Over the last week, the Midwest has received a lot of rain. It also exposed our continued lack of maintaining our national infrastructure.
If you have been reading the news, you probably have seen the effects of flooding in Iowa due to dams and levees breaking down.
I have my own personal story in suburban Chicago. Last weekend, 8 inches of rain fell in a short time span, and 1/2 of a 50,000 town was flooded.
Our suburb is like Beaver Cleaver Land. Tree lined streets. Gas lampposts. A downtown with an old fashioned appliance store (think "That Thing You Do"), a movie theater with old pipe organs and a relic of the past - a comic book store.
The town has had a history of flooding. But ten years ago it came up with a brilliant plan. When the sewer system could not handle the volume of water, it was rerouted to a local quarry. But in 2007, the city cut back on maintaining the entire sewer system and the automated pumps required to open the quarry. In only three years, the system failed, and the town was devastated.
The southern area of the town's tree lined streets and gas lampposts were eclipsed by ruined furniture laying out in people's front yard. The main grocery strip mall was an inhabitable lake. Entries to expressway were impassable, rendering the entry and exit from the town impossible. All of this in a town that is upper middle class.
The Obama administration's stimulus plan set aside about $100 billion in infrastructure spending. While a positive step, it is a drop in the bucket. We need at least to increase infrastructure 10X to make any meaningful improvement. The Obama administration, concerned with persistent unemployment, signaled last weekend, that it was considering increasing infrastructure spending.
Not only does fixing a broken system of infrastructure, make sense, to protect property and increasing throughput in travel, but it increases jobs in the hardest hit portion of the economy. With the housing market under economic distress, causing a huge inventory of unsold existing and new homes, millions of construction jobs have been eliminated.
Instead of extending welfare, dramatically increasing infrastructure spending would put millions back to work and increase tax revenues. And by doing so, our nation's infrastructure would reverse a trend, where the U.S. is severely behind other industrial nations.
One of the biggest political problems in our country, is the government's accounting system. In corporate accounting there is a clear delineation between expenses and investment. Expenses are mainly government payroll and economic transfers of tax revenues. While investments would be treated differently.
By adopting GAAP accounting standards, investments would become depreciable assets. Expenses would be recognized as variable costs that flow in and out of the nation's balance sheets. While investments would be assets on the governments balance sheet for a long period of time.
In this new political light, politicians would have incentives to decrease expenses and increase investments. By clear rules of what is an expense and what is an asset, the political discourse would be more productive. Increases in expenses would be frowned on. Decreases in expenses would be looked upon favorably. And increasing investments, would add to the balance sheet of assets, and would be encouraged.
Increasing infrastructure investment would decrease welfare expenses. And that is a win/win proposition for a county on the brink.
- John Jazwiec
I have traveled on American for almost 30 years. I have flown almost 10 million miles with them. I have the highest status within their customer base. And I pity the person who is lower than me.
You can be sitting in first class and at best you get a 50/50 chance of the crew being civil and not pithy. Again what happens at the back of "bus" must be even worse.
I had a two hour flight yesterday and I flew in coach. I always fly coach on short flights.
The first thing I got was a heavy man, sitting next to me, whose shoulders so engulfed me that my body was pressed against the window and I had no arm rest. I don't have any issue with someone's weight, but I do think airlines should make them pay for two seats.
The second thing I did, was stick out my arms which were numb and picked up AmericanWay for some light reading. I was dumbstruck. They named the top 10 best pizza parlors in the country. Now mind you I don't like pizza and have never had a piece of it in my life. But what amazed me is that instead of the magazine - pointing out places where they fly the most - they actually tried to insult a customer from Chicago.
Number 1 was New Jersey - I get it, I watched Sapranos. Number 2 was New York - again I got it - the birthplace of pizza from Italian immigrants. But the 3rd was in Denver. The 4th was in Tempe. The 5th was in San Francisco. The 6th was Boca Raton ..... and the 10th was ... Zachary's Chicago Pizza IN OAKLAND CALIFORNIA. Chicago is known for crooked officials and deep dish pizza. Does American think the rest of the country should fly to Oakland to try one of our only two claims to fame?
