The Start of My Platform – A Work in Process!

  1. Stop the War on Drugs.  Legalize all drugs.  Tax them aggressively.  Invest the tax revenue in health and human services to treat drug addiction.  The drug war is costing society far more than it is benefiting us.  We have militarized our law enforcement to the point that we have a “shoot first, ask questions later” mentality among our police force.  Whole swaths of our economy and our citizens operate outside the bounds of our legal and economic system through a black market.  This black market drives crime and the deterioration of our social binding.   We have the largest incarceration rate in the world which is an ongoing tax on our society in multiple ways: first, the cost of incarceration; second, the opportunity cost of those incarcerated; third, the destruction of families.
  2. Open the borders. Immigrants drive the growth of our economy.  What has made our country great is that we have people come from all over the world to seek freedom, stability and the opportunity to pursue happiness.  Immigrants bring a culture of risk taking and drive that we need to replenish our society and give us the drive to discover, innovate, create and build the new.  Closing the borders is small minded thinking.  It assumes the pie is fixed and we will have to split it more ways.  What those who champion closed borders fail to recognize, is that immigrants are the fuel that expands the pie.  But they only get access to government services (i.e. vouchers – see below) after they have been in the country for 10 years.  Until that point, they are required to have health insurance, pay taxes and pay for their children’s education.  If they fail to pay for these things, they will be deported.
  3. Limit Government to protecting property rights, resolving disputes, providing guard rails to a capitalistic system and making investments collectively to benefit all of society that the market doesn’t have the capacity, capability or desire to make (e.g. basic research, roads and infrastructure)
  4. In principle, Government shouldn’t be directly supplying any services other than Defense, Law Enforcement, Dispute Resolution (Legal System), incarceration, taxation and (re)distribution.  These services must be delivered by the government because we don’t want them subject to capitalism’s market forces.  For example, the business of incarceration is a business of taking away people’s freedom.  We don’t want anyone to have an incentive to grow by taking away another’s freedom.  This is the essence of slavery.
  5. <<NOTE: I am still contemplating this section.  First, I know that it is so drastic that it will never see the light of day.  Second, I am torn between several options:  a guaranteed minimum income for all, short term support through vouchers for those in need or guaranteed vouchers for all.  Also, this is the most non- libertarian thing I propose… so I really struggle with it… but in my heart, I do believe we can afford these things as a country and should share our resources to ensure everyone has these… but I am well aware of the potential downsides… 1. the potential for (or perception of) de-motivation among low income folks, 2. the required taxation which uses force to redistribute wealth, i.e. giving up freedoms, 3. the forced allocation of resources received by beneficiaries which arbitrarily defines market prices, 4. flight of the most wealthy to tax havens>>  This is my proposal:  Vouchers for universal services should be provided to every citizen.  Services, such as education and healthcare should be delivered by the market.  I fundamentally believe that universal education and healthcare are positive ROI investments for society which we can afford.    However, our government is extremely inefficient and unable to innovate to drive up quality while driving down cost, so we must rely on the market.  Each voucher is set at about 80% of the average cost in the market, so that it creates pressure on the market to continue to innovate to drive down costs.  It also assumes we will collapse the distinction between federal and state taxes and have one federal tax system.  The reason States rights folks would like this is because the use of vouchers would give the power to the people.  Here’s the simple Math:
    1. Education:  There are approximately 70-75 million people ages 3-22.  If we gave each one a  $10,0oo voucher for education, that would cost $700-750 billion.  The voucher would be a far better solution than we have today, because it would give the user (student/parent) choice which would drive innovation and efficiency.
    2. Health Care:  There are approximately 310 million citizens in the country.  If we gave each one a voucher for health insurance of $7,500 for healthcare, that would cost $2.3 trillion. Health insurers would be required to accept everyone who applied and provide a minimum level of coverage.  Their primary driver of profit would be their ability to drive down costs, as well as, any up-sells they can make, e.g. fertility.
    3. Shelter: There are approximately 125 million households in the US.  There are 310 million people.  There are 235 million adults.  Each adult gets a $750 monthly voucher.  Each child gets a $250 monthly voucher.  The total annual cost would be $2.34 trillion  This and the next are by far and away the most controversial proposals and where I struggle the most.  My main reason for taking this path is that the complexity, bureaucracy and constant tension around who qualifies for need based programs results in a lot of waste, corruption, fraud and inefficiency.  The voucher program would be simple, it would eliminate fraud, eliminate bureaucracy and would eliminate debate on who gets what.  The downside is clear, it will create a class of unproductive free loaders.  The question is … how large is that class relative to the benefits… eliminating the waste, bureaucracy and fraud of our current system will likely far out weigh any growth in free loaders.  I also believe it will enable people to take bigger risks around innovation which will drive the growth of the economy.  Today, we know that a large percentage of entrepreneurs come from families that have achieved some affluence (upper middle class) and as a result they have a safety net to take risks.  I believe that with a broader safety net, we will see a broadening of entrepreneurial activity.
    4. Food:  There are 235 million adults and 75 million kids in the US.  Each adult gets a voucher for $125 per month and each child gets a monthly voucher of $75.  The total annual cost would be $772 billion.  see comments on prior point.
    5. Defense costs between $500 billion and $1 trillion annually.  I would target moving this down to $500 billion.  Our defense spending should be limited to protecting the rights of our citizens.   We should not be proactively or offensively conducting military actions in anticipation of future risks.
    6. Government employee pensions are $1.3 trillion.  However, a portion of these benefits would be replaced by the food and shelter vouchers, so the total incremental cost would be about $1 trillion.  We made these commitments and we must fulfill them
    7. Other services including policing, transportation, debt servicing and general government adds up to another $1.5 billion which I would try to cut to $1 billion over time.
    8. All these programs together cost the country approximately $9 billion.
    9. Our total US GDP is $16.77 trillion
    10. We have a flat tax rate of 54%.  This may appear high and regressive; however, when you factor in the redistribution of wealth through vouchers, you will see that it is in fact a progressive strategy in whole.  The average GDP per capita is $54K.  The tax per capita is $29K leaving $25K of GDP per capita plus:
      1. $9K in shelter vouchers per adult; $3K per child under 18
      2. $1,500 in food vouchers per adult; $900 per child under 18
      3. $7,500 in healthcare vouchers per person
      4. $10,000 in education vouchers per child under 18
      5. Total of $18,000 in disbursements per adult; $21,400 per child under 18
    11. Taxes and disbursements would all be done electronically.  Biometric authentication would be required to receive disbursements which would be highly efficient and minimize fraud.
  6. The guard rails to society are dependent on the wealth and health of the economy.  The guard rails should be episodic and intended to buffer the capitalistic society from destructive acute variability.  (e.g. stock market breakers, antitrust laws)  <<more to come>>
  7. We need term limits at every level of government including both elected officials and government employees.  We don’t want entrenched protectionism of position in these roles (i.e. bureaucratic thinking).

