BillinBoston

When a President wastes a decade

2011-10-19T17:55:00.000-07:00

Attended a dinner at Winsor School with old friend David Sanger, now NYT chief national correspondent (I met him 30 years ago when he was an intern in WSJ Boston Bureau). Have to buy his book, "The Inheritance." He says that it argues that whether Iraq was the right or wrong war, we need to understand how significant it was in consuming national time and treasure. He estimates cost at $3.3 trillion and the establishment of a national strategy that distracts us from both domestic planning and other international interests.
New anecdote: he recently met with a Chinese general who said that ten years ago the Chinese despaired of ever catching up to U.S. power, but "we never dreamed you'd spend a decade in Iraq and Afghanistan."
It's a reminder that the most powerful weapons are those you don't use. Saber rattling can often have much more impact than actually using the saber. The Cold War, the most successful U.S. war since WWII, was all about unused weapons.
It's also a reminder that when a president picks one big battle it will prevent him from waging other battles. They have to spend some of their political capital as they go along, but it's not an infinite resource. Obama has won most of the political battles he fought -- health care, financial rescue, financial regulation, Supreme Court picks -- but he doesn't have any political capital left. Because the fight for economic recovery turned out to be the most important battle, and he can't wage it any more, most voters think he's been a failure.

Perry's job "creationism" like religious creationism

2011-10-11T11:04:00.000-07:00

The Wall Street Journal has a very interesting front-page piece on Texas Gov. Rick Perry's job "creation" programs today. http://on.wsj.com/o2vjUd It makes it clear that Perry's "job creationism" is as scientifically rigorous as religious creationism.
Written by my former colleague and Pulitzer Prize winner, Mark Maremont, the story notes that Texas committed $440 million to new jobs programs starting in 2005 and says they claim to have created 59,000 jobs. It notes that at least 12,000 of those jobs were claimed as a result of a Texas A&M genomics project that actually hired only 12 people. The rest come from adding up a plethora of unrelated jobs, most of which would have happened anyway.
Sadly, it is predictable that when a politician starts counting "jobs created" the number claimed will greatly exceed the reality. It was especially interesting that the best example of jobs created -- Citgo's new U.S. HQ with 820 jobs -- didn't really "create" jobs. It caused the jobs to be placed in Texas rather than some other state. Venezuela created the jobs because it needed a U.S. base for Citgo. Texas just offered a larger bribe to get them there than any other state was willing to provide.
To be sure, these state bribes to business are an important part of plant location decisions. But they aren't job creation in the sense of a venture capitalist providing money that creates a new industry. And it isn't a useful precedent for a U.S. president.
I am familiar with the recent plant placement efforts of a large food manufacturer. It ran rigorous analytical models to try and decide what state should get a new manufacturing and distribution facility it planned. It concluded that the only measurable financial criterion that mattered was the size of the state subsidy. So states are basically in a position of having to tax their existing businesses to bring in a new business. It's an unfortunate game of beggar-thy-neighbor, and governors have to play it. But it isn't job creation.
Perry, of course, criticizes Obama for his job creation efforts. So it's rich seeing him caught playing the same games.

Jobs place in business history? No. 3

2011-10-05T17:57:00.000-07:00

Steve Jobs' death is a tragic instance of genius interrupted. I only met and interviewed him once, but my life repeatedly has been changed by his vision and the products it created. I live on my Mac and iPhone and I probably have a more intimate relationship with them than with any other devices I've ever owned except my sea kayak, which periodically saves my life.
After 40 years of following American businesses, I've developed an interest in business journalism and business history. I believe that business and economic history probably plays a bigger role in the way the world works than most historians recognize.
It's too early to tell, but I'm a journalist, so I have to ask: How significant was Steve Jobs in business history?
After some consideration, I think he was probably one of the three most significant business people in American history. I'd rank him with Thomas Edison and Cornelius Vanderbilt -- probably in third place. Jobs (with Steve Wozniak who created the cheap disk drive) invented the personal computer. The second Apple (with VisiCalc from Dan Bricklin and Bob Frankston) was the PC that made Ben Rosen start proselytizing PCs as tools rather than toys. Bill Gates was a better business person at that point, but Jobs created the hardware. The one time I interviewed them both involved an argument over whether hardware or software should be free. That argument continues.
So what did Steve create? It's somewhat tough to say, because in corporate America, success is a team effort. But repeatedly, companies headed by Jobs created revolutionary products. That's really rare.
Giving him credit for team efforts, he created the usable PC; he created the graphical user interface, which is the way all people deal with machines today; he stole and popularized the mouse; he made desktop publishing possible; and that's just in PCs.
Then he changed movies with Pixar, demonstrating that creativity was a successful business strategy in high tech.
When he came back to Apple, his genius was really astounding. He used his vision to create products and services that remade the music industry, the PC industry, the newspaper, magazine and book publishing businesses.
And he created the smart phone -- the most important product in the world today. Nokia had led the way into smart phones but Apple took advantage of increased bandwidth, and it completely changed people's expectations. Remember reading the early reviews of iPhone? The raves were so over the top that you wondered how the Mossbergs and Pogues had been drugged. But when you got your own iPhone you wondered how any company had managed to create a product that so perfectly fit your needs. Screen gestures that did what you expected were an incredible example of a company understanding people.
The iPhone was the perfect expression of merging technology with imagination. It may never be equalled.
Still, I think there are other business people who have had a huge role in changing America. First, I would list Thomas Edison. Electricity generation was a big deal, and he invented technology to make it work and a corporate model to sell it. And inventing a market for electricity by inventing light bulbs was definitely world-changing. Edison also invented moving pictures and he created musical recordings. Think of the leap he made from a world where the impact of the spoken world was limited to shouting distance,
Last year I read a biography of Cornelius Vanderbilt that makes me think he should be in the small Pantheon of business leaders as well. He controlled sea transportation around New York, through great service (he pioneered ferries that left on a schedule rather than when they had a full load of passengers) and steely will. Then he moved on to control rail transporation. He was the first to demonstrate how to use the stock company, with many investors, to accrete the capital needed to build railroads.
There aren't many other business leaders in that league. The Wright Bros. invented the airplane, but they didn't create airlines. Bell started the phone company, but it was just one business. Saenoff didn't really invent radio the way Jobs invented the PC. JPO Morgan saved the financial system, but he didn't innovate anything.
I think Henry Ford might be in Jobs' league, mostly because the car remains the most important life changer of any technology. And Ford, unintentionally, created the middle class industrial worker. So I think I'd rank Ford and Jobs together, just behind Edison and Vanderbilt.
These kinds of rankings are completely bogus, of course.
But doing them provides some context for the events of our times.
Thoughts?

US Studying Google for Antitrust? Really?

