Archive for the 'Business' Category
Posted by Jonathan on 15th August 2014 (All posts by Jonathan)
Funny how this kind of thing sneaks up on you.
Prepare to be overwhelmed with the most comprehensive bus tour of the nearly 60 new condo towers proposed for Greater Downtown Miami.
Miami condo expert Peter Zalewski – who has been cited more than 1,000 times by local, state, national and international news outlets – is scheduled to narrate the 10 AM morning tour of the Greater Downtown Miami preconstruction condo market where more than 17,300 new units are proposed. The 2 PM afternoon tour of Greater Downtown Miami is narrated in Spanish by licensed Florida real estate broker Jenny Huertas. Zalewski will ride on the afternoon tour to answer any questions.
17,000 new units. Of course it’s unlikely that all of them will be built, but still. And this time around the developers aren’t borrowing so much, and many of the buyers are paying cash, but still. Wasn’t it just last week that we were in the midst of an endless economic stagnation? Or maybe it was a bubble. It’s easy to lose track.
It looks like there’s a lot more US dollars in Latin America than anyone thought. Or could it be inflation? Nah. If there were inflation we’d see crazy stuff like the Dow at 17k and $12 hamburgers. . .
I’m sure it will all end well.
Posted in Business, Economics & Finance, Human Behavior, Markets and Trading | 8 Comments »
Posted by David Foster on 12th August 2014 (All posts by David Foster)
Nice Work by David Lodge
What happens when an expert on 19th-century British industrial novels—who is a professor, a feminist, and a deconstructionist–finds herself in an actual factory?
This not being a time-travel novel, the factory is a contemporary one for the book’s setting in mid-1980s Britain. It is a metalworking plant called Pringle’s, run by managing director Vic Wilcox. Vic is not thrilled when his boss (Pringle’s is owned by a conglomerate) suggests that he participate in something called the “shadow” program, designed to make academics and businesspeople better-acquainted with one another, but he goes along with the request.
Robyn Penrose, literature professor at a nearby university, is also not thrilled about her nomination to participate in the program, but she is concerned about her job in an era of reduced university funding, and also thinks she had better do as asked. The way the program works is that Robyn will be Vic’s “shadow,” joining him at the plant every Wednesday, sitting in on his regular activities, and learning just a bit about what is involved in managing a business.
Vic is a self-made man, not well-educated and with few interests outside work. He is acutely aware of the danger that faces Pringle’s under the current economic climate, and is resolved that his factory will not join the long list of those that have been tossed on the scrapheap.
There is nothing quite so forlorn as a closed factory–Vic Wilcox knows, having supervised a shutdown himself in his time. A factory is sustained by the energy of its own functioning, the throb and whine of machinery, the unceasing motion of assembly lines, the ebb and flow of workers changing shifts, the hiss of airbrakes and the growl of diesel engines from wagons delivering raw materials at one gate, taking away finished goods at the other. When you put a stop to all that, when the place is silent and empty, all that is left is a large, ramshackle shed–cold, filthy and depressing. Well, that won’t happen at Pringle’s, hopefully, as they say. Hopefully.
Robyn and Vic dislike each other on first meeting: Vic sees Robyn’s profession as useless, which Robyn sees Vic’s managerial role as brutal and greedy. She is appalled by what she sees in her first tour of the factory..especially the foundry:
They crossed another yard, where hulks of obsolete machinery crouched, bleeding rust into their blankets of snow, and entered a large building with a high vaulted roof hidden in gloom. This space rang with the most barbaric noise Robyn had ever experienced…The floor was covered with a black substance that looked like soot, but grated under the soles of her boots like sand. The air reeked with a sulphurous, resinous smell, and a fine drizzle of black dust fell on their heads from the roof. Here and there the open doors of furnaces glowed a dangerous red, and in the far corner of the building what looked like a stream of molten lave trickled down a curved channel from roof to floor…It was the most terrible place she had ever been in her life. To say that to herself restored the original meaning of the word “terrible”: it provoked terror, even a kind of awe. To think of being that man, wrestling with the heavy awkward lumps of metal in that maelstrom of heat, dust and stench, deafened by the unspeakable noise of the vibrating grid, working like that for hour after hour, day after day….That he was black seemed the final indignity: her heart swelled with the recognition of the spectacle’s powerful symbolism.
The situation was so bizarre, so totally unlike her usual environment, that there was a kind of exhilaration to be found in it…She thought of what her colleagues and students might be doing this Wednesday morning–earnestly discussing the poetry of John Donne or the novels of Jane usten or the nature of modernism, in centrally heated, carpeted rooms…Penny Black would be feeding more statistics on wife-beating in the West Midlands into her data-based, and Robyn’s mother would be giving a coffee morning for some charitable cause…What would they all think if they could see her now?
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Posted in Academia, Book Notes, Britain, Business, Human Behavior, Management | 12 Comments »
Posted by David Foster on 7th August 2014 (All posts by David Foster)
Knitted footwear…may have significant implications for the global shoe industry
US Civil Rights commissioner uses “science” to argue for restricting the free speech rights of college students. (Is anyone surprised that he was formerly an aide to Nancy Pelosi?)