“A platform for what?”, you ask.  I don’t know but I have strong feelings about our political and economic systems and I wanted to capture them.

I welcome your comments.

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How to Fix Higher Ed today!

Higher Ed is Broken!

I keep hearing that Higher Ed is broken.   The consistent theme is that the price of Higher Ed is going through the roof, while it no longer guarantees you a good job when you graduate.   Students are taking out student loans that will create a financial burden that they may not be able handle.    The facts are clear… This is happening.

Why has this happened?

College was Oversold!

First, we have been fed a mantra that going to college and graduating guarantees you a better life.  This is backed up by study after study showing that the average earnings of a college graduate, or even someone who attended some college are much higher than the earnings of a high school graduate.

However, we all know that averages distort the reality of the individual outcomes.  Averages hide the variation in population.  Lately, we have been getting more studies breaking down the incomes of graduates by school and by major and we are seeing that the average was hiding a harsh reality.  Those in STEM related fields were far outperforming the average.  In contrast, those in the arts and humanities were far underperforming the average.

Meanwhile, there is very little differentiation of tuition (price tag) by major at any given school, so the ROI is dramatically different.  We have some graduates making out like bandits while others are disillusioned by their prospects when they graduate.

Easy Money Stimulates Demand

The next issue contributing factor is “easy money”.  Based on the belief that a college degree will rise all boats, the federal government made it extremely easy to get federally backed loans to fund education.    The federal government’s backing didn’t differentiate the type of major or institution you pursued.  The funds are there for any accredited school no matter the major you are pursuing.  A bank would never make this kind of blanket loan because they would see the differing outcomes and recognize that some majors didn’t create the return required to pay back the loan.  So, there is excess capital going into schools and majors that create no Return on the Investment.

It would be like the federal government backing a $1 million loan for a house that was worth $100,000.  Builders would be happy to build these houses.  Banks would be happy to lend the money with the federal backing.   And home owners who dreamed of a home would  be happy to buy this home, not recognizing that they over paid.  We saw this happen in the real estate market… and its about to happen in higher ed.

Rising Demand Increases Prices

Since it became universal belief that education would improve your lifetime earnings and  financial aid was easy to get, it drove increased demand for a college education.  Everyone should get a college degree.    As we all know from basic economics, when demand increases, two things happen – the price goes up and supply increases.  We have seen both of these things happen in amazing scale.

The number of institutions of higher ed and the number of majors offered has exploded over the last 20 years.  Between 2001 and 2011, the number of 18- to 24-year-olds increased from 28.0 million to 31.1 million, an increase of 11 percent, and the percentage of 18- to 24-year-olds enrolled in college rose from 36 percent in 2001 to 42 percent in 2011.   The most notable area of growth has been the private for-profit institutions which makes complete sense.  When there are exorbitant economic gains to be made, competition comes in.

Likewise, we have seen the cost of education sky rocket.  As can be seen in this graph by the New York Times that has circulated the web, the rising cost of Tuition has far outpaced all other goods in the last quarter century.


It’s clear that this is a demand side problem.  We have consumers making irrational decisions because they lack the information necessary to make a rational decision.  They act completely rationally given the data they have.  They are told by society that a college education will provide you a better future.  You are a loser if you don’t get a college degree.  Also, Society offers to loan them the money to attend college.  On the face of it, it makes sense.  College graduates make significantly more over their lifetime on average.

