db, Author at That's Not Market

LSAT Scores Declining For New Students And The Choice To Go To Law School

BusinessWeek reports that low test scores are not the same barrier to law school then they were previously.

The LSATs are the SATs of the law school world, and they tend to figure highly into the admissions criteria for highly ranked law schools. Just ask the US News and World Report annual rankings. And the scores for new law school students are going down.

“…since 2010, 95 percent of the 196 U.S. law schools at least partially accredited by the American Bar Association for which the NCBE had data lowered their standards for students near the bottom of the pack.”

Is it just the lower tiered schools? Nope.

“In fact, 20 of the 22 U.S. News top-20 schools—there was a three-way tie for 20th place—were enrolling students with lower test scores. Across all schools, LSAT scores for the 25th percentile dropped an average of three points.”

It isn’t too surprising considering that law school application rates have been declining. As job prospects face across-the-board declines, people normally attracted to other things will try their hand at law school. It does seem to be the default choice for people who don’t know what else to do.

BusinessWeek claims this isn’t good, but only in the context of correlation to the bar exam.

“LSAT scores matter because they tend to correlate closely with scores on one section of the bar exam, so when schools admit lower-scoring students on the former test, they risk producing more graduates who have a hard time passing the bar. “

All things being equal, yes, but bar exams also tend to weighed and curved.

However, there is another reason. If the LSAT does its job and judges aptitude for the study and practice of law (a dubious proposition, but whatever), then more people are going to law school who should be doing other things regardless of what this means on yet another test. Plus, the bar exam can be taken multiple times, so flunking out once does not kill your budding legal career.

The fact is that the practice of law can be rewarding, but it can also be hard work, long hours and very stressful.

Few people engaged in it tend to be happy. Furthermore, people going as a fallback career are entering into some of the worst job markets for new graduates. There is still a glut of unemployed and underemployed lawyers and hiring does not seem to have recovered.

People entering law school should think carefully about the three-year, unpleasant and expensive choice they are about to make.

“Solopreneur” Article Supports My Ideas About Freelance Economy

Old article shows that the Freelance Economy is not a flash in the pan; agrees with me and is therefore correct (in parts).

Several weeks ago, I saw Shane Snow give a short talk at a recent 1 Million Cups – Dallas event, where he provided some insight into how he built Contently. I looked for some more of his writing and came across this WaPo article from 2012 about “Solopreneurs,” or what I have called the “Freelance Economy.”

Snow provided one anecdote about a former (not voluntarily) news editor who succeeded as a freelancer. He provided some stats, which were helpful. If you are a freelancer, you’re not alone even if the government is not tracking you. However, this seems more like a blessing than a curse unless you believe a career unexamined by the government is not worth working.

There were a few points in the article that supports some of my views of the Freelance Economy. For example, this is not a temporary phenomena.

“The increase in freelancers isn’t a temporary phase. It’s a systemic change,” says Sara Horowitz, founder of Freelancers Union, an insurance company and advocacy group. “The recession likely sped up a shift that was happening already.”

In addition, Freelance Economy professionals value their independence.

This happens to line up with what much of the labor pool wants, too: flexibility. BLS reports that 90 percent of freelancers prefer independence to being locked in a cubicle.

There will be more in a separate post about where I disagree with the article.

More Big Tech Companies Stay Private, Or Wait Longer To Go Public

The Wall Street Journal took note that many companies with high valuations prefer to stay private these days. Mostly, it is talking about the types of tech companies that went public much earlier in their life cycle in the late nineties.

A number of Internet, software and consumer companies are raising huge sums in private deals that enable them to postpone initial public offerings for years, if not indefinitely. Moreover, they often negotiate these private placements directly with investors, bypassing banks.

The article mostly deals with how investment bankers more used to IPOs are dealing with large companies that prefer to raise money privately.

For most people, the woes of investment bankers struggling to meet changing business conditions is not particularly interesting. However, what I find interesting is the assumption that these companies would necessarily want to go public. If you don’t have to, why would you subject yourself to periodic reporting, plaintiffs’ lawyers in the securities bar, Sarbanes-Oxley, etc…?

