Business Ethics – Page 10 – education and deconstruction.com

Writing Places – Bonus Post

This blogger skimmed the book, “Writing Places” by William K. Zinsser, published in 2009. It is a career memoir. Zinsser details the twists and turns of his writing and teaching, starting with his adventures in journalism in the New York City of the mid- to late 1940’s through the late 1950’s.

The author says that the New York Herald Tribune served as a role model for his writing, instilling lifelong values in him. Two older editors in the newsroom “…went out of their way to help me [gain experience.]” Unfortunately, by the late 1950’s, for various reasons, the newspaper was unable to uphold the values it originally held as part of its corporate culture.

Zinsser fell into freelance writing for magazines such as Life and the Saturday Evening Post. His generation saw lots of human-interest stories in a slew of weekly publications. “It was also,” he writes of the early 1960’s, “the last historic moment when it was possible for a magazine writer in America to be a generalist.”

For, television gobbled up a large chunk of consumer advertising at the expense of publications. It also competed for readers’ leisure time. Excuse the cliche, “The more things change, the more they stay the same.” Television showed consumer products in live-action scenarios against which magazines could not compete. Zinsser’s work slowed to a trickle because there arose topical specialization in periodicals; contributors were required to be experts on, say, hunting or cats or wine or brides, etc.

Another trend of the 1960’s was the lax teaching of writing by American high schools. Teachers allowed students freedom of expression with little regard for grammar or syntax. Excuse the cliche, “There’s nothing new under the sun.”

Read the book to learn how Zinsser adapted to the changing times. One hint is that it involved the “…American National United Allied General Corporation.” So as not to have biased the reader, this blogger is providing the following info at the end of this post:

Zinsser admittedly is a WASP-y Northeastern elitist, whose father was a Yale graduate. He himself is a Princeton graduate. He also confesses that memoir writers tend to be “…masters of retroactive blame. The hard job is to get beyond the ancient grievances and arrive at a larger point– some moment of acceptance and healing.”

The Good Girls Revolt

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.

Double or Nothing

The Book of the Week is “Double or Nothing” by Tom Breitling with Cal Fussman, published in 2008. This short ebook describes the business partnerships between the author and Tim Poster.

Poster had a passion for gambling. In high school he and a friend acted as a bookie and made bets on professional sports, from which they won a lot of money, except for one particular boxing match. In the late 1980’s, while still in college, Poster started a hotel telephone reservation service called Travelscape. Breitling joined the business, and it kept growing in leaps and bounds. Travelscape was an early adopter of internet technology, launching an online reservation system in 1998, during which it made $20 million in sales. In 1997, it had made $12 million in sales.

Their partnership was based on trust symbolized by a handshake, rather than on legal documents. Their synergistic personalities made the business successful. Nevertheless, in 1999 when a competitor offered to buy their business, they were at a grave disadvantage due to their inexperience in multi-million dollar deal-making. The situation was extremely stressful for them.

The author describes what eventually happened, the mistakes they made and what they learned from the experience, and goes on to discuss their successes and failures in connection with another business venture– a casino.

About a year later, the partners were negotiating sale of the casino. The potential buyers consisted of two different suitors– a pair of humble, trustworthy brothers who were their close friends, and a narcissistic, petty owner of a collection of properties then worth $700 million (not Donald Trump).

The author relates that at that time, Fortune magazine had ranked the brothers’ company in the top twenty of its list of “Best Companies to Work For in America.” Job satisfaction among employees at the casino owned by the brothers was apparently so high, the employees saw no reason to unionize. That would actually be a problem if the casino was to merge with Poster’s and Breitling’s casino, as the latter was unionized.

Read the book to learn how Poster and Breitling fared with a reality TV show in their casino; how relaxing betting limits, and cheating or lucky gamblers can put a casino out of business; and the details of what transpired when they allowed their businesses to be bought.

King of Capital

The Book of the Week is “King of Capital” by David Carey and John E. Morris, published in 2012. This ebook recounts the history of leveraged buyout (“LBO” or “private equity”) firms, mostly Blackstone Group, from the 1980’s through the first decade of the 21st century. This ebook attempts to debunk the stereotype of greedy Wall Streeters.

