ServiceNow, an IT management cloud service backed by venture firms Greylock Partners, JMI Equity and Sequoia Capital, priced its initial public offering at $18.00 per share, opened at $23.75 for an IPO "pop" of nearly 32%, and is trading at around 23.00 in mid-morning trading.  Morgan Stanley is the lead left book-running underwriter, and this is the first IPO led by Morgan Stanley since the Facebook IPO.  ServiceNow is listed on the NYSE with the ticker NOW.  A strong showing by ServiceNow could open the IPO window for other venture-backed companies.

Here are links to ServiceNow's latest (full) S-1/A filing with the SEC:  
http://www.sec.gov/Archives/edgar/data/1373715/000119312512274253/d301887ds1a.htm 

Here are links to articles on the IPO:
Bloomberg:  http://www.bloomberg.com/news/2012-06-29/servicenow-advances-in-debut-after-210-million-ipo.html

Retuers:  http://www.reuters.com/article/2012/06/28/servicenow-ipo-idUSL2E8HSK1M20120628

Stockton, California's 13th largest city with a population of 290,000, yesterday filed for Chapter 9 bankruptcy protection.  Stockton is the largest city by population in the United States to file for bankruptcy, but the 2011 bankruptcy filing by Jefferson County in Alabama is the largest municipal bankruptcy in terms of debt outstanding.

Here are links to articles on the bankruptcy:
Reuters:  
http://www.reuters.com/article/2012/06/29/us-stockton-bankruptcy-idUSBRE85S05120120629 

San Francisco Chronicle:  
http://www.sfgate.com/news/article/Stockton-bankruptcy-filing-makes-history-3671895.php 

Here's a link to my prior post on Stockton:  
http://www.allenlatta.com/1/post/2012/06/stockton-is-on-the-verge-of-bankruptcy.html 

Two venture-backed companies launched their initial public offerings today, and had a mixed first day of trading.  Tesaro, a biotechnology company, and Exa, a simulation design software company, are the first venture-backed IPOs to begin trading since Facebook's IPO on May 18.

Tesaro priced its IPO at $13.50 per share, at the mid-point of its $12-$15 range, and raised $81 million in the offering for an IPO market capitalization of $360 million.  Tesaro's stock opened at $13.94 per share for an opening pop of 3.4% and closed at $13.69, up 1.4% from the IPO price.  Citigroup was the lead left book-running underwriter on the offering.  Venture capital investors in Tesaro include InterWest Partners, Kleiner Perkins Cauflied & Byers, New Enterprise Associates, Pappas Ventures and Venrock. 

Exa priced its IPO at $10.00 per share, below the offering range of $11-$13, and raised $63 million in the offering for an IPO market capitalization of $132 million.  Exa's stock opened at $10.01 per share, flat, and closed at $9.80, down 2% from the IPO price.  Stifel Nicolaus Weisel was the sole book-running manager on the offering.  Venture capital investors in Exa include Boston Capital Ventures and Edelson Technology Partners. 

It would have been nice for these companies to have strong performances for the day, but another test will be tomorrow's expected IPO of ServiceNow, an IT management cloud service backed by venture firms Greylock Partners, JMI Equity and Sequoia Capital.  ServiceNow plans to trade on the NYSE with Morgan Stanley as the lead left boor-running manager.

Bill Davidow, co-founder of Mohr Davidow Ventures, has an article on the Atlantic "What Happened To Silicon Values" that provides an interesting take on the shifting perspective in Silicon Valley on the value of the customer.  Here's the link:   http://www.theatlantic.com/technology/archive/2012/06/what-happened-to-silicon-values/258905/

Josh Barro's opinion article on Bloomberg View "Why Better Reporting Won't Lead To Healthier Pensions" provides an interesting view of the accounting rules regarding pension disclosures approved yesterday by the Government Accounting Standards Board.  The new accounting rules require many state and municipal pension funds to use more conservative assumptions (a lower discount rate) when valuing their liabilities.  By doing so, the size of the unfunded liabilities of these funds can be highlighted to the general public.  But Barro points out that this disclosure, while a good first step, doesn't require state and local governments to reform their pension systems.  Barro argues that the rules should also deal with the required cash flows, not just the stated liabilities.  In his view, showing the required cash flows could provide needed pressure to states and local governments to take action to address these pension issues.  Here's the link:   http://www.bloomberg.com/news/2012-06-26/why-better-reporting-won-t-lead-to-healthier-pensions.html

