Concho Resources to buy Henry Petroleum

This will undoubtedly be front page news in the Permian Basin: Concho Resources has entered into agreement to buy the assets of privately-held Henry Petroleum in a deal valued at $565 million.

Henry Petroleum has been a fixture in the local oil business for as long as I can remember, and Jim Henry has become one of the elder statesmen of the industry. It's sad to see the company go, but at least the assets (and people) are going to another locally-managed company.

Verizon + Alltel = Better TV?

If Verizon is successful in its attempt to purchase rival Alltel, the guy most likely to be seen crying is Chad Brokaw, the blue-shirted spokesman in the increasingly lame series of TV ads pitting Chad against the four nerdy losers representing the competition. (What's up with that wizard, anyway? I keep expecting a tie-in with The Hobbit.)

Or, Verizon could continue the series, but have Chad become the slave (ala Seinfeld) of Matthew Brent, the nunchuk-wielding Verizon avatar.

As a current Alltel customer, my take on the combination is that it's one more justification for an iPhone.

Worst Customer Service Ever?

How not to treat your customers:

• Refuse to give out your telephone number.


• Accept email, but only if the originating email address is the one in your database associated with the original setup of the customer's account. As we all know, no one ever changes email addresses, so this is bound to be a good idea.


• Have links on your website to AIM chat accounts, but make sure you're always offline.


• Once the customer finally makes contact with you via an old phone number that he found in his file and used out of desperation, berate him strongly for doing so, and state that you never use this number for support, and warn the customer that he is to never use it again.


• When the customer explains the problem, tell him that it's his fault, not yours.

Sounds pretty bad, huh? Welcome to the wonderful world of HyTek Hosting, LLC, a Connecticut-based webhost apparently run by a group of doofuses that seems to prefer playing with their Xeons over pleasing their clients.

I'm not exaggerating in anything I wrote above, as I've had a client experience each one of those things over the last couple of days in an attempt to get their website back online after their credit card expired and their account was deactivated.

The account has finally been reactivated, but I assure you that it's only temporary, until another account with a host who at least puts on an act of valuing its customers can be established. Unfortunately for HyTek, those aren't very hard to find nowadays.

Starbucks to offer free WiFi

Starbucks has announced that it will start offering a couple of hours of free WiFi to its customers who have a Starbucks card. Presumably, this freebie must be accompanied by a purchase, although the press release doesn't explicitly state this.

As an SBUX card holder, I have mixed emotions about this announcement. The downside is that if you think it's now hard to get a table at the Midkiff store, just wait until the Midland College students don't have to pay to get internet access.

The upside is that this will surely force other holdouts to match SBUX's move (I'm talking to you, Barnes & Noble).

In any event, I doubt that I'll start lugging a laptop to Starbucks, as the overall atmosphere is not conducive to business productivity. If I need or want WiFi in that setting, the Harvest Caffé has got Starbucks beat, hands-down.

By making this change, Starbucks joins the ranks of other elite Third Place providers like, um, McDonald's, IHOP, and Schlotzky's.

M$+Y!=GOOG? [YAWN]

Today's financial news will be dominated by Microsoft's $44 billion offer to buy Yahoo. I tried to get excited about this announcement, but after hammering out 250 words, my enthusiasm gave way to apathy, and I deleted the post. I can't come up with a single reason why the combination of these two companies will make an iota of difference in my life.

I don't own stock in either company (at least not directly), nor in Google for that matter. I don't use Microsoft's or Yahoo's search engines, and I don't believe their combined resources will make Google's any less useful.

And, frankly, I'm not sure the FTC will allow this deal to close anyway. I find it interesting that Microsoft thinks it's in a better position to make this acquisition than Google, because of antitrust laws. Those laws haven't been exactly kind to Redmond in the past.

But there I go again, getting worked up over a non-event. I'll let it go just by saying that I'm skeptical that Microsoft's and Yahoo's common ground of defeating Google is a good reason for combining forces, much less an achievable goal.

Starbucks Earnings Conference

I'm listening to a webcast of the 1st quarter Starbucks earning conference call, and I'm hearing some interesting things. To wit:

• Sbux will discontinue "warm breakfast sandwiches by the end of 2008," and will focus on providing a "healthy breakfast alternative." They claim that customer surveys revealed that the scent of warm sandwiches (which are offered in only about 4,000 US stores [or less than 50%], by the way) interferes with the coffee aroma, thereby destroying the ambiance the company thinks its customers are seeking.


• The company will continue to provide warm pastries and lunch.


• The company plans to open 1,175 "net stores" in the US during 2008 (which includes the closure of 100 underperforming stores -- not identified -- which is 6 times the prior 3 year average). It plans to open fewer than 1,000 stores in 2009.


• It will open 75 net new stores internationally during 2008, and over 1,000 in 2009 -- more openings than in the US, for the first time in its history.


• Sbux management intends to announce five initiatives that will "extend the company's coffee leadership" and "reaffirm our coffee authority."


• Addressing the test of the $1 8oz cup of brewed coffee in the Seattle area, the company says that it makes sense, so far, and it's a response to the "current economic pressures on its customers." They emphasized that this is still just a test, that the company intends to reinforce its position in the high-end coffee retail business (and, once again, to "reaffirm our coffee authority") while broadening its market base.

It's clear to me that Starbucks is responding to a plateau (at best) in US demand for its goods and services, and will focus its future growth strategy in international markets. However, given the financial under-performance of its current international stores, this strategy smacks a bit of desperation.

There goes the neighborhood!

According to the Wall Street Journal, Starbucks is testing $1 per cup coffee and free refills.

We who rely on the conspicuous consumption of overpriced and overhyped luxury items to assure ourselves of our significance are aghast at the prospect of having to mingle with the riff-raff and hoi-polloi that will now flock to our favorite caffeineries, where they will no doubt suck up all the rarefied air as they knock over the plastic stirrers.

Now, if they would only provide free WiFi...

1000Bulbs.com: Customer Service Done Right

I've been hard on some retailers lately, pointing out perceived failures in their service. I don't feel badly about doing that, but I do think it's equally important to recognize the companies who distinguish themselves by providing superior service. That's what I want to do now.

I've mentioned previously some dealings with a company located in Mesquite, Texas whose online identity is 1000Bulbs.com. The company – whose corporate name is the less catchy Service Lighting and Electrical Supplies – sells light bulbs. They recently merged with a sign and lighting installation and repair company, so their services will expand, but the company was built on the seemingly simple focus of light bulbs in their myriad incarnations.

They've done well. So well, in fact, that they were included on the 2007 Dallas 100 Award list which is sponsored by SMU's Caruth Institute for Entrepreneurship and which recognizes the fastest growing privately held companies in the Dallas area.

I believe they've done so well because they offer good prices on a ridiculously wide range of products (see also, "long tail"), but beyond that, they go overboard to coddle their customers, even those who are, frankly, idiots. Take me, for example.

Last year, I ordered some compact fluorescent bulbs for our game room. I ordered eight of them via the company's website, and a few days after placing the order, a box full of bulbs arrived. I unpacked them and started placing them around the room in proximity to the fixtures, and then got distracted by something (a baby squirrel, no doubt). When I returned to the task of installing the bulbs, I noticed that I was short by one. I hadn't noticed that while I was unpacking the box, but now I saw that I had paid for one more bulb than I had received...and those things aren't inexpensive. So, I got on the phone and called their tollfree support number.

