The Problem
The companies Chrysler, Ford, and General Motors all say that they can’t survive the current downturn in the market without an infusion of cash. The fact that no private sector investor, or investment group has stepped up to the plate should be a big warning sign that the future doesn’t look good for U.S. automotive companies.

In November, the CEO’s from all three American companies appealed directly to congress for government assistance. Not even thinking twice about it, all three flew from Detroit to Washington D.C. on their corporate jets. While I agree that private jets have their usefulness (mainly saving time by having the ability to reach small airports in remote areas), reaching Washington isn’t one of them. The fact that neither the CEO’s themselves nor their yes-men (and yes-women) thought this was a bad idea is very telling of their mindset.

Public outrage ensued, so what was their response? To fly coach on their next visit? No, all of them decided to drive to Washington in their most “green” vehicles. In the early morning on the eve of their next visit to congress, I watched an interview with GM CEO, Rick Wagoner, as he left for Washington in his “Chevy Malibu Hybrid with OnStar technology.” He was a rolling commercial! In the passenger seat was his driver who would take over the driving duties once they were out of sight of the news cameras so Mr. Wagoner could “work on his upcoming testimony and make calls on [his] OnStar system.”

My major problem with the current proposal is that, as a conservative, I don’t favor government involvement with private companies. This violates a whole tenant of conservatism. While I do realize that currently there is plenty of government involvement with business in the form of taxation and regulation (to differing extents in different industries), this proposal (which smacks of a nationalized auto industry) is a grand step in the wrong direction. I do realize that almost 30 years ago, Chrysler received assistance in the form of public loan guarantees, but this is a completely different situation.

Additionally, the idea of the government investing in or loaning money to the auto industry opens up a whole new host of problems. Obviously if someone is passing out money, there should be some oversight (unless it’s to the financial sector, but that’s another post). This need for oversight further illuminates the problem. Congress is currently proposing the creation of a position (the “Car Czar”) to oversee the business operations of the auto companies should they receive government funds. The government hasn’t proven itself capable of managing anything, let alone a vast manufacturing operation. In the now immortal words of Ronald Reagan, “government is not the solution to our problem; government is the problem.”

Outside of my general principles about the separation of government and business, here are my main “beefs” with the American automotive industry in no particular order:

1. The U.S. auto unions absolutely had a place at some point in time, but in the past 50 years they’ve gotten entirely out of hand. They’ve taken the notion of entitlement to a whole new level. They’ve continually fought automation and other improvements in manufacturing technology in favor of keeping the same amount of people “on the line.” All the time this was happening, most of their rivals were pouring billions of dollars into technology and automation and have maintained their lead on the Detroit automakers in quality. As proof that unionized labor is a problem and not American labor in general, I can point to other manufacturers in the U.S. who make quality products with American labor: BMW (South Carolina), Mercedes-Benz (Alabama), Toyota (Kentucky), and Honda (Ohio). Just a small side-note here: If you even want to hear the most hilarious “stupid things we did while at work” stories, talk to a current or former automotive assembly line worker.
2. A division of our family business supplied plastic injection molded parts to the “Big 3″ for many years (and parts for the Nissan Qwest for a few of those). Mainly, we supplied different types of under-hood shrouds and shields, interior parts, and were the major supplier of HVAC blower wheels (known in the industry as “squirrel cages”). When I worked there in the 90’s I saw first-hand how they treated their suppliers.
   They’re arrogant. They displayed an attitude that said we “should be happy to have any work at all” (most of our work had an 8% gross margin. After subtracting costs for inspection, scrap, tool maintenance, financial carrying cost, and overhead, our net margin fell somewhere between 0%-2%). Representatives of those companies regularly threatened to “pull the work” or “look somewhere else” if we wouldn’t “meet them” (read: capitulate) on price decreases. Their way of dealing with out-of-control health care costs, labor costs, and spending was to squeeze their suppliers for things like a 5% price reduction per year for the next 3 years (alas, now that well has run dry). As normal course of business, they would also pay their invoices far past their due dates. It was not at all abnormal for GM to pay their bills 180 days after receiving them. Ford and Chrysler were better in this respect, but not by much.
3. Executives of the “Big 3″ love perks and living the good life and I don’t believe that government backed loans or government investment would change that attitude. If finances are really that dire then they need to operate their companies and conduct themselves in the same manner that a small bootstrap company would: save and scrimp. This “good life” attitude is so ingrained in the culture, I have almost zero confidence that it can change.

