Civilian Courts Successfully Handle Terrorists

Next time someone tries to tell you that giving terrorists due process of law isn't feasible, remind him or her that "U.S. courts have, in fact, handled hundreds of terrorism-related cases since 9/11. Of the 828 defendants indicted in the United States on terrorism-related charges, 593 have been processed through the civilian court system, according to NYU Law's Highlights From the Terrorist Trial Report Card... Of the 593 defendants, 523 have been imprisoned...an 88.2 percent conviction rate." (Bob Kemper, Washington Lawyer, March 2010)

Brocade Shareholder Meeting (2010)

I attended Brocade's shareholder meeting on April 12, 2010. The company offered shareholders coffee, tea, water, and some of the best chocolate chip cookies I've ever tasted. 

At the front of the room were Tyler Wall, Dave House, Mike Klayko, and Richard Deranleau. This year, more Board members appeared in person, so the meeting seemed more fully attended. CEO Klayko delivered an oral presentation accompanied by a slideshow. Below are the main points from his presentation: 

• Network traffic continues to increase. 

• The amount of digital data is already massive--if printed in hard copy, it would form a line from Earth to Pluto and back twenty times. 

• There are over 8,000 laws on data regulation, which is an excellent situation for storage and storage area networking companies. For example, by law, financial companies need to maintain several copies of all emails sent. 

• People are afraid of the word, "delete," and will err on the side of keeping everything. 

• By 2015, consumers are expected to own 15+ billion networking devices. 

• Qzone is the Facebook of China and reaches more users than Facebook. [More consumers will be storing, publishing, and accessing information online not just in the United States, but worldwide.] 

• Cloud computing appears to be a sustainable trend. Salesforce.com (CRM) is a good fit for Brocade, and CRM also uses Brocade technology. 

• 60 to 70% of business costs typically revolve around employees, which is why corporations laid off so many employees last year; however, the workload continues to grow, and at some point, companies must re-hire employees to keep up with demand. 

• Brocade offers "unmatched simplicity, investment protection, non-stop networking, and optimization." 

After the presentation, it occurred to me that Brocade had delivered an excellent presentation about the overall marketplace but not about its own company. For example, there was no information showing how Brocade would be able to effectively compete with larger players such as Cisco (CSCO). The presentation didn't have information about Brocade's market share; specifics about Brocade's competitive advantages; new products; new streams of revenue; cost reductions, or anything else that would impact earnings per share. 

I remarked that I thought the presentation was great, and I felt like running out and buying shares in the major players in the data business--such as IBM, HP, and Cisco. In short, I didn't see why I should buy Brocade over Cisco or other technology companies that handle data. I also compared Brocade to the independent coffeeshop on the corner with Starbucks/Cisco opening franchises left and right. How did Brocade plan on competing with Cisco? 

CEO Klayko said that such comments had been made to him for the past ten years. He said that Cisco has been a "ten year conversation," and "we're still here." He then generally mentioned Brocade's "expanding product portfolio," and then briefly differentiated Brocade from Cisco by saying that Cisco believes in "vertical integration" while Brocade believes in "horizontal integration." 

Another shareholder asked about Foundry Networks, a previous Brocade acquisition. He said that Brocade had a good product line, but sales and marketing needed improvements. He appeared to have information about sales in Europe, and he indicated that Cisco was hammering Brocade overseas. "Nobody knows about you," he remarked. CEO Klayko responded by saying that he agreed that Brocade needed better branding, and part of the failure was because Brocade was a Business-to-Business (BtoB) company, not a consumer company. He agreed that Brocade needed to build on sales, but also said that half of Brocade's business already comes from outside the United States. 

And just like that, the meeting was over. I introduced myself to the shareholder who mentioned European sales, and he told me that Brocade dominated the storage area networking space. Brocade apparently has 75% market share compared to Cisco's 17%. Somehow, this gentleman realized how to sell Brocade more adeptly than the company's CEO. 

Brocade seems to have positioned itself as the alternative to Cisco, which is a horrible sales pitch. Pepsi doesn't walk around saying, "Try us when you're tired of Coke." And if someone ever told Pepsi's CEO that she should market Pepsi as a cheaper, more simple version of Coke, she would probably open a Montgomery Burns style trapdoor while hissing, "Release the hounds." 