The fellow that answered the phone was appalled that they'd failed to ship the entire order, and promised to ship the missing bulb to me immediately. He pulled up my order, confirmed the address, and apologized again for the mistake. I received the replacement bulb the next day.

That was also about the time I found the missing bulb, on a bookshelf where I had put it, forgotten it, and then failed to notice it when I started the installation. When I realized my mistake, I can assure you that I didn't need any additional light bulbs to illuminate the room, as my face was taking care of that task.

I felt awful, and quickly wrote a check covering the amount of the bulb, plus an estimate for shipping and sales tax. I drafted a letter of explanation, apologizing for my gaffe, and thanking the company for its consideration. I dropped the letter and check in the mail that afternoon.

A couple of days later, I got a phone call from a representative of 1000Bulbs.com. She said they'd received my letter, and were happy to hear that (1) the shipping "problem" wasn't a problem after all, and (2) that I had everything I needed. However, she said, they were returning my check; they appreciated the gesture, and that was sufficient. I couldn't talk her out of it, and sure enough, the check arrived a couple of days later.

Now, I've had enough experience in corporate accounting to know that it probably costs more to process and account for that check than the face amount, but it would have been very easy (and even understandable) if they'd just dropped it into the shred bin after receiving it. They didn't have to return it, much less take the time to call me.

Needless to say, because the company has layered its strong product line with caring customer service, I'll continue to do business with them as often as possible. (I'm also quite a bit more careful nowadays when it comes to unpacking boxes.) If there are any budding entrepreneurs in the audience, you could do worse than emulate 1000Bulbs.com's approach to customer service.

If customers can't get Circuit City's attention, can Wall Street?

Apparently I'm not the only one dissatisfied with Circuit City.

Particularly telling is the research analyst's remark about CC's apparent lack of regard for its customers, especially as compared to chief rival Best Buy. This observation corroborates my own experience and that of many of you, based on your recent comments.

In a completely fictitious news release, Circuit City executives promised to continue to punish shoppers until they cooperated more fully.

If you're seeking the ideal Christmas gift for Circuit City executive management, I humbly suggest sending them a link to The Cluetrain Manifesto. Sure, it's old, but so is the Bible.

FutureGen: West Texas dodged a bullet?

I realize that this won't be construed as anything but sour grapes by the good people of Mattoon, Illinois, but since the selection of that location for the FutureGen project had barely hit the ground yesterday before the DOE began waffling about the project's funding, it does seem appropriate to share one (or two) cautionary words that have a bit of relevance: Superconducting Supercollider.

It's tempting to say that if the availability of government funding is the primary motivator for undertaking a project, then that project is doomed from the start. However, that's not a fair nor accurate description of FutureGen, which has sound and desirable technological underpinnings. And there have been some noteworthy scientific achievements arise from federal government initiatives (the space program comes to mind). Still, the DOE is not NASA, and it's better known as a political pawn than an agent for technological breakthroughs.

So, the appearance of sour grapes notwithstanding, the West Texas FutureGen team is likely better off if it can move forward with a private initiative. And to the folks in Mattoon, best of luck; you're going to need it.

And the winner is...

...Illinois!?

Bummer.

[No clue? Here's an overview.]

TXU e-Cards

At the risk of sounding like Scrooge, I'd like to suggest to TXU Energy that I'd rather they channel their resources into ways to cut my electricity bill than into building foo-foo e-card websites.

Having said that, I have to admit that stringing the lights is fun.

Want better service? Be a better customer.

Stewart Doreen addressed an issue in Sunday's newspaper (I'd provide a link but I don't seem to be able to find anything anymore on MyWestTexas.com, including a site search box) that's near and dear to the hearts (and stomachs) of most West Texans: the shortage of wait staff at local restaurants.

It's not at all unusual, as Stewart pointed out, to be placed on a lengthy waiting list for a table, and observe that up to half of the restaurant's tables are empty because there aren't enough servers. My wife and I have experienced this most often at the larger chain stores (The Olive Garden, Outback Steakhouse, On The Border, and Chili's come to mind).

The theory is that better-paying jobs in other sectors of the economy are drawing people away from these roles, and there's no doubt that that's often the case. But I have to believe that another strong disincentive to being a waiter or waitress is the apparently unavoidable requirement of dealing with inconsiderate customers. Perhaps if we were easier to work with – and that encompasses more than basic politeness – more people would be willing to fill the server jobs that are now empty.

For example, it's not your waitress's fault that you had to wait for 30 minutes to get a table in a half-empty restaurant. Don't take it out on her. And if she seems frazzled, perhaps it's because she's doing double duty on a double shift.

Or your waiter is new to the job, and the shortage of personnel meant that he didn't get the training he needed to give you the quality of service you think you deserve. Again, not his fault; believe it or not, it's not all intuitive.

And if you really want to make the profession more attractive and competitive, try being more generous with your tips. Being a waiter or waitress will never compete on a strict hourly basis with most jobs in the oil patch, but a little more liberality with your tips would do a lot to bridge the gap. And don't tell me you can't afford it; if you walk into the restaurant knowing that a 10% or less tip is all you can provide, you need to be walking into a different restaurant, one that doesn't involve tipping, or eating at home.

The bottom line is that you and I, as customers, represent the single most important factor in determining whether our waiters see their jobs as something worth making a commitment to. We can help make the work more competitive with the alternatives.

If I'm noisy, I must be busy

I suppose that Thriving Office might be useful in making me seem busy, but what I really need is something that will make me seem competent.

Client Kudos

We freelancers are quick to complain about the "clients from hell," seemingly sent to us as punishment for using FrontPage in another life. You know the ones: slow-paying, unresponsive, overly critical or completely indecisive, unable to distinguish between the concepts of "hiring" and "owning," and so on.

But, more often than not in my experience, interaction with clients can be amazingly positive, and I'd like to share two recent examples, coming from opposite ends of the economic food chain.

• A couple of weeks ago, I was contacted about performing some maintenance on a website. It was in such a mess that I told the client that I really didn't want to be associated with it, but if he ever got to the point where he was willing to undergo a complete makeover, I'd be happy to give him a quote. I could sense his sigh even via email ("here we go again..."), but he requested the quote, which I sent him the same day. He was apparently happy with it, as he not only accepted it, but told me he was adding to the dollar amount, because, well, you never knew what might come up. The addition was significant – about 20% of my original quote. He asked how much I wanted up front and I told him I didn't charge anything until the job was finished. Nevertheless, I received in the next day's mail a check for more than 50% of my quote.
  
  The job went quickly, I was finished in a few days, and we went live with the new site. The client seemed very happy and offered to hand-deliver the balance of the amount due. I asked him to let me email an invoice, explaining that I had to collect sales tax on a portion of the work. I emailed the invoice, which was for the balance of my original quote.
  
  A couple of hours later, I heard a commotion at the front door, then a car drove off. The client had put an envelope in my drop box and left a plastic bag on the porch. I carried both into the kitchen and found that he'd left the following: a check for the invoice amount, cash in the amount of the "addition" he'd made to the original quote, three screen-printed t-shirts to send to the Nephew at A&M – and a quart Mason jar full of homemade salsa!


• Having large corporations for clients can be a mixed blessing. You don't normally have to worry about getting paid, although the timing might be dicey. The worst part is the bureaucracy you have to deal with (and I know first hand what that is, having dealt out enough of it myself during a 25 year career as a corporate drone). But, when the local office of a $500 million dollar company (assets) called, I figured I could cope with the inevitable headaches because the work sounded fun.
  
