Isegoria

Peter Rip of Crosslink Capital discusses what venture capital can teach corporate America:

• Finance Growth With Equity, Not Debt
  In a study surveying 30 years, researchers found that companies started when credit was difficult to obtain had better odds of long-term survival than firms started under more liberal credit environments.
• Owners Act Like Owners, Not Employees
  The spread between chief executive and rank-and-file salaries is usually a fraction of what it is in public companies. Senior executives have equity ownership, and it is their long-term compensation. Incentives between owners and managers are aligned because they are the same people.
• Accountability Is Everything
  Unlike in public companies, boards of venture-backed companies have no reluctance to replace C.E.O.’s or key managers when things aren’t working. “Wait until next year, again” is not tolerated because the companies cannot afford it. Cash is king.
• It’s About Capital Efficiency
  Our job is to allocate equity capital to the best and let go of the ones that are less efficient. Our job is to allocate equity capital to the best and let go of the ones that are less efficient.

When Chinese-American Huan Hsu moved to Shanghai a year ago, he figured his name would finally seem normal:

No longer would it be the albatross of my childhood in Utah — making me stand out among the Johns, Steves, and Jordans. But when I introduced myself, I was met with blank stares, double takes, and requests for my English name. People — Chinese people — often wondered whether I were being patronizing, like the fabled Frenchman who icily responds in English to an earnest American’s attempts to get directions en français. My company almost didn’t process my paperwork because I left the box for “English name” blank. “You don’t have an English name?” the HR woman gasped. “You should really pick one.” She then waited for me to do just that, as if I could make such an important existential decision on the spot; I told her I’d get back to her. People — Chinese people — had trouble recalling my name. One guy at work, a Shanghai-born VP, called me “Steve” for almost three months. At my workplace, which is 90 percent mainland Chinese, just about everyone I interacted with had an English name, usually selected or received in school. The names ran the gamut, from the standard (Jackie, Ivy) to the unusual (Sniper, King Kong), but what really struck me was how commonly people used them when addressing one another, even when the rest of the conversation was in Chinese.

To sort out how English names became necessities in China, I recently spent an afternoon with Laurie Duthie, a UCLA doctoral candidate in anthropology who’s finishing up her dissertation in Shanghai. Duthie has studied Chinese white-collar workers since 1997 and traces the popularity of English names in China back to the influx of foreign investment following Deng Xiaoping’s market reforms. With foreign investment came foreigners, and many of Duthie’s research participants told her that they got tired of outsiders butchering their Chinese names, so they adopted English ones. “If Betty Brown’s your boss, or if your boss can’t say Du Xiao Hua, I’d want to change my name, too,” says Duthie.

Increasingly, these bosses are Chinese, yet the English names persist, in part because English tends to be the lingua franca for business technology, and even native Chinese often find it more efficient to type, write, or sign documents in English. Using English names also creates a more egalitarian atmosphere. Most forms of address in China reinforce pecking orders, such as “Third Uncle” and “Second Daughter” at home or “Old Wang” or “Little Hu” in the village square. Your given name — customarily said in full, surname first — is reserved for use by those with equal or higher social standing, and the default honorific for an elder or superior is “Teacher” — no surprise in a country that reveres education. But an English name, other than separating those with and without such names, frees users from these cultural hierarchies.

Given the nationalism I’ve witnessed in China, I was a bit surprised at how readily Chinese adopted Western names. (Even my Americanized parents were uncomfortable with the idea of me changing my name. They said I could do as I wished when I turned 18, though always in a tone that suggested such an unfilial act would cause them to die of disappointment.) But Duthie’s participants insisted that taking an English name isn’t kowtowing, nor is it simply utilitarian. Rather, it’s essential to being Chinese and achieving Chinese goals. Whereas in the past patriotism was expressed by self-sacrifice, it is now expressed through economic activity. So by working for, say, 3M, Chinese citizens are helping to build up China, and the English names they take on in the process are as patriotic as Cultural Revolution-era monikers like Ai Guo (Loves China) or Wei Dong (Mao’s Protector).

Taking English names also fits with various traditional Chinese naming practices. In the past, children were given “milk names” when they were born, and then public names once they started school. Professionals and scholars used pseudonyms, or hao, that signified membership in an educated class. Confucius, born Kong Qiu, sometimes wrote under his zi, or courtesy name, Zhongni. Even now, Chinese sometimes take new names to mark the start of a new job, entry to graduate school, or a marriage, as my coworkers Alpha and Beta did. They subsequently named their son Gamma. (For the record, Alpha is the male.)

As one of his Chinese friends said, “A name is just a dai hao.” Dai hao, or code name, can also refer to a stock’s ticker symbol.

Philipp Meyer was a Cornell English major and the son of two recovering hippies before he became a Wall Street trader and immersed himself in its sordid excesses:

I’d been working for the bank for about five weeks when I woke up on the balcony of a ski resort in the Swiss Alps. It was midnight and I was drunk. One of my fellow management trainees was urinating onto the skylight of the lobby below us; another was hurling wine glasses into the courtyard.

