Woke American Capitalism

Yesterday marks the day when American capitalism took a crack at being “woke” when the Business Roundtable redefined the role of the American corporation in the “new” America we live in today.

In the past (1997), the Business Roundtable thought “…the paramount duty of management and boards is to the corporation’s shareholders…”

Makes sense, no? The shareholders own the company, right? Not so fast, amigo. Not so damn fast.

If you are a student of such things, you will enjoy reading the view of the world from 1997. It is here:

Business Roundtable Statement on Corporate Governance

It is worth noting that the “shareholders” are not a social club; they own the companies of which these CEOs are the leaders and managers.

The food chain looks like this:

 1. Shareholders — the owners — of companies elect the Board of Directors.

 2. The Board of Directors engages the management of the company — the Chief Executive Officer being the primary hire of the Board.

 3. The Chief Executive Officer assembles the balance of the management of the company subject to the concurrence of the Board.

 4. The CEO and the management run the company subject to Board oversight.

This is a legal construct as well as a practical structure.

In this instance, the Business Roundtable is populated by CEOs. The CEOs of the Business Roundtable did not ask permission of their boards or their owners to rediscover the purpose of corporations. They acted on their own.

The initiative was introduced by Jamie Dimon, Chairman of the Business Roundtable and Chairman and CEO of JPMorgan Chase & Co.

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CEO Shoptalk — Counting Coups

As a leader, it is imperative that the company you build and lead is energized from within by taking a moment to celebrate victories. In history, this is called “counting coups.”

The other day I was advising a client and we got to the issue of rewarding accomplishments and behavior.

“Why is this important?” the brilliant CEO asked.

“Because you will get more of whatever behavior your recognize and reward. Reward good performance — more good performance,” said your Big Red Car.

We wandered into a discussion as to how the military did it with a formal awards program wherein an individual was formally recognized by having their exploit written up, memorialized in a citation, and symbolized by a bit of colored ribbon they would wear on their uniform forever. These awards in the military are given in front of one’s unit often at a parade. It is very public moment.

The US Army Distinguished Service Cross second only to the Medal of Honor. Only given for valor.

One of my platoon sergeants when I was a young lieutenant had been awarded a DSC. Every payday we wore our green uniforms with ribbons. Every payday I would have him tell the story of how he won the Distinguished Service Cross to my platoon. We were counting coups.

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Recruitment v Seduction

A professional recruiter who I have advised — real pro — put up an article on Twitter that caught my interest. It discusses the essence of recruitment failures and why they happen. It takes a long time to get to the nub of things, but it is filled with wisdom.

I had also been building a file to write about this and they both came together at the same time. I take an earthier view of things having been in hiring mode for more than three decades.

I have always maintained that a good CEO is always recruiting and that recruitment is a seduction — meaning you want to create a reaction in the target that they want to work at your company rather than you need them to fill a job. Perhaps, overly subtle, but it is the way I think and I always had good luck in hiring.

Here’s a hiring challenge for you.

Image result for images room full of candidates

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Growing Your Way to Positive Cash Flow — Uber

I like the ride sharing business and use both Lyft and Uber, probably more Uber. It is very convenient when I have to go downtown for a meeting. It is cheaper than the cost of parking and less stressful.

I am concerned about the prospect of Uber ever — EVER — becoming profitable. You have to ask yourself how a company can come public at a huge value when they are neither profitable nor are they likely to be in the near term.

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Minimum Wage $15

Allow me to admit up front that I am a closet supporter of a $15 minimum wage. I don’t think it is a smart policy, but I like the idea. Unfortunately, it has been tried in several locations, the report card is in, and the results are not good.

A good number of reliable sources prophesied that a $15 minimum wage would devastate the restaurant business whereat that wage is applicable to kitchen workers, bus boys, servers, and even some cooks.

Turns out those prophesies were correct. Let’s take a look at New York City restaurants. This chart comes from an American Enterprise Institute publication by Mark J Perry that was sent to me by my pal Jeff Carter.

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Regulation — A Word of Praise

Your Big Red Car is not one to praise regulation or regulators. No surprise there, eh?

Your BRC, in fact, is guilty of railing against regulation. Fair play.

Today, I rise to praise the outcome of a regulatory action — the approval of the T-Mobile – Sprint merger that leaves the country with three wireless providers of some significant substance. This was good regulation with a good result on the eve of 5G, creating three worthy competitors for your wireless dollar. Bravo.

