February 29, 2008
Taxi to the Dark Side
Of my Oscar predictions, I missed only two. Among a host of great movies and actors, the category for best supporting actress was destitute; so I won't spend too much time grieving that miss. However, I am deeply interested in documentaries. No End in Sight was a wonderful look at the Iraq war and examination of America's easily avoidable and drastically deleterious mistakes therein. Despite this, it was not the winner of Best Documentary. The winner was Taxi to the Dark Side. Therefore, Taxi is on my agenda for the weekend and hopefully a brief review on EO is as well.
February 28, 2008
William F. Buckley
I'll post some original content on here soon. However, I don't have the expertise or knowledge to comment on the death of William F. Buckley. There are plenty of tributes and obituaries worthy of your time, just not from me.
Despite this, Ezra Klein's comments resonated with my sense of a current conservative anti-intellectualism. I believe new media is slowly elevating our national discourse away from cable news and conservative radio, however we are far from a nation where being a political thinker "made you a cultural figure."
As a slightly more general point, in the last two or three years, a whole host of giants have passed away, men who were political thinkers at a time when that made you a cultural figure. John Kenneth Galbraith, Milton Friedman, Arthur Schlesinger Jr., Norman Mailer, and now, William F. Buckley Jr. Gore Vidal is just about the last of their number left. And that's a shame. They would write serious books of political analysis and sell millions of copies -- they were the writers you had to read to call yourself an actual political junkie. Now, the space they inhabited in the discourse is held by the Coulters and O'Reilly's of the world. Where we once prized a tremendous facility for wit, we're now elevating those with a tremendous storehouse for anger. Run a search on quotes from Galbraith, Buckley, or Friedman, then do the same for O'Reilly and Coulter. We're really losing something here.
-- The American Prospect, February 27, 2008
Despite this, Ezra Klein's comments resonated with my sense of a current conservative anti-intellectualism. I believe new media is slowly elevating our national discourse away from cable news and conservative radio, however we are far from a nation where being a political thinker "made you a cultural figure."
As a slightly more general point, in the last two or three years, a whole host of giants have passed away, men who were political thinkers at a time when that made you a cultural figure. John Kenneth Galbraith, Milton Friedman, Arthur Schlesinger Jr., Norman Mailer, and now, William F. Buckley Jr. Gore Vidal is just about the last of their number left. And that's a shame. They would write serious books of political analysis and sell millions of copies -- they were the writers you had to read to call yourself an actual political junkie. Now, the space they inhabited in the discourse is held by the Coulters and O'Reilly's of the world. Where we once prized a tremendous facility for wit, we're now elevating those with a tremendous storehouse for anger. Run a search on quotes from Galbraith, Buckley, or Friedman, then do the same for O'Reilly and Coulter. We're really losing something here.
-- The American Prospect, February 27, 2008
February 25, 2008
The Food Crisis Has Arrived
I pointed to talk of a "coming" food crisis a few days ago. Well... it's here.
The United Nation’s agency responsible for relieving hunger is drawing up plans to ration food aid in response to the spiralling cost of agricultural commodities...
WFP officials hope the cuts can be avoided, but warned that the agency’s budget requirements were rising by several million dollars a week because of climbing food prices.
The WFP crisis talks come as the body sees the emergence of a “new area of hunger” in developing countries where even middle-class, urban people are being “priced out of the food market” because of rising food prices.
The warning suggests that the price jump in agricultural commodities – such as wheat, corn, rice and soyabeans – is having a wider impact than thought, hitting countries that have previously largely escaped hunger.
--Financial Times, February 25, 2008
The United Nation’s agency responsible for relieving hunger is drawing up plans to ration food aid in response to the spiralling cost of agricultural commodities...
WFP officials hope the cuts can be avoided, but warned that the agency’s budget requirements were rising by several million dollars a week because of climbing food prices.
The WFP crisis talks come as the body sees the emergence of a “new area of hunger” in developing countries where even middle-class, urban people are being “priced out of the food market” because of rising food prices.
The warning suggests that the price jump in agricultural commodities – such as wheat, corn, rice and soyabeans – is having a wider impact than thought, hitting countries that have previously largely escaped hunger.
--Financial Times, February 25, 2008
February 24, 2008
Oscar Predictions
I promised to get a few of my picks up for tonight's Oscars, so here they are. One note: I have not seen There Will be Blood yet...
Actor in Leading Role: Daniel Day-Lewis
Actor is Supporting Role: Javier Bardem*
Actress in Leading Role: Marion Cotillard
Actress in Supporting Role: Cate Blanchett
Animated Film: Ratatouille
Documentary Feature: No End in Sight*
Music: Atonement
Best Picture: No Country for Old Men*
I think my favorite film of the year was Bella. The film is not nominated for any awards.
* Denotes a personal favorite.
Actor in Leading Role: Daniel Day-Lewis
Actor is Supporting Role: Javier Bardem*
Actress in Leading Role: Marion Cotillard
Actress in Supporting Role: Cate Blanchett
Animated Film: Ratatouille
Documentary Feature: No End in Sight*
Music: Atonement
Best Picture: No Country for Old Men*
I think my favorite film of the year was Bella. The film is not nominated for any awards.
