Are We Ready for “A la Carte” “Cable” Television?

cable tvHave you cut the cable yet? There has been a lot of coverage in the news, trades, and other media about how millennials have abandoned “traditional” delivery methods for video product (like cable), and instead are relying on services like Netflix, Hulu, Amazon and the like. These services have not yet figured out how to deliver live news or sports (or don’t know how to monetize it), but they’ve done a better job than the terrestrial networks in creating compelling original content.

Of course, living your life “uncabled”  saves money. As I recall, my first cable service was from a company called “Telepromter” which at one time was the largest operator in the country. I think my monthly fee was less than $5.00.

Now it’s easy to have a cable bill north of $200, and if you’re like me, at least 60% of the content delivered is of no interest; I pay for shopping, religion, sports, and foreign language channels, none of which I would ever watch. On top of that, if I want “premium” content, (HBO, Showtime), I have to pay extra for that.

There are extra fees for decoder boxes and outlets in multiple rooms, add another 10% or so for “local franchise fees,” the amount a city charges a cable company as a license fee to operate in the community.

So I’m curious. Are there people sitting around the executive suite of Comcast going “holy sh*t, we are really screwed.” Because they are.

They bought NBC/Universal, so at least them have an in-house stream of content, but as I alluded to above, traditional network television hasn’t really been very successful at grinding out the hits. Now there is all this hubbub about Comcast trying to buy some Time Warner cable assets. More hard wired delivery technology? Why?

According to their September 2014 balance sheet, Comcast has $104 BILLION in debt. Share prices hovering around $55. Market cap, $145 billion. $67 billion in revenue. 136,000 employees. About a half million in revenue per employee. $750 thou in debt per employee.  Costly buildings, property,  trucks and cable and infrastructure.

Compare that with Netflix. Share price over $300. Market cap, $20 billion. Revenue: (12/31) $4 billion. Debt: $4 billion. 2000 employees. $2 million in revenue per employee. Same amount in debt per employee as revenue.  A buncha employees and a server farm.

What’s the future look like for Comcast? Can’t say. For the present, they will keep on being an internet provider, but it’s very likely their segment (method) of delivering video as a subscription service will disappear, eventually. (Of course, subscribers may not wait, ever since Comcast moved their customer service off shore, it has become easier and easier to quit them, out of frustration).

Program producers are starting to figure out they can sell their services a la carte and deliver them over the net or via other unwired technology. To any kind of device.

A mentor of mine,early in my career was Stanley S Hubbard, a true  broadcast pioneer. We kept corresponding long after I moved on from his employ. One of the most interesting letters he wrote me was in the early 80s, shortly after he created the first direct to home satellite broadcasting company, USSB, which he later sold to DirecTv (for more than a billion dollars). Mr. Hubbard wrote “ in the near future, there will be no need for conventional television networks or terrestrial stations, as anybody who wants to be a network will be able to send out programming from where ever they are.” Spot on target Stanley.

Yet terrestrial broadcasters keep buying out their competitors, largely a play by non-thinking private equity groups, I would guess, and hard wired delivery companies like Comcast keep buying more hard wired subscribers.

An enigma, at least to me.

I’m sure it’s been discussed somewhere in the industry, but for me, (not a millennial or gen xer), I’d just as soon purchase my video content on an a la carte basis, as I suspect most people would.

I’d be happy to pay more, proportionately, to get what I want, instead of what you think I need.

There have been a few rumbles about it publicly lately, but for the life of me, I don’t understand why powerhouses like HBO, SHO, and ESPN don’t dump their current distribution deals,  launch out on their own, become platform agnostic, and keep all the money.  I suspect Wall Street would forgive any temporary wobble caused by the transition.

 

 

 

 

 

cut the cable

Categories: General Management, Marketing, Media Industry, Private Equity, Turnarounds, Uncategorized | Leave a comment

What’s With McDonald’s? “Too Big to Fail?”

McD logo

The phrase, “too big to fail” was bandied about a lot during the financial crisis, especially in discussions about banks, insurance companies, car manufacturers. I’m not sure if that was true or not – of course there would have been a lot of pain if one of those companies had gone under, and a lot of lost jobs.

