Government money, accept or deny?

I attended an interesting forum in Beijing on Thursday. There are three famous VC sitting in the panel, Hugo Shong, Partner of IDG AP, Yan Yan, Partner of Softbank SAIF, and Nanpeng Li, Partner of Sequotia China. They were debating with government officials on whether a start-up in the creative industry should accept government investment. Someone did a survey among the audience. Turned out that only one tenth raised up their hand to accept the money, while another one tenth raised hands to deny the money. The argument from venture capitalist is that accepting government money means a lot of time cost,so better not.

I totally agree. I was in the same situation these days after coming back to Beijing to work on a start-up. Government said they will subsidize the overseas graduates for being an entrepreneur, but the process is very long, and there are lot of forms to be filled. I have to spend half of time dealing with those processes, instead of focusing on the main business. I would rather have the government help with reducing the bureaucracy of starting a company. Looking back, Silicon Valley is really a nice place to start a company. Hopefully government offcials can learn to be more friendly to entrepreneur and understand their concern from deep heart.

electronic commerce in China

I was going to buy a new PC. After asking around, friends suggested me going to 360buy.com(or Jingdong mall in Chinese name). The first time I heard about it is its financing story. It raised tens of millions of dollars in the last round of financing, which hits the headline of every business newspaper.

I went to the site, and selected a type branded by Acer as cheap as below 2500 RMB. Then I order a plug base, and chose to pay both after delivery. In five minutes after I clicked the "submit" button, a sales representative from 360buy called me and said he will take care of my order. wow, that's very fast service, I was thinking.

However, the next day, he called again saying the PC is not available. It may take longer than the schedule one or two days to arrive. I was pretty upset since no one told me so before I submit the order. Then I waited for a few more days before I found out that my order was blocked. I called the sales guy again, and he said there is something wrong happening on my order, and he will call to confirm with the logistic dept.

A few days later, I called again, and they said it already arrived and will be delivered in two days. However, the plug base I ordered is not available(though it is said to be available when I ordered it). How can I use the PC without those plug base? The salesman asked me to buy it in a store if I want it urgently. I argued that they should deliver a plug base to be for free. But he said he can't make that decision, and if I want to buy another type in a different order, I have to pay for the delivery fee.

It's not a pleasant experience for me. All in all, I made ten calls totally and haven't received all they need. They learned the hardware from Amazon.com, but they didn't get the software inside, which is how to make the customer satisfied. Customers should be updated frequently on how the order proceeds, which 360buy doesn't do; They also let customers pay for the mistake they made, such as a out-of-date status update. I would rather have a smooth online order experience, instead of dealing with a nice sales representative. I wasted more time in talking to them online. Customers will pay for convenience; if they find out that online experience is not pleasant enough, they will go to offline. No matter how much money you have, 360 buy, you should pay attention to it.

China Internet Conference 2009

It's probably the biggest conference in China's IT industry. That's for sure, since this is a conference serving over 360 million web users and 192 million mobile internet users. I estimate there are over 5000 people attending the conference held in Beijing's International Conventional Center, most of them are young people under the age of 30.

Speakers are trying hard to promote their companies. Big posters such as Google or Sina can be seen anywhere. Internet guys are talking about the big monopoly such as Baidu, Sina, Netease and Tencent, while mobile guys are complaining about mobile operators. The keyword is the market, instead of technology, which for me, is a pity for a lot of technical talents.

Can China have a big Internet company as innovative as Google? I have no answer. Since I arrive here for only two months, I definitely see the struggling start-ups who are trying to survive first. The first question on a start-up is business model, though most of the investors know Google never make money when they get funded, or Craigslist just don't want to make a lot of money. For a lot of Internet companies, making money is always the first priority, which make them start charging users soon, instead of focusing on improving user experience. Kaixin001.com may be one of the few who has done well without thinking too much about the revenue. But beyond that, I see CEOs are busy thinking about how to charge users, instead of delivering a better service.

I hope the conference will have more innovative speakers and topics next year, at least something exciting, something that can give people a good dream.

It's been a long journey

It's been a long journey from California to Beijing. But here I am. There are so many opportunities and so many obstacles. I keep wondering how some of the overseas company can succeed in this market since the rules are quite difficult, even for a local business person like me. However, I am learning fast on lots of relationships and the difference in China's IT market. I am glad I came back immediately after graduation since I can learn quickly because of my young age. One day when I look back, I would be proud of my decision.

