Fwd: an expert is someone who can tell you...

Want to do something new and disruptive?

Want to change the status quo?

Here's some advice -- be careful before consulting "experts"…

"An expert is someone who can tell you exactly how something can't be done." (See Peter's Laws #21)

In a rather perverse twist, experts are generally disincentivized from promoting disruptive ideas.

If someone's new theory creates a wholesale change in their field, then the expert goes from fame to a "has-been."

Many 'experts' are therefore consciously or unconsciously incentivized to keeping their field exactly the way it's always been.

Here's an example from the past…

In the early 1700's, calculating the longitude was extremely difficult, but very valuable for the British fleets.

In attempt to solve the problem, the British government launched The Longitude Prize in 1714 – a £20,000 prize (millions in today's dollars) for the person who could build a device that could accurately calculate longitude.

The Longitude Board was composed of the world's greatest astronomers, experts in their fields, because it was assumed that the solution would be astronomical in nature.

So when John Harrison, a watchmaker, proposed and built a unique timepiece (a clock), sufficiently accurate on a rocking ship to calculate longitude, the board of experts refused to award him the purse.

Harrison believed that accurate timekeeping (not better astronomical measuring equipment) was the key to the problem.

His clock (which didn't rely on a pendulum) met all of the requirements of the Longitude Prize…

Eventually (a decade later), the Longitude Prize was awarded to Harrison.

Keep Innovating!

Such a disconnect between the 'status quo' and the 'disruptive innovator' occurs over and over again.

When I announced the $10 million Ansari XPRIZE in 1996, many of the "experts" in the aerospace industry explained to me how naive I was... that $10 million would never be enough to motivate a winning solution, and that there was no way a small team could pull it off.

When Musk and Bezos proposed full reusability of their launch vehicle (the holy grail of rocketry, and something that the entire industrial-military complex had not been able to achieve), they were laughed at by many in the field.

I will close this blog with a quote from Henry Ford... I LOVE this quote. Enjoy.

"None of our men are 'experts.' We have most unfortunately found it necessary to get rid of a man as soon as he thinks himself an expert because no one ever considers himself expert if he really knows his job. A man who knows a job sees so much more to be done than he has done, that he is always pressing forward and never gives up an instant of thought to how good and how efficient he is. Thinking always ahead, thinking always of trying to do more, brings a state of mind in which nothing is impossible. The moment one gets into the 'expert' state of mind a great number of things become impossible."

Keep innovating and let's create a world of Abundance.

Interested in Joining Me? (Two options)

1. A360 Executive Mastermind: This is the sort of conversation I explore at my Executive Mastermind group called Abundance 360. The program is highly selective, for 360 abundance and exponentially minded CEOs (running $10M to $10B companies).

If you'd like to be considered, apply here.

Share this with your friends, especially if they are interested in any of the areas outlined above.

2. A360 Digital Mastermind: I've also created a Digital/Online community of bold, abundance-minded entrepreneurs called Abundance 360 Digital (A360D).

A360D is my 'onramp' for exponential entrepreneurs – those who want to get involved and play at a higher level. Click Here to Learn More.

