Improve The Higher Ed Scholarship Application ROI

Higher education costs too much, that’s a given.

The preferred solution to the problem of paying for the extraordinary cost of higher education is scholarships. Because free money is the best kind of money. 

The central problem with scholarships, however, is maximizing your return on investment. Investment of your time, and investment of your effort. 

Sallie Mae, the national private student loan company, recently purchased scholarship search-engine Scholly specifically to address the problem of improving families’ return on investment of time and effort.

As Brian Babineau, Chief Brand Officer for Sallie Mae told me, “We found that efficiency is the problem. The biggest barrier to applying (for scholarships) is that kids don’t think they can win, so they might believe the ROI of their time is terrible. We want to make it easier for them to win, and also make them feel like winning is a possibility.”

Houston

At the Greater Houston Community Foundation website, high schoolers and their parents can efficiently seek opportunities that may be available specifically for them. 

Courtney Grymonprez, Scholarship Manager at the GHCF, points me to the 48 listed scholarships on their site. 

Most are narrowly focused on children of certain employers, or from a particular school or community, or who suffered from a medical condition, or who seek to pursue a specific course of study. That specificity means that for those students who qualify, the scholarships themselves may not be overly competitive to win. 

“There are years when certain scholarships are not awarded, because nobody applied. 

Sometimes there are scholarships for one particular high school. Local scholarships are the best way of having really good chances,” she says. High school guidance counselors, she says, are a good resource for finding these types of scholarships.

Outside of the GHCF scholarships she oversees, she recommends all Texans look at the Houston Livestock and Rodeo site, where funds raised from the event are available for higher education. 

Grymonprez is quick to point out that not all scholarships there are targeted to agriculture or “rodeo themed” in any way. 

San Antonio

Meanwhile, the San Antonio Area Foundation offers over 120 scholarships totaling $9 million for local students. 

Their flagship opportunity, called “Legacy Scholarship,” is merit-based and worth $40,000 over 4 years, for 80 students from Bexar County planning to attend public or private university in Texas. That application is due during junior year. 

Between December first and February 24th this year, however, is the most efficient way for current seniors in the San Antonio area to apply for scholarships from the SAAF. Through a single application, prospective students can make themselves eligible for dozens of scholarships. Actually, at SAAF, there are currently two applications.

According to Jennifer Ballesteros, the Executive Director of Scholarship and Relief programs at SAAF, students can submit both a “universal” and a “common” application through the SAAF. Some scholarships are administered solely by SAAF staff, while other scholarships are awarded in consultation with outside committees, which explains the difference between the two categories of awards. But students should absolutely apply via both methods to increase their odds of landing money. Just two applications, to put oneself in the running for over a hundred scholarships, seems efficient to me.

As with the Greater Houston Community Foundation, many scholarships through the SAAF are highly targeted to a student’s family background, choice of major, intended career, or a specific campus. As a result of this narrow targeting, some scholarships are less competitive and more easily won. Every year, Ballesteros says, “There is money left on the table, and we do want that money to be spent.” Bellesteros mentioned money for archeology majors, to cite one example, has gone unclaimed in the past. In terms of ROI, an uncompetitive scholarship is the best kind of scholarship!

Over at the scholarship search engine Scholly, sponsored by Sallie Mae, Babineau echoed this same theme. Some money is just out there waiting to be claimed. 

“We want to change the narrative that scholarships are only for students with a 4.0 GPA and 1600 SATs,” says Babineau. “There are scholarships available for the person you are, the things you want to be and do, your hobbies. There are local scholarships available in your town. We are trying to create awareness around that.” 

Accessing regional foundations, plus a scholarship search engine, feels like an important way to increase your student’s return on investment of time and effort. 

I spent 6 minutes to create a profile on Scholly as a parent, after which the app returned with $131,250 in 11 “potential scholarships” for my child. After I inputted some more data – another 5 minutes – based on my oldest daughter’s extracurricular activities, academic interest and personal background, the app upped the amount to $151,750 in potential scholarships. 

