Monday, April 28, 2008

The Big Squeeze

Tom Ashbrook had the NY Times' Steven Greenhouse on OnPoint today to discuss Greenhouse's new book, The Big Squeeze: Tough Times for American Workers. It was an interesting discussion that is worth a listen.

It isn't hard to see that American capitalism is broken. We're extracting more at the top (a significantly greater percentage of income goes to the top one percent of earners than did 20 years ago) while retirement and health care coverage have become less secure. Income disparities are growing while social mobility is decreasing.

Markets can be wonderful but they are not perfect. I'm working on an essay on the myth of free markets and the unfortunate consequences of thinking that supply-and-demand are infallable and predictable forces, that unfettered competition is always beneficial, and that efficiency is always desireable. Watch this space for more soon. In the meantime, check out Greenhouse -- he's put together some compelling work.

Wednesday, April 23, 2008

Pod Report -- A Big "Ehhh"

I spent my first night at The Pod Hotel in New York last night. I was expecting something futuristic and so was a bit disappointed to find out that it was the old Pickwick Arms Hotel (a real hot pillow joint when I stayed there when I was just out of college and pinching pennies many years ago). It was trying hard to be cool on a budget -- sort of an Ikea hotel -- with the requisite (and annoying) dimly lit hallways and lounge music pumping throughout the property.

The room was small but no smaller than rooms I've had at the Paramount or Hudson Hotels. It was just fine given that I was only there to sleep. There was plenty of room to hang clothes and the desk was serviceable. There were plenty of outlets for recharging my various appliances.

The bed, however, was only OK. It was a far (and much firmer) stretch from the luxury beds at higher priced hotels and the pillows were spongy and cheap. But with a little help from Tylenol PM, I got a decent night's sleep. That was until my neighbors came home at 3:30 a.m. and I discovered how thin the walls are.

The bathroom is a feat of space conservation. In about the space of two phone booths they get all of the necessary equipment. Those with lots of product won't be happy with the small sink but I'm a low maintenance metrosexual so I was able to manage. It is best to visit here alone as it makes a great spacial difference to keep the bathroom door open. Otherwise it can feel like you are relieving yourself in a space capsule.

My biggest complaint is with the alarm clock. They tried to be hip -- it was an iPod docking station -- but I couldn't figure out how to set it. The time was wrong and there was no clear way to make things right.

The verdict: the Pod Hotel is not bad if you need a budget hotel, are traveling alone, and are OK with no food service, no mini bar, no business center, etc.

Tuesday, April 22, 2008

Going to the (Wine) Dogs

High on the list of business ideas I wish I'd thought of first is the Wine Dogs series of books and calendars. I encountered them recently when staying in Healdsburg, CA. -- The Winery Dogs of Sonoma County was an irresistable collection of handsome pooches who get to hang out at some of my favorite places (Wine Dogs and Winery Dogs are competitive series so perhaps there is hope for late entries).

Yes, despite the obvious sentimentality and blatant commercialism I plopped down $38 for a copy. But it was a gift.

What could be more fun than visiting wineries around the world and photographing cute K9s? I'm sure there's a fair amount of sampling the wares on a visit. The dogs from the book we met were all delightful. It might help if I was a photographer, but aside from that small consideration I'm sure I could have done this myself.

Once again, a day late and a Milk Bone late.

Monday, April 21, 2008

Enough Scranton, Already!

These words haven't passed my lips since I was nine years old and stuck in the back of a car on a tour of Civil War battlefields: "Is Pennsylvania over yet?!"

We're about 28 hours away from the finish of the endless Hillary/Barack slog through the Keystone State. Mud has been slung, working class roots have been preened and flaunted, gallons of sludgy diner coffee have been consumed, highways and backroads have been both crissed and crossed. And all that most of the electorate can say is "Isn't it time for you two to go bug Indiana?."

Note to Howard Dean: next time around, require the candidates to take a mandatory two week spa vacation when there is this much time between primaries. Wrap them in mud and seaweed so that all of the toxins can be sucked from their bodies. Then they won't be tempted to flail at each other as H and B have done over this last stretch.

Have there been any major new policy pronouncements? If there have, I've missed them between Obama being called an elitist (by a Wellesley grad, no less) and Hillary labeled a flip-flopper.

But they have discovered that in between Philadelphia to the east and Pittsburg to the west lies a great big state that acts a lot like Alabama. Don't go messin' with anybody's guns, Bibles, or bowlin' balls. You better drink draft beer and wear a flag in your lapel if you want to cut a stump with these folks.

Tomorrow, at long last, we'll see who can run with the big dogs. Most likely the margin of victory will be too narrow to make much of a difference and Pennslyvania will have endured all of this for naught.