The third thing that happened on the trip, was to be again reminded, of the problem of business travel in the summer. Amateur hour in the security lines. You can't walk anywhere because amateurs are just standing and not moving - it is like walking an obstacle course. And finally my favorite - the family bringing a tiny baby on a plane trip and crying the whole way. We have had 4 tiny babies who are now 14 through 26. We never sent a crying baby on a plane. But today's parents, are not only not concerned with other people on the plane, but are happily encouraging the crying. Way to go new parents - you are really getting them ready for the real world some day.
American you continue to suck worse every year.
Also your "newest" fliers not only drive me away, but their codling probably ensures they will be pressing a skinny guy like me 20 years from now.
By that time I will certainly not be a customer.
If the "Onion" does not lampoon you, expect me to in the future.
Nothing short, of a choice between hope of progress and no hope of progress is at stake this November. And there is only one person who can stand up for hope. Ironically, that person, needs to inner channel the 2008 candidate, who ran on one word - "Hope".
- John Jazwiec
On Saturday, I opined, that since Microsoft has failed to profitably launch, any software beyond Windows and Office, it should stop wasting shareholder value, stick to its core products and either dividend its cash or invest it in profitable acquisitions.
I also pointed out that Microsoft no longer has the DNA of an inventor. Innovative companies attract entrepreneurial talent by stock options. By definition innovative companies stock prices must be going up to do so. And must continue to do so. Because once that "music stops", a company stops attracting and retaining entrepreneurial talent. In short it becomes Microsoft.
Two things to point out today. One is I went back and looked at the stock prices of Microsoft and Apple over the last 10 years. Even though Microsoft earned $4.52 billion last quarter and Apple earned $3.25 billion, investors pay for growth. And that explains why Microsoft stock trades at 55% less than it did in 2000. In contrast Apple stock trades at a staggering 829% more than it did in 2000. If you were an entrepreneurial innovator would you be attracted to a stock options that grew 829X or stock options that were out of the money by 45%?
Put another way if you were offered 10,000 stock option in Apple in 2000, they would now be worth $8.2 million dollars (10,000 times 829X). If you were offered 10,000 options in Microsoft in 2000, they would be worthless.
The second thing to point out, is now obvious. Stock options potential to grow in value, is the single most important factor in business success. Stock option growth is the only way to attract top talent. And in technology, the main engine of growth, is human intellectual capital.
In the immortal words of Big Tom Callahan in Tommy Boy, "you are either growing or you are dying".
- John Jazwiec
My favorite quote of all time is from T.S. Elliot -
"We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time"
I have traveled around the world for almost 30 years in business. I have logged over 10 million miles with American Airlines. I have learned through my travels that no amount of academic study can substitute for being on the ground. On many trips I have brought my wife. In turn my children and my parents. Our family legacy, which we will eventually leave, is to not stop exploring. Life is a journey and only can be appreciated by an insatiable appetite for risk and learning.
My wife is a great writer. I am not. Most people who read my blogs tell me they have to get beyond the style, to find any semblance of "wisdom". And that it takes me an average amount of two hours per daily blog is humbling.
To show my readers my wife's writing skills and how fast she can write, I am embedding her email to a fairly large following of her trip from last night. Her writing style, even when she is in a hurry, makes someone feel they are actually seeing a distant place themselves.
I am also including another picture she sent. Please note, that the Bosnian War was fought in parts of Montenegro and Croatia, where my wife and her friends were willing to visit. This is what the U.S and NATO was fighting for. So that the people of this region could someday live in peace, after years of being unified under Tito, and then violently breaking back up into historic regions.
Good
Afternoon "Dobar dan" in Montenegrin!