  Sure enough, my initial experience seemed to confirm my fears, as I found myself filling out all sorts of forms to get into the company's vendor system. The first draft of the consulting agreement they provided contained some unacceptable terms, and I sent it back asking to have them either re-written or excised (and I figured this was probably the end of our relationship). To my surprise, they immediately agreed to drop the offending language, agreeing that it wasn't relevant to the type of services I'd be providing. However, one thing that stayed in was their policy of paying invoices in 45 days and via electronic funds transfer. Oh boy, I thought; not only will I have to wait forever to get paid, I'll have to periodically monitor my checking account to see when the payment arrives. Oh well.
  
  Anyway, they sent over the first major project and I got it done, and when the end of the month arrived, I generated an invoice and emailed it to my contact at the company...and started the 45 day clock. Imagine my surprise when later that afternoon I received an automatically-generated email containing a PDF document which in turn contained these words: "This notice is to inform you that an attempt has been or will be made to send funds electronically to your bank account via ACH or Wire transfer." The funds appeared in my account the next day – the day immediately following the transmittal of my invoice.
  
  Now, I'm hesitant to think that this will be the model for all future payments, but it surely is a good start to our business relationship!

As I look back over my time as a freelance consultant, I find that these two experiences are actually more representative than the hellish interactions I mentioned at the top of the post. I'm not sure why, but I suspect the fact that most of my clients come by way of referrals probably introduces some "pre-screening" into the equation (on both sides of the transaction).

The work that I do now has its share of headaches, but for the most part, my clientèle isn't a contributing factor.

Shop 'til you drop: it's now a reality

Beth and I were joking with each other about Ikea stores being so big that you needed to plan on spending the night there.

Turns out it's not a joke.

This quote reminded me of an episode from My Name is Earl:

Anyone else remember that episode?

Sharia Banking

I bought a copy of The Economist last week, enticed by the cover story, Apple and the art of innovation. Imagine my surprise to find that the article was a one page essay which, while mildly interesting – especially the contention that much of Apple's success is due to its willingness to bring in ideas from outside the company, and then build on them – was hardly worth the $5.99 cover price. (To be fair, there was another three-page profile of Steve Jobs elsewhere in the magazine, but it didn't plow any new ground.)

Fortunately, The Economist is chock-full of interesting tidbits that almost justify the steep single-issue price, especially if you can get a post or two out of it. One that caught my eye was a profile of Hussein Hamid Hassan, a resident of Dubai who has the highly specialized profession of issuing financial fatwas, which are essentially Islamic seals-of-approval certifying that the instruments or arrangements in question are sharia compliant.

The sharia financial system prohibits, among others things, the charging or paying of interest (although, apparently, returns from equity investments are permitted; you're just supposed to not make money from money. This Wikipedia article clarifies the concept somewhat.). Financial instruments that skirt this prohibition are called sukuk, the equivalent of an Islamic bond. I don't purport to understand the intricacies of such an instrument, but it appears that the main distinction between sukuk and traditional bonds is that the former is more closely tied to a specific tangible asset, a technicality that presumably qualifies it for Mr. Hassan's fatwa.

A lot of this seems to be financial sleight-of-hand, semantics, or playing loose with the facts, but the real significance is that the Islamic financial system is rapidly gaining strength. Mr. Hassan is quoted in the article as predicting that "...in a few years all the Gulf states will move to an Islamic financial system." And, in fact, last year East Cameron Partners, based in Houston, issued a $166 million sukuk, making it the first American company – and an oil company, at that – to do so. This PDF describes in detail that instrument, which was used to finance the acquisition of overriding royalty interests in some offshore GOM production. It's interesting to note that the transaction was scrutinized by not one but two shariah advisers, one in the US and one in Bahrain. The final instrument was actually a "Sukuk al-Musharaka", which is a joint venture arrangement.

It remains to be seen whether sharia-compliant banking is another sign of an Islamic conquest of the world. The issuance of significant numbers of sukuks and other shariah-compliant instruments by non-Islamic entities seems to be a double-edged sword, and raises some interesting questions, such as whether US companies should engage in business practices that are explicitly Islamic in nature.

In the attitude of "if you can't beat 'em, join 'em," some might argue that one might as well make the best of things, and make money in the process. In addition, there's an argument to be made that investment decisions surrounding sharia-compliant financial instruments are not substantially different than those made in keeping with other ethical or moral guidelines (e.g. the decision to buy stock in cosmetic companies that don't do product testing on animals).

There are some equally interesting peripheral issues, as well. If sharia banking grows as predicted, business schools will be forced to adjust their curricula accordingly. Tufts University's Fletcher School of International Affairs has a course entitled "Islamic Banking and Finance," which is an overview of the subject; it has similar courses for finance in China, Latin America, and East Asia. However, at some point the business school curricula will have to move from the overview into the practical, training accountants, economists, bankers, financiers, and so on in the hands-on issues related to such things. That transition may not be smooth. It took decades of corporate abuse to convince MBA programs of the need for beefed-up ethics training; what will it take to make them create a curriculum that is explicitly rooted in a specific religion?

And, finally, the new instruments could present challenges to analysts and potential investors who are trying to assess the financial status of companies who have issued (or invested in) them. Should a sukuk be treated as traditional debt in computing liquidity or leverage ratios? How does one assess the risk associated with such instruments? Clearly, these are issues that require new thinking for professional training and investor education.

An excellent overview of this topic is found here, Islamic Finance - The New Mainstream Alternative, via InvestorsOffshore.com.

Technorati tags: Islamic Finance | Islamic Banking | sukuk

Cap'n Jack Sparrow, Economist

Update: Professor Leeson emailed me to point out that the papers I mention below are, in fact, available in PDF format via his website. I shared with him my philosophy regarding making links more obvious to harried and unobservant bloggers. I've updated this post to provide links to the respective PDFs.

According to his website, Peter T. Leeson is the BB&T Professor for the Study of Capitalism at the Mercatus Center at George Mason University. He also has a thing for pirates – or at least for their theories of economics. He's published a couple of papers exploring those theories, and they sound like interesting reading. Following are the abstracts.

I tried unsuccessfully to find these papers online; perhaps the professor fears *ahem* pirating of his work.

Tip o'the buccaneer's cap to Ideoblog.

Putting a speed bump on new Texas tollroads

The Texas Insider reports that a Houston state representative has co-authored a bill that puts a two year hold on the Trans-Texas Corridor (TTC) and allows the legislature to study the way the Texas Department of Transportation (TXDOT) handles all toll roads.

The report says that Dwayne Bohac has some of the same concerns that a bunch of ordinary Texas citizens have about the state's plans to grab a huge swath of land through the central part of the state on which a toll road would be built and operated by a Mexican company:

I'll confess that when I first encountered the arm-waving over the plans for the TTC, I chalked it up to the usual flat-earth backlash against anything that smacks of progress. But the more I learn of the project, the more odious it seems, and I applaud the move to slow things down in order to get full disclosure on the table.

If you want to track the flipside of the coin as shown on the TTC site linked above, visit CorridorWatch (which sports the world's longest home page). One key difference between the two sites that's more telling than one might initially realize: the TTC site is also provided in Spanish.

Technorati tag: Trans-Texas Corridor

Personal Debt: Can't live with it, can't live without it

Jim over at Serotoninrain was floored when he heard that the average US household carries a credit card balance of almost $8,000. The responses to his post tended toward surprise that the number isn't actually higher.

