Archive for the ‘Business’ Category

Bonus Post

Tuesday, February 25th, 2014

“The Big Rich” by Bryan Burrough, published in 2009, is a long ebook that details the lives and times of the four Texas families who became extremely wealthy Americans from the oil business in the first half of the twentieth century. “They… became the country’s first shirt-sleeve billionaires… accumulated every toy of their age…” including lavish residences, private jets, boats, fancy cars and politicians (when they got into politics).

The editing of this book is a bit sloppy in spots. Nevertheless, according to this book, oil was first discovered in Texas in a well that was later named Spindletop in Beaumont, around 1901. The abundant quantity of oil found there caused a price drop that prompted a conversion from coal to oil among railroads and steamship companies. Suddenly, thousands of people sought to get rich quickly from oil, similar to the way people wanted in on the California Gold Rush. The nineteen teens saw a proliferation of automobiles requiring oil.

Read the book to learn all the details about the people, places, politics and peripheral issues (such as professional sports) associated with the oil industry in Texas over the next ten decades.

Work is My Play

Sunday, February 9th, 2014

The Book of the Week is “Work Is My Play” by Wallace E. Johnson, published in 1973.  This is the career memoir of a lifelong workaholic.

The author discusses his passion for doing business. In the 1950′s, he co-founded Holiday Inn on the concept of offering an affordable place for families to stay while they were on a road trip, with accommodations and dining that were superior to those of Howard Johnson’s (no relation to the author), the only other option at the time.

The author fondly describes the opportunistic personality of one of his business partners with a memorable anecdote. The partner grabbed his wife before she had finished her lunchtime pie (she was used to that) in order to punctually attend a government auction of land parcels in an undeveloped area. He then proceeded to win the bid on every single parcel because he knew real estate prices would rise in the long term.

Read the book to learn how the author had fun working nonstop and making lots of money.

The Astonishing Mr. Scripps

Monday, January 20th, 2014

The Book of the Week is “The Astonishing Mr. Scripps” by Vance H. Trimble, published in 1992. This large volume documents the life, among other family members, of Edward Willis Scripps, born in June 1854, the 13th child of James and Julia Scripps. He became the head of the nation’s first newspaper chain by the end of the 19th century.

Prior to journalism, starting at twelve years of age, Scripps was required to assist his father at bookbinding, on the farm and at a sugar mill. He quit school at fifteen. In 1872, after dabbling in a few other ventures, at eighteen, he escaped a life of manual labor to help his 38-year old older brother in the print shop at the Detroit Tribune. The culture was such that journalists had to frequent a bar in order to get good assignments. There was peer pressure to drink.

About five years later, Scripps moved to Cleveland to start another newspaper there. He wanted to sell the paper on the streets, rather than through the customary routes with paperboys. “A newsboy could buy copies wholesale at the pressroom door for half a cent, thus earning fifty cents for each hundred sold.”

The composing room was where the ad and editorial deptartments had a conflict because advertising copy and news stories competed for space so the one that was typeset second got short shrift at deadline time. Scripps’ paper favored blue collar readers. Its rivals were read by wealthy, industrialist readers. Scripps supported trade unionism and opposed the capitalists. He tried to maximize revenue from subscribers rather than advertisers so he could write what he wanted; he thus didn’t have to print what advertisers told him to.

In 1880, Scripps started yet another newspaper in St. Louis– the Evening Chronicle. A competing paper, the Post Dispatch, was bribing the Chronicle carriers to transfer their route customers to the Post Dispatch. That same year, during the presidential election, the Chronicle’s circulation jumped to 13,000 and afterwards, fell back to 10,000.

In early 1881, when James Garfield was inaugurated U.S. President, Scripps wrote, “Hence we are writing the thing up from home [St. Louis], dating it from Washington and putting big headlines over it. Of course it is fraud, but there is no greater fraud than the doubt whether the country ever had a president with a title honestly acquired.”

The four newspapers were losing money, so in 1888, Scripps formed a “syndicate”– consolidated them– to achieve economies of scale and make them profitable. Nevertheless, he still imposed draconian, petty cost-cutting measures on his employees the following year, such as making reporters pay for work-related costs like transportation, pencils, business cards and promotional copies of the paper.

