Friday, August 29, 2014

The Inhospitable Hospitality Suite Feels the Wrath of Alfidi Capital

Here's a special message for one enterprise I encountered at a recent conference.  I won't name them to save them the embarrassment.  That is a rare instance of my generosity.  I'm pretty sure the arrogant chief of this outfit, or at least the human-shaped cardboard cut-out he employs as his public face, will read my screed.  Here it comes, dude.  You can't sue me if I don't identify you.

You people were marketing private placements in natural resource extraction to a wide audience that included both accredited and non-accredited investors.  Transparency and reliability really matter in such an effort but your enterprise doesn't have a clue what those words mean.  Being cagey about your data did not help your case at all.  Failing to reveal serious questions about your operating history will furthermore be an eventual detriment.  Your entity has run afoul of your state's securities board before, and I easily located hard-copy proof.  I don't think you've changed your ways since then based on the behavior I witnessed in your hospitality suite.

Opening a hospitality suite is supposed to be a generous way to introduce investors to an opportunity.  It is not an opportunity for a senior executive to sulk while a junior flunkie gives the analyst community a straight-arm deflection.  It is also unwise to brag about your supposed desire to avoid publicity while you're speaking at a freaking nationally-advertised conference.  The cognitive dissonance on that score is amusing.  No wonder you people generate such dissatisfaction.

Get your memories straight.  I did not encounter you people in a different city last year.  We may have crossed paths in San Francisco if you attended the same conference I did in recent years, aside from the conference this year.  There's a good reason I did not give you my business card this year.  The script you use on the idiots in your local dirt patch doesn't fly with yours truly.  There are no suckers at Alfidi Capital.

One of my contacts spent some time in your hospitality suite after we spoke.  Would you like to know what he discovered?  If you are dumb enough to sue me, it goes on record in court and your investors will find out all about it.  Do yourself a favor and stay away from future conferences in San Francisco.  I'm surprised you even found your way from your hotel room to the conference, since some of your team members didn't even know where your hospitality suite was located.

Finally, the words "best" and "gut" do not rhyme.  Neither does anything in your pathetic sales pitch.  Good luck probing those dry holes, idiots.  You'll find more such dry holes wandering on two legs late at night around your favorite run-down urban district.  They're a lot cheaper than the holes you want to drill and the result might even be more enjoyable.

The Haiku of Finance for 08/29/14

Falling consumer
Yet stock market keeps rising
One cannot sustain

The Invisible SEO Substratum of Page Structure and Content

Search engine optimization (SEO) is a never-ending quest for marketing gold.  I change my SEO tactics all the time in my quest for massive Web traffic.  The Holy Grail of a high Google rank remains elusive.  Emergent tactics give Web stars a cutting edge.

Backlinks matter.  Google's web crawler bots rank a site by the quantity and quality of links it receives from other sites.  Quality means high domain authority, and that formula is the subject of guesswork among the professional SEO community.

Landing pages matter.  Social media gurus think that landing pages using popular keywords, globally visible privacy settings, internal photo links, and deep content make a landing page more visible to Google's search algorithm.

Content matters.  More content on a page attracts more traffic.  Deep content counts for more than thin content.  A combination of images, text, and video linked together in a block is deep content.  Some combination of these blocks on a page is optimal but I suspect that varies by each social media site or content aggregator that channels syndicated content.  

Enhancing visibility matters.  Rich snippets from a page that show up in search engines provide more SEO visibility.  Duplicate description tags boost traffic by grabbing additional content from a page and making it visible to searches.

Sharing matters.  I suspect that it matters more now that the unethical practice of purchasing Facebook likes and Twitter followers is widely known.  Sharing is one social media function that has not yet been outsourced to cheap labor using fake logins.  Sharing boosts a page's Google rank if it generates backlinks to the original content.

