Posts tagged ‘CEO’

This is Why Running a Service Business is Hard

This Starbucks story illustrates the hardest part about running a service business

"Pregnant woman denied Starbucks bathroom useage"

Of course, Starbucks did not deny this woman access to the bathroom.  Had the board of directors, CEO, and most of the management been at the store, they would have happily helped the woman use the Starbucks bathroom.  This woman was actually denied access to the bathroom by some knucklehead employee of Starbucks, one of the tens of thousands they hire, who likely thought they were doing the right thing.

I am sure Starbucks has a policy that the bathrooms are for customers only, and honestly in a lot of urban areas that is an essential policy or else one finds themselves spending a lot of money cleaning the bathroom and providing the public facilities that the city or shopping center developer chose not to fund.

However, in a service business, one of the keys to providing good customer service and maintaining a good reputation is, ironically, having your employees know when the rules need to be bent.  This is the number 1 thing in every training session we have in our company -- when the rules have to be enforced (safety, fires, quiet time at night) and when to back off and not act like the campground nazi ruining everyone's visit.

I have thought about why this should be for quite a while.  If rules exist, shouldn't they be enforced for everyone?  And if not, shouldn't they just be eliminated?

First, there simply are exceptions.  This is the same reason that mandatory sentencing guidelines in criminal law and no tolerance rules in schools always run to grief.

Second, even if there are not exceptions, there are people who really, really, really, strongly, aggressively believe that they are indeed an exception.  Call this modern entitlement, but we get this all the time.  Dog owners are a great example.  Every single one of them understands perfectly why everyone else's dogs have to be on leash but no one believes their little darling is a problem.  Dogs are in fact the hardest issue we often have to manage.  Ask someone to put a dog on leash and we get vitriolic complaints sent to our government partners, newspapers, etc.  Let them run around and we get vitriolic complaints sent other visitors who are bothered by dogs sent to our government partners, newspapers, etc.

Finally, the marginal cost of serving one or two exceptions is really low, practically measurable, while the cost of allowing everyone to break the rule is high.  Take the case of bathrooms.  Letting one non-customer use the bathroom costs zero.  But once word gets out that you allow public use of your bathrooms, everyone in a half-mile radius is lined up at the door every day.

 

Super-Smart!

I didn't get that big Internet payout from my year or so at Mercata, but those of us involved have this to fall back on:

Founder and CEO Steve El-Hage acknowledged that “super-smart people had tried to get the ball rolling in the past” on group buying — one of them was Mercata, which shut down back in 2001. (More recently, I’ve written about a group-buying startup called Higgle.)

It's amazing how group buying is an idea that keeps coming back.   Even pre-social media, we found it to be a better tool for driving viral marketing than for achieving any economies of scale.

Healthcare Deductibles Rising -- Why This is GOOD News

Things like Obamacare cannot be discussed, it seems, in anything but a political context.  So if you don't like Obamacare, everything that happens has to be bad. But I actually think this is good news, and goes against my fears in advance of Obamacare.  I had been worried that Obamacare would just increase the trends of more and more health care spending being by third-party payers.  And my guess is that this is happening, when you consider how many people have gone from paying cash to having a policy, either a regular policy or expanded Medicaid.

A report out today puts numbers behind what hit many workers when they signed up for health insurance during open enrollment last year: deductible shock.

Premiums for employer-paid insurance are up 3% this year, but deductibles are up nearly 50% since 2009, the report by the Kaiser Family Foundation shows.

The average deductible this year is $1,217, up from $826 five years ago, Nearly 20% of workers overall have to pay at least $2,000 before their insurance kicks in, while workers at firms with 199 or fewer employees are feeling the pain of out-of-pocket costs even more: A third of these employees at small companies pay at least $2,000 deductibles.

“Skin-in-the-game insurance” is becoming the norm,says Kaiser Family Foundation CEO Drew Altman, referring to the higher percentage of health care costs employees have to share.

Honestly, this is good news, sort of.  I don't like the coercion and lack of choice, but the main problem with health care is that the person receiving the benefits is not the person paying the bills, which means there is no incentive to shop or make care tradeoffs.  Higher deductibles mean more people are going to be actively shopping and caring what health services cost, and that is a good thing for prices and health care inflation.

On Firefox and Wedding Photographers

The OK Cupid website is protesting the Mozilla CEO's past donations to anti-gay-marriage campaigns by asking visitors to use something other than Firefox to browse their site.  Readers will know that I have actually led a past Equal Marriage effort in Arizona, so while sympathetic to the cause here, I don't think I would go so far as to block a browser to my website.  Establishing this precedent that I would boycott services and products based on the political views of company employees (which is the issue here, Mozilla does not have any official position on gay marriage that I know of), I could consume my whole life doing research.  And then I would be stuck with questions like "Are the gay marriage opinions of the Firefox CEO better or worse than Google/Chrome's enabling of censorship in China?  As I have told some folks before, if I really wanted to do do business only with those who agree with me politically, I would find myself stuck for life listening to a couple of Rush albums and watching Firefly and Wire reruns all day.

