#hottakeoftheday

May 20 2019

On behalf of all companies who’s stock is down more than 65%, I am announcing a strategic alternatives process for you…. you’re for sale, put up the sign.

I know, I know … “How can you accept an offer when you are trading more than 65% below where you were last year??” Because investors have woken up and realized – asset quality matters, basins matter, balance sheets matter… and that’s why you are down 65%+.

Roan Resources is the latest to “officially” announce it saying they have had a number of inbounds. Of course they have – and what ever offers they are seeing are the best they are going to get, so hit the bid, take their equity, cut management and staff G&A and let’s get this consolidation show on the road.

May 19 2019

In a stroke of truly politically correct and reactionary genius – the SAT’s have added an “Environmental Context Dashboard” to assess a students “resourcefulness to overcome adversity”. It measures things like crime rate and poverty levels in a community and adds the score for universities to see and help make better diversity decisions.

Ironically, administrators are missing the point. With tuition rising at 7% a year, and many private colleges costing more than $60,000/year – a college degree is going to become less of a screen for employers as it becomes less accessible to middle class families (low income will get financial aid, high income can just pay). So yes – some rich parents photoshopped their average kids face into a “crew team photo” and got admitted to college. But if you can’t get a job that pays off the investment – what’s the point??

I met a kid who had just graduated with a political science degree – we met because he was making my sandwich at Whole Foods…. when college grads can’t get jobs with degrees that cost $240,000… parents are going to start questioning the investment.

We need a better system for education – unquestionably. But an Environmental Context Dashboard is not solving the problem.

May 18th 2019

How does the private equity model evolve to address the fact that the great resource play land grab is over? Bakken. Eagleford. Permian. All extensively drilled with the limits of the fields pretty much known and understood. So returns are generated through drilling, rather than “lease and flipping” which means much bigger capital and much bigger teams required.

How to cope? Teams have started resorting to “drill fund” structures where investors invest in a basket of wells and earn a guaranteed return with a tail. Ultimately as drilling becomes a bigger focus of private equity teams with longer duration companies – I would expect PE funds to raise drill funds as a side car to their own asset level investments – both to provide leverage and capture the “leakage” of high rate mezz like loans.

The wave of bankruptcies will put assets into the market and returns will have to be drilled. Expect PE to evolve to take advantage of the new rules of the game.

May 17th 2019

A help wanted ad I see coming in the very near future…

WANTED: Debt investors need deeply experienced workout group to help us not lose all the money we invested in horrible companies with tragic balance sheets. Oh, and did we mention the assets aren’t good so you can’t drill or sell your way out of the problem.

Required skills: must be able to take a beating all day every day; must take the blame for our horrible investment so we can blame you when you can’t fix it; MUST NOT have thought buying the equity was a good idea.

 

May 16th 2019

A little misconception I’d like to clarify: It takes one woman 9 months to make a baby. 9 women can’t make one baby in one month.

Translation: throwing people at a problem doesn’t always solve it faster. Some things just take time.

You’re welcome.

 

May 15th 2019

Saudi Arabian…what are we calling it…sabotage? Iranian sanctions. Venezuelan supply falling off a cliff. In the good old days, these events would have driven oil up 10% but with tariff concerns, prices remain in the low 60’s. With so much noise in China-US trade, quietly and unnoticed, energy companies are being given a second lease on life (well, some of them).

Budgets were set at $50 oil and activity was front end loaded. Excess cash is being used for stock buybacks and debt management and G&A is being cut to reflect a cliff coming for activity. The $hit-cos are seeing their stock prices crushed and are quickly headed for Chapter 11 – which will punish debt and equity holders alike for not paying more attention to asset quality.

All these things are why I stand by my belief that horizontal rig count is going to fall below 700 in July and will see significant downward pressure on pricing in the service industry improving well level economics and profitability.

So while investors continue to hate the sector and are distracted by tariffs, these developments and current pricing are enabling the best of the best to position themselves for a really strong 2020 which I think makes some of these companies very compelling to invest in.

May 14 2019

Now that the OXY-APC-CVX drama has run its course, I find myself compelled to watch the massively entertaining “letter war” between Kimmeridge and PDC and Rice and EQT.