Scholly is just one of a number of scholarship search engines that parents and students could use to quickly identify plausible scholarships. While the “best” search engines may change over time, a Google search will quickly give your student a few places to begin.

$100 million unclaimed scholarships!

The National Scholarship Providers Association, an advocacy group, claims that $100 million in college scholarships goes unclaimed each year. 

Maybe this opens up the concept to a college junior or senior that hustling to apply for college scholarships is a very worthwhile use of time. Can 30 minutes of online work qualify them for $500? Can 2 hours of essay writing and filling out forms get you $2,000? A high schooler is unlikely to earn that much on a per hour basis in any other (legal) activity they could engage in.

A version of this post previously ran in the San Antonio Express News and Houston Chronicle.

Please see related posts:

San Antonio student who figured out the scholarship game

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Is Rackspace Officially Dead?

RXT

It’s hard to overstate the importance Rackspace played in San Antonio’s imagination about itself in the year 2009, when I first arrived in town. A scrappy mid-sized technology company, launched by 3 college kids in their proverbial dorm room, had established an early-mover advantage in the growing technology service known as cloud hosting, and was using that advantage to fend off the biggest names in tech: Amazon, Microsoft, and Google. With the cult slogan “Fanatical Support,” hopefuls wondered if Rackspace could do for San Antonio what Dell had done for Austin. Would rackers overmatch the difficult competition and transform sleepy Alamo city into a tech hub?

The relentless, one-way drop in RXT shares from $20 two years ago to just over $2 shares as of this writing tells us that David did not, in fact, slay Goliath. The stock’s chart over the last two years is just a Matterhorn-shaped downward slope with no bottom in sight.

The equity market capitalization dropped in that period from $4 billion to around $250 million by mid-May 2023, approaching one-twentieth of its former size. Looking at that kind of chart in May I naturally ask the fundamental question: “Is Rackspace dead?” And also the technical question, “what the heck is wrong with RXT shares?”

Now, here I want to distinguish between a company and its shares. A good company can be a bad stock investment. And in certain instances a bad company can be a good stock investment. And everything in between. I will mostly save the judgment about whether Rackspace is a good company with good long-term prospects, “the fundamentals,” for a future column. Today I mostly want to discuss “the technicals,” which addresses the question “What the heck is wrong with the stock?” rather than the more profound question of business prospects.

Still, we’ll do 3 sentences on the fundamentals, and then the rest of the column on the specific technical issues that may have plagued RXT, the stock, for the past two years, and in particular the last few months. And then a technical change in stock market plumbing announced last month that reflects RXT’s changed prospects.

The Fundamentals

RXT reported a loss of $612 million for the quarter ending March 2023, following a full year loss in 2022 of $805 million, on $759 million in quarterly and $3.1 billion in annual revenue, respectively.

Rackspace
Rackspace Stock Over 3 Years

As of March 2023, the company reports $3.3 billion in long-term debt at an average of 5.5 percent, not due until 2028, giving it attractively-priced debt service, and a runway of 5 years before it needs to refinance the debt. 

Cloud computing services, as an industry, are projected to grow between 15 and 20 percent annually for the next 5 years, so an experienced provider that merely maintains market share with the natural tailwinds of the industry could be positioned to grow nicely.

Fundamentally, we have 5 years to find out whether Rackspace is dead.

The Technicals

So then what technical forces are crushing RXT, the stock, these past 2 years?

Technical analysis seeks to explain the current and future price movements of a stock according to the supply and demand dynamics specific to the stock. This is distinct from studying the fundamental revenue, cost, debt, and cash flows of the business itself, as we did above.

The largest holder of RXT remains private equity firm Apollo Global Management with 61 percent of the company’s shares. In 2016 Apollo took the company RAX private from the New York Stock exchange. Apollo then relaunched Rackspace via IPO under the ticker RXT in August 2020 on the tech-oriented Nasdaq. In part because Apollo still owns most shares, the supply of tradable shares, or “float,” is quite small. Very few individual, or “retail” investors own any shares. 

