Elliott Ng


Google. China. Entrepreneurship. Hiding brightness, biding time.

My 3 Words for 2012


photo credit: Chris Michel

As 2011 pulls to a close, I’m reflecting on what has been a whirlwind 2011 for me.  While I’m still in processing mode on that, I also want to start thinking forward to 2012 because I know it’s going to be an even faster, even crazier roller-coaster ride.  I thought I’d start by finding “3 Words” to help guide 2012.

Background: What are “3 Words?”

Back on Jan 1, 2010, I read a blog post by social media consultant Chris Brogan titled My 3 Words for 2010 where Chris described a simple exercise: Come up with 3 words that serve as “guiding pillars” for the New Year:

Instead of resolutions, which don’t usually help me very much, I work hard on using these words as a lighthouse for my actions and efforts.

Faced with the prospects of what looks like a daunting year ahead, I’m using this 3 Words exercise to create a flexible guiding set of themes that I hope will become a living, evocative framework for objective-setting and decision-making.

I’m sharing this in the hopes that this might spur your thinking on 2012 and give you another method if “resolutions” don’t work for you.

Hmm…isn’t this just objectives and goals under a new name?  Not really.  I got a bit hung up on this, and if you’re been “corporate” in one life or another, you probably will too.  See Notes at end of this post for an answer to this question.

Another important, liberating principle of Chris’s “3 words” exercise is that it doesn’t matter if anyone else understands what these words mean.   It is about creating “guiding pillars” for yourself…not a tagline for others.  Do my words sound like nonsense to you?  I don’t really care.  These are my words, to help me, not you!

My 3 Words for 2012:  Spiky, Intentional, Bold.


To me, “Spiky” evokes a number of related concepts to me: focus, passion, outliers (in the Gladwellian sense), creative ecosystems (in the Richard Florida sense, see Notes), exceptional, committed to excellence, relentless.

Steve Jobs was Spiky…most of us just aren’t Steve and/or don’t want to be…but how do we want to put a ding in the universe in our own way?  After he died, I pored over the coverage.  I re-read the 2005 commencement speech. I watched the video of the speech.  I watched a version of the Think Different campaign “Here’s to the Crazy Ones” narrated by Steve himself.  I read an exceptional obituary by Steven Levy that aimed to describe and honor, but not mythologize.

Steve’s death caused me to ask a tough question of myself…when was the last time that I created a product that I personally and deeply felt was truly exceptional and without compromise?  When was the last time that I set myself to solve the most important problem to date in my career?

I didn’t like the answers I came up with.

Outliers are Spiky…but what am I putting 10,000 hours into?  Like everyone else in the Silicon Valley tech bubble, I’m into Gladwell’s Outliers (see TIME’s Lev Grossman’s review), which says that success is not just about individual talent, but about lucky timing, a supportive ecosystem, and 10,000 hours of hard work generating “accumulated advantage.”  So what have I done for 20 hours a week for the last 10 years, to be even in the running for becoming an “outlier?”

Wow, I didn’t like the lack of specificity on these answers either.

So for 2012 I want to seek my Spiky-ness.  That means choosing what to be Spiky at and being more intensely focused on it than most other people.  That also means being brutally disciplined about saying no to things that I don’t want to be Spiky at.  It means searching and finding something that I care passionately about and doing it.  It means creating something great.  It means taking complete ownership as a (quasi) “Founder” and not being an “employee.”  It means doing things I want to blog about and speak about.  It also means taking the things that “I have to do” but wasn’t previously passionate about, and becoming passionate about it.  It means holding myself and those around me to a standard of excellence and exceptionality that may not always feel “nice.”


Intentional is evocative of several loosely-related things to me.

Intentional: Get better at Saying No.

One of the tough conclusions I’ve come to about my personality is I don’t like saying no, and I don’t like to be the bad guy.  I’d like to improve in my ability to say No in a productive, collaborative way with people inside and outside of Google. I aim to be more intentional about what to say “yes” to and letting “no” be the default answer.  Selective. Choiceful.

Intentional:  The practice of “deliberate practice” 

Via John Hagel of the Center of the Edge, a Silicon Valley think tank, I came across the StudyHacks blog by academic Cal Newport, who expands on the Gladwell “Outliers” idea in a post about a study on chess players that had the following insight:

…after interviewing two large samples of chess players of varied skill, the paper’s authors found that “serious study“  — the arduous task of reviewing past games of better players, trying to predict each move in advance — was the strongest predictor of chess skill.

