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Goodbye Gruesome 2009

Posted on Thursday, Dec 31st 2009

I want to close the year by drawing your attention to a few important pieces from 2009. The first is my Forbes Sneak Peek at the 2010 decade. Many of you have read and resonated with Capitalism’s Fundamental Flaw, Rich Vs. Poor Is Not The Right Debate, and India’s Next Celebrities. The sneak peek is a synthesis of those ideas, and an optimistic outlook on where we are headed.

Depressing realities are everywhere. Health Care’s Email Prescription talks about how the U.S. health care system is not even leveraging the basics of communication technology. But encouraging steps are also everywhere: Streamlining Innovation is a look at HP’s attempts to stop the “solution looking for problem” phenomenon in the research universe. Retailers: Embrace Web 3.0 looks at unlikely case studies of companies that have built thriving businesses in unsexy niches. And Reading Your Customers’ Minds highlights innovation that is truly inspiring, especially for an AI aficionado like me!

One last thought on the post-American world after reading Fareed Zakaria’s compelling book, which I strongly recommend.

In 2010, I will continue to research and highlight the issues of our times with an aim to inspire entrepreneurship, impact policy and public opinion, and bring your perspectives, insights, and ideas to focus. And I hope that you will continue to share your thoughts and ideas at this and other forums.

Meanwhile, I hope you had a relaxing and reenergizing holiday season, and I wish you a much happier 2010.

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Sramana:
Looking forward to reading more. Wish you a fabulous 2010.

Two comments you made in your past posts on the issue of government intervention with bad incentives leading to failure, highly resonated with me this month.

1st in your posting “Capitalism’s Fundamental Flaw”, you say .. “But there is another less obvious bug in capitalism that I don’t believe regulation can quite handle. It is the fundamental flaw that our celebrated system rewards speculators much more than creators.”

In the state of Ohio, via a program called Third Frontier, the state government matches every dollar raised by angel funds. This match is not against dollar “invested” but against dollar “raised.” However great the initial intent was, the incentive has been devastating with very little return. Most of the so-called fund managers and paid administrators for these angel funds continuously dedicate their effort and get paid for raising money (speculator) as opposed to deep dive into evaluating deals to help the entrepreneurs (creators.) Example on return: Ohio Tech Angels Fund OTAF still takes joy in 1 — just 1 — exit of their portfolio company in more than 5 years that it has been in existence… that’s how devastating this has been.

2nd in your posting “Prepare for a triumphant return of the entrepreneurial spirit,” you say, “The shocks to the global financial system can be contained by requiring much higher capital reserves at banks. This also means banker compensation goes down dramatically.”
It seems you and Ariana Huffington are converging to a similar point. Today, she proposed in https://www.huffingtonpost.com/arianna-huffington/move-your-money-a-new-yea_b_406022.html that regular retail consumers and commercial clients (small businesses) abandon the big banks and to take their money to community banks. Along with this bottom-up movement and appropriately-incentivised legislation that requires higher capital reserve, I think will get the attention of the big bank leaders.

With any business, it is all about the design of the incentives. Incentives drive and change the behaviours. Proper design of incentives for those who manage the capital sources, will lead to better equilibrium and more importantly give the ability/power to “entrepreneurs” to drive the much needed recovery.

Thank you again, for your great work. Keep it coming.
Cheers!

Rini Das Thursday, December 31, 2009 at 2:57 PM PT