* Denotes a personal favorite.
February 15, 2008
The Coming Food Crisis
The rising costs of food and subsequent potential for crisis should not come as a surprise to anyone paying attention to commodity markets and policies.
From the New York Times:
The distortions in agricultural production are startling. Corn prices are up about 50 percent from last year, while soybean prices are projected to rise up to 30 percent in the coming year, as farmers have replaced soy with corn in their fields. The increasing cost of animal feed is raising the prices of dairy and poultry products.
--September 19, 2007
The general media is not paying much attention to this, as subprime related news continues to dominate most outlets. However, the situation demands a shift in focus to a problem that will likely have a much deeper impact on the world (i.e. famine and starvation).
Today's Financial Times points out a few more structural problems within the current market:
Rising food prices pack a powerful political punch in the developing (or partly-developed) world, to a degree that is sometimes underappreciated by the pampered west...
Goldman Sachs thinks this is just part of a much bigger problem of capital and resource misallocation. After all, Mr Currie argues, if the world today was a rational economic place, then regions such as the Gulf which are food-constrained ought to be investing heavily in agriculture. And since the US is the world's biggest agricultural supplier, this implies that the Saudi Arabians, say, should be snapping up farms in Wisconsin - as America secures oil in the most efficient manner by sending teams of Texans to Riyadh.
But in practice numerous investment controls prevent Saudi Arabians from buying Wisconsin farms and Americans owning Saudi oil wells. And these controls are not being dismantled now. On the contrary, mutual mistrust is now rising. Hence the fact that Gulf leaders are currently considering desalinating sea water to plant wheat in the desert - while the US and Europe are trying to turn corn into fuel. Such exercises might make sense in domestic political terms; but they are apt to be fiendishly expensive. Thus the upshot of this misallocation, Mr Currie would argue, is even more inflation - even if the world does experience some form of growth slowdown.
This campaign season, consider the issues facing the rest of the world and America's role in finding solutions. We need a leader who is informed, capable and willing to deal with situations unrelated to subprime or Iraq... immediately.
From the New York Times:
The distortions in agricultural production are startling. Corn prices are up about 50 percent from last year, while soybean prices are projected to rise up to 30 percent in the coming year, as farmers have replaced soy with corn in their fields. The increasing cost of animal feed is raising the prices of dairy and poultry products.
--September 19, 2007
The general media is not paying much attention to this, as subprime related news continues to dominate most outlets. However, the situation demands a shift in focus to a problem that will likely have a much deeper impact on the world (i.e. famine and starvation).
Today's Financial Times points out a few more structural problems within the current market:
Rising food prices pack a powerful political punch in the developing (or partly-developed) world, to a degree that is sometimes underappreciated by the pampered west...
Goldman Sachs thinks this is just part of a much bigger problem of capital and resource misallocation. After all, Mr Currie argues, if the world today was a rational economic place, then regions such as the Gulf which are food-constrained ought to be investing heavily in agriculture. And since the US is the world's biggest agricultural supplier, this implies that the Saudi Arabians, say, should be snapping up farms in Wisconsin - as America secures oil in the most efficient manner by sending teams of Texans to Riyadh.
But in practice numerous investment controls prevent Saudi Arabians from buying Wisconsin farms and Americans owning Saudi oil wells. And these controls are not being dismantled now. On the contrary, mutual mistrust is now rising. Hence the fact that Gulf leaders are currently considering desalinating sea water to plant wheat in the desert - while the US and Europe are trying to turn corn into fuel. Such exercises might make sense in domestic political terms; but they are apt to be fiendishly expensive. Thus the upshot of this misallocation, Mr Currie would argue, is even more inflation - even if the world does experience some form of growth slowdown.
This campaign season, consider the issues facing the rest of the world and America's role in finding solutions. We need a leader who is informed, capable and willing to deal with situations unrelated to subprime or Iraq... immediately.
There Will Be Blood
I'm hoping to see There Will Be Blood this weekend. It is the only nominee for Best Picture of the Year that I have not seen. Before the Oscars, I will list my favorites for a few of the categories and try to rank the best picture nominees.
January 17, 2008
Detroit Auto Show
The Detroit Auto Show has finally given us some interesting news. Emerging markets are fueling demand for new cars and, as sales there outpace developed countries, these customers will be increasingly important to major auto companies. The most recent demand is for an ultra-low cost (~$2,500 - 4,000) vehicle.
This type of car would open the door to innumerable new drivers. Temporarily ignoring the increased congestion and adverse effects on the environment, the prospect of a new paradigm in car manufacturing is a relief.
Americans are particularly fond of their large, comfortable automobiles. Current pricing differentials on small to mid-size vehicles are not enough of an incentive to buy a smaller car. However, if the price tag dropped to $4,000 on a small vehicle, I predict many buyers will reevaluate how much space they really need. The price would create a breaking point to finally separate Americans from over sized and inefficient vehicles.
