What I Learned Today

Podcasting - Its Large

2006-04-27T13:13:00.000-04:00

In case you have missed it, the hype associated with podcasting, some of which was created here, it coming to fruition. Large mainstream publications or media groups are finally catching on a releasing content for free. A simple search on iTunes is amazing...ESPN, BusinessWeek, the Wall Street Journal.

My favorite is probably PTI from ESPN.

Check out other ESPN content HERE

Cool Music

2006-04-26T20:51:00.000-04:00

Check out this site - The Hype Machine

Great streaming quality, cool non-mainstream tracks.

Safety first

2006-04-25T22:13:00.000-04:00

I guess the new S Class has 8 airbags...

Long time..

2006-04-25T19:37:00.000-04:00

...no talk. This one was too good to pass up. By Seth Godin

Why are you afraid of process?

Is it because it gets in the way of intuition?

I spend a lot of time railing against organizations and teams that fall in love with process at the expense of innovation. This is not a post about that.

It's about the opposite.

Our culture embraces the intuitive craftsman. We don't talk about Harlequin Romances or artists who paint by number. Heroism is about writing a novel or making a sale based on what's deep inside of you... not by following a prescribed pattern.

The plant manager who is proud of his seat-of-the-pants inventory management system, the bizdev guy who cherishes his network, the physician who relies on her diagnostic skills--these are all examples of intuitive craftspeople. Intuition, the sum total of our skill and our training, is the mark of someone to be reckoned with.

Process, on the other hand, appears to be for Dummies.

So we bristle when we're asked for our weekly goals sheets, or when the boss wants us to use a database or when the insurance company requires docs to follow data-driven guidelines. We pass up the tenth novel by a successful author... because the process has become too transparent.

And yet, in many cases, process is underrated.

Process is your ace in the hole when your intuition stops working.

Process is the system that doubles a plant's efficiency when you've done everything you can think of.

Take your web page (please). The intuitive marketer does her very best, and then conversion and traffic levels are established. That's all.

Replace that with a process that measures and tests and improves and repeats and changes elements hourly. Replace it with a process that's all about split testing and funnels and what works. Will a process like that invent MySpace or Flickr? Of course not. But it might very well turn your metrics from negative to positive. It might reinvent all the dynamics of your business.

What happens when a star salesperson starts tracking her calls, her time spent, her rolodex and her results? Her day isn't intuitive any longer... just the act of selling is. The result: dramatic improvements. Measuring, and measuring in public, is a piece of process that can't help but organize and leverage your intuition.

If process makes you nervous, it's probably because it threatens your reliance on intuition. Get over it. The best processes leverage your intuition and give it room to thrive.

From the Road

2006-03-13T23:39:00.000-05:00

Spending a good bit of the past two months on the road I have been interested in the uptake of digital media devices. While I am saying media, I am most interested in how our society is embracing the digital video revolution that is upon us. Items such as the iPod Video and the PSP have provided great video capability.

Honestly, I have been quite surprised by the sheer amount of people watching personal video players. On a recent flight from Los Angeles to St. Louis I counted over 20 people watching videos…the majority of which were on Video iPods. A very small amount was being watched on what I believe is the best digital media device out there today, the Sony PSP. Doing a bit of back of the envelope math, there were probably 140 people on my flight, equating to a 14%. That number did strike me as high. But given that I was flying out of LA and my flight seemed to skew a bit younger it probably makes sense that it was higher than my “just south of 10%” guess.

In terms of content, I was moving through the cabin and glancing at a two-inch screen, so much of it was difficult to decipher, however movies seemed to be the big winner (which I suppose seems natural). However I was proud to see one passenger watching Chappelle's Show on a video iPod. I have no idea if the shows are available on iTunes, however that along with the BBC version of The Office is probably something that I would buy.

Aside from digital media, I find it rather interesting that none of my flights offered meals in coach. The only offering was a snack box on all of my American flights. I found it surprising because US Air consistently offers a meal, which costs roughly $7, and I have yet to be on a flight in which they did not sell-out. I would be willing to pay $7 for a decent meal on most of my longer flights…hopefully the other will follow US Air’s lead here.

GO AZTECS!

2006-03-12T21:16:00.000-05:00

Great job guys! Gook luck against Indiana.

San Diego State Aztecs

Mountain West Conference Champs

Shhhhhhh....

2006-03-10T22:16:00.000-05:00

No, I did not start working at a library, but it has been quiet here. A busy two weeks has culminated this weekend in L.A. Expect more this weekend.

In the meantime, check out www.textually.org.

Forgiveness

2006-02-20T09:11:00.000-05:00

Foregiveness means giving up the hope that the past will be different.

Valuation Series

2006-02-20T08:58:00.000-05:00

Lorne Groe has an interesting series going about valuation. I found the DCF post to be most interesting.

So often business owners create great models with unbelievable projections for a business that they are selling. If business had not been that good to date, why is it all the sudden getting better? And if it is getting better, why is the business being sold? Probably because the current owner is not the best owner of the assets and the buyer will provide better performance. Even so, why would the buyer pay for that performance if it is not due to the seller?

A Starr in the Sea

2006-02-19T09:49:00.000-05:00

If you are looking for a good article on the restaurant business and the fury behind opening a resturant, check out this article on Stephen Starr.

My home is not for sale

2006-02-14T13:44:00.000-05:00

Are you paying attention to the housing market? Most likely, since it seems to be the most important cocktail conversation since IPO’s and internet stocks in the late 90’s. Well, if you are paying attention, you are not alone. I have been paying close attention. During my travels in the past month I have been focusing of the number of homes/condos/apartment buildings for sale. The “results” have been quite…hmmm, remarkable. Everywhere I have been from New Haven, CT to Ocean City, New Jersey and all places in between, with the exception of Detroit, MI, I have noticed what seems to be a rather large (on a relative basis) number of “for sale” signs. Yes, we are heading into the “spring market,” a time when most people decide to put a home on the market, but the sheer number of homes on the market seems quite staggering to me. On a five block walk in Philadelphia today, I pasted three apartment buildings for sale. These buildings, especially in Rittenhouse Square, have been very difficult to come by the past.

I am not certain what this is signaling, but it could be the downturn that everyone has been squawking about for the past two or three years. Yes, there is other empirical evidence to suggest this (read KB homes most recent report), but the economists have been calling for this for a while. Finally, maybe the average consumer believes it and is stepping out…or simply reducing her risk profile.

Sales of certain properties do seem a bit odd to me. With interest rates heading up and properties at relative highs does it really make sense to liquidate a good investment, when you are going to deploy that capital in an investment (assuming real estate) with a higher risk and lower return profile? Being in the market, I have found it extremely difficult to find good or great investments. In fact, my most recent investments have developed via “guerilla” tactics. We will call guerilla tactics, “smiling and dialing,” pounding the pavement and knocking on doors.

So with this potential crisis in real estate confidence, why is the average consumer so strong? Most Americans attribute a majority of their net worth to their homes. Yes, these homes have seen dramatic gains in the past three to five years (some declines in the past year), but with the trend tailing off, should the consumer still be spending as much?

The concluding question is…(drum roll please)…..is the American economy headed for a bit of a recession?

Other items to think about:

The stock market is essentially stagnant, what will get the consumer/investor excited again, leading to wealth creation and incremental confidence?

How will the Michigan real estate market stabilize with its largest industry (automotive) floundering?

Will a good deal of motivated sellers hit the market as variable rate mortgages rises, leading to home payments that the mortgagee can not afford?

Legal Drug

2006-02-14T13:40:00.000-05:00

What would happen to the coffee shop that sold its legal drug below that of Starbucks?

Nothing better than Posh and Becks?

2006-02-13T20:09:00.000-05:00

As seen on Break.com

The Best Investor of His Generation

2006-02-13T19:51:00.000-05:00

If you are finance junkie you will love this Fortune article about Eddie Lampert.

Here's the link

He made over a billion dollars for David Geffen, racked up better returns than Warren Buffett,
and talked four kidnappers into letting him go. Eddie Lampert is ... THE BEST INVESTOR OF HIS GENERATION. So what is he doing with Sears?

By Patricia Sellers
February 8, 2006: 11:41 AM EST
(FORTUNE Magazine) - The mood was tense at the Bel Age Hotel in West Hollywood, Calif., early last year. The top two dozen executives of Sears Roebuck & Co. were gathering for a strategy session with Eddie Lampert, then 42, the billionaire hedge fund manager who had just engineered an unlikely takeover of their venerable but struggling company. The fact that the vehicle of his acquisition was discounter Kmart--which Lampert had come out of nowhere to snatch control of during bankruptcy--was only one source of unease. Once their presentations started, Lampert also began poking holes in virtually every idea. "What's the benefit of that?" he asked again and again. "What's the value?" He shot down a modest $2 million proposal to improve lighting in the stores. "Why invest in that?" He skewered a plan to sell DVDs at a discounted price to better compete with Target and Wal-Mart. "It doesn't matter what Target and Wal-Mart do," he declared.

Eyes began rolling. Sure, Lampert was an alluring character: He'd built himself into one of the richest men in America, survived a bizarre and terrifying kidnapping, and somehow supercharged Kmart's moribund stock into a highflier. But when the Sears team asked him to share his vision for their company, he brushed the question aside. The impression, says one attendee, was that "Eddie was going to pull cash out of Sears to invest in the next addition to his hedge fund." Lampert says that view comes with the territory: "The pushback I get is, 'He's a hedge fund guy.' Full stop. Some places, that can be a badge of honor. In others, it's almost a term of derision."

A year after the Bel Age meeting many of those Sears executives--including the CEO, the CFO, and the chief buyer--are out of the picture. Sears stock is up 30%, and Lampert is fully in charge. While his official title is chairman, he's operating much like a CEO, calling the shots on strategy, marketing, merchandising, and more. "I'm not from a retail background, but I am a shopper," says Lampert, whose contained, sometimes shy manner is the last thing you'd expect from a big swingin' hedge fund guy. "I come to this with practical, logical ideas."

Eddie Lampert is the Steve Jobs of the investing world: He thinks differently, and acts differently, with extraordinary results. "He's the greatest investor of his generation," says fellow billionaire (and onetime mentor) Richard Rainwater, and Lampert has the numbers to prove it. His hedge fund, ESL Investments, has delivered average annual returns of nearly 30%, after fees, since its 1988 launch, according to several of its investors, who include Dell founder Michael Dell, media mogul David Geffen, and the Tisch family. Geffen, who gave Lampert $200 million to invest in 1992 (when Lampert was just 29), says that had he not periodically taken money out for diversification, he would have $9 billion today. As it is, says Geffen, "I've made more money from Eddie than from all the businesses I've created and sold."

Lampert is wealthier than Warren Buffett was at his age. And his $15 billion fund has outperformed Buffett's Berkshire Hathaway during its 18-year span (though of course the bigger Berkshire is a heavier load to move). Unlike other hedge funds, ESL doesn't typically short stocks, or trade derivatives, or dabble in currencies, or use aggressive leverage. Lampert buys cheap stocks and holds them for long periods (see "How Lampert Picks His Stocks," page 100). He made his first big money in the '90s with IBM and financial stocks like Wells Fargo, and became a billionaire by buying AutoNation and AutoZone, which have tripled and quadrupled in value, respectively, since he invested in them. But the capper so far has been his coup with Kmart. In 2004 alone, the stock soared 300%, ESL's stake grew from $1.3 billion to $5.4 billion, and as a reward that year he raked in a reported $1 billion in fee income.

Now the question is this: Is Lampert's Sears acquisition another inspired work of genius, a stepping stone to Berkshire Hathaway--like wealth creation for public investors? Or has he finally gone a step too far? In a series of revealing interviews--the first in-depth discussions he's had with any outsiders, including Wall Street analysts, since the Sears deal--Lampert acknowledges that he has nearly all of his own money in his hedge fund. That means his personal fortune is also riding on the fate of Sears Holdings, as the combined Sears-Kmart is now called. After rocketing to $163 last summer, shares of Sears Holdings have dropped to a recent $121. With same-store sales at Sears down 12% this Christmas season, the sniping among retailing purists--for a time overshadowed by Wall Street's cheers--is getting louder. "These financial guys, including Eddie Lampert, have no idea who the customer is," says Britt Beemer, chairman of America's Research Group, a retail industry consultancy. Former Sears CEO Arthur Martinez calls the plunge in holiday sales at Sears "very troubling" and wonders how long Lampert can sustain such a poor showing.

If Lampert is blinking, he sure doesn't show it. His hedge fund owns 40% of Sears Holdings, a stake worth almost $8 billion and by far its largest position. (He takes no salary for his role as Sears chairman.) From ESL's tiny offices in an unremarkable four-story building in Greenwich, Conn., Lampert manages the $54 billion, 330,000-person retail giant by phone, e-mail, and videoconference. He regularly holds court in his spartan conference room, diagramming on a big whiteboard for Sears executives who tune in remotely. The key points on his agenda: Be willing to sacrifice sales for profitability. Ignore Wall Street expectations. Question everything.

Lampert, who is a white-knuckle flier, has been to Sears' headquarters near Chicago just six times. But chief information officer Karen Austin says Lampert is the company's No. 1 user of a computer-based tool to analyze sales, margins, and inventories by store, by region, and by merchandise group. A geek at heart, he spends hours at his Connecticut office drilling down into the data, zeroing in on whatever isn't making money. His critics argue that judging a single item's profitability in isolation is unsophisticated--that a retailer's menu of offerings is what's important, even if an individual item lags. Lampert disputes that. While Sears' December sales drop was disappointing, as he admits, year-end earnings, due out in mid-March, are expected to show improving margins. That, in part, is because unprofitable items are disappearing from the stores. Sears recently stopped carrying traditional televisions, now offering only pricey flat screens. As for DVDs at Wal-Mart and Target prices, they're also a thing of the past. An in-store test showed that full-priced DVDs produce plenty of volume and a lot more for the bottom line. Eddie was right.

"I THOUGHT THEY WERE GOING TO kill me," Lampert says. He's sitting in the conference room at ESL, almost exactly three years after his kidnapping. Lampert's operation has moved to a new building, and security has gotten tighter--the beefiest receptionist in Connecticut sits behind the counter of ESL's small entrance area--but when Lampert tells the full story of what happened to him that day in early 2003, the terror of it shakes him anew.

And there's also the irony: that if Lampert hadn't been kidnapped that day, he might not be the sole, undisputed king of Sears and Kmart now. If he hadn't been crossed by a potential business partner who took his absence as an opportunity to go around him, he might even have retired. To understand the saga--the full tale that has not been told anywhere until now--you have to go back to the start of the Kmart deal.

Just about everybody thought Lampert was crazy in 2002 when he began buying up Kmart debt at around 40 cents on the dollar after the retailer filed for Chapter 11. Crazier still, Lampert loaded up more as the price sank to 20 cents, eventually boosting his total investment to $700 million. "To most people, Kmart looked like a pile of trash," says Al Koch of restructuring advisor AlixPartners, then Kmart's interim CFO. "We were told that this hedge fund guy had bought a huge portion of Kmart and wanted to get it out of bankruptcy fast. None of us had ever heard of him."

