How Toy Crazes Are Born - This article I found very interesting, it is about how toy crazes come about and how collectible toys are created. Some important points gleaned from the article:
1) Collectible toys are engineered to make children crave them in massive numbers
2) If aimed at girls, girls love highly-detailed objects
3) To stoke demand, purposely produce some toys in small numbers and also limit distribution to only certain retailers (Beanie Babies were limited solely to small toy stores); also, parents may have a bone to pick with these methods
4) The urge to collect, sort, and categorize things is actually part of a child's natural cognitive development...at about age six, children will start hoarding categories of things...from the ages of three to six, children like to classify and collect objects by size, color, and shape; from the ages to five to seven, boys and girls alike tend to aim for quantity, competing to see who has more
5) Collectibles are designed to be cute, numerous (lots of characters), affordable, and just rare enough
Friday, December 31, 2010
Monday, December 27, 2010
Two Quick Things On Fragmented Industries
1) Not all fragmented industries can be consolidated. With some industries, forming a large company in fact could actually be a detriment to keeping costs down (as opposed to being able to create efficiencies and economies of scale with a large company). Some examples could be the furniture industry or the concrete block manufacturing industry (concrete blocks are expensive to transport and easy to make locally, so a large organization probably wouldn't provide much advantage).
2) The term "fragmented" can be a bit misleading, depending on the size of the industry. An industry can be so large, that it is really made up of a bunch of smaller sub-industries which themselves are in fact very concentrated. For example, the plastics and rubber industry. As a whole, the $200 billion rubber and plastic product manufacturing industry is fragmented into hundreds of niches, but individually, each of those niches can be pretty concentrated. For example, tire manufacturing, a $15 billion industry, is very concentrated.
One could also look at the locks industry. Globally, the locks industry is fragmented, and in Asia, it is still fragemented, however in most of the developed countries, within each country, the industry is fairly concentrated.
2) The term "fragmented" can be a bit misleading, depending on the size of the industry. An industry can be so large, that it is really made up of a bunch of smaller sub-industries which themselves are in fact very concentrated. For example, the plastics and rubber industry. As a whole, the $200 billion rubber and plastic product manufacturing industry is fragmented into hundreds of niches, but individually, each of those niches can be pretty concentrated. For example, tire manufacturing, a $15 billion industry, is very concentrated.
One could also look at the locks industry. Globally, the locks industry is fragmented, and in Asia, it is still fragemented, however in most of the developed countries, within each country, the industry is fairly concentrated.
Two Business Tips
So I was doing some random Googling and stumbled across two good points for when building a conglomerate that consists of multiple companies operating under a single holding company:
1) Create an employee stock-ownership program so that the individual member companies operating under the holding company have a financial stake in the performance of the holding company; this will incentivize the management to adopt an entrepreneurial approach to running their companies.
2) Decentralization as opposed to centralized management. Basically let the member companies operate as independent subsidiaries (this is also what I had theorized about earlier, as obviously a conglomerate where everything is run with a top-down management style would probably be sluggish and bureaucratic).
1) Create an employee stock-ownership program so that the individual member companies operating under the holding company have a financial stake in the performance of the holding company; this will incentivize the management to adopt an entrepreneurial approach to running their companies.
2) Decentralization as opposed to centralized management. Basically let the member companies operate as independent subsidiaries (this is also what I had theorized about earlier, as obviously a conglomerate where everything is run with a top-down management style would probably be sluggish and bureaucratic).
Fragmented Industries
So I've decided to make a list of the fragmented industries I know of off of the top of my head. These are industries with potential for entrepreneurs to build companies in:
1) Automotive parts retailing
2) Tire dealer retailing
3) Plumbing products distribution
4) Food service equipment manufacture
5) Food service distribution (this industry I'm not quite sure of; sources say it is "concentrated," but I've also read that it's fragmented as well; it's also very large ($125 billion)
6) Sporting goods retail
7) Used auto parts
8) Commercial printing
9) Packaging
10) Interconnect technologies industry
11) Specialized contracting services (Quanta Services is an example)
12) Engineering services
13) Industrial cleaning products
14) Trucking
15) Non-food pet products
16) Specialty automotive aftermarket equipment
17) Jewelry retail
18) Business services
19) Real-estate
20) Hotel and lodging
21) Pool supply distribution industry
22) Niche consumer products (look to Jarden Corporation and Spectrum Brands)
23) Fluid control equipment (which consists of pumps, valves, and seals, each of which is a fragmented industry unto itself)
24) Sensors
25) Embedded computing/industrial computers
26) Printed circuit boards
27) Pool products (as in the hardware, such as pumps, filters, etc...for swimming pools)
28) Filters
29) Thermal management technologies
30) Life sciences tools and equipment
31) Beer distribution
32) Steel service center distribution
33) HVAC/R (Heating-Ventilation-Air Conditioning/Refrigeration) distribution
34) Clinical diagnostics testing industry
35) Used auto parts
1) Automotive parts retailing
2) Tire dealer retailing
3) Plumbing products distribution
4) Food service equipment manufacture
5) Food service distribution (this industry I'm not quite sure of; sources say it is "concentrated," but I've also read that it's fragmented as well; it's also very large ($125 billion)
6) Sporting goods retail
7) Used auto parts
8) Commercial printing
9) Packaging
10) Interconnect technologies industry
11) Specialized contracting services (Quanta Services is an example)
12) Engineering services
13) Industrial cleaning products
14) Trucking
15) Non-food pet products
16) Specialty automotive aftermarket equipment
17) Jewelry retail
18) Business services
19) Real-estate
20) Hotel and lodging
21) Pool supply distribution industry
22) Niche consumer products (look to Jarden Corporation and Spectrum Brands)
23) Fluid control equipment (which consists of pumps, valves, and seals, each of which is a fragmented industry unto itself)
24) Sensors
25) Embedded computing/industrial computers
26) Printed circuit boards
27) Pool products (as in the hardware, such as pumps, filters, etc...for swimming pools)
28) Filters
29) Thermal management technologies
30) Life sciences tools and equipment
31) Beer distribution
32) Steel service center distribution
33) HVAC/R (Heating-Ventilation-Air Conditioning/Refrigeration) distribution
34) Clinical diagnostics testing industry
35) Used auto parts
Wednesday, December 22, 2010
Create Multiple Small Businesses to Start...?
One big problem for entrepreneurs who dream of building a large business can be exactly how to acquire the capital needed to start the business in the first place. One possible solution I have read is to start off by building multiple small businesses first. Basically, you start or acquire a small business, build it up some, systemize it, and hire a good manager to run it, then you start or acquire another small business and repeat the process.
By doing this, you could theoretically get a passive income of around $300K or higher from your small businesses. This in itself is very decent money for most people, but the important part is that it then gives you money to blow on getting your bigger projects off the ground. If you continue to live on say $50K a year with an income of $300K or higher, you will be able to live comfortably while at the same time have a lot of excess money to spend on getting your business that you are intending to grow to a large size going.
By doing this, you could theoretically get a passive income of around $300K or higher from your small businesses. This in itself is very decent money for most people, but the important part is that it then gives you money to blow on getting your bigger projects off the ground. If you continue to live on say $50K a year with an income of $300K or higher, you will be able to live comfortably while at the same time have a lot of excess money to spend on getting your business that you are intending to grow to a large size going.
Cut Costs and Marketing Or Increase Product Quality and Marketing?
So one of the things I have read some businesspeople say is that, in tough times, in order to attract and retain customers, one should not cut costs, which cuts product quality, nor cut marketing, which is one of the first things to get cut oftentimes. They say that if you focus solely on Revenue! Revenue! Revenue!, you'll hurt the company. Instead, you must ask yourself, "What can we do to make people willing to pay for the product?" They say marketing should not be cut, but instead perhaps even increased because it is vitally important for consumers to remain aware of your products/services, especially if other companies are cutting back on marketing. One point made is that this can endear consumers to your company for years, as they become aware of your company's products/services because of the increased marketing, and also very aware of the very good quality, especially in a time when quality from other companies was dropping.
An example of the cutting on costs could be could be how a submarine sandwich chain might cut back on the amount of meat in the standwiches in order to save money. However, this then also makes the product quality decline. The alternative idea is to increase (or at least maintain) marketing and increase the product quality, or maintain the product quality, while offering some really premium products, and marketing them well to consumers. This may hit profits in the short-term, but longer-term, could increase them. So for example, increase the meat in the sandwiches, or maintain the level of meat in the regular offerings, and offer some really meaty premium offerings. People will pay a premium, but get really superior quality.
This happened with Burger King in their experiment with offering expensive pork ribs in the middle of the recession. People bought them up so fast that Burger King began running out. What this showed is that, despite the recession, people are willing to pay a premium if the product has very good quality. How universal this is, I do not know however. A quick Google search for "increase marketing recession" yields a lot of results on this subject. I Googled "increase product quality recession" and "increase quality recession" but there does not seem to be as much on these.
In addition to increasing marketing, one could also instead focus on finding ways to increase marketing effectiveness, as opposed to just blanket increasing the marketing budget. This can give the best of both worlds if done correctly I'd imagine (more effective marketing for the same price!).
An example of the cutting on costs could be could be how a submarine sandwich chain might cut back on the amount of meat in the standwiches in order to save money. However, this then also makes the product quality decline. The alternative idea is to increase (or at least maintain) marketing and increase the product quality, or maintain the product quality, while offering some really premium products, and marketing them well to consumers. This may hit profits in the short-term, but longer-term, could increase them. So for example, increase the meat in the sandwiches, or maintain the level of meat in the regular offerings, and offer some really meaty premium offerings. People will pay a premium, but get really superior quality.
This happened with Burger King in their experiment with offering expensive pork ribs in the middle of the recession. People bought them up so fast that Burger King began running out. What this showed is that, despite the recession, people are willing to pay a premium if the product has very good quality. How universal this is, I do not know however. A quick Google search for "increase marketing recession" yields a lot of results on this subject. I Googled "increase product quality recession" and "increase quality recession" but there does not seem to be as much on these.
In addition to increasing marketing, one could also instead focus on finding ways to increase marketing effectiveness, as opposed to just blanket increasing the marketing budget. This can give the best of both worlds if done correctly I'd imagine (more effective marketing for the same price!).
Two Ways to Do Mergers and Acquisitions?
So I've been thinking, aside from graduating from a good MBA school and going to work as an investment banker or for a private equity firm, I figure there are two ways to do mergers and acquisitions. Actually, it's more one way, but two different methods of doing it. Basically, by building companies in relatively fragmented industries. You start with a central company, build it up some, then begin to make mergers and acquisitions of other companies in the industry. As you make the acquisitions, you then work to make the whole operation more efficient (say all the acquired companies have their own accounting, financial, etc..departments, so you centralize these types of functions so all companies use the same financial, accounting, etc...departments, which streamlines operations for the firm).
Now as I see it, there are two different ways to go about building companies via mergers and acquisitions. One is via taking the core company public in order to acess the capital markets, and then using the stock in order to begin making strategic acquisitions in order to grow the company. The second is via starting your own private equity firm and using the money investors have entrusted with you in order to build the portfolio companies you have acquired.
Not being a person who likes to be bossed around, the first one I am very unsure of, because once you become CEO of a publicly-traded company, you are now responsible for a huge amount of the public's money, and thus must constantly answer to stock analysts, shareholders, a board of directors, and so forth. And you likely will also have to focus on increasing the quarterly profits, which means focusing on the short-term, instead of the long-term. None of this sounds attractive to me. Instead of remaining an entrepreneur, you become a corporate bureaucrat (or you can become one).
The alternative model is the private equity fund. In this model, you do have to answer to investors, but it is a lot more private than with a publicly-traded corporation. You do not have to answer to shareholders, worry about stock analysts, and so forth. You can focus on taking a long-term view for the business you are growing. In fact, this is one of the primary benefits and purposes of private equity firms: to take publicly-traded companies that can be in dire straits, bring them under what is a form of private ownership, and then allow the management to focus on creating long-term value and growth for the company so that it can recover, then the private equity firm can either sell the company, or they can take it public via an IPO, or they can hold onto it as well.
One of the things private equity funds/firms have been doing as of late is consolidating fragmented industries, basically buying a company and then making a bunch of acquisitions (or even buying a group of companies and "rolling them up" into a single firm). So private equity is definitely an alternative way to pursue building companies via mergers and acquisitions. An entrepreneur can do it via the publicly-traded model, or via the private equity model if they are able to start their own private equity firm through which they can then do this.
The private equity model is by no means a guarantee such investments will work however (or the publicly-traded model), as there have been some private equity disasters as well.
Now as I see it, there are two different ways to go about building companies via mergers and acquisitions. One is via taking the core company public in order to acess the capital markets, and then using the stock in order to begin making strategic acquisitions in order to grow the company. The second is via starting your own private equity firm and using the money investors have entrusted with you in order to build the portfolio companies you have acquired.
Not being a person who likes to be bossed around, the first one I am very unsure of, because once you become CEO of a publicly-traded company, you are now responsible for a huge amount of the public's money, and thus must constantly answer to stock analysts, shareholders, a board of directors, and so forth. And you likely will also have to focus on increasing the quarterly profits, which means focusing on the short-term, instead of the long-term. None of this sounds attractive to me. Instead of remaining an entrepreneur, you become a corporate bureaucrat (or you can become one).
The alternative model is the private equity fund. In this model, you do have to answer to investors, but it is a lot more private than with a publicly-traded corporation. You do not have to answer to shareholders, worry about stock analysts, and so forth. You can focus on taking a long-term view for the business you are growing. In fact, this is one of the primary benefits and purposes of private equity firms: to take publicly-traded companies that can be in dire straits, bring them under what is a form of private ownership, and then allow the management to focus on creating long-term value and growth for the company so that it can recover, then the private equity firm can either sell the company, or they can take it public via an IPO, or they can hold onto it as well.
One of the things private equity funds/firms have been doing as of late is consolidating fragmented industries, basically buying a company and then making a bunch of acquisitions (or even buying a group of companies and "rolling them up" into a single firm). So private equity is definitely an alternative way to pursue building companies via mergers and acquisitions. An entrepreneur can do it via the publicly-traded model, or via the private equity model if they are able to start their own private equity firm through which they can then do this.
The private equity model is by no means a guarantee such investments will work however (or the publicly-traded model), as there have been some private equity disasters as well.
Tuesday, December 21, 2010
Create a Toy Company
So one particular type of company I would like to create, for the fun of it, is a toy and model hobbies company. The toy industry is very consolidated and very tough, however, but the toys I would like my company to make are the following:
1) A fashion-doll brand
2) Little-kid toys (for example, a competitor to Little Tikes, Step2, Fisher-Price, and so forth)
3) Die-cast toys
4) Radio-control toys
5) Japanese-themed brand
Fashion Dolls
The fashion doll industry went through a real re-awakening when MGA came out with the Bratz doll brand in 2001. Prior to that, Barbie had been THE undisputed champion of the fashion doll world, and no one could touch her. Anytime any company tried coming out with a doll brand to take on Barbie, they were met with an even more upscale, updated, and cooler Barbie and thus crushed.
MGA took a completely different path with the creation of the Bratz. Unlike Barbie, which is a fashion doll brand based around a central lead character (Barbie), Bratz are a fashion-doll brand that is not based on any particular character. Instead, the brand, "Bratz," was based on a group of characters, a very hip, urban, edgy, and multiethnic group of characters at that.
Thus Barbie found itself up against a completely new type of doll opponent. This was not a doll brand based on one central character competing with Barbie, it was Barbie, one character, competing against a brand of dolls that created up to forty different characters.
Worse, at the time, Mattel had let the Barbie brand slack off a bit. Barbie toys utilized more cheap materials, for example the handbag of a Barbie doll was a solid piece of plastic, whereas with a Bratz doll, you got a handbag made with real cloth and fabric. Being that the Barbie brand is something like one-third of Mattel's revenue, one can imagine what this led to.
Well, first, Mattel panicked. They watched helplessly as Barbie sales plunged, and Bratz sales surged. The toy industry watched with very keen interest as this upstart company, MGA Entertainment, knocked Barbie off her perch and sent Mattel into a scramble. Mattel responded by trying to copy the Bratz brand. This resulted initially was a failure, with the dolls called "Flava." Mattel now has a version of Barbie out called "My Scene," which is a more hip version of Barbie. They also sued MGA, claiming that the guy who designed the Bratz brand, Carter Bryant, had been working at Mattel when he came up with the idea, and then went to work for MGA, who then developed the Bratz brand.