2011-06-23T12:49:00.000-07:00

The Wall Street Journal broke the news that the FTC is ready to subpoena Google for information on its trade practices.
This is likely to help Google's competitors. But it's hard to see how it's going to help consumers. And antitrust law in America is fundamentally designed to give consumers a fair shake.
(I'm an enthusiastic user of many Google services, but I don't own any stock in the company).
It's hard to imagine a company that treats consumers more fairly than Google does. It figured out a way to let people find almost any information free. It did it by giving them ads for products and services that they were likely to want rather than bombarding them with irrelevant ads. That has worked so well for businesses that they have halved their advertising in newspapers and generally reduced ad budgets because they get more effective returns for less money online.
Google has used its incredible profitability to expand its footprint on the Internet through more free services, most of which have only indirect financial returns, if any. It stores much of the world's video information free on YouTube. It runs a great free e-mail service that prevents spam better than any costly corporate e-mail services I'm aware of. It runs free Google office apps in the cloud, so you can access them from any computer. It introduced a really good, credible alternative to the iPhone at a time when Blackberry couldn't figure out how and Microsoft was fiddling and diddling with shrinking a bloated operating system into a pocket-sized package.
Google even stood up to the Chinese and moved out of that country -- an incredible example of corporate morality. Much of the criticism of Google comes from competitors and advertisers who want to game its system and bother innocent consumers with unwanted sales pitches rather than the products they actually want.
The FTC better not mess up the Google system to the point that consumers get less.
As Dan Lyons points out at Daily Beast this is certainly bad for Google. Even though the Feds may not succeed in getting the courts to find Google's actions illegal or force many operating changes, Google will have to think about something besides the customer benefit of any new service it provides. Everything it does from now on will be constrained by the need to consider what the government thinks.
The government's unsuccessful antitrust prosecution of IBM marked the beginning of the end for Big Blue's long run of dominance. Similarly for Microsoft. Those cases hinged on the giants' abilities to bundle software with existing mainframes or operating systems in a way that prevented competition from getting a toehold. Locking out competition is bad for consumers, and those actions arguably led to a better marketplace.
From a competitor's point of view Google undoubtedly looks like a voracious monopoly. But there are serious, cash rich competitors in the same space that can take care of themselves. Apple has a market cap substantially higher than Google's, a lock on the most lucrative smart phone and tablet users and control of the music industry. Microsoft has revenue and cash flow that would make most national treasuries weep, and a lock on the CIOs of the world. Facebook gets a lot more time everyday with Internet users than Google does and it knows a lot more about them.

Google provides a greater consumer service, for less money, than any other company in high tech (although Facebook is coming close). It will be tragic if that is lost due to antitrust action.

Brain-free law-making

2011-01-26T13:37:00.000-08:00

The NY Times has an interesting story on state legislators proposing bans on listening to music players or texting while bicycling or walking. http://www.nytimes.com/2011/01/26/us/26runners.html?_r=1&src=fbmain
It seems to be a classic example of legislation by anecdote, unimpeded by actual knowledge.
In fact, pedestrian fatalities declined 16% over the time that Americans presumably increased their walking while distracted. Fatalities dropped to 4,091 in 2009 from 4,892 in 2005. The story says there was a slight upturn in 2010, but that doesn't seem to have been the reason legislators decided to act.
Among the states, Arizona and Florida had the largest increases in pedestrian fatalities, followed by North Carolina, Oregon and Oklahoma. The study doesn't say whether those states had the largest increase in sales of iPods or Blackberrys -- facts that might have provided a rationale for the proposed laws.
New York State Sen. Carl Kruger of Brooklyn, proposed a bill that would apply to pedestrians in cities of one million or more. “This is not government interference,” he said. “This is more like saying, ‘You’re doing something that could be detrimental to yourself and others around you.’ ”
Kruger has a funny way of defining "not government interference."
Examples like this of legislating for the sake of legislating are enough to turn me into a full-fledged libertarian.

New Job site threatens monster.com

2011-01-23T10:35:00.000-08:00

I just read a story in the Washington Post about a new domain, "jobs" that looks like a big threat to Monster.com and CareerBuilder.com. It could do to those job sites what CraigsList did to newspapers' classified ads.
The jobs domain was authorized by the Internet registry, ICANN. It was opposed by newspapers and long-term nemesis Monster alike. The jobs domain lets companies post help wanted ads for free. You go there by typing something like http://ma.usa.jobs/writing, and see a list of postings. Companies love it because they can put up ads for free. Monster.com charges up to $395 for an add, or $230 a piece for ten or more. For a big company with a lot of openings, it's a significant saving.
If you're job hunting -- or hiring -- its worth checking out.

Official Google Blog: An update from the Chairman

2011-01-21T06:58:00.000-08:00

Official Google Blog: An update from the Chairman

http://billbulkeley.blogspot.com/2011/01/silicon-valley-boardroom-shakeups.html

Silicon Valley Boardroom Shakeups

2011-01-21T06:30:00.001-08:00

Two of the biggest companies in Silicon Valley underwent big boardroom shakeups yesterday. At Google, Eric Schmidt, the professional manager who has headed the company since 2001 relinquished the CEO title to co-founder, Larry Page. At Hewlett-Packard, the world's biggest technology company by revenue, four board members departed with five new ones coming on.
The Google change is a big deal. I'd argue that Google is the most important company on the planet -- more so than Facebook, IBM, Apple or News Corp. The Google triumvirate has created an amazing business model. And it is also a cultural and political force with its own foreign policy. Google's stance against Chinese censorship (allegedly pushed by co-founders Larry and Sergey) was an important development in world affairs last year. Its stewardship of many individual's documents, e-mail, photos, videos, phone calls and blogs is a bedrock of Internet existence.
Eric Schmidt, who I met a few times while covering Sun and Novell, has an amazing ability to foresee how technology will impact business and the economy. Google has made a series of smart moves through acquisition and invention during the decade he has been there. I'm not a shareholder, so I don't have that perspective. But as a citizen of the globe, I hope the change won't derail Google.
The good news is that the co-founders presumably are more attuned to the company motto -- Don't Be Evil. The risk is that Schmidt's acute sense of how Google fits into the wider world will be subsumed to a Google-centric view.
Hewlett-Packard, on the other hand, doesn't really matter. It's a collection of unrelated commodity businesses that don't lead in anything but cutting prices. If the whole company blew up, someone else would license Canon's printer engine technology. The same Chinese factories would make the same PCs and laptops. Another Indian body shop would take over the offshored services. The Intel-based enterprise servers would be made by some other Microsoft spawn. And only the legacy enterprise equipment would retain an H-P identity. Mark Hurd managed to make H-P profitable, but the decision to slash R&D has made it largely irrelevant.

Chinese mothers

2011-01-10T06:53:00.000-08:00

There was a fascinating piece in Saturday's Wall Street Journal by a Chinese-American mother who is a law professor at Yale. She contrasted her parenting style with that of typical American moms (and dads, including her husband). The message was that while her demands for perfection from her daughters sound autocratic and unreasonable, they produce superior children. The implication was that her methods are typical not only of Chinese-American mothers but of mothers in China as well, raising some interesting questions about the future competitiveness of our two societies.
I certainly haven't raised my children the way she did, and I suspect some of the reason is laziness and lack of self-discipline.
While her methods sound draconian, they are also incredibly time consuming. I don't think many American mothers or fathers have the discipline and determination to spend the hours working with their kids that being a Chinese mother seems to require. We all try to spend quality time with children, but not many spend the amount of time that Amy Chua seems to. I suspect her kids benefit from the amount of time and attention they get, even if they sometimes rebel at the content. She may sometimes tell them they're "garbage" but the amount of time she spends must tell them that she thinks they're incredibly important.
In one painful anecdote about forcing her daughter to learn to play a difficult piano piece, she describes spending at least four hours of yelling, screaming and listening to badly played piano. Not many parents have the energy or make the time for the sort of effort.
In the U.S., you sometimes hear about football or baseball players who are coaches' kids who spent that sort of time with their Dads. And then there's Tiger Woods. But very few parents will spend that kind of time practicing math or language or a musical instrument with a child. It's so much easier to put the kid in front of a video screen or a computer game.

