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In sifting through all of the press coverage around Ellen Pao’s attempt to get $176 million out of Kleiner Perkins, I missed one salient feature: Pao met her husband, the then-gay Buddy Fletcher, at the Aspen Institute (Pao’s profile on the organization’s “Global Leadership Network” section; see also Fletcher’s page).

In case the various investor lawsuits against Fletcher motivate the Aspen folks to edit their site, I am cutting and pasting the most important parts here:

Alphonse pursues an uncommon investment strategy combining traditional investment management, corporate finance, quantitative methods, and social responsibility. Since 1991, Fletcher Asset Management has invested more than $1 billion in dozens of promising companies. In 1996, the company had about 25 employees, and there were days when Fletcher, this tiny company (by Wall Street standards), accounted for more than five percent of the New York Stock Exchange’s trading volume. Alphonse started working in the investment arena after graduating from Harvard in 1987. He first joined the Wall Street investment firm of Bear, Stearns & Co. and in 1989 was lured away by GE’s Kidder, Peabody & Co., a giant in the Wall Street-based investment industry. Alphonse soon became an active philanthropist. The recipients of his generosity have been the NAACP, Harvard University, Alvin Ailey Dance Theater, New School for Social Research, and the Joseph Papp Public Theater/New York Shakespeare Festival. In collaboration with other groups, Alphonse has launched a $50 million multi-year initiative in education which includes a fellowship program providing $50,000 fellowships to educators, lawyers, scientists, artists, economists, and others who work toward equality. Alphonse was named “Entrepreneur of the Year 1999” by Ernst & Young. He has an A.B. from Harvard University and a Masters degree from the Yale Environment School. Alphonse is a member of the 2007 class of Henry Crown Fellows and the Aspen Global Leadership Network at the Aspen Institute.

I guess we should give the Aspen folks credit for realizing that Fletcher had “an uncommon investment strategy.”

Can readers think of another love story that would be more consistent with going from Harvard to the global douchebag circuit? Here’s my personal entry: “We met at the Aspen Institute and then fell in love at dinner seated between the Dalai Lama and Desmond Tutu at Davos.”

[And separately, if these two are representative of America’s contribution to the current global elite is it any wonder that our economic growth is anemic?]

Related:

• NYT on Buddy Fletcher’s alleged Ponzi scheme
• “Buddy Fletcher: Financial Genius — or a Fake?” (Boston Magazine)
• “Sex, Lies, and Lawsuits” (Vanity Fair article on the happy couple)
• February 2015 Ellen Pao post
• March 2015 Ellen Pao post
• Post-trial Wrap-Up
• Divorce litigators’ perspective on Ellen Pao (the Vanity Fair article, above, reveals that Pao was previously in divorce court with “Roger Kuo, now a San Francisco finance executive”)
• Post-Reddit-firing posting (with interesting analysis from Pao’s former co-worker at Microsoft)
• Guidestar page on Aspen Institute (IRS Form 990 for 2013 shows that the tax-exempt non-profit had $95.5 million in revenue and $22.7 million in profit in 2013; the CEO was paid $853,336)

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“A Tiny Bank’s Surreal Trip Through a Fraud Prosecution” is a good reminder that you don’t want to be small if you’re in a government-regulated industry. If you can’t afford lobbyists to keep the government off your back and/or the legal fees to defend against a prosecution, you’re living on borrowed time.

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Here’s a story on a Boeing 737 crash: “NTSB: Southwest Airlines captain in 2013 accident should have done ‘go-around’ rather than attempt LaGuardia landing” (NTSB release). As this was a major U.S. airline both pilots had to be very experienced (see “Foreign Airline Safety” for the career path). The full narrative shows that the captain had 8,000 hours of 737 experience (she had 12,500+ hours of total flight time). The first officer had 5000+ hours total time and 1,100 in the 737.

[According to standard airline protocol, the captain as the pilot monitoring was the person responsible for running all of the checklists and making sure that the plane was properly configured. So, although the first officer had his hands on the controls it was mostly the captain’s job to check that the flaps were set at 40 earlier in the approach.]

This shows the importance for pilots of fighting a persistent human frailty of overcommitment to a plan of action. Every landing should start with a brief about how to go-around and when to go-around (go-around = “add power and start fresh”).

