CA Special Election (repost)

I posted this a few weeks ago, decided to run it again (and probably next week as well).

Here’s how I’m voting on the measures slated for the special election on 5/19, a very important election that is a consequence of the budget that Sacramento passed recently in an attempt to close the gap on a record $42 billion deficit. I usually wait until the week of the election to post my voting guide because I think it’s important to hear all the debate on the issues but in this case the choice is so stark that I don’t see any reason to wait.

Several of the compromises that the legislature entered into require voter approval before they can be implemented. Public polling on these measures indicates they are vastly unpopular with the exception of Prop 1F and given that the governor and every other elected official is disliked by voters of both parties, it is certain that in the weeks ahead we will be deluged with TV advertising from special interest groups like the California Teachers Association instead of direct appeals from elected officials.

Prop 1A: No

Why: This is political cynicism at it’s worst, they give you something that all rational people want, in this case a spending limit that restricts politicians from spending more money than the state has, while slipping something really bad in the back door, in this case a stealth $16 billion tax increase by extending for 2 years the income tax, sales tax, and sundry fee increases that were passed in the most recent budget. It gets worse, because of the way the spending cap and revenue forecasts are calculated we are assured that CA will be stuck with a budget that is well above where we are today. No thanks.

Prop 1B: No

Why: This measure is the product of a negotiation between the governor and the powerful teacher’s union that allowed the governor to tap the education budget to cover the shortfall in the general budget. There has always been a disingenuous spin laid out by the teacher’s union on this issue because they claim that education was being cut by $9.3 billion in the emergency budget that passed recently but what they knew all along is that the Spendulus bill that got rammed through Congress included $11 billion earmarked for education in California… meaning that it was useful to cry poor over the budget all the while knowing that education was actually getting more money than the original budget allocated before the deficit grew to epic proportions.

1B is a pretty technical measure but the end result is that the so-called “rainy day fund” would be committed for the first $9.3 billion to the education bucket… meaning the rainy day fund wouldn’t actually be a rainy day fund until the $9.3b was paid out. It’s yet another bait-and-switch from Sacramento.

Prop 1C: No

Why: This one is pretty straightforward, the state wants to borrow $5 billion against future earnings from the lottery. Personally, I think the lottery should be shut down because it’s nothing but a regressive tax on people who can least afford it but hey if they want to spend $5, 10 or 20 bucks on a game of chance with odds far worse than anything Vegas has to offer, well who am I to say they should not. Back to the proposition, my primary opposition is that this is a one time fix equivalent to giving a heroin addict one last fix before they go into rehab. Also, because we have to pay interest on the debt secured by the lottery earnings, the result is that the state pays out lottery earnings as interest rather than what they were supposed to do, go to the people of California.

Prop 1D an 1E: No

Why: These measures redirect funds that were specifically allocated by voters in previous years elections and it is appropriate that voters should be asked if they want to suspend those measures and redirect the funds. However, even if these 2 measures pass they amount to about $1b, which doesn’t make a dent in the deficit and does not solve the underlying spending problem. I figure that in light of the bigger issues these two measures are inconsequential so fail the entire slate and force the legislature to get serious about fixing the structural budget issues.

Prop 1F: Yes

Why: This measure denies legislators and elected officials pay increases when the state is operating a budget deficit. This measure is largely symbolic because if you read the fine print you find that the state’s director of finance gets to determine when a deficit is largely a deficit which means they could ignore all the non-general fund budget components, which have driven the state into deficit for the last 9 years. But hey, sometimes symbolism is all that voters have so I’m voting yes.

Lunarr Is Going Dark . . .

Like Tom, I am also a big fan of the team at Lunarr and over the last year and a half have become good friends with Hideshi Hamaguchi, who is one of the most interesting and generous of heart people you will have the good fortune of meeting.

I’m a big fan of the team behind Lunarr, a startup based in Portland, OR, and led by two of Japan’s top entrepreneurs: Toru Takasuka and Hideshi Hamaguchi. I was sad to hear that Lunarr is shutting down its service by May 10.

[From Lunarr Is Going Dark . . .]

When Hideshi told me they were shutting Lunarr down I was saddened but not surprised. Their tale is emblematic of the challenges that startups have getting a consumer/SMB products launched and to critical mass when the demands for features and integration to third party services exceed the ability of startup resources to deliver them, and it is also worth remembering that software development is still a time and resource intensive process even with the range of tools that are available.

The cost of acquiring customers is not insignificant either, especially when the macro environment favors the stability of large brands leading to a big getting bigger dynamic. The demand for features coupled with an increasingly fickle consumer market means that getting it right from the start is more critical than ever and even when you do generate some buzz and interest, converting tryers into users remains a significant challenge.

With an ability to self fund the operation of this company well into the future, it is apparent that Toru and Hideshi looked at Lunarr’s prospects objectively, not as founders but as investors, and could not see a disruptive event propelling forward. I admire this discipline because it’s rare in Silicon Valley where we demonstrate an institutional bias that favors hope over experience.

While I am saddened by the demise of Lunarr, I take with me great satisfaction in the knowledge that my relationship with Toru and Hideshi transcends any single company.

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Market Outlook
T-Mobile Gets a Bid, But Not From Japan
Read more on Entrepreneurship, Investing in Japan at Wikinvest

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