Category: Movies, Entertainment & Media

SOPA, PIPA and “CFO Techniques”


GI_98327_CFO TechniquesThe inner conflict many intelligent people experience over Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA), is an old problem for me. For many years before the pharmaceutical and media lobbies brought the issue of proprietary rights infringement in the Internet age to Washington DC, I've been torn between two firm believes of mine: (1) that content creators (writers, musicians, artists, designers, etc.) are entitled to get paid whenever their creative products are used for commercial purposes (i.e. to make money), and (2) that the information available on the Internet cannot be restricted by any means.

That's why more than 10 years ago, I thought of Napster as a violator of musicians' rights to financially benefit from their products. It was obvious to me that the whole purpose of the "file-sharing service" was Sean Parker's publicity stunt to show off the Fanning brothers' technological platform with a purpose of selling it and profiting from it (which is exactly what happened).

YouTube, whose owners obviously always intended to capitalize on the advertising, is also at fault when it lets the users to upload copyrighted material without paying the content owners royalty out of their revenues. On the other hand, I don't see anything wrong with YouTube being a promotional portal for young artists, musicians, filmmakers, and such (including the crazy exhibitionists catering to voyeurs), who upload their own creations knowingly in hopes of receiving the tangible benefits of being noticed.

Of course, the most conflicting entity is Google. On one hand, we cannot exist without their search engine (I am well aware that there are geeky alternatives out there, but let's face it – Google dominates); on the other hand, when it comes to the Internet advertising they are the closest example of a monopoly we've got in our screwed up economy. Moreover, Google attains its riches by using every single one of us, the information-seeking users. Ultimately, it's in their interests to tag counterfeiters and bootleggers, because users are looking for them. And I guess they know that their hands are not exactly clean. Why else would they settle with the Department of Justice to pay $500 million for allowing Canadian Pharmacies' advertisement?

Presently the issue of the online copyright infringement hits very close to home for me. A bunch of unlicensed eBook-hacking sites are offering "CFO Techniques" downloads for free. Neither me nor my publisher is getting a single penny out of this, while the sites' owners get advertising income, revenues on sales of their users' information, and ability to pollute the hapless freeloaders' computers with the spyware invisibly attached to the plug-ins required for viewing the books. They profit unfairly using MY PRODUCT. And that's not fair.

Still, even this wouldn't force me to support the half-assed anti-constitutional laws like SOPA and PIPA. Why? Because if these laws are passed, I could go to jail for offering my readers a clip from "So, I Married an Axe Murderer" within my post about The Best Boss in Cinematic History , even though I derive no material benefits from this blog (none at all). I'd rather people steal my shit than go along with freedom of speech violations in the name of copyrights protection.

Yet, I am all for fighting piracy in an intelligent way that doesn't take our civil liberties away. And the "financial benefit" criteria seems to my CFO mind like a sensible approach. If a site takes any form of payments or generates advertising revenue through deliberate peddling (not just illustrative usage) of unlicensed and unpaid for content, the enablers of payment processing and advertising portals should stop providing their services to this site. This would be not much different than YouTube's actions under the Digital Millennium Copyright Act (DMCA): they get a notice and remove the violating content.

Money is the key. I always said that the best way to fight terrorism is going after the financial sources. The now supposedly dead Osama Bin Laden without his multimillion wealth would've been just a thug on the street. Facebook without the advertisement revenue would be just a well-designed electronic hangout with no prospects for an IPO (expected in May this year).

Why Amy Jellicoe (Laura Dern) from “Enlightened” Drives Me Mad?


Enlightened10I like whatever Mike White (a friend of Jack Black) does. Ever since "Chuck & Buck," "Orange County," "The Good Girl," and "The School of Rock" I've been a fan of his writing, which is always quirky and amazingly original. And his new series on HBO "Enlightened" is fantastic: honest, insightful, filled with an incredible array of complex and realistically fucked-up characters. On a human level, it makes me laugh, cry, sigh in recognition, squirm from awkwardness, nod and shake my head – all within the same episode.

