Famous Supreme Court Cases and Interesting Tidbits

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Photo: Ken McCown

One day my friend was cutting a piece of delicious cheesecake when it was proposed to do a “you cut, I choose” method to split it evenly. I took it a step further and told him to “Plessy v. Fergurson it” – meaning I wanted the pieces separate but equal. Of course no one understood what I was talking about, no one laughed, and I myself was not even sure I quoted the correct Supreme Court case.

So I went online to verify my dorky joke and found the Supreme Court information available to be quite underwhelming. You can find articles dozens of pages long about each particular case, but no concise summaries. Here are some of the famous cases ruled upon by the Supreme Court and a short description of why it was so significant to the United States.

Famous Supreme Court Cases

1st tier

  • Roe v. Wade (1973) — Outright abortion bans are unconstitutional
  • Marbury v. Madison (1803) — Judicial review (for Supreme Court)
  • Plessy v. Fergurson (1896) — Separate but equal (segregation)

2nd tier

  • Miranda v. Arizona (1966) — Rights to counsel and to remain silent
  • Regents of CA v. Bakke (1978) — Affirmative action
  • Tinker v. Des Moine (1969) — Freedom of speech of students in public schools
  • Brown v. Board of Education (1954) — Segregated schools is unconstitutional
  • McCulloch v. Maryland (1819) — Constituation is supreme law of the land
  • Dred Scott v. Sandford (1857) — Slave is not a citizen but property of his owner

3rd tier

  • Slaughter-House Cases (1873) — Limits privileges and immunities of state citizens
  • Gideon v. Wainwright (1963) — Right to court appointed attorney if unable to afford one
  • Griswold v. Conneticut (1965) — Individual’s right to privacy
  • Mapp v. Ohio (1961) — Evidence procured by illegal search or seizure is not permissible in court
  • Greg v. Georgia (1976) — Death penalty in not unconstitutional

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An Alternative to Traditional Venture Funding

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Photo: Wally Gobetz

Yesterday I explained the pitfalls of too much venture funding. Whenever posting about a problem I will always attempt to follow up the next day with a potential solution. My idea is a Venture Capital funded bank account to be used by the startup where every X dollars spent translates into a percentage point of equity. The beauty in this model is that the startup receives the funding they need, but are incentivized to keeps their costs under control and become profitable in a hurry.

Let’s imagine a fictitious hot new internet startup looking for series B funding to take them to the next level. The offer they receive from KPCB is $10 million in exchange for a 40% in the company. Sounds great right: a ton of money from one of the best venture firms at what the founders feel is a generous valuation. Wrong! Take that same valuation but avoid the trap of taking more money than you need. Here is a potential counter offer:

  • $2 million immediately for an 8% stake
    • This amount will certainly be needed before becoming profitable.
  • The VC firm opens a bank account / line of credit for up to $8 million more where every $25k is 0.1% of equity
    • Forces the startup to watch their expenses rather than quickly burning through money without consequences
    • Protects startup from equity dilution (an excellent explanation) by only granting equity to the VC for funding used

If things start to go downhill for the startup there must be some protection from the VCs simply closing the account. Here are some potential rules:
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Too Much Venture Funding – When More Money is a Bad Thing

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Photo: Go Go Ninja

One pitfall for startups is taking on more funding than they need in exchange for a huge chunk of the company. It is obvious that the reverse is a problem — not enough funding means the young company has to be instantly profitable and will not be able to rapidly bring in new talent. Not as apparent but almost as dangerous is taking too much funding.

The examples are endless in the dot com boom. Webvan, Kozmo, RealNames, eStyle, Upromise, Priceline WebHouse Club, 800.com, Autolines, and Pets.com are some companies that had north of $100 million in funding and went out of business. After that debacle venture capitalists are more weary to hand out that kind of money. Only a handful such as Twitter, Facebook, LinkedIn, and Zenga have crossed a $100 mil. A further sign of caution is that in these latest examples the money often came well after the company had proven themselves with millions of users or by already being profitable.

