Friday, February 26, 2010

Interview with Accuray's Founder, Dr. John Adler

Dr John Adler recently left Accuray's (ARAY) Board of Directors. Below is his departure letter and a personal interview:

Friends and colleagues,

Many of you have asked why I withdrew from the Accuray board, and more recently, even stopped consulting for the company. Because of our friendship and your close involvement with Accuray, I know that I owe you an explanation, but until now my previous board status prevented me from saying much of anything.

The decision to leave Accuray stemmed from the fact that my vision for both the future of The CyberKnife technology and how business should be conducted increasingly diverged from management. My several year effort to serve as a constructive contrarian voice on the board and within the company at large was so unwelcome (by the CEO) that I was twice issued threatening letters by Accuray-paid lawyers, demanding silence and including allegations of defamation. As my voice was muted, I felt constructively terminated from providing any meaningful company leadership.

As the founder, visionary, and passionate spokesman for Accuray, I have felt deflated by this turn of events. But I am hardly the first company founder to be rebuffed, as so beautifully described in the above video excerpted from Steve Jobs’s 2005 Stanford commencement speech: Short:, Long:

The realization that even an innovative business genius like him once felt “rejected” by “his” company, does provide solace.

Despite past events, I love what I do and remain energized by the possibility of helping to shape the still emerging field of radiosurgery. Even if our baby, the CyberKnife, is to date THE BEST radiosurgical instrument, I am convinced the future will bring yet better technology and even cooler clinical applications for precision radiation, and with this will come the potential to impact unimaginable types of disease and numbers of patients. However, if I am to be part of this future, I must find or create a partner who shares my enthusiasm for the field of radiosurgery and values my input. As I seek to make this transition, I urge you, no matter what, to remind yourself of my primary purpose. Thank you for your past and continued support.

Matthew Rafat's Interview with Dr. John Adler:

1. You recently left Accuray’s (ARAY) Board of Directors. Did you feel your departure was voluntary or involuntary? Without repeating statements you’ve published elsewhere, please explain.

For all intents and purposes my position at Accuray was “constructively terminated” over the past few years and I ceased to have any meaningful leadership role within the company or on the board of directors. For a long time I tried to be a constructive contrarian voice but Accuray’s current culture tends to mistake disagreement for disloyalty, and when coming from me, criticism was interpreted as merely the whining of a never-satisfied founder. Painful or not, it was time for me to move on and seek out or create a partner who valued my leadership and was genuinely interested in my vision for radiosurgery’s future.

2. When you first founded Accuray, what were your aspirations for the company and for CyberKnife?

At its inception, I dreamed Accuray could dominate the field of radiosurgery, especially the now rapidly emerging field of extracranial radiosurgery. A lot of my dream has come to fruition; a broad range of clinical applications, as first enabled by the CyberKnife, are now becoming ever more accepted. Hopefully someday it will be widely acknowledged that the formation of Accuray proved a decisive moment in this incipient, but very real, surgical revolution.

3. What do you believe are the main reasons CyberKnife has not experienced more widespread adoption within the medical community? How do you think Accuray could improve CyberKnife’s prospects?

Revolutions rarely happen in an instant, but rather take time for ideas to be understood and accepted. This is especially true in surgery. Today it seems unbelievable, but most of the leading hospitals in the 1800s resisted Joseph Lister’s advice for surgeons to wash their hands and sterilize their instruments before operating. Ideas and technology are not enough in themselves. For Accuray to effect meaningful change, the entire culture and eco-system of surgery and radiation therapy need to change in part, a process that involves longer term clinical outcome studies, training, government regulations, product design, the control of hospital budgets, professional and hospital re-imbursement, and more. Meanwhile, with a CyberKnife, we are talking about a very expensive product that crosses current medical specialty lines and requires the construction of a dedicated treatment facility. Moreover, one should not be surprised to realize that physician egos play a huge role at every level. Thrust in the middle of this incredibly complex and turbulent marketplace, Accuray has accomplished a lot over the life of the company. To my way of thinking it is unrealistic to have expected appreciably more success at this stage. Unfortunately expectations for Accuray were allowed to get way ahead of reality the past few years and this has engendered the current disappointment among investors with Accuray’s performance. However, I cannot emphasize enough that given the complexity of the radiosurgery marketplace, this is not a sprint but a marathon. Accuray is fortunate to have a head start because the CyberKnife is such an outstanding product. With the above understanding, it is important to build a business and company culture designed for the long haul.

It would be glib of me to suggest a few simple strategies and imply that they would miraculously transform Accuray’s prospects. It is going to be a long drawn out battle for market share over a decade or more, and to pretend otherwise is disingenuous. However this very realization in itself can help to guide corporate strategy. For example, developing the right long term allies is so critical; ultimately, salesmen don’t sell CyberKnifes, but one set of doctors, typically, but not always in academia, sells to another set of doctors. Moreover, a long drawn out battle implies being very mindful of your cash position. Meanwhile, one should avoid the frequent temptations of losing focus on your core product and customer base. Accuray’s success will be determined by literally thousands of decisions as it navigates the still undefined radiosurgery eco-system. Improving Accuray’s prospects will require a nuanced understanding of this emerging marketplace and deft hand on the leadership tiller. Management and board composition should have the requisite skills and background to make this happen. If Accuray is to succeed in its mission, it is not going to be enough for the board of directors to merely ensure that financial statements are clean.

4. Accuray may believe the medical data relating to CyberKnife patients isn’t yet sufficient to gain FDA approval. Without FDA approval, however, CyberKnife may not experience widespread adoption. This Catch-22 results because so many facilities rely on FDA approval prior to buying and using complex medical equipment. If Accuray’s current Board of Directors were to say that you are being impatient, and there is nothing they can do until CyberKnife has at least fourteen total years of post-operation medical data before FDA approval, what would be your response?