College professor accuses program about gardening of being “racist”
Functional geniuses and business idiots
Fuel cells as a major energy source: for real this time?
Sea and sand from the sky. More here.
The Social Pathologist is back!
Posted in Academia, Business, Civil Liberties, Civil Society, Energy & Power Generation, Management, Photos | 13 Comments »
Posted by Carl from Chicago on 3rd August 2014 (All posts by Carl from Chicago)
Over at Trust Funds for Kids I’ve been updating the portfolios and researching relevant topics for detailed analysis.
One interesting item to me is ADR’s or American Depository Receipts, which represent foreign stocks trading in US markets. “Sponsored” ADR’s trade on NYSE and NASDAQ and “unsponsored” ones trade on the OTC or “pink sheet” markets. Recently one of my stocks (Siemens) went from a sponsored to non-sponsored ADR status and I started researching it here.
I also researched the impact of currency moves on a portfolio, focusing on the Australian dollar vs. the US dollar and its effect on a particular Australian Bank Westpac. It is interesting to view the two elements in an intertwined fashion, since the US dollar was a poor performer over the last 5 years relative to many other currencies.
Finally I look a bit at performance over the last year and marvel about how easy it is to assess performance these days with free graphing and overlay tools, compared to the manual effort in past years’. It still is difficult to always properly factor in dividends and the timing of cash flows (investments), but that’s a different story.
Cross posted at LITGM
Posted in Business, Investment Journal | 5 Comments »
Posted by David Foster on 23rd July 2014 (All posts by David Foster)
Here’s a motorcycle helmet of fairly complex design being fabricated out of a single block of aluminum by a computer-numerically-controlled machine tool:
There’s been a lot of excitement lately about 3-D printing, and rightly so, but the hype level in some quarters may be getting a little extreme. I think a lot of journalists lack an appropriate context into which to put this emerging technology, and, in particular, fail to understand just how much flexibility and universality is already provided by the numerically-controlled machine tools which have been in common use for the last several decades.
See also my post on 3-D printing from 2013.
Posted in Business, Tech | 5 Comments »
Posted by David Foster on 20th July 2014 (All posts by David Foster)
WSJ has a good article about three people who have put themselves on good career trajectories without benefit of 4-year college degrees. One is a welder, one is a nurse, and one is an owner of franchised fast-food restaurants. Unfortunately, however, the article uncritically uses the term “middle-skilled jobs,” which is seen increasingly in articles about the job market. These jobs are said to be those which require more than high school and less than four years of college, and typically involve some sort of technical or practical training.
“Middle-skilled”….really? Is the job of a toolmaker in a factory really less-skilled than the entry-level job likely to be obtained by someone with an undergraduate Sociology degree? Is a nurse’s job less-skilled than the work likely to be assigned to someone hired on the basis of his English degree? Does owning and operating a food truck really require less skill than the kind of tasks typically assigned to an undergraduate Business major? Is the work of an air traffic controller less-skilled than the kind of a job likely to result from a major in Victim Studies?
It is good that there is increasing recognition of good career paths not requiring college degrees; however, the term “Middle-Skilled Jobs” is misleading and contributes to the continuation of credential-worship.
Posted in Academia, Business, Economics & Finance, Education, Media, Tech | 17 Comments »
Posted by David Foster on 18th July 2014 (All posts by David Foster)
…as in, “Universal Entities controls 73% of the Gerbilator market.”
Uh, no, actually they probably don’t. IBM once had something like 70% of the market for computer hardware, software, and services. The big integrated steel companies, Bethlehem Steel and US Steel, once had a very high share of the American steel market. Sears once had a high share of the retail market. These examples could be multiplied easily and almost endlessly.
A seller into a market does not control that market, or its position in that market, absent direct violence (the Mafia and various drug cartels, for example) or heavy government intervention–and even the latter is unlikely to be reliable in the long term, as the owners of TV station licenses facing first cable competition, and later Internet competition as well, found out, and as the owners of taxicab franchises facing Uber and similar competition are now discovering.
The phrase “controls X percent,” when applied to a market, is almost always intellectually lazy, and is used far too often by writers who should know better.
Posted in Business, Economics & Finance, Media | 9 Comments »
Posted by David Foster on 16th June 2014 (All posts by David Foster)
(Ran into this 2006 post while searching for an old Photon Courier post, and realized it had never been posted on Chicago Boyz. It is unfortunately still quite relevant.)
Almost every day, one encounters some business that is attempting to micromanage the interactions between its employees and its customers.
At lunchtime a couple of weeks ago, I was in the mood for bacon & eggs, so I went to a restaurant (part of a local chain) that has breakfast items all day long. The interaction went something like this:
Waitperson: Welcome to Snarfers-by-the-Lake, my name is Linda, I’ll be your server today.
Me: Hi, Linda. I’m kind of in a breakfast mood, so I think I’ll have the bacon & eggs.
WP (looks confused, as if she’d never heard of this dish before): Bacon & eggs? I don’t think…Oh, that would be our “eggs any style.”
