How To Create More Jobs 368
TechDirt is spotlighting a call by Michael S. Malone, a columnist for ABCNews.com, for letting Silicon Valley create jobs once more. Malone argues that Sarbanes-Oxley and other attempts at accounting reform have done little to prevent fraud, but in fact have managed to kill off an entrepreneurship-venture capital-IPO cycle, centered in Silicon Valley, that has taken 30 years to nourish. Here's TechDirt: "...it's time to roll back SarbOx and other accounting rules that have acted more for theatrical purposes rather than any legitimate reason. Basically, all they've done is create new reporting requirements that do little to nothing to either prevent fraud or clarify a company's actual financial position (its intended purpose). I'm all for radical transparency in financial info, but that's not what has been done. Instead, we've made it burdensome to actually grow a company — and that doesn't help create jobs. It helps kill them."
Bypass the VCs and Code (Score:5, Informative)
As I said in a previous comment, the current model of entrepreneurship is broken. VCs have left. In 2009, capital will be really hard to find. But there is a silver lining: capital is no longer necessary to start companies.
Again, fairsoftware.net [fairsoftware.net] among others is allowing people who don't have any money and don't have any VC buddies to start businesses together.
It will work because for software at least, a few smart developers can beat established software giants. Groundbreaking software can now be built quickly and cheaply by reusing a lot of existing code. You can thank the Open Source community's efforts for that.
I have a lot of respect for Mike Malone, the author of the article. He wrote one of my favorite books: "Going Public: Mips and the Entrepeneurial Dream". If you have any ounce of entrepreneurship in you, this book will reveal it. I'm sure it started vocations. But in today's piece, I disagree that Sarbanes-Oxley is the main problem, although it did reduce the number of IPOs.
The best advice I ever received for starting a company? Drop Powerpoint and your VC pitch. Write code instead.
Misses the point! (Score:5, Informative)
SOX is for publicly traded companies, not startups. By the time they are publicly traded, the need for VC is generally in the distant past.
Re:If Sarbanes-Oxley isn't working (Score:4, Informative)
We agree, except that taking the transparency components behind SarBox and making them both more easily audited and standardized would be helpful. Accountability and transparency ought to be key, but instead, SarBox isn't scrutinized by auditors, who are sufficiently comprimised by their engagements that the information is of no merit or use. The data might be there (and expensively, with lots of incongruencies) but there's no one to analyze it and act on it.
In the telecom's it seems to help at least (Score:3, Informative)
I work in disconnects for businesses for a major telco, and we have a lot of auditing requirements due to SOx. I'd hate to think of what records would look like without these requirements. Sure people can still cheat, but it's also a CYA for the company that is doing the reporting.
There is still slamming now and then, but there are far fewer disconnects in error, where the telco is at fault. Usually it is the business customer not knowing which location they actually wanted to disconnect on their side, or not reading what they wanted to disconnect.
It would be nice to not have the reports. But you know if a business is not required to do it then there will be no tracking of any type done, which is where major abuses take place.
I don't mind doing the reports in addition my normal workload because I'd been able to go over others work that I am auditing and get it back on track if there is a mistake in it.
Re:Misses the point! (Score:5, Informative)
Re:Sick and tired of people ragging on mark-to-mar (Score:5, Informative)
The problem is how does one value an asset that one is holding and that one has not sold yet, since the real value of an asset is what I could get for it on the open market.
Mark to market simply says that I need to value that asset at the current going rate for similar assets on the open market.
Now here is where the banks got screwed, and the fun part about this example is that it is currently going on today. Say I bought a 10-year treasury bill for $70 five years ago which will mature in 10 years at a face value of $100, earning around 4% annual interest. What is that asset worth?
Well, you could say that the asset's value is growing at 4% compounded interest, so the bond is worth $85 today.
WRONG!!!
Mark to market says that the asset is worth what I could get for it if I sold it today on the open market. Well, in the open market there is such a rush for cash liquidity that people have been dumping their bond holdings (including treasury bonds). And as we all learned in Economics 101, high supply, low demand translates to depressed prices.
Which means that if I tried to sell that $100 treasury on the bond market, I may only get $50 for it.
