Are Public Companies Owned by the Public?

Board of Directors Keeping a Low Profile Cartoon

Is the entire governance model of public companies broken?

In theory, public companies are owned by the public shareholders and the goal of the company is to increase the long-term value for them.

In practice , many companies are managed by minority shareholders or ineffective board members , that can not be replaced by the majority public shareholders.

Lets assume I own HP stock. Assume I think the board is not doing a remarkable  job. Since four CEO were changed in recent years, it is unlikely that all CEO’s are to blame.

How can I change the HP board of directors? This is quite impossible as I have a very tiny share of HP shares. But the largest owner has only 7%.

The classic capitalist answer is that I could sell my HP share, and if many people follow my footprints, the board would “Get the message”.  However, there are some very nice incentives for being a board member ($381,000 per year in this case) , so there is no reason for board members to resign. For example John H. Hammergren is a director of HP since 2005 and despite of the stock decline he did not “get it”.

Maybe he is an amazing director ,I don’t have  any data, but the stock does not reflect it.

HP (HPQ) Stock Price 2007 To 2012

In theory, I can send a fax a nominate my own director , but I have the feeling it would be challenging, as the process is complex.

In 2012, for example, only 20 such proposals were submitted and only 8 actually got to the voting stage.

In other companies, in which the CEO has 10%+ of the share, things might get even worst, as a minority shareholder (10% is smaller than 90% ) is running the show, and effectively selects the board members on his own. There are many conflicts as a result. It is very hard to believe that his own compensation as an employee is not highly biased because of his shareholder position.

The current practice in which the CEO’s have large influence on board selection seems extremely problematic.

One possible solution is to move to a more direct, democratic, online model elections model.

Each shareholder would be able to suggest a director ,electronically and vote, proportionally to his shares on the best directors to run the company.

As a result, the directors would also have to convince the public on their achievements, independence and value to the shareholders.

It would also help eliminate some of the nepotism , which is often seen in Israeli stock exchange, and in a more subtle ways in NYSE and NASDAQ.

Such a model would be modern, effective and representative of the public interest.

Software Development Team Optimal Size

The Ideal size for a software development team is 3.5 people.

In a team of three people , everyone is always working hard , the team leader is still writing lots of code and synchronization is easy.

However, there is always a feeling that we are scarifying long term efficiency for short term results. If only we had one  more person in the team !

In a team of four people , there is one guy who is not fully utilized because he is waiting for others, or because he is not feeling the pressure.

The team leader writes less code, as he spends more time on administration and coaching.

As a result, It is easy to conclude the ideal team has 3.5 developers. However, splitting programmers and getting some output  is quite hard.

A good compromise is to have three seasoned developers and one fresh out-of-college developer.

The experienced members realize they still carry most of the weight, while the young developer has to prove herself.

This combination also allows the team to work on refactoring and important long term missions,while ongoing bugs are done by the fresh coder.

Expense Report, Audits and Lap Dances

Shrink Your Stomach

A men leaves his wife and kids embarking on a long journey. Travelling 16,000 miles in 24 hours, crossing oceans and continents.

His time is shifted, everything seems blurry , the immune system is falling apart and the streets have no name.

Sleepless nights and sleeping pills in an anonymous motel  But the worst part of business travel is filing an expense report afterwords.

One can use the fake “Expense Report Generator” , but for the honest people life is much harder.

About ten years ago it was relatively simple:

* Company bought the airplane tickets, hotel vouchers and car rental vouchers

* Eating and general costs were $45-50 a day

* For other larger costs one should have brought receipts (Taxis , Hospitality)

* For a long travel an employee could get  a cash advance or a deposit to his bank account

French Toast in The Grove with Strawberries

Nowadays it has become much worst , although automation should have made life simpler

* The fixed daily amount was deleted, so a receipt is needed for every item purchased,  even $1 bubble gum.

* The previous allowance is  now the daily maximum . Let’s say on Monday I was extremely busy with customer visits and only grabbed a $7 Burger King lunch. On Tuesday I ate the hotel breakfast ($23), some vietnamis noodles for lunch ($7) and nice Italian dinner in San Francisco ($50) . In the past, corporate would understand people might not eat the same way every day. These days the corporate would reimburse me $57 for the two days , instead of $87 actually “eaten”.

* Since sales people abused their expense accounts to get lap dances, every receipt has to be “Itemized” . Corporates want to validate that expenses are not spent on Whiskey, Women and fancy Falafel. I’m quite confident that sales people have ways to solve the problem, but for the poor developers that’s just another annoying rule.

SexyGal Recpit, From http://ny.eater.com/uploads/2008_10_galanga.jpg

* There is no cash advance. The employee is supposed to pay for all the expenses with his private credit card. “Corporate Credit Card” are a fiction and do not really exist in Israel.Even in the US the mechanism is problematic , because the employee is personally  liable for unpaid accounts, and his credit reputation might be damaged when corporate delays payments.

