-up kids in their catchment that really should have their own local public school and both requests were denied for stupid reasons.  The RTA said that the turning light wasn’t necessary because there wasn’t a great enough risk of incidence or some such rabble.  What has to happen, a kid has to be hit by a car to get a turning light?  What does that cost Premier – maybe I can pay for it and make it a bit safer for the kids WALKING to school.  They have to walk because the minor extension to the bus route they requested would have somehow required a whole extra bus driver.  Heaven forbid we spend money on public transport in a blue ribbon Liberal riding.  Hey, but the NSW Police department are going to have some kind of new fangled micron spectrometer for doing DNA tests on people who stole something ten years ago.

Social media tools are a wonderful thing.  They give you the power to act locally, engage one on one with people on issues that matter to them.  For politicians, this stuff should be a god send.  While no doubt the Premier gets a boatload of tweets directed at her, she can use that to see what the active electorate are saying.  They spend countless dollars stuffing envelopes that we all throw in the rubbish bin whereas if they spent the same resources monitoring the tweet stream they’d get so much more value.  

I’ve now decided that I’m not going to drop the Premier from my list of people I follow.  I’m going to continue to send her tweets because many of the people who follow me, also follow her and they can see what I’m writing her.  Those people can see her lack of responsiveness.  And I will keep flogging her on it.


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Jun 5 / 10:01pm

Oil Spill/US Unemployment

Riddle me this, Batman... The US is battling a MASSIVE unemployment problem. Structurally, they are seeing a jobless recovery - something Canada experienced when the original FTA and then NAFTA were introduced in the late 80's and early 90's. I would expect that even under great conditions, US unemployment will get down to 7.0%, but never going below this figure again. This last recession has changed their economy.

Now we have this massive oil spill, an ecological tragedy going on down in the Gulf of Mexico and if reports are to be believed, the east coast should start seeing some black goo rolling up on their shores next week. When you read reports coming from parts of the deep south, you can't help but shake your head.

How does the Obama administration look the people of America in the eye, having bailed out a bunch of greedy bankers to the tune of hundreds of billions, fought a war in Mesopotamia for a similar amount and has run up an unparalleled level f debt, but yet people in Louisiana and Alabama are wading out into thigh deep pools of tar to save pelicans without so much as a single government response work in sight? Obama can continue to make bold calls on TV that BP will cover the full cost of the clean up, but if the people down south are to be believed, that's going to be a pretty lightweight bill.

I have a solution - take 50% of all of the profits from the banks that were bailed out in 2008/2009 as a special one-off tax so that they give something back to the country. Then get the national guard to deploy barracks and tent cities in a variety of key locations in the south. Use the banks' money to hire unemployed people to go down south, pay them a good wage, live in the tent cities and barracks and help clean this mess up. Make BP triple everything the banks and federal government contribute to this effort - get boots on the ground down there and start the clean up now!

This oil isn't going to clean itself up!

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Jun 5 / 7:05pm

Carried Interest Debate

Right now, there is a bill before the US Government that looks to remove a preferential tax treatment for Venture Capitalists and Hedge Fund Managers. People like Chris Dixon (@cdixon on Twitter or http://cdixon.org) and Fred Wilson (@fredwilson on Twitter or http://avc.com) have come out in favour of changing the tax treatment whereas Jeffrey Bussbang (@bussbang on Twitter or http://bostonvcblog.typepad.com) has come out against the change.

By way of background, here is the issue at hand: VCs raise funds from Limited Partners (investors on behalf of individuals, large funds, pensions, etc) and the VC invests the money strategically according to the funds goals. This money is "funds under management" so NORMALLY the VCs charge a management fee of ~2.5% from which they pay themselves a salary and keep the day-to-day administration of the fund running. Finally, when the VCs realise a return on their investment they get what is called "carry". Basically, "carry" is a percentage of the profit on the investment and is usually, from what I understand 20%. Now under US Tax Law, for the investors, they've made a long term investment and their return falls under the capital gains tax regime which means they pay a lower rate of tax on their profit. The rub is that the VC is also getting the capital gains tax treatment on their "carry". For a really good explanation of this go to Fred Wilson's blog: http://www.avc.com/a_vc/2010/05/why-taxing-carried-interest-as-ordinary-incom...