Another benefit of the $4,000 car option is greater flexibility for American consumers. The U.S. personal savings rate in November was negative 0.5%. With finances stretched to the limits, it is no wonder we are dealing with the sub-prime mortgage crisis and a looming recession. The sensitivity of American consumers is levered so tightly to home prices and interest rates, the rest of the economy falters soon after any housing disturbances.
Below are a few scenarios based on estimated car prices and basic assumptions for payment. Specifically:
- $300 Monthly Payment
- $1,500 Down Payment
My conclusion is the economy, the environment and our culture would be improved dramatically by shifting priorities away from ostentation to conservative and thrifty consumption.
This type of car would open the door to innumerable new drivers. Temporarily ignoring the increased congestion and adverse effects on the environment, the prospect of a new paradigm in car manufacturing is a relief.
Americans are particularly fond of their large, comfortable automobiles. Current pricing differentials on small to mid-size vehicles are not enough of an incentive to buy a smaller car. However, if the price tag dropped to $4,000 on a small vehicle, I predict many buyers will reevaluate how much space they really need. The price would create a breaking point to finally separate Americans from over sized and inefficient vehicles.
Another benefit of the $4,000 car option is greater flexibility for American consumers. The U.S. personal savings rate in November was negative 0.5%. With finances stretched to the limits, it is no wonder we are dealing with the sub-prime mortgage crisis and a looming recession. The sensitivity of American consumers is levered so tightly to home prices and interest rates, the rest of the economy falters soon after any housing disturbances.
Below are a few scenarios based on estimated car prices and basic assumptions for payment. Specifically:
- $300 Monthly Payment
- $1,500 Down Payment
My conclusion is the economy, the environment and our culture would be improved dramatically by shifting priorities away from ostentation to conservative and thrifty consumption.
January 16, 2008
Bush and Facts
Why do we even fund an intelligence service if the President dismisses what they say based on his wants? This administration, even after all its mistakes, continues to embrace arrogance and ignorance to guide policy.
We live in dangerous times and desperately need a pragmatic and truthful leader.
Disappointing news from today's New York Times:
On the question of Iran, Mr. Bush said he tried to explain his desire to intensify international pressure on Tehran over its nuclear program, despite a National Intelligence Estimate released in Washington in December that concluded that the Iranians had halted a covert nuclear weapons program in 2003.
He distanced himself from that finding more starkly than before, arguing that Iran’s continued enrichment of uranium was a threat because the knowledge used to master that process could be transferred to weapons research.
“I defended our intelligence services,” he said, “but made it clear that they’re an independent agency, that they come to conclusions separate from what I may or may not want.”
We live in dangerous times and desperately need a pragmatic and truthful leader.
Disappointing news from today's New York Times:
On the question of Iran, Mr. Bush said he tried to explain his desire to intensify international pressure on Tehran over its nuclear program, despite a National Intelligence Estimate released in Washington in December that concluded that the Iranians had halted a covert nuclear weapons program in 2003.
He distanced himself from that finding more starkly than before, arguing that Iran’s continued enrichment of uranium was a threat because the knowledge used to master that process could be transferred to weapons research.
“I defended our intelligence services,” he said, “but made it clear that they’re an independent agency, that they come to conclusions separate from what I may or may not want.”
January 08, 2008
Clintons and Values
If you had any doubt about what matters most in the Clinton household, look no further:
He [Bill Clinton] continued: "I actually tried to talk Hillary into leaving me when we were in law school, that's the God's truth. I told her, 'You have more talent for public service than anybody in my generation that I have met... I shouldn't stand in your way.' She looked at me and said, 'Oh, Bill, I'll never run for office.'"
--The Trail, January 7, 2008
Bill and Hillary have lived their entire lives in pursuit of power and influence. This blind ambition leads to policies and campaigns based on polls, a loss of values and purpose and ultimately a weak leader. As Hillary's campaign continues to unravel, realize the Clinton's willingness to elevate politics above marriage (and everything else) set her on this path long ago.
He [Bill Clinton] continued: "I actually tried to talk Hillary into leaving me when we were in law school, that's the God's truth. I told her, 'You have more talent for public service than anybody in my generation that I have met... I shouldn't stand in your way.' She looked at me and said, 'Oh, Bill, I'll never run for office.'"
--The Trail, January 7, 2008
Bill and Hillary have lived their entire lives in pursuit of power and influence. This blind ambition leads to policies and campaigns based on polls, a loss of values and purpose and ultimately a weak leader. As Hillary's campaign continues to unravel, realize the Clinton's willingness to elevate politics above marriage (and everything else) set her on this path long ago.
Schultz Back at Starbucks
It seems Howard Schultz is one of the informed readers of Earnest Observer. The company replaced Jim Donald with Schultz yesterday and it finally appears Starbucks is concerned with serious issues raised in a recent post.
From the Financial Times:
A company statement said the move was part of a set of initiatives aimed at "refocusing the company on providing customers with the distinctive Starbucks experience, and building on Starbucks' legacy of innovation."