In more detail:  ”…chess players at the highest skill level (i.e. grandmasters) expended about 5000 hours on serious study alone during their first decade of serious chess play – nearly five times the average amount reported by intermediate-level players.”

Similar findings have been replicated in a variety of fields. To become exceptional you have to put in a lot of hours, but of equal importance, these hours have to be dedicated to the right type of work. A decade of serious chess playing will earn you an intermediate tournament ranking. But a decade of serious study of chess games can make you a grandmaster.

This is such an awesome post, you should go read it now.

Did you read it? Good. Continue.

The question is: what is the “right type of work”?  Newport then later writes about a similar study comparing exceptional violinists to the merely standard ones, with a similar conclusion that “deliberate practice” to accelerate mastery is what made the difference:

We can start by disproving the assumption that the elite players dedicate more hours to music. The time diaries revealed that both groups spent, on average, the same number of hours on music per week (around 50).

The difference was in how they spent this time. The elite players were spending almost three times more hours than the average players on deliberate practice — the uncomfortable, methodical work of stretching your ability.

The question is: for product managers and for tech leads/managers, what is “deliberate practice” and the “right kind of work?” I’ve been thinking hard about what “top performers” are doing that others can do better at, and what “deliberate practice” will help people get there.

Intentional:  the personal dimension.

Intentional also evokes a more thoughtful and sustained focus on my family and my faith.

In 2011, my oldest son turned 10-years old…it was only yesterday that he was 8, and two days ago he was 3!  In 3 years, he will enter 7th grade and be a teenager.  In my over-simplified model of parental influence, I figure I have 3 more years of being highly influential until I become completely irrelevant as my son shifts from being parent-centric to being peer-centric.

Intentional also relates to how my wife and I want to deepen our relationship with each other, and how we can be a more closely coordinated team of partners in parenting.

The move to China also has caused me to think hard about how I want to live my faith in my daily work and family life.   I’m personally interested in how the Christian faith can be most relevant to academically and professionally “successful” people in China.


credit: gapingvoid.com

When I graduated from business school, I turned down a perfectly fine offer to join McKinsey to start an “dot-com” startup with $30,000 of credit card debt and student loans taken out 4 months before graduation.

Damn, I was a lot bolder back then.  Would I do the equivalent thing today?

Bottom line is that I want to work hard to cultivate that boldness.  You can be bold when you have the power of youthful naivety…I just didn’t “know any better.”  Age and experience teaches you the “real” probabilities of success.  And with 3 kids, I’ve got the practical worries of paying school tuition, mortgages, and saving up for college.  For Google in China, I feel it is even harder to cultivate a sense of boldness…there are so many internal constraints and other external factors (e.g. market, government, etc) that hold us back.

And yet, situations of adversity require us to step up and be bold.  I believe that the greater the challenge, the greater the opportunity for the forging of character.  At Google in China, we are hugely blessed with the opportunity to test our own personal character and (to be blunt) to also test that of our founders and company leaders as well.

At Google, both in China and in Mountain View, I see some of the most talented people I’ve worked with in my career worrying over their quarterly performance rating, or their next promotion.  Maybe the fact that sometimes I think that way makes it all the more depressing when I see it in others.

What are your dreams?  What are you passionate about?  If you could set realism aside, what can you be bold enough to think you might be able to do?  Let’s focus on doing that together!  Be a partner with me in being Bold in 2012.  If you’re not interested, please don’t sap my energy with your “realism!”

What are your 3 words for 2012?

One of the 5 people who read this far?  Let me know who you are by sharing with me (via email, Google+, Facebook, Twitter) your 3 words for 2012.  I’m interested!


Some additional thoughts that interrupt the flow of the main post but someone might find useful.

Hmm…isn’t this just objectives and goals under a new name?

Objectives are something specific you aim to achieve, with quantifiable measures to define whether those objectives are achieved.  You’ve probably heard of the term “SMART” – a framework for setting Specific, Measurable, Attainable, Relevant, Time-Oriented objectives. (Google’s version of it is “OKR” for Objectives and Key Results.)  ”3 Words” doesn’t replace objectives, but are complementary.  ”3 Words” is more about “themes”–ideally evocative of a vision that you have.  Because it’s just 3 words, it can be related to the “what,” the “how,” and the “why” of what you want to do or become.  What I like about this approach is that you can be inconsistent and not get hung up about exactly what the 3 words are.  They can flow in and around your objectives, either defining the “What” at a more meta level, or providing more of the “How” you want to achieve your objectives, or touch on the underlying “Why” that drives your Objectives.