Mattel was not successful in stopping the Bratz brand thus far, but they came very close, and really damaged the brand for MGA. MGA, upon thinking it might lose Bratz, responded by coming out with a new doll, called Moxie Girlz. One thing I have always wondered personally is whether Isaac Larian, upon seeing the Bratz idea, ever bothered to ask Mr. Bryant whether or not he had created the idea while working at Mattel. I mean that seriously. If I was owner of a toy company, and had hired on a guy who had previously worked at another company, in particular a company like Mattel, one of the first things I would have asked, just to be on the safe side, was, "You didn't design this doll while working at Mattel right?" And if he'd said, "Well yes, technically..." I'd have said, "I can't use it. If it is successful enough, Mattel could sue and try to claim it is their brand. I don't want to run that risk, or headache."
I have no idea whether Larian bothered to ask Bryant if he had come up with the Bratz concept while working at Mattel or not though. In an interview done some years ago, when asked about the Mattel lawsuit, Larian said (paraphrasing), "They can't win. It would be like if I were to say I could get into my car and drive to Mars. They can't win." The thing is, they almost DID win, which would tell me Larian must have really though Bryant did not design the doll while at Mattel. So who knows what the full details were.
Irregardless of all this, MGA did reform the fashion doll industry. The Bratz dolls, controversial as they were, personally I think had some AMAZING fashions. They really made Barbie look ridiculous. In addition, they changed the whole dynamic for how to create a fashion doll brand. No longer must a fashion doll brand be based around one single doll, but instead can be a brand based around a whole group of different doll characters. What's amazing to think about is that initially, Isaac Larian was told the idea would never work. No one would buy a multi-ethnic fashion doll brand based around multiple characters (HA!), and he was told that the success of the brand would not last when Bratz began becoming extremely successful. In this, they were inadverdently right, but only because of Mattel's lawsuit. It would be very interesting to see the position of Bratz right now had the lawsuit never occured.
Some people may point out that Barbie had multiethnic dolls as well, but with these, it was usually Barbie, the white girl, with her multiethnic sidekicks, whereas with Bratz, there was no central character. There also were no specific ethnicities. Bratz did not have a "white doll," a "black doll," a "Hispanic doll," etc...the dolls were different colors and girls could identify with whatever doll they thought best fit them.
Several lessons one could probably learn with regards to creation of a multiethnic fashion doll brand are thus, no specific ethnicities, just different colored dolls, and no central lead character.
Getting back to the point of how Bratz changed the dynamic of the fashion doll industry, as a result, there is now a slew of mutli-character fashion doll brands being created: there are Bratz dolls still, Moxie Girlz, Spinmaster's Liv dolls, Mattel's new Monster High brand, and probably a few others I do not know about.
My goal for my company is to create another brand of fashion dolls. I would like to revive the hip fashions and concepts that had initially made the Bratz so popular, which seem to have been given up as of late by brands such as Liv and Moxie Girls, and the new Bratz, due to complaints by parents and I suppose also the recession.
However, I am a firm believer that one could create fantastic eye-catching fashions without creating sexually-provocative dolls. It would be tricky, but I think it is doable. I would like the dolls to be focused on empowering girls as well. They (the characters) can love shopping and fashion, but also be into learning and education as well.
Kiddie Toys
This would be a brand meant to compete with Little Tikes, Step2, and so forth. I think creating such a company is very doable. It can make dolls, electronics, radio-control, and other such products.
Die-Cast Toys and Radio Control
One of the most innovative die-cast companies I have seen is Jada Toys. They, like Bratz, came on the toy seen and rocked their industry with really hip, quality, die-cast vehicles. Their die-cast cars focused on the collector's market and the custom vehicle industry. They got a licensing agreement with the DUB brand, which turned out to be a huge hit. One can also imagine how the Fast and the Furious movie series helped popularize the custom car market for their products as well. I would like to create very quality die-cast vehicles based off of the custom vehicle industry as well.
In terms of radio-control, radio-control toy companies are Mattel's Tyco brand, the Nikko brand, and a few others I am not thinking of. I intend to create a quality, very cool and innovative radio-control toy brand.
Model Hobbies
This group will likely consist of multiple brands, and will make model trains, hobby-grade radio-controlled aircraft (airplanes and helicopters), die-cast models, plastic model kits, and hobby-grade radio-controlled vehicles, both kits and RTR (Ready-to-Run). The really hip company in the hobby-grade RC vehicle industry I think is Traxxas. They pioneered the concept of RTR, and they are currently the leader in the RC vehicle industry. Their branding and marketing, in addition to the quality of their products, I think is absolutely top-notch (take a look at their website here: http://www.traxxas.com/).
Japanese-Themed Brand
Well with the success of Pokemon, Digimon, and now Spinmaster's Bakugan brand and the Beyblade brand, why not? Also anime is cool! I would like my company to thus create a cool Japanese-themed toy brand as well. Bakugan I believe was developed in conjunction with SEGA. Jakks-Pacific is currently seeking to create a new Japanese-themed brand as well. Theirs will be called Monsuno. Upon Googling it, it actually looks pretty cool.
Jakks-Pacific for years has been a producer of children's consumer products and of toys for brands created by other entities. However, now they are getting into creating their own content. And IMO, more power to them.
CNBTNOEHTOY
That stands for "Cool New Brand That No One Else Has Thought Of Yet" :D I don't know what it will be, but I'll definitely be trying to think one up.
1) A fashion-doll brand
2) Little-kid toys (for example, a competitor to Little Tikes, Step2, Fisher-Price, and so forth)
3) Die-cast toys
4) Radio-control toys
5) Japanese-themed brand
Fashion Dolls
The fashion doll industry went through a real re-awakening when MGA came out with the Bratz doll brand in 2001. Prior to that, Barbie had been THE undisputed champion of the fashion doll world, and no one could touch her. Anytime any company tried coming out with a doll brand to take on Barbie, they were met with an even more upscale, updated, and cooler Barbie and thus crushed.
MGA took a completely different path with the creation of the Bratz. Unlike Barbie, which is a fashion doll brand based around a central lead character (Barbie), Bratz are a fashion-doll brand that is not based on any particular character. Instead, the brand, "Bratz," was based on a group of characters, a very hip, urban, edgy, and multiethnic group of characters at that.
Thus Barbie found itself up against a completely new type of doll opponent. This was not a doll brand based on one central character competing with Barbie, it was Barbie, one character, competing against a brand of dolls that created up to forty different characters.
Worse, at the time, Mattel had let the Barbie brand slack off a bit. Barbie toys utilized more cheap materials, for example the handbag of a Barbie doll was a solid piece of plastic, whereas with a Bratz doll, you got a handbag made with real cloth and fabric. Being that the Barbie brand is something like one-third of Mattel's revenue, one can imagine what this led to.
Well, first, Mattel panicked. They watched helplessly as Barbie sales plunged, and Bratz sales surged. The toy industry watched with very keen interest as this upstart company, MGA Entertainment, knocked Barbie off her perch and sent Mattel into a scramble. Mattel responded by trying to copy the Bratz brand. This resulted initially was a failure, with the dolls called "Flava." Mattel now has a version of Barbie out called "My Scene," which is a more hip version of Barbie. They also sued MGA, claiming that the guy who designed the Bratz brand, Carter Bryant, had been working at Mattel when he came up with the idea, and then went to work for MGA, who then developed the Bratz brand.
Mattel was not successful in stopping the Bratz brand thus far, but they came very close, and really damaged the brand for MGA. MGA, upon thinking it might lose Bratz, responded by coming out with a new doll, called Moxie Girlz. One thing I have always wondered personally is whether Isaac Larian, upon seeing the Bratz idea, ever bothered to ask Mr. Bryant whether or not he had created the idea while working at Mattel. I mean that seriously. If I was owner of a toy company, and had hired on a guy who had previously worked at another company, in particular a company like Mattel, one of the first things I would have asked, just to be on the safe side, was, "You didn't design this doll while working at Mattel right?" And if he'd said, "Well yes, technically..." I'd have said, "I can't use it. If it is successful enough, Mattel could sue and try to claim it is their brand. I don't want to run that risk, or headache."
I have no idea whether Larian bothered to ask Bryant if he had come up with the Bratz concept while working at Mattel or not though. In an interview done some years ago, when asked about the Mattel lawsuit, Larian said (paraphrasing), "They can't win. It would be like if I were to say I could get into my car and drive to Mars. They can't win." The thing is, they almost DID win, which would tell me Larian must have really though Bryant did not design the doll while at Mattel. So who knows what the full details were.
Irregardless of all this, MGA did reform the fashion doll industry. The Bratz dolls, controversial as they were, personally I think had some AMAZING fashions. They really made Barbie look ridiculous. In addition, they changed the whole dynamic for how to create a fashion doll brand. No longer must a fashion doll brand be based around one single doll, but instead can be a brand based around a whole group of different doll characters. What's amazing to think about is that initially, Isaac Larian was told the idea would never work. No one would buy a multi-ethnic fashion doll brand based around multiple characters (HA!), and he was told that the success of the brand would not last when Bratz began becoming extremely successful. In this, they were inadverdently right, but only because of Mattel's lawsuit. It would be very interesting to see the position of Bratz right now had the lawsuit never occured.
Some people may point out that Barbie had multiethnic dolls as well, but with these, it was usually Barbie, the white girl, with her multiethnic sidekicks, whereas with Bratz, there was no central character. There also were no specific ethnicities. Bratz did not have a "white doll," a "black doll," a "Hispanic doll," etc...the dolls were different colors and girls could identify with whatever doll they thought best fit them.
Several lessons one could probably learn with regards to creation of a multiethnic fashion doll brand are thus, no specific ethnicities, just different colored dolls, and no central lead character.
Getting back to the point of how Bratz changed the dynamic of the fashion doll industry, as a result, there is now a slew of mutli-character fashion doll brands being created: there are Bratz dolls still, Moxie Girlz, Spinmaster's Liv dolls, Mattel's new Monster High brand, and probably a few others I do not know about.
My goal for my company is to create another brand of fashion dolls. I would like to revive the hip fashions and concepts that had initially made the Bratz so popular, which seem to have been given up as of late by brands such as Liv and Moxie Girls, and the new Bratz, due to complaints by parents and I suppose also the recession.
However, I am a firm believer that one could create fantastic eye-catching fashions without creating sexually-provocative dolls. It would be tricky, but I think it is doable. I would like the dolls to be focused on empowering girls as well. They (the characters) can love shopping and fashion, but also be into learning and education as well.
Kiddie Toys
This would be a brand meant to compete with Little Tikes, Step2, and so forth. I think creating such a company is very doable. It can make dolls, electronics, radio-control, and other such products.
Die-Cast Toys and Radio Control
One of the most innovative die-cast companies I have seen is Jada Toys. They, like Bratz, came on the toy seen and rocked their industry with really hip, quality, die-cast vehicles. Their die-cast cars focused on the collector's market and the custom vehicle industry. They got a licensing agreement with the DUB brand, which turned out to be a huge hit. One can also imagine how the Fast and the Furious movie series helped popularize the custom car market for their products as well. I would like to create very quality die-cast vehicles based off of the custom vehicle industry as well.
In terms of radio-control, radio-control toy companies are Mattel's Tyco brand, the Nikko brand, and a few others I am not thinking of. I intend to create a quality, very cool and innovative radio-control toy brand.
Model Hobbies
This group will likely consist of multiple brands, and will make model trains, hobby-grade radio-controlled aircraft (airplanes and helicopters), die-cast models, plastic model kits, and hobby-grade radio-controlled vehicles, both kits and RTR (Ready-to-Run). The really hip company in the hobby-grade RC vehicle industry I think is Traxxas. They pioneered the concept of RTR, and they are currently the leader in the RC vehicle industry. Their branding and marketing, in addition to the quality of their products, I think is absolutely top-notch (take a look at their website here: http://www.traxxas.com/).
Japanese-Themed Brand
Well with the success of Pokemon, Digimon, and now Spinmaster's Bakugan brand and the Beyblade brand, why not? Also anime is cool! I would like my company to thus create a cool Japanese-themed toy brand as well. Bakugan I believe was developed in conjunction with SEGA. Jakks-Pacific is currently seeking to create a new Japanese-themed brand as well. Theirs will be called Monsuno. Upon Googling it, it actually looks pretty cool.
Jakks-Pacific for years has been a producer of children's consumer products and of toys for brands created by other entities. However, now they are getting into creating their own content. And IMO, more power to them.
CNBTNOEHTOY
That stands for "Cool New Brand That No One Else Has Thought Of Yet" :D I don't know what it will be, but I'll definitely be trying to think one up.
Why the American Economy Boomed After World War II
One of the arguments often put forward by the proponents of massive government stimulus spending as a solution to our economic malaise right now, is that when World War II occurred, the massive level of spending the government engaged in is what created the necessary stimulus to pull the U.S. economy out of the depression it was in (the U.S. economy ran something like a deficit that was 40% of GDP during the war). After the war, the American economy experienced a phenomenal level of economic growth. Their argument thus is that if we engage in deficit spending on a similar scale, that we will see a similar turn around and level of economic growth again. I have a few problems with this argument.
Being a non-economist, my points for skepticism regarding this argument would be the following:
1) World War II itself, in terms of the amount of money spend on research and development regarding engineering and science, and in terms of the industrial base that was built up in America as a result of the war.
2) After World War II, most every other industrialized nation in the world was bombed out and rebuilding. The United States literally had no competition economically. In addition, some nations adopted socialist methods, which hamstrung their economies. Under the Labour Party, the United Kingdom for example nationalized the mines, the railroads, and so forth (which proved disastrous). Germany came close to adopting socialist central planning after WWII, but adopted market capitalism at the last second because the German people wanted nothing to do with socialism after the Nazis. This adopting socialist measures obviously hurt the economies of such nations.
3) Because of the New Deal, a lot of infrastructure had been created throughout various areas of America that had formerly, infrastructure-wise, been completely barren. Many areas had received electricity, plumbing, roads, bridges, ports, etc...and thus after the war, were able to develop into thriving economies. This development of totally rural areas of the nation into thriving economies probably had a lot to do with the big economic growth the nation experienced at the time. You had whole new areas of the country developing economically. It was things like this that endeared the Democratic party to the American people for roughly forty years as well.
An irony here is that if the Great Depression had never occurred (it is believed to have been the result of bad policies from the government and the Federal Reserve), then the New Deal infrastructure projects never would have occurred, and thus the economy may not have boomed after WWII the way it did.
4) During the Depression, the birthrate had declined. As a result, when the thriving economy of the 1950s rolled around, all of the men entering the workforce at the time found jobs ready and waiting for them.
5) The G.I. Bill, which allowed many returning soldiers to go to college or trade schools and learn skills and knowledge which they then used to build the economy.
6) After the war, the United States did not have the massive social welfare state that it has today. There was no Medicare or Medicaid and Social Security was a fragment of what it is today. As a result, the United States was able to quite easily pay down the massive level of deficit and debt it had built up during the war, in addition to helping to rebuild the economies of Europe and Japan.
7) The Interstate Highway System was started during the 1950s, which had a huge impact on the long-term economic growth of the nation.
8) The defense budget and the space program led to the funding of a lot of research at various universities and institutions. It was funding from DARPA that led to some of the key discoveries that allowed the creation of modern computers and electronics, along with the creation of the Internet and the GPS (Global Positioning System). In this sense, the defense budget I'd say served as a form of industrial policy for the United States during the 20th century (and still does to some degree).
Right now, the United States, if engaging in a similar level of deficit spending as what was seen during WWII, doesn't really have any ultra-rural areas that need infrastructure development where we would see thriving economic growth. We have a much larger social welfare state to contend with, we have a large population, and we have a lot of economic competition with other nations today. So I am not so sure the analogy holds in trying to justify massive stimulus today.
Being a non-economist, my points for skepticism regarding this argument would be the following:
1) World War II itself, in terms of the amount of money spend on research and development regarding engineering and science, and in terms of the industrial base that was built up in America as a result of the war.