This is a good decision for Starbucks and possibly the last chance for a company on its way to competing with McDonald's:
McDonald's is setting out to poach Starbucks customers with the biggest addition to its menu in 30 years. Starting this year, the company's nearly 14,000 U.S. locations will install coffee bars with "baristas" serving cappuccinos, lattes, mochas and the Frappe, similar to Starbucks' ice-blended Frappuccino...
The coffee chain has evolved into more of a filling station. It is now battling fast-food outlets for some of the same customers and meal dollars. Today, about 80% of the orders purchased at U.S. Starbucks are consumed outside the store. The average income and education levels of Starbucks customers have gone down, the company has said. As part of a big push into food, Starbucks sells lunch at more than two-thirds of its company-owned locations in the U.S.
-- Wall Street Journal, January 7, 2008
From the Financial Times:
A company statement said the move was part of a set of initiatives aimed at "refocusing the company on providing customers with the distinctive Starbucks experience, and building on Starbucks' legacy of innovation."
This is a good decision for Starbucks and possibly the last chance for a company on its way to competing with McDonald's:
McDonald's is setting out to poach Starbucks customers with the biggest addition to its menu in 30 years. Starting this year, the company's nearly 14,000 U.S. locations will install coffee bars with "baristas" serving cappuccinos, lattes, mochas and the Frappe, similar to Starbucks' ice-blended Frappuccino...
The coffee chain has evolved into more of a filling station. It is now battling fast-food outlets for some of the same customers and meal dollars. Today, about 80% of the orders purchased at U.S. Starbucks are consumed outside the store. The average income and education levels of Starbucks customers have gone down, the company has said. As part of a big push into food, Starbucks sells lunch at more than two-thirds of its company-owned locations in the U.S.
-- Wall Street Journal, January 7, 2008
January 03, 2008
Defining Conspicuous Consumption
From the New York Times:
The office, which Mr. Cappello said cost $300,000 to $350,000, holds three dozen antique chess sets, several hundred globes, 1,800 handmade canes from around the world and thousands of antique books. The paneling came from a castle in the south of France, and the Empire-period fireplace, he said, was built for one of Napoleon’s residences. A billiard table from 1849 and a large partners’ desk anchor opposite ends of the room, and 19th-century military and animal paintings adorn the walls, along with two big plasma screens, “for watching football games with my buddies,” he said.
Here are my predictions, based on the limited (thankfully) exposure I've had to people like this:
1) He has no idea how to play chess.
2) He does not use a cane.
3) Someone else picked out the antique books to adorn his walls.
4) The real reason for the room is to avoid his family while claiming to work. (You can just see the love he has for his daughter pouring out in the picture...)
All this reminds me of a quote from an earlier post:
Whatever happens, the old American scorn for pretension is bound to reassert itself someday, and dear God, let it be soon.
--B.R. Myers
The office, which Mr. Cappello said cost $300,000 to $350,000, holds three dozen antique chess sets, several hundred globes, 1,800 handmade canes from around the world and thousands of antique books. The paneling came from a castle in the south of France, and the Empire-period fireplace, he said, was built for one of Napoleon’s residences. A billiard table from 1849 and a large partners’ desk anchor opposite ends of the room, and 19th-century military and animal paintings adorn the walls, along with two big plasma screens, “for watching football games with my buddies,” he said.
Here are my predictions, based on the limited (thankfully) exposure I've had to people like this:
1) He has no idea how to play chess.
2) He does not use a cane.
3) Someone else picked out the antique books to adorn his walls.
4) The real reason for the room is to avoid his family while claiming to work. (You can just see the love he has for his daughter pouring out in the picture...)
All this reminds me of a quote from an earlier post:
Whatever happens, the old American scorn for pretension is bound to reassert itself someday, and dear God, let it be soon.
--B.R. Myers
Hoping for Cautious Captains
From yesterday's Financial Times:
In politics, business and finance, as on the seas, the hero is the person who tackles a problem, rather than the person whose actions prevent the problem arising. The statesmen we need are those who avert wars and prevent depressions, but such individuals gain little credit.
I thought about posting the entire article written by John Kay. It raises questions about politics and the leaders we choose, businesses and the compensation and stature afforded top executives and even challenges the integrity of modern capitalism and the pursuit of a career therein.
I have not conducted a detailed study, however, it seems that many of the problems in business and politics are faced by the very leaders who created them. President Bush and the Iraq war and bank CEOs and the subprime financial crisis are the most obvious recent examples. The public often praises fortitude and resolve during these events, rather than the intelligence to avoid the situation altogether. (However, in these two events, the failure has been so widespread and pronounced the public has lost its willingness to watch in awe as the leaders charge ever onward. "Stay the course" as a slogan has lost its appeal.)
In business and politics, praise is often directly related to compensation and success. The cautious manager is in danger of producing average results, but will rarely lead a company or country to ruin. Whereas the "bold" leader will more likely achieve stellar results or massive failures. These failures not only affect their reputation and legacy, but also have lasting effects on the citizens and employees who count on their judgement and expertise.