Friday
we had an amazing tour in Montenegro. The heat was excessive with the
high at 105 plus humidity. Our bus, or coach as the locals say, was air
conditioned thank goodness! Our jouney took us up into the hills to a
final height of 5000 ft above sea level. We visited a farm where they
made smoked hams, wine, honey, cheese and very good bread! It takes about
6 months and two weeks to make one smoked ham, but after tasting the ham, I can
say that it was well worth the time that it took. I bought a hand made
red wool coat from the farmers wife while we were there. And of course, I
found kitties to pet and take pictures of!! The country side was
beautiful! On the way up our road had a total of 25 switchbacks, or
hairpin turns, I got a few pics of those. It was not a drive for those
with a fear of heights or narrow roads. There were a few places where the
road was so narrow that two vehicals could not pass. At least twice we
had the trucks that were heading toward us, having to drive in reverse until
they had backed up far enough to get to a wider section of road and we could go
passed.( I think that I got this on video) This was a slow process and we
covered a couple of miles this way with a log truck in reverse!! Lots of
cliff like road sides. On the way down we went a different way so we could pass
through 2 other towns. This road was regular highway! Our guide was great
about filling in the history of the area while we drove. Kotor is the
only Fjord in The Baltic's. Our Captain also informed us that it was the
longest and deepest as well. It took 2 hours to get out to the open
Adriatic Sea from were we docked.
Saturday
we spent the day in Croatia. Our port city was Split, which is considered
to be a more Roman influenced city. The next city we went to had more
Greek influence, and the last city was more heavily influenced by The
Venicians. Who, by the way, seemed to have gotten around quite well.
It seems as though every place that we have gone the Venicians spent 2 to
300 years in power. Again our guide gave us great historical background.
Croatia is a "sport" centered country, they love their futbol
team! Our guide Raffiella also reminded us that Croatia gave us Tony
Kukoach! The Croates are a very proud people, who are willing to fight to
keep their identity. They are not yet part of the EU, but fear that they
will be in the next few years. Their currency is the Kooner. The
exchange is approximately 7 euro to 1 kooner or 5 US $ to 1 Kooner. We
went to an old settlement in the country to sample more Ham, bread, wine and olive
oil. There is a law that states that each household is allowed to produce
their own wine and olive oil. In fact, a young man who wishes to marry
must have 10 healthy olive trees that are his, to prove that he will be able to
support a wife. Houses are multi generational, parents grandparents and
sons and there families live in a multi level home. Girls must get
married and live with their husband's family.
We
are heading to our last activity port Koper, Slovenia. Our tour there is to
visit a horse farm for Lipinzaner stallions, and to also see a performance with
the horses. Almost 11pm my time, so I'm headed to bed. My room
mates are both already tucked in.
Microsoft once was a company, with ravenous employees working to change the world. It was led by Bill Gates and it depended on his cult of personality.
Today Microsoft is a simple industrial company. They just announced a 48% increase in quarterly profitability. All of it came from their legacy products - Windows and Office. All of their other efforts are losing money. Bing for instance saw its quarter loss widen from $585 million to $696 million. Their consumer entertainment and devices division's loss widened from $141 million to $172 million. Finally they have made no headway, in the fastest growing market of mobile computing.
Their CFO provided all of the commentary on the quarter results. Peter Klein commented "we're very aware of how important it is to do well on Windows Phone". When your CFO is left alone to make excuses; that is a tell-all sign that an old cult of personality, can't be substituted with a generic CEO.
Microsoft can't attract top entrepreneurial talent anymore. Why? Because that type of talent comes from a belief in the future value of stock options. Microsoft stock is not going to ever go up. It will take a long time to die. But it can't grow with the times because it is just a "sausage factory" that only makes one good sausage.
Microsoft has only two responsible options for their shareholders. One is to dividend it's cash creation to its shareholders and the second is to use their cash to buy other cash generating software companies and increasingly issue better dividends per share. The irresponsible thing to do is status quo - 15 years and counting of pissing money away, trying to copy more entrepreneurial sausages with salaried non-entrepreneurial sausage makers.