Here's a link to my prior post on the GASB pension accounting rules:  
http://www.allenlatta.com/1/post/2012/06/new-accounting-rules-to-highlight-public-pension-shortfalls.html 

Private Equity investments are facing challenges in India, according the the Reuters article "Rupee Slump Deepens India Private Equity Quagmire."  According to the article, current challenges include:

• The Rupee has slumped by 20% and is Asia's worst performing currency over the past 12 months.
• Fierce competition for deals.
• Few willing sellers.
• A regulatory ban on leverage.
• A fickle market for exits through IPOs.
• Investment holding periods have lengthened.
• India's economy has weakened as growth has slowed.
• Public share prices have slumped.

Here's a link to the article:  
http://in.reuters.com/article/2012/06/26/india-privateequity-idINL3E8HE62I20120626 

Stockton, California's 13th largest city with a population of 290,000, is on the verge of bankruptcy.  Stockton has been in a legally-required mediation period trying to negotiate a financial solution, but that mediation period is set to expire today.  It is expected that Stockton will file for Chapter 9 bankruptcy sometime this week, and as early as Wednesday.  Stockton has a debt load of $700 million and a budget deficit of $26 million in the $150 million provisional budget for the fiscal year beginning July 1, according to a story in The Wall Street Journal.  Stockton's bankruptcy will be the largest city to file for bankruptcy, according to an article in the Sacramento Bee.

How did this happen?

• Bad budget decisions based on overly optimistic assumptions of the local economy;
• Over-generous salaries and pensions that have spiraled into massive liabilities;
• An expensive downtown redevelopment effort; and
• Falling tax revenue due to the real-estate downturn.

It's a difficult situation, and one that bears watching, as many other California cities are in difficult financial situations.

Links:
WSJ.com:  http://online.wsj.com/article/SB10001424052702304441404577482743500250790.html?
Sacramento Bee:  http://www.sacbee.com/2012/06/24/4584857/vote-tuesday-could-send-stockton.html

Jay Jamison, a Partner at BlueRun Ventures, has posted an interesting analysis on TechCrunch called "The Anatomy Of A Pass, A Quantitative Analysis On Why A VC Passes."  Jamison analyzed over 200 pitches he saw and rated each company on a five point scale based on Traction; Market; Team; Product; and Likelihood of Receiving a Term Sheet.  He then ran a regression analysis and found that Team and Market are by far the most important factors in a company receiving a term sheet from BlueRun.  This makes sense to me as most early stage investors focus on team and markets.  He then finds that Traction is the next more important factor, and much more important than than Product (at least in his equation).  It's an interesting analysis and worth a read.  Here's a link to the article:   http://techcrunch.com/2012/06/24/the-anatomy-of-a-pass-a-quantitative-analysis-on-why-a-vc-passes/

Also, I encourage you to read his scoring rubric for Team, Market, Traction, Product, and Term Sheet, which can be found here.  Here's the link:  
http://jayjamison.com/2012/06/05/support-info-for-anatomy-of-a-pass/ 

Today's article at WSJ.com "IPO Market Gets Post-Facebook Test" discusses the four initial public offerings set to price this week, three of which are backed by venture capital firms.  The first IPO to price will be the first IPO since Facebook.  The four IPOs on deck are for:

• ServiceNow, an IT management cloud service backed by venture firms Greylock Partners, JMI Equity and Sequoia Capital.
• Exa, a simulation-driven design solutions provider backed by venture firms Boston Capital Ventures and Edelson Technology Partners. 
• Tesaro, a biotechnology company backed by venture firms InterWest Partners, Kleiner Perkins Cauflied & Byers, New Enterprise Associates, Pappas Ventures and Venrock.
• EQT Midstream Partners, an energy partnership that is an EQT Corporation company.

According to the article, after a freeze in the IPO market, the first IPO out is known as an "icebreaker" deal, and has historically brought good results.  This may be due to valuation concessions that IPO investors demand in the wake of the IPO freeze.  The article then discusses the IPOs in more detail.  It's a good weekend read.

Here's a link to the article.  
http://online.wsj.com/article/SB10001424052702304765304577483213317783398.html 

Proposed new accounting rules for public pension plans could highlight the massive shortfalls faced by public pension plans.  In the WSJ.com article "States Face Pressure on Pension Shortfalls" the new accounting rules, expected to be approved by the Government Accounting Standards Board, will force governments to change the way they calculate and account for unfunded pension liabilities.  Here's a link to the article:   http://online.wsj.com/article/SB10001424052702304441404577483021888092422.html?

