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Archive for April, 2011

I saw a news item that caught my eye last week. California Lt. Governor Gavin Newsome led a delegation of California lawmakers to Austin, Texas to research why so many businesses are leaving California to set up shop in Texas.

Hell, it’s not brain surgery. They didn’t need to go to all that trouble. They could have just called me. The answer to why companies are leaving California is that California is a cesspool of bureaucratic red tape, union mandates and punitive taxation. For example, my outsourced sales company, Corporate Rain International, has but one employee in California. But I am required to pay almost $900 to CA each year just to allow this part-time employee to work for me. This rankles me no end. I have employees in ten other states and no other state requires this.

John Fund wrote about this in the Wall Street Journal on Friday. He cites Andy Puzder, the CEO of Hardee’s Restaurants, who reports it takes six months to two years to get a permit to build a new Carl’s Jr. Restaurant in California versus six weeks in Texas. Likewise, California is one of only three states that demand overtime pay after an eight hour day rather than after a 40 hour week.

Fund quotes Assemblyman Dan Logue, a member of the visiting California delegation,  “We came [to Texas] to learn why [our companies] would pick up their roots and move in order to grow their businesses.” Fund notes the ironic fact that hours after the California legislators met with Texas Governor Perry, Fujitsu Frontech, announced it was abandoning California. Fund further quotes business relocation expert Joe Vranich on the growing business exodus from California. “[Fujitsu Fuontech] is the 70th business to leave this year. That’s an average of 4.7 per week, up from 3.9 a week last year.” CEO Magazine reports California is the worst state for job and business growth and Texas is the best state.

I am flummoxed as to why not only states like California, but also New Jersey, Illinois, my beloved New York, and a couple of others, persist in what can only be described as an institutional, political and cultural hostility to business and entrepreneurship. Entrepreneurs are the goose that can and must continue to lay golden eggs for the states we are based in if employment and the national economy are to recover.

If you want to read more on this topic, I wrote another post about it back on April 13, 2010 after a visit to my Texas office. Just scroll back. It is an unalloyed paean of love to the pro-entrepreneurial culture of Texas. States that want to fiscally survive our present economic downturn should look at the Texas model closely.

Fred Allen said, “California is a nice place to live–if you happen to be an orange.” It’s certainly less and less nice if you happen to be an entrepreneur. Thanks, Fred.

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Ian Schafer, CEO of Deep Focus, a digital agency in New York recently was quoted in the NY Times about the amplification effect of the Internet and social media. He said, “It’s an age when anybody can communicate to an audience…You put something out and it may well be re-tweeted thousands of times.” (NY Times-3/15/11-Stuart Elliott)

Yes, indeed. Here are a few recent stories. Last month Gilbert Gottfried, the voice of the obnoxious duck in Aflac ads, posted a number of crude jokes on his Tweeter feed (@RealGilbert) about the earthquake disaster in Japan. Japan accounts for 75% of Aflac’s business. Of course, Mr. Gottfried was fired summarily, but the damage was done. In a related vein, Kenneth Cole got in hot water on February 2, when he tweeted (with blood in the streets of Egypt), “Millions are in an uproar in Cairo. Rumor is they heard our new spring collection is now available online.” Within minutes Cole’s insensitive glibness was transmitted in thousands of tweets around the globe (scroll back to February 8 blog). Or take Chrysler. An employee of their social media agency took it on himself to post on the official Chrysler twitter site (@ChryslerAutos), “I find it ironic that Detroit is known as the motor city and yet no one here knows how to [expletive deleted] drive.” The agency was let go.

I blogged two weeks ago about Howard Schultz’ new memoir, “Onward.” On Valentines Day, 2007, Schultz wrote a devastating internal memo to his top executives about Starbuckslosing its soul” in the quest for profit. The confidential memo, meant for only Schultz’ top executives, was quickly leaked. It crashed the stock, caused a crisis of confidence among employees, and created a PR nightmare. Schultz eventually turned this crisis to his advantage (a story well worth reading for any entrepreneur), but he recounts being visited by his former head of global communications Wanda Herndon, as he sat shell-shocked in his office. He recounts:

Did you hear about the memo?” I said, still emanating disbelief. Wanda said yes, she knew about it…I shook my head and spoke about how hurt I was about the breach of trust. “Howard,” she said in the matter-of-fact tone I’d come to expect and appreciate. “Nothing is confidential. This is the new reality.” (Onward: How Starbucks fought for Its Life without Losing Its Soul, Rodale Press, 2011, p. 28)

In such a world, discretion is increasingly a byword for many top corporate executives. My own outsourced executive sales company, Corporate Rain International, has noticed an increased insulation and caution among large company executives we approach for our clients. And with good reason. The examples of damaging privacy leaks cannot be gainsayed. An assurance of prudence and judgment is a tonality that must be part of any contemporary high-level executive communication.

To quote Hillary Clinton, “In almost every profession–whether it’s law or journalism, finance or medicine or academia or running a small business–people rely on confidential communications to do their jobs. We count on the space of trust that confidentiality provides. When someone breaches that trust, we are all the worse.” (www.BrainyQuote.com)

Perhaps that is the unfortunate reality of our brave new media world.