Spiky is a term inspired by Richard Florida’s World is Spiky

By the way, the term Spiky comes from the debate between Tom Friedman–who made the reductionist claim that the World is Flat–and Richard Florida, who rebutted with a similarly reductionist counter-claim (in The Atlantic, 2005) that, no, the World is Spiky (nice summary by John Hagel).  Florida’s continuing thesis (see his writings in The Atlantic)  is that innovation is geographically spiky and will disproportionally come from geographically based ecosystems (e.g. Silicon Valley) that foster innovation by attracting what he calls “The Creative Class”).  Florida’s writings make sense — than “Spiky-ness” is not about the achievement of intellectual lone rangers, but the outcome of a massively networked group of exceptional people.  For me, being Spiky is about being part of a team, a group, an ecosystem.

Starting 2011 by joining Google in China

I’m heading over to Building 43 at Google’s Mountain View headquarters tomorrow morning.  As some of you know, I’ve decided to take on an exciting–and challenging–opportunity to serve as director/head of product management for Greater China, based in Beijing.

In this role, I’ll be leading a small, very-talented team of product managers who are doing two things: (1) launching products and supporting global R&D projects focused on Google’s global markets, and (2) driving a product roadmap serving the domestic Chinese market.  I’ll be commuting to China from Mountain View until June or July, at which point my wife, our 3 boys, and some subset of our accumulated “stuff” will lift off from our home near Mountain View and land in a new home somewhere in Beijing.  In the meantime, I’ll have plenty of time to rack up frequent flier miles, become “Googly” (aka programmed in the Google global culture) and build important relationships in the global R&D organization at Google which is Mountain-View centric.

If you’re reading this post, you probably already know that I think China is “one of the biggest stories of our time.”  Like most of you, I also firmly believe that when the history of our period is written, the internet will be another one of the biggest stories of our time.  In this role, I’m excited about the chance to play my part in both of these stories at the same time.

I remember my naive enthusiasm for China back in 2006, when I first got involved in some startup ventures in China as an advisor and micro-sized angel investor.  After all,  China’s macro numbers feed a typical US tech entrepreneur’s optimistic tendencies.  China graduates 500k engineering students annually compared to the US’s 150k students (although the quality of these students are not the same).  China overtook Japan as the 2nd largest economy in 2010 and is expected to surpass the US’s economy in 2027, according to Goldman Sachs.  The story is the same on the internet and mobile.  As of December 2010, China had over 450 mm Internet users, as estimated by the Chinese State Council Information Office, as compared to the US market of 230 mm users.  China had 38 mm 3G (smartphone) mobile phone users and a total of 842 mm mobile phone users by Oct 2010, according to Ministry of Industry and Information Technology (MIIT).

But during the past 5 years, I’ve come to appreciate an apt characterization of China made by James L. McGregor (now on Twitter), former Wall Street Journal bureau chief and Dow Jones China chief executive, who called China “the world’s greatest startup” and “the world’s greatest turnaround.”  I now try to understand everything in China in terms of these two faces–or aspects–of China.

Just about one year ago, Google announced it’s new approach to China which some later characterized as “the pullout.”  Some others have characterized 2010 as a “bitter winter” for the Chinese internet overall.  In fact, according to the saying “guo jin, min tui” the rest of Chinese entrepreneurs and non-state owned businesses also faced a bitter winter of challenges in 2010.  Even Jeffrey Immelt went off script to express his frustration.

When I told a few friends that I was considering working for Google in China, some were even surprised that Google still had operations in China!  Perhaps they were left with images of an illegal flower tribute which symbolized the end of the story.

For reasons of confidentiality and discretion, I can’t say too much about what makes me excited about joining Google in China.  What I can say is that the rumors that “Google has lost all of its good people in China” is just false.  No doubt there are some very talented people who left to join the welcoming embrace of some other domestic Internet companies, or decided to pursue their own new startup opportunities, but I was incredibly impressed by the Googlers I met in Shanghai and Beijing in my visit to the Google offices in December, some of which joined Google even before the Kai-fu Lee era.  As with any startup, the key to success is always the people, and on that dimension I found myself excited about the prospects of working with the Google China team.