On the home front, Scripps’ wife had gotten pregnant seven times in twelve years. Four children lived to adulthood.

In 1904, Scripps knew it was a conflict to “… pollute its columns with noxious hucksterism. America’s press would never be truly free and honest until newspapers flatly refused to print any advertising matter at all.” Weathy merchants could threaten to bankrupt a paper by not adverstising. Scripps looked for a city where a paper could stay in business through circulation revenue alone. He thought the paper should be an instrument for fighting oppression and improving quality of life: “… better sanitation, better education, better and healthier and more moral amusements, better homes, better wages, better sermons in our churches, better accommodations on street cars.”

The two conditions required for success with an advertising-free paper are: it must be interesting and have prompt and dependable delivery. But for Scripps, the costs exceeded the profits because he had to pay printers, pressmen, reporters, circulators, rent, utilities, etc. This blogger believes that in the 21st century, many online publications have the aforementioned conditions; however, a third condition includes the fact that readers must be willing to pay for the product.

In 1915, Scripps invested in Max Eastman’s radical weekly “The Masses” – ironically named, because the weekly’s focus was not on the downtrodden, but America’s elite. Eastman’s 22 liberal contributors submitted articles for free. The paper still operated at a loss; circulation was stagnant. There is nothing new under the sun.

Scripps wanted his teenage son Bob to work, saying “I do not want to you to be a simple onlooker and student and critic of life…” Around 1913, Bob had an affair with the wife of his father’s business partner, just like in the movie “The Graduate” (1967). Only, Bob was under 18 years old. There is nothing new under the sun.

Unsurprisingly, Scripps was a cynic. He was “… convinced, rightly or wrongly, that altruism, which is almost universal, is still almost universally a minor motive in a man.”

Read the book to learn the history of the wire services, how the people at the Scripps newspapers coped with local political corruption, how they shaped policy in Washington, survived natural disasters and wars, company power struggles, and the consequences of the Scripps family’s alcoholism.

On the Firing Line

Monday, January 13th, 2014

The Book of the Week is “On the Firing Line” by Gil Amelio with William L. Simon, published in 1998. In this informative book, Amelio chronicles his short tenure as Apple Computer’s CEO from early 1995 to mid 1997.

Some might say Amelio made a foolhardy decision to take on the challenge of turning Apple around, when he had a secure and promising future as the CEO of National Semiconductor, whose recovery he had spearheaded. Throughout the book, he discusses the series of difficulties he faced and admits his errors in judgment.

Amelio handed grist to his critics on a silver platter because he allowed his employees to talk to the media, which had a field day on many fronts. The media also played him for a fool.

There were numerous factors out of the CEO’s control that also gave him a tough time. His predecessor allowed extreme price cuts on Apple’s products, and the sales team was playing a short-sighted game– a vicious cycle every holiday season, whereby they would give deep last-minute discounts to retailers to move inventory, putting a better face than otherwise on the financial condition of the company, as its fiscal year started on October 1.

Amelio was distressed to find that the corporate culture was fragmented along departmental lines. The engineers worked on products the sales department had no intention of selling. “Apple never had an official statement of strategy – which inevitably means that every executive, and most managers, design their own versions. Everyone pursues their own goals, rowing frantically but each pulling in a different direction.” One reason was that managers knew the company was in dire financial straits and feared their projects were going to be cut.

Some thought Amelio desperate and a sellout for holding meetings with the enemy, Bill Gates, to propose making Apple products compatible with Microsoft products. Nonetheless, he was wary of Gates because Gates was unreasonably stingy in his negotiations.

With Amelio at the helm, performance of the desktop models improved tenfold but sales fell. He attributed this to the presence of a subjective element in people’s reaction to Apple “…irrelevant to product quality, and has … a lot to do with what they read in the newspapers and how comfortable they are with the state of the company.”

Read the book to learn: how Amelio was too trusting when he negotiated his employment contract; about the fronts on which he did make progress, and how he was done in by Steve Jobs.

