Paul Janisch

Unintended consequences of over-legislating (we aren't alone)

The irony of Sarbanes-Oxley was that it was intended to prevent more Enrons and Worldcoms but it ended up being a gigantic tax on small companies.

— @pmarca
The IPO is dying. Marc Andreessen explains why. - Vox

via fredwilson.vc

Fred expands on this in a later post

One thing I have seen over and over is that the best of intentions often lead to unintended consequences that are exactly the opposite of what the good intentioned people wanted to happen. I like to call that the “law of unintended consequences” and it goes like this:

Whatever it is that you intend to do, you will likely do the exact opposite

Let's come back home, Russel forwarded this onto me today.

Public service managers are being encouraged to keep posts vacant rather than fill them with whites, an SA Institute of Race Relations (SAIRR) consultant said in a newsletter this week. “In the name of transformation, managers in the public service have actually been incentivised to keep whites out for racial and ideological reasons.

Better to leave a vacancy unfilled than to put a white person into it,” SAIRR consultant John Kane-Berman said in the newsletter, published on Tuesday.

I don't think Kane-Berman is raising anything that we couldn't have worked out ourselves.  The sad thing is that it will fall on deaf ears.  The whites will probably shake their heads and say "I told you so" (and frantically start pumping their money out of the country).  Blacks will label Kane-Berman a racist (and every other white person who reads this).  

I still don't understand why it is patently obvious to me that Rob's new BEE codes are the death knell of all empowerment processes and that the dti will not at least accept the possibility.  Rob's vision of radical transformation is no better than e-tolling.  The word I am hearing is that charter alignment marches ahead - including the FSC.  I expect the FSC to be the best written of the lot but it's basing itself on rubbish so it's not going to be good.

Brace yourself BEE people, we're all going to need a change in career soon, at least we know not to apply to the government for a job.

A blag about a blog. Or why I blog

Perhaps it is because it is an election year that I choose to reflect on the last 7 and a half years of my blog and why I started doing it in the first place. The simple reason why I started was because I needed a web presence. I had no web design skills and I wasn't too familiar with Facebook at that time. I have been an avid follower of Fred Wilson for years and used the same platform he used at the time. Fred is an internet pioneer and has left me behind a long time ago but I still avidly read his various postings on a daily basis, he is that prolific. My first post was in July 2006. It's quite interesting reading through some of those posts, I certainly wasn't as opinionated as I am now. I started talking about BEE related stuff and interpreted what was going on around me. As I started to gain confidence I became more and more outspoken on certain issues and even started dabbling in the occasional political swipe as I went along.

My intention was that the blog would become my internet presence. I did set up a Caird website that carries a blog feed on it but I haven't looked at that website in years. In essence the blog has become my internet home. I did rather hope that the masses would come swarming to me for assistance at exorbitant rates because they happened upon my blog. I don't think that's happened much. I have certainly gained a fair amount of notoriety because of it and have found my blog being quoted in the press and in boardrooms – Microsoft cited me as an expert when they launched their equity equivalent programme (but they've never used my services). Once I consulted to Wells Fargo in Boston and I think this is purely because of the blog. A more relevant question is whether I have lost business as a result of the blog. I think this is quite likely, my views are forthright and often very blunt and I think this could and does put a lot of people off using me. I got fired by one client because of my blog and the anti-ANC sentiment that permeates through it, but they asked me to come back a month later.

Perhaps the greatest success of this blog is that I have never pushed content onto people. This post will be my 866^th and over the years 120-odd subscribers (including my mother) have volunteered to receive each post via Feedblitz. I am now gaining more subscribers than losing them. I believe that it was making this content freely available without pushing content that has allowed to make contact with and become friends with the best brains in the business. I am in regular contact with people like Chris van Wyk, Obed de Swardt, Ebrahiem Mohammed, Brigitte Brun, Louise Paulsen, Thinus Kruger and Gerhardus Burger. Hell even Kevin Lester sends me the occasional email (Lester still dips his paw in every now and then). Similarly I have rallied against the worst practitioners in the industry (Keith Levenstein) and the myopic platitudes of Ajay Lalu and Thami Mazwai. I have also made it an ambition to educate my reading public that institutionally protected racists like Jimmy Manyi are nothing more than vile racists. On occasion I've received emails from a right winger but I tend to ignore those.

How then does a BEE blog become so political? I certainly had no intention of having a go at the ANC when I started. And I behaved rather well until Jacob Zuma became the biggest embarrassment this country has ever seen. It is now very obvious that you cannot divorce black economic empowerment from politics. It would seem that the politicians like to use transformation as a weapon against those people/companies who are actually implementing the government's programme that the government itself has no idea how to implement it. I've been in this industry since 1994 and have only come across one example of fronting and that was Levenstein's rather feeble attempt at portraying his company as 25% black-owned. What I have seen from a citrus farm in Hazyview, through to a diesel distributor in Jankemp Dorp to a holiday resort in the Western Cape are a bunch of people who have in fact made a major difference to a number of peoples' lives, most of this is as a result of BEE-type policies. Every year I head off to Gerrie Lemmer at the ATKV asking for proof that they spent 1% on SED, I get handed figures that are a multiple of that target. And they do it because they believe they are making a difference to the lives of black people. And this is not the exception. And still the government reminds us that in fact we are racists and are making no contribution to nation-building. And to drive this message home they create programmes (that are fundamentally illegal) through their municipalities and parastatals that are designed to promote cronyism and punish legitimate white and foreign-owned businesses. Just ask my friend Selwyn who is an employer in Newcastle what his interaction with Eskom has been like over the last 10 years. After witnessing all this it became impossible for the blog not to take on a political hue. And because the blog is mine and is a reflection of my specific views I have adopted the mantle of shooting my mouth off. And I will continue doing so because I am allowed to do it in terms of our constitution (something that the NAT government would have most certainly locked me up for) and I feel that I provide some sort of service to those who would like to say what I do but can't or won't. Alas – lucrative government contracts or partnering with the Guptas shall never come my way.