The implied call to action for webmasters is to optimize their public webpages and social media landing pages in ways that accommodate the phenomena above.  Building out these enhancements and actively curating content means the landing pages get noticed in Google searches.  Facebook's Custom Stories API is a good example of a tech that allows social media developers to easily build multifunctional content for multiple social media channels.

Alfidi Capital does not have some multidisciplinary team of designers, analysts, and engineers.  I do all of this myself, and my main focus is generating content.  If my writing is good enough, it will overcome whatever I can't do to max out my visibility to Google.  

Thursday, August 28, 2014

The Haiku of Finance for 08/28/14

Four point two percent
Fake economic growth rate
Hard to believe it

Wednesday, August 27, 2014

The Haiku of Finance for 08/27/14

Bank cyber attacks
Hackers probing defenses
Risk of data breach

Funders and Builders Chat at Momentum VC

Momemtum VC has got momentum (pun intended) in San Francisco's mobile startup community.  I attended their fireside chat last week at Digital Garage's DG717 to hear how mobile startup founders get stuff done.  The two founders on hand shared insights on how they built their success stories.  I'll assemble their observations into some stream-of-consciousness mashups with my own thoughts in the mix, followed by some very insightful thinking straight from a venture capitalist.

If proximity terminals are to be compatible with analytics solutions, they also need to accept real-time data from other sources.  Such tech is useful in more than just badge and barcode reading; it can adapt to retail with commerce going mobile.  Retailers are very interested in using data from in-store video feeds.  Motion capture and facial recognition software are already in the pipeline for retail POS enterprise data.  Techies, make sure your mobile hardware has enough room for software that will push data through all of these streams.

I agree with these sharp mobile founders that entrepreneurs sometimes lack the emotional skills to succeed in large corporations.  I had too many bad experiences with bureaucratic types myself to ever go back to their way of thinking.  I like watching entrepreneurs launch into the creative tension of making something brand new.

The people in the Bay Area mobile startup community obviously know each other and frequently work together.  This builds a bench strength of capable serial entrepreneurs.  One founder said his job is to assemble a team that acquirers want to retain.  I would add that not every acquirer will go for the whole team in a buyout if they only want key people in an acqui-hire.

The sales team needs to be motivated by money, because that's a startup's only real metric.  There are multiple ways to monetize data and IMHO the founding CEO should compare each potential stream's NPV to set the sales team's initial priorities.  One founder said he liked an energetic sales team but their energy can grate on the nerves of the startup's technical people.  A strategic marketing plan generates a sales script that keeps the sales team faithful to product characteristics.

I was not aware that Traction and other portals are now connecting freelance content marketers to brands that need specific campaigns.  I was aware that marketing narratives must be compelling but it's hard to reach the "suspension of disbelief" phase without an iconic brand that carries an emotional connection.  Apple is probably the standard for such disbelief; people keep paying premiums for their incrementally improving product releases.

I learned a new acronym:  FOMO means "fear of missing out."  This fear of being disconnected from digital culture probably drives demand for those overpriced incremental improvements I mentioned above.  Startups whose marketing embodies FOMO have an edge, and I suspect investors who match patterns will seek that edge.  One founder recommended a Paul Graham essay on pattern matching; I couldn't find it right away but it's probably buried among Paul's tons of wisdom.

One additional participant was venture capitalist David Blumberg of Blumberg Capital.  The dude was super-sharp and relentlessly positive.  IMHO some entrepreneurs who become VCs share very  unique traits . . . transformative vision, lots of imagination, and divergent intellects conducive to pattern recognition.  They also have really charmed lives.  Doors just magically open.  David related numerous instances where his career took an unexpectedly successful turn when he was in the right place at the right time.  His upbeat attitude probably had a lot to do with other people's willingness to open their minds to his ideas.

David noted how software startup cost barriers are now lower than ever, and freemium mobile startups who keep their back-end service costs low can make that business model work.  His take on the 2001 dot-com crash was that bubbles happen when greedy investment bankers throw easy money and their own DNA into tech startups.  I often wish I had experience with investment bankers to see just how badly they pollute things they touch.