Friday, April 18, 2008

The Dalai Lama on Happiness

From the Detroit Free Press:

Happiness: "I believe that the purpose of life is to be happy. From the moment of birth, every human being wants happiness and does not want suffering. Neither social conditioning nor education nor ideology affect this. From the very core of our being, we simply desire contentment. I don't know whether the universe, with its countless galaxies, stars and planets, has a deeper meaning or not, but at the very least, it is clear that we humans who live on this earth face the task of making a happy life for ourselves."

Thursday, April 17, 2008

Is It Time to Re-regulate the Airlines?

I wrote this while stuck in the Tucson airport last week. Today, the New York Times advanced a similar question.

Before you flame me with “regulation never works” rants, here me out.

The airline business is a mess. Everyone who flies or invests in it knows it. Customers are aggravated, employee morale is in the toilet, and carriers are into and out of bankruptcy as often four year olds running in and out of the back door on a hot summer day.

With high fuel prices, expensive labor agreements, and customers demanding low, low prices, it is incredibly difficult to make money as an airline. Carriers are charging for extra bags, reservation changes, seat changes, and anything else they can think of to generate revenue without raising prices. They are cutting costs wherever they can. In the process they are irritating everyone up and down the value chain.

And still they can’t generate a consistently acceptable rate of return for investors. The business is trapped in an alternate reality – or surreality, really.

What is needed is a chance for the industry to regain its footing. A period of stability when they can reexamine, and perhaps reinvent, their business models. A chance to inject some rationalism into the system. A viable, robust airline industry is in the interest of management, labor, investors, and customers – not to mention the other players in businesses that support the industry or that are dependent upon it (travel and tourism is just the most obvious). .

I believe that this is a challenge that markets alone cannot solve. Government, however, can stabilize the situation as they have tried to do recently in the financial markets. They can create a "time out" when everyone can take a much needed deep breath.

Here is what I propose:

Declaration of a 24-month period of reregulation (funny, MS Word declares this a non-word with “deregulation” as the first suggested alternative – it shows you how far we have gone toward complete laissez-faire) of the industry. This would need to be legislation with a rock solid, iron-clad termination date. No extensions would be possible. This is meant to be a time-out, not a new way of doing business, and the knowledge that open competition is only two years away should keep everyone’s game sharp.

During this period, fares would be set so s to provide airlines a modest but reliable rate of return based on cost-plus pricing (the old standard was 12% profit margin for flights at least 55% full according to the Times). We need to get customers used to paying at least the marginal cost-per-mile to fly. A reliable rate of return would be attractive at least to conservative investors and keep capital flowing into the industry. I advocate that rate of return be a rangeto encourage the airlines to find new ways to create value and keep a level of competition in the system.

Let’s say that the range is 7 – 17%. In return for the guarantee of 7%, the airlines would have to agree to give up anything more than 17%. Customer service standards would be part of the plan and those carriers that make customers happier would get to keep a greater percentage of their revenue. Customers would be financing this guarantee but we already pay the price for the sad state in which the industry finds itself.

All compensation would be frozen except for cost-of-living raises – that goes for the CEO as well as the flight attendant. And any stock options granted during this time would vest over five years. There should be no surprising giant paydays during this period.

The government would convene a group of industry experts to put together the details of a proper framework. I’d give them 90 days to figure it out. If they didn’t have it ready, I’d sequester them in a cheap motel at the end of a runway somewhere to provide the extra incentive to get them to finish their work. .

Things are unsustainable the way they are now. It’s time to take a hard look at any and all alternatives the might save this industry from itself.

Thursday, April 10, 2008

The Future of Magazines

The always amusing New York Observer recently featured its magazine issue – a surefire way to sell copies in media-crazed Manhattan. Among the articles was a piece with several prominent editors like Wired's Chris Anderson and Esquire's David Granger about the future of magazines. Their conclusion: not much is changing except perhaps the technology that constitutes the flipable page. Vanity Fair’s Graydon Carter had visions of a flexible plastic screen to which magazines could be beamed that I’m sure I saw in Popular Mechanics 10 years ago.

But beyond the speculation about various whatsamagoogies that might make paper irrelevant, the rest of what constitutes a magazine will have the stability of the molecular structure of water. Long-form article? Here to stay. Glossy ads? Ditto. The magazine, you see, is well loved by millions and so is largely immune from the forces ravaging newspapers. At least according to these editors.

I am an old magazine guy myself. I’ve worked for them and been published in them. I love to read them. Magazines are like that old love you can’t help thinking about every once in awhile even though you are happily married and doing well, thank you very much. If I’m sitting with a buddy at a bar and the conversation turns to what we’d be doing if we weren’t doing what we are doing now, starting a magazine will always be at or near the top of myself. That will be met with a chuckle and a snappy retort along the lines of “Right, and maybe you’ll be Hillary Swank’s date to the Oscars next year, too.”

For as much as millions of us are in love with magazines, almost all of us know that the magazine business is right up there with buying a boat as a sure way to be relieved of a lot of money in a hurry. And there are lot more zeroes involved with a magazine.