Four Seasons

Sunday, January 5th, 2014

The Book of the Week is “Four Seasons, The Story of a Business Philosophy” by Isadore Sharp, published in 2009. In the early 1950′s, in his early 20′s, the author worked with his father, a construction contractor. He served as construction manager, rental agent, salesman, and financier. He parlayed his experience into building hotels in later decades.

The first Four Seasons opened in Toronto in 1961. It was a motel. Because the location of the second Four Seasons (actually called “Inn on the Park”) was less than ideal– the Toronto section of North York– it had to offer a few unusual features and amenities, such as smoking and nonsmoking floors, a restaurant and a fitness center, in March 1963. The property manager got a famous sports trainer to run the fitness center. In 1966, the trainer was accused of pushing performance-enhancing drugs. “He later died of lung cancer, from smoking.”

In the late 1960′s, London already had five five-star hotels. But Sharp wanted to build another one anyway. He and his business partners “…signed an 84-year lease at 210,000 Pounds Sterling a year, to be renegotiated every 21 years. He insisted on having air conditioning, unlike the competition. The hotel, opened in January 1970, ended up costing 700,000 Pounds. The lease was modified to allow a renegotiation every fourteen years.

Over the course of four years prior to the building of the hotel, the author’s London contact engaged him in social interaction to make sure he was trustworthy. The foundation of business is trustworthy relationships. The author said of certain of his major investors and his brother-in-law, “There was complete trust. Once we shook hands on a deal, there was no need for lawyers and signed documents.”

The author established an investing policy due to skyrocketing inflation in the mid 1970′s: putting a ceiling on his share of ownership at a small percentage of equity. No more than $3-5 million per property. This was based on a simple calculation of the maximum hotel fees he would collect over the first five years; Four Seasons became a property manager, rather than a real estate developer.

The Four Seasons hotels offer high-end luxury, targeting exclusively wealthy Americans and business executives. As its culture has evolved, it has identified a set of values to which its employees adhere and by which it does business: respect, fairness, honesty and trust. Sharp sought to make it a companywide habit.

Sharp knew that employees whose jobs include direct guest interaction are the ones who directly generate most of the hotel’s revenue, and the experienced ones are “… storehouses of customer knowledge, role models for new hires and advisers for system improvement…”

The author claimed that hotels other than Four Seasons face the major competitive challenge of easily accessible reservations data due to technological advances. The Web “…put every week’s best hotel deal at every traveler’s fingertips, raising the specter of unusually lethal periodic price wars… We didn’t compete on price… we were the one hotel company that could take full advantage of the new [economy] without any problems.” Right.

The last quarter of the book was a brag-fest. Nevertheless, read the book to learn of Sharp’s unpleasant episodes with regard to: Sheraton in Vancouver, attempts to open hotels in Italy, India and Venezuela; political unrest in Indonesia, ownership of The Pierre Hotel, and much more.

Bonus Post

Thursday, November 21st, 2013

“Heads in Beds” by Jacob Tomsky (pen name), published in 2012. This ebook is the career memoir of a hotel employee.

The author provides tips and tricks for gaming situations in the jobs of valet, housekeeping manager and front desk manager. He writes that entry-level workers start on the overnight shift, laboring on weekends and holidays. The managerial positions are stressful with long hours and no overtime pay.

The dead-end position of bellman pays well, but never offers advancement, just better shifts. The reason is that hauling luggage allows for frequent collection of cash tips which might be shared with fellow employees, but not with the IRS. Some workers singularly collect considerable tips on the sly by developing one-on-one relationships with guests– reserving the best rooms for them, “… supervising the bill, and essentially being a private concierge…”

Union membership offers lots of paid time off and job security. However, if a private equity firm purchases a hotel but the hotel-property-manager-seller continues to manage the hotel, there might be extensive replacement of non-union personnel with inexperienced, lower-paid incompetents.

Furthermore, top management might impose petty, draconian supervision that makes life difficult and emotionally tiring for the workers– as happened with Tomsky’s employer. The quality of customer service declines forthwith. Nevertheless, Tomsky and his colleagues were under pressure to keep guests coming to the hotel, so when management turned penny-pincher and minimized one freebie, workers continued to grant others, like room upgrades, free breakfast, late checkout, reduced minibar charges, etc.