Image result for images logo t-mobile

The big three will serve 95% of the market as follows:

AT&T serves 100,000,000 customers.

Verizon serves 100,000,000 customers

The new T-Mobile/Sprint serves 90,000,000 customers.

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William Painter Sunglasses

William Painter Sunglasses

Your Big Red Car does not do product endorsements. That is mostly because nobody has offered the Big Red Car any meaningful baksheesh for his endorsement. Trust me. I can be bought. [I’m easy.]

I love William Painter Sunglasses. I do not own any William Painter Sunglasses because I wear bifocal sunreaders that cost $10. I am going to buy some. Any day now.

WP Sunglasses cost $185, but in the rarefied Land of Cool wherein pricey Raybans are de rigeur, I dig William Painter Sunglasses.

Go see for yourself. Here is their website.

William Painter Sunglasses

Why, Big Red Car?

Because, “your face is your moneymaker.”

That’s it. Oh, yeah, they’re made from titanium. Have unbreakable lenses. Lots of cool color combos. One of them doubles as a beer bottle opener. They are inspired by NASA. If you wear them, it looks like you may have to get a piercing and a tattoo, but I may be wrong about that.

Very. Cool. Sunglasses.

William Painter Sunglasses. No, William is not my nephew.

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car.



Chipotle Redemption

Americans are a forgiving people. In the case of Chipotle (CMG stock symbol), they forgive them for years of food-borne-illnesses such as an E Coli outbreak or two or three or four.

Image result for images of chipotle

How do I know this? Because their stock price — after weathering a huge hit based on food-borne-illness scandals — hit an all time high yesterday.

In the midst of their troubles, the stock hit a low price of $255.46/share in February of 2018. Pre-market price indicators today, you ask? $762. You do the math. Wow!

Did you buy on the bad news, dear reader? NO, you did not because you, like everyone else, just said, “Gross!”

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Mandatory Arbitration

I have always been a fan of arbitration as a means of dispute resolution in business contracts as opposed to using the legal system. Arbitration — yes! Lawsuits — no!

Recently, companies have been requiring new employees to agree to a basis of employment that includes a dispute resolution technique based solely on binding arbitration. [Note: This is different, though similar, than binding arbitration in business contracts. Similar.]

The employees are being asked to give up their right to sue the company, their employer, as a condition of employment.

Good idea or nefarious overreach by the employer?

These are not contract employees, but “at will” employees. A contract employee has an Employment Agreement and the at will employee has an “understanding” or a “basis of employment” while still being subject to termination for no reason or good reason or any reason.

It is perfectly normal for an Employment Agreement to have some form of dispute resolution spelled out as part of the deal. This falls under the umbrella of “you don’t get what you deserve, you get what you negotiate.”

Today, it is reported that more than 60,000,000 US employees are working under a mandatory arbitration arrangement for employment disputes. So, it is not uncommon.

[Note: Unions have their own dispute resolution procedures as part of their collective bargaining agreement. It often is based on arbitration or a form similar.]

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Beating the Apple Tax

The Apple Store (since 2008) and the Google Play Store (a few months later) exact a thirty percent tax on all transactions. That’s 30%! This is called the Apple Tax.

Image result for logo apple store

Folks who sell through the Apple and Google Play stores believe that is an obscenely high fee. Color your Big Red Car amongst those who hold that opinion. [Note: In this blog post, I will consider the interests and behavior of Apple/Google as one and the same for simplicity.]

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Delivery — A Super Power

I was looking at something related to Domino’s Pizza and a thought jumped into my brain. Over the last ten years, Domino’s (NYSE – DPZ) has been a great performer — as as stock. Look at what they have done. Most impressive. Pizza.

stock chart

They were the pioneers in pizza delivery. Today, they have 16,000 units and expect to add 2,350 additional units by 2028.

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Dollar General Revisited

As you know I am enamored with Dollar General — America’s neighborhood store. I wrote about them about nine months ago when their stock was at $107.84/share.

Dollar General, A Love Affair

Now, it is at $127.10 and they have announced an additional 900 stores to be opened in the 44 states in which they operate. This is an example of simple execution. Nothing more.

Image result for dollar general logo

Simple plan. Steady execution. Recognition and reward from Wall Street.

Dollar General’s chart looks excellent and it is likely to continue to grow in the same direction. Bravo!