Is Groupon really more valuable than Twitter?

2010-12-01T10:55:00.000-08:00

I was surprised by the values placed on two of the hottest closely held companies -- Groupon and Twitter -- both for their sheer size and the fact that Groupon is worth more.

Groupon, a gimmicky coupon site, was valued at 50% more than Twitter, which has become core to the lives and marketing strategies of millions of people.

All Things Digital, the Wall Street Journal-affiliated Web site, is reporting that Google will pay up to $6 billion for Groupon.

And TechCrunch reports that VC giant Kleiner Perkins wants to invest in Twitter at a valuation of $4 billion.

Those are eye-popping numbers -- reportedly ten times Groupon's anticipated revenue this year, and nearly 30 times the Twitter revenue for 2010 that was projected in some stolen documents a year ago.

Groupon has a lot of revenue for a two year old company. But it only has 12 million users, and it already has a lot of competitors. As a happy user of Groupon, I can't differentiate it from the other coupon sites I use like EverSave. Setting up a local couponing site would seem to be easy to do for anyone who can inspire a sales force. Yellow Book salespeople, whose jobs would seem to be in jeopardy now, would seem like obvious competitors.

Twitter has 175 million users and it has a huge role in the social-media zeitgeist. In terms of mindshare it's already the equivalent of Facebook and YouTube. It's going to be very hard for anyone to compete for its niche. Even better micro-blogging technology wouldn't give many people a reason to shift away or add another service.

Obviously, the Groupon valuation is based on real money. Twitter's value is much more conceptual. Still, if I had the opportunity to own 1% of either company, I'd opt for Twitter.

O'Reily shouldn't Joke about beheading reporters

2010-11-10T07:04:00.000-08:00

I'm horrified by Fox host Bill O'Reilly's "joke" about beheading Washington Post columnist Dana Milbank. Dana's alleged sin was failing to acknowledge that Fox had more than one Democrat on air on election eve as it celebrated the Republican victory.
Dana is a good friend and former colleague in the WSJ Boston bureau. Because he's hilariously funny and understated, he's a perfect foil for the overheated, angry Fox commentators. Dana writes about his feelings about O'Reilly's attack on him in the Washington Post today. http://www.washingtonpost.com/wp-dyn/content/article/2010/11/09/AR2010110906643.html
He notes that jokes about beheading reporters are especially painful for those of us who worked for the Wall Street Journal when our colleague Danny Pearl was beheaded by militant Islamists in Pakistan. It's ironic that WSJ reporters and Fox commentators are all part of the News Corp. family.
O'Reilly is probably also miffed about Dana's terrific new book on his Fox stable mate, Glenn Beck: "Tears of a Clown." In the book, Dana describes the histrionic Beck, whose weepy monologues are enhanced by smearing mentholatum gel under his eyes, with devastating accuracy. Using Beck's own excuse Dana says he can't be misrepresenting Beck if he quotes his own words.
The book will tell most people far more than they want to know about what Beck says without ever really answering the question of whether he believes all of it. It struck me as a brilliant examination of how a propagandist can use innuendo and subtle misstatements to create a world that is very different from the one most of us live in.
Dana has succeeded in writing an exhaustive case study of how the paranoid mind can spin and spread conspiracy theories. Some 9 million people listen to him every week on TV and radio, so in a country of 300 million, he's only reaching a tiny fringe. But those folks scare Congressmen in conservative districts, and many of them go to tea party rallies. Unfortunately, Beck's technique and his world view matter.

Google suit over Microsoft contract hurts U.S. Gov operations

2010-11-02T10:45:00.000-07:00

Google is stepping up its game in office software with a lawsuit against the Interior Dept. for picking Microsoft Office for a $59 million upgrade. http://online.wsj.com/article/SB10001424052748704141104575588641430182832.html?mod=WSJ_hps_sections_business
I'm not sure of the merits of Google's case. But I know the resulting delay won't be good for governement operations.
The endless litigation over government IT contracts is a big reason the government IT systems are so antiquated. Every effort to upgrade IT in government agencies requires months or years of writing RFPs followed by public comments, followed by amendments, followed by bids, followed by selections, followed by litigation. This is further complicated by quadrennial turnover of agency heads and deputy under-secretaries requiring the new leader to be updated on everything that went into the contract RFP and its aftermath.
The goal, of course, is fair competition for government procurement that will result in the best systems and the lowest price. The alternative would probably be companies lobbying congressmen with campaign contributions which isn't good either. But the game for bidders now is to get into the RFP process and put in criteria that make your company's product the only one that can fulfill the RFP. That's what Google says happened at Interior.
There's also a game of pulling together many competitors into consortia with different ones taking the lead on different contracts.
Maybe the Google lawsuit will result in a better system in 2012 or 2013. But Interior will lose a couple of years of enhanced productivity, and Microsoft may end up winning anyway.

How Google Avoids U.S. Taxes and How to Prevent It

2010-11-01T06:59:00.001-07:00

My old colleague Jesse Drucker had a fascinating Washington Post article last weekend on corporate taxes. http://www.washingtonpost.com/wp-dyn/content/article/2010/10/30/AR2010103004613.html
It explains how one of the world's most profitable companies, Google, managed to virtually eliminate international taxes and minimize taxes paid anywhere by transferring its intellectual property to an Irish subsidiary. It then turned the profits of that subsidiary over to a Bermuda unit, via a Netherlands subsidiary.
You can get mad at Google for doing evil by ducking taxes. But that's unrealistic. Every company will do the most it can to cut its taxes. The U.S. 38% corporate tax rate is the highest corporate tax rate in the world, next to Japan. There will always be countries that see a benefit by having low corporate taxes. Ireland's tax-friendly laws resulted in the gainful employment of 2,000 Google workers in a shiny building in Dublin.
To me, the worst consequence of this is that the profits Google shelters from taxes have to stay overseas or be subject to the U.S. tax rate when they're brought back to the U.S. That gives Google an incentive to invest the money overseas either by buying foreign companies or building its business in Ireland and elsewhere. The Obama administration wants to force U.S. companies to pay taxes on some of their foreign profits. But that will put them at a big disadvantage against European and Asian companies that have lower tax rates. That, in turn, will hurt U.S. exports.
It seems to me that we'd bolster the U.S. export economy and the competitiveness of U.S. business a lot if we lowered the corporate tax rate to 15%. Then many companies will bring their profits back to the U.S. and invest where it makes the most economic sense rather than the most tax sense.

I just saw that Megan McArdle at Atlantic blogged on this issue advocating a zero-corporate-tax rate. http://www.theatlantic.com/business/archive/2010/10/why-we-should-eliminate-the-corporate-income-tax/65351/

Admire Greg Mankiw's sense of humor

2010-10-27T07:09:00.000-07:00

Check out Mankiw's blog. http://gregmankiw.blogspot.com/

At the top is a parody by Harvard Econ students complaining about Stephen Colbert's mocking of Mankiw. About four posts down is Colbert's takedown of Mankiw. I suggest you watch the Colbert Report first (which Mankiw was classy enough to post on his blog) and then the econ students' parody in which Greg participated.

Rich people have hormone to live longer?