This national mantra has led us to miss the differences by school and degree.

How do we fix it?

Outcome Transparency 

It’s simple.  Create transparency of outcomes by school and by degree.  Require schools to disclose outcomes for first year graduates, graduates after 5 years and after 10 years.   For first year graduates, make them disclose the percentage that are employed in their field of study.  Make them share the employers that are hiring their graduates.  Make them share the average salary, median, and distribution by major by school for each of these time horizons, 1 year out, 5 years and 10 years.

The problem is that the consumer is making a large investment without any idea of the return.  We have faced similar problems in other areas.  This is comparable to the requirement we have on food manufacturers that they must disclose ingredients and nutritional information or drug manufactures who must disclose side effects or the banks being required to disclose payment terms for a loan.   In each case, there are very formal, consistent, transparent and prominent ways that the providers are required to disclose critical consumer information that is critical to the purchase decision.

This is common place in graduate schools of business.  There is amazing transparency around the percent that are employed at graduation, the starting salaries (including mean, median and distribution), employers, etc.  This makes it easy to compare graduate schools of business.

When I decided I wanted to go back to school full time and get an MBA, I turned to the various rankings and this data was abundantly available.  Each school had a brag sheet that cut the data eight ways till Sunday.  Through this data, it became extremely clear that if you wanted to get a return on your investment, you had to go to a top 15 school.  Actually, the top 1o were where the ROI was almost guaranteed.  There were a few like my school, Darden, that bounce in and out of the top 10 that fit that category as well.  At that point, I came to the conclusion that going full time for an MBA only made sense if I got into one of these top schools.  Otherwise, it would be better to stay in my job and go part time.  Luckily, I did get into one of these schools and the ROI was realized.

If you want to get a flavor of what I am talking about, look at Harvard Business Schools data on Employment Statistics:

There is no doubt about the ROI of an MBA from Harvard.

Now, translate that to undergrad.  Imagine, if a student and their family could see how graduates do the first year, the 5th year and the 10th year after graduation by school and by major.  Imagine the student was required to sign a document saying they had seen this data before they could accept enrollment and accept financial aid.  They would make very rational decisions.

How do we get the data?

Isn’t this data really hard to get?  I have heard career placement officers say the data is really hard to get.

Go to the ultimate source – IRS data

Let’s take it out of the schools hands.  This is where our Department of Education should be doing a better job.  They should be collaborating with the IRS.  They could combine their student loan data with the IRS income data and provide a great deal of insight into outcomes.  They could then use the data as part of their standard Entrance Counseling.   The student would be required to review the expected outcomes vs. the loan payments they would have to make to get an idea of what their finances could look like over the next 10 years.  This would be eye opening and I am sure would cause many to question their decision.

Higher Ed institutions won’t like this because it will create accountability.  As a result, demand will initially decrease and there will be significant price pressure on tuition.  Hard times will befall Higher Ed until the point at which they have improved outcomes to justify the investment.

This could be the biggest contribution the Obama administration makes before they leave office and they could do it unilaterally.

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Things I want to work on…. Where to start????

here is some blathering about things I think about….. there is not structure or analysis… just ideas to play with… insights I think I have seen… now what do I do with them???

1. a new community design – one designed around sharing…

Problem… people want access to a lot of varied experiences… but they don’t want to or can’t own and maintain all the resources to pursue their varied interests… e.g. sail boats, motor boats, fishing boats, airplanes, jet ski’s, paddle boards,

I live in a community in the summer where there are dozens of boats that sit idle all summer… maybe 20% go out at anyone time. They are poorly maintained and take up a lot of room. It’s a lot of wasted resource just sitting there depreciating and cluttering up the environment…

What if the community owned the boats, maintained them and they were there for the residents to use… either on a subscription basis (e.g. club dues) or a pay per use???? It would clean up the community… give everyone a broader selection of boats to use… and they would be much better maintained… and it would cost less for everyone… while creating a summer job for our young people to maintain the fleet and manage the operation.

Further examples of this are already appearing… e.g. car sharing through Uber and zipcar… house sharing through AirBnB… now let’s apply this further…

how many colonials in america have rooms that are almost never used e.g. formal dining room and living room. why do we have those rooms… because for a few days a year… you might use them… we clearly have an over supply. Wouldn’t it be far more efficient to have a flexible space that was available for when you need it?

how many upscale communities have many houses with pools in the back yard??? when I fly, i look down and all I see is a landscape littered with pools in these sprawling communities… why do we have this? they are mostly empty, most of the time… and by having separate pools we are further isolating ourselves and disengaging with community.

And what about the elderly…. why don’t we design communities where the elderly are included. Where they aren’t shipped off to a home where all old people go… why don’t we have a place for them in our community… so we can benefit from their wisdom…and we can take care of them as they took care of us growing up.

2. better matching solutions for couples, jobs, houses, etc.

