Category: Business

Car Service Uber Faces Regulatory Challenge in Dallas

On By Norbert HauptIn Business, Commentaries, TechnologyLeave a comment

I recently wrote about how the startup Uber disrupts the taxi business.

Since then I have found this article showing how Yellow Cab is trying to make life difficult for Uber in Dallas. It exposes the donations from Brewley, the president of Yellow Cab, to Dallas city council members over the years.

What Dallas is trying to do is impose a number of regulations that would hobble car services like Uber, that use smartphone apps to hail rides. The restrictions include things like minimum times for drivers to pick up passengers and set minimum fares.

Think about this: with Uber you can request a ride and get that ride in minutes, possibly seconds, depending on where the car currently is, and the limo services require the car to wait 30 minutes? Then it sets the minimum fare to be equivalent with limo prices, making Uber uncompetitive.

This borders on the ridiculous. If a company has to protect its viability by slowing down competitors by regulation, that company is already dead.

Read Ayn Rand’s Atlas Shrugged to see what such regulation leads to.

 

Uber Disrupts Taxi Establishment

On By Norbert HauptIn Business, Economy1 Comment

Have you ever been uncomfortable riding in a cab in a large city wondering if you are being ripped off? I travel a lot, and I rent cars whenever feasible, which is most of the time. My only exception is when I am going to be staying in a downtown hotel where parking a car costs an extra $25 a night and where I don’t really need one. I don’t like cabs, and I always feel I am better off renting.

There are several Internet-based services now that are intruding on space that taxis have held for almost a century. Uber is one such commercial “car service” that is threatening to transform the rigged urban transportation system. Lyft.me allows you to find a “friend” with a car to give you a ride, so it’s more of a personal service, but it still takes away business from cabs.

To use either service you download an app, which you use to locate nearby drivers, you summon them, and you pay the calculated fare online. It’s fast, it’s efficient, it’s safe and you don’t pay a middleman. Since all users, drivers as well as customers, are registered, it’s actually much safer. While I don’t have statistics or evidence of  this, it would seem to me that it’s less likely that you pick up a serial killer when your fares have to be registered, including payment information, and when the time and location of the pickup is memorialized in a database.

Of course, none of the syndicated cab services in the big cities like these companies. They are clearly taking away their business.

You need a “medallion” to drive a cab in most cities. Medallions are scarce, regulated and difficult to get. There are only 13,150 in New York City and they cost $1 million to get. Yes, if you want to operate a taxi in New York City, you must buy a taxi and you must obtain a medallion. So unless you have a way to get or finance $1 million cash you cannot drive a taxi in New York.

Somebody is skimming a lot of money off the taxi business, and it’s not the Bulgarian driver. I am using Bulgarian because I honestly cannot remember ever having an average American taxi driver. They all appear to be immigrants.

Uber faces a legal and regulatory battle in every city it enters, and they think of it as part of getting business done. The established cab companies are fighting back.

But I believe that resistance is futile. Consumers like the convenience of app-driven hailing of cars, the safety of a registered driver and a recorded pickup time and place, and the fairness of a consistent, market-driven fare that is not rigged. And consumers love to cut out the middleman.

Sorry, cabbies, a century of dominance is enough. Make room for the entrepreneurs.

Texas Bans Sale of the Tesla

On By Norbert HauptIn Business6 Comments

The Tesla Model S is changing how we think about cars.

It was the first electric car to win Motor Trend’s Car of the Year.

Then John Broder, the New York Times journalist for automotive published a bad review which caused an uproar, partly because he intentionally depleted the battery by driving in circles in a parking lot, as alleged by Tesla. Elon Musk, Tesla’s CEO, wrote a blog post to that effect on Tesla’s site.

Then the Model S received an unprecedented 99 out of 100 rating from Consumer Reports.

Most recently, according to National Highway Traffic Safety Administration, it’s also the safest car ever.