To me- the most amusing part is that the companies instigating the fight are the companies that sold their assets in the first place (Kimmeridge and Rice both got wonderfully … attractive prices in 2016 and 2017 when they sold). Both took stock in the acquiring companies and now that stock has got beat up because EVERY ENERGY COMPANY IN THE WORLD has. It’s like selling your house to “We buy Ugly Houses” and then complaining when the housing crisis of 2008 hits and shouting “you didn’t get enough for my house!”

I get it – I want a 25% takeover premium for the companies in my portfolio too but don’t pretend you can run the assets better …. there was a reason you sold and a reason the acquiring company is struggling (maybe the assets aren’t that good…).

But – I digress. Keep up the wonderful letters, they are a welcome distraction to the tariff battle over Twitter.

 

May 13 2019

UBER is public and after the debut of LYFT it’s no surprise that it’s down 15% from the IPO price. The company has a $70b market cap, hasn’t ever turned a profit and is burning cash like an oil and gas company in 2014! I’m not convinced it should have a larger market cap than EOG – but what do I know about tech company valuations??

I do love UBER as a service though – I really do. The convenience and low cost have been big factors in reducing in DUI’s by 33% according to some studies and you have to believe it’s been a big boost to restaurants as patrons don’t need to worry about how they are getting home after.

I also think that having a single company so impactful to transportation (which is the cause of 28% of GHG emissions) should draw focus to the fact that it is driving cars – not producing oil for cars – is the cause of the emissions and the best way to reduce them.

However – maybe it’s just me – but my biggest complaint is that sometimes I feel like I am the driver’s therapist: I mean I love that we CAN have a great conversation – but do we ALWAYS have to? Can’t we just sit in silence and ponder the business model instead of you telling me about how you want to become a dog trainer? Just saying.

May 12th, 2019

I am going to be totally without controversy today and say “Happy Mothers Day” to all the moms out there. You are all amazing. Ok…. most of you are. Some of you raised little a-holes but we can talk more about that on Father’s Day.
I kid. Let’s talk climate change for a second. Carbon free is a cool concept but I ask, what changes are we willing to make to make it happen? Everyone has a plan but no one is talking about the practical consequences.
Here’s a fact. The US emits 13% of the world’s emissions (China is 26%) and 28% of those emissions are created from Electricity generation and another 28% from transportation. Electric cars NEED electricity and 30% of that in the US is generated from coal. Which is carbon! So electric cars are super cool… but where does the electricity come from? Also… ever read an article about where all the rare earth minerals we use in batteries and such come from…here’s one that should scare the hell out of you. 
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May 11, 2019

I am seriously considering starting an event driven hedge fund that invests in oil and gas companies. Here would be the rules.

If – in investor and quarterly meetings – a company talked about its net asset value under a variety of scenarios; lived within cash flow; paid a great dividend and was actively paying down debt- I would buy it.

If – however – a company used the words “weather related delays”; “non recurring (but recurring) operating cost increases”; “we will be cash flow positive NEXT year” and generally doing things that make management look like they don’t listen/ are stupid – or both – I would short the hell out of it.

What’s my point (yes, I have one): we are in the end game now and you truly don’t want to own companies that are so obviously in trouble they are going to declare chapter 11 or worse – languish as their shares fall to near 0. There are some incredible opportunities to buy the right companies – companies doing the right thing and likely to be taken over in the next year- and you can make outsized returns. Bottom line – if you want to gamble… go to Vegas. If you want to invest – the wheat is being separated from the chaff- all you have to do is look.

 

May 10, 2019

And with the stroke of midnight, our country is MUCH STRONGER with tariffs of 25% instead of 10% hitting $200 billion of imported Chinese goods. That’s the news. Our economy is better. Have a nice day…

Actually, I’d like to ask a question if I could: if I can buy an imported Chinese apple (tasty!!) for $1 and there are 25% tariffs on them, doesn’t the exporter still get $1 because they have raised the price to $1.25? Aren’t I actually paying the tariff through higher prices?

No? (Actually yes, but let’s pretend). Are you saying that demand goes down to drive prices from $1.25 to $1.10 so the thing I really wanted I don’t buy because it’s more expensive? But with higher prices, inflation goes up which makes the fed raise interest rates and then I’m hurt by the debt burden and pay higher interest rates?