But how about a company like McDonald’s? They are certainly not at risk for folding anytime soon, but they sure seem to be on a roll of negative results and publicity, and it’s coming from all quarters, whether the “news” is about ingredient issues, employee discontent, shrinking of menus, or marketing “new” items, such as the triple burgers.

The latter move seems to be an attempt to woo away customers from the brilliant success that Hardees/Carls Jr have had targeting a niche customer (young males) and their respective appetites.

As everyone is aware, there have been a number of fast-growth burger start-ups in the past several years, like Smash, Five Guys, Shake Shack, and Umami. None of them, in my opinion stand a chance of every challenging McDonald’s on size, but they may hurt them in localized markets.

The majority of the customers heading to these new chains are millenials. Customers who want to have it “their way,” and for that generation, it means fresher food, prepared to order, quality ingredients. Or at minimum, the illusion of those components being present.

McDonald’s reminds me of the newspaper industry of ten years ago, hemorrhaging customers, unsure of how to gain them back, struggling with new ways to achieve customers and revenues. The newspaper (and broadcast) industry still hasn’t figured it out. Their core group of users has completely changed the way they receive content, and what content they want to receive, and the media refuses to accept that change.

McDonald’s seems to be in the same boat. Instead of seeing how they might change to suit their customers, they seem to be hoping customers will change to suit McDonald’s

What’s really fascinating to me is how McDonald’s does such a bang-up job in adapting to the demographics with its international locations, and changing the culture and menu to suit the locale, but they seem unwilling or unable to do that at home.

Despite the current issues, McDonald’s corporation is still cranking out EBITDA that is about a third of their gross revenue, and what company wouldn’t envy that kind of return? (Yahoo finance, January 6, 2015).

Unfortunately, a restaurant doesn’t come anywhere near those kind of margins, and over 80 % of McDonald’s restaurants are franchises, many of which would qualify as typical small businesses. As most of them are closely held, it’s hard to determine what their financial results are, but one can surmise there may be more than a few that are suffering.

That ‘over 80%’ figure represents about 28000 restaurants worldwide, and if each has a team of around 50 employees, that equals a workforce of a million and a half persons. McDonald’s, without successful, profitable, franchise partners, doesn’t have much of a future.

McDonald’s needs to take a much harder look at not only the current customer base, but the habits of customers that will be coming of ‘fast food age’ over the next few decades.

For right now, fresher foods, higher quality ingredients, and cooking as much as possible on site will woo some customers, but you will have to spend some of your billion dollar ad budget explaining that.

Recycling old ad campaigns and slogans (as you are now) may make older customers happy, but they mean nothing to younger generations.

Or perhaps you’re hopeful you can change your business model to “all senior coffee, all the time?”

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More on Uber

More on WebVan, er Uber

Hong Kong Taxi

Hong Kong Taxis

A few weeks ago, I opined on this forum that I thought “Uber,” the technology company in the peer to peer ride sharing space, was/is the equivalent of the current bubble’s “WebVan,” – overvalued, over invested, destined to either crash and burn spectacularly or be forced to completely reinvent itself.

Perhaps combining two bad ideas – WebVan and Uber, into one venture is it’s salvation? Turn all those drivers into delivery people, ala Pink Dot, or put all the pizza delivery guys out of business, by turning food delivery into a competitive bidding landscape.

Obviously, I don’t have the answers, but despite their valuation and the size of their wallet, Uber is having more than its share of problems, and from all the quarters you might expect: issues of questionable driver/passenger encounters, excessive pricing (they went to “Surge” pricing in Sydney, Australia last night, as local residents endeavored to leave the central city because of a hostage/shooter situation). (Want to get to safety? $200 please!). Other issues face the company from transportation regulators, municipal, state, and national governments, unions, taxi companies, and more.

The end result is the service has been banned some places and had to sue to open or stay open in others.

Not included in the “difficulty”list are the inappropriate foot in mouth statements made by company execs on a variety of topics….the curse of a combination of business running immaturity and having far too much money thrown at you, undeservedly.

Quartz.com has a map of current places the service is banned, and places where it’s in contention. I am surprised Portland, OR has its unders in a bunch, as Uber would seem to fit right into the city’s faux hipness.