But anyway, OK Cupid is a private company and I presume they do this with their owner's approval so all's fair in conducting commerce or choosing not to conduct commerce.  Except that just a few weeks ago everyone was arguing that photographers should be forced to serve gay weddings even when they do not wish to do so.  Is this any different?  If we are going to establish a public accommodation standard that a business cannot turn away customers based on political or religious preferences, then don't we have to enforce that in a value-neutral way?

November Obamacare Exchange Numbers in an Easier to Read Format

As I did in October, here are the Obamacare Exchange activity numbers to date, based on their recent report.  Hopefully this presentation is a lot clearer than the report.

I know the nomenclature is kludgy, but it is the report that is a pain to work with.  No CEO would ever let one of his business units get away with this garbage.  The report shifts from visitors and applications to people covered by applications, presumably to pump the numbers up.  This means, for example, that the 364,682 number of people who have selected a plan is actually the number of people covered by plans that have been selected (yeah, awkward, I know).  Given that they have on average 2 people covered per plan in their application pool, the actual number of selected plans is half this number.

That is the kind of cr*p one has to put up with in this report.  Further, there is no actual enrollment data, just number of people who have put a plan in their online shopping cart.  Worse, they have a split of subdidized vs. unsubsidized in their applicant pool, but not for the plan selections.  How many of the selected plans are subsidized.  My bet is that it is a high percentage, which is why they won't tell us.  Someday we will find that few of these people are actually selecting plans they intend to pay for with their own money.

november-obamacare-exchange

The Difference Between Private and Public Governance, Part Number Whatever

Let's suppose a Fortune 500 company went through a rancorous internal debate about strategic priorities, perhaps even resulting in proxy fights and such (think Blackberry, HP, and many other examples).  The debate and uncertainty makes investors nervous.  So when the debate has been settled, what does the CEO say?  My guess is that he or she will do everything they can to calm investors, explain that the internal debate was a sign of a healthy response to adversity, and reiterate to the markets that the company is set to be stronger than ever.  The CEO is going to do everything they can to rebuild confidence and downplay the effects of the internal debate.

Here is President Obama today, talking about the budget battle

“Probably nothing has done more damage to America’s credibility in the world than the spectacle we’ve seen these past few weeks,” the president said in an impassioned White House appearance.

Good God, its like he's urging a sell order on his own stock.   I was early in observing the Republican strategy was stupid and doomed to failure, but you have to show a little statesmanship as President.

Postscript:  

Standard & Poor’s estimated the shutdown has taken $24 billion out of the economy.

If this is true, this number is trivial.  0.15% of GDP (and this from someone hurt more than most) loss from a government shutdown about 4.4% of the year (16/365)

Harvard Business School and Women

The New York Times has a long article on  Harvard Business School's effort to change its culture around women.  Given that both my wife and I attended, albeit 25 years ago, I have a few thoughts.

  • I thought the article was remarkably fair given that it came from the NYT.  Men who are skeptical of the program actually are allowed to voice intelligent objections, rather than just be painted as Neanderthals
  • I would have abhorred the forced gender indoctrination program, as much for being boring as for being tangential.  I am fortunate I grew up when I did, before such college group-think sessions were made a part of the process everywhere.  I would presume most of these young folks are now used to such sessions from their undergrad days.   I would not have a problem having an honest and nuanced discussion about these issues with smart people of different backgrounds, but I thought the young man they quoted in the article said it really well -- there is just no payoff to voicing a dissenting opinion in such sessions where it is clear there is a single right answer and huge social and even administrative penalties for saying the wrong thing.
  • I went to HBS specifically because I loved the confrontational free-for-all of the classes.   It was tailor-made to my personality and frankly I have never been as successful at anything before or since as I was at HBS.   I say this only to make it clear that I have a bias in favor of the HBS teaching process.   I do think there is an issue that this process does not fit well with certain groups.  These folks who do not thrive in the process are not all women (foreign students can really struggle as well) but they are probably disproportionately women.  So I was happy to see that rather than dumb down the process, they are working to help women be more successful and confident in it.
  • It is interesting to see that the school still struggles to get good women professors.  When I was there, the gap between the quality of men and women professors was staggering.  The men were often older guys who had been successful in the business and finance world and now were teaching.  The women were often young and just out of grad school.  The couple of women professors I had my first year were weak, probably the two weakest professors I had.  In one extreme case our female professor got so jumbled up in the numbers that the class demanded I go down and sort it out, which I finally did.  I thought it was fun at the time, but now I realize how humiliating it was.
  • To some extent, the school described in the article seems a different place than when I was there.  They describe a school awash in alcohol and dominated by social concerns.  This may be a false impression -- newspapers have a history of exaggerating college bacchanalia.   At the time I was there, Harvard did not admit many students who did not have at least 2 years of work experience, such that the youngest students were 24 and many were in their 30's and 40's.  A number were married and some even had children.   To be there, they not only were paying a lot of money but they were quitting paying jobs.  The school was full of professionals who were there for a purpose.  I had heard that HBS had started to admit more students right out of college -- perhaps that is a mistake.
  • The fear by the women running the school that women would show up on Halloween wearing "sexy pirate" costumes represents, in my mind, one of the more insidious aspects of this new feminist paternalism (maternalism?) aimed at fellow women.  Feminism used to be about empowering women to make whatever choices they want for their lives.   Now it is increasingly about requiring women to make only the feminist-approved choices.
  • I actually wrote a novel where the protagonist was a confident successful female at HBS.   So I guess I was years ahead of the curve.

