The Longshoremen shut down the West Coast for a shift in protest of the war on the Iraqi people. Perhaos there is one group on the commanding heights that will defend peace and freedom.
Thursday, May 1, 2008
Unpeg from the dollar
The Gulf States are declining to import USA inflation. This "unpegging" is a step in the destruction of the hamiltonian role the US dollar has played. History is taking place.
How Starbucks Will Fail
Cutting costs and a new line of fruit smoothies will not save Starbucks. Earnings are down 21%, and for the first time ever, fewer people walked thru the doors this period than last.
I like Starbucks, so I'll waive my $25,000 fee for my initial consultation, and advise Schultz what to do:
First, the problem, and I quote Starbucks management:
"The power of our brand is more evident now than ever," said Smith. "We were recently named among the 10 most impactful global brands by Brandchannel, and for the third consecutive year, we are listed among the 100 most valuable global brands by BusinessWeek magazine."
"Starbucks continues to refine the Starbucks Experience," stated Schultz.
These are Schultz's two talking points, endlessly repeated.
The solution is to ask: where is the customer? As Nassim Nicholas Taleb might say, Schultz has been fooled by randomness. Countless people tried to make it in the coffee business, but Schutlz succeeded, until now. In retrospect, the serial bubble economies of Masters of the Universe Bond Marketers of the 80's, the larger bubble dot-commers of the 90's, and the universal real estate mortgages-messers of the 00's needed industrial strength delivery of industrial strength coffee to fuel the berzerk biomass working to inflate these bubbles. Starbucks had the right system for delivering the right product to a market Schultz never anticipated. Brand and experience had nothing to do with anything.
Schultz had no more of an idea where the world was heading than anyone else, he and his cohort merely had the strategy that would work, given what was going on in the world. This strategy does reflect Schultz and his associates, and who they are and what they believe, but in another economy, one of the others entrepreneur's plan would have been the "successful one." We are entering "another economy."
If Schultz seriously thinks branding strategies and coffee experience on offer is the key to his success, he is delusional. Certain customers, in a certain era, and who Schultz is being in the right place at the right time, is the secret of Schultz's success.
The proof that brand and "Starbucks experience" do not matter is the alacrity with which his customers are abandoning both. Micky D knows this, and with fresh content ads in media they budgeted for anyway, McDonalds picks up Starbucks customers at no additional cost. So much for Starbucks brand and experience.
Since the random events of the structure of our economy is changed, the older one is over, the disintegration of Starbucks is underway. Starbucks no longer fits, or not to use too bad of a pun, Starbucks no longer serves. Schultz has no more of an idea of what his custoemrs want today than he did in 1980.
The problem a few dozen people at the top cannot possibly meet the changing needs of the millions of people who would patronize his 15000 stores.
Starbucks can survive in one of 2 ways:
1. Go upmarket. The rich are not going anywhere, but the vast majority of the present Starbucks customers are going to McDonalds eventually, or will simply no longer need the caffeine fix to get them through the day or exploiting bubble economy opportunities. Perhaps going forward, a wee bit of scotch, late in the evening, at home, is indicated. No way of knowing. Starbucks customers do not know yet, so no one can find out. Starbucks is probably too big to trim down in time, which leaves this upscale category open to an entrepreneur.
2. Stop retailing. Schultz did create a worldwide network of first rate coffee shop managers (I know Starbucks is not worldwide, but plenty of people from around the world put in 2 years at Starbucks precisely to learn how to run a shop, then went back to Burkina Faso or Hebei or Guadalajara to open up their own coffee shop, with the skills they learned).
So Starbucks announces they will divest themselves of all retail stores. Starbucks announces they will be strictly an importer/wholesaler of coffee, and coffee shop supplies. If they have 15,000 stores, they offer to sell the stores to the staff of that particular store, which may NOT retain the Starbucks brand. Certainly they might say "proudly serving Starbucks." but that would be up to the store's new owners... and obviously these newly-independent would not be Starbuck's franchises. Further, these stores may be free to buy coffee other than Starbucks. That information, in itself, would be a goldmine. These stores would be completely spun off, to respond to customers and change in any way each liked.
Starbucks gets into the business of financing to spin-off these entrepreneurs, until the process is complete. The result is overnight Starbucks is divested of the liability of 15000 leases in a disintegrating commercial real estate market, and retains the assets of 15000 wholesale customers. The 15000 thousand customers then get busy responding to the needs of of their local particular markets, free of Starbucks high commands' delusional failing brand and "coffee-experience" dictates. Not to mentioned since no one gets fired, there are now downsizing charge-offs to Starbucks.
Starbucks gets to watch 15,000 experiments in coffee retailing, and keep in mind, these experiments are in the hands of highly trained, highly motivated people.
Starbucks may find selling information back to retailers far more profitable than running shops.
The new slimmed down Starbucks can concentrate on the core function of coffee sourcing and distribution, adjust that to the changing world, and perhaps some day return to retailing. On the present course, Starbucks has about as much chance of surviving as WAMU.
