Category Archives: Education Policy

The 10 Year Anniversary: Lessons from the Dot Com Crash by Gregory Hilton

It was 10 years ago yesterday that the spectacular five year growth of the NASDAQ composite index peaked at 5,132.52. It had surged by 50% during the preceding year, and few saw the storm clouds on the horizon.
President Bill Clinton repeatedly spoke of the “new economy created by the information superhighway”, and Vice President Al Gore promised “You ain’t seen nothin’ yet!” Silicon Valley was transforming the world, and few people thought it was headed for disaster.
The nation was mesmerized by stories about entrepreneurs such as Marc Andreessen of Netscape. He was on the cover of TIME magazine at the age of 24, and two years later his company was sold to AOL for $4 billion.
Companies were under pressure to go public quickly, which was far easier to do in those days. More than 1,300 technology companies went public between 1995 and 2000, and 534 venture-backed initial public offerings occurred just in1999 and 2000. (In 2008 and 2009, only 18 venture-backed companies went public).
Most of the dot coms were not based on real business models. People kept investing in this new economy, but they weren’t interested in long-term growth. They were looking for a fast profit. Back then the Fortune 500 companies were looked upon as poor investments. Instead of a 7% return, investors believed they would receive 30% returns from tech start-ups.
Common sense was abandoned and investors were backing business plans they did not understand. The senior employees of these firms were recruited with promises of stock options which later turned out to be worthless.
The dot com bubble burst in 2000 and during the next two years NASDAQ lost 80% of its value. Five trillion dollars of virtual wealth disappeared. The vast majority of high tech startups shut their doors after burning through their venture capital, and they had never turned a profit. We now refer to them as dot bombs.
NASDAQ never recovered and today it is 53% below its 2000 peak. Stocks such as Yahoo fell from $115 to $5. In its worst business decision, Yahoo purchased GeoCities for $3.57 billion in January 1999, and a decade later this subsidiary was closed completely. Nortel Networks went from $113 to $1, and InfoSpace went from $1,305 to $22. AOL was then valued at $161 billion, while today it is worth $4 billion.
Tech investing was not rational a decade ago. Market share is important but the crash taught investors that profits do matter. In the late 1990’s high tech and dot com firms were receiving huge infusions of cash from venture capitalists, but once again they did not know how to turn a profit. In fact, that often was not their stated goal. They were instead working to increase traffic to their web sites.
Many times there was no useful application for the technology behind some of these dot coms, and the growth expectations were not realistic. It took Amazon five years to turn their first profit at the end of 2001. Pets.com was losing money on every sale and they promised to turn around the loss with increased volume.
Several scholarly studies have now been done on the dot com failure. One interesting observation was that not a single entrepreneur received venture capital funding by submitting a business plan over the transom. Social networks were highly important and entrepreneurs who received funding either knew the venture capitalist or gained a personal introduction.
The companies that survived were the ones which ignored the “Get Big Fast” business model. The days of 30% to 40% annual growth rates are gone, and now stock prices are reasonable and they are not at highly inflated prices. Venture capital firms are far more patient today, and an idea requires far more vetting to get funding.

What I Learned From My High School Reunion by Gregory Hilton

This will surprise some of you but I actually did graduate from high school. My class reunion is this weekend but unfortunately I am stuck in a basement in Georgetown. I sure wish I was back with the old gang at Byram Hills High School in Armonk, NY. I received several wonderful letters from former classmates and so many of the people I really want to see are participating in the three days of activities. I have not seen 95% of them since graduation.
I feel awful but Facebook has somewhat lessened the blow. While I am not there in person, I have been communicating with many of them via FB, e-mail and the phone. The result is that wonderful memories have come flooding back. We reminisced about school dances, riding the bus, my cross country team, endless baseball games, summers at the Windmill Club, the boys I sat with in the cafeteria, the seemingly impossible math assignments, my beautiful and popular sisters, bullies, learning to drive, and graduating from high school before the real life problems of college, employment and marriage hit us.
The stories they told me about the kindness of my late parents were especially touching. It has been enjoyable to catch up with people regarding the blur of activities in their lives over the past decades. High school is just one chapter in life, although it remains a unique one. My classmates have a special bond because of the closeness we achieved by going through so many new experiences in suburbia. We all had to struggle toward maturity and make decisions that prevented us from going back to the comfortable places of youth.
French was not one of my favorite subjects but I do remember the expression, plus ca change plus c’est le meme chose – the more things change the more they stay the same. That describes so many of my classmates. The nice kids continue to have pleasant personalities as adults. The good kids are still good. As for the desperadoes such as myself? Well, they seem all right too.
Our class includes a young Dwight Eisenhower (now you know why I am a Republican); a Hollywood actor (Peter Gallagher of Titanic); a rock star (Preston Reed who performs with Lyle Lovett, Bonnie Raitt and Linda Ronstadt); the winner of the Mega-Millions Lottery (Donna French); a rocket scientist (Dr. Wendy Orr); a marathon champion (Meg Kerr); my personal heroes Bob Kinn (who has been in Afghanistan since 2004 helping the less fortunate); Peter Siegel (who dated the two most spectacular women in the class); and the only Republican in his Washington, D.C. precinct (me).
Do I have any wisdom for my students? The experiences of my classmates demonstrate that life is not always smooth sailing, but adversity does build strength. In every ending there is a new beginning.
I recently spoke with a woman who was focused on cheerleading activities in high school. She was devastated her senior year after failing to qualify for the squad, and was then excluded from many of the social activities of the cheerleaders. Her life took a new direction and she instead joined some of the class nerds on the debating team. That was a few years ago. She is now United States Senator Claire McCaskill (D-MO) and says she never would be on Capitol Hill if she had been a varsity cheerleader.

