A few interesting articles to share

Hey there, folk. Recently, I’ve come across some really interesting articles and wanted to pass them along just in case some of you might enjoy them.

1. My long-time readers know that I have a pretty big following of cats from India. I’m not sure how that happened, but I get a lot of emails from kids out there who are targeting business school. A few days ago, I found a great article about the job market for those coming out of MBA programs in India and knew that it would grab the eye of at least that segment of readers. The article can be found at this link –> “India’s MBAs Face Dismal Job Market“

2. The next article is a blog entry announcing a new company involving one of my friends (TW) who is currently a first-year MBA student at Stanford GSB. The company is called GreetBeatz and they allow customers to commission custom rap, pop, and R&B tunes for friends with whom they’re connected on Facebook. When TW first told me about the idea, I thought it was a soon-to-be winner and, now that it’s up and running, I can’t wait to see them grow and gain momentum. You can find the article at this link –> “GreetBeatz Lets You Send Personalized Songs to Friends Through Facebook Connect“

3. I don’t know if any of you follow the comings and goings in the Private Equity industry, but, if you do, this article might be interesting to you. In short, a scandal has erupted involving under-the-table payments allegedly being made to NY state officials by PE firms in order to gain access to representatives (and associated investment commitments) of the New York State Common Retirement Fund. The NY State Attorney General has been going after the players in this scandal and the news on this thing has been hot for the past week or two since the story broke. The following article was posted by PEHub.com earlier today and I thought I’d share it with you guys.

By the way, I copied the entire article text here because PEHub.com sometimes shuts down access to articles via links a few days after the original posting.

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“Pension kickbacks national problem, NY’s Cuomo says”
Source: PEHub.com
Posted on May 1, 2009

New York state’s criminal probe of kickbacks paid by companies eager to manage its $122 billion state pension fund has exposed “a national network of actors” whose schemes are ongoing, state Attorney General Andrew Cuomo said on Thursday.

“This is all across the nation, and it’s continuing today,” the Democratic attorney general said on a conference call.

The probe, which began two years ago, has fixed the spotlight on the use of placement agents hired by investment firms to open the doors of the New York State Common Retirement Fund. For more details, please see: [ID:nN15509853]. Cuomo said he is also is scrutinizing lawyers and lobbyists.

The investigation is another effort to stamp out graft and the practice of “pay to play,” which involves giving gifts or campaign donations to win public contracts. So far the probe has looked into the web of relationships and business contracts involving money managers, politicians and pension officials spanning the country from New York City and the state capital, Albany, to Texas, New Mexico and California.

(Reuters) On Thursday, the U.S. Securities and Exchange Commission, which is working with Cuomo, charged that Dallas-based Aldus Equity Partners won New York pension business because of “its willingness to illegally line the pockets of others.”

The state pension fund had aimed to hire more women and minority-owned investment firms and had begun talks with one. But Aldus was chosen, Cuomo said, when the minority-owned firm “allegedly refused to pay kickbacks to Morris and another associate.”

Aldus, a private equity firm, says it manages over $5 billion, and the probe already has cost Aldus clients in New Mexico and New York. Cuomo said Aldus also is active in Louisiana, Oklahoma, Texas, California, and New York City.

ANOTHER VIEW OF GIVE AND TAKE

Both Cuomo and the SEC charged that Saul Meyer, an Aldus founder, paid about $320,000 to a shell company owned by Henry Morris, a top fund-raiser for New York’s former state comptroller. This led the New York state pension fund’s then-chief investment officer, David Loglisci, to invest $375 million with Aldus from 2004 to 2006.

Demonstrating the power that Morris wielded over pension investments, Cuomo said Morris told a Meyer intermediary: “Tell that little peanut of a man that I can take business away as easily as I provided (it).”

Lawyers for Morris and Loglisci, who were indicted in March, say they are innocent.

On Thursday, Meyer was charged with a state securities felony and released on $200,000 bail. His lawyer Paul Shechtman said: “Time and evidence will show that Saul Meyer did nothing wrong.”

Aldus knew that Morris was “working both sides of the deal,” Cuomo said, by marketing funds for investments in the Aldus/NY Emerging Fund in which Morris had a 35 percent stake.

Aldus Equity lawyer Matthew Orwig faulted the SEC for acting before finishing its probe, calling the threatened legal action “appalling and careless with the law and with people’s reputations.” Aldus partners said they were disappointed by the “unexpected legal developments.”

