Monthly Archives: December 2007

Dec 30

Growth at Any Price – Including No Growth

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Guest blog by Gene ColterTh12410
When my mom travels from my home to JFK airport this week, chances are her Florida-bound JetBlue flight will be substantially delayed, just as my dad’s flight was last week.

It won’t be the airline’s fault – New York-area airports have on-time arrival/departure percentages that rival the test scores of “successful” college football teams – but every little hiccup gets me thinking about what’s gone terribly wrong with the airline that only a short while ago had been the promise of the industry. More to the point, JetBlue stands as an object lesson on the mission that drives – and damages – many of America’s greatest companies.

JetBlue is near to hitting a couple of notable anniversaries. The discount carrier was founded almost a decade ago in 1998, and it was almost a year ago that JetBlue made worldwide headlines after allowing weather-bound passengers to spend 10 hours on the tarmac and canceling over 1,000 flights.

The root cause of that debacle – and the inevitable travel delays of the Colter brood – is not weather. It is JetBlue’s overreaching for “growth,” a sin that’s so common among notable public companies and their backers that we have trouble even recognizing its pervasiveness.

Please know that your blogger does not own sandals and hugs no trees. (In fact, given the latter’s tendency to invade his basement, he must often be physically detained by contractors from trying to cut down every tree in his heavily wooded Northern New Jersey neighborhood.) But the fact stands that there are reasonable growth strategies – often evidenced by their long-term parameters – and growth-right-here-right-now-don’t-care-how-it-happens strategies.

When David Neeleman founded JetBlue, he showed signs of getting it all right: limited, controlled reach; disdain for the all-over-the-place pricing and hub-and-spoke system that had damaged the major carriers; dynamite customer service; and a serious commitment to managing costs.

But Neeleman is also a “serial entrepreneur” and a man who seems to treat his much-discussed attention-deficit disorder as a public-relations messaging point. More to the point – and this is the real killer – JetBlue is a public company, with all the attendant quarter-to-quarter demands that entails. We should have known.

So it was a couple of years ago that Neeleman — since replaced in the top job, though he remains the company’s non-executive chairman – added another type of aircraft to JetBlue’s stable, plus a bunch more routes and a new training center. Costs – in an industry already legendary for high fixed costs – soared. The future is by no means bright for the airline with good TV, fun-loving attendants and tasty blue-corn chips.

Business luminaries with much more serious chops than I will see that I am making a lonely argument about controlled growth, and they will dismiss it. Yet the fact remains that sometimes – many times – companies would be better off reining in their urges to soar ahead and instead settle for steady profits and good cash flow, picking their spots for big strategic moves that will bring another wave of sustainable growth.

Just ask JetBlue, which posted losses for the last two years and whose stock price is near-grounded at about $6. Even fans of the airline have noted that it has grown too fast to manage its challenges.

It’s unfair (though certainly convenient) to single out JetBlue. Many companies have similarly stumbled. Countless more will follow. And even successful multinationals suffer at the hands of U.S. public markets, which, make no mistake, are a tremendous asset, perhaps more so than government and any other social entity.

Consider, for example, McDonald’s. The Golden Arches have pretty much penetrated every market they can operate in. Analysts ding the stock because it is no longer a “growth company.” But the cash flow from “Billions and Billions Served” is amazing, and what’s wrong with cash and the profits they produce? I suspect the company could fund itself from operations for eternity, or easily turn to banks or bond markets should it need to fatten up its customers, er, coffers. Does it even need to be public anymore?

So, as the New Year approaches, make your way to the airport and settle in for your long (long) trip home. Perhaps you can kill some time by working on a plan to take McDonald’s private.

* * *
Speaking of public companies, anyone who wants to get the real read on what the economy’s fate will be in 2008 would do well to skip the government data and instead turn to the companies’ financial reports. Your goal is to determine whether companies are spending down their cash piles. Right now, most aren’t. If that trend continues no amount of consumer spending or Federal Reserve intervention will keep the economy’s trajectory from looking like JetBlue’s stock chart.

Dec 26

Is it Murder?

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Guest blog written by Deb Brown.

Recently, a 17-year-old girl desperately needed a liver transplant and, which we hear too often, theCigna
insurance company — in this case CIGNA Healthcare — refused to pay for the operation. It wasn’t until 150 teenagers and nurses protested outside CIGNA’s offices that the insurance company finally decided to reverse its decision.  But, it was too late.  The young girl died last Thursday.  And, the family is planning to press murder or manslaughter charges against CIGNA.

Maybe we do need insurance companies to be charged with murder and have several top executives thrown in jail for callously refusing to try to save a person’s life.  Why does it take producers like Michael Moore, protests from teenagers, or the media in general to force insurance companies to reverse their decisions and pay for life-saving operations? This is the reason we all pay insurance premiums in the first place…so we don’t have to worry about critical procedures or medications.

Apparently, the health insurance industry doesn’t seem to care too much about its reputation.  According to a Harris poll from 2006, health insurance companies and HMOs are only ahead of oil and tobacco companies when it comes to doing a good job. 

