Needed Clarity For Confusing Times

I want to point out two hours of required listening.

This American Life has produced two wonderful programs in the last year that bring needed clarity to our the economic mess we find ourselves in.

The first piece was broadcast last May. The program was called The Giant Pool of Money. Alex Blumberg and Adam Davidson walk through the players in the mortgage business and illuminate how the house of cards was built and crumbled.

The second program was broadcast just a few weeks ago. Bad Bank describes the other piece to the economic crisis: why banks are in so much trouble. Alex and Adam return again for this episode and again describe the situation in terms that are easy to understand.

I cannot recommend these enough. I have an bachelor’s in mechanical engineering and an MBA, but those aren’t enough to get a handle on all of this. This incredible pieces of journalism were.

Go listen to them.

They are also available at iTunes for 95 cents:

Giant Pool of Money: LINK
Bad Bank: LINK

PS The Crisis of Credit Visualized goes nicely with Giant Pool of Money. YouTube has it in two parts.

Credit of Credit Visualized – Part One

Credit of Credit Visualized – Part Two

Time To Pay Attention

I just got done reading When Genius Failed, as one of the selections for the 800-CEO-READ upcoming best of business books project. In the book, writer Roger Lowenstein profiles Long-Term Capital Management. In 1998, it was the largest hedge fund and nearly brought down several Wall Street firms when the trades it made went the wrong way. The bailout required the intervention of the Federal Reserve as they herded fourteen banks to pledge $3.65 billion.

Ten years later, we are seeing the same illiquid markets that crippled LTCM. For them it was interest rate swaps; this time it is mortgage-based securities, but on a scale that is two orders of magnitude larger.

I have long argued that Enron and Long-Term Capital were not crises well-understood by the general public. In part because the drama lay in the personal stories of the affected. And there were certainly victims in the employees that worked at these firms, but the biggest causalities were in the balance sheets of large firms who are in the business of lending money. Risk is a part of that game.

We don’t pay much attention to things we don’t understand and the average American doesn’t have a lot of experience with such large-scale financial terms as debits and credits, derivatives or bond spreads. If we are nation fixated on markets and always talking business, we as a whole don’t understand balance sheets or Black-Scholes modeling. This lack of knowledge exacerbates the problem. And it is a problem.

The media reports the stories. The trouble is their viewership has a hard time assessing the magnitude of the story in the 24-hour news cycle. Cable channels report with the same passion the fall of Eliot Spitzer, the disappearance of a young mother, and the Federal Reserve loaning $200 billion to banks.

The final news item in that list is one to concentrate on. This meltdown is mostly being caused by fear and trading will loosen again.

Pay attention though to what our leaders in business and government are doing to deal with the crisis. The Treasury offering new lending guidelines. The Fed offering more and more lenient terms to its customers. Banks lending to other banks. There are broad implications to all of these. Lowenstein uses a Mark Twain quote to that fits with these unfolding events–““History rhymes; it does not repeat.”

Business Metaphors in Sports

I wanted to make sure you saw these two pieces.

The first was Michael Lewis’ account of what Mike Leach has done at Texas Tech. Amazing Stuff. I didn’t know he was behind Couch at Kentucky and Heupel at Oklahoma. The article is really about how to play by a different set of rules.

The second is a April 2005 piece from Fast Company. Chuck Wielgus shows how pick-up basketball can help you with your teams back at office.

WSJ Weekend Edition – Thumbs Up!

Today is the launch of the Wall Street Journal’s Weekend Edition. Free to subscribers, this paper comes on Saturdays. It is three sections deep.

The main news section up front. It has some nice weekly summaries and previews. Their Hot Topic looks like it will be interesting. It takes up about a half page and gives a great briefing of a weekly topic. This week it is the Roberts confirmation.

The second section is Money & Investing. This is the section I normally skip, but in the weekend version, you get a personal finance angle. The articles seemed a little too focused on high wealth strategies (hedge ideas to protect gains on your house and discount-broker package deals). The one thing it did get me to do is look through the market data. I think that will be a good thing to do on a weekly basis.