2) After World War II, most every other industrialized nation in the world was bombed out and rebuilding. The United States literally had no competition economically. In addition, some nations adopted socialist methods, which hamstrung their economies. Under the Labour Party, the United Kingdom for example nationalized the mines, the railroads, and so forth (which proved disastrous). Germany came close to adopting socialist central planning after WWII, but adopted market capitalism at the last second because the German people wanted nothing to do with socialism after the Nazis. This adopting socialist measures obviously hurt the economies of such nations.
3) Because of the New Deal, a lot of infrastructure had been created throughout various areas of America that had formerly, infrastructure-wise, been completely barren. Many areas had received electricity, plumbing, roads, bridges, ports, etc...and thus after the war, were able to develop into thriving economies. This development of totally rural areas of the nation into thriving economies probably had a lot to do with the big economic growth the nation experienced at the time. You had whole new areas of the country developing economically. It was things like this that endeared the Democratic party to the American people for roughly forty years as well.
An irony here is that if the Great Depression had never occurred (it is believed to have been the result of bad policies from the government and the Federal Reserve), then the New Deal infrastructure projects never would have occurred, and thus the economy may not have boomed after WWII the way it did.
4) During the Depression, the birthrate had declined. As a result, when the thriving economy of the 1950s rolled around, all of the men entering the workforce at the time found jobs ready and waiting for them.
5) The G.I. Bill, which allowed many returning soldiers to go to college or trade schools and learn skills and knowledge which they then used to build the economy.
6) After the war, the United States did not have the massive social welfare state that it has today. There was no Medicare or Medicaid and Social Security was a fragment of what it is today. As a result, the United States was able to quite easily pay down the massive level of deficit and debt it had built up during the war, in addition to helping to rebuild the economies of Europe and Japan.
7) The Interstate Highway System was started during the 1950s, which had a huge impact on the long-term economic growth of the nation.
8) The defense budget and the space program led to the funding of a lot of research at various universities and institutions. It was funding from DARPA that led to some of the key discoveries that allowed the creation of modern computers and electronics, along with the creation of the Internet and the GPS (Global Positioning System). In this sense, the defense budget I'd say served as a form of industrial policy for the United States during the 20th century (and still does to some degree).
Right now, the United States, if engaging in a similar level of deficit spending as what was seen during WWII, doesn't really have any ultra-rural areas that need infrastructure development where we would see thriving economic growth. We have a much larger social welfare state to contend with, we have a large population, and we have a lot of economic competition with other nations today. So I am not so sure the analogy holds in trying to justify massive stimulus today.
Wednesday, December 1, 2010
Interesting Article, Another Conglomerate and New Idea
So I discovered another conglomerate, EBSCO Industries, a $2.5 billion a year privately-owned company. I found it reading this article: The New Conglomerate - I find the article very interesting, and it gives hope, as it shows that conglomerates can work. However, it seems in order to form a conglomerate, one would need to keep the company privately-owned, because if a public company, shareholders, at least nowadays, would likely demand the conglomerate be broken up, to focus on "core" businesses.
My new business idea is another industry to consolidate (I get these ideas a lot), or at least enter into and make acquisitions in over time. However, I think this very industry could also serve as a way to acquire or build a company, take it public, and make acquisitions without having the shareholders complain about "core businesses." Basically, the packaging industry. This is a very fragmented industry from my understanding with many players. One interesting area of it seems to be the pharmaceutical packaging industry. One company in this industry, a German company named Gerresheimer AG, started originally as a much smaller company, but then it was purchased by private equity (first Invescorp and Chase Manhattan Bank, then Blackstone), which moved it into pharmaceutical packaging. They had it make a series of acquisitions, then took it public in Frankfurt in 2007.
Two other packaging companies are Clondalkin Group and Mauser Group. I am not sure about Mauser Group, but Clondalkin Group is a large packaging conglomerate that was also built by a company making acquisitions of other various packaging companies.
Well obviously a pharmaceuticals packaging company that is a made up of various different pharmaceuticals packaging businesses, will itself be a conglomerate technically, BUT, it is not a conglomerate consisting of various disprate businesses. Instead, it is a conglomerate with one core business that it focuses on, it just does so via ownership of various companies within that core business/industry.
I do not think shareholders would complain about this type of conglomerate as such. My idea was perhaps to build a pharmaceuticals packaging empire, then via further acquisitions and mergers, combine it with a few other packaging companies to build an overall packaging empire (pharmaceuticals packaging is one aspect of overall packaging). I don't know if that would be a good idea or not though, it might just be good to leave it at pharmaceutical packaging (Gerreshemier actually is in life-sciences packaging as well), however, one could also make the argument that packaging itself is a core business, just with different areas, so building an overall packaging conglomerate (as opposed to just a pharmaceuticals packaging conglomerate) is still keeping within a core business (packaging).
If I did attempt this, well all I need to do I suppose is acquire a small packaging company, grow it larger, take it public, and then begin making acquisitions, then cash out within a decade (easier said then done of course). I would imagine I could be entrusted to remain CEO of the company as I would have grown it well as a private company over some years first (so the investors would know the CEO is not some totally inexperienced person).
My new business idea is another industry to consolidate (I get these ideas a lot), or at least enter into and make acquisitions in over time. However, I think this very industry could also serve as a way to acquire or build a company, take it public, and make acquisitions without having the shareholders complain about "core businesses." Basically, the packaging industry. This is a very fragmented industry from my understanding with many players. One interesting area of it seems to be the pharmaceutical packaging industry. One company in this industry, a German company named Gerresheimer AG, started originally as a much smaller company, but then it was purchased by private equity (first Invescorp and Chase Manhattan Bank, then Blackstone), which moved it into pharmaceutical packaging. They had it make a series of acquisitions, then took it public in Frankfurt in 2007.
Two other packaging companies are Clondalkin Group and Mauser Group. I am not sure about Mauser Group, but Clondalkin Group is a large packaging conglomerate that was also built by a company making acquisitions of other various packaging companies.
Well obviously a pharmaceuticals packaging company that is a made up of various different pharmaceuticals packaging businesses, will itself be a conglomerate technically, BUT, it is not a conglomerate consisting of various disprate businesses. Instead, it is a conglomerate with one core business that it focuses on, it just does so via ownership of various companies within that core business/industry.
I do not think shareholders would complain about this type of conglomerate as such. My idea was perhaps to build a pharmaceuticals packaging empire, then via further acquisitions and mergers, combine it with a few other packaging companies to build an overall packaging empire (pharmaceuticals packaging is one aspect of overall packaging). I don't know if that would be a good idea or not though, it might just be good to leave it at pharmaceutical packaging (Gerreshemier actually is in life-sciences packaging as well), however, one could also make the argument that packaging itself is a core business, just with different areas, so building an overall packaging conglomerate (as opposed to just a pharmaceuticals packaging conglomerate) is still keeping within a core business (packaging).
If I did attempt this, well all I need to do I suppose is acquire a small packaging company, grow it larger, take it public, and then begin making acquisitions, then cash out within a decade (easier said then done of course). I would imagine I could be entrusted to remain CEO of the company as I would have grown it well as a private company over some years first (so the investors would know the CEO is not some totally inexperienced person).
Real Estate
This is another area of business that I would like to build a large company in. I would like to create office buildings, hotel chains, and shopping malls. I would like to try real-estate because I love architecture and building construction. I see it as another way to build and create things.
I have lots of ideas for fortune-building, from real-estate, to private-equity, to entrepreneurship by building a large private company (hopefully holding company), to being a professional entrepreneur who builds companies by consolidating fragmented industries. I would go about doing this by taking the companies public, then using the capital to make acquisitions over a period of years, then cashing out, as Wayne Huizenga did with Waste Management, Blockbuster, and Autonation (he is now doing it again, in the cleaning products business apparently):
Huizenga to Take Cleaning Business Public in Coolbrands Merger
I have lots of ideas for fortune-building, from real-estate, to private-equity, to entrepreneurship by building a large private company (hopefully holding company), to being a professional entrepreneur who builds companies by consolidating fragmented industries. I would go about doing this by taking the companies public, then using the capital to make acquisitions over a period of years, then cashing out, as Wayne Huizenga did with Waste Management, Blockbuster, and Autonation (he is now doing it again, in the cleaning products business apparently):
Huizenga to Take Cleaning Business Public in Coolbrands Merger
Private Equity
So in addition to building a conglomerate, I also have dreams of building a private equity firm, or of having my holding company start its own private equity firm. This may sound maniacal to some, but I think it is very doable because Goldman-Sachs started its own private-equity operation, which is right now the largest private-equity operation on Wall Street.
Private equity fits with my desire to build companies and control lots of them. The thing that I am not sure of per se is how to found the firm (provided I do not wait to have a conglomerate first). My initial goal is to become a successful entrepreneur first, then perhaps start the firm. I figure this way I can start it with my own money like Lynn Tilton started Patriach Partners. What I also wonder is what degree of education do I need to start a private equity firm? Is knowledge of how to build a company enough? Or do I need extensive knowledge in terms of finance as well...? For example, Ron Burkle dropped out of college and started Yucaipa Companies, a holding company engaged in private equity investments (is that the same thing as a private equity fund...? or is it separate in that it is a company owned by one individual with no outside investors that engages in private equity...? THIS STUFF IS CONFUSING! if I can have my holding company engage in its own private equity investments, I might do that).
On the other hand, one could also say that while knowledge of how to build a company is important, as a private equity manager, one would probably need to know a lot of formal finance knowledge in order to handle how to structure the debt and so forth of various companies and investments the firm becomes involved in.
Obviously no one in their right mind will just give some random guy with no experience or knowledge a bunch of money to manage a private equity fund (or at least not now anyway; at the height of the boom, some actually were! It was like the venture capitalists throwing money at businesses with no solid fundamentals). But what about a successful entrepreneur who doesn't have much in the way of formal education (although does have self-education), as opposed to the guy who has spent say a decade working in for example mergers and acquisitions who now wants to start his own firm. I intend to be the former, as I cannot become the latter.
Irregardless though, I do intend to self-educate myself to a great degree in finance, and I would imagine that if I have a high enough net worth, that also could provide some comfort to investors at the time as well. All of this of course is if I decided to start a wholly-separate private equity firm managed by me.
Private equity fits with my desire to build companies and control lots of them. The thing that I am not sure of per se is how to found the firm (provided I do not wait to have a conglomerate first). My initial goal is to become a successful entrepreneur first, then perhaps start the firm. I figure this way I can start it with my own money like Lynn Tilton started Patriach Partners. What I also wonder is what degree of education do I need to start a private equity firm? Is knowledge of how to build a company enough? Or do I need extensive knowledge in terms of finance as well...? For example, Ron Burkle dropped out of college and started Yucaipa Companies, a holding company engaged in private equity investments (is that the same thing as a private equity fund...? or is it separate in that it is a company owned by one individual with no outside investors that engages in private equity...? THIS STUFF IS CONFUSING! if I can have my holding company engage in its own private equity investments, I might do that).
On the other hand, one could also say that while knowledge of how to build a company is important, as a private equity manager, one would probably need to know a lot of formal finance knowledge in order to handle how to structure the debt and so forth of various companies and investments the firm becomes involved in.
Obviously no one in their right mind will just give some random guy with no experience or knowledge a bunch of money to manage a private equity fund (or at least not now anyway; at the height of the boom, some actually were! It was like the venture capitalists throwing money at businesses with no solid fundamentals). But what about a successful entrepreneur who doesn't have much in the way of formal education (although does have self-education), as opposed to the guy who has spent say a decade working in for example mergers and acquisitions who now wants to start his own firm. I intend to be the former, as I cannot become the latter.
Irregardless though, I do intend to self-educate myself to a great degree in finance, and I would imagine that if I have a high enough net worth, that also could provide some comfort to investors at the time as well. All of this of course is if I decided to start a wholly-separate private equity firm managed by me.
Monday, November 15, 2010
Working Out
So I am currently following a workout plan to build strength. I would like to gain muscle mass, the problem is that because I am one of those people with a super-hyper metabolism, it is extremely difficult for me to build muscle mass unless I eat a LOT in addition to the workouts, and it has to be good, clean food. Well I don't have the money for enough such food, I do have a bunch of big tubs of whey protein powder that my father bought for me though, but in order to be able to consume the protein necessary for serious mass building, I'd need to consume around eight shakes a day, and although this is a good powder (Optimum Nutrition), protein shakes still get sickening when you are on the fifth shake or higher.
So hopefully, I can ignore the mass and just mostly concentrate on building muscle strength, as muscle strength and muscle size are not per se the same thing, because a good deal of muscle strength relies on the nervous system. I am a weakling at the moment in terms of ability to lift heavy weights. I started out benching about 130 lbs, now I am at 150 lbs, a 20 lb increase, but I would like to get up to doing sets with 250 lbs, with at elast a 300 lb max. It will be very cool when I can where I can do multiple sets of six to eight reps with 300 lbs. I also intend to get where I can barbell squat and deadlift at least 300 lbs. These will provide an excellent base I think for then learning the Olympic lifts, and also for increasing my deadlift and barbell squat further.
A little later I am going to do my Monday workout, which consists of benchpress, military press, and pullups, we will see how my benchpress fairs this time. Hopefully I can maybe benchpress 160 lbs.
So hopefully, I can ignore the mass and just mostly concentrate on building muscle strength, as muscle strength and muscle size are not per se the same thing, because a good deal of muscle strength relies on the nervous system. I am a weakling at the moment in terms of ability to lift heavy weights. I started out benching about 130 lbs, now I am at 150 lbs, a 20 lb increase, but I would like to get up to doing sets with 250 lbs, with at elast a 300 lb max. It will be very cool when I can where I can do multiple sets of six to eight reps with 300 lbs. I also intend to get where I can barbell squat and deadlift at least 300 lbs. These will provide an excellent base I think for then learning the Olympic lifts, and also for increasing my deadlift and barbell squat further.
A little later I am going to do my Monday workout, which consists of benchpress, military press, and pullups, we will see how my benchpress fairs this time. Hopefully I can maybe benchpress 160 lbs.
I Want to Build a Conglomerate
So my big entrepreneurial dream is to build a conglomerate. A BIG conglomerate though, like on the scale of General Electric, Siemens, Koch Industries, Tyco, 3M, Berkshire-Hathaway, etc...so I was doing some Googling on building a conglomerate, and basically most of the stuff that came up said that if you want to build a conglomerate, you are nuts. And also must have a healthy dose of ego.
Basically conglomerates were a thing of the past, mainly during the '50s and '60s, as they were seen as a way to reduce risk in a business, but now they are more rare as they are not seen as being able to create value for shareholders the way a business can that just focuses on a specific area can. This I can understand fully, I mean if General Motors starts trying to design and build flat-screen televisions, and Sony gets into the tire business, they probably will fumble.
But what about businesses where you basically have a holding company that owns wholly separate businesses that then report to the holding company. Perhaps these separate companies may share accounting, finance, legal, etc...services the holding company provides, but otherwise they operate wholly independent of one another...? (I would imagine they could each have their own such services as well, but this would be less efficient from the holding company's point of view). The thing is, if these companies operate wholly independently of each other, well I mean you will have different companies specializing in different things, all contributing to one "mother company," as opposed to one single company trying to work in multiple industries.
I was reading some articles that said conglomerates can work, but there is no guarantee, and they can take years to build, such as General Electric. Well of course, but no business is really guaranteed to work and the idea of building a conglomerate is not something you plan out to do overnight, that is something that would solely be a labor of love. I would want my conglomerate to remain private, like Koch Industries, so that I would not have to answer to any shareholder presures to increase quarterly earnings or anything like that. Kohler is another example of a conglomerate (albeit a smaller one) that is completely privately-owned and which has been built up over the years.
Another reason I was thinking a conglomerate could work is, for example, let's say you own a big trucking company. Let's say it is a billion-dollar company and privately-owned, such as J.B. Hunt. Now let's say you decide you want to start a new company, a brand-new consumer electronics company. This consumer electronics company will be under your holding company which also owns your trucking company. Now let's say you successfully build this consumer electronics company, for example as Vizio was built. So now your holding company is a conglomerate consisting of two wholly-separate companies, a trucking company and a consumer electronics company. How is this going to be bad? Your holding company is a conglomerate operating in two different industries, via two separate companies. Perhaps you could have them both share the same accounting, marketing, financial, legal, etc...services, but otherwise, they are separate.
