Every Town is a Sports Town

[Please note: The word “Featured” on the left side above was NOT inserted by this blogger, but apparently was inserted by WordPress, and it cannot be removed. NO post in this blog is sponsored.]

“Its demise was caused by low attendance, conflicting agendas among the owners, and a number of very poor business decisions.”

MLB? Possibly, but definitely the USFL by 1985.

Regardless, the Book of the Week is “Every Town is a Sports Town; Business Leadership at ESPN, from the Mailroom to the Boardroom” by George Bodenheimer with Donald T. Phillips, published in 2015.

In September 1979, the Bristol, Connecticut-based cable-TV channel ESPN began televising sports-related shows, by means of deals with: RCA (regarding a space-satellite), the NCAA (regarding covering basketball games), and Anheuser-Busch (regarding sponsoring the programs). The initial concept of the then-shoestring operation was to dispense information on sports 24/7, to serve fans. ESPN won contracts to show March Madness games and the NFL draft to start.

The workplace was team-oriented with a family-feel, so everyone was a jack-of-all-trades. In 1981, the author, a recent college graduate, worked as a mailroom guy and chauffeur of sorts, for executives of ESPN. He was later promoted to videotape librarian. He was willing to relocate when the company opened new branch offices, including Denver.

Anyway, ESPN could not survive financially on ad revenue alone, as the company was paying cable operators to carry its channel. It saw a loss of $25 million annually until it negotiated in 1982 to have cable operators pay the company a certain number of cents for each household receiving its channel, and that figure could rise up to a certain maximum percentage during the term of a multi-year contract.

Due to the ultimate takeover by Capital Cities Communications, and a favorable change in media law– ESPN grew by leaps and bounds. Meanwhile, it added professional tennis, golf, NASCAR, World Cup soccer, the America’s Cup yacht race, and Sunday Night Football (for which ESPN had to pay the NFL) to its lineup in the mid-1980’s.

Globalization, recording devices, the Internet and mobile devices have made the negotiations over intellectual-property rights and sports programming between and among ESPN and other stakeholders, infinitely more complicated. In 1985, ESPN could be watched in about 30 million viewer-households in America; in 1999– in about 80 million in America and about 100 million elsewhere worldwide.

Read the book to learn: of how the author achieved a high position at ESPN, and how he boosted the morale, energy and innovative thinking of his fellow employees; what the company did when it saw its ratings plummet; what his executive team did to resolve the controversy that arose when ESPN made a movie in which the “F” word was uttered approximately thirty times; about the author’s business philosophy; and much more about the history of ESPN.

ENDNOTE: The author’s photo appears on the book’s cover with his head very slightly tilted. This flex is pleasing to the human brain, projecting the impression that he is a people-person. His boyish good looks probably served him well, too. [Total lack of head-flex, projects an unfriendly vibe.]

The Death of Money / Dealings – BONUS POST

The first Bonus Book of the Week is “The Death of Money, The Coming Collapse of the International Monetary System” by James Rickards, published in 2014. This was an all-over-the-map hodgepodge of generalizations on global financial trends, economic theory and what the author claimed was the devastation those trends could lead to, as of the book’s writing.

Prior to 9/11, the CIA possessed no expertise in the nefarious goings-on in the securities industry that could presage the occurrence of a terrorist attack. America’s law enforcement and security agencies had plenty of data, but inter-agency rivalry inhibited information-sharing and creativity– that would have allowed them to “connect the dots” in getting more specific information.

Prior to 9/11, American intelligence did detect irregular trading patterns in the stocks of the two airlines whose planes were targeted in the attacks. A tiny percentage of those trades were illegal because they were made by insiders– by the terrorists who knew those airlines’ share prices would soon plummet; the remaining percentage of anomalous trading was done by those who noticed the unusual activity (but not the reason for it) and jumped on the bandwagon.

After the attacks, threat-detection software was created for monitoring not just stock trading, but also currency and precious metals trading. The author wrote that a recently trendy means for bringing down an enemy-nation is: doing serious economic and financial harm rather than physical harm. Assaults on a nation’s technology and infrastructure such as the money-handling parts of cyberspace, aviation, dams and utilities, instead of targeting a country’s military and weapons or people of a specific ethnic group, is becoming the new normal.

The author remarked that China’s institutions are actually at risk for attacks, because the country’s government, economically, owns a large chunk of the means of production and arguably, labor; not to mention, capital. Wealthy Chinese business owners and executives have a co-dependent relationship with (corrupt) government officials. Besides, there are: “cross ownership, family ties, front companies, and straw man stockholders.”

