31 posts categorized "December 2012"

Amazon and Google spar over cloud services talent

While I've been distracted trying to catch up on the fight in California between Zynga and Kixeye over management talent, Amazon has brought a similar case in my own Seattle backyard. Amazon is seeking to hamper what a former AWS sales exec may do for Google.

Geekwire screenshotThe Amazon suit seems to have come to a head. Geekwire reported last week that the federal judge in the Amazon case has issued a preliminary injunction, an order restraining the ex-Amazon employee from soliciting Amazon customers.

Now that sounds like a win for Amazon, but it's not really. The judge limited the duration of the court's restriction to the length of a contractual restriction that Google itself put on the executive when Google hired him.

Geekwire's report put the Amazon case on my radar and Todd Bishop's policy of posting links to primary source documents gave me a chance to look at the judge's order.

Check out the guest post I wrote for Geekwire to sum up what I found. It's titled Legal lessons from Amazon’s ‘noncompete’ battle with Google and has just been posted.

Happy new year everyone! I am so thankful for your support, your engagement, your passion. JLM's exhortation in the thread on Saturday's post will be my motto for 2013!

Houseboats on Lake Union

As part of the MOHAI opening festivities yesterday, Helen and I took a cruise of Lake Union on the historic steamship Virginia V.

The tour was narrated by Seattle historian Jules James, who knows the lake better than the back of his hand.

Houseboats east side Lake Union small

We learned about the history of houseboats on both the east and west sides of the lake; about Boeing's early activities flying sea planes from the lake; about the development of Gas Works Park; and more. Helen said it was the best narrated tour she had ever heard, and I agree.

Below I've embedded a video I shot, slightly longer than a minute, showing just some of the houseboat communities along the east side of the lake. The sound quality is poor because of the strong wind, but you can probably make out Jules talking about the changes in houseboat populations over the years, as well as what the neighborhood did to stop the building of huge structures over the water from becoming a pattern.

Corporations are real, it's the shareholders who are the fictions

For a very different take on corporate law, watch this C-SPAN video of Cornell Law Prof. Lynn Stout talking to an audience at the Clinton School of Public Service at the University of Arkansas.

Stout2Among Prof. Stout's views:

  • As if countering progressive critiques of corporate personhood from discussions of the First Amendment, Stout maintains that corporations are very real; if any actor in the corporate context is fictional, it is the shareholder.
  • Shareholders are not "owners" in any meaningful way. Rather, shareholders have contractual interests in corporations, alongside others with contractual interests, such as bondholders and employees.
  • Stout denies that the interests of all corporate stakeholders are best served by maximizing the value of the holders of the "residual interests," i.e., the shareholders; Stout says that this proposition, argued by economists, is only true in the context of bankruptcy.
  • Shareholders and the public at large were both served better when corporate managers were regarded as hired hands, whose responsibilities were characterized in broader terms; the emphasis of maximizing shareholder value in the short term has perversely caused corporations to be less effective at increasing value for all concerned, including shareholders.
  • Government regulation of executive compensation has backfired. Stout seems to suggest that boards of directors would behave more responsibly, if they could not hide behind compensation formulas mandated by regulation.
  • To counter the value-destroying, short term behavior of public corporations, Stout suggests corporations treat long and short-term shareholders differently. For instance, both voting and dividend rights could be weighted to favor the shareholder who holds it, her or his position longer. In terms of public policy, the long-term capital gains holding period should be more like 3 to 5 years, rather than one year.
  • Corporate disclosure is a two-way street: Stout says corporate bylaws should require shareholders to reveal more about themselves and their shareholding agendas. No shareholder, whether individual or institutional, holds shares of public corporations in isolation; all shareholders have broader interests and aims.

At every turn, Stout attacks what she regards as received but erroneous wisdom, propagated by economists and obligingly regurgitated by lawyers who should know better or at least think more clearly, that corporate directors have legal duties to maximize profits for shareholders. Corporate law requires no such thing, she maintains.

Steve Inskeep's fiscal cliff haiku

As the US economy sidles up to the fiscal cliff, one professional journalist has the story covered from all angles.

That journalist is co-host of NPR's Morning Edition show, Steve Inskeep.

Inskeep has been tweeting little poems, in haiku form, under the #fiscalcliffhaiku hashtag.

"He offers eight, I
ask for ten. Obviously
we can't compromise."

Fiscal cliff

Here's another.

"The full moon flashes
between moving clouds. Congress
missed that moment too."

Others are tweeting haiku, too, but Inskeep's are the best.

Here's one reminding us that the laughs are at our expense.

"The sobering thing
about Congress is knowing
who elected them."

Inskeep is a good, all-around twitterer, of the pattering sort (bursts of well turned tweets on related subjects); but he's raised the standard with #fiscalcliffhaiku.