2010-10-21T17:24:00.000-07:00

Check this out: ">http://www.myfoxdc.com/dpp/health/hormone-found-in-rich-people-linked-to-longer-life-ncx-102110

It seems to me that long life by itself leads to wealth accumulation -- at least in a stable society where compounding of interest comes into play. A wealthy widow dying at age 75, would leave an estate to children in their 40s who would likely spend it on education for their children and perhaps a summer cottage. But if she lives to 94, surviving through the 1980s and 1990's with a bunch of pharmaceutical stocks, a thrifty, Depression-bred attitude and small financial needs she has accumulated a significant estate, even while helping fund grandchildrens' educations.

The theoretical wonders of compounding have been available for a long time. But very few societies have been stable enough ( until 1930, I suspect that bank failures affected most rich people in the world at some point in their lives) for people to realize them. Today, long life is likely to fuel financial accumulation.

Obama blows an environmental issue

2010-10-13T14:31:00.000-07:00

I'm disappointed that Obama sold out African children, U.S. auto owners and the world environment to placate Archer Daniels Midland and the corn lobby. http://bit.ly/a9er5i
Boosting ethanol demand when corn supplies are tight will force up food costs in poor countries. Growing corn requires more carbon emissions than it saves. And car makers say it will shorten engine life. I'd hoped that Obama's EPA would be better than this.

How paper ads still drive the newspaper business

2010-10-12T08:13:00.000-07:00

When I read David Carr's piece in the NY Times yesterday, I thought he made some smart points about Howard Kurtz, media brands and his core question: "if news is wherever the public finds it, what really is the value of creating a complicated, labor-intensive print product? " Carr's answer was that it made the writer of a fine piece (like his story revealing the crassness of Tribune management) feel good. I know how he feels. Having a story run on the front page of the WSJ was even better than being "most e-mailed".
But I was surprised to note that his entire story did not include the "A" word -- advertising. Carr is terrific reporter and fine writer. But it's pretty clear he never spent a moment working as a business reporter. If he had, he would have followed the money.
The answer to his question is this: the value of creating a print product is that advertisers will pay for it. Newspapers could probably get all their valuable readers -- the ones with money, smarts and willingness to switch brands -- to read on line. But they can't make a credible argument that those readers will buy as a result of seeing banner ads or pop-ups on line. So advertisers won't spend anywhere near as much for a banner on NYTimes.com as they will for a full page ad in the paper NY Times front section.
Nobody in charge of the Times -- or my old employer, the Wall Street Journal-- really wants to produce news on newsprint. It's environmentally offensive (which bothers the Times). It gives unions representing people like truck drivers and typographers control (which bothers the Journal). But the only way they can persuade advertisers to spend $200,000 on a full page color ad is by letting them do it in print. The paper Times or Journal is perceived by advertisers to have value while the digital version isn't.

Historically, advertising has paid up to 80% of the bills at most newspapers. That's fallen because classified advertising is dying, but ads still account for well over half of newspaper revenue. Until that changes, there's value in creating a complicated, labor-intensive product. Moreover, those complications are a huge barrier to entry. The Times, like most newspapers, has a monopoly on daily access to readers through its print edition. That means it can charge monopoly prices for ad pages. Online, readers surf numerous places for news, making banner ads on any of them a commodity that is priced competitively.

If you don't look into the continuing reliance on revenue from print advertising, you can't understand the new newspaper business.

Milbank's new book on Glenn Beck

2010-10-04T10:54:00.000-07:00

I know what book I'm buying next -- Washington Post columnist Dana Milbank's book "Tears of a Clown" -- a bio of Glenn Beck. I just read an excerpt at Daily Beast.
Dana is one of the funniest writers in the press, and a former colleague of mine in the WSJ's Boston bureau. Beck doesn't deserve treatment by such a talent, but this book looks like a lighthearted romp across Beck's bizarre body of opinion.

Wonderful money quote from Dana: "Beck can do this because he is not constrained by the fact/fiction divide that governs the rest of the news business. "

Dana goes on: "Beck calls his unique hybrid of fact and fiction “faction.” “Faction,” Beck explained, is a “completely fictional” account that somehow still has a plot “rooted in fact.” That is what Beck wrote in the foreword to his thriller, The Overton Window, which came out in mid-June. After providing a “fictional” account of world government taking over America, he offered a 30-page afterword full of citations of “factual” events that supposedly support the fictional story."
"Tears of a Clown" be a good read, but I suspect it won't become a best-seller on the strength of a Glenn Beck plug.

Legalized Bribery in Congress

2010-09-30T05:41:00.000-07:00

I was struck by many of Thomas Friedman's points in his NYT column yesterday about the Tea Party and the quest for national leadership.
But what hit me hardest was this aside: "our Congress a forum for legalized bribery." That's a pretty astounding observation to come from the lead columnist for the nation's establishment newspaper.
Much of what we call politics is about companies and interest groups coming to Washington in search of money. Politicians respond by talking only to constituents who have contributed to their campaign efforts. It's hard to see this as anything but bribery, even if the politicians aren't allowed yo keep the proceeds in small bills in their freezers.

A Beer rant

2010-09-16T14:23:00.000-07:00

Time Magazine reports a study by two profs -- U Mich and Penn, Time says -- that concludes that observers judge people holding alcohol -- in person or in photos -- to be stupid.
So what, I say.
The problem is if you put down your can of PBR you'll forget where you put it, and then you'll have to open another can and if you put that down, someone might use it for an ash tray and then the beer tastes even worse, and then you open another can and put that down and forget it and pretty soon you have half-full cans of beer all over the place and you have to go back to the store and buy another case. So the fact is that holding a can makes you seem stupid, but putting it down is stupid.

Hurd to Oracle

2010-09-07T11:31:00.000-07:00

It's going to be very interesting to see how things work out at Oracle with Mark Hurd replacing Chuck Phillips. I interviewed Mark a number of times when I was covering Teradata and NCR, and I thought he did a good job there. I have admired from afar the stock appreciation he achieved at Hewlett-Packard.
But the dysfunctional departure from H-P would give most boards reason to hesitate about hiring him. Oracle's a special case because Larry Ellison is supremely self-confident and also has total control of the company as long as he wants it. Hurd could do the dirty work of making Oracle's Sun acquisition profitable. And he's no threat to Ellison despite his formidable job history.
Hurd came into H-P as a low-ky, nuts and bolts manager who was initially welcomed as the antithesis of the charismatic Carly Fiorina. He cut costs, focused on profits and delivered a steadily increasing stock price. He made H-P No. 1 in PCs and made them profitable. He then acquired EDS, vaulting H-P past IBM to become the world's biggest IT company in terms of revenue.
But the H-P board jumped at the chance to fire him when a former contractor made unsubstantiated claims of sexual harassment, that even the board agreed weren't firable. Instead the board indicated he had lost its trust by fudging some expense accounting. As in many such cases, (think Larry Summers at Harvard) the firing occurred because Hurd had lost his reservoir of internal support for a variety of reasons and nobody (except the shareholders) felt like coming to his aid.
The New York Times savvy Joe Nocera http://www.nytimes.com/2010/08/14/business/14nocera.html?_r=1 noted that Hurd had saddled the board with blame for the notorious pretexting scandal in which company detectives spied on journalists. He also points out that Hurd's profit improvements partly reflected sharp cuts in R&D spending, a long-time point of pride for H-P.
I think the jury is still out on whether EDS was a good strategic decision. Even though H-P is working to cut costs, the service profit margins appear to be far lower than those at Accenture or IBM. EDS is regarded as a "body shop" without much intellectual-property that could be leveraged for higher margins. Analyst Bob Djurdjevic, who has watched the space for years, noted that last year in an earnings report, Hurd seemed to be trying to pretend that EDS revenues were boosting H-P's service business while trying to ignore the actual revenue declines at EDS. http://www.djurdjevic.com/Bulletins2009/10_HP_2Q.html Another data point: after stories reported Hurd's dismissal, the comments section of the Wall Street Journal was full of scathing remarks by H-P workers who celebrated his departure.
Hurd may be the perfect manager to make Oracle's Sun acquisition work. He undoubtedly will have his hands full. Sources tell me that IBM, foreseeing continued losses at Sun, was offering a substantially lower price when Oracle rescued its Silicon Valley neighbor. But Hurd is likely to be even more unpopular in Silicon Valley if he follows his formula of gutting R&D and firing thousands of engineers at Sun.