Let's say eventually you add a third wholly separate business. I'd think a conglomerate like this, managed correctly, could do fine. Perhaps if publicly-owned, there might be problems, due to shareholders pressing for constant increases in quarterly earnings, which might cause the management to mess things up, but otherwise, I'd think such a conglomerate could work okay. A good idea would be to make sure that the member companies are mostly independent enough to be able to function though. If a member company cannot act on a market opportunity or respond to a problem without consulting with the holding company's management, then this will slow down the whole operation and turn it into one big, lumbering, slow bureaucratic machine, which would be bad. Instead, the member companies should be able to mostly operate independently, and just report to the holding company.
Basically conglomerates were a thing of the past, mainly during the '50s and '60s, as they were seen as a way to reduce risk in a business, but now they are more rare as they are not seen as being able to create value for shareholders the way a business can that just focuses on a specific area can. This I can understand fully, I mean if General Motors starts trying to design and build flat-screen televisions, and Sony gets into the tire business, they probably will fumble.
But what about businesses where you basically have a holding company that owns wholly separate businesses that then report to the holding company. Perhaps these separate companies may share accounting, finance, legal, etc...services the holding company provides, but otherwise they operate wholly independent of one another...? (I would imagine they could each have their own such services as well, but this would be less efficient from the holding company's point of view). The thing is, if these companies operate wholly independently of each other, well I mean you will have different companies specializing in different things, all contributing to one "mother company," as opposed to one single company trying to work in multiple industries.
I was reading some articles that said conglomerates can work, but there is no guarantee, and they can take years to build, such as General Electric. Well of course, but no business is really guaranteed to work and the idea of building a conglomerate is not something you plan out to do overnight, that is something that would solely be a labor of love. I would want my conglomerate to remain private, like Koch Industries, so that I would not have to answer to any shareholder presures to increase quarterly earnings or anything like that. Kohler is another example of a conglomerate (albeit a smaller one) that is completely privately-owned and which has been built up over the years.
Another reason I was thinking a conglomerate could work is, for example, let's say you own a big trucking company. Let's say it is a billion-dollar company and privately-owned, such as J.B. Hunt. Now let's say you decide you want to start a new company, a brand-new consumer electronics company. This consumer electronics company will be under your holding company which also owns your trucking company. Now let's say you successfully build this consumer electronics company, for example as Vizio was built. So now your holding company is a conglomerate consisting of two wholly-separate companies, a trucking company and a consumer electronics company. How is this going to be bad? Your holding company is a conglomerate operating in two different industries, via two separate companies. Perhaps you could have them both share the same accounting, marketing, financial, legal, etc...services, but otherwise, they are separate.
Let's say eventually you add a third wholly separate business. I'd think a conglomerate like this, managed correctly, could do fine. Perhaps if publicly-owned, there might be problems, due to shareholders pressing for constant increases in quarterly earnings, which might cause the management to mess things up, but otherwise, I'd think such a conglomerate could work okay. A good idea would be to make sure that the member companies are mostly independent enough to be able to function though. If a member company cannot act on a market opportunity or respond to a problem without consulting with the holding company's management, then this will slow down the whole operation and turn it into one big, lumbering, slow bureaucratic machine, which would be bad. Instead, the member companies should be able to mostly operate independently, and just report to the holding company.
Friday, October 22, 2010
Making a Company Recession-Proof
So one thing I have noticed it seems with quite a few of the wealthy (or formerly wealthy) with this economic/financial crisis and recession, is that a lot of wealthy people seem to be oblivious to the concept of not having all of your eggs in one basket. I think Felix Dennis said it best in his book, "How to Get Rich," when he mentions that you should not have all of your eggs in one basket, nor should you spread the eggs of one basket out, but rather, try to create multiple baskets of eggs! But even if one wasn't/isn't into creating multiple baskets but rather just watching what eggs they have, one would think people would have been a bit more vigilant.
For example, some people had all of their net worth (or almost all of it) tied up into one company, a company in an industry that was definitely prone to being devastated by a major recession. And thus the great majority of their hard-earned wealth disappeared due to their company getting decimated by the recession. If you have all of your net worth tied into one company, then you make damned sure that it is a company that is very strong and very recession-resistant. Otherwise, it is just too risky. Or, take a portion of your wealth and put it into other assets, so that you are not just tied to this one business you own.
Another example of bad thinking was all the people who entrusted their entire net worth to one guy. This is what many rich apparently did with Bernie Madoff. And even with entrusting it to multiple guys, you have to be careful, because some of those so-called investment managers simply entrusted all of their money to Madoff as well. Some may say, "Well no one ever DREAMED that Bernie Madoff was a scoundrel!" well true, however, you could entrust your money to a guy who has a heart of gold, that doesn't mean he can't mess up. Investing and asset management, like any business, is part art, part science, not hard science or engineering (and even engineers have been known to make mistakes occasionally).
Mark Ecko is another guy who seemed to be oblivious to this. Apparently he had a lot of his net worth tied up in his company, which is a fashion industry company. The problem was that his company was in an industry that is extremely prone to recessions, and thus when the global financial crisis hit and then the ensuing economic depression, his company crashed, and thus so did much of his net worth.
Now I have been going off on a tangent here as I am more referring to wealth management overall with all of this, but I think the same principle applies with building a company: don't have all the eggs in one basket. If your company is recession-prone, or in an industry that goes through cycles, then make sure that you take all of this into account. The business should be ready at all times for the chances of a recession (although I am sure that this is much easier said then done).
If your business is more recession-resistance, than that is great. And if your company consists of multiple sub-companies, then I would try to make quite a few of those sub-companies ones that tend to be recession-resistant. This way, when a recession inevitably occurs, those sub-companies can help prop up the faltering companies that are recession-prone. This will thus help protect the company and help protect your fortune/wealth as well.
For example, some people had all of their net worth (or almost all of it) tied up into one company, a company in an industry that was definitely prone to being devastated by a major recession. And thus the great majority of their hard-earned wealth disappeared due to their company getting decimated by the recession. If you have all of your net worth tied into one company, then you make damned sure that it is a company that is very strong and very recession-resistant. Otherwise, it is just too risky. Or, take a portion of your wealth and put it into other assets, so that you are not just tied to this one business you own.
Another example of bad thinking was all the people who entrusted their entire net worth to one guy. This is what many rich apparently did with Bernie Madoff. And even with entrusting it to multiple guys, you have to be careful, because some of those so-called investment managers simply entrusted all of their money to Madoff as well. Some may say, "Well no one ever DREAMED that Bernie Madoff was a scoundrel!" well true, however, you could entrust your money to a guy who has a heart of gold, that doesn't mean he can't mess up. Investing and asset management, like any business, is part art, part science, not hard science or engineering (and even engineers have been known to make mistakes occasionally).
Mark Ecko is another guy who seemed to be oblivious to this. Apparently he had a lot of his net worth tied up in his company, which is a fashion industry company. The problem was that his company was in an industry that is extremely prone to recessions, and thus when the global financial crisis hit and then the ensuing economic depression, his company crashed, and thus so did much of his net worth.
Now I have been going off on a tangent here as I am more referring to wealth management overall with all of this, but I think the same principle applies with building a company: don't have all the eggs in one basket. If your company is recession-prone, or in an industry that goes through cycles, then make sure that you take all of this into account. The business should be ready at all times for the chances of a recession (although I am sure that this is much easier said then done).
If your business is more recession-resistance, than that is great. And if your company consists of multiple sub-companies, then I would try to make quite a few of those sub-companies ones that tend to be recession-resistant. This way, when a recession inevitably occurs, those sub-companies can help prop up the faltering companies that are recession-prone. This will thus help protect the company and help protect your fortune/wealth as well.
Bureaucracy VS Anarchy Within a Business
So in my previous post, I mentioned how one strategy to build a large company is by building up a company that consists of many smaller companies. Another advantage that this can provide, at least in theory (although apparently in practice from my understanding as well), the best of both worlds for when it comes to companies. That basically you get the benefits of a big business (size, economies of scale, purchasing power, etc...) combined with the benefits of a small business (agility, ability to think and react quickly, etc...) at the same time.
The thing is, either one of these can have extremes that can be bad, and it seems like a challenge for any good business thus is how to find the right balance. As mentioned, in theory, a company consisting of a bunch of independent sub-companies that all operate on their own and then report to the holding company, can be able to provide the same types of fast innovation and agility that a small company will have while also providing the benefits of the economies of scale and purchasing power of a large organization. Examples can be companies such as the locks conglomerate Assa-Abloy, the luxury goods conglomerate LVMH, automation companies that consist of multiple smaller companies, and so forth.
The problem as I see it, however, is that one cannot just have anarchy. There has to be some level of central organization and direction from the top, or else you might end up with companies creating competing products, or companies doing the same kinds of research, but not sharing their research with one another, and so forth, which leads to money wasted within the overall organization (why have company B working on how to figure out the solution to a problem if company A already figured it out, but company B isn't aware of company A's research?).
I don't really have the answer to this type of problem, as I am no expert and I am more writing about it to just throw the idea out there, as I am sure plenty of other companies grapple with this on a daily basis and for all I know it has even been written about in the Harvard Business Review and so forth (I don't know). From what I have read from the management of such companies however, it seems to be that the management seek to give a good deal of autonomy and independence to their sub-companies, so that they can all act as independent smaller companies, while just guiding all of the sub-companies along in a general direction (the CEOs of the sub-companies must report to the leaders of the holding company).
The other extreme, i.e. too much top-down management and bureaucracy, is what slows a company down and kills innovation. I mean who wants to have to go through six layers of bureaucracy just to get an idea assessed, and it still may get shot down?
This problem can also manifest itself in individual companies, not just organizations that are holding companies for multiple sub-companies, but I mean individual companies themselves. There is that fine art of achieving that happy balance between innovation, entrepreneurship, and idea-generation and central direction and control, within individual companies as well. In fact, a large holding company consisting of many sub-companies may follow the way of some general central direction and lighthearted top-down management of the sub-companies while otherwise allowing them to all operate independently, so that they can innovate and prosper and be agile. These individual sub-companies, at the same time, will then have managements that must do this same process, create an environment for innovation and idea-generation while at the same time have some lighthearted top-down central direction.
How to Create a Creative Company Culture?
The above leads one to then ponder, how exactly does one foster a creative company culture? I would imagine that for one thing, try to keep bureaucracy light and efficient. As said, the company cannot function without professional management, but it cannot be too heavy. If you end up where someone has to go through layers of bureaucracy in order to get anything looked at, approved, or done, then your company has a problem. And also, try to hire creative-minded people and then listen to their ideas. I am sure there are other aspects as well, but I am forgetting them right now.
The thing is, either one of these can have extremes that can be bad, and it seems like a challenge for any good business thus is how to find the right balance. As mentioned, in theory, a company consisting of a bunch of independent sub-companies that all operate on their own and then report to the holding company, can be able to provide the same types of fast innovation and agility that a small company will have while also providing the benefits of the economies of scale and purchasing power of a large organization. Examples can be companies such as the locks conglomerate Assa-Abloy, the luxury goods conglomerate LVMH, automation companies that consist of multiple smaller companies, and so forth.
The problem as I see it, however, is that one cannot just have anarchy. There has to be some level of central organization and direction from the top, or else you might end up with companies creating competing products, or companies doing the same kinds of research, but not sharing their research with one another, and so forth, which leads to money wasted within the overall organization (why have company B working on how to figure out the solution to a problem if company A already figured it out, but company B isn't aware of company A's research?).
I don't really have the answer to this type of problem, as I am no expert and I am more writing about it to just throw the idea out there, as I am sure plenty of other companies grapple with this on a daily basis and for all I know it has even been written about in the Harvard Business Review and so forth (I don't know). From what I have read from the management of such companies however, it seems to be that the management seek to give a good deal of autonomy and independence to their sub-companies, so that they can all act as independent smaller companies, while just guiding all of the sub-companies along in a general direction (the CEOs of the sub-companies must report to the leaders of the holding company).
The other extreme, i.e. too much top-down management and bureaucracy, is what slows a company down and kills innovation. I mean who wants to have to go through six layers of bureaucracy just to get an idea assessed, and it still may get shot down?
This problem can also manifest itself in individual companies, not just organizations that are holding companies for multiple sub-companies, but I mean individual companies themselves. There is that fine art of achieving that happy balance between innovation, entrepreneurship, and idea-generation and central direction and control, within individual companies as well. In fact, a large holding company consisting of many sub-companies may follow the way of some general central direction and lighthearted top-down management of the sub-companies while otherwise allowing them to all operate independently, so that they can innovate and prosper and be agile. These individual sub-companies, at the same time, will then have managements that must do this same process, create an environment for innovation and idea-generation while at the same time have some lighthearted top-down central direction.
How to Create a Creative Company Culture?
The above leads one to then ponder, how exactly does one foster a creative company culture? I would imagine that for one thing, try to keep bureaucracy light and efficient. As said, the company cannot function without professional management, but it cannot be too heavy. If you end up where someone has to go through layers of bureaucracy in order to get anything looked at, approved, or done, then your company has a problem. And also, try to hire creative-minded people and then listen to their ideas. I am sure there are other aspects as well, but I am forgetting them right now.
One Way to Build A Billion-Dollar Business
So I have been thinking to myself a strategy on how to build a billion-dollar company. When it comes to thinking up business ideas on how to become a billionaire, well the main strategy of course is to think up a business that you can build to the size of one billion in revenue that you will own. But some people may associate this with a business in one particular industry. One can have a "business" that makes lots of money that is really a holding company consisting of multiple separate, smaller businesses that are in completely different industries.
So for example, if you had a business that consists of ten $100 million companies, well then your holding company is essentially a billion-dollar enterprise. Your company could also own stock in part of another enterprise as well.
My personal goal is to build a multibillion-dollar company that consists of multiple sub-companies, but those sub-companies may themselves consist of even more subcompanies. There are actually quite a few businesses like this it seems. In fact, one way it seems to build a big company is simply to combine together a bunch of smaller companies.
Some examples of this are:
Assa-Abloy - this is a locks conglomerate that consists of around 90 locks brands. Basically it's just a giant holding company that consists of a bunch of smaller locks companies which it has gobbled up over the years. it continues to gobble up further locks companies (okay, maybe the term "gobble" is a bit bad because that implies that companies it has purchased were forced into being absorbed or else run out of businesses, which from my understanding is not the case here)
Quanta Services - this is a specialty contractor for the electrical, cable, telecommunications, and gas pipeline industries. Again, it is really just a holding company that consists of many smaller sub-companies it owns, which themselves sometimes consist of sub-companies, or they are a functioning company, but they own a few smaller subsidiaries as well. And I think a few of the subsidiaries of the sub-companies have their own subsidiary occassionally as well! Quanta Services apparently was started by taking a few electrical contracting businesses and combining them together under one holding company and then building from there. They eventually took the company public and have continued building, recently acquiring the nation's largest pipeline construction company.
LKQ - this is an alternative auto parts distributor. It specializes in recycled (i.e. used) auto parts, refurbished (i.e. rebuilt), and aftermarket collision replacement parts. It also has gotten into the above for truck parts as well it seems, and it does this in both wholesale and retail too. Like the previous two, it is made up of a bunch of small sub-companies, and like Quanta Services, it was started by taking four (I believe wholesale) used auto parts businesses and combining them, and then building up from there. Like Quanta, they took the company public and also like Quanta, they just recently made a very large purchase of what appears to be (or have been) the largest used auto parts retailer in the United States. They also have become a good aid to auto insurance companies in that auto insurance companies can rely on them for cheaper replacement parts for automobiles. LKQ also owns Keystone Automotive Industries, Inc, a leader in generic collision replacement parts for autos. They also own some wheel and headlight rebuilding companies too.
Consolidated Graphics - this is a holding company that consists of a bunch of independently-operating sub-companies; to quote from Wikipedia:
Companies under the Consolidated Graphics umbrella operate independently with their own management, sales force, and market presence. This business model allows these flexible, local printing companies to have the purchasing power and resources of a well managed national corporation.
LVMH - this is the mighty French luxury goods conglomerate. they own all sorts of major luxury goods brands, everything from jewelry and watch companies, to spirits companies, to handbag companies, etc...they are a good deal responsible for having commoditized luxury over the last few decades actually (separate discussion though).
Jarden Corporation - this is a niche consumer products company; basically it is a conglomerate of smaller consumer products companies that focus on niche areas.
