Wednesday, September 30, 2015

The Haiku of Finance for 09/30/15

Software on the shelf
Move to share it in the cloud
Pay for subscription

Tuesday, September 29, 2015

Monday, September 28, 2015

The Haiku of Finance for 09/28/15

Attend reception
Do not network with people
Just grab the free food

Sunday, September 27, 2015

The Limerick of Finance for 09/27/15

India's tech appeal opens wide
China's problems have now turned the tide
One billion to log in
Where connections are thin
Silicon Valley wants on this ride

Saturday, September 26, 2015

The Haiku of Finance for 09/26/15

Fashion speaker tips
Wearing their own creations
They like how they look

Alfidi Capital Visits Fashion Community Week San Francisco

Fashion Community Week San Francisco held its conference and trade show today. I had to drop in to see what was going on in this sector. I haven't touched fashion since I attended iFabbo's 2013 social media conference so this was a refresher course. I am of course quite fashionable myself, when I bother to leave home once in a while.


The regular icons from the local fashion and tech scene were on hand to share stories of how they integrate. I knew about Fashion Incubator SF but I had not heard of PeopleWearSF until today. Fashion startups graduating from the incubator can build their partner ecosystem through PeopleWearSF. I like one of the quotes from one of the early speakers at this conference: "Don't make decisions from where you are. Make decisions from where you want to be." I have not seen that quote in a Google search so it must be original. I guess it descends from well-known quotes about how founders should imagine themselves as billionaires cornering a market instead of as impoverished bootstrappers. Clothing designers building their brands should begin with the end in mind.

I had not checked into Lifograph or Greenlight VR until I saw them on the sponsor list for this conference. Maybe I heard about them in the past but completely forgot them in the course of my high-powered, fast-paced, fashionable lifestyle. Graphical data representation matters to hard-core nerds and the nascent virtual reality sector is one force pushing it.

The founders of Fashion Xchange Magazine have a rare focus on the business of fashion, unlike the more familiar magazines that just display clothes and makeup. I'll paraphrase their classic lessons: Build a complimentary team. Don't be afraid to be different. Put 110% into your vision. Passion and obsession intersect in success.


My friend Olga Chervyakova, founder of Olga Media, spoke about how she built her brand. She worked in immunology at the start of her career in America after leaving Russia. Eventually she realized that helping people makes one go farther and she started her media career to do just that. She gives credit to fashion designers from many ethnic groups while she wore their clothes during her media appearances. Olga recommends that designers loan their clothes to media professionals in exchange for free publicity.

Olga has other tips on media branding and work attitudes. Her Russian accent helps her sound distinctive in radio. Working with actors and models taught her the importance of treating everyone with respect even if they are moody. I can attest that Olga treats me with respect at the many tech conferences we have attended together in Silicon Valley, even when I am moody.

Fashionistas can enjoy their several days of exhibits and some runway action thanks to San Francisco's style gurus. I don't stick around for fashion shows because I have enough awesome clothes to last a lifetime. I even have a trunk full of 1960s era dress shirts I got for free, and I rotate them through my weekly appearances at major conferences. The Fashion Community Week models probably wouldn't want to wear my stuff, but that's okay if it leaves more awesome threads for yours truly.

Friday, September 25, 2015

Wednesday, September 23, 2015

Monday, September 21, 2015

The Haiku of Finance for 09/21/15

Fed watching money
Agreement on just one point
Keep system stable

Financial Sarcasm Roundup for 09/21/15

The Federal Reserve did not budge on its interest rate target last week. They sure dropped enough hints for several months that something was in the works. The financial media follows this subject without pause, weighing inflation against GDP growth. The real narrative should run on two totally different tracks.

Track one is consideration of systemic stability. Low interest rates have propped up insolvent commercial banks long enough for them to disgorge most of their bad mortgage paper. Institutional investors desperate for yield were dumb enough to buy this paper thinking they could get more yield at a discount. The Fed now has to open back channels to money market funds to keep the system from unraveling in the event it raises rates. Read my article on the Fed's imaginary toolbox for a refresher.

The second track is the prosaic domain of human psychology. The Fed releases its minutes after every board meeting. It is increasingly obvious that most of the board members do not know how to get out of the mess the Fed has made for itself with six years of low rates. The intellectually honest ones, like Stanley Fischer, know that what they don't know won't matter if they can innovate fast enough in another crisis. The President and Congress will play catch-up in a crisis with new rules preventing investors and savers from escaping the Fed's emergency measures.

This endless waiting game would never have happened if the Fed had gradually normalized interest rates starting in 2010. It would have been painful for a lot of banks and mutual funds that would have faced insolvency after rapidly selling whatever bundled securities the Fed was unwilling to buy. Smart policy could have forced banks to consolidate. Instead we got dumb policy that forced yields to zero, drove conservative investors into assets outside their risk profiles, and destroyed price discovery in equity markets.

The Fed's real mission is to keep the financial system in working order. The imperfect humans operating the Fed's inner levers are as prone to panic as the rest of us without leaders who will keep them calm. Systemic stability requires emotional stability. Raising rates after October will test the readiness of capital controls and other ideas under the "break glass in case of emergency" sign. Keep calm and carry on.

Sunday, September 20, 2015

Saturday, September 19, 2015

The Haiku of Finance for 09/19/15

Excel mindfully
The mind is not emotion
Be calm under stress

Dreamforce 2015, Day 4: Oceans, Mindfulness, And Wrapping Up

The final Dreamforce 2015 day felt like attendance was dropping off. Maybe people were hungover from the previous night's Dreamfest bash. All of that booze had to go somewhere and it sure didn't go into my mouth. I had three major events on my Friday agenda, besides scoring more free food, and I hit them all.

The ocean innovation panel was totally worth my time. Microplastic concentrations are increasing everywhere and disturbing the ocean's food supply chain. I have been waiting for the "marine industrial revolution" ever since I first noticed a couple of ocean floor mining stocks at the San Francisco Hard Assets Conference a decade ago. Those stocks have always traded in the pennies, and other attempts at ocean mining of manganese nodules, rare earth elements, and other minerals have all fizzled due to prohibitive costs and logistics. The innovators on this Dreamforce stage are mostly focused on gathering data about how human activity impacts the oceans. Crowdsourced Big Data will help us stop fishing piracy and preserve the export income of fishing-dependent emerging economies. I see an IoT theme in the plan for satellites and sensors that can estimate ecosystem size and wildlife migration patterns.

I tried to think of ways our ocean innovators could monetize their concepts. I have thus far come up empty. Financial incentives for recycling the floating plastic collecting in ocean gyres would have to include something analogous to carbon credit markets for air pollution. The last big tech idea to solve oceanic problems was to drop iron filings into the deep blue sea to help plankton stimulate the food chain. The science on iron fertilization is incomplete, so science needs the Big Data on ocean conditions pronto.

The Friday marathon themed keynote is usually the least data-driven part of Dreamforce. It's still entertaining but most attendees are too tired by this day to do the heavy lifting of more cloud computing. This year's theme for the fun lectures was "mindfulness," a topic suited to the amorphous spirituality of many San Francisco Bay Area people. Scraping away the pop-culture veneer leaves a core of knowledge comparable to ancient mystery schools. The subject is probably a fruitful training resource for military leaders and intelligence professionals who must think clearly under stress. Now you see my interest in the topic given my background. Namaste, and all that.