One final comment.  With regard to everything related to China, I’ve been inspired by Deng Xiaoping’s saying “tao guang yang hui, you suo zuo wei.” Maybe someday I’ll write some more about why this connects with me on so many levels.  But the idea of “keeping a low profile,” “building capabilities,”  ”hiding brightness,” and “biding time” is great advice for most companies to follow in the Chinese marketplace, much more so than in the US.  And the saying is evocative of a time in China’s history, Reform and Opening, where China’s ascendency was far from assured, and certainly not the conventional wisdom in the West as it is today.  So I guess following Deng’s advice means keeping a low profile and making stuff happen rather than creating a lot of hype that you can’t deliver against!

I’m deeply thankful for the support I’ve gotten from my professional community in both China and the US, and I wouldn’t have the confidence to take on this huge challenge without you.  Al Gore, in a TED lecture, quoted an African proverb: “If you want to travel fast, travel alone.  If you want to travel far, travel together.”  While he was talking about the climate crisis, I’ll take creative license to apply this toward the global development of the internet and the peaceful rise of China, and where these trends intersect.  I’ll expect to travel together with many friends on this journey.

photo: CC courtesy of veen on flickr.

Coming soon: changes in 2011

I’m afraid that Twitter and Facebook has sucked the life out of my blogging, so please connect with me there (or on LinkedIn).

This week I signed on to join a global Internet company to lead product management efforts in China…starting in January!  It’s a big change for me and my family on a number of dimensions.  I had originally envisioned my next step as co-founding a new company or joining a venture-backed startup company at an early stage of rapid growth.  But my long standing interests in the global internet with a special focus on China lured me into signing up for a pretty exciting Beijing-based opportunity.   I’ll be based in Silicon Valley until my kids finish this school year and then we will pack up our worldly belongings (that is, after a massive Craigslist, Freecycle, and Goodwill purge) and move to the heart of Chinese culture, Chinese government, and the Chinese internet industry.  I have high hopes to improve my rudimentary Chinese, and also to develop a detailed taxonomy of Chinese cuisine types through personally eating all kinds of Chinese food!

I’ll share more once I actually join in January, after I find out what the guidelines are for blogging.  I hope to continue to blog on CNReviews, here, and maybe Tnooz.

I’m a Tnooz Node: latest post on China TDS conference 2010

I am Five of Eleven, Tertiary Adjunct of Unimatrix Tnooz

Earlier this year, I was inducted via a set of secret geek travel blogger rituals into Tnooz as a Node.  The name is reflective of Chief Editor (or shall I say, Prime Node) Kevin May’s sense of humor and futurist leanings.  Presumably, the power of Nodeship is to harness all of the wisdom of each individual writer/blogger/contributor into a greater collective understanding of travel.  Therefore, I have added my own distinctiveness to the Tnooz Collective.

photo source: aboutwomyn.com

My latest post:  interview with Eva He about upcoming China TDS 2010

I had a chance to briefly interview Eva He, the editor of TravelDaily.cn and organizer of the China Travel Distribution Summit, about trends to be discussed at China TDS.  Since she briefly brought up the issue of Google, I asked her what she felt about the sense of an unfair playing field for foreign companies. This was most recently expressed by Jeffrey Immelt, CEO of GE.  Here are his comments reported in the Wall Street Journal:

It’s getting harder for foreign companies to do business there, he told Italian business leaders. “I really worry about China,” the FT quotes him as saying. “I am not sure that in the end they want any of us to win, or any of us to be successful.”

Immelt was apparently giving vent to the growing anger among international businesses who believe that China is engaged in a systematic effort to siphon off their technology, and then turn that technology around and use it against them in China and overseas.

He should know better than anybody: GE has been handing over technology in everything from rail locomotives to antipollution equipment to gain access to the domestic Chinese market.

For international multinationals, technology transfer has long been the quid pro quo of landing deals in China.

Foreign businesses have meekly gone along with this arrangement because they assume that since the biggest markets in everything from wind turbines to mobile phones have moved to China, you have to be in the country if you want to be No. 1, No. 2 or even No. 3 in the world. Without scale, global businesses can’t be industry leaders, they can’t remain on the frontiers of technology, and they become more vulnerable to competition. But scale means that you’ve got to be in China.