The part of this debate that I'm starting to find surprising is how the people who are against the changes are trying to justify their lower tax rate. It is nothing but FUD (fear, uncertainty and doubt). The main arguments are:

- less funds will be employed in startups because LPs will have lower returns as VCs pass on this additional cost;
- smart people will go into industries other than VC where they can make more money and pay less taxes;
- VCs will become risk averse; and,
- Smart people will find other tax loopholes.

What an absolute load of crap. This kind of drivel is consistent when you shine the spotlight on something unfair, those who've been taking advantage never have a tangible argument as to why they should get preferential treatment. The current situation is entirely unfair for the average American taxpayer. A VC or Hedge Fund Manager gets PAID a salary to invest money on behalf of other people. They get paid to do it "SUCCESSFULLY"! The meaning of success is to get the highest return possible. The VC or Hedge Fund Manager is not taking ANY capital risk whatsoever by turning up for work and doing their job, they are getting paid a salary. To then try an argue that they deserve the same tax treatment as the people taking the risk (the startup entrepreneur and the LP) is disingenuous.

The idea that VCs will become more risk averse or effectively pass on their personal taxes as a cost to the LPs is also laughable. VCs are in the business of getting higher than ordinary return on higher risk asset classes. If they stop taking risk, then they will overpay for assets and see lower returns. If they pass on their taxes as a cost to the LPs then this will lower the return. In my opinion, this will separate the men from the boys - the VCs like Fred Wilson and Chris Dixon who are killing it right now will see no change in their returns and may see higher quality deal flow while "risk averse" VCs overpay for shares in the next round of Facebook and Zynga.

I encourage a shakeup of people in the VC industry. If some of them want to leave to go be M&A bankers, go crazy. The newer generation of VCs who are becoming the successors to Ron Conway and John Doerr aren't the Harvard MBA clique who've been running the show, but they are former entrepreneurs like Chris Dixon, Caterina Fake, Reid Hoffman, Jason Calacanis, Kevin Rose and Mark Suster. Then there are guys like Fred Wilson, who LOVE what they do, they want to add value to the companies they invest in, look at what Jack Dorsey (@jack) has to say about Fred Wilson. These people aren't in it for a tax dodge and I doubt they'd leave the industry because they had to pay a fair amount of tax - in fact they'd probably look at it like a challenge to go make more money.

My favourite argument is the one about "smart people finding other loopholes". For me, that's what's become so wrong about the current economic system. You get all of these analysts and accountants spending inordinate amounts of time trying to game the tax system or the markets and they don't have any ability at all to CREATE something. Far too much time and resources are spent today trying to avoid paying taxes, if only that money and effort were put into creating new businesses or products. We've trained too many MBAs to think of tax as a "drain" on a business that should be avoided as opposed to what it really is, a byproduct of success - PROFIT.

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May 27 / 9:48pm

Something Feels Wrong

Something isn’t right economically in the world.  I won’t win a Nobel Prize for Economics for that assertion, but I just read things that are meant to be optimistic or upbeat and I find the dark cloud outside the silver lining.  A recent article in the Globe and Mail talks about how Canadians won’t suffer the same level of foreclosures as the US if the housing market cools because Canada’s banking system is less risky.  Also, Canadians carry less personal debt, although that seemed to be debatable.  This article was highlighting that the Canadian economy can withstand some downward housing pressure, but I took away from it the fact that even a slight housing slowdown could push people to the edge of losing their biggest asset.

I don’t live in Canada, so that doesn’t really bother me directly.  However, I do live in Australia where interest rates are going up, again!  Unlike Europe and the US where interest rates fell away to virtually nothing, here in Australia our current cash rate is 4.5% which is working out to a variable home loan rate of between 7% and 7.5% depending on your bank.  That’s a very wide spread and indicative of the lack of true competitiveness in the Australian banking sector.  

The other thing to note is, Australia didn’t have a recession and there is a debate about whether the country even had a single quarter of negative growth.  So if the world continues to rebound, we’re looking at a pretty odd situation here in Australia.  The Federal Government through away the massive surpluses to avoid a recession and have run up a debt.  Inflation is getting to the point where the Reserve Bank is worried about it and will have to continue to raise interest rates to keep it under control.  Rising interest rates will make the debt more expensive to service for the Federal Government.  The Federal Government is undertaking a popularist health care reform agenda and are already tabling some crazy tax grab ideas to pay for these things.  The only positive piece of news is that tax receipts for the Feds are up and that means more money in the coffers than budgeted, but its an election year so both parties will race to throw it away.