The author warned the reader that a global financial crisis is likely in the offing due to prevailing circumstances in the economic heavy hitters of the world (like, the United States and China); among those circumstances: misallocation of investment funds; employers’ power to minimize benefits and compensation; red ink and the ever-widening, (allegedly alarming) gap between rich and poor. Financial panic is correlated with social unrest. That can lead to revolution.

The magnitude and accelerating frequency of financial bailouts of the last twenty-five years just shows how fragile the economic systems of the world are. In the United States, excessive deregulation fueled out-of-control greed, etc., etc., etc. In Europe, the group of nations that agreed to adopt one currency (the euro) thought the other nations would help mitigate their own economic problems, when in reality– they were putting all their eggs in one basket. In effect, they had to get permission from the others to make significant changes to their economic policies; they were forced into unhealthy co-dependent relationships.

Read the book to get the lowdown on: all the different groups of nations which were trying to diminish the U.S. dollar’s hegemony (hint: BRICS, BELL, GIIPS, SCO, GCC) at the book’s writing; the United States’ economic system explained for laypeople (via a Venn diagram, along with how the author defined “money” and “death”– both buried in the middle of the book); and everything you ever wanted to know about the value of gold, among other factors in the American dollar’s declining power in the world.

The second Bonus Book of the Week is “Dealings, A Political and Financial Life” by Felix Rohatyn, published in 2010. This bragfest described the life of the typical alpha male who rode a fabulous career in the securities industry, starting in the 1950’s.

The aforementioned first Bonus Book described the trends indicative of a dire future global financial situation. Many such untoward events have already occurred in the last couple of centuries (!), and keep happening. Every time, the seeds of financial disaster are sown decades prior to when it hits the fan.

The selective memory and cherry-picking of data of participants and victims (not to mention propagandists!) cause readers to perceive that those kinds of events are unprecedented, or are becoming more frequent. Excuse the cliche, THERE IS NOTHING NEW UNDER THE SUN (For more info, see this blog’s posts: Serpent on the Rock, A Fighting Chance, Since Yesterday, Why I Left Goldman Sachs, The Zeroes and Dot Bomb).

Rohatyn described a few major stressful economic near-disasters that he was asked to help remedy. One situation was early 1970’s Wall Street, which was a house of cards about to collapse. Another was the near-bankruptcy of New York City in the mid-1970’s.

The late 1950’s saw the city becoming a bloated, bureaucratic civil-service gravy train, due to the increasing power of unions. The costs of generous contracts (along with other sociological factors) was eroding the city’s tax base. Local politicians stayed in power by staying friendly with the unions. One hand washed the other.

At the dawn of the 1970’s, the city needed more and more short-term loans from banks. Creative accounting allowed the debt explosion to continue. The city got subsidies from the state and federal governments, but only at the end of its fiscal year, so its deficit ballooned annually before then. The city got generous borrowing terms because it was in the state’s and fed’s best interest (excuse the pun) to deregulate the lending banks, as they were political patrons, too. Eventually, push came to shove.

In June 1975, Rohatyn was appointed to a bipartisan (truly bipartisan!) committee to help New York State governor Hugh Carey draft a bailout plan for the city, three weeks before the date on which the city would be forced into bankruptcy. Fortunately, Carey possessed the right temperament for saving the world.

Read the book to learn more about how the author helped impose some adult supervision in various, serious economic episodes in his career, and more about his career itself.

Father Son & Co.

The Book of the Week is “Father Son & Co., My Life at IBM and Beyond” by Thomas J. Watson Jr. and Peter Petre, published in 1990.

Curiously, the word “mainframe” never appeared in this volume. Not even once.

Born in 1914, Watson Jr. (hereinafter referred to as “Jr.”), who grew up in Short Hills, New Jersey, was the oldest of four siblings. His father (Watson Sr., hereinafter referred to as “Sr.”), who played well with others, executed a financial turnaround of Computing-Tabulating-Recording Company (renamed IBM in 1924).

Sr. instituted a corporate culture of “investiture socialization”– training, educating, and fostering cooperation among employees and rewarding them for performing well. They had air-conditioned offices and factories (rare for the 1930’s) in Endicott, in upstate New York. Their corporate campus afforded them the use of a country club that offered free concerts, a dining room, two golf courses, a shooting range, and library.