The most useful mindfulness speaker was Chade-Meng Tan, Google's Jolly Good Fellow and one of its earliest employees. He developed a mindfulness approach through his Search Inside Yourself Leadership Institute that is part of Google's emotional intelligence curriculum. Engineers approach undefined problems armed with data and principles from modern neuroscience. The data augments the traditional practices of spiritual masters who needed several generations of trial and error to produce personal enlightenment in students. I totally agree with Meng that remaining calm under stress is a leadership skill. I experienced a Zen moment when he described the "Big Sky Mind" concept, so do your Google search of that term and understand that we are not our emotions. Meng found that the best performing leaders score high in affection, and he confirmed this with US military special operators and combat pilots. That's all the confirmation I need.

Padmasree Warrior and Larry Brilliant are probably living national treasures. I will not attempt to restate their wisdom on my humble blog. Their influential writings are within everyone's reach thanks to Google. Highly evolved human masters can speak for themselves. Tara Brach and Jack Kornfield gave us some practical tips on staying calm while solving problems. I like the concept of imagining an enlightened master entering one's body to help accomplish a goal. I would probably imagine a historical figure or modern luminary who actually built something real. Marc Benioff's acolytes in Salesforce would probably imagine him as the Buddha embodiment entering their personas. If it works, use it.


Goldie Hawn was the final mindfulness speaker, pictured above. She was the least professionally qualified person to be on stage for this topic, but she was here because she has been on stage all her life. She shared personal stories of her overly sensitive childhood and anxiety attacks as a rising Hollywood starlet. It was embarrassing to hear her wax ecstatic for the 1970s transcendental meditation movement. She claims we create our reality . . . well, that kind of "woo" sells a lot of books. It worked for Shirley MacLaine when she was pitching New Age stuff in the 1980s.

I really hope Goldie's video from Dreamforce gets a public release. Unserious people should not run large projects. Her educational foundation is a nice hobby for a Hollywood star, nothing more. The lady is not a neuroscientist, psychologist, or even a peer-reviewed philosopher. It's okay for mindfulness programs to employ celebrities as spokespeople because they are great at staying in character. They're just not so great at running programs outside their natural expertise. Goldie briefly lapsed into ditzy blonde mode towards the end of her talk when she tried to explain the brain's amygdala. Goldie has stayed in character her entire career. The funny babe she played on Rowan and Martin's Laugh-In is not just a character, because that's the real Goldie. I prefer to remember her that way instead of thinking about all of the people at Dreamforce who somehow gave her a standing ovation. I also prefer to remember her work in There's a Girl in My Soup, especially the scene where she gets out of bed wearing nothing. I would really like to remember her work in Wildcats, especially the scene where she's in the bathtub showing everything. Goldie still looks great in her older years, but she's not my type. I really am trying to show women more respect here, people. I respect Goldie for what she does best.

Meng Tan joined the other mindfulness speakers on stage and left us with awesome advice: "Be excellent to each other." I had my own mindful quote in my head: "And . . . party on, dudes." Those two lines complete the wisdom of Bill and Ted's Excellent Adventure. The mindfulness marathon was some kind of adventure.


I went over to Moscone West for the final session with Marc Benioff and Parker Harris. I scored a prime seat for the next surprising spectacle, pictured above. Two big guys came out to sing Hawaiian-style songs, although I think the guitarist said he was from New Zealand. Anyway, these guys' warm-up act pumped the crowd with high-energy rhythms. Analysts and VIPs were in a conga line around the stage. A couple of very attractive babes were shaking it right in front of me. I totally respect their enthusiasm.


Marc and Parker answered a handful of tech-related questions about Salesforce products. Marc went gangsta for some sartorial reason but they did not have any epic rap battle. I bet George Zimmer could have set these guys up with some tuxedos from Generation Tux if they needed more style. Anyway, the absolute best moment came when one practitioner criticized immature language in some of Salesforce's marketing as insufficiently respectful of its audience's expertise. She thought that power users deserved more advanced, mature treatment. I was very impressed with the caring way that Marc probed the questioner for one specific improvement suggestion, and she offered it to the audience's applause. Wow. Marc then shared an internal employee consensus that developed on how marketing should address a prospect's CRM/cloud decision maker with a budget. Wow. I had just witnessed a major CEO spend more than 15 minutes in live, extemporaneous problem solving. I can get jaded sometimes, but now I really need to put aside my skepticism. Marc Benioff is the real deal. If he is the same in private as he is in public, then I will be doubly impressed.

Marc and Parker also had some advice for aspiring entrepreneurs. Here it is, paraphrased but unfiltered. Think more about solving problems and finding great people than building tech. Stay focused, work hard, build a great company. Get the timing right. Be happy; get away from unhappy situations (like when Marc was at Oracle). Take customer feedback seriously and adjust the product. Re-ask yourself the hardest questions in a continual process.

I don't think I can add any more to that pile of knowledge. My own knowledge base is now somewhat deeper thanks to Dreamforce 2015. I still plan to hold my own super tech fest someday. I'll invite Marc and crew to be VIP guests.

Friday, September 18, 2015

The Haiku of Finance for 09/18/15

Develop women
No more micro-aggression
Men must change their ways

Dreamforce 2015, Day 3: Lightning, Tuxedos, Women, And Loud Guitars

Dreamforce is like the Super Bowl for sales technology enthusiasts. Vendors let their imaginations run wild with gimmicks and props that will get attention. The Salesforce people are the champs at pulling publicity stunts. I pull a few stunts of my own sometimes in between keynote addresses.


The latest Salesforce SaaS tool is Lightning, a reworking of the old dashboard with a cleaner layout and more customizable data feeds. I took the photo above at their big product pavilion. It is suitably dramatic and fits my energetic personality. Ordinary conference goers can look like Nikola Tesla playing with electric current. Salesforce people know their selfie special effects.


George Zimmer is applying a lifetime of retail clothing experience to his new startup, Generation Tux. I took a photo with the man himself at their booth. The emailed version came out poorly so this version next to my conference badge is the next best thing. I attended George's feature presentation and it was probably the most creative live display at Dreamforce. The guy played up his ageless pitch lines and compared himself favorably to a similar-looking . . . Most Interesting Man In The World. His marketing and tech team explained the cloud power behind their concept. I will be impressed if Salesforce's PaaS can handle logistics management for online retailers.

George is a master showman. He plans to officiate a wedding on New Year's Eve in Times Square while the big ball drops, and he finished with a flash mob dance troupe showing off his line of tuxedos. Kudos to George for accommodating gay couples who want tux rentals for their weddings. I had no idea that market research revealed how much control brides want over wedding details. Gay marriage brings a new twist on who gets to decide those details now. I also ran into the opening keynote's Hawaiian musicians at George's big pitch. My business life is full of such serendipitous moments. I don't get invited to weddings so this event was my proxy.

