Monthly Archives: August 2012

Slow Money

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Responding to a piece in the New York Times about bypassing Wall Street with investment dollars,  AVC's Fred Wilson describes how he and his wife have abandoned Wall Street and have concentrated on investing in businesses they can feel, touch and understand:

We are in cash, real estate, venture capital, and private investments centered around our neighborhood and city (retail, restaurants, etc). Other than cash, we are invested in things we can touch and/or impact and understand.

As Ron talks about at the start of his piece, the never ending blowups on wall street are eroding confidence in that system. It certainly has eroded our confidence in that system. So we are staying out of it for the most part.…

And he describes a movement he calls Slow Money described in this way:

“Let’s just take some of our money and invest it near where we live in things we understand, starting with food,” as the movement’s founder, Woody Tasch, puts it. He describes returns as being in the “lowish single digits,” ranging from roughly 3 percent to a few percentage points higher…

As one system seems to be failing on a regular basis, it makes sense that there are new systems that operate differently that are emerging. 

Wouldn't it be sweet justice if the titans of Wall Street were put in their place not by the toothless-so-far government regulators, but by the free market they so stridently defend but seem to only believe in if it's rigged in their favor? 

Fleecing the Financiers

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How bad are the reputations of bankers and financiers these days? Bad enough that when you see news stories about bad things happening to them you experience a level of schadenfreude that almost can't be described. To wit:

Case 1: Banks desperate for money falling for scams that used to only work on people who believed a prince in Africa would reach out to them for help.

Case 2: A large trading firm almost bankrupting itself in one day thanks to some faulty computer code.

Here's a fun game: see if you can find one person who actually sympathizes with these folks. 

What Came First, Chicken or Jelly?

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Once, when I was a kid, I was in the grocery store with my mother and we were picking out jelly.  I picked out a jar of Welch's grape jelly and she told me to put it back and replace it with a jar of the store brand. Now, you have to understand that this was long enough ago that generic brands weren't just less expensive, they were lower in quality and I was just a tad unhappy that we'd have to suffer through weeks of PBJs with inferior jelly. I asked Mom why we couldn't get the (superior) Welch's and she said she couldn't support a company that treated its workers the way Welch's did. Of course I hadn't a clue what she was talking about, but I couldn't believe I was going to have to suffer through crappy jelly because some company apparently was mean to its people.

After thinking the situation through I had a thought and said to Mom, "Welch's must sell a ton of their jelly and make a lot of money, they aren't going to even notice if we don't buy a jar. It just doesn't seem worth the all the effort to me." I'll never forget her reply: "Jon, I'm sure they won't notice, but I'm also sure I'll feel better every time I make a peanut butter and jelly sandwich if I'm not making it with their jelly." How do you argue with that?

That's a story I think about every time I see one of these "product protests", the latest of which is the so-called boycott of Chick-Fil-A being called for by folks who are incensed by the company president's statement against same-sex marriage. Whether or not the boycott causes Chick-Fil-A financial distress (I doubt it will since there's now a counter-boycott being staged by conservative Christian organizations), at a minimum the people doing the boycotting can feel better about where they're jacking up their cholestorol.  

For what it's worth people really shouldn't have a problem with Chick-Fil-A taking a financial hit for their conservative stance, mainly because they've made a ton of money from broadcasting their conservative Christian values. There are a LOT of people who frequent the chain not just because they like its chicken – they also feel good being able to support a business that reflects their own values. This is definitely one of those "live by the sword-die by they sword" situations.

As for me the boycott is a non-issue since I'm probably the only person south of Boston who thinks Chick-Fil-A is overrated, and they might have the worst coffee on the planet. Bland chicken and crappy coffee equals a permanent boycott that has nothing to do with the company's politics, but for the record if I did like Chick-Fil-A I'd be taking a break from visiting their restaurants. They wouldn't notice, but I'd feel a lot better about my jacked-up cholestorol.

Update: The "Support Chick-Fil-A" counter-protest today was quite popular in towns around NC and apparently a North Carolina based Wendy's franchisee showed support for its competitor as well. Although it's the kind of thing that the local news has to carry, is it really a surprise to anyone? After all this is a state that recently passed, overwhelmingly,  a state amendment against gay marriage. It's also firmly esconced in the Bible belt, clerks routinely wish you a "blessed" day and the first question you're asked upon introduction isn't "What do you do?" but "Where do you go to church?"

All in all I'd say this is totally predictable – what would be more interesting to know is the net effect on Chick-Fil-A's business around the country. It'll probably make a good case study for the Harvard Business Review in the near future.