Top management encouraged even the lowest-level workers to make suggestions for improving working conditions. On one occasion, an anonymous complaint that reached Sr.’s desk alleged that a heating system in a plant was being renovated too early in spring, making the work environment freezing, and there was one toilet for fifty employees. Jr. was sent to personally investigate. He wrote that he began remedying the situation within one day.

The first half of the twentieth century is obviously a bygone era in employment. The non-union IBM was competing with other employers that provided labor-union: benefits, compensation and job security for their workers.

Sr. was practically the only corporate executive in America in the Depression years who agreed with FDR’s policies. One hard and fast rule under the “cult of personality” which Sr. developed, was that alcohol was prohibited in all IBM offices at all times, including lunchtime off-campus, and even special occasions.

IBM initially sold scales and meat slicers business-to-business, but switched to leasing of, and tech support for, electric typewriters and punch-card machines. That last product automated all accounting functions and processing of sales data.

In 1940, Sr. testified at a Congressional hearing on “technological unemployment”– the unfortunate, economically adverse situation in which people are thrown out of work when processes get automated. Sr. argued that his company was good for the economy, as it stimulated consumerism.

During WWII, IBM contracted with the War Department to manufacture machine guns, and keep tabs on a slew of battle-related statistics: “… bombing results, casualties, prisoners, displaced persons, and supplies.”

IBM found that the most cost-effective way to run its international business through its subsidiary, World Trade, was to assemble machine-parts in various countries so as to force interdependence among them and share the wealth. Immediately after WWII, though, there were disastrous financial losses in Europe especially, until infrastructure could be rebuilt.

By then, the company had about 22,000 employees, most of whom worshipped Sr. His photo hung on the walls of their offices. Nevertheless, at the time, he was smart enough to listen to IBM’s vice president of engineering. The latter was virtually the only manager who had the foresight to raise the alarm early, on the coming obsolescence of the medium of punch-cards, which took up scads of storage space but allowed instantaneous data-viewing. The technologically superior, compact medium of magnetic tape stored data which were invisible until viewed on a monitor. It was unclear how long the transition from punch-card to tape would take, but entrepreneurs were already making inroads on the extremely expensive experimentation required.

In the 1950’s, the U.S. government commissioned IBM and the Massachusetts Institute of Technology to do a joint defense project called SAGE. In 1957, the Soviets’ launch of Sputnik showed SAGE to be “… a costly fantasy, the SDI of its day. Before long, we found ourselves vastly overarmed, faced with the danger of mutual annihilation.”

In 1967, in the wake of racial tensions in America, IBM built a plant in the Bedford-Stuyvesant section of Brooklyn, New York City. It was part of a social program that was modestly successful; suggested by a task force comprised of white business leaders who assisted a black community board with economic development.

The author admitted that IBM had become a monopoly of sorts by the 1970’s. “The [anti-trust case against IBM] dragged on for twelve years, until the Reagan administration finally dropped it in 1981… the natural forces of technology etched away whatever monopoly we may have had.”

Read the book to learn about the role played by IBM with regard to other major negative and positive economic trends driving America over the course of more than half a century, plus more biographical information on the author and his family.

ENDNOTE: Alarmists on both sides of the economic spectrum shouldn’t have nearly as much fodder with which to propagandize, if they heed the lessons from this book, lessons that smack of deju vu all over again :

  • Some people might say Moore’s Law has run its course in the United States (See the post, “Moore’s Law / Elon Musk”).
  • Microsoft learned the most lucrative lessons from IBM in preparing its own legal defense against the Justice Department’s antitrust accusations.
  • The national healthcare system of the United States can only improve in the coming decades– eliminating one major cost for employers that was seriously hampering their bottom line.
  • The way IBM began to do business internationally decades ago, is still in existence. And
  • supply and demand will compel Americans to find solutions to seemingly overwhelming problems, such as those relating to energy, environmentalism and education.

Of course, there will always be leaders who, grateful for term limits, lacking courage– adopt the attitude of the character Linus in the “Peanuts” comic strip: No problem is ever so big or so complicated that it can’t be run away from.

Wikinomics / Courting Justice – BONUS POST

The First Bonus Book of the Week is “Wikinomics, How Mass Collaboration Changes Everything” by Don Tapscott and Anthony D. Williams, published in 2006.

This book’s authors slapped together a huge number of cliched, vast generalizations in pushing their overly idealistic scenarios of the future. They had high hopes for the open-source movement. Unfortunately, since the book’s writing, most of the open-source projects they mentioned have tapered off, because in the long run, few people can or would want to provide “sweat equity” without ever receiving any equity.