So, according to mark-to-market accounting, my $100 treasury bought five years ago for $70, whose face value if I simply computed it's value by compound interest would be $85 is actually only worth $50. And it means if I have the regulatory requirement to have a certain asset to liability ratio, my treasury bonds, which are completely and totally secure--the U.S. Government so far has not defaulted on a single treasury--is insufficiently "secure" for accounting purposes.
It's the primary reason why some people want to do away with mark-to-market rules: because many mortgage backed securities were trading at perhaps 10 cents to 20 cents on the dollar, even when the most pessimistic default rates in the mortgage market would cause the underlying assets (the houses themselves) which comprise the mortgage backed security to be worth maybe 85 cents or 90 cents to the dollar. This 9x deflation in the face value of the instrument was what killed AIG: they had no choice but to value the asset lower than the underlying homes would have been worth in the event 50% of the land mass of the United States was destroyed in a nuclear exchange with the Soviet Union.
Re:Paperwork (Score:2, Informative)
Hire a payroll company to deal with that stuff. Your time is almost certainly more important than the extra $20 per pay period that someone like Paychex charges. Right out of college I started a business with a friend and we ended up with 5 other people working for us full and part time. We used Paychex (just one of many), and we didn't have to deal with anything more complicated that a few forms we were provided with. They handled all the HR stuff for us, actually. It was quite nice to not have to worry about any of that stuff.
Re:Bypass the VCs and Code (Score:3, Informative)
Going by his account name it appears that he's likely the CEO. On the Company page you can see the details [fairsoftware.net]. My guess is he will certainly have a bias.
Re:There are other things first. (Score:4, Informative)
Yep, government regulations to restrict supply work out so well in other industries.
Ask your self, what advantage is it immigrants have over native workers? lower cost right, and why is that? because they are willing to consume less. Why don't you give up all the things I know you think you deserve.
Hauled in from over seas you say? more like risks life and limb to get here. You're right though, FORCE companies to pay immigrants the same as everyone else and they will no longer be hired. just like when minimum wage goes up the first to be fired are minorities. It's bad to have the Goobernment create wage structures to isolate certain groups the state deems undesirable.
They are not "Slaves" they are people who practice the right to sell their labor, they just can keep overhead lower than you. And they don't "steal" your jobs, they are more valuable at the price they are selling themselves for than others, meaning they are a net value. As a person starting out, I know full well the Labor laws aren't designed to benefit up and comers, but the entrenched interests who have the money. I've worked alongside immigrants while sharing a studio doing the same work as someone 20 years my senior who gets higher pay because his wage is grandfathered in. I'm sorry you have an overinflated sense of entitlement, but it isn't the state's job to enforce it. By hook or by crook were going to take what you have.
Thats Just on the supply side too, don't even talk about the loss to consumers that raising prices arbitrarily would have, or the fact that businesses that can't use labor here will be more tempted to go over there.
If you pay attention to facts your "Ideas" are little more than nationalist discrimination that will not benefit society, so that a few overpaid workers can ride the gravy train thanks to uncle Sam. Your plan would create jobs for citizens, by stealing them from the poor and paying for them at the expense of society in general.
Re:Bypass the VCs and Code (Score:4, Informative)
Correct on all counts. Now, as to bias, it's a chicken and egg problem: am I pretending there is a problem with funding startups because I started a company in that space, or did I believe there was a problem and therefore started a company to fix it?
VCs have a saying (that I really don't like because it sounds arrogant), but applicable here: "no conflict, no interest". It means that if you really were not biased and had no interest in a topic, then how could you possibly have an interesting opinion? I think it's a valid point.
Transparency is the answer. I trust everyone to be smart enough to draw their own conclusions.
Re:Bypass the VCs and Code (Score:3, Informative)
However, imagine someone with a great idea for a new type of processor that wants to compete with Intel
No one with any sense will fund them. I talked to someone a couple of years ago who was a former Intel chief architect and considered this. He got VCs to offer him funding to the tune of several millions, but eventually decided his company wouldn't be able to compete and gave up on the idea.
On the other hand, if you want to compete in the embedded processor market, you need a lot less capital. You can produce IP cores and sell them to the likes of Samsung or TI for integration, or you can contract out your manufacturing to companies like these, and maybe build some fabs once you've been in business for a few years and got a large enough chunk of the market for it to be worthwhile.
If you come up with an improvement in manufacturing technology, you'd be better off patenting it and licensing it to people building fabs, but it's very unlikely now, since even small improvements tend to require several millions of dollars of R&D.