The volume of share transactions in RXT has declined over the past year, along with the stock price. A year ago between $5 and $8 million worth of shares traded hands per day. That has slowed to an average of less than $2 million per day over the past two months. 

A low “float” of the shares, the declining dollar amount of trading, and a price approaching $1 per share all tend to further depress interest in a stock among professional investors. 

Non-Apollo shares are mostly owned by Small Capitalization Index Mutual funds. My strong belief is that this particular fact is the absolute key to understanding the one-way price movement of RXT over the past months.

Russell_2000

The top mutual fund holders of RXT are all ETFs and index funds, from Vanguard, iShares Russell, and Fidelity. RXT shares are also held in some “technology,” and “total market” index funds. 

A major technical problem for RXT of this ownership is that each of these indexes is “market-weighted.” This means that as the market capitalization of the company drops, the automatic weighting of the company within that index drops. That makes the indexes forced sellers of the company’s shares as prices decline, in a self-reinforcing vicious cycle. 

In theory, and as often happens with other stocks, institutional value investors (non-index investor) sometimes jump in to purchase shares in this scenario, which helps to break the vicious cycle. But for most value investors RXT’s float is too small, the trading volume is too small, and most importantly, value investors don’t love annual losses larger than the market capitalization of the company. So far they’ve stayed away.

But I suspect the biggest problem with RXT is the specifics of the Russell 2000 index that happened last month, which determines ownership of small capitalization index funds.

The Russell 2000 index is comprised of US small-capitalization companies, in particular those ranked numbers 1,000 through 3,000 on the list of US companies, by size.

As of 2022, the literally smallest Russell 2000 index company – the 3,000th ranked company on the list – had a total market cap of $240.1 million. Interestingly, RXT breached that bottom floor of market capitalization last month.

Russell 2000 Index Over 5 Years

The Russell 2000 index makers set April 28th 2023 as the annual cut-off date for determining who is in or out of the index. On that date, RXT had an approximate market capitalization of $320 million. This put RXT on the bubble of being dropped by the Russell 2000 index. The result of that would be further forced selling by the index holders.

New IPOs allow companies to be added quarterly. Other additions or subtractions due to growth, merger, or shrinkage happen just once a year. Companies are subtracted from the Russell 2000 index on an annual basis, and May 19th was the announcement date for whether RXT would remain in the index.

Let me not hold you in further suspense. Despite being on the bubble, RXT did not get dropped from the Russell 2000. The size of the smallest company to remain on the Russell 2000 list dropped to $159.5 million in 2023, 33 percent below the previous floor. RXT was saved in a sense because the standards for inclusion got easier!

RXT actually got added to the Russell Microcap Index for the first time on May 19 2023, the index for even smaller companies with a market capitalization going all the way down to $30 million.  

But even though they were not removed from the Russell 2000 list this year, the risk of subtraction from the index, plus the vicious cycle of lower prices leading to lower market weighting, could explain much of the past few months’ price action in RXT. 

Getting put on the Russell Microcap Index is somewhat analogous to relegation to a single-A baseball league down from the triple-A league where it had previously played. The stock may take a long time to ever attract major league investors. Or it may never again attract them.

Languishing in obscurity is ok for profitable companies that can put together a good fundamental track record of profit over time. It could get back on the list and in that sense be eligible again for the majors. For a company with $3 billion in debt due in 5 years, and a string of annual losses, it may be a harder slog. Time will tell.

A version of this ran in the San Antonio Express News and the Houston Chronicle

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DeLorean’s Legacy

August was a big month for the DeLorean car company’s legacy. In fact, August 18 was a particularly big day on both coasts. On the west coast, San Antonio-based DeLorean Motors Reimagined hosted a public launch of its “Alpha5” concept car at the 70th Annual 2022 Pebble Beach Concours d’Elegance auto show. 

Meanwhile on August 18 in New Hampshire, an alternate claim to the DeLorean legacy was announced as well. Kathryn DeLorean, original founder John Z. DeLorean’s daughter, launched the DeLorean Legacy Project, an educational engineering center with plans to build a signature tribute car, the Model JZD, first designed by Angel Guerra in 2020.

