Category Archives: Business – Opinion

Seth on Publishing

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I pretty much agree on Seth Godin's assessment of the current state of the publishing industry:

Traditional book publishers use techniques perfected a hundred years ago to help authors reach unknown readers, using a stable technology (books) and an antique and expensive distribution system.

The thing is–now I know who my readers are. Adding layers or faux scarcity doesn't help me or you. As the medium changes, publishers are on the defensive…. I honestly can't think of a single traditional book publisher who has led the development of a successful marketplace/marketing innovation in the last decade. The question asked by the corporate suits always seems to be, "how is this change in the marketplace going to hurt our core business?" To be succinct: I'm not sure that I serve my audience (you) by worrying about how a new approach is going to help or hurt Barnes & Noble.

My audience does things like buy five or ten copies at a time and distribute them to friends and co-workers. They (you) forward blog posts and PDFs. They join online discussion forums. None of these things are supported by the core of the current corporate publishing model.

Best Piece on Investing I’ve Ever Read

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Why, oh why, can't all business writing be like this piece from Dilbert's Scott Adams, who believes you should only invest in companies you hate:

Having absorbed all of the wisdom I have presented here so far, you are naturally wondering if I have any additional investment tips. Yes, and I will put my tips in the form of a true story. Recently I bought something called an iPhone. It drops calls so often that I no longer use it for audio conversations. It's too frustrating. And unlike my old BlackBerry days, I don't send e-mail on the iPhone because the on-screen keyboard is, as far as I can tell, an elaborate practical joke. I am, however, willing to respond to incoming text messages a long as they are in the form of yes-no questions and my answer are in the affirmative. In those cases I can simply type "k," the shorthand for OK, and I have trained my friends and family to accept L, J, O, or comma as meaning the same thing.

The other day I was in the Apple Store, asking how to repair a defective Apple laptop, and decided, irrationally, that I needed to have Apple's new iPad. The smiling Apple employee said she would be willing to put me on a list so I could wait an indefinite amount of time to maybe someday have one. I instinctively put my wallet on my nose and started barking like a seal, thinking it might reduce the wait time, but they're so used to seeing that maneuver that it didn't help.

My point is that I hate Apple. I hate that I irrationally crave their products, I hate their emotional control over my entire family, I hate the time I waste trying to make iTunes work, I hate how they manipulate my desires, I hate their closed systems, I hate Steve Jobs's black turtlenecks, and I hate that they call their store employees Geniuses which, as far as I can tell, is actually true. My point is that I wish I had bought stock in Apple five years ago when I first started hating them. But I hate them more every day, which is a positive sign for investing, so I'll probably buy some shares.

Again, I remind you to ignore me.

Convenience Fee

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I just registered my daughter for her club soccer team for next fall.  I opted to pay online and after I hit the "submit" button for the payment a window popped up saying that I was going to be assessed a $1.75 "convenience fee" for paying online with a credit card.  A friend of mine had a much more appropriate term for this kind of fee; he called it a d-ck fee.  And if you're wondering what the dash stands for let's just say that the word would not be a bird that quacks.

That kind of crap makes me want to drive over to the office and pay with a sack of pennies.

Sociopathic CEOs

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Lex has linked to a very interesting piece that provides the following quote:

But what part of being a CEO could be so difficult — so impossible for mere mortals — that it would mean that there are only a few hundred individuals in the United States capable of performing it?

In my humble opinion, it’s the sociopath part.

CEOs of community-based businesses are typically responsive to their communities and decent people. But the CEOs of the world largest corporations daily make decisions that destroy the lives of many other human beings. Only about 1 to 3 percent of us are sociopaths — people who don’t have normal human feelings and can easily go to sleep at night after having done horrific things. And of that 1 to 3 percent of sociopaths, there’s probably only a fraction of a percent with a college education. And of that tiny fraction there’s any even tinier fraction that understands how business works, particularly within any specific industry.

Thus there is a shortage of people who can run modern monopolistic, destructive corporations that stockholders have to pay millions to get them to work. And being sociopaths, they gladly take the money without any thought to its social consequences.

This makes it much easier for me when I read business news and ask myself the question, "How do these people sleep at night?" The answer, of course, is "quite soundly."

I'm not a big believer in generalizations, so I my knee jerk reaction is to say that this description probably only fits the vast majority of the CEOs of the world's largest corporations. 

Trust and Judgment

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Today offered another one of those lessons you learn early but need to be reminded of often: leaping to conclusions usually lands you in the wrong place.  I was at lunch and the person I was sitting next to, someone whom I trust, started talking about the ongoing situation here in the Piedmont Triad between Waffle House Inc. and its (now former) local franchisee.  Long story short the local franchisee got out of the business and in the process some employees were issued paychecks that bounced.  Fingers were pointed, but early on the local franchisee looked like the bad guy.

Now it's important to provide some context here.  People in the Triad who pay attention to these kinds of things are likely predisposed to believing the worst in any story about employees being given rubber checks, because another local company recently went out of business, and in the process the owner really did screw his employees out of pay and health benefits. 

