In the first seminar of the Business Ethics series, the professor introduced us to his definitions of Morality and Ethics, which would form the basis of his discussions. While I disagree with the definitions, for the sake of argument I will accept them to see where it leads. First, the definitions:

Morality – one’s internal belief structure of what is good and true
Ethics – the core values defined by a community of what is good and true

You can probably see the problem already. What is ethical is whatever the community (either as a whole or just a majority) believes is right. The guys at Enron were ethical because they were doing exactly what their community (Enron) believed was right. To determine if they were moral, one must look to see if there was an internal conflict between what he did because of Ethics, and what he wanted to do because of his Morals.

You can counter this with the notion that the Enron community didn’t align with the larger community (our society), and that our society is where Ethics are truly derived. But this is wrong – by deriving Ethics from a community and not from universal truths, you recognize that there are multiple communities with differing ethics. Because Ethics are derived from that community, members from one community can’t say the Ethics of another community are wrong.

This leads us to one of the biggest problems in modern philosophy today – the concept of relativism. I won’t go deep into the philosophy behind it, but basically if you follow this line of thinking to its end, you reach a point where you find a community that represents any possible combination of Ethics. I can murder people as long as I associate with a community that believes murder is right.

The existence of a practice does not entail its being ethical. We must use our intuition to determine if it is truly right.

Is whistleblowing right or wrong? According to this definition of Ethics, it is always wrong because it always is in disagreement with the core values of a business (whether those be lieing, cheating, stealing…). In my mind, this fails the Intuition Test.

Which leads me to my argument: We shouldn’t be taught “Business Ethics” if Ethics is defined as principles which the business as a whole says is right. We should be taught “Business Morality” in order to question the norms in a business to ensure they truly are right.

The Idea
In college, you have many friends who have taken many courses, but there’s no easy way to know WHICH friends took WHICH courses, and what they thought of them. It would be great to know which 10 of your friends took GEOL 101 and what they thought of it, but you don’t want to ask all your friends if they’ve taken this course – most of them haven’t. Coursevote was a way to see what your friends, and everyone else, thought about courses.

There’s many services out there that tell you what everyone thinks of a course (RateMyProfessor, PickAProf…), but your friends’ opinions matter more than the crowd. Coursevote would let you see that 40 people liked this course, 5 of them were your friends, list those friends and make it easy to ask them about it.

The original monetization plan was allowing students to sell ads for used books alongside relevant course pages. So on the MGMT 211 page, students could advertise their used books for this class. I quickly gave up on micropayments from the masses and shifted to reaching critical mass at universities so I could sell ads to local businesses. It never got big enough make ad sales worthwhile.

How it got started
Around March of 2006 I decided I wanted to pursue this idea after thinking about it for a few months. I entered a business competition called the Texas A&M Ideas Challenge, and sold a content site I managed to raise some money. In May, I won and the next day I hired a developer to build it.

We worked over the summer to build the beta site using the Facebook API, which is where we got the friend connections. Right as we were testing out the beta the Facebook Platform was launched, and I decided we had to rebuild it as a Facebook application.

What went wrong
I did a lot of things wrong, but the two biggest mistakes were jumping on a new, unproven piece of technology and not hiring my developers correctly.

Mistake #1 – Facebook Platform
The original plan had been to build our own website ( www.coursevote.com ) and use the Facebook API to figure out the social graph. Moving our application inside of Facebook right as the Platform was launching was terrible because the Platform didn’t work. There was no documentation, which made my developer’s life hell. And they liked to change things without notice, so my developer spent countless hours trying to figure out what Facebook decided to “fix” that broke our app.

The worst part was the constant downtime of the Platform. After about a month of talking to professors and staff of Mays Business School, I was allowed to show Coursevote at a required meeting of about 500 students. I gave the demo on a Tuesday and Thursday – the entire Platform was down Monday to Saturday that week, so all the students I showed it to went home and found my application broken.