Postscript:  Below the fold is an excerpt from my novel.  In it, the protagonist Susan describes how an HBS class works and shares my advice for being successful at HBS.

Continue reading ‘Harvard Business School and Women’ »

Tesla Actually Strikes a Blow Against the Corporate State

Tesla Motors and Elon Musk, the folks who seem to perennially have their hands out for special government favors and taxpayer money, may have actually struck a small blow against the corporate state:

Tesla Motors Inc. says it’s won another round in its fight with established car dealers who want to stop the company from selling its electric luxury cars directly to consumers.

Tesla CEO Elon Musk says, via Twitter, that a New York judge has tossed out a suit brought by New York auto dealers who challenged Tesla’s direct sales model as a violation of the state’s franchise laws.

Mr. Musk spent Wednesday in Texas making the case for a legislative proposal to change the law to allow direct sales of electric vehicles by U.S.-based manufacturers.  Texas car dealers have opposed the measure, saying it would open the door for other car makers to sell electric cars direct to customers –  which could undermine the value of their franchises.

Government protections of middle men in the auto business (states generally do the same in the liquor business) are a classic example of crony capitalism.  Car dealers tend to have a lot of sway with politicians, not to mention with local media for who they are generally the largest advertisers, so they are able to engineer special privileges for themselves.  Congrats to Tesla for taking this on.

Is This A Scam?

Came in via email this morning

Dear President & CEO,
 
We are an organization specified at dealing with domain name dispute and registration in Asia. We have something important on intellectual property right need to confirm with your company.
 
On April 13, 2013, we received an application formally, one company named "PhgbuhfcHolding Ltd" applied for the Brand Name "coyoteblog" and some domain names with our organization.
After checking, we found your company is the original trademark owner. If the company's action haven't been authorized by your company, so their behavior will conflict with your interests. In order to deal with the matter better, please contact us ASAP. (If you are NOT President, please forward this to your President & CEO, because this is urgent. Thanks.)

Best Regards,
 
Andy
Auditing Director

Update, from the comments:  Yes, it is!  I figured as such.  This blog gets pretty good Google ranking so I like to post this stuff for others to find in the future.

Let's Ban Exports of Dow Chemical Products

I have written before that trade policy is generally ALL corporate cronyism -- tariffs or restrictions that benefit a narrow set of producers at the expense of 300 million US consumers.

Mark Perry has yet another example, though with a small twist.  Most corporations are looking for limits on imports of competing products and/or subsidies for their own products exports.  In the case of Dow Chemical, they are looking for limits on exports of key inputs to their plants, specifically oil and natural gas.  CEO Andrew Liveris wants to force an artificial supply glut to drive down his input prices by banning the export (or continuing to ban the export) of natural gas.  If gas producers can't sell their product?  Tough -- let them try to out-crony a massive company like Dow in Washington.

But here is the irony -- there is absolutely nothing in his logic for banning natural gas exports that would not apply equally well to banning the export of his own products.   Like natural gas, his products are all inputs into many other products and manufacturing processes that would all likely benefit from lower prices of Dow's products as Dow would benefit from lower natural gas prices.

So here is my proposal -- any company that publicly advocates for banning exports for its purchases must first have exports of its own products banned.

Sequester Madness

If the Republicans are supposed to be the voice of fiscal responsibility in Washington, then we are doomed.  They are absolutely as bad as Obama, running around in panic that the trivial cuts required by the sequester (not 8% this year or 5% or even 2% but 1% of Federal spending).  I have never seen a private organization with a large administrative staff that could not take a 5% reduction and generally be better off for it.   I absolutely guarantee that I could take 5% or more off the top of every agency's budget and you would never notice it.

This includes the military.  In fact, this includes the military in particular.  The military is never asked to prioritize.   We still have armored divisions in Germany.  It is always incredible to me that Republicans, who doubt that the government can ever manage or spend wisely, suddenly cast aside all these doubts when it comes to the military.   I understand the honor that folks accord to front-line soldiers vs., say, DMV workers.  But they are not the ones spending the money.  I am tired of such honor for the troops being used to bait and switch me from a very reasonable focus on DOD spending and waste.

When it comes to the military, Republicans use the same "closing the Washington Monument" tactics that Democrats use for social programs, essentially claiming that a 5% (or 1%) spending cut will result in the cessation of whatever activity taxpayers most want to see continue.  This process of offering up the most, rather than the least, important uses of money when spending cuts are proposed as a tactic to avoid spending cuts is one of the most corrupt practices imaginable.  No corporate CEO would tolerate it of his managers for a micro-second.