That calculation gives China enormous bargaining power.

Yes it does.  Compared to aerospace and internet search engines, travel has some great characteristics that make it a better industry for foreign companies to go into:

  1. Unlike aerospace and internet search, travel is not a national security or sensitive industry.  Internet search is media, and media is a national security industry.  Foreigners have a hard time understanding that.  Based on reading the works of other people, namely Richard MacGregor’s The Party (banned in China), my impression is that Xinhua is an arm of the government that performs the functions  of BOTH the Associated Press, AND the CIA (or whoever in the US government does domestic “open source” (public source) analysis).  The press serves to keep Party members informed and is an important check-and-balance against the management reporting received directly through the Party and the government.   But all the juicy stuff is not for public distribution through news outlets.  Internet search and news portals are a critical tool to shape popular opinion and I’m surprised the government doesn’t try to control it even further…since it is a national security industry.
  2. Travel is also inherently cross-border. In order to help the domestic tourism industry flourish, you need to support outbound tourism as well.  Only then will providers and consumers taste international service standards and demand that of the domestic industry.  It is not possible to be too mercantistic in tourism:  try to attract inbound tourism dollars but prevent outbound tourism from happening.
  3. Travel is a strategic pillar of the latest 5 year plan. I haven’t seen the actual documents that reference this, but it has been widely quoted by both Chinese officials and Western travel industry people (WTTC, Amadeus) so this implies that there is National level support for travel development.

Honestly, I sympathize with Jeffrey Immelt and he is expressing a reality that most companies discuss international but see no benefit on expressing publicly.  The even greater truth is that business is hard for ALL businesses in China, not just foreign businesses.  The only businesses that get advantages are the large state-owned or state-supported enterprises that have a plug-and-play relationship into the Party through some kind of sponsorship.

Resistance is futile.  You will be assimilated.

Now, I must go back to my regeneration chamber.

I’m thinking about Google’s Acquisition of ITA Software

Google’s pending $700 mm acquisition of ITA Software is probably the most important deal of the year in travel distribution.

I have friends at Google and have eaten lunch at their campus.  In order to get a visitor badge, you have to sign a Non-Disclosure Agreement.  TANSTAAFL.  Since I’ve casually chatted about this topic with some of my friends at Google I need to be careful not to share insights derived from those conversations.

But I can share that I’m thinking a lot about this and if you’re involved in online travel or travel distribution, you should be too!

ITA Software’s QPX product provides flight availability and fares to virtually all the American online travel agencies (OTAs) and metasearch sites (e.g. Kayak, Bing).  Google had to be after something that it couldn’t get with just a commercial deal with ITA.  What is it?  Hmmm.

Here’s what I think:

  1. Google wants to create a new travel search experience that will consume massive volume of QPX queries
  2. Google wants to invest heavily in performance (speed) at scale
  3. Google wants direct access to data that ITA doesn’t usually share, maybe historical
  4. Google wants to tackle international and hotels faster.

Imagine a world where the marginal cost of flight queries are free, and mining historical flight data can also be free.  I think we can all imagine that some great customer experiences that can come out of this.

Flight metasearch players are at risk.  Kayak and Bing need to build a brand fast, get direct sources of traffic, and continue to innovate faster than Google.  The global GDS (Sabre, Travelport, and Amadeus) will be forced to price more aggressively.  No one will want to single source from Google/ITA, so Expedia will invest in its own Best Fares Search capability, and startups like Everbread and Vayant will get some deals done.  To compete with Google’s own offering, Kayak and Bing will need to consume more queries, and ITA will need to honor “most favored nations” status with existing customers, so price/query is likely to go down, but total cost might go up for flight metasearch players.

Some other insightful people on this topic:

  • More on this subject on Tnooz (including some insightful comments from Forrester’s Henry Harteveldt and PhoCusWright’s Lorraine Sileo)
  • Analysis from my fellow Tnooz nodes (Stephen Joyce, Timothy O’Neill-Dunne, Tim Hughes, Glenn Gruber, and Alex Bainbridge) and Rick Seaney of FareCompare
  • Exceptional analysis by Henry Harteveldt
  • A strategic travel technology perspective from Norm Rose.

I’m not a flight expert, but I hear ITA doesn’t have global coverage and there could be opportunities to tackle emerging regions well as ITA is bogged down in merger integration.