Steady growth and progress in business and politics are admirable goals. However, steady usually isn't associated with fame, fortune and unfettered praise. Consider the potential inverse relationship between these desires and a future leaders results.
In politics, business and finance, as on the seas, the hero is the person who tackles a problem, rather than the person whose actions prevent the problem arising. The statesmen we need are those who avert wars and prevent depressions, but such individuals gain little credit.
I thought about posting the entire article written by John Kay. It raises questions about politics and the leaders we choose, businesses and the compensation and stature afforded top executives and even challenges the integrity of modern capitalism and the pursuit of a career therein.
I have not conducted a detailed study, however, it seems that many of the problems in business and politics are faced by the very leaders who created them. President Bush and the Iraq war and bank CEOs and the subprime financial crisis are the most obvious recent examples. The public often praises fortitude and resolve during these events, rather than the intelligence to avoid the situation altogether. (However, in these two events, the failure has been so widespread and pronounced the public has lost its willingness to watch in awe as the leaders charge ever onward. "Stay the course" as a slogan has lost its appeal.)
In business and politics, praise is often directly related to compensation and success. The cautious manager is in danger of producing average results, but will rarely lead a company or country to ruin. Whereas the "bold" leader will more likely achieve stellar results or massive failures. These failures not only affect their reputation and legacy, but also have lasting effects on the citizens and employees who count on their judgement and expertise.
Steady growth and progress in business and politics are admirable goals. However, steady usually isn't associated with fame, fortune and unfettered praise. Consider the potential inverse relationship between these desires and a future leaders results.
December 12, 2007
Mayor Bloomberg and Education
Mayor Michael Bloomberg in today's Financial Times:
I have made public education reform a top priority in New York City and the progress we have begun making - substantial gains on math and English scores and graduation rates at 20-year highs - offers hope that by injecting acountability and standards into schools, we can aim for excellence, rather than settle for mediocrity.
This appears in an editorial by the Mayor discussing globalization and the threat of protectionism. Mayor Bloomberg recognizes the vital role of education in dealing with such issues. Instead of making threats against China for currency manipulation or lead paint on toys, the Mayor redirects our attention inward to a growing threat to American leadership. Further evidence of the Mayor's committment to education:
Mayor Michael R. Bloomberg announced yesterday that the city's Department of Education will require all schools to maintain arts programs, and that principals will be rated in annual reviews on how well they run those programs.
--New York Times, July 24, 2007
Presidential campaigns have not given enough time or energy to this country's education problem. My hope is that more candidates will address the issues therein and begin to offer solutions.
I have made public education reform a top priority in New York City and the progress we have begun making - substantial gains on math and English scores and graduation rates at 20-year highs - offers hope that by injecting acountability and standards into schools, we can aim for excellence, rather than settle for mediocrity.
This appears in an editorial by the Mayor discussing globalization and the threat of protectionism. Mayor Bloomberg recognizes the vital role of education in dealing with such issues. Instead of making threats against China for currency manipulation or lead paint on toys, the Mayor redirects our attention inward to a growing threat to American leadership. Further evidence of the Mayor's committment to education:
Mayor Michael R. Bloomberg announced yesterday that the city's Department of Education will require all schools to maintain arts programs, and that principals will be rated in annual reviews on how well they run those programs.
--New York Times, July 24, 2007
Presidential campaigns have not given enough time or energy to this country's education problem. My hope is that more candidates will address the issues therein and begin to offer solutions.
December 06, 2007
Starbucks Today
Starbucks recently made announcements regarding its corporate strategy and new advertising initiative. From the Wall Street Journal:
Chief Executive Jim Donald said Starbucks is getting into TV advertising because "as we grow our stores, we're trying to reach out to this broader audience that maybe [has] not had the chance to experience Starbucks."
Regardless of what the company says, this is a direct response to the following developement:
The average number of transactions in Starbucks U.S. stores fell for the first time during the most recent quarter...
Ignoring the advertising initiative and focusing on the company's broader strategy, a few observations come to mind. Hardly a victim, the success of Starbucks will force the company to make further changes to its business model and target market. My experience with Starbucks is limited to the recent past. I am not familiar with its early stores or original culture. However, I have witnessed changes within the company. The most obvious changes are related to the environment of its stores and the ubiquity of the brand.
Despite the evolution of the business, management clings to tennants of the original strategy.
Starbucks likes to think of itself as a collection of thousands of corner cafes that sponsor the local zoo and have baristas who know their customers' favorite drinks
While this strategy provided the catalyst for its impressive growth, it has now reached a point where that game will no longer work. "Thousands of corner cafes" is inherently oxymoronic and the company is too large to maintain a local feel. This is particularly true when the "corner cafe" is hawking espresso machines, DVDs, CDs, packaged coffee, cups, etc, etc. Most Starbucks stores no longer resemble a cafe, maybe a "Coffee Wal-Mart", but not a cafe.