No? (Actually yes, but let’s pretend). Oh- so then the economy slows, consumers pay more for goods we like to buy cheap and the stock market falters delaying everyone’s retirement and forcing their parents to move in with them when they run out of money.

I feel MUCH STRONGER. Thank you sir, may I have another.

May 9th, 2019

And now, we return to our regularly scheduled and topical hottakes. And what a week it’s been!!

We have to go all the way back to Monday when Amplify and Midstates agreed to a merger of equals (that’s not a real thing by the way, but sounds good in a press release). Many, many more to come so a good start.

Pioneer annnouced quarterly results with the strangest asset sale I’ve ever seen. A $450 mm divestiture for which they receive $25 mm today and the rest, based on a whole bunch of factors between 2023-2025… if ever you wanted a reason to sell companies that own Eagleford assets -that’s the one! Oh, and on the conference call he said “I didn’t come back here to sell PXD” and the stock promptly got crushed -which was a nice way of the investment community telling him “too bad”

PDC, EQT, QEP and Carrizo are having fun with activist investors (which is cute when spreadsheet jockeys tell management how to model type curves) and will be a template for future moves.

And- Mr. Wirth has made Madame Hollub very happy and won’t raise its bid for APC and plans to use the $1b to boost its buyback. I can only assume he got my note. So other than a full blown tweet – I mean trade – war that has the potential to drive the market down 10%… its quiet uptown.

May 8th, 2019

Another week, another shooting at a school but don’t worry, I am not advocating for any sentence that includes the word “gun” or “control”. I learned my lesson on alluding to that debate last time – and I like to think I’m a fast learner. No thank you!! For clarity in the sentence above, I am simply stating facts. There was a shooting at a school in North Carolina last week and there was a shooting at a school in Denver this week. Definitely NOT talking about gun control. Agreed? Please don’t post comments about the 2nd Amendment or anything like that.

Instead, I am proposing a much more practical solution: a no appeal trial with capital punishment for the guilty party AND the legal owner of the gun. I think this is a far more realistic solution that does not infringe in anyone’s personal rights and addresses the concept of public safety and justice. And I am all about practical solutions.

May 7th, 2019

Dear Mr. Wirth (Care of LinkedIn)

Thank you for your interest in Anadarko. I know right now you are thinking about raising your bid but I don’t think you should and here’s why (in case the people working for you don’t write in bullet form memos… on LinkedIn)

1. You get a billion break fee! Not bad for writing an offer. You planned to increase the buyback from $4b to $5b after the acquisition anyway- now it’s free money and you can still do.

2. You were going to sell $15-$20b of assets – likely DJ, PRB and Algeria. Who buys the DJ? That feels risky on execution with politics here. It’s all about the Permian position anyway.

3. There is this trading partner you’ve done a whole lot of coring up with and is a pure play Permian player… they look pretty. Really pretty! Maybe you should ask them to dance.

4. I am crushing hard on Madame Hollub and I don’t want you to disappoint her. A bigger Oxy is a better Oxy and makes COP and RDS get tickets to the dance too. That’s good for the industry.

So. Hopefully this has been helpful. Love and hugs,

 

May 6th, 2019

It’s official: I have a new crush and it’s Vicki Hollub. She is one tough, creative and feisty cookie and I like it a lot!

In the span of 2 weeks, Oxy has gone from unrequited admirer trying to get Anadarko’s attention to superhero calling all the shots. I thought the Buffet play was creative – a touch expensive but hey, the things we do for love.

But now…. pre selling an asset they don’t even own in the largest risk area of the deal’s integration to raise cash and leave the 3- D’s behind (DJ, Delaware, Deep Gulf of Mexico)…. be still my beating heart!

I love when companies stop playing by some antiquated and outdated rules designed to keep incumbent management teams in control of a process when they should be maximizing shareholder value instead. Elliot Management started strong in QEP but faded fast and appears to have lost without even a fight (the last press release on that deal was January!!) but this…. this is incredible.

So, here’s to you Madame Hollub. Can’t wait to see what you do next.

May 5th, 2019

Do you know what I’m thankful for? Everything.

