This Week’s Links

Comcast puts broadband usage limits on its oversold network.

This study shows that increasing tax rates makes people report more taxable income.

Dean Baker notes that the rise in durable goods orders–one of the economy’s only current strong points–has to do with machinery.

The Daily Green has a list of the ten greenest presidents in US history. You’d never guess that Tricky Dick is one of them.

The WSJ has yet another take on the China vs. India superpower debate. Somebody should build a market around all this speculation.

[Business Pundit]

Building Indian Mobile Banking: mChek CEO Sanjay Swamy (Part 7)

SM: How do you view the competitive landscape both internationally and in India?

SS: Quite honestly, I have not worried about the competitive landscape. Our opportunity is so large that I have to focus on the massive growth we have. The Indian market is so big that we have not looked at expanding beyond India.

[Sramana Mitra on Strategy]

Deal Radar 2008: Jive Software

A leader in web collaboration, Jive Software makes business social software that connects employees to each other and to their clients and partners. Their main focus is to improve teamwork and increase productivity through the use of their primary products, Clearspace and Clearspace Community. Other products include Jive Forums, a forum software, and Openfire, an open source server.

[Sramana Mitra on Strategy]

Dell Targets India

Dell and rival HP continue to jockey over market share. As per market intelligence firm IDC, Dell increased its market share from 15.5% last quarter to 16.4% versus HP’s 18.9%. It has grown 21.4% y-o-y compared with the industry growth rate of 15.3%. But this growth has apparently come at the cost of profit: yesterday Dell reported a 17% drop in Q2 profit to 6 million or {content}.31 per share. It also missed earnings estimates.

[Sramana Mitra on Strategy]

Forbes Column: Weapon Of Mass Reconstruction

My new Forbes column, Weapon Of Mass Reconstruction, is one that Barack Obama and John McCain should read for a much-needed education on entrepreneurship and economic policy.

[Sramana Mitra on Strategy]

In a Revolutionary Guesture of Cost Savings, Starbucks Refuses to Increase CEO’s Salary

From the Wall Street Journal:

Starbucks Corp. Chairman and Chief Executive Howard Schultz and other top managers will not get salary increases next fiscal year, according to an internal Starbucks memo sent this week.

The move reflects the Seattle-based coffee chain’s continuing effort to rein in spending as it tries to revive its profit growth and stock price.

Finally! A big corporation realized that tempering CEO pay is indeed a way to save money.

[Business Pundit]

Adjustable Rate Mortgages Are Housing Crisis’ Next Wave

NPR’s Morning Edition today commented on the fact that the mortgage crisis may just be warming up:

There is growing concern that the home foreclosure crisis may worsen next year as lenders are hit by a new category of loans that haven’t caused much trouble. Bank analysts say they expect delinquency rates on so-called “option ARMs” to continue rising, and those loans could cause as much trouble as subprime loans did.

The radio show said that option ARMs, otherwise known as adjustable-rate mortgages, allowed homebuyers to avoid paying down their mortgages, either paying down only the interest or some other specified minimum payment, for five years.

Many people who took out these kinds of loans had good credit. They expected to flip their homes before the five-year margin was up, making a profit while avoiding standard mortgage payments.

Unfortunately, that only works in a market where homes appreciate in value. Now that the real estate bubble has burst, homeowners are faced with a nasty 5-year mortgage reset. Because they haven’t been paying down the mortgage every month, the payment amounts will actually be higher than when they bought the house.

One expert noted that option ARMS were first created during the Emergency Home Finance Act in 1970. This act was in part drafted as a response to racial and social unrest in cities. Homes provided edgy people an incentive to mellow out their classist anger. The show states that after widespread defaults and losses, banks gave up on this type of loan.

More recently, they tried again. Unfortunately, it looks like forthcoming results won’t be any different from the first attempt.

[Business Pundit]

Tensegrity’s Jerome Rifkin Breaks Bones, Builds Business

Some entrepreneurs embody classic rags-to-riches tales. Medical device entrepreneur Jerome Rifkin offers that story a new twist: Injuries to innovation.