Nevertheless, cooperation and globalization– two other movements for which the authors had great enthusiasm– are still alive, well and prospering. It is debatable, however, how long these two can be implemented before their socialistic aspects reach critical mass, and fail.

The authors mentioned that crowdsourcing of strangers (competitors) who are offered a reward for submitting the best innovative solution for a specific problem- has been very successful. But once the problem has been solved, a corporate entity needs loyal employees to continue to implement the solution.

The authors also contended that cooperation among companies reminiscent of the way the Japanese conduct business, has also been successful. However, long-term, the Japanese way leads to groupthink and herd mentality– lack of new ideas and competition; an oligopoly or monopoly. Free-market economics– competition– forces a company to acknowledge its weaknesses and threats against it, of which it might not even be aware. This is why capitalist economics for most goods and services is the way to go– there is balance between cooperation and competition that allows workers to best fulfill their potential for their employer and themselves.

It might be recalled that pure socialism thrived for a short time when the State of Israel was born. That was an extremely special exception, for the following major reasons; the Kibbutzniks:

  • were forced to work together in order to survive in the desert, geographically surrounded by enemies;
  • were like-minded– oppressed for their religion– seeking a safe place in the world;
  • had a common goal bigger than themselves– building a country for themselves from the ground up– creating the political, social and cultural systems and infrastructure when everything was simple and their population was low;
  • had in common the shared, traumatic experience of WWII and/or the Holocaust; and
  • had substantial financial and military help from the United States.

In the United States, since the Depression Era, there has been heated political debate over how much socialism is too much. To be sure, specific socialistic entities have greatly enhanced the quality of life for Americans for decades: public libraries, the G.I. Bill, Social Security and Medicare.

Capitalistic free markets have also done the same, but when the gap between rich and poor people in a nation becomes too wide because the rich exploit vehicles to wealth through unethical political means, there occurs too much resentment among the poor.

Along these lines, the Second Bonus Book of Week, “Courting Justice, From New York Yankees v. Major League Baseball to Bush v. Gore, 1997-2000” by David Boies, published in 2004, described a few cases of how the author legally fought for underdogs (which were suing super-rich, politically entrenched entities). In antitrust and price-fixing cases, consumers have always been wronged– overcharged– and they are never fully compensated, even when the court rules against the offenders.

Born in 1941, the author (later) attended Northwestern law school in Illinois. He got a scholarship that paid his tuition, books and rent. He wrote, “I also discovered that I could borrow several thousand dollars from the government at no interest, which I did.”

Beginning in 1997, on behalf of the U.S. government, the author litigated an antitrust case against monopolist Microsoft. He helped win the portion of the case he worked on. Unfortunately, he was forced to withdraw from the case due to a conflict of interest. His role in the whole affair was meta-relevant– he represented Al Gore in the 2000 presidential election court fight. The pro-business bent of George W. Bush with his new antitrust department personnel (unethically, at best) changed the course of the Microsoft case.

The author asserted that, “The enforcement of our nation’s laws is supposed to be free from political influence, particularly when a case is ongoing [as was Microsoft’s]… [and in Gore’s case:] The rule of law means, first, that what a court (or other decision-maker) will do must be reasonably predictable, and second, that what a court does must be independent of the identity of the parties. The majority opinion [of the U.S. Supreme Court] failed both tests.”

Read the book to learn the details, as well as several other cases personally litigated by the author.

Pharma

The Book of the Week is “Pharma– Greed, Lies, and the Poisoning of America” by Gerald Posner, published in 2020.

In 2016, the “superbug” Enterobacteriaceae turned out to be resistant to 26 different antibiotics. About half of patients who contract it, die. There are a bunch of other similar bacteria in the world. The author warned that in the future, a bacterial pandemic was on the way, for which there would be no antibiotic cure. Apparently, there can be a viral pandemic, too– one that cannot be treated with antibiotics at all.

For, antibiotics kill only bacteria, if that. Yet, in the United States, for decades, antibiotics have been prescribed to treat (mild!) viral illnesses. That is one major reason that superbugs have become a trend. And there has been an epidemic of diabetes type II. And many other adverse consequences.

Anyway, the author recounted the history of big-name drug companies, which began selling morphine to soldiers during the American Civil War. In the second half of the 1800’s, Pfizer, Squibb, Wyeth, Parke-Davis, Eli Lilly, and Burroughs-Wellcome began mostly as family proprietorships that sold highly addictive, unregulated drugs. Bayer produced heroin in 1898. The twentieth century saw Merck put cocaine in its products; other companies jumped on the cocaine bandwagon.