Automation - this isn't a company here, I am referring to the automation industry. Basically this is a very fragmented industry, and many, if not most, of the companies in it are small, specialized operations, usually no more than $50 to $100 million in revenues. It can be very difficult for companies to grow to a large size in this industry (though some are), however one strategy one can follow is to combine a bunch of smaller companies together to form one large company, which some companies have done. Two such companies are Ametek and Spectris.
Wayne Huizenga followed this strategy of building companies by combining a bunch of smaller companies together with first Waste Management, then Blockbuster, then Autonation.
Rollups
During the 1990s, this became very popular in doing what became known as rollups, basically an entrepreneur would get capital and funding and then proceed to buy up a bunch of smaller companies and combine them and then take the operation public. The problem with this is that it is a business model that can be prone to fail, and thus rollups had their own little bubble right alongside the Dot Com bubble. When the Stock Market crashed in 2000, many rollups went bust along with the Dot Coms.
Rollups can work, the problem with them is that they are not quite the same as forming a company that is an actual functioning company and then gobbling up a bunch of additional companies (and this in itself is not guaranteed to work either). Basically a rollup just takes a bunch of independent companies, combines the under a holding company, and then expects the operation to work.
Wellllll....that depends. One flaw can be in the structure of the overall operation. One incentive for the people who own the sub-companies being absorbed into the organization is to let them continue to run their operation as part of the larger overall organization, but to grant them stock in the holding company. But if the owners each own large shares of stock, and thus have a lot of say in the managing of the company, and each of them also have an equal say, problems can occur. For example, what if the individual sub-companies don't get along well? What if they disagree? What if some company owners think other company owners are total idiots?
If the rollup is being funded by venture capital, and the company consists of say ten shareholders, nine individual company owners with a 10% stake, and say yourself, the entrepreneur, with a 10% stake, well it is this kind of stuff that can cause a rollup to fail. If the venture capitalists also demand a stake in the company, that can complicate things even moreso. Whereas if you have a main, large company from the get-go, that then starts making acquisitions, well this can be more solid, because you then have a functioning business from the beginning that is just buying up other companies. And oftentimes when this happens, although the original owners may be compensated fully or partially in the form of stock in the main company, they likely will not have the kind of sway like in a rollup. They would instead likely stay on to continue to run their company as part ofthe larger organization, or stay on for awhile as an advisor to help the bigger company integrate their smaller company in.
I could see a rollup being a lot less prone to problems perhaps if it is smaller (say four companies at the start) and one person has the authority to override the others if need be. So for example you the entrepreneur hold a 51% stake in the holding company, and the four companies in the organization hold together 49%. Thus if push comes to shove, in the end, you can overrule everyone if need be and centrally direct the organization.
And if you have the money, you could always just own 100% of the operation from the get-go, purchasing the sub-companies completely from the owners, so that you answer to no one but yourself. If you have venture capitalists involved, you will have to answer to them, but at least then it is just you and the venture capitalists, not you, a bunch of scattered company owners, and the venture capitalists (by "venture capitalists," I in general mean a venture capital firm consisting of multiple partners). Venture capitalists or no venture capitalists, if you take the company public, well then you have various shareholders that you now have to answer to, but it is usually different from the rollup model, because now you'll have many shareholders as opposed to just a dozen or so that can all argue on how to run the company. These many shareholders will expect you and the professional management of the company to then work to increase the quarterly share price of the company.
So for example, if you had a business that consists of ten $100 million companies, well then your holding company is essentially a billion-dollar enterprise. Your company could also own stock in part of another enterprise as well.
My personal goal is to build a multibillion-dollar company that consists of multiple sub-companies, but those sub-companies may themselves consist of even more subcompanies. There are actually quite a few businesses like this it seems. In fact, one way it seems to build a big company is simply to combine together a bunch of smaller companies.
Some examples of this are:
Assa-Abloy - this is a locks conglomerate that consists of around 90 locks brands. Basically it's just a giant holding company that consists of a bunch of smaller locks companies which it has gobbled up over the years. it continues to gobble up further locks companies (okay, maybe the term "gobble" is a bit bad because that implies that companies it has purchased were forced into being absorbed or else run out of businesses, which from my understanding is not the case here)
Quanta Services - this is a specialty contractor for the electrical, cable, telecommunications, and gas pipeline industries. Again, it is really just a holding company that consists of many smaller sub-companies it owns, which themselves sometimes consist of sub-companies, or they are a functioning company, but they own a few smaller subsidiaries as well. And I think a few of the subsidiaries of the sub-companies have their own subsidiary occassionally as well! Quanta Services apparently was started by taking a few electrical contracting businesses and combining them together under one holding company and then building from there. They eventually took the company public and have continued building, recently acquiring the nation's largest pipeline construction company.
LKQ - this is an alternative auto parts distributor. It specializes in recycled (i.e. used) auto parts, refurbished (i.e. rebuilt), and aftermarket collision replacement parts. It also has gotten into the above for truck parts as well it seems, and it does this in both wholesale and retail too. Like the previous two, it is made up of a bunch of small sub-companies, and like Quanta Services, it was started by taking four (I believe wholesale) used auto parts businesses and combining them, and then building up from there. Like Quanta, they took the company public and also like Quanta, they just recently made a very large purchase of what appears to be (or have been) the largest used auto parts retailer in the United States. They also have become a good aid to auto insurance companies in that auto insurance companies can rely on them for cheaper replacement parts for automobiles. LKQ also owns Keystone Automotive Industries, Inc, a leader in generic collision replacement parts for autos. They also own some wheel and headlight rebuilding companies too.
Consolidated Graphics - this is a holding company that consists of a bunch of independently-operating sub-companies; to quote from Wikipedia:
Companies under the Consolidated Graphics umbrella operate independently with their own management, sales force, and market presence. This business model allows these flexible, local printing companies to have the purchasing power and resources of a well managed national corporation.
LVMH - this is the mighty French luxury goods conglomerate. they own all sorts of major luxury goods brands, everything from jewelry and watch companies, to spirits companies, to handbag companies, etc...they are a good deal responsible for having commoditized luxury over the last few decades actually (separate discussion though).
Jarden Corporation - this is a niche consumer products company; basically it is a conglomerate of smaller consumer products companies that focus on niche areas.
Automation - this isn't a company here, I am referring to the automation industry. Basically this is a very fragmented industry, and many, if not most, of the companies in it are small, specialized operations, usually no more than $50 to $100 million in revenues. It can be very difficult for companies to grow to a large size in this industry (though some are), however one strategy one can follow is to combine a bunch of smaller companies together to form one large company, which some companies have done. Two such companies are Ametek and Spectris.
Wayne Huizenga followed this strategy of building companies by combining a bunch of smaller companies together with first Waste Management, then Blockbuster, then Autonation.
Rollups
During the 1990s, this became very popular in doing what became known as rollups, basically an entrepreneur would get capital and funding and then proceed to buy up a bunch of smaller companies and combine them and then take the operation public. The problem with this is that it is a business model that can be prone to fail, and thus rollups had their own little bubble right alongside the Dot Com bubble. When the Stock Market crashed in 2000, many rollups went bust along with the Dot Coms.
Rollups can work, the problem with them is that they are not quite the same as forming a company that is an actual functioning company and then gobbling up a bunch of additional companies (and this in itself is not guaranteed to work either). Basically a rollup just takes a bunch of independent companies, combines the under a holding company, and then expects the operation to work.
Wellllll....that depends. One flaw can be in the structure of the overall operation. One incentive for the people who own the sub-companies being absorbed into the organization is to let them continue to run their operation as part of the larger overall organization, but to grant them stock in the holding company. But if the owners each own large shares of stock, and thus have a lot of say in the managing of the company, and each of them also have an equal say, problems can occur. For example, what if the individual sub-companies don't get along well? What if they disagree? What if some company owners think other company owners are total idiots?
If the rollup is being funded by venture capital, and the company consists of say ten shareholders, nine individual company owners with a 10% stake, and say yourself, the entrepreneur, with a 10% stake, well it is this kind of stuff that can cause a rollup to fail. If the venture capitalists also demand a stake in the company, that can complicate things even moreso. Whereas if you have a main, large company from the get-go, that then starts making acquisitions, well this can be more solid, because you then have a functioning business from the beginning that is just buying up other companies. And oftentimes when this happens, although the original owners may be compensated fully or partially in the form of stock in the main company, they likely will not have the kind of sway like in a rollup. They would instead likely stay on to continue to run their company as part ofthe larger organization, or stay on for awhile as an advisor to help the bigger company integrate their smaller company in.
I could see a rollup being a lot less prone to problems perhaps if it is smaller (say four companies at the start) and one person has the authority to override the others if need be. So for example you the entrepreneur hold a 51% stake in the holding company, and the four companies in the organization hold together 49%. Thus if push comes to shove, in the end, you can overrule everyone if need be and centrally direct the organization.
And if you have the money, you could always just own 100% of the operation from the get-go, purchasing the sub-companies completely from the owners, so that you answer to no one but yourself. If you have venture capitalists involved, you will have to answer to them, but at least then it is just you and the venture capitalists, not you, a bunch of scattered company owners, and the venture capitalists (by "venture capitalists," I in general mean a venture capital firm consisting of multiple partners). Venture capitalists or no venture capitalists, if you take the company public, well then you have various shareholders that you now have to answer to, but it is usually different from the rollup model, because now you'll have many shareholders as opposed to just a dozen or so that can all argue on how to run the company. These many shareholders will expect you and the professional management of the company to then work to increase the quarterly share price of the company.
Monday, October 4, 2010
On the subject of a "Great Idea"
So one recurring theme about becoming rich that many people seem to buy into is the idea that you need a great idea, that it is the thinking up that Great Idea that is what makes people rich. For example, the engineer who came up with the idea for the Super Soaker water gun, or the guys who came up with the Life Is Good phrase for apparel.
But this is a misconception. Yes, a great idea can certainly be a nice thing to have, and if you are selling this idea to an established company, this is fine, but this is not essential to building a company, which is the primary way I am talking of to become wealthy. For building a company, what counts most is the quality of the company itself. Sure you can start off with a great idea, but the most important thing is to build a great company that has a creative culture that can continue to produce all sorts of great new products.
Many people focus solely on the idea of creating a world-class product and forget that one also needs to create a world-class company as well. A world-class company will create world-class products and services.
And in creating a world-class company, one doesn't necessarilly need any revolutionary new idea. They just need to find a product or service and find a way to deliver or provide that product and service better than the existing competition. A perfect example was the creation of the company Waste Management. There is nothing exciting about garbage or waste. But building a world-class company for removing and properly handling waste in a professional manner resulted in a huge company.
Or plumbing. An entrepreneur might have the goal to build a huge professional plumbing company. Again, no "great ideas" involved here, just the concept of building a world-class company to deliver a service everybody needs.
But this is a misconception. Yes, a great idea can certainly be a nice thing to have, and if you are selling this idea to an established company, this is fine, but this is not essential to building a company, which is the primary way I am talking of to become wealthy. For building a company, what counts most is the quality of the company itself. Sure you can start off with a great idea, but the most important thing is to build a great company that has a creative culture that can continue to produce all sorts of great new products.
Many people focus solely on the idea of creating a world-class product and forget that one also needs to create a world-class company as well. A world-class company will create world-class products and services.
And in creating a world-class company, one doesn't necessarilly need any revolutionary new idea. They just need to find a product or service and find a way to deliver or provide that product and service better than the existing competition. A perfect example was the creation of the company Waste Management. There is nothing exciting about garbage or waste. But building a world-class company for removing and properly handling waste in a professional manner resulted in a huge company.
Or plumbing. An entrepreneur might have the goal to build a huge professional plumbing company. Again, no "great ideas" involved here, just the concept of building a world-class company to deliver a service everybody needs.
Becoming a Billionaire
So one of my primary goals is to become a billionaire. No, not a millionaire, a billionaire. In order to do this, I intend to build a huge company and invest and build real-estate. I love entrepreneurship (or at least the subject of it---I still have to actually engage in it) and my dream is to build enormous companies.
Why am I so bent on becoming a billionaire? Well, a few reasons. For one thing, I love luxury. To expand on that more I love architecture, gardens, furniture, and interior design. As a result, I have some dream homes that I plan to own, and the only way I will be able to own these dream homes is to be very wealthy. I also love fine automobiles, everything from Lamborghinis to Bentleys. Again, the only way to own these is to be wealthy. And I love yachts, private jets, and fabulous vacations. Again, this stuff requires wealth.
The other reasons are that there are a lot of things that I want to do that will require a lot of wealth. For example, I want to work at underwater exploration, at underwater flight as Graham Hawkes has been. That will require some money. I want to be able to study whatever I want and to fund my own research. I want to contribute a lot to philanthropy. I want to do a lot of work in the arts as an artist, but to do this requires money as one can't make much income from the arts.
I also want the ability to start any companies I think up. This, again, requires money. I want to develop real-estate and invest and so forth as well. Yes, one doesn't necessarilly need a billion-dollar net worth for all of this stuff, however for the homes I want, I think the cost of the home would be around $40 million to $50 million, which to comfortably afford, I'd prefer a $1 billion net worth at least.
Basically I want the ability to build and create things as I please, whether this be through scientific and engineering research or the arts. To get this wealth, I will have to succeed in building a huge company.
Why am I so bent on becoming a billionaire? Well, a few reasons. For one thing, I love luxury. To expand on that more I love architecture, gardens, furniture, and interior design. As a result, I have some dream homes that I plan to own, and the only way I will be able to own these dream homes is to be very wealthy. I also love fine automobiles, everything from Lamborghinis to Bentleys. Again, the only way to own these is to be wealthy. And I love yachts, private jets, and fabulous vacations. Again, this stuff requires wealth.
The other reasons are that there are a lot of things that I want to do that will require a lot of wealth. For example, I want to work at underwater exploration, at underwater flight as Graham Hawkes has been. That will require some money. I want to be able to study whatever I want and to fund my own research. I want to contribute a lot to philanthropy. I want to do a lot of work in the arts as an artist, but to do this requires money as one can't make much income from the arts.
I also want the ability to start any companies I think up. This, again, requires money. I want to develop real-estate and invest and so forth as well. Yes, one doesn't necessarilly need a billion-dollar net worth for all of this stuff, however for the homes I want, I think the cost of the home would be around $40 million to $50 million, which to comfortably afford, I'd prefer a $1 billion net worth at least.
Basically I want the ability to build and create things as I please, whether this be through scientific and engineering research or the arts. To get this wealth, I will have to succeed in building a huge company.
Why I Love Entrepreneurship and Business
To me, entrepreneurship is one of the most wonderful of professions, right up there with being a medical doctor, lawyer, scientist, engineer, statesman, etc...entrepreneurs solve problems and build things. They create and innovate. They improve the standard of living for everyone, and they create jobs and economic growth along with it.
For example, a successful entrepreneur who builds a big company ends up doing the following:
1) Creates a lot of jobs
2) Creates economic growth and contributes to the overall economic growth of their community
3) Creates a lot of new tax revenue for the government (through the job creation and business growth)
4) Provides new products and services for society, which improve the standard of living
5) Allows the owner (s) to become wealthy (nothing bad there), and this thus allows the owner to contribute to things like charities, churches, and so forth
Now YES, I am well aware that plenty of entrepreneurs do not become entrepreneurs with all of the above in mind, who do it mostly for the money. Just the same, there are plenty of people who become medical doctors for the money, lawyers for the money, politicians for power (very few politicians are true statesman in my opinion), but this isn't true for all people in these professions.
In addition to all of the good entrepreneurship and business overall does, because it is about solving problems, building things, and providing products and services that improve the standard of living and quality of life for everyone, it also involves things such as passion, creativity, drive, determination, tenacity, courage, calculated risk-taking, etc...all qualities I admire in a person.
For example, a successful entrepreneur who builds a big company ends up doing the following:
1) Creates a lot of jobs
2) Creates economic growth and contributes to the overall economic growth of their community
3) Creates a lot of new tax revenue for the government (through the job creation and business growth)
4) Provides new products and services for society, which improve the standard of living
5) Allows the owner (s) to become wealthy (nothing bad there), and this thus allows the owner to contribute to things like charities, churches, and so forth
Now YES, I am well aware that plenty of entrepreneurs do not become entrepreneurs with all of the above in mind, who do it mostly for the money. Just the same, there are plenty of people who become medical doctors for the money, lawyers for the money, politicians for power (very few politicians are true statesman in my opinion), but this isn't true for all people in these professions.