We're continually presented with warnings about excessive consumer debt in the US, and I doubt that anyone disagrees with the idea that too much debt is a bad thing. However, it appears that too little debt can also be a bad thing.

According to this article in today's Wall Street Journal, the failure to maintain some level of debt can actually be detrimental to your credit score, making it more difficult to get credit when you need it, or resulting in higher interest rates when you do get it.

And, despite the kinds of reports cited by Jim, according to the Wall Street Journal more than 50 million people don't have credit scores due to this absence of debt history. (Sidenote: Removing those 50 million from the equation should significantly bump up the average debt load from the $8,000 reported above.)

What to do? The article recommends using a credit card periodically, if only to buy a tank of gasoline. (OK, that might exceed your debt tolerance, given current gasoline prices. Uh, use it for a foot-long coney at Sonic, instead. Heck, go ahead and add the large order of tots while you're at it.) As the article states,

The lesson is that things are rarely as simple as they seem. None of us want to incur personal debt, despite the claims that the pathway to true wealth is via hefty use of OPM, but, as we like to say around here, lurking behind every silver lining is a dark cloud.

Saluting a Fellow Blogger's New Business

I'm not sure in which category this post should be filed. But that's not important. What is important is that fellow Texas blogger Deborah, of Glovebox Stories and SanLeon.net, and her husband have opened a new business: the Flags Bay Flag Store. They sell US and state flags, but they also share an obvious love for the great variety of flags found across our nation, and for the important things those flags symbolize.

If you're in the market for a flag, I know they'd love to accommodate you. Regardless, it's worth dropping by their place periodically to learn more about flag protocol, history, and meaning.

I also think it's pretty cool the way they've adapted WordPress to create an e-commerce site, complete with a full-featured shopping cart via a WP plug-in. But, that's just the geek in me.

Contemplating Paychecks

Note: The following is an example of a Content Free® post offered under the guise of a legitimate and potentially erudite essay. Do not be fooled. And don't try this at home; this post was conceived and executed [you wish] by trained professionals on a closed course.

I've been a "freelance consultant" (another term for "self-unemployed") for about five years, and I'm still trying to adjust to the relative uncertainties of getting paid: not only "how much," but especially "if." As a corporate drone, there was no small degree of comfort in knowing that a regular paycheck would be arriving on a predictable and regular schedule, a fact that I suspect many take for granted.

Since MLB continues to toil in the corporate dronage system, and since her earnings via that toil put mine to shame, I still find myself confronting the vagaries of the pay calendar.

Take this month, for example. October, 2006, is the cruelest month for those on the traditional bi-monthly payment plan, where checks arrive on the 15th and the end of the month. Since the 15th lands on Sunday, many companies will issue paychecks on Friday, the 13th. The upside is that only two weeks have passed since the previous check. The downside, of course, is that it's 18 days until the next paycheck, and that 18 day period includes THREE weekends. (I don't know about you, but for us the weekends seem to be more costly than weekdays.)

Our previous employer had the most pleasing approach to pay periods I've ever encountered. We were on an "every two week" payday plan...meaning that we got paid every other Thursday. This equated to 26 paychecks per year, meaning that twice a year, we got three checks during the month. Of course, the total pay was the same, so that each check was slightly smaller, but this approach eliminated the aforementioned calendric vagaries. And for some reason, those 3-paycheck months always seemed a bit like another occurrence of Christmas.

It was a headache for the payroll department as it almost always meant that at the end of each year, we got paid for days we hadn't yet worked. But, that's why accountants made the big bucks. And every two weeks, at that.

Customer Service Done Right...and Wrong

I'm still waiting for someone to fix my garage door. After the spring broke on Wednesday I immediately called one of the two local companies who specialize in overhead doors and got on its schedule for later that afternoon. They didn't show, but I received a call that evening explaining that the installer had gone out of town for a job and was late in returning. The lady was quite apologetic and asked if they could come out on Thursday afternoon, say, around 2:00? I told her that 4:00 would work better for me, and she said something to the effect, "we'll do whatever you want, since we want to accommodate your schedule."

Well, apparently, "accommodating my schedule" and "actually doing the work" are mutually exclusive, because I received neither a service call nor an explanation for the second no-show. So, this morning I called the other company and set up an appointment for later this morning. We'll see how that works out. In the meantime, I'm looking forward to getting a call from the first company so that I can explain why they lost my business to their competitor. [I really don't expect to get that call, however.]

Contrast that with the strange phone call that came during dinner last night. As it came on my business line, I did jump up to listen to the message and once I confirmed it wasn't from a client I let the machine handle it. I listened to the whole message this morning and it began something like this: "Hello. I'm [so-and-so] with GoDaddy.com's customer appreciation group, and I'm just calling to thank you for your business. I also wanted to remind you that you have a domain name -- [so-and-so] -- that's not set up for automatice renewal and will expire on October 12. If you'd like to renew it, please feel free to call me at [such-and-such] or email me at [such-and-such] and I'll be happy to personally take care of this for you."

According to GoDaddy's About Us page, it currently has 15.7 million domain names in its registration database. I have 26 of them, amounting to -- well, let's just round it off to 0.0% of the total. And yet they're calling -- using a real person, not a recording -- about the upcoming expiration of one $9.95/year product. Now, if I was a stockholder, I might question whether this was truly a good use of company assets, but there's no denying that this is impressive attention to detail and customer service. Domain name registration is essentially a commodity, meaning (among other things) that sellers have very little ability to distinguish their product from that of their competitors. Customer service is one way to set your product apart from the others.

I'll be the first to admit that there are a number of reasons I don't like doing business with Go Daddy, starting with its slightly creepy founder and CEO. But the company is doing something right, and some of our local businesses could learn some lessons from it.

Update: The second company's repair guy showed up on time, and did the job quickly and expertly (well, as far as I know, anyway). He even gave me a tip for extending the life of my garage door opener. That's the kind of service that generates repeat customers.

Debating the Long Tail

There's an interesting dust-up going on between Wall Street Journal columnist Lee Gomes and Wired Magazine editor Chris Anderson over the validity of some of Anderson's hypotheses set forth in his best-selling book, The Long Tail: Why the Future of Business is Selling Less of More. [Disclosure: This book is laying on my end table, but I've yet to read it.]

In his July 26th Portals column entitled It May Be a Long Time Before the Long Tail Is Wagging the Web, Gomes argues that a review of some recent data either refutes or at least doesn't strongly support some of Anderson's arguments.

Anderson strikes back in this blog entry entitled The Long Tail: The Backlash, Chapter 1, accusing Gomes of misinterpreting his book, mistating the facts, misunderstanding the statistics, and being mean to baby squirrels.

It's all very amusing, and even educational, especially if you take the time to read through the extensive comments left on Anderson's post. Anderson comes across as a bit defensive (someone accused him of assuming an attitude of martyrdom), but he also raises some good counterpoints. And any thread in which someone mentions that omitting an reference to leptokurtosis invalidates the whole discussion must have some merit (if only to my pal Jim).

I'm not all that interested in whether the statistics prove the truth of the Long Tail Theory, primarily because it feels right, and I want it to be true (as a card-carrying, non-dues-paying member of the Long Tail in nearly every conceivable part of my life). That's hardly the basis for sound economic decisions, but I never claimed to be an economist. However, I am fascinated by the give and take of the proponents of both sides of the argument. At some point, the discussion over motives gets louder than the debate of the facts.