I don’t know that any response is required because I have never been at odds with the Accuray board over this general issue. However, it is important to point out that the CyberKnife has been cleared by the FDA for a broad range of clinical applications. Instead the issue to which you allude is not FDA clearance but governmental and private health insurance reimbursement. In this regard, for many years now I have tried to emphasize, and drive within Accuray, the organizational structures which can help CyberKnife users demonstrate through clinical outcome studies the benefits of radiosurgery for a range of clinical applications. So practically speaking I am among the converted. Moreover, if you are going to demonstrate clinical benefit at 5 years, it is going to take at least five years to produce credible research papers…there is no other way around it and you sometimes have to be patient. However, for many clinical applications, one can still make a compelling argument for CyberKnife radiosurgery today by cleverly utilizing shorter term data, as well as studies created by competitors.

5. In many cases, a company’s founder will cede control and guidance of his or her company in order to promote the company’s growth. eBay (EBAY) is one successful example of a founder accepting a more business-savvy CEO in order to maximize shareholder value. Why is your departure from Accuray different from the usual tensions between founders and less technically-knowledgeable but more business-savvy executives?

When a company transitions from a start-up to a more financially driven enterprise there may come a time when it makes sense for a company to bring in a “professional” CEO. Sometimes a so-called “business-savy” CEO can also burnish company image just prior to an IPO; eBay and Google (GOOG) being cases in point. But then if the CEO is smart, he should step aside and get out of the way! The greatest technology companies are routinely guided for years and years by their founders…HP, Intel, Oracle, Apple, Amazon and Microsoft all come to mind. Eric Schmidt may be the CEO of Google but it is widely understood that his job is to execute the vision of Google’s founders. Meanwhile, the loss of the founders can doom a leading-edge technology company as so aptly illustrated by what happened to Apple after Steve Jobs was fired. The more murky the future, and the greater the need for continued product innovation, the more important it is to keep the founder directing company vision. However, in the event that it becomes necessary to replace the founder, the onus should be on the board of directors to ensure beyond all reasonable doubt that they have the right man or woman! And if a new CEO is brought in who doesn’t measure up, the board should ‘fess up and either promptly recruit a replacement or bring the founder back to take charge.

For Accuray much of the future depends not on making elaborate business deals or driving down the cost of goods (although both of these can be useful objectives), but rather successfully navigating the myriad pitfalls of product development and clinical research. If Accuray is to reap the long term success for which it was once positioned, company leadership, including the board, should have a nuanced view of the most complex medical marketplace imaginable. This emerging radiosurgical marketplace is going to require non-stop innovation, especially in product design and changing the medical eco-system in which radiosurgery resides. If you look at Silicon Valley’s most successful companies, which tend to depend on continuous innovation, the founding team stayed engaged for a very long time.

6. What do you feel Accuray is doing well?

Up until now The Cyberknife continues to be the best overall dedicated radiosurgery system in the medical marketplace. Moreover, Accuray, in conjunction with the not-for-profit CyberKnife Society, which it once helped to create, has been instrumental in working with users to generate vital outcome studies demonstrating radiosurgery’s clinical benefits. In doing so, the CyberKnife has established itself as the gold standard to date for many if not most radiosurgical applications. Once upon a time Accuray was unique in the radiation field for its ability to attract a broad cross section of surgeons. In addition, the company was very successful in getting differentiated technical re-imbursement for CyberKnife radiosurgery. The above is particularly laudable when one is reminded that Intuitive Surgery, arguably the most successful capital equipment medical device company in Silicon Valley over the past decade, has neither conclusive outcome data to support the utilization of its Da Vinci device nor is there special re-imbursement for using its surgical products; so far the Da Vinci is merely an intrinsically cool and rather expensive surgical gizmo. Despite Accuray’s many shortcomings and Intuitive Surgical’s lionization, it is notable that CyberKnife radiosurgery is miles ahead of the Da Vinci concept for surgery when measured by clinical validation and cost effectiveness.

7. What do you feel Accuray is doing poorly?

In planning for unrealistic growth, Accuray scaled operations prematurely and needlessly burned through a lot of cash, and at the same time, communication with investors deteriorated terribly. Of note, since the arrival of CFO Derek Bertocci’s, both of the above issues have improved. However, the company has tragically lost touch with what was once a credible and very unique base of surgical users. The CyberKnife product is increasingly becoming bloated and overly expensive. In parallel, internal company processes have the complexity of a company 10 times the size, which is not a good thing for a company so dependent on rapid innovation. Many CyberKnife features were poorly conceived and in the process of development, robbed engineering talent from more important projects. Rather than envision and drive new clinical applications for radiosurgery, Accuray has chosen to spend a lot of energy and focus backtracking into the traditional radiation oncology market, long dominated by Varian and others. Internally, dissenting opinions are frowned upon, and the Accuray board has virtually no background in any of the medical or technical fields that are relevant to company business. For many years now Accuray has done a very poor job of selling to major US academic centers, which represent vital hubs of clinical research going forward. Moreover, because it’s under represented at major medical centers, Accuray lacks political clout within major medical societies and the government. In belatedly following my mother’s admonition “to not say anything, if you can’t say something nice,” I will stop here.

8. What are your favorite memories during your time with Accuray?

I loved my years as CEO between 1999 and 2000. Going into the company, I was a complete neophyte in the business world, and had so much to learn. Although these were very challenging years from the standpoint of hiring (the competition from technology companies was fierce) and at the same time the ensuing economic downturn was ferocious (making fund raising incredibly tough), during this period the business was finally righted after 5 years of repeated near death experiences. We turned the business around by simply focusing on the product, creating the right team and aggressively selling.

9. Your son, John “Trip” Adler, is an accomplished gentleman in his own right. Please tell us more about him and his company, What would people be surprised to know about Trip?

Although a very young CEO, Trip has been incredibly successful with Scribd, the company he founded 3 years ago at age 22. If Trip wasn’t my son, I’d be very jealous! However, the nature of Scribd and its business is almost the diametric opposite of Accuray. For those interested in knowing how different I suggest they listen to a podcast at:

The world might be surprised to know that Trip is an incredibly talented Jazz saxophone player. I wish he played more often.