Speaking of business, it's my business to discuss some very important keynotes from the third day. Larry Brilliant from the Skoll Global Threats Fund described how innovators found many ways to beat biological nightmares. We can thank determined inventors for defeating smallpox and polio. The unscientific opponents of vaccinations deserve no thanks. Mindfulness advocates on Dreamforce's fourth day have a lot to chew on because alert people will innovate. Big Data makes digital disease surveillance cheaper and broader than ever for public health systems in developing countries.

Marc Benioff and Parker Harris got to tell famed tech journalist Kara Swisher about their progress in advocating for womens' careers. Marc admitted regrets for not doing more earlier in Salesforce's life, but I noticed he interrupted Kara several times when she was about to ask important questions. Male executives need to change that habit. I am dismayed to see that the term "micro-aggression" is now an acceptable description of workplace cultural traits. Men need to watch their language and bad habits, like interrupting someone, lest they be labeled micro-aggressors after they reach some unspecified threshold of unacceptable actions.

Kara's questions shed some light on how female thought leaders view controversial gender relations subjects like male privilege. White male backlash against perceived slights is increasingly evident in the rhetoric among Donald Trump's supporters. Women see The Donald's supporters as bewildering in the context of white male leadership in history. Middle class men have in fact seen stagnant real wages since the early 1970s, so perhaps we should not be surprised when the less informed among them seek scapegoats in minorities and women.

Marc mentioned Travis Kalanick's reluctance to grok Uber's need for a more public morality. Some CEOs really do need a backstage chat to frame moral images as brand-builders. Uber probably needs an intervention to prevent its culture from running off the rails. Send over Sheryl Sandberg to lead their Lean In circles. Maybe Parker could go instead; he was so proud of Salesforce's leader development programs that he mentioned it several times on stage.

It's too bad Marc gives himself a middling grade in supporting women's equality in the workplace. I'd give him a much better grade than the "F" I give myself. The bosses who treated me worst in life have all been women. I just don't like anyone, male or female, so I could never work at Salesforce.

Forrester Research had a very interesting talk on customer obsession from three of their leading folks. The age of the customer sounds like a big theme for them and I'll bet it sells a lot of consulting contracts. I would use the Forrester Customer Experience (CX) Index if I were actually selling things, but I'm not, so I read their insights just for kicks. I do not think a distinction between business technology and traditional IT is necessary to make the case for increased capex spend, as long as a smart CMO and CIO can show how it drives revenue. I have heard the term "mobile moments" at other conferences. Exploiting those moments in a simple enough context means having a buy button loaded into everything.

The heavily advertised women's panel featuring Jessica Alba and Susan Wojcicki was a can't miss event for yours truly. In times past I would have said something about admiring hot babes, but guess what, I really am trying to expunge bad attitudes from my life so I don't end up with Uber's branding problems or The Donald's reputation. Susan's sisters Anne Wojcicki and Janet Wojcicki are also quite accomplished. I did not know that Google started when its founders rented out Susan's garage. I noticed that these women don't mind discussing their hormones or motherhood rites with each other, even in front of large audiences. Women are different from me. No kidding.

Jessica shared one of her early adviser's lessons that if a business plan has more than 20 unanswerable questions, then it isn't ready for launch. One big unanswered question is what Jessica's venture, the Honest Company, will do about a lawsuit from a disgruntled customer. She did not discuss her company's legal challenges at all on the Dreamforce stage. The company's sunscreen left a lot of customers feeling burned. Jessica is known for her really nice skin tone and persistent tan. Her discussions of her products' development did not give me the impression that she is deeply familiar with the effects of chemistry on human skin. Contrast that with the answers Marc and Parker give to questions about how their SaaS products work. Gender equality matters, and so does technical competence.

I learned a few more things about gender relations. Paid maternity leave matters very much to working women. They are very concerned about job security in the absence of formal policy guarantees, either from employers or the federal government. I also noted the audience's very audible shocked reaction when moderator Gayle King said her post-partum physical appearance became a management concern when she returned to the newsroom. Wow, professional women are really sensitive to how others perceive their looks on the job. Wow. Men, take note. Every comment we make about a woman's physique in the workplace becomes a micro-aggression.

Talk of educating, training, and recruiting women in STEM careers was a big hit with this audience. Men in management need to take a serious look at women they can develop for advancement. Silicon Valley executives should of course advocate for diversity but that's tough to do when companies like Uber are in denial about their need for stronger morality. Jessica admits that she hires failed entrepreneurs who learned something at each failure. Her preferred strengths of hustle and common sense are fundamentally moral attributes. Moral failures are less likely to lead to introspective learning.

The third day ended with a big, loud, hard, Dreamfest music concert at Pier 70. That venue is perfect for outdoor rock and roll, plus more free food and booze than I've seen in a long time. I had my fill of hot dogs, fish and chips, and other fried comfort foods that absorbed the one glass of pinot noir I could hold. Gary Clark, Jr. gave a bluesy performance that channeled Stevie Ray Vaughan's spirit. The Killers have been on my mental playlist for a decade and I was thrilled to see them play live. "Mr. Brightside" was an awesome way to kick things off, and I wish they had played its sequel "Miss Atomic Bomb" but it was not meant to be. I was totally thrilled to hear the Killers cover Journey's "Faithfully," one of my favorite songs, even if it only lasted for one stanza.

I did not stay for the Foo Fighters although they headlined the show. I could not stomach more than one song of that group on my way out the gate to grab one more hot dog. Giant TV monitors showed Dave Grohl squatting in a chair screaming wildly. The most musically competent Foo Fighters song was "Big Me" and its parody candy commercial tells me everything about how this band parodies a real rock band. No thank you. I do not support rock bands who obnoxiously display their lack of musical skill. The Killers were harmonious, nuanced, and layered. Foo Fighters have always been monochromatic and uninspired; their entire sound is derivative of Nirvana's brief flash in the pan. The Killers are on one of my Spotify playlists. Find it and hear them yourselves.

Dreamforce's approach to planning the bus movements to and from Pier 70 showed the limits of software professionals' real world abilities. Software people have trouble understanding hardware precisely because logistics must move things around the real world that cannot be transported digitally. I made this remark to another Dreamforce guy walking into the Pier 70 gate for the show, and he high-fived me. I totally scored a "killer" observation at Dreamfest.

Thursday, September 17, 2015

Wednesday, September 16, 2015

The Haiku of Finance for 09/16/15

When in charge, take charge
Improvising leadership
No need for a cue

Dreamforce 2015, Day 2: Uber and Microsoft, With Music

I started the second day of Dreamforce 2015 with the event's free breakfast. Dreamforce opted to start today's breakfast of champions with the wimpy music of James Taylor and John Denver. The Press / Analyst Lounge opened soon afterwards and I could escape mediocrity there. Much better music would come later in the day.

Marc Benioff sat down with Uber's CEO Travis Kalanick for the first big event of the day. They had a fireside chat with no fireplace, a common convention in Silicon Valley. Travis said reliability is the most important part of Uber's service. Prompt pick-ups and safe rides were their measures of reliability. I would also measure driver courtesy but I guess that's the point of star ratings. I have never used Uber because mass transit is cheaper in urban areas. Travis said Uber's neighborhood heat maps help direct more driver supply to areas where demand is greatest. Their operations research overlay on top of their logistics network helps predict a supply / demand imbalance.