One of these is a for-profit business and the other is a historical tribute and non-profit educational project. Both are attempts to grapple with what this car brand meant in the past and what it will mean in the future. What is DeLorean’s true legacy?

Ever since its star turn in the famous Michael J. Fox movie, the DeLorean brand has operated in the boundary space between the past and the future. Any DeLorean project wrestles with this fact. A DeLorean-branded car is by definition a 40-year-old throwback while simultaneously marketing itself as a blast into the future.

The DeLorean of our imagination embodies this paradox. A retro-futuristic relic of discontinuous-time and liminal space.

The DeLorean Motors Reimagined folks know this. The name “Alpha5” – the prototype they debuted last week at Pebble Beach – uses “5” in the name because the company claims to have imagined 1990, 2000, 2010 DeLoreans (the Alphas 2, 3 and 4) that never were. That’s a cool made-up retconned legacy idea, actually. 

Alpha5
The Alpha5, Fifth of It’s Name?

Their signature tagline, “The Future Was Never Promised” to me sounds somewhat apologetic, as if anticipating and then responding to a disappointed fan who objects to their vision of the future for DeLorean.

Unfortunately, or maybe inevitably, it’s proving hard to satisfy the hardcore fandom that wants both retro and futuristic styling. So far it’s gone over about as well as did Hayden Christiansen’s Anakin Skywalker in the Star Wars prequels, as compared to the original Darth Vader narratives, another retconned remake that enraged original superfans.

The Delorean Motors Reimagined Instagram page hosts a relentless series of complaints about the Alpha5: that it’s not a real DeLorean, that it very clearly reused a 2019 design for a concept car called the DaVinci, that it looks like a Tesla, and that they didn’t honor the DeLorean design legacy. To satisfy your own schadenfreude, I invite you to visit their social media.

Davinci Car
The DaVinci Concept Car from ItalDesign

The most immediate challenge to their future business hit the company a week before Pebble Beach. Electric car company Karma Motors sued DeLorean Motors Reimagined and its top executives for stealing intellectual property and breaching the non-disclosure agreements they signed as Karma employees in 2021. For them to have a future, they will need to go back to address this past, in court.

Other fights over intellectual property

As one dives deeper into the obsessions of the DeLorean fandom online, the questions of intellectual property rights and legitimacy get even more convoluted. By the time it publicly launched in 2022, the San Antonio-based DeLorean Motors Reimagined had already teamed up in a joint venture with Delorean Motor Company of Texas, based in Humble. That company, led by Stephen Wynne, had long ago established itself as the successor to John Z. DeLorean’s bankrupted firm by buying up DeLorean parts and then over time acquiring lapsed trademark rights to the name, logo and design. 

Sally Baldwin DeLorean, the administrator for John Z. DeLorean’s estate and his fourth wife at the time of his death in 2005, however, sued DeLorean Motor Company of Texas for improper use of intellectual property in 2014 and again in 2018. That case was settled in 2018 for an undisclosed amount, leaving DeLorean Motor Company of Texas in a strong position to claim intellectual property rights to the DeLorean name, brand, imagery and logo. Rights which it has now shared in a joint venture with DeLorean Motors Reimagined.

John DeLorean’s daughter Kathryn and a fan-favorite design

Kathryn DeLorean, JZD’s daughter, believes that Sally cheated on her father and also cheated her out of proceeds of her late father’s estate. Meanwhile, she has embarked on her own attempt to establish a DeLorean legacy, by working with a fan-friendly designer.

In November and December 2020, freelance automobile designer Angel Guerra of Spain launched a COVID-era fantasy idea: A 2021 DeLorean tribute to the 40th anniversary of the car. 

In the online super fandom of DeLorean, Angel Guerra’s designs caught spontaneous fire. In Guerra’s telling, he reached out to Delorean Motor Company of Texas and shared his vision and even business plans for building a prototype within a year. When DeLorean Motor Company of Texas declined to pursue the idea, Guerra returned to his regular day job, working on European hyper-car auto designs. 