[Disclosure: I (the interviewer) own shares of Accuray (ARAY).]

Apple Shareholder Meeting (2010)

Apple, Inc. (AAPL) held its annual shareholder meeting in Cupertino, California on February 25, 2010. Apple offered shareholders only coffee, tea, and water. Steve Jobs attended the meeting in his trademark jeans (with holes in the right knee area) and black turtleneck. Although he looked noticeably thinner than two years ago, he appeared healthy. Al Gore also attended the meeting, and he looked like he was in great shape (unlike previous years, where he appeared to be a tad overweight--perhaps recent Democratic victories have improved his health).

Much of the meeting focused on environmental issues. One person argued that if the science is right, then nothing else matters, and Apple needed to be more environmentally-conscious. Another shareholder summed up the issue by saying, "Pollution is waste, waste is inefficiency--it's as simple as that."

During the Q&A session, a shareholder mentioned Apple's $40 billion in cash, and asked whether Apple would issue a dividend. Mr. Jobs said that the cash provided security and flexibility, and Apple could take risks knowing that "the ground is always there if we miss." Mr. Jobs also implied that the stock price would stagnate if Apple issued a dividend.

Someone else mentioned that Nintendo was doing very well with its Wii and asked if Apple would consider a strategic alliance with Nintendo. Mr. Jobs said that such alliances take a lot of work, and Apple would need a big payoff to consider a strategic alliance.

I was tired of the environment-related questions. I explained that business-wise, it doesn't matter whether the science is right or wrong, only whether a majority of the American public believes that environmental issues are important. If the majority of Americans feel strongly about environmental issues, they will petition Congress or state legislatures to pass more stringent laws mandating certain corporate behavior. However, if Apple at least projects an image of being socially conscious, it will help stave off stringent legislation that might harm the company. In short, being ahead of the curve on environmental issues allows Apple to increase its chances of saving shareholders from potentially harmful and costly legislation. (It also makes little sense to criticize Al Gore whenever the Democrats control Congress, because Mr. Gore's presumed access to Democratic legislators allows him to provide input into legislation affecting Apple.)

Mr. Jobs responded by saying that it was even more simple--being environmentally-conscious "is the right thing to do." He then made several comments showing that Apple sincerely believed in environmental issues not just as a business issue, but as a philosophical issue.

I also asked what challenges Mr. Jobs saw for Apple, i.e., what keeps you up at night? Mr. Jobs first joked, "Shareholder meetings," but then became more serious. He said he was concerned about the overall economy, because if people were concerned about buying textbooks or putting their kids through school, then it would be more difficult for Apple to sell its products.

Overall, the meeting went well. Mr. Jobs was more pro-active in cutting off shareholders who would ramble on, but otherwise, it was a typical Apple meeting--people came to see Mr. Jobs and to get a piece of the Apple mystique.

Bonus: Mark Duncan has been a marketing consultant at askmar ( for over 25 years, focusing on helping early stage start-ups develop traction in their marketplace. Mr. Duncan's thorough notes on the shareholder meeting are below:

* The meeting started at 10 AM, the formal meeting ending at 9:25 AM. At that point, Steve Jobs took questions and answers to about 10:20 AM.

* Apple wants to do the right thing. We have reduced the size of our packaging because it benefits us both from an environmental and business standpoint. People are noticing, our reputation is pretty good. Can it be better? Yes, but we’re working on it. Our recycling rates are phenomenal.

* What is Apple afraid about most, what keeps you up at night? Fundamentally, we require stability in the world. People aren’t going to buy our products unless they can put food on the table and afford school. We are affected by things beyond our control. Accordingly, we try to do the best we can.

* Why not issue a stock dividend? It is part security and flexibility. It nice to know when you jump that the ground will still be there if we miss. Also, we never know what opportunities are out there. Sometimes you need to think big and pretty large. When you want to do something big and bold, it is nice to be able to write out a check and not have to borrow a lot of money. Our judgment and instinct is to keep out powder dry. Quite frankly, if we issued dividends or did a stock buyback, our stock price would still be in the same place. What really drives our stock price is our ability to grow and keep up with new products that everyone wants.

* Internationally, we opened our first store in China, and have 25 more stores planned for China over the next year.

* [On environmental issues.] We are more interested in walking the talk, than talking the talk. Lots of companies set goals and attend conferences, than don’t actually meet their goals. We are the first and only company to actually do something about it. Dell challenged us on our green statements to the Truth in Advertising board, which found that we were correct [in our claims]. We have audited 100 of our suppliers, and over half of them told us that they had never been audited before. We do it because it is the right thing to do.

* With respect to usability and accessibility. We have the most accessible products in production available today, with a few hundred million passionate users. I personally receive 6 to 12 emails each week about accessibility.

* When I run across a security problem, it would be nice to have a way to email Apple regarding the threat. We will look at providing an email for this purpose.

* Will the increased emphasis on mobile products result in a decrease in traditional Mac products? First, we have decreased our app approval time from 2 to 3 weeks to one week. Our customers are buying mostly laptops, followed by iMacs, Mac Minis, and towers. We listen to our customers. We love the iMac, we think it is the best product of its type in the world.

* Apple has no retail stores in Wyoming, Montana, and North Dakota. Would like to see more theaters in stores. It is hard to do this [take Apple classes?] in smaller stores, particularly with the higher noise levels.

* Apple ads are primarily targeted at the young and hip. Yet the products have a tremendous appeal to middle aged and older people. Jobs noted that often older people like to think of themselves as young and hip!

Update: other reviews of the meeting are HERE and HERE.

John Yoo, D-Bag

For anyone out there who still supports or likes John Yoo, please, please, for the love of God and Constitution, read THIS short Atlantic article. One excerpt:

Based on the results of our investigation, we concluded that former Deputy AAG John Yoo committed intentional professional misconduct when he violated his duty to exercise independent legal judgment and render thorough, objective, and candid legal advice. [Italics added]

And you're welcome, even if I can't expect a "thank you."