In addition to all of the good entrepreneurship and business overall does, because it is about solving problems, building things, and providing products and services that improve the standard of living and quality of life for everyone, it also involves things such as passion, creativity, drive, determination, tenacity, courage, calculated risk-taking, etc...all qualities I admire in a person.
Saturday, October 2, 2010
Ignorant Progressives Versus Smart Progressives
So I've been thinking recently about Progressives and their worldview and what they desire, and I've come to the conclusion that in general there are three types of Progressives: what I'll call the Ignorant Progressives, Smart Progressives, and Ideological Progressives.
Ignorant Progressive
So what exactly is an "Ignorant Progressive?" This type of Progressive is the good-hearted kind, the kind who fits Ronald Reagan's quote when he said, "The trouble with our liberal friends isn't that they're wrong, it's that they know so much that isn't so." These Progressives think that the solution to every problem in society is more government. That to fix poverty, education, healthcare, crime, etc...we just need government programs.
Such Progressives do not adhere to this belief in big government out of any ideology, it is out of ignorance. They literally have no understanding of the alternative ways of looking at and thinking about these problems. It is "obvious" to them that more government is the solution and that we could create a utopia if only those evil meanie conservatives would just let us spend the money.
If those evil conservatives who just "don't care" and only "represent the rich" would just get the out of the way or get with the program, we could provide everyone with free healthcare, free education, fix crime, fix poverty, and so forth.
These types of Progressives from my observation often end up becoming Republicans, or much more moderate Democrats, later on in life if/when they learn about the Republican positions on these subjects a lot more in-depth.
Smart Progressive
This type of Progressive is the truly dangerous type, and the one with a malicious agenda. They are usually elitist, and do not care much at all about the people (note this is usually the case).
They understand fully that the creation of a cradle-to-grave social welfare state will turn the people into obedient lambs to the government and keep them mired in poverty, sucking off of the breast of the government, which is what they want.
They understand fully that heavy regulation over an industry will allow that industry to become dominated by a few very large, very powerful corporations, which is what they want, as an industry dominated by a few very large and powerful corporations is far easier to control and regulate, and form a relationship with, then one made up of many hundreds or thousands of smaller players.
The understand that control over certain industries allow a great deal of control over the economy overall, for example healthcare, as this is one-sixth of the economy.
They understand fully that a high minimum wage protects Big Business by making it much tougher for their smaller business competitors to compete, and also protects the labor unions from cheaper labor (in the 1940s and 1950s, this was blacks and minorities, in current times, it is immigrant labor).
The Smart Progressive understands fully the conservative arguments against their policies, and understands fully that their policies aid Big Business and keep the people mired in poverty. But this type of Progressive is an elitist who is after control. They are not at all interested in helping the people so much as in controlling the people and maintaining permanent power. They are usually very elitist and believe that the people need to be ruled by them.
Ideological Progressive
This type of Progressive is very interesting, and even confusing, because it usually consists of very intelligent people, who are also decent, but for some reason these people adhere to beliefs that make no sense. to give an example, such a Progressive might claim we could fund universal healthcare and universal college-level education for everyone. If you point out to them all of the problems occuring with the nations and states that try these things, they will just ignore those facts.
For example, the French national healthcare system is deeply in debt. The British National Health Service, is also in debt. The UK and France themselves are in some rather deeper debt. Italy, Spain, Greece, and Ireland, are on the verge of bankruptcy financially. One could look at the financial crisis that is the Massachussettes healthcare program, the financial disaster that was the Tennessee experiment with expanded government healthcare (TennCare), the massive fiscal disaster that is California, our largest economy in the USA, etc...plus you factor in the fact that the European nations also spend less as a percentage of GDP on national defense than the United States does. Yet, they still cannot afford their social welfare states.
But none of the above will phase the Ideological Progressive. They are not evil and they usually even understand all the conservative arguments. But yet they adhere to this belief system in a very large social welfare state. Which is why I name them the Ideological Progressive...the only thing I can think of that makes them this way is ideology.
Ignorant Progressive
So what exactly is an "Ignorant Progressive?" This type of Progressive is the good-hearted kind, the kind who fits Ronald Reagan's quote when he said, "The trouble with our liberal friends isn't that they're wrong, it's that they know so much that isn't so." These Progressives think that the solution to every problem in society is more government. That to fix poverty, education, healthcare, crime, etc...we just need government programs.
Such Progressives do not adhere to this belief in big government out of any ideology, it is out of ignorance. They literally have no understanding of the alternative ways of looking at and thinking about these problems. It is "obvious" to them that more government is the solution and that we could create a utopia if only those evil meanie conservatives would just let us spend the money.
If those evil conservatives who just "don't care" and only "represent the rich" would just get the out of the way or get with the program, we could provide everyone with free healthcare, free education, fix crime, fix poverty, and so forth.
These types of Progressives from my observation often end up becoming Republicans, or much more moderate Democrats, later on in life if/when they learn about the Republican positions on these subjects a lot more in-depth.
Smart Progressive
This type of Progressive is the truly dangerous type, and the one with a malicious agenda. They are usually elitist, and do not care much at all about the people (note this is usually the case).
They understand fully that the creation of a cradle-to-grave social welfare state will turn the people into obedient lambs to the government and keep them mired in poverty, sucking off of the breast of the government, which is what they want.
They understand fully that heavy regulation over an industry will allow that industry to become dominated by a few very large, very powerful corporations, which is what they want, as an industry dominated by a few very large and powerful corporations is far easier to control and regulate, and form a relationship with, then one made up of many hundreds or thousands of smaller players.
The understand that control over certain industries allow a great deal of control over the economy overall, for example healthcare, as this is one-sixth of the economy.
They understand fully that a high minimum wage protects Big Business by making it much tougher for their smaller business competitors to compete, and also protects the labor unions from cheaper labor (in the 1940s and 1950s, this was blacks and minorities, in current times, it is immigrant labor).
The Smart Progressive understands fully the conservative arguments against their policies, and understands fully that their policies aid Big Business and keep the people mired in poverty. But this type of Progressive is an elitist who is after control. They are not at all interested in helping the people so much as in controlling the people and maintaining permanent power. They are usually very elitist and believe that the people need to be ruled by them.
Ideological Progressive
This type of Progressive is very interesting, and even confusing, because it usually consists of very intelligent people, who are also decent, but for some reason these people adhere to beliefs that make no sense. to give an example, such a Progressive might claim we could fund universal healthcare and universal college-level education for everyone. If you point out to them all of the problems occuring with the nations and states that try these things, they will just ignore those facts.
For example, the French national healthcare system is deeply in debt. The British National Health Service, is also in debt. The UK and France themselves are in some rather deeper debt. Italy, Spain, Greece, and Ireland, are on the verge of bankruptcy financially. One could look at the financial crisis that is the Massachussettes healthcare program, the financial disaster that was the Tennessee experiment with expanded government healthcare (TennCare), the massive fiscal disaster that is California, our largest economy in the USA, etc...plus you factor in the fact that the European nations also spend less as a percentage of GDP on national defense than the United States does. Yet, they still cannot afford their social welfare states.
But none of the above will phase the Ideological Progressive. They are not evil and they usually even understand all the conservative arguments. But yet they adhere to this belief system in a very large social welfare state. Which is why I name them the Ideological Progressive...the only thing I can think of that makes them this way is ideology.
President Bush Was Not a Right-Winger
...or at least, not in the way the Democrats like to keep making out. The way they keep speaking, you would think that he governed like a Reagan Republican or something. The Democrats keep talking about how we need not return to the types of policies that "got us into this mess in the first place." Okay, well what policies exactly of President Bush's are they talking about a "return to?" Because last I checked, President Bush governed in many ways like a Democrat with a Republican twist:
1) He said he would re-sign the Assault Weapons Ban when it expired if Congress would renew it
2) He signed what at the time was the largest expansion of the government into healthcare in decades with his Medicare Prescription Drug Bill (which ironically is actually managing to pay for itself right now! a first it seems among government healthcare programs considering the Massachusettes program, the Tennessee program, and Medicare and Medicaid, have all spiraled out of control in costs).
3) He signed the Sarbannes-Oxley legislation, which increased regulations on corporations and the financial system, because of the scandals from companies such as Enron, Worldcom, Tyco, and so forth.
4) He implemented No Child Left Behind, an expansion of the federal government into the educational system, something traditionally only supposed to be the realm of the states and local government.
5) He tried to grant amnesty to illegal immigrants
6) He sent more aid to fight AIDS in Africa than any other president in history (indeed, really any other person).
7) He doubled the Child Income Tax Credit from $500 to $1000 per child
Where is any of this "right-wing?" Yes, he did try to partially privatize Social Security which fell through and he would not engage in any kind of carbon cap-and-trade scheme, and of course there were his national security and foreign policies, from the wars in Iraq and Afghanistan to Guantanomo Bay, surveillance ("wiretapping"), the Patriot Act, waterboarding, enhanced interrogations, rendition, military tribunals, his shifting American foreign policy to being much more unilateral, etc...but none of this stuff had anything to do with the economy (except for the cap-and-trade resistance, which helped the economy, not hurt it).
I do not know of any Republicans talking about going and increasing gun control, increasing the federal government's presence into education, increasing the government's presence into healthcare, increasing the government's presence into the financial system, granting amnesty to illegal immigrants, and so forth.
Nope, the people talking about doing all that, and in the name of "Change," are the Democrats, and in particular Obama. In fact, it almost seems as if Obama is just Bush 2.0 in this sense. Or President Bush was Obama-lite in this sense. President Obama pushed through MASSIVE new regulation of the healthcare system, MASSIVE new regulation of the financial system, and wants MASSIVE change to the areas of education (actually he already nationalized the Student Loan Program), and energy.
1) He said he would re-sign the Assault Weapons Ban when it expired if Congress would renew it
2) He signed what at the time was the largest expansion of the government into healthcare in decades with his Medicare Prescription Drug Bill (which ironically is actually managing to pay for itself right now! a first it seems among government healthcare programs considering the Massachusettes program, the Tennessee program, and Medicare and Medicaid, have all spiraled out of control in costs).
3) He signed the Sarbannes-Oxley legislation, which increased regulations on corporations and the financial system, because of the scandals from companies such as Enron, Worldcom, Tyco, and so forth.
4) He implemented No Child Left Behind, an expansion of the federal government into the educational system, something traditionally only supposed to be the realm of the states and local government.
5) He tried to grant amnesty to illegal immigrants
6) He sent more aid to fight AIDS in Africa than any other president in history (indeed, really any other person).
7) He doubled the Child Income Tax Credit from $500 to $1000 per child
Where is any of this "right-wing?" Yes, he did try to partially privatize Social Security which fell through and he would not engage in any kind of carbon cap-and-trade scheme, and of course there were his national security and foreign policies, from the wars in Iraq and Afghanistan to Guantanomo Bay, surveillance ("wiretapping"), the Patriot Act, waterboarding, enhanced interrogations, rendition, military tribunals, his shifting American foreign policy to being much more unilateral, etc...but none of this stuff had anything to do with the economy (except for the cap-and-trade resistance, which helped the economy, not hurt it).
I do not know of any Republicans talking about going and increasing gun control, increasing the federal government's presence into education, increasing the government's presence into healthcare, increasing the government's presence into the financial system, granting amnesty to illegal immigrants, and so forth.
Nope, the people talking about doing all that, and in the name of "Change," are the Democrats, and in particular Obama. In fact, it almost seems as if Obama is just Bush 2.0 in this sense. Or President Bush was Obama-lite in this sense. President Obama pushed through MASSIVE new regulation of the healthcare system, MASSIVE new regulation of the financial system, and wants MASSIVE change to the areas of education (actually he already nationalized the Student Loan Program), and energy.
Stop blaming Bush
So one of the rants I have often seen leftists make on forums (and occasionally on television if my memory is serving me right) is that yes, the economic problems we currently face are very large and deep, but the Tea Party and their proponents such as Sarah Palin are stupid idiots for thinking that the solution to the mess is to just put Joe Sixpack in charge (to use the phrase of one guy on a forum).
Well ignoring the fact that I don't think the Tea Party types are promoting necessarilly just putting Joe Sixpack in charge, one thing these very leftists repeatedly keep doing that I do not understand is blaming Bush for the cause of the economic problems.
Their reasoning seems to be: "These problems are very deep and there are no easy answers or solutions; the actual problems themselves are not really fully understood yet. But Bush did it."
Now of course, exactly how President Bush caused it, is never addressed. What these "failed Bush policies" President Obama keeps referring to, precisely are, you never really see defined. The reality is that, just as the solutions to the crises are complex, so is the cause. You could literally fill an entire shelf with books and you still would not have a full understanding of the causes of this crises. There are all sorts of variables involved:
Deregulation of certain areas perhaps
Excessive regulation of certain areas it seems
Lack of oversight from the SEC as they couldn't keep track of all the information from the regulations
Greedy mortgage lenders who lent mortgages to those who wouldn't be able to pay them back
Greedy home buyers who took out mortgages they should not have
Fannie Mae and Freddie Mac
Bad monetary policy on the part of the Federal Reserve
Excessive spending by the Bush administration (now with further spending by the Obama administration it seems)
...and so forth. There are probably other things I did not cover that I am not thinking of right now or just am not aware of. But this crises is like the Great Depression. There were a lot of variables that created what we now know of as "the Great Depression." Just the same, this current crises's causes were very complex and deep.
And the Republicans can get faulted somewhat for this kind of simplistic reasoning too. Claims ranging from "Bush did it" and "failed Bush policies" to "Democrats did it with Fannie Mae and Freddie Mac" to "Reagan did it" to "Alan Greenspan did it!" all are grossly oversimplifying this topic.
Well ignoring the fact that I don't think the Tea Party types are promoting necessarilly just putting Joe Sixpack in charge, one thing these very leftists repeatedly keep doing that I do not understand is blaming Bush for the cause of the economic problems.
Their reasoning seems to be: "These problems are very deep and there are no easy answers or solutions; the actual problems themselves are not really fully understood yet. But Bush did it."
Now of course, exactly how President Bush caused it, is never addressed. What these "failed Bush policies" President Obama keeps referring to, precisely are, you never really see defined. The reality is that, just as the solutions to the crises are complex, so is the cause. You could literally fill an entire shelf with books and you still would not have a full understanding of the causes of this crises. There are all sorts of variables involved:
Deregulation of certain areas perhaps
Excessive regulation of certain areas it seems
Lack of oversight from the SEC as they couldn't keep track of all the information from the regulations
Greedy mortgage lenders who lent mortgages to those who wouldn't be able to pay them back
Greedy home buyers who took out mortgages they should not have
Fannie Mae and Freddie Mac
Bad monetary policy on the part of the Federal Reserve
Excessive spending by the Bush administration (now with further spending by the Obama administration it seems)
...and so forth. There are probably other things I did not cover that I am not thinking of right now or just am not aware of. But this crises is like the Great Depression. There were a lot of variables that created what we now know of as "the Great Depression." Just the same, this current crises's causes were very complex and deep.
And the Republicans can get faulted somewhat for this kind of simplistic reasoning too. Claims ranging from "Bush did it" and "failed Bush policies" to "Democrats did it with Fannie Mae and Freddie Mac" to "Reagan did it" to "Alan Greenspan did it!" all are grossly oversimplifying this topic.
Sunday, September 26, 2010
Myths and Misperceptions Regarding Supply-Side Economics
Anyone who has studied some economics has likely heard of what is called supply-side economics. However, there seems to be a big misconception over just what supply-side economics actually is. I have heard it defined by quite a few as the following:
The idea that when you cut taxes for the rich, they will spend the money and it will "trickle-down" to the middle-class and the poor.
It has also been defined as:
The idea that when you cut taxes for the rich and business, that they will be so inspired to work harder that they will produce a assive amount of new wealth and increase tax revenues.
Both of these are wrong. Example #1 is often nicknamed (deridingly) "Trickle-Down Economics" and many on the Right throughout the years have fallen hook, line, and sinker for this definition as well it seems. But no economist anywhere (from what I understand) has ever made this claim about supply-side economics.
Example #2 is based on a misconception of the Laffer Curve, which is also a concept misunderstood by many, both folks on the Left and the Right.