I was at a luncheon fundraiser for ACE in Denver this week, and I am grateful for the reminder. Each year, ACE gives $6 mm and 2000 scholarships to allow low income kids to go to private local schools and change their opportunity set in life. Education- and the access to a safe, Learning focused environment- changes lives. From life time earnings expectations, delaying child rearing and creating new role models for the community to look up to- access to a quality education is a key way to close the income gap. Would I be where I am had I not been born into a family that could access a high quality education? No.

Where does ACE get much of it’s money in the local community and who are the founders and leaders of the organization? The Oil and Gas industry. My friends and colleagues in this industry are so generous with their time, their resources and their knowledge it is hard to understate the industry’s positive impacts in all the communities we live.

I am proud to be in Oil and Gas. I am proud to provide low cost energy to the country that lifts families out of poverty. And I am grateful to have been given the opportunity.

May 4th, 2019

Business school professors might tell you that in an acquisition, you should take the best of both companies and make the Newco “better”. That’s why I wrote the book – “…What They Didn’t Teach You In Business School”. Most people teaching have never been through an acquisition personally and just interviewed some CEO 10 years after the fact for a paper they wrote and think they understand corporate culture. They do not.

The people that work at Oxy and CVX do so because they like it; they fit the culture; and they understand the politics. If they didn’t, they would leave or be forced out. From what I know of those cultures – I would be a horrible fit and they would be best to be rid of me ASAP. I did work at APC for a long time and I would say generally I was a good fit. So. Post merger – OXY and CVX would have to get rid of me and all the “like me’s” to keep us from rocking the culture boat. And how would they know who those people are? They don’t but they can’t make a mistake.

That’s why they have to get rid of almost everyone and post every job they need and invite applications from EVERYONE to find people who will fit at best OXy or CVX. Because a warm body WILL NOT do when there are so many people available.

 

May 3rd, 2019

After the school dance this week, I had to tell my son “If they gossip to you, they gossip about you.” Just a good reminder for all the grownups.

 

May 2nd, 2019

Taking a stand is good: it lets people know what you think and lets people react to it.

Patagonia has decided that it only wants to brand clothing of brands that are like minded and in that, financial services and oil and gas are out. Did I mention that they use fleece in their products so I should probably mention that fleece is made of polyester and of course that is derived from petroleum based products.

So in addition to not buying clothing from Patagonia, I can also safely call them misinformed about where they get the material to make their products. Like people who drive electric cars to “save the planet”, it would help them to realize the plastics and the energy required to fuel the car came from oil and gas too.

 

May 1st, 2019

Earnings season has kicked off, and for once, companies – and the stocks that reflect their decisions – are performing in sync. Show capital discipline and get rewarded. Outspend, and watch your stock get crushed. Tier 1 assets (pronounced Delaware) are allowing companies like CXO, DVN, CVX, XOM to crush expectations. Tier 2 and 3 assets have “weather impacts”, “third party curtailments” and “midstream delays”. Yeah… ok. G&A reductions, share buybacks and free cash flow are mentioned in every press release – which shows that even if they aren’t executing, they know what to say. These are good developments and are making it clear who the winners will be at the end of 2019.

April 30th, 2019

Just when I was going to write a wonderfully motivating hottake on team work…. some guy name Buffet shoved Anadarko back in the spotlight. 8% is really hard to make on large amounts of capital without taking a lot of risk- and through 2008 and the financial crisis, Buffet made a killing supporting banks with great preferred returns and warrants. So one must take notice when he commits 10 billion (with Warrant kickers) to Oxy’s bid for APC. Not surprisingly, the market re-valued CVX with a lower probability of winning and reflected Oxy’s higher likelihood bid by driving their stock lower. If I’m Chevron, and I love me some Permian- their is another company I would covet more than APC. Let’s see how quickly “it” gets into play.

April 29th, 2019

What’s a Monday morning without a little M&A news from Sunday. Anadarko has decided to talk to Oxy….. and wow, does that look bad on the Board. So you get an offer from Oxy – well 3 actually- and then accept Chevron’s proposal and $1b break fee; and then Oxy writes a letter and now with egg covering your face, you think it’s time to engage. I stand by my view CVX doesn’t raise its bid and now, with Oxy looking more likely, Oxy stock falls to match expectations they have to issue a lot of stock to get the deal done. But let this be a lesson to other Boards who are currently in negotiations: assume everyone will know everything one day so don’t make decisions you wouldn’t like on the front page of the WSJ.

