Archive for April, 2009

When will it end? IT leading the blind does not work!!!

April 29, 2009

Airlines – “pricing optimization” systems run amok to the extent that people simply prefer driving.
Government – buying a hunting license requires a file folder of dates and records and trivia
Cable – All choices are universally bait and switch
More cable and telecommunications – Fees, contracts, “bundles” to keep obsolete or unneeded services
Utilities – surcharges which are really excessive taxes which pay for things the utilities should pay for themselves
Credit cards – byzantine fee structures all over the place
Credit rating – what other than a network of computers generates this perfect three digit number for each person
Rewards cards – why why why! Why does a loaf of bread cost less this way. (I know all the reasons why, and they are all sinful)

Some industries are plagued by bureaucracy, consumer fleecing and other sins, and have been before and after the growth of IT. But with IT’s growing horsepower, IT enables automation of these same misguided formulas and magnify them all out of proportion.

It is external to the customer. It is in the inner working of the companies themselves…ever dealt with a company that has had major M&A activity (you have even if you didn’t know it)??…these are nightmares.

Of course the entire financial system is full of dysfunctional complexity promoted as innovation.

This growing balloon of endless mazes of complexity in every corner of modern industries has to have true cultural and anthropological forces at work. My belief? MBA’s, an overabundance of corporate-y attorneys, a huge lack of REAL men and REAL women acting like REAL humans, and IT. Endless capacity of IT. The average contract in real estate – the industry I am in now – is north of 40 pages of tiny print. That is a basic one.

It is a needless waste of mediocre brainpower. Even men of great talent…in this environment they are reduced to trudging through the weeds with the rest of us. In 25 more years, will it be better or worse?

Texas Secession

April 28, 2009

So, a lot has been made of Texas secession lately. I remember a few years back living in Austin and running into many folks who loved this idea, albeit in a sentimental notion only. It’s easy to understand why it is so tempting today. I don’t really think it’s in the cards, but I will say that there are reasons it’s a popular idea in Texas.

Here’s the marketeers take: Most Texans have much higher trust of Austin politics than Washington’s. And while the culture of the USA is embracing relativism to such a degree as to be indistinguishable from a “generalized global culture,” the idea of being a Texan has a much clearer brand, good or bad. So it’s the combination of a greater degree of trust (and in turn affinity), a more tangible brand, and the obvious economic turmoil which together drive such a “radical” idea to the forefront of social consciousness.

In plain English, we’re tired of dealing with stuffed shirts who sound good on TV and who obviously screwed a bunch of stuff up (and won’t admit it much less deal with it), we think of Texas as home, and we’re probably better off on our own anyway.

Sure, its still just a sentimental notion, but that’s how a lot of big changes start.

HR 1207

April 28, 2009

Please support HR 1207, tell your representatives in Congress.

HR 1207 provides additional transparency of the Fed. I am not an ideologue on this issue but in 2009 when the US government is bailing out the financial system via the Fed, the US should and needs additional transparency from the Fed. Much like a private business loses some of its freedom to keep finances private from creditors when it needs extraordinary support, so has the Fed lost its case for this privilege. The argument that the Fed works better with a certain arm’s length from the government might hold water (I don’t know), I do know at this point, I would much prefer a thorough transparent understanding and status of the Fed.

Should you start a business in this mess?

April 26, 2009

If you’re under 40, you definitely haven’t been an adult in an economy this bad. If you’re under 70, you haven’t been alive in an economy as bad as some people say we’re in for.

Since that’s everybody reading this (except for you, brave 80 something reading a blog post about starting a business), we’re all in the same boat here. This economy is rough, we aren’t quite sure what’s going to happen, and why in the world would you take a big financial risk like starting a business in this environment?

There isn’t a pat answer to this. You DEFINITELY should factor it in and some businesses probably aren’t ripe for starting at this particular moment. But you already know this. What can I say that will impact your thinking?