Me: OK…style I like ‘em is over medium, with the bacon pretty crisp.
WP: Over medium…and would you like bacon or sausage with that?
Me: Bacon…pretty crisp.
WP: And our soup today is cream of broccoli.
Me: Soup with breakfast? That would be something different!
WP: I know it’s silly, but they make me say it.
I know it’s silly, but they make me say it. In how many consumer-oriented businesses could employees say the same thing?
Also a couple of weeks ago, I had to call my local telco, always a dreaded experience. After I had finally gotten through the levels of the voice response menu and got a person, it was:
CS Agent: Thank you for calling, how may I provide you with exceptional service today?
How may I provide you with exceptional service today? You can bet the agent didn’t come up with this phrase all by herself. And I doubt if her management came up with it all on their own. No, I detect the fine hand of a consultant here–maybe the pointy-haired guy in Dilbert went into the CS consulting business.
What imaginable purpose is there in requiring this phrase to be used in thousands of calls per day? Customers will decide if the service is “exceptional” or not based on what gets done or not done. You’re not going to convince them by using the word. And from the standpoint of the CS agents, this kind of thing can only breed cynicism.
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Posted in Business, Customer Service, Human Behavior, Management | 32 Comments »
Posted by David Foster on 14th June 2014 (All posts by David Foster)
Lead and Gold links an article by Noemie Emery:
They had a dream. For almost a hundred years now, the famed academic-artistic-and-punditry industrial complex has dreamed of a government run by their kind of people (i.e., nature’s noblemen), whose intelligence, wit, and refined sensibilities would bring us a heaven on earth. Their keen intellects would cut through the clutter as mere mortals’ couldn’t. They would lift up the wretched, oppressed by cruel forces. Above all, they would counter the greed of the merchants, the limited views of the business community, and the ignorance of the conformist and dim middle class…Their stock in trade was their belief in themselves, and their contempt for the way the middle class thought, lived, and made and spent money: Commerce was crude, consumption was vulgar, and industry, which employed millions and improved the lives of many more people, too gross and/or grubby for words.
These attitudes, Emery notes, explain the passionate attraction that so many academics and journalists felt toward Barack Obama:
Best of all, he was the person whom the two branches of the liberal kingdom—the academics and journalists—wanted to be, a man who shared their sensibilities and their views of the good and the beautiful. This was the chance of a lifetime to shape the world to their measure. He and they were the ones they were waiting for, and with him, they longed for transcendent achievements. But in the event they were undone by the three things (Fred) Siegel had pegged as their signature weaknesses: They had too much belief in the brilliance of experts, they were completely dismissive of public opinion, and they had a contempt for the great middle class.
Much of the “expertise” asserted by people in the academic-artistic-and-punditry complex is entirely imaginary, as far as the organization and management of social institutions goes. L&G cites one of my old posts at Photon Courier:
In university humanities departments, theory is increasingly dominant–not theory in the traditional scholarly and scientific sense of a tentative conceptual model, always subject to revision, but theory in the sense of an almost religious doctrine, accepted on the basis of assertion and authority. To quote Professor “X” once again: “Graduate “education” in a humanities discipline like English seems to be primarily about indoctrination and self-replication.”…
Becoming an alcolyte of some all-encompassing theory can spare you from the effort of learning about anything else. For example: if everything is about (for example) power relationships–all literature, all history, all science, even all mathematics–you don’t need to actually learn much about medieval poetry, or about the Second Law of thermodynamics, or about isolationism in the 1930s. You can look smugly down on those poor drudges who do study such things, while enjoying “that intellectual sweep of comprehension known only to adolescents, psychopaths and college professors” (the phrase is from Andrew Klavan’s unusual novel True Crime.)
See also L&G’s post How We Live Now: The Rule of Inept Experts.
I believe that the overemphasis on educational credentials has played a major part in shifting the power balance between Line and Staff in organizations of all types…here, I am using “Line” to refer to people who have decision-making authority and responsibility, and corresponding accountability for outcomes, while “Staff” refers to people who analyze, study, and advise, but are not themselves decision-makers. It was once pretty well understood that one should not take a person whose entire experience is in Staff positions (however exalted) and put him in a high-level Line position, where the consequences of failure will be very serious, without first having him gain experience and prove his performance in lower-level Line positions where the consequences of failure will be less-devastating to the entire organization. This seems to be much less well-understood today, the ultimate example of course being the career path of Barack Obama.
Fred Siegel, mentioned in Noemie Emery’s article, is the author of the very interesting book The Revolt Against the Masses, which is on my (long) list of books that need reviewing.
Posted in Academia, Big Government, Book Notes, Business, Civil Society, Management, Media, Political Philosophy, Politics, USA | 17 Comments »
Posted by TM Lutas on 9th June 2014 (All posts by TM Lutas)
Thomas Piketty has written a monster of a book, Capital in the Twenty-First Century. I find myself in strange agreement with Brad DeLong, that the collective conservative response is weak. I had a patch of time that left me twiddling my thumbs waiting for some pretty long database operations to finish over the past four days. So I went and decided to fisk the book. I just finished the introduction. It took four posts, Part I, Part II, Part III, Part IV and overran the spare time I had available from a database import and indexing task by about 12 hours.