Stephen M. Walt's column on ForeignPolicy.com "The Top 10 Things That Make Air Travel Annoying" really hit a chord with me.  I travel a lot, both domestically and internationally, and found this article of interest.  Walt's top 10 are, briefly:

1. Baggage fees.
2. Change fees.
3. Poor entertainment choices on flights.
4. Loyalty programs with no real benefits.
5. TSA difficulties.
6. Airlines keeping passengers in the dark about delays, flight cancellations, etc.
7. Late night dinners on night flights.
8. In-flight restrictions that don't make sense, like turning off electronics prior to take-off and landing.
9. Poor customer service.
10. Passengers who rant about acts of fate / God.

I'd add Immigration lines as number 11.  After my latest debacle at London's Heathrow airport (the worst major international airport in the world, in my opinion), which you can read about here, immigration lines have to be one of the most irritating aspects of international travel.

I'd also add the baggage claim process as number 12.  I've had to wait ridiculous lengths of time for my checked bag to show up on a carousel.  Before you say that any seasoned international traveler knows never to check a bag, let me say that I take presentation materials and workout gear, and so I often have no choice but to check a bag.

Hat tip to my friend Kurt for forwarding the column to me.

Here's a link to the article:  
http://walt.foreignpolicy.com/posts/2012/06/22/the_top_ten_things_that_make_air_travel_annoying 

Here's a link to my post on London Heathrow, the worst major international airport in the world in my opinion:  
http://www.allenlatta.com/1/post/2012/6/heathrow-airport-is-an-embarrassment-to-the-uk.html 

The Wall Street Journal article "Lawmakers Push for Overhaul of IPO Process" reports that lawmakers are calling on the SEC to overhaul the initial public offering process in the wake of the Facebook IPO.  The crux of the letter seems to be that underwriters are able to "dictate" the price at which IPO shares are first sold to investors.

In my opinion, this is incorrect.  The purpose of the IPO roadshow is to market the issue to institutional investors and to build the order book.  Building the book is a process whereby the institutional investors give orders for a number of shares at a certain price.  It is this process that the book-running underwriter determines the "market" price for the IPO.  At the beginning of the roadshow, the underwriters establish a pricing range for the IPO, but this initial range is often shifted higher or lower depending on road show demand, and the final pricing is dictated by supply and demand.  It is true that the price at which institutional investors buy IPO shares usually contains an "IPO discount" but this discount provides an incentive to all IPO investors to invest in these risky propositions.  Also, in my view, investors purchasing stock in an IPO once it starts trading are basically bettors and are gambling that the stock price will go up.  Stock prices are typically very volatile after an IPO and so these IPO speculators should bear the risks of their bet.

I believe the IPO process generally works well, and my thoughts on how to improve it relate to disclosure.  I'm a big believer in disclosure as it helps the markets operate more efficiently.  The more information, the better.  To improve the IPO process, I would have all of the underwriting syndicate's  projected revenue and earnings estimates for the company disseminated publicly so that all institutional and retail IPO investors are working with the same information.  In addition, if the company revises guidance during the IPO process, this information should also be made public.  Finally, while I'm on a roll, I believe that every IPO should disclose at least five years of annual and three years of quarterly financial and operating data, and that the metric "free cash flow" should be a required reporting metric.

Link to The Wall Street Journal article:  
http://online.wsj.com/article_email/SB10001424052702304441404577479024205961592-lMyQjAxMTAyMDIwMTEyNDEyWj.html#project%3DSECIPO%26articleTabs%3Darticle 

The letter from Congress to the SEC can be found here:  
http://online.wsj.com/article_email/SB10001424052702304441404577479024205961592-lMyQjAxMTAyMDIwMTEyNDEyWj.html#project%3DSECIPO%26articleTabs%3Dinteractive 

The recent Bloomberg Businessweek article "Workday: The Gentleman's IPO" offers an interesting view of the initial public offering plans of Workday, the human resources and financial management cloud services provider.  According to the article, Workday should post bookings of $500 million this year, and plans to raise a $500 million in its IPO.  The company will file its S-1 registration statement with the SEC confidentially, as allowed under the JOBS (Jumpstart Our Business Startups) Act.  Under the JOBS Act, companies filing their registration statements confidentially only have to make them public 21 days prior to their roadshow.  This confidential filing option is attractive to smaller companies as it allows them to work through any issues with the SEC outside the glaring spotlight of the media, and their competitors.  