This might just be the most revolutionary car in history, and it’s conceptualized, designed, built and marketed in the good United States of America. We’re manufacturing again, and it’s something phenomenal.

So why does the state of Texas ban its sale and why are several other southern states trying to do the same?

Because Tesla does not want to sell through the dealer network. To buy a Tesla, you buy it directly from the company, without hassling with dealers, their markups and all the overhead that comes with it. All Tesla cars cost the same.

Imagine a wondrous place like a Tesla store where you can go, test-drive a car, make your payment and drive away. No haggling. No hidden costs. No other car-dealer tricks. It’s somewhat like the Apple store for cars.

Suddenly the car dealers get all nervous.

This is what Bill Wolters, the president of the Texas Automobile Dealers Association, said:

This happens all the time. Someone wants an exception to the franchise laws. If we made an exception for everybody that showed up in the legislature, before long the integrity of the entire franchise system is in peril.

Heck, I did not even know there WAS a franchise system! Now I get it. The car dealers had it rigged all along. They have an artificial barrier, something like a country club, that is protected by laws keeping everyone that does not play by the same rules out of competition. I had no idea I can’t just start building cars and selling them.

It does not seem to matter that a new company on the block gets to sell American goods, create American jobs, move America forward in the world. Bought-off politicians are suddenly eager to cut this job creator off at the roots because it puts their franchise system in peril.

If you have to protect yourself behind legislation or regulation to compete, you’re already dead. I would recommend reading of a little Ayn Rand to the Texas Automobile Dealers Association.

I am rooting for Tesla, the company that needs to win this battle, and shake up the good network of car dealers. This is good old American disruption on its way.

One of my reader asked if anyone ever heard of a Tucker? There were only 51 Tuckers built before the company folded. The reader implied that Tesla was going to go the way of Tucker. Did he know that in June 2013, Tesla sold 1425 vehicles. In California, Tesla sold more cars than Buick, Cadillac, Chrysler, Fiat, Jaguar, Land Rover, Lincoln, Mitsubishi, Porsche, and Volvo. Tucker? Really?

Now when can I afford one?

Bank of America Bullies Activist

On By Norbert HauptIn Business, CommentariesLeave a comment

Jeff Olson, a 40-year-old San Diego man is being prosecuted for writing anti-big-bank slogans with kiddie-chalk on sidewalks in front of Bank of America branches to protest their exorbitant ATM fees.

Bank of America is a the massive conglomerate that received $45 billion in interest-free loans from the US government in 2008-2009 in a bid to keep it solvent after bad bets went south. But that powerful company can’t handle a single man with a mission, so they stirred up the San Diego police to prosecute him.

We have a choice. We can use the big banks, or we can use non-profit credit unions. What’s your choice?

I am a Bookstore Mooch – Take Four

On By Norbert HauptIn Books, Business, EconomyLeave a comment

I cannot imagine a world without a physical bookstore.

When I travel, one of my favorite pastimes is browsing in a book store. I like the smell of books, I like to see the cover art, I like to thumb through them to get a feel for the books before I buy them. Being an artist, I like coffee table books on art, photography and nature.

But I do not like to have boxes of heavy books filling my storage space. So I welcomed eBooks and I have stopped buying physical books, except for reference materials and books with lots of photos and illustrations, where eBooks don’t do the job very well.

So when I go to a bookstore now, I see what’s going on, and then I buy the book online later. This, of course, hurts the bookstore.

I wrote a number of blog posts about that. Here they are:

Mooch – Take One – March 15, 2010

Mooch – Take Two – May 10, 2011

Mooch – Take Three – December 26, 2011

Some of those posts were written when there were still Borders stores. Now those are all gone. Barnes and Noble is the only viable large bookstore chain left. I want them to succeed.

However, their holiday results in 2012 were dismal. Sales from stores and the website sank 11 percent to $1.2 billion. Revenue at the Nook unit, which includes devices, accessories and content, fell 13 percent to $311 million. Their Nook devices are competing head-on with Amazon Kindle devices and Apple iPads. A tough neighborhood to compete in.

