How I Would Structure a Public Company

Prior to the 20th century, companies were generally family owned and run; they were small and easy to direct. The evolution of public ownership changed all of that. It created a separation between ownership and leadership. In an attempt to ensure that public companies are driven by shareholder interest, a two-tier hierarchy was developed.

The first tier is the Board of Directors. The board is composed of two types of members: Internal Directors – from within the company – and External Directors – independent from the company. All members of the board are elected by the shareholders, including the Board Chair.

The second tier is the Leadership Team. Leadership is hired or approved by the board of directors to guide the daily operation of the company. The typical leadership team looks like this:

Screen Shot 2017-08-06 at 9.50.59 AM

I have a few issues with this structure:

  1. Why have “Chief Officers” if there are no “Officers”?;
  2. Why have “Vice Presidents” if there are no “Presidents”?; and
  3. The title of “Manager” has a negative connotation

I would execute this structure:

Screen Shot 2017-08-06 at 9.59.44 AMThe word “officer” is derived from the Latin word “officium” meaning “service”.  That’s a beautiful definition of what a “manager” should be – of service to their company and their employees. Anyone in a leadership position should be called an officer. As one rises through the ranks of a company, they take on greater responsibility and their title becomes more general. For example, the technical branch of a company could look like this:

Screen Shot 2017-08-06 at 10.30.54 AM

I think that is a better way of doing things. What do you think?

Carbon Dividends

On June 1st, in an address from the White House Rose Garden, President Donald Trump announced that the United States would withdraw from The Paris Agreement. The remaining parties reacted with anger and an even stronger resolve to hold the US accountable for its pledge. One way that the international community could retaliate is to levy a border-adjustment tax on the carbon content of American exports. If faced with such a pressure, the Trump administration would need a plan to replace the Obama-era regulations that it has repealed.

In February, the Climate Leadership Council (CLC) provided a plan titled “The Conservative Case for Carbon Dividends“. The section within the paper titled “The Need for a Conservative Climate Solution” reads:

Mounting evidence of climate change is growing too strong to ignore. While the extent to which climate change is due to man-made causes can be questioned, the risks associated with future warming are too big and should be hedged. At least we need an insurance policy. For too long, many Republicans have looked the other way, forfeiting the policy initiative to those who favor growth-inhibiting command-and-control regulations, and fostering a needless climate divide between the GOP and the scientific, business, military, religious, civic and international mainstream.

Now that the Republican Party controls the White House and Congress, it has the opportunity and responsibility to promote a climate plan that showcases the full power of enduring conservative convictions. Any climate solution should be based on sound economic analysis and embody the principles of free markets and limited government. As this paper argues, such a plan could strengthen our economy, benefit working-class Americans, reduce regulations, protect our natural heritage and consolidate a new era of Republican leadership. These benefits accrue regardless of one’s views on climate science.

In short, the CLC admits that climate change is real (though doubts that it is driven by human activity) and that climate policy is inevitable in the United States. So, instead of leaving it to the next Democratic Congress to pass legislation that actually addresses climate change, the “Grand Old Party” should take the opportunity to pass legislation that supports its “conservative convictions” instead.

The plan has 4 pillars:

  1. A carbon tax implemented at the first point where fossil fuels enter the economy, beginning at $40/ton and increasing steadily over time.
  2. All the proceeds from this carbon tax would be returned, tax-free, to the American people via dividends.
  3. Border adjustments levied on the carbon content of imports and exports.  Proceeds from these fees would be added to the carbon dividends.
  4. Elimination of regulations that are no longer necessary upon the enactment of the previous three pillars.

On a positive note, I have absolutely no issue with pillar number one. However, the same cannot be said for the remaining three pillars, especially pillar number two.