Start-up investors love “disruptive” and there’s no arguing Uber disrupts on a lot of levels and in a lot of segments.

I can’t imagine personally using it. It’d be a safety concern for me. And it kinda feels like hitchhiking for money.

Lots of people have their eyes on Uber ….. especially those who have sunk millions into it. What’s your guess? Long term, big winner? Or spectacular crash and burn?

One thing I do admire about Uber, tho. That’s one beautiful photo of Central Hong Kong on their website. Wonder if Hong Kong Uber drivers wear white gloves and open the doors for passengers like the taxi drivers do?

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Red Lobster – In a Pinch, Clawing Its Way to the Bottom

Red Lobster AcquisitionDarden, the restaurant operator (Olive Garden, Longhorn Steakhouse, Yard House, Capital Grille ) sold Red Lobster a few months ago. The acquirer was / is Golden Gate Capital, a private equity firm based in San Francisco, that also holds California Pizza Kitchen. Eddie Bauer, Zales and other consumer facing businesses. Golden Gate was formed by ex-employees of Bain.

The published price was $2.1 billion, of which approximately $1 billion was outstanding debt, which must be retired.

Various publicly stated reasons for the sale included 1) activist investors belief the company could perform better, and 2) the company’s desire to focus on its more profitable brands. But one can’t help but thinking they just wanted to cut a loser loose, as their other brands perform so much better than the Lobster.

The last financial figures I was able to find put the Lobster’s revenue at $2.62 billion for 2013, about $3.5 million per store, although per store sales on a year to year basis have fallen for several years. Darden claims a profit margin of 5.7 % across its entire line of brands.

Optimistically, if the chain in fact did turn in a 5.7% margin, or $148 million, the sale price reflected a valuation of 15x profit. In reality, the multiple was probably higher than that, as Darden has publicly stated that other portfolio brands perform better than Lobster.

Coinciding with the closing, Golden Gate spun the real property of the company, at least over 500 locations, for $1.5 billion, to American Capital Realty Partners, seemingly resulting in a net purchase price of $600 million for the restaurant chain.

On the surface, the sale / leaseback seems like a brilliant move, bring the acquisition value to only about 4x profit, with the previous margin assumption.

But behind the scenes, it is a recipe for disaster. Chain restaurants, especially in the fast casual segment, aim for profit in the 2% – 5% range; in other words, the segment is a very low margin business.

Prior to the sale, Red Lobster’s operating expenses did not include rent, as they owned their buildings. Now they will add a rent expense line to their P/L, reducing the margin even more.

The restaurant chain says it has suffered from a couple of different circumstances – during the downturn, most every restaurant’s performance was diminished, and the Lobster in particular suffered from dramatically increasing prices in fresh seafood. (Particularly a shrimp blight in Asia – personally I’d be happier and a potential customer if Lobster made a commitment to buying only wild caught American shrimp).

So there are two paths to private equity investors receiving a substantial return over the life of this deal: dramatically increase revenue or profit. In the fast casual segment, it’s unlikely a rapid rise in revenue will come, unless the parent spins off a majority of restaurants as franchises, and books those sales as revenue. With over 700 restaurants in the portfolio, and supposedly near a “50% share’ of the seafood restaurant segment (according to some sources), it’s unlikely they will be adding a significant number of new company-owned outlets.

That leaves increasing profits as an option, and that means cutting costs either with suppliers or layoffs. By some accounts, the former appears to be happening.

In one of my other business interests, I regularly hear from restaurant diners who report on their experiences. Over the past two months, Red Lobster diner reports have increasingly received poorer marks, particularly for the quality of food.

One diner was indignant that the ‘melted butter’ served with seafood wasn’t butter (nor was the spread served with the biscuits) (nor upon asking was any real butter available), another complained of the “fresh fish” tasting “old,” while still another talked about fish filets being prepared and served “untrimmed” giving diners an appearance of receiving a larger portion, even though the edible portion was less than the restaurant previously served. The biggest complaint I have heard is that the size of shrimp in dishes has grown increasingly smaller, with one diner saying “they looked like 30-40s.”) A quick glance at some Yelp reviews this morning confirms there quite a few disenchanted customers.