Back in the 1980’s, one kind of transaction or “deal” the LBO firm did, was buy out companies that were publicly traded, taking them private. It risked only a tiny amount of its own money to take ownership and take over the management, usually 5-15% of the total price. The role of the firm was to arrange financing. The management of the company (client) being bought out, was the party risking the most, and doing the buying out– borrowing a large percentage of the purchase price (leveraging) — in essence, “robbing Peter to pay Paul” with the monies raised by the LBO firm from various financial institutions.

This was where “junk bonds” came in– very risky debt instruments that carried extremely high interest rates, as much as 19%. The reason for the risk and high return, was that, in the event that the client went bankrupt, bank loans were repaid to creditors first, and if there was any money left, then much later, the junk bonds would be repaid.

According to Carey and Morris, the goal of LBO firms that were “corporate raiders” was to capitalize on the hidden value of a target’s assets that was not being reflected in its stock price. The value was there but the directors and officers of the target were too busy looting their company by throwing lavish parties at their mansions and on their yachts, and zipping around in their corporate jets.

The raiders had no interest in owning the target, but wanted to make it leaner and meaner by firing the greedy CEO’s. Then they would cash out at a profit of several times their initial investment. Over time, the targets developed strategies, such as the “poison pill” to counter the raiders. Unfortunately, “For all their talk of overhauling badly run companies, the raiders seldom demonstrated much aptitude for improving companies.” Pox on both the houses of the raiders and targets.

Buyout firms that were not corporate raiders truly wanted to own the target. “…buyout investors look for companies that produce enough cash to cover the interest on the debt needed to buy them and which also are likely to increase in value.” A major part of the job of LBO firms is to identify possible deals through extensive financial research, and then decide whether to invest in the ones predicted to succeed.

The year 1981 was a great year for LBO’s because interest rates peaked, there was an economic downturn, and stocks were down. In the autumn of 1985, two partners, Steve Schwarzman and Pete Peterson started Blackstone Group. Schwarzman said that his partnership would not be able to compete with the older, more experienced LBO firms, unless it “…brought efficiencies to a company by way of cost improvements or revenue synergies.”

The early 2000’s became a rerun of the 1980’s as financial institutions took on excessive debt loads. Fall of 2008 saw the U.S. Treasury Department and the Federal Reserve Bank raise funds to try to bail out Lehman Brothers, Merrill Lynch and AIG by calling on private equity firms like Blackstone Group to help.

Read the book to learn more about the redistribution of wealth among the wealthy over the course of three decades, and the turnover, and victories and defeats of the partners at Blackstone Group.

Deals on the Green

The Book of the Week is “Deals on the Green” by David Rynecki, published in 2007. This ebook discusses how golf fuels business deals among the super-rich.

The author contends that the personality traits golfers need for success in golf and business include: friendliness, “imagination, tenacity, multitasking, guts, passion, and compassion…” The very act of playing golf is a major ingredient for success at many big-name companies, including GE, McGraw-Hill, J.M. Smucker, Tyson Foods, McDonald’s, Goodrich, Estee Lauder, Morgan Stanley and Johnson & Johnson. Businesspeople observe how others play the game– an indication of their character– to determine whether to do business with them.

The people who build a golf course include architects, landscapers and marketers. Many country clubs are exclusive, invitation-only kinds of places. The way “nobodies” can play on the golf courses at such clubs is to participate in fundraising events or volunteer to do menial work at them (and write big donation checks). Most of the major manufacturers of American golf equipment are located in Carlsbad, CA.

Etiquette dictates that any talk of business on the golf course should take place between the fifth and the fifteenth holes. There should be casual conversation, not an aggressive pitch.

Read the book to learn the names of people, places and equipment related to golf, and “…what really goes on when the titans of industry and finance get together” on the golf course.