Revenue-neutral carbon taxes – wherein all proceeds are returned to the public – can make intuitive sense. If the public knows that a carbon tax will increase steadily over time, they are incentivized to invest in technology that will enable them to pollute less in order to pocket more of their tax-free dividends. The problem is that this intuition assumes the rationality of the consumer. The Department of Treasury estimates that the bottom 70% of Americans would receive more in dividends than they would pay in carbon taxes. If 70% of the country is benefiting financially from the carbon tax without changing their behaviour, can you expect them to put in the effort and money to reduce their emissions?

A similar revenue-neutral carbon tax was implemented in the Canadian province of British Columbia (BC) in 2008. In 2007, the province of Quebec implemented its own carbon tax (which I will call revenue-controlled) with revenue being reinvested into energy-efficiency programs in public energy and transit. The results: greenhouse gas (GHG) emissions reduced by 3% in BC compared to 8% in Quebec from 2008 to 2015 and gross domestic product (GDP) increased by 13% in BC compared to 8% in Quebec while population increased by 3% in BC and 2% in Quebec between 2012 and 2015 (population data for 2008-2011 wasn’t available on the Statistics Canada website).

 

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In order to ideally test the efficacy of British Columbia’s revenue-neutral carbon tax, I would need to compare its performance to a simultaneously but independently implemented revenue-controlled carbon tax in the same province, which is impossible. Although the comparison to Quebec’s carbon tax is not ideal, it is still valuable. It demonstrates that a revenue-neutral carbon tax is likely inferior to a revenue-controlled carbon tax at reducing emissions. What it does do better is stimulate the economy; one of the foremost “conservative convictions”.

“Recomposition”

With every wake or funeral I attend, I become more uncomfortable with the way we bury and remember our dead. In North America anyway, there are two main ways that bodies are prepared for burial – embalming and cremation.

When a body is embalmed, bodily fluids are removed and replaced with a formaldehyde-based chemical solution that delays decomposition. Then, the body is dressed and cosmetically prepared by styling the hair and applying make-up. On the other hand, when a body is cremated, it is incinerated in a chamber heated to 1000°C. The remaining ashes are then collected and ground into a fine powder.

Neither of these processes are at all safe for the environment – formaldehyde is a proven carcinogen and fossil fuels are burned to heat cremation chambers. To make matters worse, the prepared remains are then placed in metal, wood or stone boxes and buried underground or in a mausoleum. The amount of resources – money, material and land – that are poured into modern burials is absolutely ridiculous. Please don’t get me wrong, I completely understand the need to honour our dead, but there must be better ways to do so.

Every organism produces and consumes nutrients in order to live. When it dies, and decays, the organism’s nutrients are released into its surroundings.  Humans are no exception. Unfortunately, the modern practices of burial and cremation do not allow our nutrients to be returned to the environment. In cremation, nutrients are consumed by fire, while in modern burial, the casket and burial vault prevent most nutrients from being released into the soil. If we were instead buried in a simple shroud or wooden casket – as we were in the past – we would effectively be recycled into the earth.

So why did we move away from this method? As far as I can gather, there are three main reasons: it was thought that modern caskets were aesthetically superior, would protect against grave robbers and would protect soil and groundwater quality near cemeteries. I believe that only one of these – the protection of soil and groundwater quality – may be a legitimate reason for supporting modern burial in this day in age. However, The World Health Organization has found that even with modern burial methods, soil and groundwater around cemeteries is contaminated. In fact, the formaldehyde in embalming fluid and the metals in modern caskets arguably pose a greater risk to soil and groundwater quality than the products of natural decomposition. Further study is required to know for sure.

Researchers at the University of Western Carolina are conducting this research as part of their Urban Death Project. They are researching the effects of “recomposition” – their system that transforms bodies into soil through natural decomposition. The whole process would look something like this:

When a person dies, their body is transported to a morgue for refrigeration. It is kept there until funeral and/or burial plans can be made. The body is then placed in a simple shroud or wooden casket and transported to the “recomposition” site. My vision for the “recomposition” site (the Urban Death Project has yet to release a rendering) looks something like the Vietnam War Memorial in Washington DC. The burial ground (above) is separated from a public park (below) by a retaining wall marked with the names of all those buried there. Over time, the bodies become a part of the soil which is used to grow memorial gardens.

