March 21, 2016
What we’re reading this week
Facebook and Real Estate
2 years ago a real estate developer named Mircea Voskerician sued Facebook founder Mark Zuckerberg. Voskerician owned property behind Zuckerberg’s home and threatened to develop said property into a home that would have visibility of the Zuckerberg estate. The Zuckerbergs didn’t want this and agreed to buy the land for $1.7 million, a supposedly discounted price. The “discount” was given after Zuckerberg allegedly agreed to introduce Voskerician to a “desirable pool of potential customers.” This didn’t happen and Voskerician sued. The case settled last week, 6 weeks before Zuckerberg was scheduled to recount his version of the events before a jury. The case appeared to hinge on Voskerician’s ability to actually develop the property. The developer had provided a bank statement to the courts to substantiate his claim that he had the resources to build on the land and Zuckerberg’s lawyers challenged its legitimacy. The case then started to unravel as Voskerician’s original attorney dropped his client, citing California’s ethics rules for lawyers providing details about conflict between them and their clients. Most recently, lawyers representing Voskerician withdrew the case and settled with Zuckerberg in exchange for a guarantee that Zuckerberg would not turn around and sue Voskerician. More interesting aspects of the case emerged over the course of the two years. Specifically, that Voskerician once had a side business selling old medical equipment on eBay that he salvaged from garbage cans during his work at Stryker Corp. and one of the potential buyers of the land behind Zuckerberg’s home was an unidentified “African Prince.” Reading over the proceedings was like watching an episode of The People’s Court (which plays non-stop at my doctor’s office no matter what time of day I am there), just with like, more money involved. It seems that no matter how much money you make garbage pickers might still take you to court over weird real estate deals.
Whenever people mention politics, we are fond of telling them that we are “politically agnostic.” One particularly insightful client once told me that means I must be a pessimist that votes republican. No comment. That being said, I caught an article on CNBC titled If Trump wins, stocks will crash 50%. The story makes reference to Wedbush’s director of equity trading, Ian Winer, and his prognostication that Donald Trump’s election would cause a 50% decline in the stock market. Among other things, he references Trump’s stance on taxes for the highest earners in America, his desire to beef up military spending, and his plans for building up the US’s infrastructure. Additionally, Winer addresses Trump’s proposal to mass deport 11 million undocumented immigrants. His rationale is that one, this would be very expensive and two, these people have a lot of jobs that documented citizens wouldn’t want to do. At least, they wouldn’t want to do them for the same price as an immigrant. Admittedly there is more to it that than that but illegal immigrants in America seem to satisfy both parties. Simply put, people come to America because they don’t want to live where they are from and it would potentially cost a lot more to pay documented US citizens to perform the same work.That seems like a win-win. Sure, there are other issues that need to be addressed if we continue to open our boarders but I am also not convinced that the answer is to throw everybody out. I also really enjoyed reading Donald Trump’s tax reform page on his website. “If you are single and earn less than $25,000, or married and jointly earn less than $50,000, you will not owe any income tax. That removes nearly 75 million households – over 50% – from the income tax rolls. They get a new one page form to send the IRS saying, “I win,” those who would otherwise owe income taxes will save an average of nearly $1,000 each.” And “The Trump Tax Plan Ends The Unfair Death Tax.” It is unfair, why should my family be punished because I lacked the good grace to live forever?
Banks And Technology
From Reuters: “U.S. banks make cool technology, realize it can be sold”. The article details how banks, in the wake of shrinking revenue from traditional business activities have started to develop technology around data security, mobile applications and systems integration for their own use but also to sell to outside companies. The ways in which banks have struggled for the past decade and how they are changing is interesting to me but this idea is a little flat. I feel like banks are just going their job by improving data security and building mobile applications. To turn around and ask for more money seems a little childish. However, I was delighted by one part of this article, “Goldman has arguably been the most aggressive developer and seller of its own technology to outside companies, something it has been doing on and off since the dotcom boom of the 1990s. Its chief executive, Lloyd Blankfein, is fond of saying Goldman is more like a technology company than a bank.” That’s cool I guess, but “Goldman is now hoping to capitalize on the popularity of “bring your own device” policies, wherein employees conduct business on their own mobile phones and tablets, rather than on company-issued devices.” Huh? I am too young to remember when companies started allowing people to do their jobs “remotely.” Intellectually, I understand that the advent of the laptop caused corporate mouths to water at the idea of employees working after hours: answering emails, making reports, building spreadsheets! People could work around the clock! Employees were dying to work after 5 but just lacked the resources to make it happen. I imagine corporations were disappointed when they realized that people weren’t working more, just differently. When work bleeds into personal time, there is an equal and opposite reaction. I.e. people tend to do personal stuff during work hours. I’m not convinced that Goldman’s effort to just lean-in to this idea is a step in the right direction. Goldman’s plan is the inverse of the laptop. It feels a lot like laziness. Instead of “Hey, here is a laptop so you can take your work home” it’s “oh, what the hell, just bring your tablet to work.” My 8 year old daughter is sometimes allowed to bring a tablet to school when her class earns a “technology day.” Because my wife and I shudder at the idea of giving an child a phone or a tablet (yes, we are those people) we send her in with a deck of cards (yes, she is that kid). What will happen when she grows up? I imagine her sitting at a desk at Goldman Sachs with an etch-a-sketch pretending to trade commodities because she never learned to bring your own technology to work. I’m not even going to address the security issues of bank employees conducting business on their own devices.
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