Guerra was then surprised to hear a few months later that in fact DeLorean Motor Company of Texas was pursuing a new futuristic electric car joint venture. This turned out to be a group from Karma Motors that formed the executive team of DeLorean Motors Reimagined in San Antonio. Guerra’s comment to me on the formation of that venture, just a few months after he pitched Stephen Wynne of DeLorean Motor Company of Texas, was “what a coincidence.”

Guerra subsequently joined forces with Kathryn DeLorean to offer another kind of legacy. They hope students of design and engineering will learn from building his concept car, the “Model JZD.”

Angel Guerra and Kathryn DeLorean are careful in their public communications to disclose that the DeLorean Legacy Project is not affiliated with DeLorean Motors Reimagined (of San Antonio) or DeLorean Motor Company, Texas (of Humble).

They are not competing in any commercial sense. They represent a different claim, however, to the fandom of the DeLorean. In launching her legacy project, Kathryn says “There is no competition, I am a DeLorean, I’m making engineers, not engines.”  

Now then, let’s go back to the future. Ten years from now, Whose legacy will we remember? Obviously, I don’t know. 

But there’s a recurring pattern with this company. Kathryn DeLorean claims she was cheated out of her estate by her step-mother Sally Baldwin DeLorean. Sally Baldwin DeLorean claimed she was cheated out of intellectual property and royalties by Stephen Wynne’s company. Karma Motors feels cheated out of intellectual property by the executive team of DeLorean Motors Reimagined. Guerra feels cheated out of credit and inspiration by Wynne. Online superfans feel cheated out of DeLorean’s legacy by the new designs. And I’m worried about the public being cheated out of up-to-$1 million in city and county subsidies offered to DeLorean Motors Reimagined, a pure startup with no track record, entering an extremely difficult industry.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

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TPR Podcast Episode #1: I Had No Idea How Hard It Would Be

After years of trying to launch a proper podcast with proper professional help…a milestone unlocked for me! The first episode is titled “I Had No Idea How Hard It Would Be” and I think that is also a good description of me, over the past few years, trying to make this happen.

I am super pleased this show with Texas Public Radio has finally launched.

You can listen (you should listen!) here.

But also, you know, subscribe on Apple Podcast or Spotify or wherever, so you won’t miss an episode.

If you’d like to see a quick YouTube preview of the episode, check that out here:

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Me Hosting Local PBS-affiliate News Show

It’s been about 32 years since I hosted a TV news show…to be specific it was my high school weekly, called “Perspective.” Anyway…I guest hosted the PBS affiliate in San Antonio weekly show “On The Record.” Why not? It was fun for me. If you’re not a local San Antonio politics nerd, you may not find it as fun as I did.

And they do a Soundcloud version of the show, if you prefer your television as audio only for some reason.

Michael_Taylor_On_the_record
On the Record, Michael Taylor as Guest Host

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Pi Day Kickstarter

I’d like to wish all of you math nerds reading this on or around March 14 a “Happy Pi Day.” 

Since 2010, my family has celebrated the 3.14 calendar date by hosting a neighborhood pie-eating blowout in my backyard.1

Pi Day also reminds me of the one and only time I participated in a Kickstarter campaign. Back in 2013, via Kickstarter, I pledged $15 in advance to a complete stranger on the internet who promised to manufacture metallic baking pans in the shape of the Pi symbol. Obviously I had to have one. A few months later, he delivered. I’ve been the happiest Pi Day nerd in the world ever since. 

Kickstarter, originally launched in April 2009 – in the depths of the Great Recession – offered an entirely new way to fund creative ideas. “Kickstarter” quickly became a brand that sounds less like a company and more like a whole category of how to do things, kind of like Kleenex and Zipper started as brands but then just became the word for a thing that we all need.

But the company is real, not just a word. Kate Bernyk, Senior Director of Communications, says they have been profitable since the beginning, and currently count 90 employees. 