Thank you, Hillary.

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Atlas is shrugging–finally. Ayn Rand‘s masterpiece, Atlas Shrugged, will make its debut as a motion picture next Friday. About damn time.

I was surprised and pleased to see a trailer for Rand’s great novel last week. It is a rare thing these days to view a Hollywood movie that celebrates rather than denigrates the virtues of entrepreneurship, capitalism and laissez-faire economics, while also delineating the dangers of command economics and the faceless tyranny of excessive government regulation. Here’s hoping this belated debut will do justice to Rand’s compelling and contemporarily pertinent tale.

Reading Atlas Shrugged was a seminal event in my own philosophical journey from quasi-socialist to a fiscally conservative entrepreneur. I come from an extremely liberal family. Norman Thomas, leader of the American Socialist Party, gave a presentation in my family’s living room in 1961 and my father was an acquaintance and fellow-traveler of Hubert Humphrey. During college and after I was directly involved in Democratic politics for left-wing candidates like Andrew Young, George McGovern and Jimmy Carter.

I was not alone in being jolted by Ayn Rand’s almost 1200 page novel. In 1991 the Library of Congress and the Book-of-the-Month club did a joint survey and found that Atlas Shrugged ranked second only to the Bible among books that made a difference in people’s lives. As of Friday, the novel was still ranked number 79 by Amazon. It remains a hot seller almost 60 years after its publication–and this for a frequently dense and philosophical novel of similar length to Tolstoy’s War and Peace.

Martin Fridson, who reviewed the film this week in Barron’s (April 11, 2011, p. 23), reports the film is finally being produced by entrepreneur John Aglialoro, who acquired the film rights back in 1992. That it has taken him 19 years to get the film up speaks volumes to the Hollywood disdain for anything smacking of approbation for the courage and zeal of the entrepreneur. Looked at from afar, it appears to me that there is an unspoken reverse McCarthyism to contemporary Hollywood that cannot countenance a celebration of business. With few exceptions (Robert Duvall, Clint Eastwood, Jon Voigt, Kelsey Grammar come to mind), there exists a lockstep uniformity and a smug condescension, if not downright hostility, to any positive view of the benighted businessman.

In an article in the October 11, 2010 New Yorker, James Surowiecki quotes Edward Jay Epstein as saying, “Businessmen are now part of Hollywood’s ‘Axis of Evil.'”  Surowiecki says businessmen are now default villains playing the roles once occupied by Nazis, Russians and tin-pot dictators.

Perhaps Atlas Shrugged will be a first crack in that pattern. The movie has a low budget (less that $20,000,000) and is being produced without major stars. Nevertheless, Fridson states, “Rand’s advocates will regard this film as an eloquent statement of her call for individual freedom. Moviegoers interested mainly in entertainment will appreciate its locomotive-like pace, and will be moved by searing images of America in a devastating depression in 2016.” Hmm. I hope that’s not predictive and I hope and pray the film will do the book justice.

Thank you, Martin Fridson.

P.S. On a note of splendid irony, Atlas Shrugged will open on traditional Tax Day, April 15, 2011.

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Love.

That’s the first word in uber-entrepreneur Howard Schultz new memoir Onward: How Starbucks Fought For Its Life Without Losing Its Soul. That’s also the word I took away from an event I attended at the Inc. Business Owners Council meeting in New York, which Mr. Schultz addressed on March 30 in New York.

Mr. Schultz’ writing positively reeks of love. And I mean that in the nicest possible way. I’ve only read half his book, but here’s a quote from the first page:

There is a word that comes to my mind when I think about our company and our people. That word is “love.”  I love Starbucks because everything we’ve tried to do is steeped in humanity. Respect and dignity. Passion and laughter. Compassion, community, and responsibility. Authenticity.

I can’t imagine a more endearing and noble foundational statement for any entrepreneur. It is also very clear that Schultz has effectively walked his idealistic talk, when you hear him in person.

I do have at least two quibbles with his book. One is his annoying proclivity for self-aggrandizement when he constantly refers to his personal intimacy with seemingly every big shot CEO in the US, as well as numerous performers and celebrities–his dawn bike rides with Michael Dell, his references to long conversations with the likes of Bono, K.D. Lang, Norman Lear, Jeffrey Katzenberg, et al. To my taste he includes just too much non-essential name dropping. (“And then I spoke to my good friend [plug in CEO or celebrity.” or “I immediately called my long-term intimate pal [plug in the CEO or celebrity.”) It’s a bit much for me. My other cavil is that the book does simply go on too long about the technicalities of coffee. At least for me. But perhaps that is unfair. Schultz has a deep passion which informs his excessive detail about the ins and outs of coffee entrepreneurship.

My favorite thing about Schultz is his very personal love for his company in the context of the global community. He is a convincing evangelist. He embraces his company as a lover. He also offers Starbucks as a mediator of meaning, an impassioned global citizen, and even a vehicle of salvation. He is unquestionably deeply in love with Starbucks. It is probably very difficult for his wife.

Howard Schulz describes the Starbucks mission as the following: “To inspire and nurture the human spirit one person, one cup, and one neighborhood at a time.” How lovely. More thoughts about this next week.

Thank you, Howard.

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