 

February 24, 2019

There is a book called “The myth of the ethical consumer” by Gianna Eckart. I haven’t read it but I heard her on a podcast and let’s be honest, the title tells you everything you need to know.

Consumers can hate where a product comes from or how it is made and still buy it. The only way behavior changes is to legislate it out. And on the topic of legislation- let’s get real about carbon emissions: if we want to reduce them, consumers MUST pay more.

Here’s a fun stat. The US uses 9.33 million barrels of oil for gasoline each day and a 0.25/gallon gas tax would reduce it to 9.23 million (that’s not a lot).

Here’s another stat: ride sharing services have increased total miles driven in cities by 160%. The problem of reducing emissions is easy: dramatically raise gasoline taxes and tell consumers (voters) we are saving the planet. Now which politician is brave enough to actually tell the truth??

 

February 23, 2019

Remember the 1980’s? Acid rain, leaded gasoline and a hole in the ozone. It was all that anyone talked about. It’s now 2019 and, it appears, crisis was averted.

The peak size of hole in the ozone was 11.5 million square miles in 2000. Since banning CFCs worldwide in 1996, the hole has shrunk to 2.3 million square miles – shrinking 1.3 million square miles in last year alone. Replacing CFCs was estimated to cost $36 billion over 90 years from 1991.

The EPA banned leaded gasoline in 1995 the lead in children’s bloodstreams dropped 80% driving their IQs 3.5 points higher (study period 1976 to 1999). And it only cost 3 cents a gallon more.

Acid rain became a problem of the past (in North America anyway) when the Clean Air act was amended in 1990 dramatically reducing the emissions of SOx and NOx, in large part from power plants using coal.

Humanity has a history of solving problems. Agreeing on what the problems are appears to be the bigger challenge for politicians these days.

 

February 22, 2019

I went to a fundraiser for a local councilman and it illuminated a number of things for me (I was aware I’m totally unelectable before this evening so THAT wasn’t one of them…..).

1. Upper-middle class folk who are fiscally conservative and socially liberal and who think they are the silent majority – are delusional. They represent about 14% of the electorate and aren’t a focus group for either party.

2. US National politics doesn’t enable governance to the middle of the bell curve where centrists live – and so the skew to one side or the other drives rhetoric. This is silly and needs to change.

3. There are two types of politicians. Those who want to BE someone. And those who want to HELP someone. Let there be more of the the latter in the future.

I truly commend all those who choose public service. More people should try.

 

February 21, 2019

“An optimistic oilman is someone without enough experience.” “The best well you drill is the one you sold pre drilling.”! “Please let there be another boom, I won’t squander it all away this time.” These expressions all rattle around my little brain all day long.

And yet….Oil at $57; Energy equities are one of the best performing sectors this year; Modest capital cuts and generally a flat rig count haven’t upset the world supply balance; Saudis playing ball.

AND…. the China trade deal looking like it’s happening! Federal reserve is being accommodative on interest hikes!! It feels so good!!! Can I get a glass of wine?!

….Isn’t this the time in a horror movie when the killer climbs in your window with a chainsaw?

 

February 20, 2019

At the risk of not having an original thought each morning, I have to reiterate two hot takes from days gone by (Jan 11 and 12 if you are tracking!)

The average life expectancy of an American male is 79 years old and 71% of S&P 500 companies have a mandatory retirement age- with 43% setting it at 72.

So I ask, purely mathematically, should a 77 year old man really be running for President when the inauguration isn’t until he’s 79?? Dude… book a cruise, take up golf, introduce Jane to her next husband …. Something else! Anything else!

I want to play in the NHL but I’m 41 and I don’t skate very well…. so I too have reluctantly let that dream go. Instead, I live vicariously through my children in hopes they send me on a cruise when I’m 77.

 

February 19, 2019

I went out to a long time business partner’s family ranch yesterday and learned a surprising amount about raising exotic animals. It’s not a business I’m familiar with, despite being a relatively rough and tumble guy- as those who know me can attest.

Some fun facts. The females are worth more than the males (as they create the value). You only really need one male because they attack each other over the women and risk mortal injury. So- you keep the “best” one around and sell the rest to be shot. I often say it’s as important to be lucky as good and on an exotic animal farm, a good looking, lucky male has a much better time of life.