As I wrote about the Burger King takeover a few months ago, Red Lobster is in peril if they don’t focus on the three things that bring customers into a restaurant: food quality, experience, and value.

Apparently those points are concepts that have eluded private equity.

When prices get so out of whack that diners can chose fast casual at the same price point as McDonalds, and likewise, some fast casual diners can hit full service restaurants for the same price point, clearly something has to change.

(And please dear god, don’t let the changes include selling crappy product with your name on it in the frozen food aisles at grocery stores).

I’m not omniscient (darn it), but I don’t see the Red Lobster transaction ending well for investors. Just my opinion of course.

Footnote:  A couple days after I wrote this, Red Lobster announced they were making substantial changes to their menu, including adding more lobster. Duh.  The most brilliant strategy?  This quote from management:  “Menu items are also presented in the way diners order, “beginning with drinks and ending with desserts.”   Probably took a $500,000, 750 page  study from Booz or McKinsey to figure that out.

(Red Lobster began as one seafood restaurant in Lakeland, Florida in 1968 and is now the world’s largest casual dining seafood restaurant company, with 47 percent market share in the seafood specialist segment, over 700 restaurants in the United States and Canada and more than 58,000 employees)

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Is Uber This Bubble’s Webvan?

Did Uber Send Hailo Packing?

Hailo, the taxi hailing app, started in London by a team of taxi drivers and tech entrepreneurs has pulled the plug on its North American operations, despite having raised more than $100 mil from some of the top venture firms.

The company operates in more than thirty cities around the world, and had US operations in a half dozen metro areas.

Hailo’s public announcement stated that the reason they are leaving is that the “high cost of marketing in the US” would make profitability a near term impossibility. Like they didn’t know the costs prior to opening the branches?

Some articles have opined there are other reasons, the obvious being the competition from Uber, Lyft, and similar services, as well as the fact Hailo relies on licensed taxi drivers, who 1) were ‘suspicious’ of making deals with the application company, and 2) the service relies heavily on smart phones, and penetration of smart phone users among US taxi drivers pales in comparison to the same segment outside of the US. (They didn’t figure this out ahead of time, either?).

While I agree that most ‘old line’ industries (including taxi services) could use some shaking up, I don’t believe on demand, private vehicle transportation like Uber is the answer. I prefer to think of Uber, with its billion dollars + of investment as the Webvan of the current bubble. In other words, I don’t think they will survive, at least in their present form.

Uber is currently operating in 200 cities, and is sitting on an $18 billion valuation. (Up from 3 bil last year) (LOL). They were projected to have $200 mil in revenue in 2013. Whatever happened to the days when company valuations were based on performance, instead of hype speculation?

If you’re not familiar with Uber, it’s basically a ride matching service, contracting with private citizens who own “late model sedans in excellent condition,” drivers must have insurance and be over 21. Prospective passengers use the app to request a ride, and software takes care of the rest, matching driver and passenger and handling payment.

Uber has expanded its offering to include licensed taxis and regulated limousines, along with adding ‘quality tiers,’ higher pricing for luxury transportation and such.

Some cities have banned Uber, saying the company is not regulated like taxis and therefore not as safe. There’s probably truth to that, there have been some news reports of passengers not feeling safe; there has also been complaints about ‘demand’ pricing with Uber, with rates jacked up during special events or high demand. Of course, taxis are unable to do that.

In order to have a complete US roll-out, Uber will have to litigate in a bunch of cities, fighting both municipalities and powerful unions. Expensive proposition.

My own concern as a user would be my personal safety, not only lacking confidence in the driver’s ability, but also being suspect of their individual character. Some proportion of drivers undoubtedly have nefarious reasons for signing up.

Some optimistic/pessimistic critics believe services like Uber will eventually put traditional taxi companies out of business, and then seriously jack their own rates.

An article in AdWeek magazine recently opined that the future of Uber is to merge with Google, and use the upcoming ‘self-driving car’ technology as an automated consumer goods delivery service, a road-based alternative to Amazon’s proposed drone delivery project.

That would mean Uber would switch from being a personal service matching company to strictly a logistics company, and there is pretty stiff competition in that segment.