I have spent my career in fields dominated by matching algorithms… and I consistently find that math only goes so far… then the judgement of individuals can provide insight that the algorithms can’t learn. An example is credit underwriting. We have the most amazing mathematicians working on algorithms to predict who is good credit and who is bad. These are great for identifying the quick kills and the quick passes. Those that are clearly qualified are simple decisions. Likewise, those that are clearly unqualified are similarly easily determined by the algorithms. If your FICO score is less than 530, you suck. you have shown yourself to a bad payer. You don’t deserve unsecured credit. Likewise, if you are over 760 FICO, you are going to pay your bills unless something catastrophic happens. The type 1 and 2 errors in these populations are extremely low and unlikely. however, the real opportunity is in the shades of grey. The winners and losers in the business of unsecured consumer credit are those that can parse the goods and bads in the FICO ranges between 660 and 720… everyone is always trying to get new data and build even more complex models to dissect this population and identify a good population that others can’t.

I have seen that a judgmental review by a credit analyst is very effective at deciphering this grey area. MBNA was great at this. when a credit analyst calls an applicant and asks them a bunch of questions, they are able to get a much richer picture of the consumer and they can apply their experientially based judgement to put a finer lens on this population. A good analytical shop will sit with the credit analysts, particularly those that out perform the average, and understand what they look at and their rationale… those model builders will then go and use that insight to build better models.

My gut says, the crowd can tell you more about an individual (and with more accuracy) than a model alone. it’s the combination of a model and human judgmental review that gives you the richest answer. however, algorithms prevail on the internet. They are used to target ads, to help you find stuff in search, find dates, find houses, find jobs… due to the abundance of choices and efficiency of the medium, there is not a big penalty for type 1 or 2 errors of these models… so the technologist who run these companies continue to invest in their models. but they can only be so good… because they lack the judgmental review on the grey area. and there is a big cost… its noise to the user… a user has to sift through hundreds, thousands, or more choices to find what they want… but that is slow and tedious… for an individual user… so how can we leverage the cloud to do the judgmental review for us.

For example, when posting a job… how do we find the best candidates… we post a job… and sift through responders… but those aren’t necessarily the best candidates… they are the best candidates that saw the ad and applied. They in fact could be the most desperate. I have found in my career, that the best hires are often the ones not looking… so how do we find the absolute best candidate… we do a search of linked in… or we hire a head hunter… to do the search or sift through responses… but neither of these are really leveraging the power of the crowd…. the crowd knows more about me than a linked in profile or a head hunter interview could ever tell… how do we leverage that insight???

3. electric planes.

I own a flight school. There are just a few basic costs in running a flight school. Fuel, maintenance, labor (pilots) and insurance. If our training planes were like my Tesla S, we would dramatically reduce the cost of at least two of these and maybe three. first, flying an electric plane with similar technology to the model S would drastically reduce the cost of flying. about 1/3 of the cost is fuel. Second, electric motors are much more reliable and maintenance free relative to internal combustion. Finally, with the improved reliability, I bet you find that the cost of insurance would decline too.

4. what are the implications of a world of abundance?

I think we are coming on a time when a fundamental principle of economics might be overturned… that is the principle of endless needs and wants… could there be a time approaching when we are satiated? where the world has enough wealth to provide satiation to all living people? maybe the bar keeps going up… or maybe we reach an point of enlightenment, where we realize more doesn’t equal happier… and we no longer need any more. What if that happens on a grand scale… then what does the world look like? What are the implications?

When I was in Hawaii last year… they talked about the early days with the indigenous people prior to european settlers… and they would leave their shoes on the front porch when they went inside, so that anyone in the community could use them if they needed them… is that the world of abundance?

Owning things is only relevant when they are scarce… but if they are abundant, then they will be free to use for all. how do you protect them from being misused or wasted? is there a finite limit on anything? or will our ingenuity innovate abundance????

The only finite thing I see is life itself… the time we have on this planet… today… we have not yet figured out how to extend lifespans… will scarcity be redefined to the use of the time we have… and optimizing it. you have 80-100 years in this life if you are lucky… how will you use it? what do you want to experience? it seems as though time will be the new currency of economy…. when optimizing the use of your time, what is the objective function… money? wealth? happiness? social impact? how many lives you touched? how many people adored you?

And what happens when we figure out how to extend lifespans…. 50, 100 or infinitely… then what? will we have overcrowding or will we stop having kids or will we innovate our way back to abundance????

5. how do we better redistribute wealth?

we have more than enough wealth to provide food, shelter, education and health care for the world. How do we bring everyone’s standard of living up to a minimum that enables them to pursue their happiness and prosperity without creating a disincentive for them to be productive…

Capitalism is our religion in the US…. its’ our unifying principle and belief system… but I wonder where its limits are… do we really have the stomach for survival of the fittest?  is that where our heart lies?  can we stand by and watch the weak die?  what if survival of the fittest meant that a new species emerged that devoured all humans, would we stand by and say they are the stronger species or would we fight?  won’t those that don’t proper in capitalism, stand up and fight?

Also, Capitalism and democracy seemed to have slightly conflicting principles. Capitalism at its heart is about freedom to chose and value exchange. Democracy is about collective decision making for the betterment of the whole where the majority rules. implicit in democracy is a loss of choice if you are the minority. These two competing principles are at the center of much strife in our society. how do we reconcile these?

I know next to nothing about most of these… but I see the opportunity!!!! I have the problem. It would be fun to work on the solution… but where to start?