Their outlook is bleak.

This caused me to change my behavior. I created a Barnes and Noble account, downloaded the Nook app for my iPad, and I have bought my first eBook off Barnes and Noble. I comparison shopped for pricing at Amazon, and found that the book was priced identically.

I am not buying a Nook. I have two physical Kindles. I have a Kindle app on my iPad, my iPhone and my computer. I do not need another device, sorry, Barnes and Noble. But I’ll buy books from Barnes and Noble from now on, if I can. I will test their service, offering and performance.

I don’t want to live in a world that has no physical book stores. Hopefully it’s not too late for Barnes and Noble to survive.

Chevron CEO Watson in AP Interview

On By Norbert HauptIn Business, Climate Change, Energy2 Comments

Climate change activists decry Chevron CEO Watson’s statements in an interview by AP for shirking responsibility for climate change:

AP: Do fossil fuel producers bear the responsibility for curbing greenhouse gas emissions?

WATSON: We have the responsibility to deliver our energy in an  environmentally sound fashion. The greatest advancements in living  standards in recorded history have taken place in the modern hydrocarbon  era.  I don’t think that’s coincidental. Our leaders have to make a  decision. Do they want that to continue or do they have a better  solution for us? So it’s not my call.

I tend to agree with Watson. It really ISN’T the responsibility of the oil companies to do something about climate change. Their job is to maximize shareholder return by exploring and selling petroleum products to retail customers. What makes us think that Chevron or the other oil companies are going to take steps that will erode their business?

It’s a silly thought.

It is the responsibility of all of us, and our political leaders eventually, to find scalable and effective alternative energy sources. In the same interview Watson also states that the only other scalable energy source is nuclear. That may be the case right now, but it will change, as pressure to find other sources increases. It’s a copout to just say nothing else is scalable. Oil wasn’t scalable either when it was first found. Governments subsidized oil heavily in the early years, just like they subsidize wind and solar now.

Many years ago, when the tobacco companies were still a strong in the U.S., and smoking ads were still allowed, it wasn’t the tobacco companies that curbed smoking in our country. Their job was to produce and sell tobacco. It was the public, it was public education and health awareness that curbed smoking. If somebody had told us then that smoking would not be allowed in any public building or work place anymore, we would not have believed it. But it happened, because it was healthy and good.

Curbing the use of fossil fuel will also happen, and it won’t be initiated by the oil companies. Get used to that.

Chevron is not shirking responsibility for climate change. It’s not responsible for it. It’s just that its product has many problems, including generation of greenhouse gases as it gets burned, but last and not least, that there is only a limited amount of it on earth. Despite Watson’s statements that oil will be around for generations, it is going to run out, we just don’t know exactly how soon.

It is we, the people, that are responsible.

The Awesome Power of Social Media

On By Norbert HauptIn Bad Product, Business, CommentariesLeave a comment

Today I read this article on gawker.com about a musician who traveled with his guitar. He did everything he could to get Delta to let him bring his classic 1965 Gibson ES-335 on board his flight from Buffalo to Detroit — going so far as to offer to buy the guitar its own seat. The guitar was worth over $10,000. The airline refused to let him carry it on and made him check it.

Sure enough, the airline wrecked the guitar completely. The costs of repair were estimated to be almost $2,000. And of course, the guitar would never again have its pre-damage value.

Then Delta tried to get off cheap and offered the passenger $1,000 – which he refused. Even several letters to the president of the company remained unanswered. Then a call came from Yahoo news. Delta started playing ball.

I had a similar experience last year when I had an adverse outcome with the Avis car rental company in Germany. I was charged over 1,000 Euros for repair of a “scratch” I could not see and did not make. All normal channels, through credit card companies, insurance companies and Avis “customer support” got me nowhere.