Now, compound the changes in environment with the ubiquity of the brand. Living near the center of Houston, I could locate at least 5-7 Starbucks stores in the time it would take to locate 1 McDonalds. If the cafe theme is still a goal, how is this prevalence aiding the company in meeting its objectives? The corporate feel of the stores is sharply enhanced by the corporate image invoked by seeing a Starbucks on every corner (or two on every corner, circled here on West Gray Street in Houston).
The money quote from the Wall Street Journal article hints at the fate of Starbucks.
"There is a huge battle of the coffee brands and everyone is encroaching on Starbucks's turf," says Dean Crutchfield of Wolff Olins, a branding firm owned by Onmicom Group. "The competitiveness is diluting and commoditizing the entire coffee category, so it's critical that Starbucks maintains its message in the marketplace."
The most interesting thing about this observation is his focus on the commoditized portion of the market. I believe he is referring to McDonalds and Dunkin Donuts and ultimately comparing Starbucks to these down-market competitors. Starbucks has not maintained its message to the marketplace and therefore will be forced to compete with the national chains. The quality of the coffee will most likely begin to resemble these chains rather than the local coffee shops and cafes. A lower quality product, marketed to the masses is inevitable. The corporate strategy has deviated too far its the original intent to return now. Also, the logistics of supplying thousands of stores with coffee does not allow for local or heterogeneous experiences.
The size and culture of Starbucks indicate further shifting in strategy. I believe this shift will be toward the lower end of the coffee market and allow local coffee shops and cafes to fill the "corner cafe" gap left behind. Hopefully that means a few more places like the one below.
Chief Executive Jim Donald said Starbucks is getting into TV advertising because "as we grow our stores, we're trying to reach out to this broader audience that maybe [has] not had the chance to experience Starbucks."
Regardless of what the company says, this is a direct response to the following developement:
The average number of transactions in Starbucks U.S. stores fell for the first time during the most recent quarter...
Ignoring the advertising initiative and focusing on the company's broader strategy, a few observations come to mind. Hardly a victim, the success of Starbucks will force the company to make further changes to its business model and target market. My experience with Starbucks is limited to the recent past. I am not familiar with its early stores or original culture. However, I have witnessed changes within the company. The most obvious changes are related to the environment of its stores and the ubiquity of the brand.
Despite the evolution of the business, management clings to tennants of the original strategy.
Starbucks likes to think of itself as a collection of thousands of corner cafes that sponsor the local zoo and have baristas who know their customers' favorite drinks
While this strategy provided the catalyst for its impressive growth, it has now reached a point where that game will no longer work. "Thousands of corner cafes" is inherently oxymoronic and the company is too large to maintain a local feel. This is particularly true when the "corner cafe" is hawking espresso machines, DVDs, CDs, packaged coffee, cups, etc, etc. Most Starbucks stores no longer resemble a cafe, maybe a "Coffee Wal-Mart", but not a cafe.
Now, compound the changes in environment with the ubiquity of the brand. Living near the center of Houston, I could locate at least 5-7 Starbucks stores in the time it would take to locate 1 McDonalds. If the cafe theme is still a goal, how is this prevalence aiding the company in meeting its objectives? The corporate feel of the stores is sharply enhanced by the corporate image invoked by seeing a Starbucks on every corner (or two on every corner, circled here on West Gray Street in Houston).
The money quote from the Wall Street Journal article hints at the fate of Starbucks.
"There is a huge battle of the coffee brands and everyone is encroaching on Starbucks's turf," says Dean Crutchfield of Wolff Olins, a branding firm owned by Onmicom Group. "The competitiveness is diluting and commoditizing the entire coffee category, so it's critical that Starbucks maintains its message in the marketplace."
The most interesting thing about this observation is his focus on the commoditized portion of the market. I believe he is referring to McDonalds and Dunkin Donuts and ultimately comparing Starbucks to these down-market competitors. Starbucks has not maintained its message to the marketplace and therefore will be forced to compete with the national chains. The quality of the coffee will most likely begin to resemble these chains rather than the local coffee shops and cafes. A lower quality product, marketed to the masses is inevitable. The corporate strategy has deviated too far its the original intent to return now. Also, the logistics of supplying thousands of stores with coffee does not allow for local or heterogeneous experiences.
The size and culture of Starbucks indicate further shifting in strategy. I believe this shift will be toward the lower end of the coffee market and allow local coffee shops and cafes to fill the "corner cafe" gap left behind. Hopefully that means a few more places like the one below.
No Country for Old Men
There has been a lot written about this movie over the past few weeks and I don't feel the need to elaborate much. However, here are a few thoughts and the trailer for your viewing pleasure:
While not something I would recommend to my grandmother, I enjoyed the movie. Being from Texas, I have grown accustomed to seeing the state portrayed in greatly exaggerated forms. No Country for Old Men depicts west Texas and its people fairly accurately. The studied landscape and restrained characters were appreciated.
The movie has several themes, however most obvious to me was the dispiriting effect evil has on our lives. While it kills some and merely depresses others, it affects everyone. There is no fighting it and despite your efforts to defeat it, evil lives on.