Which begs the question from this author. When Apple has only thrived by a cult of personality of Steve Jobs in the 1980s and again in the late 1990s and today, what happens when he leaves?
I suspect that the answer will come when their new CEO, lets their current CFO make all of the announcements and commentary in quarterly reports.
- John Jazwiec
I have provided a link to a NY Times article that laments that women have surpassed men in being employed/not underemployed. The writer's theory, is women have made strides in the workplace, due to gender liberation of the 1970s and access to higher education.
I argued in the comment section, (not as successfully as last Sunday's NY Times where I was the second highlighted comment with almost 100 recommendations - LOL) that this misses a central point; gender is less relevant today in a "flat world", where advanced economies only reward someone's creativity to add unique value (singular). This "economic Darwinism", as I called it, does not discriminate amongst gender and it is far from certain that it is correlated to years of education.
To the latter point, only if a person, can come out of high school, with all of their creativity in tact (our schools are based on the needs of the industrial revolution - conformity is emphasized over creativity) and never succumbed to conformity; can they ever, even hope, to succeed in the 21st century economy.
My wife is an English, Speech and Theater major with certified secondary education. I have enclosed another picture of her from two days ago in Malta. My 3rd oldest child, Morgan, is going off the University of Illinois on the same track. Both are gifted writers. Both are off the chart in creativity. My wife and all of my children are very creative and I would argue they have a better skill set than someone in manufacturing or someone who goes to 8 years of college to become a pharmacist (taking drug and camera orders at Wal-Mart), a general doctor (CVS) or an eye doctor (part time at Lenscrafters).
The cold reality, is that this deep recession may have had it's tipping point extended with debt, but it's roots are in the titanic shift of employment/economic sustainability. There are jobs that are not coming back. There are also jobs that leave a professional - who is not adding enough unique value - economic deflation with its inherent changes in life-style, consumer spending and stained legacy for their children.
This recession, is not just any recession. It is going to take at least a generation for us to work our way through it. Our education systems must change. Everything must change. But nothing can get better, until everyone wake's up, to the harsh facts of the new 21st century economic world. Even the economic survivors, that add unique value, will be negatively impacted by systemic unemployment with higher taxes and deflated assets - homes and businesses - with too much supply being chased with too few dollars.
- John Jazwiec
A myth is not a lie. A myth is a universal way to transcend history through symbolism and story telling. Mythology is the immutable "truth", that every civilization, religion and political scientist uses as the lowest common denominator to provide the most impact to its audience. Mythology is also a great business sales tool.
One of the most widely accepted mythology is birth, adolescence, enlightenment and death. As in all of the great mythologies - from the Egyptian to the Greek to the Roman to the present day - birth is a symbol of promised future change, adolescence is a symbol of promised matured change, enlightenment is a symbol of promised change that is codified and death provides the soil for new change.
Business changes through the same mythology. Businesses are started to change established order. Businesses reach a level of maturity where the change becomes adopted. Businesses reach a level of enlightenment where the change is codified. And they finally end so that new change can begin.
In business, you can have all of the Powerpoints-By-Death you want, but only the recognition of the "true" mythology and the use of story telling makes a significant impact. Bullet points and words don't work as well as symbols and visualization.
A better way is for business to sell "birth", through a "day in the life" of something new vs. something that has effectively died. IBM, becomes yesterday's Microsoft which becomes today's Apple with a promised death for all in the future.
It is this cycle of life, that has been passed down through ancient cultures to today, that speaks to us as consumers. It is only people that understand this "true mythology" that can take ideas and turn them into meaningful change. Ghandi and MLK understood this. Microsoft, Apple and Google have understood this.
Your business must understand this to make meaningful change. And unless you are prepared to accept the death of status quo, and have not locked your business into the great harness of time's arrow, there can be no chance for birth or re-birth.