I think it is unrealistic to assume Uber and self-driving cars will solve parking and traffic congestion. Cars in "orbit" around a city block or on standby still have to loiter somewhere while they await a passenger. Keeping the engine running means on-demand urban transport will not solve air pollution.

Marc asked Travis whether he knew if Uber had a heart. It was an obvious setup for a discussion of Salesforce's 1/1/1 philosophy and Travis missed a clear opportunity to shine. He meandered into an example of how Amazon is supposedly an inspirational workplace without addressing that culture's dissidents and escapees. Marc again turned the talk back to doing good by discussing the International Red Cross as his inspiration and Travis eventually took the hint that he should discuss generosity. The Uber app allows donations supporting Salesforce's latest charitable theme. That's it, folks. Uber's boss was mostly AWOL while Marc probed for morality. Travis expects Uber to hold "optimistic leadership" in the self-driving car market, but I want to see them exercise some moral leadership first.

The Community Cloud keynote had a few unexpected gems for me. Enterprises have figured out that embedding an impulse purchase button into experts' context discussions makes financial sense. Constant CRM data feeds build the buy recommendations. One of their sample clients was Iraq and Afghanistan Veterans of America (IAVA), and I got to meet their founder Paul Rieckhoff for the first time. The IAVA people totally grok that veterans' future communities will be online and not in smoky old halls. Using Salesforce's platform to enroll veterans in benefit programs is an IAVA concept the VA should adopt.

The main keynote with Marc Benioff and friends started filling up very early. The Dreamforce chaperons ensured that we analyst types got to our reserved seats early enough. That's one of the perks I like about being an analyst. I can get used to this VIP treatment. Salesforce deserves kudos for reserving VetForce a section, and the crowd applauded them just for showing up. Military people are great at showing up on time and sitting in designated areas. I do it myself all the time, like with the analyst crowd.

Stevie Wonder was the surprise musical guest at Dreamforce. He played a medley of his biggest hits. The guy is clearly talented and I recognize his skill even if his stuff is not the kind of music I like. I am not very familiar with his repertoire but I don't think "Dreamforce" was in his original lyrics. I learned something today from Dreamforce attendees. Marc Benioff's keynote audience gave VetForce veterans a polite ovation but not everyone stood up. It seemed like a forced and charitable acknowledgement, as if it were a reluctant gift. Stevie Wonder got a much longer and more heartfelt standing ovation from the entire hall (except me, I'm not a fan). Public ovations have emotional content. Virtuosos are irreplaceable but warriors are expendable. Society's verdict is clear. Stevie Wonder makes people feel good. Veterans make people feel bad.

Marc was the genuine article. He thanked veterans, educators, women, and environmental advocates. The audience loved applauding and I joined in more often than I should given my occupation. I learned something about the analyst community today. It is not an analyst's job to applaud on cue. Applause equals advocacy, and analysts must be objective. I must learn to ignore the spectacle and examine the content.

I learned a new phrase called "precision enterprise," based on Marc's inspiration from precision medicine. Maybe I heard it before but forgot it. Parker Harris came out dressed as the fake superhero "Lightning Man" to promote Salesforce's Lightning SaaS. I get it, lightning comes out of a cloud. It was so funny of Marc to feign ignorance of the program's components and pretend to think it was downloadable rather than a cloud SaaS. Parker put down his plastic lightning bolt to pick up a Thor-like hammer for "Thunder," their IoT cloud. He slammed the thing on stage to a huge thunder sound effect. He also had some other prop that looked like a glowing halo on a stick. Wow, these folks go all out with theatrics.

The giant video screens in Moscone South showed lots of torso-length portraits of attractive women who were admins and executives in Salesforce's ecosystem. They showed a few token men later but the women were enough to remind me why I like attending Dreamforce. Tech women can really find great careers in the cloud sector.

The final event for me was the fireside chat (again, no fireplace) between Microsoft CEO Satya Nadella and Wired magazine writer Jessi Hempel. The introductory act was a phenomenal Japanese musician named Yoshiki. The guy excels at both modern rock and classical compositions. He played the piano brilliantly at Dreamforce, finishing with "The Star-Spangled Banner." I want to dwell on his musicianship and its effects for a moment.

Yoshiki performed the gentlest rendition of "The Star-Spangled Banner" I have ever heard. He exhibited musical genius by demonstrating an intimacy with our national anthem that some Americans do not possess. It felt like listening to the language of a grateful admirer, as if the Japanese cherry blossoms in Washington, DC were singing the song. I want to thank Paul Rieckhoff of IAVA for standing up in the front row, reminding all of us to stand for our nation's anthem. He exhibited leadership at that moment even though no Dreamforce authority figure told us to stand, there was no American flag visible as a cue, and the musician could have easily veered off into another composition as an improvisation. When in charge, take charge.

Let's get back to the tech chat. Satya thinks Microsoft has a collective soul. I know at least one ex-Microsoft employee who thinks it does. The "iPhone Pro" joke made its point about loading enterprise-scale apps on a non-native platform. Using the full MS Office suite on smartphones and apps means anyone can collaborate with file management, social media monitoring, and real-time co-editing while mobile.

Satya thinks revenue and profits are lagging success indicators, with usage data better suited as leading indicators. He urged us to have our smartest people build those leading enterprise indicators and monitor the workflows feeding them. He tried a few demos of a spoken audio natural language query, and some bugs were so obvious he needed a hand from a techie backstage. I suspect the audio query misinterpreted his Indian accent.

Satya has a very mature understanding of why partnerships with other platforms matter. Developers have to design with an agnostic view of devices in a market where Microsoft can no longer count on operating system leadership. Satya even sounds a little like Steve Jobs by advocating more computer literacy in education.

I witnessed high-minded thought leaders and quick-thinking moral leaders today. I will now seek out Yoshiki on Spotify for more examples of his talent.

Tuesday, September 15, 2015

The Haiku of Finance for 09/15/15

Find a cloud career
Hire aptitude, then train skill
Workplace does compute

Dreamforce 2015, Day 1: Veterans And Everyone Else

Dreamforce 2015 opened today in San Francisco. I was on hand for technology, punditry, and revelry. Ubiquitous computing means nerds no longer monopolize this mystery cult. Former jocks and cheerleaders now have reason to relive their college glory days after work hours at a major technology convention. My readers can join the fun vicariously.


Here is the majestic entrance to the Dreampark at Dreamforce. It's the part of Howard Street in front of Moscone Center that's blocked off so rock bands can play and adults can lounge in beanbag chairs. I remember they had some giant inflatable cloud-like honeycomb thing in 2013. I must say that I framed that shot really well with the sunlight coming through the clouds. It's totally appropriate for cloud computing.


The Salesforce mascot, SaaSy, makes its rounds among the convention exhibits. I wonder if this thing has its own dedicated driver so it can zip around to all of the Dreamforce hot spots. The prevalence of college-type images is noticeable. The entire neighborhood becomes a "campus." Afterparties don't have togas or kegs but they obviously draw from fraternity and sorority culture. The company has a mascot that cheers on its people from the sidelines of their main event. Dreamforce culture is the perfect reflection of San Francisco's never-ending adolescence. The difference is that the grown-ups on scene make serious money. Somehow it all works as a business.