I don't know whether David read Paul Graham's thinking on pattern recognition, but he said something about it that opened my eyes.  If business models are more important than tech, then VCs use their pattern recognition abilities to compare those models.  Recognizing product cycle length, required support, and other factors are patterns that reveal the future.  They also leverage the business domain expertise of the startups already in their portfolios to perform due diligence on other startups.  He closed with the "six T's" categories VCs use when evaluating a startup:  Theme, Team, Terrain (market and competitors), Timing (go-to-market strategy), Tech, and Terms.  Wow!  That is some major insight into VC pattern recognition ability.  Thanks, David!

The tension between tech-focused engineers and revenue-focused marketers is as old as the tech sector.  It came up several times in these conversations and I've heard it expressed in different formats before.  David summarized it with a joke:  "How do you tell the difference between an engineer and a marketer?  Engineers don't know how to lie, and marketers don't know when they're lying."  The serious role of the CEO is to ensure the engineers produce something marketable and that marketers stay on the script that keeps them honest.

I'll make one more general comment about the San Francisco startup scene.  I've noticed that a lot of incubation co-working spaces have some pricey amenities.  Designing things like art, terraces, and other ornate extras into work spaces raises the incubator's cost.  Anything non-functional that raises a cost also raises the startup's hurdle rate.  The discount rate VCs apply to tech startups is always extremely high, and it makes little sense for incubation sponsors to raise it even higher by adding costs to commercial real estate.  I like startups that operate on a shoestring because I take a dirt-cheap approach to everything in life.  I can't imagine succeeding any other way but some broke San Franciscans are determined to live premium lifestyles.  Momentum matters more when it comes at a bargain price.

Full disclosure:  I have a tiny sweat equity stake in a mobile startup.  That entity is not involved with Momentum VC at the present time.  

Tuesday, August 26, 2014

The Haiku of Finance for 08/26/14

Candlestick Park plan
Housing and multi-use plots
Vibrant future land

Farewell to San Francisco's Candlestick Park

I never saw the San Francisco Giants or San Francisco 49ers play at Candlestick Park.  I was always too busy with my professional life to make time for a game.  The pending end of Candlestick Park's useful lifetime prompted me to find some way to see the venue before it is gone.  Fortunately, there was one way remaining.


The San Francisco Recreation and Park Department had a plan thanks to Amanda Tugwell.  She conceived and managed a public tour program that allowed people to see the Stick one more time while its operations wind down.  I secured a spot for myself on today's 9:30AM tour, with a discounted ticket price of $15 thanks to my veteran status.  Being a veteran has its perks, including a savings of three bucks off this ticket price.


I did not attend the Paul McCartney "Out There" concert that closed out the park's official schedule.  Friends said it was a cool show but I wasn't about to pay through the nose and fight traffic to see Sir Paul.  I'm sure the guy can sing quite well.  I would have been tempted to pay if Van Halen had played instead.


Amanda served as our tour guide and took us through the stadium, pointing out its notable features.  The statue of St. Francis of Assisi outside Gate A is supposed to be moved to Golden Gate Park at some point, and the "founders' bench" honoring the 49ers' first owners is supposed to move to Levi's Stadium in Santa Clara.  Once inside the gate we checked out the SFPD's two-room jail cell for fans who get too rowdy.  I'd sure like to throw some people I know in there.


We spent some time in the press box while some folks in our group told stories of their favorite games.  One common memory was the Loma Prieta earthquake in 1989.  The fans kept chanting for the game to go on, unaware that parts of The City and the Stick were severely damaged.  I was a high school student in Sacramento at the time, plotting my eventual escape to San Francisco.