In addition, the universe of investors for private companies is expanding.

Banks trying to woo more private-placement clients said they provide a needed service. Companies are staying private longer partly because the number of investors interested in private deals has expanded significantly, they said.

Many of these companies are also less dependent on funding from the public markets.

“What’s changed is that companies are getting so quickly from startup to real traction,” said Dan Dees, global head of technology, media and telecommunications banking at Goldman. “You can’t just wait for the IPO pitch.”

And yet, this is what critics used to complain about for IPO companies: they were too immature for the public markets.

To me, it still comes down to an essential question for the issuer: Why do you want to go public. Because ‘go’ is only a part of it. ‘Being’ public is the long-term expense and obligation.

‘Barbarians at the Gate’ Available on Youtube

HBO version of classic book.

When I was a simple music student studying classical and jazz guitar in college, I had revelation in the second semester of my third year: I would soon have my BFA in Classical Guitar Performance. Then what?

I was also reading a book that changed the direction of my life. ‘Barbarians at the Gate’ is the chronical of the takeover of RJR Nabisco. After reading that, I decided I wanted to be a part of that world. I had a better understanding of what the lawyers did more than the financial advisors. As a result, I went to law school with the goal of being a corporate/securities lawyer. And the rest was history.

After I had been practicing for a few years, I read it again. It was even better with the benefit of experience.

HBO turned it into a comedy, but it still works. Check it out.

Uber, France and Protectionism

France moves to ban Uber while homegrown ridesharing service BlaBlaCar continues to grow.

Carsharing service (or unlicensed taxi service, depending on who’s talking) Uber has faced enourmous regulatory hurdles where local taxi cartels try to protect themselves from the popular service. Europe is no exception as several there is a movement in several countries to stop or regulate or extract fees from Uber. However, Europe has lagged the U.S. in startup activity and success and has taken action against many prominent U.S. tech companies, such as the recent antitrust actions against Google and previous antitrust actions against Microsoft that seem so quaint now.

With that backdrop, let’s take a look at France and Uber.

The French government recently declared that some of Uber’s services would be banned in 2015. Like many places, there are some consumer protection rationales.

““Currently, those who use UberPop are not protected in case of an accident,” Mr. Brandet told the French news channel BFM TV, on Monday. “So not only is it illegal to offer the service, but for the consumer, it’s a real danger.””

Anyone anywhere who has ever taken a licensed cab knows this is silly. The real answer? Regulation and protection of a local cartel.

“Critics contend that the service represents unfair competition for other taxi operators, and falls afoul of many licensing rules across Europe. That has led cities across Europe, including Brussels and Berlin, to outlaw the budget car service.”

But what happens if a local company makes good?

“The 28-year-old student is one of a growing number of people across France relying on ride-sharing to travel long distances. Driving the change is a homegrown startup called BlaBlaCar that is challenging state-run railway monopoly SNCF by creating an alternative transport network out of empty car seats.”

Is longer distance safer? What about how everyone loves European trains and how every U.S. city wishing to be considered “world class” wants more trains?

It turns out that when given a choice, people prefer not to take public transportation.

“BlaBlaCar’s ascent has come partly on the back of a deteriorating public-transport system across the continent.”

Even better:

“Its business model responds to the flaws in train travel his association has been complaining about for years: high prices and bad service . . .”

It makes you think that maybe a homegrown company has advantages over a foreign company providing what the local authorities cannot.

Or maybe they simply don’t like it when people make money in an unregulated environment.

“Because it keeps fees so low that drivers are sharing costs rather than making profit, the company argues it is quite different from a company like Uber, which also uses some nonprofessional drivers and bills itself as “ride-sharing.”

“There has been such a hijacking of the word ‘ride-sharing,’ ” said Mr. Brusson. “The key is about the driver not making a profit, and the driver going to his destination anyway.””

And yet, BlaBlaCar has business aspirations, as long as the drivers don’t make money.

“BlaBlaCar was originally called covoiturage.fr—simply the French word for “carpooling”—but its founders changed the name to BlaBlaCar to ease international expansion with a non-French brand they could own.”

France moves to ban Uber while homegrown ridesharing service BlaBlaCar continues to grow.