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Remembering the Summer of 2000

Today, we announced that I am the CEO of GiveCorps.  Its old news to me since I made the decision 4 months ago, but today was the day we got around to making the announcement.  I changed my linkedin a little over a month ago, so for anyone watching, they already knew.  However, we needed to make it official, so today we issued a press release.  

This last 4 months has reminded me of the summer of 2000.  That summer I made a decision that has and will continue to profoundly affect the rest of my life.  I knew it was a big decision at the time and I dwelled on it.  I labored over that decision for many hours.  

In the summer of 2000, I decided to work for a startup called GoPin.  It was spinout of Nortel Networks.  It was funded by CrossPoint Venture Partners.  There were 69 people in Ottawa, Canada working on GoPin.  They were planning to use long distance calling cards issued by the Regional Bell Operating Companies as a payment method for digital goods online.  

What was I thinking?

I had worked for until June 2000.  However, I had really stopped working for them back in April.  At Talk, I learned a few valuable lessons.  

First, do your due diligence.  I saw a lot of similarities to what I had been doing at First USA and thought that it would be simple to translate the experience over to long distance.  What I didn’t appreciate was that long distance was very different that financial services.  Long distance telephony was changing fast and I had no idea.  Which led to the next lesson.  Don’t work in an industry that is commodity hell.  Since there was very limited differentiation between carriers, it became an all out price war within months of my joining  I was not prepared for that.  Finally, and most importantly, work with people you know and trust.  I only interviewed with three people.  The CEO, his right hand man and a friendly board member.  What I didn’t appreciate was that these people were only one faction of the business.  They were brought in to right the ship and take it to the next level, however, there was a whole other side to this business which included a legacy team brought in by the founder.  It was an odd mix of this new group that had been with the CEO on several different stints prior and the legacy group.  Then there was me.  Odd man out!

Every one of these rules I broke and ended up in a job I hated, working with people that I had no connection.  That was a bad place to be.  However, I have always been good at “failing fast”.  If I see that it won’t work, I have no problem cutting and running.  In the same vane, I have no problem sticking with something and fighting through obstacles if I believe the mission is worthy and possible.  At Talk, it became clear that I made a mistake.  However, it would lead to the best career decision I ever made.  It only took 7 or 8 years to prove that it was a great career decision.

There were so many great things about that summer.  My daughter was born in March of that year.  We moved back to the Baltimore area before I had found a new job, so I had a lot of time to spend with my daughter and wife.  

I started actively looking for a job and was offered the head of marketing at early that summer.  Something didn’t feel right about the job.  First, the board member that I interviewed with at was on the board of too.  So, when I started negotiating, they withdrew the offer.  I am certain the board member chimed in at that point and I was toast.  It’s funny.  I knew I didn’t want to work there, but it was the high flying hot startup, so I felt like I should want to work there.  It was in my home town.  It was an internet advertising company and I was the internet advertiser of the year.  A perfect fit, but it wasn’t.  I didn’t know the people.  I didn’t know the technology.   And they had dogs in the office… I am allergic to dogs.  My gut was telling me that if I took it, I would be making the same mistakes again.  I was glad they pulled out because my rationale side might have over ruled my gut and I might have made another mistake.  

Just a month after that offer blew up, I was connected with Gary Marino.  We were connected through a common friend.   I knew of him but didn’t really know him.  However, we had worked at Citibank and First USA at the same time .  We shared close relationships with the same colleagues, so even though we hadn’t worked together closely, we had shared language and experience.  We were part of the same tribe.  We had the same domain expertise.   Gary had started working with GoPin as an advisor and CEO in waiting.  He was hired by CrossPoint to be parental supervision and domain expert to the Nortel folks who had spun out.  He asked me if I wanted to help him out.  It felt right.  Although I didn’t know him well, we had a common language and common experiences.  We were from the same tribe.  It felt good and safe.  I agreed to work with him on a consultative basis and we would see where it went.  

It was a crazy first few months.  We quickly realized that phone card payment strategy had all kinds of flaws, but we had 69 people in Ottawa working to make it a reality.    The shear mass of them gave their strategy more credibility than it deserved.  It was a cluster f#*k!  But we did use the time to do some great research on what the consumers and merchants would want in an internet payment option.  This research led to Bill Me Later, but it wouldn’t be until 6 months later that Bill Me Later clearly emerged as a strategy.  In the meantime, we were trying to figure out how to make an internet payment option out of a long distance phone card.  It was painful!  

However, we continued to hire.  Surround ourselves with our tribe.  People we knew and trusted.  People with a common language and experience.  These were the foundations of what would become a powerful team that built Bill Me Later.

During that summer, it wasn’t so clear that Bill Me Later would emerge out of this morass.  In the meantime, I continued to pursue other more stable jobs in Baltimore.  