Venture capital investors include: Bezos Expeditions, Greylock Partners, InterWest Partners, and New Enterprise Associates. According to the article, other investors include Dell's Michael Dell, LinkedIn's CEO Jeff Weiner and LinkedIn co-founder Reid Hoffman.

Here's the link to the article:   http://www.businessweek.com/articles/2012-06-18/workday-the-gentlemans-ipo

The article on The Verge "After Facebook's IPO Flub, Value of Tech Startups Falls Back to Earth" discusses the divergence in the pre-IPO and post-IPO valuation disconnect for companies like Facebook, and how there have been no initial public offerings since Facebook.  This means that tech startups will have a harder time raising capital and that more tech companies will be more receptive to being acquired.  One tidbit from the comments was that apparently Anthony Noto of Goldman Sachs (a co-lead manager on Facebook's IPO) indicated that Facebook refused to take the usual IPO discount of 10-20% that allows institutional investors to profit on the first day.  If this is the case, then Facebook really did do a great job of taking all the money off the table in the IPO.  If an IPO is truly fully priced, there's really no where to go but down for the stock price.

Here's a link to the article:  
http://www.theverge.com/2012/6/19/3096611/facebook-ipo-startups-valuations-bubble-acquisitions-pop 

Glenn Solomon, a partner with GGV Capital, contributed a post to Fortune's From the Crowd Blog "3 Reasons VCs Can Get IPOs Very Wrong" which explores some reasons why venture capitalists may over-value private companies prior to their initial public offerings.  The post was written on May 21, just after Facebook's IPO (which looked successful at that time), but before Facebook's stock price broke the IPO price.  The post uses Zynga and Groupon as examples of returns VCs have obtained in later rounds or in secondary purchases prior to the IPOs of these companies.  Solomon points to three primary factors that might have played a role in VCs obtaining less than stellar returns from these pre-IPO transactions:

• Growth Rate Emphasis.  VCs are very focused on growth rates and will pay high valuations for companies that are growing very rapidly.  However, the public market isn't willing to pay extra for high growth, so there's a disconnect which may lead to VCs overvaluing a company prior to its IPO.
• Profit Margin Factors.  Many private, rapidly growing companies aren't profitable, and so the basic public market metric of P/E ratio doesn't apply.  Because of this, VCs look at Price/Sales ratios.  While public investors do this as well, they want to see earnings and margin expansion over time.  As it can take time for this to happen, public investors may value these companies lower than VCs.
• Valuing Unproven Models.  When a company introduces a new business model, it won't have comparable companies to use to measure performance.  As a result, public investors can be uncertain as to how to value these companies until the business models are more mature, leading to volatility in valuation.

I think this is an insightful post and a good read.  Here's the link:  
http://finance.fortune.cnn.com/2012/05/21/3-reasons-vcs-can-get-ipos-very-wrong/ 

Link to Glenn Solomon's blog:  
http://sandhillrdmeetswallst.com/ 

The State of California and many of its cities and municipalities are facing spiraling costs from pension and retiree health benefits.  The University of California is also caught in this crisis.  In today's AP article "University of Calif. Faces Mounting Pension Costs" the article examines the system's nearly $10 billion unfunded liability, the causes of this crisis and some of the steps the University of California system has taken to address this crisis.  Unfortunately, one of the steps has been dramatic increases in tuition for students of the UC system.  Some of the take-aways from the article:

• $10 billion in unfunded liability
• 56,000 current retirees, and another 116,000 employees near retirement
• Employees can begin collecting pensions at age 50 and receive maximum benefits at 60
• Pensions are based on the average of their top-earning years
• There are 2,129 UC retirees drawing annual pensions of more than $100,000, 57 with annual pensions exceeding $200,000, and 3 with annual pensions in excess of $300,000.

