Archive for April, 2009

Last month I had the opportunity to be a judge at the Sustainable Venture Capital Investment Competition (SVCIC) at the University of North Carolina. They are the long-time home of the VCIC, the the Sustainable version is now about 5 years old. It was started by Deb Parsons who now actually works for Investors Circle in San Francisco. A Venture Capital Investment Competition is different than a business plan competition. In the latter, students present business plans and compete for funding. In this competition, real entrepreneurs present business plans, and the student teams have to choose who to fund and how to structure the deal. Students act like VCs. I competed while an MBA student at BGI and it was challenging and fun. A friend suggested I try judging in the future and I’m really glad I did.

As the Sustainable competition, it’s really an opportunity to engage around what “sustainable” does or should mean. The presenting entrepreneurs had a range of how much they themselves promoted sustainability though all had businesses related to energy, materials or waste. Those all relate to sustainability, but a differentiator is where pushing sustainability falls within the priority list of the founder. Is she looking for new opportunities that advance sustainability? Or is she looking for new opportunities because of where she has leverage over others or where she has friends in business? It doesn’t have to be a case of business vs. non-business thinking: those could all be valid ways of finding new opportunity; it’s your priorities that determine which ones you look for. Businesses are now reaping energy efficiency gains that they could have before but it just wasn’t a priority, things like adding skylights to commercial shopping areas to cut lighting costs. It also helps to have it become a business-community-wide priority because there are more products and services to help you, and more leaders to watch and imitate. For would-be sustainable investors, the goal is to find those leaders.

The format of the competition is inevitably artificial: teams get business plans ahead of time; entrepreneurs present for 15 minutes, so far so good. But then each team gets 15 minutes to ask questions of their entrepreneur and that’s it. They have overnight to design their deal and make presentations for us, the judges, to see the next day. So judging is a little crazy – I watched 8 teams ask similar questions of the same entrepreneur for 15 minutes each and then had all of 5 minutes to write notes about it. Entrepreneurs who agree to this process definitely have to have patience!

It was fascinating to be a judge and watch how different teams posed questions. For example one team asked “aren’t your competitors going to make countermoves to put you out of business?” Another team asked “if you win in this business, who will be the losers?” Those are two very different ways to get into the same conversation. It was also helpful to watch different teams try to probe the entrepreneurs on their commitment to/interest in sustainability. It ranged from a single question of “you mentioned sustainability, what are your strong points?” to a multiple question drill-down that seemed very confrontational. As an observer I could really see how unhelpful it was to drill down. Either the entrepreneur has a priority of sustainability and will talk about it given an opportunity, or they don’t and trying to beat them up about it at best gives them an opportunity to catch on and greenwash and more likely just beats them up needlessly over a non-shared priority. There are businesses out there that are contributing to sustainability without focusing on it, but business is also about adapting to change and growing. If it’s not a priority at the top then I don’t think it’s really part of the company. Net, I felt like I learned something about improving the dialog between entrepreneurs and sustainably-minded investors.

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I did jury duty this week and ended up on a personal injury case, this resulting from a car accident. I got the sense that several other trials were also car-accident cases – at least two of our “expert witnesses” were testifying in other cases that day. My spouse was on a jury about two years ago, and his case was also personal injury, though it was between a worker and a manufacturer of a piece of equipment.

The plaintiff’s lawyer pushed us fairly hard during voir dire on whether or not we could be fair or were predisposed against personal injury cases. There certainly are handy negative archetypes to latch on to: an injured party is not really injured but just going for the big payoff, or an ambulance-chasing lawyer trying to make a buck. On the other side I could conjure up a reckless driver unwilling to own up to consequences.

The sad truth that seemed reasonable to me is that the injured party really is injured and likely faces a lifetime of chronic low-grade pain management. The problem is, he’s been rear-ended three times in a two-year period, each time he was stopped at a light, once he was already the 3rd car deep when a drunk slammed full-speed into the end of the line. This last time was the most minor; it seemed pretty clear that our defendant barely tapped him. In my mind, the question has nothing to do with the facts of the accident or fault, it’s also not really an issue of what the plaintiff needs, it just comes down to who pays.

How do we decide who pays? Do we go by the pain and behavior changes of the injured (what I boil the plaintiff’s case to), or do we go by the amount of damage done to the vehicles in the accidents (what I boil the defendant’s case to)? Those two trend lines were in direct opposition. For better or for worse, I was the alternate so I didn’t get to watch the group wrestle with this. I just got my “all clear” call from the court, I have no details on how my fellow jurors decided but they ended up awarding nothing.

What I found myself thinking was that a national health care system would save all of this. It was sad to me how low the amounts of money were at stake: somewhere between 3 and 10K to cover the medical treatments, maybe $1500 for pain and suffering, though the plaintiff’s lawyer also suggested $15000 for, a future-looking expense, I think future pain and suffering. So a total around 20K. I was trying to do the math, it must have cost at least $100/hr for the lawyer. Three days of court time plus prep which involved collating a huge notebook of documents and deposing 3-4 people, maybe 50 hours (spread among cheaper assistants as well) so I’ll hazard $5000, plus 2 expert witnesses, so I’ll round my final upper estimate for the defendent up to 6000 -totally off the cuff, but trying to stay below a likely settlement offer which would have avoided trial. Don’t know what the defendant was offered to settle, and also don’t know if he’d make an economic or an emotional decision. I’ll guess the plaintiff’s lawyer was signed up for a cut of whatever was won. But to calculate the total savings that could be had if we had nationalized healthcare we have to add the judge, the clerk, the bailiff, the courthouse time and the jury (plus alternate!). We as a society surely could have provided good healthcare treatment for less.

If we didn’t have to battle out in court who pays, how much would be saved annually? We need to take this into account when we’re looking at what would be more efficient for healthcare – how much goes into the legal system as a side effect of our “competitive” system now? Suddenly having good care for everyone seems much more feasible in my mind.

One interesting side note, the courthouse does seem to be an economic boon for the immediate area by bringing a big and steady lunch-crowd to the nearby shopping mall.

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