I give you my obligatory badge selfie. Normally this is the first image I display in a long article about a conference, but not today. I am an analyst. Special people like me get special access to special places like the Press / Analyst Lounge at major conferences. The activities inside the lounge are privileged and confidential. It reminds me of a secure military facility, with better amenities.


Barclays brings London to San Francisco. Barclays fired me in 2007. Note the white banner at the top. Yeah, "client success experience," whatever. The clients were dumb, I had no success, and it was a very bad experience. The financial market chatter about automating CRM never mentions that this will eliminate most of the jobs in sales and support. Buying a dream home is still an emotional trigger and mortgage brokers know it's a hook. It only takes one domain expert to design the decision rules for an AI broker that will pitch more effectively as it learns from thousands of daily client interactions.

I had planned on attending the more prominent keynotes today. The long lines for those of us who were not pre-registered far in advance were a deterrent. I would rather use my time productively than stand in line. I went to a couple of workshops for veterans instead. The audience and speakers were much more to my liking than what I usually encounter at tech shows. Veterans Workshop described their training for moderately and severely disabled veterans. VetsinTech coordinates education, employment, and entrepreneurship for technology-minded veterans in several of its nationwide chapters. I frequently help out VetsinTech and I know they're the real deal. Veterans2Work holds classes year-round in Salesforce administrator certification. Employers need to know the research showing how job candidate aptitude is several times more predictive of performance than a resume or a structured interview. My former employers never understood my military aptitude and were very eager to terminate me.

Salesforce developed its VetForce initiative to get veterans into cloud CRM jobs. A slew of speakers from Salesforce's partner network, many of whom were themselves veterans, spoke about how they recruited and trained veterans to meet their internal hiring goals. They all know the HR research about how veteran-led companies perform well and that's why they are developing the next decade's bench strength now. One vet's biggest tip was to network for advocates inside an enterprise who can unlock hidden job vacancies. I tried that among my alumni networks over a decade ago and all of my potential advocates shut me out precisely because I was a veteran. Maybe times really are changing now that America's wars in the Middle East are no longer horrific news stories.


The expo floor in Moscone West prominently displayed the VetForce agenda. VetForce has a candidate for this election cycle. He's as rich as a wild-haired real estate developer but without a mean streak. He also knows more about email and enterprise security than a typical senior government official.

Check back with me tomorrow to see if anyone other than America's veterans is making a difference in cloud computing. I did pay attention to one space imagery company planning to launch a small constellation of satellites. They see profit in tracking climate change, mining output, and ocean transport activity. Veterans know plenty about satellite imagery and rocketry. There's another natural career fit, at a higher altitude than the cloud.

Monday, September 14, 2015

The Haiku of Finance for 09/14/15

Integrate record
Tech plug loads Excel data
Auto-track the sale

Financial Sarcasm Roundup for 09/14/15 (special Dreamforce 2015 edition)

I am officially registered for Dreamforce 2015, the annual Salesforce motivational festival. I picked up my blogger badge today and you will all get to see it as I blog my way through the action this week. Here are some sneak previews with today's fun.

I attended one of the kickoff parties that Salesforce's many partners use to show off their products. The booze was flowing and the cheese plates were filled to the brim. Apttus throws a pretty good bash. I went up to the Marriott Marquis' Presidential suite to see what Apttus had to show us all.


Apttus had these cookies laid out, all wrapped up and everything. They were made in the image of Marc Benioff, CEO of Salesforce. I find this both unbelievable and awesome. I ate this cookie plus a bunch of other goodies before I went over to the bar for Jello shots. The cookie was classic sugar shortbread, just like your grandparents used to make way the heck back in ye olden days of yore.


Alright, this personality cult is getting out of hand. That's a Lego sculpture of Marc Benioff's bust. Now I need another Jello shot. I should mention that the Jello shots were made with tequila and garnished with an edible flower. I have made "drunken gummys" myself, which are chemically similar to Jello shots.

It wasn't all fun and games up at the Presidential suite. One of the Apttus reps gave me the rundown of how a customer contact spreadsheet in Excel can immediately update a Salesforce contact record via the Apttus interface. I don't need any CRM in my line of work but a lot of people should pay attention.

The Dreamforce massive tech explosion officially starts tomorrow. I am so totally super-psyched. There are usually lots of hot babes at Dreamforce and I fully expect the single ones to find my manliness compelling. It may take a few more Jello shots but I'm sure I can handle the action.

Sunday, September 13, 2015

The Limerick of Finance for 09/13/15

It's worthwhile to pay bills on time
Willful nonpayment looks like a crime
Just have enough cash
Checks can clear in a flash
Be accurate down to the dime

Saturday, September 12, 2015

The Haiku of Finance for 09/12/15

Trading desk routine
Compare quotes and execute
Then drink after work

The Imaginary Federal Reserve Toolbox

The NYT weighs in on how the Federal Reserve may adjust interest rates this month. The Fed drops a lot of trial balloons and its information operations campaign has prepared the media. The FOMC's open market operations are not as potent as they were before the crisis. Other central banks' recent experiments with adjustments in the middle of macroeconomic stimulus offer abject lessons in how effective the Fed's new tools can be.

China and Europe have gone full-steam ahead with stimulative experiments, albeit in different ways. China has begun liquidating some of its foreign currency reserves. The liquidation has not yet ignited a run on the US dollar because other major reserve currencies still look weak by comparison. Australia and Canada, for example, have seen their currencies weaken against the dollar because collapsing commodity prices have crashed the value of their natural resource exports. Europe continues a form of monetary stimulus while Greece muddles through a transitional government. The next Greek crisis offers a final opportunity to test the euro's resilience.

The US dollar's strength amidst the macroeconomic chaos approaching both China and Europe offers the Fed a very short window of opportunity to experiment with a non-traditional interest rate increase. Paying banks not to lend is generous as long as the Fed's ginormous balance sheet of agency securities is sufficiently solvent to fund such payments. If a significant amount of mortgage loans move to non-performing status, many agency notes become toast and the Fed will be hard-pressed to continue paying banks not to lend.

The Fed is about to open a new chapter in money market fund history. Borrowing from money market funds would effectively be an accounting trick that places a new asset on those funds' balance sheets called "Loan to Fed," or some such name. The notional amount of the loan may be enough to prevent money funds from "breaking the buck" and causing the kind of chaos in overnight lending that almost destroyed the US financial system in 2008. It's a brilliant innovation, especially if the money funds who nervously anticipate paying negative interest rates can sustain the Fed's remittance to the US Treasury.

The likely rise in interest rates in September 2015 is a sleight-of-hand move. It will be one of those times in financial services that the back office will drive the front office, all while most of Wall Street and the financial media will only be watching the front office. The stock and bond markets will know that the experiment works if money funds do not break the buck for the rest of 2015. Hedge funds and other private investors should watch money market funds and other ultra-short duration instruments rather than long-term metrics such as mortgage rates. If money funds panic and the CBOE VIX suddenly goes vertical, the Fed may be forced to raise its official target rate by more than 25 basis points.