Tomsky also relates that immediate causes for termination include “stealing and sleeping on the job.” Movie and minibar are the charges that guests most often challenge. Both guests and hotel employees have money-saving or money-making schemes. The author writes, “… beware of any employees not wearing name tags. They are up to something and don’t wish to be identified.” Some guests make odd requests. One time, eight female guests rumored to be partying, requested a Bible. The author writes, as it turned out, “They just wanted to roll a joint, simple as that.”

Read the book to learn the phrases hotel employees and guests should use to get desired results, the kinds of punishments the hotel agents mete out to difficult guests, and how guests can get the most out of their stay.

How to Castrate A Bull

Sunday, October 27th, 2013

The Book of the Week is “How to Castrate A Bull” by Dave Hitz with Pat Walsh, published in 2009. This ebook chronicles Hitz’s career, describes the ups and downs of the tech company he co-founded– NetApp, and imparts wisdom on management, leadership and interesting trivia. A flash drive can store a small amount of personal data of everyone on earth, a hard copy of which would represent 20 million pounds of paper.

NetApp was a start-up in the early 1990′s that built and sold business-to business, a “…network storage system in eighteen months with eight people and $1.5 million.” It went public in November 1995. A start-up has to sell something people are willing to pay for, such as a physical product, or advertising.

During the year 2000, NetApp’s share price tanked– as did that of many other tech stocks– plummeting from $150 to $6. The company delayed laying people off, and did not speak of it, as long as possible. “We announced layoffs one day and did them the next.” Hitz thinks taking care of such unpleasantness quickly is the best policy. Prolonged “palace intrigue” is bad for the work environment. Employees who know their last day is in the future are going to have less than optimal productivity, loyalty and a stable emotional state, to say the least.

When it came time to write the section on the NetApp’s philosophy in the company manual, Hitz says, “Company values only work if the leaders say, ‘These are things I really do believe. If I violate them, please call me on it… Values should remain constant, but appropriate behavior will change as a company grows.” When an employer provides “fun stuff” or free food to its employees, “that’s a symptom of good culture, not a cause of it.”

Read the book to learn Hitz’s explanation of how NetApp became a tremendously successful company, and how it fared after the dot-com crash.

Bonus Post

Friday, October 18th, 2013

This blogger skimmed the ebook, “Word of Mouse” by John Riedl and Joseph Konstan, published in 2002.

It is about the concept called “Collaborative Filtering.” That means the ability to make product-recommendations to consumers based on a significant number of their self-reported likes of products via an algorithm in a computer program.

The authors claim that the program makes recommendations with a high degree of accuracy, once a subject provides sufficient data on likes and dislikes. Such data are superior to demographic data such as age, occupation and sex, when it comes to predicting future preferences.

Collaborative filtering can be applied to sales of clothing, books, movies and goods sold on the internet– simple products that are purchased according to taste. “Cultural tastes seem to run in patterns.”

This blogger theorizes that the algorithm would do poorly on complex offerings that involve customer service– restaurant meals, hotel rooms, flights or personal services, because they are an experience that varies every time and are more likely to be enjoyed multiple times. A singular product like a book or movie, is a one-time experience.

When polled by the computer program on a book or movie, consumers express their like or dislike only for the book or movie, not bookstore atmosphere or moviegoer rudeness. Consumers might rate a hotel room on hotel-staff friendliness, room decor, cleanliness, and a host of other variables; if they have stayed at the hotel more than once, the rating might also reflect consumers’ general vibe about the hotel for all their stays. On any given day, the consumer might have a good or bad experience at a hotel. Anyway, the algorithm might achieve the same degree of accuracy by recommending a hotel simply based on other hotels with similar amenities and features, as by recommending based on the consumer’s likes of other hotels.

