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Archive for June, 2012

I get at least two upgrades per week for various things on my Apple desktop.  I really couldn’t tell you what they do.  I suppose they are helpful.  I certainly understand the importance of antivirus upgrades.  For the rest of it, not so much.

But one thing upgrades don’t seem to do is make my internet life simpler or easier. Now, admittedly, I am of the trogladyte baby boomer generation.  Technology does not come to me as easily as breathing, like it does for my employees, my younger entrepreneurial colleagues, and, most especially, my ten year old daughter.  So what I long for every day is an app for technological simplicity.  Wherefore art thou, O wondrous app?  It seems making things simpler for the technologically impaired is not the first thing on the minds of genius inventors, engineers, or app creators.

On Monday, June 18, 2012, writer Delia Ephron, a fellow long-in-the-tooth member of my generation, wrote a marvelous cri de couer for the OpEd page of the Wall St. Journal.  With great unpretentious wit she describes her attempt to master the new Facebook upgrade called the Timeline.  She reports:

“The Facebook page used to be quite basic.  Even a moron (me) could understand it.  At the top of the page you posted a message.  Below that, ‘friends’ could respond, and below that were your earlier posts.  Now thanks to this newer better thing called a Timeline—I’m sure many people, younger people, understand why it’s called this, but I don’t—there are multiple columns.  The Facebook page is now completely confusing.  What is new?  What is old? The messages are where?  Where?  Your eye is flying around having no idea where to land.”

I’m sure the Facebook help desk will straighten out Delia when they get back to her.  But I understand her frustration.  I’m bloody busy and I don’t want to spend time with upgrades that do more and more.  Please give me less and less.  I need to spend my days with that Mt. Everest of undealt with items filling my inbox.

Delia Ephron goes on to report that Microsoft’s Word “improves” itself constantly.

“I just got a new computer and was forced into a $149 upgrade.  I also had to spend $199 on a new version of Final Draft, the software program that screenwriters use.  “Don’t get 8 whatever you do, it’s worse than 7,” I was warned by screenwriter friends.  Final Draft 7 is so preferred that the other week I found one for sale on eBay for $400.”

While I am admittedly imperfectly comfortable with technology, I am not a Luddite.  My virtual executive sales outsourcing company, Corporate Rain International, couldn’t exist without complicated IT and brilliant apps. Many of my clients make these magical things.  I wish there was more attention paid to user-friendly accessibility for antediluvian entrepreneurs like me.

In a final comment about coming upgrades for smart phones, Ephron says, “My new phone is already too smart for me and I assume these new phones will be smarter.  All a smarter phone means is another way for me to feel dumber.”  Amen, Sister Delia.

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President Obama seems to hate us entrepreneurs.  Why, for God’s sake?  Why?  He needs us to succeed if he is to succeed.

What has utterly amazed me over the last 3 1/2 years is the Obama administration’s lack of sympathy and even hostility to small business.  The culmination of this consistent trope came last week when the President informed us our private sector was doing just fine, but the public sector was what was truly suffering in the present recession.  Huh?

Obama seems hurt and surprised when small business howls with alarm at the farrago of mandates, regulations, penalties, and added taxes his policies promulgate.  In nothing is this more apparent than his complete lack of sensitivity to the unpopularity and impracticality of ObamaCare in America as a whole, and in our small business community in particular.

The Supreme Court will decide if ObamCare is constitutional before the end of June.  But, whatever the nine Justices decide next week, to my mind this misbegotten 2700 page monstrosity is straight-out, all-fired, and pure-D insane.

Here are just a few reasons practical reasons it won’t work, especially for small business:

  1. It’s hugely expensive for us to comply with.  Jeffrey Carlisle, Founder of Our Health Connector states, “A massive amount of money is dedicated toward an alphabet soup of regulation which shift energy [away from health] and onto compliance.”  (New Hampshire Union Leader-May 12, 2012)
  2. Many small businesses will simply bypass the law by paying a fine and dropping healthcare altogether.  This helps no one.  For instance, Laura Doerger-Roberts, with 170 employees at Vinylmax in Hamilton, OH, says it will be cheaper for her to pay a $340,000 fine than comply.  Or take President Pat Daly of Sierra Bullets in Sedalia, MO.  Pat says, “At Sierra we have looked at ObamaCare. If it goes the way we believe it will, it would make sense for us to pay the fine and go.  I can’t imagine that being a better plan than the excellent healthcare we supply now.”  (The Sedalia Democrat-May 2, 2012)
  3.  ObamaCare is a disincentive to hire or expand.  73% of businesses in a recent survey report the healthcare law is an obstacle to hiring.  (The Hill-April 16, 2012)
  4. It will be more expensive for employees as increased regulatory costs and medical overhead are passed on through reduced salaries and diminished raises.  63% of owners in a survey by Zywave in Milwaukee, WI, say they’ll be forced to do this, resulting in wage stagnation.  (Birmingham Business Journal-June 1, 2012)
  5. Supposedly small business will get a tax credit to ameliorate the above mentioned problems.  However, it requires filling out IRS Form 8941, a mind-numbingly complex series of calculations.  Furthermore, according to my own CPA, going through this expensive accounting exercise will only qualify a very small number of companies.  Why bother?

And let’s not even mention the effect on our national debt.

So, while the intentions of Obama and ObamaCare may be good—even noble—the actual results for the economy are horrendous.  Small business must create the bulk of new jobs if our economy is to improve and it simply cannot do this while groaning under the added weight of ObamaCare.