Friday, September 11, 2015

The Haiku of Finance for 09/11/15

No way to sell bonds
Credit downgrades slam holdings
Gate ready to shut

BRICS Downgrades Portend Bond Market Illiquidity Gates

Goldman Sachs invented the BRICS concept to attract corporate finance clients. Enterprises that sought expansion to supposedly hot emerging markets now had a fun acronym to throw around their boardrooms. Emerging markets rode the BRICS coattails with eye-popping debt issuance. The world's debt explosion now faces an implosion, beginning with some BRICS members.

The S+P downgrade of Brazil's sovereign credit rating is another ill omen for the world's bond markets. The Petrobras downgrade also matters because that company's fate is inseparable from that of Brazil's national economy. Brazil ranks 69th out of 174 on Transparency International's Corruption Perceptions Index and 118th out of 178 on the Heritage Foundation Index of Economic Freedom. The poor rankings indicate that Brazil's national government cannot resolve its fiscal problems without a much more severe political crisis. Petrobras will not be out of the woods as long as the Brent crude price tests a multi-year low.

The other BRICS problems are obvious and endless. Beijing cannot prop its equity markets forever and will eventually run out of foreign currency reserves to sell. Russia's dependence on oil exports place it next in line behind Brazil and China for drawn-out political and economic drama.

Bond investors should recall US regulators' recent discussions of bond market gates that will prevent investors from liquidating their holdings. Endowment and pension fund managers are often confined to investment-grade bonds in accord with their investment policy statements. Sovereign credit downgrades will require money managers to sell their downgraded bonds as one developing country after another faces the credit ratings axe. The SEC's theoretical bond market gates will then suddenly become reality. Retail bond investors will be unable to sell anything as the market goes bidless.

It would be unfair to blame Goldman Sachs for the BRICS debacle. The rest of Wall Street is just as shortsighted as one marquee firm. Everyone who could have seen this coming chose to ignore default risks for emerging economies tied to low-value exports. Investors who sought higher yields in fixed income will be stuck with junk bonds when the gates slam shut.

Thursday, September 10, 2015

The Haiku of Finance for 09/10/15

Hard asset benchmark
One for all commodities
Or pick more than one

Picking Correct Hard Asset Benchmarks

Hard assets deserve more attention than they get. Commodities, real estate, and perhaps even infrastructure are often lumped together into a very broad asset class. Picking them apart into sensible components requires identifying benchmarks for apples-to-apples comparisons.

Commodities are a very broad subject. Base metals, precious metals, energy sources, foodstuffs, and other materials have radically different uses. The Bloomberg Commodity Index Family is both broad enough and specialized enough to track the sector. The Commodity Research Bureau Indexes represent a less flexible allocation but is nevertheless included in other commercial index products. Picking a broad proxy like the CRB matters for fund managers who run portfolios large enough to include all of the benchmarks components. A fund managing that only hedges with energy futures or metal futures needs more specialized benchmarks tracking just that one thing.

Timberland and farmland are not the same thing in real estate. The end products, final markets, and supply chain inputs (fertilizer, climatology, etc.) are all different. Comparing timber REITs and farmland REITs means using their separate benchmarks. The real estate sector makes it easy. The NCREIF Timberland Index and NCREIF Farmland Index are as different from each other as corn stalks and black walnut trees.

Infrastructure may or may not deserve consideration as a separate asset class. It shares many risk characteristics with equity yet is often funded like a fixed income fund. The problem with benchmarks like the S+P Global Infrastructure Index is their tendency to track actively traded equities that build or maintain infrastructure. It is difficult for infrastructure-related investment products to make pure-play claims if they cannot hold ownership in the infrastructure projects themselves. Muni bond issuance remains the primary funding method for publicly-owned infrastructure. It makes no sense for an investment manager to benchmark a muni bond portfolio against an equity infrastructure index.

Institutional investment managers are often the dumbest people in finance, aside from financial advisers in retail wealth management. They led the charge into alternative assets decades ago with the Swensen Yale model. Some of them probably rode the recent commodities bear market all the way down. Herd mentalities drive smaller endowments and pension funds to mimic the poor portfolio models of the largest universities. Many things can go wrong with an asset allocation leaning heavily on illiquid hard assets. Doing right by any fund's beneficiaries involves picking the correct benchmarks and understanding which hard assets they track.

Wednesday, September 09, 2015

The Haiku of Finance for 09/09/15

Decarbonizing
Sane path to development
Global goal agreed

French Ameri-Can Climate Talks In San Francisco 2015

The French Ameri-Can Climate Talks (FACTS) roadshow came to San Francisco last night. I attended at the Exploratorium to hear from luminaries, as I usually do when intellectual heavyweights are around. The French government promotes the FACTS series as a precursor to the UN COP 21 / CMP 11 conference in Paris this December. I will render my impressions of the speakers' insights with my own genius thrown in to make it worthwhile.


The UN Environment Program (UNEP) quantifies the gap between annual goals for carbon reduction and actual carbon generation. The UN 2030 Agenda for Sustainable Development supersedes the UN Millennium Development Goals (MDGs) because development without sustainability still exacerbates climate change. NOAA data shows the world's surface temperatures rising. Complaining about methodologies does not change the data. UNEP quantifies each country's climate change as Intended Nationally Determined Contributions (INDCs). The implied take-away is that some nations, presumably the heavy polluters like China, will have disproportionately larger INDCs. UNEP's Green Economy Initiative redefines prosperity to include human and ecological factors. The initiative would be more marketable to the finance sector if it used the language of ESG criteria and triple-bottom line outcomes that investment managers now widely accept.

President Nixon's Project Independence was an early attempt to put the US energy sector on a sustainable path. It failed because it focused more on supply changes than demand management. One of the FACTS speakers noted that decarbonizing the US economy now works because demand-side energy efficiency is ten times more effective in reducing carbon output than the expansion of renewable energy supply. Energy used per unit of GDP and carbon generated per unit of energy can still decline while GDP continues to grow. The central lesson of sustainability is that the developing world need not trade away future prosperity to save the planet.


Regulating energy markets and human behavior ideally generates Nash equilibriums, but some actors will always resist these equilibriums by seeking self-maximizing outcomes. The paradox is that individuals' optimizations do not optimize an entire system. The global regulatory regime that COP 21 / CMP 11 embodies should move many national economies toward Nash equilibriums. The US EPA Clean Power Plan recognizes that decarbonization is the only politically possible solution the developed world can offer the developing world.

I like the Lazard investment banker's joke that energy companies should put their receivables into special purpose vehicles (SPVs) and sell them as unit trusts to investors. The good thing about carbon trading is that energy companies won't have to use SPVs to monetize their gains from efficient demand or renewable supply. Investment banks can have their fun packaging solar and wind assets into yield cos at a high scale while microfinance enables smaller off-grid solutions at a low scale. Lazard does great work publishing annual summaries of the levelized cost of energy (LCOE) for each major renewable energy technology. The DOE NREL's LCOE calculator is agnostic towards any one technology. I say utilities should use NREL's calculator first to determine what commitment their capital budget and credit quality will allow, then use something like Lazard's numbers to determine which tech is most affordable.