- John Jazwiec
Lou Piniella, yesterday, announced he is planning to retire at the end of the year. Sweet Lou is 67. Don't worry about him, he has plenty of money and something most of us will never see - Social Security and Medicare.
It has been 25 years, since I have cared about the Cubs. I only have the same kind of "rubber necking" instinct, to watch them figure out new ways to screw things up, as I do watching the workings of the federal government. I have long since stop counting on both organizations to provide me anything, but simple "clown-like" entertainment.
When I thought, things could not be more screwed up, than being owned by a newspaper, the Cubs new owner has done the impossible. He has managed to oversee - in his first year mind you - the least amount of wins per $ of payroll in baseball, and turned an "investment" in new urinals into the least amount of attendance in 20 years. Now that takes some doing. I can't wait for next year. If the new owner can make the Cubs even more messed up in his first year, than I thought possible, I can't wait to see his next "act" in 2011.
The Banking Reform Bill has 2,319 pages. That is compared to 66 pages for Sarbanes-Oxley. And if pages of a bill are correlated to regulatory bureaucracy, the demand for attorney fees is going sky high. How did government get this screwed up? The same way, the Cubs have screwed things up, the wrong management system.
Forget about Jimmy Stewart and "Mr. Smith Goes To Washington". Instead of politicians, treating the job like a service to their country, today's politician thinks it is a career. And a way to hire his or her friends. If you want to run for politics you need the backing of powerful lobbyists. More importantly to be re-elected you have to run a fine line between corporate money and citizens outrage.
That is why the Banking Reform Bill has 2,319 pages. Take the members of the House and Senate and multiply them by about 4 key influencer's per head and presto you get that amount of pages.
Perhaps not in my life time, but at some point, the Cubs and Washington must face a day of reckoning and hit the reset button. In both cases the root causes of failure must be understood.
For the Cubs fans, it is easy, shake them and say "what do the Cubs have to do with feeding your family?". "It is virtual reality, stupid".
In the case of the federal government it is no joke. The root cause is career politicians and not implementing term limits and real campaign reform.
We can all keep taking pain medication and hope our teeth will get better in the morning. But someday, we will all have to go the dentist, and have a root canal.
The only alternative, is to be like Cub fans, and continually wait until "next year"; finally dying when the infection has killed our brains.
- John Jazwiec
Last week, I blogged that Apple's hubris, would be their undoing, after they were defensive and dismissive of the iPhone V4 problem.
Their stock took a beating today. The Android X and Motorola have momentum. Motorola's co-CEO took a punch, that Apple deserved by letting their guard down, saying that the weakness of the iPhone's signal was inherent in the design. When something as evil as Google, with a product called an Android, and a company with more ups and downs than a roller coaster with a "co-CEO", can pass the "snicker test" and bite you - you know, you screwed up.
Which brings me to my wife's Europe vacation with her friends. I have included three pictures from her trip. If Rome, Corsica and Sicily are outdated, they at least have tourism. When the US, and its hubris have left it in the dark ages, who is even going to want to visit the Field of Dreams in Iowa? Plow down the baseball field and start planting seeds to feed the world. The US value will be like Saudi Arabia. "Oh, that is an interesting piece of sand, but move over so I can tap your oil".
The first picture is my wife in Rome tossing a coin into the Trevi Fountain. Legend has it, that if you toss one coin into the fountain you will return. If you toss two coins into the fountain you will find a new romance partner and three coins you will get married or divorced. I see my wife only throwing one coin. I hope that is not wishful thinking.
The second picture is from Corsica, the birthplace of Napoleon. I can assure you that the muscled guy under the statue is not me.
Finally the third picture is from Sicily. My wife is standing in front of a volcano crater. American's don't usually spend their time looking at a globe (maybe a map of a mall), but if they did, they would realize how large Sicily is. Besides it's quint villages it is shaped by pillage and vulcanism
- John Jazwiec