Image result for vietnam monument dc

Hopefully, the Urban Death Project’s testing is successful and these “recomposition” sites are deployed by the time I “go” because, in my opinion, the existing options aren’t working for anyone – living or dead.

“What The Health!”

Two days ago, my uncle told me that he watched “What the Health“. He said that after watching the film, he felt for the first time like he needed to change his diet. I was immediately curious and decided to watch it on Netflix last night.

The purpose of the film is to present a plant-based (vegan) diet as the secret to preventing and even reversing chronic diseases – and to expose the corruption in government and business that keeps the public from adopting such a diet. I want to take a closer look at some of the facts used in support of the filmmaker’s arguments.

1. Approximately half of deaths are caused by cancer and heart disease(U.S.)

2. The World Health Organization (WHO) classifies processed meat as a Group 1 carcinogen – the same group as cigarettes and asbestos – and classifies red meat as a Group 2 carcinogen.

From the Frequently Asked Questions on the WHO website, the Group 1 category is used when “there is convincing evidence that the agent causes cancer”. The classification only describes the strength of scientific evidence, not the associated level of risk. In other words, consumption of processed meat has been classified in the same category as tobacco smoking and asbestos, but this does NOT mean that they are all equally dangerous. Furthermore, the Group 2 category is used when an agent is “probably carcinogenic to humans” but convincing evidence has yet to be found.

3. Cooked meats – including pork, fish and poultry – release chemicals that are carcinogenic.

When meats are cooked at high temperatures, especially over an open flame, heterocyclic amines (HCAs) and polycyclic aromatic hydrocarbons (PAHs), which have been proven to cause cancer in animals, are formed. A definitive link between these chemicals and cancer causation in humans has not been found.

4. Meat consumption is a higher risk factor for diabetes and heart disease than consumption of alcohol, carbohydrates, or sugar.

5. Eating 1 egg per day is just as bad as smoking 5 cigarettes per day for life expectancy

Tl;dr: The amount of cholesterol in an egg yolk is unhealthy (100-200mg, 40-75% of the suggested daily limit) but not nearly as unhealthy as smoking 5 cigarettes per day.

In 2010, a Nurse’s Health Study was published outlining mortality risk factors – how lifestyle and dietary choices impact mortality. The study began in 1986 when researchers surveyed 50,112 female registered nurses in the United States aged 30-55. Follow-up questionnaires were sent to participants every two years until their year of death or 2004, whichever came first. A theoretical model, a Cox proportional hazards model, was used to compute hazard ratios for associations between each risk factor and mortality. Through this analysis, the researchers reported that smoking the equivalent of 1 pack/day for 46 years increased one’s risk of death by 108% (relative to never smoking) while consuming 105mg of cholesterol/day increased one’s risk of death by 17%. How Dr. Greger inferred from those results that the daily consumption of the amount of cholesterol in a single egg yolk cuts a woman’s life short by the same amount as smoking 5 cigarettes per day is beyond my understanding.

In the video linked above (see 5), Dr. Greger goes on to describe another study on the relationship between egg yolk consumption and carotid plaque. He correctly interprets that eating more than 3 eggs/week was found to significantly increase carotid plaque area, and that carotid plaque area increases exponentially with both pack-years of smoking and egg-yolk years, but I think he misinterpreted the definitions of pack-years and egg-yolk years. In the study pack-years are defined as the number of packs/day of cigarettes times the number of years smoking while egg-yolk years are defined as the number of egg yolks/week times the number of years consumed. Given these definitions, I struggle to see how even the most aggressive egg yolk consumers are exposing themselves to a risk equivalent to those that smoke a pack/day for 40 years or more.

6. The American Cancer Society, American Diabetes Association, and American Heart Association are sponsored by animal product and pharmaceutical companies.

