Category Archive

                   Global Crisis/Innovation Blog

 How to Spread a Small Idea Into a Big Deal

By Shlomo Maital

  I love public transportation, and ride Israel’s excellent trains and buses all the time.  Lately, at several bus stops, I noticed something rather strange.  There were improvised book shelves, and books on them.  Why? Who?  When? 

   I discovered the answer the other day. Here is the story.   Dr. Danny Shoshan, and Amit Matalon, of Technion’s Architecture Faculty, devised an experiment to see how the city and its residents interact.  They placed two sets of bookshelves at bus stops in a Haifa neighborhood.  They stocked them with books and monitored what happened over a 3-week period.  “A miracle took place,” Shoshan says. “People took over the role of stocking and returning the books”.  They then expanded the project to six more locations.  The same thing happened.  Technion students began to put their theses and textbooks on the shelves for sharing.  In religious Orthodox neighborhoods, residents put religious books and CD’s on the shelves.  

  “Our motivation for the project was art,” Shoshan says. “Public space is the place to bring Art!”  Similar “libraries” have been built in other Israeli cities – Tirat HaCarmel, Kfar Saba and even Tel Aviv.  Others will soon be added.  There have even been orders from abroad.  The Mayor of Kfar Saba notes, “with minimal investment and very very creative thinking, we can make municipal libraries available to the general public.”  

    Innovator – why not try this in your city?  Just put a few books on the bench at a bus stop.  See what happens.  Or in general:  Put something in a public place, that arouses curiosity, interaction and conversations.  This is what ‘art’ is truly meant to be.  

• Source: Technion FOCUS magazine, Oct. 2011.

Global Crisis/Innovation Blog

Steve Keen on HardTalk: Write off the Debt!

By Shlomo Maital

   Steve Keen, “the merchant of gloom”, an Australian economist who predicted the global financial crisis, was interviewed on the BBC program HardTalk, on Nov. 25.  Here is what he said.  In short:  The banks have created enormous unsustainable amounts of debt, and we have no choice – either endure two decades of Japanese-like stagnation, while the debt slowly winds down to sustainable levels,  or write it off, start fresh, and avoid the ‘lost generation’ of youth who find no jobs. 

     “We’re already in a Great Depression, in the last one people did not call it that until it was over, always hoping change, improvement is just around the corner.. Great Depression wasn’t called that until the late 1930’s.  The situation now economists call transient may be like Japan, which had a lost two decades, this is the best we can hope for under the current situation, slow grinding process to wind the debt down. 

     “When you have a growing population and economy used to growth, people expect jobs when they leave school but find none, even if you grow a bit less than population change, that means we create a lost generation – which has one outlet, frustration and violence. This is not how to manage an effective society, to be caught in such a trap.  Hitler rose, because he reversed the conventional economic behavior of his time and turned Germany away from 25% unemployment (by building a war machine), leading to the catastrophe of WWII.  He would never have risen were it not for the Depression. You can get very bad social outcomes from the current situation.   The Tea Party was a visceral reaction, right wing. Occupy Wall Street is progressive, it’s been broadly-based, youth-based, people who are laid off, people you would not expect to sit in a tent on Wall St. …a major part of their attitude is that they’ve had their trust in society betrayed. They want a harmonious society. They are not socialists.  They believe society should be something we can trust in, destroyed by the financial sector. They want to rebuild that trust. They don’t know quite how.  I’m opposed to capitalism “parasiting” itself and living off other sectors. 

     “ I think Occupy Wall St. should occupy economic departments of universities..you don’t get into this fix without extraordinarily bad thinking among economists.  I think economic departments in universities should be closed. 