The problem , like in many other cases, is that finance department focuses on the minority of unethical employees and creates a huge bureaucratic workflow that wastes more money than it aims to saves. While finance administration might be easier, it is amazing that an employee needs to spend 3-4 hours post travel to get back the private money he spent.

Since the costs of checking all these rules become very high, many corporates outsource the auditing to a far away country, with people who can’t read our language and have litle understanding of business, business travel and local facts. Try and explain to an auditor from India your Hebrew Receipt for a Big Data conference (or vice versa).

Of course, once you get high enough in the pyramid , you can delegate such chores to your admin (I’m guilty as charged) , and once you get high enough to change the process you  forget how annoying this type of activity is…..

Why Great Software Developers Should not do Porn and AlgoTrading

Product Manager – Backgammon, Company unspecified, Gibraltar

The world’s leading online gaming company, requires an innovative Product Manager to own, develop and manage the company’s suite of Backgammon products. This dynamic role will see you developing and owning the product roadmap for Backgammon, generating new product ideas and driving successful product rollouts.

I believe it is a shame when some of the top intellectual minds of our times devote their 12 hours work days to algorithmic trading, on-line gambling, “casual” gaming, search engine optimization  , on-line porn, search diversion through “Freeware\Malware” and so on.

Of course, these ultra smart developers are not using these services (at least not all of them:) ). They are the brains that run the software and algorithms to operate the questionable services.

I’m not passing judgment on the need for the services , although I’m quite sure Algo Trading has no economical benefit to the world . I do think that being a “Product manager for backgammon” is less important and satisfactory than “Product manager for diabetes cure” .

I see too many brilliant friends who want to make easy money by finding a loop-hole in the global financial system. While I can’t commit that I would never work in such company, I prefer not to do it, as long as I can.

Interestingly enough, these services are somewhat related. For example, a lot of the real good money in SEO is from references to gambling and porn sites . Forex trading is not really different from a legal(?) form of gambling and “casual gaming” ,IMO, is quite the same.

It just seems that developing the Google search engine is more productive than algorithms that create fake content that only seems real to Google, but no real person would ever want to read.

Our civilization moves forward from innovation like Bioinformatics and Wikipedia, even Facebook and Twitter. But it seems that we can leave SEO to the average  developers….

Mitigating the risk of lawyers

It’s not a crime to be innocent, these things we have not done
But you’re not some little child, spring is past and gone
Well I know my craving heart and I’ve seen your vicious eyes
And I think we know the truth, both you and I
Don’t flutter your lashes like a little girl
And ask me why it’s such a cruel, cruel world, no
Don’t ask any more stupid questions
You already know the answers to,

New Model Army, Stupid Questions

Lawyers represent a huge risk to the business. Most of them believe their role is to insure they can never be blamed for any decision made, rather than the traditional role of a business – to make money.

And I’m not even talking about external lawyers who are looking for ways to sue you these are your own employees who earn their living of your business.

A typical discussion with the legal department goes something like this:

• Manager: Can I Do X?
• Legal:No, it is risky.
• Manager:But It is Really Important.
• Legal: I’ll check.

Legal never get back so the managers pings legal two weeks later.

• Manager : What’s the answer? Legal : You can’t.
• Manager : Why? Because it is very risky for IP\TAX\HR\Contract reasons.

Happy Legal Expert Taking Risks

I have learned a few rules to mitigate the risk from the legal department.

• Learn the principles. My two MBA courses on contracts and law in information systems have given me enough basics to ask hard questions.
• Managers should understand employees’ social rights , benefits and different employment models etc. This is important part of the role, not “HR department role”.
• Always start from the business goal. The lawyer cannot argue about that because he does not understand the business and because you are the owner.
• If you are hiring the lawyers get the good ones who understand business and are service oriented.
• If you are using internal legal and  get bad service – complain. Legal is a service provider , just like the IT department. If their responses are slow, inaccurate or unhelpful to te manager one should talk to their executive and ask for assistance.
• Demand domain expertise. High-Tech Lawyers should understand the difference between SaaS ans On Premise, for example.

• Use standard forms,standard contracts, standard NDA etc. It is not scalable to rethink these for each relationship.
• Request service, not consulting. For example :”   want to have a OEM partnership with X in two weeks because it is going to add 20M$ for us next year. Please handle the legal parts ASAP”
• Give the lawyers context and business reasons: what  are you trying to achieve, who is the other side, what’s the urgency, what’s the reward.
• Don’t go legal unless you have to.Risk is everywhere – bugs, features, unhappy customers. As managers we manage risk without even thinking about it. Lawyers are trained to think only about the risks and have a very strong bias against action. In decisions where risk is understood and  is small , it is better to leave legal out of the picture.
• Unless we are talking about tax or death issues , no one is going to come back to the manager 10 years from now and blame him anyway
• Insurance is a great way to quantify risk and can be used in many cases. For example , instead of  long debates on what will happen if your web site is crashed by aliens,  it is simpler to buy insurance.
• “Risk to legal department” != ”Risk to the business”
• Magic words: “I understand the risk and I accept it, If things go wrong this is my business decision”.Since most lawyers are just looking to cover their behinds, this is what they need to hear.