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The Energy Source v The Energy Sink Theory of Life

Big Red Car here on a wet Austin By God Texas day. It is May, y’all, and it is time to contemplate the Memorial Day floods.

Here is a pic from the 1981 Memorial Day floods, my first personal intro to the phenomenon. This pic is taken at the bridge in front of Hut’s Hamburgers, home of some of the best burgers on the planet. There were car lots next to Shoal Creek and hundreds of cars ended up in the creek.

Image result for images austin texas memorial day floods

When you come to Austin, you are going to want to get a Hut’s Hamburger. Trust me on this. Get the hickory burger.

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Harry’s and the Subscription Wizard

In case you have not heard, Harry’s has been sold to Edgewell Personal Care Company in a $1,370,000,000 stock-and-cash deal.

Image result for harry's razors logo

The founders of Harry’s — Andy Katz-Matfield and Jeff Raider — will head up Edgewell’s US operations as co-presidents.

Edgewell is also the owner of Schick and Wilkinson shaving products and thus this is a strategic acquisition.

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Peter Drucker

The other day I was reading a blog in which a particular management methodology was discussed. It seemed noticeably similar to Peter Drucker’s concept of Management by Objectives contained in his excellent book, The Practice of Management (1954). It got me thinking about Peter Drucker.

Image result for images peter drucker

One of the phenomenon in business, particularly in the venture capital funded startup business world, is a complete lack of appreciation that businesses existed long before the invention of the personal computer or the Internet.

I often joke, “Your generation did not invent sex or business” by which I mean it is worthwhile to have knowledge of things from before the Internet.

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Managing Expectations and Messaging

I wish I were not using President Donald J Trump as an exemplar for part of my blog post, as it is not intended for a political discussion, but rather for the CEO and his/her slice of capitalism.

As a CEO, two of the elements of your company that can be (must be?) managed are expectations and messaging. They are intimately related.

As a CEO, you are converting a Vision into a Mission and creating Strategy, Tactics, Objectives in a framework of Values which define a Culture.

Click on this graphic to see it at larger scale. It shows how these things are related. There is both structure and process at work here.

I often find that CEOs are comforted when they are able to see how all of these concepts are related and work together. It proves up the structural elements of your rapidly evolving process.


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The Unions Come For Tech

Bit of a gray day out here in the ATX which is a great day to be viewing the bluebonnets. Bluebonnets do not belong to a union. If they did, they would require more rain, no?

Today, however, we speak of the unionization of tech companies. A pal of mine (tip of the hat to LE of the City of Brotherly Love) sent me an article announcing that the staff of Kickstarter is going to become members of the Office and Professional Employees International Union Local 153.

In announcing this bold step, the union had this to say:

Kickstarter United is proud to start the process of unionizing to safeguard and enrich Kickstarter’s charter commitments to creativity, equity, and a positive impact on society. We trust in the democratic process and are confident that the leadership of Kickstarter stands with us in that effort. Kickstarter has always been a trailblazer, and this is a pivotal moment for tech. We want to set the standard for the entire industry. Now is the time. Come together. Unionize.

Kickstarter is the first notable tech company to embrace the idea of a union, but in the last few years employees have begun to speak with a louder voice at some of the other companies on issues such as sexual harassment [talking to you, Uber] and selling technology to the Pentagon [talking to you, Amazon, Sales Force].

These louder voices are what has attracted OPEIU to come calling.

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You Are All Alone

Nice warm day in the ATX after a morning of rain. Ahh, On Earth as it is in Texas! It’s SXSW time in the ATX.

As a founder, entrepreneur, CEO there are times — most of the time — when you must rely solely upon yourself. You are all alone.

Even when you are a member of a team, at times you are all alone because you are the decider.

This is not a bad thing; it is just a thing. You can relax knowing that every other founder, entrepreneur, CEO has had the same feeling.

That feeling — when the butterflies in your gut become condors and they try to slice their way out with their sharp talons. Your stomach is an acid pit and your breath is like kerosene.

It is real, but you can handle it. Learning to rely upon your own judgment is critical.

I am not counseling you to ignore advice. Solicit advice, but know that sometimes, you will jump alone.

Here is a video of a stick of paratroopers (with equipment) getting ready to jump over White Sands as part of a training exercise. Every soldier who approaches that door is a member of a team, but when they jump they make that decision alone. You as a founder, entrepreneur, CEO will make that same decision.

You got this, trust me.

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