I had always harbored an interest in education.  Education changed my life.  However, I also saw our public education model as flawed.  I felt like I wasted a lot of time until the lightbulb finally went off.  I wished that I could have had a better experience earlier.  Instead I was trapped in this regimented factory like education model that turned me off rather than lit me up.  I always wanted to figure out a better way to educate our young people.   Interestingly, Baltimore was home to one of the more successful for profit education companies, sylvan learning centers.  I heard of a position opening as the CMO for Sylvan and pursued it aggressively.  It was perfect.  It was in Baltimore.  It would allow me to focus on a passion, education.  And it would leverage my functional domain expertise, direct marketing.  I couldn’t have scripted it better.  This time I did it right.  I interviewed with everyone.  I even attended company events to get to know the people.  But my gut kept nagging at me that it wasn’t right.  I didn’t really know the people.  I was gun shy to join another tribe.  I waited the full two weeks to decide and then finally, I turned the job down.  I know I pissed off the President, but it just didn’t feel right.  

I remember the hours spent riding my tractor mowing my lawn that summer and mulling over the decision.  I struggled with it.  I thought I was crazy for even considering doing the GoPin job.  The Sylvan job was so clearly a better fit all around.  

It was funny, but it felt safer to be with my tribe in a company that really didn’t exist with a product that would never work, then it was to join an established company with a proven product in a senior role working with people I didn’t know and trust.  I followed my gut and it worked out.  Even joining Talk proved to be a wise decision.  If I hadn’t gone to Talk and failed, I wouldn’t have even considered GoPin (which became Bill Me Later).  However, the Talk experience taught me what to value in a career decision and serendipitously aligned with the timing of my next opportunity.  

All along I was following my gut and it worked out.  

So, when I think about this summer with GiveCorps, I remember the anxiety of the summer of 2000 and remind myself to trust my gut, don’t sweat trying to rationalize what your gut is telling you and have faith that it all works out the way it should.  

Some people may say this is reckless, but my gut hasn’t let me down this far, so why should I stop trusting it now.  

My gut is telling me that we are trying to solve an important problem at GiveCorps.  We need to create a more efficient means for Non-profits to leverage the resources of the community to fulfill their missions.  Our government is broken and populace are disenfranchised.  We need a better way to come together as a society to make our world a better place.  

I suspect that I will look back on this decision to join GiveCorps and look back many years from now and be amazed at how this decision has profoundly affected so many lives.  That is my goal!

I continue to dare to dream… and I continue to be amazed that my dreams keep coming true!


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So, you want me to invest in your startup????

Yes, I have made a few investments in startups.  Some have worked out amazingly well, others have been complete bombs.  Most of the investing I do that I direct is because it is focused on my areas of interest.  Otherwise, I leave the investing up to the professionals.  

If you want me to invest, read this first and see if it fits in at least one of these areas.  The more the better.  

Revitalize Baltimore

I am interested in making Baltimore a more vibrant economic environment.  The thing I am most proud about Bill Me Later is that there are over 600 people who have jobs in Baltimore County because we started Bill Me Later.  Imagine if there were 20 Bill Me Later’s in Baltimore, what that could do for the metro economy.  If you have a business that is going to sustainably create jobs in the Baltimore metro area, I want to talk to you!!!!

Improve Public Education

I believe education is the highest return investment society makes.  However, I don’t think we are getting our money’s worth now.  It could be so much better.  The world has changed.  We are no longer a manufacturing or agricultural economy.   We are a knowledge economy.  We don’t need to conform, we need to innovate.  We need to cultivate the natural curiosity and desire to learn that each of us had when we came out of the womb, not stifle it to ensure predictable repeatable outcomes.  If you have a vision for how we should re-invent public education to support the needs of the 21st century, I want to talk to you!!!

Leverage My Skills and Experience

I have over 20 years experience in consumer credit, payments, direct marketing, partnership marketing, internet marketing, entrepreneurship, new product development, e-commerce, B2B marketing.  I am a creative problem solver.  I like to architect new business models that uniquely solve customer problems and create a win-win for all involved in the exchange.  If you have a company that can benefit from my experience, I might be interested.  However, it needs to fall into one of the above areas to get my attention or it has to be truly a once in a lifetime opportunity.  

Leverage My Tribe

On June 7, 1989, I started my internship at Citibank.  I didn’t know it then, but that was the beginning of the rest of my career.  The people I met at Citibank, I would work with the remainder of my career.  Many people helped me along the way.  Now, I would like to give back by helping others in my tribe.  So, if you are in my tribe, you know it.  I am here to help.  If you need my tribe to make your business successful, come talk to me.  

If you don’t fall into at least two of these buckets, its very unlikely I am going to invest my time or money.  However, if it truly is a once in a lifetime opportunity to change the world or make a lot of money, then I am open to breaking that rule.

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The Future of Education is Pilot Training


When I am in discussions about Ed Reform and Ed entrepreneurship, I often forget that I own a flight school, but then I see a pattern that I recognize and realize that “it’s already happening in pilot training!”

First, some statistics.  At any given time there are about 100,000 people in the US who have a current student pilot certificate.  This is a round number because the term for a student pilot certificate has just recently extended to 5 years for those under 40 from 2 years previously.  Of those Student pilots, about 25,000 students take the private pilot written exam every year and about 91% pass.  

Becoming a pilot is actually pretty easy, but a very thorough and rigorous process.  There is a ton of content and decision making skills you have to master along with mastering the physical part of flying.   However, the process is highly flexible, adaptable and personalized.

