Monthly Archives: August 2011

steve jobs: legacy and wise words

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma — which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.”

– Steve Jobs, 2005 Stanford Commencement Speech

It’s been more than five years since Steve Jobs gave that commencement speech at Stanford, but it’s a speech that I find just as relevant today (perhaps moreso even) as I did then.  Even today, I’ll pull it up on my iPhone or MacBook when I need a gentle nudge in the “right” direction. While the adage of “following your heart” is one that is doled out especially often within Western cultures, Jobs articulates it in a manner that resonates particularly well — creating that fine balance between being both personal and vague enough for you to fill in the blanks.

While we all knew that the day would come that Jobs would no longer be at the helm of Apple as the company’s CEO, it’s a fact that perhaps none of us really wanted to accept. After all, here was someone who has truly made a disruptive and lasting impact on our society, in helping us define what we want, disrupting industries, and creating entirely new business ecosystems altogether — multiple times over (of course,the fact that these changes made him one of the wealthiest men in the world helped too ;))

And despite his notorious working style (Apple employees routinely report of his near-Draconian management style), Jobs is a visionary in the true-est sense of the word.  From the idea of a “personal computer” to Pixar,  to the portable world of iPods and iPhones, Jobs has helped shape the very way we think about media, music, pricing, and technology. And with the introduction of the iPad, it seems appropriate that the individual who introduced personal computing has now sparked the catalyst for the shift into the post-PC world.

The question for Apple will now be how much of the company’s innovation was its own and how much of it was Jobs? Granted Jobs is not fully leaving his place at Apple and will remain on board as an adviser, the cultural and organizational changes will certainly be felt.

As a society, we always have a way of romanticizing the past and the accomplishments at the end of one’s professional tenure, and while this doesn’t mark the end of Jobs’ career at Apple, it certainly is the end of an era. However, in Jobs’ case, and in reflecting on the ideas he has already made come to life, perhaps there isn’t much romanticizing there.

Thank you, Steve Jobs, for your inspiration and work. There are many who can hatch grandeur dreams, but only a few who can translate them into tangible visions. Thanks for being the few among those few, and for so eloquently articulating those words of wisdom that will stay etched in this writer’s mind for many years to come.

a compilation by the WSJ of steve jobs’ quotes from over the years: 


Leave a comment

Filed under life, miscellaneous, random thoughts, technology

Transfer Pricing 101

Every few years (or months as of late), the area of “transfer pricing” surfaces itself, even if the term never (or rarely) appears anywhere, as was the case with last week’s 60 Minutes segment on the world’s “new tax havens”. Part of it is the skewed taxonomy of the word itself, evoking implications of price structuring (i.e., determining how much a product is worth (albeit partially true)) versus its actual practice, determining the internal market cost of services rendered between company subsidiaries.

But a large part of it is the complexity of the practice itself, despite a very simple and innately intuitive objective — companies should compensate their internal business units for services rendered the same way they would with any external service. In this way, according to theory, companies would be prevented from shifting profits to lower tax jurisdictions.

As an example, Apple, which makes its famed iPods and iPhones predominantly in its Shenzhen, China factories, managed by third-party FoxConn and its own Apple-owned site.  Apple pays FoxConn the equivalent of a cost plus 5% margin but could choose to “charge” its own privately held subsidiary a cost plus 15% amount. Because Apple only has to pay a 25% tax rate in China, versus the 35% in the US, Apple would automatically gain a 10% cost savings for all business expenses incurred in China.  (all numbers, except for the corporate tax rates, are made up)

Transfer pricing tries to prevent this through a principle known as “arm’s length”, and while each tax jurisdiction has its own definition of what is considered arm’s length, it’s generally accepted that companies may compensate their internal business units at a margin that is roughly equal to those realized by third party companies.

While most reports like the recent 60 Minutes special are quick to tack onto the $60 billion of tax dollars that flow overseas every year, and the questionable practices that surround it, this fundamental principle remains largely untouched and unspoken for.  Rather than calling for this practice to be done away with (which is not possible; if anything, the number of countries that have enacted transfer pricing in recent years is steadily on the rise), emphasis should be placed on creating less ambiguity. What entails a sales and marketing service? What third-party companies should be considered as comparable in determining arm’s length? Are public companies, which are often the only companies with publicly available financial statements, even the right benchmarks to use?

And perhaps the foremost challenge and threat governments, particularly the US, should consider is the question of intellectual property transfer.  Especially among Silicon Valley companies, the ongoing trend has been to shift valuable technical IP developed in the heart of California’s Silicon Valley to the corporate-friendly business environment of Dublin, Ireland (tax rates range between 10% and 12.5%), where English is also the lingua franca.   According to an article by BusinessWeek, Google has been able to save more than $3 billion in taxes by housing the company’s search advertising IP in Dublin.

More than just profits, however, what happens when a paper-based transfer of IP translates into talent-based IP transfer?  Then, while the numbers won’t be as quantifiable or seem as impactful as $60 billion in tax savings, the implications will be far more substantial. Rather than asking the question of how we need to crack down on corporations to retain tax savings, the more pivotal question will be what we can do to ensure that IP developed within the borders of any one country need not move simply based on tax merits.

views expressed are only my own, and are by no means comprehensive. i am not a transfer pricing practitioner or expert, just a passerby thinking aloud  🙂

Leave a comment

Filed under miscellaneous, random thoughts, technology, us politics