Tuesday, December 11, 2007

Hide everything,...

...the Utah State Government is coming to help. Governor Huntsman thinks his mandatory insurance plan is going to fix things. Let's just say I'm skeptical.

As I understand it, the plan will have three income tiers. Folks in the bottom tier will receive something like Medicaid. Folks in the middle will receive subsidies to help them pay for insurance. Folks in the top tier will have to buy their own. At least they'll have to if they want to do such mundane things as go to school or get a job, because they'll have to provide proof of insurance in order to apply. And you won't be able to employ them without that proof of insurance, either.

Does anybody else see anything wrong with this? Suppose your income increases and you bump up a tier, but you can't afford your insurance any more (an existing problem that this plan exacerbates)? Suppose you bump up a tier, and private insurers won't insure you? Suppose you're an employer, and the promotions and raises you provide your employees do them more harm than good? Do you have any idea how much pressure employers will be under to pay under the table, or to pay in barter? Do you have any idea how the underground economy will explode?

This disaster needs headed off.

Everything old...

...is new again. Things sure have changed since the dot-com days. No cash to burn, no Segways and lobster tails for everybody. You may have to raise your money from the Three Fs (Family, Friends, and Fools). You may have to work out of your apartment. You may have to pinch pennies. You may have to eat at home, and not take-out either. Oh yeah, and you actually have to have a product. That people will buy. And you have to sell it to them. And you have to service it. Yep, things sure have changed. Back to reality. About time.

Bankruptcy Bilge

Let me make one thing perfectly clear: I know there's a lot of bankruptcy fraud. I've had to deal with a fair amount of it over the last 20-odd years. Nevertheless, there are times when it's the only way, and that way needs to be available. In my not so humble opinion, the recent bankruptcy amendments have made it impossible for a lot of people who ought to declare bankruptcy to do so, allowed creditors to continue showing debts as good when they're actually bad (thus exacerbating the credit mess), and not rid us of any significant number of fraud-bots. In other words, the amendments have failed to do what the bankruptcy system is supposed to do.

Further, they've allowed us to feel way too good about this economy, because after all bankruptcy filings are way down. Witness a comment I saw recently by the Clerk of the Bankruptcy Court. He thinks the economy is fine, even though filings are up 23% over last year, because 1) filings are still far below the pre-amendment rate, and 2) they are not rising as fast as the rest of the country. Concerning #1: Duh! The amendments slammed the bankruptcy door on huge numbers of people. That's not a good thing. They're still broke; we just no longer have a way to recycle them back into the economy. That's not a strong economy. That's waste.

As for #2, I think a look at the underlying data would show those rosy figures are a result of Utah's entrepreneurial spirit. Utah has an abnormally high percentage of self-employed. Thanks to the amendments, these folks are ineligible for Chapter 7, and Chapter 13 is not cost effective. So they just go down the tubes. Explain to me how this is either a good economy or good for the economy.

I remember an episode of "The Simpsons"...

...in which they went to the mall, and as they walked around, the shops kept changing into Starbucks. By the time they left, every shop was a Starbucks.

I know how close to the truth this is, having spent years in Seattle. There was one intersection downtown at which three of the four corners had a Starbucks. Eventually, they shut down one, leaving the two kitty-corner from one another. And this was in a city where the locals referred to the place as "Charbucks" and went only to Stewart Brothers' Coffee, nka Seattle's Best Coffee. Then Starbucks simply bought SBC.

But now Starbucks now looks like it's on decaf. It's stock is down 40% this year, largely due to this kind of oversaturization. But momentum is momentum, and the company still plans to open another 2400 stores this fiscal year, even while Chairman Howard Schultz whines about the growth watering down the Starbucks experience.

Most of us can only dream of being too big and too popular, but there really are some lessons to be learned here by us mere mortals. First, plan your growth. That doesn't mean simply saying, "Yeah, we want to grow." That means realistically assessing your market and your place in it, and assembling the internal tools to act on that information. Second, realize that the plan will have to change. The market will change. Your place in it will change. Your company resources will have to change too. Starbucks long ago passed the point where its expansion plan started eating itself, but it isn't making any changes.

Once upon a time, the Titanic discovered that "Full speed ahead" is not always the best plan, and by the time it made this discovery, it was too late to change. Starbucks may be in the same boat. Keep your eyes peeled for icebergs, and when the time comes to turn, do it.