Unlike Fred, I can’t say that I have a single cogent reason for it.  My reasons range from marketing thinks I should to I learn a lot from writing to I think the ecosystem may benefit from the perspective of someone, who is neither a VC nor an entrepreneur, who works closely with many start-up companies,, to I enjoy the writing.

With respect to the marketing motive, one thing I have learned is that marketing alone is not a valid reason to blog.  I probably spend between 2 and 4 hours per week on this blog (that translates to 150 hours per year (round numbers)).  I am pretty sure that I have not directly acquired a single client because of this blog.  Compare this performance to the book I wrote some years ago or an article I wrote on SEC issues related to sales of stock by insiders in public companies, each of which produced many very good clients.  But, I admit, I would not have started if marketing (and one of my partners) had not convinced me to give it a try.

With respect to learning, a lot of those hours I spend are used reading what other bloggers have to say, in effect, keeping up with the topics of the day.  I would be doing much this even if I weren’t writing, but when I read blogs now I consider them in terms of why is this person saying whatever they are saying and what would I say about it.  Strangely enough, this can make a difference in the daily practice of law.  (For example, I have formed opinions about the merits (or not) of VC seed notes and my clients have benefitted from these views.)

With respect to the ecosystem, blogging in this space is dominated by VCs (Fred Wilson, Brad Feld, etc.) and certain entrepreneurial types (Dharmesh Shah, Nivi and Naval, etc.).  Each of these groups has a vested point of view in, say the VC seed note debate, and almost all other topics.  I am not invested (and I use that word advisedly) in this debate (or most of the others) and there are times when a less committed point of view is useful.

Finally, as with everything in life, there is no excuse for not having fun.  You can think of tons of reasons to blog.  Leveraging your time (as Fred Wilson does), selling (as marketing would like to do), learning, etc. but in the end, it has to be fun.

As if that was not enough, Monday's WSJ had an article on a subject near to my thesis that I have posted on from time to time that global oil reserves are systematically overstated.  The WSJ headline is "Natural-Gas Data Overstated."

I continue to report from time to time on what I read out there on the subject of peak oil.  It is not entirely clear to me how peak oil affects the tech world.  But I continue to believe that the methodologies used for calculating oil reserves systematically overestimate the size of reserves.  Another seemingly undeniable force is the growing appetite for oil in India and China (soon to be followed by other developing countries, I imagine).  One conclusion that I draw from this is that we, as a society, are grossly underinvesting in alternative energy and renewable energy technologies.  See my post on investment in New England versus California.  BTW, I think that taken together (meaning California, Mass, Texas and anything else you want to add to it) investment levels are still way too low. 

10. Ireland

9. United States ($47,500)

8. Brunei

7. Singapore

6. Kuwait

5. Norway

4. Bermuda

3. Luxembourg

2. Qatar

1. Liechtenstein ($118,000)

Basically, you got tiny countries (Ireland has 6.2 million people, Singapore has 5 million, Norway has 4.8 million plus tons of oil), tax havens, oil producers, and the United States. I don’t know, but I am guessing that the next 20 would include Japan, Germany, France etc. I am also guessing that if you put together the list of the "next" 20 countries in 1970 (or perhaps 1870) it would not be much different.

He also brought home a list of the bottom 40 countries based on GDP per capita. It is basically sub Saharan Africa (with some exceptions, South Africa, and some add ins Afghanistan, Haiti, Burma etc.). At the bottom was Zimbabwe with a per capita GDP of $200. I am making three final guesses (1) if you put this list together in 1970, it would not be much different, (2) if you put this list together (assuming one could) in 1870 or 1670 it would not be much different, and (3) that the spread between the lowest and the highest per capita GDP has done nothing but increase.

With the possible exception (depending upon when you measure) of the United States and the Asian countries (Japan, Korea others?), the countries that have really cracked the top group are, generally speaking, oil rich countries with tiny populations. (Where are Nigeria and Venezuela?)

Oil is going to become less valuable over time. Yes, the price per barrel will increase (and increase dramatically as world supplies dry up and become harder and harder to exploit), but other sources of energy will have to be developed. Certainly our children, and probably anyone who reads this post, will live to see the day when today’s oil powerhouse countries will resemble Lichtenstein – rich but so what? Sustained wealth and influence does not come so much from cashing in the winning lottery ticket in the natural resources game but rather from constant innovation.

So, here is one final guess, if you take this measurement again in 2070, the U.S. will still be near the top of the list.