Thursday, February 25, 2010

EIA on Natural Gas

Natural gas seems to be hitting new lows these days. Yet, the government expects the price of natural gas to increase in 2010: 

EIA expects this year's annual average natural gas Henry Hub spot price to be $5.37 per million Btu (MMBtu), a $1.42-per-MMBtu increase over the 2009 average of $3.95. EIA projects continuing price increases in 2011, averaging $5.86 per MMBtu for the year. EIA expects working gas inventories to end the first quarter at about 1,644 billion cubic feet (Bcf) compared with 1,734 Bcf in the previous Outlook, because of colder-than-normal weather in early January. [Citation here.] 

UNG and GAZ allow traders to play natural gas prices. There are several negative potential tax issues with buying GAZ or UNG, so I trade these in a retirement account to be on the safe side. 

Also, it's true that natural gas ETFs/ETNs may not necessarily track the actual price of natural gas, but they do seem to follow the general movement of prices. If the government is saying prices are heading up, why not consider natural gas as an investment, albeit an admittedly speculative one? 

I don't know if I will hold my GAZ shares one day or one year, but I don't feel as if I am buying an overvalued commodity. As more consolidation occurs in the natural gas sector (XTO Energy, etc.), at some point, prices are likely to increase. While consolidation may not be good news for consumers, speculators may benefit from short-term volatility. 

Disclosure: I own GAZ and have owned UNG in my Roth IRA. 

Note: GAZ closed at 12.03 on February 25, 2010, the date of this posting. 

Update on March 1, 2010: MF Global’s Mike Fitzpatrick's says, "Technically, the charts are bearish." According to THIS article, he "expects $4 natural gas to be tested very soon." As of today, natural gas traded at around 4.680, so Mr. Fitzpatrick expects a 17% drop. 

Update on March 8, 2010: I averaged down by buying some GAZ at around 11.23. I am now losing around 5% on this position. The actual price of gas is $4.517/MMBtu. I hope I have the mental fortitude not to check this position until October 2010, when natural gas prices may rise much higher. 

Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

Update on June 2020: I haven't owned GAZ, USO, or UNG for many years. It looks like GAZ actually traded lower by October 2010. I did not learn about "contango" until after I published this post, though I did warn that GAZ "may not necessarily track the actual price of natural gas." I also wrote that GAZ was "an admittedly speculative" investment. A much better post on natural gas can be found here: 

Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

Wednesday, February 24, 2010

U.S. Supreme Court to Decide Important Free Speech Case

Click HERE for a transcript from the Supreme Court's oral arguments in Holder v. Humanitarian Law Project. [Click on "Full Screen" after the jump to enlarge the text.] 

The Humanitarian case might determine the breadth and scope of power the American government may exercise when it wants to control speech. Amazingly, the case and its complex issues aren't front page news everywhere. Below are some off-the-cuff comments I made after I read the transcript: 

The pro-free-speech lawyer, Cole, didn't do a great job. There was some drama: Scalia verbally smacked Sotomayor when she raised a misguided example, but Breyer played the good knight and saved her. Justice "That's Not True" Alito looked out of his range intellectually. None of the lawyers were able to really answer Ginsburg's very relevant questions. Breyer, as usual, asked the most interesting and intelligent questions. Scalia clearly wants to kick the ball down the road and uphold the statute. Unfortunately, it appears Kennedy, the swing vote, might be leaning towards Scalia's angle due to the unusual fact pattern involved, i.e., the government did not actually convict anyone for exercise of free speech (the case involves an action for declaratory relief, not an actual prosecution or conviction). Surprisingly, Roberts looked like he hadn't yet made up his mind, though towards the end, he seemed to be leaning towards Constitutional avoidance. Unsurprisingly, Thomas never asked a question. 

Actually, come to think of it, neither lawyer did well. The government's lawyer, Kagan, started off very well, but self-destructed at the end, when she suggested the government could prosecute lawyers who submit briefs on behalf of Congressionally-labeled terrorist organizations, even if the briefs relate to tsunami relief or U.N. aid requests. She should have thought harder about her audience. She's talking to a bunch of former lawyers who used to write briefs and in-house advisory opinions for sometimes-not-so-wonderful organizations. Maybe that's why former corporate attorney Roberts seems conflicted. 

After I emailed the transcript to an acquaintance, I sent him more detailed comments: 

The fact that the Justices spent most of their time discussing hypotheticals indicates that no one really knows what kind of conduct is prohibited. If the Justices can't figure out what is covered, then how is an ordinary American supposed to comply with the law? As for Scalia trying to kick the ball down the road, isn't the whole point of a request for declaratory relief precisely to avoid kicking the ball down the road and having to deal with a prosecution? 

What really bothers me is that no one answered Justice Ginsburg's perfectly valid questions. For example, everyone agrees that membership isn't proscribed, but then what? Are we supposed to just show up to a meeting and sit there to ensure we comply with the statute? Kagan seems to say anything beyond being an inactive paper member of an organization could be proscribed conduct, and it's up to the prosecutors to determine the scope of the law. Sorry, but I'd rather have a clear line than a line drawn by the Supreme Court than thousands of politically ambitious D.A.s deciding what constitutes inactive, legal membership in their own discrete jurisdictions. 

Also, I am a member of numerous legal organizations. I've attended annual meetings, communicated with board members, dispensed legal advice to schools they operate, posted on their blogs, etc. For all I know, one of these organizations might have rogue members plotting against the government. If the Court doesn't narrow the law and require a specific intent provision, then I could potentially be prosecuted merely by being an active member of the overall group, despite lacking any malicious intent. Thus, Kagan's argument boils down to this: trust the government, because we won't prosecute someone who isn't really a terrorist. I'm sorry, but if you're a Muslim in 2010, a Japanese-American in 1942, an African-American with Black Panther friends in 1965, etc, it's a little harder to trust prosecutorial discretion. 

Practically speaking, if the conservative Justices have their way, any lawyer with Muslim clients or Islamic non-profit clients must consider dropping all of them as clients. After all, who knows? If one person within an organization is supporting terrorism, then the entire organization becomes suspect, and anyone who has helped the organization, even in good faith, can be held liable for material support. Just my two cents.