Evil is personified in Anton, a hired killer who has no regard for pity or humanity. His job is clearly defined and his determination is limitless. The theme is consistent in his character, showing evil cares nothing for your ideals and has the ability to engulf and ultimately consume your life.
While not something I would recommend to my grandmother, I enjoyed the movie. Being from Texas, I have grown accustomed to seeing the state portrayed in greatly exaggerated forms. No Country for Old Men depicts west Texas and its people fairly accurately. The studied landscape and restrained characters were appreciated.
The movie has several themes, however most obvious to me was the dispiriting effect evil has on our lives. While it kills some and merely depresses others, it affects everyone. There is no fighting it and despite your efforts to defeat it, evil lives on.
Evil is personified in Anton, a hired killer who has no regard for pity or humanity. His job is clearly defined and his determination is limitless. The theme is consistent in his character, showing evil cares nothing for your ideals and has the ability to engulf and ultimately consume your life.
November 15, 2007
Where's the Style?
One of the most dissapointing things about living in Houston is the lack of style. This includes both men and women. In most cities, the streets are not full of dashing gentlemen and modern women. However, they exist and remind their peers that one's appearance can be drastically enhanced with proper clothing.
The most prevalent style in Houston reminds me of the no-face camera shots shown on the news when discussing obesity statistics. The few supposedly style concious count an Hermes tie or Gucci purse as the vanguard of cosmopolitanism. But, I digress...
Fortunately, I found The Sartorialist about a year ago and am able to follow trends and see examples of truly stylish men and women. A few of my favorites follow, but I would encourage anyone interested in fashion to check out one of the best blogs out there.
This gentleman was photographed in Milan. I am particularly impressed with the subtle details, yet relative simplicity of his clothing.
This gentleman was photographed in New York. Again, the details and accessories are what interest me the most. However, it never hurts to have a tailor as talented as his.
This gentleman was photographed in London. Simply classic.
Milan
New York
Stockholm
via The Sartorialist
The most prevalent style in Houston reminds me of the no-face camera shots shown on the news when discussing obesity statistics. The few supposedly style concious count an Hermes tie or Gucci purse as the vanguard of cosmopolitanism. But, I digress...
Fortunately, I found The Sartorialist about a year ago and am able to follow trends and see examples of truly stylish men and women. A few of my favorites follow, but I would encourage anyone interested in fashion to check out one of the best blogs out there.
via The Sartorialist
November 13, 2007
Texas Rail
I've often wondered how well a high speed train system would work in Texas. Trains in Europe are reaching speeds of 200 - 357 miles per hour.
These speeds make previously dreaded road trips or flights unnecessary. For example:
Houston to Dallas by:
- Car = 4 hours
- Train at 200 mph = 1 hour 12 minutes
- Train at 357 mph = 40 minutes
San Antonio to Dallas by:
- Car = 4 hours 30 minutes
- Train at 200 mph = 1 hour 22 minutes
- Train at 357 mph = 46 minutes
Even shorter times separate cities like Austin from the rest of the state's major business districts (due to its central location). This would not only make business travel easier, but would also enable residents of one city to easily work in another. I know many people who would love to live in a different Texas city, but are constrained due to their employment situation.
One caveat for any development plans, however, involves the sprawl of a city like Houston. Personal transportation after a train ride is a necessity. This isn't Europe and walking or even biking are not a feasible options. Fortunately, MIT engineers are making progress on an innovative solution.
Meant to work more like a car sharing service than that of a personal vehicle, MIT hopes to change the way that we think about personal transportation. Stacks of vehicles could be placed throughout the city to create a small network that is linked to the existing mass transportation systems within the city. When a person comes gets off a bus or train, they can just hop into one of these vehicles and go about their business. They can either drop it off at the vehicle stack at their destination, if there happens to be one, or returned to their original stack, where the vehicle will be recharged and wait for the next person to take it.
via Inhabitat
These speeds make previously dreaded road trips or flights unnecessary. For example:
Houston to Dallas by:
- Car = 4 hours
- Train at 200 mph = 1 hour 12 minutes
- Train at 357 mph = 40 minutes
San Antonio to Dallas by:
- Car = 4 hours 30 minutes
- Train at 200 mph = 1 hour 22 minutes
- Train at 357 mph = 46 minutes
Even shorter times separate cities like Austin from the rest of the state's major business districts (due to its central location). This would not only make business travel easier, but would also enable residents of one city to easily work in another. I know many people who would love to live in a different Texas city, but are constrained due to their employment situation.
One caveat for any development plans, however, involves the sprawl of a city like Houston. Personal transportation after a train ride is a necessity. This isn't Europe and walking or even biking are not a feasible options. Fortunately, MIT engineers are making progress on an innovative solution.
