Monday, October 22, 2007

London, on the other hand

Prêt à Manger - 2 stars

EAT - 1 star

Marks & Spencer - 1 star

Stick and Bowl - 2 stars
31, Kensington High Street, W8

Foubert's - 0 stars
17 Kensington High Street, W8

As opposed to Paris, London is a city I remember fondly, although for no good reason. I first visited in 1993, when my girlfriend and I stayed with my sister for a week near Earl's Court and saw the tourist sites. I spent three weeks there in 1996, taking a summer course at the LSE that was trivially easy and living in a dorm on the South Bank across from the Tower of London, and my favorite memories are of running along the Thames, back before my knee broke down during my one and only marathon. But the longest time I spent there was a truly miserable experience, six weeks of a brutal McKinsey study in 1998 working until late at night six or seven days per week, and the kind of pressure that gave me panic attacks for the first time in my life, and living in the Royal Horseguards hotel near Whitehall. (When I left, the bill was well over $10,000, including hundreds of dollars for laundry.) The love of my life visited me for two weeks, and I spent almost no time with her, but I did ask her to marry me one evening in the Victoria Embankment Gardens, and she hugged me and said yes. I believe I went to the office later that night.

So I don't know why London is a city I always look forward to seeing (I've been back a half dozen times since then on various business trips), and why it's even a place I would like to live. (Of course, I realize that I will live in very few of the places where I would like to live.)

This trip was undoubtedly one of the worst, as I was sick for all three days, progressing through the various stages of a severe cold, including sniffling my way through a full-day meeting and a miserable flight back home. But still it was momentarily invigorating to swim in the diverse sea of busy commuters, and to look in at all the wonderful things to buy and eat in a real city, and to imagine what it would be like to be there every day.

This time I was staying in a hotel just off Kensington High Street and across from the Kensington Gardens, an area thickly populated with restaurants. But being sick the whole time, I confined myself to takeaway and casual places. Luckily, London has a restaurant category that is so good and so obvious that I wish we had it in the US: the high-quality, fresh-food cafeteria pioneered (I think) by Prêt à Manger and since copied by many other chains. Prêt was my favorite place to eat back in 1998, in part because I could get more or less as many things as I wanted and still stay within a reasonable expense limit. (Looking back on my McKinsey days, I should have spent and expensed much, much more than I did.) I ate once at Prêt and once at EAT, and each time I had one of those quintessentially English sandwiches, mature cheddar with pickle (which is not what you think of when you hear the word "pickle"), and they were both reassuringly familiar.

My other discovery was a Chinese hole-in-the-wall called Stick and Bowl, where people are densely packed into communal bar-type seating and they make all the standards, with a slight tendency toward Cantonese cuisine, and they bring them to you fast. The spring roll was grayish on the inside (though tasty), but the sautéed bok choy with garlic sauce was just right, and the vegetable noodle soup was the closest thing to chicken soup that I would eat these days. If only we had such a place back home.

The last day I had a couple hours in the morning before I had to leave for Heathrow (which was itself an adventure, since the Heathrow Express was shut down and I had to take a cab instead). I thought about swinging by Victoria Embankment Gardens and ... what would I do? Take a picture of the spot where we got engaged? Instead I had herbal tea and a scone at the Marks & Spencer cafe, took a walk in Kensington Gardens, and sat on a bench and watched the dogs (almost as cute as the Parisian ones) until it was time to go. It was cool but brilliantly sunny, and apart from missing my family I wished time would stop.

Tuesday, October 16, 2007

Paris, again, again

Cafe Guitry - 1 star
10, place Edouard VII, 75009

Luna di Miele - 0 stars
49, passage Choiseul, 75002

Wadja - 3 stars
10, rue de la Grande-Chaumiere, 75006

Tresor du Kashmir - 0 stars
rue de la Michodiere, 75002

Santi - 1 star
49, rue Montorgueil, 75002

Regular readers of this blog (of which there may be one or two) know about my complex relationship with the city of Paris. I was just there for six days, and this time I was determined not to repeat the usual tour of my favorite places to eat, and in fact I succeeded in not visiting Denfert, or going to any Left Bank patisseries.

However, my company's new Paris office is actually just two blocks from the old Bibliotheque Nationale (BN), or national library, which is where I spent most weekdays back when I lived in Paris thirteen years ago. so the trip was not without its share of nostalgia. The first night I was there I ate with my friend Alex at the same Italian restaurant in the northwest corner of the funny little road that surrounds the Palais Royal gardens where I used to eat with my old friend Peter. (Back then Peter was a love-struck graduate student in German history who lived in Paris to be with his French girlfriend; now he's a tenured professor at Harvard.) I had a pizza with capers and anchovies, which was quite good, the crust nicely blackened the way I like it. And just before I left the city we went to the Cafe San Jose on the rue des Petits Champs, just around the corner from both the office and the BN, and it was just as crowded and friendly as ever.

