Posts tagged ‘marketing’

The Days I Love My Job

I write on this blog a lot on those days in my job that get me down.  That only makes sense because I write about government regulatory policy vis a vis business and it is government interventions that often cause me the most heartache.

But there are good days too.  I have been putting together a new division and really need someone with b2b sales and marketing experience to run it and get it going.  I was just trying to figure out how I wanted to do a search when a resume came to me unsolicited from a current employee who has done a great job for us.  Basically they were applying for our manager training program (all our campground managers start in front-line service jobs).   Well, it turns out this guy who is currently cleaning bathrooms and doing landscaping for us in a campground is recently retired from over 10 years running a sales force for a $80 million industrial company and more recently running the whole division for that company for 2 years.  Talk about just finding a $100 bill lying on the sidewalk!

The Value of Branding

This is yet another in a series of posts on the value of branding (previous iterations include here and here).  Socialists and anti-capitalists often deride branding as, at best, a complete waste of resources and at worst a huge value destruction in that the marketing associated with branding tricks consumers into buying products they don't want or need.  This argument that consumers effectively lack agency in the face of corporate marketing is characteristic of a broader class of capitalist critiques that assume the powerlessness of individuals to make good choices.

I don't buy into these critiques because I think individuals are hugely powerful in a capitalist system, far more powerful in fact than they are in any more authoritarian system  (just ask Toys R Us and Pontiac).  Brands are obviously useful to producers as they help create barriers to entry and a potential basis for obtaining a price premium.  But they also have benefits to consumers.  I ran into one this morning.

My 21-year-old daughter is in another city and called to say that she thought she had a bad tire on her car and was not sure what to do.  Every dad worries about his daughter when she is on her own (I know, patriarchy, but I am not apologizing) and this is particularly true in car repair because women have historically been taken advantage of in many car repair situations.  But I sent her without hesitation to the local Discount Tire store.  That's because I knew from past experience with several of the stores in this chain that the stores were clean and safe and the people who worked there were fair -- they have never tried to charge us for something we don't need.  My wife goes there all the time because she is kind of panicky about her tires and most of the time they tell her the tires are fine and fill them with a bit of air and send her on her way with no charge.  They easily could have sold her a crapload of tires she didn't need but have never done so.  So it was with relief that I saw Discount Tire had a store near her.  Sure enough, she just needed air (is this sort of tire-related behavior genetic?) and they were very nice to her and filled up the tire and told her she was fine.

This is the power of branding.  From a distance, without any chance to inspect or check out the establishment, I knew exactly what the store would look like and was pretty confident how their employees would treat my daughter.  That has real value.

Fraudulent Caller ID

You guys know me, I am not calling for some new law or government program.  But I would like to see the telephone companies exercise a little bit of basic professionalism.  The last several spam marketing calls (50/50 it is either for toner or credit card processing) have had legitimate-looking caller IDs that have caused me to actually pick up the phone when I would have normally let it ring through.  This morning's call from a credit card processor showed up as "Pediatric Urology" in Phoenix.  Really?  I guess they are pissing on my time, but other than that I think this is BS.  I don't think it is too much to ask that the caller ID match the business name or individual who is paying for the phone line.  I have this problem even more on calls to my cell phone where spam businesses have somehow obtained caller IDs that are just for individual's names.

Postscript:  It is amazing to me, given the sheer volume of calls I get for merchant (credit card processing) services that there actually seems to be an expectation someone might actually say, "wow, I never ever thought of accepting credit cards, tell me how it works?"  I find this super hard to believe but it must happen or else people wouldn't be paying a lot of real money to make these calls.  So PLEASE, all you business people out there, do not buy things from cold callers.  I promise you can just google whatever they are selling and likely find a better deal online.

Also, if you are starting your own business, do not -- whatever you do -- put any personal phone in your state business registration files.  These are the files all these spammers mine for prospects.  I finally had to change my home phone number because I made this mistake and we could not stop getting 5 phone calls a day from toner and credit card processing sales people.

Postmortem on SolarCity

Two years ago, I wrote about the acquisition of SolarCity by Tesla.  I thought this represented near-criminal self-dealing at the time and there has been little since to convince me otherwise.  As I wrote then:

This is honestly one of the weirdest acquisition proposals I have seen in a long time:  Elon Musk's Tesla offers to buy Elon Musk's Solar City.

This makes zero business sense to me.    This is from the press release:

We would be the world’s only vertically integrated energy company offering end-to-end clean energy products to our customers. This would start with the car that you drive and the energy that you use to charge it, and would extend to how everything else in your home or business is powered. With your Model S, Model X, or Model 3, your solar panel system, and your Powerwall all in place, you would be able to deploy and consume energy in the most efficient and sustainable way possible, lowering your costs and minimizing your dependence on fossil fuels and the grid.

I am sure there are probably some hippy-dippy green types that nod their head and say that this is an amazing idea, but any business person is going to say this is madness.  It makes no more sense than to say GM should buy an oil production company.  These companies reach customers through different channels, they have completely different sales models, and people buy their products at completely different times and have no need to integrate these two purchases.  It is possible there may be some overlap in customers (virtue-signalling rich people) but you could get at this by having some joint marketing agreements, you don't need an acquisition.  Besides, probably the last thing that people's solar panels will ever be used for is charging cars, since cars tend to charge in the garage at night when solar isn't producing.