The Youth Pill

2010-07-22T07:08:00.000-07:00

I just finished reading "The Youth Pill" by my former colleague David Stipp. It's a terrific piece of science writing, and it's good news to boot. It shows that scientists are well on their way to developing pills that we can take daily in order to prolong the active, healthy part of our lives by ten years or so.
Full disclosure: David is a good friend and if I didn't like the book, I wouldn't write about it. But I did and I will.
Stipp makes a believable case that researchers can create pills that create the same effects inside our cells that calorie restriction does. As has been repeatedly proved, animals that exist on low calorie diets -- at least one-third less than normal -- live 20% or more longer than their normally fed peers. This isn't unalloyed good news. Very few humans want to live on such restricted diets all their lives.
But calorie restriction doesn't make us live longer through some Calvinist trade-off of happiness for age. It makes us live longer because it changes certain processes in our cells. Stipp explains that the search for the youth pill involves understanding those mechanisms and then finding chemicals that will promote or block those processes.
Stipp is a terrific reporter and writer who makes the science feel accessible, even for those of us who last took biology before the chemical structure of RNA was decoded. He is particularly endearing when describing research subjects like naked mole rats, -- long lived, long-toothed African rodents that live in colonies underground -- and a worm called a nematode that is transparent and reveals "a rich inner life."
The book acknowledges that we're still some years away from having a youth pill. But it makes a strong case that one or more will be developed and they will do a lot more to prolong and improve our lives than curing cancer or heart disease ever will.

WSJ fails to deliver in story on farmers and derivatives

2010-07-15T07:07:00.000-07:00

Former NYT reporter Edmund Andrews delivered a devastating critique of a Tuesday WSJ story that purported to show that new financial regulations would hurt farmers. http://bit.ly/9ubTCE
As a former WSJ reporter I was shocked to read through the whole story and find no evidence of actual impacts. Worse, there wasn't even any cogent explanation of how any individual farmer was likely to be directly impacted.
I admired the Journal for going beyond the usual Washington-bureau article about vote-counting on the Senate floor and whether there are enough Republicans signing on to make it a bi-partisan bill. We need more stories that look at the real world impact of what Washington does.
But it's disappointing when a reporter goes out to Nebraska, talks to some pretty intelligent farmers, dealers and co-op managers and comes back with a story that doesn't actually demonstrate that the legislation will have any impact. At the least, the reporter should have found someone to say that spreads on derivative contracts are likely to rise by two-cents per hundredweight or something. Then we could get some idea of the magnitude of the issue.
As Ed wrote, the headline certainly led readers to expect more than the story delivered.

WSJ vs NYT on Teach-for-America Success

2010-07-12T17:14:00.000-07:00

How different can two factual articles be?
When the NYT and WSJ cover the same subject, they sometimes display completely different world views.
The Wall Street The Journal 's op-ed page and NY Times news pages had pieces on Teach for America in the past three days. It was fascinating to see the differences in their conclusions. The Journal evaluated TFA based on its results for kids. The Times evaluated it based on its results for teachers.
It's a classic example of differing world views: do organizations exist for their workers? Or for their customers? Twenty-year-old TFA recruits top college students from liberal-arts colleges, trains them for five weeks and offers them to underachieving school districts. Despite widespread teacher-union opposition, some 4,500 will start work in 100 terrible school districts next fall.
The Journal loves TFA because it believes the talented college grads that TFA recruits to teaching help kids learn. At the same time, TFA disrupts the teachers' unions that play a huge role in the Democratic Party.
The Times is deeply skeptical about TFA because Ivy League kids are signing up, but they aren't committing to a lifetime as teachers.
As is typical in analyses of education, each cites studies to support its view of the positives or questions about TFA. (Having covered education for the Journal for a few years in the 1990's, I can attest that education statistics generally are either slippery or slipshod, and often both. There's no SEC or GAAP for education statistics, and they tend to be flimsy. Experiments are seldom replicable)
The Journal piece emphasized TFA's concentration on improving performance of students. Money quote from the WSJ article by Naomi Schaefer Riley, former editorial page writer there:
"The results are clear. A 2008 Urban Institute study found that "On average, high school students taught by TFA corps members performed significantly better on state-required end-of-course exams, especially in math and science, than peers taught by far more experienced instructors. The TFA teachers' effect on student achievement in core classroom subjects was nearly three times the effect of teachers with three or more years of experience." A new study from the University of North Carolina found that middle school math students taught by TFA teachers received the equivalent of an extra half-year of learning."
The Times is dubious: "Research indicates that generally, the more experienced teachers are, the better their students perform, and several studies have criticized Teach for America’s turnover rate.
“I’m always shocked by the hullaboo, given Teach for America’s size” — about 0.2 percent of all teachers — “and its mixed impact,” said Julian Vasquez Heilig, a University of Texas professor. Dr. Heilig and Su Jin Jez of California State University, Sacramento, recently published a critical assessment after reviewing two dozen studies. One study cited indicated that “by the fourth year, 85 percent of T.F.A. teachers had left” New York City schools.
Predictably, the quotes in the Times are from profs at a teachers college -- Cal State Sacramento. The critique is about lifetime job commitment - not what most parents and kids are concerned about.
If TFA is right, teachers colleges and the job-security concerns of their graduates are the problem rather than the solution.
The Journal quotes are from a Washington think tank. The Journal cites analysis of student performance. It's arguably politically motivated, but it's looking at the impact on students.

There's also an interesting side issue -- how to evaluate TFA vs. the Peace Corps, a comparison TFA encourages.
The Journal: "TFA received a federal appropriation of $21 million last year, and it has asked for $50 million in fiscal year 2011 Given that the Peace Corps gets $350 million, Ms. Kopp suggests "this seems like a no-brainer . . . " But so far, TFA has a big zero next to it in President Obama's budget. Almost no Republicans have signed on to support it because of budget deficit concerns.

The Times points out that TFA's attractions aren't altogether eleemosynary:
"Teach for America has become an elite brand that will help build a résumé, whether or not the person stays in teaching. And in a bad economy, it’s a two-year job guarantee with a good paycheck; members earn a beginning teacher’s salary in the districts where they’re placed. For Mr. Cullen, who will teach at a Dallas middle school, that’s $45,000 — the same he’d make if he’d taken a job offer from a financial public relations firm."
Again, the Journal focuses on the outcome (cost effectiveness) and the Times focuses on the workers.

The Journal has certainly created anxiety among its fans in the past year over whether political concerns color its coverage. But in this case, the Times seems to have gone way out of its way to critique TFA, and the Journal's analysis looks solid.

