After watching interviews of Governor Romney and the debates, both Presidential and VP, I’m starting to fully get my arms around how Governor Romney works and the details of his tax plan.

Governor Romney is a successful financier. He is an amazing deal maker. When he has control of a situation, he knows exactly how to get things done. He knows exactly what he wants to do and he knows exactly the process he needs to take to get there. He is incredibly confident in his ability.

I see some of me in him. When it comes to my companies, I know what i want to do and I have complete confidence that I will get to where i need to go. I might not always get there, but I tend to only get into businesses and battles where I am extremely confident I can come out ahead. My failures have never stopped  me from having absolute confidence in how I approach business.  I have the feeling that Governor Romney has this trait to a far greater degree than even I do. No failure will ever slow down Governor Romney’s confidence.

That confidence is exactly the foundation of his tax plan.  This is how I see his plan:

-  He will work to create bipartisan agreement to reduce federal spending as a share of GDP to 20 percent – its pre-crisis average – by2016.

- He will work to create bipartisan agreement to simplify the Tax Code

-  That the rich will continue to pay the same share of taxes as they pay now.

- He believes that income and corporate tax cuts across the board will increase economic growth which will offset the impact of any tax cuts that he is able create in a revenue neutral manner

- He intends to first negotiate  a bipartisan agreement to  eliminate corporate and individual deductions other than mortgage interest deductions, health care deductions and several other tax deductions that he feels are important to the middle class

- Once he has negotiated a bipartisan agreement to eliminate corporate and individual deductions he will be able to access the impact on revenues and determine what tax cuts that can be reasonably made. His goal and hope is that those tax cuts will be 20pct across the board for individuals and to 25pct for corporations.  But he has been clear that it is not absolutely certain that these will be the exact numbers.

Well I’m going to fill in those details in a second. But first I want to provide a little more detail on my perception of Governor Romney.  As I said at the beginning of this post Governor Romney is a deal maker who has extreme confidence in his ability to get his deals done.

Agree or not, I am certain that Governor Romney firmly believes the following – at Bain he created a company that was built on his ability alone to close deals to buy or invest in companies. He knew that he took people’s money and he was relentless in getting profitable deals done to make them money.  He was hired to fix the Olympics. and he did.  He  was hired to fix the state of Massachusetts and he feels certain that he did.  Add all this together and I believe that Governor Romney firmly believes that he is as good a negotiator and dealmaker as there is.  

If you put a problem in front of him, he knows in his mind that given enough time, resources and control he can solve the problem. 

Which is the exact detail of the Romney Tax Plan that makes all the numbers add up.  Governor Romney is the detail.  He will take all the unsolved variables in the algorithm that is our desire to reduce the budget deficit , increase economic growth and thereby  increase employment and negotiate them into the outcome that will solve this country’s financial problem.

Can he do it ? I don’t know. What I do know is that in order for him to have a rational negotiation on all of these variables it requires the politicians he will be negotiating with to negotiate in the best interests of the country rather than for their own personal interests and for the projections of the economists advising him to be accurate.  Those are both high risk factors that will be difficult to overcome.  I don’t know that anyone can over come them, including Governor Romney. I think it will be difficult for anyone to walk in to the office  and get to a compromise that solves the algorithm. But I know Governor Romney has no doubt in his mind that he is more than up to the challenge.  Which leads to the next algorithm, what happens if he gets elected and can’t get bipartisan agreements ? That has to be part of the equation as well.

So what does all this mean ? It means this is how I was thinking and I wanted to get it out there to let people comment on it. Thats the beauty of a blog, it can create discussion on topics i am interested in.

I’m not saying you should or should not vote for either of the candidates. That is up to you. Nor am i saying that economic issues should be the only factor in who you should vote for.  Everyone needs to make their own decisions. Just as I will make my own decision on Nov 6th. 

Thanks for reading this far. I hope you jump in on the comments

Wall Street doesn’t know what business it is in. Regulators don’t know what the business of Wall Street is. Investor/shareholders don’t know what business Wall Street is in.

I originally wrote this almost 4 years ago. It’s amazing how it still fits.