Here's the link to the AP article:  
http://hosted.ap.org/dynamic/stories/U/US_CALIFORNIA_UNIVERSITY_PENSIONS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT

Here's a link to the UC Retirement Benefits website, which has information about the steps UC is taking to address the issues:  
http://ucrpfuture.universityofcalifornia.edu/
 

The recent Bloomberg View opinion piece "California's Bad Bet Makes JPMorgan's Look Minor" by David Crane, President of Govern For California, is a good history lesson of how California adopted the pension legislation that is causing so many problems now.  A worthwhile read.  Here's the link:   http://www.bloomberg.com/news/2012-06-17/california-s-bad-bet-makes-jpmorgan-s-look-minor.html

The article in today's Wall Street Journal "Morgan Stanley Was 'Driver' on Facebook's Wild IPO Ride" offers an insightful view of Morgan Stanley's role in Facebook's initial public offering and some of the decisions that may have impacted the IPO's performance.  A worthwhile read.  Here's the link:   http://online.wsj.com/article_email/SB10001424052702303822204577464331791367546-lMyQjAxMTAyMDEwODExNDgyWj.html

Yammer, the enterprise social networking company, is being acquired by Microsoft for $1.2 billion, according to The Wall Street Journal.  Yammer facilitates social networking, collaboration and file sharing across the enterprise, and currently more than 85% of the Fortune 500 use Yammer's services.

Benefits to Microsoft of the acquisition include:

• Product enhancement.  Yammer's enterprise social networking platform may enhance a number of Microsoft products, including Outlook, SharePoint and possibly SkyDrive and Dynamics CRM.  These are likely the true synergies from the acquisition.
• Enterprise Customer Base Expansion.  Yammer reportedly has over 200,000 enterprise customers, and Yammer boasts that more than 85% of the Fortune 500 use Yammer's services.  This could drive cross-selling and up-selling opportunities.
• Skype possibilities.  Skype could be a beneficiary of Yammer's enterprise solutions.  Imaging Skype at an enterprise level that includes Yammer's capabilities.
• Defensive acquisition.  Acquiring Yammer takes away a future competitor and also takes Yammer out of play for other companies to acquire.  It also helps Microsoft catch up to Salesforce.com and Oracle, which have recently made acquisitions in this space.

Links:

Prior post on the acquisition:  http://www.allenlatta.com/1/post/2012/06/yammer-to-be-acquired-by-microsoft-for-12-billion-wsj-report.html 

WSJ.com article on the acquisition:  
http://online.wsj.com/article/SB10001424052702303822204577467312505454118.html?mod=googlenews_wsj 

VentureBeat article on the synergies from the transaction:  
http://venturebeat.com/2012/06/15/why-microsofts-purchase-of-yammer-is-the-smartest-deal-of-the-year/ 

ZDNet article on the synergies (and an argument that the acquisition is "zany"):  
http://www.zdnet.com/blog/btl/microsoft-yammer-and-the-land-grab-social-enterprise-lunacy/80009 

Trefis article on the synergies:  
http://www.trefis.com/stock/msft/articles/126937/microsoft-to-acquire-yammer-for-1-billion-we-think-it-makes-sense/2012-06-15 

Yammer, the enterprise social networking company, has agreed to be acquired by Microsoft for $1.2 billion, according to a report by The Wall Street Journal.  The acquisition will help Microsoft fill in its Office product suite with social networking and collaboration tools and it's also defensive in nature in that these types of companies are likely to become competitive to the Office suite of products.  It's good news to enterprise technology firms because it helps to ratify the business model and valuations, and its good for venture capital firms as it shows there's a lucrative exit for these deals.

Yammer's last venture round was in February of this year, raising $85 million at a rumored valuation of $500-$600 million, according to an article in TechCrunch.  The February financing brought total venture investment in Yammer to $142 million.  Assuming the rumored valuation range was correct, this is a nice (and fast) payday for the February round investors.

Venture capital investors in Yammer include Charles River, CrunchFund, DFJ Growth, Emergence Capital, Founders Fund, Khosla Ventures, Meritech and USVP.
 
Link to the WSJ.com story:  http://online.wsj.com/article_email/SB10001424052702303822204577467312505454118-lMyQjAxMTAyMDEwNDExNDQyWj.html#articleTabs%3Darticle 


Link to the TechCrunch story:  
http://techcrunch.com/2012/02/29/enterprise-social-networking-platform-yammer-raises-85m-from-dfj-growth-khosla-and-others/ 

Starbucks has fully endorsed the digital age with the creation of a new position, Chief Digital Officer.  The VentureBeat article "How Starbucks is turning itself into a tech company" explores how Starbucks has recognized the importance of the digital offerings to its customers and to the company.  Starbucks' customer base is increasingly mobile and social.  By combining all of its digital businesses (such as wifi offerings, social media, digital marketing, etc.) under one executive, the goal is to make digital a priority and to help spur even more growth for Starbucks.  In my view, we will see more companies develop this type of role as customers shift even more to mobile applications and social networks.  The article is a good read.  Here's the link:   http://venturebeat.com/2012/06/12/starbucks-digital-strategy/