Miss Me Yet?

They say absence makes the heart grow fonder. Its been since April. You must be really fond. Lots of interesting developments I should be covering more regularly. “More regularly” is a sliding scale, of course.

Better Than Bitcoin? Fund Manager Discusses Disruptive Tech In Finance

Former co-head of largest bond fund discusses what can really disrupt entrenched businesses.

: Not the most disruptive finance technology.

Kicking Bitcoin while its down, Mohamed El-Erian penned an article for CNBC about how technology is taking on finance. In his words “via a democratization process that could gradually reconfigure a notable part of the institutional landscape, particularly in consumer finance, while challenging regulators to adapt.”

While most people would think “Bitcoin,” El-Erian doesn’t even consider it a good example. He claims its impact, “both actual and potential, is relatively limited when compared to ongoing attempts to enhance and democratize lending, borrowing, investing, and payments and settlements.”

El-Erian notes his take on the sequence for disruptive tech:

A bold innovation suddenly lowers entry barriers for certain activities;
Mechanisms emerge to enable a larger part of the population to participate in what is deemed desirable but, until now, had been hard to access;
As the disruptive forces gain traction, existing business models face difficult adaptation challenges, and regulators begin to fall behind; and
The situation is often amplified by a natural human tendency to overproduce and over-consume hitherto restricted goods and services.

He sees this happening in finance, though the pace is less frantic and less disruptive. According to El-Erian, examples include:

Internet-driven lending and borrwoing clubs
peer-to-peer initiatives in consumer financial services
Digital wallets
Mobile transfers

He suggests that they reduce costs and provide “fairer risk-pooling outcomes and better credit underwriting.” He doesn’t mention that none of these ideas are particularly new. He does mention that the prospects for each vary considerably.

While this was not the most insightful article on the subject, it is hard to dismiss El-Erian’s statements, given his former position as CEO and CIO of PIMCO, home of the largest bond fund.

General Mills Pushes Boundaries With Online Terms and Conditions

General Mills gets a lesson ‘bout messin’ with legal rights in overbearing Terms and Conditions.

"Like" this on Facebook for a coupon and waiver of legal liability.

Almost anyone who has put up a website is guilty: Your “Terms and Conditions,” “Terms of Use,” “Legal Matters” or “Legal Terms” section is over the top.

Sure, you want to be protected. Or, at least, you want to feel protected.

However, you may face a severe backlash from the people you are courting as customers.

Case in point: General Mills.

General Mills slipped some language into their Legal Rights that said customers,

“give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways.”

Instead, if you derive any sort of benefit, you are stuck with email negotiation or arbitration for any dispute. That $0.50 coupon for Wheaties is looking kinda expensive now, isn’t it?

General Mills backtracked the language, explaining:

“There’s no mention of arbitration, and the arbitration provisions we had posted were never enforced. Nor will they be. We stipulate for all purposes that our recent Legal Terms have been terminated, that the arbitration provisions are void, and that they are not, and never have been, of any legal effect.”

Then they added, “That last bit is from our lawyers.” Always blame the lawyers.

General Mills spokesperson explained that they never imagined this reaction. “Never considered it” is probably more accurate.

She continued to explain:

“Similar terms are common in all sorts of consumer contracts, and arbitration clauses don’t cause anyone to waive a valid legal claim [Ed: Um, sometimes they do.]. They only specify a cost-effective means of resolving such matters [Ed: Um, not always.]. At no time was anyone ever precluded from suing us by purchasing one of our products at a store or liking one of our Facebook pages. That was either a mischaracterization – or just very misunderstood. Not that any of that matters now.”

Translation: You, Customers, didn’t read it correctly, but we are changing it anyway.

Good for General Mills for listening to customer complaints, but you’d think they would have been more diplomatic about it. How about the truth: “We overreached and didn’t think any of our customers would ever notice, at least until they tried to sue us. Since there are plaintiffs lawyers and public interest groups that pay attention to this sort of thing, word got out. Sorry about that. We’re changing back.”

Here is the current page for General Mills’ Legal terms.