About two years ago at Forbes I imagined a hypothetical budget discussion at a corporation that followed Congressional budgeting practices.

Republican Branding

Someone from the National Council of Mayors or Cities or some such group called me wanting to meet.  I asked him what he wanted.  Blah blah blah.  I asked him after a bunch of doublespeak about learning about how my great business operates what he really wanted.  He said he wanted to share with me Federal and State and City programs to help my business.  The conversation then went approximately this way:

Me:  I don't want any of that stuff.  I don't want other people to be forced to pay for my business

Caller:  So you are a Republican?

I would love it if Republican's narrowly branded themselves as folks who don't take money by force from others.  I would call myself one.  But unfortunately Republicans and Chamber of Commerce type CEO's who nominally call themselves Republicans wallow all the time in such corporate cronyism.

Further, Republicans spend a lot of time on social crusades that drive me crazy.  The other day at a party, I was talking to a number of entrepreneurs who all should have found a natural home in the Republican party given their economic views.  But they were all Democrats, most of them for the simple reason that they did not want to be associated with Republican social crusades.  I talked to a guy for hours who despised Obamacare but voted for Obama twice because he did not want to be associated, for example, with Republican's anti-gay position (e.g. Rick Perry).

Of course, this is a double edged sword.  There are likely many Republican voters who are fiscally liberal but vote Republican for its commitment to opposing gay marriage and abortion and the like.

PS-  The call actually went on for a while.  He asked me what he could help me with.  What is my number one problem?  I told him, honestly, we have put everything else on hold, all our growth plans have been frozen, until we figure out how to minimize the costs of the PPACA on us.   This was not something he seemed to want to discuss.

The Silly Fact-Check Genre

I do not agree with Mitt Romney's implied protectionism in his ads, particularly when he says

Obama took GM and Chrysler into bankruptcy and sold Chrysler to Italians who are going to build Jeeps in China

The problem with Obama's intervention in the GM and Chrysler bankruptcies was cronyism -- the protection of favored insiders to the detriment of the operation of the rule of law -- rather than any accelerated globalization.  The auto industry is a global business, deal with it. We should be thrilled that Chrysler is participating in the Chinese economy, an opportunity they would not have had a generation or two ago.  This kind of populist BS is exactly why I voted Johnson, not Romney, this morning.

Anyway, this statement has been subject to a lot of "fact-checking."  Chrysler head Sergio Marchionne wrote a letter in the Detroit News, and while he did not attempt to deny the part about Italians (though that would have been funny), he did write:

Chrysler Group's production plans for the Jeep brand have become the focus of public debate.

I feel obliged to unambiguously restate our position: Jeep production will not be moved from the United States to China.

OK, thanks for the clarification.  But wait, the letter goes on.  He spends a lot of time explaining how Chrysler is investing a lot in Jeep SUV development and production, and that many jobs are being added making Jeeps.  In fact, Jeep SUV's seem to be the big bright spot in the Chrysler turnaround, which is funny because Obama's logic for handing Chrysler over to Fiat for about a dollar was that Fiat would turn Chrysler around with all of its great small car designs.

Anyway, the really interesting part comes late in the article, where he says in paragraph 9:

Together, we are working to establish a global enterprise and previously announced our intent to return Jeep production to China, the world's largest auto market, in order to satisfy local market demand, which would not otherwise be accessible.

So Chrysler ... is going to build Jeeps in China.

This is why the whole "fact check" genre is so stupid.   We could fact-check this three ways, depending on what political axe we want to grind:

  1. We could say that Romney's ad was exactly correct, that Chrysler's CEO says it is going to build Jeeps in China, just as Romeny said.  Romney's statement is literally true as written, which one would think might be a good criteria for a fact-check.
  2. We could say that Romney's ad was misleading, because the implication was meant to be that Chrysler is shifting North American production to China, and they are not (Politifact took this tack).
  3. We could argue that Romney's entire premise is wrong, because what matters to long-term economic health and wealth creation in this country is that Chrysler is making the optimum production decisions, wherever the factories end up.  And further, that making these decisions the subject of political discourse virtually guarantees they will be made for reasons other than optimizing efficiency.  This is the fact-check I would make but you will not hear in mainstream media fact-checks, because the level of economic ignorance on trade in most of the media is simply astonishingly high.

Maybe Another Reason To Vote Romney

OK, there are lots of reasons to get Obama out of office.  The problem is, that for most of them, I have no reasonable hope that Romney will be any better.  Corporatism?  CEO as Venture-Capitalist-in-Chief?  Indefinite detentions?  Lack of Transparency?  The Drug War?   Obamacare, which was modeled on Romneycare?  What are the odds that any of these improve under Romney, and at least under Obama they are not being done by someone who wraps himself in the mantle of small government and free markets, helping to corrupt the public understanding of those terms.

So I am pretty sure I cannot vote for Romey.  I really like Gary Johnson and I am pretty sure he will get my vote.  Republican friends get all over me for wasting my vote, saying it will just help Obama win.  So be it -- I see both candidates undertaking roughly the same actions and I would rather that bad statist actions be taken in the name of Progressives rather than in the name of someone who purports to be free market.