At this point I could continue to investigate each argument that the film makes but I am starting to feel like I am beating my head against a wall – and I’m sure that you are too. The purpose of the last 6 points was twofold: to demonstrate that a plant-based (vegan) diet is generally healthier than a diet heavy in animal products, but that the filmmaker’s have significantly dramatized the facts.

All of the health risks associated with animal-based diets make sense when you understand that our bodies were designed by evolution for a plant-based diet. Given that there doesn’t seem to be a nutritional advantage to consuming animal products, why are we wasting resources raising animals as a food source? If all of the nutritional value in animal products originally comes from their food – plants – then why don’t we just eat the plant?  Both of these points make complete sense to me now that I have seen “What the Health” but I am somewhat confused as to why I didn’t come to these realizations on my own. I suppose that I never really stopped to think about my diet and I certainly wasn’t exposed to these ideas in my daily life – proof that the money animal product and pharmaceutical companies are spending is serving its purpose.

To be fair, I don’t think that there is anything inherently wrong about consuming animal products. It is the quantity in which we consume them, and subsequently the way in which they are produced, that are the issues. If we were to move back to diets that are 80-90% plant-based we and our environment would be much healthier – saving an extraordinary amount on healthcare and resource costs. Maybe incentivizing plant-based diets should be at the forefront of the Republican’s new Better Care Reconciliation Act.

Listen to Halsey

Music was never really present in my house growing up. I may have taken a year of drum and piano lessons when I was really young but I never learned to properly play an instrument or understand music theory. I only started to learn how to appreciate good music about two years ago when I decided to teach myself how to play the guitar. I’m not an expert by any means but I think I am getting there…

Although I can’t yet call myself a musician, I do consider myself an artist. I am a writer, painter and engineer, but those are just labels. Fundamentally, I am both a thinker and a doer. A lot of people are doers, but true thinkers are far more rare. To me, artistry starts with curiosity, curiosity breeds education, education breeds contemplation, contemplation breeds understanding, and understanding breeds truth. Once an artist has found his or her truth, all that is left is to share it – thats where the doing comes in. Thought gives execution purpose, and that, to me, is art.

As an artist, I appreciate other artists. In the case of music, I believe that there are three types: those that create, those that perform and those that do both. I gravitate toward those that do both. I appreciate artists who write, produce and perform THEIR music.  Halsey is one of those rare artists.

Both of the albums she has released to this point have been concept albums – her first, BADLANDS, creates and explores a post-apocalyptic wasteland, while her second, hopeless fountain kingdom, is a story told in the vein of Romeo and Juliet. Creating the best music is difficult enough without adding the complexity of maintaining a unifying theme throughout an album. She definitely did a better job of that the second time around and I am confident that the next album will be even better. Even if the music isn’t for you, I hope that you will appreciate the artistry.

As an auxiliary note – if you are an artist, create and share. You never know who will see your work, appreciate it and want to give you the opportunity to grow. Halsey started by posting covers on YouTube. Then, she posted her song “Ghost” on SoundCloud and got a record deal with Astralwerks as a result. Now, she has a #1 album in hopeless fountain kingdom. Anything can happen…

Alright…I’ll Write About Uber

Until now, I have resisted writing about Uber because their issues have been well-documented without my help, but last night Travis Kalanick resigned as CEO, seemingly leaving “his” company without a leader.

Though he did lead the company’s growth for the last 7 years, Travis Kalanick did not create Uber. The idea for Uber was conceived by Garrett Camp, the current Chairman of Uber’s board of directors. Camp is a 38 year old, Canadian software engineer turned entrepreneur. He founded his first company, StumbleUpon, in 2001 while earning a Master’s degree in software engineering from the University of Calgary. He sold StumbleUpon to eBay in 2007 for $75 million but remained CEO until stepping down to “work on other ventures” in 2012. Those other ventures are Expa and Uber.