The self-driving car will probably take a couple of generations to be fully adopted, after the inevitable battle with regulatory authorities.

What do you think? Do services like Uber and Lyft have legs? Would you be one of the first to have a self-driving car?

As for me, a big no for the first question, a big yes for the second.

 

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I, For One, Don’t Believe Most CEOs are Overpaid

A topic that gets a lot of press these days is the compensation packages awarded to some CEOs. Many people take umbrage to the size of these packages, for a variety of reasons including “disproportionate to rank and file,” “nobody is worth that much,” “(the company) could have used the same amount of money to fix (something).”

Some of the objections are based purely on emotional response, some on a passion for social causes, some on envy, some on a lack of understanding of what the positions requires of a person.

For many reasons, I don’t think most CEOs are overpaid, and I base my opinion on my own personal experience of having run companies. Oh, not the kind where the pay range was seven figures + annually, but all companies have pretty much the same group of challenges, albeit on a different scale.

For most people in the workforce, they have one person they have to please or impress on the job – their boss or immediate supervisor.

The CEO of a large company has a constituency of many “bosses’ s/he has to satisfy simultaneously, which may include:

  • The board of directors
  • Shareholders
  • Banks and other creditors
  • Wall Street
  • Vendors and suppliers
  • Employees and/or unions
  • Regulatory agencies and statutes, if applicable
  • Customers

That list is not in any particular order, I, like most CEOs I suspect, would have a hard time prioritizing the list, as they each have to be the most important group at one time or another.

Each of these groups, in turn, has little interest or understanding of the demands any other group in the list puts on the company or execs in its C suite.

To be a successful CEO, one has to learn to juggle the needs of each of these groups and deal with their unique challenges on a timely basis.

So what you say?

Well, almost all of us have a choice and the ability to accomplish anything we want in life, as long as we realize in order to take one path, generally we will have to sacrifice some things on the alternate path.

The head honcho of a large company, multinational, public or private is going to have to make a lot of sacrifices to please all of the groups, and probably at the top of the list is a successful home life.

There will be more times than not that some issue from one of the groups on the list is going to cause the C level exec to miss a milestone event with his family, something that can’t be ‘made up’ or smoothed over with presents instead of presence.

Don’t think it’s a big deal? Ask any successful CEO what his/her biggest regret in life is.

I do, however, object to giant exit packages for CEOs who have failed, but I guess that’s part of the culture today.

Is it right that successful CEOs receive salaries that surpass XX multiples of the rank and file wages?

Hard to say. While I have empathy for families that are having a hard time making ends meet, and I’ve certainly been in that position myself; we all have free will and the choice to do anything with our lives that we want to; it’s not like someone goes to work at McDonalds or WalMart and wakes up one day and says “WTF? I didn’t know they were going to pay me that!”

I’m reminded of my youth – my father was a contractor with unionized labor, and from time to time, some trade would go on strike. The logic expressed was always something along the lines of “electricians (or whomever), get paid such and such, and we only get XX per hour.”

In my infinite wisdom and brilliance as a 12 year old working for a buck an hour, I’d pipe up and say “so go be an electrician.”

America was built by generations of dreamers, not whiners.

 

 

 

 

 

 

 

 

 

 

 

CEO Pay

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Jeff Zucker, The Man In Charge of Killing CNN

Introduced to the world in 1980 by television visionary Ted Turner, CNN, which stands for Cable NEWS Network, became the first 24/7 television news network. It has cable distribution deals that afford it a reach of 100,000,000 homes in the US, and millions and millions of more viewers through its international networks and affiliates.

In January of 2013, former NBC/Universal President Jeff Zucker was picked to head the cable news operation. Looking at Zucker’s career path, one might see why it was believed he could successfully manage and build CNN; his career had seen a series of positions requiring more and more responsibility. He had news experience, having previously been in charge of the Today Show, if one considers that show “news.” Depending on whom you ask, the reviews for Zucker’s tenure at NBC are mixed.

From various internet sources:

Under Zucker NBC fell from being the number one rated network to the lowest rated of the four broadcast networks and was occasionally being beaten in the ratings by programming on some of the more popular cable channels.