Oct 23rd 2008 7:16PM

Everyone is going to answer that question differently based on their own personal situation. But what I can tell you as a business person trying to look at the big picture, I don’t remember 4 years ago as being a good time for business.  As a starting point of reference, here is a reminder of what the stock market was going through in the fall of 2008

Out of the top 10 point declines in the Dow Industrials, 5 of them occurred in the fall of 2008

Oct 22nd 2008 514 pts 5.7pct

Andrews Ross Sorkin wrote a piece for the NY Times that was just ridiculous. He put the blame squarely on the back of the CFO of FB. Talk about getting it 180 degrees wrong.

Have you ever been to an auction where the selling party told a buyer to reduce their price because they were worried that the item might not hold its value ? Neither have I.  If the CFO of Facebook came on SharkTank and told me that he was able to sell his shares to the public for $38 a share, but turned down the opportunity, I would crush him for being an idiot.

Facebook was able to raise about 10 BILLION DOLLARS in this IPO. The CFO’s job is not to manage shareholder portfolios. His job is to help Facebook succeed. I don’t know about you, but putting 10 BILLION DOLLARS in the bank in my opinion is one way to help them succeed.

Who’s job is it to help manage the portfolio’s of FB investors ? If an investor doesn’t manage their own portfolio, the brokers who sold them the stock are responsible.  It’s their job to read the prospectus if you as an investor are too lazy to do so.  It is the job of the broker to help the investor understand the value of the company and make a buying decision. No question that there are a lot of brokers out there that did not do their jobs.

As far as traders who bought the stock hoping for a pop. No one cares about them. Seriously. You trade, you know you are going to lose on trades. That is how things work.

I bought and sold FB shares as a TRADE, not an investment. I lost money. When the stock didn’t bounce as I thought/hoped it would, I realized I was wrong and got out. It wasn’t the fault of the FB CFO that I lost money. It was my fault.  I know that no one sells me shares of stock because they expect the price of the stock to go up.  So someone saw me coming and they sold me the stock. That is the way the stock market works. When you sit at the trading terminal you look for the sucker. When you don’t see one, it’s you.  In this case it was me.

If the goal of the company is to maximize the cash obtained from the IPO, then the CFO should absolutely price the stock to maximize the return. If the goal of the company is to get a 1 day pop to make a PR splash , that is a completely different strategy. It obviously was not the strategy of Facebook.  Facebook maximized the cash available to it. They have been very clear that they will not manage the stock, they will manage the company to reach the goals they have been very open and honest about. Good for them.

Andrew did try to make one cogent argument that Facebook faced the risk of employees leaving because their options were underwater.  Apparently Andrew forgot that companies can re-price their options. Problem solved.

I will leave you with this article from a few years back when Google was at a similar point, having lost more than TWICE the market cap valuation that Facebook has lost to this point

http://www.cbsnews.com/2100-500395_162-4750463.html

© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

When it comes to getting a job, the USA has bifurcated into two employment worlds, the digital world and the brick and mortar world.

The brick and mortar world is everything you physically touch. Its manufacturing. Its retail sales. Its distribution. Its construction. Etc.

The digital world is everything defined by what you find on computing devices. It can be on your desk, in your hand or in the cloud.

What has happened is that the brick and mortar world has had every bit of intelligence that can be sucked out of it completely removed.  Any information that can be created, identified or recognized is being captured in as automated a process as possible and delivered to “big data” or even small data databases in the cloud. What used to require some intelligence at the brick and mortar work place has been seeded and ceded into the cloud.

Every smart company wants to become smarter and the way to do that is not by asking their employees to communicate  orally or in writing to management, its by automating everything.

When Starbucks introduces Square, its not to make their in store employees do more, its to simplify the process involved in serving customers and to allow them to spend more time on improving the customer experience.

The problem for those  who work in brick and mortar is that as the intelligence is sucked out of the job. The intelligence required to do the job is reduced. Yes, you still have to be good at what you do. But you can  be great at customer service or great in a factory line with out a college education. The competition for jobs that don’t require degrees has pushed down the wages paid for brick and mortar jobs as well. When there are no specific skills beyond basic people and communication skills required the job pool competing for any openings expands considerably. Forcing down wages. Leaving more unemployed unemployed.

The other unfortunate part of working brick and mortar is that as intelligence is moved out of of physical locations it also reduces the number of jobs available.  Have you ever seen a cashier at an Apple Store ? Unemployment is sky high in the brick and mortar world.