One might argue that some of the technologies are the same, and I suppose some of the battery and electricity management tech overlaps.  But again, a simple sourcing agreement or a battery JV would likely be sufficient.

So what do these companies share?

I went on to discuss several possible reasons for the deal but settled on this one as the best explanation:

I have no inside information here, but this is the best hypothesis I can put together for this deal.  SolarCity has huge cash needs to continue to grow at the same time its operating margins are shrinking (or getting more negative).  They are having trouble finding investors to provide the cash.  But hey!  Our Chairman Elon Musk is also Chairman of this other company called Tesla whom investors line up to invest in.  Maybe Tesla can be our investor!

The reason I call this two drunks propping each other up is that Tesla also is also burning cash like crazy.  It is OK for now as long as it has access to the capital markets, but if it suddenly lost that, Tesla would survive less than 6 months on what it has on hand.  Remember, SolarCity was a golden child just 3 years ago, just like Tesla is today.  Or if you really don't believe that high-flying companies that depend on access to the capital markets can go belly up in the snap of a finger when they lose their luster with investors, I have one word for you:  Enron.

Essentially, I saw the SolarCity deal as a bailout of Musk's and his friends' and family's investments in SolarCity by Musk-controlled Tesla.  Nothing that has happened since has convinced me this is wrong.  The most prominent evidence has been the dog that never barks -- SolarCity, or Tesla Energy as it is called, is almost never mentioned in conference calls and investor communications by Tesla any more -- certainly the rooftop business is not.  The only thing that ever seems to get a mention are a few big standby battery installations in Australia.   Turns out there was a reason (via Seeking Alpha):

This was a dying business when Tesla bought it an insiders all knew it.

Disclosure:  I tend to short Tesla when it reaches the 350/360 level and cover when it drops into the 200's.

Update:  Here is a great timeline of the whole sorry history of the SolarCity acquisition by Tesla.  This paints an even worse picture than I was aware of.

IHOP And Modern Marketing

The International House of Pancakes announced the other day that they are changing their name to International House of Burgers, or IHOb.   I am 99% certain that this is just a marketing gimmick, a way to get social media buzz, after which they will "as a result of public pressure" go back to the old name.  A sort of intentional version of what Coke did years ago by accident with New Coke.

So far, I would judge it to be successful.  They were talked about on several national radio shows that I listen to (on sports talk radio, no less) and got a day's worth of media coverage (and presumably another day's worth when they change back).  This is a LOT of free advertising for a brand I have heard absolutely nothing about for years (except from my 21-year-old daughter who still makes me take her there from time to time for funny face pancakes.)

Brand strategy has really evolved a lot from when I was in B-school.  In the 1990's my wife was a brand manager at Frito-Lay and brand management at the time seemed incredibly conservative.  There were very defined, tightly-spaced rails that circumscribed what you could do with a brand.  But that is so boring it gets nowhere on social media.  "Fritos! They are... uh... everything they always have been."  This IHOP gimmick (and Budweiser's temporarily changing its name to America) demonstrate a lot less risk-aversion with core brands in a social media era where one has to be outrageous to get attention.

Postscript:  I was in Santa Monica the other day and saw something where they had a really lame, forgettable tag line for the city.  I wanted to help them with some catchier phrases.  Like, "Santa Monica:  World's Nicest Homeless Shelter" or "Santa Monica:  Watch Out For That Scooter!" or "Santa Monica:  You Want HOW MUCH for Rent??"

"Water Is The Most Mispriced Commodity In The World". I agree

A few years ago there was a contest here in Arizona to see who could submit the best water conservation marketing campaign.   I submitted a picture of my water bill with the price photo-shopped so it was doubled.  Politicians here in Arizona subsidize the hell out of water, block or refuse to fund infrastructure projects that would produce more, and then blame consumers for shortages.

Anyway, Zero Hedge quotes a guy named Rick Rule, who I don't know, on a variety of commodities but his bit on water really struck me:

Following their discussion of nuclear energy and the future of uranium pricing, Townsend posed a much broader question: What will be the most important themes in the natural resources market in the coming years and decades.

Rule's answer might reinforce readers' anxieties over the availability of water - something that's already been widely discussed because of Cape Town's looming "Day Zero." Rule even went so far as to call water "the most mispriced commodity on Earth".

The third place – and this is very much more difficult to implement – is water. Water is the most mispriced commodity in the world. Because water is allocated politically. It is believed to be a right, as opposed to a commodity. The consequence of that – as an example, here in the US Southwest, we have taken sources of water, like the Colorado River, and we have allocated approximately 130% of the flow of the river to various claimants. This is sort of hard on the river. You have a circumstance where water flows uphill to votes rather than downhill for money. And you can’t allocate something that doesn’t exist.

And also because of the structure of the American water business. Because of the fact that most of it is delivered politically rather than via markets. The rents that go to water, while they are insufficient to maintain supply, go to municipalities. And they go to fund current political goals as opposed to maintaining the infrastructure for the production and distribution of water.