Multi-modal Instruction

A student has many options to learn to become a pilot.  They can watch videos like King Schools, Sporty’s or even some free videos on youtube.  They can read various text books, FAA books, the FAA website or even various material on the internet.  They can talk one on one with a flight instructor.  They can take classes at a flight school or college.  Or, they can even play video games on the computer, like Flight Simulator, or mobile device.   Each of these usually includes some form of formative assessment – small quizzes that ensure that you comprehended, retained and can apply the material as you are learning it.   The great thing is that you can mix and match.  So, I really enjoyed watching the King videos.  They were corny but entertaining and they had quizzes at the end of each video to ensure you got the material.  If you got something wrong, they would immediately take you back to the place in the video so you could re-watch the section and then take the quiz again.  This loop would continue until you got it right or cancelled out.   In contrast, my friend who was taking lessons at the same time really enjoyed reading the text book. He read it cover to cover, over and over.  I can’t do that!!!

At the same time, we would be training on the actual flying part with an instructor.  Our instructor was quite good. He would be throwing questions at me in context to ensure I was getting through my material.  Similarly, I was taking practice tests on my iphone while I was sitting in boring meetings at work.  With this much reinforcement, I knew exactly when I was ready to take the test.


Testing isn’t a single test but more of a process of many tests.  

The first assessment comes from the FAA certified physician.  They give you a thorough physical to determine if you are qualified physically to fly solo.  You could have been flying the plane by yourself with an instructor next to you for a long time, but before they will let you get in a plane to fly on your own without a your instructor, you must pass their physical.  There is an exception to this rule for Sport Pilots, but that is a limited license with a small population of students – less than 1,000 take this path each year.

The next assessment is your instructor.  They have two assessments to determine whether you are ready to fly solo.  First is their judgement as to what they have seen the student do while they were training.  They have a check list of things that they have to know you know how to do before they will let you fly solo.  Second, they will give you a brief quiz that they prepared to ensure you know the basics.  Once you have past their quiz and their judgement says you are ready.  You get to do 3 take offs and landings “in the pattern”.  Once you have passed that step, you are free to fly yourself to any airport that the instructor has given you permission to land.  This completes the first real step to flying.  You aren’t a certified pilot yet, but you can practice flying on your own.  That is both the most scary and greatest sense of accomplishment in becoming a pilot.  

Once you have accumulated the minimum 40 hours of flight time and your instructor feels that you are ready to take the written test, the instructor will sign you off to take the test.  Again, the instructor plays a key role in ensuring that you are ready.  They should be asking you questions every time you go flying with them to ensure that you are comprehending, retaining and know how to apply the information, skills and judgement required to be a pilot.  In fact, its high stakes for the instructor.  If their students have too low a pass rate on the exams, they risk their certification as a flight instructor.

There are a lot of other tools out there that support this screening.  I used an iphone app to continuously take sample test questions until I could consistently get a better than passing grade on the test.  Once I felt I was ready and the instructor agreed, I went and took the test at a certified testing center on a computer.  It took 30 minutes and I passed.  WhaHOOO!

At this point, the only step left was meeting with a FAA examiner to take the verbal and practical (flying) test.  This takes a few weeks generally because there are a limited number of examiners and their schedule is filled up.  

The FAA examiner has a checklist to go over as they conduct the verbal test.  Usually the verbal test is in an informal setting and scenario based.  The examiner presents situations to you and asks you related questions.  They are testing to see if you can apply the material that you consumed to pass the written test.  The scenarios are real world situations that you may face and are very practical.  I actually learned a lot in the process.  My examiner took me through situations that I hadn’t thought about but with my training I could figure out the answer.   One in particular, figuring out how long it will take your plane to lift off and determining what to do, if you don’t lift off in that expected time, proved very insightful and valuable to experiences I had later.  The verbal test was by far the toughest of the 3 tests.  The final test was the practical exam.  This is when you get in the plane and perform maneuvers to show you know how to fly the plane and what to do in case of an emergency.  This is actually the easiest of the tests, because you have practiced them for over 40 hours and it is the fun part of flying!!!  


There are many insights I gained from my flight school.  

  1. Instruction should be de-linked from certification.
  2. However, instructors should be continuously using formative assessment to ensure the student is comprehending, retaining and able to apply the skills, knowledge and judgement you are instructing.
  3. Instructors should be measured by the success of their students.
  4. Instruction should move at the pace of the students motivation and abilities
  5. Instruction should be provided in as many modes as feasible.
  6. The student should be free to chose the modality that works well for them.  
  7. The student should be free to select an instructor that works well for them.

Of course, the biggest difference between flight training and traditional education is that the motivation to do it is completely student driven.    However, I believe that students are born naturally curious and want to learn.  They just want to learn what they see value in learning.  So, why don’t we harness that natural curiosity and desire to learn and use it to provide a better education for each of our citizens.   I learned meteorology, physics, biology, mathematics, geometry, passenger management and more, all driven by my desire to fly a plane.  I had no real desire to study any of those subjects, but my desire to fly a plane drove me to learn quite a bit about each.  Every person has a passion.  Every person has interests.  Can’t we discover those interests and use them as a platform to deliver the education they will need to be a positive, contributing member of society???!!!!

