I am in final preparations for my trip to India, so I may not be blogging much over the next couple of weeks. I will try to find a computer, an internet connection, and some time while I am there, but I am not really sure what to expect. 'Til then ...

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Madison seems always to rank near the top of livability rankings. Here is one from Utne.com on "America's Most Enlightened Towns." Madison ranks fifth. My former home -- Portland, Oregon -- ranks second. The criteria? Cities "making a special effort to foster connectedness and contentment among all the people who live in them." Cities that are "dealing creatively with the challenges they face, places that can provide inspiration and practical ideas about how to improve life in your own hometown." And cities that offer "access to alternative health care, lively media, a breadth of cultural activity, and diverse spiritual oppportunities." Of course, so-called "progressive" politics is also part of the mix. Despite my leanings toward the right side of the political spectrum, I must confess to sharing the sentiments of one of my closest friends, who stated, "Liberals make better neighbors." As long as they aren't setting my tax rates.

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The New York Times is reporting {ID=venturpreneur; password=blawg} that the Internal Revenue Service is cracking down on questionable tax opinion letters from attorneys and accountants, another legacy of Enron. Interestingly, policy makers are finally making the connection between the increased availability of limited liability and lower professional standards:

Another move would require legal and accounting firms to police their partners through high-level oversight committees. Mr. Everson said that a breakdown in professional integrity at some firms was a core problem for tax law enforcement.

This strategy is intended to counter the weakening of self-policing resulting from a shift in the legal form of most professional firms - from partnerships to limited liability partnerships - a change that has gone virtually unnoticed by Congress in its inquiries into the spread of tax cheating.

Under the old form, each partner was liable for all acts by all partners, a powerful incentive to enforce compliance with the law. Under the new form, the liability of each partner for misconduct by other partners is limited or even eliminated, provided that the partner remains unaware of the misconduct.

I told you so. (Thanks to Bill Whitford for the pointer.)

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My daughter and I made one of our favorite dinners tonight: Austrian semmelknödel (dumplings) with mushroom cream sauce. Austrians are dumpling pros, and if you have never had the pleasure, it is almost worth the trip just to get the food. Of course, combine the food with the Alps and a trip to Gmundner Keramik, and it is worth the trip.

Anyway, we made more than enough dumplings for my modest family of seven, and I commented half-jokingly to my daughter, "You should sell those extra dumplings on eBay." Next thing I knew, she had set up a display and was taking a digital photo of four dumplings. Only then did it occur to me that someone might actually object to our selling dumplings over the internet, so I did a little digging and found that states do indeed regulate the sale of frozen food. We could start our dumpling business, but it appears that we would need a license in most states, and we would need to sell many dumplings to cover that cost. When my daughter heard all of this, she was very disappointed. Her entrepreneurial dream had been squashed like a bad dumpling. So I am on the lookout for a new entrepreneurial idea for her. How about an Austrian import business? At least with that we could justify regular trips to the Salzkammergut.

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I am back after some much needed R&R, and too much time spent on eBay. As you may know, eBay has been the focus of much scholarly attention (see here and here and here, for recent examples), so what I have to say in this short space and with limited experience may not be generalizable. As a skeptic of fundamental price efficiency in markets, I was intrigued by my recent search for the complete set of DVDs of Monty Python's Flying Circus. My eBay search revealed many options -- several auctions and even more "Buy It Nows" -- but the least expensive option (by at least 5-10 percent, after accounting for shipping and handling costs) was at Overstock.com. This disparity has an efficient markets explanation, however, because Overstock has a reputation for horrible customer service. Nevertheless, my BizRate search reveals prices ranging from Overstock's low ($107.59) to highs in the mid-$190s. With extremely low search costs offered by internet retailing, shouldn't the prices of commodities like this converge?

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This is a bit embarrassing, but I will admit it anyway: I just won my first auction on eBay. I have had an account for over a year, but I rarely visit the site. And I have only bid on one item before today. I lost that auction, but today I prevailed with a bid of $.01 for a mobile phone vehicle power charger (retail $24.99). Not bad, even after adding the shipping costs. (Now I have three other bids pending, so it looks like I'm hooked.)