To test my own position, I have been scrounging for reasons to vote for Romney.  I have two so far:

1.  Less likely to bail out Illinois when its pension system goes broke in the next few years

2.  I might marginally prefer his Supreme Court nominees to Obama's

That is about all I have.  Stretching today, I have come up with a third:

3.  If we have a Republican in the White House, the press will start doing its job and dig into the facts about drone strikes and warrant-less wiretapping.

You know the press are in full defense mode protecting their guy in office when the only press that reports on the ACLU's accusation about sky-rocketing wire tapping under Obama are the libertarians at Reason and the Marxists at the World Socialist Web site.  Four years ago the New York Times would have milked this for about a dozen articles.  It may take a Republican President to get the media to kick back into accountability mode over expansions of executive power.

A Good Reason To Get Obama Out of Office

OK, there are lots of reasons to get Obama out of office.  The problem is, that for most of them, I have no reasonable hope that Romney will be any better.  Corporatism?  CEO as Venture-Capitalist-in-Chief?  Indefinite detentions?  Lack of Transparency?  The Drug War?   Obamacare, which was modeled on Romneycare?  What are the odds that any of these improve under Romney, and at least under Obama they are not being done by someone who wraps himself in the mantle of small government and free markets, helping to corrupt the public understanding of those terms.

But here is one issue Obama is almost certainly going to be worse:  Bail outs of states.  States will start seeking Federal bailouts, probably initially in the form of Federal guarantees of their pension obligations, in the next 4 years.  I had thought that Obama would be particularly susceptible if California is the first to come begging.  But imagine how fast he will whip out our money if it is Illinois at the trough first?

Now that Chicago's children have returned to not learning in school, we can all move on to the next crisis in Illinois public finance: unfunded public pensions. Readers who live in the other 49 states will be pleased to learn that Governor Pat Quinn's 2012 budget proposal already floated the idea of a federal guarantee of its pension debt. Think Germany and eurobonds for Greece, Italy and Spain.

Thank you for sharing, Governor.

Sooner or later, we knew it would come to this since the Democrats who are running Illinois into the ground can't bring themselves to oppose union demands. Illinois now has some $8 billion in current debts outstanding and taxpayers are on the hook for more than $200 billion in unfunded retirement costs for government workers. By some estimates, the system could be the first in the nation to go broke, as early as 2018....

For years, states have engaged in elaborate accounting tricks to improve appearances, including using an unrealistically high 8% "discount" rate to account for future liabilities. To make that fairy tale come true, state pension funds would have to average returns of 8% a year, which even the toothless Government Accounting Standards Board and Moody's have said are unrealistic....

Look no further than the recent Chicago teachers strike. The city is already facing upwards of a $1 billion deficit next year with hundreds of millions of dollars in annual pension costs for retired teachers coming due. But despite the fiscal imperatives, the negotiation didn't even discuss pensions. The final deal gave unions a more than 17% raise over four years, while they keep benefits and pensions that workers in the wealth-creating private economy can only imagine.

As a political matter, public unions are pursuing a version of the GM strategy: Never make a concession at the state level, figuring that if things get really bad the federal government will have no political choice but to bail out the pensions if not the entire state. Mr. Quinn made that official by pointing out in his budget proposal that "significant long-term improvements" in the state pension debt will come from "seeking a federal guarantee of the debt."

I had not paid much attention to the Chicago teacher's strike, except to note that the City basically caved to the unions.  The average teacher salary in Chicago, even without benefits, will soon rise to nearly $100,000 a year for just 9 months work.  But I am amazed at the statement that no one even bothered to challenge the union on pensions despite the fact that the system is essentially bankrupt.  Illinois really seems to be banking on their favorite son bailing them out with our money.

Our Business Needs Government Funding Because We Don't Want To Drive Out Of State To Talk To Bankers

This is from an article in Distro, free publication that Engadget pushes to my iPad.  The only version I can find to link to is this pig of a pdf.  The article is on 38 Studios, the Curt Shilling video game company that the taxpayers of Rhode Island lost over $50 million funding.  This is a justification for a similar tech funding program in Nevada:

“The Catalyst Fund and the NCIC Fund are two of the best things that have happened in Nevada in the time that I’ve been here,” he said. “The biggest challenge facing Nevada is that we have very little in the way of risk capital. Our funding capacity is only a fraction of what our actual funding needs are.”

Meanwhile, most of the limited venture money available in the area tends to be in the hands of investors who lack familiarity with the tech sector, said Colin Loretz, co-founder and CEO of Web-based  startup Cloudsnap. Loretz — whose company recently received support from startup accelerator TechStars — ended up going out of state to secure funding from investors in San Antonio and San Francisco.

“What we’ve always found was that there were few funding options in Reno, and most of them didn’t understand what we were doing,” Loretz said. “They were very, very knowledgeable in more traditional areas such as manufacturing, mining and clean energy, but not cloud services.”