Some of the lessons I have learned and will keep sharing:

(1) The market is huge but out of order. you have to be quick enough, you have to have street smart. Especially for Internet, people learn quickly, and they are all smart people.

(2) Have a local partner or adviser. I have a lot of local friends who helped me going through the burcraticracy of the government, the toughness of local businessmen. etc. Without them, I can't imagine my business will go on smoothly.

(3) Everyone can help you. It's amazing that even a random introduction can help with a million-dollar business, which I've never experienced in U.S. A big network of contacts is essential for a businessman. You know who you can call when you are in trouble, or eager to expand your business.

Those are not typical lessons in a business school. Have to be in real practice to know this. You lucky readers:)

Being in China

It is a right decision to come back to China. Beijing almost become a strange city to me even in less than a year. People work hard, and it's never difficult to get banker working on Sunday, and to order food in the night. I even ordered water online, and got a phone call in one minute.

A lot of people are starting companies, especially Stanford Alumni. I already met a few who are doing well, and a few who are still working hard. They are impressive people. The Chinese government also tried to support people who studied overseas to come back to start company. I went to a few government-sponsored zone to visit companies and government officials. However, it's sad to see no one is really into helping build start-up. Some of them only care about charging start-up rental, and some of them only care about the number of start-up they attract.

So I totally understand why Kai-fu Lee, the former CEO of Google China, now left to start an incubator. China needs an incubator more than just an office for start-up. It's good that he realize that young entrepreneurs need more support in human resources, strategy, technology.etc. I am sure there will be more and more people doing the same thing.

Walking on the street, I feel overwhelmed by the crowds, but I sense their eager to succeed. The country is on the way to grow quickly.

P.S. if anyone can tell me how I can access blogger efficiently, that will be appreciated.

Back to work on thumb and dinner

Back to China, two things I have started to do most, first working on my thumb, I started to sms a lot. It is like a replacement for my blackberry email, and now I type sms crazily. The second thing is dinner. Talking business has to happen during dinner, and even not a big dinner person like me has to adapt to it.

Good thing is I feel achievement every day. There are new opportunity and partners coming up every day, and I feel refreshed. Beijing is packed with people and opportunity. It's a trade off, but more like a trigger of a powerful bullet. Way to go!

My privacy concern with facebook mobile

I just found out that Facebook Mobile occupied the address book on my blackberry. It automatically matched the name of my Facebook friends with the name in my address book, and then insert the facebook info of those matches to the address book. I never agreed to let this happen, at least no one asked me to agree with this option. Further, I don't know whether this info exchange is just one-way or two-way. If it is two-way, then it means facebook knows all the information on my address book, including my friends' phone number. I feel my privacy protection is violated by facebook.


Be careful when you download the facebook mobile.

I just can't stop laughing at this.....

when you have to click the UI designer to close the Chrome window. ha.

Real-time search, is this the future?

One thing I like about Twitter is you get real-time news from real-time people. Google news can't do this since it depends so much on newspaper. For me, twitter is more like what is happening to the world now, while Google news is what happened yesterday. A question I've always been thinking is if twitter can replace Google since a lot of people definitely stopped blogging and started twittering.

Today I ran into this website http://www.collecta.com/, which is a real-time search engine. It is still in early stage, but it is interesting that it searches comments across the web and tweets too. I can see this is a very good news tool for me to get updated information(though have to be specific, all you will get random comments all over). Newspapers is running out of fashion, and the next one is news wires.

A break from Google for one second. Just for some fresh news.

Paypal opened its platform

This is the thing I loved about Internet. Open, open, open, even for payment. Seems a lot of opportunities.

http://finance.bnet.com/bnet/?GUID=9518883&Page=MediaViewer&Ticker=%24CNET

oday PayPal announced plans to open its payment platform to third-party developers with the release of new APIs (Application Programming Interfaces) that allow developers to embed PayPal’s secure global payment system into their applications and platforms.

In opening up the PayPal platform, developers can now create new ways to send and receive payments for services beyond traditional e-commerce. According to a recent McKinsey report, the global payments market represents a $30 trillion opportunity.

PayPal has spent over a decade creating a secure, global payments network for e–commerce and person-to-person transactions, which seamlessly integrates 27 financial networks, 15,000 local banks, 190 global markets and supports 19 currencies.

What Facebook should learn from Twitter, and in reverse?