But Lampert knew exactly what he was doing. He'd spent hundreds of hours analyzing Kmart's financials and reached a simple conclusion: "Kmart's bankruptcy was avoidable," he says. To his thinking, the retailer had frittered billions on unproductive store improvements and excessive inventories. The prevailing wisdom held that Wal-Mart and Target were squeezing Kmart into oblivion by stealing its sales, and that Kmart had to fight back to maintain its dwindling market share. Lampert felt differently: that only by managing Kmart for profitability, not sales growth, could the discounter succeed. And if need be, Lampert could sell off Kmart's real estate, which had been valued at $800 million in a liquidation analysis filed in bankruptcy court. He was sure it was worth much more.

As 2003 approached, Kmart was hungry for more cash to keep operating, and Lampert considered bringing on a partner: Ron Burkle, a secretive California billionaire who had owned more than 6% of Kmart stock pre-bankruptcy and wanted back in.. Lampert and Burkle considered several possibilities: that Burkle would buy some of Lampert's Kmart debt or partner with him to put additional funds into Kmart. "The company needed a lot of money," says Lampert. "And he had a lot of experience that could be valuable."

On Friday, Jan. 10, at about 7:30 P.M., Lampert left his office to meet his wife and mother for dinner at a nearby restaurant. He was anticipating a weekend full of phone calls and meetings--the following Monday was a key deadline for Kmart's refinancing--but as he walked to his car in the underground parking garage of ESL's building, four masked men grabbed him. They pulled a thick hood over his head, shoved him into an SUV, and sped off. An hour later Lampert was sitting on a toilet in a motel bathroom, blindfolded, his hands and feet bound by plastic handcuffs. His abductors told him that they had been hired to kill him. It made no sense, but he wasn't about to argue. "One thing I was sure of was that I had to tell the truth because they knew everything about me," Lampert recalls. "They knew where I lived, how much I had paid for my house, who worked at my office, how much I was worth. If I bullshitted them, they'd know it."

He sat in that bathroom for 39 hours, awaiting who-knew-what. They gave him water and one meal (Popeye's fried chicken). When they removed his blindfold so that he could eat, he kept his eyes down, even though they had masks on. "I was respectful," he says. They'd taken his wallet away but allowed him to hold a passport photo of his 5-month-old son that he'd wedged into his billfold. When they demanded that he record a message to his wife, he complied. "I was in God's hands," he says.

It was later reported that Lampert talked his kidnappers into believing that he would deliver $5 million to them if they let him go. But the real story is a little different. One of the kidnappers foolishly used Lampert's credit card to order pizza delivered to a friend's house. When Lampert heard them talking about it, he saw an opening. Didn't they realize that the police were on to them now? Only if they released him would they have a chance to get away. Lampert, after all, had never seen them, so he couldn't ID them. But if they got caught with him as a captive--or harmed him--they would be in terrible trouble. Lampert says he did discuss a payoff with his captors, but nothing was decided on. "Ultimately they realized that it was better to let me go than to kill me," he says.

At 2 A.M. on Sunday the kidnappers dropped him at the off ramp of exit 3 on I-95. Even then he feared that they would shoot him, but they drove off. He walked a mile to the Greenwich police station. The cops apprehended the culprits within days. Ranging in ages from just 17 to 23, they had used the Internet to research Lampert and buy equipment for their caper. They later pleaded guilty. They are now in prison, and Lampert says he just wants to put the episode behind him.

"A couple of friends said to me, 'Stop. Get out of the business. Retire,' " Lampert recalls. "I thought about it--not for a long time, but it was definitely a consideration." A few hours after he arrived home, he says, he asked colleagues to call the key players in the Kmart refinancing and pass along a message: "I need to collect my thoughts. I don't need weeks. I need days." He was stunned by the reaction he got: A few people suggested that he might have concocted the kidnapping story to buy time.

Then he heard about Burkle. The day after Lampert's release, as he was recovering from his ordeal with his family, Burkle went to Jim Adamson, Kmart's then-CEO, and said he would be willing to put up the money the company needed, without Lampert. When Lampert found out, he was furious at Burkle's apparent end run. "It jolted me back to reality," he says. Instead of retiring, he jumped back into the fray, elbowing Burkle aside--and committing $110 million. Burkle says that Lampert misinterpreted his maneuvers, and that he acted only because one of Lampert's colleagues told him that ESL was not going to put any more money in. "We never would have gone in when somebody was kidnapped and tried to do a deal around him," says Burkle.

In any case, by the time Kmart emerged from bankruptcy in May 2003, a year ahead of schedule, Lampert had invested some $800 million. When his debt converted to equity, he found himself with a commanding 54% ownership stake.

WHEN LAMPERT WAS 14, HIS FATHER died of a heart attack at age 47. A lawyer, he nonetheless left the family, which lived in the middle-class town of Roslyn, N.Y., with virtually no savings. Lampert's mother took a job as a clerk at Saks Fifth Avenue. Eddie worked in various warehouses--stocking shelves, picking orders--after school and on weekends to help support her and his younger sister, Tracey. "He was a child, and then suddenly he was a man," says his mother. Eddie handled the pressure. He earned good grades, made time for soccer and basketball, won the scholar-athlete award at his high school. He got financial aid to help pay for Yale, where he majored in economics and was inducted into Phi Beta Kappa and Skull & Bones. "Even back then Eddie was intense," says Steven Mnuchin, his college roommate, who now runs Dune Capital in Manhattan and sits on the board of Sears Holdings.

After college Lampert landed a job at Goldman Sachs, persuading Robert Rubin to let him join his risk-arbitrage unit. The decision-making process he learned working for the future Treasury Secretary (now Citigroup vice chairman)--envisioning possibilities and their inherent risks--has shaped him as an investor, he says: "In investing, you constantly make decisions under conditions of uncertainty."

After four years the 25-year-old Lampert decided he didn't want to build his career inside someone else's money machine. In early 1988 he moved to Texas to work with Richard Rainwater, whom he had met in Nantucket a few months earlier. Rainwater gave him seed money to launch his own equity fund, which Lampert dubbed ESL. "Eddie works harder than anyone I've ever seen," says Rainwater. He recalls that when he owned the Texas Rangers (with George W. Bush), he would take the guys from his office to the stadium on sunny afternoons to play baseball. "Eddie would come with us, but he'd be there with his papers spread out on the right-field stands." Lampert cringes at Rainwater's portrayal. "Richard's office was like Grand Central Station," he says. "Richard would say, 'Joe Smith is coming to town. Let's all have lunch with Joe Smith.' I'd say, 'No, I have my work to do.' "

He split with Rainwater after a year and a half over a disagreement about his role. Lampert pushed to get involved in deals, but Rainwater wanted him to stay focused on buying and selling stocks. "It wasn't that I thought I'd do deals," says Lampert, who was 27 when he set out on his own, taking ESL with him. "But I was hell-bent on the principle that I should have the flexibility to do deals." He adds, "The irony is that I didn't do a deal until 15, 16, 17 years later." That first deal was Kmart.

During ESL's early days, Lampert was an ordinary passive investor. "I bought IBM two years after Lou Gerstner got there," he says. "They had an incredible services business, but most investors were focusing on the mainframe and PC businesses, so IBM's valuation was low. In four or five years, we made four or five times our money." Starting in the late '90s with AutoZone and then AutoNation, he became more active, attacking capital spending and playing a key role in replacing top management. He took heat from some critics, who charged that he was pursuing short-term fixes that could end up hurting the companies. But the stocks of AutoZone and AutoNation continued to rise, and ESL still counts both among its core holdings. Lampert's tactics back then--and critics' reactions to them--would become a model for his future deals.

WHEN KMART EMERGED FROM bankruptcy in 2003, Lampert quickly cut spending, reduced inventories, and halted what he calls "crazy promotions" to clear out merchandise. "For the first year or so, we had declining same-store sales, but more stores made a profit. To some people, it looked like a plane that was going from 40,000 feet to 20,000 feet, and in five minutes from now, it's going to hit the ground. We said, 'We're going to land this plane.' And we did."

The stock didn't just land, it soared. By summer 2004, Kmart was solidly profitable and building a $3 billion cash pile. The retail novice was proving everyone wrong. The buzz on the Street was that Lampert planned to milk the company for cash, using Kmart's real estate as his secret cache. Lampert exploited the moment. In June he announced the sale of some 70 Kmart stores--5% of the base--to Sears and Home Depot for more than $900 million. The figure was so high, Kmart stock zoomed on the news. Lampert's stake, acquired for $800 million, was now worth about $4 billion.

But Lampert had another card to play. His hedge fund had also quietly accumulated almost 15% of Sears over the previous four years. In selling 50 Kmart stores at a premium price, he'd spotlighted the weakness of Sears management. With Wall Street convinced that Kmart had gotten the better of the deal (Home Depot's purchases were deemed more strategic), Sears stock dipped. That opened the door to phase two of Lampert's plan: to use Kmart to take over Sears.

On Halloween weekend of 2004, Lampert and Sears CEO Alan Lacy sat down in Lampert's Greenwich home. Lampert prodded Lacy to sell him the company. After endless bad news--sales declines, profit shortfalls, and 75,000 job cuts--Lacy was exhausted. Kmart's $12 billion takeover was announced three weeks later.

Not long after, Lampert placed a call to Arthur Martinez, who had run Sears during a short-lived revival in the late '90s. Martinez had recharged the company (and its stock) by reducing costs, imposing new financial discipline, and luring female shoppers with the "Softer side of Sears" campaign. Martinez had an office in Greenwich not far from ESL, and on a mild winter day he walked the few blocks over for a visit. Lampert greeted him warmly, though the two had never met before. "Do you think I've done something crazy?" Lampert asked Martinez when they sat down. Martinez didn't answer him directly. "You have taken on the most complex retail integration task in history," he replied. Martinez recalls that Lampert wanted to know how he had gone about changing a vast bureaucratic organization. "I told him that it was far harder than I thought it was going to be," Martinez says. He'd underestimated "the cultural challenge," he told Lampert, and should have cleared out the old guard more quickly. Says Lampert: "He was helpful. The changes he made didn't stick, so the turnaround stalled out."

Lampert got the message, though his strategic approach is not what Martinez's would have been. He replaced CEO Lacy, who was Martinez's successor, with retailing newcomer Aylwin Lewis, 51, a restaurant industry man and former president of YUM Brands (owner of Pizza Hut, Taco Bell, and Kentucky Fried Chicken) whom he had hired to run Kmart just before the Sears deal was announced. "He's been on an incredibly steep learning curve," says Lampert of Lewis, with whom he talks frequently and e-mails constantly. A few months ago, CEO Lewis recalls, he asked Lampert, " 'Where do you end and I begin?' Eddie said, 'Why do you have to know that? This is a partnership.' " Lewis is pragmatic. "You check your ego at the door," he says. "Eddie is a nontraditional leader. I've learned to be nontraditional."

Lampert found Sears a new marketing chief too, not by using a recruiter but by querying a tech world contact who steered him to IBM. Lampert, who admires the company for its cultural revival, asked Maureen McGuire, a 30-year IBMer, to meet him at his ESL office. McGuire recalls asking Lampert, " 'Why would you hire me? I have no retail experience.' He told me, 'That's exactly why I want you. I need somebody with fresh eyes.' "

Lampert's right hand at ESL, Bill Crowley, 48, is now his eyes and ears at Sears headquarters, typically spending three days a week there. "We don't use discounted cash flows out five years and weigh it against the cost of capital," says Crowley, whom Lampert installed as Sears' CFO and chief administrative officer. "We talk about how much money we are making right now, and how that can change."

At times it seems as if Lampert's only passion is in tightening the operations. (One experiment in expansion, new stores called Sears Essentials that put Sears brands like Craftsman, Kenmore, and DieHard into Kmart's off-the-mall locations, has already been scaled back after a subpar rollout.) Says Morgan Stanley's Greg Melich, a bear on the stock: "You could find specialty retailers that have scaled down to something sustainable. But among general-merchandise retailers, there's no example of long-term success."

"The notion of spending money on the business--I'm not opposed to it. I just want a return for it," Lampert says. That attitude has certainly helped free up cash flow: Sears Holdings ended 2005 with more than $3.5 billion on its books. But how is Eddie going to create long-term value? He offers no specifics. When I propose one popular speculation--that if improved operations don't get the stock moving soon, he will begin selling off more real estate and maybe even Sears house brands like Craftsman--he laughs, simply saying, "No." In other conversations he suggests that rather than unload the company's prime properties, he'd like to better exploit them--he calls Land's End, for one, "a strategic asset." But he offers few details.

In other words, we just have to trust him--as his hedge fund investors have. (He demands a five-year minimum commitment from them, and refuses to tell them what he's investing in.) He points to three role models that together may say more about where he's going than any retail initiative he might float: Bob Rubin, who claims that the best decision-makers keep their options open until the last reasonable moment; Bill Belichick, the coach of the New England Patriots football team, who befuddles and outwits his opponents by constantly adjusting the game plan; and Warren Buffett, who turned from investor to business builder by acquiring operations at good prices and rearranging the cash flow, in many cases to invest elsewhere. "The entrance strategy is actually more important than the exit strategy," Lampert says. Could Sears Holdings evolve into another Berkshire Hathaway?

"One of the unspoken secrets about business leaders is that they often have no idea about where they're going to end up," Lampert says coyly. "I know the right direction. Whether we end up at the destination--rebuilding Sears Holdings into a great company on many dimensions--I don't know. But we're headed in that direction."

IN LATE JANUARY, LAMPERT TAKES ME for a walk-through of the Kmart in White Plains, N. Y., 20 minutes from his Greenwich office. He points out that he redirected the toothpaste display to the end aisle, and carps that the bath towel section needs classier signage. His mother has joined us, and we sit down on Martha Stewart patio chairs in the outdoor-furniture section for a chat. "I never thought he would go into retail," Dolores Lampert says. "It's a very hard business. But it's a challenge, and Eddie likes a challenge." She talks about how he'd been accepted to both Harvard and Yale law schools after college, and how crushed she was when he told her he was going to Goldman Sachs instead. "I didn't know what Goldman Sachs was," she recalls, adding: "I called my mother and I cried. I was hysterical."

I ask Dolores Lampert what Eddie's greatest insecurity is. She pauses, and almost chokes up, then replies, "This is a terrible thing to say, but it's that he won't live long enough to complete all his goals." His mother goes on, saying how Lampert writes his goals on a yellow legal pad, just like his father did before he died. "But Eddie won't die young," she says, not looking at him. "He'll probably live into his 90s."

Lampert is sitting quietly, watching us but involved in his own thoughts. "I want to be known as a great businessman," Lampert had told me earlier. With all he's accomplished, you might think he'd feel like one already. But Lampert has bigger aspirations, even if he's mostly mum about them. Sitting there in the Kmart with his mother, he agrees that he worries about dying young like his dad did. "If you had asked me the question, I wouldn't have answered that way. But that is the right answer." And then he goes silent. Perhaps he is calculating the probabilities and, whatever they may be, thinking that he has no time to waste.

FEEDBACK psellers@fortunemail.com

HOW LAMPERT PICKS HIS STOCKS

LIKE WARREN BUFFETT, EDDIE LAMPERT CALLS HIMSELF A

"value investor," meaning he buys into companies whose assets he

calculates are worth more than the current trading price. "The idea is that

I'm going to pay this price and great things may happen, but they don't have to

happen for me to do okay," he says. He typically doesn't short stocks,

trade currencies or derivatives, take on substantial leverage, or do any of the

fancy stuff that most hedge funds do. His firm, ESL Investments, employs 20

people, whereas another hedge fund its size (there are just a few) would have

hundreds and a busy trading floor. "We try to stay very focused,"

Lampert says. He takes large positions in major companies and typically holds

them for a long time. He has owned AutoZone and AutoNation, his two biggest

investments besides Sears Holdings, since 1997 and 2000, respectively. ESL now

owns about 29% of each company.