If you have a business built around a bigger force than the macro-economy’s force on it, then keep going. This can be broad or very specific. Here are three examples:

1. Demographics. If your business is built around a demographic force that isn’t going to change, keep going. Since this is so broad, you certainly need to think about (or get some outside perspective) on how the economy might affect the demographic force you’re tapping into, but demographics is a major force and if you are working with it, it’s a major advantage. I recently learned Rosetta Stone sales went up 50% last year. Globalization, worldwide nomadic behavior, and America’s fascination with “cultural awareness” aren’t going away and Rosetta Stone is a huge beneficiary.

2. Industry/Category force. The iphone is the best example. If you can grab the coattails of a force like this (such as developing killer iphone apps), keep going. The cell phone industry might flatten a little, but isn’t going anywhere…and the iphone is gobbling market share for breakfast. That iphone force is cutting through economic headwinds like butter.

3. Your business. Let’s say it’s talent (a Great Team). Let’s say it’s capital resources (a rich Dad). Let’s say it’s a rock solid patent (a Great Invention). Let’s say it’s a big customer (Michael Dell is your godfather). If you have a force that greatly impacts your chances for success and enhances your profit-potential, it might be appropriate to say “bad economy, be damned!” There are a lot of advantages to starting a business in a down economy, and it’s rare to have the formula for success in any economy, so if you have a major factor working in your advantage, keep going.

p.s. if you don’t think you have any of these inherent advantages, or identifiable advantage (that is not an illusion in your head), don’t start a business, not just now, not ever. There are a million businesses one could start. Starting without an advantage is a bad idea!

CMBS failures

April 25, 2009

CMBS, securitized loans made on commercial real estate, is predicted by real estate folks, to cause a massive amount of pain all over the place. This is of course a huge generalization, but the industry press and reports generally show big “bar charts of pain”, showing rising tides of CMBS explosions.

So, the question is, when a specific asset which was leveraged with CMBS goes bad, what is the trickle effect? Well, when only one asset ACTUALLY defaults, which is going to be well after the impending fate is well known by those involved, sometimes very little. The CMBS offering that one asset was a part of was built to have a series of steps which would be triggered which would absorb the blow, spreading it over the whole offering, flowing through a byzantine structure.

The problem I think most people involved in the market intuitively feel is what happens when the great majority of such assets tank? The answer is not well understood. In fact, because each CMBS offering had different byzantine structures, any type of “global” understanding of the problem inevitably ends up at the generalized level, ie “massive amount of pain all over the place.”

As banks and the government work at this problem, with a mixed set of goals, inevitably more byzantine structures and rules apply, never allowing things to just happen. The theory is, if everything just happens, there will be panic and collapse, which is probably true. The issue is because no one wants to smite the Gordian Knot, they instead layer more yarn all over it, making it into a Too Big to Smite Knot!

Questions for Prop 1 on May 9

April 24, 2009

Before I start, Prop 2 is so ridiculous, just vote no for that.

On Prop 1, I’ll vote no on that too because I want the hotel, but I understand the concerns and have my own. In most of the “stuff” out there, I can’t find a clear analysis.

– What are some specific conventions we’re not able to compete for and win?

– What are some specific conventions we hosted in the 80’s and 90’s which have not come recently, which are choosing other places in part or entirely because of no hotel?

– What occupancy does the hotel need to achieve to meet the annual debt coverage, given a reasonable price rate compared to similar hotels?

– Assuming the capital markets do not improve for 12 months, how is the hotel going to be delivered anytime soon anyway?

Marketing thoughts

April 21, 2009

On usability

– I don’t know how to measure the “I get it factor” or the “It just works” factor, but it is real and it means more than ever.

– Writing for people is a lot easier than writing for “your audience” or “consumers” or “the general public.” So just write for people.

– Simplicity does not equal simple.

On common sense value

– Give them a break.

– Give them a good deal.

– Don’t take your customer for a ride.

On selling

– Most buyers aren’t experts in your product. Very few want to become experts. They have an awareness, whether conscious or subconscious, that they are at your mercy in many respects. You, being the expert, market your stuff to them, being the ones hoping your stuff will solve their problems. Don’t overlook the obvious fear built into that relationship. If you aren’t the type that can harness that fear (i.e. overbearing closer with a real success rate), better to remove it.