It is believed, on a country-wide basis, that we have deferred as much as 3 trillion dollars in sustaining capital investments in the water business. I can’t tell you when this theme comes home to roost. But when it does come home to roost, this might be one of the great resource themes of all time.

What is the Essence of a Two By Four?

Decades ago, common carpentry practice (later set in stone by written regulations) specified that certain applications needed a 2 inch by 4 inch board.   The reason this board was chosen was not due to its size per se (in most cases, for cost and space issues, I am sure folks would love to have gotten away with something smaller).  This size board was chosen for a specific application by its load-carrying ability.   For example, two inch by four inch boards spaced every 16 inches apart created acceptably strong framing for a wall.

Anyway, after many years of making lumber, the timber and lumber industry found ways to make the 2 inch by 4 inch board much stronger.  Well, not always stronger, but more uniform in strength such that the weakest board in a batch was much closer to the average than before.  But for standards, this has about the same effect -- 2 inch by 4 inch boards could be considered to be much stronger since the expected value had to be set at the minimum that might be encountered.

So now, all the standard applications are over-designed.  We can get away with a smaller, cheaper board than a 2x4.  Or, for those of you less focused on capitalism and more focused on environmentalism, we can use fewer trees to build the same house.  But how do we switch an entire industry that is steeped from birth as to what a 2x4 should be used for?  How do we rewrite a myriad of regulations that all call for a 2x4?

Well, in the lumber industry, they redefined the 2x4 to actually be something like 1.5 x 3.5 actual inches, a board which under new production processes has the same predicted strength as the old 2" by 4" boards.  In effect, they decided that the essence of a 2x4 was not its dimensions, but its load-carrying ability.  Almost any engineer can understand this immediately.  This means we still frame walls with 2x4's spaced every 16 inches, but the lumber is smaller and less expensive than it was before.  Standards and training don't have to change.  Architects maybe had to adjust a bit because their wall widths changed slightly, but a 3.5 inch board width actually is a nice number because with sheets of 3/4 inch drywall on both sides it makes for a nice round number 6" thick wall.

All of this is background to this absurd story, is using this history to try to commit legal blackmail against a couple large home store chains (via Overlawyered):

Two home improvements stores are accused of deceiving the buyers of four-by-four boards, the big brother to the ubiquitous two-by-four.

The alleged deception: Menards and Home Depot (HD) market and sell the hefty lumber as four-by-fours without specifying that the boards actually measure 3½ inches by 3½ inches.

The lawsuits against the retailers would-be class actions, filed within five days of each other in federal court for the Northern District of Illinois. Attorneys from the same Chicago law firm represent the plaintiffs in both cases. Each suit seeks more than $5 million.

“Defendant has received significant profits from its false marketing and sale of its dimensional lumber products,” the action against Menards contends.

“Defendant’s representations as to the dimension of these products were false and misleading,” the suit against Home Depot alleges.

The retailers say the allegations are bogus. It is common knowledge and longstanding industry practice, they say, that names such as two-by-four or four-by-four do not describe the width and thickness of those pieces of lumber.

 

Great Moments in Regulation

Here is what you are paying your government to spend time on:

The age-old question has finally been answered: No, Snuggies are not clothing.

Earlier this month, a federal court ruled that Snuggies, the As Seen on TV 'blanket with sleeves', should be classified as blankets, and live as a separate entity from robes or priestly vestments.

The ruling followed the Justice Department's argument that Snuggies are apparel and not blankets, so they should be 'subjected to higher duties than blankets', reports Bloomberg.

Judge Mark Barnett of the Court of International Trade said during the trial that the Customs and Border Protection was in the wrong to classify Snuggies as apparel. Barnett cited the Snuggies' use of marketing as a blanket, specifically referencing its packaging with the phrase, "The Blanket With Sleeves!".

The judge added that those who purchase Snuggies may likely be "in the types of situations one might use a blanket; for example, while seated or reclining on a couch or bed, or outside cheering a sports team."

In Barnett's opinion, the addition of sleeves 'was not enough' to have the Snuggie be considered a piece of clothing. He added the use of sleeves allowed the Snuggie "to remain in place and keep the user warm while allowing the user to engage in certain activities requiring the use of their hands."

More so, Judge Barnett rejected the idea a Snuggie may also be similar in fashion to priestly vestments or scholastic robes which also use wide sleeves and a loose fit around the body. In his ruling, the judge argued that robes open from the front, and priestly vestments and scholastic robes have no opening on either side, so the role of a Snuggie as a garment is invalid.

Mea Culpa

The history of this blog has been, except for the last three months, one of me never ever making political prognostications.  This is a policy I will return to, as I was completely wrong about this election.  Just to rub my own nose in it, this is what I wrote:

I think that "shackled to a suicide bomber" is more apt. Trump is not only going to lose big in this election to an incredibly weak Democratic candidate, but he is also going to kill the Republicans in the House and Senate and any number of down-ballot elections.

Oops.  At this point the election is not decided but Trump is clearly competitive and the Republicans look likely to hold on to both houses of Congress.