My takeaway: If you are a 9 point buck, best not be born to a 10 point because you are going to be sold and shot. BUT- perspective as to your place in the world matters! If there is shooting to be done — a 10 point buck would be a wonderful friend.

 

February 18, 2019

From my NAPE summary note, a common question arose: “I know the asset market is dead…. but why?” Here’s my take:

1. Asset acquisitions are about high grading one’s portfolio. To do that, the key requirement is access to capital. Pubco’s with “tier 2/3” assets can’t raise capital. Period. Pubco’s with Tier 1 assets have decades in front of them and don’t need more inventory. Ergo, unless they can use equity, deals aren’t getting done.

2. Private equity is the ONLY group WITH capital BUT they have portco’s they can’t sell (refer to point 1). This means they are long assets in old funds so unless a new deal is dripping off the page- they can be patient: cash is king. Buyers want a screaming deal and sellers aren’t distressed enough (yet) to take a low bid.

3. Finally, there is no market for new prospects because PE hasn’t switched to a drill your returns model yet. 5,000 acres in XYZ basin with HZ potential might be the greatest idea ever – but if you can’t drill it ALL THE WAY and sell your PDP at exit, it’s not buyable at entry. There is no source of low cost of capital for a PDP buyer today since the MLP market blew up.

This too shall pass- but you need to see a lot change before it does.

 

February 17, 2019

It has been argued that social media’s biggest drawback is “peacocking”. Pictures at the beach. Pictures at new jobs. Happy, sunshine and lots of nice looking teeth.

I have never seen a selfie of someone crying after being broken up with, losing a job or having a parent pass. But those things happen far more often than the former.

To live is to fail. It’s what makes the success feel so good and the best way we learn what not to do. Everyone has failed. Everyone has been down. And luck and timing play a huge factor in success. I am reminded why I started posting on LinkedIn. And why I started writing in the first place in 2012.

No “peacocking” today: Here’s the article that started my journey and to remind everyone – everyone fails. More importantly, there are many people to help pick you up and make you smile. All you have to do is ask.

 

February 16, 2019

As we start our Saturday, there are 600 million heavy trucks and buses on roads throughout the world as well as 597 million passenger cars and trucks. And all these have combustion engines. There are 3 million electric vehicles. How much lithium and electric power generation would we need to change that? (And for kicks, Google how you get and where to find Lithium)

38% of the world’s electricity is generated from coal, not to mention its use in iron and steel. 7% of global carbon emissions are used to make steel which is used in every part of wind turbines. To turn silicon dioxide into solar panels – you need to run something called an electric arc furnace… an ELECTRIC ARC!

I love the oil and gas industry and what we do to power the world economy. I just wish politicians in Washington would think their “green” ideas through a bit more. Maybe AOC should follow me on LinkedIn…..I’m easy to find.

 

February 15, 2019

I leave NAPE with pains in my liver but a bounce in my step – which for a near perma-bear is a dramatic shift! What were my take-always?

1) Water is the new oil. It is, perhaps, the last frontier of “lease and flip” and is mirroring the trajectory of the horizontal resource play boom.

2) There are a lot of midstream dollars looking for a place to happen and it feels like we are going to be over built in the near term.

3) Technology, AI and data management tools are finally attracting real investment and the number of new products that are dramatically better than the incumbents are impressive. I mean seriously – how is anyone still using Aries?? Grab an abacus and make fire from rocks.

4) In spite of my constant worrying about the supply – demand fundamentals of crude oil in particular – 600 mmbbls of storage availability for China’s strategic reserves probably put a floor under oil prices as they were active buyers in December when crude was in the 40’s.

5) The asset market remains dead with no end in sight. “Drill your returns” is the only thing that works. One day soon, there will need to be a real market to sell PDP heavy assets.

Our industry is filled with amazing people doing amazing things and I’m grateful to be a part of it.

 

February 14, 2019

Houston…. we have a problem! I think the NAPE conference goers bought the Four Seasons out of booze last night.

Has anyone seen my name tag? If “he” said something offensive … it wasn’t me… it was the guy that stole my badge.

 

February 13, 2019

While I dislike 530 am flights immensely – the trade off as I head to winter NAPE in Houston is the pregame massage at Massage Envy. One needs to be in tip top shape as one prepares for the roughly 300 conversations that will occur in the next 36 hours.

