with Auren
Hoffman
Month of September,
2002
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Summation Push Auren Hoffman's Summation Push for September, 2002 This issue: * Deflation, Real Estate, and Economic Assessment * Why a Jewish New-Yorker who Graduated from Berkeley and Lives in San Francisco ended up a Republican * Book Review: Inside the Cult of Kibu -- by Lori Gottlieb ad Jesse Jacobs * Movie of the Month: Requiem for a Dream * Reader Responses (Peter Harter, Daniel Kumi, Patrick Flanders, Caroline Waxler) * Friend of Auren: Price Roe * Summation Push Pick Links * Hoffman Reading List -------------------------------- DEFLATION, REAL ESTATE, AND ECONOMIC ASSESSMENT By Auren Hoffman Much of the U.S. population has been in an extended period of deflation. What do I mean by that? Many Americans are spending less today for the same items they were purchasing a year ago.
Key spending items for most Americans: Rent or home mortgage, household services (like a plumber), car payments, taxes, travel, groceries, electronics, entertainment, etc.
All of the items mentioned above have dropped in price within the last 18 months. Although there are a few other key items which have increased in price (notably healthcare costs), by and large, most Americans get more "stuff" for less money.
Even spending items like legal services and some continuing education courses have gotten cheaper.
Is deflation a good thing or a bad thing? I'm not sure. But if prices keep getting cheaper, that would seem to be a disincentive to spend money now. Even though most people are earning low interest, their effective interest rate is much higher.
On real estate...
There are a lot of people, especially in the San Francisco Bay Area where real estate prices are soaring, who believe that real estate is a good safe haven in a down market. People are saying that with the market down and interest rates really low, you should buy real estate.
I don't buy it.
In San Francisco, residential properties rents have been dramatically reduced in the last 18 months. That means where a typical home sold, for example, for 200 times monthly rent in 2000, it might now sell for 300 times monthly rent. Additionally, rental vacancies have been dramatically increasing. That's a significant difference that probably means properties in SF and many other cities are significantly overvalued.
(What are your thoughts? Write auren@summation.net) -------------------------------- Send Summation Push to a colleague. -------------------------------- WHY A JEWISH NEW-YORKER WHO GRADUATED FROM BERKELEY AND LIVES IN SAN FRANCISCO ENDED UP A REPUBLICAN
By Auren Hoffman
People often ask me, "Why are you a Republican?"
I usually answer with something slick like "Because I'm a Jewish New Yorker that went to college at Berkeley who now lives in San Francisco."
To which, the response is often, "Say what?" So I thought I'd go over the real reason why I'm a Republican.
What really compels me to be a Republican isn't lower taxes, smaller government, personal responsibility, or anything like that. I don't wake up in the morning thinking "I wish my tax rate was 28% instead of 33%" –- though I do support those things.
I'm a Republican because I'm deeply concerned that we are creating a permanent underclass in America. Our nation's poor -- the bottom 5% of wage earners, live in a society that the remaining 95% would hardly recognize as being American and would certainly not wish upon any citizen.
In a country as rich and powerful as the United States -- this is a true tragedy, one we must fix.
Most of our nation's poor live in decrepit housing, with little healthcare, significantly lower life expectations, and no access to a good education -- and most are on public assistance. Poor adult women are confined to a life of welfare. Poor adult men disproportionately spend a significant part of their life in jail (over two million people in the U.S. are in prison -- and very few inmates are rehabilitated in prison -- most only get worse).
Our society is turning a blind eye to this problem. It both infuriates and saddens me that there is virtually no one speaking about real solutions to this problem. How can we sit back and just letting this happen? Some people say only the Democratic Party is the party of little guy. I disagree. So how I did I change my stripes?
My political evolution
I grew up as a Democrat. During college at UC Berkeley, I started to fall in love with Libertarian ideals. I read Ayn Rand's The Fountainhead, Anthem, and Atlas Shrugged. Rand’s philosophy of Objectivism appealed to a young, intelligent individual who saw the entire world ahead of him. But it also appealed to someone who lead a particularly sheltered life and who had not seen much of the poor and those less fortunate.