The door to the SF 49ers locker room was immediately across from the visitors' locker room.  The trash talk must have been thick in the air if the two teams ever crossed paths.  I asked Amanda where the cheerleaders' locker room was located; it was upstairs somewhere and we would not get to see it.  Darn.  I was looking forward to seeing where the gals undressed and showered.  I'm pretty sure I'd have no difficulty getting an NFL cheerleader to date me, thanks to my extreme manliness.  My schedule is quite full so the ladies will have to get in line.


The 49ers locker room was exactly like what you'd expect from watching NFL games on TV.  No one is supposed to walk on the big team logo on the floor out of respect for tradition.  I played by that rule today.


The jerseys of famous former players hang high on the walls.  I'll bet more than a few of the multimillionaires on pro sports teams are banging each others' wives and girlfriends non-stop.  Rich people tend to do that when they're bored.


Amanda took us to another locker area that used to be the 49ers lockers when they shared the stadium with the Giants.  I stood where Steve Young's locker used to be situated.  The room later became the coaches' and trainers' area when the 49ers took over as sole tenant.


Amanda noted that the 49ers won all of those championships on the wall without the modern demands that wealthy athletes make upon their ball teams.  The ultra-modern Levi's Stadium has everything the players and rich patrons want.  We shall see whether it produces a comparable string of Super Bowl victories.


The final whiteboard lineup represents whatever the coaches were planning for the 49ers' final home game at Candlestick Park in 2013.  I have no idea what this stuff means but I captured it for posterity.  The tunnel leading out to the field used to have a Bill Walsh plaque that players would touch for good luck, much like the "Play Like a Champion Today" sign at the University of Notre Dame's stadium.  I never touched that sign when I was a Notre Dame undergrad and I never miss a chance to denigrate that school.  I do not like my alma mater at all.  I'm pretty sure the 49ers could beat the daylights out of the Fighting Irish any time they want.  Unknown vandals purloined the Bill Walsh plaque before it could be moved to Levi's Stadium.  If anyone knows who pulled that shameful stunt, they should contact SF Rec and Park and the 49ers to rectify the situation.


We got on the field and I asked Amanda to throw me one of the footballs she brought.  I fumbled the catch.  I threw it back to her and missed by at least one body length.  I can at least say I threw a football around on an NFL field for one day.  The goal posts were already down so attempting a field goal was not meant to be.  I never had the skills for team sports, so finance is definitely the better career for me.


We ended our tour in the players' former parking lot, where posters recount the 49ers' most memorable plays.  I remember watching "The Catch" on live TV as a kid.  My fascination with San Francisco probably started at right about that time.  I thanked Amanda for the great job she did as our tour guide.  Her innovative tour concept made money for The City.  Any sports organization should be glad to have her on board.


I did not wax nostalgic for Candlestick Park because this tour was my only experience inside the stadium.  Plenty of San Franciscans must have indelible memories of the Stick.  Families remember the fun times they had in the stands, cheering for their favorite team.  Wealthy people in the luxury suites remember the ostentatious displays of privilege that impressed their business partners and closed deals.  Players and coaches remember their bowl ring victories, shocking defeats, colossal paychecks, and the fun times on the road banging nameless chicks.  The San Francisco 49ers have moved to Silicon Valley, and hopefully they'll change their name to reflect their new neighborhood.  I'm not glad to see them go, but I am glad I got to see their old home at Candlestick Park.  

Monday, August 25, 2014

The Haiku of Finance for 08/25/14

Buying mortgage note
Workout payments or foreclose
Not a passive play

Avenues to Real Estate Paper Notes

Passive income from real estate is a fascinating topic.  Anyone who finds income from property-secured notes boring is free to stop reading now.  I pick up tips from real estate sources every so often about how cash flow notes work.  I have never invested in one but I know just enough to figure out where to start.

Beginning with cash flow notes means finding reliable information.  Personal Real Estate Investor magazine has plenty of articles on strategies for selecting properties and avoiding bad decisions, but I didn't find anything there on cash flow notes.  Google searches for "cash flow note investing" and related word combos reveal plenty of sites claiming to offer education on note investing.  The most realistic introduction to the topic I've found is W.J. Mencarow's The Paper Source, which offers plenty of free background information on researching notes.