Aldus could face more legal peril. The New York state pension fund is weighing legal remedies against Aldus and Meyer after ending its investment with the firm. New York City pensions could cut ties with the firm, while New Mexico’s governor called on the state Education Board to drop its contract with Aldus a day after ordering the state investment officer to do so.

Cuomo said that while Meyer was seeking more business with New York’s pension fund, he helped Daniel Hevesi, a son of Alan Hevesi, the former state comptroller whose oversight of the state pension fund is being probed, earn a $250,000 fee on a New Mexico pension deal.

Alan Hevesi’s lawyer Bradley Simon has said the former comptroller “has not been charged with any misconduct with respect to mismanagement of the New York state pension fund.”
By Joan Gralla and Rachelle Younglai
(Additional reporting by Jim Christie in San Francisco)
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4. The article below is another posting from PEHub.com (They’ve got some great stuff on there) that immediately caught my eye for two reasons. First, it’s all about management and business, which, as you know, is a strong interest of mine. Second, I’m a HUGE fan of the “Godfather” trilogy. In one article, the writer combined two topics that stick out to me and did so masterfully. I figured that some of you might find this entertaining.

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“The Management Gospel According to The Godfather” by Howard Anderson
Source: PEHub.com
Posted: April 27, 2009

Everything I know about management I learned from The Godfather.

At its core, business is quite simple. The goal of any organization is to upset the status quo and then re-establish it on a more favorable basis. Of course, all your competitors are trying to do the same thing.

The world of business is inhabited by just two tribes – Attackers and Defenders. The Defenders own the mountain. They have customers, a product that is valued, financial strength and organizational prowess. They are able to withstand certain amounts of adversity and protect their franchise.

Attackers are young upstarts without any of those strengths, but often with a new method, a new technology, or a new view of the world. Defenders? Think IBM, AT&T, Disney, Goldman Sachs. Think The Corleone Family. Attackers are the new kids on the block. Cisco, Google, E-Trade, Pixar. Think Sollozzo, the drug lord.

The Godfather is a management book. It puts Peter Drucker to shame; it makes Good to Great about as relevant as Mr. Rogers.

The Godfather is not about The Mafia, it’s not about Families; it is not about tradition. It is about how you take a small commodity company, Carlene Olive Oil, and change its business model, change its constituency and make it into a worldwide dominating enterprise. It is about handling Adversity; it is about turning a sleepy little family business into Power. It is about taking tactics and turning them into strategy. Its lessons are for Rupert Murdoch and his quasi-dysfunctional family, or Bernie Madoff or Steve Jobs.

It is about a founder, Vito Corleone, who takes an organization about as far as it can go… to Michael Corleone, who is the first of the next generation – who proves himself at another organization (the Marine Corps) and comes back to reorganize and globalize a family company. But The Godfather is also about hubris, bad management, dysfunctional organizations and failures to read the tea leaves. It is the mother of all case studies. Just as The Corleone family was left vulnerable to the ambushed Don, Apple is vulnerable when Steve Jobs is disabled with illness and the Children’s Crusade management team tries to cope.

It is about a meritocracy – where the best move up, where primogenerity gives way to competence. It is about branding, where enemies are intimated, friends are rewarded and survival is Job One.

It is about talent. How to recognize it. Reward it. Encourage it. It is about recruiting. It is about weeding out talent also. Jack Welch may talk about firing the bottom 10%. The Godfather shows how really to weed out those who aren’t with the program.

The Godfather is about dedication; the placing of the job above all else. It is about Business/Government relations. It is about picking partners, and recognizing when partners do not have the same agenda. It is about negotiation. It is about recognizing both opportunity and risk.

So maybe the Harvard Business School should save their students about $150,000 and two years of their lives. Just give them the book or the movies and go from there.

Howard Anderson is the founder and former president of high-tech market research firm The Yankee Group. He is also a co-founder of Battery Ventures, a venture capital firm in the Boston area, and, most recently, YankeeTek Ventures, a high technology venture capital firm in Cambridge. He currently serves as The William Porter Distinguished Lecturer of Behavioral Policy Science at MIT Sloan.

The above post is a truncated version of a longer presentation Howard is preparing, which will be given on May 21. Get more info here.
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