The Corner Office

It was the end of a long work day, but back then, the days seemed to go a lot quicker than they do now. It was 1998 and the stock market’s unprecedented bull run - fueled by the dot-com boom - seemed like it would never end.

At the tail end of a phone interview with USA Today’s Silicon Valley bureau chief, Julie Schmit asked if I would be a source for another reporter’s story on how unbudgeted tax income from the stock market surge was responsible for the nation’s first budget surplus in almost 30 years.    

For those who were too young or have short memories, at that time, the market had indeed seen an impressive bull run. But as they say, “they ain’t seen nothin’ yet.” Over the next 3 years the NASDAQ would skyrocket 250 percent, only to plummet right back down to where it started. Maybe we’d all just as soon forget that ever happened.

And yet, there was a remarkable benefit that, for the most part, slipped under most of our radar screens. But when you read this excerpt from the USA Today archives, the lesson we, in the deficit and budget-challenged present, can learn from history comes into focus:  (more…)

Tired of seeing his business evaporate every weekend, Stuart Frankel - the owner of two Subway franchises in Miami - came up with an idea. He decided to offer all foot-longs for $5, about a buck less than regular prices, on weekends.

Next thing he knew, Frankel had lines out the door and double-digit sales growth.

Next thing Subway knew, it had one of the biggest hits in fast-food history.

The $5 footlong promotion alone generated $3.8 billion over the past year - more than Arby’s and Domino’s entire U.S. business. At a time when everyone’s business is down, Subway’s sales grew 17 percent in 2008, making it the number two fast-food company, worldwide, behind behemoth McDonald’s. Actually, Subway should surpass McDonald’s in total number of franchises in 2010, an amazing feat.

The big question is this: Is the $5 footlong just a flash-in-the-pan, a round number that resonates with fast-food customers? Or is it a function of consumer price-points and price elasticity that affect virtually all markets? (more…)

Entrepreneurs worry too much about what they’re going to develop, make, or market. What’s more important is that they make, develop or market something. The odds that they end up making it big doing something different are apparently pretty high.

Here are 15 companies that became famous, not for what they started doing, but for something that came later. Sure, they may be related, but the point is still valid: better to get started on something; innovative people find a way.

• Backed by French venture capital, DuPont began making gunpowder in 1802.
• McDonald’s. In 1927, brothers Dick and Mac McDonald opened a hot dog stand called “The Airdrome” at the Monrovia airport in California. 21 years later, the company began focusing on hamburgers.
• Nokia was originally a paper mill in Finland. (more…)

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If you’ve never won a big contract or huge piece of business, you don’t know what you’re missing. It’s an incredible feeling; like a burst of adrenaline that lasts for as long as the business lasts. But that’s sort of the problem with adrenaline, isn’t it? When it’s gone, you feel like you’re dead inside. And when a company loses that one big deal, that’s exactly what can happen.

At 4:05 pm EST on Monday, solid state drive maker STEC announced its third quarter results. Revenues and earnings were up considerably, beating the company’s previous guidance. All good, right? Not exactly.

Buried way down in the fifth paragraph of the earnings press release, came a whopper:  

“One of our customers entered into a $120 million supply agreement with us for shipments covering the second half of 2009. We recently received preliminary indications that our customer might carry inventory of our ZeusIOPS at the end of 2009 which they will use in 2010.”  

The next day, STEC’s stock was down a whopping 39 percent on volume of 32 million shares. Turns out the customer referenced in the quote, EMC, accounted for 15 percent of STEC’s revenues last year. Sure, STEC had 329 customers in 2008, but just two of them - Smart Modular and EMC - accounted for 50 percent of the company’s total sales. (more…)

Not only is the writing on the wall - the writing has covered the wall and spilled over onto the floor, the ceiling … hell, it’s everywhere. Big government has come to America. Now what?

Do you suck it up and learn how to live in the new world order? Or is this just a short-term pendulum swing - an overreaction to the financial crisis and eight years of George W. Bush? In that case, just vote the creeps out and play “Don’t Get Fooled Again,” right? Well, not exactly.

You see, there’s new legislation on the table that, when coupled with the bills that have already been rammed through congress, may make it very difficult to get the big government pendulum to stop, let alone swing back the other way, at least in our lifetimes.  (more…)

We have record unemployment, national debt, and deficit spending. We have a vastly imperfect system. We are our own worst enemy. And we have endless greed, fraud, and scandal. But capitalism’s best days are ahead, and not just because things can’t get much worse.