Two hot French babes chatted me up at the reception afterwards. I kept them entertained by demonstrating my amazing intellect and they were suitably impressed. A whole bunch of hot French babes attended this lecture. There must be something in the water over there in France that makes women so much hotter than the ones growing up in other regions. The FACTS talk got me interested in hearing more about financing the UN's sustainable goals even if there are no babes on hand to admire my interpretations.

Tuesday, September 08, 2015

The Haiku of Finance for 09/08/15

Data lake deep dive
Design governance up front
Stay out of the swamp

CIO Deep Dive In The Data Lake

The data lake concept has been around for a few years. It really came into its own in 2014 after PwC implied it can reduce information silos and Gartner warned of its limits. It is certainly a marketing boon for Hadoop architecture vendors and their integration specialists. A data lake that can scale as fast as cloud storage expands means more efficient IT spending, at least initially. It may also mean more IT spending at the back end of a large project if CIOs do not define the lake's governance up front.

The fourth stage of maturity in Edd Dumbill's data lake dream throws down a challenge to IT pros who design strong application clouds. Any CIO with an eye on the long game must design analytics, governance, and security into the data lake at the very beginning. The CIO's budget proposal to the CFO will then be a realistic estimate that won't come back to haunt the company in a year when the Chief Data Officer (or the CIO again, if they also wear the data hat) asks for more money to make the cloud apps work. The CFO should not need to explain a negative capex surprise to analysts in a future conference call with analysts if the CIO is realistic about the data lake's eventual requirements.

The emergence of XML as a strong industry standard means data lakes should be portable if an enterprise switches to another public cloud IaaS provider. An immature data lake will pose problems for data lifecycle management (DLM) if it ignores the midlife activities of processing and analytics just to save money on storage and retrieval. The Data Management Association (DAMA) Data Management Body of Knowledge (DMBOK) is a CIO's help file for optimizing a data lake's DLM. Call the process data administration or DLM, but the result in matching investment outlay to Big Data enterprise goals is the same.

Dumping dirty data into a data lake may seem like a cheap and easy way to assemble an integrated data base. Completing the dump without layering analytics into the Hadoop structure risks turning it into a data swamp. The swamp metaphor became a joke among IT pros soon after the Gartner release linked above hit the wires. Calculating the Cloudonomics risk/return tradeoff of a data lake approach is the CIO's key to staying out of a swamp.

Monday, September 07, 2015

The Haiku of Finance for 09/07/15

Abenomics roll
Some new flavor of sushi
Tastes like a failure

Financial Sarcasm Roundup for 09/07/15

One great thing about this blog is that visitors from the future can see how sarcastic I was at this point in history. I will be just as sarcastic in the future.

Japan's Q2 GDP is still down, no matter how you slice the inventory numbers. Maybe they could slice up some sushi rolls to go with those numbers. I'll have the dragon roll and California roll, please, because one plate is never enough. Abenomics is still in vogue over on that side of the Pacific Ocean. It will probably survive until a round of hyperinflation ruins the ability of ordinary Japanese to purchase very expensive imported foodstuffs for their sushi.

China is rapidly selling off its foreign exchange reserves to support its stock markets and currency. The US is not at all prepared for a sudden run on the dollar, but that is now very likely as more central banks follow China's path. Janet Yellen and Stanley Fischer are going to have some sleepless nights at the Eccles Building running scenarios on how to mitigate a dollar run. I expect pizza delivery services in Washington, DC will work overtime when the Federal Reserve starts pulling all-nighters.

Global supply and demand keep pushing oil prices down. Gas-guzzling Americans can enjoy a few more months of easy motoring. It's premature to call a bottom as long as financially weak oil service firms have access to cheap lines of credit in the US. I await the high yield debt market's collapse and the de-listing of multiple oil companies before I consider the sector a bargain.

If this blog were food, it would probably taste like vinegar.

Sunday, September 06, 2015

The Limerick of Finance for 09/06/15

China slices its growth by a hair
No one tells the truth over there
All such figures inflate
Can't reveal their true state
Honesty in statistics is rare

Saturday, September 05, 2015

Friday, September 04, 2015

The Haiku of Finance for 09/04/15

Optical circuit
Silicon with photonics
Some kind of bandgap

POET Technologies Has No Poetry

POET Technologies has been sitting on my radar screen for a few months. I had to let it percolate to figure out where it fits because it used to be known as Opel Technologies. Their main technology claim is that some integrated circuit with optics will extend Moore's Law. I am not convinced this is the path of least resistance for computing. All of the guru talks I have attended at many tech conferences attest to quantum computing as the next step. Anything that's not quantum can add marginal capabilities but will not be a quantum leap.

The company website's investor relations page talks a lot about several directors but little about management's background. I am not in the habit of giving managers the benefit of the doubt once their company migrates to manufacturing. POET's Yahoo Finance page shows the management team receiving very large compensation packages with no recent revenue.

Photonic integrated circuits (ICs) have been around for a while. Search the IEEE Xplore archive for the article "Optical Integrated Circuits: A Personal Perspective" for a discussion of the difficulties in moving the photonic Moore's Law curve. POET's tech uses gallium arsenide, but a simple Google search of "optical integrated circuits gallium arsenide" reveals articles dating from the 1980s on the promise of such technology. Basic descriptions of gallium arsenide (GaAs) indicate its value as a substrate material in ICs but it is not amenable to the same economies of scale that favor silicon. Light Science and Applications offers a selection of articles on photonic ICs, several of which describe competitors to GaAs tech.

You'd think that something with such a long development history would show some marketable results by now. I had to examine POET's unaudited financial statements and MDA for the six months ended June 30, 2015. They had over $15M in cash on hand with a burn rate of about $1M per month, so they should be around for at least another year. The tough pill to swallow for investors is the negative retained earnings of almost -$79M. All of that capital went to develop a 30-year old tech that has yet to match the performance of silicon in ICs. I did not see anything in the MDA describing a detailed strategy for generating revenue. Rearranging royalties and obtaining SBIR grants are no substitute for revenue.

I am hard-pressed to understand this company's rationale for existence. The IC market is broad but it is not at all clear how POET will capture any revenue once it irons out the kinks in its production process and has a viable chip to sell. I prefer not to bother with long-shots in circuits, especially when quantum computing offers so much more potential.

Full disclosure: No position in POET Technologies (tickers PTK.V and POETF) at this time.

Thursday, September 03, 2015

The Haiku of Finance for 09/03/15

Offtake agreement
Promise to buy production
Signal to lenders

True Gold Mining Has True Problems

True Gold Mining is losing money. I just thought I'd say that right off the bat so we don't waste any time beating around the African bush. The company has been around in some form since 1987 according to Yahoo Finance. That's plenty of time to get out of the market's basement and generate some wealth.

Their current CEO is a former investment banker, and his bio on the company website says nothing about academic qualification as a geologist or specific operational success. I see this over and over again in junior mining companies. The company's Yahoo Finance profile says their chairperson is making an obscene amount of money for a company with no revenue in several years. Guess what, when you put a bunch of investment bankers in charge of a mining company, don't expect to see a bunch of metal coming out of the ground.