Yet, the economist in me cannot stop being constantly mad at the show's protagonist, Amy Jellicoe (played by always fabulous Laura Dern, who shares the show's executive-production credits with Mr. White). And it's not because I don't believe in the phony enlightenment through expensive retreats and self-help books. It seems that the creative team shares my opinion on this issue - the persistent cracking of the artificial facade exposes the impossibility of achieving peace in the realm of contemporary American existence, plagued by social and monetary fights for survival. What really makes this CFO frustrated is the fact that this woman DOESN'T PERFORM ANY WORK, BUT STILL GETS PAID.

There is nothing wrong with coming to realization that there are important things in your life beyond the job. Take if from me, most people work for a paycheck, not for self-realization, including those at the very top of the business hierarchy.   That's a sad truth about our lives. However, "WORK" is an operative word. Coming to the office whenever, occupying yourself with personal matters throughout the day, and then waltzing out smiling before anybody else, like Amy does - there is only one word to classify that kind of an attitude: STEALING.

If the job heavily bears on your psyche and you feel that you will not be able to tolerate the meaningless work for one extra second, leave and quit getting paid. That's the honest thing to do. And Amy does find a job, which agrees with her newly-acquired outwardly predisposition. Guess what? It pays only $25K a year and she "cannot survive on that!" If only she could continue getting the regular direct deposits from the bad-wolf corporation, while contributing her time at the shelter – that would be a blissful combination!

Amy seems like a person who wouldn't be toiling for eight hours in front of a computer screen even for the most noble purpose – it's just too much for an "enlightened" person. But she especially despises the fact that her department analyses the employees performance metrics. I am not going to judge here what the corporation does with the results – there is not enough information in the show to do so, only vague hints. Yet, I can definitely say that there is nothing wrong with productivity analysis per se. Companies of all shapes and sizes must to do that, if they want to survive and prosper.

Socialist countries provided most people with work (albeit at incredibly low salaries), regardless of their efforts. Many people there would come to places of employment without any impulse to attend to their jobs. Look what happened to those economies! It's people like Amy Jellicoe who end up at Zuccotti park hanging out and screaming about the disappearance of the middle class, while the real members of that class continue going to work, doing their jobs, helping their businesses to survive. Those, who don't want to work are the reason why the quality of products and services continuously goes down, why the economy deteriorates right in front of our eyes.


The Lopsided View of Corporate Taxation


Corp TaxesIn October 24th issue of New York Magazine, Andre Tartar's Intelligencer column featured a black-background Darth-Vader-sinister entry, disdainfully called The Freeloading Playbook (see the page's image to the left).  It presented four "tax-dodging" schemes employed by international corporations.  I have quite a few problems with the piece, but will focus on the misleading interpretations that I believe to be the most damaging to the education of general public on such important subjects as political economy and corporate taxation.

First of all, as far as an average reader is concerned, the implications are that the corporations are engaged in unpunished tax-evasion practices.  This is a gross distortion of truth.  We can argue for years about the nature of trickery, but the fact is that the Internal Revenue Code had deliberately created these loopholes to accommodate the international expansion of the US business, and the companies simply utilize the opportunities the tax laws allow them.  I assure you that there are other ways to reduce taxable income, including transfer-pricing of inter-company transactions (between the US parent and foreign subsidiary, or other way around).

Secondly, "freeloading" by definition means living off somebody's generosity.  Way to further confuse clueless Zucootti-Park affectionadoes!  Whose generosity we are talking about here?  Those who get the biggest chunks of the revenue derived from corporate taxation?  The military complex?  Government-subsidized industries like automaking and agriculture?  Chinese bankers (the interest on their loans to the US government must be paid)?  Welfare recipients?