By the end of college I started to feel more compassionate for others and decided the Libertarian ideology was too self-centered for me. I looked to the Democratic Party, but their plans, while well-intentioned, didn't seem to have much effect on the poor. So I took a fresh look at the Republican Party and did a little comparison. Here is what I came up with:
Democrats say -- "Give a man a fish" I think our society should strive to institute the toolset -- to teach a man to fish. This means government has an important role to play in helping improve the society in which we live.
I'm a Republican because I care.
I'm a Republican not just because I care about our nation's poor (I hope everyone does) but also because I cannot accept living in a nation that looks the other way and hands out tiny band-aids to cover up gaping holes.
I'm a Republican not just because I cannot accept this disastrous problem, but also because I want real solutions. Not band-aids -- I want results. I think we should strive for a society where no one -- absolutely NO PERSON -- is condemned to a life of misery just because the dice got rolled the wrong way and they just happened to be born to an impoverished family.
I still believe in America the Beautiful -- but as Edmund Burke once said, "Beauty is the promise of happiness" -- and many Americans cannot believe in the inner beauty of a country that doesn't serve them.
Many poor children don't even have big dreams. Though most people in this world never achieve their dreams -- everyone should have a wish and everyone should be given a toolset to allow them to chase that wish if they have the inner ethic to do so.
Where I grew up in Westchester County, NY (now home to Bill and Hillary Clinton), most people I knew were just like my family and I: Democrats. I grew up in a nice neighborhood with good schools. My parents chose to move from Staten Island to Westchester when I was five so I would have the opportunity to go to a great public school. And I'm extremely grateful to them for doing that. From our perch in Westchester, we viewed social problems with a shared outlook, born of our Democratic belief in "giving a man a fish. It's the compassionate thing to do."
From Westchester, I went to UC Berkeley -- another fine public school. Unlike some of my neighbors in Westchester, my family was not wealthy. My parents couldn't afford an SAT prep course ($500) so I had to settle for a SAT prep book ($20). I had to work 25 hours/week in high school to save money to pay for college. I learned that you don't have to be born rich to succeed in America but you do need to have the toolset to dream and to take advantage of opportunities.
Still, millions of kids don't have the same opportunities that I did. Millions of kids' parents cannot afford to make that choice to send their kids to a better school. Millions of kids are forced to go to schools that are war zones, that don't promote learning, and/or just don't cater to a kid who has a mom on welfare (doesn't vote), a father in jail (not allowed to vote), and a pregnant 15-year-old sister (too young to vote).
We need to start caring about that kid (it is going to be tremendously more difficult to provide real opportunity to the parents). We need to give people opportunities early in life.
We need to start giving that kid a promise of beauty -- so he or she can believe and benefit from America the Beautiful.
What exactly can we do?
The most important thing we can do is to give kids an opportunity to get a better education now. The only way they will be able to overcome adversity (which isn't easy) is if we can help them build a real toolbox of skills, knowledge, drive, and understanding. Right now our bottom 5% of schools are failing our kids and therefore failing society.
... what are we going to do about it?
One proposal is to prop up the school they are currently going to -- give it more money and resources -- and make some smart reforms in education so that the school can get better. This is a GOOD idea -- and it should be done. But it will take TEN YEARS MINIMUM (probably more since very few failing schools have been able to reform themselves) to really convert a bad school to a good school.
Are we going to subject another generation of kids to a life of despair while we try to improve our current schools over the next ten years?
Is this fair?
That might be worth the sacrifice if it isn't your kid going to one of these failing schools. But we should not sacrifice kids -- not even one kid.
These kids need an opportunity to go to a better school now. These kids need school choice.
Kids should not have to be subjected to the very worst performing schools (the bottom 5% of schools). Kids attending poor schools should have the civil right to go to a better school so that they can pursue the American Dream. They should be given a choice to attend a local charter school or a private school -- or even a parochial school. Now many Democrats get up in arms about this -- "how can you mix church and state?" they ask. I'm not for proselytizing to kids -- I think that is a bad idea -- but it is a far worse evil to subject a kid to a life of never being able to pursue the American Dream because they went to a bad school.