The Karma Project in Burkina Faso is their big show. Burkina Faso is ranked 85 out of 175 on Transparency International's Corruption Perceptions Index and 102 out of 178 on the Heritage Foundation's Index of Economic Freedom. Its absolute scores in those rankings are abysmal. Demonstrations forced True Gold to halt its Karma Project in January 2015. Unrest has a funny way of messing up business in a poor, corrupt country.

I read the Karma Project's NI 43-101 preliminary economic estimate dated August 10, 2014. The indicated and inferred resources are decent grades and sizes, but I believe their assumed gold price of $1557/oz is too high given present gold market conditions. The probable reserve grades average to 0.85 Au g/t; that's still decent but not inclusive of proven reserves. I also wonder why they chose a gold price assumption of $1250/oz for their economic analysis that differs from the $1557/oz assumption for the resource estimate. Adding their estimated cash operating cost of $630/oz and capital cost of $207/oz gives us a total cost of $837/oz, unless I'm missing something. That is below gold's current spot price but above its long-term average historical price, so the project is very vulnerable to a prolonged bear market in gold.

The Liguidi Project in Burkina Faso is their side show. The project's fact sheet includes some sample drill results but I don't see anything that resembles a 43-101 report. The final Liguidi results will have to wait for daylight if Karma ever gets going. All of the international ranking data on corruption and freedom apply to both projects with equal validity.

The former investment bankers running True Gold need to raise US$132M to bring Karma into full production. I reviewed their consolidated financial statements dated June 30, 2015. The company's burn rate of $1.4M/month and cash on hand of $23M means they can survive for about 16 months before needing another capital raise. Shareholders will experience dilution if True Gold raises a big chunk of that $132M at some point. The accumulated negative retained earnings of -$81.3M shows how little progress the management made towards productively employing capital they raised in the past.

I will not invest in True Gold. The main project looks decent enough but it's in a bad neighborhood called Burkina Faso. Investment bankers should learn about geopolitical risk before they agree to run mine exploration companies.

Full disclosure: No position in True Gold Mining (tickers TGM.V and RVREF) at this time.

Wednesday, September 02, 2015

The Haiku of Finance for 09/02/15

Good copywriting
Content driving conversion
Get word data first

Copywriting Language Zingers In Content Marketing

There's a whole bunch of conventional wisdom sloshing around the Interwebs about how to craft text that captures an audience's attention. Zinger phrases are the copywriting bridge from eyeball capture to audience commitment. Those of us who live and die by Web traffic need hard core facts to support our content marketing.

I did a Google search of "compelling subject lines" and came up with a lot of recycled blog posts saying the same things. Action words that promise life-changing benefits and force decisions are no-brainers that have been around forever. The new twist is in the delivery through social media. Linkbait farms are full of links saying "10 Best Ways To Do Something You Need Right Now" next to pictures of Grumpy Cat and Kim Kardashian. Grumpy and Kim are not doing something you need right now, so feel free to ignore them.

Any MOOC copywriting course would be a cool bag of tricks if it were co-branded with a reputable business school. Everyone would have access to that top material but only the A-grade students would use it effectively, just like they would in a traditional school. Leading with a title that starts with a number, like those "10 Best Ways" articles, is all the rage on social media sharing sites. Rather than link to copywriting how-to blogs that come and go, I would rather search Google for "copywriting academic research" to find the peer-reviewed proof of workable tactics.

The marketing community does not have a doctrinal definition of how long copy should be to get attention, or maybe I just couldn't find one because I don't have the marketer's secret decoder ring. Conventional wisdom now favors short-form copy that matches people's abbreviated attention spans. I cannot find research that determines whether short-form copy is truly more effective than long-form copy at getting either attention or compliance with a final pitch. It may not matter if the power words punch the reader out up front in the copy headline.

I searched the Harvard Business Review and Knowledge@Wharton for "copywriting" and found next to nothing that would validate any best practices. One Wharton article is "Marketers Turn to Metrics to Measure the Impact of Their Initiatives." It discusses the need for hard metrics but offers none. The market is thus wide open for the kind of unverifiable folk wisdom that ad agencies have always purveyed. Copywriting is still in the Mad Men era. Modern content marketers are welcome to dive into academic journals in search of proof that phrasing, word length, tone, and alphanumeric variation truly drive conversion rates.

Fear and greed still drive audience response in a highly evolved digital age. Pushing an elevator pitch like "How to make 10x more money, go 2x as fast, save 50% on your bills, and be 3x more attractive, all within 24 hours" would be a copywriter's dream. Yeah, people really believe that stuff. Delivering on that promise is the product developer's problem. Alfidi Capital offers no such promises. The zinger content you see here is in a class by itself.

Tuesday, September 01, 2015

The Haiku of Finance for 09/01/15

Megadonor waste
Incumbents make for best bets
Campaign investing

Seabridge Gold Has A Bridge To Two Projects

Seabridge Gold leaves me puzzled. It has been around for many years, long enough to have discovered and developed significant mines by now. The stock's profile page on Yahoo Finance shows the top executives making serious six figures. Executive pay is not a marker of enterprise success. It is nice to see that the CEO is a trained mining engineer and that the rest of the team has been around the block with other mining companies.

They have two serious projects now. The Kerr-Sulphurets-Mitchell (KSM) project in Canada has several iterations of NI 43-101 reports. I read the preliminary feasibility study (PFS) for 2012, and the reserves are not much to crow about without the deposit's size. Consider how low the 2P reserves grade of 0.55 Au g/t would be without the 38.2M oz of metal to make it interesting. It is notable that the 2P reserves grade is about the same as the measured and indicated resource grade, a positive sign given the tendency of reserve grades to be lower after more engineering work. The project's estimated IRR is only 11.5%, less than half what Sprott's Rick Rule uses as a rule of thumb for viability. It's good that their assumed total operating cost of $597.60/oz is so low, even lower than gold's long-term average historic price. They must still raise the $5.3B initial capital cost.

The Courageous Lake project also has a PFS from 2012. This project looks a lot more desirable than KSM due to its 2P reserves grade of 2.2 Au g/t, but it only has 6.5M oz of metal. They only have to raise $1.52B in capital to make it work, but the estimated 7.3% IRR is even lower than the KSM project. The total operating cost of $1123/oz is also higher than KSM, and higher than gold's long-term price.  Priority funding for Courageous Lake would make more sense in healthier economic times. The hard times in mining worldwide now make KSM the more attractive candidate for initial development.

Check out Seabridge's Q2 10-Q report dated June 30, 2015. They had cash and short-term deposits of almost $CAD14.7M. That should be enough to operate for over one year given their present burn rate, once they have paid their current liabilities. Their fundraising success in April 2015 of $16.3M is very noteworthy. It is also noteworthy that the financing was executed at a share price of $10.17. Shares of Seabridge closed today at $6.22. General market conditions are dragging down many companies but Seabridge's private investors continue to have sufficient faith that their investment is worth the premium they pay.

Seabridge is viable if a major partner wants to contribute billions of dollars to starting its two major projects. The market is bidding up this company's share price based on its ore body estimates rather than its operating history. These kinds of lower-grade projects make sense now that high-grade ores are running out worldwide. The mining sector will have to adjust to a new era of permanently lower IRRs with companies like Seabridge Gold.

Full disclosure: No position in Seabridge Gold (ticker SA) at this time.