In 1904, the head of the United States government’s Bureau of Chemistry, Harvey Wiley, was concerned about contaminants in the nation’s food supply. Consumers were being sickened by chemicals that were supposed to retard spoilage or enhance the appeal of foods. They included, but were far from limited to: borax, salicylic acid, formaldehyde, benzoate, copper sulfate and sulfites. Trendy patent medicines were also doing harm to consumers. The word “patent” gave the impression of approval or regulation of some kind, but actually meant nothing.

Through the first third of the twentieth century, the government continued categorizing, monitoring and taxing drugs, but the pharmaceutical companies continued using trade groups and legal strategists to protect their profits. The 1930’s saw the big drug companies start research laboratories. Finally in 1938, the government established the Food and Drug Administration, and began to require extensive product-testing and labeling, and factory inspections. That same year, the Wheeler-Lea Act prohibited false advertising of drugs, except for previously manufactured barbiturates and amphetamines.

After Pearl Harbor was attacked in December 1941, America sought to manufacture penicillin in volume. For, the newly introduced antibiotic would be very helpful to the war wounded. But the drug’s fermentation process required a rare ingredient. In spring 1942, one patient who had friends in high places was cured. That largely used up the penicillin supply in the entire country. Other kinds of antibiotics were produced in the next decade, but their profitability was hampered by the bureaucratic processes of patent applications and FDA approval applications.

In the late 1940’s, Arthur Sackler and his brothers founded a family drug-company dynasty. The author revealed excessive trivia from FBI files on them and other greedy characters whose tentacles pervaded all businesses that could help sell (translation: maximize profits of) the family’s healthcare goods and services. This meant consulting, advertising, publishing, charities, public relations, database services, etc. The parties failed to disclose countless conflicts of interest.

In the early 1950’s, drug companies successfully lobbied the U.S. Patent and Trademark Office to allow drugs with strikingly similar molecular structures to be deemed different so that they could be granted separate patents. A higher number of drugs could then be rushed to market sooner, and make the most money.

In 1952, farmers fed Pfizer’s antibiotics to their animals so that they grew bigger (both Pfizer and the animals). In the mid-1950’s, Pfizer, Lederle, Squibb, Bristol and Upjohn engaged in an illegal tetracycline price-fixing scheme. They reaped hundreds of millions of dollars in earnings. The FDA chief was in Sackler’s back pocket. So when violations came to light, the FTC and FDA gave the offenders a slap on the wrist. However, senator Estes Kefauver was a thorn in their side.

Kefauver led an investigation as to why America’s drug prices were so excessively high when compared with those in other nations. In fighting back, the drug industry smeared Kefauver as a liberal pinko, claiming he had designs on forcing socialized medicine on the United States. The nineteen drugmakers under the gun gave bogus excuses. The real reason is that America’s drug prices and patents are subjected to minimal or no regulation, unlike everywhere else.

In 1956, Americans were told they were stressed, but a wonder drug called “Miltown” would help calm them down. The mild tranquilizer became a best-seller, until it was counterfeited and appeared on the black market, and its adverse side effects gave it bad publicity. Oh, well.

Then in the 1960’s came the culture-changing birth control Pill, and Valium– also called “mother’s little helper” that was marketed as a weight-loss aid. The next game-changer was thalidomide. Kefauver used the worldwide backlash against this drug to push through some drug safety and effectiveness regulation in the United States in 1963. For a change. Even so, in 1972, when the U.S. Supreme Court confirmed certain regulatory powers conferred on the FDA, drugmakers merely sought additional markets for their products on other continents.

In 1976, there was a swine flu epidemic in America. Healthcare companies were reluctant to develop a vaccine for it, fearing an orgy of litigation from victims if any harm was done. So the government unwisely agreed to foot any legal bills. Sure enough, some vaccine recipients developed cases of Guillain Barre syndrome, and neurological complications. The (taxpayer-funded) Justice Department took the hit. Other parties piled on. “The CDC had exploited ‘Washington’s panic’ to ‘increase the size of its empire and multiply its budget.’ “

Moving on, the author told the whole sordid story of the “opioid crisis” in America. In a nutshell: in May 2002, Purdue Pharma, maker and unethical marketer of OxyContin, hired Rudy Giuliani’s firm to defend it against the firestorm from its host of illegal activities. The firm collected a $3 million fee per month. Purdue collected $30 million per week from OxyContin sales. To be fair, Purdue and the Sackler family were the poster-scapegoats of the crisis. Numerous other parties aided and abetted them: other pharmaceutical companies, doctors, FDA bureaucrats, and pain management “experts” and pharmacists. The far-reaching consequences have caused a lot of trouble for society as a whole in the areas of: increased healthcare costs, criminal justice, social services, drug rehabilitation services, lost productivity and earnings, etc.