The Cure

The Book of the Week is “The Cure” by Geeta Anand, published in 2008. This ebook tells the emotional, suspenseful story of how a family coped with three disabled children, two of whom were suffering from a genetic disease for which a cure is yet to be found.

In the late 1990’s, John Crowley’s daughter and son were both diagnosed with Pompe disease, a muscle disorder. Patients, with varying severity, “have imperfectly produced acid alpha-glucosidase enzyme” which results in paralysis, obstructed breathing, and, if left untreated, death before the age of five.

Even though Crowley possessed the personality, talents, skills, education and privileged background that one would think would allow him access to a life-saving enzyme to save his children, he had to face numerous obstacles. The father naturally fell into the role of entrepreneur to do so. His wife provided invaluable emotional support and around-the-clock care of the children with the help of nurses; not to mention the running of the household.

Nevertheless, lots of genetic and environmental luck determines whether patients become fully cured and/or whether the quality of their lives improves significantly, or whether they die– even when they are sufficiently fortunate to take part in a trial of a new life-saving medicine. Death would be inevitable without the medicine.

Every patient is different. There are many different criteria the U.S. Food and Drug Administration considers when deciding whether to approve particular medical products for sale. Money plays a major part in whether a new product ever sees the light of day. A young medical research company raises funds through venture capitalists, and because the whole operation carries extremely high risks, if the company achieves success– the rewards, fittingly, are also extremely high.

Scientists must do years of preclinical testing on animals to make sure a new medicine works sufficiently well before even considering administering it to humans. In the United States, possible deadly consequences and possible future litigation motivate the scientists to act with integrity by performing tightly controlled experiments, so as not to have to fudge research results.

Another aspect of drug development, is avoiding a conflict of interest such as that in Crowley’s situation. He played a pivotal role in the race to bring a medicine to market; it appeared he was doing it to get the medicine for his own children.

The estimated annual expense of the enzyme for each child was $200,000, and $1 million for all future annual medical expenses, including the enzyme, plus wheelchairs, nurses, ventilators, catheters, etc.

Read the book to learn of the Crowley family’s experiences with American biotechnology.

Bad Boy Ballmer

The Book of the Week is “Bad Boy Ballmer, the Man Who Rules Microsoft” by Frederic Alan Maxwell, published in 2002. This ebook recounts the history of Microsoft and the career of its co-founder, Steve Ballmer.

Ballmer grew up in Birmingham, Michigan, which was a community comprised of “intense and well-funded academic, athletic, and social competition, and a high level of parental expectation, involvement, and support.” Ballmer’s father decided he was going to attend Harvard College. Fortunately, his superb academic record proved sufficient for acceptance. There, he met Bill Gates. They struck up a friendship and started Microsoft in the spring of 1975.

In the early 1980’s, under Ballmer’s and Gates’ auspices, the company created applications software that worked best on its own operating systems. This was one of many of Microsoft’s monopolistic practices that prompted government investigations and many lawsuits against it. Legally, financially and politically astute, Microsoft successfully defended itself for well over a decade, and employed unlawful dirty tricks in taking swipes at IBM, Sun Microsystems, Netscape and many other companies that made competing products. The whole time, Microsoft arrogantly denied it was a monopoly.

In the summer of 1998, Ballmer was named president of the company, which was still dogged by accusations of illegal business practices. The corporate culture had changed for the worse, and employee turnover rose. In order to boost morale, Ballmer “scheduled one-on-one interviews with the top hundred of Microsoft’s now thirty-five thousand employees, asking them what they thought was wrong with the company and how it could change.”

Ballmer told the press that his $180 billion company was overvalued. Shortly thereafter, on September 23, 1999, Microsoft’s NASDAQ stock price plummeted. Shareholders in the Seattle area alone suffered collective losses of $11 billion, or over “$3,000 for every man, woman, child and dog.” Other tech stocks fell precipitously as well. It was thought that Ballmer’s remark was a deliberate strategy to financially debilitate Microsoft’s rivals, which lacked the resources his company did.