There's also a third definition for supply-side economics as well:
The idea that when the economy is in a recession, you cut taxes.
Example #3 is really prominent among people and politicians these days. It seems every time a recession occurs, Republicans say, "Tax cuts! Deficit spending by the government doesn't work." And then Democrats go, "Stop with that ridiculous supply-side economics. We need deficit spending and the reason deficit spending historically hasn't worked is because we have never spent enough."
So I will address these fallacies each in some detail. To start, there's generally two ways of thinking about the economy: demand-side and supply-side. Demand-side focuses on demand. Supply-side focuses on supply. Keynesian economics, named after the economist John Maynard Keynes, is demand-side. Keynes called for demand-side stimulus in recessions. When private-sector aggregate demand drops off, the government needs to step in to make up for the drop-off in demand. There are generally three ways of doing this:
1) Government deficit spending - This in itself has different variations. It means the government runs a deficit in order to spend money to make up for the drop-off in aggregate demand in the private sector. Government can try spending on infrastructure, it could try buying all sorts of stuff to prevent companies from having to cut back on production, also there is what is called military Keynesianism, basically gun up the defense budget to stimulate the economy. Whether or not deficit spending works or not is hotly debated in economics (and would require a whole other blog post to address on its own). The media, generally leaning to the far-Left, will try to make out as if anyone critical of deficit spending as a form of stimulus is some ultra-rightwing crackpot, but the reality is that many economists are skeptical of deficit spending as a form of stimulus.
For example, Harvard economist Greg Mankiw is a skeptic: http://gregmankiw.blogspot.com/2009/01/krugman-on-stimulus-skeptics.html
Paul Krugman, the Nobel Prize-winning economist, on the other hand, is a huge proponent.
(there are other good economists who are skeptics and proponents)
2) Demand-side tax cuts - This shatters myth #3, the idea that supply-side economics calls for tax cuts as a form of stimulus. Demand-side tax cuts are not supply-side, they are throughly Keynesian, they just take an opposite view, that is, instead of have the government run a deficit by spending the money on its own to create demand, just cut people's taxes and let them spend the money instead.
Which works better is again hotly debated. Spending proponents say that if given tax cuts, there is no guarantee the people will spend the money. They may hoard it instead, so then no stimulative effect occurs. Whereas with bureaucrats spending it, you can be absolutely positive it will get spent. This view also relies on what is called the Keynesian Multiplier Effect, basically, that government spending money will increase the GDP, which means people will make more money, which means their aggregate demand will increase, which means that the GDP will expand even further from thir additional spending. According to the spending advocates, the multiplier effect means that for every dollar of government spending, you get more than a dollar of economic growth (in practice, this is very questionable however).
Tax cut proponents say that bureaucrats do not know how to spend the money, that the people know a lot better what to purchase to increase their well-being than bureaucrats do (certain public works projects may create economic growth in terms of the statistics, but do little to nothing to improve the people's well-being), and that deficit spending is too slow. Yes, the money is guaranteed to be spent, but how long will it take? Whereas with tax cuts the money goes immediately to the people.
3) Helicopter Technique - This is basically kind of the same thing as tax cuts, except instead of cutting taxes, the government spends money, but it spends it by sending everyone a huge check in the mail, in the hopes that the people will then spend the money and stimulate the economy. Unemployment benefits are in a sense a form of this.
These are in general the three ways to stimulate the economy to increase demand. All of them have some merti and all of them are open to criticisms as I see it. None of them should be seen as a 100% full-on solution for economic problems. There are also some other ways as well, but they are controversial (for example, unemployment benefits, and raising the minimum wage).
Some say that increasing unemployment benefits will increase aggregate demand and thus help move the economy out of the recession, and thus unemployment benefits need to be continued in this recession for example (according to this belief). You give people money and they will spend it (usually the same people claiming this are the ones who claim the people will hoard the money if it is given in tax cuts it seems!).
Critics point out that maintaining high unemployment benefits and for too long will artificially keep the unemployment rate high (people will sit on their rears on unemployment until their benefits are going to run out, upon which they then start looking for work). Thus, while unemployment benefits for a certain length of time represent a good form of social safety net, keeping them in place too long can inadverdently end up extending a recession.
Both of these views hold merit I think but again both need to be taken with a grain of salt because the criticisms of both of them are pretty valid too.
Another form of economic stimulus is raising the minimum wage. Here again it's the same arguments. The proponents say that raising the minimum wage will give people more money to spend, thus increasing aggregate demand, and thus stimulating economic growth. The critics contend that raising the minimum wage only increases the unemployment rate, because of the laws of supply and demand, i.e. artificially increase the price of something and you create a surplus of it.
And again, there's a form of irony. With something such as gasoline, the same people proposing a "living wage" recognize that artificially raising the price of fuel will get people to buy less. It is one of the best ways to stop people from buying SUVs and pickup trucks and switching to more fuel-efficient vehicles (BTW I am not saying I advocate such a policy). But when it comes to employment, these same people then think that one can raise the price of labor for businesses and not have any side effects.
On this, I would say that the critique of a higher minimum wage is pretty valid. Most employers in America are small businesses, and small businesses have a limit on what they can pay their employees. Increase the costs of those employees and something must give. Each full-time job with benefits may be converted into two part-time jobs with zero benefits, pay can be cut, what the owners pay themselves may be reduced, or prices may have to raised, offerings of goods and services may have to be cut, offerings of the quality of goods and services may cut (less meat on the sandwich), etc...or some combination of the above.
Big Businesses can handle a higher minimum wage better, and I believe it is for this reason that Wal-Mart supports a higher minimum wage.
Also the economist Paul Krugman wrote an article some years ago pointing out the nasty effects to employment of a higher minimum wage as well; he described a way to do the things a "living wage" seeks to do, but with a different policy mechanism. However, this article was written back around 1990. I have the link somewhere, but do not know where it is now. Also, I would not be shocked if Krugman has since changed his mind on this issue. A higher minimum wage also protects the trade unions by pricing workers out of the market.
Now a little on supply-side economics. As pointed out, demand-side economics focuses on demand. Supply-side economics, by contrast, deals with the supply of goods and services in the economy. So for example in dealing with excessive inflation, a demand-sider will look at the problem and reason, "The economy has an excess of demand in it. We need to increase taxes or reduce government spending." (by demand-side economics, if tax cuts are done for stimulus, once the economy recovers, they must be increased back to where they were, or the economy will become overwhelmed with demand according to the theory and skyrocket inflation).
Whereas a supply-side looks at the situation and reasons, "There are not enough goods and services to meet the demand in the economy. We need to see if we can increase the supply of goods and services to meet this demand."
This can be accomplished if taxes on business and investment are too high and also if sectors of the economy are so excessively regulated that it unnecessarilly hamstrings economic growth.
Thus supply-side economics calls for cuts to investment and business taxes. There's only one problem with this: the politics. Because many taxes for investment and businesses are "for the rich." Not too many Americans make money through investments. Only the higher-earners who also devote substantial time to investing, or rich people who make a lot of money from investments, earn money this way. I may be mistaken, but I believe middle-class people can earn money indirectly this way if their pensions or mutual funds receive money via investments. For example, if a big corporation pays out money in dividends, mutual funds, pension funds, etc...that own large chunks of that company's stock, will make money in that sense. However, explaining all of this to the general public as a politician can be a bit tricky.
So in general, cutting investment taxes can be seen as cutting taxes for the rich. Business taxes would be the corporate tax rates, for corporations of course (and nothing tricker for a politician than giving corporations tax cuts!), and the tax cuts that affect small businesses. Small businesses come in various forms, LLCs, LLPs, C-Corporations, S-Corporations, etc...S Corporations are taxed at the individual marginal income tax rates. Actually, the business itself is not taxed at this rate, the income the business makes is passed onto the shareholders who then pay taxes on it at the individual rate.
So business tax rates are the corporate and income tax rates. Only a portion of small businesses are taxed at the highest marginal income tax rates, so a reduction in the highest marginal rates in the hopes of stimulating small business investment and job creation will probably only apply to a limited number of small businesses (although I do not know how many exactly). Interestingly, a reduction in lower marginal tax rates, while a demand-side tax cut, could also, to a degree, be supply-side if it helps a business owner invest in their business more.
The thing to keep in mind however with supply-side economics is that the immediate benefit of any tax cuts for businesses, provided they increase investment, will likely go to the middle-class. This is because the business will hire additional employees. The business does this in the hopes of making more money for the shareholders in the future, but the immediate benefit goes to the workers who were hired.
With an economy hamstring by excessive regulations and/or very high business and investment taxes, slashing these tax rates usually will lead to such a boom in investment and business growth and creation, that a massive number of jobs are created, and with it, a huge boost in tax revenue (along with a huge increase in income and standard-of-living for the middle class). The thing to keep in mind though is that investment and business taxes need to already be pretty restrictive for this to happen. If they are fairly low already, then lowering them further likely won't do much. Another key point to remember: no one gets a job from a poor person or a broke business.
So to get to our examples now:
Example #1
The idea that when you cut taxes for the rich, they will spend the money and it will "trickle-down" to the middle-class and the poor.
As said, no economist has ever made this claim about supply-side economics. Politicians and media pundits, on both the Left and the Right, have made it throughout the years, but it is wrong. That is not to say that such a trickle-down effect cannot happen. It probably could. But that isn't the idea. The idea, as stated, is that when business and investment taxes are cut, you stimulate investment and thus create more goods and services and jobs for the economy. And provided this happens, the immediate benefit is to the middle-class, not the rich.
Example #2
The idea that when you cut taxes for the rich, that they will be so inspired to work harder that they will produce a massive amount of new wealth and increase tax revenues.
As described above, this is based on a misunderstanding of the Laffer curve. Basically, the Laffer curve, by economist Arthur Laffer, says that as you raise taxes, you increase revenues. But eventually you reach a point where taxes are so restrictive that as you raise them higher, you actually start to see tax revenues decline. And the inverse holds true (PAY ATTENTION REPUBLICANS): Lowering taxes that are too high and too restrictive will increase revenues, but eventually you reach a point where when you lower the tax rates, you lower the revenues as well. (this isn't to argue against lowering taxes, just to point out that after a certain point, lowering taxes must also be accompanied by reductions in government spending as well!).
Most economists agree with the Laffer curve in general, but they disagree on what the exact rates are at which revenues start to decline as taxes are increased. This really also depends on the tax itself as well. For example, historically, cutting the capital gains tax rate, in the short-term at least, has increased tax revenues. And raising the capital gains tax rate, in the short-term again, has decreased revenues. But this is because the capital gains tax is a unique tax and what happens in the long term with raising or lowering it is more debatable.
Different taxes behave differently.
As noted above, supply-side economics is based on incentivizing businesses to invest more and create jobs, and for this to happen, the tax rates must already be excessively high. A business isn't just going to invest more because of a minor cut in their taxes. But a major slash can definitely do the trick. For example, in the United Kingdom, when Labour party raised investment tax rates to around 90% I think it was, not much investment occurred. Slash those rates down to 40% though, and watch investment and job creation explode.
Example #3
The idea that when the economy is in a recession, you cut taxes.
Again, as explained above, this is a misconception of both the Left and the Right. When the economy is in recession, provided one wants to try some form of stimulus (Austrian economists hold the view that no stimulus is needed), a stimulus can be either supply-side or demand-side, and a demand-side stimulus can be a combination of deficit spending and tax cuts. One can also combine a supply-side stimulus with a demand-side stimulus.
The idea that when you cut taxes for the rich, they will spend the money and it will "trickle-down" to the middle-class and the poor.
It has also been defined as:
The idea that when you cut taxes for the rich and business, that they will be so inspired to work harder that they will produce a assive amount of new wealth and increase tax revenues.
Both of these are wrong. Example #1 is often nicknamed (deridingly) "Trickle-Down Economics" and many on the Right throughout the years have fallen hook, line, and sinker for this definition as well it seems. But no economist anywhere (from what I understand) has ever made this claim about supply-side economics.
Example #2 is based on a misconception of the Laffer Curve, which is also a concept misunderstood by many, both folks on the Left and the Right.
There's also a third definition for supply-side economics as well:
The idea that when the economy is in a recession, you cut taxes.
Example #3 is really prominent among people and politicians these days. It seems every time a recession occurs, Republicans say, "Tax cuts! Deficit spending by the government doesn't work." And then Democrats go, "Stop with that ridiculous supply-side economics. We need deficit spending and the reason deficit spending historically hasn't worked is because we have never spent enough."
So I will address these fallacies each in some detail. To start, there's generally two ways of thinking about the economy: demand-side and supply-side. Demand-side focuses on demand. Supply-side focuses on supply. Keynesian economics, named after the economist John Maynard Keynes, is demand-side. Keynes called for demand-side stimulus in recessions. When private-sector aggregate demand drops off, the government needs to step in to make up for the drop-off in demand. There are generally three ways of doing this:
1) Government deficit spending - This in itself has different variations. It means the government runs a deficit in order to spend money to make up for the drop-off in aggregate demand in the private sector. Government can try spending on infrastructure, it could try buying all sorts of stuff to prevent companies from having to cut back on production, also there is what is called military Keynesianism, basically gun up the defense budget to stimulate the economy. Whether or not deficit spending works or not is hotly debated in economics (and would require a whole other blog post to address on its own). The media, generally leaning to the far-Left, will try to make out as if anyone critical of deficit spending as a form of stimulus is some ultra-rightwing crackpot, but the reality is that many economists are skeptical of deficit spending as a form of stimulus.
For example, Harvard economist Greg Mankiw is a skeptic: http://gregmankiw.blogspot.com/2009/01/krugman-on-stimulus-skeptics.html
Paul Krugman, the Nobel Prize-winning economist, on the other hand, is a huge proponent.
(there are other good economists who are skeptics and proponents)
2) Demand-side tax cuts - This shatters myth #3, the idea that supply-side economics calls for tax cuts as a form of stimulus. Demand-side tax cuts are not supply-side, they are throughly Keynesian, they just take an opposite view, that is, instead of have the government run a deficit by spending the money on its own to create demand, just cut people's taxes and let them spend the money instead.
Which works better is again hotly debated. Spending proponents say that if given tax cuts, there is no guarantee the people will spend the money. They may hoard it instead, so then no stimulative effect occurs. Whereas with bureaucrats spending it, you can be absolutely positive it will get spent. This view also relies on what is called the Keynesian Multiplier Effect, basically, that government spending money will increase the GDP, which means people will make more money, which means their aggregate demand will increase, which means that the GDP will expand even further from thir additional spending. According to the spending advocates, the multiplier effect means that for every dollar of government spending, you get more than a dollar of economic growth (in practice, this is very questionable however).
Tax cut proponents say that bureaucrats do not know how to spend the money, that the people know a lot better what to purchase to increase their well-being than bureaucrats do (certain public works projects may create economic growth in terms of the statistics, but do little to nothing to improve the people's well-being), and that deficit spending is too slow. Yes, the money is guaranteed to be spent, but how long will it take? Whereas with tax cuts the money goes immediately to the people.
3) Helicopter Technique - This is basically kind of the same thing as tax cuts, except instead of cutting taxes, the government spends money, but it spends it by sending everyone a huge check in the mail, in the hopes that the people will then spend the money and stimulate the economy. Unemployment benefits are in a sense a form of this.
These are in general the three ways to stimulate the economy to increase demand. All of them have some merti and all of them are open to criticisms as I see it. None of them should be seen as a 100% full-on solution for economic problems. There are also some other ways as well, but they are controversial (for example, unemployment benefits, and raising the minimum wage).
Some say that increasing unemployment benefits will increase aggregate demand and thus help move the economy out of the recession, and thus unemployment benefits need to be continued in this recession for example (according to this belief). You give people money and they will spend it (usually the same people claiming this are the ones who claim the people will hoard the money if it is given in tax cuts it seems!).
Critics point out that maintaining high unemployment benefits and for too long will artificially keep the unemployment rate high (people will sit on their rears on unemployment until their benefits are going to run out, upon which they then start looking for work). Thus, while unemployment benefits for a certain length of time represent a good form of social safety net, keeping them in place too long can inadverdently end up extending a recession.
Both of these views hold merit I think but again both need to be taken with a grain of salt because the criticisms of both of them are pretty valid too.