Then I started blogging about the incident, publishing to Twitter and Facebook, accompanied by a letter to the CEO of Avis. Possibly due to my standing with Avis as a very frequent, long-term customer, but certainly partly due to my persistent social media campaign publishing the lack of cooperation by Avis, the company offered to absorb all costs of the “repair” within about five days of my writing to the CEO.

I put the record straight in my blog after Avis came through, and I have been a returning customer since.

Today, we have a powerful megaphone with the Internet and the various social media outlets. In the past, if you were wronged by a large corporation, you could never have fought back. Now, a few appropriate blog posts and relentless distribution can get a buzz going very quickly, one that companies as large as Delta or Avis can only ignore at their peril.

This is one of the most powerful effects of social media.

Do you have any stories like that to share?

Tech Giants for 2013

On By Norbert HauptIn Business, TechnologyLeave a comment

This headline (highlighted by me in red box) caught my attention:

Tech Giants

The headline made complete sense to me as soon as I read it.

However, the fact that Microsoft is not listed is a sad situation for that company. In a headline about contemporary tech giants, of which Microsoft in better days was the only one, they are not even listed now in the top four.

Sad.

Market Value of Four Companies

On By Norbert HauptIn Business, Economy, Need to KnowLeave a comment

For as long as I remember thinking, Exxon (now Exxon Mobil) was the most valuable company in the world. That changed this year.

Apple passed Exxon Mobil, and now Exxon Mobil is more than $80 billion behind Apple, surely never to catch up again. (Peak oil has passed, but that is another subject).

Say you had asked me at Christmas 1997 who the two most valuable tech companies would be at Christmas 2012, fifteen years in the future.

If my answer would have been that number 1 would be Apple, and number 2 would be a little company called Google that would not even be founded until September 4, 1998 in the Internet search engine business – you would have called me insane.

Microsoft was worth $164 billion at that time. Exxon $144 billion, Apple about $2.6 billion, and Google didn’t exist. Zero.

Market Value

You might also notice that Apple is worth more than Microsoft and Google combined.

What a difference 15 years make.

Dumbfound Your Competition

On By Norbert HauptIn BusinessLeave a comment

Here is an excellent article by Darren Hardy about how to turn the business down-turn in December into a success-generating engine.

Sweatshops and the Invisible Hand of Satan

On By Norbert HauptIn Atrocities, Business, EconomyLeave a comment

It’s easy for us Americans to amble over to Walmart or Target and get cheap stuff. We don’t mind paying a lot of money for clothes. It comes at a cost to us. But more importantly, it comes at a cost much more severe: children in sweatshops, people in economic slavery, abused women, and sometimes death. Here is an excellent post to this effect by Dan Wall:

Sweatshops and the Invisible Hand of Satan: A Few Thoughts on Some Not-So-Invisible Fires.

Small Business and Taxes

On By Norbert HauptIn Business, Economy, Political2 Comments

Mitt Romney and Obama always say:

I want to lower the tax rates for small businesses so they can keep more of their money and hire more people.

I think there is something very wrong with this statement on more than one level.

First we need to decide what he means by small businesses. There are railroads with less than 1,500 employees that are considered small businesses.

But really, it’s the mom and pop grocery, the sole proprietor web designer, the photography studio on Main Street that are really small businesses. Businesses with 9 employees or less make up 95% of small businesses according to the most current U.S. census data.  The non-employer companies, entrepreneurs or freelancers, with no employees at all, make up more than 78% of all businesses.

When politicians talk about “small businesses” to the general public, most of who have never operated any business at all, this promise of lowering tax rates for small businesses so they hire more people just pulls the wool over the eyes of the public.:

Oooh, aaah, the great presidential candidate knows so much about stuff we have no idea about. Yes, let’s lower taxes.

I quit my last job as an employee in 1989, became a consultant and was a non-employer company of one person for two years. Then I hired two or three people. Then five more. Now our little small business ranges between 25 employees and just under 50 employees at its highest time, with annual revenues of $4 million to $6 million, depending on the economy. With that background I consider myself a small business man with 23 years of experience. I think I know something about small businesses.