The shift that these editors seem to have missed, as gauzy eyed infatuateurs might be expected to, is that the magazine is no longer the entity that matters. It is but one of many delivery vehicles for content in a world in which the audience likes to dictate its preferred channels for communication.

Vanity Fair – I’ll continue to continue to pick on Mr. Carter as I’m a happy and loyal subscriber -- is content that embodies and expresses a certain perspective on the world to readers who are intrigued, entertained, and engaged by that perspective. That it happens to occur on glossy paper is largely a result of the time at which it was relaunched.

Who gets this shift? The unsinkable Martha Stewart and Martha Stewart Omnimedia. Note that it is omnimedia. That may reflect her deep-seated desire to be the ruler of all she surveys, but is more likely a realization that you have to be able to deliver the goods to your audience in as many ways as they want to get them. One can no longer be a magazine with a web site (or a web site with a magazine for that matter). Martha’s presence on radio and television, in magazines, and on-line are extensions of a singular editorial point of view. There are experts at Omnimedia who know all about how to put out a great magazine, but they are counterbalanced by experts in flowers, cooking, and crafting who know how to best leverage all of their media options for maximum impact. Each piece is integral to the whole, not a second-tier appendage to a mothership medium.

Who else gets it? That other diva of the daytime, Oprah. She has branched out into multiple media and even pushes the envelope even farther than Martha. Who is trying to create the world’s largest online classroom? It ain’t Harvard, it’s Oprah.

Are magazines here to stay? I hope so and think that as long as there is a desire to curl up on the couch on a rainy day, read at the beach, tear out a cartoon to stick on the fridge, catch up on the news when all electronic devices must be switched off, and for a hundred other reasons, traditional print media will continue to exist. They’ll just occupy a very different part of the value chain for readers, editors, and publishers alike.

Sunday, April 6, 2008

Airline Mergers

I posted a question on LinkedIn that asked if people saw any potential benefit to the proposed airline mergers that have been drifting about lately. It generated a flurry of responses.

Aside from one person associated with the industry who saw benefits for customers, employees, and investors alike, everyone was pretty vitriolic that there would be no benefits at all. I agree with the voice of the crowd.

The research with which I am familiar shows that 60 - 70% of all mergers fail to deliver any shareholder value over time. In a struggling industry where the mergers are combinations of operationally and profitability challenged players, I would say that the odds are lower still. Some, however, disagree.

As a frequent flyer, I haven't seen anything make the flying experience better in some time. Worse still, there doesn't seem to be much effort being exerted by the airlines. It seems more like they are putting up with customers (especially in coach) rather than trying to satisfy them. Airplanes are more crowded, staff is more stressed, and the amenities ever fewer. The latest report on customer satisfaction with U.S. airlines is due out tomorrow and was previewed on Good Morning America today.

I am on the US Air shuttle between Boston and New York or Washington on a regular basis. Once US Air merged with America West, the only change I saw was fewer options available at the automated kiosks. It became harder and took longer to check in. And have you tried to use your miles to get a flight lately? Don't get me started.

Now that all of the majors seem to be edging closer to the M&A dance floor, there could be a significant impact on a number of routes.

The rumour mill has quieted a bit in recent weeks but don't expect it to stay that way.

What do you think? Will the mergers, should they come to pass, benefit or hurt passengers?

Wednesday, April 2, 2008

Important Bird Areas

I went to an interesting fund raiser for the Massachusetts Audubon Society last evening. It was held to highlight the important bird area program (in Massachusetts and globally). The important bird area program, or IBA -- even birders aren't immune to the three-letter anagram disease -- puts forth a simple proposistion: there are certain places more critical to the survival of birds than others and those should be prioritized for conservation.

What I liked most about this event was that there was no glitz, no society photograhers, no air kisses. The people there wanted to be there, cared about birds and the environment, and were having a good time. There were many generous donations of items for the silent auction and raffle prizes (thanks to Blackstone's of Beacon Hill for organizing the evening).

Ray Brown, host of Ray Brown's Talkin' Birds on WATD-FM (and streaming on-line) hosted a panel Q&A session but that was about as serious as the content got. But there was plenty of talk of osprey and finches and even robins.

I like, too, the idea of designating areas as important. Development deals trade open space parcels as if all land has equal value as habitat (or with no concern about its value as habitat). Towns preserve land the land that is available (and lots of preservation is at this micro level). Our ecosystems are vast and complex, and we've only scratched the surface in understanding the interdependencies. Migratory species like birds cross continents, time zones, and political boundaries without a second thought -- their survival depends upon it.

A recent NY Times Op-Ed pointed out that many of our everyday shopping choices can have an impact on the health of migratory bird species.

We need to look at habitat and species preservation at the scale and scope at which they function. The designation of important bird areas will help different counties, states, and countries coordinate efforts and focus on the most critical projects. They may also help raise the awareness that we are but one part of the web of life and that we, too, require healthy, vibrant, varied habitat for our own survival.