Lampert's stock picking is a "form of

immersion," he says. Before he put a penny into AutoZone, he visited dozens

of the auto-parts retailer's outlets and had one of ESL's analysts spend six

months calling on hundreds of stores, posing as a demanding customer. "It's

probably overkill," Lampert says, but he can't resist. "Eddie doesn't

do things that 99% of the hedge fund world does," says Tom Tisch, an ESL

limited partner since 1992. To avoid pressure to sell his holdings prematurely,

Lampert requires ESL's investors to commit their money for five years--rare in

the hedge fund world, where the standard lockup is one year.

Lampert also believes that secrecy is a key advantage

for an investor. Because ESL today owns such large stakes in companies, those

holdings must be publicly disclosed. But Lampert still refuses to talk about

the specifics of his portfolio, even with his own investors. In the past

Lampert has had occasional conflicts with his limited partners over this

policy. Media mogul David Geffen, who has invested with Lampert since 1992,

recalls insisting to him at one point, "I want to know where the hell my

money is." Lampert refused to tell him. "The rules are the rules, and

they're the same for everybody," says Geffen. "Eddie is very strict.

It's one of the things I admire about Eddie. But I don't like it about

him."

Of course, much has changed since Lampert made the

biggest bet of his career: his $12 billion acquisition of Sears. He used to

wield his influence quietly at companies--by shaking up management and imposing

financial discipline from his seat inside the boardroom. Now, by taking an

active role in running Sears Holdings, he is veering from his old self and from

Buffett, who takes pains to avoid meddling in management. Buffett also tends to

buy well-run market leaders--such as Wal-Mart (whose stock he bought last year)

rather than its downtrodden victims like Kmart and Sears. "Warren Buffett

says, 'I'd rather jump over a one-foot hurdle than a six-foot hurdle,' "

says Lampert. "We'd rather jump over a one-foot hurdle too. But it's

difficult to find the opportunity. So I'm willing to engage more in

underperforming companies."

EDDIE'S RULES

Lampert on being an active--not

activist--investor:

"You don't need to revolutionize an industry or

overhaul a company to make money. Often you need to change the way capital is

allocated and maybe change compensation targets. I'd rather do these things

privately than publicly."

On capital spending:

"A lot of managers say, "Here's the rule of

thumb: We have to spend X amount per year." It gets written into the plan.

You know who benefits? The consumer. There's nothing wrong with that. But my

job is to provide value for the investor."

On executive compensation:

"Compensation committees divide pay into

quartiles. No board wants to pay people in the fourth quartile, but somebody

has to be there. If your performance is in the fourth quartile, then maybe your

pay should be in the fourth quartile."

On Wall Street guidance:

"The world is just not predictable enough to give

earnings guidance. The prevailing wisdom is, you set guidance at a level that

you can beat, so the surprise is on the upside. Or you sell something on June

29 for $2.2 million even though you could have gotten $2.5 million on July

1."

REPORTER ASSOCIATES Julia Boorstin and Joan Levinstein contributed to this article.

S-Corp's vs. LLC's

2006-02-13T08:38:00.000-05:00

S-Corp vs. LLC is always a great debate. Brad Feld provides a nice twist on the commentary.

S-Corp's vs. LLC's

Last week, I blogged an answer to the question “What’s The Best Corporate Structure For An Early Stage Company?“ A few people responded asking why I didn’t like LLC’s more.
While there are several advantages of an LLC over an S-Corp (ability to issue different classes of securities, ease of set up, informality of operating agreements, lower state taxes, non-US investors), venture funds typically cannot (or don’t want to) invest in LLCs. When a VC invests in an LLC, they risk getting an income tax called UBTI (unrelated business tax income). This type of income is frowned upon by investors in venture funds partnerships and most funds have a provision in their fund agreements that they will use best efforts not to bring UBTI into the partnership. As a result, VC funds shy away from investing in LLCs.

The able minded entrepreneur says “yeah Brad, but I’m not ready for venture capital yet – I’ll just do an LLC now and convert to a C-Corp when I raise VC in a year.” Ok, but in order to "convert" an LLC into a C-Corp, one actually has to go through a complete merger, whereby a new entity is created, which usually drops down a wholly owned subsidiary, that sub is merged into the LLC, leaving the LLC as the sub of the parent. In short, it’s complicated and makes the lawyers and accountants some extra cash. Yuck.

In contrast, converting an S-Corp to a C-Corp is simply a "check the box tax election” (or - actually – “unchecking the box”) - this can be done in a day with a single tax form. No lawyers, no accountants, no money. Therefore, while the LLC has some benefits, the costs of converting the LLC into a fundable entity is substantially higher and usually not worth the additional effort.

The previous post, stemmed from this post below.

What's The Best Corporate Structure For An Early Stage Company?

I got the following question from a reader a week ago.

A project I'm involved with is aiming to go from a team of "4 founders with a great idea and a prototype" to a full fledged online service. I believe that even at an early stage, structuring ourselves to allow for growth/investment is critical. Naturally passion for our core mission, competence, and an ability to connect with the existing team are critical. Yet compensation (with an equity component) is a big part of the equation. I want people to have a sense of ownership and our current back of the envelope structure just isn't suited at the moment for bringing people onto the team. To avoid reinventing the wheel, is there a "best practices" template for early stage companies with respect to structure/incorporation? What's the smartest structure for an early stage company?

There are two logical choices (S-Corp or C-Corp) and a third one (LLC) that pops up occasionally. The best choice depends on the financing path you are ultimately planning on going down. Rather than define each of them in-depth, I’ve linked to the Wikipedia definitions which are very good.

S-Corp: If you are not going to raise any VC or angel money, an S-Corp is the best structure as it has all the tax benefits / flexibility of a partnership – specifically a single tax structure vs. the potential for double tax structure of a C-Corp – while retaining the liability protection of a C-Corp.

C-Corp: If you are going to raise VC or angel money, a C-Corp is the best (and often required) structure. In a VC / angel backed company, you’ll almost always end up with multiple classes of stock, which are not permitted in an S-Corp. Since a VC / angel backed company is expected to lose money for a while (that’s why you are taking the investment in the first place!) the double taxation issues will be deferred for a while, plus it’s unlikely you’ll be distributing money out of a VC / angel backed company when you become profitable.

LLC: Often an LLC (Limited Liability Company) will substitute for an S-Corp (it has similar dynamics) although it’s much harder to effectively grant equity (membership units in the case of an LLC vs. options in an S-Corp or C-Corp – most employees understand and have had experience with options but many don’t understand membership units.) LLC’s work really well for companies with a limited number of owners; not so well when the ownership starts to be spread among multiple people.

Based on your question, it seems like you’ll ultimately want to raise money in which case a C-Corp is probably best for you. An established lawyer who does corporate work with early stage / VC backed companies can set this up quickly, easily, and inexpensively for you - they are often the best source for the equivalent of a “best practices template” since this is routine work and requires simple, boilerplate documents and filings.

George Carlin on Aging

2006-02-12T10:00:00.000-05:00

I had a conversation with a friend yesterday about aging and marriage and thought this piece by George Carlin fit the topic nicely.

George Carlin's view on Aging

Do you realize that the only time in our lives when we like to get old is when we're kids? If you're less than 10 years old, you're so excited
about aging that you think in fractions. "How old are you?" "I'm four and a half!"

You're never thirty-six and a half. You're four and a half, going on
five! That's the key. You get into your teens, now they can't hold you back. You jump to the next number, or even a few ahead. "How old are you?" "I'm gonna be 16!" You could be 13, but hey, you're gonna be 16!

And then the greatest day of your life . . . you become 21. Even the
words sound like a ceremony . . . YOU BECOME 21. . . YEAS!!!

But then you turn 30. Oooohh, what happened there? Makes you sound like bad milk. He TURNED, we had to throw him out. There's no fun now, you're just a sour-dumpling. What's wrong? What's changed?

You BECOME 21, you TURN 30, then you're PUSHING 40.

Whoa! Put on the brakes, it's all slipping away. Before you know it, you REACH 50 . . . and your dreams are gone.

But wait!!! You MAKE it to 60. You didn't think you would!

So you BECOME 21, TURN 30, PUSH 40, REACH 50 and MAKE it to 60.

You've built up so much speed that you HIT 70! After that it's a
day-by-day thing; you HIT Wednesday! You get into your 80s and every day is a complete cycle; you HIT lunch; you TURN 4:30; you REACH bedtime.

And it doesn't end there. Into the 90s, you start going backwards; "I was JUST 92." Then a strange thing happens. If you make it over 100, you become a little kid again. "I'm 100 and a half!"

May you all make it to a healthy 100 and a half!!

HOW TO STAY YOUNG

Throw out nonessential numbers. This includes age, weight and height. Let the doctor worry about them. That is why you pay him/her.
Keep only cheerful friends. The grouches pull you down.
Keep learning. Learn more about the computer, crafts, gardening, whatever. Never let the brain idle. " An idle mind is the devil's workshop." And the devil's name is Alzheimer's.
Enjoy the simple things.
Laugh often, long and loud. Laugh until you gasp for breath.
The tears happen. Endure, grieve, and move on. The only person who is with us our entire life, is ourselves.
Be ALIVE while you are alive.
Surround yourself with what you love, whether it's family, friends, pets, keepsakes, music, plants, hobbies, whatever. Your home is your refuge.
Cherish your health: If it is good, preserve it. If it is unstable,
improve it. If it is beyond what you can improve, get help.
Don't take guilt trips. Take a trip to the mall, to the next county, to a foreign country, but NOT to where the guilt is.
Tell the people you love that you love them, at every opportunity.

"You don't have to have a big IQ"

2006-02-12T09:05:00.000-05:00

In the past few weeks I have been looking at a good deal of resumes, performing some interviews and reviewing current employees. I have always enjoyed the hiring process as it has allowed me to meet new people and see what people are thinking about business and certain industries. The one unique thing about this hiring and review process is that it has been for a business that I am buying. Buying a business, or being a new executive at an existing company provides a rather unique conundrum, as the existing employees, even with a lot of communication, feel uneasy about their jobs. This has been in the biggest hurdle in buying the business from a management standpoint because it is difficult to thrive right off the bat in an environment filled with change and uncertainty (just ask Mark Hurd over at HP, who is doing a great job by the way).

Nonetheless, reading the Wall Street Journal today I came across a nice paragraph from a piece with Jack Welch, entitled Preacher Man.

Speaking of the Welch management system:

"We all chafed! But you gotta say the guy [Steve Jobs] is remarkable. I think he probably could have done well anywhere...Because I know how to hire great people. It's not very complicated. You don't have to have a big IQ. You don't have to know all these genius things. If you can get great people to stretch and reach their dreams, you will get incredible performance. But you gotta smell 'em, feel 'em. You gotta like people."

Is this for real?

2006-02-11T21:49:00.000-05:00

I have been waiting for mCommerce (or mobile commerce) or a long while. It has been available in Asia in a variety of way. Motorola's M-wallet seems to be the first real domestic solution for mobile transactions.

Read about it here

Kanye, Kanye, Kanye

2006-02-09T07:50:00.000-05:00

Kanye West had a decent night at the Grammys last night. I did not see any of the show, but the list of winners showed up in my inbox this morning. This was somewhat timely as yesterday I was given a copy of Entertainment Weekly, which had an interesting article about Kanye West along with a good interview. If you are familiar with Kanye West you know he is always good for a quote. Here is the best one from the interview.

"You can't learn anything from a compliment."

All too true. When doing anything in which you want to improve, seek constructive criticism and ask what you can do better.

Here is a link to the article, entitled The Ego Has Landed.

I own Mark Cuban

2006-02-09T07:42:00.000-05:00

Well not really, but I am simply following his lead. Apparently he owns Phil Jackson, the coach of the LA Lakers. Mark's post is pretty funny, but also provide some great insight into sports psychology. You can read it here.

Here is an excerpt:

For whatever reason, I have gotten to Phil so completely and thoroughly that every time he comes to Dallas he has to offer unsolicited comments about me to the media. I wonder if he dreams about me the nights he spends here in Dallas. Ok, I dont wonder. Im curious about it.

A Zestimate

2006-02-08T08:18:00.000-05:00

I have been fooling around with Zillow this morning, which launched in beta last night.

If you dont recall, Zillow, a cool company of the month, is a site dedicated to real estate...seems to be only residential at the moment. The site, which states to be "Your Edge in Real Estate" provides a variety of services, with the most useful one in my mind being the "instant valuation" or Zestimate.

After playing with the site for about an hour checking on properties I own or am interested in, I found the data that drives the Zestimates to be spotty at best. Granted, the site is in Beta (i.e.: not finished), but I found a variety of cases where certain properties simply did not exist according to the site or the data was very old, significantly undervaluing the properties. But, on a few properties the data was right on and very detailed.

One item/feature that would be cool would be a search function that allows the user to find undervalued markets. I site very well could have it and I did not find it, but nonetheless...it would be useful (assuming the data gets better).

Give 'em the Pickle

2006-02-01T19:21:00.000-05:00

If you are looking for a great lesson in customer service, check out this Video

Can you hear me now?

2006-01-31T19:24:00.000-05:00

We are clearly on the way to a nationwide (or close to) wireless network (some iteration of WiMax). Wonder what the wireless carriers (think Verizon or Cingular) are going to do?

Are you one of the ~3 million?

2006-01-31T18:22:00.000-05:00

According to a publisher that I was talking with last week, only 1/10 of 1% of Americans read books on a "regular" basis.

If you make the list, great, if you dont, here are some books that you may be interested in.

Two fun posts from The Big Picture

2006-01-29T16:19:00.000-05:00

Real Estate Souffle

Browning on Market Cliches

Dont fight the Fed while eating the souffle.

Cool Company of the Month - Doctor's Associates

2006-01-29T09:59:00.000-05:00

Company of the Month

Jan 29…wow, I am cutting this one close. However, this month has been a busy one, capped off (or being capped off) with a good bit of traveling and a lot of meetings, with some neat companies. It was this schedule that caused me to hold off on my Cool Company of the Month selection.

So without further ado, the Cool Company of the Month goes to Doctor’s Associates. If you have never heard of Doctor’s Associates, I am not surprised and you should not be either. Their more public name is Subway. Yes, Subway the sandwich shop.

Being at their headquarters in Connecticut, I have been amazed by how “small company” this “big company” feels. Every other Friday they have a cocktail party at headquarters, provide breakfast and lunch for all employees and encourage employees to develop new products for franchisees and therefore customers just like Google turns out new services. Some fail, some succeed, some don’t move the needle but make a franchisee happy. But they innovate, embrace change (somewhat…I still have some issues with the discontinuation of the SubClub card without another program to replace it) and continue to grow.

Yes, at times the growth seems to be at the cost of the other franchisees. Cannibalization has been a word too often associated with Subway. Stores have seemed to pop up everywhere. So much so that there are now more Subways than McDonalds (just domestically I believe). Just over 25,000 stores worldwide, with close to 20,000 of those being North America.

But again, what I have found so interesting with this company is how nimble it is. While many will disagree, do you recall any other quick service restaurants that hoped on the Atkins craze faster than Subway? Additionally, they are getting ready to launch a couple of additional services that as far as I know will be industry firsts…pretty cool.

One company that I do need to mention since I am heading to Detroit this weekend is Ford. Not so cool what is happening to the company, but in many cases pain equals gain.