But even among Democrats, school choice is a splitting issue. While most Democrats are against school choice, 68% of African-Americans and 65% of Hispanics support it (those numbers are from a poll by Public Agenda that even used the evil word "vouchers").
President Bush often talks about "leaving no child behind" -- and we can't.
Now I'm not saying that all Republican leaders really care. Many Republicans (and Democrats, for that matter) are not dedicated to ending poverty. But even these Republicans support dynamic solutions like school choice that would go a long way to ending poverty.
I have been extremely fortunate. I quickly experienced the American Dream -- experienced it beyond what I could have ever hoped at a very young age (I'm now just 28). And I started to realize that I was one of the lucky 95% that have the tools to achieve big dreams -- I wouldn't be the person I am today if I was born into poverty -- and that's not fair.
p.s. If this opinion invokes a strong reaction in you, please forward it to friends.
Note: Thanks to Price Roe (see Friend of Auren section below) who helped edit this piece.
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Useless Fact:
James Buchanan was the only unmarried president of the U.S. -- pretty sweet pick-up line: "Heh baby, I'm your Pres."
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BOOK REVIEW:
If you lived the dot-com days and forgot to keep a dairy, this book will bring it all back.
The review in Wired (see http://www.wired.com/news/culture/0,1284,54181,00.html) on this booked summed it up best:
"The book is full of first-person stories of the heady days of the dot-coms from nearly 100 individuals who helped shape the digital decade. Inside.com's Kurt Anderson; Auren Hoffman, founder of Kyber Systems; Steven Overman, executive assistant to Wired magazine co-founders Louis Rossetto and Jane Metcalfe; and DEN's David Neuman are among the movers and shakers sharing memories."
And yes, I am shamelessly promoting this book because I am in it. But it is a really fun and interesting book -- very gossipy, especially juicy, and quite revealing. This is not a business book -- it is a lifestyle book -- a very good one.
Lori Gottlieb wrote the now famous Industry Standard article on Kibu (see http://www.thestandard.com/article/display/0,1151,20779-0,00.html) in December 2000. That article is now a dot-com classic -- and I think this book will be too.
(To see more book reviews, check out the Hoffman Reading List at http://www.summation.net/reading.html) (What are you reading? Write auren@summation.net) ----------------------------------------------------
Quick thought:
Does General Pervez Musharfaf want to be the Mustafa Kemal Ataturk of Pakistan? Is he modeling himself on Ataturk?
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MOVIE OF THE MONTH:
Requiem for a Dream
I watched it with my high school friend Eric Engel on July 4th -- right before going out and enjoying some terrific Boston fireworks. The movie is about a group of young friends that have a heroin addiction (note: this is not a happy movie, but it is done very well.)
-------------------------------- The objective of Summation is to READER RESPONSES AND OPINIONS Regarding last month's article on Cyber-terrorism is a Real Threat (see http://www.summation.net/Push0208.html) Peter Harter remarks:
Good summary of the cybersecurity debate. Some other thoughts -- Council of Europe Cybercrime Treaty covers some 40 countries. More laws may be needed in countries where law is lacking. I Love You Virus started in the Philippines but could not prosecute person since act was not against any local law. Better enforcement of laws and more training and resources for law enforcement probably better path to pursue. Also, if a hacker pecks away on his keyboard in Moscow and enters a computer system in New York, the Citibank case from a few years ago demonstrates that the long arm of the law can bring a hacker to justice. But as for hackers in rogue countries that are not really fixed and with governments that are not really cooperative....
Question today is whether cybercrime laws will be used to prosecute corporate crime and malfeasance. Weak auditing and accounting, poor or suspect management and broad oversight of financial assets... how much different when applied to IT assets? Finance and other corporate activity rides on IT and often times the IT performance and costs have more to do with a a company making its quarter cost and sales numbers (e.g., Cisco, Amazon, eBay). A network outage due to a cyberwarfare attack or a software glitch or a misconfiguration by an employee or a thwart by an internal person can impact productivity, costs, and reputation as well as cause harm to people and physical assets.