The authors discuss an online business that was started in 1998, Priceline, which allows customers to name the highest price they are willing to pay for a product or service, and if their purchase is approved, (presumably) receive it at a deep discount. For the most part, this appears to be irrelevant to collaborative filtering. Nevertheless, interestingly, the “reverse-auction model” has turned out to be profitable for travel-related services but not for gasoline, groceries and financial services. The reason is that airlines and hotels suffer a total loss on each plane seat and hotel room unfilled on any particular flight or night, respectively. Recouping some revenue from passengers and guests, even at a deep discount, is preferable. The authors make a point about how Priceline displays local geographic expertise in selling its services. Displaying expertise is important for online selling.

The authors boldly proclaim, “We envision recommenders moving out more into the public and the bricks-and-mortar sphere… Recommenders can limit the number of items a customer needs to see on each [Web]page… Recommenders can also be used in voice interfaces where the limiting factor is low bandwidth…”  Clearly, Riedl and Konstan underestimated the algorithmic proficiency of Google.

Read the book anyway to see the authors’ enthusiasm for collaborative filtering and get numerous tips on online selling, marketing, and what we now know about the internet. :)

The Good Girls Revolt

Sunday, July 21st, 2013

The Book of the Week is “The Good Girls Revolt” by Lynn Povich, published in 2012. This short ebook discusses what happened when a group of female employees sued Newsweek magazine’s parent company in March 1970, for gender discrimination.

Shortly thereafter, similar litigation followed at other publications– at Time, Inc., Reader’s Digest and various newspapers across the United States. The author briefly describes the historical backdrop before, during and after. One of many cultural phenomena she relates is that the year 1973(!) saw the elimination of classified ads divided into “Help Wanted– Female” and “Help Wanted– Male,” the former of which were mostly for menial and/or low-paying jobs. “Saying you worked at Newsweek was glamorous compared to most jobs available to college-educated women.”

The author says that from the early 1920′s up until the aforementioned lawsuits, periodicals publishers relegated women to dead-end positions. At Newsweek, the vast majority of female employees held the title “researcher”– a fact-checker, who could never become a reporter or editor like, or get paid as much as, the male employees. Besides, many of the men were hired “…as reporters and writers with no prior professional journalistic experience” and most of the female researchers had the same qualifications as they did.

One reason many women did not protest or were not even consciously angry about their situation, is that they were conditioned by the workplace and society in general to comply with gender stereotypes. Four decades ago, women were limited in their opportunities and criticized if they chose a male-dominated career field. They were given to believe they should not aim too high, but stay where they were, because otherwise, they would encounter difficulty.  It became a self-fulfilling prophecy for most of them. Even many women’s colleges at that time had the goal of providing an education with the assumption that a graduate might get a job, but she would quit the workforce when she had children.

Even today, in the American workplace, there is an environment in which women are jockeying for position and power. According to the book, they are less well-liked, the higher up the corporate ladder they climb. The opposite goes for men. In certain aspects of their lives, such as weight-loss groups and fitness, women band together and cheer each other on. But not usually in the workplace.

Read the book to learn about the consequences of the initial legal action, and whether Newsweek’s workplace policies changed when, in 2006(!), three female employees recognized the recurrence of gender discrimination.

Bonus Post

Thursday, July 18th, 2013

The ebook “Uncorked” by Marco Pasanella, published in 2012, is the author’s personal account about a family who opened a wine store in a ramshackle building on the site of the former Fulton Fish Market, an up-and-coming neighborhood in Manhattan in 2005.

According to the book, Americans have access to more than 24,000 kinds of domestic and international wines, although 4/5 of the wine sold at the store was the lowest-priced variety. Pasanella describes the steps he took in dealing with inspectors from the New York State Liquor Authority. He had to apply for a liquor license and thereafter, comply with arbitrary laws. He was told that “60% of a shop’s annual sales come between Thanksgiving and New Year’s Eve.”

Pasanella, a decorator in his previous career, learned various other factoids from friends and research. The high-volume wine sector in the last decade has shifted from London and New York to Hong Kong. A cork is the preferred stopper in commercial wine bottles because it releases sulfur fumes from chemicals used by some winemakers, while keeping oxygen out.

Read the book to learn many more handy wine-business tips and lessons Pasanella learned; some of which he learned the hard way.