The largest category of Kickstarter projects are games, followed by art, design, film, music, fashion, and comics. The typical  person who raises money on Kickstarter is an artist, a musician, a builder/designer, or an author – someone who has something new and experimental to try, but not the funding to make it happen right now.

Kickstarter specifically does not allow backers to fund traditional businesses through a loan or ownership in a business.There are other online funding platforms for that. But many businesses use Kickstarter to experiment with new project ideas and new product lines. 

Austin-based camping equipment marker Kammok launches product designs on Kickstarter, with nine successfully-funded products, from a 2-person tent to a hammock tent, to sleeping bags and quilts. 

Necessity as the mother of invention led to a new use for Kickstarter in the past year. Bars turned to Kickstarter to market private-venue rental events, or to fund the creation of branded swag to keep the lights on, or to provide specific musical rewards for customers. The COVID-era version of projects on Kickstarter became known at the company as “LightsOn,” because that’s what businesses needed to do by necessity this past year.

Kickstarter does not do fundraising for purely philanthropic projects. There are other online funding platforms for that as well. And yet, a clear social-mission orientation drives a huge number of projects on the platform. Bernyk pointed me proudly to the company’s corporate charter as a Public Benefit Corporation. This is a state designation that I’d never heard of before, but indicates a kind of additional bottom-line beyond profit, to include social values, support for artists, transparency, and other “Don’t Be Evil”-type company practices.

That is not to say that people and businesses can’t make money with Kickstarter. I contacted the producer of the Pi Pan from 2013, not realizing originally that he’s actually from my hometown, San Antonio. Garrett Heath says he and his partners made money from Pi Pans. And, they continue to sell Pi Pans on Amazon, which he says provides him with a small but welcome income every year. He’s very enthusiastic about Kickstarter’s role in helping them fund a manufacturing mold and original large purchase order that otherwise they could not have funded. 

Kickstarter charges 5 percent of the money raised by each project. That is, according to Bernyk, their entire revenue stream. They update their daily stats on their website, which include $5.08 billion raised in total, over 197,579 projects, and a 38.5 percent success rate on projects launched.

Since 2012, the company has successfully facilitated funding for between 18,000 and 22,000 projects per year. 524 projects have raised over a million dollars, including some high profile movies and documentaries. 

The Hog Book: A Chef’s Guide to Hunting, Preparing and Cooking Wild Pigs got funded recently for a $45 pledge. It is scheduled for delivery in April 2021. The Hog Book is also a project coming out of Texas, because duh, obviously. I assume you’re going to want to order that book for Texas Hog Day, which happens in April every year?[2. Ok, I just made that last holiday up.[

Every Texan needs this book, obvs.

The defining characteristic of a Kickstarter project is that it’s a time-limited “project,” with a clear beginning, middle, and end.

Kickstarter’s success supports one of my counterintuitive but strongly held beliefs about money, namely: there is always more money available than there are good ideas to fund. Wealthy philanthropists know this. Venture capitalists and angel investors know this. They always suffer from too much money and too few good ideas to fund.

Now, I will admit, regular people mostly walk around with a scarcity mindset. I mean the “I wish I had more money,” mindset. Whenever I have a brilliant idea, my next follow-up idea is “Well, but where would I get the money for that?” 

But see, that should not limit creative people. Since 2009 with Kickstarter, the money part has largely been taken care of, at least for certain types of creative projects.

For Heath, he’s pleased with the realization of his brilliant idea, made possible by Kickstarter. “It was a great experience. It opened up the doors to make something cool, and something relatable that people love. Those Pi Pie pans will be around for an irrationally long time.”

I see what he did there. Heath is officially invited to my next Pi Day Party, March 14, 2022. As are all of you. Entry fee: Bring a pie for every 3.14 guests. Extra props if you bake the pie in a pi-shaped pie pan.

A version of this post ran in the San Antonio Express News.

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  1. Sadly, no pi party was held this year. #ThanksCOVID.