Brokering notes seems more difficult than buy-and-hold investing because it requires a constant search for counterparties.  Investing in a note for the long term simply requires a search for available inventories.  The secondary market for notes linked to real estate are private placements, but I suspect that crowdfunding portals covering real estate will eventually list them for sale.  That would be a huge step forward for transparency.

Professional investment managers offer funds that buy pools of available notes and work with homeowners who are delinquent on payments.  This turns non-performing notes into performing notes after a few months of renewed payments.  The key to success for these firms is their ability to buy nonperforming notes at large discounts.  I do not have firm data on the size of this market; banks obviously have some non-performing notes they want to remove from their balance sheets to avoid impairments.  Fannie Mae and Freddie Mac sell large blocks of notes as "tapes" priced in nine figures.  Hedge funds and private equity firms buy these tapes and resell them in smaller lots to private money managers.  Fund managers who refuse some non-performing loans in those tapes may give the large private equity firms the chance to foreclose on homes and become landlords.  Foreclosing on hundreds of houses is a lot of work, which is why most private equity firms getting into landlording prefer to make all-cash offers on normal home sales.  A smaller fund that buys their non-performing notes directly from a bank has a similar opportunity to become a landlord.

Investing in these notes reminds me of tax lien investing.  The similarity with tax liens is that purchasing one allows the opportunity to foreclose and take possession of real property.  The difference is that investors must purchase tax liens from municipal government agencies, and must purchase notes from banks or large asset managers.  Purchasing liens may offer an investor seniority over a mortgage note owner, although I have read conflicting interpretations on how one is senior to the other.  Nolo's discussion of liens and mortgages in foreclosure illustrates how recording dates can complicate matters.  That is a very important thing to know if competing investors seek the most expeditious route to foreclosure.  Nolo's discussion of mortgages and deeds of trust will be of interest to investors purchasing notes outside their own state.  Knowing which category prevails for a note will determine whether the foreclosure process is attractive.

Foreclosing on delinquent notes is not the only result of a note investing strategy.  Buying and holding them to collect the cash flow is the stated rationale of the private funds lining up to buy them and restructure their payment terms.  Retail investors who do not qualify for the gates in privately managed note funds always have the option of buying publicly traded funds that manage ABS and MBS paper.  That route does not involve the cumbersome, labor-intensive approach through private placements.  Privately managed pooled note funds have defined life spans and high fees.  They are not transparent and the field is prey for scams.

I would consider cash flow notes for my own portfolio in normal economic times.  These are not normal times.  The strong possibility of hyperinflation in the US means debtors can pay back liabilities with future dollars that are worth much less.  Owning a cash flow note backed by real estate exposes the holder to asset destruction during hyperinflation.  The underlying real estate remains but the note becomes worthless.  Aspiring landlords should remember how high inflation can turn their pile of notes into a pile of manure.

Nota bene:  None of this discussion constitutes investment advice.  I have to state that out of concern that some nutcase will make false claims against me.  I do not give personal financial advice.

Sunday, August 24, 2014

The Limerick of Finance for 08/24/14

People can't afford to retire
When their financial straits are too dire
Those who refused to save
Dug themselves a nice grave
It's too late to pull out of that fire

Saturday, August 23, 2014

The Haiku of Finance for 08/23/14

Motivating staff
Threaten to terminate them
That will make them work

Friday, August 22, 2014

The Haiku of Finance for 08/22/14

Hospitality
Invite investors to suite
Always have free drinks

Thursday, August 21, 2014

The Haiku of Finance for 08/21/14

Humble startup team
Few people wear many hats
Everyone pitch in

Wednesday, August 20, 2014

The Haiku of Finance for 08/20/14

Always be closing
Success secret is selling
Revenue matters