Photo: Universal Pops / Flickr.

A better way to regulate equity crowdfunding

Yesterday the NYTImes ran an update on where the SEC is in the process of writing rules to implement the equity crowdfunding provisions of the JOBS Act.

The title of the piece, ‘Crowdfunding’ Rules Are Unlikely to Meet Deadline, is a downer, but the report is actually optimistic, insofar as it suggests that viable rules are achievable:

"Advocates for both investors and members of the crowdfunding industry have dissected nearly every element of the legislation. 'I think there are probably 25 or 30 legitimately important issues,' said Douglas S. Ellenoff, a New York securities lawyer who is advising some in the industry. 'But I think they’ve all been hashed out. They have heard issues from a variety of angles, and I think that the draft proposals are fairly advanced.'"

I remain highly skeptical.

The problem isn't a lack of earnestness on the part of almost everyone involved.

The problem instead is that the underlying legislation is an amalgamation of new behaviors and old regulatory theories. To write rules to implement such a clash of worlds, everyone is in effect seeking a "light" version of a limited offering registration. Online portals morph into a kind of broker dealer; issuers with no operating history are caught in the trap of preparing audited financial statements to no purpose; and promoters are held personally liable for disclosures in plans that, experience suggests, are likely to be abandoned within weeks.

I think the Congress should start over.

One way to go would be to make each individual citizen her own regulator, responsible for her own behavior.

6a01156e3d83cb970c017d3ce12179970cI call this approach the "Individual Crowdfunding Account." This way does not require issuers, portals, regulators or anyone else to verify income or net worth.

Here's the core concept: each year, any individual is permitted to set aside up to $2,000 in an Individual Crowdfunding Account. Putting money into an ICA is completely voluntary. Some years, you could skip earmarking any funds to it; other years, you could partially fund it. But $2,000 per year is your max. After 5 years, you could have diverted no more than $10,000 of your income or net worth into an ICA. That is the essential means of investor protection in this approach - simple paternalism, a cap on how much you can devote to unregulated equity crowdfunding.

From funds in your ICA, you are free to invest in any crowdfunding deal you like. There would be no regulations for issuers or portals to follow, other than this one: no funds could be accepted from any source other than a bona fide Individual Crowdfunding Account. In fact, why not make this one prescription on issuers and portals really tough: all persons involved are personally liable to the investor for any funds taken other than from an ICA.

Could an investor withdraw liquid funds from her ICA at any time? Yes, of course. But then those funds are not available for investing in crowdfunding deals.

If the investor gets a positive return from one of her deals - unlikely, but possible - then that upside, being proceeds of her ICA funds, can be put back into the ICA for future investing. Or not. Totally up to the investor.

Congress is good at writing laws that expire if not expressly renewed. That trait can be put to good use, by experimenting with something that tosses out the old paradigm altogether. If Individual Crowdfunding Accounts don't work, the idea can turn into a pumpkin in five years and not be extended.

Guns and public health

I caught a fascinating segment on KUOW's Weekday with Steve Scher this morning. Scher interviewed Dr. Frederick Rivara, who, with another physician, Dr. Arthur Kellermann, authored an editorial, Silencing the Science on Gun Research, available online at the Journal of the American Medical association.

HandgunThere's a personal backstory here. It appears the authors of the editorial were once actively involved in public health research that sought to better understand how access to handguns correlates to violence, injury, murder and suicide.

Such research was effectively put to a stop by Congress in 1996, the authors maintain. Since then, legislatures have taken action to stymie what access public health authorities may have to information about guns, as well as to censor what physicians can talk about with patients who may be depressed or mentally ill.

The perspective of these researchers is another angle from which to view how ideological our country is about private gun ownership.

Photo: Charles Seguy / Flickr.

The travel lifestyle

What would it be like to live, not your entire life, but years at a time, as though you were on the road?

You'd want to pack light. A simple canvas duffle bag, black, like you might use to tote gear for snowboarding, that would work.

Duffle bagYou'd need plenty of cords and cables and maybe a spare battery or two for your phone and laptop. The rest of us would expect daily reports so you'd have to maintain a consistent, virtual home on AWS or Azure or something like that.

If I went with you I would miss the books on my bookshelf. I don't consult them often, once read, but I like the idea that they are there. Hours of thinking penciled in the margins, the pages layered and stacked vertically, like steel plates, protected from digital obsolescence.

To keep from settling in you might really have to hit the road. Do it long enough, you might return home able to discern daily differences in each familiar hillside, crosswalk, neighborhood turn. No weather would ever be the same; associations of smell and sound would evoke timeless memories out of place, almost without place.

Maybe just the shoes on your feet with the idea that you would replace them from time to time.

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