The attorney of the family who just lost their daughter during this holiday season says, “The insurer ‘maliciously killed her’ because it did not want to bear the expense of her transplant and aftercare.” 

Maybe it has something to do with H Edward Hanway’s salary and compensation? According to Forbes in 2006, Hanway, CIGNA’s CEO, had a total compensation package of $28.82 million. 

It’s tragic that insurance companies can continue to make these heartless decisions.  This is certainly a case to follow.  If CIGNA is charged with murder or manslaughter and some executives spend some time in jail, maybe then, and only then, will they see a child as a child and not as a claim form.

I wonder if Hanway has a 17-year-old daughter?

Dec 21

And now, it’s on to Kilimanjaro and let’s win there

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Chris ‘Repman, Jr’ Cody and I are leaving for Tanzania and a climb of 20,000-foot Mt. Kilimanjaro. At the veryKilimanjaromap_2
least, it should prove to be the adventure of a lifetime (at least for me).

In my absence, a variety of Peppercom executives will be posting their thoughts on the Repman blog. Considering the talent and personalities of those who’ve volunteered, things should be anything but dull.

I thought I’d end by paraphrasing Bobby Kennedy’s final public utterance, ‘….And now, it’s on to Kilimanjaro and let’s win there.’ I’m just hoping Kili doesn’t prove to be my personal Sirhan Sirhan. 🙂

Dec 20

Sheep weep at steep leap

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The Electric Sheep Company, one of Web 2.0’s real superstar design shops, is firing one-third of itsElectric_2
employees in light of declining business.

Considered white hot just a year or so ago, Electric Sheep made its mark by designing ‘builds’ for brands on Second Life. Now, though, with many companies re-thinking the viability of a Second Life presence, Electric Sheep has had the plug pulled (or its billings sheared, depending upon one’s metaphor of choice).

Electric Sheep’s management made the same mistake many of us made during those lazy, hazy, crazy days of dotcom mania. Peppercom did it. And when the dotcom express derailed, we had to manage our way through two separate messy and depressing downsizings. I’ll never forget one bleak February day when, in the midst of the downsizings, our phone system shut down. Rumors began circulating in the industry that we’d closed. Ouch.

But, that was then and this is now. We’ve not only diversified our client portfolio, we’ve also become much more disciplined in hiring. We’ll never again hire willy-nilly in expectations of a continued boom. Instead, we analyze, as best we can, what the coming 90 days look like and make ‘go/no go’ staffing decisions accordingly.

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Dec 19

Whatever a man sows, that he will also reap

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Guest blog written by Rob Longert.
Chrisanderson
Apparently WIRED Magazine editor, Chris Anderson, is unaware of this common proverb, or maybe he
doesn’t believe in karma…he should. 

Back on October 29, 2007, Chris posted the names of about 300 publicists who he called “lazy flacks”

He did this because, he said, they didn’t do their research. As a young professional in the communications industry I can understand the pressure of media relations, and his reasoning is probably right. But the industry is working on that and Chris even agreed to participate in a November “PR Pitching Faux Pas to Avoid: Top Editors Share How to Keep the Love Alive with Mainstream Media” event, part of Bulldog Reporter’s PR University series.

Was his blog post a call for change in the industry? Probably not.

On October 29 did Chris get one too many unsolicited emails and in a fit of frustration ousted innocent professionals doing their job? Most likely.

While on a trip to China, Chris incurred more than $2,000 in roaming fees on his iPhone, simply because he did not shut off the roaming feature on his phone.

Have there been multiple articles online about this very topic? Yes.

As editor-in-chief of an influential tech magazine like WIRED, shouldn’t Chris know about technological features of the most talked about electronic device of the year? Most definitely.

Did Chris get what was coming to him? Absolutely.

Chris, my friend, it is a tough world out there, and you made a mockery of a job we take pride in, took advantage of the positives we bring to your industry, and berated us to our peers.

Who is the lazy flack now?

Dec 18

Playing in the big leagues

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I played in the big leagues last night. It was my first time and I hope it won’t turn out to be just a ‘quickLaughfactory_logo_2
cup of coffee’ as long-term minor league baseball players call their brief stints in the ‘bigs.’

You see, I performed 15 minutes of stand-up at the Laugh Factory. And, while I’ve probably done 25 previous gigs at other venues, this was my first one in the bigs. The Laugh Factory is the real deal, with top-of-the-line facilities, audio/video support systems, a closed circuit television system and A-level comics. In fact, the room itself reminded me more of a Vegas lounge than a Manhattan comedy club.

I did well. As well as I’ve ever done. So, I was pleased when I sat down afterwards (and my blood pressure returned to near normal levels). Then, I watched as real, professional comedians dazzled the audience. And, I was humbled (and very thankful for my day job).

Playing in the big leagues is a scary, but exhilarating, experience. I think I’ve mastered the timing and techniques, but now I know it really is all about material.

