Carl from Chicago

Business executive interested in history, economics, taxation and energy policy.

25 Stories About Work – Plains Blizzard

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I was recently on a plane doodling and thought of some funny / interesting stories from 25+ years of working and traveling. So I decided to write them up as short, random chapters of a non-book with the title of this post. Hope you enjoy them and / or find them interesting. Certainly the value will be at least equal to the marginal cost of the book (zero)…

Somewhere in Iowa, the ’90s…

I was an auditor for a long since merged together utility. We used to fly in and out every week, leaving Sunday night (in your suit, in case your luggage was lost by the airlines) and leaving the office at 5pm Friday and driving to an airport 3 hours away to arrive home about 10pm Friday. We did this every week for the “busy season” which lasted about 3 months or so.

For Thanksgiving weekend one time we left on a Wednesday. A giant storm was coming up over the plains as we drove across Iowa into Nebraska where the airport was for flights into Chicago. At the time we didn’t really have cold weather gear, we just had long wool coats and leather gloves to go over our suits. We didn’t even have boots, just work shoes.

We stopped at a gas station and the wind was really whipping across the plains. When I got out to pump gas I was almost knocked flat on my back. While shivering in the car after pumping gas I told them we ought to turn back and just give up for the night and stay in Iowa.

I was the lowest ranking guy so I was overruled. There were obvious reasons why everyone wanted to get home for Thanksgiving and away from work in Iowa.

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The Restaurant and Bar Business

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I am far from an expert on the Restaurant and Bar Business segments but as a long time resident of Chicago in various areas packed with these establishments from Wrigleyville to Bucktown to River North I am at least a frequent regular qualified to throw my 2 cents in. I hadn’t thought too much about the economics of this until I talked to a friend who recently opened two great pizza places where he is the owner about what you get when you buy a used restaurant.

You get nothing… you have to re-model and start over the food concept. And when you sell, the next guy does the same.

What makes a good restaurant as a business? There are a lot of variables and I am only speculating, but certainly timing and location are key elements. For instance you have the Twisted Spoke, a bar on Grand Avenue in what used to be a pretty sketchy part of town that is rapidly gentrifying, and they have the iconic “skeleton on a motorcycle” on permanent rotation in front. This bar has survived for a long time with a mix of hipster / biker cool, an astoundingly good drink / beer mix, and surprisingly good food and interesting / witty / iconic employees. I’d bet that back in the day this place was actually full of bikers but nowadays the crowd looked like the usual hipsters in plaid shirts. And don’t forget the enormous benefit of a rooftop – it astounds me how many bars / restaurants ignore the fact that Chicago people LOVE to sit outside during the few nice days that we receive every year and they drink like fish and eat until they can’t even move.

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Sign of a New Peak for Stocks?

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Back in the woeful years of the dot.com boom and bust I worked for a company with a dubious distinction. The value of that company in the stock market was less than the value of the cash we had on our books. What the market was essentially saying is that the sum total of all our efforts as employees was NEGATIVE – we would be worth more if we just shut down immediately and gave back the cash to investors. The fate of that company, of course, was to go bankrupt.

Today there are some other major signs of froth in the market. Yahoo is a classic web / advertising / technology stock with a solid market capitalization of $40 billion. Yahoo’s CEO, Marissa Mayer, was a Google alumna and has been receiving a lot of press for her intelligence and drive to change the company, as well as her good looks.

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However, all is not as it seems.  The primary value for Yahoo isn’t its online advertising, email, or users – it is the stakes that they amassed in the hot Chinese e commerce company Alibaba (NYSE: BABA) and also Yahoo Japan.  In fact, the value of Yahoo is less than the value of these stakes, which are approximately $45B, partially due to the reason listed in this  Bloomberg article:

While the market value is large for Yahoo’s Asian assets, that doesn’t necessarily reflect the value available to investors and the company because of taxes, said Ben Schachter, an analyst at Macquarie Securities USA Inc. Yahoo, which would have made $8.3 billion by selling Alibaba shares at the IPO, only reaped around $5.1 billion after taxes.