Can You Make Money Writing Algorithms? – Part III

“Money For Nothing and the (K) Nearest Neighbors Are Free”, Doctor Mark Knopfler

In 2007 I wrote Why it is hard to make money form algorithms and How new technologies allow making money from algorithms.

Kaggle is a fascinating example:

Kaggle is an innovative solution for statistical/analytics outsourcing. We are the leading platform for predictive modeling competitions. Companies, governments and researchers present datasets and problems – the world’s best data scientists then compete to produce the best solutions. At the end of a competition, the competition host pays prize money in exchange for the intellectual property behind the winning model.

The biggest challenge right now is for $3M , to improve the broken American health care system with 951 teams competing at this stage.

If we want to go for higher numbers: google paid $12B for Motorola patents. Most of these patents have probably never been used and are not-so-important-or-smart.

While I believe most software patents are idiotic, this is how the game is played these days. And in some sense it is encouraging that Intellectual property, in the form of Algorithms starts showing its economical value.

And the people with skills are doing well. From  ”Big Data Skills Bring Big dough” in GigaOm

If you can claim to be a data scientist and have the chops to back that up, you can pretty much write your own ticket even in this tough job market. A quick search of the popular job posting sites –Indeed.com,SimplyHired.com, or Dice.com – shows a huge demand for data scientists or anyone who can demonstrate other “big data”skills.

And , most importantly, the funniest show in TV right now (except for Fox News) is Big Bang Theory, focusing on Algorithms to making Friends.

The German version is even funnier

A Watershed Year for Data Migration: Keeping the Lights on in Transition

Reblogged from EMC IT’s Journey to the Private Cloud:

When it comes to moving a live data center that is supporting a nearly $20-billion corporation, things change daily. So even though the team overseeing EMC Corporation’s transfer of data to a new data center 600 miles away spent 12 months in a discovery process to hone our migration strategy, the process is still a bit of a moving target.

Read more… 924 more words

Interesting post on the Migration of a huge Data Center

Three Examples on How not to Lead by Example

Three stories that never happend and probably never will

Porsche and Outdoor Camping

CEO in a Tent

As a CEO Invite your top executive team,some over 50 years old,  to an outdoor seminar, sleeping in tents.

Explain to them that sleeping two in a tent would bond the team together and allow an early start in the next morning.

Drive home with your Porsche Jeep and personal driver to sleep with your spouse.

Arrive late the next morning because of traffic, while everyone is waiting for you to start the training.

VP Engineering and the Hacked Weekend

Following a major security vulnerability found in your department code you call all developers to look for more bugs on the weekend.

Explain that while you don’t expect a one ay effort to find bugs that were not found in year, it is a critical method to communicate  the importance of secure coding.

On the same weekend stay with your family at home. After all , you don’t even know how to check out the code from RCS, let alone find security bugs in it.

Banana Performance Review

VP HR slow Performance (Review)

Force the entire organization to a methodical yearly performance review.

Force the managers to put the employees on a standard distribution curve.

Calculate the bonuses as a direct result of the performance review, with 1% flexibility.

Perform the performance review for your own direct reports three months behind the deadline, in a casual and quick manner.

Five Best Songs for Pogo (Dancing)

POGO Dancing

In memory of many fun Friday nights in  ”Zman Amiti”.

• Should I Stay or Should I Go, The Clash
• Killing in The Name, Rage Against the Machine
• Papa Won’t Leave You Henry, Nick Cave
• Smells Like Teen Spirit, Nirvana
• Debaser, Pixies

From Wikipedia: The basic steps allow for a variety of interpretations, some of which might appear quite violent. Pogo dancers have their choice of:

• keeping their torsos rigid or thrashing them about;
• holding their arms stiffly at their sides or flailing them;
• keeping their legs together or kicking about;
• jumping straight up and down, jumping in any direction, or spinning in the air.

Occasionally, dancers collide, but this is not necessarily part of pogo dancing. An uninformed bystander might get the impression that the dancers are attacking one another. People sometimes get injured when pogoing, but, more often than not, pogoers who fall to the ground are helped up instead of getting trampled.

Who Moved my Espresso Machine?

Our Hi-Tech Office Espresso Machine

Background -  our office occupied half of the floor and due to exceptional growth in Beer Sheva we added the second half of the floor. The distance between the two parts is about six meters.

 A short water cooler talk with one of my employees, lets call him Dean.

Dean: “When will we have an espresso machine in our side of the floor?”

Me: “Never”

Dean: “Why, are they better than us?”

Me: “Yes”

Dean: Silence.

.

If you ask stupid questions, you’ll get stupid answers . To be honest, I’m also located in the side without an expresso machine.

While I agree on the  importance of gourme food in software development , walking 15 second to get a top notch espresso is easy enough, even for our semi spoiled industry.