At lunch I was hearing from a trusted source that the Waffle House franchisee was one of the most honorable and ethical business people she had ever met.  Knowing what I know about the source, and knowing the number of people she knows in the business community, my angle on the story instantly shifted 180 degrees. After reading the initial coverage of the story I'd just assumed that the franchisee had gotten in too deep and had done what lots of companies do in that situation: tried to hold on and pray for a miracle while telling the employees nothing of the problems and then eventually bouncing paychecks. I also assumed that stories of delinquent payroll taxes would soon follow. A one minute conversation at lunch changed my assumptions, and I began to think that there's probably a whole lot more to the story and I probably needed to reserve judgment until the situation was fully aired.

Now don't get me wrong, I don't think the media did any faulty reporting.  The stories I read simply stated the facts: employees' paychecks bounced, the state's labor department was investigating and if they found any wrongdoing they were going to go after the franchisee for the employees' pay.  I did the rest of the work myself, leaping to conclusions and letting my own biases take me to an early, and potentially faulty, conclusion.  Luckily I was saved from myself today.

After lunch I got back to my desk and found this story waiting in my alert box. It seems that my source at lunch was right and it's the folks at Waffle House Inc. who haven't been behaving too well in this case, at least to this point.  And that's where I need to remember another lesson: there's usually more to a story than meets the eye, and it will probably be a while before we have the full story here.  Stay tuned. 

Reynolds Gets Front Page Treatment on the Other WSJ

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The Wall Street Journal gives front page treatment to Reynolds' moves in the smokeless tobacco market. Here's a lead paragraph that'll grab you:

During board meetings, Reynolds American Inc. Chief Executive Susan Ivey likes to suck on dissolvable smokeless-tobacco strips to get her nicotine fix.

That visual just doesn't conjure up the same, well, sophisticated image as the execs on Mad Men sucking on Camels, which I'm thinking is going to be a marketing challenge for Ivey and her cohorts. I mean if we're going to be honest with ourselves we have to admit that smoking looks a lot cooler than sucking on something, even if it does make you smell like a wet goat.

Cuban: Corporate America Has Been Neutered

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Mark Cuban's latest post, titled Why are we condemning Jeff Zucker & NBC over Leno, has this:

In today’s corporate world, if you don’t take the risks, you don’t get skewered on blogs, on cable news, in the newspaper. Public condemnation  appears to be a far worse consequence than financial success is a reward. Thats a huge problem for our country.

In today’s world, we reward Patent Trolls with 8 and 9 figure settlements for ideas they never did a minute of work on or ever tried to monetize. The extent of their effort was hiring or selling out to patent lawyers. That’s a problem.

In today’s world, we reward companies that cut 10,000 jobs to benefit a few thousand shareholders. We lie to ourselves and say that the money will be re-invested in growth or passed on to shareholders. In reality, it will be used to buy back the stock that was awarded to corporate management under the guise of “avoiding dilution”

His post also contains a little nugget that is going to enter my lexicon of regularly used aphorisms: "No balls, no babies."  Don't think I'll use that one when I'm coaching girls soccer though.

Why Background Checks are Kind of Important

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Here's a story that every HR person should keep in mind when they're hiring.  One of the Domino's employees who made the nasty video that got so much attention earlier this year has just been kicked out of her community college because she's a registered sex offender.  The manager who hired this woman might want to look into changing his/her hiring practices. 

Tax the Speculators

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As part of a post about the economy Mark Cuban makes a very interesting point about differentiating between investors and traders/speculators:

Our government doesn’t know the difference between an investor and a speculator or trader.  If we did, we would understand that we should tax the trader/speculator more heavily than the investor.

The investor allows entrepreneurs access to capital and allows them to work with it and build businesses, which in turn build employment and do great things for the economy. The trader/speculator pushes companies to make more money now rather than invest in doing the right thing for the company. The trader/speculator dominates the stock market today, which in turn puts pressure on public company CEOs to cut jobs and play games with their financials in order to give the appearance of stability in a far from stable market. The investor understands the bigger picture and is ok if profits fall for several quarters or even several years as long as the company will maximize its return over the long run.

The government should raises taxes significantly on profits from short term capital gains on the sale of public stocks, indexes, commodities, futures held for 24 hours or less and extend the length of time required to qualify for Long Term capital gains and reduce the tax rate on Long Term gains.  This will discourage flash trading, ETFs that move markets purely on cash inflows rather than fundamentals and also reduce the amount of speculation on commodities. It will also reward companies that act in the financial interests of long term holders and their employers. I think the impact on the economy would be far fewer layoffs as CEOs find themselves with more shareholders who think long term rather than short term. Believe it or not, there are shareholders who are fine with companies not beating their numbers if the company is making progress towards a clearly defined goal. I don’t care if the P/E of the stocks I own is 14 or 20. I want the companies investing in being a great company rather than  trying to make traders of their stock happy. Most CEOs give great lipservice to this approach, but they are so focused on marking to market their own personal stock portfolios, they emphasize stock performance over doing the right thing for the company. Taxation can change the focus on public companies and stock trading. That would be a great thing for the economy.

More On the Time Warner Tiered Pricing Plan

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Ben Hwang posted the best explanation I've seen about Time Warner's new pricing scheme for internet data usage.  His analogy using water, hose and bucket really helps put the issue in perspective and goes a long way towards tearing down some of Time Warner's arguments for the pricing.

BTW, Ben's one of the people behind Merchant's Mirror which is a local start up that I think will make some waves in the near future.  They've just moved into the incubator at Nussbaum Center for Entrepreneurship in Greensboro so I think you'll be hearing a lot about them.