I am just the lawyer. I don’t know what the problem is, but I have seen the situation before and I recognize the symptoms. Everyone involved is engaged in a collective delusion. They are all ignoring (perhaps they really don’t see it) an important fact. The emperor has no clothes. 

If you find yourself doing the same thing over and over again and getting the same results and you continue to be convinced that your strategy and tactics are destined to succeed – you just can’t explain why they haven’t, consider whether or not you and your team have not fallen into a collective delusion. You need to find reality in order to address it effectively. 

Your widget is perfect. It is the best thing on the market. The competition, while well established, is lumbering and slow and expensive. But no one is buying. You need to go back over each of the facts and examine each one. Somewhere you are missing something. Here is my bet. The most basic premise is where you have gone wrong. In this widget example, I began with “your widget is perfect.” I am willing to bet that it isn’t. If there is some premise that can’t be examined, that is truly an article of faith. If the CEO keeps saying our widget is faster, and no one ever challenges that assumption, it is almost certain that that is where the problem lies. 

It may be that the problem can’t be fixed, but you might as well know it. If it can’t be fixed and the problem is fatal, at least you can move on. If it can be fixed, then you at least have a shot at it if you can identify the problem. The real world gives you feedback. What you think is nice, but it better not fly in the face of what is actually happening or you may find that you are parading down the street with no clothes.

I wrote on April 13 of this year that a “ski slope number” is one that demonstrates palpably that something is wrong. What I wrote was, “I have it on good authority that in Dubai, they built an indoor ski slope. Imagine building an indoor ski slope in the middle of the desert. Just stating the proposition demonstrates its absurdity and hubris. It palpably demonstrates that the pendulum has swung too far.”

If you lend money to people who build ski slopes in the desert and new islands upon which to build luxury housing, you checked your common sense at the door (or maybe you just decided to gamble). In no event should you be shocked or surprised when they can’t pay you back. The bad news is that, once again, the rest of the world will suffer because the masters of the financial universe engaged in this kind of speculation.

I have spent a lot of time in Africa dating back to my Peace Corps days in Mali, to three business trips to Lagos, Nigeria (when I went in and out of Murtala Mohamed airport six times when it was one of the airports about which there were warnings in all other airports), the surface crossing of the Sahara desert and a recent visit to Uganda and Rwanda. When you add it all up, it is a lot of time, and Nigeria was (when I visited at least) a pretty dangerous place. Anyway, in all the time I spent in many African countries, I never felt threatened. And, nothing bad ever happened. Having said that, we visited Thailand a couple of years ago. We had a great trip. When we got home, we learned that the airport had been bombed by extremists just a few hours after we had left. Crazy stuff can happen anywhere.

Switching gears for a moment, NPR recently had a piece on what is the greatest invention? The Polio vaccine? Electricity? The internal combustion engine? The Flush toilet? My vote is not an invention at all, in the sense that it is not tangible. My choice is the rule of law. The rule of law enables everything.

According to the WSJ,

A Bank of America spokesman said in a written statement that the VIP recordings "were retained only for a limited time or until avialable recording space was utilized. Due to these limitations, we have no recordings from before July 2008 when Bank of American assumed management of Countrywide and terminated the VIP program."

Perhaps Bof A was following some regular corporate policy and the destruction of the recordings had nothing to do with the contents. 

What I really want to get to (for which this article in the WSJ is just the jumping off point)  is that destruction of records (electronic or not) can be a really bad idea.  Lawyers have a word for destruction of evidence "Spoliation."  The link is to Dictionary.com, but here is how Black's Law Dictionary defines spoliation:

The destruction of evidence.  It constitutes and obstruction of justice.  The destruction, or the significant or meaningful alteration of a document or instrument.

There is also a wonderful latin phrase "contra spoliatorem onmia praesumuntur".  A rough translation of this phrase is that all presumptions go against the destroyer of evidence.   Not only does it look bad, a judge and a jury and a prosecutor are likely to assume it is bad.

Paul Tsongas was a Partner in our law firm, and I distinctly remember him telling a story about his hard working parents in Lowell. The moral to the story was that no matter how hard they worked, and they worked hard, they were prisoners of larger economic trends. Unfortunately, I think the same will have to be said of the many many people who have lost their jobs in this recession. A lot of these jobs just aren’t coming back until it is equally cost efficient to build stuff here rather than elsewhere. The time necessary to level the playing field is not going to be measured in months. Also, if the process is just a leveling process, the end result may not be so great. Do we really want to look like a better China?