Now I know why the criticism is so weak. Piketty is a target rich environment and doing a line by line analysis is simply exhausting. But it’s the only way to be sure.
Posted in Book Notes, Business, Economics & Finance, Public Finance, Society, Taxes, USA | 18 Comments »
Posted by Carl from Chicago on 7th June 2014 (All posts by Carl from Chicago)
An important event in my household is the spring planting of everything that is going into our garden on the balcony of our condo. They are grown inside under a grow light (mostly, except for items like lettuce and carrots) and then they get put outside.
The tomato plants grow by leaps and bounds! So what is used every day to keep up with their vigor? Why my old books, of course.
There you can see the usual suspects on my nightstand… some WW2 (Van Der Vat is a great author), of course America 3.0 by our good friend Michael Lotus, and “Africa’s World War” on the Congo. Then you have a couple of architecture books and finance books like the classsic “The Myth of the Rational Market”.
I’ve switched over (mostly) to the kindle now and haven’t been buying new books in hardcover. I bought a book on New Yorker cartoons in hardcover since I figured that would be the type of coffee table book that people might actually pick up and look at. I also might buy an occasional architecture or infographic book in softcover or used, as well. But that’s about it.
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Posted in Blogging, Book Notes, Business | 18 Comments »
Posted by Carl from Chicago on 1st June 2014 (All posts by Carl from Chicago)
For many years I worked as a consultant across a variety of industries. While there are many ways to describe the type of work I did, my favorite (when talking to a teenager or child) was
I give advice, and they don’t take it
This article from Today’s NY Times titled “Why You Hate Work” provided a pithy antecdote that summarized this situation:
Several years ago, we did a pilot program with 150 accountants in the middle of their firm’s busy tax season. Historically, employees work extremely long hours during these demanding periods, and are measured and evaluated based on how many hours they put in.
Recognizing the value of intermittent rest, we persuaded this firm to allow one group of accountants to work in a different way — alternating highly focused and uninterrupted 90-minute periods of work with 10-to-15-minute breaks in between, and a full one-hour break in the late afternoon, when our tendency to fall into a slump is higher. Our pilot group of employees was also permitted to leave as soon as they had accomplished a designated amount of work.
With higher focus, these employees ended up getting more work done in less time, left work earlier in the evenings than the rest of their colleagues, and reported a much less stressful overall experience during the busy season. Their turnover rate was far lower than that of employees in the rest of the firm. Senior leaders were aware of the results, but the firm didn’t ultimately change any of its practices. “We just don’t know any other way to measure them, except by their hours,” one leader told us. Recently, we got a call from the same firm. “Could you come back?” one of the partners asked. “Our people are still getting burned out during tax season.”
This brief example has it all:
1) the client has diagnosed the situation (people are getting burned out and quit)
2) the consulting firm develops an alternative course of action
3) the pilot was successful
4) the client disregards the recommendation (over some period of time) and is back where they started
While there are many jokes about consultants such as “they borrow your watch and tell you the time” it is important to note that every consultant needs a client and the clients are the “root” of the problem. Why commission a study if you don’t intend to follow through on the results?
Lots of reasons. For starters – the act of “trying to do something” or “conducting an analysis” buys time and inaction, which is a precious commodity at most companies. It is very difficult to get something done, and it is even MORE difficult to get something done when an alternative hypothesis is under way (such as a consulting effort). In the end, usually the client knows how to solve the underlying problem, but the effort that it would take and the corresponding rewards to those managers tasked with carrying out the solution is too meager to justify the organizational resistance that will occur.
All of these organizational problems are compounded by short-term thinking; executives want results NOW, this quarter, not improved performance 2-3 years down the road. They may talk about the long term, but the short term consumes 90% of their waking hours, and the next quarterly earnings release. Changing a culture or implementing a wrenching solution that differs from the status quo 1) is hard 2) takes time 3) is met with systemic and subtle resistance at every turn. The final bullet in change internally are external events; even if you can somehow make progress against your current ills, a “new” external shock will take away the focus and organizational oxygen from YOUR issue unless you can implement a rapid and permanent solution (i.e. close something down, sell it, “burn the ships”) before your organizational capital melts away.
Here’s the part where someone often asks “what’s the solution?” and tries to summarize it all up. I don’t know. It is hard enough to figure out the long term arc of consulting, a multi billion dollar business, and how it survives jibes and efforts to extinguish it, without trying to think about how to make it better.
Generally the types of corporations that rely on consultants to do their thinking for them don’t last long, unless they are somehow protected from competition (government, non-profit, unionized, utilities, much of financial services, etc…). It is these sorts of enterprise, along with the dying, that provide much of the consultants’ income. You don’t hear Google and Amazon or even GE talk about how consultants are helping them; they solve their own problems. I guess this is the underlying solution – be a better company.