New York Times columnist Maureen Dowd wrote that in Hollywood “there has been a single topic of discussion: How does Jeff Zucker keep rising and rising while the fortunes of NBC keep falling and falling? …many in the Hollywood community have always regarded him as …a network Napoleon who never bothered to learn about developing shows and managing talent.” She explained that Zucker “is a master at managing up with bosses and calculating cost-per-hour benefits, but even though he made money on cable shows, he could not program the network to save his life.”

Dowd also reported that an unnamed “honcho at another network” stated that “Zucker is a case study in the most destructive media executive ever to exist… You’d have to tell me who else has taken a once-great network and literally destroyed it.”

Whether he was successful or not at NBC isn’t really of consequence; if one judges success by the fact that he garnered a $25 million + exit package, then yeah, I guess he’s successful.

But primarily he had overseen entertainment programs at NBC, and he is apparently intent on bringing that background to CNN.

From the changes made so far, and announced for the future, it would seem that Zucker believes the network can do “better” by obtaining a small piece of a larger cable ‘pie’ (stealing audience away from dramatic and reality channels), rather than trying to completely dominate a segment where there are very few competitors. (cable news).

So he’s shuffled talent around, experimented with new hosts and slightly varying formats, and now is busy adding “non news” shows like Anthony Bourdain.

In published interviews Zucker explained the changes he intends to employ to CNN’s programming. Zucker said that his intent to refashion CNN’s programming to feature “more shows and less newscasts.” In an effort to attract viewers of cable channels like The Discovery Channel and A&E he wants CNN to publish more documentary like programming that provides viewers with what he called a unique “attitude and a take.

It seems that so far, this strategy is failing as CNN’s audience is at a 20 year low.

The “powers that be” have obviously forgotten what built the network in the first place, and what’s missing from today’s on air broadcasting line up: hard news reporting, backed up by solid investigative long form journalism, in a format accessible and digestible by a new breed of younger consumers of news and information.

I suspect that millennials hardly relate to Wolf Blitzer.

One of the most rewarding stops in my career was a stint overseeing a multinational division of a global news agency; it was also the best group of colleagues I ever had. While I had responsibility over the entire division, that did not include editorial decisions; however, my business decisions had the potential to affect editorial content on a daily basis. So I was acutely aware of the prioritization of news coverage that we distributed, and what went in to producing those stories.

I particularly remember the painstaking work that went into verifying ‘breaking news,” and obtaining verification from 2nd and 3rd sources prior to running with the story, despite the pressure to be ‘first.’

The days of that type of conscientious journalism are gone and that is especially obvious when watching CNN or one of its competitors, when rumors become ‘breaking news’ and verifications are apparently pretty far down the “to do” list.

Apparently, in Zucker’s mind, breaking news breaks over and over again throughout the day, as they rerun the same story that they “broke” hours earlier.

I’d like to see more news, not less, Mr. Zucker. As much as I enjoy Anthony Bourdain on occasion, I’m hardly going to tune in to CNN to watch him.

As I said earlier, you need to be more aware and in tune with your newer audience, and how they receive, manage, and digest information.

There are so many ultra-qualified, long form, investigative journalists out on the street these days that would certainly be grateful for work. You might also benefit from picking up some of the producers let go at Current TV.

You’ll have to lose some of your content bias, as well, of course. While I personally don’t think CNN is quite as bad as Fox in its leanings, a slant is surely there.

Step up to your challenge. Bring back the cachet and credibility of a first rate news organization. Hire journalists, not “talent.” Develop a Rolodex of experts that goes deeper than “founder of the popular blog… or CNN host of …….”.

If you’re fresh out of ideas on how to do that, or don’t know how, call Ted Turner. I’ll bet he has an idea or two about his baby.

 

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Trust Your Employees and Reap the Rewards

Richard Branson, Chairman of the multinational Virgin Group, made some “news” this week by announcing that employees of the (over 400) companies would no longer be bound by an official vacation policy; employees would be free to take the time they need/want, and it would not be monitored.

In other words, Branson is placing his trust in the employees to do what they think best. This fits in nicely with what I was writing about a couple weeks ago, on how to be a great CEO, in which I opined if you take care of your employees first and foremost, they will take care of your business.