Another form of economic stimulus is raising the minimum wage. Here again it's the same arguments. The proponents say that raising the minimum wage will give people more money to spend, thus increasing aggregate demand, and thus stimulating economic growth. The critics contend that raising the minimum wage only increases the unemployment rate, because of the laws of supply and demand, i.e. artificially increase the price of something and you create a surplus of it.
And again, there's a form of irony. With something such as gasoline, the same people proposing a "living wage" recognize that artificially raising the price of fuel will get people to buy less. It is one of the best ways to stop people from buying SUVs and pickup trucks and switching to more fuel-efficient vehicles (BTW I am not saying I advocate such a policy). But when it comes to employment, these same people then think that one can raise the price of labor for businesses and not have any side effects.
On this, I would say that the critique of a higher minimum wage is pretty valid. Most employers in America are small businesses, and small businesses have a limit on what they can pay their employees. Increase the costs of those employees and something must give. Each full-time job with benefits may be converted into two part-time jobs with zero benefits, pay can be cut, what the owners pay themselves may be reduced, or prices may have to raised, offerings of goods and services may have to be cut, offerings of the quality of goods and services may cut (less meat on the sandwich), etc...or some combination of the above.
Big Businesses can handle a higher minimum wage better, and I believe it is for this reason that Wal-Mart supports a higher minimum wage.
Also the economist Paul Krugman wrote an article some years ago pointing out the nasty effects to employment of a higher minimum wage as well; he described a way to do the things a "living wage" seeks to do, but with a different policy mechanism. However, this article was written back around 1990. I have the link somewhere, but do not know where it is now. Also, I would not be shocked if Krugman has since changed his mind on this issue. A higher minimum wage also protects the trade unions by pricing workers out of the market.
Now a little on supply-side economics. As pointed out, demand-side economics focuses on demand. Supply-side economics, by contrast, deals with the supply of goods and services in the economy. So for example in dealing with excessive inflation, a demand-sider will look at the problem and reason, "The economy has an excess of demand in it. We need to increase taxes or reduce government spending." (by demand-side economics, if tax cuts are done for stimulus, once the economy recovers, they must be increased back to where they were, or the economy will become overwhelmed with demand according to the theory and skyrocket inflation).
Whereas a supply-side looks at the situation and reasons, "There are not enough goods and services to meet the demand in the economy. We need to see if we can increase the supply of goods and services to meet this demand."
This can be accomplished if taxes on business and investment are too high and also if sectors of the economy are so excessively regulated that it unnecessarilly hamstrings economic growth.
Thus supply-side economics calls for cuts to investment and business taxes. There's only one problem with this: the politics. Because many taxes for investment and businesses are "for the rich." Not too many Americans make money through investments. Only the higher-earners who also devote substantial time to investing, or rich people who make a lot of money from investments, earn money this way. I may be mistaken, but I believe middle-class people can earn money indirectly this way if their pensions or mutual funds receive money via investments. For example, if a big corporation pays out money in dividends, mutual funds, pension funds, etc...that own large chunks of that company's stock, will make money in that sense. However, explaining all of this to the general public as a politician can be a bit tricky.
So in general, cutting investment taxes can be seen as cutting taxes for the rich. Business taxes would be the corporate tax rates, for corporations of course (and nothing tricker for a politician than giving corporations tax cuts!), and the tax cuts that affect small businesses. Small businesses come in various forms, LLCs, LLPs, C-Corporations, S-Corporations, etc...S Corporations are taxed at the individual marginal income tax rates. Actually, the business itself is not taxed at this rate, the income the business makes is passed onto the shareholders who then pay taxes on it at the individual rate.
So business tax rates are the corporate and income tax rates. Only a portion of small businesses are taxed at the highest marginal income tax rates, so a reduction in the highest marginal rates in the hopes of stimulating small business investment and job creation will probably only apply to a limited number of small businesses (although I do not know how many exactly). Interestingly, a reduction in lower marginal tax rates, while a demand-side tax cut, could also, to a degree, be supply-side if it helps a business owner invest in their business more.
The thing to keep in mind however with supply-side economics is that the immediate benefit of any tax cuts for businesses, provided they increase investment, will likely go to the middle-class. This is because the business will hire additional employees. The business does this in the hopes of making more money for the shareholders in the future, but the immediate benefit goes to the workers who were hired.
With an economy hamstring by excessive regulations and/or very high business and investment taxes, slashing these tax rates usually will lead to such a boom in investment and business growth and creation, that a massive number of jobs are created, and with it, a huge boost in tax revenue (along with a huge increase in income and standard-of-living for the middle class). The thing to keep in mind though is that investment and business taxes need to already be pretty restrictive for this to happen. If they are fairly low already, then lowering them further likely won't do much. Another key point to remember: no one gets a job from a poor person or a broke business.
So to get to our examples now:
Example #1
The idea that when you cut taxes for the rich, they will spend the money and it will "trickle-down" to the middle-class and the poor.
As said, no economist has ever made this claim about supply-side economics. Politicians and media pundits, on both the Left and the Right, have made it throughout the years, but it is wrong. That is not to say that such a trickle-down effect cannot happen. It probably could. But that isn't the idea. The idea, as stated, is that when business and investment taxes are cut, you stimulate investment and thus create more goods and services and jobs for the economy. And provided this happens, the immediate benefit is to the middle-class, not the rich.
Example #2
The idea that when you cut taxes for the rich, that they will be so inspired to work harder that they will produce a massive amount of new wealth and increase tax revenues.
As described above, this is based on a misunderstanding of the Laffer curve. Basically, the Laffer curve, by economist Arthur Laffer, says that as you raise taxes, you increase revenues. But eventually you reach a point where taxes are so restrictive that as you raise them higher, you actually start to see tax revenues decline. And the inverse holds true (PAY ATTENTION REPUBLICANS): Lowering taxes that are too high and too restrictive will increase revenues, but eventually you reach a point where when you lower the tax rates, you lower the revenues as well. (this isn't to argue against lowering taxes, just to point out that after a certain point, lowering taxes must also be accompanied by reductions in government spending as well!).
Most economists agree with the Laffer curve in general, but they disagree on what the exact rates are at which revenues start to decline as taxes are increased. This really also depends on the tax itself as well. For example, historically, cutting the capital gains tax rate, in the short-term at least, has increased tax revenues. And raising the capital gains tax rate, in the short-term again, has decreased revenues. But this is because the capital gains tax is a unique tax and what happens in the long term with raising or lowering it is more debatable.
Different taxes behave differently.
As noted above, supply-side economics is based on incentivizing businesses to invest more and create jobs, and for this to happen, the tax rates must already be excessively high. A business isn't just going to invest more because of a minor cut in their taxes. But a major slash can definitely do the trick. For example, in the United Kingdom, when Labour party raised investment tax rates to around 90% I think it was, not much investment occurred. Slash those rates down to 40% though, and watch investment and job creation explode.
Example #3
The idea that when the economy is in a recession, you cut taxes.
Again, as explained above, this is a misconception of both the Left and the Right. When the economy is in recession, provided one wants to try some form of stimulus (Austrian economists hold the view that no stimulus is needed), a stimulus can be either supply-side or demand-side, and a demand-side stimulus can be a combination of deficit spending and tax cuts. One can also combine a supply-side stimulus with a demand-side stimulus.
Saturday, September 25, 2010
Alpha and Betas in Personal Relationships
So one of the things that I have been thinking about lately is this whole issue of Alpha and Beta people, in particular, relationships between such people. Basically some have said that any Alpha person should avoid marrying another Alpha person because doing so will mean the personalities will clash and the relationship just won't work. Alphas are usually defined as those who are very ambitious, goal-oriented, driven, etc...while Betas are the more laid-back types.
According to the naysayers, an Alpha woman needs a Beta man, and an Alpha man should only seek a Beta woman.
But I am not so sure. I think it depends on a few things. For example, how does one define an Alpha person versus a Beta? For example, on paper, I am an Alpha. I work hard, am very ambitious, am very goal-oriented and driven, etc...however in other ways, I am a Beta. I am not prone to say complain about bad customer service in the way many others are, or be assertive in the way many others are.
On the other hand, there are those who are Alphas in that they will complain over say bad customer service and who are assertive, but are not goal-oriented or very driven or ambitious.
I think the definitions of Alpha and Beta are a bit over-simplified and that people can have qualities of both, although they may lean more to one way than the other. In terms of what kind of partner is appropriate, I think it just depends on the people.
One could have two Alphas, say two people very goal-oriented and driven, but one may be very Alpha and the other have some Beta characteristics. Or one could have two total Alphas together, but one is more Alpha than the other.
For example:
1) Hard-charging male corporate executive-type, with wife who is also an executive, but wife is more Beta and not as assertive as the man
2) Hard-charging male corporate executive-type along with hard-charging female type, but in this instance, the woman, while dominant in her work, wants a man who is dominant as well, and the man, while dominant, doesn't want a submissive wife, he wants a wife who is his equal.
According to the naysayers, Example #2 should not work, but I think it could. One other thing to keep in mind is Beta does not mean inferior. The hard-charging ultra-dominant male executive type can have a Beta wife, that doesn't mean she is lacking in intelligence or bravery or anything (i.e. a Beta wife is not a Stepford wife).
This can also be reversed too, with wifey the Alpha and husband the Beta, but this is rarer. In the end, I think it just depends on each person. For some couples, both people being a total Alpha could result in disaster, whereas for others, it could work fine.
According to the naysayers, an Alpha woman needs a Beta man, and an Alpha man should only seek a Beta woman.
But I am not so sure. I think it depends on a few things. For example, how does one define an Alpha person versus a Beta? For example, on paper, I am an Alpha. I work hard, am very ambitious, am very goal-oriented and driven, etc...however in other ways, I am a Beta. I am not prone to say complain about bad customer service in the way many others are, or be assertive in the way many others are.
On the other hand, there are those who are Alphas in that they will complain over say bad customer service and who are assertive, but are not goal-oriented or very driven or ambitious.
I think the definitions of Alpha and Beta are a bit over-simplified and that people can have qualities of both, although they may lean more to one way than the other. In terms of what kind of partner is appropriate, I think it just depends on the people.
One could have two Alphas, say two people very goal-oriented and driven, but one may be very Alpha and the other have some Beta characteristics. Or one could have two total Alphas together, but one is more Alpha than the other.
For example:
1) Hard-charging male corporate executive-type, with wife who is also an executive, but wife is more Beta and not as assertive as the man
2) Hard-charging male corporate executive-type along with hard-charging female type, but in this instance, the woman, while dominant in her work, wants a man who is dominant as well, and the man, while dominant, doesn't want a submissive wife, he wants a wife who is his equal.
According to the naysayers, Example #2 should not work, but I think it could. One other thing to keep in mind is Beta does not mean inferior. The hard-charging ultra-dominant male executive type can have a Beta wife, that doesn't mean she is lacking in intelligence or bravery or anything (i.e. a Beta wife is not a Stepford wife).
This can also be reversed too, with wifey the Alpha and husband the Beta, but this is rarer. In the end, I think it just depends on each person. For some couples, both people being a total Alpha could result in disaster, whereas for others, it could work fine.
Wednesday, September 22, 2010
What Women Want In A Man
So we've all heard the saying I'm sure that a man "...wants a lady in the living room, but a whore in bed." Are women the same way, except with men? It seems many women are attracted to the motorcycle bad-boy types, but obviousy these guys usually do not make for good husband material; oftentimes these types of men can even be abusive. Often the guy who makes good husband material is Boring Bob With A Good Job who takes out the trash daily and pays the bills, etc...but is no motorcycle bad-ass.
So what I've been thinking is, just as so many men want the woman who is a lady in public but wild in bed, do women want a man who can be a gentleman in the living room, but a motorcycle bad-boy in bed??
So what I've been thinking is, just as so many men want the woman who is a lady in public but wild in bed, do women want a man who can be a gentleman in the living room, but a motorcycle bad-boy in bed??
Monday, September 20, 2010
Why I Love Amazon
So one of my favorite things to do is to go book exploring on Amazon. Amazon.com has to be one of the all-time greatest things to ever happen for book lovers. I mean think about it, you look up one book and they provide you with a list that shows other books relating to this one book you looked up, often books that you've never heard of and didn't even know existed. In addition, usually books on Amazon are chock full of reviews, and fairly accurate ones at that (although not always).
And then there's all of the lists created by readers. You can find lists on almost every subject and it is just amazing, because you can get sooooo much information on various books to read. And each book leads automatically to even more books.
One of my favorite things is when one book leads to books on an entirely different subject but one that you actually happen to be passionate about. And then when these books lead to even other books on still other subjects that you are also passionate about (although this time it was also through the public library system). For example, I was doing some research on classical architecture, a subject I am very passionate about.
This led me to a book by a woman named thinking Jane Jacobs, called "The Death and Life of Great American Cities." Now this in itself was a discovery, because urban studies, city and town planning, etc...are all passions of mine, relating to architecture. Anyhow, somehow I had never heard of this woman or her book, but apparently it is about how much of the work of the city planners and social controllers of the "modern architecture" type of mindset had messed up our cities and created more problems than fixed.
Upon looking up this book on Amazon, I then discovered a book called "The Economy of Cities," also by Jane Jacobs. Apparently this book is about economic development, basically dealing with how cities influence and are necessary for economic development. Economic development is also a subject I am very interested in, and I see from the Amazon list that apparently Jane Jacobs wrote other books on cities and planning and economic issues as well, so I am very delighted to see that these subjects are combined as they are.
Anyhow, so then I look up the book "The Economy of Cities" in the public library system, and what do I find? A book called "The Company Town: The Industrial Edens and Satanic Mills That Shaped the American Economy." This also occassionally happens, you do a search in the library system for one book, and up pop other books you didn't know about that happen to be in areas you are very interested in.
Now the histories of business, social control and social engineering, towns, cities, etc...I find fascinating. And this book relates right to them. So then I search on Amazon for this book and it leads me to another book, apparently a great work of literature called, "The Pillars of the Earth," which from what I have gleamed so far is a book that takes place in the 12th century about the construction of a cathedral. Well being a lover of architecture and literature, this sounds like a great book.
This book led me to some other books as well, but I mean you can get the picture. What would we do without Amazon!?
The one thing I do NOT like about Amazon is that they are knocking Barnes & Nobles out of business, but unfortunately, that is just due to the nature of the business of selling books.
And then there's all of the lists created by readers. You can find lists on almost every subject and it is just amazing, because you can get sooooo much information on various books to read. And each book leads automatically to even more books.
One of my favorite things is when one book leads to books on an entirely different subject but one that you actually happen to be passionate about. And then when these books lead to even other books on still other subjects that you are also passionate about (although this time it was also through the public library system). For example, I was doing some research on classical architecture, a subject I am very passionate about.
This led me to a book by a woman named thinking Jane Jacobs, called "The Death and Life of Great American Cities." Now this in itself was a discovery, because urban studies, city and town planning, etc...are all passions of mine, relating to architecture. Anyhow, somehow I had never heard of this woman or her book, but apparently it is about how much of the work of the city planners and social controllers of the "modern architecture" type of mindset had messed up our cities and created more problems than fixed.
Upon looking up this book on Amazon, I then discovered a book called "The Economy of Cities," also by Jane Jacobs. Apparently this book is about economic development, basically dealing with how cities influence and are necessary for economic development. Economic development is also a subject I am very interested in, and I see from the Amazon list that apparently Jane Jacobs wrote other books on cities and planning and economic issues as well, so I am very delighted to see that these subjects are combined as they are.
Anyhow, so then I look up the book "The Economy of Cities" in the public library system, and what do I find? A book called "The Company Town: The Industrial Edens and Satanic Mills That Shaped the American Economy." This also occassionally happens, you do a search in the library system for one book, and up pop other books you didn't know about that happen to be in areas you are very interested in.
Now the histories of business, social control and social engineering, towns, cities, etc...I find fascinating. And this book relates right to them. So then I search on Amazon for this book and it leads me to another book, apparently a great work of literature called, "The Pillars of the Earth," which from what I have gleamed so far is a book that takes place in the 12th century about the construction of a cathedral. Well being a lover of architecture and literature, this sounds like a great book.
This book led me to some other books as well, but I mean you can get the picture. What would we do without Amazon!?
The one thing I do NOT like about Amazon is that they are knocking Barnes & Nobles out of business, but unfortunately, that is just due to the nature of the business of selling books.
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