Also, I am absolutely appalled by the fact that the companies that reinvest their earnings into their international value chains are thrown onto the same page with actual schemers who creatively avoid taxation (still legitimately, though) through M&A transactions and intellectual property licensing.  Notice how for "Double Irish," "Killer B," and "Deadly D" Mr. Tartar came up with singular examples – Google, IBM, and Eli Lilly respectively, while for earnings reinvestment he chummily states, "like, everyone." 

Yes, everyone, including  thousands of international  small businesses who set up foreign subsidiaries as their distribution arms to sell US products abroad.  (These structures are so common that I used one of them as a typical example in my book CFO Techniques– see the illustration below.)  So, they don't repatriate all of their money because they incur operational expenses overseas in the normal course of business.  That doesn't mean that they should be compared with the 500 super-rich companies.

Figure 5-1     M. Guzik, "CFO Techniques," Apress, 12/02/2011; Figure 5-1.

What exactly Mr. Tartar and others like him would like to propose?  That establishing foreign subsidiaries for the sake of running more efficient businesses should be prohibited altogether by law, like it was in the Eastern bloc countries during the communist rule?  Or that we allow double-taxation?  Guess what?  Business super-powers will survive anyway, but the small businesses exposed to such treatment would cease to exist. 

And why nobody questions the incredible fact that in this supposed bastion of free-market economy we have practically the highest corporate taxes in the world  – up to 38% federal, plus up to 12% state?  So, in some localities there are companies who end up paying 50% of their income to the government.  We have over 6 million companies with less than 100 employees in this country, and they are suffocated by these rates.  Why don't we approach the taxation problem from that side? 

Those who have at least rudimentary understanding of commercial principles and really care about our economy should be arguing for the protection of small businesses every chance they get, instead of throwing around meaningless and confused statements like the ones in the "Intelligencer."       

No Tip Reciept: The Legal Obligations of a Waitress


5510tA couple of weeks ago (I apologize for the delayed reaction) AOL Jobs featured a Claire Gordon's article about Victoria Liss, a waitress/bartender (the author called her both), who posted a copy of a customer's receipt on her Facebook page together with a photo of some guy who just happened to be the customer's double namesake.  She's done this in retaliation for a zero-tip and a note the customer wrote at the bottom, which basically amounted to a personal attack on her appearance.

The article has generated over 3500 comments.  If you scroll through them, you'll notice that most fall into two groups.  Those written by people, whose income at some point in their lives depended on tipping generosity, express compassion and support for Ms. Liss's being hurt by the "horrible" treatment; many share their own experiences of customers' "unfairness."  Others emanate the collective contempt towards the "obnoxious" expectations of tips by service industry professionals (especially in food and drink establishments), regardless of the quality of their work.  Many state that tips are essentially performance bonuses – a valid point I strongly uphold.

What surprises and worries me is that only a handful of commentators address the most important issue of the story – the illegality and immorality of Ms. Liss's act of publicizing the receipt to the whole world.  You see, it wasn't hers to use as she pleases.  A credit card receipt is a financial and legal instrument that binds together at least four entities: a credit card holder (customer), a credit card acceptor (merchant, in this case the restaurant as a legal entity and its owners), a credit card issuer (bank), and a payment clearance party (merchant service provider).  Do you see a waitress anywhere on this list?  With respect to the receipt, the server has a fiduciary duty to her employer to pass it to accounting.  That's it.  She was not supposed to copy it, take it out of her place of employment, or use it any other way.  Ms. Liss's actions violated the customer's personal rights to privacy and broke the fiduciary trust of her employer.   In addition, all those financial parties to the transaction are bound by the federal law to protect the credit card holders' privacy.   Ms. Liss exposed all of them to a possibility of civil legal actions and regulation censures.

Technically, every single party injured by Ms. Liss have rights to go after her: the customer, the poor innocent guy whose picture she posted, the employer, the merchant service provider, and the bank that issued the credit card.  At the very least, she should be fired.  And if I was in charge of Facebook's policy-making, I would close her account as well.  This has nothing to do with the freedom of speech – this is aiding in an illegal activity.             