I’ve got four irrefutably logical reasons why capitalism is alive, well, and thriving. And you know what? I got them from the naysayers - those who think we’re all too greedy for our own good, we should apologize for being success-oriented business people, and America’s best days are behind her.

1. Author / guru Paul B. Farrell (pictured) decries the ‘Death of Soul of Capitalism: 20 reasons America has lost its soul and collapse is inevitable,’ (not to be confused with his ’30 Reasons for Great Depression 2 by 2011,’).
   And yet you can go to his website and buy his books with titles like ‘Millionaire Meditation: Stress Management for Wall Street, Corporate America & Entrepreneurs,’ ‘The Millionaire Code: 16 Paths to Wealth,’ ‘The Lazy Person’s Guide to Investing,’ ‘The Winning Portfolio,’ and ‘Zen Millionaires.’ Do you think he really believes capitalism is going down? Think hard now.
   (more…)

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When everything’s going well, people manage to find things to whine about. And when there really is something to whine about - like record unemployment, national debt, deficit spending, bonus pools for bank executives - look out below.

Not that there’s anything wrong with that. Complaining does give us all something to do instead of worrying, something to feel in control of even if we’re not. Which I guess is why we do it.  

And while it does afford us some amount of temporary relief, it doesn’t really change a thing except annoy everyone around us. Instead, you might consider actually doing something to help fix the economy and accelerate its return to normal, whatever that means.

No, I’m not talking about spending money or creating jobs. Anybody who tells you to do that is an idiot. You’re going to do that when you feel it’s in the best interest of your company, shareholders, family, whatever.

That said, there are three things each of us - as business leaders and managers - should be doing, actually need to do. Sure, they’re not easy, but none of the most important things in life are. Besides, we didn’t get to this point overnight, and we won’t recover overnight either. Just put one foot in front of the other, starting here: (more…)

On Friday the SEC arrested and charged a billionaire hedge-fund manager and five others - including high ranking executives from IBM, Intel Capital, and Mckinsey & Co. - with insider trading resulting in $25 million in illicit gains.

While it’s tempting to write this off as the work of a few greedy individuals, I don’t believe that’s the case. If the allegations are true, it would appear that the rampant conflicts of interest and insider trading of the tech bubble is still alive and well. The only difference is that, instead of investment banks, the instigators are now hedge funds.

Just look at the breadth and depth of the allegations that the feds used wiretaps and informants to uncover; this was no Mickey Mouse operation:

• It involves Robert Moffat - a senior VP and prime candidate to succeed IBM CEO Sam Palmisano, Rajiv Goel, a managing director at Intel Capital, and Anil Kumar, a director at McKinsey & Co.
• It involves confidential, inside information about earnings and acquisitions involving Google, Intel, Hilton, Clearwire, Sun, and Polycom.
• The linchpin is Raj Rajaratnam - a billionaire hedge-fund manager and former president of investment bank Needham & Co.   

Insider Trading: Past, Present and Future

(more…)

A survey of the nation’s top CEOs indicates business conditions are improving. I don’t know about you, but I’m not feeling it. So who, exactly, is benefiting from the bullish outlook?

If you work for Goldman Sachs, which today announced quarterly profits of $3.2 billion while setting aside $5.4 billion for compensation, you’re a happy camper. But if you’re among the 9.8 percent of Americans that are unemployed - a 25-year record - you’re probably not in the mood to celebrate just yet. (more…)

The other day I was watching a debate on CNBC starring a senior labor union official who said - with a straight face - that the UAW (United Auto Workers) had nothing to do with the demise of the U.S. automotive industry. Hard to believe, I know. 

There was a time when America needed labor unions to organize for worker’s rights, but federal and state laws prohibit workplace atrocities of the past. Moreover, the payoff for high-profile class action litigation is such that any large employee groups capable of getting the attention of union lawyers could just as easily get their own attorney to take the case.

I spent decades in the high-tech industry where unions had no traction. Over the years, there were issues involving worker safety in manufacturing facilities, but those were effectively dealt with in the courts. That aside, high-tech employees are typically treated well and if they’re not, there are always state labor boards and lawyers to intervene on employee’s behalf.

So here we are in the 21st century and we still have all these unions for teachers, nurses, truckers, airline employees, construction workers, and yes, automotive workers. But are they really needed? Do they really help employees? Or do they just diminish America’s competitiveness in an increasingly global marketplace? (more…)