I just read today that now Tesla, hardly credible as a high-volume auto manufacturer adversely impacted by high gas prices, is looking for a $650 million slice of the government “bailout” pie. They’ve stated that the money will be used to finance development of their new Model S for which they were unable to get private-sector funding. Where does it stop?

The Solution
Get smaller. No government funding. Some people believe that without government intervention, the U.S. auto industry will just die a quick death. This isn’t the case at all. They’ll just need to file bankruptcy and reorganize into a more efficient and sustainable organization. Whether that means a merger of one or more companies, I don’t know. Personally, I think that some of the freedoms that filing Chapter 11 could give the auto companies is attractive. Painful, but attractive in the long run. Will it be pretty? No. Necessary? Yes.

Question: What should I do if I work for a jerk?

Answer: Leave. I know there are classic Bob Sutton examples of revered jerks like Steve Jobs, but I wonder about the people who put up with him. Can they not find another visionary to work for who is not such a jerk?

Staying in a job like this makes you look bad. People wonder why you put up with it. And, frankly, you should too. It’s like being an abused wife. The wife who stays always defends the relationship by how much she gets out of it, but to everyone else it is obvious that she should leave. The problem is a loss of personal perspective.

People who don’t quit those jobs sound like some people that I know.

I’m feeling pretty good about Jettisoning Vonage right about now. Click here to see why.

That is all. Carry on.

The IKEA Jerker

We have a new employee starting work on Monday, so you can imagine my dismay when I swung down to my local (not really that local) IKEA to pick up another Jerker workstation only to find they’ve been discontinued. I had to settle for what logically seems to be its replacement; the Fredrik workstation. The Fredrik workstation has a more pleasing appearance than the Jerker, but isn’t near as stout or durable. The IKEA website lists it for $99, but locally it costs $149.

Assembling it was like taking a class on Clever Engineering. Each step of assembly brought a knowing smile to my face. Only four screws hold the whole thing together! Everything else is an ingenious system of interlocking clips further strengthened by the MDF shelves. Cleverness aside, this desk was obviously engineered for ease of assembly and production efficiency. Once assembled, it’s clear that this desk probably won’t last more than two or three years. The Jerker will probably last ten.

Oh well, it’s all in the name of profits progress.

IKEA Fredrik

Vonage’s Stock Performance – 3/24/2007

That may all be well and good, but my experiences in dealing directly with their IT deparment (mostly in attempts to establish an extranet VPN connection with them), I was dealing with people who seemingly didn’t know what they were doing.

It all makes sense now. It’s because they weren’t “product” people.

This is an obvious fact that was overlooked by the media and apparently by Google themselves. As I predicted, as soon as they made the purchase, the media spotlight is shining bright on YouTube which is causing all the same people that policed Google to now focus on their new acquisition.

YouTube is going down the…um…tubes now that all the funny mainstream stuff is being yanked off the site (Viacom announced today that they are suing GooTube for $1 Billion).

How could a company like Google not understand that “it’s the content stupid”?

*videos posted without permission from the copyright holders.

Our new customer needn’t worry, though. I take the responsibility very seriously. We have our first deliverable on April 24, and then bi-weekly deliveries until July 4th; the project finish date.

I’ll post again then with a success story.

After some back-and-forth with them, they said it was being declined due to AVS (Address Verification System). I hadn’t moved, so this was strange. They eventually suspended my service due to non-payment since we couldn’t get this problem worked out. This was their response to my inquiry as to why my account had been suspended:

Dear Customer:

Thank you for contacting Customer Care.

Your credit card was denied due to an AVS check. Address Verification Service. Because of this she has another man.

If there is anymore questions that need to be answered, then please contact us by the information provided below.

Regards,
Robert Gibson
Customer Care Rep.

The emphasis above is mine. To this day, I’m still not sure what that means except for the fact that Vonage is infested with low-class moronic losers.

I permanently canceled my account the next day and have never looked back. Today, we currently use VOIP for home and work, but we user TelaSIP. Much better and cheaper.

UPDATE 3/9/07: Sweet Justice! Today, Vonage got smacked down for using some of Verizon’s patented technology relating to connecting VOIP calls to the regular circuit-switched network. They’ve been ordered to pay $58 Million. Verizon is seeking an injunction preventing them from using the technology.

The first thing I turned away was a request from a company to create a system that would allow their website visitors to sign up for regular email messages containing coupons or a newsletter or something. They needed a way to manage the contacts and a system that would allow recipients to ‘opt out’ of the email marketing. I’d be doing the customer a disservice if I sold them something that was already built and is better than what we could build for a reasonable amount of money. I referred them to Constant Contact, which for a small monthly fee, meets all their needs.

