Southwest Airlines Humor

swa humor

Pre-flight safety announcements I’ve heard from time to time:

For those of you who haven’t traveled since the sixties, this is a seat-belt.

If you’re traveling with children please put your own oxygen mask on first, then put one on the child with the most potential.

All carry-ons have to be stowed in the overhead bin or under the seat in front of you. And if it didn’t walk on, it’s a carry-on.

We don’t expect a drop in cabin pressure. If we did, we wouldn’t have shown up for work today.

Please take care when opening the overhead bins. If something falls on your head it creates way too much paperwork.

It’s a $2,200 fine for smoking in the lavatory and if you wanted to spend that kind of money, you would have flown American.

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IRS shoots low for Design Contest

koskinen

IRS Commissioner John Koskinen

The IRS is scheduled to announce a design contest for making interactions with their agency easier, and they are offering $10,000 to the winner. $10.000? This doesn’t really advance the idea of the IRS being in touch with reality. In the entrepreneurial world, $100k seems to be some kind of informal threshold for anyone who is serious about incentivizing results.  Even the smallish city of Amarillo, Texas pays out half a million in grants every year to promising new businesses. And ff you don’t want to go to the trouble of actually doing anything, Wells Fargo offers $25,000 just for “telling your story”.  Sorry to say it, but $10,000 is a joke.

To make it even more embarrassing, the prize money is being provided by the Mortgage Bankers Association for the purpose of making life easier and more profitable for their members. They are reported to be looking for a way to automate how tax returns are provided to lenders. If the size of this prize is any indication, the MBA isn’t very committed to the concept.

Posted in accelerators, Angel capital, Angel Investors, Business, capital, crowdfunding, equity, financing, government bids, grants, incubator, incubators, innovation, investors, loans, nondilutive equity, startup, startups | Tagged , , , , | Leave a comment

Security questions go overboard @United

Recently updated my United account and was a little overwhelmed by the security questions. I have to answer and remember FIVE security questions from THIS set? Not to worry, United has thoughtfully provided answers to choose from, so if your favorite artist happens to be Ibrahim El-Salahi or Katsushika Hokusai, all you have to do is remember how to correctly spell the name when that question prevents you from logging on 6 months from now. These are friendly skies?

Security questions

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Lunch with Boone

Boone

Never short on advice

Several years ago I became interested in buying the Herring Hotel in Amarillo with the idea of turning it into condos and temporary executive housing. The Herring was a historic, but neglected property which had been purchased out of bankruptcy for $15,000 by a California investor who was trying to flip it for a big gain. My entrepreneurial spirit surfaced and I could see transforming it into something profitable, as well as something good for civic development. I was living on my ranch at the time, but had a social friendship with Liz Pickens who said, “Why don’t you talk to my dad about it?” So I called Boone and he said, “Sure, come on in, we can have lunch and discuss it.”

Cover of Time

A love for the game

At the time, he was flying high with Mesa Petroleum, the Amarillo exploration company that initially made him rich and famous. He was the highest paid executive in America, a media darling, and had just hit upon a simple business model that would really define him going forward – find an oil company whose assets were worth more than their market capitalization, then just buy all the stock and sell all the assets. If a company had a market capitalization of $50 million but the assets were worth $70 million, you just buy all the stock for 50 then sell off the assets for 70 and, presto, you just made $20 million. He took a lot of heat from people who thought a company shouldn’t be destroyed that way, but they were normally the people who had a comfortable position within that company. His logic, in my opinion, was fairly unassailable.

I remember sitting at his breakfast table one morning right after he had banked about $50 million on his Gulf Oil deal. (The group he led made over $700 million.) He described how it unfolded: “Our lawyers told us that after we launched our takeover bid, we might have 2 weeks before they mounted an effective counter strategy. 2 weeks went by, then 4 weeks, then 6 – they never came up with a counter strategy.” This was the kind of thing which just reinforced his publicly stated views that most American CEOs were lazy, entitled incompetents who should either “get to work” or be replaced.