Cross posted at LITGM
Posted in Business | 4 Comments »
Posted by David Foster on 23rd May 2014 (All posts by David Foster)
…an interesting discussion at Ricochet:
Imagine a Republican governor slashed Pennsylvania’s regulations and taxes. Imagine a Republican President and Congress slashed federal regulations and taxes.
Would that do anything to ensure a tech boom in central Pennsylvania?
Why? Go try to convince an Ivy League computer engineer to move to the near suburbs of NYC. No prob. Now try to pitch them on moving 3 hours from NYC to Amish country. Impossible. Charles Murray’s Super Zips win every time.
Put another way: Rand Paul might be able to solicit Silicon Valley donor dollars to Kentucky, but he’ll never export Kentucky values to the Valley.
RTWT, and the comments.
Posted in Business, Human Behavior, Politics, Tech, USA | 45 Comments »
Posted by David Foster on 10th May 2014 (All posts by David Foster)
Bill Waddell writes about a product-quality decision made by Mark Fields, who will shortly become CEO at Ford…and about the reaction of then-and-current CEO Alan Mulally:
Early on his tenure at Ford Mulally implemented a process in a weekly review meeting whereby the execs color coded their status reports – green for those on target, yellow for those running behind and red for any project in serious trouble.
No one had ever brought a red project to the meeting when Fields learned that there was a serious defect in the roll out of the first Edge cars. Customers and dealers were anxiously waiting for the Edge and it was a critical part of Ford’s strategy.
According to “Once Upon a Car” – a great book about the crises in the auto industry when the economic bottom fell out in 2008:
“Fields had two choices, neither one of them good. He could ship the Edges that worked, restart production, and hope the glitch could be found and fixed on the fly. Or he could delay the launch and be the first executive to go into Mulally’s Thursday-morning meeting with a big fat red dot on his weekly progress sheet. He sat down with his team in Dearborn and made the call. “We are not going to ship a vehicle before it is ready,” he said. ‘We just can’t . We have to delay it. I’m going to have to call it a red.’ His staff members looked at him. He could almost feel their pity.
At the next business review, Fields took his seat, right next to Mulally. As luck would have it, he was the first executive to present. His mind raced. I’m going to get killed here , he thought. Then he took a deep breath and showed everyone the launch page with a large red dot on it. ‘The Edge launch is red,’ he said. ‘And we’re delaying it.’
Fields thought he felt people moving their chairs away from the table, away from him. Bringing bad news to senior management at Ford was typically avoided at all costs. Nobody wanted to even be near the culprit. The Thunderbird Room got very quiet. Everyone looked at Mulally, waiting for his reaction. A few seconds passed. Then Mulally turned toward Fields, stood up, and started clapping.
This reminds me of a story about entrepreneur/inventor/industrialist George Westinghouse, which I posted years ago as part of my Leadership Vignettes series, and re-posted more recently:
The date, sometime during the late 1800s. The scene, a Westinghouse Electric factory complex in Pittsburgh, with an unpaved yard between buildings. A young laborer–a recent immigrant–is trundling a wheelbarrow, filled with heavy copper ingots, over an iron slab which serves as a track across the yard. The wheelbarrow goes off the track and into the mud. As the laborer struggles to get it back on the track, other workers begin mocking him.
At that moment, a man in formal clothing is crossing the yard. It is George Westinghouse, founder and chief executive of the company. He wades into the mud and helps the man get the wheelbarrow back on the slab.
Not a word was said, but powerful messages were transmitted: when someone is having problems, you don’t laugh at him–you help him. When things go wrong, no one is too important to dive in and get his hands dirty.
This is a splendid example of how good organizational cultures are created: through the power of example. Think how much more effective Westinghouse’s action was than the mere posting of a “corporate values statement” containing phrases such as “we must respect our fellow employees at all times.” Not that such things lack value, but they are meaningless unless backed up by action.
It would have been very easy for Westinghouse to simply ignore the incident and continue on his way. After all, he was heading to a meeting about something–a multi-million-dollar bond issue, say–compared with which a wheelbarrow stuck in the mud would seem to pale in importance. But his instincts were the right ones.
(The story is from Empires of Light, by Jill Jonnes)
And similarly, Alan Mulally’s action in applauding Mark Fields’ bad news was far more effective than any poster or e-mail tag line to the effect that “transparency is our highest value,” or some such phrase.
Disclosure: I’m a Ford shareholder.
Posted in Book Notes, Business, Management | 8 Comments »
Posted by Sgt. Mom on 24th April 2014 (All posts by Sgt. Mom)
This would appear to be the new theme song for the Fed-Gov’s Bureau of Land Management – that bane of ranchers like Cliven Bundy – as well as a whole lot of other ranchers, farmers, loggers, small landowners, and owners of tiny bits of property on the edge of or in areas of spectacular natural beauty, west of the Mississippi and between the Mexican and Canadian borders.
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Posted in Americas, Big Government, Business, Civil Society, Current Events, Entrepreneurship, Environment, Law, North America | 11 Comments »
Posted by Carl from Chicago on 18th April 2014 (All posts by Carl from Chicago)
Recently a few loose threads have come together on the Internet and some “old school” high tech companies.