I don’t want to blame Facebook for it all. Even if the Platform worked, moving my application inside of Facebook was a bad idea and I should have realized it sooner.

Facebook applications were mostly games, and functional applications got drowned out in the noise. The applications inside Facebook should be things you use often; Coursevote was something you’d use once a semester. And many students didn’t like the concept of applications, so would refuse to try it out regardless of its utility.

If I had kept it on its own website, I could have used the Facebook API without having to get caught up in the “useless Facebook app” wave. It could have developed its own brand, and students could have associated Coursevote.com with “where I go for course information each semester.”

The Platform added no new value, only more complexity. It transferred control of my application from me to Facebook. If I hadn’t been distracted by the shiny new technology, Coursevote might have had a better chance of succeeding.

Mistake #2 – Hiring Developers
This was the first time I had ever hired someone to do work on a startup with me. I didn’t know the proper way to compensate, and I learned a lot by seeing what didn’t work.

I hired my first developer the day after winning the business competition. He was a friend of a friend, and I had heard great things about his programming abilities. But he wasn’t passionate about the project; he was just a “hired hand” doing his job. I told him the project specs, he quoted me a price, and we got to work.

After Facebook launched the Platform, we had to rebuild almost everything. He reached the point where he just wanted this project to be done, and the code reflected that. I had to hire another developer take over.

I saw that just paying someone who cares nothing about the project didn’t work out well, so I sought out a developer who liked the idea and would work for equity – becoming a cofounder. This worked well at first, but he became less interested in the project when paying jobs came around and he saw Coursevote wasn’t taking off as well as we hoped.

If I could redo it I would have vested his ownership and paid him a small salary – letting him choose his own salary/equity balance.

Where Coursevote is now
It’s still on Facebook, but its main differentiating feature – what your friends think – still doesn’t work. What’s up now is Version 1, Version 2 (with the new developer) never got finished.

What I learned

• Put together a great team who loves the idea, and compensate them fairly.
• Fail early. Be willing to pull the plug when it becomes obvious it won’t work.
• Seek the advice of people who have done this before. This could have solved a lot of the developer problems.
• What your customers say and do are two different things. Everyone I asked said they would definitely use the service, but it was so difficult getting people to actually sign up for the service.
• Have more money on hand than you think you need. Nothing goes according to plan.

As he tried to show them the problem with this, he gave the following story:

Then I gave the analogy of a Greek scholar who loves the Greek language, who knows that in his own country there aren’t many children studying Greek. But he comes to another country, where he is delighted to find everybody studying Greek – even the smaller kids in the elementary schools. He goes to the examination of a student who is coming to get his degree in Greek, and asks him, “What were Socrates’ ideas on the relationship between Truth and Beauty?” – and the student can’t answer. Then he asks the student, “What did Socrates say to Plato in the Third Symposium?” the student lights up and tells you everything, word for word, that Socrates said, in beautiful Greek.

But what Socrates was talking about in the Third Symposium was the relationship between Truth and Beauty!

What this Greek scholar discovers is, the students in another country learn Greek by first learning to pronounce the letters, then the words, and then the sentences and paragraphs. They can recite, word for word, what Socrates said, without realizing that those Greek words actually mean something. To the student they are all artificial sounds. Nobody has ever translated them into words the students can understand.

I said, “That’s how it looks to me, when I see you teaching the kids ‘science’ here in Brazil.”

Does this sound familiar? This is why I’m so disillusioned by our educational system. No one is here to learn, only to get good grades so they can get a good job. How do they get good grades? By memorizing.

Some of you might know that I consider studying a form of cheating. If you’re being tested over your knowledge of a subject, studying is the means by which you fake that knowledge. That isn’t to say I don’t study – I don’t study much, but I do skim my notes before a test. Our educational system has devolved from testing your knowledge to testing your memorization skills. Studying isn’t cheating because you’re not being tested for knowledge.