Behind us, someone had stolen the hotel’s shoe-polishing machine and carried it into the room; there were a line of drunken bankers waiting to use it. Half of them were dripping wet, having gone swimming in all their clothes and been too drunk to remember to take them off. It took several more weeks of this before the bank considered us properly trained.
[...]
I put on 45 pounds in my first year at the bank, and, as you might guess, it was not from eating McDonalds. Occasionally I ate stuff like sushi, but mostly it was steak. We went to the good places like Sparks, Peter Luger’s, and the Strip House. We tended to look down on chains like Morton’s and Ruth’s Chris-they were for car dealers or stock brokers, not traders. Regardless of where we ate, we ate in quantity. My standard strategy was to order half a dozen appetisers, plus a steak and lobster, plus a few desserts and much wine as I could drink, as long it was under a few hundred dollars a bottle. Followed by a digestif, typically a 30-year-old port. There’s not any way to justify this except to say I was trying to catch up to my colleagues. We would treat those restaurants like Roman vomitoriums. And it wasn’t the food so much as the wine. Being a junior employee, I couldn’t really order bottles that cost more than a few hundred dollars, but the senior guys could get nicer stuff – Opus One, Chateau Latour. As long as we were out with a client, the bank paid. I remember being stunned the first time I saw a dinner bill for ten grand. But that was just the beginning.

What it boiled down to was austerity for everyone else and rampant consumption for ourselves. I never saw anyone literally set fire to money, but I did drink most of a bottle of 1983 Margaux ($2,000).
[...]
One evening, a close friend from the bank, an art history major from Princeton, took a bunch of recruits out with me. I did my normal trick of ordering nearly everything on the menu. There were piles of raw fish, shrimp, paté, sauces that had taken hours to prepare. It was far more food than anyone could eat and I could see some of the recruits were a little stunned at the quantities of uneaten shrimp and oysters being shovelled into the bin. I ate a big steak, put down a few bottles of red wine at $400-a-bottle and we hopped into a minibus we’d chartered for the night (gauche, but we couldn’t find a large enough limo). We stopped somewhere and bought a mixed case of Veuve Clicquot and Moet. Try the difference between these two, I demanded, but by then the recruits were all so drunk they barely touched it. I could tell they were getting a little scared. This stuff is bottom of the line, I told them. You ought to try the vintages. I downed at least two of the bottles in rapid succession. Some of the recruits would not look at me. They did not want to be there anymore. We stopped at a bar. I realised I was going to be sick, made sure my colleague had things under control, caught a cab, and promptly began vomiting out the window. Because of the quantity of wine and red meat I’d consumed, it looked like I was spitting up blood. The cab driver pulled over, certain I was about to die in his backseat. A finely dressed couple opened the door and I clambered out and vomited on their shoes. I don’t remember how I got home. The next morning I discovered a dozen cigars stuffed in my pockets, probably from the restaurant. I told my colleagues what had happened, looking for some moral bearing, secretly hoping to be chastised, but they all thought I was a hero. The vomiting on strangers was their favourite part. My boss, for fun, would sometimes throw cocktail olives, sushi, things of that nature, across the room in restaurants, always at people we didn’t know.

Markets are driven by a very small number of very large investors, he notes, and those people may not be bad people, but they won’t question their million-dollar paychecks.

Business writer Phaedra Wise wrote her Confessions of an Entrepreneur's Wife after her husband spent years trying to get his carbonated juice drink off the ground:

The truth was he had little time for analysis. As the head of sales and marketing, CEO, president, and chairman of the board, as well as the person charged with finding capital, he had a staggering workload. Like a shark, he needed to push relentlessly forward to survive.

Bill’s travel schedule was unpredictable. He bounced from fundraising pitches to sales calls all over North America. When he was home (a few days every other week) he was exhausted and burned out. He had no desire to socialize. I packed away the party dresses and started turning down invitations.

I quit asking him how things were going at work because his answers always focused on problems. He was the No. 1 problem-solving guy, and when you’re a hammer, everything around you looks like a nail. It scared me that from Bill’s perspective the whole thing was so often about to collapse.

He was also beginning to question whether it was even worth it. With each new round of financing he had diluted his shares. He and Wayne held shares jointly in an S corporation. (They shared a single vote to control their combined shares, which meant the tension between them never diminished.) In the first round they kept 60 percent, but by 2004 they were down to less than 30 percent. I reminded Bill of a conversation I once had with a CEO I was interviewing. “How could you give up so much equity?” I asked. “Well,” the CEO said, “it’s better to have 1 percent of 10 million than 100 percent of nothing.” I could see that Bill’s hard work was paying off. I didn’t want him to give up yet.

When the company received a local business award, I was thrilled. I thought it would be a chance for Bill to slow down and realize that he had created a big success. For one night he–we–could revel in his accomplishments and accept a few accolades. I got a sitter and picked out my dress, but the day before the party Bill canceled. He had to be in Chicago to meet with a potential investor. I was disappointed, but by now I was used to it.