Meant to work more like a car sharing service than that of a personal vehicle, MIT hopes to change the way that we think about personal transportation. Stacks of vehicles could be placed throughout the city to create a small network that is linked to the existing mass transportation systems within the city. When a person comes gets off a bus or train, they can just hop into one of these vehicles and go about their business. They can either drop it off at the vehicle stack at their destination, if there happens to be one, or returned to their original stack, where the vehicle will be recharged and wait for the next person to take it.
via Inhabitat
Subprime
The subprime fallout and subsequent roller-coaster financial markets are not entirely funny (after all, lowering my year-end bonus is no laughing matter). However, the decisions and business practices leading to this turmoil are quite amusing. Below is a short primer about the events leading to our current situation, made tolerable by British wit.
November 12, 2007
Peak Oil?
Oh, the infinite wisdom of Matt Simmons:
"If the world is nearing peak oil supply output, alternative fuels take on a more ominous urgency," said Matt Simmons, chief executive of Simmons & Co., a Houston-based investment bank. Simmons, a long-time proponent of peak-oil theory, popularized the idea with his 2005 book, "Twilight in the Desert."
--Dow Jones, October 23, 2007
It amazes me how often people talk without saying anything. Anyway, "nearing peak oil supply output" is broad and hard to criticize, but this surely doesn't help his argument:
Last week's news centred on the Tupi field - at present, little more than a couple of exploratory wells 280km off Brazil's coast in the Santos Basin. But those two wells have confirmed that the field holds between 5bn and 8bn barrels of oil, not far short of the entire reserves of Norway.
--Financial Times, November 12, 2007
Further developments to watch:
The president of Brazil, Luiz Inácio Lula da Silva, said the discovery of reserves that may total as much as eight billion barrels of oil and natural gas might lead the country to join the Organization of Petroleum Exporting Countries.
--Bloomberg News
"If the world is nearing peak oil supply output, alternative fuels take on a more ominous urgency," said Matt Simmons, chief executive of Simmons & Co., a Houston-based investment bank. Simmons, a long-time proponent of peak-oil theory, popularized the idea with his 2005 book, "Twilight in the Desert."
--Dow Jones, October 23, 2007
It amazes me how often people talk without saying anything. Anyway, "nearing peak oil supply output" is broad and hard to criticize, but this surely doesn't help his argument:
Last week's news centred on the Tupi field - at present, little more than a couple of exploratory wells 280km off Brazil's coast in the Santos Basin. But those two wells have confirmed that the field holds between 5bn and 8bn barrels of oil, not far short of the entire reserves of Norway.
--Financial Times, November 12, 2007
Further developments to watch:
The president of Brazil, Luiz Inácio Lula da Silva, said the discovery of reserves that may total as much as eight billion barrels of oil and natural gas might lead the country to join the Organization of Petroleum Exporting Countries.
--Bloomberg News
My How Things Change
I'm too young to have full knowledge of what I'm about to say, but for posting sake I'll count movie watching and book reading as "industry experience."
A common expression regarding leveraged buyouts is "cutting/trimming the fat." This references any unnecessary or superfluous spending within a company. Once the private equity firm has acquired the company, a significant amount of new debt is partially intended to instill discipline in the company's operations.
Because of their leverage they cannot afford bureaucracy and excess fat; they need shorter lines of communication to customers, employees, suppliers and other constituents. They need to invest their capital in highly productive assets. They need to address the very concerns that business critics have leveled at American industry in its recent years of decline. Because they have few near-term prospects for liquifying their investment, they must take the long-term view.
--Wall Street Journal, May 31, 1984
Fast forward to the height of the subprime fallout and halting of LBO deals and the expression suddenly carries the opposite meaning:
Compare that to Blackstone and KKR, which larded their deals with ever increasing amounts of borrowings until investors turned off the high-yield spigot this summer. Until that spigot opens again, big U.S. buyout firms will largely be sitting on their hands, not exactly a recipe for cranking out the profits public shareholders will expect from them.
--Wall Street Journal, November 12, 2007
I believe more profound shifts in rhetoric will surface regarding "sustainable" and "renewable" energy sources. Sure, corn and soybeans are renewable resources, but are they viable sources for renewable energy?
A common expression regarding leveraged buyouts is "cutting/trimming the fat." This references any unnecessary or superfluous spending within a company. Once the private equity firm has acquired the company, a significant amount of new debt is partially intended to instill discipline in the company's operations.
Because of their leverage they cannot afford bureaucracy and excess fat; they need shorter lines of communication to customers, employees, suppliers and other constituents. They need to invest their capital in highly productive assets. They need to address the very concerns that business critics have leveled at American industry in its recent years of decline. Because they have few near-term prospects for liquifying their investment, they must take the long-term view.
--Wall Street Journal, May 31, 1984
Fast forward to the height of the subprime fallout and halting of LBO deals and the expression suddenly carries the opposite meaning:
Compare that to Blackstone and KKR, which larded their deals with ever increasing amounts of borrowings until investors turned off the high-yield spigot this summer. Until that spigot opens again, big U.S. buyout firms will largely be sitting on their hands, not exactly a recipe for cranking out the profits public shareholders will expect from them.
--Wall Street Journal, November 12, 2007
I believe more profound shifts in rhetoric will surface regarding "sustainable" and "renewable" energy sources. Sure, corn and soybeans are renewable resources, but are they viable sources for renewable energy?
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