By cleaning up our own act first our systems will have a lower target profile. Misconfiguration and change control management comprise some 70% of the basis for infosec problems in today's commercial and government enterprises. Not attacks from the outside. Until we get our information infrastructure up and running according to well understood standards and audit traffic against some sort of expected behavior or policy, then we can't manage it effectively or successfully against an attack.
... and Daniel Kumi opines:
Loved your excellent piece on cyber terrorism. I think most corporations do not realize the enormity of this threat -- both as potential victims or vehicles for the destruction of other systems. Current switches that control critical information infrastructures can be controlled remotely by hackers, and perhaps shut off to cause disruptions.
As you probably know employees are increasingly demanding wireless access to corporate networks. However, making it easier for employees to the access the network opens up the network to unauthorized devices. Such devices could conceivably be used in cyber attacks without leaving any trail to the perpetrator, potentially creating a huge liability for corporations.
... and Patrick Flanders writes:
I love reading your columns, however i reject your statement that "The next attack on U.S. soil might not come from a suicide bomber -- but it could prove to be more deadly and more costly to the economy than your ordinary suicide bomber." While it's quite true that a cyber attack could wreak economic havoc, it is not likely that a cyber attack will produce anything nearly as deadly as what a suicide bomber can do. Nothing that can be done with software (or even the messages that can be conveyed via software) can destroy in terms of human lives as can a sick zealot. Ask anyone who has lost a friend or family member to a terrorist.
On good books to read, Caroline Waxler suggests:
-- Steel My Soldiers Hearts by Colonel David Hackworth
(Write Auren your thoughts. Write auren@summation.net) -------------------------------- Send Summation Push to a colleague. -------------------------------- FRIEND OF AUREN (FOA)
Price Roe
Brian Frank, one of my venture capitalists at WR Hambrecht, likes to say that he will forever regret the day he introduced me to Price. Since we met in April 2001, Price and I have been a great team in San Francisco -- co-founding the New Century Leadership Circle (NCLC) together (more at http://www.newcenturycircle.org).
Price is one of the best story-tellers I have ever met. He's hilarious and can command a room.
Price is a native of Houston (he'll never let you forget that) and earned his B.A. degree in History from Colgate University and his M.B.A. from Harvard Business School in 2000.
He worked a long stint at Accenture (then Andersen Consulting) and Heidrick & Struggles. He also worked for the Bush 2000 presidential campaign in Karl Rove's "strategery" group on the e-campaign, helping direct and implement website, email, coalitions, and executive outreach strategies.
Right now, Price is the Assistant Campaign Manager for the Simon for Governor campaign out of Sacramento.
See past profiled Friends of Auren at: http://www.summation.net/friends.html
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THIS WEEK'S SUMMATION PUSH PICK LINKS TO MAKE YOU THINK: * Smart People Are Overrated (http://www.newyorker.com/fact/content/?020722fa_fact) -- very interesting article by Malcolm Gladwell (author of the "Tipping Point").
* Strategic Forecasting (http://www.stratfor.com) -- a great site for breaking global news and analysis (brought to my attention by Erik Bethel).
* Soccer at your desktop (http://fire.he.net/~sonarr/sc.html) -- fun diversion.
* Auren's Ryze page (http://www.ryze.org/view.php?who=auren) -- worth viewing.
* RSVP for the Party of the Decade (http://evite.citysearch.com/GGParty@eudoramail.com/2011Party) -- taking place on Nov 11, 2011.
*How to sell via e-mail (from the book "21st Century Selling") (http://www.summation.net/emailselling.html)
*What am I reading? The Hoffman Reading List (http://www.summation.net/reading.html)
NOTE: Auren Hoffman works for BridgePath.com but the opinions expressed
herein are solely those of Mr. Hoffman. NOTE: You may reprint in full or in part (for
free) with permission from author. Auren Hoffman's bio can be found at:
(http://www.summation.net/hoffman.html)
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