Taxes are ”one of the big issues,” Schachter said.

While it is true that $45B in investment value isn’t worth $45B because of the after-tax implications, it certainly implies that the market isn’t valuing Yahoo at very much at all.  It is also possible that the market thinks that Alibaba is over-valued at its current price of near $100 (after a huge run-up from its IPO price of $68, another huge sign of froth in the market) but the two stocks will generally track closely together now.  Yahoo is sort of a broken “tracking stock” for this value.

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Riot Fest Chicago 2014

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Riot Fest in Chicago was held over three very cold and rainy / muddy days in Chicago’s Humboldt Park in September. I went with a friend on Friday which was cold, rainy, muddy and insane and on Sunday when the weather was nice (still cold) and the mud had somewhat hardened. Riot Fest is more of a fan-friendly (cheaper) Lollapalooza with a bigger dose of punk / emo bands and without any of the EDM flavor that you get from Lolla (and get on a massive scale elsewhere). It was also held in Humboldt Park which is relatively far afield for the more gentrified classes but actually is closer to where the younger fans of this music might actually live and work. For me, it was an opportunity to see some of the bands I like such as Social Distortion, Mastodon, Slayer, Primus, Weezer and the Afghan Whigs. Definitely skewing a bit older for certain.

Here is Gwar! I wasn’t a huge fan of Gwar before seeing them live but they put on an awesome show that needs to be seen to be believed, where they kill a giant dinosaur and banter with the crowd in a completely disturbing manner. At one point they wanted everyone to put their heads down for a moment of silence (their former front man died recently) but then their deranged emcee said that everyone was looking down for a crack rock that the band had dropped since they couldn’t do this sort of stuff sober. They also sprayed everyone near the front with fake blood which is their trademark – many fans throughout the park for the rest of the day looked a bit sunburned from the residue of their pinkish hue thanks to Gwar.

Riot Fest had great food and it was very reasonable. They had a Cevapcici stand where I had a great Serbian sausage for about $7 and all kinds of different items, not just the usual “festival” type stuff. Fortunately they set up most of these stands on the roads that curve through the park so they didn’t sink into the mud.

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Massive Disruption to the Cable Industry Coming – Part II

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Recently I wrote about the impact to the cable industry that is coming in the form of Microwave Fixed Wireless here.

While on vacation in Door County I noticed a small store front office in Bailey’s Harbor for Door County Broadband. The first thing I thought of is how would a company like this operate out of a small storefront with just one truck (parked outside)? Then I realized that this firm is the local upstart providing Microwave Fixed Wireless against the incumbent phone / cable company in that region, Frontier. Unlike the local phone / cable company (who really are one and the same nowadays), you can run a microwave fixed wireless broadband company with few employees because you don’t have to pay for all the same physical infrastructure (telecom poles, physical connections) when you are doing a wireless model; you just need to 1) get the physical infrastructure (towers) in place and then 2) hook up the dish in the homes and point it at the tower. This model needs far fewer “boots on the ground” than the traditional model.

While researching this further, I came across this document called

America’s Broadband Heroes:
Fixed Wireless Broadband Providers
Delivering Broadband to Unserved and Underserved Americans

This document is clearly biased in favor of the upstart fixed wireless providers, but has many interesting and sourced facts about the industry and is highly recommended reading.

While wireline and mobile wireless carriers focus on regulatory gaming and manipulation of the Universal Service Fund to benefit their bottom lines, many Americans are left without access to broadband services because they reside in places that are deemed to be unprofitable by traditional carriers. Even more Americans have substandard or overpriced broadband access and no alternatives for obtaining better service because of the lack of competition in the broadband market. It is clear that the current system is broken, and the absence of competition, abuse of USF and the lack of access to critical network facilities for competitive entrants puts our nation into a position of disadvantage compared to other OECD countries.

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