Particularly telling is this comment by well-known (OK, to some) blogger and journalism professor Jay Rosen:

I just didn't see that in the WSJ column, but perhaps I'm not journalistically-sensitive enough to pick up on such subtleties.

Technorati tags: The Long Tail | Chris Anderson | Lee Gomes

What a difference a day makes!

Forgive me for sitting here with a goofy grin as I type this, because I think I've landed in some kind of Bizarro World for Consultants, and it's a strange feeling.

Here's what's got me feeling like I've gone through the looking glass. I emailed an invoice to a client yesterday...and got the check today. Then, just a couple of hours ago, I dropped an invoice off at another client's office, along with a backup disk and some other stuff, just intending to save a little postage (sorry, Jim)...and he said, "wait here and I'll write you a check." Oh my. Is there another eight word phrase that sounds more lovely to a consultant's ears? I think not.

The thing is, neither of these were trivial checks. They were new-bicycle, upgrade-your-computer, finally-get-that-operation-you've-been-saving-for, fill-up-the-SUV checks.

I love $75 oil!

Teens Lack Financial Perspicaciousness? Like that's a shock...

The Jump$tart Coalition for Personal Financial Literacy was created in 1995 with the goal of ensuring that "basic personal financial management skills are attained during the K-12 educational experience." The Coalition had discovered what many of us suspected all along: the average student who graduates from high school lacks basic skills in the management of personal financial affairs.

The organization administers a biennial test to assess the level of financial literacy among American students. The 2006 test was given to almost 6,000 12th graders in 37 states, and the results released in April showed a very slight increase in scores over the 2004 test. Still, the average score for the 30 question test was just 52.4% (vs 52.3% in the previous exam).

I thought it might be interesting to look at the handful of questions where fewer than 40% of the test-takers knew the correct answers. I've extracted them from the complete test results, which are available via this PDF document. I've provided the correct answer in the blank line below each question; just click and drag over the blank line to reveal it.

Many savings programs are protected by the Federal government against loss. Which of the following is not?

a. A bond issued by one of the 50 States
b. A U. S. Treasury Bond
c. A U. S. Savings Bond
d. A certificate of deposit at the bank

Only 28.6% answered correctly (a); 49.3% answered (d)

Doug must borrow $12,000 to complete his college education. Which of the following would NOT be likely to reduce the finance charge rate?

a. If his parents took out an additional mortgage on their house for the loan.
b. If the loan was insured by the Federal Government.
c. If he went to a state college rather than a private college.
d. If his parents cosigned the loan.

Only 30.4% answered correctly (c); 32.9% answered (a)

If you had a savings account at a bank, which of the following would be correct concerning the interest that you would earn on this account?

a. Sales tax may be charged on the interest that you earn.
b. You cannot earn interest until you pass your 18th birthday.
c. Earnings from savings account interest may not be taxed.
d. Income tax may be charged on the interest if your income is high enough.

Only 22.7% answered correctly (d); 50.9% answered (c)

Retirement income paid by a company is called:

a.Rents and profits
b. Social Security
c. 401k
d. Pension

Only 37.7% answered correctly (d); 32.9% answered (c) and 25.9% answered (b)

If your credit card is stolen and the thief runs up a total debt of $1,000, but you notify the issuer of the card as soon as you discover it is missing, what is the maximum amount that you can be forced to pay according to Federal law?

a. nothing
b. $50
c. >$500
d. $1000

Only 15.1% answered correctly (b); 55.8% answered (a)

Kelly and Pete just had a baby. They received money as baby gifts and want to put it away for the baby's education. Which of the following tends to have the highest growth over periods of time as long as 18 years?

a. A U.S. Govt. savings bond
b. A savings account
c. A checking account
d. Stocks

Only 14.2% answered correctly (d); 44.8% answered (a)

I tend not to get too exercised over this perceived shortfall in "financial literacy." I'm pretty sure I was clueless even as a high school senior about many of these topics, either deferring to my parents for advice and direction, or deeming them irrelevant to my more immediate needs. On the other hand, I gained the knowledge I needed in college, and that's not an option or a choice for many kids.

I am surprised by certain things, like the abyssmal failure to understand that the liability for a stolen or lost credit card is not zero. This is a bit scary, given how many teens nowadays have their own credit cards.

The linked PDF has a section at the end where scores are broken down by demographic indicators. It's interesting to note how certain expectations by the students about their futures correlate with their financial acuity. For example, when asked about the type of work they intended to when they finished school (whatever that means), the group that picked "manual labor" scored only 41.0% on the test while the group that picked "professional worker" scored 54.9%, a seemingly significant difference that also raises questions of cause and effect, i.e. which came first, their career aspirations or their inability to grasp -- or lack of interest in -- basic personal finance?

Technorati tags: Jump$tart Coalition | Personal Financial Skills

Logos and Licenses

I'm sure that everyone has heard by now that Apple successfully staved off a challenge by the Beatles's record label, Apple Corps, to the computer company's use of the the Apple logo on the iTunes Music Store. But that wasn't the day's only resolution of an ongoing dispute involving a trademarked item.

Texas A&M University (my alma mater, and that of MLB, my dad, my brother and an uncle) announced today that it had finalized a licensing agreement to allow the Seattle Seahawks football team to legally use the university's "12th Man" trademark. According to the news release:

The Seahawks organization had essentially thumbed its nose at A&M's polite requests to either discontinue using its trademark or to agree to reasonable licensing terms, so the university took 'em to court. In the process, it caught some flak for making a big deal out of what many apparently thought was a trivial matter. The news release addressed this in a typically spirited fashion:

It should be noted that A&M began using the "12th Man" term in 1922, and registered two trademarks for its use in the 1990s.

I wouldn't try to draw too many conclusions from this, although it does seem to confirm one rather obvious warning to those who would try to take advantage of the normally easygoing Lone Star style. Whatever you do, amigo, don't mess with Texas.

Oh, I think that's trademarked.

Technorati tags: Texas A&M | The 12th Man

FCPA: An old "friend"

Boy, does this post bring back old memories. I can't remember the last time I heard or read a reference to the Foreign Corrupt Practices Act...probably not since my days as a corporate drone in Dallas when we had to sign all sorts of employee affidavits and internal control memoranda. I can't even remember why, now.

Oh, now I remember: bribes. Here's a brief introduction to the FCPA:

That last little bolded bit explains why I, as someone who was unlikely ever to set foot outside of the USA as a corporate drone in an official capacity (or CDIAOC), was required nevertheless to promise not to try to bribe any foreigners. That was one of cool things about working for a multinational company, "cool" being a relative term, of course.

There's more about the FCPA here if you're really having trouble sleeping.

Beeville and Bolivia: Brotherhood of Boneheads

A few days ago, a fellow Texas blogger took the oil industry to task for paying out billions in dividends instead of reinvesting that cash in new oil and gas projects. If you've wondered about that yourself, you might want to view Bolivia's decision to nationalize (a euphemism for "steal") its natural gas fields. In one fell swoop, the government is forcing foreign companies to walk away from more than $4.5 billion invested over the past ten years in Bolivian infrastructure and producing properties. And these investments were made in one of the more stable and accessible parts of the world.

This is just one example of how the investment of significant amounts of capital and technical expertise will be appropriated in the short term in other South American countries such as Venezuela, Peru, and Ecuador. Bolivia has already announced plans to take over the crude oil and mining industries next, and all foreign owned private property thereafter.

I'm sure we're witnessing the creation of the next world-class power, as hundreds of thousands of skilled Bolivian geoscientists, engineers, and financial wizards will rush to fill the void left by the exodus of the foreign dullards who have been stealing them blind.