Where else do we see this? Here are a few examples:

• Entrepreneurs spend a lot more time in ailing companies than is rational. Why not have airline-style criteria before going into a startup about when you will admit failure, e.g., “If revenues are not at least $X by Date Y, I am taking a job at a Fortune 500 company”?
• I attended a hearing on family law at the Massachusetts State House, Joint Committee on the Judiciary (sharing some data from a statistical study on divorce litigation in Middlesex County). One loser parent after another went up to testify about how they had gone broke paying lawyers (up to $2.7 million per case) to fight against a judge’s early ruling that their plaintiff would be the winner parent (getting the house, the kids, and the tax-free child support profits). All of them would have been far better off if they’d walked away from the situation (including unfortunately their children) after the first temporary order favoring the other parent. (They could have heeded the advice of a lawyer quoted in the Massachusetts chapter: “You know that the game is rigged. Why are you swinging at every pitch?”)
• I had lunch yesterday with an executive from a mid-sized health insurance company. He pointed out that organizations as a whole can overcommit. “After Obamacare it doesn’t make sense to keep going as a mid-sized business. That’s what Anthem buying Cigna is about. Our company should be selling itself to United or Anthem but people can’t accept the situation.”

What do readers think? Are there more situations in life where on could apply airline-style stabilized approach criteria that, if exceeded, would call for a go-around? If so, what are they?

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Starting your own company is, on average, economically irrational. If you work for a big enterprise you have access to their capital and their brand. If you become a dentist or physician (or have sex in Massachusetts, New York, or Wisconsin with a couple of dentists or physicians), you’ll probably make more money than the typical entrepreneur and with a lot less risk.

The Wall Street Journal piece “Why Some Entrepreneurs Feel Fulfilled—but Others Don’t” contains a hidden gem:

When it comes to schooling, for instance, more of it doesn’t always lead to greater satisfaction. Researchers in the Netherlands have found that entrepreneurs with high levels of general education—say, from an Ivy League university—actually end up less satisfied with the income their startups generate than those who had more practical, specific professional and educational experiences.

The reason: Many Ivy Leaguers overestimate their abilities, only to end up disappointed when they don’t find quick success or earn what they think they deserve. “People tend to have high expectations when they are highly educated,” says Ingrid Verheul, an assistant professor of entrepreneurship at the Rotterdam School of Management, who co-wrote the 2011 Netherlands study. “They expect to be good at things. They have higher opportunity costs, and often expect to be working higher-level jobs.” …

It isn’t that Ivy League types do any better or worse than people with more specific educational experiences, says Ms. Verheul. Rather, she says, income satisfaction is in many ways tied to how people think they stack up to their peers. In the Ivy League, peers may go on to earn huge salaries in high-level management, which could make the typical entrepreneur’s salary seem small. People educated in more specific fields see their peers go into similar businesses, so they set more realistic expectations.

A similar dynamic is at work with people who started businesses with lots of initial capital, Ms. Verheul says. According to the study, those who begin with a lot of money are likely to expect high financial returns. When their returns aren’t as high as expected, they aren’t satisfied.

Related:

• Tips for Startup Companies
• this post about Ellen Pao with a former co-worker’s comment: “… employers have continued to hire her for jobs with increasing responsibility, wrongly hoping that she will one day live up to the promise shown at Princeton and Harvard, only to be disappointed; and, Ellen still can’t accept that she can’t repeat her academic success in the business world, …”

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“A New Cadre of Experts Helps Women Navigate Their Divorces” is an interesting July 18 NYT article. The amoral adult-centered world of divorce litigation is reflected in that the editors chose to put this in the “Style” section and that the negative effects on children are alluded to just once, in a “How are you going to help your children heal?” quote from an interviewee (the academic psychologists and epidemiologists whose papers are cited in Real World Divorce found that, in general, children do not heal after a typical U.S.-style divorce). The journalist does not mention that children effectively pay for 100 percent of the cost of a divorce, including for the consultants interviewed, because children will receive a smaller inheritance (and the time, energy, and money that their parents put into litigation is not available for parenting).

The profitability of divorce for a thoughtful American is apparent from the facts reported. The main interviewee runs divorce salons for women out of “century-old Brooklyn Heights carriage house that had been remade into the sort of place location scouts covet: an aspirational set for the next Nancy Meyers movie” with a “soaring glass-walled living room and backyard.” How did Elise Pettus, “trained as a journalist and filmmaker” (but whose name shows up in IMDB on just three films, the most recent of which is from 1990, and in low-level production assistant-type jobs), manage to obtain a multi-million dollar house in New York City? She herself is divorced…

The rest of the article is interesting because it shows what is on the minds of contemporary Americans who have sued their spouses or defended against a lawsuit by a spouse in New York, a typical winner-take-all jurisdiction (the victorious parent gets the house, the kids, and most of the cash; Census data from March 2014 shows that 91 percent of the winners in NY were women).