Yahoo! – Yahoo! (I guess I need the exclamation mark) has a value that is less than the sum of its component parts. The market capitalization of Yahoo! comes in the fact that it owns a significant portion of two Asian internet companies. Per this pithily titled article “How Is Yahoo So Worthless“:
Yahoo is huge. It is the fourth-biggest Internet domain in the United States. It is the fourth-biggest seller of online ads in the country. It is the most popular destination for fantasy sports, controls one the most-trafficked home pages in news, and owns the eighth-most popular email client. In the last three months, it collected more than $1 billion in revenue. It’s very rich.
It’s also totally worthless.
Technically, it’s worse than worthless. Worthless means without worth. Worthless means $0.00. But Yahoo’s core business—mostly search and display advertising—is worth more like negative-$10 billion, according to Bloomberg View’s Matthew C. Klein.
The math: Yahoo’s total market cap is $37 billion. Its 24 percent stake in Alibaba, the eBay of China, is worth an estimated $37 billion (Alibaba hasn’t IPO’d yet, so this figure will vary), and its 35 percent stake in Yahoo Japan is worth about $10 billion. That means its core business is valued around negative-$10 billion.
This isn’t just a random business article; there is some actual financial science behind this analysis. At my trust fund site Yahoo! is one of the stocks I selected since I believe that their new CEO Marissa Meyer is a badass but according to the math she is still losing the battle.
At one point in my career I worked for a public company that had $300M in cash on hand and a market value of $200M. Your business plan could be to fire everyone and drink in a bar all day and you’d be much closer to $300M than $200M (after all, how much can you drink). The market is anticipating that bad things are going to happen or that Yahoo! won’t be able to successfully sell and repatriate the cash for these investments. It is like that famous postcard my relatives in Montana had that said “If I won a million dollars I’d just keep ranching until it was all gone.” That is what the market today thinks of Yahoo! – even if they successfully extracted the cash from these investments, they’d invest it into something of less value (by $10B or so, apparently).
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Posted in Business, Economics & Finance, Tech | 16 Comments »
Posted by Sgt. Mom on 15th April 2014 (All posts by Sgt. Mom)
I’ve been surfing my usual internet hangouts over the last week or so – in between working on various editing, formatting and sales projects for the Tiny Publishing Bidness – so although I did surf, and read and observe reports on a number of different and rather disturbing events – I didn’t have time to write anything about them until after I had finished the biggest of the current projects on my plate.
The biggest of them was the new-old range war of the Bundy ranch. I suppose that technically speaking, the Fed Gov had some small shreds of technical justification in demanding grazing fees … but the longer one looked at the whole of L’affaire Bundy, the worse it looked … which is doubtless why the Fed Gov backed down. A tactical retreat, of course; The optics of a shoot-out between the minions of the Fed Gov and the various Bundy supporters would not have been good, for Harry Reid and his clan and friends most of all, although they may eventually act – seeing that they have a position which will be at risk by tolerating defiance.
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Posted in Americas, Blogging, Business, Civil Liberties, Deep Thoughts, Just Unbelievable, Media, North America, Politics, Real Estate | 19 Comments »
Posted by David Foster on 8th April 2014 (All posts by David Foster)
(Yesterday marked the 50th anniversary of the announcement of the IBM System/360 series (original press release here)…seems like a good time to rerun this book review, which I originally posted in 2011)
Buy the book: Father, Son & Co.
When Tom Watson Jr was 10 years old, his father came home and proudly announced that he had changed the name of his company. The business that had been known as the Computing-Tabulating-Recording Company would now be known by the grand name International Business Machines.
“That little outfit?” thought young Tom to himself, picturing the company’s rather random-seeming collection of products, which included time clocks, coffee grinders, and scales, and the “cigar-chomping guys” who sold them. This was in 1924.
This is the best business autobiography I’ve read. It’s about Watson Jr, his difficult relationship with his father, the company they built, and the emergence of the computing industry. It is an emotional, reflective, and self-critical book, without the kind of “here’s how brilliant I was” tone that afflicts too many executive autobiographies. With today being IBM’s 100th anniversary (counting from the incorporation of CTR), I thought it would be a good time to finally get this review finished and posted.
Watson’s relationship with his father was never an easy one. From an early age, he sensed a parental expectation that he would follow his father into IBM, despite both his parents assuring him that this was not the case and he could do whatever he wanted. This feeling that his life course was defined in advance, combined with fear that he would never be able to measure up to his increasingly-famous father, was likely a factor in the episodes of severe depression which afflicted him from 13 to 19. In college Watson was an indifferent student and something of a playboy. His most significant accomplishment during this period was learning to fly airplanes—-”I’d finally discovered something I was good at”–a skill that would have great influence on his future. His first job at IBM, as a trainee salesman, did little to boost his self-confidence or his sense of independence: he was aware that local IBM managers were handing him easy accounts, wanting to ensure success for the chief executive’s son. It was only when Watson joined the Army Air Force during WWII–he flew B-24s and was based in Russia, assisting General Follett Bradley in the organization of supply shipments to the Soviet Union–that he proved to himself that he could succeed without special treatment. As the war wound down, he set his sights on becoming an airline pilot–General Bradley expressed surprise, saying “Really? I always thought you’d go back and run the IBM company.” This expression of confidence, from a man he greatly respected, helped influence Watson to give IBM another try.