Despite the regression in funding since the dot com bust, there still is too much money flying around for internet startups. Websites that are a good idea but lack a monitization strategy can raise tens of millions of dollars with good connections and a little luck. These aren’t large-scale manufacturing companies that need to purchase machinery or brick and mortar stores that need to purchase expensive inventory, they are websites that only need to buy a few servers. They have no need for tens of millions.

What happens when a startup receives more funding than they need?

  • It removes the sense of urgency to become profitable.
  • It makes it appear like the funding is a win, when really it is just a step in the process to having a profitable company, not the end goal.
  • The founders may become paper millionaires and lose focus.
  • The company loses control in the form of pressure from a VC firm with a huge vested interest.
  • The company owns less by selling equity for money they don’t need.
  • They spend the money foolishly because they can.  There were famous dot com heyday parties that cost over a quarter million.
  • They blow money on marketing. Obviously marketing is important, but cash strapped companies are forced to be creative with their marketing and still get more results than a Pets.com Super Bowl commercial.
  • Overaggressive expansion. Expanding before having a plan leads to unnecessary employees without direction.

Now that we all agree that too much venture funding is a bad thing, what can we do about it? Check back tomorrow for my idea.

Here is the second post “An Alternative to Traditional Venture Funding.”

The Smart Mathematics of Credit Cards

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Photo: Andres Rueda

You most likely use credit cards daily, but have you taken the time to consider how they work? Let’s examine one of the most obvious aspects of the credit card: the number. Credit card numbers are 14 to 16 digits long and link your purchase back to your account at the bank. But what do they mean?

The first digit is reserved for specifying what type of card it is. 3 = Travel and Entertainment card (34/37 = AMEX, 38 = Diner’s Club), 4 = Visa, 5 = MasterCard, and 6 = Discover. Each type handles the next 12 to 14 digits differently. They are used to identify the account number, bank number, whether it is a business or personal account, and/or the currency. Check out these sites for a more in depth coverage of how each credit card provider uses these digits.

One thing all credit cards have in common is a check digit at the end which is used to verify that it is a valid credit card. The check digit uses the Luhn algorithm, also known as the modulus 10 algorithm, to “check” the rest of the numbers. It’s goal is to not prevent counterfeit, but rather to protect against the accidental mistyping or mistransmission of the number.

The algorithm:

  1. Double the value of every second digit moving from right to left.
  2. Sum the value of every individual digit.
  3. If the total ends in zero it is valid, any other number it is invalid.

Let’s take a simple example: 47142

  1. 2×4 = 8, 2×7 = 14. Therefore we have 4(14)1(8)2
  2. 4+1+4+1+8+2 = 20
  3. 20 ends in zero so the number is valid.

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How Would You Like Continuous Direct Deposit for Your Paycheck?

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Photo: Andrew Magill

I receive a monthly paycheck. No I’m not bragging, quite the opposite, I am complaining. This sounds great to those who are unemployed, but why do I have to wait an entire month before being payed? The work that I do on March 1st I will not actually receive any compensation for until April 1st, 31 days later. To put it another way, 0.1% of my life later. Now does it seem like a bigger deal? I would much rather have the instant gratification of immediately receiving the wages of my hard day’s work.

Before big corporations came about I imagine everyone got paid at the end of the day. Today we sign agreements to give the company the right to only pay us once a week, bi-weekly, or even monthly regardless of whether you are paid by the hour or on salary. And of course there is no interest paid even though they are holding what is rightfully your money. My solution I call continuous direct deposit.

In the workplace money is never physically handed to the employee by their boss, it is all done by either check or direct deposit. Direct deposit allows for the transferring of funds from one bank account to another without dealing with cash or checks. Continuous direct deposit would transfer money from the employer’s bank account to the employee’s at infinitesimally short time periods — time periods that would make my monthly paycheck look like an eternity. Anyone with a salaried position can determine how much money they make any given minute, second, or even millisecond. This can be boiled down into an equation to be used to continuously deposit your paycheck into your account.

In theory you should be able to head to your bank’s website, repetitiously hit refresh, and watch you balance slowly tick up. Altering the equation could ensure that money is only deposited weekdays or during work hours.

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