Is There a Liberal Bias in the News Media by Gregory Hilton

Liberal journalists outnumber conservatives by a 3 to 1 margin.

Liberal journalists outnumber conservatives by a 3 to 1 margin.


I believe there is a liberal bias in the media. The Pew Research Center for The People & The Press found five times more journalists described themselves as “liberal” as said they were “conservative.” A 2005 survey conducted for the American Journalism Review found nearly two-thirds of the public disagreed with the statement, “The news media try to report the news without bias,” and 42 percent of adults disagreed strongly.
Media bias is important because while newspaper circulation is declining, the mainstream media still has tremendous influence. The ideology of these journalists is significant because they are selecting the stories we read. That is a major source of bias, because major topics are often ignored. They pick topics which reinforce their mindset. Media bias is “the selection of which events will be reported and how they are covered.”
The responsibility of the news media is to be as unbiased as possible and to present all sides of an argument. That is a primary reason why radio and TV stations are granted public airwaves. Too many journalists have crossed the line and become commentators. The stories they select are often designed to score partisan political points.
Julianne Malveaux is a fine advocate but she should not be a journalist covering the Supreme Court. She use to be with USA Today, and spoke of Justice Clarence Thomas by saying: “You know, I hope his wife feeds him lots of eggs and butter and he dies early like many black men do, of heart disease. Well, that’s how I feel. He is an absolutely reprehensible person.”
Surveys of journalists’ self-reported voting habits show them backing the liberal Democratic candidate in every presidential election since 1952, including landslide losers George McGovern, Walter Mondale and Michael Dukakis. In 2004, a poll conducted by the University of Connecticut found journalists backed John Kerry over George W. Bush by a greater than two-to-one margin. In 2008, the margin was 3 to 1.
A number of journalists have also admitted that the majority of their brethren approach the news from a liberal angle. During the 2004 presidential campaign, for example, Newsweek’s Evan Thomas predicted that sympathetic media coverage would boost Kerry’s vote by “maybe 15 points.” Similar observations were made during the 2008 campaign.

Education Policy: Can American Learn From Japan by Gregory Hilton

Japanese high school students.

Japanese high school students.


Japan always outperforms the U.S. in math and science scores. That is well known, but most Americans would be surprised to learn Japanese schools do not have janitors or cafeteria workers. Those tasks are left to the students. They sign up for chores on the blackboard. Students serve the school lunch to the teachers and themselves. This helps students develop autonomy, responsibility and a strong work ethic. It’s an idea that could work well in America.
The Japanese students also wear uniforms. Japan introduced Western style school uniforms in the late 19th century as a part of its modernization program. Today, school uniforms are almost universal in the public and private school systems. They are also used in some women’s colleges. Boys wear pants and jackets, and girls wear blazers and skirts. They have lunch in the classroom, not a cafeteria. Some of them are in school on 2 or 3 Saturdays/month, and they often stay after school for cleaning or club activities. I have spoken to many Japanese students and they enjoy practicing English. I have yet to meet an American student who speaks Japanese. The U.S./ Japan comparison can also be misleading. In Japan it is only the best and the brightest who are able to attend school, while in the US school is mandatory until the age of 18.
Most Japanese students also attend night school five days a week, as well as during the day on Saturdays. They always have homework. They are drilled non-stop to prepare for very competitive exams which determine their entire future course in life. They only sleep a few hours per night – not enough by U.S. standards for growing bodies. They have virtually no free time.
The dark side of the Japanese system involves the high rates of teen suicide and bullying. They are viewed as products of an educational system which demands a high level of obedience. Lack of focus on creativity and expressing one’s opinion is the price to pay for a system that churns out students who excel on math and science tests.
The system is changing but only at the pace at which Japanese society is moving away from the job-for-life philosophy. The Japanese university system is far easier than its U.S. counterpart. Japanese students use their college days to enjoy life.
The current 20 somethings in Japan are now called the “so-so generation.” They have seen the workaholic lifestyle of their parents and they reject it. Young Japanese do not want promotions because it will mean additional work. They are satisfied with a lower income lifestyle that gives them more free time. Also, the plunging birthrate means Japan will lose 70% of its workforce by 2050, and 75% of Japanese will be of retirement age plus by 2035.