I have been using the app from twitter and facebook on my blackberry for a while. It's very interesting to see their difference, and in fact, they can learn from each other to improve the service.

What Facebook Can Learn from Twitter:

(1) shorter summary on the highlights of friends status, so that users can see more updates from friends just by scanning
(2) Remove the add friends button since people will rarely use phone to add friends.
(3) Also reduce the refreshing time. Twitter is much better on this.

What Twitter can learn from Facebook:
Facebook Mobile integrates into blackberry much better by having "facebook" on the navigation panel, and then it stopped sending me msg via email. While for twitter, it still sends me msg via email though I can get it from the twitter app.

GSB former dean to join Citi's board

Finally, this gave me some confidence on Citi as an investor.

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20090724005298

Citigroup Board Names Three New Outside Directors and Announces Other Governance Actions

NEW YORK--(BUSINESS WIRE)--Citi's Board of Directors today announced three new outside directors. In addition, the Board announced a new, non-executive Chair for Citibank, N.A., a new oversight committee for Citi Holdings and a new Chair of its Audit and Risk Management Committee.

The three new outside directors are:

• Diana L. Taylor, the former Superintendent of Banks for the New York State Banking Department, and current Managing Director of Wolfensohn Capital Partners, a fund manager.
• Timothy C. Collins, Chief Executive Officer of Ripplewood Holdings L.L.C., an investment firm that invests in financial services and other sectors.
• Robert L. Joss, Ph.D., Dean and Philip H. Knight Professor of the Graduate School of Business at Stanford University, and former Chief Executive Officer and Managing Director of Westpac Banking Corporation Ltd.

The new directors, who will stand for election at Citi’s next Annual Meeting, bring the total on the Board to 17 members – only one of whom (Citigroup Chief Executive Officer Vikram S. Pandit) is a member of Citi management.

China's shares to exceed U.S. in three years

Bloomberg has an interesting article citing a fund manager with Templeton on China's stock market will exceed U.S. in three years. Beyond the size, I am more interested on opening access for global investors as well as foreign companies who want to list in China. Size is important, as well as globalization.

July 17 (Bloomberg) -- China’s stock market may surpass the U.S. as the world’s largest by value in three years as state- owned companies sell new shares and the nation’s 1.4 billion people put more of their money into equities, Mark Mobius said.

“The Chinese population is just dipping its toe into equities and they’ve got a long way to go,” Mobius, who oversees about $25 billion of emerging-market assets as executive chairman of Templeton Asset Management Ltd., said in an interview with Bloomberg Television in London. State-owned companies are “coming up with more huge” initial public offerings, he said.

I wish Baidu would be more like Google

I read a very good article from Keso, a famous Chinese blogger, on the questions that if Baidu only exists for the purpose of marketing. It was deleted later, and I guess, because of the pressure from Baidu. But i still want to share it because it is the weakest part in China's Internet world now, and people have to face the problem.

Keso said the innovation will not naturally grow because of the increasing number of Internet users in China. Unfortunately, Baidu believed the other way, he said. "That's why Google is almost like half of the Internet, and changed the way people and enterprise work, while Baidu still positions itself as a marketing tool. It worked well in the past eight years, but Baidu is losing its edge in the impact on China's Internet. It's more about population business, and it's risky. He said Alibaba, instead, is doing something interesting to have enterprise more efficient.

Having been in silicon valley, it's amazing to see how a few big companies such as Google and Cisco pushed the whole industry. A lot of start-ups already planned to be bought by them in the future, while in my opinion, is a good thing. Big companies are not good at innovation, and buying small companies is an efficient way to go. Looking at Baidua and a few other big Internet companies in China, not a lot of them actually did merger and acquisition. They all believe they can do it themselves, while losing touch with the industry trend.

Baidu is safe for now, with the good financial numbers; but safe shouldn't be enough for this no.1 internet company in China. They should go further and set up a vision for China's Internet. Only until then they can be called a great company.

The Michael

He is still a super star on the stage




He loves climbing trees(while that stupid journalist wasn't dare to), and he adores kids(while that stupid journalists kept asking stupid questions). He was hurt after opening himself so much. Sigh！！！

Are you kidding me? Citi raisedemployee salary by 50%

Even i have a lot of friends working in investment banking, I still can't believe it. Citi just got bailout money, and it is just using this to compensate its employees. Come on, the excuse of losing employees doesn't make sense, since right now there are so many bankers on the street begging for a job. oh, poor US taxpayer.