Camp hired a private driver while CEO of StumbleUpon. He developed Uber in 2009, as a way to make the service more affordable – sharing the car, and the cost, between a number of his friends. Because he was committed to StumbleUpon at the time of Uber’s founding, Camp brought on Kalanick as an “advisor”. To that point, Kalanick had dropped out of a computer engineering and business economics degree at UCLA and co-founded two peer-to-peer file sharing businesses – Scour.net, which filed for bankruptcy to protect itself from a lawsuit, and Red Swoosh, which was acquired in 2007 by Akamai Technologies for $19 million. Although he served as CEO of Red Swoosh, Kalanick did not become Uber’s first CEO. He hired a seemingly less qualified candidate, Ryan Graves, who he then replaced less than a year later.

Now, Uber is looking for its third CEO. This might be an opportunity for Garrett Camp to step into an acting role while the board searches for the right hire. They are reportedly also searching for a COO (Chief Operating Officer), CMO (Chief Marketing Officer) and independent board members. Marissa Mayer would be an interesting hire as COO – bringing another woman, but more importantly, more technical and managerial experience to the boardroom table.

Although he has resigned as CEO, Kalanick has not resigned from Uber. He retains his seat on the Uber board, his super-voting shares (giving him, Camp and Graves additional influence) and his 12 percent financial stake in the company. This resignation could end up being more like the leave of absence announced on June 13 if Kalanick can recover from his disastrous year, both personally and professionally.

Whole Foods Market: Past, Present, and Future?

In 1976, Whole Foods Market co-founder, John Mackey, dropped out of college and moved into a vegetarian co-op in Austin, Texas. Two years later, at the age of 25, he raised $45000 from friends and family to open his own natural foods store. The original store was called “Safer Way” – a deliberate attack on the grocery giant Safeway. The store was on the main floor of an old house that John bought with his then girlfriend and co-founder Renee Lawson Hardy.

In 1980, Safer Way partnered with competitor Clarksville Natural Grocery to open the first “Whole Foods Market”. From 1984 to 1992 Whole Foods took on venture capital to fuel expansion to Dallas and Houston. Then in 1992, Whole Foods Market went public, giving them the capital to expand across the United States, Canada and the U.K. through acquisitions, while continuing to open new stores from the ground up.

Today, there are 465 Whole Foods Markets across the United States accounting for just 1-2% of the nation’s grocery revenue.

On June 16, it was announced that Amazon will acquire Whole Foods Market in an all-cash transaction valued at approximately $13.7 billion. For the time being, Whole Foods Market will continue to operate stores under their brand and John Mackey will remain as CEO.

Amazon’s mission statement reads: “We seek to be Earth’s most consumer-centric company”. Arguably, their actual mission is to be Earth’s most consumer-dominant company. If you want to take a cut of all economic activity, you need a foothold in groceries as the category accounts for about 20% of consumer spending. That is why Amazon has been experimenting in the space for over a decade, first with Amazon Fresh and more recently with Amazon Go.

Amazon’s key to control the consumer market though is Prime. With Prime’s reliability and convenience, Amazon has created a moat around consumer goods that doesn’t depend on price because customers don’t even bother to check anywhere else – that is except, maybe, the grocery store. Eliminating the opportunity for Prime customers to be reminded that other retailers sell consumer goods, potentially at lower prices, is just another reason for Amazon to get into the brick-and-mortar grocery game.

The Amazon acquisition is almost certainly the unfortunate death of Whole Foods Market. Amazon has no passion to be a grocer let alone a natural foods grocer. They are a services company that is purchasing a $13.7 billion tactic and they aren’t done yet.

Let’s decompose the process a consumer goes through to purchase groceries:

  1. They must decide what they want to eat
  2. They must create a list of the required ingredients
  3. They must take stock of what they have in their pantry
  4. They must purchase the list of outstanding items
  5. They must transport the groceries from the retailer to their home

Even with the purchase of Whole Foods, Amazon has only addressed the last 2 elements of the consumer process. I’m interested to see if they target a meal planning company like Platejoy, to control the remainder. After all, if your mission is to be “Earth’s most consumer-centric company” you might as well own it all.