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Fwd: 2016 Financials

ASC 718 vs IRC 409a – What Are The Differences? Jane Levin (Corporate Controller at Private) | Jun 26, 2013 What is the difference between IRC 409a and FASB ASC 718? And for a U.S. c-corp do I need to worry about ASC 718? Answers Topic Expert Jim Timmins (Managing Director at Teknos Associates) | May 9, 2011 IRC 409A is a tax regulation, published and enforced by the IRS. ASC 718 (formerly FAS 123R) is an accounting standard published by the FASB and overseen by the public accounting firms (and the SEC, in the case of publicly traded companies). IRC 409A establishes a requirement for the issuance of stock options to employees and others -- a requirement that must be met or the option recipients will be subject to severe tax penalties. This basic requirement is that stock options must be priced at or above the fair market value of the underlying security (that is, the security into which the options are exercisable, usually common stock). IRC 409A then defines methods by which a private company can show that it appropriately determined fair market value (basically, either a "do it yourself" approach for young companies or an independent appraisal for most other companies). ASC 718 lays out the methodology by which the compensation expense for stock options is calculated under GAAP for inclusion in financial statements. ASC 718 utilizes a slightly different standard from IRC 409A (the fair value of the underlying common stock rather than the fair market value), but that difference are immaterial for most purposes. Because there has been little enforcement activity by the IRS around IRC 409A, but most companies have had their ASC 718 work scrutinized by an audit firm, the focus of attention in stock option pricing has shifted from tax compliance to GAAP compliance. The AICPA has published a practice aid (Valuation of Privately-Held-Company Equity Securities Issued as Compensation) that is used by audit firms in their review of valuation reports used to price stock options. Most high quality valuation reports follow this guidance to ensure GAAP compliance -- and tax compliance follows almost automatically in most cases. ASC 718 vs IRC 409a – What Are The Differences? Jane Levin (Corporate Controller at Private) | Jun 26, 2013 What is the difference between IRC 409a and FASB ASC 718? And for a U.S. c-corp do I need to worry about ASC 718? Answers Topic Expert Jim Timmins (Managing Director at Teknos Associates) | May 9, 2011 IRC 409A is a tax regulation, published and enforced by the IRS. ASC 718 (formerly FAS 123R) is an accounting standard published by the FASB and overseen by the public accounting firms (and the SEC, in the case of publicly traded companies). IRC 409A establishes a requirement for the issuance of stock options to employees and others -- a requirement that must be met or the option recipients will be subject to severe tax penalties. This basic requirement is that stock options must be priced at or above the fair market value of the underlying security (that is, the security into which the options are exercisable, usually common stock). IRC 409A then defines methods by which a private company can show that it appropriately determined fair market value (basically, either a "do it yourself" approach for young companies or an independent appraisal for most other companies). ASC 718 lays out the methodology by which the compensation expense for stock options is calculated under GAAP for inclusion in financial statements. ASC 718 utilizes a slightly different standard from IRC 409A (the fair value of the underlying common stock rather than the fair market value), but that difference are immaterial for most purposes. Because there has been little enforcement activity by the IRS around IRC 409A, but most companies have had their ASC 718 work scrutinized by an audit firm, the focus of attention in stock option pricing has shifted from tax compliance to GAAP compliance. The AICPA has published a practice aid (Valuation of Privately-Held-Company Equity Securities Issued as Compensation) that is used by audit firms in their review of valuation reports used to price stock options. Most high quality valuation reports follow this guidance to ensure GAAP compliance -- and tax compliance follows almost automatically in most cases. From: Jim Felter Sent: Friday, May 12, 2017 5:53:58 PM To: Steve Scott Subject: Re: 2016 Financials   check this link https://www.capshare.com/blog/just-how-bad-is-409a-noncompliance-for-a-startup-really/ Just How Bad is 409A Non-Compliance for a Startup, Really ... www.capshare.com In the decade since IRC 409A was enacted, people have debated whether or not startups really need to comply. Valuation firms have emphasized a host of negative ... From: Steve Scott <steve@verthermia.com> Sent: Friday, May 12, 2017 5:39:52 PM To: Jim Felter Subject: Re: 2016 Financials   Thank you for the examples.  Not as bad as I thought, but, pretty sure they don't want to see the issue more than 55% of the tax going to government. Plus, state taxes and SSI, etc. What a pain. For everyone.  Another hard part also for me is letting go any further claims we would have against Ken and party for mismanagement and improper activities. I think those may be off the table with a settlement. Still the likelihood of pursuing additional actions against them is remote.  Steve On Fri, May 12, 2017 12:21 PM, Jim Felter jim@verthermia.com wrote: Well, let's setup phone calls to Jeff, Ken and Roger and make the deal with them on the outstanding balance. I have attached a slide from a presentation showing the negative effect of the 409a tax calculation based on $100,000,  From: Steve Scott <steve@verthermia.com> Sent: Friday, May 12, 2017 1:34:41 PM To: Jim Felter Subject: 2016 Financials   Jim, I need these financials. Time to put in the PPM is now. Steve