Going Solo – BLS Reports More Americans Quitting Their Jobs For The Freelance Economy

More Americans going solo in the Freelance Economy as culture shifts from “get comfy job” to “I’ll make my own job.”

Noting recent Bureau of Labor Statistics reports, Bplans reports that the number of Americans quitting their jobs is at a 5-year high. This is related to a reported rise in entrepreneurial activity.

I am not surprised, as the Freelance Economy offers great opportunity and flexibility to the ambitious and talented.

While the economy was hurting, people were staying in their jobs as fear kept them in place. People now feel more confident about landing well if they quit, whether it is for another job or to create their own job.

“We’re currently in the midst of a major cultural shift—48 percent of Americans want to be entrepreneurs today. While past generations believed that the best and safest path was through a long career at a big, stable company, those in the workforce now don’t see it that way at all. The financial crisis called into question the entire notion of job security, as “stable jobs” were lost and “stable companies” turned out to be anything but.

Nowadays, many people are of the mindset that entrepreneurship is actually the more secure path. Instead of putting yourself at the mercy of layoffs and watching the heads of the company you work for make bad decisions, entrepreneurship means taking your fate into your own hands.”

According to Bplans, this is a trend that spans generations.

“A whopping 63 percent of 20-somethings want to start their own businesses, according to a recent survey…

According to the Kauffman Foundation, the 55+ age group is the fastest growing demographic of entrepreneurs. “Encore careers” are becoming more and more common, as retirees want to stay active and supplement their retirement income at the same time.”

“Encore careers.” I like it.

Spanning the divide of the millenials and the AARP set are the baby boomers under retirement age, and the 25% of them who want to go entreprenurial.

Is it just economic conditions that are pushing folks into the Freelance Economy? Nope.

Technology is making entrepreneurship accessible, from reducing cost to promoting ease of use.

“It costs almost nothing to build a basic web page, and you can set up a whole business infrastructure for under $100 a month. Virtual help desks, for example, allow small companies to offer world-class customer service without adding a whole customer service team to the payroll.”

In this regard, Bplans believes that “we are entering into a new golden age of entrepreneurship in America.”

From this solo practitioner, it is hard to argue.

Why Startups Fail – Mint vs. Wesabe

In an old blog entry (that I just found), one of the founders of Wesabe thinks back to why his company lost to Mint.com and shut down. For those who don’t remember, Mint was high-flying personal finance site that was sold to Intuit in 2009 for about $170 million.

Wesabe and Mint went head-to-head. Mint won. Here's why.

Marc Hedlund writes an honest article about his take on why Wesabe eventually shut down. First, he knocks out four myths, including that Mint launched first, had a better name and design and went viral.

Then, Hedlund discusses what he saw were the drivers behind the success of one and the failure of another. At the end of the day, it comes down to familiar themes recognized by those of us who work with businesses, particularly startups.

“I think in this case, Mint totally won at the first (making users happy quickly), and we both totally failed at the second (actually helping people).”

Mint gave people what they wanted and made it easy. Wesabe wanted to help people change their financial behavior, which is a value judgment with which the consumer himself/herself may disagree.

Hedlund notes that some of the things founders obsess over are really not important:

“You’ll hear a lot about why company A won and company B lost in any market, and in my experience, a lot of the theories thrown about – even or especially by the participants – are utter crap. A domain name doesn’t win you a market; launching second or fifth or tenth doesn’t lose you a market. You can’t blame your competitors or your board or the lack of or excess of investment.”

He does get to the crux of the issue about how to succeed:

“Focus on what really matters: making users happy with your product as quickly as you can, and helping them as much as you can after that. If you do those better than anyone else out there you’ll win.”

That’s it. Give people what they want to meet their needs and solve their problems.

Hedlund still believes that there are problems to be solved. However, imposing your judgment on people’s behavior will not have the same success as meeting people’s needs and desires.

“So, yeah. Changing people’s behavior is really hard. No one in this market succeeded at doing so – there is no Google nor Amazon of personal finance. Can you succeed where we failed? Please do – the problems are absolutely huge and the help consumers have is absolutely abysmal. Learn from the above and go help people (after making them immediately happy, first).”