This is simply bizarre.  Why does every single geographical box we might draw on the map need to be self-sufficient in tech venture capital?  What is the big deal about going out-of-state for investment.  It can't be hard to do, since the person speaking actually did exactly that himself.

According to Google Maps, Sand Hill Road, the epicenter of tech venture capital, is just 4 hours and 24 minutes from downtown Reno by car.  That makes the venture capitalists in Menlo Park closer to Reno than to LA.  What is the big freaking deal that makes it so important for Nevada to have in-state tech venture capital, even at the cost of blowing a lot of taxpayer money to get there?

By the way, I thought this was a funny adjunct to that justification:

Meanwhile, Nevada officials said they have learned from the problems experienced by other states and built the necessary protections into their programs. Management of the NCIC fund, for example, will be overseen by a private equity firm, said Nevada State Treasurer Kate Marshall.

We need a state private equity fund because we have no private equity expertise in Nevada.  The state fund will be run well because we will put the (supposedly nonexistent) state private equity experts in charge of it.  Not to worry.  No chance at all that this state money will just be used to back and bail out the private equity managers' investments.

The article is light on details about how the whole Rhode Island debacle went down.  I would really like to find a step by step history that shows how debacles like this occur.

Part-Time Job for College Student

The trade group that represents companies like mine that privately operate public parks is looking for a college student to work part-time for us, either this summer or into the fall.  The ideal committment is 20 hours a week for 6-10 weeks but we could accommodate fewer hours for a longer span of time.  We are willing to pay in the ballpark of $13 an hour plus expenses (phone and Internet bills, etc).  We anticipate the candidate would work from his or her own home (or dorm) and already has access to a computer and Internet connection as well as a word processing software of some sort.

Job responsibilities would include:

  • Working with our members to accumulate and organize our intellectual property vis a vis this business.  This includes marketing material, regulatory and statutory information, how-to guides, etc.
  • Working with our partner agencies, like the US Forest Service, to get statistics on our members' scope  (e.g. we don't even know how many US Forest Service parks are run privately) and to synthesize these into marketing materials

The candidate need not have any specific knowledge of our business, and we have experts in the organization that can supply contacts and information.  Being an all-volunteer organization, we need someone with the time and the focus to gather and organize the information we have.  The candidate will have direct contact with the CEO's of most of the key players in this industry as well as with senior staff officers of a number of public recreation and lands agencies.    We want someone who is bright and unafraid to approach, even pester, strangers for information.  Quantitative skills and/or economics or business-related studies are a plus but are not required.  Experience with web tools such as content management systems like WordPress also a plus.

If someone is interested, have them email me at warren -at- camprrm *dot* com or hit the email link above.

Awesome

I know this is one reason ExxonMobil is hated by many, but you gotta love a CEO who is actually willing to speak his mind rather than spew the reconstituted generic platitudes that you get from most companies.  From CEO Rex Tillerson:

"If you want to live by the precautionary principle, then crawl up in a ball and live in a cave."

 

Where Did Those First Solar Subsidies Go? $32 Million went to their Failed CEO

It would be impossible to trace all the ways taxpayer money ends up in the coffers of solar manufacturers like First Solar.  Most of First Solar's money has been made selling panels in Germany to solar plants that, by law, can rape electricity customers with prices 10-15x higher than the market price for electricity.  First Solar also benefits more directly from direct subsidies, loan guarantees, "retraining" subsidies and even government Ex-Im Bank loans to sell panels to itself.  While First Solar vehemently denies it is a subsidy whore, it is telling that when Germany began to cut its solar feed-in tariffs, First Solar's stock price fell from over $300 to around $20.  Just watch day to day trading of First Solar stock, it does not move on news about its efficiency or productivity, it moves on rumors of changes in government subsidies.

Let's look at one subsidy.  In 2010, the Obama administration gave First Solar a subsidy of $16.3 million, ostensibly to help open a new plant in Ohio.  But it is interesting that this private company, which apparently could only raise the $16.3 million it needed by taking it by force from taxpayers, had plenty of money to pay its CEO.  In the 13 months leading up to its $16.3 million taken from taxpayers, First Solar paid its new CEO $29.85 million!  

Rob Gillette, the ousted CEO of First Solar Inc., earned more than $32 million in compensation from the struggling company for his two years of service, according to a regulatory filing Wednesday.

Gillette came to First Solar from Phoenix-based Honeywell Aerospace in October 2009 and was fired by the Tempe-based solar company's board of directors in October 2011....

Most of his compensation came in the three months of 2009 that he worked, when his total compensation, including salary, bonus, stock and options awards and other perks, reached $16.55 million. In 2010 his total compensation was $13.3 million, and last year he earned $2.46 million, which consisted of $763,000 in base salary and a $1.7 million severance.

Yep, they can't scrape up $16.3 million of their own money for a factory but they can find $30 million to give to an unproven CEO they eventually had to ride out on a rail.