Then you look at other things like the price of Gold, the situation in Europe with debt, the falling Euro, the posturing of France and Germany and you start to wonder.  If I were China, I’d be very worried about my foreign currency holdings – Russia looks pretty smart for buying Canadian dollars.  The US economy looks like it could turn the country into a banana republic at any moment.

All up, I’ve decided to de-leverage.  When times are good, it isn’t necessarily a bad thing to carry some personal debt but with all of this uncertainty around, I’m thinking cash will soon be king.  So we’re going to start getting rid of anything that incurs an interest charge and move our money into things that yield some kind of return.  I’m also starting to think we’re going to see some opportunities and having cash always gives you the chance to take advantage of an opportunity.

Or maybe I’m just a skittish cynic.  At the very least I’ll be a cashed up, debt-free cynic.

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May 7 / 6:40am

Finally an iPad Date!

Apple has finally confirmed that Australia, the UK and seven other countries will be getting the iPad on May 28th. That's good!

The stupid part, none of the carriers have announced their plans for the 3g version of the iPad. Secrecy is one thing, but please let me me know the price of the thing you'd like me to buy. Hardly seems like I'm asking for much.

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May 6 / 1:18am

Thunderbird 3 is Disappointing

I’ve always been a fan of Thunderbird – I’ve found it to be a lightweight and reliable mail client.  Unfortunately, the newest v3 of Thunderbird has a few issues with IMAP.  A number of people (myself included) are reporting that sporadically, TB is deleting emails off the server and the client.  With my situation, it seems that any email older than a week is being purged.  The whole point of IMAP is to keep your mail on the server and sync the client so that you can have multi-client access to your email.  Having searched through every setting imaginable, I’ve all but given up.  I made one last change today telling my email accounts to ignore my profile and not delete mail ever, even though that’s what the profiles say!

Ultimately, I’ve decided that Thunderbird is off my list of good products and I’ll have to stick with the standard Mail product from Apple.  Very disappointing.

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Apr 26 / 5:25pm

Gizmodo Raid

There are many theories floating around about the raid on Jason Chen’s home on Friday night.  I have my own theory.

First of all, the guy who found the phone had an obligation under the California Civil Code Section 2080 to try and return the phone to its owner.    He obviously figured out he had a prototype on his hands, so the only owner could be Apple.  According to the Gizmodo piece he even rang them to give it back but couldn’t seem to get past their help desk ticketing system.  So at this point, he’s in the clear.

What happens next though, is where I think the police and DA are interested and no doubt why Apple is now calling it “stolen property”.  Under Section 2080, the finder is supposed to return the property to its owner WITHOUT COMPENSATION.  By offering the phone to Gizmodo at a price, the finder has breached the civil code.  Whether the item now is “stolen” or not is up to a court to decide.  The legal trick here is, the law requires he try and return it within a “reasonable period of time”.  How long is reasonable?  Call Apple up and telling them he has their property seems like he’s done his best.  Again, a judge will decide probably what’s reasonable.

As for Gizmodo, this is where it gets interesting.  If the item is deemed to be stolen and they paid for it, then Jason Chen will certainly get done for possession of stolen goods.  He paid for an item that he knew the seller could not have legally been in possession of.  If there is no charge of theft against the guy who found it, then Gizmodo aren’t off the hook – they could still be staring down the barrel of the California Trade Secrets laws.  The DA could make a case that they coerced the finder into selling them the phone and therefore they had misappropriated trade secrets knowingly.  

I think that’s what the police are looking for - they are trying to fill in the gaps between this guy finding the phone, trying to give it back to Apple, Gizmodo getting involved and how he ended up taking money for the phone.  The warrants name Jason Chen and not Gizmodo, so it certainly looks like the DA is going for him personally, which must lead one to believe they are going down the theft path.

This whole thing by Gawker about journalist rights are completely not in question.  The DA would NEVER want to take that on.  This is about a simple, but very high profile case of an “alleged” stolen prototype.

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