China Travel Summit 2010 in Beijing 9/15-16

I’ve been given the honor of moderating a panel at China Travel Summit (aka China Travel Distribution Summit or China TDS) in Beijing 9/15-16.  TravelDaily.cn has convened a smart, high-level group of people in China Travel. One of them is Gregg Brockway, founder of TripIt, profiled here on CNReviews.

As a moderator and media partner of the event, I can access a 10% discount off of the current rate of RMB 3800 from the event.  Use the code “CTS555? when you register and you should get a $50 discount, or 10% off.  Use this link: http://www.traveldaily.cn/go/74.html (There are even deeper discounts available for hoteliers and airlines but you have to contact TravelDaily.cn directly.  I’d be pleased to make the intro.)

Join my personal update e-newsletter on China Travel

I’m never as good at keeping in touch with people directly as I’d like.  So I created a email newsletter for my friends who share some interest  for the China travel industry.  Right now, it is about 90-100 people.

If you’re interested in the topic and want to get an email about 4-6 times a year, please sign yourself up.  If I don’t know you, I’ll get in touch to introduce myself.  I reserve the right to remove people from the list!

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Notes to self: 2009 in Review

Placeholder post for me to record my thoughts and reflections on 2009.

Some quick, stream of consciousness thoughts:


US economy continued to stagnate.  The stock market hit a low in March.  After the famous Sequoia Startup RIP presentation we put plans in place to shut down our Beijing R&D team.  I took the lead on the overall plan for the company.  It was the right thing to do but it was extremely unfun because the team was doing many great things and our Beijing R&D operations fed my interest in China-related activities.

Went to China February 22 – March 4 (or so).  Took two half-days off to tour Chinese contemporary art galleries with RedBoxStudio and Maya Kovskaya.  Still haven’t written about those 2 amazing half-days.


April. TravelCom in Atlanta.  We announced that we hit 1 mm UV/month.  I also picked a social media fight with TravelPost and Kayak.  Fortunately, that ended well, with a little bit of media coverage we wouldn’t have had, and everyone ended up staying friends.  Meanwhile we are making huge progress with our UpTake Blog Network and our idea to create Travel Insights 100.

On my China side projects, CNReviews was rebooted and reimagined by Kai Pan, my new lead editor and partner.  We also start getting contributions from BloggerInsight, which are invaluable for providing some more business-related content.


UpTake continued to do extremely well, but in part because of seasonality of travel traffic.  I took time off to attend a few conferences:  Gnomedex, Conde Nast World Savers Congress and the Clinton Global Initiative Annual Meeting.  Finally decided to move on to pursue my interests in China and social media.  Yen and I started making plans quietly for my departure.  Everyone on my staff is past the 2 year mark, and doing a great job, so no guilt over leaving.


Left UpTake in October.  Announced my departure.  Yen wrote a very nice farewell post as well.  But then get pulled back into the PhoCusWright preparations.

In other matters, I spoke at AAMA Entrepreneurs workshop about lessons learned from my startup experience.  Led a case study at Plug & Play University with Professor Tom Kosnik.  Was on two panels at Rethink Hawaii: one on China and the Internet, the other on Fast Pitch.  Coached a Stanford E145 team called “Midnight Love.”

In November, attended PhoCusWright Conference.  Spoke at PhoCusWright at the “Blogger Town Hall” meeting.  Blogged about travel innovation.

Bummed out that I couldn’t attend CNBloggerCon this year.  Anyway, it was in a remote cave (in Lianzhou) somewhere in Guangdong Province near the Hunan border.  Amazing they had Wifi, but the location was chosen because it was not likely that authorities would shut down the conference.  In previous years, it was in Guangzhou (2008), Beijing (2007), Hangzhou (2006), and Shanghai (2005).  CNReviews sponsored the conference and we sent Kai and Min Guo there to cover it.  But Kai didn’t choose to write anything about it.  Rebecca MacKinnon did.

China trip: Dec 1-11 (or so).  Attended China Travel Distribution Summit and was quite honored to be sitting on the same panel as guys like Fritz Demopolous of Qunar.com, Ivan Zhang of Kuxun.cn, and Hao Wu of DaoDao.com.  I’ve know Fritz for a while and am always impressed by what he has accomplished, and his humble but intellectually assertive demeanor.  Someone said that they consider Fritz to be 70% Chinese.  That’s something to aspire to.