Legal issues aside, what's up with the fact that she couldn't even remember the customer's face and got the wrong guy's picture?  Why nobody questions that?  

And I cannot help myself wondering about the other side of the story.  What prompted the customer to be so extreme?  Just your basic assholiness?  I doubt that.  Leaving no tip is one thing, but the text of the note may signify a reactive response to something that transpired beforehand.  Ms. Liss admits herself that her suggestion of fats multiplied by carbs was not welcomed by the guests.  What happened after that?  Did she walk away, mattering snide remarks about anorexia and bulimia?  You know, in that quite audible whisper, mastered so well by disgruntled service workers – the waitresses, the bartenders, the bank tellers, the park attendants, and so on, who hate their jobs and resent their customers.  At one point or another we all have been exposed to their passive-aggressive harassment.  Trust me, it can unbalance even the most stable of customers.     

Marc Cenedella Freaks Out: “Privacy is for old people says LinkedIn founder”


Linkedin_2-300x206Marc Cenedella is upset! He is so upset he is lashing out at something Reid Hoffman said nearly a year ago at World Economic Forum in December 2010 (the Ladders' researchers must have been working on digging something up on him for months):

Privacy for Old People Says LinkedIn Founder

And I understand – LinkedIn went public and made X amount of millions in cash for Mr. Hoffman (I hope my readers understand that, like the rest of the public-stocks billionaires, he cannot really turn the $1.6 billion of his shares into liquid assets overnight). Mr. Cenedella, who started The Ladders barely two months after LinkedIn was launched in 2003, had wet dreams about being exactly in Mr. Hoffman's position by now.

I have no fucking clue why would he be dreaming those dreams. It's not that he created anything original. There were already other job boards with premium memberships and listing fees before The Ladders. The only differential he had was the $100K+ executive appeal (which, as you know, they just dropped – see my September 24th post). Did he think that those minute bells and whistles would be sufficient to build his value as an attractive investee?

You didn't really think that Marc was upset about your personal privacy, did you? Well, he did at some point – he was a man of ideals. When he started his company he did the right thing – he declared in the Terms & Conditions that he will not share, sell, etc. members' information. And indeed, I don't know anybody who gets spammed because of their usage of The Ladders. It's the other job boards that got their emails too: Monster, CareerBuilder, HotJobs, etc.

But big bucks are big bucks – they manage to bend out of shape the purest of idealists. And now, when Marc is alone in his office or his kitchen writing his blog, he is jealous, devastated, and desperate to kick himself in the nuts for not doing what all other amoral Internet moguls do, namely selling every single shred of your privacy in exchange for a golden bonanza Hoffman experienced on May 19th this year, when LinkedIn's IPO closed at the double of the entering price. (By the way, now it's at four times of the initial offer.)

So, he is upset and the post linked above is his way of letting the buildup of negativity out. Well, Mr. Cenedella's motivations aside, Hoffman's remarks in Davos are wrong on so many levels, it would take me several more posts to break it all down( don't worry, I am not going to). This is exactly what I would expect from someone who "made it" in the way Mr. Hoffman did, though. What's the implication here? Even if you are 18, but is concerned with your constitutional rights for privacy, you are "old" and square? And if you want to be perceived as young and hip, you should disregard all privacy concerns?

Statements like that don't upset me because they are "politically incorrect," as Marc Cenedella claims – I don't care about that shit! They upset me because they are politically dangerous and stupid. How intellectually limited one should be to mix up the teenagers' exhibitionism with privacy issues? Are you that confused? You don't see the difference between people, on their own accord, making decisions to disclose information about themselves and your selling their connectivity and interests profiles to third-party predators for an enormous gain? This proves once again that nowadays success, even in business, has nothing to do with intellect.