In between, though, I had two of the nicer days I've had in Paris in a long time. On Saturday I got together with Jay (then: impoverished graduate student like the rest of us; now: MacArthur fellowship-winning professor of French medieval history) to drink kirs in his rented 17th-century apartment on the Ile St. Louis, see an old Fritz Lang movie in Action Ecoles in the 5th, drink French beer at a cafe in the 6th, and eat a very nice dinner (and drink a bottle of wine) at Wadja. I had a somewhat overbearing sardine tarte, a wonderful filet of bar (I always forget how to translate names of fish), and what did I have for dessert again? Anyway, it was great. And the best part (ok, maybe not the best part) was being able to pay the 120+ euro bill (we split it) without blinking. (For those from my company reading, I didn't expense it.) Who says money can't buy happiness?

On Sunday, I took my friends Alex and Sigrid (newcomers who are staying in Paris for six months) around the city with the general mandate of avoiding major tourist sites (minor tourist sites were ok). The undisputed high point of my entire trip, surpassing even the pilgrimage to Berthillon, was lying on one of the hills of the Buttes-Chaumont on a perfect day (completely sunny, temperature around 70) and watching the unbelievably cute Parisian dogs playing with (bothering) their people. ("Come on, let's play! Oh, you have food? I need some food. Why don't you give me some food? OK, I'll go over here and ask these nice people. Hey! Why did you put that leash on? I don't want to lie down! OK, I'll lie down ...") So maybe you don't need money to be happy.

Overall the food probably wasn't up to my usual Parisian standards. It included several mediocre croissants from the bakeries between my hotel and the office (which, of course, are still better than any croissant you can buy in the US), a few trips to passable lunch spots near the office that cater to business people (at one of which they microwaved the pesto before our eyes before spooning it on the pasta), a two-hour "business lunch" (preceded by a five-minute meeting) at the Cafe Guitry with a partner of ours (tarte pissaladiere and marmite de poisons, both decent), a so-so Indian restaurant near the office, a nice, modern lunch place on the rue Montorgeuil, and a sushi place near the hotel that would go out of business in San Francisco in a matter of weeks. But in the end I think what I like the most about being in Paris - or any other foreign city where I've lived - is the feeling of actually living there, and doing the ordinary things that people who live there do. And this time, commuting to the office each morning, going to a movie, and lying in the grass of the Buttes Chaumont, I had more of that feeling than I have since 1994.

Friday, October 12, 2007

Who's the entrepreneur?

I wrote this on an impulse because I was enraged by an article in The New York Times about VCs posturing as entrepreneurs. Of course, the Times didn't print it (they get a thousand submissions for everything they publish), so enjoy.


As an entrepreneur, I was surprised to read the title "Entrepreneurs Defend a Tax Benefit Despite a Dubious Congress" (V. C. Nation, Sept. 21), and offended to learn that venture capitalists are posing as entrepreneurs in order to protect their anomalous tax treatment. VCs, as we call them, may like to think of themselves as entrepreneurs, but they are no such thing. Even associates fresh out of business school make six-figure salaries, and partners' base salaries are considerably higher - funded, of course, by the 2% asset management fee they charge their investors.

The ongoing debate, of course, concerns the "carry," or the share of investment gains that they keep for themselves, and whether it should be taxed as ordinary income or a capital gain. On the face of it, I fail to see how anyone could argue that this constitutes a capital gain, since the capital at risk is not theirs to begin with. A sophist might argue that the carry is deducted from the investors' capital gains, and hence should be treated that way for tax purposes ... but that's the same as arguing that when you sell stock for a gain, your broker should pay capital gains tax on his commission, because it comes out of your gain.

But leaving aside that well-trodden ground, the claim that VCs deserve their tax break because of the "sweat equity" that they invest in their portfolio companies, and the jobs that those companies create, is a bit much. VCs do play an important role in allocating capital - my company would not exist without them - but so do research analysts, mutual fund managers, equity underwriters, and traders, all of whom pay ordinary income tax.

Once the capital is allocated, many successful entrepreneurs - who no longer need to play nice with VCs - would describe the ongoing assistance they receive as ... well, "incidental" would be a nice way to put it. (One of the most candid VC partners I met once said, when asked what his role was, "we provide the money.") But even in the cases where they do provide valuable assistance, why should that work be taxed at a lower rate than the work done by every employee who helps the company grow and succeed?

On September 14, 2001, I quit my job to found a software company with five friends. We earned nothing for six months until we acquired funding, and then took large pay cuts from our previous salaries until the company was self-sustaining. Today, our company has more than 350 highly skilled, highly paid employees (the vast majority in the United States), and has created hundreds more jobs among our partners and customers.

It is true that those jobs would not exist without the initial backing we received from VC firms. But aside from the function of allocating other people's capital, which does not in itself merit capital gains treatment, I would defy any VC to argue that he played a greater role in creating those jobs than did I, or any other founder, or any one of fifty other important people in the company - and all of us pay ordinary income tax on our salaries.

In general, I fail to see why the contributions of capital toward growth and job creation are more valuable than the contributions of labor. As a result, although the lower tax rate on capital gains benefits me as a part-owner of my company, I don't see why it should exist. But given that it does exist, for VCs to argue that the labor they put into their portfolio companies is so much more valuable than the labor of the employees that their labor (and not ours) should be taxed as if it were capital is both nonsensical (should firefighters pay capital gains tax on their salaries because they are crucial to society? should teachers?) and insulting to the people who really build those companies.