How different between Facebook and Kaixin

I am a daily user of two social networking websites: Facebook and Kaixin(kaixin001.com). Facebook is for networking with my Stanford friends, while Kaixin is for networking with my friends in China. Kaixin is said to be the copycat of facebook of China; however, it is not true just in terms of my behavior.

Difference 1: name.

I use real name on facebook, and all my friends use real name. However, I use fake name on Kaixin, while I know there are plenty of friends using fake name too(amazing we can still find each other)

Difference 2: activities
I usually look at the news feed on facebook to learn what my friends are doing: I leave msg to them, comment on the pictures, as well as upload photos; However, I don't often change my status on Kaixin, neither do my friends. I never have a profile photo there, and don't upload my vacation photos. I spend 90 % of the time on playing games with friends. We buy and sell each other, plant garden, and raise a lot of pigs, rabbits and cows as pets.

Difference 3: interactions with the site
I get plenty of msgs in my facebook account; I never communicate with facebook system. On kaixin, most of the message I get are from the systems, such as "your friend just bought you in 60000 dollars", or "you was just award 1000 dollars".

It will be some interesting research topic for academia on why such difference is generated. I am sure there is something related with different culture, or different user behavior. This may suggest that social networking website may have a hard time to expand globally. And there is always some opportunities for companies who work hard on learning local behavior.

How to create and implement a policy?

China issued a new rule on requiring PC makers to include filtering software in new PCs recently, quoted to filter the harmful pornography content from the youths . I am confused by where it came from and the way it implemented the policy.

Three questions:
(1) If this policy only targets at youths, why every PC needs to include this computer? not every household has a young kid.

(2) If parents are worried about this, then why don't give them the option, say put a CD in the PC pack, to let them set up themselves?

(3) Curing a disease has to cure from the fundamental. Why don't spend more money on regulating those pornography website, instead of making a national-wide expensive policy like this? I would be curious to know how much taxpayers' money is spent on this? and is there any open/transparent bid on who is going to be the software provider?


If those questions can't be answered, then this policy is destined to be a bizarre.

M&A still going on in Silicon Valley

When things are cheap, everyone is moving, especially big guys, Oracle, Microsoft, Cisco, Intel....

SANTA CLARA, Calif., June 4, 2009 – Intel Corporation has entered into a definitive agreement to acquire Wind River Systems Inc, under which Intel will acquire all outstanding Wind River common stock for $11.50 per share in cash, or approximately $884 million in the aggregate. Wind River is a leading software vendor in embedded devices, and will become part of Intel’s strategy to grow its processor and software presence outside the traditional PC and server market segments into embedded systems and mobile handheld devices. Wind River will become a wholly owned subsidiary of Intel and continue with its current business model of supplying leading-edge products and services to its customers worldwide.

Transforming Journalism

Today I went to a conference organized by MIT/Stanford Venture Lab held in GSB. It is called News in the 21st centure: who will read print anymore? As a former news person, I definitely sense a lot of enthusiasm in the conference, and different touches on the future of the print industry. There's a guy named Rob Curley from Las Vegas Sun showing a bunch of projects they are doing on interactive media including a relationship of mafia and a map of history of different building in Vegas.

A few interesting topics include if Twitter is a type of journalism. Over half of the people in the room raised hands when asked if they use twitter. However, some people argue it is not journalism because no one is double checking sources.

Another thing is the comparation of usage of Kindle and iPhone. only three of four in the room have Kindle, compared with over half owning iPhone. This is interesting to see because Kindle is planning to change the whole newspaper industry(while only a few news person use it right now). If there's a book reading function on iPhone, I am sure it will be much popular than Kindle. another start-up idea?!!!

One thing I remember clearly is someone said: the question is not if newspaper will survive, but will journalism survive? Trained in journalism, I know how important the double-check sources and don't take annoymous quote are. However, do we still need those in an era with abudant information? I am seeking an answer.

my take-away from Berkshire meeting

have been busy with class work for a week and finally came back to talk more on the Berkshire meeting. A few take aways I would like to share:

(1) A song named "my favorite managers". Berkshire made a music video rewriting the song of "my favorite things" in the Sound of Music. It exhibits the pictures of all the Berkshire managers in the video. A lot of times we see investors invest in a company without even knowing the management. here I can sense that Berkshire is really proud of its managers, and help promote them any time. I love the video.

(2) Both Charlie and Munger said good words on the government, which has surprised a few of my classmates.