     “We have to change the political power balance.  The financial sector, the creditors of the world, are dominant politically for 30 years. The debtors are at the bottom.  We need to resverse that, turn the power back to the debtors.  Politicians won’t listen until they have to. Politicians are reactive, not leaders.  They go along with the general trend that a larger financial sector without regulation is a good thing. And they get their campaign contributions from it.      Banks created more loans than they should have, then bundled them and sold them to pension funds and institutions. So we can’t have a ‘jubilee’ (50-year debt forgiveness).  The debt is too widely owned.  We have to see where debt is good and where it is bad. Good debt finances investment in technology. Bad debt finances gambles on rising asset prices. THAT is what did the damage.  In America’s economy, good debt is sustainable at 50-70% of one year’s GDP.  Current level of debt?  300% of GDP.  Not sustainable.  The debt caused a house price bubble.   Write off debts of people like you and me.  We have to look at the situation, what do we face if we honor debts that should never have happened?  Best example is Japan, a cohesive society, and their GDP growth is lower than population growth, even with a falling population. We face two decades of that. 

      “We must admit something – the credit system has failed.   Historically,  in Australia, 10% of GDP went to pay for housing.  Today it is 100%.  That 90% financed the bubble.   But if we forgive debt on an individual basis it will take forever.  We need a systemic approach.  Households did not make the bad decisions. The banks did.  So we have to write off the debt.  As someone has said,  debt that CANNOT be repaid, WILL NOT be repaid. Let’s face it.   There are two sources of money: banks through lending and government through deficits.  Banks over-lent.  Let’s stop this and reduce private debt, while letting government create credit exclusively.  In the past 3-4 years, the rescues have been to create money and give it to the banks, believing the banks will lend. That is bizarre, because they’ve lent too much already. So all this money has been ineffective.  What we have to do, not easy, the working model is – give the money to the public,  to pay off their debt level, not spend it.  Per capita.  Pay the debt down.   It is not a tax cut.  If you give the money to everybody, and require debt reduction —  we reward those who over-borrowed, but, we must do this, because there is a system failure, and there has to be a system solution.  EVERYBODY gets a boost, and the scale of my solution is extreme, but normal policy allowed a 40-year buildup of unsustainable debt.  We need a sophisticated approach to eliminating an unsustainable systemic level of debt.   If we keep the parasitic banks alive, the economy dies.  If we did my solution, banks would get money in loan repayment.  Their cash flow would decline.  So the bank would struggle, and the financial services would decline – but most already are insolvent, we just haven’t recognized this. 

     “Banking behavior is positive when it provides working capital for business. It is negative when they finance Ponzi schemes to gamble on asset prices, where the money itself is causing that asset price bubble. This is parasitic.   Instability in capitalism is created.  It gets to technological breakthroughs.  This is creative.  That also includes financial instability. So I am trying to promote creative instability, and control financial instability.  We have to control the Frankenstein.  Banks make money by creating debt.  Most of us decline that debt, because it is dangerous.  In Latin the word ‘mortgage’ means ‘death contract’  (mort =  morte, death).  In the past 40 years, we were encouraged by economic theory to take on more debt than we should.  We have to prevent the possibility of asset bubbles financed by leverage from happening again, and it might.    Countries have rising sovereign (govt.) debt because much of the private debt has been made public by governments.   My Eureka moment: in 2005 I looked at the data for Australia, and saw debt growth in Australia rising exponentially, relative to income.    I plotted the data – perfect exponential curve, 1964-2005.  I thought, this has to change!  When debt starts to fall, we will have a financial crisis. I had to raise the alarm.     

      “People were not worried about private debt.  Because economists have a mythical view of debt – money goes from the patient people who have money, to those who are impatient and need and want to borrow money.  This is a myth.   Max Planck failed to convince his Maxwellian colleagues about quantum mechanics, and said, the old physicists have to die off before the young physicists will lead to the triumph of quantum physics.  The same applies to economics. The old Keynesians will have to die off.  Unconventional economics has been derided, but it knows the current version of capitalism doesn’t work.  And after the global crisis, this is being recognized.  I see no politician bold enough to do what I recommend. “   

        Global Crisis/Innovation Blog

 How to Innovate by Asking Audacious  Questions

By Shlomo Maital

 Renault Fluence: no gasoline!