By the way, I don't know Mr. Gillette, but I was once an executive at Honeywell Aerospace for several years.  I can tell you that it's a great place to find an executive who is focused on process to manage large complex organizations in a relatively stable business where manufacturing, logistics, and schmoozing large buyers is important.  It is a terrible, awful place to seek an executive for a fast growing business that needs to rapidly shift business strategies and where grinding through the process gets the wrong answer 12 months too late.

OMG, We Have Really Hit Bottom - Young People Forced to Work to Support Themselves

Back when he was blogging, TJIC had a nice little animated gif with people running around yelling "Oh Noz."

 [update:  sent to me by by the folks at finem respice]

I wish I had it for this chart and the accompanying text  (via Kevin Drum)

Many young adults have felt the impact of the recession and sluggish recovery in tangible ways. Fully half (49%) of those ages 18 to 34 say that because of economic conditions over the past few years, they have taken a job they didn’t really want just to pay the bills. More than a third (35%) say they have gone back to school because of the bad economy. And one-in-four (24%) say they have taken an unpaid job to gain work experience.

First, this study is great evidence of my "what is normal" fail.  There is no baseline.  OK, 24% moved back in with their parents.  How many did this in good times?  How much worse is this?

But the real eye-catcher to me is that somehow I am supposed to be shocked that people have to find a job to pay the bills.  Even a job that, gasp, they really didn't want.  I have a clue for you.  A lot of jobs 22-year-olds have to take are not that compelling.  Mine were not.  Despite what colleges seem to be telling them, the world does not offer up a lot of really cool jobs to inexperienced young adults.  Long before you are closing deals with CEO's, you are probably writing sales literature in some cubicle.

And by the way, I am struck by how wealthy our society is when I look at this chart.  Look at answers two and three.   In both cases, people are saying that in tough times, they chose to forego income and build their skills, even perhaps paying for the privilege.  What other time in history would people have this luxury?  How many countries today would have so many people with this luxury in hard times?  Even in the Great Depression in this country I don't think we saw the same phenomenon.  Obviously the economy sucks and it would be great for everyone for it to improve, but in most other times and even in many other countries in the world today, a significant bar in bad times would have been "I starved to death."

Prosecutorial Abuse

While nominally about the Gibson Guitar raid, this article is actually a great primer on abusive prosecutorial tactics businesses are increasingly facing

Prosecutors who are looking for an easy “win” know that businesses roll over. A public raid on its offices, or an indictment of its officers, can destroy a business’s reputation and viability. That makes the owners easy to intimidate into a plea bargain.

If they choose to fight, they face the full wrath and fury of the feds. In the Gibson raids, the SWAT teams were deployed even though Gibson had offered its full cooperation to investigators. Such raids are increasingly used to intimidate citizens under suspicion. The orchid importer, a 65-year-old with Parkinson’s, was shoved against a wall by armed officers in flak jackets, frisked, and forced into a chair without explanation while his home was searched

The government also attempts to get low-level employees to “finger” their bosses. For example, the feds threatened Gibson employees with long prison sentences. This is not a search for truth, but an immoral attempt at extortion to win convictions. Investigators examine the lives of “little fish” and use minor, unrelated violations (smoking a joint, or exaggerating income on a loan application) to pressure them to back the government’s case against their employers. Mobsters have experience with threats like this, but a secretary or an accountant is scared to death by the threat of prosecution.

A favorite ploy of prosecutors in these cases is to charge defendants with false statements based on their answers to the investigators. The sentence for this can be five years in prison. No recording is made of the interviews — in fact, the feds prohibit taping the interviews — and the agents are not stenographers. They cannot possibly recall the exact wording of the questions and the answers. Yet after the interview, they will produce a “transcript” replete with quotes throughout. And if a witness says he did not actually say what the agent put in quotes, it is the witness’s word against a fine, upstanding federal agent’s. Staring at a five-year sentence will get most people to say whatever the government wants them to.

The feds also pile up charges. According to Juszkiewicz, the Justice Department warned Gibson that each instance of shipping a guitar from its facility would bring an added charge of obstruction of justice. Prosecutors routinely add extra counts to stack potential prison sentences higher. For instance, faxing invoices for the wood would be charged as wire fraud. Depositing the check for the sale of the guitars would be money laundering. The CEO’s telling the press he is innocent would bring charges of fraud or stock manipulation. The intent is to threaten such long sentences that the targets plead guilty rather than risk decades in prison.

Prosecutors further tighten the screws by seizing the assets of the company, a tactic once used against pirates and drug lords but now routinely used to prosecute white-collar crimes. The federal agents seized six guitars and several pallets of ebony during their initial 2009 raid against Gibson. Federal law allows assets to be seized not just from convicted criminals, but also from those never charged. Owners must prove that the forfeited property was obtained legally; otherwise, the government can keep it. That gives the government incredible leverage, because without the seized inventory and bank accounts, the business will most likely go under. How can Gibson make guitars if the wood is being held by the government? How can it service customers when the government took its computers as evidence? How can it pay lawyers when its bank accounts were seized? Asset forfeitures bring to mind a similar twist on the law uttered by the Queen of Hearts in Alice in Wonderland: “Sentence first, verdict afterwards.”