People still do that?

2006-01-29T09:36:00.000-05:00

I have been looking at a good number of resumes recently and have been surprised by the number of people that still use Microsoft Word templates to create a resume. While the feature is nice, do you really want your resume to look like another one in the pile?

If you need some help, check out Monster

Human Interaction Not Required

2006-01-25T21:39:00.000-05:00

I love grocery shopping and this is a dream. Soon I wont have to deal with the cashiers.

What is worrisome however is that technology is quickly minimalizing human interaction.

Presentation Minimalist

2006-01-25T19:35:00.000-05:00

Four months ago or so I read a report on presentations in which the author suggested having no more than six words per slide. His thought behind the technique was that the words simply acted as an attention getter or guide to what the presenter was saying, which is the most important part of the presentation.

After reading the piece I started paying close attention to presentations that I was putting together and also those in which I was in the audience. After a few months of a very unscientific study I have come to the conclusion that less is more. In most situations in which I was in the audience I was much more engaged when the presentation was simpl, meaning that it would take me a couple of seconds to read what was on the slide, allowing me to then listen to the presenter. The most recent example, which is the other extreme, was a presentation I attended today. THE PRESENTER READ EVERY SLIDE! I was getting a cup of coffee every 15 minutes.

So, for your next presentation, try the minimalist approach. No more than six words per slide. It is tough, but I have found the audience to be much more engaged.

The juggling act continues

2006-01-23T23:02:00.000-05:00

Sitting in a hotel room in Milford, CT writing a long post on real estate and contemplating Ford's announcement, I had CNBC on listening to a discussion on teen marketing...only to find out that the next program on would be Blow Out. Are you kidding me?

What's next? Repeats of Apprentice Martha Stewart!

Still waiting for the Squawk Box podcast.

Speaking of juggling acts, like CNBC, I have been critical of Kobe Bryant before, but his 81 point performance is truly remarkable. Granted it was against the raptors, but I believe it may have been the best regular season NBA performance ever.

The more I use it the more I like it

2006-01-22T22:57:00.000-05:00

I have been traveling a lot recently and have always found Mapquest a bit suspect. So recently I have been trying out different "mapping" or direction sites and really like Yahoo Maps (Beta) the best.

The site is very fast, doesnt seem to bog everything down like the others, and provides the ability to send the directions to my mobile phone.

I also love the mapping technology....Check out this Demo. Nice use of AJAX

Begging and Seeking

2006-01-18T09:22:00.000-05:00

One of the great lines that I learned in my most recent corporate post (and last corporate post) is:

I would rather beg for foregiveness than ask for permission.

Great line. Sums up what should be the attitude of most entrepreneurs.

Recently I was reading a piece on a rather large VC firm and one of the partners was discussing a deal that another partner was putting together. During the discussion he used a similar line:

To seek permission here is to seek denial.

Ah...the City

2006-01-16T21:55:00.000-05:00

Reference this

to understand this.

100%

2006-01-14T09:45:00.000-05:00

For close to three years I have been an avid supporter (and shopper) of Trade Joes. If you have yet to shop at one of their many locations, please do. You will find the experience an order of magnitude better than that of a large grocer such as Acme. The food, mostly Trader Joes brand, is always fresh, of great quality and relatively inexpensive (my box of Joes O's, essentially Cheerios, runs $2.00!).

In addition to great food, Trader Joes has figured out service. Their "team members" are typically friendly and attentive, while also occasionally being eccentric. Nonetheless, the experience is typically a great one capped off with me spending a good deal of money.

This is where is gets interesting for me.

As you may know by now (as a daily reader of the blog) I like numbers, finance and business, with retail being one of my favorites. And with Trader Joes always seeming to impress me, I have always paid particular attention to my own shopping habits in the store (and my total $ spent) in addition to taking heed of what others are getting and the "fullness" of their baskets. My little informal surveys have been amazing...I wish Trader Joes would go public...or at least take a private investment from me.

The Center City Store (philly), which if memory serves me correctly has been open for roughly two years, I would imagine is a microcosm of the nationwide trend. In those two years my average dollars spent per trip has more than doubled. And what has causde this 100+% growth? Two things. Samples and new products.

I am a sucker for samples. I love new things and will try anything. Therefore I now buy Ginger Beer and Trader Joe nonfat vanilla yogurt. One is purely a treat (ginger beer) while the other I consider a necessity and is typically found at a store like Giant for less money, but the yogurt found at Trader Joes is better. I would have never known without the sample.

In terms of new products, I have never witnessed a company manage square footage as well as Trader Joes (that is probably a stretch, a good deal of co's do this well). They continuely squeeze new product in (great fresh guacamole) without the shelves or freezer case looking crowded.

Not surprisingly, I do not seem to be an anomoly. Looking at what others are buying and the amount they are buying, I would imagine average $ per visit has significantly increased for most shoppers. Nothing unveils this trend more than the fact that the store had to bring in carts because people could not fit everything in their oversized baskets. Another indicator has been the addition of checkout people. While this could be construed as a function of increased traffic...traffic seems to be the same, however "basket size" has increased, therfore increase wait time in line, which people hate. So to get people out faster, which I found was a problem as my total bill was increasing, is now back to what I believe is reasonable.

Trader Joes will someday reach saturation and become a case study in retail growth. In the meantime, I simply hope I dont find to many other retailer that grow my average bill 2x without me frowning.

What is wrong with this picture

2006-01-12T20:13:00.000-05:00

...aside from the fact that Kobe scored 48 and the Sixers lost?

Google Video DRM does not support my Mac.

Google finally made Google Earth available to Mac users, wonder how long this one will take.

If I were the Mayor of Philadelphia

2006-01-09T08:51:00.000-05:00

If I were the Mayor of Philadelphia…

…I would probably start by cutting off my fro. For some reason I don’t think the frizzy, 1980’s, Fresh Prince of Bel Air fro resonates with the residents of the City of Brotherly Love. Even though I was recently re-elected, it is time for an image change. One that makes me look less corrupt, friendlier and a resident of the 21st century.

Now that the image is out of the way, lets get down to business. Speaking of business, I need to reduce or get rid of the business privilege tax. Believe me, I have done business in the city, and it is far from a privilege. This tax, which is a burden to every business owner in the city, but mostly for small businesses and start-ups, is unbelievable prohibitive and deters many smart, successful business owners in the burbs from opening up shop in the city.

Along similar lines, I would get rid of the city wage tax. This again deters many businesses from operating or moving to the city as they would be required to give every employee a raise since the employee would be subject to the tax, which is a shade under 4% for non-residents. I would embrace supply side economics in this case and make the case that by minimizing or completely abolishing the tax, I would bring in more businesses, generating more sales tax, property tax etc for the city. Sure, more traffic equals more costs…but more people, equals more businesses, more businesses equals more sales tax (revenue).

Reduce the tax abatement on new construction from 10 years to 5 years. For those of you unfamiliar with the tax abatement, Philadelphia provides a 10-year property tax abatement on new construction. This abatement stays with the property, meaning that it is transferred from owner to owner should the property change hands (assuming the annual paperwork is filled out of course). The abatement is great, it will save me thousands of dollars this year alone. However, I am quite certain that length of the abatement is too long and reducing it from 10 to 5 years would not have deterred me from buying the property. But reducing the abatement on new construction would do two things: get those property taxes to the city faster (keep in mind the tax bills will be significant since the properties will be assessed at their true value, as opposed to one of the other problems in the city, paying property taxes on the 1970’s value of the property…the city is leaving a lot of money on the table); and it will slow new construction in the city, which is becoming a problem.

Now that some of the fiscal issues have been addressed…what should I do with Penns Landing? I would build an entertainment center, in which the centerpiece would be a new stadium. Yes, I know. You are now looking at me like I have two heads. Philly just got a new baseball and football stadium and the Wachovia Center (Sixers and Flyers) is not that old, what would the stadium be for?? Well, hoops, hockey, concerts, everything. Yes, the Wachovia Center is not old, and it is difficult to justify building a new stadium, but that is what Penns Landing needs, an entertainment centerpiece that will draw people to Penns Landing and then to the city after. The sports complex, which is a concrete jungle of boredom, is terrible. If you want a great model, look at San Diego. Petco Park has revitalized a rather boring area of downtown San Diego and added even more buzz to the great Gaslamp District. The Stadium, lets call it Penns Center (I would really push to call it the Lebold Center, after the mayor of course), will host the Sixers, Flyers, Wings, concerts, our arena football team and other events such as Disney on ice. In addition to riverfront stadium, I would build an adjacent outdoor venue that could hold small outdoor concerts in the summer and other events such as the Sixers’ championship parade/party. After these event specific entertainment venues I would look to park one of my gaming licenses on the water. With these three things, others will follow and take advantage of Philly’s entertainment mecca (which also includes my personal favorite, Dave and Busters).

Speaking of entertainment, one of the biggest wastes of taxpayer’s dollars that I can think of has been the push to blanket the city with a wi-fi network. First and foremost, I would imagine that less than 25% of the residents could make use of the network. Secondly, it wont be free (but it should be) so why would I pay $X to only be able to use my laptop in Philly. What happens if I am sitting in a Bucks County Coffee (BCC) shop in Montgomery County? Cant use the philly wireless, but oh wait…BCC understands wifi and provides it free to its customers. Problem solved…but what if I am in a Starbucks? PROBLEM. I will have to sign us for a T-mobile account. While I do commend the city for looking to be on the forefront of technology, it is a waste of my money. Plus, if the network is up and running, I would imagine that it will be like everything else Philly operates…spotty at best.

While spotty is on the mind, I will change the way public transportation operates. First and foremost I will allow everyone who has a full time job in Philadelphia to receive an annual “trail pass” (a pass to use regional train system) at a significantly discounted rate. This discounted rate would encourage the use of public transportation for work…while marking the monthly parking fee significantly higher (with relatively higher rates, some lots will either suffer or reduce their rates, making a sale of the land more attractive, thereby providing a better use for the city in terms of revenue opportunities).

Second item under transportation, I will have SEPTA run a midnight (late night) train or bus system that allows partygoers to travel out of the city safely on Thursday, Friday and Saturday nights. This system, which would be provided for a flat fee of $5 per person, would allow anyone to travel into to the city to experience the bars, restaurants or clubs and then travel home (to a variety of regions) safely. Boston operates a similar Party Bus line, and it is fantastic. In Philly, one could take the train in from Manayunk and then at the end of the night catch the 2:30am bus, which would meet at 15th and JFK back to Manayunk. Simply, Easy, Effective and I am sure used, as opposed to the last train that runs to Manayunk before midnight, which has been empty ever time I have been on it.

If I were mayor I would also have the Chief of Police implement the Jack Welch rule of management and lop off the bottom 20% of the police force every year. Knowing a few cops and some other folks involved, there are too many “lifers” in the force who do it to simply collect a paycheck and not to protect the city’s residents. I believe the 2005 murder rate speaks volumes. The Police Department cannot handle a city the size of Philadelphia. Too many cops sit around in their cars, eat donuts (yes, I have witnessed this...not a myth) and smoke cigarettes (we should institute the Rendell rule and ban smoking within the department again). Getting rid of the bottom 20% will ensure a stronger force, rid the city of its dead wood and force everyone to perform better.

Since the cops can’t smoke, I don’t want to be a mayor who discriminates, therefore I would ban smoking in all public places. I am not going to beat a dead horse, if it works in California and New York City, it will work here.

While I could continue, I believe that would be enough for one term. Assuming re-election, I will have “to-do” list. However it goes without saying that as one of the biggest and best cities in the nation, our mayor should no continually head the list of Worst Mayors in America.

Small socks

2006-01-06T17:31:00.000-05:00

I was in Target today returning/exchanging some items from Christmas. One of the items was a bag of socks that were simply too large (size 12-14). While glancing around the sock rack I noticed that there was a price difference between the long tube socks and the short ankle socks. The difference was $2 or in percentage terms, over 20%. Of course, the tube socks are longer and therefore use more material, potentially more labor and more packaging. They also weigh more, which could cause an increase in shipping costs. But, the kicker in that tube socks are not cool. The tube socks get a $2 discount. Or put another way, there is a small sock premium because they are cool.

Does your company have any small socks?

Bowl for Kids' Sake

2006-01-06T08:39:00.000-05:00

As I have mentioned on a couple of occassions, I participate in Big Brothers Big Sisters as a Big Brother to a young man from Philadelphia. The more I get involved with the organization, the more I am impressed. The events are always coordinated extremely well and they continually provide great opportunities for Bigs and Littles (no wonder it is a four star charity).

With this in mind, there is a great event coming up, Bowl for Kids' Sake, which helps raise money for Big Brothers Big Sisters, nationwide.

To learn more about the event, here is the site.

The donation is $50 per bowler and there are five different bowling days in the Philadelphia region, all in March.

Form a team today, help some great children, support a great program and have some fun.

The best CES coverage in the world...

2006-01-05T21:39:00.000-05:00

...is a blog.

Engadget

FIZZ-boh

2006-01-03T11:06:00.000-05:00

Finally...can we please take this national.

Courtesy of the New York Times

Owners' Web Gives Realtors Run for Money

By JEFF BAILEY
MADISON, Wis. - Across the country, the National Association of Realtors and the 6 percent commission that most of its members charge to sell a house are under assault by government officials, consumer advocates, lawyers and ambitious entrepreneurs. But the most effective challenge so far emanates from a spare bedroom in the modest home here of Christie Miller.

Ms. Miller, 38, a former social worker who favors fuzzy slippers, and her cousin, Mary Clare Murphy, 51, operate what real estate professionals believe to be the largest for-sale-by-owner Web site in the country.

They have turned Madison, a city of 208,000 known for its liberal politics, into one of the most active for-sale-by-owner markets in the country. And their success suggests that, in challenging the Realtor association's dominance of home sales, they may have hit on a winning formula that has eluded many other upstarts. Their site, FsboMadison.com (pronounced FIZZ-boh) holds a nearly 20 percent share of the Dane County market for residential real estate listings.

The site, which charges just $150 to list a home and throws in a teal blue yard sign, draws more Internet traffic than the traditional multiple listing service controlled by real estate agents.

Madison is home to the University of Wisconsin and a city where the percentage of residents who graduated from college is twice the national level. It is also a hotbed of antibusiness sentiment, which turns out to be the perfect place for a free-market real estate revolution. Bucking the system is a civic pastime here.

"It may be an extension of the 1960's, when we stuck it to the man by protesting the war," said Mayor David J. Cieslewicz, who notices all the FsboMadison signs around town. "These days we stick it to the man by selling our own home - and pocketing the 6 percent."

Elsewhere, the Justice Department, free-market scholars, plaintiffs' lawyers and countless entrepreneurs are vowing to make real estate more competitive and to bring down sales commissions. To do that, they advocate forcing the Realtors' association to share control of its established listing services. Those critics seem to view the listings as an unassailable monopoly.

And who can blame them? Those 800-plus local listing services, controlled by local branches of the Realtors' association, help dole out about $60 billion a year in commissions to real estate agents and the firms that employ them. Despite numerous attacks, the association has been remarkably successful to date at protecting its turf. Through lobbying, litigation and legislation, the Realtors' group has managed to keep control of the crucial listings.

Ms. Miller and Ms. Murphy, however, built a separate and alternative listing service - a parallel market, much like the Nasdaq, which rose in recent decades to challenge the New York Stock Exchange's dominance and sparked competition that eventually reduced transaction costs for all stock investors.