Thats not to say there aren’t some bright lights in this area. As the intelligence of the factory is sucked up from the floor the cost of labor falls and makes manufacturing in the US more competitive. Hence we are seeing some manufacturing return to the US which is of course a good thing

In the other world, the digital world, the non-brick and mortar world, there is  negative unemployment. Thats right there are far more jobs than there are people to fill them.

If you just look at the unemployment rate for recent college graduates its 6.8pct. My guess is that if you take out Sports Management majors and a few other “I did this for passion and not a job” majors (Sorry had to get that in there ), that rate might be under 5pct. That is close to full employment for college graduates and even non college graduates that had the foresight or luck to learn the skills required to get a job in the digital world.

Everything of intelligence is being moved into the cloud. There is not one business process that you can think of that makes sense to put in the cloud that hasn’t been written as an app. I get dozens of proposals for these types of apps every WEEK.

The explosion is due to the fact that digital entrepreneurship is experiencing a renaissance. Why ? Because with a Laptop, a SmartPhone, a broadband connection and an account on Amazon Web Services or one of their competitors, if you understand technology and are willing to work your ass off, you have everything you need to start a cloud based company. Everything.

I don’t know the exact numbers but it wouldn’t shock me if thousands of these companies are being formed every month.

And those cloud based service companies are hiring, hiring, hiring.  You would be hard pressed to find a single example of one of these companies that is not looking to hire more smart people. Experience not required.

That giant sucking sound you hear is the sound of intelligence being sucked from the brick and mortar locations into smart applications in the cloud licensed or owned by the companies that own the brick and mortar locations.

The best news is that with online educational resources coming on, and im not talking about the for profit schools, Im talking about FREE educational resources, anyone with the focus and inclination and access to a pc on the net has a chance to  learn a digital skill that can be of value to these new digital companies and allow you to change worlds.

What is my solution ?  I will tell you what I told my alma mater Indiana University and the University of North Texas committee that I am on. Every junior and senior should hold open at least 1 class in each of their junior and senior years for job skills training.

The university should make those classes fungible. Meaning each year the range of job skills classes is defined by the needs of employers in the global marketplace.  If they change every 2 years. Great. Employers will be thrilled and so will students who will be able to find jobs. If they change every year. students will have broader skill sets. Which also makes employers happy.

Companies struggle to keep up with all the changes the latest in digital technology requires. Train people and they will hire them.

The university should also make those classes available for high school seniors. If they can test in , let them.  It will allow smart kids to do smart things and get smart digital jobs. And who knows, they just might change their mind and go to IU or North Texas or be happy grabbing a great job. Either way the school has done something good.

Trust me if Sports Management Majors were good at Pig Latin (And if you think im talking about Igpay Atinlay, you probably could have benefited from a class like this ), they could get far better jobs than they are getting today. When they get them.

Who is upset ? Professors and administrators  at universities.  Why ? Because some of the classes they have taught for years would be replaced by newbie classes. I personally think a little change in the culture  at schools is a good thing. Stop building and taking on debt and invest in new and relevant courseware. But that is me.

I’ve had a lot to say about Education and you can find my blogs on the subject here .

Henry Blodget and others have been arguing about the future of TV. I thought I would add my argument about the future of video on the internet. This is taken from an interview in VideoMaker Magazine.

From 1999

by Larry Lemm
November 1999

This last Spring, Yahoo!, the Internet portal, paid about $5 billion worth of stock to acquire Broadcast.com, a streaming video company. This transaction solidified streaming video as a technology not only to watch in the future, but as a technology to use today. Mark Cuban, a founder of Internet video portal Broadcast.com, is very hopeful about the opportunities this technology opens.

Videomaker: What is Broadcast.com and what do you offer fledgling video distributors?

Cuban: Broadcast.com’s mission is to turn the Internet into a broadcast medium. We are much like the DirecTV of the Internet. We have put together the technology, infrastructure and software, and have aggregated content in order to aggregate audience. With this base, we offer content creators the ability to put their products of all kinds in front of an audience at a minimal cost.

Videomaker: Recently, I believe you made the statement “eventually most of the streaming video that people will see on the Internet will be home videos.” Why do you think that is true?