The final section is called Pursuits. This week they have everything from a review of the new Disney Park in Hong Kong to an extensive article on new restaurants opening around the country. They are going to have regular features on books, film, food and drink.

So, a big thumbs up!

I keep hounding all you business people to subscribe to the Wall Street Journal. They have just given you another reason with the additional weekend coverage. Go get it now!

Back to the Future – Introduction

I have been reading back issues of Fast Company over the last week. I got some old issues from Jack and Tom. I now have issue 2 through 15, a smattering of 20 somethings, and everything from 45 on.

There is clearly material that is dated (articles about mouseballs and service that burn CD-ROMs for $100), but there are articles just as relevant today as they were written. I am going to highlight the stuff I ran across over the next couple of weeks.

Fast Company has always been great about making all of its material available for free, but reading it off the website doesn’t hold a candle to reading it from the pages of the original magazine.

And one more thing…

I was reminded of one more ironic quote in the WSJ piece.

“You hire some bloggers to come in , and you give them a list of 10 talking points, and it becomes nothing more than a spin machine,” says Todd Copilevitz, director of digital initiatives for Omnicom Group’s Tracy-Locke. “Those are ultimately going to be derided as sellouts or as commercial.”

This should have followed his quote:

Mr. Copilevitz should know something about sellouts and commercialism. At Richards Interactive, he was heavily involved in the Raging Cow Debacle in early 2003, when Dr. Pepper/ 7-Up enlisted young teen bloggers to speak favorable about their new flavored milk product. This upset the blogging community to the point where some called for boycotts of the product since there was no disclosure that these bloggers had a relationship or been briefed by company or their agency.

If you are not familiar with the whole Raging Cow thing, there is a great summary at Business Blog Consulting that includes an interview with Copilevitz.

Again, can we find better sources?

EVEN MORE FED UP!!!

I was returning to normal. Blood pressure was falling. I thought I would be back to blogging in a day or two.

And then I saw the blogging article in the Wall Street Journal. It is titled Corporate Blogging Get a Chance. I saw some people referencing it last night and I made sure to find it this morning.

Let me start by saying that this article is under the regular Advertising column that runs in WSJ. BLOGGING IS NOT ADVERTISING!

Vespa gets alot of ink in the article:

In a move that runs counter to current popular notions of how the so-called blogosphere ought to operate, Piaggio Group, the Italian manufacturer of Vespa scooters, intends to launch two blogs written by U.S. Vespa owners. Piaggio views the blogs as extensions of traditional scooter clubs, in which enthusiasts of the vehicles gather to discuss issues and ideas, says Paolo Timoni, chief executive of Piaggio USA.

Did you catch the ‘intends’ part? Piaggio is a client of Cooper-Katz and is working with Steve Rubel, the current Superman for corporate blogging.

So, Rubel got Piaggio a huge PR placement in WSJ for SOMETHING THAT DOESN’T EVEN EXIST YET!!!!

Attention Journalists: I would be more than happy to talk to you about companies who are actually blogging now. There are great stories out there about things that are already happening.

Again, this is not about Steve or Piaggio. That is just a firm serving a client.

It’s the hype and the media is reporting as news.

I’ll be off for a few more days… 🙂

Milwaukee looks good in the Fortune 500

OnMilwaukee.com looked through the recent Fortune 500 issue and found the Milwaukee and Wisconsin fared pretty well.

  • Wisconsin has 25 Fortune 1000 companies
  • The big names are Northwestern Mutual, Johnson Controls, Manpower, Kohl’s, Harley-Davison, Rockwell, and Wisconsin Energy Corporation.
  • Johnson Controls is the top ranked Wisconsin company at #71
  • In looking at metro Milwaukee, the area ranked #5 when you consider population and number of ranked companies.

When You Know It’s Over

The bizblogsphere is full of talk about brands and the relationships they build with their customers. I think there are few brands that achieve the level of truly influencing your life. For me, Fast Company magazine was one of those brands.