The price competition is startling. FsboMadison listed about 2,000 homes in 2005 and said that about 72 percent of its listings sell. If those 1,440 houses averaged $200,000 per sale, the real estate commissions under the 6 percent system would have been about $17.3 million. Ms. Miller and Ms. Murphy collected about $300,000.

"They don't care - they're not profit-driven," said François Ortalo-Magné, an associate professor of real estate at the University of Wisconsin who has studied residential sales in Europe and the United States.

That lack of profit motive - big profit, anyway - may be the reason FsboMadison is succeeding. Most entrepreneurs want to quickly grab a piece of that $60 billion in commissions by offering a price lower than what most real estate agents charge to attract consumers. Ms. Miller and Ms. Murphy, working patiently, are focused on providing a place for buyers and sellers to meet and exchange information.

"I don't think we've done anything unusual," Ms. Murphy said. "We are not out to take over the market, to eliminate the real estate world. We're just here to offer this service."

For hardship cases, divorces mostly, they waive the $150 fee. They refuse to accept referral fees from real estate agents, lawyers or others. Advertising on their Web site costs $150 a year - $250 with a corporate logo. And payment for listings is by personal check only, an anachronism in today's world of immediate credit card transactions. The policy is aimed at keeping people from listing their house on a whim. "Some people are impulsive; they're not ready," Ms. Murphy said.

In 1997 Ms. Murphy and her husband bought a house together and she decided to sell her place without a real estate agent. But it was a bother. "You'd have to guess. Do we put a $120 ad in the paper this weekend?"

Her husband suggested she start a Web site. At a play date with their year-old daughters, Ms. Murphy, a former nurse, bounced the idea off her cousin, Ms. Miller, who told her husband about it that night. "We both laughed about Mary Clare's stupid idea," Ms. Miller said.

But it grew on them. The cousins contacted for-sale-by-owner sellers in the local newspaper, about 25 of them, and offered a free listing on a Web site. Ms. Miller's husband paid $50 for a used power saw at a garage sale to make yard signs. They checked out library books on making a Web site. With eight listings, including Ms. Murphy's, FsboMadison went live Feb. 28, 1998.

A young couple found the site and bought Ms. Murphy's house. "We sat there and had a glass of wine," Ms. Murphy recalled. "And they said, 'Hey, there's that crack in the basement wall.' And we said, 'No problem. We'll take care of it.' "

Dealing directly with each other seemed so civilized, she said. "I keep coming back to that."

With the yard signs, some newspaper advertising and people finding it on the Web, the site took off: 333 listings in 1998; 777 in 1999; about 2,000 each of the last three years.

Briefly stay-at-home moms after their daughters were born, the cousins became busy home-based entrepreneurs. Among the first words spoken by Ms. Miller's daughter, Tatum, "was FSBO, and we were so proud of her," Ms. Miller said.

To real estate agents, "for sale by owner" conjures up some cranky tightwad trying to sell an overpriced, ramshackle house. Agents utter FSBO as if there was something foul stuck to the bottom of their shoe. "It's a commission-avoidance scheme," said Sheridan Glen, manager of the downtown Madison office for Wisconsin's biggest real estate broker, the First Weber Group.

Mr. Glen ticks off the tasks that real estate agents handle: using market expertise to price a house; advertising and showing it; negotiating an offer; organizing the paperwork for closing. "We do a good job," he said. "We deserve 6 or 7 percent."

The Justice Department sued the Realtors association in September, claiming that its rules for listings unfairly disadvantage online brokers who might stimulate price competition in the business.

Agents take comfort by reminding themselves that FSBO and other alternative sales methods blossom in an up market and tend to wither in market downturns. The market is slowing now. And they note that owner sales, which have been around as long as property rights, have always accounted for something less than 20 percent of home sales.

Kevin King, executive vice president of the local Realtors' association, runs the multiple listing service but says he pays no attention to FsboMadison. "It's not important; I don't follow it," he said. "I don't even know the people."

But times have changed. Most consumers are now accustomed to executing large transactions, including airline tickets and investments, over the Internet with little or no assistance. Buyers and sellers are now far more comfortable dealing with each other through Web sites like eBay. And it is far easier to find the FSBO offerings on a single Web site with photographs and property descriptions, not unlike the official multiple listing service. Do-it-yourselfers were hard to find among the classified ads and makeshift yard signs.

A robust for-sale-by-owner operation has also helped open the Madison market for other alternatives to real estate agents. Jason A. Greller, a lawyer, charges a flat fee of $600 to help a buyer or seller on a house transaction and handles about 200 a year. Many of his clients find a house on FsboMadison and also see his advertisement on the site.

Stuart and Sheri Meland, both 28, put their graduate studies on hold in 2002 and started a business that offers sellers a spot on the traditional multiple listing service, plus a yard sign, for a flat fee of $399. Most sellers agree to pay a buyer's agent a 3 percent commission, show the home themselves and either negotiate on their own or hire a lawyer.

William A. Black, a lawyer for the Wisconsin Department of Regulation and Licensing, says he does not think consumers who bypass real estate agents are missing much. "The majority of residential transactions are very simple: 99 percent can be done without a broker. And the 1 percent screwed up - the broker couldn't have prevented it."

Alternative listing services would need to reach a combined 50 percent to 60 percent of a market to topple a multiple listing service, Steve Murray, an industry consultant, guessed.

That is what David B. Zwiefelhofer, Webmaster for FsboMadison, would like to see, and he constantly encourages Ms. Miller and Ms. Murphy to expand. "I think this is the one place in the country where FSBO could overtake" the multiple listing service, he said.

His clients, not surprisingly for a social worker and a nurse, are embarrassed by their success, Mr. Zwiefelhofer said. "It bugs me to no end," he said. "The Web site still looks like it was designed by some high school student five years ago."

True, there are no FsboMadison business cards. The filing system is a stack of paper in the bedroom closet. The 2006 business plan, Ms. Miller said, is to "keep going." But FsboMadison does have its first part-time employee, someone to relieve Ms. Miller's husband of sign-installing duty. Ms. Miller hired a man who was her middle school gym teacher.

Very Smart

2006-01-01T23:06:00.000-05:00

Google Video

2006-01-01T20:10:00.000-05:00

Been having some fun with Google Video today.

IFILM is also pretty cool as well.

Squid Soup

2006-01-01T11:25:00.000-05:00

Mr. Godin does it again with three great posts on marketing and product uptake.

Part 1

Part 2

Part 3

For any of you who have started a company, Seth's words will ring clear in your head. Uptake of anything new is nerveracking at best...a lot like running on a treadmill. You feel like you are making progress, but then you look down and you are in the same spot.

Also of note, Seth often refers to Squidoo, a company he recently started which is to be a knowledgebase-like community. If have yet to find value in the site (for me), but you may want to have a look.

Keep in mind...the site is in BETA (aren't they all now??) I intended to include this on my list for 2005...is everyone taking a page out of Softies book and launching things that are not complete? That is what I am going to tell everyone now when I screw up or something is wrong with me. "Sorry, I am in BETA."

Here is Seth's post:

One of the most important ideas in business writing is certainly Geoff Moore’s Crossing the Chasm. In it, he talks about the bell curve that indicates how any population will respond to a new technology.(Espen Andersen points out that the real source is the Diffusion of Innovations, by Rogers. My apologies to Everett).

The little green tail on the left represent the few, the brave, the innovators. These are the geeks and the nerds that love new stuff. The black segment next to it are the early adopters (not adapters, that means something else) that embrace new ideas that help them do the rest of their lives more productively. The next group picks up new ideas a little more slowly (these are the folks who bought an iPod last year) and the next group completes the mass market (these are the ones that will buy an iPod next year). The last group are the laggards and they still have a record player.

One of the giant insights of the new marketing is that the only way to introduce a new idea is to move across the curve. Sell to the little tail, they tell the next group, which passes the word on to the mass market. That’s why the little tiny green tail is so valuable... these are the people who are listening, these are the people who will become your marketing force.

So, where’s the myth?

The myth is that marketers think these people actually care.

People don’t care, certainly not about marketers.

The vast majority of new products never show up anywhere on this curve. A new restaurant opens in Manhattan and the foodies don’t materialize. A new consulting practice, based on a challenging and proven idea, opens up but leading edge companies never become clients. A fresh new face decides to run for city council but the political junkies don’t sign her petition.

The truth is that for most ideas, for most markets, nothing happens at all

The secret to true understanding of marketing has very little to do with permission or positioning or product development. It’s not about loyalty or conversations or blogging, either. Those are all essential ideas and tactics, but what really matters is brown rice and squid soup.

Imagine a hotel buffet. Dozens and dozens of items (this is an Amercian buffet, where excess is the key). You can have whatever you want, as much as you want.

The cost of making a mistake at the buffet is precisely zero. There is no time cost, no opportunity cost, no social cost. Put some on your plate, if you like it, you can have more.

So, it turns out at this buffet, the two best items (where best is obviously a loaded word, and in this case best to me means best tasting and simultaneously healthiest) were the brown rice and the squid soup. The brown rice was soft, just a little bit chewy. It was like very good white rice, but with flavor and texture that went beyond white rice. It was nutty and had both texture and flavor. And the squid soup had depth. The squid (yes, the name attracted me to the soup) was as soft as an egg noodle and the broth had tomatoes but didn’t taste like Campbell’s.

You’ve already guessed the punchline. Of the hundreds of people at the buffet, very few even tried either one.

Why?

Inertia.

There is a cost of trying the rice and the soup. The cost is the effort necessary to consider switching. Beyond that, there’s the (tiny) fear of tasting something you won’t like or the effort involved in realigning your worldview if you do like it.

“But I don’t like squid soup,” they say. Well, how exactly do you know that? What chance is there that they’ve previously tasted squid soup and rejected it? Close to zero. But this audience, this market, has a worldview, and it includes the rule: if it’s a weird food and it’s in a soup, I don’t like it. Getting rid of that rule requires effort.

I read a survey three years ago (beware surveys like this one) that said only a third of all Americans had ever tasted a bagel. Now, the bagels that are available in most places are horrible and not bagel-like at all, but the point is that in most areas, most endeavors, most markets, most people, when given the choice, try nothing.

The problem with the bell curve is that most people, in most situations, will ignore your idea.

Football is huge on television in the US, soccer is not: inertia. The fact that General Motors sells any cars at all is related to inertia. It’s not just the middle-America mass market at work here. This explains why an entire race of people on Easter Island became extinct—once they embraced a cultural system that involved cutting down trees, it was too hard to stop, even after they could see the coming danger.

It’s always easier to do nothing (new).

Humans embrace change far more than any animal on the planet. But we’re bad at it.

Of course, you’re not bad at it. You’re always buying new stuff, reading new blogs, trying new ideas. You’re the cutting edge... (which leads to my next post).

In my last post, I riffed about how little people liked change... and referred to you, my loyal readers, as the self-elected early adopters, the radical new, the folks who embrace big new ideas.

You use Firefox, read a hundred blogs with an open-source RSS reader, have a blog, post your bookmarks with delicious, have a flickr account, you’re a digger and you have built a dozen squidoo lenses. After all, they’re all free, they teach you about valuable new ideas and they’re fun.

Except, if my numbers are accurate, that last paragraph probably isn’t true.

Delicious is a sensation, but far less than 1% of the people online (who are already in the cutting edge of the population when it comes to embracing new tech ideas) have posted their bookmarks. Firefox is demonstrably better than the built-in alternative, and they have market share of less than 20%. Too much inertia. “I’ll just use what’s built in...”

AOL users, were, by definition, the cutting edge for years. They were among the first to go online. But then millions got stuck inside AOL’s walled community, not even realizing that AOL ≠ the internet. Inertia became a critical asset for AOL. That satisfied users by giving them what they liked, not by selling them squid soup.

Web 2.0 is off to a rocket-fast start. Little companies growing superfast. But most of the readers of this blog haven’t built a lens or shared their bookmarks or uploaded their photos yet. How come? It’s fast and free and perhaps fun. The answer is pretty obvious—you’ve got other things to do. The cost of deciding to try is too high, because you can always decide later.

All the innovations that pundits like to talk about—from Jetblue to the Prius to Apple—have tiny market share compared to the attention they get or the benefits that people rave about. Because even the cutting edge isn’t in that much of a hurry.

Watch out for the 5% rule
Most new marketing ideas that are any good feel like they might be able to convert 5% of those in the market for what’s being sold.

And of course, only 5% of the population is in the market for what’s being sold.

And only 5% of those in the market are choosing to pay attention.

So it’s really 5% of 5% of 5%. Take 10,000 people. That’s 500, which gets you 25 which gets you one.

1 new customer.

5% isn’t enough. Not if you’re in a hurry!

The punchline
Marketing used to be expensive. Buy a few million dollars worth of ads and you could have a shot at success.

Marketing is now (potentially) much, much cheaper. But that doesn’t mean it’s easy. The challenge now isn’t to raise a whole bunch of money. The challenge is to invent a product or service or idea or meme that’s so compelling that the tiny green portion of the curve, the geeks in whatever market you live in, can’t ignore what you have to offer. That, and once they adopt what you’ve got, they can’t help but spread it.

That’s not easy. No one ever said it was. But that’s the challenge anyone with a business to grow or an idea to spread has to overcome.

How Clean is Your Firetruck

2005-12-30T09:35:00.000-05:00

Interesting post by Seth Godin. While some may get rubbed by the analogy...it does provide a vivid story. And that is what sets people apart.

Clean firetrucks

We live in a neighborhood where all the firehouses are run by volunteers. I don’t know how we’d get by without them... they do brave work, with little credit.

One thing you’ll notice is how clean the trucks are. “Why are the trucks so clean,” a friend asked? After all, a clean firetruck isn’t a lot better at putting out fires than a smudged one.

The answer: Because when there isn’t a fire, the firemen wait for the siren to ring. And while they’re waiting, they clean the truck.

Sounds a lot like where you work. Most organizations are staffed with people waiting for the alarm to ring. Instead of going out to the community and working to prevent new fires, the mindset is that firemen are working to put out the fires that have started. Hotel desk clerks don’t write letters or make calls to generate new business—they stand at the desk waiting for business to arrive. Software engineers are often overwhelmed with an endless list of programming fires—and rarely get a chance to think about what they ought to build next.

The structure of most organizations (and every single school I've ever encountered!) supports this. It’s about cleaning your plate, finishing your assignments and following instructions. Initiative is hard to measure and direct and reward. Task completion, on the hand, is a factory orientation that is predictable and feels safe.

In fast-changing markets, clean firetrucks show attention to detail but rarely lead to growth and success.

What a great way to describe a stuck but busy organization. "They sure have clean firetrucks."

trackback

Hopefully I dont get in trouble like he did

2005 Year in Review

2005-12-28T17:55:00.000-05:00

2005 was a great year with a lot of highlights, not least of which was the start of this blog. When I started the blog, for the reason of logging things that I had learned, I had no idea how much people would enjoy reading it and in some cases make it a part of their daily routine. It is quite touching when you get an email from a reader “just to say thanks.” I hope that I can continue to deliver in 2006 and make What I Learned Today a daily ritual for more people. But to all of the readers out there, THANK YOU.