Monks and Nuns in Love

Last Sunday's NYT published a beautiful love story. See HERE for more.

Tuesday, February 23, 2010

To all the American Newborns: You Owe a Trillion Dollars, Thanks to Mommy and Daddy

Mish has done an excellent analysis on the trillion dollar public sector benefit problem. See HERE for more. It's horrifying and edifying at the same time. Sigh.

Monday, February 22, 2010

First Date Ritual

Do any of you have pre-first-date rituals? I have a few things I do before a first date.

I have an older American car (from 2003), and it's not worth much, so I try to spend as little as possible on it. On date night, however, I like to get the car washed and inflate the tires.

Usually, I go straight from work to the date, so in the morning, I spend an extra half hour fussing about my appearance. For example, I use a straight razor instead of my usual electric one, and I cut the hair on my nape.

As for my clothes, I usually stick with a business casual outfit, which tends to be a nice white collared shirt and a pair of new jeans. I wear my faded Wrangler jeans all the time, so I use another pair of jeans, which I rarely wear, on dates.

I have Drakkar Noir cologne and toothpaste/mouthwash in the office, so I use those before I go. (I bought the Drakkar Noir cologne because of a Dale Earnhardt, Jr. car promotion.)

I should probably add hair gel, but I don't use hair gel enough to justify buying any. For some reason, most of the hair gels I see come in large tubes that would take me years to finish.

Sometimes, I forget to wear a belt, but I fix that issue if there is a second date. Unfortunately, I have to wake up earlier than usual to do all the administrative stuff, and changing my sleeping patterns leaves me in a tired mood. I make up for it by taking a small nap in the afternoon.

I fully realize I sound like a bad Southern caricature--Wrangler jeans, Earnhardt car collection, no hair gel, no belt, old American car, etc. I tend to just come in casually, even when I implicitly realize the dating game requires some song and dance. At the same time, my casual approach should weed out the materialistic, shallow women, so I'd like to think it all balances out. Besides, my white collared shirt is from Nordstrom or another higher-end retail store, so at least there's one hoity-toity part to my first date ritual.

I have no idea if my first date ritual works, but I'm in no rush. I hear good things come to those who wait.

Saturday, February 20, 2010

Big v. Small: Telephone Edition

The battle continues: Here is an article about telephone companies against new tech companies. The seedy understory is that telephone companies don't want to share their lines or subscribers with smaller telephone companies, so they might be ripping out the copper wiring in some areas.

Then, to avoid regulation and possibly to avoid sharing new fiber optics lines with smaller competitors, some companies have apparently convinced courts that their newer fiber optic lines transmit "information," not telephone calls, so the state PUC isn't the appropriate regulator. Such a strategy would help big phone companies take care of smaller telephone competitors, but it may also open the door for companies like Cbeyond (CBEY). (At the same time, I think the FCC, a federal agency, may still regulate telephone companies' fiber optic networks, but that regulation would occur at the distant federal level, not the more local state level.)

Friday, February 19, 2010

Daily Journal Article on Campbell's Youth Basketball Program

See HERE for an article on Campbell's youth basketball program (by Lisa Kestenbaum). It's good to see Campbell's youth basketball program get some well-deserved recognition.

Below are some of the comments I submitted to the writer:

I’ve been coaching basketball for about seven years. A Campbell Community staff member, Terry Alexander, saw me playing basketball and asked me to referee some games. The next year, he asked me to coach, and I’ve been involved in the Campbell Community Center’s program ever since. After dealing with adults and their problems all week, there’s nothing more gratifying than coaching kids, especially kids in grades 2nd to 5th. These kids just want to move around and play, and when you have a great program and staff like Campbell does, it makes it easy to teach the kids.

I’ve traveled all over the world, and I’ve run my own solo practice since 2004, but my biggest lessons in life came from coaching kids. At some point, for example, you realize that every single kid on your team looks up to you. I started coaching when I was about 25 years old, and it was stunning to think that anyone actually looked up to me. At first, it’s the most frightening feeling in the world. I joke that coaching kids is my own personal version of Orwell’s 1984, because the kids are always watching you and trying to see how much they can get away with, how much you care about them, and how dedicated you are.

You worry that your own personality issues–the same impatience and hyper-competitiveness that drive many lawyers–will negatively affect the kids. Over time, though, you realize that your responsibility to the kids trumps everything else. And that’s the lesson: when you’re around kids, everything else must fade away, and you must learn to be calm and collected with them no matter what.

Campbell’s program is unique because of its diversity. I’ve coached in several different programs, but Campbell attracts kids from all over. This year, my team has kids with backgrounds from Japan, China, Mexico, Africa, the Middle East, and Ireland. Later on, these kids will probably go to different high schools and separate based on income or education status. Right now, however, they have the opportunity to play together and become friends.

People talk about achieving a world where race won’t matter, but such a post-racial world already exists in Campbell’s youth sports programs. To me, diversity is important because it proves that America works. For instance, when I call some of the kids’ houses to notify them about practice times, a grandparent will pick up the phone. Oftentimes, he or she doesn’t speak any English. Later, I meet the parents. They sometimes speak English with an accent, and they might hold onto the old culture because it’s familiar to them. The kids, however, speak perfect English and will identify primarily as American. That’s the beauty of America–no matter where you come from, by the third generation, we produce Americans who speak and act virtually the same. This isn’t necessarily true in France, other parts of Europe, or Japan, and I think sports programs, especially youth sports programs, are a large part of why America has successfully assimilated people from all over the world. After all, it’s hard to think someone’s different from you because of the color of his skin or his mom’s accent when you play sports with him over the course of several months.

Coaching sports also helps generate interesting conversation topics. Non-lawyers don’t want to hear about your latest CCP 998 offer, but everyone loves a good story about the kid who shot from halfcourt, made it, and did a funny little dance. Recently, during settlement discussions, I discovered opposing counsel also coaches youth sports. We spent about two minutes chatting about our coaching experiences. Even the case doesn’t settle and moves to litigation, it’s going to be much harder to treat each other without civility now that we have something in common.