Cuban: Only because of sheer numbers. It will be so easy to present video to small audiences. Instead of the summer vacation or wedding video sitting on the shelf, we will post them on our family web sites so that grandma and grandpa can watch whenever they want. We will do the same with high schools posting their games, debates and school plays.

It will be far more convenient than corralling everyone into the family room or making copies of the tape to send everywhere. When you add up the numbers, a couple of hours from a lot of families dwarf the total amount of content created by traditional producers.

Videomaker: When do you think we’ll see this shift in focus from commercial video to personal video on the net?

Cuban: Over the next two years, as people get cable modems and DSL lines, they will start to put pictures, then videos up. All you have to do is look at the new Sony PCs with IEEE 1394 i.LINK interfaces to see how easy it will be. Soon all PCs will have these interfaces and the floodgates will open.

Videomaker: What opportunities do you think this will present to videographers, Webmasters and advertisers?

Cuban: There are two elements here, true businesses and labors of love. The labors of love that are non-commercial, will thrive. People will create their own El Mariachi-type productions for the ego gratification and some will get discovered and go on to bigger and better things.

For businesses, there will always be a place for quality production. The quantity of home video will almost be equaled by the quantity of corporate video. These businesses will need top-notch production services for Internet and Intranet video. Every new product, shareholders meeting, new building and maybe even new employee will have some video component that will be hosted by the company. Webmasters will have to know how video on the Internet works and have partnerships in place to host and promote content that will reach outside the corporation.

For advertisers, the realization should set in very quickly that the Internet world is no longer flat. That banners to catch people’s attention will diminish in effectiveness and video and other multidimensional elements, from animation to future media types will take their place. The agencies and advertisers that learn to harness this ability, particularly in a broadband world, will get far better results

Videomaker: What will Broadcast.com do to support this trend?

Cuban: We will continue to build our infrastructure to support the largest possible audience. We currently are pushing out broadband video at 700k, 30 frames per second. We will continue to push the envelope of technology, working with advertisers to introduce broadband video ads on our site, Media Asset Management partners such as ISLIP technology and with digital distribution opportunities as well.

Videomaker: Do you think that streaming video will begin to rival television as the video delivery medium of choice?

Cuban: I think that in the next five to ten years you won’t be able distinguish between the two. Think of it this way: ordinary cable TV is just a video monitor attached to a dumb computer (a set-top box), connected to a cable that goes to a network. The problem is that it’s mostly analog and doesn’t scale or do anything else. My personal thought is that a Pentium computer will replace the set-top box. It will have a DVD player, HDTV decoder, wireless keyboard, analog TV tuner, IEEE 1394 and USB connectivity. It will have a hard drive for a personal TV recorder and high-speed Internet access via an Ethernet connection out to a cable modem or ADSL line. And it will connect to a TV or PC monitor or both. Most importantly it will look like a DVD player instead of an ugly beige PC so we won’t be afraid to put it on top of the TV in the living room. All of this will become available for under $1500, starting by Christmas in small quantities, quickly dropping to under $1k next year. With one of these in the bedroom and living room, you won’t care if what you are watching comes from a traditional TV station over cable or from Broadcast.com over your Internet connection. You will just hit a button on the remote and go back to eating popcorn.

Videomaker: What is the most important thing a home videographer can do to get ready to stream video?

Cuban: Play with it. The more you know, the more you can try. You can go to real.com or microsoft.com/windowsmedia and find out what you need to digitize your creations. Once you have learned to digitize, you can get low-cost hosting space on sites like simplenet.com and upload.

Videomaker: Where do you think the future of Internet video is headed?

Cuban: All media used to be defined by its spectrum or physical form. You had a TV channel. You had a tape. Now all media is going digital. In a digital world, media can be stored on any digital platform, from a hard drive to a personal digital recorder. Or it can be transported on any digital medium from digital cable to DTV, to dialup over AOL. Because digital transport, like the Internet is becoming more available and less expensive, I think we will see digital video content becoming far more available where we want it, how we want it. This is both good news and bad news for the video business. It means there will always be an outlet for your work and that there will always be production demand. But because everyone has access, there will be far more competition to be seen.

Videomaker: What do you think will be the biggest innovation for streaming video in the next year?

Cuban: Falling bandwidth prices. More bandwidth to the office and home means more choice and opportunity.