Fwd: why UBI works

Will Artificial Intelligence "destroy humanity?"... probably not. But I am concerned that A.I. and Robotics will massively impact the future of work. McKinsey & Co. predicts that 45 percent of jobs today will be automated out of existence in only 20 years. This weighs on me. While the magnitude of the coming change doesn't bother me, it is the speed of the change I'm worried about. (NOTE: We've seen such change before. America went from a society of farmers (84% in 1810), to only 2% farmers today). This is a blog about one mechanism to buffer the impact of rapid "Technological Unemployment." In this blog I'll make the case for Universal Basic Income and unpack some of the common misconceptions of giving money away for free. Eradicating Poverty Today there are 700 million people around the world living in extreme poverty (defined by the World Bank as $1.25/day (in 2005 prices)). According the to Brookings Institute, just $80 billion would lift ALL of them out of extreme poverty. We spend twice this amount in global aid every year – if only we could give the funds directly to the people who need it most. In a recent Abundance 360 webinar, I interviewed Michael Faye, the co-founder of GiveDirectly, who presented some compelling data about the disruption of philanthropy through peer-to-peer aid. Let's dive in. What is GiveDirectly? GiveDirectly is the largest UBI experiment to date. Over the next 12 years, GiveDirectly is running a controlled trial across 4 villages in Kenya, with more than 26,000 participants. In addition to a control group, one village will receive a regular basic income for 12 years, another for 2 years, and yet another will receive a single lump sum equivalent to 2 year's worth of income. Within each village, everyone -- man, woman and child -- receives the same equal payment of roughly 75 cents per day regardless of their current wealth. Incredibly, since launching the experiment in 2012, GiveDirected has distributed more than $100 million in total donations for people in extreme poverty. The data they are accumulating on the efficacy of UBI is incredible. Here are the top 3 takeaways from our conversation: 1. Philanthropy is ripe for disruption. Most of today's billion-dollar non-profits and NGO are incredibly inefficient and bureaucratic. Michael estimates only about "15 - 20% of donations" actually get to recipients, adding that in many cases "the current system is so complex that many of the agencies themselves don't know the actual number." Many programs and donations are in-kind items, such as foods, which are often resold at a discount because the recipients simply don't want them. By giving cash instead of goods, combined with its mobile-enabled technology stack, GiveDirectly flips that ratio. For every dollar, 90 cents ends up in the hand of the recipient. 2. Directly giving cash has counter-intuitive positive byproducts. As a society we underestimate the ability of the poor to make decisions in their best interest. We want to prescribe who gets what, how much, and under what conditions. For example, Michael asks, "If you ask a child whether they'd prefer to give a poor person a cow, or give them money?" They typically respond that its better to give a cow. It feels better." We are also hesitant to give cash for fear that it will lead to increased substance abuse, or lead to laziness. However well documented studies consistently show that cash transfers: Tend to cause a decline in the purchase of alcohol or tobacco; and Tend to lead to an increase in the hours worked. For example, in Sri Lanka, a study of one-time transfers found that men's annual income had increased by 64-96% of the grant amount after five years. In Uganda, 4 years after a small one-time donation, recipients were earning 41% more than those who had not received the donation. 3. Cash Transfers Lead to Better Health & Social Outcomes. Looking at over 160 studies across 30 countries and 56 cash transfer programs, the Overseas Development Institute recently performed a meta analysis, finding positive results across areas such as education, health and nutrition, savings and investment, and employment. Specific to health, studies have found: Large increases in children's height and weight in South Africa Reductions in HIV infections and psychological distress in Malawi Reductions in low-birth weight in Uruguay, and Reductions in child labor as well as increases in childhood schooling. Decreases in domestic violence. My Closing Thoughts Technological unemployment is coming fast and it has the potential to lead to significant social unrest. We need to be proposing and running experiments to validate solutions that work across geographies, cultures and at scale. UBI is one idea. I salute the passionate entrepreneurs who are launching experiments to uncover their solutions. What will you do to make an impact? We have the raw materials to create a world of abundance. Let's get to work. Interested in Joining Me? (two options) ... 1. A360 Executive Mastermind: This is the sort of conversation I explore at my Executive Mastermind group called Abundance 360. The program is highly selective, for 360 abundance and exponentially minded CEOs (running $10M to $10B companies). If you'd like to be considered, apply here. Share this with your friends, especially if they are interested in any of the areas outlined above. 2. A360 Digital Mastermind: I've also created a Digital/Online community of bold, abundance-minded entrepreneurs called Abundance 360 Digital (A360D). A360D is my 'onramp' for exponential entrepreneurs – those who want to get involved and play at a higher level. Click Here to Learn More. P.S. Every week I send out a "Tech Blog" like this one. If you want to sign up, go to Diamandis.com and sign up for this and Abundance Insider. If you wish to stop receiving our emails or change your subscription options, please Manage Your Subscription PHD Ventures , 800 Corporate Pointe, Suite 350, Culver City, CA 90230