Thursday, February 18, 2010

A Gentleman and a Scholar

I have not laughed so hard in so long. HERE's an article on dating an attorney. My favorite tip:

Don’t be surprised when your lawyer sweetheart nitpicks everything. When it happens, don’t accuse him of splitting hairs. That would be like accusing a dolphin of swimming. Instead, thank him for being both a gentleman and a scholar.

Hilarious, isn't it? And so true.

Wednesday, February 17, 2010

Amity Shlaes on Government Employment

From Bloomberg's Amity Shlaes (2/17/10):

From January 2000 to January 2010 -- first under President George W. Bush after Sept. 11, then under Barack Obama -- the number of non-postal employees in the federal government grew 15 percent, to 2.18 million from 1.89 million...[but] over the same period, private-sector employment decreased by 3 percent.

[When including local and state government employees] Federal data show that [over the last decade] the number of total government employees in the U.S. rose to 22.5 million from 20.6 million.

Jobs with Uncle Sam aren’t just more numerous than they used to be. They’re better. Wages and benefits for federal civilian workers were more than double the average total compensation in the private sector: $119,982 versus $59,909. In the treacherous period between December 2007 and mid-2009, the number of federal employees earning more than $100,000 doubled, rising to 66,500 or so.

See here for more. Personally, I'd love to be a federal government attorney. Right now, I regularly receive phone calls where the person calling has a good case based on the facts and the law, but his or her wage losses or damages are too low to file suit.

Many people don't realize that lawsuits are expensive. By the time you file a lawsuit, get the complaint served, file a few motions, and take a deposition, you're looking at about $2,000 in costs--none of which goes to the lawyer. Fast forward six months, and costs can increase to $6,000 easily. In one case I took to trial, the other side's costs exceeded $18,000.

If damages are low, I cannot ordinarily justify spending $5,000 of my own money for a potential $10,000 settlement--and so many hourly or part-time workers have cases where six months of severance would equal about $10,000. Sadly, it's not unreasonable to argue that poor people get run over twice--first, in their job environments, because poor people tend to take tougher or boring jobs, and second, in finding an attorney to negotiate a severance or to file suit.

In any case, if I worked for the federal government, I could, assuming the approval of my boss, assist anyone who had a good case. Why? The taxpayer would be footing the bill for my time, not the poor or middle class worker. Of course, I would hope the agency would keep costs as low as possible. One way to do that would be to reduce retiree benefits, such as pensions. If taxpayers are paying $80,000/yr to a retired cop or lawyer, that's $80,000 that's not being used to hire a new cop or lawyer. Plus, it's always been unclear to me why taxpayers should be paying money to someone who is not longer helping taxpayers.

These kinds of "golden parachutes" exist in the private sector, too. In fact, taxpayers could be liable for private pension obligations as well as government employees' pensions. As of 2008, the Pension Benefit Guaranty Corporation (PBGC) had a $10.8 billion deficit, estimated to rise to $26.3 billion in 2018; however, total underfunding of all private sector pension plans, on a termination basis, amounts to an astounding $225 billion. Clearly, we have a problem.

America's pension plans need reform. One simple reform would be to require that all new government workers have 401(k)s, not pensions. Such a move would immediately reform public sector pension plans and assist already stretched taxpayers, but it is highly unlikely. Public sector unions have so much clout, it seems they can force politicians to put government employees' interests ahead of taxpayers' interests. That's a shame, because Congress had no qualms about reforming private sector pension plans. According to CNN's Colin Barr, Congress has already enacted a law--the 2006 Pension Protection Act--to force corporations to fully fund their pensions by 2015. See here for more.

Despite the new law, cash-rich companies like Exxon Mobil Corporation (XOM) continue to have underfunded pensions. In Exxon's case, its pension is underfunded by about $6 billion. Shareholders should take notice--over the next five years, some companies may have to reduce their growth or take on more debt to fully fund their pensions.

More here, from Mark Scolforo. He points out that taxpayers are in the hole $1 trillion because of public sector retirement benefits, including pensions: "As of 2008, states had $2.4 trillion to meet $3.4 trillion in promised pension, health care and other post-retirement benefits."

Tuesday, February 16, 2010

O' Canada: a Cheat Sheet

Courtesy of the NYT and Bruce Headlam, HERE is a hilarious "cheat sheet" on Canada. Below is my favorite part:

Canada has two national symbols, the Maple Leaf, a symbol of nature and growth, and the Beaver, which represents industry and loyalty.

According to Roman legend, the beaver, when cornered, will chew off its testicles and offer them up to the attacker. Modern biologists have dismissed this as myth. Beaver will only chew off their testicles if you ask nicely. But that’s our point: you have to ask.

Like I said, it's hilarious.

Monday, February 15, 2010

Chuck Thompson on the NBA

An oldie but a goodie: HERE is Chuck Thompson's take on last year's NBA finals. Who is Chuck Thompson? For starters, he's written one of the funniest books I've ever read. See here for a book review of Smile When You're Lying.

Saturday, February 13, 2010


I saw an excellent comment from "milleniumfalcon" on the Motley Fool's website. The author's comment relates to our current economic crisis. The author promulgates several interesting ideas. For more, see below:

1. Create jobs. More jobs = more tax revenue. The question is how to create them. Well for one, how about truly funding and streamlining the SBA loan process, since small business creates most of the jobs.

2. Invest in new technology. Eventually (and we all know this) oil prices will rise to the point that using it is not economically viable. The time to start this process is now. Turn those old Saturn plants into wind turbine factories. Turn the closed Chrysler plants into solar panel R&D and manufacturing factories. Get into the business of partnering with business, much like large corporations do when they "incubate" a business before spinning it off. Not takeovers, but investments. Part of what an intelligent government does is invest in the items of the future that don't have an immediate payoff. (Like stem cell research, for example.)