Incredibly, Brocade's marketing strategy seems to be based on the idea that Cisco ought to have a competitor, so why shouldn't it be Brocade? Brocade's management and Board of Directors really ought to talk to RedHat and other Linux-based operating systems purveyors. Ask them how that type of sales pitch worked against the Cisco of software, Microsoft (MSFT). 

How could a company be so clueless when it comes to basic marketing strategy, especially in an increasingly global environment? Well, I lost interest in Brocade stock after last year's annual meeting. (You can read my long-winded rationale HERE if you're interested.) I sold my shares, thinking that a potential buyout wasn't enough justification for holding onto Brocade shares. Now, it's quite possible that someone will eventually buy Brocade. About two years ago, Brocade removed its "poison pill" provision, basically alerting the world that it was open to a takeover. (Also, maybe Carl Icahn will show up. He did make some money on Yahoo, didn't he?) 

Also, I like CEO Klayko--he's down-to-earth, diligent, not arrogant, and clearly a good guy. Yet, despite all of its good points, Brocade must realize that Wall Street will never give it any respect until it tries to position itself as a leader in the industry. No one wants to buy products from a company that positions itself as Cisco-lite and talks about its major competitor in respectful, almost hushed, tones. (Contrast Brocade's comments about Cisco with Salesforce.com's CEO's comments about its competitor, Oracle. Slight difference, no?) 

If Brocade wants its stock price to increase, it needs to grow some cojones and improve diversity in the upper ranks. Right now, Brocade runs like a company that doesn't mind being in second place. Absent some major changes, Brocade will continue to be the nerd at the high school while Cisco struts around as the cool kid. Thus, Brocade can talk all it wants about how much better its products are from a techie standpoint, but at the end of the day, it's Cisco--with its massive cash, effective marketing, more aggressive management, and better management diversity--that will get the beautiful fans. If I had to give Brocade's CEO a pep talk, here's what I would tell him: 

I don't want you to be the guy in the PG-13 movie everyone's really hoping makes it happen. I want you to be like the guy in the rated R movie, you know, the guy you're not sure whether or not you like yet. You're not sure where he's coming from, okay? You're a bad man. You're a bad man, Mikey. You're a bad man. You're a bad man. 

Mr. Klayko: I'm really hoping you can make Brocade into the bad man on the block. You're so money, but you don't even know it. 

Disclosure: I bought more BRCD shares after the meeting, but only because I expect IBM to buy out Brocade at some point.

Congrats to My Friends and their Newborn Son

Finally, a Good Lawyer Joke

From the awesome show, Community, comparing being a doctor to being a lawyer:

Well, anybody could be a lawyer. You can even represent yourself. You can't do surgery on yourself. It's illegal. You'd get arrested. And then you'd get a free lawyer.

A great show, but Hulu only has two episodes posted. Bonus: Chevy Chase is fantastic on the show.

Wealth Distribution

From UC Santa Cruz Professor G. William Domhoff:

http://sociology.ucsc.edu/whorulesamerica/power/wealth.html

Wealth Concentration: As of 2007, the top 1% of households (the upper class) owned 34.6% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 50.5%, which means that just 20% of the people owned a remarkable 85%, leaving only 15% of the wealth for the bottom 80% (wage and salary workers)

Estate Tax: Figures on inheritance tell much the same story. According to a study published by the Federal Reserve Bank of Cleveland, only 1.6% of Americans receive $100,000 or more in inheritance. Another 1.1% receive $50,000 to $100,000. On the other hand, 91.9% receive nothing (Kotlikoff & Gokhale, 2000). Thus, the attempt by ultra-conservatives to eliminate inheritance taxes -- which they always call "death taxes" for P.R. reasons -- would take a bite out of government revenues for the benefit of less than 1% of the population.

You should read the entire article (click on link above). The charts are especially fascinating.

Update: per the Federal Reserve Bulletin (September 2014, Vol 100, No 4) aka the 2013 Tri-Annual Survey of Consumer Finances from 2010 to 2013, about 1 in 5 American families earns over 100,000 USD each year.