So, just like the minor league phenom who gets his shot with the major league parent club but sees how much he still needs to refine, I’m now heading back to the minors. I’ve got to learn to hit the ball out of the park before I can reasonably expect a second cup of coffee at the Laugh Factory.

Dec 17

Finally, a guy who’s got it right

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Here’s a big tip of the hat to Las Vegas Lawyer Todd Phillips, who has filed a gender bias complaint withLadies_2
the Nevada Equal Rights Commission. Todd’s problem? The gym he was touring with his wife offered her a cheaper sign-up rate as well as a special workout section for women.

More and more guys are stepping up to complain about ladies’ night laws at gyms, bars and nightclubs. And, that’s a good thing. No offense, ladies, but why should you get special breaks?

It’s been open season on guys for as long as I can remember. And it runs the gamut from tongue-in-cheek male bashing in the workplace to TV commercials and sitcoms in which the guy is almost always portrayed as a total dope. In fact, one wonders what sort of subliminal damage the latter does to young boys watching at home.

Mr. Phillips, who just happens to be a gender bias lawyer, says special ladies’ nights are just as discriminatory as ‘…a whites-only country club or whites get in free deal…’. That may be a stretch, but I do think the overall public image of men needs some burnishing. And, I’m right behind you Todd. Oh, and by the way, are you done with the elliptical trainer yet?

Dec 12

The digital age giveth and the digital age taketh away

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I never cease to be amazed how ignorant certain people can be (and I’m not even referring to the currentDrunk
occupant of 1600 Pennsylvania Avenue).

Ever since Web 2.0 debuted and powerhouse sites like Facebook and MySpace became all the rage, we’ve seen, heard and read about images and reputations being ruined because of indiscreet postings.

And, yet, college kids continue to do irreparable damage to themselves. The latest example is a group of party-hardy co-eds who not only post photographs and videos of themselves vomiting and urinating in public, but also publish their names and colleges affiliations. And, when confronted, these young women actually defend their activities.

Facebook’s ‘Thirty reasons girls should call it a night’ has every drunken and debauched antic captured for one and all to see. And, the featured co-eds think it’s cool (‘It’s just something fun to do,’ said one. ‘You need to be able to laugh at yourself.’).

What don’t these young women get about the web? Do they not realize future employers will check the sites? Do they not realize they’re doing themselves irreparable harm?

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Dec 11

It’s been a long time since I rock and rolled

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Led Zeppelin gave its first concert performance in 25-plus years last night and, according to reports, allLed
went well with the Rock dinosaurs.

Zep is just the latest classic rock group to capitalize on the mega millions to be made on the concert circuit.

I just saw The Police at Madison Square Garden and was dazzled by the staying power of 57-year-old Sting, 58-year-old Stuart Copeland and 65-year-old guitarist Andy Summers. I also saw Jethro Tull a year or so ago at Carnegie Hall. Lead Singer Ian Anderson can still hop up on one leg and blow the flute for all he’s worth. I’ve also seen the Moody Blues, Cream and, of course, the Stones.

But, I’ve also had mixed feelings about the whole thing. It’s weird seeing bald, obese, aging fans grooving to their childhood rock stars. It’s weirder still to see some of those same Baby Boomers literally falling asleep during the groups’ encores.

Perhaps the strangest phenomenon of all, though, is the bathroom break some of the aging rockers take midway through the performance. Tull did it. So did the Moody Blues. I remember Ian Anderson telling the audience, ‘I don’t know about you, but I’ve got to pee. We’ll be back in 15 minutes.’ And they were.

So, I guess it’s cool to see the heroes of my youth still rocking away (especially when they’re 10 or 15 years older than I). But, it’s a little sad to think that more and more women concert goers are wearing Depends underneath their thongs and their male counterparts have less hair on their heads than the average cue ball.

I’ll bet Roger Daltrey and his fellow aging rockers are glad they didn’t ‘die before they got old.’ They’d have missed out on billions of dollars, millions of fans and numerous bathroom breaks between sets.

Dec 10

I agree with Andy Young

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Former UN Ambassador, Atlanta Mayor and Civil Rights Leader Andrew Young says he wants BarackAndrew_young
Obama to be president, but not until 2016. Young believes Obama is too much of an outsider and has not built the infrastructure necessary to be a successful chief administrator. As Young put it, ‘you can’t run a government all by yourself.’

I agree. In fact, I tell would-be entrepreneurs the same thing when I lecture at colleges and universities. To be successful in business, one has to build an infrastructure of contacts, content and experience. In most instances, entrepreneurial success is dependent upon who you know, who can open doors for you and who can pave the way. Sure, the blood, sweat and tears are all yours but, in our case, we knew the key agencies, the key media and the key influencers. And they all helped when our turn came.

Obama is a Beltway novice. If he should gain the oval office, I believe he’ll be so stressed in building first-time bridges that he won’t be able to accomplish much of anything. America needs someone who knows the ropes, has an infrastructure in place and can effect change. I’m not saying Hillary’s that person. But, I agree with Andy Young that it sure isn’t Obama.