And so we now enter a disastrous phase in the life of BEE where the clueless are once again taking those who make an effort to task. They claim that a level 6 is the average that this is just not good enough. Not that they understand what it takes to get to a level six. They have now sowed so much doubt in the industry with their latest codes that I'm not sure whether it'll fully recover. There is no reason to tolerate this anymore – why do we have to field this abuse when it is now so apparent that the people who are levelling it are doing so to disguise the fact that they are failing in their duty as government or they are spoiling to get hold of an even bigger slice of that lucrative government pie called entitlement. Not only are we taking all this abuse but it is our tax revenue that finances the lavish lifestyles of the abusers. I won't take it anymore. And for that reason I will continue on my bloggy path of self-destruction (and litigation where necessary).

Dramatis Personae

Over the last 7 years I have made reference to a number of people on this blog. Here are some of them

Kevin – sometimes, but not always, Kevin Lester.

jungle jim (always lowercase) – Jimmy Mwanele Manyi. I see he is returning to his African roots, I wonder where it will stop. Xhosa or Zulu X perhaps

The Ralph Lauren person – not too cryptic. The reason why polo shirts are so expensive is because the rider is wearing a Lacoste shirt. I have it on very good authority that the Lauren is the same pronunciation as Lauren Bacall.

Levenstain – Levenstein

Zoomer, Zumachinegun, moron, idiot (usually preceded by the word fucking) – Jacob Zuma

Rob and derivatives – Rob (another word for steal) Davies

Udge – Mr Lalu. The man with the best bristles in the business

Racist – see jungle jim

Mal Ossie – Malusi Gigaba. I think I'll call him Maddox from now on

Incompetent – normally refers to Rob but doesn't ever exclude Zoomer

Zungrabber – Sandile Zungu

Zungs – people like Zungrabber

PLT – pathetic little tw…………….

Related articles

And so spake those who dictate our future

Zoomer transcends and BEE is the consequence

ANC: Kunene a desperate, loose cannon but Zuma is not?

Fred Wilson on corporate entities

Slightly edited down - read the full post here.  It is based on the American legal system but as with most things that Fred talks about it is applicable almost anywhere

First off, you don't have to incorporate to be in business. There are many people who run a business and don't incorporate. A good example of this are many of the sellers on Etsy. They make things, sell them, receive the income, and pay the taxes as part of their personal returns.

But there are three big reasons you'll want to consider incorporating; liability, taxes, and investment. And the kind of corporate entity you create depends on where you want to come out on all three of those factors.

I'd like to say at this point that I am not a lawyer or a tax advisor and that if you are planning on incorporating, I would recommend consulting both before making any decisions. I hope that we'll get both lawyers and tax advisors commenting on this post and adding to the discussion of these issues.

When you start a business, it is important to recognize that it will eventually be something entirely different than you. You won't own all of it. You won't want to be liable for everything that the company does. And you won't want to pay taxes on its profits.

Creating a company is implicitly recognizing those things. It is putting a buffer between you and the business in some important ways.

Let's talk first about liability. When you create a company, you can limit your liability for actions of the corporation. Those actions can be for things like bills (called accounts payable in accounting parlance), promises made (like services to be rendered), and lawsuits. This is an incredibly important concept and the reason that most lawyers advise their clients to incorporate as soon as possible. You don't want to put yourself and your family at personal risk for the activities you undertake in your business. It's not prudent or expected in our society.

Taxes are the next thing most people think about when incorporating (edited - this paragraph is relevant in the US).

And then there is investment/ownership. Even before we talk about investment, there is the issue of business partners. Let's say you want to split the ownership of your business 50/50 with someone else. You have to incorporate to create the entity that you can co-own. And when you want to take investment, you'll need to have a corporate entity that can issue shares or membership interests in return for the capital that others invest in your business.

So now that we've talked about the three major considerations, let's talk about the different kinds of entities you will come across. (all US-type corporations)

The important thing to remember is that if you are starting a business, you should create a corporate entity to manage the risk and protect you and your family from it. You should start with something simple and evolve it as the business needs grow and develop.

As an investor, you should make sure you know what kind of corporation you are investing in, you should know what kind of liability you are exposing yourself to, and what the tax obligations will be as a result.

And most of all, get a good lawyer and tax advisor. Though they are expensive, over time the best ones are worth their weight in gold.