His first injury occurred while he was cycling home from a University of Florida research lab. A personal injury attorney hit Rifkin in the chest with his Jeep, knocking him over and parking on his hand.

While Rifkin was still recovering from that injury, he fell off his mountain bike while pedaling rapidly through a flat greenway. His clipless pedals refused to let go of one of his feet, resulting in a sheared femur that left him bedridden for three months.

In terms of mobility, Rifkin was back at square one. He progressed from being bedridden to using a wheelchair, then a cane. After years of physical therapy, he finally graduated to unassisted walking.

The implications of re-learning to walk weren’t lost on Rifkin. “From an engineering viewpoint, I was kind of appalled at the stark comparison between what my feet were doing when they operated properly and how prosthetics operated with current market technology,” he says.

“When you’re walking, things operate on a really passive basis. As long as your foot and center of gravity are in the right place, and the joints beneath your knee have the proper range of motion, you’re going to take a proper step.”

“On the other hand, a carbon fiber leaf spring is very stiff. You have to load it up significantly before it starts to move. That’s completely different from a natural movement.”

“I thought about it cumulatively for months, and I realized…this is real. There’s got to be a better mechanical way to make this happen.”

In late 1999, Rifkin began designing a prosthetic foot in his home workshop. Eight years later, the K2 Promoter, a new kind of device that uses tensegrity (tensile integrity) design to provide a compliant, strong, stable walking experience, is striding towards market release. The prosthetic was recently featured in Popular Science magazine.

Rifkin’s copious amounts of patience and endurance have kept him in the entrepreneurial game for nearly a decade, a time span in which 71% of startups flounder.

Business Pundit interviewed Rifkin to learn the secrets behind his motivation and tenacity in the face of sizable roadblocks.

BP: What inspired you to start Tensegrity?

A lot of it was having a poorly chosen degree, honestly. My degree is in biomedical engineering. I thought that since the degree was really hard to get, few people would have it, and it would be worth a fair amount of money.

That only works if there’s an industry to hire you. In 1996, when I graduated university in Florida, there just wasn’t a medical device industry. In California, there was, but I wasn’t interested in moving there.

I rattled around research jobs for a while and made really lousy money. I kept my night job as a line cook at a restaurant and bar to try to pay rent, and was generally dissatisfied with how I’d spent my college career.

I eventually moved and got a job at a mountain bike shop for a while. That’s where I bought the bike–on employee discount–that I broke my femur with. Of course that’s what got me thinking about feet, what they’re good for and what they do.

I later worked for a series of insurance companies, where I gained a solid understanding of business politics and acumen. One insurance company had an illegally high pending claims rate. They had sold so many policies—they had really aggressive salespeople—that they couldn’t administer their own business.

Pended claims are a potential liability, and they were a publicly-held company. Every quarter, they would routinely deny millions of dollars of pended claims, with the assumption that if people were serious they would resubmit. But there was no check to see if the claim was a resubmission or not.

This was an illegal business practice, and the way they got around the potential prosecution was that they had the governor of the state, Jeb Bush, on their board of directors. They were above the law because he would not be implicated.

I thought…I can do better than that. I mean, that was a publicly held company, and it was run like that. That was an interesting formative experience in my business psychology.

And then I moved out West. I had a day job for 5 years, 4 years longer than I thought I’d have it, while I tried to get my foot design stabilized and funded. Eventually, in 2005, a grant came through. I negotiated the company down to 3/4 time, so that I had more time to work on my product.

BP: If you have a hard day or week ahead, how do you deal with it?

There are some hard aspects of the job. I’m not a big fan of patent writing, grantwriting, or payroll taxes. But there are parts of my job that I love. I love the design work and I love the helping people, so I guess my work-life balance is job-job balance.

I treat myself by doing the parts of my job that I love as often as possible. I also tie my work together into a big picture, that I’m writing this grant so that it can be funded and I can do the work that’s outlined there. The work is fun. The planning of the work and the explaining of the planning of the work to other people in grant format may not be fun, but stepping back and seeing the big picture and seeing why it’s important that I do the nasty parts on time and with good quality helps a lot.