3. Invest in education. I am a college professor. Let me tell you, I see the pablum that comes from our educational system and it is not pretty. MOST OF YOUR CHILDREN have pathetic reading skills, sickening math skills, and the creative resources of your average fruit fly. They can't think outside the box, because they haven't learned a bloody thing INSIDE the box. Kill the U.S. Department of Education. Keep that money local, the way ti is supposed to be. Get rid of NCLB: teaching students to take a test is not actually teaching student. (Besides, this [law] has become a racket--states keep lowering standards so students can "pass." If we don't get back to basics, your kids will have exciting careers asking, "Would you like some vanilla in your latte?" (Okay...rant over.)

4. Level the taxes playing field. Under the current tax code, people who labor (you know, work for a living) have a higher tax rate than those who make most of their money through investments. Raise the rates and make them equitable. Let's go back to the 90's tax rates. [Note: I do not agree with going back to the 90's tax rates.] Let's get rid of the $90,000 "cap" on taxable salary for social security. [I do agree with raising the Social Security taxable income ceiling.]

5. Take the idea of a flat tax or a value-added tax (VAT) seriously. It works in other countries, so why not here? It solves a couple of problems. There's no use for an enormous IRS. There are fewer ways to cheat. Make exemptions for the necessities of life only: food, clothing, shelter.

6. Really reform healthcare. As it stands, 50% of healthcare costs are covered by the government, between the Feds and the States. What we need to do is cut the costs of healthcare before adding anyone else to the rolls. How do we do that? There must be downward pressure. Repeal the part of the "drug bill" that does not allow Medicare and Medicaid to negotiate lower prices. Allow the importation of cheaper drugs from countries with good regulatory systems (Canada, Germany, etc.) Allow competition across state lines. (Here in MO, one company has a lock on 87% of healthcare coverage.) Tort reform. And for God's sake, get the fat people on a diet. We lowered smoking rates in this country from 45% in the '60s to 21%. And most of that was done via peer and cultural pressure, not laws. If we can do that with smoking (an addictive habit--I know--I was one of them), why can't we do the same thing regarding the fat b*stards in our populace. Dropping weight = dropping costs. (I know this too, because I was 50 pounds overweight. I lost a lot of it and my blood pressure dropped, my cholesterol went down and I'm generally in better shape. All that and more with no drugs.)

6. Really dice up the defense budget. Bring our men and women in uniform home from Iraq. Seriously. Do we need more tanks? Really? Really? Must we have troops in Germany? Really and truly? Let's stop playing cop and let most of the rest of the world learn some responsibility. (And let the National Guard do its real job to boot. Helping people here after a disaster. We need no more Katrinas.)

7. Rebuild. New Orleans.

I'll shut up now.

I can't remember the last time I read a comment that made so much sense. By the way, when I visited New Orleans, the French Quarter is completely intact. When the author talks about rebuilding, he ought to mention roads, bridges, etc. Otherwise, however, many of his suggestions make sense.

Friday, February 12, 2010

Hank Paulson = Idiot or Just Stupid?

America's recovery plan: cause other countries to spend more and save less.

From former Treasury Secretary Henry Paulson: "[W]hen you look at it globally we have nations in Asia, China, Japan and others that don't have enough domestic consumption. They need to consume more less. And...the only way [is] with direct, very forceful dialogue between nations."

So the plan is to put other countries' citizens in debt? With "dialogue"?

Just when I was starting to get over George Bush II, something like this comes up.

Thursday, February 11, 2010

New Interview with Bill Watterson

HERE is the (unfortunately short) interview with Bill Watterson, who created my favorite comic strip, Calvin and Hobbes:

By the end of 10 years, I'd said pretty much everything I had come there to say. It's always better to leave the party early. If I had rolled along with the strip's popularity and repeated myself for another five, 10 or 20 years, the people now "grieving" for "Calvin and Hobbes" would be wishing me dead and cursing newspapers for running tedious, ancient strips like mine instead of acquiring fresher, livelier talent. And I'd be agreeing with them. I think some of the reason "Calvin and Hobbes" still finds an audience today is because I chose not to run the wheels off it.

Also, the Post Office is releasing a Calvin and Hobbes stamp--I can't wait!

Bonus: as of 2010, Watterson lives in Cleveland. I wonder if he's a LeBron James fan. Actually, Watterson attended Kenyon College in Gambier, OH, and he's been in Ohio ever since.

Here's one interesting fact: Watterson designed grocery advertisements for four years prior to creating Calvin and Hobbes.

And for the self-employed out there: "It's surprising how hard we'll work when the work is done just for ourselves." (1990 graduation speech at Kenyon College) I guess the days are just packed, huh? :-)

Wednesday, February 10, 2010

Lawyers and Depression/Pessimism

From Daniel Lukasik:

Pessimism is seen as a plus among lawyers, because seeing troubles as pervasive and permanent is a component of what the law profession deems prudence. They have to foresee every possible snare and catastrophe. While this might help them be better lawyers, this trait does not always make them happy human beings.

More here. Hat tip to Alison B.

Tuesday, February 9, 2010

EA Stumbles

What is going on with Electronic Arts? Its stock tanked today, and it doesn't seem able to catch up to Activision. Gaming companies seem to make money when they 1) create internal blockbuster hits like Call of Duty that generate sequels; and/or 2) create online casual games like Farmville, which rely on advertising to make money, not tapped-out or piracy-happy consumers.

I just bought some shares of ERTS. Not much, but a little. Maybe Microsoft will buy them out.

Why Medicare Will Destroy Us

According to financial journalist Steve Kerch, the "55+ age group represents 38% of all U.S. households and is projected to rise every year to be almost 45% of households by 2019." In short, we are inviting fiscal disaster unless we find a way to fix Medicare.

I really hope the younger generation starts having more kids. After all, someone has to pay for all the entitlement programs. What's that? You think it's immoral to pass along bills to an unborn generation? Well, what spending would you cut? The military? It's about 21% of our budget. The latest military budget passed in the Senate with an 80 to 10 margin. Good luck.