Great book on Civil War

2010-06-29T19:23:00.000-07:00

I just finished reading John Keegan's "The American Civil War: A Military History."
I've read a number of Keegan's books, including his wonderful book on WW II, and I find they always enhance my understanding of things I thought I already knew.
The Civil War book had several revelations. First: Lincoln, as commander in chief, understood the war better than any of the West-Point-educated generals. Richmond hardly mattered. Lincoln knew that it was a war to defeat an army.
Second: Grant really was a great general. Yes, he butchered nearly 100,000 of his own soldiers. But he knew what he was doing. Keegan's brilliance is that he shows how the territory -- the geography -- where the armies fought dictated the kind of war they fought. Keegan also shows how the deep-seated beliefs of the two sides (and the fact that they fought in units comprised of their neighbors and friends), created a level of bravery and a frequency of battles that has never been seen in any other campaign. Only a willingness to fight (and an economic and demographic advantage) like Grant's could have prevailed. Keegan reminds us that he had to conquer hostile territory against an entrenched enemy.
Third: Sherman's March to the Sea was a much more daring military campaign than I had realized. After reading Keegan's book, I am amazed that even late in the war, the Southerners couldn't cut Sherman's tenuous supply lines that stretched 900 miles to Louisville.
Every time I read one of Keegan's books, I am reminded that winning wars really matters. Sometimes, when reading history, it's tempting to think that historical developments are inevitable. Reading a military history is a reminder that things could go wrong and that history could have developed in very different ways.
One criticism of the book: despite acute attention, I couldn't understand Keegan's explanation of how Grant conquered Vicksburg. As Grant and Lincoln expected, that was a crucial event, opening Tennessee and eventually Georgia to Union conquest. But Keegan's explanation of some very sophisticated tactics lost me. One of my reactions to this book is that I need to read a book about the battle of Vicksburg.
If you care about America, this is an excellent choice for your mental library.

Today's Journal looks like the old Journal

2010-06-08T13:17:00.000-07:00

I really liked the front page of the Wall Street Journal today. There was a fine feature, with no time peg, on India defining poverty upward, and having a hard time deciding who is actually poor enough to rate benefits. There was a sweet a-hed on zoo tigers obsession with Calvin Klein's Obsession for Men. And there were solid news stories on Obama planning to allow offshore drilling again and Goldman Sachs getting caught stalling the probe by a government commission.
It was like the old days -- a couple of stories I never would have expected to read anywhere else, and a couple of newsy features on business and economic stories where the Journal has expertise.

Speechifying at MITX awards

2010-06-03T07:59:00.000-07:00

MITX -- the Massachusetts Innovation and Technology Exchange had its annual awards ceremony last night. It highlighted dozens of tiny Massachusetts start-ups developing businesses from custom-jewelry-design Web sites to counterfeit-drug-detection programs for West Africa.
The group also gave me a "Lifetime Achievement" award ('what, it's over?' one friend inquired). I was allowed to speechify for a few minutes and reflect on how technology has progressed and the changing fortunes of the state as a high-tech hotbed.
Here's my talk:

When I came to Boston in the fall of 1978, covering computer companies was a half-time job for one of the four reporters in the Journal's bureau. Banking and mutual funds were the prestige beats in the region. Polaroid and Raytheon were the premiere high-tech firms here. Bolt, Beranek & Newman had invented the packet-switching technology for ARPANET that eventually turned into the Internet -- but it was best known as an acoustic consulting firm.
One of the first computer entrepreneurs I met was An Wang, whose company's word processors had already transformed office work. Dr. Wang referred to himself as "the secretary's friend." Once on a tour of the United Nations, he was introduced to the secretarial pool. He got a standing ovation.
Today, of course, Wang word processors have disappeared from the landscape. And so have secretaries.
Reflecting back on 30 plus years of covering technology as both a business and a social story I'm astounded at the changes I've seen. And its clear the rate of change has accelerated. The decade of the 80's saw the emergence of PCs as common office tools replacing typewriters and calculators and ledger sheets. By the end of the decade, people were beginning to use internal e-mails to communicate within companies and some consumers used Prodigy and CompuServe e-mail.
Technology really started to revolutionize people's lives in the 1990's.
The key development? The decision by the U.S. government to open up the Internet to commercial use in 1993 along with the release of the Mosaic browser. That was just 17 years ago, about halfway through my tenure as a Wall Street Journal technology reporter.
By then, computers were getting cheap enough so most middle-class households had one. Business people were replacing their pagers with cell-phones. Still, by 1995 there were only 16 million Internet users. Today there are over 1.8 billion people on the Internet and there are some 4 billion cell phones around the world.
Today we simply assume that, with a little effort, any of us can talk or text with just about any literate person on the planet at any time. That's pretty amazing.
Even though I worked for a business paper, as a reporter I always tried to see how technological developments affected us sociologically. I loved writing stories showing people using technology. I remember writing about cell phones when my best example of one in use was Mitch Kapor -- already retired from Lotus -- using one to let his chauffeur know when to pick him up.
I thought I'd throw out a list of five ways that technology has made our childrens' lives dramatically different from those of kids just 20 years ago. None of these are revelations, but the speed with which they've transformed their lifestyles is startling.
As Sgt Pepper said: It was Twenty years ago today
Parents were giving kids pagers so they could tell them when to get in touch; today even 10-year olds carry cell phones.
20 years ago kids knew maybe 50 people. Today any teen-ager with fewer than 500 Facebook friends is a recluse. And they actually keep in touch.
20 years ago: teenage drivers needed to learn to read maps; today they listen to a GPS.
20 years ago: kids bought CDs. Today they pay for iTunes or steal the music.
20 years ago: kids did research at public libraries and ambitious families bought them encyclopedias. Enough said.
Twenty years ago, also, there was a big community of substantial technology companies in the Boston area. There were signs of trouble, but no one then could have imagined the astounding decline of the local high-tech leaders.
That was one of the great disappointments of my experience as a Boston technology reporter. Digital Equipment, Wang, Data General and Prime were all substantial companies with huge resources, smart employees and big ambitions. So were Lotus and Computervision and Apollo; Cabletron and Bay Networks. And that's not even mentioning more dubious propositions like Symbolics and Thinking Machines and Kendall Square Research.
Like most observers, I never anticipated they would decline so swiftly. I wrote about the business errors that individual companies made. But I missed the structural problems that wiped out the whole lot of them. In retrospect, I think they suffered because having a proprietary base of business went from being an asset to being a burden in the space of five years.
No business model can survive being flipped on its head so dramatically. Only very adroit managers with huge financial cushions managed that transition.
The local companies lacked flexibility because they had avoided consumer markets. Selling to consumers forces a company to be nimble and be very disciplined about costs. All the local companies sold to businesses almost exclusively.
Today, despite the disappearance of the large publicly held technology companies, Massachusetts technology is thriving, as we can see tonight. Clearly the sustainable advantage for Massachusetts is continual innovation, even though the ideas may end up growing elsewhere. So long as Harvard and MIT maintain their leadership -- and they've proved they can do it for centuries -- the area is going to be a great place to invent and start businesses. Two of the most significant Internet businesses of the last decade were started in dorms near here; Napster and Facebook.
All we really know about the future is that we don't know much. I was reminded of this recently at a conference on the future of publishing. One of the top executives of Conde-Nast recalled that just a decade ago " "we were all terrified about the merger of AOL and Time Warner." Meanwhile, Google and Facebook didn't exist. And today, he said they are: "the world's largest media company and the world's biggest publisher."
Watching this space has never been more fun.