The biggest lesson is that the problem isn’t money!!!.  Learning to become a pilot easily has a school year’s worth of content in it and the total cost including gas and plane rental (the biggest expenses by far) was under $10,000.  That is less than we spend to put a kid through school for a year.   Take out the plane rental and the gas and the cost was under $2,000.  The instruction costs $45 per hour for 20-30 hours.  The videos cost under $300.  The equipment costs another $200-400.    Learning to fly is expensive, but if you take the unusually high cost of the plane and gas out, its actually pretty cheap.  Why isn’t all school this cheap?

I think I will continue to add to this article over time, as I continue to learn so much about teaching, learning, etc from my flight school.


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It’s Distribution Stupid!

Over the last year or so, I have talked to a lot of entrepreneurs about their ideas.  Most of the good ones, have a somewhat complete team, a sense of the market and a clear idea of the problem they are trying to solve.  They even have a pretty well articulated solution to the problem.  They have read about lean startup and design thinking and are now quite adept at following those guidelines.  

However, the one thing I consistently see is even the good teams fail to have a well thought out distribution strategy.   Some people test for the presence of a distribution strategy, by looking for momentum or traction.   Investors are always looking for the exponential growth curve in either customers or revenue and preferably both.  I prefer to understand the thought process that went into trying to create that exponential growth.

After I have asked people about the team, the market, the problem, their solution and how it is differentiated, my next question is almost always “how are you going to distribute it, market it or get people to buy or use it?”

I have two favorite answers to this question.  

1.  People will like it so much it will go viral, OR

2. We will do a lot of PR, get a lot of buzz and leverage SEM/SEO.  

These answers show me that they really haven’t thought about it.  And let me tell you the difference between a great idea and a great business is most often an effective distribution/marketing strategy.  

All distribution strategies start with a key question:  How much can I afford to spend to get a customer? 

The answer to this question depends on your unit economics and customer economics. 

Unit Economics:  How much do you make for every purchase?

Customer Economics:  How many purchases will a customer make?

Assuming you don’t have to spend any more to get a customer to make repeat purchases*, then figuring out how much you have to spend to get a customer is as easy as multiplying the profit per purchase by the number of purchase the customer will make.  This will give you an acceptable Cost Per Acquired Customer (CPA).  Note, this is over simplifying, but a reasonable back of the envelop method to figure out the general ballpark.   (*not a great assumption) 

After knowing how the maximum CPA you can bare, the best distribution strategies depend on the business you are in. 

For consumer internet, the most successful distribution strategies are ones that leverage network effects as a result of the product design.  One of the earliest examples of this was Hotmail.  Hotmail got a lot of buzz being one of the first “free web email” providers, but that wasn’t really the secret sauce.  The real secret sauce was that at the bottom of every email sent using Hotmail, was a simple call to action “want free email, click here”.   So, the very use of the product by one customer was marketing it to hundreds or more prospects.  This led to network effects that drove exponential user growth at a low or no cost.  Finding these situations is like finding a pot of gold.  If you ever find a network effects driven adoption model, come find me.  I want to invest!  It’s a guaranteed winner.

Another effective distribution strategy for consumer internet companies is that of the Remoras (or sucker fish).  These are the companies find a much larger and fast growing company and design a complementary product/service that can ride along with their growth.  Probably, the best most recent example is Zynga which exists because of the Facebook platform and grew along with the growth of Facebook.

Similar but more interdependent are the clownfish and the anemones.  They have a symbiotic relationship and grow with each other.  A great example of this was the mutual interdependence of eBay and PayPal.  

For B2B technology solutions, it really depends on your target market.  Are you pursuing enterprise clients or SMBs?

If you are pursuing enterprise customers, then you need an exceptional sales force and sales support.  The key to a successful enterprise sales strategy is a well designed end to end sales process.   The process will cover the following elements:

  1. A strong and clear value proposition that is well articulated in presentation and marketing materials.
  2. Testimonials from satisfied clients willing to speak at trade shows, quoted in the press and/or captured on video
  3. Target customer list with relative value ranking
  4. A commission plan with clear goals/quotas and incentives that ties to the financial goals of the company which are derived from the value placed on the opportunities
  5. Proven sales team with a strong sales manager (process focus, not a closer)
  6. Strong technical sales support
  7. A well articulated and managed plan for customer boarding

If you are pursuing SMBs, you might very well have a direct sales force in the form of a call center or outsourced sales, but you will often need to rely on channels or partners to distribute your product as well. 

Channels or partners can be very effective for both SMBs as well as selling to consumers.  The challenge with both is that the value of each individual customer is not large enough to justify the investment in a direct sales effort.  Finding a channel or partner who already has a connection with your end customer can be a very cost effective path to acquiring new customers.   The key is to find partners who will have an interest in cross selling your product.  It can’t just be about economic incentives, your product has to help their product or their relationship with the customer.  I have seen way too many partnerships fail because the only incentive to distribution the partners product was monetary.    That hardly ever works. 

I could go on all day, talking about the various strategies for distributing your product, but I won’t because the answer for every company has to be tailored to their situation. 

The key is to have thought through the question: “how are you going to distribute it, market it or get people to buy or use it?”

The key to a fast growth business is the distribution strategy.

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