P.S. Common sense called. It says it's time for a third party that understands basic math and basic economics.

Monday, February 8, 2010

Reggie Miller Interview: What the NBA Has Lost

HERE is a NY Times interview with Reggie Miller. Reggie was probably my favorite player to watch in the NBA. In my mind's eye, I can still see his incredible series against New Jersey (back when the Nets were legit contenders), and his playoff games against Michael Jordan.

If you haven't seen the Bulls-Pacers playoff series yet, you are definitely missing out. What NBA fan could possibly forget Reggie's eerily similar "Bryon Russell" push-off against Jordan, the game-winning three-pointer, and Reggie's subsequent twirling dance? (By the way, people forget Jordan almost won that game, but his three-pointer at the buzzer rolled in and out.)

I also clearly remember certain games from the Knicks-Pacers playoff series--such as LJ's unfortunate four-point play, which came from an Antonio Davis foul that clearly didn't warrant the continuation. The refs should have called a non-shooting foul, but after the Madison Garden crowd exploded, the refs probably risked a riot if they hadn't called a shooting foul and the three-point basket. The worst part was that Indiana shipped out Antonio Davis, one of the league's best defenders, the very next year, making it look like it was his fault the Pacers lost. In reality, Coach Larry Bird, who was just five feet away from the play, was telling Antonio Davis to "get up on him" and play closer defense, and Davis was just listening to his coach.

In my eyes, only Reggie Miller and Glen Rice were able to get under Michael's skin--and that feat alone is quite an accomplishment. I've copied an interesting section of the interview below:

Q: Are there any talkers left in the league?

A: It’s not the same. Everyone hugs one another now and kisses before jump balls and pats each other and helps them up. It’s a kinder and gentler league. Chivalry is nice and all, but it’s not the same.

I think Reggie just inadvertently explained why the NBA has lost its luster. There are no real rivalries anymore. As Charles Oakley once said, David Stern has "sissified" the league.

In the interview, Reggie also proclaims that LeBron will not be going to New York. I happen to agree, but Reggie seems awfully sure that LeBron won't be playing for the Knicks. I wonder if he has any inside information.

P.S. Although Reggie Miller and Jason Williams (during his Sacramento days) were my favorite players to watch, in real life, if I ever made it to the NBA, I'd be more like Dennis Rodman or Ben Wallace.

Saturday, February 6, 2010

Coaching Girls vs. Coaching Boys

I've been coaching basketball for about seven years now, usually 3rd, 4th, and 5th graders. After a recent game, a girl on my team had to wait for her brother to finish his practice, so she had free time. I spent about 30 minutes doing one-on-one drills with her. She picked up certain skills that had eluded her in the team practice very quickly. I was surprised and left wondering why I wasn't able to teach her the same skills during the team practice.

Someone else offered the following hypothesis: although every child benefits from individual attention, young girls seem to respond even better to it, because individual attention creates a bond between the coach and player. This person said that while boys enjoy competitive drills, girls tend to be more interested when working together as a team or doing activities that create relationships.

I also remember a tough game where we lost by about fifteen points (final scores at this age level are usually 40-35, 32 to 25, etc.--relatively low total points). I always make sure to tell my team that I don't care if they win or lose--I only care if they play hard and have fun. But no one wants to lose, so everyone was dejected. I complimented everyone, and I also told them to work on some specific things. Here is my point: when I complimented the boys, there was no visible emotional effect. The result was exactly the opposite with both girls--they immediately smiled. I don't know what lessons to take from that post-game experience. Perhaps I need to figure out what to say to the boys to make them happy even if they lose.

Friday, February 5, 2010

Update on Stock Market

On January 20, 2010, prior to the market opening, I indicated the stock market would decline to around 1000. See HERE. From January 19 to February 5, the S&P declined from 1,150.23 to 1066.19--a drop of 7.3%. I recently dipped my toe in the market, buying dividend-paying stocks, but now I'm not sure if the S&P will decline to 1000. If the market continues to decline to 1000 or 900, I will double down. I kept some gunpowder for another shot, which makes me feel better if the market does in fact decline to 1000 or less.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

Brandeis on Gossip

Reason #28,474,556,347 why I love Brandeis:

When personal gossip attains the dignity of print, and crowds the space available for matters of real interest to the community, what wonder that the ignorant and thoughtless mistake its relative importance. Easy of comprehension, appealing to that weak side of human nature which is never wholly cast down by the misfortunes and frailties of our neighbors, no one can be surprised that it usurps the place of interest in brains capable of other things. Triviality destroys at once robustness of thought and delicacy of feeling. No enthusiasm can flourish, no generous impulse can survive under its blighting influence.

More here.

Thursday, February 4, 2010

People to Government Unions: Baaaa Baaaa

More on government unions HERE. I've shown this article to some people, and they never address it directly--they just start talking about the increasing prison population, the increasing immigrant population, etc.

In short, people keep trying to justify out-of-control state spending by referring to the specific expense they hate the most; however, the point isn't that some people dislike specific expenditures--everyone dislikes some expenses, whether it's Medi-Cal, prisons, pensions, etc.

The point is that overall state spending is out of control, and a specific segment of the population has made themselves immune to economic fluctuations at the expense of taxpayers, including the middle-class.

Wednesday, February 3, 2010

How to Select a Jury

HERE is an excellent post re: jury selection by Texas attorney Mark Bennett.

Tuesday, February 2, 2010

California's Unemployment Fund Problem

From the nonpartisan California Legislative Analyst's Office:

The Unemployment Insurance fund is currently insolvent. In its most recent fund forecast, the Employment Development Department projects that the fund will experience a year-end deficit of $7.4 billion in the 2009 calendar year, rising to $18.4 billion in 2010 and $27.2 billion in 2011.

Perhaps this explains why the unemployed might be having a harder time getting approved for benefits.

Monday, February 1, 2010

Another Blog Recommendation

Interesting post on Iran here, with some pictures. Good stuff, no? The entire blog is worth a look-see.