An Email...

This isn't directly related to Interactive Media, but considering my strong interest in the business of said industry, it might apply. Enjoy.

Luv,
~Savid

Yes, I think you're exactly right. The article definitely hit home with me, b/c I've seen the same things that he noticed years ago. All the problems we face today were visible years ago, but it was so easy to make money that everyone just went along their happy way.

The incentive structure that most CEOs and boards have created is extremely misaligned with investor interest - and not just in the financial sector. Managers are incentivized to take absurd risks, partly because the manage to quarterly earnings (not, say, 5-10+ year earnings, even though most shareholders hold their shares for a much longer period of time than a few quarters), and partly because, even if they are fired, they still walk away with millions and millions of dollars.

The best example of this, in my mind, was the CEO of Bear Stearns, who lost billions of dollars for shareholders, yet walked away afterward with hundreds of millions for himself due to his golden parachute. And just last night AIG announced that it was paying "retention bonuses" to its top executives, b/c it's no longer allowed to pay "end of the year bonuses" due to the terms of the gigantic bailout the government gave it.

The amount of money the government has already spent on this bailout is ridiculous - it adds up to about $30,000 per US citizen. Wow! It makes Iraq look like a drop in the bucket.

But this too will pass, and once things settle down another bubble will eventually come, that's just the way it works. I've come to the conclusion that there's not much that can be done to change the system - the robber barons of the early 20th century only lost their power because the great depression was so bad and so many people had so little. While the masses are placated, they have no reason to start a revolution or rock the boat, and even the poor of today have refrigerators.

We hear about all the layoffs at the financial firms, and yes there are lots of people out of jobs, but the companies are hiring them all back, just at much cheaper rates. Why pay a middle manager 200k when you can pay someone desperate, but just as good, 100k?

Can you tell that working in this industry has made me a little jaded to it all? Hehe. I think back when I first started, a wide-eyed idealist who believed that in the business world when people tell you something that they meant it, and that it was necessarily true. I like to think that I've done a lot of growing up during this time, and will be much, MUCH better prepared for the future because of it. As the famous quote goes "trust, but verify." All too true.

Love,
Dave