As of 2013, if you are between 18 to 35 years old and your net worth is more than 10,400 USD, you are better off than half of all American families in your age group.  

Free Book on Investing

I don't know how long the offer will last, but you can click on THIS LINK for a free book by Burton Malkiel: The Elements of Investing.

Back in the day, Mr. Malkiel's book, A Random Walk Down Wall Street, heavily influenced my financial education (even though I disagreed with his central thesis on EFM). Apparently, this new book is for beginners, but if Mr. Malkiel is involved, it should be fun to read for everyone.

Stranger than Fiction

[Published March 11, 2014]

"Let no young man choosing the law for a calling for a moment yield to the vague popular belief that lawyers are necessarily dishonest. Resolve to be honest in all events; and if, in your own judgment, you cannot be an honest lawyer, resolve to be honest without being a lawyer. Choose some other occupation." -- Abraham Lincoln, from another era. 

I can talk generally about an academia-governmental complex forming, not just with student loans (which the government profits from), but the idea that schools no longer teach practical skills and therefore rely on their ability to make connections, many of whom are governmental, therefore rendering schools less likely to criticize government overreach.  

I can talk generally about the public’s mistaken assumption that all judges are worthy of being trusted merely because a politician gave them a title. (Riddle me this: people hate politicians and lawyers, but respect judges, who are just former lawyers. Speaking of which, forgive me this soapbox moment: stop electing D.A.s to the bench and look instead at public defenders and private civil law practitioners, especially at smaller law firms. You’re far more likely to see a judge on a civil case than a criminal case if you’re a law-abiding resident, and you want your judge to have experience with different areas of civil law. Finally, when you elect a D.A., you’re often electing someone who is beholden to the police union. Yet, the point of having a separate judicial branch is to create independent oversight, especially over the police.) 

I can talk about the lack of diversity on the local bench—18 out of 89 judges are people of color, in a county where about 37% of the population (including myself) are immigrants. 

But I'll talk about the American public's failure to understand two crucial elements of America's success: first is immigration. On 9/11, some people think of burning buildings, Bradley/Chelsea Manning, Iraq, or Bush, but me, I think of a poem:  "I've promised myself, even if I'm the last snowman, that I'll ride into spring on their melting shoulders." As I wrote, “[The poem] represents the immigrant experience and persevering through difficulty to ensure that previous generations…did not toil in vain.”  In other words, we’re all immigrants here in America, though some of us are thrice-removed, trying to find springtime.  Corny, yes.  I stand by it.  As far as I’m concerned, America is successful because of our openness to immigration.  That iPhone?  Steve Jobs’s biological father was from the Middle East.  eBay?  Persian guy from France. And so on. 

Second is the principle that public and private spheres are different and must remain so. The failure to understand this concept has caused many government employees to misunderstand their role--namely, to serve the public and, in higher positions of discretion, to have integrity. We seem a long way from the 1970s bumper stickers of "Question Authority." We are going in the wrong direction.

I’ll close with one of my favorite legal quotes from then-law-student (later Supreme Court Justice) Louis Brandeis:

That the individual shall have full protection in person and in property is a principle as old as the common law; but it has been found necessary from time to time to define anew the exact nature and extent of such protection. Political, social, and economic changes entail the recognition of new rights, and the common law, in its eternal youth, grows to meet the new demands of society. Thus, in very early times, the law gave a remedy only for physical interference with life and property, for trespasses vi et armis. Then the ‘right to life’ served only to protect the subject from battery in its various forms; liberty meant freedom from actual restraint; and the right to property secured to the individual his lands and his cattle. Later, there came a recognition of man's spiritual nature, of his feelings and his intellect. Gradually the scope of these legal rights broadened; and now the right to life has come to mean the right to enjoy life, -- the right to be let alone [by the government]; the right to liberty secures the exercise of extensive civil privileges; and the term "property" has grown to comprise every form of possession -- intangible, as well as tangible.

           -- “The Right to Privacy,” Harvard Law Review, Warren and Louis Brandeis, 1890.

Update: though Brandeis was speaking of government in relation to people, nothing in his comments disallows stringent regulation against groups, nonprofits, and corporations.