I try not to let school get in the way of my education, and do a good deal of learning outside of class through things like the BIL Conference. BIL was so exciting because it was a gathering of really smart people who wanted to learn. While the lectures were great, I most valued the hallway conversations. It’s so refreshing to spend time with people who have a passion for learning.

I often feel like I’m missing out on the real college experience, and that Texas A&M University isn’t a “real” college. I want to hang out around Oxford, Stanford, Princeton, and MIT and have those interesting and random conversations with intellectuals, which I was always told college was like. I want to take classes that are interesting and actually learn something, without worrying how the class will affect my GPA. I want to spend my four undergraduate years in an environment similar to the one we created for two days at BIL.

Now that I’m almost done with school, I feel like Texas A&M cheated me of an education. Everything I’ve done and learned these past few years have been despite this institution, not because of it. I want to take a few years getting a “real” education – go to a great university and sit in on classes that interest me. I don’t care about grades or a degree, I just want the knowledge.

When you work for a grade, you’re learning for someone else. Whether you have to get that 3.5 GPA to get a job with one of the Big Four, or you need a 4.0 to get into some graduate program.

True learning is internal. I learn because I want to learn. Selfish, I know.

I have been repeatedly disappointed by my formal education, and I now turn to my informal education to teach me.

For one of my classes (FINC 421) we started our own hedge funds. We were given $30M in a program called StockTrak with the ability to buy 50% on margin, access to Bloomberg, and a few basic QUANT rules. Over 3 months we were able to generate over 20% return, which is amazing.

Our professor started this project to see if a student-run, QUANT-based hedge fund would be possible here at Texas A&M. After these great results, there’s a pretty good chance we’ll be getting a hedge fund here in the next few years. We already have a student-run stock portfolio (The Tanner Fund).

Here’s the presentation we’re giving tomorrow on our results:

| View | Upload your own

‘The Real American Gladiators’ is the name of our Hedge Fund; I’m not sure who came up with that name.

For those that are interested, here’s a few details on how we made so much:

• We downloaded the most recent data on about 7000 stocks from Bloomberg, rated them based on (Free Cash Flow)/(Enterprise Value) and Return on Invested Capital, then sorted them from most undervalued to most overvalued.
• After eliminating all with a market cap below $1B, we went $30M long on the first 10 and $30M short on the last 10. This long-short strategy allowed us to make money despite market conditions. In effect, we were betting that one group of stocks was relatively mispriced against another.
• After 2 weeks we closed out our positions and repeated.
• After about 4 trades we integrated Reversal into our strategy – that is the concept that the best performing stocks this month will be the worst performers next month (see graph in slideshow for more details).
• Towards the end of the presentation we show what “our fees” were. This is based on a management fee of 20% profits + .5% of assets under management.
• I was amazed at how well these QUANT strategies worked. We had such great results because we were unemotional (never using our “gut”) and made our trades a few hours after computing the data, while it was still fresh and relevant.
• While the annualized return is 115%, I don’t think we could expect that high of a yearly return. I think our portfolio did so well because of the increased volatility in the market recently. I don’t think these results are typical; however, I do think the QUANT strategies would continually beat the market. Just not as much as we were able to do over the past 3 months.

More information on this topic can be found here:

• TED Talk – Aubrey de Grey
• The Immortalist: Aubrey de Grey on Aging – briefly discusses how no one has been able to scientifically discount Aubrey’s hypotheses.
• Aubrey’s slide deck – A more scientific presentation than the one he gave at TED
• Sens.org – The research being done by Aubrey and his team

If you’re interested in hearing him speak, he will be at Texas A&M in the fall (we’re still working out the date). Send me an email if you’d like to know when we have more information on this talk.

What’s changed?