My initial schedule when I was working full time was this: I’d come home from my day job at 5pm, go straight to sleep, wake up hungry, eat something really quickly, work in my shop until 4am, clean up and shut it all down, go back to sleep, wake up at 8am, go back to my corporate job and keep it all running. I had two four-hour naps between work to sustain me.

I’d get overwhelmed, but then I’d get back to the task on hand, use focus and concentration to make the precise metal cut, write this sentence precisely, write that email. After you tie it all together with the big picture, it’s easier to stay motivated about why a particular task leads to the bigger picture of success. Without that understanding, I don’t think I could do it.

BP: How did you find a mentor?

Mentors were hard to find because I had a day job. I’d go to the DaVinci Institute (a futurist think tank/entrepreneur center) and those sorts of places. As soon as I mentioned having a day job, I’d be taken less seriously. I felt like people were perceiving me as inadequate, like “Why don’t you have belief in yourself? When you going to do this for real? If you really believe you’ve got something, why don’t you commit to it?” Nobody said that out loud, but that’s what I felt was going on.

It’s easy to speak in generalizations and platitudes about entrepreneurial ventures. Like if you’re in, you’re in, and things will financially work out from there. Well, real life’s not that cut and dry. You still need to eat.

I ended up actually finding mentors in unexpected places, especially when I started grad school. I decided to attend grad school to gain access to equipment more than anything else. I ended up finding two mentors there, one in a different department, and one who ran the engineering tool crib. He was the retired COO of a cardiovascular medical device startup, meaning he was repeatedly tasked with taking product ideas from idea to startup. He was an invaluable mentor.

You always have to keep your eyes out–between my two main mentors, I’ve got a wealth of experience and perspectives, and I didn’t find either of them where you’d really expect.

BP: What stops you from giving up?

I used to joke that I’m not smart enough to give up. I don’t know, really. It feels like the right thing to do, to pursue it. Even now, with angel rounds coming in and venture capitalist interest, I still wonder, before the grant comes in, how I’ll make my mortgage payments. It’s a real challenge sometimes, but oddly enough, I never consider giving up.

I think part of it is that I’ve been doing it so long that it becomes part of my self-definition, so I can’t give it up psychologically. Another part is that I’ve seen enough preliminary success that I have a lot of hope for the future. Giving up now would be abandoning everything I’ve done. You know how like the airline industries can’t fail because they’re big enough in the American economy? I’ve got enough riding on this one that if it fails, I will be a long time recovering.

That’s the difference between involved and committed. It’s like the old ham and eggs breakfast joke: The chicken was involved, the pig was committed. I’m not a big fan of that one, but it’s true. My ass is on that plate.

BP: What do you use for inspiration?

I use those inspiring quote refrigerator magnets and the occasional fortune cookie. My favorite fortune cookie says “You will make thousands of dollars daily by doing nothing.” I like that one, the product could well make me thousands daily while I do nothing.

BP: Where do you envision Tensegrity in its most successful form?

It would be a lot of fun to make vehicle-type devices that could align you so that you could run in a powered orthosis–say, a vehicle a shape of a metal animal, you could run along trails, potentially, I think that would be a lot of fun.

I was so naive, I thought I’d have the foot done within two years. Here I am, 8 years later. That is one of my inspiring visions for how to enjoy my creations.

Jerome Rifkin is the founder of Tensegrity Prosthetics. To find out more about the company, please visit their website.

[Business Pundit]

Building Indian Mobile Banking: mChek CEO Sanjay Swamy (Part 6)

SM: Where are you seeing traction in terms of income level?

SS: It is unbelievable how wide our customer base is. We were sitting in a meeting with one customer who said it was a high-end niche product, and that they would be happy to roll it out but expected it would remain a niche offering.

[Sramana Mitra on Strategy]

Intuit Poised

On August 21, Intuit (Nasdaq: INTU) reported fiscal year 2008 and fourth quarter earnings that beat Street estimates. Q4 revenue grew 11% to 8 million, beating the Street estimate of 0 million.

[Sramana Mitra on Strategy]

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