The products that Watson had been selling, as a junior salesman, were punched card systems. Although these were not computers in the modern sense of the word, they could be used to implement some pretty comprehensive information systems. Punched card systems were an important enabler of the increasing dominance of larger organizations in both business and government: the Social Security Act of 1935 was hugely beneficial to IBM both because of the systems they sold to the government directly and those sold to businesses needing to keep up with the required record-keeping.
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Posted in Biography, Book Notes, Business, Management, Tech | 13 Comments »
Posted by Sgt. Mom on 6th April 2014 (All posts by Sgt. Mom)
At the mighty Big Enchilada!
Yes, at the San Antonio Book Festival. The exhibitor tables were across the street – and there were only two homeless that I spotted, from the Watercress Press table. Otherwise a mildly rewarding day, and a grateful return home to a frozen pizza and two episodes of Upstairs, Downstairs on the TV.
Posted in Americas, Architecture, Book Notes, Business | 3 Comments »
Posted by Sgt. Mom on 28th March 2014 (All posts by Sgt. Mom)
Just this week and thanks to gaining a new book-publishing client, I was able to complete the purchase of a new refrigerator-freezer. Oh, the old one was staggering along OK, still keeping the refrigerated foods cold and the frozen food frozen … but there were so many dissatisfactions with it, including the fact that it had such deep shelves that in cleaning it out we discovered an embarrassingly large number of jars of condiments whose best-if-sold-by-date were well into the previous decade … not to mention a couple of Rubbermaid containers with leftovers in them that we had quite forgotten about. Well, out of sight, out of mind, as the saying goes. Truly, I don’t like to waste leftovers, but in this case, we had a good clean-out and as of now are resolved to do better, cross-my-heart-and-hope-to-die. The new and larger refrigerator-freezer has relatively shallow and many adjustable shelves in its various compartments; so that we dearly hope that the buried-at-the-back-of-a-deep-shelf-and-totally-forgotten-about syndrome will be banished entirely.
Anyway – enough of my failings as a thrifty housekeeper; the thing that I was marveling on this afternoon was that the new refrigerator-freezer has an automatic ice-maker. Better than that – an automatic ice-maker and ice-water dispenser in the door, and a small light which winks on when depressing the lever which administers ice (in cubes or crushed) and ice-water and then gradually dims once released. And if all that is a small luxury compared to the previous refrigerator-freezer, it is a huge luxury compared to the electric ice-box that made my Granny Jessie’s work and food-storage capabilities somewhat lighter than those of her own mother. It’s monumental, even – and no one thinks anything of it today, unless the electricity goes off.
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Posted in Anglosphere, Business, Customer Service, India, Personal Narrative, USA | 9 Comments »
Posted by Dan from Madison on 28th March 2014 (All posts by Dan from Madison)
Somewhere, sometime, I read a bit of great investing advice. A guy listed ten things to do and not do over your investing life, and number one on the list of things to do was to read Warren Buffet’s shareholder letters. I finally found some time to read this years version, which recaps 2013. You can find them all here.
The letters are always entertaining to me, and I just love the way he uses “plain” English to describe his successes, operations, and failures.
One part really stuck out this year from page 6:
Indeed, who has ever benefited during the past 237 years by betting against America? If you compare our country’s present condition to that existing in 1776, you have to rub your eyes in wonder. And the dynamism embedded in our market economy will continue to work its magic. America’s best days lie ahead.
In the title of America 3.0, it says:
America 3.0: Rebooting American Prosperity in the 21st Century-Why America’s Greatest Days Are Yet to Come
Yes, we will have some short term pain, but I have fully come around to thinking that indeed, we are eventually going to move forward at a rapid and profitable pace. And I won’t be betting against Warren Buffett and Charlie Munger any time soon.
Disclosure: I own Berkshire Hathaway B shares.
Posted in America 3.0, Business, Markets and Trading | 16 Comments »
Posted by Zenpundit on 9th March 2014 (All posts by Zenpundit)
cross-posted to zenpundit.com
The Union League Club of Chicago Building
Yesterday, I attended the 2014 Midwest Business & Markets Conference at the historic Union League Club of Chicago. While business conferences are far afield from my usual interests, the main draw for me was seeing Lexington Green speak about the book he co-authored with James C. Bennett, America 3.0
Michael J. Lotus (“Lex”) His book
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Posted in Anglosphere, Business, Chicagoania, Civil Society, Deep Thoughts, Diversions, Economics & Finance, Education, Entrepreneurship, Illinois Politics, Internet, Political Philosophy, Politics, Society, The Press, USA | 9 Comments »
Posted by Carl from Chicago on 8th March 2014 (All posts by Carl from Chicago)
I live in the River North area of Chicago, which is full of restaurants of every type and description. There is also intense competition among many of the smaller restaurant groups, since apparently some level of scale (5+ or more restaurants) is helpful and these restaurants tend to have very high levels of food quality and service, based on my experience.