And here is the shocker:

Never in those 23 years have I paid attention to the tax rate and never has the tax rate had any impact whatsoever on hiring decisions. NOT ONE TIME.  So, from my own experience as a small business, I need to say that Romney and Obama are way off base with his statement.

The fact is:

Small businesses like mine, who want to grow to hopefully become large businesses, pump all the profits they make back into the business to grow. They often don’t make money, show no profit, and pay no income taxes at all.

Such businesses also often bring in investors, friends, family, angels, venture capitalists, who put money into the company to help them grow, which again very often leads to no profits at all, sometimes even many years of losses. Such losses accumulate, and those businesses have a “tax loss carry forward” which is not available in California but in many other states, and it’s a federal rule. Due to that, many such growing businesses pay no federal income tax during the growing years.

Yet, those businesses grow, create jobs, employ people, buy equipment and services and fuel the economy.

Another fact is:

The reviled stimulus actually has created 10 to 20 jobs over more than three years in our company due to several orders that resulted at least partly from stimulus money. The stimulus worked for us.

We create jobs when we get new orders. We get new orders because we have great products or excellent service. So we need more people to provide more of those services and build more of those products.

Orders – or economic activity – create our jobs.

The tax rate has never once even come into my thinking when I was working on creating jobs.

I like low taxes, don’t get me wrong. But stop making people who know nothing about small business believe that low tax rates cause entrepreneurs to hire more people.

You can put my tax rate to zero – heck, you can make it negative and PAY ME, and it still won’t by itself create a single job.

Gas Prices in California – Call Me Paranoid

On By Norbert HauptIn Business, Energy, SustainabilityLeave a comment

In 2000, I remember traveling in Northern California. I was sitting in a restaurant for breakfast at 9:00am when all of a sudden all the lights went out. Fortunately, I already had my food. I finished my breakfast by the sunlight coming through the windows, paid cash, and left. The restaurant had to shut down because the kitchen didn’t have any outside light or power.

This was the time of the California rolling blackouts. We were told that there were problems with the power grid, and supply and demand. During that time, our rates for electricity in San Diego doubled and tripled, and we got astronomical power bills from SDG&E.

Over a year later, on December 2, 2001, Enron collapsed. Only then did we find out that there were a few people who called themselves “the smartest guys in the room” who had manipulated the electricity market and not only caused the outrageous prices but also ordered plants shut down for no reason at times of highest demand. Their hands were in our pockets and we didn’t know it.

In the aftermath, one guy committed suicide, a few went to jail, but the great majority took their money and went about their business. Thousands of people all over the country lost their life savings. Their pensions were in Enron stock, since their mom-and-pop power company was bought up by these “smartest guys in the room.”

But that was all more than ten years ago.

When gasoline jumped from $4.19 to $4.69 at my local gas station within five days last week, I remembered Enron. I wonder how long it will take before we find out who is stealing the money out of our pockets right now?

Mission Statement Wisdom from Gitomer

On By Norbert HauptIn BusinessLeave a comment

From Gitomer’s Newsletter, a wealth of wisdom on mission statements.

Here are 12.5 questions designed to make you think, squirm, and reassess your mission and its meaning:

1. Who created your mission statement?
2. What does it mean to you?
3. Do you have it memorized?
4. Do you use it as a guiding light?
5. Do you have it up on the wall in your office?
6. Do you have it on a card in your wallet?
7. Is it your computer wallpaper?
8. Does it in any way affect your corporate behavior?
9. How do your customers benefit from it?
10. Does it inspire you?
11. Does it motivate you to make more sales?
12. Do any of your customers know your mission?
12.5 Or is it just a bunch of BS that your marketing people – or worse, your ad agency, created? Most mission statements are created for PR purposes, purported image, or some other form of business pomposity. Totally bogus.

If the mission statement is so important, and so genuine, why doesn’t EVERY employee commit it to memory, and execute it every day at work?

Pretty sad, huh?

Time for me to get to work on dust things off.