In business school, there is a famous project we do in marketing that teaches an important lesson.  In that project, a bunch of Ivy Leaguers are asked to estimate the percentage of people in the US who snow ski.  We all look around the table and say, "I ski and you ski and she skis, so it must be about 80%", when in fact the percentage is in the single digits.  The lesson is to not make predictions for whole markets (and countries) based on one's own personal outlook and experience.  I and many other clearly did not understand large swathes of the electorate, something I want to think about for a bit.   The one thing I am sure about is that my (and many others') attempt to apply a policy framework to this is simply not going to work.  Trump is a sort of anti-wonk, a governmental Loki. Policy choices likely don't explain this election.

Looking for A Digital Marketing Specialist

If you know anyone in the Phoenix area who might be interested, have them apply.  Please do not apply by putting something in the comments section.

Phoenix digital marketing specialist for campground company

Update:  fixed the link

If You Want to Worry About Something Other Than This Election....

From the WSJ:

A Midwestern metropolis is under attack from an unseen enemy, with victims pouring into doctors’ offices and pharmacies with telltale wounds.

“Right now I don’t even want to go outside to get the paper,” said 82-year-old Chuck Heinz, a retired manufacturing manager whose upper torso is peppered with dozens of welts.

Megan Kinser, who has been attacked at least two dozen times, goes out only when she has to. “It makes me nervous,” said the 32-year-old pharmacy assistant.

The culprit: Pyemotes herfsi, otherwise known as the oak leaf itch mite.

The eight-legged pest causes intense itching in humans. Native to Central Europe, researchers believe it made its U.S. debut in the 1990s in Kansas City and has since spread to many parts of the Midwest, with outbreaks happening every three to eight years. Nearly invisible to the eye at 1/100th of an inch, the mites are back in full force.

“You can’t see them, they’re microscopic and before you know it they’re under your skin,” said Jared Mayberry, marketing director of Ryan Lawn & Tree in Overland Park, Kan.

People are being told to wear hats and cover most of their skin when they go out and to jump in the shower as soon as they go inside. And to avoid walking under red oaks, particularly pin oaks.

But with at least 3.5 million pin and other red oak trees in the Greater Kansas City area, according to a 2010 estimate by the Agriculture Department, that may be easier said than done.

The arachnid becomes of most concern to humans in the fall, after it spends all summer feasting on the larvae of a gall midge, a fly that nests in oak leaves.

The itch mites eventually tumble to Earth this time of year—as many as 300,000 a day per tree.

You're Wasting Your Vote -- Not

People ask me who I am voting for in the Presidential election this year about five times a day.  I wish they wouldn't.  Asking me about the upcoming election is a bit like having people constantly asking me if I am looking forward to my root canal next week.  I find the whole subject of elections depressing -- these are people competing to exercise power over me that they should not have -- and this feeling only is worse with the horrendous choices we are being offered this year by the major parties.

But I play along, and tell them I am voting for Gary Johnson.  And then I get, about 100% of the time, this retort -- You're wasting your vote!

What the hell does this mean?  Since we keep voting and nothing really changes in the corrupt actions of a power-hungry government, I suppose one could call that a wasted vote, in the same spirit of "doing the same thing over again and expecting different results."  Many libertarians refuse to vote, both for this reason and to avoid giving their sanction to those who seek to exercise power.  But that is now what most people mean when they say I am wasting my vote.

What they mean is that any vote that is not for one of the two main Coke or Pepsi parties is wasted because the system has been structured by these two parties to make third party runs effectively hopeless (in much the same way that Coke and Pepsi coordinate their actions in the retail channel to exclude rivals from shelf space).

This is clearly brilliant marketing by the two major parties to get this phrase so embedded in everyone's head, but it is stupid.  For example, by this same logic, any vote for a losing candidate is wasted, so 47 or 48 percent of people are always wasting their vote.

The two major parties are going to continue producing the same crap candidates by the same process and espousing the same stale statism until people start voting for someone else.

I know a lot of folks fear a Trump presidency so much they are willing to hold their nose and vote for Clinton just to make sure that is avoided.  I can't necessarily argue with that logic.  Clinton is a conventional candidate and at least will suck in conventional and predictable ways.  But I am more confident in the robustness of the American system to withstand bad Presidents, even perhaps as bad as Trump.  I will say I would have been more confident in this statement 16 years ago before the last two Presidents worked so hard to erode Constitutional safeguards and checks on the power of the President.  On this dimension (and really only on this dimension) a Trump presidency might at least have one silver lining, in that it would sure as hell cure the Left of their love for the imperial presidency.

Will Aspirin Become the Next Epipen?

Aspirin is grandfathered from all the FDA silliness, right?  That's what I thought until this:

But if the FDA gets its way, nitroglycerin will not be obtainable for pennies. The situation was stable until Pfizer went through the time and expense required to test its particular version of nitroglycerin, Nitrostat, which the FDA approved in 2000. Once the FDA did that, other versions became officially "unapproved." In 2010, the FDA sent warning letters to two companies, Glenmark and Konec, ordering them to cease marketing their versions of nitroglycerin, known as sublingual nitroglycerin tablets, leading to the New York Times headline above. The article quotes Dr. Harry M. Lever, a cardiologist at the Cleveland Clinic, who said, "If it's not approved and no one has tested it, we can't be sure that it's safe and effective." He added that if patients with angina took substandard or ineffective nitroglycerin tablets, their pain might not subside and the problem could potentially progress to a heart attack.