Fwd: A New Trend in the Board Rooms - Trend # 4

May 2017 - Issue #108 - Is Your Board "Risk Smart"? May 2017  -  Issue #108 Board of Directors NEWSLETTER A free publication Published by:  Erich Stolz - CEO, CFO, Board Director Email: Erich.Stolz@BoardDirector.net A new Trend in the Board Rooms: Trend # 4:  Is Your Board "Risk Smart"?    Boards are under increasing pressure to oversee risks and perform an outstanding job in risk governance. Many boards are scratching their heads and trying to figure out which approach to an effective risk oversight and risk governance works well. Executives and Management are ultimately responsible for exercising prudent care to keep the risks at bay. However, the Board of Directors is responsible to make sure that proper controls, rules, procedures, policies, and monitoring tasks are in place.    The key questions are: What are boards doing about it?    How can boards become "Risk Smart"?    More and more boards have established a board-level risk committee. You'll find those risk committees more often in large public corporations. However, the trend of establishing a risk committee can now be found in mid-size and privately held companies. This trend is now gaining momentum in other, less regulated industries. In just a few years from now, I would bet that you'll find a risk committee in the majority of companies and organizations – regardless of its size and market.    Why is this trend noteworthy? Why is this so important to the readers of this newsletter? Why should board members and executives look into this trend deeper? The answer is rather simple: Boards are charged with the responsibility of overseeing the various risks as effectively as possible. The difficulty and intricacy to properly oversee the various risks are growing constantly and have never been greater. How can the board become "Risk Smart"?    Based on my experience and observations at various boards, there are six distinctive actions and tasks that can increase the "Risk Smartness" and the prudent governance approach: Clearly define the board's role for overseeing the company's risk The most important elements of the board's risk oversight role: Formation and configuration of the risk governance Oversight and observe the risk management process Partnership and cooperation with the CEO and executive team to clearly understand everyone's roles and responsibilities of certain critical risks    2.  Create and cultivate a "Risk Smart" culture The most important components of a "Risk Smart" culture: Clearly identify and assign accountability and responsibilities Policies and procedures are in place that clearly describe what risk factors need to be communicated and reported to the appropriate people Let the employees question or challenge the organization whenever they have a legitimate concern risks The organization has a specific set of rules that support the values and conviction of the organization, and all employees clearly identify themselves with and follow those rules The organization continuously educates and trains its employees with an appropriate set of skills, know-how, and risk aptitude      3. Recognize the risk appetite of the organization and create a tailored approval process        The important parts of a risk appetite and approval process are: Determine how much of a risk the organization is willing and able to take Differentiate if a risk is quantitative or more qualitative Only the board can approve a major risk – it is a board's decision and beyond the CEO's authority It is important for the board to connect the risk factors to the company's strategy Once a risk is approved by the board, the executive team communicates that decision throughout the company The executive team should continuously keep an eye on any company's exposure. The executive team can make certain adjustments and changes to some policies and procedures but must report those modifications to the board Depending on the culture and nature of the business, some companies are risk takers while others are risk adverse       4.  The board assist and aids the executive team to incorporate risk thinking into their strategy      One of the most important tasks of the board is to advice the executive team about the alignment of the strategy with the company's mission, vision, specific milestones, and risk factors The board provides essential leadership in the strategic planning process The board can bring significant value to the table by providing an expanded perspective and experience on certain strategic risk factors – actual losses as well as faded away opportunities The board can challenge the executive team's overly optimistic views of the future The board can sometimes "peek around the corner" by clearly grasping any potential disruptions or newly created risks which the executive team may have overlooked      5.  Evaluate the development and advancement of the risk governance method     Regular assessment can help boards determine whether it is receiving the quality and the quantity of information to carry out its role. What is the secret key for an effective assessment? Asking the right questions and compare if the current risk governance is still working properly. For instance: Has the executive team passed on certain risk issues to the risk committee? Is the entire board informed about certain risk issues – whether new issues or ongoing issues? Does the executive team clearly identify certain risks, accompanying assumptions, and alternative solutions – and discuss those steps with the risk committee and / or with the entire board? Is the board being informed on a timely fashion when risks arise? How does the executive team monitor and recognize new upcoming and developing risks? Is there an agreement with the board when the executive team should take action?      6.  Make certain that the company discloses all noteworthy risks to its stakeholders    The organization should do more than just satisfy the boilerplate requirements as set by the SEC disclosure rules. The higher the quality of information published and how the company drives risk monitoring in all important decisions, the better. Since there is no specific rule set by the SEC of how the process of good governance is supposed to work, the company has an opportunity to being more attractive to shareholders by clearly communicating what type of risk management and risk oversight is in place. The board has an opportunity to grow its risk-related oversight tasks by distributing the risk-related responsibilities among various committees, not only the newly established risk-committee. The creation of a risk management team can certainly enhance the work of the newly established risk-committee. The board can provide much more than boilerplate and "legalese". The board can add value by providing thoughtful descriptions and some specific quantitative analysis. The board can provide visibility of how the risk management and risk oversight actually function at the company along with a short presentation of the board processes. Gain credibility and trust in the eyes of shareholders and prospective investors by disclosing how well the board and executive team has kept many risks at bay and even reduced certain risks.   The trend of continuously rising risks can have a serious effect on any organization. That's why the role of the risk smart board is extremely important and valuable. By having a strong and also a forward-thinking base in place – risk oversight, risk smart culture, risk appetite, alignment of strategy and risks, continuously evaluating the risk oversight process, and disclosure to the investors - boards can help make the company more attractive to shareholders.    I hope that these insights can be useful to your board and company as a guide toward a "Risk Smart" organization. For any comments or questions, please contact me. Erich Stolz 18 years Board Experience at various companies and industries. Served on Audit, Compensation, Governance, and Strategy Committees. I can be reached at 832-372-5419 or Erich.Stolz@BoardDirector.net Erich Stolz | 515 Post Oak Blvd., Suite 700, Houston, TX 77027 Phone 832-372-5419 Unsubscribe stevescott@techacq.com Update Profile | About our service provider Sent by erich.stolz@boarddirector.net in collaboration with Try it free today