Read the book to learn an additional wealth of details and the details of wealth of the healthcare industry’s evolution into a hegemonic legal behemoth / excessive profit center, in the form of a series of cautionary tales in various topic areas– drug advertising, blood donations, biotech, epidemics, pharmacy benefit managers– that wrought major good and bad (mostly bad) cultural and regulatory changes (including the Hatch-Waxman Act and the Orphan Drug Act); plus the family battles following the sudden death of Arthur Sackler.

Samsung Rising

The Book of the Week is “Samsung Rising, The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech” by Geoffrey Cain, published in 2020.

In 2009, the author, a Korean-speaking journalist moved to South Korea to find out all he could about the then-electronics company Samsung, the most famous company in the country. In the ensuing years, Samsung’s relationships with technology-products makers became incestuous because it decided to make its own products while simultaneously supplying its competitors with parts for their products.

The author personally visited the city of Daegu, hometown of Samsung’s founder. In March 1938, Samsung started as a produce stand. The founder followed the Japanese business model of building an empire owned by family members, that involved complicated, group-focused, loyalty-oriented arrangements. Sounds somewhat familiar.

Anyway, in the 1950’s, he branched out into different industries, such as wool clothing, sugar refining, insurance, banking, retailing etc. The corporate culture involves slogan-chanting, and a drill team. But different divisions of the company harbor petty jealousies. The company’s success as a whole is treated as a zero-sum game, so one division’s success is considered to come at the expense of another’s. Sounds somewhat familiar. In autumn 2011, when Samsung’s division in America successfully marketed its new phone and stole a significant amount of market share from Apple, Samsung’s marketing division in South Korea lost face.

The founder made valuable government contacts that invited the kind of corruption that used to be frowned upon in the United States twenty years ago. Ironically, the United States has always provided significant financial aid to South Korea beginning with the Cold War and thereafter.

In 1999, Samsung and Sprint cooperated in a venture to make and export cell phones to the United States. Pursuant to South Korean culture, “After the bonding over booze and karaoke, it’s an accepted practice to roll out bags of cash and other gifts for your partners [American telephone service companies].” However, Samsung had to learn that Americans don’t do business that way (at least not explicitly).

In April 2008, Samsung’s chairman was charged with stock manipulation and tax evasion. In August 2010, and again in July 2011, Apple and Samsung launched an orgy of patent litigation against each other. In October 2011, Samsung already supplied parts for Google’s Android phone, but decided to introduce a phone of its own, the Galaxy Note series. It was a cross between a phone and a tablet, that would compete with Apple’s iPhone. Samsung sought to steal Apple’s customers. Apple had a reputation for making only one version of an overpriced product that delivered exactly what customers desired, that made them feel they were in the “in” crowd. Samsung would offer a choice of different-sized screens. It came late to the market, but improved upon existing products.

In August 2016, Samsung launched a new Galaxy Note phone. In October 2016, Samsung compounded its problems by denying that its phone burst into flames without warning. Its employees who were native South Koreans were under pressure not to express any negative sentiments about anything associated with their employer. For they risked ruining their careers, as word would get around to the few other competing employers in the country, and they would never work anywhere in their homeland again. Sounds somewhat familiar.

Read the book to learn about a wealth of additional details on the culture of South Korea (which is the same as the corporate culture of Samsung), how Samsung came to focus solely on technology parts and products, and much more.

Klondike

The Book of the Week is “Klondike, the Alaskan Oil Boom” by Daniel Jack Chasan, published in 1971.

For decades, oil has been a political football that has caused international strife. This book recounts the story that has become a cliche: what transpired when oil was discovered in Alaska in March 1968.

Through the 1800’s, Alaska’s economy was based on fur trading (exploited by the Russians whose activities left many native Alaskans dead of disease and from weapons), canneries, sawmills, gold, and whaling (exploited by the Americans, who forced many native Alaskans to migrate or else they would starve); by the mid-1900’s, it was based on salmon, lumber, gold, copper, hunting, private prop planes, and during wartime– military bases.