Yesterday I and two colleagues visited Better Place, a company founded by Israeli entrepreneur Shai Agassi.  Better Place wants to wean the world from its addiction to oil and gasoline.  It believes consuming 85 million barrels of crude oil daily, half of it for powering automobiles, is not sustainable.  Its solution:  Create an ecosystem with electric cars (Renault-Nissan “Fluence”),  lithium-ion replaceable batteries, charging stations, and battery-replacement stations. The first such nation-wide system is now almost in place in Israel (we interviewed Agassi by phone as he made the rounds of his robotic battery-replacement stations, aiming at having 50 of them in place very soon, all over the country).  Hybrids are not the solution, because they still consume gasoline, albeit somewhat less of it.  Better Place thinks the added electricity used by electric cars can be generated by non-fossil-fuel sources, and Denmark, the next site of a nation-wide system, already makes 20 per cent of its power through wind and sun, and has so much of it Denmark pays Germany (!) to take the power off its hands.   Drivers of Better Place cars drive in to charging stations, where a robot replaces the spent battery with a charged one, in less time than it takes to fill a tank with gasoline.  You pay by subscription, based on kilometrage driven yearly (20,000 km., 30,000 km., etc.).  The car’s computer tells you if you havee enough charge to get to your destination without a new battery, and if not, where you can replace the spent one.

     The origin of Better Place was an audacious question.  After completing an amazing career (B.Sc. from Technion-Israel Institute of Technology at age 17 ½,  work at Apple,  startup named TopTier, sold to SAP, work at SAP leading up to a top management position, resigned to launch Better Place, and Agassi is only 36),  Agassi asked this question:

    How can we run a country’s cars without gasoline?

The technological answer is simple.  Electric cars. The business answer is really tough – how to sustain a company that does this.  Better Place is essentially a “media” company. It doesn’t sell cars, Renault does that. It sells the recharging/battery replacement system.  Fluence owners drive in to a batter replacement center, and a robot replaces the lithium-ion battery under the car with a charged one.  The margin between what Better Place pays for electricity and what it charges the drivers for electricity provides profit that drives and sustains the business. 

    It all began with an audacious question. But Agassi’s answer was NOT technological, solely, but cleverly business and economic.  This has enabled him to raise several hundred million dollars, from top investors, including GE. 

   So – innovator:  Ask, what is the question? Not, what is the answer!  And, seek highly audacious questions.  Questions that comprise unsolved, perhaps unsolvable, social problems. Then tackle them with energy vision and creativity.     

    Global Crisis/Innovation Blog

 How to Build a $15 b. Global Company

By Shlomo Maital 

  Eli Hurvitz

The legendary founder, long-time CEO and Chair of Teva Pharmaceuticals Ltd. Eli Horwitz, recently passed away, at age 79.  He died of cancer.  

  Teva is a $15 global pharmaceutical giant, the world’s leading generic drug firm, and is on its way to “31 for everyone” ($31 b. in annual revenues).  It was driven by the vision and skill of Hurvitz, and his long-time CEO Israel Makov.   To create a global market leader is tough. To do so from an Israeli home base is nearly impossible.   How did Hurvitz and Makov do it?  Through sweeping vision and smallest-detail execution, qualities that rarely collaborate or even co-exist.

   Hurvitz spotted a press report, in 1985, describing the U.S. Hatch-Waxman Act, named after American political leaders Orrin Hatch (Senate) and Henry Waxman (House).  This act was designed to encourage generic drugs (ethical drugs whose patent has expired, and can be produced and sold by anyone), as a way of reducing health care costs, even then troubling America’s leadership.  Few pharmaceutical firms showed any interest.  Generic drugs are commodities, with low margins (compared to the enormous margins enjoyed on ethical drugs).  Why bother?  Hurvitz spotted a business opportunity. He realized that to excel in generics, Teva, his company, would have to be super-efficient at managing costs, and super-speedy in developing ways to produce generic drugs the instant patents expired (recall that pharmaceutical companies patent not only the molecule but also the way they produce it).  He also realized that Teva would have to scale up, and to do so would require many acquisitions – so he built world-class competency at acquiring and integrating companies.  His CEO Israel Makov was a great partner.  Makov offers this prescription for building a global firm:  first to imagine, first to move, first to scale.  Hurvitz and Makov imagined (a global giant, in generics),  moved (to build global capability) and scaled up.  Together they disproved the assumption that cost-effective production cannot take place in high-wage high-cost Israel (Teva’s Kfar Saba plant is its most efficient worldwide). 