Related:

• this study of a month of lawsuits in a Massachusetts courthouse

 

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Can someone explain why investors are excited about Amazon earning $92 million on revenue of $23.2 billion (nytimes)? That’s a 0.4 percent profit. Does the stock going up 17 percent on this news make a mockery of the Efficient Market Hypothesis?

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The Boston Herald reports that the government will protect our tender ears from Donald Trump until he recants his thoughtcrime:

“I just don’t agree with him at all,” Boston Mayor Martin J. Walsh told the Herald yesterday. “I think his comments are inappropriate. And if he wanted to build a hotel here, he’d have to make some apologies to people in this country.”

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Uber continues to have a tough time with politicians and the government regulators whom those politicians appoint. I’m wondering if part of this difficulty is that politicians are now so segregated from the rest of the population (Marie Antoinette/Louis XVI) that they will never use Uber (and, since Uber is fairly new, never would have used Uber in their pre-success days).

Let’s look at Hillary Clinton, for example. The Daily Caller says that she can’t go anywhere on a plane smaller than a Gulfstream G450 (about $50 million factory-new, depending on how pimped out the interior is). One thing that one does not see is a Gulfstream G450 land at Teterboro and the passengers come out to summon Uber from their phones.

The mayor of a smaller city may not travel around in a G450, of course, but he or she probably gets a car and driver and hence will never have a personal need for Uber.

Readers: What else do politicians regulate that they never have to use personally? And should there be some kind of requirement that regulators also be customers of the industry that is being regulated? Otherwise, why wouldn’t it be trivial for a well-funded lobbyist to get rules established to eliminate competition?

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Here’s a Facebook posting from a friend who is in Italy with his family:

As we approached the city, we stopped to get fuel at a normal rest area with an Esso station. It was expensive – 1.609 Euros per liter, (I had previously never paid over 1.2) but Italy seemed to be that way at every station. My wife filled up the van while I went inside to buy ice cream for me and the kids. I bought three Magnum bars that came to 6.9 Euros total. I started to hand my Amex card to the guy on the left. The guy on the right signaled for me to give the card to him. I did, and he handed me a receipt, and then the guy on the left handed me another receipt. I walked out to the van, and my phone popped up an Amex “foreign transaction” alert for 69 Euros. I looked at the first receipt and it said 69 Euros. I went back inside, took the photos of the guys, and then demanded my 69 Euros back. They acted surprised, and like it was a mistake. I waited for the money. They asked me if cash was ok, and handed me 69 Euros from the register. I left.

I then asked my wife how much the fuel came to. She said 130 Euros. That seemed like a lot, even for 1.609 per liter. I did the math and they would have needed to put in 80.8 liters to come to that. The van has an 80 liter tank, and it was almost 1/4 full when we pulled in. I estimated that he overcharged us by almost 30 Euros. It was odd that the receipt had no details on it. I went to the guy who ran the pump, and asked for 30 Euros. I don’t understand Italian, but he was pretending nothing was wrong. I then went inside and talked to the guy who had ripped me off for the iced-creams, and he went into the fuel computer and eventually pulled out a transaction for pump 21 that was for 130 Euros and 80 liters and claimed that was mine. I didn’t accept it, as it was not possible to put 80 liters into my tank, and asked for my 30 Euros again. He then pulled out a second transaction that was for 106 Euros and 65 liters. That was as expected. He then called over someone who may have been a manager, and I showed him the two receipts. I then went to the guy who ran the pump again and asked for my money again, and said I would call the Police. The manager-looking guy asked him to cough up the money, and he gave me 24 Euros from his own wallet. We learned to pay by cash in Naples.

We drove away, and then had to pay a toll when entering the city. It was over 56 Euros – the largest toll I have ever heard of. This time, we used cash and handed 70 Euros. The toll booth attendant shorted us 10 Euros of change. I would not leave or let other cars behind me go until he gave me 10 Euros. I then got his attention and took his photo. Lesson number two – use only exact change when you pay in cash.

——————

I’m wondering what the Italian translation for “That American from Hell” is….

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For those interested in both tech and the legal system… “When Prosecutors Believe the Unbelievable” is a Slate article about a criminal rape prosecution and conviction that hinged on data from cell phones. “Woman staged ‘rape’ scene with knife, vodka, called 9-1-1, police say” is about the contradiction between a crime victim’s testimony and Fitbit data (how did the police get hold of the Fitbit data? This ABC story has some info).

Related:

• Harvard Law School professor Nancy Gertner, a former Federal judge, says “women feel so oppressed that they cannot consent willingly” (Yale Alumni Magazine)
• Domestic Violence chapter of Real World Divorce

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