• Improved information architecture – The previous version had a menu that was completely unorganized. Every time a new page was added to the site, a link was added to the main menu. I broke the menu up into targeted user groups, updated content (newsletter), and most important pages.
• Better integration of WordPress – Before, I had installed wordpress for them to post all the new content: things like events, news, jobs… and each week they sent out an email with a long list of all the new stuff. But it wasn’t well defined – if I wanted a job, I had to look through all the news and events to get to it. I’ve broken the different types of content into categories, and created an event calendar so people can easily see what’s coming up. Also, this will make updating the site a lot easier for the staff.
• Cool, flashy stuff – Homepage is using SlideshowPro to present eye-catching pictures of important things. Live chat with staff on homepage (through meebo), event calendar on the homepage, and I’ve made the site wider to accommodate more content (previous version had been designed for 800×600).

Check it out and tell me what you think.

If you like my photos, subscribe to my photos feed.

We recently replaced all the computers in the Masters Lab with iMacs running Windows XP

Faculty Lounge

Kyle Field from Mays

(more photos)

I got a chance to meet with Kelly Williams, Director of Milestone Venture Group, after he talked to a class this morning. His talk was much more interesting than most I’ve seen because he used Q&A throughout – as opposed to the more common hour-long lecture.

He’s working in private equity, but the way he discussed it was much different from how I had viewed PE. He finds small companies (where $5-10MM will get a majority stake) with great management teams which are having trouble growing the company. My only knowledge of PE groups were the ones taking public companies private with billion dollar buyouts, which seems to happen every day now.

An over-simplification of my view was that VC’s bring private companies to the public market, and PE’s take them back private. While I’d still prefer to be a VC – I find going from $0 to $5MM much more exciting than $5MM to $50MM – this just shows that there’s a lot more to private equity that I don’t know.

He was a great guy and I hope to meet him again soon.

[Update:] Ah, one of my favorite VC’s, James Chen of CXO Ventures helps me out with the difference between VC’s and Buyouts. Thanks!

With my Coursevote.com idea, I won the Business Ideas Challenge.

It was an amazing experience. The judges had some great questions and advice, and really saw the potential of this project. I wasn’t allowed to actually demo the site (not allowed to use computers), but I printed out a few key pages from it for the judges. After the presentation we had a reception where I talked with a bunch of the judges, only a few had seen my idea. We had interesting conversations about my product and the new media landscape in general.

I’m about to hire a developer and we’ll get to work on building this site right away. Hopefully by mid-summer I’ll have a working prototype, which I’ll test out with some people and work out any bugs. The goal is to open it up university-wide by the beginning of school this fall.

If you’d like to beta test the site, or just keep up with it, go to Coursevote.com and type in your email address.

If you were a judge or someone I met today, send me an email so I can stay in contact. Thanks again for spending this whole day at Texas A&M helping us with this event.

(photo from a tour of Mays Business School I followed around, more here)

A couple days ago I found out that I’m a finalist for the 6th Annual Business Ideas Challenge. So on May 2nd I will be presenting my idea to a group of business leaders and possibly win a prize. 1st gets $3,000, 2nd gets $2,000 and 3rd-10th get $1,000 each.

My idea (which I had been planning to do before I heard about this competition) is Coursevote.com. I’m not going to go into much detail, but basically its a Digg for courses.

After I was told that I was a finalist, I received the details on the presentation. I get 5 minutes to present my idea, and 5 minutes of Q&A.

But, I’m not allowed to use the demo I built specifically for this competition. It’s going to be a lot more difficult describing this idea than if I was just allowed to show it. I wish someone had told me this before I spent a few weeks developing it.

[Update:] I’m printing out handouts with two pages of the demo, which should help. It’s not as good as if I had access to a computer, but it will have to work.

Whether or not I win, I’ll begin work on this project once summer starts in a few weeks. I’m hiring a developer and hopefully will have a private beta ready mid-summer. My goal is to fully launch it in the fall when everyone gets back.

I’m using the iPod in Car sale to fund it, and hopefully will have some winnings to add to that.

If you’d like to check out the demo, send me an email. I’d love to get some feedback on it.