In company after company I have led, from Bettendorf to Beijing and from Duluth to Durban, I’ve never had this operating philosophy fail. Of course, there will always be one or two employees that will abuse the freedoms or try and manipulate other employees to ‘cover’ for them, but sooner, rather than later, peer pressure puts the kibosh on this.

My role model for demonstrating respect for employees came from watching my father. A contractor, he’d rise early, put his suit on to go to the office, stop at the shop, change clothes, help the guys pull equipment and load trucks. He’d keep the best employees on the payroll even when jobs were slim. In turn, they would take the initiative to find and complete tasks unassigned – fixing equipment, updating inventory and so on.

In an industry where workers are prone to jumping from employer to employer, my dad had quite a few employees that stayed on more than fifty years.

My dad loved fresh fish and game, but didn’t hunt himself. Yet nearly every Saturday in the appropriate seasons, there would be a knock at the back door, and one of the employees would pass over a stringer of fish, some venison steaks or game birds.

He called it quits around age 75, not because he was tired or bored, but to take care of my ailing mother, otherwise, I am sure he would have worked another decade or more.

When he passed, a few months short of the century mark, the service was attended by more than a thousand people, and even though he had not been a “boss” for nearly a quarter century, more than a hundred former employees came to pay their respects.

How could anyone ask for more demonstrable evidence of corporate success than that event?

In recent days, with a lot of media attention on employee discontent, you see companies with an attitude that is 180 degrees different than I advocate. The companies treat employees as a completely disposal resource, easily replaced. And that attitude is evident, in the type of service that company offers, or the quality of its products.

My father used to tell me “the most valuable asset a company has walks out the door every day at 5 o’clock, and you hope that you’ve treated them well enough that day that they can’t wait to come back in the morning.” I agree, and practice it at each company I’m involved with.

It takes so little to implement this philosophy; it’s doesn’t require huge pay raises or completely revamping benefit programs.

It only requires something that will cost the CEO and stakeholders zero: taking an interest in the employees and making your respect and appreciation for their efforts evident, every day.

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Ken Wheaton, Ad Age Editor, Takes Umbrage with Latest Carl’s Jr / Hardees TV Ads

In a recent editorial, he says: (the ads) are disgusting, the (agency and client) should be ashamed of themselves, (the ads) aren’t sexy or funny. The maligned advertising agency is “72 and Sunny,” a creative shop out of Los Angeles and Amsterdam; here’s a look at some of their work for other clients.

From online biographies, it appears that Mr. Wheaton has never worked in either the ad agency or fast food business, and it seems his only employer ever (excepting his career as “novelist”, has been Ad Age, which is fairly highly regarded in the industry, though it does not hold the cachet it one did – but what trade magazine does?

Obviously I support any person having an opinion on anything, (I have a few,myself), bur Wheaton’s criticism seems to come to us from a viewpoint of either “politically correct editorializing” or perhaps as a side effect of his Catholic education in Acadiana. Again, I have no beef with any of that.

Carl’s Jr., and their acquired subsidiary should be lauded for their success with their marketing and strategic planning, both inside and outside of the stores.

With only a few thousand restaurants nationwide, they can’t compete in revenue (or marketing budgets) with the “big guys,” so they chose a target demo, designed a menu to appeal to that demo, and marketing the menu and concept directly to the demo. That’s damn smart.

The campaign, which would be generally described by many as using objectified women to sell hamburgers, has been a huge success, in terms of both creating buzz and selling product, and isn’t that what advertising is supposed to do?

The effort started with a swimsuit clad, car-washing, burger eating Paris Hilton in 2005, and has employed some top models and celebrities in similar situations. My personal favorite is the one done by chef / celebrity/ cookbook author Padma Lakshmi.

We’ve become a culture where everyone is a critic about everything, whether we’re dumping on restaurants on Yelp, dissing a contractor on Angie’s List, or posting photos/videos of products or situations gone awry on one of a dozen websites.

And there are so many sets of double-standards for these criticisms; chef/owners shouldn’t “get into it” with online reviewers, yet large corporations must respond to negative posts that can cause damage to a reputation or bottom line.