Imagining Washington Budget Shenanigans Played Out in a Corporate Board Room

For all the criticism by the Left of corporate corruption, nothing that goes on in even the most dysfunctional corporations matches business as usual budgeting in Washington.  This week in my column at Forbes I present a few vignettes imagining Washington budget logic in a corporate board room.  A sample:

Board Member: Let’s get started.  After an absolutely disastrous year, financially, we’re now five months into our fiscal year and you still have not presented us with a budget for this year.  Why?

CEO Obama: My staff was waiting until their employment contracts were renewed before we presented a budget.

Board Member:  Excuse me?

CEO Obama: You remember — many of my associates in the company had their contracts up for review in November.  They were afraid they might lose their job if you did not like their budget work, so they delayed introducing any budgets until after you renewed their 2-year employment contracts.

Board Member: That seems unbelievably deceptive and feckless.  But let’s leave that aside for a moment.  November was still several months ago, why have we seen no budget since then?

CEO Obama: Well, as you know, I have a number of rivals for my job in this company.  I want to force one of them to suggest a budget first.

Board Member: Why is that?  It seems to me it is your job as leader of this organization to define the budget, particularly given the unprecedented fiscal challenges we face.

CEO Obama:  If I propose a budget first, everyone will just shoot holes in it.  If I let someone else come forward with the budget, I can snipe at it and make my rivals look worse.  In particular, I think that Ryan guy down in Finance may be dumb enough to create a plan.  If he does, I can spend so much time making him look bad you will forget I never submitted a plan of my own.

Dispatches from The Corporate State

This is the kind of story I always thought typical of corporate states like France. It is sad to see this happening so frequently in the US

Recently, President Obama selected General Electric CEO Jeffrey Immelt to chair his Economic Advisory Board. GE is awash in windmills waiting to be subsidized so they can provide unreliable, expensive power.

Consequently, and soon after his appointment, Immelt announced that GE will buy 50,000 Volts in the next two years, or half the total produced. Assuming the corporation qualifies for the same tax credit, we (you and me) just shelled out $375,000,000 to a company to buy cars that no one else wants so that GM will not tank and produce even more cars that no one wants. And this guy is the chair of Obama's Economic Advisory Board?

This is the classic kind of cozy relationship between large industrial corporations and government that has been a feature of European states for years.

The Perfect Story Will Combine Joe Arpaio and Sex with Dogs

This soooo reminds me of Dave Barry's Interview years ago with reason.

​The Maricopa County Sheriff's Office busted two guys -- one of whom was an elementary school music teacher -- last month who allegedly used Craigslist to try and have sex with a dog, and the sheriff seems to think it's becoming a trend -- despite it only happening once.

Sheriff Joe Arpaio earlier this week wrote a letter to Craigslist CEO Jim Buckmaster alerting him of his office's findings and advising him to re-examine security policies on the website to make sure people don't use it to coordinate sex with animals -- again, despite it only happening one time that the sheriff knows about.

Here is the quote from Barry's interview: And here is my post on it

John wrote about it and he got into the usual thing where he immediately got to the question of whether or not you can have sex with dogs. The argument was that if it wasn't illegal to have sex with dogs, naturally people would have sex with dogs. That argument always sets my teeth right on edge....

I got a few letters, mostly pretty nice. One or two letters saying, "Here’s why it wouldn’t work to be a libertarian, because people will have sex with dogs." Arguments like, "Nobody would educate the kids." People say, "Of course you have to have public education because otherwise nobody would send their kids to school." And you’d have to say, "Would you not send your kids to school? Would you not educate them?" "Well, no. I would. But all those other people would be having sex with dogs."

For-Profit Education Regulations

Here are apparently a couple of the new regs for-profit colleges are expecting:

One proposed rule, which is expected to be finalized this spring, will restrict students from using federal financial aid to pay for programs that rack up excessive loan debt but train students for occupations with relatively low entry-level salaries.

A second rule, which will go into effect this summer, will close loopholes that allowed admissions counselors to be compensated based on how many students they signed up

The first rule is particularly interesting to focus on, especially given that they do not apply to government-run schools.  This means that if you want to go to UCLA and run up loads of debt in economically dead-end majors like women's studies or art history, you are still free to do so.  But go forbid you want to study to be a nurse or a teacher at the University of Phoenix.  This from the CEO of Apollo, the parent company of University of Phoenix

some of the trade-school-type programs may be more vulnerable because of gainful employment (the anticipated federal rule about debt and entry-level salaries). . . . Gainful employment will cause programs, in areas such as nursing or teacher education or law enforcement, (for) for-profits not to be able to offer them . . . (because the federal formula) uses first-year salaries.

I can tell you my first-year salary for what I wanted to do wouldn't have qualified. It takes time.

Two things you can expect from any set of regulations.  1) Large companies will eventually benefit, because the compliance costs will weed out smaller companies and deter future startups.  2) Innovation will be reduced, as certain established business models and practices will become safe harbors under the rules, adding risk to anyone wishing to try an additional approach.