     Innovator:  Keep your eyes peeled for news accounts of trends that embody business opportunities, like Hatch-Waxman.  Envision the possibilities.  Organize to implement.  Move and scale quickly.  And you too, like the late Eli Hurvitz, will create a market-leading global firm.  

  Global Crisis/Innovation Blog

Kyle Bass Sees What is Plainly Visible But Unseen

By Shlomo Maital 

US house prices/median family income, 1978-2008

In a previous blog, I quoted Peter Drucker, who “saw what is visible but unseen”, just by looking out the window.  Kyle Bass did the same. He worked at Bear, Stearns, becoming at age 28 the youngest senior managing director in the firm’s history.  He is now the managing partner of Hayman Advisors LP, an investment firm which he founded in 2005-6.  Bass is famous (notorious?) for foreseeing the subprime mortgage crisis and profiting from it immensely, when most of us just didn’t see it. He realized before anyone that private bank debt would become sovereign debt, and that Greece’s debt was too big for Greece to be able to pay back.  He bet on that — when Greece’s interest rates were nearly equal to Germany’s.  He won big time.   He was recently interviewed on the BBC program “Hardtalk”.  Here is what he said:

   “ in 2001 [Fed Chair Alan]  Greenspan traded the dot com bust for the housing boom, lowered interest rates to 1%, because he thought that was how to come out of the dot.com bust aggressively.  Then he quit…handed the  reins to Bernanke.  We [at Hayman]  looked at:    median home prices, median income that had moved in parallel for 50 years…and at affordability. When Greenspan created the housing boom, there was massive divergence between median income and median home price [see figure above]…home prices took off, median incomes stayed stable…     How did we profit? When you are a fiduciary, like Hayman, people invest their capital with us, in order to not lose and to make good risk adjusted returns…  in 2006 we had a portfolio of investments all over the world… the hedge we did, we bet against the bottom 3% of subprime securitization, it cost me 1% a year.. it was the best asymmetric hedge I’d ever seen in my life…   we were long in the fund, so this was our hedge, just in case something went wrong. We knew something would go wrong.  We had a good hedge against it.  We lost on other investments, profited on the subprime hedge, and made profit overall.  

    “We have a large portfolio of global investments. And enormous hedges in Europe and in Japan.   We  realized the crisis would move from housing, to banks, to govt. We did math which other people did not do.  As the housing problem metastasized, it started to move globally, what we saw was,  beginning of 2008 to Q2 2009, every time a highly levered institution got into trouble,  in US and EU, the Central Banks took those bad private risks/assets and moved it onto the public balance sheet.  [It was called a ‘bailout’, ‘too big to fail’.]   We decided in mid-2008, there would be either massive delevering (deleveraging, write-off of bank debt, including bankruptcy), or would the move onto the govt. balance sheet.  The latter happened – in the US and partly in the EU they moved bad private assets onto the govt. balance sheet.    No one did this calculation…looked at how big debts were, how big revenues were, for govts.  What solidified our search was:  for Iceland, 300,000 people, $20 b. GDP,  3 Iceland banks had over $200 b. worth of assets!.  When the Icelandic banks went bad, it sank the country.  No regulator existed, deciding to put limits on the size of banking system relative to GDP…because it generated revenues, jobs.     

     “The global debt scenario?  Yes, we took bets against Greece…  for a $1,000 bet, you could make $700,000 profit, in the initial stages, 2008.  Greece’s sovereign debt traded as if it were German sovereign debt… it was within 11-17 basis points of German debt.  That’s 11/100 of one per cent.  There were great asymmetric hedges then.  Today,  all the asymmetry hedges in the world lie in Japan.  