His statement is false. The unapproved versions have been tested in three important ways: the companies that manufacture these drugs thoroughly vet them to make sure that they are pure and offer a consistent dose of nitroglycerin; these marketed drugs have been tested in the bodies of millions of Americans in regular medical practice over many years; and many different organizations have tested nitroglycerin in countless clinical trials.

I can't think of anything about the situation in nitroglycerin that doesn't obtain for aspirin.  By this, all it would take would be for one company to have the cojones and cash to get FDA approval for their aspirin and they might be able to wield a monopoly.

Why Don't Progressives Use Their Power as Hedge Fund Customers to Challenge Hedge Fund Compensation?

Kevin Drum observes that the top 25 hedge fund managers earned $13 billion in total, including one hapless dude who made $250 million despite losing money and shutting down the fund.

I will say that I have always scratched my head over asset manager compensation.  The tradition is that they get paid as a percentage of assets managed, sometimes with a percentage of the profits as well but never taking a percentage of the losses.   Perhaps this made some sense with smaller pools of money, but today with huge pools of money, the same old percentages yield ludicrous compensation results.  I certainly understand why the managers would defend this compensation scheme, but why do customers accept it?

This reminds me of real estate broker compensation.  The tradition when I grew up is that the seller paid 6%, about half of which went to the seller's broker and half to the buyer's broker.  For years that 6% was etched in stone and no one broke ranks -- the agents were pretty good at maintaining the cartel, and the government helped by putting the force of law behind broker licensing that helped keep the agent supply down.  But as home prices kept increasing, people started noticing that while 6% of $100,000 may have made some sense as reasonable compensation, 6% of $2 million was absurd, especially since a $2 million home was not even close to 20x harder to sell.   So people, initially savvy high net worth folks, and later everyone, began negotiating the 6%.  I have negotiated this number on every home I have sold since the mid-1990s.

I am not really knowledgeable about the asset management business -- in some sense I have negotiated my commission by choosing to put all my money in low-fee Vanguard funds.  How does the asset management business hold the line on fees, particularly when they are in a business where it is so easy to measure their relative performance, and presumably pay them based on this performance?

Which got me to thinking about the customers of hedge funds.  Aren't many of these customers progressive or controlled by progressives?  Hedge funds have been very successful marketing to university endowments, non-profit foundations, and public pension funds -- aren't these institutions often controlled by progressives, or at least left-liberals?  Aren't a disproportionate share of the very high net worth Hollywood and billionaire types who invest in hedge funds also progressive or liberal?  Heck, Hillary Clinton's son-in-law ran a hedge fund until recently.  So why don't these folks get together and instead of worrying about whether their portfolios are invested in Israel or Exxon or some other progressive bette noir, why don't they agree to a set of principles as to how they are going to pay for their asset management services in the future, and stick to these?  I say that progressives should get together, because they are politically passionate about this, but I can't think of any good reason why good libertarians or conservatives wouldn't happily join in to reduce their fees.

I understand that to the extent that there are black swan hedge funds that beat the market year in and year out, these folks will be hard to challenge as they can probably write their own terms.  But for the other 99% of hedge funds, why not use the power progressives already have as customers before we start talking about various government hammers.

PS-  I will put my two cents in.  I think the new Mother Jones site design is awful.

A Blast From My Childhood

Apparently, the sea monkey and x-ray glasses business empire is being fought over by several people.  I would have bet that the business did not exist any more, but apparently it still sells several million dollars a year of the little engineered brine shrimp.  This is a fascinating article throughout, both on the history of sea monkeys, the marketing genius that made it work, and the current legal fight.  Link via Tyler Cowen.

Congress Almost Always Rewards Failed Government Agencies. Here is Why

One can build a very good predictive model of government agency behavior if one assumes the main purpose of the agency is to maximize its budget and staff count.  Yes, many in the organization are there because they support the agency's public mission (e.g. protecting the environment at the EPA), but I can tell you from long experience that preservation of their staff and budget will almost always come ahead of their public mission if push comes to shove.

The way, then, to punish an agency is to take away some staff and budget.  Nothing else will get their attention.  Unfortunately, in most scandals where an agency proves itself to be incompetent or corrupt or both (e.g. IRS, the VA, more recently with OPM and their data breaches) the tendency is to believe the "fix" involves sending the agency more resources.  Certainly the agency and its supporters will scream "lack of resources" as an excuse for any problem.

And that is how nearly every failing government agency is rewarded for their failure, rather than punished.  Which is why our agencies fail so much.

Note that organizations in the private world are not immune to similar incentives.  A company's marketing staff will work hard to get more people and resources for marketing, and in good times their staff and budget may balloon.  The difference is that in the private world, there is competition.  Other companies are trying to sell similar products and services.  And if the marketing department is screwing up a lot, or those resources spent on it are not being used productively, the company is going to lose sales and thus resources.  To survive, massive changes will be made, including likely some deep cuts and large restructurings in marketing.

It is frustrating to work in corporations that seem to lurch from growth periods to cutbacks in an endless cycle.  But it beats the alternative where the organization always grows and never is forced to confront the value of how it spends its resources.