The Book on Murdoch's takeover

2010-05-24T13:57:00.000-07:00

I recently finished Sarah Ellison's fine recounting of Rupert Murdoch's takeover of my only employer ""War at the Wall Street Journal." The first two-thirds of the book, up to the handover of the company at the end of 2008, largely repeats what Ellison wrote as a reporter for the Wall Street Journal in the heat of the takeover.
The last third gets into what Thomson, Hinton and Baker have done since then.
The battle was largely preordained due to Murdoch's willingness to spend over $5 billion to buy something nobody else wanted that would decline in value by about $2 billion within a year of the takeover. The dithering by the Bancroft family and the opposition formulated by some reporters turned out to be interesting but irrelevant. Perhaps if the family had been more involved in the paper in the past, they would have hung together in opposition. But if they'd been more involved, the paper might not have ascended to the national stature it achieved.
Ellison's book is really short on heroes. The talented and cerebral Journal managing editor Marcus Brauchli, now editor of the Washington Post, seems overmatched, naive and feckless as he attempts to hold on to his job. CEO Rich Zannino seems small-minded as he tells the family he has no plan to achieve more than modest growth over five years. As a takeover baron Murdoch seems single-minded and wily. But once he wins the prize, his actions are puzzling as he tries to change the publication he schemed so hard to acquire.
Ellison's book is especially worrisome for documenting cases where editors Thomson and Baker alter or eliminate stories that seem supportive of the Obama administration. In one case, she writes, Baker ordered up a story based on some health care statistics from a think tank. When the reporter questioned the numbers, the think tank said it was revising them, and the reporter discovered it was owned by United Healthcare. The reporter proposed a story on United's efforts to game the debate, but Baker decreed the subject no longer interesting.
In my 30-plus years at the Journal before the takeover I never saw or heard of a story being pulled because it didn't support a political agenda. If reporters and editors now think that's happening, the Journal has a problem. As time goes on, readers will notice.

2010-05-14T18:41:00.000-07:00

They've B -- ruined my night

Keep on Truckin! Offbeat Indicator Positive

2010-04-05T07:22:00.000-07:00

Kevin Helliker has a fascinating story http://online.wsj.com/article/SB10001424052702303450704575160181383858928.html?mod=WSJ_hps_LEFTWhatsNews in today's Wall Street Journal on an upswing in pick-up truck sales. That's good for the automakers, obviously, but I'm more interested in it as a positive for the economy.
As the story points out, about 75% of pick-up truck sales are bought by small businesses. If they're buying pick-ups, they must feel good about the economic outlook. More important, those companies have a disproportionate impact on hiring. If they are buying pick-ups, they are likely to be hiring workers -- at least day laborers -- to sit in the back of those club cabs.
I'm always fascinated by unusual economic indicators like that. They sometimes provide insights that don't appear in the big-picture numbers issued by the Commerce department.
One of my favorites was broom hardware. I recall that back in the 1980's a Standex International executive told me that his firm had a factory that made the wire fasteners that hold straw brooms together. He said that was a great indicator of consumer confidence, because when times were tough, home makers would make do with the old broom, even if it was worn down. When the outlook improved, they bought new ones. I don't know whether that factory is still in operation (Standex was acquired years ago). But there's probably some current equivalent. Swiffer pad sales?

Closing Vermont Yankee -- This is Nuts

2010-02-25T18:48:00.000-08:00

The Vermont Senate voted to close Vermont Yankee, a nuclear plant that has been pumping out base-load kilowatts for 38 years. The 26-4 Senate vote partly reflected anger at lies about tritium leak risks from the plant's owner.
But this plant is the best hope for the state to produce electricity that is in the ballpark of national competitiveness. And even if skepticism about global warming is growing, switching to coal or even natural gas for base-load power seems like a lousy environmental deal.
The track record of safety by nuclear plants in this country is awfully good, overall. The waste storage issue could be solved if the most powerful man in the Senate wasn't in place to block use of Yucca Mountain. Closing Vermont Yankee seems dumb economically and environmentally.

Are soda and candy food? Taxachusetts wonders

2010-02-18T09:32:00.000-08:00

Massachusetts Governor Deval Patrick has proposed raising revenue and combating obesity by ceasing to call soda and candy "foods." That would mean they would be subject to the state sales tax, unlike other food items.
Somewhat to my surprise I like this idea.
While I support a large social role for government, I sympathize with low-tax libertarians who are skeptical of excessive regulation. But this tax action seems like just the right direction for government. It isn't banning soda. It's just sending an economic message to consumers that they might want to consider alternatives.
This is a good thing, because the state will never be able to persuade consumers about the hazards of sweetened foods. Advertising by Coke, Pepsi and Hershey's will always overwhelm any anti-obesity message.
However, if this is really about combating obesity, the tax should only apply to sugar-sweetened soda and candy -- not sugar-free alternatives. In fact, I think the state should levy a specific tax -- maybe ten cents per can or candy bar -- on sugar- sweetened soda and candy. Consumers who saw that kind of price differential might well switch to sugar-free gum and diet soda.
The sugar tax should also apply in restaurants and fast-food joints. I bet McDonalds would have more than one flavor of diet soda available if sugared drinks all cost 20 cents more. Gov. Patrick's proposal won't impact fast food sales, since they're already subject to the restaurant tax.
If the sugar tax works, maybe the state could go after other insidious food threats that consumers aren't aware of. I'm thinking of white bread and rolls. If they cost more than whole wheat, rather than less (white bread doesn't spoil as fast, so it's cheaper for restaurants and markets to stock) consumers would gravitate to healthier bread. Who knows? Maybe a whole-wheat roll would even mitigate the health horrors of a Fenway Park hot dog.

Another sign of the newspaper apocalypse

2010-02-10T18:41:00.000-08:00

I was walking to the health club at 6 a.m. this morning.
I saw a truck pull up to DeLuca's market, and a man dumped a bundle of newspapers.
It's a Boston Globe truck. Reassuring. The Globe's Here!
But the truck is blanketed with Ocean Spray Cranberry Juice ads.
I slowly processed this.
The Boston Globe is selling ad space on the sides of its delivery trucks.
It isn't promoting the news.
It's promoting corn-syrup-enhanced, pseudo-healthful, processed food products.
Some ad salesman for the Globe found he got a bigger commission by selling space on the side of a delivery truck than he got for selling space in the paper.
This is bad for the newspaper business model.

Ford and the Twitterati

2010-02-06T11:40:00.000-08:00

I just came across something about the shift to digital advertising that struck me as unusually alarming for traditional media.
Ford Motor Co. has publicly announced that 25% of its marketing budget is going to digital and social media. That's more than double the 9% car industry norm, according to J.D. Power. Given how much auto-makers spend on marketing, that suggests hundreds of millions more ad dollars could leave TV, newspapers and radio if Ford's strategy pays off.
I learned this from a help-wanted ad from Advertising Age, which wants a Silicon Valley-based social-media reporter so it can serve its readers better. It was reacting to an October story in Business Week's Auto Beat Blog, which I had missed. http://www.businessweek.com/autos/autobeat/archives/2009/10/ford_spending_2.html
Business Week's report said that Ford is especially excited by a social-media marketing trial it is conducting for the Ford Fiesta, which is sold in Europe and will come to the U.S. this year. It had a contest to let 100 Europeans drive the car and share their experiences. According to Business Week: "Ford isn’t saying what it’s cost on the program is. But it says that (it) has created 11 million social networking impressions; five million engagements on social networks (people sharing and receiving); 11,000 videos have been posted; 15,000 Tweets (not including re-tweets), 13,000 photos." This let Ford build a mailing list of 50,000 people in the U.S., hardly any of them Ford owners, who want to be informed of the launch.
Ford recently has been the smartest of the U.S. car makers. People hoping that ad dollars will soon back to mainstream media better hope Ford's wrong this time.