In January, 1970, the author visited an Eskimo village, whose residents hunted caribou for food, lived in plywood cabins, and got around in snowmobiles. They sold masks made of caribou in tourist shops in Alaskan cities to make a living. On average, they passed away in their mid-30’s.

In 1912, the Alaskan Native Brotherhood was formed to help aboriginal Alaskans assert their legal rights. Through the decades, various tribes of natives, including the Tlingits, Haidas, Tanacross, Minto, and Inupiat had their lands grabbed by the United States federal government. Finally, in 1966, they formed a group called the Alaska Federation of Natives but it became a political front that actually separated the tribes from their lands. Different tribes had beefs with other tribes, and there were divided loyalties. In the last three years of the 1960’s, Alaska’s state government had political differences with the federal Department of the Interior.

Just a few of the actual consequences (which were ongoing, and were likely to get worse in the future, due to ongoing legal wrangling at the book’s writing) of oil discovery included:

  • Eskimos’, Indians’ and Aleuts’ ways of life were disrupted emotionally, financially and property-wise, due to the mere planning of the oil companies involved.
  • Many activities associated with the extraction of the oil were environmentally damaging to the land and air due to the construction of: a pipeline to be completed in 1972, and the flying in of temporary housing, vehicles and facilities for workers, etc. (Los Angeles would get the oil if it was ever extracted, thus decreasing oil prices and increasing its smog), and
  • Some of the parties involved with the whole extravaganza profited before a drop of oil was even extracted: lawyers, oil workers, Alaska Airlines, and Alaska’s state government– which collected revenues from lease payments, filing fees, drilling permits, etc.

There was always the incalculable potential for ecological disasters which could rear their ugly heads at any time: oil spills and earthquakes. Of course, “The Interior Department had no such trouble computing the possible benefits of the pipeline.”

Read the book to learn a wealth of additional details of why Alaska’s natives were at many disadvantages in their fight with “city hall” (hint– one was that an Alaskan senator doubled as the chair of the Senate Interior Committee, who was friendly with president Richard Nixon’s Environmental Quality Council) and which kinds of compensation, if any, to which some of them might be entitled.

Taken For A Ride

The Book of the Week is “Taken For A Ride, How Daimler-Benz Drove Off With Chrysler” by Bill Vlasic and Bradley A. Stertz, published in 2000.

This was a story not atypical in many ways, of any 1990’s merger between two big-name public companies. One difference, however, was that one was American (Chrysler), and the other, German (Daimler-Benz). Thus, there was the additional difficulty of minimizing employee friction in connection not only with the different corporate cultures, but with the different national cultures.

Another difference was that Daimler and Chrysler weren’t direct competitors– product-wise demographically or geographically, so there was little personnel duplication between them. So minimal employee layoffs were in order.

Initially, Kirk Kerkorian was a major shareholder of Chrysler. In April 1995, his group Tracinda made a tender offer for all of Chrysler, but unwisely publicly admitted it had yet to line up the financing for purchasing the company. The news brought out all the greedy stakeholders: Tracinda’s people, and institutional and individual shareholders of Chrysler. Other parties to the possible transaction included investment bankers, and consultants of various kinds– image, financial, M&A, and legal.

The media stoked public anger at Tracinda for its poor planning (which might have been deliberate, to rattle the target). The Wall Street Journal made the emotionally charged claim that Kerkorian would saddle Chrysler with a heavy debt load if his bid was successful. Of course, regardless of success, he knew he would boost Chrysler’s share price and make more money for himself.

There were various times when different male corporate leaders became angry at others, usually when they felt they had or were going to get, less power or money than they thought they deserved.

For example, anger was directed at Lee Iacocca, former turnaround artist of Chrysler around 1980. At the time of the Kerkorian affair, he was a paid corporate consultant to Chrysler but contracted with Kerkorian, too. So Chrysler revoked the stock options he still had. “He [Iacocca] was… madder than a hornet when he heard he would get only $42 million…”

By the mid-1990’s, auto industry executives knew their companies would be swallowed up by bigger ones if their own companies didn’t make acquisitions or team up with their competitors.

One other possible way to expand was to try to sell cars to Third World countries like Vietnam. However, the bulk of those Asians– who were still farming and fishing– would need to save their entire annual salaries for forty years (!) if they wanted to buy even the lowest-price Chrysler car, the Neon. Besides, their country still had few paved roads, anyway.

In summer 1997, the timing just happened to be right for Daimler and Chrysler to get together with a stock swap (rather than a tender offer– buying the stock from the shareholders to cash them out– make them no longer owners of the stock). Nevertheless, the months-long merger talks had to be kept secret because if the news was prematurely leaked, Chrysler’s stock price would skyrocket, making a deal prohibitively expensive.