(3)Munger, which is always cool, suggested people not to pay much attention the ratings.

(4)Who can succeed Buffett? I guess there will be no one. He is not only smart, but also good at building relationships. I think he will be a very good politician before learning that he actually came from a politician family. He said his successors have to learn how to build relationship with business managers, sellers, other investors and shareholders. and I think he achieved those in an excellent way."They have to understand different needs of those managers, and knowledge of individual personalities and meet different demands"-WB

(5)Both of them said investment is more about emotional peace, instead of high IQ. and I totally agree.

(6) "authority does not go to the position -- it goes to the person", this makes me think a lot.

(7) What's Berkshire's competitive advantage? the answer is surprisingly "little turnover". people buy and hold it for a long time, which no other companies can catch up. An interesting quote from Munger is "a lot of the corporate America are running from headquarter, with profit forecast in different branches. The stupidity of managing practice will give BH comparative advantage."

There are more transcript here, though it is not accurate. One of the best things is just go to the shareholder meeting yourself, since people hear different things from the same conversation.

The wisdom of two men

here is my notes from the Berkshire Hathaway meeting. kind of in a rush, but still a lot of interest things. I read the news on WSJ and FT today, and they definitely missed a lot of information(I know editors are tough and spaces are limited). So I hope you can find more things you are personally interested from my personal notes. The numbers are based on the order of questions.

Warren and Charlie are definitely two of the smartest people i've ever seen, and the most modest.

1. Bought two equity options, from 15.14 to 9.94. 4.9 put options, have 15 to 21 years to run. Has to be lowered at that time. Will make time.

2. Financial literacy

3. Wells fargo: doing the best they can (munger: insane accounting)

4. Discount rate. (they got to do sth in b-school_

High IQ tends to fail, should give some points to others

5. Moody’s rating. It is all anticipation on housing price, not primarily payment system. Don’t pay attention to rating.

6. There’s real activities pick up in lower to middle end housing under 750K; right now it is eating up all the inventories(this is the second way, and the first way is to create demand)

7. Four managers 39% plus dividend. Better than average. “they are ready for the job, but should still learn how to build relationships with potential seller, shareholders, and other managers. They have to understand different needs of those managers, and knowledge of individual personalities and meet different demands

8. Teach value investing. 1-how to value a business 2- how to think about market

Invest in things you understand. Try to get rid of beta in the first 10 mins.

Investing is more about stability and inter peace of the decision.

“it’s simple but not easy”

9. Munger-just reduce nonsense. Your emotion is more important than your IQ. There is resistance to a new human kind to new ideas.

10. Authority goes with the individual, not with the position.

11. People’s behavior changed after the crisis. More people came to our website to save money. In the first 4 months, there are 600,000 policy holders.

12. It should be again S&P 500. The intrinsic value of Berkshire should be going up.

13． Wells fargo good business model. Leverage causes me trouble in the world

Control emotion. Don’t let u sell it because of the emotion

If they own a farm, they can’t get a quote everyday. You have to look at the asset itself to see if it is intelligent investment.

14. the government bailout should be used on infrastructure. Intent is the right thing. It will have consequences on its scale. We don’t think it should be a free ride.

M: hugely electricity improvement

15. borrowing cost higher compared with companies with high guarantee. Real problem for us now. We use borrowed money for utilities. 58 billion

16. They cause leverage to run wide. They cause counter partners to sign sth difficult. Move market in different way. Pop up in unpredictable way. After 1920, congress said people can’t borrow a lot of money to go again the securities. Federal reserve introduced swap. Still 50%, but can do 100% now.

Settlement date got pushed down. Hard to find another person on the other side. More dates, more and more default.

“Great crash”

Ben graham would not like this idea. He would be willing to buy and sell mipriced.

M: derivative dealers take two advantages: 1.??? 2. Being in the same line of clients and have better advantages. “it’s a dirty business”. “ we need less in America”

17. Freddie and fannie, preferred stock was gone. No reason to go up equity. There are lots of earning power there.would buy those wealth there. Chrylser: not a sustaible business model. When common equity is wiped out, the business doesn’t worth a lot of money.

18. competitive advantage: unique shareholders, low turnover rate of 20%, deeply embedded culture. You can’t do this elsewhere. Need to add the right ones.

M: a lot of the corporate America are running from headquarter, with profit forecast in different branches. The stupidity of managing practice will give BH comparative advantage.