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I thought I would die laughing when I saw the Gettysburg Address on PowerPoint. Even though I am a PowerPoint afficionado, I enjoy a good satire. But John Naughton, writing in The Guardian, is serious in his disdain for the software: "As an addiction of the white-collar classes, PowerPoint ranks second only in perniciousness to cocaine. Some executives appear to be -- literally -- incapable of public utterance unless they have their bullet-pointed security blanket on a screen behind them." This is, of course, the well-worn complaint that PowerPoint is a "substitute for thought." (Pardon my directness, Mr. Naughton, but your column is a substitute for thought. It contains nothing original on the topic ... besides the link to the Gettysburg Address.) The more that I hear this so-called argument, the more I am inclined to believe that complaints against PowerPoint are a cover for laziness. Most people I have met who grumble about PowerPoint are techo-dinosaurs, and I have the feeling that this is their way of mitigating what otherwise might be a competitive disadvantage. In fairness, I have seen (and made!) many bad PowerPoint presentations, but they are not inherently worse than a "naked" presentation or one that uses the "crutch" of a chalkboard. I am old enough to know that business people did not become bad public speakers because of technology. So enough of the complaints!

(Thanks to Kaimi Wenger for pointing out this story.)

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My friend Larry Ribstein is back to blogging about film. His latest effort is an analysis of a recent Forbes article on the Top 10 business films of all time. As always, Larry has a point of view on this topic:

“Good” businesses are those where the artistic types have the upper hand, and bad businesses are those where the artists have lost. In other words, films see firms from the cramped perspective of the assembly line or the cubicle. From way out in Hollywood, firms often seem like beehives or rabbit warrens, unfit for human habitation. We don’t see what businesses actually do – create social wealth and meaningful jobs, and provide means for all of our ends, from writing articles to. . . making movies. In fact, businesses couldn’t succeed in the long run if they ignored the needs of their workers and customers.

...

Films’ treatment of business has significant social implications. Movies are very influential. They might explain why people are so ready to accept more business regulation whenever anything goes wrong, despite the fact that we know that legislators and regulators are also flawed. After decades of business-unfriendly movies, we assume that business cannot be trusted.

This is good stuff, so keep an eye on BusFilm.

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GM is pulling Saturn into the fold. For those of us who are Saturn owners, this is a sad day. For many reasons, buying a Saturn did not feel the same as buying a GM car. After looking at various comparable models, mostly German and Japanese, we purchased a Saturn L300 because it seemed like a good value. And we have been proven right. We were so excited about our car that we toured the Saturn factory in Spring Green, Tennessee. I remain impressed that GM gave this a chance -- and stuck with it for many years, even though the Saturn division created some rifts in the company. I am sorry to see the experiment fail.

Thanks to Rob at BusinessPundit for the pointer.

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Whenever I find them, I share them with you. This time, deal terms on the East Coast from Fish & Richardson. One item that jumped out: 68% of the deals involved cumulative dividends. Traditionally, cumulative dividends have not been so frequent in venture capital financings. In this instance, 79% of the rounds were down rounds, so it looks like venture capitalists are attempting to magnify their downside protections.

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My work in venture capital has been focused mostly on the United States, but comparative work on venture capital financing is fascinating stuff. Knowledge@Wharton offers the following insights on Asian venture capital from Wharton Professor Raffi Amit:

Consider term sheets, the legal agreements that venture investors use to lay out the conditions for their investments. “Some of the clauses are perceived by Asian entrepreneurs as offensive,” Amit said. They interpret the contracts as a sign that the investor doesn’t trust them rather than as a normal means of doing business.

Similarly, some Asian entrepreneurs don’t understand why venture capitalists want to be heavily involved with their companies, checking in weekly and participating in board deliberations. “The entrepreneurs say, ‘What? You don’t trust me?’” Amit said. “It’s not a matter of trust. It’s a matter of creating a whole that’s greater than the sum of the parts. The VC has been in this movie many, many times before. He can help open doors to potential customers and recruit professionals. He can do all sorts of value-added activities.”