I kicked off 2005 with what has been my greatest trip to date: India. If you have yet make the trip, please make it a point to get there. I traveled all over the Western Coast from Mumbai down to the southern tip of Kerala. India radiates a youthful innocence that I hope is not lost in its newfound power. The most important part of the India trip for me, aside from the three weeks of relaxation, was the confirmation of my thesis that people who are doing exactly what they want to do lead much better lives. During the trip I road on a train with two girls from London who travel for three months every winter and a girl from New York who simply quit her job, packed up and set off on a six month journey throughout Asia. Now that’s living!

Aside from India, I had some great business trips that allowed me to take part in the vivacious growth of the mobile industry. To get a feel for the amazing strides in the past three year simply find one of your old mobile phones and compare it to one of today’s models. I just did…and the comparison is amazing. Comparing my Motorola V600 to my Samsung SCH300 (I think) is like comparing a Ford Pinto to a Lamborghini Murcielago. The Samsung has a tough to read black and white screen, sounds terrible, a stand alone phone book, two games (one of which does not work properly, so much for testing) and a small screen. The Motorola has a bright color screen, 4x couple megapixel camera, a video camera, Bluetooth, a sync-able address book and some great games. Seeing these great differences and how quickly the mobile phone has evolved from a telephony device to a mobile computing device is amazing. And nothing quite epitomizes this as much as JAMDAT and my CEO of the year, Mitch Lasky.

JAMDAT, probably the world’s leader in mobile gaming, has had quite a life, capped off by sealing an acquisition deal with Electronic Arts. Leading this charge has been Mitch Lasky, the soft spoken CEO of JAMDAT. I have met Mitch on a couple of occasions and every time I am impressed with his vision and knowledge. While I have disagreed with him at times (the Blue Lava acquisition), I always respected his thoughts and his ability to execute. Much like great athletes, Mitch has the ability to slow things down allowing him to manipulate the competition. He capped off a wonderful few years by selling out to EA, which would have been extremely difficult of anyone to pass up given EA’s worldwide presence. Nonetheless, Mitch did a great job and deserves to be in the top post somewhere else.

Speaking of mobile, I believe 2006 will be the year of mobile marketing…meaning using the mobile devices, such as mobile phones, as a marketing channel. We have already seen a bit of it with programs like American Idol, but it should hit the mainstream in 2006. Should you be interested in mobile marketing VIRTU MOBILE can help you.

With marketing in mind, I am switching gears to my company of 2005. While most would immediately think Google (obvious choice, right?) or perhaps Apple, I am going to shun the popular for the hated…Exxon Mobil. Come on, how great is it? How many companies are told (and subsequently hated) they are making too much money? Nonetheless, life is good for Lee Raymond and the good ‘ol boys at XOM.

A few honorable mentions:

- Skype – How can we forget the company that stole eBay’s money?
- Continental Airlines – Only “major” not suffocating on their own stupidity
- Yahoo – Simply because I used the site so damn much this year

Looking towards 2006 keep your eye on three companies:

- Agilent Technologies
- Under Armor
- Tekelec

I really wanted to put a financial company on one of the two lists above, but this year I have dealt with a variety of banks and other financial institutions simply to find them a service industry disaster. They seemingly always forget two of the most important items of the service industry: attention to detail and customer service (they somewhat go hand-in-hand). Nonetheless, for the majority of 2005 I hated all of the processes that I had to complete to deal with a bank and how I had to continually fill out the same stupid forms…wasting my time. Recently however, I have found a fantastic institution that lacks the normal bank bureaucracy and simply gets things done. If you are local (Philly), check out Malvern Federal, they are super.

In closing, I was recently thinking about cities that had a great 2005. Covering the globe in my mind, it was tough to come up with a city that had a better year than Philadelphia. Yes, Philadelphia. The city whose government I hammer all too often had a fantastic year. Start off with a Center City that is booming, add in a Super Bowl trip by the Eagles, a flawless Live 8, topped off with Ben Franklin’s 300th birthday (ok it is actually in 2006, but we celebrating now), and finally a bunch of great exhibits, the addition of Chris Webber and the departure of T.O. What a year. Kudos to Philly.

Wrapping up 2005, I have a few other things that I wanted to discuss, but I think two pages will suffice…so now I will go to list form.

Worst phrase of 2005 – “Keeping my powder dry”

Biggest Trend of 2005 – Blogging/Podcasting

Best Musician – The Killers

Most Annoying Musician – Mariah Carey

Best Picture – Wall Street (it came out this year right?)

Best Blog – Seth Godin

Best Podcast – Ricky Gervais (episode 4 was not that great, but the first three were hilarious).

Best Concert – Live 8…anytime you are playing in multiple countries at the same time the game is over

Worst trade - Martha Stewart - sells Imclone to save 60k while her company MSO, loses millions in market cap during the scandal (I note it in 05 because she is out of the clink).

Worst management - Calpine (I guess you can be overlevered)

Best move by an Athletic Department - My Aztecs firing football coach Tom Craft. The guy was a cancer. Chuck Long should be great.

Worst change - My boys at CNBC again...what are you doing changing Squawk Box???

Best Quote - Leaders are visionaries with a poorly developed sense of fear and no concept of the odds against them. They make impossible things happen.

Oh yeah, one last thing. You probably noticed, I gave the blog a facelift for the new year. New colors for a new year. I hope you and you family have a happy and healthy 2006!

Here's to warmer weather on the East Coast.

Tom Peters' Six Musts

2005-12-28T08:04:00.000-05:00

Tom Peters is considered a management God by many. I simply enjoy his blog. It always has great business content.

Below are six things that Tom advises every CEO to do. I would add a seventh...stop providing Wall Street quarterly guidance.

Chip Bell to Tom Peters (12.20.2005): "If you were asked to be the keynote speaking coach to a new company CEO eager to do a great job, what is the one thing you would advise the CEO
to do (or not do)?"

TP: (A) Read 2 books. (1) Bossidy (& Charan) on execution ... Execution: The Discipline of Getting Things Done. Main takeaway: Bedrock #1 for corporate success is a "culture of execution." (FYI, Bob Nardelli did this brilliantly at Home Depot, despite pressure to do sexier stuff first.) (2) Read Lou Gerstner's book ... Who Says Elephants Can't Dance: Inside IBM's Historic Turnaround. Main takeaways: Listen first, then do vision no matter how high the pressure for a "scintillating vision." Also, you must tackle head-on the extant culture head; Gerstner reluctantly did this and did it well, but Carly Fiorina didn't at HP (she led with "vision").

(B) And: LISTEN! LISTEN! LISTEN! (The answers are already out there, typically among the most exercised and disenchanted.)

(C) And: COMMUNICATE! COMMUNICATE! COMMUNICATE! (Esp: Keep the board informed of everything, especially hiccups!)

(D) And: Work proactively in every "little" which way, each and every day to "live" and "ooze" INTEGRITY! (Integrity begets trust which begets a good place to work which begets performance.)

(E) And: Remove or marginalize ASAP the career "career corporate politicians."

(F) And: "Do a GE": Elevate HR to the head table on the Right Hand of God, with great HR talent and an HR seat with equal power to that of the CFO. (Again, Nardelli did this spectacularly at Home Depot!)

Wouldn't it be great if...

2005-12-27T23:09:00.000-05:00

....you could download NBA, NFL or NHL games to your mobile media player.

BTW: This is post #200

Wharton Private Equity Conference

2005-12-27T23:05:00.000-05:00

Wharton Private Equity Conference

If you are in Philadelphia on Jan 20, you should stop by the Bellevue for the Conference

She's Faster than a Greased Pig

2005-12-24T11:39:00.000-05:00

In the UK, T-Mobile has pulled off a brilliant campaign with the The Beautiful Game.

Have a chance of putting yourself in the shoes, er, make that socks, er.....make that panties (i guess) of a streaker.

There is one train running in NYC

2005-12-22T09:20:00.000-05:00

An Open Call for Rational Exuberance

2005-12-21T16:06:00.000-05:00

Are you a young (22-25) entrepreneur that is looking for an opportunity to learn, lead and love what you are doing?

If so, I may have an opportunity for you!!

I am looking for a manager and leader to take over a soon-to-be-acquired Subway sandwich shop. Assuming that all goes well, I plan to acquire additional stores, in which this person would oversee.

So the first goal is to take a store that is inefficient and mis-managed, and turn it into a great Subway. The second goal is then to create a systematic management system for Subway stores that can be replicated, creating a nice chain of Subways that outperform the quick service restaurant industry.

If you those goals seem interesting to you, read on.

First off - PAY. It will be competitive and it will be incentive based. The better the store performs, the better off everyone will be financially.

Now that we got that out of the way, here is what I am looking for.

A people person.
A doer
A little financial experience
Service industry experience
Creativity
Open mind
A willingness to learn
A leader

Additionally, you must speak perfect English and be delighted to make sandwiches. Ideally, you love food, find it easy to make friends and enjoy a challenge. Did I mention that I make a great cup of coffee and the store is located right next to a movie theatre?

Also, it is cool if you are right out of college or have not had a management job. Exuberance is more important than experience.

We are building a place to grow and we would love for you to be a part of it!

Send your resume, contact information or a quick note to tlebold@msn.com

No Title Required

2005-12-21T10:34:00.000-05:00

Great picture.

Buy the t-shirt HERE.

Omid Kordestani is a player...according to the Wall Street Journal

2005-12-20T09:25:00.000-05:00

Pretty good article in the Wall Street Journal about how the AOL/Google deal happened and the gentleman, Omid Kordestani, who consummated the marriage.

Here is a brief excerpt:

Mr. Kordestani says in business he is driven to "establish relationships, build trust, and deliver on your promises." He says a second prong of his business philosophy is to deliver value to partners, such as sales to Google's advertisers.

Watching the whole AOL saga unfold makes me laugh a bit given the valuation history of this company. I guess everything, including AOL, is cyclical....

Here is the link - Unsung Player
Key to Matching
Google, AOL

GooglePark

2005-12-19T10:47:00.000-05:00

I dont believe that I have passed this one on yet....pretty funny.

GooglePark - The Battle for AOL.

Night Club at Noon

2005-12-18T09:43:00.000-05:00

Yesterday I participated in a wonderful event called Night Club at Noon, hosted by the wonderful folks at Zanzibar Blue.

The purpose of the event is to help educate youth that receive little or no musical education in school. I attended with my little brother from Big Brothers Big Sisters, who fortunately has had the opportunity to take trumpet lessons at school.

Aside from the great jazz, the kids were given a wonderful lunch and a few gifts (musical, of course) for the holiday. Kudos to Earle, Leon and everyone else for putting on such a great event.

Please check out some of the following sites...

Jazz Journeys

Zanibar Blue - Music Calendar

The History of Jazz - Jazz Roots

Why wouldn't they use eBay?

2005-12-16T08:37:00.000-05:00

I have been following United Rentals for a few months now and became rather intrigued with the co's use of eBay to sell equipment.

URI's certified auction site can be found here.

Pretty simply concept that a lot of the retailers (Gap, etc) grasped quickly...if you want to sell something (excess inventory or in this case used equipment) quicky and get a pretty fair price, use eBay.

Now, I realize that this would piss off the dealers, but why would the auto folks not try a similar program with excess inventory or other used vehicles. Instead of dumping it on dealers or into rental fleets, sell those puppies on eBay.

CNBC is killing me

2005-12-16T07:54:00.000-05:00

They finally make the leap to podcasting, but with Kudlow & Company. Are you kidding me? If I listened to that while riding my bike I would probably fall asleep and flip over the cliff. I love Kudlow, super smart dude, but not exactly the epitome of excitement.

Please, PLEASE give us Squawk Box as a podcast.

Also of note, the Squawk Blog is a great idea, but they sucking wind with execution. We need more than two posts per month...let's hope Mark, Kernan and Faber get typing.

Finally....the Ricky Gervais podcast is #1 on iTunes...

Today is a Gift

2005-12-15T20:48:00.000-05:00

I was sitting in a Starbucks today before a meeting, and happened to meet a great guy by the name of Harold Lease ("Hal"). After a few great jokes, Hal looked me in the eye and said "I want to tell you something that has changed people's lives." Leaning in, he said the following:

"Yesterday is history, tomorrow is a mystery, but today is a gift."

After a pause (probably for effect), he said "remember, today is a gift, today is a gift."

Thanks Hal...mangia at Ralphs!

Cool Company of the Month - BoConcept

2005-12-15T20:31:00.000-05:00

If you like furniture, check out BoConcept. Great quality, sweet design at moderate prices.

For those of you in Philly, the good news is that a store is opening on Chestnut in Feb. Happy shopping!

BoConcept® Philadelphia
1719 Chestnut Street
Philadelphia, PA 19103
(Opening February 2006)

Ricky Gervais is at it again

2005-12-14T10:21:00.000-05:00

For those of you who don't know Ricky Gervais, you should. He is the brains behind the hit BBC series The Office, which subsequently birthed the US hit series, The Office.

Ricky is know for delivering brilliant humor with dry wit and perfect timing. If you have not seen the original series you can rent the various seasons. I believe the first season of The Office was the best, but season two is certainly side-splitting as well.

But nonetheless, Ricky is at it again with a great Podcast called The Ricky Gervais show. Check out the website here.

If you want to subscribe via iTunes, simply paste the URL below into the Podcast subscription field.

http://www.guardian.co.uk/podcasts/rickygervais/mp4.xml

Podcasting is starting to take hold...finally. Bye Bye radio.

Metcalfe's Law

2005-12-12T12:22:00.000-05:00

I just learned about Metcalfe's Law today. Pretty interesting.

Here is a good post about it.

Here it is in wikipedia.

It really feels like the 90s again...

2005-12-12T11:46:00.000-05:00

.....but the co's are not going public, they are just being bought for huge sums.

Yahoo Buys Del.icio.us

Is Paying Taxes on Capital Gains Really a Problem?

2005-12-07T10:10:00.000-05:00

I was having a conversation today with a friend today about real estate. He was concerned with paying taxes on a $30,000 real estate gain and wanted to know of any ways to defer or minimize the tax burden. Essentially he was pissed that the government was going to take a nice chunk of his gain. After discussing a couple of options, we both laughed after I brought up the “high class problem” concept to him. Simply put, paying taxes on a $30,000 gain, which equates to over 100% annualized return for him, is a “high class problem.”

While I am far from certain whom I originally heard the phrase from and have no idea who coined it, I am a relatively frequent user of the phrase. I simply love it as it so eloquently and simply embodies such a problem as having to pay taxes on a 100% gain.

With my friend’s “problem” in mind, I thought I would create a list of other such “high class problems.” Please feel free to add to the list. I could only wish I had a monopoly on “high class problems.”

• Paying taxes on investment gains
• Having to pay $2.80 to put premium gas in your Ferrari
• Not getting a hot towel in first class
• Indecisiveness when selecting a charity to donate money to
• Getting tired from lugging your 17 inch Powerbook around Heathrow
• Not getting selected for a massage on a Virgin Atlantic flight while in Upper Class
• Having the elevator break…in your house
• Getting fired with a $100mm golden parachute
• Buying Google at $200
• Getting paid $9mm by the Sixers to stay at home. Yes, I am talking about Glenn Robinson
• Paying $100 for dinner at the Marine Room in San Diego
• Paying millions in fees to Goldman Sachs to take your company public
• Missing the final 10+% by selling tech in Dec 1999
• Having to pay $100k for a Harvard MBA
• Having to fly commercial because your jet is getting serviced

Inspiration at a Tire Shop?

2005-12-06T17:39:00.000-05:00

I was at Ardmore Tire today in Conshohocken, PA to get my tire repaired. A lonely screw made its way into the poor, balding rear tire, forcing me to get it patched.