Which brings us to Beeville, the town in south Texas which has decided to bring ExxonMobil to its knees -- or at least to $1.30 gasoline -- via a boycott of the local filling stations. Well, actually, there's nothing to tie the good citizens of Beeville and Bee county to the Bolivian story other than my love for a good alliterative headline. Well, other than the fact that both are examples of the kind of wrongheaded lunacy that has made the oil bidness into a "damned if you do, damned if you don't" kind of industry.

Personally, I wouldn't blame any of the oil majors for just liquidating the whole shootin' match back to the shareholders and letting Bee county strike a deal with those good ol' boy jobbers in Bolivia for their future fill-ups.

Amex Card: Counting the Cost

Deb over at Write Lightning is not happy about the effect of increasing American Express fees on local businesses, and she cites the example of a restaurant who can no longer afford to accept the credit card.

This is not a new issue, although it may be gaining more attention in the US. But one of the first things we learned when we started going on annual dive trips to various locations in the Caribbean and Central America was that very few shops accepted American Express, and those that did placed a surcharge on the purchase to try to recoup the higher service fees charged by Amex.

Even in the US, I was once able to negotiate a discount on a fairly large purchase by agreeing to pay cash rather than using the Amex Gold card that I initially flashed at the merchant.

This isn't a problem for us anymore, as we cut our card in half a dozen years ago, following the company's refusal to pay an insurance claim following a rental car incident on the island of Bonaire. (It was simply a ruined tire, if you must know.) After paying the annual fees for years, it was a slap in the face for the company to refuse to honor the first obligation we had ever presented to it. And, as Deb points out, I'm sure no one at Amex lost any sleep over the loss of our account.

But we've been more than satisfied with its lower-rent cousins -- Mastercard and Discover -- and so have the merchants and restaurants we deal with. I'll be surprised if Deb's restaurant-owning friends notice any difference at all in their business once they cut Amex loose -- is there anyone in the world who carries only an Amex card? -- but they should see a nice uptick in their bottom line.

Dinosaur Jobs

Fellow west Texas blogger Reagan Lynch emailed a link to an article entitled Six Jobs That Won't Exist in 2016. The jobs listed included "gatekeepers" (which are positions designed to control our access to or consumption of data), bloggers, "advertising creatives," auto mechanics, US high tech positions, and Indian call-center operators.

This list is obviously tongue-in-cheek. First, there's no data to support the claim that "blogger" is a job that exists even today. Second, those who believe that auto mechanics will be replaced by programmers are obviously not acquainted with fundamental concepts like friction. Third, the vanishing of Indian call centers is a pipe dream, given that the only accurate prediction of the bunch is the elimination of US tech jobs. You don't really think that once all those tech jobs are relocated to India that that country will relinquish its call centers, do you?

But it is an interesting exercise, predicting the next buggy-whip manufacturer or zeppelin engineer. Any thoughts?

Disney/Pixar 2.0

Today's Wall Street Journal discusses the potential conflicts of interest if Steve Jobs lands on the Disney board of directors if the Disney acquisition of Pixar becomes a reality. As Apple becomes increasingly active as a provider/facilitator of entertainment content, the relationship of that company and Disney as competitors/collaborators/supply-chain-participants starts to get muddled.

The article states that most observers think that Jobs could handle the dual roles without problem, but that may not be within his control, depending on how high the wall is built to ensure arms-length objectivity. Jobs has apparently been able to limit his involvement at Pixar to true high-level management, while he continues to be an incredibly hands-on, detailed manager at Apple. There's no reason to think he couldn't do the same at Disney...except that he might find that he's not working with the same level of managerial and creative talent at Disney that he's got at Pixar, nor will the creative constraints be as loose.

One interesting footnote to this story is the revelation that Jobs's investment in Pixar is now worth $3.5 billion. He paid $10 million for Pixar in 1986.

Finally, in the wake of my rather tacky post last week about the potential acquisition of Pixar by Disney, I'm gratified to see that the WSJ's "Question of the Day" is "Which company stands to benefit more in a Disney-Pixar deal?" and, more to the point, 74% of the respondents think the deal will benefit Disney more than Pixar. I have no idea what planet the other 24% are logging in from.

Technorati tags: Disney | Pixar | Steve Jobs

The Dummy's Guide to Ruining a Good Company

Step 1: Sell it to a bad one.

Step 2: There is no Step 2.

I'd be happy to entertain insights as to how this deal will enhance Pixar's creative capital and climate.

Technorati tags: Pixar | Disney | Execs Thrive; Employees Dive

Evans to Rosneft?

I'm absolutely fascinated by reports that Midlander and former Commerce Secretary Don Evans has been asked by Russian president Putin to become Chairman of the Board of Russia's largest oil company. If true, and if it comes to pass, we may someday look back on this event as a watershed in the legitimization of the Russian oil and gas industry, which up to this point has been at best a doddering behemoth and at worst a disaster of the first stripe.

The implied message of the outreach is arguably much more important than the actual event. Putin seems to be admitting that his country's most valuable industry is basically out of control, and there's no one inside Russia who can master it. He's also taking proactive steps to give some assurance that when Rosneft becomes partially privatized next year via an IPO, it will have the kind of leadership necessary to ensure that investors feel comfortable in buying its stock.

It also is a vivid reminder of how different the Russian style of government and business is from what we're accustomed to. Of course, Rosneft is a state-owned company and thus you'd expect that the political leader would have a certain amount of control over or input to the selection of the business leader. But can you imagine Dubya inviting, say, Tony Blair to become head of ExxonMobil? OK, bad example. But, you know what I mean.

I doubt that anyone's naive enough to think that Evans will singlehandedly turn around an entire national industry. But if a west Texas oilman can't do it, nobody can. At the very least, it's a good start.

Technorati tags: Donald Evans | Rosneft

Big Cheese in the Panhandle

Here's an announcement that's bound to send the folks over at Jessica's Well into a higher level of froth:

According to the article, that $190 million figure represents the cost of building the new 5 million-pound-per-day cheese plant. That's a pretty measurable investment. Less reassuring is this statement regarding the new jobs:

That seems like a Magic 8 Ball kind of projection, if you ask me. Still, this appears to be a big-time coup for a small burg like Dalhart. Good on them...but they still won't have interactive water fountains. That has to count for something, right?

Incidentally, the JW take on said fountains and other examples of government largesse is worth reading.

KMID-TV Kisses Off Grande?

Update (11/18/05): According to this article in today's Midland Reporter-Telegram, the KMID and Grande have "reached an agreement" and ABC's local programming will not be pulled from the cable's lineup. Terms of the agreement were not disclosed.

Does anyone really believe that the local ABC affiliate, KMID-TV, is going to withdraw its programming from the Grande Communications cable network in west Texas on December 31? I know; they say they're going to do it, calling it Grande's decision in electing not to pay the station 30¢ per subscriber. Of course, Grande provides a different perspective on the dustup (link is to a PDF document), including the following:

Gee, doesn't this sound familiar? Oh, now I remember. It was three years ago that KMID threatened to pull its programming from the other cable provider in the area, Cox Communications. Guess what? There was never any disruption of service.

All the same arguments I put forth back then still seem to apply. Of course, Grande's subscriber base is smaller than Cox's (I couldn't find any actual numbers to quantify the difference) but the real winners if this parting actually occurs will be the other three local stations, and, possibly, Cox itself. It's not beyond the realm of possibility that some people would rather switch cable companies than lose access to ABC programming; the network had four of the top ten shows (and three of the top five) in the last Nielsen survey.