Return to California.  Spent the holidays at home, with Karen’s relatives coming to celebrate Christmas with us.  Dress up as Santa Claus for the first time.

Update and November Trip to China

I’ll be headed to China tomorrow and staying there until November 19.   My work at UpTake has caused me to be terribly out of touch with many of the people that I met with and worked with in China prior to getting involved in UpTake.  So I wrote a quick update on myself at CN Reviews.

More details on my China trip and itinerary are on CN Reviews.  The exact travel dates are on that post, so if you’re in China at the same time and want to meet up, contact me and lets see if we can make it happen!

I provide a short update on what I’ve been up to at that post.  I also wrote a longer update at my new VisualCV, an online resume product that I’m testing out because of their partnership with The China Business Network, which I’m informally advising.

Its the end of the world as we know it

Via niubi on Twitter I discovered an excellent post from John Maudin’s Thoughts from the Frontline entitled “Who’s Afraid of the Big, Bad Bailout?” (credit: John@FrontlineThoughts.com).  You need to sign up for his newsletter to see the entire article but it is well worth the read.  Here’s an except that helps to explain the whole credit crisis and how subprime mortgages, RMBS, CDOs, and credit default swaps (CDS) all fit together:

Dear Joe,

I understand your reluctance to vote for a bill that 90% of the people who voted for you are against. That is generally not good politics. They don’t understand why taxpayers should spend $700 billion to bail out rich guys on Wall Street who are now in trouble. And if I only got my information from local papers and news sources, I would probably agree. But the media (apart from CNBC) has simply not gotten this story right. It is not just a crisis on Wall Street. Left unchecked, this will morph within a few weeks to a crisis on Main Street. What I want to do is describe the nature of the crisis, how this problem will come home to your district, and what has to be done to avert a true, full-blown depression, where the ultimate cost will be far higher to the taxpayers than $700 billion. And let me say that my mail is not running at 10 to 1 against, but it is really high. I am probably going to make a lot of my regular readers mad, but they need to hear what is really happening on the front lines of the financial world.

First, let’s stop calling this a bailout plan. It is not. It is an economic stabilization plan. Run properly, it might even make the taxpayers some money. If it is not enacted very soon (Monday would be fine), the losses to businesses and investors and homeowners all over the US (and the world) will be enormous. Unemployment will jump to rates approaching 10%, at a minimum. How did all this come to pass? Why is it so dire? Let’s rewind the tape a bit.

We all know about the subprime crisis. That’s part of the problem, as banks and institutions are now having to write off a lot of bad loans. The second part of the problem is a little more complex. Because we were running a huge trade deficit, countries all over the world were selling us goods and taking our dollars. They in turn invested those excess dollars in US bonds, helping to drive down interest rates. It became easy to borrow money at low rates. Banks, and what Paul McCulley properly called the Shadow Banking System, used that ability to borrow and dramatically leverage up those bad loans (when everyone thought they were good), as it seemed like easy money. They created off-balance-sheet vehicles called Structured Investment Vehicles (SIVs) and put loans and other debt into them. They then borrowed money on the short-term commercial paper market to fund the SIVs and made as profit the difference between the low short-term rates of commercial paper and the higher long-term rates on the loans in the SIV. And if a little leverage was good, why not use a lot of leverage and make even more money? Everyone knew these were AAA-rated securities.

And then the music stopped. It became evident that some of these SIVs contained subprime debt and other risky loans. Investors stopped buying the commercial paper of these SIVs. Large banks were basically forced to take the loans and other debt in the SIVs back onto their balance sheets last summer as the credit crisis started. Because of a new accounting rule (called FASB 157), banks had to mark their illiquid investments to the most recent market price of a similar security that actually had a trade. Over $500 billion has been written off so far, with credible estimates that there might be another $500 billion to go. That means these large banks have to get more capital, and it also means they have less to lend. (More on the nature of these investments in a few paragraphs.)

Banks can lend to consumers and investors about 12 times their capital base. If they have to write off 20% of their capital because of losses, that means they either have to sell more equity or reduce their loan portfolios. As an example, for every $1,000 of capital, a bank can loan $12,000 (more or less). If they have to write off 20% ($200), they either have to sell stock to raise their capital back to $1,000 or reduce their loan portfolio by $2,400. Add some zeroes to that number and it gets to be huge.

The letter goes on with more examples and makes the case for action.  Unfortunately, the House Republicans voted the bailout bill down.