Waiting in the lobby of the shop I noticed a sign that talked about attitude, to which I thought deserved some additional publicity.

Also of note, the words were found by the owner of Ardmore Tire, at a Seafood Restaurant in Charleston, SC. I would imagine the restaurant, like the tire shop, provides exceptional service.

Attitude

"The longer I live, the more I realize the impact of attitude on life. Attitude, to me is more important that education, than money, than circumstances, than failures, than successes, than what other people think or say or do. It is more important than apperance, giftedness or skill. It will make or break a company...a church...a home. The remarkable thing is we have a choice every day regarding the attitude we will embrace for that day. We cannot change our past...we cannot change the fact that people will act a certain way. The only thing we can do is play on the one string we have, and that is our attitude...I am convinced that like is 10% what happens to me and 90% how I react to it. And so it is with you...we are in charge of our Attitudes!"

What kind of attitude do you display to your colleagues, clients or employees? Do they exhibit the same attitude?

Simply Pricing

2005-12-06T15:16:00.000-05:00

How do you price your products?

Bucks County Coffee simply looks for a round number "close" to Starbucks price...leading to $1.80 for a large coffee and $3.40 for a large Chai Tea Latte.

Pretty simple approach. No brain damage required.

Avoiding Perpetual Failure

2005-12-06T10:23:00.000-05:00

I was in a meeting today that made me think about one of the greatest lines from the movie Wall Street.

“If this guy owned a funeral parlor, no body would die.”

Watch out for people that have perpetual bad luck.

Check out other great quotes from Wall Street here

Commodities

2005-12-04T12:13:00.000-05:00

When running a business, loyalty may be the most important commodity you have.

Are you a success?

2005-12-02T08:40:00.000-05:00

When someone mentions that another person is a “success,” what do you automatically think of? I recently realized that all to often one’s definition of “success” equated to money. So and so has a great job and makes a lot of money, she is really successful. The thought that money equates to success is a rather shallow one and quite disturbing.

Sure, making money is a great thing. It allows one access to a variety of things such as cars, schools and vacations. It provides great material items that allow one to live a bit easier in terms of energy exertion, but does one’s bank account really equal success?

While Donny Deutsche would say “yes” (he called himself a success last night because “he has built some wealth” for himself) I would simply argue “no.” Happiness equals success. People have different wants, different goals and dramatically different lifestyles. One of the most successful people that I know is not a self-made millionaire, who recently sold his web 2.0 company, netting a cool $100mm, but a postal worker of 25 years who coaches and refs basketball to make a little extra money (but, he loves it) and plays video games, much to his wife’s chagrin, in his free time. In my mind, he is the epitome of success. He always wears a smile, enjoys simple pleasures, such as nature, just as much as the exotic. Needless to say, he is happy. He, in my mind, is a tremendous success.

Unfortunately, he would typically not be labeled a resounding success, while I would gather that he falls in the minority (I am gathering that I majority of Americans are not happy with their job or home life). He makes significantly under six figures, but values every dollar that he makes and spends, while enjoying everything that he does. The guy always has a smile on his face…a face you will never see on the cover of Forbes or Fortune.

Success is smiling, laughing and having fun...enjoying life. Money is just the cherry on top of sundae.

IPO Securities Litigation

2005-11-30T21:32:00.000-05:00

With fond memories of the late 90s still dancing through my head following the Under Armor IPO dancing through my head, I have been receiving quite a bit of paperwork concerning an IPO Securities Litigation class action suit.

Essentially, individuals who bought or recieved shares in companies such as Drugstore.com or Agilent Technologies may get some money back because there was "apparently some shady business going down."

Tom Evslin, a former executive who is named in the suit, has a good post on the topic.

Here is the link.

Here is an excerpt:

If you are thinking of bringing your company public, you do want to remember about the long tail and high cost of litigation. Also, if I were writing a new prospectus, I’d be asking my lawyers about a clause in the risk factors that says:

“Underwriters may be making side deals which the Company and its officers do not know about. They may be receiving undisclosed compensation. Were these events to occur, it would be to the detriment of the Company and its stockholders.”

I don’t think anyone pays much attention to the risk factors in a prospectus but they’re supposed to be as effective proof against lawsuits as garlic is against witches.

My two cents: While I was fortunate enough to not lose any money on these deals, I know plenty of people did, and they deserve every penny they get. The unfortunate thing is that the lawyers will end end making more than the investors and the IBs will keep humming......

Thoughts from Starbucks...WiFi is Dead...unless it is free

2005-11-30T15:25:00.000-05:00

With companies like Cingular offering great EDGE networks, why would anyone pay for WiFi...as I currently do. Instead of having to hunt for a Starbucks or some other "Hot Spot," I can get on the net any place, any time via the Cingular network. Sure, the fees are a bit higher, but the portability is unmatched and you, or in this case me, are not tethered to a Starbucks or a Panera Bread.

So, if WiFi wants to succeed, it must be free...as Google is doing in NorCal, otherwise the value proposition of paying at a Starbucks diminishes significantly as the price of EDGE/EVDO networks comes down.

Google-Mart...coming to a town near you?

2005-11-28T09:58:00.000-05:00

Robert Cringely has a interesting post on the future of Google, which he believes closely resembles Wal-Mart.

Here is an excerpt:

Google has the reach and the resources to make this work. There are only so many fiber networks and they'll be BUYING service from those outfits -- many of which are in or near bankruptcy. Say the containers cost $500,000 each in volume and $500,000 per year to run. That's $300 million to essentially co-opt the Internet. And you know whose strategy this is? Wal-Mart's. And unless Google comes up with an ecosystem to allow their survival, that means all the other web services companies will be marginalized. There will be startups and little guys, but no medium-sized companies. ISPs, which we've thought of as a threatened species, won't be touched, but then their profit margins are so low they aren't worth touching. After all, Wal-Mart doesn't try to own the roads its goods are carried over. And the final result is that Web 2.0 IS Google.

I am not the biggest fan of Google (or Wal-Mart for that matter), and therefore dont get terribly enthused by Cringely's piece, but it is interesting.

Are you going to push these buttons?

2005-11-25T09:26:00.000-05:00

A free PC in which the company hopes to make money off of "hot keys." Good Luck!

The other good point...if someone is taking a free PC, can he really afford to buy something off of a sponsor site?

Check out the free PC here.

Nader on Leadership

2005-11-24T09:50:00.000-05:00

With the "bonus" and "review" season approaching, keep in mind the best thing that I have ever heard come out of Ralph Nader's mouth.

"I start with the premise that the function of leadership is to produce more leaders, not more followers."

Gobble Gobble

2005-11-24T09:43:00.000-05:00

HAPPY THANKSGIVING!!

Are you too young?

2005-11-23T09:16:00.000-05:00

All too often, friends of mine, and I would imagine a great deal of other "young people," get "shot down" due to their age. Whether it be for a promotion at their employer, a prospective job or during the capital raising process for a start-up, age seems to play a rather discriminatory role in the decision making process.

"We can't make you a partner, you are only 26." "What experience do you have that would make you think you can run a business, you just graduated from college." "We can only pay you $50,000 because of your lack of experience."

Meanwhile, it is these same people that rely on these "young people" to do incredible things, work their butts off and get more done in a day than the average employee gets done in one week! Why does corporate America tend not to embrace this youthful exhuberance, and in a lot of cases, amazing CPU power (my generation is f*%^#ng smart)?

I am not certain if it is insecurity, jealously or plain stupidity, but the downside to rewarding a twenty-something is marginal, while the upside is unlimited. Some recent examples come to mind:

- Theo Epstein - The Boston Red Sox took a chance and won. If he sucked, oh well, we took a shot. Theo brought a different mind-set that produced a championship.

- The Google folks are obvious

- CEO of facebook - Business card reads: I'm CEO....bitch

Yes, for every success story, I would imagine there are multiple failures. And many point to the late 90s as the era of taking chances on youth, which according to some imploded (provided capital to an idea in a powerpoint or on a napkin never really seemed like a good idea, did it?). But, to use age as a crutch or an excuse is ridiculous and limits the power of capitalism.

At least the Economist gets it. Everyone else should listen....my generation is changing the face of this world.

"Why focus on these late teens and twenty-somethings? Because they are the first young who are both in a position to change the world, and are actually doing so. For the first time in history, children are more comfortable, knowledgeable adn literate than their parents about innovation central to society. The internet has triggered the first industrial revolution to be led by the young."

Some things never cease to amaze me

2005-11-22T18:50:00.000-05:00

Check out this link, and be amazed.

It is a very cool illusion. Kudos to M Back and JL Hinton

Idiocracy

2005-11-22T18:11:00.000-05:00

I had an epiphany over the weekend while working at the restaurant...I thought to myself "I am under the rule of an 'idiocracy.'"

While I was not sure if the word/term existed, I thought that it accurately depicted the situation. The manager, who has been selected by the owner to manage the place, is a complete idiot with very little power...the owner continually undermines his decisions. So to make up for the complete lack of power, the idiot tries to exert more power and influence on his staff...making his decisions even worse.

Today, I was again reminded of the situation and did a search on idiocracy, which did not yield much outside of a movie that is listed for 2006 (huh? After reading the storyline they should put the kibash on production).

So, now when under the management of an Idiot, please feel free to call the situation an idiocracy.

Here is the link to the movie.

Finally....Someone has realized the power of the PSP

2005-11-22T16:04:00.000-05:00

TIVO....smarter than I thought.

TiVo To Bring TV Programming To Apple Video iPodTM and PSPTM (Playstation® Portable)

Add it to your gift list

2005-11-22T15:37:00.000-05:00

Someone asked me about books as Holiday gifts today. In terms of business, one of the best is Good to Great by Jim Collins.

Would you buy big mo?

2005-11-21T15:34:00.000-05:00

Ben Bernanke would. And according to Jeremy Siegel, it has paid handsomely.

Bernanke owns Big Mo

Body Worlds

2005-11-20T11:27:00.000-05:00

Last night I saw an amzing exhibit at the Franklin Institute in Philadelphia, Body Worlds.

The exhibit is truly a convergence of art and science (Plastination).

Click here to learn more about plastination.

It feels like the late 90s again

2005-11-18T16:31:00.000-05:00

Did you see the Under Armor IPO today???

Moonshot!

90%+ gain from offer.....is the company really called UnderArmor.com?

Where is Your Aluminum Helmet?

2005-11-17T12:21:00.000-05:00

My words would not do it justice.

The Study

Walmart - The High Cost of Low Price

2005-11-17T09:06:00.001-05:00

I was on my way Monday night to see a new movie about Walmart, Walmart - The High Cost of Low Price, when I got a call for a last minute meeting and had to turn around. I was really looking forward to the movie and the meeting that followed at the Chestnut Hill Library.

While I did not get to see the movie, I found Mark Pincus' "review" interesting and informative. The text can be found below.

The link for the movie can be found HERE

See the Walmart movie - "more work from less ants"

i saw "walmart the high cost of low price" tonight and was shocked by how evil this company really is. we've all had some sense that walmart has been a bad corporate citizen by paying its employees so little they have to get welfare and medicaid. somehow i wrote this off that walmart was just the scapegoat for anger against all minimum wage employers who cant afford decent benefits.

go see this movie. it should be called "when capitalism goes bad". i am a staunch free market believer, but the deplorable actions of this company make me question my own philosophies. the movie takes us through countless inteviews with disguntled former employees outlining a clear picture of a corrupt company focused on nothing but the bottom line and wealth creation for the walton family and top management.

you can always write off angry employees, but not judges who have awarded millions in damages against walmart for breaking environmental laws, failing to provide adequate security in its parking lots even after its own reports found this would totally stop the murder and rape that seem to have become commonplace. apparently, there have been dozens nationwide in the first half of 2005 alone.

the film takes us to china where employees complain of harsh treatment, 14 hour work days, being told to lie to inspectors about their 7 day work weeks, being forced to live in squalor/dorms that they are charged for even if they choose not to.

more reasons to hate walmart...

walmart systematically fights unions by filming, firing and intimidating employees.
walmart regularly receives subsidies from towns that independent businesses are never offered only to move out of the town limits once they are supposed to start paying back.
the walton family collectively worth $100 billion, has given less than 1% of their money to charity while bill gates has dontated 58%.
walmart employees gave $5 million for hurricane and other relief for fellow employees while the waltons donated $6,000
walmart costs US taxpayers an estimated $3 billion annually in additional welfare, medicaid and public assistance to its employees.
walmart is currently the defendant in the nation's largest class action suit by 1.8 million women claiming they were denied equal pay.
walmart has been voted out or denied zoning in 100's of small towns who fear its horrible effects on their communities and has attempted to go around city councils by buying referendums (and mostly failed!).
the ceo earned $27 million last year while the average employee made $12,000
the company claims in commercials that it 'attempts to' buy american products while importing $18 billion annually from china.
it has been accused of fostering the worst working conditions in bangladesh
my questions for anyone who supports this evil corporation through shopping or stock ownership are

are you aware how fucking evil this company is?

if you are, how can you support it?

hello! wake up! you get what you pay for!

how do you think they managed to sell you a sweatshirt for $5.00?

there is a great reference to the revolution of the ants in the film too. a worker talks about how walmart makes its money on the backs of the ants. see, one of its corporate policies is that store managers have to reduce costs every month. only one way to that, get more work from less ants!

WOW! - Good for Mobile

2005-11-15T10:31:00.000-05:00

According to the NPD Group, the average mobile gaming session is 11 minutes.

Lessons from a Landlord

2005-11-15T09:55:00.000-05:00

For the first time in my rather short real estate career I outsourced some property management.

Just a couple of months ago, September, I decided that managing a 6 unit apartment complex was a bit more than I wanted to handle from a property management perspective. With this in mind, I called a few friends that are in the real estate business and asked for references. After a few phone calls and a couple of “interviews” I decided on a firm that had a long local history and very good references. However, during the entire process my gut told me that they were not right for the job, with the genesis of this doubt stemming from the firms principle.

The man seemed to lack the tact, trust and communication skills it takes to deal with tenants and contractors. While he at times spoke eloquently to me, other times it seemed like a formal education had eluded him. Of course there are a variety of people who are successful, eloquent, etc without a formal education, however it is an uphill battle, especially in the world of property management.

Putting these concerns (again my gut feel) aside, I signed a deal with the firm to have them manage this 6-unit complex. From the jump, I asked to be copied on all of the communication that went to the tenants to see if his gruff personality was portrayed in the letters. Sure enough, the first letter, which simple introduced his firm to the tenants, was filled with quotation marks, indicating clichés, and exclamation points. This set off my internal alarm, which caused me to get even more involved….the last thing you want when you outsource, right?

After a few more instances and conversations with some of the tenants, I discussed some of the issues with the manager, who of course had some rather ridiculous response for everything under the sun. My biggest problem aside from having to even think about the problem, was the fact that he did not treat the tenants like human beings. This philosophical difference was the last straw.

After one month the management company is being removed. Lesson learned. Always make sure that you have a management team whose interests and philosophies are aligned with that of the owner. Secondly, always trust your gut.

Management is about Human Beings

2005-11-15T09:39:00.000-05:00

Per Peter Drucker:

Management is about human beings. Its task is to make people capable of joint performance, to make their strengths effective and their weaknesses irrelevant.

Warren Buffet: Tips for Individual Investors

2005-11-14T09:24:00.000-05:00

This past weekend the Wall Street Journal had a good article on Warren Buffett entitled Warren Buffett, Unplugged. The article mostly focused on Mr. Buffett’s investment style, management style and the daunting task of replacing him at Berkshire Hathaway.