When you interact with the bar staff, hostess, and server you can usually tell if you are working with someone who is “going through the motions” or someone “who is good at their job”. There are many subtle details that are much larger than “getting your order right” – they include knowledge about the food and presentation, recommendations based upon your input, and generally anticipating needs and solving problems without having to be prompted many times.
Recently I’ve come to the preliminary conclusion that many of the waitresses and servers in these higher end restaurant groups must have gone to college and are well educated. When you talk with them they are very sharp and quick and they seem to have the type of drive or energy that could make them successful in a variety of careers. I would never ask them directly because that’s none of my business and it could embarrass them.
This article form Bloomberg titled “College Graduates Taking Low Wage Jobs Displace Less Educated” confirms at least my anecdotal impressions here in Chicago.
She got a job as a hostess at Blackbird, a One Off restaurant, while pursuing a bachelor’s degree in Germanic studies and communications at the University of Illinois at Chicago in 1999. “The formality of classes, papers and grades did lend a hand in where I am today because I had a broader sense of cultures, interactions and interpersonal skills,” said Galban, who is now also a partner at the restaurant Nico Osteria, one of seven Chicago restaurants managed by One Off. Of the company’s more than 700 employees, more than 60 percent hold college degrees or higher, yet fewer than 10 positions require a degree, Galban said.
The willingness of college educated adults to take on these jobs will likely cause at least three side effects, one of which was the “main” topic of the Bloomberg article I linked to above:
1. These restaurants will be more competitive than typical restaurants, because the higher educated and higher skilled workers will drive customer satisfaction and drive efficiencies within the food and drink serving processes. As these workers move “up the chain” at the restaurants, they will also offer career paths for other college degree holders as well
2. Less-skilled workers will have less opportunities because they won’t be able to compete with these individuals. It would be a simple “screen” to give preference to individuals with a degree who apply for jobs, even if it isn’t a requirement of the job. In the past the assumption was that if someone “over-qualified” would work at your restaurant or business, they would leave immediately when a new opportunity arises, but in today’s stagnant economy (especially in Illinois) there don’t seem to be a lot of opportunities for them to “jump to”.
3. Since the cost of higher education is so high today, parents need to think of how they will feel when their liberal arts (or lackadaisical business) degree holding children are potentially serving them in a restaurant, and if this is worth the vast expense and financial impact of the degree that they are seeking
Another side effect to consider is that these restaurants are not just randomly seeking out applicants from the pool. Their employees are not only young, they are disproportionally above-average looking. Perhaps if you aren’t college educated you can make up for it in attractiveness.
Cross posted at LITGM
Posted in Business, Chicagoania, Education | 17 Comments »
Posted by Sgt. Mom on 26th February 2014 (All posts by Sgt. Mom)
(This afternoon I am working through my archives for materiel to post on the Watercress Press website blog, and I came across this post from … well, a while back. I thought it might be relevant, in these unsettled days and in light of various Boyz reminiscing about Tolkien and heroic days of yore. It might also serve as a departing point for a train of thought, especially when we need more inspiration than ever.)
I am not one of those given to assume that just because a lot of people like something, then it must be good; after all, Debbie Boone’s warbling of You Light Up My Life was on top of American Top Forty for what seemed like most of the decade in the late 70s, although that damned song sucked with sufficient force to draw in small planets. Everyone that I knew ran gagging and heaving when it came on the radio, but obviously a lot of people somewhere liked it enough to keep it there, week after week after week. A lot of people read The DaVinci Code, deriving amusement and satisfaction thereby, and some take pleasure in Adam Sandler movies or Barbara Cartland romances – no, popularity of something does not guarantee quality, and I often have the feeling that the tastemakers of popular culture are often quite miffed – contemptuous, even – when they pronounce an unfavorable judgment upon an item of mass entertainment which turns out to be wildly, wildly popular anyway.
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Posted in Arts & Letters, Business, Deep Thoughts, History, Lit Crit, Media, War and Peace | 4 Comments »
Posted by Sgt. Mom on 23rd February 2014 (All posts by Sgt. Mom)
I am a business owner. My partner and founder of Watercress Press has always intended that I should take over the business eventually … and as of this weekend, the papers have been signed. Oh, there are a couple of more things to be sorted out, and essentially I have been the active partner for more than a year … but here I start on the next big part of my life, as a business owner and raving capitalist. Although I do promise not to starve and flog the employees while chuckling manically and swan-diving into my pool of gold coins.
Too much. The blood spatters get everywhere after a good flogging, and the stains never come out.
This is by way of apologizing for no History Friday post from me. There was just too much going on, I didn’t have the time to sit down and focus on the post I was thinking about – Billy the Kid, a definite contrast to the last Wild West frontier character that I posted about on History Friday. I did manage to finish a chapter in the next book, and start another adventure in my reworking of a certain popular Wild West character, so the week hasn’t all been given up to real life in this present world.
Posted in Book Notes, Business | 24 Comments »