So anyway, I had this lunch meeting set and was expecting a quick restaurant trip, but Boone had a different idea. When I got to Mesa headquarters he took me into the boardroom where his assistant had laid out a lunch for not only the two of us, but all his top lieutenants who he had asked to sit in and listen to my idea. (Except for David Batchelder, who never fit the Mesa mold and decamped for La Jolla early on).

Boone made introductions and then had me describe my idea to the group. At the time, Amarillo was home to several NYSE companies and I thought there was a market for corporate lodging downtown near the headquarters buildings. A company like Mesa, which brought in a lot of out of town visitors could logically take advantage of putting them up in a nice and convenient location. And if Pickens signed on to the concept first, I figured the others would be a cinch. So after I finished describing my vision, his guys (and they were all guys) weighed in, one by one, with their opinions about the concept and the chances for success. All in all, the feedback was pretty negative. Boone had a negative opinion about the property from the get-go, and his executives didn’t think there was enough market demand to make it profitable.

As soon as lunch was over, Boone ended the meeting and ushered me out, saying, “See, I just saved you a lot of money…..and you owe me lunch.”

~1451666804~2006-herringhotel

The Herring Hotel

Unfortunately for Amarillo, the Herring Hotel still stands as a shell in downtown with little prospect of being rescued. Boone subsequently lost control of Mesa Petroleum, but quickly founded BP Capital where he made $4 billion, of which he says he has “lost $2 billion, gave away $1 billion, and still have $1 billion.” He is still making deals and I still owe him lunch.

 

Posted in accelerators, Angel capital, Angel Investors, Business, capital, crowdfunding, equity, financing, incubator, incubators, innovation, investors, loans, startup, startups, Uncategorized | Tagged , , | 2 Comments

Why the 1202 tax preference isn’t that great

IRSThe recent tax bill is amazing in the ways that have been dreamed up to “nudge” society’s behavior. A few (and I mean only a few) of the more interesting items that were passed:

  • Section 179 – gives you a tax deduction for buying up to half a million dollars worth of stuff for your business.  But please don’t buy stuff you don’t need just to get the deduction – you will go broke. I have seen it.
  • Here’s a killer deal – you can offset payroll taxes with Research & Development spending. Who dreamed this up?
  • The New Markets Tax Credit – an esoteric and byzantine gravy train for those who are able to get on board – specifically lawyers, accountants, developers, and non-profits.
  • Oh, and you cannot file an amended return claiming earned income credit for a year when you did not have a valid social security number. Duh.
  • But Section 1202 is the most interesting to me because there is a school of thought out there that says it is basically worthless. The 1202 tax preference basically says that you can avoid all the capital gains tax on investments made in startup companies. There are lots of qualifiers of course, but the idea has received support because it would seem to encourage investment into startups formed as C-corps. Not so fast. Due to the nature of the startup universe and the way that tax law is applied to it, any advantage that an investor thinks he is going to get may just evaporate. Below is an illustration, courtesy of Gene Betts of the Central Texas Angel Network.

betts

Posted in accelerators, Angel capital, Angel Investors, Business, capital, crowdfunding, equity, financing, grants, incubator, incubators, innovation, investors, loans, nondilutive equity, startup, startups, tax credits, Uncategorized | Tagged , , , , | 1 Comment

Merry Christmas – You’re getting an extra $1,500 in 2016

According to the Federal Reserve Bank of Dallas, this is the average savings per family from the cheaper gasoline prices which are expected to hold for 2016.

oil

I’m a little fuzzy on the argument for why lower oil prices are supposed to be bad for the economy. No question that it hits the oil industry in their bottom line, but doesn’t it also reduce the cost of operation of most businesses and lower the cost of living for individuals? I can’t remember ever having personally benefited from high oil prices.

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Angel Investing Stats 2015 Q3

Q3-2015-Infographic

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