Tuesday, April 29, 2008
Govt Targets Old Ladies
When one of these elders dies, the other will lose their home to the inheritance tax.
The law first appeared to destroy retained family wealth, especially the landed wealthy. Now it has gotten around to the merely frugal. Did they cheer when the laws first went after the rich?
The laws were first written to destroy the rich who got the poor into so many wars. Now it is the poor who get the poor into wars (Tony Blair). Perhaps the solution is to not have power concentrated into so few hands, rich or poor.
Communist Party - People's Republic of China
The best president in the last 100 years, Jimmy Carter, got in trouble for pointing out the American government had an "inordinate fear of communism." The only successful communist party ever is the Communist Party of the People's Republic of China. And what a spectacular success it has been. Is there something essentially superior to the Chinese that they could make communism work, where no one else could? They have engineered the greatest creation of prosperity with peaceful means mankind has ever seen. At the same time, the communists have permitted Hong Kong to continue as a free port, in fact replicating the Hong Kong success in another 20 cities in China.
Now Hong Kong is of course a Celtic innovation that by happy accident ended up on the South China Coast. But here again, like Communism, another utterly foreign innovation, the Chinese were able to make it work in China. The Portuguese had better relations and a longer time-frame in Macao, just a few dozen miles across the Pearl River Delta from Hong Kong, but never thought to match the offer of freedom made in Hong Kong. Of course, now free of Portuguese administration, Macao booms like a Chinese fireworks show.
The Chinese success has been an opportunity for small businesses worldwide, as anyone who attends Chinese trade shows can see. The demand for Chinese innovation and cheap management has created labor shortages in China, forcing wages and the standard of living up at the bottom of the economic pyramid. The Communist Party of China has been a blessing to small businesspeople worldwide.
The Chinese under the Communist Party have been excellent competitors. I regret that the Chinese, for all their inventiveness, have not been the innovators that historically has contributed to the good, the true and the beautiful that has so benefitted mankind in the past. But good enough, we must take what good we can get.
Competition is from the Greek meaning "to strive with..." as when single runners never go as fast as a dozen all do when running against each other.
Right now the American Revolution has gotten off track, hijacked by the Hamiltonians, and the fruits of their policies are bitter indeed with the financial problems, food shortages, permanent war, lockdown on civil liberties and other promises they have made and delivered on.
These Hamiltonians are too dull to compete, they can only do war when their unimaginative polcies fail. The Communist Party of China is leading the Chinese people to unimagined prosperity and the Hamiltonians want combat not competition.
I am certainly not about to move to China. USA will return to its role as a beacon of hope to the oppressed of the world once we Jeffersonians restore the American Revolution. The Chinese Communists are outperforming the USA Hamiltonians. Big deal. I can do that. My job is to stay here and do just that, at the small business level.
But to restore the American Revolution, and compete with the Chinese Communist Revolution, we have to be here build the restoration when the Hamiltonians fall, whether it is during the eight years Hillary is the Hamiltonian president, or some time after.
What will be interesting is when the best of China gets into a competition with the best of USA. Then we'll see the world progress when all, especially the poor, have access to the material benefits of free market science and industry, and the leisure to pursue the good, the true and the beautiful.
Right now, all Americans are losing, whether they know it or not. Under the Hamiltonians, the failure is complete, it is just a matter of suing for peace, with your present and future ransomed for the benefit of a few. A done deal.
The antidote can be taken immediately, and begins to cure immediately. Start your own business. As Cicero said, dimidium facti qui coepit habet. Begin and you are halfway there. You know how to begin. Note a problem you experience in a field you love. Then come over to the blog, where we have made it easier to use, and continue the conversation and support for your business. Excelsior!
Some Canadians Want to Be Hamiltonians
This fellow is alarmed that big business uses international trade to avoid taxes. This is not good, he says. We should make this criminal, so we can get more taxes for governments to do social engineering.
First he needs t understand that it is policy to have big biz avoid taxes. Second, he needs to understand there are no good government programs, so any money diverted from commerce to government is lost, wealth destroyed. Third, the money kept by the corporations goes to goods and services, which benefit the economy.
The best "solution" is to get rid of government, subsidies and restrictions, which will lead to peace and prosperity.
The only problem with that plan is the fellow will not be able to write editorials advocating lockdown on other people.
Defend Japan: Eat More Rice
Japan has no rice shortage, and is encouraging Japanese to eat more rice. But their government programs cause Japanese rice to cost three times the price of Thai rice.. A free market would give Japan a secure supply and lower prices.
Monday, April 28, 2008
Speculators Behind Food Shortage
No mention in this article of big biz and big govt pushing biofuels, only that the shortage is caused by business people, and more regulation is needed.
Coldplay Expands Free Market
The pop band Coldplay (I don't know) is giving away their next hit free of charge, contributing to the revolution in music business, and all publishing, and expanding the list of business people who find free is a very good price to charge.
I Missed This One!
Of course, during war, chewing gum, chocolate bars... huge steady business. Warren Buffett just financed Mars to buy Wrigley. Too late to get in, the stocks have already shot up. If I miss out on something like war profiteering, I think it should be illegal.
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