“what would they do differently if they own the whole place”? usually asking the CEO. That’s the difference with other companies. They know we are not going to leverage it up.

19. When we buy companies, we buy tips. We want our partners to understand. We are reluctant to sell them. We own some stocks for some decades. If we were wrong, we sell. 6.6 billion; sold a couple of million in J&J just because of its cash flow level.

20. I like the personal contact. Different attitude. Webcast will turn into a TV show.

21. Inflation: we are following policies,

2.3 trillion

It’s not the taxpayer who are paying. It is the people who have a lot of purchasing power. Shrinkage of real-value dollar. It may be the Chinese who are paying for it.

(1) Earning power. You will have your share of national economic pie if you are best in your practice.

(2) Best products and wonderful business. Coca-cola. People will pay to buy the products they favorite.

M: invest in coca coal instead of government bonds

Declare ( I got paid)

22. Washington post

We would not buy one third of the newspaper no matter what price is. 1700 newspaper. They don’t have the price power, losing the customer and advertisers. They are not essential for them anymore. Changing everyday.

As long as we don’t think it will not make up a loss, we will stick to it.

Keep looking for a good model.

M: national tragedy They kept government honest. They will not be disireable. This is life.

23. south florida will be a problem for a long long time considering many units there

24. importance of opportunity cost – face problems in Sep and Oct. we love to have money around. $5 billion GS. We were faced with chaotic market for opportunity cost calculation constantly. Have to measure billion from one to another. Big transaction cost. It is a sign of opportunity cost.

25. Nature of advertising. We know half works, but don’t know which half. We will never stop with the advertising. We want every American investors to buy it, probably not China. Will spend more money this year. 800 million this year, compared with 600 million past year. We want Geiko and Coca to be in everyone’s mind. We are getting more than advertising money.

A brand is a promise.

We are a low-cost producer.

26. Irish bank??? Its more about business model. Best bank in the country. should have understood the exposure to development-related loan. “I just wasn’t paying attention”

WAMU-there were a lot of signs. You can get a lot of trouble leveraging.

The figures are there, just people didn’t notice.

Huge differentiation between businesses.

M: allow a conservative bank to show a lot of earning when they made a lot of big loans. If accounting has made a big job, then banks will not do this. I am ashamed.

Afternoon:

1. Get uneven

2. M: BYD investment is worth it, feel privileged to be connected to. 17000 engineers, and beat all the JVs with foreign brands. People need batteries. The founder is young.

3. Moody downgrade didn’t affect the borrowing cost. But affect the brand globally

m-“they show considerable independence”

4. “in the end you will find I am right because Munger is smart and I am right” -WB

5. Wind energy “net exporter of energy” love the idea of putting in more in wind. One of the advantages we have is we are a big tax payer. We will do more in utility business. In the pipeline, we did well by not investing in dynergy in 2002.

M-in any utility subsidiary we will be leaders

Fairest opinion based on fairest opinion

6. 4 trillion in money market account, sep meeting in coglone

7. Scale causes lower return, a few percentages in our intrinsic value over S&P 500. It will not be 10 percent any more. Cant happen with big money

8. It’s very hard to imagine we will have nothing to do in China. We want to buy more in BYD, but they didn’t sell it.

9. 1 trillion reserve can’t hold US assets. 250 billion in paper. They have reluctance to put in US government bonds. The purchasing power will be deducted. They are running a trade plus. China has the most successful economic policy in the world. They lost purchasing power a bit, and that’s great policy. US and China should be friendly nation.

10. (admit mistakes)

11. Don’t believe in contracts. It’s about the passion. Will they keep the same passion no matter what will happen. It’s all about mutual trust.

12. we will not spin off any business since we have wonderful business. See’s candies generate a lot of cash flow; if they can’t use it, we will use it somewhere else

13. what people need-water, over populated countries

14. 3 billion swiss francs invested in a swiss securities(12% a year) . get called.

15. Nationalized the annuity business is a good thing. Public got outraged.

16. Keep hedging on euro dollars. Could be a pain in the next year.

17. Honor and system: shareholder is the honor, executive is the system

18. We find people who love their business

19. Interest rate were much higher last sep, so good opportunity to buy into US equity. Corporate bonds is cheaper and disorganized, Mcdonald burger, cheaper, happy since I am going to buy it for the year. Wait for 1973 1974

20. Picking is not the game, but pricing is the game.

21. Household information is important, residential construction.