It can be unnerving to talk to Jim Buckmaster, the chief executive of Craigslist, particularly if you work for a newspaper. I did so once, in his apartment in San Francisco, and it was a memorable experience.

It was partly because of what he said - essentially that the online classified ads venture founded by the eponymous Craig Newmark would continue to scoop up the advertising that used to be the lifeblood of city and local papers.

It was also because Mr Buckmaster talks a bit like the leader of a cult. When asked why Craigslist is doing something - or is not - he tends to gaze into the distance and claim merely to be following the wishes of users.

Continue reading "In defence of Craigslist" »

The move by the state of Massachusetts to impose a 2.5 per cent tax on its biggest university endowments is causing an outcry. It is not surprising, given what is at stake for Harvard’s $36bn foundation.

The debate was reported in the Wall Street Journal on Friday after rumbling along in the state’s media and in higher education circles this month. State politicians are feeling the budgetary pinch and have put forward a bill to levy universities in the state that have endowments of more than $1bn.

At the moment, although universities such as Harvard and Yale can be regarded as some of the world’s biggest hedge funds, they have tax-exempt status. They do not even have to meet the requirement on other non-profit foundations in the US to distribute 5 per cent of their capital each year.

I think it is a bad idea, for reasons I will come to. And, surprise, surprise, there are plenty of Harvard economists who think so, including Greg Mankiw. But before I say why, it is worth acknowledging the arguments in favour.

Continue reading "Slapping a tax on Harvard’s $35bn hoard" »

I can’t say I agree with Felix Salmon and John Carney that the most interesting anecdote in the great New York Times piece about the feud between Alan Greenberg and Jimmy Cayne at Bear Stearns was the following:

The final straw for Mr Cayne was Mr Greenberg’s decision to charge Mr Cayne a commission of $77,000 for the sale of his six million shares of Bear stock, a rate far above the maximum $2,500 commission that employees pay for a single trade. Since Mr Cayne was not an employee anymore, he did not deserve such a rate, Mr Greenberg said. “If he doesn’t like it, he should do his future business elsewhere,” he added.

Actually, I prefer this one:

Mr Greenberg says he did contemplate leaving, in part because his views were not being heard and for another reason as well. “I was depressed. My dog was sick,” he said. “He had not been performing well in dog shows.”

I think that, while the first story speaks well to the pettiness that can erupt between two old friends and colleagues when an institution disintegrates, the second says something about the oddity of Bear’s executive culture.

The lesson, I think, is that both men were too old and out of touch to be in charge of their institution, particularly in a time of turmoil.

Mr Cayne, 74, was chairman, but was seriously ill last summer and spent a lot of time out of the office at bridge tournaments as Bear crumbled. Having been around for so long - and been originally hired by Mr Greenberg when he was earning his living playing cards - he lost touch with his responsibilities.

Meanwhile, Mr Greenberg, who is 80, was revered for his past leadership of Bear and for his witty, irreverent manner. That is fine, but he was allowed to remain chairman of the risk and executive committees, which was ridiculous.

I wrote in a column that Bear’s leadership was “old, self-satisfied and inbred”and this article provides no reason to change that view. I imagine a lot of employees must wish a plague on both Mr Greenberg’s and Mr Cayne’s houses.

I always look out for pieces written by Malcolm Gladwell in The New Yorker, who was noted the other day in the Wall Street Journal as one of the world’s leading business pundits. They tend to be intriguing, clever, full of great anecdotes and thoroughly enjoyable.

He is also, of course, the author of the best-sellers The Tipping Point, and Blink, which are both wonderful reads.

All the same, Gladwell has come under some scrutiny for allegedly, how to put this, making the best of his stories. That is to say, contriving that his evidence fits his latest all-encompassing theory a little too neatly.

Continue reading "Malcolm Gladwell and the art of invention" »

My FT column this week is on the problems of US infrastructure - particularly transport-related infrastructure - and why the country needs to do something about them. You can read it here and post comments below.

I cannot say that I was keen on New York City passing a law to force fast food restaurants to post the number of calories on the food items they sell. It struck me as a single state initiative that would cause of lot of bureaucratic difficulty for no very good reason.

Still, I am intrigued by the results, now that outlets have started to comply, and by the lesson that one’s instincts about which foods are calorie-rich are not always accurate.

A case in point: the Starbucks next to our office in Manhattan, which now has calorie labels on its cakes and pastries.

So, which one of these would you guess had the most calories and which the least?

1. A slice of marble cake with a chocolate swirl in it

2. A slice of banana nut loaf

3. A slice of lemon cake

The answer is 3. For the record, the first has 430 calories, the second 460 calories and the last 500 calories. Somehow, I was fooled by the fact that lemons sound healthy, and nuts and bananas natural, while chocolate sounds sinful.

Just goes to show. Mind you, I am still not sure that I favour the law.

Every so often, a product comes along that everyone expects to be a pathetic failure but turns out to be rather good. I would put in that category the internet replay services offered by broadcasters in the UK and the US.

The US product is Hulu, a video service offered by NBC Universal and Fox on which one can watch full-length replays of television programmes made by the two broadacasters as well as a few films.

The UK product is iPlayer, the internet service offered by the BBC which is becoming so popular that one or two internet service providers have protested that it is taking up too much bandwidth.

I cannot vouch for iPlayer because I live in New York and am barred from using it but I did use Hulu the other night to watch a couple of past episodes of 30 Rock and I have to report that the experience was a pleasure.

Continue reading "The surprising quality of internet television" »

I have never seen Arnold Schwarzenegger, the governor of California, in person so I took the opportunity to do so this lunchtime at the Milken Institute Global Conference. I have to say that I was impressed.

Mr Schwarzenegger was talking about his push to build infrastructure such as roads, rail links and schools in California. He has also linked up with Ed Rendell, governor of Pennsylvania, and Michael Bloomberg, mayor of New York to spread that message across the US.

I expected him to be amusing and unusual but he surprised me with his fluency in talking about the topic and his charm. Maybe it helped that he was in a room full of business people (and financiers with an interest in the subject) who were on his side.

I also liked his lack of tact. At one point, eulogising about why his state was “the greatest place in the world” he compared it to other states. “People are not dying to go to Iowa,” he said. I can only imagine the apology he will have to make for that.

Continue reading "Schwarzenegger the global citizen" »

My FT column this week is about Michael Milken and his defence at the Milken Institute Global Conference of high-yield finance in the wake of the subprime mortgage crisis. I think he gets some things wrong but is correct about one big thing.

You can read it here and comment below. Incidentally, Andrew Ross Sorkin of the New York Times is at the conference and wrote about the same topic earlier this week, so you can compare and contrast here.

Amid all the financial confusion, one things seems clear enough: the days of the $10bn plus leveraged buyout are gone for now.

Even when the backlog of unsyndicated high-yield loans held by banks is cleared - which now looks like will happen fairly quickly - they are not going to be rushing back to the private equity funds to offer new multi-billion facilities.

The reason for that is not simply that they have been burned by the events of the past year. More concretely, they can no longer package up mezzanine and secured debt for buyouts and transform it into collateralised loan obligations (CLOs).

This was the unanimous conclusion of a panel on private equity this morning at the Milken Institute Global Conference, which included Leon Black of Apollo Advisers and Thomas Lee of the eponymous private equity group.

Continue reading "Back to the past for private equity firms" »