When I started reading FC in 1998, it was a breath of fresh air in the corporate life I was living. They were talking about innovative ideas and the interesting people putting them into practice. I could not wait for the next issue to come in the mail. When it arrived, it stopped everything and read it from cover to cover. Reading the magazine planted the seeds for what I has happened since in my work life.

To celebrate their 10 year anniversary, the magazine is looking back at the big issues of the past. This month, they examine the Tom Peters’ “The Brand Called You” cover. The piece is titled “Me Inc.: The Rethink” (you can imagine where this is going). Writer David Lidsky and FC says Brand You was a great idea that never happened and it was a questionable idea to start with. In the list of greatest hits for Fast Company, I would put this article at #2 behind Free Agent Nation.

I feel Fast Company doesn’t stand for what they use to. They even seem to be distancing themselves from some of the things in their past. I think John Byrne and G+J wants Fast Company to be a business magazine reporting about interesting companies and telling stories others won’t. That is great, but that not what made me fall in love with the magazine.

I want the Agenda.
I want the Passion.
I want Fast Company when it was out to change Your Life.

I think we have both changed and it is time for us to go our separate ways.

Thanks for everything.

Whole Lotta Money

Today’s news seemed to be dominated by dollar signs.

I am all for capitalism, but this seems to show it is all about the money. The companies producing these products have found the traditional media more than happy to report the hype. The trouble is it does nothing to represent the products. People aren’t saying “Wow they made $99 zillion dollars. I need to go buy that.” People aren’t telling there friends that either. They are buying them because they are great experiences and that what they are talking to their friends about.

Why to read Wired

I read every issue of Wired magazine. Some tell me that the design is too much for them. Others tell me it is too much about tech.

I read it because they give you a headstart on how technology is going to impact your business and its strategy. You must go read this month’s article called The Long Tail. It is an outstanding analysis of how e-commerce companies are consolidating demand like physical stores never could.

Consider this – The top 400,000 songs on Rhapsody’s music service are played by customers at least once a month. That is amazing. If you were to look at my iTunes purchases, you would see some very similar behavior. I have some very popular stuff and a few tracks were I probably made the purchase for that month.

Let me recommend again getting a subscription to Wired.

What you could learn

I like what Forbes is doing. I think they have great reporting with alot of original stories.

Here is what you could learn by reading the current issue of Forbes:

  • Did you know all of the big planes used to fight fires have been grounded since May? There have been three fatal crashes in two years. The wings snapped off two planes in mid-air. One contractor has taken the next step and modified a 747. [Splooosh!, p66]
  • 800,000 people will take Alaskan cruises this year (that’s 25% more than the state’s population). The summer popularity of the region lets the cruise lines will redeploy ships from winter destinations such as the Caribbean, Mexico, Hawaii, the Panama Canal, and Europe. Carnival sends 16 ships and over 1/3 of their passengers now department from Seattle. [Cruise Control, p98]
  • The cover story is about XM radio. What is amazing is about the article is what the National Association of Broadcasters has done over the years to squash innovation. Their latest maneuver is equally amazing. In 1995, Congress enacted a law that requires all digital radio to pay royalities to performers. The exemption for traditional radio was maintained and as well as the NAB’s version of digital, HD radio. The law also made it illegal to broadcast local content, such as traffic reports and sports. The NAB argued that local stations would be hurt by competition from satellite ignorant of local tastes. “Never mind that the radio titans were knitting together nationwide networks to let hundreds of their own stations carry identical programming.” [Broadcast Bullies, p140]
  • Rexam is helping beverage upstarts with more than just packaging. To help build the market for both, they are helping companies with retailers, inventory, and distribution of the finished product. [Thirsting for Growth, p174]
  • Finally, read about ADV Films. They are the leading distributor of anime in the U.S. There are starting their own cable channel and have started producing their own anime. [Why Grow Up?, p178]