Corporate Surveillance Is Not What I Fear

The Left seems to be wasting its legitimate outrage about surveillance on the wrong targets.

At a base minimum, people should be able to walk down a public street without fear that companies they’ve never heard of are tracking their every movement — and identifying them by name — using facial recognition technology,” the privacy advocates wrote in a joint statement....

People simply do not expect companies they’ve never heard of to secretly track them using this powerful technology. Despite all of this, industry associations have pushed for a world where companies can use facial recognition on you whenever they want — no matter what you say. This position is well outside the mainstream.”

Look, I am all for these folks campaigning for better privacy protections on businesses, but really, isn't this the wrong target.  Seriously, Target is tracking me in order to ... what?  Make me a targeted discount offers and rearrange their stores to better match my shopping habits?

Look, the government has guns and prisons.  They can take my money and my assets.  What the government can do to me makes the fear of being in Pepsi's marketing data base seem like a pure joke.

Every day I leave my house I have to pass this damn government surveillance cactus not a hundred yards from my home, tracking my face and license plate.

There are at least two more of these in walking distance of my house.

I have news for you folks on the Left -- the government doesn't give a crap about your privacy, but is willing to beat on private corporations for a while (which really pose you zero harm) to divert you from the real threat, which is them.  And in the end, despite all their rhetoric, they will likely let private corporations do whatever they want as long as the government gets a backdoor into the data.

It is the latter that worries me the most.  I couldn't care less what Wal-Mart knows about my shopping habits.   But I do care that data they gather could be funneled into Uncle Sam's greedy hands.

A Company Called Upskilled Is Still Threatening Me Over Spam They Put on My Site

I got yet another email from blog spammer Upskilled that had a more threatening tone than the last:

We have tried to contact you several times regarding the link on “http://camprrm.typepad.com/” to our site http://upskilled.edu.au/.

This link is in violation of Google's Webmaster Guidelines and must be removed in order to bring our site into compliance with Google's terms.

Like it is something I did that is in violation.  They are now sort of hinting that if I do not respond they will have to put my site on some naughty list sent to Google.  All of which follows this laugh-inducing line from their prior email:

We appreciate your efforts to promote our website; however, we are trying to bring our website within Google’s guidelines.

Yeah, as if I put it there. It is a spam comment they put there years and years ago back when Google rewarded such behavior.   A spam comment not placed by me but in fact placed by them against my wishes. The comment was one sentence repeated out of the post itself and signed with their corporate link.

For those who are not familiar, the original Google secret sauce over older search engines was that they did not rely on metadata in the post itself to assess relevance of the post (back in the day, people used to fill their metadata with "Britney Spears" and similar gunk to attract search rankings).  Instead, they looked at how many other sites linked to you.  The more, the better.

But people are nothing if not innovative in gaming metrics, and quickly web sites started trying to spam links to their themselves all over creation.  They sometimes paid sites for links, but why pay when you can stick links to your site for free in spam comments on blogs.  This is what Upskilled clearly did.

Now, Google has changed their algorithms (actually they change them constantly) and penalize sites for having these spam links.  Which is why this company Upskilled is trying so desperately to convince me that I am somehow responsible for their spam link.  It almost tempts me to create a whole web page that is just the word "Viagra" repeated over and over and linked to their site.

For the record, here is my response to their email I have sent several times to their National Marketing Manager Michael Crump, which they continue to ignore and pretend that I am not answering them:

I no longer control this site at typepad.  I left it 7 years ago for self-hosting.  Typepad continues to display the blog, but I cannot make any changes without paying hundreds of dollars to reactivate my account.

Perhaps I misunderstand the situation, but I must say I have only limited sympathy.  Your company obviously engaged in a marketing campaign where you used automated programs to leave spam comments on blogs -- in this case the comment your bot left was just a quote of some of the text in the post itself.  Such spam comment bots are the bane of us blog owners' existence and we spend a lot of time and money fighting the behavior you engaged in.  In trying to promote your business, you vandalized my blog with digital graffiti.  Now that Google has changed its search ranking rules to penalize this behavior, you want me again spend time and effort doing your cleanup for you.

By the way, now that I read your original email more clearly, I am infuriated with your approach.  "We appreciate your efforts to promote our website; however, we are trying to bring our website within Google’s guidelines".  You are implying that I put up the link rather than you guys.  Insulting.

You want to scare me that somehow I am in violation of Google guidelines.  But in fact you are in violation.  It was you or your paid marketing representatives that put the link on my site, not me.  I didn't even want it there.  And since that sort of spam comment violates the terms and conditions of my site, you put it on my site in violation of my rules and express wishes.

Upskilled: Yes I Sprayed Graffiti on Your House. I Now Demand You Clean It Up

Update:  I have an update on Upskilled's continued attempts to blame me for their spamming this site.  

I received a link removal request the other day from Upskilled.edu.au pointing to a link in a comment back at my old typepad blog site.  In part the email said: "We appreciate your efforts to promote our website; however, we are trying to bring our website within Google’s guidelines."