While healthcare is certainly a mess, this just ain’t the way to fix it.  Indeed, Obama needs entrepreneurs to succeed if he is to have any hope of generating tax revenue to support his ambitious expansion of federal services.  Poorly wrought, bureaucracy heavy programs like Obamacare make this task herculean, if not impossible.  So, for the sake of all of us, I personally hope ObamCare will be thrown out next week–because, like Crazy Eddie says, “It’s insane.”

As liberal journalist Matt Taibbi puts it in his recent book Griftopia:  Bubble Machines, Vampire Squids, and the Long Con That Is Breaking Ameirca, “The Congressional Record will forever show that ObamaCare was passed in a romper room of overgrown children seemingly barely old enough to keep from peeing on themselves.”

Goodness me.  Thanks, Matt

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I watched with some alarm the All Things Digital Conference last week in Silicon Valley.  There was a tone of caution and concern in a number of the presentations there.  This is notable because Silicon Valley and its technology entrepreneurs have always been among the most optimistic sectors of our entrepreneurial community.  Not so much this year.

Some of this dyspeptic trope centered around regulation, which is increasingly wet-blanketing this most effervescent sector of U.S. business.  For example, Mary Meeker of Kleiner Perkins Venture Capital, who is historically among the most optimistic analysts on all interactive things, concluded her presentation with this comment:  “What gives me pause is that when we were born, 85% of households paid federal income taxes.  Now only 49% do.  Soon more people will receive government aid than pay taxes. That scares me a lot.”

Though Silicon Valley has been politically liberal over the years, there is a palpable unease there  with the bureaucratic overreach of the present administration.  This is both in terms of proactively onerous regulatory and mandate burdens on small business and also in terms of what is not being done to help entrepreneurs grow.

One of the more egregious examples of the latter is the issue of skilled worker immigration.  Larry Ellison, the CEO of Oracle, spoke about this at All Things Digital, stating, “Immigration is a good thing.  It is simply madness that after Stanford grants someone a Ph. D., the next thing they get is an INS letter saying, ‘Get out.'”

Ellison is right.  Over 600,000 high-skill jobs are going begging this year.  Additionally, immigrants created 28% of all new firms last year (CNN Money, May 7, 2012).  Over the years highly-skilled immigrants have provided one of the USA’s greatest competitive advantages.  Their knowledge of world markets, their passion, their ambition, their education, their skills, etc., are excellent.

Yet current American immigration officials are utterly clueless.  They do everything they can to prevent immigrants from helping make the U.S. more competitive.  How stupid can the present government be?

Take the case of Kunal Bahl who graduated from Wharton in 2007.  He was unable to get a VISA that would allow him to start a company.  What did he do?  He went back to India and started SnapDeal, India’s Groupon, and created thousands of jobs in New Delhi.  (www.techcrunch.com, 3/6/11)

More than a half million engineers, scientists, doctors, mathematicians, and researchers are stuck in immigration limbo, according to Vivek Wadhwa, who recently completed a study on this subject for Duke University and the Kaufman Foundation.

The U.S. is falling behind in business, something our current bureaucracy seems not to understand.  Niall Ferguson at Harvard Business School refers to a recent survey of more than 1,000 HBS alumni in which only 16% favored the U.S. as a place to locate a business.  The reasons?  Regulation and anti-business taxation and policy.  Ferguson opines that with regard to regulatory issues, “the United States is declining in terms of competitiveness.”

Brooks Atkinson, columnist for the NY Times (Once Around the Sun, 1951), once said.  “Bureaucracies are designed to perform public business. But as soon as a bureaucracy is established, it develops an autonomous spiritual life and comes to regard to public as its enemy.”

Yup.  Thank you, Brooks.

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I’ve lately witnessed a curious phenomenon:  Some of my clients and friends are pulling back from foreign outsourcing.

Even a year ago I never thought I would see this happening.  I don’t know if it’s a permanent trend, but there is an increasing chorus of caveats from businesses that outsource overseas.

For example, Lee Coulter, VP of Business Processes at Ascension Healthcare, reports that Ascension reduced outsourcing over 50% in the past two years for its 84 hospitals and 400 healthcare centers.  He has gone instead to shared service centers, particularly for his back office processes, for which he is efficiently deploying Oracle’s PeopleSoft with greater control and less cost.  (WSJ blog-Joel Schechtman-4/27/12)

Tom Chenault, CEO of Chenault Systems in Dallas, relates the following annecdote in an article in the Dallas Business Journal to illustrate his reason for rethinking outsourcing .  Says Chenault:

“The other night I decided to stop at a fast-food drive-in.  I ordered the No. 1 hamburger and  medium-size limeade over the intercom.  While I was trying to explain that I did not want too  much ice in the limeade, I detected a foreign accent.  The carhop, who was also foreign,  brought me a No. 1 hamburger and a large bag of ice instead of my low-ice drink.  In spite of  everything, along with some good humor, I gave the embarrassed carhop a good tip.”

So what are the problems of offshore outsourcing for the entrepreneur?

Well, here are a few that are widely bruited about.

  1. Overseas labor seems much less expensive initially.  However, it is often much more expensive for the long hauls particularly with regard to design, detailing, specification, and customization.
  2. Language and culture make precise and effective communication overseas undependable.
  3. Security of proprietary information becomes problematic.
  4. Low wages may go up quickly, somewhat obviating the original reason for outsourcing.
  5. There are none of the non-quantifiable advantages of collegiality, proximity, and communal creativity.
  6. Expenses can be great to supervise overseas operations and manage complex foreign tax issues.
  7. Outsourced workers have no incentive to look for efficiency.
  8. Legal documents won’t protect you.  NDAs mean nothing overseas according to the FBI.

Atul Vashistha, Chairman of the Neo Group, which advises corporations on outsourcing, says simply, “Companies are realizing now they might have outsourced jobs they never should have.”

Thanks, Atul.

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