– The idea is to get people to want to buy your product so they will buy it. Salespeople spend too much time on everything other than getting a prospect to WANT what they are selling. (This does not apply to those who sell things that have absolutely no desirable appeal. I feel sorry for you.)

– Most buyers want what everybody else wants: the best product at the best possible price. This probably isn’t the surest way to maximum profits, but keeping it in mind will get you closer to any sale.

– To contradict myself (actually just complete the picture), most buyers just want to feel good when they buy your product from you.

Managing sales

– Your CRM is your friend.

– Sales and customer support activities represent the bulk of time someone from your company spends with your customers. As a rule, it’s better to reduce the quantity of time spent than to reduce the quality.

Managing marketing

– Marketing ideas are almost universally expensive propositions, especially in a startup environment. A fifteen minute conversation about a product promotion idea can boomerang from a $1,000 cool idea to a concept that would require $millions. If you can’t manage the execution of the idea presently, just write it down and move on; it is in all likelihood a distraction. The high dollar ideas should come from your core business strategy, which is rarely a pure marketing idea.

Vote No!

April 16, 2009

Vote No in Dallas’s May 9 special election on both propositions. The first, regarding the hotel, makes zero sense. The hotel project is a perfect example of economic stimulus which people from all walks of life and all parties support. The city is using its credit standing to make financing the hotel more cost effective. It’s as simple as that.

The second is insipid. $1,000,000 threshold is absurdly low. 500 vote threshold is even more absurd. The proposition is equivalent to frivolous lawsuits that waste time and energy of everyone involved–it is also a dishonest and ill-conceived proposition that benefits no one. Vote No.

Vote No. Vote No. Vote No. Vote No. Vote No. Vote No. Vote No. Vote No. Vote No. Vote No.

May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9 May 9!!

Mark your calendar.

tea party

April 15, 2009

The tea party thing is frustrating. Until there is a legitimate third party which promotes transparency at the expense of lobbyists, incumbent leadership and staff, special interests, and other sacred cows, don’t expect a lot of change…or a fundamentally improved economy.

Obama’s financial agenda is largely reactive. You can criticize his social agenda or his unabashed attaching of his social agenda to his financial one. But his financial agenda, which is really not his agenda at all, is reactive to a problem foisted on him, and he deserves no blame for the current economic state of affairs. Unfortunately, he lacks the technical competecency to come close to dealing with the issues and lacks the “officer corps” under him to get to the essence of the issues. Obama’s leadership style is not ideal for this time; it will be interesting to see if he can adapt to become the leader we need. I hope so.

The tea parties are revolting not because the messages are wrong (which by and large they are) but because they perpetuate the fundamental problems they protest. To tea party attendees, my general response is, go buy a mirror on your way home. And to the propoganda artists, go get a real job.

It’s ironic our culture’s flavor of the month is an adaptation of a historical event from hundreds of years ago, which is an incorrect, inappropriate and untimely metaphorical reference. As per normal, intellectual honesty loses to emotional chicanery.

Notes I found in my phone from who knows when

April 1, 2009

I enjoy myself more doing less and thinking about less. Doing and thinking about only what matters to me.
Being nice definitely pays off. Good nice, not lame nice or fake nice.
Being sick is a great excuse to be lazy.
Thinking your life is unique is delusional unless you are a one of a kind person leading a one of a kind life, right? Otherwise, it’s all pretty much the same.
When I started to enjoy other people more, I recaptured some of my sanity.
There are a lot of kinds of happiness. And a lot of times, we are faking.
Language is really cool. When you can record a thought, it’s just cool. If you can be artful with language, it’s special.
Being good communicating with words is not the opposite of being good communicating without words.
The fact that your instincts have failed you before means nothing.
Your past always makes you more interesting. Not the knowledge of it. Just it.
Sometimes I envy a much simpler mind but this is analagous to a kid wanting ice cream for dinner every night.
Often, I am least bored doing ‘nothing.’
When you watch a decent movie a second and third time, you see more, there is more entertainment value. Life is the same way.
All men are not created equal. Or is it equally? Either way.
If your bet’s in your pocket, are you really playing the game?