The Dangers Of Compound Interest

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Paul Collins, writing in Lapham's Quarterly, takes a fascinating dive into the intriguing history of trusts and estates meant to last for centuries:

The notion of a “Methuselah” trust has a long history—and as with many peculiar notions, Benjamin Franklin got there first. Upon his death in 1790, Franklin’s will contained a peculiar codicil setting aside £1,000 (about $4,550) each for the cities of Boston and Philadelphia to provide loans for apprentices to start their businesses. The money was to be invested at compound interest for one hundred years, then a portion of the fund was to be used in Boston for a trade school. For Philadelphia, he recommended using the money for “bringing, by pipes, the water of Wissahickon Creek into the town”—or perhaps “making the Schuylkill completely navigable.” The whole scheme was perfectly suited for a man who once half-jokingly proposed that, in preference “to any ordinary death” he be “immersed in a cask of Madeira wine” for later revival, as he had “a very ardent desire to see and observe the state of America a hundred years hence.”

Franklin’s plans soared beyond a mere century, though. After a portion of the funds were to be paid out for a first set of public works, the remainder was then to grow for another century—until, by Franklin’s estimate, in 1990 both cities would receive a £4,061,000 windfall from their most famous native son.

Apparently, the era was marked by a bit of a craze for schemes by which a wealthy benefactor, through the miracles of compound interest, would wield influence on society long after death. The story of Peter Thellusson is fascinating, and apparently the inspiration behind the Dickensian Jarndyce v. Jarndyce saga in Bleak House:

Thellusson had an impressive fortune of some £600,000 by his death in July 1797, worth about $68 million today. But at the reading of the old financier’s will, his reckless sons received the shock of their lives. “It is my earnest wish and desire,” he lectured them from beyond the grave, “that they will avoid ostentation, vanity, and pompous shew; as that will be the best fortune they can possess.”

It would also be almost the only fortune they’d possess. Most of the estate was to be invested at compound interest until every currently existing heir was dead, whereupon upward of £19 million would cascade onto their distant descendants. It was as if, one legal scholar marveled, Thellusson had “locked his treasure in a mausoleum and flung the key to some distant descendant yet unborn.”

His heirs did not take the news well: one took out a pistol and shot the old man’s portrait.

 A problem that gave rise to the common-law principle of perpetuities


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“They don’t recognize that humanity, developing by a historical, living process, will become at last a normal society. But they believe that a social system that has come out of some mathematical brain is going to organize all humanity all at once, and make it just and sinless, in an instant, quicker than any living process. That’s why they so instinctively dislike history, nothing but ugliness and stupidity in it, and they explain it all as stupidity. That’s why they all so dislike the living process of life.”

– Fyodor Dostoyevsky

Quick Tips To Become A Better Writer

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  1. Read, read, read, read, read, read. Everyone always says that because it's true. But don't necessarily read just anything, read various styles of writing and create a basic taxonomy of those stylesthat you can refer to mentally, in a mindset that's more like concentrated practice than just breezy reading. Pay attention to structure, tone, form, use of (or wilful disregard for) grammar, and cadences.
  2. Learn how to break down basic sentence structure. Know what a gerund phrase and subordinate clause are, or how to spot a sentence splice. You can ignore the "rules" but you need to know them.
  3. To expand on number 2: Be able to instinctively identify the subject, verb, and object of your sentences. Every sentence has 'em, at least a subject and a verb. This isn't a firm rule, but there's an excellent chance that your sentence's perceived meaning hinges on them, no matter how complicated. And for reference subject, verb and object of the last sentence by the way were "there" "is" and "chance" respectively, not the thing that looks like a sentence and follows the word "that." Now that you know what they are exploit them. Most likely there's a better verb than variations on "to be" such as "is" "was" "has been" and the like.
  4. Write. But don't just write whatever comes to mind (though you should do that too): write to form. Now that you're being observant of how certain styles are structured and their conventions you can try for yourself. Attempt to mimic the way certain kinds of prose are written.

Here are a few examples of the same thing in various styles picked at random: 

"Triangle" – straight news format aka New York Times or AP style

Wilson Phillips, an internet user from Skokie, Illinois, visited the popular online site Quora today in an attempt to learn how to write. In a visit  Mr. Phillips described as "disturbing," site contributors were alleged to have committed several acts of hostility, including accusations he was an disgruntled former employee of Myspace, a claim Mr. Phillips denies. 