   “The only way to resolve EU problems is to have massive debt restructuring, write-downs.  You know Europe is in trouble when it has a German Pope, and an Italian Central Banker.  World sovereign debt has grown in the  last 9 years from $80 trillion to $210 trillion. That’s  12% / yr., while GDP grew at 4%.   It is not sustainable.  The “PIIGS” (Portugal, Iceland, Ireland, Greece, Spain) are heading into insolvency.  There is noo solution but – either pay the bills, or  debts have to be written down.    Germany itself has defaulted twice in the last 100 years.  Germany hasn’t recapitalized its banks.. UK,  US HAS!  EU banks have three times the leverage of US banks.  EU hasn’t recapitalized its banks.    Issue Eurobonds (with no country on the face)? So profligate Southern European countries continue to spend wildly and Germany foots the bill.    Profligate countries blackmail Germany every time.  It’s not to Germany’s benefit.   How many of your relatives would you go joint and severally liable with?   EU won’t work unless it has centralized taxing authority, until every one of the 17 Euro nations cedes sovereignty.  This is a tall order.   The [bond] market is telling us, it won’t work.   Japan? It  will fall big time.  Japan has the single worst balance sheet problem with sovereign debt in the world…    in Japan: a xenophobic society, population decline, they will lose 27 m. people in next 40 years to demography…private assets of the public in Japan are close to $13.2 trillion…but govt. debt is $15 trillion – the first time in history a country’s sovereign debt exceeds private assets…. In Italy, the 10 yr rate went from 5% to 6%:  and Italy went to full crisis, in one percent!  Japan spends 50% of central govt. tax revenue on debt service, and  half is interest… if Japanese interest  rates rises 2%, debt service will alone exceed govt. revenue!”

   Kyle Bass went to college (Texas Christian University) on a combined academic/sport scholarship (he was a champion diver).  As a talented high diver, he knew how to take leaps others did not.  His leap into betting against subprime mortgages was a huge success. Perhaps then, we should listen to what he says about the euro and Japan.  

  Global Crisis/Innovation Blog

Angela Merkel, Meet Frederick the Great

By Shlomo Maital

What would happen if Frederick the Great, King of Prussia (b. 1712 – d. 1786),  Der Alter Fritz, who ruled for over 40 years, came back to life and spoke with German Chancellor Angela Merkel?   What would they chat about?

   Here’s my take on it.

   Merkel:  Alter Fritz,  I’m in deep trouble. I lead Germany, Germany is the only nation that can save the euro, yet my stubborn people won’t let me, they want to punish Greece and Italy more than they want to strengthen Germany.

  Frederick:  The reason you were chosen Chancellor, Angela, is presumably because you are smart and wise, like me.  We know you are smart, because you are a trained scientist.  But are you wise?

   Merkel:  What do you mean, Frederick?

   Frederick:  Shall I tell you how I saved my nation?

   Merkel:  Yes please.  My history is a bit rusty these days, all I get to read is what those damned economists write.

   Frederick:  Europe had a mini-ice age for two centuries.  Crops froze.  The people were starving. They had no grain, no bread.  I heard of something called a potato, brought from the New World by the Spanish in the 16^th C. But it spread very slowly in Europe.  Yet the potato was ideal, because even if its leaves froze above ground, the potatoes below ground survived.  But – how can I get those stubborn Prussian farmers to adopt it?  So, around 1770, I planted potatoes in the fields of my palace in Potsdam.  I announced I would whip any farmer who stole my potatoes for seed.  I served them regularly for my dinner.  And I left big holes in my fences.  The potato quickly spread like wildfire throughout Prussia.  To this day, kartoffel is a German favorite.  It saved Prussia from mass starvation.  In contrast, in France, stupid King Louis and his “Academy of Science” declared that the New World Americans were idiots, because they ate corn and potatoes.  They refused to adopt the potato.  Some say the resulting starvation led to the French Revolution.  Louis lost his head – literally.  

   Now, do you see what I mean by ‘wise’?   

   Merkel:  Yes, but…  I have no palace. And … I’m afraid my Germans today are more French than Prussian.    