The thing to notice here is that the structure of venture capital relationships is influenced significantly by local culture. This (perhaps obvious) insight ties into some comparative work that I am still doing between U.S. and Finnish venture capital relationships. When I began that project, many years ago, differences between the countries called out for an explanation. In the interceding years, Finnish relationships have changed dramatically, and today venture capital contracts in Finland look very similar to U.S. contracts.

How does one explain the change? Is this global cross-reference? (The Finns looked at our contracts and liked what they saw.) Or perhaps powerful forces of globalization? (This explanation would seem more appealing if the market for venture capital were truly global.) I am still working that out, but I suspect that we might see similar movement in Asian venture capital relationships in the near future.

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Still find blogs that I like to read. Futurepundit.com first caught my eye with a post entitled, "Earthlike Planets May Be Common In The Universe, but the most recent post on "Cell Phone Cameras And Personal Privacy" got me hooked:

In a way what is happening is that the invasion of celebrity privacy by paparazzi photographers and video camera operators is being extended to include the invasion of privacy of non-celebrities as well. People who used to expect that their relative anonymity would allow them to conduct their daily activities free from surveillance and recording by others are at greater risk of being photographed. But there is a big rate-limiting factor in all this: there are not enough people to view all the pictures. Besides, most of the pictures are pretty boring anyhow.

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What happened to the debate about convergence in corporate governance? You remember: these are the arguments about whether Germany and Japan and the rest of the developed world would converge on the U.S. model of corporate governance. The debate is still around, of course, but many of the biggest names in corporate law scholarship have already had their say on this topic. William Bratton, John Coffee, Ronald Gilson, Jeffrey Gordon, Henry Hansmann, Reinier Kraakman, and Mark Roe all have written about convergence. In addition, a vigorous debate among economists, led by Rafael La Porta, Florencio Lopez-de-Silanes, Andrei Schleifer, and Robert W. Vishny (LLSV) has generated a substantial amount of empirical evidence, though almost all of it is inconclusive.

Despite all of the attention lavished on convergence in corporate governance, it is not clear that anything has been resolved. As Brett McDonnell argued convincingly last year in Convergence in Corporate Governance – Possible, But Not Desirable, 47 Villanova Law Review 341 (2002), much of the early legal scholarship on this topic has been “faddish,” embracing whichever system produced the best results at the moment. The later scholarship has been more nuanced, but as McDonnell states: “there are more possibilities on this question than most commentators have tended to acknowledge, and we do not have much to go on in choosing among these possibilities.” Seems like a recipe for a dead end.

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Damjan Lampret is the founder of OpenCores.org, which is a consortium of developers who are trying to apply the open source concept to hardware. Hmm. Nothing inherently wrong with the concept, but this Wired article suggests that hardware innovations are more likely than software innovations to be subject to existing patents. Still, I like the argument raised by Bruce Perens of Open Source Definition, who contends that the process of working around a patent sometimes leads to new technologies.

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The fall colors are long gone in Wisconsin, but another new favorite blog (The Loom) is paying tribute to William Hamilton's attempt to explain fall colors as an evolutionary adaptation.

He and Brown proposed that a brilliant leaf was, like a peacock's tail, a signal. A peacock's tail takes a huge investment of energy, energy that could otherwise be diverted to fighting off parasites or surviving other stresses. A strong male can afford to use up this energy, which makes the tail an honest ad for its parasite-fighting genes. In the case of leaves, trees are not sending signals to other trees--they are sending signals to tree-eating insects.

Trees, after all, are as besieged by insects as birds or other animals are by internal parasites. They fight their enemies a sophisticated arsenal of chemical agents, sticky traps, and other weapons of mass arthropod destruction. Hamilton and Brown proposed that trees that have a strong constitution warn off insects by changing colors in the fall. In a sense, they say, "I can shut down my photosynthesis early in the fall, pump a lot of red or yellow pigments into my leaves, and still have enough energy left to annihilate your babies when they hatch in the spring. So just move along."

Now, I am not a biologist (though I did read parts of The Structure of Evolutionary Theory!), but this strikes me as at least a little far-fetched. It reminds me of the old expression, "when you have a hammer, every problem looks like a nail." I have another explanation for fall colors: they just happen as the leaves die. It's going to take more than 100 birch trees in Norway to convince me otherwise.

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