Secondly, I turned down some web-hosting business. We currently rent an entire server from Go Daddy. After you add administrative and support costs into what we’re paying for the server, there is no money to be made on a small scale in hosting. Our philosophy is because of the convenience to us, we’re happy to host our customer’s sites for no more than our direct cost.

If we marked hosting up at all, without overloading our server (which many providers do) we wouldn’t even be price competitive. We’re happy to make money for what we do well (development) and break even on what we consider a commodity (hosting).

I definitely have no desire to be a “hosting” company.

Hello,
We apologize in the delay in notifying you.
We are unable to process your order at this time.
Our site is being redesigned at this time to reflect current inventory.
We have cancelled your order below.
We have NOT charged your credit card.
We apologize for the inconvenience.

Electronets.com STAFF

Because I was annoyed at their delay in not notifying me very quickly that they weren’t able to fufill my order, I sent them an email stating my annoyance. The strongest words I used were “Thanks for nothing.” and “I’ll be sure not to order anything from your company again.”

I realize that I’m just being an ass. I’ve been cranky lately for some reason and just looking for an argument. Here was their reply to that email, which I really didn’t even expect.

You are welcome. Obviously not too intelligent though… we were genuinely apologetic and this is what we get from you.
You are trash.

Electronets.com STAFF

I responded to inform them that I’d post their response on my blog for all to see, and here was their response to that.

Yes, and we will be happy for you. Make sure you post the fact that you obviously didn’t read our policies regarding our website that you agreed to.

Good day !

I tried to send them a response, but oddly enough my mail is being rejected by their SMTP server now. I sent my reply through another account, but that was also a no-go. All I wanted to do was explain the difference between libel and slander, since there seemed to be some confusion on the meanings of each.

I don’t know which policy they’re referring to which would prevent me from letting them know that I was annoyed. Unless maybe I didn’t read it closely enough and it read, “We don’t have your camera”. I know I would’ve remembered reading that part. So that can’t be it.

The interface is just like their personal Gmail and Calendar ones, but we can manage all the accounts under our domain name. This is a must for any small business. We’ll definitely recommend that our customers take advantage of this service.

Hotmail has gotten what it deserves for sitting on their hands for four years.

For as long as I can remember, besides using his own image in brochures and his nickname for product names, my grandfather used the Tapco logo on all sorts of promotional items: watches, pens, pencils, notepads, tape measures, shirts, pants, hats, jackets, money clips, pocket calculators, and pocket knives amongst other things I can’t recall. If you can name it, there was probably a version made adorned with the Tapco logo. For so long, my life was inundated with all things Tapco. It even seemed that my grandfather’s wardrobe was entirely furnished by Tapco. It was both silly and brilliant at the same time.

The Tapco Logo – Known internally as “The dancing letters”

For more than 30 years, at trade shows, he’d wear a bright green sport coat (the company’s color) that he would tell people was “money green”. People began to stop by our booth at shows just to meet him or shake his hand. Because Tapco’s tools were entirely mechanical, we were particularly popular with the Amish.

One time, while I was traveling with the area sales rep in south-eastern Ohio, the rep and I stopped at an Amish bakery which sold hand-made outdoor furniture in addition to baked goods. While he was inside buying a pie, I waited outdoors by the furniture. A salesperson approached me and asked if I needed any help. He noticed the Tapco logo on my shirt (see what I’m saying?) and said, “Tapco, huh?” I said, “Yes, it’s the company I work for.” The salesperson replied, “Do you know Windy Marsh?”

When my grandfather died, I wanted to create the design for his headstone in order to honor his memory in two ways. First, was by having a headstone that would standout amongst the others, like he did in a crowd. Secondly, with the kind of “brand recognition” he had, I wanted to keep his name and his company’s logo linked. The granite has a greenish hue to it, but we couldn’t get anything approching the color of “money green”. I also wanted to make each letter a separate piece, but the headstone company said it would lead to it being vandalized. Here’s the resulting design:

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It definitely stands out.

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That being said, I think there is a use for words designed to confuse or deceive when you’re having a private business discussion in public. I feel no obligation to assist eavesdroppers in knowing details about the inner-workings of my business.