Is Scott Brown a man with a plan?

2010-02-04T17:34:00.000-08:00

Scott Brown is in the Senate. Does he have a strategy? Or is he still bowled over by the fact that he's there?
I don't usually do purely speculative blogs, because at heart I'm a reporter. But I'm fascinated by the possibilities that Scott Brown represents.
By bizarre circumstance, he's the most powerful man in the Senate. He's been wise enough to say that he plans a bi-partisan approach. That plays well here in Massachusetts -- where he'll be running again in two years. But it also means the Republican troglodytes can't completely depend on him, giving him leverage. And the Democrats can believe that they still have a prayer of getting some fraction of their health agenda through. That means that Scott Brown, the most junior Senator in the minority party has real power.
What should Scott Brown do? He should say that he's committed to responsible fiscal policy. He should say he believes in universal health care and cutting health care costs. He should say he won't get bogged down in Republican social issues.
He probably could shape one or two major national policies. I think he should demand at least one major cost-cutting initiative and one health care initiative. For example, require Medicaid and Medicare recipients to agree they won't participate in medical malpractice suits. And require the government to assume health costs for any family that spends more than one sixth of its income on health insurance.
I know Scott Brown wasn't elected to deal with all these problems. Most of his voters just want him to stop government's dramatic expansion and rein in excesses -- whether that's bank bonuses or government deficits.
He doesn't have a mandate, but he's got a temporary and unprecedented power.
It would be cool to see him use it in a positive way.

Lady Gaga and the digital disaster

2010-02-01T18:13:00.000-08:00

Last week the WSJ had a fascinating article explaining why Lady Gaga is the new role model for the music industry.
What fascinated me were the stats showing how the music industry is the model for the rest of media in getting hammered by the digital revolution.
Top selling album of 1999 -- Millennium by the Back Street Boys -- 9.4 million copies. Top selling album of 2009: Fearless by Taylor Swift, 3.2 million copies.
Employment in the music industry? "The upheaval of the last decade has forced the major record companies to cut their work force by 60%, according to a recent report by the Recording Industry Association of America." http://online.wsj.com/article/SB10001424052748704094304575029621644867154.html
In a sense, the music industry has done well. Best-seller sales are down 65% and employment is down only 60%. That means the industry has found new revenue sources. But the big picture is horrible. Despite everything the industry did, it is barely one-third the size it was a decade ago.
I suspect that every industry that crosses the digital divide faces a similar fate -- more than half of the jobs and revenues go away. That's happened in photography. It probably happened in the travel agency business. It will happen in Yellow Pages and newspapers and book publishing.
Nobody designs a business plan to cope with that kind of collapse. Neither Harvard Business School nor McKinsey would craft an industry plan around such a scenario.
But, that's what is happening in large swaths of our economy.

MSM vs. Blog ethics -- sponsored by Weinermobile

2010-01-26T06:59:00.000-08:00

What's the difference between an independent blogger and a reporter or bloviator for the mainstream media? It isn't education or training or writing ability. It's where your paycheck comes from.
People in mainstream media know their paychecks come from the publication or website. And so do their readers. Even though those publishers may be compromised by ad dollars or sponsorship fees, the writers are separated from such concerns at all but the tiniest outfits. The MSM model calls for maximizing readership by having the reporters write for the reader, without thinking about where the publication's revenues come from.
Bloggers' paychecks are seldom transparent. Even though most bloggers don't make a living at what they do, there is a temptation to search for perks. The Isthmus, an interesting alt weekly in Madison, Wisc., has a fascinating article on this subject related to blogging housewives. http://www.thedailypage.com/daily/article.php?article=27981 .
The article points out that many corporations showed up to hand out gifts at the "BlogHer" convention in Chicago last summer -- something they wouldn't do if they didn't think it would pay off. Indeed, the Oscar Myer Weinermoblie -- a top attraction -- later made a special trip to Georgia to visit "Domestic Diva" a well-known blogger Mom who couldn't make the convention.
Now I don't believe that anyone can be bought off by a ride in the Weinermobile. But it's easy to see why Oscar Myer would want blogging moms to associate its products with campy Americana kitsch. That would seem to be so much better than thinking of Oscar Myer's processed salt, fat and meat byproducts as potentially lethal concoctions that could inflate the bellies, clog the arteries and raise the blood pressure of America.
Editors at mainstream media make sure that a bit of skepticism appears in most articles puffing products. There's no such constraint on Domestic Diva who called her family's ride in the Weinermobile "the best day of my life." Reader beware.

Hacking Google

2010-01-25T11:10:00.000-08:00

China's apparent threat to Google is alarming me. Now that I'm a freelance writer without an in-house IT staff I'm counting on Google.
All my work is being done on Google. Gmail is my lifeline. It's the email I use on my iPhone. I'm not using Word or Excel or Powerpoint. I'm using Google Documents and its other apps. Even when I'm on a 3G connection with my netbook rather than on my home wifi, they work plenty fast. And I like the idea of Google handling backup for me and fighting viruses.
But its accusations against China are worrisome. While Google hasn't said so, it seems to me that if China can successfully hack specific e-mail accounts, it could possibly disrupt or even block other service. I can't operate if Google isn't functioning. I'd like Google to be more forthcoming about how secure it is against well-funded government hackers.
Gordon Crovitz's Information Age column in the Wall Street Journal today, compares the threat to Google and other IT-based companies to that posed by the Barbary Pirates to American seafarers in 1805. http://online.wsj.com/article/SB20001424052748704562504575022251970284896.html
I think that's a valid analogy. And, as he says, that means our government has to pay attention. It has to take steps to keep American businesses safe from government-sponsored cyber-criminals. I don't think the Obama administration has started to grapple with this, although I hope I'm wrong.
It's definitely something government should be moving on quickly. Shutting down or fooling operations like Google or Citigroup or Union Pacific or Apple's app store or even the L.A. traffic light system, could put a big dent in the world's economic system.

Congressional travel

2009-12-16T14:49:00.000-08:00

Interesting front- page article in today's Wall Street Journal about congressional travel increasing 70% from 2005 to 2008. online.wsj.com/article/SB126092430041092995.html

But the total expense cited was chump change -- only $13 million. It's tough to get too concerned about that when Congress is running trillion dollar deficits. And while there's great detail on their $118 daily food allowances and the cost of hotel rooms in London ($340 a night) and Edinburgh ($1500 for a shared suite), none of it seemed outrageous.

Having Senators and representatives travel abroad -- even to nice places -- seems like a good way to broaden their perspectives and make them more aware how fast the world is globalizing.

What's more disturbing was the revelation that these folks were travelling on Air Force planes, commandeered for their use. And they apparently had Air Force-supplied aides carrying their suitcases and embassy workers driving their vans. Those costs aren't disclosed, and judging by NetJets' norms, a trans-Atlantic private jet flight costs $40-80,000 depending on the size of the plane. I say, let them fly commercial. Even last minute business class flights would save the taxpayers a lot of money. And it would keep the lawmakers in touch with the experiences of their constituents.