Wednesday, August 22, 2007

Launch Day!!!

Today marked the launch of CoNotes ( Wohooo! A very needed step for me psychologically, but a pretty insignificant step in the grand scheme of things. Nevertheless, it is nice to just have it out there for people to respond to.

I haven't really say anything in my previous posts about my startup, so I guess now is the time. CoNotes aims to solve a huge problem for most job seekers: lack of accurate and relevant information about companies. How do I know this is a problem? Well think about the job that you have now. How different was your impression of the company before and after you started working. My guess is that a) either you didn't know enough to even have much of an impression to begin with; or b) it has changed a lot.

I want to change that because we spend 1/3 of our lives working, so it critical that we know what we are getting ourselves into when we take a job. I want provide you with company information that is both accurate and relevant to you. How is this possible? Well as a product, think of CoNotes as a "Wikipedia + Yelp" for companies. But it is very different in one critical way: the information is guaranteed to be sourced from peers. Unlike other players in this area such as Vault or Wetfeet, where you have no idea where the information is coming from (it could be some 10 year old kid across the street), CoNotes limits its network of contributors and readers to peers. The first network of peers that I am piloting with is my own, the MBA student network. For MBA students, you can count on the information coming from other MBA students at peer schools.

So that is the concept in a nutshell. Currently, the site can be considered in a very early release state. The feature set is going to be built up gradually over time, but a lot of the most critical features are there right now.

If you are a student at one of the following schools, you should have access to the site.
  • Columbia Graduate School of Business
  • Cornell University
  • Darden School of Business, University of Virginia
  • Fuqua School of Business , Duke University
  • Haas School of Business, University of California Berkeley
  • Harvard Business School
  • IMD Business School
  • Kellogg School of Management, Northwestern University
  • London Business School
  • MIT Sloan School of Management
  • Stanford Graduate School of Business
  • Stern School of Business, NYU
  • Tepper School of Business, Carnegie Mellon
  • Tuck School of Business, Dartmouth University
  • UCLA Anderson School of Management
  • University of Chicago Graduate School of Business
  • University of Michigan
  • Wharton School, University of Pennsylvania
  • Yale School of Management
New features will be rolled out soon. But for those of you who are eager MBA students who are always in recruiting mode, hopefully the set of features in there will get you going. Check back often, as this is a viral community. As more people sign up, the amount of valuable information increases exponentially.

And definitely let me know what you think. I love feedback. But right now I need to sleep. Coding is fine and often times very interesting, but IT stuff just hurts. It's never fun setting up a server. Zzzzzzzzzzzzzzz...

Tuesday, August 14, 2007

State of the Economy

I am not an economist nor a financial guru, but I'm pretty sure our economy is about to hit the crapper any time now. I'm waiting for the day that there are six or seven firms who all simultaneously decide to announce bankruptcy or a halt on withdrawals (which pretty much signals bankruptcy is near).

I'm going to give you my take on why our economy is about to tank, and please let me know if I am crazy. So the past few years of economic growth have been driven by easy credit. Not just for homeowners, but for corporations too. Hedge funds have been doing well by buying securitized debt and things seemed to be going well. Except we have this problem where the debt underlying a lot of these securities had underrated risk (i.e. they are riskier than they were sold at). In top of that, several hedge funds have been levering up the wazoo so that their initial capital makes up only a small percentage of their actual investments. It was as if debt were crack cocaine. They got a taste of it and only wanted more and more, so it could feed their addiction to use that money. But that means if their investors start asking for some of their money back (which all the smart ones are doing now), then they have a serious problem. The debt is like cocaine, remember! It's in their blood and they've already used that loaned money to make some investments. The expectations are that those investments will pay off much better than their debt rates. But to secure the necessary returns, these funds need time to implement their investment strategy. Well they don't have time with their investors demanding their money back. So their investments are not paying off at high enough rates to cover their debt. Now these hedge funds have no time, no money, and pretty much don't have anything besides an addiction.

How does this all lead to an economic downturn? Well this is not a small problem. It's a HUGE problem at EVERY bank on Wall Street. Everyone on Wall Street is sitting around with a finger on their nose hoping it will all go away. These announcements about hedge fund stalls and bankruptcies are an early indicator of what the real problem is. Well if you remember that all that debt was riskier than it actually was...the big trigger will be when all that debt gets re-rated at its true risk value (i.e. higher interest rates and lower value). The current run on hedge fund money by investors asking for their money back is just people who are trying to get something back before this huge debt-rating correction happens. Once that happens, the value of a lot of money will suddenly drop. So imagine if you were living a lifestyle with an income of $100K. Maybe you weren't too thrifty and spent everything you made. Well then one day someone comes along and tells you that you now will be making $50K. Now you are going to have trouble paying down your car lease, your mortgage payments, and that totally unnecessary habit of buying items out of the Sharper Image catalog. That's pretty much what is going to happen when all that debt gets re-rated, but at a much larger scale. No more car, no house, and definitely no more $500 Ionic Sonic Breeze air purifiers. The pains will be felt everywhere. The people to feel it first will be the banks. Then corporations who were expecting to get easy loans will be hit hard. These corporations will get tight with their spending, so service firms will have no business. And pretty much it ripples through the economy.

I'm pretty worried about recruiting for my classmates in business school. It looks like it is going to be a pretty craptastic recruiting year.

What can do you about this? Probably nothing, unless if your name is Bernard Bernanke. I definitely would take a look at any of your investment allocations. Move them out of any companies that are highly-levered and issuing junk bonds (e.g. GM). You might want to look at putting the money in a corporate bond mutual fund that focuses on high-quality corporate bonds.

I hope I'm wrong about the economy. But the more I think about it, the more I realize we are headed for a couple years of a tough economy. That might just be the nail in the coffin for the Republicans in the 2008 elections.