Digital Siege, Why Young Entrepreneurs Are Winning

I am happy to say that my book is finally out.  Now I understand the saying “great novels and paintings are never finished, just abandoned!”    The feedback I have gotten on these successful stories of entrepreneurs is super.  It appears more appealing to young entrepreneurs than established executives even though my original idea was to help executives adapt to the new world.

This reminds me of Albert Einstein’s comment,

 “Everybody is a genius. But if you judge a fish by its ability to climb a tree, it will spend its whole life believing that it is stupid.”

The older corporate executives who have grown up with hierarchical organization models and before the Internet should not be judged by their inability to see the power of the Internet and its information and distributed business models.  They will be replaced over time like those executives whose business approach was cast during the Great Depression.  Learning to climb a tree may not be the right expectation for seasoned executives, given their tremendous knowledge and experience built over years.  This doesn’t mean they won’t be replaced.  It just means they deserve an honorable exit.

Many thanks to John Reed for writing the Foreword and Bill Schrader for writing the Introduction.  Two special people in my life, mentoring my executive and entrepreneurial periods respectively.  The book could not have been written without their influence and effect on me.  Both are two of the smartest, most creative minds I have met in many years and many countries.

I am increasingly impressed with the young entrepreneurs I interact with and how they deal with becoming a CEO, not by choice, but by the fact of being a founder, a technical wizard, a young person with a great dream.  This will be the subject of my next book as it is an equally important and unique circumstance of our times.  “CEO from Birth. The Entrepreneur’s Challenge.” (Working title)



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In Defense of Banking in a Fin Tech World

I know the joke. What is 5,000 bankers at the bottom of the ocean?

…A good start.

Let’s face it bankers, lawyers, and accountants are not top of the list to gather around at cocktail parties. Thankfully, now I can say I’m an Internet entrepreneur, an artist, a former racecar driver, or some other intriguing icon and not have the group slip away to refill their glasses.

Fin Tech is great.  I am a big enthusiast. It will revolutionize settlements, contracts, and small loans, as we know them. But let’s not throw out banking just yet.

Banking has historically been at the core and has always lost the fringe to disintermediation. In 2014 Quicken Loans originated more mortgages than either Citibank or Bank of America, but who provided the money? Commercial paper and high yield bonds were bank loans before. Who doesn’t now have a Schwab One or other money market account at a non-bank? Disintermediation (disruption now) brought on by market developments will continue and it should.

However, there are a couple of banking things that are not changed by frictionless flows and crowd- or micro-.

  1. People want 30-year mortgages and 5-year car loans, but want their deposits available today.
  2. A lenders portfolio is only a reflection of the state of their customers and this changes over time and cycles. When you first make a loan, pretty much all customers are OK. It’s the future that’s a problem.
  3. The exciting Fin Tech developments, as revolutionary and important as they are for the future, are not quite ready for the Mississippi River.

Who can argue with the attractiveness of immediate settlements? Instant online loans? If we add to this reducing fees, greater financial inclusion, mobility, etc. it is understandably a very attractive target for major disruption particularly given the incumbents’ earnings and inefficiencies.

Then I look at Bitcoin and envision how it could handle the Continuous Linked Settlement (CLS) foreign exchange system flows of $5 trillion per day when its total market cap (after the 2015 run up) is $6.9 billion and its daily volume is less than $100 million. I then imagine how Dwolla with its master/sub accounts at Veridian Credit Union and Compass Bank could improve on Target2 and its Euro 2.5 trillion daily settlements, 99.98% of which happen within 5 minutes.

No, these examples are not Fin Tech. They are the result of hard working people trying to deal with the core, not the fringe. It is not cocktail party or coffee shop conversation material. It does not warrant a cover story on “Wired” or “Inc”.  The fringe will become the core eventually. Eyeballs, email subscribers and click throughs were the hot ticket in the late 1990s. Then on March 20, 2000, Jack Willoughby’s article appeared on the “Barron’s” cover titled “Burning Up. Warning: Internet companies are running out of cash – fast.” Anyone over 30 knows what followed.

At the time, Alan Greenspan coined the phrase “irrational exuberance”. Yes it was, but we also know how the Internet has pervaded our lives now 16 years later. It wasn’t a straight line and it will not be for Fin Tech.

Let the thousand flowers bloom. Just don’t bet on one flower or one spring.

“Big Data” and the Entrepreneur

First, a few estimates (not mine):

  • 45% of the world’s population is now online
  • One third of the world’s information is stored in alphanumeric text and still image data,
  • The estimated telecoms capacity to exchange data in 2014 was 667 Exabyte (1 Exabyte = 1 billion gigabytes)

Are we surprised that “big data” is a hot and growing topic? It takes me back to my time at M.I.T. Sloan and Jay Forrester. Jay was one of the first professors at Sloan (1956) and we studied his System Dynamics.

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Entrepreneurs vs. Innovation

There are many books written about innovation and guides to help entrepreneurs, but what is the difference?  Does one need to be innovative to be an entrepreneur or have entrepreneurial talent to be innovative?

One of the most entrepreneurial corporations historically has been Citibank, particularly in the international field.  Citi had offices in far flung Buenos Aires and Shanghai before there were telephones or air travel.  The local manager had to be entrepreneurial.  I was Citi’s country executive in Sweden, Ireland, and Singapore in the 1980s and it was still that way.  We had an expression that “sometimes its easier to ask forgiveness later for a decision than to get approval before.”

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