It’s always easier to dump on a business, concept, or person rather than offer some positive recommendations within the same piece.

As almost always with online posts, there is better content in the comments than in the original piece, as one respondent to Wheaton’s piece stated: After reviewing comments on this lazy Saturday afternoon, I am thankful to say I’ve finally witnessed the ultimate expression of sanctimoniousness…

It still surprises me how often a few thousand “ad people” want and expect brands to spend millions of dollars to reach THEM, instead of the millions of consumers who actually are responsible for purchasing 99%+ of their products.

The ad can perhaps be said to be in bad taste, or even crass, but to demonize female sexuality as “sexism” is ridiculous, and to imply the ad will be ineffective because the ad doesn’t appeal to someone who would never eat there in the first place slips past egocentric, and is actually just stupid…

Kinda funny to me, I would think that most people that are offended by such things would find the current spot the least offensive in the bunch.

If Mr. Wheaton has some suggestions as to how Carl’s Jr / Hardees (or any company) can continue their success in reaching their target demo, I am sure the company and their agency would love to hear them.

Perhaps he can incorporate them in his next novel?

Categories: General Management, Marketing, Uncategorized | Tags: | Leave a comment

Today I Fix Retail Stores

Today I Solve The Problems of Retailers

Sears, Radio Shack, Best Buy…..going, going gone? Many analysts think so.

Radio Shack used to be so cool, and still could be.

It’s the only place to get things you didn’t know you needed. Capacitors, resistors, bits of wire and plugs. Hobbyists and home handymen are the market.

Batteries for everything. New mobiles and services to go along with them. That’s all they need. Get rid of the toys and the stuff that’s marginal.

But first? I’ve been going in your stores for decades, and with very few, and I mean VERY few exceptions, you have the rudest, least helpful personnel of any retail chain,, ever, anywhere. They all act like you’re interrupting their day. They are no longer knowledgeable about the products you sell.

They can’t install the batteries you sell, or activate the phones. Terrible. Keep the stores open, fire the employees en masse or send them to personality school. Seriously.

Best Buy. I used to call on them at one of my first jobs. They only had three or four stores, and the company name was “Sound of Music.” (Oh, damn, now their old jingle is in my head).

So the “analysts” (MBAs in their first jobs, who apparently know everything about everything), say people go to a store to touch and feel an object, then rush home to buy it off the internet.

Bingo! Put an e commerce kiosk in every aisle at Best Buy, let the people shop there. And not pay shipping. And take (mostly) immediate delivery. Sears has some software that shows you appliance prices at competitors. Best Buy could have that. Even if they were a little higher price on some items, the screen could show the price difference when you add shipping and a calculation for the time spent waiting. And the “kiosks” would be a lot more knowledgeable than most sales people. So cut your staffs, too. Boost cash flow. Compete with the internet. You’re welcome.

Sears. I don’t know what to do about them. I think they were better when the carried the always dependable and reliable store brand, Craftsmen, and their other house brands, and they meant it when they said “Satisfaction Guaranteed – For Life.”

Kind of like Penny’s, Sears is full of unknowledgeable sales people. Maybe that’s just retail these days, but it used to be that the employees knew what they were selling and good explain intelligently to anybody.

I was looking at ranges a couple months ago, went to Sears, and although it seems like these two things couldn’t possibly go together, the salesman was incredibly pushy while not having the slightest bit of product knowledge.

Sure I walked. Do people go touch and feel at Sears like at Best Buy and then just go home and shop online? I don’t think so. But the Sears name and reputation used to mean something. Now it’s just “another store,” at least that’s what it seems to me.

Want me to fix YOUR company’s problems? Drop me a line.

BTW – couple years ago I consulted a niche specialty store, had a lot of potential, little competition.  Within a few months, we had seven stores open in three months, quite an accomplishment.  With ten more on the drawing board.  I found some outside investors, also an accomplishment.  You don’t find many people that want to invest in retail.  The company owner thought it was great, and that the investor’s money could be his own little piggy bank.  Guess how long the company lasted?  Right.  Lesson:  don’t spend investor’s money on your own crap.

Categories: General Management, Interim Services, Marketing, Turnarounds, Uncategorized | Tags: , | Leave a comment