The recent DealBook article "Companies Born in Europe, but Based on the Planet" provides an interesting look at how many European start-ups are making an international expansion strategy a focus early on.  The article highlights the experience of SoundCloud, the web-based audio sharing service, and discusses how London, Paris and Berlin are attracting technology start-ups and investors.  Here's the link:  http://dealbook.nytimes.com/2012/06/11/companies-born-in-europe-but-based-on-the-planet/ 

Heathrow Airport in London is the worst international airport that I have to deal with, and I travel a lot.  I fly to Asia or continental Europe almost every month.  I fly to London roughly eight times a year, and have probably logged close to 100 visits to Heathrow in my life.  At Heathrow, I have suffered through strikes, computer snafus, delayed/cancelled flights, lost luggage (don't get me started!) and horrible lines (aka "queues" in the UK) at immigration.  My most recent experience with immigration, on Sunday, June 10 was one of the worst I've ever had.  Here's what happened:

I arrived at Heathrow Terminal 4 early Sunday morning and the immigration hall was so jammed with people that the lines snaked down hallways.  Fortunately (or so I thought) I had a Fast Track ticket for the priority immigration line.  The Fast Track line also went down the hallway and was next to the normal immigration line.  The Fast Track line moved very slowly, and the normal immigration line moved much faster, but the normal immigration line was very long and once it was out of the hallway and in the main immigration line it went back and forth like a line for an amusement ride.  After an hour in the Fast Track line, I located a supervisor and asked why the Fast Track line was moving so slowly.  His reply was simply that he didn't know and that I could move to the regular queue if I wanted.  Very frustrating.  After an hour and 45 minutes, I had only moved a short distance in the Fast Track line and the line for regular immigration had shortened considerably.  Out of sheer exasperation, I finally left the Fast Track line and went to the regular immigration line.  That took another 15-20 minutes, but at least I was moving, and ironically, additional immigration agents were added to the Fast Track line and it ended up about a tie for me to get to immigration in the normal line compared to the Fast Track line.  All in all, an incredibly frustrating experience.

In my view, British Airport Authority, or BAA, the owner of Heathrow, has made a mockery out of Heathrow Airport.  Heathrow is so poorly managed that in my view it is an embarrassment to the United Kingdom.  This experience, just two months away from the Olympics, portends bad things for visitors to the UK for the Olympics.  In my view, BAA has proven that they are incapable of managing Heathrow and should be forced to sell Heathrow to a manager who can get it right.

I've been trying to figure out how to complain directly to BAA and the UK Border Agency, but their websites appear to make it impossible to file a complaint (sounds about right).  So I have to resort to my blog.

For those traveling to London, my best advice: AVOID HEATHROW!

Robert Ackerman of Allegis Capital has a good post on PEhub.com called "Venture Capital at a Tipping Point."  In this post, Ackerman discusses his views on why venture returns are poised for an upward trajectory.  The first reason is the "new era of  of entrepreneurial innovation and creativity" where new developments in cloud computing, social media and mobile are pushing the edges of innovation outward.  The second reason is the right-sizing of capital in the venture capital universe.  Where for many years there was too much capital, the capital flows are now appropriate for the industry.  Other reasons include the increase in corporate merger and acquisition activity, the JOBS Act which lower regulatory hurdles for venture capital-backed companies to go public, and the increased activity in the M&A and IPO markets.  It's a good read.  Here's the link:   http://www.pehub.com/154685/robert-ackerman-venture-capital-at-a-tipping-point/

The opinion piece "From The California Dream To A Cautionary Tale" by Edward Luce in today's Financial Times provides a frank and sobering analysis of the state of the (formerly?) great State of California.  The piece discusses how California is lagging other states in economic growth, suffers from high unemployment and is eroding the quality of the state's world-recognized University of California system.  According to the piece, the problem is two-fold: too much democracy (the Ballot Initiative process has tied the system in knots); and too little democracy (a voter initiative that became law requires a two-thirds majority in the legislature to pass new taxes).  If you're a Californian, this is an important read.  Unfortunately it's behind a subscription firewall, but a free registration will enable viewing the article.  Here's the link:  http://www.ft.com/cms/s/0/7557edba-b08d-11e1-8b36-00144feabdc0.html