Of course, the losers are the same schmoes that take it on the chin every time: the customers...you and me. Although, now that I think about it, removing easy access to "Desperate Housewives" from a few thousand homes each week might not be such a bad thing after all.

I predict this will get settled before December 31. If not, look for violence to potentially take place on January 4, 2006.

Technorati tags: Grande Communications | KMID-TV

SOX Driving Privatization?

I've made no secret of the fact that I am an accountant by education, although through a fortuitous combination of Divine intervention and blind luck, I've never had to do any real accounting to make a living. Nevertheless, one of the rights that naturally accrues (see...there's an accounting term, right there) to an accounting degree is that of deriding the Sarbanes-Oxley Act of 2002 (affectionately referred to as "SOX") at every turn.

The laws and related regulations derived from SOX were enacted in response to Enron and other major corporate accounting fiascos, and the purpose was pure: to provide more accountability (no pun intended) for corporate executives to ensure that their companies were not monkeying around (that's a technical auditing term) with their books so as to mislead, defraud, neuter and/or otherwise annoy their shareholders (and, hopefully, their employees who hoped someday to do more with their 401K balances than have a nice meal out with the family).

Still, SOX has been a big burden on a multitude of frontline accountants who couldn't cook the books if they were asked to, but who have to do all the grunt work so that somewhere way up the line, the CEO/CFO/Controller/Whomever can sign something saying things are hunky-dory (more auditspeak) and thus they won't have to go to jail and work on their golf swings. Like the Pharisees in Biblical times, corporate accounting managements have built layers and layers of additional controls and reports around the SOX requirements under the principle that anyone violating them will die of outright fatigue before getting to the truly felonious infractions.

Which leads us to...what? I forget where I was going with this. It's too much fun just to bash SOX. Hmm. Oh yeah, I remember.

Today's Wall Street Journal has a mild rebuke for folks like me, pointing out that the reported costs of being a publicy-traded company are up a mere 45% from last year, mainly due to SOX...but that's not a lot of money for most large corporations. (We'll agree to ignore for purposes of this post the hidden costs, primarily productivity losses.) Plus, the article goes on, SOX has actually made companies behave better, and that's A Good Thing.

But, apparently, there are those who feel that better behavior is overrated. Some are putting forth the theory that SOX is a catalyst for a new trend of the privatization of public companies; the requirements of SOX apply only to publicy-held companies. The recent multi-billion dollar acquisition of Georgia-Pacific (a public corporation) by Koch Industries (a privately-held company) is Exhibit A in this argument.

Interesting theory, but Alan Murray, the author of the WSJ article, has a different explanation for the flight to private:

Well, rats. Now I don't know who to root for. Anything that stifles some of the despotic urges that so often seem to crop up in officers of companies whose net income is bigger than the combined GNP of Central America can't be all bad, can it?

Still, this possible trend toward privatization bears watching...if only to see if it even exists. I tend to be skeptical that it's driven by SOX, and even though I characterize SOX as being excessively burdensome on smaller companies, I'd have to wonder what any company had been up to if it was willing to abandon the funding and risk-sharing benefits of being publicly trading just to avoid some regulations.

Technorati tags: Sarbanes-Oxley | Privatization

Price Gouging: A matter of morals, not economics

I'm surprised that no one has called me on the following paragraph, taken from a post earlier in the day:

I had a vague sense of unease even as I typed that paragraph, but it took a mid-afternoon bike ride to zero in on what I'd missed. Simply put, I should have written the last sentence as follows:

Price gouging -- the arbitrary setting of inflated prices with the primary purpose of profiting from a shortage of critical goods or services during a time of emergency -- is morally reprehensible, in my opinion.

As far as I know, there is no technical or economic definition as to what constitutes price gouging. Like obscenity, it's something one recognizes when one sees it...but not everyone sees something in the same way. In some cultures, the flash of a female ankle is considered obscene, but others have very different standards.

Some will argue that the oil and gas industry is an oligopoly and the standard supply-and-demand market constraints don't work, and thus accusations of price gouging in the wake of the recent hurricanes are warranted. I don't agree with the base assumption of an oligopoly, and such arguments seem to ignore the realities of how commodity prices are actually set. Nevertheless, even if the argument was true, a solution remains elusive.

What are reasonable profits? How much could prices rise and over what period of time before price gouging could be charged? How do you factor in legitimate supply shortages? And what goods and services should be covered by price gouging laws? Gasoline? Toilet paper? Diet Coke? iPods?

In the end, attempts to penalize price gouging will likely do more harm than good, because they will inevitably fail to consider the preceding questions. Proposed solutions will be based on political expediency and/or moral judgments, neither of which generally result in good legislation.

Don't take my word for it. Much smarter people than me are saying it much better.

Technorati tag: Price Gouging

Oil Prices: Save us from the Senate

Yesterday's Senate grandstanding hearings about the causes and impact of increased oil, natural gas and gasoline prices in the wake of the hurricanes provided some disappointing but not surprising insights into why that body is exactly the wrong group to address the issue: an inability (or unwillingness) to grasp fundamental economic truths.

Witness this exchange between the Federal Trade Commission Chairman and the honorable senator from the great oil-producing state of Oregon:

One would hope that by referring to this conclusion as "astounding," the senator was implying that a door to understanding had been thrown wide open and he now saw the direct link between supply, demand and prices. One would probably be mistaken in this hope.

To the extent that interdiction of actual price gouging at the retail level can be achieved, the process is worthy. Price gouging -- the arbitrary setting of inflated prices with the primary purpose of profiting from a shortage of critical goods or services during a time of emergency -- is reprehensible. But the senators appear to be overreaching -- shocking, I know! -- by attempting to exert economic control all the way back through the supply chain, starting with the raw product coming out of the ground.

In light of those hearings, the irony of this becomes almost unbearable.

For a realistic take on what the Senate hearings are all about, you'd do well to see how our Australian mates view the process. In an article entitled "Big Oil takes Senate back to school," we get this insight:

This is a complex issue and there will be no solutions created by the Senate, or anywhere else in the US, for that matter. But the ability of the Senate to make things much, much worse in the long run should not be underestimated.

Technorati tags: Oil and Gas Prices | Price Gouging | Windfall Profits Tax

US stays competitive; EU loses ground

The World Economic Forum (WEF) has released its Global Competitiveness Report, and Finland retains the top spot, followed by the US. Sweden, Denmark and Taiwan round out the top five, which was identical to last year's ranking (with the exception that Denmark and Taiwan swapped places).

The nations of western Europe continue to lose ground in these annual rankings. Here's what the Wall Street Journal has to say about this situation:

Italy trails powerhouse economies like Tunisia, and is barely ahead of Botswana. France and Spain rank 30 and 29, respectively, behind Chile (23), Estonia (20) and New Zealand (16). Interestingly, China and India rank only 49 and 50, with China dropping three spots since last year; India is up five spots. Full rankings including a comparison with last year's survey results are found here.

Here's how the study is described in the WEF's press release:

Here's what the study's Executive Summary has to say about the US performance:

Macroeconomic imbalances. That's econospeak for huge budget and trade deficits.

Very interesting reading. Given all the other problems in the world, it's also difficult to engage in any schadenfreude regarding the EU's continuing decline. Difficult, but not impossible. ;-)

Technorati tags: World Economic Forum | Global Competitiveness Report

Tiered Pricing Ahead for iTMS? And why a little piracy is a good thing.