   Global Crisis/Innovation Blog

Drucker at 100

By Shlomo Maital

 Peter Drucker

 On Saturday (Nov. 19) we mark the 102^th anniversary of the birth of Peter Drucker, the scholar who more than any other management expert defined the nature of the discipline of running businesses.  In over three dozen books (the last published just three years before his death, in 2002), Drucker taught students of management the essentials of building organizations, with integrity, respect, and vision.  

   Drucker was a visionary, yet insisted, “I never predict; I just look out the window and see what’s visible but not yet seen,” he told Forbes magazine.  He was the first to understand tht the industrial revolution is over, and the innovation / knowledge revolution has begun. In his 1968 book The Age of Discontinuity, he challenged managers to boost the productivity of knowledge work, to create a surge in productivity like that the industrial revolution created.  

   He foresaw the angst of the 2007-11 global crisis.  In an interview given nearly 25 years ago, he said, “in the next economic downturn, there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions.”  Drucker hated the way CEO’s overpaid themselves. 

   Drucker fled his native Austria because of the rise of the Nazis.  This strongly influenced him, and his conviction that good management is essential not only for the success of companies, but also for the economic and political stability of the community and the nation.  

    According to author Richard Straub, Drucker called management a “social technology” (would that it was!) and called himself a “social ecologist”, one who watches the man-made environment of society.  Straub notes that in a 2008 Gallup Poll on honesty and ethics, only 12 per cent of respondents felt business executives had high/very high integrity – an all-time low.  And in economist Richard Layard’s study of happiness, among the people employees wanted to interact with, the ‘boss’ (CEO) came dead last.  Drucker would have been deeply distressed to see how bad management has ruined the lives of many in America, Europe and elsewhere, in the current global crisis.  

   My favorite Drucker story is how he consulted to Starbucks – by rising at 4 a.m. and going out with a delivery truck, to bring supplies to one of the outlets.  First, Drucker made sure he understood the business, at the coal face, long before he ever dared to offer advice.  Take heed, consultants.  Get out of your office, like Drucker, and get down and dirty in the mines.    

 Global Crisis/Innovation Blog

Innovator:  Your EQ May Be More Crucial Than Your IQ

By Shlomo Maital

 Looking back on my ‘career’, I find the thing I most regret concerns the two or three sharp, hasty words I blurted, that created lifelong enemies.  (In Academe, memories are long – like, centuries long).  These words were the result of low EQ – emotional intelligence.   EQ is in very short supply in many organizations, driven by people who’ve spent their lives studying and researching.   I recall a Workshop we once did for Intel engineers in Ireland. We taught them strategy, HR, innovation – lots of strong tools. We included, at the last minute, a short lecture by an expert on Emotional Intelligence.  A huge majority of them chose the EQ talk as by far the most valuable.  They realized it was something they needed,  as super-smart nerdy engineers, and lacked.

   Emotional Intelligence (EQ) is defined as “a self-perceived ability to identify, assess, and control the emotions of oneself, of others, and of groups”.  The concept was built mainly by Daniel Goleman.  It includes ‘reading’ your own emotions, and reading those of other people, and acting and responding in a mature and controlled fashion.

  In his 2004 book, *    Primal Leadership:   Learning to Lead With Emotional Intelligence,    Goleman and co-authors  link EQ with leadership.   Here is their typology, showing how to assess your EQ in four separate key dimensions, and then linking EQ with leadership styles. 

   The dimensions: 1. Self awareness (emotional awareness; accurate perception; self-belief);  2. Self management (control the emotions; transparency; adaptability; achievement; initiative; optimism);  3. Social awareness (empathy; organizational awareness; ability and desire to serve or meet needs);  4.  Relationship management (inspire others; influence othes; develop others; change catalyst; build bonds; teamwork). 

    They identify six leadership styles. Which suits you?   1. Visionary. 2. Coaching. 3. Affiliative. 4. Democratic. 5.  Pace-setting. 6. Commanding. 

    And finally, they pose five key questions all  innovators should answer.  1.  Who do I want to be?  2. Who am I?  3.  How can I reduce the gaps between (1) and (2)?  4.  How can I experiment, in order to understand better who I am and who I want to be?  5.  Who will support me, in these efforts? 