To state the obvious, this is why all the talk about entrepreneurial effort and new technologies is so critical to the equation. If we can’t bring the entrepreneurial world back in a big way, we are going to suffer for a really long long time. This is why I feel so committed to the Emerging Enterprise Center and why we should all care about the turmoil in the angel and venture world and, ultimately, in the world of exits and the capital markets.

Consider that a huge portion of the investing community (baby boomers) is trying to retire or prepare for retirement right now. These folks may want to have a portion of their investments in equities, and it is one thing to take normal market risk for an appropriate portion of your portfolio. But, is the risk that the regulators are not watching the big players (or giving them a pass because they are part of the club) a normal market risk? I think not.

It is unfair to assert that the bias at the SEC is solely or even primarily responsible for the woes in the capital markets, but it doesn’t help. To bring back a robust capital market you have to do a lot of things, but one of them is restore confidence in the regulators. To turn to the entrepreneurial world, without a robust market for new issues, exists will continue to be disappointing (both IPOs and M&As). A lot of other things have to be done, but the tone at the SEC affects the venture world.

The SEC needs to take a very tough and probably very public look at itself to achieve a change in perception.

It goes without saying that the goal of venture investing in the U.S. is to make profits. A secondary goal might be to create enduring companies, but profit is first and foremost. Creating enduring great companies is arguably a by product of the profit motive and, possibly, the best way to make money, but it is not the end. I am not certain of what I am about to write, but I believe that the motive for Chinese venture investment is to create business in China that employ people. The population of China is vast, 1.4 billion. While a portion of the population live in relatively good circumstances (the ones that live and work in Beijing, Shanghai, and a few other industrial centers being perhaps 50 million) the rest live in rural poverty (more like the third world than the first or second world). The government needs to find ways to pull these people forward and good jobs is it. If they government fails, considerable political instability could arise. The government is less concerned with profit than with employment.

Remember China is a communist country. The vast amounts of venture money they have does not come from private investors (although there is some of that); it comes from the government. In addition, it is controlled by the government. The government controls who can own equity in Chinese companies, when and how money can come into the country and, most importantly, when and how money can leave the country. It also controls the exchange rate, which it sets at 7 RMB for one dollar (way too low). All these policies support one goal – employment. By way of an obvious example, by keeping the exchange rate way low, they keep down the cost of labor and make it attractive to locate manufacturing in China. Another example, is keeping money in China. If you can’t get investment capital out, then in stays in the Chinese economy. One could argue that this particular policy is counter productive since it discourages investment (if you can’t get your capital out why put it in?), but it is hard to argue what policy is being followed.

China is still a great market (eventually it will be the biggest market in the world). It is the current best place to make money – after all in this global recession; they grew at a whopping 6 percent. Somehow, to make cross border investment work, some of these conflicts in style, purpose and regulation will have to be bridged. Ultimatley, I think they can be because their goals and U.S. goals are not mutually exclusive, but adjustments are going to have to be made on both sides. The beginning will be to understand the differences.

For those of you involved with public company acquisitions, note the SEC's new interpretation 239.13, which indicates that directors, officers and others who sign consents to a transaction will receive restricted securities, not registered securities, apparently even when the transaction is registered on Form S-4. My reading of the interpretation is that this outcome does not apply if the insiders merely agree to vote in favor of the deal.

In my experience, acquisitions of public companies are rarely accomplished by means of a consent solicitation, which makes this interpretation seem mostly inapplicable.

However, the interpretation does not explicitly address voting agreements that include an irrevocable proxy in favor of the buyer (which is the customary practice). If there is a meaningful distinction between a written consent and an irrevocable proxy (at least for purposes of determining whether or not there is an investment decision), it is an awfully thin one.

So beware: of late the SEC staff (particularly the Office of Mergers and Acquisitions) has not be particularly accommodating, so you might find yourself fighting about this issue.

Lawyer B: 

The SEC's preoccupation with baroque distinctions like these is why they miss little things like a $50 billion Ponzi scheme conducted over 15 years by a high-profile member of the investment community. It's a perfect example of one of Parkinson's laws, the Law of Triviality.

In the opportunity category: It looks like there will be many small grants and that companies addressing issues in the healthcare, education and other social services are likely to be eligible. The grants will not be limited to states, municipalities and the like. So, it appears that it will be possible for private companies to access grants (or, in some cases, loans) for appropriate projects. For the right company this could be a significant source of non-dilutive equity. There are procedures in place for making applications, and now is the right moment. Having said that, the NTIA seems to be making it up as it goes along. This is understandable since neither they, nor anyone else, has done this before.