Read the book to learn what, in summer 1999, prompted the following: “His aides had never seen Kirk Kerkorian so mad. In two days he lost almost $600 million on his Daimler Chrysler stock” plus all the other details of the whole story.

Women Who Work

The Book of the Week is “Women Who Work, Rewriting the Rules for Success” by Ivanka Trump, published in 2017. As is well known, Ivanka is Donald Trump’s daughter.

This volume described the business the author co-founded in an attempt to persuade females to vote for Trump for president in 2016. It was a redundant, wordy “do’s and dont’s” guide / bragfest (for the author, who used real-life examples from her own personal and professional life), interspersed with interesting research results, for women in the workplace. There were two words used grammatically incorrectly: “architect” was used as a verb, and “evolve” was used as a transitive verb.

Anyway, the Women Who Work website was started in November 2014. The tips provided were mostly common sense, like– listen to your coworkers at meetings, don’t gossip, lead by example, etc. One particularly curious line included: “… being authentic doesn’t mean candidly sharing every thought that comes to mind… using authenticity as an excuse to be unprofessional (“I am who I am!”).”

It was unclear at whom the author was targeting her vast generalizations and a few incorrect assumptions: experienced or inexperienced female workers. The author assumed that the reader had a female boss, worked with females, and worked with a team. She did provide some good tips for entry-level workers. However, she cited a 2014 study of Harvard Business School graduates in connection with gender roles in the home– but obviously, that group isn’t representative of the entire country.

Ivanka had to be vague, as every workplace is different. Her tips were unrealistic for women in male-dominated fields. Besides, the vast majority of employers in this country are still run by men. Ivanka also assumed the reader ran meetings, delivered presentations and managed a team. But if the reader had already reached a position with such responsibilities, she wouldn’t need this book.

The author wrongly assumed that the best way to get a job is through a recruiter. That might be true in some fields, such as information technology. But if the reader is a creative, independent thinker, she might get a job via thorough research on her situation, approaching employers directly, even if she has few or no contacts in the industry.

If the reader was laid off by her employer, Ivanka wrote, “Know that your manager probably doesn’t enjoy the conversation any more than you do and it may not have even been her decision to let you go.”

Letting employees go immediately is a far smarter policy than letting them know one, two or three months in advance of their firing but allows them to keep working. The latter scenario means the now-former employees will have zero productivity, will steal resources from their former employer, and will simply spend all their time looking for a new job.

Fired employees on the same level will be competing with each other for a new job so if they’re smart, they won’t tell the others they’ve been fired, but they’ll certainly be resentful, angry and possibly be sufficiently disgruntled to hurt their former employer.

The former employer thinks they’re saving money by not paying unemployment insurance– avoiding paperwork. They’re providing full pay for three months rather than half pay for six months. It’s actually more costly for them in the long run, in terms of personnel issues. And such former employers usually have unfriendly corporate cultures in the first place.

Ivanka said, “You’re never too old, experienced or far into your career to make a change.” That’s a lie, according to the AARP, which says that cases of age discrimination are on the rise. Nevertheless, young females just entering the workforce might want to read the book to get some tips.

I Love Capitalism – BONUS POST

The Bonus Book of the Week is “I Love Capitalism, An American Story” by Ken Langone, Cofounder of the Home Depot, published in 2018. This is the bragfest of a Wall Streeter, who appears to have bragging rights.

Born in September 1935 in Roslyn Heights, in New York State (on Long Island), Langone caught the entrepreneurial bug early in life. By college, he was selling stationery and neckties.

In the single-digit 2000’s, Langone helped recruit a CEO for Home Depot. In the short term, the CEO greatly improved the numbers that serve as indicators of a company’s financial success. However, the dollar value of the company actually decreased after a few years. His philosophy damaged the corporate culture by violating the company’s philosophical values.

For, the CEO failed to understand that in a customer service business like Home Depot, corporate culture drives the numbers. Employee satisfaction gets the same score as customer service. His replacement “… dressed like a plumber, and he looked like a nerd… [but] he became a rock star to the employees…”

Langone admitted up front that he had mentors and helpers left and right throughout his life. “Some guys who get to be wealthy like to brag about being self-made men. I can’t imagine they’re not leaving somebody out of that equation.” [likely, their daddy.]

Read the book to learn about who assisted Langone in his adventures in capitalism.