I'm probably the last person in the universe to discover Chris Anderson's blog, The Long Tail.* But it's now firmly entrenched in NetNewsWire where I'll be checking it often.

A couple of somewhat recent posts caught my eye and I'm linking them in one article despite their taxonomic disparities. (I don't know what it means either; I just made it up.)

The first article discusses the possibility that Apple may move to a tiered pricing structure in its iTunes Music Store (iTMS), discarding its current $.99/song policy. The move may be to a range of prices that provides for a higher fee for new music and a lower fee for older or less popular music. According to the article, the record labels are all in favor of the former, which is no surprise. What's surprising, perhaps, is that they're also in favor of the latter. The thinking is that the less popular music -- which, in this case, represents "the long tail" -- would sell better at a lower price. You could get into all kinds of discussions about demand elasticity, etc. but the idea does have merit and I find it attractive from a selfish perspective. I suspect that my preference for Diana Krall over Coldplay, or for Brazilian samba over glitch/dance would mean that my likely choices in downloads would fall into the lower price categories. In any event, it's in Apple's best interests to pay close attention to things like this as iTMS continues to mature.

The second article presents an even more intriguing suggestion, that a small amount of software piracy is actually beneficial to the industry. This is based on two premises, one related to "user experience" and the other economic.

On the user experience side, Anderson states "Any protection technology that is really difficult to crack is probably too cumbersome to be accepted by consumers." This is not a new concept, and we're all experiencing it more often. As software (or any digital content, really) becomes subject to increasingly strict DRM, it also becomes increasingly a pain to register, to use on different computers (or music players), etc. There's a fine line between making the DRM scheme strong enough for protection and too strong for reasonable use.

The economic argument goes thusly: "...piracy can actually let you raise your prices." Anderson gives a great example of how this can be the case:

An even more interesting argument is this one:

This implies that piracy should be encouraged in order to gain a foothold in an otherwise closed market. Anderson refers to that strategy as "controversial," but it's worked for centuries in the field of religious evangelism, where the creation of a few "true believers" (spiritual beta testers?) can ultimately influence the direction of an entire nation or culture.

Interesting articles, both. I recommend them.

*If you're unfamiliar with the term, "long tail," it's a description of a commonly observed phenomenon in statistical analysis wherein a vast population of events occur very infrequently, while a very few events occur very frequently. Anderson adapted that term and in its proper noun format ("The Long Tail") uses it to described economic and business models that place value on providing an immense array of goods even though no single item is sold very frequently. Focusing on The Long Tail is what companies such as Amazon.com and NetFlix (and Apple's iTMS) do, and it's working out very well for them. If you want a quick primer regarding The Long Tail, visit Wikipedia.

Technorati tag: The Long Tail

Looking for "undervalued" housing? Try Odessa, TX

According to a recent study, Odessa, Texas is home to the fourth most undervalued housing market in the nation. Housing in Odessa is judged to be undervalued by 14%. College Station, Texas (-19%) leads the undervalued category, followed by El Paso (-17%). Killeen (-13%) gives Texas four out of the five most undervalued housing markets in the nation.

Midland (-6%) is tied for 12th with a number of other mostly-midwestern cities. Dallas was the largest metro area (population >5 million) to be undervalued (-11%). However, the study apparently excluded Metroplex suburbs like Frisco and Plano where, one suspects, the pricing might be skewed to the overvalued end of things.

The study, the results of which appear at CNN.com, was conducted by the National City Corporation:

On the flip side, four of the most overvalued markets are in California (big shock, huh?). Santa Barbara leads the pack (+69%, with a median home price of $564K) with Salinas (+67%; median price - $516K) following closely.

And where would you live if you wanted housing that, according to this study, was priced just right? Well, you have a choice among such exciting destinations as Lafayette, LA, Lincoln, NE and Oshkosh, WI.

As one might expect, given the current overheated nature of the US real estate market, overvalued areas outnumber undervalued ones by more than 2-to-1.

Technorati tags: Real Estate | Housing Prices

Kat's Impact Hits Home

I went out this afternoon to run a few errands. As I pulled onto Midkiff to head to the post office, I contemplated whether I should top off the Durango in light of reports that Hurricane Katrina's disruption of GOM production and Gulf Coast refining would drive gasoline prices higher. I had just about decided that it wasn't worth the time to save a potential few cents per gallon when I glanced over at the Kent Quik Texaco station and saw "$2.67" on the sign, then looked at the Chevron station right across the street which still read "$2.47." Since I was already in the right lane, I whipped in and put $30 in the tank; twenty cents a gallon is nothing to sneeze at.

A soccer mom was filling up her Suburban at the pump next to me and I said something about getting while the getting was good. She said that when she took the kids to school this morning the Texaco station was still at $2.47. When she noticed the higher price, and the lower price at the Chevron station, she too decided to fill up. Unlike me, however, she put an even <cough> $100 in that gas tank!

This is starting to get ugly.

Aloha to Free Market: Hawaii caps gasoline prices

It was a stupid idea 35 years ago, and it's still a stupid idea. But that hasn't stopped Hawaii's legislature from placing a cap on the wholesale price of gasoline, effective September 1.

Industry and analyst reaction was swift and predictable:

In a wonderful example of economic naivety, one state senator responded to those criticisms thusly:

It might not be a bad idea to file those quotes -- especially the senator's concluding sentence -- into the "famous last words" category.

Any bets as to when we'll hear the first [Northeastern] [Democratic] congressman call for reinstatement of the Windfall Profits Tax?

Technorati tags: Price Controls | Legislative Hubris | Energy Prices

India and China to Team Up for Oil & Gas Bidding

I'm not sure how I missed this, but the governments of India and China have announced that their state-run oil and gas companies are entering into an agreement whereby they'll be able to jointly bid on oil and gas assets.

Both countries are, of course, net importers of crude oil and natural gas and their growing demand for same is pointed to by many as one of the reasons for the high energy prices worldwide.

Some believe that this alliance will give the countries the financial wherewithal to compete on the global stage, and, indeed, it will eliminate one competitor from the picture.

But, as CNOOC found out when it set it sights on Unocal, there's more to being a player at that level than simple access to cash. It's a bit naive to think that by bringing India into the picture, China's politics will somehow be glossed over or appear irrelevant to governmental authorities having jurisdiction or influence over such transactions.

As for India, I trust they're simply adhering to the time-proven strategy of keeping their friends close, and their enemies even closer. But, there's another adage that might apply...something about lying down with dogs...

Technorati tag: India/China Partnership

Strange New World

Pardon the somewhat out-of-character seriousness of this post, but I can't help bringing to your attention this article from Barron's Online, from which comes this (emphasis mine):

Remember the good old days when IPOs were evaluated primarily on such down-to-earth criteria as interest rate predictions, raw material availability and pricing, technological competence and strength of competition?

It's Not a Game

The more I think about the word games being played by the manufacturer of "Grand Theft Auto: San Andreas," the more steamed I get.

By now, you've surely heard about the decision by the Entertainment Software Rating Board (ESRB) to reclassify the video game from M (for "mature 17+" audiences) to AO ("adults only 18+") because of the presence of pornographic "mini-games" that are accessible to anyone with an internet connection and the knowledge to download and install the third-party software that unlocks them. That would include about 90% of the pre-teen and older kids in America who own the game, I'd guess.

As you may recall, the manufacturer first claimed t