This is hugely insulting.  The link in question is obviously from a spambot marketing campaign they had years ago.  If they had just confessed that and said they were sorry I might not be ticked off, but to imply that I somehow put up this spam comment and therefore am obligated to take it back down is infuriating.  Anyway, I would have to pay Typepad hundreds of dollars to get back into my account so I can't do it anyway.

I sent them this:

I must say I have only limited sympathy.  Your company obviously engaged in a marketing campaign where you used automated programs to leave spam comments on blogs -- in this case the comment your bot left was just a quote of some of the text in the post itself.  Such spam comment bots are the bane of us blog owners' existence and we spend a lot of time and money fighting the behavior you engaged in.  In trying to promote your business, you vandalized my blog with digital graffiti.  Now that Google has changed its search ranking rules to penalize this behavior, you want me again to spend time and effort doing your cleanup for you.

No thanks.

When Corporations Use Social Causes as Cover for Cutting Costs

My absolute favorite example of corporations using social causes as cover for cost-cutting is in hotels.  You have probably seen it -- the little cards in the bathroom that say that you can help save the world by reusing your towels.  This is freaking brilliant marketing.  It looks all environmental and stuff, but in fact they are just asking your permission to save money by not doing laundry.

However, we may have a new contender for my favorite example of this.  Via Instapundit, Reddit CEO Ellen Pao is banning salary negotiations to help women, or something:

Men negotiate harder than women do and sometimes women get penalized when they do negotiate,’ she said. ‘So as part of our recruiting process we don’t negotiate with candidates. We come up with an offer that we think is fair. If you want more equity, we’ll let you swap a little bit of your cash salary for equity, but we aren’t going to reward people who are better negotiators with more compensation.’

Like the towels in hotels are not washed to save the world, this is marketed as fairness to women, but note in fact that women don't actually get anything.  What the company gets is an excuse to make their salaries take-it-or-leave-it offers and helps the company draw the line against expensive negotiation that might increase their payroll costs.

Postscript:  Yes, I understand the theory of negotiation and price discrimination, as used by auto dealers.  One can make an argument that setting prices high (or wages low) and then allowing negotiation by the most wage or price sensitive is the best way to optimize profits, and that Pao's plan in the long-term may actually raise their total compensation costs for the same quality people.  I don't think she is thinking that far ahead.

The Problem with Email is That It's Free

Yeah, I know, free is always supposed to be better.  But the problem of spam is caused entirely by its being free.   Here is an example:

According to the indictments, between 2009 and 2012 Nguyen and Vu hacked at least eight email service providers -- the companies that collect your data under slightly more legitimate circumstances -- to steal marketing data containing over a billion email addresses. After that, they worked with Da Silva to profit from the addresses by sending spam with affiliate links for a company he controlled, Marketbay.com.

At least according to the DoJ, all of that work netted around $2 million in affiliate marketing fees.

We don't have any idea how many emails they sent to each of these billion addresses.  But let's say they sent 10 spams to each (probably a low guess).  That is 10 billion spam emails for a net revenue of $2 million, or around $.0002 per email sent in revenue.

Long ago I proposed that (and I am not sure how to do this technically) emails should cost $0.001, or a tenth of a cent, to send.  For you and I, say if we sent 200 emails a day (an email copied to 5 people would be 5 emails for this purpose) it would cost us 20 cents a day or about $75 a year, not much more than we pay for security software and updates.  But if you could make it work, spam would be reduced drastically.  No way there is any profit in sending an email for $.001 for an expected return of $.0002.

I have no idea in the current structure of the Internet how one would even do this.  The charge would have to come from the receiving end, somehow refusing to deliver it if it does not get payment information.  However, anyone who is going to steal a billion email addresses could likely hack the payment system.

I was going to call this tragedy of the commons, but that is not really quite right.  Tragedy of the commons is sort of related to free public resources, but is more of an issue of lack of property rights than of the zero price.

Increasing Tribalism in America

As I mentioned before, the last two days I was sitting in a conference on parks and park management out in California.  Most everyone was pretty respectful in the room, and discussions about race and ethnicity that could have degenerated into political finger-pointing generally did not.

But there was one exception I thought really odd.  A gentleman (can't remember his name), who is apparently the marketing director for Delaware North Company's extensive concession operations in Yellowstone, began his talk by expressing how crazy he thought Conservative Republicans are.  I thought this was a lead in for some kind of joke, but actually he just seemed to want to make sure that though he was currently living in Wyoming, no one should mistake him for a Conservative.  My guess at the time was that this man was transferred to this post after growing up back East, and is constantly embarrassed to think his tribe of liberal Easterners might think he was part of that flyover country Republican tribe.  Otherwise, I can't figure out why he would feel the need to make us understand this -- it certainly had nothing to do with his pitch and it seemed like a terrible marketing practice, particularly given the likely demographics of his current customer base.**

In fact, in a bit of irony I see repeated fairly often, he used this as an intro to his speech on a day where the main topic was inclusiveness (for those in the parks world, we ritualistically beat ourselves up at every opportunity for not attracting enough young people, urbanites, and people of color to rural public parks).  In theory, "inclusiveness" and "diversity" are supposed to mean that we are trying to get rid of the whole in-group / out-group thing altogether, but I often suspect that in practice, many folks are using them as code words for just shifting the out-group tag from one set of people to another.