"Time Magazine" – famous backwards construction used in features

The clicks on the keyboard started out even, but soon picked up in speed. As comments were added, tempers flared. A voice rang out. "They should be so lucky as to work for Rupert!" it said, as minutes became hours. Broad daylight gave way to a dim monitor glow, and a grim realization took hold. It was almost midnight, and Wilson's secret was out. 

"Gawker" – ie snarky news/blog style

It looks like Wilson won't be getting off this island any time soon. Sources tell us the ex social-ite had a run in with the valley mafia late last night on Quora, which is quickly turning from a minor Mike Arrington masturbatory obsession into a digital mob. 

"Gonzo" – Hunter S. Thompson, the master

They're a vile bunch, mean on a good day and as vicious as a badger when cornered. And to them Wilson was prey. A life and reputation torn into meat and bone, the bastard never had a chance. Of course for predators that's the price of a meal, and he wasn't even the first that day. 

Heh. The details matter. Ask most people to write the first sentence of a story about a run of the mill news event like a house fire and they'll probably do something like "A house on Main Street burned down today" when in real life those stories usually come at the news sideways. For example: "Broken windows and car alarms were among the unpleasant sights this morning at the site of a residential blaze that claimed three downtown homes".

And so on… ya get the point. And that's just journalism; do the same with modern fiction, magical realism, classic literature, your favorite writers, etc. Once you can separate style from subject you have a set of tools that can evoke a mood. Like a musician practices ear training to identify pitch or major from minor keys you should know the mechanics that underpin a certain feel or tone, and use them, even when you forget you're using any style and just have your own voice.

The Difference Between NYC and Silicon Valley

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In New York, you may be a famous TV personality, who isn't nearly as cool as the fashion designer and makes less than a Goldman analyst, who in turn has money but is far less famous than you. Even if you can get into the hippest club you probably can't break into the ninth generation native gang sitting at the end of the Brooklyn bar talking about the Yankees, or be given the time of day by an NYPD detective.

Each of many subgroups is superlative, the subject of global admiration and books and movies and mythology. You can be truly exceptional in a category or three in a place like this but you will always be surrounded by people that have you badly beat in some other category that matters.

It keeps you humble, and prevents typical delusions like the idea that being the eleventh most crucial person in the creation of a killer 12 month old photo sharing computer program actually makes you consequential.

Advice to Startup Founders: Be Yourself (not too much)

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Recap and full video of Belgrave Trust founder Nick Baily speaking about “Vision & Values” to a class of startup founders at the New York semester of Adeo Ressi’s Founder Institute, 2010.

In the many years I’ve known Adeo Ressi he’s never failed to be an inspiration, for sheer energy if nothing else, but also an unbounded optimism, bias towards getting things done, and a willingness to toss aside the old in favor of a vision of how things could be. So its no surprise that his most recent endeavor, the Founder Institute, a “school” (or bootcamp?) for startup founders, has grown so rapidly.

It’s a no-nonsense semester long class that takes in people at all stages, united only by their desire to be entrepreneurs. A crash course intensive, it covers direct hands-on issues and skills required to run a startup, as well as the intangible stuff that really matters but is rarely taught — like dealing with stress, or partners, and how to explain yourself and what you do (a message Adeo has a gift for delivering with brutal clarity, as this video makes clear).

So needless to say it’s been a blast to participate in this semester’s NYC chapter as a mentor, with chapter head Gabe Zichermann. I had the pleasure of presenting at the semester’s first formal class a few weeks ago, dubbed “Vision & Values,” about the big picture questions that face every founder as they get started.

Here’s the video, and there’s a link to the slides below. Also you can see this clip as well as the great presentations on the same night by fellow presenters Carter Cleveland ( and Gary Whitehill (NYEW) too via this Vimeo link

Belgrave Trust Founder Nick Baily Speaks at NY Founder Institute Session #2

Slides also viewable here, as PowerPoint and PDF

My Huffington Post Essay On Financial Reform & The Green Economy…

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…is live. Wander on over for a (hopefully) interesting read titled "Nicholas Baily: Financial Reform? Sure. Kill America's Future Green Economy? No thanks." 

Here's a preview:

In the State Of The Union address, President Obama outlined a plan for economic growth, with green jobs as a cornerstone. Saying "the nation that leads the clean energy economy will be the nation that leads the global economy" the president directly mentioned jobs in clean energy and technology no less than six times. And his vision was clear.

In his own words: "We should start where most new jobs do — in small businesses, companies that begin when an entrepreneur takes a chance on a dream, or a worker decides it's time she became her own boss. Through sheer grit and determination, these companies have weathered the recession and they're ready to grow."

The rest at The Huffington Post