But I wasn’t always a NAPE pro – my first year in 2012 featured a recently unemployed younger version of myself rolling around the conference floors with a piece of paper that said “Looking for assets, Looking for $500 mm”. Needless to say it was a fruitless effort but the experience served as the launching pad for the best lesson for the next 7 years: complete and utter failure of my first start up. (As many of you know- that became the topic of the as of yet to be published book and blog “WTF is Wrong with Everybody Else…. What they Didn’t Teach you in Business School”)

As I head back with 7 years under my belt, I reflect on the phrase: “You are either learning, or you are making money. You aren’t doing both at the same time.” I agree. And a nugget for the newbies – I’ve learned all the business happens after 9 pm in the Four Seasons lounge. See you there!

 

February 12, 2019

In the past 50 years, the population of the world has doubled, water use has tripled and oil use has quadrupled. I’m glad we are debating the difference between a wall and a physical barrier ….

 

February 11, 2019

There was a scene in the movie “Men in Black” where Tommy Lee Jones picked up the National Enquirer and proclaimed “This is the only newspaper doing real investigative journalism”. Alien landings, Elvis sightings and the occasional affair.

So it is perhaps no surprise that the tabloid got the scoop on the world’s richest couple last month. The odd part to me is Bezos isn’t really a celebrity CEO in the ways others are so his targeting seems bizarre. Also – are naked selfies really news any more?? Is there anyone left in America that cares about this story?

But – it took a twist last week when it appears that the stealing of the photos and the outing of Bezos was politically motivated – with possible involvement from the Saudi’s and as a gesture of forgiveness to the White House. I don’t know much about blackmail – but I don’t know that taking on the bank account of Jeff Bezos AFTER the story already broke up their marriage AND he owns the Washington Post ends well for the National Enquirer.

Maybe they should go back to Elvis sightings and other more newsworthy events, because this seems to be a battle they can’t win.

 

February 10, 2019

I was appropriately called out yesterday for a true first world problem: my frustration at Netflix streaming speed during Batman (though I still maintain it’s an investment decision, the point was well made!)

In sharing the story, my wife was reminded of a time a meat salesman came to the door and she couldn’t buy any because the freezer was full (and we subsequently bought another freezer). My son dropped his Beats headphones on his iPhone and cracked the screen. And my mother in law can’t use her timeshare points in Hawaii because she has too much other travel planned this year.

1st world problems.

Check. …So I made a donation to the Gates Foundation. We are so so lucky to live where we live and have the opportunities we have. Thank you. Thank you. Thank you. I am grateful.

February 9, 2019

I like to rewatch movies I love- so when I saw that the “the Dark Knight” was on Netflix streaming last night- I was so excited (yes, I’m a child in a man’s body).

Of all the superhero movies – the Batman trilogy is my favorite. Of course, that Christian Bale is an exceptional actor that dominates every role he has ever had… helps.

I couldn’t put my finger on it but something was off. About 40 minutes in, I realized Netflix was accelerating the playback by about 15%. Subtle, but really annoying. I don’t know what deal Netflix made with studios but that couldn’t have been accidental.

If you want to be content (and it’s awesome original content) – be that. But if you wreck my favorite movies because you got a discount to stream them fast… I’m selling your stock.

February 8, 2019

Trust is a powerful thing. You trust people you’ve never met more than someone that broke your trust in the past. And teams that truly trust each other and don’t need to fact check can do amazing things at incredible rates. “Trust but verify” is the dumbest thing I’ve ever heard.

So it occurred to me as I was watching the State of the Union that a team building event might be a good idea. Divide up into groups and do a rope course! Play 2 truths, 1 lie. And, of course, finish the day with a trust fall from a high wall. In the meantime, the American public can vote on who goes first……

 

February 7, 2019

My youngest son asked me “are you excited about my birthday?” His birthday is at the end of March. Being the father that I am (and that can go both ways…) I thought it was time for a parenting moment.

I said “To be honest, I’m not thinking about your birthday. I was thinking about myself. And the moment this conversation is done, I’m going to go back to doing what everyone else is doing right now – and that’s thinking about themselves. So no. I’m not thinking about your birthday.”