     Self-awareness is a key (and underestimated) element in innovation.  You cannot deal effectively with the powerful opposition your new ideas will arouse, unless you are very secure with who you are.  So, set aside your high IQ, and reflect on your EQ.  It’s really important.     

————

* Primal Leadership: Learning to Lead With Emotional Intelligence   by Daniel Goleman,   Richard E. Boyatzis  and Annie McKee   HBS Press, 2004.

                                                       Global Crisis/Innovation Blog

Direct to the Client:  Can You Disintermediate a Service?

By Shlomo Maital

Here is the latest “power word” in innovation:  Disintermediation.

     Yuk.  One of those economists’ words.  Never trust a word with two prefixes joined, especially when one is ‘dis’.  

    But there is a powerful idea here.   Disintermediation means “eliminating the middle man” and linking supply directly to demand, or creator/innovator directly to user/fan/customer.  Writing in the Nov. 1 issue of Bloomberg Business Week, John Tozzi ( jtozzi2@bloomberg.net) describes “Bandcamp”,  and how Ethan Diamond left his great job at Yahoo to launch Bandcamp, an easy way for rock bands to publish and sell music online.   Writes Tozzi:

  Artists can plug Bandcamp’s player and storefront into their own websites to stream entire albums for free and sell or give away downloads. Today, hundreds of thousands of artists use Bandcamp, and Diamond says about 25,000 join every month. That makes the company a fast-growing contender to succeed Myspace as the go-to online tool for musicians to get music directly to fans. As Myspace users decamped for Facebook, “there was basically a huge vacuum left,” says Aram Sinnreich, founder of media consultant Radar Research. “There were more than 10 million bands on Myspace. All those bands needed someplace to go.”

 Food coops are linking farmers directly with consumers. Capital markets are making it possible for businesses to borrow directly from lenders, without banks.  Digital books are enabling authors to sell directly to readers without a publisher.  Disintermediation takes that frustrating, sterile, greedy middleman (publishers give authors 12 ½ per cent royalties, take a year to prepare the book, and then, forget to market it) and eliminates him/her.  The Web is a powerful tool for disintermediation. 

   Pick a service or product.  Innovator – can YOU disintermediate it?   If so – you have a business. 

====================

Bandcamp Powers Online Sales, Aims to Fill Myspace ‘Vacuum’, By John Tozzi – Nov 1, 2011

    Global Crisis/Innovation Blog

  The New Democracy: Bond Traders Rule!

By Shlomo Maital

  A new form of democracy has just been born – yesterday in fact.  

  Greece appointed Lucas Papademos as Prime Minister designate.  He ran Greece’s Central Bank, at the time Greece bluffed its way into the European Single Market and euro, with false data, and was vice governor of the European Central Bank. He has consistently opposed any ‘haircut’ (reduction) of Greece’s debt.

  Italy is apparently appointing Mario Monti, former European Commission competition commissioner, as its new Prime Minister, to replace Silvio Berlusconi and lead Italy toward new austerity measures.

  Why were these new leaders chosen?  In the sole desperate hope that the bond markets will like the moves sufficiently, to raise the price of Italy’s and Greece’s sovereign bonds, enough to keep those two countries solvent, able to continue to borrow in capital markets so they can avoid default and bankruptcy.  

  Will it work?  Will the bond traders agree? Will they give a Facebook “thumbs up”? (Like!). Or will they give a Facebook thumbs down?   Everything depends on these bond traders – the future of Europe, the future of the Euro, and perhaps the future of global markets.

    This is the new democracy.  A key political decision is being made, NOT by the people of Greece, and not by the people of Italy, but by the faceless millions who buy and sell bonds in global markets.  And they, of course, are driven not by considerations of the wellbeing of Italians and Greeks – but by the wellbeing of their bonuses and bottom lines.  

    Not a very good system, is it!  It is not, in fact, democracy any longer.  It is the oligarchy of money.  We thought the power of financial markets had been curtailed and regulated after the global crisis of 2007-9 – but in fact, it has if anything grown.