It’s with this in mind that I subscribe to my late grandfather’s “1% rule” and have adapted it to other areas of my business. My grandfather used and taught his executives to use this rule when discussing business in public places, such as restaurants, elevators, etc. It was particularly useful when we were out-of-town at tradeshows and often in close proximity to customers and competitors.

The Windy Marsh Rule of 1%

If you make something for $1 and you sell it for $2,
you’ve made 1%.

Makes perfect sense.

UPDATE: To answer some questions about why we specifically used the 1% rule: Our company was in the building products industry, which is notorious for having very small profit margins. There are many large companies in this industry (Alcoa, Certainteed, Owens Corning) who could easily drop $100+ million to tool-up and make competing products to our own; thus lowering our very large margins. In order to keep people from wrecking our segment of the market, we’d give them the distinct impression that there wasn’t any money in it. If anyone ever overheard us talking about making 1%, they’d probably think, “Wow, now that’s a tough market to be in. Let’s stay out of there.” It seems to have worked.

That’s not to say that there aren’t other good software companies out there, because there are, but our target customers are small businesses and most large reputable software houses can’t afford to take on a twenty-thousand dollar project; they’re concentrating on implementing things like multi-million dollar supply-chain management tools for Fortune 500 companies. The small business owner has few options for good work, and since he usually has limited technical knowledge, he’s a ripe candidate to be taken advantage of. There are a lot of people running around out there claiming to be programmers or web developers (a term which we’ve expunged from our vocabulary internally). They perform shoddy work in a poor manner and are polluting our niche of the industry.

On one of our first jobs (not a distant memory), we made some serious errors in our quoting, and without the customer’s knowledge, we ate more than $18,000 in overages. Why did we do that? I can assure you that it wasn’t intentional and that we’ve taken some serious steps to redesign our quoting and pricing process. A lot of companies would find a way to back charge the customer, renegotiate the deal, or try to recoup it elsewhere. We ate those charges with no expectation of ever seeing that money because it wasn’t the customer’s problem that our quoting methodology was faulty.

We’re new to the custom software business. Not new to software development, mind you, or even new to business in general. We are new to running a business that creates software; all the ancillary processes that go with running a business of this nature have been a learn-as-you-go experience for us. Due to some expensive lessons, we’re learning quickly, though.

UPDATE: I just found this post. Karl is spot on.

Just thought I’d share that little tidbit.

Due to there only being three of us, and considering that I have the most sales experience, by default I am handling the sales stuff. Don’t take this to mean that I’m a good salesman, because I’m not; which doesn’t mean that I can’t be persuasive in a conversation, because I can. Where I fall short as a salesman is making cold calls, staying “on top” of leads to develop them into business, etc. Generally speaking, I am not the best at anything that involves direct human contact with people I don’t know well.

My personal strengths lie in IT knowledge and experience, software design, sales management, and determining corporate direction and strategy. Being that we’re such a small company, I don’t have the luxury of having salespeople (let alone a salesperson) to do my bidding. Which sucks. Why are meeting with and calling customers such difficult tasks for me? Is it solely because I’m introverted? I don’t think so. I wasn’t always so hateful towards these tasks.

After giving this a lot of thought, I believe it’s due to events the occurred in the year leading up to selling our company in July of 1999. I was working as a Regional Manager at the time, and my grandfather had just died; due to estate state reasons (and poor planning on my grandpa’s part) my dad decided to sell the company with management “in-place”. Since he didn’t want to work for someone outside of the family, he promoted his Executive Vice-President to be President (while retaining the titles of Chairman and CEO) and then moved himself, my mom, and my sister to Arizona; leaving me working for the company in Michigan until the company was sold.

The catch was: I couldn’t tell anyone that the company was being sold. As the search for a qualified buyer progressed, and potential buyers were identified, rumors in the industry flew. Customers, employees, and independent representatives would call me daily and ask “if the company was being sold”. Doing my best to honor my dad’s wishes, I would always answer in the negative. After a while, lying to everyone became so stressful for me that I began having problems sleeping and would become anxious on workdays. Eventually it came down to going into work, entering my office, closing the door behind me, and ignoring my ringing phone.

In hindsight, the experience has had a negative effect on me; making it more difficult for me to deal with people than it already was as an introvert. The experience has also had a positive effect on me as well. I tend to be super honest (and sometimes too frank) with customers and people in general. It’s uncomfortable for me to tell even little “white lies” to people.

As a company we’re doing okay and I’m powering-through the fact that I often have to operate as our salesperson. That doesn’t mean I have to like it though.

My Hiding Place (taken on my last day at Tapco):

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