Tough love. But true. So the next time you are stressing about your boss or co workers thinking about you or something you did – trust me, they aren’t.

 

February 6, 2019

I went to dinner last night with 2 of my co-workers. They said “You’re blowing up my phone with my LinkedIn posts.”

I said “You are just saying that metaphorically.” They said “no” and both pulled out their phones in unison (which was an experience to be hold). Sure enough- I was the post that appeared when the opened LI and when they “swiped up” (as opposed to the infamous swipe right)- lo and behold, I was there again! On both phones!

For those of you who’s phone I’m blowing up, I’m sorry. I’m not in charge of the algorithm. I’ll do my best to make it worth your while.

Work with people you like and more importantly- trust. It’s a lot more fun. Even when you blow up their phone.

 

February 5, 2019

Why does every tax plan that comes forward have to be so extreme and filled with rhetoric? 70% tax rate? 77% estate tax rate? Come on.

There IS wide income disparity and a country isn’t great unless it’s great for everyone. But my question is: does anyone have faith that elected officials won’t build more bridges to nowhere and fund pet projects instead of actually addressing the problem?

So Mr. Sanders- I’m not sure if you thought this through but if the government is going to take 77% as a death tax – you may discover that everyone impacted retires early, takes their families on the greatest vacations ever and spends it all before the government gets a second crack at it (didn’t they pay income tax the first time??).

Instead… here are some logical proposals.

1. Make T-bills federally tax free for those earning less than $100,000/year to encourage saving.

2. Add back a 39.6% rate for those earning more than $1 mm (the 2017 tax rate).

3. Make the first $20,000 of dividend income from US owned corporations tax free for those making <$100,000/year.

4. Make 529 contributions tax deductible for families making <$100,000/year as education is the great long term equalizer.

Not sexy. Not newsworthy. But maybe that should be the point.

 

February 4, 2019

199 overall draft pick.

9 Super Bowl appearances (out of 53 total games). 6 wins. All with Belichick.

Respect.

 

February 3, 2019

It’s Super Bowl Sunday! Here are some fun facts!

The ticket allocation is done by the NFL: 35% of the tickets go to the teams playing in the game; 6.2% goes to the host city team and 33% are split between the other teams. The NFL keeps 25% for media, staff, etc. T

he average ticket price paid this year was $4,380 (sold by whoever got them at face value in the ticket allocation).

30 second commercials are $5.25 million, but the game is seen by over 100 million people every year and the only time at my house there is no talking is when the ads are on.

$6 billion will be bet on the game, though only 5% will be through legal means. Fun side bets range from length of the national anthem (over/under 1:47), heads or tails, number of songs Maroon 5 will play at halftime (over/under 7.5) and number of tweets DJT will send during the game (over/under 6).

And then, when all is said and done everyone I know, except Ken and Drew, will have their day ruined when the Patriots win again.

 

February 2, 2019

Relationships are interesting. Did you know that higher rates of education in women lowers the total fertility rate?

One stat showed that 61% of women in Ethiopia with no schooling have a child before 20 whereas 16% with 8 years or more of schooling do. Staying in school longer delays marriage, raises the opportunity cost of having children and affords the opportunity to learn about things about nutrition and health care which increases survival rates (and decreases the desire to have more).

Similarly, early childhood education (pre Kindergarten) is strongly linked with long term success. Study after study shows a higher probability of graduating high school and earning higher lifetime income by participating in high quality pre-k activities.

As the world population grows and income gaps become more pronounced, the relationship with and impact of education is staggering.

 

February 1, 2019

I’m having FOMO with so many people announcing a run for President in 2020. The qualifications appear to be to have been born in the US and have a pulse. Oh. And have a whole bunch of impractical ideas that make the news. Check.

For the record, the federal estate tax (the tax paid on gross money AFTER income tax has been paid someone’s whole life) is effectively 37% above $11.2 million. So the “billionaires not paying their share” are actually paying $370 mm to the government when they die. As we’ve learned the average life expectancy of an American is 80. So the billionaire pays $4.6 million in “excess tax” above income taxes during their life for every year they are alive.

Want more good news! When you are dead you can’t donate to a PAC or vote about how your money is spent. Talk about a win-win for the government.

So basically a 77 year old man and a 70 year old women are wanting old, rich people to die to pay for their campaign promises. Nice.