Also included in the article was a section providing “Buffett’s Tips for Individual Investors,” which can be found below.

1. “Look at stocks as parts of businesses. Ask yourself, ‘How would I feel if the stock exchange was closing tomorrow for the next three years?’ If I am happy owning the stock under that circumstance, I am happy with the business. That frame of mind is important.”

2. “The market is there to serve you and not instruct you. It is not telling you whether you are right or wrong. The business results will determine that.”

3. “You cant precisely know what the stock is worth, so leave yourself a margin of safety. Only go into things where you could be wrong to some extent and come out ok.”

4. “Borrowed money is the most common way that smart guys go broke.”

5. “The stock doesn’t know you own it. You have feelings about it, but it has no feelings about you. The stock doesn’t know what you paid. People should not get emotionally involved with their stocks.”

I also thought there were a couple of quotes in the article worth passing along.

• “We delegate to the point of abdiction.”
• “If we bought a couple of million, that would be fine.”
• “If you don’t make mistakes, you can’t make decisions. You can’t dwell on them.”

Traits of a Great Investor

2005-11-11T10:15:00.000-05:00

Tenacious (but not stubborn)
Creative (but not overly so)
Logical Thinker
Thorough (but not too thorough)
Values and invests In relationships
Adjusts to and bounces back from mistakes
Decisive (but not impetuous)

Compliments of A VC, who heard this while attending a Hedge Fund lecture

PROTRADE

2005-11-10T11:27:00.000-05:00

While it is not making "Cool Company of the Month" status, PROTRADE is a great concept and just got some additional funding.

Think stock market for athletes.

By the way, I am short Donovan McNabb.

Leadership

2005-11-09T10:39:00.000-05:00

Leadership is figuring out where everyone is going and then getting in front of them and saying "follow me".

Great quote/cliche picked up from A VC

A Tale of Two Athletes – There are some good people in pro sports

2005-11-09T10:11:00.000-05:00

For those not in Philadelphia or without a TV, radio, computer, newspaper, etc. there has been a large ego-trip taking place in the City of Brotherly Love. Since the start of the NFL season, the Philadelphia Eagles best wide receiver, Terrell Owens (arguably one of the best receivers of all time) has been up to his old “me first” tricks.

While attempting to renegotiate a contract he signed just last year, Owens has held-out of training camp, consistently criticized the Eagles quarterback Donovan McNabb, called the organization “classless” and maintained antics worthy of an Oscar. Most memorable being the day he got kicked out of practice, went home, called the media and held his own workout in his front lawn with nothing but spandex pants on. Two days ago the Eagles suspending Owens indefinitely for conduct detrimental to the team (aka: for being a freaking idiot).

Owens epitomizes everything that is wrong with professional sports. Athletes like Owens beg, borrow and “steal,” along with a smiling agent and willful owners, while the everyday human pinches pennies to attend a game of the team she grew up idolizing. While I don’t have the statistics in front of me, I would imagine that ticket price growth has far outpaced wage growth.

While I have always loved sports, athletes such as Owens have disenfranchised me quite a bit. It is difficult for me to watch a game filled with athletes whom barely try, whine about everything under the sun and get paid multiples more than the average teacher or doctor.

Last night, a breath of fresh air was thrust into my thinking on athletes. Samuel Dalembert, the young center for the Philadelphia 76ers, is the player who injected the air of humanity.

In the Manayunk section of Philadelphia, I happened to run into Dalembert who was seeking some food. I typically never approach any professional athlete, as was the case here. However, in what was maybe a case of mistaken identity, Dalembert approached me. Nonetheless, we struck up a conversation and the center could not have been more down to earth, friendly or genuine. He is what is great about sports. As a young Haitian playing soccer, Dalembert was “discovered” (tough to miss, the guy has to be over 7 feet tall....media guide lists him at 6'11") and brought the US. A couple of years later he is playing the greatest basketball league on the planet.

The world needs more Dalemberts and less Owens. In a world filled greed (greed maybe good though…thank you Gordon Gekko), corruption and a generally inflated view of self-importance it is refreshing to see people who have acknowledged their relative “success” and use it as a platform to help others as opposed to simply furthering their cause.

Stop ID Theft

2005-11-08T09:45:00.000-05:00

Bob Wright, Vice Chairman of GE, wrote a nice op/ed piece in the Wall Street Journal Today. One statistic he mentioned is unbelievable:

"Piracy and counterfeiting is estimated to cost companies around the world more than $600 billion a year, about equal to the GDP of Australia."

Australia has the 17th largest GDP in the world.

PowerPoint Templates

2005-11-07T15:32:00.000-05:00

Does anyone have a good resource for free PowerPoint templates?

If so, please email me or post it in the comments.

Thank you

Yahoo/Cingular - Interesting but not Earthshattering

2005-11-07T10:19:00.000-05:00

Check out Yahoo's first mobile phone here.

While I am always interested in new mobile offerings, a Yahoo branded mobile phone, offering integrated Yahoo services is near-sighted and just not that compelling.

Check out a compelling new phone here.

Mobenta: You are wasting everyone's time

2005-11-04T09:19:00.000-05:00

For a couple of years now I have had Mobenta in my favorites tool bar. It is (was) a great resource for getting information on the mobile industry. However, for the past couple of months they have been missing the mark....big time. For example, sitting here on November 4th, looking at the site, I am quite surprised to find that the most recent item in the "Lastest News" section is from October 17. Is the mobile market already that mature where nothing exciting happens for months???

Now that Mobenta has proved to be incredible irrelevant, please check out MoCoNews for great information about the mobile content industry.

Cool Company of the Month - Zillow

2005-11-04T08:50:00.000-05:00

While it has yet to formally launch, the service offering gets me excited.

Zillow

Does this look like trash to you?

2005-11-02T09:43:00.000-05:00

Yes, it does to me too. However, it apparently does not look like trash to the Philadelphia Waste Department...it has been sitting there for over two weeks.

A Guide for Managing Entrepreneurs

2005-10-31T13:19:00.000-05:00

A couple of months ago a publication asked me to write a piece on entrepreneurship. The piece still remains in queue, so I thought I would give it some light here.

A Guide for Managing Entrepreneurs

I have been in the workforce for close to four years now and recently resigned from my normal, 9-5 job to pursue other interests as an entrepreneur. During the three plus years after college I did not have one manager/boss at my two jobs - Institutional Sales Associate for a Wall Street research shop and Business Development for a small technology company - that knew how to handle me. When I say handle me, I mean knew how to maximize my potential, take advantage of my strengths and strengthen my weaknesses. By no means did I, or do I, expect managers to be perfect, however a manager should understand what type of employee he has and look to take advantage of the person he has working for the company. While I truly believe this is not a problem with a majority of people, I would imagine that it is a problem for a great deal of managers whom are dealing with entrepreneurial personalities. So given my experience as both a worker trying to break out of a mold that someone else created and as a newly minted entrepreneur who will some day face this dilemma, I believe a brief guide on handling these situations would be a valuable piece of paper. Not to mention that it will help me manage myself. An entrepreneur’s most demanding characteristic is that she never met a challenge she did not like, right?

First, I believe it is important to discuss exactly what I mean by someone with the entrepreneurial personality. An entrepreneurial personality is one that despises the status quo, loves to be creative and typically comes up with ideas faster than execution is even possible. Additionally, the typical entrepreneurial personality craves control, hates busy work, loves to think and makes decisions rather fast. Think of Jeff Foxworthy’s famous line “You might be a redneck if…” You may be an entrepreneur if most of the previous descriptors fit you. Oh yes, entrepreneurs like, make that love, risk. Calculated risk.

Hopefully by now you have determined if you are dealing with an entrepreneurial personality. If so, read on. If not, cut this out of the paper, save it, and go searching for an entrepreneurial personality to hire. Managed right, every company needs one. Especially a company in need of a change agent.

For this brief guide, I am going to focus on five items for managing an entrepreneurial personality: Empowerment; Autonomy; Creativity; Energy; and Change Agents.

Empowerment

Entrepreneurs need to be empowered. No one believes in an entrepreneur more than she believes in herself. It is this confidence and will to win that drives her to be the best and allows her to turn what could otherwise be deemed a failure into a resounding success.

Sure, it is always difficult to turn the reigns of anything over to someone else, however empowering an entrepreneur is a vote of confidence that will boost her efficiency and results faster than anything else. Having an entrepreneur follow the typical corporate handbook in terms of silos and code of conduct is like strapping two parachutes on a Ferrari. The body has been designed for high performance and the engine is breathing fire, but the performance will be hindered by the two items that don’t meet the aerodynamics of the exquisite vehicle.

If you currently manage entrepreneurial personalities and have not empowered them, do so…little by little. It will be like taking the restrictor plate off of Jeff Gordon’s NASCAR. The performance will finally match the skill set.

Autonomy

Autonomy goes hand-in-hand with empowerment. The entrepreneurial personality needs autonomy to thrive. She will have her own way of doing things, many of which may be viewed by others as awkward or unconventional, however remember that the entrepreneur thinks differently than most. Decisions are typically made quickly and incorporate an analysis of all available information. This quick decision-making, and lack of wavering, produces a highly effective, efficient multi-tasker who can complete a weeks worth of work in a couple of days. Just let her do things her way, the work will get done.

Assuming the entrepreneur is managing a team, let her manage how she wants…a sort of self-governance so to speak. Chances are her management style will differ from that of the norm. Typically it will be one in which she empowers her team and provides the team with plenty of rope to make mistakes, and in some cases to hang themselves. While this style of management may be perceived as risky, and is typically viewed as poor management, the space the entrepreneur lends her team allows the entrepreneur to focus on her tasks, thoughts and vision, while fostering growth among the team. Also of note, I have noticed in a variety of occasions that an entrepreneur’s team is typically a happy, productive one.

Creativity

Embrace an entrepreneur’s creativity. And by embracing it, I mean execute some of the crazy ideas that the entrepreneur comes up with. If you don’t, she will lose interest and the creativity that is so valuable will be lost until someone else or something else peeks her interest.

By embracing this creativity you will, at minimum, have one person that will not be a “yes” woman and will have the ability and the proverbial “green light” to think for herself and challenge the status quo with new ideas and concepts.

Entrepreneurs thrive on ideas. Ideas are their lifeblood and what gets them excited. At times this leads to a bit of Attention Deficit Disorder, as a plethora of ideas can lead to a lack of interest in a current project. That is a management exercise in and of itself, but harnessed right, can be of extreme value to most companies.

If you remember six words about creativity, here they are. Foster it, nurture it, challenge it.

Energy

Entrepreneurs by nature have a great deal of energy. In most cases the energy is all-natural, but in a number of cases this energy is amplified by a variety of caffeinated products. This energy is a great positive as long as it is channeled, as opposed to stifled.

The best way to channel this energy is to simply give the person a great deal of things to work on. An entrepreneur will rarely “flag someone for piling on.” Entrepreneurs do not like down time and are great multi-taskers, with a tremendous aptitude to get a great deal of work done in a small period of time. Make use of this. Channel the entrepreneur’s energy into a variety of projects that will spark creativity.

About once a quarter the entrepreneur will burn out and her energy level will get cut in half, if not more. While this is typically the energy level of a non-entrepreneurial personality, the entrepreneur is running on empty and needs a break. As I have done, and recommend for those entering the workforce, one vacation per quarter allows you to maintain this high energy level throughout the course of the year. As a manager, if you notice that the entrepreneur’s energy level is waning, and it had been a number of months since the person took a break, suggest one. Nothing recharges the batteries better than a week away from the office. While the entrepreneur will still remain very active, chances are she will come back with a number of ideas for the company and plenty of energy for execution.

Change Agents

Every company at one point or another will need a change agent. Someone who will drive people to do things that they have never done before, to think on a different plane or to simply review a process or operation and recommend a new way. Entrepreneurial personalities are great at this, and in fact enjoy the challenge of driving change. Remember, the entrepreneur believes that she can change the world, so changing a piece of a company should be rather easy.

The most important piece of having the entrepreneur as the change agent is the management of the other “non-entrepreneurs” during this time. Conflict will arrive almost immediately, not only due to the changes (no one likes change), but because the personalities of the two parties will be like oil and water. The hard charging entrepreneur will not mix well with the workers whom like collecting a paycheck and doing things the way they are. This is an important time for the senior management to support both parties and communicate the reasons for the change while consistently endorsing the entrepreneur’s efforts and teaching the masses. After the initial turbulence, both parties will end up enjoying each other, as the entrepreneur will see the fruits of her labor and the masses will realize that working with the change agent is a symbiotic relationship that benefits them greatly.

One final item to note is something that every manager needs to keep in mind irrespective of whom he is managing, but it is particularly important for entrepreneurial personalities. Communication. It needs to happen early and often. Consistent communication ties all of the previous five elements together. Communication guides the empowerment process, directs the level of autonomy, provides “cheer leading” for creativity, helps channel energy and guides the company through the difficult waters of change. Communication is a necessity and quite frankly something entrepreneurs enjoy.

As I mentioned earlier, managing an entrepreneurial personality is not an easy task. Conventional management methods will not work for the simply reason that an entrepreneur is not a conventional employee. Keeping these five topics in mind while managing such a person will not only aid you and your company, but allow the entrepreneur to make use of her many skills and unadulterated ambition.

What I Learned Today

Podcasting - Its Large

Cool Music

Safety first

Long time..

From the Road

GO AZTECS!

Shhhhhhh....

Forgiveness

Valuation Series

A Starr in the Sea

My home is not for sale

Legal Drug

Nothing better than Posh and Becks?

The Best Investor of His Generation

S-Corp's vs. LLC's

George Carlin on Aging

"You don't have to have a big IQ"

Is this for real?

Kanye, Kanye, Kanye

I own Mark Cuban

A Zestimate

Give 'em the Pickle

Can you hear me now?

Are you one of the ~3 million?

Two fun posts from The Big Picture

Cool Company of the Month - Doctor's Associates

People still do that?

Human Interaction Not Required

Presentation Minimalist

The juggling act continues

The more I use it the more I like it

Begging and Seeking

Ah...the City

100%

What is wrong with this picture

If I were the Mayor of Philadelphia

Small socks

Bowl for Kids' Sake

The best CES coverage in the world...

FIZZ-boh

Very Smart

Google Video

Squid Soup

How Clean is Your Firetruck

2005 Year in Review

Tom Peters' Six Musts

Wouldn't it be great if...

Wharton Private Equity Conference

She's Faster than a Greased Pig

There is one train running in NYC

An Open Call for Rational Exuberance

No Title Required

Omid Kordestani is a player...according to the Wall Street Journal

More to Read

GooglePark

Night Club at Noon

Why wouldn't they use eBay?

CNBC is killing me

Today is a Gift

Cool Company of the Month - BoConcept

Ricky Gervais is at it again

Metcalfe's Law

It really feels like the 90s again...

Is Paying Taxes on Capital Gains Really a Problem?

Inspiration at a Tire Shop?

Simply Pricing

Avoiding Perpetual Failure

Commodities

Are you a success?

IPO Securities Litigation

Thoughts from Starbucks...WiFi is Dead...unless it is free

Google-Mart...coming to a town near you?

Are you going to push these buttons?

Nader on Leadership

Gobble Gobble

Are you too young?

Some things never cease to amaze me

Idiocracy

Finally....Someone has realized the power of the PSP