 

** PS-  which should not be taken to mean that I necesarily would disagree with him if we discussed the details, just that it seemed a pointless and even self-defeating observation to make in this context.

So Why Is Paul Krugman Now Defending the Privileges of the 0.1%?

Apparently Paul Krugman has weighed in on Amazon and has concluded that it has "too much power".

I just cannot believe progressives are falling into the trap of defending major publishers against Amazon.  People like Krugman who bash Amazon are effectively setting themselves up as defenders of a small oligarchy of entrenched publishers who have, until recently, done a very good job of making themselves the sole gatekeeper of who gets into print.  Amazon is breaking this age-old system down, in the same way that Uber is challenging taxi cartels and Tesla is challenging traditional auto dealer networks, and giving most everyone access to the book buyer.

The system that Krugman is defending is the system of the 1%.  Or 0.1%.  The current publishing system benefits about 200 major authors who are in the system and whose work has traditionally been spammed by the large publishers to every bookstore and news outlet.  When you walk into an airport book seller, how much diversity of books do you see on the front table?   You just know that you are going to see Sue Grafton's "AA is for Aardvark" and Janet Evanovich's "Fabulous Forty-Six".  The publishers have risk-return marketing incentives to push the 46th Stephanie Plum novel over trying any new author.

So while the traditional publishers flog the 0.1% of authors, Amazon has empowered 20,000 authors.   Those who sell just a few thousand copies (or fewer) of books have found an outlet in Amazon that never existed for them (as disclosure, I am one of those).  And writers who distribute mainly through Amazon get a far higher percentage of their book revenues than they ever would get from the traditional publishers.

So Amazon is helping the consumer (lower prices) and 99.9% of authors (better access and higher profits).  It is perhaps hurting the top 0.1% and a few century-old entrenched corporations.  So what doesn't Krugman like?

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.

Non-Monetary Job Benefits Example

The other day I wrote about non-monetary job benefits.  Here is an example:

A small-time vintner's use of volunteer workers has put him out of business after the state squeezed him like a late-summer grape for $115,000 in fines -- and sent a chill through the wine industry.

The volunteers, some of them learning to make wine while helping out, were illegally unpaid laborers, and Westover Winery should have been paying them and paying worker taxes, the state Department of Industrial Relations said.

"I didn't know it was illegal to use volunteers at a winery; it's a common practice," said winery owner Bill Smyth.

State law prohibits for-profit businesses from using volunteers.

Before the fine, volunteer labor was common at wineries in the nearby Livermore Valley, said Fenestra Winery owner Lanny Replogle.

...

About half the people the state considered Westover employees were taking a free class at the Palomares Canyon Road winery. Students learned about growing vines, harvesting and blending grapes and marketing the finished product.

"This was an incredible opportunity for me," said Peter Goodwin, a home winemaker from Walnut Creek who said he dreams of opening a winery with some friends. "I got to learn from someone who knows the business."

The winery sometimes asked Goodwin if he wanted to assist in different tasks.

"That's what I wanted, to be as involved as much as possible -- it was all about learning," he said. "I don't understand the state's action. It was my time, and I volunteered."

I have mixed feelings on this.  On the one hand, this demonstrates the appalling violation of individual freedom that minimum wage laws create -- not just for the employer, but for the employee as well.  Minimum wage laws mean that you are not allowed to perform labor for less than that minimum, even if you choose to and get non-monetary benefits that you feel fully compensate you for the time.

On the other hand, you have to be particularly clueless, especially in California, to claim ignorance on this.  I work in an industry that 10 years ago routinely accepted volunteer labor (illegally) and I was never lulled by the "everyone else is doing it in the industry" excuse.  I will say that it is irritating to try to run a business in compliance with the law and to find yourself undercut by folks who are avoiding the more expensive parts of the law.  Years ago there used to be a couple of non-profits who competed against me running campgrounds.  They were really for profit - they just paid their president a large salary rather than dividends - but used the non-profit status** as a dodge to try to accept volunteer labor.  Eventually, they were stopped by several courts from doing so.

Yes, I know this is kind of odd.  You might ask yourself, why are there so many people willing to take their volunteer position when you are offering paid jobs?  It turns out here are a lot of non-monetary benefits to this job such that people will do it for free.  In fact, that huge fountain of hypocrisy that is the Federal Government exempts itself from paying minimum wage and accepts volunteers to run its campgrounds where I must pay them.

 

** the non-profit status helped them in one other way.  We take over operation of recreation areas under concession contract from the government.  Many government employees hate this sort of outsourcing partnership, and really find it - for the lack of a better word - dirty to sully themselves interacting with a profit-making entity.  The non-profit status helped my competitors seem friendlier -- ie less capitalistic -- than I.  California recently passed a law allowing lower cost third party operation of certain parks functions but only if this was performed by a non-profit.   I had a US Forest Service District Ranger in Kentucky tell me once that he was offended that I made money on public lands, providing services in the National Forest.  I answered, "Oh, and you work for free?"  I said that I did not know how much he made but I guessed $80-100 thousand a year.  I said that would be over double what my company made in profit in the same forest operating and paying for hundreds of camp sites.  Why was I dirty for making money in the Forest but he thought he as "clean"?