Performance of Microsoft employees was reviewed every six months, on a 5-point scale. Managers competed for the privilege of supervising employees awarded high scores. However, the system had an inherent unfairness in that some managers gave 3’s for 4.5-level work, because they were supposed to rank their subordinates pursuant to the normal curve.

Read the book to learn more about how Ballmer’s personality and actions shaped Microsoft for over a quarter of a century.

Dot Bomb

The Book of the Week is “Dot Bomb” by J. David Kuo, published in 2001. This ebook details the business dealings and the ensuing suspenseful power struggle at a dot-com company called Value America between 1996 and 2001.

The online retailer’s intended brand image was to boast maximum selection of merchandise shipped directly from sellers. This delivery-on-demand arrangement allowed the company to remain inventory-free, and thus minimize overhead costs. However, in reality, it needed to use resellers for many of the supposedly infinite products it sold.

Value America’s founder and leader, Craig Winn, was a charming megalomaniac who had grand plans to partner with various major corporations in order to attract investors and make the company worthy of an IPO. Unfortunately, Winn had planned to sell stock to the public just after the peak of the dot-com boom, when brokerages’ confidence in internet companies had started to wane.

After Value America went public, Goldman Sachs issued a report that Amazon.com was the internet retailer with the highest potential for success because it had high sales margins on its then-merchandise consisting only of books; a $30 billion valuation was not out of the realm of possiblity. Goldman went on to say Value America had the worst prospects, with sales margins of 1% and runaway costs. It would have to achieve revenues of billions of dollars in order to make any money.

Toward the end of the story, the author realized “Despite the hype, headlines, and hysteria, this was just a gold rush we were in… a lot of us were kin to those poor, freezing fools in Alaska who had staked everything on turning up a glittering chunk of gold.”

Read the book to learn the fate of the author, his family and the other Value America employees with dollar signs in their eyeballs.

Venus Envy

The Book of the Week is “Venus Envy” by L. Jon Wertheim, published in 2002. This book describes the colorful characters that graced women’s professional tennis in 1999, 2000 and 2001. Those included the Williams sisters, Hingis, Davenport, Pierce, Capriati, Kournikova, Sanchez-Vicario and others.

Most tennis players who become professionals are pressured by a parent to make playing a career. Venus and Serena Williams’ father Richard filled that role. He had the promotional instincts of Don King. In the mid-1990’s, when his older daughter had just turned pro at the young age of fourteen, he predicted that both his daughters would play each other in Grand Slam finals. Most people thought, “This wasn’t a tennis father from hell. This was a tennis father from outer space.” He knew what he was talking about. Not only did he guide them to success, but did so without making them crazy, unlike so many other tennis parents who cause their kids psychological harm.

Tennis is a typical professional sport in that making money is the major goal. Tennis’ authoritative bodies that hold global tournaments, have a history of awarding less prize money to the women than to the men. The purported reason is that the women are less entertaining. This led to an interesting course of events in the early 1970’s.

The women also get treated differently at post-tournament press conferences, at which they are asked personal questions that men would never be asked. Another cause for complaints from the women is that the quirky ranking system awards more money to some players who have more entertainment value than playing ability. The system “unfairly punishes older, less attractive players.”

Read the book to learn more about why women’s tennis is the “world’s most popular and financially successful women’s sport.”

High Priest

The Book of the Week is “High Priest” by Timothy Leary, published in 1995. This is a personal account of a man who, in the late 1950’s and early 1960’s, developed a reputation for experimenting with brain-altering chemicals such as LSD. He used students as guinea pigs at his Harvard University laboratory.

Some of Leary’s impressionable charges unwisely updated their parents on their religious and philosophical enlightenment; others “quit school and pilgrimaged eastward to study yoga on the banks of the Ganges.” Unsurprisingly, the parents and school administrators felt that Leary was a bad influence, and he was fired. He attempted to relocate his spiritual profiteering to Mexico, but was busted in 1963 for failing to obtain authorization to run a business there. He then took his allegedly raunchy, psychoactive, disease-spreading endeavors in the dark arts to Antigua in the West Indies.

Read the book to learn the details of this ideological character’s psychedelic research results.